Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 11, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
TMI SMS
Articles
News
Notifications
Customs
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20/2020 - dated
9-4-2020
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Cus
Seeks to exempt customs duty on ventilators, personal protection equipments, covid-19 testing kits and inputs for these goods.
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19/2020 - dated
9-4-2020
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Cus
Seeks to amend notification No. 8/2020-Customs dated 02.02.2020 to make changes consequential to enactment of Finance Act, 2020.
GST - States
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31/2020-State Tax - dated
9-4-2020
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Gujarat SGST
Provides relief by conditional lowering of interest rate for tax periods of February, 2020 to April, 2020
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30/2020-State Tax - dated
9-4-2020
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Gujarat SGST
Gujarat Goods and Services Tax (Fourth Amendment) Rules, 2020
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F.1-11(91)-TAX/GST/2020 - dated
17-3-2020
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Tripura SGST
Seeks to extend the last date for furnishing of annual return/reconciliation statement in FORM GSTR-9/FORM GSTR-9C for the period from 01.07.2017 to 31.03.2018.
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F.1-11(91)-TAX/GST/2020 - dated
17-3-2020
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Tripura SGST
Notification issued to prescribe due dates for filing of return in FORM GSTR-3B in a staggered manner.
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1/2020-State Tax (Rate) - dated
17-3-2020
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Tripura SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June. 2017
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F.1-11(92)-TAX/GST/2017(Part-I) - dated
6-3-2020
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Tripura SGST
Notification regarding Constitutes a State level Screening Committee on anti-Profiteering for the State of Tripura
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118/2020/3(120)/XXVII(8)/2019/CT - dated
12-2-2020
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Uttarakhand SGST
Appointment of 1st January,2020 as date of commencement of section 14 of UKGST Act, 2019
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7326 /CSTUK/GST-Vidhi Section/2019-20/CT-07 - dated
6-2-2020
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Uttarakhand SGST
Seeks to insert proviso in Notification No. 4387/CSTUK/GST-Vidhi Section/2019-20/CT-44 dated 16th October, 2019
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131/2020/17(120)/XXVII(8)/2019/CT-75 - dated
4-2-2020
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Uttarakhand SGST
Uttarakhand Goods and Services Tax (Ninth Amendment) Rules, 2019
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130/2020/17(120)/XXVII(8)/2019/CT-74 - dated
4-2-2020
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Uttarakhand SGST
Seeks to insert Proviso in Notification No. 116/2018/5(120) /XXVII(8)/ 2017/CT-4 dated 31st January, 2018
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01/2020/17(120)/XXVII(8)/2019/ON-10 - dated
4-2-2020
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Uttarakhand SGST
Uttarakhand Goods and Services Tax (Tenth Removal of Difficulties) Order, 2019
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50/2020/10(120)/XXVII(8)/2019/CT-04 - dated
3-2-2020
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Uttarakhand SGST
Seeks to amend Notification No. 116/2018/5(120)/XXVII(8)/2017/CT-4 dated 31st January, 2018
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Delay in filing appeal - The failure on the part of the petitioner to file the appeal in time was on account of the attempt of the petitioner to unsuccessfully upload the appeal memorandum on the website of the 1st respondent - Delay condoned - Appeal restored before the first appellate authority - HC
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Detention of goods - Section 129(3) of the CGST Act - stock transfer - allegation that the consignor and consignee are two different entity with different GSTINs - appellant contended that the detention itself is without jurisdiction and authority. We are not persuaded to accept such a contention, because the officer had mentioned sufficient reason for detention of the transport. - HC
Income Tax
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Disallowance of depreciation on computer software u/s 40(a)(ia) - assessee had purchased software but had not deducted TDS u/s 194J of the Act on the payment for its purchase - when the assessee has once capitalized the payment and had not deducted TDS on such payments, Sec.40(a)(ia) of the Act cannot be invoked for disallowance of depreciation - AT
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Disallowance u/s 40A(3) - cash payments to lorry drivers - The payments is supported by ledger account of transport operators on whose behalf the payment were made to lorry drivers on day to day basis - where payments are genuine and identifiable no disallowance under section 40A(3) are warranted. - AT
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Rectification u/s 154 - Exemption u/s 54F denied - the assessee through rectification application u/s 154 of the Act wants to play second innings which is nothing but abuse of the process of law. - AT
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Exemption u/s 54F - Assessee given advance for purchase of land in the year 2005 and accordingly acquired right for specific performance of agreement of sale - The said right constitutes “capital asset” within the meaning of sec.2(14) of the Act. Subsequently, the assessee has received money for giving up the said right. - Benefit u/s 54F allowed - AT
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Exemption u/s 10(23FB) - income earned on investments from VCUs [venture capital undertaking] - Since we have held in the preceding paragraphs, that the assessee cannot be subjected to tax for capital gains, there was no necessity to examine the question of applicability of provisions of sec.10(38) of the Act to the capital gains earned by the assessee on sale of shares. - AT
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Capital gain - LTCG or STCG - Period of holding of asset - right acquired on signing of JDA - this right was held by the assessee for more than 36 months because it was acquired on 16.12.2010 and sold in F. Y. 2014-15. Hence, the capital gain in question is LTCG and not STCG - AT
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Disallowance of TDS recoverable written off - AO directed to verify that initially the assessee recognized the total invoice amount and subsequently, identified the bad debt with reference to the deficit payment by the party and the amount under TDS certificate issued - If both the conditions are satisfied, claim to be allowed bad debt - AT
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Bogus LTCG - Long Term Capital Gain on sale of listed equity share exempt u/s 10(38) - Company has a meager turnover and minuscule profit. The regulators conducted the enquiry and found that the price of this company has been rigged. - The statement of the assessee itself did not give any credence to the mere documentary evidences produced by. - Additions confirmed - AT
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Assessment u/s 153C v/s Reopening of assessment u/s 147 - when incriminating documents were found during the course of search, the same have been used in the case of the assessee-company. The proper course the A.O. should have adopted is to proceed against the assessee-company under section 153C of the I.T. Act instead of recording reasons for reopening of the assessment under section 147/148 of the I.T. Act. - AT
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Unexplained investment - Purchase of vehicle - In the assessment order, the AO has also accepted that the assessee has sufficient bank balance to meet out for purchase of car, however, did not accept the explanation of the assessee and added the same to the total income of the assessee. - additions deleted - AT
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Condonation of delay - delay of 2554 days in filing the appeal - sufficient cause for delay - assessee waited for the decision of the similar issue pending before the CIT(A) Mysore, which was decided on 31.08.2017 construing the status of the assessee as a Central Government Organization for the purpose of valuation of perquisites and not as an autonomous body - the grounds taken by the assessee for condonation of delay is not sufficient. - AT
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Validity of initiation of proceedings u/s 147/148 - Addition u/s 69 - anonymous complaint - Once the sellers as well as the purchasers have denied the allegation of any unaccounted purchase consideration/sale consideration paid or received in their statements recorded under section 131 of the Act, then in the absence of any such fact detected during the investigation carried out by the DDIT, the opinion formed by the DDIT and consequently by the AO is merely based on the allegation made in the complaint which is anonymous complaint as admitted and stated by the DDIT Investigation - AT
Customs
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Seeks to exempt customs duty on ventilators, personal protection equipments, covid-19 testing kits and inputs for these goods. - Notification
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Special Refund and Drawback Disposal Drive - Implementation of decision to expedite pending refund and drawback claims - Order-Instruction
