Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 18, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Customs
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39/2020 - dated
16-4-2020
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Cus (NT)
Exchange Rates Notification No.39/2020-Customs (NT) dated 16.04.2020
DGFT
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03/2015-2020 - dated
17-4-2020
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FTP
Amendment in Export Policy of formulations made from Paracetamol (including FDCs)
GST - States
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33/2020- State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to provide relief by conditional waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods of February, 2020 to April, 2020.
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32/2020-State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to provide relief by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to April, 2020.
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31/2020-State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to provide relief by conditional lowering of interest rate for tax periods of February,2020 to April,2020.
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3/2020-State Tax (Rate) - dated
7-4-2020
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Maharashtra SGST
Seeks to amend Notification No. 1/2017- State Tax (Rate) to prescribe change in MGST rate of goods.
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27/2020-State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to prescribe the due date for furnishing FORM-GSTR-1 for the quarters April, 2020 to June, 2020 and July, 2020 to September, 2020 for registered persons having aggregate turnover of upto 1.5 crore rupees in the preceding financial year or the current financial year.
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2/2020-State Tax (Rate) - dated
7-4-2020
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Maharashtra SGST
Seeks to amend Notification No. 11-2017-State Tax (Rate) dt.29.06.2017 reducing MGST rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft from 18% to 5% with full ITC.
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19/2020-State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to specify class of persons, other than individuals who shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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18/2020-State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to notify the date from which an individual shall undergo authentication, of Aadhaar number in order to be eligible for registration.
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17/2020-State Tax - dated
7-4-2020
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Maharashtra SGST
Seeks to specify the class of persons who shall be exempted from aadhar authentication.
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14/2020-State Tax - dated
30-3-2020
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Maharashtra SGST
Seeks to exempt certain class of registered persons capturing dynamic QR code and the date for implementation of QR Code to be extended to 01.10.2020
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13/2020-State Tax - dated
30-3-2020
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Maharashtra SGST
Seeks to exempt certain class of registered persons from issuing e-invoices and the date for implementation of e-invoicing extended to 01.10.2020.
Indian Laws
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G.S.R. 250 (E) - dated
13-4-2020
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Indian Law
Sovereign Gold Bond Scheme 2020-21
Money Laundering
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G.S.R. 254(E) - dated
16-4-2020
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PMLA
Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2020.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Release of goods - The procedure for compliance of the conditions stipulated u/s 67(6) is literally provided under Section 140 of the Central Goods and Services Tax Rules 2017. Therefore, unless the security as contemplated under Section 129(2), read with Section 67(6), is furnished with; or payment of the entire amount of tax and penalty imposed under Section 3 is made, the goods are not liable to be released. - HC
Income Tax
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Addition u/s 41(1) - waiver of unsecured interest free loans taken - since the assessee has not claimed any allowance or deduction in respect of the unsecured loan obtained by it, the provisions of sub-section (1) of section 41 of the Act would not apply. - HC
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Depreciation u/s 32 - conversion of partnership firm into private limited company - assessee is entitled to depreciation on the enhanced cost at which the assessee has taken over the assets - AT
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Penalty u/s 271D - urgency and compulsion to take loan in cash - default u/s 269SS - o justification for accepting loans in cash even through banking channels were available and also utilized by these two lenders - Levy of penalty confirmed - AT
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Penalty u/s 271(1)(c) - addition invoking provision of Section 50C - when in respect of sale of property, matter was referred to DVO to determine sale consideration at a higher amount, that by itself would not amount to furnishing inaccurate particulars of income so as to levy penalty u/s 271(1)(c) - AT
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Demand of Short deduction of TDS through rectification order u/s 154 - CIT(A) dismissed the appeals of the Assessee without realizing that the order u/s.154 of the Act was passed by the ACIT-CPC-TDS and not on any application filed by the Assessee. - if the CIT(A) is of the view that the issue was debatable then the order u/s.154 of the Act should have been cancelled by him. - AT
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Validity of reopening of the assessment u/s 147 - a perusal of the reasons would indicate that there is no coherence between the information available with the AO visŕ-vis transaction of the assessee, and formation of belief that income has escaped the assessment. These reasons are vague and inconclusive - AT
Customs
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Permission for setting up a 'Software Technology Park' with retrospective date - Having imported goods in October-November 2005 itself without waiting for LOP, writ petitioner cannot make a request now to advance the effective date of approval merely to take advantage and get benefit under a Customs notification. - HC
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The Tribunal is legally enjoined to determine a dispute arising from the relevant tax laws and not as an alternative for administration of the tax system. The effect of the present application for stay of operation appears to be the latter and which we decline to, tacitly or covertly, to be a participant in. Accordingly, the application for stay is rejected.
