Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 4, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Disallowance u/s 43B - property tax levied by the Municipal Authority is a charge on the property. Undisputedly, the licensor is the owner of the property, hence, liable to pay the property tax. That being the case, the amount equivalent to the property tax reimbursed to the licensor cannot be treated as rate, tax, fee, cess, etc., as provided u/s 43B(a) - Therefore, the disallowance made has to be deleted.
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Disallowance of business expenses - The expenditure is allowed as deduction only if it has been incurred for the purpose of business, payment by way of account payee cheques and deduction of TDS does not prove that the expenses had been incurred for the purposes of business
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Addition u/s 68 - Unexplained source of the bank deposits - it was incumbent upon the assessee to cogently rebut that assessee has not received any sums abroad for services rendered in India which could have been transferred from abroad in his Indian account through these concerns. The sole reliance upon the FIRC which is only a certificate of remittance from abroad in absence of the overwhelming surrounding circumstances by the learned CIT appeals not at all sustainable.
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Penalty u/s 271(1)(c) - disallowance of provisions for doubtful debts - Once the assessee has produced and disclosed all the relevant facts then mere disallowance of claim by the AO on the ground that the same is not allowable as per provisions of the Income Tax would not lead to the conclusion that the assessee has furnished the inaccurate particulars of income or concealed the particulars of income.
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Penalty u/s 271(1)(c) - dditional income while filing return as part of search proceedings - As such the income disclosed by the assessee was voluntarily without having found any document in the course of search. We also note that there no reference made by the authorities below to the documents of incriminating nature having bearing on the income of the assessee in their respective orders. - No penalty.
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Reopening of assessment u/s 147- non-issue of notice u/s. 143(2) - Non filing of ITR within thirty days after issue of notice u/s. 148 - though the assessee did not file the return of income within the specified time given by AO, the assessee had filed the return of income before the reassessment was framed. - So, on a con-joint reading of section 148(1) with sec. 139(4) and section 144 makes it abundantly clear that pursuant to a notice u/s. 148 of the Act, if an assessee files belatedly a return or a letter reiterating his earlier return then the AO is bound to issue notice u/s. 143(2) of the Act, if he has to frame re-assessment order u/s 143(3)/144 of the Act.
Customs
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Measure to facilitate trade during the lockdown period - section 143AA of the Customs Act, 1962 - Circular
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Invitation of applications for empanelment of Chartered Engineers for examination/ valuation of second/ old and used machinery/goods etc in the jurisdiction of Air Cargo Complex (Import), Mumbai Customs Zone-Ill - Trade Notice
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Customs clearance at Ports/ Dry ports for Cargo Movement and Trade Facilitation on account of Covid-19 virus - Trade Notice
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Preventive measures to be taken to contains the spread of Novel Coronavirus (COVID-19) - Trade Notice
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Advance authorization - extension of time for fulfilment of export obligation - The second respondent Joint Director General of Foreign Trade is directed to allow extension of appropriate period under paragraph 4.42 of the Handbook of Procedures upon charging of composition fee as applicable either under clause (b) or clause (c), as the case may be
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Refund of terminal excise duty (TED) - international competitive bidding - Deemed Exports - There are several situation were duel reliefs are extended to an assessee, both of an exemption as well as of refund. In a case where both reliefs are available, the option to select the relief of its choice vests with the assessee.
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Penalty u/s 114 of CA - Smuggling - Red Sanders - prohibited goods -The entire case made out only on the basis of statements which we held that the same do not have evidentiary value. The Revenue could not establish a case of attempt to export the prohibited goods. Therefore entire action is illegal and without authority of law
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Amendment in shipping bills u/s 149 of the Customs Act 1962 - the amendment sought by the appellant in the shipping bills of entry was liable to be allowed since only a declaration was sought by the Appellant that rebate should be granted by refund of service tax paid on the specified services under paragraph 2 of the notification
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Revocation of custom broker license / CB License - The allegation that the appellant did not demonstrate the desired level of diligence and efficiency is too vague, and lacking in objectivity, for ascertainment without specificity. Moreover, neither the Inquiry Authority nor the Commissioner of Customs had taken it up on themselves to scrutinize the documentary and oral evidence for arriving at such a conclusion.
DGFT
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Acceptance of scanned copies of pre-registration application and other documents by Local Users for REG under the European Union's Generalised System of Preferences (EUGSP) - Trade Notice
Service Tax
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A demand of service tax under a particular category could not have been confirmed under a different category - the demand of service tax could not have been confirmed under “works contract” when the show cause notice was issued under “construction of complex services”.
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Refund of service tax - SEZ unit - Time limitation - ab initio exemption provided under the SEZ provisions, having over riding effect on the service tax provision. Under such position of law, a notification under service tax cannot restrict or provide a time limit for grant of refund to the SEZ unit and developer.
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Business Auxiliary Services - After sale service was agreed to be provided by MAN Germany on its own account. The discount that is being offered by the Appellant to MAN Germany is merely an adjustment in the price of goods sold and is not towards provision of any service to be undertaken by MAN Germany on behalf of the Appellant. The service provided by MAN Germany would, therefore, not classify as BAS.
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Short payment of service tax - Difference in receipts between ST-3 return and Form-26AS (TDS certificate) - It is established principle of law that the turnover figures cannot be rejected without any cogent reason and/or specific discrepancy pointed out. In absence of any specific discrepancy or allegation, the demand of service tax short paid on account of renting of immovable property services, is not tenable.
Central Excise
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The show cause notice which was issued on altogether different grounds than involved in the present proceedings was no bar to issue another show cause notice under extended period of limitation - The appellant could not show that he had any bonafide belief while not paying the proper excise duty on extra charges collected from the buyers or taking an inadmissible credit - Demand with interest and penalty upheld.
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CENVAT Credit - input services - GTA service - Admittedly, services of GTA and Manpower Supply Agency Service have been received only for the sake of accounting at Head Office, there can be no disallowance.
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CENVAT Credit - Rule 9(1)(bb) - duty paying invoices - it is clear that the department has accepted that there is no suppression of facts. To establish suppression of fact, there is no option for the department except to issue a SCN and adjudicate the matter, therefore, at the appellants end on availment of cenvat credit and the suppression of facts on the service provider can neither be alleged nor can be decided, therefore, Rule 9(1)(bb) is not applicable.
VAT
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Levy of penalty - It is not actual evasion of tax as contemplated in the books, but it is an attempt. Probably it might be an omission. But as far as the Department is concerned, the reasonable view that the Department could take is that there is an attempt to evade tax. - Levy of penalty confirmied equal to the amount of tax.
