Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 2, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of CST - Benefit of lower CST or exemption from CST post GST - Procurement of high speed diesel oil for manufacturing - the question whether the finished goods would also have to be amongst the six retained goods for the purpose of applying the provisions of Section 8(3) of the Act, need not be answered for the present.
Income Tax
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U/s 138 (1) of IT Act 1961 Central Government specifies Nodal Officer, Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)
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Task Force for drafting a New Direct Tax Legislation-Extension of term
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Dismissal of revenue appeal by High court without framing the questions - every order/judgment, which decides the lis between the parties, must contain the reason(s)/ground(s) for arriving at a particular conclusion - Matter restored before HC
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Correct head of income - gain arising on sale of share - If in the later year the assessee had declared a loss on capital side, we wonder whether going against such a self declaration of the assessee, the Assessing Officer had to foist upon the assessee the conclusion that the loss was a business loss.
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Attachment of Property including vehicles - the buses are used to facilitate the movement of students between their homes and the college. Students should not be made to suffer on account of the conflict inter se the petitioner and the Income Tax Department - the Department is directed to release the buses to the petitioner solely for use in college activities.
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TP Adjustment - AMP expenses by applying bright line test on protective basis - TP adjustment amounting by applying BLT is not sustainable on protective basis having no statutory mandate.
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Once deduction at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC has been claimed no further deduction at the rate of 100% again for the next five years can be claimed on the ground of undertaken substantial expansion.
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Special audit u/s 142(2A) - Scope of special audit has widen after amendment in Section 142(2A) w.e.f. 1.6.2013. The special audit can now be directed not only if the accounts are complicated but also if there is doubt to the correctness of the account or multiplicity of transactions or volume of transaction or specialized nature of the accounts.
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Exemption u/s. 10A is allwable without set of brought forward business loss and unabsorbed depreciation of non-eligible business unit.
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Set-off of carried forward depreciation is not eligible if assessee offer tax u/s 44BB(1) but same can be claimed Section 44BB (3). Subsection (1) with non-obstinate clause has overriding to provisions of Sections 28 to 41 of the Act which includes Section 32 also.
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Carry forward of business loss - original return was filed u/s 139(1) within time declaring positive income - later revised return u/s 139(5) filing declaring loss - On a revised return filed, it can only be a return under Section 139(1) and not one under Section 139(3) - Benefit of carry forward not allowed.
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Computation of deduction u/s 80IA - eligible business shall be treated as the only source of income- Assessee is eligible to deduction without adjustment of loss of other unit.
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Direction in original appellate proceeding - Not challenged - it cannot now question the findings of the lower appellate authority based on earlier direction - No substantial question of law arises in this regard.
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Income from other sources - forfeiture of earnest money received during the negotiation of a capital assets is not taxable as income from other sources prior to 01.04.2015 as Insertion of new subsection (IX) in Section 56(2) w.e.f. 01.04.2015 is prospective nature.
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Taxability of Notional interest - Deposit/advance made to certain parties - The availability of interest free funds in the hands of assessee by way of Capital Account is not disputed and in such circumstances, no notional interest is taxable.
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Revision u/s 263 - lack of inquiry - If AO fail to verify statutory Form and examine of eligibility of deduction u/s 10AAA and allow deduction then such order clearly erroneous and prejudicial to the interest of the Revenue.
Customs
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Duty free import authorisation (DFIA) - The present dispute is not of classification but compliance with the licence condition. The description of the goods, based upon examination, amply evidences the negligible scope for printing and hence unusable in furtherance of the purpose for which authorisation was issued. - Benefit not allowed.
FEMA
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Foreign Exchange Management (Permissible Capital Account Transactions)(Amendment) Regulations, 2019
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VRR - A Foreign Portfolio Investor may enter into forward contracts, foreign currency-rupee option contract, cost reduction structures or swaps with Rupee as one of the currencies with an Authorised Dealer in India to hedge the currency risk.
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Foreign Exchange Management (Borrowing and lending) (Amendment) Regulations, 2019 - Borrowing and lending by persons resident outside India
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NRI or OCI may trade or invest in all exchange traded derivative contracts approved by Securities and Exchange Board of India from time to time subject to the limits prescribed by SEBI
Corporate Law
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Central Government appoint persons as part-time members of the National Financial Reporting Authority (NFRA) - Total 7 members (3 members are from ICAI)
Indian Laws
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Condonation of delay of 457 days in filing appeal - Since, the right to appeal is a statutory right, this court is not persuaded to accept that relief can be granted to the petitioner who has lost such a right on account of delay.
Service Tax
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Refund - Unjust enrichment - If the debit notes are not acted upon and not recorded as receivables in the books of the appellant are not receiving any sum as service tax from the customers in any manner and hence it is to be held that service recipient has not paid the service tax element to the appellant. Therefore, doctrine of unjust enrichment is not attracted in this case.
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Nature of Service - BAS - the activity undertaken by the appellant herein of threshing and drying of raw tobacco leaves would not come under category of ‘Business Auxiliary Service’ and is not a taxable activity
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Export of service of not - After receiving the taxable service by the overseas entity, the place of actual use of service will not be considered as the relevant factor for export inasmuch as the appellant was not a party to the service used within India
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Classification of services - Merely taking such licence or abiding by such labour law, it cannot be said that the contract for executing works within the manufacturing activity would be supply of man power.
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CENVAT Credit - construction of residential property - unsold flats at the time of receipt of completion certification - demand of service tax/ reversal of credit set aside.
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Evasion of service tax - onus on the revenue to prove - there is no investigation to show as to whom the said services have been provided; that when the same were provided, who paid the consideration for the same and when the invoice was raised. In the absence of any such evidence, the demands are unsustainable.
Central Excise
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Valuation - extended period of limitation - department could very well have appointed Cost Accountant as provided in the Central Excise Act, 1944 to ascertain whether the price adopted by them was correct or not. That was not done and instead, the instant SCN was issued, applying dubious method - appellant will succeed both on the grounds of revenue-neutrality as well as on limitation
VAT
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Whether the specific contract entered into by the assessee herein was for transfer of goods in the form of goods or not in the form of goods; the fact admitted being that it is a works contract? - The description of the work as enumerated to the Department by the awarder also assumes significance
Case Laws:
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GST
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2019 (3) TMI 68
Attachment of Bank accounts of petitioner - section 83 of the Central Goods and Service Tax Act, 2017 - case of petitioner is that it is difficult for the petitioner company to manage its day-to-day affairs and that in view of the property which has been offered by way of security which is unencumbered and the value of the property is ₹ 2.75 crore, the attachment over the bank accounts may be released - Held that:- By way of interim arrangement, the respondent No.1 is directed to release the attachment over the bank accounts of the petitioner referred to hereinabove, subject to Shri Ashwinkumar Jayantibhai Patel and Shri Jashvantkumar Jayantibhai Patel, father and uncle of Mitesh Ashwinkumar Patel, one of the Directors of the company, permitting attachment of the property described hereinabove for release of the bank accounts - To secure the interest of the revenue, the petitioner shall also maintain an amount of ₹ 50,00,000/- in its Current Account No.916020018310340 maintained with the Axis Bank Limited, Asarwa Branch, Ahmedabad. Stand over to 22nd February, 2019.
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2019 (3) TMI 67
Seizure of goods alongwith vehicle - irregularities in the documents accompanying the goods - Held that:- In the present case, it is the owner who has come forward for release of the goods and the vehicle and therefore in the light of the interim direction of this court, security or indemnity bond equal to the amount of the purposed tax and penalty alone could have been demanded by the Assistant Commissioner (Commercial Tax), instead he has unnecessarily asked for security/indemnity bond of heavy amount of ₹ 10,75,770/- - The aforesaid demand can not be sustained in law in the facts and circumstances of the case and the provisions of Section 129 (1) of the Act. The impugned order dated 6.10.2018 is quashed and the direction is issued to the Assistant Commissioner (Commercial Tax) to accept the security and indemnity bond as directed vide order dated 4.10.2018 of the value of tax and penalty ie. ₹ 59,120/- each from the petitioner and to release the goods and the vehicle forthwith accordingly - petition allowed.
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2019 (3) TMI 21
Levy of CST - Benefit of lower CST or exemption from CST post GST - Procurement of high speed diesel oil for manufacturing - Section 8 (1) of the Act of 1956 - inter-state sale - clinker - benefit of the Form-C - concessional rate of duty - validity of Circular of 05.09.2017 - Held that:- From a bare perusal of the Circular dated 05.09.2017, it is discernible from Clause 9 thereof that a dealer who purchased one of the six retained goods for the purpose of inter-state sale and used it for manufacturing of a finished goods, which would be a good, other than the six retained goods, is not liable to pay sales tax under the CST Act of 1956 and also under the AVAT Act of 2003 and to that extent his registration under Section 7(2) of the CST, Act of 1956 ceases to exist. The pre-requisite of being entitled for a registration under Section 7(2) of the CST Act of 1956 is that the dealer so registered is liable to pay tax under the sales tax law of the State, which in the present case would be AVAT Act of 2003. Therefore, if according to the authorities in the State of Assam in the Taxation and Finance Department the petitioners are not liable to pay any tax under the AVAT Act of 2003, from 01.07.2017 onwards, the authorities may withdraw the registration under Section 7(2) of the CST Act of 1956, inasmuch as, the pre-requisite of Section 7(2) of being liable to pay tax under the state sales tax law ceases to exist. The provisions of the AGST Act of 2017 in respect of the definition of the word ‘goods’ and Section 9(2) thereof, are pari materia with that of the definition of the word ‘goods’ under Section 2(52) and Section 9(2) of the CGST Act of 2017, respectively - the provisions of CST Act of 1956 as regards the six retained goods as indicated above continues to have its force and had not been repealed by the GST Act of 2017. In view of the provisions of Section 12(5) of the Constitution (One Hundred And First Amendment) Act, 2016 and 9(2) of the CGST Act of 2017, read with Section 9(2) of the AGST Act of 2017 and the admitted position of the respondent authorities in the Central Govt and the State Govt that neither the date for levy of tax under the GST Acts of 2017 had been notified in respect of the five aforementioned goods, including high speed diesel oil and nor there is any recommendation by the Goods and Services Tax Council as regards the date to make the GST Acts applicable in respect of the said goods, we are unable to accept with the contention of the learned Senior Additional Adovate General that upon withdrawal of the registration of the petitioners under Section 7(2) of the CST Act of 1956, they would now be subjected to a levy of tax under the GST Acts of 2017. As the very basis for withdrawing the registration under section 7(2) of the CST Act of 1956 is that from 01.07.2017 onwards the dealers dealing in interstate purchase of high speed diesel oil and using in for manufacture of good other than the six goods are not liable to pay a tax under the AVAT Act of 2003, the very basis of not being liable to pay tax under the AVAT Act of 2003 being incorrect and unacceptable, the provision for withdrawing or enforcing a cession of the registration of such dealers under section 7(2) of the CST Act of 1956 as provided in Clause-9 of notification dated 05.09.2017 is also found to be unacceptable and unsustainable. As it has been concluded that the registration of the petitioners u/s 7(2) of the CST Act of 1956 could not have been withdrawn for an underlying reason that the manufactured good referred in Section 8(3) of the CST Act of 1956 would also have to be amongst the six retained goods, this Court is of the view that the question whether the finished goods would also have to be amongst the six retained goods for the purpose of applying the provisions of Section 8(3) of the Act, need not be answered for the present. In the event, if the respondent authorities are of the view that the manufactured goods would also have to be amongst the six retained goods for availing the benefits of Section 8(3) of the CST Act of 1956, the appropriate remedy for implementing the same cannot be an withdrawal of the registration of the dealer u/s 7(2) of the Act by providing that in the circumstance, the dealer is no longer leviable under the AVAT Act of 2003. The circular dated 05.09.2017 is accordingly set aside. Petition disposed off.
