Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 12, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Constitutional validity - Transitional Credit - Difference of opinion between the Bombay High Court and that of Gujarat High Court - notices issued - In the meantime, operation of the impugned judgment shall remain stayed.
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Levy of GST - on sale of REC scrips and intermediaries in the transaction - the present Petitioner had earlier filed a petition seeking the same relief but withdrawn - the Court dismisses the present petition with cost of ₹ 1,00,000/-
Income Tax
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Benefit of deduction u/s 80IA to transferee or assignee - the Proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit under Section 80IA.
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Addition towards gift - Sale of land - the transactions of gift of shares and transactions relating to sale of land - transfer of land arose during Asst. Year 2009-10 and the impugned gift relating to Asst. Year 2008-09 - Addition of gift cannot be made in the A.Y. 2009-10.
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Estimating the profit on alleged unrecorded sales - A.O. directed to make addition by estimating profit @ 15% of the amount so deposited in the bank account with respect to unaccounted sales.
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TDS u/s 194C - freight - non-furnishing of the PAN to the prescribed income tax authority within the prescribed time as per the provision of sub section 7 of the section 194C of the Act does not require to make the disallowance of the expenses
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TDS u/s 195 - seconded employees - Since the assessee has not become employer of seconded employees, what the assessee paid the employer is the income of those companies and not in nature of reimbursement of salary.
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Exemption u/s 11 - charitable activity u/s 2(15) - mere action of charging fee for services, by itself, would not justify invoking of the proviso to section 2(15) unless it is established that the purpose and object is profit motive.
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Penalty u/s 271AAB - undisclosed income in terms of clause (c) of explanation to section 271AAB - being a penal provision, the same must be strictly construed and in light of satisfaction of conditions specified therein before levying penalty - deeming fiction cannot be extended to the penalty proceedings
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Transfer pricing - Addition in final assessment - AO is not permitted to make any addition which is not contained in the draft assessment order and approved by the DRP u/s 144C
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Disallowance of interest 36(1)(iii) - advances to subsidiaries and step down subsidiaries - once the assessee has demonstrated the commercial expediency and corporate strategy for advancing interest bearing funds as interest free advances to subsidiary companies same is duly deductible
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Passing of order of assessment in non existing company - merger of company - assessment framed by the AO against a non existent entity despite being informed vide several communications is not sustainable - it is not curable u/s 292B being jurisdictional legal infirmity which goes to the root of the matter
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Assessment u/s 153A - no assessment was pending on the date of search - no incriminating material found in search - assessment u/s 153A is not permissible solely on the basis of report of the Investigation Wing and statement recorded u/s 133A
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Addition u/s 43B - enhanced licence fee for land payable to railway - not covered in Section 43B(1)(b) - clause (g) in Section 43B(1) w.e.f. 01.04.2017 apply to the assessment year 2017-18 and the subsequent assessment years and prospective in nature
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LTCG - transfer of Internal Audit and Risk Consultancy practice (IARC) to company - client list and contract relationship has been built by the assessee over past 30 years - cannot be considered as a non-compete fees - this is a long-term capital asset - cost of the acquisition will be nil as self-acquired u/s 55 (2)(a)(ii)
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Condonation of delay - appellant filed rectification - given the nature of grievance, it was reasonable to expect that the remedy will be available u/s 154 - delay in filing of appeal which was a result of a bonafide, even if overoptimistic and erroneous - delay condoned
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Penalty u/s. 271B - Non furnishing of Tax Audit Report within the prescribed period u/s 44AB - Limitation to impose penalty u/s 275 - quantum of penalty to be imposed u/s 271B was dependent on the outcome of appellate order u/s 250 - AO has validly kept the penalty proceedings in abeyance till disposal of appeal
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Adjustment on account of outstanding trade receivables - delay in payment by AE - outstanding trade receivables beyond reasonable period will come under international transactions as per Amended Section 92B - directed TPO to determine the industry average or average of collection period
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Admission of addition evidence - assessee is required to be given a fair chance and opportunity in the interest of natural justice if additional evidence submitted, have a material bearing to decide the issue
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Penalty u/s 271(1)(c) - bogus purchases - If the assessee has submitted all the documentary evidences to substantiate the purchases so made then merely making of estimated addition of 15% will not attract the penalty
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Benefit of deduction u/s 80IA - Provisos to Section 80IA(4)does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit - recognition as transferee or assignee of the principal contractor is sufficient
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Penalty u/s 271(1)(c) - 100% deduction u/s 80IC - mistake in counting the initial assessment year - realising mistake revise computation filed and paid tax before assessment - human error cannot partake the colour of intentional or willful claim - no penalty
Customs
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Extended period of limitation - Misdeclaration of imported goods - The distinct and different classification adopted at the port is a clear pointer to the confusion in classification that may absolve the importers of deliberate intent to misdeclare.
DGFT
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Extension of validity of Pre-shipment Inspection Agencies (PSIAs).
Indian Laws
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Nature of transaction - benami transaction or not - some financial assistance was given to the buyer of property - that cannot be the sole determinative factor/circumstance to hold the transaction as benami in nature. - The intention behind the financial assistance must be established.
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Dishonor of Cheque - insufficiency of funds - The evidence on record, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts. - The observations of the High Court that findings of the trial court are perverse are unsustainable.
SEBI
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Risk-based capital and net worth requirements for Clearing Corporations under Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018
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Separate BSDA limit for Debt Securities
Central Excise
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Clandestine removal - Shortage of raw material and finished goods - no verification at the buyer/supplier’s end conducted by the Revenue - mere payment of duty on the material found short to avoid litigation and difficulty the allegation of clandestine removal cannot be proved.Material found sought to avoid litigation and difficulty delegation of clandestine removal cannot be proved
VAT
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Developer and codeveloper of an SEZ - According to Section 11(1)(i) of the HSEZ Act, 'any goods exported out or imported into the SEZ have been exempted from payment of any tax duty, fees, cess or any other levies under any existing State Law including the Act.
Case Laws:
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GST
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2019 (4) TMI 657
Constitutional validity - Transitional Credit - Restriction on migration of Cenvat Credit to GST - Vires of clause(iv) of subsection (3) of section 140 of the CGST Act - CENVAT Credit - purchases made by the First Stage Dealer. Difference of opinion between the Bombay High Court and that of Gujarat High Court - Held that:- notices issued - In the meantime, operation of the impugned judgment shall remain stayed.
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2019 (4) TMI 654
Levy of GST - trading margins on sale of REC scrips and intermediaries in the transaction - the present Petitioner had earlier filed a petition seeking the same relief but withdrawn - Held that:- With the counsel on both occasions being the same, and being fully aware of the facts, it was imperative for the Petitioner to have made a full and correct disclosure of all the material facts concerning the filing of the earlier petition by the same Petitioner seeking the same relief. That not having been done, the Court dismisses the present petition with cost of ₹ 1,00,000/- which would be paid by the Petitioner to the Delhi High Court Legal Services Committee (‘DHCLSC’) on or before 30th April 2019 and placing on record the proof of payment of such costs. The Registry will place this petition before the Court for directions in the event the costs as directed are not deposited by the Petitioner within the time stipulated.
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Income Tax
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2019 (4) TMI 685
Addition u/s 43B - enhanced licence fee for land payable to railway - duty, cess or fee payable under law for the time being in force or any payments made by virtue of Section 43B(1)(b) - crystallization of liability - additional ground - applicability of insertion of clause (g) in Section 43B(1) w.e.f. 01.04.2017 - HELD THAT:- This Court is of the opinion that even otherwise, having regard to the facts of this case, the arguments with respect to the applicability of Section 43B is untenable Assessee follows a mercantile system of accounting where such entries are made on contingent basis. This consistent practice was recognized and the only question was whether the existence of a dispute in any manner implicated the accountancy practices adopted by the asseessees in treating an unascertained liability to unquantified liability. Furthermore, Section 43B, either in Clauses (a) and (b) of sub-section (1), do not in the opinion of this court, cover the kind of licence fee that is under consideration. The reference to fee has to be always read along with the expression law in force . The documents placed on record even along with the additional grounds, make it clear that the transactions between the parties was plain and simple, a commercial one, while the land was allotted for a certain licence fee. The central issue in dispute was a retrospective increase in licence fee and claim for damages. The assessee has relied on notes of clauses to the bill which interprets Section 43B(1)(g). It states that this amendment takes effect from 01.04.2017 and would accordingly apply to the assessment year 2017-18 and the subsequent assessment years. Thus, it is clear beyond any shade of doubt that notions of clarificatory amendment, etc. would not be applicable herein. - Decided against revenue.
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2019 (4) TMI 684
Benefit of deduction u/s 80IA to transferee or assignee - assessee undertaken the work of developing the railway sidings and was operating and maintaining the same - As alleged assessee does not satisfy the proviso to sub-section 4 of Section 80IA - Assessee himself did not enter into any such contract with the Railways or with the Central Government - Tribunal allowed claim as 80IA(4) of the Act, especially, the Provisos thereto, permits even the transferee of an infrastructure facility to avail such deduction - HELD THAT:- Tribunal in our opinion, rightly applied the Proviso to Section 80IA(4) of the Act and held that since the Assessee was recognised as contractor for these railway sidings, which undoubtedly fell under the definition of infrastructure facility , it was entitled to the said benefit under Section 80IA of the Act. The grounds on which the Assessing Authority denied the said benefit to the Assessee ignoring the effect of Provisos to Section 80IA(4), therefore, could not be sustained. Tribunal, in our opinion, has rightly held that the Proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit under Section 80IA of the Act. There is no dispute before us that the Assessee was duly recognised as transferee or assignee of the principal contractor M/s.ST-CMS Company Private Limited and was duly so recognised by the Railways to operate and maintain the said railway sidings at Vadalur and Uthangalmangalam Railway Stations. The findings of fact with regard to the said position recorded by the learned Tribunal are, therefore, unassailable and that clearly attracted the first Proviso to Section 80IA(4) of the Act. - Decided in favour of assessee.
