TMI Tax Updates - e-Newsletter
April 6, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax

TMI SMS

• Reopening of assessment u/s 147 - Revenue failed to show non-disclosure of facts, despite having reason to believe, notice quashed

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Articles

1. What are the circumstances where GST is Refundable

   By: Sanjeev Singhal

2. "Due Date/Interest/Late Fee/Penalty for filing of GSTR 3B and GSTR 1 Due to COVID -19 Outbreak."

3. 11 Key Steps that can guarantee 100% error free GSTR-3B

   By: deepak gulati

News

1. CBDT issues orders u/s 119 of IT Act,1961 to mitigate hardships to taxpayers arising out of compliance of TDS/TCS provisions

2. Auction for Sale (Re-Issue) of ‘New Government Stock 2022’, Auction for Sale (Re-issue) of ‘6.45% Government Stock 2029’, and ‘New Government Stock 2060’.

Notifications

DGFT

1. 59/2015-2020 - dated 4-4-2020 - FTP

Amendment in Export Policy of Diagnostic Kits

2. 01/2015-2020 - dated 4-4-2020 - FTP

Amendment in Export Policy of Hydroxychloroquine.

GST

3. 36/2020 - dated 3-4-2020 - CGST

Seeks to amend Notification No. 29/2020–Central Tax, dated the 23rd March, 2020

4. 35/2020 - dated 3-4-2020 - CGST

Extension of validity of e-way bills.

5. 34/2020 - dated 3-4-2020 - CGST

Seeks to amend Notification No. 21/2019-Central Tax, dated the 23rd April, 2019 - Extension of due date of furnishing statement, containing the details of payment of self-assessed tax in FORM GST CMP-08

6. 33/2020 - dated 3-4-2020 - CGST

Seeks to amend Notification No. 4/2018–Central Tax, dated the 23rd January, 2018 - waiver of late fee for delay in furnishing the statement of outward supplies in FORM GSTR-1

7. 32/2020 - dated 3-4-2020 - CGST

Seeks to amend Notification No. 76/2018–Central Tax, dated the 31st December, 2018 - Waiver of fee for late filing of return

8. 31/2020 - dated 3-4-2020 - CGST

Seeks to amend Notification No. 13/2017–Central Tax, dated the 28th June, 2017 - A lower rate of interest of NIL for first 15 days after the due date of filing return in FORM GSTR-3B and @ 9% thereafter is notified for those registered persons having aggregate turnover above ₹ 5 Crore and NIL rate of interest is notified for other cases for certain period.

9. 30/2020 - dated 3-4-2020 - CGST

Central Goods and Services Tax (Fourth Amendment) Rules, 2020

GST - States

10. 27/2020-State Tax - dated 27-3-2020 - Gujarat SGST

Due dates for GSTR-1 for the quarters April to Sept-20 for registered persons having aggregate turnover up to ₹ 1.5 crore

11. 16/2020-State Tax - dated 27-3-2020 - Gujarat SGST

Gujarat Goods and Services Tax (Third Amendment) Rules, 2020.

12. 14/2020-State Tax - dated 27-3-2020 - Gujarat SGST

Exemption to insurance company, banking company, NBFC etc. from QR Code and implementation w.e.f. 01.10.2020

13. 13/2020-State Tax - dated 27-3-2020 - Gujarat SGST

Exemption to insurance company, banking company, NBFC etc. from e-invoicing and implementation w.e.f. 01.10.2020

14. 12/2020-State Tax - dated 27-3-2020 - Gujarat SGST

Waived off requirement of GSTR-1 for 2019-20 for tax payers who could not avail option under Noti. No. 022019-STR

15. 11/2020-State Tax - dated 27-3-2020 - Gujarat SGST

Special procedure for corporate debtors under corporate insolvency resolution process

Circulars / Instructions / Orders

Income Tax

1. F. No. 275/25/2020-IT(B) - dated 3-4-2020

Order u/s 119 of the Income tax act, 1961 (the Act) regarding submission of Form 15G and 15H for Financial Year 2020-21

2. F. No. 275/25/2020-IT(B) - dated 3-4-2020

Order u/s 119 of the Income tax Act, 1961 on issue of certificates for lower rate/nil deduction/collection of TDS or TCS o/s 195, 197 and 206C (9) of the Act for Financial Year 2019-20

GST

3. 136/06/2020 - dated 3-4-2020

Clarification in respect of various measures announced by the Government for providing relief to the taxpayers in view of spread of Novel Corona Virus (COVID-19)

FEMA

4. 28 - dated 3-4-2020

Rupee Drawing Arrangement – Remittance to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund

Customs

5. PUBLIC NOTICE No. 09/2020 - dated 19-3-2020

Amendment in Public Notice No. 16/2019 dated 06.12.2019 regarding procedure to be followed after amendment of Policy condition No. 2 (iii) to Chapter 95 of ITC (HS), 2017- Schedule — 1 (Import Policy)

6. PUBLIC NOTICE NO. 11/2020-Cus - dated 6-3-2020

Implementation of PGA eSANCHIT— Paperless Processing under SWIFT- Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs

7. PUBLIC NOTICE NO. 08/2020 - dated 4-3-2020

Electronic sealing-Deposit in and removal of goods from Custom bonded Warehouses

8. PUBLIC NOTICE No. 13 /2020 - dated 2-3-2020

Implementation of automated clearance at ACC (Import) Commissionerate

9. PUBLIC NOTICE NO. 10/2020 - dated 26-2-2020

Electronic scaling-Deposit in and removal of goods from Customs Bonded Warehouse

10. PUBLIC NOTICE NO. 11/2020 - dated 26-2-2020

Implementation of PGA e-SANCHIT — Paperless Processing under SWIFT — Uploading of Licenses /Permits / Certificates / Other Authorizations (LPCOs) by PGAs

11. PUBLIC NOTICE NO. 09/2020 - dated 25-2-2020

ICES Advisory 08/2020- Separate option to waive Late filing Charges

12. PUBLIC NOTICE NO. 08/2020 - dated 24-2-2020

24x7 clearance of import cargo

13. Standing Order No. 02/2020 - dated 20-2-2020

Streamlining export data to include District level details in Shipping Bills

14. PUBLIC NOTICE NO 05/2020 - dated 14-2-2020

ICES Advisory 01/2020 (SCMTR) dated 13.01.2020 — Registration and Application Process for all the Stakeholders

15. PUBLIC NOTICE NO. 05/2020 - dated 13-2-2020

Implementation of automated clearance on pilot basis

16. PUBLIC NOTICE NO. 04/2020 - dated 12-2-2020

Standard Operating Procedure (SOP) to be followed by exporters

17. PUBLIC NOTICE NO. 06/2020 - dated 12-2-2020

"Implementation of PGA eSANCHIT- Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs"

Highlights / Catch Notes

GST

• CGST Rules 2017: Updated Due Dates for FORM GSTR-3B Filing from April to September 2020 for Taxpayers.

  Notifications : Return in FORM GSTR-3B of CGST Rules, 2017 along with due dates of furnishing the said form for April, 2020 to September, 2020 - Notification as amended
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• Compliance Deadline Extended to June 30, 2020, for Department and Assessee with Some Exceptions.

  Notifications : Extension of due date of compliance (on the part of Department as well as Assessee) which falls during the period from "20.03.2020 to 29.06.2020" till 30.06.2020 with some exceptions
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• E-way Bill Validity Extended to April 30 for Expirations Between March 20 and April 15 Under CGST Rule 138.

  Notifications : Where an e-way bill has been generated u/r 138 of CGST and its period of validity expires during the period 20.03.2020 to 15.04.2020, the validity period of such e-way bill shall be deemed to have been extended till the 30.04.2020
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• Quarterly Tax Payment and Annual Return Filing Procedures for Notification No. 02/2019-Central Tax (Rate) Compliance.

  Notifications : Procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 02/2019– Central Tax (Rate), dated the 7th March, 2019 - Notification as amended
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• Late Fee Reduction for FORM GSTR-1 Filings Under GST to Ease Taxpayer Burden and Encourage Timely Compliance.

  Notifications : Reduction / Waiver of late fee in case of delayed filing of FORM GSTR-1 - Notification as amended
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• Late Fees Waived for Specific Delays in Filing FORM GSTR-3B; Amendments Aim for Relief in Certain Cases.

  Notifications : Seeks to specify the late fee payable for delayed filing of FORM GSTR-3B and fully waive the amount of late fees leviable on account of delayed furnishing of FORM GSTR-3B in specified cases. - Notification as amended
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• GST Interest Rate Update: Amended Notification Under CGST Act 2017 Clarifies New Rates for Compliance and Regulatory Purposes.

