Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 15, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Local Authority or not - Ahmedabad Municipal Transport Service - applicant being a “local authority” is providing advertisement service to the business entity, accordingly as per the aforesaid Notification applicant is not liable to payment of GST but under reverse charge mechanism recipient of Service is liable to payment of GST. - AAR
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Classification of goods - rate of GST - Supply of products such as frontal frames with fascia pads along with fixture as a complete set, would qualify as a mixed supply for the reasons discussed hereinabove. The said ‘mixed supply’ can be classified as supply of any of the three supplies i.e. Frontal frames (Tariff heading 73269080) OR Fascia pads (Tariff heading 39201099) OR Fixtures (Tariff heading 73181500/73181600/73182200), for the reasons discussed hereinabove and the GST applicable thereon will be 18%(9% SGST + 9% CGST). - AAR
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Utilisation of Input Tax Credit - The applicant cannot use the Input Tax Credit Balance available in the Electronic Credit Ledger legimately earned on the inputs/raw-materials/inward supplies(meant for outward supply of Bullions) towards the GST liability on ‘Castor Oil Seed’ which were procured from Agriculturists and subsequently meant for onward supply. - AAR
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Governmental Authority or not - National Institute of Design, Paldi, Ahmedabad (NID) - Since it has been established from the discussions hereinabove, that NID has been formed by an Act of Parliament, the applicant will have to register themselves as a tax deductor under the provisions of Section 24 of the CGST Act, 2017 read with Section 51 of the Act, if they fulfil the condition of ‘fifty-one percent, or more participation of Government by way of equity or control, to carry out any function’. - AAR
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Classification of goods - rate of GST - Plastic Toys - The Toys of plastic manufactured and supplied by the applicant fall under 95030030 - the GST applicable on the said product is 12% - AAR
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Classification of services - Health Care Services - The medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment for patient opting with or without packages along with allied services i.e. (room rent/food/doctor fees Etc.) provided by hospital is a "Composite Supply” - Exempt from GST - AAR
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Seeking grant of Bail - vicarious liability - evasion of GST - The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. - HC
Income Tax
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Declaration filed under section 4(1) of the DTVSV Act - From a plain reading of the provisions of the DTVSV Act and the Rules it emerges that the Respondent- Designated Authority would have to issue Form-3 as referred to in Section 5 (1) specifying the amount payable in accordance with section 3 of the DTVSV Act in the case of declarant who is an eligible appellant not falling under section 4(6) nor within the exceptions in section 9 of the DTVSV Act, which fact appears to be undisputed. - HC
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Estimation of income - Accommodation entry provider - the only material with the Revenue authorities is that of the statement of entry operators confirming that they have received brokerage/commission at the rate of 0.25% to 0.5% from the assessee, which fact has not been doubted by the authorities. Though the ld.CIT(A) has to some extent justified to restrict the impugned disallowance, but he has not given due weightage to the only evidence available on record in form of statement of entry operators has not been considered logically. - AT
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Legality of approval granted by the designated superior authority u/s 153D - The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. - AT
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Unaccounted income disclosed during the course of survey - In the present case, not only one partner of the assessee made discloser of additional undisclosed income, but it was endorsed by two other partners in presence of their CA. - During first appellate stage the assessee try to introduce new facts that the undisclosed additional income was earned from the business of sarees and dress material for which no separate accounts were maintained. - If the mistake was realised later on the statement should have been retracted immediately. - Additions confirmed - AT
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Allowability of development expenses - CIT(A) was justified in allowing the claim of estimated development expenses booked by the assessee in the Profit & Loss Account on matching concept by adopting scientific method allowable u/s 37(1) of the Act and thus the theory adopted by the Ld. A.O of the assessee having received the development charges in cash is just in air and has no legs to stand for since there is no evidence to prove it and it is merely on surmises and conjectures. - AT
Customs
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Benefit of advance authorisations - There are several matters in dispute between parties, viz. petitioner and respondents. Petitioner claims that imported goods undergo certain process, which is a manufacturing process, whereas test reports and factual position contended by the other side has been stated to be otherwise. In such disputed scenario, it is not be a case where it can be said that the revenue department is acting without powers or authority having regard to provisions referred to - HC
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Territorial Jurisdiction - Levy of penalty u/s 112(a) of the Customs Act, 1962 - import of confectionery items from Dubai - Allegation of under valuation by DRI - As Section 1, sub section (2) of the Customs Act, 1962 admittedly is having jurisdiction in only within whole of India and its territories and cannot be extended beyond India and the appellant is located outside of India, therefore, no penalty can be imposed on the appellant under Customs Act, 1962 - AT
IBC
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Initiation of CIRP - Since it has been categorically covenanted that the payment had to be made on or before 31/03/2020, on failure to do so it would then be held to be in default. The date of default thus has to be construed only as 31/03/2020 and not otherwise. The contention of the Petitioner that the default has occurred on 31/07/2019 cannot be accepted. - Tri
Service Tax
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Issuance of pre-show cause notice consultation - demand of service tax - The contesting respondents were mandatorily required to have a pre-show cause notice consultation with the petitioner-company and that having not being done in the instant matter, the proceedings initiated by the contesting respondents via the impugned show cause notice are non-est in law. - HC
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Violation of principles of natural justice - SVLDRS - The scheme has been brought in to have amicable resolution of disputes securing interest of revenue and start the new GST regime and to give benefit to eligible persons participating in the scheme of waiver of interest, fine, penalty, immunity from prosecution. It has been observed that non compliance of principles of natural justice would impeach the decision making process rendering the decision invalid in law. - HC
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Levy of penalty u/s 78 of FA - allegation of evasion of service tax - The assessee being a public sector undertaking of the Government of India is an additional factor to hold that any mala fide intention to evade payment of Service Tax would not be attributed, to levy penalty under Section 78 ibid. - AT
Central Excise
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Quantification of CENVAT Credit reversed - common Input/Input Services used - There is indeed serious error in calculation of the amount to be paid under Rule 6(3). As regard the terms “total Cenvat Credit” to be considered for the formula as provided under Rule 6 (3A)- AT
VAT
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Levy of Interest - The respondent is not justified in levying interest from the original assessment year - In the case on hand, Rathna Residency is not the petitioner before this Court. It is only Rainbow Restaurant that is the petitioner before this Court. Rainbow Restaurant is contending that it cannot be considered as “a restaurant attached to a star hotel”. Thus the petitioner was under a bonefide impression that they are not liable to pay tax at a higher rate. Therefore, as per Section 42 of the Act, only from the date on which the petitioner's liability is quantified, the question of paying tax would arise. - HC
Case Laws:
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GST
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2021 (4) TMI 568
Maintainability of petition - availability of alternative remedy - Delegation of powers by the commissioner - Provisional attachment - Proceedings initiated u/s 83 - petitioner admits that there is alternate remedy available, but contend that the rule of exclusion of jurisdiction due to availability of alternative remedy is a rule of discretion and not one of the compulsions - It was held by High Court that the writ petitioner has not only efficacious remedy, rather alternative remedy under the GST Act, and therefore, the present petition is not maintainable. HELD THAT:- Arguments concluded - Judgment reserved.
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2021 (4) TMI 567
Sub-Contract from a Sub-Contractor - Sub-contractor is sub-contracted from a sub-contractor of the main contractor - main contractor is provider of works contract to a Government entity - eligibility for concessional rate of GST - no privity of contract between applicant and main contractor - HELD THAT:- In the instant case, it is seen that there is no privity of contract between the applicant and M/s. Karnataka Neeravari Nigam Ltd. The original contract is awarded by M/s. Karnataka Neeravari Nigam Limited to M/s. Ocean Constructions (India) Private Limite - Hence as per the notification, any subcontractor providing services to Main contractor by executing the works mentioned in the serial number 3 of clause (iii) and clause (vi) which is exclusively covered under the clause (ix) of serial no.3 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 (as amended from time to time) will be exempted from payment of GST subject to M/s. Karnataka Neeravari Nigam Limited is qualified to be called as a Government Entity. In the present case, it is M/s. Shaaz Electricals who is the sub-contractor who is covered under the said entry. As there is no privity of contract between the applicant and M/s. Ocean Constructions (India) Private Limited and the contract is between the applicant and M/s. Shaaz Electricals, the services provided by the applicant is not covered under the said entry. It is observed that the privity of contract is between the applicant and the M/s. Shaaz Electricals, however M/s. Shaaz Electricals is not covered under Central Government, State Government, Union Territory, a local authority or a Governmental Authority or a Government Entity and hence the supply made by the applicant is not covered entry no.3 (iii) of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 - For the same reason, the activity of the applicant is also not covered under entry no. 3(vi) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended).
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2021 (4) TMI 566
Taxability - levy of GST - Rent received from Backward Classes Welfare Department - services of renting an immovable property - exemption under entry number 3 of N/N. 12/2017 -Central Tax (Rate) dated 28-06-2017 - HELD THAT:- The applicant has rented his property to the Backward Classes Welfare Department, Government of Karnataka, who in turn is using the same for providing hostel facilities to the post metric girls of backward classes. This is in relation to the function entrusted to a panchayat under article 243G of the constitution which is covered by 27th entry of 11th schedule which says Welfare of the weaker sections, and in particular, of the Scheduled Castes and the Scheduled Tribes. Since the applicant is providing to the State Government pure services by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution, the same is covered under the entry number 3 of Notification No. 12/2017 -Central Tax (Rate) dated 28-06-2017 and hence is exempted under the CGST Act, 2017 - the activity is also exempted under the KGST Act, 2017.
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2021 (4) TMI 565
Classification of supply - rate of tax for the scope of supplies - independent supplies or composite supply with principal supply of goods - supplies made by different Cost Centres - naturally bundled services - Time of supply - HELD THAT:- It is seen that the applicant was a successful bidder to the tender invited by the BMRCL and the tender is for Supply of 150 numbers of Standard Gauge Intermediate Cars compatible with and suitable for integration with the existing trains of Bangalore Metro Rail Project Phase-I . The applicant has applied and been allotted the work and the applicant has entered into the contract with BMRCL vide Contract No.3 RS-DM dated 25th March, 2017. It is clear that the contract is for manufacture and supply of Standard Gauge Intermediate Cars along with integration with installation and commissioning of cars supplied, including training, supervision and maintenance, supply of spares, preparation of manuals etc. - the contract was for supply of intermediate cars which are compatible with the existing trains and for integration with installation and commissioning of cars supplied, including training, supervision and maintenance and supply of spares and preparation of manuals etc. and this is a single contract. The contract is verified and found that the contract is a single contract for both supply of goods and also for services related to those goods supplied, like installation, integration, commissioning, training and maintenance and splitting of the entire contract is for the purposes of milestones in the completion of the contract and is a single continuous chain. The Contract agreement also clearly states that the contract is a single contract involving supply of goods and services. Further, it is also seen that the contract cannot be separated and awarded to different persons and since the nature of the spares and services are exclusive to the main supply, it cannot but be awarded to the same person. It is seen that the Total Contract Price is split up into separate Contract Prices cost centre wise and one of the cost centre H is optional, and is incidental but integral part of the Supply contract. Further, it is also important to note that there is no option on the supplier as far as supplies of spares are concerned - it can be seen that supply covered under Cost Centre H, being optional, cannot be treated as a part of the contract of supply of 150 cars and integration and other services, until that option is exercised by the contractee. This cost centre would be operative only on the request of the contractee and when such request is made by the contractee, the applicant is bound to provide such services at the agreed upon rates. The Cost Centre C to G would form a composite supply as the supply involves supply of intermediate cars and also integration, commissioning etc. There would be supply of goods and supply of services involved in this activity and hence would form a naturally bundled supply - The supplies made by the applicant under Cost Centres C, D, E and G form a composite supply and since the supply of intermediate cars is the principal supply, would be treated as the supply of intermediate cars as per section 8 of the CGST Act, 2017 and section 12 of the CGST Act, 2017 is applicable to the issues related to the time of supply.
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2021 (4) TMI 564
Export of services or not - levy of GST on foreign supplier on their service charges - services of stevedoring, transportation, storage, bagging, stuffing and again transportation of the goods which are temporarily imported - zero rated supply or not - place of supply of services or not - HELD THAT:- The fertilizers/goods are discharged from the vessel, brought from the vessel to the custom bonded warehouse, packed in smaller bags as per the requirement of the client and thereafter dispatched from the warehouse after 2/3 months ( as per instructions of their clients) for export to the ultimate buyers of the clients of the applicant. It is therefore, apparent that the aforementioned fertilizers/goods never cross the customs barrier and mix-up with the indigenous goods as these goods were temporarily imported to India (for export purpose) and stored in customs bonded warehouses and exported from there to outside India. Whether the services such as stevedoring, transportation, storage, bagging, stuffing and again transportation of the goods (which are temporarily imported) provided by them can be considered as export of services or not? - HELD THAT:- The service recipients (the clients of the applicant located outside India in the instant case) neither have a place of business in India for which registration has been obtained nor do they have any place of business other than the place of business for which registration has been obtained, in India. In view of the above, we find that the conditions (a) and (b) are not applicable in the instant case. Further, since condition (c) above is also linked to (a) and (b), the said condition can also not be made applicable to the instant case. We, therefore, conclude that only condition(d) which states that in absence of such places as mentioned at (a),(b) and (c) above, the location of the usual place of residence of the recipient, is applicable in the instant case - thus the place of supply of services, in the instant case, will be the location of the recipient of services i.e. out of India. We therefore find that condition(ii) of Section 2(6) of the IGST Act, 2017 is also fulfilled. As per Sub-section (2) of Section 13, the place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services, provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. However, since the location of the recipient of services is available in the instant case i.e. outside India, we will have to find out under which sub-section of Section-13 the services provided by the applicant falls - the services such as stevedoring, transportation, storage, bagging, stuffing and again transportation of the goods (which have been temporarily imported into India as discussed earlier) would fall under sub-section(3) of Section 13, since the goods are required to be made physically available by the recipient of services to the supplier of services in order to enable the supplier to supply the aforementioned services. Condition(iii) of Section 2(6) of the IGST Act, 2017 has not been fulfilled in the instant case since the location of supply of service is not located outside India but in India and therefore the services rendered by the applicant will not be covered under export of services - the services rendered by the applicant are not covered under Export of services as envisaged in Section 2(16) of the IGST Act, 2017 - the aforementioned services of stevedoring, transportation, storage, bagging, stuffing and again transportation of the goods which are temporarily imported, would not be considered as Export of service for the period prior to 01.02.2019 but would be considered as Export of service w.e.f. 01.02.2019 onwards. Since it has determined that the services provided by the applicant are covered under export of service w.e.f. 01.02.2019, they will be covered under the provisions of Section 16(1)(a) as export of services w.e.f. 01.02.2019. As regards the eligibility of the applicant for Zero rated supply under Section 16 of the IGST Act, 2017, we find that the applicant shall not be eligible for Zero rated supply as per the provisions of the said section upto 31.01.2019. However, they will be eligible for Zero rated supply as per the provisions of Section 16(1)(a) of the IGST Act, 2017 w.e.f. 01.02.2019.
