TMI Tax Updates - e-Newsletter
May 12, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise

Articles

1. ABOLITION OF DDT AND ITS IMPACT

   By: ARJUN JAIN and Sankalp Malik

2. GARNISHEE PROCEEDINGS UNDER GST LAWS

   By: DR.MARIAPPAN GOVINDARAJAN

3. Supply of Car for Demonstration- Its Classification, taxability, applicable rate & ITC Provision

   By: Ashish Mittal

News

1. Role of Resolution Professional / Liquidator in respect of Avoidance Transactions.

2. New procedure for registration, approval, etc. of certain entities deferred to 1st October, 2020

3. Clarification in respect of residency under section 6 of the Income-tax Act, 1961

Notifications

GST - States

1. 40/2020-State Tax - dated 7-5-2020 - Gujarat SGST

Extension in validity of e-way bills till 31.05.2020 for those which expire during the period 20.03.2020 to 15.04.2020 and generated till 24.03.2020

2. 39/2020-State Tax - dated 7-5-2020 - Gujarat SGST

Amendment in Notification No 11-2020-ST regarding Special procedure for corporate debtors under corporate insolvency resolution process

3. 38/2020-State Tax - dated 7-5-2020 - Gujarat SGST

Gujarat Goods and Services Tax (Fifth Amendment) Rules, 2020

4. (19/2020) - FD 03 CSL 2020 - dated 7-5-2020 - Karnataka SGST

Amendment in Notification No. (17/2020) No.FD 03 CSL 2020, dated the 20th April, 2020

5. (18/2020) - FD 03 CSL 2020 - dated 7-5-2020 - Karnataka SGST

Amendment in Notification No. (05/2020) No.FD 03 CSL 2020, dated the 27th March, 2020

Circulars / Instructions / Orders

Customs

1. Public Notices No. 23/2020 - dated 6-5-2020

Further amendment of Public Notice No. 10/2020 dated 26.03.2020

2. PUBLIC NOTICE NO. 79/2020 - dated 5-5-2020

Extension Of time limits under the Customs Act, 1962 and Rules and Regulations issued there under

3. PUBLIC NOTICE No. 35/2020 - dated 4-5-2020

Further amendment of Public Notice No. 18/2020

4. PUBLIC NOTICE NO. 35/2020 - dated 4-5-2020

Relaxation of clearance of import cargo due to delay arising on account of outbreak of Corona virus

5. PUBLIC NOTICE No. 21/2020 - dated 4-5-2020

ICES Advisory 16/2020- Streamlining of certain import processes in ICES

6. PUBLIC NOTICE NO. 28/2020 - dated 1-5-2020

Extension of Validity all AEO certificates that are expiring/have expired during the period of 1st March'2020 and 31st May'2020

7. PUBLIC NOTICE No. 34/2020 - dated 1-5-2020

ICES Advisory 16/2020 — Streamlining of Certain Imports Processes in ICES

8. PUBLIC NOTICE No. 18/2020 - dated 1-5-2020

Guideline for conduct of personal hearing in virtual mode under Customs Act, 1962

9. Public Notices No. 22/2020 - dated 1-5-2020

ICES Advisory 16/2020 — Streamlining of Certain Imports Processes in ICES

10. PUBLIC NOTICE NO. 78/2020 - dated 30-4-2020

Cancellation of  Import licence holder of COVID-19 Rapid Diagnostic kit from  China

11. PUBLIC NOTICE No. 13/2020 - dated 30-4-2020

Guidelines for conduct of personal hearings in virtual mode under Customs Act, 1962

12. PUBLIC NOTICE NO. 09/2020 - dated 29-4-2020

Guidelines for conduct of Personal Hearing in virtual mode under Customs Act, 1962

13. Public Notice No. 17/2020 - dated 29-4-2020

Guidelines for conduct of personal hearings in virtual mode under Customs Act, 1962

14. PUBLIC NOTICE NO.15/2020 - dated 28-4-2020

Guidelines to conduct personal hearing! in the virtual mode under Customs Act.1962

15. Public Notices No. 21/2020 - dated 28-4-2020

Guidelines for conduct of personal hearing in virtual mode under Customs Act, 1962

16. PUBLIC NOTICE No. 32/2020 - dated 28-4-2020

Transshipment Permission to M/S Interglobe Aviation Limited, New Delhi to transship imported cargo to and from Air Cargo Complex Ne» Delhi to other Air Cargo Complexes viz. Mumbai, Kolkata, Bengaluru, Hyderabad, Chennai, Jaipur, Lucknow, Cochin, Trivandrum and Varanasi through the flights operated by them

17. PUBLIC NOTICE No. 33/2020 - dated 28-4-2020

Guidelines for conduct of personal hearings in virtual mode under Customs Act, 1962

18. TRADE FACILITY NO. 11./2020 - dated 22-4-2020

Review of Circular No. 17 / 2020 dated 03.04.2020 namely, 'Measures to facilitate trade during lockdown period- section 143AA of the Customs Act, 1962'