DGFT
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Allocation of additional quantity of 745 MTRV for export of sugar to USA under Tariff Rate Quota (TRQ). - Public Notice
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Import of additional quota of Urad (2.5 Lakh MT) for the fiscal year 2019-20. - Trade Notice
Corporate Law
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Holding of Directorship in more than the maximum number of companies - continuation in holding such directorship even after one year from commencement of the Companies Act, 2013 - contravention of Section 165(3) which is punishable under 165(6) of the Companies Act, 2013. - The present complaint is within limitation as offence U/s 165 of the Companies Act, 2013 is a continuing offence
Indian Laws
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Sovereign Gold Bond Scheme 2020-21 - Notification
PMLA
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Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2020. - Notification
SEBI
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Additional relaxations / clarifications in relation to compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR’) due to the COVID – 19 pandemic - Circular
Central Excise
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Valuation - deduction of discounts - though the availability of the discounts was known at the time of clearance of the goods, these were quantified later but are to be deducted from transaction value. Thus, at the time of clearance of goods, since there is no quantification of demand, provisional assessment needs to be resorted to - he rejection of the request for provisional assessment was incorrect and unsustainable in law - AT
VAT
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Stock Transfer - failure to furnish Form F - Infrastructure construction - Transfer of equipments and machineries from one site to other site between States - it does not attract any case even under CST Act and filing of Form F is not mandatory in this case - HC
Case Laws:
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GST
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2020 (4) TMI 496
Cancellation of his GST Registration of petitioner - cancellation on the ground that petitioner had not filed GST return for more than six months - HELD THAT:- The writ petition is disposed with liberty to the petitioner to make fresh representation to the Commissioner, CGST within four weeks from today along with an upfront amount of ₹ 30.00 lakh. If such a representation is made (along with aforesaid amount), the Commissioner, CGST shall consider petitioner s request for revocation of cancellation order, in accordance with law, within ten days from the date of receipt of such representation. Till decision is taken on petitioner s representation the impugned cancellation order dated 13.03.2020 shall be kept in abeyance. However, the GST registration of the petitioner shall be restored once the nationwide lockdown is over.
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2020 (4) TMI 495
Confiscation of goods alongwith conveyance - levy of penalty and fine - Section 130 of GST Act - HELD THAT:- By virtue of the order of this Court in M/S DEVASYA INDUSTRIES, PROPRIETOR KOKILABEN SURESHKUMAR PATEL VERSUS STATE OF GUJARAT [ 2019 (5) TMI 1771 - GUJARAT HIGH COURT] , the truck as well as the goods have been released. Notice in the form GST MOV-10 - HELD THAT:- The writ-applicant shall appear before the authority concerned and make good his case that the notice deserves to be discharged. Application disposed off.
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2020 (4) TMI 494
Release of detained goods alongwith conveyance - section 130 of GST Act - While issuing notice, this Court directed that the vehicle as well as the goods be released, upon payment of the tax, in terms of the impugned notice - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT ] . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.
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2020 (4) TMI 493
Detention of goods - levy of fine and penalty - case of petitioner is that goods detained under Section 129(1) was only 'promotional materials' consigned by the supplier, not intended for sale, and it will not attract any tax liability as contemplated under Section 7 of the GST Act - principles of natural justice - HELD THAT:- Subsection (7) of S.107 provides that where the appellant had paid the amount stipulated under sub-section (6), which in the case at hand is 10% of the remaining amount of tax in dispute, the recovery proceedings for the balance amount shall be deemed to be stayed - merely because the appellant had failed to furnish security, or to get the goods released, by paying the amount of tax and penalty imposed, the confiscation proceedings cannot be proceeded, because he had instituted a statutory appeal after compliance of pre-requisite condition. Release of goods - HELD THAT:- The provision under Section 129 is clear and unambiguous that the goods under detention can be released only on compliance with the provisions of sub-section (6) of Section 67 of the Act, which is made applicable with respect to the condition under Section 129, by virtue of Section 129(2) of the Act. The procedure for compliance of the conditions stipulated under Section 67(6) is literally provided under Section 140 of the Central Goods and Services Tax Rules 2017. Therefore, unless the security as contemplated under Section 129(2), read with Section 67(6), is furnished with; or payment of the entire amount of tax and penalty imposed under Section 3 is made, the goods are not liable to be released. Appeal disposed off.
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Income Tax
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2020 (4) TMI 491
Addition u/s 41(1) - waiver of unsecured interest free loans taken - accounting entries to be determinative of the nature of receipt or not ? - HELD THAT:- In the year under consideration, the assessee was not carrying any business activity in terms of the main object of the assessee company - while assessee had borrowed monies from Matrix Logistics Private Limited, it had not claimed any deduction or allowance in respect of the same - As decided in Kedarnath Jute Manufacturing Co. Ltd. v. CIT [ 1971 (8) TMI 10 - SUPREME COURT] the accounting entries cannot be determinative of the nature of receipt and what can be added to income under section 41(1) of the Act is something in respect of which, deduction has been allowed in the past In CIT v. Mahindra Mahindra Ltd [ 2018 (5) TMI 358 - SUPREME COURT] on a perusal of sub-section (1) of section 41 of the Act, it is evident that there is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under section 41 of the Act. In the facts of the present case, since the assessee has not claimed any allowance or deduction in respect of the unsecured loan obtained by it from Matrix Logistics Private Limited in any previous year, the provisions of sub-section (1) of section 41 of the Act would not apply. The Tribunal has, therefore, rightly applied the decisions of the Supreme Court in Kedarnath Jute Manufacturing Co. Ltd. v. CIT and CIT v. Mahindra Mahindra Ltd. (supra) to the facts of the present case.- Decided against revenue
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2020 (4) TMI 490
Bogus purchases - Addition @ 12.5% - purchases from grey market - HELD THAT:- Having regard to the fact that goods were in fact purchased though not from the named parties but from the grey market, no infirmity can be found in the approach adopted by the Commissioner (Appeals) in restricting the addition to 12.5% of such bogus purchases, which would be the approximate differential amount between the actual price of the goods and the expenditure claimed on the basis of the bogus bills. The Tribunal was, therefore, wholly justified in upholding the order passed by the Commissioner (Appeals). The controversy raised vide proposed question (A), therefore, does not give rise to any question of law.
