TMI Tax Updates - e-Newsletter
May 14, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. CLASSIFICATION BASED ON ASSUMPTION AND PREUSMPTIONS

   By: DR.MARIAPPAN GOVINDARAJAN

2. LOOK OUT CIRCULAR

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Auction for Sale (Re-Issue) of Government Stocks

2. Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and Combined for the Month of April 2019

3. Inaugural Session of WTO Ministerial Meeting begins in New Delhi

Notifications

Companies Law

1. F. No. 1/13/2013 CL-V, part-I, Vol.lll - dated 10-5-2019 - Co. Law

Companies (Incorporation) Fifth Amendment Rules, 2010

GST

2. 24/2019 - dated 11-5-2019 - CGST

Seeks to extend the due date for furnishing FORM GSTR-3B for the month of for the month of April, 2019 for registered persons in specified districts of Odisha till 20.06.2019.

3. 23/2019 - dated 11-5-2019 - CGST

Seeks to extend the due date for furnishing FORM GSTR-1 for taxpayers having aggregate turnover more than ₹ 1.5 crores for the month of April, 2019 for registered persons in specified districts of Odisha till 10.06.2019.

SEBI

4. SEBI/LAD-NRO/GN/2019/17 - dated 10-5-2019 - SEBI

Securities and Exchange Board of India (Portfolio Managers) (Amendment) Regulations, 2019

Circulars / Instructions / Orders

GST - States

1. GST Circular No. 18/2019 - F.17(134)ACCT/GST/2017/4412 - dated 28-3-2019

Clarifications on refund related issues.

2. GST Circular No. 20/2019 - F.17(134)ACCT/GST/2017/4404 - dated 28-3-2019

Clarification in respect of transfer of input tax credit in case of death of sole proprietor.

3. GST Circular No. 19/2019 - F.17(134)ACCT/GST/2017/4420 - dated 28-3-2019

Verification of applications for grant of new registration.

4. GST Circular No. 16/2019 - F.17(134)ACCT/GST/2017/4375 - dated 12-3-2019

Clarification on various doubts related to treatment of sales promotion schemes under GST.

5. GST Circular No. 17/2019 - F.17(134)ACCT/GST/2017/4377 - dated 12-3-2019

Nature of Supply of Priority Sector Lending Certificates (PSLC).

6. F.17(134)ACCT/GST/2017/4379 - dated 12-3-2019

CORRIGENDUM - GST Circular No. 01/2019 dated 8th January, 2019,

7. GST Circular No. 15/2019 - F.17(134)ACCT/GST/2017/4308 - dated 1-3-2019

Clarification regarding tax payment made for supply of warehoused goods while being deposited in a customs bonded warehouse for the period July, 2017 to March, 2018.

8. GST Circular No. 14/2019 - F.17(134)ACCT/GST/2017/4290 - dated 1-3-2019

Compliance of rule 46(n) of the RGST Rules, 2017 while issuing invoices in case of inter- State supply.

9. GST Circular No. 13/2019 - F.17(134)ACCT/GST/2017/4299 - dated 1-3-2019

Mentioning details of inter-State supplies made to unregistered persons in Table 3.2. of FORM GSTR-3B and Table 7B of FORM GSTR-1.

DGFT

10. TRADE NOTICE NO. 12/2019-20 - dated 13-5-2019

Discontinuing submission of physical copy of RCMCs with effect from 1.7.2019 while filing application for incentives/entitlements under FTP

Companies Law

11. 06/2019 - dated 13-5-2019

Clarification for form ADT-I filed through GNL-2 under the Companies Act, 2013

Highlights / Catch Notes

GST

• Taxpayer Entitled to Input Tax Credit Transitioning from VAT to GST; Revenue Must Support via Section 140, Telangana GST Act 2017.