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2021 (4) TMI 563
Local Authority or not - Ahmedabad Municipal Transport Service - engaged in rendering passenger transportation services and runs public buses in the city of Ahmedabad within the limits of Municipal Corporation - GST on procurement of security services received from any person other than body corporate under reverse charge mechanism - GST on advertisement services or the service recipient of AMTS is required to pay GST under reverse charge mechanism - registration as a Deductor under GST as per the provision of Section 24 of the CGST Act. Whether the applicant i.e. AMTS would be qualified as local authority as defined under the CGST Act, 2017? - HELD THAT:- AMTS is a statutory authority established to carry out the functions entrusted to a Municipality under Art. 243W of the Constitution. It is a body discharging municipal functions, although not a municipality as required to be constituted under Art. 243Q of the Constitution and is fit to be included as other authority under Section 2(69)(c) of the GST Act. It will also be a local authority within the meaning of the above section of the GST Act if the Applicant is legally entitled to or entrusted by the State Government with the control or management of a municipal or local fund. Thus, Ahmedabad Municipal Transport Service (AMTS), is a statutory authority discharging municipal functions (although not a municipality as required to be constituted under Art. 243Q of the Constitution), is legally entitled to and entrusted by the State Government with the control or management of a local fund as defined in Gujarat Treasury. In view of the above discussion we hold that Ahmedabad Municipal Transport Service (AMTS) can be termed as a local authority under Section 2(69)(c) of the GST Act. Liability to pay GST on procurement of security services received from any person other than body corporate under reverse charge mechanism - exemption under Sl. No. 3 of N/N. 12/2017 - Central Tax (Rate) or Sl. No. 3 of N/N. 09/2017 - IGST (Rate) - HELD THAT:- The term in relation to is very wide and the intention of the legislature is to encompass all those services which are provided so as to enable the organization to perform function entrusted in Article 243W of Constitution Of India. In the instant case Security Service is necessary to provide the passenger transport service without any hurdle. The security of a transport undertaking is of utmost importance considering possibility of unfortunate events that may threaten the safety of Vehicles. The fact is that security is vital for safe-keep of undertaking and it can be ensured only by way of keeping enough security measures and procedures in place. Thus, the security service has direct nexus with the transportation service. Accordingly, security services would be included within the term in relation to and would be covered within pure service as envisaged in the exemption Notification No.12/2017-CT (Rate) dated 28.06.2017. As per the N/N. 29/2018-CT (Rate) dated 31.12.2018 Reverse Charge Mechanism on Security Service provided to local authority by any other person other than body corporate is not applicable. Therefore, the applicant being a local authority in terms of Section 2(69) of CGST Act, 2017 as discuss in above Para s is not liable for payment of GST under Reverse Charge Mechanism on receipt of Security Service. Whether the applicant is required to pay GST on advertisement services or the service recipient of AMTS is required pay GST under reverse charge mechanism considering Notification No. 13/2017-Central tax (Rate) dated 28-06-2017? - HELD THAT:- The applicant i.e. AMTS is considered as local authority in terms of Section 2(69) of CGST Act, 2017. Therefore, in terms of Sl. No. 5 of Notification No. 13/2017-CT (Rate) dated 28.06.2017, Services supplied by the Central Government, State Government, Union territory or local authority to a business entity located in taxable territory is liable to payment of GST under reverse charge mechanism - In view of the Sl. No. 5 of the Notification No. 13/2017-CT (Rate) dated 28.06.2017 applicant being a local authority is providing advertisement service to the business entity, accordingly as per the aforesaid Notification applicant is not liable to payment of GST but under reverse charge mechanism recipient of Service is liable to payment of GST. Whether AMTS is required to be registered as a Deductor under GST as per the provision of Section 24 of the CGST Act? - HELD THAT:- The applicant is considered as local authority under Section 2(69) of CGST Act, 2017. In view of the clause (b) of Section 51 of the CGST Act, 2017 local authority is compulsory required to take GST Registration for the purpose of deduction of TDS on the payments made to the supplier of taxable goods and/or services. Govt. of India vide Notification No. 50/2018-Ct dated 13.09.2018 has specified the category of person which includes local authority to whom TDS is to be deducted - the applicant being local authority is required to obtain registration as GST TDS deductor in terms of Section 51 of CGST Act, 2017.
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2021 (4) TMI 562
Classification of goods - rate of GST - Bollards - Bolts, nuts, screw, washer etc. known as fixtures - Frontal Frames - Fascia Pads UHMW PE pads - Buoys - Chains/Swivel/D-Shackle/Chain tensioner - Rubber Fender (both types) - few products such as frontal frames with fascia pads along with fixture as a complete set - fender panel system along with services such as assembly, installation supervision service - supply of installation service where usage of chemical is essential to provide effective service - composite supply or not - classification of the bundle. Classification of goods - rate of GST - Bollards - HELD THAT:- Bollards would be rightly covered under Tariff heading 73259999 - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time), Sub-heading 7325 finds mention at Entry No.237 of Schedule-III of the said notification wherein the GST liability is 18%. Classification of goods - rate of GST - Bolts, nuts, screw, washer etc. known as fixtures - HELD THAT:- Fixtures such as bolts, nuts, screws and washers are specifically covered under the aforementioned sub-heading 7318 of the First Schedule to the Customs Tariff Act, 1975 - The goods finds place in Sub-heading 7318 which finds mention at Entry No.232 of Schedule-III of the said notification on which GST liability is 18%. Classification of goods - rate of GST - Frontal Frames - HELD THAT:- Looking to the description of the product given by the applicant as well as the photographs of the Frontal frames provided by the applicant and comparing the same to the above, it appears that the said product will be rightly covered under Sub-heading 7326 and specific tariff heading 73269080 of the First Schedule to the Customs Tariff Act, 1975 - The goods as per Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) is found under Sub-heading 7326 finding mention at Entry No.238 of Schedule-III of the said notification on which GST liability is 18% Classification of goods - rate of GST - Fascia Pads UHMW PE pads - HELD THAT:- Tariff heading 3920 covers plates, sheets, film, foils and strips of plastics combined with other materials and Tariff heading 392010 covers sheets of polyethylene. Images of UHMW PE pads (as obtained from internet) are placed above. Also, as described by the applicant, fascia pads are made of high quality of plastics (polyethylene )and are applied on the frame structure on which vessels/ship hull touches - the Fascia pads which are sheets of polyethylene(made from polymers of ethylene) would be rightly classifiable under the Tariff heading 39201099 of the First Schedule to the Customs Tariff Act, 1975 - Sub-heading 3920 finds mention at Sr.No.106 of Schedule-III of the said notification on which GST liability is 18%. Classification of goods - rate of GST - Buoys - HELD THAT:- The said product rightly merits classification under the Tariff Heading 89079000 of the First Schedule to the Customs Tariff Act, 1975 - Sub-heading 8907 finds mention at Sr.No.251 of Schedule-I of the said notification on which GST liability is 5%. Classification of goods - rate of GST - Chains/Swivel/D-Shackle/Chain tensioner - HELD THAT:- There is no specific entry for the products i.e. swivel, shackles and chain tensioner under the said sub-heading - chains would be rightly classifiable under Tariff heading 73158900 whereas dshackles and swivels would be rightly classifiable under Tariff heading 73159000 (being parts or accessories). However, since we do not find any specific mention of chain tensioners any where, we find it necessary to know what a chain tensioner is. We therefore, find it prudent to refer to the definition of a chain tensioner as per the dictionary - The said product is a device which forms a part or accessory to a chain which adjusts slackness in the chain to enable continuous and proper chain operation and would therefore be rightly classifiable under Tariff heading 73159000 of the First Schedule to the Customs Tariff Act, 1975 - Sub-heading 7315 finds mention at Sr.No.229 of Schedule-III of the said notification on which GST liability is 18%. Classification of goods - Rubber Fender (both types) - HELD THAT:- The said product rightly merits classification under the Tariff Heading 40169400 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) which reads as Boat or dock fenders, whether or not inflatable - Sub-heading 4016 finds mention at Sr.No.49 of Schedule-IV of the said notification on which GST liability is 28% - the rate of GST in respect of the aforementioned sub-heading i.e. 4016 will be 28% (14% SGST + 14% CGST) upto 14.11.2017 and 18% w.e.f. 15.11.2017 after amendment. Supply of few products such as frontal frames with fascia pads along with fixture as a complete set - composite supply or not - classification of this bundle and applicable tax rate thereon in accordance with Notification No. 01/2017 dated June 28, 2017 (as amended) - HELD THAT:- The supply is concluded to be a mixed supply - Mixed supply comprising of two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. However, it is found that the supply of all the three goods involved in the said supply i.e. frontal frames, fascia pads and fixtures are leviable to GST at 18% i.e. all of them attract equal rate of tax. Hence the said Mixed supply of goods can be considered to be the supply of any of the three supplies i.e. Frontal frames (Tariff heading 73269080) OR Fascia pads (Tariff heading 39201099) OR Fixtures (Tariff heading-73181500 / 73181600 / 73182200) and the GST leviability on the said supply will be 18%. Supply of goods i.e. fender panel system along with services such as assembly, installation supervision service - classification of this bundle and applicable tax rate thereon in accordance with Notification No. 1/2017 dated June 28, 2017 (as amended) - HELD THAT:- The aforementioned supply of goods and services is not a composite supply as well as does not constitute a mixed supply - since it has been established that the aforementioned supply is neither a composite supply nor a mixed supply , we conclude that the applicant will have to supply the aforementioned goods as well as services separately and not as a combination - the supply of goods i.e. fender panel system along with services such as assembly, installation supervision service would not qualify as a composite supply or a mixed supply. Hence, there is no question of either determining the classification of this bundle or deciding it s applicable tax rate. Supply of installation service where usage of chemical is essential to provide effective service - classification of this bundle and applicable tax rate thereon in accordance with Notification No. 11/2017 dated June 28, 2017 (as amended) - HELD THAT:- The aforementioned supply of services and goods i.e. chemicals, constitutes a Composite supply - since the aforementioned supply is a Composite supply in which the Installation Service is the principal supply, the said supply will be treated as a supply of Installation Service in terms of clause(a) of Section 8 above, and therefore, the GST liability will be the tax leviable on Installation Service - Installation Service appears at Sr.No.25 (ii)of the said notification on which GST liability is 18%.
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2021 (4) TMI 561
Utilisation of Input Tax Credit - Balance available in the Electronic Credit Ledger legitimately earned on the inputs/raw-materials/inward supplies(meant for outward supply of Bullions) - whether the balance available can be used towards the GST liability on Castor Oil Seed which were procured from Agriculturists and subsequently meant for onward supply - Castor Oil Seed is intended to be supplied in domestic market or to export it - HELD THAT:- For the applicant, to be eligible to take input tax credit on any supply of goods or services, the same has to be used or should be intended to be used in the course or furtherance of his business i.e. the nexus/connection between the inputs and the final products manufactured from these inputs is required to be proved - For example, inputs such as dores of gold, silver etc. procured by the applicant are used in the manufacture of their final product i.e. Gold(including Gold Plated with Platinum) unwrought or in semi-manufactured forms or in powder form, based metal clad with silver, not further worked than semi-manufactured, coin etc. The core issue is that the applicant wants to trade in Castor oil seeds on which the GST liability is 5% and wants to utilise the input tax credit (availed on inputs such as gold dores, silver dores etc.) available with him in his electronic credit ledger for the payment of the said GST. However, for the applicant, to be eligible to avail the input tax credit for the payment of the GST leviable on the Castor oil seeds which they intend to supply domestically or to export it, the applicant has to first prove the nexus or connection between the inputs and the castor oil seeds which he intends to supply, in the terms of sub-section(1) of Section 16 of the CGST Act, 2017 i.e. he has to prove as to how the gold dores or silver dores are used or intended to be used in the course or furtherance of his business of supply of Castor oil seeds. In this regard, firstly, the applicant has not submitted any document/literature etc. in respect of how they wish or intend to carry out the business of supply of castor oil seeds. Secondly, they have not provided/submitted any proof in respect of the input-final product nexus/connection in respect of the inputs i.e. gold and silver dores etc. vis-a-vis Castor oil seeds nor provided any such document/literature in respect of how the inputs i.e. gold dores or silver dores are used or intended to be used in the course or furtherance of their business of supply of Castor oil seeds - Even otherwise, on a plain comparison of the provisions of Section 16(1) of the CGST Act, 2017 with the issue in hand, it can very easily be derived that there is no nexus/connection whatsoever, of the inputs i.e. gold dores or silver dores with the business of supply of Castor oil seeds by the applicant. It can therefore, be seen that the even the basic conditions envisaged in the provisions of Section 16(1) have not been fulfilled in the instant case, it can be undoubtedly concluded that the inputs are not used or intended to be used in the course or furtherance of the business of supply of Castor oil seeds. The applicant cannot use the Input Tax Credit Balance available in the Electronic Credit Ledger legimately earned on the inputs/raw-materials/inward supplies(meant for outward supply of Bullions) towards the GST liability on Castor Oil Seed which were procured from Agriculturists and subsequently meant for onward supply.
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2021 (4) TMI 560
Governmental Authority or not - National Institute of Design, Paldi, Ahmedabad (NID) - liability to pay GST on procurement of services under reverse charge mechanism - Security services received from any person other than body corporate as per N/N.13/2017 Central Tax (Rate) - Access to e-books/e-database from service provider located outside India as import of service as per N/N.10/2017 IGST (Rate) - requirement to be registered as a tax deductor under GST as per the provision of Section 24 of the CGST Act. Whether NID would qualify as governmental authority as defined under the Integrated Goods and Services Tax Act, 2017? - HELD THAT:- For the applicant to fall under the definition of Governmental Authority , the following 3 conditions will be required to be satisfied: (1) It has to be set up by an Act of Parliament or a State Legislature or has to be established by any Government; (2) The Government should have 90 per cent or more participation by way of equity or control and (3) It should be established for carrying out any function entrusted to a municipality under Article 243W of the Constitution or to a Panchayat under Article 243G of the Constitution. Since the applicant has fulfilled the conditions of being formed by an Act of Parliament and being established to carry out the function entrusted to a municipality under Article 243W of the Constitution and to a Panchayat under Article 243G of the Constitution, it is concluded that the applicant will fall under the definition of Governmental Authority if it also fulfils the condition namely ninety percent or more participation of Government by way of equity or control. Whether NID is liable to pay GST on procurement of (a)security services received from any person other than body corporate as per Notification No.13/2017-central Tax Rate (b)access to e-books/e-database from service provider located outside India as import of service as per Notification No.10/2017-IGST(Rate) under reverse charge mechanism, in view of the exemption granted in Sr.No.3 of Notification No.12/2017-Central Tax(Rate) or Sr.No.3 of Notification No.09/2017-IGST(Rate)? - HELD THAT:- Sr.No.3 of aforementioned Notifications No.12/2017-Central Tax(Rate) dated 28.06.2017 and Notification No.09/2017-IGST(Rate) dated 28.06.2017 exempts Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental Authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. In the present case, in view of non-submission of copies of agreement or contract with regard to the services received/to be received by the applicant, it would not be possible to give a decision in the matter. Whether NID is required to be registered as a tax deductor under GST as per the provision of Section 24 of the CGST Act? - HELD THAT:- NID has been formed by an Act of Parliament of the Government of India i.e. the NID Act. However, they have not given any proof with regard to fifty-one percent, or more participation of Government by way of equity or control, to carry out any function . Hence, it is found that since it has been established that NID has been formed by an Act of Parliament, the applicant will have to be registered as a tax deductor under the provisions of Section 24 of the CGST Act read with Section 51 of the Act, if, and only if, they fulfil the condition of fifty-one percent, or more participation of Government by way of equity or control, to carry out any function . It is therefore concluded that the applicant will have to be registered as a tax deductor under the provisions of Section 24 of the CGST Act read with Section 51 of the Act, if they fulfil the condition of fifty-one percent, or more participation of Government by way of equity or control, to carry out any function .