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Deletion of interest on tax by the Tribunal - the Tribunal has wrongly granted relief to the assessee by deleting interest. After rejection of Form 3-b the amount of interest levied on admitted tax was liable to be paid by the assessee and the order of the Assessing Officer in this regard is in conformity with the statutory schemes.
Case Laws:
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GST
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2020 (4) TMI 100
Whether the petitioner, Vardaan Trade Link Pvt. Ltd., has been granted the opportunity of filing G.S.T. TRAN-1 form either by reopening of the portal or manually? - HELD THAT:- Revenue submits that the petitioner has been allowed to file his G.S.T. TRAN-1 form during the pendency of the writ petition. No further order is required to be passed - petition disposed off.
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Income Tax
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2020 (4) TMI 99
Disallowance of deduction u/s 80P - specific argument raised by learned counsel for the petitioner is that that the ratio of the decisions of the Division Bench should be applicable in the petitioners case to assessment for the present year as well - HELD THAT:- Though the Supreme Court in the case of Parashuram Pottery Works Co. Ltd. Vs Income Tax Officer [ 1976 (11) TMI 1 - SUPREME COURT] has stated that there should be a finality in matters of assessment and stale issues should not be reactivated beyond a particular stage, the learned Senior Standing Counsel points out that the orders of appellate authorities for previous years have not been challenged on account of the low monetary effect. In the light of the specific plea of the Standing Counsel to the effect that the issue is now being agitated further before the Supreme Court it is of the view that the matter should be permitted to reach its logical conclusion and should not be nipped at the bud, at the stage of assessment. This writ petition is dismissed though granting liberty to the petitioner to file a statutory first appeal within a period of three weeks from today. Let recovery of the demand not be enforced till disposal of the appeals by the Commissioner of Income Tax (Appeals). No costs.
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2020 (4) TMI 98
Disallowance u/s 43B - Amount been paid to the landlord towards reimbursement of property tax to be paid by the landlord / licensor on the property taken on lease by the assessee - HELD THAT:- On a perusal of the lease and license agreement it is seen that burden of paying the property tax is on the licensor. As per the mutual agreement between the parties, the licensee agreed to reimburse the property tax to the licensor save and except any late fee / charge for any statutory dues. Thus, as could be seen from the aforesaid terms of the agreement, the reimbursement of property tax by the assessee to the licensor is purely contractual and not a statutory liability. Even otherwise also, property tax levied by the Municipal Authority is a charge on the property. Undisputedly, the licensor is the owner of the property, hence, liable to pay the property tax. That being the case, the amount equivalent to the property tax reimbursed to the licensor cannot be treated as rate, tax, fee, cess, etc., as provided u/s 43B(a). Therefore, the disallowance made has to be deleted. - Decided in favour of assessee.
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2020 (4) TMI 97
Disallowance u/s 14A r.w. Rule 8D - Disallowance not exceeding the quantum of exempt income - HELD THAT:- In the case of CIT Vs. Corrtech Energy Ltd [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] has held that in the absence of any exempt income being claimed by the assessee provisions of section 14A r.w.r 8D could not be invoked. The rationale behind this judgment is that the amount of disallowance u/s 14A should not exceed the exempt income. The ld.AO was not justified in invoking provisions of section 14A of the Act in the present case. Moreover, the assessee has earned a small amount of ₹ 2,64,500/-, whereas the ld.AO has calculated a whopping sum of ₹ 7,72,41,277/- as proportionate expenditure for earning the exempt income. Even assuming that some expenditure is required to be disallowed but such disallowance should not exceed the quantum of exempt income. Therefore, we uphold order of the ld.CIT(A) on this issue, and dismiss the ground of appeal of the Revenue.
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2020 (4) TMI 96
Deduction u/s 80IC disallowed - Prohibited product manufactured - assessee is engaged in the business of manufacturing of pesticides which is prohibited item as per the Schedule XIII of the I.T. Act - CIT (A) held that the entry no. 15 of the part B of Schedule XIII includes insecticides, fungicides, herbicides and pesticides and since the assessee was manufacturing the article which is mentioned in the prohibited list, he was not entitled for deduction u/s 80I - HELD THAT:- The product manufactured by the assessee as per the license of manufacturing issued by the authorities is a Fungicide namely, Trichoderma Viride . This product of Fungicides is also a prohibited item covered under Item no. 15 of Schedule XIII part B of the I.T. Act. Thus, the ld. CIT (A) after examination of the certificates issued by SIIDC, UEPPCB, TNAU, AC Customs Central Excise, the product manufactured (Trichoderma Viride) and after examining whether this product is eligible or prohibited item, gave a categorical finding that the product manufactured by the assessee is a Fungicide which is a prohibited item for the claim of deduction and accordingly denied the deduction u/s 80IC. Having gone through the entire factum and the material on record, we find no good reason to interfere with the reasoned order of the ld. CIT (A). Disallowance of business expenses - AO held that the assessee has failed even to provide copies of the bills raised by this two parties - HELD THAT:- Both the agreements do not make any mention of the consideration to be paid for rendering the service mentioned in the contract. No contract can be complete without any consideration. Apparently, these two documents therefore are a facade created by the assessee to make the department believe that the payment of commission was genuine. The expenditure is allowed as deduction only if it has been incurred for the purpose of business, payment by way of account payee cheques and deduction of TDS does not prove that the expenses had been incurred for the purposes of business.- We find that the assessee has failed to substantiate the business expenditure as provided u/s 37(1) of the Act. Hence, we decline to interfere with the order of the ld. CIT (A). - Decided against assessee.
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2020 (4) TMI 95
Addition u/s 68 - Unexplained source of the bank deposits of the assessee - assessee received his earnings from various consultancy work carried out in India, through his fully owned foreign companies, located outside India and brought the same earnings back in India - HELD THAT:- It is settled law from Hon ble Apex Court in the case of Sumati Dayal Vs. CIT [ 1995 (3) TMI 3 - SUPREME COURT] and CIT Vs. Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] that revenue authority are not to put on blinkers and ignore the overwhelming surrounding circumstances. CIT(A) s reliance upon the case laws and the circular is totally not applicable on the facts of the present case. The facts of the case prima facie indicate that assessee has received sums abroad from foreign concern on account of services rendered in India. In these circumstances it was incumbent upon the assessee to cogently rebut that assessee has not received any sums abroad for services rendered in India which could have been transferred from abroad in his Indian account through these concerns. The sole reliance upon the FIRC which is only a certificate of remittance from abroad in absence of the overwhelming surrounding circumstances by the learned CIT appeals not at all sustainable. Order of learned CIT(A) is to set aside the order of the assessing officer is to be restored. Accordingly we set aside order of learned CIT(appeals) and restore that on the assessing officer on the issue of credits in the bank account. As regards the investment in shares out of the said bank account the same cannot be added again as unexplained investment. It is settled law that assessee cannot be subject to double jeopardy. Hence qua the unexplained investment in shares the order of CIT(A) is upheld. - Revenues appeal stands partly allowed.