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2019 (4) TMI 683
Benefit of deduction u/s 80IA to transferee or assignee - Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. - Assessing Authority denied the said benefit was that the Assessee himself did not enter into any such contract with the Railways or with the Central Government - Tribunal allowed claim - HELD THAT:- Tribunal, however, in our opinion, rightly applied the Proviso to Section 80IA(4) and held that since the Assessee was recognised as contractor for these railway sidings, which undoubtedly fell under the definition of infrastructure facility , it was entitled to the said benefit u/s 80IA. The grounds on which the Assessing Authority denied the said benefit to the Assessee ignoring the effect of Provisos to Section 80IA(4), therefore, could not be sustained. Tribunal, in our opinion, has rightly held that the Proviso does not require that there should be a direct agreement between the transferee enterprise and the specified authority for availing the benefit under Section 80IA. There is no dispute before us that the Assessee was duly recognised as transferee or assignee of the principal contractor M/s.ST-CMS Company Private Limited and was duly so recognised by the Railways to operate and maintain the said railway sidings at Vadalur and Uthangalmangalam Railway Stations. The findings of fact with regard to the said position recorded by the learned Tribunal are, therefore, unassailable and that clearly attracted the first Proviso to Section 80IA(4) - Decided in favour of the Assessee and against the Revenue.
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2019 (4) TMI 682
Deduction u/s.80P - eligibility to interest - HELD THAT:- Net figure which has been considered by the CIT for treating the assessment order as erroneous and prejudicial to the interest of the Revenue by holding that the gross amount of interest should have been charged to tax and not net interest. In our considered opinion, when the interest itself is eligible for deduction u/s.80P the compulsion of the assessee to offer certain amount in order to enable the completion of the assessment, cannot be stretched so far so as to bring the entire amount of interest received from bank to tax which is otherwise deductible in view of various decisions discussed in the preceding para. Once we hold that the entire amount of interest is eligible for deduction u/s.80P, the order of the CIT directing the AO to charge to tax the full amount of interest and not its part, becomes automatically unsustainable. We, therefore, vacate the impugned order.
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2019 (4) TMI 681
Addition u/s 40A(2)(b) - related party transaction - AO alleged that rates is excessive and unreasonable as Linux was free and open-source software - HELD THAT:- Upon perusal, the undisputed position that emerges is the fact that the assessee has purchased the stated software under 6 bills for resale. The part of these software has been sold by the assessee during impugned AY and the balance software have been reflected as Closing Stock under the head electronics which is evident from closing stock details. The perusal of quantitative details reveals that the assessee is having closing stock of these items for ₹ 84.02 Lacs. Further, the assessee has sold the software in subsequent years which is evident from sales invoices placed on record. So far as the observations that the Linux was free open source software, is concerned, it has been submitted that the said software has been tailor made by the assessee as per the user’s requirement and the said fact remain uncontroverted. Another noteworthy point is that fact that nothing has been placed on record by AO to support the finding that the price paid by the assessee was excessive or unreasonable, in any manner, having regards to the market price of these goods. Under these circumstances, no infirmity could be found in the impugned order. Appeal stands dismissed.
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2019 (4) TMI 680
Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the Assessing Officer under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.
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2019 (4) TMI 679
Monetary limit - Penalty u/s 271(1)(c) - Held that:- Admittedly, the tax effect in the present appeal is less than ₹ 20 lakhs. Vide Circular No.3/2018 Dated 11thJuly, 2018 issued by CBDT, it has been directed that the Department shall not file appeal before the Tribunal in case where the tax effect does not exceed the monetary limit of ₹ 20 lakhs. It is also directed that this instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in Tribunals. Pending appeals below the specified tax limit may be withdrawn/not pressed. The Ld. D.R. in view of the Board’s Circular above did not press the Departmental Appeal. The case of the Department would not fall in the exceptions provided in the above Board Circular. - Decided against revenue
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2019 (4) TMI 678
Penalty u/s. 271B - Non furnishing of Tax Audit Report within the prescribed period u/s 44AB - Limitation to impose penalty u/s 275 - HELD THAT:- Issue of finality of the turnover of the business of the assessee was disposed off vide order u/s 250 dated 18-05-2017 in the appeal filed against the assessment order. Find that it is provided u/s 275 that where the relevant assessment order or the other order is subject matter of appeal before the Commissioner of Appeals u/s 246A penalty order has to be passed before the expiry of financial year in the course of which such proceedings have been initiated or within one year from the end of financial year in which order of the Commissioner (Appeals) is received by the Principal CIT - whichever is later. In this case the quantum of penalty to be imposed u/s 271-B was dependent on the outcome of appellate order u/s 250 of the Act in the appeal filed against the assessment order passed by the AO. AO has validly kept the penalty proceedings u/s 27IB of the Act in abeyance and has disposed off the same by 30-10-2017 within the prescribed period after the disposal of appellate order u/s 250 of the Act. The assessee has not furnished any reasonable cause for not getting the accounts audited as required u/s 44AB. It is also noted that the AO has already established for failure of the assessee to get its accounts audited or to furnish a report of such audit as required u/s 44AB vide his assessment order dated 17.3.2016 and the CIT(A) has also confirmed the major part of the addition made by the AO. AO has rightly imposed penalty u/s 271B with the provisions of the Act and therefore, the same was rightly confirmed by the CIT(A), which does not need any interference on my part, hence, uphold the action of the CIT(A) on the issue of dispute and reject the ground raised by the assessee.
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2019 (4) TMI 677
Addition towards gift - Sale of land - gift of shares and transactions relating to sale of land - Year of taxability - CIT (A) deleted the addition following the decision in the case of Krupeshbhai N Patel [2013 (4) TMI 922 - GUJARAT HIGH COURT] - HELD THAT:- transaction of transfer of land arose during Asst. Year 2009-10 and the impugned gift relating to Asst. Year 2008-09 - Addition of gift cannot be made in the A.Y. 2009-10. Decision in the case of COMMISSIONER OF INCOME TAX VERSUS KRUPESHBHAI N PATEL [2013 (4) TMI 922 - GUJARAT HIGH COURT] followed. -. Also see SMT. LALITABEN NARHARI PATEL [2016 (5) TMI 217 - ITAT AHMEDABAD]. According we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. Consequently, the sole grounds of appeal of the revenue is therefore, dismissed.
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2019 (4) TMI 676
Admission of addition evidence - Denial of natural justice - sufficient cause for non-production of additional evidence during the assessment proceeding - penalty u/s 271(1)(c) - addition u/s section 69A and denial of benefit of deduction u/s 54B - HELD THAT:- We find that the valuation report was obtained later on hence, it was not available at the time of assessment proceeding. Further, the lower authorities did not examine the claim of the assessee of deduction under section 54. Thus, the additional evidence submitted by the assessee have a material bearing to decide the issue. Therefore, the assessee is required to be given a fair chance and opportunity to the assessee in the interest of natural justice. As incumbent upon CIT (A) to confront these evidences with the AO by seeking a remand report and to seek his comments. In absence of the same, the order passed by the CIT (A) is passed in violation of principles of natural justice. The principle of audi alteram partem is the basic concept of natural justice. The expression “audi alteram partem” implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. After taking into account all the facts and circumstances of the case, we find it appropriate to send this issue back to the file of the AO. The assessee shall submit all the evidences before the AO in support of its claim and shall be free to raise all legal and factual issues before the AO. The AO shall give adequate opportunity of hearing to the assessee and shall decide the all issues afresh after considering all the details. The assessee may place any evidences and judgements as he wants to supports his case. Penalty u/s 271 (1) (c) - Held that:- As in earlier part of this order in respect of items on which penalty was levied remanded for fresh consideration. Hence, the issue on which penalty is levied is no longer survived; therefore, penalty levied is not maintainable as of now. Accordingly, we delete the penalty so levied subject to condition that the AO is free to re-initiate penalty proceedings under section 271 (1)(c) on finalization of denova setaside assessment proceedings, if the circumstances so warrant or he thinks fit. - Decided in favour of assessee
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2019 (4) TMI 675
Assessment u/s 153A - assessment was not pending on the date of search - proof of incriminating material unearthed during the course of search and seizure u/s 132 - Addition u/s 68 - HELD THAT:- AO has solely relied upon the report of the Investigation Wing Kolkata and statement of one Shri Anand Sharma recorded by the Investigation Wing during the survey under section 133A. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure u/s 132 in case of the assessee. The requirement for making the addition u/s 153A in the assessment year where the assessment was not pending on the date of search and the proceedings are in the nature of reassessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Additions made by the AO while passing the assessment order under section 153A for the impugned assessment year cannot be sustained and liable to be set-aside. Coming to the merits of the additions sustained by the ld CIT(A) u/s 68 it is noted that the assessee company has received share application money of ₹ 8 lacs and ₹ 10.35 lacs as unsecured loan from M/s Jalsagar Commerce Pvt Ltd during the financial year relevant to impugned assessment year. As relying on M/S. KOTA DALL MILL VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX AND VICE-VERSA [2019 (1) TMI 344 - ITAT JAIPUR] the addition made u/s 68 towards share application money and unsecured loan from M/s Jalsagar Commerce Pvt ltd is hereby directed to be deleted. - Decided is favour of assessee.
