TMI Tax Updates - e-Newsletter
March 19, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws

Articles

1. Top 13 Takeaways of 39 th GST Council Meeting

   By: NikhilMohan Jhanwar

2. TAXABILITY OF EPC CONTRACTS FOR SOLAR PLANT

   By: Dr. Sanjiv Agarwal

News

1. Exports from India

2. WTO Ruling against India

3. Public Debt Management Quarterly Report — October to December 2019

4. APEDA signs MoU with SFAC

5. Formulation of the National e-Commerce policy and the new Industrial Policy under consideration of the Government

6. FDI for Make in India

Notifications

GST - States

1. 271/XI-2-9(47)/17-U.P. Act-1-2017 - dated 28-2-2020 - Uttar Pradesh SGST

Amendment in Notification No. KA.NI.-2-836/Xl -9(47)/17-U.P. Act-1-2017-Order-(06)-2017 Dated : June 30, 2017

2. 111/XI-2-9(42)/17 - dated 17-2-2020 - Uttar Pradesh SGST

Uttar Pradesh Goods and Services Tax (thirty Sixth Amendment) Rules, 2020

3. F.No-509/46 /Commercial Tax - dated 5-2-2020 - Uttar Pradesh SGST

Amendment in Notification No. 43 Dated : October 09, 2019

4. 110/XI-2-9(47)/17 - dated 5-2-2020 - Uttar Pradesh SGST

Amendment in Notification No. KA,NI.-2-159/XI-9(47)/17-U.P. Act-1-2017-Order-(107)-2018 Dated : January 31, 2018

SEBI

5. SEBI/LAD-NRO/GN/2020/08 - dated 13-3-2020 - SEBI

Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) (Amendment) Regulations, 2020

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DIL1/CIR/P/2020/37 - dated 17-3-2020

General Information Document

FEMA

2. 22 - dated 17-3-2020

Settlement system under Asian Clearing Union (ACU) Mechanism

DGFT

3. 65/2015-20 - dated 17-3-2020

Proformae of application and end use certificate for implementation of "Global Authorisation for Intra-Company Transfers (GAICT) of SCOMET items / software/ technology" under Para 2.79F in the Handbook of Procedure

Highlights / Catch Notes

GST

• Company Alleged to Violate Section 171(1) of CGST Act by Not Passing Tax Cut Benefits to Consumers.

  Case-Laws - NAPA : Profiteering - supplies made by the Patanjali Products- Kesh Kanti Hair Cleanser / Detergent Powder etc. - allegation that the benefit of reduction the rate of tax not passed on - It is evident from the above narration of facts that the Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered as per the explanation attached to - Section 171 of the above Act. - NAPA
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Income Tax

• Court Invalidates Section 147 Notice Issued to Non-Existing Amalgamating Company; Deems It Substantively Defective.

  Case-Laws - HC : Reopening of assessment u/s 147 - notice against non-existing company - notice was issued in the name of the amalgamating company - The substantive defective notice issued against a non-existing company is not curable. - HC
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• Adult Children's Rent Payments Deemed Genuine, Offering Tax Benefits to Father for Shared Home Interest Burden.

  Case-Laws - AT : Income from house property - the assessee's major son and daughter are financially independent (or substantially so), with independent incomes, sharing the interest burden of their common residence with their father. And, as such, instead of transfer of funds to him per se, have regarded, by mutual agreements, the same as rent, as that would, apart from meeting the interest burden to that extent, also allow tax saving to the assessee-father. - A genuine arrangement cannot be disregarded as the same results or operates to minimize the assessee's tax liability. - AT
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• Assessee's Deduction Increased u/s 80IA(4) Due to Disallowed Bogus Purchases; All Activities Qualify for Benefits.

  Case-Laws - AT : Profit eligible for deduction u/s 80IA(4) - increased eligible profit due to disallowance of bogus purchase - All the activities carried on by the assessee are eligible to claim deduction u/s 80IA(4) - Benefit was rightly granted to assessee - AT
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• Tax Authorities Confirm Land Investment Additions; No Dispute Over Sale Deed Details or Allegations of Misconduct.

  Case-Laws - AT : Undisclosed investment - land received from Aunt - Amount disclosed in the sale deed - Assessee stated that no amount paid to Aunt - It is not the case of the assessee that the contents of the sale deed were ambiguous or of such a nature which required elaboration or clarification through oral evidence. Nor she has alleged any fraud, misrepresentation, intimidation, or want of due execution or want of capacity in any executing party, or failure of consideration, or mistake in fact of law. - Additions confirmed - AT
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• Unabsorbed depreciation can't offset salary income, but carry forward is allowed; business losses also can't offset salary.

  Case-Laws - AT : Set off of unabsorbed depreciation allowances against income under the head salary - losses under the head income from business or profession, including unabsorbed depreciation, if any cannot be set off against income assessable under the head salaries - disallowances confirmed - however, carry forward of unabsorbed depreciation allowed - AT
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• Penalty for Non-Disclosure of Capital Gains u/s 271(1)(c) Deleted After Assessee Corrects Error During Assessment.

  Case-Laws - AT : Penalty u/s 271(1)(c) - non-disclosure of working of capital gains - the assessee had rectified the mistake during the course of assessment proceedings - this mistake has occurred on the advice of chartered accountant, who has filed the return of income - CIT(A) rightly deleted the penalty - AT
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• Sales Promotion Expenses Allowed for Export Businesses: Align with Industry Practices and Business Needs.

  Case-Laws - AT : Disallowance of sales promotion expenses - directors of the company has incurred this expenditure and we may have to accept the general practice of the industry - assessee is in export business and it has to entertain the visitors. We can consider this expenditure incurred only for the purpose of business - AT
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• Income Tax Appeal: Trust's Kuri Business Profits Members, Denied Exemption u/s 11, Fails Section 2(15) Criteria.

  Case-Laws - AT : Exemption u/s 11 - CIT-A observed that proceeds of kuri business in the case of the assessee substantially benefited the members or subscribers and the predominant object was to generate profit in the hands of subscribers - The activity carried on by the assessee-Trust in the form of kuri business is hit by the proviso to section 2(15) - exemption cannot be allowed - AT
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• Cash Payments to Truck Drivers After Hours Should Not Be Disallowed: Section 40A(3) & Rule 6DD Explained.

  Case-Laws - AT : Addition u/s 40A(3) - cash payments were made to truck drivers after banking hours - even this amount should not have been disallowed u/s 40A(3) read with Rule 6DD of the Income-Tax Rules as the CIT(A) had observed in respect of payments made to truck drivers where he deleted the part cash payment. In that matter, the CIT(A) was not justified in confirming part additions under the same set of facts - AT
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Customs

• Customs Allows Re-export of Undeclared Gold After Payment of Fine u/s 77 of Customs Act 1962.

  Case-Laws - CGOVT : Gold Biscuits - Baggage Rules - No baggage declaration had been filed by him under Section 77 of Customs Act, 1962 since the goods were intercepted by the customs after immigration before the applicant went to green channel - the applicant’s contention regarding non-declaration under Section 77 of Customs Act, 1962 is accepted - Re-export allowed subject to payment of redemption fine and penalty - CGOVT
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• Silver Import Rules: Baggage Use for Commercial Silver Import Violates Customs Act, 1962; Leads to Confiscation.

  Case-Laws - CGOVT : Smuggling - Silver items - Baggage Rules - Although silver does not fall under the category of prohibited goods, the import of silver is governed by certain terms and conditions as per Customs Act, 1962 and rules made thereunder. Any import in violation of the above renders the goods liable for confiscation. The passenger cannot use “baggage” as a route to smuggle silver items for commercial use - CGOVT
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DGFT

• DGFT Releases Proforma for GAICT Applications Under Para 2.79F for SCOMET Transfers in Companies Globally.

  Circulars : Proformae of application and end use certificate for implementation of "Global Authorisation for Intra-Company Transfers (GAICT) of SCOMET items / software/ technology" under Para 2.79F in the Handbook of Procedure - Public Notice
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FEMA

• ACU Mechanism Enhances Economic Cooperation by Allowing Local Currency Transactions Among Member Countries, Reducing Reliance on US Dollar.

