Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 27, 2020
Case Laws in this Newsletter:
GST
Income Tax
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Articles
News
Notifications
Customs
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G.S.R. 263 (E) - dated
24-4-2020
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Cus
Corrigendum - Notification No. 17/2020-Customs, dated the 25th March, 2020
GST - States
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38/1/2017-Fin(R&C)(144) - dated
21-4-2020
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Goa SGST
Amendment in Notification No. 38/1/2017- -Fin(R&C)(100)/2805, dated the 8th May, 2019
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38/1/2017-Fin(R&C)(143) - dated
21-4-2020
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(43)/433, dated 31st January, 2018
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38/1/2017-Fin(R&C)(142) - dated
21-4-2020
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(87), dated 31st December, 2018
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38/1/2017-Fin(R&C)(141) - dated
21-4-2020
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Goa SGST
Amendment in Notification No. 38/1/2017-Fin(R&C)(8) dated 30th June, 2017
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38/1/2017-Fin(R&C)(140) - dated
21-4-2020
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Goa SGST
Goa Goods and Services Tax (Fourth Amendment) Rules, 2020
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(4-B/2020) - FD 05 CSL 2020 - dated
23-4-2020
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Karnataka SGST
Karnataka Goods and Services Tax (Third Amendment) Rules, 2020
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(17/2020) - FD 03 CSL 2020 - dated
20-4-2020
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Karnataka SGST
Seeks to extend due date of compliance which falls during the period from "20.03.2020 to 29.06.2020" till 30.06.2020 and to extend validity of e-way bills.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Method of calculation of tax liability - execution of works contract - whether tax liability should be determined as per the GST regime @ 12% or under the VAT regime @5%? - the matter is remanded to the Commissioner of Taxes, Assam for determination of tax liability of the petitioner which may be decided on the basis of the Circular - HC
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Filing of Form 'TRAN-1' by the extended date - Merely, because the implementation has been stayed in Review by the Hon'ble Gujarat High Court, in our considered opinion, is no ground to review our judgment, however, in our view, the appropriate remedy for the Revenue would be to approach the Hon'ble Supreme Court by filing an appeal. - HC
Income Tax
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Interest u/s 244A OR 132B(4) - not refunding the seized amount - Sections 132B and 244A of the Act are independent provisions and are not over-lapping. Rather, Section 132B(4) of the Act deals with interest for the period from seizing of the amount till finalisation of the assessment and Section 244A of the Act operates for the period after the refund has become due under the Act - HC
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Addition u/s 37(1) - non-competition fee - revenue or capital expenditure - it does not bring in any capital asset - the payment is allowable u/s 37(1) - HC
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Rectification u/s 154 - Deduction claimed u/s. 80IAB - Wrong classification of income under the head ‘income from house property’, has resulted in wrong claim of deduction under S. 23/24 while computing income under the head ‘house property’ and requires correction. Similarly, the normal business expenses incurred were also not claimed from lease rentals in view of restrictions placed under the head ‘income from house property’. The correct computation of business income on realignment of head of income would thus be required to correctly determine the quantum of income eligible for deduction under S. 80IAB - AT
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Penalty u/s 271B - assessee has not filed the tax audit report u/s 44AB - reasonable cause for the late filing of the tax audit report or not? - the penalty levied under section 271F of the Act was rightly confirmed by the ld. CIT(A). - AT
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Exemption u/s 11 - registration u/s 12AA denied - main object of the trust is to give benefit to the family member of the deceased members of the Rotary Club - rejecting the application for registration of the Trust is amounting to miscarriage of justice. DIT(E) ought to have allowed the registration application filed to the assessee - AT
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Short deduction of tds - disallowance of expenses u/s. 40(a)(ia) - TDS u/s. 194C or u/s 194I - AO either could accept the claim of the assessee or could disallow the claim of the assessee but he could not have disallowed the proportionate expenditure - AT
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Denying credit for tax deducted at source in the hands of company - income is credited to the bank account held in the name of one of the director, credit for TDS in respect of the additional incentive is reflected in the Form 26AS of the director - it would be grossly unfair and unjust to deny the assessee the credit of TDS where the corresponding income has been assessed in its hand - AT
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Addition on account of undisclosed income - Addition u/s 68 - Merely because, husband did not inform the death of her wife to the bankers, the entire transaction of return of loan by assessee firm to Late wife and issue of cheque by husband of his late wife who was joint signatory in the bank account cannot be held to be non-genuine. - AT
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Disallowance of commission expenses - the commission was given only for procuring contracts from the railway and such kind of commission for procuring contracts from government is not permissible as per the government rules - Addition confirmed.
