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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 3, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Earning from Google Adsense - Sale of Space or Time for Advertisement simpliciter, being only a sale of goods, no service tax liability. Articles TRANSFER OF INPUT TAX CREDIT IN CASE OF DEATH OF A SOLE PROPRIETOR Commissioner Appeals And Revisions Under Income Tax Act,1961 News Auction for Sale (Re-Issue) of Government Stocks Notifications Customs 29/2019 - dated 1-4-2019 - Cus (NT) Handling of Cargo in Customs Areas (Amendment) Regulations, 2019 28/2019 - dated 1-4-2019 - Cus (NT) Seeks to amend Notification No. 12/97-Customs (N.T.), G.S.R. No. 193(E), dated the 2nd April, 1997 GST - States 52/GST-2 - dated 31-3-2019 - Haryana SGST Haryana Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 51/GST-2 - dated 31-3-2019 - Haryana SGST Amendment of notification no. 32/GST-2, dated 08.03.2017 50/GST-2 - dated 31-3-2019 - Haryana SGST Amendment in Notification No. 35/ST-2, dated 30.06.2017 49/GST-2 - dated 31-3-2019 - Haryana SGST Notify certain services to be taxed under RCM under Section 9(4) of the HGST Act, 2017 48/GST-2 - dated 31-3-2019 - Haryana SGST Under section 148 of the HGST Act, 2017 to notify certain class of registered persons under HGST Act, 2017 47/GST-2 - dated 31-3-2019 - Haryana SGST Amendment of Notification No. 48/ST-2, dated 30.06.2017 under the HGST Act. 2017 46/GST-2 - dated 31-3-2019 - Haryana SGST Amendment in Notification No. 47/ST-2, dated the 30th June, 2017 45/GST-2 - dated 31-3-2019 - Haryana SGST Amendment of Notification No. 46/ST-2, dated 30.06.2017 under the HGST Act. 2017 SEBI SEBI/LAD-NRO/GN/2019/07 - dated 29-3-2019 - SEBI Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2019 SEBI/LAD-NRO/GN/2019/06 - dated 29-3-2019 - SEBI Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2019 SEBI/LAD-NRO/GN/2019/05 - dated 29-3-2019 - SEBI Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2019 Circulars / Instructions / Orders DGFT TRADE NOTICE NO. 52/2018-19 - dated 1-4-2019 Restriction on import of Peas and Pulses Highlights / Catch Notes GST Input tax credit - the petitioner is eligible to take ITC of compensation Cess paid on purchase of vehicles used for rental business and subsequently, used for effecting taxable supply by way of sale on such vehicles. Visit to Get Source Confiscation of goods - unless the tax and penalty are quantified, no confiscation order could be passed. It is necessary to provide an opportunity to the owner of the goods or person incharge of the goods vehicle to make payment of tax and penalty subsequent to the objections filed, if any. Visit to Get Source Appointment as an administrative agency by government - Livelihood for Artists and Local Art Hubs - falls under the category of pure services as per St. No.3 of Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 - exempted from GST. under Sl. No.3 of Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 Visit to Get Source Liability of GST - supply on discounted price - As per Rule 27 of GST Rules where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall be the open market value of such goods - if electrical items like, switches, fan, cables etc. are supplied as CSR expenses on free basis without collecting any money then input tax credit will not be available u/s 17(5)(h) of the KSGST and CGST Act Visit to Get Source Classification of supply - supply of goods or supply of services - activity of Bus Body Building on job work basis, on the chassis supplied by the customer is Manufacturing services on physical inputs (under SAC Code 9988) owned by others and thereby attract 18% GST Visit to Get Source Classification of goods - The fresh raw green pepper containing substantial moisture is vegetables under Chapter 7 and would not classify as spices under chapter 9. Visit to Get Source Classification of goods -fishing vessels, factory ships and other vessels for processing or preserving fishery products - Marine diesel engine and gear boxes supplied for use in vessels / goods falling under heading 8901, 8902, 8904, 8905, 8906, 8907 will be taxable @5% GST - If it is used for some other purpose, the applicable tax rate of 28% GST. Visit to Get Source Income Tax Revision u/s 263 - merger of appellate order - very issue which was considered by the CIT(A) and concluded was reopened - no scope for re-examination in the jurisdiction u/s 263 as the assessment order has merged in the appellate order. Visit to Get Source Capital gain computation - allowability of the interest for purchasing a capital asset - interest cost for the period for which the capital asset was retained or held by the assessee prior to being sold/transferred is not deductible u/s. 48 in computing capital gain u/s. 45. Visit to Get Source Tax credit of the tax paid in USA - Assessee is eligible to claim tax credit for federal and state taxes paid on the income earned during the year but not eligible for credit of Medicare and Disability taxes which is not in the nature of income-tax Visit to Get Source Penalty u/s 271(1)(c) - quantum addition upheld up to High Court - SLP admitted - Evidences and arguments placed by assessee shows that claim was made disclosing the complete facts in its return of income putting notes in the computation of total income, corroborating it with its balance sheet, supporting it with judicial precedents - mere rejection of the claim of the assessee cannot be invited with the penalty Visit to Get Source Taxation on FCCBs - cost of acquisition in the hands of non-resident Indian investors would be the conversion price determined on the basis of the price of the shares on the date of conversion of FCCBs into shares (NSE price) - cost of acquisition of the shares as per clause 7(4) of the FCCB Scheme is tenable Visit to Get Source Disposal of appeal u/s 250(6) - dismissal of appeal on merits in summary manner amounts to contraventions of statutory role of CIT(A) as prescribed U/s 250(6) and Section 251 even if assessee failed to attend the the hearing or comply the notices/directions of the CIT(A) Visit to Get Source Disallowance of depreciation rejecting concept of 'Block of Asset' - use of individual assets - business use of each item of a block of assets is not necessary for allowing depreciation on the block Visit to Get Source Addition u/s 69 on account of deposit with HSBC Bank account of citizen of USA and NRI - Income received /Accrued or deemed to be received/ Accrued in India u/s 5 - AO has no jurisdiction to tax the deposits held by the assessee abroad unless it is proved that the source of deposits are from India Visit to Get Source Customs Handling of Cargo in Customs Areas (Amendment) Regulations, 2019 Visit to Get Source Issuance of DFIA licence - There is no “actual user condition” so as to restrict right of petitioner to import maize. So long as the export goods and the import item corresponds to the description given in the SION, it cannot be held to be invalid by adding something else which is not in the policy. Visit to Get Source Classification of the product - digital set top box is a reception and transmission apparatus not only a reception apparatus hence fall under Chapter Heading 852520 Visit to Get Source Advance Authorisation Scheme - fulfillment of export obligation after amalgamation - The Appellate Committee has failed to take into consideration the fact that there is a provision in the Handbook of Procedures for extension of export obligation period. - order set aside. Visit to Get Source DGFT Restriction on import of Peas and Pulses Visit to Get Source Indian Laws Dishonor of Cheque - collection of excise duty during search - The record of the complaint was absolutely insufficient to form the opinion that the cheques were issued by the accused/ petitioner towards the discharge, in whole or in part, of the legally enforceable debt or liability. Visit to Get Source PMLA If the bank is an innocent party and victim from the hand of borrowers, who mortgaged the properties which were not acquired from the proceed of crime, being a secured creditors, the mortgaged properties cannot be attached under PMLA Visit to Get Source SEBI Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2019 Visit to Get Source Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2018 Visit to Get Source Service Tax Refund of tax - the department cannot get itself unjust enriched by relying on Section 11B of the Act. If the services are not coming within the ambit of taxable service as contemplated under the Act 1994, Section 11B of the Act is not applicable. Visit to Get Source CENVAT Credit - input services - the towers are constructed in Salem and that the Trichy unit is taking the benefit of these towers for providing output service - the service tax has been suffered - Credit cannot be disallowed. Visit to Get Source Provider of CHA services - CENVAT Credit - input services - they have not included the value of these services in their output services, the appellant has taken a credit in violation of the Rules with the intent to evade payment of service tax. Therefore, the extended period of limitation was correctly invoked. Visit to Get Source Earning from Google Adsense - Sale of Space or Time for Advertisement simpliciter, being only a sale of goods, that cannot be brought into the fold of service tax under the above provisions of the Finance Act, 1994. Visit to Get Source Central Excise CENVAT Credit - duty paying documents - When these invoices were available for determination and payment of Service Tax on reverse charge basis, obviously these invoices are available for claiming the credit also. Visit to Get Source Refund claim - time limitation - amounts were paid during the investigation - Wherever the duty has been paid in excess of what was required to be paid or has been claimed to be paid in excess of what have been required to paid, the provisions of Section 11B apply in full force. Visit to Get Source CENVAT Credit - duty paying invoices - credit availed on the basis of invoices issued by said First Stage Registered Dealers without actually receiving the goods i.e. MS Scrap from them - Burden to prove is on Revenue for which it fails. Visit to Get Source VAT Quantum of penalty - suppression of taxable turnover - imposition of penalty at 200% was excessive and levy of penalty at 100% would meet the ends of justice. Visit to Get Source Case Laws: GST 2019 (4) TMI 151 Intermediary services or not - management consultancy services - Section 2(13) of The Integrated Goods and Services Tax Act, 2017 - place of supply of services - Held that:- The services provided by the applicant will appropriately fall under the SAC 9983 as management consultancy services as the applicant is directly providing service to his clients and is not engaged in facilitating or arranging the supply of goods or services or both between two or more persons as in the case of intermediary services. Accordingly the service provided by the applicant is rightly classified under Management Consultancy Services and does not come within the meaning of the term intermediary as defined in Section 2(13) of IGST Act, 2017. Section 13 of the IGST Act, 2017 lays down the principles for determining the place of supply of services where the location of supplier or location of recipient is outside India. The question essentially involves the determination of the Place of Supply of the services supplied by the applicant which is beyond the jurisdiction of the Advance Ruling Authority. 2019 (4) TMI 150 Input tax credit - paid on purchase of motor vehicles used in providing services of transportation of passengers or renting of motor vehicles - GST cess - Compensation Cess - Held that:- The CGST Act and Compensation Cess Act are pari-materia in nature and levy two separate taxes. i.e.. GST and Compensation Cess respectively on simultaneous basis on a supply of goods or services or both. Therefore, a particular supply of goods or services or both could be taxable under both the Legislations or could be taxable only under the CGST Act and not under the Compensation Cess Act or vice versa. As per Notification No.2/2017 - Compensation Cess (Rate} dated 28-06-2017, services of transfer of right to use any goods is liable for Compensation Cess, whereas the rental services and passenger transport services are not liable for Compensation Cess as it does not involve transfer of right to use of motor vehicles. As per Section 2(p) of the Compensation Cess Act taxable supply means a supply of goods or services or both which is chargeable the cess under this Act. Therefore leasing supplies are taxable supply for the purpose of Compensation Cess Act and rental business Is not regarded as taxable supply for the purpose of Compensation Cess Act as the same is not chargeable to Cess under the said Act - Compensation Cess is not chargeable on rental service, being an exempted supply. The vehicles used for rental business service are generally sold after three - four years of purchase. Therefore. the sale of vehicles being taxable supply. Compensation Cess will be attracted as the sale is effected within 5 years, of such purchases. Considering provision envisaged in Sec. 17(2) of the CGST Act / SGST Act read with Sec. 11 of the Compensation Cess Act, the petitioner is eligible to take ITC of compensation Cess paid on purchase of vehicles used for rental business and subsequently, used for effecting taxable supply by way of sale on such vehicles. 2019 (4) TMI 149 Extension of time to file Form GST TRAN – 1 - transition to GST Regime - transitional credit - Held that:- By virtue of the amendment to Rule 117 of the Central Goods and Services Tax Rules, 2017, by inserting sub-rule 1(a) with effect from 10.09.2018, the time period specified for uploading the Form in Tran - 1 has been extended upto 31.03.2019 - the petitioner is entitled to upload the Form Tran - 1 by 31.03.2019, if the registered person could not submit the declaration by the due date on account of technical difficulties on the common portal - Petition allowed. 2019 (4) TMI 148 Detention of goods - eway bill was not matching - issuance of FORM GST MOV-06 - Section 129(1) of CGST Act - Held that:- The grounds urged by the petitioner being mixed questions of facts and law, the appeal has been rightly preferred by the petitioner and the same is pending adjudication before the Appellate Authority. 10% of the disputed tax/penalty amount is already deposited by the petitioner - In such circumstances, without going into the merits or demerits of the case, this Court finds it appropriate to direct the Appellate Authority to dispose of the appeal in accordance with law - appeal disposed off. 2019 (4) TMI 147 Confiscation of goods - GST VIG-10 issued u/s 130(1), (2) and 122 (1)(ii) and (iv) of the Central Goods and Service Tax Act, 2017 - It is the contention of the petitioners that the respondent has detained the goods and vehicle illegally for more than a month, in violation of the procedure prescribed by the Government of India through Circulars and confiscated the goods and vehicle without there being any order of confiscation or there being arrears of tax and penalty - section 129 of CGST Act. Held that:- Where the proper officer is of the opinion that the goods and conveyance need to be detained under Section 129 of the CGST Act, he shall issue an order of detention in Form GST MOV-06 and a notice in form GST MOV-07 in accordance with the provisions of Sub-section (3) of Section 129 of the CGST Act, specifying the tax and penalty payable. The notice shall be served on the person in charge of the conveyance - In terms of clause (j), where any objections are filed against the proposed amount of tax and penalty payable, the proper officer shall consider such objections and thereafter pass a speaking order in Form GST MOV-09, quantifying the tax and penalty payable. On payment of such tax and penalty, the goods and conveyance shall be released forthwith by an order in Form GST MOV 05 - As per clause (k), in case the proposed tax and penalty are not paid within seven days from the date of the issue of the order of detention in Form GST MOV-06, action under section 130 of the CGST Act shall be initiated, proposing confiscation of the goods and conveyance and imposition of penalty. In the present set of facts, it is not in dispute that the notice under Section 129(1)(b) of CGST/KGST Act, 2017 was issued by the respondent on 2.01.2019, to which objections were filed by the petitioners. In such circumstances, it was incumbent on the part of the respondent to consider the said objections and pass a speaking order quantifying the tax and penalty and thereafter to release the goods subject to payment of tax and penalty or to confiscate the goods. However, the respondent considering the objections filed by the petitioners proceeded to pass the impugned order of confiscation of goods and conveyance under Section 130(1)(ii) r/w 122(1)(ii) and (iv) of the CGST Act, whereby penalty and fine payable by the petitioner is quantified - reference made by the learned HCGP to Section 160 of the CGST Act to treat the said impugned order as an order of penalty cannot be countenanced for the reason that it is not mere wrong quotation of provisions of law in passing the order impugned but the procedure prescribed is disturbed. It is well settled law that unless the tax and penalty are quantified, no confiscation order could be passed. It is necessary to provide an opportunity to the owner of the goods or person incharge of the goods vehicle to make payment of tax and penalty subsequent to the objections filed, if any. Without providing such an opportunity, proceeding to pass confiscation order directly would not be construed as any mistake, defect or omission to come within the ambit of Section 160 of the CGST Act. It is a fundamental flaw which goes to the root of the matter and the said lacuna cannot be cured by referring to Section 160 of the CGST Act. This Court deems it appropriate to quash the order impugned and restore the notice issued by the respondent under Section 129(1)(b) of the Act, albeit the said notice is withdrawn by the respondent while passing the order impugned. 