  Case-Laws - HC : ITC - transitional arrangements for input tax credit - Once it is admitted that credit was available to the petitioner on the date of switch over from VAT regime to GST regime and once it is admitted that the petitioner may be entitled to make a claim for this credit in other modes - Revenue ought to have given a purposive interpretation to Section 140 of the Act r.w.s 16 to 21 of the Telangana GST Act 2017
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• Respondent Failed to Pass Input Tax Credit Benefits to Flat Buyers, Must Continue Passing Benefits Post-June 30, 2018.

  Case-Laws - NAPA : Profiteering - purchase of flat - benefit of Input Tax Credit (ITC) not passed - Since the present investigation is only up to 30.06.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent.
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• Court Grants Interim Relief for Manual GSTR3B Filing for August 2017; Respondents Must Accept and Acknowledge.

  Case-Laws - HC : Manual filing of GSTR3B for August 2017 - petitioners, who have been diligently prosecuting the matter all throughout, should not be made to suffer, and hence, are entitled to the grant of interim relief - the petitioners are permitted to file manually GSTR3B for August 2017 with correct and true details and the respondents are directed to accept and acknowledge such GSTR3B manually
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• Company Penalized for Raising Prices Despite GST Cut, Violating CGST Act 2017, Section 122(1)(i.

  Case-Laws - NAPA : Profiteering - supply of “luggage trolley bag/suitcases” - Respondent had increased the base prices of his products despite reduction in the rate of GST from 28% to 18% - It is established that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence u/s 122(1)(i)- liable for penalty
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Income Tax

• Reassessment Notice Invalidly Issued to Deceased, Not Binding on Legal Heirs Without Proper Notice u/s 159(2)(b.

  Case-Laws - AT : Reassessment notice u/s 148 on a dead person - though as per section 159(2)(b), the AO is free to initiate proceedings against the LR but proceedings were initiated against the dead person after the death of the assessee, hence the notice issued on the dead person cannot make the legal heirs binding unless a proper notice is issued on the legal heirs
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• Cranes Hiring Charges Not "Work" u/s 194C; No TDS Deduction Needed, No Disallowance u/s 40(a)(ia.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) - TDS u/s 194C - payments towards the hiring charges of cranes - a simpliciter payment towards hiring charges of cranes cannot be brought within the sweep of the definition of the term “work” as envisaged in Sec. 194C - it was not obligatory on the part of the assessee to deduct tax at source u/s 194C on hiring charges of cranes - no disallowance
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• Court Grants Tax Exemption for Educational Activities u/s 10(23C)(vi) Despite Additional Objectives in Documents.

  Case-Laws - AT : Grant of exemption/approval u/s 10(23C)(vi) - It is not in dispute that the aims and objects of the assessee are to promote education and assessee in pursuance of aims and objects only carried out the educational activities - Merely because the assessee printed certain aims and objects as per the requirement of Registrar of Societies would not make out a case for rejection
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• Assessment Proceedings u/ss 147/148 Void Due to Lack of Recorded Reasons by AO; Assessment Order Quashed.

  Case-Laws - AT : Reopening of assessment - very initiation of assessment proceedings u/s 147/148 were void and non est at the very outset because the AO has not recorded any reasons after applying his mind nor supplied the copy thereof to the assessee - question of filing / disposing off the objections by assessee/AO does not arise - assessment order quashed
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• Tribunal must decide on merits; dismissing for non-prosecution not allowed if statute requires decision. Writ Petition valid.

  Case-Laws - HC : Appeal dismissed for non-prosecution by Tribunal - remedy against such order - if the substantial provision contained in the statute mandates the disposal of an appeal on merits, the Rules cannot empower a mere dismissal for non-prosecution - cases of this type do not fall either u/s 254(2) or under the proviso to Rule 24 - the Writ Petition is maintainable
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• Petitioner's Challenge on Income Tax Act Section 127(2)(a) Dismissed Due to Acknowledged Understanding of Show Cause Notice.

  Case-Laws - HC : Transfer of case u/s 127(2)(a) - If the petitioner was really aggrieved by a one-line SCN which did not indicate any reasons for the proposal - the petitioner could have given a one-line reply demanding the reasons - petitioner herein understood the reasons and countered those reasons in their response - not open to the petitioner to cite the lack of reasons for assailing the impugned order
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• Court Upholds Transfer of Proceedings u/s 127(2)(a) of Income Tax Act; Dismisses Writ Due to Procedural Adherence.