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Income Tax
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2019 (3) TMI 66
Dismissal of revenue appeal by High court without framing the questions - High Court jurisdiction to dismiss the appeal filed under Section 260A - no substantial question of law - HELD THAT:- High Court did not dismiss the appeal in limine but dismissed it after hearing both the parties. In such a situation, the High Court should have framed the question(s) and answered them by assigning the reasons accordingly one way or the other by exercising powers under subsections (4) and (5) of Section 260A of the Act. As mentioned above, in the absence of any discussion or/and the reasoning/ground as to why the order of ITAT does not suffer from any illegality and why the grounds of Revenue are not acceptable and why the appeal does not involve any substantial question(s) of law or though framed cannot be answered in Revenue’s favour, the impugned order suffers from jurisdictional errors and, therefore, legally unsustainable for want of compliance of the requirements of subsections (4) and (5) of Section 260A of the Act. This Court has consistently laid emphasis that every order/judgment, which decides the lis between the parties, must contain the reason(s)/ground(s) for arriving at a particular conclusion. In order to decide as to whether the impugned order is legally sustainable or not, the Appellate Court is entitled to know as to what impelled the Court below to pass such order in favour of one party and against the aggrieved party. We find that this requirement is missing in the impugned order of this case and hence the interference is called for. We allow the appeal, set aside the impugned order and remand the case to the High Court with a request to decide the appeal filed by the Revenue (Commissioner of Income Tax) afresh on merits in accordance with law.
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2019 (3) TMI 65
Correct head of income - gain arising on sale of share - Business income or Short Term Capital Gain - HELD THAT:- Tribunal had taken into account all the relevant factors for coming to a conclusion that sale of shares resulted into business income of the assessee. Tribunal noted frequency of purchase and sale of shares, quantum of sale and purchase of shares and the relevant gains besides other factors in order to come to a conclusion that the assessee had intended to engage itself in the business of buying and selling the shares. No error in the view taken by the Tribunal, since the Tribunal had noted in its Judgment all the factors in coming the conclusion, which are factual in nature, and with respect to which no perversity is demonstrated. Assessee however contended that in the later year the assessee had suffered loss in the process of selling the shares which was declared as capital loss. AO in the assessment after scrutiny accepted this declaration of the assessee and therefore the department is acting inconsistently which is not permissible. The issue of the assessee suffering loss in the subsequent year arose after the assessment in the present year was completed. If in the later year the assessee had declared a loss on capital side, we wonder whether going against such a self declaration of the assessee, the Assessing Officer had to foist upon the assessee the conclusion that the loss was a business loss. If at all, it was up to the assessee to claim it as business loss if the assessee was satisfied with the gain being taxed as business income - Decided against assessee
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2019 (3) TMI 64
Computation of income from the project under the Slum Rehabilitation Scheme - entitled for deduction of the provision of the liability with respect to construction of municipal staff quarters/ road depot and compound wall - Tribunal disallowed assessee's claim of expenditure on the ground that, liability in question had not crystallized - HELD THAT:- The view of the Tribunal was that, the liability was a contingent one, depending upon assessee being put in vacant possession of land where construction would be carried out. We do not find that, the Tribunal has committed any error. A liability which is contingent and which has not crystallized, would not be allowed as an expenditure. It is in this context, the Tribunal found that the assessee's liability to carry out construction, free of cost had not yet crystallized since it was contingent upon the authorities being able to give vacant possession of the portion of the plot on which, such construction would be carried out. The record suggests that such portion was occupied by the slum dwellers who were resisting their eviction. Whatever be the reason, the Slum Rehabilitation Authority was unable to put assessee of vacant possession in said area for years together.
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2019 (3) TMI 63
Estimation of income arising out of the activities of the club on the higher side - estimation of daily collection - Tribunal reduced the gross income of the assessee - statements given at the time of search u/s. 132(4) - HELD THAT:- The Tribunal, as noted, scaled down the daily collection to ₹ 50000/- taking a mean and also granted further relief for the holidays and adjustment for inflation for the past period. The entire issue is based on appreciation of evident on record. We do not find that the concurrent findings of the CIT(A) and the Tribunal in the context of estimation of the club's daily collection suffers from any perversity. The view of the Tribunal that the daily collection cannot be spread over all 365 days in an year, was also perfectly valid. When the Tribunal was further spreading such collection rate for a span of six years going backwards, and thus, applying the method of interpolation, adjustment for inflation had to be made and therefore, correctly applied by the Tribunal. Telescopic benefit of income earned in previous year to cash and jewellery found - HELD THAT:- Since the additions were made on estimation for the entire period, the Tribunal was of the opinion that further additions under different heads were not necessary. We do dot find any error in view of the Tribunal. No question of law, therefore, arises.
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2019 (3) TMI 62
Bogus purchases - addition u/s 69C - Tribunal disallowing 12.5% of the bogus purchases - HELD THAT:- There is no mention of the grievance by the Assessee or even with regard to non-consideration of various documents such as Sales Ledger, Purchase Ledger etc. by AO in the order of the Tribunal. The submission of Assessee that the same was urged before the Appellate Tribunal, but was not considered, cannot be accepted. If the Tribunal had failed to make a note of the submission of a party in its order, then the appropriate remedy for the party was to move the Tribunal for rectification of the order ensuring it that the submissions made by it are recorded in the order. Given the factual matrix that the Appellant had not challenge the finding of bogus purchases, the above issue could not have been raised by it before the Tribunal. Disallowance in the present facts do not give rise to any substantial question of law.
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2019 (3) TMI 61
Benefit of exemption under Section 10(23C)(vi) as well as under Section 11 rejected - validity of assessment rejecting benefit - stay petition - HELD THAT:- Argument advanced that the assessments themselves are invalid in the light of the proviso to Section 143(3) that casts a mandate upon the Assessing Officer to frame an assessment denying the benefit of Section 10(23C) of the Act unless the officer had intimated the Central Government or the prescribed authority the specifics of the contravention of the statutory provision and such approval had consequently been withdrawn and in the light of the fact that the Miscellaneous Applications of the Petitioner are pending before the Tribunal we do not propose to delve upon this legal submission at this juncture as it will, no doubt, be considered by the Tribunal while disposing the Miscellaneous Applications, in accordance with law. Stay application - recovery proceedings - HELD THAT:- With the express consent of learned counsel before direct the Tribunal to list the stay applications on Friday, 22.02.2019, and dispose the same after hearing the parties and in accordance with law. No separate notice of hearing need be issued by the Registry of the Income tax Appellate Tribunal and both learned counsel before me will instruct the parties to appear for the hearing of the stay petitions on 22.02.2019 and cooperate in their conduct and disposal. Attachment of the movables, it is brought to my notice that the buses are used to facilitate the movement of students between their homes and the college. Students should not be made to suffer on account of the conflict inter se the petitioner and the Income Tax Department. Thus, while the attachment dated 07.02.2019 will continue, the Department is directed to release the buses to the petitioner solely for use in college activities.
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2019 (3) TMI 60
Liability to interest tax on interest on debentures - Interest Tax Act, 1974 - HELD THAT:- The issue stands covered in favour of the assessee and against the Revenue by a decision of Commissioner of Income Tax v. Gujarat Industrial Investment Corporation [2016 (10) TMI 54 - SUPREME COURT] found on a reading of the definition of 'interest' as contained in Section 2(7) of the Interest Tax Act, 1974 that the Act would have no application to interest on debentures. We hence answer the said question in favour of the assessee and against the Revenue. Liability to pay interest tax on the interest received on a loan made to a broker - assessee being a company engaged in the purchase and sale of securities - HELD THAT:- There being no trading activity between the assessee and the broker, it cannot be said to be a trading advance. The advance was made for making investments and after such investments were made what was retained with the broker was levied with interest by the assessee thus giving it the character of a loan. The assessee's intention at the time of advance is not at all relevant, since the character of the amounts retained with the share broker underwent a change, insofar as the levy made for interest. It is also clear that the amount remained with the broker for one year and hence the receipt of ₹ 1,80,000/- as interest on a loan of ₹ 10 lakhs @ 18% p.a. - Decided in favour of the Revenue and against the assessee.
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2019 (3) TMI 59
Claim u/s 10A - scope of amendment - entitlement to exemption u/s 10A only upto 1997-98 as five years within a block of eight years from the assessment year 1990-91 - intention of the Legislature in bringing forth the amendment in 1998 - since the assessee has already availed the exemption for five years, amendment to Section 10A which came into effect on 01.04.1999 extending the period of five years to ten years, is not available to the assessee? - HELD THAT:- A Division Bench of the Karnataka High Court has in C.I.T. v. DSL Software Ltd. [2011 (10) TMI 423 - KARNATAKA HIGH COURT] considered the object behind the amendment extending the period of exemption under Section 10B, wherein also a similar amendment was brought in 1998 and the period of exemption was extended from five years out of eight yeas to a period of ten years with effect from 01.04.1999. Object with which this amendment was introduced, was to extend the benefit for a period of ten consecutive years from the date of commencement of manufacture or production. Only if the assessee has already availed the benefit under the unamended provision and ten consecutive years would fall prior to 01.04.1999; when the amendment came into effect, would the assessee be disentitled to the said benefit. If the ten years from the date of production has not expired prior to the date on which the amendment came into effect, for the remaining unexpired period, he would be entitled to the benefit and he cannot be denied the benefit for the reason that he has availed the benefit of the unamended provision for a period of five years and that had expired before the amendment came into force. The Karnataka High Court was of the opinion that it would run counter to the intention with which the amended provision was brought into the Statute book and that it would negate the amended provision - Decided against revenue.
