Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 11, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
GST - States
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G.O.Ms.No. 292 - dated
29-4-2019
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Andhra Pradesh SGST
Andhra Pradesh Goods and Service Tax (Second Amendment ) Rules 2019
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G.O.Ms.No. 291 - dated
29-4-2019
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Andhra Pradesh SGST
THE ANDHRA PRADESH GOODS AND SERVICES TAX ACT, 2017 (ACT NO. 16 OF 2017) TO NOTIFY CERTAIN CLASS OF REGISTERED PERSONS UNDER SECTION 148
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G.O.Ms.No. 290 - dated
29-4-2019
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Andhra Pradesh SGST
CERTAIN AMENDMENTS TO THE NOTIFICATION ISSUED IN G.O.MS.No. 256, REVENUE (CT.II) DEPARTMENT, DATED. 29.06.2017
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G.O.Ms.No. 289 - dated
29-4-2019
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Andhra Pradesh SGST
CERTAIN AMENDMENTS TO THE NOTIFICATION ISSUED IN G.O.MS.NO.588, REVENUE (CT.II) DEPARTMENT, DATED: 12.12.2017 RELATED TO SERVICES OF NIL RATE OF TAX.
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G.O.Ms.No. 288 - dated
29-4-2019
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Andhra Pradesh SGST
PRESCRIBING RATE OF TAX FOR CERTAIN GOODS OF THE ANDHRA PRADESH GOODS AND SERVICES TAX ACT, 2017 (ACT No.16 OF 2017)
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G.O.Ms.No. 287 - dated
29-4-2019
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Andhra Pradesh SGST
CERTAIN AMENDMENTS TO THE NOTIFICATION ISSUED IN G.O.MS.NO.259, REVENUE (CT.II) DEPARTMENT, DATED. 29.06.2017 RELATED TO RATES OF TAX ON SERVICES.
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S.O. 213 - dated
8-5-2019
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Bihar SGST
Governor of Bihar appoints the 21st day of June, 2019, as the date from which the provisions of the Bihar Goods and Services Tax (Fourteenth) Amendment Rules, 2018 rule 12 of [Commercial Taxes Department notification No S.O. 07 dated the 3rd January, 2019 published in the Bihar Gazette, Extraordinary, vide number 18, dated the 3rd January, 2019], shall come into force.
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S.O. 212 - dated
8-5-2019
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Bihar SGST
To notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 02-2019– State Tax (Rate), dated the 7th March, 2019.
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S.O. 211 - dated
8-5-2019
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Bihar SGST
Bihar Goods and Services Tax (Third Amendment) Rules, 2019.
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Removal of Difficulty Order No. 05/2019- State Tax - dated
8-5-2019
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Bihar SGST
Bihar Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019.
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3/2019-State Tax(Rate) - dated
8-5-2019
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Himachal Pradesh SGST
Amendment in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017
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08/2019-State Tax (Rate) - dated
8-5-2019
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Himachal Pradesh SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017
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CT/41/2019-C1 - dated
8-5-2019
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Kerala SGST
Construction of apartments- option to pay state tax- filing of option-instructions issued.
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No. 4827/CT/POL-41/1/2017-Policy - dated
29-3-2019
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Orissa SGST
Extend the period for submitting the declaration in FORM GST TRAN-1 till 31st March, 2019
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S.O.39/P.A.5/2017/S.10/2019 - dated
8-4-2019
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Punjab SGST
Supersession of the Government of Punjab, Department of Excise and Taxation, Notification S.O.26/P.A.5/2017/S.10/ C.A.14/2017/S.21/2017, dated the 30th June, 2017.
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S.O.38/P.A.5/2017/S.148/2019 - dated
8-4-2019
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Punjab SGST
Notify the registered persons having aggregate turnover of up to 1.5 crore rupees furnish the details of outward supply of goods or services or both in FORM GSTR-1.
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S.O.37/P.A.5/2017/S.11/2019 - dated
8-4-2019
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Punjab SGST
Rescind the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.32/P.A.5/2017/S.11/2017, dated the 30th June, 2017.
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S.O.36/P.A.5/2017/S.23/Amd./2019 - dated
8-4-2019
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Punjab SGST
Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.92/P.A.5/2017/S.23/2017, dated the 28th November, 2017.
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S.O.35/P.A.5/2017/S.10/Amd./2019 - dated
8-4-2019
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Punjab SGST
Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.26/P.A.5/2017/S.10/C.A.14/2017/S.21/2017, dated the 30th June, 2017.
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S.O.34 /P.A.1/2019/S.1/2019 - dated
8-4-2019
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Punjab SGST
Appoint the 1st day of February, 2019, as the date on which the provisions of the Punjab Goods and Services Tax (Amendment) Act, 2018 (Punjab Act No.1 of 2019), except clause (b) of section 8, section 17, section 18, clause (a) of section 20, sub-clause (i) of clause (b) and sub-clause (i) of clause (c) of section 28, shall come into force.
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S.O.33/P.A.5/2017/S.23/2019 - dated
8-4-2019
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Punjab SGST
Category of persons exempt from obtaining registration who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees.
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S.O.32/P.A.5/2017/Ss. 9, 11 and 16/2019 - dated
8-4-2019
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Punjab SGST
Notify that the State tax, on the intra-State supply of goods or services or both
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G.S.R.20/P.A.5/2017/S.164/Amd.(27)/2019 - dated
8-4-2019
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Punjab SGST
The Punjab Goods and Services Tax (Second Amendment) Rules, 2019
SEBI
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SEBI/LAD-NRO/GN/2019/15 - dated
8-5-2019
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SEBI
Securities and Exchange Board of India (Employees' Service) (Amendment) Regulations, 2019
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Input tax credit - Restriction u/s 16(2) where consideration is not paid within 6 months - consideration for inward supplies paid through book adjustment - The GST Act and rules does not restrict the recipient from claiming the input tax credit when consideration is paid through book adjustment - credit duly allowable
Income Tax
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Addition of explained cash credit u/s 68 - the lenders of funds have not, at any stage, discharged their onus in furnishing documentary evidence in respect of cash deposits made in their accounts and against which loans were advanced to the assessee - The creditworthiness of the lenders and the genuineness of the transaction was not clear - addition sustained
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Exemption u/s 11 - salary paid to two specified persons u/s 13(3) - these persons have devoted full time to the educational institution to the best of their knowledge, ability and experience - A.O. did not bring any evidence on record as to how the salary paid to these persons with reference to their qualification was excessive or unreasonable - relief granted
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Addition u/s 68 - credit of undisclosed income - it was declared before settlement commission that company has earned the undisclosed income and routed in books through its companies as unaccounted share capital - sources of income is taxed in the hands of Surya Food and Agro Ltd - Therefore prima facie the case of the assessee shows that there is double taxation, once the source of income and secondly the application of income - addition deleted
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TP Adjustment - Design Engineering Services - in the TP study report assessee applied margins at the entity level - it cannot be precluded from furnishing segmental details during TP or DRP proceedings in order to benchmark the margins of its international transactions on the basis of segmental profitability of AE segment - segmental details are to be adopted and margins of segment of AE transactions are compared with margins of comparables selected
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Revision u/s 263 by CIT - order of assessment indicate that the AO has made enquiry on various issues and assessee submitted the details therefor - The enquiry pertained to the remuneration of the partners and the expenses/receipts - the nature of order does not bring within the purview of Section 263 as such order cannot be said to be “prejudicial to the interests of Revenue"
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Penalty u/s 271AAA - defective notice - if there is no clarity in the stand of the Revenue for initiation of penalty u/s 271AAA, whether it is for failure of the assessee to explain the manner in which undisclosed income was derived or it is the failure to substantiate the manner of earning of income or for not recording of such income in the books of account - penalty not leviable
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TP Adjustment on export of Valves -ALP determination - TPO ought to have arrived at the ALP of the respondent's sale to its A.E. by only comparing it with uncontrolled transaction of sale to in USA and not with sales to its AEs in different parts of the world - comparison has to be region /country specific
Customs
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Imposition of late filing fees - belated filing of Bills-of-Entry - Clearly, no mala fide is found in the above developments by the Revenue and therefore, it can be safely assumed that the Revenue was otherwise satisfied with ‘sufficient cause’.
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Validity of restriction imposed on import of pigeon peas, Beans of the species Vigna Mungo (L.) Hepper (Moong Dal) - the peas growers in India are unable get the right price resulting in loss to small farmers - The restrictions imposed by the Government of India are justified.
DGFT
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Registration of contracts for Peas (HS - code 0713 10 00) under Trade Notice No. 25/2018-19 dated 17th August, 2018
Indian Laws
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Discharge of liability of a secured debt - precedence over the liability of a crown debt or any other / state debt - in case of repugnancy or inconsistency between the provisions of Central and State enactment, the Central law would prevail.
IBC
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Default on the part of Corporate Debtor to make the payment - the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code
SEBI
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Reporting for Artificial Intelligence (AI) and Machine Learning (ML) applications and systems offered and used by Mutual Funds
Service Tax
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Demand of service tax - construction of multilevel parking - The multilevel parking are made for reducing traffic conditions and parkings on the road and is for betterment and development of the city. It cannot be said to be a commercial activity so as to tax the same.
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Demand of interest for the period April 2012 to March 2013 - The first set of returns were filed in the instant case on 19.09.2013 and therefore 18 months from this date will be 18.03.2015. The show cause notice was issued on 16.03.2015 within the normal period of limitation - demand of interest upheld.
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Revenue has put the blame on advocate representing the Department for delay in filing the Notice of Motion - We fail to understand as to how the Department expects the Advocate to file a notice of motion for restoration to get the appeal restored and to remove the office objections in the appeal, without receiving single farthing from the Department even for out of pocket expenses.
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Demand of service tax & penalty - Performa invoices - The appellant has not provided any service against the invoices for which the service tax has been demanded from the appellant - no service tax is payable on Performa invoices
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Pre SCN consultation - it was necessary in terms of para 5.0 of the Master Circular for the Respondent to have engaged with the Petitioner in a pre SCN consultation - matter relegates the parties to the stage prior to issuance of impugned SCN
Central Excise
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Validity of Search proceedings - search under Central Excise post GST u/s 12F of the Act of 1944 read with Section 18 of the Act of 1944 and Section 174(2)(e) of the Act of 2017 - admission of HAWALA transaction through Whatsapp messages during search - Search proceedings sustained.
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Search proceedings - An error committed by the Officer in seizing the documents which may ultimately be found not to be useful for or relevant to the proceeding under the Act will not by itself vitiate the search.
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Interest on differential duty - price escalation clause - Section 11A and section 11AB as it stood at the relevant time did not provide read with the rules any other point of time when the amount of duty could be said to be payable and so equally the interest - Demand of interest confirmed.
Case Laws:
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GST
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2019 (5) TMI 701
Input tax credit - Restriction u/s 16(2) where consideration is not paid within 6 months - consideration for inward supplies paid through book adjustment - reversal of credit - Sections 16 and 49 of the GST Act - transactions where the payment had not been made by account payee cheque or account payee draft or through electronic banking clearance - HELD THAT:- In the present context, consideration , as defined under section 2(31), provides the scope and ambit for modes of payment. It includes, in relation to the supply of goods or services, any payment, made or to be made, whether in money or otherwise, and also the monetary value of any act or forbearance. This definition of consideration cast the net so wide that almost no form of payment is excluded. The recipient can pay the supplier consideration by way of setting off book debt. Unless the law specifically restricts the recipient from claiming the input tax credit when consideration is paid through book adjustment, credit of input tax cannot be denied on this ground alone. Rule 19(8) of the West Bengal Value Added Tax Rules, 2005, specifically provided that credit of input tax would be available only if the payment was made by account payee cheque or account payee draft or through electronic banking clearance when such payment exceeded rupees twenty thousand in a day. No such restriction is apparently provided under the GST Act. The Applicant can pay the consideration for inward supplies by way of setting off book debt. The GST Act and rules made there under does not restrict the recipient from claiming the input tax credit when consideration is paid through book adjustment, subject to the conditions and restrictions as may be prescribed and in the manner specified in Sections 16 and 49 of the GST Act.
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2019 (5) TMI 700
Refund of unutilized Input Tax Credit - period from July, 2017 to March, 2018 - HELD THAT:- Petition disposed off by directing respondent No.2 to take a decision on the preliminary objections dated 15.4.2019, in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner within a period of one week from the date of receipt of the certified copy of the order.
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Income Tax
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2019 (5) TMI 699
Perversity of order of tribunal - reliance of wrong certificate of CA - taxability of pledged gold as income u/s 28(iv) - huge stock of gold in the possession of the assessee - assessee attributed stock of gold to inheritance from his grandfather who died in 1997 - HELD THAT:- We agree with their contentions. It is indeed perverse. In paragraph 4 of the impugned order the tribunal has narrated that in the year ending 31st March 1997 the audited statement of accounts of Khagendranath Nandi, the assessee s grandfather declared that he had pledged gold weighing 927.17 gms. This is even less than 1 kg. Then it goes on to rely on a chartered accountant s certificate that as on 31st March 1997 the gold in the custody of the grandfather was 27,927.17 gms. or about 28 kgs. The contradiction between the grandfather s audited accounts and the chartered accountant s certificate is so glaring that any reasonable adjudicator would have straightway discarded that certificate as false and fraudulent and taken steps against the chartered accountant. On the contrary this was accepted and acted upon by the tribunal which came to the finding that this quantity of gold was indeed pledged gold which become the property of the assessee. The question of law whether the pledged gold is taxable as income u/s 28(iv) is become secondary. We have no hesitation in setting aside this order of the tribunal dated 23rd December 2016. We remand the above issue back to the tribunal to make a proper finding on facts on it upon hearing the parties, by a reasoned order. The tribunal will then decide the question of law arising therefrom with reference to section 28(iv). The tribunal will pronounce its decision within three months of communication of this order. We also make it clear that our observation above are to be taken as tentative and the tribunal will be at liberty to draw its own conclusion in the matter.
