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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter April 4, 2019 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Analysis of New Rule 88A –“order of Utilization of input tax credit” along with numeric illustrative comparison pre and post amendments. Analysis of Post facto Discount and its impact on Input Tax Credit under the GST Regime Precautions to be taken while entering into a Real Estate Transaction MCA Compliace Calender FY 2018-19 News Indian Advance Pricing Agreement regime moves forward with signing of 18 APAs by CBDT in March, 2019 4th Session of India-Ukraine working group on Trade and Economic Cooperation held in New Delhi Notifications GST - States Order No. 04/2019- State Tax - S.O. 76 - dated 29-3-2019 - Bihar SGST Bihar Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 09/2019- State Tax (Rate) - S.O. 75 - dated 29-3-2019 - Bihar SGST Seeks to amend Notification No. 02/2019- State Tax (Rate), dated the 7thMarch, 2019 08/2019- State Tax (Rate) - S.O. 74 - dated 29-3-2019 - Bihar SGST Seeks to amend Notification No. 1/2017- State Tax (Rate), dated the 29th June, 2017 07/2019- State Tax (Rate) - S.O. 73 - dated 29-3-2019 - Bihar SGST Notify certain services to be taxed under RCM under Section 9(4) of the BGST Act, 2017 06/2019- State Tax (Rate) - S.O. 72 - dated 29-3-2019 - Bihar SGST Under section 148 of the BGST Act, 2017 to notify certain class of registered persons under BGST Act, 2017 05/2019- State Tax (Rate) - S.O. 71 - dated 29-3-2019 - Bihar SGST seeks to amend Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017 04/2019- State Tax (Rate) - S.O. 70 - dated 29-3-2019 - Bihar SGST Seeks to amend Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017 03/2019- State Tax (Rate) - S.O. 77 - dated 29-3-2019 - Bihar SGST Seeks to amend Notification No. 11/2017- State Tax (Rate), dated the 29thJune, 2017 F-10-12/2019/CT/V(34) - Order No. 3/2019-State Tax - dated 8-3-2019 - Chhattisgarh SGST The Chhattisgarh Goods and Services Tax (Third Removal of Difficulties) Order, 2019. 15/2019 – State Tax - dated 28-3-2019 - West Bengal SGST Extend the due date for filing FORM GST ITC-04 in respect of job work for the period from July, 2017 to March, 2019 till 30th June, 2019 SEBI S.O. 1512(E) - dated 1-4-2019 - SEBI Central Government nominates Shri K.V.R. Murty, Joint Secretary, Ministry of Corporate Affairs as Member of the Securities and Exchange Board of India (SEBI) vice Shri Injeti Srinivas, Secretary, Ministry of Corporate Affairs with immediate effect and until further orders Circulars / Instructions / Orders SEBI CIR/CFD/CMD 1/44/2019 - dated 29-3-2019 Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity DGFT TRADE NOTICE NO. 02/2019-20 - dated 3-4-2019 Imports of Maize (feed grade) under the TRQ Scheme for 2018-19 Highlights / Catch Notes Income Tax Deduction u/s 80IB(10) - HC held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction - SLP dismissed. Visit to Get Source Exemption u/s 11 - Merely because a hotel is rented by assessee society for using, as a hostel for student, does not make any difference, as far as student of the society exclusively uses the same - Assessee remains charitable u/s 2(15). Visit to Get Source Reopening of assessment u/s 148 - deemed dividend u/s 2(22)(e) - Already taxed in hand of recipient concern - re-assessment proceedings cannot be initiated in the hands of assessee being the major shareholder as reason to believe to escaped of income is missing Visit to Get Source Disallowance of provision made on account of accrued incentive payable to employees - expenditure has been made on the basis of the performance of the employees - It is nothing but additional variable salaries payable to the employees. - Claim allowed. Visit to Get Source Exemption u/s.54F - construction of new residential house on land purchase of two parts one before sale of assets - If a plot is purchased in contemplation of ensuing construction within a reasonable time even before the transfer of the original asset, there can be no fetters on the allowability of exemption u/s 54F, if other conditions are fulfilled Visit to Get Source Penalty u/s 271(1)(c) - The assessee was under mistaken belief that land sold being agricultural land is not susceptible to tax - since the assessee has demonstrated that the bonafide circumstances existed for non-inclusion of the capital gains, no penalty is leviable Visit to Get Source Penalty u/s 271D - scope expression "any other person" appearing in s. 269SS - acceptance of cash from its own (HUF) by the assessee does not fall within the purview of provisions of s. 269SS - No penalty u/s 271D Visit to Get Source Exemption u/s 11 - Disallowance of utilization fees - payment against equipment and assets owned by trustees, but used by trust - in absence of finding that utilization fees paid is excessive or is for the direct or indirect benefit of any person, same can not be disallowed. Visit to Get Source Assessment u/s 153A - No challenge to search u/s 132(1) - When the search is not under challenge it is not open for the assessee to challenge the consequences of such search - hence initiation of proceedings u/s 153A is proper Visit to Get Source Capital gain u/s 45(4) - payment to the retiring partners - All that happened was the firm's assets were evaluated and the retiring partners were paid their share of the partnership asset, there was clearly no transfer of capital asset - no capital gain Visit to Get Source TP adjustment - scope of Mutually Agreed Procedure (MAP) for determining the tax between India & USA - once CBDT in the later year agreed that transfer pricing consideration in relation to US based transactions can be safely adopted for the purpose of the assessee's non-US based transactions then it would be wholly inappropriate to allow the revenue to argue to the contrary Visit to Get Source Scope of writ petition - Writ Petition under Article 226 of the Constitution of India, is not acceptable when facts are themselves disputed and detailed examination of facts required to ascertain the facts Visit to Get Source Validity of re-reassessment u/s 147 - scope of section 292BB - non-issuance of notice u/s 143(2) is not a procedural irregularity, the same cannot be cured u/s 292BB Visit to Get Source Addition u/s 14A read with rule 8D - categorical finding and satisfaction of the A.O. that expenditure has been incurred to earn the exempt income - Disallowance upheld Visit to Get Source Customs Release of consignments - “Yellow Peas/green peas” imported - issuance of “Detention Certificate” - there shall be a waiver of demurrage charges. Visit to Get Source Indian Laws Dishonor of cheque - insufficiency of funds - legally enforceable debt - The standard of proof for rebuttal of the presumption u/s 139 is guided by a preponderance of probabilities - appellant duly rebutted the presumption. Visit to Get Source PMLA Offence under PMLA - bank is an innocent party and victim from the hand of borrowers, 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. Visit to Get Source Service Tax Courses offered by IIM (IIMA) - Commercial Training or Coaching Services - Recognition by law does not mean recognition by AICTE or AIU etc., but it means recognition by government in any significant manners. In the instant case, the courses under dispute have been recognized by government as equivalent to other degree/diploma courses for the purposes of employment and higher education. Visit to Get Source Classification of services - appellants have received extra amount from the customers over and above the hiring charges shown in the agreement entered by them with the vehicle owners - GTA Services or BAS? - Cannot be taxed as BAS. Visit to Get Source Classification of services - The activity undertaken by the appellant is in the nature of mobilization of camps, upkeep and maintenance of camps and such other services that would not fall under the definition of Survey & Exploration of Mineral Services. Visit to Get Source Demand of service tax - amount of food charges collected from the clients and shown separately on the invoices as being VAT paid thereon - Benefit of N/N. 12/2003-ST - Further in terms of Section 65B the appellant is not liable to pay service tax on the value of foods supplied. Visit to Get Source Central Excise Classification of goods - bulletproof special purpose vehicles for army/paramilitary forces - the bulletproof SPVs deserve to be classified under chapter heading 8705 90 00 - Benefit of exemption allowed. Visit to Get Source Area Based exemption - benefit of N/N. 50/03-CE - the girder unit is a separate and independent unit which is capable of manufacturing the MS girder of their own shall be treated new industrial unit which is eligible for exemption. Visit to Get Source Process amounting to manufacture or not - packing/re-packing of the parts/components - these items were not brought under the ambit of Section 2(f)(iii) fiction of manufacture - it was only brought in the Finance Act, 2011 with retrospective effect, at par with amendment to Notification issued u/s 4A - Extended period of limitation cannot be invoked. Visit to Get Source VAT Classification of goods - portable hand held electronic ticketing machine - this ticket issuing machines are expressly included in Entry 8470, by no stretch of imagination, it falls under 8471 Visit to Get Source Case Laws: GST 2019 (4) TMI 226 Extension of time for filing of GST TRAN-I - transition to GST regime - transitional credit - Held that:- Without going into the issue as to whether the time for the purpose can be extended, as the petitioner has moved the aforesaid application, the Assistant Commissioner/Commissioner GST may consider the above application and pass appropriate order in accordance with law - petition disposed off. Income Tax 2019 (4) TMI 225 Reopening of assessment u/s. 147 - benefit of carry forward and set off of unabsorbed depreciation for the A.Y. 1997-98 against the income of A.Y. 2005-06 which was not in accordance with the provision of section 32(2) as amended by Finance Act 2001 w.e.f. 01.04.2002 - carry forward and set off unabsorbed depreciation against the profits and gains of subsequent years, without any limit - HELD THAT:- SLP dismissed. 2019 (4) TMI 224 Deduction u/s 80IB(10) - assessee is engaged in the business of housing development - AO disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee - HC held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction under section 80IB(10) - HELD THAT:- SLP dismissed. 2019 (4) TMI 223 Stay of demand - imposed a condition on the petitioner depositing 15% of the outstanding demand, upon which, remaining demand would stand stayed - HELD THAT:- SLP dismissed. 2019 (4) TMI 222 Interest on Fixed Deposit Claim u/s 80HHC - AO worked out the deduction under Section 80HHC by adopting negative figure and computed the figure accordingly, thereby making a deduction - HELD THAT:- SLP dismissed. Appeal dismissed as below the prescribed monetary limits. 2019 (4) TMI 221 Stay petition - Transfer of Assessment Proceedings in the same City from one Authority to another was upheld by Single bench in writ - HELD THAT:- There is no stay granted by the Division Bench of this Court operating against the Revenue Department and since the writ petition was dismissed long ago, namely on 24.08.2011, in all probability, the Authority, to whom the Assessment Proceedings were transferred by the Commissioner of Income Tax, might have concluded the Assessment Proceedings. However, the learned counsel for the Respondents does not have the updated instructions in this regard. Transfer of Assessment Proceedings in the same City from one Authority to another, we are of the considered opinion that no interference by this Court is called for and therefore, the learned Single Judge is right in dismissing the writ petition filed by the Assessee. No prejudice, whatsoever, was pleaded or much less established by the Assessee in the present case, as against the transfer of the proceedings from one Authority to another. No merit in the present appeal filed by the assessee and the same is liable to be dismissed. Accordingly, this writ appeal is dismissed. 2019 (4) TMI 220 Capital gain u/s 45(4) - scope of word "dissolution of the firm or otherwise" - reconstitution of the firm - share payment to retiring partners - whether transfer of capital asset by way of distribution is involved in payment to the retiring partners - HELD THAT:- The KARNATAKA HIGH in CIT Vs. M/S DYNAMIC ENTERPRISES [2013 (11) TMI 731 - KARNATAKA HIGH COURT] has held that after retirement of partners, the partnership continued and the business was also carried on by the remaining partners. There was thus no dissolution of the firm and there was no distribution of capital asset. What is given to the retiring partners was money representing the value of their share in the partnership. No capital asset was transferred on the date of retirement. In absence of distribution of capital asset and in absence of transfer of capital asset in favour of retiring partners, no profit of gain arose in the hands of partnership firm. In the present case, admittedly there was no transfer of capital asset upon reconstitution of the firm. All that happened was the firm's assets were evaluated and the retiring partners were paid their share of the partnership asset. There was clearly no transfer of capital asset. Revenue has not argued that the reconstitution of the firm was a colourable device to avail tax liability. - Decided against revenue 2019 (4) TMI 219 TP adjustment - scope of Mutually Agreed Procedure (MAP)for determining the tax between India & USA - ALP determination in MAP regarding US & non US based transactions - MAP being a non-adjudicatory process have role in ALP determination u/s 92C - HELD THAT:- The position projected by the learned Counsel for the assessee is correct, however, this was the situation for the later assessment year and cannot be accepted for the present assessment year. In our opinion, two significant features therefore arise in the present Appeal; firstly, the MAP has been drawn after the consideration of relevant aspects giving rise to transfer pricing adjustment and secondly, the CBDT in the later year agreed that such transfer pricing consideration in relation to US based transactions can be safely adopted for the purpose of the assessee's non-US based transactions. In the present year, therefore it would be wholly inappropriate to allow the revenue to argue to the contrary. Exemption u/s 10A allowable prior to the setting off of brought forward losses and unabsorbed depreciation - HELD THAT:- The issue stands covered against the Revenue by the decision of this Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT] Treatment to interest income as business income and consequently eligible for deduction under Section 10A - interest on tax refund - HELD THAT:- Issue of interest on tax refund not to be treated as interest on deposits was not agitated by the Revenue before the Tribunal. Thus this issue not arising from the order of the Tribunal, does not arise for our consideration. In any case we find that the impugned order of the Tribunal has followed its decision rendered in the Assessee's case reported for A.Y. 2004-05 [2009 (6) TMI 677 - ITAT MUMBAI]. Mr.Pinto is unable to point out any distinguishable features in the present Appeal which would warrant out taking a different view from that having been taken in the order passed by the Tribunal for the A.Y. 2004-05 . Moreover, nothing has been shown to us which would indicate that the Tribunal's order for the A.Y. 2004-05 has not been accepted by the Revenue. - Revenue appeal dismissed. 