  Case-Laws - HC : Transfer of case u/s 127(2)(a) - coordinated and effective investigation - Once it is found that the respondents have followed the procedure prescribed by law and once it is found that there was no arbitrariness, it may not be possible for us to interfere with the decision -writ dismissed
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• Goodwill from Business Acquisition Eligible for Depreciation u/s 32(1)(ii) of Income Tax Act.

  Case-Laws - AT : Depreciation on Goodwill - appellant had acquired the business undertaking on a going concern basis - goodwill acquired upon acquiring the business which is nothing but the difference between the consideration paid in excess of the book value of the assets is eligible for depreciation u/s 32(1)(ii)
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Customs

• Petitioner Entitled to Copy of Import General Manifest Forming Basis for Show Cause Notice u/s 124 of Customs Act.

  Case-Laws - HC : Inspection of documents based on which SCN was issued u/s 124 of CA - Inspection of Import General Manifest (IGM) - the petitioner must be furnished with a copy of the IGM allegedly filed by them.
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DGFT

• RCMC Physical Copy Requirement Removed for FTP Incentive Applications from July 1, 2019 by DGFT.

  Circulars : Discontinuing submission of physical copy of RCMCs with effect from 1.7.2019 while filing application for incentives/entitlements under FTP
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Corporate Law

• Companies Can File Form ADT-I for Auditor Appointments via Form GNL-2 Under Companies Act, 2013.

  Circulars : Clarification for form ADT-I filed through GNL-2 under the Companies Act, 2013
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• High Court Confirms Share Allotment Issues as Oppression and Mismanagement u/s 397 of Companies Act.

  Case-Laws - SC : Oppression and mismanagement - allotment of shares - the High Court has opined that these acts in overall factual matrix of the case, were sufficient to conclude that ground under section 397 had been made out. - Order of HC confirmed.
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Indian Laws

• Petition Challenges Builder: Is It a Class Action Under Consumer Protection Laws? National Commission Missteps on Supreme Court Guidelines.

  Case-Laws - SC : Common petition against builder - class action or not - Consumer Protection - same cause of action is not necessary - What is required is sameness of interest - National Commission in the instant case, completely lost sight of the principles so clearly laid down in the decisions of Supreme Court.
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Central Excise

• Refund Denial Overturned: Registration Not Required by Law for Claim, Authorities Made an Error in Decision.

  Case-Laws - AT : CENVAT Credit - ISD - In the absence of the condition that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law
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VAT

• Court Orders 9% Interest on Delayed State Sales Tax Refund for Inter-State Transaction After Six-Month Wait.

  Case-Laws - SC : Reimbursement of State Sales tax paid - inter-state transaction - Despite repeated requests to process its application for refund and to issue the Refund Payment Order, no steps were taken. - Refund to be made with interest @ 9% from the date of expiry of 6 months of the date of receipt of the application.
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Case Laws:

• GST

• 2019 (5) TMI 789
  Cancellation of registration of petitioner - the order passed by the first appellate authority is not being complied with - HELD THAT:- The court is of the view that the matter requires consideration. Hence, Issue Rule returnable on 12th June, 2019. By way of interim relief, the respondent authorities are directed to restore registration number being Registration granted to the petitioner under Central Goods and Services Tax Act, 2017, within a period of fifteen days from the date of receipt of a copy of this order. Direct Service is permitted.

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• 2019 (5) TMI 788
  Release the detained goods together with the conveyance - HELD THAT:- By way of an interim measure, the respondents are directed to release the detained goods together with the conveyance, subject to the petitioner paying the tax and penalty as computed by the respondent authorities and also subject to filing a solemn undertaking before this court to the effect that the petitioner shall make good the deficit liability, if any, as may be determined finally by the authorities for the goods as well as for the vehicle/s subject to the petitioner s right to challenge the same in accordance with law. Stand over to 19th June, 2019.

