Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 12, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Central Excise
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Territorial Jurisdiction - Detention of goods - Goods detailed in Kerala whereas jurisdiction lies in Tamil Nadu - In case of a bonafide dispute with regard to the classification between a transitor of the goods and the squad officer, the squad officer may intercept the goods and detain them for the purpose of preparing the relevant papers for effective transmission to the judicial assessing officers and nothing beyond. - HC
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Classification of goods - Preparation of a kind used in Animal Feeding, Bio Processed Meal - a critical analysis is required to establish that the said product is meant only for animal feed - there are no evidences in support of the applicant’s claim that the said product falls under Chapter heading 23099090. The applicants withdrawn of the comment that “and not fit for human consumption”, further substantiates our contention - Not entitled to Nil rate of duty - AAR
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Classification of services - works contract service or not - business of real estate developer and is developing a colony by executing joint development agreement with the land owner - the activities performed/to be performed by the applicant cannot be classified under Para 5 of schedule Ill. It amounts to supply of services under works contract and is liable to be taxed under GST Act - Rule 31 applies in the instant case and the value of supply is equal to the amount received/receivable by the applicant which is equal to 40% of the amount on which the plots are sold. - AAR
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Pure services or not - supply and distribution of electricity - work of distribution of electricity and electrification work in rural area also - it appears from the context that services involving no supply of goods are considered as pure service. - The Government of Madhya Pradesh is having full control over the applicant and the applicant is covered under the definition of Government Entity. - The work entrusted to the applicant as mentioned above is covered under the article 243G of the constitution - Benefit of exemption from GST is available - AAR
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Exemption from GST or not - deduction of TDS while paying consideration for the supply conservancy/solid waste management service to the Howrah Municipal Corporation - Applicant's supply to HMC is a pure service - The same is eligible for exemption from GST - NO TDS liability u/s 51 of GST - AAR
Income Tax
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Govt. notifies Brunei Darussalam for the Exchange of Information and Assistance in Collection with Respect of Taxes. - Notification
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Disallowance being the interest on late payment of TDS - the interest expenses claimed by the assessee on account of delayed deposit of service tax as well' as TDS liability are allowable expenses u/s 37(1) of the Act. - AT
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Scrutiny assessment u/s 143(3) - issuance of the statutory notice u/s 143(2) - Change in address - The assessee submitted that he changed his address and the new address was mentioned in the return of income filed for subsequent years - AO who had jurisdiction over the assessee i.e., ITO Ward-8(3), Kolkata had not issued the notice to the assessee u/s 143(2) of the Act as mandatorily required under the Act, the assessment framed u/s 143(3) is bad in law - AT
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Short term capital loss - genuine purchase and sale of shares or not - value of consideration for transfer of shares is far exceeding the valuation as per Rule 11UA. - the AO has failed to point out any mistake in the working of the value of shares as per Rule 11UA. The disallowance made by the AO is based on conjectures. - AT
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Capital gain - LTCG - capital asset u/s 2(14) - Exemption u/s 54/54F - Right in the asset relinquished/ surrendered after booking of flat - Period of holding - surplus/ compensation received - the assessee in the present case claimed right in the asset, which was remained in the ownership of assessee for more than 36 month when it was relinquished/ surrendered - Benefits allowed - AT
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Enhancement of assessment u/s 251 - additions were made by the CIT(A) in first round - matter was remanded back by ITAT to CIT(A) - assessee sought the adjournment - CIT(A) not satisfied with the reasons mentioned by the assessee and the Ld. CIT(A) has determined the income of the assessee on already determined income - Order cancelled - AT
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TP Adjustment - associated enterprises (AEs) - Business advances cannot be construed as loan advanced to the assessee company. Once the same is excluded and the loans given by the aforesaid two entities are considered independently, we find that none of the aforesaid parties had advanced loans more than 51% of book value of total assets of the assessee company. Hence it could be safely concluded that the aforesaid two entities cannot be construed as AEs of the assessee company within the meaning of section 92A(2)(c) - AT
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Block assessment u/s 158BD - Penalty u/s 158BFA(2) - Penalty is almost automatic unless it is covered by the proviso. In the present case, return was not filed by these two assesses after receipt of notice u/s 158BD. Hence, the proviso is not applicable - AT
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Exemption u/s 11 - charitable activity u/s 2(15) - to promote the handloom sector - organizing exhibitions in different parts of the country - AO has not appreciated the activities and objective of the society properly and therefore he is not justified in holding that provision of section 2(15) will be attracted in the case of the assessee. - AT
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Interest income on loans / ICD given to subsidiaries and group concerns - Correct head of income - “income from other sources” or “income from business” as claimed by assessee - AO directed to treat interest income as “income from business” and to allow interest expenditure u/s.36(1)(iii) - AT
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Validity of exparte assessment order - Reopening of assessment - Petitioner has sought confirmation as to whether a return of income can be filed manually by it, since it was unable to upload a return electronically, the successor company not having been incorporated for that assessment year. No reply has been given to this letter and instead the impugned order of assessment has come to be passed on 30.12.2017, exparte. - Order set aside - The petitioner is permitted to file a return within a period of two (2) weeks - HC
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Application for Income Tax Settlement Commission - Short payment of admitted tax - this is not a case where the assessee has consciously short-paid admitted tax. There are computational differences that exist that could well be the reason for the remittances falling short of the required amounts. - the differences are quite insignificant in the context of the entirety of the payments made. - Matter restored before commission - HC
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Exemption u/s 11 - Deemed registration u/s 12AA - Charitable activity or not - The Supreme Court decision does not lay down any principle of law. In such circumstances, deemed registration cannot be granted on the ground that the application filed by the Trust u/s 12AA is not decided, for any good reason, within a period of six months from the date of filing. - HC
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Validity of reassessment order u/s 147 - order was not uploaded online - Procedure followed by the revenue in time barring assessments is that while the order may not be uploaded immediately, a DIN number is generated and the order of assessment sent manually. In the present case, the DIN number appears to have been issued on 28.12.2019 and the assessment order in hard copy issued on the same date franked by the post office on 30.12.2019 and served upon the assessee on 02.01.2020, (though returned) with the endorsement 'left'. - Since the order has been received only now, appeal to be filed within 30 days - HC
Customs
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100% EOU unit - Debonding - for imported capital goods, the appellant is liable to pay duty at the rate of duty prevailing on the date of debonding - the appellant is liable to pay duty for indigenously procured capital goods at the rate of duty prevailing on the date of debonding - no interest is payable by the appellant. - AT
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Revocation of CHA License - time limitation - The Revenue has not failed in following the time schedule or limitation which is mandatory one, as has been declared by the Courts of law in number of decisions referred to above, but the Respondent/Licensee made the Revenue to wait for some time only to get some benefits on its own awaiting some orders to be passed in the parallel proceedings initiated by the Customs Authorities - The matter is remitted back to the CESTAT for fresh consideration - HC
Indian Laws
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Frequently Asked Questions on LLP Settlement Scheme, 2020 issued by the Ministry of Corporate Affairs, Government of India - News
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Dishonor of Cheque - Account closed - When the cheque is returned by a bank with an endorsement account closed, it would amount to returning the cheque unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque as envisaged in Section 138 of the Act. - HC
SEBI
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Procedure for launching of schemes - Regulation 28 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 - Sub-regulation (4) amended
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Appointment of custodian - Regulation 26 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended - gold or gold related instruments may be kept in the custody of a custodian (earlier it was Bank)
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Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2020. - Notification
Central Excise
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Rebate of duty - failure to self-sealing of the exported goods - The government agrees with the applicant’s contention that contravention of the mandatory conditions stipulated in Para (2) & Para (3) of the Notification No. 19/2004, dated 6-9-2004 cannot be waived or relaxed under Rule 18 of Central Excise Rules, 2002 - CGOVT
Case Laws:
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GST
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2020 (3) TMI 445
Exemption from GST or not - deduction of TDS while paying consideration for the supply conservancy/solid waste management service to the Howrah Municipal Corporation - whether the above supply is exempted in terms of SI No. 3 or 3A of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017)? HELD THAT:- The recipient is a municipal corporation, which is a local authority as defined under section 2(69) of the GST Act - Applicant performs compaction service and transport compacted garbage to the dumping station with the help of hook loaders mounted in compactor machine. There is, however, no reference to any supply of goods in the course of executing the work. The consideration to be paid measures the work only in terms of the quantity of the garbage lifted and removed. Based on the above documents, it may, therefore, be concluded that the Applicant's supply to HMC is a pure service. Furthermore, Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. SI No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant's supply to HMC is a function mentioned under SI No. 6 of the Twelfth Schedule - The Applicant's service to HMC, therefore, is exempt under SI No. 3 of the Exemption Notification. The TDS Notifications bring into force section 51 of the GST Act, specifying the persons under section 51 (1)(d) of the Act and have mandated and laid down the mechanism for deduction of TDS. These notifications, therefore, are applicable only if TDS is deductible on the Applicant's supply under section 51 of the GST Act. Section 51(1) of the Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both - As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply.