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2020 (4) TMI 489
Depreciation u/s 32 - conversion of partnership firm into private limited company - assessee-company claimed depreciation on the enhanced value of assets as per the revaluation of assets made as on 30.06.2007 by the firm - HELD THAT:- Since the issue has been decided by the ITAT in earlier year in assessee's favour the disallowance of depreciation by the AO for this year is not sustainable as the same is consequential to the depreciation allowed and WDV of assets in earlier year. Therefore, following the order of the Coordinate Bench in assessee s own case for AY 2009-10 I [ 2019 (3) TMI 1764 - ITAT MUMBAI] wherein held assessee is entitled to depreciation on the enhanced cost at which the assessee has taken over the assets and direct the AO to allow the depreciation as claimed by the assessee - Decided in favour of assessee.
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2020 (4) TMI 488
Bogus purchases - hawala purchases - CIT-A confirming addition of 12.5% - HELD THAT:- After reopening assessment, AO made detailed enquiry by issue of notice to the suppliers and found that assessee has taken accommodation bill of the purchases - considering the reply filed by AO, AO only added profit element in such alleged bogus purchases which works out at 12.5%. CIT(A) has observed that before the AO, assessee himself has conceded for addition of 12.5% of hawala purchases, therefore, assessee should not have any grievance at all to file appeal before him. CIT(A) has considered various judicial pronouncements on the issue and after applying the same to the facts of the case, confirmed the addition to the extent of 12.5% of the alleged bogus purchases. Nothing was placed before us so as to persuade us to deviate from the findings of the CIT(A). Accordingly, we do not find any reason to interfere in the order of CIT(A) for upholding addition of 12.5% of alleged bogus purchases. - Decided against assessee.
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2020 (4) TMI 487
Deduction u/s 80IB - manufacturing activities - Proof of commencement of production - HELD THAT:- Assessee tried to justify that the production was commenced on 30.03.2012. During the course of hearing, ld. AR drew our attention to the certificate issued by the General Manger, DIC, Kathua on 07.01.2013, scanned copy of which has been incorporated in the assessment order that the General Manager, DIC, Kathua has clearly mentioned that the commencement of production is with effect from 30.03.2012. This has not been controverted by the ld. DR before us. In the month of March, the consumption of electricity was 1536 units and the documents were also placed before the AO and these documents have not been disregarded by the AO and the AO has accepted that the electricity consumption was made in the month of March, 2012. The assessee has also shown in the trading account as on 31.03.2012 wages expenses and the AO could have examined the payment of wages showing in the trading account for the financial year ending as on 31.03.2012. The labour register was produced before the AO, which has not been denied. Even the labour register for the subsequent year has also been placed before the AO. If the AO has doubted the commencement of production, he could have examined the labourers for being satisfied himself, however, he Just strengthened his analysis of the electricity consumption and the date of certificate issued by the General Manager, DIC, Kathua. We consider the date of commencement of production as 30.03.2012, and, therefore, the assessee is eligible for claiming deduction u/s.80IB(4) of the Act on the profit derived from the industrial undertaking as claimed by the assessee.- Decided in favour of assessee. Addition u/s.68 - unexplained investment in purchase of land - As per assessee there are no cash credits which are appearing in the books of account and as such application of wrong provisions of the Act not remotely connected is arbitrary and unjustified - HELD THAT:- Submission made by the assessee before the AO and other related documents and considering to the request of ld.AR of the assessee, we restore the issue raised in both the grounds to the file of AO for further verification. The assessee is also directed to appear before the CIT(A) with necessary documents for substantiating his claim as raised before us. Ground raised by the assessee are allowed for statistical purposes.
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2020 (4) TMI 486
Excess Cane Price Paid to Sugarcane Suppliers - price over and above the Statutory Minimum Price (SMP) fixed by State Government for purchase of cane - HELD THAT:- As decided in MAJALGAON SAHAKARI, SAKHAR KARKHANA LTD. VERSUS ACIT, SHRI CHHATRAPATI SHAHU, DCIT, ITO [ 2019 (3) TMI 906 - ITAT PUNE] set aside the impugned orders on this score and remit the matter to the file of the respective A.Os. for deciding it afresh as per law in consonance with the articulation of law by the Hon ble Supreme Court in TASGAON TALUKA S.S.K. LTD. [ 2019 (3) TMI 321 - SUPREME COURT] The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2). Sale of Sugar at Concessional to the Members/Shareholders - HELD THAT:- As decided in MAJALGAON SAHAKARI, SAKHAR KARKHANA LTD. [ 2019 (3) TMI 906 - ITAT PUNE] it would be just and fair if the impugned orders on this score are set aside and the matter is restored to the file of AOs, instead of to the CIT -(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited [ 2012 (11) TMI 669 - SUPREME COURT] Government Guarantee Fees - disallowance u/s. 43B - authorities below have held that Government Guarantee Fee is akin to tax, cess or fee and hence, non-payment of same would result in disallowance u/s. 43B - HELD THAT:- In the present case, payments made by the assessees on account of Government Guarantee Fees to the Maharashtra Government are in respect of pre seasonal loans. It is neither emanating from the records, nor the Revenue has brought before us any material to show that the assessee is under obligation to pay Government Guarantee Fee on account of statutory requirement as revenue to the State. In the case of Commissioner of Income Tax Vs. Udaipur Distillery Co. Ltd. [ 2003 (9) TMI 23 - RAJASTHAN HIGH COURT] has held that tax , duty , cess or fee constituting a class, denotes various kinds of imposts by State in its sovereign power of taxation to raise revenue for the State. Within the expression of each specie each expression denotes different kind of impost depending on the purpose for which they are levied - merely levy of charge as tax or fee is not conclusive of its character. It is only if any amount becomes payable by way of tax, duty, cess or fee, it falls within the purview of section 43B - Government Guarantee Fees cannot be put in same bracket as tax, cess or duty and hence, no disallowance u/s. 43B of the Act in respect of non-payment of such fee can be made. Accordingly, this issue is decided in favour of the assessee. Ceremony Expenses Disallowance - HELD THAT:- Commissioner of Income Tax (Appeals) has allowed 1/4th of the expenditure by following the order of Tribunal in the case of Shivamrut Maryadit vs. DCIT [ 1998 (12) TMI 120 - ITAT PUNE] and restricted the addition to ₹ 65,627/-. We do not find any infirmity in the findings of Commissioner of Income Tax (Appeals). Accordingly, this issue is dismissed.