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Recovery of Customs Duty with penalty after a gap of 17 years - It is the grievance on the part of the petitioner that for the entire period of 17 years, the show cause notice issued in the year 2000 was not heard and surprisingly the date of hearing was given after 17 years - there are no grounds put-forth by the department, which can attribute any of the reasons to the petitioners for delay, which has been caused in adjudicating the matter - SCN quashed - HC
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Interest on Delayed Refund of SAD - The interdepartmental lack of clarity can hardly effect the right of the parties particularly when there is statutory provision permitting the interest on the refund claim, if the sum is not paid within stipulated time period of 3 months - HC
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Imposition of 100% penalty instead of 25% - if there is any short payment they would have been be asked to pay at that stage and the matter could have been come to an end. But instead of doing so, the matter had to travel up to this Tribunal which is very unfortunate - As whole of the demand of duty, interest and 25% penalty has been paid by the appellant and the Managing Director is also not be penalised. - AT
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Valuation of imported goods - import of multi functional digital copiers - enhancement of value - Mere acquiescence by the importer in order to expedite their clearances through customs does not form the evidence that the value has been mis-declared, more so when the enhancement was marginal - Confiscation as well as redemption fine set aside. - AT
Corporate Law
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Sale of Land of a company - proper authorization - Sale of the property of a company requires board resolution to that effect. The sale alleged to have been executed is only on the basis of board resolution dated 01.08.2015 which itself cannot be relied upon. Therefore, the sale of the said land seems to have been executed without proper authorization of the board - AT
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Power of the tribunal to pass appropriate orders - Impleadment of the appellants(s) as party (including auditors) - Before passing any appropriate order in public interest and to save the economy of the Country from collapse, if the Tribunal is of the opinion that it requires to give appropriate hearing to the concerned parties, including those who audited ‘IL&FS’ and/ or those who have managed or were concerned with ‘IL&FS’ or its Group Companies, it cannot be held to be illegal - AT
Service Tax
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CENVAT Credit - input services - The appellant has specifically come out with a case that the CENVAT Credit availed by the appellant for the period 2011-12 pertains to input services received by the appellant prior to 1 April, 2011 - credit cannot be denied by applying the amendment made in the definition of ‘input service’ with effect from 1 April, 2011 - AT
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Demand of service tax on the amount of reimbursement of payroll cost for the expatriate employees deputed - to ascertain whether the employer employee relation exists, matter remanded back - AT
VAT
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Validity of assessment order - CST Act - inter-state sales or not - It was thus incumbent upon the Authority to examine the transactions minutely and then come to a decision as to whether the transactions were domestic transactions inter se the petitioner and the vendor or inter state sales. - HC
Case Laws:
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GST
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2020 (4) TMI 305
Release of detained goods alongwith conveyance - section 129 of GST Act - HELD THAT:- By way of an interim measure, the respondents are directed to release the detained goods together with the conveyance, subject to the petitioner paying the tax and penalty as computed by the respondent authorities and also subject to filing a solemn undertaking before this court to the effect that the petitioner shall make good the deficit liability, if any, as may be determined finally by the authorities for the goods as well as for the vehicle/s subject to the petitioner's right to challenge the same in accordance with law. It shall be open for the writ applicantd 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 applicants 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 (4) TMI 304
Delay in filing appeal - appeal was dismissed on the ground that it is time barred under Section 107 (1) of the Tamil Nadu Goods and Service Tax Act, 2017 - HELD THAT:- The failure on the part of the petitioner to file the appeal in time was on account of the attempt of the petitioner to unsuccessfully upload the appeal memorandum on the website of the 1st respondent - This resulted in the delay and therefore the petitioner filed the appeal manually on 16.4.2019 by which time the limitations had expired under Section 107(1) of the Tamil Nadu Goods and Service Tax Act, 2017. There are merits in the contentions raised by the petitioner - Appeal restored before the first appellate authority - decided in favor of petitioner.
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2020 (4) TMI 303
Detention of goods - Section 129(3) of the CGST Act - stock transfer - allegation that the consignor and consignee are two different entity with different GSTINs - HELD THAT:- Learned counsel for the petitioner/appellant contended that the detention itself is without jurisdiction and authority. We are not persuaded to accept such a contention, because the officer had mentioned sufficient reason in Ext.P5 for detention of the transport. Whether those reasons mentioned in Ext.P5 will amount to a transit made in contravention of the provisions of the CGST Act or the Rules, is a matter which need to be adjudicated by the 1st respondent before passing an order for payment of tax and penalty as contemplated under Section (3) of Section 129. It will suffice if the appellant is given an opportunity to participate in the adjudication process, if necessary after filing objections with supporting documents to Ext.P7 notice - order directing release of the transit, on furnishing Bank Guarantee is not interfered with - Appeal disposed off.
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Income Tax
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2020 (4) TMI 302
Deduction u/s 80IA - Disallowance of Project Facilities Expenses - Whether disallowance of expenditure would increase profit derived from industrial undertaking and as the AO has not disputed eligibility of such deduction under section 80IA ? - HELD THAT:- As emerging from the record, it is evident that the sole ground on which the AO has sought to disallow the expenditure is that, such expenses were incurred in the previous year and not in the current year. It is an admitted position that the assessee was entitled to deduction under section 80IA of the Act. The consequence of disallowance of expenditure by the Assessing Officer is that the eligible income under section 80IA of the Act would get enhanced and the assessee would be entitled to deduction thereof under section 80IA of the Act. The Tribunal was, therefore, justified in coming to the conclusion that the issue was tax neutral and upholding the order passed by the Commissioner (Appeals). It not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to question of law, much less, a substantial question of law warranting interference.
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2020 (4) TMI 301
Addition u/s 68 - Cash found to have been deposited in two bank accounts - onus to prove that the credit entries appearing therein were not in the nature of income - HELD THAT:- Onus was on assessee to prove that the credit entries appearing therein were not in the nature of income. It also emerges that the assessee could not file plausible explanation for credit entries before lower authorities Many discrepancies were found in documentary evidences submitted by the assessee in support of the fact that cash deposits were out of proceeds of agricultural produce. Similar is the position before us wherein the assessee is unable to file any additional evidence to support the said fact. The perusal of computation of income would show that the assessee has already reflected agricultural income of ₹ 0.73 Lacs in the return of income. Therefore, the plea the cash deposits were sourced out of agricultural income could not be accepted. Having said so, equity would demand that items which are capital in nature or the transactions which do not give rise to any taxable income should not be considered as assessee s income since only true income was to be brought to tax. Further, the benefit of cash withdrawals from the said bank accounts should be granted to the assessee. Entire credit received through banking channels aggregating to ₹ 15,82,636/- (₹ 4,35,000/- ₹ 11,47,636/-) could not be considered as assessee s income since outward payments have also been made from the said bank accounts. It is noted that besides rental income agricultural income, the only source of income for the assessee was earnings from shop. Considering this fact, we are of the opinion that a reasonable estimation of profit against these receipts would meet the end of justice. We estimate the same @10% which comes to ₹ 1,58,264/-. The balance addition of ₹ 20,57,059/- shall stand confirmed. The ground raised by the assessee stand partly allowed. Grant of TCS credit which is reflected in Form 26AS - HELD THAT:- AO is directed to verify the same and grant due credit of TCS as per law. The additional ground stand allowed for statistical purposes.