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2019 (5) TMI 698
Addition of explained cash credit u/s 68 - exemption u/s 10(23C)(iiiad) - assessee had received unsecured loan in cash from various persons - genuineness creditworthiness of the lenders - HELD THAT:- The Tribunal while confirming the addition made on account of unsecured loan received, had noticed that the lenders of funds have not, at any stage, discharged their onus in furnishing documentary evidence in respect of cash deposits made in their accounts and against which loans were advanced to the assessee. The creditworthiness of the lenders and the genuineness of the transaction was not clear and even the lenders summoned by the Assessing Officer had not submitted their income tax returns. Therefore, the addition made by the Assessing Officer u/s 68 was rightly confirmed by the CIT(A) and did not call for any interference by the Tribunal. Since the assessee had failed to discharge its onus in respect of unsecured loan, therefore, on adding the same with its receipts from fees and interest, the gross receipts amounted to ₹ 1,40,03,382/- (₹ 67,75,000/- + ₹ 72,28,382/-) which exceeded Rs. one crore. Since, the gross annual receipts of the assessee exceeded Rs. one crore and the assessee having not taken prior approval from the Chief Commissioner of Income Tax, Panchkula, thus, the assessee was not eligible for exemption u/s 10(23C)(iiiad). Therefore, the said exemption was rightly disallowed and as a consequence the excess of income over expenditure shown at ₹ 7,89,745/- was also rightly added to the unsubstantiated unsecured loan and the taxable income of the assessee determined. The aforesaid findings of fact recorded by the authorities cannot be held to be perverse based on non-appreciation of material or based on the misreading of any evidence on record which may warrant interference by this Court. No question of law, much less, substantial question of law arises in the appeal - appeal is dismissed
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2019 (5) TMI 697
Revision u/s 263 by CIT - genuineness of the capital introduced in the names of the partners - As per CIT No enquiry for ascertaining the genuineness of the loan to which AO has failed to apply his mind - ITAT reversed the order the CIT, Alwar - HELD THAT:- ITAT held that it was not a case where Assessing Officer completed the assessment without conducting necessary and proper enquiries. The issue raised by the Pr.CIT has been considered by the assessing Officer at the time of assessment and the assessee has submitted evidences and details in support of its claim made in P L account. Therefore, in his view, the order passed by the AO U/s 143(3) of the Act on 24/3/2014 was not an erroneous order, which could be said to be prejudicial to the interest of the revenue We are inclined to concur with the view expressed by the ITAT as the order of assessment indicate that the AO has made enquiry on various issues and assessee submitted the details therefor. The enquiry pertained to the remuneration of the partners and the expenses/receipts. The Assessing Officer enhanced the return income of the assessee of ₹ 2,99,820/- to ₹ 4,55,556/- by making additions out of the various expenses. The nature of the assessment order does not bring the case of the revenue within the purview of Section 263 as such order cannot be said to be prejudicial to the interests of Revenue - Decided in favour of assessee.
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2019 (5) TMI 696
Reopening of assessment u/s 147 - bogus purchases - CIT(Appeal) has held that 15% of unverifiable/bogus purchases is to be added to the income of the appellant also confirmed by ITAT - HELD THAT:- Copy of reasons recorded were supplied to the assessee alongwith notice u/s.142(1) and notice u/s.143(2) dated 21.4.2014. The Assessing Officer on examination of purchase details noted that the assessee had shown purchases from M/s. JPK Trading Pvt. Ltd. Amounting to ₹ 20,96,965/-. However, as per the statement of Shri Praveen Kumar Jain, it was found that M/s. JPK Trading Pvt. Ltd. had never sold any goods and were only issuing bogus sale invoices and charged commission. CIT(A) and ITAT have noted the request of the appellant for permitting cross examination of the Director of the said company Shri Praveen Kumar Jain of M/s. JPK Trading (I) Pvt. Ltd. Tribunal that the Assessing Officer taking resort to various case laws made the trading addition of ₹ 5,24,240/- by disallowing 25% of unverifiable purchases of ₹ 20,96,965/-. CIT(A), however, reduced the trading addition to ₹ 5,24,240/- by relying on the judgement of the ITAT Jaipur Bench dated 22.10.2014 in Anuj Kumar Varshney vs. ITO [ 2015 (4) TMI 533 - ITAT JAIPUR] . The CIT(A) has also upheld the earlier orders by dismissing the appeal and noted that the CIT(A) has elaborately discussed the issue raised by the assessee in his order, which was not interfered by this Court. No substantial question of law. We are inclined to concur with the view taken by the ITAT as also the CIT(A). In our view, the present appeal does not raise any question of law much less substantial question of law.
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2019 (5) TMI 695
Stay of demand - Attachment orders - Application for stay filed by the petitioner was pending before the CIT (A), an authority superior to the assessing officer and requested him to keep the collection of demand in abeyance till the disposal of the said application - HELD THAT:- The impugned recovery action is premature, apart from being mechanical and without any application of mind. The petitioner has approached the CIT(A), an authority empowered to consider and adjudicate upon the request for stay, (see Paulsons Litho Works vs Income-Tax Officer And Others [ 1993 (11) TMI 50 - MADRAS HIGH COURT] as early as on 22.01.2019, which is within thirty (30) days from the date of order of assessment. This fact has also been brought to the notice of the respondents. It was thus, incumbent upon the respondent to have awaited adjudication by the CIT (A) upon the request for stay made by the petitioner. The impugned order is set aside and the assessing authority is directed to lift attachments in the bank forthwith. It is brought to my notice by the learned standing counsel that a sum of ₹ 16,00,000/- (approx) has been appropriated from the accounts. The same shall be retained by the department and adjusted against the disputed demands.
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2019 (5) TMI 694
TP adjustment - benchmarking international transactions of sale of Valves - aggregation of its transactions with the A.E. vs aggregation of its transactions with Non AE - ITAT held difference between the prices charged to A.E. and non A.E. being within the tolerance limit of 5% - HELD THAT:- Mr. Suresh Kumar, learned counsel appearing in respect of the appeal submits that the approach adopted by the TPO was correct approach. However, he is not able to point any flaw in the approach of the CIT (A) and the Tribunal in adopting the aggregated approach in the present facts. Thus, the view taken by the Tribunal of determining the ALP of sales to AE on the comparison of the aggregation of AE and non AE transactions (taking its arithmetical mean) does not call for any interference. No substantial question of law. TP Adjustment on export of Valves - Valves in Kit form to its AE in USA viz. Flow Serve Sulphur Spring (Flow Serve) - ITAT held that TPO had clearly made a fundamental error in determining the ALP of sales of vales and kits made to Flow Serve by comparing its margin with other sales by the respondent to its AEs in different parts of the world - HELD THAT:- We note that Chapter X of the Act is a special provision relating to avoidance of tax. Section 92 deals with computation of income from international transaction having regard to ALP. It provides any income arising from the international transaction shall be computed having regard to the ALP. The ALP is defined under Section 92F(ii) to mean a price which is applied or proposed to be applied in transactions between persons other than AE's in uncontrolled transactions. This is further supported by Rule 10A(d) where uncontrolled transaction has been defined as a transaction between enterprises other than with A.E's. whether resident or non-resident. In view of the above clear position in law, the TPO ought to have arrived at the ALP of the respondent's sale to its A.E.viz. Flow Serve by only comparing it with uncontrolled transaction of sale to in USA. Thus the approach of the TPO is contrary to the clear provisions of law. Besides as held by the Tribunal the comparison has to be region /country specific, which in this case, the TPO has completely ignored. Therefore, the view taken by the Tribunal does not call for any interference as it is in accordance with the self evident provisions of law - No substantial question of law.
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2019 (5) TMI 693
Unexplained Investment in properties - Addition u/s 69B - cash payments outside the books of account - notings made in the seized material - assessee s contentions that no cash was paid for purchase of the property - HELD THAT:- As rightly contended by the assessee, the seized ledger of Indian Shipping Agencies Pvt. Ltd., in which these entries were made is not the regular cash book or any other books of account; and it is apparent that this ledger has been used for rough jottings and notings. As perused the letter of retraction dated 15.04.2008 filed before the ADIT (Inv.), Mangalore by the assessee in which the M.D. of the assessee has stated that there was no consideration paid over and above the consideration mentioned in the registered sale deed and the cash advance noted in the seized ledger were returned by the recipient after cheques were given, but no noting of the cash returned were made in the seized material. No addition could be made in respect of the so-called cash payments outside the books of account as unexplained investment. The contentions of Shri Ajit Kumar Rai (Shetty), that no cash payment was received by him from the assessee cannot be brushed aside lightly and his averments have not been controverted by the authorities below. No material has been brought on record to disbelieve / discredit Shri Ajit Kumar Rai s (Shetty) claim; which supports the stand of the assessee that no cash payment was made as stated at the time of search. Therefore, making any addition on the basis of the assessee s statement at the time of search by ignoring the assessee s subsequent explanation / rebuttal, which is corroborated by the statement of Shri Ajit Kumar Rai (Shetty), is clearly not justified. Addition on account of differences in liabilities - HELD THAT:- In the course of hearing before us, the learned AR for the assessee did not file any reconciliation in respect of the difference in creditors balance; as already pointed out by the CIT(A). There is a difference of ₹ 1,14,172/- in the creditor s balances and this fact was noticed by the AO in the course of assessment proceedings. In the absence of any reconciliation being furnished to explain the difference of ₹ 1,14,172/- in creditor s balances, we find no reason to interfere with or deviate from the action of the CIT(A) in sustaining the aforesaid disallowance. Consequently, ground No.2 of assessee s appeal for Assessment Year 2004-05 is dismissed. Allowable business expenditure u/s 37 - expenses claimed under the head tipper mamools - HELD THAT:- The factual finding of the CIT(A) that all these expenses are legitimate business expenses has not been controverted or shown to be erroneous by Revenue. We, however, find that even after rendering the above factual finding that expenses claimed under the head tipper mamools are legitimate business expenses, the CIT(A) has gone on to hold that some / partial adhoc disallowance of these for Assessment Yea₹ 2004-05 to 2008-09 was required to take care of payments to government officials; which, in our view, is not called for. In this view of the matter, we delete the adhoc disallowances made by the CIT(A) Machinery Hire Charges - HELD THAT:- Assessee has not been able to adduce any evidence in support of the explanation and claim put forth; that the amounts collected towards machinery hire charges as per the seized materials found at the time of search did not belong to it and it was used for distribution amongst the staff and other members of the gang / crew that was carrying out the work. It is also seen that the AO and CIT(A) have relied on the statement of Shri Asif, the assessee s employee, given at the time of search that this shows that these amounts were being collected and recorded as such in the seized materials. Considering the fact that the material found shows the collection of cash, which was not recorded in the assessee s books of account, we are of the considered view that the addition made on this account is justified. Payments of speed money - genuineness of the expenses claimed - HELD THAT:- Considering the AO s remand report and the enquiries made at the relevant point in time, it is seen that even on facts, the assessee has been able to establish the genuineness of the expenses claimed under this head and we find that there is no adverse material on record to establish that there is any inflation of expenses by the assessee. In this view of the matter, we are of the view that no interference is called for in the impugned orders of the CIT(A) on the issue of payments of speed money. Consequently, the grounds raised by Revenue on this issue are dismissed. Unexplained expenditure based on seized material A/HML/18 - HELD THAT:- From the orders of assessment, it is seen that the assessee has put forth the very same explanation before the AO, as was put forth before the CIT(A) and the addition was made as the relevant books of account were not produced at that point of time. Before the CIT(A), in the case of M/s. Indian Shipping Agencies Pvt. Ltd., it appears that the books of account of various group concerns were produced and after due verification, these additions have been deleted. Following the conclusions arrived at and findings rendered by the CIT(A) in the case of M/s. Indian Shipping Agencies Pvt. Ltd., the CIT(A) has deleted the additions made in the hands of the assessee in the case on hand as well. - Revenue grounds are dismissed. Short deduction of TDS on the payments to labour contractors - disallowances made u/s 40(a)(ia) - HELD THAT:- We find that the CIT(A) had rightly deleted these disallowances made u/s 40(a)(ia), holding that it would amount to duplication. The CIT(A), on examination of the details on record in this regard, found that the said payments made to sub-contractors in these years was in respect of speed money and hence there was no obligation to deduct tax at source thereon. It is however seen that the impugned disallowances were made on the ground that there is short deduction of TDS and it is not a case of failure to deduct tax at source. Considering the fact that no disallowance can be made u/s 40(a)(ia) in respect of short deduction of TDS as was held by the ITAT Kolkata Bench in the case of DCIT Vs. S. K. Tekriwal [ 2011 (10) TMI 10 - ITAT, KOLKATA ] Unexplained investment in Kuthar Lands - whether AO made the addition towards unexplained investment in the purchase of Kuthar lands in the hands of the assessee only on protective basis and not on substantive basis - HELD THAT:- As rightly contended by the assessee, there is no need for making this addition of the said unexplained investment in the hands of the assessee in the case on hand as it is not Revenue s case that the lands at Kuthar were purchased either by the assessee or that unexplained funds of the assessee were used to make the said payment. It is seen that even the AO has only made the addition protectively in the hands of the assessee because the seized material, in which these payments were noted, were found in the course of search conducted in the case of the assessee company. In the facts and circumstances, as narrated above, we are of the view that the CIT(A) has rightly deleted the addition and we find no reason to interfere with or deviate from his decision. TDS u/s 194C - disallowance u/s 40(a)(ia) - payment less than ₹ 20,000/- - HELD THAT:- It is not disputed that each voucher for the aforesaid payments is less than ₹ 20,000/- and the payments have been made to various persons and therefore the provisions of section 194C of the Act are not attracted at all. The fact is that several vouchers of less than ₹ 20,000/- are prepared and no adverse finding has been rendered thereon. Revenue has also not adduced any material to establish that these payments by the assessee are in the nature of works contract with M/s. S. S. Associates or M/s. Divya Enterprises and therefore the provisions of section 194C are not attracted to these payments made. No disallowance u/s 40(a)(ia) can be made since there was no requirement to deduct TDS in the first place. In this view of the matter and after taking into account the facts and circumstances of the case on this issue, we are of the opinion that the CIT(A) s finding directing deletion of the disallowance made by the AO for any interference and is accordingly upheld.