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• 2019 (5) TMI 787
  Review application - Provisional release of goods - review is sought for on the ground that while the total tax demand was of Rs. 13,03,57,862/-, only Rs. 46,75,791/- has been secured by this Court and no suitable directions have been issued to secure the remaining tax demand - HELD THAT:- This Court has duly recorded the submission of the learned senior standing counsel that in terms of the show cause notice, the total tax demand comes to around of Rs. 13 crores and hence the relief claimed in the petition may not be granted and that, if at all, the Court is inclined to grant any relief as prayed for, the respondent (original petitioner) may be directed to furnish the bank guarantee of at least Rs. 1 crore. No case is made out for review of the aforesaid judgment and order - Application dismissed.

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• 2019 (5) TMI 786
  Input tax credit - transitional arrangements for input tax credit - Section 140 of the Telangana GST Act, 2017 - HELD THAT:- Once it is admitted that credit was available to the petitioner on the date of switch over from VAT regime to GST regime and once it is admitted that the petitioner may be entitled to make a claim for this credit in other modes, we think that the second respondent ought to have given a purposive interpretation to Section 140 of the Act read with Sections 16 to 21 of the Telangana GST Act 2017. As he has failed to do the same, the matter requires reconsideration. The matter is remanded back to the second respondent for a fresh consideration - petition allowed by way of remand.

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• 2019 (5) TMI 785
  Profiteering - purchase of flat - benefit of Input Tax Credit (ITC) not passed - GST was being charged from him @12% - violation of provisions of Section 171 of the CGST Act, 2017 - HELD THAT:- The Respondent in his submissions has repeatedly stated that the Applicant No. 1 had withdrawn the complaint in which it was alleged that the Respondent had not passed on the benefit of ITC to him, on being satisfied with the clarification given by him on the issue of benefit of additional ITC and hence the investigation conducted against him should have been dropped. However, this contention of the Respondent is not acceptable as there is no provision in the above Act or the Rules framed under it to withdraw the complaint once it has been made by following the prescribed procedure and despite withdrawal the offence of profiteering remains and therefore, the DGAP has rightly persued the investigation. Once violation of the provisions of Section 171 (1) of the above Act had come to the notice of the DGAP he was legally bound to ascertain the truth of the allegation after conducting detailed investigation as per the provisions of Rule 129 (1) of the CGST Rules, 2017 as it not only adversely affects the interests of the common buyers but also amounts to wrongful appropration of the concession which has been granted by the Central as well as the State Government by sacrificing their own revenue and hence no illegality has been committed by him by launching the present investigation against the Respondent. The Respondent has also stressed that the computation of the benefit/ loss could not be done before completion of the project. It is apparent from the record that the above project was launched by the Respondent in the year 2013 and was likely to be completed by March, 2019 after a lapse of a period of about 6 years whereas he had been regularly availing the benefit of additional ITC w.e.f. 01.07.2017 to pay his output tax liability by appropriating the benefit of ITC which he was required to pay to the flat buyers. The Respondent can not be allowed to enrich himself at the cost of the buyers and keep them waiting till the project was completed and hence he is legally bound to pass on the benefit periodically to them by computing the same on the basis of the ITC availed as well the instalments paid by them. Any reversal of ITC due to unsold flats could have been factored by him during the course of calculation of the benefit and had any of the buyers surrendered his allotment after availing the benefit of ITC the same could also have been taken in to consideration while selling the flat to the subsequent buyer. Since the Respondent is a person duly registered under the above Act he is legally liable to pass on the benefit and he cannot deny the same on the ground that he had not received the benefit from his suppliers. The Respondent can always claim the benefit from his suppliers if he thinks that it is due to him by following the legal options but he cannot contend that he would not pass on the benefit to his recipients on this ground and hence his claim is ultra vires of the above Section. Penalty - HELD THAT:- It is apparent from the record that the Respondent had not released the benefit for a period of about one year and tried to avoid its release on various grounds viz. that it would not be possible to compute the same before the completion of the project and that he would be required to reverse the ITC on the unsold flats. He has passed the benefit only after the present proceedings were initiated against him which shows that he was not willing to comply with the provisions of Section 171 (1) of the above Act and therefore this act of the Respondent falls foul of the provisions of the above Section which makes him liable for penalty as per the provisions of the CGST Act, 2017 and the Rules framed under it. The proposed imposition of penalty under the above Sections and cancellation of his registration is not sustainable unless specific allegations how he had violated the provisions of the above Sections are levelled against him. Therefore, the notice is ordered to be withdrawn to the extent that it proposes to impose penalty on him as per the provisions of the above Sections and the Rule. However, rest of the contents of the above show cause notice will continue to operate. The provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount of Rs. 1,01,06,773/- inclusive of CST @12% or 18% on the base profiteered amount of Rs. 89,68,979/-. The Respondent has also realized an additional amount to the tune of Rs. 49,169/- from the Applicant No. 1 which includes both the profiteered amount @1.79% of the taxable amount (base price) and GST on the said profiteered amount - this Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. Since the present investigation is only up to 30.06.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. It is also evident from the facts that the Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Anand Vilas Project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than what he was entitled to collect and has also compelled them to pay more GST on the additional realisation than what they were required to pay by issuing incorrect tax invoices and hence he has committed an offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty under the provisions of the above Section. Application disposed off.