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2020 (4) TMI 300
Disallowance of depreciation on computer software u/s 40(a)(ia) - assessee had purchased software but had not deducted TDS u/s 194J of the Act on the payment for its purchase - HELD THAT:- As during the year assessee had purchased the software and it was capitalized and the purchase of software has not been claimed as an expenditure. It is also a fact that no TDS was deducted by the assessee on the purchase price paid by it. We find that the Bangalore Tribunal in the case of Kawasaki Microelectronics Inc. [ 2015 (9) TMI 9 - ITAT BANGALORE] has held that the question of disallowance of expenses u/s 40(a)(ia) of the Act arises only when an expenditure is claimed by the assessee and on which the tax at source as per the provisions of Chapter XVII-B of the Act has not been deducted. It held that when assessee has not claimed payment as an expenditure, then the question of disallowance u/s 40(a)(ia) does not arise - when the assessee has once capitalized the payment and had not deducted TDS on such payments, Sec.40(a)(ia) of the Act cannot be invoked for disallowance of depreciation. Before us, Revenue has not pointed out any contrary binding decision in its support nor has placed any material to demonstrate that the aforesaid decision of Bangalore ITAT has been set aside / over ruled / stayed by higher judicial authorities. We are therefore of the view that the AO had erred in disallowing the claim of depreciation by invoking the provisions of Sec.40(a)(ia) of the Act. We therefore direct the AO to grant deduction of depreciation. Thus, the ground of the assessee is allowed. Denial of deduction u/s 10A with respect to Unit No.I, Bangalore - AO denied the claim of deduction as the claim of deduction was not made in the return of income - HELD THAT:- The fact that the claim and detail of working of deduction of 10A has been made in the computation of income is evident from the computation filed by the assessee in the Paper Book. In such a situation, the claim of the assessee that the assessee had through oversight missed to claim the deduction cannot be brushed aside without there being any material to demonstrate to the contrary. We also find that the Hon ble Bombay High Court in the case of Pruthvi Brokers [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] has held that the jurisdiction of the appellate authorities to entertain the claim which has not been made before the AO but before the appellate authorities has not been rejected by the Hon ble Apex Court in the case of Goetze India Pvt. Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] - AO was not justified in denying the claim of deduction u/s 10A of the Act with respect to Unit No.1 of Bangalore. We therefore direct the AO to grant deduction subject to the assessee complying with other conditions of deduction. Thus, the ground No.2 of the assessee is allowed. TP Adjustment - international transactions with it s Associated Enterprises (AEs) - comparable selection - HELD THAT:- Infosys Ltd. - since the turnover of the assessee was ₹ 342.21 crore, it would fall in the category of a medium seized firm as per Dun Brad Street categorization compared to Infosys Ltd., which would fall in large company with turnover greater than ₹ 2000 crore. It therefore directed its exclusion. Functional dissmilaity - ICRA Techno Analytics Ltd., and Infosys Ltd., are not comparables and Akshay Software Technologies to be the comparable company with the assessee. Risk adjustment - granting of percentage of risk adjustment by DRP - TPO denied the risk adjustments as he was of the view that assessee facing single customer risk which brings the assessee almost at par to the uncontrolled comparables and risk levels and therefore no adjustment was necessary - HELD THAT:- We find that DRP after considering various decisions cited in his order has directed the TPO to decide the percentage of risk adjustment. Before us, Revenue has not pointed any contrary binding decision in its support nor has pointed out any fallacy in the findings of DRP. Before us, Ld.A.R. has further submitted that if Infosys Ltd., is excluded from the list of comparables then the assessee would be within the arms length as compared to that of comparables and no adjustment to ALP would be required. Since we have hereinabove upheld the order of DRP in excluding the Infosys Ltd. from the list of comparables and for the reasons cited herein above, we are of the view that no interference to the order of DRP is called for. Method of computation of deduction u/s 10A - HELD THAT:- We find that identical issue arose before the Tribunal in assessee s own case for A.Y. 2009-10 wherein the Co-ordinate Bench of the Tribunal by following the decision of CIT Vs. HCL Technologies [ 2018 (5) TMI 357 - SUPREME COURT] held that to calculate deduction u/s 10A of the Act, the expenses should be reduced from the export turnover and total turnover also. Before us, Revenue has not pointed out any contrary binding decision in its support. We therefore find no reason to interfere with the order of DRP. Thus, the grounds of Revenue are dismissed.
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2020 (4) TMI 299
Disallowance u/s 40A(3) - cash payments to lorry drivers - five parties reflected that they had received cash payment in excess of ₹ 20 000, in a day - HELD THAT:- In the present case, the payments made to individual lorry drivers has not been disputed. It is not the case of Revenue, that payment made by the assessee are not genuine or the payee is not identifiable. The assessee has explained that it is his business necessity that the assessee had to make payments to lorry drivers to deliver coke at the doors of customers. The payments is supported by ledger account of transport operators on whose behalf the payment were made to lorry drivers on day to day basis. Thus, applying the ratio of judgement of ANUPAM TELE SERVICES [ 2014 (2) TMI 30 - GUJARAT HIGH COURT] and ATTAR SINGH GURMUKH SINGH [ 1991 (8) TMI 5 - SUPREME COURT] where payments are genuine and identifiable no disallowance under section 40A(3) are warranted. No disallowance under section 40A(3) are warranted. Ground of the assessee are allowed.
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2020 (4) TMI 298
Revision u/s 263 - additional income surrendered during the course of survey was required to be taxed @ 30% as per the provisions of section 115BBE without allowing any deduction in respect of any expenditure or allowance under any provisions of the I.T. Act, 1961 and not by adopting / calculating the normal tax rates applicable as done by AO - whether the assessee was eligible to claim set off of loss of the current year from the business as against the declared / surrendered income ? - HELD THAT:- Since the assessment year involved in the present case is assessment year 2014-15 and whereas the amended provisions of section 115BBE(2) are applicable from 1.4.2017, hence, the assessee as per the above reproduced Board Circular was entitled for set off of loss against surrendered income. In view of this, there is no merit in the action of the Ld. PCIT in making the impugned addition and not allowing the set off of income. So far as the observation of the Ld. PCIT that the Assessing Officer has computed the income as per the normal provisions of the Act, whereas, as per the provisions of section 115BBE of the Act, the Assessing Officer should have calculated the tax @ 30% of the declared income is concerned, we find that the assessee being a company has already paid the tax @ 30%. Order of the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue, therefore, the PCIT has wrongly exercised the jurisdiction u/s 263 of the Act and the action of the Ld. PCIT in setting aside the assessment order cannot be held to be justified. The impugned order passed by the Ld. PCIT u/s 263 of the Act is, therefore, quashed. - Decided in favour of assessee.
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2020 (4) TMI 297
Rectification u/s 154 - Exemption u/s 54F denied - HELD THAT:- From the sequence of the events, it is apparent that initially the assessee did not choose to contest the dismissal of deduction u/s 54F of the Act either by way of appeal or by way of Cross objections in spite of the fact that the assessee preferred cross objections on other issues. The order of the CIT(A), therefore, on the issue under consideration had become final. The appeal of the Revenue as well as cross objections of the assessee were decided on 30.1.2014, therefore, the order of the Assessing Officer as well as order of the CIT(A) merged with the order of the Tribunal dated 30.1.2014. Now, the assessee through rectification application u/s 154 of the Act wants to play second innings which is nothing but abuse of the process of law. Even otherwise, the assessee has been given opportunity by the Ld. CIT(A) and the assessee, if was aggrieved from the said order, could have filed an appeal against the said order of the CIT(A) and even could have raised the issue through Cross objections along with other grounds which ultimately have been decided by the Tribunal vide order dated 30.1.2014. Even, the Ld. CIT(A) has rightly observed that under the provisions of section 154 of the Act, a mistake apparent on record can be rectified. However, the provisions of section 154 are not meant for re-argument of the case on merits. In view of this, even otherwise, the application of the assessee u/s 154 of the Act has rightly been dismissed by the Ld. CIT(A). - Decided against assessee.
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2020 (4) TMI 296
Exemption u/s 54F - Nature of source of income / gain for investment - LTCG or not - Assessee given advance for purchase of land in the year 2005 and accordingly acquired right for specific performance of agreement of sale - acquiring of capital asset within the meaning of sec.2(14) - HELD THAT:- There is no dispute with regard to the fact that the assessee had entered into an agreement of sale for purchase of an agricultural land located in Venkatala Village, Yelahanka Hobli, Bengaluru North Tq. A perusal of the said agreement would show that as per clause 4.6 of the agreement, the vendor shall effect conversion of scheduled property from agricultural to non-agricultural use . As per clause-6, either of the party committing breach shall be liable to pay cost, expenses, damages, losses incurred by the aggrieved party. In the case of H Anil Kumar [ 2011 (1) TMI 1159 - KARNATAKA HIGH COURT] assessee entered into an agreement for purchase an immovable property and paid ₹ 1,00,000/-as advance. Subsequently the assessee filed a suit for specific performance of the agreement for sale. Thereafter, the assessee withdrew the suit for specific performance in lieu of payment of ₹ 7,50,000/-. The Hon'ble jurisdictional Karnataka High Court held that right of specific performance of the contract of sale constitutes Capital asset and compensation received for giving up the above said right constitutes capital gains. Facts of the present case are identical with the facts available in the case of H Anil Kumar (supra). The assessee herein has given advance for purchase of land in the year 2005 and accordingly acquired right for specific performance of agreement of sale. The said right constitutes capital asset within the meaning of sec.2(14) of the Act. Subsequently, the assessee has received money for giving up the said right. The same shall constitute capital gains in the hands of the assessee as per the decision rendered by the jurisdictional High Court in the case of H Anil Kumar (supra). In the instant case, it is not the case of assessing officer that the assessee did not get the right of specific performance of agreement of sale upon entering the sale agreement between the assessee and the seller. In the absence of such a legally valid finding, in our view, the revenue cannot place reliance on the decision rendered by Hon'ble Supreme Court in the case of Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] - Decided against revenue.
