TMI Tax Updates - e-Newsletter
March 21, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. RECOMMENDATIONS OF GST 39th COUNCIL

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Firm busted for fraud of Input Tax Credit of around ₹ 24 crores, 2 sent to judicial custody

2. Export of Masks, Ventilators and textile raw material for masks and coveralls prohibited

3. Special Economic Zones in the Country

4. Strengthening Intellectual Property Rights (IPR) Regime in India

5. 7.1% CAGR recorded in trade with India’s FTA and PTA partner countries

6. Repayment of 10.70% GS 2020

7. Companies (Amendment) Bill, 2020.

8. Finance Commission constitutes Committee to Review Fiscal Consolidation Roadmap of the General Government

9. Pre-Filing Consultation through video-conferencing

Notifications

Customs

1. 29/2020 - dated 20-3-2020 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

2. 28/2020 - dated 20-3-2020 - Cus (NT)

Exchange Rates Notification No.28/2020-Custom (NT) dated 20.03.2020

DGFT

3. 52/2015-2020 - dated 19-3-2020 - FTP

Amendment in Export Policy of Masks, Ventilators and textile raw material for masks and coveralls.

4. S.O. 1122(E) - dated 17-3-2020 - FTP

Extending the date of import up to 30.04.2020 in respect of import of Urad for the year 2019-20.

IBC

5. S.O. 1145(E) - dated 18-3-2020 - IBC

Central Government notifies a debt raised from the Special Window for Affordable and Middle-Income Housing Investment Fund

Income Tax

6. F.No. Pr.CCIT/(Hqrs.(Coord.)/Delhi/VSV/Designated Authority/2019-20/18641 - dated 18-3-2020 - IT

Notification of 'designated authority' under 'the Direct Tax Vivad Se Vishwas Act, 2020'

7. F. No. Pr. CCIT/Lko/Judl./VSV/Vol.21/2019-20 - dated 18-3-2020 - IT

Notification of 'designated authority' under 'the Direct Tax Vivad Se Vishwas Act, 2020'

SEBI

8. G.S.R. 189(E) - dated 19-3-2020 - SEBI

Securities Contracts (Regulation) (Amendment) Rules, 2020.

Circulars / Instructions / Orders

DGFT

1. EC-A Circular No.32/2015-20 - dated 20-3-2020

Institution and/or continuation of proceedings under Foreign Trade (Development & Regulation) Act, 1992 and Rules thereunder against companies/firms against whom proceedings have been instituted in the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016

2. Policy Circular No. 33/2015-20 - dated 20-3-2020

Clarification on Notification No. 50/2015-20 dated 03.03.2020

3. Trade Notice No. 56/2019-20 - dated 19-3-2020

Restriction on import of Pulses.

4. Trade Notice No. 57/2019-2020 - dated 19-3-2020

Modalities for import of 4 Lakh MT Urad for the fiscal year 2020 - 2021.

Customs

5. PUBLIC NOTICE NO. 21/2020 - dated 14-2-2020

Implementation of PGA e-SANCHIT– Paperless Processing Under SWIFT-Uploading of Licenses/Permits/Certificates/ Other Authorizations (LPCOs) by PGAs

6. PUBLIC NOTICE NO. 2/2020 - dated 28-1-2020

"Implementation of PGA e-SANCHIT— Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs"

7. Public Notice No 03/2020 - dated 23-1-2020

Imolementation of Sea Cargo Manifest Transhipment Regulations (SCMTR)

8. PUBLIC NOTICE NO. 01/2020 - dated 21-1-2020

Levy and Collection of Social Welfare Surcharge (SWS) on imports under Various schemes such as Merchandise Exports from India Scheme (MEIS), Services Exports from India Scheme (SEIS) etc.

Highlights / Catch Notes

GST

• High Court Stays Demand for Interest on Delayed GSTR-3B Submission Regarding ITC u/s 50 of CGST Act.

  Case-Laws - HC : Liability of Interest - delayed submission of GSTR-3B - Section 50 of the CGST Act - The demand raised by the respondents only in respect of interest on the ITC, which was lying to the credit of the petitioner assessee, is stayed - HC
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Income Tax

• Depreciation on ATMs: Recognized at 60% as ATMs function like computers in business operations.

  Case-Laws - AT : Disallowance of depreciation claimed on Automated Teller Machines (ATM) - @ 15% OR 60% - the test would be: Does an ATM fulfil the functions of a Computer in the business activity of an assessee? Is it a tool of his trade with which it carries on his business? - AO directed to allow depreciation @60% - AT
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• Section 10(37) Exemption: Property Transfer Remains Compulsory Despite Agreement on Compensation.

  Case-Laws - AT : Exemption under section 10(37) - Transfer of property on compulsory acquisition -Merely because the compensation amount is agreed upon would not change the character of acquisition, from that of compulsory acquisition to the voluntary sale. - AT
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• Taxpayer Seeks Section 10B Deduction During Assessment, Previously Claimed Section 80HHC for Ten Years, Case Reassessed.

  Case-Laws - HC : Claim for deduction u/s 10B - 100% EOU - Deduction was neither claimed in the original ITR or revised ITR but claimed first time during the assessment proceedings - earlier assessee was claiming deduction u/s 80HHC for 10 years - Matter restored before CIT(A) for fresh consideration - HC
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• Court Orders Lifting of Bank Account Attachment; Assessing Officer to Consider Stay Application Per DBDT Guidelines.

  Case-Laws - HC : Attachment of bank accounts - Recovery of outstanding tax demands - Petition for stay of taxes - Applications under Section 154 are pending - recovery proceedings along with interest u/s.220(2) and penalty u/s.221 - The attachment will stand lifted forthwith. - AO directed to consider the stay application in view of DBDT guidelines - HC
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• Loan Waiver by State Not Considered Subsidy u/s 28(iv) of Income Tax Act; No Extra Tax Implications.

  Case-Laws - HC : Characterization of income - cash receipt due to waiver of loan by the state government - whether in the nature of subsidy - to be treated as benefit / perquisite u/s 28(iv) or not - there is a fundamental difference between “loan” and “subsidy” and the two concepts cannot be equated. While “loan” is a borrowing of money required to the repaid back with interest; “subsidy” is not required to be repaid back being a grant - even if a “loan” is written off or waived, which can be for various reasons, it cannot partake the character of a “subsidy” - No additions - HC
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• High Court Overturns ITAT's Order; Examines Error u/s 254 for Overlooked Co-ordinate Bench Decision.

  Case-Laws - HC : Rectification u/s 254 - A mistake which is apparent from the record or not - non-consideration of an issue by the ITAT - As already pointed out above, there was no averment in the miscellaneous application by the respondent / assessee that it had pointed out or argued the Co-ordinate Bench decision relating to the block assessment during hearing of the appeal and that the Tribunal did not consider the same. - All that the Tribunal had done was to restore the matter to the file of the assessing officer for a fresh decision in accordance with law in which the respondent / assessee would have ample opportunity to place all the materials at its command before the assessing officer for consideration. - Order of ITAT set aside - HC
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• No Penalty Imposed for Technical Breach of Section 269T as Assessee Proves Genuine Transactions u/s 271E.

  Case-Laws - AT : Penalty u/s 271E - violation of the provision of section 269T - assessee has repaid the loans and advances received from various creditors otherwise than by crossed cheque - sufficient and reasonable cause for repayment of the loan to the directors and shareholders - the assessee has demonstrated that transactions were genuine with relevant documents. It is a mere technical violation and there is no loss to the revenue - No penalty - AT
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• CIT's Section 264 Order Deemed Invalid; Appeal Restored to CIT(A) for Reconsideration Due to Jurisdiction Overreach.

  Case-Laws - AT : Doctrine of Merger of an order - CIT(A) observed that the appeal has been merged with order of Revision passed by the CIT u/s 264 - Prohibition u/s 264(4) - the appeal of the assessee was pending before the Ld. CIT(A) during the relevant time when the matter was decided by the Ld. CIT u/s 264 - Therefore, the Ld. CIT under section 264 has exceeded his jurisdiction by passing the order which is not sustainable in the eyes of law. - Matter restored before CIT(A) - AT
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• Cross Objection Appeal Restored After Erroneous Dismissal Linked to Revenue's Low Tax Effect Appeal Dismissal.

  Case-Laws - AT : Restoration of cross objection appeal - Dismissal of appeal of the revenue on low tax effect - consequently cross objections of the assessee were also dismissed - the issue to be decided in the CO was an issue independent of the appeal filed by the Revenue. In such cases, the CO cannot be dismissed simply on the ground of dismissal of the appeal by the revenue involving low tax effect. - AT
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• Rejection of Section 10(23C)(vi) Approval Challenged; Section 12AA Registration Not a Barrier, Reconsideration Ordered.

  Case-Laws - AT : Application for approval u/s 10(23C)(vi) rejected - assessee is already granted registration u/s 12AA - registration u/s 12AA of the Act granted to the assessee should not be a bar for granting approval u/s 10(23C)(vii) - CIT(E) directed to decide the matter afresh - AT
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• Assessing Officer Aware of Non-Taxation of Arbitration Income; Revenue Recognition Policy Fully Disclosed in Notes.

  Case-Laws - AT : Revision u/s 263 - The revenue recognition policy being followed by the assessee to recognize the interest income was fully disclosed in Notes to the account. - the position taken by assessee to recognize the interest income was accepted by Ld.AO who was well conscious of the fact that certain arbitration income was not offered to tax. Hence, it could not be said that there was non-application of mind by Ld. AO on the sated issue. - AT
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• Finance Act 2013: Seized Cash Treated as Advance Tax from Seizure Date, Not Applicable to Current Case.

  Case-Laws - AT : Treatment of cash seized during the search as advance tax - Explanation was brought by the Finance Act 2013 with effect from 1st June 2013. Thus the same cannot be applied to the facts of the case on hand. - AO directed to treat the seized cash as an advance tax with effect from the date of seizure of cash. - AT
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Customs

• New Tariff Values Set for Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold, and Silver under Customs Regulations.

  Notifications : Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver - Notification
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• Export Valuation Must Use Transaction Value, Not FOB Price, for Iron Ore Fines Under Customs Act Section 14.

  Case-Laws - AT : Valuation of export goods - export of Iron Ore Fines - the transaction value i.e. FOB price cannot be treated as cum duty price under section 14 of Customs Act, 1962 for the purpose of calculation of export duty. - The appellant cannot, on their own, claim a new valuation methodology for their exports when the law specifically lays down that transaction value at the place of export is the assessable value for determining the export duty. - AT
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• Mis-declared Steel Scrap Leads to Reduced Penalty; No Malafide Intent Found; Cenvat Credit Claimable for CVD.

  Case-Laws - AT : Mis-declaration of imported goods - Heavy Melting Steel Scrap - The rate of duty is same. Moreover, the differential duty on enhancement value is CVD which is available to the appellant as Cenvat credit. When this is undisputed fact, we find that there is no malafide intention on the part of the appellant. However, it is admitted fact that description i.e. Heavy Melting Scrap was wrongly declared as against the actual material of Shredded Scrap. - Redemption fine and penalty reduced substantially - AT
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• Importers Must Be Involved in Classifying Monitors and T.V. Tuners Under CTH 8528100 and 84733030.

  Case-Laws - AT : Change in classification of goods - monitors and T.V. tuners - The law is well settled that the matter cannot be adjudicated behind the back of the importer and importer should be given adequate opportunity to explain its case with the documentary evidence in support of the claim of classification of the subject goods under CTH 8528100 and 84733030 respectively. - AT
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• Import Case Denies Exemption: Crude Palm Oil Fails to Meet Carotenoid Content Requirement Over 500 mg/kg.

  Case-Laws - AT : Import of Crude Palm Oil - High seas sale - carotenoids content of the imported palm oil - the appellant could not be able to justify that carotenoid contents is more than 500 mg/kg contrary - Benefit of exemption cannot be allowed - AT
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DGFT

• DGFT Extends Urad Import Deadline for 2019-20 to April 30, 2020.

  Notifications : Extending the date of import up to 30.04.2020 in respect of import of Urad for the year 2019-20. - Notification
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IBC

• Resolution Plan Approval by NCLT Sparks Debate on Halting Prosecution of Insolvent Companies.

  Case-Laws - HC : Continuation of prosecution proceedings after approval of resolution plan against the company - there is no dispute that a resolution plan has been approved by the Adjudicating Authority (NCLT) and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged. - HC
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• GST Department Ordered to Release Corporate Debtor's Assets to IRP; IB Code Prevails Over GST Acts.

  Case-Laws - Tri : Direction to GST Department for detachment of the properties attached by them, being in the form of "Finished Goods", raw materials and the machineries belonging to the Corporate Debtor and to hand over to IRP of the Corporate Debtor and lodge the claim with the IRP - It is loud and clear that IB Code is not a debt recovery tool - this Adjudicating Authority is of the considered view, that provisions of section 238 of the IB Code override the Gujarat State GST Act 2017 and Central GST Act 2017 - Tri
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SEBI

• Securities Contracts Rule 19: Key Listing Requirements for Transparency, Financial Standing, and Minimum Public Shareholding on Stock Exchanges.

  Act-Rules : Requirements with respect to the listing of securities on a recognised stock exchange - Rule 19 of the SECURITIES CONTRACTS (REGULATION) RULES, 1957 - as amended
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Service Tax

• CENVAT Credit Refund Denial Overturned: GSTR-3B Debited as Claimed; No Dispute from Revenue for April-June 2017 Period.