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2020 (4) TMI 485
Penalty u/s 271D - Period of limitation - urgency and compulsion to take loan in cash - default u/s 269SS - HELD THAT:- Clause (c) of section 275(1) of the Act provides that no order u/s 271D of the Act shall be passed after expiry of the financial year, in which the proceedings are completed or six months from the end of the month in which the action for imposition of penalty, is initiated. The relevant financial year, is 2016-17 in this case and the relevant month of initiation of penalty, is April, 2016. Therefore, the order passed by the Assessing Officer on 29.11.2016 is very much valid and not time barred. On merits we find this is a clear case of receipt of cash by the assessee in violation of section 269SS - no justification for accepting loans in cash even through banking channels were available and also utilized by these two lenders. The appellant required money for hospital premises but there were no compelling reasons for accepting the cash as such - appellant is well educated doctor and cannot claim to be ignorant of law in this regard - Decided against assessee.
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2020 (4) TMI 484
Penalty u/s 271(1)(c) - addition invoking provision of Section 50C and Capital Gain was levied - matter was referred to the DVO - revision of belated return seeked - amount was inadvertently shown in unsecured loan - whether assessee cannot be exonerated of its liability by claiming that it had filed an invalid revised return? - HELD THAT:- The assessee has submitted that this was an inadvertent mistake on the part of the Accountant of the assessee which has not been accepted by the authorities below In the case of CIT vs Fortune Hotels and Estates (P.) Ltd., [ 2014 (10) TMI 783 - BOMBAY HIGH COURT] had expounded that when in respect of sale of property, matter was referred to DVO to determine sale consideration at a higher amount, that by itself would not amount to furnishing inaccurate particulars of income so as to levy penalty under Section 271(1)(c) As in the case of Price Waterhouse Coopers (P.) Ltd. vs CIT [ 2012 (9) TMI 775 - SUPREME COURT] had expounded that an inadvertent error cannot lead to rigours of penalty. Furthermore, a larger bench of the Honourable Court in the case of Hindustan Steel Ltd. vs State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] had expounded that when the conduct of the assessee is not contumacious, the authority may not levy the penalty. That technical and venial breach may not lead to levy of penalty. Conduct of the assessee in this case is not contumacious to warrant levy of penalty and assessee's plea that there was an inadvertent error on the part of the Accountant deserves to be accepted. - Penalty deleted. - Decided in favour of assessee.
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2020 (4) TMI 483
TDS u/s 195 - payments made to non-residents - assessee s appeal is against not providing sufficient opportunity to rebut the material gathered by the Assessing Officer on the basis of which additions have been made - HELD THAT:- We find that the assessee had taken a specific ground for not providing sufficient opportunity in the form of Ground No.1 in form No.35. CIT has duly reproduced the same. However, while disposing of the appeal, the Ld. CIT(A) has not adjudicated this ground. Ld. CIT(A) has only decided the other grounds. Therefore, we set aside the impugned order being contrary to the principles of natural justice. The Ld. CIT(A) ought to have adjudicated this ground. Therefore, the impugned order deserves to be set aside on this ground alone - Appeal of the assessee is allowed for statistical purposes.
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2020 (4) TMI 482
Disallo wance of interest expenses - interest bearing funds were diverted for purchase of a land - Assessee submitted that being the assessee firm s asset, the same will be utilised for its business and the interest expenses incurred cannot be disallowed - HELD THAT:- For the assessment year 2008-09, an identical issue was considered by the Tribunal in assessee s own case [ 2020 (2) TMI 206 - ITAT COCHIN] amounts borrowed have been diverted for purchase of an asset which belongs to the assessee s firm. Admittedly, the said asset was not put to use even as on date of hearing of this appeal. Therefore, going by the proviso to section 36(1)(iii) interest expenses on capital borrowed for purchase of asset cannot be allowed as deduction - interest expenditure has to be necesssarily capitalised - proviso to section 36(1)(iii) of the Act is applicable during the relevant assessment year, namely 2009-10 and since the asset (land) has not been put to use by the assessee, the interest expenditure for acquiring the same cannot be allowed as a deduction - Decided against assessee.