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• 2019 (5) TMI 784
  Manual filing of GSTR3B for August 2017 - requirement of subrule (2) of Rule 88 of the CGST Rules - HELD THAT:- In the absence of proper response on the part of the respondents, the Court is of the view that the petitioners, who have been diligently prosecuting the matter all throughout, should not be made to suffer, and hence, are entitled to the grant of interim relief as prayed for in paragraph 5(A) of the application. The petitioners are permitted to file manually GSTR3B for August 2017 with correct and true details and the respondents are directed to accept and acknowledge such GSTR3B manually filed by the petitioners for August 2017 - application allowed.

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• 2019 (5) TMI 783
  Profiteering - supply of luggage trolley bag/suitcases , namely Tropic 45 Weekender Black and Neolite Strolly 53 360(VlP) FIR - benefit of reduction in the rate of tax not passed on - contravention of provisions of Section 171 of the CGST Act, 2017 or not - penalty - HELD THAT:- The Respondent had increased the base prices of his products w.e.f. 15.11.2017 despite reduction in the rate of GST from 28% to 18%. The DGAP in his Report has also revealed that the amount profiteered by the Respondent in respect of supplies of the products during the period 15.11.2017 to 31.08.2018 is Rs. 18,887/-. Therefore the Respondent has acted in contravention of the provisions of Section 171 of the CGST Act, 2017 in as much as he did not pass on the benefit of reduction in the rate of tax to his recipients by way of commensurate reduction in the prices. Penalty - HELD THAT:- It is established from the record that the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the above Act and hence he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 - In the interest of natural justice before imposition of penalty a notice be issued to him asking him to explain why penalty should not be imposed on him. Application disposed off.