2019 (4) TMI 112 Appointment as an administrative agency - composite supply of services - pure services - whether the execution of Livelihood for Artists and Local Art Hubs as an administrative agency fall under taxable service as per the provision of the GST Act? - Held that:- The activities performed by the petitioner falls under the category of pure services as per St. No.3 of Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017. As per the notification, Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Govt., State Govt. or Union territory or local authority or a Govt. Authority by way of any activity In relation to any function entrusted to a Panchayat under Article 243G bf the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution. Safeguarding the interests of the weaker sections of society, 'Promotion of cultural, educational and aesthetic aspects' etc. are the items coming under 12th Schedule of the Constitution of India. The activities performed by the petitioner being a pure service, comes under the Sl. No.3 of Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 and is exempted from GST. 2019 (4) TMI 111 Liability of GST - goods provided free of cost by the Distributors of M/s. PoIy Cab Wires Private Limited to KSEB for reinstating connectivity in flood ridden areas - Input tax credit - Applicability of Sec. 17(5) of CGST Act, 2018 on CSR expenses - Held that:- In this case after availing input tax credit, the applicant disposed goods as free supply for CSR activities, Hence, the applicant is liable to reverse the input tax credit already availed. However the petitioner is pointed out that with regard to billing of free of cost materials, distributors issued tax invoices showing sale value, GST and total amount with 100% discount and pay the GST liability to Government In such scenario, input tax credit can be availed only if, the output tax liability towards the outward supply was remitted to the Government. The applicant instructed its distributors to provide the goods at free of cost to Kerala State Electricity Board for flood renovation work- The distributors billed the goods to Kerala State Electricity Board and paid GST to Government. In the invoice so issued, the distributor had valued the goods for the purpose of tax and value was shown as discount. As per Rule 27 of GST Rules where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall be the open market value of such goods, If the open market value is not available, be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply. If the value of supply is not determinable as stated above, the value of supply of goods or service or both of like kind and quality. 2019 (4) TMI 110 Classification of supply - supply of goods or supply of services - activity of Bus Body Building on job work basis, on the chassis supplied by the customer - rate of GST - Held that:- Chassis is a semi-finished goods and any treatment done by any other party on the chassis of principal is the activity of the job work. The ownership of the chassis is not transferred to the job worker. The job worker can use his own goods for providing the service of job work. In this case fabrication of body is a structure which is applied on the chassis supplied by the customer and hence the activity of fabrication of body with material is also a service covered under SAC Code 9988 - Manufacturing services on physical inputs (goods) owned by others and thereby attract 18% GST. 2019 (4) TMI 109 Classification of goods - fresh raw green pepper of genus Piper Nigrum - whether classifiable as a vegetable that merits classification under heading 0709 99 10 of Chapter 7 of the Customs Tariff Act, 1975 - rate of tax - Held that:- The fresh raw green pepper imported and exported by the is not used as a condiment and unlike other spices, is not used in raw form to add flavour to food. Green pepper in hydrated form or frozen or dried form come under the heading 0904 11 50 - The vegetables in raw form containing substantial moisture contents are classified under Chapter 7. However, when the same is processed, dried or the moisture contents removed. then its character changes and would classify under chapter 9. Hence, it is stated that the raw pepper covered under classification 0709 99 10 being a vegetable, it does not merit classification as spices under classification 0904 of Chapter 9 of the Customs Tariff Act, 1975. Green pepper plucked from vine of a spice plant has no characteristics of spices. In common parlance. green pepper before its process is not Included in the category of spices . The spices are the group of vegetable rich in essential oils and aromatic principles, and when on account of their characteristic taste, are used as condiments. The aroma of spices and essential oil can be emerged from green pepper only after the processing of such produce. Therefore, the green pepper picked from the vine qualifies the classification under Chapter 7. 2019 (4) TMI 108 Classification of goods - Marine Diesel Engine - Gear Box - whether classified under TSH 8408 and TSH 8483 respectively or can be treated as parts of heading of 8902, 89048905, 8906 and 8907? Held that:- The parts of goods of heading 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter are taxable @5% GST as per Sl No.252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. In view of the specific inclusion of parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 of any chapter under Sl No. 252 of 1st Schedule of the notification, the general tax rate applicable to parts like Marine Engine and Gear Box falling under HSN 8408 and 8483 respectively has no applicability, if the end use of the goods are in the vessels / goods falling under the heading 8901, 8902, 8904, 8905, 8906, 8907 of the Customs Tariff as parts of such goods. The marine diesel engine and gear boxes supplied for use in vessels / goods falling under heading 8901, 8902, 8904, 8905, 8906, 8907 will be deemed to be parts of such goods and thereby taxable @5% GST per Serial No.252 of Schedule-I of the Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. If it is used for some other purpose, the applicable tax rate would be as per their respective TSH 8408 and 8483 at the rate of 28% GST as per Sl Nos 115 and 135 of the said notification. Income Tax 2019 (4) TMI 107 Condonation of delay in filing the income tax return - Tribunal was of the opinion that since the return of income was not filed by the assessee within time, the claim for carry forward of losses was not sustainable - why the application for condonation of delay could not be filed for as long as six years? - HELD THAT:- The petitioner first contested the claim before the Revenue Authorities. The Tribunal by its judgment dated 21.3.2014 held that such loss was not allowable in absence of filing of the return within time and in absence of condonation thereof. Even if the petitioner was bonafide pursuing the claim in the assessment proceedings, nothing prevented the petitioner from filing appropriate proceedings before the CBDT for condonation of delay once the Tribunal expressed its opinion. The petitioner has accepted such opinion and not preferred the appeal in the High Court. As per the impugned order, the first evidence of such a petition being filed before the CBDT was on 23.10.2015. Though the petitioner contended that previously one such petition was filed on 6.10.2014, the CBDT found no evidence of such proceedings being filed. The petitioner claims to have filed such an application before the AO. Even there, the CBDT found that the evidence of any such petition being presented, inadequate. The petitioner produced the receipt of private courier of having dispatched the same. The CBDT, however, in the impugned order records that even the Authority to whom the same has been forwarded is not mentioned. Under these circumstances, the petitioner has not been prompt in pursuing the remedies on the ground of limitation and latches. We are doubtful if this period of six years for approaching CBDT is extendable in the first place. No case of interference is made out. 2019 (4) TMI 106 Revision u/s 264 - Taxation on Foreign Currency Convertible Bonds - NBVL issued FCBB - conversion of FCBB in shares partly - determination of cost of acquisition of the shares - assessee has considered the cost of acquisition of the shares to be the closing price of the shares of NBVL on the National Stock Exchange on the date of allotment of the shares to the assessee i.e. on 18th August, 2011, but the AO faulted it.- transfer referred to in clause (x) or (xa) of section 47 and section 47(x) under a transfer by way of conversion of bonds or debentures and (xa) by way of conversion of bonds HELD THAT:- We find that section 115AC(1) clearly refers to income by way of interest on bonds of an Indian company issued in accordance with such Scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf. Section 49(2A), to which we have already made detailed reference above, deals with a capital asset being a share or debenture of a company becoming the property of the assessee in consideration of a transfer referred to in clause (x) or (xa) of section 47 and section 47(x) under a transfer by way of conversion of bonds or debentures and (xa) by way of conversion of bonds referred to in clause (a) of subsection (1) of section 115AC into shares or debentures of any company. The assessee may maintain that there is nothing in the Act which enables the authorities to deal with a situation and it is only clause 7 dealing with transfer and redemption and particularly sub-clause (4) thereof, as spelt out in the Scheme, which will apply. We are of the clear opinion that it is the conversion of foreign currency convertible bonds that the cost of acquisition in the hands of non-resident Indian investors would be the conversion price determined on the basis of the price of the shares as in this case, the National Stock Exchange, on the date of conversion of foreign currency convertible bonds into shares. This is the cost of acquisition in the hands of a non-resident investor. That would be the conversion price determined on the basis of the price of the shares at the National Stock Exchange and, therefore, conversions of FCCBs would be done accordingly. A bare perusal of the unamended provision denotes that insofar as on introduction of clause (xa) of section 47 effective from 1st April, 2008 by the 2008 Finance Act, this subsection (2A) of section 49 was also amended. Simultaneously, with the introduction of clause (xa) in section 47, this amendment has been effected. Therefore, though section 47 opens with the words nothing contained in section 45 shall apply to the following provisions , section 49 provides for determination of cost with reference to certain modes of acquisition. Earlier, where the capital asset being a share or debenture in a company, became a property of an assessee in consideration of a transfer referred to in section 47, the determination of the cost of that acquisition was provided for. By the substituted sub-section (2A) of section 49, the cost of acquisition of the asset of the assesee shall be deemed to be that part of the cost of debenture, debenture-stock bond or deposit certificate in relation to which such asset is acquired by the assessee. The introduction of the word bond and the word or before the words deposit certificate with effect from 1st April, 2008 is thus crucial. All this came once Chapter XII titled as Determination of Tax in Certain Special Cases had, by virtue of amendment with effect from 1st April, 2002 enabled imposition of tax on income from bond or global depository receipt purchased in foreign currency or capital gains arising from their transfer. Now, even in that part, while clauses (a) of sub-section (1), which deals with the total income by an assesse, being a non-resident, including what is provided by in clause (a) of sub-section (1) of section 115AC of the Income Tax Act, 1961 the legislature had in mind the scheme. In these circumstances, it is evident that any scheme prior thereto and particularly the one involved before us, namely, the FCCB Scheme notified by Central Government in 1993 and applicable with effect from 1st April, 1992 and enabling the computation of cost of acquisition, in terms thereof, was held to be unaffected. It was, therefore, possible to compute the cost in terms of the clauses of that scheme and which was admittedly an earlier scheme. To our mind, therefore, assessee is right in his contention that the revisional authority fell in clear error in taking assistance of the amendments made by the Finance Act, 2008. To our mind, he is right in urging that the cost of acquisition of the shares was to be determined with reference to the date of acquisition of the FCCBs, then, the period for which the shares should be regarded as having been held by the petitioner assessee should also be reckoned to the date of acquisition. He is right in urging that the second respondent failed to consider the scheme and therefore, once these clauses are included in the FCCB Scheme itself, then, they would govern the FCCB related transactions to the extent the corresponding provisions are not made in the Act. The authority was not right in holding that the cost of acquisition of the shares as per clause 7(4) of the FCCB Scheme is not tenable. Thus, the Government of India notified Scheme effected from 1992 held the field and was the applicable one. The FCEB Scheme has equal status but is admittedly a later one. As a result of the above discussion, we are of the firm opinion that this writ petition deserves to succeed. Rule is, therefore, made absolute 2019 (4) TMI 105 Accrual of income - Commission paid by the suppliers of the assessee to the different investment companies amounts to diversion of funds - Tribunal answered the issue in favour of the assessee - HELD THAT:- Revenue has simultaneously assessed the assessee as well as the Company who received the commission from the supplier (with reference to protective assessment). As such, there is an attempt to make unlawful gain by the Revenue, which is not correct or sustainable. Similar challenge raised by the Revenue has already been considered by this Court [2019 (4) TMI 79 - KERALA HIGH COURT] answering it against the Revenue. 2019 (4) TMI 104 Applicability of interest u/s 234D prior to 01.06.2003 - excess refund granted - prospective amendment - HELD THAT:- The matter has already been considered by this Court as per the verdict in Commissioner of Income Tax vs. Kerala Chemicals and Proteins Ltd. [2010 (1) TMI 263 - KERALA HIGH COURT], whereby it was held that the interest under Section 234D can be levied only with effect from 1st June, 2003, i.e. with effect from the date of introduction of the provision in the statute. - Decided in favour of the Assessee 2019 (4) TMI 103 Revision u/s 263 - merger of appellate order - Issue involved is subject matter of appeal before CIT(A) - Deduction u/s 80 IC(2)(b)(iii) - whether all the 59 oil well are to be treated as separate undertaking - form 10CCB was filed consolidated - ITAT set aside revision proceedings u/s 263 and also allowed appeal on merit HELD THAT:- The revision proceedings under Section 263 of the Act will disclose that the very issue which was considered by the CIT(A) and concluded was reopened, which is indicative by the observation of CIT, wherein he has stated that the perusal of the record shows that the Assessing Officer had not examined or applied his mind on the basic issue as to whether the assessee is actually a mineral based industry or not. As noticed, the question of considering the wells of the assessee as an undertaking was not accepted by the Assessing Officer though the claim of mineral based industry was not rejected. Whether such acceptance was erroneous and whether the CIT(A) has committed an error in allowing the claim will lose its relevance when it is to be noticed only to the extent of finding out whether the same issue could have been examined in a subsequent revision proceeding under Section 263 of the Act. When in the revision proceedings the CIT accepts during the course of the order that the assessee had claimed deduction under Section 80 IC claiming to be a mineral based industry and in that background when the claim was disallowed by the Assessing Officer but allowed by the CIT(A), the issue would stand concluded and there would be no scope for re-examination in the jurisdiction under Section 263 of the Act as the assessment order has merged in the appellate order. The matter not having been examined in the same manner or to the same extent and depth is immaterial. When the claim for deduction was on that basis, the exception as contained in Clause-(c) to Explanation-1 to sub-section (1) of Section 263 of the Act would not apply nor will the circumstance stated by the Hon’ble Supreme Court in the case of Shri Arbuda Mills Ltd., Ahmedabad [1996 (1) TMI 11 - SUPREME COURT] be relevant to the present fact situation. In that view, the revision proceedings under Section 263 of the Act in the present context was not sustainable. - Decided in favour of assessee 2019 (4) TMI 102 Penalty u/s 271(1)(c) - addition made in quantum proceedings were set aside and remanded back to the AO by Tribunal - HELD THAT:- Since the order by which the quantum was added and the AO came to the conclusion that the assessee had furnished inaccurate particulars of income ceases to exist, on account of being set aside by the Tribunal, the initial cause of levy of penalty does not exist, we have no hesitation to delete the penalty pursuant to order passed by the AO. However it will be open for the AO to initiate the penalty proceedings. In case in the remand proceedings the AO comes to a conclusion that this is a case for imposition of penalty as the assessee has either filed inaccurate particulars of income or had concealed the income, penalty proceedings may be initiated again in accordance with law. - Decided in favour of assessee. 