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2020 (4) TMI 481
Disallowance of deduction u/s 80JJA - assessee has claimed deduction u/s 10JA - AO disallowed the claim holding that employees working in software unit cannot be treated as workmen as envisaged under the Act and deduction u/s 80JJAA cannot be allowed in respect of additional wages paid to be employees who are working in 10A units, by virtue of provisions of section 80A(iv) - HELD THAT:-As per the decision rendered by the co-ordinate bench in the case of Manhattan Associates (India) Development Centre (P.) Ltd [ 2019 (10) TMI 1192 - ITAT BANGALORE] salary paid to software engineers are eligible for deduction u/s 80JJAA of the Act . Hence the first reasoning given by the AO shall fail. With regard to the second reasoning, as per the submission made by the learned AR, there appears to be some confusion with regard to facts relating to the deduction u/s 80JJAA of the Act claimed by the assessee. The assessee has also furnished certain additional evidences to substantiate its claim. Under the set of facts, we are of the view that this issue requires fresh examination at the end of the Assessing Officer. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for examining it afresh. Disallowance u/s 14A - HELD THAT:- We find force in the submission made by the learned AR. As per the decision rendered by Delhi Special Bench of the Tribunal in the case of Vireet Investments Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] only those investments which have yielded exempt income should be considered for computing the average value of investment. In view of the above, we direct the A.O. to re-compute the disallowance u/s 14A of the Act by excluding the investments made in foreign subsidiaries while computing average value of investments. Disallowance of Provision made by valuing derivatives at the year end, i.e, marked to market rate of valuation of derivatives - AO by following the CBDT Circular No.3/2010 dated 23.03.2010, disallowed the claim of the assessee by holding that the loss arising on account of revaluation of foreign exchange derivatives on marked to market basis is a notional loss - CIT(A) also confirmed the same - HELD THAT:- When a specific query was put to the learned AR as to whether the assessee has revalued all foreign exchange derivatives, trade receivables and trade payables in respect of import and export activities, the learned AR submitted that the matter may be restored to the file of the Assessing Officer for examining the claim of the assessee afresh. It is pertinent to mention here that the assessee should have valued all trade payables and trade receivables and foreign exchange forward contract entered in foreign currencies, which are outstanding as at the year end, in order to avail the claim of deduction of net amount of loss, in any, arising on account of marked to market valuation of those items at the year end. Since this aspect has not been examined by the Assessing Officer, we deem it appropriate to restore the same to the file of the Assessing Officer for examining it afresh. The order of Ld CIT(A) passed on this issue is accordingly set aside.
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2020 (4) TMI 480
Demand of Short deduction of TDS through rectification order u/s 154 - TDS done as per the DTAA - whether DTAA will prevail over the provisions of sec.206AA? - debatable issue or not? - HELD THAT:- Special Bench of the ITAT, Hyderabad in the case of Nagarjuna Fertilizers and Chemicals Ltd. vs ACIT [ 2017 (3) TMI 81 - ITAT HYDERABAD] has held that DTAA will prevail over the provisions of sec.206AA of the Act. Therefore, the TDS done as per the DTAA is correct. Similar view has been taken in the case of Danisco India (P)Ltd.vs Union of India [ 2018 (2) TMI 1289 - DELHI HIGH COURT] It was the ACIT-CPC-TDS who passed the order u/s.154 of the Act and therefore if the CIT(A) is of the view that the issue was debatable then the order u/s.154 of the Act should have been cancelled by him. He dismissed the appeals of the Assessee without realizing that the order u/s.154 of the Act was passed by the ACIT-CPC-TDS and not on any application filed by the Assessee. Again the question of limitation will also go against the revenue and not against the Assessee because it was the revenue i.e., the ACIT-CPC-TDS, who passed the order u/s.154 of the Act. The law as interpreted by the judicial forums by the Hon ble Delhi High Court on 5.2.2018 prior to the order u/s.154 of the Act passed by the ACIT-CPC-TDS supports the plea of the Assessee. In the given and facts and circumstances of the case and the legal position on the issue, we are of the view that the orders u/s.154 of the Act raising demand for short deduction of tax at source and interest thereon cannot be sustained and the same is directed to be cancelled. The appeals of the Assessee are accordingly allowed.
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2020 (4) TMI 479
Validity of reopening of the assessment u/s 147 - return was processed under section 143(1) - notice beyond four years - Bogus LTCG claimed - HELD THAT:- Reference to reason would indicate that the AO has nowhere quantified the income escaped. Notice has been issued after an expiry of four years from the end of the relevant assessment year, but before six years. This notice could be issued within limitation if the AO has made out a case that income exceeded rupees one lakh has escaped assessment. No such finding or observation or reference has been made in the reasons extracted (supra). In the opening line of the reasons, the AO has observed that as per information received from the ITO, Ward-16(1), Mumbai, the assessee carried out transaction in shares/securities with M/s.Gold Star Finvest. This information is factually incorrect or not cross-verified by the AO before recording reasons. The assessee has not carried out its share/security transaction with Gold Star Finvest in respect of which capital gain arose to the assessee stand ultimately considered by the AO for denial of exemption under section 10(38) of the Act. Further, a perusal of the reasons would indicate that there is no coherence between the information available with the AO vis -vis transaction of the assessee, and formation of belief that income has escaped the assessment. These reasons are vague and inconclusive. On the basis of such reasoning, the assessment assessee cannot be reopened. Respectfully following the judgment of Hon ble jurisdictional High Court in the case of Bakulbhai Ramanlal Patel Vs. ACIT [ 2011 (3) TMI 1576 - GUJARAT HIGH COURT] allow this ground of appeal and quash the re-assessment order. - Decided in favour of assessee.
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2020 (4) TMI 478
Levy of fee u/s. 234E - default in furnishing quarterly TDS statements - intimation u/s. 200A - period falling after 1st June 2015 - HELD THAT:- As decided in GAJANAN CONSTRUCTIONS AND OTHERS VERSUS DCIT, CPC (TDS) , GHAZIABAD, UTTARPRADESH AND ITO (TDS) , NASHIK [ 2016 (10) TMI 92 - ITAT PUNE] prior to 1.06.2015 late fee u/s 234E cannot be charged while processing quarterly return u/s 200A Identical issue came up for adjudication before the Third Member Bench in the case of Emsons Exim Pvt. Ltd., v. ITO [ 2019 (8) TMI 1461 - ITAT MUMBAI] and the Third Member agreed with the view that fee u/s. 234E of the Act can only be charged in respect of delay in filing the statements of TDS for the period after 01st June, 2015. Thus we delete the late fee levied u/s 234E of the Act while passing intimations u/s 200A of the Act for the financial year 2012-13 where admittedly the intimations were passed on 22.12.2013 which is prior to 1.6.2015 in this case. - Decided in favour of assessee.