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• Income Tax

• 2019 (5) TMI 782
  Transfer of case u/s 127 (2)(a) - Currently, the jurisdiction is with the Dy. CIT, Circle - 3 (2), Hyderabad - centralization of the petitioner s case at Mumbai - assessee objected to the proposed centralization but objections were overruled by the Pr. CIT, Hyderabad - non furnishing of reasons - coordinated and effective investigation - company have registered office at Pune and Corporate Office at Hyderabad - HELD THAT:- If the petitioner was really aggrieved by a one-line show-cause notice which did not indicate any reasons for the proposal; the petitioner could have given a one-line reply demanding the reasons to be furnished. If the Department had failed to furnish reasons even thereafter, but proceeded to pass orders, then the same would have been a clear violation of the procedure prescribed u/s 127 (2)(a). But, in this case, the petitioner understood the reasons and countered those reasons in their response. Therefore, it is no more open to the petitioner to cite the lack of reasons in the show-cause notice as a ground for assailing the impugned order. In fact, our experience shows that different jurisdictional authorities, different benches of the Tribunal and even different High Courts take different views on certain complicated issues. Therefore, when multiple parties located at different places coming under different jurisdictional Officers are involved in an investigation, there is nothing wrong in the competitive authority taking a decision to centralize the assessment of all the parties. In a nutshell, this is described as coordinated and effective investigation and hence the allegation that the same is a bald and vague statement, cannot be accepted. An Assessee who faces no hardship in shifting their registered office to another State just for the purpose of bagging contracts in that State also, cannot plead that the centralization and transfer for the purpose of coordinated and effective investigation would cause hardship to them. If huge infrastructure projects can be undertaken by the petitioner in various States without causing financial, managerial and logistic stress, they cannot plead stress in so far as the centralization and transfer of assessment alone. As we have indicated earlier, the respondents have not taken any decision arbitrarily to transfer the investigation to Mumbai. The decision is a fall out of a search conducted in the Offices of ABIL Group of entities and their Promoters. It may be true that the percentage of the work sub-contracted by the petitioner to ABIL Group of entities may be abysmally low. But the magnitude of the projects undertaken by the petitioner are so huge that even the small percentage sub-contracted to ABIL, with an obligation on their part to entrust the work to one of the partnership firms promoted by the promoters of the petitioner company runs into several Crores. Therefore, we do not think that the respondents can be accused of acting arbitrarily. Once it is found that the respondents have followed the procedure prescribed by law and once it is found that there was no arbitrariness, it may not be possible for us to interfere with the decision, in cases of this nature. Therefore, the Writ Petition is liable to be dismissed

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• 2019 (5) TMI 781
  Deduction u/s 80IC - substantial expansion - whether an assessee is entitled to deduction @ 100% of its profits or @ 25% only, where the substantial expansion is carried out by it after initial period of five years from the date of setting up of the industrial unit? - HELD THAT:- In the assessment year 2011-12, the assessee carried out substantial expansion and claimed deduction @ 100% u/s 80IC for the assessment year 2012-13. The Assessing Officer allowed only 25% of deduction claimed u/s 80IC being the sixth year as a firm and disallowed 75% of the deduction claimed under Section 80IC of the Act. The CIT(A) confirmed the disallowance. The Tribunal allowed the appeal and directed the Assessing Officer to grant deduction of 100% of its eligible profits to the assessee following decision of Hon ble Himachal Pradesh High Court in the case of M/s Stoverkraft India [ 2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] . The matter is no longer res integra. The Apex Court has finally in M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] held that in case substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become initial assessment year , and from that assessment year the assessee shall been entitled to 100% deductions of the profits and gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). - Decided in favour of assessee. Disallowance u/s 37 and 36(1)(iii) - HELD THAT:- Tribunal had held that the disallowances challenged in the additional grounds pertaining to interest and bad debts resulted in increasing the business profits of the assessee. Since the assessee was held entitled to claim deduction of its profits at the rate of 100%, therefore, the additions so made were entitled to deduction u/s 80IC as accepted by the Department also vide the Circular dated 2.11.2016 resulting in no addition to the taxable income of the assessee. No illegality or perversity could be pointed out by the learned counsel for the revenue in the aforesaid findings recorded by the Tribunal in the appeals which may warrant interference by this Court. No question of law, muchless a substantial question of law arises in these appeals - revenue appeals are dismissed

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• 2019 (5) TMI 780
  Addition towards excessive sugarcane price paid to members as well as non-members of the assessee - Addition u/s 40A - HELD THAT:- Both the sides are unanimously agreeable that the extant issue of deduction for payment of excessive price for purchase of sugarcane, raised in the appeal under consideration, is squarely covered by the aforesaid judgment in TASGAON TALUKA S.S.K. LTD. [ 2019 (3) TMI 321 - SUPREME COURT] remit the matter to the file of the A.O for deciding it afresh as per law in consonance with the articulation of law by the Hon ble Supreme Court in the aforenoted judgment. It is made clear in so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon ble Supreme Court supra. G round allowed for statistical purposes. Giving of sugar to members and non-members at concessional rates - HELD THAT:- It would be just and fair if the impugned order on this score is set aside and the matter is restored to the file of AO, instead of to the CIT(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given in KRISHNA SAHAKARI SAKHAR KARKHANA LTD. [ 2012 (11) TMI 669 - SUPREME COURT] - Issue allowed for statistical purposes.