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2019 (3) TMI 58
Non-prosecution of appeal by assessee - HELD THAT:- As relying on COMMISSIONER OF INCOME-TAX. VERSUS MULTIPLAN INDIA (PRIVATE) LIMITED. [1991 (5) TMI 120 - ITAT DELHI-D] we dismiss the appeal of the assessee in limine for non-prosecution. We wish to clarify that the assessee will be at liberty to approach ITAT for recall of this order and for restoration of this appeal under relevant provisions of law if the assessee is able to show that there was reasonable cause for non representation on the part of the assessee on the date of hearing.
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2019 (3) TMI 57
Rejection of books of accounts - Estimation of income on liquor sold - majority of the expenditure claimed under the heads freight and hamali, printing and stationery breakage etc. were not supported by proper vouchers - HELD THAT:- The coordinate benches of this Tribunal consistently taking a view that estimation of income at 3% of the cost of the goods sold is reasonable in this line of business. See SRI VENKATESWARA WINES VERSUS THE INCOME TAX OFFICER, WARD 10 (4) HYDERABAD. [2015 (11) TMI 1746 - ITAT HYDERABAD] Estimation of income on liquor sales at Bar & Restaurant, the AO estimated the same at 10%, which is reasonable and the same is hereby upheld, which is inline with the precedents. Estimation of on income on food items sold at Bar & Restaurant, AO estimated the same at 25%. The coordinate bench of this Tribunal in the case of M/s V.R. Bar restaurant [2015 (10) TMI 1485 - ITAT HYDERABAD], directed the AO to estimate the same at 10% as against 20% adopted by the AO. Therefore, following the said decision, we direct the AO to estimate the income on food items at 10%.
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2019 (3) TMI 56
Addition u/s 43B - Deduction of PF & ESI actually been paid before filing the return of income u/s 139(1) - employees contribution to PF and ESI - HELD THAT:- This jurisdictional Hon’ble Calcutta High Court in the case of M/s Vijay Shree Limited [2011 (9) TMI 30 - CALCUTTA HIGH COURT] held that if employees contribution to PF and ESI is paid before the due date of filing the return of income, no disallowance is made u/s 43B. Amendment to section 43B of the Act was held to have retrospective effect. The same view has been affirmed by the Hon’ble Supreme Court in the case of Alum Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT) wherein it was held that if the assessee paid the amount in respect of PF and ESI before the due date of filing return of income there should not be any disallowance. We note that the assessee’s case under consideration, the PF and ESI were paid within the due date of filing return of income u/s 139(1) of the Act and therefore there should not be any disallowance and hence we direct the AO to delete the addition on account of PF and on account of ESI. - Decided in favour of assessee.
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2019 (3) TMI 19
Computing profit and gains of shipping business u/s 44BB - Different subsection of Section 44BB - Set-off of carried forward depreciation is eligible - Tribunal referred to the provisions contained in Section 44BB and held that, the computation provided therein, would override the provisions of Section 32 and in particular, sub-section 2 thereof - HELD THAT:- The legislature has ruled out applicability of sub-section (2) of Section 32 of the Act while computing the profits and gains of an eligible assessee, arising out of the business in terms of sub-section (1) of Section 44BB of the Act. Any other view would be opposed to the plain language used in this sub-section. We do not discern any indication in this sub-section to come to the conclusion that while providing exclusion of anything contrary to contained in Sections 28 to 41, the legislature intended to exclude Section 32 and, particularly, sub-section (2) thereof. The decision of this Court in case of Hindustan Petroleum Corporation Ltd. [1990 (7) TMI 44 - BOMBAY HIGH COURT] would not change this position. The deeming infection provided under sub-section (1) of Section 44BB of the Act, relates to the profits and gains of an assessee arising out of a business and is not directly connected with or corelated with the non-obstinate clause with which, the said sub-section begins, ruling out any conflict with the provisions contained in Sections 28 to 41 of the Act. - Appeal dismissed
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2019 (3) TMI 18
Special audit u/s 142(2A) - amendment in Section 142(2A) w.e.f. 1.6.2013 - complexity doubts about correctness of the accounts, multiplicity of transactions - specialized nature of business activities - scope of AO's exercising powers u/s 142(2A) - Transfer pricing issues - honest attempt on the part of the AO to understand the books of accounts of the assessee company or application of mind - HELD THAT:- In the present case, we have already noted that the detail grounds on which the Assessing Officer formed an opinion that special audit was necessary and the final order that he passed calling for such special audit. As noted, final audit proceeds on various grounds of genuineness of the transactions and payments by the assessee. We may recall, doubts about correctness of the accounts, multiplicity of transactions and specialized nature of business activities are some of the additional grounds, now recognized by the legislative for special audit. We do not find that the order requires any interference. Merely because some of the transactions were subjected to transfer pricing mechanism, would not debar the Assessing Officer from exercising powers under Section 142(2A) of the Act, if the conditions for exercising such powers were otherwise satisfied. The Transfer Pricing Officer would be essentially concerned with the assessment of the arm's length price of the specified transactions with an associated enterprise. Reference to the judgment of this Court in case of this very assessee [2018 (10) TMI 376 - BOMBAY HIGH COURT] would also be of no avail. It was a case in which the assessee had challenged the orders passed by the Assessing Officer calling upon for special audit of the petitioner's accounts for several assessment years. However, the decision of the Court was not on merits. the Court did not decide the petitioner's objection to the special audit on merits, instead proceeded on consensus. Secondly, the assessment years involved in the said orders besides others were 2010-11, 2011-12 and 2014-15. For the assessment years 2010-11 and 2011-12 unamended provisions of Section 142(2A) would apply. In the result, we do not find merit in this petition - Decided against assessee.
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2019 (3) TMI 17
Deduction u/s 80-IA - netting of interest allowed in first round of litigation - Order not challenged by revenue - interest were received in the course of business or in relation to business transaction - HELD THAT:- AO had denied deduction u/s 80I-A but not altogether declined that the income received was by way of business. Were it not so, the question of considering the alternate submission of assessee, i.e. for the benefit of netting would not have been remitted by the ITAT in its first order. It was open to the Revenue to have questioned the remand in the first instance. Having not done so, it cannot now question the findings of the lower appellate authority with respect to the working out of the netting principle in the facts of this case. No substantial question of law arises in this regard. Miscellaneous income reported from sale of scrap, including cheque bouncing charges, late payment charges etc. - whether it could be treated as business income having regard to the fact that the assessee is a telecommunications company - HELD THAT:- It is not disputed that this question has been decided against the Revenue in Principal Commissioner of Income Tax-09 v. M/s. Vodafone Mobile Services Ltd. [2019 (1) TMI 472 - DELHI HIGH COURT] by a Division Bench of this Court.
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2019 (3) TMI 16
Bad debts written off - non-rural branches claimed under clause (vii) of Section 36(1) - HELD THAT:- Issue has to be decided in favour of the assessee and against the Revenue, going by the decision in Catholic Syrian Bank Ltd. v. C.I.T. [2012 (2) TMI 262 - SUPREME COURT OF INDIA] AO shall verify the computation, looking into whether there is any allowance granted for provision of bad debts in non-rural branches for the previous years. In which event alone, the allowance of written off bad debts in non-rural branches, will be confined to the excess allowed from the provision made, and deduction allowed, for non-rural branches. In making the computation, there can be no consideration of the provision for bad debts for rural branches as granted under clause (viia) of Section 36(1). Hence, the first question is answered in favour of the assessee and against the Revenue. Determination of non-rural branches - provision for bad debts u/s 36(1)(viia) - HELD THAT:- On the second question, the issue stands covered in favour of the Revenue and against the assessee. In C.I.T. v. Lord Krishna Bank Ltd. [2010 (10) TMI 860 - KERALA HIGH COURT] this Court had held that the determination of non-rural branches shall be only with reference to the revenue villages and not solely on the basis of the population. This Court specifically noticed the anomaly insofar as even wards in municipalities being included for identification of rural branches, when the identification is on the basis of the population alone in wards of the local authorities. Alternative submission before High Court - no contention before lower authorities - HELD THAT:- A similar contention was raised in assessee's own case in a batch of cases decided [2018 (12) TMI 1611 - KERALA HIGH COURT] and connected cases. We have found that such a question does not arise in the Revenue's appeal. The assessee had also not taken up such a contention before any of the authorities. The assessee cannot be permitted to take that contention at this stage, especially when there is no appeal filed by the assessee. We hence refuse to look into the said contention. Accrual of income - interest accrued on securities which are not yet matured has to be assessed as income for the year - HELD THAT:- The third question stands covered in favour of the assessee as per the decision of this Court in C.I.T. v. Federal Bank Ltd [2008 (1) TMI 195 - KERALA HIGH COURT]
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2019 (3) TMI 15
Carry forward of business loss - Distinction of return filed u/s 139(1) & 139(3) - original return filed u/s 139(1) within time declaring positive income - later revised return u/s 139(5) filing declaring loss - whether the revised return filed u/s 139(5) can be treated as return u/s 139(3) - HELD THAT:- What we find is that carry forward of loss with respect to the two heads of income; being 'profits and gains on business or profession' and 'capital gains' has been culled out from Section 139(1) and a specific provision made under Section 139(3). The filing of a return under Section 139(3) alone would enable such claim of carry forward. A loss return can definitely be filed under Section 139(1). But the same would be restricted to the set off being claimed in that relevant previous year without any claim for a carry forward of loss which remains after set off. True Section 139(3) makes applicable the provisions of the Act as if it were a return under Section 139(1). Hence, if a return is filed under Section 139(3), necessarily, the assessee could avail of the benefit under Section 139(5) for filing a revised return which would be treated as the original return filed under Section 139(3). When a return is originally filed under Section 139(1), the enabling provision under Section 139(5) to file a revised return only enables the substitution or revision of the original return filed. On a revised return filed, it can only be a return under Section 139(1) and not one under Section 139(3). This compelling distinction persuades us to set aside the order of the Tribunal. The assessee originally filed a 'nil' return with positive income under Section 139(1). When a revised return under Section 139(5) is filed, it only substitutes the original return filed under Section 139(1). The return hence permits set off of the loss against the income of that relevant previous year. What remains after such set off can not be carried forward for reason of the revised return not being deemed to be one under Section 139(3). - Decided in favour of the Revenue.