  Circulars : Settlement system under Asian Clearing Union (ACU) Mechanism - Circular
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Corporate Law

• High Court Rules Prosecution Halted Post-Approval of Resolution Plan by NCLT in Corporate Insolvency Proceedings.

  Case-Laws - HC : Continuation of prosecution proceedings against the company in cases CIRP proceedings where resolution plan has been approved - there is no dispute that a resolution plan has been approved by the Adjudicating Authority (NCLT) and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged. - HC
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PMLA

• Court Dismisses Appeal Due to 80-Day Delay; Exceeds 120-Day Limit u/s 42 of Money Laundering Act.

  Case-Laws - HC : Condonation of delay of 80 days in filing the appeal - Time Limitation - As per Section 42 of PMLA, 2002 as mentioned above, the maximum limit to condone delay is (60 days + 60 days) 120 days whereas, captioned appeal is filed beyond the period of limitation - thus, this Court has no power to condone the delay beyond 120 days. Thus, the present application is dismissed.- HC
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Service Tax

• Show Cause Notice Error Corrected; Paragraph 11 Set Aside, Proceedings to Continue Per January 9, 2020 Order.

  Case-Laws - HC : Validity of SCN - SCN challenged on the point that the procedure set out for adjudication/assessment has not been followed - this error has been rectified by order dated 09.01.2020. To this extent paragraph 11 of the impugned show cause notice is set aside. With the regularisation of the procedure, proceedings under the impugned show cause notice will continue. - HC
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• CESTAT Clarifies Service Tax Refund Rules Under Reverse Charge; Stresses Strict Interpretation of Exemption Notifications.

  Case-Laws - HC : Refund of Service Tax - Time Limitation - reverse charge mechanism - The CESTAT has passed a laconic, well-reasoned and thorough order - It is trite, that while interpreting exemption notifications, such notifications have to be interpreted, stricto sensu. - HC
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Central Excise

• High Court Rules Against Petitioner: No Hearing Given Before Rejecting Legacy Dispute Resolution Scheme Application.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - rejection on the ground that “the concerned investigative authority has submitted that the amount has neither been quantified nor communicated to the assessee” - an opportunity of hearing should have been given to the petitioner before passing any adverse order. - HC
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• Rebate Claim Denied: Export Activity Classified as Trading, Not Manufacturing; Cenvat Credit Request Unaddressed.

  Case-Laws - CGOVT : Rebate claim - export of goods - trading activity - rejection on the ground that there was no manufacturing activity - Since the activity undertaken is in the nature of trading activity, no rebate is admissible in respect of the impugned goods. The claim of the applicant for allowing Cenvat credit debited at the time of export merits no consideration - CGOVT
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• Court Rules No Duty on Small Pesticide Pouches; Refunds Due for Overpaid Duties Under Standards of Weights & Measures Act, 1976.

  Case-Laws - AT : Valuation and Refund - insecticides/pesticides - pouch of 10gms or less than 10gms not required to pay duty - in terms of the provisions Section 2(p) of the Standards of Weights & Measures Act, 1976, the appellants are required to affix MRP thereon wherein it has been specified that the multiple pieces are packed in a bigger box, the manufacturer is required to affix MRP. - They have paid the duty rightly and claimed refund of cash paid duty - AT
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Case Laws:

• GST

• 2020 (3) TMI 697
  Release of goods alongwith the truck - section 130 of CGST Act - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] . Application disposed off.

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• 2020 (3) TMI 696
  Filing of Form GST Tran-I - transitional credit - transition to GST regime - HELD THAT:- The writ-applicant is entitled to seek the benefit of the Order No.01/2020- GST issued by the Government of India, Ministry of Finance dated 7th February 2020 - Having regard to the fact that the TRAN-1 could not be filed on account of technical glitches, the respondent No.2 is directed to permit the writ-applicant to file form in TRAN-1. Application disposed off.

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• 2020 (3) TMI 695
  Profiteering - supplies made by the Patanjali Products- Kesh Kanti Hair Cleanser / Detergent Powder etc. - allegation that the benefit of reduction the rate of tax not passed on - contravention of section 171 of CGST Act - penalty - HELD THAT:- The profiteered amount is determined as Rs. 75,08,64,019/- as per the provisions of Rule 133 (1) of the above Rules as has been computed vide Revised Annexure-8 of the Report dated 06.01.2020. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. The Respondent is also directed to deposit an amount of Rs. 75,08,64,019/- in the CWF of the Central and the concerned State Government, as the recipients are not identifiable, as per the provisions of Rule 133 (3) (c) of the above Rules alongwith 18% interest payable from the dates from which the above amount was realised by the Respondent from his recipients till the date of its deposit. Penalty - HELD THAT:- It is evident from the above narration of facts that the Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus profiteered as per the explanation attached to Section 171 of the above Act. Therefore, he is apparently liable for the imposition of penalty under Section 171 (3A) of the CGST Act, 2017 - Therefore, a show cause notice be issued directing him to explain why the penalty prescribed under the above sub-Section should not be imposed on him.

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• Income Tax

• 2020 (3) TMI 694
  Denying exemption under Sections 11 and 12 - whether the activities carried out by the Assessee fall under the 4th limb i.e., the advancement of any other object of General Public Utility of the definition of the term charitable purpose under Section 2(15) of the Act and not under the 2nd limb education ? - HELD THAT:- Petitioner (s), on instructions issued by the Department of Revenue, Ministry of Finance vide F.No.390/Misc./116/20l7-JC, dated 22.08.2019, seeks permission to withdraw these special leave petition(s) along with pending applications therein due to low tax effect. Permission granted, subject to just exceptions.

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• 2020 (3) TMI 693
  Maintainability of appeal - low tax effect - HELD THAT:- Though the entire tax effect in the present matter has been stated to be to the tune of Rs. 11.21 crores, it is admitted that in respect of question as framed at page 49, the tax effect is less than Rs. 2 crores. We see no reason to interfere in the matter. This special leave petition is, accordingly, dismissed.

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• 2020 (3) TMI 692
  Assessment u/s 153A - undisclosed cash transactions -HELD THAT:- Revenue has not been able to produce any cogent material which could fasten the liability on the respondent. The CIT(A) has also examined the assessment record and has observed that the AO did not make any further inquiry/investigation on the information passed on by the DCIT, Central Circle-19, New Delhi. No attempt or effort was made to gather or corroborate evidence in this relation. In these facts and circumstances, we are not inclined to entertain the present appeal as no substantial question of law arises for our consideration.

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• 2020 (3) TMI 690
  Notice u/s 131 - action of respondent under Sections 132 - ground taken is that there were no reasons to believe that the income has been concealed and that in any case, the money could not have been seized - HELD THAT:- Revenue has placed before us, the reasons which were recorded at the time of converting the survey into search. It seems to us at this stage that the reasons disclosed cannot said to be non-existent and arbitrary. Faced with this, learned Senior counsel sought to argue that the action subsequent to the search show the arbitrariness of the search operation. We are afraid it would not be possible for us to comment on anything which is foreign to the writ petition. Next contention that the money which was seized was not in the form of cash but in the form of bank deposit and there was no requirement to seize it, we put it to him that money could be returned to the petitioner subject to the petitioner providing adequate surety in case any liability is created. Petitioner states that he has no objection. He has further argued that even till date no demand is pending. Learned counsel for the revenue has objected to point out that this is not an entirely correct factual situation because this Court granted stay of final order. We deem it appropriate to direct the petitioner to furnish the Bank guarantee for the amount seized (along with whatever the interest has accrued in this interregnum) and once that is done, the revenue shall refund the amount to the petitioner.

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• 2020 (3) TMI 689
  Reopening of assessment u/s 147 - notice against non-existing company - notice was issued in the name of the amalgamating company - HELD THAT:- The jurisdiction assumed by the Assessing Officer to issue notice under Section 148 of the Act to non-existing company is substantive illegality and not the procedural violation of the nature adverted to in Section 292-B of the Act. The substantive defective notice issued against a non-existing company is not curable. On this ground alone, without adjudicating upon the other issues raised by the petitioner inasmuch as the limitation aspect, change of opinion, non-existence of tangible material and non-failure on the part of the assessee disclosing full and true material facts need not be examined. Without going into these aspects, the writ petition requires to be allowed on the ground of issuance of notice under Section 148 of the Act to the non-existing company. - Decided in favour of assessee.

