Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 6, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of supply - activity of Zinc Platting for customers - the applicant is a registered person and when he undertakes electroplating activities on the goods belonging to another registered person, then the nature of work of the applicant is ‘Job work” - Rate of GST is 12% in case of registered principal, otherwise GST is payable @18% - AAR
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Classification of supply - sale / booking of units in a project after its first occupation and receipt of advance against that booking - If any part of the consideration is received before the date of issuance of completion certificate, then the transaction would be treated as a supply of service as per clause 5 of Schedule II to the GST Act, attracting the levy of GST - The first occupation as claimed by the applicant in the instant case, without having the mandatory completion certificate by the jurisdictional authorities is found to be devoid of any merit. - AAR
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Classification of services - services for the right to use minerals including its exploration and evaluation - The service namely “Licensing services for the right to use minerals including its exploration and evaluation” is classified under Service Code (Tariff) 9973 37 - Liable for GST @18% - AAR
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Bail application - issuance of GST Invoices without any supply of the goods or services to anybody on commission basis causing loss of more than 98 crores approximately - The petitioner may be released on bail by the learned Trial Court if he finds that he has approached the authority for compounding of the offence on deposit of at least 20% of the evaded amount on account of CGST. - HC
Income Tax
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Clarifications on provisions of the Direct Tax Vivad se Vishwas Bill, 2020 - Circular
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Deduction u/s 80IA - change in the share holding of the assessee company - When the loss of earlier years have already lapsed, then the same cannot be notionally carried forward and set off against the profit and gains of the assessee's business for the year under consideration in computing the quantum of deduction under section 80IA (1) - HC
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Exemption u/s 11 and 12 - income received from organizing the event of Garba during the Navratri festival - The activities like organizing the event of Garba including the sale of tickets and issue of passes etc. cannot be termed as business. - Revenue failed to prove the activity undertaken is in fact in the nature of business - HC
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Deduction u/s 80IA(4) - The word “Power” should be understood in common parlance as “Energy”. “Energy” can be in any form being mechanical, electricity, wind or thermal. In such circumstances, the “steam” produced by the assessee can be termed as power and would qualify for the benefits available under Section 80IA(4) of the Act. - HC
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Deduction claimed under section 80-IB(10) - notify the industrial park of the petitioner under rule 18C of the Income-tax Rules, 1962 - The action of the CBDT instructing DIFF vide official memorandum dated March 1, 2012 to withdraw the approval suffers from the vice of arbitrariness and lacks jurisdiction. - CBDT directed to notify the petitioner's industrial park under rule 18C of the Income-tax Rules, 1962 in terms of the Industrial Park Scheme, 2002 in an expedited manner - HC
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Disallowances of expenses - no business activity - merely lull in the business activities does not mean that the assessee has closed down its business activities. - the assessee cannot be deprived from the benefit of claiming the deduction for the expenses incurred to keep the setup of the business in existence. - AT
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TDS u/s 194I - Levy of interest u/s 201(1A) - lease rent paid to Noida authority - If the said interest has already been paid by the NOIDA, no recovery can be made from the assessee for the said amount of the interest. - Assessee directed to cooperate and provide the relevant information required by the AO - AT
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Revision u/s 263 - PCIT having accepted the fact that the Ld.AO has examined the issue of suppression of turnover should have confined the scope of his revisional powers to the issue, which he had questioned in his show cause notice, rather than going to the issue of various expenditure, which is not at all a subject matter of proceedings u/s 147 of the I.T.Act, 1961. - AT
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Allowable deduction while computing the taxable income - education cess and secondary & higher education cess paid on the Income Tax and Surcharge - education Cess, which is not disallowable item, on its payment, the cess is an allowable expenditure as per provision of section 40(a)(ii) - AT
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Exemption u/s. 11 - Charitable activity u/s 2(15) - mutuality concept applicability - We are inclined to remit this issue back to the file of AO to verify the books of accounts and analyze with its objects and re-do the assessment as per law. It is not necessary that the assessment should be completed based on the return of income filed by the assessee or what stand taken by the assessee and we direct the AO to complete the assessment as per law. - AT
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Penalty u/s 271(1)(c) - disallowance u/s 94(7) - short-term capital loss on sale of shares where dividend has been received - transactions in certain securities - levy of penalty confirmed - AT
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Penalty u/s 271AAB - difference in stock of goods as per books and as found at the time of search is on account of valuation of such stock at the market value instead of cost and the same cannot be a basis to hold that it represent undisclosed income so defined in explanation to section 271AAB - AT
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Penalty u/s 271AAB - such jewellery found in possession of family members belongs to them and doesn’t belong to assessee alone - further, most of the jewellery found is old one - mere disclosure of such jewellery in the statement of the assessee recorded u/s 132(4) of the Act would not represent undisclosed income as defined in the explanation to section 271AAB - AT
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Depreciation on Innova car - car having been purchased from the company’s fund though in the name of the Director and expenses as to its maintenance and running have been duly charged to the account which are audited one and have been duly accepted, disallowance made by the AO and confirmed by the ld. CIT (A) is not sustainable - AT
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Rejection of books of accounts u/s 145 (3) - AO by recklessly rejecting the books of account proceeded to estimate the income by applying profit @ 5% of the gross receipt which much less than the income for which the assessee company has already assessed (before depreciation). - CIT (A) has rightly and validly accepted the books of account and set aside the estimation of gross profit @ 5% - AT
Customs
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Validity of the order of Settlement Commission, the JDGFT - Advance License Scheme - extension of time limit for discharge of export obligation, denied - Partial relief of immunity granted from levy of interest and penalty on payment of 10% at interest - There are no infirmity in the exercise of discretion vested with the settlement commission while granting partial waiver to the petitioner at that point of time - HC
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Recovery of Interest - failure of the petitioner to fulfill the conditions of EPCG Scheme - The petitioners are entitled to reduction of the interest in terms of the policy decision taken by the Ministry of Commerce in their public notice - HC
Service Tax
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Validity/scope of SCN - Demand of service tax under different head - if the confirmation of service tax is under a different category than the one which was proposed in the show cause notice then such confirmation of demand is not sustainable. - AT
Central Excise
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Valuation - inclusion of additional amount which has been collected by the appellant from their customers as representing VAT but which has not been deposited as VAT forms an additional consideration for sale, in the assessable value - Excise Duty has to be paid on such amounts which are retained by the assessee. - AT
Case Laws:
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GST
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2020 (3) TMI 242
Levy of GST - transfer of title in moulds from applicant to Indian buyer - eligibility of Indian Buyer to take credit of the GST paid to the applicant for said purchase - Scope of Advance Ruling Application - HELD THAT:- It is evident that transfer of the title in goods is supply of goods. In the case at hand there is transfer in title of moulds for a consideration and the supply is in the course of business therefore, the same constitutes supply of goods and GST is liable to be paid on such supply. - thus, GST is applicable on the transfer of title in moulds from the applicant to the India buyer. CENVAT credit of GST paid - HELD THAT:- The question is not answered as the same is not in the ambit of this authority as per Section 97(2) of the Act.
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2020 (3) TMI 241
Classification of supply - supply of goods or supply of services - rate of GST - activity of Zinc Platting for customers in Automobile, General Engineering and Electrical Electronic Industries - HELD THAT:- The applicants are undertaking the work of electroplating the components of automobiles, etc., provided by the customers as per their specifications made in the diagram. For doing the electroplating, they purchase metals such as Zinc Ingot, Silver Bullion, Nickel, Copper, Chemicals., Hydrochloric and Nitric Acid, SC casting. The customers send the components under Delivery challan with the reason for Transport as Outward-Job-work in the E-Way bill to the applicant. After doing Electroplating as per the specifications of the customer, the applicant raises invoice charging applicable GST and return the components stating outward supply in the E-way bills. The components are owned by the applicants customers and are sent to the applicant for electroplating and return back. The final product is also owned by the applicants supplier - the supply of the applicant is that of Supply of Service . Classification of the service - HELD THAT:- SAC 9988 as per the Explanatory notes, covers those services characterized as outsourced portions of a manufacturing process - In the case at hand, the electroplating job done by the applicant is a portion of manufacturing process of the customer of the applicant and therefore, the activity of the applicant is covered under SAC 9988. Thus the activity of undertaking manufacturing services by a registered person on the physical inputs owned by another registered person is a job work . In the case at hand, the applicant is a registered person and when he undertakes electroplating activities on the goods belonging to another registered person, then the nature of work of the applicant is Job work . Rate of GST - HELD THAT:- The applicable rate of tax from 30.09.2019, is given vide entry 26(id) of Notification No. 11/2017-C.T.(Rate) as amended by Notification No. 20/2019-C.T.(Rate) dated 30.09.2019, which is @ 6% CGST in cases when the goods are owned by another Registered person as in such cases the applicant supply engineering services as job-work and the applicable rate of tax in cases when the goods are owned by unregistered persons continues @9% CGST as per Si.No. 26(iv) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended.
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2020 (3) TMI 240
Classification of supply - supply of goods or supply of services - sale / booking of units in a project after its first occupation and receipt of advance against that booking - whether classifiable under Para 5 of Schedule-III to the CGST Act, 2017 - sale or not - booking of units in a project and consequently receipt of advance against that booking after first occupation of the project - levy of GST. Whether the sale / booking of units in a project after its first occupation and receipt of advance against that booking is classifiable under Para 5 of Schedule-III to the CGST Act, 2017 as sale of building and thus neither regarded as Supply of goods nor supply of services? Thus whether the same is outside the purview of Goods and Services Tax? - HELD THAT:- Tbuilding completion certificate as desired by the applicant, has not been issued by the Municipal Corporation, Bilaspur (C.G.) owing to non-compliance of the legal provisions and for Want of procedures by the applicant, as mandated under Section 301 of Municipal Corporation Act, 1956 and Rule 98 of Land Development Rules, 1984 - In view of the above, the date of issuance of completion certificate by the competent authority in the instant case, shall be considered as the date of completion of the property and if the entire amount of consideration has been received after such date of completion, then that would not be treated as a taxable service. If any part of the Consideration is received before such date. then the transaction would be treated as a supply of service as per clause 5 of Schedule II to the GST Act and attracts the levy of GST. Whether the booking of units in a project and consequently receipt of advance against that booking after first occupation of the project, where the project has been completed and promoter has applied for issuance of completion certificate, which is pending before local authority; is outside the purview of Goods and Services Tax? - HELD THAT:- The occupancy of any unit, without observance of all procedures as mandated under the statute or any other law/rule for the time being in force leading to non-issuance of such mandatory completion certificate by the Competent authority, can in no way be termed as a valid occupancy, especially in the wake of clarifications supra, issued by the competent jurisdictional authorities. Although this authority is not in judgment on the legality or otherwise of the occupancy of the unit by any of the occupant without the issuance of the said completion certificate by the competent authority, it follows from the response by the authorities of Municipal Corporation - Allowing the occupants to such occupancy of the units by the applicant, without observance of procedures as mandated under the law can also be inferred as a modus operandi to circumvent the procedures to avoid exigibility to tax. The aforesaid letter from the authorized officers of Municipal Corporation, Bilaspur makes it abundantly clear that the said completion certificate is a legal requirement and is issued only on compliance, certifying therein that the building is fit to be occupied thereby essentially declaring that the building construction has reached a stage where all byelaws and features of sanctioned plan have been accomplished or completion has taken place and that the same is ready for safe occupancy. Accordingly it is found that the date of issuance of completion certificate by the competent jurisdictional authority in the instant case shall be considered as the date of completion Of the property and if the entire amount of consideration has been received after such date of completion, then that would not be treated as a taxable service. If any part of the consideration is received before such date, then the transaction would be treated as a supply of service as per clause 5 of Schedule II to the GST Act, attracting the levy of GST - The first occupation as claimed by the applicant in the instant case, without having the mandatory completion certificate by the jurisdictional authorities is found to be devoid of any merit.