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2019 (5) TMI 692
Exemption u/s 11 - salary paid to two specified persons u/s 13(3) - approval of the governing body of the society including the appointment and remuneration of both these persons - AO found that salary paid to these persons are excessive in comparison to the normal practice followed for other employees - HELD THAT:- The assessee, however, submitted before Ld. CIT(A) that both these persons were appointed through the resolution passed under the General Body Meeting dated 04.06.2008. It was also submitted that both these persons have devoted full time to the educational institution to the best of their knowledge, ability and experience. It, therefore, appears that A.O. followed the orders for earlier years, in which the assessee did not produce documents regarding approval of the Governing Body. Further assessee explained that Governing Body passed resolution in earlier year on 04.06.2008. A.O. did not bring any evidence on record as to how the salary paid to these persons with reference to their qualification was excessive or unreasonable. A.O. did not make any comparison, but, appears to have followed order for earlier years. In earlier year, the matter have been decided in favour of the assessee as is noted by the CIT(A) in his Order because the same salary have been considered in earlier years. CIT(A) also referred to decisions of the Coordinate Bench of Delhi Tribunal in the case of ACIT vs. Idicula Trust Society [ 2015 (3) TMI 191 - ITAT DELHI] in which the Tribunal has referred to the enhancement in pay/salary by Sixth Pay Commission in January, 2006. In the case of the assessee, assessee explained that salary paid to these persons was even less than the salary prescribed by the Sixty Pay Commission. Since the A.O. compared the facts of this year for earlier years, in which, relief has already been granted to the assessee as per findings of the CIT(A), therefore, CIT(A) correctly following the earlier precedence, deleted the addition - Decided in favour of assessee.
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2019 (5) TMI 691
Penalty levied u/s. 271(1)(c) - undisclosed contract receipt - non defective notice - non specification of charge - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [ 2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.
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2019 (5) TMI 690
Penalty levied u/s. 271(1)(c) - non defective notice - non specification of charge - HELD THAT:- Show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [ 2017 (12) TMI 883 - ITAT, KOLKATA] - Decided in favour of assessee.
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2019 (5) TMI 689
Disallowance of software expenses - expenditure under the head Repairs Computers Others - capital expenditure OR revenue expenditure - HELD THAT:- The issue that expenses incurred by an assessee on purchase of a software which brought greater efficiency in functioning of its business had been as allowable as a revenue expenditure See HOLCIM SERVICES (SOUTH ASIA) LTD. [ 2018 (5) TMI 1700 - BOMBAY HIGH COURT] . Further in the case of CIT Vs. Raychem RPG Ltd. [ 2011 (7) TMI 953 - BOMBAY HIGH COURT] had observed that the expenditure incurred by an assessee on purchase of a software which facilitated its trading operations or enabled the management to conduct its business more efficiently or more profitably would not form part of the profit making apparatus of the assessee and would be allowable as a revenue expenditure. Thus expenditure incurred by the assessee on purchase of software application and payment made for acquiring license to use those applications was to be allowed as a revenue expenditure. - Decided in favour of assessee Disallowance of deduction u/s 35(2AB) in respect of Ennore Unit Goregaon Unit - claim of weighted deduction under Sec.35(2AB) - HELD THAT:- The issue pertaining to the entitlement of the assessee towards claim of weighted deduction u/s 35(2AB) is a recurring issue which was also involved in its case for the immediately preceding year i.e A.Y 2008-09 [ 2018 (7) TMI 1887 - ITAT MUMBAI] We find that the Tribunal while disposing off the appeal of the assessee for the immediately preceding year i.e A.Y. 2008-09, had after considering the contention of the assessee that it had applied for approval in Form 3CM which was still pending, restored the issue to the A.O for providing an opportunity to the assessee to furnish the approval of the competent authority in the prescribed manner for claiming the deduction u/s 35(2AB). In all fairness ground requires to be restored to the file of the A.O as above - Ground allowed for statistical purposes. Depreciation on additions to computer software - assessee had claimed depreciation on the capitalized value of the software expenses @ 60% - AO allowed @25% - HELD THAT:- The assesses claim of depreciation on software expense @ 60% which was allowed by the CIT(A) had also been accepted by the revenue and the same had also not been carried any further in appeal before the Tribunal. In terms of our aforesaid observations, we are of the considered view that the assessee had rightly claimed depreciation on computer software @ 60%. We thus set aside the order of the CIT(A) in context of the issue under consideration and vacate the disallowance made by the A.O on the said count - Decided in favour of assessee Disallowance of claim of depreciation on assets of BMIL and PHL - HELD THAT:- Now when the DRP while disposing off the objections filed by the assessee had specifically directed the A.O to allow claim of depreciation as was raised by the assessee in respect of BMIL, therefore, there was no reason for the A.O to have not followed such directions while passing the final assessment order u/s 143(3) r.w.s 144C(13), dated 28.01.2014. In terms of our aforesaid observations, we direct the A.O to allow the assesses claim of depreciation insofar the assets of BMIL are concerned. Depreciation on the assets of PHL - HELD THAT:- CIT(A) while disposing off its appeal for A.Y 1999- 2000 had observed that the sale of two divisions viz. (i). Glass Division (GGL); and (ii). Bulk Drug Division (BDD) by the assessee was rightly claimed as slump sale transaction. However, as is discernible from the order of the DRP, the issue as to whether the sale of the aforesaid two divisions was to be construed as itemized sale of assets or slump sale is pending before the ITAT in the preceding years of the assessee. Accordingly, the DRP had directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal regarding slump sale vs. itemized sale. In the backdrop of the aforesaid fact situation, now when the matter as to whether the sale of the aforesaid two divisions by the assessee is to be treated as an itemized sale or a slump sale is pending in the case of the assessee for the preceding years, therefore, we find no infirmity in the order of the DRP who had rightly directed the A.O to allow depreciation to the assessee on the basis of the outcome of the main appeal Adjustment of Inventory as per Sec. 145A - value of the closing stock - HELD THAT:- As per Clause 12(b) the adjustment u/s 145A worked out at Nil. It is the claim of the assessee that the amount reflected in Clause 12(b) of the tax Audit report shall be treated as the adjustment required u/s 145A, and in support thereof had relied on the order in the case of Hawkins Cookers Ltd. Vs. ITO [ 2008 (8) TMI 904 - ITAT MUMBAI] . We have perused Clause 12(b) of the Tax Audit report of the assessee and find that it is the claim of the assessee that the impact of grossing up of tax, duty, cess etc. by restating the values of purchases and inventories by inter alia including the effect of CENVAT credit will be Nil, subject to Sec. 43B that the duty, taxes, cess etc. is paid before the due date of filing of the return of income. As the ld. D.R had submitted that the aforesaid working of the assessee would require to be verified, we therefore, in all fairness restore the matter to the file of the A.O for readjudication. Disallowance of interest expenditure u/s 14A r.w. Rule 8D(2)(ii) - HELD THAT:- As decided in assessee's own case [ 2018 (7) TMI 1887 - ITAT MUMBAI] Tribunal after deliberating on the issue under consideration, had directed the A.O to verify the assesses claim of availability of sufficient interest free funds for the purpose of making investments in exempt income yielding assets, and if the said claim was found to be in order, then no disallowance of interest expenditure U/rule 8D(2)(ii) could be made. We thus respectfully following the view taken by the Tribunal in the assesses own case for A.Y 2008-09 in the backdrop of the aforesaid settled position of law, thus direct the A.O to verify the claim of availability of sufficient interest free funds with the assessee. After verification, if the assesses claim is found to be in order, then the disallowance of the interest expenditure made in its hands u/s 14A r.w 8D(2)(ii) shall be deleted. Disallowance of administrative expenditure U/rule 8D(2)(iii) - in the assesses own case for the immediately preceding year i.e A.Y 2008-09 in M/s Piramal Enterprises Ltd. Vs. Asst. CIT [ 2018 (7) TMI 1887 - ITAT MUMBAI] had directed the A.O to exclude the investments which had not yielded any exempt income during the relevant previous year for computing the disallowance U/rule 8D(2)(iii). The A.R had during the course of hearing of the appeal furnished before us the working of the disallowance of administrative expenses u/s 14A r.w Rule 8D(2)(iii). As per the said working the disallowance works out at ₹ 20,730.26. The A.O is directed to examine the working of the assessee and decide the issue accordingly after affording an opportunity of being heard to the assessee. Disallowance of deduction u/s 35A on the trade marks - HELD THAT:- Deduction of the entire expenditure of ₹ 34 crore in terms of the observations of the tribunal had to be allowed in one go u/s 37, which would thus put it in a much more disadvantageous position, had thus for the said reason not pressed its appeal before the High Court on the issue of allowability of claim of deduction u/s 35A. In the backdrop of the aforesaid facts, the Tribunal while disposing off the appeal of the assessee for the preceding year i.e A.Y 2008-09 observed that as the claim of the assessee for deduction u/s 35A was allowed in the preceding years, thus applying the rule of consistency allowed the same during the year before them. As the assesses claim of deduction u/s 35A had consistently been allowed by the Tribunal in the preceding years, therefore, respectfully following the view taken by the Tribunal while disposing off the appeal of the assessee for A.Y 2008-09, the disallowance made by the A.O/DRP u/s 35A of ₹ 2,42,85,714/- during the year under consideration viz. A.Y 2009-10 is vacated. Disallowance of advertisement and business promotion expenses - HELD THAT:- No such exercise carried out by the A.O can be gathered from the orders of the lower authorities. Apart there from, nothing has been brought to our notice by the ld. D.R in the course of hearing of the appeal which would have persuaded us to have arrived at a different view. Be that as it may, we find that the A.O even at the time of disallowing 50% of the expenses i.e ₹ 27,90,84,346/-, had observed that the same were being disallowed as majority of the expenses were incurred for giving freebies to doctors for promotion of assesses business which was inadmissible u/s 37(1) being an expense prohibited by law. We thus on the basis of our aforesaid observations, being of the considered view that the A.O/DRP had erred in making an adhoc disallowance of ₹ 27,90,84,346/- i.e 50% of the advertisement and business promotion expenses, therefore, delete the same. Disallowance of deduction u/s 80IC -on account of reallocation of expenses - A.O had carried out part allocation of the interest R D expenditure to its Baddi unit, only for the reason that there was a disparity between the profit rate of Baddi unit and the other units - HELD THAT:- As is discernible from the records, the department had failed to place on record any cogent and irrefutable material which would conclusively establish that the borrowed funds were utilised in setting up the Baddi unit and further the R D expenditure incurred was in context of the manufacturing activity carried out at the Baddi unit. Apart there from, there is also no clarity on the fact whether the assessee had maintained unit wise accounts and the expenditure claimed is as per the accounts. In nut shell, there is no evidence which would justify attribution and allocation of the interest expenditure and the R D expenditure to the Baddi unit of the assessee. We find that similar facts were involved as regards allocation of the aforesaid expenses viz.(i). interest expenditure; and (ii). R D expenses, in the assesses own case for the immediately preceding year i.e A.Y 2008-09 before the Tribunal The Tribunal observing that as the revenue had failed to bring on record any cogent material to establish that the borrowed funds were utilised in setting-up the Baddi unit and further the R D expenditure incurred was related to manufacturing activity carried out at the Baddi unit, had thus in all fairness restored the issue to the file of the A.O for fresh adjudication, after affording an opportunity of being heard to the assessee. As the fact situation in context of the issue before us remains the same, therefore, respectfully following the order passed by the Tribunal in the assesses own case for the immediately preceding year i.e A.Y 2008-09, we restore the matter to the file of the A.O for fresh adjudication. Needless to say, the A.O shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee. Disallowance of deduction u/s 80IC - on account of ineligibility of the assessee - HELD THAT:- If the undertaking or enterprise is formed by transfer to a new business of machinery or plant previously used for any purpose of a value less than 20% of the total value of machinery or plant used in the business of such undertaking or enterprise, then as per Sec.80IC(4)(ii) r.w. Explanation 2 of Sec.80IA(3), it can safely be concluded that the said condition stands satisfied by the assessee. However, at the same time the aforesaid claim of the assessee that the amount of ₹ 4,57,28,210/- (supra) did not from part of the cost of FFS machine, but was the accumulated depreciation of the said machine is not borne from the records and would require verification. Therefore, to the said extent the matter in all fairness is restored to the file of the A.O for making necessary verification. In case the claim of the assessee is found to be in order, then no adverse inferences as regards satisfaction of the second condition envisaged in Sec.80IC(4)(ii) would be drawn in its hands. Addition towards transfer pricing adjustment - Corporate guarantee given by the assessee to its AE - HELD THAT:- Issue under consideration had directed the A.O to charge commission on Corporate Guarantee @ 0.5%. As the facts involved in the case before us in context to the issue under consideration remains the same, therefore, we respectfully follow the view taken by the Tribunal in the case of the assessee for A.Y 2008-09 and direct the A.O to charge commission on Corporate Guarantee @ 0.5%. Addition of disallowance u/s 14A r.w Rule 8D for computing book profits under Sec. 115JB - HELD THAT:- We direct the A.O to not consider the disallowance made u/s 14A r.w Rule 8D while computing the book profit u/s 115JB of the I.T Act in the hands of the assessee. See VIREET INVESTMENT (P.) LTD. [ 2017 (6) TMI 1124 - ITAT DELHI]
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2019 (5) TMI 688
Disallowance of interest - notional interest on interest free advances to 5 related parties - sufficient interest free funds - HELD THAT:- As sufficient interest free funds were available with the assessee which were sufficient enough to cover up the interest free advances given to the related parties, in our view both the lower authorities erred in confirming the disallowances of interest of and the same deserves to be deleted. Disallowance of commission payment - for some parties for absence of details, confirmations rendering of service and on balance @ 50% being excessive - whether commission is paid for the purpose of business of the petitioner and allowable? - CIT(A) reduce the same on @30% - HELD THAT:- For two categories, The finding of the Ld. AO is not specific and seems to be half hearted before making disallowance. When the assessee has placed necessary details and genuineness of the commission expenditure has not been doubted then in such circumstances no disallowance was called for. We, therefore, set aside the finding of Ld. CIT(A) and delete the disallowance of commission made by the AO. Now coming to the third category of disallowance where no details made available by the assessee about the nature and services rendered, the AO issued notice u/s 133(6) of the Act but satisfactory reply was not received. In some cases notice u/s 133(6) could not be served. In the case of Misc. commission expenses no details were filed. Rates of commission also varied from 2% to 15 % but no proper explanation was given. Thus where the assessee is unable to satisfy the lower authorities about commission expenditure claimed, we find no reason to interfere in the well reasoned finding of the CIT(A) disallowing the commission expenditure computed @ of 30% of the commission expenditure - Decided partly in favour of assessee.