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2020 (3) TMI 444
Pure services or not - supply and distribution of electricity - work of distribution of electricity and electrification work in rural area also - exempt services or not - Government Entity or not - Applicability of provision of S. No. 3 of the table of Notification no. 12/2017, Central Tax (Rate), Dated - 28/06/2017 - HELD THAT:- Exemption from GST is granted under Serial No 3 to the Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to an function entrusted to a Panchayat under article 243G of the Constitution or in relation to an function entrusted to a Municipality under article 243W of the Constitution - Pure service is not defined in the GST Act. However, it appears from the context that services involving no supply of goods are considered as pure service. The Applicant claims that the service received from M/s. Primeone work force private limited does not involve supply of any goods while provisioning the services. Thus services are therefore, classifiable as pure service. The Government of Madhya Pradesh is having full control over the applicant M/S M.P. Paschim Kshetra Vidyut Vitran Co. Ltd. and the applicant is covered under the definition of Government Entity. The work entrusted to the applicant as mentioned above is covered under the article 243G of the constitution as the function entrusted to the Panchayat i.e., Rural Electrification including distribution of Electricity. However, the applicant work is not covered under Article 243W of the constitution as the function entrusted to the municipality. It is concluded that the services received by the applicant from M/s. Primeone work force Pvt. Limited fulfills the requisite criteria mentioned in S. No. 3 of the notification no. 12/2017 - Central Tax (Rate), Dated - 28/06/2017 as amended from time to time and eligible for claiming benefit available under the said provision. But the benefit can be availed only in case of where services mentioned in S. No. 3 is received in area covered under Panchayat limits as the entrusted work is covered under article 243G of the constitution and not under article 243W of the constitution.
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2020 (3) TMI 443
Maintainability of Advance ruling application - Classification of goods - Re-rolled strip 108 SP - covered under HSN 81110010 or not? - HELD THAT:- As per the submission of the Applicant that their Bill of entry is being assessed by the department under the Chapter heading(HSN) No. 81110010 and paying the Customs duty and IGST as per the rate applicable in this chapter heading means the question raised by the applicant has already been decided by the department by assessing the goods under HSN 81110010 and also Applicant paid the IGST under this heading, hence as per the proviso to Section 98(2) of CGST Act, the Authority shall not admit the application where the question raised in the application is already decided in any proceedings in the case of an applicant. It is concluded that the application is liable to be rejected as per the proviso of section 98(2) of CGST Act.
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2020 (3) TMI 442
Classification of services - business of real estate developer and is developing a colony by executing joint development agreement with the land owner M/s. Star Construction - works contract or not - Valuation - applicability of Residual Rules i.e. Rule 30/31 provided under GST Valuation Rules. HELD THAT:- The service provided by the applicant is regarding development of the site which includes civil construction and amenities regarding the site in order to make it for the purpose of residence. The services provided by the applicant are based on an agreement signed between the land owner and the applicant which comes under works contract. The agreement provides that the applicant gets 40% of the amount at which each of the plots is sold. This shows that the consideration that the applicant receives is in the form of money and not in the form of land. The only peculiar feature of this arrangement is that the landowners do not arrange any cash amount on their own to pay to the applicant for their services. They do not have to invest any personal amount in this manner and as and when a plot is sold the amount is shared and the applicant receives a part of their consideration. In this manner the applicant gets paid his consideration progressively. Therefore in terms of the provisions of Section 15 the applicant receives the value of taxable supply made by them. Consideration for a service is the total value that the service provider gets in the deal and not what the service provider expends for the provisioning of the service. The total gain to the applicant or the total amount accruing to the applicant for the services is 40% of the amount at which the plots are sold. It has already been emphasized and held that the applicant has no right in the title of the land and therefore the applicant cannot be considered as the sellers of the plots. Their role is limited to aiding and assisting the landowners in the sale of the plots. They are only service providers in the whole process, be it development of the raw land into residential plots or their sale after the development. Therefore the entire amount received by them is liable to be taxed. Thus, the activities performed/to be performed by the applicant cannot be classified under Para 5 of schedule Ill. It amounts to supply of services under works contract and is liable to be taxed under GST Act - Rule 31 applies in the instant case and the value of supply is equal to the amount received/receivable by the applicant which is equal to 40% of the amount on which the plots are sold.
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2020 (3) TMI 441
Classification of goods - Preparation of a kind used in Animal Feeding, Bio Processed Meal - whether falls under HS Code 23099090 or otherwise? - rate of GST - Applicability of Notification 02/2017-CT (Rate) dated 28.06.2017 - HELD THAT:- The Chapter heading 23099090 is exclusively meant for animal feed. It is noted that the applicant has not provided any evidence to prove that the said product Bio Processed Meal is meant for animal feed. We find that the applicant is renowned manufacturer of soya based products, both for general public, for animal fee as well as for industrial use. In such a situation, a critical analysis is required to establish that the said product is meant only for animal feed - there are no evidences in support of the applicant s claim that the said product falls under Chapter heading 23099090 . The applicants withdrawn of the comment that and not fit for human consumption , further substantiates our contention. As the applicant has failed to submit any evidence to support their claim of Chapter heading 23099090 for their product, and therefore the applicant is not entitled to claim Nil rate of duty under as per Notification 02/2017-CT(Rate) dated 28.06.2017 and corresponding notification issued under MPGST Act.
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2020 (3) TMI 439
Territorial Jurisdiction - Detention of goods - whether the Officers of Kerala would have a jurisdiction to detain and seize the goods or at the best could have intimated the jurisdictional Officer in Tamil Nadu to initiate proper proceedings against the petitioner in view of the report? HELD THAT:- Section 129 opens with a non obstante clause empowering the Officers to detain and seize the goods, if it found to be in contravention of any of the any of the provisions of the Act and release of the vehicles, as per the conditions, enumerated, therein. In case of a bonafide dispute with regard to the classification between a transitor of the goods and the squad officer, the squad officer may intercept the goods and detain them for the purpose of preparing the relevant papers for effective transmission to the judicial assessing officers and nothing beyond. In the present case, it is a case of bonafide miscalculation as to whether the goods would be exigible to 12% or 28% - Similar question was considered in the case of Synergy Fertichem [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT ] In case of a bonafide dispute with regard to the classification between a transitor of the goods and the squad officer, the squad officer may intercept the goods and detain them for the purpose of preparing the relevant papers for effective transmission to the judicial assessing officers and nothing beyond. The impugned order of detention Ext.P1 and consequential notice Ext.P2 in Form GST MOV-07 are not sustainable and hereby quashed - The goods are directed to be released to the petitioner with a further direction that the inspecting authority of Kerala would prepare a report and submit the same to the assessing authority, Tamil Nadu for taking action, if deem it appropriate, in accordance with law - Decided in favor of petitioner.
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Income Tax
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2020 (3) TMI 447
Disallowance u/s 14A r.w. Rule 8D(2)(iii) - assessee made suo-motu disallowance - HELD THAT:- Assessee demonstrated that own interest free funds of the assessee were sufficient to cover the investment made. The CIT(A) deleted the disallowance made u/r 8D(2)(ii) by following the decision of Hon ble Jurisdictional High Court in the case of CIT vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] . The Revenue in ground No.1 of the appeal has impugned the findings of CIT(A) in deleting the disallowance made un Rule 8D(2)(ii) in respect of interest expenditure. No material has been placed on record by the Revenue to controvert the findings of CIT(A) . We do not find any infirmity in the findings of CIT(A) in deleting the disallowance made under Rule 8D(2)(ii). The ground No.1 raised by the Revenue is devoid of any merit. The Special Bench of the Tribunal in the case of M/s. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that while computing disallowance under section 14A r.w. Rule 8D(2)(iii) only those investments that yield exempt income should be considered for computing average value of investments The second contention of the assessee that disallowance under section 14A of the Act should be restricted to the extent of exempt income earned is supported by the judgmen of PCIT vs. State Bank of Patiala [ 2018 (11) TMI 1565 - SC ORDER] . Thus, in the light of aforesaid decisions we deem it fit and proper to restore this issue to the file of Assessing Officer for the limited purpose of recomputation of disallowance under Rule 8D(2)(iii) in line with the principles laid down in the case of PCIT vs. State Bank of Patiala and ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] Disallowance of mark to market loss - provision for mark to market loss is an unascertained liability, it is a provision for loss, which may or may not occur at the time of settlement of the contract at future date and hence, disallowed the same in entirety - HELD THAT:- Co-ordinate Bench of the Tribunal in assessee s own case for assessment year 2011- 12 [ 2017 (5) TMI 1719 - ITAT MUMBAI] has considered this issue and has held that mark to market loss claimed by the assessee is allowable. We find no infirmity in the impugned order in accepting assessee s claim in line with the order of Tribunal . Respectfully following the decision of Tribunal in assessee s own case, we dismiss Ground No.2 of the appeal by the Revenue. Disallowance of discount on buy back of debentures - Assessee has treated the receipts on buy back of debentures as capital in nature - AO held that the receipts are on revenue account and thus, made addition - CIT(A) reversed the findings of AO and upheld the assessee s contention that receipts on redemption of debenture are capital in nature - HELD THAT:- We concur with the findings of CIT(A) that the amount received by the assessee on redumption of debentures is not a source of income to the assessee. The buyback of debentures at a lower a mount simply reduces the loan liability of assessee , which is capital in nature. It is not a trading liability and hence, any reduction in such liability cannot be on revenue account. Thus, in view of the facts of case and decision discussed above, we find no reason to interfere with the reasoned findings of CIT(A) on this issue.