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2020 (4) TMI 477
Computation of tax u/s 115JB - not granting MAT credit u/s 115JAA including surcharge and cess as claimed by the assessee - HELD THAT:- As decided in M/S VIRTUSA (INDIA) PVT. LTD. VERSUS DCIT, CIRCLE 17 (2) , HYDERABAD [ 2016 (3) TMI 245 - ITAT HYDERABAD] the tax liabilities for normal provisions as well as MAT are calculated with surcharge and cess. The MAT credit in row 7 are calculated automatically using the prescribed algorithm, this is nothing but balancing figure i.e., the difference between tax liability as per normal provisions and MAT provisions. Both the above tax liabilities are calculated with surcharge and cess. These are the standard format, which are expected to be followed by all the assessees and also important to note that the above format of ITR 6 was amended w.e.f. AY 2012-13 by CBDT. Moreover, this is more relevant for the department also. These formats are regulated by CBDT. Assessing Officer cannot overlook these formats and (interpret it in his own method of calculating tax credit while making assessment u/s 143(1) of the Act.) proceed to calculate the MAT credit to compute assessment u/s 143(1) applying different methods when the proper and correct method as proposed by CBDT in ITR-6. The Assessing Officer is expected to follow the ITR-6 format to complete the assessment u/s 143(1) or 143(3) of the Act. Apex court decision in the case of K. Srinivasan [ 1971 (11) TMI 2 - SUPREME COURT] may not have been brought to the knowledge of the ITAT, Delhi. Moreover, the explanation 2 of section 115JB is applicable to calculate tax liability u/s 115JB and the same explanation should also be applied for giving credit u/s 115JAA. The tax liabilities calculated u/s 115JB by applying the explanation 2, the tax liability so computed are remitted by the assessee and then the same was carried forward for future MAT credit. In our view, while calculating the MAT credit u/s 115JAA, the same explanation 2 in section 115JB must be applied. The assessee had followed the procedure properly and the Assessing Officer had made the calculations applying his own interpretation or relied on the programme, we are not sure whether it is programme hitch or the interpretation of Assessing Officer was not in line with the calculations proposed in ITR-6. Therefore, we delete the addition made. - Decided in favour of assessee.
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2020 (4) TMI 476
Condonation of delay filling Rectification u/s 254(2) - delay of 304 days in filing of the miscellaneous application - HELD THAT:- As relying on case OM PRAKASH SANGWAN VERSUS ITO, WARD-33 (4) , NEW DELHI [ 2018 (5) TMI 1789 - DELHI HIGH COURT] we hold that the application of the assessee is not barred by limitation. On merits, the assessee has appeared before us and satisfied us that there was sufficient cause for his non-appearance when the appeal was called for hearing. The Tribunal had not adjudicated this appeal on merits, as per law. Thus, we set aside the order of this Tribunal and restore the appeal in terms of proviso to Rule 24 of the Income Tax Appellate Tribunal Rules, 1963. The registry is directed to post the appeal for hearing on 03/09/2019. As this date was pronounced in the open court, no separate notice of hearing shall be issued to either party. Miscellaneous application of the assessee is allowed.
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Customs
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2020 (4) TMI 475
Permission for setting up a 'Software Technology Park' with retrospective date - It is the case of the writ petitioner that certain imports had been made sometime in October-November 2005. These imports pertain to setting up of proposed STP is writ petitioner counsel's say and these imports have been made by claiming benefit of customs notification being N/N. 153/93 - HELD THAT:- Having imported goods in October-November 2005 itself without waiting for LOP, writ petitioner cannot make a request now to advance the effective date of approval merely to take advantage and get benefit under a Customs notification. In the considered opinion of this Court, no tenable arguments has been made to say that the impugned order needs to be interfered with when the refusal to advance the effective date is based on the undisputed factual position that writ petitioner had only LOT and went ahead without waiting for LOP. Petition dismissed.
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2020 (4) TMI 474
Release of imported goods - stay of implementation of impugned order - Commissioner of Customs dropped the proceedings - As per revenue, seizure and confiscation is also necessary for recovery of duty - HELD THAT:- We fail to see the extent to which continued control of the imported goods could alleviate possible harm to the exchequer. The show cause notice proposes that the said goods be confiscated and such confiscation, not being deprived of the option of redemption, merely enables recovery of fine without recourse to the goods themselves. Sale of these goods, under section 142 of Customs Act, 1962, is, consequently, not an acceptable course of action. Moreover, the value of goods under control of customs authorities is but a fifth of the amount in dispute. The legal implication of stay of implementation of the impugned order remains unexplained. An order dropping proceedings, if held to be non-operable pending disposal of the appeal, merely restores the allegations in the show cause notice for fresh determination by the Tribunal save file file. The appeal of Revenue has the very same consequence - No case has been made out by Revenue that, sans our intervention, miscarriage of justice will ensue. The Tribunal is legally enjoined to determine a dispute arising from the relevant tax laws and not as an alternative for administration of the tax system. The effect of the present application for stay of operation appears to be the latter and which we decline to, tacitly or covertly, to be a participant in. Accordingly, the application for stay is rejected. As the issue involves substantial revenue, the application is allowed and Registry is directed to list the appeal for disposal on 30th March 2020.