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2020 (4) TMI 94
Disallowance of interest payment - interest free advances given by the appellant company - whether appellant had advanced the loans and advances from its own funds and not out of the borrowed funds? - HELD THAT:- Loans and advances including interest free advances are far less than the own funds. And hence, the presumption that the own funds have been utilized for extending the loans and advances sets in. When the assessee has got own funds available at their disposal, no disallowance is called for as enunciated in various judgments. The decision in the case of Bright Enterprises Pvt. Ltd. Vs. CIT [ 2015 (11) TMI 342 - PUNJAB HARYANA HIGH COURT] it was held that if there are interest free funds available then it will be presumed that these have been made out of interest free funds. Similar view was held in the case of CIT Vs. Kapsons Associates Investment Pvt. Ltd. [ 2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT] as held that interest on investment in other properties not for business purpose cannot be disallowed if the assessee is having sufficient interest free funds at its disposal. Similar view was taken by the Hon'ble Supreme Court in the case of Hero Cycles Pvt. Ltd. [ 2015 (11) TMI 1314 - SUPREME COURT] held that no disallowance is called for if the assessee has got own surplus fund. Keeping in view the fact that the assessee has got sufficient own funds to extend the loans interest free, we hereby direct that the disallowance made under section 36(1)(iii) be deleted. - Decided in favour of assessee. Disallowance u/s 14A r.w.r 8D(2)(iii) - 0.5% has applied on the average investments - AR argued that earning dividends is not an assured activity, no business man will ever incur a recurring in anticipation of non-assured returns especially dividends - HELD THAT:- We hereby hold that the disallowance needs to be restricted to the dividend yielding investment only for the years involved. The Assessing Officer is hereby directed to re-compute the disallowance taking into consideration, the dividend yielding investments -The disallowance under Rule 8D(2)(iii) be restricted to dividend yielding investments to determine the average value of the investments. - Decided in favour of assessee.
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2020 (4) TMI 93
Revenue recognition - Interest against the advance made to SLCCL - whether compensation received from SICCL was in the nature of Interest against the advance made to SICCL and not in the nature of capital - HELD THAT:- Receipt of ₹ 35 crones is nothing but interest on money given to M/S Sahara India Commercial Corporation Ltd.[SICCL] - The appellant has furnished additional submission vide letter dated 02.01.2016 which is unsigned. Therefore, no cognizance is taken of this letter. Compensation received is of capital nature especially in view of the fact that ₹ 35 crores was received on 09.04.2007 merely five days after such and so called agreement was entered into. It is pertinent to note that principle amount of ₹ 400 crores was received on 25.05.2007. M/s Sahara India Commercial Corporation Ltd. itself had treated ₹ 35 crores as Interest only. The action of AO in taxing ₹ 3,33,00,000/- is confirmed. These grounds of appeal are dismissed. Treatment of interest earned as Income from other sources - During the course of appellate proceedings, the AR of the appellant filed written submission. I have considered the findings given by the AO and written submission filed by the AR of the appellant. The AO has added ₹ 3,33,00,000/- as income from other sources. The appellant has submitted that the learned AO has erred in treating the interest earned including proportionate compensation under the head income from other sources against the business income a claimed by the appellant. The learned AO has failed to appreciate the fact that the Interest of ₹ 1.69 crores was earned from the Inter Corporate Deposits made to Indus City Scapes Construction Pvt. Ltd. The AO observed that the appellant s income consists of rental Income and interest Income only. Therefore, the AO has correctly taxed ₹ 3,33,00,000/- under the head income from Other Sources . Addition u/s 40(a)(ia) - transaction was a colourable device to reduce taxable income - if at all the transaction was in accordance with commercial necessity, the expense was in the nature of interest expense and the assessee was liable to deduct TDS - HELD THAT:- As the parties themselves have not acted upon the terms and conditions as laid out in the said agreement, the appellant cannot now pleaded that other terms and conditions contained in this agreement be construed as not ambiguous. The action of Assessing Officer in adding as interest income is confirmed. This ground of appeal is dismissed. There is a difference between discount allowed and interest paid. In the case of the appellant as there was no purchase or delivery of goods or bills raised as held earlier, there cannot be any discount allowed. The amount of ₹ 7,82,68,493/- cannot be termed as discounting charges and is in the nature of interest paid on money borrowed wherein receivable from subsidiary company might have acted as security or a loan of ₹ 100 Cr. As interest is liable for TDS, the action of AO is adding u/s. 40(a)(ia) is confirmed. TP Adjustment - ALP of the service charges / commission on extending corporate guarantee to the AEs - HELD THAT:- ALP on corporate guarantee has already been examined by the jurisdictional bench of Chennai ITAT in the case of Redington India Ltd. v. JCIT [ 2014 (10) TMI 669 - ITAT CHENNAI] which was applied by the DRP in the assesses case itself , supra, we do not find any reason to interfere with the order of the DRP and hence the corresponding grounds of the Revenue are dismissed .
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2020 (4) TMI 92
Deduction u/s 80P - CIT(A) rejected the objections raised by the assessee and passed orders u/s 154 disallowing the claim of the assessee u/s 80P(2) - HELD THAT:- CIT(A) had initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Co-operative Banks and other Banks - Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income.