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2019 (3) TMI 14
Deduction u/s 80IA - consolidated financials have been prepared for the entire business - Denial assessee from claiming deduction under section 80IA in respect of the one undertaking of its choice - HELD THAT:- We may, at this juncture, usefully refer to the provisions of section 80IB(5) of the Act which provides that in determining the quantum of deduction under section 80IA, the eligible business shall be treated as the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year upto and including the assessment year for which the determination is to be made. There is thus no doubt that each unit, including a CPP, has to be seen independently as separate and distinct from each other and as units for the purposes of grant of deduction under section 80IA of the Act. Where the assessee deserves profits from multiple units, all being eligible for deduction under Chapter VIA, the profits or losses arising from the respective units have to be considered in totality and only if the resultant figure were positive, would the assessee be entitled to its claim. Thus, the judgment M/S SYNCO INDUSTRIES LTD VERSUS ASSESSING OFFICER [2008 (3) TMI 13 - SUPREME COURT] considers the interplay between the income and losses arising from eligible units alone, all of which are eligible for deduction under Chapter VIA, and would not apply to the facts and circumstances of the present case whether the claim under Section 80I was restricted only to the 16 MW unit at Karnataka. Mr.Senthil Kumar, fairly, does not dispute this position. - Decided in favour of assessee.
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2019 (3) TMI 13
Deduction u/s 80IC - substantial expansion - initial Assessment Year - claiming deduction at the rate of 100% again for the next five years as had undertaken substantial expansion under Section 80IC - HELD THAT:- Assessee have availed deduction under Section 80-IC alone. Initially, they claimed the deduction on the ground that they had set up their units in the State of Himachal Pradesh and after availing the deduction @ 100% they want continuation of this rate of 100% for the next 5 years also under the same provision on the ground that they have made substantial expansion. As pointed out once the assessee had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3), in no uncertain terms, provides for deduction @ 25% only for the next 5 years. It may be asserted again that the assessee accept the legal position that they cannot claim deduction of more than 10 years in all under Section 80-IC. See COMMISSIONER OF INCOME TAX VERSUS M/S. CLASSIC BINDING INDUSTRIES [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] - Decided against the assessee
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2019 (3) TMI 12
Disallowance u/s 14A - total investments for Rule 8D - strategic investment - disallowance in the opinion of AO, was to be worked out by considering the total investments irrespective of the fact that whether these investments yielded any exempt income during impugned AY or not - HELD THAT:- We find that the disallowance worked out by the assessee is well in line with the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that only exempt income yielding investments were to be considered to arrive at the said disallowance. Therefore, the additional expense disallowance made under normal provisions, as made by Ld. AO, could not be sustained and the stand of FAA, though on different reasoning, was to be confirmed. Accordingly Ground Number- 1 stand dismissed. Plea of exclusion of strategic investment as accepted by FAA while granting relief to the assessee, is concerned, same stand could not be sustained in view of decision of Hon’ble Apex Court in Maxopp Investment Ltd. Vs CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA] Applicabily of Rule 8D in MAT - adjustment of disallowance u/s 14A while computing Book Profits u/s 115JB - HELD THAT:- As submitted that in terms of the cited decision of Special bench, disallowance was to be worked out with reference to expenses debited by the assessee in the Profit & Loss Account on actual basis and not by resorting to computational mechanism as provided in Rule 8D (2). Followed Reliance Capital Ltd. [2019 (2) TMI 1543 - ITAT MUMBAI] where it was held that disallowance u/s 14A was to be made in terms of Clause (f) of Explanation-1 to Section 115JB. Therefore, the matter, stand restored back to the file of AO to ascertain the actual expenses debited in the Profit & Loss Account to earn the exempt income and make disallowance u/s 115JB accordingly. The assessee is directed to provide the details thereof. Ground No. 3 stands allowed for statistical purposes.
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2019 (3) TMI 11
Disallowance u/s 14A read with Rule 8D (ii) - satisfaction about the correctness of the claim of the assessee - HELD THAT:- In this case AO without recording his dissatisfaction / reasons as to his satisfaction about the correctness of the claim of the assessee mechanically proceeded to invoke the provisions contained u/s 14A with Rule 8D which is not permissible under law. CIT(A) has deleted the addition on the basis of facts that expenditures debited to P & L Account by the assessee have been suo moto added back by the assessee in the computation of income. So, we find no scope to interfere into the findings returned by CIT(A). Income from other sources - forfeiture of earnest money received during the negotiation of a capital assets - Insertion of new subsection (IX) in Section 56(2) w.e.f. 01.04.2015 is prospective - sale proceeds forfeited to be deducted from the cost acquisition of the property in question u/s 51 - HELD THAT:- Since in A.Y. 10-11 there was no provision under the Act for treating the forfeiture of earnest money received during the negotiation of a capital assets as income from other sources, the CIT(A) has rightly deleted the addition. The issue in controversy is also covered by decision rendered by Co-ordinate bench of Tribunal in case of Vijay Singh [2014 (12) TMI 599 - ITAT DELHI]. - Decided against the revenue.
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2019 (3) TMI 10
Revision u/s 263 - lack of inquiry - non filing and verification of statutory Form - Examination of eligibility of deduction u/s 10AAA - HELD THAT:- A bare reading of the order of the Pr.CIT shows that the AO has failed to make inquiry into the relevant aspects concerning eligibility towards deduction u/s 10AA. The prescribed form required for the purposes of claim of deduction u/s 10AA was not available before the AO. AO did not make any inquiry in this regard. The form ultimately filed before the Pr.CIT was also found with reference to Section 10A in place of Section 10AA. The approval of the SEZ authority was also not placed before the AO nor asked for. The order of the AO u/s 143(3) clearly suffers from lack of inquiry and application of mind. AO has clearly failed to discharge its quasi-judicial functions while framing the assessment order. Such an assessment order is thus clearly erroneous and prejudicial to the interest of the Revenue. The reply received by the AO from SEZ authority in response to Section 133(6) was towards its competence to implement EOU Scheme and issue of letter of permission of STP Scheme in place of its issuance by BOA (Board of Approval). The reply was made to explain the delegation of powers to the Directors of STP Schemes and ratification of such approvals by the competent authority. The inquiry was made on only one limited aspect of the matter loosing sight of the other crucial aspects as noticed by the Pr.CIT. Thus, the usurpation of the jurisdiction u/s 263 and conclusion of the Pr.CIT that the assessment order passed is erroneous and prejudicial to the interest of the Revenue cannot be faulted. Certain documents furnished at a later stage after completion of the assessment, the correctness of which has not been tested, cannot be seen as sufficient compliance of deduction provision. - Decided against assessee.
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2019 (3) TMI 9
Validity of order of CIT(A) dismissing the appeal ex-parte - entitlement to be provided with adequate opportunity of being heard - No evidence to serve the notices or were received back unserved - HELD THAT:- CIT (A) goes to prove that notices for appearance of the assessee were issued on 05.072017, 28.08.2017 and 17.10.2017 in all the three appeals but it is nowhere recorded in the order that if the notices were served upon the assessee or the notices were received back unserved. CIT (A) has proceeded to decide the appeals without getting the notices served on the assessee which amounts to denial of adequate opportunity of being heard. So, we are of the considered view that in the interest of justice, assessee is entitled to be provided with adequate opportunity of being heard, hence impugned orders passed by the CIT (A) are set aside and remanded back to the CIT (A) to decide afresh after providing an opportunity of being hard to the assessee.- Appeals filed by the assessee are allowed for statistical purposes.
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2019 (3) TMI 8
Reopening of assessment - Addition allowing the deduction u/s 54 being long term capital gain - change of opinion - HELD THAT:- In the instant case, AO opened the proceedings on the basis of same facts which have already been considered by the assessing officer while passing the original assessment order u/s 143(3). Therefore question arose as to whether the Assessing officer can reassess the facts and materials which were the subject matter of the original assessment. C.I.T. vs. Kelvinator (I) Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] while dealing with identical issue has held that the assessment cannot be re-opened u/s.147 on the basis of same facts and materials (and no more) disclosed at the time of original assessment made under section 143(3) by mere change of opinion. In view of dictum in CIT vs. Kelvinator of India Ltd as the opening of assessment is based upon mere change of opinion, hence the assessment order is liable to be quashed on this ground alone, therefore we do not have any hesitation to quash the assessment order and consequently the impugned order is set aside. - Decided in favour of assessee.
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2019 (3) TMI 7
TP Adjustment - AMP expenses by applying bright line test on protective basis - HELD THAT:- We are of the considered view that following the decision rendered in case of Sony Ericsson Mobile Communications India (P.) Ltd. Sony Ericsson Mobile Communications India (P.) Ltd & Others V. CIT [2015 (3) TMI 580 - DELHI HIGH COURT] and in Perfetti Van Melle India Pvt. Ltd. (2017 (5) TMI 1305 - ITAT DELHI), TP adjustment amounting by applying BLT is not sustainable on protective basis having no statutory mandate. Consequently, protective adjustment made by the TPO/DRP/AO qua AMP expenses by applying bright line test on protective basis is not sustainable in the eyes of law having no statutory mandate, hence appeal filed by the taxpayer is allowed.
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2019 (3) TMI 6
Unexplained money received from buyers - money received against the sale of property - HELD THAT:- Assessee has claimed that the money was received against the sale of property of ₹ 32 lakhs out of which the Department has seized ₹ 24.70 lakhs but as the registered sale deed of this property is of ₹ 15.60 lakhs, the AO was right in holding that the amount of ₹ 16.40 lakhs is unaccounted as it could not be substantiated by any document of the buyer. AO has summoned the buyer in this respect and asked for confirmation during the course of assessment proceedings but the buyer did not responds to this, hence, the explanation of the assessee that the money is received from the buyer remained unexplained, hence, addition was rightly sustained by the CIT(A). Addition on account of cash deposit - HELD THAT:- Cash deposit of ₹ 4 lacs in the bank account of the assessee is transferred to Madhuban Branch and not a part of the addition made by the AO of ₹ 16.40 lacs, therefore, the addition of ₹ 4 lacs made by the AO was rightly confirmed as this cash deposit could not be explained by the assessee during the course of assessment as well as appellate proceedings. Rework the calculations of capital loss - HELD THAT:- Relevant provisions does not allow set off of long term capital loss against any other head of income, hence, this claim of the assessee was rightly rejected by the authorities below. - Decided against assessee.