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• 2020 (3) TMI 688
  Addition on account of sale of sugar at concessional rate to the members/ other farmers by the assessee - HELD THAT:- As MANGANGA SAHAKARI SAKHAR KARKHANA LTD., GANESH SAHAKARI SAKHAR KARKHANA LTD [ 2019 (11) TMI 346 - ITAT PUNE] held in this process, the assessees got taxed even for the potential profit to the extent of difference between the cost price and market/levy price, as the case may be. Ergo, we hold that such a straightway difference between the market/levy price and the concessional price of sugar cannot be construed as appropriation of profit leading to addition as has been extantly done. The impugned orders to this extent are set aside and the matters are restored to the file of the respective AOs for first ascertaining the cost price of sugar to each assessee and then make addition on this issue by treating it is as a case of appropriation of profit only to the extent of the concessional sale price which is below the cost price. However, it is clarified that in determining cost price of sugar to the factory, not only all the direct costs but all the indirect costs should also be taken into consideration. In other words, all items of debit to the Trading and Profit and loss account would constitute cost base. Needless to say, the assessee will be allowed reasonable opportunity of hearing in such fresh proceedings on this issue - Appeal of assessee are allowed for statistical purposes.

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• 2020 (3) TMI 687
  Addition u/s 36(1)(viia) in respect of provision for bad and doubtful debts - HELD THAT:- As relying on BHAGINI NIVEDITA SAHAKARI BANK LTD., LOKMANGAL CO-OPERATIVE BANK LTD.[ 2018 (12) TMI 322 - ITAT PUNE] It is clear that the assessee without rural branches / advances, is entitled to deduction u/s 36(1)(viia) of the Act. Accordingly, we are of the opinion, that the grounds 1 and 2 raised by the assessee are allowable. Disallowance on account of advertisement expenses - HELD THAT:- Expenditure incurred on the birthday / victory day celebration qua the erection of Flexies of the politicians, is not an allowable expenditure u/s 37 of the Act. In our considered opinion, the orders of the Assessing Officer / CIT(A) are fair and reasonable. They do not call for any interference. Accordingly, ground 3 of the assessee is dismissed. Disallowance u/s 14A of the Act read with Rule 8D - HELD THAT:- As relying on the binding judgment of Hon ble Bombay High Court in CIT Vs. Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] we are of the opinion that ld. Counsel demonstrated the disallowance made by the Assessing Officer is uncalled for under Rule 8D(2)(ii) of the Rules.

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• 2020 (3) TMI 686
  Reopening of assessment u/s 147 - Bogus purchases u/s 69C - addition on account of peak credit - HELD THAT:- At the time of formation of belief, the only requirement would be that there must be certain prima-facie material before Ld. AO which would suggest possible escapement of income. Nothing more would be required at that stage to reopen the case. Of course, after going through the factual matrix, it would be open for Ld. AO to make additions by invoking any particular statutory provisions which would best apply to given factual matrix. Therefore, we are not convinced with legal grounds raised by Ld. AR and hence, decline to accept the same. The additional ground raised by the assessee stands. No discrepancies have been found in quantitative details as well as stock register maintained by the assessee for assessment year under consideration as well as for subsequent AY 2011-12. The same is evident from financial statements as well as quantum assessment order for AY 2011-12, as placed on record. From the perusal of these documents, it is quite discernible that the figures of opening stock as well as sales in AY 2011-12 has been accepted while framing assessment order and these figures have not been disturbed. The aforesaid position of circular transactions has also been accepted by Ld.AO in para 6.6 of quantum assessment order wherein it has been accepted that the assessee has made circular transactions to the extent of Rs. 1163.89 Lacs. The said factual matrix has also been elaborated by us in preceding para 2.11. These facts would lead us to inevitable conclusion that the transactions, to that extent, were to be considered as mere paper entries and the same were to be disregarded while making the additions in the hands of the assessee. If these transactions were removed from assessee s financials, there would be no impact on the profit for this year as well as subsequent year. AR s plea, to that extent, were to be accepted and no such additions against these purchases would be sustainable in the hands of the assessee. So far as the balance purchase for the year under consideration is concerned, it is noted that the assessee has made cheque payment of Rs. 382.72 Lacs to one of the stated entities during the year and as per the statement of the director, cash was generated and the material was purchased in cash from the open market. To regularize the cash purchases, bills were procured from stated entities. We are of the considered opinion that the additions, which were to be sustained in the hands of the assessee against these purchases, would be to account for profit element embedded in such purchase transactions to factorize for profit earned by assessee by procuring goods from grey / unorganized market. The method of peak credit as adopted by Ld. AO would not be a suitable method under the circumstances rather an adhoc estimated addition would meet the cause of justice. Keeping in view the assessee s nature of business, we estimate the additions at 5% of balance purchases of Rs. 3,84,03,652/- which comes to Rs. 19,20,183/-. The balance addition stands deleted. The method of estimation would be in line with the recent decision in Pr.CIT V/s Rishabhdev Tachnocable Ltd. [ 2020 (2) TMI 662 - BOMBAY HIGH COURT] wherein Hon ble Court has approved the estimated additions on similar lines, as sustained by Tribunal. To summarize, the addition to the extent of Rs. 19,20,183/- stand confirmed and the balance additions stands deleted

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• 2020 (3) TMI 685
  Penalty levied u/s 271(l)(c) - Bogus purchases - profit element in the purchases restricted @12.5% - HELD THAT:- It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. In this case an adhoc estimation was made by the Assessing Officer restricting the profit element in the purchases @12.5%. On identical situations the Coordinate Bench in the case of Shri Deepak Gogri v. Income Tax Officer [ 2017 (11) TMI 1857 - ITAT MUMBAI] holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. Also see AERO TRADERS (P) LTD. [ 2010 (1) TMI 32 - DELHI HIGH COURT] In the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) - Decided against revenue

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• 2020 (3) TMI 684
  Treating the house property as a self-occupied property - AO restricted the claim of interest u/s. 24(b) - status of the property, i.e., self-occupied or rented - HELD THAT:- Revenue has rested merely by doubting the genuineness of the arrangement, without probing the facts further. What is the total area, as well as its composition/profile? How many family members, besides the assessee (the owner) and the two tenants, are residing thereat? Has the area let been specified, allowing private space (a separate bedroom each) to son and daughter, who would in any case be also provided access to or user of the common area - specified or not so in the agreement/s, viz. kitchen, balcony, living area, bathrooms, etc. How has the rent been received, i.e., in cash or through bank and, further, been sourced, i.e., whether from the assessee (or any other family member), or from the capital/income of the tenants. Why, there was even no attempt to inquire if the arrangement was a subsisting/continuing one, or confined to a year or two, strongly suggestive of, in that case, a solely tax motivated exercise. We are conscious, well be that the assessee s major son and daughter are financially independent (or substantially so), with independent incomes, sharing the interest burden of their common residence with their father. And, as such, instead of transfer of funds to him per se, have regarded, by mutual agreements, the same as rent, as that would, apart from meeting the interest burden to that extent, also allow tax saving to the assessee-father. A genuine arrangement cannot be disregarded as the same results or operates to minimize the assessee s tax liability. We are, accordingly, in principle, in agreement with the assessee s claim inasmuch as, as afore-noted, there is nothing on record to further the Revenue s case of the arrangement being not a genuine arrangement, i.e., apart from being unusual. On quantum, however, the assessee s stand is infirm. The house property, A/1-5, Prithvi Apartments, the family residence of the Pathan family, is, in view of the rent agreements, both a self-occupied and a let out property. The interest claimed (Rs. 21.62 lakhs) is qua the entire property, which therefore cannot be allowed in full against the rental income, which is qua a part of the house property. The assessee shall provide a reasonable basis for such allocation as well as the working of the area let. We say so as it may well, in view of the joint residence, be that no area (portion) is specified in the rent agreements. The number of family members living jointly; their living requirements - which may not be uniform; fair rental value of the property, etc., are some of the parameters which could be considered for the purpose. The AO shall adjudicate thereon per a speaking order, giving definite reasons for being in disagreement, where so, in whole or in part, with the assessee s working, within a reasonable time. We decide accordingly. - Decided partly in favour of assessee.