  Notifications : Seeks to prescribe rate of interest under CGST Act, 2017 - Notification as amended
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• ITC Restriction: 10% Cap for February-August 2020 Requires FORM GSTR-3B Submission per Rule 36 CGST Rules 2017.

  Act-Rules : Restriction on ITC upto 10% - the said condition shall apply cumulatively for the period February, March, April, May, June, July and August, 2020 - FORM GSTR-3B to be furnished accordingly - Rule 36 of the Central Goods and Services Tax Rules, 2017
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• Businesses Can Opt for Simplified GST Composition Levy u/r 3 for Easier Compliance and Reduced Tax Burden.

  Act-Rules : Intimation for composition levy - Rule 3 of the Central Goods and Services Tax Rules, 2017 as amended
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• Government Offers Tax Relief: Deadline Extensions, Lower Interest Rates, and Fee Waivers Under CGST Amid COVID-19 Crisis.

  Circulars : Clarification in respect of various measures announced by the Government for providing relief to the taxpayers in view of spread of Novel Corona Virus (COVID-19) - CGST - Circular
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• Goods Detention Under GST Act: Applicant Challenges Show Cause Notice in Form GST MOV-10 After Release of Goods.

  Case-Laws - HC : Detention of goods alongwith conveyance - section 129(1) of the GST Act - goods were already released - It is now for the applicant to make good his case that the show cause notice, issued in Form GST MOV-10, deserves to be discharged.
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Income Tax

• Tax Incentives for New Businesses in Free Trade Zones u/s 10A of the Income-tax Act, 1961.

  Act-Rules : Special provision in respect of newly established undertakings in free trade zone, etc. - Section 10A of the Income-tax Act, 1961 as amended
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• Income-tax Act, 1961: Amendments in Section 10, Clauses (23D) to (50), clarify exempt incomes from total taxable income.

  Act-Rules : Incomes not included in total income [Clause (23D) to Clause (50)] - Various clauses amended - Section 10 of the Income-tax Act, 1961
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• Income-tax Act 1961 Amendment: Updates to Section 10(23C) Exemptions for Clearer Tax-Exempt Income Categories.

  Act-Rules : Incomes not included in total income - Clause (23C) of Section 10 amended - Section 10(17A) to 10(23C) of the Income-tax Act, 1961
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• Section 9A: Foreign Entities' Activities Exempt from Indian Tax Obligations, Facilitating International Business Without Extra Tax Liabilities.

  Act-Rules : Certain activities not to constitute business connection in India - Section 9A of the Income-tax Act, 1961 as amended
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• Income Deemed to Arise in India: Section 9 of Income-tax Act, 1961, Clarifies Taxation on Various Income Sources.

  Act-Rules : Income deemed to accrue or arise in India - Section 9 of the Income-tax Act, 1961 as amended
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• New Guidelines for Submitting Form 15G and 15H u/s 119 of the Income Tax Act for FY 2020-21.

  Circulars : Order u/s 119 of the Income tax act, 1961 (the Act) regarding submission of Form 15G and 15H for Financial Year 2020-21 - Order-Instruction
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• Court Quashes Section 147 Reassessment Notice Issued After Four Years Due to Lack of Non-Disclosure Evidence by Taxpayer.

  Case-Laws - SC : Reopening of assessment u/s 147 - The notice issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment but since the revenue has failed to show non-disclosure of facts the notice having been issued after a period of 4 years is required to be quashed.
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• Assessee's Unique Goodwill Accounting Method Rejected, Leading to Denied Depreciation Claim and Confirmed Additions.

  Case-Laws - AT : Depreciation on Goodwill - inflated value of goodwill - the assessee has followed a different method for accounting goodwill in books of accounts, so as to claim higher depreciation, although such method has been followed in accordance with prescribed accounting standard. - Claim of the assessee rejected - Additions confirmed.
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• No Penalty u/s 271(1)(c) When Housing Loan Interest Results in No Revenue Loss for Government.

  Case-Laws - AT : Levy of penalty u/s. 271(1)(c) - No doubt, the assessee needs to disclose necessary facts with regard to payment of interest for housing loan and receipt of interest income from builder under appropriate head of income. But fact remains that if you consider net result of both transactions the assessee incurred loss and from this it is abundantly clear that there is no loss of revenue to the Government. - When no Loss to revenue, no penalty.
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• Assessment Order for 2008-09 Invalidated Due to Incorrect Notice u/s 143(2) Instead of 153C.

  Case-Laws - AT : Validity of assessment order - Assessing Officer himself has not considered the assessment year 2008-09 as covered u/s 153C of the Act. The assessing Officer has issued notice in the impugned assessment year u/s 143(2) of the Act and thus passed the assessment order u/s 143(3) of the Act. The above assessment order passed was not in pursuance of any notice issued u/s 153C of the Act. - Assessment order quashed.
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• Section 43B Disallows Service Tax Deduction for Unrecorded Liability in Profit and Loss Account; Additions Deleted.

  Case-Laws - AT : Disallowance of service tax u/s 43B - outstanding statutory liability - The assessee has not routed the outstanding service tax through its profit and loss account but has taken this amount directly to the balance sheet. - The Provisions of Section 43B are only restrictive in nature and not an enabling provision. If the claim is otherwise not allowable as deduction then the same cannot be allowed by invoking the provisions of Section 43B of the Act - Additions deleted.
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• AO Must Issue Separate Order for Objections to Section 148 Notice; Failure Leads to Notice Nullification.

  Case-Laws - AT : Reopening of assessment u/s 147 - where no order has been passed by the AO deciding the objections filed by the assessee against notice issued under section 148 of the Act, or where such objections have been decided alongwith the assessment order, the notice issued u/s 148 of the Act deserves to be quashed.
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• Corporate Membership Fee Disallowance Overturned; CIT(A) Affirms No Enduring Benefit from Airport Authority Membership Payment.

  Case-Laws - AT : Disallowance on account of membership fee paid to Airport Authority of India - Corporate membership - such expenditure did not bring into existence any benefit of enduring nature. - CIT(A) rightly allowed the claim.
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• Taxable Commission Income Estimated Over 207 Days After Offsetting Disclosed Income and Expenses; Some Additions Deleted.

  Case-Laws - AT : Addition of commission income - estimation commission income of the assessee for 207 days - set off with the income already disclosed by the assessee - the only method which could be adopted is to work out total commission income for 207 days by whatever method, then debit that commission income from the amount already disclosed by the assessee plus expenditure and the remaining will be taxable. - Part of the additions deleted.
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• Membership Fees from Members Exempt from Tax u/s 11 Due to Principle of Mutuality and Charitable Activities.

  Case-Laws - AT : Exemption u/s 11 - Charitable activity u/s 2(15) - Principle of Mutuality - NASSCOM - the membership fees received by the assessee from its own members comes within the meaning of principle of mutuality and as such the net income of the assessee from its own member is exempt from tax.
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• Double Taxation Agreement Rates Are Final; No Extra Surcharge or Education Cess Allowed, Says AO.

  Case-Laws - AT : Surcharge and Education Cess in the amount of tax charged by the AO under the Double Taxation Avoidance Agreement (DTAA) - Rates as per DTAA cannot be further enhanced by Surcharge and Education Cess
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Customs

• Import Undervaluation Claims Dismissed: Insufficient Evidence from Department After Retraction of Statements in Hawala Case.

  Case-Laws - AT : Undervaluation of imports - payment of differential amounts to foreign buyers through Hawala - Once, the statements have been retracted, the onus lies on the Department to prove that the statements are correct. The same has not been discharged - further, other than statements, no evidence documentary or otherwise has been put forth by the Revenue to substantiate the allegation of under-valuation. No samples were drawn and no enquires were made. - Demand set aside.
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FEMA

• Rupee Drawing Arrangement Explained for Remitting to PM-CARES Fund under FEMA Guidelines for Emergency Relief Support.

  Circulars : Rupee Drawing Arrangement – Remittance to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund - Circular
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Service Tax

• Debate Over Classification of Broadcasting vs. Intermediary Services for Tax Purposes; No Outflow to Overseas Entity.

  Case-Laws - AT : BAS - Broadcasting Service or intermediary service - Import of services - Place of provision of services - respondents are ‘surrogate’ providers of ‘broadcasting’ service in India - The retained amount is not an outflow and, in the absence of outflow of consideration from the respondents herein to the overseas entity, recourse to these Rules cannot be had.
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• Supreme Court: Tax on Elevator Contracts Limited to Service Component per Finance Act 1994, Abatement Benefits Clarified.

