Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 22, 2019
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Scope of Section 44BB - Reference to full bench - amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section(2) of Section 44BB for computing tax liability
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Condonation of delay in filing claim of carry forward losses u/s 119(2)(b) - in case of genuine hardship, if on account of reasons beyond the control of the assessee, an application or claim is not made by the assessee within the period specified in the Act, that powers u/s 119(2)(b) are required to be exercised by CBDT.
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Taxability of LTCG & STCG as business income - assessee had treated the shares as investment, the number of transactions during the year were not large and held the shares for reasonably long period before selling - in view of CBDT Circular dated 29.2.2016, same shall not be put to the dispute by AO - taxable as capital gain
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Set off of brought forward business loss and brought forward long term capital loss - capital gains computed u/s 50 is be deemed to be short-term capital gains and this deeming fiction is restricted only for Section 50 but the benefit of set off of long term capital loss u/s 74 is to be allowed
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Interest received on short term deposits - income being the amount invested temporarily in short term deposits out of advance towards equity share capital by promoters are capital receipts and go to reduce the project cost with which it is inextricably linked - not exigible to tax as Income from Other Sources
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Penalty u/s 271AAB - In absence of the requisite contents of specific charge the initiation of proceedings cannot be sustained being bad in law - such defect is not curable u/s 292BB - quashed the penalty order
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Assessment u/s 153A - subsequent search - order of the Income tax Settlement Commission for A.Y 2005-06 had attained finality after first search - assessment order based on subsequent search framed u/s 153A is without jurisdiction and deserves to be quashed
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Deduction u/s 10A - compensation/damages received by the assessee on termination of export contract would be in the course of his export business and is to be treated as income derived from out of the business - qualifies for deduction
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Addition u/s 41(1) - appellant has written of some of the liabilities in the subsequent assessment years and offered the same as income - taxing such income in the year under consideration would amount to taxing the same income twice, which is impermissible in law
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Addition u/s 41(1) - AO alleged that liability is non-existent - section 41(1) can be invoked provided there is trading liability in existence - in absence of any liability, the question of taxing any income on the ground that there was remission or cessation such liability would not arise
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Waiver of interest u/s 220(2A) - three conditions namely, genuine hardship, circumstances beyond the control and co-operation in any enquiry relating to assessment or recovery have not been fulfilled by assessee - keeping in view the conduct of the petitioner, Commissioner has exercised its discretion judiciously - Waiver denied
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Benami transactions - offence under Benami Act - onus of proving a benami transaction - after amendment, the onus of proving a benami transaction rests entirely on the shoulders of the respondents (Benamidar & beneficial owner) - Once both are able to discharge their burden of proof, then the burden of proof would be shifted to the prosecution - since IO has miserably failed to discharge such burden of proof - appeal is dismissed
Customs
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Jurisdiction - power of Commissioner of Customs to extend the period for issue of SCN - After the amendment, Commissioner of Customs is fully empowered to pass such order for extension without reference to the person from whom the goods were seized.
Service Tax
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Classification of services - The fact that some of the students are being the Coventry University cannot be classified as the franchise services as proposed by the Revenue - We also find that the service by the way of education as a part of recognized university recognized by law is taxable neither taxability during the positive list nor under the negative list
Central Excise
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Availing cenvat credit wrongly - Since the duty is paid at the time of clearance of the final product, the credit availed on the inputs stand reversed already - thus, such credits are to be considered as non-taken abinitio.
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Demand of duty - receipt of inputs or not - demand based on statements of the suppliers of the inputs - cross-examination not allowed - Revenue has no other evidence - demand set aside.
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Classification of goods - Aluminium and Zinc Castings and articles thereof - the order in classifying the product as motor vehicle parts is incorrect - the same is classifiable as casting under respective sub-headings.
VAT
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Validity of Revised entitlement certificate dated 02.04.2018 - The RIPS-2003 is a composite scheme whereunder the benefits are conferred conditionally and therefore the argument of unreasonableness and arbitrariness is wholly misconceived.
Case Laws:
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Income Tax
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2019 (4) TMI 1182
Taxability of LTCG STCG as business income - assessee had treated the shares as investment, the number of transactions during the year were not large and held the shares for reasonably long period before selling - HELD THAT:- We are broadly in agreement with the view of the Tribunal. Most significant aspect as noted above is that out of total gain of ₹ 1,10,35,000/-, only 12,000/- represented short term capital gain. That apart, the CBDT has now issued Circular dated 29.2.2016 which provides that subject to certain conditions, any receipt of listed shares and securities held by an assessee for a period of more than 12 months if the assessee desires to treat the income from transfer of shares as capital gain, the same shall not be put to the dispute by the Assessing Officer. However, the stand of the assessee once taken would not be changed later. Under these circumstances, no question of law arises - Appeals dismissed.
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2019 (4) TMI 1181
Taxability of stock appreciation rights - HELD THAT:- Issue relating to redemption of stock appreciation rights constitutes income liable to tax or not is admitted by Court arises from decisions of tribunal decided following decision in SUMIT BHATTACHARYA VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 16 (1) , MUMBAI [ 2008 (1) TMI 655 - ITAT MUMBAI]
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2019 (4) TMI 1180
Assessment u/s 153A - questions of validity of search authorization against the assessee - statement was recorded at the fag end of the search when assessee was exhausted - compulsion to admit additional income - statement taken was not a statement as per the provisions of sec. 132(4) - HELD THAT:- We are of the opinion that even though revenue may have an arguable case in relation to the tribunal s first conclusion of invalidity of assessment u/s 153A, in view of the tribunal's ultimate conclusions, these Appeals are not required to be entertained. The tribunal in the impugned judgment while deleting additions on merits has come to the conclusion that the revenue authorities did not contradict the submissions of the assessee regarding impermissibility of reliance on certain documents and the statements recorded in search. The tribunal also noted that the analysis carried out by the Assessing Officer suffered from multiple infirmities. Assessing Officer had not carried out the qualitative analysis and had carried out on certain arithmetical calculations based on loose papers. In the result the entire issue is based on appreciation of materials on record. No question of law arises - Appeals are dismissed.
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2019 (4) TMI 1179
Year of taxability of the undisclosed receipts - income from such undisclosed receipts as per the regular methodology - In the returns the assessee also disclosed the same amount of income, but shifted the year of earning such income as per its method of accounting and also claimed expenditure in relation to such additional receipts - assessee company is engaged in the business of development of real estate properties and is declaring income from such business on the basis of a particular methodology, which has been accepted in the course of regular assessments. - HELD THAT:- It can be seen that the view of Assessing Officer would lead to contradictions, since the assessee s income would be based on two different methodologies. First would be income arising out of computation on the basis of regular methodology and the second would be in relation to the income on receipt basis. The tribunal therefore accepted that the declaration of the assessee in the returns filed post search, to avoid such contradictions the income had to be recognized as per the assessee s regular methodology. No question of law therefore arises. Deletion of the protective assessment - Since substantive assessment was confirmed and the benefit of telescoping granted by the CIT Appeals which was confirmed by the tribunal. Both issues are based entirely on facts. No question of law arises.
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2019 (4) TMI 1178
Deduction of compensation payment u/s 37(1) - assessee had entered into an agreement for purchase of an immovable property - there were number of charges and impediments in the title to the property and to clear this, the Assessee had to incur considerable expenditure - assessee could not provide the land then an MOU was executed to repay the principal with lumpsum compensation - CIT (A) held that the original MOU with the trust and the cancellation deed were executed on the same day on a stamp paper which was by way of an afterthought - HELD THAT:- We find that with respect to the Assessee s claim of expenditure of ₹ 6,00,60,000/ , the Assessing Officer having rejected claim as being non genuine, the CIT (A) further examined the materials on record. He noted that apparently, the original MOU with the trust and the cancellation deed were executed on the same day on a stamp paper which was by way of an afterthought. He further highlighted the discrepancies emerging from the record and observed that out of the opening balance of ₹ 7.3 Crores received from the said trust, an amount of ₹ 1.64 Crores was adjusted as advance for the land in the year under consideration. It was noted that though such advance of ₹ 1.64 Crores was given on the basis of the MOU dated 26/02/2007, the MOU itself does not mention such payment. The two revenue authorities and the Tribunal concurrently came to the conclusion that the claim of expenditure was not genuine. There were major discrepancies in the accounts and the documents presented by the Assessee in relation to such claim. We do not find there is any question of law arising. It is true that once in course of a business an expenditure is shown to have been incurred for the purpose of business, the Assessing Officer would not substitute his judgment for that of the Assessee in making such expenditure. However in the present case, the very genuineness of the expenditure has been rejected - No question of law arises - Appeal is dismissed. Disallowance of expenditure u/s 37(1) - The revenue authorities and the Tribunal concurrently held that the payments were not genuine. Reference to unregistered document was only by way of additional ground to reject the transaction. It was found that the entire transaction was bogus, was by way of afterthought and created in order to reduce the Assessee's tax liability. No question of law arises - Appeal is dismissed.