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2020 (3) TMI 239
Classification of services - services for the right to use minerals including its exploration and evaluation - classified under Service Code (Tariff) 9973, specifically under 9973 37 as licensing services for the right to use minerals including its exploration and evaluation or as any other service under the said chapter? - benefit of N/N. 11/2017-Central Tax (Rate), dated 28-6 2017 - Rate of GST - HELD THAT:- It is settled position that the service in question does not fall at Serial No. 17(i) to 17(v) of the said notification. We further observe that the service in question is also not covered at Serial No. 17(vi) to 17(viia) of the said notification. In this context, our view gets further strengthened on pursuing the order dated 25-3-2019 passed by Rajasthan Advance Ruling Authority on the same issue in the case of M/s. Wolkem Industries Ltd [ 2019 (4) TMI 1498 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN] . wherein it was held that service in question falls at (viii) of Serial No. 17 of Notification No. 11/2017 (as amended from time to time) which attracts GST @ 18% - thus, service in question shall fall under residual Entry 17(viii) of the said notification which attract GST @ 18% as on date. The Haryana Advance Ruling Authority in M/s. Pioneer Partners [2018 (9) TMI 1477 - AUTHORITY FOR ADVANCE RULING, HARYANA] has categorically held that the service in question does not fall at Serial No. 17(i) to (v) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (amended from time to time) but fall at residual Entry No. 17(viii) of the said notification. The Haryana Advance Ruling Authority has passed the Ruling on the issue in hand on 29-6-2018 and the relevant provisions of Serial No. 17 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (amended from time to time) - However, the advance ruling dated 29-62018 passed by the Haryana Advance Ruling Authority in the case of M/s. Pioneer Partners was according to the provisions relevant during the period in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, however with the amendment in the said notification on 31-12-2018, the said advance ruling has no relevance as on date to the issue in hand.
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2020 (3) TMI 238
Release of detained goods alongwith the vehicle - demand to deposit a bank guarantee equivalent to the amount stipulated therein - HELD THAT:- The petitioner undertakes that the petitioner shall deposit the bank guarantee of the required amount stipulated in the show cause notice dated 8th March, 2018 within three weeks - In case such bank guarantee is deposited within three weeks from today, the proceedings taken out under section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 shall stand concluded in view of the provisions of section 129(5) of the Uttar Pradesh Goods and Services Tax Act, 2017. Petition disposed off.
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2020 (3) TMI 237
Bail application - issuance of GST Invoices without any supply of the goods or services to anybody on commission basis causing loss of more than 98 crores approximately - HELD THAT:- The principle as laid in case of P.V. Ramanna Reddy vs. Union of India [ 2019 (5) TMI 1528 - SUPREME COURT ] holding that though Section 69(1) of CGST, 2017 confers power upon the Commissioner to order arrest of a person for cognizable and non-bailable offence does not contain safeguard incorporated in Section 41 and 41A of the Code of Criminal Procedure, 1973 in view of provision of Section 70(1) of the said Act same must be kept in mind before arresting a person - However, Section 41A(3) of the Code of Criminal Procedure does not provide an absolute irrevocable guarantee against arrest, while turning down the prayer for release of the petitioner on bail and thereby held that petitioner would not be entitled to be enlarged on bail but gave him the liberty to approach the authority for compounding of the offence under Section 138 of CGST Act. The petitioner may be released on bail by the learned Trial Court if he finds that he has approached the authority for compounding of the offence on deposit of at least 20% of the evaded amount on account of CGST. Application dismissed.
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2020 (3) TMI 236
Release of detained goods alongwith truck - sections 129 and 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in GST-MOV- 10, deserves to be discharged. Application disposed off.
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2020 (3) TMI 235
Release of detained goods alongwith truck - Section 130 of the Central Goods and Services Act, 2017 - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged. Application disposed off.
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Income Tax
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2020 (3) TMI 234
Deduction u/s 80IA - Applicability of section 79 - No positive profit available for deduction after considering the losses of the previous years to be set off against the income of the current year - change in the share holding of the assessee company, as a result of which the provisions of section 79 was made applicable and the accumulated losses from the assessment years 1997-1998 to 2001-2002 lapsed - HELD THAT:- It is clear that the burden is on the Revenue to establish that any change in the shareholding was not effected with a view to avoiding or reducing any tax liability. As the Assessing Officer has not gone into this aspect at the time of assessment, at this stage, it would not be appropriate to consider the issue as to whether the shareholding was genuine or not for the purpose of computation of quantum under section 80IA( 1) for the year under consideration. Similarly in the decision in the case of Ganga Corporation Asbestos Pvt Ltd [ 2014 (5) TMI 153 - ALLAHABAD HIGH COURT] issue whether business of the assessee had remained the same or whether there was cause of unity of control and common management. Such a issue is not arising from the facts of the case, reliance placed by the Revenue for the alternative submission is not required to be considered. When there is no issue of any strict or otherwise literal construction of the provisions of the Act, the application of section 80IA( 5) of the Act to deny the effect of provisions of section 79 of the Act cannot be sustained as per the Scheme of the Act,1961. When the loss of earlier years have already lapsed, then the same cannot be notionally carried forward and set off against the profit and gains of the assessee's business for the year under consideration in computing the quantum of deduction under section 80IA( 1) of the Act, 1961. The provision of section 80IA( 5) cannot be invoked to ignore the provisions of section 79 by virtue of which the business loss of the assessee prior to year 2001-2002 has already lapsed. Assessing Officer, CIT(Appeals) and the Tribunal were therefore, not justified in applying section 80IA( 5) of the Act so as to ignore the losses which have already lapsed by operation of section 79 - Appeals are allowed.
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2020 (3) TMI 233
Exemption u/s 11 and 12 - income received from organizing the event of Garba during the Navratri festival - ITAT allowed the benefit to assessee - charitable activity u/s 2(15) - whether the questions of law as proposed by the Revenue could be termed as substantial questions of law? - HELD THAT:- Assessee has been supporting 120 non-government organizations. The assessee is into health and human services for the purpose of improving the quality of life in the society. The objectives of the Society includes mobilizing resources from the local communities. It organizes medical camps for thalassemia affected children. It also provides vocational training to the disabled orphans, undertakes various program for empowering women including providing midday meal to the poor students. The activities like organizing the event of Garba including the sale of tickets and issue of passes etc. cannot be termed as business. The two authorities have taken the view that the profit making is not the driving force or the objective of the assessee. This is indicative of the fact that any income generated by the assessee from events like Garba does not find its way into the pockets of any individual or entities. It is to be utilized fully for the purposes of the objects of the assessee. As held in many pronouncements, the expression trade , commerce and business as occurring in the first Proviso to Section 2(15) of the Act must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of charitable purpose . An activity would be considered business if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case the activity may be regarded as a business even when the profit motive cannot be established/ proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. Having regard to the concurrent findings recorded by the two authorities, we are of the view that we should not interfere with the order passed by the Appellate Tribunal. - Decided in favour of assessee.
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2020 (3) TMI 232
Addition u/s 14A - computing book profit under Section 115JB - HELD THAT:- No addition in the book profit can be made on the basis of the calculations worked out under section 14A - See GUJARAT STATE FERTILIZERS CHEMICALS LTD. [ 2013 (7) TMI 701 - GUJARAT HIGH COURT] and GUJARAT FLUOROCHEMICALS LTD [ 2019 (7) TMI 541 - GUJARAT HIGH COURT] Grant of subsidy - Claim of depreciation - HELD THAT:- We are in agreement with the concurrent finding of fact arrived at by the CIT(A) as well as the Tribunal as the assessee did not acquire any fixed assets on which depreciation has been claimed, and therefore, grants cannot be reduced from cost of fixed asset of the assessee. Therefore, appeal stands dismissed qua question No.2[c] proposed by the Revenue. Interest income - business instead OR income from other sources - HELD THAT:- Interest earned by the assessee was directly related to the business.
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2020 (3) TMI 231
TDS u/s 195 - Disallowance u/s.40(a)(ia) - non deduction of tax on commission payable to foreign agents - HELD THAT:- As decided in own case issue decided in favour of assessee [ 2019 (9) TMI 1332 - GUJARAT HIGH COURT ] Disallowance under Section 36(1)(iii) - assessee had capitalized the interest cost on the borrowings used to acquire the capital assets - HELD THAT:- The concurrent finding of fact recorded by the two authorities is, that the assessee had furnished the working of interest capitalized to the tune of ₹ 32,64.147/- after taking into consideration the capital expenditure incurred for the capital assets and the quantum of work in progress from time to time. The Tribunal rightly observed that the presumption drawn by the Assessing Officer that the total term loan received was towards the CWIP could not be said to be based on any cogent material. Question, as proposed by the Revenue cannot be termed as a substantial question of law. Deduction u/s 80IA(4) - operation of the Captive Power Plant - as per revenue production of steam is only a byproduct, which is used by the assessee for its manufacturing activity - HELD THAT:- This Court took notice of the fact that the assessee had installed turbine for power generation which relied on the excess steam production capacity of the plant. This Court ultimately took the view that the installation of turbine for power generation could be said to setting up of a new industrial unit and therefore, the assessee would not be entitled for deduction of sum under Section 80IA of the Act. Facts in the case of Commissioner of Income-tax Vs. Atul Ltd. [ 2016 (8) TMI 413 - GUJARAT HIGH COURT] are quite different and the ratio, as propounded in the same, will have no applicability to the case on hand, more particularly, the question No.3 with which we are dealing with. It is difficult for us to take the view as suggested by the learned standing counsel appearing for the Revenue that steam would not amount to power. The word Power used in Section 80IA(4) has not been defined under the Income Tax Act. The word Power should be understood in common parlance as Energy . Energy can be in any form being mechanical, electricity, wind or thermal. In such circumstances, the steam produced by the assessee can be termed as power and would qualify for the benefits available under Section 80IA(4) of the Act. Disallowance u/s 14A - HELD THAT:- CIT(A) allowed the appeal following the deduction given by this Court in the case of Corrtech Energy Pvt Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] . The deduction as allowed in Corrtech Energy Pvt Ltd. (Supra) is that no disallowance can be made if no exemption from the income has been claimed. - Decided against revenue.
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2020 (3) TMI 230
Deduction u/s 80IA - HELD THAT:- Tribunal has rightly held that the appeal has become academic in view of the fact that the total income of the assessee for the A.Y. 1995-96 even after inclusion of the disallowance made by the Assessing Officer was ₹ 314.84 Lakhs, against which the claim under Section 80IA allowed by the Assessing Officer was at ₹ 322.05 Lakhs. The Tribunal also considered that even the CIT (A) has also allowed the revised claim of deduction made by the assessee under Section 80IA of the Act, 1961 at ₹ 630.35 Lakhs keeping in mind the fact that the income of the assessee prior to deduction under Section 80IA of the Act was ₹ 314.84/-. Lakhs. Therefore, the issue of revised claim made by the assessee of ₹ 690.35 Lakhs is of no consequence. Similarly, for the A.Y.1997-98, the assessee's total income prior to deduction under Section 80IA of the Act, 1961 stands assessed at ₹ 190.68 Lakhs. However, the eligibility to deduction under Section 80IA stands confirmed by the Assessing Officer at ₹ 354.02 Lakhs. Therefore, the consideration of revised claim of ₹ 487.39 Lakhs is no consequence as the assessed income is much less than the eligibility under Section 80IA of the Act, 1961. Disallowance of consultancy fees - HELD THAT:- Both, the CIT (A) and the Tribunal have given concurrent findings of fact and, hence, we answer Question (B) being factual in favour of the assessee and against the Revenue.
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2020 (3) TMI 229
Deduction claimed under section 80-IB(10) - notify the industrial park of the petitioner under rule 18C of the Income-tax Rules, 1962 - HELD THAT:- It is not in dispute that the petitioner had applied for the occupancy certificate along with the architect's certificate before the Bangalore Development Authority on December 29, 2006 well within the stipulated period of one year as enumerated in condition No. 5(ii) of the approval under the Scheme 2002 and the said occupancy certificate was issued on June 23, 2007. The delay caused by the authority in issuing the occupancy certificate would not obliterate the rights of the petitioner to avail of the benefit under section 80-IA(4) of the Act vitiating the very purpose of the approval granted by respondent No. 2. If the compliance is made on the part of the petitioner, the same cannot be frustrated on technicalities or minor deviations by applying the Industrial Park Scheme 2008 which was not in force during the relevant period. The arguments of the learned counsel for the Revenue on these grounds requires to be negated. The action of the respondent No. 1 instructing respondent No. 2 vide official memorandum dated March 1, 2012 to withdraw the approval suffers from the vice of arbitrariness and lacks jurisdiction. In terms of the Scheme 2002, respondent No. 1 is empowered to issue the notification under rule 18C of the Rules in compliance with the approval order of respondent No. 2 not to adjudicate upon it. The language employed in the official memorandum impugned would not indicate that the instructions therein were only recommendatory. Even if the same to be construed as recommendatory, no such recommendation has been accepted by respondent No. 2. Respondent No. 1 is directed to notify the petitioner's industrial park under rule 18C of the Income-tax Rules, 1962 in terms of the Industrial Park Scheme, 2002 in an expedited manner, in any event, not later than three months from the date of receipt of certified copy of the order.