  Case-Laws - AT : Works Contract - contracts entered into with customers for manufacture of elevators that are then erected, commissioned and installed at the site - Denial of benefit of abatement - As per the decision of Apex Court, the authority vested in the Union to levy tax is limited to the ‘service’ component and only in accordance with the machinery provisions in Finance Act, 1994
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• Taxation of Business Consultancy and Legal Services in Arbitration Under Reverse Charge Mechanism Explored by Adjudicating Authority.

  Case-Laws - AT : Management of business consultancy service - Import of legal services relating to arbitration proceedings - reverse charge mechanism - Negative list - taxation of services in the hands of ‘deemed provider of service’ - demand of service tax confirmed for the Normal Period - Adjudicating authority directed to separate the wheat from the chaff.
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• Court Rules Against Including Free Supplies in Service Valuation for Earthmoving Equipment Repairs; Circulars Lack Legal Basis.

  Case-Laws - AT : Valuation - repair and servicing of ‘earthmoving equipment’ - free supply of goods by recipient of service - Neither the circulars of Central Board of Excise & Customs, advising the inclusion of all expenditure incurred for rendering services, nor the expansion of ‘consideration’ to encompass ‘consumables’, that does not add to the assets of the provider of service, have sanction of law. - Demand set aside.
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• Rebate Claim Denial Overturned; Claimants Entitled to Rebate Under Notification 11/2005 Despite Rule 5 Cenvat Credit Rules Issue.

  Case-Laws - AT : Rejection of rebate claim - Refund or rebate claim - the denial of rebate on the ground of not opting for refund under Rule 5 of CCR, is not sustainable in law and therefore, appellants are entitled to the rebate under the provisions of Notification 11/2005
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• Demand for Service Tax Overturned Due to Lack of Invoice Verification; Case Remanded for Further Review.

  Case-Laws - AT : Principles of natural justice - demand alongwith interest and penalties - In this case the appellant was never asked to provide copy of invoices to verify whether the service provider has paid any service or not. - without co-relation / verification by the authorities below has confirmed the huge demand against the appellant which shows negligence on the part of Audit team. - Matter remanded back.
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Case Laws:

• GST

• 2020 (4) TMI 132
  Detention of goods alongwith Conveyance - section 129 of GST Act - part B of the E-way bill not filled up - HELD THAT:- The 1st respondent shall forthwith release the detained vehicle and goods which is the subject matter in the impugned Ext.P5(a), detention order, on the petitioner furnishing bank guarantee to the value of the amounts shown in the impugned Ext.P7 proceedings which comes to a total amount of Rs. 66,528/-. Petition disposed off.

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• 2020 (4) TMI 131
  Detention of goods alongwith conveyance - section 129(1) of the GST Act - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST MOV-10, deserves to be discharged. Application disposed off.

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• 2020 (4) TMI 130
  Detention of goods alongwith conveyance - section 129(1) of the GST Act - HELD THAT:- The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [ 2020 (2) TMI 1159 - GUJARAT HIGH COURT] - It is now for the applicant to make good his case that the show cause notice, issued in Form GST MOV-10, deserves to be discharged. Application disposed off.

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• Income Tax

• 2020 (4) TMI 133
  Reopening of assessment u/s 147 - Valid reason to believe that undisclosed income had escaped assessment or not? - sufficient material before the assessing officer to take a prima facie view that income of the assessee had escaped assessment - failure to show non-disclosure of facts the notice having been issued after a period of 4 years - HELD THAT:- Obviously, during the assessment proceedings the assessee will have the right to place material on record to show that the transaction in question was a genuine transaction. It is trite law that an assessing officer can only reopen an assessment if he has reason to believe that undisclosed income has escaped assessment. Mere change of opinion of the assessing officer is not a sufficient to meet the standard of reason to believe . Subsequent facts which come to the knowledge of the assessing officer can be taken into account to decide whether the assessment proceedings should be reopened or not. Information which comes to the notice of the assessing officer during proceedings for subsequent assessment years can definitely form tangible material to invoke powers vested with the assessing officer under Section 147 of the Act. The material disclosed in the assessment proceedings for the subsequent years as well as the material placed on record by the minority shareholders form the basis for taking action under Section 147 of the Act. At the stage of issuance of notice, the assessing officer is to only form a prima facie view. In our opinion the material disclosed in assessment proceedings for subsequent years was sufficient to form such a view. We accordingly hold that there were reasons to believe that income had escaped assessment in this case. Question No.1 is answered accordingly. Whether there was failure on the part of the assessee to make a full and true disclosure of all the relevant facts? - Extension of limitation period - HELD THAT:- Assessee disclosed all the primary facts necessary for assessment of its case to the assessing officer. What the revenue urges is that the assessee did not make a full and true disclosure of certain other facts. We are of the view that the assessee had disclosed all primary facts before the assessing officer and it was not required to give any further assistance to the assessing officer by disclosure of other facts. It was for the assessing officer at this stage to decide what inference should be drawn from the facts of the case. In the present case the assessing officer on the basis of the facts disclosed to him did not doubt the genuiness of the transaction set up by the assessee. This the assessing officer could have done even at that stage on the basis of the facts which he already knew. The other facts relied upon by the revenue are the proceedings before the DRP and facts subsequent to the assessment order, and we have already dealt with the same while deciding Issue No.1. However, that cannot lead to the conclusion that there is nondisclosure of true and material facts by the assessee. It is interesting to note that whereas before this Court the revenue is strenuously urging that the assessee is guilty of nondisclosure of material facts, before the High Court the case of the revenue was just opposite. In our opinion the revenue cannot now turn around and urge that the assessee is guilty of nondisclosure of facts. We are also of the view that the revenue could not be permitted to blow hot and cold at the same time. We are clearly of the view that the revenue in view of its counter affidavit before the High Court that it was not relying upon the nondisclosure of facts by the assessee could not have been permitted to orally urge the same. Even otherwise we find that the assessee had fully and truly disclosed all material facts necessary for its assessment and, therefore, the revenue cannot take benefit of the extended period of limitation of 6 years. Whether in terms of second proviso to Section 147 of the Act read with Section 149(1) (c) of the Act, the limitation period would be 16 years since the assessee has derived income from a foreign entity? - HELD THAT:- There is nothing in the reasons to indicate that the revenue was intending to apply the extended period of 16 years. It is only after the assessee filed its reply to the reasons given, that in the order of rejection for the first time reference was made to the second proviso by the revenue. In our view this is not a fair or proper procedure. If not in the first notice, at least at the time of furnishing the reasons the assessee should have been informed that the revenue relied upon the second proviso. The assessee must be put to notice of all the provisions on which the revenue relies upon. If the revenue is to rely upon the second proviso and wanted to urge that the limitation of 16 years would apply, then in our opinion in the notice or at least in the reasons in support of the notice, the assessee should have been put to notice that the revenue relies upon the second proviso. The assessee could not be taken by surprise at the stage of rejection of its objections or at the stage of proceedings before the High Court that the notice is to be treated as a notice invoking provisions of the second proviso of Section 147 of the Act. Accordingly, we answer the third question by holding that the notice issued to the assessee and the supporting reasons did not invoke provisions of the second proviso of Section 147 of the Act and therefore at this stage the revenue cannot be permitted to take benefit of the second proviso. Thus notice issued to the assessee shows sufficient reasons to believe on the part of the assessing officer to reopen the assessment but since the revenue has failed to show non-disclosure of facts the notice having been issued after a period of 4 years is required to be quashed

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• 2020 (4) TMI 129
  Depreciation on Goodwill - inflated value of goodwill - assessee followed AS-14 for accounting of acquisition of business, while arriving at goodwill - method of valuation or computation of net-worth for different purposes - CIT (Appeals) restricting Depreciation considering the Goodwill as the net worth of the Seller instead of Assets as per valuation report as reduced by the Liabilities - Goodwill booked by the Assessee is the Net difference in Consideration paid on purchase of the Unit under Slump Sale, as reduced by the individual Assets other than Assets except Goodwill accounted for as per valuation Report - HELD THAT:- Admittedly, AS-14, nowhere prescribed for different method of computation of net worth of undertaking acquired by way of slump sale for different purposes. In this case, the assessee although, followed AS-14 for accounting of acquisition of business, while arriving at goodwill, it has revalued its assets, which is different from value of assets, as per books of accounts of erstwhile proprietorship firm. When it comes to payment of capital gain on slump sale, the proprietor of erstwhile firm has taken net worth as per books of accounts of firm as on the date of acquisition. From the above, it is very clear that the assessee has taken different values for the purpose of accounting of acquisition of business and the proprietor has followed different method for computation of net-worth for the purpose of computation of capital gain on slump sale. Since, the seller of assets i.e proprietor of erstwhile firm and the director of the present assessee are one and the same and also, fact that the director has holding more than 21% in present company, it is undoubtedly clear that the assessee has followed a different method for accounting goodwill in books of accounts, so as to claim higher depreciation, although such method has been followed in accordance with prescribed accounting standard. Therefore, we are of the considered view that the Ld. AO, as well as the Ld.CIT(A) were right in, coming to the conclusion that the assessee has arrived at inflated value of goodwill to claim higher depreciation on intangibles. Since, the assessee has taken different values for different purposes, we are of the considered view that the ratio laid down CHOWGULE COMPANY PRIVATE LIMITED VERSUS ADDL. COMMISSIONER OF INCOME-TAX [ 2016 (2) TMI 407 - BOMBAY HIGH COURT] is not applicable to the case of the assessee and hence, the same is hereby rejected. - Decided against assessee.