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2020 (4) TMI 295
Exemption u/s 10(23FB) - income earned on investments from VCUs [venture capital undertaking] - HELD THAT:- there is merit in the contentions of the assessee that the condition prescribed to the effect that the shares of venture capital undertaking should not have been listed in a recognized stock exchange shall apply only at the time of making investment. - the VCF Regulations do not prohibit cases where the initial investments made in unlisted shares of Venture Capital undertaking becomes listed shares due to corporate actions. Such kind of corporate actions are usually undertaken on commercial expediency, business exigencies and for the future welfare of the company. The income from Capital gains is not a period cost/income like interest income. Only period cost/income are amenable for split up on the basis of time period. Capital gains arises only on sale of shares and hence, the question of splitting up the same on the basis of time period cannot be made. Though the provisions of sec.61 to 63 and the provisions of sec.10(23FB) operate in different manner, yet the conclusion is that the assessee should not subjected to tax to capital gains and interest income. We also notice that the beneficiaries have offered their respective share of income in their hands, meaning thereby, the assessee also seeks to avail the benefits of sec. 61 to 63 of the Act. The assessee has also submitted that it is a pass through entity, meaning that the income from investments is taxable in the hands of beneficiaries. It is pertinent to note that the revenue has not challenged the observations of Ld CIT(A) in holding that the assessee cannot be assessed to tax the very same income which has been offered by the beneficiaries in their respective hands. This observation of Ld CIT(A) were, apparently, based on the fact that the assessee is a revocable trust and alternatively it is a pass through entity. Since we have held in the preceding paragraphs, that the assessee cannot be subjected to tax for capital gains, there was no necessity to examine the question of applicability of provisions of sec.10(38) of the Act to the capital gains earned by the assessee on sale of shares. Assessment of accrued interest on the loan given - The loan transactions are governed by the terms and conditions entered between the parties. The assessee has stated in its annual report that there was dispute between the parties with regard to the interpretation of terms and conditions and accordingly it has stated that interest income was not recognized. AO did not accept the above said reasoning and accordingly proceeded to compute notional interest. However, in our view, the AO is not entitled to give different treatment to the notional interest so computed by him, i.e., he has to give very same treatment that was given to the interest income earned from loans given to other Venture Capital Undertakings. The AO has allowed exemption to the interest income earned from other VCU, in which case, the notional interest income computed by him should also enjoy very same exemption. We order accordingly. Whether CIT(A) has exceeded his jurisdiction by making observation that income from capital gains out of investment in shares and interest income from Venture Capital Undertakings earned by the assessee need to be examined in the hands of ultimate beneficiaries? - We notice that the Ld CIT(A) has not given any directions and has only made observations, impliedly in support of his decision that the above said incomes are not taxable in the hands of the assessee.
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2020 (4) TMI 294
Capital gain - LTCG or STCG - Period of holding of asset - right acquired on signing of JDA - HELD THAT:- The Occupancy certificate issued by BBMP is dated 30.03.2016. Hence in the present year i.e. F. Y. 2014 15 relevant to A. Y. 2015 16, the Building was not complete and therefore, what is sold cannot be flat but only right in the flat. Hence, it is seen that in the facts of the present case, capital Asset in question is not the flats but right to obtain flats from the builder. This right has accrued to the assessee on 16.12.2010 itself on signing of JDA itself and the assessee is holding it since then because nothing more was required to be done in this regard. In our considered opinion, this right was held by the assessee for more than 36 months because it was acquired on 16.12.2010 and sold in F. Y. 2014 15. Hence, the capital gain in question is LTCG and not STCG. On this issue, we find no infirmity in the order of CIT (A). Allowability of deduction u/s 54 - new asset was acquired by the assessee on 10.01.2014 but the assets were transferred by way of sale deed executed on or after 16.01.2015 and therefore, as per the AO, the new asset was acquired prior to one year before the date of sale of flats - whether date of sale agreement should be considered or date of sale deed should be considered for the purpose of counting the period of one year before the date of sale as provided in section 54? - HELD THAT:- Latest date of Agreement and Date of possession/transfer is 27.11.2014. Even if we consider this date as the date of sale, the acquisition of the new asset acquired by the assessee on 10.01.2014 is not prior to one year before the date of sale of flats. As relying on SH. SANJEEV LAL ETC. VERSUS COMMISSIONER OF INCOME TAX ANOTHER [ 2014 (7) TMI 99 - SUPREME COURT] we decline to interfere in the order of CIT (A) on this issue also because as per this judgment, date of sale agreement has to be considered as date of sale because some rights of the vendor gets extinguished and the vendee acquires some rights in the property in question on the date of the sale agreement coupled with part payment. - Decided against revenue.
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2020 (4) TMI 293
Addition on account of Unearned Revenue - revenue recognition - HELD THAT:- As decided in own case [ 2019 (11) TMI 1395 - ITAT DELHI] unearned revenue has been offered for tax in the subsequent years as exhibited in chart elsewhere, we are of the considered opinion that the addition is uncalled for and deserves to be deleted. Disallowance of provision of Liquidated Damages - HELD THAT:- As decided in own case [ 2019 (11) TMI 1395 - ITAT DELHI] CIT(A) categorically stated that when the payments were actually made, the accounts were adjusted with reference to any remission or waiver that the company may get in respect of damages payable for the late delivery and the same was brought to tax u/s 41(1) of the Act by crediting the liquidated damages accounts. Therefore, the impugned amount was not only the provision but the actual amount of the liquidated damages pertaining to the period of delay falling within the previous year relating to the assessment year under consideration. The Ld. CIT(A) categorically stated that the assessee was following this method consistently. Disallowance out of Expenditure in Foreign Currency - HELD THAT:- As decided in own case [ 2019 (11) TMI 1395 - ITAT DELHI] It is not in dispute that school fees of the children of the employees have been paid by the assessee company. We are of the considered view that if the same is treated as perquisites in the hands of the employees then the same takes the colour of the salaries. We, accordingly, restore this issue to the files of the AO. The assessee is directed to demonstrate that the school fees has been treated as perquisites in the hands of the employees and the AO is directed to examine the same and decide the issue afresh after giving a reasonable opportunity of being heard to the assessee. Disallowance out of Technical Training Expenditure - HELD THAT:- As decided in own case [ 2019 (11) TMI 1395 - ITAT DELHI] Chartered Accountant certificate clearly shows that it is a contra entry inadvertently shown under the head details of expenditure in foreign currency. We find that complete ledger accounts were given to the lower authorities which were not examined by them. In the interest of justice and fair play, we restore this issue to the files of the AO. The AO is directed to examine the ledger accounts and verify whether it is contra entries and after verifying the same and if found correct delete the addition, after giving a reasonable opportunity of being heard to the assessee. Ground is treated as allowed for statistical purposes. TP adjustment - provision of marketing support services AND provision of warranty support service - HELD THAT:- As decided in own case [ 2019 (11) TMI 1395 - ITAT DELHI] Cost of marketing team should be bifurcated based on revenue of AE from its operations in India vis a vis revenue generated by the assessee from its sales to third party vendors. We, accordingly, restore this issue to the file of the Assessing Officer/TPO. The assessee is directed to submit the India Specific Profit and Loss Account, network equipment sales to Indian telecom operators of the AE duly certified by an authorised public accountant of Finland. Warranty support services - TP adjustment is of a very small amount being 1.01 crores. Considering the facts in totality, we direct the TPO to accept the TSS segment as part of network division for bench marking the international transaction which means that this segment should be taken with the main network division of aggregated approach for bench marking. Technical support services - assessee entered into an Advance Pricing Agreement u/s 92CA of the Act with CBDT and agreement is dated 28.03.2016 and at page 13 under Appendix 1A, details of covered transactions between the assessee and the AEs related to networks division - provision of telecom support services and warrantee support services have to be clubbed together. Therefore, for the detailed discussion given hereinabove in respect of provision of warrantee support services, the same will apply to the telecom technical support services mutatis mutandis. TP adjustment on account of this service is also directed to be deleted. Disallowance of expenses for moulds and tooling, expenditure for project equipment and components written off and out of repair and maintenance expenses - HELD THAT:- It is true that while making the disallowances, the Assessing Officer followed the findings given in A.Y 2010-11 and the DRP while deleting the disallowance have followed the directions given in A.Y 2010-11. Since the Revenue did not prefer any appeal for A.Y 2010-11, the directions of the DRP have attained finality. Further, we find that the facts and circumstances and underlying issues are identical during the year under consideration also. Therefore, considering the past history of the assessee, we do not find any reason to interfere with the findings of the DRP. Accordingly, Ground Nos. 1 to 3 are dismissed. Disallowance of TDS recoverable written off - HELD THAT:- As decided in M/S NOKIA SIEMENS NETWORKS INDIA [2018 (2) TMI 1783 - ITAT DELHI] it has become necessary to verify whether the assessee had recognized the income as and when the services are rendered or goods are dispatched and subsequently, whether the assessee written off the difference amount of deficit payment and the amount under the TDS certificate issued, in their books of accounts. It would be conveniently verified by the learned AO and if he finds that initially the assessee recognized the total invoice amount and subsequently, identified the bad debt with reference to the deficit payment by the party and the amount under TDS certificate issued. On verification of compliance with these two conditions, learned AO will allow this expense. Disallowance of utilization from provision for foreseeable losses - AO was of the opinion that the provisions for liquidity damages has been debited to profit and loss account but not added back in the computation of income. Therefore, provisions are unascertained liabilities and are not admissible deduction - HELD THAT:- Considering the method of accounting employed by the assessee and on finding that the provisions have been written back in earlier years and have been claimed subsequently, we do not find any reason why the write off should not be allowed as deduction for the write back has been accepted as part of the income. We, accordingly, direct the Assessing Officer to delete the addition.