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2020 (3) TMI 228
Deduction u/s 10A - HELD THAT:- In the present case, the Assessing Officer has not proved that any arrangement had been arrived between the parties which resulted in higher profits. Consequently, the re-working of the profits by Assessing Officer by invoking section 10A r.w.s. 80- IA(10) of the Act is not justified. The action of the Assessing Officer to restrict the deduction u/s 10A is hereby set-aside. Thus, assessee succeeds on this aspect. TP Adjustment - ordinary profit earned by the assessee be that of comparable companies - HELD THAT:- Assessee reported international transactions regarding system integration division and bifurcated the same in two sub-business segments namely IS-Infra and Balance Systems. The Balance Systems was benchmarked with external comparables to show arm‟s length price and with internal TNMM comparables for IS-Infra Business thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2020 (3) TMI 227
Unexplained credit u/s 68 - unexplained share capital - HELD THAT:- In so far as companies incorporated under Indian Companies Act are concerned, whether private limited or public limited companies, they raise their share capital, through shares though manner of raising share capital in private limited company on one hand and public limited company on other hand, would be different. The share capital and share premium are basically irreversible receipts or credits in the hands of the companies. Share capital is considered to be cost of shares on equivalent amount issued and premium is considered as extra amount charged by the company for issue of that capital. In the case of private limited company, normally shares are subscribed by family members or persons known/close to the promoters. Public limited company, on the other hand, generally raised by public issue inviting general public at large for subscription of these shares. Yet, it is also possible that in the case of public limited company, the share capital is issued in close-circuit. When companies incorporated under the Companies Act raise their capital through shares, various persons would apply for shares and then give share application money. This amount received from such share holder would naturally be credited in the books of accounts of the assessee. Once the alleged share capital is credited to the accounts of the assessee, then role of section 68 would come. PAN details were submitted in order to demonstrate that this assessee is assessable to tax, and it proves its identity. That concern, responded to the notice received u/s 133(6) - AO, thereafter did not conduct any inquiry. We deem it appropriate to mention that investigation wing of the department is able to unearth details of various accommodation entry providers mainly Kolkatta based companies, but the AO nowhere observed that these concerns were ever engaged in providing accommodation entries, and this fact came to notice of the Department through its investigation wing. Thus, if he has any doubt, he should have called for further information from the share applicants. He should have asked the assessee to produce directors of share applicant companies or Shri Anil Kumar who is brother of one of the directors. AO could have issued summons u/s 131. But instead of conducting any inquiry, he just draw certain inference for disbelieving the documents produced by the assessee or received by him in response to his notice under section 133(6) - we are of the view that since the AO failed to conduct inquiry even on the second remand report called for by the ld.CIT(A), his conclusion are without any supporting evidence. In view of the above discussion, we allow this ground of appeal, and delete the impugned addition. - Decided in favour of assessee.
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2020 (3) TMI 226
Disallowances of expenses - no business activity - whether the temporary lull in the business activities amount to closure of the business - HELD THAT:- The answer certainly is in negative. It is because there can be a situation when the assessee is not able to generate any business but it has to incur the expenses to keep its business setup in existence. Thus in such a situation the assessee cannot be denied the claim of expenses incurred during the period when he was not able to generate the business. Furthermore, it is also important to note that the business is governed by the market forces which are beyond the control of the assessee. Thus merely lull in the business activities does not mean that the assessee has closed down its business activities. Accordingly, we hold that the assessee cannot be deprived from the benefit of claiming the deduction for the expenses incurred to keep the setup of the business in existence. Disallowance of expenses - no business activity during the year and the appellant had failed to prove the same - HELD THAT:- Expenses incurred by the assessee to keep the business setup in existence are eligible for deduction. But it is equally important to ascertain whether the expenses incurred by the assessee are really essential to keep its business setup in existence during the lull period. As such, in our considered view all the expenses incurred by the assessee during the lull period are not eligible for deduction except those expenses which were necessary to incur or keep its business setup in existence. In the case on hand, this aspect has not been verified by the authorities below. Now again the question arises whether the issue for the deduction of the expenses claimed by the assessee should be set aside to the file of the AO to find out the expenses which were necessary to be incurred for keeping the status of the business alive. Considering the facts available on record, we note that all the details of the expenses incurred by the assessee were available before the authorities below, therefore we feel that the revenue should not be given fresh inning for determining the expenses incurred by the assessee which are to be allowed/disallowed as the case may be. Ground of appeal of the assessee is allowed. Deduction claimed u/s 24(a) and 24(b) - income from letting out the land is chargeable under the head income from other sources - HELD THAT:- Rent cannot be classified as income under the head house property. To tax the rent income under the head house property, there has to be a house property or the land pertinent thereto as envisaged under the provisions of section 22 of the Act. But in the case on hand, even if we assume that there was the bungalow for some time, the rent received thereto cannot be classified as income under the head house property as lease agreement was never intended for the use of bungalow. Accordingly, the only option available to tax the impugned rental income from the land is under the head income from other sources. Accordingly, we hold that the assessee is not entitled for the deduction under section 24(a) and 24(b) of the Act with respect to such rental income as discussed above. Regarding the claim of the assessee for the interest expenses against the income from other sources, we note that the provisions of section 57 of the Act require allowing the deduction of the expenses incurred in generating the income under the head other source. Indeed the assessee has incurred interest expenses but failed to justify based on documentary evidence that such interest expenses were incurred in connection with impugned land/investments/bungalow. Accordingly, we are not convinced with the argument of the assessee. Hence, we do not find any infirmity in the order of the authorities below. Thus, the ground of appeal of the assessee is dismissed. Penalty u/s 271(1)(c) - addition on account of business expenses - HELD THAT:- Once the quantum addition itself stands deleted then there should not be any penalty on the assessee based on such addition/disallowance. Hence we direct the AO delete the penalty with respect to addition on account of business expenses disallowed. Disallowances of deduction claimed under section 24(a) and 24(b) - HELD THAT:- We hold that the assessee did not claim the deduction under section 24(a) of the Act with mala-fide /dishonest intent. We hold that there cannot be any penalty on account of disallowance of the deduction claimed by the assessee under section 24(a) of the Act. Interest expenses in the earning of impugned rental income - Assessee claimed that the interest was paid on the money borrowed which was invested in the impugned property from where he was getting the rental income. The assessee has also furnished the details of the parties from whom he has borrowed fund which was utilized for the purpose of the investments. However the AO without verifying the genuineness of the details furnished by the assessee has levied the penalty merely on the ground that such interest expenses was disallowed during the quantum proceedings. We hold that the AO cannot just levy the penalty merely on the ground that the additions were made during the quantum proceedings. As such the AO has to carry out necessary verification by issuing the notice to the parties before levying the penalty. In view of the above, we are of the opinion that no penalty can be levied under section 271(1)(c) of the Act for the reasons as stated above. Hence the ground of appeal of the assessee is allowed.
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2020 (3) TMI 225
TDS liability on payment made to, ICOM, a non-resident company for services rendered outside India - HELD THAT:- ICOM is an entity based in USA and it offers services only to its members and these services are subject to only those members who have to get membership by becoming a member in the above said entity. These services are available to its 800+ members spread over 60 countries and it offers a full range of integrated marketing and media communication services. Both AO and Ld. CIT(A) are of the opinion that just because of payment was made to ICOM, it means to utilization of services in India. The courts have held that TDS is to be deducted only in those income which are chargeable to tax in India. Both AO and Ld. CIT(A) have not brought on record any information by which the income of ICOM is chargeable to tax in India. Assessee has utilized the same services from international independent agency networks through which any of the members can utilize anywhere in the world. The question is whether such utilization of services is taxable in India. Particularly, when the origin and sources of such information are available outside India and merely utilizing such information in India, whether such utilization can be taxable in India. Therefore, in our considered view, the availing of net based services are outside the ambit of FTS provisions particularly when it cannot chargeable to tax in India and further as per the information submitted before us, the assessee has utilized these information outside India. Therefore, any income /payment for which such payments are not taxable in India, certainly such payments are outside the provision of TDS. See . INDUSIND BANK LTD. [ 2019 (4) TMI 1677 - BOMBAY HIGH COURT] - Decided in favour of assessee. Addition towards entertainment expenses - AR submitted before us that entertainment expenses were paid to Gymkhana Club for which director utilized the same and he submitted that Ld. CIT(A) wrongly observed that it is the payment for Gym which is not to any club for its membership - HELD THAT:- We notice that Ld. AR has not brought on any bill or copy of any voucher which clearly indicate whether this payment is actually to the Gymkhana or towards any payment on behalf of Gym as observed by the tax authorities. Since the payment involved is very small, we direct the AO to verify whether this payment is towards Gymkhana club, then the AO is directed to allow the above expenditure as entertainment expenses. Accordingly, ground raised by the assessee is allowed for statistical purposes. Difference between the sales declared in VAT and service tax return and sales declared in financial statement - CIT(A) acknowledged the method adopted by assessee, but however he observed that the assessee must have claimed the expenditure for the reimbursement and the reimbursement income was not declared by the assessee. - HELD THAT:- We notice that the method adopted by assessee must have disclosed the turnover less the non-media turnover as their sales and at the same time, assessee must have claimed cost of services less non media expenditure as their expenditure. On record, assessee has submitted only the reconciliation of sales and not submitted any reconciliation of cost of services as per which it has reduced the corresponding cost of services in the expenditure charged to profit and loss account. Therefore, we are inclined to remit this issue back to AO to verify the cost of services rendered by assessee relevant for both media and non media services. If it is found that the assessee has excluded the cost of services relating to non media, in their profit and loss statement, the addition in turnover, may be deleted. It is needless to say that assessee may be given proper opportunity of being heard and at the same time, assessee is directed to file reconciliation of cost of services before AO. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
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2020 (3) TMI 224
TDS u/s 194I - Levy of interest u/s 201(1A) - lease rent paid to New Okhla Industrial Development Authority (NOIDA), on which tax was not deducted by the assessee company - HELD THAT:- It was the responsibility of the assessee to furnish documentary evidence in support that the NOIDA has paid tax to the Income-Tax department on lease rental income i.e. for the amount of the tax which was deductible on lease rental payment under reference, along with the interest. If the said interest has already been paid by the NOIDA, no recovery can be made from the assessee for the said amount of the interest. Rajesh Projects (India) Ltd. versus CIT [ 2017 (2) TMI 1109 - DELHI HIGH COURT ] as directed that if the basic liability along with interest to be paid by the GNOIDA has been satisfied, no recovery shall be pursued from the buyer. In view of the facts and circumstances, we feel it appropriate to restore this issue to the file of the Learned Assessing Officer, with the direction to verify whether the NOIDA has made payment of the basic TDS liability along with the interest due thereon. The assessee shall cooperate and provide the relevant information required by the Assessing Officer. If after verification, it is found that the basic TDS liability and interest thereon has already been paid by the NOIDA, then no such liability shall be raised on the assessee. Accordingly, we restore this issue to the file of the Assessing Officer with above directions in both the appeal before us - Appeals of the assessee allowed for statistical purposes.