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• 2020 (4) TMI 128
  TP Adjustment - transactions of two segments be aggregated for comparability purposes - Whether transactions of the assessee in Production and Distribution segments can be construed as closely linked transactions ? - HELD THAT:- We find that an identical issue in assessee s own case arose before the Co-ordinate Bench of Tribunal in A.Y. 2012-13 [2019 (12) TMI 456 - ITAT PUNE] - The Co-ordinate Bench of Tribunal held that manufacturing segment cannot be aggregated with distribution segment and both need to be benchmarked independent of each other We are dealing with a situation in which the assessee is trying to club the transaction of Production of finished goods with Trading of spare parts, which is a step further away from technical know-how in the process of manufacturing. In view of the foregoing discussion, it is held that the authorities below were fully justified in holding that the Manufacturing segment cannot be aggregated with the Distribution segment and both need to be benchmarked independent of each other. We, therefore, accord our imprimatur to the view canvassed by the TPO in rejecting the aggregation approach adopted by the assessee. - Decided against assessee. Include UMS Technologies Ltd. as comparable company - HELD THAT:- TPO has worked out the loss of UMS Technologies Ltd. at (-) 5% by allocating the expenses in the ratio of turnover of Engine segment to total revenue i.e. at 41.85%. He has completely disregarded the segment loss reported in the audited Balance Sheet. We further find that no reasons have been given by TPO for disregarding the segmental revenue as disclosed in the audited results. In such situation, we are of the view that TPO was not justified in working out the margins of UMS Technologies Ltd. at (-) 5% when the audited Balance Sheet itself shows the loss of Engine segment at (-) 22.89%. We find that if the margin of UMS Technologies Ltd. is considered on the basis of audited results, then it is comparable with the loss of assessee and therefore, no adjustment is called for. We therefore, set aside the adjustment made by TPO and thus, this ground is allowed. Since this ground is allowed, as submitted by assessee, ground Nos.4 and 5 becomes academic and therefore, requires no adjudication.

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• 2020 (4) TMI 127
  Income accrued in India - Royalty receipt or FTS - taxability of amount received by the assessee from Sandvik Asia Private Limited in India - HELD THAT:- It is an undisputed fact that during the year under consideration assessee had received fees towards granting user access to software application and for providing IT support from SAPL. Before us, both the parties have admitted that the facts of the case in the year under consideration are identical to that of assessee s own case in A.Ys 2010-11, 2011-12, 2013-14 and 2014-15 [ 2019 (5) TMI 939 - ITAT PUNE] . We find that the Co-ordinate Bench of the Tribunal while deciding the issue on identical facts in assessee s own case in A.Y. 2014-15 held that the payments received by assessee from SAPL cannot be considered to be as Royalty or FTS and not taxable in India. - Decided against revenue.

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• 2020 (4) TMI 126
  Bogus purchases - Transaction with hawala/suspicious dealers - HELD THAT:- On perusal of records, the assessee is into the business of whole seller and reseller in dyes and chemicals and pharma items. The assessee has declared gross profit of 5.61% to 5.91% for AY 2009-10 to AY 2011-12. Although, the rate of gross profit declared by the assessee in his books of accounts is not a correct yardstick to determine the profit element in alleged bogus purchases, but if you go through the nature of business of the assessee and industry practice, at any point of time 100% additions cannot be sustained. Further, although the assessee has cited the decision in the case of Mohammad Hazi Adam and Company vs PCIT [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] and requested to scale down additions made by the Ld. AO towards gross profit rate of other purchases, but the claim of the assessee cannot be accepted, because the gross profit declared by the assessee in its regular books of accounts cannot be considered as correct in view of the fact that there is some sort of doubt is still there, in respect of purchases claim to have made from certain parties. After considering facts and circumstances of this case and consistent with view taken by the co-ordinate bench in number of cases a reasonable amount of profit needs to be estimated of alleged bogus purchase to meet the ends of the justice. Hence, by taking into account over all facts and circumstances of this case and also, consistent with view taken by the co-ordinate bench in similar cases, we direct the Ld. AO to estimate 12.5% profit on alleged bogus purchases.

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• 2020 (4) TMI 125
  Levy of penalty u/s. 271(1)(c) - No loss to revenue - addition made towards interest income under the head income from other sources - concealment of particulars of income in respect of interest received from Hiranandani Constructions Pvt Ltd. - income received from builder has not been offered to tax, because interest paid on loan is more than the amount of interest received and hence opined that the assessee has furnished inaccurate particulars of income which leads to concealment of particulars of income - HELD THAT:- The assessee has taken housing loan of Rs. 2,25,00,000/- from Kotak Mahindra Bank Ltd., on 28.01.2011 and said loan has been directly paid to Hiranandani constructions Pvt Ltd. Since the installment paid for purchase of flat is in excess of amount needs to be paid, in the schedule of payments the developer has paid interest of Rs. 13,62,658/- calculated @ 12% on excess money received before the due date of payment from the assessee. The assessee has paid interest on housing loan to Kotak Mahindra Bank a sum of Rs. 14,19,435/-, and did not claim deduction towards interest paid on housing loan u/s 24(b) of the Act. The assessee has also not offered interest income interest received from Hiranandani Constructions Pvt Ltd., of Rs. 13,62,658/- under the head income from other sources. Sole reason for not claiming interest deduction and not offering interest income for tax is that if you consider interest payment to bank and interest received from the builder the net result under the head income from other sources is loss at Rs. 56,777/-. No doubt, the assessee needs to disclose necessary facts with regard to payment of interest for housing loan and receipt of interest income from builder under appropriate head of income. But fact remains that if you consider net result of both transactions the assessee incurred loss of Rs. 56,777/- and from this it is abundantly clear that there is no loss of revenue to the Government. When there is no loss of revenue to the Government and the claim of the assessee is bonafide, then the rigours of penalty provided u/s 271(1)(c) of the Act cannot be invoked. In this case, on perusal of facts, we find that the explanation offered by the assessee for not offering interest income to tax is bonafide and hence we are of the considered view that the A.O as well as Ld. CIT(A) were erred in levying penalty u/s 271(1)(c) - Decided in favour of assessee.

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• 2020 (4) TMI 124
  Validity of Assessment order passed u/s 143(3)/153A instead of u/s 153C - In the present case assessee is not a searched person , but a person other than searched person - scope of amendment made in 153C - HELD THAT:- According to Section 153A of the Act assessment or re-assessment relating to any assessment year falling within the period of 6 assessment year pending on the date of initiation of the search under Section 132 would abate. Apparently in this case the date of search is 16.07.2009 and this year s period would be assessment year 2004-05 to assessment year 2009-10. Therefore, it is apparent that the assessee for assessment year 2008-09 should have been made under Section 153C of the Act and not under Section 143(3) of the Act as has been done. The Hon ble Delhi High Court in the case of Pr. CIT Vs. Sarwar Agency Pvt. Ltd. [ 2017 (8) TMI 733 - DELHI HIGH COURT] clearly covers the issue in favour of the assessee. Amendment made in 153C of the Act by the Finance Act applies from 1st April, 1970 which covers the issue that hence-forth the period of the search pressing as well as the other person would be the same sixth assessment years immediately proceeding the year of search. However, the above amendment does not apply to the assessment year 2008-09 as the impugned assessment order has been passed under Section 143(3) of the Act same is not sustainable in law. Assessing Officer himself has not considered the assessment year 2008-09 as covered under Section 153C of the Act. The assessing Officer has issued notice in the impugned assessment year under section 143(2) of the Act and thus passed the assessment order under Section 143(3) of the Act. The above assessment order passed was not in pursuance of any notice issued under Section 153C of the Act. In view of the above facts we found that the impugned assessment order passed under Section 143(3) of the Act is invalid as such assessment order should have been passed under Section 153C - Decided in favour of assessee.