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Difference in stock found during the course the survey - addition on the basis of statements recorded during the survey u/s.133A does not empower any IT authority to examine on oath and therefore any admission made in a statement recorded during the survey cannot by itself, be made the basis for addition - additions deleted - AT
IBC
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Maintainability of application - initiation of CIRP - what is the terms and conditions of the contract between the parties and the documents substantiating the same, ought to be decided only by trial by the Civil Court. Hence, this Adjudicating Authority cannot go into these details in a summary suit. - Tri
Service Tax
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Imposition of penalty u/r 15 of the CCR, 2004 read with Section 78 of the FA, 1994 - after being pointed out by the CERA Audit, the appellant went through its records and finally did not dispute and paid the entire amount of tax along with applicable interest before issuance of the Show Cause Notice - No penalty - AT
Case Laws:
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GST
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2020 (4) TMI 729
Method of calculation of tax liability - execution of works contract - whether tax liability should be determined as per the GST regime @ 12% or under the VAT regime @5%? - HELD THAT:- Circular No.3/2017-GST dated 24.08.2017 clearly defines the mechanism for payment of GST and deduction of tax at source (TDS) in respect of works contractors and suppliers - The aforesaid Circular dated 24.08.2017 has provided the detailed methodology for payment of tax by way of TDS in respect of works executed during and post VAT period. This Court is of the view that under such circumstances, the Commissioner of Taxes, Assam will decide the exact liability of the petitioner to pay tax by referring to the said Circular No.3/2017-GST dated 24.08.2017 so that the petitioner can pay tax as liable to be paid by him either under the rate fixed under the VAT regime or under the GST regime, as the case may be - the matter is remanded to the Commissioner of Taxes, Assam for determination of tax liability of the petitioner which may be decided on the basis of the Circular dated 24.08.2017 and the petitioner will accordingly deposit the determined tax amount. Petition allowed by way of remand.
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2020 (4) TMI 728
Registration of members of the petitioner society - CGST Act, 2017 - the respondent no. 2 has refused to purchase the books from the members of the petitioner s society only on the ground that they are not able to supply the GST registration number. - respondents shall seek instructions and if required, file a counter affidavit within a period of two weeks - HELD THAT:- List on 27th March, 2020.
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2020 (4) TMI 727
Filing of Form 'TRAN-1' by the extended date - The decision was passed in view of judgement of ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] where the respondents were directed to permit the petitioner to file Form 'TRAN-1' by the extended date - HELD THAT:- Issue decided in the case of M/S. AJAY HARDWARE INDUSTRIES PVT. LTD., VERSUS UNION OF INDIA AND OTHERS [ 2019 (12) TMI 414 - PUNJAB AND HARYANA HIGH COURT] where it was held that Merely, because the implementation has been stayed in Review by the Hon'ble Gujarat High Court, in our considered opinion, is no ground to review our judgment, however, in our view, the appropriate remedy for the Revenue would be to approach the Hon'ble Supreme Court by filing an appeal. - application dismissed.
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Income Tax
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2020 (4) TMI 726
Penalty u/s 271(C) - proceeding initiated against u/s 201 (1) (1A) - no-reply to show cause notice - request for a period of three weeks to respond to the same on account of the lockdown declared by the Government of India across India so as to effectively deal with the Covid-19 pandemic - HELD THAT:- Immediately after the lockdown is withdrawn by the Government, a period of two weeks reckoned therefrom is granted to the petitioner to reply to the Notices to the show cause issued by the respondent. Immediately after receiving replies to the Notices to show cause, the respondent shall be at liberty to take further steps in both the matters, in accordance with law. Both the petitions are disposed of alongwith the pending applications in terms of the aforesaid statement made by the learned Senior Standing Counsel of the respondent/Department and the order passed above.
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2020 (4) TMI 725
Exemption u/s 54B denied - appellant and his three brothers had sold jointly owned land and for his 1/4th share he purchased land in the name of his wife and claimed exemption under Section 54B - HELD THAT:- It is an undisputed fact that after selling the agricultural land the appellant purchased a land worth his share, in the name of his wife. The issue is directly covered by the decision of this Court in Dinesh Verma's case [ 2015 (7) TMI 486 - PUNJAB HARYANA HIGH COURT] wherein declined the exemption Section 54B as it requires the assessee to purchase the property from out of the sale consideration of the capital asset. It does not entitle the assessee to the benefit conferred therein if the subsequent property is purchased by a person other than the assessee including a close relative even such as his wife or children. If the legislature intended conferring such a benefit, it would have provided for the same expressly. The reliance of Gurnam Singh's case [ 2008 (4) TMI 28 - PUNJAB AND HARYANA HIGH COURT] will not enhance the case of the appellant as the property in that case was purchased in the joint name of the assessee and his only son, which is not the case in the present case. - Decided against assessee.
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2020 (4) TMI 724
Interest u/s 244A OR 132B(4) - not refunding the seized amount - demand against the petitioner justifying retention of the seized amount, yet no interest was paid - HELD THAT:- Clause (b) of Section 244A of the Act talks of all other cases than mentioned in clause (a) and (aa) for giving interest from the date of payment to the date on which the refund is granted. The refund of amount became due to the petitioner under the Act after finalisation of the assessment i.e. 21.1.2014 and the same was refunded on 4.7.2017, in such circumstances, the case is covered under clause (b) of Section 244A of the Act. Sections 132B and 244A of the Act are independent provisions and are not over-lapping. Rather, Section 132B(4) of the Act deals with interest for the period from seizing of the amount till finalisation of the assessment and Section 244A of the Act operates for the period after the refund has become due under the Act. Madhya Pradesh High Court in Manohar Lal's case [2001 (2) TMI 99 - MADHYA PRADESH HIGH COURT ] took a view that Section 132B of the Act is a self contained code, the assets seized have to be dealt with under Section 132(6) of the Act and payment of interest is to be made under Section 132B(4) of the Act and Section 244 of the Act had no application. With utmost respect, we are not in agreement with the view taken by Madhya Pradesh High Court for the reasons mentioned above. WP allowed. The petitioner shall be entitled to interest under Section 244A of the Act for the period from 22.1.2014 till the date of payment.