19. Addendum I to Public Notice No. 05/.CCP/lMR/2020 - dated 18-4-2020

Request for Amendments and Waiver of Late Fee Charges in the Bills of Entry and regularization of Prior 85 Advance Bills of Entry through e-mail procedure as facilitation during outbreak of COVID-19

20. TRADE NOTICE No. 02/2020 - dated 14-4-2020

Paperless Customs — Electronic Communication of PDF based Gatepass and OOC Copy of Bill of Entry to Custom Brokers/ Importers

21. PUBLIC NOTICE NO.12/2020 - dated 8-4-2020

Measure to facilitate trade during the lockdown period - section 143AA of the Customs Act. 1962

22. TRADE CIRCULAR NO. 10/2020 - dated 1-4-2020

Movement and clearance of Import/Export Cargo

23. TRADE NOTICE No. 12/2019/CCP/JMR - dated 3-3-2020

ICES Advisory 09/2020 (Turant Customs) - Customs Compliance Verification and System OOC - Implementation on All India basis

24. Trade Notice No. 01/2020 - dated 3-3-2020

ICES Advisory 09/2020 (Turant Customs) - Customs Compliance Verification and System OOC - Implementation on All India basis

Highlights / Catch Notes

GST

• Petitioner in GST Evasion Case Awaits Trial; State Must Complete Probe in 3 Months or Bail Granted.

  Case-Laws - SC : Release on bail - fake firms - evasion of GST input taxes - Petitioner spent one year in Jail - the maximum punishment to be imposed on the petitioner, if convicted, is five years. - The State shall make endeavour to complete the investigation within three months from today - In case the investigation is not completed within three months from this day, the petitioner shall be released on bail by the Trial Court by imposing appropriate terms and conditions
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Income Tax

• Transition from Project Completion to Percentage Completion Method Under AS-7: Revenue-Neutral Impact on Income Tax Assessment.

  Case-Laws - HC : Accrual of income - Accounting as prescribed by accounting standard AS-7 - Completed Contract Method - for the subsequent years, it has changed from Project Completion Method to Percentage Completion Method in the subsequent year and as such, there is revenue neutral in the assessment year in question.
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• Court Clarifies No Duplication in Deduction Claims u/ss 10B and 10A for Third-Party Transactions and Inter-Unit Transfers.

  Case-Laws - HC : Deduction u/s 10B / 10A - transactions through third parties and inter-unit transfers - Duplication of claim of exemption - it is pertinent to mention here that the question of duplications in the fact situation of the case does not arise as each person can claim only on the value addition by him and the presumption that there can be duplication is contrary to the principle of computation of the income under the Act.
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• Appellate Authority Rules AO Wrong to Disallow Claims on Discounts and Rebates Due to Percentage Variations.

  Case-Laws - HC : Discount to the customer - disproportionately higher percentage - merely because there was variations in the previous and subsequent year with regard to the discount and rebates, AO should not have disallowed the claim of the appellant with regard to the discount and rebates and profits.
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• TDS Section 195: Agent-Non-Resident Client Relationship Clarified; Non-Resident Must Be Primary Client for TDS Applicability.

  Case-Laws - AT : TDS u/s 195 - The agent may be main client, but the law mandates that the non-resident should be the main client of the agent. Therefore, this reasoning of the Ld. CIT(A) cannot be affirmed. The A.O. has also observed that 52% of the revenue of the agent is from non-resident. In our view, 52% of the revenue would not make the agent falling in the category of the working mainly for the non-resident.
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• CIT(A) Deletes Bank Account Credit Addition, Urged to Apply Same Logic for Investment Addition Deletion in Share Trading Case.

  Case-Laws - AT : Addition on account of credits in bank account - CIT(A) himself has considered the fact that the wife of the assessee has profit on share trading and accordingly deleted the addition, therefore, the initial burden had been discharged by the assessee. CIT(A) should also have deleted the addition on account of investment
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• Tax Assessment Reopened on Unverified Document Lacking Signature; No Evidence of Income Received by Assessee.

  Case-Laws - AT : Reopening of assessment - reason to believe or reason to suspect - Noting in the loose paper on the basis of which the AO reopened the assessment did not contain any signature of the assessee and it is also not established whether at all any amount was received by the assessee and most important the Department could not bring on record any other corroborative evidences in support of the addition made
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Customs

• Goods Confiscation Case: No BIS Mark Needed for Stainless Steel Shipment in 2017 Before Quality Control Order Took Effect.

  Case-Laws - AT : Confiscation of goods - The date of shipment that is Bill of Lading which is in month of January, 2017, the Stainless Steel Products (Quality Control) Order, 2016 was not in force, therefore the appellant was not required to affix BIS Mark on the product imported by them.
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IBC

• Appellant's Claim for Managerial Remuneration Rejected; Must Substantiate Form-D with Records During CIRP Process.