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2020 (3) TMI 446
Long-term capital gain on sale of land - accepting valuation report of DVO who is not qualified Valuer of agricultural land and not accepting the valuation report of Government Approved Valuer, who is qualified Valuer for agricultural land - HELD THAT:- AO is directed to re worked out index cost of acquisition by taken FMV at ₹ 210 per sq. meter and re-compute taxable long-term capital gain , accordingly, That Ground No. 1 and 2 are partly allowed. See Smt. Hemaben Bharatbhai Desai [ 2019 (2) TMI 1810 - ITAT SURAT] Addition on account of difference in Jantri Value by applying the provisions of section 50C - HELD THAT:- As difference between the valuation as per stamp duty and the sale consideration issue by the assessee is less than 10% and in such circumstances no addition can be made.
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2020 (3) TMI 440
Stay of demand - respondent by a communication dated 20.01.2020 informed that the stay petition can be considered only on payment of minimum of 20% of total demand when the demand is contested before the CIT (Appeals) - HELD THAT:- Though there is no embargo under the notice communicated under Section 226(3) of the Income Tax, 1961 on the appellant from operating its accounts, it appears that the order giving the benefit to the appellant has become inoperable. To insist on the petitioner, the first pay 20% of the disputed tax in five installments ending with 30.07.2020 and thereafter, the lift the order of attachment would result in denial of the benefit originally conferred on 21.01.2020 on the appellant. We are inclined to modify the order by lifting the order of attachment subject to the appellant paying amount in installments. The concession being given by this order will stand automatically withdrawn sine die if the appellants fails to pay the amounts as per the date fixed by the learned Single Judges. It is also relevant to mention that the appellant is dealing with public money and is accountable. In such circumstances, this Court is inclined to pass the following order:- (i) the order of the Assistant Commissioner of Income Tax, Central Circle 1, Trichy dated 07.02.2020 under Section 226(3) of the Income Tax 1961 is stayed till 01.04.2020 on condition that the appellant pays the first installment in terms of the order of the learned Single Judge on or before 30.03.2020. (ii) On such deposit, the stay shall stand renewed and so on till the subsequent installment strictly in terms of the order of the learned Single Judge till 30.07.2020. (iii)upon payment of the fifth installment on 30.07.2020, there shall be absolute stay. (iv) the respondents are directed to give necessary instructions to the concerned banks to enable the appellant to operate its bank accounts in its usual course of business. (v) In case, the appellant fails to pay the amount as per the order of the learned Single Judge, the respondents are also at liberty to initiate appropriate proceedings in accordance with law to recover the tax due from the appellant.
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2020 (3) TMI 437
Validity of reassessment order u/s 147 - order was not uploaded online - Validity of notice issued u/s 148 - seeking reason - though the petitioner has filed a return no reasons were sought. The assessing authority proceeded to issue a notice under Section 143(2) as well as questionnaires calling for information from the assessee. The assessee has also duly complied with the requests. It is for the first time on 02.11.2019 that the petitioner has sought reasons. - HELD THAT:- Procedure followed by the revenue in time barring assessments is that while the order may not be uploaded immediately, a DIN number is generated and the order of assessment sent manually. In the present case, the DIN number appears to have been issued on 28.12.2019 and the assessment order in hard copy issued on the same date franked by the post office on 30.12.2019 and served upon the assessee on 02.01.2020, (though returned) with the endorsement 'left'. The assessment order, in original, is handed over to the learned counsel for the petitioner. Since the order has been received only now, the petitioner is given thirty (30) days from today to file a statutory appeal, if it is so desires. Recovery proceedings shall also commence after 30 days from today. The petitioner is directed to supply forthwith its present address for communication to the Department. As regards assessment year 2012-13, the petitioner has not sought reasons at all. It has however received the order of assessment and is permitted to file an appeal challenging all aspects of the impugned order, within a period of thirty (30) days from today.
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2020 (3) TMI 436
Exemption u/s 11 - Deemed registration u/s 12AA - Charitable activity or not - no order was passed within 6 months from the date of application u/s 12A - HELD THAT:- From the various pronouncements, the principle discernible is that, it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the Court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term deemed has to be read in its context and further the fullest logical purpose and import are to be understood. It is because in modern legislation, the term deemed has been used for manifold purposes. We find it difficult to subscribe to the views expressed by the Kerala High Court in the case of TBI Education Trust [ 2018 (7) TMI 1737 - KERALA HIGH COURT] , wherein the court has relied upon the decision of the Supreme Court in the case of Kunhayammed v. State of Kerala [ 2000 (7) TMI 67 - SUPREME COURT] . The Supreme Court decision does not lay down any principle of law. In such circumstances, deemed registration cannot be granted on the ground that the application filed by the Trust under Section 12AA is not decided, for any good reason, within a period of six months from the date of filing. In the result, the Appeal is allowed.
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2020 (3) TMI 434
Application for Income Tax Settlement Commission - Short payment of admitted tax - payment of additional taxes is a primary condition for maintainability of the application - HELD THAT:- Admitted position is that there is no shortfall as on date as confirmed by the officer, even though there was a shortfall, according to the Department, as on date of application before the SC. On an overall consideration of the matter, this is not a case where the assessee has consciously short-paid admitted tax. There are computational differences that exist that could well be the reason for the remittances falling short of the required amounts. This is apparent from the contentions of the assessee/petitioner and revenue extracted above. In addition, the differences are quite insignificant in the context of the entirety of the payments made. In the interests of substantial justice the petitioners' case should be considered on merits by the Commission. The impugned order treating the application as invalid is thus set aside and the Settlement Commission is directed to take the matter up for hearing on merits and pass appropriate orders, in accordance with law.
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2020 (3) TMI 433
Validity of exparte assessment order - Reopening of assessment - scheme of amalgamation - HELD THAT:- i) No return of income has been filed by OAS for the relevant assessment year. However, there are credits in the bank account that are liable to be explained by the entity for the purposes of determination of taxability. ii) The factum of amalgamation was not known to the Income Tax Department. The jurisdictional notice, i.e., notice under Section 148 thus came to be issued to OAS. iii) Receipt of notices by OGT is not denied, since it has appeared before the Assessing Officer bringing to its notice the factum of amalgamation only then. iv) On 14.09.2017, OGT brings to the notice of the Department the merger of OAS with OGT and specifically requests the Department to handover the notice to its office staff, one Mr.Suresh. v) Subsequent notices have been issued to OGT (formally known as OAS) and the order of assessment has also been passed in the name of Oasys Greentech Pvt. Limited, i.e., the petitioner. vi) OGT has admittedly filed a return of income in the name of OAS for A.Y.2013-14 even subsequent to amalgamation and also received refunds issued to OAS. The stand of the petitioner to the effect that proceedings for reassessment ought to have been issued only in the name of OGT is clearly misconceived insofar as the Department has not been put to notice of the factum of amalgamation by OGT till 14.09.2017 and the petitioner has also, by filing a return in the name of OAS and receiving refunds addressed to OAS, furthered the impression that OAS is an existing entity. This argument is rejected. No infirmity in law insofar as the impugned proceedings for re-assessment are concerned and the same are held to be valid. Petitioner has sought confirmation as to whether a return of income can be filed manually by it, since it was unable to upload a return electronically, the successor company not having been incorporated for that assessment year. No reply has been given to this letter and instead the impugned order of assessment has come to be passed on 30.12.2017, exparte. Order dated 30.12.2017 is set aside. The petitioner is permitted to file a return within a period of two (2) weeks from today. It is made clear that the assumption of jurisdiction by the respondent/Assessing Officer is perfectly in order. After hearing the petitioner, the Officer shall complete the proceedings for re-assessment on merits within a period of four (4) weeks from date of filing of return.