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2020 (4) TMI 723
Addition u/s 37(1) - non-competition fee - revenue or capital expenditure - HELD THAT:- Tribunal considering the decision in the case of M/s McDowell Co. Ltd. [2002 (2) TMI 302 - ITAT BANGALORE] held that the entire payment by the assessee is allowable as revenue expenditure and not merely 1/4th of payment towards non-competition fee as it does not bring in any capital asset and held that the payment is allowable under Section 37(1) of the Income Tax Act and directed the Assessing Officer to give appropriate relief after re-computing the income as per the direction of this Tribunal and modified the order of the Tribunal to the said extent. We find no error in the order passed by the Tribunal. It has followed its earlier order in the case of M/s McDowell Co. Ltd correctly - Substantial question of law is answered against the revenue.
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2020 (4) TMI 722
Allowance under explanation to section 35(1)(ii) - whether the donee sent back the donation to the donor ? - Tribunal justified in remitting the matter back to the file of the assessing officer or not? - HELD THAT:- Having given a finding that the appellant is entitled to exemption, the Tribunal went further and based on sworn statement of founder director of M/s.Herbicure Healthcare Bio-herbal Research Foundation that the organization returned the donation to the assessee, thought it fit to remand the matter to ascertain the means of the assessee and the actual amount paid by the assessee and decide the issue afresh after affording sufficient opportunities to the assessee. This Court does not find anything wrong with that. The approach of the Tribunal is very balanced. Initially, it found that the disallowance made by the lower authorities is unsustainable and allowance should be given, however, based on the statement made by the donee, the Tribunal rightly remanded the matter to the assessing officer.
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2020 (4) TMI 721
Deduction u/s 80P - assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969 - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assessee-society. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P - In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the AO to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) - Appeal filed by the assessee allowed for statistical purposes.
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2020 (4) TMI 720
Scope of rectification under Section 154 - Deduction claimed u/s. 80IAB - Claim disallowed by a rectification order passed by the AO u/s. 154 - HELD THAT:- Eligibility of deduction u/s. 80IAB is governed by the true character of lease rental income derived. The CBDT circular albeit in the context of S. 80IA(4-(iii) has expressed its concern on litigation towards taxability of lease income under the appropriate head and granted relief to the taxpayer for eligibility of deduction. The issue thus cannot be said to be totally free of any debate. On the contrary, the debate, if any, leans in favour of the assessee. Thus, the rectification carried out u/s. 154 of the Act, in our view, is beyond the mandate of law and requires to be struck down. Deduction u/s 80IAB - HELD THAT:- Find considerable merit in the plea of assessee for allowability of deduction claimed from income derived by way of letting out of properties. The assessee is entitled to benefit of deduction notwithstanding wrong classification of income under the head income from house property . The AO was under duty to examine the true nature and character of income while framing assessment regardless of error committed by the assessee in this regard. The claim of assessee u/s 80IAB thus deserves to be allowed on first principles. Wrong classification of income under the head income from house property , has resulted in wrong claim of deduction under S. 23/24 while computing income under the head house property and requires correction. Similarly, the normal business expenses incurred were also not claimed from lease rentals in view of restrictions placed under the head income from house property . The correct computation of business income on realignment of head of income would thus be required to correctly determine the quantum of income eligible for deduction under S. 80IAB - restore the issue back to the file of Assessing Officer for re-determination of taxable income in accordance with law, having regard to the true nature of income derived by the assessee. The AO shall grant deduction u/s. 80IAB. Allowability of interest expenditure u/s. 36(1)(iii) - HELD THAT:- Issue towards claim of interest expenses is also required to be examined de novo by the AO in the light of overhaul and realignment of nature of SEZ income under the head business income. Accordingly, the issue of allowability of interest is restored to the file of AO for redetermination in accordance with the law in the light of provisions applicable in relation to income chargeable under the business income and in the light of observation noted above.
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2020 (4) TMI 719
Penalty u/s 271B - assessee has not filed the tax audit report u/s 44AB - reasonable cause for the late filing of the tax audit report or not? - HELD THAT:- Once the assessee has paid all the taxes due on the returned income including the demand raised in the assessment order before 30.09.2010, the assessee is mandated to file the return of income within the prescribed time limit. Since the assessee failed files the return of income within the prescribed time limit, we are of the considered opinion that the penalty levied under section 271F of the Act was rightly confirmed by the ld. CIT(A). We find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the assessee stands dismissed.