2019 (4) TMI 218 Allowability of club expenses u/s 37 - business or personal expenditure - expenses towards procuring membership in the 'club' for arranging various comforts and convenience - HELD THAT:- As decided in assessee's own case [2019 (4) TMI 82 - KERALA HIGH COURT] 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. Disallowance of commission alleging diversion of income - Sum paid by the suppliers of the Assessee to various investment companies as assessable as income of the Assessee company - HELD THAT:- As decided in assessee's own case [2019 (4) TMI 79 - KERALA HIGH COURT] addition deleted by the Commissioner (Appeals) in the appeal filed by the Assessee, holding that the same is not correct or sustainable and that the said commission receipts were to be assessed at the hands of the investment companies and not at the hands of the Assessee. This was affirmed by the Tribunal in Annexure-C order, holding that the aforesaid commissions have already been substantively assessed at the hands of the investment companies. This being the position, it could not have been assessed at the hands of the Assessee under any circumstance. The said finding on fact is not assailable under any circumstance and we hold it against the Revenue. Concealment of income by selling good tyres as defective second tyres - HELD THAT:- As decided in assessee's own case there cannot be any addition on the basis of surmises or conjectures and that the accounts were accepted and not rejected; adding that such reduction in the value was because of the defects with reference to the consumer complaints. The said finding was affirmed by the Tribunal. We are of the view that this is purely a 'question of fact' answered with reference to the materials on record and no interference is warranted at our hands, as no substantial question of law is involved Addition for lack of proper vouchers - HELD THAT:- As decided in assessee's own case as per Annexure-C order under challenge, the Tribunal held that there was no valid ground to call for interference with the order passed by the Commissioner. The said 'finding on fact' is not liable to be interdicted by this Court, for want of any substantial question of law. Question stands answered against the Revenue. Rent paid for a building not used for the business purpose - HELD THAT:- As decided in assessee's own case there was no tenable ground. In fact, it is borne out from the materials on record that the Chairman and Managing Director of the Assessee Company was also the Chairman and Managing Director of some other companies as well, who are housed in the building in question and as such, the dis-allowance/restriction to an extent of 50% came to be sustained. We do not find any reason to interdict the said finding and reasoning and no substantial question of law (but for a question of fact) is brought to our notice. It stands answered against the Revenue. Depreciation on increased liability due to foreign currency fluctuation u/s 43A - HELD THAT:- This question has been answered against the Revenue, as per our verdict passed in assessee's own case [2019 (4) TMI 82 - KERALA HIGH COURT] by virtue of the rulings rendered 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, through Managing Director vs. Commissioner of Income Tax, Dehradun. [2010 (3) TMI 81 - SUPREME COURT] Deduction u/s 80HHC on the basis of finally assessed income - HELD THAT:- Clause (baa) of Explanation to section 80HHC lays down that 'profits of business' means the profits of business as computed under the head Profits and gains of business or profession . Thus, where adjustments are made by the Assessing Officer to the profits of business computed by the Assessee in its return of income the assessed profit is to be considered for the purpose of computing deduction u/s.80HHC. Allowability of interest income on deposit for deduction u/s 80IA? - HELD THAT:- For giving deduction under Section 80IA, the income shall be relatable to the business of the Assessee; whereas in the instant case, the disputed income is the income generated by way of interest from the amounts deposited by the Assessee elsewhere and it is having no relation to the business activity of the Assessee. This is the dictum laid down in Commissioner of Income Tax vs. Jose Thomas [2001 (11) TMI 73 - KERALA HIGH COURT]. Though the said decision is with reference to the mandate for deduction under Section 80HHC, the ratio/dictum is the same. 2019 (4) TMI 217 Disallowance of club expenses - expenses other than the membership fee were mainly food expenses and therefore they were in the nature of 'personal expenses' which is not admissible under Section 37(1) - HELD THAT:- It is true that the expenditure incurred by the assessee for procuring the 'club membership' was a matter considered in the previous assessment years and the benefit given was sought to be restricted only in respect of such amount and the remaining part spent for availing the facilities was held as taxable. In the instant case, the total amount claimed by the assessee included the expenses for food and such other facilities as assessed by the Assessing Officer and hence it was disallowed by the Assessing Officer. The said finding on fact, which was upheld by the Commissioner (Appeals), ought not to have been altered by the Tribunal, holding that the issue was already found in favour of the assessee. The order passed by the Assessing Officer and affirmed by the Commissioner, disallowing a sum under the head ‘club expenses’ is liable to be sustained. - Decided against assessee Contribution made to the Employees' Welfare Fund Trust - HELD THAT:- Referring to stand of the assessee is that it was only to facilitate transportation of the employees as per the service conditions and never amounts to any diversion of funds as alleged by the Revenue. Similar question with reference to Section 40A(9) in respect of the previous assessment years has already been considered by this Court and answered in favour of the assessee. This being the position, similar course will follow in the present case as well and there is no question of law to be considered. Disallowance u/s 14A - HELD THAT:- Mandate of Section 14A can be valid and effective only from the assessment year 2007-2008, in view of the law declared in categorical terms by the Apex Court in Commissioner of Income Tax Vs. Essar Teleholdings Ltd. [2018 (2) TMI 115 - SUPREME COURT OF INDIA] and the AY in question is Assessment year 2000-2001. - Decided in favour of assessee 2019 (4) TMI 216 Scope of writ petition - Challenge of Reassessment order in writ - addition of cash credits u/s 69A - dispute of ownership of bank account in the Axis Bank - availability of statutory appeal - HELD THAT:- Detailed examination of facts required to appreciate the petitioner's submissions is not possible in this Writ Petition under Article 226 of the Constitution of India, particularly when the facts are themselves disputed. In this light of the matter, this Writ Petition is dismissed. The Writ petitioner is at liberty to challenge the impugned order of re-assessment by way of statutory appeal before the Commissioner of Income Tax (Appeals) within a period of one (1) month from today 2019 (4) TMI 215 Validity of re-reassessment proceedings u/s 147 - non-issuance of notice u/s 143(2) - scope of section 292BB - HELD THAT:- Section 292BB of the Act provides for a deeming provision that any notice under any provision of the Act, which is required to be served upon the assessee, has been duly served upon him in time, in accordance with the provisions of the Act. In the opinion of this Court, this section would be applicable where a notice has, in fact, been issued and a contention is raised that such notice has not been served upon the assessee or has not been served in time or has not been served properly, namely, where there is a defect in the service of notice. This provision does not apply to a case where no notice has been issued at all. In the facts of the present case, at the cost of repetition, it may be stated that no notice under section 143(2) of the Act has been issued after the assessee had filed its return of income and hence, section 292BB of the Act would not be attracted. In the light of the fact that nonissuance of a notice under section 143(2) of the Act is not a procedural irregularity, the same cannot be cured under section 292BB of the Act and hence, the assessment order passed without issuance of notice under section 143(2) of the Act, would be rendered invalid. The Tribunal as well as the Commissioner (Appeals), therefore, did not commit any error in holding that the notice issued prior to the filing of the return of income was invalid and that, in absence of a valid notice under section 143(2) of the Act, the assessment order was rendered invalid. - Decided in favour of assessee 2019 (4) TMI 214 Disallowance u/s.14A r.w.r. 8D - HELD THAT:- Assessee paid interest to Corporation Bank as well as Kotak Mahindra Bank to the tune of ₹ 1,39,445/- and ₹ 10,61,618/- respectively, thereby leaving other expenses at ₹ 8,11,107/-. The assessee submitted a chart before the CIT(A) contending that out of such remaining expenses, a sum of ₹ 7,72,505/- was exclusively incurred towards expenses in respect of taxable income thereby leaving common expenses, incurred both for taxable and non-taxable income, at ₹ 38,602/-. CIT(A) himself incorporated the submission of the assessee in the impugned order but misconstrued the same and ordered to make enhancement by the sum of ₹ 38,602/- which is not justifiable. We, therefore, order to delete the enhancement made by the CIT(A) to this extent. Exclusion of expenses exclusively towards taxable income u/s 14A - HELD THAT:- Three items of expenses, viz., professional charges for project at Parvati amounting to ₹ 5,51,500/- ; stamp duty, stamp paper and miscellaneous expenses of ₹ 86,893/-; and expenses relating to property rented out by the assessee at ₹ 50,872/-, have no connection with the exempt income and hence cannot be considered for disallowance u/s 14A. The remaining item of expense in this list is a sum of ₹ 83,240/-, which is payment of professional fees, that relates to income-tax filing return common both to the taxable and exempt income. The same is therefore, liable to be considered as common expense and not exclusively for taxable income. At this stage, it is pertinent to note that even under rule 8D, the disallowance u/s.14A cannot exceed the total amount of expenses incurred by the assessee either exclusively for exempt income or jointly for exempt and taxable income. In this backdrop of the facts, we order to restrict the disallowance to ₹ 1,21,842/- (Rs.38,602 + ₹ 83,240). The issue is, therefore, partly allowed. Computation of interest u/s.234A and 234B - date-wise payments of self-assessment tax made by the assessee, both before and after the due date u/s 139(1) - HELD THAT:- Once the amount of self assessment tax was paid, the Revenue could not be considered as deprived of the amount of tax due to it. As interest u/s 234A is compensatory, following the rationale, we hold that the consequence will be no different if the amount of self-assessment tax is also paid after the due date but before the filing of return of income. In such a scenario, the Revenue will stand compensated to the extent of payment of self-assessment tax made after the due date and accordingly the amount of interest u/s 234A for the period during which such an amount stood paid, needs to be computed on the proportionately reduced amount of tax accordingly. We set-aside the impugned order and remit the matter to the file of the AO for calculating the amount of interest u/s.234A afresh after considering date-wise payments of self-assessment tax made by the assessee, both before and after the due date u/s 139(1). 2019 (4) TMI 213 Scope of inquiry while granting registration u/s 12AA - CIT (E) not disputed that objects society is charitable - effect of non-production of books - non explanation of cash deposit etc. - HELD THAT:- Stage of granting registration u/s 12AA CIT (E) is not to examine the application of income, which is to be done by the AO on year to year basis at the time of deciding the exemption u/s 11; that the CIT (E) is not to examine the genuineness of the Trust but not the income of the Trust for charitable or religious purpose which functions are assigned to AO and that the registration of the Trust does not involve inquiry into the actual activities or application of the funds etc., particularly when there is nothing on record to make out that the object of the Trust or activities of the Trust were not genuine; and that non-production of books does not mean that the genuineness of the charitable activities of the assessee society is not established. When aims and objects of the assessee society to open schools for imparting education and vocational training which is per se a charitable object under section 2(15) and the assessee society has been running a school in the name and style of Rainbow Kids Valley School, the ld. CIT (E) had no ground to decline the registration under section 12AA of the Act. - Decided in favour of assessee. 2019 (4) TMI 212 Penalty u/s 271(1)(c) - defective notice issued u/s. 274 - non specification of charge - non of strike out the inappropriate words in notice - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. See COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT). Also see COMMISSIONER OF INCOME TAX & ANR. VERSUS M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SUPREME COURT] - Decided in favour of assessee. 2019 (4) TMI 211 Penalty u/s 271(1)(c) - addition account of provision for retention and power cost and provision for liquidated damage - difference of opinion between the assessee and the assessing officer - No information given in the return was found to be incorrect or inaccurate - HELD THAT:- AO while passing the assessment order made the addition account of provision for retention and power cost and provision for liquidated damage. The appeal filed by the assessee challenging the addition before CIT(A) was dismissed vide order dated 18.03.2011. No further appeal was filed before Tribunal. AO issued notice u/s 274 r.w.s. 271(1)(c) dated 07.12.2012. AO recorded that none appeared on behalf of the assessee nor any submissions was made. The Assessing Officer levied the penalty on both the disallowance @ 100% of the tax sought to be evaded vide his order dated 28.03.2013. There is no dispute that all the necessary facts and figures were disclosed by the assessee in its return of income. The return of income was accompanied the profit and loss account for the year, ended 31.03.2007, balance sheet as on 31.03.2007 and relevant schedules. No information given in the return was found to be incorrect or inaccurate, therefore, it could not be said that the provision made by assessee disallowed during the course of assessment proceedings was a result of any suppression of facts or deliberate concealment of income. No justification for imposing penalty when assessee had disclosed all the facts in the audited statement of accounts for the year under reference. There was no concealment of income at all. We are of the further view that it was just a clear cut case of difference of opinion between the assessee and the assessing officer. - Decided against revenue. 