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2019 (3) TMI 5
Exemption u/s. 10A - Adjustment of brought forward business loss and unabsorbed depreciation - assessee has two units – one is STPI and other non-STPI unit. - HELD THAT:- CIT(A) has rightly allowed the appeal of the assessee by holding that the brought forward business loss and unabsorbed depreciation of non-eligible business unit is not allowed to be adjusted while calculating the exemption u/s. 10A - Following the law laid down in CIT vs. Yogokawa India Ltd. (2011 (8) TMI 845 - KARNATAKA HIGH COURT), deduction u/s 10A is required to be taken before setting off brought forward losses and unabsorbed depreciation. Disallowance u/s. 14A - HELD THAT:- Since, the appellant has been able to establish that none of the fund borrowed is diverted towards investment in Mutual Fund Units, the expenditure related to indirect expenses is not justifiable and hence the addition u/s 14A is deleted. Regarding disallowance under limb iii of Rule 8D, the appellant has not been able to explain why some expenditure related to management of such investment, income from which is exempted, should not be disallowed. Since the investment has been made, some amount of follow up actions, record keepings, discussions and consultations are bound to happen which will lead to some administrative expenses. Such administrative expenses are to be computed at the rate of 5% of average investment. In the case of appellant, the AO has computed such which is in accordance with the law and hence confirmed. - Decided against revenue.
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2019 (3) TMI 4
Accrual of ‘real income’ - Addition on account of notional interest - share application money remaining without allotment of shares - availability of interest free funds in the hands of assessee by way of Capital Account - HELD THAT:- Where the assessee has own funds and had utilized the same for the purpose of giving advances to different concerns who were related to Apollo Tyres, where the assessee was dealer in tyres of Apollo Tyres Ltd., no adverse inference can be drawn against the assessee. The availability of interest free funds in the hands of assessee by way of Capital Account is not disputed and in such circumstances, where the available funds were much more than interest free advances in the hands of assessee, no disallowance on account of interest expenses is to be made in the hands of assessee. - Decided in favour of assessee.
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2019 (3) TMI 3
Addition of subcontracting expenses - Ex-parte order - Bogus expenses paid to the related party - CIT(A) deleted the addition - HELD THAT:- CIT(A) has not made any effort to get the authenticity of existence of the latter company M/s. Mayan Infrastructure Pvt. Ltd. or the assessee has furnished any details about the existence of the latter company. Since the turnover of M/s. Mayan Infrastructure Pvt. Ltd. was more or less with the expenses of the assessee, AO made all the efforts to locate the latter company for serving notice under section 133(6) of the Act through the Inspector of Income Tax. The report of the Inspector of IT is very clear about non-existence of M/s. Mayan Infrastructure Pvt. Ltd. Thus AO has rightly held that the expenses paid to the related party M/s. Mayan Infrastructure Pvt. Ltd. is bogus and M/s. Mayan Infrastructure Pvt. Ltd. is only a shell company, which exists only in paper. - Decided in favour of revenue
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2019 (3) TMI 2
Addition of bogus purchases - ex parte order - Assessment u/s 147 based on investigation report - profit rate determination - assessee was able to co-relate the purchase of material with the allocation of raw materials and sales of finished products. - HELD THAT:- Neither before the AO nor before the Commissioner (Appeals) the assessee has produced any supporting evidence either to prove delivery of goods or the fact that the goods were actually sold by the concerned parties. Assessee even could not establish the existence of the concerned parties, considering the fact that the notices issued under section 133(6) returned back unserved. Claim of the assessee that the purchases made are genuine cannot be accepted. AO has accepted the fact that the assessee has purchased goods from some other source and for that reason alone he has estimated the profit at the rate of 12.5% which has been sustained by Commissioner (Appeals). The assessee has neither appeared before us nor brought any material on record to controvert the aforesaid factual finding of the departmental authorities and has also failed to demonstrate that the profit rate adopted at 12.5% is unreasonable. - Decided against assessee.
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2019 (3) TMI 1
Stay petition - recovery proceedings - payment of 15% of the disputed demand - AO rejected petition by way of a non-speaking order - HELD THAT:- AO insisted on payment of significant portions of the disputed demand prior to grant of stay resulting in extreme hardship for tax payers. Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic. As relying on MAHENDRA MILLS AND ANOTHER [2000 (3) TMI 3 - SUPREME COURT] notwithstanding the assessee may not have specifically invoked the three parameters for the grant of stay, it is incumbent upon the assessing officer to examine the existence of a prima facie case as well as call upon the assessee to demonstrate financial stringency, if any and arrive at the balance of convenience in the matter. Set aside impugned order dated 25.01.2019. AO is directed to pass orders de novo on the stay application filed by the petitioner in the light of the discussion as aforesaid, after hearing the petitioner, within a period of four weeks from date of receipt of a copy of this Order
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Customs
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2019 (3) TMI 55
Benefit of N/N. 40/2006-Cus dated 1st May 2006 - duty free import authorisation (DFIA) - Held that:- The impugned order has held that the original authority had wrongly surmised that it is only unbleached, bleached and dyed fabrics that are used for printing. The description given by the original authority, though inadequate, is further qualified with the expression made of yarn of different colours with distinct of 'check and self-design . This, in our view, is not contested and would render the fabric incapable of being subjected to further printing of any pattern in the normal course from an aesthetic or from commercial standpoint. The present dispute is not of classification but compliance with the licence condition. The description of the goods, based upon examination, amply evidences the negligible scope for printing and hence unusable in furtherance of the purpose for which authorisation was issued. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 54
Valuation of imported goods - straw applicator 30 - bent foil treator - old and used goods or not? - value enhanced based on contemporaneous data - Held that:- At different places, averments are made that the goods are old and second hand and also that these machines are new. - We, therefore, do not find that the certificate to be a credible evidence of the condition of the goods. Nevertheless, the report of the examination by the docks unit is available and nothing has been brought on record to controvert the finding therein on behalf of the appellant herein - thus, the goods are not second hand as claimed by the appellant. Determination of the value of the goods - Held that:- The value adopted for assessment straw applicator has not been challenged and it is only the finding on the condition that has been contested along with the judgement by which bent foil treator has been re-assessed. With our finding of goods not being second hand , the absence of challenge to the enhanced value of straw applicator renders a finality to the assessment. The impugned order has relied upon on import whose applicability has not been controverted with acceptable evidence to the contrary - Insofar as bent foil treator is concerned, the enhancement suffers from incompatibility with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The valuation adopted for straw applicator 30 alone survives. The adoption of enhanced value is based on an examination report of the customs officials. There is nothing on record to evidence that there has been a deliberate misdeclaration on the part of the importer and, even if the consequence of such mis-declaration may have benefitted them, that does not provide sufficient grounds to invoke section 111(m) of Customs Act, 1962. The interest of justice would be best served by setting aside the confiscation and penalty - the appeal is allowed except to the extent of confirming the duty liability arising from the enhanced value of straw applicator 30 - appeal allowed in part.
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2019 (3) TMI 53
Dutiability - alleged concealment in imports of the past - Absolute confiscation - lack of application of mind and lack of objectivity - Held that:- The limitations in the procedure prescribed for examination of goods, and the failure on the part of the appellant to furnish details of post importation transaction, was held by the adjudicating authority to be sufficient to establish the case, notwithstanding reference to the actions of the proper officers in assessing and releasing of goods. In the absence of acceptable reason for release, despite mis-declaration, for home consumption their contention that attestation could well establish the consequence claimed by the appellants, the criticality of cross examination is evident. Even if it were not so, it was incumbent upon the adjudicating authority to dispose off the request for cross-examination. Evaluation of the resultant evidence may well have provided stronger grounds than the impugned order contains. The course of justice will be best served by setting aside the impugned order, save that portion pertaining to absolute confiscation of the goods, and remanding the matter back to the original authority for a fresh decision after dealing with the request of the appellants for cross-examination of the assessing officers of the impugned consignments and other evidence presented by the appellants, if any - appeal disposed off.
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2019 (3) TMI 52
Mis-declaration of imported goods - LED TVs were misdeclared as LED TV panels - confiscation - penalties - Held that:- The law of admission is absolutely clear that admissions needs no further proof unless and until contrary is proved or are withdrawn. I observe that despite being summoned for more than four times and despite being recorded twice there is no retraction on part of the appellant for the admission of impugned LED TVs to have been procured by way of improper imports. Rather the statement of the co-noticees goes on to further corroborate the admission of the present appellant - there is no infirmity in the order under challenge while directing the confiscation of goods being the result of improper import. BIS Certification - Held that:- It is an acknowledgement on the part of the appellant that BIS Certification is required for all such LED TVs, which are measuring 32 Inches and above, as is also apparent from the appellants emphasis about the information received from Ministry of Electronics and Information Technology dated 24th May, 2017. Though appellants defense is that the LED TVs recovered from their premises are of 80 CMs. i.e. 31.5 Inches, measurement being less than 32 Inches, no BIS registration is required - Perusal thereof shows that LED for Samsung brand as well as for Sony brand are mentioned to be of 32 Inches. The appellant could not produce any other document to support that the dimension thereof was 31.5 Inches. in absence thereof and in view of the above noticed acknowledgement on part of the appellant - thus, the adjudicating authority has committed no error while holding these LED TVs of 32 Inches for which mandatory BIS Certification is required as per Electronic and Information Technology goods (Requirement of Compulsory Registration) Order, 2012 as was notified on 3rd October, 2012. There is no infirmity in the order under challenge, same is hereby upheld - appeal dismissed.
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Insolvency & Bankruptcy
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2019 (3) TMI 51
Corporate Insolvency process - default in payment of claimed amount - HELD THAT:- From the definition of “Operational creditor” and “Operational Debt”, it can be seen that the applicant has supplied goods to the respondent company and therefore clearly comes within the definition of Operational Creditor Similarly the claim of outstanding payments to applicant comes within the definition of Operational Debt. There being default in payment of claimed amount, and the respondent has failed to establish the fact that there is a pending dispute between the parties, such application deserves to be admitted for triggering Corporate Insolvency Resolution Process against the respondent corporate debtor. We are satisfied that the present application is complete and there has been default in payment of dues by the respondent. Therefore, on fulfilment of the requirements of section 9(5)(i)(a) to (d) of the Code, the present application is admitted. In pursuance of Section 13(2) of the Code we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Regulations) with regard to admission of this application under Section 7 of the Code.
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PMLA
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2019 (3) TMI 50
Amendments to the PML Act - amendments were made in the years 2015, 2016 and 2018 and per-se unconstitutional and liable to be set aside - specific query from the Court why the petitioner, being a Parliamentarian is challenging the amendments effected in the years 2015, 2016 and 2018 now in the year 2019 - HELD THAT:- The petitioner herein is a Member of Rajya Sabha. The plea of Mr. Chidambram that the petitioner was not aware that such amendments have been carried out as Money Bills, is no reason to challenge the amendments, at least of the years 2015 and 2016 in the year 2019. In any case, merely because the petitioner came to know recently that such amendments have been carried out as Money Bills, would not justify the delay. Even otherwise, his submission that it was only after the judgment was rendered by the Supreme Court, on a similar issue, did the petitioner thought it fit to challenge the amendments of 2015, 2016 and 2018 by filing this petition, does not answer the submission made by Ms. Acharya that the challenge, apart from being hit by delay and laches, is by a person who has no locus, being not aggrieved by the amendments. Case followed KUSUM INGOTS ALLOYS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 342 - SUPREME COURT OF INDIA]. We do not think that it is a case where this Court should exercise its extraordinary jurisdiction under Article 226 of the Constitution of India.