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2020 (4) TMI 718
Addition towards cost of purchase of film rights u/s 40A(2) - HELD THAT:- Assessee, the mother of assessee and sister of the assessee acquired the impugned property during 1992. The mother of the assessee and sister of the assessee settled their portion of the land by a settlement deed dated 17.06.2011. Assessee has sold and claimed capital gain, in accordance with the case law relied on in CIT vs Manujal J Shah [ 2011 (10) TMI 406 - BOMBAY HIGH COURT] the period of holding is to be reckoned from the year 1992-93 for the purpose of computing cost of indexation and therefore, we do not find any reason to interfere with the order of the Ld. CIT(A). Claim of interest capitalisation towards cost of acquisition - For the purpose of indexation the assessee has submitted before the CIT(A) that the land was purchased during 1999-2000 relating to assessment year 2000-01. The interest paid was in connection with the acquisition which happened almost 15 to 20 years back. The relevant papers were not able to be produced since the details of capitalisation happened about 20 years back. Assessee has been subject to tax audit in the relevant assessment year and the books of account are duly audited and certified by the CA, the same was duly submitted by the AO as an alternative evidence to substantiate the interest capitalisation which the AO has not considered and made the disallowance. CIT(A) held that he is convinced with the AO s action on capitalisation interest on capitalising the interest is correct, as per law and directed the AO to include the interest on housing loan borrowed as part of the cost of acquisition. Since, the Revenue has not disputed the findings recorded by the CIT(A) with relevant material, we do not find any reason to interfere with the decision of the CIT(A) on this issue. Disallowance on assessee s claim on loss of distribution of movie relating to the movie Badrinath - CIT(A), the assessee has explained very clearly the nature and the scope of the transaction and made out the case that the amount paid to the company was at arm length which was prevalent as per normal practice in the assessee s business. The assessee has also made out that there was no unreasonableness in the transaction and the transaction was fully accounted and all the relevant particulars were filed before the AO. As submitted that the AO has not made out the case based on evidence but came to a conclusion that the said transaction was a sham transaction. Considering the material and the plea etc., CIT(A) held that the AO has not made out the case based on evidence. The AO has not determined the fair market value with comparable cases etc. Therefore, he deleted the additions. Revenue is not able to dislodge the findings recorded by the Ld. CIT(A) with relevant material. In the facts and circumstances, we do not find any reason to interfere with the order of the Ld. CIT(A) and hence the corresponding grounds of the Revenue are dismissed.
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2020 (4) TMI 717
Disallowance on premium paid on redemption of foreign currency convertible bonds - Revenue expenditure or capital loss - HELD THAT:- Expenditure incurred by the assessee by way of premium paid on redemption of FCCB would be of revenue expenditure only and hence the assessee would be entitled to claim the same in accordance with the law. It is also clear from the above that the AO has not examined this issue properly and he merely disallowed the sum stating that the assessee s claim is of capital nature. The description given as regards to various entries and as explained by the ld AR, supra, and its corresponding implications were neither examined by the AO nor by the ld CIT(A). Remit this issue back to the A O for a fresh examination and allow the assessee s claim in accordance with law. The assessee shall place all materials in support of its contention and shall comply with the requirements of the AO in accordance with law. AO is free to conduct appropriate enquiry as deemed fit. - Revenue s appeal is treated as partly allowed for statistical purposes.
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2020 (4) TMI 716
Exemption u/s 11 - registration u/s 12AA denied - main object of the trust is to give benefit to the family member of the deceased members of the Rotary Club and same is not giving benefit to public at large and giving benefit to group of deceased members - HELD THAT:- Trust has been given a certificate from the office of the Charity Commissioner after going through the Memorandum of Association and seeing the activities of the trust and trust is meant for deceased member of Rotary Club Family Members. As Rotary Club is carrying out charitable activities for the public at large as organizing the blood donation camp giving books to poor students and doing charity for orphanage etc. there are trusts meant for benefit of war widows those widows are also getting Government pension and in some of the cases they have been allotted petrol pump, gas agencies and houses etc. has been given to them at concessional rates by the Govt. but apart from that there are trusts those are getting donation and doing lots of activities for betterment of the war widows and their families. If there trust registration is legal and valid why Rotary Club Social Security fund cannot held to be legal and valid. In our considered opinion, rejecting the application for registration of the Trust is amounting to miscarriage of justice. DIT(E) ought to have allowed the registration application filed to the assessee - Direct the department to grant registration u/s. 12AA to the assessee. - Decided in favour of assessee.
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2020 (4) TMI 715
Disallowance of depreciation claimed u/s. 32 - assessee could not produce any proof with regard to put to use the said vehicles on 31.03.2009 - HELD THAT:- Since vehicle was put to use on 31.03.2009 and in support of its contention, assessee has submitted copies of ledger before the lower authorities and respectfully following the aforesaid judgments, we allow claim of the assessee and this ground of the assessee is allowed and we direct assessing officer to allow the claim of depreciation Short deduction of tds - disallowance of expenses u/s. 40(a)(ia) - TDS u/s. 194C or u/s 194I - disallowance of proportionate expenditure - HELD THAT:- As decided in M/S SK. TEKRIWAL [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] provisions of section 40(a)(ia) has two limbs one is where, inter alia, assessee has to deduct tax and the second where after deducting tax, inter alia, the assessee has to pay into Government Account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfall, it cannot be assumed that there is a default as the deduction is not as required by or under the Act, but the facts is that this expression, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction has not been paid on or before the due date specified in sub-section 3(1) of section 139. Section 40(a)(ia) refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 and no disallowance can be made by invoking the provisions of section 40(a)(ia) - AO either could accept the claim of the assessee or could disallow the claim of the assessee but he could not have disallowed the proportionate expenditure - Decided in favour of assessee.