2019 (4) TMI 210 Loss on sale of unquoted shares - particulars regarding the year of acquisition, cost price, indexed cost and sale consideration were furnished in the course of assessment proceedings - sales were not effected through Recognized stock exchange and were not sold in acute financial exigency - HELD THAT:- The cost of acquisition of shares in Tatia Skylines & Health Farms Ltd. i.e. ₹ 41,25,000/- is apparent from schedule 5 of audited accounts of the assessee. In view of the totality of facts explained above the disallowance of assessee’s claim for long term capital loss of ₹ 81,90,769/- is beyond any controversy and requires to be allowed and therefore we confirm the findings of ld CIT(A). We note that so far of long term capital loss arising from sale of 20,56,850 shares of JP Morgan, it is an admitted fact that the company failed to furnish any details. The failure to furnish such details may result in disallowance of Long term capital loss of ₹ 6,52,950/- relating to acquisition and sale of shares of JP Morgan shares only. The loss arises from the sale of 20,56,850 shares of JP Morgan wherein the assessee failed to furnish any details are not allowed and balance loss is allowed. Hence, A.O. is directed to delete the addition accordingly and balance loss of ₹ 6,52,950/- is confirmed. That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is, therefore, upheld and the ground of appeal of the Revenue is dismissed. Disallowance of expenses u/s 40(a)(ia)for non deduction of tds - TDS u/s 194C - expenses claimed under the sub-head "Dyes & Chemical" are purchase of material- HELD THAT:- Expenses claimed under the sub-head "Dyes & Chemical" is in relation to purchases of materials. This fact is also admitted at para 5 of the assessment order. Therefore, the question of deduction of TDS U/s 194C is not applicable. That is, the provisions of Chapter XVIIB of the Act relating to TDS do not attract on purchase of goods and materials. Therefore, the disallowance made by AO is contrary to the provisions of section 194C of the Act. That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition - Decided against revenue 2019 (4) TMI 209 Penalty u/s 271D - acceptance of cash by appellant from its (HUF) - scope expression "any other person" appearing in s. 269SS - appellant himself as well as the Karta of his own H.U.F i.e. Ranjit Roy (HUF)have control of funds - HELD THAT:- The acceptance of the financial accommodation from Ranjit Roy (HUF) by the assessee does not fall within the purview of provisions of s. 269SS of the Act as the appellant is acting in a dual capacity being the appellant himself as well as the Karta of his own H.U.F i.e. Ranjit Roy (HUF) and there being common control of funds with the assessee. Thus there is no infringement of the provision of s. 269SS of the Income Tax Act, 1961. We note that the approach of the AO in resorting to levy of the impugned penalty in the sum of ₹ 4,50,000/- is thoroughly unfounded in the circumstances and based on unconnected considerations not relevant to the issue in dispute which is untenable in law and accordingly, such specious action in that respect cannot survive for judicial scrutiny and the ld. Commissioner (Appeals) was absolutely wrong in upholding such impugned levy in a preposterous manner without appreciating the facts and circumstances of the instant case in the proper perspective and acted beyond the pale of law - appeal of the assessee is allowed 2019 (4) TMI 208 Penalty u/s 271(1)(c) - defective notice issued u/s. 274 - non specification of charge - non of strike out the inappropriate words in notice - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. See COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee. 2019 (4) TMI 207 Deduction u/s 80P(2)(a)(i) - assessee is involved into giving funds to the non-members - whether the assessee is a co-operative society meant for its members only and whether any income was earned by way of investment/loans etc to non-members? - HELD THAT:- In a recent order in the matter of M/s. Udaya Souharda Credit Co operative Society Ltd [2018 (8) TMI 1063 - ITAT BANGALORE], it was noted by the Tribunal that Karnataka State has notified Karnataka Co – Operative Societies Act, 1959 as well as the Karnataka Souharda Sahakari Act, 1997 and both Acts are in force. Therefore, conversion from one into another is possible. Thereafter the Tribunal held that the deduction u/s.80P can only be applied to a cooperative society registered under the Karnataka Co- Operative Societies Act, 1959 and thereafter the matter was restored back to the AO for fresh decision after making necessary enquiry and investigation. In the present case, the facts are identical and one more plea was raised pertaining to mutuality. Thus following the decision of Citizen Cooperative Society (2017 (8) TMI 536 - SUPREME COURT) and Udaya Souharda Cooperative Society (supra), we remand the appeal to the file of the CIT (A) to decide the issue afresh in the light of the observations made hereinabove - Appeal of the Revenue allowed for statistical purpose. 2019 (4) TMI 206 Penalty u/s 271(1)(c) - capital gains arising on sale of property - assessee had bonafide belief that land was an agricultural land and was therefore exempted from capital gain tax - As per assessee land belong to HUF and was not the individual property - HELD THAT:- We have perused the order of the CIT(A) in this regard and also the order of the AO in penalty proceedings as well as quantum proceedings. We notice that CIT(A) has appreciated the facts and circumstances of the case in perspective as noted above and applied the law in proper perspective. The assessee has demonstrated that the bonafide circumstances existed for non-inclusion of the capital gains. The assessee was under mistaken belief that land sold being agricultural land is not susceptible to tax. The CIT(A) has rightly interpreted the fact situation and granted relief. We thus decline to interfere. - decided against revenue. 2019 (4) TMI 205 Penalty u/s 271(1)(c) - Non specification of charge - not specially pointing out that whether the penalty was proposed on concealment of particulars of income, or for furnishing particulars of income - HELD THAT:- Perusal of the notice issued u/s 274 read with section 271(1)(c) in order to initiate the penalty proceedings against the assessee goes to prove that even at the stage of issuing the notice, AO was not aware as to whether he is issuing notice to initiate the penalty proceedings either for “concealment of particulars of income” or “furnishing of inaccurate particulars of such income” by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions into motion against him, he/she should be specifically made aware of the charges to be leveled against him/her. In the instant case, not only the notice issued to the assessee u/s 274 r.w.s. 271(1)(c) is defective but AO has not even made himself satisfied at the time of making disallowance / addition in assessment order if the assessee has furnished inaccurate particulars of income or has concealed particulars of his income rather to be on the safer side he has invoked both the limbs of section 271(1) of the Act. So, we are of the considered view that this is not merely a case of serving a defective notice under section 274 r.w.s. 271(1) on the assessee rather it is a case of non-application of mind on the part of the AO to make himself satisfied as to under which limb of section 271(1)(c) he is going to initiate/levy the penalty on the assessee. Penalty under section 271(1)(c) cannot be levied merely on the basis of fact that in the penalty order, the AO has rightly levied the penalty for furnishing inaccurate particulars of income because when very initiation of the penalty proceedings are vitiated, as discussed in the preceding paras, the penalty order is not sustainable. - Decided in favour of assessee. 2019 (4) TMI 204 Disallowance of expenditure / provision made on account of accrued incentive - assessee has made a provision for the performance based incentive of the employees - as submitted payments to be made to the employees for encouraging them to promote business of the assessee - HELD THAT:- The above provision has been made by the assessee on year-to-year basis on the basis of the performance of the employees. The excess provision is always written back to the profit and loss account in the subsequent year, if it is found to be short, further provision is made. This accounting practice is carried on by the assessee consistently. As the expenditure has been incurred for the incentive of the employees of the company raised on their performance for the same year for which the actual services have been rendered by the employees, above expenditure has been incurred by the assessee during the year only and exclusively for the purposes of the business. Expenditure has been made on the basis of the performance of the employees and allocated to each of the employees it is an ascertained provision. According to us it is a definite and accrued liability of the assessee for the year for which the services have been rendered by the employees. It is nothing but additional variable salaries payable to the employees. Same partakes character of salary. - Decided in favour of assessee Disallowance of depreciation on 12 vans - HELD THAT:- On the fact that the assessee has shown the purchase of these vehicles, obtained the temporary registration of these vehicles, shown that after bodybuilding they have been received back by the assessee from 22 to 25/03/2004, and they have been used for the purposes of the shooting during the year, it cannot be said that assessee has not used these vans for the purpose of the business of the assessee. Therefore according to us, assessee has also satisfied user test for allowability of depreciation.- Decided in favour of assessee Addition on account of advances written off - advance given to employees who left - business loss - HELD THAT:- advances were given to employees for the purposes of business, such advances have become bad as employees left the assessee. They are not in the nature of bad debt so, not required to have been credited to Profit and Loss A/c in earlier periods. Conditions of allowability of bad debts do not apply to business losses. We do not find any infirmity in the order of the learned CIT – A and therefore the order of the learned CIT – A is confirmed. Addition of interest payable to Prasahar Bharti for non-deduction of tax - CIT–A has deleted the disallowance since Prashar Bharti is a corporation and not liable to pay income tax on its income as provided under 196 (ii) - HELD THAT:- Though we find that Prasar Bharti has been established under the Prasar Bharti Act. CIT(A) has not given any reason that how interest earned by it is exempt from tax. Provisions of section 10(23BBH) exempts income of Prasar Bharti . Above section was inserted w.e.f. 01.04.2013 (i.e AY 2013-14). Therefore, up to that Assessment Year income of Prasar Bharti was not exempt. Hence, as the impugned assessment year is prior to the date of Assessment Year 2012-13, we are of the opinion that assessee should have deducted tax at source on income of interest paid to Prasar Bharti. We reverse the order of the ld CIT(A) and restore the order of the AO Addition of software expenses - revenue or capital expenditure - AO granted assessee 60% of the depreciation holding that software expenditure is a capital expenditure in nature - HELD THAT:- CIT – A who held that software expenditure incurred by the assessee is an application software for upgradation. The assessee has not incurred any expenditure on acquiring any asset of enduring nature. He further relied upon the decision in case of Ashahi Glass Works Limited [2011 (11) TMI 2 - DELHI HIGH COURT]. In view of this we do not find any infirmity in the order of the learned CIT – A in deleting the above disallowance. Addition on account of provision consumption of debtors - claim of the assessee is that company has given discount to its debtors based on consumption of Airtime during the current year - HELD THAT:- The assessee company sale space in its channels to advertiser usually a unit of sale of space is 10 seconds. The assessee company gave various schemes to its advertiser like consumption incentive, series discount etc. In case of consumption incentive, the advertisers are given an offer that in case if it consumes particular amount of time during the given period for broadcasting and advertising then it will be entitled to the consumption incentive. During the year, assessee has passed on this consumption incentive of ₹ 34059992/–. Learned CIT(A) has held that this is the expenditure in the nature of incentive to the advertiser and the assessee has also shown income against this expenditure. Before the learned CIT – A the assessee demonstrated by producing the copies of the deals of some of the parties and shown that it is not an asset or liability but actual expenditure. As held that assessee is eligible for deduction of the above expenditure. DR could not point out any infirmity in the order of the learned CIT(A). We confirm the order of the learned CIT(A) Disallowance of software expenditure - assessee has not furnished the adequate details before the lower authorities to demonstrate that the software expenditure incurred by the assessee is whether revenue expenditure or capital expenditure? - HELD THAT:- As the assessee has not submitted any details before the lower authorities, this ground of appeal is once again set aside back to the file of the learned assessing officer with a direction to the assessee to substantiate it within 30 days of this order before the assessing officer by submitting the proper evidences in the form of the bill and the nature of the software to demonstrate how they are of the revenue expenditure. In the result ground number 4 of the appeal of the assessee is allowed with above direction. Addition u/s 14A - disallowance of expenses for earning dividend income - HELD THAT:- satisfaction is the mandatory requirement for invoking the provisions Section 14A read with Rule 8D of the Income Tax Rules for making any disallowance. As the learned assessing officer has not recorded any satisfaction about the correctness of the claim of the assessee about the disallowance made by it in its tax audit report, the disallowance made by the learned assessing officer is not sustainable. Disallowance towards leave encashment expenditure - HELD THAT:- Assessee has claimed leave encashment expenditure without making any payment. As the provisions of section 43B (f) of the income tax act is very clear. Therefore, we upheld the disallowances of leave encashment expenditure under section 43B of the income tax act. 2019 (4) TMI 203 Denial of exemption u/s.54F - construction of new residential house on land purchase of two parts one before sale of assets - HELD THAT:- It is important to bear in mind that sale of an original asset and side-by-side purchase or construction of a new residential house is not only an important decision of one’s life having repercussions for a longer period of time, but is also a time consuming matter as the concerned person has to mobilise his resources. If a plot is purchased in contemplation of ensuing construction within a reasonable time even before the transfer of the original asset, there can be no fetters on the allowability of exemption u/s 54F, if other conditions are fulfilled. What is a reasonable period, depends on the facts and circumstances of each case, which should normally not exceed two years before the date of transfer of the original asset, albeit such a period of two years cannot be a benchmark. A plot of land purchased prior to such a reasonable period cannot ordinarily be viewed as having been purchased for starting construction of a new residential house. It, ergo, follows that so long as the construction of a new residential house is completed within a period of three years from the date of transfer of the original asset, the benefit of exemption u/s.54F has to be allowed with reference to whole of the cost of plot or the cost of construction thereon, even if such a process of purchasing the plot or constructing the house started within a reasonable time anterior to the date of transfer of the original asset. The date of purchase of the first part of the plot on 11.10.2010, which is within the reasonable period as discussed above, constitutes the date of initiation of process of construction, and the deadline for the completion of construction would be 10.6.2015. As the construction actually got concluded latest by 15.9.2014, we hold that the assessee is entitled to exemption u/s 54F with reference to the full amount of ₹ 1.12 crore spent on purchase of two parts of land and construction of new residential house thereon. The impugned order is overturned pro tanto. 