TMI Tax Updates - e-Newsletter
March 26, 2019

Case Laws in this Newsletter:

GST Income Tax Insolvency & Bankruptcy Service Tax Central Excise

TMI SMS

• If an offence committed u/s 132 of GST, determination of tax is not required - summons can be issued directly or offender can be arrested

  ---

Articles

1. Availment of Input tax credit on the tax paid under RCM

   By: CA Seshukumar

2. GST: BASE PRICE HIKE AMOUNTS TO PROFITEERING

   By: Dr. Sanjiv Agarwal

3. ORIGINAL ASSESSMENT GETS RESTORED ON CANCELLATION OF REASSESSMENT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Opportunities and Challenges of FinTech (Shri Shaktikanta Das, Governor, Reserve Bank of India - March 25, 2019 - Keynote Address Delivered at the NITI Aayog’s FinTech Conclave)

2. NITI Aayog to organise FinTech Conclave 2019

Notifications

GST - States

1. G.O.Ms.No. 256 - dated 20-3-2019 - Andhra Pradesh SGST

Constitution Of Consumer Welfare Fund - Formation Of Standing Committee Under Sub Rule (4) Of Rule 97 of APGST Rules 2017.

2. G.O.Ms.No. 255 - dated 20-3-2019 - Andhra Pradesh SGST

Prescribing Composition Scheme with 3% Rate of Tax for Persons Having Annual Turnovers up to ₹ 50 Lakhs in the Preceding Year and Supplies include Services.

3. G.O.Ms.No. 254 - dated 20-3-2019 - Andhra Pradesh SGST

Prescribing option, for Eligible Registered Persons, whose aggregate Turnover in the Preceding Financial Year did not exceed one Crore and Fifty Lakh rupees, to pay tax under Composition Scheme.

4. G.O.Ms.No. 253 - dated 20-3-2019 - Andhra Pradesh SGST

Prescribing Time Period for Filing GSTR-1 for those Registered Persons having Aggregate Turnover up to 1.5 Crore rupees in the preceding financial year or the current financial year.

5. G.O.Ms.No. 252 - dated 20-3-2019 - Andhra Pradesh SGST

Prescribing Persons, Whose Aggregate Turnover in The Financial Year Does Not Exceed ₹ 40 Lakhs and Engaged In Exclusive Supply of Goods, Exempt From Obtaining Registration Under The Said Act.

6. 2/2019-State Tax (Rate) - dated 7-3-2019 - Gujarat SGST

Rate on First supplies upto fifty lakh rupees in any financial year by a registered person

7. 14/2019-State Tax - dated 7-3-2019 - Gujarat SGST

Aggregate turnover limit for eligibility under composition

8. 13/2019-State Tax - dated 7-3-2019 - Gujarat SGST

Extension in time limit for GSTR 3B for April to Jun 2019 upto 20th day of the succeeding Month

9. 12/2019-State Tax - dated 7-3-2019 - Gujarat SGST

Extension in time limit for GSTR 1 for April to Jun 2018 upto 11th day of succeeding Month

10. 11/2019-State Tax - dated 7-3-2019 - Gujarat SGST

Extending time limit for furnishing details in FORM GSTR-1 for the quarter April to June-2019 upto 31st July 2019

11. 10/2019-State Tax - dated 7-3-2019 - Gujarat SGST

Category of persons exempt from obtaining registration under the GGST Act

12. 9/2019-State Tax - dated 21-2-2019 - Gujarat SGST

Extension for GSTR 3B for the Month of January- 2019 to 22/02/2019 for the state

13. 8241–FIN-CT1-TAX-0043/2017 - dated 7-3-2019 - Orissa SGST

Supersession Notification No. 19857-FIN-CT1-TAX-0022-2017 , dated the 29th June, 2017

14. 8237–FIN-CT1-TAX-0043/2017 - dated 7-3-2019 - Orissa SGST

Exemption from registration for any person engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed ₹ 40 lakhs

15. 8233–FIN-CT1-TAX-0043/2017 - dated 7-3-2019 - Orissa SGST

Prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores for the months of April, May and June, 2019 under the OGST Act, 2017

16. 8229–FIN-CT1-TAX-0043/2017 - dated 7-3-2019 - Orissa SGST

Prescribing Composition Scheme with 3% Rate of Tax for Persons Having Annual Turnovers up to ₹ 50 Lakhs in the Preceding Year and Supplies include Services

17. 3102-FIN-CT1-TAX-0034/2017 - dated 29-1-2019 - Orissa SGST

Odisha Goods and Services Tax (Amendment) Rules,2019

SEBI

18. SEBI/LAD-NRO/GN/2019/04 - dated 22-3-2019 - SEBI

Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2019

19. SEBI/L.A.D.-N.R.O./G.N./2019/03 - dated 22-3-2019 - SEBI

Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2019.

SEZ

20. S.O. 1401(E) - dated 18-3-2019 - SEZ

Central Government notifies the 6.69 hectares area at Wagholi and Kharadi Villages, Pune, in the State of Maharashtra and constitutes an Approval Committee

VAT - Delhi

21. Zone-IV/AC/W-58/ VAT/Forms/2018-19/791-800 - dated 22-3-2019 - DVAT

Notified declarations ’C’ Forms are declared obsolete and invalid for all purposes with effect from the date of issue

22. Zone-IV/AC/W-58/ VAT/Forms/2018-19/781-790 - dated 22-3-2019 - DVAT

Notified declarations ’C’ Forms are declared obsolete and invalid for all purposes with effect from the date of issue

Circulars / Instructions / Orders

GST - States

1. CCTs Ref.in CCW/GST/74/2015 - 01/2019 GST - dated 28-1-2019

Clarification on certain issues (sale by government departments to unregistered person; leviability of penalty under section 73(11) of the APGST Act; rate of tax in case of debit notes / credit notes issued under section 142(2) of the APGST Act.

2. CCTs Ref.in CCW/GST/74/2015 - 02/2019 GST - dated 24-1-2019

Denial of composition option by tax authorities and Effective date thereof

3. CCTs Ref.in CCW/GST/74/2015 - 03/2019 GST - dated 24-1-2019

Clarification on export of services under GST

4. CCTs Ref.in CCW/GST/74/2015 - 04/2019 GST - dated 24-1-2019

Clarification on refund related issues

5. CCTs Ref.in CCW/GST/74/2015 - 05/2019 GST - dated 24-1-2019

Clarification regarding GST rates & classification (goods)

6. CCTs Ref.in CCW/GST/74/2015 - 06/2019 GST - dated 24-1-2019

Clarification regarding GST tax rate for Sprinkler and Drip Irrigation System including laterals.

7. CCTs Ref.in CCW/GST/74/2015 - dated 6-1-2019

Amendments in Notification issued vide Chief Commissioner's proceedings in Ref. CCW/GST/74/2015, Dt. 10.08.2018.

8. CCTs Ref.in CCW/GST/74/2015 - dated 6-1-2019

Amendments in the Notifications No. CCW/GST/74/2015-3, Dt.08.08.2017 and CCW/GST/74/2015-1, Dt. 15-11-2017.

9. CCTs Ref.in CCW/GST/74/2015 - dated 6-1-2019

Amendments in the CCW/GST/74/2015, Dt. 15.09.2017 and CCW/GST/74/2015, Dt.27.03.2018.

Customs

10. PUBLIC NOTICE NO. -03/2019 - dated 11-3-2019

Standard Operating Procedure (SOP) at Integrated Check Post (ICP), Raxaul for movement of export/import cargo and transit cargo through Integrated Check Post, Raxaul

11. PUBLIC NOTICE NO. - 01/2019 - dated 28-2-2019

EO Programme digitization - Ease of doing business -Development of web-based application for AEO T1; Modification in Circular No. 33/2016 regarding benefit related PCA to AEO

Highlights / Catch Notes

Income Tax

• Court Examines Impact of Deemed Sale Consideration on Capital Gains Tax Exemption u/ss 54EC and 50C.

  Case-Laws - HC : Exemption u/s 54EC - LTCG - applicability of deeming fiction application u/s 50C - the sale consideration deemed to have been received by the Assessee may be much higher than one declared in the sale deed, the Assessee would claim no further capital gain tax liability by simply claiming to have made investment in specified asset the full declared sale consideration.
  Visit to Get Source

  ---

• Tax Assessment u/s 153A: Additions Based Solely on Family Member's Statement Deemed Impermissible.

  Case-Laws - AT : Assessment u/s 153A - during the course of search, no incriminating material was found except the statement of one family member. Solely on the basis of the statement of one family member, the addition was in the case of all the family members, which cannot be done.
  Visit to Get Source

  ---

• Assessee's Blame on Chartered Accountant Rejected; Penalty u/s 271(1)(c) Upheld by ITAT, HC, and SLP Dismissed.

  Case-Laws - SC : Penalty u/s 271(1)(c) - The attempt to blame the Chartered Accountant cannot result in the assessee's exoneration and claimed in absolute terms. In the circumstances, the penalty was rightly imposed. - Decision of ITAT and HC confirmed by dismissing SLP
  Visit to Get Source

  ---

• Supreme Court allows 362-day delay in revenue appeal, orders Rs. 1 lakh payment to respondent; case back to High Court.

  Case-Laws - SC : Condonation of delay - delay of 362 days - delay in revenue appeal condoned by the apex court subject to the payment of ₹ 1 lacs to the respondent / assessee. - Matter restored before HC
  Visit to Get Source

  ---

• Section 133A: Addition Not Permissible Without Incriminating Material; Retraction of Disclosure Justifies Decision.

  Case-Laws - AT : Addition based on statement recorded on oath u/s. 133A - no incriminating material was found in the survey - assessee retracted the disclosure - addition not permissible
  Visit to Get Source

  ---

• Individual Admits Undisclosed Income Routed Through Alleged Non-Resident Indian; Section 132(4) and 158B(b) Invoked.

  Case-Laws - HC : Undisclosed income u/s 158B(b) - admission u/s 132(4) that it was his own money routed back to his own family members through an alleged NRI and was undisclosed income - disclosure of gift in return prior to search not sufficient to exclude from undisclosed income.
  Visit to Get Source

  ---

• Section 40(A) Income Tax Act: Related Party Agreements Insufficient for Allowing Research Fees as Business Expenditure.

  Case-Laws - HC : Disallowance u/s 40(A) - related party transaction - merely because there was an Agreement between the Assessee Company and the related party or the partnership firm, the Research and Advisory fees made by the Company to the partnership firm, in which one of the Directors had a substantial interest, cannot be allowed wholly or partly as a business expenditure
  Visit to Get Source

  ---

• Legal heirs not liable for penalties u/s 271(1)(c) if deceased's liability wasn't finalized before death.