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Service Tax
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2019 (3) TMI 49
Refund of service tax paid - Classification of services - site formation and clearance, excavation and earth moving and demolition services or not - doctrine of unjust enrichment - Section 11B of the Central Excise Act, 1944 - Held that:- The adjudicating authority as well as the first appellate authority have ventured beyond the period in question and have recorded that appellants have raised invoices relating to the period but nothing concrete has brought on record to show that the appellant had in fact collected the amounts of service tax for which he has filed the refund claim. We notice that the entire confusion is created by the adjudicating authority and the first appellate authority by considering the documents which were beyond the period in question for which the refund claim has been sought - The Chartered Accountant’s Certificate extract which is produced in the Order-in-Original is itself very specific that the certificate is for the period in dispute up to September, 2006 only. Further, we find that learned CA was correct in bringing to our notice that the ledger accounts of the customers in their accounts which are annexed from Page 57to 101 of the paper book indicates no recovery of service tax amount during the disputed period or subsequently also. If the debit notes are not acted upon and not recorded as receivables in the books of the appellant are not receiving any sum as service tax from the customers in any manner and hence it is to be held that service recipient has not paid the service tax element to the appellant. Therefore, doctrine of unjust enrichment is not attracted in this case. The department has not produced any evidence whatsoever that service tax has been paid by the service recipient and if so the mode of payment to appellant. Hence only on the basis of conjectures and premises the lower authorities have rejected the refund claim which in our view is incorrect and the statistics which are sought to be mentioned in the Order-in-Original by the adjudicating authority are irrelevant to the facts of the case it i.e., the refund claim is for a specific period i.e., 16.06.2005 to 30.09.2006. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 48
CENVAT Credit - input services - House Keeping Services - Held that:- Reliance was placed in the case of WIPRO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE [2017 (5) TMI 188 - MADRAS HIGH COURT], where it was held that Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc. of the office premises. At any rate, the credit rating of an industry is depended upon how the factory is maintained inside and outside the premises - following the said decision, the credit is allowed. Refund of unutilized input service credit - date of filing of refund claim - Rule 5 of CCR read with Notification No. 27/2012-CE (NT) dated 18.06.2012 - Held that:- The delay is there only on account of the receipt of appellant’s application for refund and this fact is duly supported by the Legacy Cell letter dated 18.07.2017 in C.No. IV/16/02/2017-Misc.Leg.RF/ RB-II issued by the Office of the Commissioner Goods and Service Tax, Chennai-South Commissionerate, wherein the date of claim of the appellant for refund has been acknowledged as 27.06.2017 - there is no finding by the lower authorities as to the non-compliance with any of the provisions of Rule 5 of CCR, 2004 for rejecting appellant’s claim. This, coupled with date of acknowledgement by the Legacy Cell, makes it very clear that the appellant’s claim for refund was in order and is even so, in terms of Notifications referred to in the Order-in-Original - refund cannot be rejected on this ground. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 47
Scope of SCN - Insurance Auxiliary Service or not - period from October 2003 to June 2008 - LTU unit or not - scope of SCN - SCN premises that the services provided by them were under “Insurance Auxiliary Service” whereas the appellants were providing only “General Insurance Service” - Held that:- The contention regarding provision of services only under General Insurance Service has been contended by the appellant right from the reply to the Show Cause Notice and also in the personal hearing and has also been taken note of by the adjudicating authority in paragraph 7 of his Order. However, there is no further discussion, analysis or finding on this aspect. In our view, if the appellants are only engaged in providing General Insurance Service, the Show Cause Notice issued to them demanding tax under Insurance Auxiliary Services cannot sustain. This would be best ascertained by the adjudicating authority in de novo adjudication. Accordingly, for the limited purpose of ascertaining the fact that the appellants had indeed provided only General Insurance Service and not Insurance Auxiliary Service, the matter is remanded to the adjudicating authority - Appeal allowed by way of remand.
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2019 (3) TMI 46
Adjustment of CENVAT credit in respect of service tax paid to the intermediary MSO who were supplying the signals and link to them - Held that:- The said request is tenable since the appellant would be eligible for CENVAT credit of the service tax paid to the MSO. However, the appellant has to furnish documentary evidence to show that they have paid the service tax to the MSO. For this purpose, we remand the matter to the adjudicating authority who shall look into the plea of adjustment of CENVAT credit for the amount that has to be paid by the appellant. The matter is remanded to the adjudicating authority for the limited purpose of granting the benefit of CENVAT credit on the basis of the documents furnished by the appellant - The penalties are set aside in toto - appeal is partly allowed by way of remand.
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2019 (3) TMI 45
Business Auxiliary services or not - Non-payment of service tax - service tax on the commission paid by them to a commission agent situated abroad - reverse charge mechanism - It is the case of the revenue in the audit that the appellant having paid an amount to a person situated abroad, under reverse charge mechanism is liable to pay service tax - benefit of N/N. 13/2003-ST - whether the activity of threshing and drying undertaken by the appellant of raw tobacco procured and purchased will amount to an activity falling under category of ‘Business Auxiliary Service’ or otherwise? Held that:- This very issue has been decided by this bench in the case of ML Agro Products Ltd [2017 (2) TMI 1355 - CESTAT HYDERABAD], where it was held that threshing and drying of the tobacco leaves will not amount to any service falling under the category of ‘Business Auxiliary Services’ - thus, the activity undertaken by the appellant herein of threshing and drying of raw tobacco leaves would not come under category of ‘Business Auxiliary Service’ and is not a taxable activity - demand set aside. Taxability - commission paid to foreign commission agent, under reverse charge mechanism - Held that:- The bench in the case of Kohinoor Foods Ltd [2017 (3) TMI 1289 - CESTAT NEW DELHI] specifically held that the transaction would fall under the purview of notification 13/2003-ST and eligible for exemption and hence no tax is payable - demand set aside. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 44
Refund of unutilized CENVAT Credit - input services - Banking and Other Financial Services - Business Support Services - export of services - Held that:- The entire share holdings of the appellant company were held by Ms. Ritu Singhal and Shri Rajiv Singhal. There is no specific mention about the overseas recipient of service M/s. Banyantree Capital Advisors Limited, Mauritius. Further, no evidences were produced by the department to show that the appellant was the subsidiary company of the overseas service receiver. Thus, the denial of refund benefit on the ground that appellant is subsidiary of the service receiver will stand for judicial scrutiny. With regard to provision of service, it is an undisputed fact that appellant had entered into an agreement with the overseas service receiver and pursuant to such agreement, had provided the service on payment of consideration in the form of “advisory fee”. After receiving the taxable service by the overseas entity, the place of actual use of service will not be considered as the relevant factor for export inasmuch as the appellant was not a party to the service used within India and there is no specific agreements executed between the appellant and the Indian recipient of service - Since the appellant is no way connected to the user of service in India, it cannot be said that the services provided to overseas entity cannot be considered as export in terms of Export of Service Rule, 2005. There is no merits in the impugned order passed by the Learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 43
Club or Association Membership Service in respect of subscription and donation collected from their members - demand of service tax - Held that:- The demand in respect of Club/Association Service cannot be sustained in the case of M/s. Ranchi Club Ltd. Vs. Chief Commr. of C.Ex. & S.T., Ranchi Zone [2012 (6) TMI 636 - JHARKHAND HIGH COURT] - the demand that has been confirmed under Club or Association Services cannot be sustained and is set aside. Supply of Tangible Goods Service in respect of transport vehicles (oil tankers) from their client i.e., M/s. HPCL on hire charge basis as per “bulk petroleum products transport agreement” between the appellant and M/s. HPCL - Held that:- From the agreement and other facts on record it is evident that the contract was for transportation of petroleum products on which service tax under GTA has been discharged by M/s. HPCL themselves. The nature and type of arrangement between the two parties also service to indicate that there is no Supply of Tangible Goods involved in this matter - This being so, the demand made under this category also cannot be sustained and requires to be set aside. Renting of Immovable Property Service - Held that:- It is clear that the amounts received by the appellants under the renting category are very much under the threshold limits in each of the years. This being so, in view of the demands earlier set aside, i.e., demand under Club/Association Service and Supply of Tangible Goods Service, there cannot be any further demand under renting since the total amount received would be within the threshold limit. In the circumstances, the demand under renting will also require to be set aside. Appeal allowed in toto.
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2019 (3) TMI 42
Classification of services - Man Power Recruitment or Supply Agency Service or not - works related to manufacture of tractors within the manufacturing vicinity of M/s. Tractors and Farm Equipments Ltd. - According to the department, the appellants not being independent contractor and worked under the supervision of M/s. TAFE they are to be considered as man power supply agent - Held that:- The appellant is an independent contractor appointed for executing work that are entrusted to him by TAFE. So also, at clause 3 as well as clause 7, it is stipulated that appellant shall be responsible for the defect in executing the works. Appellant executes the works along with other workers and merely because he has engaged other workers in executing the work, it cannot be said that he is the supplier of man power. In clause 11 of the agreement, it is stated that the company will have privity of contract with the contractor only and will give instructions only to the appellant/contractor and has nothing to do with the conditions of employment of the workers who work with appellant. Reliance placed by the department in clause 14, in our view, is misconceived. It can be seen that while the workers are engaged to work within the manufacturing activity premises they have to abide by certain labour legislations. Merely taking such licence or abiding by such labour law, it cannot be said that the contract for executing works within the manufacturing activity would be supply of man power. The conclusions that have been arrived by lower authorities can at best be termed as presumptive without any evidential or legal basis - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 41
Levy of service tax - dredging services provided to various contractors - Held that:- The SCN is bereft of the details of the various recipients to whom service was rendered but claimed to be excluded from the tax liability. Undoubtedly, the service rendered to M/s Hindustan Construction Company has, after detailed examination of the facts, been found to be inconsistent with the definition, and the intended object of taxation, of ‘dredging services.’ Likewise, the service rendered to M/s ABG Shipyard is also not in question. It would, therefore, appear that the breakup of the dues in the present appeal is a discovery attributable to the response to the show cause notice in which the details of contracts entered into appear to have been offered up as justification for non-payment of the taxes. As far as the service rendered to M/s Sri Pathy Assoceates is concerned, the facts are clear enough. The work was undertaken as part of the ‘tsunami emergency’ funded by Asian Development Bank and executed on ‘work orders’ issued by Tamil Nadu Maritime Board. The claim of the notice, and the respondent herein, is that the final recipient of the service, Asian Development Bank, is a privileged person excluded from the burden of tax under various international treaties as well as specific legislation of Parliament - We are unable to ascertain whether the exclusion claimed by the respondent during the adjudication proceedings is their entitlement. However, it was the bounden obligation of the adjudicating authority to consider the submission and give a finding thereof. This, he has patently failed to do. The impugned order set aside to the extent that the proceedings were dropped against the respondent in relation to the services rendered to M/s Sri Pathy Associates - matter remanded back to the original authority for fresh decision after hearing submissions made by the respondent - appeal allowed by way of remand.