2019 (4) TMI 202 Assessment u/s 153A - proof of incriminating material found in search - HELD THAT:- CIT(A) after perusal of the assessment order concluded that during search and seizure operations, books of accounts, document, loose papers etc. were seized. The seized documents and papers are the incriminating material on the basis of which additions have been made. We, therefore, do not find any reason to interfere with the order of the Ld. CIT(A). Unexplained Expenditure on foreign travel - HELD THAT:- AO has estimated unexplained expenditure on foreign tours undertaken by the assessee. Ld. counsel for the assessee has, during course of hearing, drew our attention to the various advertisements by the travel agents in respect of foreign tours offered by them. After considering totality of facts, we are of the view that it would serve the interest of justice if estimate by the AO is reduced to 50%. Therefore, the AO is directed to delete 50% of the additions i.e. ₹ 3,00,000/-, ₹ 5,00,000/-, ₹ 4,97,175/-, ₹ 1,60,060/- & ₹ 8,00,000/- respectively for the A.Ys. 2010-11 to 2014- 15 and rest are sustained in view of the fact that the assessee could not furnish any confirmation of the travel agents. Unexplained investment in jewellery - CIT(A) confirming that the AO was justified in holding that only 100grms of gold jewellery found with the assessee is explained out of the addition of ₹ 29,79,754/- made by the AO towards alleged unexplained investment in jewellery - HELD THAT:- If the total jewellery is calculated as per the board’s circular, the availability would be of 2500 gms. Assessee’s brother Shri Vipin Chouhan has purchased jewellery of ₹ 20 lacs through cheque which is estimated for 450 gms. Thus, the total jewellery of 2950 gms. stand explained whereas jewellery kept in locker belongs to his deceased mother who passed away on 26.9.2010 and the same was in the possession of the wife of the assessee for safe custody because she is the eldest daughter-in-law of the family. If this jewellery is considered then there would be no surplus. We find that assessee was required to prove that jewellery was jointly held and since the jewellery have been recovered from the possession of the assessee, therefore, contention of the assessee could not be accepted. The contention of the assessee that apart from the jewellery covered by CBDT Circular, the assessee has certain jewellery where he has evidences of purchase of the same, this aspect requires verification at the level of the AO. Therefore, we deem it appropriate to set aside the issue back to the file of the AO with direction to the assessee to furnish the requisite evidences in support of the claim Unexplained cash found during the course of search with the family - HELD THAT:- Assessee has contended that the respective cash books have been seized and are verifiable and without verifying the same from the books, the additions are not justified. Considering the rival submissions, we are of the view that this aspect requires verification at the level of the AO. Therefore, we deem it appropriate to set aside the issue back to the file of the AO with direction to the AO to provide the copies of the required records to the assessee and then the AO will decide the issue afresh. The assessee is also directed to co-operate in this regard. Thus, this issue is allowed for statistical purposes only. Unexplained opening capital - HELD THAT:- Assessee has claimed that all the details were furnished before the ld. CIT(A) but she did consider the same. The assessee further submitted that opening balance is out of past savings of the assessee, investment in the partnership firms were verifiable from the books of accounts and bank balances were also verifiable. Therefore, we deem it appropriate to set aside the issue back to the file of the CIT(A) with direction to call for remand repot from the AO on this issue and thereafter, CIT(A) would decide the issue afresh in terms indicated hereinabove. Thus, this issue is allowed for statistical purposes only. 2019 (4) TMI 201 Assessment u/s 153A - No challenge to search u/s 132(1) - HELD THAT:- It is the emphatic statement made on behalf of the assessee that the assessee does not challenge the search conducted on him but what is being challenged is the assessment made u/s 153A as not in accordance with law on the ground that no search u/s 132(1) was initiated against the assessee. When the search is not under challenge, and when something incriminating is found in the lockers belonging to the assessee, we have a grave doubt in our mind as to whether it is open for the assessee to contend that he doesnot want to challenge the search but he wants to challenge the consequences of such search. No substance in the argument advanced on behalf of the assessee that there is no proper search in this matter by initiating the proceedings u/s 132(1) and, therefore, the initiation of proceedings under section 153A against the assessee is bad under law. Stretching the logic to the extent of leading to absurd inferences or attributing redundancy to the wisdom of legislature is not permissible. It is something different to argue that nothing incriminating was found during the search and, therefore, it is not open for the AO to make any addition qua the assessee. We, therefore, reject the first contention of the assessee. Assessment Years 2010-11 - Except jewellery, no material much less incriminating material was found during the search that took place on 16/1/2013. It is, therefore, clear that after the search, Ld. AO sought to reopen the concluded assessment for the Assessment years 2010-11 and 2011-12. In view of the decision of the Hon’ble judicial High Court in the cases of Kabul Chawla[2015 (9) TMI 80 - DELHI HIGH COURT]; Meeta Gutgutia [2017 (5) TMI 1224 - DELHI HIGH COURT]; and Lata Jain [2016 (5) TMI 1273 - DELHI HIGH COURT] no assessment could be framed and section 153A of the Act in the absence of any incriminating material recovered during the search qua the assessee qua the assessment years. We are, therefore, of the considered opinion that the additions made for the Assessment Years 2010-11 and 2011-12 made in the absence of any incriminating material is bad under law and cannot be sustained. No notice u/s 143(2) was issued till 20.9.2014 beyond the period provided u/s 143(2) - HELD THAT:- Notice u/s 143(2) issued in this case is beyond the prescribe time and the assessment made in violation of the statutory provision is without jurisdiction. On this ground, we find that the assessee succeeds. We, therefore, do not propose to dwell deeper into the merits of the case since the assessee gets the relief on the question of law of limitation. 2019 (4) TMI 200 Disallowance of interest attributable to advance - amounts withdrawn through embezzlement and fraud conducted by Sh. Arun Kapoor - HELD THAT:- These funds were out of interest-bearing fund is not correct, as assessee in year when advances were made, had interest-free funds of its own, amounting to ₹ 105.94 crores being share capital, securities premium, free reserves, debenture redemption reserve and accumulated depreciation reserve. There has been nothing contrary to the afore stated observations by CIT(A) and by this Tribunal in preceding assessment years that has been brought on record by AO or DR for year under consideration. Addition under head ‘marriage gift’ Shagun on marriage ceremonies of close relatives of employees, dealers and suppliers of company - allowablity of expenses u/s 37 (1) - HELD THAT:- Marriage gifts to dependents of employees are given in accordance with scheme laid down by company. As observed that these expenses are incurred towards marriage gifts to family members/dependents of staff/dealers are normal business courtesy incurred in course of running business. It has also been observed therein that these expenses are incurred by way of staff welfare and allowable as revenue expenditure on ground of commercial expediency and to develop good relationship with employees/dealers so as to further business interest of assessee. Tribunal in assessee’s own case for assessment year 1978-79 allowed the expenses. Disallowance of Subscription fees - HELD THAT:- these payment made towards Gymkhana Club and other Associations which are being provided toto Sr.Executives of the company to entertain dealers/suppliers and other business associates. As further observed that out of total claim AO has only disallowed on the ground that they are personal in nature. There has been no basis that has been attributed by Ld.AO for an ad-hoc disallowance. It is observed that these expenses have been regularly incurred by assessee in preceding assessment years which has been allowed as business expenses. There are a series of judgements passed by Hon’ble Supreme Court and High Courts holding subscription fees paid to Clubs on behalf of employees are incurred for business purposes and are allowable expenses. Disallowance of consultancy expenses - HELD THAT:- It is observed that assessee before Ld. CIT(A) tabulated nature of services rendered by these personnel and has also submitted copy of appointment letters along with form 16 A, wherein TDS has been deducted. AO has made ad-hoc disallowance on mere surmises which cannot be allowed. Ld.CIT(A) has not recorded any infirmity in respect of the same. We do not therefore find any infirmity with the view taken by Ld.CIT(A) and the same is upheld. Expenses towards advertisement in Hindustan Times - HELD THAT:- as submitted that Sh. Janki Dass Kapur who was the founder of assessee, and, it was under his able leadership that company achieved tremendous growth and excellence in field of cycle manufacturing. It has been submitted that these expenses have been incurred in loving memory of Sh. Janki Dass Kapur’s death anniversary to pay tribute/homage on behalf of management, staff and workers of all 5 units of company. Looking into cause, we do not find any infirmity in view taken by Ld. CIT (A) and same is upheld. Disallowance of Glow Sign Board expenses - HELD THAT:- Glow sign boards were used for promotion of assessee’s business in various cities. It is observed that assessee has incurred these expenditure with an objective to facilitate business promotion and not with an object to acquire asset of enduring nature. Disallowance of staff welfare expenses - HELD THAT:- AO has made ad-hoc disallowance on a lump-sum basis without pointing any specific vouchers that is inadmissible. It has been submitted that assessee being a public limited company is subjected to statutory audit and tax audit under section 44 AB and no adverse comment has been made out by AO. Disallowance of foreign travel expenses - addition deleted by this Tribunal in earlier AYs on ground that FBT has been duly paid on such expenses - HELD THAT:- For year under consideration there is no such clarity arises out of assessment order neither has Ld. Counsel submitted anything in respect of the same. Further on perusal of order passed by Ld.AO, it is categorically clear that family members of Kapoor family have undertaken foreign travel.Since assessee has not provided any details of personnel travelled abroad, we do not find any infirmity in disallowance made by Ld.AO and same is upheld. Addition on account of entertainment wine and beer - HELD THAT:- as submitted that assessee has 4000 dealers nationwide and company executives need to visit these dealers from time to time since company products can only be sold through network of these dealers. These amounts are spent on entertainment of dealers, who are selling products of the company. Further it is observed that Ld.AO has not expressed reason for disallowance apart from saying that expenses were not justified. - A.O. made addition on mere surmises and therefore deserves to be deleted. We do not find any infirmity in the view taken by Ld.CIT(A) and same is upheld. Expenses incurred under the head ‘prize and rewards’ - HELD THAT:- Counsel submitted that these are clubbed with head ‘salary and wages’ and has been paid to their employees as a matter of company policy to reward extraordinary work done by its employees. It has also been observed that TDS has been deducted on these payments. Such payments are very much necessary for large magnitude business carried out by assessee. We therefore do not find any infirmity in view taken by Ld. CIT (A) and same is upheld. Addition under the head ‘sales promotion’ - HELD THAT:- Admittedly these expenses are un-vouched and assessee has not been able to provide any bills in respect of same. Under such circumstances we do not find any reason to uphold view of Ld.CIT (A) and same is reversed and addition made by Ld.AO stands upheld. 2019 (4) TMI 199 Reopening of assessment u/s 148 - addition on account of deemed dividend u/s 2(22)(e) - Already taxed in hand of recipient concern - assessee was major shareholder of the concern - Reason to belief - HELD THAT:- Eventuality of application of section 2(22)(e) whether in the hands of Zetex or the assessee simultaneously cannot be taken up i.e. where the addition has already been made in the hands of Zetex by the AO concerned and the said addition was challenged before various Forums simultaneously, re-assessment proceedings cannot be initiated in the hands of assessee being the major shareholder. DHFL Venture Capital Fund Vs. ITO [2013 (6) TMI 575 - BOMBAY HIGH COURT] had held that jurisdictional requirement for reopening of assessment under section 148 of the Act was the formation of reason to believe by the Assessing Officer that income had escaped assessment and existence of that reason must be in present No merit in initiation of re-assessment proceedings by recording reasons for reopening assessment in the hands of assessee as on 04.09.2013 i.e. the date on which the addition was already made in the hands of recipient of loan, though the assessee was major shareholder of the concern giving loan and concern taking the loan. Hence, the re-assessment order passed under section 143(3) r.w.s. 147 of the Act is annulled. The additional ground of appeal raised by assessee is thus, allowed. 2019 (4) TMI 198 Addition u/s 68 - unexplained share application money received from the Holding Company - identity of the Investor, its creditworthiness and the genuineness of the transaction - assessee-company has even explained the source of the source - ultimate beneficiary of the unaccounted funds - Held that:- Burden upon assessee-company u/s 68 to prove the identity of the Investor, its creditworthiness and the genuineness of the transaction, have been proved by the assessee-company, which have been correctly appreciated and accepted by the CIT(A) for the purpose of deleting the addition. No addition could be made merely on presumption as has been done in the present case. Since the similar addition have been deleted by the CIT(A) in assessment year 2004- 2005 and the Departmental Appeal have been dismissed by the Tribunal and similar addition have been deleted in the case of Mr. Suresh Nanda by ITAT on substantive basis and the Order is confirmed by the Hon’ble Delhi High Court, therefore, the issue is covered in favour of the assessee by the Order of the Tribunal in its own case as well as in the case of Mr. Suresh Nanda [2015 (5) TMI 938 - DELHI HIGH COURT]. Therefore, there is no justification to make the addition against the assessee-company. - decided in favour of assessee. 