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• 2019 (5) TMI 779
  Grant of exemption/approval u/s 10(23C)(vi) denied - mentioning some other aims and objects other than pursuance to aims and objects of assessee society - assessee society is running only educational institution and established only for educational purposes - HELD THAT:- It is not in dispute that the aims and objects of the assessee are to promote education and assessee in pursuance of aims and objects only carried out the educational activities. The assessee did not do any other activity, therefore, merely mentioning some other aims and objects would not disentitle the assessee for claiming exemption/approval under section 10(223)(vi) CCIT did not bring any material on record as to how assessee was doing any other activity in pursuance to aims and objects of assessee society. Merely because the assessee printed certain aims and objects as per the requirement of Registrar of Societies would not make out a case for rejection of the application of assessee for approval under the above provision. The material on record clearly suggest that assessee solely exist for educational purposes only. Merely because some other aims and objects have been mentioned other than education, which have also not been verified at this stage would clearly show that assessee is entitled for exemption / approval 10(23C)(vi) of the I.T. Act. The issue is covered in favour of the assessee by the case of Harf Charitable Trust (Regd.) Malerkotla vs. Chief Commissioner of Income Tax And Another [ 2015 (8) TMI 848 - PUNJAB HARYANA HIGH COURT] - Decided in favour of assessee.

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• 2019 (5) TMI 778
  Non speaking order of CIT-A - dismissal of appeal of assessee - Penalty u/s. 271(1)(c) - no assessment proceedings completed u/s 201/201(1A) - HELD THAT:- CIT(A) did not deal the issue on merit and passed a non-speaking order by dismissing the appeal of the assessee by upholding the action of the AO. It is a settled law that even an administrative order has to be speaking one. In this regard, we draw support from M/S SAHARA INDIA (FIRM) , LUCKNOW VERSUS CIT, CENTRAL-I ANR [ 2008 (4) TMI 4 - SUPREME COURT] wherein it has held that even an administrative order has to be consistent with the rules of natural justice . We remit back the issues in dispute to the file of the Ld. Commissioner of Income Tax (Appeals) to discuss each and every aspects of the issues involved in the Appeal and decide the same afresh by passing a speaking order, after considering all the evidences/documents. Needless to add that the assessee should be given adequate opportunity of being heard.

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• 2019 (5) TMI 777
  Penalty u/s 271(1)(c) - non specific satisfaction recorded by AO - defective notice - HELD THAT:- Penalty in dispute is not sustainable in the eyes of law, because the AO has not recorded any clear finding whether the assessee was guilty of concealment of income or furnishing of inaccurate particulars of income. Secondly, the notice u/s. 271(1)(c) has been issued to the assessee levying the penalty for furnishing of inaccurate particulars of income/concealment of income, whereas the penalty in dispute has been levied by the AO on account of furnishing of inaccurate particulars. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2019 (5) TMI 776
  Admission of additional grounds -as alleged Penalty u/s 271(l)(c) levied without jurisdiction, illegal and bad in law - HELD THAT:- We are of the considered view that in view of the decision of NTPC Limited [ 1996 (12) TMI 7 - SUPREME COURT] the additional grounds raised by the assessee are purely legal ground and did not require fresh facts which is to be investigated and goes to the root of the matter. In the interest of justice, we admit the aforesaid additional grounds. We find that since these additional ground were not raised before the Ld. CIT(A), hence, the same requires adjudication by the Ld. CIT(A), therefore, in the interest of justice, we remit back the aforesaid additional grounds to the file of the Ld. CIT(A) with the directions to decide the same afresh under the law, after giving adequate opportunity of being heard to the assessee.