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2019 (4) TMI 674
Estimating the profit on alleged unrecorded sales - A.O. estimated G.P. @ 22.7% - HELD THAT:- We had carefully gone through the order of the Hon’ble Rajasthan High Court in the case of Anita Choudhary and found that in that case the assessee was engaged in the business of trading of marble and granite, whereas in the present case, the assessee was engaged in manufacturing of marble slabs and tiles. The profit rate of manufacturing is always high as compared to the traders, therefore, considering the totality of facts and circumstances of the case, we direct the A.O. to make addition by estimating profit @ 15% of the amount so deposited in the bank account with respect to unaccounted sales. Penalty u/s 271(1)(c) - HELD THAT:- After considering the entire facts and circumstances while disposing the quantum appeal hereinabove we have directed the A.O. to estimate the profit @ 15% and upheld the addition only to that extent. It is clear that the addition to the income is based on estimate of profit rate when the A.O. passed order vis a vis when we dispose the quantum appeal. In such estimated addition, no penalty is to be levied in view of the decision of the Hon’ble Jurisdictional High court in COMMISSIONER OF INCOME-TAX VERSUS KRISHI TYRE RETREADING AND RUBBER INDUSTRIES [2014 (2) TMI 21 - RAJASTHAN HIGH COURT]. Considering the totality of facts and circumstances of the case we direct the A.O. to delete the penalty so imposed on the estimated addition so made.
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2019 (4) TMI 673
Penalty u/s 271(1)(c) - bogus purchases - estimated addition of 15% - HELD THAT:- Quantum and penalty proceedings are separate and if in the penalty proceedings, it is found that the assessee has furnished all the evidences to substantiate its claim of not furnishing inaccurate particulars, no penalty is to be imposed even if the addition is being confirmed. In the instant case, the assessee is carrying on business at Jaipur as exporter and trader of precious and semi precious gems and stones from last many years. The entire sales are export sales and all realizations of sale proceeds are in the form of foreign currency through proper banking channels. For the purposes of exports, the assessee purchases goods from various dealers including above named JPK Trading (I) Pvt. Ltd and the same were exported outside India. In the course of this regular business activity the assessee inter alia purchased goods, namely precious and semi precious gems and stones from above named company JPK Trading (I) Pvt. Ltd. and to prove the genuineness of the purchases made from above named party the assessee furnished copy of purchases invoices, copy of bank statements copy of export invoices, Airways bills, bank advice in relation to realization of sale proceeds in foreign exchange, confirmation of supplier, TIN of supplier which is issued to a dealer doing business of purchase/sale issued by the Govt. of Rajasthan. It is clear from the documents so furnished by the assessee that the assessee has submitted all the documentary evidences to substantiate the purchases so made, under these facts and circumstances, merely making of estimated addition of 15% will not attract the penalty U/s 271(1)(c) - Decided in favour of assessee.
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2019 (4) TMI 672
Claim of deduction u/s 10AA - computation of deduction - HELD THAT:- As relying on assessee's own case [2017 (12) TMI 862 - ITAT HYDERABAD] we direct AO that since the telecommunication charges are excluded from export turnover, the said charges should also be excluded from the total turnover for the purpose of computing deduction u/s 10AA of the Act. Accordingly, this ground is allowed. Adjustment on account of outstanding trade receivables - delay in payment either from AE or non-AE- scope of amendment to section 92B - Held that:- As the definition of Section 92B is amended to bring in the nature of financing by way of allowing the AEs to retain the trade receivables beyond reasonable period. In our view, the outstanding trade receivables beyond reasonable period will come under international transactions as per Amended Section 92B. Accordingly, the assessee as well as TPO have to determine what is the reasonable period of outstanding which they can allow to the AEs. It may be as per the bilateral agreement or trade practice in the industry or historical average collection period of the assessee or reference can be drawn from statutory limits fixed by the legislature in the similar enactment. Therefore, we direct the TPO to determine the industry average or average of collection period adopted by the comparable companies selected for the TP study and calculate average collection period of the assessee during this assessment year. TPO has selected only 9 transactions which have crossed one month to determine the adjustment of TP whereas assessee has transacted total 31 transactions during this year. TPO has to calculate the average collection period for this year. Whether the average collection period is within industrial average or not has to be determined. Since we do not know the industry average, we remit this issue back to the file of TPO to determine the industrial average as directed above i.e. calculate the average collection period of the comparable companies selected for the TP study and average collection period of the assessee for the whole year. The collection during the year which are within the industry average should be allowed and only the collection period beyond industrial average alone should be charged with the interest based on the rate of LIBOR since it is international transaction. -Decided in favour of assessee for statistical purposes.
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2019 (4) TMI 671
Passing of order of assessment in non existing company - ‘UTV Tele Talkies Limited’ was merged with its ultimate holding company namely ‘UTV Software Communications Ltd.’ w.e.f. 01.04.2013 - AO has admitted in his remand report that he had knowledge of the fact the assessee company got merged with its ultimate holding company - Additional Ground of appeal - HELD THAT:- Communications filed by the assessee along with evidences are speaking loudly that the assessee discharged its burden while failure to bring on record successor in interest during assessment proceedings was on the part of the Revenue. The AO in its assessment order vide para 4.2 and 4.3.1 has admitted to having knowledge offactum of merger of ‘UTV Tele Talkies Limited’ with its ultimate holding company ‘UTV Software Communications Limited’, which is reiterated by the AO in his remand report filed on the direction of learned CIT(A) during appellate proceedings. The AO has not conducted any prima facie enquiry as is contemplated u/s 170 of the 1961 Act read with Order 22 Rule 10 of CPC to bring on record successor in interest, despite several intimations given by the assessee to the AO as to the amalgamation of „UTV Tele Talkies Limited’ with its ultimate holding company ‘UTV Software Communications Limited’ during assessment proceedings. The non conducting of prima-facie enquiry by the AO to bring on record successor in interest as is contemplated u/s 170 read with Order 22 Rule 10 of CPC and framing of an assessment on a non existent entity is fatal keeping in view factual matrix of the case as discussed by us in preceding para’s of this order. In the instant case based on factual matrix before us, we are afraid that an assessment order passed by the AO dated 01.02.2016 u/s 143(3) of the 1961 Act is suffering from a legal infirmity as an assessment is framed by the AO against a non existent entity despite being informed vide several communications and a complete failure by the AO to bring on record successor in interest, thus in our considered view assessment order dated 01.02.2016 passed by the AO u/s 143(3) is not sustainable in the eyes of the law liable to be quashed as even provisions of Section 292B of the 1961 Act cannot save it from being quashed as this is a jurisdictional legal infirmity which goes to the root of the matter - assessment order quashed
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2019 (4) TMI 670
Disallowance of expenditure u/s 14A, 36(1)(iii) and 37(1) - Commercial expediency and corporate strategy for advancing interest bearing funds as interest free advances to subsidiary companies - HELD THAT:- In the instant case, there is no dispute that there is no dividend income earned during the impugned assessment year. Therefore, there is no case for disallowing the expenditure relatable to dividend income. This view is also supported by the decision of this Tribunal in the assessee’s own case for the A.Y. 2013-14 [2018 (5) TMI 1256 - ITAT VISAKHAPATNAM] also. Therefore, respectfully following the view taken by this Tribunal in the case cited we hold that there is no case for disallowing the expenditure relatable to exempt income without having derived exempt income. Accordingly, the expenditure relatable to dividend income withdrawn by the assessee required to be upheld. Hence, we set aside the orders of the lower authorities and allow the appeal of the assessee on this issue. Perusal of the Balance Sheet shows that the assessee has shareholder’s funds of ₹ 2478.45 crores and the investment made in mutual funds is a paltry sum of ₹ 1.89 crores. Therefore, we hold that the assessee is having sufficient interest free funds to the make the investment in mutual funds, hence, we do not see any reason to sustain the disallowance u/s 37(1). Accordingly, we set aside the orders of the lower authorities on this issue and delete the addition made by the AO In the instant case, the assessee has demonstrated the commercial expediency and corporate strategy for advancing interest bearing funds as interest free advances to subsidiary companies. The subsidiaries are 100% owned by the assessee company and step down subsidiaries are owned by the subsidiaries, therefore, the interest on borrowed capital required to be allowed as deduction and there is no case for disallowance. Accordingly, we hold that in the instant case there is no case for disallowance of interest u/s 36(1)(iii). Interest free advances given to the assessee to its subsidiary are part of corporate strategy with a business prudence and interest free funds available to the assessee are more than the advances given to the subsidiary company. Therefore, we hold that no disallowance is required u/s 36(1)(iii) of the Act. Accordingly, we hold that the disallowance made by the AO in respect of expenditure relatable to exempt income u/s 14A, disallowance of capital expenditure u/s 37(1) and disallowance of interest expenditure u/s 36(1)(iii) are unsustainable, accordingly deleted. The orders of the lower authorities in respect of ground allowed in favour of assessee Addition of legal expenses - HELD THAT:- From the agreement, it is found that the service provider is providing services to the assessee company for supply of manpower and expertise wherever and and whenever needed on ongoing basis. The assessee has made the payment through cheque and the service tax was paid and the TDS was also deducted for the services rendered by the service provider. The department has not brought on record any evidence to show that the agreement is bogus. Hence, there is no reason to suspect the payment or nature of services rendered. Therefore, there is no case to sustain the addition made by the AO. Accordingly the addition made by the AO is deleted and the appeal of the assessee on this ground is allowed. Disallowance of sponsorship expenses - HELD THAT:- As decided in assesee's own case [2018 (5) TMI 1256 - ITAT VISAKHAPATNAM] expenditure incurred for sponsorship is business expenditure Addition for corporate guarantee commission - assesse charged the guarantee commission from AE @ 0.90% and the TPO proposed for @ 1.30% - HELD THAT:- following the view taken by this Tribunal in the assessee’s own case [2018 (5) TMI 1256 - ITAT VISAKHAPATNAM], we hold that Corporate Guarantee commission charged by the [email protected]% is reasonable. Accordingly, we set aside the orders of the lower authorities and delete the addition made by the AO. Folio maintenance charges and provision for leave encashment - made addition in the final assessment order without being brought on Draft assessment order - HELD THAT:- From plain reading of section, it is observed that the AO is not permitted to make any addition which is not contained in the draft assessment order and approved by the DRP. In the instant case, the additions made by the AO in the final assessment in respect of folio maintenance and provision for leave encashment does not contain in the draft assessment order and without the approval of DRP. Therefore, we hold that the additions made in the final assessment with regard to folio maintenance and leave encashment are unsustainable, accordingly deleted. Levying of interest u/s 234A - HELD THAT:- In the instant case, the assessee filed the return of income on 28.11.2014 against the due date of 30.11.2014. Subsequently, the assessee filed the revised return of income on 16.02.2016 within the time limit allowed u/s 139(5). In the earlier paragraphs, we have held that the revised return was filed due to mistake of omission and the same was held to be valid. Since we held that the return of income filed u/s 139(5) is valid, there is no case for levying of interest u/s 234A. Accordingly, the interest charged u/s 234 A is cancelled and the appeal of the assessee is allowed.