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2020 (3) TMI 430
Transfer pricing adjustment in respect of interest on purchase price of two ships - Tonnage Tax Scheme applicability - HELD THAT:- In the instant case, the provisions of chapter X have been invoked to alter an expenditure, namely the mobilisation and demobilisation charges paid for a qualifying ship, an item which has no bearing on the income as computed under Chapter XIIG and accordingly the provisions of Chapter X have no application in computing the income of the assessee chargeable to tax as per Chapter XII-G of the Act. In view of the aforesaid discussion, in our considered view, the transfer pricing regulations do not apply to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under TTS. Considering the decision of coordinate bench of the Tribunal in own case the provisions of transfer pricing regulations are not applicable to the assessee to the extent of operation carried by assessee through qualifying ships which is covered by Tonnage Tax Scheme. Transfer pricing adjustment on account of fees receivable for providing negative lien - HELD THAT:- As gone through the orders of the authorities below and found from the record that the TPO/AO has made adjustment for providing letter of negative lien by assessee to the bank. The TPO has equated the said transaction with that of guarantee given to bank. In case of guarantee there is a possibility of a liability arising to the guarantor on account of providing guarantee. However, in the present case, even if EGL defaults in payment of loan, there will be no liability on assessee for paying any amount since assessee is not a guarantor. Hence, there would never be any liability on assessee even in case of default. Keeping in view the nature of negative lien letter given by the assessee and the totality of facts and circumstances of the case and the terms of letter of negative lien given by the assessee, we direct the A.O. to make adjustment by applying 0.25% to the said transaction instead of 0.5% applied by the AO. Transfer pricing adjustment in respect of interest on advance given for allotment of preference shares - HELD THAT:- From the record, we found that the TPO has charged interest on advance for share application money to AE treating the same as a loan. As considered the judicial pronouncements referred by the ld AR and the ld. DR during the course before us as well as judicial pronouncements referred by the lower authorities in their respective orders. As per our considered view the A.O. has correctly charged interest by treating the advance for share application money as loans and advances, since the shares were not finally allotted and money was refunded back to the assessee, the A.O. has correctly made adjustment. Rate of interest to be applied on the said amount ought to be at LIBOR, since the transaction is in the foreign currency as relying on M/S AURIONPRO SOLUTIONS LTD. [ 2017 (6) TMI 1087 - BOMBAY HIGH COURT] and Cotton Naturals (I) Pvt. Ltd. v DCIT 2015 (3) TMI 1031 - DELHI HIGH COURT] - we direct the TPO/AO to restrict the adjustment by taking LIBOR rate. We direct accordingly. This ground of appeal is allowed in part. Adjustment in respect of interest on outstanding receivables - TPO has made adjustment by charging interest with regard to delay in receipt of payment for the services so rendered, accordingly, the TPO was justified in making the said adjustment - HELD THAT:- As from the record, we found that the working of interest as determined by TPO is incorrect. The TPO has charged interest beyond the previous year relevant to assessment year under consideration. Accordingly, we restore the matter back to the file of TPO/AO to recalculate the chargeable interest and confine the same only up to the end of the year under consideration i.e. 31/3/2013 and not thereafter. We direct accordingly. Interest income on loans / ICD given to subsidiaries and group concerns - Correct head of income - income from other sources or income from business as claimed by assessee - HELD THAT:- In the present case, the assessee has advanced ICD to its subsidiary in order to promote their business and charged interest thereon. Applying the ratio laid down by the Hon'ble Supreme Court in the case of S.A. Builders v. CIT [ 2006 (12) TMI 82 - SUPREME COURT] wherein it has been held that interest expenditure incurred by the assessee is allowable as business expenditure, the interest income earned by the assessee on ICD given to subsidiary to promote their business would be taxable as business income. We direct the AO to treat interest income as income from business and to allow interest expenditure u/s.36(1)(iii) of the I.T. Act. We direct accordingly. Disallowance of common interest expenditure - HELD THAT:- Assessing Officer apportioned the said expenditure on the basis of turnover between tonnage and non tonnage activities. We do not find any merit in the order of the A.O. in so far as the interest expenditure is periodic cost of borrowing incurred for the purpose of financing business activities. Therefore it has to be apportioned on basis of cost of financing i.e. value of assets and not on basis of turnover, since the turnover of the business has got no relation with the interest expenditure so incurred by the assessee. We, accordingly, restore this issue to the file of the A.O. to recompute the same by allocating interest expenditure in the ratio of assets employed between the tonnage and non tonnage activities. We direct accordingly. Whether once the income is treated as income under tonnage tax income, the same should not again be taxed as part of normal income offered by the assessee ? - From the record we found that AO was justified in treating the income of ₹ 7,07,52,924/- as tonnage tax income, however, the same should not again form the part of normal business income. We found that AO has inadvertently again added the same income under the head normal business income, which amount to double taxation of same income, accordingly, we direct the AO to reduce the same from normal business income after due verification. We direct accordingly.
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2020 (3) TMI 429
Disallowance u/s 14A - whether any expenditure incurred in earning income which does not form part of the total income shall be disallowed in computing total income? - HELD THAT:- Bangalore Bench of ITAT in the case of M/s UB Infrastructure Projects Ltd., Vs. DCIT. [ 2017 (12) TMI 1749 - ITAT BANGALORE] this Tribunal took the view that there can be no disallowance of expenses u/s 14A of the Act, if there is no exempt income earned during the relevant previous year as followed in Cheminvest Ltd. v. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] - We are of the view that the disallowance of expenditure u/s 14A of the Act cannot be sustained and the same is directed to be deleted. Disallowance u/s. 14A in the present case should be restricted to the exempt income earned by the assessee. Disallowance of interest expenses u/s. 36(1)(iii) - HELD THAT:- What is Assessee s interest in the project, whether Assessee intends to develop the project and why the payment is routed through Mysore Logistics Pvt.Ltd., and what is the connection between the project and Mysore Logistics Pvt.Ltd., are not explained. Therefore the business purpose, in our view was rightly not accepted by the CIT(A). As far as Primus Engineering Solutions Pvt. Ltd., is concerned, it is claimed that interest was charged on this loan and the CIT(A) has directed the AO to verify this aspect and allow relief. Hence, we need not examine the business purpose of this loan, as the loan is not interest free loan. What is now left for consideration is interest free loan to G.Susheela who is a director of the Assessee - The stand taken by the Assessee has not been established with credible evidence. There is no agreement between G.Susheela and the Assessee to substantiate the claim of the Assessee. There is no material brought on record to show any obligation on the part of G.Susheela to part with her rights over any property that she might acquire either as owner as agreement holder in favour of the Assessee. In such circumstances, the plea of the Assessee deserves to be rejected and was rightly rejected by the CIT(A).
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2020 (3) TMI 428
Exemption u/s 11 - charitable activity u/s 2(15) - to promote the handloom sector. - organizing exhibitions in different parts of the country for display and sale of handloom fabrics/ cloth manufactured by handloom weavers and handloom society. - Whether activities carried out by the assessee which resulted in the profits/ surplus are commercial in nature? - HELD THAT:- Since the facts of the case are same as in assessment year 2010-11, respectfully following the order of the ld. CIT(A)-36 for assessment year 2010-11, it is held that the assessee cannot be said to be involved in carrying on any business, trade or commerce and the Assessing Officer is directed to allow the benefit of section 11 with consequential benefits and the Tribunal vide its order [ 2019 (3) TMI 1738 - ITAT DELHI] has also upheld the order of the Ld. CIT(A) by holding that AO has not appreciated the activities and objective of the society properly and therefore he is not justified in holding that provision of section 2(15) will be attracted in the case of the assessee. In view of above, we do not find any infirmity in the order of the Ld. CIT(A), hence, uphold the same by respectfully following the Tribunal s order above and reject the grounds raised by the Revenue.
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2020 (3) TMI 427
Block assessment u/s 158BD - no valid satisfaction has been recorded by the AO of the searched person before issuance of notice under section 158BD - HELD THAT:- As in the present case, satisfaction was duly recorded by the AO of the searched person in the Assessment Order passed by the AO in the case of searched person under section 158BC of the IT Act. Addition to the extent of 1/4th share of the investment made in the property at Hosur Road, Bengaluru - HELD THAT:- We find that the dispute is this in the present case that it is admitted position of fact that to the extent of ₹ 20 lakhs, the amount is explained by the assessee by way of liability payable to Mr. J. K. Malik but he AO has rejected this claim of the assessee on this basis that on the date of search, no such liability was in existence because the same was cleared on account of some property transaction. This is not the case of the AO that the property handed over to Mr. Malik to clear this liability was an unaccounted property acquired during the block period. Even if that property is unaccounted property but acquired by assessee prior to block period then also the said property cannot be added in the block period as undisclosed income. If an unaccounted property is acquired prior to block period, then no addition can be made on account of that property in block period. This is also not the finding of the AO that any money in cash was paid by the assessee to clear this liability of Mr. Malik. Hence, we hold that this amount of ₹ 20 lakhs cannot be considered for the purpose of making addition in the hands of the assessee because this is not the case of the AO that no liability was incurred by the assessee payable to Mr. Malik. This is also not the case of the AO that the liability in question payable to Malik was squared up by the assessee by way of cash payment or by way of transferring the property being undisclosed property acquired during block period. Hence, to this extent the source of investment has to be accepted and we order accordingly. Even as per the AO, the explanation of the assessee is documented and appear prima facie reasonable. The AO has rejected this explanation merely because the assessee has not produced the concerned person for examination. If the examination of that person was so much important for AO, the AO should have used his powers to summon him and ensure his examination but this is not done by the AO. Hence in our considered opinion, this explanation of the assessee cannot be rejected for this reason alone that the assessee could not produce the person, when it is found by the AO that the explanation of the assessee is documented and is prima facie reasonable. Hence, we hold that on this issue also, the explanation of the assessee should be accepted and the addition made by the AO is not justified. Addition made by the AO is not justified without giving finding that liability was cleared by making cash payment or that liability was cleared by way of property transaction settlement being unexplained property acquired during block period. For this transaction also, this is not the finding of the AO that the liability of Mr. Raju is cleared by way of cash payment or that the liability was cleared by way of a property transaction of undisclosed investment in property acquired during block period. Hence, we hold that this addition is also not justified. Penalty u/s 158BFA(2) - HELD THAT:- Penalty is almost automatic unless it is covered by the proviso. In the present case, return was not filed by these two assesses after receipt of notice u/s 158BD. Hence, the proviso is not applicable and hence, we uphold the penalty but direct the AO to recompute the same on the quantum addition of ₹ 4 Lacs only upheld by us while deciding the relevant quantum appeals.