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• 2020 (3) TMI 683
  Profit eligible for deduction u/s 80IA(4) - increased eligible profit due to disallowance of bogus purchase - HELD THAT:- It is not necessary for the assessee to engage in taking accommodate entry to the value of Rs. 40 lakhs in order to reduce the eligible profit. Considering the volume of the business of the assessee, the disallowance made by the AO has no impact on the profit nor it is necessary for the assessee to reduce any profit, which is eligible to be claimed u/s 80IA(4) of the Act. It is on record that assessee has already submitted the relevant documents in support of the purchases. Further, we notice that Ld. CIT(A) has not verified any of the above aspects and at the same time, we notice that Ld. CIT(A) allowed the increase in eligible profit because of sustaining the disallowance made by the AO u/s 80IA(4) of the Act. Since, there is no impact on sustaining the bogus purchases on the taxable income, Ld. CIT(A) might not have given importance to verify the relevant documents submitted by the assessee before him as well as AO and since, assessee has already got the benefit from the order of Ld. CIT(A), therefore we choose not to disturb the findings of Ld. CIT(A). We notice that assessee has not carried on any other business other than business of infrastructure and we draw strength from the findings of Coordinate Bench in assessee s own case for AY 2009-10 that the assessee s business is eligible to claim deduction u/s 80IA(4) of the Act. Since there is no change in the activities of the assessee during this assessment year in reference to earlier assessment years. All the activities carried on by the assessee are eligible to claim deduction u/s 80IA(4) of the Act. Therefore, we are inclined to accept the findings of Ld. CIT(A). Accordingly, ground raised by the revenue is dismissed. Disallowance of expenses in the eligible business will increase the eligible profit - This profit if it is proved that it is earned only from eligible business, then such profit is eligible to be claimed u/s 80IA(4) of the Act. In the given case, assessee does not have any other business other than the eligible business u/s 80IA(4) of the Act and the chart below show that the assessee was already claiming deduction u/s 80IA(4) of the Act over the past assessment year Chart status shows that the assessee is into carrying eligible business and does not have any other activities, therefore the profit earned by assessee is eligible to be claimed u/s 80IA(4) of the Act and any increase in such profit due to disallowance will also be treated as eligible profit to be claimed deduction u/s 80IA(4) of the Act. The courts have held in the following cases that the increased profit due to disallowance is very much available for claiming deduction u/s 80IA(A) in Sheth Developers [ 2012 (8) TMI 159 - BOMBAY HIGH COURT ] ACIT vrs. Mahalaxmi Infraprojects Pvt. Ltd. [ 2018 (1) TMI 1103 - ITAT PUNE ] Respectfully following the above decision, we are inclined to accept the findings of Ld. CIT(A) and the revenue has not brought on record any information relating to the activities of the assessee that it has carried on any other activities, which are not covered u/s 80IA(4) of the Act during this assessment year. Accordingly, ground raised by the revenue is dismissed. Reopening of assessment - bogus purchases - HELD THAT:- Reopening of assessment is bad in law. After considering the material on record, the assessment was reopened with the fresh material on record and this aspect was not considered during assessment proceedings u/s 143(3) r.w.s 153A of the Act. Therefore, there is no mistake in reopening the assessment. Disallowance of bogus purchase - we notice from the order passed by Ld. CIT(A) that Ld. CIT(A) accepted the findings of AO that assessee has made purchases from Lakhan Traders Pvt. Ltd. and Gorhan Traders Pvt. Ltd. as bogus purchases without verifying the documents submitted by the assessee and not verified whether it is necessity for the assessee to take such bogus purchase, even though its business is eligible to claim deduction u/s 80IA(4) of the Act. Since Ld. CIT(A) accepted the alternate plea of the assessee that it is eligible to claim deduction u/s 80IA(4) of the Act on increased profit due to disallowance of purchase. Since assessee has already got the benefit by availing deduction u/s 80IA(4) of the Act on the difference of profit disallowed by the AO as deduction u/s 80IA(4) of the Act and similar to discussion in para 27 28. Therefore, adjudication on the grounds raised by the assessee will have no affect rather it is academic in nature. Therefore, appeal filed by the assessee is accordingly dismissed as infructuous.

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• 2020 (3) TMI 682
  Reopening of assessment u/s 147 - non-service of notice u/s 148 - undisclosed investment - land received from Aunt - Amount disclosed in the sale deed - Assessee stated that no amount paid to Aunt - HELD THAT:- Assessee was required to obtain PAN and give her address which has not been done in this case. Therefore, the AO was absolutely justified in sending notice under section 148 of the Act on the last addresses available as per registered sale deed. Since, the assessee was not residing on the given addresses, therefore, question of refusal to accept the notice does not arise.Therefore, the ld.CIT (A) has rightly observed that the contention of the appellant that the service of notice is not as per section 282 is not tenable in law and was not accepted. In the light of above facts and circumstances, We find that that there was a proper service of notice under section 148 of the Act by affixture and the assessee was well aware of the assessment proceedings going on in her case as evident from letter dated 26.09.2016 filed by the intended to be A.R. of the assessee in connection with penalty show-cause notice under section 271(1)(b) of the Act dated 24.08.2016 - Decided against assessee Addition being investment in purchase of immovable property - only evidence relied upon is the registered sale deed - HELD THAT:- We find that there is a valid registered sale deed dated 22.12.2008 which has come on record and same is sought to be disapproved through oral evidence being plain paper signed by some villagers to say that the assessee was adopted daughter. CIT (A) has rightly held that such a recourse is not permitted in law as per provisions contained in chapter VI of Indian Evidence Act, 1872, which prohibits admission of oral evidence to contradict contents of a contract reduced in writing and registered as per law subject to certain exceptions like fraud, misrepresentation etc. It is not the case of the assessee that the contents of the sale deed were ambiguous or of such a nature which required elaboration or clarification through oral evidence. Nor she has alleged any fraud, misrepresentation, intimidation, or want of due execution or want of capacity in any executing party, or failure of consideration, or mistake in fact of law. The contention of the AO that sale deed was prepared by the writer in a routine way cannot be accepted, where consideration was clearly discernible and recorded on registered sale deed itself and claimed to be having paid at home by the both parties of the deal. CIT (A) also observed that letter on plain paper signed by village Sarpanch/ villagers is only self-serving document and does not hold ground against clear recitation in the registered sale deed dated 22.12.2008, and the seller Smt. Naseeb Kaur was transferring her ownership in the property along with all attendant rights to the appellant Smt. Tirath Kaur and another person Smt. Joginder Kaur, in lieu of consideration of Rs. 1,04,28,000, half of which is Rs. 52,14,000. In the light of above facts and circumstances, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. - Decided against assessee.

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• 2020 (3) TMI 681
  Disallowance u/s 80P(2)(a)(i) - HELD THAT:- The assessee has earned interest income on surplus funds deposited with nationalized bank and the cooperative Bank and the same is not attributable to business operation of the assessee co-operative society as interest earned on the fund invested with the commercial bank is not operational income from providing credit facilities to its members. We consider that earning of such interest income either from nationalized or cooperative bank will not change nature and character of the income. On perusal of the provision of section we observe such deduction is pertinent to the operational income earned by the co-operative society from the activities in which it is engaged and not the other income which accrues to the society in the form of interest from investment of surplus funds with the cooperative bank. No merit in the appeal of the assessee, therefore, the same is dismissed. However as decided in the various decision of SHREE RAM CO-OP. CREDIT SOCIETY LTD [ 2020 (3) TMI 619 - ITAT AHMEDABAD] we direct the assessing officer to allow pro rata expenses in respect of interest earned from deposit held with nationalized bank to the assessee for computing the deduction u/s. 80P after examining/verification and affording adequate opportunity to the assessee.

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• 2020 (3) TMI 680
  Deduction u/s 80P - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Co-operative Banks and other Banks - Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. Appeals filed by the assessee are partly allowed for statistical purposes.