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2019 (4) TMI 669
Stay of recovery of demand - disallowance made u/s. 80JJAA - HELD THAT:- We find that assessee has already complied with the direction of the Jurisdictional High Court and remitted 20% of the disallowance made u/s. 80JJAA. Further assessee’s appeal for preceding assessment year which are on substantially similar grounds has been heard by this Tribunal and orders has been reserved. In the circumstances, we are of the opinion that it is a fit case for grant of stay. We stay the balance demand for a period of six months or till the disposal of the appeal whichever is earlier. In the result, the stay petition of the assessee stands allowed.
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2019 (4) TMI 668
Long term capital gain - transfer of Internal Audit and Risk Consultancy practice (IARC) to company - "client relationship and goodwill‟ - capital receipt - Entitled to deduction under section 54EC - HELD THAT:- Assessee has transferred it capital assets as defined u/s 2 (14) it cannot be said that the above sum received by the assessee is a capital receipt which is not chargeable to tax. According to us, the assessee has transferred capital asset, therefore, it is chargeable to tax under the head capital gain. It can also not be considered as a non-compete fees because in the agreement through which the assessee has received INR 29 Lacs does not talk about the non-compete conditions. For the same the assessee has entered into another agreement for which INR 1,600,000 have been paid by the buyer to the assessee, which has been offered by them as a non-compete fees as business income. As the above client list and contract relationship is been built by the assessee over past 30 years it can also not be held to be a short-term capital asset but they are a long-term capital asset. Now the 2nd question arises about the cost of acquisition of these assets. The assessee has not purchased the reassessment are self-acquired therefore according to the provisions of section 55 (2) (a) (ii) the cost of the acquisition of these essential be taken to be nil. Therefore INR 2,900,000 on by the assess is chargeable to tax under the head capital gain and the cost of acquisition being nil. Therefore, INR 2,900,000 cannot be taxed as non-compete fees and also cannot be considered as capital receipt but is chargeable to tax under the head capital gains. As the assessee has made an investment in the specified bonds and capital gain has arisen to the assessee from transfer of a long-term capital asset, assessee is also eligible for exemption under that section. Disallowance as bonus paid to the partners - HELD THAT:- The remuneration payable was to be mutually agreed between the partners from time to time further in para number 10 on interpretation of clause 2 of the supplementary deed the honourable high courts held that conjoint reading of clause 7 of the partnership deed dated 01/05/1976 and clause 1 and 2 of the supplementary partnership deed dated 01/04/1992 conditions of section 40(b)(v) are not satisfied. The honourable High Court held so because there was no manner of quantifying the amount payable to the partners. In the impugned case before us, the assessee has clearly mentioned the amount payable to each of the partner as bonus. Hence, the revenue‟s reliance on the above decision is misplaced. Further in another decision of relied upon by the learned authorised representative in VAISH ASSOCIATES [2015 (8) TMI 855 - DELHI HIGH COURT] wherein a supplementary deed was executive on 01/08/2009 was considered to be effective from 01/04/2009 for assessment year 2009-10. Accordingly, the disallowance of rupees for 972773/– made by the learned AO because of bonus/remuneration paid to the partners is not sustainable. Therefore we reverse the order of the learned CIT – A and direct the AO to delete the above addition.
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2019 (4) TMI 667
Condonation of delay - Delay in filing of an appeal as assessee pursuing relief before the wrong forum - assessment order u/s 143(3) - assessee filed rectification application u/s 154 - exclusion/ inclusion of time spent in pursuing the remedy under section 154 - CIT(A) has summarily dismissed the appeal as time barred - HELD THAT:- Given the nature of grievance of the assessee, it was reasonable to expect that the remedy will be available under section 154 as well. There are large number of decisions holding that cess and surcharge can be levied on tax charged at the rate prescribed in the tax treaties, and in our humble understanding, that is an open and shut issue in favour of the assessee. That was perhaps the reason that at the stage of hearing of appeal itself, though with the consent of the parties- which they extended graciously, this appeal was picked up for out of turn hearing here and now. In these circumstances, the approach of the assessee in filing a rectification petition against the levy of cess and surcharge, in addition to the tax rate prescribed under the India UAE Double Taxation Avoidance Agreement, in our humble understanding, cannot be said to be lacking bonafides. Viewed thus, the CIT(A) was clearly in error in not condoning the delay in filing of appeal which was, in our humble understanding, a result of a bonafide, even if overoptimistic and erroneous, assessment about efficacy of section 154 to seek redressal of his grievance in question. The assessee had followed an inappropriate course, and, with the benefit of hindsight, there is no dispute about this error. The delay in filing of appeal before the CIT(A), against the assessment under section 143(3), therefore, indeed deserves to be condoned. We reverse the stand of the CIT(A) on this point. The order of the CIT(A) thus stands vacated. In this view of the matter, it is not even necessary to examine whether the time spent by the appellant in pursuing the remedy under section 154 is required to be excluded, under section 14(1) of the Limitations Act, in computation of time limit, and whether when that period is so excluded, whether the appellant can be found to be at fault so far as limitation aspect is concerned Levy of surcharge and cess on the tax rates prescribed under the tax treaties - assessee is a company fiscally domiciled in, and tax resident of, the United Arab Emirates - India UAE DTAA - HELD THAT:- SEE CAPGEMINI SA C/O. KALYANIWALLA & MISTRY [2016 (7) TMI 712 - ITAT MUMBAI], THE BOC GROUP LIMITED [2016 (1) TMI 414 - ITAT KOLKATA], EVEREST INDUSTRIES LIMITED VERSUS JCIT RANGE-1 AND DCIT CIRCLE-1 VERSUS EVEREST INDUSTRIES LIMITED [2018 (4) TMI 426 - ITAT MUMBAI], SUNIL V. MOTIANI [2013 (12) TMI 1105 - ITAT MUMBAI] No contrary decision was cited before us nor any specific justification assigned for the levy of surcharge and education cess. The provisions of the India UAE Double Taxation Avoidance Agreement are in pari materia with the provisions of India Singapore DTAA which was subject matter of consideration in DIC Asia Pacific’s case [2012 (6) TMI 686 - ITAT, KOLKATA]. We, therefore, have no reasons to take any other view of the matter than the view so taken by the coordinate benches. Respectfully following the same, we uphold the plea of the assessee and direct the Assessing Officer to delete the levy of surcharge and education cess on the facts of this case. Once this relief is allowed, the taxes payable by the assessee are the same as taxes deducted at source and no other grievances survive.
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2019 (4) TMI 666
Disallowance of freight expenses u/s 40(a)(ia) - non-deduction of TDS u/s 194C - non-furnishing of the PAN to the prescribed income tax authority within the prescribed time - as per assessee transporters had furnished their PAN Nos, therefore the TDS was not deducted - HELD THAT:- We note that the assessee has furnished the PAN of all the transport contractors before the ld. CIT-A. This fact can be verified from the submission of the assessee before the Ld. CIT (A) which is recorded on pages 6 and 7 of the order. Thus we are of the view that there is sufficient compliance of sub-section 6 of the section 194C. We note that the ITAT Ahmedabad in INCOME-TAX OFFICER, WARD 9 (4) , AHMEDABAD VERSUS ANDHRA ROADWAYS [2015 (7) TMI 1317 - ITAT AHMEDABAD] has held that the non-furnishing of the PAN to the prescribed income tax authority within the prescribed time as per the provision of sub section 7 of the section 194C of the Act does not require to make the disallowance of the expenses The assessee has not furnished the copies of the PAN of the transport contractors to the AO during the assessment proceedings, we note that the Revenue has not challenged this fact/issue by filing an appeal to the tribunal. Thus it appears that the Revenue is not aggrieved on account of non-furnishing of PAN to the AO during the assessment proceedings. Therefore, we are not inclined to entertain the argument of the DR as discussed above. We are not impressed with the finding of the CIT-A. Accordingly, we reverse the same and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Addition u/s 14A - HELD THAT:- There is no dispute about the fact that the own fund of the assessee exceeds the amount of investment. Therefore in our considered view presumption can be drawn that there was no investment in the shares out of the borrowed fund. Therefore there cannot be any question for any disallowance on account of interest expenses. In holding so, we find support and guidance from case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]. We hold that no disallowance of interest expense claimed by the assessee can be made on account of investments as discussed above. Hence, we reverse the order of the authorities below. The AO is directed to delete the addition made by him. Regarding the administrative expenses, we note that the AO has derived his satisfaction for making the disallowance under the provisions of section 14A read with rule 8D - the assessee has not furnished any details suggesting that it has not incurred any expense in relation to such income. Thus in the absence of any working from the side of the assessee, the AO had no alternative except to resort to the provisions of section 14A read with rule 8D of Income Tax Rules. Thus we confirm the disallowance of the administrative expenses made by the authorities below. Hence the ground of appeal of the assessee is partly allowed. Disallowance of repairing expenses - nature of expenditure - revenue or capital expenditure - HELD THAT:- The authorities below have not brought anything on record suggesting that there were some new assets formed out of such expenses or the assessee derived some benefit of enduring nature. Thus, we are of the view that such expenditure cannot be termed as capital in nature merely on the ground that it will generate enduring benefit to the assessee. See COMINCO BINANI ZINC LIMITED [1992 (2) TMI 11 - CALCUTTA HIGH COURT]. Addition u/s 145A by increasing the closing stock for CENVAT receivable - difference between opening and closing stock on account of CENVAT/VAT - HELD THAT:- There is no ambiguity that the assessee has been following the exclusive method of accounting. However, the assessee to comply the provisions of section 145A of the Act has given the effect of CENVAT/VAT in the opening stock, and closing stock in the statement of income. Thus, we can safely conclude that though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A but the effect of the same has been duly considered by the assessee in its computation of income. We do not concur with the view of the Ld. CIT(A) and accordingly direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
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2019 (4) TMI 665
Penalty u/s 271(1)(c) - error in counting the eligible assessment years from the initial assessment year for claim of deduction u/s 80IC - realising mistake revise computation filed and paid tax before assessment - human error or willful false claim - HELD THAT:- On the basis of the audit report the assessee claimed the deduction u/s 80IC. There is no dispute that the under taking of the assessee is eligible for deduction u/s 80 IC and therefore, it can be safely concluded that the claim was not a false claim. As mentioned elsewhere in the audit report itself the auditors have mentioned the initial assessment year as A.Y. 2009-10 u/s 80IC the assessee is eligible for 100% deduction for first five assessment years starting from the initial assessment year. The Chartered Accountant has included the assessment year under consideration as the 5th assessment year since no deduction was claimed in A. Y. 2009-10 and therefore the chartered accountant counted the eligible assessment years from A. Y. 2010-11. In our considered opinion this clearly shows the human error and cannot partake the colour of intentional or willful claim. In the case in hand the assessee was very much eligible for claim of deduction u/s 80 IC of the Act and due to the error in counting the eligible assessment years from the initial assessment year the error has crept for which it cannot be said that the assessee has willfully and intentionally claimed the deduction. No fit case for the levy of penalty u/s 271 (1) (c) of the Act. - Decided in favour of assessee.