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2020 (3) TMI 426
TP Adjustment - adjustment of AMP expenditure - method to be adopted for benchmarking the trading transactions - RPM v/s TNMM - assessee had benchmarked its trading segment by adopting Resale Price Method as the most appropriate method - HELD THAT:- There is no dispute with regard to the fact that the assessee does not make any value addition to the products imported by it from its AE. When there is no value addition and the imported products are sold as it is, then Resale Price method is held to be most appropriate method in the cases relied upon by Ld A.R. Resale Price Method is most appropriate method in the facts and circumstances of the present case. Accordingly we direct the AO/TPO to adopt Resale Price Method as most appropriate method and determine the ALP of the transactions accordingly. Validity of Transfer pricing adjustment made in respect of AMP expenses - Following the decision rendered in AY 2012-13 in the assessee s own case [ 2019 (5) TMI 1541 - ITAT BANGALORE] we hold that no adjustment needs to be done in respect of AMP expenses and accordingly direct the AO to delete the impugned addition.
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2020 (3) TMI 425
TP Adjustment - advances received by the assessee company from Sovereign Ship Management Ltd, UK - relationship between the assessee and Sovereign Ship Management Ltd, UK said to be that of the associated enterprises - AEs of the assessee company within the meaning of section 92A(2)( c) - HELD THAT:- Language of section 92A(2)(c ) of the Act is unambiguous and clear that in order to fall within the ambit of deeming fiction of of becoming AEs, either Sovereign Ship Management Ltd, UK or Premier Ship Management Ltd, UK should have independently advanced loan to the assessee company which more than 51% of book value of total assets of the assessee company. In the instant case, only if the loans advanced by both Sovereign Ship Management Ltd, UK and Premier Ship Management Ltd, UK are combined, the said provision is satisfied. Advances received by the assessee company from Sovereign Ship Management Ltd, UK are in the nature of business advances for rendering ship management and consultancy services by the assessee company to the said party and hence the same cannot be construed as loan advanced to the assessee company. Once the same is excluded and the loans given by the aforesaid two entities are considered independently, we find that none of the aforesaid parties had advanced loans more than 51% of book value of total assets of the assessee company. Hence it could be safely concluded that the aforesaid two entities cannot be construed as AEs of the assessee company within the meaning of section 92A(2)( c) of the Act which is the case of the ld DRP. In this regard, the ld DR vehemently argued that the assessee itself had reported these two parties to be AEs in its Form 3CEB. We are unable to persuade ourselves to accept to this argument of the ld DR for more than one reason that the facts of the assessee company are staring on us from its financial statements; moreover the plain language of the statute is unambiguous and it is very well settled that there is no estoppel against the statute. See M/S VEER GEMS [ 2018 (7) TMI 382 - SC ORDER] Thus we hold that Sovereign Ship Management Ltd, UK and Premier Ship Management Ltd, UK cannot be deemed to be AEs of the assessee company within the meaning of section 92A(2)( c) of the Act and hence no adjustment to ALP in respect of transactions carried out , need to be done. Decided in favour of assessee.
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2020 (3) TMI 423
Enhancement of assessment u/s 251 - additions were made by the CIT(A) in first round - matter was remanded back by ITAT to CIT(A) - assessee sought the adjournment - CIT(A) not satisfied with the reasons mentioned by the assessee and the Ld. CIT(A) has determined the income of the assessee on already determined income - HELD THAT:- CIT(A) should have issued a fresh notice u/s. 251(2) to the assessee for substantiating its claim in order to prove the documentary evidences and to answer the query raised by the Ld. CIT(A) for the enhancement notice, but the same has not been done by the Ld. CIT(A), which is contrary to law and facts on the file and hence, the impugned order is not sustainable in the eyes of law. Further, the notice dated 16.5.2016 issued by the Inspector of Income Tax where the approval of the Ld. CIT(A)-I, Noida was of dated 17.5.2018, which shows the pre-determined mind of the Inspector and non application of mind of the authorities below and even the Inspector of Income is not competent to issue such notice. Even otherwise, on perusing the documentary evidences filed by assessee in the shape of paper book on the issues in dispute which I have discussed in the preceding paragraphs, AO has examined all the issues with supporting evidences filed by the assessee which is a matter of record. Therefore, the enhancement notice is not sustainable in the eyes of law and resultantly the enhancement made by the Ld. CIT(A) is not tenable, therefore Cancel the impugned order dated 29.10.2018 by accepting the appeal filed by the assessee.
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2020 (3) TMI 422
Weighted deduction claimed u/s.35(2AB) pertaining to contract labour expenditure, professional fees and GET salary - HELD THAT:- Hon ble Gujarat High Court in the case of CIT vs. Claries Lifescience Ltd [ 2008 (8) TMI 579 - GUJARAT HIGH COURT] has clearly held that once facility is approved, the entire expenditures so incurred in development of R D facility has to be allowed for weighted deduction as provided by Section 35(2AB) Since the approval is granted during the previous year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35(2AB) of the Act by the assessee. Domestic travel expenses u/s .35(2AB) - HELD THAT:- AO had not made any disallowance regarding this claim and first time the claim was made before the learned CIT(A). Therefore, we deem it proper to remit the issue back to the AO for considering the same in accordance with law. In view of the above, ground no.2 is allowed for statistical purposes. Excise duty refund as derived from the business of industrial undertaking and eligible for deduction u/s 80IB - HELD THAT:- Once the excise duty refunds has been held to be arising from manufacturing activity and is included in the profits eligible to be exempt u/.80IB of the Act, the grievance of the assessee that such receipts should have been treated as capital receipt is contradictory as by including in the P L account and allowing the benefit under s.80IB of the Act such refunds have already been held to be revenue in nature. An item of receipt can be treated as revenue as capital depending upon its nature. The same item cannot be said to be both revenue as well as capital in nature. Disallowance u/s 36(1)(iii) - HELD THAT:- CIT(A) has made a finding of fact that interest free funds during the year had increased from the earlier year and such funds were much more than interest free advances and CWIP investments were for the purpose of business. The learned CIT(A) has therefore rightly deleted the addition
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2020 (3) TMI 421
Capital gain - LTCG - capital asset u/s 2(14) - Exemption u/s 54/54F - Right in the asset relinquished/ surrendered after booking of flat - Period of holding - surplus/ compensation received by the appellant on surrender of his rights in a property (booking rights in flat) - HELD THAT:- We are of the view that the assessee on booking acquired a right in the asset on 10.04.2007. The asset/interest in asset/ flat was surrendered in 25th July 2011, therefore, the assessee retained right in the asset for more than 36 month, therefore, the assessee was qualified for claiming LTCG on cancellation/surrender of such asset and the compensation so received is qualified for LTCG. The case law relied by ld. DR for the revenue in case of Shobha jain Vs CIT [2016 (10) TMI 973 - ALLAHABAD HIGH COURT] in our view is not applicable on this grounds of appeal. The facts of this case are entirely based on different facts. In the said case, the dispute was with regard to disallowance under section 54F. The assessing officer disallowed the exemption holding that it is permissible only in respect of residential house is purchased or constructed within the stipulated period. The assessee has shown agreement for purchase of land. And the assessee failed to show that there was transfer of property by execution of sale deed. The Tribunal recorded a clear finding that there was no sale of property in dispute for the reasons that no document of sale deed was placed before the revenue authority. Moreover, the assessee in the present case claimed right in the asset, which was remained in the ownership of assessee for more than 36 month when it was relinquished/ surrendered. In the result, ground no.1 of the appeal is allowed.