2019 (4) TMI 101 Capital gain computation - Allowability of the interest on borrowed capital employed by the assessee for purchasing a capital asset - Mode of computation - computing short-term capital gain (STCG) arising on its’ transfer, which in the present case is by way of sale of a house property in January, 2007, i.e., within a period of less than ten months of its’ purchase by the assessee in April, 2006 - HELD THAT:- Why, the borrowed capital may be repaid immediately, while the acquisition, since complete, and thus its’ cost, would remain unaltered. Again, the borrowed capital may not be repaid even after the asset is sold, and interest may continue to be incurred, deploying the sale proceeds for any other purpose. In a given case, the asset may be sold on credit, so that interest cost continues to be incurred. The same, in short, it needs to be appreciated, is a holding cost, i.e., cost of holding the asset, post acquisition, allowable as a revenue expenditure where the asset is to be used for the purpose of business. As explained in CIT v. Tata Iron and Steel Co. Ltd. [1997 (12) TMI 5 - SUPREME COURT] reference to which was also made during hearing, there is a fundamental difference between the cost of an asset and the means of its’ financing. The manner or mode of repayment of the loan obtained to acquire an asset has, therefore, nothing to do with the cost of the asset acquired for the purpose of the business. There is, in view of the fore-going, no basis either on facts or in law to consider the interest cost for the period for which the capital asset was retained or held by the assessee prior to being sold/transferred as a capital cost and, thus, deductible u/s. 48 in computing capital gain u/s. 45 - Decided against assessee. 2019 (4) TMI 100 Penalty u/s 271(1)(c) - defective notice - non striking of inappropriate words in the penalty notice - Non specification of charge - addition u/s 68 on account of share capital receipt from different persons and an amount being commission paid for arranging the accommodation entries - HELD THAT:- The notice issued u/s 274 r.w.s. 271 (1) (c) of the IT Act that the inappropriate words in the said notice have not been struck of. I find the coordinate bench of the Tribunal in the case of Sanjay Mitra Vs. DCIT [2018 (10) TMI 132 - ITAT DELHI] has decided an identical issue and the penalty so levied by the Assessing officer and upheld by the CIT(A) has been deleted. Notice does not specify as to under which limb of the provisions, the penalty u/s 271 (1) (c ) have been initiated thus penalty levied u/s 271 (1) (c ) is not sustainable and has to be deleted. - Decided in favour of assessee. 2019 (4) TMI 99 Charitable activity - benefit under section 11 - unsecured loan to its sister concern covered u/s 13(3) without any consideration - assessee had given interest free loans without any consideration or security to M/s Baba Amarnath Educational Society which was covered u/s 13(1)(c) and 13(1)(d) - - HELD THAT:- As decided in assessee's own case for the AYs 2013-14 and 2014-15 nothing has been brought on record by the Revenue to prove that the main object of the assessee actually was giving loans and not providing education. We also agree with the CIT(A) that the loan given to the respective Educational Society do not qualify as a deposit/investment for the purposes of section 11(5) of the Act, and therefore the assessee cannot be said to have violated the provisions of section 11(5) so as to be denied exemption u/s 11, as per section 13(1)(d) of the Act. Moreover since the impugned loans/advances were made in earlier years, the provisions of section 13(1)(c)/(d) could in any case not have been invoked in the impugned year.- Decided in favour of assessee. 2019 (4) TMI 98 Penalty u/s 271(1)(c) - complete disclosure the facts - taxability of excess contribution received by the assessee - taxable or not on the principles of mutuality - all the concurrent authorities starting from CIT – A to the honourable High Court has decided this issue against the assessee holding that principle of mutuality does not apply on the facts of the case - SLP admitted - HELD THAT:- During the course of assessment, proceedings the assessee made the complete disclosure explaining that why the above amount assessee claims to be tainted with mutuality and therefore is not chargeable to tax u/s 4 of the income tax act. Evidences and arguments placed before us shows that assessee has made a claim disclosing the complete facts about the same in its return of income putting notes in the computation of total income, corroborating it with its balance sheet, supporting it with judicial precedents of the honourable Supreme Courts. This show that assessee has completely disclosed the facts about its claim along with all the arguments. It is also the fate of the claim of the assessee that it has been concurrently rejected by all the appellate forums. However, mere rejection of the claim of the assessee cannot be invited with the penalty. Further more on this issue of the excess contribution received the learned AO has recorded his satisfaction that assessee has furnished inaccurate particulars of income in the assessment order. However, at the time of levy of the penalty as per para number 1 at page number 2 of the penalty order he levied penalty for concealment of income. This fact itself renders the penalty on this issue not sustainable. - Decided in favour of assessee. Disallowance of claim u/s 35D - The assessee has claimed expenses of INR 454992/– under section 35D as preliminary expenses however the capital employed of the assessee is only INR 10200/– and the claim is required to be restricted only to the extent of 5% of the capital employed for amortization - HELD THAT:- The assessee explained as per letter dated 8/9/2003 before the AO that the total preliminary expenses are INR 568740/– out of which INR 113748/– being 1/5 of the total expenses were charged to the income and expenditure account for the year ended on 31st of March 2000. The balance amount of INR 454992/– has been charged to the income and expenditure account for the year ended 31st of March 2001 it was stated that as assessee has claimed that it is a mutual concern operating on a no profit basis the above preliminary expenses are merely form part of the expenses charged to the income and expenditure account incurred by the assessee in the ordinary course of business for carrying out the activities of the assessee and therefore such preliminary expenses have been rightly claimed in the impugned assessment year. The claim of the assessee was rejected for the reason that the assessee is not a mutual concern. Therefore for the reasons given by us in cancelling the penalty levied on addition of ₹ 4444002/– of the excess contribution received claimed as a mutual concern, we also cancel the penalty on the disallowance of INR 4 54482/–.- Penalty cancelled - Decided in favour of assessee. 2019 (4) TMI 97 Assessment u/s 153A - assessment for the year under consideration was not abated as on the date of search and CIT holding that the contention of the assessee cannot be accepted in view of SLPs admitted in various cases - No opportunity of cross examination of witnesses - addition u/s 68 - HELD THAT:- Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. In the instant case, we find that the time limit prescribed for issue of notice u/s 142(1)/143(2) of I.Tax Act for AY 2010-11 & AY 2011-12 has expired before the search. Therefore, the assessment for AY 2010-11 & A.Y 2011-12 was deemed completed. Not providing opportunity to cross examination - relying on the decision of the Tribunal in the case of M/s Kota Dall Mill Vs. DCIT [2019 (1) TMI 344 - ITAT JAIPUR] for the A.Y. 2010-11 and 2015-17, it was held that addition made without providing opportunity of cross examination is not sustainable. The details clearly show that at the time of granting of loans to the assessee these companies were having sufficient funds. Further, we have already recorded the details of repayment made by the assessee of these loans and once regular repayment was there even prior to the date of search, then the transactions cannot be doubted as nothing can be achieved by taking the loan and then repaying the same through banking channel even if there is corresponding channelization of cash. As we have discussed that the AO has not pointed out any discrepancy in the financial statements or in the bank account statements of the loan creditors to show that there was deposit or introduction of the cash prior to giving the loan to the assessee no addition to be made. No addition in case of not abated assessment, when no incriminating material is found, is covered by the decision of the Tribunal in the case of M/s Kota Dall Mills Vs. DCIT. [Supra] Tribunal have confirmed the order of the ld. CIT(A) with respect of the share application money accepted at premium from following three concerns namely M/s Sangam Distributors Pvt. Ltd., M/s Teac Consultants Private Limited and M/s ISIS Mercantiles Pvt. Ltd. Similarly we found that the unsecured loan taken from M/s Jalsagar Commerce Pvt. Ltd. have also been dealt by the Tribunal after dfealing threadbare in the case of M/s Kota Dall Mill Vs. DCIT (supra) for the assessment years 2010-11 to 2015-16. As the facts and circumstances during both the assessment years are same as have elaborately discussed by the Tribunal in the above years, respectfully following the same, we do not find any merit in the addition so made with respect to unsecured loan taken from M/s Jalsagar Commerce Pvt. Ltd. and share application money with premium from M/s Sangam Distributors Pvt. Ltd., M/s Teac Consultants Private Limited and M/s ISIS Mercantiles Pvt. Ltd. Disallowance u/s 14A - non recording any satisfaction as to the correctness of the claim made by the assessee - CIT(A) has deleted the addition by observing that AO has mechanically applied the Rule 8D as amended w.e.f. 02/6/2016, which was not even applicable to the relevant assessment years under consideration - HELD THAT:- AO has not established any nexus of investment with the borrowed funds, rather availability of sufficient interest free funds justifies the case of the assessee that the disallowance U/s 14A is unwarranted. Detailed findings were recorded by the ld. CIT(A) are as per material on record which do not require any interference on our part. Accordingly, grounds taken by the revenue in both the years with regard to the disallowance U/s 14A of the Act are dismissed. 2019 (4) TMI 96 Assessment u/s 143 r.w.s. 153C - additional grounds of assessee that assessment order passed under section 143 r.w.s. 153C is not correct and AO ought to have been passed assessment order under section 153A - Search was not conducted in the case of assessee - HELD THAT:- Warrant was issued in the case of M/s. R.K. Real Estates and not in the name of the assessee. In the assessment order, it has been mentioned that “search & seizure operations were conducted in the case of M/s. R.K. Real Estate Group on 06/10/2006. During the course of search & seizure proceedings some incriminating documents and cash relating to the assessee were found and seized. Hence, notice under section 153C was issued to the assessee on 14/08/2007 for asking him to file returns of income for the six assessment years i.e. 2001-02 to 2006-07.” From the above, it is clear that search was not conducted in the case of assessee, it is only conducted in the case of M/s. R.K. Real Estates, therefore, the Assessing Officer has passed assessment order under section 143(3) r.w.s. 153C of the Act. We find that the order passed by the Assessing Officer is in accordance with law. We find that the AR of the assessee submitting that the assessment order passed by the Assessing Officer under section 143(3) r.w.s. 153C is not correct, is no basis and deserves to be rejected. Addition u/s 68 - ingenuity of bank deposits - HELD THAT:- We find that the assessee except confirmation letters, no relevant details are filed either before the ld. CIT(A) nor before us to show that the creditworthiness of the creditors, genuineness of the transaction, simply filing the details in a tabular form which shows the extent of land and business carried by the assessee is not sufficient to discharge the burden casted upon him to show that the deposits in his bank account are a genuine transactions and the same is received from the creditor who is having a sufficient funds. Under these facts and circumstances of the case, we are of the opinion that the Assessing Officer and the ld. CIT(A) has considered the issue in detail and addition was made under section 68 correctly Addition sale of lorry as unexplained income - why the sale of lorry is not to be treated as his income as he is filing his return of income under section 44AE? - whether it is a case fallen u/s 44AE of the Act or otherwise? - HELD THAT:- The assessee has not filed any details such as, date of purchase of lorry, date of sale of lorry and details of depreciation like, what is the depreciation claimed and upto what date depreciation claimed and total depreciation claimed, therefore we find that the assessee neither filed any details before the Assessing Officer nor before the ld. CIT(A), even before us. Therefore, the argument of the assessee cannot be considered. We find no infirmity in the order passed by the CIT(A). Addition u/s 68 - the assessee's wife has received money from Margadarshi chit fund and the same is deposited in the assessee‟s bank account - HELD THAT:- Assessee has deposited various amounts as in the nature of cash deposits. From the details filed by the assessee and also the order of the ld. CIT(A), it is very clear that the amounts have been withdrawn from the bank. We find that the assessee has failed to establish a fact that the amount received by the assessee on account of Margadarshi chit fund, the very same amount has been received by the assessee and deposited in the bank. Due to cash amount was deposited and immediately withdrawn the same. Therefore, the argument of the ld. counsel for the assessee is rejected. Unexplained deposits - as per assessee the amount is not belonging to him and was received from his niece, who is residing in USA for the purpose of repayment of her educational loan - HELD THAT:- The assessee has not explained anything, simply stated that he has withdrawn and he wanted to repay the very same amount to clear educational loan of his niece. We find that no reasons in the submissions of the assessee. That apart, when parents of the assessee‟s niece are residing at Vijayawada, why this amount was deposited in the account of the assessee, no explanation is offered and therefore we find that the Assessing Officer has rightly made the addition, which was rightly confirmed by the CIT(A) Assessee's appeal dismissed. 2019 (4) TMI 95 Tax credit of the tax paid in USA - Foreign Tax Credit - assessee has paid federal tax, state tax and medicare-cum-disability tax in USA - HELD THAT:- Assessee is eligible to claim tax credit both federal as well as state taxes paid on the income earned during the year. Respectfully following the TATA SONS LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 2 (3) , MUMBAI [2011 (2) TMI 1528 - ITAT MUMBAI] we direct the AO to allow the credit to the extent of state taxes paid by the assessee along with the federal taxes paid. The Medicare and Disability taxes are not in the nature of income-tax, hence, this may be disallowed. Accordingly, ground raised by the assessee is allowed. 2019 (4) TMI 94 Addition u/s 69 on account of deposit with HSBC Bank account - Income received /Accrued or deemed to be received/ Accrued in India u/s 5 - deposits made out of foreign source - assessee and his wife are NRI and are US citizens - A.O. was of the view that the assessee was not able to prove that the deposits in HSBC Bank account are on account of foreign earned income - AO jurisdiction to tax the deposits held by the assessee abroad - CIT(A) deleted the additions - HELD THAT:- The assessee is NRI and a citizen of USA for many years prior to concerned assessment year is not in dispute. In the said circumstances, the Assessing Officer has no jurisdiction to tax the deposits held by the assessee abroad unless it is proved that the source of deposits are from India. On identical issue in DCIT (IT) -3 (3) (2) , MUMBAI VERSUS SHRI HEMANT MANSUKHLAL PANDYA [2018 (11) TMI 949 - ITAT MUMBAI] decided the issue in favour of the assessee. (i) The Assessing Officer has no jurisdiction to tax the deposits made by the assessee in HSBC unless the source of deposits are from India, as the assessee is a citizen of USA and is a Non-resident in India within the meaning of the Income-tax Act, 1961 from 1993 onwards and even for the earlier years. (ii) The assessee has to prove that the source of deposit in the HSBC account was out of India and not from India. (iii) If the deposits were not made out of foreign source during the years for which assessments are made, but are carried over balances from NRI Bank account in 1999, then the assessee has to prove by producing relevant bank account to confirm that it was deposited into Indian bank account out of transfer of funds from foreign NRI Bank account. Remit the issue in dispute to the file of the Assessing Officer with a direction to pass fresh order in the light of our above directions - Appeals filed by the Revenue are allowed for statistical purposes. 