  Case-Laws - AT : CIRP process - release of managerial remuneration/salary arrears - Appellant claims that his Application was considered by the Adjudicating Authority but the Adjudicating Authority wrongly rejected the same - When the claim is submitted in Form-D, the amount claimed must have support from record to spell out dues payable and the Applicant cannot expect the Resolution Professional and COC to go and get the necessary permissions
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Service Tax

• CENVAT Credit Refund Claims Must Adhere to Time Limits in Section 11-B of Central Excise Act, 1944.

  Case-Laws - HC : Refund of CENVAT Credit - time limitation - Rule 5 of CENVAT Credit Rules itself clearly specifying that such refund claims would be subject to “such safeguards, conditions and limitations as may be specified, by the Central Government, by notification” and the above referred notification No.5/2006 and 27/2012 clearly specifying in clause (6) and clause 3.0(b) respectively that “before the expiry of the period specified in Section 11-B of the Central Excise Act, 1944” it cannot be gainsaid by the appellants that provisions of Section 11-B of the Central Excise Act is not attracted to the refund claims made under CENVAT Credit Rules, 2004.
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• Clubs and associations formed before July 1, 2012, exempt from service tax; mutuality principles apply to cooperatives.

  Case-Laws - HC : Club or Association Service - principles of mutuality - the companies and co-operative societies which are registered under the respective Acts can be said to be constituted under those Acts and the clubs or associations incorporated prior to 1.7.2012 were not included in the service tax net.
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Central Excise

• Negligence in Processing 2012 Duty Refund Claim Despite 2017 Tribunal Order to Adjudicating Authority.

  Case-Laws - AT : Refund of excess duty paid for the month of April, 2012 - compounded levy scheme - There is negligence on the part of the Adjudicating Authority for not entertaining the refund claim despite the direction of the Tribunal vide order dated 10.10.2017.
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Case Laws:

• GST

• 2020 (5) TMI 240
  Release on bail - fake firms - evasion of GST input taxes - Petitioner spent one year in Jail - the maximum punishment to be imposed on the petitioner, if convicted, is five years. - HELD THAT:- It is not in dispute that the maximum punishment to be imposed on the petitioner, if convicted, is five years. It is also not in dispute that the petitioner has already undergone one year and eight months imprisonment. It is brought to our notice that some of the accused are released on bail. The State shall make endeavour to complete the investigation within three months from today - In case the investigation is not completed within three months from this day, the petitioner shall be released on bail by the Trial Court by imposing appropriate terms and conditions - If the investigation is completed, the report shall be filed before the concerned court. In case, the investigation is completed and the report is filed within three months from today, it is open for the petitioner to move the trial court for bail, if he so chooses. If such an application is filed, the same shall be considered on its own merits by the trial Court. SLP disposed off.

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• Income Tax

• 2020 (5) TMI 239
  Accrual of income - Accounting as prescribed by accounting standard AS-7 - Completed Contract Method of accounting followed by the assessee did not reflect the correct profits and percentage method of accounting as prescribed by accounting standard AS3 7 issued by ICAI after amendment to Section 145 - HELD THAT:- In the instant case, it has been noticed by the appellate Tribunal that assessee was in the activity of projects and was not a construction contractor. Thus, the revised AS-7 would be applicable to an enterprise undertaking construction activities on their own account as a venture of commercial nature. The assessee undertakes construction activities for those persons to whom it intends to sell super built area along with undivided share of land in a project which it is developing as a developer. In the instant case, the Tribunal has rightly held that in case of revised AS-7 is to be applied, then the opening inventories is also to be valued as per revised AS-7. In fact, the revenue had accepted the method of accounting adopted by the assessee for the previous years and in the light of guidance note provided that AS-7 is applicable to real estate developers, assessee itself has changed the method of accounting and for the subsequent years, it has changed from Project Completion Method to Percentage Completion Method in the subsequent year and as such, there is revenue neutral in the assessment year in question. Hence, for the reasons aforestated, we answer the substantial question of law No.1 in the affirmative i.e., in favour of the assessee and against the revenue. Characterisation of income - Rental income received from Forum Mall - Income from business OR Income from house property - HELD THAT:- As said issue involved is no longer res integra in view of law laid down by this Court in the matter of COMMISSIONER OF INCOME TAX-III VS. VELANKANI INFORMATION SYSTEMS (P) LTD. [ 2013 (8) TMI 113 - KARNATAKA HIGH COURT ] whereunder it has been held if assessee is in the business of taking land, putting up commercial building thereon, letting out such building with all furniture as his profession or his business then notwithstanding the fact that he has constructed building and he has also provided other facilities and even if there are two separate rental deeds, it does not fall within the income from house property and as such, question Nos.2 and 3 are answered against revenue and in favour of the assessee.