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2020 (3) TMI 420
Computation of capital gain - LTCG OR STCG - Block of assets - HELD THAT:- As per section 50(1), if the value of consideration exceeds the aggregate of cost of acquisition and expenses on transfer, there will be Short Term Capital Gain. On the other hand, if the value of consideration of the part transferred is less than the cost of acquisition, then the balance left is the WDV of the block at the end of the year on which depreciation will be charged as per section 32 of the Act. The above provision deals with a case where part of the block of depreciable asset is transferred i.e. the block does not cease to exist. As per section 50(2), if the value of the consideration exceeds the aggregate of cost of acquisition and the expenses of transfer, there will be STCG. On the other hand, if the value of consideration of entire block transferred is less than the aggregate of cost of acquisition and expenses of transfer, there will be short term capital loss. The above provision deals with the case where entire block of depreciable assets is transferred i.e. the block ceases to exist. In the instant case, the assessee sold all the 9 units during the impugned assessment year and out of the sale proceeds of the said flats sold, it purchased a property located in Goa. Disallowing the set off of sale of the units at Ashok Towers/Ashok Garden against the new purchase of property at Goa - appellant submits that in the block of assets concept u/s 50, the sale of asset is ought to be set off against the purchase of new assets in the same block - HELD THAT:- In the instant case the assessee has set up the business, which was ready to commence its operation. Thus the assessee would be entitled to claim expenditure which were incurred for the purpose of business. The contentions raised by the assessee before the Ld. CIT(A) vide ground no. 4 was that the AO erred in concluding that since there was no business income in the relevant assessment year, depreciation loss will not be allowed. CIT(A) has allowed this ground of appeal. Set off of sale of the units at Ashok Tower / Ashok Garden against the new purchase of property at Goa - In the block of assets concept u/s 50, the sale of assets ought to be set off against the purchase of new assets in the same block - HELD THAT:- We direct the AO to examine it and pass necessary order as per the provisions of the Act. We direct the assessee to file the relevant documents / evidence before the AO. Thus the 2nd ground of appeal is allowed for statistical purposes. In the instant case, we find that the assessee has rightly valued the shares as per Rule 11UA of the Income Tax Rules, 1962 (the Rules) and filed a copy of it before the AO. Further the assessee had even obtained the valuation report from the registered valuer under Rule 11UA. In any case, the value of consideration for transfer of shares is far exceeding the valuation as per Rule 11UA. In the instant case, the AO has failed to point out any mistake in the working of the value of shares as per Rule 11UA. The disallowance made by the AO is based on conjectures. In such a situation, we agree with the findings of the Ld. CIT(A) and confirm it. Short term capital loss - AO disallowed the short term capital loss claimed on the reason that it is not borne out of genuine purchase and sale - HELD THAT:- We find that the assessee has rightly valued the shares as per Rule 11UA of the Income Tax Rules, 1962 (the Rules) and filed a copy of it before the AO. Further the assessee had even obtained the valuation report from the registered valuer under Rule 11UA. In any case, the value of consideration for transfer of shares is far exceeding the valuation as per Rule 11UA. In the instant case, the AO has failed to point out any mistake in the working of the value of shares as per Rule 11UA. The disallowance made by the AO is based on conjectures. In such a situation, we agree with the findings of the Ld. CIT(A) and confirm it. Thus the 4th ground of appeal is dismissed. Claim of depreciation and administrative expenses - HELD THAT:- It is well settled that where a business unit has been set up by the assessee, which was ready to commence operation, the assessee would be entitled to claim the expenditure which were incurred for the purpose of business. Further, for the purpose of claiming depreciation u/s 32 of the Act, the assets should satisfy the dual conditions of forming part of the block of assets and being used for the purpose of conducting assessee s business. In the instant case, we find that these conditions are satisfied. Therefore, we confirm the order of the Ld. CIT(A) on the above matter
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2020 (3) TMI 419
Lease-hold refurbishment expenses - Revenue expenditure - HELD THAT:- Considering the decision of Tribunal on similar set of fact when the similar expenses were allowed as revenue expenditure in favour of assessee, no variation in facts nor any contrary law is brought is brought to our notice therefore, respectfully following [ 2017 (6) TMI 597 - ITAT MUMBAI] this ground of appeal is allowed in favour of assessee. Disallowance of provision for depreciation on investment - HELD THAT:- It was open to the ITO and the assessee to ascertain true and proper income while submitting income-tax returns. That, for valuing the closing stock, it was open to the assessee to value the stock at cost or market price whichever is lower. That, the assessee was valuing the stock-in-trade at cost for the purposes of statutory balance sheet but, for the purposes of income-tax return, the assessee was valuing the stock-in-trade at cost or market value whichever was lower and that practice was accepted by the Department for 30 years. Consequently, the Supreme Court allowed the appeal filed by UCO Bank [1999 (9) TMI 4 - SUPREME COURT ]. In our view, the judgment of the Supreme Court in UCO Bank's case (supra) squarely applies to the facts of this case. In fact, the present case before us is on a stronger footing because in the case of UCO Bank (supra), the loss was not debited to the profit and loss account whereas in this case, as can be seen from the working at pages 25 and 26 of the paper-book, the loss has been debited to the profit and loss account which is reflected as a provision for Liability in the balance sheet and shares and securities were valued at cost on the asset side. For the reasons given hereinabove, we answer the above quoted question in the affirmative i.e. in favour of the assessee-bank and against the Department. Disallowance under section 14A - HELD THAT:- The assessee has not allocated any expenses for earning the said dividend income. The Assessing Officer invoked the provision of Rule 8D and calculated the disallowance under section 14A of ₹ 7,81,083/-. Admittedly, the provisions of Rule 8D is not applicable for the year under consideration. The ld. AR of the assessee prayed that disallowance under section 14A should be restricted to 2% of the total exempt income and strongly relied upon the decision of Hon ble jurisdictional High Court in Godrej Agrovet Ltd. [ 2014 (8) TMI 457 - BOMBAY HIGH COURT] Hon ble jurisdictional High Court in Godrej Agrovet Ltd. (supra), while considering the disallowance under section 14A for A.Y. 2005-06 restricted the disallowance to the extent of 2% of total exempt income. Considering the decision of jurisdictional High Court, the disallowance for the year under consideration is restricted to 2% of the exempt income. Depreciation on printers, cables, routers and other connectivity charges - Assessing Officer while passing the assessment order allowed depreciation @ 15% against the claim of assessee of 60% - HELD THAT:- We have noted that Hon ble Delhi High Court in DCIT vs. BSES Rajdhani Powers Ltd. [ 2010 (8) TMI 58 - DELHI HIGH COURT] and in CIT vs. Bonanza Portfolio Ltd. [ 2011 (8) TMI 1058 - DELHI HIGH COURT] held that computer peripherals and accessories form an integral part of computer system and eligible for depreciation @ 60%. Considering the decision of Tribunal, the Hon ble Delhi High Court is directed the Assessing Officer to allow the depreciation @ 60% on printers, cable lines and other connected peripherals. Hence, this ground of appeal is allowed. Disallowance under section 14A/Rule 8D(2)(iii) to 50% of administrative expenses - HELD THAT:- Assessing Officer while making the disallowance considered the average value of entire investment made for earning exempt income. The ld. CIT(A) restricted the disallowance to 50% of the amount on estimation basis. Considering the decision of Special Bench of Delhi Tribunal in ACIT vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] we direct the Assessing Officer to recompute the disallowance by considering only those investments which yielded exempt income during the year. Before making recomputation of disallowance under this clause, the Assessing Officer shall grant opportunity to the assessee. In the result, this ground of appeal is allowed for statistical purpose.
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2020 (3) TMI 418
Scrutiny assessment u/s 143(3) - issuance of the statutory notice u/s 143(2) - Change in address - addition u/s 68 - The assessee submitted that he changed his address and the new address was mentioned in the return of income filed for subsequent years. The assessee also submitted that he filed Form No.18 with Registrar of Companies, regarding change of address. No separate intimation was given to the Assessing Officer by the assessee regarding change of address. HELD THAT:- The Court held that mere mentioning of the new address on subsequent return without specifically intimating the AO with respect to change of address and without getting the PAN database changed, is not enough and sufficient. The court found that the assessee claimed to have filed a letter for change of address but such letter was never produced before any of the authorities. As held that on the facts of the case, the notice issued on the address available on the PAN data base was proper and valid service of notice u/s 143(2) - The court held that the change of address in the database of PAN is must, in case of change of the name of the company and/ or any change in the registered office of the corporate office of the assessee and the same has to be intimated to the Registrar of Companies in the prescribed format i.e., Form 18 and after completing the said requirement, the assessee is required to approach the Department with the copy of the said document and then the assessee is required to make an application for change of address in the departmental database of the PAN. In the present case the assessee has failed to do so. This judgment is on the issue of service of notice. It is not an issue as to whether the Assessing Officer has jurisdiction over the assessee. As already stated, it is not a case of notice being issued by a non-jurisdictional Assessing Officer. Issue in the case before the Hon'ble Supreme Court was not with regard to the jurisdiction of the officer in issuing the notice but was with regard to the service of notice on the proper address. The said judgement therefore does not help the department on this issue of jurisdiction now before us. Jurisdiction has to be conferred u/s 120 of the Act. Any act by an authority without jurisdiction is ab-initio void. In view of the above discussion, as the Assessing Officer who had jurisdiction over the assessee i.e., ITO Ward 8(3), Kolkata had not issued the notice to the assessee u/s 143(2) of the Act as mandatorily required under the Act, the assessment framed u/s 143(3) is bad in law as held by the Hon ble Supreme Court in the case of ACIT Anr. Vs. Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] . Hence we quash the same.