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• 2020 (4) TMI 123
  Disallowance of service tax u/s 43B - outstanding statutory liability not paid before filing of the return of income - HELD THAT:- Outstanding amount of Rs. 1,25,39,228/- on account of service tax pertains to the period prior to 30-06-2011 rather a sum of Rs. 1,21,38,957/- relates to earlier financial year being 2010-11 and therefore, it was the opening balance of statutory liability as on 01-04-2011. The assessee has not routed the outstanding service tax through its profit and loss account but has taken this amount directly to the balance sheet. Therefore, the assessee has not claimed any deduction on account of said amount of service tax which was neither collected nor paid to the Govt. account. As relying on M/S POWER LINERS VERSUS A.C.I.T., CIRCLE-3, JAIPUR [ 2018 (1) TMI 512 - ITAT JAIPUR] when the assessee has neither included this amount of service tax in the turnover/ revenue receipts nor claimed as deduction in the profit and loss account then the said amount cannot be disallowed u/s 43B for the year under consideration. The assessee cannot claim deduction of this amount in the subsequent years when it is paid to the Govt. Account by invoking the provisions of Section 43B of the I.T. Act, 1961. In fact, this is a claim allowability of which has to be first decided u/s 28 to 42 and only when the amount is allowable as a deduction under these provisions then the provision of section 43B can be invoked. If the claim is not allowable as the deduction u/s 28 to 42 of the I.T. Act, 1961 then the question of invoking the provisions of section 43B either for disallowance or for claiming the deduction on the event of payment does not arise. The Provisions of Section 43B are only restrictive in nature and not an enabling provision. If the claim is otherwise not allowable as deduction then the same cannot be allowed by invoking the provisions of Section 43B of the Act - we delete the disallowance/ addition made by the AO - Decided in favour of assessee.

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• 2020 (4) TMI 122
  Deduction u/s 10AA - Exclusion of expenditure incurred in foreign currency, communication and insurance cost from export turnover - Expenditure incurred in connection with rendering of services outside India - HELD THAT:- CIT(A) while granting relief on alternative plea that same should be reduced from both export turnover as well as total turnover, has not adjudicated the issue, the expenditure incurred in foreign currency should not be reduced from the export turnover. Hence, this issue is remitted back to the file of ld. CIT(A) for fresh adjudication after affording due opportunity of hearing to the appellant in accordance with law. Thus, ground raised by the assessee is partly allowed for statistical purposes. Exclude expenditure incurred in foreign currency on insurance, freight and telecommunication charges from both export turnover and total turnover - HELD THAT:- As decided in favour of the assessee and against the Revenue by the decision of the Hon ble Apex Court in the case of CIT vs. HCL Technologies Ltd [ 2018 (5) TMI 357 - SUPREME COURT]. Belated remittance of Provident Fund/ ESI payments as deduction - CIT-A deleted the addition on the ground that payments are made within the due date of filing of return of income and not within the time stipulated u/s.36(1) (va) - HELD THAT:- Hon ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security Intelligence India Pvt. Ltd [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] had held that when EPF/ESI contribution are made within due date of filing the return, the same should be allowed as deduction. Therefore we do not find any reason to interfere with the order of the ld. CIT(A). Ground No.3 raised by the Revenue stands dismissed.

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• 2020 (4) TMI 121
  Validity of assessment - notice in the name of non-existent company as amalgamation seeked - HELD THAT:- In the instant case, the details of amalgamation were noticed by the revenue in the original assessment proceedings itself. Despite this fact, the assessing officer has chosen, in the instant case, to pass the impugned reassessment order in the name of M/s Herbertsons Ltd, which was a non-existent company on the date of passing of the assessment order. Hence, in view of the binding decisions rendered in the case of Intel Technology India (P) Ltd [ 2015 (5) TMI 614 - KARNATAKA HIGH COURT] and in the case of Maruti Suzuki India Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] we hold that the impugned assessment order is null and void. Accordingly, the same is quashed. However, as observed by Hon ble Karnataka High Court in paragraph 9 of its order in the case of Intel Technology India P Ltd, the revenue may proceed in accordance with the law and in terms of provisions of the Income tax Act in respect of return of income filed for the year under consideration. - Decided in favour of assessee.

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• 2020 (4) TMI 120
  Penalty u/s 271C - default pursuant to orders under section 201(1)) for not making TDS payments made towards foreign travel - assessee-bank has failed to deduct TDS but in proceedings u/s 201 of the Act, the assessee has accepted the claim and paid the amounts - HELD THAT:- As decided in own case [ 2019 (11) TMI 1138 - ITAT BANGALORE] fact that non-deduction of TDS has come out in the survey operations u/s 133A of the Act. We found that the assessee has not deducted TDS and explained reasonable cause in the penalty proceedings and the assessee s action is not wanton but on a bona fide belief. As decided in SYNDICATE BANK, NGV KORAMANGALA, BANGALORE, SYNDICATE BANK, NGV YELHANKA, BANGALORE, SYNDICATE BANK, GANGANAGAR, BANGALORE [ 2019 (7) TMI 1266 - ITAT BANGALORE] the mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty. - Decided in favour of assessee.

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• 2020 (4) TMI 119
  Reopening of assessment u/s 147 - no order has been passed by the AO deciding the objections filed by the assessee - HELD THAT:- In Bayer Material Science (P.) Ltd. vs. DCIT (supra), it has been held, following GKN Driveshafts Pvt. Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] that it is incumbent on the Assessing Officer, when objections against the reasons recorded by the Assessing Officer for formation of belief of escapement of income, have been raised by the assessee, that the Assessing Officer needs must decided such objections by a specific separate order, disposing of the said objections. In case, the AO rejects the objections raised by the assessee, such a separate order would enable, following the principles of natural justice, an opportunity to the assessee, to challenge the said separate order before the competent Court. In General Motors (India) (P.) Ltd. vs. DCIT [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] it has been held that where no order has been passed by the AO deciding the objections filed by the assessee against notice issued under section 148 of the Act, or where such objections have been decided alongwith the assessment order, the notice issued u/s 148 of the Act deserves to be quashed. Accordingly, the assessment order passed by the Assessing Officer is reversed as null and void in the absence of separate specific order disposing of the assessee s objections against the reasons recorded. - Decided in favour of assessee.

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• 2020 (4) TMI 118
  Disallowance u/s 10AA in respect of SEZ- Unit -1 - AO examined the manner of allocation of common expenses between the 3 units owned by the assessee - AO was of the view that certain common expense have been booked under STPI unit where here no deduction u/s 10AA of the has been claimed, thereby reducing the profits of non-10AA units (taxable units) and increase the profits of exempted unit, apparently, with the objective of claiming higher exemption - HELD THAT:- Considering the Revenue model of cost + mark-up adopted by the assessee, as rightly pointed out by the assesee, it will not gain anything by under booking expenses in the exempt unit, since the under-booking of expenses would result in corresponding reduction in Revenue also. In any case we noticed that the AO has asked the assessee to reallocate the common expenses only by entertaining surmises and conjectures and not based on any creditable defect noticed by him. Hence, we are of the view that there is no reason to interfere with the order passed by the ld CIT(A) on this issue. TP Adjustment - Selection of comparable - CIT- A seeking exact comparability, which searching for comparable companies of the assessee under TNMM - HELD THAT:- We have gone through the orders passed by ld CIT(A) and grounds taken by the Revenue. We find merit in the submissions made by the ld AR. Accordingly we reject the transfer pricing grounds urged by the Revenue holding that they do not emanate from the order passed by the ld CIT(A).