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2020 (4) TMI 91
Transfer pricing adjustment on account of AMP expenses - HELD THAT:- According to the Rule, under the PSM, combined net profit of the AEs arising from the international transaction has to be determined and thereafter, if incurrence of AMP expenses is to be considered from the value of such international transaction then the combined profit has to be determined from the value of such international transaction. No FAR analysis of AE has been carried out or even demonstrated that any kind of profit has been derived by the AE from the AMP expenses incurred in India. Otherwise also, the profit earned on account of AMP expenses incurred by the assessee by way of economic exploitation of the trademark/brand in India already stands captured in the profit and loss account for the assessee company and the same has duly offered to tax and hence there was no logic to compute or make any Transfer Pricing Adjustment on this score. As rightly observed by the Ld. DRP in its order these issues are covered in assessee s own case for the assessment year 2006-07 to 2013-14 [ 2018 (12) TMI 277 - ITAT DELHI] Subsidy from the Government of West Bengal received for setting up for a new project in West Bengal under the West Bengal incentive scheme 2000 and 2004 - Revenue or capital receipt - HELD THAT:- As decided in own case [ 2018 (12) TMI 277 - ITAT DELHI] merely because here in this case the quantification of subsidy was based on reimbursement of sales tax, it does not meant that it is a revenue receipt. This view now is well supported by the various decisions as noted above that character of subsidy in the hands of the assessee is the determinative factor having regard to the purpose for which subsidy was given. Accordingly, we hold that the subsidy received by the assessee from the subsidy received under the West Bengal Incentive Scheme of 2004 is capital in nature and cannot be taxed as revenue receipts. Thus, this issue is decided in favour of the assessee. Credit of TDS - assessee agitates that the actual credit of tax deducted at source to the tune of ₹ 5,31,70,455/-as claimed in the return of income for the assessment year 2015-16 should have been allowed, is a matter of verification and direct the Assessing Officer to verify the actual credit of tax deducted at source and allow the same - HELD THAT:- We do not find any justification to sustain the additions made by the learned Assessing Officer. We therefore, set aside the findings of the Ld. DRP and direct the Assessing Officer to delete the impugned additions.
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2020 (4) TMI 90
Addition u/s 68 on account of Share Application - onus to prove - HELD THAT:- In the present case the shareholder directors were existing and have also responded and participated in the reassessment proceedings initiated against them. They have admitted to them having invested in Share Capital of the assessee Company. Neither the AO of assessee company nor the AO of the Directors have alleged that the source of Share Capital was from assessee Company. None of them have doubted the FIRC s submitted by the assessee and the directors. The Assessee has filed all relevant evidences proving the identities and the credit worthiness of the Directors which also have not been doubted by the AO. AO has not appreciated that the return of income filed by the Directors will only include incomes from sources in India considering that their residential status is that of a Non-resident . Moreover, the CA certificate filed has also been rejected by the AO on whimsical grounds without bringing on record facts to objectively disbelieve the same. We also note that the ratio laid down by the Hon ble Apex Court in NRA s case (supra) on the contrary supports the case of assessee. In the present case, undisputedly, the enquiry conducted by the AO has not unearthed anything negative so as to disbelieve the evidences furnished by the assessee in support of genuineness, identity and credit worthiness of the shareholders directors. Under the circumstances, we are of the considered view that the order of the Ld CIT (A) is correct and needs no interference. Accordingly we dismiss the grounds raised by revenue by upholding the order of Ld CIT (A). - Decided against revenue.
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2020 (4) TMI 89
Penalty u/s 271 (1) (c) - CIT-A cancelling the penalty levied for disallowance of depreciation on non-existing assets AND disallowance of prior period expenses - HELD THAT:- Disallowances/ additions made by the AO in respect of depreciation on non-existing assets and prior period expenses were deleted by this Tribunal vide order dated 28-08-2017 in [ 2017 (9) TMI 649 - ITAT JAIPUR] . Thus the additions itself are not in existence then the penalty levied by the AO would not survive. The ld. DR has submitted that the Department has filed an appeal against the order of this Tribunal before the Hon'ble Jurisdictional High Court, however the findings of this Tribunal on these issues have not been disturbed by the Hon'ble Jurisdictional High Court till date. Therefore, in the facts and circumstances of the case when additions/ disallowances were deleted by this Tribunal then the penalty deleted by the ld. CIT(A) does not require any interference. Levy of penalty u/s 271(1)(c) on account of disallowance of provisions for doubtful debts - HELD THAT:- From the findings of the AO as well as Tribunal in the quantum proceedings, it is clear that it is not a case of furnishing inaccurate particulars of income or concealment of particulars of income but the claim of the assessee is regarding provision for bad and doubtful debts being outstanding dues from the electricity disconnection consumers. Once the assessee has produced and disclosed all the relevant facts then mere disallowance of claim by the AO on the ground that the same is not allowable as per provisions of the Income Tax would not lead to the conclusion that the assessee has furnished the inaccurate particulars of income or concealed the particulars of income. Accordingly, following the judgement in the case of CIT Vs. Reliance Petroproducts (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] the penalty levied by the AO against disallowance of claim of provision for bad and doubtful debts is deleted. - Decided in favour of assesse.
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2020 (4) TMI 88
Grant of recognition u/s 80 G denied - Assessee has obtained certification under section 12 a read with section 12 AA (1) (b) (i) of the act - HELD THAT:- Undisputedly, assessee has been granted registration under section 12AA of the Act, and that there is nothing on record brought out by authorities below, or Ld. CIT DR regarding violation of objects of Trust. Grant of approval/recognition under section 80 G of the Act, can act as catalyst to encourage prospective donors to look at intended activities/objects and possibly provide financial support through donations/contributions. In the facts of present case, assessee was holding valid registration under section 12 AA of the Act, as on date of impugned order, which conversely means that Ld. CIT (E) was satisfied with objects of assessee in not disputing the registration under section 12 AA. Reasons cited by Ld. CIT(E)(supra), are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee s application for recognition under section 80G. We also noticed that Ld. CIT(E) has not examined the application of assessee in terms of section 80 G (5) of the Act. Thus, respectfully following the view taken by M/S. INDIC SCIENCE RESEARCH TRUST VERSUS THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS) , BENGALURU. [ 2018 (7) TMI 1902 - ITAT BANGALORE] we remand the question of grant of approval under section 80 G (5) (vi) of the Act to Ld. CIT (E) for fresh consideration the light of decisions referred to herein above. Needless to say, that Ld. CIT(E) will afford proper opportunity of being heard to assessee in accordance with law. Grounds raised by assessee stands allowed for statistical purposes.
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2020 (4) TMI 87
Penalty u/s 271 (1)(c) - addition made on account of disclosure of additional income while filing return as part of search proceedings - HELD THAT:- As no search and survey has taken place at the premises of the assessee and assessee has voluntarily disclosed the income of the department. Thus, in such case, penalty cannot be imposed. In a recent decision of Supreme Court in the case of Rajkumar Gulab Badgujar [ 2019 (9) TMI 360 - SC ORDER] wherein it is held that wherein the returned income has been accepted u/s 153C and therefore, it is held that in such case, penalty cannot be imposed. Also in PARAG V. CHUGH VERSUS THE DCIT, CI RCLE 1, BARODA. [ 2019 (10) TMI 1240 - ITAT AHMEDABAD] there was no documentary evidence found by the search team suggesting that there was any undisclosed income of the assessee. As such the income disclosed by the assessee was voluntarily without having found any document in the course of search. We also note that there no reference made by the authorities below to the documents of incriminating nature having bearing on the income of the assessee in their respective orders. The ld. DR has not advanced any arguments against the contentions raised by the ld. AR for the assessee, thus we are not convinced with the penalty levied by the authorities below. - Decided in favour of assessee.