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• 2020 (5) TMI 238
  Deduction u/s 10B / 10A - transactions through third parties and inter-unit transfers - Duplication of claim of exemption - HELD THAT:- From perusal of Section 10A of the Act, it is evident that the intention of the legislature is to encourage establishment of export oriented industries with the object of receiving convertible foreign exchange. In order to claim deduction under Section 10A of the Act, the conditions laid down under Section 10A(2) have to be complied with. It is pertinent to mention here that in INTERNATIONAL STONES INDIA P. LTD. [ 2018 (6) TMI 1478 - KARNATAKA HIGH COURT] a division bench of this court has held that a narrow and pedantic approach cannot be applied in construing the words by an undertaking and restricting the benefit under Section 10B of the Act only in respect of direct export of such goods manufactured by such units. The deemed export by the assessee undertaking even through third party who has exported such goods to foreign country and has fetched foreign currency for India still remains a deemed export in the hands of the assessee undertaking also. It is evident that the appellant is entitled to benefit of deduction under Section 10B of the Act in respect of export made to third parties and inter unit transfers. So far as submission made by learned counsel for the revenue that the matter requires factual adjudication and therefore, should be remitted is concerned, suffice it to say that there were in all approximately 40 parties with whom the appellant had entered into 398 transactions. The report of an accountant which is required to be furnished by the assessee along with the return of income, under sub-section (5) of section 10B shall be in Form No. 56G. The aforesaid report has been furnished by the appellants and it is not the case of the revenue the appellants have not furnished the aforesaid report. Besides this, it is pertinent to mention here that the question of duplications in the fact situation of the case does not arise as each person can claim only on the value addition by him and the presumption that there can be duplication is contrary to the principle of computation of the income under the Act.

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• 2020 (5) TMI 237
  Discount to the customer - Disallowance as it is disproportionately higher to the percentage of discount granted in earlier year though there is increase in the turnover and the rate of tax paid - HELD THAT:- AO has not doubted the books of accounts of the appellant. AO has held that there is nothing on record to say that assessee was adopting any uniform policy in respect of discount and it was being given in the uniform way to the customers. The amount on account of discounts and rebates has been disallowed. CIT(Appeals) has held that the burden of proof lies on the assessee in order to claim that the expenditure falls under Section 37(1) - Claim of the assessee under this head is not fully verifiable in nature. Tribunal vide impugned order negatived the assessee s contention on the ground that because the turnover has increased in the subsequent year therefore higher rate of discount is to be allowed cannot be accepted because the discount and rebate is at percentage basis and not on the basis of the turnover. Books of accounts of the assessee as well as the material produced by the assessee was not disputed by the AO - merely because there was variations in the previous and subsequent year with regard to the discount and rebates, AO should not have disallowed the claim of the appellant with regard to the discount and rebates and profits.In the subsequent year, even though the amount incurred by the appellant on account of discount and rebates was Rs. 26,33,892/-, however, the profit has increased to Rs. 42,50,777/-, which was accepted by the Revenue - Disallowing the amount claimed by the assessee on account of discount and rebates is not correct - Decided in favour of the assessee.

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• 2020 (5) TMI 236
  Exemption u/s 54F - Taxing capital gain under the head business income and not giving benefit of exemption u/s 54F - grievance of the assessee relate to explaining the scope of limited scrutiny and treating the property on sale of capital asset as business income in place of capital gain - HELD THAT:- Respectfully following the order of the Tribunal in the case of brother of the assessee Shri Ramesh Raj Bohra 2020 (5) TMI 205 - ITAT JODHPUR] we do not find any justification for the addition so made treating the capital gain as business income and not allowing deduction of expenditure so incurred.

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• 2020 (5) TMI 235
  TP Adjustment - comparable selection - HELD THAT:- Assessee is a company engaged in the business of software development activities relating to electronic integrated circuits and form where development circuits and marketing support services, thus companies functionally dissimilar with that of assessee need to be deselected. Sale of wireless division of assessee as slump sale - treated the gains arising as short term capital gains - grant indexation while computing capital gains - assessee is 100% export oriented unit engaged in business of software research and development services as well as marketing support services - HELD THAT:- Transaction is a slum sale or not is not only based on interpretation of terms and conditions of the entire agreement but it is also based on the manner in which the gains has been accounted by assessee in its books of accounts. From the extracts of the accounts of assessee it is clear that it has not accounted for profits on itemised assets. In the instant case there is a sale of an entire undertaking as a going concern and assessing officer should have computed the capital gains under section 45 to 50 of Income tax Act. Ld.AO has also not identified the items that have been sold independently but has considered the lump sum valuation made by the buyer in the hands of assessee which is not in accordance with the provisions of the act. We therefore direct Ld.AO to compute the quantum of capital gains in accordance with law as a slum sale. Ld.AO is directed to decide the cost of undertaking for purpose of computing capital gains that is arisen on transfer of asset as a going concern and is directed to value it as per section 55 of the act Ld.AO is also directed to grant indexation while computing capital gains. Ld.AO is also directed to decide the depreciation on block of assets and the capital gains has to be computed in accordance with section 45 to 50 of the Act. Accordingly, we allow this ground raised by assessee. Software expenses under section 40(a)(ia) - HELD THAT:- As the issue is against assessee by decision of Hon ble Karnataka High Court in case of CIT vs Samsung Electronics Ltd [ 2009 (9) TMI 526 - KARNATAKA HIGH COURT] as held held purchase of software to fall within the ambit of royalty - we do not find any infirmity in the action of Ld.AO.