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2019 (4) TMI 1177
Scope of Section 44BB - Reference to full bench - Whether the amount reimbursed to the assessee by ONGC, representing the service tax paid by the assessee to the Government of India, should be included in computing the aggregate amount referred to in subsection (2) of Section 44BB of Act ? HELD THAT:- SCOPE OF SECTION 44BB(1) (2) - On its literal construction, Section 44BB(2) would only be the amount paid by the ONGC to the assessee on account of (i) provision of services in connection with or (ii) supply of plant and machinery on hire used in, the prospecting, extraction and production of mineral oils. As the amount reimbursed by the ONGC, towards the service tax paid by assessee earlier to the Government, is not an amount paid to the assessee towards the services provided by the latter in connection with the prospecting, extraction or production of mineral oils, it is not required to be included in the amounts specified in clauses (a) and (b) of Section 44BB(2). CAN SERVICE TAX BE PASSED ON TO THE SERVICE RECIPIENT - Service tax is levied, under the Finance Act, 1994, on services. Service tax is, therefore, a tax on service , and does not form part of the consideration paid for the services rendered, much less services rendered in connection with the prospecting, extraction or production of mineral oils. Reimbursement of service tax by the service recipient to the service provider, representing the amount of tax already paid by the service provider to the Government, would not constitute a part of the amount received for the services rendered by the service provider-assessee to the service recipient-ONGC, much less a part of the amount received for services rendered by the assessee in the prospecting for or the extraction or production of mineral oils. SCOPE OF SECTION 44BB(3) - Section 44BB(3) of the Act also contains a non-obstante clause, and would prevail notwithstanding anything to the contrary in Section 44BB(1) of the Act. Section 44BB(3) enables an assessee to claim a lower income under the head profits and gains, than the deemed income specified in Section 44BB(1) and (2), if it keeps and maintains such books of accounts, and other documents, as are required under Section 44AA(2), and gets its accounts audited and furnishes a report of such audit as is required under Section 44AB. In case an assessee complies with these requirements, the assessing officer is, thereafter, required to proceed to make an assessment of the total income or loss of the assessee, under sub-section (3) of Section 143, and determine the sum payable by, or refundable to, the assessee. CIRCULARS ISSUED BY THE CBDT: ITS EFFECT - Tax is required to be deducted at source, under Section 194-I of the Act, with respect to income paid by way of rent. Likewise tax is required to be deducted at source under Section 194-J by the service recipient when fees are paid towards professional or technical services rendered by the service provider. It is only because service tax, on such payment, was not income has the CBDT, in its Circulars dated 28.04.2008 and 13.01.2014, directed that tax should be deducted at source only on the net amount, paid towards rent or as fees for services rendered by the service provider, i.e. the total amount paid less service tax. The Circulars issues by the CBDT reflect its understanding that service tax paid by the assessee is not income . While it is true that, unlike income computed in terms of Sections 28 to 43D under Chapter IV of the Act, Section 44BB(2) is a special provision and requires ten percent of the gross receipts to be treated as income, the amount so determined is nonetheless the presumptive income of the assessee and should be deemed to be its income in terms of Sections 4, 5 and 9 of the Act. The circulars issued by the CBDT does support the submission, urged on behalf of the assessee, that service tax would not form part of the amounts referred to in clauses (a) and (b) of Section 44BB(2) of the Act. FAILURE OF THE DEPARTMENT TO PREFER AN APPEAL AGAINST THE JUDGMENT OF THE DELHI HIGH COURT: ITS CONSEQUENCES - Except to state that the said judgment needs re-consideration, no justifiable cause has been shown as to why this Court should take a view different from that of the Delhi High Court, in Mitchell Drilling International Pvt. Ltd. [ 2015 (10) TMI 259 - DELHI HIGH COURT] , more so when the Division Bench of the Delhi High Court has taken a view similar to that of a Division Bench of this Court in M/s Schlumberger Asia Services Ltd. [ 2009 (7) TMI 51 - UTTARAKHAND HIGH COURT] . As the revenue has not been able to show just cause for this Court to take a different view, we see no reason to differ with the Division Bench judgment of the Delhi High Court that reimbursement of service tax is not an amount paid to the assessee on account of providing services and facilities in connection with the prospecting for, or extraction or production of, mineral oils in India. CONCLUSION - We answer the reference in favour of the assessee, and against the Revenue, holding that the amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section(2) of Section 44BB of the Act.
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2019 (4) TMI 1176
Penalty u/s 271(1)(c) - deduction u/s 80IC - quantum decided in favour of assessee - HELD THAT:- It is an undisputed fact that the matter re: very quantum of tax liability stands decided in favour of the respondent- assessee by the Hon ble Supreme Court in Pr. Commissioner of Income Tax, Shimla versus M/s Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] and other connected matters. As a necessary corollary, the deletion of penalty by the ITAT would be fully justified and would leave no scope to raise any substantial question of law in this appeal.
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2019 (4) TMI 1175
Waiver of interest u/s 220 - levy of interest for non-payment of tax - application for waiver of interest rejected by CIT - HELD THAT:- In the present case, the assessee, at every stage, has challenged the order passed by the authorities. It is not a case where the assessee was ready to deposit the income tax. After the assessment order was passed by the Assessing Officer pursuant to the seizure operation, the Commissioner, keeping in view the conduct of the petitioner, has exercised its discretion judiciously and the three conditions laid down u/s 220 (2A) of the Income Tax Act, 1961 have not been fulfilled enabling the Commissioner to waive out the interest. Every person is having certain compulsion while paying interest and that cannot be the sole ground for allowing the application in respect of waiver of the interest. As relying on BM MALANI VERSUS COMMR. OF INCOME TAX ANR. [ 2008 (10) TMI 2 - SUPREME COURT ] he assessee is not entitled for any relief of whatsoever kind.
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2019 (4) TMI 1174
Deduction u/s 80P(2)(a)(i) - interest on securities and dividend are business income of banking business? - HELD THAT:- These questions of law have been decided in favour of the assessee and against the Department in the earlier Income Tax Appeal The Commissioner of Income Tax vs. M/s United Mercantile Cooperative Bank Ltd [ 2011 (11) TMI 666 - ALLAHABAD HIGH COURT] on the basis of the Apex Court judgment reported in Commissioner of Income Tax vs. Karnataka State Cooperative Apex Bank [ 2001 (8) TMI 9 - SUPREME COURT] wherein it has been held that interest arising from investment made in compliance with the statutory provisions to enable it to carry on banking business would be exempt u/s 80P(2)(a)(i). In this view of the matter, we are of the considered opinion that the order of the Tribunal does not suffer from any legal infirmity - appeal dismissed
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2019 (4) TMI 1173
Disallowances of bogus purchases to 25% - concern person of seller makes statement in search that he issued bogus bills to various parties on nominal commission - in light of the statement AO held that the evidence for purchase produced by the assessee was not genuine and disallowed - AO worked out the yield ratio and found that during the period from assessment years 1992-93 to 1997-98, there was a big variation in actual yield achieved - assessee company had not provided the reason for decrease in gross profit ratio and details of yield as called for - assessee also submitted that if the purchases are held to be bogus, the corresponding sales be excluded - CIT(A) restricted the disallowance to 25% - Tribunal dismissed the appeals - HELD THAT:- As can be seen from the order passed by the Commissioner (Appeals), he, after appreciating the material on record, has recorded a finding of fact to the effect that the assessee had produced goods by utilising such bulk drugs and it is in the light of such finding of fact recorded by him that he has restricted the disallowance on account of bogus purchases to 25%. The Tribunal has not disturbed such finding of fact recorded by the Commissioner (Appeals). A perusal of the proposed questions shows that the appellant has neither challenged the concurrent finding of fact recorded by the Commissioner (Appeals) and the Tribunal, nor has it been pleaded that the findings of fact recorded by the Tribunal are perverse. In the facts of the present case, the Tribunal, having concurrently found that there were corresponding sales in respect of the bogus purchases, was wholly justified in confirming the order passed by the Commissioner (Appeals) in restricting the bogus purchases to 25% of the bogus purchases. Since the Tribunal as well as the Commissioner (Appeals), have merely followed the decision of the jurisdictional High Court, no infirmity can be found in the impugned order passed by the Tribunal warranting interference. However, it may be clarified that the quantum of deduction, namely, 25% cannot be said to be a fixed standard, inasmuch as, in the case of Sanjay Oilcake Industries v. Commissioner of Income tax [ 2008 (3) TMI 323 - GUJARAT HIGH COURT] what the court has held was that the extent of restriction was merely an estimate and that an estimate cannot give rise to a question of law. Nonetheless, having regard to the facts and circumstances of this case, this court does not find any warrant for interference. In the light of the above discussion, the conclusion arrived at by the Tribunal being based upon a finding of fact, namely, that there were corresponding sales in respect of the bogus purchases, the impugned order passed by the Tribunal cannot be said to give rise to any question of law, much less, a substantial question of law warranting interference - appeals dismissed.