  Case-Laws - HC : Penalty u/s 271(1)(c) levied on the legal representative/heirs - unless the penalty proceedings are concluded against a living assessee, the legal heirs cannot be held liable to face those proceedings or pay any sum determined as penalty payable u/s 271(1)(c)
  Visit to Get Source

  ---

• No TDS on Revenue-Sharing Payments to Distributors u/s 194J; No Disallowance u/s 40(a)(ia.

  Case-Laws - AT : TDS u/s 194J - payment to distributors on revenue sharing basis - neither fee for professional or technical services nor royalty - TDS not deductible - no disallowance u/s 40(a)(ia)
  Visit to Get Source

  ---

Customs

• Raxaul ICP SOP Streamlines Cargo Movement for Efficient Trade and Compliance with Customs Regulations.

  Circulars : Standard Operating Procedure (SOP) at Integrated Check Post (ICP), Raxaul for movement of export/import cargo and transit cargo through Integrated Check Post, Raxaul
  Visit to Get Source

  ---

State GST

• GST Clarifies Reverse Charge on Used Vehicles, Seized Goods, and Scrap Sales by Government Bodies Across India.

  Circulars : Intra-State and inter-State supply of used vehicles, seized and confiscated goods, old and used goods, waste and scrap made by the Central Government, State Government, Union territory or a local authority is a taxable supply under GST - clarification issued on reverse charge.
  Visit to Get Source

  ---

SEBI

• SEBI 2019 Amendment: Streamlining Fee Structures for Compliance and Transparency in Financial Markets.

  Notifications : Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2019.
  Visit to Get Source

  ---

• SEBI Amends Custodian Regulations 2019: New Eligibility, Reporting, and Compliance Rules to Boost Market Oversight and Investor Protection.

  Notifications : Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2019
  Visit to Get Source

  ---

Service Tax

• GST Summons Validity: No Need to Determine Exact Tax Amount Before Issuing u/s 132 for Offenses.

  Case-Laws - HC : Validity of summons issued by the Commissioner of GST - if an offence committed u/s 132 determination of tax is not required and the Department can proceed straight away by issuing summons or if reasonable grounds are available by arresting the offender.
  Visit to Get Source

  ---

• Clarification on Refund of Unutilized CENVAT Credit and VCES Payments u/s 107; Eligibility Criteria Highlighted.

  Case-Laws - AT : Refund of unutilised CENVAT credit - amount paid under Voluntary Compliance Encouragement Scheme (VCES) - Section 107 has never debarred the assessee from claiming refund if it is otherwise entitled to.
  Visit to Get Source

  ---

• CENVAT Credit Case: No Evidence of Intent to Evade Tax, Extended Limitation Period Not Applicable.

  Case-Laws - AT : The appellant could have entertained bonafide belief that they are eligible for CENVAT Credit on the dumpers and tippers - also there is nothing in the record to indicate that there was suppression, misstatement of fact with intent to evade tax - Extended period of limitation cannot be invoked.
  Visit to Get Source

  ---

• Revenue Sharing in Property Rental Exempt from Service Tax: No Service Provider-Recipient Relationship Established.

  Case-Laws - AT : Revenue sharing agreement - renting of immovable property service - There is no provision of any service to any other person and there is no service recipient or service provider relationship, which is an essential condition to attract service tax liability and the services per-se are rendered would be to sale itself.
  Visit to Get Source

  ---

• Service Tax Under Reverse Charge Mechanism: Revenue-Neutral CENVAT Credit Means No Intent to Evade Tax Payment.

  Case-Laws - AT : Revenue neutrality - Reverse charge mechanism - in case the service tax on reverse charge basis is paid, the same is eligible to avail cenvat credit - the situation is truly a revenue neutral one. - the appellant cannot be saddled with the allegation of intention to evade payment of service tax.
  Visit to Get Source

  ---

Central Excise

• Tribunal's Role as Final Fact-Finder: Ensures Orders Reflect Thorough Case Consideration and Core Issue Documentation.

  Case-Laws - HC : The Tribunal is a final fact finding Authority under the Act. It must necessarily record the essence of dispute before it and give its findings on consideration of submissions made in the context of the dispute. - It is only when such an exercise is done, the order would be a speaking order.
  Visit to Get Source

  ---

• Refund Rejected: Excess Duty Claim Denied Due to Time Bar and Unjust Enrichment u/s 11B.

  Case-Laws - AT : Refund of excess duty paid - rejection on the ground of time bar and unjust enrichment - There is no provision other than Section 11B for the assessee to claim refund whether it is paid using cash or by debiting CENVAT account.
  Visit to Get Source

  ---

• Recipient Manufacturer Can Avail CENVAT Credit Based on Supplier's Jurisdictional Officer's Duty Determination, Without Recipient Officer's Challenge.

  Case-Laws - AT : CENVAT Credit - recipient manufacturer is entitled to avail the benefit of duty and quantum of duty already determined by the jurisdictional officer of the supplier unit cannot be contested or challenged by the officer incharge of the recipient unit
  Visit to Get Source

  ---

• CENVAT Credit Reversed: Granulated Slag Deemed Waste, Rule 6 of CENVAT Credit Rules, 2004 Not Applicable.

  Case-Laws - AT : Reversal of CENVAT Credit - exempt goods-by-product - granulated slag - slag arising in the course of manufacture of iron and steel is a waste and that the provisions of Rule 6 of CCR, 2004 are not attracted
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (3) TMI 1187
  Validity of summons issued by the Commissioner of GST - it is the case of Petitioner that the tax has not been determined in accordance with Section 73 and 74 of the Act and till the tax is determined, Department has no right to summon the Petitioner or arrest the Petitioner under Section 69 of the Act - Held that:- It is pertinent to note that it is clear case of the Department that the Petitioner and its sisters concerns have availed input tax credit to the tune of Rs. 328,36,73,701/- on the basis of fake invoices, out of which Rs. 40,53,58,772/- is the fraudulent input tax credit claimed by Petitioner No.2 of which Petitioner No.1 is the Managing Director - The Petitioners Writ Petition is confined to technicalities as also to the fact that the Petitioner No.1 was residing abroad and was not involved in day to day affairs of the company. This Court is not convinced by the arguments advanced by the counsel for the Petitioner for the very reason that Petitioner No.1 is the Director of the company since 08.08.2012 and has been receiving managerial remuneration from the company to the tune of about Rs. 60 lakh per annum. Petitioner No.1 became the Managing Director of Petitioner No.2 on 30.05.2018, hence contention of counsel for the Petitioner that he was not involved in day to day affairs of the company, cannot be accepted. The contention that the tax is to be first determined under Section 73 74 of the Act does not have any force for the very reason that in an offence committed under Section 132 of the Act determination of tax is not required and the Department can proceed straight away by issuing summons or if reasonable grounds are available by arresting the offender. Since offence under Section 132 is made out and Senior Officials of Company are behind bars, Petitioner being Managing Director is responsible and Department has the right to proceed under Section 69 and 70 of the Act - petition dismissed - decided against petitioner.

  ---

• Income Tax

• 2019 (3) TMI 1207
  Condonation of delay - Tribunal refusing to condone the delay caused in filing the Appeal before the Tribunal - whether sufficient cause is made out or not? - possible fallout of the Appeal not being entertained by the Tribunal on merits - cancellation of registration granted under Section 12A - HELD THAT:- Assessee has filed an Affidavit suggesting that the earlier Chartered Accountant had given an opinion that no Appeal was needed to be filed. It was upon being correctly advised later on by the new Chartered Accountant, that the Assessee decided to file Appeal before the Tribunal. Additionally, we notice that cancellation of registration granted under Section 12A of the Act would deprive the Assessee of the benefits under Section 11 of the Act for all times to come. When the Assessee filed a fresh application for registration under Section 12A of the Act, the Commissioner rejected the same by an order dated 28/02/2014 on the ground that once the registration is cancelled, there is no provision under the Act enabling the Assessee to file fresh application for registration. What would, therefore, emerge is that by virtue of the order of a Director of Income Tax cancelling the registration of the Assessee, the Assessee would not be entitled to the benefits under Section 11 for all times to come. Thus taking a liberal view of the delay, the delay not condoned in filing the Appeal before the Tribunal, is ordered to be condoned. The Assessee shall deposit a sum of Rs. 50,000/( Rupees Fifty Thousand Only) by way of costs with the High Court Legal Aid Services within two weeks from today. - Decided in favour of assessee

  ---

• 2019 (3) TMI 1206
  Re-assessment proceedings u/s 147/148 - addition of Development and Testing Charges holding it to be a Capital Expenditure which was claimed as Revenue Expenditure by the Assessee in the Profit and Loss Account - difference between change of opinion and reasons to believe - HELD THAT:- The learned Single Judge was absolutely right in holding that the Assessee, having not raised an objection before the Assessing Authority to the re-opening of the assessment under Section 147/148 of the Act, should be deemed to have acquiesced to the same. Nothing prevented the Assessee from raising the objection, which could have been dealt with by the Assessing Authority in accordance with law. Having not raised any such objection before Assessing Authority that the expenditure claimed as Revenue Expenditure was already considered and allowed as Revenue Expenditure and therefore, for treating the same now as Capital Expenditure is a change of opinion, is not a tenable contention and therefore, it cannot be a ground to be raised in writ jurisdiction. Further, when a specific and adequate alternative remedy is available to the Assessee for taking such a plea to find as to whether the expenditure claimed by the Assessee is to be treated as Revenue Expenditure or Capital Expenditure, if the High Court was to entertain such controversy on merits, the entire litigation in this respect can be just brought on the Board of the High Court instead of availing the regular Appellate Forum provided under the Act. We are satisfied that in the present case, there was no change of opinion on the part of the Assessing Authority and therefore, the re-opening of the Assessment Order was initiated on valid and reasonable grounds. Even if there is a correct disclosure of the expenditure, it may be, in the opinion of the Assessee, a Revenue Expenditure but, in the opinion of the Assessing Authority, it can be a Capital Expenditure. But, that deserves to be decided on the basis of facts by the higher Appellate Forums and that cannot become the ground to straightaway invoke the writ jurisdiction under Article 226 of the Constitution of India. Therefore, we are satisfied that the order of the learned Single Judge does not suffer from infirmity so as to call for any interference - Decided against assessee.