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2020 (3) TMI 223
Revision u/s 263 - Assessment order passed u/s 147 - suppression of gross receipts on the basis of reasons recorded for reopening of assessment, which is further supported by evidences found during the course of survey in form of second set of financial statements prepared by the assessee for the impugned assessment year - HELD THAT:- In this case, on perusal of facts, we find that the Ld.PCIT has questioned the issue of suppression of turnover, which is also a matter of deliberation by the Ld. AO during the reassessment proceedings and hence, we are of the considered view that the Ld. PCIT was completely erred in invoking jurisdiction to revise the assessment order passed by the Ld. AO u/s 143(3) r.w.s. 147 of the I.T.Act, 1961, in respect of very same issue of suppression of turnover, which was very much deliberated by the Ld. AO during the assessment proceedings. Other part of proceedings taken up by the Ld.PCIT as directed the Ld. AO to examine the expenses and determine the net profit after considering the profit declared by the assessee for the year under consideration, after taking note of the fact that there is large number of difference in certain expenses claimed in two set of financial statements. We find that first and foremost the PCIT has exceeded his jurisdiction conferred upon by him u/s 263 because the show cause notice is very clearly stated that the assessment order is erroneous, insofar as, it is prejudicial to the interest of the revenue, in respect of the issue of suppression of turnover. Once the Ld.PCIT having found that the issue of suppression of turnover was considered by the Ld. AO, at the time of assessment proceedings, he should have confined its scope of revisional powers to the issue of suppression of turnover instead of going to the issue of expenses claimed by the assessee and profit declared for the year under consideration. Because, the issue of various expenses claimed in two set of financial statements was neither, subject matter of reassessment proceedings u/s 147 of the Act, nor find place in show cause notice issued by the Ld.PCIT u/s 263 of the Act, 1961. PCIT having accepted the fact that the Ld.AO has examined the issue of suppression of turnover should have confined the scope of his revisional powers to the issue, which he had questioned in his show cause notice, rather than going to the issue of various expenditure, which is not at all a subject matter of proceedings u/s 147 of the I.T.Act, 1961. AO himself is precluded from making any other additions in reassessment proceedings, when he failed to make additions on the issues on which reasons for reopening of assessment was recorded, then certainly in our consider view the Ld.PCIT is also precluded from taking those issues in revisional proceedings u/s 263 of - issue of various expenses questioned by the Ld.PCIT was explained by the assessee during the assessment proceedings with reference to two set of financial statements and the Ld. AO has accepted the claim of the assessee and completed assessment without making any additions on the issues. It is also a matter of fact that the two set of financial statement have been prepared for two different periods and the difference of income and expenditure recorded in said financial statements has been explained before the Ld. AO, during reassessment proceedings. PCIT was incorrect in coming to the conclusion that the Ld. AO ought to have carried out necessary enquiries with regard to various expenditure claimed in two set of financial statements and also, the profit declared by the assessee for the year under consideration in comparison with average profitability of certain comparables furnished by the assessee. We, therefore are of the opinion that the Ld.PCIT has gone beyond the scope of his revisional powers conferred on him by the provision of section 263 - Decided in favour of assessee.
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2020 (3) TMI 222
Disallowance u/s.10AA(9) r.w.s.80IA(10) - HELD THAT:- The crux of the decision of the Tribunal [ 2016 (12) TMI 1673 - ITAT PUNE] held in favour of the assessee was that mere existence of the close connection and 'more than ordinary profits' are not enough to assume an arrangement as contemplated u/s. 80-IA(10) of the Act. The Assessing Officer is also required to prove any such arrangement existing which resulted in more than ordinary profits. The learned AO has not proved any arrangement between the parties in the facts of the case. Therefore, following the decision of the Pune Bench of the Tribunal in assessee s own case (supra.), we are of the opinion that the order of the Ld. CIT(Appeals) is fair and reasonable as allowing the claim - Decided against revenue. Disallowance made u/s.14A r.w.r. 8D(2)(ii) (iii) - HELD THAT:- As relying on GODREJ BOYCE MANUFACTURING COMPANY LIMITED VERSUS DY. COMMISSIONER OF INCOME-TAX ANR. [ 2017 (5) TMI 403 - SUPREME COURT] Assessing Officer ought to record his satisfaction to the effect that assessee s claim of expenditure of lesser amount having regard to its account is incorrect. In this case, the Assessing Officer without discussing the issue has merely stated in the assessment Order that appropriate disallowance should be made u/s.14A of the Act and accordingly, disallowed the additional amount u/s 14A of the Act which was deleted by the Ld. CIT(Appeals) - No infirmity with the findings of the Ld. CIT(Appeals) and relief provided to the assessee by the Ld. CIT(Appeals) is hereby sustained - Decided against revenue Allowable deduction while computing the taxable income - education cess and secondary higher education cess paid on the Income Tax and Surcharge - Claim raised for the first time before the Tribunal and they have not claimed this deduction in the return of income also - HELD THAT:- We find the ground raised by assessee in cross objection is legal in nature, hence, the same is admitted in line with the decision of Hon'ble Supreme court of India in the case of NTPC Ltd. Vs. CIT [ 1996 (12) TMI 7 - SUPREME COURT] We find this issue has already been adjudicated by the Pune Bench of the Tribunal in the case of DCIT Vs. Bajaj Allianz General Insurance Company Limited [ 2019 (8) TMI 370 - ITAT PUNE] wherein held education Cess, which is not disallowable item, on its payment, the cess is an allowable expenditure as per provision of section 40(a)(ii) - Decided in favour of assessee.
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2020 (3) TMI 221
Exemption u/s. 11 - Charitable activity u/s 2(15) - mutuality concept applicability - as per revenue assessee has declared interest and miscellaneous income received from banks - HELD THAT:- When the assessee was providing services to its members as well as non members, it can never be categorized under mutuality concept. The mutuality concept can be applied only when a mutual concern or AOP, who agree to contribute funds for common purpose and receive back the surplus left out in the same capacity in which they made the contribution. Therefore, the capacity as contributors and participants remain same. When they cannot separate the activities of participants and non members, they can never be considered as mutual concern. Therefore, in our considered view, the activities carried on by the assessee can never be assessed under the concept of mutuality. We notice that assessee company was established under section 25 of the Companies Act with the motive to carry on charitable activity and we also notice that assessee was granted registration u/s 12A of the Act. Since, assessee was carried on its affairs not keeping separate data for its members as well as non members and also we take note of the object clause para 1 of Memorandum of Association based on which, even Ld. CIT(E) has granted registration u/s 12A recognizing it as a charitable institution. We notice that AO has invoked the ratio of Banglore Club [ 2013 (1) TMI 343 - SUPREME COURT] simply considering the fact that assessee has filed its return of income based on mutuality concept overlooking the actual facts. We are inclined to remit this issue back to the file of AO to verify the books of accounts and analyze with its objects and re-do the assessment as per law. It is not necessary that the assessment should be completed based on the return of income filed by the assessee or what stand taken by the assessee and we direct the AO to complete the assessment as per law. Therefore, we direct the AO to evaluate the facts of the case by considering the complete facts on record like assessee was granted registration u/s 12A of the Act and also assessee carried on activities based on its charitable objectives and needless to say, assessee should be given proper opportunity of being heard. - Decided in favour of assessee for statistical purposes
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2020 (3) TMI 220
Revision u/s 263 - excise duty refund and interest subsidy to be treated as revenue or capital receipt - to be included in computation of section 115JB book profits since forming part of the corresponding reserves - HELD THAT:- Since the learned coordinate bench(es) had already accepted the assessee s case drawing distinction between the two subsidy schemes, the impugned receipts have therefore rightly held as capital and not revenue in the regular assessment in issue. Coming to latter issue of section 115JB book profit computation of the corresponding excise duty refund and interest subsidy reserves (supra), we note that this tribunal s coordinate in Binani Industries Ltd vs. CIT [ 2016 (3) TMI 873 - ITAT KOLKATA] , Indo Rama Syntehetics (I) Ltd. [ 2011 (1) TMI 1 - SUPREME COURT] , Apollo Tyres Ltd. [ 2002 (5) TMI 5 - SUPREME COURT] that when a receipt is not even a revenue item, the same also does not form part of book profits u/s 115JB of the Act. Hon ble jurisdictional high court in PCIT vs. Ankit Metal Power Ltd. [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] also reiterate the very proposition. We follow the very reasoning herein as well mutatis mutandis and conclude that the PCIT s twin orders under challenge in these assessment years have erred in law and on facts in assuming revision jurisdiction since the Assessing Officer had rightly not included the excise duty refund and interest subsidy as a revenue item in normal computation and corresponding reserves for book profits u/s 115JB of the Act. PCIT s revision direction under challenge are reversed and the impugned both regular assessments in these two assessment years are restored as a necessary corollary. - Decided in favour of assessee.
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2020 (3) TMI 219
Disallowance of expenditure incurred by the appellant towards payment on account of running royalty - HELD THAT:- We find the AO in the instant case, following the order of his predecessor treated the entire royalty expenses as capital in nature and after allowing depreciation made addition to the total income of the assessee. We find in appeal, the CIT(A), following the order of his predecessor in assessee s own case for assessment year 2011-12, treated 25% of such royalty payment as capital in nature and held the balance amount to be revenue in nature. We find identical issue had come up before the Tribunal in assessee s own case in the immediate preceding assessment year. CIT(A) has allowed only 75% of the royalty payment as revenue in nature, therefore, respectfully following the decision of the Tribunal in assessee s own case in the immediately preceding assessment year, we hold the entire royalty payment as revenue in nature. Accordingly the ground raised by the assessee is allowed and the ground raised by the Revenue is dismissed. Bad debt u/s 36(1)(vii) - CIT(A) sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs - HELD THAT:- We find the assessee is changing its stand from time to time. He has made one statement before the Assessing Officer whereas before the CIT(A) he has come out with another theory. In any case the assessee has not substantiated the reasons for changing its stand before the two lower authorities. It is not coming out from the record as to when and how Maruti Suzuki Ltd. Company has stated or written to the assessee that they are not going to make any more payments against the outstanding balance. Since, nothing is coming out from the record, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to restore this issue to the file of the AO with a direction to give one more opportunity of hearing to the assessee to substantiate the claim of deduction. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are allowed for statistical purposes only. Disallowance of the expenditure incurred by the appellant - staff welfare - expenditure to this extent did not appear to be in accordance with the attendance policy of the appellant - HELD THAT:- The reasons of such relief granted by the CIT(A) has already been reproduced in preceding paragraphs and the Revenue is not in appeal against the same. So far as the disallowance of ₹ 8,55,000/- is concerned, assessee brought to our notice the attendance reward policy of the assessee company giving date wise, name wise and department wise, the payment made for the entire year. It is the industry policy that when the staff works for some extra time, different companies give incentives to their employees which the assessee in the instant case has followed. Under such circumstances, we are of the considered opinion that the entire amount should have been allowed as deduction and the Ld. CIT(A) is not justified in sustaining ₹ 8,55,000/-. We, therefore, set-aside the order of the CIT(A) and direct the AO to delete the disallowance. The ground raised by the assessee is accordingly allowed.
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2020 (3) TMI 218
Assumption of jurisdiction u/s 153C - no satisfaction note recorded in the case of the searched person - HELD THAT:- CIT(A) while adjudicating the issue has gone through the documents which are mentioned in the satisfaction note and found that the documents so found or seized are photocopy of the sale deed, agreement of sale along with indemnity bond, possession letter, etc in respect of Sunder Nagar Property purchased by the assessee from M/s Atma Ram Properties Ltd. These documents do not give any indication that the assessee had paid ₹ 3.5 Crores in cash over and above of ₹ 33 Crores as recorded in the sale deed. We find the Ld. CIT(A) while adjudicating the issue has followed the decision of the Hon ble Delhi High Court in the case of PEPSI FOODS PVT. LTD. [ 2014 (8) TMI 425 - DELHI HIGH COURT] and PEPSICO INDIA HOLDINGS PRIVATE LIMITED [ 2014 (8) TMI 898 - DELHI HIGH COURT] DR could not controvert the factual findings given by the Ld. CIT(A) in his order on this issue. We further find that there is no satisfaction note recorded in the case of the searched person which is a condition precedent for issue of notice u/s 153C although the Assessing Officer of the searched person and the other person is the same. In view of the above discussion and detailed reasoning given by the Ld. CIT(A) on this issue, we find no infirmity in his order in quashing the proceedings initiated under section 153C of the Act by the Assessing Officer. The grounds raised by the Revenue are accordingly dismissed.