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2020 (3) TMI 417
Addition u/s 68 - None of the twelve companies could be located on the given address from whom the assessee company had claimed to have taken unsecured loan - HELD THAT:- In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the loan creditors, thereafter the onus shifted to AO to disprove the documents furnished by assessee. The documents furnished by assessee cannot be brushed aside by the AO without cogent reasons. AO s action to draw adverse view in the light of the documents discussed supra cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, we hold that addition cannot be sustained merely based on inferences drawn by circumstance. We are inclined to uphold the order of the Ld. Commissioner of Income Tax (Appeals) To sum up section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature source of the loan received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the loan creditors. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, we do not want to interfere in the impugned order of Ld. CIT(A) which is confirmed and consequently the appeal of Revenue is dismissed. Addition on account of interest payment to bogus loan creditors - AO disallowed the interest expenditure which were paid by the assessee to the aforesaid twelve (12) loan creditors, on the reason that the loan creditors were bogus entities/companies - HELD THAT:- While adjudicating ground nos. 1 5 we have found that loan creditors are not bogus companies and that the interest were paid through banking channel and TDS have been duly deducted by the assessee. We find that the ld. CIT(A) has rightly deleted the impugned addition. We confirm the action of the ld. CIT(A) and dismiss this ground of appeal of Revenue. Employees contribution of PF/ESI - Addition of non-deposit within due date as prescribed in PF/ESI Act - HELD THAT:- We note that the ld. CIT(A) has given the relief to the assessee after taking note that the assessee had deposited on account of employees contribution to PF/ESI before the due date of filing of return of income, which factual finding is corroborated from perusal of pages 35-36 of the PB (Tax Audit Report) from where, we note that the assessee, in fact, had remitted the employees contribution of PF/ESI before due date of filing of return of income. Therefore, we confirm the order of the ld. CIT(A) by relying on the decision of the Hon ble Jurisdictional High Court in the case of Vijay Shree Ltd dt. [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] Disallowance being the interest on late payment of TDS - AO disallowed since this amount has been remitted by the assessee for late payment of TDS - HELD THAT:- We note that the ld. CIT(A) has given relief taking note of the decision of this Tribunal in the case of M/s. Narayani Ispat Pvt. Ltd [ 2017 (10) TMI 67 - ITAT KOLKATA] as well as the decision of the Hon ble Allahabad High Court in the case of Triveni Engineering Works Ltd. vs Commissioner Of Income-Tax [ 1983 (10) TMI 49 - ALLAHABAD HIGH COURT] . We note that this issue is no longer res integra. This Tribunal in Narayani Ispat P. Ltd. has decided this issue by holding as under: The issue of delay in the payment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura Vs. CIT [ 1997 (12) TMI 16 - SUPREME COURT] in favour of assessee to conclude that the interest expenses claimed by the assessee on account of delayed deposit of service tax as well' as TDS liability are allowable expenses u/s 37(1) of the Act. The interest expenses claimed by the assessee on account of delayed deposit of service tax as well' as TDS liability are allowable expenses u/s 37(1) of the Act. - Decided against the revenue.
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2020 (3) TMI 416
TP Adjustment - Central Service Charges - Cost Allocation - HELD THAT:- Respectfully following the decision of the Hon'ble jurisdictional High Court in the case of Johnson Johnson [ 2017 (3) TMI 1520 - BOMBAY HIGH COURT] we hold that the action of the Revenue in accepting only 75% of the expenses to be at arm's length is not correct. Accordingly, we direct the ld.TPO to consider the entire 1,07,000 Euro (8,000 + 48,000 + 51,000) in respect of three expenses as stated supra, as the expenditure incurred for the purpose of business of the assessee and which is determined to be at arm's length and accordingly no adjustment in that regard is called for. Depreciation of non-compete fees - As decided in CIT vs Ingersoll rand internationa [ 2014 (6) TMI 934 - KARNATAKA HIGH COURT] and Pentasoft technologies vs DCIT [ 2013 (11) TMI 1057 - MADRAS HIGH COURT] held that depreciation/amortisation of the non-compete fee was held to be allowable on the ground that as held by honourable Madras High Court it strengthens the transfer of IPR and as held by honourable Karnataka High Court it fell into the realm of definition under section 32. No decision from honourable jurisdictional High Court has been cited before us. In this view of the matter honourable Apex Court decision in the case of Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] has to be followed. In the said case law honourable court had expounded that if two constructions are possible the one in favour of assessee should be adopted. Since the decision of the learned CIT(A) is in accordance with the ratio arising from the decision of honourable Karnataka High Court and honourable Madras High Court as above we do not find any infirmity in the same in absence of any direct jurisdictional High Court decision on the subject. Hence we uphold the order of ld CIT(A) on this issue Applicability of provision of section 43A - CIT(A CIT(A) held that since this criteria is not fulfilled as person from whom business is acquired is also an Indian company hence, he has held that section 43A is not at all applicable - HELD THAT:- CIT(A) in his adjudication has not considered the finding of the Assessing Officer that the asset involved in slump sale included areas of Nepal, Sri Lanka and other. In this view of the matter learned CIT(A) s finding is not at all sustainable. Since learned CIT(A) has not considered all aspect of the reasoning given by the Assessing Officer for making the addition, we deem it appropriate to remit this issue to the file of learned CIT(A) to consider them afresh and pass a speaking order on this issue. Needless to add the assessee should be granted adequate opportunity of being heard. CIT(A) in his adjudication has neither referred to this decision nor dealt with the aspect of Assessing Officer s order that the asset acquired included a reference to Sri Lanka and Nepal. However, in this regard, we note that the said decision of Hon'ble Delhi High Court was with respect to section 9(1)(i) of the Act. It was not rendered in connection with section 43A of the Act. It is settled law that decision has to be considered in terms of context in which it is rendered.
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2020 (3) TMI 414
TP Adjustment - determination of Arm s Length Price (ALP) in respect of an international transaction between the Assessee and it s Associated Enterprise of rendering Software Development Services (SWD Services) - HELD THAT:- Assessee company is engaged in providing SWD services to its affiliates, for which it received a consideration during the previous year relevant to the assessment year 2010-11. Since the transaction of provision of Software service by the Assessee was an international transaction, income from such international transaction has to be determined having regard to Arm s Length Price (ALP) thus companies functionally dissimilar with that of assessee need to be deselected. Computation of operating cost and operating margin - HELD THAT:- We are of the view that foreign exchange gain/loss are operating in nature in case of export business. The Assessing Officer is directed to include the same as cost/income in case of assessee as well as comparables. Other items are extra-ordinory items and hence non-operating in nature. The other income, if not related to business operations, but interest on FDs etc, has rightly been excluded by the TPO from operating revenue. IT is directed accordingly. Operating profit margin in its TP study at 10.27% - TPO has considered employee s stock compensation and provision for service tax as non-operating cost. At the same time, the DRP has also given a direction that these items of expenditure are non-operating in nature. In the given facts and circumstances of the case, we are of the view that it would be just appropriate to set aside to remand the question of determination of operating profit margin of the assessee to the TPO for fresh consideration after analysis of the operating expenditure considered by the assessee while working out its operating profit margins in the TP analysis. Deduction under Section 10A - DRP is correct and is in accordance with the decisions of the Hon'ble High Court of Karnataka in CIT v. Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] which has since been affirmed by the Hon'ble Supreme Court in C/T v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] . Direct the AO to grant the MAT credit to the extent available.
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2020 (3) TMI 413
TP Adjustment - Kaybee Exim Pte Ltd Singapore (KPEPTL) is an associated enterprise (AE) of the appellant within the meanings of Section 92A - HELD THAT:- Ld representatives fairly agree that the case of the Assessing Officer hinges only on application of Section 92A(1) and it does not meet any of the specific conditions set out in Section 92A(2). Once we hold that Section 92A(1) cannot be applied on standalone basis, and has to be essentially considered in conjunction of Section 92A(2) only when it satisfies at least one of the conditions set out therein, it is clear that the relationship between the assessee company and its KE-S cannot be said to be that of the associated enterprises. The case of the revenue must, therefore, fail on this test. In view of the above discussions, as also bearing in mind entirety of the case, we have to hold that the relationship between the assessee and the KE-S was not of the AEs, and, accordingly, no arm s length price adjustments could be made on the transactions between these two entities.