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2020 (4) TMI 86
Disallowance of depreciation u/s 32(1) r.w.s. 43(l) - assets of the demerged units included asset acquired out of Excise duty exemption (accounted as deferred government grants in the books of accounts) as per scheme of investment - excise refund being revenue receipt cannot be reduced from the cost of plant machinery - HELD THAT:- In view of the identical question of whether the receipt of excise refund is capital receipt or revenue receipt and whether same will go to reduce the actual cost of asset is involved in the year under consideration, and thus, respectfully following the finding of the Tribunal in [2018 (9) TMI 1791 - ITAT DELHI ] we uphold the finding of the Ld. CIT(A) on the issue in dispute. The grounds of the appeal raised by the Revenue in both assessment years are dismissed.
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2020 (4) TMI 85
Reopening of assessment u/s 147- non-issue of notice u/s. 143(2) - resort to Best Judgment Assessment - HELD THAT:- Taking into consideration the ratio decidendi laid by the Hon ble Supreme Court in Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] the Hon ble jurisdictional High Court and various other Hon ble High Courts that non-issue of notice u/s. 143(2) vitiates the very usurpation of jurisdiction to frame assessment order u/s. 143(3) of the Act, the Ld. CIT(A) taking note of the fact that AO has not issued notice u/s. 143(2) of the Act despite assessee filing the Return of income dated 20.11.2017 has found the usurpation of jurisdiction by AO to be bad in law and consequently quashed the same after taking note of the remand report filed by the AO which is reproduced for easy reference. Main reason the AO states regarding non-issue of notice u/s. 143(2) of the Act was the omission on the part of the assessee to file return of income within thirty days after issue of notice u/s. 148 - Clause (a) and (b) of sub-section (1) of section 144 is not applicable to the f acts of the case as discussed after going through the remand report of the AO. So coming to clause (c), we note that if the assessee has filed the return, and thereafter assessee fails to comply with all the terms of a notice issued under sub-section (2) of section 143, then AO can resort to Best Judgment Assessment. Here in this case the assessee had filed return of income before the AO on 21.09.2017 and 20.11.2017, therefore, as per clause (c) the AO was duty bound to give the mandatory notice u/s. 143(2) and in case if the assessee failed to comply with all the terms of the notice issued u/s. 143(2) then only he could have resorted to Best Judgment Assessment u/s. 144 of the Act. When the assessee receives a notice u/s. 148, he is required to file a return of income within the time specified by the AO in that notice; and once the assessee files the return of income pursuant to notice u/s. 148, the return will be treated as a return u/s. 139 and the provision of section 139 so far as may be applicable would apply. In the present case though the assessee did not file the return of income within the specified time given by AO, the assessee had filed the return of income on 21.09.2017 and on 20.11.2017 before the reassessment was framed on 22.12.2017. So, on a con-joint reading of section 148(1) with sec. 139(4) and section 144 makes it abundantly clear that pursuant to a notice u/s. 148 of the Act, if an assessee files belatedly a return or a letter reiterating his earlier return then the AO is bound to issue notice u/s. 143(2) of the Act, if he has to frame re-assessment order u/s 143(3)/144 of the Act. Therefore, the contention raised by the Ld. CIT, DR and reasoning given by AO cannot be countenanced. Since, it is not the case of the AO/Ld. CIT, DR, that assessee has not filed return of income pursuant to notice u/s. 148 of the Act, and when the fact was that assessee had filed return of income, the AO in order to successfully usurp the jurisdiction to frame assessment had to issue notice u/s. 143(2) which was a jurisdictional notice and mandatory for framing of assessment order u/s. 143(3) or u/s. 144 of the Act as discussed. - Decided against revenue.
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Customs
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2020 (4) TMI 84
Advance authorization - extension of time for fulfilment of export obligation - It is the case of the petitioners that they have fulfilled the export obligations for both the authorizations in terms of quantity as well as in terms of F.O.B. value. However, the petitioners have taken a little more time over and above six months allowed by this court for fulfillment of export obligations for one of the authorizations. HELD THAT:- It is evident that the petitioners have fulfilled the export obligation under the advance authorisations; however, in case of Authorisation No.0810090670 there has been a delay of two months and one day in fulfilling the export obligation. From the averments made in the memorandum of application as referred to hereinabove, this court is of the considered view that sufficient cause has been shown by the petitioners for not fulfilling the export obligation within the time specified by this court. There is an enabling provision which permits the regional authority to extend the export obligation period in the two contingencies as provided under clause (b) and clause (c) of para 4.42 of the Handbook of Procedures; however, in the facts of the present case in view of the fact that the Joint Director General of Foreign Trade has allowed substitution of name of the new entity and its IEC number with extension of export obligation period by six months under the directions of this court, it is not possible for him to extend such period on his own at the request of the petitioners. It is in these circumstances, that though the power of extension is vested in the regional authority, he may not be in a position to exercise such power unless permitted by this court. Therefore, it would be necessary for this court to issue appropriate directions to the concerned authority. The second respondent Joint Director General of Foreign Trade is directed to allow extension of appropriate period under paragraph 4.42 of the Handbook of Procedures upon charging of composition fee as applicable either under clause (b) or clause (c), as the case may be, and intimate the petitioners about the amount payable by them. Upon such intimation being received, the petitioners shall deposit such amount of composition fee within ten days of receipt of such communication - Application allowed.
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2020 (4) TMI 83
Maintainability of petition - alternative statutory remedy - Refund of terminal excise duty - international competitive bidding - Deemed Exports - rejection of claim on the ground that the commodity in question is entitled for exemption from duty, and thus only an exemption may be claimed and not the relief of refund - HELD THAT:- There are several situation were duel reliefs are extended to an assessee, both of an exemption as well as of refund. In a case where both reliefs are available, the option to select the relief of its choice vests with the assessee. Maintainability of petition - Revenue also argues that that the writ petition is not maintainable in the light of the fact that the impugned order is subject to a revision in terms of Regulation 16 of the Foreign Trade (Development and Regulation Act) 1992 - HELD THAT:- Since the issue arising for consideration is squarely covered by the judgment of M/S. LENOVO (INDIA) PVT. LTD. VERSUS UNION OF INDIA, THE DIRECTOR GENERAL OF FOREIGN TRADE, THE JOINT DIRECTOR OF FOREIGN TRADE, THE COMMISSIONER OF CENTRAL EXCISE [ 2016 (11) TMI 623 - MADRAS HIGH COURT ] where it was held that respondent is directed to process the refund claim in accordance with 2009 Policy, by taking into consideration the petitioner's refund Application and pass appropriate orders, within a period of three months - there are no reason to relegate the petitioner to alternate statutory remedy. Petition allowed - decided in favor of petitioner.