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2020 (3) TMI 217
Penalty u/s 271(1)(c) - disallowance u/s 94(7) - short-term capital loss on sale of shares where dividend has been received - transactions in certain securities - HELD THAT:- The assessee in the return of income claimed such short term capital loss and adjusted the same against short-term capital gain on sale of the motor cars. When the Assessing Officer pointed out this error to the assessee, the assessee agreed to the said amount for tax. The contention of the assessee that this was a bonafide error on the part of the assessee, whereas contention of the Revenue is that had this error not pointed out of by the Assessing Officer, this would have remained unnoticed and the assessee would have taken benefit of the error. It is evident that in the return of income, the assessee claimed short term capital loss which was not allowed in terms of section 94(7) of the Act. This is also a matter of fact that this error came to light only when the Assessing Officer asked for justification of the claim of certain capital loss in view of the clear provisions of section 94(7) of the Act. In our opinion, there is no doubt that in the return of income particulars filed by the assessee in respect of short-term capital loss, which has been adjusted against the short-term capital gain, are inaccurate. Excess claim of expenses and prepaid expenses - assessee admitted that it has wrongly claimed deduction of the whole of the amount of ₹ 6,73,440/- instead of ₹ 1,12,240/- pertaining to the year under consideration - HELD THAT:- Obviously the assessee has filed inaccurate particulars of income in the return of income filed, though later on assessee has accepted its mistake. AO cannot absolve the assessee for filing inaccurate particulars in the return of income and pardon him, if the assessee except the mistake and pay the tax on the same. This action of the assessee cannot be said to be voluntary. Further, the learned Counsel could not substantiate before us as how two opinion exists on the issue of prepaid expenses of corporate entrance fee disallowed by the learned Assessing Officer. CIT(A) has relied on the decision of Mak Data Ltd. [ 2013 (1) TMI 574 - DELHI HIGH COURT] wherein it is held that the statute does not recognize defences on account of voluntary disclosure , buy peace , avoid litigation , amicable settlement etc. to explain away of its conduct under the Explanation -1 to Section 271(1)(c) - voluntary disclosure does not release the assessee from the mischief of the penal proceedings under section 271(1)(c) of the Act and the law does not provide that when assessee makes voluntary disclosure of his concealed income, he has to be absolved from the penalty. Also see NG TECHNOLOGIES LTD. [ 2014 (12) TMI 481 - DELHI HIGH COURT] - Decided against assessee.
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2020 (3) TMI 216
Computation of long term capital gain - Claim of exemption u/s 54F - agreements relied upon by the assessee to say that he is only a 50% shareholder of 2.20 acres of land are both unregistered documents - HELD THAT:- Since the stamp papers used for recording the registered as well as unregistered documents are in seriatim, we are of the opinion that the said documents cannot be brushed aside. Since all the documents are not filed before the Tribunal, we are also not able to appreciate the contentions of the assessee. One of the contentions of the assessee is that he retained ₹ 82,50,000/- and returned the balance to one Mr. Suresh Reddy is also not brought to record. All these facts are to be verified by the authorities. We deem it fit and proper to remand the issue to the file of AO to consider all the documents filed by assessee and even if the agreements are not registered but since the stamp papers are found to be genuine, the transactions have to be accepted as correct. AO is accordingly directed to verify the same and re-adjudicate the issue in accordance with law. Exemption u/s 54F - assessee has been offering rental income from three residential properties due to which the AO and the CIT(A) have denied exemption u/s 54F - assessee s contention that the said properties belong to the company which has constructed the houses but since they remained unsold and were let out and income was offered to tax in the hands of the assessee also needs verification by the AO. The AO has to examine as to when the flats were constructed and by whom, and if sold when the flats have been sold by the assessee or BNR Developers Pvt.Ltd. If it is found that assessee s contention is correct that these flats were stock-in-trade of the company, and income has been offered to tax in the assessee s hands and do not belong to assessee, then only assessee will be eligible to claim exemption u/s 54F of the Act. The AO is accordingly directed to verify assessee s claim afresh in accordance with our directions as above.
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2020 (3) TMI 215
Penalty u/s 271AAB - undisclosed income of the specified previous year - disclosure of additional income offered in the return filed u/s 153A - Surrender statement where the stock has been valued at market price prevailing as on the date of search - HELD THAT:- As per sub-section (3) of Section 271AAB, the provisions of section 274 and section 275 as far as may be applied in relation to penalty under this section which means that before levying the penalty, the Assessing officer has to issue a show-cause granting an opportunity to the assessee. Order levying the penalty is an appellable order and therefore, the fact that the statue has provided for an appellate remedy against the levy of penalty, the levy of penalty cannot be held as mandatory but the same will depend upon facts and circumstances of each case. Thus, we agree with the contentions of the ld AR that the levy of penalty is not mandatory in all cases but the Assessing officer has to decide based on facts and circumstances of the case. In fact, it is a consistent view of this Tribunal across various Benches that levy of penalty u/s 271AAB is not automatic in nature but the AO has the discretion and has to take a decision after arriving at the conclusion that the income disclosed by the assessee in the statement recorded U/s 132(4) of the Act is an undisclosed income in terms of Section 271AAB(1) r/w. explanation defining the undisclosed income. Where the discretion so applied by the Assessing officer has been rightly exercised or not in a particular case can be reviewed and subject to appellate remedy as so provided in the Act. As far as present penalty proceedings u/s 271AAB are concerned which is solely based on the search proceedings and anyways independent of the assessment proceedings, the Assessing officer is required to give a specific finding that there is an undisclosed income found during the course of search in terms of undisclosed stock and which has not been recorded in the books of account. The undisclosed stock could be in terms of physically identifiable stock not found recorded in the books of accounts or the stock not found recorded at the appropriate value so determined by the Assessing officer. In the instant case, we find that the Assessing officer has merely gone by the surrender statement where the stock has been valued at market price prevailing as on the date of search and has not examined the matter from the perspective of determining any excess stock and the cost of such stock which is not recorded in the books of accounts. There is no finding that there is any excess stock which has been physically found and which has not been recorded in the books of accounts as on the date of search. In light of above discussions, it is thus clear that difference in stock of goods as per books and as found at the time of search is on account of valuation of such stock at the market value instead of cost and the same cannot be a basis to hold that it represent undisclosed income so defined in explanation to section 271AAB - penalty levied u/s 271AAB is not sustainable and the orders of the lower authorities are set-aside and the appeal of the assessee is allowed.
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2020 (3) TMI 214
Penalty u/s 271AAB - assessee has made disclosure of additional income as offered in the return filed u/s 153A - credit of jewellery disclosed in the wealth tax returns - HELD THAT:- In the instant case, the AO has recorded his satisfaction while passing the assessment order that there is undisclosed income found during the course of search and other conditions being satisfied and therefore, the assessee is liable for penalty u/s 271AAB, thereafter the notice initiating the penalty proceedings U/s 271AAB was issued to the assessee - Assessing officer has given a specific finding as reflected in the penalty order that the assessee is liable for penalty U/s 271AAB(1)(a) which provides for levy of penalty @ 10% on the undisclosed income found during the course of search and admitted in statement recorded u/s 132(4) of the Act. Therefore, we donot see any infirmity in the initiation of penalty proceedings and consequent penalty order so passed by the Assessing officer on this account and the contentions so raised by the ld AR in this regard cannot be accepted. As per sub-section (3) of Section 271AAB, the provisions of section 274 and section 275 as far as may be applied in relation to penalty under this section which means that before levying the penalty, the AO has to issue a show-cause granting an opportunity to the assessee. Order levying the penalty is an appealable order and therefore, the fact that the statue has provided for an appellate remedy against the levy of penalty, the levy of penalty cannot be held as mandatory but the same will depend upon facts and circumstances of each case. Thus, we agree with the contentions of the ld AR that the levy of penalty is not mandatory in all cases but the Assessing officer has to decide based on facts and circumstances of the case. In fact, it is a consistent view of this Tribunal across various Benches that levy of penalty u/s 271AAB is not automatic in nature but the AO has the discretion and has to take a decision after arriving at the conclusion that the income disclosed by the assessee in the statement recorded U/s 132(4) of the Act is an undisclosed income in terms of Section 271AAB(1) r/w. explanation defining the undisclosed income. Where the discretion so applied by the Assessing officer has been rightly exercised or not in a particular case can be reviewed and subject to appellate remedy as so provided in the Act. In the instant case as well, it is an undisputed fact that the jewellery so found during the course of search has been found from the bedrooms of various members of the assessee s family and thus, such jewellery found in possession of family members belongs to them and doesn t belong to assessee alone. Therefore, merely because the assessee has declared the same in his statement recorded u/s 132(4), it will not be regarded as undisclosed income of the assessee in absence of any fact or material to establish that entire jewellery was acquired by the assessee and belongs to the assessee alone - credit has been allowed in respect of jewellery disclosed in the wealth tax returns by some of the members of the family. However, there are other members of the family not subject to wealth tax, in respect of which no credit has been allowed even as per CBDT Circular dated 11.05.1994 which the Courts have held to be reasonable possession looking at the customs prevailing in our country and useful guidance can be drawn from the decision of Hon ble Rajasthan High Court in case of CIT vs Shri Satya Narain Patni [ 2014 (5) TMI 1002 - RAJASTHAN HIGH COURT] jewellery so found during the course of search was old jewellery except for 98 grams, therefore, for the purposes of determining undisclosed income by way of investment in such jewellery, valuation at current rates by Department Valuer is not correct and what needs to be determined is the value/cost in the year of acquisition/investment however, no efforts have been made by the Department. Therefore, mere disclosure of such jewellery in the statement of the assessee recorded u/s 132(4) of the Act would not represent undisclosed income as defined in the explanation to section 271AAB. - Decided in favour of assessee.
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2020 (3) TMI 213
Deduction on account of provision for bad and doubtful debts u/s 36 (1) (vii) - HELD THAT:- Respectfully following the decision of the Tribunal in Assessee's own case [ 2020 (1) TMI 995 - ITAT BANGALORE] we hold that the AO was justified in disallowing the claim for deduction on account of provisions for bad and doubtful debts u/s.36(1)(viia) of the Act as admittedly the Assessee did not debit its profit and loss account any sum towards provision for bad and doubtful debts. We therefore restore the order of the AO - Decided against assessee Depreciation on investments held to maturity as stock in trade - HELD THAT:- As decided in THE KARNATAKA BANK LTD VERSUS ASSISTANT COMMISSIONER OF INCOME TAX MANGALORE [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT] order passed by the authorities balding that in view of the RBI guidelines, the assessee is stopped from treating the investment as stock-in-trade is not correct That finding recorded by the authorities is hereby set aside. Disallowance stale drafts and pay orders u/s 41 (1) - assessee purchased these and had not claimed/encashed them - AO was of the opinion that the said amount which remained unclaimed in the hands of assessee was profit chargeable to tax under section 41 (1) - HELD THAT:- As decided in own case the amounts represented credit balances in the name of the trading parties and was taken to its P L a/c. The CIT(A) held that these amounts were not revenue receipts but were of capital nature. The provisions of s. 41(1) were not attracted in the facts of this case because he assessee s liability to pay back the amounts to its customers had not ceased. Ground raised by revenue stands dismissed. Disallowance of interest expenses u/s.40(a)(ia) - HELD THAT:- As DR submitted that, for assessment year 2007-08, there is no finding of Ld.AO regarding collection of form 15 G/H by assessee. We therefore, direct assessee to submit evidences of form 15 G/H having collected before Ld. AO. AO shall grant relief to assessee as directed by this Tribunal in the subsequent assessment years reproduced hereinabove. Accordingly, these grounds raised by assessee stands allowed as indicated hereinabove.