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• 2020 (4) TMI 117
  Disallowance u/s 14A - assessee submitted that no expenses have been incurred for earning the same - HELD THAT:- The issue in the present case is already covered against the assessee in assessment year 2010-11 [ 2017 (8) TMI 417 - ITAT DELHI] we do not find any reason to deviate from the same. Therefore, respectfully following the decision of the coordinate bench in the assessee s own case the disallowance under Section 14A of the Act in the normal computation of the total income is upheld. Addition to the book profit under Section 115JB - HELD THAT:- This issue is squarely covered by the order of the coordinate bench in assessee s own case [ 2017 (8) TMI 417 - ITAT DELHI] wherein following the decision of the Special Bench in the case of Vireet Investment [ 2017 (6) TMI 1124 - ITAT DELHI] the addition is deleted. The learned Departmental Representative also stated that the issue is covered by that decision. Therefore, respectfully following the decision of the coordinate bench we direct the learned Assessing Officer to delete the addition while computing book profit on account of disallowance under Section 14A made in the normal computation while computing book profit on account of disallowance under Section 14A made in the normal computation. Disallowance on account of coordinate social responsibility - AO stated that the above expenditure is not wholly and exclusively incurred for the business purposes of the assessee and hence disallowed - HELD THAT:- The assessee has incurred the above expenditure in improving the passenger facilities and the solar system at one of the railway stations which is run by Ministry of Railways. The Ministry of Railways is the only customer of the assessee. Therefore, these expenditure have direct nexus with the business of the assessee. Even otherwise Explanation (ii) inserted in section 36(1) with effect from 1.04.2015 is prospective in nature, impugned assessment year is assessment year 2011-12, we direct the Assessing Officer to delete the above disallowance. Addition on account of prior period expenditure - HELD THAT:- Explanation of the assessee is that though the above expenditure related to earlier period but the bills of the same have been approved during the year. As the expenditure have been incurred and approved during the current year though may be pertaining to earlier year it cannot be said to be a prior period expenditure. Similarly in the earlier year in assessee s own case ITAT has deleted the above disallowance. Therefore, respectfully following the decision of the coordinate bench, we direct the Assessing Officer to delete the disallowance. Adjustment of book profit in the book profit on account of Leave Travel Assistance - HELD THAT:- As decided in own case [ 2017 (8) TMI 417 - ITAT DELHI] co-ordinate bench has confirmed a similar addition on account of Leave Travel Concession. Therefore, respectfully following the decision of the co-ordinate bench, we confirm the action of the Assessing Officer. Difference in gross lease rent received and lease rent offered for taxation - HELD THAT:- In assessee s own case, the Hon ble Delhi High Court has considered this issue in [ 2014 (6) TMI 224 - DELHI HIGH COURT] and further the co-ordinate bench in assessee s own case for assessment year 2010-11 [ 2014 (6) TMI 224 - DELHI HIGH COURT] has dealt with that issue and deleted the addition made by the learned Assessing Officer confirming the order of deletion of the learned CIT (Appeals) on the identical grounds. Disallowance on account of membership fee paid to Airport Authority of India - Corporate membership - CIT (Appeals) allowed the claim of the assessee holding that the same is allowable under Section 37(1) - HELD THAT:- Assessee has paid this sum for corporate membership of Airport Authority of India Officers Institute. The fact has been noted that the personal expenses of the executives are not incurred. The identical issue arose before the Hon ble Delhi High Court in [ 1999 (7) TMI 58 - DELHI HIGH COURT] wherein it has been held that such expenditure did not bring into existence any benefit of enduring nature. Also see M/S GROZ BECKERT ASIA LIMITED [ 2013 (2) TMI 375 - PUNJAB HARYANA HIGH COURT] - Decided against the Revenue.

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• 2020 (4) TMI 116
  Revision u/s 263 - long-term capital gain in the hands of the assessee being 50% of assessee s share in the property before allowing deduction u/s 54E by considering the fair market value of the property as on 01.04.1981 - CIT(A) directed the AO to adopt the computation of capital gain as on 01.04.1981 as declared by the assessee on the basis of the report of a registered value - HELD THAT:- We find on appeal by the assessee, Tribunal, vide order dated 23rd September, 2015, restored the issue to the file of the AO for fresh adjudication. We find, the AO, subsequently, passed an ex parte order u/s 144 of the Act and determined the total income in the hands of the assessee at Rs. 7,68,81,070/- as against the returned income of Rs. 4,70,82,272/-. CIT(A) gave partial relief to the assessee by substituting the fair market value of the property as on 01.04.1981 at Rs. 16,32,036/-. It is the submission of the assessee that in the case of the brother of the assessee, the Tribunal has quashed the section 263 proceedings initiated by the CIT against the order passed by the AO wherein he has considered the fair market value of the property at Rs. 95,28,000/- as on 01.04.1981. In hands of the brother of the assessee the AO has already considered the fair market value of the property as on 01.04.1981 at Rs. 95,28,000/- and since the assessee is holding 50% of the share in the said property, therefore, in the fitness of things the fair market value of the property has to be adopted at Rs. 95,28,000/- as on 01.04.1981. AO is accordingly directed to recompute the indexed cost of acquisition and consequential capital gain in the hands of the assessee. Since levy of interest on tax demand is consequential, the ground on this is dismissed. The grounds raised by the assessee are accordingly partly allowed.

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• 2020 (4) TMI 115
  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). Subsequently, the CIT(A) passed orders u/s 154 wherein the claim of deduction u/s 80P was denied, by relying on the judgment of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] - The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assessee-society. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the AO to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) 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. Appeals filed by the assessee are partly.

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• 2020 (4) TMI 114
  Addition of commission income - estimation commission income of the assessee for 207 days - set off with the income already disclosed by the assessee - Method to work out total commission income - HELD THAT:- Once, after taking into consideration the turnover, the commission income has been worked out at a sum of Rs. 25 lakhs, then how the commission income already accounted for by the firm at Rs. 27.50 lakhs could not be set off. We could appreciate the case of the Revenue, if after taking into the average commission income for three days, the learned CIT(A) worked out the commission income of 207 days at Rs. 27.50 lakhs plus Rs. 25 lakhs. In that situation, the stand of the Revenue not to give set off of Rs. 27.50 lakhs could be justified. But in the present situation, the only method which could be adopted is to work out total commission income for 207 days by whatever method, then debit that commission income from the amount already disclosed by the assessee plus expenditure and the remaining will be taxable. The disclosure made by the assessee at Rs. 27.50 lakhs is more the ultimate estimated income worked out by the learned CIT(A); therefore, no further addition is required. Accordingly, the addition of Rs. 18,20,407/- is deleted and the appeal of the assessee is partly allowed. Penalty u/s 271AAA - survey u/s 133A - HELD THAT:- The assessee failed to fulfill the conditions of Section 271AAA. It, therefore, deserves to be visited with penalty. However, the penalty is to be restricted qua 10% of the additions we have confirmed. We have already deleted Rs. 18,20,407/-; therefore, 10% of this is to be excluded. The penalty is, therefore, restricted to Rs. 2,75,000/-, instead of Rs. 4,57,041/- imposed by the Assessing Officer.

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• 2020 (4) TMI 113
  Deduction in respect of sale of seeds claimed u/s 80P(2)(IV) - as alleged assessee has claimed gross profit in excess - HELD THAT:- Firstly, we find that assessee has claimed gross profit of Rs. 6,07,354/- on sale of seeds. However, as per the trading account submitted by the assessee and examined by the Revenue authorities showed GP of Rs. 4,57,875/-, therefore, the assessee has claimed excess amount to the extent of Rs. 1,49,479/-. To this effect, no explanation was given by the assessee nor any details available on record. Therefore, disallowance made by the Revenue authorities to this extent is confirmed. So far as the balance amount of Rs. 1,83,150/- is concerned, we find that ITAT in the assessee s own case for the A.Ys.2013-14 and 2012-12 [ 2019 (4) TMI 1852 - ITAT AHMEDABAD] has given further relief at 20% on the balance amount of the disallowance. Therefore, since facts are similar in the present year also, we would take this line of finding recorded by the Coordinate Bench, and allow similar relief to the assessee in this year also. Accordingly, we allow further relief to the extent of 20% on the balance sum of Rs. 1,83,150/-, and allow this ground partly. Disallowance u/s 14A r.w. rule 8D - as explained by the assessee that the investments had been made out of own funds - HELD THAT:- In the case of CIT Vs. Corrtech Energy P.Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] has held that if there is no exempt income claimed by the assessee, then there could not be any disallowance under section 14A of the Income Tax Act. We find that the assessee has not debited any expenditure or has not claimed any expenditure for earning exempt income, then on presumptive basis expenditure cannot be calculated for disallowance. By applying formula given in Rule 8D read with section 14A of the Act, the AO has worked out an estimated disallowance at Rs. 4,40,120/-. It is difficult to comprehend, rationality of estimating an expenditure of Rs. 4,40,120/- for earning a meager dividend income of Rs. 16,362/-. Therefore, considering the facts and circumstances of the case of the assessee, and also following the ratio of the case law cited (supra), we are of the view that disallowance under section 14A cannot exceed the exempt income. Hence, we direct the assessing officer to restrict disallowance under section 14A to the extent of exempt income earned by the assessee i.e. Rs. 16,362/-. - Decided partly in favour of assessee.