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• 2020 (3) TMI 679
  Disallowances of set off of unabsorbed depreciation allowances against income under the head salary - Whether the provision of section 32(2) has not made any distinction between current year deprecation and unabsorbed depreciation? - HELD THAT:- From the language used in provisions of section 71(2A) and the explanatory memorandum to Finance Act, 2004, it is very clear that any losses under the head income from business or profession cannot be allowed to set off against income assessable under the head salaries. Therefore, we are of the considered view that the Ld. AO, as well as the Ld.CIT(A) were right in disallowed set off of unabsorbed depreciation allowances against income under the head salaries. This legal position has been strengthened by the decision of ITAT, Mumbai in the case of DCIT vs Time Guaranty Limited [ 2010 (6) TMI 516 - ITAT, MUMBAI] where the law has been explained, in light of provision of section 32(2) and held that losses under the head income from business or profession cannot be set off against income under the head income from other sources. In this view of the matter and respetfully following case laws considered hereinabove, including the decision of ITAT, Mumbai, in the case of DCIT vs Time Guaranty Ltd. (surpa), we are of the considered view that losses under the head income from business or profession, including unabsorbed depreciation, if any cannot be set off against income assessable under the head salaries. The Ld.CIT(A) after considering relevant facts has rightly confirmed disallowances of unabsorbed depreciation losses against income under the head salaries and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the assessee. Assessee made an alternate argument that if at all unabsorbed depreciation loss ise not allowed to be set off against salary income, and then said unabsorbed depreciation allowances may be allowed to carry forward to subsequent years. We find that there is no restriction, as per the provisions of section 72 to carry forward unabsorbed deprecation to subsequent years. Therefore, if the assessee has fulfilled conditions prescribed therein for carry forward of unabsorbed depreciation, then the ld. AO is directed to allow carry forwarded of unabsorbed deprecation to subsequent years.

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• 2020 (3) TMI 678
  Reopening of assessment u/s 147 - deemed dividend addition u/s 2(22)(e) - HELD THAT:- By mere application of section 2(22)(e) of the Act may not be sufficient, but AO has to investigate and substantiate that the advances received by the beneficiary are in the nature of business advance or other advance and whether the chargeability of the provisions in the hands of the beneficiary or in the hands of the shareholders. We notice that AO has not applied his mind whether the chargeability of deemed dividend are attracted in the hands of the assessee or not, were not properly investigated and proceeded with the information received from JCIT(OSD) office. It is a duty of the AO to apply his mind and record satisfaction of escapement of income. Without clear satisfaction, AO cannot initiate re-assessment proceeding. Further, assessee has raised the objections before the AO, as soon as it received reasons for reopening of the assessment and the same has to be disposed of by the AO before completing the re-assessment order u/s 147 of the Act. In this case, AO has miserably failed to dispose off the objections raised by the assessee. It is clearly against the decision in the case of GKN Driveshafts (India) Ltd vrs. ITO [ 2002 (11) TMI 7 - SUPREME COURT] Respectfully following the above decision, we are inclined to accept the submission of Ld. AR and we hold that AO has not disposed off the objections prior to completion of the assessment. Hence, assessment order passed by the AO is not proper, accordingly quashed. Decided in favour of assessee

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• 2020 (3) TMI 677
  Deduction u/s. 80IA(4) - FDR interest, scrap sales and EDI charges - whether these incomes cannot be said to be derived from the business activity of the assessee of running a Container Freight Station. - HELD THAT:- We find that the issues ( reg: claim of deduction u/s. 80IA (4) of the Act] on a/c of FDR/EDI/scrap sales and profit earned from the operation of an inland container depot (ICD) involved in the present appeal are in favour of assessee and against the revenue, which has been affirmed by decision of the Hon ble Bombay High Court in assessee s case [2018 (4) TMI 749 - BOMBAY HIGH COURT] . The facts in AY 2010-11 are identical and similar to the facts in earlier assessment years ( AY 2008-09) as dealt with by this tribunal. We further find that the AO has ought to have followed the said decision of the Hon ble Bombay High Court in assessee s own case. The AO made additions only on the reason that the matter is still pending in Hon ble High Court, ignoring the fact that the Hon ble High Court had already decided the issues in AY 2008-09 in favour of assessee.

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• 2020 (3) TMI 676
  TP Adjustment - Charging of notional interest pertaining to outstanding balance of receivables from AEs - TPO has applied LIBOR of 4.8% in making the adjustment which was confirmed by the DRP - HELD THAT:- We found that the facts and circumstances in both the years under consideration i.e. A.Y. 2012-13 and 2013-14 are same wherein under similar facts, the addition was made by the A.O. on account of interest pertaining to outstanding receivables from AEs. In all fairness, we restore the matter back to the file of the TPO/AO for deciding the issue afresh in terms of the direction given by the Tribunal in its order [ 2015 (7) TMI 602 - ITAT MUMBAI] in so far as facts and circumstances for the A.Y. 2009-10 are pari materia to the facts and circumstances which are before the lower authorities for the A.Y. 2012-13 and 2013-14. Incorrect computation of the income tax payable by the assessee and utilization and carry forward of MAT credit by the assessee - HELD THAT:- As stated by the ld AR that the MAT credit was not correctly given by the A.O., therefore, in all fairness, we restore the matter back to the file of the TPO/AO and direct to reverify the carry forward and MAT credit. We direct accordingly. Non grant of full TDS/TCS credit and non consideration of TDS and advance tax payable by erstwhile subsidiary - HELD THAT:- It appears that the TDS credit and advance tax payable by erstwhile subsidiary of the assessee amount go Rs. 1,72,79,041/- was not given which was merged with the assessee w.e.f. 01/04/2011. It was also pointed out by the ld AR that the A.O. has not given credit of advance tax paid by the erstwhile subsidiary of the assessee which was merged with the assessee w.e.f. 01/04/2011. We direct the A.O. to verify the factual position of TDS and advance tax and to give proper credit as per law. We direct accordingly. Incorrect computation of interest U/s 234B/234C due to noncredits/ short credits granted to the assessee - HELD THAT:- We direct the A.O. to verify the computation of interest U/s 234B of the Act. With regard to interest U/s 234C, we direct the A.O. to charge the same on returned income and not on the assessed income. Computation of interest U/s 244A - HELD THAT:- As per the provisions of Section 244A of the Act, interest on refund is to be allowed @ 0.50% per month from the 1st day of April of the assessment year to be date on which the refund is granted. Accordingly, the assessee is entitled for interest u/s 244A of the Act up to the date on which the refund is granted. The A.O. is directed to verify the correctness of interest and grant necessary refund as per law. Adjusting book profit U/s 115JB by adding the disallowance on account of depreciation on office premises - HELD THAT:- Hon ble Supreme Court in the case of Apollo Tyres Ltd. Vs CIT [ 2002 (5) TMI 5 - SUPREME COURT] have observed that while computing income U/s 115J, the A.O. has only power of examining whether books of account are certified by authorities under Companies Act as having been properly maintained in accordance with Companies Act and thereafter, he has limited power of making additions and reductions as provided for in Explanation to said Section. It was further held that the A.O. does not have jurisdiction to go behind net profit shown in the P L account except to extent provided in Explanation to Section 115J of the Act. Respectfully following the decision of the Hon ble Supreme Court, we do not find any justification in the order of the TPO/A.O. for making addition of the depreciation while computing book profit.

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• 2020 (3) TMI 675
  Penalty u/s 271(1)(c) - non-disclosure of working of capital gains - the assessee had rectified the mistake during the course of assessment proceedings - HELD THAT:- As complete details/ particulars were available before the AO in regard to this transaction of sale of sales and conversion of its investment into stock-in-trade. In view of the explanation of the assessee that there has been an inadvertent mistake/ error in filing the return of income and that also occurred entirely on accountant oversite of the chartered accountant while computing income which was required to be computed after considering the provisions of section 45A(2) of the Act. Having regard to the fact that investments were converted into stock-in-trade during the previous year relevant to this assessment year, the charter accountant should have considered the computation of income under section 45(2) of the Act. We noted that this mistake was immediately rectified by the assessee during the assessment proceedings and according to us, this mistake has occurred on the advice of chartered accountant, who has filed the return of income. Hence, we are of the view that the CIT(A) has rightly relied on the decision of Hon ble Supreme Court in the case of Reliance Petro Product Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] . Hence, we are of the view that the CIT(A) has rightly deleted the penalty. - Decided against revenue.