  Case-Laws - AT : Refund of unutilized CENVAT Credit - The period involved is April, 2017 to June, 2017 and the refund claim was made in June, 2018, which is perhaps within the period of one year but, however, by that time it is an undisputed fact that the GST regime had taken over by which filing of ST-3 Return was done-away. There is also no denial by the Revenue as to the claim of the appellant that subsequent to the filing of TRAN-1 Return, the refund amount was debited in its GSTR-3B/Electronic Credit Ledger - The denial of refund is not in accordance with law - AT
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• Event Management Services: Charges Collected as Rent from Customers Deemed Part of Service Tax, Not Separate Goods Hire.

  Case-Laws - AT : Short payment of service tax - Event Management Service - The charges collected in the nature of rent from the customer can only be considered as expenses for providing the event management services. Merely because the appellant bifurcated the contract as Event Management Service and for hiring of goods, it cannot be concluded that the charges paid for use of the goods do not fall within Event management Services.- AT
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• Dispute Over Service Tax on Interest from Metal Loans u/s 66D of Finance Act, 1994.

  Case-Laws - AT : Demand of service tax on interest - providing metal as loan to the customers - The Revenue is of the opinion that only if the loan is in the form of Indian rupee and interest is earned on that, then alone under the provisions of Valuation Rules or Section 66D of Finance Act, 1994 - There is no provision in the law to hold that interest identified by Valuation Rules or Section 66 is interest only on cash loan. - AT
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• Court Rejects CENVAT Credit Claim; Appellant Denied Access to Key Report, Deemed Miscarriage of Justice.

  Case-Laws - AT : CENVAT Credit - rejection of cenvat credit by the Court on the observation relying on the verification report of the jurisdictional Range Officer - No such report/copy was provided to the appellant, neither any opportunity provided to inspect the report and offer their comments - t is miscarriage of justice by denying adequate opportunity of hearing to the appellant. - AT
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Central Excise

• Rebate Claims Valid for Duty-Free Export Goods Despite Rule 8(3A) Restrictions on Credit Utilization Under Central Excise Rules, 2002.

  Case-Laws - CGOVT : Rebate of Central Excise duty - Non-payment of duty due to restriction in utilization of credit under Rule 8(3A) of Central Excise Rules, 2002 - the rebate claims cannot be denied on the ground that the export goods have been cleared without payment of duty from the manufacturer’s premises on the date of removal. - CGOVT
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• Appeal Challenged Due to Time Limits; Commissioner (Appeals) Cannot Extend Deadline u/s 35A, Central Excise Act, 1944.

  Case-Laws - AT : Maintainability of appeal - time limitation - exclusion of certain period - Commissioner (Appeals) has no power to extend the period of limitation in terms of Section 35A of the Central Excise Act, 1944 - Admittedly, the appellant did not follow the advice given by the adjudicating authority vide letter dt. 22.06.2017 - AT
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• Refund Claim Denied: Trader Supplying Duty-Paid HSD Not Eligible Under Notification No. 108/1995 for Exemption.

  Case-Laws - AT : Refund claim - HSD was supplied to M/s TIL - N/N. 108/1995 - There is nothing in the notification to say that a trader who bought goods on payment of duty from another manufacturer and in turn supplies to one of the eligible parties will also be eligible for refund under the exemption notification. - AT
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• Rebate Claim Recovery Denied Due to Timely Filed ER-Returns and Lack of Intent to Evade Duty.

  Case-Laws - AT : Recovery of Rebate claim after two years from sanction of refund - There is no iota of even whisper that the assessee had any intention to evade the duty. The admitted fact remains that the respondent/assessee has exported the goods on payment of duty under claim of rebate. Admittedly goods have been exported out of India and proof of export has been duly submitted. Respondent admittedly has been regularly filing the ER-Returns which were never objected by the Range Officer at the appropriate time - Demand cannot sustain - AT
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Case Laws:

• GST

• 2020 (3) TMI 805
  Liability of Interest - delayed submission of GSTR-3B - Section 50 of the CGST Act - petitioner s submission is that upon credit into the electronic cash ledger of the petitioner assessee, the amount stands credited into the account of the government - HELD THAT:- Prima-facie, we do not agree with the submission. However, since the matter is still at preliminary stage, we do not wish to say anything further on this aspect lest the same has a bearing on the final decision of the Court. The demand raised by the respondents only in respect of interest on the ITC, which was lying to the credit of the petitioner assessee, is stayed - List on 8th October, 2020.

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• 2020 (3) TMI 804
  Reopening of portal to again file the rectified Tran- I form - HELD THAT:- The respondents are directed to extend the date of submitting the declaration electronically in Fort GST TRAN-1, insofar as the petitioner is concerned - reliance can be placed in the case of ANGAMUTHU AMUTHAVEL VERSUS THE COMMERCIAL TAX OFFICER, GOODS AND SERVICES TAX COUNCIL, THE JOINT COMMISSIONER, UNION OF INDIA [ 2019 (10) TMI 1259 - MADRAS HIGH COURT] - petition allowed.

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• 2020 (3) TMI 803
  Alleged deduction of GST instead of VAT as per the stipulations contained in Tender Notification - HELD THAT:- This Writ Petition is disposed off reserving liberty to the petitioners to make an appropriate representation to the jurisdictional respondents producing all evidentiary material in support of his claim within three weeks; if such a representation is made within three weeks, the respondents concerned shall take a decision thereon after giving a personal hearing to the petitioners or their agent and further that the result of such consideration shall be made known to the petitioners, within eight weeks. If the delay is brooked in taking such a decision within the period prescribed as above the jurisdictional respondents shall be liable to pay a cost of Rs. 5,000/- for the delay of each week, to the petitioners collectively and from their own purse.

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• Income Tax

• 2020 (3) TMI 802
  Disallowance of depreciation claimed on Automated Teller Machines (ATM) - @ 15% OR 60% - contention of the assessee that ATM machine falling within the meaning of computer qualifying for depreciation @60% - HELD THAT:- The Karnataka Sales Tax Act and the Income-tax Act, 1961 are not similar, i.e., pari materia legislations. In the matter of interpretation of an entry under the sales tax laws Trade Test or Common Parlance Test is applied while considering whether a particular item/goods fall in an entry or not, whereas under the Income-tax Act, 1961, particularly when considering whether an item is to be considered as plant and machinery and/or building or any of the items specified in the Appendix to the Incometax Rules, 1962, functional test is the decisive test, as ruled by the Hon ble Supreme Court of India in numerous cases, one such being CIT vs. Anand Theatres [ 2000 (5) TMI 4 - SUPREME COURT] In other words, the test would be: Does an ATM fulfil the functions of a Computer in the business activity of an assessee? Is it a tool of his trade with which it carries on his business? If the answer is in affirmative, it would be a computer and moreover the issue was already decided in favour of the assessee in assessee s own case by the Co-ordinate Bench of the Tribunal [ 2019 (6) TMI 1454 - ITAT CHENNAI] and hence, we do not find any reason to depart from the findings of the Co-ordinate Bench of the Tribunal. Accordingly, we direct the Assessing Officer to allow depreciation @60% as claimed by the assessee. Thus, the appeal filed by the assessee for assessment year 2015-2016 stands allowed.

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• 2020 (3) TMI 801
  Penalty u/s 271(1)(c) - additions made towards disallowance of depreciation on steel purchase, additions towards disallowance out of professional charges paid to various parities and additions towards transfer pricing adjustment u/s 92C of the Act, in respect of interest on loan to subsidiaries - HELD THAT:- Penalty levied on disallowance of depression on steel purchases, the issue has been considered by the Coordinate Bench of the ITAT in assessee s own case for the A.Y 2003-04 to 2006-07 [ 2013 (12) TMI 599 - ITAT MUMBAI] where under identical set of facts the penalty levied on additions towards depreciation on steel purchases has been deleted. This fact has not been disputed by the Ld. DR. Therefore, by following the decision of Coordinate Bench, in assessee s own case for earlier years, we are of the considered view that the Ld. CIT(A) was right in deleting penalty on additions towards disallowance of depreciation on steel purchases and hence, we are inclined to uphold the finding and reject the ground taken by the Revenue. Penalty levied on additions towards disallowance of professional fees - we find that the additions made by the A.O towards disallowance of professional fees to S.K Gupta Group of Companies has been finally deleted by the ITAT in quantum proceedings in [ 2017 (4) TMI 1489 - ITAT MUMBAI] where the additions made by the A.O towards disallowance of profession fees has been deleted. Once the addition on which the penalty levied has been deleted by the appellate authorities, then penalty levied on said addition cannot survive. Therefore, we are of the considered view that there is no error in findings recorded by the Ld. CIT(A) while deleting penalty levied in respect of disallowance of professional fees and hence, we reject the ground taken by the Revenue. Penalty levied on additions towards transfer pricing adjustment u/s 92C - towards interest on loans to subsidiaries, we find that although the A.O has levied penalty for furnishing inaccurate particulars of income, but fact remains that the assessee has disclosed necessary facts required for computation of total income in the return of income filed for the year which is evident from the fact that detailed note has been annexed to statement of total income filed for the year and explained the facts with regard to loans to subsidiaries. We further noted that whether transfer pricing adjustments can be made in respect of loans to subsidiaries when such loan has been given to the AE to increase and expand the business of the assessee is a debatable issue, which is evident from the fact in the case of Piramal Glass Limited Vs. DCIT in income tax appeal [ 2019 (11) TMI 1384 - BOMBAY HIGH COURT] has admitted the question of law on whether transfer pricing adjustment is required to be made on loans given to AE to increase and expand the business of the assessee. In this case, on perusal of facts, it is noted that the assessee had also lend monies to its AE on account of business expediency. Once there are divergent views on the issue by various Courts and Tribunals, then it clearly shows that the said issue is debatable issue and always two views are possible. When the issue is debatable and always two views are possible, then on such issues the penalty provided u/s 271(1)(c) of the Act cannot be invited for furnishing inaccurate particulars of income. It is an admitted fact that, at the time of filing of return of income the issue is debatable and which has attained finality much later. Further, the transfer pricing provisions were first introduced in the statue in the FY 2001-02 and the law was in an incipient stage at the point of filing return of income, when the issues first arose. In fact, the first assessment cycle under the transfer pricing provisions for A.Y 2002-03 was completed by 31.03.2005 and hence by the time, filing of return of income for A.Y 2008-09, there was not much judicial clarity on the issue. Further, no guidelines were also issued by the CBDT on this issue. Issue of transfer pricing adjustment u/s 92C of the Act, in respect of loans to subsidiaries is a debatable issue and on such issue penalty u/s 271(1)(c) of the Act should not be levied. We are of the considered view that the assessee has discharged its onus cast upon by explanation 271(1)(c) of the Act, which states that, if the assessee acts with good faith and due diligence then no penalty should be levied. Hence, we are of the considered view that the A.O was erred in levied penalty u/s 271(1)(c) of the Act, in respect of transfer pricing adjustment made u/s 92C of the Act, towards interest on loan to subsidiaries - Decided against revenue Penalty u/s 271(1)(c) - income tax payable on the total income as computed under normal provisions of the Act, is less than the tax payable on the book profits u/s 115JB - HELD THAT:- As clarified that where the income tax payable on the total income as computed under the normal provisions is less than the tax payable on the book profits computed u/s 115JB of the Act, then penalty u/s 271(1)(c) of the Act is not attracted with reference to additions / disallowances made under normal provisions of the Income Tax Act, 1961. In this case, it is an admitted fact that, as per the order of the A.O u/s 154 of the Act, dated 20.07.2016 the assessee was assessed to tax under provisions of 115JB of the Income Tax, 1961, although the A.O has made various additions towards total income computed under normal provisions of the Income Tax Act, 1961. Therefore, We are of the considered view that penalty u/s 271(1)(c) of the Act cannot be levied with reference to additions / disallowances made to income computed under normal provisions of the Income Tax Act, 1961. Identical issue has been considered by the coordinate Bench of the ITAT Mumbai in the case of Kapil Rayon India Pvt Ltd., Vs. ITO [ 2020 (1) TMI 1170 - ITAT MUMBAI] where under identical set of facts it has been held that when income is computed under the provisions of Sec. 115JB of the Act, then penalty u/s 271(1)(c) of the Act cannot be levied in respect of additions made towards total income computed under the normal provisions of Income Tax Act, 1961. - Decided against revenue

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• 2020 (3) TMI 800
  Exemption under section 10(37) - Transfer of property on compulsory acquisition - addition on account of long-term capital gain treating sale of agricultural land - HELD THAT:- We find that facts of the case are identical as in the case of VASANTBHAI MOHANBHAI BHANDARI, PREMILABEN M. BHANDARI, NARESH M BHANDARI VERSUS DCIT, RANGE-2 (3) , SURAT AND SHRI ISHWARBHAI M PATEL, SHRI DINESHCHANDRA C. PATE, CHANCHALBEN MOHANBHAI BHANDARI VERSUS ITO, WARD-2 (3) (1) , SURAT [ 2019 (12) TMI 1284 - ITAT SURAT] insofar as acquisition of the land is concerned, the same was compulsorily acquired as the entire procedure prescribed under the LA Act was followed. The settlement took place only qua the amount of the compensation which was to be received by the appellant for the land which had been acquired. It goes without saying that had steps not been taken by the Government under Sections 4 6 followed by award under Section 9 of the LA Act, the appellant would not have agreed to divest the land belonging to him to Techno Park. He was compelled to do so because of the compulsory acquisition and to avoid litigation entered into negotiations and settled the final compensation. Merely because the compensation amount is agreed upon would not change the character of acquisition, from that of compulsory acquisition to the voluntary sale. It may be mentioned that this is now the procedure which is laid down ever, under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as per which the Collector can pass rehabilitation and resettlement award with the consent of the parties/land owners. Nonetheless, the character of acquisition remains compulsory. Accordingly, the assessee is eligible for exemption under section 10(37) of the Act. Consequently, the AO is directed to allow exemption under section 10(37) - Decided in favour of assessee.