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2019 (4) TMI 1172
Reopening of assessment u/s 148 - notice in the name of a deceased person - HELD THAT:- Department had due notice about the death of the assessee, inasmuch as other proceedings under the Act had been taken against the petitioner as the legal heir of deceased assessee. Thus, despite the fact that the Department was well aware of the death of the assessee, the impugned notice under section 148 of the Act came to be issued to the deceased assessee and not to the heir and legal representative of the deceased. The impugned notice dated 29.03.2018 under section 148 of the Act which is a jurisdictional notice, having been issued in the name of a deceased person is invalid and lacks jurisdiction and, therefore, cannot be sustained. See CHANDRESHBHAI JAYANTIBHAI PATEL VERSUS THE INCOME TAX OFFICER [ 2019 (1) TMI 353 - GUJARAT HIGH COURT ] - Decided against revenue.
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2019 (4) TMI 1171
Addition u/s 41(1) - liabilities written off and offered as income in subsequent years - proof of existing liability - remission or cessation of non-existent liability - HELD THAT:- In the facts of the present case, while the assessee has shown the trading liability in its books of account, no benefit has been obtained in respect of such trading liability by way of remission or cessation thereof; under the circumstances, the requirements of section 41(1) are not satisfied in the present case. Any such cessation or remission of liability has to be in the previous year relevant to the assessment year under consideration, in the facts of the present case, it is not the case of the Assessing Officer that the liabilities ceased to exist in the previous year relevant to the assessment year under consideration. In fact the Assessing Officer has doubted the very genuineness of such liabilities. Therefore, in the absence of any liability, the question of taxing any income on the ground that there was remission or cessation of such non-existent liability would not arise. The Tribunal, in the impugned order, has held that the Assessing Officer was right to hold the financial year in question as the right year for taxability when the facts concurring the non-existence were unrevealed (sic. revealed/unraveled). Thus, the Tribunal has doubted the very existence of the trading liabilities. Thus, the reasoning adopted by the Tribunal is contrary to the provisions of section 41(1) of the Act, which can be invoked provided there is trading liability in existence and there is remission or cessation of such liability. If no trading liability exists, the question of invoking section 41(1) of the Act would not arise. Another relevant aspect of the matter is that the appellant has written of some of the liabilities in the subsequent assessment years and offered the same as income, therefore, taxing such income in the year under consideration would amount to taxing the same income twice, which is impermissible in law. - Decided in favour of assessee.
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2019 (4) TMI 1170
Revision u/s 263 - Adjustment u/s 115JB - book profit for MAT - HELD THAT:- Tribunal proceeded to allow the appeal principally on two grounds. Firstly, that by virtue of the judgment of Supreme Court in case of Apollo Tyres Ltd. Vs. Commissioner of Income Tax [ 2002 (5) TMI 5 - SUPREME COURT] , while computing the assessee's book profit under the MAT provision, the Assessing Officer cannot tinker with books of accounts duly audited. Secondly, that the Assessing Officer having carried out inquiries with respect to the genuineness of the donation, the Commissioner could not have exercised revisional powers. Quite apart from these observations of the Tribunal, independently we find that during the year under consideration the assessee had committed to a total donation of ₹ 12.75 crores, out of which ₹ 10.25 cores was actually donated during the period relevant to the assessment year in question. Out of the remaining ₹ 2.50 crores ₹ 2 crores was donated in the next year, but even before the date of closing of the account of the present year and remaining ₹ 50 lakhs was donated shortly after that. In view of such facts, we do not see any reasons to interfere. We are conscious that the decision of the Supreme Court in case of Apollo Tyres (supra) is referred to larger bench, however, this view has been followed consistently by this Court and we do not propose to depart from the same - appeal dismissed.
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2019 (4) TMI 1169
Condonation of delay in filing claim of carry forward losses u/s 119(2)(b) - After realising the mistake after change of CA petitioner filed an application before the CBDT for condonation of delay in filing the return of income claiming loss - rejected by CBDT stating that petitioner was not prevented from any circumstances beyond its control, no external factors preventing the petitioner from filing its revised return and petitioner is continuously earning profits and it cannot be said that payment of taxes will cause any genuine hardship to the bank - HELD THAT:- It is true that the authorised signatory and CEO of the Bank had signed the return of income, it cannot be gainsaid that the concerned officer would have relied upon the Chartered Accountant to have prepared a correct return of income. It is only after the income tax matters were handed over to another firm of Chartered Accountants, and the authorised representative called for the old records so as ascertain and substantiate the amount of brought forward losses available for set-off that it could be detected that though there was a book loss Thus, it was because of circumstances beyond its control that the petitioner could not file the return of income u/s 139(9) within the specified time, inasmuch as the error committed while filing of the return of income did not come to its notice till the Chartered Accountants were changed and the authorised representative called for the old records so as ascertain and substantiate the amount of brought forward losses available for set-off. Therefore, the petitioner has made out a case of genuine hardship for admitting the claim after the expiry of the period specified under the Act. In the opinion of this court, if one considers the reasoning adopted by the Board for rejecting the application, in no case would a bank or a company be in a position to avail of the benefit of section 119(2)(b) as all banks and companies would have employees who maintain the daily accounts and prepare or assist in preparation of Profit and Loss account as well as balance sheet; such books of account are subject to audit by regular auditors as well as tax auditors. It is in cases like the present one, wherein despite the aforesaid position, in case of genuine hardship, if on account of reasons beyond the control of the assessee, an application or claim is not made by the assessee within the period specified in the Act, that powers u/s 119(2)(b) are required to be exercised. In light of the above discussion, this court is of the considered view that the CBDT ought to have exercised such powers u/s 119(2)(b) of the Act and condoned the delay in filing the return of income.
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2019 (4) TMI 1168
Computation of deduction under section 10A - exclusion of expenses incurred in foreign currency, both from the export turnover and total turnover - HELD THAT:- What is excluded from the export turnover must also be excluded from total turnover, since one of the components of total turnover is export turnover. See TATA ELXSI LTD. case [2011 (8) TMI 782 - KARNATAKA HIGH COURT] Setting off of brought forward losses - HELD THAT:- While considering this aspect, the Tribunal relied upon the decision in Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT ] and held in favour of the assessee Compensation amount received by the assessee on account of termination of export/service contract - whether that income could be treated as business income arising out of export item? - HELD THAT:- This court in M/S. HEWLETT PACKARD GLOBAL SOFT LTD. [ 2017 (11) TMI 205 - KARNATAKA HIGH COURT ] has held that the interest income derived by the assessee would be eligible for deduction under section 10A of the Act. Likewise, in the case on hand, the compensation/damages received by the assessee on termination of export contract would be in the course of his export business and is to be treated as income derived from out of the business, which qualifies for deduction under section 10A of the Act. Deduction of amount from the export turnover which relates to software supplied to another STP unit - HELD THAT:- The Tribunal while answering the said question held that it is a deemed export, as the export is done through STP unit and foreign exchange is earned. This court in Tata Elxsi Ltd. v. Asst. CIT [2015 (10) TMI 634 - KARNATAKA HIGH COURT] it is clear that if an assessee wants to claim the benefit of section 10A, firstly he must export articles or things or computer software. Secondly, the export may be done directly by him or through other exporter after fulfilling the conditions mentioned therein. Thirdly, such an export should yield foreign exchange which should be brought into the country. If all these three conditions are fulfilled, then the object of enacting section 10A is fulfilled, and the assessee would be entitled to the benefit of exemption from payment of Income-tax on the profits and gains derived by the undertaking from the export .
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2019 (4) TMI 1167
Monetary limit - maintainability of appeal - tax effect - HELD THAT:- The present appeal filed by the Revenue neither has any cascading tax effect nor it involves any issues of common principles involved in a group of matters or a large number of matters. Thus, the decision initially pointed out by the learned counsel for the appellant-Revenue in the case of CIT v. Gemini Distilleries [ 2017 (10) TMI 1275 - SUPREME COURT OF INDIA] does not come in the way of the present appeal being withdrawn and the withdrawal of the appeal can be permitted as per recent Central Board of Direct Taxes' circular dated July 11, 2018. Assessee does not dispute this position. Accordingly, in view of the aforesaid reasons and the Circular dated July 11, 2018 issued by the Central Board of Direct Taxes, the present appeal filed by the appellant-Revenue is permitted to be withdrawn. The appeal is, accordingly, dismissed as withdrawn/not pressed.