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Corporate Laws
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2020 (4) TMI 473
Holding of Directorship in more than the maximum number of companies - continuation in holding such directorship even after one year from commencement of the Companies Act, 2013 - contravention of Section 165(3) which is punishable under 165(6) of the Companies Act, 2013. Whether the complainant has proved the documents filed with the complaint? - HELD THAT:- The complainant has filed Ex. CW-1/1 which is computer printout dt. 24.08.17 downloaded from the MCA portal showing the details of DIN application. This document bears stamp of the ROC alongwith signatures of Dy./AROC - This document satisfied the requirement of admissibility of document as evidence U/s 397 of the Act. The document CW-1/2 also bears stamp of certification of the Registrar of Companies as provided under the Act. There is due compliance of section 397 of the Act to prove the evidence of documents kept by Registrar. Hence, the complainant has proved the documents as admissible evidence for the present prosecution. Whether CW-1 Ms. Shefali Gupta AROC is competent to depose in the present case? - HELD THAT:- The complaint was filed by a public servant in his official capacity and admittedly, he was transferred during the pendency of the present case. Witness CW-1 Ms. Shefali Gupta is presently posted as Assistant Registrar of Companies and derives her knowledge on the basis of official record. The argument of CW-1 being an incompetent witness is rejected. Whether the complaint is barred by limitation? - HELD THAT:- The offence U/s 165 of Companies Act is continuing in nature till the directorship of accused remains in more than 20 companies after 01.04.15 . As per Ex. CW-1/2 the accused was shown as director in more than 20 companies as on 26.07.17 i.e. the date when Ex. CW-1/2 was downloaded from MCA portal. However, complainant themselves have filed copy of letter dt. 23.02.17 of the accused which is Ex. CW-1/4 wherein accused has detailed that his directorship is within the permissible limit as provided U/s 165 of Companies Act - The resignation of accused has not been filed with the complainant office. Moreover, offence U/s 165 is punishable with fine only for each day during which the default continues. The present complaint is within limitation as offence U/s 165 of the Companies Act, 2013 is a continuing offence - the argument of Ld. Counsel that complaint is barred by limitation is humbly rejected. Whether the accused Roop Kishore Madan is/was Director in more than 20 companies on the date of filing of the complaint? - HELD THAT:- The onus is upon the complainant to prove that accused Roop Kishore Madan was Director in more than the number of companies which is permissible under Section 165 of Companies Act, 2013. CW-1 has proved Ex. CW-1/1 Ex. CW-1/2 to show the Directorship of accused - The Ex. CW-1/1 was taken from the MCA portal which reflects name and address details of the accused along with DIN No. 00656697. Ex. CW-1/2 shows a list of companies in which the DIN number of accused is used for his appointment as Director. No evidence has been led to show submission of resignation before 01.04.15 by the accused - the complainant has proved the allegations against the accused beyond reasonable doubt. Accordingly, accused Roop Kishore Madan is convicted for the offence under Section 165(6) for contravention of Section 165(3) of the Companies Act, 2013 - decided against accused - application disposed off.
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Insolvency & Bankruptcy
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2020 (4) TMI 472
Extension of time in the Corporate Insolvency Resolution Process - third proviso of Section 12 inserted vide Gazette Notification dated 6th August, 2019 - HELD THAT:- Section 12 has been amended which described time limit for completion of Corporate Insolvency Resolution Process which has been amended by addition of two more proviso to sub-section (3) of Section 12 which can be stated to be second and third proviso. This has come into force w.e.f. 16th August, 2019 vide SO No. 2953E - In terms of third proviso of sub-section (3) of Section 12, as we find that the Corporate Insolvency Resolution Process of the Corporate Debtor is pending and has not been completed within the period referred to in the second proviso, we hold that the Corporate Insolvency Resolution Process is to be completed within another period of 90 days from the date of commencement of Insolvency Bankruptcy Code (Amendment Act, 2019) i.e. w.e.f. 16th August, 2019. In view of the fact that the period has been extended for another 90 days in the present case in view of third proviso to sub-section (3) of Section 12, the impugned order is set aside and the Resolution Applicant is allowed to move before the Committee of Creditors and Resolution Professional and direct completing of the process within 90 days from the date of commencement of Insolvency Bankruptcy Code (Amendment Act, 2019) i.e. w.e.f. 16th August, 2019 - Appeal allowed.
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Central Excise
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2020 (4) TMI 471
Refund of CENVAT Credit - refund rejected on the ground of time limitation and unjust enrichment - goods supplied to navy in terms of N/N. 64/95-CE dated 16.03.1995 - wrongful reversal of credit as per under Rule 6 (3A) of CCR - whether the wrong reversal of amount in the cenvat credit account by the appellant would amount to payment of duty to the Government? - HELD THAT:- The Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, TIRUPATI VERSUS M/S SNJ SUGARS AND PRODUCTS LTD. [ 2018 (3) TMI 345 - CESTAT HYDERABAD ] where it was held that the amount paid by respondent being an amount and does not amount to duty, the provisions of Section 11B of the Central Excise Act, 1944, would not get attracted to such refund claims, and the bar of unjust enrichment will not apply, as the said provisions of Section 11B of Central Excise Act, will apply to refund is a duty. The rejection of refund on the ground of time bar cannot sustain - The Commissioner (Appals) has remanded to look into the issue of unjust enrichment. The appellant has to establish that the duty burden has not been passed on to another in the remand proceedings ordered by the Commissioner (Appeals) - appeal allowed in part and part matter on remand.