  ---

• 2019 (3) TMI 1205
  Nature of loss claimed - capital loss or busniss loss - assessee to start a new business of generation of power through windmill entered into an agreement with the seller for acquiring a windmill plant situated on a plot of land and paid advance for acquisition of Windmill - After making initial payment of Rs. 1 Crore, the assessee defaulted in making further payments, upon which the said MOU was cancelled - HELD THAT:- The analysis of the terms would suggest that title of the property in question, was not to pass to the assessee till full payment. Even otherwise, title in the immovable property would not pass otherwise than under a registered document which is compulsorily registerable. It may be that the assessee was put in possession at the time of execution of the agreement and allowed the use of the project also. Clause (17) reiterates that the seller would put the assessee in possession upon payment of the final installment. This clause necessarily refers to the possession with ownership. Till then, the assessee can at best be seen as a permissive user. We are not required to consider the alternative scenario presented before us by the learned Counsel for the assessee, as to what will be the position if the title in the asset had passed on to the assessee. Even then, one would briefly comment on such hypothetical situation. In this case, in order to claim depreciation, the assessee must establish basic facts. Any such claim is necessarily based on facts and law. Whether the original owner in the meantime claimed depreciation, when was the asset installed, when was the asset put to use are some of the factual aspects needed to be gathered before the claim of depreciation could have been granted. Such a claim is raised for the first time before us. The assessee cannot raise such a contention for the first time before the High Court, when no factual foundation was laid before the authorities below. Whether the sum retained or forfeited by the seller can be treated as lease rental? - The question has to be answered in the negative. Clause (10) of the agreement provides that in case of any failure to pay the agreed amount within the agreed time on the part of the assessee, the seller would withdraw or cancel the contract and in such event, the seller would be entitled to forfeit an amount of Rs. 90,00,000/and return the balance out of the sum already paid. The salient feature of this clause is that the sum of Rs. 90,00,000/to be retained by the seller is fixed irrespective of which installment the assessee failed to pay, for how long the possession and use of the asset is retained by the assessee and under what circumstances the payment could not be made. Linking of sum of Rs. 90,00,000/to be retained by seller on account of default of payment by the assessee, to the lease rental charges, would be opposed to the forfeiture clause having no relation to the period for which such asset was put to use by the assessee. In a given case, the asset may remain with the assessee for only one month before the forfeiture clause may kick in and in a given case, the assessee may default in the last installment and till then continue to use the asset for generation of power. In either case, the forfeiture of the amount would remain the same i.e. Rs. 90,00,000/. Quite apart from this, clause (10) refers to forfeiture of the amount and not a lease rental, nor such intention can be gathered from any other clause contained in the MOU. The MOU was one integrated contract for sale of the asset and permissive user of the asset till payment of full installments. The lease rental if at all was embedded in the contract terms. There was no separate lease rental envisaged, none can be culled out from the terms of the contract. Appeal dismissed.

  ---

• 2019 (3) TMI 1204
  Deduction u/s 54EC - computation of capital gain tax after claiming exemption under section 54EC - applicability of deeming fiction application u/s 50C - Tribunal reversing the order of CIT in confirming the action of the assessing officer in taxing capital gain, to the extent of the enhanced and notional sale consideration under section 50C - whether Appellant had invested the entire sale consideration accruing on transfer of the immovable property in the prescribed bonds in terms of section 54 EC? - assessee was a joint owner of a plot of land situated at Borivali, Mumbai, having 25% undivided share in the plot - HELD THAT:- Clauses (a) and (b) of subsection (1) of section 54EC would always have limit of Rs. 50 lakhs specified in the further proviso for investment in the specified asset. No conflict or any incongruent consequences of applying the provisions of section 50C for the purpose of computation of capital gain tax after claiming exemption under section 54EC of the Act. The deeming fiction under section 50C of the Act, must be given its full effect and the Court should not allow to boggle the mind while giving full effect to such fiction. We are not opposing the proposition canvassed by the Counsel of the Assessee that deeming fiction must be applied in relation to the situation for which it is created. However, while giving full effect to the deeming fiction contained under section 50C of the Act for the purpose of computation of the capital gain under section 48, for which section 50C is specifically enacted, the automatic fallout thereof would be that the computation of the assessee’s capital gain and consequently the computation of exemption under section 54EC, shall have to be worked out on the basis of substituted deemed sale consideration of transfer of capital asset in terms of section 50C. Any other interpretation, particularly one canvassed by the learned Counsel for the Assessee, would render the provisions of section 50C redundant. In a situation like the one on hand, even if for the purpose of section 48, in terms of section 50C of the Act, the sale consideration deemed to have been received by the Assessee may be much higher than one declared in the sale deed, the Assessee would claim no further capital gain tax liability by simply claiming to have made investment in specified asset the full declared sale consideration. Tribunal has not committed error in interpreting the relevant statutory provision. Income Tax Appeals are therefore dismissed.

  ---

• 2019 (3) TMI 1203
  Entitlement for exemption u/s 54 - agreement was entered into for joint development of property - building under construction as the same having not constructed within the stipulated period of three years for availing benefit as per Section 54(1) - contention of the Revenue is that the possession of the property in question was handed over to the Developer - 'transfer' within the meaning of Section 2(47) - execution of Joint Development Agreement and execution of Power of Attorney in favour of the Developer - HELD THAT:- The contention of the the Revenue is that the possession of the property in question was handed over to the Developer is not borne out from any evidence on record. The Tribunal, in our opinion, has rightly held that mere licence to enter into the property for measuring the land and preparing the plan for construction of the building cannot be construed as handing over physical possession of the property. Section 53A of the Transfer of Property Act also does not get attracted in such circumstances, as, admittedly, not even a part of consideration had passed on from the Developer to the Assessee in the Assessment Year 2011-2012. The mere execution of Joint Development Agreement and execution of Power of Attorney in favour of the Developer does not amount to 'transfer' within the meaning of Section 2(47) of the Act. Findings recorded by the Tribunal in the present case are findings of facts and they do not give rise to any perversity giving rise to a Substantial Question of Law so as to call for interference by this court under Section 260A - decided against revenue.

  ---

• 2019 (3) TMI 1202
  Addition towards income from Pisiculture - AO estimated the water spread area at 90% of the water spread area - assessee has taken 124 acres of agricultural land on lease and cultivated the fish ponds - AO did not accept the submission of the assessee and the guidelines of the CBDT to consider 70% of water spread area for estimation of income - HELD THAT:- The assessee has taken 124 acres of land on lease for Pisciculture. The CBDT after considering the facts of the case held that 70% of the water spread area is reasonable. Therefore, we hold that for the purpose of estimation of income, considering 70% of the water spread area of 124 acres is reasonable and in consonance with the instructions issued by the CBDT. Except the letter given by the assessee to the bank, there was no other evidence brought on record by the AO by making physical inspection or any other evidence from the revenue authorities. This view is also supported by the order of this Tribunal in Krishna Fisheries supra. Therefore, we consider 70% of water spread area is reasonable. Estimation of income - HELD THAT:- The decision relied upon by the assessee is distinguishable on facts and cannot be applied in the assessee s case. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. Hence, we direct the AO to estimate the income at Rs. 15,000/- per acre on 70% of the water spread area. The assessee s appeal on this ground is allowed partly. Unexplained cash deposits in the bank - assessee has taken the gold loan for carrying agricultural opearations and the gold loan was utilized for the said purpose - sale proceeds of the crops grown in the paddy field were said to have been deposited in the Bank account for repayment of the Bank loan, therefore, argued that the source stands explained, hence no addition is required to be made - HELD THAT:- The assessee has not produced any bills and vouchers with regard to the agricultural operations and the expenditure incurred. The assessee also did not give break-up of expenses incurred for cultivating the 10 acres of agricultural land. The assessee neither furnished the break-up of expenses nor produced the bills and vouchers. The assessee also did not furnish the date of taking the gold loan. As per the bank account copy placed before us, the account was opened on 01.12.2012 by the time the entire agricultural operations of Rabi crop would be completed except the tilling activities. Therefore, the explanation of the assessee that the gold loan was utilized for the purpose of agricultural operations was also not supported by any evidence. In any case, for cultivation of 10 acres of agricultural land, the expenditure of Rs. 14.17 lakhs is exorbitant and unbelievable. The assessee submitted that he had sold the agricultural produce and the deposits were made out of sale of paddy. The assessee neither furnished the names of rice millers nor furnished the details of amounts received from various rice millers towards sale of paddy. - Decided against assessee Source of gold loan taken by the assessee which was available as a source for cash deposits - HELD THAT:- The assessee has not furnished the actual date of taking the gold loan. The assessee also did not furnish the purpose of application of gold loan. The assessee being a business man, having fish ponds and liquor business, operating regular bank accounts and it is unbelievable to accept the contentions that cash was available intact. Therefore, it is beyond doubt that the assessee has applied the bank loan for the purpose which was not explained and the same cannot be taken as a source for deposits made in the bank account. Accordingly, on this count also, the assessee fails. Addition towards unexplained cash deficit - assessee explained that there was sufficient cash balance out of agricultural operations and AO did not convince with the explanation offered by the assessee - HELD THAT:- In the instant case, the AO estimated the income from pisciculture as well as from sale of liquor after rejecting the books of accounts. The AO also made the unaccounted cash deposit as per books of accounts. Once, the AO rejects the books of accounts and estimate the income, the AO is not permitted to revisit the same books of accounts and bring the cash deficit as income in the hands of the assessee unless there are unexplained investments. Therefore, we set aside the orders of the lower authorities and delete the addition made by the AO. The appeal of the assessee on this ground is allowed.

  ---

• 2019 (3) TMI 1201
  Revision u/s 263 - assessment competed u/s 143(3) - interest payment simply allowed by AO without making enquiry - chit loss claim accepted by AO without making any enquiry - HELD THAT:- Pr.CIT has specifically pointed out in his order that assessee has invested in the firm of Rs. 18,85,000/- as against the bid amount of Rs. 36.00 lakhs, ignoring this fact the AO has allowed the entire chit loss claimed under the head ‘income from other sources’, instead of allowing the proportionate chit loss on the bid amount against income from M/s. Shine Steels received by way of interest & remuneration. Therefore, the order passed by the Assessing Officer is prima-facie erroneous and prejudicial to the interests of the Revenue as pointed out by the Pr.CIT. We find that the Assessing Officer simply accepted the explanation of the assessee and assessment is completed. Therefore, the Pr.CIT has examined all the facts and gave a finding that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. We fully agree with the order passed by the Pr.CIT. No reason to interfere with the order passed by the Pr.CIT. Thus, this appeal filed by the assessee is dismissed.