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2020 (3) TMI 212
Transfer pricing adjustment made on payment of management fee to the Associated Enterprise (AE) - HELD THAT:- Not only the AE has rendered services to the assessee under GSA, but the assessee is also in receipt of such services and has also benefited by such services. In fact, it has been submitted by the learned Authorised Representative that while making payment towards intra group services, the assessee has also deducted tax at source under section 195 . Thus, all these facts clearly go to prove that the assessee, indeed, has received certain specified services from the AE and payments have been made in consideration of such services. Therefore, the services rendered by the AE to the assessee certainly have some value attached to it which requires benchmarking under any of the methods prescribed under the statute. Transfer Pricing Officer accepts that some services have been rendered, however, he has made a general observation that such services do not have any value and has proceeded to determine the arm's length price on a purely on ad hoc basis. Whereas, the reading of the AAR ruling, referred to above, clearly demonstrate that highly specialized services, in fact, were rendered by the AE to its Indian subsidiary. Thus, on the basis of facts available on record, we have no hesitation in holding that the determination of arm's length price at nil is without any legal sanctity, hence, cannot be sustained. Accordingly, following the judicial precedents cited before us, we delete the addition made in this regard. TDS u/s 194H - Disallowance u/s 40(a)(ia) - HELD THAT:- Identical view was expressed by the Tribunal while deciding the issue in assessment years 2008 09 and 2009 10. Pertinently, while implementing the direction of the Tribunal in assessment year 2007 08, the Assessing Officer vide order dated 30th December 2016, has allowed assessee s claim of discount given to the distributors which is evident from the copy of the order placed in the paper book. It is also the submissions of the learned Authorised Representative that though similar disallowance was made by the Assessing Officer in the assessment years 2013 14 and 2014 15, however, the DRP has allowed assessee s claim by deleting the disallowance. Considering the fact that while deciding identical issue in assessee s own case for the assessment year 2007 08, 2008 09 and 2009 10, the Tribunal has restored the issue to the Assessing Officer for fresh adjudication with specific direction, we are inclined to follow the same and restore the issue to the Assessing Officer for fresh adjudication with similar direction. Suffice to say, if similar claim made by the assessee was allowed by the Assessing Officer in assessment year 2007 08 and by the DRP in assessment years 2013 14 and 2014 15, then there should not be any difficulty in allowing assessee s claim. Disallowance of commission paid - HELD THAT:- We are of the view that assessee s claim that the accruals of ₹ 2,30,66,201, was subjected to deduction of tax at source on receipt of invoice in subsequent years requires factual verification at the end of the Assessing Officer. Accordingly, we restore the issue to the Assessing Officer for fresh adjudication after verifying the material available on record or to be filed by the assessee and decide the issue in accordance with law after due opportunity of being heard to the assessee. Ground is allowed for statistical purposes. Short grant of TDS credited - HELD THAT:- We direct the Assessing Officer to verify the TDS as per Form no.26AS, and grant credit to the assessee in accordance with law. This ground is allowed for statistical purposes. Disallowance of tax deducted on interest expenditure incurred in foreign currency - HELD THAT:- As could be seen, the assessee had entered into a borrowing arrangement with Standard Chartered Bank on a net of tax basis. As per the terms of the agreement, the assessee has computed TDS on a net of tax basis and no tax has been separately debited to the Profit Loss Account. It is also a fact on record that as per the borrowing arrangement, the tax liability, if any, on payment of interest has to be borne by the assessee. Therefore, the tax withheld has to be allowed as expenditure to the assessee. We do not find any infirmity in the directions of the DRP. Ground is dismissed.
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2020 (3) TMI 211
Legality of the order passed U/s 144 - best judgment assessment - HELD THAT:- In the instant case, we find that during the course of assessment proceedings, the Assessing officer has issued notice u/s 143(2), 142(1) and through such notice, has sought to examine the books of accounts of the assessee. The assessee in turn submitted copy of cash book and ledgers however, bills, vouchers, muster rolls, wages register, purchase bills, etc were not produced for verification inspite of various opportunities granted by the Assessing officer. We therefore find that the Assessing officer having given sufficient opportunity to furnish the aforesaid details and the assessee failing to even attend to the proceedings and replying to the show- cause so issued by the Assessing officer, the provisions of section 144 have been rightly invoked by the Assessing officer. How the powers of best judgment should be exercised by the Assessing officer and what principles should be followed by the Assessing officer while making the best judgment? - As relying on BRIJ BHUSHAN LAL PARDUMAN KUMAR, ETC. [ 1978 (10) TMI 2 - SUPREME COURT] what is therefore, required is to make an honest and fair estimate of income and such estimate of income should have a reasonable nexus to the available material and the circumstances of the case. In the instant case, we find that the Assessing officer has disallowed 15% of material, wages, office and petrol expenses amounting to ₹ 11,84,522 for the reason that the assessee has failed to substantiate these expenses, however, on what basis/rationale, he has arrived at the figure of 15% has not been specified. There is no finding that there are any specific expenses which have either not been incurred for the purposes of business or are bogus in nature, therefore, in absence of any specific finding by the Assessing officer, the disallowance so made is directed to be deleted. Further, interest and remuneration to partners have been disallowed due to specific provisions of section 184(5) which provides that where there is a failure on part of the firm as is mentioned in section 144 of the Act, no deduction by way of interest and remuneration shall be allowed. Given the specific bar in the statute against allowance of such interest and remuneration where the assessment has been completed u/s 144, we donot see any infirmity in the action of the Assessing officer where he has strictly followed the provisions of section 184(5) of the Act. Addition made on account of negative cash balance - we find that inspite of sufficient opportunities provided by the ld CIT(A) during the appellate proceedings and having called the remand report, the assessee has failed to produce the necessary documentation in support of its claim and the addition has thus rightly been made by the Assessing officer. Lastly, regarding non-allowance of full depreciation on all the fixed assets, we find that in the balance sheet as on 31.03.2009, the assessee has shown a shop with a book value of ₹ 22,87,000 besides Tools and plant with book value of ₹ 63,750. In the profit/loss account, depreciation on only tools and plant has been debited and similar is the position in the computation of income and the auditor s report where depreciation claim is limited to tools and plants. At the same time, given that value of shop has been reflected as part of block of assets in the financial statements and is a matter of record which can be verified in terms of ownership and where such shop premises are utilized for the purposes of business, the assessee shall be eligible for depreciation even though not claimed earlier and the matter is remanded to the file of the Assessing officer for limited purposes of verifying the depreciation on shop forming part of assessee s block of assets and where the same is found to be in order, allow the claim as per law.
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2020 (3) TMI 210
Rejection of books of accounts u/s 145 (3) - assessee has failed to produce the books of accounts and supporting evidence - GP estimation - HELD THAT:- Details of major expenses incurred by the assessee along with vouchers have been furnished before the AO and have been so examined by the AO; that record has been maintained by the assessee qua the expenditure incurred for each test conducted at various locations across the country; that payment details of all the expenditure incurred by the assessee have been duly produced before the CIT (A) who has verified the same; that expenses for hiring the invigilators and examiners for conducting the oral test, for local conveyance, hiring of police, etc. along with vouchers have been duly brought on record and verified as such by the CIT (A); that AO without pointing out any specific/clear deficiency in bills/vouchers proceeded to reject the books of account on the basis of surmises for which assessee has not been provided any opportunity to rebut the same; that when there was no valid ground for AO to reject the books of account u/s 145 (3), the question of estimating the gross profit @ 5% of the gross receipts does not arise. AO has not recorded any categoric finding that the accounts produced by the assessee were defective or incomplete rather rejected the same eon the hyper-technical ground that certain details have not been brought on record. AO by recklessly rejecting the books of account proceeded to estimate the income by applying profit @ 5% of the gross receipt at ₹ 76,94,395/- whereas assessee company has already assessed its income from business at ₹ 1,03,37,625/- (before depreciation). So, AO for the reason best known to him has assessed the income of the assessee substantially less than the returned income. CIT (A) has rightly and validly accepted the books of account and set aside the estimation of gross profit @ 5% and proceeded to examine the sustainability of the various allowances claimed by the assessee independently. Allowable expenditure u/s 37(1) on its new project - HELD THAT:- Bare perusal of the assessment order goes to prove that except for repeating the language of section 37(1) of the Act, AO has not written a word as to how these expenditure claimed by the assessee are not business expenditure. Identical issue has already been decided by the Revenue in favour of the assessee in 2008-09 and such expenses have been accepted as revenue expenses in AY 2010-11 also, the rule of consistency has to be followed by the Revenue particularly when there is no change in the business model and facts and circumstances of the case. So, aforesaid expenditure incurred on salary, hiring premises on rent, business promotion expenses, etc. have been rightly treated as revenue in nature by the CIT (A) with which no new assets have came into existence, hence no ground is made out to interfere in the findings returned by the ld. CIT (A), consequently ground of revenue dismissed. Addition u/s 40A(2)(b) - Excessive rent paid by the assessee to its director - HELD THAT:- Except for the facts that the premises at Greenwood Plaza had covered area of 1858 sq.ft. and open terrace of 462 sq.ft and the fact that new premises is in better location, no new facts have been brought on record by the assessee. So, we are of the considered view that ld. CIT (A) has determined the rent in the light of the facts and circumstances of the case by examining the lease deed of two premises taken on rent by the assessee company itself, which is carrying out the same business in the two premises. So, we find no scope to interfere into the findings returned by the ld. CIT (A). - Decided against assessee. Addition of gift of silver items - assessee has not furnished the details called for by the AO nor it is proved that such gifts are given for the purpose of business - Allowable expenses u/s 37(1) - HELD THAT:- When the disallowance has already been made by the assessee company in FBT return which has been accepted by the AO no separate addition can be made which would amount to double disallowance. So, we hereby delete this addition of ₹ 5,47,622/- sustained by the ld. CIT (A) for AY 2009-10, however subject to verification by the AO qua the facts brought on record by the assessee. Hence, ground no.2 in assessee s appeal for AY 2009-10 is determined in favour of the assessee. Outstanding balance of sundry creditors, namely, Indoor Exteriors and Phone in Baroda - HELD THAT:- When the Revenue has not disputed the fact that supplier has not supplied the goods which is apparent from the copy of account of supplier to whom payment had otherwise been made through banking channel, no addition can be made on this account. So, we are of the considered view that the addition is not sustainable and ordered to be deleted, however subject to verification by the AO. Computation of carry forward losses and unabsorbed depreciation qua the year under assessments by the AO and confirmed by the ld. CIT (A) on the ground that the same has not been correctly computed - HELD THAT:- Since it is a factual mistake pointed out by the ld. AR for the assessee, AO is directed to correctly compute the carry forward losses and unabsorbed depreciation to arrive at the logical assessment. Depreciation on Innova car - HELD THAT:- When the books of account have been accepted by the ld. CIT (A) and order of ld. CIT (A) has held to have been sustainable by the Bench as per findings in the preceding paras, depreciation cannot be disallowed because vehicle running and its maintenance expenses have been duly charged to the accounts. Moreover, when vehicle is proved to be purchased from the company s funds, depreciation cannot be disallowed merely on the basis of surmises that it was not used for the business of the assessee. So, car having been purchased from the company s fund though in the name of the Director and expenses as to its maintenance and running have been duly charged to the account which are audited one and have been duly accepted, disallowance made by the AO and confirmed by the ld. CIT (A) is not sustainable, hence ordered to be deleted.
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2020 (3) TMI 209
Rectification of mistake apparent from record u/s 254 - Addition of undisclosed receipt - assessee has contended that since there is no dispute in nature of deposits, suggestion of learned Counsel of the assessee that 8% of suppressed transport receipt should be adopted as income - HELD THAT:- Addition of undisclosed receipt by the Assessing Officer was confirmed by learned CIT(A) and therefore the same was confirmed by the ITAT in the aforesaid appeal. Assessee s contention that only 8% thereof should have been brought to tax as income and the ITAT has erred in not accepting the same is seeking review of the order not permissible under the Act.
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2020 (3) TMI 208
Levy of penalty u/s 271(1)(c) - addition u/s 69 as the said amount was found deposited in the assessee s bank and no satisfactory explanation was furnished by the assessee - HELD THAT:- CIT(A) has not considered the above aspect of the matter and merely for the reason that assessment order has been confirmed in quantum proceedings by the Tribunal, he has confirmed the levy of penalty ex-parte qua the assessee. Given the peculiar facts and circumstances of the present case, we believe that the assessee deserve one more opportunity and we accordingly deem it appropriate to set-aside the matter to the file of the ld CIT(A) to decide the same afresh taking into consideration aforesaid discussion after providing reasonable opportunity to the assessee. Needless to say, the assessee should attend to the appellate proceedings before the ld CIT(A) and cooperate in timely completion of the appellate proceedings. Appeal of the assessee is allowed for statistical purposes.