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• 2020 (3) TMI 799
  TP Adjustment - International transaction u/s 92B - Letter of Comfort by the Appellant to the Banks - CIT(A) concluded that there is a fundamental between guarantee and Letter of Comfort and Guarantee is a legal enforceable; however, Letter of Comfort is not - HELD THAT:- Hon ble Karnataka High Court in United Braveries (Holding) Ltd. vs. Karnataka State Industrial Investment and Development Corporation ( 2011 (8) TMI 1331 - KARNATAKA HIGH COURT) held that Letter of Comfort merely indicates the appellant s assurance that respondent would comply the term of financial transaction without guaranteeing performance in the event of default. The co-ordinate bench of Tribunal in India Hotels Co. Ltd. [ 2019 (9) TMI 1340 - ITAT MUMBAI] on similar ground of appeal by following the decision of Hon ble Karnataka High Court held that Letter of Comfort does not constitute international transaction. So far as contention of ld. DR for the revenue that after amendment in Explanation to section 92B is concerned, we have noted that co-ordinate bench in SIRO Clinpharm P. Ltd ( 2016 (5) TMI 633 - ITAT MUMBAI) held that amendment in Explanation to section 92B by Finance Act, effective from 01.04.2002 is to be treated as effective at the best from A.Y. 2013-14. Thus, in view of the aforesaid discussion, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Disallowance u/s 14A - HELD THAT:- In assessee s own case on identical issues have been considered by Tribunal from A.Y. 2000-01 to 2002-03 and 2004-05 wherein the Assessing Officer is directed to compute the disallowance under section 14A at 5% of the exempt income. No material change in the fact is brought to our notice for the year under consideration. Therefore, following the order of Tribunal for A.Y. 2000-01 to 2002-03, which was followed in A.Y. 2004-05, hence, we direct the Assessing Officer to compute the disallowance under section 14A at 5% of exempt income. In the result, this ground of appeal is partly allowed.

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• 2020 (3) TMI 798
  Stay of demand - HELD THAT:- We feel that the approach taken by both respondent Nos.1 and 2 in not accepting the stay prayer of the petitioner and instead directing the petitioner to pay 20% of the demand is not justified. The two authorities did not address the issues raised by the petitioner, namely, that in his own case for earlier assessment years against orders passed by the assessing officer on the same issue, the first appellate authority had held it to be a co-operative society and entitled to deduction under Section 80P(2) of the Act which was confirmed by the Tribunal. It was not the case of the petitioner that only because it has filed an appeal before the first appellate authority, the entire demand should be stayed. As perused the CBDT Circular No.530 dated 06.03.1989 and considered the decision of this Court in ICICI Prudential Life Insurance Co. Ltd. [ 2014 (2) TMI 518 - BOMBAY HIGH COURT] On due consideration, we are of the view that the impugned demand notice dated 20.11.2019 issued by respondent No.1 for the assessment year 2017-18 is liable to be stayed till disposal of the appeal by the first appellate authority. We also direct that the first appellate authority may expedite hearing of the appeal filed by the petitioner on 14.12.2019.

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• 2020 (3) TMI 797
  Recovery proceedings against trust - family trust - setting aside the attachment and the garnishee notices on the primary ground that the said properties belong to the trust and do not belong to the original petitioner No.1. (trustees) - HELD THAT:- Subject properties do not belong to the original petitioner No.1 Harish R. Laliwala in his individual capacity. If that be the position then the impugned attachment orders in respect of the subject properties issued by respondent No.1 for realisation of the liability of the original petitioner No.1 either in his individual capacity or as Managing Director of M/s. Verma Extrusions Pvt. Ltd. (asseesee company) would be untenable in law and fact. Mr. Suresh Kumar appearing on behalf of the Revenue also fairly submits that pursuant to issuance of the Letters of Administration by this Court to the trustees of the trust, the above position is settled in law that the subject properties stand in the name of the trust and do not belong to the original petitioner No.1 against whom the Revenue has initiated recovery proceedings. He however submitted that the recovery proceedings being civil in nature would however continue against the original petitioner No.1 and his estate in the hands of his legal-heirs and representatives. But in so far subject properties are concerned, he has fairly accepted the position that continuance of the attachment orders would now not be sustainable in law in view of the Letters of Administration issued to the trust. It is evident that the subject properties belong to the trust which was settled by Smt. Sushila R. Laliwala s Will before initiation of recovery proceedings by the Revenue against the original petitioner No.1. The said properties did not belong to the original petitioner No. 1 or his legal heirs / representatives. The trust being formed in the year 1978 and the Will of Smt. Sushila R. Laliwala made in 1985 much before initiation of recovery proceedings, there is no question of the said properties being diverted to the trust to evade payment of due tax. We set aside and quash the attachment orders dated 27th August 1997 being exhibits O1 , O-2 and O-3 in respect of the subject properties. The demand notice dated 20th January 1994 being exhibit L and six garnishee notices issued under Section 226 (3) of the Act being exhibits R-1 to R-6 to the Petition would also stand interfered with. Revenue is free to pursue proceedings against the estate of original petitioner No.1 in the hands of his legal-heirs and representatives in accordance with law in so far as the order dated 15th December 1993 under Section 179 (1) of the Act is concerned.

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• 2020 (3) TMI 796
  TP Adjustment - arm s length price applying the TNMM method was contrary to the transfer pricing provisions - HELD THAT:- As decided in LI AND FUNG INDIA PVT. LTD. VERSUS COMMISSIONER OF INCOME TAX [ 2014 (1) TMI 501 - DELHI HIGH COURT] a determination of ALP with reference to the relevant factors (cost, assets, sales etc.) of the enterprise in question, i.e. the assessee, as opposed to the AE or any third party. The textual mandate, thus, is unambiguously clear. TPO s reasoning to enhance the assessee s cost base by considering the cost of manufacture and export of finished goods, i.e., ready-made garments by the third party venders (which cost is certainly not the cost incurred by the assessee), is nowhere supported by the TNMM under Rule 10B(1)(e) of the Rules. Having determined that (TNMM) to be the most appropriate method, the only rules and norms prescribed in that regard could have been applied to determine whether the exercise indicated by the assessee yielded an ALP. The approach of the TPO and the tax authorities in essence imputes notional adjustment/income in the assessee s hands on the basis of a fixed percentage of the free on board value of export made by unrelated party venders - no question of law

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• 2020 (3) TMI 795
  Deduction u/s 80P - claim to be Primary Agricultural Co-operative Credit Societies, to deduction under Section 80P - HELD THAT:- As decided in K. 2058, SARAVANAMPATTI PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY LTD. VERSUS THE INCOME TAX OFFICER [ 2020 (2) TMI 214 - MADRAS HIGH COURT] assessee would be entitled to deduction under Section 80P. The reasoning was that under the TNCS Act, a member and an associate member are one and the same and an associate member has also been held to be holding the character of a member. Definitions of the expressions members and associate member under the TNCS Act and held that an associate member is also a member in terms of Section 2(16) of the TNCS Act. Furthermore, the Assessing Officer himself found that the associate members are also admitted as members of the society. In such circumstances, the Assessing Officer fell into an error in not granting any relief to the assessee society, which was rightly granted by the CIT (A) as confirmed by the Tribunal. In addition to that, the Assessing Officer has not pointed out that loans have been disbursed to all and sundry in terms of the provisions of the TNCS Act and in terms of Clause (b) to Sub-Section (4) of Section 80P of the Act, the society has an area of operation, operates within the taluk and will provide long term credit for agricultural and rural development activities as well. The CIT (A) rightly granted the relief to the assessee as confirmed by the Tribunal.

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• 2020 (3) TMI 794
  Exemption u/s 11 - non acceptance of the plea for accumulation of income as per Section 11(2) of the Act read with Form No.10 - HELD THAT:- Matter would deserve a remand to the learned Income Tax Appellate Tribunal. As a matter of fact, the Assessee could have approached the learned Tribunal by way of a Miscellaneous Application if a document like Form No.10 along with the Resolution filed before the learned Tribunal contained all the details and evidence of such accumulation set apart by the Assessee Trust for the purpose of construction of building etc., in terms of the provisions of Section 11 permitted by law. We find from paragraph 6 of the learned Tribunal s order that, though the learned Tribunal has referred to the said Resolution dated 01.09.2008 passed by the Assessee Trust, without finding it to be defective, they have not given any benefit of the same to the Assessee Trust. Whether the said surplus fund has been really spent by the Assessee Trust for such construction or not for charitable purposes of the Trust contained in its Trust Deed or not might be a subsequent fact, which may be relevant for the Tribunal to consider, coupled with the fact that the Assessee Trust has been assessed as such in Exempted Category for the subsequent Assessment Years as stated by the learned counsel for the Assessee. Tribunal should re-examine the Form No.10 furnished by the Assessee along with the Resolution and additional evidence, which may be produced by the Assessee Trust before the learned Tribunal. Therefore, we dispose of the present appeals without answering the questions of law as such and request the learned Tribunal to reconsider the said Form No.10 dated 01.09.2008 and the Resolution along with the evidence of the surplus amount having been spent by the Assessee Trust for the purposes of the Trust.

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• 2020 (3) TMI 793
  Claim for deduction u/s 10B - 100% EOU - Deduction was neither claimed in the original ITR or revised ITR but claimed first time during the assessment proceedings - earlier assessee was claiming deduction u/s 80HHC for 10 years - Whether the amendment to Section 80A(5) by the Finance (No.2) Act, 2009 with retrospective effect from 1st April 2003 should be interpreted so as prospective? - HELD TAT:- Appellate Authorities have the power to consider the claim for deduction in terms of Section 10B is not to be construed as some observations in the context of the provisions of Section 80A(5) - All that we have said is that generally, the Appellate Authorities may not be justified in refusing to even consider the assessee s claim for deduction on the ground that such claim was not made in the original returns or the revised returns filed before the AO. If any contention based upon the provisions of Section 80A(5) of the IT Act is raised by the Revenue, then, obviously, such contention will have to be considered by the Appellate Authority in accordance with law. Appellant-assessee will have the liberty to meet such contentions, including by way of urging the very grounds raised in the present Appeal on the aspect of prospectivity etc. We, therefore, clarify that we leave all such issues open for the decision of the Commissioner of Income Tax (Appeals) and thereafter, if the need be, the ITAT. Accordingly, we answer the first substantial question of law against the appellant and in favour of the respondent-Revenue. We answer the second and the third substantial questions of law in favour of the appellant-assessee and against the respondent- Revenue. However, for reasons indicated earlier, we refrain from answering the fourth substantial question of law, leaving the same open for the present. We set aside the judgments and orders dated 31.03.2010 and 10.03.2011, made by the Commissioner of Income Tax (Appeals) and the ITAT respectively, insofar as they concern the issue of deductions under Section 10B of the IT Act and we restore the appellant-assessee s Appeal bearing ITA No. 158/PNJ/08-09 to the file of the Commissioner of Income Tax (Appeals) for fresh adjudication on the issue of deductions under Section 10B of the IT Act, in accordance with law and on its own merits. We request the Commissioner of Income Tax (Appeals) to dispose off the Appeal, which we have now restored to its file, as expeditiously as possible and in any case, within a period of four months from the date the parties appear and file the authenticated copy of this judgment and order. We direct the parties to appear before the Commissioner of Income Tax (Appeals) on 07.04.2020 at 11:00 a.m. and file authenticated copy of this judgment and order.

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• 2020 (3) TMI 792
  Attachment of bank accounts - Recovery of outstanding tax demands - Petition for stay of taxes - Applications under Section 154 are pending - recovery proceedings along with interest u/s.220(2) and penalty u/s.221 - HELD THAT:- Orders of this nature do not comply with the requirements that have been set out for disposal of stay applications. We had occasion to deal with a similar issue in the case of Mrs.Kannammal V. Income Tax Officer [ 2019 (3) TMI 1 - MADRAS HIGH COURT] The present matter as well, the impugned order does not deal with the aspects of prima facie case, financial stringency and balance of convenience. Hence, the impugned order is set aside. Applications under Section 154 are pending - bank account of the petitioner was attached on 22.02.2020, which has been challenged. According to the petitioner, the balance therein has also been appropriated. The attachment will stand lifted forthwith. The petitioner will appear before the Assessing Authority on Tuesday, the 17th of March, 2020 without expecting any further notice in this regard. The Assessing Authority is directed to reconsider the stay application filed by the petitioner keeping in mind the order aforesaid setting out the guidelines of the CBDT, as well the applications under Section 154 and pass orders within a period of six (6) weeks from date of first hearing. Till such time, no further recovery proceedings be initiated.

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• 2020 (3) TMI 791
  Characterization of income - cash receipt due to waiver of loan by the state government - whether in the nature of subsidy - to be treated as benefit/ perquisite u/s 28(iv) or not - Income chargeable to income tax under the head profits and gains of business and profession - value of any benefit or perquisite has to arise from business or the exercise of a profession and it should not be in cash - provisions of Section 28(iv) of the Act as attracted where alleged benefit or perquisite is other than cash - HELD THAT:- From a careful analysis, it is evident that there is a fundamental difference between loan and subsidy and the two concepts cannot be equated. While loan is a borrowing of money required to the repaid back with interest; subsidy is not required to be repaid back being a grant. Such grant is given as part of a public policy by the state in furtherance of public interest. Therefore, even if a loan is written off or waived, which can be for various reasons, it cannot partake the character of a subsidy . From the discussions and reasons aforementioned, we find sufficient force in the contention of the appellant. The substantial question of law therefore is answered in favour of the assessee by holding that waiver of loan cannot be brought to tax under Section 28(iv) of the Act.