2019 (4) TMI 93 Disallowance of expenditure u/s 37 - under the head “interest paid on delayed payment of taxes, personal use of telephone, PWC Global Services Charges & Software licence fee” - HELD THAT:- As regards the issue relating to disallowance of interest paid on delayed deposit of service tax, it is observed that a similar issue involved in the case of DCIT –vs.- M/s. Webel Consumer Electronics Limited [2012 (12) TMI 1178 - ITAT KOLKATA] decided in favour of the assessee wherein interest paid on delayed payment of sales tax was held to be a deductible expenditure by the Tribunal. Also see M/S PRICEWATERHOUSECOOPERS PVT. LTD. VERSUS ACIT, CIRCLE-2 (2) , KOLKATA [2018 (9) TMI 1812 - ITAT KOLKATA] - we uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of interest paid by the assessee on delayed payment of service tax. Adhoc disallowance of telephone expenditure - HELD THAT:- As observed that a similar disallowance made by the Assessing Officer in the case of ACIT – vs.- Price Water House [2018 (9) TMI 1812 - ITAT KOLKATA] was deleted by the Tribunal holding that the adhoc disallowance made by the Assessing Officer on the basis of presumption without bringing any material evidence on record to show the personal use of telephone was not sustainable. Disallowance of PWC Global Service Charges - similar issue has been decided by the Tribunal in favour of the assessee in the case of M/s. Price Water House Coopers Pvt [2018 (9) TMI 1812 - ITAT KOLKATA] uphold the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for deduction on account of PWC Global Service Charges. Software licence fees - HELD THAT:- Allowing the deduction claimed by the assessee on account of software licence fees paid to M/s. Wipro Limited. Non-refundable grant - business receipt OR income from other sources - HELD THAT:- matter needs re examination by the Assessing Officer as the matter was decided by him with reference to the agreement dated 01.07.1998 and not with reference to the agreement dated 16.03.2011, which was referred to and relied upon by the ld. CIT(Appeals). As already observed by us, it is relevant to ascertain for deciding the exact nature of the non-refundable grant received by the assessee from the PWC BV as to whether the same was received as per the agreement dated 01.07.1998 or as per the agreement dated 16.03.2011. As observed by us while determining the nature of receipt, one should be guided by the terms of the agreement genuinely entered into between the parties. We, therefore, set aside the impugned order passed by the ld. CIT(Appeals) giving relief to the assessee on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after considering both the agreements dated 01.07.1998 and 16.03.2011 Disallowance on account of partner’s remuneration under section 40(b)(v) - HELD THAT:- The issue involved in Ground No. 2 is consequential to the main issue involved in Ground No. 1 and since the issue in Ground No. 1 was decided by the ld. CIT(Appeals) in favour of the assessee by his impugned order, he allowed the consequential relief to the assessee on the issue involved in Ground No. 2. Since we have set aside the impugned order passed by the CIT(Appeals) giving relief to the assessee on the main issue involved in Ground No. 1 and restored the said issue to the file of the Assessing Officer for fresh consideration, it follows that even the issue involved in Ground No 2, which is consequential in nature, should also go back to the Assessing Officer for fresh consideration depending on his decision on the main issue. Expenditure incurred on payment of software licence fees - nature of expenditure - revenue or capital expenditure - HELD THAT:- We find merit in the arguments of the ld. Counsel for the assessee that the expenditure in question incurred by the assessee did not result in any enduring benefit to the assesesee so as to treat the same as capital in nature. If we consider the nature of the software for which licence was acquired by the assessee and the use for which the same were put in the profession of the assessee of Chartered Accountancy, the expenditure in question incurred by the assessee as its share in the licence acquired to use the said software is revenue in nature and the same is allowable as deduction as rightly held by the ld. CIT(Appeals). Disallowance of insurance premium paid by the assessee towards Accountants risk policy - HELD THAT:- It could not be disputed that the payment of policy premium to cover the risk of damages owing to professional negligence was in relation to the business of the assessee and the fact remains that the said payment had a direct nexus with the business of the assessee and had to be recorded as expenses wholly and exclusively for the purpose of the business of the assessee. In Price Water House vide [2018 (9) TMI 1812 - ITAT KOLKATA] held that the premium paid towards Accountants Risk Policy cannot be considered as one falling within the ambit of Explanation 1 to section 37 of the Act - we uphold the impugned order of the CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of insurance paid by the assessee towards Accountant Risk Policy. 2019 (4) TMI 92 Allowability of the provision of warranty - scope of policy for warranty - concept of accrual and the "matching concept" - contractual obligation to make the payment in principle - HELD THAT:- Sum of provision was calculated based on the policy adopted by the company. This policy has not been found erroneous by the authorities in any forum. Therefore, it is wrong infer that the assessee does not have a policy and the contractual obligation to make the payment in principle and the quantification is also not found erroneous and unscientific by the authorities. It is also seen that unutilised provision is carried forward to the subsequent years by maintaining the opening and closing balances. Therefore, without bringing any evidence on record, the allegation of the Assessing Officer and the Commissioner of Income-tax (Appeals) that the warranty expenses are not claimable is incorrect. We also find the assessee has been maintained this method in principle over the years and they are not disturbed conclusively. Therefore, we hold that the provisions created by the assessee are required to be allowed as claimed by the assessee. Accordingly, the grounds raised by the assessee in this appeal are allowed. 2019 (4) TMI 91 Rectification of mistake u/s. 254(2) - review v/s rectification - HELD THAT:- Revenue want us to sit in judgment over the tribunal’s order on the issue of jurisdiction adjudicated in that order. As this will be a review of order not permissible u/s. 254(2) this is not sustainable. It is settled law that review of the order of the tribunal u/s. 254(2) in the garb of the rectification of mistake is not permissible. 2019 (4) TMI 90 Disallowance of depreciation rejecting concept of 'Block of Asset' - existence of individual asset in block of assets - use of individual assets - Some assets of a block of assets are not used in a particular year - HELD THAT:- In the present case, this is not the case of the AO that some asset of building block and plant & machinery block are not existing in the respective block of assets. In respect of each of these two blocks, the AO is also allowing depreciation in respect of some assets included in these two blocks. Hence in our considered opinion, part amount of depreciation disallowed by the AO in respect of some asset in each of these two blocks is not justified and it is not as per law. Depreciation is allowable on both the blocks in full and the same cannot be reduced in the manner done by the AO. This is not the case of the AO that there is no business income of the assessee because part depreciation is allowed by the AO also. The objection of the AO is this that the assessee is engaged in illegal mining activity and for this reason, the mining license is cancelled. This is not the case of the AO that the assets in question cannot be used by the assessee in some other business. In fact, this is admitted by the AO also that part assets of these two blocks are being used for business purpose and AO himself allowed part depreciation for each of these two blocks. Some assets of a block of assets are not used in a particular year, whether for allowing depreciation, we have to ensure that each item of the block of assets was used for business purpose. In our humble opinion, this is not the requirement of law that in the block of assets concept, business use of each of the assets of the block has to be seen and examined and depreciation is to be allowed only in respect of the assets used. We note that in this case, one of the assets is not even owned by the assessee because it was sold out but still, depreciation is allowable on WDV less sale proceeds. Hence, it is clear that business use of each item of a block of assets is not necessary for allowing depreciation on the block. We therefore delete the disallowance of depreciation made by the AO by respectfully following the tribunal order rendered in the case of Swati Synthetics Ltd. vs. ITO [2009 (12) TMI 667 - ITAT MUMBAI]. Since, we decide the issue in favour of the assessee 2019 (4) TMI 89 Dismissal of appeal ex parte - statutory provisions for disposal of appeal u/s 250(6) - violation of principles of natural justice - HELD THAT:- In which the assessee neither attended the hearings before the Ld. CIT(A) nor filed written submissions before the CIT(A) and showed indifferent approach, leading the Ld. CIT(A) to pass ex-parte order on the ground of nonappearance of the appellant. CIT(A) erred in dismissing Assessee’s appeal on merits in a summary manner, without giving detailed reasons for her order, on various grounds of appeal before her. We further hold that the CIT(A) erred in passing a non-speaking order on each of the points which arose for her consideration and she failed in discharging the statutory obligation to state the reasons for her decision on each such points, which arose for determination in assessee’s appeal before the CIT(A). If CIT(A) passes a summary order on merits; it amounts to contraventions of statutory role of CIT(A) as prescribed U/s 250(6) and Section 251. Therefore, we set aside the impugned order dated 31.03.2016 of CIT(A); and we direct the Ld. CIT(A) to pass denovo order as per law, in accordance with Sections 250 and 251 of I.T. Act, for fresh disposal of appeal filed by the Assessee before the Ld. CIT(A) against the aforesaid Assessment Order dated 28.03.2013. 2019 (4) TMI 88 Undisclosed income - income on the basis of loose paper - calculation mistake - gross or net surrender - applicability of Section 115BBE HELD THAT:- Documents income works out to ₹ 2,10,13,228/- (Gross receipt ₹ 3,26,00,730/- less expenses ₹ 65,19,150/- less expenses ₹ 50,68,352/-), but inadvertently Director Shri Sunil Jain during the course of survey while admitting the undisclosed income totaled the three figures comprising of income and expenses and surrendered income at ₹ 4,41,88,232/- which in our view was a bonafide mistake as the income on the basis of impugned loose paper was desired to be surrendered. CIT(A) has rightly deleted the addition by allowing ground of the assessee and therefore needs no interference as the right amount of undisclosed income has been subjected to tax. We accordingly confirm the view taken by CIT(A) and dismiss revenue’s Ground No.1. Set off of expenditure against the unaccounted income - HELD THAT:- Alleged expenditure have been thoroughly explained by the assessee before the lower authorities and the impugned account mainly includes salary paid to Shri Sunil Jain and others which have been duly offered to tax by Shri Sunil Jain and others in their respective return of income tax. It is also discernable from the records that the impugned expenditure have been claimed against the income from organizing health camp which is also the part of the business activity of the assessee company. No infirmity in the finding of CIT(A) and the same needs to be confirmed. In the result Ground No.2 of the revenue stands dismissed. 2019 (4) TMI 82 Claim of expenditure - Funds/loans by way of 'rights issue' of non-convertible debentures - claim was rejected by the Assessing Officer for the reason that the amount in question was in respect of the preceding assessment year, i.e. 1992-93 and hence it should have been claimed in that year - relevance to the 'mercantile system of accounting' projected as the basis for raising the challenge by the Department - HELD THAT:- In the instant case, the bill was raised by the Stock Brokers only on 10.03.1993 (within the assessment year 1993-94), though the 'rights issue' had been closed on 04.10.1991 (assessment year 1992-93). This being the position, it was rightly claimed by the Assessee in respect of the assessment year 1993-94. Reliance is sought to be placed on the verdicts in Commissioner of Income Tax vs; Raj Motors Yad [2005 (9) TMI 49 - ALLAHABAD HIGH COURT] and Commissioner of Income Tax vs. Sanco Trans Ltd. [2006 (1) TMI 83 - MADRAS HIGH COURT]. It is also pointed out by the learned Sr. Counsel that there is no dispute for the Department as to the genuineness of the expenditure incurred by the Assessee and as such, the contention/challenge raised is rather hyper-technical. There was no need, necessity or occasion for the Assessee to have made any provision for meeting the expenses in the year 1992-93, as the demand from the Stock Brokers was raised only as per their bill dated 10.03.1993, accountable for the assessment year 1993-94. The finding and reasoning given by the Tribunal holding it in favour of the assessee and against the Department is within the four walls of law. No substantial question of law Characterization of income - gains earned on cancellation of the Foreign Exchange Forward Contract - capital receipts or revenue receipts - Raise additional ground - HELD THAT:- It was noted by the Tribunal that additional ground was raised both by the Assessee and the revenue for the first time before the Tribunal; by virtue of which there was no opportunity for the Assessing Officer and the Commissioner of Income Tax (Appeals) to have it considered and hence left it to be decided by the Assessing Officer at the first instance. We find no illegality, irregularity or impropriety with the finding and reasoning given by the Tribunal and no interference is warranted with the direction given. Technical Know-how Collaboration Agreement - Assessee claimed the said amount during the assessment year 1993-94, which came to be rejected by the Assessing Officer, stating that approval was given by the Government only on 13.10.1993, i.e. coming within the assessment year 1994-95 - HELD THAT:- The appeal preferred by the Assessee was partly allowed by the Commissioner of Income Tax (Appeals) holding that it was mentioned in the Government letter dated 02.04.1993 that duration of the agreement shall be for a period of 5 years from expiry of the earlier agreement and hence the agreement became operative on the date of expiry of the earlier agreement itself, i.e. from 26.01.1992, though the approval was given by the Government only later on 13.10.1993. It was held that the approval related back to the effective date of agreement viz. 26.01.1992. The Commissioner of Income Tax (Appeals) also observed that, out of the total royalty amount of ₹ 2,61,52,641/-, a sum of ₹ 49 lakhs was in respect of the period from 26.01.1992 to 31.03.1992 falling within the period of the assessment year 1992-93 and hence the said extent cannot be allowed as part of expenses of the assessment year 1993-94. CIT (Appeals) virtually deleted the dis-allowance of ₹ 2,12,52,641/- relatable to the period from 01.04.1992 to 31.03.1993. The Tribunal considered the facts and figures meticulously and found that the order passed by the Commissioner of Income Tax (Appeals) was not liable to be interdicted. It was accordingly, that the appeal preferred by the Revenue was dismissed. We hold that the finding and reasoning given by the Tribunal is correct and sustainable. Expenditure claimed towards payment of 'club membership fee' - HELD THAT:- Tribunal under similar circumstances in respect of the assessment year 1991-92 (in the Assessee's own case) had been accepted by the Revenue and that the said finding was supported by the decisions of other High Courts as well, which stood in favour of the Assessee. It was accordingly, that the order passed by the CIT (Appeals) in favour of the assessee was upheld and the appeal preferred by the Revenue was dismissed in relation to the challenge against 'club expenses'. The finding arrived at by the Tribunal is well supported by reasons. The amount spent for acquiring membership in the Clubs stands on a different pedestal from the amounts incurred for availing materials supplied or service provided in the clubs. This Court finds that the said issue is to be answered in favour of the assessee. Deduction of commission - sister concern of the assessee, which according to the AO was an instance of 'diversion of funds' - HELD THAT:- In the appeal preferred by the Assessee, the CIT(Appeals) deleted the above additions, holding that there was no dispute as to the actual payment of commission and that the details of export (through the sister concern/Raunaq