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2019 (5) TMI 687
Addition u/s 68 - whether the credit in the form of share capital in the companies under appeal can be considered to be application of undisclosed income of M/s Surya Food and Agro Limited who have declared such income before the Settlement Commission? - HELD THAT:- Before the Settlement Commission, the assessee has repeatedly stated, that the undisclosed income which is being offered before the Settlement Commission has been applied by way of introduction in the shape of share capital to group entities viz., M/s Surya Processed Food Pvt.Ltd. and M/s Surya Agrotech Infrastructure Limited. In paragraph 15 of the application before the Settlement Commission, M/s Surya Food Agro Limited has made it clear that there is no other undisclosed asset found or application of funds by the group . This statement made before the Settlement Commission has neither been found to be incorrect nor before us it has been shown that M/s Surya Food and Agro Limited has applied the undisclosed income offered before the Settlement Commission for acquisition of any other asset. We entirely agree with order of the ITAT passed in stay petition wherein the ITAT held that the disclosure has been made by the company who has earned the undisclosed income and routed in books through the petitioner companies as unaccounted share capital. The application of the income is taxed in the hands of the petitioner companies apparently it seems and sources of income is taxed in the hands of Surya Food and Agro Ltd. Therefore prima facie the case of the assessee shows that there is double taxation, once the source of income and secondly the application of income . In view of the above, since the income has already been taxed in the hands of M/s Surya Food and Agro Limited, the application of the said income in the form of share capital in M/s Surya Processed Food Pvt.Ltd. and M/s Surya Agrotech Infrastructure Ltd. i.e., the appellants before us, cannot be taxed again. Accordingly, we delete the addition for unexplained share capital and allow ground No.1 in all the appeals. Expenditure being commission for acquiring the accommodation entries in the form of share capital - HELD THAT:- Both the parties have agreed that if it is accepted that the investment in the share capital was out of the undisclosed income of M/s Surya Food Agro Limited, which is disclosed before the Settlement Commission, the same finding would be squarely applicable with regard to commission for arranging such accommodation entries. In view of the finding with regard to ground No.1, we hold that the addition for alleged expenditure on arranging the accommodation entries in the form of share capital is also made from the undisclosed income offered and settled by M/s Surya Food Agro Limited before the Settlement Commission. - Decided in favour of assessee.
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2019 (5) TMI 686
Penalty u/s 271AAA - defective notice - non specification of clear charge - change of stand - HELD THAT:- Initially the Assessing Officer recorded the finding that assessee company has not specified and substantiated the manner in which such unaccounted income has been derived by it . But, subsequently, he recorded the finding that the assessee company has failed to explain the manner in which the undisclosed income was derived . We further find that in the notice issued under Section 271AAA, the penalty proceedings have been initiated on altogether different charges. There is no clarity in the stand of the Revenue for initiation of penalty under Section 271AAA, whether it is for failure of the assessee to explain the manner in which undisclosed income was derived or it is the failure of the assessee to substantiate the manner of earning of income or for not recording of such income in the books of account. See BHAVI CHAND JINDAL [ 2018 (9) TMI 1560 - DELHI HIGH COURT] - thus we cancel the penalty levied under Section 271AAA - Decided in favour of assessee.
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2019 (5) TMI 685
Disallowance of enhanced compensation paid to land owners - payment on the basis of the decision of the High Court and claimed as general expenses - according to the AO the assessee is entitled to recover it from the lessee from whom the loan was taken thus allowed payment of enhanced compensation to the extent of amount recovered from the lessee which was offered as income and the balance compensation payable was not allowed by AO - CIT-A deleted the disallowance - HELD THAT:- Neither the AO nor the CIT(A) has examined the lease agreements based on which the assessee is entitled to recover the enhanced amount of compensation from the lessee. Without examining the lease agreement entered into by the assessee with the lessee, it is not possible for us to hold that to what extent the assessee is entitled for the claim of enhanced compensation as an expenditure. If there is enforceable clause in the lease agreement based on which the property was leased out by the assessee, the assessee can recover the amount of enhanced compensation from the lessee. Hence, the amount to the extent received or receivable from the lessee is to be brought to tax. I When the assessee is claiming the payment of enhanced compensation as an expenditure, it is incumbent on the part of the assessee to offer the recoverable amount of compensation from its lessee. The assessee cannot pick and choose only the claim of expenditure towards payment of enhanced compensation and cannot withhold the offering of receipt of enhanced compensation from its lessee. Hence, it is appropriate to remit the issue to the file of the AO to examine the relevant lease agreement entered into by the assessee with its lessee and decide thereupon. However, we make it clear that if the assessee offered the receipt of enhanced compensation from its lessee in any other assessment year, there cannot be double taxation in these years. With this observation, we remit this issue to the file of the Assessing Officer for fresh consideration. Appeals filed by the Revenue are partly allowed for statistical purposes.
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2019 (5) TMI 684
Treatment to lease rent received - lease to operate plant for manufacturing of tyres - correct head of income - `income from business OR `income from other sources - HELD THAT:- In view of the co-ordinate Bench order of the Tribunal in assessee s own case for assessment year 2010-2011 [ 2016 (6) TMI 1292 - ITAT COCHIN] , which is identical to the facts of the instant case, we hold that the CIT(A) was justified in directing the Assessing Officer to assess the rental income received by the assessee under the head `business or profession . - Decided against revenue
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2019 (5) TMI 683
Condonation of delay - delay of 1578 days - HELD THAT:- As we examine the explanation given by the assessee for condonation of delay, then it would reveal that hardly there is any explanation. They have accepted the computation of capital gain before the AO. They have not raised any objection at the level of AO, and then decided not to file appeal against the order of the ld.CIT(A). There is no plausible reason for condoning the delay of almost more than four years. The assessee ought to have vigilant for their rights. No merit in their applications and therefore, all the applications for condonation of delay are rejected. Consequently, the appeals of the assessees are also dismissed. Rectification application u/s 154 - plea of the assessee is that capital gain be assessed in the hands of the assessee on the basis of DVO s report called for in the cases of other co-owners - FAA dismissed application of the assessee on the ground that no such material is available on the record of the assessee and there is no apparent error in the order of the CIT(A) - HELD THAT:- The power of rectification u/s 154 can be exercised only when the mistake which is sought to be rectified, is an obvious patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. Since no evidence is available before the CIT(A) when the appeal of the assessee was decided on 7.2.2013. Orders in the case of other co-owners have come up subsequently on 14.4.2016. Therefore, on that date no apparent error was committed by the ld.CIT(A). To our mind, there was no material which can demonstrate that order of the ld.CIT(A) was suffering from an apparent error. Therefore, the ld.CIT(A) has rightly rejected the application of the assessee - Appeals of the assessee are dismissed.
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2019 (5) TMI 682
Condonation of delay - delay on account of earlier advocate who kept the papers in a drawer and over looked - CIT(A) dismissed the appeal in limine - Reopening of the assessment u/s 147/148 - HELD THAT:- In the present case it is noticed that the CIT(A) dismissed the appeal in limine and had not condoned the delay. He mentioned that there was delay of 740 days in filing the appeal, however, the claim of the assessee is that the delay is of 217 days. The assessee also filed an affidavit first time before this Bench of the Tribunal which was not available to the CIT(A). It is also claimed that the proper application was filed for condemnation of delay alongwith certificate issued by the then advocate before the CIT(A) which has not been appreciated in right perspective. Therefore, considering the totality of facts, deem it appropriate to set aside this case back to the file of the CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
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2019 (5) TMI 681
TDS u/s 195 - Disallowance of expenditure u/s 40(a)(i) - payment to GFG Gorup Ltd., New Zealand for purchase of software - AO notes this to be licensed software and hence, was of the view that payment was in the nature of royalty and the assessee ought to have deducted tax at source - whether the deduction claimed by assessee on purchase of licensed software is to be allowed as deduction in the hands of assessee or not? - HELD THAT:- As decided in JOHN DEERE INDIA PVT. LTD., (JOHN DEERE EQUIPMENT MERGED WITH JOHN DEERE INDIA PVT. LTD.) VERSUS THE DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) 1, PUNE [ 2019 (3) TMI 458 - ITAT PUNE] where the software is purchased across the counter as shrink proof software, then it is not akin to royalty both under the Income Tax Act or the DTAA. The Tribunal held that since the definition of royalty has not been amended under DTAA, then the said definition would be paramount and would have to be applied for deciding the issue. It also held that amendment to section 9(1)(vi) of the Act by insertion of Explanations 4 to 6 would not change the scenario and make the assessee liable for deduction of tax at source in the relevant year. Thus no merit in the orders of authorities below in having held the assessee to be in default for non deduction of tax at source out of aforesaid payments. We reverse the order of CIT(A) in this regard and direct the Assessing Officer to allow the claim of expenditure - Decided in favour of assessee.
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2019 (5) TMI 680
Stay of demand - Assessee has readily agreed to pay the amounts to the tune of 25% of the tax demand for the A.Y. 2012-13. And also submitted that for the A.Y. 2013-14 the tax already paid would be more than 25% - TDS us 194H - discount extended to the prepaid distributors - demand under section 201(1) and 201(1A) - assessee has submitted that they have paid substantial amounts towards the tax comprehensively and argued that the Company should be treated as a single entity as far as the financials are concerned - HELD THAT:- As gone through and taken cue from the CBDT O.M. N0.404/72/93-ITCC dated 29.2.2016 wherein revised guidelines were issued in partial modification of instruction No 1914 regarding the stay of demand while the appeal is pending before the CIT(A). We have also gone through the nature of the additions and the amount of the taxes recovered by the Department and paid by the Assessee further assessment years before us. Accordingly where the Ld.AR has stated that in the eventuality of grant of stay and early hearing he is ready to argue the appeal on any date in the month of May itself. However it was his submission that there may be departmental appeal pending as the CIT(A) in these years as deleted the addition proposed by the A.O within the scope of Section 194J. Thus the factual position may be ascertained. Ld. CIT DR submitted that the A.O. has filed cross appeals today itself and it was for this specific reason that he was requesting that the appeal may be listed for hearing in July 2019 alongwith other appeals pending adjudication on a near similar issue right from 2005-06 A.Y. onwards Order: - The assessee shall pay an amount of ₹ 60,00,000/- within seven working days from the date of this order. Subject to the payment being made within the stipulated date Early hearing is granted and the appeals are directed to be listed for hearing on 18/07/2019. The parties are directed to ensure there availability if need be on the next date i.e; 19/07/2019.