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• 2020 (3) TMI 790
  Rectification u/s 254 - A mistake which is apparent from the record or not - non-consideration of an issue by the ITAT - HELD THAT:- It was not the case of the respondent - assessee that it was a mistake apparent from the record which was required to be rectified. As discussed above, all mistakes cannot be rectified under Section 254(2) of the Act. Only a mistake which is apparent from the record can be rectified under the said provision. Even according to the Tribunal, the decision given by it in the appeal was correct but because the Coordinate Bench decision was not mentioned or discussed, the entire order was recalled and the appeal was directed to be heard afresh. When on the one hand the Tribunal says that its decision was correct, we fail to understand why and how the Tribunal had recalled the said correct order. Firstly, if the order was correct, there was no reason or necessity for recalling such correct order. The Tribunal had come to the conclusion that non-consideration of the Co-ordinate Bench decision was a mistake apparent from the record. As already pointed out above, there was no averment in the miscellaneous application by the respondent / assessee that it had pointed out or argued the Co-ordinate Bench decision relating to the block assessment during hearing of the appeal and that the Tribunal did not consider the same. Thirdly, we are of the view that having regard to the order passed by the Tribunal in the quantum appeal, no prejudice has been caused to the respondent / assessee. All that the Tribunal had done was to restore the matter to the file of the assessing officer for a fresh decision in accordance with law in which the respondent / assessee would have ample opportunity to place all the materials at its command before the assessing officer for consideration. Tribunal was not justified in passing the impugned order dated 05.01.2009. Accordingly, the said order is hereby set aside and quashed.

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• 2020 (3) TMI 789
  Stay of demand - HELD THAT:- Writ-applicant preferred an application dated 14th February 2020 before the Principal Commissioner of Income Tax. It is informed by the learned senior counsel appearing for the writ-applicant that the Principal Commissioner of Income Tax has yet to look into the review application preferred by the writ-applicant. We clarify that the pendency of this writ-application shall not come in the way of the Principal Commissioner of Income Tax to look into the Review Application preferred by the writ-applicant herein and decide the same in accordance with law. If the Principal Commissioner of Income Tax takes up Review Application at the earliest and dispose of the same in accordance with law. Let this exercise be undertaken within a period of four weeks from the date of receipt of writ of this order. Till the final disposal of this writ-application, there shall not be any coercive recovery. Direct service is permitted.

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• 2020 (3) TMI 788
  Writ of certiorari for quashing the impugned draft assessment order u/s 144C (1) - HELD THAT:- As stated that the Department is in process of doing the needful. Learned Senior counsel for the petitioner has countered by arguing that this order cannot be converted into an order under Section 143 (3) of the Act. He has further argued that this order cannot be rectified and it should also be open to them to challenge in case any rectification which is not borne out by law is made. Learned Senior Standing counsel for the respondent has accepted this offer. Resultanly, the present writ petition is disposed of with the clarification that the petitioner would be at liberty to challenge any subsequent order which may be passed and take all pleas before the appropriate authority.

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• 2020 (3) TMI 787
  Penalty u/s 271E - violation of the provision of section 269T - assessee has repaid the loans and advances received from various creditors otherwise than by crossed cheque - sufficient and reasonable cause for repayment of the loan to the directors and shareholders - HELD THAT:- In the instant case, there is no dispute that the transactions are between mutually / closely associated with the persons i.e. company, directors and shareholders of the company. The amount was repaid otherwise than by crossed cheque. The transactions are genuine which were duly reflected in the books of accounts. The interest paid was also allowed by the AO in the assessment made u/s 143(3) of the Act. In the case relied upon by the Revenue, penalty was imposed u/s 271D of the Act. In the instant case, the assessee has demonstrated that transactions were genuine with relevant documents. It is a mere technical violation and there is no loss to the revenue. Hence, we are of the view that facts of the present case are distinguishable from the facts of the case relied upon by the revenue. Therefore, we hold that there is sufficient and reasonable cause for repayment of the loan to the directors and shareholders i.e. E.Rajeev, E.Padmapriya, E.Lakshmi and E.V.Sudhakar and hence we set aside the order of the Ld.CIT(A) and cancel the penalty levied by the Addl.CIT. Accordingly, appeal of the assessee on this ground is allowed. Repayment of deposit to A.V.V.Subrahmanyeswara Swamy and 62 persons - AO made the addition though the assessee stated that the deposits were repaid through account payee demand draft, since the assessee failed to produce the copies of demand drafts or counterfoils of the demand drafts - CIT(A) allowed relief to the extent of Rs. 20,000/- on each deposit, thus allowed Rs. 12,60,000/- and the balance penalty was confirmed - HELD THAT:- Addl.CIT has levied the penalty for non-producing the evidence for payment through demand drafts. In the instant case, the assessment was completed u/s 143(3) and the AO has completed the assessment after verification of the books of accounts and we find no adverse comment with regard to payment of loan through DDs. The assessee also furnished the demand draft number in the account copy. Therefore, we do not see any reason to disbelieve the submission of the assessee that the repayment was made through demand drafts as furnished in the account copies, hence, we hold that there is no case for levy of penalty u/s 271E with respect to the payments made to the depositors in the case of Sri A.V.V.Subrahmanyeswara Swamy Others and accordingly, we set aside the order of the Ld.CIT(A) and delete the penalty. - Decided in favour of assessee.

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• 2020 (3) TMI 786
  Doctrine of Merger of an order - CIT(A) observed that the appeal has been merged with order of Revision passed by the CIT u/s 264 - Prohibition u/s 264(4) - HELD THAT:- DR before us at the time of hearing has not brought any iota of evidence suggesting that the appeal before the Ld. CIT(A) was not pending either at the time of filing the revisionary application or passing the revisionary order under section 264 of the Act. Thus as a matter of fact the appeal of the assessee was pending before the Ld. CIT(A) during the relevant time when the matter was decided by the Ld. CIT under section 264 of the Act. In the light of the above discussion the Ld. CIT under section 264 has exceeded his jurisdiction by passing the order which is not sustainable in the eyes of law. Coming to the facts of the case relied by the Ld. CIT (A) in his order in case of CIT Vs. Eurasia Publishing house (p) ltd. [ 1997 (10) TMI 53 - DELHI HIGH COURT] as decided that the order of the AO has been merged with the order of the Ld. CIT under section 264 of the Act. As such there was no question on the validity of the order passed by the Ld. CIT under section 264 of the Act. Thus the facts of the case referred by the Ld. CIT (A) in his order is distinguishable from the present facts of the case. Accordingly, in our humble and considered opinion the principles laid down by the Hon ble Delhi High Court in the case of CIT Vs. Eurasia Publishing house (p) ltd (supra) are not applicable in the present facts of the case. Accordingly, we are not inclined to place our reliance on such judgment. Before parting, we also note that the assessee is a limited company and has the support of the professionals. Therefore it is not expected from such company to move the appeal before the learned CIT (A) and also make application for the revision under section 264 of the Act simultaneously which is unwanted under the provisions of law. Thus the question arises whether the assessee has done so intentionally or due to negligence. Whatever is the case, the assessee has acted negligently therefore in our considered view some cost should be imposed upon the assessee. Accordingly we direct the assessee to deposit a sum of Rs.40,000 to the income tax office before the commencement of the proceedings before the learned CIT (A) for its negligent approached. We set aside the finding of the Ld. CIT(A) and direct him to admit the appeal filed by the assessee and decide the issue afresh as per the provisions of law on merit.

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• 2020 (3) TMI 785
  Restoration of cross objection appeal - Dismissal of appeal of the revenue on low tax effect - consequently cross objections filed by the assessee were also dismissed - HELD THAT:- As rightly contended on behalf of the Assessee, the grounds raised in the CO are independent of the appeal filed by the Revenue and therefore such a cross objection cannot be dismissed simply on the ground of dismissal of the appeal by the revenue involving low tax effect. The residential premises of the Assessee was searched u/s. 132 of the Act on 26.10.2007. An order of assessment dated 31.12.2017 was passed by the AO. The Assessee had filed return of income in response to notice u/s.153A of the Act declaring income of Rs. 24,06,380/-. In the assessment order, the AO computed by making addition of Rs. 94,105 as income from House Property not declared, Rs. 56,17,005 being unexplained investment in purchase of jewellery as per seized document and Rs. 25,52,000 being unexplained cash remittances to bank account u/s.69. In respect of addition of Rs. 56,17,005, the CIT(A) sustained the addition made by the AO against which the Assessee has filed cross objection before the Tribunal. The addition of Rs. 25,52,000 was deleted by the CIT(A) against which the revenue filed appeal before the Tribunal but that appeal was dismissed for low tax effect. Therefore the issue to be decided in the CO was an issue independent of the appeal filed by the Revenue. In such cases, the CO cannot be dismissed simply on the ground of dismissal of the appeal by the revenue involving low tax effect. The decision of the ITAT Delhi Bench in the case of Ajay Kalia [ 2016 (2) TMI 165 - ITAT DELHI] supports the plea of the Assessee. We therefore recall the orde in so far as it relates to dismissal of CO as infructuous and direct that the said CO will be heard and decided on merits. - Decided in favour of assessee

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• 2020 (3) TMI 784
  Application for approval u/s 10(23C)(vi) rejected - assessee is already granted registration u/s 12AA - HELD THAT:- On going through the decision in the case of Reva (Sunil) Educational Society [ 2019 (11) TMI 1099 - ITAT INDORE] and examining the facts of the instant appeal we are of the considered view that the issues raised before us are same and therefore following our own decision we restore the issue of approval u/s 10(23C)(vii) of the Act to Ld. CIT(Exemption) for necessary examination. Further registration u/s 12AA of the Act granted to the assessee should not be a bar for granting approval u/s 10(23C)(vii) of the Act. Needless to mention that opportunity of being heard should be provided to the assessee and all the issues raised in this appeal are restored to Ld. CIT (Exemption) for deciding afresh as per terms indicated above. - Decided in favour of assessee for statistical purpose.

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• 2020 (3) TMI 783
  Reopening of assessment us 147 - waiver of principal component under O.T.S scheme which was already considered by the appeal order passed by the learned CIT(A) against the original assessment order and allowed in assessee s favour - HELD THAT:- It is clear from the assessment order that the assessment was reopened by issue of notice u/s 148 on 19.03.2012 to disallow the expenditure as the assessee had not carried on any business activity during the year. The claim of expenditure, therefore, was not in relation to the income offered - In the re-assessment made under Section 143(3) r.w.s.147 dated 18.03.2013, the A.O., inter alia made disallowance of Rs. .2,23,92,916/- towards interest and finance charges and waiver of principal component under O.T.S Scheme. Reason for reopening the assessment was for assessing the expenditure claimed at Rs. 3,83,62,305/- and not to consider the waiver of principal component under O.T.S Scheme. Since notice under Section 147 was issued within four years from the end of the relevant assessment year, in the absence of any material/evidence from the assessee s side that the issues on which reopening was made was already examined and considered by the A.O., it is not possible to hold that re-opening of the assessment was invalid. Therefore, corresponding grounds of assessee fail. There is merit in the assessee s plea that in the re-assessment made the A.O. should not have made addition towards waiver of principal component under O.T.S Scheme, which was originally proposed by the A.O for an enhancement before the learned CIT(A) against the original assessment order, which was duly considered by the learned CIT(A) and rejected it in his order, which was ultimately sustained by the ITAT. Therefore,, the A.O. should not have once again added such sum in this re-assessment order. Hence, the A.O. is directed to delete that addition. With regard to assessee s plea that the expenditure disallowed in respect of interest and finance charges paid is allowable under Section.43B of the Act etc., it is clear from the Appellate Authorities order that the assessee pleaded that it has carried on various activities, which required to upkeep the business infrastructure and to maintain business sustainability etc. The assessee has also pleaded that it had paid the interest and finance charges, thereafter only it got the one time settlement, part of which was already assessed. Interest and finance charges actually paid by the assessee should be allowed under Section 43B. On this issue, it appears that the facts and associated circumstances have not been properly examined by the lower authorities. Therefore, we deem it fit to remit this issue back to the file of A.O. for a fresh examination, to verify as to whether the assessee continued its business or not during the period relevant to assessment year, why and how the assessee has incurred the impugned interest and finance charges whether such expenditure was connected to its business or other sources of income, whether if the interest and finance charges were paid during the year, whether it is allowable under Sections 28 to 43 of the Act or under the head other sources etc., and then decide the issues in accordance with law. The assessee shall place relevant materials in support of its contentions before the A.O. and comply with the requirements of the A.O. in accordance with law. The A.O. is also free to conduct appropriate enquiry as deemed fit. The A.O. after affording effective opportunity to the assessee shall decide the matter on merits. - Appeal of assessee is partly allowed for statistical purposes.