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2020 (4) TMI 292
Addition u/s 14A read with rule 8D - notional disallowance of expenditure incurred for earning of tax exempt income - HELD THAT:- Expenditure claimed by the assessee in the computation of income is the audit fee, legal fee, bank charges etc. which cannot be said to be related to investment activity of the assessee. Further, the assessee has not made any investment during the assessment year under consideration. All the investments were old investments. No interest expenditure has been claimed by the assessee. Hence, we do not find any infirmity in the order of the CIT(A) on this issue and the same is hereby upheld. Addition u/s 68 - assessee had failed to prove the creditworthiness of the persons from whom he allegedly received the aforesaid credits - HELD THAT:- Amounts were received through banking channel. Some transactions undertaken by the assessee with other parties have been accepted by the Assessing Officer and that there was no cash deposits by the said parties in the bank accounts. That even the concerned creditors have also explained their sources of the aforesaid funds. That even out of the aforesaid three parties, the advance received from Shri Inderjeet Singh and Shri Charanpreet Singh have been refunded as due to some dispute, the sale deed could not be executed. So far as advance from Shree Radhey Terra Private Limited was concerned, the company has explained that the amount was paid out of the funds available with the company as advance against the purchase of the property. Further, that the requisite details of the company alongwith their PAN numbers, Income-tax returns, bank statements etc. were filed. Further, that the amount was still outstanding due to dispute with the party. Long Term Capital Gains on sale of land - assessee claimed the same to be rural land situated beyond 8 KMs from the Municipal limit, hence, not falling under the capital assets exigible to Long Term Capital Gains - HELD THAT:- As noted that on the similar issue in the assessment year 2011-12, the additions were deleted by him while replying upon the report of the certificate of the Naib Tehsildar (Land Revenue Officer) certifying the fact that the subject land was situated beyond 8KMs of the Municipal Limit - as observed that in his report, the Inspector did not mentioned any Khasra number, however, in the report of the Tehsildar, Khasra numbers of the land were mentioned and certificate was given as per the exact details. He observed that the report of the Naib Tehsildar was based on record and, hence, was much authentic, whereas, the report of the inspector was prepared on estimation basis. He, accordingly relying upon the certificate of the Naib Tehsildar held that the land was agricultural rural land not falling in the definition of the capital assets for the purpose of levy of capital gains tax - no infirmity in the order of the CIT(A) on this issue also.
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2020 (4) TMI 291
Levy of penalty u/s 271(1)(c) - filing inaccurate particulars of income or not? - defective notice - non specification of charge - HELD THAT:- Notice issued by A.O. under section 274 r.w.s. 271(1)(c) of the I.T. Act to be bad in Law as it did not specify under which limb of Section 271(1)(c) of the I.T. Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. We are of the view that since notice is bad in Law as it did not specify under which limb of Section 271(1)(c) of the I.T. Act penalty proceedings have been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income, therefore, levy of penalty is wholly unjustified. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2020 (4) TMI 290
Bogus LTCG - Long Term Capital Gain on sale of listed equity share exempt u/s 10(38) - HELD THAT:- Assessee HUF and another HUF of the same family entered into similar transaction with the same company and earned astronomical return within a short span of time of one year and three months. The lower authorities analyzed the financials of the company whose shares were invested into, they do not speak anything except that the whole transaction are sham. Company has a meager turnover and minuscule profit. The regulators conducted the enquiry and found that the price of this company has been rigged. They also found that the route was preferential allotment of individual allottees and three different cooperates. The regulator also found the exit providers, the persons who funded the IPO, and the evidence of rigging of the price. All these culminated into an order dated 23 January 2017 by SEBI . Investigation wing of the income tax department also found with the statement of the brokers that the whole transaction is sham. The statement of the assessee itself did not give any credence to the mere documentary evidences produced by. Further more the honourable Delhi High Court has already decided on identical issue in case of Udita Kalra [ 2019 (4) TMI 834 - DELHI HIGH COURT] and Suman Poddar [ 2019 (9) TMI 1089 - DELHI HIGH COURT] which are against the assessee. Therefore, no merit in the appeal of the assessee and all six grounds of appeal challenging the same addition on different pretext are dismissed.
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2020 (4) TMI 289
Assessment u/s 153C v/s Reopening of assessment u/s 147 - unexplained income under section 68 - valid approval granted u/s 151 - HELD THAT:- Referring to provisions contained under section 153C it is clear that the A.O. should consider the issue of share capital and share premium based on the documentary evidences seized from Jain Brothers, copies of the seized documents are attached with the assessment order particularly as Annexures B and D. It would, therefore, show that incriminating material was found during the course of search in the case of search operation carried out in the case of Shri S.K. Jain Group of cases. The same seized documents were relied upon by the A.O. while framing the assessment in the case of the assessee and initiating the re-assessment proceedings. It is well settled Law that validity of the re-assessment proceedings is to be determined with reference to the reasons recorded for reopening of the assessment. Reasons for reopening of the assessment shows that during the course of search incriminating material pertaining to assessee-company were found and seized and that M/s. Blue Bell Finance Ltd., has made investment in assessee-company. The A.O. has specifically referred to the seized documents during the course of search as Annexures B D and also attached various other documents found during the course of search to the assessment order. D.R. also admitted that the aforesaid Annexures were found during the course of search in the case of Jain Group. Therefore, when incriminating documents were found during the course of search, the same have been used in the case of the assessee-company. The proper course the A.O. should have adopted is to proceed against the assessee-company under section 153C of the I.T. Act instead of recording reasons for reopening of the assessment under section 147/148 of the I.T. Act. We are of the view that A.O. was not justified in initiating the re-assessment proceedings under section 147 of the I.T. Act, 1961. The A.O. should have proceeded against the assessee under section 153C -A.O. did not apply his mind to the facts and circumstances of the case and material on record. Therefore, we set aside the Orders of the authorities below and quash the reopening of the assessment in the matter. In the result, additional grounds of appeal of assessee challenging the reopening of the assessment are allowed and resultantly, all additions stand deleted. - Decided in favour of assessee.