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2019 (5) TMI 679
TP adjustment - Payment of commission @ 6% on its sales arose - HELD THAT:- Tribunal vide order [ 2019 (2) TMI 351 - ITAT PUNE] has noted the rendering of services by TTPL and has held that Commission Agreement dated 01.12.2007 existed between the assessee and TTPL and as per clauses of the said agreement, it was clear that TTPL was facilitating purchases in respect of assessee from Dassault, UK. It was responsibility of TTPL to undertake marketing efforts to telemarketing and inbound enquiries through its dedicated support. The assessee had further furnished evidences demonstrating that the purchase of software license was done by the assessee from Dassault, UK and TTPL was facilitating the entire process in ensuring smoothing selling of transactions. In view of tangible evidence filed by assessee, the Tribunal held that payment of commission was justified. Following the same parity of reasoning, we hold that no upward adjustment merits to be made in the hands of assessee, where the commission rate of 6% has been found by the Tribunal to be appropriate and the learned Departmental Representative for the Revenue has failed to bring on record any evidence to the contrary - delete the addition made on account of arm's length price of international transactions undertaken by the assessee. Disallowance of amortization of premium paid on leasehold land - HELD THAT:- The said issue raised of disallowance of amortization of premium paid on leasehold has been decided by the Tribunal with lead order relating to assessment year 2001-02 [ 2015 (8) TMI 557 - ITAT PUNE] we hold that the said expenditure is not allowable in the hands of assessee. - Decided against assessee Disallowance of provision made for expenditure in respect of Bhavishya Kalyan Yojana - HELD THAT:- Said issue has been decided against the assessee as relying on assessee's own case [ 2015 (8) TMI 557 - ITAT PUNE] Disallowance made u/s 14A read with Rule 8D - HELD THAT:- The first plea of assessee is that it had own funds which were more than its investments and hence, no disallowance under Rule 8D(2)(ii) of the Rules. This argument of assessee needs verification at the end of Assessing Officer.Accordingly, we direct the Assessing Officer to verify the claim of assessee in this regard and in case own funds of assessee are more than investments, then no disallowance is warranted under Rule 8D(2)(ii) of the Rules on account of dictate of the Hon ble Bombay High Court in CIT Vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] Disallowance made i.e. under Rule 8D(2)(iii) of the Rules - AO is again directed to work out the disallowance by considering investments which have yielded dividend income. The Assessing Officer shall afford reasonable opportunity of hearing to the assessee in this regard. The ground of appeal No.8 is thus, allowed for statistical purposes. Enhanced deduction under section 10A - HELD THAT:- We find that the issue raised vide ground of appeal No.9 is squarely covered by the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Gem Plus Jewellery India Ltd. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] . Accordingly, we hold that the assessee is entitled to enhanced deduction under section 10A of the Act on account of corporate tax additions made in its hands. We direct the Assessing Officer to re-compute the aforesaid deduction under section 10A of the Act. TP Adjustment - Design Engineering Services - application of segmental profitability while benchmarking its international transactions with AEs. - the assessee has shown PLI at 27.99%. - in TP report benchmarking applied on entity level but before TPO/DRP it applied based on segmental profitability - HELD THAT:- Where the assessee has provided segmental information which is also audited in the case of assessee, though filed during TP proceedings / DRP proceedings but the same cannot be brushed aside on the ground that the assessee in the TP study report has worked out the margins at entity level. In this developing scenario of transfer pricing, it is necessary to implement and apply the law as it develops. Merely because the assessee had in the TP study report applied margins at the entity level, it cannot be precluded from furnishing segmental details during TP proceedings or DRP proceedings in order to benchmark the margins of its international transactions on the basis of segmental profitability of AE segment. The fact which needs to be kept in mind is the turnover of assessee, which in the AE segment was ₹ 295 crores and in non AE segment was ₹ 467 crores i.e. out of total revenue of ₹ 764 crores, only ₹ 295 crores was attributable to AE segment. We find no merit in the orders of authorities below in benchmarking international transactions on entity level. Accordingly, we accept the plea of assessee that segmental details are to be adopted and margins of segment of AE transactions are to be compared with margins of comparables selected. In this regard, the assessee has explained that even if the margins of Eclerx Services are applied, which though he claims to be not functionally comparable, but still margins shown by the assessee would be within +/- 5% range and no adjustment needs to be made in the hands of assessee on account of said segment of Design Engineering Services. The Pune Bench of Tribunal in Tieto IT Services India (P.) Ltd. Vs. DCIT [ 2018 (3) TMI 940 - ITAT PUNE] had also in similar circumstances directed the application of segmental profitability while benchmarking its international transactions with AEs. Accordingly, the ground of appeal No.2 raised by assessee
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2019 (5) TMI 678
Disallowance of sales tax component of the bad debts written off - allowable as business loss under Section 28 or not? - HELD THAT:- As decided in assessee's own case the sales tax component of the debts written off, was allowable as business loss u/s 28 of the Act being in the nature of loss incidental to business. Ground No. 1 is accordingly dismissed. Disallowance u/s 14A read with Rule 8D(2)(ii) - disallowance of interest with reference investment in shares of the subsidiary - HELD THAT:- As in assessee's own case [ 2016 (10) TMI 1258 - ITAT KOLKATA] CIT-A found that the assessee invested only in its wholly owned subsidiary DIC Coating India Limited which was acquired in 1997 in terms of the scheme approved by the Hon ble High Court of Calcutta. Undisputedly, the Revenue did not carry the first appellate order for A.Y. 2005-06 in appeal to the higher forums having jurisdiction. Therefore, we find no infirmity in the order impugned before us and the said order passed by the CIT-A is justified in deleting the disallowance of interest made on account of borrowed funds Addition of travelling expenses reimbursed to the assessee s parent company, M/s DIC Corporation, Japan - HELD THAT:- Once the assessee established business connection with the visits undertaken by the executives of the foreign parent then the conditions prescribed u/s 37(1) for allowing deduction for expenditure were fulfilled. In such case it was not open for the AO to decide whether or not incurring of such expenditure was necessary for the assessee s business. All that the assessee was required to show was that the expenditure was incurred or laid out wholly and exclusively for its business purposes. On the facts of the present case we find that the assessee had established that the expenditure was incurred for it s business purposes and therefore the Ld. CIT(A) was justified in allowing the relief to the assessee. Ground No. 3 is therefore dismissed. Additional depreciation disallowed - addition on the ground that the depreciation did not pertain to plant machinery but in respect of furniture fixtures - HELD THAT:- Tribunal in its order [ 2019 (2) TMI 1619 - ITAT KOLKATA] directed the AO to follow the directions of DRP and pass a speaking order. The Ld. AR for the assessee pointed out that in the order u/s 254 the AO accepted the assessee s contention that the electrical installations were installed at factory premises and these were not in the nature of furniture fixtures but formed part of plant machinery block qualifying for depreciation @ 15% and also additional depreciation u/s 32(1)(iia) of the Act. Since the factual matrix of the assessee scase during the year is found to be same and the Ld. DR was unable to controvert the findings of the Ld. CIT(A) which were recorded after going through the specifications of the electrical installations; we do not find any reason to interfere with the order of the Ld. CIT(A). This ground is therefore dismissed. Transfer pricing adjustment - international transactions with AEs involving payment of royalty, purchase of material export of finished goods - payments made pursuant to the cost contribution agreements - HELD THAT:- Rates at which the royalty was paid was pursuant to the agreement approved by the Dept. of Industrial Policy Promotion, Ministry of Commerce Industry. Such rates were also within the rates prescribed by SIA FIPB in respect of the technical collaboration agreements between residents of India and the nonresidents under the automatic route i.e. 5% 8% in respect of domestic sales export sales respectively. In view of the foregoing facts we hold that the rate of royalty adopted by the assessee for making royalty payments were within the prescribed parameters and therefore at arm s length. In the circumstances therefore we do not find any infirmity in the Ld. CIT(A) s order in granting relief. In this regard, we find support from the decision of the coordinate Bench of this Tribunal in the case of ACIT Vs Dow Agrosciences India Pvt Ltd [ 2016 (12) TMI 936 - ITAT MUMBAI] . Also see M/S. OWENS CORNING INDUSTRIES (INDIA) PVT. LTD. [ 2014 (10) TMI 651 - ITAT HYDERABAD] We uphold the Ld. CIT(A) s order deleting the downward adjustment made by the TPO in respect of royalty payments Adjustment made by the TPO in respect of international transactions involving purchase/sale of materials/goods - HELD THAT:- AR of the assessee very fairly conceded at the beginning that foreign exchange gain could not be considered to be forming part of the operating income in the given set of facts. We therefore direct the AO to re-work the PLI of the tested party i.e. the assessee company, being OP/OR after excluding the foreign exchange gain. Ground No. 5(iii)(a) of the Revenue s appeal therefore stand allowed. Comparability analysis - grounds of the Revenue is that the CIT(A) had undertaken exact product comparability instead of a broader product comparability which is otherwise permitted under the TNMM - HELD THAT:- We do not see any merit in the Ld. DR s submission that the entire issue should be restored to the file of TPO for consideration afresh because the Ld. DR could not pin point any glaring factual mistake or legal infirmity in the Ld. CIT(A) s findings nor any fresh material was brought to our attention on the basis of which we could be persuaded to hold that the entire issue needs to be de novo examined by the TPO. However from the facts as discussed above, it is evident that the Ld. CIT(A) himself adopted broader product comparability criteria and not exact product comparability by adopting the broader segment of specialty chemicals as opposed to only printing inks. The Ld. DR could not controvert this fact.We therefore do not find any in-principle merit in the grievance raised by the Revenue. Application of TNMM - Asessee is engaged in the business of manufacture of printing inks, which by itself is a major industry segment in which several companies are engaged. In the circumstances ideally for application of TNMM; the industry specific data pertaining to printing inks industry alone should have been taken into consideration (since sufficient and reliable data was available) as was rightly done by the TPO in his initial SCN. No infirmity in the Ld. CIT(A) s order wherein he rejected the comparables identified by the TPO which were functionally not similar. The approach of the Ld. CIT(A) in considering companies found to be functionally comparable under the broad segment of specialty chemicals cannot be faulted with.
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2019 (5) TMI 677
Deduction u/s 80IB(10) on pro rata basis in respect of Kumar Shantiniketan projects - as noticed that the flats bearing Nos.3 and 4 at D Building with garden area of 236.03 sq.ft and the garden area was not considered in that built up area of the flats - AO had observed that if the garden area was included in the built up area then the maximum permissible built up area would exceed the mandatory requirement prescribed u/s 80IB(10) accordingly denied the claim of deduction u/s 80IB(10) - HELD THAT:- As decided in assessee's own case [ 2013 (11) TMI 465 - ITAT PUNE] and [ 2017 (1) TMI 1663 - ITAT PUNE] deduction u/s.80IB(10) was to be allowed on prorata basis with reference to qualifying residential units and assessee would not be denied claim for deduction u/s.80IB(10) if some of its residential units are of built up area exceeding prescribed limit in clause (c) of section 80IB(10) of the Act In view of the above decisions, in the present case it is held that whatever portion completed by the assessee which satisfies the conditions prescribed u/s.80IB(10) is eligible for deduction - Decided in favour of assessee.
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2019 (5) TMI 676
Nature of receipt - interest u/s 28 of the Land Acquisition Act - additional amount u/s 23(1A) - solatium u/s 23(2) - will form part of enhanced compensation u/s 45(5)(b) - HELD THAT:- Section 45(5) makes no reference to the nature of property that is acquired but it deals with the category of cases which falls in the description of capital assets . Section 10(37) exempts specifically an income chargeable under the head capital gains arising from the transfer of agricultural land. It is, therefore, clear that once the Hon ble Supreme court directed the AO in the case of Hari Singh [ 2017 (11) TMI 923 - SUPREME COURT] that after examining the facts to apply the provisions contained in the Income-tax Act with a specific reference to the agricultural land stating that in case if it is found that the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to these depositors. What was acquired by the Government was an agricultural land and such a fact is well evident from the assessment order itself . As a matter of fact, AO, by granting exemption under section 10(37) of the Act, refunded a sum of ₹ 1,22,01,723/-. Only question is whether the interest received u/s 28 of the Act assumes the character of enhanced compensation and consequently it is exempt u/s 10(37) ? - In view of the decisions of the Hon ble Supreme Court referred to above, we do not have any doubt in our mind as to the law in this aspect and while respectfully following the ratio laid down by the Hon ble Supreme Court in the case of Ghanshyam [ 2009 (7) TMI 12 - SUPREME COURT] and Hari Singh [ 2017 (11) TMI 923 - SUPREME COURT] above, direct the AO to refund the TDS amount that was deducted on account of the interest received under section 28 of the Land Acquisition Act Also. With these directions, we allow the appeal of the assessee.
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2019 (5) TMI 675
Disallowance u/s 14A - Assessee made suo moto disallowed u/s 14A - non recording of satisfaction by AO - AO rejected on the ground that the disallowance was not worked out as per mandate of Rule 8D of IT Rules and computed the disallowance u/s.14A r.w.r 8D - HELD THAT:- On the issue of necessity of recording the satisfaction before proceeding to work out disallowance under Rule 8D of IT Rules, we find that in the case of CIT Vs. Asian Paints Limited [ 2019 (2) TMI 819 - BOMBAY HIGH COURT] and after considering the decision of Godrej and Boyce Manufacturing Co., Ltd., Vs. DCIT reported [ 2017 (5) TMI 403 - SUPREME COURT] has held that Rule 8D of the rules cannot be invoked where suo moto disallowance made by the assessee is not found to be satisfactory by the AO having regard to the account of the assessee. It has further held that in the absence of recording of non-satisfaction in terms of Sec.14A(2), invocation of Rule 8D is not permissible Thus absence of recording of necessary satisfaction in terms of Sec.14A(2), we are of the view that in the present case, no disallowance of expenses under Sec.14A r.w.r 8D is called for - Decided in favour of assessee Taxability of rental income on property held in stock in trade under the head income from house property - 32 unsold flats/shops - Deemed rent in respect of unsold units - AO was of the view that since assessee was owner of two or more house properties, provision of Sec.23(4) would be attracted and as per which assessee should have offered deemed rental income from the aforesaid properties - why the deemed rent in respect of closing stock not be brought to tax? - HELD THAT:- We find that in the case of CIT Vs. Neha Builders Pvt. Ltd. [ 2006 (8) TMI 105 - GUJARAT HIGH COURT] has held that when the business of the assessee is to construct the property and sell it or to construct or let out then that would be the business and the business stocks which may include movable and immovable properties would be taken to be stock-in- trade and any income derived from such stocks cannot be termed as income from house property . Following the decision of Co-ordinate Bench of the Pune Tribunal in the case of M/s. Cosmopolis Construction Vs. ITO [ 2018 (9) TMI 1621 - ITAT PUNE] hold that in the present case, no addition on account of deemed rent of 32 unsold flats can be made in hands of the assessee. We therefore set aside the addition made by AO. Thus, the ground of the assessee is allowed.