International Ltd.) were produced before the AO and the said Company (payee) had duly disclosed the said income in its account and satisfied the income tax. It was also observed that the AO had no case that the agreement in this regard was not valid. Reliance was also placed on the various other supporting factors to hold that the allegation of diversion of income was wrong and misconceived. The finding of the CIT (Appeals) was affirmed by the Tribunal, leading to the dismissal of the appeal preferred by the Department (paragraph 48). This is a clear 'finding on fact' and the challenge raised by the Revenue in this appeal does not involve any substantial question of law. Depreciation claimed by the Assessee in terms of Section 43A on the increased cost of the asset due to fluctuation in currency rate - increased cost of the asset due to fluctuation in currency rate - HELD THAT:- Assessee showed enhanced value of its capital assets of the plant and machinery to an extent of ₹ 9,95,75,351/- in its books of accounts, being the amount of increase in liability due to fluctuation in the exchange rates of foreign currency. AO disallowed the depreciation, holding that the increase in liability was artificial and did not represent any actual payment during the year, by virtue of which it would not come within the purview of Section 43A. CIT(Appeals) took a stand in favour of the Assessee and held that the instance would clearly fall within the ambit of Section 43A and in turn directed the AO to grant the relief, which was sought to be challenged by the Revenue before the Tribunal. Notice of this Court that the issue stands squarely covered in favour of the Assessee, by virtue of the rulings rendered by the Supreme court in Commissioner of Income Tax,Delhi vs. Woodward Governor India P.Ltd [2009 (4) TMI 4 - SUPREME COURT] and Oil and Natural Gas Corporation Ltd, Dehradun [2010 (3) TMI 81 - SUPREME COURT] Allowability of advertisement charges - re-open the assessment and to disallow some portion of advertisement expenses - payments made by 'account payee cheques' - HELD THAT:- We find that the materials produced before the Assessing Officer clearly reveal that the amounts were paid by the Assessee by way of crossed cheques and that there was no dispute with regard to the works in relation to the publicity effected. So also, pursuant to the summons issued by the Assessing Officer, the Bank Manager had produced the details/records; asserting that all the cheques were encashed (also producing copies of the relevant cheques, except the Cheque for the amount aggregating to ₹ 9,30,332/-, which could not be traced out). There is no dispute as to the publicity effected and that the payment was effected through crossed cheques and further since all these cheques have been encashed, we are of the view that this is not a fit case where interference is to be made with the finding and reasoning given by the Tribunal. The omission/absence on the part of the Bank to produce the particulars in respect of the cheque for ₹ 9,30,332/- (stating that the said cheque could not be traced out) by itself cannot be a ground to draw any adverse inference, as the other ingredients with regard to the work involved, payment of publicity charges through crossed cheques and encashment of cheques by Bankers stand vindicated. That apart, the finding given by the Tribunal is purely a 'question of fact' and no substantial question of law is involved. 'Roll over charges' for renewal/roll over of the foreign exchange forward contracts taken by the Assessee for repayment of foreign currency loans - HELD THAT:- We are of the view that the challenge raised by the Assessee does not constitute any substantial question of law coming within the purview of Section 260A of the Income Tax Act, to be entertained by this Court in the appeal. This Court is also aware of the present 'Litigation Policy' framed by the Government of India, Ministry of Finance as per the Circular No.3/2018 dated 11.07.2018 of the CBDT, Department of Revenue, which has been issued in suppression of the earlier Circular bearing No.21/15 dated 10.12.2015. 2019 (4) TMI 81 Block assessment u/s 158BC - undisclosed income on account of excess stock of jewellery - no sized material found - Tribunal estimating the undisclosed income in the absence of any seized material, which is a condition precedent for computation of undisclosed income under section 158BB - HELD THAT:- Tribunal being a fact finding body has failed to discharge its duty in an appropriate manner by recording the findings of facts on the basis of materials on record. CIT (Appeals) by giving an acceptable finding as quoted above on the basis of the seized material during the course of search, found that the alleged excess jewellery belonged to the partners of the Assesee firm and therefore the addition made in the hands of the Assessee firm to the extent of ₹ 7,62,190/- towards 1859 gms jewellery was not justified. Though the Tribunal had no contra material before it, but for the reasons best known to the learned members of the Tribunal, they stated in paragraph 5 that “We specifically direct the assessee to offer some undisclosed income on account of excess stock of gold jewellery for the assessment year 1998-99 out of ₹ 7,62,190/-”. Thereafter, the learned Tribunal proceeded to state that “The ld. counsel for the assesee relied on the order passed by the first Appellate authority but, he agreed for the addition of ₹ 3,00,000/- out of ₹ 7,62,190/- as undisclosed income for the assessment year 1998- 99.” We are unable to reconcile ourselves with the doubtful observations made by the learned Tribunal in the aforesaid manner. It was not at all open to the learned Tribunal to seek for any concession from the Assessee much less direct the learned counsel to make any such concession. No such concession is said to have been made by the learned counsel for the Assessee. We are rather pained and surprised at the aforesaid tenor of the order passed by the learned members of the Income Tax Appellate Tribunal- Decided in favour of assessee. 2019 (4) TMI 80 Non-compete fees payment - whether an allowable business expenditure u/s 37? - HELD THAT:- SLP admitted. Customs 2019 (4) TMI 146 Issuance of DFIA licence - petitioner's entitlement for importing maize popcorn vide SION entry as E75 under DFIA scheme - export of maize starch powder under DFIA scheme - actual user condition - whether petitioner can be allowed to import maize popcorn against DFIA licence for export of starch powder under SION entry No. E75 when admittedly imported popcorn is not used to manufacture export product namely maize starch powder? Held that:- The scheme itself is of transferable authorisation and therefore in that context different interpretation cannot be made. Moreover, Clause 4.27(iv) conveys that wherever SION prescribes 'Actual User' condition, it will prevail. Herein, no such actual user condition is specifically prescribed by SION for relevant entry. Chapter 9 of the FTP 2015 20 specifically defines the term 'actual user' as a person who utilizes imported goods for manufacturing in his own unit. It means that actual user condition relates to a person and not to a product. Therefore, the argument advanced by the petitioner regarding actual user condition would not sustain. It is not denied that popcorn maize has also similar starch contents as other varieties of maize, indicating that popcorn maize can be used to manufacture maize starch powder. The scheme never conveys that there is actual user condition attached to the import against the export obligation. It amounts to adding some conditions in the FTP when they never exist. Moreover, when the authorisation is made transferable under the scheme there is no question of actual user condition - It reveals that DFIA scheme is distinct than Advance Authorization Scheme where raw material is to be imported on authorization and to be used for manufacturing purpose. Basically, DFIA is post export scheme in which exporter has to first export goods and after realization of proceeds, exporter has to make an application to the authority, who after verification, grant DFIA certificate which is transferable. Therefore, there is no actual user condition inbuilt under the scheme. As per SION export item at serial No. E 75 is maize starch powder against which exporter is permitted to import maize without putting any condition or restriction as regards to variety, quality or characteristic in the said entry. Moreover, there is no such corresponding condition in licence. In its absence, any addition of words cannot be imported to change the equation. Precisely, import of popcorn maize is not excluded from the scope of term maize . The petitioner has imported maize which is capable of being used in the manufacturing of export goods namely maize starch powder. There is no actual user condition so as to restrict right of petitioner to import maize. So long as the export goods and the import item corresponds to the description given in the SION, it cannot be held to be invalid by adding something else which is not in the policy. The petitioner is entitled to import popcorn maize under DFIA scheme vide SION entry E75 - petition allowed - decided in favor of petitioner. 2019 (4) TMI 145 Jurisdiction - power to review - Imposition of ADD - imports of AA Dry Cell Batteries from the People s Republic of China and Vietnam - Section 9C of the Customs Tariff Act. Whether the Designated Authority s negative Final findings recommending no anti dumping duty on the ground of it not being in accord with the disclosure statement published by it, can in the circumstances of this case, be interfered with in judicial review? Held that:- Supreme Court judgments, and several decisions of High Courts, have clarified that the Designated Authority is only an investigating authority whose findings are recommendatory in nature. It is only when the recommendation is followed by a notification imposing anti dumping duty that a lis arises; this appears to be clear from the three judge decision in Tata Chemicals v Union of India [2008 (3) TMI 17 - SUPREME COURT]. No doubt, every DA adopts and is duty bound to adopt (in consonance with GATT provisions as well as the rules) a quasi-judicial procedure, whereby opportunity is granted to the concerned parties and those likely to be affected, culminating in reasoned final findings. Supreme Court in Automotive Tyre Manufacturers Association v. the Designated Authority Ors [2011 (1) TMI 7 - SUPREME COURT OF INDIA] has held that the DA exercises quasi-judicial functions and is bound to act judicially. The DA determines the rights and obligations of the interested parties by applying objective standards based on the material/information/evidence presented by the exporters, foreign producers and other interested parties by applying the procedure and principles laid down in the 1995 Rules. While determining the existence, degree and effect of the alleged dumping, the Designated Authority determines a lis between persons supporting the levy of duty and those opposing the said levy. According to Rule 4(1) (d) of the Rules, the duty of the Designated Authority is to recommend the amount of anti-dumping duty, which if levied, would remove the injury to the domestic industry. Section 9A of the Customs Tariff Act enables only the Central Government to impose anti-dumping duty. The Customs Tariff Act and the Rules thereunder thus make it clear that the Designated Authority s findings are mere recommendations intended to assist the Central Government. This court is conscious of the separate roles that the Designated Authority and the Central Government perform in deciding whether or not to impose anti-dumping duty. The Central Government is restricted from imposing anti-dumping duty in certain circumstances. One such circumstance is outlined in Section 9B (1)(b)(ii) of the Act. Section 9B(1)(b)(ii) prevents the Central Government from levying anti-dumping duty on any article imported into India from a member of the World Trade Organisation (WTO) or from a most favoured nation, unless a determination has been made that import of such article causes or threatens material injury to any established industry in India. In the present case, 01.04.2014 to 31.03.2015 was chosen as the period of investigation- initiated on 20.10.2015. By Rule 17 necessarily the DA had to furnish its report. On 27.09.2016, DA issued the Impugned Final Findings wherein it recommended against the imposition of anti-dumping duty. The proviso enables the Central Government, in the exercise of its discretion to extend that period by a maximum of six months. In the event that the DA had decided to impose anti-dumping duty, the Central Government, according to Rule 18(1) would be obligated to impose antidumping duty within three months of the Designated Authority s final finding. In case of an adverse finding, even the provisional duty (if imposed earlier) has to be revoked within forty-five days of publication of the final findings. In the facts of the case, if the petitioners contentions were to be accepted, the window period for the DA to have reconsidered the matter after judgment, under Article 226 would have been between 27.9.2016 and 20 April 2017. Even if, arguendo anti-dumping duty were justified, the matter would necessarily have to be remanded back before the DA for reconsideration. Anti-dumping duty will only be imposed once both the DA and the Central Government agree that it is warranted. However, as the period of investigation is from 01.04.2014 to 31.03.2015, all determinations will only concern this 12-month period. Petition dismissed. 2019 (4) TMI 144 Imposition of penalty - main plea raised by the appellant was since the other co-noticee has paid up the entire duty, interest and 25% penalty, proceedings has to be deemed to be concluded against all other noticees as per sub-section (1A)(2) of section 28 to Customs Act, 1962 - Held that:- The co-noticee M/s. M.G. Trading Co., has paid-up the duty demand, interest as well as 25% penalty within 30 days from the issue of show-cause notice - proviso to sub-section (2) of section 28 of the Customs Act states that the proceedings in relation to co-noticees will stand concluded when such demand, interest and 25% penalty has been paid-up by one of the notices. Penalty do not sustain - appeal allowed - decided in favor of appellant. 2019 (4) TMI 143 Condonation of delay of 7 days in filing appeal - Held that:- The appeal was filed beyond the statutory period of sixty days, but within the condonable period of 30 days. Accordingly, the delay in filing the appeal before the lower appellate authority is hereby condoned - matter remanded to the ld.Commissioner (Appeals) for deciding the issue on merits - appeal allowed by way of remand. 2019 (4) TMI 142 Refund of SAD - N/N. 102/2007 - time limitation - section 27 of Customs Act, 1962 - discharge of VAT liability by appellant - Held that:- Condition no. 2(d) of notification no. 102/2007-Cus dated 14th September 2007 mandates discharge of VAT liability as a prerequisite for claiming the exemption ex post facto. It is not disputed that some of the sales had occurred more than a year after the goods were cleared. The exemption is effected through refund upon evidencing of discharge of VAT liability and section 27 of Customs Act, 1962 prescribes time-limit of one year from the relevant date beyond which it cannot be claimed. The impugned order has rendered a finding on the ineligibility, the sanction of refund by the original authority was not proper - appeal dismissed. 