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• 2020 (4) TMI 112
  Rectification u/s 254 - mistake apparent on record - Tribunal has passed ex-parte order for non appearance of the assessee on the date of hearing - HELD THAT:- Assessee has failed to make out a mistake apparent on record from the order of the Tribunal [ 2019 (6) TMI 1462 - ITAT MUMBAI] because the Tribunal has decided the issue involved in appeal on merits, as well as the legal issue taken by the assessee challenging validity of reopening of assessment u/s 147 of the I.T.Act, 1961. Although, the Tribunal has passed ex-parte order for non appearance of the assessee on the date of hearing, but fact remains that the issues raised in appeal has been decided on merits, including legal ground taken by the assessee challenging validity of reopening of the assessment. No doubt, when appeal is disposed off, exparte it can be recalled if the aggrieved person makes out a case of reasonable cause for not attending the hearing. In this case, the assessee has failed out make out a case of reasonable cause, which can be considered to recall order. Therefore, we are of the considered view that there is no merit in miscellaneous applications filed by the assessee, which can be rectified u/s 254(2).

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• 2020 (4) TMI 111
  Principle of Mutuality - Exemption u/s 11 - Charitable activity u/s 2(15) - NASSCOM is the premier trade body and the chamber of commerce of the IT-BPO industries in India. - exemption u/s 11 12 denied to the assessee and that the assessee society was to be assessed as normal AOP (Association of Person) - AO stated that it can be seen that assessee itself has bifurcated its income in two streams first stream of income from members is claimed as exempted on the Principle of Mutuality and second stream of income earned from services provided to both the non- members as well as members - HELD THAT:- The assessee has offered the income for taxation received from non-members but the assessee has claimed the exemption of income of Rs. 8.32 crores which is received from the members of the association on the principle of mutuality, The assessee has also relied on various case laws on the principle of mutuality. It is seen that the income Of the assessee received from one non-members has been offered for tax by the assessee itself after the amendment in section 2(15) for AY. 2009-10 onwards. It is only the membership fees from its own members which has been claimed as exempt by the assessee on the principle of mutuality. The assessee is a trade association of software industries and its main objective is to promote and protect the interest of its members. So the membership fees received by the assessee from its own members comes within the meaning of principle of mutuality and as such the net income of the assessee from its own member is exempt from tax. The case laws cited by the assessee as above also support the case of the assessee on the principle of mutuality, After considering all the facts and circumstances of the case and keeping in view the order of my predecessor for AY. 2009-10, benefit on principle of mutuality be granted to the assessee on membership fees from members only. Issue to be decided in favour of assessee as relying on own case [ 2019 (11) TMI 339 - ITAT DELHI] and [ 2019 (10) TMI 123 - ITAT DELHI]

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• 2020 (4) TMI 110
  Royalty receipt - amount received by the assessee from providing users a right in off-the-shelf software and use of standard facilities and support services - HELD THAT:- As decided in own case [ 2020 (1) TMI 1177 - ITAT PUNE] such amount cannot be treated as Royalty chargeable to tax. Rate of tax at which software and standard facility income should be charged to tax - AO charged the tax @ 40% - HELD THAT:- In view of our decision on grounds nos. 1 2 about non-taxability of these amounts, this ground has been rendered infructuous. Since the income itself is not chargeable to tax, there can be no question of rate of tax at which such income should be charged. Surcharge and Education Cess in the amount of tax charged by the AO under the Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- From the computation of income, it can be seen that the income of the assessee which has been charged to tax under the regular provisions has also been subjected to Surcharge and Education Cess. In so far as the taxability of income under the DTAA is concerned, there are specific rates on which such incomes are chargeable to tax. Such rates cannot be further enhanced by Surcharge and Education Cess as has been held in the several decisions including the one dated 30-11-2015 relied by the ld. AR in DDIT (IT) Vs. The BOC Group Limited [ 2016 (1) TMI 414 - ITAT KOLKATA] - We, therefore, overturn the impugned order and direct not to charge Surcharge and Education Cess on the rates of tax under the DTAA. This ground is allowed. Levy of interest u/s.234D - HELD THAT:- As AR submitted that the assessee was not granted any intimation of refund u/s. 143(1) of the Income-tax Act, 1961 (hereinafter also called `the Act ), which ultimately turned out to be not refundable AO is directed to verify the factual scenario in this regard and decide the issue afresh as per law. Allowing lesser credit of TDS - HELD THAT:- AO is directed to examine the correct amount of TDS as per certificates and grant necessary credit as per law after allowing reasonable opportunity to the assessee.

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• 2020 (4) TMI 109
  Rectification u/s 154 - disallowing the claim of indexation of the assessee - HELD THAT:- we set aside the orders of the authorities below and restore the matter in issue to the file of AO with direction to pass the order u/s 154 afresh as per law in the light of directions of the Tribunal dated 29.01.2016 [ 2016 (1) TMI 1444 - ITAT DELHI] for assessment year under appeal i.e. 2006-07. The AO shall give reasonable sufficient opportunity of being heard to the assessee before passing the order.

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• Customs

• 2020 (4) TMI 108
  Undervaluation of imports - payment of differential amounts to foreign buyers through Hawala - rejection of declared value - redetermination of value of imported goods - imposition of penalties on various persons individually and severally. - Retracted statements. - Scope of the term Importer HELD THAT:- A bare reading of the definition implies that the term importer includes any person holding himself out to be the importer. However, it is important to note that such a person holding himself out to be the importer would be considered an importer any time between the importation of the goods and the clearance of the same for home consumption. In the instant case, it is not in dispute that the entire case is about the goods which have been imported and cleared for home consumption after due assessment. It is evident that Shri Satish Luthra has not been held to be an importer before the clearance of goods for home consumption and as such he cannot be held to be an importer after the clearance of the goods for home consumption - for the purpose of Section 2 of the Customs Act 1962, Shri Satish Luthra cannot be held to be an importer and as such cannot be a person referred to in Section 28 of Customs Act 1962. Therefore, neither the demanded duty nor the imposed penalty can be held to be devolved on Shri Satish Luthra. Under-valuation of goods - HELD THAT:- The entire allegations in the show cause notice and consequently the impugned order are based on statements of different persons. Some of them have been since retracted. All the impugned goods imported by or imported in the name of nine importers have been cleared for home consumption by the proper officers. The Department has sought to re-determine the value of such goods which have been already cleared for home consumption without filing appeals against the respective assessments in the Bills of Entry. We find that Learned Commissioner has been categorical in holding that there is considerable difference between price of branded goods and un-branded goods of the same specification. The investigation has not made any efforts to cross-link the seized goods to the goods imported under the Bills of Entry filed by the nine importers. In the instant case Commissioner has, on the one hand, found that there is no co-relation between the impugned seized goods and the Bills of Entry. He has set out a new ground of some of the goods being branded by looking into the portion of the Bills of Entry which is normally not visible on the printed copy. He has not supplied the copies of Bills of Entry showing that the goods are branded. In doing so, Learned Commissioner has not only travelled beyond the scope of the SCN but also has contravened the principles of natural justice - The evidence that commissioner seeks to rely during the course of adjudication, is not supplied to the appellants and thereby, an opportunity to defend themselves has been denied to them. Under the circumstances, such an order is not maintainable and is liable to be set aside. Moreover, OIO failed to give proper grounds to establish that the transaction value declared by the appellants is liable to be rejected. The OIO does not rely upon any contemporaneous imports of identical or similar goods to establish that the goods are mis-declared - the entire case of the Department is built upon the statements of different persons involved and most of the statements have been retracted. Once, the statements have been retracted, the onus lies on the Department to prove that the statements are correct. The same has not been discharged - further, other than statements, no evidence documentary or otherwise has been put forth by the Revenue to substantiate the allegation of under-valuation. No samples were drawn and no enquires were made. Thus, there are no reasons for rejection of the assessable value of the goods, more so looking in to the fact that the goods have been once cleared by Customs after due process of examination and assessment, as declared by the importers have been given. The impugned order suffers from various lacunae and thus is liable to be set aside. When the charge of under-valuation is not established, no case is made out for imposition of redemption fine, penalties and demand of duty from any of the appellants involved - Appeal allowed - decided in favor of appellant.

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• 2020 (4) TMI 107
  Maintainability of appeal - non-compliance with the requirement of pre-deposit - delay condoned on sufficient reasons shown - HELD THAT:- No purpose will be served by keeping the appeal pending in the files of Tribunal as there is no order on merits. With the consent of both sides, we proceed to dispose the appeal itself. On perusal of records, it is seen that the Commissioner (Appeals) has not considered the merits of the case - The appeal is remanded to Commissioner (Appeals), who is directed to decide the appeal on merits. Appeal allowed by way of remand.