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2020 (4) TMI 82
Penalty u/s 114 of CA - Smuggling - Red Sanders - prohibited goods - demand based on various statements - retraction of statements - confiscation of Red Sanders as well as cash - HELD THAT:- The entire case against the appellant was made out by the department on the charge that the appellant have attempted to export the prohibited goods namely Red Sanders which were kept in the premises of the appellant. For making such charge the revenue has heavily relied upon various statements of various persons - it is found that almost all the statements were retracted in writing. Most of the statements recorded under section 108 of Customs Act, 1962 were retracted. The appellant despite the fact that the statements were retracted also requested for cross-examination of the persons whose statements were relied upon under section 138(B), however, the Learned Adjudicating Authority has not acceded to the request of the appellant and rejected the Cross-examination. It is a settled law that even any statement the Adjudicating Authority, intend to rely upon and the same is disputed by the person against whom the said statement is likely to be used, it is necessary for the Adjudicating Authority to grant the cross examination of such witnesses in terms of section 138(B) of the Customs Act, 1962. From the reading of the above section 138(B) it clearly comes out that even without asking for cross examination it is incumbent on the Adjudicating Authority to examine the witness before relying upon his statement for the Adjudication process. Therefore, in the present case in one hand most of the statements were retracted and over and above the appellant requested for cross examination. The Adjudicating Authority is duty bound under the statute to grant the cross examination. In absence of cross examination of the witnesses the statements given by them has no evidentiary value and same cannot be relied upon against the appellant. When the appellant sought for cross examination of the witness and if the request is not acceded to the adjudicating authority should not have relied upon the statements of such witness. The appellants case is on better footing as their request for cross examination is reinforced with the retraction of the most of the statements, therefore, since the adjudicating authority has not granted the cross examination, all the statements have no evidentiary value and case could have been decided without the support of such statements - In the present case except statements there is no evidence to show that the goods allegedly kept with intention to attempt the export thereof. No peace of document which show that the red senders stored were meant for export it is undisputed fact that the appellant is a licensed trader of red senders who purchase the red senders in Government auction and trade within the country, therefore, by any stretch of imagination it cannot be construed that the goods laying with the appellant were attempted to the export. The entire case made out only on the basis of statements which we held that the same do not have evidentiary value. The Revenue could not establish a case of attempt to export the prohibited goods. Therefore entire action is illegal and without authority of law - the confiscation of red senders, cash seized during the investigation are not sustainable - penalties also set aside - appeal allowed - decided in favor of appellant.
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2020 (4) TMI 81
Amendment in shipping bills u/s 149 of the Customs Act 1962 - rejection for the reason that documentary evidence should have been made available at the time of export - HELD THAT:- A perusal of the notification dated 29 June, 2012 clearly indicates that the Central Government had granted rebate of service tax on the taxable service received by the exporter of goods and used for export of goods subject to the extent and manner specified in the notification. The notification provides that the rebate shall be granted by way of refund of service tax and that the rebate shall be claimed either on the basis of the rates specified in the Schedule of rates as per the procedure specified in paragraph 2 of the notification or on the basis of documents as per the procedure specified in paragraph 3 of the notification - In the instant case the Appellant had sought amendment in the shipping bills by claiming rebate on the basis of rates specified in the Schedule as provided for in paragraph 2 of the notification and not on the basis of paragraph 3 of the notification, for which documents were required to be produced. The Commissioner (Appeals) completely failed to distinguish the requirements of paragraph 2 of the notification and paragraph 3 of the notification. The documents which the Commissioner (Appeals) sought from the Appellant are in relation to the requirements of paragraph 3 of the notification and in fact even the information sought in the format is a format contemplated in paragraph 3 of the notification. Paragraph 2 of the notification required a declaration to be made in the shipping bills regarding the intention to claim rebate either under paragraph 2 or paragraph 3 of the notification. The appellant had not indicated the said declaration and it is this declaration that was sought to be submitted in the shipping bills through the amendment sought by the Appellant. Neither the Adjudicating Authority nor the Commissioner (Appeals) have mentioned about any requirement of paragraph 2 of the notification not having been met by the Appellant. It is, therefore, clear from the nature of the amendment that was sought by the Appellant in the Bills of entry and also from the provisions of section 149 of the Customs Act and the notification dated 29 June, 2012 that the amendment sought by the appellant in the shipping bills of entry was liable to be allowed since only a declaration was sought by the Appellant that rebate should be granted by refund of service tax paid on the specified services under paragraph 2 of the notification - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 80
Revocation of custom broker license / CB License - charges leveled against the appellant are that the mandated advise was not forthcoming, that the appellant had filed the bill of entry without insisting upon the various prescribed clearances and that speed and efficiency, prescribed by the regulations, was also lacking - HELD THAT:- It is seen from a perusal of the Regulations that the role of the customs broker is to act as an agent and to file the necessary papers for facilitating clearance. Regulation 10 imposes certain obligations on such customs brokers. The Regulation pertaining to rendering of proper advise has been wrongly held to have been breached as the Inquiry Report, along with various evidences, point out that such advise was indeed furnished to the importers; the non-compliance with such advise on the part of the importer did not, of itself, suffice for the customs broker to desist from acting for the importer - It is not prescribed in any part of the statute, or regulations framed there-under, that these documents were required to be filed along with the bill of entry. Admittedly, they were not; but such deficiency was not illegal and could have been rectified before out of charge was granted. The allegation that the appellant did not demonstrate the desired level of diligence and efficiency is too vague, and lacking in objectivity, for ascertainment without specificity. Moreover, neither the Inquiry Authority nor the Commissioner of Customs had taken it up on themselves to scrutinize the documentary and oral evidence for arriving at such a conclusion. Above all, we are concerned that such proceedings should comply strictly within the time-lines prescribed in law. The failure to do so casts a taint on the proceedings as one that was either not motivated by public interest or lacking gravitas expected when depriving a customs broker of the means of livelihood. The time lines prescribed in Regulation, 17 of Customs Broker Licensing Regulations, 2018 appear to have been complied with in its breach. This is not consistent with the mandated prescription in the Regulations. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2020 (4) TMI 79
Withdrawal of application - constitution of committee of creditors or not - Interim Resolution Professional did not appear even on issuance of SCN - HELD THAT:- In exercise of the powers conferred under rule 11 of the National Company Law Appellate Tribunal Rules, 2016, we set aside the impugned order dated October 1, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench in KETKI SHAH TALATI FINANCIAL CREDITOR VERSUS KASATA HOMETECH (INDIA) PRIVATE LIMITED [ 2019 (10) TMI 1263 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI] and dispose of the application under section 7 filed by Ketki Shah Talati as withdrawn - The appellant-Kasata Hometech (India) P. Ltd. (corporate debtor) is released from the rigour of corporate insolvency resolution process . The interim resolution professional will handover the assets and records to the promoter/director of the corporate debtor immediately. The case is remitted to the Adjudicating Authority to decide only the corporate insolvency resolution process cost, which includes fee of the interim resolution professional and cost incurred by him, which is to be paid by the appellant within 15 days from the date of such order by the Adjudicating Authority.