2019 (4) TMI 87 Advance Authorisation Scheme - Export Promotion Schemes - transfer of Authorisation from the old unit to the new IEC - automatic extension of the export obligation period after amalgamation of the company - existence of company to which the original Authorisation was issued - fulfillment of export obligation after amalgamation Policy Relaxation Committee concluded that the merger with the new company had taken place after the expiry of export obligation period, namely, (i) the IEC number of M/s Lubi Submersible Ltd. had been surrendered on 14.3.2013; (ii) during this period of 36 months, the petitioner could discharge only 7.78% export obligation; (iii) The petitioner would not be able to file shipping bills in the new IEC for old Authorisations due to limitation of system software at ICEGATE Customs; and (iv) Extension beyond 48 months is not considered and that period has lapsed in March, 2014. In view of the above, the petitioner was asked to get its case regularised in terms of Para 4.49 of the Handbook of Procedures, 2015-2020. petitioner made another application dated 30.11.2016 to the Policy Relaxation Committee to re-consider its decision which also not resulted in any relief and was rejected vide order dated 14.5.2018 Held that:- A perusal of the order dated 14.5.2018 of the Appellate Committee shows that the Policy Relaxation Committee had called upon the Regional Authority to explain why the amendment was not allowed when the High Court had allowed amalgamation of the two companies. It was stated that the merger took place after the expiry of the export obligation period and the IEC number of M/s Lubi Submersibles was surrendered on 14.3.2013. In the opinion of this court, the grounds of rejection as stated in the impugned order do not appear to be germane. Paragraph 4.22 of the Hand Book of Procedures, 2009-14 provides that the fulfillment period of export obligation under an Advance Authorisation shall commence from the authorisation issue date, unless otherwise specified and further provides that the export obligation shall be fulfilled within thirty six months except in the case of the categories specified therein. The paragraph further provides that in case of inputs mentioned in Appendix 30A, the export obligation period be specified against each entry therein and facility of extension of export obligation period shall not be permitted in case of Advance Authorisation issued for these inputs and that the Regional Authority shall make endorsement in the Advance Authorisation to that effect. While it is true that an Advance Authorisation is non-transferable, it would mean that it cannot be transferred from one entity to another. But in this case, upon M/s Lubi Submersibles having been amalgamated with M/s Arvind Iron Pvt. Ltd., M/s Lubi Submersibles lost its identity and ceased to carry on business, and therefore, the question of fulfillment of the export obligation thereafter by Ms. Lubi Submersibles would not arise - the obligation to fulfill the export obligation of the Transferor Company viz. M/s Lubi Submersibles was on the transferee Company, namely, M/s Arvind Iron Pvt. Ltd. which was soon thereafter converted to M/s Lubi Industries Pvt. Ltd. and then to M/s Lubi Industries LLP. The respondents seek to take action against the petitioner M/s Lubi Industries LLP in respect of non-fulfillment of the export obligation of M/s Lubi Submersibles but refuse to transfer the Advance Authorisations of the Transferor Company to the IEC of the Transferee Company on the specious plea that there is no provision for transfer of Advance Authorisation. In this case, since by virtue of the order of amalgamation, the Advance Authorisations also stand vested in the petitioner M/s Lubi Industries LLP, it is not as if the Advance Authorisation is being transferred to another person, but it is the person whom the respondents seek to hold liable to fulfill the export obligation who is seeking transfer of Advance Authorisation to its IEC number so as to enable it to fulfill the export obligation of M/s Lubi Submersibles. It cannot be gainsaid that in view of the fact that M/s Lubi Submersibles ceased to exist upon its amalgamation with M/s Arvind Iron Pvt. Ltd., the question of M/s Lubi Submersibles fulfilling the export obligation would not arise and it is only the Transferee Company which can fulfill the export obligation. On account of the applications being rejected on the ground that there is no provision for transfer, the petitioner could not show any exports against the Advance Authorisations in questions despite having been engaged in the business of export all throughout that period. Thereafter, the petitioner once again applied before the Policy Review Committee, both, for transfer of Advance Authorisation, as well as for extension of export obligation period - it is apparent that the Appellate Committee has not applied its mind to the controversy in issue and has merely placed reliance upon the orders passed by the subordinate authorities, without taking into consideration the fact that it was these very orders which had given rise to the review appeal. This court is of the opinion that the impugned order dated 14.5.2018 passed by the Appellate Committee suffers from the vice of nonapplication of mind to the relevant issues and is contrary to the provisions of the Handbook of Procedures, 2009-14, the Circular dated 16.11.2011 as well as the Public Notices issued in this regard from time to time, which renders the impugned order unsustainable in law - Petition allowed. 2019 (4) TMI 86 Change in classification of the product -Chapter Heading 852520 or heading 8528 - digital set top box - reception and transmission apparatus or only reception apparatus - lower authorities have relied on the original opinion of the SAC but discarded the clarification on the ground that it was given only on the strength of data sheet - Held that:- It is not proper to discard the clarification merely for that reason. Data sheet of equipment is a vital piece of evidence in itself. The matter was remanded directing lower authorities to examine the evidence that appellants produce. The appellants has produced Test Certificate of Electronics and Quality Development Centre, Government of Gujarat (reproduced in para 3 above). This has been discarded without any reasons. This test reports essentially echo s the revised clarification opinion of SAC. The issue regarding presence of transmission facility in the imported product has not disputed even in the original proceeding. The rejection of second opinion of the SAC on the ground that it was based solely on the data sheet is misplaced. The data sheet of the product contains all the necessary information. Moreover, set top box, inherently functions by receiving signals from satellite and transmission of the same to other devices for display or use. The clarification report of SAC is further supported by the test report of Electronics and Quality Development Centre, Government of Gujarat. Even the report of the Ministry of Communication and Information Technology dated 24.11.2004 support the fact that the set top box has reception and transmission apparatus in following words. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 85 Revocation of CHA License - Customs Brokers Licensing Regulations (CBLR), 2013 - forfeiture of security deposit - time limitation - report of the Inquiry Officer not submitted within a period of 90 days from the issue of SCN under Regulation 20 (5) - order of the competent authority was not issued within 90 days after receipt of the inquiry officer’s report as per Regulation 27 of the CBLR - Held that:- As the time limits laid down in Regulation 20 of CBLR 2013 have been followed in the breach, the impugned order of revocation and forfeiture of security deposit cannot be sustained and will require to be set aside - appeal allowed - decided in favor of appellant. Corporate Laws 2019 (4) TMI 141 Revival of company - Seeking to permit the applicant and its members to clear the dues in terms of the application - authority of person who has made an application seeking scheme of revival - pierce the veil and judiciously X-ray the same - HELD THAT:- This application is filed by an entity whose background is unknown. It is also not clear as to whether it has the support of large number of stated 1127 permanent workers who are working with the respondent company. It is a mandatory provision spelt out u/s 391 of the Companies Act that no order sanctioning any compromise or arrangement shall be made unless the Court is satisfied that the person who has made an application has disclosed to the court all material facts relating to the company such as the latest financial position of the company, the latest auditors report of the accounts of the company, the pendency of any investigations etc. No such relevant information or details or financial statements are forthcoming alongwith the present application. On the bonafide of the petitioner one cannot help noticing that the applicants essentially seek to take over the assets and management of the respondent Company. The scheme envisages reduction of the share capital of the existing shareholders from the value of each share being ₹ 10 to ₹ 1 per share. It seeks allotment of fresh share capital to the ex. employees and to the creditors to the company so that the said fresh allottees would be the majority shareholders. The Company Court has to satisfy itself that the Members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith. There is nothing to show that the applicant represents the majority of the Ex. workers of the respondent company. He purports to act for and on behalf of a class of creditors, namely, the workers to take over the management of the company. The Scheme seeks to replace the present management by reducing their share capital and allotting shares to the workers/creditors. The scheme can neither be termed to be just, fair or reasonable. The scheme completely lacks bona fide. Insolvency & Bankruptcy 2019 (4) TMI 140 Corporate insolvency process - Adherence to period of 270 days for completion of the Resolution Plan - HELD THAT:- The approved Resolution Plan submitted by LHG is not capable of implementation due to default in adhering to the payment schedule, we dispose of this application by directing that the period from the date when DVI submitted its final plan i.e. on 05.03.2018 up to the date of the receipt of copy of this order be excluded while calculating the period of 270 days for completion of the Resolution Plan with liberty to the financial creditor and/or Resolution Professional to make appropriate complaint with the Insolvency and Bankruptcy Board of India or the Central Government on the allegation of wilful or intentional default and to pursue the appropriate remedy for the offence, if any, committed by the respondent with right to respondent No.1 to defend the action. The period of 10 days in addition would also stand excluded for serving the notice to DVI for representing its case before the Committee of Creditors and for which the Committee of Creditors is reconstituted. The Resolution Professional and the Committee of Creditors would take a final decision and report to the adjudicating authority about the final outcome Misrepresentations in the information memorandum by RP - default in implementing the Resolution Plan submitted by the applicant - HELD THAT:- The application of the financial creditor has been disposed of with liberty to the Resolution Applicant or the financial creditors to file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government, claiming that the LHG intentionally and wilfully contravened the terms of the Plan. No effective order therefore, can be passed in this application as the matter would be within the purview of the Competent Authority. The Adjudicating Authority under the Code without passing an effective order cannot lay down the guidelines in the exercise of its jurisdiction, which is to adjudicate the matters under the Code and the Rules and Regulations framed thereunder. We reject this application in limine. 2019 (4) TMI 139 Corporate insolvency process - Adjudicating Authority had not issued any notice prior to admission of the application under Section 7 of the ‘I&B Code’ - HELD THAT:- In the present case, as we find that the aforesaid procedure has not been followed and the Adjudicating Authority has violated rules of natural justice by not issuing any notice to the ‘Corporate Debtor’ about the date of admission, we have no other option but to set aside the impugned order dated 14th December, 2018. It is accordingly set aside. The matter having already settled between the parties, we are not remitting the matter back to the Adjudicating Authority. In effect, order (s), passed by the Adjudicating Authority appointing ‘Interim Resolution Professional’, declaring moratorium, freezing of account, and all other order (s) passed by the Adjudicating Authority pursuant to impugned order and action taken by the ‘Interim Resolution Professional’, including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. FEMA 2019 (4) TMI 138 Contravention of the provisions of Section 18(2) & 18(3) of FERA, 1973 - failure to realize the export proceeds - HELD THAT:- Appellant neither has the finances to carry on a protracted litigation in Doha, Qatar. (Additional affidavit in this regard has also been filed). The Appellant has addressed numerous letters to its Advocate Ahmed Ali Morafi to enquire about the current status of the matter but unfortunately had not received any written response from him. The Appellant has also tried to contact the said advocate on his phone number mentioned in his letter head but is unable to reach him on the same. It has come on record that even after taking all reasonable steps, it is quite evident that the export proceeds could not be realized for reasons /due to circumstances which were beyond the control of the Appellant. Department has not been able to prove that certain acts on part of the Appellant resulted in the non-realization of the export proceeds. As submitted on behalf of appellant that the total number of Appellant during the period during the period during the financial year 1992-93 to 1995-96 was ₹ 5.61 crores. There is no outstanding bills of the Appellant with their Banker for the financial years 1997-98, 1998-99, 1999-2000) and the said fact has been certified by Global Trust Bank Ltd. The unrealized amount of ₹ 17,85,835/- does not constitute even 5% of the total turnover. The Appellant is entitled for write-off of the unrealized export proceeds as per RBI Circular No.88 dated 12.03.2013. Under these circumstances and in the light of above, it is evident that it is held that the Appellant has taken all sufficient, reasonable and timely steps which are legally permissible within their limited means and to realize the unpaid export value. The Appellant has discharged the burden cast upon him under Section 18(2) r.w. 18(3) of FERA, 1973. In this context the appellant seeks to rely upon the decisions of the Hon‟ble Delhi High Court in Ganesh Polytex Ltd. and Ors. Vs. Union of India (UOI) and Ors. [2010 (9) TMI 463 - DELHI HIGH COURT] The appeal is allowed, the benefit is given to the appellant who should not be penalized for non-repatriation of the full export value within the prescribed period, the appellant is exonerated from the allegations made in the SCN dated 29.06.2001. The impugned order is set-aside. PMLA 2019 (4) TMI 137 Offence under PMLA - provisional attachment order - proceeds of crime - Appellant Bank priority over the mortgaged property - Attaching the mortgaged properties without any valid reasons - HELD THAT:- In order to recover the monies taken by the Respondent Nos. 5&6, the only recourse the Bank has is the Mortgaged properties and if the same is attached the Bank will have no other recourse and will lose large amounts without any fault of the Bank. The consequence of the attachment would be borne by the general public and depositors. The Bank in its usual course of business provides finance and credit facilities to its customers. The Appellant Bank has therefore no reason to doubt the source for which the money has been borrowed by the Bank. Respondent Nos. 5&6 had approached the Appellant Bank in the year 2015 and requested the Appellant and Bank of India to constitute a consortium for sum of ₹ 91.00 Crores (Rupees Ninety One Crores only) on the terms and conditions contained in the respective sanction letters of the said banks and also the terms and conditions contained in the working capital Consortium Agreement dated 13.03.2015 entered into by and among the borrower and the said banks. If the bank is an innocent party and victim from the hand of borrowers, who mortgaged the properties which were not acquired from the proceed of crime, being a secured creditors, the mortgaged properties cannot be attached equivalent to the value thereof if the said properties are not purchased from the proceed of crime or as a result of criminal activity at the time of sanctioning the loan. The finding of both authorities are against law for attaching the mortgaged properties without any valid reasons. Banking system cannot be destroyed in this manner. It is settled law that the money advanced by them for the purchase of the property cannot be taken to be the proceeds of crime. The Adjudicating Authority is obliged to record a finding to that effect and to allow the provisional order of attachment to lapse. Otherwise, a financial institution will be seriously prejudiced - impugned order of attachment is set aside. 2019 (4) TMI 136 Prevention of Money Laundering - no cogent evidence provided by the ED in order to show that the appellant has any link and nexus with any alleged accused parties - HELD THAT:- No plea of the appellant has been referred wherein it was stated that the appellant was the buyer of the property and Mrs. Nirmala Jain was the seller of the said property and due to personal reasons on the part of the seller the sale of the property did not take place in favour of the appellant. Thus, her name should be deleted as respondent. The appellant thus before this Tribunal claiming no right in the property. She was arrayed as defendant no. 50 in the application. Respondent says that since she is claiming no right and title in the property, her name may be deleted. Even, no prosecution complaint has been filed under section 8(3)(a) of the Act. Ninety days period has already been expired. Therefore, the impugned order against the appellant is set-aside by allowing the present appeal. 