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2020 (4) TMI 288
Unexplained investment in gold and silver - assessee was in possession of 590 gms. gold and accordingly the value of the same at the relevant point of time has been added to the total income of the assessee after allowing 15% less towards alloy contents - HELD THAT:- Though the CBDT Instruction was not available at the relevant point of time, however, there is no mention in the said instruction that the same will apply retrospectively or prospectively. However, the when the AO completed assessment for the year under consideration, it was very much available with the department as the AO has passed assessment order on 31.12.1998 and the CBDT Instruction No.1916 is dated 11.05.1994. It is also pertinent to mention here that in the case of the assessee earlier as directed to drop the proceeding initiated vide order dated 21.09.2013, passed by the Authorised Officer, Special Court, Bhubaneswar in Confiscation Case No.4/2009. Further the Hon ble High Court has observed that if the assessee is acquitted of the offence then the confiscated property is to be returned to him. So the natural corollary to this provision is that if there is no possibility of recording any conviction as in the case of death of the person affected and abatement of the criminal trial against him, a confiscation cannot be made as there is no possibility of the person affected being convicted for the offence under the P.C.Act. We are of the opinion that the addition made on account of possession of gold of 590 gms. worth of ₹ 2,17,350/- is not sustainable. Addition on account of possession of silver of 13 kgs. worth of ₹ 3,21,870/-, we have gone through the paper book at page 220 and found that the assessee was having 100 kgs. of silver since the year 1965. Therefore, it can safely be presumed that in the relevant assessment year the assessee must have 13 kgs. silver which he has already shown in the wealth tax return. Before us, ld. DR did not bring any cogent material on record to controvert the above facts. Accordingly, we direct the AO to delete the addition made on account of investment in gold and silver totaling to ₹ 3,21,870/-. Ground No.4 in the appeal of the assessee is allowed. Purchase of vehicles - Assessee explained that for purchase of the said vehicle the assessee has taken loan from his office and remaining amount has been paid from the bank on account of closure of term deposits and savings account - HELD THAT:- We find that the assessee has got sanctioned of ₹ 42,000/- from his office as loan for purchase of car, copy of which is filed in the paper book at page 5 and remaining amount has been collected from the bank on account of term deposits and savings bank, a certificate in this regard has been issued by the United Bank of India, copy of which is filed at page 6. In the assessment order, the AO has also accepted that the assessee has sufficient bank balance to meet out for purchase of car, however, did not accept the explanation of the assessee and added the same to the total income of the assessee. In our opinion, on perusal of the above documents placed before us in the form of paper book, we are satisfied that the assessee has accumulated money for purchase of car from his office as loan and from the bank after closing the term deposits and savings account. Therefore, the addition made by the AO on account of purchase of car and confirmed by the CIT(A) is directed to be deleted.
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2020 (4) TMI 287
Reopening of assessment u/s 147 - Whether AO has reopened the assessment merely on the basis of change of opinion? - HELD THAT:- AO has passed the original assessment order after taking into consideration the details/explanations furnished by the assessee in response to the queries raised by him from time to time. Moreover, the AO has not pointed out any new fact or tangible material on the basis of which he formed a belief that income of the assessee has escaped. Hence, we find substance in the contention of the Ld. counsel that the AO has changed his opinion on the basis of facts and details made available by the assessee during the course of original assessment proceedings. On the basis of the material on record it can be concluded that in the present case, the AO has formed his belief on the basis of material already available on record which amounts to change of opinion. As per the ratio laid down by the Hon ble Bombay High Court in the case of CIT vs. Jet Speed Audio P. Ltd. [ 2015 (2) TMI 766 - BOMBAY HIGH COURT] reopening on the basis of change of opinion is not permissible under the law. Hence, allow this ground of the appeal of the assessee and quash the order passed by the AO holding that the AO has initiated the proceedings u/s 147 r.w.s. 148 on the basis of change of opinion. - Decided in favour of assessee.
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2020 (4) TMI 286
Deduction u/s 80-IA(4) - container freight station eligibility for deduction - HELD THAT:- We have seen that on identical grounds of appeal, similar issue was decided by the Tribunal in favour of the assessee by relying upon the decision of Hon ble Supreme Court in Container Corporation of India [ 2018 (5) TMI 359 - SUPREME COURT ] wherein freight station is held as eligible for deduction u/s 80IA(4). Deduction u/s 80IA claimed consisting head rent and interest on Fixed Deposits - HELD THAT:- We have noted that interest on FD was held to be not inextricably linked with the business of the assessee and was decided against the assessee. However, the other component of income, viz. Rental income is restored back to the file of the AO with similar direction as contained in order of the Tribunal for AY 2009-10 [ 2019 (8) TMI 1472 - ITAT MUMBAI ] Disallowance u/s 14A - Proof of earning exempt income - HELD THAT:- We have noted that during the period under consideration, the assessee has not earned any exempt income. There is no finding of AO, whether the assessee has earned any exempt income. Therefore, we direct the AO to verify the fact if any exempt income has been earned by the assessee and if no exempt income has been earned by the assessee, then no disallowance u/s 14A be made. This ground of appeal is treated as allowed.
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2020 (4) TMI 285
Condonation of delay - delay of 2554 days in filing the appeal - sufficient cause for delay - assessee waited for the decision of the similar issue pending before the CIT(A) Mysore, which was decided on 31.08.2017 construing the status of the assessee as a Central Government Organization for the purpose of valuation of perquisites and not as an autonomous body - HELD THAT:- It is the responsibility of the concerned officer to deduct TDS from the perquisite value of rent free accommodation given to its employees in terms of Rule 3 of I.T.Rules, 1962, without waiting for the decision of CIT(A), Mysore which is not the jurisdiction of the present assessee. We are of the opinion that the grounds taken by the assessee for condonation of delay is not sufficient. The Hon ble Supreme Court in the case of Pundlik Jalam Patil (D) By Lrs. Vs. Exe. Eng. Jalgaon Medium Project Another [ 2008 (11) TMI 611 - SUPREME COURT] has held that, Settled rights cannot be lightly interfered with by condoning inordinate delay without there being any proper explanation of such delay on the ground of involvement of public revenue. It serves no public interest. We are of the opinion that, the delay of 2554 days in filing the present appeal by the assessee cannot be condoned. Accordingly, we dismiss the application for condonation of delay filed by the assessee and consequently, appeal of the assessee is also dismissed on the ground of delay.
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2020 (4) TMI 284
Penalty u/s 271(1)(c) - defective notice - absence of any specific mention in the show-cause notice issued u/s 274 as to whether the asseessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income - HELD THAT:- Notice issued under section 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. See BIJOY KUMAR AGARWAL [ 2019 (6) TMI 721 - CALCUTTA HIGH COURT] - Decided in favour of assessee.
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2020 (4) TMI 283
Validity of initiation of proceedings under section 147/148 - Addition u/s 69 - anonymous complaint - sanction for issuing the notice under section 148 - addition made by the AO on account of understatement of sale consideration based on the report of the DDIT Investigation and Tax Evasion Petition - HELD THAT:- Except translating English version into Hindi vernacular by the AO, there is nothing in the reasons recorded to suggest that the AO has applied his own mind on the information or material as forwarded by the DDIT Investigation vide letter dated 25th March, 2014. It is further pertinent to note that the said communication is not forwarding the facts or information to the AO but it is a sort of opinion and finding given by the DDIT Investigation. DDIT and the AO have given much emphasis on the details of the subsequent sale of the plots by the assessees. However, there is no allegation that those details are not disclosed by the assessee as the same were duly recorded in the books of account and also declared in the return of income filed for the relevant assessment year. Once the sellers as well as the purchasers have denied the allegation of any unaccounted purchase consideration/sale consideration paid or received in their statements recorded under section 131 of the Act, then in the absence of any such fact detected during the investigation carried out by the DDIT, the opinion formed by the DDIT and consequently by the AO is merely based on the allegation made in the complaint which is anonymous complaint as admitted and stated by the DDIT Investigation Reopening is based on a borrowed satisfaction which is also not based on any tangible material but merely on suspicion and allegations made in the anonymous complaint. The DDIT Investigation has stated this fact that the loose papers annexed to the complaint were neither prepared by the assessee nor belonging to the assessee. Therefore, such loose papers prepared by some anonymous person would not constitute a tangible material or incriminating material to form the belief that income assessable to tax has escaped assessment. Sanction accorded by the ld. CIT for issuing the notice under section 148 in the case of the assessee is hyper mechanical. In a series of decisions as relied upon the assessee, the Coordinate Benches of the Tribunal have taken a consistent view that mere signing against a particular column of the format is nothing but a mechanical approval without application of mind. Hence in view of the above facts and circumstances of the case, we hold that the reopening of the assessment is not valid and the same is liable to be quashed. - Decided in favour of assessee.
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Customs
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2020 (4) TMI 282
100% EOU - Recovery of Customs Duty with penalty - It is the grievance on the part of the petitioner that for the entire period of 17 years, the show cause notice issued in the year 2000 was not heard and surprisingly the date of hearing was given after 17 years - HELD THAT:- In the reply filed by the respondents, all averments have been denied and it has been stated that the petitioner had not produced any documentary evidence like income tax return or other documentary evidence showing that the petitioner had stopped the business and the factory and its office premises had been sold out. Since, these facts had not been stated with substantive and supportive documents, claims have not been genuine - there are no grounds put-forth by the department, which can attribute any of the reasons to the petitioners for delay, which has been caused in adjudicating the matter. The provisions of law have been made apparently clear and the ratio is emphatically focused on adhering to the time limit while adjudicating the show cause notice. Petition allowed - decided in favor of petitioner.