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2021 (4) TMI 559
Scope of Advance Ruling - Classification of supply - export of services - zero rated supply or not - Commission paid to foreign agent who is non resident of India and he does not have any permanent establishment or business connection in India - liability of GST on such commission payable to foreign agent related to service provided out of India. HELD THAT:- Both the questions raised by the applicant do not fall within any of the clauses of (a) to (g) of Sub-section(2) of Section 97 of the said Act, i.e. they do not fall within the ambit of Section 97(2) of the said Act as both the questions are related to export of service which would also require the determination of place of supply of services which is not under the scope of jurisdiction of the Advance Ruling Authorities.
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2021 (4) TMI 558
Classification of goods - rate of GST - Plastic Toys - entitlement to Input Tax Credit in relation to CGST-SGST separately - debit notes issued by the supplier in current financial year i.e. 2020-21, towards the transactions for the period 2018-19 - HELD THAT:- The said toys are made of plastic meant for children and are not electronic toys, and therefore conclude that the plastic toys manufactured and supplied by the applicant are correctly classifiable under Heading 95030030 of Chapter 95 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Tax liability on the product - HELD THAT:- The Toys of plastic manufactured and supplied by the applicant fall under Sr.No.228 of Schedule-II of N/N. 01/2017-Central Tax(Rate) dated 28.06.2017 and the GST applicable on the said product is 12%. Whether the applicant can claim input tax credit of CGST-SGST charged separately in debit notes issued by the supplier in current financial year of 2020-21 towards transactions for the period 2018-19? - HELD THAT:- From a combined reading of the definition of debit note , sub-section (3) of Section 34 of the CGST Act, 2017 and the particulars to be provided in a debit note issued under GST, it is amply clear that the debit note is not an independent document or an invoice in itself and is connected to an invoice as it is issued in pursuance to change in value of an invoice. It, therefore, follows that the financial year to which a debit note pertains, is invariably the financial year in which the original invoice (related to the said debit note) was issued - in light of the provisions of amended sub-section(4) of Section 16 of the CGST Act, 2017(amended w.e.f. 01.01.2021), it is concluded that the applicant shall be entitled to claim the input tax credit only in respect of debit notes issued by the supplier towards the transactions entered into and goods supplied to the applicant during the financial year 2018-19, on or before the due date of furnishing of the return under section 39 for the month of September following the end of the said financial year 2018-19 or furnishing of the relevant annual return, whichever is earlier.
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2021 (4) TMI 557
Classification of services - Health Care Services - Composite Supply or not - medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment for patients opting with or without packages along with allied services i.e. (room rent/food/doctor fees Etc.) provided by hospital - HELD THAT:- The exemption is applicable to a Clinical Establishment , when services by way of diagnosis or treatment or care for illness, etc. are undertaken by such establishment under the directions of a medical doctor. The applicant hospital is a Clinical Establishment and for the health care services as defined in the Notification above provided including the supply of medicines, implants and consumables, rooms, food etc. they are exempt under Sl. No 74 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - medicines, surgical items, implants, consumables and other allied items provided by the hospital through their hospital in house pharmacy used in the course of providing health care services as well as supply of food and room on rent to in-patients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply of In Patient Healthcare Service. Supply of inpatient health care services by the applicant hospital as defined in Para 2(zg) of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended, is exempted from CGST as per Sl. No. 74 of the above notification. Reliance can be placed in the case of IN RE: M/S. TERNA PUBLIC CHARITABLE TRUST [ 2019 (7) TMI 1331 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] where it was held that The supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment and hence not taxable under GST Laws.
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2021 (4) TMI 556
Seeking grant of Bail - vicarious liability - proper investigation and enquiry was made by the officials of the GST Department before arrest or not - evasion of GST - HELD THAT:- As the evasion of the duty is more than ₹ 5 crores, therefore, the offence alleged against the applicant is cognizable and nonbailable. In view of sub-section (1) of Section 138 of CGST Act, 2017 any offence under CGST Act, 2017 is compoundable, both before or after the institution of the prosecution - In the present case, no effort is made on behalf of the applicant to compound the offence either before the institution of the prosecution or at post prosecution stage. The offence alleged against the applicant is economic offence in which the evasion of duty amounting ₹ 62,10,28,165/- is made against the applicant. Although the offence is punishable with imprisonment of five years yet the evasion of huge amount of duty is a great loss to the Government Exchequer. As such the alleged offence is economic - The Hon'ble Apex Court in Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2013 (5) TMI 896 - SUPREME COURT] held that the economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Bail application dismissed.
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2021 (4) TMI 555
Validity of SCN - Infraction of Rule 142 (1A) of the Central Goods and Services Tax Rules, 2017 - requirement to furnish intimation with regard to the tax that they proposed to impose on the petitioner in the prescribed form, i.e., PART - A of FORM GST DRC-01A - HELD THAT:- Mr. Harpreet Singh, who appears on behalf of respondent nos.2 and 3, seeks a short accommodation to return with instructions qua this aspect of the matter. List the matter on 09.04.2021.
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2021 (4) TMI 554
Whether the Petitioner should have submitted documentary evidence to prove his claim that he is a practicing individual lawyer and does not come under the provision of GST or service tax? - HELD THAT:- The Court expresses its concern that practising advocates should not have to face harassment on account of the Department issuing notices calling upon them to pay service tax/GST when they are exempted from doing so, and in the process also having to prove they are practising advocates. The Commissioner GST is directed to issue clear instructions to all the officers in the GST Commissionerates in Odisha that no notice demanding payment of service tax/GST will be issued to lawyers rendering legal services and falling in the negative list, as far as GST regime is concerned. List on 22nd April, 2021.
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2021 (4) TMI 553
Clandestine removal - allegation that the goods kept unaccounted with intent to evade payment of CGST/SGST by supplying the same clandestinely - books of accounts/stock register maintained at the time of search or not - excess stock were found against the entries made in books of accounts/stock register at the time of search or not - value of seized goods are correct or not - Confiscation - penalty u/s 122(1)(xvi) and (xviii) of CGST Act, 2017. Whether books of accounts/stock register maintained at the time of search and whether excess stock were found against the entries made in books of accounts/stock register at the time of search and whether seized goods is liable for confiscation or not in terms of Section 130 (1) (ii) (iv) of CGST Act and rules made thereunder? - HELD THAT:- There is no doubt that in fact the books of accounts of the assessee/respondent was not available in the premises of the assessee/respondent at the time of search in the respective premises and it was lying only in the premises of the other unit i.e. M/s Tirupati Plywood Industries, the same fact admitted by the assessee/respondent in his submission also. Therefore, it was enough reason to believe to the search team to seize the goods which were lying at the search premises as the related records/ documents were not available - the investigating team has rightly seized the goods which were lying without any records which are required as per CGST and Rules. The records/books of accounts were not properly maintained by the assessee/respondent. Hence excess goods found during the search proceedings was rightly been seized by the search team and the same is also liable to confiscation under Section 130 (1) (ii) and (iv) of the CGST Act, 2017 - seized goods valued to ₹ 4,32,333/- is liable to confiscation in terms of Section 130 of CGST Act and rules made thereunder. Since, the goods has already been released by the adjudicating authority therefore, there are no other option but to impose fine in lieu of confiscation of released goods under Section 130(2) of CGST Act, 2017. Whether value of seized goods are correct or not? - HELD THAT:- The adjudicating authority has ignored the admission/acceptance of value of Proprietor and he incorrectly re-determined the value of seized goods. Therefore, the adjudicating authority has grossly erred in releasing the seized goods by taking value amounting to ₹ 2,74,767/- instead of ₹ 4,32,333/- whereas the entire seized goods (considering the value ₹ 4,32,333/-) should have been ordered to be confiscated as the said seized goods were unaccounted in violation of Section 35 of CGST Act read with Rule 56 of CGST Rules, 2017. Whether penalty is imposable upon the Firm/Assessee under Section 122(1)(xvi) and (xviii) of CGST Act, 2017 or not? - HELD THAT:- It is established that the assessee did not maintained the proper books of account at the time of search proceedings hence he violated the provisions of Section 35 of CGST Act and Rules made thereunder. Accordingly, the penalty under Section 122(1) (xvi) and (xviii) of CGST Act, 2017 upon the assessee is very well attracted in the instant case. Confiscation of goods ordered - fine of ₹ 1,00,000/- imposed - penalty imposed under Section 122(1) (xvi) and (xviii) of CGST Act upon M/s Agarwal Sales, F1(a), Shri Khatu Shyamji Industrial Area, Reengus, Distt-Sikar. However, since the adjudicating authority has imposed penalty amounting to ₹ 13,730/- in the said section hence if it has been deposited by the assessee, the same may be appropriated. Appeal disposed off.
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2021 (4) TMI 552
Revocation of cancellation of registration - non-reply to the notice issued within the time specified therein - HELD THAT:- The appellant submitted in their written submission that the additional requirement was raised regarding interest on tax paid thereon. However, now appellant has filed all the pending GST returns till cancellation of registration as well as deposited the all Govt. dues along with late fee and interest. In this regard, the appellant submitted copy of challan dated 19.01.2021 towards payment of interest amounting to ₹ 4800/- and also submitted copy of Form GST DRC-03. The appellant has now been complied with the above said provisions, therefore, the registration of appellant may be considered for revocation by the proper officer - the proper officer are directed to consider the revocation application of the appellant subject to the verification of payment particulars, filing of returns and compliance of the provisions of CGST Act and rules made thereunder - appeal disposed off.
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2021 (4) TMI 551
Maintainability of appeal - time limitation of filing appeal - period of appeal as prescribed under Section 107(2) of CGST Act,2017 - levy of penalty u/s 129(1)(a) of CGST Act, 2017. Whether the appeal filed by the appellant is beyond the period of appeal or not as prescribed under Section 107(2) of CGST Act,2017? - HELD THAT:- The appeal has been filed by the appellant or department in accordance with the Notification No.55/2020-Central Tax dated 27.06.2020 amending Notification No.35/2020-Central Tax dated 03.04.2020. By the said Notification, the period for filing of appeal has been extended upto 31st December-2020 which is squarely applicable in the instant case. In view of this, there is no force in the contention of the respondent that the appeal has been filed beyond the period of appeal and therefore appeal is absolutely maintainable. L evy of penalty u/s 129(1)(a) of CGST Act, 2017 - HELD THAT:- In the instant case, it is fact on record that the owner of the goods failed to come forward for releasing of the detained goods and the goods were got released by the Transporter of the conveyance. Therefore, in terms of Section 129 (1) (b) of CGST Act, 2017, detained goods has to be released on payment of the applicable tax and penalty equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereon whereas, in the instant case, the owner of the goods does not come forward to pay tax and penalty - In the instant case, penalty should have been imposed by the adjudicating authority equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereon, whereas, adjudicating authority has imposed penalty equal to 100% per cent of the tax payable on the detained goods which is not proper and correct. In the instant case value of the goods is ₹ 1,23,312/- therefore, penalty is stands modified to ₹ 61,656/- under clause (b) of sub section (1) of Section 129 of CGST Act, 2017 and the penalty already deposited by the respondent may be appropriated accordingly. Appeal allowed in part.
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Income Tax
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2021 (4) TMI 550
Assessment against amalgamating company - assessment order passed in the name of non-existing entity - scheme of amalgamation - HELD THAT:- The Supreme Court in the case of Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT ] had considered that income, which was subject to be charged to tax for the assessment year 2012-13 was the income of erstwhile entity prior to amalgamation. Transferee had assumed liabilities of transferor company, including that of tax. The consequence of approved scheme of amalgamation was that amalgamating company had ceased to exist and on its ceasing to exist, it cannot be regarded as a person against whom assessment proceeding can be initiated. In said case before notice under Section 143(2) of the Act was issued on 26.9.2013, the scheme of amalgamation had been approved by the high court with effect from 1.4.2012. It has been observed that assessment order passed for the assessment year 2012-13 in the name of non-existing entity is a substantive illegality and would not be procedural violation of Section 292 (b) of the Act. The Supreme Court in its aforesaid decision, has quoted an extract from its decision in Saraswati Industrial Syndicate Ltd. Vs. CIT [ 1990 (9) TMI 1 - SUPREME COURT] The Supreme Court has also referred to decision of Delhi high court in the case of CIT Vs. Spice Enfotainment Ltd 2011 (8) TMI 544 - DELHI HIGH COURT and observed that in its decision Delhi high court had held that assessment order passed against non-existing company would be void. Such defect cannot be treated as procedural defect and mere participation of appellant would be of no effect as there is no estoppel against law. Such a defect cannot be cured by invoking provisions under section 292B. Petitioner lead us to consider that petitioner has made out a case for reliefs and it would be appropriate to allow petition in terms of prayer clause (a).