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2019 (4) TMI 1166
Disallowance of commission expenditure - allowable revenue expenditure u/s 37 - payment to various customers/registry consultants purchasing the stamp papers - deficiency of not maintaining necessary vouchers and acknowledgement receipts at the end of the assessee for paying commission to the persons purchasing the stamp from him - HELD THAT:- On one hand the assessee has placed all financial statements, stamp sale registers showing the claim of commission expenditure along with financial statements, income tax returns, affidavits of various registry consultants and also showing the register entering date wise entry of commission paid as and when the stamps are sold. On the other hand the only allegation made by the Ld. A.O is that the claim of commission is not supported by any documentary evidence. It is true that each and every entry of commission payment the assessee has not provided the details and the same seems to be impractical because the entries of commission payment are multiple times in a day and it is not practically possible to take a receipt from each and every person who may be either a registry consultants or the customer actually using the stamp for himself. However one cannot deny the fact that the person who is coming to purchase the stamp from a stamp vendor is conscious of the fact that the stamp vendors are earning some commission/income from sale of stamp paper. There being multiple stamp vendors, the customer has a liberty/option to purchase stamp paper from the stamp vendor who gives maximum commission or parts with maximum profits embedded in the stamp value. One of the well known business principle is that for increasing the gross revenue the profit margin needs to be reduced and same seems to be the situation of the assessee. Thus out of the total disallowance disallowance of commission to the extent of 25% shall be justified to cover the deficiency of not maintaining necessary vouchers and acknowledgement receipts at the end of the assessee for paying commission to the persons purchasing the stamp from him. We accordingly order so and set aside the finding of both the lower authorities and partly allow assessee s appeal by sustaining disallowance of commission expenditure at ₹ 2,52,572/-. - Decided partly in favour of assessee
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2019 (4) TMI 1165
Assessment u/s 153A - jurisdiction of AO to assess the assessee for the year under consideration on the basis of subsequent search - issues attained finality by the order of the Settlement Commission for assessment year covered in first search - DR contended that disclosure before the Settlement Commission was not true and correct and, therefore, the AO was well within his power to frame the assessment u/s 153A - HELD THAT:- Revenue is free to approach the Income Tax Settlement Commission as held by the Hon'ble High Court of Delhi M/S. OMAXE LTD. AND ANOTHER VERSUS DEPUTY COMMISSIONER OF INCOME TAX AND ANOTHER [ 2014 (5) TMI 147 - DELHI HIGH COURT] . Respectfully following the judgments of the Hon'ble Delhi High Court [supra], we hold that the assessment order framed u/s 153A of the Act is without jurisdiction and deserves to be quashed.
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2019 (4) TMI 1164
Deduction u/s 80IB(10) on pro-rata basis - certain residential units had built up area in excess of prescribed limit of 1,000 sq.ft. - assessee had violated the provisions of section 80IB(10)(e) and 80IB(10)(f) - HELD THAT:- We find that Ld. CIT(A) had decided this ground in favour of assessee by relying upon the various judgments of Jurisdictional ITAT mentioned in its order and also the orders in assessee s own case for AY 2012-13 wherein the claim of deduction had been allowed on pro-rata basis. Even during the year under appeal, the assessee had sold two flats and had worked the proportionate disallowance. Hence, CIT(A) had rightly directed the AO to disallow the claim of deduction on pro-rata basis of the two flats and allow the claim of deduction on the balance amount. No new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or deviate from the findings so recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this ground raised by the revenue stands dismissed.
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2019 (4) TMI 1163
Penalty u/s 271AAB - no notice of initiating penalty u/s 271AAB(1)(a) was given to the assessee - defective notice - defect curable u/s 292BB - HELD THAT:- A bare reading of the notice suggests that the notice has been issued in a casual fashion. AO has not applied his mind and no specific charge is mentioned for which the assessee was required to be show caused. In absence of the requisite contents of specific charge the initiation of proceedings cannot be sustained being bad in law. Admittedly, CIT(A) reduced the penalty by applying the provisions of section 271AAB(1)(a). There is no ambiguity under the law so far powers of Ld. CIT(A) is concerned, he can modify the penalty order by enhancing or reducing the penalty. However, where the Act provides for two different rates under different two provisions of law in our considered view, the assessee ought to have been given an opportunity of hearing on this aspect. However, in the present case at the very inception notice initiating penalty is not in accordance with mandates of law. Moreover, it is settled position of law that such defect is not curable u/s 292BB of the Act. Therefore, we hereby quash the penalty order. - Decided in favour of assessee.
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2019 (4) TMI 1162
Ex-party appeal order - assessee sought adjournment by explaining the reasons - reasonable cause for not attending the proceedings - HELD THAT:- Reasons given in the letter as recorded by the ld. CIT(A) are reasonable cause for not attending the proceedings because the ld. AR of the assessee was busy in Central Council of ICAI elections scheduled for 8th 9th December, 2018. Though the CIT(A) granted sufficient opportunities to the assessee however, on the last occasion when the AR has explained the reasons for not attending the hearing then having regard to the facts and circumstances of the case one more opportunity ought to have been granted to the assessee. As regards the maintainability of the appeal for want of e-filing, we note that the ld. CIT(A) except giving the reasons in the impugned order did not raise this defect by issuing any notice or otherwise for rectification of the same on the part of the assessee. Though there was a defect in filing of appeal as the assessee did not file electronically but filed in physical form therefore, the said defect is required to be removed by the assessee. Accordingly, in the facts and circumstances of the case as well as in the interest of justice, we set aside the impugned order of the ld. CIT(A) and remand the matter to the record of the ld. CIT(A) for adjudication of the same afresh after giving an opportunity of hearing to the assessee. The assessee is directed to remove the defects and e- file the appeal within a period of 30 days from the date of this order.
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2019 (4) TMI 1160
Interest received on short term deposits - nature of receipts - deposits kept temporarily with Bank out of advances towards share capital from promoters during the construction period i.e., for purchase of land, grading and development thereof for industrial purposes, development of infrastructure, payment to consultants, civil contractors, advance payments to machinery suppliers, prior to the commencement of business - to be capitalized and set off in capital work-in-progress as contended by the assessee OR is to be taxed as income under the head Income from Other Sources as held by the authorities below - HELD THAT:- In the case of Indian Oil Panipat Power Consortium Ltd., Vs. ITO [ 2009 (2) TMI 32 - DELHI HIGH COURT] and the other decisions referred we are unable to sustain the view taken by the learned CIT(A) by placing reliance on the decision in the case of Tuticorin Alkalis Chemicals and Fertilizers Ltd. [ 1997 (7) TMI 4 - SUPREME COURT] . Respectfully following, inter alia, the decision of the Hon ble Delhi High Court in the case of Indian Oil Panipat Power Consortium Ltd.,(supra), we hold that the interest income being the amount invested temporarily in short term deposits out of advance towards equity share capital by promoters are capital receipts and go to reduce the project cost of setting up the aromatic complex at MSEZ with which it is inextricably linked. We, therefore, reverse the findings rendered by the authorities below that the aforesaid interest is exigible to tax under the head Income from Other Sources . Consequently, the grounds raised by the assessee on this issue are allowed.