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• Service Tax

• 2020 (4) TMI 106
  Business Auxiliary Services - Broadcasting Service or intermediary service - Import of services - Place of provision of services - respondents are surrogate providers of broadcasting service in India - For Revenue, it was argued that retained amount constitute consideration for acting as an intermediary for securing the earnings that are generated from telecast of signals - HELD THAT:- The retained amount is not an outflow and, in the absence of outflow of consideration from the respondents herein to the overseas entity, recourse to these Rules cannot be had. Most critically, the domestic broadcast agency and overseas broadcast agency , though taxed by the same provision, are treated differently in the range, as well as channel, through which the service is rendered. Therefore, the logic of uncalled for preference in the absence of countervailing is flawed. In a series of decisions commencing with that of the Hon ble High Court of Bombay in Commissioner of Service Tax, Mumbai II v. SGS India Ltd [2014 (5) TMI 105 - BOMBAY HIGH COURT] the factum of final delivery of the resulting activity to India was held to be insufficient to withhold from service rendered the benefit accruing to exporters. Therefore, taxability is excluded if it is established that the transaction is an export. The deeming fiction carries with it the burden of tax on the entire consideration receivable by the overseas entity and in the hands of the Indian entity acting as agency of such overseas entity. Respondent is deemed provider of service and the range of activities included in the taxable service comprises the very aspects that were sought to be taxed in the proceedings initiated by the show cause notices. Perceptibly, the same activity cannot be taxed twice as the classification of services itself provides, by section 66F of Finance Act, 1994, for situation in which more than one competing entry cannot be allowed to sustain - Appeal dismissed - decided against Revenue.

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• 2020 (4) TMI 105
  Works Contract - contracts entered into with customers for manufacture of elevators that are then erected, commissioned and installed at the site - Denial of benefit of abatement - Jurisdiction - authority vested in officers designated under Finance Act, 1994 to alter the taxing entry for discharge of liability with intent to compel a particular mode of assessment peculiar to that entry - HELD THAT:- The law pertaining to taxability of service component of composite works contracts took a long time to attain finality. The decision of the Hon ble Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] makes it abundantly clear that the authority vested in the Union to levy tax is limited to the service component and only in accordance with the machinery provisions in Finance Act, 1994. Appellant has not, and still does not, for the composition scheme. To the extent that this continues to be option exercised by the appellant, the adjudicating authority is required to satisfy itself about the scope, and extent, of eligibility for notification no. 12/2003-ST dated 20 June 2003 and, in the event of recourse to the composite scheme by the appellant, for the duty to be computed accordingly. Adjuring the original authority to limit the adjudication, now ordered, to the normal period from the relevant date in relation to the first show cause notice and for the first three months of 2012-13 in the second notice and to comply strictly with the framework for taxation of works contract service expounded by the Hon ble Supreme Court in re Larsen Toubro Ltd, the demand for these two periods set aside with the direction that the same be subject to fresh adjudication in which the appellants herein shall be entitled to make all their submissions - appeal disposed off.

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• 2020 (4) TMI 104
  Management of business consultancy service - Import of legal services relating to arbitration proceedings - reverse charge mechanism - Negative list - taxation of services in the hands of deemed provider of service - extended period of limitation - HELD THAT:- From the details of Invoices, it appears that, these do not come within the purview of exclusion of charges for representation before courts or tribunals that, according to us, can be extended also to arbitral forums. The claim, made on behalf of the appellant, that only services rendered by business entity was taxable in the pre-negative list era does not preclude the service received by the appellants from M/s Eversheds LLP from being taxed as the provider of service has been so described for the restricted purpose of excluding individuals. The issues arising from taxation of services in the hands of deemed provider of service was, during the relevant time, fraught with doubts and assumptions and judicial light was thrown to dispel the attendant darkness only in recent times. Furthermore, as deemed a provider of service , obliged to discharge the tax liability, the appellant was entitled to avail of credit under CENVAT Credit Rules, 2004. Motive for suppression, misdeclaration or evasion of tax is, thus, not patent. Nor do we find any substance in the impugned order or show cause notice to conclude otherwise. In these circumstances, the recovery of tax on the charges paid to M/s Eversheds LLP in notices that extended beyond the normal period of limitation stands barred. Demand of service tax confirmed for the Normal Period - Adjudicating authority directed to separate the wheat from the chaff. Renting of immovable services - Held that:- The appellant had discharged liability on rental of immovable property, along with interest, before issue of show cause notice. There are no evidence of any of the ingredients that could lead to invoking of the extended period in section 73 of Finance Act, 1994. Therefore, the provisions of section 73 (3) of Finance Act, 1994 precludes further proceedings. The imposition of penalty of Rs. 7,41,600 and of Rs. 40,375 fails to find sustenance in law. Appeal disposed off.

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• 2020 (4) TMI 103
  Valuation - repair and servicing of earthmoving equipment - free supply of goods by recipient of service - separate invoicing of the materials utilised in rendering the service - to be included in assessable value or not - section 67 of Finance Act, 1994 as clarified in circular no. 96/7/2007-ST dated 23th August 2007 of Central Board of Excise Customs - HELD THAT:- In the present instance, it is not in doubt that goods have been transferred to the recipient of the service; it is the incorporation of the goods within the article that has been subject to the service, and the ramifications thereof, that is. In the context of judicially determined mutuality, the extent to which section 67 of Finance Act, 1994 can be stretched is the crux of resolution. The jurisdictional competence to enforce VAT liability excludes us, as well as the adjudicator, from authority to ascertain the discharge of tax liability on the goods component of the impugned transactions. The adjudicating authority has, thus, erred in presuming to the contrary in the absence of particulars in the invoices. The supply of consumables by the recipient does not constitute consideration to which value was required to be assigned for enhancing the gross amount charged in section 67 of Finance Act, 1994. Neither the circulars of Central Board of Excise Customs, advising the inclusion of all expenditure incurred for rendering services, nor the expansion of consideration to encompass consumables , that does not add to the assets of the provider of service, have sanction of law. The differential tax confirmed in the impugned order cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2020 (4) TMI 102
  Rejection of rebate claim - Refund or rebate claim - non-compliance with conditions of N/N. 11/2005 dated April 19, 2005 - failure to produce details of Cenvat credit availed/utilized, maintenance of proper records showing the receipt and consumption of the input services etc. - relation of input service with output service - HELD THAT:- The Appellant have produced the decision of Supreme Court in SHARE MEDICAL CARE VERSUS UNION OF INDIA [ 2007 (2) TMI 2 - SUPREME COURT] , to hold that the Appellant is allowed to choose the rebate option, when more than one options are available. Therefore, the denial of rebate on the ground of not opting for refund under Rule 5 of CCR, is not sustainable in law and therefore, appellants are entitled to the rebate under the provisions of Notification 11/2005 - The appellant is also entitled to rebate under Notification 11/2005 since all conditions are fulfilled by the Appellant. Rebate also rejected on the ground that there is no direct nexus between the input service and the output services - HELD THAT:- This ground is also not sustainable - The appellant produced various decisions wherein these services have been held to be input services and has nexus with the output service - Further, in case of a rebate, the question of which input was used in terms of availment of cenvat credit does not arise as settled by Tribunal judgments quoted by the Appellant - Therefore, the denial of rebate on lack of nexus is not sustainable in law - the appellants are entitled to the rebate on these input services. Non-production of details of Cenvat credit availed/utilized, maintenance of proper records showing the receipt and consumption of the input services etc. - HELD THAT:- Despite Appellant s claim that all the documents were submitted even at the time of rebate claim, the case remanded to the original authority who will examine the documents. The matter is remanded to the original authority for verification of the documents required as per the conditions prescribed in the Notification 11/2005 and grant rebate as per the same Notifications - Appeal allowed by way of remand.

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• 2020 (4) TMI 101
  Principles of natural justice - demand alongwith interest and penalties - appellant submits that the demand against the appellant is not sustainable as no verification of documents has been done either by the Adjudicating Authority or by the audit team - HELD THAT:- In this case the appellant was never asked to provide copy of invoices to verify whether the service provider has paid any service or not. Therefore, arguments advanced by the learned Authorised Representative for the Revenue is not sustainable - in this case, without co-relation / verification by the authorities below has confirmed the huge demand against the appellant which shows negligence on the part of Audit team. The matter is remanded back to the adjudicating authority to afford an opportunity to the appellant to provide all the relevant documents - Appeal allowed by way of remand.

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