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2020 (3) TMI 207
Additions on account of unverifiable creditors - Revenue holding that the creditors in the balance sheet are found not genuine and assessee had failed to establish that the said creditor was genuine and did not produced confirmation - HELD THAT:- Apparently the assessee was not debtor in the books of M/s.Pamis Tex Pvt. Ltd., as on 31.03.2009 thus, had reached to two possibilities i.e. either the claim of purchase by assessee from M/s. Pamis Tex Pvt. Ltd., is bogus or unaccounted payment has been made to M/s.Pamis Tex Pvt. Ltd., in A.Y. 2006-07 and A.Y. 2007-08. In any of those situations, the income chargeable to tax pertained to A.Y. 2006-07 and A.Y. 2007-08 and since the same has escaped assessment. Therefore, the same was required to be made in A.Y. 2006-07 and 2007-08. Therefore, considering all those facts it was directed to the AO u/s.150(1) of the I.T.Act to issue notice u/s.148 for A.Y. 2006-07 and A.Y. 2007-08 and add unaccounted payment pertaining to each year in that assessment year. Accordingly, the ld.DR appearing on behalf of the Revenue also stated at BAR that the assessment years for A.Y. 2006-07 to 2007-08 have already been reopened and respective additions have already been made in those years. The said fact has also been confirmed by the assessee at BAR. Since both the parties have agreed that additions have already been made in the respective assessment years i.e. 2006-07 and 2007- 08, therefore, there is no cause left before the ld.DR to challenge this finding recorded by the ld.CIT(A) in this assessment year as the order passed by ld.CIT(A) has already been complied with and now there is no loss to the Revenue. DR has failed to substantiate its argument as to how and in what manner the order passed by the ld.CIT(A) on this ground is not sustainable in Law or what impropriety has been committed by the ld.CIT(A). No new facts or circumstances have been brought before us in order to controvert or rebut the findings recorded by ld.CIT(A). Therefore, we find no reasons to interfere or deviate from the lawful findings so recorded by ld.CIT(A), thus we upheld the same and dismiss this ground of appeal of Revenue Unexplained repayment of unsecured loans - sources and nature of the amount of repayment of the same were not proved despite repeated opportunities - HELD THAT:- As during the appellate proceedings, the assessee has filed all required documents which have already been got verified by ld.CIT(A) by seeking Remand Report from the AO which established that the entire loan has already been repaid by the assessee. Thus, the ld.CIT(A) rightly concluded that the repayment of the loan mentioned that there had been reduction in the liability and unless there is an evidence that these repayment has been bade out of unaccounted income, no addition can be made. It was also held that if the AO feel that unsecured loans were bogus, then in that eventuality the corresponding addition was required to made in the year in which the unsecured loans were taken. No new facts or circumstances have been brought before in order to controvert or repaid the factual findings so recorded by the CIT(A). No infirmity in the order of ld.CIT(A), accordingly same is upheld, consequently Ground No.2 of appeal of the Revenue is dismissed. Unexplained advances to suppliers - nature and genuineness of the transaction was not proved by the assessee either during the course of assessment proceedings or during the remand proceedings - HELD THAT:- As during the appellate proceedings the ld.CIT(A) has sought Remand Reports from the AO and after appreciating said factual findings had rightly concluded that in comments filed dated 01.08.2013 the assessee has mentioned that the above amount is not advanced to the supplier, but in fact debtors of the assessee and the audited report has wrongly mentioned it as advance to suppliers. Therefore, in such circumstances it was rightly concluded by the ld.CIT(A) the if AO doubted the source of these payments, the addition should have been made of the corresponding liability, which has been used to finance this advance. In any case, an item on the asset side of the balance sheet can be added in the hands of the assessee unless the corresponding liability to finance the asset has been brought found to be consequently the additions were rightly deleted. In the light of above, we do not find any infirmity in the order of ld.CIT(A), accordingly same is upheld, consequently Ground No.3 of appeal of the Revenue is dismissed.
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2020 (3) TMI 206
Revision u/s 263 - Pr.CIT has held that the order of the AO as erroneous insofar prejudicial to the interest of Revenue on account of non-verification of some items - HELD THAT:- After perusal of the details of the fixed assets which were available before the AO during the assessment proceedings, we find that the AO after due application of mind framed the assessment under section 143(3) of the Act. Similarly, we note regarding the proceeds from deposits and cash credit i.e. unsecured loans, that the AO during the assessment proceedings has required the assessee to furnish the details in the notice issued under section 142(1) of the Act dated 22-10-2012. We also find that the assessee in response to the above notice has filed the details of the unsecured loan as well as confirmations. Similarly, we note, regarding the transactions covered under section 40A(2)(b) of the Act assessee in response to the queries raised in the course of hearing has submitted vide letter dated 06/03/2013 that the transactions were carried out with the related parties at the prevailing market rate. We hold that the assessment order was framed under section 143(3) of the Act after due verification by the AO. Accordingly, we are of the view that the order of the AO cannot be held as erroneous insofar prejudicial to the interest of Revenue on account of non-verification of the facts as stated above. We conclude that the assessment was framed by the AO after considering the various details filed by the assessee. Therefore, we are not inclined to uphold the finding of the learned ld. Pr.CIT with respect to the items as discussed above. Accordingly, we quash the order passed by the Ld. Pr.CIT under section 263.
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Customs
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2020 (3) TMI 205
Smuggling - Gold Bars - Bailable offence or not - Section 135 of the Customs Act, 1962 - HELD THAT:- The fact is not disputed that the market price of the goods seized does not exceed one crore of rupees. Nowhere in the counter affidavit has it been stated that the gold that was seized from the applicant belongs to the category of prohibited goods duly notified by the Central Government, nor has it been stated that evasion or attempted evasion of duty exceeds fifty lakh rupees. Further, no fraud has been alleged as referred in clause (d) of sub-section (6) of Section 104 - there is a merit in the contention of the learned counsel for the applicant that the offence is a bailable offence as provided in sub-section (7) of Section 104 of the Customs Act. It is no longer res integra that the right to claim bail as provided under Section 436 Cr.P.C. in a bailable offence is an absolute and indefeasible right and in such offences there is no question of discretion in granting bail as the words of Section 436 are imperative - Application allowed.
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2020 (3) TMI 204
Validity of the order of Settlement Commission, the JDGFT - Advance License Scheme - extension of time limit for discharge of export obligation, denied - Partial relief of immunity granted from levy of interest and penalty on payment of 10% at interest - HELD THAT:- The Central Government has Issued Notification No. 46/2013- Customs dated 26.9.2013. The said notification has amended the a host of Notifications including Notification No 204/92-Customs dated 19.5.1992 wherein it has been stated that in a case of default in export obligation, when the duty on goods is paid to regularise the default, the amount of interest paid by the importer shall not exceed the amount of duty if such regularisation has been dealt in terms of Public Notice of the Government of India in the Ministry of Commerce No. 22 (RE-2013)/2009-2014 dated 12th August, 2013 - However, in the present case the Settlement Commission had exercised its discretion the as per the provision as it stood at that point of time and granted partial waiver of interest. There are no infirmity in the exercise of discretion vested with the settlement commission while granting partial waiver to the petitioner at that point of time - Since the petitioner had wrongly assumed that it could challenge the impugned order of the 1st respondent Settlement Commission perhaps under a mistaken notion, I am not inclined deny and dilute the benefit which was conferred to the petitioner under impugned order of the 1st respondent Settlement Commission. Petitioner is therefore directed to pay interest within a period of 30 days from date of receipt of copy of this order failing which the 2nd respondent will be entitled to proceed under Section 127 H of the Customs Act, 1962 as if no immunity was granted - petition disposed off.
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2020 (3) TMI 203
Jurisdiction - power of Recovery of Interest - failure of the petitioner to fulfill the conditions of Export Promotion Capital Goods scheme licence read with Notification No.160/92-Cus., dated 20.04.1992 issued under Section 25(2) of the Customs Act, 1962 - It is the contention of the learned counsel for the petitioners that the authorities under the Foreign Trade (Development and Regulation) Act, 1992 do not have power to either collect customs duty or levy interest. HELD THAT:- While considering the provisions of the Foreign Trade (Development and Regulation) Act, 1992, the Export and Import Policy and the relevant Handbook of Procedures, it has to be kept in mind that the customs duty under Notification No.160/92-Customs dated 20.04.1992 was issued to implement the Policy - The Notification No.160/92-Customs dated 20.04.1992 was not independent of Export and Import Policy of the Ministry of Commerce. The petitioners having agreed to bind to the conditions of the license issued in terms of the Foreign Trade (Development And Regulation) Act, 1992, the Export and Import Policy and the relevant Handbook of Procedure the Foreign Trade (Development And Regulation) Act, 1992 cannot approbate and reprobate - Therefore, it is not open for the petitioners to state that the Officers of the Ministry of Commerce have no power to levy of interest. It is not open for the petitioners to state that the respondents had no authority to demand interest on the custom duty foregone even though the petitioners failed to discharge export obligation undertaken by them. When the impugned orders were passed, the Customs Notification No.46/2013-Cus dated 26.09.2013 had not been issued. As per the said notification, in case of default of export obligation, the amount of interest to be paid by an importer shall not exceed the amount of duty if such regularisation has been dealt in terms of public notice of the Government of India, in the Ministry of Commerce No.22 (RE-2013)/2009-14 dated 12.08.2013 - The Ministry of Commerce had considered the difficulties faced by the manufacturer exporters like the petitioners and had therefore over a period of time relaxed the rigours by reducing the interest. Earlier, Public Notice No.5/(RE-99)/1997-2002 dated 06.04.1999 was issued giving an opportunity to persons like the petitioners to regularise the default by extending the period of export obligation upto 31.03.2001 provided applications were made by such manufacturer-exporters within the stipulated time and a bond was executed undertaking to pay customs duty together with 24% interest from the date of import upto 30.09.2001. The petitioners are entitled to reduction of the interest in terms of the policy decision taken by the Ministry of Commerce in their public notice - the cases remanded back to the original authority namely, the Joint Director of General of Foreign Trade, the licensing authority to re-determine the interest to be paid by the respective petitioners in terms of Customs Notification No.46/2013-Cus dated 26.09.2013 - petition allowed by way of remand.
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PMLA
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2020 (3) TMI 202
Money Laundering - proceeds of crime - allegation that proceeds of crime utilised subsequently by the accused persons for acquisition of various movable/immovable assets so as to project them as untainted on continued basis even after 1st June, 2009, which is an offence under Section 3 of PML Act - HELD THAT:- It is undisputed that initially, ECIR was registered with the allegation that the total value involved in the instant offence is more than ₹ 30 lac and due to contravention of provisions under Section 37 of the Act, the proceeding was initiated in terms of the provisions under Section 2y(ii) of the PML Act for the purpose of investigation. It is also undisputed that during the course of investigation, Assistant Director, Directorate of Enforcement wrote a letter to Chief Environment Officer on 13th December, 2013 and requested to provide the valuation of the unit, which was not installed in the factory, in reply to which, information was given by the said Officer that cost of the device/chimney, which was not installed at the time of inspection, is ₹ 2 lac. Thereafter, Complaint Case No. 04 of 2015 was filed by Enforcement Directorate in the court of Special Judge (PML Act) with the allegation that the inspection of factory was conducted by the officers of the Board on 16th July, 2007 and it was found that no pollution control equipment was installed in the factory as per the provisions laid down in the Act. From the record, it is also evident that after purchasing the land in question in the year 2004 for running the factory, the revisionist had applied for consent of the Board in the year 2007 and the inspection of the premises was conducted by the officers of the Board, in which, the pollution control unit was not found. As by way of Act No. 23 of 2019, Explanation clause has been added in Section 2(u) of the PML Act, which clearly provides that the 'Proceed of Crime' include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Indisputably, in the present case, the cost of the unit, viz. ₹ 2 lac, which was not installed at the factory, is treated as 'Proceed of Crime'. Learned counsel for the respondent failed to dispute the fact that initially the allegation levelled was that total value involved in the offence was more than ₹ 30 lac, which is categorically mentioned in the ECIR, but later on, in the complaint case, only the cost of equipment which was not installed, is treated as a 'Proceed of Crime' - Admittedly, the court below failed to consider this aspect of the matter. Revision allowed.