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• 2020 (3) TMI 674
  TP Adjustment - transactions for purchase of one product, viz. Nicorandil, with the said AE - Appellant had purchased the said Product from the AE @ Rs. 20,000 per unit, while the AE sold same product to third party @ Rd. 17,000 per unit - difference in the quality of Product sold by the AE to the Appellant and the Third Party - HELD THAT:- Assessee has purchased Nicorandil chemical from its associate enterprises @ 20,000 per Kg, whereas the same chemical are sold in the domestic market for lesser value. We observed from the submission made by Ld. AR that the assessee has purchased chemical from the associate enterprises in order to export the same and assessee has instructed the associate enterprises to supply the quality as per the specification of the buyers and accordingly associate enterprises has supplied the chemical following the above said specification. We are in agreement with the Ld. AR of the assessee that the quality of the product for export has to be as per the specification of the buyers and should go through strict quality check and the parameters of the chemical are as per the specification and name of the product may be similar what is being sold in the domestic market. However, the quality specification may vary according to the specifications required by the buyers. We cannot go with the name of the product rather we have to verify the name of the products with specifications which are sold in the domestic as well as international market. There may be specific requirement of particular quality for export with proper testing. From the assessment records, it is not clear whether the AO/TPO has verified in the above said specifications and we notice that AO has merely verified the name of the chemical in the documents submitted before him. Addition proposed by the TPO are negligible compared to the value of exports made by the assessee, therefore we are inclined to delete the above said addition in favour of the assessee. Accordingly, ground no. 1 is allowed. Disallowance of sales promotion expenses - HELD THAT:- It is common practice that whenever customers are entertained and they are accompanied by the executive of the company and the payment made invariably through plastic money and the payment vouchers are being reimbursed by the company, therefore in this case also, directors of the company has incurred this expenditure and we may have to accept the general practice of the industry. Therefore, considering the fact that assessee is in export business and it has to entertain the visitors. We can consider this expenditure incurred only for the purpose of business. Therefore, this expenditure is allowed as business expenditure. We do not agree with the AO that the payment made through credit card owned by the director are only for personal expenditure. Accordingly, ground no. 2 is allowed.

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• 2020 (3) TMI 673
  Exemption u/s 11 - CIT-A held that proceeds of kuri business in the case of the assessee substantially benefited the members or subscribers and the predominant object was to generate profit in the hands of subscribers - CIT(A) concluded that running a kuri business is not incidental to objectives of trust and Section 11 (4A) impose a bar on such business and income from Kuri business becomes taxable in the hands of the trust - HELD THAT:- Assessee-Trust will not be entitled to claim exemption u/s. 11 if it was found to have carried on business from which income was derived. Admittedly, the assessee in the present case is engaged in the activity of providing medical relief to the public. During the assessment year under consideration, the assessee earned income from kuri business to the tune of Rs. 12,28,637/-. This activity of kuri business cannot be considered as incidental to earning profits of the assessee. None of the primary objects of the assessee-Trust have nexus with the business activity of the assessee. Therefore, the assessee- Trust cannot claim exemption u/s. 11 of the I.T. Act as the activity of kuri business is not done in the course of carrying on the primary objects of the assessee-Trust. The activity carried on by the assessee-Trust in the form of kuri business is hit by the proviso to section 2(15) of the Act as mentioned in earlier para. We are in full agreement with the findings of the lower authorities that as the proviso to section 2(15) puts an embargo on carrying on business by the charitable Trust only if the business is incidental to the main and pre-dominant objects of the the assessee-Trust. AR placed reliance on the decision of the Cochin Bench of the ITAT in the case of Dharmodayam Co. [ 2002 (2) TMI 313 - ITAT COCHIN] which is misplaced because the decision pertains to cases prior to 1-4-1992 when section 11(4A) of the I.T. Act was not on statute. Section 2(15) was amended with effect from 1.4.2009 by Finance Act, 2008. - Decided against assessee.

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• 2020 (3) TMI 672
  Addition u/s 40A(3) - cash payments were made to truck drivers and to the agents of coal suppliers who had supplied coal through trucks at the brick kilns of the assessee firm - HELD THAT:- Banking facility at village Ballarpur were not there as has been rightly observed by the CIT(A) at para 5.2.2 of his appellate order.It is also noticed that since, the truck drivers and the coal agents deliver the coal at night because of heavy vehicles cannot ply during the daytime and insistance for cash payments, hence the assessee was obliged to do the cash payments as per business practice in that area where lots of brick kilns are there. A.O. has not found any fault with the payment nor has disbelieve the payment made for the coal suppliers who are duly registered with the VAT department. The payment has not been doubted by the A.O. or by the Ld. CIT(A), hence looking to the facts that the payments were made after the banking hours and that too at village Ballarpur, where there are no banking facilities, we are of the considered opinion that even this amount should not have been disallowed u/s 40A(3) read with Rule 6DD of the Income-Tax Rules as the CIT(A) had observed in respect of payments made to truck drivers where he deleted the part cash payment. In that matter, the CIT(A) was not justified in confirming part additions under the same set of facts. - Decided in favour of assessee.

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• Customs

• 2020 (3) TMI 671
  Lifting of LOC issued by the 2nd respondent - Allow petitioner to travel to Singapore, Korea, United Kingdom, Europe, Bangladesh, Malaysia, Indonesia, Japan and China from February, 2020 till 31.05.2020 - crux of the contention raised by the petitioner in the counter affidavit in respect of LOC was that if the petitioner is permitted to travel abroad, it would vitiate and hamper the investigation proceedings under Prevention of Money Laundering Act - HELD THAT:- Since the learned counsel for the respondents submitted that similar conditions can be imposed in this case also for suspending the LOC issued by the 2nd respondent till 31.05.2020, this Court is of the view that without expressing any view on the other conditions raised by both parties, this Writ Petition can be disposed of with conditions imposed.

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• 2020 (3) TMI 670
  Maintainability of petition - time limitation - HELD THAT:- This petition is disposed of as not pressed at this stage.

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• 2020 (3) TMI 669
  Classification of imported goods - Sputtering Targets - whether classified under Central Excise Tariff Heading 8543 or under 7115? - Duty Drawback - HELD THAT:- Section Notes and Chapter Notes of Schedule to Customs Tariff Act, 1975 are in line with the General Rules for the Interpretation of the Harmonized System of Nomenclature. Therefore a combined reading of Rule 3(a) of HSN and Chapter Note 1(b) of Chapter 71 of the Schedule to the Customs Tariff Act (CTH), 1975 makes it clear that the impugned items merit classification under Chapter 71 - Although a notification cannot decide the classification of an item it is observed that silver sputtering target have been mentioned under Chapter 71 under Notification No. 8/2003-Customs, dated 13-1-2003 by C.B.I. C. Apex Court in PANKAJ JAIN AGENCIES VERSUS UNION OF INDIA [ 1994 (7) TMI 89 - SUPREME COURT] has held that Machinery parts not specifically described in a heading of Customs Tariff Act, 1975/Central Excise Tariff Act, 1985 do not for that reason become excluded from levy of statutory duty. Such parts to be classified in an appropriate heading by applying relevant Section Notes and Chapter Notes - Therefore the impugned goods will fall under Chapter 71 of Schedule to CTA, 1975 in light of the above judgment of the Apex Court. The Government does not find any deficiency in the Commissioner (Appeals) s order - revision application dismissed.