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• 2020 (5) TMI 234
  Additions of Unexplained receipt on protective basis - HELD THAT:- On consideration of submission of Ld. CIT-DR which could not be controverted by Ld. Representatives of concerned assessees, that the divergent view have been taken by the appellate authorities below, we are of the view that in the interest of justice and fair play the present impugned orders are required to be set aside with direction to Ld. CIT(A) to decide the appeals de novo in the light of aforesaid facts. Accordingly, the issues raised in the present appeals are remitted back to the file of the CIT(A) for deciding the same afresh as per law with direction that the ld. CIT(A) would decide the appeals relating to substantive proceedings at first and thereafter the appeals relating to protective assessments.

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• 2020 (5) TMI 233
  Additions of Unexplained receipt on protective basis - HELD THAT:- In view of the submissions, that the divergent view have been taken by the appellate authorities below, we are of the view that in the interest of justice and fair play the present impugned orders are required to be set aside with direction to Ld. CIT(A) to decide the appeals de novo in the light of aforesaid facts. Accordingly, the issues raised in the present appeals are remitted back to the file of the Ld. CIT(A) for deciding the same afresh as per law with direction that the ld. CIT(A) would decide the appeals relating to substantive proceedings at first and thereafter the appeals relating to protective assessments.

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• 2020 (5) TMI 232
  Excess cane price paid to sugarcane suppliers - HELD THAT:- Excess sugarcane price paid by the assessee the issue is restored to the file of Assessing Officer with similar directions as above in the cases of M/s. Vasant Rao Dada Patil SSK Ltd. [ 2019 (3) TMI 1637 - ITAT PUNE] and also consider the contentions of assessee with respect to SMP vis-a-vis FRP regime, where ever raised. The Assessing Officer shall decide the issue, after affording reasonable opportunity of hearing to the respective assessees, in accordance with law. Thus, the issue of excess cane price paid to sugarcane suppliers is allowed for statistical purposes. Disallowance of harvesting and transportation charges u/s. 37 - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by CBDT Circular No. 6/2007, dated 11-10-2007 issue of allowability of such expenses in the case of Co-operative Sugar Mills has been examined by the Board. These expenses are incurred by the Sugar Mills for ensuring an adequate and sustained supply of freshly cut sugarcane that is an essential input for the continuous running of such Mills. These expenses are, therefore; incurred for a commercial expediency and are prima facie wholly and exclusively for the purpose of business. Such expenses are, therefore, allowable in the computation of the income of the Co-operative Sugar Mills - Appeal of assessee is allowed for statistical purpose.

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• 2020 (5) TMI 231
  Suppression of sales - sales are entered in the sales register and the figure of sale amount shown in profit loss account - HELD THAT:- AO has referred in his order the stock statement as sales register, which in fact was the statement of stocks showing the inward outward quantity of materials received. It is primarily maintained for the status of stocks (in quantity) position of the company. Value of the sales are entered in the sales register and the figure of sale amount shown in profit loss account is in agreements with the figure shown in the sales register - As explained to AO that the same was entered into the stock register because of the wrong setting of accounts in the computer system. As such it was wrongly entered into the stock register. Assessing Officer s attention was also drawn on the fact that had the same has been sales, there would have been an entry of stock quantity in the outward column. The assessee company, also produced the bank statement and the ledger copy of the party, but ignoring all the evidences produced before him, the Assessing Officer has treated this amount as suppressed sales, which is completely unjustified. Counsel explained the Bench with help of reconciliation statement that the entry in the stock register dated 08.08.2013 relates to advance received from M/s Bagaria Brothers Pvt. Ltd. of Rs. 1,75,00,000/- which has been inadvertently entered into the stock register and therefore it resulted into difference but if the said sum is excluded then there will not be any difference in the quantity of the stock register. The ld. D.R. has also fairly agreed with the reconciliation of stock submitted by the assessee, as noted above. Considering the explanation submitted by the assessee and taking into account the stock reconciliation statement, we note that there is no any suppressed sales, hence we delete the addition. Ground of assessee allowed. Disallowance of operating expenses - HELD THAT:- Reconciliation of the operating expenses has neither been examined by Assessing Officer nor by ld. CIT(A). Therefore, ld. Counsel prayed the Bench that this issue may be remitted back to the file of Assessing Officer for his examination. Ld. D.R. did not have any objection if the matter is remitted back to the file of Assessing Officer for fresh adjudication. We have heard both the parties and perused the material available on record. We note that one more opportunity should be given to the assessee to explain the above mentioned reconciliation of operating expenses and justification thereof. Ground raised by the assessee are allowed for statistical purposes. Addition of travelling expenses - Allowable business expenses - HELD THAT:- As Counsel submitted that now assessee is ready to submit the vouchers and bills of the travelling expenses therefore, one more opportunity should be given to the assessee to explain the genuineness of the travelling expenses before Assessing Officer therefore the matter may be remitted back to the file of the AO.The ld. D.R. for the revenue did not have any objection if this ground is remitted back to the file of AO.Therefore, we are of the view that one more opportunity should be given to assessee to plead his case before Assessing Officer. Therefore, we set aside the order of ld. CIT(A) and remit the issue back to the file of Assessing Officer for de novo adjudication.Ground raised by the assessee are allowed for statistical purposes. Addition under the head subscription and donation - assessee failed to produce relevant bills and vouchers before Assessing Officer - HELD THAT:- As Counsel prayed the Bench that if an opportunity is given the assessee is ready to make compliance. Therefore one more opportunity should be given to assessee to plead his case before Assessing Officer. Therefore, we set aside the order of ld. CIT(A) and remit the issue back to the file of Assessing Officer for de novo adjudication. Ground raised by the assessee are allowed for statistical purposes.