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2019 (4) TMI 1159
Set off of brought forward business loss and brought forward long term capital loss against the deemed short term capital gain computed u/s 50 - CIT-A allowed the claim - HELD THAT:- High Court in M/S. MANALI INVESTMENT [ 2013 (12) TMI 333 - BOMBAY HIGH COURT] has considered the issue of allowance of set off of long term capital loss in terms of section 74 of the Act against the short term capital gain computed u/s 50. Hon ble High Court has observed that by virtue of Section 50 of the Act, only the capital gains is to be computed in terms thereof and be deemed to be short-term capital gains and this deeming fiction is restricted only for the purposes of Section 50 of the Act but the benefit of set off of long term capital loss under section 74 of the Act is to be allowed. Hon ble High Court has also followed its decision in the case of CIT vs. . Ace Builders (P.) Ltd, [ 2005 (3) TMI 36 - BOMBAY HIGH COURT] As regards to set off of business loss against gain on sale of depreciable asset of factory building by the assessee, We find that the co-ordinate Bench of the Tribunal in the case of M/s. Raj Shree Roadlines vs ITO [ 2013 (3) TMI 811 - ITAT MUMBAI] for A.Y . 2007-08 has considered the issue of business loss of unabsorbed depreciation and eligible business loss can be set off against short term capital gain computed u/s 50 of the Act. We find that the Tribunal after considering the provisions of section 32(2), 72(2) and 73(3) of the Act opined that while deciding the issue of carrying forward of loss/unabsorbed depreciation and the amendment made in these section from time to time are applicable for carrying forward of depreciation/loss with effect from 1.4.2002. In the case of Manali Investment [ 2013 (12) TMI 333 - BOMBAY HIGH COURT] wherein, it is held that short term capital gain computed under section.50 of the Act can be set off against brought forward capital loss and also brought forward business loss. Accordingly, we are of the considered view that the CIT(A) has rightly allowed the claim of the assessee and we affirm the same - Decided against revenue
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2019 (4) TMI 1158
Search and seizure action u/s 132(1) - ex-parte order - During the course of search cash, gold coins and diamond jewellery were found and accordingly additions were made - HELD THAT:- Aggrieved by the order of AO, the assessee preferred an appeal before the Ld. CIT(A) who after considering the submissions and contentions of the assessee passed order dismissing the appeal of the assessee. During the course of hearing nothing has been brought before us to controvert the findings of the CIT(A) which otherwise appear to be correct and reasonable. After hearing the Ld. D.R. and considering the facts on record and merits of the case, we find that the Ld. CIT(A) has passed a reasoned order and we are inclined to affirm the same - Appeal of the assessee is dismissed
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2019 (4) TMI 1157
Disallowance of excess remuneration - addition 40A(2)(b) - commercial expediency - remuneration to Managing/Whole Time Directors, in excess of the limits specified u/s 198 r.w.s. 309 of the Companies Act, 1956, for which approval of the Central Government is pending to be filed - non-compliance of transactions entered u/s 297 of the Companies Act - HELD THAT:- In the instant case, after the closure of the books and audit of accounts for the year ended 31.03.2011 (AY 2011-12), being the impugned year, the auditors noticed that the remuneration sanctioned by the EGM and paid to the Directors was in excess of the limits set out in Schedule-XIII of the Companies Act. The excess can be redone by an appropriate application to the Central Government u/s 309 of the Companies Act. Accordingly, the statutory auditors in their audit report vide para (g) made comments without quantifying in any manner the alleged excess. Further, we find that the entire excess which is paid by a valid resolution, sanctioning higher remuneration was repaid back to the company by a pro-tanto reduced remuneration for the subsequent 3 years. It shows that the payments made earlier and recovery later are within the four corners of law. There is no infraction of provisions of Income Tax Act. We delete the addition made by the AO - Decided in favour of assessee
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2019 (4) TMI 1156
Penalty u/s 271(1)(c) - unexplained income - CIT-A reducing the penalty in respect of cash component for only 3 units for which evidence was found during the search - HELD THAT:- As mentioned earlier the Ld. CIT(A) restricted the addition to the extent of 17% and deleted the balance 83% of estimate. In appeal, in assessee s own case for AY 2007-08 have directed the AO to delete the addition made on account of extrapolation in respect of advances received during the year. Observing that such an exaggerated/wild extrapolation in the matter is unjust and unwarranted, especially when enquiries were done and nothing adverse was found against the assessee and as the offer of ₹ 1 crore made covers all the discrepancies, the Tribunal held that no further additions made by the AO/CIT(A) is sustainable. Also in respect of the additional ground filed by the assessee to the effect that notice u/s 143(2) was not issued to the assessee within a period of 12 months from the date of filing of return for the impugned assessment year, the Tribunal restored the ground to the file of the AO for deciding afresh as per law after verifying the records. Addition on account of on-money - CIT(A) restricted the addition to the extent of 17% and deleted the balance 83% of estimate basis - HELD THAT:- Tribunal directed the AO to delete the addition made on account of extrapolation in respect of advances received during the year. Further observing that such an exaggerated/wild extrapolation in the matter is unjust and unwarranted especially when inquiries were done and nothing adverse was found against the assessee and as the offer of ₹ 1 crore covers all the discrepancies, the Tribunal held that no further additions made by the AO/CIT(A) is sustainable. Also in respect of the additional ground filed by the assessee to the effect that notice u/s 143(2) was not issued to the assessee within a period of 12 months from the date of filing of return for the impugned assessment year, the Tribunal restored the ground to the file of the AO for deciding afresh as per law after verifying the records.
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2019 (4) TMI 1155
Reopening of assessment - deduction u/s. 43B disallowed - HELD THAT:- As per tax audit report, it was stated that this claim is u/s. 43B and this is accepted factual position that no payment was made in the present year and therefore, deduction u/s. 43B is not allowable in the present year u/s. 43B. As per the relevant portion of tax audit report it is seen that it has been shown that property registration fees was paid out of opening balance of ₹ 96 Lakhs which has been paid during the present year and regarding date of remittance, it is said that Note no. 3 is relevant and note no. 3 says that paid / adjusted during the year and when this is admitted position of fact that payment was not made in the present year and there is no evidence to claim in the tax audit report, in our considered opinion, the reopening is valid because at the stage of reopening, only a prima facie case has to be made out by the AO that some income has escaped assessment and the AO has done so in the present case. In this view of the matter, we uphold the reopening. Ground no. 2 is rejected. Merit of the disallowance u/s 43B - HELD THAT:- The claim of the assessee is this that in earlier year, certain provisions was made and the same was disallowed in the respective year u/s. 43B and in the present year, such provision is reversed by debit to provision account and credit to rent account. This is the claim of the assessee that such credit to rent account in the present year by way of reversal of the earlier provision having been already disallowed in the respective year, cannot be taxed in the present year. If the facts stated by assessee are correct then the claim of assessee is acceptable. But since this factual aspect has never been examined by AO or CIT (A), we feel it proper to restore the matter back to the file of AO for factual verification of this aspect of the matter. Ground no. 3 is allowed for statistical purposes.
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2019 (4) TMI 1154
Disallowance of deduction claimed u/s. 80IB in respect of gumbased unit - HELD THAT:- In the assessment order under appeal, the AO did not make any analysis of the transfer price and has simply held that artificial profits in the case of Buddi Unit, have been created. Since it is a settled issue that the deduction 80IB is to be allowed, even if the goods produced by any eligible unit are capitively consumed, the AO observation that Buddi Unit is not eligible for deduction u/s. 80IB was not upheld by the Ld. CIT(A). As regards, section 80IA(8) and the transfer price of the goods, the facts in the year, under appeal, are same as in AY 2003-04. CIT(A) has by following the order of the Tribunal as well as the earlier order of the Ld. CIT(A) in respect of assessment year 2003-04, as aforesaid has rightly held that disallowance made by the AO was not confirmed even on the alternative reasoning which the AO had taken in AY 2003-04 and allowed the appeal of the assessee, which does not need any interference. There is no illegality or infirmity in the finding of the Ld. CIT(A) on the issues in dispute, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue.
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2019 (4) TMI 1153
Condonation of delay - HELD THAT:- Hon'ble Supreme Court in the case of Vedabai Alia Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil 2001 (7) TMI 117 - SUPREME COURT] held that the court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression sufficient cause , the principle of advancing substantial justice is of prime importance. The court held that the expression sufficient cause should receive liberal construction. The circumstances narrated by the assessee, wherein, he has stated the reasons which caused the delay, therefore, the delay is condoned. Disallowance @ 20% of the bogus purchases - HELD THAT:- The assessee claim to have made purchases of ₹ 38,62,915/- (Assessment Year 2010-11) from the Hawala Parties mentioned in the assessment order. The Sales Tax Department carried out independent enquiries, wherein, conclusively proved that the parties were engaged in the business of providing accommodation entries without actual delivery of goods. The stand of the assessee before the AO as well as before the CIT (Appeal) is that the goods were consumed in the manufacturing process. Considering the suppressed profit to the tune of the ₹ 7,72,583/- (being 20% of purchases of ₹ 38,62,915) for Assessment Year 2010-11 and ₹ 8,86,064/- (being 20% of bogus purchases of ₹ 44,30,321/-) for Assessment Year 2009- 10, the addition was made. Admittedly, there cannot be sale without purchases or manufacturing without consumption but at the same time, the assessee being a manufacturer has to prove the consumption. The assessee has intentionally inflated the value of purchases by taking accommodation bills to reduced the gross profit and thereby reduced the taxable income. Thus the appeals of the assessee having no merit, therefore, dismissed.
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2019 (4) TMI 1152
Rectification u/s 254 - MAT credit u/s 115JAA - HELD THAT:- Mistake apparent from record which was not considered by the Bench while adjudicating the appeal of the assessee. The assessee has again reiterated the same issue that income tax and surcharge are separate charges and stated that assessee would be entitled MAT credit of ₹ 111167334/- as against ₹ 98442398/- claimed by the assessee. After going through the Misc. Application of the asssessee in the light of the above findings we observe it is pertinent to mention that the power of rectification u/s 254(2) can be exercised only when the mistake which is sought to be rectified is an obvious patent mistake, which is apparent from the record and not a mistake which is required to be established by arguments and long drawn process of reasoning on points on which there may conceivably be two opinions. In view of the above and after considering the detailed findings of the Co-ordinate Bench in the case of the assessee, we do not find any merit in the Misc. Application of the assessee, therefore, the same is dismissed. Misc. Application of the assessee is dismissed.