  ---

• 2019 (3) TMI 1200
  Addition u/s 14A - suo moto disallowance by assessee - correctness of the claim of the assessee in respect of such an expenditure in relation to the income which does not form part of the total income under the Act - HELD THAT:- Before jumping to the conclusion that the disallowance has to be worked out in accordance with the provisions of Rule 8D(2) of the Rules, AO did not refer to the correctness or otherwise of the disallowance made by the assessee herself. Requirement of law under Rule 14A(2) is that it is only if the AO having regard to the accounts of the assessee is not satisfied with the correctness of the claim in respect of such an expenditure in relation to the income which does not form part of the total income under the Act then only the AO shall determine the amount of expenditure incurred in accordance with the method prescribed under Rule 8D. Rule 8D(1)(a) also reflects this mandate of law. When we apply the provisions of Section 14A read with Rule 8D(1)(a) in the light of the observations in the case of Godrej & Boyce Manufacturing Co. Ltd [2017 (5) TMI 403 - SUPREME COURT OF INDIA] to the facts of the case, irresistible conclusion is that any addition made in violation of the above, cannot be sustained. We, therefore, while respectfully following the above line of decision allow grounds of assessee’s appeal and direct the learned AO to delete the same. Income from trading of securities - Correct head of income - income from short term and long term capital gain OR income from business - in respect of all the three years, CIT(A) had taken a consistent view that this receipt must be treated not as income from business but has to be treated as income from short term capital gain and long term capital gain - rule of consistency - HELD THAT:- A coordinate bench of this tribunal in the light of the decision of CIT vs Avinash Jain [2013 (1) TMI 315 - DELHI HIGH COURT] and CIT vs CNB Finwiz Ltd.[2014 (8) TMI 645 - DELHI HIGH COURT] held that the law on this aspect is fairly settled and in the facts and circumstances of the case, learned CIT(A) was right in directing the AO to treat the impugned receipt as income from capital gains and not as business income. In view of the consistent view on this aspect for all the Asstt. Years 2010-11, 2012-13 and 2013-14 and a coordinate bench confirming such a view for the AY 2010-11 whereas Revenue accepting the same for AY 2012-13, we are of the considered opinion that in the absence of any change in the fundamental facts permeating these three years, it would not be appropriate to allow the position to be changed in a subsequent year. We find our opinion fortified by the decision of the Hon’ble Supreme Court in the case of Radhasoami Satsang vs CIT [1991 (11) TMI 2 - SUPREME COURT] - direct the learned AO to treat this particular receipt as income from short term and long term capital gain but not as income from business. - decided against revenue

  ---

• 2019 (3) TMI 1199
  Levy of penalty u/s 271(1)(c) - assessment u/s 143(3) - undisclosed income - defective notice - conditions precedent for a passing of valid penalty orders u/s 271(1)(c) ignored - HELD THAT:- Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) and M/S SSA’S EMERALD MEADOWS [2015 (11) TMI 1620 - KARNATAKA HIGH COURT]- Decided in favour of assessee.

  ---

• 2019 (3) TMI 1198
  Maintainability of rectification application filed beyond the period specified and mandated under section 154(7) - Intimation was processed under section 143(1)- non-grant of TDS credit as per Form No.16 issued by his employer, Government of Karnataka - no amendment / rectification shall be made after the expiry of 4 years from the end of the financial year in which the order sought to be amended was passed - HELD THAT:- In the case on hand, as rightly pointed out by the CIT(A), the assessee ought to have filed the said rectification application under section 154 of the Act on or before 31.03.2014. However, in the case on hand, the assessee has admittedly filed a rectification application on 18.03.2017; which is barred by limitation being filed belatedly with a delay of almost three years. All the averments to the contrary put forth by the assessee / learned AR, as to what the AO / CIT(A) ought to have done / not done etc., does not come to the assessee’s rescue as the assessee has not been able to establish the basic requirement; i.e., that its rectification application dated 18.03.2017 before the AO was maintainable as per the relevant mandate of the provisions of section 154(7). With due respect, as perused the judicial pronouncements cited are rendered in contexts that are different from the issue of dispute in the case on hand i.e., whether the assessee’s rectification application dated 18.03.2017; filed belatedly by almost three years beyond 31.03.2014, as per mandate of section 154(7) of the Act; is maintainable. In view of the facts and circumstances of the case and the relevant provisions of section 154 we find no cause to interfere with or differ from the finding rendered by the CIT(A) - Decided against assessee.

  ---

• 2019 (3) TMI 1197
  Deduction u/s 80IB(10) - part completion of project - Deduction allowable on pro-rata basis qua the complete part of the project - HELD THAT:- As decided in assessee's own case for A.Y. 2011-12 it is a settled legal proposition that the claim of deduction is allowable on pro-rata basis qua the complete part of the project. Considering the above, we are of the opinion that the assessee is entitled to pro-rata deduction u/s.80IB(10) for the buildings B, C and D. We therefore, uphold the order of CIT(A). The grounds raised by the Revenue are dismissed.

  ---

• 2019 (3) TMI 1196
  Assessment u/s 153A - addition based on excel sheet found during the course of search and also the statement of assessee during the course of search - addition in the case of various family members as unexplained investment in the acquisition of space in Indirapuram Habitat Centre - Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under Section 153A of the assessee? - Whether the addition can be made only on the basis of statement given by the assessee during the course of search? - HELD THAT:- When during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person. Value of the statement recorded during the course of search - HELD THAT:- We, respectfully following the decision of Harjeev Aggarwal [2016 (3) TMI 329 - DELHI HIGH COURT] and Best Infrastructure (India) (P.) Ltd. [2017 (8) TMI 250 - DELHI HIGH COURT] hold that the statement recorded during the course of search on standalone basis without reference to any other material discovered during the search and seizure operation would not empower the Assessing Officer to make the addition merely because any admission was made by the assessee during the search operation. Admittedly, in this case, during the course of search of assessee’s premises, no incriminating material was found except the statement of one family member. Solely on the basis of the statement of one family member, the addition was in the case of all the family members, which cannot be done. The addition for unexplained investment can be made only in the year when the investment is made and not in any other year. In view of the above, even as per the statement of Shri Lalit Mahajan, no addition can be made in this year. In view of the above, we do not find any justification to interfere with the order of the learned CIT(A). The same is upheld. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 1195
  Penalty u/s. 271(l)(c) - disallowance representing of interest expenditure considered as attributable on the outstanding balance due from Chitralekha Printers and Publishers Pvt. Ltd., in assessment order passed u/s. 143(3) - difference in grounds on penalty initiated and finally imposed - HELD THAT:- Although the penalty was initiated for furnishing of inaccurate particulars of income whereas the penalty has finally been levied for concealment of income. Even, in the show-cause notice, AO has failed to mention the specific charge against the assessee. These two expressions i.e. furnishing of inaccurate particulars and concealment of income, as per judicial pronouncements of higher judicial authorities, carry different connotations and non-framing of specific charge against the assessee vitiates the penalty proceedings. See Manjunath Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT]- wherein it is observed that concealment of income and furnishing of inaccurate particulars of income in Section 271(1)(c) carry different meanings/connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. - decided in favour of assessee.

  ---

• 2019 (3) TMI 1194
  Unexplained cash credit u/s 68 - share premium/share application money unexplained - HELD THAT:- The assessee has proved all the three conditions/ingredients which are required to be fulfilled such as genuineness, creditworthiness and identity of the investors and therefore the addition as made under section 68 by the AO is not correct. We are fully in agreement with the conclusion drawn by the Ld. CIT(A) reversing the order of AO by holding that all the three ingredients were duly specified. Therefore, we do not find any reason to deviate from the finding as given by the Ld. CIT(A) accordingly we uphold the order of Ld. CIT(A) and dismiss the appeal of the Revenue. Addition u/s 69C - disallowance being 5% of unexplained cash credit as made by the AO under section 69C as unexplained expenditure is also ordered to be deleted as the same does not survive at all. - Decided in favour of assessee

  ---

• 2019 (3) TMI 1173
  Revision u/s 263 - Whether depreciation at the enhanced rate of 30% for a vehicle can be claimed by an assessee who does not run a business of hiring out the vehicle for consideration? - distinction ought to be made between the two parts to Section 263 - HELD THAT:- SLP dismissed.

  ---

• 2019 (3) TMI 1172
  Condonation of delay - delay of 362 days - reasons for delay - As per the High Court, the said delay is not satisfactorily explained - HELD THAT:- The main cause of delay was difference of opinion between the two officers and ultimately legal opinion was taken and it was decided to file the appeal. In view of the aforesaid and having regard to the importance of the matter, we are of the opinion that the High Court should hear the appeal on merits. We, thus, set aside the impugned order. The respondent can be compensated by award of cost. We condone the delay in filing the appeal in the High Court, subject to payment of cost of Rs. 1,00,000/- (Rupees One Lakh only), to be paid by the appellant to the respondent within a period of four weeks. The matter is remitted back to the High Court.

  ---

• 2019 (3) TMI 1171
  Reopening of assessment - reasons not supplied to the assessee during the contemporary period - HELD THAT:- SLP Dismissed.

  ---

• 2019 (3) TMI 1170
  Penalty u/s 271(1)(c) - error of the Chartered Accountant led to the assessee not complying with the law - Chartered Accountant ignorance of Section 40(ii) - Assessee's malafide intention - inadmissible expenditure from the profits of the business - HELD THAT:- SLP dismissed.

  ---

• 2019 (3) TMI 1169
  Penalty levied u/s 271 [1](c) - addition on account of capital gain wrongly claimed as exempt by the assessee? - assessee had not offered the amount of tax on the basis of artificial dispute with mala fide intention and mere disclosure in notes did not protest the assessee from penal action provided under Section 271 [1](c) - HELD THAT:- Special Leave Petition dismissed.