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Service Tax
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2020 (4) TMI 78
Validity of SCN - demand confirmed under Construction of complex service whereas the nature of activity carried out by the appellant was in the nature of works contract - Nature of advance receipt - HELD THAT:- It was not permissible for the Revenue to issue a notice demanding service tax under construction of complex services as defined under section 65 (105) (zzzh) of the Finance Act, 1994 when the nature of activity was of works contract - a demand of service tax under a particular category could not have been confirmed under a different category - the demand of service tax could not have been confirmed under works contract when the show cause notice was issued under construction of complex services . Benefit of advances from the taxable values of service tax - rejection for the reason that the taxable value of service provided by the party did not tally with the balance sheet figures and, therefore, service tax liability was required to be calculated as per the balance sheet figures available on record - HELD THAT:- No reason has been assigned by the Principal Commissioner as to why the certificate of the Chartered Accountant was not accepted. It is clear that instead of considering the actual advances received during a particular year, the Principal Commissioner has computed taxable value on the closing balance of advances as appearing in the balance sheets. Learned Representative for the assessee has stated that under this head excess demand of ₹ 3,49,553/- due to inclusion of advances has to be set aside and, therefore, the rest of the demand of ₹ 8,69,022/- can be confirmed. There are force in the contention of the learned Representative of the assessee. The excess demand of ₹ 3,49,553/- due to inclusion of advances is set aside. Appeal allowed in part.
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2020 (4) TMI 77
Refund of service tax - SEZ unit - Time limitation - Exemption from payment of service tax under Section 26 (1)(e) read with 51 of SEZ Act, 2005 - appellant-assessee a developer in the SEZ - HELD THAT:- Relying on the precedent decisions of this Tribunal, particularly in the case of M/S. INTAS PHARMA LIMITED VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD [ 2013 (7) TMI 703 - CESTAT AHMEDABAD] , It is held that the ab initio exemption provided under the SEZ provisions, having over riding effect on the service tax provision. Under such position of law, a notification under service tax cannot restrict or provide a time limit for grant of refund to the SEZ unit and developer. Accordingly, impugned orders are set aside and appeals are allowed. The adjudicating authority are directed to grant the refund within a period of 45 days from the date of receipt of this order alongwith interest - appeal allowed.
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2020 (4) TMI 76
Business Auxiliary Services - demand for the period April 2009 to June 2012 confirmed for the reason MAN Germany was rendering BAS to the Appellant by providing after sale services to the customers of vehicles on behalf of the Appellant - HELD THAT:- The role of the Appellant assigned under the Agreement was limited to sale of trucks including spare parts. Article 9.2 clearly provides that the Appellant shall not be responsible for rendering any after sale services and that MAN Germany shall arrange for such services as may be required by its marketing organizations or its designated buyers. Article 9.5 basically provides that as MAN Germany has to provide warranty and after sale service, the Appellant shall allow a discount of Euros 500 on the product sold by the Appellant to MAN Germany. This does not in any manner mean that MAN Germany was rendering after sale service on behalf of the Appellant. In fact, the agreement is to the contrary. It provides that the Appellant shall not be responsible for rendering any after sale service. In such a situation, it cannot be said, under any circumstances, that MAN Germany was providing after sale service on behalf of the Appellant. After sale service was agreed to be provided by MAN Germany on its own account. The discount that is being offered by the Appellant to MAN Germany is merely an adjustment in the price of goods sold and is not towards provision of any service to be undertaken by MAN Germany on behalf of the Appellant. The service provided by MAN Germany would, therefore, not classify as BAS. The confirmation of demand, therefore, for the period 1 April, 2009 to 30 June, 2012 cannot be sustained - Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 75
Short payment of service tax - renting of immovable property service - Difference in receipts between ST-3 return and Form-26AS (TDS certificate) - HELD THAT:- There is no allegation in the show cause notice that the appellant has filed incorrect returns (Form ST-3) or have maintained improper account nor any discrepancy is pointed out in their accounts. Further, the account of the appellant are also subject to audit under the provisions of Section 44AB of the Income Tax Act read with Rules thereunder. The copy of the audit report are annexed with the appeal memo. It is established principle of law that the turnover figures cannot be rejected without any cogent reason and/or specific discrepancy pointed out. In absence of any specific discrepancy or allegation, the demand of service tax short paid on account of renting of immovable property services, is not tenable - Penalties also set aside. Appeal allowed - decided in favor of appellant.
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Central Excise
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2020 (4) TMI 73
Extended period of limitation - imposition of penalty - Non inclusion of value of Hummali/ Tulaicharges in the assessable value - Non inclusion of amount charged on the basis of debit notes in the assessable value - Cenvat credit of Customs Education cess and Customs Secondary Higher Education Cess - Cenvat Credit on outward freight - Cenvat Credit on invoice after six months of the issue of invoice. Cenvat credit - freight from the factory to the buyers premises for F.O.R. supply - HELD THAT:- The issue has been settled only by the Apex Court judgement in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT] wherein it has been held that the cenvat credit on outward freight from the place of removal was not admissible - though the demand alongwith interest is sustainable on this count however, we find that the charges of wilful suppression are not sustainable against the appellant. Accordingly, the penalty imposed on this issue is legally not sustainable as department already have knowledge of such facts. Availment of credit of ₹ 3283/- beyond six months - HELD THAT:- N/N. 6/2015CE NT dated 01.03.2015 was issued which extended the time limit to avail the cenvat credit on invoices from six months to one year. As per Order-in-Original Cenvat credit on invoice dated 17.07.2014 has been taken on 01.03.2015 which was rightly availed in view of the amended notification. Thus, the demand alongwith interest and penalty is dropped on this issue. Non-inclusion of certain amounts collected for Hummali/ Tulai - non-inclusion of value of recoveries made against debit notes on rate difference - incorrect availment of inadmissible Cenvat credit against Customs education cess and higher secondary cess - HELD THAT:- The appellant was responsible for discharging excise duty on correct assessable value and availing only admissible cenvat credit. The show cause notice which was issued on altogether different grounds than involved in the present proceedings was no bar to issue another show cause notice under extended period of limitation - The appellant could not show that he had any bonafide belief while not paying the proper excise duty on extra charges collected from the buyers or taking an inadmissible credit - Demand with interest and penalty upheld. Appeal allowed in part.