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• 2020 (3) TMI 668
  Smuggling - Gold Biscuits - Baggage Rules - absolute confiscation - penalty - HELD THAT:- In the instant case, it is evident that applicant is the bona fide owner of impugned goods and the applicant had requested the Commissioner (Appeals) to allow the re-export of impugned goods. Section 80 of the Customs Act, 1962 provides that the detained imported goods can be re-exported at the request of the passenger where he/she is returning from India to a foreign country. Thus, apart from declaration of the imported goods at the time of arrival of passenger, return of the passenger to the foreign country after a short visit to India as a tourist or otherwise is a crucial condition for re-export of such goods. The applicant has contended that he was not given an opportunity to declare the gold items in writing at the time of his arrival at Kolkata Airport. No baggage declaration had been filed by him under Section 77 of Customs Act, 1962 since the goods were intercepted by the customs after immigration before the applicant went to green channel - the applicant s contention regarding non-declaration under Section 77 of Customs Act, 1962 is accepted. The applicant returned after a short visit to India. The Government holds that the re-export of the confiscated gold biscuits can be allowed in the present case. Hence, re-export of the impugned gold items are allowed on payment of redemption fine of Rs. 2,00,000/- (Two lakhs only) under Section 125 of the Customs Act, 1962. The penalty of Rs. 50,000/- (Fifty thousand only) as ordered by the Assistant Commissioner and upheld by the Commissioner (Appeals) on the applicant under Section 112 of Customs Act, 1962 is upheld. The above fine and penalty should be paid within 30 days of the receipt of the order. Revision application allowed.

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• 2020 (3) TMI 667
  Smuggling - Silver items - Baggage Rules - redemption of confiscated goods - HELD THAT:- Silver in any other form other than ornaments does not come within the ambit of bona fide baggage as per the Baggage Rules, 2016. The applicant has brought 8 pieces of silver bowls of foreign origin. This is an admitted fact by the applicant in his voluntary statement tendered under Section 108 of Customs Act, 1962 that he owns a shop dealing in silver utensils and he purchased these utensils from Yangon, Myanmar. From the evidence on record it is observed that the applicant crossed the green channel without declaring the impugned articles in his possession in the Customs declaration form or in any other form to the Customs officers and thereby violated Section 77 of the Customs Act, 1962. The applicant has attempted to smuggle the impugned silver articles with an intention to evade customs duty and in gross violation of provisions of Customs Act, 1962 and rules made thereunder read with Foreign Trade Policy (2015-2020). Although silver does not fall under the category of prohibited goods, the import of silver is governed by certain terms and conditions as per Customs Act, 1962 and rules made thereunder. Any import in violation of the above renders the goods liable for confiscation. The passenger cannot use baggage as a route to smuggle silver items for commercial use - the Government does not find any deficiency in the order of the Commissioner (Appeals) - Revision Application filed by the applicant is rejected.

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• Corporate Laws

• 2020 (3) TMI 666
  Continuation of prosecution proceedings against the company in cases CIRP proceedings where resolution plan has been approved - offences punishable under the Companies Act, 2013; offences punishable under the Companies Act, 1956 and; certain offences under the Indian Penal Code, 1860 - petitioner submits that in terms of Section 32A of the IBC, as inserted by Section 10 of the Insolvency of Bankruptcy Code (Amendment) Ordinance, 2019; the petitioner is required to be discharged from the aforesaid proceedings - HELD THAT:- Section 32A(1) of the IBC states that a Corporate Debtor would not be liable for any offence committed prior to commencement of the CIRP and the corporate debtor would not be prosecuted if a resolution plan has been approved by the Adjudicating Authority. In the present case, there is no dispute that a resolution plan has been approved by the Adjudicating Authority (NCLT) and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged. Petition allowed.

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• Insolvency & Bankruptcy

• 2020 (3) TMI 665
  Detachment of the properties attached - section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Hon ble Supreme Court in Pr. CIT v. Monnet Ispat and Energy Ltd. [2018 (8) TMI 1775 - SC ORDER] held that whenever there is any inconsistency between IB Code and any other law, the IB Code will prevail. Also, it is loud and clear that IB Code is not a debt recovery tool. This Adjudicating Authority is of the considered view, that provisions of section 238 of the IB Code override the Gujarat State GST Act 2017 and Central GST Act 2017. The Deputy Commissioner of State Tax, (Enforcement) Division-8, Surat is hereby directed to release the assets of M/s. Electra Accumulators Ltd., the Corporate Debtor, enabling the IRP of the Corporate Debtor to collate the claims from the creditors and complete the Insolvency Resolution Process of the Corporate Debtor in a time line prescribed by the Insolvency and Bankruptcy Board of India. Application allowed.

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• 2020 (3) TMI 664
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- There is no proof of any acknowledgement of liability on the part of the Corporate Debtor or any payment made by the Corporate Debtor within the limitation period that may have the effect of extending the period of limitation within the meaning of section 18 or section 19, as the case may be, of the Limitation Act, 1963. The dates of default in respect of the five invoices range between 29.03.2014 and 13.08.2014. Even if we take the last of the dates, i.e., 13.08.2014, the three-year limitation in terms of article 137 of the Limitation Act, 1963, for filing the present proceeding ended on 12.08.2017, while the present petition was filed on 15.05.2018. This Petition is barred by limitation - Petition dismissed.

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• 2020 (3) TMI 663
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- This application filed by the Petitioner under section 9 of the Insolvency Bankruptcy Code, 2016 is Rejected on the ground that - (i) the Petitioner(Buyer) has failed to submit C-Form to the Respondent(Seller) in time as per the terms of the Letter of Award, dated. 29.05.2015. (ii) the amount claimed in the Petition is the VAT amount, which has already been collected from the Petitioner and deposited with the Government by the Respondent for want of C-Form within the time period stipulated in the Letter of Award. The Respondent is hereby directed to co-operate with the Applicant and both the Applicant and Respondent may take-up the matter with the respective Department of the Government for refund, if otherwise amount is refundable and as per Law. Petition disposed off.

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• PMLA

• 2020 (3) TMI 662
  Condonation of delay of 80 days in filing the appeal - Time Limitation - Section 5 of Limitation Act, 1973 - HELD THAT:- It is an admitted case of applicant that initially appeal was filed on 24.12.2019 vide diary No.1621374/2019 and same was returned under objections which is still pending in the Registry. Whereas, in para 5 of the captioned appeal, it is specifically mentioned that no other appeal is filed or pending before this Court or any other Court - Learned counsel for applicant submits that instead of re-filing the appeal filed on 24.12.2019, the applicant/appellant has filed the present appeal by mistake. As per Section 42 of PMLA, 2002, any person, aggrieved by any decision or order of the Appellate Tribunal, may file an appeal before the High Court within 60 days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order, provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding 60 days. Fact remains that order of the Appellate Tribunal was pronounced on 29.08.2019, however, as argued by learned counsel for applicant, the same was received on 11.09.2019 whereas the captioned appeal is filed on 22.01.2020. As per Section 42 of PMLA, 2002 as mentioned above, the maximum limit to condone delay is (60 days + 60 days) 120 days whereas, captioned appeal is filed beyond the period of limitation - thus, this Court has no power to condone the delay beyond 120 days. Thus, the present application is dismissed. Delay cannot be condoned - COD application dismissed.

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• Service Tax

• 2020 (3) TMI 661
  Validity of SCN - SCN challenged on the point that the procedure set out for adjudication/assessment has not been followed, insofar as there is no pre-consultative process that has been followed in this case - HELD THAT:- Evidently, the pre-adjudication/consultation envisaged is with the Assessing Officer and not with the Audit Commissioner and this error has been rectified by order dated 09.01.2020. To this extent paragraph 11 of the impugned show cause notice is set aside. With the regularisation of the procedure, proceedings under the impugned show cause notice will continue. Petition disposed off.

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• 2020 (3) TMI 660
  Refund of Service Tax - Time Limitation - reverse charge mechanism - Benefit of N/N. 41/2007-ST dated 6th October 2007 (amended by the notification No. 17/2008-ST dated 1st April 2008) - HELD THAT:- The clause 2 (e) of the Notification No. 41/2007-ST must be applied strictly, and the Appellant cannot selectively seek relief of the said notification. The CESTAT has passed a laconic, well-reasoned and thorough order upholding the order of the Commissioner (Appeals), which merits absolutely no interference. It is trite, that while interpreting exemption notifications, such notifications have to be interpreted, stricto sensu. The question of law raised in this appeal is answered against the Appellant and in favour of the Respondent - appeal dismissed.