2019 (4) TMI 197 Penalty U/s 271(1)(c) - income computed after relief provided by Hon’ble CIT(A) - non specifying the limb for reasons in the penalty notice to impose the penalty i.e. whether the penalty was initiated for concealment of particulars of income or for furnishing inaccurate particulars of income - HELD THAT:- AO had computed the penalty on income computed after relief provided by Hon’ble CIT(A). However ld CIT(A) had allowed the relief by directing the AO to compute the penalty on the net addition sustained by Hon’ble ITAT Jaipur. As settled law that on estimated addition, penalty under s. 271(1)(c) cannot be imposed because there can be no concealment in these cases, nor that the assessee has furnished inaccurate particulars of income. Any estimate is an opinion which is taken subjectively, when this difference of opinions leads to any addition, it cannot terminate into a penalty under s. 271(l)(c) . Further, it cannot be said that the process of imposition of penalty is automatic in the eventuality of estimated income. The mere fact of addition on an estimated basis, particularly when the assessment is made on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty. The degree of proof required for the imposition of penalty is quite different from and is of a much higher order than that required for the purpose of making addition on an estimated basis. Besides, addition on the basis of estimate does not ipso facto supply evidence of concealment so as to justify penalty. Finding of concealment cannot be based on estimation alone. In the facts of the instant case, the factum of concealment was not proved beyond the shadow of doubt. No justification for imposition of penalty U/s 271(1)(c) of the Act in all the years under consideration - Decided in favour of assessee 2019 (4) TMI 196 Exemption u/s 11 and 12 - allowability of salary and perquisites to its trustees - allowability of utilization fees paid to the trustees for use of assets - Scope of section 13(1)(c) - HELD THAT:- it is not not disputed that both trustees were professionally qualified doctors, who besides looking after the administration and running of hospital, were also providing services to the hospital. The payment to them was also linked to the fees collected from the patients. The total professional charges paid to them where the payment is made for rendering professional services to the assessee trust, it cannot be held to be for the direct or indirect benefit of trustees. We find no merit in the orders of authorities below in invoking provisions of section 13(1)(c) in the present set of facts. Accordingly, we hold that professional fees paid to two trustees is to be allowed as deduction. Disallowance of utilization fees paid to the trustees - payment against equipment and assets owned by trustees, but used by trust - HELD THAT:- There is no finding that utilization fees paid is excessive or is for the direct or indirect benefit of any person. In the absence of the same and where the facilities of using equipment and services were provided by the trustees to the assessee trust, then utilization fees linked to such facilities or services is to be allowed as deduction in the hands of assessee. We find no merit in the orders of authorities below in this regard. Both the issues decided in favour of assessee 2019 (4) TMI 195 Bogus purchases - disallowance at the rate of 10% towards gross profits - HELD THAT:- Referring to M/s. Chhabi Electricals Pvt. Ltd. and others [2017 (6) TMI 514 - ITAT PUNE] we are of the opinion that the addition by way of estimation is to be made in the hands of the assessee at the rate of 10% of the alleged bogus purchases in both the assessment years uniformly. This is over and above the net profit shown by the assessee in both the assessment years. Accordingly, the grounds raised by the assessee are partly allowed. 2019 (4) TMI 194 Exemption u/s 11 - charitable activity or not? - Disallowance of boarding expenditure - use of hotel for residential accommodation for students with catering services - No allegation of excessive payment - No violation of section 13 - No violation of section 2 (15) - HELD THAT:- For provision of services, assessee has engaged Mars catering services, which is also part of Mars enterprises. There is an agreement also of assignment of original agreement from Mars enterprise to Mars catering services private limited. Expenditure has been incurred by assessee only for purpose of educational facilities to be given to student of lodging and boarding for staying in Mussoorie and studying in the assessee society. It is not denied or can be disputed that assessee is providing education to students and lodging and boarding facilities are incidental to education. No violation of section 13 has been pointed out by learned AO. It cannot be said that expenditure incurred by assessee is not for purpose of education. For all these considerations as stated above learned CIT-A has deleted addition. Merely because some celebrities are holding shareholding in one of entities to which assessee society has engaged for provision of services does not make any difference in allowance or disallowance of a particular expenditure for object of society. Merely because a hotel is rented by assessee society for using, as a hostel for student, does not make any difference, as far as student of the society exclusively uses the same. These facts do not exclude assessee from provision of section 2 (15). It is also not the case of AO that assessee is carrying on business activity, which is tainted with profit motives and is not an educational activity. The AO in this appeal does not dispute further repair expenditure of such hotel used as hostel by assessee. Hence, we do not find any infirmity in order of learned CIT – A in disallowing above claim. - Decided against revenue Defect in Form 36 - Appeal of revenue does not deserve any merit even for admission. By looking at form number 36 it is apparent that learned assessing officer has mentioned respondent as “Oil and natural gas Corp Ltd, Dehradun.” Here respondent is not ONGC but Woodstock school, Mussoorie. As AO wrongly shows respondent, and form number 36 is wrongly filled up, on this issue, defect notice was also issued to LD AO at time of filing of appeal. Registry of tribunal has mentioned this defect in notice itself on 14/07/2014. It is also surprising that learned assessing officer has filed this appeal in 2014, until 2019, no attempt has been made to even correct mistake. However, until now learned assessing officer has not even carried to correct error. Such callousness and carelessness on part of assessing officer who filed appeal shows complete non-application of mind. - Decided in favour of assessee. 2019 (4) TMI 193 Disallowance made u/s 14A - excess of own funds - HELD THAT:- Own funds available with the assessee is in excess of the value of investment and hence the decision rendered in the case of Karnataka State Industrial & Infrastructure Development Corporation Limited [2015 (11) TMI 1631 - KARNATAKA HIGH COURT] shall apply to the facts of the present case. The disallowance out of interest expenditure is no called for. DR submitted that the assessee has used the mixed funds. However, from the submission made by the assessee, we noticed that the assessee has made the impugned investment out of the sale proceeds of land sold to M/s.ITC Limited. Hence, we noticed that the assessee is able to show the nexus between the funds utilized and the investment made. Disallowance made out of administrative expenses under Rule 8D(2)(iii) the assessee has placed reliance on the decision rendered in the case of Syntex Industries Limited [2018 (3) TMI 1448 - SUPREME COURT] in order to contend that no disallowance out of administrative expense should be made. It show that the assessee had made minor investments out of surplus funds, while in the instant case the assessee has not shown that it had surplus funds and further investments made by it could be regarded as minor in nature. Hence, in our view, the assessee cannot take support of the above said decision. The assessee has made investment in Mutual Funds units which does not involve use of much of administrative capabilities. Provisions of Rule 8D(2)(iii) should not be applied to the facts of the present case. Since the assessee has received exempt income, some disallowance is called for to meet the requirements of sec.14A of the Act. Accordingly, we direct the A.O. to make lump sum disallowance of ₹ 25,000/- towards administrative expenses and, in our view, the same would meet the requirements of sec.14A of the Act. TDS u/s 194J - Disallowance of purchase cost of software u/s 40(a)(ia) - TDS liability fastened upon the assessee retrospectively - whether payment made towards purchase of software is in the nature of Royalty attracting TDS provisions? - HELD THAT:- The assessee cannot be fastened with the liability to deduct tax at source retrospectively and accordingly, we set aside the order passed by the CIT(A) on this issue and direct the A.O. to delete the impugned addition. Disallowance of interest levied on late remittance of TDS - HELD THAT:- Hon’ble Madras High Court in the case of CIT vs. Chennai Properties & Investments Ltd [1998 (4) TMI 89 - MADRAS HIGH COURT], wherein it was held that the interest paid would take the colour from the nature of Principal amount required to be paid, but not paid in time. Accordingly it was held that the interest paid on belated payment of TDS cannot be considered as compensatory in nature and accordingly held that the same is not allowable as deduction. Non-granting of TDS credit - HELD THAT:- Assessee should not be denied the benefit of credit of TDS as provided in Rule 37BA(3)(ii) of I.T Rules. Accordingly we restore this issue to the file of the AO for examining the claim of the assessee. We also direct the assessee to move appropriate petition before the AO in this regard, which shall be considered in a liberal manner by the AO. Appeal of the assessee is partly allowed. 2019 (4) TMI 192 Disallowance of interest u/s 36(1)(iii) - allegation that fund were used for purchase of mutual fund - HELD THAT:- Neither the AO nor the CIT(A) has verified the source of these credits in the OD account whether these transfers in the OD account were made from the other loan account or assessee’s own fund. If these transfers in the OD account are made from the assessee’s own fund then certainly the disallowance to the extent of the interest charged on the OD account can be considered for the purpose of investment made in the mutual funds but if the said transfer of fund in the OD account is from other loan account or any part of fund is from some other loan account then the disallowance has to be calculated based on the actual borrowed fund utilized for investment in mutual funds. Since the Assessing Officer has considered the amount therefore, the disallowance should not exceed the amount which was disallowed by the Assessing Officer in the impugned order. Hence, in the facts and circumstances, we find that despite the second round, the assessee has not produced the relevant details to show the moment of the fund in the OD account and specifically the credit/deposits made in the OD account so as to support its contention that the assessee’s own fund was utilized for investment in mutual funds and not the borrowed funds. In absence of the relevant details and evidence, the issue cannot be decided conclusively. Hence, we are constrained to remand the matter to the AO for verification of the source of fund. Disallowance u/s 14A - HELD THAT:- Disallowance U/s 14A of the Act on account of interest expenditure, this issue is common to the disallowance of interest expenditure made by the Assessing Officer U/s 36(1)(iii) of the Act in ground No. 1 of the appeal. Hence, in view of our finding and observation on ground No. 1 of the revenue’s appeal, this issue is set aside to the record of the Assessing Officer on same terms for verification of the moment of the fund and actual source of investment in the mutual funds. Disallowance on account of common/indirect administrative expenditure being 0.5% of the average investment as per Rule 8D(2)(iii) of the Rules - Since the dividend income during the year is only ₹ 1,81,392/-, therefore, in view of the binding precedents on this issue, the disallowance made U/s 14A read with Rule 8D(2)(iii) of the Rules, cannot be more than the exempt income. The Hon’ble Delhi High Court in the case of Cheminvest Ltd. v. Commissioner of Income-tax-IV [2015 (9) TMI 238 - DELHI HIGH COURT] has held that if there is no exempt income earned by the assessee during the year, no disallowance can be made on account of administrative expenditure, therefore, we find that the disallowance restricted by the CIT(A) to the extent of exempt income is proper and justified. 2019 (4) TMI 191 Penalty u/s 271(1)(c) - addition made on account of software expenses - capital or revenue expenses - furnishing of inaccurate particulars of income - assessment order framed u/s 143(3) - HELD THAT:- The assessee has furnished all the particulars of software expenses claimed in the income tax return. As such there was no deliberate act on the part of the assessee to furnish inaccurate particulars of income by claiming software expenses as revenue in nature. Therefore, in our considered view the penalty levied u/s 271(1)(C) is unsustainable in the given facts and circumstances. See M/S SIDHARTHA ENTERPRISES, LUDHIANA [2009 (7) TMI 22 - PUNJAB AND HARYANA HIGH COURT] penalty is imposed only when there is some element of deliberate default and not a mere mistake. The assessee has claimed software expenses under the head “software expenses” as evident from the order of the AO which shows that the software expenses were claimed as revenue in nature under the bonafides belief. Had the intention of the assessee been malafide then it should have claimed the same under any other head to avoid the attention - See KANBAY SOFTWARE INDIA (P) LIMITED. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX. [2009 (4) TMI 499 - ITAT PUNE-A]. Exemption u/s.10A - whether the deduction under section 10A needs to be worked out after setting off the brought forward losses? - gains of the business of an eligible undertaking has to be made independently - HELD THAT:- M/S YOKOGAWA INDIA LTD. [2016 (12) TMI 881 - SUPREME COURT] there remains no ambiguity that the assessee shall work out the deduction u/s 10A from its total income before allowing the brought forward losses. We hold accordingly. Hence the ground of appeal of the assessee is allowed. 2019 (4) TMI 190 Addition u/s 14A read with rule 8D - assessee is having investments and earned dividend income which is exempt from tax - assessee has not shown any expenditure incurred - recording of satisfaction of AO - HELD THAT:- Assessee reiterated that there is no satisfaction by the A.O. that the assessee has not incurred any expenditure to earn the exempt income. In this regard, he placed reliance on several Tribunal decision in this regard. As regards the tribunal’s decision referred by the assessee, we find that they were rendered on the facts of the case, with a finding that there was no whisper by the A.O. regarding his satisfaction that the assessee has incurred expenditure to earn exempt income. In the present case, we find that it is not a whisper but a categorical finding and satisfaction of the A.O. that expenditure has been incurred to earn the exempt income. In our considered opinion, the CIT(A)’s finding to this effect is devoid of any infirmity. Except for calling the categorical satisfaction of the A.O., absence of satisfaction, the ld. Counsel of the assessee has not made out any case to negate the disallowance u/s. 14A. Hence, in the background of the aforesaid discussion, we do not find any infirmity in the order of the authorities below. Hence, we uphold the same. - Decided against assessee. Customs 2019 (4) TMI 189 Release of consignments - Yellow Peas/green peas imported - issuance of Detention Certificate for waiver of Demurrage and Container Detention Charges in terms of Regulation 6(1)(1) of Handling of Cargo in Customs Areas Regulations 2008 - Held that:- The petitioner will remit the entire duty component of the consignments imported by them where such duty is leviable along with a bank guarantee for the 10% of the invoice value. In cases where the duty impact is neutral, the petitioner shall furnish a bank guarantee for the 10% of the invoice value. Upon satisfaction of the aforesaid conditions, the consignments shall be released forthwith Waiver of Demurrage and Container Detention Charges - Held that:- In the light of Rule 6(1) of the Handling of Cargo in Customs Areas Regulations, 2009, which provides that the Customs Cargo Provider shall not, subject to any other law for the time being in force, charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive Officer or examining officer, as the case may be, there shall be a waiver of demurrage charges. Petition disposed off. 2019 (4) TMI 188 Penalty u/s 112(b) of Customs Act, 1962 - smuggling of diamonds - Held that:- Shri Dhanji Nanji Varia, Shri Vikram Natavarlal Patel and Shri Jaisukh Gobarbhai Savalia have admitted that they have earlier purchased/ polished the diamonds smuggled by the two main noticees. They have admitted that they were not aware of that the diamonds were of Zimbabwe origin and no KPC certificate was given to them - a reasonable conclusion can be reached that the appellants were regularly dealing in smuggled diamonds which they knew or had reasons to believe about the illicit nature and therefore liable to confiscation. In these circumstances, imposition of penalty on the appellants under Section 112(b) is fully justified. Further, penalty of ₹ 5 Lakh each has been imposed on these appellants. Looking at the degree of involvement it is felt that penalties of ₹ 5 Lakh each on these three appellants namely Shri Jaisukh Gobarbhai Savalia, Shri Vikram Natvarlal Patel and Shri Dhanji Nanji Varia is excessive and the same are reduced to ₹ 50,000/- each. Penalty on Ms. Mancy H Kumpavat - Held that:- It is seen that she may have assisted in the activities of two main noticees but she was not directly involved in any manner. In these circumstances, imposition of penalty under Section 112(b) of the Customs Act, 1962 on Ms. Mancy H Kumpawat is not justified and the same is set-aside. Appeal allowed in part. 2019 (4) TMI 187 Rectification of mistake - mistake apparent on the face of record or not - Held that:- In this case, decisions cited by the appellant on the issue of belated production of end use certificate shall disentitle to the assessee for the benefit of Notification No. 83/1990-cus and those decisions have not been considered while passing the order dated 23.08.2017. In that circumstances, it is a mistake apparent on record while not considered the decisions which are relevant on the assessee. The order dated 23.08.2017 is recalled and direct the registry to list the appeal for re-hearing on the said issue in due course - ROM Application allowed. 