  ---

• 2019 (3) TMI 1168
  Income arising out of shipping activities - system of allocation of expenses - Addition on account of adjustment of the ratio for allocation of administrative and other expenses between tonnage and non-tonnage activity - By applying direct income proportionate method, the A.O. allocated the administrative expenses to the extent of 73.06 % to the tonnage tax activity and rest 26.94 % to the non tonnage tax business - Tribunal deleted the addition - HELD THAT:- Tribunal did not approve the stand taken by the A.O. for reallocation of the administrative expenses rejecting the assessee’s treatment which was based on “Annual Operating Charter Hire Income method”, on the ground that in relation to other expenses namely, total operating expenses, interest and finance charges, the A.O. had accepted the method of accounting adopted by the assessee. Similarly, in relation to depreciation also, the A.O. had not make any adjustments. Only in relation to the administrative expenses, the A.O. made the adjustments We are broadly in agreement with the view taken by the Tribunal. No question of law arises. - Decided against revenue

  ---

• 2019 (3) TMI 1167
  Rectification petition u/s 254 - scope of undisclosed income u/s 158B(b) - rectification of mistake of fact as well as mistake of law - additions in the hands of the Assessee for NRI gift by CIT(A) - overlooking the disclosure of the NRI Gifts in the regular return filed prior to the date of search - search u/s 132(4) with regard to the NRI gifts - upholding the addition by Tribunal regarding NRI Gifts as undisclosed income Finding of facts - substantial question of law - HELD THAT:- No substantial questions of law arises in the present case. The findings on facts about the alleged NRI gifts which the Assessee in the present case specifically admitted in the statements recorded under Section 132(4) at the time of search that it was his own money routed back to his own family members who were the partners of the firm through an alleged NRI and was undisclosed income. There can be no better evidence than the said specific admission of the Assessee. Never, gifts have been accepted by any Assessing Authority by treating the explanation and confirmations given by the Assessee as sufficient and never was the NRI Donor produced and found to be genuine by the Assessing Authority. The CIT (Appeals) has discussed all these aspects after the specific enhancement notice was given by him and thereafter giving the cogent findings of the facts. Thus on the admission of the Assessee himself that such money was his own undisclosed income brought back in the country through alleged NRI gifts was the best evidence and in our opinion was sufficient to bring it to tax in the hands of the Assessee Firm, and the learned CIT (Appeals) cannot be said to have faulted in any manner in serving an enhancement notice, inter alia, on the said issue and making the additions in the hands of the Assessee Firm. In our opinion, the Tribunal was justified in rejecting the Miscellaneous Petition of the Assessee also under Section 254 of the Act as there was no mistake apparent in the original appeal order passed by the Tribunal - decided against the Assessee

  ---

• 2019 (3) TMI 1166
  Disallowance u/s 40(A) - related party transaction - sum paid to its sister concern as advisory fees - there are no documentary evidence produced when in the nature of trade such documentary evidence is not possible to be maintained as all institutions are conveyed by telephonic messages - Finding of facts - perversity - substantial questions of law - HELD THAT:- It cannot be contended that merely because there was an Agreement between the Assessee Company and the related party or the partnership firm, the Research and Advisory fees made by the Company to the partnership firm, in which one of the Directors Mr.Amarnath had a substantial interest, ought to be allowed wholly or partly as a business expenditure. The mere fact that the same person, Mr.M.Amarnath who had substantial interest in the partnership firm, was the person to whom Research and Advisory fees was paid by the Assessee Company was also the Director in the Assessee Company itself and could have rendered such advisory services to the Assessee Company in the best business interest of Assessee Company even pro bono in which he himself was the Director. Therefore, naturally a doubt could arise in the minds of the Assessing Authority about the genuineness of the payment made to the partnership firm, a related party in which the same person had substantial interest. Tribunal on the basis of materials available before it, cannot be said to have committed any perversity in making such disallowance even though resulting in the reversal of the order passed by the First Appellate Authority viz., CIT (Appeals). The Tribunal being the second and higher tier of the Appellate Forums viz., higher than the CIT (Appeal), naturally has the same and wider powers of the lower Appellate Authority and therefore reversal by the final fact find body ie., the Tribunal in all such cases need not be and cannot be declared to be perverse. The scope of Section 260-A of the Act is limited and only the substantial questions of law can be entertained and answered by the High Court u/s 260-A of the Act - DECIDED against the Assessee and in favour of the Revenue.

  ---

• 2019 (3) TMI 1165
  Penalty u/s 271(1)(c) levied on the legal representative/heirs - penalty was initiated assessee-husband but not concluded prior to his death - penalty in hand of wife - interpretation of Section 159 - HELD THAT:- Tribunal was perfectly justified in setting aside the said penalty against the assessee/wife of the deceased late Sri S.Shanmugam, by the impugned order, as the penalty proceedings in question were initiated originally against the assessee-husband only and were not concluded against the said assessee, prior to his death on 23.01.2011. Since the provisions of Section 271 (1) (c) depend upon the guilty animus or mens rea on the part of the assessee concerned, naturally, as legal representative, the wife cannot be held liable to defend those penalty proceedings or be held guilty of any mens rea on the part of the husband. Therefore, unless the penalty proceedings are concluded against a living assessee, the legal heirs cannot be held liable to face those proceedings or pay any sum determined as penalty payable under Section 271 (1) (c) of the Act. - Decided in favour of the Assessee and against the Revenue.

  ---

• 2019 (3) TMI 1164
  Rectification of mistake u/s 154 - disallowance of brought forward losses as well as TDS credit - Return u/s 134(1) as processed u/s 143(1) - HELD THAT:- It emerges during the course of hearing that neither the Assessing Officer nor the CIT(A) has adjudicated assessee’s grievance on merits in section 154 rectification or regular appellate proceedings as they have gone by technical objections regarding non-maintainability of the former and that of limitation in latter grievance. Therefore deem it appropriate to restore the instant issue of brought forward from 2008-09 and TDS credit to the Assessing Officer for necessary adjudication on merits after affording three effective opportunities of hearing to the taxpayer who shall be at liberty to file on record all necessary evidence. - Assessee’s appeals are allowed for statistical purposes

  ---

• 2019 (3) TMI 1163
  Application for recognition u/s 80G denied - CIT(E) has already granted the assessee trust registration under section 12AA - charitable activity or not? - main objection by the CIT(E) to grant of recognition under section 80G of the Act was that the assessee trust has not carried out any noticeable activity till formation of the Trust - HELD THAT:- What is significant / noticeable activity is very subjective and cannot be the basis for rejection of the assessee’s application. It is for the assessee to determine which of its activities in furtherance of its objects are to be taken up initially. Grant of approval / recognition under section 80G of the Act can act as a catalyst to encourage prospective donors to look at the intended activities / objects and possibly provide financial support through donations / contributions. Strangely, in the case on hand, on the very same day i.e., 25.07.2018 when he rejected the assessee’s application for recognition under section 80G of the Act, the CIT(E) has granted the assessee-trust registration under section 12AA of the Act vide order dated 25.07.2018; ostensibly, after examination of the assessee’s objects, etc., which the CIT has categorized as “Advancement of any other object of general public utility”. Restore the matter to the file of the CIT(E) to examine the matter afresh in the light of his order granting the assessee registration under section 12AA of the Act and our observations hereinabove. - Assessee’s appeal is allowed for statistical purposes.

  ---

• 2019 (3) TMI 1162
  Penalty u/s 271(1)(c) - claim of bad debt disallowed - disallowance has been deleted by the Tribunal itself - HELD THAT:- Sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income - the quantification of the penalty is depended upon the addition made to the income of the assessee. Since in the present case, basis for visiting the assessee with penalty has been deleted by the Tribunal itself, the impugned penalty does not survive. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 1161
  Penalty u/s 271(1)(c) - quantification of the penalty - HELD THAT:- The quantification of the penalty is depended upon the addition made to the income of the assessee. Since in the present case, basis for visiting the assessee with penalty has been extinguished by quashing the re-assessment order and thereby deleting addition by the Tribunal, the impugned penalty does not survive. There is no room for the Revenue to impose penalty under section 271(1)(c) in this case. Therefore, we cancel the impugned penalty and set aside both orders of the Revenue authorities passed under section 271(1)(c) of the Act. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 1160
  Exemption u/s.11 - registration certificate u/s.12A was missing - FIR lodged and informed to department - Trust filing return mentionning certificate no and claiming exemption u/s.11 - Subsequently obtained registration u/s.12A - HELD THAT:- The assessee has obtained registration certificate u/s.12A since assessment year 1975-76 onwards through certificate No.1845. The said registration certificate was lost and the assessee has also informed the Department about the same and the assessee filed FIR regarding the missing of the 12A registration certificate. Therefore, legal responsibility has been duly complied with by the assessee. The requirement of law is crystal clear that once registration u/s.12A or even after amendment section 12AA is granted then it is for perpetuity until or unless expressly revoked by the Department as per provisions of law. Through the copies of return acknowledgements filed before us, it is clear that the assessee was claiming the benefit of registration u/s.12A of the Act and subsequently getting benefit u/s.11 of the Act especially from assessment year 2004-05 to 2006-07. The facts further reveal that in order to keep all speculations at rest, the assessee has again applied for fresh registration u/s.12AA of the Act on 17.06.2013 and have got the certificate of registration u/s.12AA of the Act from 10.12.2013. The facts therefore demonstrates that the assessee has all throughout acted in a bona-fide manner and absolutely there is no doubt that it is registered u/s.12A of the Act. That all throughout the returns filed, the assessee has claimed benefit of exemption u/s.11 of the Act being registered u/s.12A of the Act and the Revenue Authorities have accepted such return and there has not been any objection at any point of time from the Revenue Authorities. Taking totality of facts and circumstances into consideration legal right by way of registration u/s.12A of the Act has been bestowed on the assessee trust and therefore the benefit of exemption u/s.11 of the Act should also be provided to the assessee in the relevant assessment year. - Decided in favour of assessee.

  ---

• 2019 (3) TMI 1159
  Assessment u/s 144 - Levy of penalty u/s. 271(1)(c) - non appearance before AO & CIT(A) - issued notices u/s. 143(2) and u/s. 142(1) - All the notices were again returned back by the postal authority with remarks ‘NF’ - service through affixture at the address mentioned in the return of income - No intimation to change of address from Ahmadabad to Pune - working Director was in jail other Director being in the advanced age. - HELD THAT:- It is an undisputed fact that the assessee neither appeared before Assessing Officer nor made adequate effort to defend the appeal before the First Appellate Authority. Ostensibly, the assessee has not communicated change in address from Ahmedabad to Pune to the Assessing Officer.Under such circumstances the AO had no option but to issue notices on the address available with him. The Assessing Officer issued notices on the address mentioned in the return of income as well as new address of the assessee at Pune. However, the notices were retuned back un-served by the postal authority with remarks ‘left/NF’. Thus, AO was constrained to proceed u/s. 144 of the Act. Even before the Commissioner of Income Tax (Appeals) after initial representation none appeared at the time of final hearing of first appeal. Mrs. Dahuram Sridhar one of the Directors of assessee company has filed an affidavit stating reasons for non-representation of assessee before the authorities below. A perusal of affidavit indicate, that the non-appearance of assessee before authorities below was on account of crisis faced by the assessee due to arrest of Director who was actively involved in the conduct as assessee’s business and the other Director being in the advanced age. Taking into consideration entirety of facts and the principles of natural justice, we are of considered view that an opportunity should be afforded to the assessee to represent its case before the authorities below. Consequently, the impugned order is set aside and the issues/additions assailed in appeal are restored back to the file of Assessing Officer for denovo adjudication. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee - Appeal of assessee is allowed for statistical purpose with the aforesaid directions.