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2020 (4) TMI 281
Interest on Delayed Refund of SAD - section 27 of CA - petitioners have made claim for refund and if the same was sanctioned after huge delay of 7 years - HELD THAT:- If any duty is ordered to be refunded under sub-section (2) of section 27 to an applicant and it is not refunded within three months from the date of receipt of application under sub-section(1), interest is required to be paid to the applicant as may be notified by the Central Government in the Official Gazette. It has been consistently 6% which has been notified by the Central Government - it is also noticed that after receiving that refund amount which is aggregating a sum of ₹ 6,31,811/- and ₹ 18,62,355/- respectively the petitioners had communicated to the respondent authorities and made request for 6% of interest which, upon calculation, comes to ₹ 3,40,321. There are no other ground except the unclarity of the authority in processing the refund claim. This interdepartmental lack of clarity can hardly effect the right of the parties particularly when there is statutory provision permitting the interest on the refund claim, if the sum is not paid within stipulated time period of 3 months - respondent No.2 is directed to revise and modify the orders dated 19.3.2019, 5.4.2019 and 10.4.2019 also calculate and process statutory interest as to be paid under Section 27-A of the Customs Act and pay to the petitioners within four weeks from the date of receipt of certified copy of present order - petition disposed off.
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2020 (4) TMI 280
Maintainability of petition - alternative remedy of appeal - Refund of SAD - section 27 of the Customs Act, 1962 - denial on the premise that the identity of the goods had been changed on account of slicing of the timber into pieces - HELD THAT:- All questions raised before this court, including the aspect of limitation, can be raised before the departmental appellate authority. When the statute provides for an efficacious alternative remedy in a given case, then such remedy has to be exhausted first before taking recourse to any other remedy - This is not the case where alternative remedy shall not operate as a bar as none of the contingencies, namely (i) violation of the principles of natural justice (ii) enforcement of any of the fundamental rights or (iii) where the order or proceedings are wholly without jurisdiction or the vires of an act, has been challenged. Hence, it would be appropriate that the petitioner avails the alternate remedy of challenging the impugned order by filing appeal before the departmental appellate authority - Petition is disposed off with the direction that petitioner shall be at liberty to file an appeal against the impugned order-in-original dated 31.10.2019 passed by the Office of respondent No.3 before the concerned Commissioner of Customs (Appeals) within a period of Two Weeks from the date of receipt of writ of this order.
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2020 (4) TMI 279
Imposition of penalty - appellants have paid of all the duty along with interest and 25% of the penalty with an impression that 25%of the penalty works out to ₹ 2,03,592/- whereas the actual amount of penalty works out to ₹ 2,53,313/- - HELD THAT:- The appellant was under the impression that 25% of the penalty works out to ₹ 2,03,952/- and it was paid by them before investigation itself therefore while issuing the show-cause notice, the authorities are required to calculate the actual amount of penalty payable by the appellant towards penalty and if there is any short payment they would have been be asked to pay at that stage and the matter could have been come to an end. But instead of doing so, the matter had to travel up to this Tribunal which is very unfortunate - As whole of the demand of duty, interest and 25% penalty has been paid by the appellant and the Managing Director is also not be penalised. The penalty equal to 100% duty imposed by the learned Commissioner is not sustainable against the appellant - Appeal allowed.
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2020 (4) TMI 278
Valuation of imported goods - import of multi functional digital copiers - enhancement of value - restricted goods - import restrictions under notification No.31 (RE-2012)/2009-14 - Confiscation - redemption fine - penalty - HELD THAT:- Evidently, only photo copier machines and not multi functional digital copiers were restricted for import during the relevant period. Restriction on multi functional digital copiers came into force much later only w.e.f. 28.02.2013 - This issue has been decided by the Hon ble High Court of Madras in the case of THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE VERSUS M/S. CITY OFFICE EQUIPMENT AND OTHERS [ 2013 (4) TMI 655 - MADRAS HIGH COURT] clearly holding that the restriction on import of second hand multi functional digital copiers come into force only from 28.02.2013 and not before - Therefore, the import of the goods in question was therefore not restricted and confiscation under section 111(d) needs to be set aside. Enhancement of value - HELD THAT:- The enhancement was marginal from US $23,855/- to US $30,030/-. The importer could have challenged this enhancement arguing that there is no evidence that they have mis-declared the value and hence the declared value must be accepted. However, they have chosen not to do so and paid the customs duty on the enhanced value. Mere acquiescence by the importer in order to expedite their clearances through customs does not form the evidence that the value has been mis-declared, more so when the enhancement was marginal - Confiscation as well as redemption fine set aside. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2020 (4) TMI 277
Sale of Land of a company - proper authorization - order passed by NCLT covering alleged impugned Board Resolution of Board Meeting dated 01st August, 2015 as well as registration of document for land measuring 9 Acres 18 Guntas with the Sub-Registrar as specified in the petition as null and void - HELD THAT:- The Appellant has failed to adduce any evidence relating to the presence of Respondent no.2 at the Board Meeting held on 01.08.2015. Therefore, in terms of the provisions of section 17 of the Limitation Act, 1963, the petition was filed by Respondent No.2 within time and is not barred by limitation - Audit Report and relevant financial statement is not reflecting sale of the said land. No board meeting dated 01.08.2015 was held as per the annual return (2015-2016) of the company. Moreover, due diligence was not done by the appellant to verify that the board resolution was passed on 01.08.2015. The original board resolution was not shown to the Appellant and he purchased the land on the basis of certified copy of the board resolution. A perusal of financial statement shows that balance sheet is at historical cost basis and not on replacement cost basis apparently, hence there may be purchase of land not sale of land as reflected under Fixed Assets in Balance Sheet. Sale of the property of a company requires board resolution to that effect. The sale alleged to have been executed is only on the basis of board resolution dated 01.08.2015 which itself cannot be relied upon. Therefore, the sale of the said land seems to have been executed without proper authorization of the board - Order of NCLT upheld. Appeal disposed off.
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2020 (4) TMI 276
Power of the tribunal to pass appropriate orders - Impleadment of the appellants(s) as party (including auditors) - IL FS Group Companies has suffered majority debt obligation of IL FS - Section 242 of the Companies Act, 2013 - whether this Appellate Tribunal should interfere with the impugned order dated 9th August, 2019 whereby the Appellants have been impleaded as party Respondents? HELD THAT:- In similar case of UNION OF INDIA, MINISTRY OF CORPORATE AFFAIRS VERSUS GITANJALI GEMS LTD. AND ORS., SURESH KUMAR BHUTANI, PARESH PRAVIBHAI RATHOD, HARESH V. RAJLAL SHAH, KETAN CHANDRAKANT SOLANKI, MANISH LALIT DANI, SANKET BIPIN SHAH, HIMANSHU PRAVINCHANDRA TRIVEDI, JYOTI B VORA, SUDHIR AMBALAL MEHTA AND CHANDRAKANT KANU KARKARE [ 2018 (9) TMI 678 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] while discussing wide powers of the Tribunal under Sections 241-242 of the Companies Act, 2013, conjointly read with Section 246 and Sections 337 to 341, this Appellate Tribunal held that During the process of investigation and pendency of an application under Section 241(2) read with Section 242 of the Companies Act, 2013 and in view of powers conferred under Section 221, the Tribunal is not only empowered to pass appropriate interim order against the Company but also against any person or individual, including the order to desist. The Tribunal is empowered to pass order under Section 242 of the Companies Act, 2013 in a petition under Section 241(2) if it forms opinion that the affairs of the company have been conducted in a manner prejudicial to the public interest. Once such opinion is formed by the Tribunal, it may pass any order as it deem fit and proper - The various acts prejudicial to public interest have been highlighted which has cascading impact on various sectors of economy - The Department of Economic Affairs which is responsible for the financial stability of economy and in the Country too has raised Red Signals of the likely collapse of IL FS and has expressed its deep concern on the impact of Indian Economy in its Confidential Note dated 30th September, 2018. Before passing any appropriate order in public interest and to save the economy of the Country from collapse, if the Tribunal is of the opinion that it requires to give appropriate hearing to the concerned parties, including those who audited IL FS and/ or those who have managed or were concerned with IL FS or its Group Companies, it cannot be held to be illegal - Appeal dismissed.