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2021 (4) TMI 549
Declaration filed under section 4(1) of the DTVSV Act - Petitioner seeking remedy of waiver of interest by way of an application under Section 264 of the Income Tax Act - HELD THAT:- Petitioner filed applications under the DTVSV Act and Rules vide declarations in Form-1 dated 18th November, 2020 and waiver undertakings in Form-2 for each of the 11 years for the period 1988-89 to 1998-99 to avail of beneficial tax payments to end the litigation with the Revenue-Authorities. Pursuant to the filing of these applications, on 3rd December, 2020, Respondent No.1 called upon the Petitioner to submit working of disputed tax in relation to undisputed income for A.Y 1987-88 to 1998-99, stating that, Petitioner had mentioned disputed tax in the Form-1 despite the disputed income shown as Nil in the 154 proceedings, tax having been calculated correctly for Assessment Years 1987 to 1998 and there being no dispute in income tax calculation and despite that, the Petitioner had calculated disputed tax and filed the declarations under the DTVSV Act. The main purpose of the application under section 264 of the Income Tax Act being only to considerably reduce the interest under Sections 234-B and 220(2) of the Income Tax Act by seeking to adjust the credit of regular tax paid challans for Assessment Year 1987-88 of ₹ 12,43,000/- to various years i.e. to Assessment Years 1988-89 to 1998-99 even though Petitioner would be liable to pay a total demand of ₹ 88,90,180/- including a large interest component if the revision application under section 264 was to be rejected. Whether Petitioner satisfies the definition of disputed tax as contained in the DTVSV Act and Rules so as to be considered to have filed a valid declaration in Form-1 and waiver undertaking in Form-2? - Going by the submission and the definition of disputed tax as contained in section 2(1)(j)(F) of the DTVSV Act as contended by the Petitioner, it appears from the facts that the Petitioner would fall within the said definition. We find merit in the submissions made on behalf of the Petitioner. It would, therefore be apposite to refer to the legislative background of the DTVSV Act -what was intended by the Hon ble Finance Minister was to bring a scheme similar to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 which pertained to indirect taxes. The object of the Vivad se Vishwas Scheme is to reduce litigations in direct taxes, where the tax payer would have to pay disputed tax. It therefore emerges that the DTVSV Act has been enacted to address the urgent need to provide for resolution of pending tax disputes where a huge amount of disputed tax arrears of over ₹ 9.32 lakh crores is locked-up. The DTVSV Act is aimed not only to benefit the Government by generating timely revenue but also to benefit the taxpayers by providing them peace of mind, certainty and saving time and resources rather than spending the same otherwise, enabling the taxpayers to be able to deploy the time, energy and resources saved, by opting for such dispute resolution, towards their business activities. The Act confers benefit on the tax payers who can put an end to tax litigation by paying specified percentage of tax and obtain immunity from penalty and prosecution and waiver of interest. In the context of the issue at hand, it would be pertinent to refer to the preamble to the DTVSV Act. The preamble clearly provides that this is an Act to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The emphasis is on disputed tax and not on disputed income. For a declarant to file a valid declaration, there should be disputed tax in the case of such a declarant. As can be seen from the aforesaid undisputed fact that Petitioner having filed revision application under Section 264 of the Income Tax Act for the Assessment Years 1988-89 to 1998-99 for credit/ adjustment of ₹ 12,43,000/- which application is pending before the Commissioner. Petitioner, admittedly being an eligible Appellant, squarely satisfies the definition of disputed tax as contained in Section 2(1) (j)(F) of the DTVSV Act, 2020. This is because, if the revision application under Section 264 of the Income Tax Act is rejected, then the Petitioner would purportedly be liable to pay a demand of ₹ 88,90,180/including income tax, interest. Petitioner as eligible Appellant has filed declaration under section 4 with the designated authority under the provisions of Section 4 of the DTVSV Act in respect of tax arrears which include the disputed tax which will become payable as may be determined by designated authority under Section 3. A look at definition of tax arrears clearly refers to an aggregate of the amount of disputed tax, interest chargeable or charged on such disputed tax etc. determined under the provisions of Income Tax Act. This is not only a case where there is a disputed tax but also tax arrears as referred to in section 3 of the DTVSV Act. The respondents have not raised any objection under any provision of the DTVSV Act or DTVSV Rules with respect to the declarations or undertakings furnished by the Petitioner nor have they passed any order let alone a reasoned or speaking order rejecting the said declarations. The Respondents have summarily rejected the declarations without their being any such provision in the DTVSV Act or the Rules. There also does not appear to be any fetter on the Designated Authority to determine disputed tax of an amount other than that declared by the petitioner. From a plain reading of the provisions of the DTVSV Act and the Rules it emerges that the Respondent- Designated Authority would have to issue Form-3 as referred to in Section 5 (1) specifying the amount payable in accordance with section 3 of the DTVSV Act in the case of declarant who is an eligible appellant not falling under section 4(6) nor within the exceptions in section 9 of the DTVSV Act, which fact appears to be undisputed. As also observed by us earlier, the case of the Petitioner would be covered by the definition of disputed tax as per Section 2(1)(j)(F) of the DTVSV Act. It has to be kept in mind in view of what has been observed by us earlier, that the DTVSV Act is a beneficial legislation for both the Revenue and the tax payer. We are of the view that the Designated Authority under the DTVSV Act viz Respondent No.2 in this case is not justified in rejecting the declarations filed by the Petitioner. Accordingly, we set aside the rejections. We direct the Respondent No.2 to consider the applications made by Petitioner by way of declarations dated 18th November, 2020 in Form-1 as per law and proceed with according to the scheme of the DTVSV Act and Rules in the light of above discussion within a period of two weeks from the date of this order.
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2021 (4) TMI 548
Assessment of trust - depreciation allowable as application of income on charitable objects - Double deduction - Whether the Tribunal was right in holding that the assessee is entitled to claim depreciation on the assets, in the form of application of income, even though cost of purchase of asset was treated as application of income under section 11? - HELD THAT:- As decided in M/s.National College Council, Teppakulam, Tiruchirapalli [ 2021 (4) TMI 469 - MADRAS HIGH COURT] dismissed the appeals and answered the substantial questions of law against the Revenue.
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2021 (4) TMI 547
Assessment u/s 153 - Time limit for completion of assessments and reassessments - draft order barred by limitation or not? - HELD THAT:- The proceedings were stayed for a period from 08.12.2011 to 07.03.2012 i.e., for a period of 103 days and if period of 103 days is added, and a period of 60 days as prescribed in proviso to Section 153(4) is added, the draft order ought to have been passed by the Assessing Officer upto 06.05.2012, whereas, in the instant case, the draft order has been passed on 05.07.2012 and therefore, the draft order is barred by limitation and no fault can be found with the finding of the tribunal. In view of preceding analysis, the substantial questions of law are answered against the revenue and in favour of the assessee.
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2021 (4) TMI 546
Exemption / deduction u/s 10A - Setting off of loss of a Unit eligible for deduction under Section 10A against the profits of other Units entitled for a similar deduction under Section 10A - HELD THAT:- Second substantial question of law answered in favour of the assessee by a decision of the Hon'ble Supreme Court in the case of Commissioner of Income-tax vs. Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT ]
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2021 (4) TMI 545
Income Tax Settlement order under section 245D( 4) - second respondent has come to a conclusion that the 1st respondent in their respective writ petitions have made adequate disclosures for settling the case and therefore has granted a waiver to the first respondent in the respective writ petitions, from payment of penalty and immunity from the prosecution in terms of section 245H of the Income Tax Act, 1961 - HELD THAT:- There is no scope for interference under Article 226 of the Constitution of India. Though, this Court exercise vide power Article 226 of the Constitution of India. its jurisdiction is narrow. The court is really not concerned with the ultimate decision of the 2nd respondent, Income Tax Settlement Commission, but only with the decision-making process. The Court can interfere only where there is perversity and arbitrariness in the order impugned before it. Question the regarding true and full disclosure of income for the purpose of settling the case before the 2nd respondent Income Tax Settlement Commission is a question of fact. The Income Tax Settlement is the final fact find authority. Therefore, to that extent, the impugned order settling the cases of the 1st respondent in the respective writ petition covering the period covered by section 153A of the Income Tax Act, 1961, there is no merit in the writ petition. The petitioner has also not demonstrated any extraordinary circumstances, which warrants interference on the issues arising of the facts determined by the second respondent Income Tax Settlement Commission. Whether the Settlement Commission can direct payment of interest? - There two distinct stages under Chapter XIX-A and that the legislature has not contemplated the levy of interest between the order under Section 245-D(1) stage and Section 245-D(4) stage. Interest under Section 234-B will be chargeable till the order of the Settlement Commission under Section 245-D(1) i.e. admission of the case. In the impugned order, the 2nd respondent Income Tax Settlement Commission has directed the interest under Section 234A to be charged for the delay in filing of the original return under section 139/153 A/153C. The impugned order to the extent it is contrary to the decision of the Honourable Supreme Court in the above case in Brij Lal Vs Commissioner of Income Tax [ 2010 (10) TMI 8 - SUPREME COURT ] is liable to be there for modified. The officers under the jurisdiction of the 1st respondent are therefore directed to give effect to the order of the second respondent Income Tax Settlement Commission in terms of the order of the Hon ble Supreme Court in Brij Lal Vs Commissioner of Income Tax. These writ petitions are partly allowed to the extent:- i. The impugned orders passed by the 2nd respondent Income Tax Settlement Commission in the respective Writ Petitions to the extent it settles the case of the 1st Respondent in the respective Writ Petitions for the Assessment Year 2012-13 are set aside. ii. The jurisdictional officer, Income Tax Officer or Assistant Commissioner of Income, as the case shall therefore finalize the assessment for the Assessment Year 2012-13 within a period of 3 months from the date of receipt of a copy of this order. Orders to be passed shall be in accordance with law and in compliance with the procedural law as it prevailed during the period in dispute. iii. The impugned orders passed by the 2nd respondent, Income Tax Settlement Commission in the respective Writ Petitions are set aside to the extent it directs payment of interest contrary to the decision of the Honourable Supreme Court in Brij Lal Vs Commissioner of Income Tax [ 2010 (10) TMI 8 - SUPREME COURT ] iv. The officers of the Income Tax Department shall finalise the interest strictly in accordance with the decision of the Hon ble Supreme Court in Brij Lal Vs Commissioner of Income Tax .
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2021 (4) TMI 544
Settlement Commission (SC) order u/s 245D(2C) - whether there has been a full and true disclosure of income by the petitioner? - HELD THAT:- We had occasion to consider the same issue in the case of Hitachi Power Europe GmbH V. Income Tax Settlement Commission and others [ 2020 (9) TMI 540 - MADRAS HIGH COURT] and in very similar circumstances, have held that a discussion on the merits of the taxability of income at the stage 245D(2C) would be beyond the scope of what that provision envisaged.No serious contest is laid to this position by the revenue. Revenue points out that the petitioner has been lethargic in approaching this Court and there are laches on its part insofar as the writ petition is filed only after six months from the date of the impugned order and that too after the petitioner has participated in the proceedings for assessment initiated by the Assessing Authority. The petitioner explains the interregnum as administrative delay since some of the approvals necessary for the initiation of litigation had to be received from abroad. We accept this submission and reject the argument of the Revenue. The writ petition is liable to be allowed - impugned order is set aside.
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2021 (4) TMI 543
Rectification of mistake - addition on account of depreciation of earlier years charged as per Companies Act in audited accounts written back in the books of Account during the assessment year 2007-08 - HELD THAT:- AO in the first round of litigation has made addition to the income of the assessee to the tune of 15% of the depreciation which led to the additions to the income of the assessee to which stood enhanced to the additions to the income of the assessee to the tune of entire depreciation write back by ld. CIT(A). The tribunal in first round of litigation gave relief to the assessee to the tune of ₹ 43.95 lacs and the assessee being aggrieved filed MA. The tribunal allowed the MA by restoring the issue back to its file for fresh adjudication of ground number 5 6. During the course of hearing before tribunal which was conducted pursuant to its order in MA through videoconferencing through virtual court, the counsel of the assessee and ld. CIT-DR have put in their arguments before the Bench to support their contentions. Both the ld. Counsel for the assessee as well ld. CIT-DR agreed that the matter need to go back to the file of the AO for fresh adjudication, as verifications are required to be made by AO as to the claim of depreciation made by the assessee in preceding years and impact of this reversal of depreciation of earlier years on tax liability of the assessee under the provisions of the 1961 Act for the impugned ay. Thus, keeping in view the entire factual matrix of the case and after hearing both the parties, we are of the considered view that this issue needs to go back to the file of the AO for fresh adjudication on merit in accordance with law. The assessee is directed to produce relevant evidences that it is claiming correct depreciation and written down value of assets for earlier years under the provisions of the 1961 Act while filing return of income with Revenue , and no prejudice is caused to Revenue by this reversal of depreciation and to demonstrate that this reversal of depreciation is tax neutral. - grounds of appeal filed by assessee allowed for statistical purposes. Valuation of closing stock of finished goods - assessee has not included excise duty payable on closing stock of finished goods while valuing its closing stock of finished goods, which as per Revenue infringes on Section 145A(ii) of the 1961 Act - The assessee is claiming that its finished goods are lying in warehouse , but the complete facts as to status /location of warehouse are not emerging from records. Thus, it is not clear from the records before us as to the location of the warehouse and whether the same is located within factory premises or is at some other location outside factory premises. Similarly, it is also not emerging from the records whether the said warehouse is a bonded warehouse which was set up by assessee within factory premises with the permission from excise department to shift finished goods from manufacturing site to said bonded warehouse without firstly paying excise duties. These facts need verification by the AO and the assessee is directed to produce records before AO to prove its stand , including producing excise records as well permission from excise department to set up bonded warehouse within factory premises and to shift finished goods to bonded warehouse without firstly paying excise duties. In case it is found by AO after verification that the finished goods are lying in the bonded warehouse within factory premises and the finished goods are allowed to be shifted by excise department to bonded warehouse without firstly paying excise duty , then obviously the liability for excise duty incidence has not occurred and the same cannot be included for the purposes of Section 145A(ii). Thus, we are restoring this issue back to the file of the AO for fresh determination of the issue in accordance with ratio of decision of Hon ble Supreme Court in the case of Polyset[ 1999 (10) TMI 66 - SUPREME COURT] - Grounds of appeal filed by assessee allowed for statistical purposes.
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2021 (4) TMI 542
Penalty u/s 271(1)(c) - defective notice u/s 274 - decision of quantum appeal - as per assessee no mention of specific limb of Section 271(1)(c) for which penalty proceedings have been initiated by way of striking off the inappropriate words in penalty notice - HELD THAT:- It is pertinent to note that the assessee company was not in existence when the first search took place on the group of BPTP and the seized material therein clearly does not belong to assessee company. Secondly, at the time of the second search no incriminating material was found in respect of the assessee company. Hence, the addition made on PDC s based on the first search does not have any corroborative evidence which has been brought by the Revenue on record. The CIT(A) as well as the Assessing Officer has failed to establish that the assessee company was involved in unexplained/unaccounted money transactions. Therefore, the assessee succeeds in quantum appeal. As regards penalty order, firstly, the correct limb was not struck off or rather indicated by the Assessing Officer in the notice under Section 274 r.w.s. 271(1)(c) of the Act and hence the decision of the Jurisdictional High Court in case of M/s Sahara India Life Insurance Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] is squarely applicable in present case. Besides this, since the quantum appeal has been decided in favour of the assessee and addition has been deleted, the penalty itself does not survive. Hence, both the appeals of the assessee are allowed.