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2020 (4) TMI 714
TP Adjustment - method of benchmarking international transactions entered into by the assessee with it Associated Enterprise (AE) - assessee selected AE as tested party and selected 16 companies as comparable to benchmark the transaction - HELD THAT:- Transfer pricing adjustment at nil fails on both counts. Firstly on the account of benefit test which is not to be applied by the TPO and secondly none of the method of benchmarking the international transaction as specified in section 92C has been applied. Disallowance of TDS credit - assessee pointed that TDS reflected in Form 26AS in respect of certain payments has been offered to tax by the assessee in subsequent assessment years as the payment was actually received by the assessee during the later assessment year - HELD THAT:- After considering the submissions of ld.Authorized Representative of the assessee we deem it appropriate to restore this issue back to the file of Assessing Officer. The Assessing Officer is directed to grant TDS credit to the assessee in the year in which the assessee has received the income and has offered the same to tax. Grant of TDS credit and grant of interest u/s 244A - assessee pointed that rectification petition has already been filed before the Assessing Officer and the same is still pending for the disposal - HELD THAT:- AO is directed to dispose of the rectification petition filed by the assessee expeditiously, preferably within a period of three months from the date of receipt of this order.
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2020 (4) TMI 713
Condonation of delay - delay of 979 days - HELD THAT:- Delay cannot be attributed to the deliberate conduct of the assessee neither through intention nor through action. No malafide is made out by the Revenue. Further, we find relevant to extract the relevant paras from the judgment in the case of Atlas Copco [ 2019 (8) TMI 1415 - ITAT PUNE] wherein held that the assessee has raised a legal ground through these Cross objections, which goes to the root of the matter. It would be seen infra that the said legal issue is squarely covered in the assessee s favour by several orders passed by the Tribunal including those by the Pune Benches. Under these circumstances, we condone the delay and take up the Cross objections for disposal on merits. Penalty u/s 271C - Non deduction of TDS on contractual payments - payee is Non Resident Indian (NRI) and the assessee is under statutory obligation to make the deduction of TDS at the rate of 40% - HELD THAT:- Assessee brought our attention to the various decisions and submitted that this is a covered issue by virtue of the order of the Bangalore Bench of the Tribunal in the case of ITO vs. Intel Tech India (P.) Ltd.. [ 2009 (4) TMI 546 - ITAT BANGALORE] . Assessee submitted that the levy of interest u/s 201(1)/201(1A) of the Act is not sustainable when the payee made the payment of taxes fully. Non-Discrimination Article is provided by way of Article 25 of the India-Indonesia Treaty whereby the non-resident assessee has to be treated as part with domestic entities. In other words, the judgment of the Hon ble Supreme Court in the case of Hindustan Coca Cola Beverage (P.) Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] is equal applicable to the case of a non-resident like the present deductee. This issue must go back to the file of the CIT(A) for fresh adjudication in the matter of findings of the CIT(A) does not sync with the legal proposition laid down by the various judgements cited above. Therefore, the CIT(A) is directed to examine the issue afresh and applied the correct law after granting reasonable opportunity of being heard to the assessee as per set principles of natural justice. Appeals of the assessee are allowed for statistical purposes.
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2020 (4) TMI 712
Denying credit for tax deducted at source in the hands of company - credit for the TDS denied on the ground that as per Rule 37BA of the Income-tax Rules, 1962 the director has not filed the declaration with the deductor - income is credited to the bank account held in the name of one of the director, credit for TDS in respect of the additional incentive is reflected in the Form 26AS of the director - HELD THAT:- TDS was neither allowed credit in the hands of Shri Pramod Kumar Agrawal nor the assessee whereas the income is assessed in the hands of the assessee. The only technical objection raised by the authorities below are that the scope of 143(1) of the Act is very limited and only those adjustments are made which are prima-facie not allowable to the assessee on the basis of material available before the AO. CIT(A) upheld the order of AO by reasoning that AO is correct in denying the credit of TDS to the assessee as the assessee sought to rely on the new material in the form of affidavit, letter of AO of Shri Pramod Kumar Agrawal to establish that there is a mistake in the order under section 143(1) of the Act, however, under section 154 of the Act the scope is very limited as the material sought to be relied by the assessee was not part of the record at the time of passing the order under section 143(1) of the Act. We are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue as it would be grossly unfair and unjust to deny the assessee the credit of TDS where the corresponding income has been assessed in its hand and this has been done despite the fact that the AO of Shri Pramod Kumar Agrawal has communicated to the AO of the assessee that the credit of TDS has not been allowed to Shri Pramod Kumar Agrawal and may be allowed to the assessee company after verification of facts. Authorities below have gone by the technicalities of the issue instead of correcting the wrongs. It would be gross injustice, if the assessee is denied credit of TDS in view of the fact that the income is already assessed in the hands of the assessee. - Decided in favour of assessee.