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Service Tax
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2020 (4) TMI 275
CENVAT Credit - input services - output service of renting of immovable property service - period of dispute in the first show cause notice dated 15 March, 2012 is from 1 April, 2007 to 31 March, 2010, and from 1 April 2011 to 31 March, 2012 in the second show cause notice dated 16 April, 2013. Whether the amendment made with effect from 1 April, 2011 in the definition of input service will be applicable to the facts of the present case since the period of dispute in the second show cause notice is from 1 April, 2011 to 31 March, 2012? HELD THAT:- The second show cause notice dated 16 April, 2013 makes no mention of the amendment made in the definition of input service , much less mentioning that the input services have been received by the appellant after 1 April, 2011. In reply to the show cause notice, the appellant stated that in view of the clarification dated 29 April, 2011 issued by CBEC, input services received prior to 1 April, 2011 were admissible for CENVAT Credit. It has also been stated that the input services in question were received by the appellant before 1 April, 2011 in the grounds of appeal also. The appellant has specifically come out with a case that the CENVAT Credit availed by the appellant for the period 2011-12 pertains to input services received by the appellant prior to 1 April, 2011. In this connection, the relevant pages of the CENVAT Register for the period 2011-12 have also been enclosed - The Commissioner has not examined this aspect and has merely observed that in view of the amendment made in the definition of input service with effect from 1 April, 2011, the appellant would not be entitled to avail CENVAT Credit. It clearly transpires from the reply filed by the appellant as also from the documents enclosed in the appeal that even though the period in dispute may be from 1 April, 2011 to 31 March, 2012, but the input services were received by the appellant prior to 1 April, 2011. The clarification contained in the Circular dated 29 April, 2011, on which reliance has been placed states that The credit on such service shall be available if its provision had been completed before 01.04.2011. Thus, CENVAT Credit could not have been denied to the appellant for this reason - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 274
Demand of service tax - failure to pay service tax on the amount of reimbursement of payroll cost for the expatriate employees deputed from Deloitte Touche Overseas Services LLC USA during the relevant period - CENVAT Credit on input services - Business Auxiliary Services. Levy of Service tax - reimbursement of payroll cost of expatriate employees deputed from overseas - HELD THAT:- This Tribunal to ascertain the employer employee relation remanded the matter to the adjudicating authority in DELOITTE TAX SERVICES INDIA PVT LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE HYDERABAD - IV [ 2019 (11) TMI 1261 - CESTAT HYDERABAD] . Following the said precedent, the present appeals are also remanded on the said issue to the adjudicating authority to ascertain the said facts accordingly. CENVAT credit - input services namely business auxiliary services - HELD THAT:- Since we are remanding the appeals on the first issue to the adjudicating Commissioner, in our view it is appropriate also to remand the issue of admissibility of CENVAT Credit to the adjudicating Commissioner to examine its admissibility from all aspects including the principle of law applicable to the facts of the case. Appeal allowed by way of remand.
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Central Excise
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2020 (4) TMI 273
CENVAT Credit - input services - Angles, Channels, Sheets and Plates etc. used in structural support and also fabricated structurals like technological structure, cable tray, earthing strip, used in the factory of production - HELD THAT:- Hon ble Madras High Court in the case of M/S. INDIA CEMENTS LTD. VERSUS THE CUSTOM, EXCISE AND SERVICE TAX THE COMMISSIONER OF CENTRAL EXCISE, [ 2015 (3) TMI 661 - MADRAS HIGH COURT] has held that steel items like MS Rod, Sheet, MS Channel, MS Plate, Flat, etc., used for erection of capital goods or used for fabrication of structural to support various machines, such as crusher, Kiln, hoopers, etc., and without such structural, machinery could not be erected and would not function. It was held that on these items, Cenvat credit is allowable in terms of Rule 2(a) (A) of Cenvat Credit Rules, 2004 - credit is available in respect of iron and steel items like Angles, Channels, Sheets, Plates etc., used as structural support. CENVAT Credit - fabricated structural procured from suppliers like McNally Bharat, and as well as MIDH Private Limited. - HELD THAT:- Being items like technological structure, which have been used in flotation cell, SPVC pumps. Further, Cable Tray have been used for support of cables in the flotation cell and earthing strips have been used for earthing in pressure filters. Cable tray have also been used for support of cables in pressure filters. CENVAT Credit - technological structures, cable tray, earthing strip etc. procured from Macnically Bharat and MIDH Private Limited - HELD THAT:- The details furnished have not been found to be untrue and further, no reliance can be placed on the verification reports of the Range superintendent dated 31.03.2017, as the copy of the said report was never made available to the appellant/asseessee - the appellant is entitled to cenvat credit also for this amount of ₹ 7,92,597/-. Demand set aside - penalty also set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (4) TMI 272
Validity of assessment order - CST Act - period 2006-07 - inter-state sales or not - filing of Form 'C' Declarations - HELD THAT:- The impugned order is flawed on two aspects. Firstly, though the respondent has extracted the entire objections as part of the order itself, he concludes that the transactions would only be domestic sales notwithstanding that 'C' Form Declarations have been filed. He notes the position that the delivery address is out of State, but still persists in his conclusion that the sales are only domestic. The transactions have not been examined in detail as directed by the first Appellate Authority. The petitioner has placed on record at pages 18 to 87 of the typed set of papers, documents such as, purchase invoice and challans in relation to the transactions at issue, which are stated to be part of the records before the Assessing Officer. It was thus incumbent upon the Authority to examine the transactions minutely and then come to a decision as to whether the transactions were domestic transactions inter se the petitioner and the vendor or inter state sales. This exercise has not been done - It was also incumbent upon the Assessing Authority to have granted an effective opportunity of personal hearing. Petition allowed by way of remand.
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2020 (4) TMI 271
Principles of natural justice - inter-state sale or not - respondent has justified the impugned order on the ground that though notice was issued to the petitioner, the petitioner did not file any reply and therefore, the impugned order came to be passed - HELD THAT:- Notice dated 19.01.2012 was issued after the inspection was carried on 17.08.2004 by the enforcement wing of the Commercial Tax Department and records were seized from the petitioner s factory and its depot in Pondicherry. After the records were ceased, notices were issued on 19.01.2012 - Meanwhile, TNVAT Act, 2006 came into forced substituted to the TNGST Act, 1959. As per Section 12-C of the TNGST Act, the respondent was required to complete the assessment based on the returns already filed, without insisting on documents or the presence of dealer. As per Section 12-C of the TNGST Act, 1959, the respondent ought to have passed a deemed assessment order based on the returns filed by the petitioner. The said assessment can be re-opened under the provisions of the TNGST Act, 1959 read with Section 88 of the TNVAT Act, 2006 - without passing a deemed assessment order under Section 12-C of the TNGST Act, 1959, the respondent has straight away issued a pre-assessment notice dated 19.01.2012 to the petitioner based on the inspection carried out by he enforcement official on 17.08.2004 for the Assessment Year 2004- 05. The notice dated 19.01.2012 issued to the petitioner was in order though it relied on the findings of the investigation of the enforcement wing in 2004 as there were enough materials for the respondent to re-open the assessment for escaped turnover - petitioner ought to have participated in the said proceeding and given a proper reply to the said notice. However, the petitioner failed to file a reply. The case is remitted back to the respondent to pass a fresh order in accordance with law - petition allowed by way of remand.
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Wealth tax
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2020 (4) TMI 270
Proceedings of Criminal Case under Sections 35(B) of Wealth Tax Act, 1957 - Non filing of return after long lapse of time - HELD THAT:- Section 276(C) deals with an offence of willful attempt to evade tax; Section 277 deals with false statement in verification etc., and Section 278B deals with offences by company. Since Tribunal found that there was no concealment of income and order of penalty was quashed, prosecution u/s 276C would also automatically come to an end. Court held, when a criminal trial cannot proceed, it cannot be allowed to continue as that will amount to abuse of process of law. Charge of conspiracy was not proved and various offences under the provisions of IPC were also not satisfied, hence, proceedings were liable to be set aside. In the present case, firstly order of Tribunal relates to a different period of assessment. Secondly, it has not been found that Assessee was not liable to submit W.T. Return in the relevant A.Y. In my view, for the case in hand, applicant cannot take advantage of aforesaid judgement of Tribunal and it cannot be said that complaint filed in the case in hand would automatically cease after setting aside penalty imposed for the A.Ys. 1983-84 to 1988-89 since in the present case, A.Y. 1990-91 is involved.
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