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2021 (4) TMI 541
Reopening of assessment u/s 147 - notice issued after four years from the end of the relevant assessment year - disallowance u/s 40a(ia) with respect to non-deduction of tax u/s 194H on the discount enjoyed by the distributors on sale of prepaid cards and u/s 194J pertaining to payment of roaming charges to Telecom Service providers - HELD THAT:- It is trite that in order to reopen an assessment made under Section 143 (3) of the Act after the expiry of four years from the end of the relevant assessment year, the reasons recorded must allege that there was failure on the part of the assessee to disclose fully and truly material facts necessary for its assessment. Such allegation is necessary since it is a condition precedent to the assumption of jurisdiction. In the absence of such allegation, the reassessment proceedings have to be held as without jurisdiction. We note that at the time when the assessee s assessment was completed, the law as it stood was that there was no liability to deduct tax at source in respect to discount and roaming charges. Therefore there cannot even be an allegation of failure to disclose fully and truly any material fact necessary for assessment. Reliance by the Revenue on the judgment of the Hon ble Supreme Court in the case of A.L.A. Firm vs. CIT [ 1991 (2) TMI 1 - SUPREME COURT ] is misplaced in as much as this judgment of the Hon ble Apex Court relates to reopening of assessment within a period of four years on the basis of information, being a judgment which came to the notice of the Assessing Officer subsequent to the assessment. In our considered opinion, this principle will not apply where the assessment is sought to be reopened after the expiry of four years from the end of the relevant assessment year on the basis of a subsequent judgment of the Hon ble Delhi High Court which is being interpreted as reversing the legal position and in such case the Assessing Officer will have to establish failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, we hold that the impugned notice u/s 148 of the Income Tax Act and the proceedings u/s 147 of the Act are not sustainable in law for the reason that there is no whisper in the recorded reason that there was any omission or failure on the part of the assessee in disclosing fully and truly facts for assessment. We quash the reassessment proceedings accordingly - Decided in favour of assessee.
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2021 (4) TMI 540
Assessment u/s 153C - undisclosed LTCG - whether the document in the form of tally and Balance sheet as found during the course of search belong to the assessee? - HELD THAT:- To our mind, the documents found during the search in the given facts and circumstances, were of the SJSL where the transactions for the impugned land were recorded. Thus, these were the documents which were not belonging to the assessee but to M/s SJSL. Hence, in the absence of any document found belonging to the assessee, the proceedings under section 153C of the Act cannot be initiated against the assessee. On perusal of the statement recorded under section 133(4) reproduced by the AO in his order we do not find any remarks made by such director to the effect that material/document seized during the search does not belong to the PS i.e. SJSL , or belong to the assessee company. In this regard, we also note that there were no incriminating material against OP was found in the search. Further section 153C emphasize that there should be material or document seized which belong to the OP. As such statement recorded during search is not a material or document found and seized. Therefore the statement recorded under section 132(4) cannot be construed as material/document for invoking proceeding under section 153C of the Act specially, in the circumstances where no material of incriminating in nature found belonging to OP. What could be documents having bearing on the determination of the total income of the person searched or other ? - whether the document in the form of tally and balance sheet found during the course of search is an incriminating document in nature? - In our considered view such document are not an incriminating material, as such those documents are part of the books of account maintained by the SJSL wherethe transactions for the purchase and sales of the lands were duly disclosed. Likewise, the corresponding entries in the books of accounts of the assessee and corresponding capital gain was offered to tax in the income tax returns. Thus the impounded documents were belonging to the SJSL and not the assessee company where all the material facts were disclosed. Hence the same cannot be termed as incrimination document found against the assessee company. There is no ambiguity to fact that in case of the assessee normal assessment under section 143(3) of the Act was already completed vide order dated 22-02-2012. Thus the year under consideration is unabated assessment year which can be disturbed only based on incriminating document against the assessee found during the course of search as held by the Hon ble jurisdictional High Court in the case of Pr. CIT vs. Saumya Construction [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] Thus we are of the view that the proceedings initiated under section 153C of the Act without having any incriminating materials belonging to the assessee which have bearing on its income is not sustainable. Capital gain computation - application of sec 50C - whether the stamp duty as applicable on the date of agreement (Banakhat) i.e. 12 -03-2008 should be taken as sales consideration or the actual date when the properties were actually transferred to the ultimate buyer i.e. November 2009 to March 2010? - HELD THAT:- The clause (vi) of the provisions of section 2(47) provides that the word transfer in relation to capital asset includes any transaction by way of agreement which has the effect of transferring or enabling the enjoyment of any property. Indeed, the buyer of the property is enjoying the property in the given facts and circumstances. Thus in our considered view the conditions as specified under clause (vi) of the section 2(47) of the Act has been satisfied. Thus the property was transferred on 28-03-2008. Accordingly in such circumstances the value of the stamp duty as applicable on the date of agreement i.e. 12-03-2008 shall be taken as the sale consideration for working out the capital gain. We also note that the right of the assessee got extinguished by virtue of agreement to sale with respect to the property in dispute. After entering into the agreement of sale a right in personam has been created in favour of the buyer and the assessee was bound to execute the conveyance deed as per the direction of the buyer i.e. SJSL, therefore such agreement of sale should be treated as the date of transfer of the property. CIT (A) alternately also held that by virtue of first provisoinserted in the provision of section 50C (1) vide finance Act 2016, the assessee will get relief due to the fact that consideration was decided along with agreement to sale i.e. before the execution of sale deed and also received part payment - As we note that the2nd proviso clearly stipulates that the stamp duty to be taken as the sale consideration of the agreement date where the amount of consideration or a part thereof has been received by an account payee cheque or by account payee bank draft or by use of electronic clearing system through the bank account on or before the date of agreement for transfer. Admittedly in the case on hand, the assessee has received a sum of R11,000 in cash at the time of agreement. The cheque payment was received by the assessee 1st time dated 05-10-2009 for ₹ 65,00,000/-. In other words the conditions as stipulated under the 2nd proviso to section 50C of the Act in order to enjoy the benefit of 1st proviso was not complied with by the assessee. Therefore we are of the view that the finding of the learned CIT (A) to this extent is not correct.
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2021 (4) TMI 539
Long Term Capital Gain on sale of Vejalput land - HELD THAT:- There is no dispute qua the amount of capital gain earned by the assessee along with other parties. As per the assessee the amount of capital gain was taxable in the assessment year 2007-08 and 2008-09 whereas the revenue had taxed the entire amount of capital gain in the assessment year 2006-07 as contended by the learned AR. At the time of hearing, as pointed out by the learned AR that the assessee has settled his dispute for the assessment year 2006-07 under VSV scheme 2020. For this purpose, the learned AR has filed form 3 issued by the Income Tax Department showing the settlement of the dispute under VSV scheme 2020. As the dispute relating to the year under consideration has been settled under VSV scheme 2020, we hold that no separate adjudication is required. Share of profit from the undisclosed sources of income of the partnership firm - HELD THAT:- We note that the ITAT in the identical facts and circumstances in the case of other partners [ 2018 (5) TMI 852 - ITAT AHMEDABAD] has remanded back the matter to the file of Ld. CIT(A) for fresh adjudication in accordance with the provisions of law. Respectfully following the same, we are inclined to remand this matter to the file of Ld. CIT(A) for fresh adjudication in accordance with the provisions of law. Hence, the ground raised by the assessee is allowed for statistical purposes. Exemption under section 54B - alternate contention for allowing the of the Act as the investment in the agricultural land purchased which is more than the capital gain even if the benefit of cost of improvement is ignored - HELD THAT:- Admittedly, the assessee in his computation of income has shown investment in the agricultural land which is much more than the capital gain earned by the assessee after ignoring the index cost of improvement. Accordingly, in principle we find force in the contention of the learned AR for the assessee as the investment in the agricultural land exceeds the amount of capital gain. However, this aspect has not been verified by the authorities below. Accordingly we are inclined to set aside the issue to the file of the AO for the limited purpose to verify whether the assessee has made investments in another agricultural land only. If the contention of the assessee is found correct, then the assessee should be allowed the benefit of exemption under section 54B of the Act as discussed above. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
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2021 (4) TMI 538
Undisclosed income - Voluntary disclosure of the assessee about the undisclosed income - year of taxability - assessee has made disclosure on his individual capacity and stated that transactions of payment of cash and making such investment was made by him in the financial year 2009-10 relevant to the Asstt.Year 2010-11, and therefore, the assessee had rightly included the said disclosure amount in the return for the Asstt.Year 2010-11, which was as per the statement made under section 132(4) - HELD THAT:- Except voluntary disclosure of the assessee about the undisclosed income, there is nothing with the department to establish that the undisclosed income declared by the assessee pertained to the year 2009-10. CIT(A) recorded a finding that enquires have been conducted in the case of only seven companies, which together contributed a share capital of ₹ 12 crores and the AO straight away assumed and concluded that entire share capital of ₹ 20.50 crores subscribed by 16 entities has been provided by the appellant; and even amongst the seven companies in respect of TPL Finance, the AO has found cash deposit of ₹ 50.00 lakhs whereas the company has subscribed to an amount of ₹ 3.00 crores, but no inquiry has been conducted by the AO about the balance amount of ₹ 2.50 crores; nor any statement of the directors/principal officers of this company was record. This being the factual position, the action of the AO is highly disputable and no merit to stand. The basis for the impugned addition is merely the statement of the assessee and nothing else. The mere investment in the share capital made in the Asstt.Year 2009-10, ipso facto does not suggest that the assessee had income in that year, in the absence of any concrete material evidence to prove accordingly. Even otherwise also ultimately the impugned amount has suffered tax in the Asstt.Year 2010-11 and even the AO has not given credit of amount of taxation in the Asstt.Year 2010-11, while assessing the amount in the Asstt.Year 2009-10, it amounts to double taxation. Considering all these aspects, and after going through the well reasoned order of the ld.CIT(A) on this issue, we do not find any merit in the ground of appeal of the Revenue challenging deletion of addition Addition on account of brokerage and commission income earned from undisclosed income - HELD THAT:- After going through the record, we find that the impugned brokerage and commission income was allegedly incurred by the assessee on the undisclosed income of ₹ 20.50 crores. However, since the said undisclosed income disclosed by the assessee has been deleted by the ld.CIT(A) and confirmed by the ITAT as per the discussion hereinabove, the impugned addition of ₹ 41.00 lakhs for the Asstt.Year 2009-10 has no leg to stand, and the same is accordingly cancelled. This ground of appeal of the Revenue is dismissed. Addition on account of brokerage expenses incurred by the assessee for introduction of share capital/premium - assessee alternatively pleaded that instead of 1% as estimated by the ld.CIT(A), a reasonable rate of brokerage be restricted to 0.5%. - .AO has made addition of ₹ 41.00 lakhs assuming that the assessee has incurred expenditure of 2% to 4% for the purpose of obtaining entry of introduction of share capital - HELD THAT:- We find that both the authorities below calculated the brokerage commission on some assumption without any basis. It may be noted that no incriminating material was found during the course of search pertaining to brokerage stated to be paid by the assessee. The authorities below mentioned in their impugned order that as per the prevailing market practice, the range of commission/brokerage would be in the range of 2% to 4%, but there is no such instance mentioned at the end of the authorities to corroborate the same. The only material with the Revenue authorities is that of the statement of entry operators confirming that they have received brokerage/commission at the rate of 0.25% to 0.5% from the assessee, which fact has not been doubted by the authorities. Though the ld.CIT(A) has to some extent justified to restrict the impugned disallowance, but he has not given due weightage to the only evidence available on record in form of statement of entry operators has not been considered logically. Therefore, we incline to give further relief to the assessee by restricting addition at 0.5% of the share capital/premium introduced by the assessee. Accordingly, impugned addition is hereby restricted to 0.5% i.e. assessee would get further relief of ₹ 10,50,000/-, in other words, addition now stand confirmed at ₹ 10,50,000/-
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2021 (4) TMI 537
Validity of reopening of the assessment by issuing notice u/s 148 read with section 147 - eligible reason to believe escapement of income - bogus LTCG/STCL and unsecured loans receipts - A.O noted that the assessee company has no real business activities since there are no purchase and sales found during the relevant F.Y - whether the AO on the basis of whatever material before him, [which he had indicated in his reasons recorded ] had reasons warrant holding a belief that income chargeable to tax has escaped assessment? - whether the condition precedent necessary to usurp the re-opening jurisdiction can be discerned from perusal of the reasons recorded by the AO in the instant case? - HELD THAT:- As in the reasons recorded had specifically stated that the assessee had received ₹ 25,00,000/- from M/s. DRS Enterprises Pvt. Ltd. and M/s. Hanuman Traders Pvt. Ltd. which according to him was nothing but the unaccounted money of the assessee company which prompted him to believe that there is escapement of income, and therefore, he resorted to reopening u/s 147 of the Act by issuing notice u/s 148 of the Act. So it should be noted that this was the factual basis/foundation based on information from Investigation Wing, which was the basis and reason for him to form a belief that income of assessee which is chargeable to tax has escaped assessment. However, when the assessee brought to the notice of the A.O that the assessee company did not receive ₹ 25,00,000/- from M/s. DRS Enterprises Pvt. Ltd. and M/s. Hanuman Traders Pvt. Ltd., the A.O finds that the assessee company has received money from M/s Radharani Vyapaar (P) Ltd. According to the A.O, M/s Radharani Vyapaar (P) Ltd. has received the money directly from M/s Kokila Trading Co. and M/s Kokila Trading Co. has received money from M/s. DRS Enterprise. Thus, it is noted that the factual foundation on which the AO based his reason for reopening does not exist. Information adverse may trigger reason to suspect and not reason to believe . So the AO should have conducted reasonable enquiry and collected material which could make him believe, that in fact there is escapement of income, which in this case AO did not do, so the reopening based on the reasons recorded by him to re-open is bad in law. Reasons are required to be read as they were recorded by the A.O. No substitution or deletion is permissible. No addition can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded by the A.O. He has to speak through the reasons . Their lordships added that the reasons shall be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and evidence Therefore, reasons are to be examined only on the basis of reasons as recorded. Here, in this case, note that the A.O on mistaken facts resorted to reopening which is an admitted fact on a perusal of re-assessment order. Therefore, the condition precedent for reopening the assessment u/s 147 of the Act is found to be absent and, therefore, the reopening itself is bad in law - Decided in favour of assessee.
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2021 (4) TMI 536
Disallowance of additional depreciation - Scope of amendment to section 32(1)(iia) - depreciation claimed by the assessee relates to assets acquired in the preceding assessment year, wherein the assets were used for less than 180 days and only 10% of depreciation was claimed in earlier year - whether CIT(A) has erred in directing the Assessing Officer to allow the assessee s claim of additional depreciation by relying on the decision in the case of Brakes India Ltd [ 2017 (4) TMI 511 - MADRAS HIGH COURT] on the ground that the issue involved relates to the assessment year 2014-15, whereas the amendment to section 32(1)(iia) by Finance Act 2015 came into force only from 01.04.2016 and not retrospectively - HELD THAT:- Respectfully following the decision of the Tribunal [ 2017 (5) TMI 1694 - ITAT CHENNAI] , we find no reason to interfere with the order passed by the ld. CIT(A) on this issue. Moreover, the ld. DR has not explained the impact on the amendment made vide Finance Act, 2015 with effect from 01.04.2016 by substituting or in the business of generation or generation and distribution in the existing subsection (iia) to section 32(1) of the Act to the earlier decisions of the Tribunal or the decision of the Hon ble Madras High Court in the case of Brakes India Ltd. v. DCIT [ 2017 (4) TMI 511 - MADRAS HIGH COURT] or the decision of CIT v. Rittal India (P) Ltd. [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] . Accordingly, the ground raised by the Revenue stands dismissed.