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• 2020 (3) TMI 782
  Revision u/s 263 - Addition in respect of interest on arbitration awards granted to the appellant - HELD THAT:- Assessee during the course of regular proceedings with respect to taxability of interest on arbitration awards were not called for by AO in notice u/s 142(1) and the submissions were purely suo-moto voluntary submissions which would clearly demonstrate that Ld. AO did not apply his mind to this aspect while framing the assessment. We find that assessee has duly certified the paper-book containing the said submission that the aforesaid submissions vide letter No. PG/26138 as well as supporting documents were duly submitted to Ld.AO during the course of regular hearing. The factum of making said submission during the course of regular assessment proceedings was reiterated by the assessee in para-5 of its submissions dated 25/03/2019 to Ld. Pr.CIT while opposing the revision proceedings u/s 263. CIT-DR has not disputed the fact that the said documents were not, at all, available before Ld.AO during the course of regular assessment proceedings. The argument advanced is that the said documents were not called for by Ld. AO and the same were not considered by Ld.AO while framing the assessment. It is difficult to accept the fact that the said documents were not appreciated / considered by Ld. AO since a specific disallowance has been made, being conscious of the fact that certain arbitration income was not offered to taxation by the assessee. The assessment orders for earlier years were specifically called for vide notice u/s 142(1) and the same were also furnished by the assessee. Upon perusal of the same, Ld.AO specifically took note of the fact that similar disallowance was made in earlier years and therefore, he chose to make similar disallowance during the year under consideration. The computation of income filed by the assessee clearly demonstrated that arbitration awards received during the year were offered to tax whereas interest on arbitration award was reduced while computing the taxable income. The revenue recognition policy being followed by the assessee to recognize the interest income was fully disclosed in Notes to the account. In the light of all these facts, it could safely be concluded that the position taken by assessee to recognize the interest income was accepted by Ld.AO who was well conscious of the fact that certain arbitration income was not offered to tax. Hence, it could not be said that there was non-application of mind by Ld. AO on the sated issue. This being the case, a logical assumption would arise that Ld.AO has duly applied his mind to the issue of interest on arbitration award and chose not to make any addition thereof. Therefore, it could not be said that there was non-application of mind and no view was taken by Ld. AO on the stated matter. Subject matter of proposed revision was already deliberated upon by Ld. AO and a possible was taken in the matter. That view could not be said to be contrary to law, perverse or unsustainable in law, in any manner and the same would be a possible view keeping in mind the rule of consistency. Assessment order could not be termed as erroneous or prejudicial to the interest of the revenue u/s 263 as held by Pr. CIT. The action of AO, in our opinion, was in consonance with the position accepted by the revenue in earlier years and therefore, it could not be said that the order was not in accordance with law. In such a case, the action of Ld. Pr.CIT in invoking jurisdiction u/s 263 could not be sustained in the eyes of law. Therefore, we quash the same in terms of settled legal position as enumerated by us in opening paragraphs. Keeping in view the fact that in the present appeal we are merely concerned with determining the validity of revisional jurisdiction u/s 263, the argument that whether the action of the assessee in recognizing the interest income, in such a manner, was in consonance with the provisions of The Arbitration and Conciliation Act, 1996 or not, is left open. The other arguments also, on merits, not delved into and left open. - Decided in favour of assessee.

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• 2020 (3) TMI 781
  Characterization of distribution fee i.e. Royalty or not? - HELD THAT:- The assessee only acts as an intermediary between the Broadcaster and the ultimate customer who views the channel. The assessee neither any right in the content that is broadcasted over the channel nor any right to make any changes in the content to be broadcasted on the channel. The assessee simply acts as a distributor and distributes the channel to various LCOs/MSOs/DTH operators in the chain who in turn distribute it further to the ultimate viewer. The distribution fees paid by the assessee cannot be termed as Royalty within the meaning of section 9(1)(vi) by making the payment it does not acquire any right to use any copyright or rights relating to the content that is broadcasted on the channel. TP Adjustment - comparable selection - HELD THAT:- Considering the nature and activities carried out by all 4 comparable company which are primarily engaged in distribution of software product as noted above. The software distribution company are held to be good comparable to distributor satellite channels in Turner International India (P.) Ltd. vs. ACIT [ 2018 (8) TMI 259 - ITAT DELHI] . Therefore, we accept the submission of ld. AR of the assessee to accept these comparable as comparable with assessee and direct the AO/TPO to work out the T.P. Adjustment afresh. Needless to order that before passing the order, the TPO/Assessing Officer shall grant opportunity to the assessee. In the result, the grounds related to comparability of comparable are allowed in accordance with the aforesaid directions. Considering the fact that we have allowed the functional comparability, therefore, discussions on alternative adjustment held by DRP have become academic. Short deduction of TDS - MAT Credit - interest u/s 234B - HELD THAT:- AO is directed to verify the TDS details and grant appropriate relief to the assessee as per law. Similarly on MAT Credit, the AO is directed to verify the fact and grant relief to the assessee in accordance with law. So far as levy of interest u/s 234B is concerned, this interest is consequential, thus, the AO is directed to work out the interest as per law.

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• 2020 (3) TMI 780
  Addition u/s 68 - unsecured loan - HELD THAT:- Assessee has duly discharged its onus of proving the identity and creditworthiness of the persons and genuineness of the transactions by furnishing the confirmation letters, assessment particulars including PAN and copy of I.T. return, balance-sheet P L account, Bank statement to show that the payments have been made through banking channels in respect of Loan creditors It is settled proposition of law that the information gathered behind the back of the assessee cannot be used against him unless until an opportunity of rebutting the same is given to the assessee statement by itself does not constitute information, unless the Assessing Officer has made enquiries thereon and inferred understatement of income - Decided in favour of assessee.

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• 2020 (3) TMI 779
  Deduction of bad debts written off u/s 36(2)(i) - HELD THAT:- As observed by the Hon ble Supreme Court in the case of TRF Ltd. Vs. CIT [ 2010 (2) TMI 211 - SUPREME COURT] as per the post-amended Sec.36(1)(vii), it is not necessary for the assessee to establish that the debt in fact, had become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. As per the aforesaid settled position of law, we are of the considered view that now when the assessee holding a conviction that the entire amount receivable from NSEL could not be recovered, had thus written off 25% of the entire receivable amount i.e. Rs. 1,98,70,000/- in its books of accounts, therefore, there was no justification on the part of the lower authorities to have declined the said claim of deduction so raised by the assessee. We find, that the said issue also covered by the view taken by a coordinate bench of the Tribunal in the case of a sister concern of the assessee company viz. M/s Remi Securities and Engineering Limited vs. ACIT, Circle 13(3)(1), Mumbai for A.Y 2014-15 [ 2019 (9) TMI 1339 - ITAT MUMBAI] - Accordingly, in terms of our aforesaid observations and finding no reason to take a view different from that arrived at by the Tribunal in the case of the sister concern of the assessee company, we herein set aside the order of the CIT(A) and vacate the disallowance of the assesses claim for bad debt - Decided in favour of assessee.

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• 2020 (3) TMI 778
  Bogus capital gain - Addition being 33% of the total addition on account of short-term capital gain - whether assessee has used this transaction as a colorable device to reduce its tax liability by diverting the income ? - HELD THAT:- In the present case there was no reference made by the authorities below suggesting that the transaction is carried out illegally, as the transaction in the instant case were within the ambit of the law as nothing being illegal/illegitimate was brought to our notice. The transactions carried out by the parties were very much normal transaction. There was no variance in the impugned transaction with regard to the terms of the agreement - impugned transaction cannot be regarded as colorable device merely on the reasoning that there is no tax liability arising in the hands of the seller being the wife of the assessee. Hence the ground of appeal of the assessee is allowed. Non granting the credit for the cash seized during the search by treating the same as advance tax - HELD THAT:- The provisions for the adjustment of seized cash against the tax liability are contained under the provisions of section 132B of the Act. As per the provision, the cash seized during the search and seizure operation can be adjusted against the existing tax liability, and the liability of tax determined on the completion of the assessment. Now the question arises for the determination of the existing liability. In the instant case, the assessee has declared income of Rs. 1,22,16,750.00 in the return filed dated 30-9-2011 and the assessee has also requested to treat the seized cash as advance tax vide letter dated 29-09-2011. As a result of the disclosure of income in the return of income transpires that there was a liability of tax on the assessee. Thus in our considered view, the seized cash can be treated as an advance tax liability. See SHREEJI PRINTS PVT. LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [ 2013 (7) TMI 19 - ITAT AHMEDABAD] - cash seized during the search and seizure operation can be treated as advance tax liability in the given facts and circumstances. Explanation was brought by the Finance Act 2013 with effect from 1st June 2013. Thus the same cannot be applied to the facts of the case on hand. The Hon ble Supreme Court in the case of CIT Vs. Cosmos Builders promoters Ltd. [ 2016 (5) TMI 1407 - SC ORDER] has held that such an amendment is prospective in nature. Accordingly, it cannot be applied to the case pertaining to the year under consideration. We are not inclined to sustain the order of the Ld.CIT (A). Accordingly, we set aside the order of the Ld.CIT (A) and direct the AO to treat the seized cash as an advance tax with effect from the date of seizure of cash. Interest u/s 234B - HELD THAT:- As we have directed the AO to treat the amount seized during the proceedings as advance tax from the date of seizure of the same - we direct the AO to levy the interest under section 234B of the Act after giving the credit of Rs.15 lakhs i.e. the cash seized during the search proceedings. Hence the ground of appeal of the assessee is allowed.

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• Customs

• 2020 (3) TMI 776
  CVD on the basis of MRP based assessment - Supply of modems to an institutional buyer - it was held that In the present case, BSNL is procuring modems in bulk from the appellant after import. Consequently, they fall within the definition of institutional consumers as above, to whom the provisions of Section 4A will not be applicable. HELD THAT:- There is no need to interfere - appeal dismissed.

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• 2020 (3) TMI 775
  Import of vehicle bearing Chassis Number - specific discrepancy noticed was that the payment of interest, which is mandatory for maintaining the settlement application before the Commission, had not been effected - HELD THAT:- No order in terms of Section 127C(1) has been passed in this matter, rejecting the application at the threshold. However, as the application has been allowed to be proceeded with for final hearing, it is deemed to have been admitted in terms of the proviso to Section 127(1). The legal and logical result of this sequence of events is that the application has been found to be proper and maintainable, the SC presumably being satisfied prima facie with the explanations offered at that stage - No doubt, the question regarding payment of interest on merits will stand reserved for detailed decision at the time of final hearing. However, since the condition for both maintainability, as well as the legal issue raised on merits, are one and the same in this case, the Commission ought to have adjudicated the matter on merits in full and rendered a speaking order on this issue. All the impugned orders of the Settlement Commission is set aside and the matters remitted back to its file - petition disposed off.

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• 2020 (3) TMI 774
  Smuggling - Bangladesh currency taka - Whether on the facts and in the circumstances of the present case, the Tribunal has proceeded on irrelevant considerations and has erred in passing the impugned order dated 28-4-2017 and in approving the order-in-appeal dated 31-5-2016 and order-in-original dated 7-12-2015 without examining the entire record? - HELD THAT:- On perusal of sub-section (1), it is explicit that when any goods to which the Section applies are seized under the Act under a reasonable belief that they were smuggled goods, the burden of establishing that they were not smuggled goods, shall lie upon the person from whose possession the goods were seized. Sub-section (2) has applicability insofar as gold and manufactures thereof are concerned and to watches as well. However, the Central Government has been empowered to extend its applicability to any other class of goods by issuance of notification in the Official Gazette in that behalf - The Indian currency seized in the present case falls outside the ambit of Section 123 of the Act not being a notified item. However, by virtue of Section 121 of the Act, it is still liable to be confiscated provided it is as a result of sale proceeds of smuggled goods. In such a situation, the presumption contained in Section 123 of the Act would not be available to the Revenue which can be relied upon. Even though the provisions of the Evidence Act, 1872 (In short, the 1872 Act) are not applicable to proceedings under the Act, yet the broad principles and rule of evidence contained in Section 101 of the 1872 Act regarding Burden of proof would place the initial burden on the Department to establish by producing material evidence that the Indian currency or the asset sought to be confiscated was a result of sale proceeds of smuggled goods. In the present case, the appellant from whose possession cash of Rs. 8,23,100/- was seized had by preponderance of evidence shown that partly the amount was for the purpose of discharging the loan which was taken by him from his father-in-law - In the absence of any material to substantiate the allegation of the Revenue, the Additional Commissioner of Customs (Preventive), the Commissioner (Appeals) and the CESTAT were not justified in upholding the order of confiscation of the amount of Rs. 8,23,100/- and imposition of the penalty in respect thereof. The substantial question of Law is answered in favour of the appellant and against the Revenue relating to seizure of Indian currency of Rs. 8,23,100/- - appeal disposed off.

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• 2020 (3) TMI 773
  Duty Drawback - application for fixation of the brand rate rejected - Rule 7(1) of the Drawback Rules - HELD THAT:- Rule 7 clearly stipulates that in case the exporter has already availed All Industries Rate (AIR) irrespective of the fact whether it is only in respect of the customs portion or the Customs, Central Excise Service Tax portion together no application under Rule 7 for the fixation of brand rate can be filed. Moreover, the para 7 of the above said notification quoted by the applicant only relates to the All Industries rates of drawback and has nothing to do with the fixation of brand rate under Rule 7 of the Drawback Rules. These are two independent provisions and cannot be linked to claim benefit which is not due. The scope of Notes and Condition No. 7 (supra) is thus limited to granting of Customs portion of drawback even when Cenvat facility is availed. It nowhere stipulates that Customs portion and Central Excise portion can be availed separately and that too by two different entities. Revision application rejected.

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• 2020 (3) TMI 772
  Valuation of export goods - Claim of benefit of Cum-duty from FOB value - export of Iron Ore Fines - validity of assessments of the shipping bills before the first appellate authority - HELD THAT:- When the goods are imported all costs up to the Indian Port include the transaction value of the goods (FOB) as well as the freight incurred and the transit risk in the form of transit insurance until the goods reach the Indian Port. In fact, even the landing cost i.e., costs involved in landing the goods etc. are also included in the assessable value in case of imports. Therefore, the value for the purpose of imports is CIF value plus cost of landing - The present case is of exports. In case of exports, the cost of freight and transit insurance are not part of the transaction value at the Port of export i.e. the Indian Port where the goods are exported. It includes only the Free on Board (FOB) value. This is the value for the purpose of Section 14 and export duty must be calculated on this FOB value. The argument of the appellant is that out of this FOB value, the element of duty also must be deducted to determine the assessable value. In other words, their argument is that the FOB must be taken as cum duty price and the assessable value must be calculated backwards so that whatever is charged by them from the overseas buyers must be treated as including the export duty. A plain reading of Section 14 would not show such a change in the valuation methodology is permissible under the law. The appellant cannot, on their own, claim a new valuation methodology for their exports when the law specifically lays down that transaction value at the place of export is the assessable value for determining the export duty. But, it appears that a wrong practice was in vogue of taking the FOB price as cum duty price upto 2008. An identical case in respect of the same appellant came up before the Tribunal, Kolkata in M/S. SESA GOA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, BHUBANESWAR-I [ 2014 (4) TMI 658 - CESTAT KOLKATA] in which it has been categorically held that the transaction value i.e. FOB price cannot be treated as cum duty price under section 14 of Customs Act, 1962 for the purpose of calculation of export duty. Appeal dismissed.