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• 2020 (5) TMI 230
  TDS u/s 195 - payments made by the appellant AST Enterprise Inc., UAE for import of commodities - assessee to prove that agents are not securing orders in India mainly or wholly for non-residents - HELD THAT:- Authorities have considered from the material placed before it that the agent is working mainly or wholly on behalf of the non-resident on the ground that more than 50% of the commission receipt is received from the non-resident. CIT(A) has also observed that an agent is regarded as economically dependent on the principal if it derives major revenue from principal or if he services the principal and bear entrepreneurial or business risk. CIT(A) observed that agent namely M/s. Ashapura Commodities it is stated that PKT Associates is from main client. In our view, this basis of the Ld. CIT(A) is not in confirmity with the law. The agent may be main client, but the law mandates that the non-resident should be the main client of the agent. Therefore, this reasoning of the Ld. CIT(A) cannot be affirmed. The A.O. has also observed that 52% of the revenue of the agent is from non-resident. In our view, 52% of the revenue would not make the agent falling in the category of the working mainly for the non-resident. Reliance is also placed on the circular no.23/1969 dated 23.7.1969. See HINDUSTAN SHIPYARD LIMITED [ 1975 (4) TMI 9 - ANDHRA PRADESH HIGH COURT] We find merit into the contention that under the facts of the present case, it cannot be considered that the agent was mainly working for the non-resident. Moreover, the assessee has furnished various documents to demonstrate that agent was a general commission agent. He therefore, has no liability for deduction of tax cannot be fastened on the assessee. Therefore, we set aside the order declaring the assessee as assessee in default and direct the A.O. to delete the additions so made. Hence, ground No.1 of assessee s appeal is allowed.

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• 2020 (5) TMI 229
  Addition on account of credits in bank account - Allegation that, assessee failed to discharge the burden of proof by not establishing the genuineness of credits in the bank account - CIT(A) deleted part addition considering the past savings - HELD THAT:- CIT(A) considered the past savings but did not appreciate the explanation of the assessee that he was working in the Government Health Department since 02.9.1997 as an Assistant Surgeon and the credits are from the rotational fund - credit entries regarding the cancellation of DD purchased for share trading, clearing of cheque no.143176 and IDBI Infrastructure Bonds purchased by the assessee in earlier years have not been considered by the CIT(A), which is not justified because the assessee has explained the nature of credit entries. Direct the Assessing Officer to delete the addition on account of cash credits in bank account. Ground no.1 raised by the assessee is allowed. Addition on account of interest on FDR - HELD THAT:- AO himself noted in the assessment order that FDRs relate to earlier years, therefore, find force in the contention of the assessee that the major part of interest earned on maturity value of FDRs pertains to previous years, which should not be added in the present year. Direct the AO to delete the addition in respect of interest earned on previous years and restrict the addition to the year under consideration if the same is not part of return of income for the present year. Accordingly, ground no.2 raised by the assessee is partly allowed. Addition on account of private practice - AO made addition noting that the assessee could not prove the credit entry made in the bank account - CIT(A) confirmed the same on the ground that the assessee is a Surgeon and receiving fees from private practice - HELD THAT:- CIT(A) noted in the order that the assessee is a Surgeon and receiving fees from private practice. Perusal of assessment order and impugned orders shows that no corroborative evidence was brought on record by the Revenue Authorities in this regard. CIT(A) on presumptive basis sustained the addition, which is not justified. Thus, direct the AO to delete the addition. Unexplained investment in shares and mutual fund - CIT(A) held that the AO was not justified in making the addition of the income on account of profit on share trading pertaining to wife of the assessee - HELD THAT:- Investment was not deleted on the ground that the initial burden was not discharged by the assessee. CIT(A) himself has considered the fact that the wife of the assessee has profit on share trading and accordingly deleted the addition, therefore, the initial burden had been discharged by the assessee. CIT(A) should also have deleted the addition on account of investment - direct the AO to delete the addition. Ground no.4 raised in the assessee s appeal is allowed.