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Customs
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2020 (3) TMI 438
Revocation of CHA License - time limitation - allegation that revoking the Customs Broker Licence of the Respondent/Customs Broker was beyond the Statutory Limitation Period - violation of Regulation 20 of the Customs Brokers Licensing Regulations, 2013 - HELD THAT:- The issue whether these limitations prescribed in various Sub Regulations of Regulation 20 are to be strictly followed in the mandatory sense or not had already engaged the law Courts in a quite number of cases. Similar issue came up before a Coordinate Bench of this Court in the matter of SANTON SHIPPING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2017 (10) TMI 621 - MADRAS HIGH COURT] . The Coordinate Bench of this Court, wherein one of us is Party (R.Suresh Kumar, J.), having considered a number of decisions of various High Courts, have concluded that, the CHALR-2004 i.e., the erstwhile Regulation which dealt with the Customs Broker Licence and that was replaced subsequently by the present CBLR, 2013, is a Mandatory Regulation. The time limits in CBLR, 2013 is mandatory, therefore, it has to be strictly followed.. In the case in hand, at the three check points viz., under Regulation 20(1), 20(5) and 20(7), whether the Revenue has passed the test of limitation and if not, where it failed, has to be gone into? - HELD THAT:- On 09.06.2017, Offence Report was generated or sent by the Customs Authorities to the Appellant/Revenue pursuant to which show cause notice under Regulation 20(1) was issued on 06.09.2017, in between there were only 87 days, therefore, in the first stage, the Revenue passed the test of limitation. At the second stage, since the show cause notice was issued on 06.09.2017, the Revenue should have prepared and sent the Enquiry Report under Regulation 20(5) on or before 05.12.2017, the fact remains that, such Enquiry Report was sent on 29.11.2017 and in between there were only 83 days, therefore, the Revenue in the second stage also has certainly passed the test of limitation. The issue now revolves only in a very narrow compass, i.e. whether the Revenue passed the third stage of limitation which comes under Regulation 20(7) of CBLR, 2013 or not? - HELD THAT:- Again the dates are, the Enquiry Report is dated 29.11.2017 under Regulation 20(5), however, the Order-in- Original or revocation of licence was passed either on 08.05.2018 or 09.05.2018, in between there were 159 days, therefore, certainly it is beyond the 90 days limitation, as has been prescribed under Regulation 20(7) - Merely because of this 159 days in between these two dates, as referred to above, whether we can straight away construe that the final order of revocation of licence passed by the Revenue was beyond the 90 days limitation and therefore, the Order in entirety shall go only on the ground of limitation. In this context only, we should look into the facts of the case, which are very much essential to see the real reason or real happenings to know whether the Revenue has failed in their duty to strictly adhering the time limit of 90 days or the Respondent/Customs Broker has made the Revenue to wait for a particular period unmindful of the 90 days limitation. On 12.02.2018, the Respondent/Licensee appeared before the Appellant/Revenue and after having taken note of the limitation factor as well as the merits of the case, he has made a request to keep the matter in abeyance to avail the orders to be passed on the main issue against Customs Department and that order was expected to be in their favour. The said request was recorded by the Revenue in the Note file dated 12.02.2018 during the hearing - the said arrangement of keeping the file in abeyance for some time awaiting the orders to be passed in the main issue initiated by the Customs Department where also the Respondent/Licensee was the party, was made only at the instance of the Respondent, and the said time where the present issue was kept in abeyance as per the request of the Licensee, definitely shall be reduced from the overall 90 days limitation period provided under sub-regulation (7) of Regulation 20 of CBLR, 2013. For the said arrangement, which had been made purely on the request of the Petitioner, one Mr.Padmanabhan, Managing Director of the Respondent/Licensee has signed it in the very Note file itself on 12.02.2018. Therefore, it has become very apparent and obvious that, it is not the Revenue, who kept the file, without passing the final order under Regulation 20(7) within the 90 days limitation period and it has been kept pending only at the instance of the Respondent/Licensee. Here in the case in hand, insofar as the first two limitation stages are concerned, as discussed, the Revenue had been very cautious and strictly followed the limitation period in issuing show cause notice as well as preparing and sending the Enquiry Report - Insofar as the third stage of limitation i.e. for passing final order of revocation of licence or imposing penalty order against the Customs Broker, though the Revenue had been very conscious about the limitation, it was triggered by the voluntary action and request made by the Respondent/ Customs Broker alone, who made the Revenue to keep the file in abeyance, therefore, in the present case, there is absolutely no material to come to a conclusion that, the Revenue has failed in strictly adhering the limitation period under Regulation 20(7) of CBLR, 2013. Here in the case in hand, the mandatory requirement of the limitation has never been ignored by the Revenue. Even in respect of the 90 days limitation under Regulation 20(7) of CBLR, 2013, the Revenue was very conscious and was very particular about the limitation within which, they wanted to pass the final order. However, it was the Respondent/Custom Broker/Licensee should voluntarily given up its right to insist the limitation clause by making a request to the Revenue to keep the file in abeyance awaiting the orders to be passed in the related/parallel proceedings initiated by the Customs Authorities where the Licensee expected some favourable orders. The Revenue has not failed in following the time schedule or limitation which is mandatory one, as has been declared by the Courts of law in number of decisions referred to above, but the Respondent/Licensee made the Revenue to wait for some time only to get some benefits on its own awaiting some orders to be passed in the parallel proceedings initiated by the Customs Authorities - Since these aspects have not at all attempted to be considered by the CESTAT in the impugned order, we are fully satisfied that, the given facts and circumstances of the case in hand, makes it abundantly clear that, the order of the CESTAT is liable to be interfered with. As we aware that the Tribunal since has passed the impugned order only on the basis of limitation and merits of the issue since has not been discussed, we are constrained to remit this matter to the CESTAT for fresh hearing to decide the issue on merits without going into the limitation point. The matter is remitted back to the CESTAT for fresh consideration, of course, only on the merits of the issue, not on the ground or point on limitation under Regulation 20 of CBLR, 2013 - petition allowed by way of remand.
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2020 (3) TMI 435
Refund of SAD - benefit of N/N. 102/2007-Cus dated 14.09.2007 - HELD THAT:- The issue is decided in the case of M/S. GOYAL IMPEX AND INDUSTRIES LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CUSTOMS CHENNAI (REFUNDS-SEA) [ 2019 (9) TMI 1331 - MADRAS HIGH COURT ] where the refund was allowed. Petition allowed.
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2020 (3) TMI 424
100% EOU unit - Debonding - Demand of Differential Duty - allegation that the appellant is liable to pay duty at the rate prevailing at the time of import/procurement of the goods, whereas appellant paid the duty at the rate prevailing at the time of debonding of the unit - benefit of N/N. 52/2003-Cus dated 31.03.2003 and N/N. 22/2003-CE dated 31.03.2003. HELD THAT:- The issue decided in the case of SAHUWALA HIGH PRESSURE VERSUS COMMISSIONER OF CUSTOMS, AND SERVICE TAX VISAKHAPATNAM CUS [ 2020 (3) TMI 272 - CESTAT HYDERABAD] where it was held that for imported capital goods, the appellant is liable to pay duty at the rate of duty prevailing on the date of debonding and the appellant is liable to pay duty for indigenously procured capital goods at the rate of duty prevailing on the date of debonding. Thus, for imported capital goods, the appellant is liable to pay duty at the rate of duty prevailing on the date of debonding - the appellant is liable to pay duty for indigenously procured capital goods at the rate of duty prevailing on the date of debonding - no interest is payable by the appellant. The Revenue is directed to calculate the duty at the rate prevailing on the date of debonding. If any, amount is payable by the appellant, the same is shall be paid within one month - appeal disposed off.
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Insolvency & Bankruptcy
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2020 (3) TMI 415
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The Hon'ble Supreme Court has held that existence of undisputed debt is sine qua non of initiating Corporate Insolvency Resolution Process (CIRP) in TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED VERSUS EQUIPMENT CONDUCTORS AND CABLES LIMITED [ 2018 (10) TMI 1337 - SUPREME COURT] where it was held that once the operational creditor has filed an application, which is otherwise complete, the Adjudicating Authority must reject the application under Section 9 (5) (2) (d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. Petition dismissed.
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Central Excise
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2020 (3) TMI 431
Rebate of duty - failure to self-sealing of the exported goods - rejection on the ground that the respondent had contravened the procedure enumerated in para 3(a)(i), (ii) (iii) of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 issued under Rule 18 of C.E. Rules, 2002 - HELD THAT:- It is observed that the rebate of duty on the export goods is allowed under Notification No. 19/2004-C.E. subject to the conditions, limitations and procedures specified in Para 2 and Para 3 thereof. While conditions and limitations are specified in Para 2, the procedure to be followed is specified in Para 3 of this notification. From the word shall used in Para 2(a) to 2(g) of the notification (supra), it is evident that all the conditions and limitations mentioned in Para 2 are mandatory and non-negotiable. Further the condition that the excisable goods shall be exported after payment of duty is a substantive condition for claiming the rebate of duty. Similarly the procedure relating to sealing of goods and examination at the place of dispatch and export thereof specified in Para 3(a)(i), ((ii) and (iii) of the notification are also mandatory - The essence conditions and procedure prescribed thereunder is to establish the identity and the duty paid character of export goods which has not been done in the present case which is a substantive condition of notification. Commissioner (Appeals) observation that the warehouse appearing in para 2(a) of the notification includes the warehouse of the merchant exporter is incorrect. Therefore his findings that the merchant exporter could have cleared the impugned goods from his warehouse under self-sealing procedure is fallacious - The Government is of the view that the Commissioner (Appeals) has not appreciated the true facts; the real spirit and the text of the Notification 19/2004, dated 6-9-2004 and granted relief to the applicant erroneously. The government agrees with the applicant s contention that contravention of the mandatory conditions stipulated in Para (2) Para (3) of the Notification No. 19/2004, dated 6-9-2004 cannot be waived or relaxed under Rule 18 of Central Excise Rules, 2002 - revision allowed.
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Indian Laws
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2020 (3) TMI 432
Dishonor of Cheque - offence under Section 138 of the N.I. Act - rebuttal of presumptions - HELD THAT:- We need to note the legal principles regarding nature of presumptions to be drawn under Section 139 of the Act and the manner in which it can be rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. It was also stated that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. The complainant being holder of cheque and the signature on the cheque having not been denied by the accused, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. It is relevant to notice the general principles pertaining to burden of proof on an accused especially in a case where some statutory presumption regarding guilt of the accused has to be drawn. When the cheque is returned by a bank with an endorsement account closed, it would amount to returning the cheque unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque as envisaged in Section 138 of the Act. In the present case, when the complainant presented the cheque for encashment, it was returned unpaid with an endorsement that account of the applicant has been closed - The complainant issued notice to the applicant which was refused by the applicant and ultimately a complaint case was filed in which the applicant was convicted and sentenced to pay compensation for a sum of ₹ 50,000/- which was confirmed by the judgment of the appellate court. This Court does not find even any illegality or perversity in the orders passed by the Courts below - Petition not maintainable - revision dismissed.
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