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2021 (4) TMI 535
Delayed remittance of Provident Fund contribution and ESI - disallowance u/s 36(1)(va) OR u/s 43B - DR has argued that unlike the employers contribution, the employees part of contribution to PF and ESI are not allowable under section 43B of the Act since the said contributions are not paid within the due dates as specified in the respective Acts, and such unpaid employees contributions are liable for disallowance under section 36(1)(va) r.w. section 2(24)(x) - By following the decision of CIT v. Industrial Security Intelligence India Pvt. Ltd. [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] CIT(A) directed the Assessing Officer to allow the actual amount paid before the due date of filing the returns under section 139(1) of the Act - HELD THAT:- As in this case, on perusal of the details of break-up of the PF/ESI contribution remitted on the actual dates as furnished by the ld. Counsel for the assessee, we find that the assessee has remitted the remittance of the employee s contribution to PF and ESI much before the filing of the return of income under section 139(1) of the Act on 26.09.2014 for the assessment year 2014-15. In view of the above facts and respectfully following the above decision of the Hon ble Jurisdictional High Court, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue stands dismissed.
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2021 (4) TMI 534
Disallowance of commission paid - specific services the commission agent rendered to the assessee for which the assessee has paid the commission - assessee has failed to submit any documentary evidences to prove the genuineness of claim and actual services rendered by foreign agent - HELD THAT:- Generally no direct evidence for the service rendered can be produced and the relationship of the service rendered and business purposes has to be established by circumstantial evidence and growth in the business of the assessee in such cases. In this case, as per the matching concept of taxation, both the commission Agents have given sufficient business. Foreign Agent has given export orders of ₹.22.Crs and local agent has procured orders for Reliance Jio Info Comm Ltd. for the extent of ₹. 60 crores, by which revenue has increased from ₹.2.72 Crs to ₹.6.36 Crs. Thus, there is a direct nexus between the income generated and the commission payment. It is beyond doubt that the commission paid by the assessee was on account of commercial expediency. If there was evidence that sales increased due to effort of the commission agent and that the commission paid was reasonable and the commission was held to be deductible as has been held in in the case of Voltamp Transformers Pvt. Ltd. [ 1980 (10) TMI 35 - GUJARAT HIGH COURT] Assessee has very well entered into an agreement for payment of commission both with foreign agent as well as domestic company for the purpose of assessee s business, which were duly signed and accepted by the respective parties. Not only agreement, the assessee has also furnished copies of commercial Invoice, confirmation of Accounts, copy of Form 15CB in the case of foreign party, for non-deduction as they do not have an office in India, in the case of Indian Company, TDS was deducted, copies of Bank Statement to establish that the payment were made through Banking channel, purchase order copy, copies of sale invoices for commission paid to M/s. Poushali Sales (P) Ltd., copies of Shipping Bills in case of Exports Orders, Service Tax Registration Service tax payment, audited financials of M/s Poushali Sales (P) Ltd., with income tax computation and acknowledgement of tax return for three assessment years, i.e.,2016-17, 2017-18 2018-19. Moreover, the commission payments have been made to M/s. Paushali Sales Pvt. Ltd., the domestic agent through banking channels after duly deducting TDS and the said company has declared the commission revenue both to the Service Tax Department and the Income Tax Department as per the respective returns filed and produced before the Assessing Officer, and such transaction was duly accepted by the respective Departments. - Decided in favour of assessee.
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2021 (4) TMI 533
Legality of approval granted by the designated superior authority u/s 153D - approval granted by the superior authority in mechanical manner or not? - contention on behalf of the assessee that approval granted u/s 153D does not meet the requirement of law and hence assessment orders passed in consequence of such non-est approval is a nullity in law - HELD THAT:- The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. At the cost of repetition, it may be reiterated that in the instant case, approving authority did not mention anything in the approval memo towards his/ her process of deriving satisfaction so as to exhibit his/her due application of mind. From the said approval, it can be easily inferred that the said order was approved, solely relying upon the implied undertaking obtained from the Assessing Officer in the form of draft assessment order that AO has taken due care while framing respective draft assessment orders and that all the observations made in the appraisal report relating to examination / investigation of seized material and issues unearthed during search have been statedly considered by the AO seeking approval. Thus, the sanctioning authority has, in effect, abdicated his/ her statutory functions and delightfully relegated his/her statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The addl. CIT in short appears to have adopted a short cut in the matter and an undertaking from AO was considered adequate by him/ her to accord approval in all assessments involved. Manifestly, the Additional CIT, without any consideration of merits in proposed adjustments with reference to appraisal report, incriminating material collected in search etc. has proceeded to grant a simplicitor approval. This approach of the Additional CIT, Central has rendered the Approval to be a mere formality and can not be countenanced in law. Very recently, the co-ordinate bench in Sanjay Duggal ors [ 2021 (1) TMI 909 - ITAT DELHI] has echoed the view after a detailed analysis of similar facts and also expressed a discordant note on such mechanical exercise of responsibility placed on designated authority under section 153D of the Act. Hence we find considerable force in the plea raised by the Assessee against maintainability of hollow approval under S. 153D totally devoid of any application of mind. The approval so granted under the shelter of section 153D, does not, in our view, pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments relatable to search in captioned appeals are non est and a nullity and hence quashed. In view of prima facie merits found in the legal objections, We do not consider it expedient to look into the aspects on merits of additions/ disallowance. Estimation of income - Bogus purchases - HELD THAT:- In parity, the findings of the co-ordinate bench in assessees own case in earlier would apply mutatis mutandis in the present cross appeals. Accordingly, the AO is directed to restrict the disallowance/ addition to 4% of the alleged bogus purchases similar to Assessment Year 2010-11.
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2021 (4) TMI 532
Benefit of 'Vivad se Vishwas Scheme, 2020' - HELD THAT:- An identical application filed by an assessee in the case of M/s. Nannusamy Mohan (HUF) [ 2020 (11) TMI 484 - MADRAS HIGH COURT ] taking note of the fact that some assessee's have already filed declaration in Form No. 1 along with Form No. 2 to the Designated Authority and received Form 3 and some assessee's had already filed Form No. 1 2 and awaiting form no. 3 from the designated authority and also the fact that remaining assessee's are willing to file Form No. 1 and 2 within the due date prescribed for this purpose, we dismiss the appeals filed by the assessee's as withdrawn. However, a liberty is given to the assessee's to restore the appeals, in the event of the Designated Authority, for any reason reject the application filed by the assessee under section 4 of the said Act.
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2021 (4) TMI 531
Benefit of 'Vivad se Vishwas Scheme, 2020' - some assessee's have filed declaration in Form No. 1 along with undertaking waiving rights for any remedy in Form No. 2 to the designated Authority and has also received Form 3. In some cases, form no 1 and 2 has been filed and awaiting form no. 3 from the designated authority and in some cases, the assessee's have expressed their willingness to file form no. 1 and 2 and settle their dispute under the scheme - HELD THAT:- Once the assessee's intend to file a declaration in Form No. 1 along with undertaking and expressed their willingness to settle pending disputes regarding direct taxes, then there is no point in keeping appeal filed by the assessee's. We, further noted that recently the Hon'ble Jurisdictional High Court of Madras has considered an identical application filed by an assessee in the case of M/s. Nannusamy Mohan (HUF) [ 2020 (11) TMI 484 - MADRAS HIGH COURT] for availing the benefit of 'Vivad se Vishwas Scheme, 2020', where the Hon'ble High Court has dismissed the appeal filed by the petitioner as withdrawn, but allowed liberty to the assessee to restore the appeal in the event the designated authority for any reason reject application filed by the assessee under section 4 Some assessee's have already filed declaration in Form No. 1 along with Form No. 2 to the Designated Authority and received Form 3 and some assessee's had already filed Form No. 1 2 and awaiting form no. 3 from the designated authority and also the fact that remaining assessee's are willing to file Form No. 1 and 2 within the due date prescribed for this purpose, we dismiss the appeals filed by the assessee's as withdrawn. However, a liberty is given to the assessee's to restore the appeals, in the event of the Designated Authority, for any reason reject the application filed by the assessee under section 4 of the said Act. We, further make it clear that in a cases where the appeal is filed by the Revenue and the assessee's have for any reason opted out from the scheme or the applicants under the scheme misrepresents any facts which resulted in rejection of application filed under the scheme, then the provisions of section 4(6) of the Act, shall be applicable to all appeals and in such cases, all the proceedings and claims which were withdrawn under section 4 and all the consequences under the Income-tax Act against the declarant shall be deemed to have been revived. We, further make it clear that the assessee's should promptly inform the Assessing Officer about their decision to opt out of the scheme or rejection of application by the designated authority to the Assessing Officer, so as to enable to file miscellaneous application to restore the appeal.
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2021 (4) TMI 530
Disallowance u/s 14A r.w.r. 8D - CIT-A directed disallowance u/r. 8D(2)(iii) amounting to half percent of assessee's investment which earned exempt income - HELD THAT:- No infirmity in the above direction of learned CIT(A). Assessee's claim that this limb of disallowance u/r. 8D(2)(iii) was not invoked by the AO is not at all sustainable. AO had made disallowance under section 14A. CIT(A) had deleted that and directed for a disallowance of 0.5% of the average value of investment under rule 8D(2)(iii) after necessary verification by the Assessing Officer. We find that the disallowance sustained by learned CIT(A) in effect is much less than that by the Assessing Officer. Even if investment have been made out of available interest free fund the same by no stretch of imagination goes on to the prove that no disallowance under rule 8D(2)(iii) is required. We are not at all convinced by the assessee's contention that due to technicality there is infirmity in the direction of learned CIT(A) as the Assessing Officer initially has not proposed any such disallowance . Hence, we uphold the order of learned CIT(A). Hence, this appeal by the assessee for A.Y. 2001-02 stands dismissed. Rectification of mistake u/s 154 - re-computing the deduction allowable u/s. 33AC - whether the impugned amount represents profit earned on account of freight paid to the subsidiary company is to be considered as shipping business income for the purpose of computation of deduction u/s. 33AC or not? - in the assessment order under section 143(3) of the Act, the AO has denied this claim by holding that 19.62% comprises the freight attributed by the assessee company to the Singapore based associate companies and that income earned through hiring of vessels belonging to others cannot be said to be the income derived from operation of ships - HELD THAT:- The ownership by the assessee is not criteria for deduction under section 33AC. The issue raised is squarely covered by the above said case law referred by the assessee's counsel. No contrary decision has been produced. While adjudicating this issue learned CIT(A) originally has mentioned that the case laws relied upon by the Assessing Officer are very much applicable. We find that as a matter of fact, the Assessing Officer has not mentioned any case laws on this issue. In this view of the matter in our considered opinion assessee's plea succeeds that denial of deduction on the ground that these freights were paid to the subsidiary company ships is not sustainable. Accordingly this issue is decided in favour of the assessee. Different item to be considered as business income for the purpose of computation of deduction - As relying on DOLPHIN OFFSHORE [ 2009 (3) TMI 653 - ITAT MUMBAI] , MERCATOR LINES LTD. [ 2007 (6) TMI 303 - ITAT MUMBAI] ,GAL OFFSHORE SERVICES LTD. (NOW THE GREAT EASTERN SHIPPING CO. LTD.) [ 2008 (11) TMI 93 - BOMBAY HIGH COURT] these items rejected by the Assessing Officer have been considered and accepted as business income for the purpose of determining deduction allowable under section 33AC of the Act in the above case laws. Respectfully following the precedents, we set aside the order of learned CIT(A) and decide this issue in favour of the assessee. Allowability of interest under section 244A of the Act on the excess amount of tax paid by the assessee - HELD THAT:- As CIT(A) directed that the Assessing Officer should grant interest under section 244A of the Act as provided under the Act. In the absence of any further detail furnished by the assessee, we find that there is no infirmity in the direction to grant interest under section 244A of the Act as per provisions of the Act. We find that learned CIT(A) has already directed the Assessing Officer to follow the prescription of the Act. Hence, no separate adjudication is required. Hence, we uphold the order of learned CIT(A). This ground raised by the assessee stands dismissed. Short-term capital gain on account of sale of VESSEL assessed to tax @ 37.5% is taxable at the rate of 20% as provided in Section 112 of the Act as Long-term Capital Gain and Long-term Capital Loss incurred by the Appellant should be deducted from the same - HELD THAT:- We note that there are contradictory decisions on the above subject. However, now we note that the assessee has raised alternate contention that the assessee should have allowed set off of brought forward unabsorbed long term capital loss of ₹ 11,86,28,448/- against the short term capital gains of ₹ 6,97,21,921/-. We find that this alternative contention is covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. M/s. Manali Investment [ 2013 (12) TMI 333 - BOMBAY HIGH COURT] Accordingly, the alternate ground No. 5 is decided in favour of the assessee. While deciding the alternate ground we have noted that though this issue is being raised for the first time but it is a legal issue. Moreover, even in the case of Goetz India Ltd. Vs. CIT [ 2006 (3) TMI 75 - SUPREME COURT] has accepted the jurisdiction of the ITAT in considering a ground not raised earlier even without filing revised return. Accordingly, the alternate ground as above stands allowed. Computing the Book Profit u/s. 115JB - considered deduction u/s. 33AC amounting to ₹ 40,19,96,248 instead of the amount credited to reserve u/s. 33AC and debited to Profit and Loss Account amounting to ₹ 46,00,00,000 - HELD THAT:- We note that the assessee is raising a legal issue. We note that it is settled law that book profit shown by the assessee has to be as per the profit shown in the profit and loss account subject to only those adjustments as provided in the Act. As mandated in the case of Apollo Tyres Ltd. Vs. CIT [ 2002 (5) TMI 5 - SUPREME COURT] no tinkering with the book profit as per profit and loss account is permitted otherwise than mandated by the provisions of the Act as contained in section 115JB of the Act. This is more so in rectification order passed. Hence, with the above observation this issue is remitted to the file of the Assessing Officer to consider the issue afresh and follow the mandate of law as above.