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• 2020 (5) TMI 228
  Reopening of assessment - reason to believe or reason to suspect - addition in hands of the assessee on the basis of some entries in the books of third persons as per noting found in the loose papers - additions were made as per informations were received from Investigation Wing on the basis of TEP (Tax Evasion petition) and the noting found in the loose papers wherein the name of the assessee is mentioned and against the name of the assessee 1.87 is written but whether it is an amount in thousand, Lakhs or Crores nothing is evident from that noting - HELD THAT:- Revenue Authorities could not bring any other corroborative evidences to substantiate the said noting in the loose paper. The entire addition has been based on this single noting found in this loose paper without any corroborative evidences. Even at the time of hearing, the Ld. DR could not place on record any relevant document, evidences in order to substantiate and corroborate the addition made on the basis of that entry in the loose paper. Tribunal in the case of Pradeep Amrutlal Runawal Vs. TRO [2015 (12) TMI 958 - ITAT PUNE] and Addl. CIT Vs. Miss Lata Mangeshkar [1973 (6) TMI 13 - BOMBAY HIGH COURT] wherein it is a settled legal position that it is not correct for the Assessing Officer to just rely on the noting found on the loose paper and make addition in the hands of the assessee if there is no corroborative evidences or materials substantiating to that effect. Noting in the loose paper on the basis of which the AO reopened the assessment did not contain any signature of the assessee and it is also not established whether at all any amount was received by the assessee and most important the Department could not bring on record any other corroborative evidences in support of the addition made - Decided in favour of assessee.

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• Customs

• 2020 (5) TMI 227
  Confiscation of goods - imposition of redemption fine - redemption fine imposed on the ground that the appellant have not complied with the requirement of Stainless Steel Products (Quality Control) Order, 2016 in as much as the appellant is required to affix the BIS Mark on the imported goods at the time of shipment - HELD THAT:- This case there is no dispute between assessee and the revenue. Admittedly the goods were shipped in the month of January, 2017. At that point of time Stainless Steel Products (Quality Control) Order, 2016 had not come into force, same came into force on 07.02.2017 only. In terms of the Para 2.17 of the Foreign Trade Policy,2015-2020 the date of import has to be reckoned, as per the date of shipment/dispatch from the supplying country. The date of shipment that is Bill of Lading which is in month of January, 2017, the Stainless Steel Products (Quality Control) Order, 2016 was not in force, therefore the appellant was not required to affix BIS Mark on the product imported by them. The contention of the Lower Authority as well as the submission made by Learned Authorized Representative that since the appellant was having knowledge about Stainless Steel Products (Quality Control) Order, 2016 at the time of dispatch of the goods from supplying country they should have affix the BIS Mark is of no basis - it is surprising how the Lower Authority has given such finding particularly when the order was not having legal backing to enforce such order in 2016. Appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2020 (5) TMI 226
  CIRP process - release of managerial remuneration/salary arrears - Appellant claims that his Application was considered by the Adjudicating Authority but the Adjudicating Authority wrongly rejected the same - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is matter of record that COC dealt with the claim of the Appellant in meeting dated 26.04.2018 as well as 07.08.2018 but did not support the Appellant with regard to his claim for salary in excess of what is permissible under Section 197 of the Companies Act. The Appellant appears to have been aware that he was drawing excess salary which was being picked up on the basis that approval of Central Government was awaited and on two occasions, admittedly the excess drawn was returned - Being in managerial position, this may have happened in the Company (which is now stated to have gone in liquidation) because of being related party. The Appellant was related party as reflected from the minutes of COC meeting dated 26.04.2018 (Annexure - A of Reply) in Item No.9. The COC which includes the lead and other lenders did not approve and there is nothing to show that Central Government permitted payment of excess remuneration and when this is so, there appears to be no reason to find fault with the Impugned Order and we do not find any reason to interfere. There are no substance in the argument that it was responsibility of this Resolution Professional to move the Government for necessary permission. When the claim is submitted in Form D, the amount claimed must have support from record to spell out dues payable and the Applicant cannot expect the Resolution Professional and COC to go and get the necessary permissions. There is no substance in the Appeal. Appeal dismissed.