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2020 (4) TMI 711
Disallowance u/s 80P(2)(d) - interest received from the co-operative bank - CIT(A) has upheld the order of the AO stating Saraswat Co-operative Bank Ltd. is not a cooperative society and therefore the exemption can not be allowed - HELD THAT:- In the present case, the issue is settled by the various judicial forums wherein it has been held that cooperative bank is a cooperative society and any interest income accruing to the cooperative society is eligible for deduction under section 80P(2)(d). The case of the assessee is squarely covered by the decision of the coordinate bench in the case of M/s. Lands End Coop. Housing Society Ltd. [ 2016 (2) TMI 620 - ITAT MUMBAI] - Decided in favour of assessee.
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2020 (4) TMI 710
Addition on account of undisclosed income - Addition u/s 68 - addition made holding that the assessee firm cannot return the loan to a dead person and a dead person cannot give loan to the partners - HELD THAT:- Since Smt. Kanta Hurkat was died earlier and the repayment was made to her legal heir Shri Manak Chand Hurkat through bank account operated jointly by late Kanta Hurkat and Shri Manak Chand Hurkat and as such it was operated by Shri Manak Chand Hurkat after death of Smt. Kanta Hurkat. CIT(A) should have accepted this clarification but he did not appreciate the same and just confirmed the order of the A.O. Found that as the case was time barring and the assessee could not obtain confirmation of such transactions from the legal heir of Late Kanta Hurkat, the case was finalised by the A.O. on 22/03/2016 U/s 143(3). As the confirmation has been obtained later on and essential evidence to decide the case, the same was filed before the ld. CIT(A) but he declined to entertain the same without any cogent reason. Find no merit in the action of the ld. CIT(A) for accepting the clarification regarding chain of documents which the assessee could not file before the A.O. As gone through all the chain of transactions which were through account payee cheques. All the bank statements are on record. The bank account of Late Kanta Hurkat was operated jointly by the husband of Late Kanta Hurkat and by Late Kanta Hurkat. Shri Manak Chand Hurkat continued to operate the bank account even after death of his wife. Merely because, husband of Late Kanta Hurkat did not inform the death of her wife to the bankers, the entire transaction of return of loan by assessee firm to Kanta Hurkat and issue of cheque by husband of Kanta Hurkat who was joint signatory in the bank account cannot be held to be non-genuine. Accordingly, find no merit in the action of the A.O. for making addition U/s 68 - Decided in favour of assessee.
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2020 (4) TMI 709
Reopening of assessment u/s 147 - AO issued notice U/s 148 on account of escapement of income on the basis of AIR information - escapement of income is capital gains arising on the sale transaction of the property - not allowing the benefit of cost of improvement and brokerage paid while calculating the short term capital gain - HELD THAT:- Where the AO is in possession of information that the assessee has sold a property during the year under consideration and the same has not been reported in the return of income, it is clearly a case of escapement of income in terms of capital gains which will arise on sale of such property. Basis such tangible piece of information even where received through AIR, where the AO forms a prima facie opinion that the income has escaped assessment and has recorded the reasons and sought the permission from the higher authorities before issue of notice u/s 147 we donot see any infirmity in the action of the AO in acquiring jurisdiction under section 147 - reasons for escapement of income is capital gains arising on the sale transaction of the property and not that sale consideration is less than the value adopted for stamp duty purposes, therefore, mere inter- change of sale consideration and value adopted for the purposes of stamp duty in the reasons so recorded cannot be treated as fatal which can deny the acquisition of jurisdiction by the AO. Further, basis this tangible piece of information in possession of the AO which shows that capital gains has escaped assessment, where the approval has been accorded by the higher authorities, we donot see any infirmity therein. Not allowing the deduction of expense incurred by the assessee on account of cost of improvement of the house property and the transfer expenses - Where certain expenditure has been incurred before selling the property, the assessee can claim the same provided he is able to substantiate the same through any verifiable evidence. In the instant case, there is nothing on record which remotely support the contention so advanced by the assessee either in terms of any physical attributes of the property at the time of purchase and at the time of sale of the said property or any third party evidence which corroborates the act of incurrence of such expenditure as so claimed by the assessee - for claiming brokerage expenses, the assessee has to submit some evidence in terms of the person to whom the brokerage has been paid and his involvement in the sale transaction, however, there is nothing on record in this regard and therefore, we donot see any infirmity in the order of the CIT(A) in sustaining the disallowance of cost of improvement and brokerage expenses. In the result, the ground of appeal is dismissed. Addition u/s 68 - Assessee has submitted necessary affidavits in support of gift of money received from his family members and close relatives. The affidavits contain the necessary particulars about the donor, their address, PAN and Aadhaar number as well as their current occupation and source of money so gifted to the assessee. In absence of any material on record disputing the contents of the affidavits so filed by the assessee, the initial onus cast on the assessee has been satisfied and the addition so sustained by the ld CIT(A) is hereby deleted. In the result, the ground of appeal is allowed.
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2020 (4) TMI 708
Penalty u/s. 271(1)(c) - Incorrect claim of deduction u/s. 35 - HELD THAT:- Bona fide claim made by the assessee which is disallowed due to lack of compliance shall not lead to concealment of the particulars of income or furnishing inaccurate particulars of such income for the purpose of levying penalty U/s. 271(1)(c) of the Act. Therefore, we hereby direct the Ld. AO to delete the penalty levied - Decided in favour of assessee.