  ---

• 2019 (3) TMI 1158
  Penalty u/s 271(1)(c) - Defective notice - return of income declaring the total income at NIL - addition of capital gain - recording the satisfaction at the time of initiation of penalty proceedings u/s 271(1)(c) - HELD THAT:- The legal requirement of making a clear cut reference to the applicable limb of clause (c) of section 271(1) of the Act is not met by the Assessing Officer while initiating and levying the penalty u/s 271(1)(c) of the Act. Thus, the satisfaction suffers from ambiguity in the mind of the Assessing Officer. Therefore, we are of the opinion that, considering the above referred binding judgments, such penalty order is unsustainable in law legally. It is a settled legal proposition that the Assessing Officer is under obligation to specify the appropriate limb of clause (c) of section 271(1) of the Act at the time of initiation as well as at the time of levy of penalty. We are of the opinion that the order of the CIT(A) is reasoned one on this legal issue. Thus, we do not find any infirmity in the order of the CIT(A) on this legal issue. Accordingly, the ground raised by the Revenue is dismissed.

  ---

• 2019 (3) TMI 1157
  Addition based on statement recorded on oath u/s. 133A - Assessee had offered additional income from merchant trading from China to USA and income from wind turbine at Tamilnadu - no incriminating material was found in the survey - assessee retracted disclosure stating that it was purely adhoc disclosure and the income & expenses relating to merchant trading as well as turbine project was properly recorded in the books of accounts - HELD THAT:- The factual matrix that assessee’s own funds were far in excess of investments made by the assessee remain unrebutted. Nothing has been placed on record to controvert the findings in impugned order. So far as expense disallowance is concerned, we find that the disallowance has been restricted to the extent of exempt income earned by the assessee which is in line with the settled legal positions. Therefore, finding no infirmity in the impugned order, we dismiss this ground of revenue’s appeal. No incriminating material was found in the survey proceedings and the additions were made merely on the basis of statement given by the director without bringing on record any evidences either during survey proceedings or during assessment proceedings. It was further noted that these statements made during survey proceedings, on standalone basis, would have no evidentiary value in terms of case of S. KHADAR KHAN SONS [2007 (7) TMI 182 - MADRAS HIGH COURT] confirmed by SC [2013 (6) TMI 305 - SUPREME COURT] Evidentiary value unless supported by certain circumstantial evidences and therefore, the reliance of first appellate authority on cited binding judicial pronouncements to arrive at the conclusion was quite appropriate and no infirmity could be found in the same. Another important factor to be noted is that the stated transactions were carried out through banking channels and duly recorded in the books of accounts which were subject to Audit. The complete details of these transactions along with relevant documentary evidences was placed by the assessee before AO and therefore, fully discharged the onus casted upon assessee, in this regard. - Decided against revenue.

  ---

• 2019 (3) TMI 1156
  Eligibility of claim of deduction u/s 10B - eligibility of alternative claim u/s 10A - assessee is a 100% Export Oriented Unit (EOU) - AO denied the claim on the ground that it is not a 100% EOU as defined in section 10B, since approval under the STPI scheme cannot be considered sufficient for granting the benefits of section 10B - HELD THAT:- Referring to judgment of REGENCY CREATIONS LTD., VALIANT COMMUNICATIONS LTD. [2012 (9) TMI 627 - DELHI HIGH COURT] approval as 100 per cent Export Oriented Undertaking under Software Technology Park of India (STPI) scheme cannot be considered sufficient for granting benefit of section 10B of the Income Tax Act.1961. The facts of the case in above decision of the Hon’ble Delhi High Court apply squarely in this case. Accordingly, the assessee, not being approved by the Board appointed by the Central Government in exercise of powers conferred u/s 14 of the Industries (Development and Regulation) Act, 1951, is not eligible for exemption u/s 10B of the I.T.Act. Alternative claim of deduction u/s 10A - Assessee had made a claim by furnishing a certificate in Form No.56F before the assessment order was finalized - HELD THAT:- To claim deduction u/s 10A the assessee is required to file audit report in Form No.56F. Even if the certificate as required u/s 10A was not filed along with the return of income, the provision regarding filing of audit report is only directory and not mandatory and the audit report can be filed during the course of assessment proceedings. In the instant case, the audit report was filed in the course of assessment proceedings and there is no error in granting deduction u/s 10A We are of the view that the assessee is not entitled to deduction u/s 10B of the I.T.Act, whereas, the alternative claim of deduction u/s 10A of the I.T.Act, the claim should be granted to the assessee provided that necessary pre-condition for satisfaction of the same are qualified in assessee’s case - Decided partly in favour of assessee.

  ---

• 2019 (3) TMI 1155
  Addition of notional interest - availability of non-interest bearing funds - whether advance given for business exigencies? - appellant is not in the business of money lending - HELD THAT:- Assessee had availed cash credit facility long back and that the sums advanced were made during the relevant previous year as such there was no nexus between sums borrowed with funds advanced to M/s Dashmesh Steel Hypermart. It is also claimed the advance was given for business exigency i.e to avail a discount of 10% on the purchases made from M/s Dashmesh Steel Hypermart and on total purchases of Rs. 41.10 lakh a discount of Rs. 3,98,920.00 has been received. Thereafter, due to supply chain issues with M/s Essar Steel, the assessee was given to understand that discount further shall not be given by M/s Dashmesh Steel Hypermart, as such purchases were stopped. Further that a part of advance was returned back aggregating to Rs. 1.22 Crores. In this regard the in the case of Reliance Utilities & Power Pvt. Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] held that the disallowance out of interest expenditure is not called for when the assessee has got sufficient own funds. Where the assessee has own funds as well as borrowed funds, a presumption can be made that advances given for non business purposes have been made out of own funds. A similar view has been held by the Hon’ble Supreme Court in Munjal Sales Corporation vs. CIT [2008 (2) TMI 19 - SUPREME COURT]. Therefore, the contention of the Assessee that no disallowance of interest was called for as it had non-interest bearing funds available in its capital account was not found to be justified by the CIT(A). As pointed out by the AO, the Assessee had only funds to the extent of Rs. 1,02,54,062/- as on 31/03/2QJ0 in the partner’s Capital account, therefore only to this extent it can be considered that non-interest bearing funds were available, accordingly on balance funds (Rs 3,43,00,000/- less Rs. 1,02,54,062/-) the disallowance of interest was valid. Therefore, the AO was rightly directed to recompute the disallowance of interest by the Ld. CIT(A) - decided against assessee.

  ---

• 2019 (3) TMI 1154
  TDS u/s 194J - payments to the Distributors of the Films constitutes fee for professional or technical services or royalty - Addition u/s 40(a)(ia) - HELD THAT:- Assessee is in the exhibition of films procured from distributors on revenue sharing basis. The Revenue shared by the assessee with the distributor to exhibit the cinematographic film is outside the scope of expression royalty under Clause (v) to Explanation 2 to Section 9(1)(vi) of the Act referred to under the provisions of Section 194J of the Act. Therefore, such payment to distributor does not call for deduction of TDS. Section 40(a)(ia) of the Act do not come into play for disallowance of the expenses incurred by the assessee for exhibition of films. - Decided in favour or assessee.

  ---

• Insolvency & Bankruptcy

• 2019 (3) TMI 1193
  Liquidation of the Corporate Debtor - no Resolution Plan submitted - CIR process - Resolution Profession, on the recommendation of the CoC, filed an Application for further extension of the time period of CIR Process on the ground that the proceedings under the I&B Code, 2016 were suspended between 23.10.2017 to 21.12.2017 by virtue of the orders of the Hon’ble High Court of Madras and this Authority had extended the time period of CIR Process till 22.06.2018 - HELD THAT:- It is stated by the Resolution Professional that the CoCs has unanimously rejected the revised offer submitted by the Resolution Applicant on 07.01.2019 with 100 per cent voting share. Since no Resolution Plan has been received by this Authority under Sub-Section (6) of Section 30 of the I&B Code, 2016, before the expiry of the Corporate Insolvency Resolution Process the Corporate Debtor has to be ordered for Liquidation. This Authority hereby orders for liquidation of the Corporate Debtor viz., M/s. Infinitas Energy Solutions Pvt. Ltd., which shall be conducted in the manner as laid down in Chapter III of part II of the I&B Code, 2016.

  ---

• 2019 (3) TMI 1192
  Corporate insolvency process - existence of "financial debt" - unsecured loan outstanding - ‘debt’ and ‘default’ on the part of the ‘Corporate Debtor’ - whether the amount claimed by Respondent No. 1 is not a ‘Financial Debt’ within the meaning of Section 5(8) and Respondent No. 1 cannot be treated as a ‘Financial Creditor’ for the purposes of I&B Code? - HELD THAT:- The balance sheet as on 31st March, 2017 as of the reply affidavit filed by Respondent No.1, inter alia, reflects a non-current liability of Rs. 4,72,76,182/- treated as ‘long term borrowings’ and not treated as shareholder’s funds. Same factual position is reflected in the communication made by the Company Auditor ‘Ganesh Mehta’, Partner ‘Ganesh and Rajendra Associates’ addressed to Respondent No.1 in his communication dated 5th December, 2017 forming Annexure D to the reply affidavit of Respondent no.1. Communication reflects total unsecured loan of Rs. 4,72,76,182/- against the Corporate Debtor in the books of the Company as on 31st March, 2017, the breakup showing the loan amount of Rs. 1,45,36,475/- in the name of Respondent No.1. In the face of this documentary evidence it is abundantly clear that the amount disbursed by Respondent No.1 to the Corporate Debtor was in the nature of debt treated as long term loan and not as an investment in the nature of share capital or equity. Such disbursement cannot either be treated as largesse. We are convinced that the aforesaid amount outstanding as against Corporate Debtor, default whereof is not in issue, has all the trappings of a ‘financial debt’ and falls within the purview of Section 5(8)(f) of the I&B Code and Respondent No.1 is covered by the definition of ‘Financial Creditor’. Appeal dismissed.