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Service Tax
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2020 (3) TMI 201
Valuation - demand of service tax on the gross turnover without giving any allowance for the material utilised in execution of the contract - period April, 2008 to March, 2012 - extended period of limitation - penalty u/s 76, 77 and 78 of FA - Cum-tax benefit - HELD THAT:- It is evident that the appellant have done works contract wherein they have executing the work alongwith material. Thus, the gross amount paid to them by the principal, includes the value of materials. Further, the appellant are also assessed to sales tax and they have paid VAT on the value of the materials which are to be sold to the principal in the execution of work contract. In the impugned order, mistake in calculation of tax dues has already appreciated by the Commissioner (Appeals). Accordingly, the impugned order is set aside and remanded to the original adjudicating authority for re-determination of tax liability after allowing deduction for the material component, which is verifiable from the sales tax assessment order and also from the other records. Cum tax benefit - HELD THAT:- The appellant shall be entitled to cum tax benefit as already held by the Commissioner (Appeals) and also entitled to turnover . Imposition of penalty u/s 76, 77 and 78 of FA - HELD THAT:- In absence of any malafide no penalty is exigible under Section 76 and 78, as there is no case of deliberate default made out in the show cause notice - The penalty under Section 77 shall also stand reduced in terms of the re-quantification of the demand. Appeal allowed by way of remand.
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2020 (3) TMI 200
Validity/scope of SCN - Demand of service tax under different head - the proposal in the show cause notice was for confirmation of demand under Commercial or Industrial Construction Service whereas the demand was confirmed under Erection, Commissioning and Installation Service , Maintenance and Repair Service and Manpower Supply Agency Service - HELD THAT:- On perusal of this Tribunal s decision in the case of M/S. MARUBENI INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX NEW DELHI [ 2016 (8) TMI 676 - CESTAT NEW DELHI] , it is noted that the demand was raised under Commercial and Industrial Construction Service whereas the same was confirmed under various services other than Industrial Construction Services. In the case of M/s Marubeni India Pvt. Ltd., it was held that as per declaration of law in various cases stated therein allegations are required to be made by revenue very clear in the show cause notice and adoption of classification of service under the heading different than the one proposed in the show cause notice amounts to passing the order beyond the scope of show cause notice - Tribunal in the above stated case made it clear that if the confirmation of service tax is under a different category than the one which was proposed in the show cause notice then such confirmation of demand is not sustainable. Demand do not sustain - appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (3) TMI 199
Clandestine removal - excesses and shortages of bricks and sponge iron - no corroborative evidences of allegation found - HELD THAT:- The entire case of the Revenue is based upon the shortages detected at the time of visit of the officers. There is no corroborative evidence showing any clandestine manufacture and removal of the goods. The legal position is settled laying down that clandestine removal allegations cannot be upheld only on the ground of shortages detected by the visiting officers, in the absence of any other evidence. Inasmuch as in the present case, there is no other evidence to substantiate the charge of clandestine removal, impugned order is set aside - appeal allowed - decided in favor of appellant.
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2020 (3) TMI 198
Valuation - inclusion of additional amount which has been collected by the appellant from their customers as representing VAT but which has not been deposited as VAT forms an additional consideration for sale, in the assessable value - HELD THAT:- There are several schemes of State Governments in which, as an incentive, businesses are allowed to collect amounts as representing VAT/Sales Tax but not remit the amount to the State Government. The question is whether in such cases the amounts so retained form part of the assessable value for the purposes of Excise Duty. Since such matters were pending in various States all these appeals or at least many of them were disposed of by the Hon ble Apex court who held that Excise Duty has to be paid on such amounts which are retained by the assessee. This judgment was not confined to any particular law of a particular state or a particular scheme but has laid down the law. Review Petitions filed against this judgment were also dismissed by the Hon ble Apex Court. There is nothing on record to show that a larger Bench of Supreme Court has taken any contrary view - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] . We therefore, find this judgment is binding on us and leaves us with no option but to hold that the assessee in the present case is bound to pay Excise Duty on the amounts collected as representing VAT but which were not paid to the government under the scheme. Extended period of limitation - penalty - HELD THAT:- Such a suggestion preposterous considering that it is clearly on record that the Revenue is aware of modus operandi of the assessee. To allege fraud, collusion, willful misstatement or suppression of fact or violation of Act or rules with an intent to evade payment of duty and invoke extended period has no basis - the demand for extended period of limitation needs to be set aside - penalty also set aside. The demand for the normal period of limitation is upheld and the demand for extended period of limitation is set aside - amounts which have been collected by the appellant as VAT and retained must be taken as cum duty price and Excise Duty are calculated accordingly - appeal is remanded to the Adjudicating Authority for the limited purpose of re-computation of duty.
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2020 (3) TMI 197
CENVAT Credit - denial on the sole ground that their factory address was not reflected in the invoices and only their head office address was shown - period from April, 2010 to March, 2015 - HELD THAT:- It is seen that the credit was availed by the appellant after reflecting the same in their RG-23A Part-I and Part-II registers - It is well settled law that substantive benefit cannot be denied on the basis of procedural lapses, if any. The appellant had also their head office and the address stands shown inasmuch as orders might have placed from the head office. The Tribunal in the case of COMMR. OF C. EX. SERVICE TAX, RAIPUR VERSUS DAYALAL MEGHJI AND COMPANY [ 2015 (12) TMI 488 - CESTAT NEW DELHI] has held that it is the appellant s own head office and he would be entitled to take the credit on the basis of invoices issued in the name of the head office. Appeal allowed - decided in favor of appellant.
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2020 (3) TMI 196
CENVAT Credit - time limitation for claiming credit - credit denied on the allegations that the same stands availed after a period of six months from the date of issuance of the invoices and in terms of Notification No. 21/2014-CE dated 11 July, 2014, the credit is available only within a period of six months from the date of the invoices - HELD THAT:- The issue stands decided in BHARAT ALUMINIUM COMPANY LIMITED VERSUS JOINT COMMISSIONER OF CENTRAL TAX, GOODS SERVICE TAX [ 2019 (7) TMI 1084 - CESTAT NEW DELHI] laying down that period of six months limitation provided with effect from 1.9.2014 would not apply to the Cenvatable invoices issued prior to the said date - credit remains allowed - appeal allowed - decided in favor of appellant.
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2020 (3) TMI 195
CENVAT Credit - cutting and slitting of CR Coils - process amounting to manufacture or not - HELD THAT:- It is an admitted fact that after cutting and slitting of CR coils converting into sheets, the appellants have cleared the goods on payment of duty, therefore, in terms of the decision of the Hon ble Bombay High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] wherein it has been held that when the goods have been cleared on payment of duty after utilizing the Cenvat credit and the same will be termed as reversal of Cenvat credit, therefore, we hold that payments of duty by the appellant shall amounts to reversal of Cenvat credit sought by the revenue in the show cause notice. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (3) TMI 194
Levy of tax - Betel Nut - no material fact available on record to show that the revisionist has purchased 4700Kg. betel - tax levied on the basis of ex-parte SIB survey - HELD THAT:- From the perusal of record it is clear that only on the basis of a bill/invoice which has been discovered by the Revenue, the said transaction has been brought to tax with regard to purchase of 4700Kg. betel nut alleged to have been purchased from M/s Trade Impex, Kanpur. The revisionist throughout the aforesaid proceedings has denied the transaction in question - It has further been brought on record that M/s Trade Impex in their return have also denied the said transaction and a confirmation was sought in this regard from the Assistant Commissioner, who by means of report dated 06.02.2012, confirmed the fact that no such transaction has been undertaken by M/s Trade Impex. Once the Department itself could not verify the said transaction, then the same cannot be included in the turnover of the revisionist who is the other contracting party - there is no possibility that the transaction in question has ever taken place and in absence of any such evidence, satisfaction recorded by the Tribunal is on the face of it infirm and is liable to be interfered by this Court. Revision allowed.
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2020 (3) TMI 193
Principles of natural justice - imposition of penalty - exemption sought on sales to Special Economic Zone (SEZ) - opportunity for personal hearing denied for some issues - HELD THAT:- Pursuant to order dated 28.06.2016, a notice has been sent only in respect of the period 2007-08 and only on the issue of exemption claimed as sales to SEZ. After considering the reply of the petitioner, this issue has been accepted in favour of the petitioner by the respondent. However, in regard to the remaining eight issues that formed the subject matter of the earlier assessments, he merely reiterates his conclusion in the original order of assessment. Learned counsel for the petitioner states that detailed objections had been filed even at the original instance to the eight issues and the original orders of assessment have in fact been set aside by order dated 07.04.2014. Clearly, no opportunity of hearing has been extended to the petitioner in respect of the remaining eight issues as well as penalty, pursuant to order of this Court dated 28.06.2016 - thus, there are no choice but to set aside the impugned order of assessment, simply for want of opportunity. Let the petitioner appear before the respondent on Monday, the 17 th February, 2020 at 10.30 a.m. without expecting any further notice in this regard - The assessments for the period 2007-08, 2008-09, 2010-11, 2011-12 and 2012-13 (all assessments, baring for the period 2007-08, still pending before the Assessing Authority) shall be taken up for hearing and after affording sufficient opportunity to the petitioner - petition allowed by way of remand.
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Indian Laws
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2020 (3) TMI 192
Auction - mortgaged property - Non-performing asset - whether in a matter of the present nature the appellants should be exposed to the ignominy of going through the process of criminal proceedings? - rejection on the ground of delay against which an appeal is said to have been filed before the DRAT and it was pending though it is now stated to be dismissed. HELD THAT:- The SARFAESI Act is a complete code in itself which provides the procedure to be followed by the secured creditor and also the remedy to the aggrieved parties including the borrower. In such circumstance as already taken note by the High Court in writ proceedings if there is any discrepancy in the manner of classifying the account of the appellants as NPA or in the manner in which the property was valued or was auctioned, the DRT is vested with the power to set aside such auction at the stage after the secured creditor invokes the power under Section 13 of SARFAESI Act. In the matter of present nature if the grievance as put forth is taken note and if the same is allowed to be agitated through a complaint filed at this point in time and if the investigation is allowed to continue it would amount to permitting the jurisdictional police to redo the process which would be in the nature of reviewing the order passed by the learned Single Judge and the Division Bench in the writ proceedings by the High Court and the orders passed by the competent Court under the SARFAESI Act which is neither desirable nor permissible and the banking system cannot be allowed to be held to ransom by such intimidation. Therefore, the present case is a fit case wherein the extraordinary power is necessary to be invoked and exercised. Appeal allowed - decided in favor of appellant.
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2020 (3) TMI 191
Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - acquittal of the accused - rebuttal of presumption - HELD THAT:- Presumption is rebuttal and respondent may prove that there was no debt to be discharged by him, but he himself did not enter into witness box. The respondent did not give reply to the notice issued to him as per Ex.P/3. It is not a case of respondent that he has not signed the cheque. A meaningful reading of the provisions of the Act, 1881 makes it ample clear that the person signed the cheque over to payee remains liable. Presumption will live, exist and survive and shall end only when contrary is proved by the accused/respondent. From the evidence, it is not a case where source of income is not established. The amount was advanced on the basis of personal relation, therefore, preparation of other documents was not required under the law and cheque issued by the respondent is the best document for showing liability of the respondent - On an overall assessment, it can be said that the finding of the Sessions Court is against weight of the evidence and same is not legal because it is contrary to the provisions of the Act, 1881. In view of the evidence of both sides, argument advanced on behalf of the respondent is not acceptable and the act of the respondent falls within mischief of Section 138 of the Act, 1881. Respondent is convicted under Section 138 of the Negotiable Instruments Act, 1881. The date of issuance of cheque is 8-7-2011. Appellant is entitled to interest @ 6% per annum on the amount advanced by him - Appeal allowed - decided in favor of appellant.
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