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2020 (4) TMI 707
Exemption u/s 11 - society has been granted registration u/s 12AA - Denial of natural justice - status of the society is treated as AOP - AO has made addition as the assessee society has not claimed the earlier year losses in its return of income - CIT(A) has passed ex-parte order without giving any opportunity of hearing and hence the addition made by the Assessing Office - HELD THAT:- From the perusal of the order of the CIT(A) it can be seen that the CIT(A) has not given opportunity of hearing to the assessee before enhancing. As per the provision of the Income Tax Act, 1961, the CIT(A) has to give a proper hearing before enhancing any assessment, but the CIT(A) failed and has overlooked the provisions of the Income Tax Act. Therefore, it will be appropriate to remand back this entire issue to the file of the CIT(A) for proper objection after giving hearing to the assessee. Both the appeals are identical, therefore, both the appeals are partly allowed for statistical purpose.
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2020 (4) TMI 706
TP Adjustment - Interest on receivables due from the AE - TPO benchmarked the transaction of interest receivable from the AE applying CUP method as most appropriate method and adopted interest rate as 6 months LIBOR rate + 400 basis point - HELD THAT:- We find that Hon ble Delhi High Court in the case of Bechtel India Private Limited [ 2016 (9) TMI 196 - DELHI HIGH COURT] held that when the assessee is a debt free company the question of receiving any interest on receivable did not arise. The assessee is a debt free company has not been disputed by the learned Departmental Representative after verification of the financial statements of the assessee. In the circumstances, in view of the binding precedents, the transfer pricing adjustment on account of the interest receivables in the case of the assessee cannot be sustained. The other arguments of the learned counsel of the assessee challenging the transfer pricing adjustment are rendered merely academic and accordingly, we are not giving our finding in respect of those arguments. The transfer pricing adjustment on account of the receivables is accordingly deleted. - Decided in favour of assessee. Disallowance of commission expenses - HELD THAT:- Assessee has failed to produce documentary evidence to support that Mr. Pandey provided any kind of services to the assessee. Merely providing some email exchange between him and the assessee is not sufficient to support that Mr. Pandey provided any kind of services in relation to the contracts for which he has been paid commission expenses - During the course of the hearing, the learned counsel of the assessee was asked whether similar commissions have been given in case of the contracts received from private parties, he clearly admitted that no such commission expenses have been paid for executing the contract of the private parties. This fact also support the finding of AO that the commission was given only for procuring contracts from the railway and such kind of commission for procuring contracts from government is not permissible as per the government rules. No documentary evidences to support the service rendered by Mr. Pandey, the reliance placed on the decision in the case of CIT Vs. Conimeters Electricals (P) Ltd. [ 2009 (8) TMI 1236 - DELHI HIGH COURT] is of no help to the assessee.- Decided against assessee.
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2020 (4) TMI 705
Reopening of assessment - additional income as income from other sources and the provisions of section 69B of the Act were invoked - assessee accepting the strong possibility of the existence of direct nexus to bring that the said cash as a business income in the hands of the assessee and Serum group of company and if the assessee fails to demonstrate the same before the CIT(A) he is free to confirm the additions and prayed for remanding this issue to the file of the CIT(A) for fresh examination - HELD THAT:- In the interests of justice, an opportunity should be granted to the assessee. Accordingly, I proceed to remand this issue, raised in ground no.2, to the file of the CIT(A) for fresh adjudication. The CIT(A) shall adjudicate the said issue afresh after entertaining the submissions and additional evidences of the assessee, if any, which is directly connected to this transaction of ₹ 38,25,000/- paid in connection with the transaction of purchase of land by Serum group of company. The CIT(A) shall also grant reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Addition u/s 14A r.w.r. 8D - Computing of disallowance - computation of the average investments - HELD THAT:- Considering the above submissions of the assessee, on one side and the order of the Tribunal in the case of Quick Heal Technologies Ltd. [ 2019 (3) TMI 699 - ITAT PUNE] on the other, we find the issue now stands covered in favour of the assessee i.e. only the dividend yielded investments should be considered for computation of average investments.
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2020 (4) TMI 704
Difference in stock found during the course the survey - admission recorded by the department u/s. 133A - assessee has categorically stated that during the course of assessment proceedings, the audited books of account were produced by the assessee and also placed on record copy of audited report - HELD THAT:- No addition can be made only on the basis of admission recorded by the department u/s. 133A - we find support from the CBDT Circular No. 286/2/2003 dated 10-03-2003 as well as the decision of Hon ble Supreme Court in the case of CIT vs. Khader Khan Son [ 2013 (6) TMI 305 - SC ORDER] in which it has been categorically held that addition on the basis of statements recorded during the survey u/s.133A does not empower any IT authority to examine on oath and therefore any admission made in a statement recorded during the survey cannot by itself, be made the basis for addition and therefore considering the totality of the facts as narrated and discussed above, we are of the view that addition made by the assessing officer and upheld by the ld. CIT(A) are not sustainable in the eyes of law and we direct the ld.AO to delete the additions. - Decided in favour of assessee.