  ---

• 2019 (3) TMI 1191
  Corporate Insolvency Resolution Process - existence of financial debt - period of limitation for application u/s 7 - evidences of alleged debt and occurrence of alleged default - HELD THAT:- IL FS Financial Services Limited - ( Financial Creditor ) has disbursed the amount and the Corporate Debtor has raised the amount with an object of having economic gain or commercial effect of borrowing. The clauses of SPA if read along with the LoU , we find that the terms of transaction involved not only the purchase of shares but it shows the date by which the amount of transaction was to be repaid by the Corporate Debtor which had fallen due on 19th August, 2012. There was an element of time value of money , particularly, when one of the conditions related to internal rate of return of 15% on the transaction, therefore, the time value of money having already shown, we hold that the amount disbursed by IL FS Financial Services Limited - ( Financial Creditor ) and the Corporate Debtor had agreed to reverse the transaction by purchasing the shares within a specified time along with the payment of 15% accrual on 20th August, 2009. We hold that the amount if disbursed by IL FS Financial Services Limited - ( Financial Creditor ) comes within the meaning of financial debt , therefore, the IL FS Financial Services Limited - ( Financial Creditor ) has been rightly claimed to be a Financial Creditor and filed Form-1 under Section 7 of the I B Code . Limitation - HELD THAT:- In the present case, it is not in dispute that right to apply under Section 7 accrues to IL FS Financial Services Limited - ( Financial Creditor ) since 1st December, 2016, when I B Code came into force. Therefore, the application under Section 7 being within the period of three years from the date of right to accrue the application, we hold that the application under Section 7 was well within the time. Whether the claim was barred by limitation or not? - HELD THAT:- There is a continuous cause of action and the Corporate Debtor never raised the question of limitation and on the other hand, a reply vide letter dated 18th November, 2015 intimating that the suit is pending and therefore, to withdraw the petition. There being a continuous cause of action, we hold that the application under Sections 433 and 434 of the Companies Act, 1956 was not barred by limitation and the Corporate Debtor cannot take plea that there is no debt payable in law. Abatement - whether application under Sections 433 434 of the Companies Act, 1956 on transfer abated, IL FS Financial Services Limited - ( Financial Creditor ) having failed to file Form-1 under Section 7 within 60 days i.e. by 5th February, 2017? - HELD THAT:- In view of the decision of the Hon ble Supreme Court in Zile Singh (2004 (10) TMI 553 - SUPREME COURT), we hold that the case of the Appellants is covered by the Notification dated 29th June, 2017 and it having filed Form-1 on 25th May, 2017 i.e. immediately after transfer of the case, the petition under Sections 433 434 of the Companies Act, 1956 has not abated. In so far as the amended order dated 30th August, 2018 is concerned, under sub-section (2) of Section 420 of the Companies Act, 2013 read with National Company Law Tribunal Rules, it is always open to the Adjudicating Authority to make necessary correction in the order passed by it. It is not in dispute that the application under Section 7 was considered by Mr. M.K.Shrawat, (Member (Judicial) and Mr. Bhaskara Pantula Mohan, (Member (Judicial). The order dated 28th August, 2018 has been signed by one of the Members namely- Mr. M.K.Shrawat, (Member Judicial), the other Member who agreed and signed, having not shown therein, it was open to the Adjudicating Authority to make necessary correction The application under Section 7 being complete and we having held that IL FS Financial Services Limited is the Financial Creditor and there is a debt and default, the application under Section 7 is to be admitted.

  ---

• 2019 (3) TMI 1190
  Counting the total days permissible for completion of CIRP - Completion of CIRP process - 'exclude certain period' for the purpose of counting the total period of 270 days - RP seeking excluding the period from the date of pronouncement of the order and communication of the order to the ‘Interim Resolution Professional’ (IRP) i.e. from 25th March, 2018 to 6th April, 2018 for calculating the total period of 270 days of ‘corporate insolvency resolution process’ - the ‘Committee of Creditors’ decided to appoint Mr. Shailen Shah, as a Resolution Professional in place of Ms. Purnima Dhiraj Shetty. HELD THAT:- The earlier ‘Resolution Professional’ had not taken any effective steps due to which the ‘Committee of Creditors’ recommended to appoint the appellant on 15th June, 2018, and the appellant was intimated by the Adjudicating Authority on 16th August, 2018 and the matter is remained pending before the Adjudicating Authority for more than a month after which the order was passed on 6th August, 2018, we are of the view that the period between filing application for approval of the name of the appellant and date of communication of the order i.e.16th August, 2018 should be excluded for the purpose of counting the period of 270 days. This period for exclusion will be in addition to the exclusion of period as already made by the Adjudicating Authority by impugned order dated 26th October, 2018. We accordingly direct to exclude the aforesaid period for counting 270 days. The Resolution Professional will now take immediate steps to take up the matter with ‘Committee of Creditors’ and in turn the ‘Committee of Creditors’ will pass appropriate order under Section 30 in accordance with law and place its decision before the Adjudicating Authority for its decision.

  ---

• 2019 (3) TMI 1189
  Counting the total days permissible for completion of CIRP - Completion of CIRP process - 'exclude certain period' for the purpose of counting the total period of 270 days - Resolution professional seeking to exclude the period between the date of pronouncement of Admission order and date of communication of the order to IRP, i.e. from 25.3.2018 to 6.4.2018, for calculating the total period of 270 days of Corporate Insolvency Resolution Process - HELD THAT:- The period between the order of admission and the actual date, i.e. the date when the Resolution Professional has taken the charge for completion of the CIRP should be excluded in counting the total days permissible for completion of CIRP. As relying on Velamur Varadan Anand v. Union Bank of India [2018 (6) TMI 1062 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] 12 days period, i.e. from 25.3.2018 to 6.4.2018 (from the date of admission till the date of communication of order to IRP) is excluded from counting the total period of CIRP.

  ---

• 2019 (3) TMI 1188
  Corporate insolvency process - existence of financial debt - occurrence of default - whether Petition filed on Form No.1 in the capacity of a Financial Creditor is bad in law? - whether the arrangement between the Petitioner and Respondent as recorded in the letter dated 20.08.2009, did not involve any “disbursement against the consideration for the time value of money”? - HELD THAT:- In addition to the conventional borrowings where a lender has advanced a sum of money to a borrower against the payment of interest and disbursed the money against the consideration for the time value of money, this definition has also included all those transactions which are not having the element of physical transfer of money from the hand of the lender to the account of the borrower. Thus, the “disbursement” as well as element of “interest” are not the two conditions sine-quo-non so as to fall within the ambits of the definition of 'Financial Debt'. Those transactions where an amount is raised having commercial effect of a borrowing are also coming within this definition. Other transactions such as “derivative transaction” or “counter indemnity obligation” or “value” of a transaction, may be calculated on the basis of market value and to be taken into account for the purpose of claim of “Financial Debt”. In the light of the above discussion and on due perusal of the documents annexed, the Debt is to be qualified as “Financial Debt” as defined under section 5(8) of Insolvency & Bankruptcy Code, 2016. As a result, the Financial Creditor has filed this Application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Since this is a Petition of “Financial Creditor”, therefore, the Insolvency Process shall commence as prescribed under Section 7 of IBC, 2016. The occurrence of “default” is established. The Financial Debtor had failed to pay the amounts due. Debt in question is a 'Financial Debt' and that the occurrence of 'default' is recognized, hence considering the state of affairs mentioned supra the Petition under consideration deserves to be “Admitted”.

  ---

• Service Tax

• 2019 (3) TMI 1186
  Cleaning services rendered to the railways under Finance Act, 1994 - demand of service tax with penalty - Mega Notification issued by the Ministry of Finance - interpretation of the notification - Held that:- It is well settled law that applicability of the notification has to be examined qua the Clauses of the agreements and related matters. In such scenario entertaining the writ petition would not be justifiable - Without expressing any opinion on the merits or demerits of the case, Writ petition is dismissed with liberty to the petitioner to approach the appellate forum - petition dismissed.

  ---

• 2019 (3) TMI 1185
  Classification of services - manpower recruitment services or not - period 16.6.2005 to 31.3.2008 - Held that:- It is evident that though appellant may have well used their own manpower for carrying out the services, the fact remains that the agreement is only to do Inspection of Greige Fabric and Inspection and Trimming / Fringe cutting of dipped belting chafer fabrics. They were also paid only as per the quantum per meter based on the quantum of the work done by them and not on man hours or based on the number of labourers supplied - the services carried will not come in the purview of manpower recruitment or supply service - appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 1184
  Refund of unutilised CENVAT credit - amount paid under Voluntary Compliance Encouragement Scheme (VCES) - Held that:- A conjoint reading of Section 107 and 109 of Finance Act relating to Service Tax payment under VCES, 2013 would clearly reveal that if any amount paid in pursuance of such declaration made under Section 107, the same shall not be refundable under any circumstances which would indicate that if any amount is paid in excess during such voluntary disclose, the same would not be refunded and it has never debarred the assessee from claiming refund if it is otherwise entitled to. Except that payment of tax dues under VCES cannot be made through CENVAT credit available to the assessee, rest of CENVAT Credit Rules, 2004 is applicable, even though duty liability is discharged through voluntary disclosure scheme. Therefore, the order of the Commissioner (Appeals) rejecting refund of unutilised CENVAT credit to the appellant, that to without providing it an opportunity of being heard, is an erroneous order and the same is required to be set aside. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 1183
  CENVAT Credit - dumpers and tippers - Held that:- Tribunal in the case of Ganta Ramanaiah Naidu [2009 (9) TMI 261 - CESTAT, BANGALORE] has held that CENVAT Credit cannot be availed as these vehicles are registered with the authorities i.e. under Motor Vehicle Act and the rules made there under - decided against appellant. Time limitation - Held that:- The appellant in this case could have entertained bonafide belief that they are eligible for CENVAT Credit on the dumpers and tippers - also there is nothing in the record to indicate that there was suppression, misstatement of fact with intent to evade tax - the entire demand on this point needs to be set aside as blatently hit by limitation. CENVAT Credit - invoices raised by the importers do not contain the details of the CVD paid - Held that:- When the documents clearly indicate the receipt of capital goods, use of them within the mining area for rendering taxable output services, the denial of CENVAT Credit to the appellant on hyper technical ground as to the importer s invoices do not indicate the CVD amount which has been passed on, seems to be incorrect more so when co-relation of the documents is possible - credit cannot be denied on this ground. CENVAT Credit - input services rendered by ASIP Pvt Ltd. - Held that:- It is seen from the ledger account that the appellant has been making payment to said service provider on account and as per running bill raised by the service provider along with tax. On the face of such clear cut documentary evidence, the adjudicating authority was in error by not accepting the same, to that extent, the adjudicating authority s orders is not sustainable. Appeal allowed in part.