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Customs
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2019 (5) TMI 703
Extension of the Anti-Dumping Notification dated 10.4.2019 - extension sought so that both the sides may have sufficient time to conduct the matter and have appropriate recourse after the hearing - HELD THAT:- At the request of counsel for the petitioner as well as respondent, matter is adjourned to 11.06.2019. It is specifically observed that matter be proceeded with on 11.06.2019. so that matter be disposed of on that day or at-least within one week thereafter, if the hearing is lasting long and in that view of the matter, this Court deems it fit to direct the authority to extend the Anti-Dumping Notification for further period of 45 days from 09.05.2019, so that both the sides may have sufficient time to make submissions. Matter is adjourned to 11.06.2019.
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2019 (5) TMI 674
Quashing of proceedings u/s 135 of Custom Act, 1962 - Smuggling - Gold Bars - seizure - applicant claims the ownership of the recovered gold bars and has moved release application - HELD THAT:- In absence of any valid paper at the time of seizure of the gold bars it becomes smuggled commodity and proved as such under the law. Since the issues involved are contentious and legal it has been brought to the notice of the court and after recording the statement u/s 108 of the Custom Act, notices were sent to the applicant thrice, which the applicant fails to respond to and he failed to raise any plea before the authority concerned. Now the applicant is given reasonable opportunity to appear before the authority/ court concerned to set up his defence to the best of his ability, for which six weeks time is given to the applicant to move proper application in response to the notice and to put in his physical presence before the authority concerned - in case applicant moves an application within the time prescribed before the authority/court concerned, he or it as the case may be shall, after affording opportunity of hearing to both the parties, pass appropriate order without incurring any further delay. Application disposed off.
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2019 (5) TMI 673
Validity of restriction imposed on import of pigeon peas, Beans of the species Vigna Mungo (L.) Hepper (Moong Dal) - Vires of N/N. 19/2015-2020, dated 05.08.2017 and 22/2015-2020 dated 21.08.2017 - the import policy of the goods were amended vide above notifications from free to restricted - Validity of Trade Notice No.19/2017 dated 25.10.2017 issued for the purpose of implementation of notifications - petitioners uniformly submitted that the above said notifications have caused grave prejudice to the petitioners in as much they are unable to import the contracted quantity of Pigeon Peas/Toor Dal due to the said notifications and trade notices. HELD THAT:- From the provisions of the FTP, it is clear that the condition, which is stipulating certain measures subsequently and even such restriction placed on the imports are otherwise stated to be free. The expression unless otherwise stipulated appearing in clause (b) of para 1.05 makes it abundantly clear that it is not because there is a blanket provision made in para 1.05 that the restriction or regulation notwithstanding the export or import will ordinarily be permitted. If otherwise there is a stipulation, then these above words will not be of any assistance. Therefore, so far as the impugned Notifications are concerned, it is evident that they are issued in exercise of the powers conferred by section 3. The FTP, as amended from time to time, always contains stipulations with regard to the import. Section 19 (3) of the FTDR Act provides for laying every rule and every order made by Central Government under the Act before each house of parliament, which has not been complied with by the respondents. However, Section 3 confers the power of Central Government to make orders and announce the Foreign Trade Policy. In Notification No.4/2015-2020 the policy condition No.4 specifically states that the import is restricted for a period from 1st April to 30th June 2018, to the total quantity of one lakh MT of yellow peas minus the quantity already imported from 01.04.2018. Thus, the stipulation of policy condition No.4 restricted the import for the period from 1st April to 30th June, 2018 to the total quantity of one lakh MT is as per Section 3 notified by the DGFT. So, there cannot be any import exceeding this quantity within the period stipulated. This will also include the shipment already arrived and this understanding was not in dispute or confusion. If the contracted quantity in terms of the contract between the local importer and the person abroad, is specified and if the entire amount has been secured in terms of this Irrevocable Commercial Letter of Credit or full advance payment irrespective of whether the delivery of the goods will be made in part or not will be covered by the words already imported . Therefore, it can be understood that if there is an Irrevocable Commercial Letter of Credit, the shipment backed by such Irrevocable Commercial Letter of Credit and if they are already imported between the said notified date, they will be registered as per para 1.05 of FTP 2015-2020. With respect to advance payments made to the extent of hundred percent, they will also be qualified to register with the regional authorities of the DGFT. Thus, the transitional arrangement is already clarified by the trade notices, which are not in contravention to the substantive provisions of the notifications or Section 3 of the FTDR Act. The restrictions imposed by the Government of India are justified, which are brought out by the Government of India through the DGFT for the benefit of the farmers, who are cultivators of indigenous peas, as the import of Peas flooding the market reduce the demand for locally grown peas - the peas growers in India are unable get the right price resulting in loss to small farmers. Petition dismissed - decided against petitioner.
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2019 (5) TMI 672
Imposition of late filing fees - belated filing of Bills-of-Entry - Section 46 (3) of the Customs Act, 1962 - HELD THAT:- Section 46 deals with entry of goods on importation and also prescribes the time limit for filing the same, apart from prescribing the consequence for failure to adhere to the time limit. The second proviso to Section 46 (3) deals with a situation where, the Bill-of-Entry is not presented within the time specified, which makes the importer liable for such charges for late presentation of the Bill. The above proviso also qualifies the late fees if the appropriate officer is not satisfied with the cause shown for the delay. The Order-in-Original dated 08.11.2017 has nowhere questioned the bona fides of the importer/Customs Broker against whom the said order was passed since it is the first requirement of Section 46 read with proviso to Sub-Clause (3) that the charge of late fee was subject to non-satisfaction of the proper officer as to the sufficiency or otherwise of the cause for delay, which discernibly is not questioned - The impugned order referring to this Order-in-Original dated 08.11.2017, has also not questioned the bona fides of the appellant. It is clear from the impugned order as well as that of the Commissioner (Appeals) that there was no reason/question of non-satisfaction as to the reasonable cause shown by the appellant. It is very difficult to accept as to how the Order-in-Original came to be passed against a Customs Broker just because it made a request - Appellant is clearly not the first importer, there is request for amendment in IGM on record, allowed by the Revenue after collecting requisite fees and these are clearly post-import developments. The subsequent developments, were perhaps necessitated because of the goods being perishable. Clearly, no mala fide is found in the above developments by the Revenue and therefore, it can be safely assumed that the Revenue was otherwise satisfied with sufficient cause . Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 671
Smuggling - Red Sanders - Reliability on statements before the Customs officer under Section 108 of the Customs Act, 1962 - Absolute confiscation - penalty u/s 114 and 114AA of the Customs Act, 1962 - HELD THAT:- The original authority has discussed the role played by the appellant in the alleged smuggling of Red Sander which is a prohibited item for export. Further, the confessional statement of the appellant and other persons who were involved in the smuggling fully corroborated by the documentary as well as circumstancial evidences of the case and the statements of the co-accused - The objection of the appellant that cross-examination was denied is not sustainable in view of the various decisions relied upon by the Revenue cited supra wherein it has been held that cross-examination cannot be claimed in every case as a matter of right. Penalty u/s 114 and 114AA of the Customs Act, 1962 - HELD THAT:- With regard to quantum of penalty imposed on the appellant under Section 114 and 114AA of the Customs Act, 1962, it is on a higher side because the original authority has imposed penalty of ₹ 2.5 lakhs each under Section 114 and Section 114AA on the main accused viz. Mr. Abdul Razak and Shri K.P. Sibu. In para 48(f) and 47 of the Order-in-Original, original authority has observed that Mr. Abdul Razak @ Ashraf is the prime person in the attempted smuggling of Red Sander and Mr. Sibu was the Operation Manager of the smuggling syndicate who coordinated the operation and he was also instrumental in tampering with the latches of the container so as to enable to open Customs sealed container without breaking up the seals - the appellant has rightly been convicted under Sections 114 and 114AA of the Customs Act, 1962 - penalty upheld but quantum reduced. Appeal dismissed - decided against appellant.
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Insolvency & Bankruptcy
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2019 (5) TMI 670
Initiation of Corporate Insolvency Resolution Process (CIRP) - Default on the part of Corporate Debtor to make the payment - appointment of qualified Interim Resolution Professional - HELD THAT:- As per section 2 of the Code, the provisions of this Code shall apply to any Company incorporate under provisions of the Companies Act, 2013 (18 of 2013) or under any previous Company law; any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008 etc. in relation to their, liquidation, voluntary Liquidation or bankruptcy as the case maybe. The instant claim relates to the year 2012 and the Petitioner itself admits that last transaction with the Respondent was on 01.01.2013. Moreover, the Respondent has promptly denied the claim of the petitioner vide their reply dated 22.06.2017 by denying the liability. And the claim itself is basing on the purported letters issued on 08.10.2012, 30.03.2013, 30.09.2013 and 31.03.2014 which are denied by the Respondent. Therefore, the claim itself is barred by laches and limitation apart veracity of claim itself. Moreover, the MoU dated 14.01.2013 in question, itself contained several terms and conditions to claim any bills as detailed supra. Therefore, disputed issues cannot be gone into the proceedings in summary proceedings like instant proceedings initiated under the Code. The instant Company Petition is not only barred by laches and limitations and then there is a substantial dispute raised by the Respondent. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code - The Hon'ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] , has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. Thus the claim in question itself is disputed and the same is also barred by laches and limitations, and the Petition is filed with intention to recover the alleged outstanding amount and thus it is liable to be rejected - petition dismissed.
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PMLA
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2019 (5) TMI 644
Offence under PMLA - Look Out Circular as issued without statutory sanction or not? - Existence of scheduled offences - possibility of the petitioner fleeing from India, and hence, as a precautionary measure, a Look Out Circular was issued against him and accordingly he was detained by Immigration Authorities at Delhi Airport, while he was trying to board a flight to Nepal - HELD THAT:- The entire investigation is related to offences under Sections 10, 13 and 18 of the Unlawful Activities Prevention Act, 1967 and under Section 153A of IPC against Dr.Zakir Naik and others, vide the FIR No.5 dated 18.11.2016. As per the said FIR, the activities of Dr.Zakir Naik and his associates are prejudicial to the maintenance of harmony among various communities and likely to disturb the public tranquility. The FIR also revealed existence of scheduled offences under Part A of the PMLA and ECIR/MBZO/13/2016 dated 21.12.2016 has been recorded by the Zonal Office, Mumbai of the Directorate of Enforcement. As the offence of money laundering is cognizable and a non-bailable offence and the petitioner has been listed as one of the suspected persons, the investigation has been initiated. As the Look Out Circular itself seems to have been issued only based on the FIR registered under the PMLA and the Unlawful Activities Prevention Act, 1967 and therefore, the legality of Look Out Circular has to be considered having regard to the circumstances prevailing as on the date, on which, the request for issuance of Look Out Circular is made. No doubt the petitioner had accepted and acted upon the Look Out Circular and appeared for several hearings based on the summons issued. Hence, the petitioner cannot challenge the legality or validity of the Look Out Circular. Admittedly, his passport and mobile phone were returned to him and what remains to be decided is the validity of Look Out Circular in terms of the length of time. In this case the investigation is not yet over as the authorities are trying to extract the required details for their investigation. Therefore, in the present case it cannot be stated that the Look Out Circular was issued without statutory sanction or that the respondents did not have jurisdiction to issue the impugned Look Out Circular. Look Out Circular was issued in the year 2016 and is challenged after almost more than a year long enquiry was being conducted, by issuing numerous summons. Hence, the impugned Look Out Circular cannot be quashed at this stage. However, this court is inclined to direct the second and third respondents to complete the enquiry as expeditiously as possible, however, not beyond three months from the date of receipt of a copy of this order.
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Service Tax
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2019 (5) TMI 702
Valuation - Outdoor catering service - includibility of 40% non-taxable service - abatement as per Rule 2C of the Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- Catering service includes both sale of food and service for consumption of food. Therefore the other component of 40% of gross value received from catering services cannot be definitely considered as exempted services to make Rule 6(3) of CENVAT Credit Rules, 2004 applicable and to maintain separate records for availment of CENVAT credit on it including on processed food purchased as raw material. Extended period of limitation - demand for the period prior to 01.06.2012 - HELD THAT:- It cannot be said that only because audit party had found some credit availed has inadmissible, suppression of fact is made out - Extended period cannot be invoked. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 669
Pre SCN consultation - whether prior to issuing the impugned SCN dated 4th September 2018, the Office of the Principal Commissioner, Central Excise, Service Tax and Central Tax Commissionerate, Delhi South (the Respondent herein) ought to have held a pre-notice consultation with the Petitioner in terms of para 5.0 of Master Circular dated 10th March, 2017 issued by the CBEC? HELD THAT:- The officers of the Respondent do not appear to have taken any conscious decision in regard to the requirement of the Master Circular. A pointed question was posed by the Court to Mr.Harpreet Singh whether prior to issuing the impugned SCN, a decision was taken by the Respondent in the light of para 5.0 of the Master Circular not to undertake the pre-notice consultation. After going through the notes in file, Mr. Harpreet Singh stated that there was no noting in the file to that effect - In other words, it appears that the Respondent completely ignored the Master Circular before proceeding to issue the impugned SCN. The mandatory character of the Master Circular can be traced to Section 83 of the Finance Act, 1994 which makes Section 37 B of the Central Excise Act, 1944 applicable in relation to service tax. In terms Section 37 B of the Central Excise Act, 1944 instructions issued by the CBEC would be binding on the officers of the Department - In the present case, the Court is satisfied that it was necessary in terms of para 5.0 of the Master Circular for the Respondent to have engaged with the Petitioner in a pre SCN consultation, particularly, since in the considered view of the Court neither of the exceptions specified in para 5.0 were attracted in the present case. Accordingly, without expressing any view on the merits of the case of either party in relation to the issues raised in the impugned SCN, the Court sets aside the impugned SCN dated 4th September, 2018 and relegates the parties to the stage prior to issuance of impugned SCN. Petition allowed.