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Customs
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2019 (4) TMI 1190
Confiscation - Diamonds - whether, in the facts of the case, the diamonds in question are liable to be confiscated under Section 113(d) of the Customs Act, 1962? - HELD THAT:- Section 113(d) specifically provides that the export goods are liable for confiscation, if they are exported or attempted to be exported contrary to any prohibition imposed by or under Customs Act or any other law for the time being in force. The fine of ₹ 20 lakhs on the appellants were imposed for the reason that the goods were liable for confiscation under Section 113(d). If the Appellant has done any act towards the exportation, namely, taking of the goods out of India and if the act or acts could be fitted in the course of such movement of the goods, or, in other words, the act could fall in the course of progress towards the actual physical taking of the goods out of India, the mischief of section 113(d) would be attracted. Admittedly the goods were booked for export by Perez Hender Valmore. It is not the case of DRI that the said Perez Hender Valmore has any link or relation or concern with the Appellant. There must be an act or acts, by the Appellant, done towards the actual physical movement of the goods with intention to take them out of India. According to DRI also, the said Shri Perez Hender Valmore and not the appellant, attempted to export 1641 pieces of cut and polished diamonds illegally by concealing the same in the courier packet by mis-declaring the contents and concealing the aforesaid diamonds in grey black coloured sports jacket of Nike brand and the said Perez Hander Valmore has no link with the Appellant. Section 113(d) ibid has no application on the facts of the present case. Therefore the goods/diamonds in question cannot be confiscated and are liable to be released unconditionally to the owner i.e. the Appellant - Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1189
Revocation of CHA License - forfeiture of security deposit - violation of Regulations 11(a), 11(b), 11(d), 11(n) 11(j) of the Custom Broker Licensing Regulations, 2013 - HELD THAT:- The required KYC were produced by the Appellant to the Department at a later stage to the Licence Issuing Authority and not to the investigating Agency. This suggests that the necessary KYC documents were actually not present with the appellant when the investigating agency visited and asked them to produce the KYC documents of the importer firm. This very facts prove that the appellant had indeed not negotiated the clearance of the impugned consignments and have allowed his licence to be misused by other persons and have thus violated the provisions of Regulation 11 (a) of CBLR, 2013. The charge of failure to advise the client to comply with Regulation 11(d) or the charge of concealment of any document etc. as per regulation 11(j) does not hold good as these charges are not substantiated by any positive evidence with respect to knowledge of the CB or circumstantial evidence like extra pecuniary gain etc. There is nothing on record to also show that appellant was too prevented from being present personally or through his authorized G Card or H Card representative when called by the investigating agency for participating in the examination of impugned import consignments, the arguments adduced by them in their support are without valid evidences and thus the appellant has violated the provisions of Regulation 11(b). The appellant has not complied with the provisions to regulations CBLR 2013 - appeal dismissed - decided against Revenue.
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2019 (4) TMI 1188
Valuation of imported goods - FAG ball bearings - undervaluation - rejection of declared value - enhancement of assessbale value - HELD THAT:- The enhancement has been effected on the basis of the published price of the manufacturer after extending permissible discount and the adjudicating authority has restricted the duty liability to 70% of the list price of 2002/01/1st March 2002. The rejection of the declared value cannot be cause of cavil as the declared value of the imported goods were not in consonance with the price list for the said goods. However, the applicability, and validity, of the price list for determining the value under section 14 of Customs Act, 1962 is questionable for not being consistent with section 14 of Customs Act, 1962 and rule 4 of Customs Valuation (Determination of Value of Imported Goods) Rules, 1988 - The proper officer is required to take recourse to the rules sequentially. Assessment of imported goods requires that each of the Rules, pertaining to identical or similar goods, rejected with cogent reason before proceeding to invoke rule 8 of the said Rules. In the absence of such sequential application, the adjudication order, and the impugned order upholding it, cannot be said to be correct in law. Matter is remanded back to the adjudicating authority for fresh consideration of the value in accordance with Section 14 of Customs Act, 1962, including the Rules framed thereunder - appeal allowed by way of remand.
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2019 (4) TMI 1187
Refund of the excess duty - re-assessment of the bills - Misdeclaration of imported goods - spark ignition engines for motor cars - ECM Engine - grievance of the appellant is that the lower authorities have not considered their request for alteration of the tariff item in the bills of entry - principles of natural justice - HELD THAT:- Refund is a special provision under section 27 of Customs Act, 1962 that is comprehensive and self-contained on its own. Likewise, re-assessment is intrinsic to section 17 of Customs Act, 1962. Irrespective of eligibility or entitlement to either of these, the errors will have to be attended to under section 149 of Customs Act, 1962 and in accordance with the law prescribed. This aspect has not been examined by the lower authorities; it would be appropriate to set aside the impugned order and refer the matter back to the original authority for considering the application of the appellant under the provision of section 149 of Customs Act, 1962. Appeal allowed by way of remand.
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2019 (4) TMI 1186
Valuation of imported goods - certain items were not declared - mis-declaration of description - it appeared that the main PCB for DVB with connector was actually DVB C MPEG-2 Card which was used in Set Top Boxes for converting the source signal into contents in a form that can be displayed on TV Screen and other display device - Power Supply for DTH - rejection of declared value - NIDB Data for contemporaneous import. HELD THAT:- The imported goods are electronic populated printed circuit board. A lay man will not be able to decide the nature of the product and the possible use for such products, by casual inspection. Reference to website cannot only be the basis for loading value of imported goods and demanding differential duty - the goods, which are still not cleared out of Customs charge, will need to be examined and a suitable expert opinion obtained as to the nature of the goods. Power Supply for DTH - The investigating agency has concluded that the imported goods were SMPS Power Supply Board used for control power supply in STB - HELD THAT:- In this case also, a lay man will not be able to decide the nature of the product and the possible use for such products. Reference to website cannot be the only basis for loading the value of imported goods and demanding differential duty - the goods which are still not cleared out of Customs charge, will need to be examined and a suitable expert opinion obtained as to the nature of the goods. Thereafter, proper valuations of the goods are required to be re-determined in the light of the Section 14 of the Customs Act, 1962 read with Customs Valuation Rules., 2007. The issue is remanded to the adjudicating authority for passing a denovo order after getting the goods examined by an expert for taking opinion as to the exact nature of the goods - Appeal allowed by way of remand.
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2019 (4) TMI 1185
Jurisdiction - power of Commissioner of Customs to extend the period for issue of SCN - whether the Commissioner of Customs is empowered to extend the period for issue of Show Cause Notice in terms of Section 110, by a period of six months, Suo Moto, without reference to the person from whom the goods were seized? - Section 110 (2) of the Customs Act, 1962 - provisional release of goods - HELD THAT:- The amendment to the provisions has been made w.e.f. 29/03/2918. The original six months period from the date of seizure was to expire on 26/04/2018. Since the amended provisions have come into effect before such date, we are of the view that the Commissioner of Customs is fully empowered to pass such order for extension without reference to the person from whom the goods were seized. The Commissioner of Customs is directed to consider the request made on behalf of the appellant for provisional release of the goods - appeal disposed off.
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2019 (4) TMI 1184
Stay on the operation of the impugned Orderin-Appeal, passed by the Commissioner of Customs (Port) - monetary limit of amount involved in the appeal - HELD THAT:- The committee of Commissioners have held that the impugned order falls under clause (a) of Para 3 of the instruction dated 17/08/2011 introduced vide instruction dated 17/12/2015. There is no constitutional validity of any of the provisions of the Act or Rules is under challenge before any of the Superior Courts in respect of the issue under dispute in the present appeal. Accordingly, on perusal of records, the amount involved in this case is below the monetary limit of ₹ 10 lakhs. There is no reasons for staying of the impugned order as prayed by the appellant/Revenue - the Stay Petition being devoid of merits is rejected - The appeal filed by the Appellant/Revenue is well covered under the National Litigation Policy and the same is accordingly dismissed.
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2019 (4) TMI 1183
Rectification of mistake application - non-mentioning/non-consideration of circular No. 12/2014-Cus dated 17/11/2014 - HELD THAT:- This Bench of the Tribunal has passed a detailed order on the merits of the case and though holding that the refund claim was filed well within the period of six months i.e. on 09/11/2007 but held that the refund claim filed by the appellants is not admissible as per the provisions of the Customs Act, 1962. There is no mistake in the order dated 29/06/2018 passed by the Tribunal. The case laws as cited by the Ld. Advocate are not applicable to the facts of the present case. ROM application dismissed.
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Insolvency & Bankruptcy
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2019 (4) TMI 1191
Appointment of Mr. Santanu T Ray as Resolution Professional (RP) in the place of Mr. S. Gopalakrishnan, Interim Resolution Professional (IRP) - HELD THAT:- If the intention of the legislation is to give absolute power to the COC, there would not have been a provision under Section 22 (3)(b) making it mandatory to file an application before the Adjudicating Authority seeking change of the IRP /RP. We wanted to first convince the Bank authorities for continuing the IRP as RP in as much as we felt that the IRP had gone into the matter very deep and his continuance as RP is in the best interest of the COC and as there is a public interest in pursuing the matter from various angles with various Government Authorities particularly when the activities of the Suspended Directors of the Corporate Debtor smacks of fraud and illegality. The decision of the COC for the change of IRP, Mr. S Gopalakrishnan and appointing Mr. Santanu T Ray in his place is not tenable and the COC has no absolute power to change the IRP / RP at their whims and fancies without any valid or tenable reasons. The change of RP must be rational/tenable/reasonable and not at the whims and fancies of the COC. Application for the change of IRP and to appoint Mr. Santanu T Ray as RP is rejected as the Bank consisting of 100% COC had thoroughly failed to put forth any tenable or valid or genuine reasons for the same and thus it is held that the COC is not vested with the absolute power to change the IRP without any valid or tenable reasons particularly when the Adjudicating Authority after considering the contentions on both sides and expresses an opinion to continue the IRP as RP, and accordingly the present IRP is confirmed as RP of the Corporate Debtor. Application dismissed.