2019 (4) TMI 186 Jurisdiction - power of Committee of Chief Commissioners to review an appeal - Section 129A (1) (a) of the Customs Act, 1962 - Revocation of CHA License - forfeiture of security deposit - Held that:- Notwithstanding the provisions of Regulation 21 of the CBLR 2013, under Section 129D of the Customs Act, 1962 the Committee of Chief Commissioners are fully empowered to review an order or decision for filing an appeal before the Appellate Tribunal - also, the department is entitled to file appeal in this matter under the provisions of Section 129A (1) (a) of the Customs Act, 1962. Matter reserved for orders - Both sides to note that in case the Ld. Advocate fails to submit copies of case law relied upon and / or the Ld. A.R fails to submit the report on the said case laws, before 18.03.2019, the appeal will be taken up for finalisation and orders without any further reference to either side. 2019 (4) TMI 185 Imposition of ADD - Import of PVC Flex Films from China - N/N. 79/2010-Cus. - appellant contended that the self adhesive vinyl imported by it is a different product than the PVC Flex Film and as such not covered under the purview of anti-dumping duty - Held that:- The goods imported by the appellant namely, self adhesive vinyl was never subjected to payment of anti-dumping duty inasmuch as the said product was different from the PVC Flex Films, on which anti-dumping duty was imposed. The said fact is evident from the Notification dated 25.08.2011, which excludes self-adhesive vinyl for consideration of PVC Flex Film for the purpose of levy of anti-dumping duty - the subject goods imported by the appellant will not be subjected to levy of anti-dumping duty. Further, the learned Commissioner (Appeals) has not extended the benefit of notification dated 25.08.2011 on the ground that no sample of the disputed goods was drawn for test and the same had not cleared on payment of anti-dumping duty. It is an admitted fact on record that classification of the subject goods has never been questioned or objected to by the Customs Officers at the time of assessment. Thus, there was no requirement of drawal of any samples for the purpose of test, to ascertain the type of goods imported by the appellant - Since the Central Government vide Notification dated 25.08.2011 had specifically clarified that the said Notification shall not applicable to self-adhesive vinyl, there are no justifiable reason to agree with the findings of the Commissioner (Appeals) with regard to imposition of anti-dumping duty. Appeal allowed - decided in favor of appellant. PMLA 2019 (4) TMI 152 Offence under PMLA - attachment or property pre-mortgaged with bank - HELD THAT:- In the present case, this Appellant - HELD THAT:- Bank is an innocent party since it had already lent its own money to the Predicate Offender and the property in question being mortgaged to the Bank which is provisionally attached by the Respondent- Deputy Director ought to have been released by the Adjudicating Authority under Section 8(2) of PMLA. The proceedings before the authority and this tribunal are of civil proceedings. It is wrong to allege that this tribunal has no jurisdiction to pass such order. 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. 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. In the light of above, the impugned order is set-aside. Consequently, the provisional attachment order is also quashed as far as Bank is concerned. It is clarified that the Bank has only restricted his prayer qua attachment of mortgaged property. The complaints against the borrowers may continue as per law for which the Bank has no concerned. Service Tax 2019 (4) TMI 184 Levy of service tax - Valuation - Mandap Keeper service - conference facility - demand of service tax, interest and imposition of penalties under Section 76 as well as 78 of the Finance Act, 1994 - Held that:- Tribunal in the case of Hotel Amarjit Pvt. Limited [2014 (4) TMI 920 - CESTAT MUMBAI] has settled the issue regarding liability of catering provided with Mandap Keeper service and held that the services rendered by the mandap keepers as a caterer would also be liable to service tax under the category of ‘Mandap Keeper Services’. In case where there is provision of stay along with food and conference facility, best judgment method can be applied to arrive at the value of conference facility, after necessary evidence is produced by the appellants. Benefit of N/N. 1/2006-ST dated 01.03.2006 - Held that:- The appellant also claimed that they have availed Cenvat credit only for the period prior upto 01.03.2006 and not thereafter. In those circumstances, the benefit of Notification No. 1/2006-ST dated 01.03.2006 cannot be denied to the appellants. Penalty u/s 76 and 78 of FA - Held that:- The penalty imposed under Section 76 is set-aside, wheras penalty u/s 78 upheld. Time Limitation - Held that:- It is seen that the appellant had not declared the correct figures in their returns filed with the department and therefore, no benefit of limitation can be extended to the appellant. Benefit of cum-tax - Held that:- In view of the settled law, the benefit of cum-tax value cannot be denied to the appellant and the demand is required to be revised on that count. The appeal is partly allowed and the matter is remanded to the original adjudicating authority for re-quantification of demand. 2019 (4) TMI 183 Courses offered by IIM (IIMA) - Commercial Training or Coaching Services - demand of service tax on long duration courses - demand on the ground that long duration courses are not approved by AICTE - issuance of second SCN - Extended period of limitation - Circular No. 86/4/2006 dated 01.11.2006 - validity of SCN - Held that:- Till the introduction of Finance Act 2010 by which explanation was inserted in sub clause zzc of Section 65 (105) of the Finance Act, the term ‘Commercial Coaching of Training Centre’ was deemed to have included only those centres which were rendering the service with profit motive as clarified vide Circular No. 86/4/2006-dated 01.11.2006 (S) - However with enactment of the Finance Act, 2011 the clause (27) of Section 65 of the Finance Act, the term ‘Commercial Training or Coaching Centre’ would cover all trainings centers giving training for a consideration irrespective of the profit motive of the center. This change was given retrospective effect from 01.07.2003. It is seen that in the notice, the only ground raised is that the long term course on which demand has been raised are not recognized by AICTE etc. The law does not provide for recognition by AICTE as a pre-condition of exemption from tax. The language is very clear. Prior to 01.05.2011, institutes providing training leading to qualification ‘recognized by law’ were outside the purview of tax. After 01.05.2011 ‘coaching and training’ leading to qualifications ‘recognized by law’ are exempted (upto 01.07.2012) and in the same fall under negative list thereafter. Thus the SCN is not sustainable as there is no allegation that the coaching or training provided by the appellant is not recognize by law. Non recognition by AICTE is not the same as non recognition by law. Recognition by law does not mean recognition by AICTE or AIU etc., but it means recognition by government in any significant manners. In the instant case, the courses under dispute have been recognized by government as equivalent to other degree/diploma courses for the purposes of employment and higher education. Moreover, Ministry of HRD has clearly laid down in their letter dated 31.01.2017 that recognition by AICTE or NBA accreditation is not required by IIMs. These facts have been affirmed by the letter of TRU dated 14.02.2017 - the long term course of IIM are courses recognized by law. In view of that the demand does not survive on merits. Time Limitation - Held that:- There was not suppression and mis-declaration by the appellant. There was not malafide intention whatsoever, thus barred of the demand would also be liable to be set aside on account of limitation. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 182 Classification of services - appellants have received extra amount from the customers over and above the hiring charges shown in the agreement entered by them with the vehicle owners - GTA Services or BAS? - time limitation - Held that:- The customers to whom the appellant has provided GTA services has no knowledge whether the appellant is rendering service of transport of goods by using their own vehicles or by using the vehicles hired from other vehicle owners. This being the case, the allegation of the department that the extra amount collected is for procurement of services for their customers / client is factually incorrect. It is discussed in detail by the Commissioner that the appellants have discharged the service tax on this extra amount by including under it GTA service. They have availed 75% abatement which is legally available for the said category of service. That amount that has been collected by them for transportation of goods of their clients / customers has been thus subject to levy of service tax under GTA service. Thus the department cannot argue that the said amount has to fall under BAS and the appellant have to discharge service tax under BAS - there is no element that would attract the activity or the amount collected by the appellant in relation to hiring of vehicles or transportation of goods to be falling under BAS. Time Limitation - Held that:- There are no ingredients to establish suppression of facts with intent to evade payment of service tax. On such score, the allegation of suppression of facts with intent to evade payment of service tax cannot sustain. The appellant succeeds on the ground of limitation also. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 181 Classification of services - Survey and Exploration of Mineral Service or not - demand of the short-paid service tax along with interest and penalties - Held that:- From the activities explained by the appellant it can be seen that these activities have nothing to do with Survey Exploration of Mineral Service. Appellants have undertaken mainly the preparation of camps mobilization and also upkeep and maintenance of these camps. The Commissioner (Appeals) for the period from 25.4.2006 to 20.12.2007 has analyzed the very same issue in detail and held that the activities does not fall under Survey Exploration of Mineral Service. It was held that activity of the appellant are not in the nature of seismic services and collection / processing, interpretation of data and drilling or testing in relation to survey and exploration - The CBEC vide its Circular No. 80/10/2004-ST dated 10.9.2004 has clarified that the service tax under this category would be limited to the services rendered in relation to Survey and Exploration only and not on the activity of actual extraction after the survey and exploration is complete. The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax. The activity undertaken by the appellant is in the nature of mobilization of camps, upkeep and maintenance of camps and such other services that would not fall under the definition of Survey Exploration of Mineral Services. Demand cannot sustain - appeal allowed - decided in favor of appellant. 2019 (4) TMI 180 Classification of services - Online Information and Database Access and Retrieval Service or Business auxiliary services - demand of service tax with interest and penalty - Held that:- The respondent has provided Online Information and Database Access and Retrieval Service and have discharged service tax on the entire amount received as consideration. The respondent procured purchase orders from the Indian clients for getting access for online information and database and provided access details to the customers. They collected payments from the customers and paid to foreign online information service provider on behalf of their service. The entire amount received from the customers and paid to foreign service provider has been subject to levy of service tax under Online Information and Database Access and Retrieval Service. There is no dispute that the entire amount has suffered tax under Online Information and Database Access and Retrieval Service, the further demand confirmed under BAS on the very same amount cannot sustain - appeal dismissed - decided against Revenue. 2019 (4) TMI 179 Demand of service tax - amount of food charges collected from the clients and shown separately on the invoices as being VAT paid thereon - N/N. 12/2003-ST dated 20.06.2003 - case of the revenue is that as the appellant is providing ‘Mandap Keeper’s Service’ and ‘Catering Service’, therefore, they are liable to pay service tax on the full amount charged by them form the clients - Held that:- The appellant has charged hall rent separately on which service tax has been paid and also charged for supply of food on which VAT has been paid, therefore, in terms of N/N. 12/2003-ST dated 20.06.2003, the appellant is entitled to claim deduction on the value of the foods supplied. Admittedly, on full value of food supplied, the appellant has paid VAT, therefore, in terms of N/N. 12/2003-ST dated 20.06.2003, the appellant is entitled to claim deduction - the appellant are not liable to pay differential service tax as demanded in the impugned order on account of Catering Service which are sought to be included in the value of service on which the appellant has already paid VAT. In these circumstances, the demand on account of short payment of service tax is set-aside. As per Section 65B (44) (a) (ii), supply of goods which is deemed to be sale is excluded from payment of service tax. Admittedly, on the basis of the foods supplied by the appellant has paid VAT holding that the same is sale of food, therefore, in terms of Section 65B of Finance Act, 1994, the appellant is not liable to pay service tax on the value of foods supplied. CENVAT Credit - credit denied for want of documents - Rule 9 of the Cenvat Credit Rules, 2004 - Held that:- The appellant took cenvat credit during the period October 2006 and September 2010 and was filing statutory returns from time to time and periodical audit took place and no objection was raised for availment of cenvat credit. Therefore, the show cause notice issued to the appellant on 30.03.2012 for the period October 2006 to September 2010 is barred by limitation. As the fact of the availment of the cenvat credit was in the knowledge of the department. Therefore, the cenvat credit cannot be denied to the appellant. As extended period of limitation is not invokable and demand is not sustainable against the appellant. Therefore, no penalty is imposable on the appellant. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 178 Business Support Services - appellants have retained certain percentage of the consultant’s fee charged from the patients as per agreement with different consultants on account of administrative support provided by appellants to various consultants/doctors - Held that:- This Tribunal in the case of M/S. SIR GANGA RAM HOSPITAL VERSUS C.S.T., DELHI-I [2018 (7) TMI 1127 - CESTAT NEW DELHI], where it was held that The fact remains is that in the given arrangements/agreements with the diagnostic centres the appellant is not providing any health service. It is merely collecting money on behalf of the diagnostic centres for providing them the number of patients. Hence, the share of revenue so collected in the hands of the appellant cannot be categorized as a consideration for rendering the health service to the patients. The appellants had not provided any business support service to the consultants/doctors or patient, therefore, no service tax is payable by appellants under the category of Business Support Service - Appeal allowed - decided in favor of appellant. 2019 (4) TMI 177 CENVAT Credit - input services - event management service - Real Estate Agent Service - appeal has been filed by the Revenue on ground that the decision in respondents’ own case i.e. Axis Bank Ltd. [2017 (3) TMI 874 - CESTAT MUMBAI] which has been relied upon by the learned Commissioner while passing the impugned order, has not been accepted by the department and they have filed appeal before the Hon’ble High Court of judicature at Bombay against the said order - Held that:- The issue in the instant matter has been squarely covered by the said decision where it was held that the credit on these services are allowed. It is not the case of Revenue that any stay order has been passed by the Hon’ble High Court in the Appeal filed by them against the aforesaid order. Therefore following the decision of this Tribunal as aforesaid, there is no merits found in the appeal filed by the Revenue and therefore, the same is dismissed. Decided against Revenue. Central Excise 2019 (4) TMI 176 Classification of goods - bulletproof special purpose vehicles for army/paramilitary forces - whether these light armoured troops carrier is classifiable under chapter 8705 90 00 or under tariff item 8710 00 00 or not? - benefit of N/N. N/N. 6/03-CE dt.1.3.2003 - Held that:- On-going through the certificate issued by VRDE and tender documents placed on record, we find that it show that these documents show that the requirement of Boarder Security Force is for light armoured troop carrier and as per the certificated issued Vehicle Research Development Establishment that the vehicles manufactured by the appellants are special purpose armoured vehicle. Admittedly, the vehicle in question is a special purpose vehicle, therefore, the same have merited classification under tariff heading 8705 90 00. We have also examined HSN Explanatory Notes to chapter 87.10 it excludes cars and lorries of the conventional type, armoured or equipped with subsidiary removable armour which will cover under headings 87.02 to 87.05 as applicable. Therefore, it is clear that 87.10 covers tanks and other armoured fighting vehicles in the HSN. Therefore, light armoured bulletproof vehicles are specifically excluded from classification under tariff heading 87.10. The bulletproof vehicles manufactured by the appellants are light armoured bulletproof vehicles is not disputed. The feature of the bullet proof SPV indicates that these provide protection to the troops sitting inside the vehicles, against bullet/hand grenades. It also had provision for holes on the roof and the sides, through which the troops inside the vehicle can retaliate. Thus, primary purpose of the said vehicle was patrolling, surveillance and security of the forces inside the vehicle while being stationed at the battlefield. Therefore, the SPVs are designed and manufactured for special purpose and use. These are not principally designed for the transport of passengers or goods and hence, are not excluded from the purview of heading 8705. The main purpose is to ensure the safety of the occupants inside the vehicle for which, the vehicle is made bulletproof. Therefore, the bulletproof SPVs deserve to be classified under chapter heading 8705 - As the goods are classifiable under chapter heading 8705 90 00. Therefore, the appellants are entitled for the benefit under Serial No.50 of exemption N/N. 6/03-CE dt.1.3.2003. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 175 Penalty u/r 26 of Central Excise Rules, 2002 - clandestine removal of cigarettes - fictitious firms - cross-examination not carried out properly - reliability on the statements - Held that:- The main objection raised by the Ld. AR this Tribunal is functus officio as the appeals have already been dismissed by this Tribunal for non compliance of the stay order and the order of this Tribunal have been merged with the order of the Hon’ble High Court. the appeals of the appellants have already been restored by this Tribunal vide its order dt.27.8.2018 and the said order has not been challenged by the Revenue. Therefore, the objection raised by the ld.AR is not sustainable and accordingly, the same is discarded. During the relevant period in terms of Rule 6 of Central Excise Rules, 2002, the factory of the appellants was under physical control of the Superintendent or Inspector of Central Excise, wo were required to assess the duty payable before removal by M/s. Pelcan. However, as per Chapter 4, cigarettes would have been removed only on invoice which shall be countersigned by the Central Excise Superintendent. When the department itself is controlling manufacturing process of the appellant, in that circumstance, without hand in gloves with the Central Excise officers, the clandestine removal cannot take place - Moreover, in this case, no incriminating documents received from the possession of the appellants. Moreover, no extra amount has been received from the custody of the appellants which can be presumed the sale of clandestine removed goods. he whole case of the Revenue is based on the third party document and the statements of various persons whose cross examination has not been granted in terms of Section 9D of the Central Excise Act,1944. The allegation based on the third party document without any corroborative evidence cannot be the basis to allege clandestine removal of the goods. In the absence of examination-in-chief, allowing the cross-examination, the adjudication is a futile exercise. As the said procedure has not been followed by the authority below and the appeal of M/s. Pelican has already been dismissed. In that circumstance, the statements of witnesses on the basis it has been alleged that the appellants are engaged in the activity of clandestine removal without payment of duty are not admissible. Nod corroborative evidence have been brought on record to support the statement of witnesses and the whole case is based on third party documents, the penalties on the appellants are not imposable. Penalties set aside - appeal allowed - decided in favor of appellant. 2019 (4) TMI 174 Demand of Interest under Rule 49A of the Central Excise Rules, 1944 - refund claim of interest paid on BED and AED(TTA) - no charging provision - Held that:- We do not find how the interest to be collected as there is no charging provision for collection of interest, therefore, we hold that no interest is payable by the appellant. No interest is payable by the appellant under Rule 49A of Central Excise Rules, 1944 in the absence of any charging provision - appeal allowed - decided in favor of appellant. 2019 (4) TMI 173 SSI Exemption - clubbing of clearances - units that all are controlled by one family member - dummy units - Held that:- The allegation of the Revenue is that all three units are partnership firm and having common partners. That cannot be the sole ground to club the clearances of all the units. Moreover, M/s. Sonex Decor Pvt.Ltd., is a private limited company is a separate firm with its Directors, therefore, the same cannot be the ground to club the clearances of all the units - Moreover, M/s. Sonex Decor Pvt.Ltd., is a private limited company is a separate firm with its Directors, therefore, the same cannot be the ground to club the clearances of all the units. Other reason for clubbing of clearances of all the units are having financial flow back, mutual lending and borrowing etc. amongst the units; collection of sale proceeds on behalf of each other; joint control exercised by Shri Harvinder Singh and Shri Jaspal Singh on all the four units; common managerial control; partners/directors being members of the same family; and common use of facilities of telephone, fax, computer, office equipment, staff etc - We take note of the fact that all the units located at different locations having separate income-tax, sales tax, central excise registration. All units are having electricity connection, their own machinery and plant to manufacture their final products and maintaining their separate records such as manufacturing, purchasing, sale etc. The appellants are having bank accounts separately. There are some instances where some payments have been received by another person on behalf of the other but the same has been transferred to their respective account and during the course of their business if they have taken any money from the other company the same has been repaid. These facts have been recorded in the impugned order. Similar issue was examined by Hon’ble Supreme Court in the case of Rollatainers Limited vs. CCE, Delhi-III [2004 (7) TMI 92 - SUPREME COURT OF INDIA], where it was held that clearances of two factories within the same premises, same owner and common balance sheet with common boundaries but having separate staff, separate management, separate passage, separate entrance with separate central excise registration and producing different end products, cannot be clubbed together. Thus, the clearances of all the units cannot be clubbed together - appeal allowed - decided in favor of appellant. 2019 (4) TMI 172 Classification of goods - product CG 005 cleared by the Appellant - whether classifiable under CSH 27090000 attracting Nil rate of duty or classification under CSH 27101990 of CETA 1985 attracting duty at 16%? - scope of SCN - Held that:- Neither the Dy.Chief Chemist’s report nor the report of Director CRCL, New Delhi are having any consistency nor the findings of the Adjudicating Commissioner is in line with the proposal in the SCN. Besides, the report obtained from Director, CRCL dt.28.10.2009 and 03.12.2009 obtained during the course of personal hearing were not subjected to any cross examination even though requested by the Appellant. Since the classification of the product rests on the analysis of the sample by respective chemical examiners, their conflicting view do not lend support to the findings of the Commissioner in arriving at a conclusion that the de-hydrated crude oil after process of distillation, which undisputedly remains at the bottom, is classifiable under CSH 2710.1990, a classification which is different from the proposed classification in the SCN i.e. fuel oil under CSH 27101950 of CETA, 1985. Scope of SCN - Held that:- The learned Commissioner has travelled beyond the scope of SCN and relied upon material which are conflicting in nature and without any further verification or re-test and hence the classification arrived at by the learned Commissioner cannot be sustained. The classification under a different sub-heading to the one proposed in the Show Cause Notice is not permissible. Appeal allowed - decided in favor of appellant. 2019 (4) TMI 171 Interest on differential duty under sub-section (2B) of Section 11A of Central Excise Act, 1944 - appellant paid the differential duty which arose due to enhancement of prices of motor vehicle parts cleared earlier and issued supplementary invoices of such differential duty - Held that:- It has been brought to the notice of the Bench that in similar circumstances this Tribunal has remanded the matter to the adjudicating authority to decide the issue on the basis of the outcome of the reference pending before the Larger Bench of Hon’ble Supreme Court - In such scenario, at this stage, it is prudent to remand the matter to the Adjudicating Authority to decide the issue of liability of interest on the differential duty paid subsequent to the revision of prices, on the basis of the outcome of the pending reference before the Larger Bench of Hon’ble Supreme Court. Appeal allowed by way of remand. 2019 (4) TMI 170 CENVAT Credit - input services - commission agent service utilized for its business - sales promotion activity or not - Held that:- Identical issue has been considered by this Tribunal in the case of BELOORBAYIR BIOTECH LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, BANGALORE [2018 (5) TMI 24 - CESTAT BANGALORE] and this Tribunal has allowed the appeal of the appellant by holding that The commission paid on sales becomes part of sales promotion resulting in increased manufacturing activity - credit cannot be denied - appeal allowed - decided in favor of appellant. 2019 (4) TMI 169 CENVAT Credit - common inputs / input services used both in the manufacture of dutiable products as well as exempted goods - non-maintenance of separate records - sub-rule (3) of Rule 6 of Cenvat Credit Rules, 2004 - Department was of the view that the appellants had not exercised option to pay proportionate credit on inputs / input services used in manufacture of exempted goods - Held that:- When the manufacturer is not maintaining separate accounts for the common inputs used for manufacture of exempted as well as dutiable products, they have to comply with the provisions under sub-rule 3 (i) or (ii) of Rule 6 of CCR 2004. Thus, if the assessee is intending to pay an amount equivalent to cenvat credit attributable to inputs and input services as per the Explanation I in the said rule, they have to exercise the option and such option will be applicable to all the exempted goods / services of the assessee. Whether the said option is procedural or mandatory? - Held that:- The Tribunal in the case of Mercedes Benz India (P) Ltd. [2015 (8) TMI 24 - CESTAT MUMBAI] had occasion to analyse the similar facts and held that the aid requirement of exercising the option is only a procedural one. The main intention of this provision of law contained in sub-rule 3 of Rule 6 is that the assessee, who is not able to maintain separate accounts for common inputs / input services used, shall not avail cenvat credit on the inputs / inputs services used in manufacture of exempted goods - In the present case, appellants have informed vide their letter dt. 20.07.2009 that they intend to reverse cenvat credit on monthly basis on the inputs / input services used for production of electricity that is wheeled out to TNEB. As per the Explanation I of the said rule, the said option once exercised would be applicable to all the exempted goods manufactured by the appellant. On such score, the letter given by the appellant would be sufficient intimation to the department that they intend to avail the option stated in sub-rule 3 (ii) of Rule 6 of CCR 2004. Time Limitation - Held that:- The SCN has been issued much later after two years on 22.5.2013 only. When the appellant has reversed the credit and intimated the department, the allegation that the appellant has suppressed the facts with intention to evade payment of duty / tax is unjustified - Appeal succeeds on limitation also. Demand do not sustain - appeal allowed - decided in favor of appellant. 2019 (4) TMI 168 CENVAT Credit - Valuation - removal of inputs as such - Windshieldd - Rule 8 of Central Excise Valuation Rules, 2000 - Held that:- The fact of the appellant having manufactured the goods for SGSIL under Notification No. 214/86 was evidently not brought to the knowledge of the adjudicating authority at any stage, at the same time, these facts had been informed by the appellant to the jurisdictional central excise officers earlier to the adjudication. In the circumstances, there is a case for remanding the matter so as to give the appellant one more opportunity to explain the matter before the adjudicating authority - appeal allowed by way of remand. 