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2019 (4) TMI 664
TDS u/s 195 - reimbursement of Travel expenses & salary costs on seconded employees - simply reimbursement or FTS - levy tax and interest u/s.201(1) and u/s. 201(1A) - Indo Japan DTAA - HELD THAT:- The expenses have been incurred in connection with technical services agreement, they bear a clear nexus with the technical services rendered and part and parcel in the process of service of a technical character. Therefore, the expenditure has been incurred for earning royalty/ FTS. The expenditure is that of service providers and not that of the assessee company. On the issue of the issue of reimbursement of salary costs on seconded employees, the CIT(A) held, inter-alia, that the seconded temporarily employees exchanged experience and skill training by the employer. i.e. the employer in this case is the entity which is seconding and once the term of the secondment is over, they will return back to their original employer and they do not loose the employer-employee relationship of the parent organization. Since the assessee has not become employer of seconded employees, what the assessee paid to Nippon Paint Company Limited and Wuthela Holdings Pte Limited at INR 29,62,869/- is the income of those companies and not in nature of reimbursement of salary. Further, CIT (A) applied the ratios of the Apex court/ HC/AAR and Tribunal. Although, the assessee filed this appeal, it has not laid any material to dislodge the findings recorded by the CIT(A) on the above issues, and hence we do not find any reason to interfere with the order of the Ld CIT(A). Therefore, the assessee’s appeal is dismissed.
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2019 (4) TMI 663
Disallowance u/s 43B - interest payable to banks and financial institutions - applicability of the Sick Industrial Companies (special provision) Act, 1985 - effect of written back the said amount of interest u/s 41(1) as miscellaneous income in subsequent year - contingent liability - HELD THAT:- In CIT Vs. J K Corporation Limited [2010 (10) TMI 192 - CALCUTTA HIGH COURT] the Hon’ble High Court held that the Sick Industrial Companies (Special Provisions) Act, 1985, is a special act and the scheme framed thereunder is binding upon everyone, as it has assumed the character of conclusions by virtue of section 18(4) and also section 18(8) and once a scheme is framed by virtue of section 32(1) , the scheme overrides all other provisions of the law including the Income Tax Act, 1961 and other instrument or document having effect by virtue of any law. In view of the above decision, it is evident that the schemes would override the provisions of the Income Tax Act. However no such scheme had been produced by the assessee either before the lower authorities or before us and thus the assessee cannot be allowed the benefit of the Sick Industrial Companies Act( supra). The arguments related to working capital loan interest not covered under the provisions of section 43B of the Act and written back of the interest liability under section 41(1) of the Act in AY 2008-09, had not been raised before the lower authorities and first-time these arguments have been made before the Tribunal. We also note that these issues have not been raised before us by way of any additional grounds of appeal. The provisions of section 43B during relevant period also contain the subsection (c), which includes interest in respect of the loans from financial institutions. Any working capital loan from such financial institution is also subject to the provisions of section 43B of the Act during relevant period. From the evidences containing balance sheets and profit and loss account etc presented it is not clear whether the interest on working capital loan was related to financial institutions covered by subsection (c) of 43B during relevant period or related to scheduled banks covered by subsection (d) of 43B during relevant period . On this issue further investigation of facts is required. In the year under consideration the dispute is in respect of allowabilty of claim of interest expenditure under the provisions of section 43B of the Act, which is allowed only on payment basis. The claim of interest expenditure written back under section 41(1) of the Act in subsequent years, were never raised or evidence in support thereof filed before the lower authorities. - Decided against assessee.
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2019 (4) TMI 662
Exemption u/s 11 - charitable activity u/s 2(15) - main object of assessee trust - HELD THAT:- The Trust is sponsored and the nature of activities of the trust is to provide credit insurance cover to Indian Exporters keeping in view of the national interest. The Trust is sponsored by Govt. of India with the objective to promote exports, improve competitiveness of Indian exports and to implement schemes formulated by the Govt. of India for the benefits of medium and long term exporters in national interest. Certainly, none of the above objectives are tainted with motive of trade, commerce or business as Govt. of India is not into business of providing Credit Insurance. Wherever, it has intended to do so, it has been done through Corporate structure e.g. ECGC of India Ltd. (Export Credit Guarantee Corporation) which does the credit insurance activity on commercial basis with Govt. of India as the sole shareholder with a premium and other income of ₹ 1020 crores (appx) and a net surplus of ₹ 171 (approx) for FY 2012-13. On the basis of the above, NEIA’s activity cannot and should not be considered to be in nature of trade, commerce or business. Since the dominant and prime object of the assessee is not to earn the profit in relation to trade, commerce and business, therefore, the exemption u/s.11 & 12 is not liable to be declined. Accordingly, we set aside the finding of the CIT(A) in this issue and allowed the claim of the assessee. Corpus donations - disallowance in sum of ₹ 190 crores received during the year from Central Government of India accounted as Corpus Contribution - HELD THAT:- Relying on decision in CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES VERSUS ITO-1 (1) , (EXEMPTIONS) , MUMBAI [2018 (2) TMI 1875 - ITAT MUMBAI] mere action of charging fee for services, by itself, would not justify invoking of the proviso to section 2(15) unless it is established that the purpose and object is profit motive. Considering the entirety of circumstances we are unable to find any credible reasoning taken by the Revenue to say that the purpose and object of the assessee Trust falls within the meaning of expression ‘trade, commerce or business’ used in the proviso to section 2(15) - the assessee Trust has been settled by the Government of India and SIDBI. The trust deed brings out the objects and purpose for which the assessee Trust has been set up, namely, to mitigate the difficulties faced by the small scale industries and micro enterprises in availing credit facilities from various lending institutions. It is also to be noted that the object and purpose of the Trust is focussed on small scale industries and micro enterprises and is not available to entrepreneurs at large. Apart there-from, it is also prescribed in the scheme operationalized by the Trust that the benefits are to be made available only to credit facilities aggregating upto ₹ 10.00 lacs sanctioned and disbursed by the lending institutions. Therefore, it could not be inferred that there is any profit motive so as to view the activities to be ‘trade, commerce or business’ as understood for the purposes of proviso to section 2(15) - it is not possible to infer that assessee Trust is carrying on any regular ‘trade, commerce or business’ and on the contrary it is an entity which is essentially existing for charitable purposes but conducting some activities for consideration or fee. - Decided in favour of assessee.
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2019 (4) TMI 659
Accrual of income - Compensation awarded by the Motor Accident Claims - whether sum payable to the claimants on the death of victim falls within the ambit of interest within the meaning of Sec. 2 (28A) and can be subjected to tax? - HELD THAT:- Leave granted. Interim order passed earlier will continue till further orders.
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2019 (4) TMI 658
Deduction u/s.10A - deduction of expenditure incurred for 'Export Turn Over' - Maintainability of appeal u/s 260A - existence of substantial question of law - excluding 3 comparables on the ground of functional dissimilarity - Tribunal directing TPO to give working capital adjustment considering the comparables after exclusion of the three companies - HELD THAT:- SLP dismissed.
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2019 (4) TMI 636
Stay of recovery - Interim injunction seeking restraining the respondent from proceeding with the recovery of demand pursuant - TPA - Disallowance u/s 80JJAA - HELD THAT:- The specific submission of the petitioner to the effect that the TP issue was covered by the order of the Tribunal has neither been adverted to nor adjudicated upon, despite being specifically raised by the petitioner. A prima facie case arises in the present case for grant of interim orders. The petitioner also states that the appeal is itself listed for final hearing before the Tribunal on 20.03.2019. In these circumstances, there shall be an interim stay of recovery, as prayed for, upon condition that the petitioner remits 20% of ₹ 61,11,213/- being the disputed demand arising from dis-allowance under section 80JJAA of the Act and provide proof of remittance of the same on 20.03.2019 before the Tribunal before proceeding with the appeal. Both the petitioner and revenue are directed to co-operate in the expeditious disposal of the appeal.