  ---

• 2019 (3) TMI 1182
  Revenue sharing - Demand of service tax - renting of immovable property service - Held that:- There is no provision of any service to any other person and there is no service recipient or service provider relationship, which is an essential condition to attract service tax liability and the services per-se are rendered would be to sale itself - an identical issue was considered in the case of Ambience Hospitality P. Ltd. [2018 (12) TMI 1112 - CESTAT NEW DELHI], where it was held that the appellant has not delivered the possession of club to AMPL by way of tenancy but has only given the right to manage and operate the club for their mutual benefit, on principle to principle basis. Accordingly, we hold that the provisions of Service Tax are not attracted - thus, impugned order to the extent it confirms the demands raised on the appellant under the renting of immovable property services is unsustainable. CENVAT Credit - common input services and the services utilized for exempted output service - Rule 6 of CCR - Held that:- Appellant has been pleading before the lower authorities that they have maintained separate records for the services rendered for the exempted category and they have not availed CENVAT credit of the service tax paid on common input services. The Adjudicating Authority it seems has not considered this plea in a holistic manner, and in a pedantic approach held that demand is liable to be confirmed - the Adjudicating Authority should be given an opportunity to reconsider the entire evidences on this point - Matter on remand. Appeal allowed in part and part matter on remand.

  ---

• 2019 (3) TMI 1181
  Extended period of limitation - IPR services - reverse charge mechanism - period from 10.09.2004 to March 2013 - Held that:- Prior to 18.04.2006, no tax liability arises under reverse charge mechanism is the law settled by the Apex court in the case of Indian National Ship Owners Association [2009 (12) TMI 850 - SUPREME COURT OF INDIA]. It is undisputed in the facts of this case that the demand raised on the appellant is under reverse charge mechanism - for the period prior to 18.04.2006, no demand arises on the appellant. Period post 18.04.2006 - Held that:- The demand has been raised under the category of Intellectual Property Rights services under the Finance Act 1994, by recording that the said technical knowhow which has been given by the Foreign Company is their proprietary interest, and though it is not registered under Indian Patents Act 1970, the service tax liability arises on interpretation of definition of intellectual property services - the issue is no more res integra as the Tribunal in the case of Reliance Industries Ltd [2016 (6) TMI 1108 - CESTAT MUMBAI], where it was held that If the IPR is registered in any foreign country but is not registered in India, the same will not attract the service tax - demand not sustainable. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 1180
  Revenue neutrality - Reverse charge mechanism - appellant had received various taxable services from overseas service providers who do not have office in India and incurred charges/expenses in foreign currency - service tax not paid - Held that:- It is seen that the appellants are liable to pay service tax in the present demand under reverse charge mechanism as per Section 66A of the Finance Act, 1994. It is very much true that in case the appellants pay the service tax on reverse charge basis, they would be eligible to avail credit on the said amount as a service recipient. Thus, the situation is truly a revenue neutral one. On such score, the appellant cannot be saddled with the allegation of intention to evade payment of service tax. Penalty - Held that:- The Hon’ble jurisdictional High Court in the case of C.C.E., Chennai-IV Vs. M/s. Tenneco RC India Pvt. Ltd. [2015 (7) TMI 342 - MADRAS HIGH COURT] has observed that when the entire exercise is revenue neutral, the assessee could not have achieved any purpose by evading duty - Taking note of the fact that the situation is a revenue neutral one, this is a fit case for setting aside the penalty imposed under Section 78 of the Finance Act, 1994. Penalty set aside - rest of demand upheld - appeal allowed in part.

  ---

• 2019 (3) TMI 1178
  Extended period of limitation - bonafide belief that he is not a photographer in commercial trade parlance and not liable to service tax - assessee registered himself with the department in October, 2005 and he has paid service tax for the services rendered by him till September, 2006. - Demand for the period prior to October 2005 Whether the assessee would fall within the scope of Section 65(105)(zb)? - Held that:- Section 65(105)(zb) of the Act not only restricts the definition to photography studio alone but also to an agency. The assessee is an individual, a proprietary and he is an agency in the legal sense of the terms. Therefore, Section 65(105)(zb) of the Finance Act would stand attracted and the assessee is liable to pay service tax. Extended period of limitation - Held that:- The facts clearly disclose that the assessee failed to get himself registered with the department and consequently would fall within the scope of suppression and extended period of limitation could be invoked. Appeal dismissed - decided against assessee.

  ---

• Central Excise

• 2019 (3) TMI 1179
  Re-credit of duty - goods returned by the customer - fictitious invoices or not - Non-speaking order - Whether the scrap generated in the hands of the job-worker was not supported by the duty-paid documents involving demand of Rs. 1,10,656/-? - Held that:- There is a merit in the submission made on behalf of the Revenue. This as we find that the impugned order of the Tribunal does record the appellant s submissions and only after consideration of the same has come to the conclusion that the issue would require reconsideration by Adjudicating Authority. Therefore, remanded this issue to the Adjudicating Authority. So far as other issues are concerned, we find that the impugned order of the Tribunal merely proceeds to record its conclusion. When an Appellate Authority is in agreement with the lower authority s decision, it does not absolve him to briefly indicate his reasons in the context of the submissions made in the appeal by the party. We find that on the above issues, the impugned order does not record any submissions made by the parties before it. This manner of dealing with an appeal by the Tribunal is not appreciated. The Tribunal is a final fact finding Authority under the Act. It must necessarily record the essence of dispute before it and give its findings on consideration of submissions made in the context of the dispute. It is only when such an exercise is done, the order would be a speaking order. It is only when the conclusions arrived at in the order of the Tribunal passes through the process of apparent reasoning, can it be called a speaking order - the issues are answered in the negative i.e. in favour of the appellant and against the respondent. Appeal disposed off.

  ---

• 2019 (3) TMI 1177
  Goods supplied against International Competitive Bidding (ICB) - Sl. No. 91 of the Central Excise N/N. 06/2006-CE dated 01.03.2006 as amended - denial on the ground that M/s. BHEL sent an e-mail to the appellants stating that their corporate office has informed them about non-eligibility of the Excise Duty exemption on the goods cleared to Mega Power Project certificate issued by North Chennai Power Corporation - Held that:- It is very clear that the appellants and/or M/s. BHEL had, on more than one occasion, informed the jurisdictional Superintendent of Central Excise that the clearances of boiler components are being made without payment of duty in terms of Notification No. 06/2006-CE. The appellants therefore were very much under a bona fide belief that they were eligible for the exemption based on the certificates issued by M/s. BHEL. They cannot be faulted that M/s. BHEL took a u-turn on such eligibility and informed them by e-mail at such a period that they were not eligible for such exemption. In any case, based on that e-mail, subsequent to the audit visit and the letter from the jurisdictional Superintendent, the appellants paid up the amounts with interest and informed the fact of the same to the authorities on 30.08.2010. This is definitely a case where the provisions of Section 11A(2B) ibid may very well have been extended to the appellant. Time Limitation - Section 11A(2B) of CEA - Held that:- The SCN has been issued almost four years from the date of the audit objection and the payment made by the appellants. Notwithstanding the contentions of the Ld. AR, it is found that the conclusion reached by the adjudicating authority that the appellants had indulged in mis-statement of facts, etc., is contrary to the evidence on record. In fact, this is a base where the benefit of Section 11A(2B) should have been extended to the appellants. Penalty u/s 11AC of CEA - Held that:- When the ingredients of Section 11AC ibid are not present at all in this case, the penalty imposed under that Section cannot be sustained and is required to be set aside - penalty set aside. Appeal allowed in part.

  ---

• 2019 (3) TMI 1176
  Refund of excess duty paid - rejection on the ground of time bar and unjust enrichment - Held that:- Section 11B deals with the refund of excess duty paid. It does not distinguish between duty paid in cash and duty paid through CENVAT Credit. If duty paid by the assessee using CENVAT Credit is not covered by Section 11B no portion of that Section should apply to such refunds. In other words, the refund itself would not have been admissible if the limitation would not apply simply because the duty was paid using CENVAT Credit. There is no provision other than Section 11B for the assessee to claim refund whether it is paid using cash or by debiting CENVAT account. If the assessee is not covered by Section 11B then his entire application under Section 11B needs to be dismissed because Section 11B is made only for refund of excise duty whether paid in cash or through CENVAT Credit - there is no force in the argument of the appellant that what they paid is not excise duty. In this case the appellant has paid duty in pursuance of contract between them and their customers in which they billed their customers in excess and have subsequently returned the money through credit notes and corresponding debit notes of their customer. It is evident that the burden of excess excise duty had not been passed on to their customers. Time Limitation - Held that:- The application has been submitted under Section 11B on 20.10.2014 covering the period March 2013 to June 2014. Evidently, large part of it is within time. The officer could have rejected the claim if it was not supported by documents or issued a show cause notice asking the assessee why it should not be rejected for want of required information. Instead, time was passed by seeking additional information twice and returning refund application twice before finally issuing the show cause notice - the delay on the part of the appellant is less than the delay on the part of the department themselves in processing the refund claim. The applicant is entitled to refund reckoning the original date of application as the date of application for filing refund - the appeal needs to be partly allowed reckoning the original date of filing of refund of application on 20.10.2014 as the date of application. Appeal allowed in part.

  ---

• 2019 (3) TMI 1175
  CENVAT Credit - inputs under Section 11A of the Central Excise Act read with Rule 14 of the CCR - demand on the ground that the duty paid on inputs is in excess of the actual duty liability and the said excess duty has been wrongly taken as CENVAT credit - Held that:- The appellants have purchased the inputs from its sister concern situated in Perembra and has taken the CENVAT credit on the basis of invoice issued by the sister concern - Also the appellant has taken the CENVAT credit on the duty actually paid by them to the sister concern - In the case of CCE v. MDS Switchgear Ltd., [2008 (8) TMI 37 - SUPREME COURT], the Apex Court has held that recipient manufacturer is entitled to avail the benefit of duty and quantum of duty already determined by the jurisdictional officer of the supplier unit cannot be contested or challenged by the officer incharge of the recipient unit. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (3) TMI 1174
  Reversal of CENVAT Credit - exempt goods-by-product - granulated slag - common input/input services used for taxable as well as exempt goods - no separate inventory of input and input service has been maintained - Rule 6(3) of CENVAT Credit Rules, 2004 - Held that:- This issue is no more res integra and has been settled in favour of the assessee in the case of M/S. MUKAND LTD VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM [2018 (11) TMI 12 - CESTAT BANGALORE], where it was held that It is well settled that slag arising in the course of manufacture of iron and steel is a waste and that the provisions of Rule 6 of CCR, 2004 are not attracted - demand do not sustain - appeal dismissed - decided against Revenue.

  ---