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2021 (4) TMI 529
Unaccounted income disclosed during the course of survey - survey action conducted u/s 133A on the business premises of assessee wherein incriminating documents were found in possession of partners of assessee firm - statement of one of the partner of assessee firm as recorded on oath disclosed unaccounted income as net income for assessment year (AY) 2012-13 - partner of assessed also furnished the bifurcation of unaccounted income - primary contention of the assessee that the partners of the assessee made statement of gross business receivable, CIT(A) held that while making statement in the survey proceeding the partners specifically stated that the amount is distributed among the partners are unrecorded and unaccounted receivables of the firm - HELD THAT:- There is no dispute that during the survey action on 05.07.2011, the partner of the assessee declared additional undisclosed income - It was also stated in the statement that it is the net income of assessee and that no expenses against the said undisclosed income would be claimed. There is no dispute about the legal position that the survey team has no authority to record the statement of person on oath, meaning thereby the statement recorded during survey is per se not admissible in the evidence. In the present case, not only one partner of the assessee made discloser of additional undisclosed income, but it was endorsed by two other partners in presence of their CA. The statement was acted upon by making the payment of tax of ₹ 2.10 Crore till 29.03.2012, on such undisclosed income. During first appellate stage the assessee try to introduce new facts that the undisclosed additional income was earned from the business of sarees and dress material for which no separate accounts were maintained. Before, Tribunal the assessee has filed Audit report, as duly signed by learned CA, who was present during the survey action and endorsed the statement of the partner of assessee. In para 8(a) of the Audit report the assessee/auditor has shown its business of Land Building Development , in para 8(b) which relates to change in the business or profession the assessee has written N.A. - in Audit report it is reported that the books of accounts are maintained in computer system. Now again adverting to the stands taken by the assessee; before survey team the partner of the assessee disclosed additional income of ₹ 10.78 Crore, the assessee paid tax of ₹ 2.10 Crore till 29.03.2013, which shows the conduct of the assessee that the stamen made during the survey action was acted upon. At the time of filing return of income declared income of ₹ 4.00 Crore. The assessee retracted from the statement of the partner after more than two years. No reasonable and plausible explanation in retracting the statement was offered except simply stating that they realised their mistake later on. If the mistake was realised later on the statement should have been retracted immediately. In the retraction affidavit the partners of the assessee has no where stated that there was any pressure or any coercive measure was used against them while recording the statement. Before Ld. CIT(A), the assessee raised another story of business of sarees and dress material, which was not substantiated. Thus, the additional plea of the assessee was not allowed. Strangely, again the decision of Ld. CIT(A) in not accepting the additional plea no grounds of appeal was raised before this Tribunal. The aforesaid distinctive plea raised by the assessee does not inspire confidence. In view of the aforesaid discussions, we do not find merit in the grounds of appeal raised by the assessee. Appeal of the assessee is dismissed.
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2021 (4) TMI 528
Allowability of development expenses - A.O observed that the assessee had claimed development expenses on estimated basis which are much higher than the actual expenses incurred during the year - why the assessee has changed the system of claiming development expenses on estimated basis with effect from Assessment Year 2013-14? - HELD THAT:- From perusal of the above observation by Ld. A.O we find that firstly he mentions that development expenses has not yet been incurred in respect of all the plots and then he further observes that actual development expenses actually incurred would have to be considered for deduction but he fails to give the benefit of actual expenses incurred by the assessee during the year and thirdly he applies a complete different approach with regard to the development charges whether received or not but would accrue to the assessee @ ₹ 170/- per sq.feet at par with 22 buyers of plots. Looking to the above observation of Ld. A.O we are of the view that his approach is neither here nor there. Ld. A.O is not sure what actually he want to assert upon. CIT(A) after examining the facts in detail and also discussing the settled judicial precedents decided in favour of the assessee allowing the claim of development expenses claimed on estimated basis of development expenses for Assessment Year 2013-14 and partly allowing the claim of development expenses for Assessment Year 2010-11. A.O denied the claim of development expenses claimed by the assessee without providing on record any cogent material to show that the assessee has received cash over and above the amount recorded in the books of accounts. None of the buyers of the plots in their statement recorded by the Ld. A.O has stated about the payment of cash to the assessee. The fact of the matter is that whatever the buyers have confirmed in their statement recorded before Ld. A.O all those payments are duly recorded in the respective ledger account. It is also not in dispute that the excess development charges recovered at ₹ 61,21,220/- are offered to tax in Assessment Year 2015-16 which includes sum of ₹ 39,21,275/- pertaining to the Assessment Year 2013-14 A.O has raised no doubt about the genuineness of the actual development charges incurred by the assessee nor has he pointed out any mistake in the books of accounts maintained by the assessee except about the claim of development charges. The assessee has been consistently claiming the actual development charges from Assessment Year 2009-10 till Assessment Year 2012-13. Though actual expenses are incurred subsequently also but expenses are booked in the Profit and Loss account based on a scientific method i.e. report of technical expert. The assessee purchase piece of land, makes a plan for its development with all amenities required for establishing the colony which includes land leveling, roads, internal roads, parks, common areas and other incidental expenses relating to development of land till it is handed over to the plot holders and then subsequently for making a particular colony fit for constructing residential houses. In all this process development charges ought to be incurred. They were incurred and were consistently charged to Profit Loss Account. The change of accounting policy effected from Assessment Year 2013-14 was based on the accounting standard AS-5 issued by Institute of Chartered Accountants of India which permits the change and which was done so to make appropriate presentation of financial statements of the enterprise. The same was taken up since the highest number of plots were sold by the assessee during Assessment Year 2013-14 which were 168 in number. Almost 16% of saleable area was sold during the year. Change in accounting policy is duly disclosed in the audited financials by way of note. Actual development charges incurring during the year are also reported in the balance sheet. Development charges which were taken from some of the purchasers of plot and were excess in nature in comparison to the amount charged to other plot purchasers the excess amount of ₹ 61,21,220/- have already been offered to tax in Assessment Year 2015-16 and the chart showing year wise amount of income offered during Assessment Year 2015-16 has already been mentioned by us in the preceding paras. Where the genuineness of actual development expenses incurred by the assessee has never been in doubt at any stage by the revenue authorities nor the Departmental Representative could controvert this fact then the next thing to be considered is that whether the assessee over charged the Profit Loss Account by claiming the higher amount of estimated development expenses. The excess amount charged in the preceding years has been offered to tax in Assessment Year 2015-16 and it would not be justified to tax an income already offered to tax in the correct year as there is no loss to the revenue department. It is a settled law that once an amount has been subjected to tax in a given assessment year, it cannot be taxed again in another assessment year. This principle emerged from the decision of Hon ble Supreme Court in the case of Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] CIT(A) was justified in allowing the claim of estimated development expenses booked by the assessee in the Profit Loss Account on matching concept by adopting scientific method allowable u/s 37(1) of the Act and thus the theory adopted by the Ld. A.O of the assessee having received the development charges in cash is just in air and has no legs to stand for since there is no evidence to prove it and it is merely on surmises and conjectures. The fact remains that the assessee had been consistently incurring development expenses and the genuineness of the same has not been doubted by the revenue authorities at any stage. We accordingly find no reason to interfere in the finding of Ld. CIT(A) and the same is confirmed. We accordingly order so and dismiss all the grounds of appeal raised by the revenue for Assessment Year 2013-14. Application made by Ld. Counsel for the assessee under Rule 27 of Income-Tax (Appellate Tribunal) Rules, 1963 which provides that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him - In view of Rule 27 of Income-tax (Appellate Tribunal) Rules, 1963 and also in view of the judgment of Hon'ble Delhi High Court in the case of Sanjay Sawhney [ 2020 (5) TMI 441 - DELHI HIGH COURT] we accept the application of the assessee. As regards the issue of taxability of development charges received by the assessee at ₹ 3,70,650/- Ld. CIT(A) has held that this sum is to be taxed in Assessment Year 2010-11. Ld. Counsel for the assessee submitted that this amount has already been offered to tax in the return of income filed for Assessment Year 2015-16. Once an amount has been subjected to tax in a given assessment year, it cannot be taxed again in another assessment year. In view of the above judgment and the fact that the income of ₹ 3,70,650/- relating to Assessment Year 2010-11 is offered to tax for Assessment Year 2015-16 and is duly reported in the audited Profit Loss Account and its relevant schedule, we are of the view that the finding of Ld. CIT(A) of taxing the impugned amount in Assessment Year 2010-11 deserves to be set aside. In the result this issue raised by the assessee through application under Rule 27 of Income-Tax (Appellate Tribunal) Rules, 1963 is decided in favour of the assessee.
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2021 (4) TMI 527
Penalty levied u/s 271(1)(c) - disallowance u/s 36(1)(iii) - HELD THAT:- As relying on ratio laid down in Reliance Petroproduct (P) Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] and Ventura Textiles Ltd. [ 2020 (6) TMI 305 - BOMBAY HIGH COURT ] is squarely applicable to the instant case wherein held merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(1)(c). Following the same, we delete the penalty levied by the AO u/s 271(1)(c) of the Act.- Decided in favour of assessee.
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Customs
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2021 (4) TMI 526
Benefit of advance authorisations - provisional release of seized goods - seeking assessment of Bills of entry - drawing samples of the goods in the containers to have tested at a laboratory - goods misdeclared or not - HELD THAT:- It appears that samples had accordingly been sent to one laboratory M/s. Geo Chem Laboratory and once again to JNCH laboratory, and that test results have also been known. With reference to the same, several contentions are being advanced on either side, including there is a request on behalf of the petitioner to draw samples once again contending that third portion of sample is not supplied to petitioner and to have tests carried as suggested by them, purporting to emphasize that in several tests can be carried out by which results would not be same, as contended by the revenue. There are several matters in dispute between parties, viz. petitioner and respondents. Petitioner claims that imported goods undergo certain process, which is a manufacturing process, whereas test reports and factual position contended by the other side has been stated to be otherwise. In such disputed scenario, it is not be a case where it can be said that the revenue department is acting without powers or authority having regard to provisions referred to - It would be pertinent to refer that IEC Code No. 0388007737 has not been blocked and it is only to be on alert. So far as request for drawing further samples from seized goods is concerned, it is for the petitioner to make a proper approach. It would be expedient that the concerned authorities proceed with the assessment process as early as possible - petition dismissed.
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2021 (4) TMI 525
Territorial Jurisdiction - Levy of penalty u/s 112(a) of the Customs Act, 1962 - import of confectionery items from Dubai - Allegation of under valuation by DRI - error in not relying on th decision of Larger Bench of this Tribunal in M/S SEVILLE PRODUCTS LIMITED VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2021 (3) TMI 775 - CESTAT NEW DELHI] - appellant is located in Dubai, outside of India and having no office in India - HELD THAT:- It was inquired from the ld. A.R. about the decision of the Larger Bench on this issue by this Tribunal passed in 2021. The ld. A.R. fairly accepted that he is not aware of the decision. It is very unfortunate that the departmental officers appearing before this Court are not updated with the latest judgments of this Tribunal. As there is a decision of the Division Bench of this Tribunal which is against the Revenue, but the ld. A.R. said that he will rely on the decision of the Single Member Bench of this Tribunal, which is in their favour, but he will not rely on the decision of the Division Bench which is having higher value in the eyes of law. The said act of the ld. A.R. cannot be appreciated at all being an officer of the court. It is expected from the officer of the court to assist the court. As section 1, sub section (2) of the Customs Act, 1962 admittedly is having jurisdiction in only within whole of India and its territories and cannot be extended beyond India and the appellant is located outside of India, therefore, no penalty can be imposed on the appellant under Customs Act, 1962 - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2021 (4) TMI 524
Right of respondent on common road - disturbance or hindrance to the Resolution Professional or to any of his staff or security personnel in any manner caused or not - HELD THAT:- Schedule -1 property details and position which is filed in the Reply Affidavit at page 42 that site map has been filed with shows that on the south side of the plot there is a common road, this fact has not been denied by the Appellant. This fact has also been mentioned in the Title Deed, so taking this fact and all the submissions advanced by the parties, the Ld. Adjudicating Authority has rightly pass the impugned order. The proceeding before the Adjudicating Authority and this Tribunal is summary in nature as to follow strict time line. The Learned Counsel for the Appellant have failed to make out any ground and the finding recorded by Ld. Adjudicating Authority - Appeal dismissed.
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2021 (4) TMI 523
Liquidation of Corporate Debtor - liquidation sought as no Resolution Plan was receive - Section 33(1) of the IBC 2016 - HELD THAT:- On 02.02.2021 pronouncement of orders was deferred upon request of a prospective Resolution Applicant viz. Mantena Constructions Pvt Ltd, who had filed application expressing its interest in putting up a Resolution Plan and requesting certain details from the RP in furtherance thereof. Orders were passed in permitting the Applicant therein to access the details. The RP was also directed to provide the required information. However, on 23.03.2021 the Applicant (Mantena Constructions Pvt Ltd) submitted that upon verification of the information made available, it was no longer interested in submitting a Resolution Plan. Thereafter, orders in MA No. 227 of 2018 MA No. 350 of 2018 were reserved and are being passed today. The Corporate Debtor, Unity Infraprojects Limited, shall be liquidated in the manner as laid down in Chapter-III of the Code - liquidator appointed - Liquidator shall endeavour to sell the Company as a going concern during the liquidation in terms of Regulation 32A of the Regulations - moratorium ceased to have effect.
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2021 (4) TMI 522
Related party transactions or not - Preferential transactions - seeking directions to the related parties to pay back the amount to the Company - Section 43(1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the impugned transactions are between the Respondents [erstwhile Directors of the Corporate Debtor] and Corporate Debtor. The Applicant s case is that these transactions are preferential in nature because the amount was advanced by the Corporate Debtor to the Respondents and Land Sale Agreement was also made between them. However, the Applicant failed to prove that these transactions made by the Corporate Debtor were preferential in nature, by producing any document. According to the Applicant SVAR and Associates conducted Audit and filed a Report, but that was not produced along with the Application. Similarly, in order to prove the time period of transaction held prior to two years from the date of commencement of CIRP, nothing was placed on record to that extent also. Thus the contention of the Applicant as to this transaction being preferential transaction, under Section 43 of I B Code, cannot be accepted. Even otherwise, while relying on Regulation 35 A of CIRP Regulations a specific timeline has been provided, by which the Resolution Professional has to form an opinion if the Corporate Debtor has been subjected to any of the objectionable transactions - The objectionable transactions including preferential transactions cannot be an unending process. The examination has to commence on the insolvency commencement date. The Resolution Professional has to form an opinion by the 75th day of commencement of CIRP. If the Resolution Professional comes to the conclusion that the Corporate Debtor has been subject to preferential transactions, the determination has to be made by the 115th day commencement of CIRP. On verification of the records, it is seen that even though an Application for avoidance of preferential transactions has been filed by the Applicant on 04.01.2021 [after curing the defects], he did not press for the same on 08.01.2021 the date when the Resolution Plan was approved. Once a Resolution Plan is approved, the Corporate Debtor is managed by a new management and the Resolution Professional becomes functus officio - not taking timely action in the matter of avoidance of Preferential Transactions is a fault on the side of the Resolution Professional, because without insisting for orders in the Application for avoidance of Preferential Transactions, the Resolution Professional agreed to proceed the matter and obtained approval of the Resolution Plan. Now at this belated stage, without following the timeline prescribed in Regulation 35 A, the former Resolution Professional cannot seek any relief in respect of preferential transaction that too without providing any documents with reference to Preferential Transactions. This Tribunal cannot entertain the prayers of the former Resolution Professional for a direction to the related parties to pay back the amount to the Company - Application dismissed.