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2019 (4) TMI 634
Penalty u/s 271AAB - essential condition for levy of penalty - undisclosed income in terms of clause (c) of explanation to section 271AAB - HELD THAT:- Mere disclosure of income u/s 132(4) would not automatically lead to levy of penalty but the AO has to give a clear and specific finding that the case of the assessee falls in the ambit of undisclosed so defined in the explanation to section 271AAB. The facts and circumstances of each case thus needs to be closely examined by the AO which shows that the levy of penalty is not automatic. Levy of penalty under section 271AAB is not mandatory in nature and it needs to be examined whether there is any basis for levy of penalty and whether the assessee has satisfied the necessary conditions for levy of penalty u/s 271AAB. In the result, the ground of appeal is allowed. Penalty on excess stock found - HELD THAT:- AO 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 separate identifiable stock not found recorded in the books of accounts and also 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. 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 and the penalty levied thereon is liable to be set-aside. Cash advances for land purchases in the statement recorded u/s 132(4) - HELD THAT:- The undisclosed investment by way of advance for purchase of land can be subject matter of addition in the quantum proceedings, as the same has been surrendered during the course of search in the statement recorded u/s 132(4) and offered in the return of income, however the same cannot be said to qualify as an undisclosed income in the context of section 271AAB read with the explanation thereto and penalty so levied thereon deserved to be set-aside. Also conscious of the fact that there are deeming provisions in terms of section 69, 69A and 69B wherein such investments are deemed to be treated as income in absence of satisfactory explanation. In our view, the deeming fiction so envisaged under Section 69, 69A and Section 69B where investments which are found either not recorded or found recorded at a lesser value in the books of accounts, and such investments are deemed to be income of the assessee of the year in which such investments have been made, cannot be extended and applied automatically in context of section 271AAB. It is a well-settled legal proposition that the deeming provisions are limited for the purposes that have been brought on the statute book and have therefore to be applied in the context of provisions wherein they have been brought on the statue book and not otherwise. In the instant case, the deeming provisions are contained in section 69, 69A and section 69B and therefore, the same could have been applied in the context of bringing to tax such investments to tax in the quantum proceedings, though the fact of the matter is that the AO has not even invoked the said deeming provisions in the quantum proceedings in the instant case. Therefore, even on this account, the deeming fiction cannot be extended to the penalty proceedings which are separate and distinct from the assessment proceedings and more so, where the provisions of section 271AAB provide for a specific definition of undisclosed income. Where a specific definition of undisclosed income has been provided in Section 271AAB, being a penal provision, the same must be strictly construed and in light of satisfaction of conditions specified therein and it is not expected to examine other provisions where the same has been defined or deemed for the purposes of bringing the amount to tax. In the entirety of facts and circumstances of the case, the penalty U/s 271AAB is directed to be deleted on amount of surrender made during the course of search in absence of the same qualifying as undisclosed income as so defined under section 271AAB of the Act. - Decided in favour of assessee.
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Customs
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2019 (4) TMI 653
Jurisdiction - power to issue SCN - Undervaluation of imported goods - evasion of customs duty - Held that:- The similar matter came up before this Court in COMMISSIONER OF CUSTOMS, LUDHIANA VERSUS M/S TL VERMA AND CO. [2018 (9) TMI 1152 - PUNJAB AND HARYANA HIGH COURT], wherein this Court while allowing the appeal remitted the matter back to the Tribunal to decide the same on merits after the decision of the Supreme Court in Mangali Impex Limited's case [2016 (8) TMI 1181 - SUPREME COURT]. The matter is remitted back to the Tribunal to decide the same on merits.
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2019 (4) TMI 652
Jurisdiction - power to issue SCN - Undervaluation of imported goods - evasion of customs duty - Held that:- The similar matter came up before this Court in COMMISSIONER OF CUSTOMS, LUDHIANA VERSUS M/S TL VERMA AND CO. [2018 (9) TMI 1152 - PUNJAB AND HARYANA HIGH COURT], wherein this Court while allowing the appeal remitted the matter back to the Tribunal to decide the same on merits after the decision of the Supreme Court in Mangali Impex Limited's case [2016 (8) TMI 1181 - SUPREME COURT]. The matter is remitted back to the Tribunal to decide the same on merits.
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2019 (4) TMI 647
Misdeclaration of imported goods - import of glass microspheres in the guise of glass beads - suppression or wilful mis-representation - extended period of limitation - Held that:- The glass and glassware includes glass beads, glass microspheres etc. and these have been grouped as glass beads , glass microspheres and others indicating these to distinct products - It is clear from the structure of the relevant chapter in the First Schedule to Customs Tariff Act, 1975 that the imported goods must squarely fall under heading no. 70182000. Extended period of limitation - Held that:- It is apparent that the same documents, viz. the certificate of origin and the certificate of analysis, based on which the impugned order has reclassified the goods, were available with the assessing officer at the time of import. The distinct and different classification adopted in Jawaharlal Nehru Custom House, Nhava Sheva is also a clear pointer to the confusion in classification that may absolve the importers of deliberate intent to misdeclare. It is also apparent that the consequence of differential levy, being restricted to additional duties of customs, that no particular gain would have accrued to the appellant by misdeclaring the goods - the extended period under section 28 of Customs Act, 1962 cannot be invoked for demand of duty. Penalties - Held that:- As the demand is restricted to normal period of limitation, and in view of the specific finding of lack of deliberate misclassification, there is no scope for invoking penalties under section 114A of Customs Act, 1962 or under section 112 of Customs Act, 1962. Appeal allowed in part.
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Service Tax
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2019 (4) TMI 656
Refund claim - services consumed in SEZ unit - N/N. 17/2011-ST dated 1.3.2011 - denial of refund on the ground that there were no nexus between the services and the operation carried out in the SEZ - Held that:- Though there is a delay of 242 days in filing this appeal which has not been satisfactorily explained, we have gone through the matter. We do not find any merits. Appeal is dismissed on the ground of delay as well as on merits.
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Central Excise
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2019 (4) TMI 655
Filing of affidavit for Valuation - Held that:- The Customs Excise and Service Tax Appellate Tribunal had disposed of the appeals, without deciding the question either way, in view of the pendency of the matter in this Court and giving liberty to the respondent herein to come again after having verdict from the Supreme Court. We do not understand this manner of disposing of the appeal. The Tribunal should have kept the appeal pending till the decision of Civil Appeal No. 9725 of 2014 or decide the matter on its own on merits. Matter remanded back for fresh consideration.
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2019 (4) TMI 650
Clandestine removal - undervaluation of finished goods by the appellant sold through M/s JBCPL and M/s MBSC - shortage of finished goods during the stock taking at the factory premises - irregular Cenvat credit on the basis of four supplier of the scrap without accompanying of the goods - no cross-examination allowed - Held that:- The demand of ₹ 40,76,894/- has been confirmed on the basis of certain loose slips/ pages relied upon by the Revenue which were resumed from Shri Raman Bhatia, Director of M/s JBCPL, who was the consignment agent. No reliance can be placed on these loose sheets as the name of the appellant is not mentioned in the said loose sheets. Reliance cannot be placed on the statements of Shri Raman Bhatia without cross examination. M/s JBCPL was selling the identical goods on behalf of the other manufacturer as a dealer. No statements have been recorded from alleged buyer of finished goods, whose name appeared on these loose sheets. Hence, there is no corroboration for the authenticity of loose sheets or averment of Shri Raman Bhatia - also, the adjudicating authority has not followed the procedure as prescribed under Section 9D of the Central Excise Act for placing reliance on the various statements recorded from the various persons, who were either the consignment agent/dealers/supplier of the goods. It is also stated earlier that no reliance can be placed on the third party evidence, without independent corroboration as has been done by the adjudicating authority. CENVAT Credit - Held that:- Although names of the various supplier of these inputs/raw materials were available with the investigators, however, they have not been examined and merely the credit have been denied to the appellant - no statements or any transporter to prove the scrap was loaded from any other premises then supplier of the goods during Alka Creations. Demand in respect of supply made by the appellant to M/s MBSC during the period from Jan. 2011 to October 2011 - case of the Revenue was that there is under valuation to the extent of ₹ 5/- to 10/- for SS flats in respect of sales to M/s MBSC by five years - Held that:- No sufficient corroborative evidence was brought on record to prove this charge by the Revenue. Though, the statements were recorded from Managing Director, he was not questioned about the valuation with regard to clearance to M/s MBSC. This duty demand was solely based on some records seized from the premises of M/s MBSC which showed entries merely and some found during search - The department failed to rebut or controverted the various findings as recorded by ld. Adjudicating authority in the impugned order and therefore same is required to be upheld. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 649