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2019 (3) TMI 40
CENVAT Credit - input services or not - having nexus with output service or not? - purchase of flat for office purpose - It appeared to the appellant that as they are using the premises for business purposes, they availed credit of service tax paid to the builder towards construction of flat/office premises - penalty - Held that:- The said construction service availed by the appellant towards construction of the flat/office premises is not relatable to the output service, they are providing - Appellant are not entitled to the said cenvat credit of ₹ 51,319/-. Penalty u/s 78 of FA - Held that:- The matter is of interpretation of the statute and there is no suppression of facts or malafide on the part of the appellant - penalty u/s 78 not warranted. Appeal allowed in part.
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2019 (3) TMI 39
Classification of services - Construction of Residential Complex Services or works contract service? - appellant provided various services such as construction of boundary wall, sewerage and drainage system, roads, laying of pipeline etc. - period 2006-07 to 2010-11 - Held that:- The Apex Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] has held that composite services are to be classified only under the category of Works Contract Services with effect from the date of introduction of such service i.e. 1.06.2007. The Apex Court has also categorically held in its finding that such composite services cannot be liable for service tax under any other category prior to the introduction of WCS - thus, there can be no levy of service tax for the period upto 31.05.2007. The perusal of the Show Cause Notice indicates that the demand for the service tax has been raised under the category of Construction of Residential Complex Services. In view of the Apex Court decision in the case of Larsen and Tubro the liability for service tax, if at all, can be raised only under the category of WCS. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 38
Classification of services - Construction services - activity of construction of foundation roads etc. - composite services - Held that:- The activity of construction of foundation roads etc., are in the nature for Composite Service in which the appellant was required to supply the materials to be used in the construction activity. Such composite service is to be classified only under the Work Contract Service introduced with effect from 1/06/2007, in view of the decision of the Hon’ble Supreme Court in case of Larsen and Turbo [2015 (8) TMI 749 - SUPREME COURT]. By following the decision of the Apex Court, the demand for service tax for the period upto 31/05/2007 is set aside. For period commencing on 1/06/2007, the composite services would be liable for classification under Works Contract Service only - But we note the SCN has proposed the demand for service tax under the category of Commercial and Industrial Construction Service as well as Repair and Maintenance Service. Hence the confirmation of demand under the category of WCS will not be proper particularly in view of the decision of the Tribunal in case of Ashish Ramesh Dasarwar [2017 (9) TMI 1001 - CESTAT MUMBAI] wherein Tribunal has taken the view that demand for Service Tax is to be set aside if the Show Cause Notice proposed a classification different from WCS for construction activity - the demand for service tax made under the (CICS) category for Construction of foundation/ roads as well as repair of roads set aside. Activity of laying pipes supplied by the customers - Commercial or Industrial Construction Service or not? - Held that:- To take a final view in respect of liability of service tax for the activity of laying of pipelines, the relevant contracts executed are required to be verified. For such purpose, the demand is set aside and the matter remanded to the Adjudicating Authority to take a de Novo decision only on this activity. Appeal allowed in part and part matter on remand.
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2019 (3) TMI 37
CENVAT Credit - construction of residential property - unsold flats at the time of receipt of completion certification - Held that:- When the appellant availed the CENVAT credit on the input services, he was entitled to take the same and there was no provision in the CCR to reverse the same prior to 01.04.2016 and in the present case, the period covered is prior to the amendment in Rule 6(1) of CCR, 2004 - further, the services provided by the appellant during the relevant period up to the date of obtaining the OC would not qualify as exempted services and therefore, the provisions of Rule 6 will not be applicable. The issue is squarely covered in favour of the appellant by the decision of Division Bench, CESTAT, Ahmedabad in the case of M/s. Alembic [2018 (10) TMI 1557 - CESTAT AHMEDABAD] wherein it has been held by the Division Bench after considering the CENVAT Credit Rules as well as the amendment in Rule 6 by adding Explanation w.e.f. 01.04.2016 that the Appellants were not legally required to reverse any Credit which was availed by them during the period 2010 till obtaining Completion Certificate, i.e. during the period when output service was wholly taxable in their hands, merely because later on, some portion of the property was converted into immovable property on account of receipt of Completion Certificate and on which no Service Tax would be paid in future. Impugned order not sustainable - further, the amount of ₹ 11,67,545/- paid by the appellant ‘under protest’ the protest is vacated - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 36
Evasion of service tax - Sale of Space and Time for Advertisement - Advertising Agency Services - scrutiny of their profit and loss account revealed that they have received more consideration from their client which was not reflected in their Service Tax Return during the relevant period - Held that:- The entire case of the Revenue is based upon the comparison of figures as reflected in Profit and loss Account and Service Tax Returns. There is no further evidence to show that the appellant had provided the services in question. In the absence of any evidence reflecting upon the fact that the appellant have provided services and have received consideration that the same which was not included in STR returns, the demand raised on that basis is unsustainable as per the settled law. The allegations are being made by the Revenue and onus to prove the same is also on the Revenue - in the instant case there is no investigation to show as to whom the said services have been provided; that when the same were provided, who paid the consideration for the same and when the invoice was raised. In the absence of any such evidence, the demands are unsustainable. The Hon’ble Madras High Court decision in the case of M/s Firm Foundations & Housing Pvt. Ltd. V/s Principal Commissioner, Chennai, [2018 (4) TMI 613 - MADRAS HIGH COURT], has dealt with an identical issue and held that Revenue’s reliance on profit & loss account to include with amount reflected their in having been offered for service tax are irrelevant for the purpose of determination of tax and is based upon the impugned assessment which are erroneous. Appeal allowed - decided in favor of appellant.
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2019 (3) TMI 35
Refund of service tax paid - Rule 5 of Cenvat Credit Rules 2004 read with Notification 27/2012 CE (NT) dated 18.06.2012 - rejection on the ground of time bar - Held that:- In this case the appellants have received the FIRC during the month of April 2016 and they filed the refund claim on 28.04.2017 which is very well within the time period i.e. 1 year before 30.06.2017 - the issue is squarely covered in favor of the appellant by the Larger Bench decision of this Tribunal in the case of M/s. Span Infotech India Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] wherein it has been held that for the purpose of refund, relevant date for the purpose of deciding the time limit for consideration of refund claim may be taken as end of the quarter in which the FIRC is received. The appellant’s claim is within limitation as per the Larger Bench decision - the impugned order rejecting the refund claim is not sustainable in law - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (3) TMI 34
Process amounting to manufacture or not - uncoiling the sheets, cutting them to sizes and corrugating them into form to be used as roofs - excisability - extended period of limitation - confiscation - penalties - Held that:- As the appellant is bringing into existence a new commodity as known in the market, there is no hesitation in holding that the appellant has indeed manufactured the profiles from the sheets - the process amounts to manufacture - demand of excise duty upheld. Time Limitation - Held that:- Appellant would not have gained much by evading any excise duty as the overwhelming part of the cost is of sheets on which they are entitled to CENVAT credit paid by the suppliers anyway. They are also paying service tax on corrugation element on it. So what is escaping tax is the small profit margin between the purchase price of the sheets and the sale price of the sheets. If the appellant is required to pay excise duty they will be entitled the CENVAT credit - the revenue has not made out a case to invoke extended period of limitation. The entire demand in the show cause notice is beyond the normal period of limitation and therefore, the demand and interest do not sustain - confiscations and penalties also do not sustain - appeal allowed.
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2019 (3) TMI 33
CENVAT Credit - credit availed at the end of peripheral unit of the input service distributor - Held that:- Reliance placed in the case of CST, AHMEDABAD VERSUS GODFREY PHILIPS INDIA LTD. [2008 (12) TMI 90 - CESTAT, AHMEDABAD], where it was held that Central Excise officer have jurisdiction over office of input service distributor to decide the dispute regarding eligibility of input service for credit. Thus, it is incumbent upon the ISD to prove the eligibility or otherwise the Service Tax credit, since at the receiver end no detail would be available regarding the nature of services. Also, it cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. Further it is not established that appellant had any malafide intention to suppress its duty liability from the department. The legality or admissibility of credit can only be question to the ISD by its jurisdictional authority - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 32
CENVAT Credit - electricity generated in the Cogen is primarily used in the factory for manufacture of dutiable final products such as sugar and surplus electricity is sold to other parties - common input services also availed - non-maintenance of separate records - Rule 6 of CENVAT Credit Rules, 2004 - Held that:- The appellant has already reversed the proportionate CENVAT credit amounting to ₹ 2,39,329/- for the period April 2015 to March 2016 as per the formula which is prescribed under Rule 6(3A) of CCR - further, the Department is wrongly demanding the amount of ₹ 10,97,718/- by wrongly following the formula as prescribed under Rule 6(3A) of CCR. The reversal of proportionate CENVAT credit amounting to ₹ 2,39,329/- is perfectly valid and incompliance with the CENVAT credit Rule 6(3A) - demand not sustainable - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 31
CENVAT Credit - exempted goods - captive consumption - electricity - reversal of proportionate credit on input and input services related to that quantity of electricity sold to outside agencies - Rule 6 of CCR - Held that:- This issue is no more res integra and has been settled in favour of the assessee by this Tribunal in the case of M/s. Venkateshwara Power Project Ltd. & Ors. vs. CCE [2018 (11) TMI 913 - CESTAT BANGALORE], where it was held that in the generation of electricity from bagasse, no other input or input service is used and therefore, the electrical energy is neither excisable under Section 2(d) of Central Excise Act, 1944 nor exempted goods and hence, Rule 6 is not applicable - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 30
CENVAT Credit - exempted goods - captive consumption - electricity - reversal of proportionate credit on input and input services related to that quantity of electricity sold to outside agencies - Rule 6 of CCR - Held that:- This issue is no more res integra and has been settled in favour of the assessee by this Tribunal in the case of M/s. Venkateshwara Power Project Ltd. & Ors. vs. CCE [2018 (11) TMI 913 - CESTAT BANGALORE], where it was held that in the generation of electricity from bagasse, no other input or input service is used and therefore, the electrical energy is neither excisable under Section 2(d) of Central Excise Act, 1944 nor exempted goods and hence, Rule 6 is not applicable - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 29
Excisability - by-products - LD Slag and bi-Fuel Dust falling under Chapter Heading 2719 and Corex Sludge falling under Chapter Heading 2705 - Rule 6(1) or 6(2) of CCR, 2004 not followed - Held that:- This issue is no more res integra and has been settled by various decisions of the High Courts and the Supreme Court as wherein it has been consistently held that even after the amendment from 01.03.2015, Rule 6 shall not applicable to by-products/waste products produced during the manufacture of dutiable final products - the impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.