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• Service Tax

• 2020 (5) TMI 225
  Refund of CENVAT Credit - time limitation - Rule 5 of CENVAT Credit Rules, 2004 - period prior to and from 01.04.2012 - applicability of time prescribed under Section 11B of the Central Excise Act, 1944 - pivotal issue which arises for consideration would relate to refund claims made by the respective appellants under the CENVAT Credit Rules, 2004, post 31.03.2012 and for the earlier period also. Hence, Rule 5 of the CENVAT Credit Rules, 2004 which was in force up to 31.03.2012 and the Rules made from 01.04.2012 - HELD THAT:- Where any input for input service is used in the manufacture of final product which is cleared for export under Bond or letter of undertaking, the Cenvat credit in respect of the same, so used shall be allowed to be utilized by the manufacturer or provider of output service so used and shall allowed to be utilized by the manufacturer or provider of output service and if for any reason, such adjustment is not possible, the manufacturer or the provider of output service would be entitled to seek refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification. To put it differently, in terms of Rule 5 of CENVAT Credit Rules, 2004 when a manufacturer is exporting the final product continuously without payment of duty, the CENVAT Credit on inputs-input services would be accumulating to his CENVAT Credit records. Such manufacturer would be entitled to utilize the CENVAT Credit either for payment of excise duty on final products cleared for home consumption or for export on payment of duty or for payment of service tax on output service. If these contingencies are not forthcoming for any reason, then manufacturer/output service provider can seek refund as provided under Rule 5 read with relevant or extant notifications so issued. The effect of the amendment of Section 11-B on 12-5-2000 is that all claims for rebate pending on this date would be governed by a period of one year from the date of shipment and not six months. This, however, is subject to the rider that the claim for rebate should not be made beyond the original period of six months. On the facts of the present case, since the claims for rebate were made beyond the original period of six months, the respondents cannot avail of the extended period of one year on the subsequent amendment to Section 11-B - the irresistible conclusion which has to be necessarily drawn by relying in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] is to the effect that in respect of refund of claims made under Rule 5 of CENVAT Credit Rules, 2004 the provisions of Section 11-B of the Central Excise Act would be squarely applicable. Even in respect of the refund claims made under the CENVAT Credit Rules, 2004 insofar as it relates to service providers under the Finance Act, 1994, the provisions of Central Excise Act, 1944 as specified in Section 83 of the Finance Act, 1994 would cover the same inasmuch as, Section 11-B also finds a place in Section 83 of the Finance Act, 1994. Though argument is sought to be put forward by contending that by virtue of notification dated 01.03.2006 specifying the period of limitation, we are not inclined to accept the same, inasmuch as, Rule 5 of CENVAT Credit Rules itself clearly specifying that such refund claims would be subject to such safeguards, conditions and limitations as may be specified, by the Central Government, by notification and the above referred notification No.5/2006 and 27/2012 clearly specifying in clause (6) and clause 3.0(b) respectively that before the expiry of the period specified in Section 11-B of the Central Excise Act, 1944 it cannot be gainsaid by the appellants that provisions of Section 11-B of the Central Excise Act is not attracted to the refund claims made under CENVAT Credit Rules, 2004. The substantial questions of law is answered by holding that refund applications filed under the CENVAT Credit Rules, 2004 cannot be without reference to limitation or time prescribed under Section 11-B of the Central Excise Act, 1944 - the question of law is answered to the effect that limitation for claiming refund of unutilized Cenvat credit should be within the period prescribed under Section 11-B of Central Excise Act. Appeal dismissed.

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• 2020 (5) TMI 224
  Club or Association Service - principles of mutuality - services provided by a club to its members - HELD THAT:- The entire case papers as well as the judgment rendered by the Apex Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT] , we have no hesitation to arrive at the conclusion that questions of law raised in these appeals is an issue, which is no more res integra in the light of finding recorded by the Apex Court which held that In the light of the authoritative pronouncement of Hon ble Apex Court in Calcutta Club Ltd. holding that the companies and co-operative societies which are registered under the respective Acts can be said to be constituted under those Acts and the clubs or associations incorporated prior to 1.7.2012 were not included in the service tax net, necessarily, we have to answer the substantial questionsof law against the revenue and in favour of the respondent-assessee and accordingly, it is ordered - Appeals are dismissed by answering the substantial questions of law in favour of respondent-assessee and against appellant-revenue.

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• Central Excise

• 2020 (5) TMI 223
  Refund of excess duty paid for the month of April, 2012 - compounded levy scheme - HELD THAT:- Through the order of the Adjudicating Authority dated 01.04.2019 and entertaining various refund claims of the appellant but have no whisper of any word about the refund claim for the month of April, 2012 wherein refund claim of excess duty of Rs. 9,50,000/-, Machine No. 2 was sealed for the period 16.04.2012 to 30.04.2012, which shows the negligence on the part of the Adjudicating Authority for not entertaining the refund claim despite the direction of the Tribunal vide order dated 10.10.2017. The Adjudicating Authority is directed to entertain the refund claim for the month of April, 2012 within a period of seven days from the receipt of this order and pass the order in accordance with law, if it is held that the appellant is entitled for the refund of excess duty, the same shall be paid alongwith interest - Appeal disposed off.

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