Clandestine removal - readymade garments - demand based on assumptions and presumptions - demand on the basis of outward register maintained by uneducated contractual employees employed by security contractor - Held that:- There is no dispute regarding value of the clearances effected by Respondent Assessee, Octave Apparels, and the only dispute is regarding bifurcation of these clearances into knitted garments and non-knitted garments. The Department in the Show Cause Notice quantified assessable value of dutiable goods i.e. non knitted garments at 1,92,83,241/- involving Central Excise duty amounting to ₹ 25,86,133/- whereas Respondents contended total clearance of dutiable goods was below the SSI limit. Department had all the details of goods cleared from the Respondent’s premises viz name of buyer, quantity of items sold, mode of transportation and there was nothing to record to show that any investigation was made form the buyers of the goods or the transporters to substantiate the allegation of clandestine removal. The Commissioner further observed that the Department / Adjudicating Authority without causing any investigation from the buyers/transporters to verify the entries made in the said register to ascertain Respondent’s contentions that the register cannot be relied as the same contained the entries in respect of cancelled gate passes against which no sales were effected, returned goods and trade samples held that the Department has failed to prove its case. There is no dispute that the gatekeepers / security staff were contractual persons employed by security contractor. The register maintained by them was not under the instructions of the Respondent assessee and the said register was not supervised and/or scrutinized by the Respondent assessee. Thus, there is nothing wrong in the Commissioner’s observation that confirmation of demand relying on those registers was incorrect. The Revenue’s contention on this count also is unimpressive and merits rejection. There is no allegation that the Respondent cleared any material without raising invoices but only charge is that the goods cleared as knitted garments or fabric were in fact non-knitted garments and that Respondents wrongly claimed some entries to be those related to return of goods or clearance of samples - Without any investigation from buyers of the goods or transporters to conclusively ascertain that goods were knitted or non-knitted and to verify the veracity of the Respondent’s claim in respect of return of goods / clearance of sample confirmation of demand on the basis of outward register that too not maintained by the Respondent’s office but by the Security personnel engaged by security contractors cannot be sustained. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 648
Clandestine removal - Cigarettes - Currency - absolute confiscation - manufacturer of clandestined cleared goods not identified - retraction of statements - Held that:- It is a fact on record that during the course of investigation, some cash and some cigarettes were recovered from Shri Ajay Adwani which were seized. The cash was also seized recovered from the possession of Shri Samaylala Janghel and at that time, statements of both the appellants were recorded, but, these statements were retracted by them and thereafter no statements of the appellants have ever been recorded and no effort were not to investigated the manufacturer of these cigarettes - Unless and until it is identified who is the manufacturer of clandestine cleared the goods, the allegation that the cash recovered from the appellants is sale proceeds of clandestine removed cigarettes is not sustainable. Revenue has failed to establish that who is the manufacturer of clandestine cleared the goods and no duty is sustainable on account of clandestine cleared goods and it is a fact on record that the appellant are not the manufacturer and are only trader, therefore, in the absence of identifying who is manufacturer of goods, it cannot be held that the Indian currency recovered from the possession of the appellants is the sale proceeds of clandestine manufacture and cleared cigarettes. Seizure of Indian Currency - Held that:- The Indian currency has been seized under Section 121 of Customs Act, 1962 which were made applicable to Central Excise matters vide Notification No. 68/63-CE dated 04.05.1963, issued under Section 12 of the Central Excise Act, 1944 - he Indian currency can be ordered for confiscation is only in terms of Section 111, 113 and 125 of Customs Act, 1962 which were not made applicable in terms of Notification No. 68/63-CE dated 04.05.1963. Therefore, the Indian currency seized cannot be confiscated under Section 121 of the Customs Act, 1962 - The currency seized is required to be released to the appellants and seized goods cannot be held liable for confiscation - no penalty is imposable on the appellants. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 646
CENVAT Credit - input services - Outward Courier services - period involved is from March 2007 to February 2010 - Held that:- The said amount involves both inward transportation of raw materials as well as goods sent for job works. The definition does not put any restriction with regard to inward transportation of raw materials and so also in the case of goods sent for job work. The credit availed on the service tax paid for such charges would thus be eligible. However, the amount has to be quantified. The Hon’ble Apex Court in the case of M/s. Ultratech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA] has held that after the amendment, the credit availed on outward transportation beyond the place of removal would not be eligible with effect from 01.04.2008. The appellant has pointed out that the period involved is from March 2007 to February 2010. The credit availed up to 01.04.2008 would therefore be eligible to the appellant. Thus, the eligibility of credit in respect of courier services needs re-consideration both with regard to quantification as well as eligibility for the period after 01.04.2008. Appeal allowed by way of remand.
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2019 (4) TMI 645
CENVAT credit - clearance of by-product - electricity sold to various companies - common inputs and input services used in manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - proviso to sub-rule (1) of Rule 6 of CENVAT Credit Rules, 2004 - Held that:- The issue decided in the case of M/S. VENKATESHWARA POWER PROJECTS LTD., M/S. THE UGAR SUGAR WORKS LTD., M/S. EID PARRY (INDIA) LTD., M/S. SRI SRIVSGAR SUGAR & AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL GOODS & SERVICE TAX [2018 (11) TMI 913 - CESTAT BANGALORE], where it was held that there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely, electricity. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 644
CENVAT Credit - capital goods - items used for fabrication of structural items which are embedded to the earth - Held that:- The impugned goods have been used for fabrication of supporting components of capital goods. Further, the appellants have furnished the Chartered Engineer certificate regarding the usage of the said goods. Also it is found that the said goods have not been used for laying foundation for the capital goods. This issue regarding the cenvat credit on various machinery is squarely covered in favour of the appellant by the decision of the Division Bench of the Tribunal in the case of Monnet Ispat & Energy Ltd. [2016 (1) TMI 917 - CESTAT NEW DELHI] wherein identical goods were involved on which cenvat credit was denied. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 643
CENVAT credit - clearance of by-product - common inputs and input services used in manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - demand of 6% of the value of electricity sold to various companies - proviso to sub-rule (1) of Rule 6 of CENVAT Credit Rules, 2004 - Held that:- The issue decided in appellant own case M/S. VENKATESHWARA POWER PROJECTS LTD., M/S. THE UGAR SUGAR WORKS LTD., M/S. EID PARRY (INDIA) LTD., M/S. SRI SRIVSGAR SUGAR & AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL GOODS & SERVICE TAX [2018 (11) TMI 913 - CESTAT BANGALORE], where it was held that there cannot be a demand of 6% of the value of exempted electricity sold outside the factory in terms of Rule 6(3) (i) of CCR simply on the ground that the appellant has failed to maintain separate account on receipt of input or input services used in the manufacture of dutiable goods, namely, Sugar and exempted goods, namely, electricity. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 642
CENVAT credit - clearance of by-product - common inputs and input services used in manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - demand of 6% of the value of electricity sold to various companies - proviso to sub-rule (1) of Rule 6 of CENVAT Credit Rules, 2004 - Held that:- The issue decided in the case of COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM VERSUS LAILA SUGARS PVT LIMITED [2019 (2) TMI 568 - CESTAT BANGALORE], where it was held that in case of removal of waste or by-product Rule 6(3) has no application. Appeal dismissed - decided against Revenue.
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2019 (4) TMI 641
The main appeal is pending before the Division Bench of this Tribunal and the present appeal also arises out of the common order, which is to be heard together - the case is made over to DB, to be clubbed and heard in the normal course.
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2019 (4) TMI 640
Valuation - various goods manufactured by the appellant, but captively consumed for use within the factory as well as captive mines for various activities, such as, construction, repair and maintenance activities - Rule 8 of the Central Excise Valuation Rules, 2000 - time limitation - Held that:- The Larger Bench of the Tribunal in the case of Ispat Industries Ltd. [2007 (2) TMI 5 - CESTAT, MUMBAI], where it was held that the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. Thus, during the disputed period, the valuation is required to be adopted in terms of Rule 4 ibid, on the basis of value of clearances to independent buyers. Time Limitation - Held that:- It is on record that the appellant has kept Department informed about their proposal for captive clearance of goods manufactured for purposes of civil constructions, repair and maintenance etc.. They have done so by means of a letter in December, 2005 - the Department will not be justified in alleging suppression against the appellant and invoking extended period of limitation. As such, the demand raised by the show-cause notice dated 02.08.2006, is to be restricted, to normal period of time limit - The second show-cause notice dated 22.03.2007, is within time. There is no justification for imposition of penalty - penalty set aside. Appeal allowed in part.