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2019 (3) TMI 28
CENVAT Credit - MS Channels, Angles, Bars falling under Chapter 72 which are used for fabrication of support structures embedded to earth - during the period from June 2006 to December 2006, the appellants have availed first 50% of CENVAT credit of ₹ 14,39,931/- and Education Cess of ₹ 28,814/- on duty paid and 50% credit was again availed on 01.04.2007 - recovery of CENVAT Credit availed alongwith interest and penalty - Held that:- The appellant has produced the Chartered Engineer’s certificate certifying the usage of various impugned goods but the same was not considered by the Commissioner (A) on the ground that the same has not been produced before the Original Authority. Further, as far as usage of these impugned goods are concerned, it is the Chartered Engineer who is an expert and his certificate should be considered as valuable piece of evidence to prove the usage of the goods. In the present case the Chartered Engineer’s certificate was not considered by the Commissioner (A). This case needs to be remanded back to the Original Authority with the direction to verify the usage of the goods in the light of the certificate issued by the Chartered Engineer - appeal allowed by way of remand.
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2019 (3) TMI 27
CENVAT Credit - inputs/capital goods - MS Steels, angles, plates etc used for various factory work like fabrication of capital goods etc. - Held that:- Prior to 07.07.2009, CENVAT credit availed on various MS plates, angles, channels, etc., which are used for in the factory premises for fabrication as well as for structural purposes, CENVAT credit needs to be allowed as has been decided by the various benches including this bench in the case of Sagar Cements [2018 (11) TMI 738 - CESTAT HYDERABAD] - demand set aside. Demand post 07.07.2009 - Held that:- The Chartered Engineer’s certificate is not that very clear to come to any conclusion. The Chartered Engineer’s certificate needs to be considered by the adjudicating authority to come to a conclusion as to how much quantity of steel has been used for the purposes of fabrication of capital goods and other work - matter remanded back to the adjudicating authority to reconsider the issue afresh (of availing CENVAT credit on materials viz., MS angles, plates etc.), after following the principles of natural justice - matter on remand. CENVAT Credit - inputs/capital goods - tyres which were used for payloads - Held that:- This issue is also now decided by the Tribunal in the case of Penna Cements [2017 (2) TMI 611 - CESTAT HYDERABAD], where it was held that the tyres are necessary accessory to dumpers which are capital goods used in the manufacturing activity and integrally connected in the manufacture of final products - credit allowed. Appeal allowed in part and part matter on remand.
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2019 (3) TMI 26
Valuation - part of final goods cleared to sister unis - related party transaction or not - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 - Held that:- In the first instance, the appellants have been taking a stand that they are not governed by CAS-4 standards and are not required to produce CAS-4 certificates. On the other hand, we are also unable to fathom the method and manner of working of the differential duty liability adopted by department. If they were not satisfied with appellant’s method of cost construction they should have themselves appointed a Cost Accountant as permitted in Central Excise law to ascertain the cost of production and worked out the assessable value as 115% / 110% of such cost, as the case may be, to demand any duty liability. Instead, a very discernible shortcut, not supported by any provision of law, was adopted, namely, adding 15% to their invoice prices. There are merits in the contention of the appellants that this issue in any case is revenue-neutral. Time limitation - Held that:- There is no doubt that the issue was in correspondence right from 2004. The SCN in question was however issued only on 03.05.2007. If appellants were consistently contesting their requirement to arrive at the assessable value of clearances under CAS-4, department could very well have appointed Cost Accountant as provided in the Central Excise Act, 1944 to ascertain whether the price adopted by them was correct or not. That was not done and instead, the instant SCN was issued, almost after three years after the initiation of correspondence between the department and the appellant, that too on the very dubious methodology of adding 15% to invoice prices - appeal succeeds on the ground of limitation. The appellant will succeed both on the grounds of revenue-neutrality as well as on limitation - appeal allowed.
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2019 (3) TMI 25
Excisability - intermediate goods - ‘sugar syrup’ utilised by the appellant in the manufacture of ‘biscuits’ - Held that:- The issue decided in the case of VENUGOPAL FOODS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE – II [2018 (12) TMI 1172 - CESTAT MUMBAI], where it was held that In the absence of any test report to contradict the ‘fructose’ content in the ‘sugar syrup’ produced by the appellant, it is not sufficient reasons found to consider the impugned goods to be excisable within the meaning of section 2(d) of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (3) TMI 24
Whether the specific contract entered into by the assessee herein was for transfer of goods in the form of goods or not in the form of goods; the fact admitted being that it is a works contract? Held that:- It is a composite contract of supply of materials and labour. The work is of supply of materials which are to be fabricated in accordance with the specifications and measurements as stipulated by the awarder, attached to the plastic moulds of seats and fixed in the stadium. Going by the description of the work as also the classification of the different works involved, 86% involves fabrication and 14% involves supply of poly propylene chair which are also fixed in the fabricated steel frames - thus, the transfer is not in the form of goods. The goods in the form of stainless steel sheets are cut to size and fabricated into frames to which is fixed the seating element made of PVC, which as stand alone cannot be used as seats or sold as such in the market. In this case the State does not contest that the assessee executed a works contract; but, however, the contention is that there is transfer in the form of goods since the agreement has described it as providing PVC chairs on stainless steel framework . One has to look at the work description as such extracted herein above as available in the Annexure attached to the agreement. The description of the work as enumerated to the Department by the awarder also assumes significance - the Tribunal has correctly answered the question based on the various facts as found in the agreement and answer the question, though on facts, in favour of the assessee and against the Revenue. Revision dismissed.
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2019 (3) TMI 23
Imposition of penalty u/s 47(6) of the Kerala Value Added Tax Act, 2003 - penalty imposed for the reason of the defect noticed being technical, insofar as the goods being not accompanied with any document in support of the transport from Cochin to Tuticorin - Held that:- It cannot be said that the defect was only technical in nature. The goods were declared at the Walayar Check Post and brought to Cochin, the destination as understood by the transporter itself. If the transport had been to Tuticorin, then necessarily, there should have been a transit pass taken from Walayar and surrendered at Amaravila Check Post. It cannot be said that the goods are not saleable commodities - The finding of the Tribunal was that the goods were not notified and not a fast moving saleable item. It was held that Form-8F was uploaded from Cochin only, since the consignment was taken to Cochin for reason of the short-form of the destination having been noted as 'COK', which actually had to be 'CJB'. It was held by the Tribunal, that it was the mistake of the transporter, since the invoice was issued specifically to M/s.Madurai Tuticorin Express Way Ltd., Tuticorin Road, Project Camp at KM 216, Sinthalakar, Ettavapuram – 628902. The findings of the Tribunal cannot be sustained - revision allowed.
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2019 (3) TMI 22
Revision of returns for the assessment year 2016-17 in the light of Section 42(2) of the KVAT Act, 2003 - Held that:- Reliance placed in the case of EVEREADY INDUSTRIES INDIA LIMITED VERSUS ASSISTANT COMMISSIONER, SPECIAL CIRCLE-I, STATE GOODS AND SERVICES TAX DEPARTMENT, ERNAKULAM AND ANOTHER [2018 (8) TMI 1773 - KERALA HIGH COURT], where it was held that respondents are directed to permit the petitioner to revise the returns for the assessment year 2015-16 - petition disposed off following the decision of the above case.
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Indian Laws
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2019 (3) TMI 20
Condonation of delay of 457 days in filing appeal - appeal rejected on the ground that it was filed beyond the period as prescribed under Sub-section (1) of Section 68-O of the Narcotic Drugs & Psychotropic Substances Act, 1985 - forfeited property. Whether the Appellate Tribunal can entertain an appeal from an order of a Competent Authority, which is filed after expiry of sixty days from the receipt of the order? Whether this Court can condone the delay beyond the said period in exercise of its powers under Article 226 of the Constitution of India? Held that:- The plain reading of the proviso to Sub-section (1) of Section 68-O of the NDPS Act indicates that the Appellate Tribunal has no jurisdiction to entertain an appeal which is filed beyond a period of sixty days from the date on which the order passed by the Competent Authority is served on the appellant. An appeal under Sub-section (1) of Section 68-O of the NDPS Act can be filed only within a period of 45 days from the date on which the order is served. However, the Appellate Tribunal can entertain an appeal even beyond the said period of 45 days if it is satisfied that the appellant was prevented by sufficient cause from filing the said appeal. However, this power is not available to entertain an appeal beyond a period of 60 days. The contention that the petitioner has any inherent right to file an appeal against the order of the Competent Authority, is flawed. It is well settled that an appeal is a creature of statute and there is no inherent right of appeal. In Durga Shankar Mehta v. Thakur Raghuraj Singh and Ors [1954 (5) TMI 25 - SUPREME COURT] the Supreme Court had held that “It is well known that an appeal is a creature of statute and there can be no inherent right of appeal from any judgment or determination unless an appeal is expressly provided for by the law itself.” Plainly, if the right of appeal is a creature of statute, it would be open for the legislature to curtail the said right as well. Therefore, there is no infirmity in the legislature providing a limited right of appeal. The Parliament has provided a right of appeal against an order of the Competent Authority, albeit, subject to the condition that the same be preferred within the specified period. It has expressly curtailed the power of the Appellate Tribunal to entertain an appeal which is filed beyond the specified period. Thus, a person aggrieved by an order of the Competent Authority has no right to an appeal if the same is not preferred within the prescribed period. Clearly, if the petitioner has no statutory right to file an appeal, the question of issuing directions under Article 226 of the Constitution of India to provide the same, contrary to the statue, would not arise - Since, the right to appeal is a statutory right, this court is not persuaded to accept that relief can be granted to the petitioner who has lost such a right on account of delay. Petition dismissed.
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