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2019 (5) TMI 668
Condonation of delay - failure to remove office objections within stipulated time - delay of 619 days in filing the Notice of Motion - Revenue has put the blame on advocate representing the Department for such delay - HELD THAT:- There was a delay on the part of the Officers of the Department in contacting another junior panel Advocate appointed. The said panel Advocate forwarded a notice of motion for signature. Instead of returning the notice of motion duly signed, a modified notice of motion was sent to the junior panel Counsel who raised an objection to the act of sending modified Notice of Motion. There is no explanation as to why such a modified notice of motion was sent to the advocate. Firstly, there is a default on the part of the Department as objections were not removed. Secondly, the Department refused to pay even a single farthing to the junior Counsel who was engaged in August, 2017 to file a notice of motion for restoration. We fail to understand as to how the Department expects the Advocate to file a notice of motion for restoration to get the appeal restored and to remove the office objections in the appeal, without receiving single farthing from the Department even for out of pocket expenses. There is a complete justification for the said advocate who refused to file the notice of motion without receiving requisite amount as mentioned in the bill submitted by him. The allegations made against the said junior Counsel engaged in August, 2017, are most unfortunate and ought not have been made. There is a delay at every stage on the part of the Department. No case is made out for condonation of delay and for restoration of the appeal - Notice of Motion dismissed.
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2019 (5) TMI 667
Waiver of pre-deposit - CENVAT Credit - Rule 6(3A) of CCR - HELD THAT:- Keeping in view the debatable issue involved in the appeal coupled with the fact that for the period from 1.2.2009 to 30.9.2010, the condition of pre-deposit of tax amounting to ₹ 1,46,01,332/- for hearing of the appeal has been stayed by the Tribunal, in our opinion, the appeal filed by the appellant deserves to be adjudicated without insisting for pre-deposit of ₹ 64,82,994/- in the present case. Tribunal had erred in law while not granting full waiver from pre-deposit instead directed the appellant to make a pre-deposit of ₹ 64,82,994/- with proportionate interest - the present appeal is allowed.
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2019 (5) TMI 666
Short payment of service tax - Cargo Handling service - demand of differential duty - period October, 2014 to March, 2015 - applicability of section 73(1B) of the Finance Act, 1994 - HELD THAT:- The section was inserted with effect from 14.05.2015 and there is no indication, whatsoever, in this sub-section that it is meant to have retrospective application. It is a well settled legal position that fiscal statutes always have prospective application unless a contrary intention appears in the statute itself. In this case, there is no indication of such application and therefore, section 73(1B) applies only with effect from 14.05.2015 and not to earlier cases such as the present one. Demand of differential duty - it was alleged that original authority considered only the original return and not the revised one or the return for the financial year 2015-16 in which details of payments for the earlier financial year have been indicated - HELD THAT:- Along with this appeal, the appellant has filed a copy of ST-3 return for the year 2015-16 which does indicate some amounts paid through challans at Sl.No.H2 as payments towards arrears . These amounts need to be reckoned while deciding the tax liability by the appellant. Had the appellant submitted copies of this return before the original authority and First Appellate Authority they could have avoided unnecessary litigation in appeal to that extent - this is a fit case to be remanded back to the original authority to consider the challans and the ST-3 returns filed by the appellant including revised ST-3 returns for 2014-15 and ST-3 returns for the financial year 2015-16 and re-determine the tax liability, interest and penalties, if any. Appeal allowed by way of remand.
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2019 (5) TMI 665
Demand of interest - period of limitation - service tax dues were paid by appellant but interest for such delay payment not made - HELD THAT:- There is no time limit in Finance Act 1994 for issuing demand of interest. However, Hon ble High Court of Delhi has held in the case of HINDUSTAN INSECTICIEDES LTD. VERSUS COMMISSIONER CENTRAL EXCISE, LTU [ 2013 (8) TMI 225 - DELHI HIGH COURT] that the demand for interest must be raised within the same time limit as taken of tax itself. In other words, the demand can be raised within 18 months (as applicable during the relevant period) if there are no elements of fraud, collusion, wilful mis-statement and within 5 years if these elements are present. - In the impugned order the adjudicating authority held that these elements were not present and as well as dropped the proposal to impose penalty under Section 78. Therefore, only the normal period of limitation of 18 months applies. The 18 month period must be reckoned with respect to the relevant date indicated in Section 73(6) In the present case, since the assessee has filed periodical returns the date on which the return is so filed becomes the relevant date. The first set of returns were filed in the instant case on 19.09.2013 and therefore 18 months from this date will be 18.03.2015. The show cause notice was issued on 16.03.2015 within the normal period of limitation - demand of interest upheld. Penalties u/s 76 and 77 of FA - HELD THAT:- The main ground on which it has been pleaded is that they had difficulties in getting payments for their services from their clients. This is not substantiated by any documents apart from the assertion by the appellant before me and before the adjudicating authority. The conduct of the appellant also does not inspire much confidence because if there were difficulties and do they had paid the service tax late, they should have also paid the interest along with it instead of waiting till a show cause notice is issued by the department and then contesting it - Penalties upheld. Appeal dismissed - decided against appellant.
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2019 (5) TMI 664
Demand of service tax - service for which the invoices has been raised by the appellant - HELD THAT:- The appellant has not provided any service against the invoices for which the service tax has been demanded from the appellant. Moreover, the invoices in question are in the nature of Performa Invoices issued by the appellant and no service tax is payable on Performa invoices. No service tax is payable by the appellant for the invoices in question - demand set aside - penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 663
Taxability - construction of multilevel parking - demand was raised under the category of Commercial and Industrial Construction Services - whether the service is properly classified under Commercial and Industrial Construction Services or under works contract services - commercial activity or not - HELD THAT:- There is no dispute that such multilevel parking stands constructed by the respondents for Lucknow Development Authority, whose main function is to provide public facilities. The multilevel parking are made for reducing traffic conditions and parkings on the road and is for betterment and development of the city. It cannot be said to be a commercial activity so as to tax the same. There are no justifiable reasons to interfere with the impugned order of Commissioner - appeal dismissed - decided against Revenue.
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2019 (5) TMI 662
Classification of services - Health insurance services or not - HELD THAT:- The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider, then it satisfies the definition of health services provided under Section 65(105)(zzzzo) of Finance Act, 1994. We have gone through the definition and note that the requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider, then it satisfies the definition of health services provided under Section 65(105)(zzzzo) of Finance Act, 1994. The appellants during the relevant period had provided said services and therefore there is no reason for us to interfere with the impugned orders - appeal dismissed - decided against appellant.
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2019 (5) TMI 661
Refund claim - unjust enrichment - amount deposited to Consumer Welfare Fund - HELD THAT:- The appellant has filed the refund claim of service tax reimbursed by the MES based on their letter dt. 24/01/2016 and the refund claim has been filed at the instance of the MES as the MES is the ultimate consumer and the entire tax burden borne by the MES only and has not been passed on to any other person - the appellant is claiming the refund as a representative of the MES and not on his own account and therefore the principle of unjust enrichment under the provisions of Section 11B of the Central Excise Act is not applicable to the present case. Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 660
Refund claim - respondent was not liable to pay service tax which was paid to the extent of around ₹ 36 lakhs on behalf of M/s TMF Services India Pvt. Ltd. in respondent s service tax registration code - HELD THAT:- The contention of revenue was that the refund should have been filed by the third party. I do not find any merit in the contention of revenue. Appeal filed by Revenue is dismissed.
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2019 (5) TMI 659
Construction of residential complex service - said flats were for use as staff quarters by the said university - whether the definition of residential complex service is fulfilled or not? - grounds raised by Revenue is that the CBEC through clarification dated 24.05.2010 had clarified that if NBCC constructed residential houses for Central Govt. then the same were not taxable, but if NBCC further awards a contract to sub-contractors, then sub-contractors were liable to pay Service Tax - HELD THAT:- On careful consideration of the definition of residential complex service we note that flats constructed for personal use are not covered by the definition of residential complex - appeal dismissed - decided against Revenue.
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2019 (5) TMI 658
Classification of services - Business Auxiliary services or not - society commission received for procurement of sugar through various societies formed at district level which controlled the sale of sugarcane by the farmers to the appellant - HELD THAT:- Under Business Auxiliary Service, commission is treated as consideration when such commission is received for promotion or marketing of sale of goods or for providing service or for providing Customer Care Service or for arranging procurement of goods for the clients. In the present case appellant is not engaged in promotion of any sale of goods on behalf of anybody else, nor any service, nor any activity being undertaken on behalf of the clients. Clear meaning of the transaction is that when sugarcane is purchased by the appellant, some amount is received back from the seller of the sugarcane. It clearly means that it is a type of discount. Thus, the appellant had provided any Business Auxiliary Service . Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (5) TMI 657
Interest on differential duty - price escalation clause - Whether interest is payable on the differential excise duty with retrospective effect that become payable on the basis of escalation clause under Section 11AB of the Central Excise Act, 1944? - Whether the decision in SKF case [ 2009 (7) TMI 6 - SUPREME COURT] and also in International Auto [ 2010 (1) TMI 151 - SUPREME COURT] lay down the correct law having regard to the decision of this Court in MRF case [ 1997 (3) TMI 104 - SUPREME COURT] which was in fact rendered by a Bench of three Judges. HELD THAT:- The scheme of the Central Excise Act and the Rules are a separate code. Section 11A is a provision for recovery. If there is a non-levy, non-payment, short-levy or short-payment, the same becomes recoverable under Section 11A. If there is any of the four contingencies referred to in Section 11A, then Section 11AB is attracted. The working of the parent Act is intricately intertwined with the rules, the scope of which we have already referred to. Therefore, if the value which is declared by way of self-assessment, by way of rule 6 and on which the duty is paid is not the full value then under the scheme of Section 11A read with Section 11AB and the Rules, the assessee incurs liability for interest when in a case where there is full value found and it dates back to the date of removal. In this case admittedly that at the time goods were removed the price was not fixed. The assessee was fully conscious of the fact that it was subject to variation. Assessee must be imputed with knowledge that the value it was declaring was amenable to upward revision. The circumstances were indeed clearly both apposite and appropriate for the assessee to invoke the provisions of Rule 7 and seek an order for provisional assessment. In fact, take the example of manufacturer A and manufacturer B. Both remove goods under contracts which contain escalation clauses. Manufacturer A invokes Rule 7. It seeks permission for removal of goods on provisional assessment. Though an order of final assessment has to be passed within a period of time it is capable of being extended without any time limit. Manufacturer-A on the basis of upward revision of the price with retrospective effect and acknowledging the value to be the value as provisionally assessed and as enhanced by the escalation arrived at under the escalation clause pays the duty when the escalation comes into effect on the difference in the value under Rule 7. Apart from payment of the differential excise duty manufacturer A becomes also liable to pay interest from the date when the escalation would come into play on the arrival at the higher price having retrospective operation. Manufacturer B in identical facts clears the goods on the basis of self-assessment even though he is fully aware that the value of the goods which is paid is not fixed and is amenable to upward revision. He deliberately chooses not to go in for provisional assessment. Section 11A was held to be a recovery provision as regards non-levy, non-paid, short-levy, short-paid or erroneously refunded duty. Levy of excise duty under Rule 10 of the Excise Rules, 1944 on the basis of approved classification list or price list was found to be correct levy. It did not give rise to short-levy. Undoubtedly, the amended provisions of Section 11A empowered recovery of duty even in a case where the classification list has been approved earlier and it would operate from the date of removal and not from the date on which show cause was issued. Section 11A and section 11AB as it stood at the relevant time did not provide read with the rules any other point of time when the amount of duty could be said to be payable and so equally the interest. - Decision and views expressed in SKF case(supra) and International Auto (supra) sustained. Appeal dismissed.
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2019 (5) TMI 656
Maintainability of appeal before High Court - imposition of penalty under Rule 25/26 of the Central Excise Rules, 2002 upon the Directors/ partners of the companies/firms - Valuation - SSI Exemption - contentious issues posed by the appellants are as to whether the Rules 9 and 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 are applicable or not and also that in the facts of the case, the clubbing of clearance of all the concerns was justified or not? HELD THAT:- Section 35G(1) of the Act of 1944 provides an appeal to the High Court against an order of the tribunal, however, with an exception to the effect that an appeal involving question of valuation of goods or rate of duty shall lie before Hon'ble the Supreme Court under Section 35L of the Act of 1944 - Upon a bare reading of the provision contained in Section 35G(1) of the Act of 1944, we are of the considered opinion that since in all the appeals enumerated in Table-A above, the basic question revolves around valuation of goods or applicability of Rule 9 or 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000, they are not maintainable as initially Section 35G of the Act. The appellant-assessee is required to challenge these orders of the tribunal before Hon'ble the Supreme Court as provided under Section 35L of the Act of 1944 - A perusal of the orders impugned reveals that the penalty in question has been levied under Rule 25/26 of the Rules of 2002 on the allegation that the valuation of the goods has not been properly made and/or value of clearances of all the manufacturing units need to be clubbed together. Hence, the appeals (mentioned in Table-B and Table-C above) are also required to be heard by Hon'ble Supreme Court. In any case, it will be in the fitness of the things that all the appeals involving common facts and question of law are heard and decided by one forum. The appeals at hands are not maintainable before this Court and the same are required to be preferred under Section 35L of the Act of 1944, before Hon'ble Supreme Court - appeal dismissed as not maintainable.