2019 (4) TMI 135 Prevention of Money Laundering - retention of records - non specification of reasons - HELD THAT:- No report against the appellant has been forwarded to the Magistrate. No complaint against the appellant was filed before a Magistrate. No cognizance of schedule offence was taken by any authority or Additional Secretary to the Government of India. If the Act, if one will read in meaningful manner, no civil or private disputes between two parties and any criminal proceedings can become subject matter of PMLA, unless the officer authorized has reason believe on the basis of information and material available in his possession to the effect that the‘person concerned’ has committed an offence under Section 3 of the Act;and the ‘person concerned’ has derived and obtained proceeds of crime and as a result of criminal activities relating to a schedule offence or against third party who is in possession of any proceeds of crime and it is likely to be concealed, transferred or dealt with which may frustrate any proceedings under this Act within the meaning of Sections 5, 17 to 21read with definition of Section (u) of the Act. The Respondent proceedings under the provisions of PMLA forsecuring “proceeds of crime” does not arise at all and the present proceedings are completely abuse of process of law. The continuation of proceedings are just for harassment and nothing else. The complainant has already deposed her statement who raised no-objection to quash the said F.I.R. before the Hon’ble Delhi High Court. She has settled the disputes prior to registering the ECIR, search and seizure, on the date offiling of application under Section 17(4) for retaining the records and passing the impugned order, the respondent was party to the said proceedings but still the Respondent has chosen to conduct the search and seized several important and confidential records/documents belonging to the Respondent on 03.11.2017. In the present case, the statutory obligations laid down in section 20(1), 20(2), 20 (4) and 21(4) of PMLA have not been complied with. Anattempt has been made to retain the records without recording any‘reason to believe’. The provisions of section 8 (3) (a) provides that the attachment orretention of property or record seized shall continue during theinvestigation for a period not exceeding ninety days. The said prescribed period has already been expired as more thana year has already elapsed but the properties and records have not beenreturned so far which is in clear violation of the provisions of PMLA. Noprosecution complaint has been filed against the Appellant. Present appeal is allowed. The impugned order dated 10.4.2018 is set-aside. The application filed by therespondent under Section 17(4) for retention of documents is dismissed accordingly. Service Tax 2019 (4) TMI 134 Refund of service tax - service tax paid under mistake of fact - MESCOM ledger maintenance service - rejection on the ground of time limitation - Section 11B of the Central Excise Act, 1994 - Held that:- The settled principle of law is mere payment of tax made by the respondent under the mistaken notion would neither validate the nature of payment nor the nature of transaction. The controversy in the present case involves around the applicability of Section 11B of the Act to the facts of the present case - In the KVR Construction, [2012 (7) TMI 22 - KARNATAKA HIGH COURT], the Division Bench of this Court has categorically observed that when once there was no compulsion or duty cast to pay the service tax, the amount paid by petitioner under mistaken notion, would not be a duty or service tax payable in law. The petitioner has paid tax amount on a mistaken notion and the maintenance of books of MESCOM is not a taxable service, the department cannot get itself unjust enriched by relying on Section 11B of the Act. If the services are not coming within the ambit of taxable service as contemplated under the Act 1994, Section 11B of the Act is not applicable. Hence, respondent No.2 is directed to refund the tax amount to the petitioner. Petition disposed off. 2019 (4) TMI 133 CENVAT Credit - duty paying documents - it is alleged that the documents are not proper - Held that:- Though these are ATD memos, it is seen that the appellants have supplied the invoices issued by the service provider to establish the fact that the service tax has been paid by them. The Department does not have a case that the service tax, as per the invoices, is not paid by the appellant. The allegation is that they have to produce proof that the service provider has paid up the service tax collected to the Government. This is not a requirement to avail Credit. When it is established that tax has been suffered, the service recipient is eligible to avail Credit on the said documents - credit allowed. CENVAT Credit - input services - the towers are constructed in Salem and that the Trichy unit is taking the benefit of these towers for providing output service - Held that:- It appears that this technical difference has not been appreciated by the Department or even by lower adjudicating authority, although there has been no analysis of this response made by the appellant - the service tax has been suffered by the appellants and there is no finding to the contrary. This being so, the disallowance of Credit is unjustified. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 132 CENVAT Credit - Provider of CHA services - input services - rental charges of godowns - stevedoring charges - reimbursable expenses - extended period of limitation - Held that:- The stevedoring and godown rent are reimbursable expenses as they do not directly pertain to the Custom House Agent services rendered by them although they provide/facilitate these services also to their clients. In the instant case, the taxable service rendered by the appellant is Custom House Agent service and renting of godowns and stevedoring are separate services which are provided to their clients. The appellant themselves are treating these as reimbursable expenses incurred by them on behalf of their clients - such a service cannot become an input service for the Custom House Agent services provided by the appellant. The appellant had wrongly availed the CENVAT Credit on these two input services and the same needs to be recovered from them. Since the appellant has availed CENVAT credit on the services which, prima-facie, are not at all covered the definition of ‘input services’ under CCR 2004 and they have not included the value of these services in their output services, the appellant has taken a credit in violation of the Rules with the intent to evade payment of service tax. Therefore, the extended period of limitation was correctly invoked. The demand is sustainable along with interest - there is no reason to interfere with the imposition of penalty under Rule 15(3) of CCR 2004, read with Section 78 - appeal allowed in part. 2019 (4) TMI 131 Business Auxiliary Service - appellants were collecting port handling charges and terminal handling charges and remitted the same to M/s.Kawasaki - Department has alleged that said activity falls under Customer Care Services provided on behalf of the client within the definition of Business Auxiliary Service‛ - Held that:- Both the authorities have stated that appellant provided port handling and terminal handling services to their customers. Appellant as an agent of M/s.Kawasaki Liner Services collected port handling charges and terminal handling charges from their customers and remitted the same to their principal. However, they have not collected any mark up or retained any part of the charges collected from their customers. They have just passed on the same to their principals. While collecting the port handling charges or terminal handling charges, appellants have not rendered any such service under this category. It is in fact Kawasaki Liner Service who have rendered these services. The appellants having not provided any service of port handling or terminal handling service and having not collected any consideration in this regard, the demand of service tax under this category on the appellants cannot sustain. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 130 CENVAT Credit - common input services used in both taxable and non-taxable services - exempted value of services provided to Jammu & Kashmir - short levy of Service Tax under ‘reverse charge mechanism - extended period of limitation - Held that:- If no input credit is availed on input services used for rendering exempted services, then there may not be any revenue loss - Further, It is also a matter of record that an Order-in-Original dated 21.09.2015 came to be passed covering a similar issue for earlier periods and hence, the arguments of the Consultant that there was no suppression or fraud etc., and that therefore larger period of limitation could not be invoked, merits consideration. There is no dispute with regard to the payments evidenced by the tax payers’ counterfoils on which there is no discussion nor any finding and in any case, the same will have to be given due credit, which is not done here - matter requires reconsideration - appeal allowed by way of remand. 2019 (4) TMI 129 CENVAT Credit - delayed payment of service tax - service tax was paid on being pointed out - suppression of facts or not - Rule 9(1)(bb) of Cenvat Credit Rules, 2004 - Held that:- This is a case of only delayed payment of service tax for the period November-December 2011 - Even though the same was pointed out by the department, the appellant was very much aware of the liability and the transaction for which the service tax was due, was recorded in the books and service tax was paid during scrutiny of three months. Therefore, it cannot be alleged that there is suppression of facts on the part of the appellant - credit allowed - appeal allowed - decided in favor of appellant. 2019 (4) TMI 128 Refund of service tax - Construction of Residential Complex Services or not - refund claimed on the ground that they were not liable to payment of service tax under the said category as per the CBEC Circular No. 108/02/2009-ST dated 29.01.2009 - principles of unjust enrichment - Held that:- Tribunal in the case of M/s. Real Value Promoters Pvt. Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] has held that in case of composite contracts, the activity cannot be subjected to levy of service tax under the category of Construction of Residential Complex Service (CRCS)/Commercial or Industrial Construction Service (CICS)/Construction of Complex Service (CCS). Even if the activity/service is not subject to levy of service tax, it has to cross the hurdle of not being hit by unjust enrichment. In the present case, the Department has alleged that the appellants have shown the said refund amount in their Books of Account as expenditure. This apart, the appellant has not raised any invoices. Thus, it is not forthcoming from the records whether the appellants have passed on the burden of tax to another person or not - That such workings/calculations are after giving the appellant the benefit of cum-tax. This has to be verified. For the purpose of verifying as to whether the demand is hit by unjust enrichment, the issue requires to be remanded to the adjudicating authority, who shall verify the same - appeal allowed by way of remand. 2019 (4) TMI 127 Short payment of service tax - non-inclusion of an amount of ₹ 13,82,406/- in the total taxable value for the returns filed for the year 2010 – 11 - re-imbursable expenses - Held that:- It is settled law that reimbursable expenses cannot be subject to levy of service tax during the disputed period - From the records, it is seen that the appellants have raised a contention that they have discharged the service tax on the value of ₹ 10,14,593/- which was the amount after exclusion of reimbursable expenses. So even though it is stated to be expenses and costs incurred for providing services, the appellant admits that the amount raised in the Show Cause Notice includes certain amount which is not reimbursable expenses and has to be included in the taxable value. Taking note of this aspect and also the request of the appellant seeking for an opportunity to furnish evidences to establish their case, it is deemed fit to remand the matter to the adjudicating authority for reconsideration of the issue. Penalty u/s 76 - Held that:- The issue is wholly interpretational one, the appellant has put forward reasonable cause for not paying service tax. This is a fit case for invocation of section 80. Therefore, penalty under section 76 is set aside. Appeal allowed in part and part matter on remand. 2019 (4) TMI 126 Sale of Space or Time for Advertisement - appellants were collecting money for flashing advertisements on their websites from various parties and Google Adsense. It appeared that the said amounts collected for flashing such advertisements - demand of service tax - Held that:- Any service provided/to be provided to any person in relation to Sale of Space or Time for Advertisement, etc., would come under the fold of the aforesaid service category. However, on closer analysis, it is evident that the service tax can be levied only in respect of the services provided in relation to Sale of Space or Time and not for Sale of Space or Time . This has to be so, since service tax is an indirect tax, leviable only on service and not on sale of goods - The combined takeaway from the analysis of the above legal provisions will only result in the conclusion that only services provided in relation to Sale of Space or Time for Advertisement on the internet attract service tax liability under Section 65(105)(zzzm) ibid. However, the Sale of Space or Time for Advertisement simpliciter, being only a sale of goods, that cannot be brought into the fold of taxability under the above provisions of the Finance Act, 1994. The lower authorities have confirmed the tax liability on this activity of the appellant on the mistaken premise that any person who provides space in their website for advertisement through internet is squarely covered as providing a taxable service under this category of service - the lower authorities have been found to be erroneous - demand do not sustain. Support Services of Business of Commerce - demand of service tax - Held that:- As admitted by the appellants themselves in their reply dated 27.07.2009 to the Show Cause Notice dated 01.04.2009, The website belongs to them (assessee), where various e-transactions are concluded and executed by Mercado. Since the transactions emanate from their website, they are entitled for a margin out of the sale proceeds . The arrangement of sharing of net margins equally on all executive orders is only a quantification of the charges that would be payable to the appellant by Mercado for each successful transaction. Mercado is only paying the appellant for the support provided by the latter for supporting their business in the cyber world - there is no infirmity in the impugned Orders of the lower authorities which have confirmed/upheld the tax liabilities in respect of these transactions under the category of Support Services of Business or Commerce. Appeal disposed off. 2019 (4) TMI 125 CENVAT Credit - input services - event management service - maintenance charges - bed rental charges - Held that:- The event management services were availed by the appellant for conducting the annual day function. The appellant is a BPO service provider and have to undertake such events as per the circular and instructions issued by the higher officers - In the case of Oceans Connect India Pvt. Ltd. [2016 (9) TMI 377 - CESTAT MUMBAI] relied by the ld. counsel, the event management service has been held to be eligible for credit - credit allowed. Maintenance charges - Held that:- These are incidental to the renting of immovable property - the maintenance charges are eligible for credit - credit allowed. Service tax paid on bed rental charges - Held that:- The ld. counsel has submitted that the appellant would be able to furnish documents to substantiate that these are used for providing output services - the issue has to be remanded to the adjudicating authority who shall reconsider the issue after giving the appellant an opportunity to furnish evidence and for personal hearing - matter on remand. Appeal allowed in part and part matter on remand. Central Excise 2019 (4) TMI 124 Interpretation of statute - Effect of amendments - Whether interpretation of provisions of Section 38A of the Central Excise Act, 1944, in the light of Section 6 of General Clauses Act by the Customs, Excise & Service Tax Appellate Tribunal is proper or not? - Held that:- Before the Court, at the time of admission, the questions as proposed by the Revenue did not raise any issue with regard to demand being barred by limitation. Thus, that issue stands concluded in favour of the respondent even as per the Revenue. So far as other questions which are now being raised are the same which were subject of consideration by the coordinate Bench of this Court at the time of admission. At that time, the appeals were admitted only on one issue by reframing the question of law as reproduced hereinabove. Thus, our entertaining/examining the question for consideration would amount to review of the order dated 18th September 2009 admitting the appeals. This, without any reasons being even suggested by the Revenue, which would warrant the questions being reurged at the time of final hearing of these appeals. There is no reason to exercise our power under the proviso to section 35G (4) of the said Act in the present facts - the substantial question of law as framed in these appeals in the present facts is academic, and are not answered - appeal dismissed. 2019 (4) TMI 123 CENVAT Credit - duty paying documents - credit denied on the ground that no proper documents as prescribed under Rule 9 of the Cenvat Credit Rules 2004 was produced - Held that:- The invoice of the service provider is a prescribed document for the purpose of availing credit. It is not the case of the Revenue that the credit which has been claimed has been claimed without the strength of such an invoice. Neither in case of reverse charge it could be so. The payment of Service Tax on reverse charge could have been made only on the basis of the invoices issued by a service provider in case of service provided from outside and invoices issued by the said service provider abroad or in case of GTA services by the said GTA service provider. When these invoices were available for determination and payment of Service Tax on reverse charge basis, obviously these invoices are available with the appeals for claiming the credit also. The documents evidencing the payment of Service Tax in this case is the debit entry in the Cenvat Credit Account. These debit entries made in Cenvat Credit registers read along with invoices issued by the service provider would satisfy the requirements of Rule 9 of Cenvat Credit Rules - credit cannot be denied on this ground. CENVAT Credit - input services - outward freights - CBEC vide Circular No.97/8/2007-ST dated 23.08.2007 - Held that:- The issue decided in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [2018 (3) TMI 993 - SUPREME COURT], where it was held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed - credit allowed. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (4) TMI 122 Valuation - physician samples - case of the department is that in both type of clearances, the duty should have been paid on the value which is pro-rata value of trade pack of the same medicament - time limitation - Held that:- Similar issue decided in the case of COMMISSIONER - CENTRAL EXCISE & CUSTOMS VADODARA - I VERSUS MARSHA PHARMA PVT LTD [2010 (9) TMI 1125 - GUJARAT HIGH COURT] where it was held that when different interpretations were possible, the extended period of limitation could not be invoked and penalty could not be levied. Thus, it cannot be said that appellant has suppressed any fact or had any malafide intention. Accordingly, the demand for the period April 2005 to December 2006 by issuing a show cause notice dated 11.03.2008, is time-barred - appeal allowed - decided in favor of appellant. 2019 (4) TMI 121 CENVAT Credit - credit availed on the strength of bills of entry where CVD has been paid by using DEPB scrips issued prior to 01.09.2004 - extended period of limitation - Held that:- The issue has been decided in the case of KAMANI OIL INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-II [2017 (12) TMI 161 - CESTAT MUMBAI], where it was held that the larger period cannot be invoked in case of bonafide belief on issue involved as it was disputed - the appellant would be entitled to benefit of limitation on this issue. CENVAT Credit - clearance of capital goods on which credit has been taken as waste and scrap for the period up to October 2008 - Held that:- It is seen that prior to 01.04.2012, there was no specific provision requiring reversal of Cenvat credit of capital goods, if not removed as such. Consequently, the demand on this count cannot be sustained - reliance also placed in the case of PARIKH PACKAGING PVT. LTD. VERSUS C.C.E. AHMEDABAD-I [2019 (2) TMI 1417 - CESTAT AHMEDABAD] - demand do not sustain. CENVAT Credit - Goods Transport Agency services availed for movement of goods beyond the place of removal - Held that:- The Hon'ble Apex Court in the case of Vasavadatta Cement Limited [2018 (3) TMI 993 - SUPREME COURT] has clarified that the credit would be admissible for the period up to March 2008 in view of the definition of input service at the material time - The appellant are not contesting the demand after March 2008. Demand for the said period is therefore confirmed. The matter is remanded to the Adjudicating Authority for re-quantification of the demand. 2019 (4) TMI 120 CENVAT Credit - input services - Group Insurance of staff under Group Gratuity scheme of employees - Professional Service of Company Secretary - Courier services - Construction Services (repair and maintenance) - supply of tangible goods (Crane) for handling of finished goods for loading-unloading at appellant’s godown - Held that:- All the services are essential for the overall manufacturing and business activity of the appellant. Reliance placed in various judgements like Hydus Technologies India Pvt. Limited vs. CCE [2017 (2) TMI 538 - CESTAT HYDERABAD], HCL Technologies Limited vs. CCE [2015 (9) TMI 1037 - CESTAT NEW DELHI], Modern Petrofils Dty. Div. & Ors. vs. CCE [2017 (9) TMI 206 - CESTAT AHMEDABAD], TVS Motor Company Limited vs. CCE [2017 (11) TMI 29 - CESTAT CHENNAI] and India Pesticides Limited vs. CCE [2016 (8) TMI 724 - CESTAT ALLAHABAD]. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (4) TMI 119 Scope of SCN - Refund of amount paid under protest - case of Revenue is that Ld. Commissioner (Appeals) committed serious error of law in making out a new case for the Revenue, which was neither setup in the SCN or adjudication order, that the claim for refund is premature and ill-advised and that the Asst. Commissioner sat in judgment over the direction of the Commissioner of Central Excise - Held that:- The lower appellate authority has indeed gone beyond the parameters of the SCN - The SCN dated 16.11.2010 had not gone into the eligibility of the appellant to file the claim nor had it delved into the discrepancies found by the Commissioner (Appeals) in paragraphs 4.2 to 4.5 of the impugned order. In effect, the SCN has not found fault with the filing of refund claim but has only proposed rejection of the claim predominantly on the ground that even if the goods impugned ie., inputs and capital goods have not been physically removed out of the factory, the work “removal” in Rule 3 (5) of CCR cannot be given a meaning merely “restricted to the physical removal of the goods”. The SCN made a proposition that the appellant has discharged their duty liability by way of reversal of credit and they are very much in order and as such there cannot be any refund claim. The adjudicating authority also has closely followed the contours of the SCN. The matter requires to be addressed once again by the original authority - appeal allowed by way of remand. 2019 (4) TMI 118 CENVAT Credit - input services - outward transportation of goods upto the buyer’s premises - Held that:- There is not much discussion in the orders passed by the authorities below as to which is the place of removal. It is also stated that the appellants have not furnished necessary documents to prove that the sale is on F.O.R. basis. Though, counsel for the appellant has produced the documents now to show that the sale is on F.O.R. basis, it is best that the matter be remanded for the purpose of verification of these documents - appeal allowed by way of remand. 2019 (4) TMI 117 Imposition of penalty u/r 15(1) and (15(2) of the CCR read with Section 11AC of the Central Excise Act - irregular availment of CENVAT Credit, immediately reversed on being pointed out - Held that:- As soon as the Audit pointed out the wrong availment of CENVAT credit by the appellant, the appellant reversed the same along with interest before the issuance of show-cause notice - the appellant vide their letter dt. 13/03/2012 informed the Department that they have taken the credit by mistake and there was no intention to avail excess credit. The Tribunal in various decisions has held that once the duty is paid along with interest before the issuance of the show-cause notice and there is no suppression of fact with intent to evade payment of duty, then the assessee is not liable to pay penalty - reliance placed in the case of CC, Mangalore Vs. Jindal Vijayanagar Steel Ltd. [2011 (8) TMI 1261 - KARNATAKA HIGH COURT]. Penalty do not sustain - appeal allowed - decided in favor of appellant. 2019 (4) TMI 84 Refund claim - time limitation - Section 11B of the Central Excise Act, 1944 - application for refund was filed beyond the period of one year - appellant’s first contention is that the amounts were paid during the investigation and they should be treated only as deposits and not as payment of duty - Held that:- If no SCN is issued under Section 11A the amounts deposited need to be refunded to the person who deposited to them. However, an exception has been made under Section 11AC. The purpose of this provision is to avoid unnecessary litigation when the assessee agrees with the department’s point of view at the stage of investigation itself. In such a case, the assessee can pay the duty interest and penalty and no show cause notice needs to be issued in terms of Section 11AC. In this case, the appellant had voluntarily paid the amounts during the investigation and without protest. Therefore, a letter was issued by the department confirming the payments made by the appellant and stating that the proceedings are need to have been concluded under Section, 11AC. Wherever the duty has been paid in excess of what was required to be paid or has been claimed to be paid in excess of what have been required to paid, the provisions of Section 11B apply in full force. Appeal disposed off. 2019 (4) TMI 83 CENVAT Credit - duty paying invoices - credit availed on the basis of invoices issued by said First Stage Registered Dealers without actually receiving the goods i.e. MS Scrap from them - Burden to prove on Revenue - Held that:- The Revenue is not disputing the fact that First Stage Dealers raised invoices giving all the particulars required to be given under the provisions of Cenvat Credit Rules in respect of material supplied to the assessee-Appellant. It is also not being disputed that the assessee-Appellant has received inputs and entered the same in their Central Excise records. The said inputs were further used by the assessee-Appellant in the manufacture of their final product which were cleared by them on payment of duty. This fact is sufficient to prove the physical entry of the inputs in the assessee-Appellant’s premises. During the course of arguments before this Tribunal, the assessee-Appellant also produced the invoices against which they have availed the Cenvat Credit along with supporting documents including lorry receipts and weighment slips. Therefore, the burden is cast upon the Revenue to prove that it was merely a paper transaction and goods were not received by the assessee-Appellant, which it failed - It is further shown that all the payments made to the First Stage Dealers are through banking channels by way of Cheques/RTGS. The Revenue has not brought on record any evidence to prove any flow back of monies. Also the assessee-Appellant have discharged its onus as required under Rule 9(1) & (5) of CCR, 2004 and as explained by Hon’ble Allahabad High Court in its decision in the case of Commissioner Excise Customs and Service Tax Vs Juhi Alloys limited [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT]. Appeal allowed in toto. CST, VAT & Sales Tax 2019 (4) TMI 116 Quantum of penalty - suppression of taxable turnover - filing of revised return - Section 26 of the Puducherry Value Added Tax Act - Held that:- In terms of Clause (a) of the Puducherry Value Added Tax Act, the dealer shall not be eligible to file revised return if any action either has been initiated or pending under Section 24 or under Section 30 or under any other Section under the Puducherry Value Added Tax Act. Admittedly, the proceedings were initiated under Section 24(1) of the Act and the pre-assessment notices were issued in June 2006. The assessee, after having suffered the assessment order and agreeing to pay the tax, had filed the revised return. Such revised return is not a return in the eye of law and it is not maintainable. Therefore, the question of either accepting or rejecting such return does not arise, as such return can never be taken on file - thus, the contention raised by the assessee based on the plea that they have filed revised return, deserves to be outrightly rejected and it is accordingly rejected. Section 24(3) states that when making any assessment under sub-section (2), the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty not exceeding double the amount of tax due on the turnover that was not disclosed by the dealer in his return or, in the case of failure to submit a return, double the amount of tax assessed, as the case may be. The proviso uses the expression “may also direct”, which appears to give an opinion that there is a discretion vested with the assessing officer. In the instant case, the assessee was a dealer in petroleum products and admittedly there has been a suppression of taxable turnover. However, the fact remains that the assessee has paid the tax as quantified by the assessing officer, though not in one single shot, but in installments as granted by the department. The imposition of 200% penalty would require a clear finding of the condemnatious conduct of the assessee and that the conduct of the assessee was thoroughly lacking bonafide. In the assessment order, there is a proposal for one and a half or two times penalty for suppression. It is true that the assessee did not give any explanation to the pre-assessment notice - taking note of the peculiar facts and circumstances of the case, it can be said that imposition of penalty at 200% was excessive and levy of penalty at 100% would meet the ends of justice. Admittedly, the assessee has paid the entire tax liability in installments as granted by the department along with the tax equal to 2% of such amount for each month or part thereof, after the date specified for its payment in terms of Section 37(4) of the Puducherry Value Added Tax Act - the judgement of the Tribunal in the case of M/S. SURYA SERVICE STATION VERSUS THE APPELLATE ASSISTANT COMMISSIONER (CT) , PUDUCHERRY [2018 (12) TMI 1542 - MADRAS HIGH COURT] applies to the present case, wherein the Court had dismissed the tax case revisions filed by the assessee and allowed the tax case revisions filed by the department and restored the order of the original authority on identical set of facts. The tax case revisions are dismissed. Indian Laws 2019 (4) TMI 115 Validity of remand of the case - Offences punishable under section 138 of Negotiable Instruments Act - imprisonment with fine - Held that:- There was neither any need and nor any occasion to remand the case to the Magistrate - there was enough material before the Appellate Court on the basis of which the appeal on merits could have been decided one way or the other instead of remanding the case to the Magistrate for deciding it afresh. The impugned order and the order dated 12.07.2005 of the Appellate Court are set aside - appeal allowed. 2019 (4) TMI 114 Dishonor of Cheque - Cheque returned back with an endorsement that “the addressee has left the premises” - section 138 of NI Act - existence of debt or not - It was the defence of the revisionist that she did not take any loan amount from the respondent but in fact, the respondent and one Pankaj had stolen the cheque of the revisionist from the shop of her husband. Held that:- This Court has already taken note of the conduct of the parties which clearly shows that the revisionist has changed her stand from time to time - In the present case, no FIR was lodged. The place from which the cheque in question was allegedly stolen, is also in dispute. In her evidence, the revisionist has stated that the cheque was stolen from the shop of her husband, whereas in the registered notice Ex.P7 she has stated that the cheque was stolen from the drawer of her computer table. No specific suggestion was given to the respondent alleging that the cheque in question does not bear her signatures. No application was ever filed by the revisionist under Section 45 of Evidence Act for sending her disputed cheque to the Handwriting Expert for examination of her signatures. On the contrary, in paragraph 10 of her cross-examination, she has specifically admitted that the signature on the cheque resembles with the specimen signatures in the Bank. Even otherwise, the Bank has not returned the cheque on the ground of difference in her signatures. This Court is of the considered opinion that the respondent has succeeded in establishing beyond reasonable doubt, that the cheque bearing no.119954 was issued in lieu of the amount of ₹ 10 lac taken by the revisionist from the respondent and later on, she blocked her entire bank account in stead of issuing instructions of stoppage of particular cheque - the Trial Court as well as the Appellate Court did not commit any mistake in holding that the cheque bearing no.119954 was issued by the revisionist in discharge of legal liability which was returned by the Bank on the instructions of the revisionist - the revisionist is held guilty for offence under Section 138 of Negotiable Instruments Act. Revision dismissed. 2019 (4) TMI 113 Dishonor of Cheque - section 138 of NI Act - no debt or liability payable by the accused on the date of issuance of Cheque - section 14 of CEA - Held that:- Admittedly, in the present case, the complainant / respondent had instituted the prosecution u/s 138 of NI Act against the accused/ petitioner before the Ld. MM on the basis of the accused having tendered certain cheques to the Excise Officials when they had carried out a raid / search of his premises. It is when his statement u/s 14 of the Central Excise Act, 1944 was recorded, that the complainant alleges in the complaint that the accused had admitted his liability to pay the Central Excise Duty evaded by him on the pretext of his entitled to exemption under some notification. As such, reference to Section 14 of the Central Excise Act, 1944 becomes necessary. The record of the complaint before the Ld. MM was absolutely insufficient to form the opinion that the cheques were issued by the accused/ petitioner towards the discharge, in whole or in part, of the legally enforceable debt or liability. As per the record available before the Ld. MM, the show cause proceedings of the demand and recovery of the Central Excise duty alleged to have been evaded by the accused had been initiated and there was nothing in the complaint that any order in consequence thereof, of the determination of the evaded central excise duty had been passed by the proper officer / competent authority under the Central Excise Act. Instead, the accused petitioner had shown that the order was passed subsequently which was stayed by the Appellate Authority on the appeal preferred there against by the accused / petitioner - the impugned order dated 04.05.2018 vide which the petitioner had been summoned to face trial for the offence u/s 138 of NI Act suffers from a grave illegality and cannot be sustained. Revision allowed.
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