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2021 (4) TMI 521
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - existence of debt and dispute or not - date of default in case of issuance of fresh cheques as replacement cheques - HELD THAT:- Since the replacement cheques were issued by the Corporate Debtor and were accepted by the Petitioner, the contention of the latter that default had taken place on 31/07/2019 does not hold water. In the clause 4 of the Consent Terms it was clearly stated as The Corporate Debtor hereby agrees and undertakes that the said amount shall be paid by the Corporate Debtor to the Financial Creditor vide postdated cheques (PDC) on the due dates mentioned hereunder . When the Corporate Debtor issued fresh cheques and they were accepted, the due date also got extended. Besides by its conduct the Petitioner accepted the extension of the due dates. The contention of the Petitioner that the fresh cheques would not extend the date of default would not be helpful. Since it has been categorically covenanted that the payment had to be made on or before 31/03/2020, on failure to do so it would then be held to be in default. The date of default thus has to be construed only as 31/03/2020 and not otherwise. The contention of the Petitioner that the default has occurred on 31/07/2019 cannot be accepted. In view of Section 10A of the Code, no Petition can be filed for the default occurring on or after 25/03/2020. The default in the instant case having occurred after 25/03/2020, this Petition presently would not be maintainable - petition dismissed.
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Service Tax
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2021 (4) TMI 520
Issuance of pre-show cause notice consultation - Levy of service tax - services offered by the petitioner-company to two entities located outside India - recipients of the services are associate concerns or not - export of services - Rule 6A of the Service Tax Rules, 1994 - HELD THAT:- The contesting respondents were mandatorily required to have a pre-show cause notice consultation with the petitioner-company and that having not being done in the instant matter, the proceedings initiated by the contesting respondents via the impugned show cause notice are non-est in law. That being said, the only issue, which remains to be addressed, is concerning limitation. This aspect is pending consideration before the Supreme Court i.e. as to the date when the limitation will commence. The contesting respondents will serve an appropriate communication on the petitioner-company indicating therein, the date, time and venue at which they intend to convene a meeting for holding the pre-show cause notice consultation - concerned officer will accord a personal hearing to the authorized representative of the petitioner-company - petition disposed off.
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2021 (4) TMI 519
Violation of principles of natural justice - Service of SCN - It is the case of the petitioner that communications are required to be made either on email id or via SMS on registered mobile/phone - Recovery of service tax - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Decisions in CAPGEMINI TECHNOLOGY SERVICES INDIA LIMITED VERSUS THE UNION OF INDIA, THE CHIEF COMMISSIONER, CENTRAL GST CUSTOMS, MUMBAI ZONE, THE COMMISSIONER, CGST CENTRAL TAX, THE JOINT COMMISSIONER, CGST CENTRAL EXCISE, MUMBAI EAST, [ 2020 (10) TMI 3 - BOMBAY HIGH COURT] put emphasis on object underlying framing of scheme. The division bench deciding the matters has emphasised that the scheme has been formulated with a view to put an end to past disputes pertaining, inter alia, Central Excise and Service Tax etc., and to have disclosure of unpaid tax and realisation of locked up revenue. The scheme has been brought in to have amicable resolution of disputes securing interest of revenue and start the new GST regime and to give benefit to eligible persons participating in the scheme of waiver of interest, fine, penalty, immunity from prosecution. It has been observed that non compliance of principles of natural justice would impeach the decision making process rendering the decision invalid in law. In case of CHAQUE JOUR HR SERVICES PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (3) TMI 659 - DELHI HIGH COURT] , Delhi High Court, while application under SVLDRS had been rejected by the authority on the premise that the disputed amount was not quantified and communicated prior to 30.6.2019 finding that the impugned order has been passed without hearing petitioner had set aside the impugned order and the matter was remanded to competent authority to hear the petitioner before passing order. It is deemed appropriate that petitioner may have an opportunity of hearing. It is considered appropriate to set aside the impugned statement SVLDRS-3 dated 19th February, 2020 - petition disposed off.
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2021 (4) TMI 518
Levy of penalty u/s 78 of FA - allegation of evasion of service tax - Legal Opinion received from their empanelled advocates - Reverse charge mechanism - intent of suppression of facts not present - HELD THAT:- The condition precedent for invoking Section 78 ibid. viz. that there should be non-levy, short levy, short payment or erroneous refund of Service Tax by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the rules made thereunder with the intention to evade payment of Service Tax, is not satisfied and accordingly, Section 78 ibid. would not be attracted in the present case - The assessee being a public sector undertaking of the Government of India is also an additional factor to hold that any mala fide intention to evade payment of Service Tax would not be attributed, to levy penalty under Section 78 ibid. The penalty levied under Section 78 ibid is not justified - Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 517
Refund of the unutilized credit - inputs and input services used for providing output services - Cleaning Service - Plant Rental Charges - Freight Charges - Installation Charges - Pest Control Charges - Car parking charges, terrace charges, terrace and car-bike charges - Auditorium Charges - Event Management Charges - Purchase of air conditioning Civil Work - Membership subscription. Cleaning Service - HELD THAT:- In the case of M/S HCL TECHNOLOGIES LTD VERSUS C.C.E. NOIDA [ 2015 (8) TMI 595 - CESTAT NEW DELHI] , it has been clearly held that Cleaning Services are essential for providing output services and therefore, the same would qualify as input service and hence eligible for refund - the denial of CENVAT Credit on this service is bad. Plant Rental Charges - HELD THAT:- The appellant did not file any details as to the nature of service. However, it is seen that since services of renting of equipments for organizing events are allowed as valid input service, the same logic should apply here and accordingly, in principle, the denial of CENVAT Credit is held bad - The Delhi Bench of the CESTAT in the case of M/S HCL TECHNOLOGIES LTD VERSUS C.C.E. NOIDA [ 2015 (8) TMI 595 - CESTAT NEW DELHI] has held so. Freight Charges - HELD THAT:- Freight Charges are included in the inclusive part of the definition of input service under Rule 2 (l) of the CENVAT Credit Rules, 2004 and hence, the denial by the lower authorities is bad. The impugned order to this extent is set aside and this ground is allowed. Installation Charges - only ground for rejection by the lower authorities is the non-furnishing of any details - HELD THAT:- Since no details were furnished, this issue requires re-adjudication. Accordingly, the impugned order to this extent is set aside and the matter is remanded to the file of the Adjudicating Authority to verify the details and follow the guidelines - this issue is allowed by way of remand. Pest Control Charges - HELD THAT:- The assessee has claimed that this issue is akin to Cleaning Services, which is very much essential to keep the business premises safe and clean and hence, the denial is clearly uncalled for - Reliance can be placed in the case of M/S HCL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE AND SERVICE TAX, NOIDA [ 2015 (9) TMI 1037 - CESTAT NEW DELHI] - Credit is allowed. Car parking charges - terrace charges - terrace and car-bike charges - HELD THAT:- The parking charges is an essential service provided to all the employees and used by them during the course of their employment and hence, this forms an essential service - denial of CENVAT Credit on the above service is therefore held to be bad. Auditorium Charges - HELD THAT:- The service is an essential service since the trainings are provided for the employees of the appellant or business meetings are held there and hence, the denial of CENVAT Credit is not justified. Event Management Charges - input service or not - it is the case of the appellant that the above services were used for promoting the brand name of the company and the expenses relating to advertisements or sales promotions are specifically covered within the scope of the definition of input service - HELD THAT:- Issue decided in the case of M/S. BNP PARIBAS GLOBAL SECURITIES OPERATIONS P. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI SOUTH [ 2019 (4) TMI 125 - CESTAT CHENNAI] where it was held that event management service has been held to be eligible for credit - credit allowed. Purchase of air conditioning - it is the case of the assessee that the service were not used for the construction of a building or civil structure, but they were in the nature of annual maintenance charges - HELD THAT:- Reliance placed in the case of M/S. VIRTUSA INDIA PVT. LTD. VERSUS CCE, HYDERABAD [ 2016 (6) TMI 681 - CESTAT HYDERABAD] where it was held that credit is to be allowed - credit allowed. Membership Subscription - HELD THAT:- The business promotion is very much essential for the survival of every company, the membership only expands the reach thereof and hence, it is a way of marketing the brand, which is an essential service - credit allowed. Appeal allowed in part and part matter remanded.
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2021 (4) TMI 516
CENVAT Credit - input services - advertising service availed from the print media to foster the business - appellant is a coaching institute - HELD THAT:- The definition of input services as amended with effect from 01.07.2012, make it clear that inclusive part of the definition specifically include among various activities, the service provided by advertising agency. It is sufficient to hold that advertisement service is an input service. Also it is apparent that the appellant has availed the same to foster its business i.e. in relation to its business. Hence the same is definitely an input service for the appellant for which appellant can claim credit of service tax paid on such service. Hence, Cenvat Credit cannot be at all denied. While disallowing this Cenvat Credit, Commissioner (Appeals) has relied on Master circular dated 23.08.2007, the said adjudicating authority has miserably failed to take into consideration the subsequent amendment to the definition of the input service. Any provision prior to that amendment could not therefore, be taken into consideration. The findings of Commissioner (Appeals) based on unamended provision of input service are, therefore, held unreasonable and illegal. Appeal allowed - decided in favor of appellant.
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2021 (4) TMI 515
Demand of Service Tax - Works Contract Service - reverse charge mechanism - ST-3 returns not considered before passing the orders - violation of principles of natural justice - HELD THAT:- The appellant has deposited service tax in time which has been reflected in ST-3 return and the impugned order has been passed without considering the ST-3 returns, therefore, there is gross violation of principle of natural justice. Appeal allowed - decided in favor of appellant.
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Central Excise
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2021 (4) TMI 514
Refund of input tax credit - input service or not - consent fees paid to Tamil Nadu Pollution Control Board (TNPCB) under reverse charge mechanism - requirement of issuance of SCN u/s 11B of CEA - HELD THAT:- The Order-in-Original has been passed undoubtedly without the issuance of Show Cause Notice. The Commissioner (Appeals) in the impugned Order has also observed that one Shri P. Veera Kumar appeared before the Adjudicating Authority, but however, both the authorities below are silent as to whether the said person, who is alleged to have been heard, was well-versed with the law and the change in law and whether the said person was authorized by the appellant-company to argue before the authorities. It is the basic tenet of our Constitution that justice should not only be done, but should manifestly and undoubtedly be seen to be done . The above fundamental principle has to be followed along with the principles of audi alteram partem and any Order which creates a doubt as to the manner in which it was passed, has to be held as having passed without adhering to the principles. The fundamental principles of law are at stake and the Orders have been passed without affording proper and reasonable opportunities to the appellant - Appeal allowed by way of remand.
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2021 (4) TMI 513
Levy of penalty - CENVAT Credit - goods not supplied only invoices were moved - allegation is that goods were never transported and the goods never crossed the Shambhu Border - Lack of investigation on the part of Revenue - HELD THAT:- In this case, it is a fact on record that during the course of investigation, no shortage or excess of the goods were found in the premises of both the appellants. In that circumstance, duty cast on the Revenue to ascertain the fact if the appellant no.1 has not received the goods, then from where, they procured the goods and used the same for manufacturing of dutiable goods which have been cleared on payment of duty. Further, it was also the duty of the Revenue to find out where M/s Mas Equipments Pvt Ltd has cleared the goods without payment of duty. This is lacking in the investigation which gives benefit of doubt in favour of the appellants. Penalty on M/s Mas Equipments Pvt Ltd (appellant no.2) is not imposable - appeal allowed - decided in favor of appellant.
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2021 (4) TMI 512
Quantification of CENVAT Credit reversed - common Input/Input Services used in exempted goods/exempted services and dutiable goods/taxable services - revenue has issued Show Cause Notices on the monthly reversal as well as on the yearly reversal, while appellant is calculating the amount on provisional basis month wise and also final payment on the completion of the financial year - Rule 6(3) of CCR - HELD THAT:- There is indeed serious error in calculation of the amount to be paid under Rule 6(3). As regard the terms total Cenvat Credit to be considered for the formula as provided under Rule 6 (3A) - It also appears that there is a duplication of demand in as much as Show Cause Notice issued on monthly reversal as well as on yearly reversal. The Adjudicating Authority has also not properly considered the total Cenvat Credit that whether the clearances made to SEZ and deemed export under Notification No.108/95-CE dated 28.08.1995 should be taken as exempted clearances or otherwise. Likewise there are serious discrepancies in the Show Cause Notices which are purely on a factual matrix. The matter needs to be remitted to the Adjudicating Authority for proper appreciation of the facts and correct calculation of demand, if any arise - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (4) TMI 511
Finalisation of assessment - inclusion of amount computed under Income Tax for the purpose of computing the petitioner's turnover under TNVAT Act - levy of tax and penalty - HELD THAT:- There is no clear proof evidencing the production of various proofs. Be that as it may, it appears that in the impugned order, atleast a portion of the amount that represents the petitioner's income amenable to income tax, has been included for the purpose of computing the petitioner's turnover under TNVAT Act. That apart, another defect pointed out by the assessing authority rests on mismatch. However, the procedure laid down in J.K.M.Graphics Solution Private Limited case [ 2017 (3) TMI 536 - MADRAS HIGH COURT] , was not followed.
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2021 (4) TMI 510
Levy of higher rate of Tax on Restaurant as applicable on Hotels - Period for determination of interest liability - Bondafide belief - Violation of principles of natural justice - assessing officer pointed out that after issuing pre-revision notices, the objections of the assessee were received - HELD THAT:- Personal hearing was held on 18.12.2015. On the said date the petitioner's representative appeared and his statement was also recorded in writing by the assessing officer. Only thereafter the impugned orders were passed on 06.01.2016. Thus, the principles of natural justice were complied with in the instant case. Whether the respondent erred in applying Section 7(1)(a) of the Act? - HELD THAT:- Since Rainbow Restaurant is carrying on its business in the very same premises, the assessing authority rightly held that it is a restaurant attached to a star hotel and therefore, Section 7(1)(a) of the Act will apply. Section 7(1)(a) of the Act states that the higher rate of tax will be levied not only on the star hotel recognized by the Government but also on the restaurant attached to such star hotel. The expression attach has been defined in Black's Law Dictionary as to annex, bind or fasten. If something is part of another, it is said to be attached (Oxford Advanced Learner's Dictionary, New 9th Edition). Attached to connotes something different from mere ownership - If the petitioner has been carrying on its business at a place distinct from that of the Star Hotel, then, Section 7(1)(a) of the Act cannot be invoked at all. But the petitioner restaurant is in the very same building owned by the Star Hotel, namely, Rathna Residency. Therefore, the assessing authority was justified in holding that the petitioner is a restaurant attached to a Star Hotel and therefore would fall within the sweep of Section 7(1)(a) of the Act. The respondent is not justified in levying interest from the original assessment year - the star hotel itself was selling the items mentioned in Section 7(1)(a) of the Act. But in the case on hand, Rathna Residency is not the petitioner before this Court. It is only Rainbow Restaurant that is the petitioner before this Court. Rainbow Restaurant is contending that it cannot be considered as a restaurant attached to a star hotel . Thus the petitioner was under a bonefide impression that they are not liable to pay tax at a higher rate. Therefore, as per Section 42 of the Act, only from the date on which the petitioner's liability is quantified, the question of paying tax would arise. Petition allowed.
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