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2019 (4) TMI 639
Clandestine removal - Shortage of raw material and finished goods - no verification at the buyer/supplier’s end conducted by the Revenue - whether the department was right in fastening the duty on account of shortage of the finished goods, and raw material found during the joint stock verification? - Held that:- It was presumed by the department that since the authorised representative and the Director of the noticee have accepted the shortage and also made voluntary payment the clandestine removal is accepted by them and hence no further proof is required to that effect. Ld. AR has relied upon the various decisions, wherein it has been held that once the shortage is accepted, no further proof is required for the clandestine removal of the goods. But we feel that the same cannot be applied in the facts and circumstances of present case because the assessee is never accepted the shortage as claimed by the Revenue but paid the Central Excise duty to avoid further litigation and coercion. The department has not conducted any verification at the buyer/supplier’s end in spite of having complete address with them. The Hon’ble Tribunal in the case of Central Cables Ltd. Vs. CCE, Nagpur [2011 (1) TMI 1011 - CESTAT, MUMBAI] held that stock taking by Revenue officers not considering inputs for manufacture and clearance not entered in statutory records before the stock taking. In this case, though the assessee failed to explain the shortage during the visit of Revenue officers, but they did not admit the same and submitted all information along with reconciliation statement. In absence of corroborative evidence, allegation of clandestine removal was not sustainable assessee was only liable for non-maintenance of statutory record. The allegation of clandestine removal is very serious charge and required to be proved with a tangible evidence and supported by corroborative facts - in the present case, Revenue has failed to conduct the investigation in a full proof manner so as to sustain charge against appellant. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 638
Clandestine production and removal - MS ingots - shortage of inputs and finished goods - retraction of statements - no proper investigations carried out - cross-examination of various persons denied - demand based kn assumptions and presumptions - Held that:- Revenue has made the case of clandestine removal of the manufactured goods and subsequent raising of demand on such huge quantity of without properly corroborating evidences on record. After going through the impugned order, it is found that the entire show cause notice is based on the stock taking report and the various statements recorded from the Authorised Representative, Transporter and Director of the appellant company. There is no evidence regarding any movement of goods by trucks or any other means to and from the factory of the appellant. No adequate enquiry or investigation from the transporter was carried out by the department. It is also on record that the department has got the complete address of most of the buyer of the appellant who are well known established concerns. However, there was no investigation regarding receipt of the said quantity which were alleged to be cleared by the appellant - No evidence was brought during the investigation regarding any evidence of receipt of money by the appellant as there was no seizure of cash at all. From the investigation, it is clear that in the present case, no evidence has been gathered by the Revenue. The allegation of clandestine removal of finished goods and the raw material are based purely on the assumption and presumption and surmises and conjecture. No corroborative evidence was adduced by the Revenue in support of alleged clandestine removal of the goods. It is well settled that the charge of clandestine removal is a serious charge and the demand cannot be made on the basis of mere surmises and conjectures and assumption and presumption. Non-accountal of the receipt of raw material or clandestine removal of the goods cannot be on the basis of presumption. Further, in the alleged clearance of 19352.552 of final product is based upon the show cause notice issued of SSSIL alleging the manufacture and clearance of 18501.04 MT of sponge iron to the appellant. We find that the reliance placed on the another show cause notice without further corroboration is of no use in the present case. Even it is on the record that the document on which the clandestine removal and manufacture is fastened on the appellant has been recovered from the guest house of the employee of M/s SSSIL this at the best as 3rd party evidence and the reliance on which cannot be without the further corroboration. It is also on record that the ld. adjudicating authority has denied the cross-examination asked by the appellant - The admissibility of the evidence without following the procedure established under Section 9(D)(i) of the Act, is not admissible as a evidence in the investigation proceeding as mentioned in para 4.2 of order - Also in this case, raw material for the manufacture of the ingot by the appellant has come from the State of Orissa. No evidence on transport whatsoever has been gathered by the Revenue about the transport of the goods from the one state to another state which is well documented at the check post of two states. Impugned order is not sustainable - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 635
CENVAT Credit - input services - place of removal - Outward Transportation of Goods (GTA Services) upto the buyer’s premises - main grounds raised by the appellants is that the Board’s circular dated 08.06.2018 has clarified with respect to what is to be the place of removal - Held that:- On a perusal of the Circular, it is found that the general principles concerning place of removal as elucidated by the Apex Court in the case of Commissioner of Customs & Central Excise, Nagpur Vs M/s. Ispat Industries Ltd., [2015 (10) TMI 613 - SUPREME COURT] have been brought out. The judgment in COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [2015 (4) TMI 857 - SUPREME COURT] basically concerns itself with includibility of certain costs incurred the delivery of the goods at the buyer’s point, whereas, on the other hand Ultra Tech Cements Ltd., [2018 (2) TMI 117 - SUPREME COURT OF INDIA] is confined to eligibility of Cenvat credit in respect of transportation undertaken by the seller/manufacturer till the buyer’s premises. The appellants should be given an opportunity to establish which is the place of removal for them and then look into the eligibility of credit on GTA services availed for outward transportation upto the buyer’s premises in the light of the judgments of M/s. Ultra Tech Cements Ltd., M/s. Roofit Industries Ltd. and the Board’s Circular dated 08.06.2018 - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (4) TMI 651
Maintainability of appeal - noncompliance of Section 63(3) of the PVAT Act, 2005 - Imposition of penalty u/s 11(6) of the Punjab General Sales Tax Act, 1948 - repealed act - Held that:- In the assessment order passed by the assessing authority, reference has been made to Section 11(5) of the Madhya Pradesh Sales Tax Act, while relying upon decision of the Division Bench in Battulal's case [1962 (5) TMI 19 - MADHYA PRADESH HIGH COURT], whereas it was Section 11(5) of the Central Provinces and Berar Sales Tax Act, 1947 which was under consideration in the said decision. In pursuance to the assessment order dated 27.12.2010, the penalty had been imposed vide order dated 30.5.2011 which had been affirmed by the DETC (A) and the Tribunal - The Division Bench judgment of the Madhya Pradesh High Court in Battulal's case having been overruled by the Full Bench decision in Shyama Charan Shukla's case [1974 (4) TMI 90 - MADHYA PRADESH HIGH COURT] which decision was affirmed by the Apex Court in Shyama Charan Shukla's case [1990 (9) TMI 296 - SUPREME COURT OF INDIA], it would be appropriate that the matter is remitted to the Assessing Officer to decide the issue afresh in accordance with law. The matter is remanded back to the assessing authority to decide the same afresh, in accordance with law.
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2019 (4) TMI 637
Developer and codeveloper of an SEZ - exemption from payment of tax - individual industrial unit - Section 7(6) of HVAT Act, 2003 and 11(1)(i) read with Section 19(i) of HSEZ Act, 2005 - time limitation - Held that:- A perusal of Section 7(6) of the Act shows that only an individual industrial unit undertaking the activity of setting up of the unit in a SEZ area has been exempted from payment of tax and not a developer or co-developer of a SEZ. According to Section 11(1)(i) of the HSEZ Act, 'any goods exported out or imported into the SEZ have been exempted from payment of any tax duty, fees, cess or any other levies under any existing State Law including the Act.' The Tribunal had noticed that the developer or co-developer of a SEZ has not been exempted from payment of tax under the Act by Section 7(6) of the Act and only an individual unit/dealer has been exempted for setting up of the unit in SEZ area. The Tribunal while setting aside the observations of the appellant as recorded in para 3 (iii) of the clarification order issued under Section 56(3) of the Act, had recorded that a developer and co-developer of an SEZ are entitled for exemption from payment of tax under the Act by virtue of Section 11(1)(i) of the HSEZ Act - No illegality or perversity could be pointed out by the learned counsel for the appellant in the aforesaid conclusion recorded by the Tribunal which may warrant interference by this Court. No question of law arises in this appeal. Condonation of delay in filing appeal - time limitation - Held that:- Since the appeals were barred by time, the applications under Section 5 of the Limitation Act, 1963 were filed for condonation of delay in filing the appeals - no ground is made out for condonation of delay in filing the appeals. Appeal dismissed - decided against appellant.
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Indian Laws
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2019 (4) TMI 661
Nature of transaction - benami transaction or not - Whether in the facts and circumstances of the case and merely because some financial assistance has been given by the father to the sons to purchase the properties, can the transactions be said to benami in nature? - Held that:- In the case of Thakur Bhim Singh [1979 (12) TMI 158 - SUPREME COURT OF INDIA], it is observed and held by this Court that while considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction. It is further observed by this Court as to what the intention of the person who contributed the purchase money, has to be decided on the basis of the surrounding circumstance; the relationship of the parties; the motives governing their action in bringing about the transaction and their subsequent conduct etc. The High Court has rightly come to the conclusion that the plaintiff has failed to prove that the purchase of the suit properties – Item Nos. I(a) to I(c) in the names of defendant Nos. 1 to 3 were benami in nature. It is true that, at the time of purchase of the suit properties – Item Nos. I(a) to I(c), some financial assistance was given by Late G. Venkata Rao. However, as observed by this Court in various decisions, that cannot be the sole determinative factor/circumstance to hold the transaction as benami in nature. The plaintiff has miserably failed to establish and prove the intention of the father to purchase the suit properties for and on behalf of the family, which were purchased in the names of defendant Nos. 1 to 3. The intention of Late G. Venkata Rao to give the financial assistance to purchase the properties in the names of defendant Nos. 1 to 3 cannot be said to be to purchase the properties for himself and/or his family members and, therefore, as rightly observed by the High Court, the transactions of purchase of the suit properties – Item Nos. I(a) to I(c) in the names of the defendant Nos. 1 to 3 cannot be said to be benami in nature. The intention of Late G. Venkata Rao was to provide the financial assistance for the welfare of his sons and not beyond that. None of the other ingredients to establish the transactions as benami transactions, as held by this Court in various decisions, are satisfied, except that some financial assistance was provided by Late G. Venkata Rao. The purchase of the suit properties – Item Nos. I(a) to I(c) in the names of defendant Nos. 1 to 3 cannot be said to be benami transactions and, therefore, as rightly observed and held by the learned trial Court and confirmed by the High Court, the plaintiff has no right to claim 1/4th share in the suit properties – Item Nos. I(a) to I(c) which were purchased by the sons in their names by separate sale deeds. Petition dismissed.
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2019 (4) TMI 660
Dishonor of Cheque - insufficiency of funds - doubt about the discharge of legally enforceable debt or liability - Section 138 of Negotiable Instruments Act - rebuttal of presumptions - Section 139 of the Act - burden to prove - Held that:- The complainant being holder of cheque and the signature on the cheque having not been denied by the accused, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. This Court in Bharat Barrel Drum Manufacturing Company Vs. Amin Chand Pyarelal, [1999 (2) TMI 627 - SUPREME COURT] had occasion to consider Section 118(a) of the Act. This Court held that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable and defendant can prove the non-existence of a consideration by raising a probable defence. A Three-Judge Bench of this Court in Rangappa Vs. Sri Mohan, [2010 (5) TMI 391 - SUPREME COURT OF INDIA] had occasion to elaborately consider provisions of Sections 138 and 139. In the above case, trial court had acquitted the accused in a case relating to dishonour of cheque under Section 138. The High Court had reversed the judgment of the trial court convicting the accused. In the above case, the accused had admitted signatures on the cheque. This Court held that where the fact of signature on the cheque is acknowledged, a presumption has to be raised that the cheque pertained to a legally enforceable debt or liability, however, this presumption is of a rebuttal nature and the onus is then on the accused to raise a probable defence. Thus, the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability, which, of course, is in the nature of a rebuttable presumption. In the present case, signature on cheque having been admitted, a presumption shall be raised under Section 139 that cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In cross-examination of the PW1, when the specific question was put that cheque was issued in relation to loan of ₹ 25,000/- taken by the accused, the PW1 said that he does not remember. PW1 in his evidence admitted that he retired in 1997 on which date he received monetary benefit of ₹ 8 lakhs, which was encashed by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts. High Court without discarding the evidence, which was led by defence could not have held that finding of trial court regarding financial capacity of the complainant is perverse - the accused has raised a probable defence and the findings of the trial court that complainant failed to prove his financial capacity are based on evidence led by the defence. The observations of the High Court that findings of the trial court are perverse are unsustainable. Appeal allowed - the judgment of the High Court is set aside and that of the trial court is restored.
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