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2020 (4) TMI 72
CENVAT Credit - input services - GTA service - Manpower service - legal service received by the appellant - period January, 2016 to September, 2016 - HELD THAT:- The appellant company admittedly is having only one factory and their Head Office is located at Delhi, having a common registration under centralised registration scheme. There is no question involved of distribution and thus, the appellant is not required to be registered as an ISD for its Head Office - Admittedly, services of GTA and Manpower Supply Agency Service have been received only for the sake of accounting at Head Office, there can be no disallowance. In view of the common registration number under the centralised registration scheme, the impugned order is not maintainable and also suffers from mistake of facts and mistake of law. Appeal allowed - decided in favor of appellant.
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2020 (4) TMI 71
CENVAT Credit - duty paying invoices - invoices issued but service tax on such invoices not discharged - Rule 9(1)(bb) of Cenvat credit Rules, 2004 - HELD THAT:- Undisputed facts is that though the service provider at the time of issuing of invoices did not pay the service tax but subsequently they discharged the service tax and no proceeding was initiated against the service provider, the entire matter was closed. Since, there is no SCN issued to the service provider nor any adjudication order was passed, it cannot be said that there is suppression of facts on the part of the service provider. The suppression of facts needs to be established only by way of issuing the SCN invoking proviso to Section 73 (1) and thereafter, by the adjudication if the suppression of facts is established. In the present case no such exercise was carried out, it is clear that the department has accepted that there is no suppression of facts. To establish suppression of fact, there is no option for the department except to issue a SCN and adjudicate the matter, therefore, at the appellants end on availment of cenvat credit and the suppression of facts on the service provider can neither be alleged nor can be decided, therefore, Rule 9(1)(bb) is not applicable. The appellant is clearly entitled for the cenvat credit as the case is not covered under Rule 9(1)(bb) - Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2020 (4) TMI 74
Imposition of penalty u/s 47(6) of the Kerala Value Added Tax Act - only reason for imposing penalty by the Enquiring Authority is for not providing Form 8FA during transit - intent to evade tax or not - HELD THAT:- The Enquiry Authority had come to a clear finding that the goods happened to be intercepted during transit. If the goods had reached the go-down and books of account were not prepared in accordance with the bill of entry or transaction was not disclosed, there was no possibility of the department coming to know about the transaction unless the import documents are verified from the customs authority. Therefore as far as the declaration in Form 8FA is concerned, it is mandatory and if any transportation is not accompanied by the said Form, it is reasonable to conclude that there is an attempt to evade tax. It is not actual evasion of tax as contemplated in the books, but it is an attempt. Probably it might be an omission. But as far as the Department is concerned, the reasonable view that the Department could take is that there is an attempt to evade tax. The Tribunal was justified in arriving at a conclusion that the appellate authority had committed error in setting aside the order of penalty. However, it is seen that double the amount of tax was imposed as penalty - The quantum of penalty is reduced. Appeal allowed in part.
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2020 (4) TMI 70
Whether the Tribunal was justified in providing the benefit of exemption of tax to the Respondent contrary to the findings arrived at by the Assessing Authority and that too without considering the adverse material found during survey dated 4/5th July, 2001? - HELD THAT:- The Tribunal has accepted the reasoning given by the assessee that the amount of cash of ₹ 12,20,000/- discovered was not utilized towards the sale or purchase of raw material and also that the Assessing Authority could not found any discrepancy in the cash book and various documents and accounts maintained by the assessee and, therefore, the rejection of book of accounts was against the provisions of law. It has also been observed by the Tribunal that from the cash book maintained by the assessee transaction from the date 3.7.2000 to 15.11.2000 the cash of ₹ 12,20,000/- found could not be said to be related to any transaction and nor the said transaction has been pointed out in the assessing order and, therefore, no adverse interference in this case can be made against the assessee and, therefore, the additions made were set aside - No fact could be placed by the State which can persuade this Court to take a view different from the view recorded by the Tribunal and, therefore, this question is answered in favour of the assessee as against the the respondent. Whether the Learned Trade Tribunal was justified in waiving of the interest which was liable under Section 8(1) on the admitted sale turn over like admitted tax? - HELD THAT:- In the present case, Form 3 Kha was not valid for the assessment year in question and, therefore, the tax was rightly levied upon the sale transaction - It is not in dispute in the present case that the assessee himself mentioned certificate in their accounts the turnover to claim benefit of Section 3 Kha, which according to the provisions of the Act were on the face of it not valid and this did not require any deep examination of the issue. Whether the judgment and order passed by the Tribunal is justified ignoring the facts set out in the assessment order which was passed strictly in accordance facts available on records as also the provisions of the Trade Tax Rules - HELD THAT:- It is found that the respondent dealer himself filed the invalid Form 3 -B, contrary to provisions of the Act. It was well within the knowledge of the respondent dealer that 44 Form 3-B were not valid for the financial year 2000-01 and the respondent dealer is liable to pay the tax at full rate i. e. at the rate of 10 per cent but despite the fact, respondent dealer did not deposit the tax at full rate i.e at the rate of 10 per cent and deposited the tax at concessional rate at the rate of 2.5 per cent and deliberately claimed the exemption which was not admissible to him - the Tribunal has wrongly granted relief to the assessee by deleting interest. After rejection of Form 3-b the amount of interest levied on admitted tax was liable to be paid by the assessee and the order of the Assessing Officer in this regard is in conformity with the statutory schemes. Revision allowed in part.
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2020 (4) TMI 69
Evasion of Trade Tax - all materials not considered - principles of natural justice - HELD THAT:- From perusal of the impugned order passed by the Commercial Tax Tribunal it is clear that while allowing the revision of the revenue they have not considered the entire material with corrective perspective. The Assessing Authority while exercising the best judgment has extrapolated the figures and assessed the evasion of the total turnover to ₹ 5 Crores as well as this aspect of the matter has not even dealtwith by the Commercial Trade Tax Tribunal which goes to the root of the matter and this is the reason we deem it proper to remand the matter back to the Tribunal for reconsideration of the claim made by the revisionist. The matter is remanded back to the Commercial Tax Tribunal to pass a fresh order after reconsidering the issues raised by the concerned parties - Revision allowed by way of remand.
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