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• Central Excise

• 2020 (3) TMI 659
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the concerned investigative authority has submitted that the amount has neither been quantified nor communicated to the assessee - Circular No.1071/4/2019-CX.8 dated 27th August, 2019 - HELD THAT:- Since in the present case, the petitioner has raised a plea that it was eligible to file an application despite the amount having been neither quantified nor communicated to the assessee by the Department till 30th June, 2019, this Court is of the view that an opportunity of hearing should have been given to the petitioner before passing any adverse order. The impugned communications dated 26th November, 2019 and 19th December, 2019 are set aside and the respondent no.1 is directed to decide the petitioner s application after giving an opportunity of hearing to the petitioner. List the matter before respondent no.1 on 16th March, 2020 at 11.30 P.M. A reasoned order, after giving an opportunity of hearing, shall be passed by respondent no.1 on or before 25th March, 2020 - application disposed off.

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• 2020 (3) TMI 658
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - rejection on the ground that the concerned investigative authority has submitted that the amount has neither been quantified nor communicated to the assessee - Circular No.1071/4/2019-CX.8 dated 27th August, 2019 - HELD THAT:- Since in the present case, the petitioner has raised a plea that it was eligible to file an application despite the amount having been neither quantified nor communicated to the assessee by the Department till 30th June, 2019, this Court is of the view that an opportunity of hearing should have been given to the petitioner before passing any adverse order. The impugned communications dated 26th November, 2019 and 19th December, 2019 are set aside and the respondent no.1 is directed to decide the petitioner s application after giving an opportunity of hearing to the petitioner. List the matter before respondent no.1 on 16th March, 2020 at 11.30 P.M. A reasoned order, after giving an opportunity of hearing, shall be passed by respondent no.1 on or before 25th March, 2020 - application disposed off.

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• 2020 (3) TMI 657
  Rebate claim - export of goods - trading activity - rejection on the ground that there was no manufacturing activity undertaken and therefore no duty was leviable on it - HELD THAT:- A JCB machine (model no. JCB 4DX, colour- yellow having engine model no. JCB 444 of capacity 68.6 kw, 92 HP) has been supplied as per the export order by the applicant under the brand name of JCB. The claim of the applicant that he has fitted the cold start kit in the engine is incorrect since the export order mentions the engine and cold start kit separately and the packing list also mentions them separately - It is further observed that JCB machine has been supplied with standard accessories which are in the nature of bought out items. Since these were duty paid, the applicant has availed Cenvat credit of the same and exported them together as a single item. Since the activity undertaken is in the nature of trading activity, no rebate is admissible in respect of the impugned goods. The claim of the applicant for allowing Cenvat credit debited at the time of export merits no consideration. The Government does not find any deficiency in the Commissioner (Appeals) s order - Revision rejected.

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• 2020 (3) TMI 656
  CENVAT Credit - exempt goods - IOPAMIDOL - Allegation on the ground that it did not pay the amount equal to 10% of the sale price of exempted goods - period September 2006 to December 2008 - HELD THAT:- The department has invoked the provisions of Rule 6(3) to hold that the appellant has not maintained the prescribed records and thus, is liable to pay 10% of the amount of sale price of the exempted goods. Since there are contradictions in the stand of the Revenue as well as the appellant regarding maintenance of adequate records, we are of the view that this particular aspect has to be re-examined at the original level for proper appreciation, as to whether, the requirement of erstwhile Rule 6(2) (effective upto February 2008) and the amended provisions incorporated thereafter under the CENVAT statute would be applicable and whether the subsequent amendment took place in the CENVAT statute consequent to the introduction of the Finance Act, 2010 would have any application for deciding the issue. Appeal allowed by way of remand.

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• 2020 (3) TMI 655
  Valuation and Refund - insecticides/pesticides - Revenue is of the view that the appellants are manufacturing insecticides/pesticides and packing them in the pouch of 10gms or less than 10gms, therefore, they are not required to pay duty - Section 4(A) of the Central Excise Act, 1944 - HELD THAT:- It is a fact on record that the appellants are packing the pouches of pesticides/insecticides of less than 10gms and the same were packed into a bigger box and affixing MRP thereon. Therefore, in terms of the provisions Section 2(p) of the Standards of Weights Measures Act, 1976, the appellants are required to affix MRP thereon wherein it has been specified that the multiple pieces are packed in a bigger box, the manufacturer is required to affix MRP. The appellants have rightly paid duty under Section 4(A) of the Central Excise Act, 1944. Consequently, the appellants have correctly taken the refunds under Notification No. 56/2002-CE dated 14.11.2002 on duty paid in cash. In these circumstances, the proceedings against the appellants are not sustainable. Appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 654
  Refund claim - time limitation provided under Section 11B of the Central Excise Act, 1944 - HELD THAT:- The issue arising out of the present dispute is no more res integra in view of M/S TECHNOCRAFT INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-I [ 2019 (4) TMI 1076 - CESTAT MUMBAI] - The Tribunal has held that the limitation period provided under Section 11B ibid is applicable for refund claim of accumulated Cenvat credit in terms of Rule 5 ibid. There are no infirmity in the impugned order passed by the learned Commissioner (Appeals) in denying the refund benefit to the appellant on the ground of limitation - appeal dismissed.

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• 2020 (3) TMI 653
  Interest on delayed refund - relevant time for claiming refund - proviso as introduced under Section 11BB of Central Excise Act, 1944 - HELD THAT:- The issue has been clarified by Hon ble Apex Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] . In the said case, Hon ble Apex Court has examined the issue in detail and also examined the C.B.E. C. Circular dated 1-10-2002 and held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. In the present case, the refund claims were filed during the period 7-3-1993 to 28-4-1994. Section 11BB was introduced with effect from 26-8-1995. It is apparent that 3 months have passed from the date of filing refund claim and introduction of Section 11BB - there is a merit in the claim of the appellant that they are entitled for interest with effect from 26-8-1995 onwards till sanction of refund - appeal allowed.

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• Indian Laws

• 2020 (3) TMI 691
  Appointment to the post of Income Tax Inspectors - Arathi Sarah Sunil challenged the selection and the rank list on the ground that she has to be placed first. She impleaded all the four persons placed above her including Alwin Francis and Liksy Joseph in the O.A. 156/2017. Notices were issued. Alwin Francis appeared, Liksy Joseph failed to appear - HELD THAT:- The learned counsel appearing for Liksy Joseph however submits that in the O.A. the contention raised was only as to whether Arathi Sarah Sunil is entitled to be placed as the first rank holder among the five. The question of disqualification for reason of non-production of the NOC came later and hence she had approached the Tribunal within time, against such disqualification by O.A.399/2018. She has also filed an appeal from the O.A. filed by Arathi Sarah Sunil and if this Court allows the O.P. against the order in O.A.399/2018 and Liksy Joseph is considered for appointment necessarily Arathi Sarah Sunil will lose her appointment. Alwin Francis submits that there is only a consideration directed in the Tribunal's order and he being the first among the three, necessarily has to be given the appointment if the Department finds favour with his contentions for not producing the NOC within time. The Department however submits that as of now the Department would like to go for a fresh selection. It is also submitted that Arathi Sarah Sunil was offered appointment as a Tax Assistant, which she declined. It is also argued that though the team in which Arathi Sarah Sunil was included, obtained a bronze medal in a World Championship, she had not played and was merely a substitute in the team. This was the only claim for considering her as the first rank holder as raised in the O.A., which cannot be countenanced. We are of the opinion that there being no infirmity in the selection conducted, we need not interfere with the selection as such and the Department's prayer to permit them to conduct a fresh selection is declined. We also are not inclined to dwell upon the claim raised as to the ranking being wrong. The further issue is as to who are to be appointed to the two posts. In this circumstances, the first aspect to be looked at is the disqualification of two candidates. We find that since there are two vacancies of Income Tax Inspectors, Arathi Sarah Sunil , who has been directed to be appointed by the Tribunal gets the first post available. The case of Alwin Francis has to be considered by the Department itself as to whether any exemption can be granted insofar as the NOC not being produced along with the application which later is filed with the Department. The same shall be considered within a period of two months from today. We are informed that Arathi Sarah Sunil has not been issued with any appointment order, because of the pending litigations. The appointment order of Arathi Sarah Sunil shall be issued within a period of two weeks from the date of receipt of a certified copy of the judgment.

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