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Service Tax
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2019 (4) TMI 1151
Classification of services - commercial coaching services and franchise services or not - appellant had been engaged in providing vocational Training to students/corporate employees HELD THAT:- It is a fact that the main appellant are recognized as Research and Education Society and conducts various courses affiliated by the various universities and also as per AITC approved courses and awards degree to the students. Regarding courses, which are being provided in collaboration with Coventry Universities, the same are also recognized by the UK government as well as the parallely by the Punjab Technical Universities - the main appellant is providing the educational services approved by the various Universities recognized under law for the AITC approved course. The fact that some of the students are being the Coventry University cannot be classified as the franchise services as proposed by the Revenue - We also find that the service by the way of education as a part of recognized university recognized by law is taxable neither taxability during the positive list nor under the negative list which has been rightly pointed out by the Ld. advocate. As the main service, other than the transportation service is held to be not liable for service tax, we hold demand on other appellants, who have been visited with the penalty, is also not sustainable and liable to be set aside. Appeal allowed in part.
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Central Excise
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2019 (4) TMI 1150
Classification of goods - Aluminium and Zinc Castings and articles thereof - whether classified under Chapter Subheading 7907.90 and 7616.90 or under CSH 8708.00 as Motor vehicle parts? - demand of differential duty - HELD THAT:- Considering the facts that the appellant did not have the facility of machining, grinding, finishing etc. in their factory premises as found by the officers of the department, and also end-use certificate produced by them that such processing are being carried out after being cleared from the premises of the appellant at the premises of the customer, we do not find any merit in the impugned order in classifying the product as motor vehicle parts, which is classifiable as casting under respective sub-headings as claimed by the Appellant. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1149
Short payment of duty - receipt of inputs or not - demand based on statements of the suppliers of the inputs - cross-examination not allowed - HELD THAT:- Hon'ble Supreme Court in a catena of case including the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [2015 (10) TMI 442 - SUPREME COURT] has held that If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice. The matter is remanded to the adjudicating authority to allow cross-examination of the witnesses as requested by the appellants.
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2019 (4) TMI 1148
Clandestine removal - order was passed ex-parte - cross-examination of various witnesses denied - principles of natural justice - HELD THAT:- In the present case, the appellant is situated under jurisdiction of Nagpur Commissionerate. The order confirming the demand against M/s Kamdhenu Ispat Ltd. was challenged before the Delhi Bench of this Tribunal and after considering all aspects of the case the Tribunal remanded the matter to the adjudicating authority for de novo consideration of all issues raised by M/s Kamdhenu Ispat Ltd. Since the investigation was common and M/s Kamdhenu Ispat Ltd. is also a noticee in the present case, therefore, the present case also be remanded to the adjudicating authority for fresh adjudication taking all issues raised by the appellant in the present appeals - Appeal allowed by way of remand.
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2019 (4) TMI 1147
SSI Exemption - clearance of packing materials namely, printed cartons of paper and paper board and also catch covers affixing the brand name of others - Time Limitation - HELD THAT:- The issue decided in the case of KAJAL PRINT PACK (PVT) LTD SUNIL P RUI VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI V [2018 (10) TMI 158 - CESTAT MUMBAI] , where it was held that There is no definition of printed cartons of paper or paperboard either in the notification or elsewhere. Accordingly, this description should conform to such as is commonly understood, and intended, in the industry. There is no reason to deviate from the aforesaid findings of the Tribunal. Time limitation - HELD THAT:- The appellant from time to time disclosed all relevant facts to the department while claiming the exemption and there is no suppression of fact on their part with intent to evade payment of duty - the appeal succeeds on both counts, that is, on merit as well as on limitation. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1146
CENVAT Credit - raw materials, which were shown as obsolescence - provisions has been made in their balance sheet during the relevant period i.e. April 2003 to March 2007 - HELD THAT:-The show cause notice was issued on the basis of balance sheet alleging that the provisions made for obsolescence raw material were written off from the Books of Account, accordingly, by virtue of Board s circular issued in 1995, the appellant is required to reverse the credit. Nowhere it is shown that the written-off materials were cleared from the factory without reversal of credit or without payment of appropriate duty. Otherwise also, the period involved in the present case is prior to the relevant amendment made to CENVAT Credit Rules, 2004, by way of insertion of the Rule 3(5B) on written off inputs which came into effect on 11th May 2007. The Hon ble High Court of Bombay in the case of COMMISSIONER OF C. EX., NAVI MUMBAI VERSUS HINDALCO INDUSTRIES LTD. [2011 (6) TMI 662 - BOMBAY HIGH COURT] and Hon ble High Court of Gujarat in COMMISSIONER OF CENTRAL EXCISE VERSUS INGERSOLL RAND (INDIA) LTD. [2013 (2) TMI 32 - GUJARAT HIGH COURT] has categorically held in the cases that the said rules cannot be made applicable retrospectively even though the circular directs for reversal of credit on the written-off goods. In the absence of any evidence adduced by Revenue in making a specific allegation that raw materials were cleared from the factory without reversal of credit or payment of duty, there is no merit found in the impugned order - appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1145
Clandestine Removal - cross-examination of witnesses denied - period 2004-05 to 2005-06 - HELD THAT:- The Revenue, on the basis of investigation against the appellant M/s Cona Industries found that there was clearance of excisable goods manufactured by M/s Cona Industries without payment of appropriate Central Excise duty during the relevant period. In arriving at the said conclusion, the department relied upon the evidences, which includes the statements of various persons who associated in the removal of such goods. By assailing the allegation in reply to the show-cause notice, the appellant vehemently requested for cross-examination of the witnesses whose statements have been recorded in the SCN and relied upon for the issuance of the notice. However, the learned adjudicating authority did not accede to the said request and proceeded with the adjudication even though referred to and relied on such evidences in confirming the demand. We are of the view that such an approach is in gross-violation of principles of natural justice. Matter remanded to the original adjudicating authority to allow the cross-examination of the witnesses as requested by them - appeal allowed by way of remand.
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2019 (4) TMI 1144
CENVAT credit - inputs contained in the waste and scrap generated in the premises of the job worker not received back along with job-worked goods - Rule 57AC(5)(a) and Rule 4(5)(a) of CENVAT Credit Rules, 2002/2004 - HELD THAT:- The input that has been removed to premises of the job-worker after undertaking necessary job-work is required to be returned within 180 days from the date of such removal of the inputs to jobworker. However, under the said Rules there is no mention about return of the waste and scrap, if any, generated in the premises of the job-worker. Since the provision relating to return of waste and scrap generated in the premises has been deleted in the year 2000 and under the new provisions, no such stipulation is mentioned, therefore, it can safely inferred that CENVAT credit cannot be disallowed, on the quantity attributed to waste and scrap generated in the premises of the job-worker. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1143
SSI Exemption - use of brand name - SCN issued to the appellants seeking exclusion of the branded products manufactured by them from the benefit of the notification - N/N. 1/93 dated 28/02/1993 - interpretation of notification - HELD THAT:- In view of the explanation under the Notification, it is found that Learned Commissioner (Appeals) has correctly concluded that the goods manufactured by the Appellants where the brand name or the trade name of the original equipment manufactured as long as such words indicate the connection in the trade. It is a settled principle in law as well as there is no ambiguity in the wordings of notification, the same needs to be construed strictly. Demand of duty upheld. Penalty - HELD THAT:- Even though penalty has been imposed u/s 11 AC of CEA 1944, both the authorities below has not extended the benefit to discharge the penalty subject to fulfillment of condition laid down there under. Consequently the appellant is allowed to discharge 25% penalty under Section 11AC and CEA 1944 subject to fulfillment of condition laid down. Penalty imposed under Rule 173Q is set aside. Appeal allowed in part.