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Insolvency & Bankruptcy
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2020 (4) TMI 703
Admissibility of application - section 60(5) of the Insolvency Bankruptcy Code, 2016 - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- On perusal of the records, it is found that Form F at Page 29 of the application is incomplete - It does not contain any date and address of the executor of the form. In the Declaration Form, all the spaces are blank and no address is given. Under such circumstances, the genuinity of the document(s) is/are not only doubtful but it cannot be entertained in any manner. Application cannot be admitted.
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2020 (4) TMI 702
Maintainability of application - initiation of CIRP - Corporate debtor failed to make payment of outstanding dues - existence of dispute or not - HELD THAT:- In respect of petition filed under section 7 of I B Code for initiation of CIRP by Financial Creditor, the Adjudicating Authority has to see the existence of financial debt, whether the default has occurred and whether the petition is complete. From the records submitted alongwith the petition, it can be said that the petition in Form-1 filed by Shri Dinesh Kumar Patwari, AGM of the Bank and in support of the same, the Petitioner has filed authorization papers. The petition is complete - There is financial debt owed by the Respondent to the Petitioner. Time Limitation - HELD THAT:- Date of NPA is 31-5-2015. The last date of transaction is on 30-6-2016 - The petition is filed on 18-3-2019 and is well within time. Petition allowed.
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2020 (4) TMI 701
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- The CD has defaulted in making repayment of loan/credit facilities to the Petitioner Bank and the date of default is 30/09/2015 - The Petitioner Bank has filed the petition within the period of limitation, as the last payment into the Account has come on 26/02/2016. The present LB. Petition is filed by the duly authorised official of the Applicant Bank in a prescribed format under section 7 of the LB. Code annexing copies of loan documents confirming the existence of debt due and defaulted and proposed a name of Resolution Professional to act as an Interim Resolution Professional (IRP). This Adjudicating Authority is satisfied that The Corporate Debtor availed credit facilities from the Financial Creditor; Existence of debt is above Rs. One Lakh; Debt is due; Default has occurred on 30/09/2015; Petition has been filed within the limitation period as the last payment into the account has come on 26/02/2016, when the petition has been filed on 30/11/2018 and Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Bank under section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. The present IB Petition is admitted. The date of admission of this petition is 13/01/2020 - Application admitted - moratorium declared.
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2020 (4) TMI 700
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- Hon'ble Supreme Court has held that existence of undisputed debt is sine qua non of initiating Corporate Insolvency Resolution Process (CIRP) in TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED VERSUS EQUIPMENT CONDUCTORS AND CABLES LIMITED [ 2018 (10) TMI 1337 - SUPREME COURT] . The Adjudicating Authority does not have the powers of the Civil Court to arrive at the exact amount due and payable under various invoices. Further, what is the terms and conditions of the contract between the parties and the documents substantiating the same, ought to be decided only by trial by the Civil Court. Hence, this Adjudicating Authority cannot go into these details in a summary suit. Application dismissed.
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PMLA
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2020 (4) TMI 699
Bail Application - PMLA act - substance of the charge against the petitioner is that he was the person in control and management of one Rose Valley Group of Companies - price of debenture charged as per wishes of petitioner and without permission from statutory authorities - HELD THAT:- This Court is of the view that Section 436A in its application cannot be read de hors its provisos. The object and purpose of the section is to ensure that the person is not detained pending trial for a period that may exceed half of the total punishment prescribed under the Section under which he is charged. Upon exceeding such period, the petitioner is in fact entitled to be granted bail. The right to bail under Section 436A is not absolute. This Court notes that Rose Valley Group of Companies is being prosecuted various other proceedings both civil and criminal - Application dismissed.
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Service Tax
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2020 (4) TMI 698
Maintainability of appeal - appropriate forum - legal and factual contentions raised by the appellant - availability of statutory remedy - HELD THAT:- There is no prayer made in the writ petition for challenging the constitutional validity of any statutory provision. The legal and factual contentions which are raised by the appellant before the learned Single Judge in the writ petition can be always raised before the Appellate Tribunal by preferring an appeal. The jurisdiction of this Court under Article 226 of the Constitution of India is always equitable and discretionary. The learned Single Judge has declined to interfere on the ground of availability of an efficacious remedy - Appeal dismissed being not maintainable.
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2020 (4) TMI 697
Imposition of penalty u/r 15 of the CCR, 2004 read with Section 78 of the FA, 1994 - Irregular availment of Cenvat Credit - demand u/s 73 (2) of the Finance Act 1994 along with interest already paid before issuance of SCN - Suppression of facts or not - HELD THAT:- There are no ingredient of miss-statement or suppression of facts with an intent to evade payment of tax. In fact after being pointed out by the CERA Audit, the appellant went through its records and finally did not dispute and paid the entire amount of tax along with applicable interest before issuance of the Show Cause Notice. The penalty imposed under Rule 15 of the CCR, 2004 read with Section 78 of the Finance Act, 1994 is set aside - Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (4) TMI 696
Rectification of mistake - typographical error - HELD THAT:- On page no.2 in paragraph No.4 the word Appellant be substituted by the word Revenue . The necessary correction be carried out and corrected order be uploaded accordingly.
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