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2020 (4) TMI 470
Extended period of limitation - CENVAT credit - inputs issued by the units, who are availing exemption under Notification No. 01/10-CE dt. 06.02.2010 - area based exemption - credit denied on the premise as per Notification No. 02/14-CE (N.T.) dt. 20.01.2014, the appellant was not entitled to credit prior to the Notification No. 01/10-CE dt. 06.02.2010 - period involved in this case is 01.06.2012 to 19.01.2014 but SCN issued by invoking extended period on 21.06.2017. HELD THAT:- In their own case M/S. B.R. AGROTECH LTD. VERSUS CCE ST, JAMMU [2018 (10) TMI 1828 - CESTAT CHANDIGARH] for the same period, this Tribunal has already held that extended period of limitation is not invokable holding that when the Revenue is having divergent views on the issue, the extended period of limitation is not applicable. The extended period of limitation is not invokable - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 469
Valuation - allowability of deduction of discounts which are known at the time of clearance of goods from Depot but are quantified later - Finalization of provisional assessment of goods - rejection of request for provisional assessment - HELD THAT:- The issue is no more res-integra, in view of the decision of Hon ble Apex Court in the case of UNION OF INDIA OTHERS VERSUS BOMBAY TYRES INTERNATIONAL PVT. LTD. [ 1983 (11) TMI 70 - SUPREME COURT] where it was held that the deduction of trade discounts known and understood at the time of removal of goods is permissible even if the same are quantified later. Thus, though the availability of the discounts was known at the time of clearance of the goods, these were quantified later but are to be deducted from transaction value. Thus, at the time of clearance of goods, since there is no quantification of demand, provisional assessment needs to be resorted to. This is also in line with the Board s Circular dated 30.06.2000 - the rejection of the request for provisional assessment was incorrect and unsustainable in law and the learned Commissioner (Appeals) has rightly set aside the order passed by the learned Assistant Commissioner, rejecting the request for provisional assessment. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2020 (4) TMI 492
Time limitation for Finalization of assessment - case of appellant is that the proceedings for finalization of the assessment was initiated beyond the time limit stipulated under Section 25 (1) of the Kerala Value Added Tax Act, 2003 - validity of Section 174 of the KSGST Act - HELD THAT:- The grounds raised in the writ petition other than the one relating to validity of Section 174 of the KSGST Act, has not been looked into by the Single Judge. Under such circumstances, a remand of the writ petition for a fresh consideration and disposal, on the grounds raised other than the one relating to validity of Section 174 of the KSGST Act, would suffice to meet the ends of justice. Appeal allowed by way of remand.
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2020 (4) TMI 468
Rectification of mistake - mistake apparent on the face of record - Principles of natural justice - the petitioner is not been afforded any reasonable opportunity of being heard by the 1st respondent even prior to the present stage of the decision said to have been taken - HELD THAT:- The Secretary to the office of the Advocate General will immediately forward a copy of this judgment to the 1st respondent, for necessary information and immediate compliance. Petition disposed off.
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2020 (4) TMI 467
Levy of penalty - Exemption from levy of tax - TNVAT Act - non-filing of Form-WW - violation of Section 63A(1) of the TNVAT Act - violation of principles of natural justice - HELD THAT:- It is seen that the impugned order of assessment was passed on the reason that the petitioner has not responded to the notice of proposal. The impugned order has referred to three notices viz., 04.01.2019, 01.03.2019 and 22.04.2019. Insofar as the first notice dated 04.01.2019 is concerned, the petitioner is not disputing the receipt of the same and however, it is stated that the petitioner has paid the penalty of ₹ 10,000/- on 01.06.2019. Insofar as the other two notices viz., 01.03.2019 and 22.04.2019 are concerned, it is the specific case of the petitioner that those notices were not served on the petitioner. It is for the respondent to establish the proof of service. However, it is stated that the respondent is not having acknowledgment or returned post relevant to the notice dated 22.04.2019. Therefore, it is to be construed that no such notice was served on the petitioner. Thus, it is evident that the impugned order was passed without issuing notice to the petitioner or effecting proper service of the same. This Court is of the view that a final opportunity shall be granted to the petitioner so as to enable them to appear and place all the material documents before the Assessing Officer to redo the assessment on merits and in accordance with law - the matter is remitted back to the Assessing Officer to redo the assessment - Petition allowed by way of remand.
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2020 (4) TMI 466
Stock Transfer - failure to furnish Form F - personal hearing not availed - principles of natural justice - Transfer of equipments and machineries from one site to other site between States - HELD THAT:- Even though it is stated that an opportunity of personal hearing was not availed by the petitioner, there is no averment as to the letter written by the petitioner on 25.06.2019 and that the delivery of the personal hearing notice, after the time fixed for the same. At the out set, this Court is of the view that the respondents have not complied with the principles of natural justice, as directed by this Court in its earlier order, dated 12.06.2018. On this ground alone, the impugned orders are liable to be set aside - In the instant case, tax is levied for transfer of equipments and machineries from one site to other site between States. When the requirement of the machinery is accomplished at one site in execution of the project, naturally, it will be taken to the other site, where it is required. Even in the present case, it is a clear case that the petitioner is a Contractor involved in Infrastructure construction. In the present case, he has been carrying out construction of roads for the National Highways Authority of India. Perusal of the impugned orders show that the person who transferred the goods and the consignee are one and the same. In that event, transfer of equipments and machinery will not amount to transfer of property and the process of sale or resale is not attracted in this transaction - the impugned assessment orders passed by the respondent set aside - petition allowed.
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