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2019 (4) TMI 1142
CENVAT Credit - inputs which were alleged to have not been received in their factory under cover of any specified documents - HELD THAT:- The appellant had availed credit based on the invoices issued by their supplier, but registration number mentioned in the invoices was that of their registered dealer premises - Dealer s Registration number was wrongly incorporated by the supplier to the appellant and inadvertently, they had availed credit on the basis of such invoices, where the main address was mentioned as that of the appellant, but instead of their manufacturing premises, registration number was that of their registered dealer s premises. The Cenvat Credit availed by the appellant, should not be denied, merely because there was some typographical error on the part of the manufacturer-supplier in mentioning the registration number on the invoices issued by the manufacturer/supplier - the mistakes were admitted and rectified by the said manufacturer/supplier. Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1141
CENVAT credit - denial on the ground that the process of manufacture not taking place - it was alleged by Revenue that the machinery was exported without export being taken place - machinery described as Continuous Automatic Coil to Coil galvanizing Line under Chapter 8419 - HELD THAT:- This being complex machinery, the appellant procured various components and sub-systems from different vendors. Upon receipt of such goods in the factory, they availed cenvat credit. It is not in dispute that all the various components/sub-systems were received in the appellant s factory and subject to various processes. It is not in dispute that the appellant has procured the various inputs components and sub-systems which made up the complex machinery. It is also not in dispute that these goods have been received in the appellant s factory. Further, there is no dispute that any of the goods so procured are not required in the assembly of the machines cleared for export - there is no reason to take the view that the cenvat credits taken are improper. It is settled position of law that subsequent reversal of Modvat credit is to be considered as non-taking of the credit - It is not in doubt that at the time of clearance of the machinery for export, duty stand paid. Since the duty is paid at the time of clearance of the final product, the credit availed on the inputs stand reversed already - thus, such credits are to be considered as non-taken abinitio. There is no justification for ordering payment of cenvat credit all over again - Appeal allowed - decided in favor of appellant.
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2019 (4) TMI 1140
Refund claim of deposit made - sealing of machinery - requirement of prior intimation - N/N. 42/2008-CE and 30/2008-CE(NT) both dated 01.07.2008 - HELD THAT:- According to Rule 10 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 and notification No. 42/2008-CE and 30/2008-CE(NT) both dated 01.07.2008, if a machine does not produce for a continuous period of 15 days, than the duty shall be calculated on proportionate basis and the balance amount of duty shall be abated for the non-production period subject to the condition - The primary condition is that the assessee shall file an intimation to the Deputy/Assistant Commissioner of Central Excise with the copy to the Superintendent of Central Excise at least 3 working days prior to commencement of non-production period and on receipt of such intimation, the Superintendent shall seal and uninstall the PMPM machine under his proper supervision rendering the PMPM machine in-operable during the period of closure. The appellant had given intimation on 1.11.2013 being Friday (1st working days), 2.11.2013 was Saturday (2nd working day) and 4.11.2013 was Monday (3rd working days). Since, appellant had given prior intimation regarding closure of the factory from 5.11.2013 which was well in advance of three working days and sealing, uninstalling and removal of said machine is not under dispute - thus, the provisions of rule 10 of said Rules were fully complied and rejection of refund of substantial amount on plea of non-compliance of procedure of rule 10 of said Rules and interpreting working days as per convenience of Department are not sustainable. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2019 (4) TMI 1139
Validity of Revised entitlement certificate dated 02.04.2018 - constitutional validity of Clause 13 of the Rajasthan Invest Promotion Scheme-2013 - Time limitation for rectification of Mistake - HELD THAT:- Clause 9(B)(viii) of the RIPS-2003 inter alia provides that with a view to rectify mistake apparent on the record, subsidy sanctioned by the assessing authority of the Commercial Taxes Department, under this scheme may be rectified suo motu or otherwise any order passed by the assessing officer as per the provision of Section 33 of the Rajasthan Value Added Tax Act-2003. This is thus clear that this provision has been intended to be applied by the assessing officer of the Commercial Taxes Department. Meaning thereby, had the assessing officer initiated the action to rectify the mistake, he could do so only within a period of limitation of four years prescribed under Section 33 of the Rajasthan Value Added Tax Act, 2003. This provision cannot therefore create any impediment for the State to invoke Clause 13 of the RIPS-2003. Clause 7 of the RIPS-2003 is the relevant provision relating to Capital Investment Subsidy with which we are concerned in the present matter. Clause 7(i)(a) of the RIPS-2003 provides that in case of new investments made, the sum total of Capital Investment Subsidy (Interest component) and Capital Investment Subsidy (wage component) would be subject to a maximum limit of fifty percent of the tax payable and deposited under the Rajasthan Sales Tax Act, 1994, the Central Sales Tax Act, 1956 and Rajasthan Value Added Tax Act, 2003. Clause 7(i) (b) of the RIPS-2003 inter alia provides that in case of investment made in the Modernization/Expansion, the amount of Capital Investment Subsidy shall be subject to a maximum of fifty percent of the amount of the Central Sales Tax and VAT payable or deposited by the unit on its additional capacity, so created over and above the installed capacity before Expansion/Modernization. Undeniably, the cement package was inserted into the RIPS-2003 as sub-clauses (vi) and (vii) vide notification dated 05.12.2005 which empowered the SLSC to grant tax incentive upto 75% to the entrepreneurs on fulfillment of the conditions contained therein, but these two sub-clauses were soon thereafter deleted on 28.04.2006. The SLSC was therefore left with no authority whatsoever to decide in its meeting dated 17.03.2011 to grant 75% tax subsidy to the petitioner-company. Thus clearly, it is basically decision of the SLSC which has been revised by the Principal Secretary, Finance Department on behalf of the State Government and not the decision of the BIDI. In case of ambiguity in charging provisions, the benefit must necessarily go in favour of assessee, but the same is not true for an exemption notification or exemption clause wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. Furthermore, the burden of proving applicability of exemption would be on the assessee to show that his case comes squarely within the parameters of the exemption notification or exemption clause - In the present matter, case of the petitioners has not even been considered by the BIDI which merely relegated it to SLSC, as such the provisions of the RIPS-2003 are to be strictly adhered to. Unlike the exemption schemes where the assessee is not collecting the taxes from the customer/purchaser, here in the present case of subsidy, the tax is collected from the customers/purchasers and after depositing the same with the department, the amount to the extent of 50% or 75%, as per the entitlement certificate, is refunded to the assessee. The petitioner-company was very much aware about Clause 13 of the RIPS-2003 while submitting the application and availing the benefits. Therefore, the petitioner-company will be deemed to have waived all objections with regard to any clauses of the RIPS-2003. The RIPS-2003 is a composite scheme whereunder the benefits are conferred conditionally and therefore the argument of unreasonableness and arbitrariness is wholly misconceived. The argument that exercise of power of revision within five years after the expiry of seven years during which benefit was availed by the petitioner-company, makes the said provision as unreasonable, arbitrary, oppressive and violative of fundamental rights of the petitioners, has no merit. Petition dismissed.
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Indian Laws
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2019 (4) TMI 1161
Benami transactions - offence under Benami Act - onus of proving a benami transaction - whether R-2 is the beneficial owner ? - whether transaction was bona fide for beyond reasonable doubt? - HELD THAT:- In the present case, the beneficial interest in the property is with R- 1. The Adjudicating Authority has correctly observed that there is nothing to show that the property in question is held by R-1 for the benefit of R-2. The sale deeds for all the 10 flats has not been challenged by the IO. The erstwhile sellers had entered/executed the sale deed with R-1 , representing themselves to be the true owners. As per the mandate of Section 91 and Section 92 of the Indian Evidence Act, 1872, If a transfer has been done of an immovable property vide a written documentary evidences in the form of a registered sale deed. The contradictory stand by way of oral evidence is not available unless the party concerned challenging the written documents are able to prove that those are sham documents and executed between the parties contrary to law. It is correct that after amendment, the onus of proving a benami transaction rests entirely on the shoulders of the respondents. Before amendment, the burden of proof was on the prosecution to prove the guilt of the Benamidar and beneficial owner. Once both are able to discharge their burden of proof as per amended law, then the burden of proof would be shifted to the prosecution. In the present case, the respondents were able to discharge their initial burden of proof by producing the sale deeds and document pertaining to the loan amount and respondent no. 1 was also the promoter of respondent no. 2, no even prima contrary evidence is proved by the appellant. Thus, in the facts of present case and documentary evidence proved, the onus of proving a benami transaction rests entirely on the shoulders of the IO who is making the charge. The burden of proof shall shift to the person who is taking contrary of within the meaning of section 91 and 92 of the Evidences Act, 1972. The authority has also concurred with the submission of R-1 that the IO has miserably failed to discharge such burden of proof. Once the primary evidence is proved by way of written document which is not challenged, no evidence of an oral agreement or statement shall be admitted, the burden shall be shifted to the party who pleaded oral agreement. After the amendment in the Benami Act, if apply as it is, the burden of proof was shifted upon the appellant. In the present case, the IO has failed to discharge such burden and he has merely based on his personal perception with uncorroborated statements had passed the order without even a single iota of evidence to discharge such a burden of proof once the R-1 was able to prove that his transaction was bona fide for beyond reasonable doubt. Once the burden is shifted upon the IO,the principles of general law available prior to amendment would apply.
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