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• 2020 (3) TMI 771
  Mis-declaration of imported goods - Heavy Melting Steel Scrap - enhancement of value of imported goods - N/N. 21/2002-Cus - HELD THAT:- The appellant has nowhere disputed about the mis-declaration of description of goods and enhancement of value of the imported goods. All along the submission of the appellant is that there is no malafide intention in mis-declaring the description of the goods. We find force in the submission of the appellant that both the descriptions i.e. Heavy Melting Scrap or Shredded Scrap falls under the same tariff description as well as same Customs Tariff Heading. The rate of duty is same. Moreover, the differential duty on enhancement value is CVD which is available to the appellant as Cenvat credit. When this is undisputed fact, we find that there is no malafide intention on the part of the appellant. However, it is admitted fact that description i.e. Heavy Melting Scrap was wrongly declared as against the actual material of Shredded Scrap. Considering the overall facts and circumstances of the case and as no malafide intention exists, we are of the view that redemption fine and penalty is too harsh which needs reduction. Accordingly, we reduce the redemption fine from Rs. 3,00,000/- in each case to Rs. 1,00,000/- in each case and penalty in each of the appeals is reduced from amount equivalent amount of duty to Rs. 20,000/- (Rupees twenty thousand only) in each appeal. Appeal allowed in part.

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• 2020 (3) TMI 770
  Absolute Confiscation - import of marble - restricted goods - DGFT Policy Circular No. 37 (RE-08) 2004-2009 dated 31/10/2008 - Section 48 of the Customs Act, 1962 - ground that the imported goods have already been disposed off during the pendency of appeal has no relevance to the payment of Redemption Fine - HELD THAT:- Once confiscation of the goods is held to be valid in any proceedings, the property in the goods is vested in the Government and the sale proceeds being the total consideration of such property, as a natural corollary such sale proceeds will represent the confiscated goods. Once the confiscated goods allowed to the redeemed on a redemption fine, the sale proceeds which represent the goods, will be paid to the importer only after deduction of such fine. Thus, the redemption fine is to be charged from the importer while releasing the goods, the same also needs to be recovered from the sale proceeds which represent the consideration of the property. However, in view of the contradicting decisions on the matter at hand by the benches of the Tribunal, we refer the matter to Larger Bench on the issue whether the redemption fine and penalty, if any, imposed in the adjudication order needs to be recovered from the sale proceeds, if the confiscated goods are sold/disposed of by auction during the pendency of appeal . Appeal disposed off.

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• 2020 (3) TMI 769
  Change in classification of goods - monitors and T.V. tuners - principles of natural justice - HELD THAT:- The request made by the respondent herein for cross-examination of the concerned officials of the department who changed the classification of the goods were not being adhered to and no specific reasons have been assigned for denial of cross-examination of those persons. Further, it is also noted that the respondent herein have specifically stated before the original authority that it is in a position to establish the fact that the goods in question imported by it should appropriately be classifiable under CTH mentioned in the bill of entry. Thus, it is a classic case that the matter was adjudicated against the respondent by denying the principle of natural justice. The law is well settled that the matter cannot be adjudicated behind the back of the importer and importer should be given adequate opportunity to explain its case with the documentary evidence in support of the claim of classification of the subject goods under CTH 8528100 and 84733030 respectively. Therefore, the matter should be examined at the original level thoroughly with the help of the submissions made by the respondent in support of its claim of classification under the CTH mentioned in the bill of entry presented for assessment. Appeal allowed by way of remand.

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• 2020 (3) TMI 768
  Import of telecom cables - Benefit of N/N. 25/2005-Cus. dated 01.03.2005 - benefit under Sl.No.28 of the said notification has been denied by the department alleging that the cables are capable of carrying more than 80 Volts - HELD THAT:- The very same issue as to whether the appellant is eligible for exemption under Sl.No.28 and Sl.No.33 was considered by the Tribunal in the appellant s own case M/S. VOLEX INTERCONNECT (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [ 2018 (9) TMI 1156 - CESTAT CHENNAI] . The Tribunal in the said case disallowed the claim of the appellant under Sl.No.28. However after placing reliance on the decision of the Hon ble Supreme Court in the case of FORMICA INDIA DIVISION VERSUS COLLECTOR OF CENTRAL EXCISE [ 1995 (3) TMI 98 - SUPREME COURT] the claim of benefit exemption under S.No.33 of the very same notification was allowed. The appellant would be eligible for benefit under Sl.No.33 of the Notification No.25/2005 - demand set aside - appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 767
  Mis-declaration of imported goods - Zinc Dross Scrub - goods were found in excess quantity, that is against the declared quantity 19.33 Metric tones, physically it was found as 22.32 Metric tones - Confiscation - redemption fine - penalty - HELD THAT:- There is no dispute on the facts on the present case that the imports of the appellant were found in excess, as per the quantity mentioned in import documents. There is nothing on record to establish that the appellant has mala fide to import excess quantity. However, there is no dispute that the excess quantity were imported therefore, the same is liable for confiscation but found without any mala fide intention. The duty attributed to the excess quantity goods is Rs. 1,24,350. As against the duty liability of excess found goods, the redemption fine and penalty was very exaggerated which needs to be reduced. The redemption fine of Rs. 1 Lakh is reduced to Rs. 10,000 and penalty is reduced to Rs. 3,000 - Appeal allowed in part.

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• 2020 (3) TMI 766
  Re-computation of the duty liability - Notification No. 65/88-Cus, dated 01.03.1988, which provides 40% effective rate of duty - Confiscation - redemption fine - penalty - HELD THAT:- On going through order of the adjudicating authority, the earlier adjudication order was set aside and the matter was remanded back only for re-computation of duty liability in terms of Notification No. 65/88-Cus, dated 01.03.1988. As the said order has reached its finality, therefore, the adjudicating authority has no option to go beyond the direction of this Tribunal while remanding the matter to the adjudicating authority. The order of the confiscation of goods and imposing redemption fine of Rs. 65,00,000/- is against the directions of the order of this Tribunal, dated 03.09.2007 - the redemption fine imposed on the appellant by way of impugned order is set aside - appeal disposed off.

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• 2020 (3) TMI 765
  Refund of SAD - N/N. 102/2007- Cus dt. 14.09.2007 - Time limitation - HELD THAT:- The date of communication of the finalization of the assessment of bills of entry are not in dispute and refund claims filed by the appellants are within time from the date of communication of final assessment of bills of entry. Hon ble High Court in the case of PIONEER INDIA ELECTRONICS (P) LTD. VERSUS UNION OF INDIA ANOTHER [ 2013 (9) TMI 705 - DELHI HIGH COURT] has held that the refund claim can be filed within the period of one year or six months, as the case may be, of the final assessment as stipulated by Explanation II to Section 27 of the Act or within the enlarged period of one year from the date provisional release as stipulated by Notification No. 93/2008-Cus dt. 01.08.2008, which means the appellants were at the liberty to file the refund claim within one year from the date of communication of the order of the finalization of the assessment bills of entry. Admittedly, the refund claims have been filed by the appellants within one year from the date of communication of the order of the finalization of the assessment bills of entry. Therefore, the refund claims filed by the appellants are within time. The matter remanded back to the adjudicating authority to decide the issue on merits within one month of receipt of this order - appeal allowed by way of remand.

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• 2020 (3) TMI 764
  Import of Crude Palm Oil - High seas sale - carotenoids content of the imported palm oil - benefit of N/N. 21/2002-Cus., dated 1-3-2002 as amended - allegation that the CO contents was less than 500 mg/kg, therefore, the appellants are not eligible to the benefit of exemption Notification No. 21/2002-Cus., dated 1-3-2002 - HELD THAT:- There is no material to support the contention of the appellant, inasmuch as the test report of the Dy. Chief Chemist has not been challenged by the appellant by filing necessary appeal before the higher forum for retesting nor the remnant sample with the Dy. Chief Chemist, after conducting the test as mentioned in the respective test report, have been subjected to further test by any other agency to discard the Dy. Chief Chemist s test report on the carotenoid contents of the imported crude palm oil. In the present case, the appellant could not be able to justify that carotenoid contents is more than 500 mg/kg contrary to the Dy. Chief Chemist s Report, and consequently eligible to the benefit of said notification - the observations recorded by the Learned Commissioner (Appeals) in upholding the orders of the Adjudicating Authority does not warrant interference. Appeal dismissed - decided against appellant.

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• Insolvency & Bankruptcy

• 2020 (3) TMI 777
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- It is not the case of the Corporate Debtor that there is no default, but they are submitting that right of the Petitioner to bring action under the Code is subject to and controlled by Inter-Creditor Agreement wherein the Creditors has set out certain procedures before taking any action. In a nutshell, the Corporate Debtor is trying to say that the Code is subservient to the Inter-Creditor Agreement, comply with the conditions in the Inter-Creditor Agreement and ignore the Code at least for the time being. The issued raised by the Corporate Debtor cannot come in the way of admission of this Petition in view of the fact that the Petitioner has established debt and default beyond doubt as provided under section 7 of the Code - This Adjudicating Authority, on perusal of the documents filed by the Petitioner, is of the view that the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of section 7 is taken as complete, accordingly this Bench hereby admits this Petition. Application admitted - moratorium declared.

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• 2020 (3) TMI 763
  Continuation of prosecution proceedings after approval of resolution plan against the company - Corporate Insolvency Resolution Process (CIRP) - Section 32A of the IBC - HELD THAT:- A Corporate Debtor would not be liable for any offence committed prior to commencement of the CIRP and the corporate debtor would not be prosecuted if a resolution plan has been approved by the Adjudicating Authority - In the present case, there is no dispute that a resolution plan has been approved by the Adjudicating Authority (NCLT) and in the circumstances, there is much merit in the contention that the petitioner cannot be prosecuted and is liable to be discharged. The impugned order dated 16.08.2019 and the impugned summons dated 21.08.2019, are set aside - Petition allowed.

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• 2020 (3) TMI 762
  Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- It is pertinent to note that the Applicant has placed on record all the invoices, stating that the Respondent itself had acknowledged the said invoices. Once the debt is shown as due, it is for Respondent to prove that there are no outstanding dues to be paid to the Applicant. There has been much cloud in the submission of the Respondent. Therefore, without any specific details of material particulars or evidence the fact of existence of a dispute cannot be sustained. In the present case, there is no such dispute as pre-existing, the dispute which was being claimed to be pre-existing by the corporate debtor did not survive. The present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. Application admitted - moratorium declared.

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• 2020 (3) TMI 761
  Direction to GST Department for detachment of the properties attached by them, being in the form of Finished Goods , raw materials and the machineries belonging to the Corporate Debtor and to hand over to IRP of the Corporate Debtor and lodge the claim with the IRP - section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the instant case, an application was filed by ICICI as financial creditors against the Innoventive Industries Ltd. On account of a default of payments due on credit availed by Innoventive Industries it is argued that pursuant to relief order passed by the Government of Maharashtra under the Maharashtra Relief Undertaking (Special Provisions Act) 1958 (MRUA), the Corporate Debtor is not liable to pay any due to ICICI. On the basis of the overriding effects of IBC over MRUA, National Company Law Tribunal (NCLT) declared a moratorium and appointed Insolvency Resolution Professional (IRP). In the appeal, NCLAT held that there is no repugnancy between MRUA and IBC as they are enactments of two diverse fields. IBC has an overriding effect over the provisions of MRUA. The period of completion of the CIRP is restricted to 180 days or 270 days or 330 days from the date of admission of the application. The Code in itself is a time-constrained process; hence, the attachment of assets during such process drastically affects the stakeholders of the Corporate Debtor. It is pertinent that obtaining a release of the assets from such statutory authorities is a task in itself and requires a substantial number of days or months for the final judgment to be pronounced. Hence, the precious time of a resolution professional will be spent in obtaining judgments in such matters. Directly or indirectly, such litigation hampers the whole process of CIRP. Accordingly, such litigation affects the stakeholders of the corporate debtor. It is loud and clear that IB Code is not a debt recovery tool - this Adjudicating Authority is of the considered view, that provisions of section 238 of the IB Code override the Gujarat State GST Act 2017 and Central GST Act 2017 - application allowed.

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• 2020 (3) TMI 760
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - outstanding debt or not - time limitation - HELD THAT:- On perusal of the records it is found that the application filed by the financial creditor is well within limitation. That, the documents filed along with the application is sufficient to prove that there exists financial debt. That, the account statement issued by the financial creditor, is annexed to the application at page No. 301 showing the account position of the corporate debtor as on 26.09.2018 - On perusal of the records it is found that the letter of authority dated 29.08.2018 issued by General Manager of the applicant bank authorising Mr. Sunil Kumar Jha is proper and valid. The Adjudicating Authority is of the considered view that there is a debt due to financial creditor and there is default on the part of the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - In the instant case, the documents produced by the Financial Creditor clearly establish the debt and there is default on the part of the Corporate Debtor in payment of the financial debt . The application under section 7 (2) of the IB Code is complete in all respects and there is debt due to the financial Creditor and there is default on the part of the corporate debtor . Hence, there is no alternative but to admit the application in absence of any infirmity - the petitioner/financial creditor having fulfilled all the requirements of section 7 of the Code, the instant petition deserves to be admitted. Petition admitted - moratorium declared.