2019 (4) TMI 167 Rectification of mistake - mistake apparent on record or not - Held that:- In the case in hand, the case of the appellant is that while passing the order this Tribunal has not considered the correct facts of the case as per their written submissions, therefore, there is a mistake apparent on record while taking the decision, therefore, as written submission filed by the appellant, correct fact has not been recorded in the order passed by this Tribunal, therefore, it is a mistake apparent on record and required to be rectified. Although the appellant filed written submission on 06.11.2017 but the same has not been taken on record as not placed in the file before this Tribunal, in that circumstances, the written submissions filed by the appellant could not be considered, therefore, the applications for rectification of mistake allowed, in that circumstances, the matter is required to be re heard for recording the correct facts of the case and thereafter to take decision. The appeals are to be listed for reconsideration on 15.04.2019. 2019 (4) TMI 166 CENVAT Credit - ineligible credit or not - trading activity - time limitation - no suppression of facts - Held that:- The appellant has disclosed entire credit availed by them. The ST-3 returns also reflect these details. Therefore, the appellants cannot be saddled with guilt of intention to evade payment of tax. Further, an earlier show-cause notice has been issued invoking the extended period which overlaps with the period involved in the present show-cause notice. The Hon’ble Supreme Court in the case of M/s. Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA] has held that when all relevant entries were within the knowledge of department while which issuing the first show-cause notice, the second show-cause notice invoking extended period cannot sustain. The confirmation of demand or penalties or interest invoking the provisions not contained in the show-cause notice also cannot sustain - appeal allowed - decided in favor of appellant. 2019 (4) TMI 165 CENVAT Credit - inputs and capital goods used in R &D works - denial on the ground that R & D works is not related to manufacture - Held that:- For any manufacturer, R & D activity is indispensable part of the manufacturing activity. The manufacturer has to improve their finished products and also seek out new methods or process for manufacturing final product so as to make it commercially feasible and economically viable, and to improve the quality and marketability of the finished products. Therefore, the contention of the department that R & D activity is not connected to manufacturing activity in any manner is not tenable - Reliance also placed in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S TIMEX WATCHES LIMITED [2017 (11) TMI 1104 - ALLAHABAD HIGH COURT] - credit allowed - appeal allowed - decided in favor of appellant. 2019 (4) TMI 164 CENVAT Credit - closure of business - clearance of capital goods - Rule 3(5A) of Cenvat Credit Rules, 2004 - Held that:- The facts of the case are not in dispute that the appellant has taken over the unit on as is where is basis with the capital goods in question in 2001 and no Cenvat credit was taken at that time, as appellant has not taken cenvat credit on the capital goods, therefore, provision of Rule 3(5A) of Cenvat credit Rules, 2004 are not applicable to the facts of this case. The demand under Rule 3(5A) Cenvat credit Rules, 2004 is not sustainable against the appellant - appeal allowed - decided in favor of appellant. 2019 (4) TMI 163 Clandestine removal - shortage of goods - wire rods - demand on the ground that the consignments of the goods against which the appellant has availed credit were not found entered in the record of Information Collection Centres set up by the Punjab Govt. for transportation of the vehicles - Held that:- The main reason to issuance of the show cause notices to denial of the cenvat credit to the assessee is that the transport vehicles are not entered at ICCs, therefore, it was alleged that the assessee has not received the inputs. In some cases, suppliers have admitted that they have not supplied the goods. Moreover, some of the vehicles found non existence and not capable of transportation of goods are other than tankers. The credit sought to be denied on the basis of GRs issued by M/s.APPL, we find that as the transportation arranged by M/s.APPL i.e. M/s.Amrit Roadlines and the invoices bearing the same number, therefore, on this ground, the credit cannot be denied. In that circumstance, the assessee is required to be a chance to produce the invoices with supporting evidence for availment of credit. Appeal disposed off. 2019 (4) TMI 162 Change of Classification of goods - process amounting to manufacture or not - MRP based valuation u/s 4A - Held that:- The fact which has not been disputed by the appellant that the appellant is doing packing, repacking and affixing MRP on the spare parts received after manufacturing by the suppliers. In terms of Section 2(f) (iii) of Central Excise Act, 1944, the activity undertaken by the appellant amounts to manufacture, when the activity undertaken by the appellant amounts to manufacture, therefore, after manufacturing the goods which emerge to be classified. Therefore, it is not the question of change of classification of the goods. In fact, when the activity undertaken by the assessee amounts to manufacture then the goods are to be classified correctly as per Third Schedule. Therefore, the adjudicating authority has correctly re-classified the goods. The appellants are themselves are manufacturers and their goods are to be valued in terms of Section 4A of the Act - appeal dismissed - decided against appellant. 2019 (4) TMI 161 Area Based exemption - benefit of N/N. 50/03-CE dt.10.6.2003 - girder unit - new unit or Extension of existing unit? - it was alleged that the appellant did not itself consider the girder unit as a separate unit but merely an addition of plant and machinery to the already existing unit-II - benefit denied as the girder unit was not a new unit but an extension of the existing Unit-II, whose date of production continued to remain unchanged upto 30.8.2014. Held that:- On going through the said certificate, it is found that it has been certified that girder unit is separate and independent production line. Moreover the letter issued by the Superintendent is also more relevant to the facts of this case and shows that on physical verification of the unit, they came to conclusion that girder unit is an independent and separate unit. In that circumstance, the notification is relevant to deal with the situation. Admittedly, the girder unit is a separate and independent unit and the finding of the Commissioner is contrary to the certificate issued by the DIC office as well as physical verification report submitted by the Superintendent, Kala Amb, Central Excise. As the adjudicating authority misinterpreted the certificate issued by the DIC office, District Sirmour, therefore, the whole of the finding of the adjudicating authority has gone wrong, in that circumstance, the impugned order deserves no merit. It has also been held in various decisions of this Tribunal that although there is one factory which could have different unit of the different unit and to be treated as separate unit - Therefore, the girder unit is a separate and independent unit which is capable of manufacturing the MS girder of their own shall be treated new industrial unit which is eligible for exemption under N/N. 50/03-CE dt.10.6.2003 which started their production from 20.03.2010. Therefore, the same is eligible for benefit of exemption notification for clearance of their goods without payment of duty till 19.03.2020. The appellant is entitled to area based exemption under N/N. 50/03-CE dt.10.6.2003 for their girder unit i.e. unit-II till 19.03.2020 - Appeal allowed - decided in favor of appellant. 2019 (4) TMI 160 Process amounting to manufacture or not - trading of parts of earthmoving equipment/excavators and receive parts in bulk and sell them after consolidation by putting in polythene bags/wooden boxes/gunny bags as the case may be without any labeling etc. - case of Revenue is that the activity of packing/re-packing by the appellant amounts to manufacture in terms of Section 2(f)(iii) of the Act, therefore, they are liable to pay duty on their activity - extended period of limitation. Held that:- In this case, the facts of the case are not in dispute that the appellant is a trader and receiving the parts in bulk and sell them after consolidation by putting in polythene bags/wooden boxes/gunny bags as per the requirement of the buyers - the activity of packing/re-packing of the goods in a unit container amounts to manufacture. On going through the process undertaken by the appellant, we find that the appellant is not putting this packing/packed goods in a unit container. In fact, the appellant is packing the goods a bigger carton/gunny bags for ease of transportation to the place of the buyers and the buyers are selling these parts separately without any packing done by the appellant to the ultimate customers - the appellant is engaged in the activity of packing/re-packing of the parts/components of earthmoving equipments falling under Tariff 84264100, 8427, 8429 and 843010 of the First Schedule to the Central Excise Tariff Act, 1985, which has been put at Sl. No. 108 amending the Notification No. 49/2008-CE(NT) dt. 24.12.2008 under Section 4A as notified the items for the purpose of MRP valuation. However, these items were not brought under the ambit of Section 2(f)(iii) of the Act fiction of manufacture, it was only brought in the Finance Act, 2011 with retrospective effect under Section 73 of the said Act w.e.f. 29.04.2010 i.e. at par with amendment to Notification issued under Section 4A of the Act. Extended period of limitation - Held that:- Prior to 28.05.2012, there was no deeming provision to demand duty under Section 2(f)(iii) of the Central Excise Act, 1944 and the introduction of such amendment which was made effective retrospective, the extended period of limitation is not invokable for issuance of the show cause notice as there is no allegation to invoke extended period of limitation such as fraud, collusion, willful mis-statement, suppression of facts or intent to evade duty under Central Excise Act/Rules. Admittedly, whole of the demand in this case has been confirmed by invoking extended period of limitation, therefore, the extended period of limitation is not invokable in the facts and circumstances of the case. The demand against the appellant is not sustainable - appeal allowed - decided in favor of appellant. 2019 (4) TMI 159 SSI Exemption - job-work - use of brand name - it was alleged that the brand name belongs to third party i.e. M/s Luk India Ltd. - whether these assemblies were having embossed brand name LUK thereon or not? - Held that:- There is no evidence available on record to show that the job workers in question are manufacturing LUK brand, Clutch assembles. In that circumstances, demand against the manufacturers are not sustainable - Moreover, the packing activity has been undertaken on job works who were packing these assemblies in the Polythene boxes branded by M/s Luk India Ltd. Merely, packing of these assemblies does not amount to manufacture as there was no deeming provision during the relevant time. The appellants are not manufacturing the goods having brand name of third party. Therefore, the allegation against the appellants is not sustainable in the absence of any cogent evidence. The appellants are entitled for exemption under Notification No. 8/2003 dated 01.03.2003 and no demand is sustainable against them - penalties also not sustainable - appeal allowed - decided in favor of appellant. 2019 (4) TMI 158 CENVAT Credit - input services - cleaning service - maintenance and repair services - expenditure for works in residence of director was rendered in the factory or its property - Held that:- Each of those services are in conformity with the definition of inputs in rule 2(l) of CENVAT Credit Rules 2004 - credit allowed - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (4) TMI 157 Exemption u/s 4-A of the U.P. Trade Tax Act, 1948 - negligibility of machines as regards total investments made - no inquiry was conducted by the Tribunal before passing the final order - principles of natural justice - Held that:- The impugned judgment upheld - SLP dismissed. 2019 (4) TMI 156 Classification of goods - Whether portable hand held electronic ticketing machine is an IT produce and falls under heading and sub-heading No.8471 to be eligible for tax at 4% or under sub-heading No 8470 attracted tax rate at 12.5% - Held that:- The impugned judgment and order passed by the High Court is upheld - SLP dismissed. Indian Laws 2019 (4) TMI 155 Doctrine of promissory estoppel - Handing over possession of a Row House to the respondent - whether the buyer was entitled to seek a refund or was estopped from doing so, having claimed compensation as the primary relief in the consumer complaint? Held that:- The Buyer’s Agreement is dated 2 July 2007. In terms of the agreement, the date for handing over possession was 31 December 2008, with a grace period of six months. Even in 2011, when the buyer filed a consumer complaint, he was ready and willing to accept possession. It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund - the orders passed by the SCDRC and by the NCDRC for refund of moneys were justified. 2019 (4) TMI 154 Dishonor of cheque - insufficiency of funds - repayment of borrowed amount - Section 138 of NI Act - existence of legally enforceable debt or not - rebuttal of presumption - preponderance of probabilities - Held that:- Section 139 of the Act mandates that it shall be presumed, unless the contrary is proved, that the holder of a cheque received it, in discharge, in whole or in part, of a debt, or liability. The expression unless the contrary is proved indicates that the presumption under Section 139 of the Act is rebuttable. Terming this as an example of a reverse onus clause the three Judge Bench of this Court in Rangappa [2010 (5) TMI 391 - SUPREME COURT OF INDIA] held that in determining whether the presumption has been rebutted, the test of proportionality must guide the determination. The standard of proof for rebuttal of the presumption under Section 139 of the Act is guided by a preponderance of probabilities. The first appellate court held that the presumption under Section 139 of the Act stood rebutted and that the defence stood probabalised. From the judgment of the High Court, the significant aspect of the case which stands out is that there has been no appreciation of the evidence or even a reference to the reasons furnished by the first appellate court. Having regard to the law laid down by the three Judge Bench in Rangappa (supra) the appellant duly rebutted the presumption under Section 139 of the Act. His defence that there was an absence of a legally enforceable debt was rendered probable on the basis of the material on record. Consequently, the order of acquittal passed by the first appellate court was justified - Appeal allowed - decided in favor of appellant. 2019 (4) TMI 153 Dishonor of Cheque - insufficiency of funds - Section 138 of Negotiable Instruments Act - presumption under Section 118(a) and Section 139 Negotiable Instrument Act, 1881 was fulfilled - Held that:- The coordinate Bench of this Court has clearly held by its judgment M/S. SONI IMPEX VERSUS M/S. TAURAIN OVERSEAS & ANR [2015 (2) TMI 1304 - DELHI HIGH COURT] that the petitioner has been able to rebut the presumption and the respondent has failed to establish beyond reasonable doubt its case. This judgment of the coordinate Bench of this Court was not brought to the notice of the Appellate Court when it was hearing the arguments in this matter. Accordingly, the impugned judgment was passed. It is an admitted position that the respondent No.1 did not assail the order of the Coordinate Bench of this Court dated 04.02.2015, wherein, the findings, as noticed above, have been recorded. In that view of the matter, I am of the view that the impugned order cannot be sustained. Accordingly, the impugned order dated 09.12.2015 is quashed. Petitioner is acquitted of the said offence - the amount deposited by the petitioner with the Appellate Court as also with this Court shall be returned to the petitioner along with interest, if any accrued thereon. Petition allowed.
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