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2019 (5) TMI 655
Validity of Search proceedings - search under Central Excise post GST u/s 12F of the Act of 1944 read with Section 18 of the Act of 1944 and Section 174(2)(e) of the Act of 2017 - admission of HAWALA transaction through Whatsapp messages during search - search conducted by Directorate General of Goods and Service Tax Intelligence in the premises of the petitioner at Jaipur on 27.08.2017 - Reason to believe present or not - HELD THAT:- We are not inclined to uphold the contention that the respondents did not have sufficient material to form requisite reason to believe as envisaged under Section 12F read with Section 18 of the Act of 1944 and Section 100 (4)(5) Cr.P.C. to conduct the search in question. We are also not inclined to countenance the submission that since the Act of 2017 came into force w.e.f. 01.07.2017, proceedings of search could not have been carried out at Jaipur premises of the petitioner-company and that the said proceedings would not be saved by virtue of Section 174 of the Act of 2017. We hold so because the proceedings of search and seizure carried out in the premises of the petitioner at J-6, 2nd Floor, Himmat Nagar, Tonk Road, Jaipur, Rajasthan were in continuation of the proceedings already initiated prior to enforcement of the Act of 2017, which is evident from the fact that the respondents had already on receipt of intelligence conducted simultaneous search operations at various places at Bastar, Indore and Jaipur on 30.01.2017 after following the due procedure under Section 12F read with Section 18 of the Act of 1944. Relevance of the documents seized by the respondents - HELD THAT:- The documents seized by the respondents, most of which were original title deeds/sale deeds of the immovable properties, is concerned, it is found that certain incriminating material was found from drawer of the table in the cabin of Mr. Natwar Lal Sharda, Managing Director of the petitioner-company, which shows that he is the real owner of the unregistered factory and actual beneficiary of the business in Village Belinga, District Bastar, Chhattisgarh - Merely because some of the files that were seized by the search team contained original sale/title deeds of the immovable properties and the same were eventually returned back would not be sufficient to vitiate the entire action of the respondents because the material suggests that the officials of the respondents in doing so acted bona fide - Mere use of the word, resumed in place of seized at certain places in the panchnama would not in any manner invalidate the action of the respondents in ultimately seizing certain documents in the course of investigation. An error committed by the Officer in seizing the documents which may ultimately be found not to be useful for or relevant to the proceeding under the Act will not by itself vitiate the search. If prima facie there are grounds to justify the belief of the officer in conducting search, this Court would have no reason not to accept such belief, although it may or may not have entertained such belief. Petition dismissed.
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2019 (5) TMI 654
CENVAT Credit - capital goods - HR coils, MS angles, MS channels, MS plates, MS flats etc. falling under Chapter 72 of CETA, 1985 - Commissioner(Appeals) has in fact accepted the admissibility of credit on various items but remanded the case back to the original authority for verification of the usage even after certificate from Chartered Engineer was submitted by the appellant. HELD THAT:- Most of the impugned goods have been covered in the definition of inputs and have been used for repair and maintenance / fabrication of capital goods. The various decisions have held the eligibility of the assessee for CENVAT credit for various goods which have been used for manufacturing of final product. Further the credit of ₹ 26,27,670/- have been availed on the goods falling under Chapters 84, 85, and 90 which are specifically covered in the definition of capital goods as contained in Rule 2(a) of CCR, 2004. Besides this, the Chartered Engineer has certified the usage of all the impugned goods which are in dispute in the present case and he has certified that the material used for machinery and accessories are part and parcel of the said machines and he has also certified utilization / consumption of material during the period from September 2015 to March 2016. He has given the certificate of usage of each and every item which has not been considered by both the authorities below. The impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 653
100% EOU - removal of goods to DTA - Job-work - entire activity was carried out without intimation to the Customs authorities, without de-bonding of capital goods and without obtaining permission of the Development Commissioner to remove the finished goods into DTA - Penalty u/s 11AC - HELD THAT:- As per Section 11AC(1)(2), it is clear that where any duty is determined under sub-section (10) of Section 11A and the interest payable thereon under Section 11AA in respect of transactions referred to in clause (b) is paid within 30 days of the date of communication of the order of the Central Excise officer who has determined such duty, the amount of penalty liable to be paid by such person shall be 25% of the duty so determined - it is clear that this option of paying 25% will commence from the date of the appellate order. The appellant is only liable to pay 25% of the actual duty as penalty which works out to ₹ 4,66,692/- - appeal allowed in part.
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2019 (5) TMI 652
CENVAT Credit - input service - outward transportation upto March, 2008 - place of removal - Period involving prior to the amendment of the definition of input service under Notificaion No. 10/2008-CE (N.T) dated 01.03.2008 - HELD THAT:- The issue of availability of CENVAT Credit paid on outward transportation upto March, 2008 i.e. prior to the amendment of the definition of input service under Notificaion No. 10/2008-CE (N.T) dated 01.03.2008 has been decided by the Hon ble Supreme Court in the case of Commissioner of Customs, Central Excise Service Tax, Guntur Vs. Andhra Sugars Limited [ 2018 (2) TMI 285 - SUPREME COURT ] where it was held that Once it is accepted that place of removal is the factory premises of the assessee, outward transportation from the said place would clearly amount to input service. That place can be warehouse of the manufacturer or it can be customer s place if from the place of removal the goods are directly dispatched to the place of the customer. One such outbound transportation from the place of removal gets covered by the definition of input service. Thus, the appellant/assessee is eligible for availment of CENVAT Credit of outward transportation of goods from the place of removal to the warehouse or customer s place - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (5) TMI 651
Principles of natural justice - main ground which has been canvassed by the revisionist is that entire assessment proceedings were exparte - HELD THAT:- Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases. Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. The court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoever concise they may be. The order dated 07.11.2007 passed by the Trade Tax Tribunal is set-side and the matter is remanded to the Trade Tax Tribunal to be decided afresh in accordance with law after affording an opportunity of hearing to the revisionist - revision allowed by way of remand.
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2019 (5) TMI 650
Imposition of tax under Section 7(4) of U.P. Trade Tax Act - imposition of penalty under Section 15A( 1)(q) of the Act - cancellation/surrender of Transit pass at exist check post not done - HELD THAT:- The fact reveals that the first appeal were filed on 30.12.1999 by the applicant, against the orders of the assessment and penalty dated 14.1.1999 and 31.1.1997. Admittedly no application under Section 12B or the certificate allegedly issued by the buyer dated 24.3.2000 was filed by the applicant before the first appellate authority. The first appeal was decided on 1.2.2001 i.e. much after the date of preparation of the alleged certificate dated 24.3.2000. The contents of para 6 of the grounds of appeal therefore are not supporting the claim of the applicant. The first appeal was decided after issuance of the certificate and admittedly the alleged certificate was not filed before the first appellate authority. Revision dismissed.
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2019 (5) TMI 649
Compliance with the Pre-deposit - appellant is incurring huge losses as is evident from the Balance Sheets and is not in a position to deposit the amount - reversal of input tax credit - retention of bye products by the Rice Millers - Punjab VAT Rules. HELD THAT:- The appellant was required to pre-deposit 25% amount of the additional demand of the tax as a condition precedent for hearing of the appeal, which was reasonable and justified - No illegality or perversity could be pointed out by the learned counsel for the appellant in the findings recorded by the Tribunal which may warrant interference by this Court. No question of law arises in this appeal - appeal dismissed.
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2019 (5) TMI 648
Revision of assessment order - deemed assessment - suppression of sales or purchase - TNVAT Act - assessment years 2010-11 to 2015-16 - HELD THAT:- It is settled law that while passing the assessment order, the Assessing Officer cannot blindly accept the report of the Enforcement Wing officials of the Department. He has to independently consider whether the said report is factually correct or not. In the instant case, a detailed reply has been given by the petitioner, wherein, they have categorically denied that there is neither sales or purchase suppression with supporting facts and figures - All the factors have not been considered by the respondent under the impugned assessment orders but instead the respondent has outrightly rejected the replies by blindly accepting the Enforcement Wing officers field audit report without any independent source of information. It is clear that the Assessing Officer must take an independent decision and should not blindly accept the Enforcement Wing Officer's report of the Department. For the forgoing reasons, this Court is of the considered view that the respondent has passed the impugned order by total non-application of mind and therefore, all the impugned orders will have to be necessarily quashed - the matters are remanded back to the respondent for fresh consideration - Petition allowed by way of remand.
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2019 (5) TMI 647
Limitation for finalization of assessment - year 2010-2011 - time limitation provided u/s 25 (1) of the Kerala Value Added Tax Act, 2003 - writ dismissed following a decision - HELD THAT:- Learned counsel for the appellant contended that, the judgment in SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [ 2019 (2) TMI 300 - KERALA HIGH COURT] covers only the question of validity of Section 174 of the KSGST Act. It is pointed out that the learned Single Judge had omitted to consider and decide the challenge raised based on the question of limitation u/s 25 (1) of the KVAT Act. The above fact is not disputed by the learned Special Government Pleader (Taxes) appearing for the respondents. Therefore we are of the considered opinion that a remittance of the writ petition for fresh consideration and disposal on the question raised other than the validity of Section 174 of the KSGST Act, would suffice to meet the ends of justice. - petition allowed by way of remand.
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2019 (5) TMI 646
Delay in filing appeal or not? - Whether there was infact a delay in filing appeal before the first appellate authority when the appellant filed application for rectification but the same was not entertained and appeal had to be filed without any copy of order? HELD THAT:- The appellant had moved the said rectification application followed by the applications dated 14.10.2013 and 16.12.2013 only to cover up the delay in filing the first appeal and to create a ground for condonation of delay in filing the appeal - As per Section 19 of the Act, the rectification of an order can be done if there is clerical or arithmetical mistake apparent from the record of the case. By moving the rectification applications, the appellant sought benefit of ITC claim for higher amount than that allowed by the Assessing Authority under the Act. Further, the rectification could be done by the Assessing Authority within two years from the date of supply of copy of the order. The copy of the assessment order dated 4.2.2011 was supplied to the appellant on 11.4.2011 and, therefore, the rectification order could be passed upto 11.4.2013 only. However, the appellant filed the first appeal on 27.12.2013 for which no explanation was furnished by it. Since no explanation muchless satisfactory explanation was furnished, the Tribunal has rightly dismissed the appeal. Appeal dismissed - decided against appellant.
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Indian Laws
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2019 (5) TMI 645
Discharge of liability of a secured debt - precedence over the liability of a crown debt or any other debt - Whether the Notification dated 22.06.2015 issued under the MPID Act, which is a State Legislation, could override the provisions of SARFAESI Act, which is a Central Act and under the provisions of the said Act, the property in question was auctioned? HELD THAT:- A bare reading of Article 254 of the Constitution of India leaves no manner of doubt that parliamentary supremacy in matters under List III of the Seventh Schedule of the Constitution has to be maintained. In case of a conflict between Centre and a State on a subject matter, which could have been legislated upon by both, without a doubt the Central Legislation would hold supremacy. Uniform application of law across the country is undoubtedly the basic feature of Indian jurisprudence and in case there is a conflict between a Central and a State Legislation and the State Legislation being repugnant to the Central Legislation, the former would be inoperative. The Apex Court in its judgment titled as UCO Bank and anr. vs. Dipak Debbarma and ors., [ 2017 (1) TMI 742 - SUPREME COURT ] has held that in case of repugnancy or inconsistency between the provisions of Central and State enactment, the Central law would prevail. The proceedings under the SARFAESI Act would, without a doubt, hold primacy over the MPID Act. Whether the recovery of a secured debt would take precedence over a crown debt - HELD THAT:- The Supreme Court, time and again in its various pronouncements, has reiterated that the right of a secured creditor to recover its debts, will always be a prior right, even over the right of recovery of a crown debt or any other debt - Reliance placed in the case of M/s Rana Girders Ltd. vs. Union of India [ 2013 (8) TMI 540 - SUPREME COURT ] - thus it is evident that debt which is secured under the provisions of a Statute becomes the first charge over the property in question and has to give way to a crown debt, which is in the nature of an unsecured debt. A reading of Section 31-B of Recovery of Debts and Bankruptcy Act, 1993, which starts with a non-obstante clause, makes it amply clear that the right of a secured creditor to realise a secured debt shall have priority over all debts and government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority - It cannot be over emphasised that the property in question was auctioned by the respondent-PNB Housing Finance Ltd. to recover its secured debts and the attachment order issued by Government of Maharashtra must yield to the rights of the respondent-bank. Therefore, the auction proceedings must be taken to their logical end and there is no reason why the registration of the Sale Certificate be refused to the auction purchasers i.e. the petitioners. Territorial jurisdiction of this Court to entertain the instant petition - HELD THAT:- Section 20 of Civil Procedure Code which deals with the issue of jurisdiction of a Court lays down in no uncertain terms that a Court within the jurisdiction of which the cause of action wholly or in part arises or where the defendant resides or carries on business shall have the jurisdiction to try a matter. A writ petition is entertainable in a High Court within the jurisdiction of which even a part of the cause of action may have arisen. The property in question is located at Chandigarh, auction of the property was held in Chandigarh and importantly, the branch of Punjab National Bank from which the loan was raised by the petitioners was also located at Chandigarh. Thus, there is no doubt that this Court has the jurisdiction to hear and decide the instant lis because not only the cause of action has arisen within the jurisdiction of this Court but as already noticed above, the property in question is also located within the territorial jurisdiction of this Court. Petition allowed.
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