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• Service Tax

• 2020 (3) TMI 759
  Condonation of delay of 619 days in filing a notice of motion for restoration of a Central Excise Appeal which stood dismissed for non-removal of office objections - HELD THAT:- Delay condoned. Issue notice, returnable in six weeks.

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• 2020 (3) TMI 758
  Condonation of delay in filing appeal - HELD THAT:- By this application the applicant seeks condonation of delay of 150 days in re-filing the appeal. For the reasons stated in the application, the delay is condoned. Application disposed off.

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• 2020 (3) TMI 757
  CENVAT Credit - common input services - non-maintenance of separate records - Rule 6(3)(c) of CCR, 2004 - HELD THAT:- The Ld. Commissioner should be given an opportunity to examine the issue from the point of view of the appellant s eligibility to avail the CENVAT Credit and utilise it after 01.04.2008. If the appellant is so eligible, the only mistake of the appellant is utilising the CENVAT Credit well in advance of the date when he was not entitled to utilise it. The interest for the differential period may have to be calculated and recovered. Ld. Commissioner should also examine the claim that there was no demand in terms of revised Rule 6(3)(c) of CCR, 2004 - matter remanded to the adjudicating authority for denovo adjudication - appeal allowed by way of remand.

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• 2020 (3) TMI 756
  Reversal of CENVAT Credit - exempt services - Rule 6 (3) of CCR, 2004 - bifurcation of works contract service into two district services - HELD THAT:- In the present case, there is only one transaction of Works Contract Service which is taxable service of which certain portion has been exempted. There are no distinct transactions for two services involved. In such a situation, Rule 6 doesn t become applicable, it is only one distinct service. It is not even the case of the department that the appellant was providing two different services when it is one service where exemption has been provided to certain value would not mean that the appellant was providing exempted service which otherwise is taxable. As Rule 6 (3) was not applicable, the demand made under Rule 6(3) cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 755
  CENVAT Credit - input services - Works Contract - Transport of Goods by Road - Architect Services - Consulting Engineer Services - Management Consultancy Services - It appeared to Revenue that during the period from October 2007 to September 2010, as the project was under construction stage, and hence there was no output service (of renting) rendered during that period - HELD THAT:- The issue of availability of CENVAT credit, for construction of commercial complex which is meant for commercial activity and for earning rent, taxable under the provisions of Finance Act, 1994, is decided in favour of the assessee, in the aforementioned rulings, the appellant/assessee is held entitled to CENVAT credit. In the interest of justice, the matter is remanded for the limited purpose of verification of the commercial nature, which shall be verified from the Plan approved by the Town Planning Authority and other facts (actual user for commercial purpose) as may be led before the Adjudicating Authority - appeal allowed by way of remand.

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• 2020 (3) TMI 754
  Refund of unutilized CENVAT Credit - rejection on the ground that the amount claimed as refund was not debited from the appellant s Cenvat Credit Account at the time of filing the claim - HELD THAT:- The period involved is April, 2017 to June, 2017 and the refund claim was made in June, 2018, which is perhaps within the period of one year but, however, by that time it is an undisputed fact that the GST regime had taken over by which filing of ST-3 Return was done-away. There is also no denial by the Revenue as to the claim of the appellant that subsequent to the filing of TRAN-1 Return, the refund amount was debited in its GSTR-3B/Electronic Credit Ledger. With the introduction of GST there was a change in the scenario, there was also no provision in the ACES system to debit the refund amount and that subsequent reversal by the appellant in its GSTR-3B file is a sufficient compliance with condition at paragraph 2(h) of Notification No. 27/2012-CE (NT) dated 18.06.2012. This aspect has also been clarified by the CBIC in its Circular No. 58/32/2018-GST dated 04.09.2018. The denial of refund is not in accordance with law - Appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 753
  Short payment of service tax - Event Management Service - service tax on the amounts collected on the equipments / goods used for providing Event Management Services not paid - demand of short paid duty alongwith the interest and penalties - HELD THAT:- Event Management service includes even the consultation provided in this regard. In the present case, the appellant rendered services like organizing events of Rock shows, Corporate shows, Marriages, Promotions etc. They collected charges for conduct of the events and also provided certain equipments / goods required to conduct the event. The appellant entered into separate contract with the customer for providing the goods needed for the event and collected charges in the nature of rent. These charges are nothing but expenses for rendering event management service and should form part of taxable value for paying service. This is because without the use of such equipments / goods the appellants would not be able to conduct the event. The charges collected in the nature of rent from the customer can only be considered as expenses for providing the event management services. Merely because the appellant bifurcated the contract as Event Management Service and for hiring of goods, it cannot be concluded that the charges paid for use of the goods do not fall within Event management Services. It is true that supply of Tangible Goods Services are taxable w.e.f. 16.5.2008. In the present case, the contracts are artificially bifurcated so as to exclude the charges incurred in use of the goods for providing Event Management Services which is not permissible. The demand confirmed along with interest in the impugned order does not require any interference - the penalty is set aside invoking Section 80 of the Act - Appeal allowed in part.

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• 2020 (3) TMI 752
  Business Support Service - demand service tax on the ocean freight collected by the appellant - HELD THAT:- It is brought out from the facts explained by both sides that activity is nothing but purchase and sale of cargo space. The amount received for such activity is a profit earned for purchase and sale of the cargo space. The Tribunal in the case of SURYA SHIPPING VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2020 (2) TMI 282 - CESTAT AHMEDABAD] has analyzed the very same issue and has held that sale and purchase of cargo space is not service. If it is not a service then there is no question of considering it as an input service so as to include the charges in the taxable income. The amount received is nothing but profit from sale. In the present case also the demand is under BSS. In Surya Shipping the Tribunal held that the activity not being a service cannot be subject to levy of service tax under BSS also. Demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 751
  Levy of service tax - interest income - banking services - safe-keeping of gold in their vaults - profit earned by the appellant which is a difference between the sale price of gold to their customers and purchase price of gold from Union Bank of Switzerland or MKS Finance - whether to be considered as consideration for charging service tax or not? - HELD THAT:- The onus was on Revenue to identify the consideration, if any, received by appellant for providing service. Without any consideration there is no service tax payable. We therefore set aside the impugned orders for demand in all the appeals in respect providing Safe Vault Service and allow the appeals in respect of safe vault services. Demand of service tax on interest - providing metal as loan to the customers - The Revenue is of the opinion that only if the loan is in the form of Indian rupee and interest is earned on that, then alone under the provisions of Valuation Rules or Section 66D of Finance Act, 1994 - Held that:- interest is not to be treated as part of consideration for determination of service tax. - We do not find any support from any of the provisions of law for such contention by Revenue. There is no provision in the law to hold that interest identified by Valuation Rules or Section 66 is interest only on cash loan. The service tax confirmed on interest earned by the appellant by providing metal as loan is not sustainable - appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 750
  Construction of residential complex service - discharge of service tax on certain residential projects - HELD THAT:- The Board vide circular No.108/02/2009-ST dt.29.1.2009 has clarified that the construction done for personal use does not fall within the levy of service tax. In the present case, it can be seen that landowner is engaged directly by the appellant for construction of the flats which are intended for personal use. This is excluded from the definition of construction of residential complex service. Appeal dismissed - decided against Revenue.

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• 2020 (3) TMI 749
  Levy of Service Tax - clearing and forwarding services - It is the case of the assessee that these activities do not amount to rendering clearing and forwarding service as they do not physically handle or receive or store the goods/coal, but only do liaisoning, supervision and co-ordination. Not agreeing with the arguments of the assessee, the Adjudicating Authority - HELD THAT:- Hon ble Apex Court in the case of M/S. COAL HANDLERS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, RANGE KOLKATA I [ 2015 (5) TMI 249 - SUPREME COURT] has held that the appellant assessee is not liable to pay service tax. The assessee is not liable to pay service tax on the services rendered by them - demand set aside - appeal dismissed - decided against Revenue.

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• 2020 (3) TMI 748
  Renting of immovable property services - appellants are co-owners of immovable property which was leased out to customers - Demand of service tax - HELD THAT:- This Bench of the Tribunal in a batch of appeals viz. SMT. RAJESWARI, SHRI. M. BABU, SHRI. M. VIJAYKUMAR, SMT. V. SHARMILA, SHRI. R. VENUGOPAL, SHRI. S.R. DEVARAJAN, SMT. UMA SANJAY, SHRI. D. RAM PRAKASH, SHRI. S.V. JANARDHANAN, SHRI. B. RANGARAJAN, SMT. PARVATHI KRISHNARAJ, SHRI. E. JOHN DINAKAR, SMT. E. SUGANTHI JOY, SMT. SUGANTHI JOY EDWIN VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, COIMBATORE, SALEM, MADURAI [ 2019 (2) TMI 862 - CESTAT CHENNAI] had considered the very same issue as to whether rent received by co-owners can be clubbed together to demand service tax. The Tribunal in the said order had relied upon the decision in the case of SAROJBEN KHUSALCHAND OTHERS VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2017 (5) TMI 240 - CESTAT AHMEDABAD] and allowed the benefit of exemption notification no.6/2005-ST dt. 1.3.2005 to the individual co-owners who jointly owned the property and provided the service of renting of immovable property. It was held that service tax is leviable only in proportion to the rent received by each of the co-owners. The Tribunal in the said case had remanded the matter to the adjudicating authority to consider the plea of allowing the benefit of exemption N/N. 6/2005 as amended and to look into threshold limit of co-owners. The matter has to be remanded to the adjudicating authority who is directed to look into the discussions made in the Tribunal s final order in the case of Smt. Rajeswari others , and consider whether the appellants are eligible for the threshold exemption - Appeal allowed by way of remand.

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• 2020 (3) TMI 747
  CENVAT Credit - duty paying documents - it is submitted by him that in the FIRC documents, the Mumbai unit was erroneously mentioned instead of Chennai unit - HELD THAT:- The address mentioned in the FIRC document is that of Mumbai unit instead of Chennai Unit, we find that the refund sanctioning authority for the refund claims for subsequent periods has verified necessary documents and allowed refund. The orders passed in this regard is produced - Taking into consideration this aspect, we hold that address of Mumbai unit mentioned in FIRC document is only an error by oversight and rejection of refund claim on this ground requires to be set aside which were hereby do. Denial of refund claim - allegation that the claim is time barred when computed from the date of submission of the refund after rectification of defects - HELD THAT:- Needless to say that the period has to be computed from the date of original submission of the refund claim and not from the date when it is re-submitted after rectification. The appellant has filed the claims within one year from the date of FIRCs. Hence rejection of refund claim on this ground requires to be set aside. Non-submission of documents / FIRCs - Ld. consultant has requested for one more opportunity to submit the documents - HELD THAT:- The ground for rejection are remanded to the adjudicating authority to reconsider on submission of documents. Another reason for rejection is that the amount has been realized by Forex cheque and not by direct remittances - HELD THAT:- Since bank has credited the amount to their account, the service tax paid on such consideration paid cannot be denied - Appeals ST/42176-42179/2018 in which this issue is a ground for rejection are remanded to the adjudicating authority to reconsider the matter after verifying the invoices as to realization of cheque amount by the bank. Appeal allowed in part and part matter on remand.

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• 2020 (3) TMI 746
  Non-payment of service tax - Manpower Recruitment and Supply Agency Service - HELD THAT:- From the facts brought out on record as well as after perusal of the Master Secondment Agreement, it is seen that M/s. NSK Ltd., Japan deputed staff to the appellants generally for a period of two or three years. The said staff were under the payroll of the relevant foreign company and the appellant is responsible for payment of salary, bonus, etc., to the employees. After the work period, they would return to the parent company. The salary package for the above deputed staff is in the designated foreign currency; part of the salary was disbursed to the staff in India and the balance was disbursed to their account in the home country. It is established from records that there is no temporary supply of manpower being provided by M/s. NSK Ltd., Japan/Home Companies while deputing the employees to the appellant. The said activity does not fall within the definition of Manpower Recruitment and Supply Agency Service - the demand under Manpower Recruitment and Supply Agency Service cannot sustain. Demand of service tax - Computer Network Service (on-line information and database access and/or retrieval service) - HELD THAT:- It is seen from the invoice that the appellant has paid the amount to M/s. NSK Ltd., Japan. In fact, the services have been provided by M/s. NSK Network and Systems Co. Ltd., Japan to M/s. NSK Ltd., Japan. M/s. NSK Ltd., Japan has collected the cost share that was to be paid by the appellant and then paid it to the service provider viz., M/s. NSK Network and Systems Co. Ltd., Japan. The amount has been paid by appellant vide invoice raised on M/s. NSK Ltd., Japan and not to M/s. NSK Network and Systems Co. Ltd. who have provided the service of software support, liaison support, etc., for networking. Since there is no evidence of a service provider-service recipient relationship with M/s. NSK Ltd., Japan to whom appellant made payment with regard to this service, the demand made under this category cannot sustain. Consulting Engineer Service - Appellants have paid Service Tax under the said category, but however, did not include the amount paid in the nature of travel expenses, etc. - HELD THAT:- There are no hesitation to conclude that the levy of Service Tax on such amount cannot sustain - decided in favour of the assessee. Time Limitation - HELD THAT:- All the issues are interpretational in nature and litigations were pending before various fora. Therefore, invocation of extended period alleging suppression of facts, wilful mis-statement, etc., is without any basis. The department has not produced any positive evidence to prove their allegation of wilful mis-statement or suppression of facts - the appellant succeeds on limitation as well. Appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 745
  Maintainability of application - application for early hearing - HELD THAT:- On specific query made by the bench as to what is the status of appeal today nearly one year down the line from the date when earlier hearing was allowed, learned counsel fairly submitted that the appeal is still pending. Taking note of this fact the appeal in that case where application for early hearing was allowed nearly one year ago, we also direct the counsel to ensure his presence on the date of hearing i.e. 11.03.2020 which has been fixed after taking note of his availability and convenience. Since by allowing request for early hearing the normal queue of listing the matters is compromised no request for adjournment made on that date shall be entertained. In case if either of side chooses to abstain or seek adjournment matter shall be taken up for consideration and disposal ex-parte.

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• 2020 (3) TMI 744
  CENVAT Credit - Input services - event management service - HELD THAT:- A similar issue has been considered by the Division Bench of this Tribunal in M/S. HONDA MOTORCYCLE SCOOTER INDIA PVT. LTD. VERSUS CCE, DELHI-III [ 2016 (8) TMI 308 - CESTAT CHANDIGARH] . It is not in dispute that event management service has been used by the Appellant for promoting their brand value as recorded by both the authorities below in the respective orders. There are no merits in the impugned order - appeal allowed.

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• 2020 (3) TMI 743
  CENVAT Credit - input services - professional charges - travelling expenses - allegation that the input services on which credit availed by them do not satisfy the definition of input Services prescribed under Rule 2(l) of Cenvat Credit Rules,2004 - period 2008-09 to 2012-13 - HELD THAT:- The appellants have provided output services i.e., Sterlisation of Pharma and Food products for which they charged consultancy fees on process development and other aspects relating to the management of company, namely labour law, legal opinion etc. The issue of admissibility of credit on these services is covered by the judgement of Hon ble High Court of Allahabad in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. HCL TECHNOLOGIES [ 2014 (11) TMI 663 - ALLAHABAD HIGH COURT] . Hence the said service is an input services within the scope of definition prescribed under Rule 2(l) of CCR ,2004 and credit availed on such Input Services is admissible. Travelling expenses - HELD THAT:- The same are in relation to sales promotion and post sales related activities undertaken by the Appellant and also covered by the judgement of DR. REDDY S LAB LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2009 (9) TMI 287 - CESTAT, BANGALORE] - Hence, credit on such input services is also admissible. Penalty - HELD THAT:- The credit in relation to several other input services availed post 1.4.2011 on a bonafide belief but later the appellant had reversed the credit with interest, hence penalty is not warranted - Penalty set aside. Appeal allowed in part.

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• 2020 (3) TMI 742
  CENVAT Credit - rejection of cenvat credit by the Court on the observation relying on the verification report of the jurisdictional Range Officer - Section 142(9) of the CGST Act read with the provisions of Cenvat Credit Rules, 2004 - HELD THAT:- No such report/copy was provided to the appellant, neither any opportunity provided to inspect the report and offer their comments. In this view of the matter, it is miscarriage of justice by denying adequate opportunity of hearing to the appellant. Accordingly, this appeal is allowed by way of remand to the adjudicating authority. Appeal allowed by way of remand.

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• Central Excise

• 2020 (3) TMI 741
  Rebate of Central Excise duty - rejection of rebate claims on the premise that the applicant is not a merchant exporter but he is a principal manufacturer as the ownership of the goods remained with them during the manufacturing process - HELD THAT:- The Government holds that rejection of rebate claims on account of filing before the wrong forum is not justified in the present case. It is further held that the central excise authorities (erstwhile) having jurisdiction over the manufacturer s unit will be the appropriate authority to consider these rebate claims since the goods for purpose of export have been removed from the manufacturer s premises on ARE-Is after payment of central excise duty. Verification of duty paid character and identity of the export goods can be established at their end. The Government allows the applicant to file the rebate claims with the erstwhile central excise authorities having jurisdiction over M/s. Saraswati Agro Chemicals (India) Pvt. Ltd., Dera Bassi, District Mohali, Punjab - revision application allowed.

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• 2020 (3) TMI 740
  Rebate of Central Excise duty - Non-payment of duty due to restriction in utilization of credit under Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- Since payment in respect of export goods was required to be made in terms of Rule 8(1) of Central Excise Rules, 2002, the exporters had no choice but to comply with the same which they have done in the instant case. Therefore the rebate claims cannot be denied on the ground that the export goods have been cleared without payment of duty from the manufacturer s premises on the date of removal. The Government does not find any deficiency in the Commissioner (Appeals) s order - revision dismissed.

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• 2020 (3) TMI 739
  Clandestine removal - Miss-Rolls - demand based on third party record - corroborative evidences or not - impugned order based on presumption and surmises - HELD THAT:- The whole of the case is based upon third party record. There is no corroborative evidence supporting the allegations of the department. The director of appellant No. 1- Sh. Ajay Kumar Malhotra specifically denied any clandestine clearance of Miss-Roll to BRMPL. The department neither made investigation from the transporter or the truck drivers who transported the goods from the factory of the appellant No. 1 - There is no corroborative evidence that SRSDL received raw material, manufactured and cleared the goods clandestinely. Hence allegations made against SRSDL and Sh. Ajay Kumar Malhotra, appellant NO. 1 2 are not sustainable and their appeals are to be allowed. Penalty - HELD THAT:- The penalty u/r 26 cannot be imposed upon a corporate body. The appellant is a private limited company hence penalty imposed is not sustainable - the penalty imposed is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2020 (3) TMI 738
  Maintainability of appeal - time limitation - exclusion of the time consumed by the appellant for pursuing the remedy before the adjudicating authority is required to be reduced in terms of Section 14 of Limitation Act, 1963 - whether the appeal filed by the appellant before him on 11.01.2018 is barred by limitation or not, in which the appellant has challenged the order dt. 17.01.2017? - HELD THAT:- Admittedly, the time consumed by the appellant till 22.06.2017 is required to be excluded in terms of Section 14 of Limitation Act, 1963, but thereafter the appellant did not file the appeal before the learned Commissioner (Appeals) within time and the learned Commissioner (Appeals) has no power to extend the period of limitation in terms of Section 35A of the Central Excise Act, 1944 - Admittedly, the appellant did not follow the advice given by the adjudicating authority vide letter dt. 22.06.2017. The appeal filed by the appellant before the learned Commissioner (Appeals) is barred by limitation - Appeal dismissed.

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• 2020 (3) TMI 737
  Refund claim - HSD was supplied to M/s TIL - rejection on the ground that the documents which were supplied along with the refund application did not substantiate the claim of the appellant that they duty of refund sought had been paid - N/N. 108/1995 - HELD THAT:- The claim of refund in the application was not of duty paid by M/s RPL. Further, a plain reading of the exemption notification shows that the goods which are supplied to the specified agencies are exempted from the payment of basic excise duty subject to some conditions mentioned in the exemption notification. There is nothing in the notification to say that a trader who bought goods on payment of duty from another manufacturer and in turn supplies to one of the eligible parties will also be eligible for refund under the exemption notification. There is no explicit exemption to the goods which have been bought by the appellant and in turn supplied to an eligible party. The case laws relied upon by the appellant pertain to the cases where the eligible recipient of the goods had claimed refund of the duty paid. There cannot be a dispute in such cases because the beneficiary who should not have paid the duty is eligible for refund if he had actually paid it. At any rate, the application was not seeking refund of duty paid by M/s RPL but of duty paid by their refinery. Such HSD having not been supplied to M/s TIL, the question of refund does not arise. Appeal dismissed.

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• 2020 (3) TMI 736
  Rectification of Mistake - Section 35C of the Central Excise Act, 1944 - SSI Exemption - Clandestine removal - HELD THAT:- A bare perusal of the aforesaid sub-section (2) of Section 35C of the Act indicates that the Appellate Tribunal may, with a view to rectify any mistake apparent from the record, amend any order passed by it under sub-section (1). Sub-section (1) provides that the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision for a fresh adjudication. What is, therefore, necessary for a mistake to be rectified is that it must be apparent from the record. It, therefore, follows that what cannot be corrected by way of rectifications is a decision on a debatable point of law or fact or failure to apply the law to a set of facts which still to be investigated. But if the mistake otherwise is such an inaccuracy which is so obviously apparent, the same can be rectified by any of the nodes as mentioned in the Section 35C of CESTAT Rules. The findings of the impugned order are based on wrong observations and wrong application which definitely amounts to be an error apparent on record - the impugned final order is recalled - application allowed.

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• 2020 (3) TMI 735
  Recovery of Rebate claim after two years from sanction of refund - export of goods outside India - payment of duty on exempted goods - Rule 19 of Central Excise Rules, 2002 - extended period of limitation - HELD THAT:- The refund claims of the assessee/respondent had already undergone sufficient scrutiny at pre-audit as well as post audit stage of refund, before those were actually sanctioned by the Adjudicating Authority. Raising an audit objection after two years of such sanction and even disbursement, is beyond the legislative intent. Issuing of show cause notice in March, 2015 proposing the recovery of claims sanctioned and disposed way back in 2011-12 is, therefore, not sustainable. The show cause notice is rather beyond the period of limitation. There is no iota of even whisper that the assessee had any intention to evade the duty. The admitted fact remains that the respondent/assessee has exported the goods on payment of duty under claim of rebate. Admittedly goods have been exported out of India and proof of export has been duly submitted. Respondent admittedly has been regularly filing the ER-Returns which were never objected by the Range Officer at the appropriate time - Commissioner (Appeals) has committed no error while holding the show cause notice as being barred by time and holding the assessee otherwise entitled to the claim for getting the refund of duty as was paid by them on finished goods exported out of India. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2020 (3) TMI 734
  Imposition of penalty u/s 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 - imposition of additional tax on the sales made by the Assessee, which were not supported by declaration in C Forms - Best Judgment Assessment - HELD THAT:- The parameters of Section 12(3)(b) of the Act are not satisfied in the present case. Section 12(3)(b) provides for imposition of penalty in case of submission of incorrect or incomplete return by the Assessee. Both the grounds given above for imposition of additional tax on the Assessee did not result in Best Judgment Assessment against the Assessee and it cannot amount to filing of incorrect or incomplete return by the Assessee. On debatable issues, even if the addition in taxable turnover is made by the Assessing Officer, it does not amount to Best Judgment Assessment, which can be passed, only if the regular books of accounts and the return filed by the Assessee are rejected for given reasons. Therefore, the learned Tribunal has erred in relying upon the insertion of the Explanation in Section 12(3) of the Act at a later date with effect from 01.04.1996 to uphold such penalty in the year 1993-94. Thus, the Explanation to Section 12(3) does not get attracted to the facts of the present case at all. Petition allowed.

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• 2020 (3) TMI 733
  Validity of assessment order - cancellation of registration of dealer - Gujarat VAT Act - HELD THAT:- It is not in dispute that the assessment order came to be passed pursuant to the returns, said to have been filed by the writ-applicant. However, in fact, no such returns were filed by the writapplicant and it was the Tax Consultant who created the bogus record - There is no hesitation in quashing the assessment order as well as the order passed by the first appellate authority dated 31st July, 2018. The matter is remitted to the authority concerned for fresh hearing on the subject - Appeal allowed by way of remand.

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• 2020 (3) TMI 732
  Maintainability of appeal - Section 58 of the Tamil Nadu Value Added Tax Act 2006 - principles of natural justice - HELD THAT:- There is no error in the order passed by the learned Single Judge and even the ground of breach of principles of natural justice, if at all can be established by the Assessee, the Assessee can very well file an appeal under Section 58 of the Act before the Sales Tax Appellate Tribunal besides raising the grounds on the merits of the case. Therefore, it does not entitle the Assessee / Appellant to resort to writ jurisdiction invariably in all circumstances for the alleged breach of principles of natural justice. In the present case the appellant could avail the effective alternative remedy - the Writ Appeal is disposed of by relegating the matter back to the first appellate authority viz., the The Appellate Deputy Commissioner (CT), Chennai (East), Chennai.

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• 2020 (3) TMI 731
  Principles of Natural Justice - validity of assessment order - HELD THAT:- On account of the fact that the petitioner did not place certain facts before this Court, this Court, while considering the writ appeals held that there has been no violation of principles of natural justice and accordingly confirmed the order passed in the writ petitions. However, after elaborately hearing the learned counsel today, we find that certain important factual details were not placed before us when the writ appeals were heard. Though the petitioner is to be blamed for such an act, nevertheless the Court has to take into consideration the facts, which are undisputed and then take a decision and merely because there was a default committed by the petitioner, the Court cannot refuse to exercise the review jurisdiction especially when those undisputed facts will turn the dimension of the case. Review application allowed.

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• Indian Laws

• 2020 (3) TMI 730
  Smuggling - Recovery of psychotropic substance - Narcotic Drugs - bail application - HELD THAT:- Perusal of the facts appearing on record prima facie reveal that petitioner is dealing with narcotics drugs. He has tried to send the drugs by concealing the same in a parcel. Later on, a raid was conducted at his residence in Calcutta and huge quantity of psychotropic tablets were recovered from there. Ld. Counsel for the petitioner has submitted that petitioner has been granted bail in the other case. However, the Ld. APP has clarified the fact that it was a default bail granted by Court since charge sheet was not filed within the statutory period. So far as minor discrepancies or contradiction in prosecution version are concerned, these will no doubt be considered by the Ld. Trial court at the appropriate stage but these cannot be examined at this stage as the law is well settled that at the time of bail, the evidence need not be discussed or analyzed in detail. Bail application dismissed.

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