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• 2019 (5) TMI 775
  Reopening of assessment - non recording of reasons by AO - assessee not given copy of reasons recorded for issuance of notice u/s 148 - non independent application of mind by AO - borrowed satisfaction - HELD THAT:- Reasons have not been recorded by the AO rather based the assessment order on the information received from DCIT, CC 2(2), Mumbai along with assessment order of M/s. Avance Technologies Limited passed u/s 153C of the Act, so the question of supplying reasons recorded to the assessee does not arise. When assessee had made a request for supply of the reasons recorded and the said request had not been adhered to and the AO proceeded to pass the assessment order even without providing an opportunity to cross examine the Director of M/s. Avance Technologies Limited whose statements have been relied upon to prove the fact that M/s. Avance Technologies Limited, a accommodation entry provider has provided accommodation entry of Rs. 25,00,000/- to the assessee. So, the very initiation of assessment proceedings u/s 147/148 of the Act were void and non est at the very outset because the AO has not recorded any reasons after applying his mind nor supplied the copy thereof to the assessee and as such, in these circumstances, question of filing / disposing off the objections by assessee/AO does not arise. As decided in Pr.CIT-16 vs. Jagat Talkies Distributors [ 2017 (9) TMI 192 - DELHI HIGH COURT] wherein GKN Driveshaft (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] discussed held that when the assessee has not been given copy of reasons recorded for issuance of notice u/s 148 by the AO, entire assessment proceedings and resultant assessment order passed u/s 143(3)/148 was to be quashed. - Decided in favour of assessee.

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• 2019 (5) TMI 774
  Penalty u/s 271(1)(c) - addition of bogus purchases - HELD THAT:- As relying on M/S. ORIENTAL CLEARING AGENCIES VERSUS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE [ 2017 (11) TMI 1765 - ITAT PUNE] bogus purchase was offered as income of the assessee and the penalties were initiated for concealment of income. On these facts, the Tribunal held in this case stating that the penalty u/s 271(1)(c) of the Act initiated and levied under the wrong charge and the same is unsustainable In the case of bogus purchase, the correct charge/correct limb should have been the one relating to the default of furnishing of inaccurate particulars of income and not the concealment of income as the bogus purchases are very much recorded in the books of account. The penalty levied by the Assessing Officer in both the appeals are unsustainable on legal issue. Therefore, we find the orders of the CIT(A) in both the years are fair and reasonable and they do not call for any interference.- Decided in favour of assessee. Claim of deduction u/s 80IA(4)(iv)(a) - assessee claimed the set off of loss pertaining to the windmill unit against the profits of other undertaking of the assessee - HELD THAT:- As decided in assessee own case [ 2018 (4) TMI 1627 - ITAT PUNE] it was running civil construction activity from which it was showing profits from year to year and the losses arising from windmill in the earlier years have already been set off against the said income and the balance income had been assessed in the hands of assessee. It is not case of Revenue that after adjustment of losses in the respective years the assessee had shown any losses. There is no merit in the order of Assessing Officer in holding that deemed losses have to be adjusted against profits of undertaking. In view thereof, we hold that the assessee was entitled to the claim of deduction under section 80IA(4)(iv)(a) - Decided in favour of assessee.

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• 2019 (5) TMI 773
  Reference to DRP u/s 144C - eligible Assessee - first to pass a draft assessment order as per the provisions of Sec.144C(1) which has a non-obstante clause - allowing the AO additional time over and above the limit provided u/s 153(1) third proviso - HELD THAT:- We however find similar issue has already been considered and decided against the Assessee by the ITAT Delhi Bench in the case of Honda Trading Corporation vs. CIT [ 2015 (9) TMI 846 - ITAT DELHI] wherein it was held that the provisions of section 144C override the provisions of section 153. While rejecting the assessee s contention that the limitation in section 153 referred to passing of draft assessment order held that - Section 144C gives a complete go bye to section 153; and the Act does not contemplate any limitation for passing of draft assessment order, which can be passed within a reasonable time. Additional ground raised by the Assessee on the question of limitation is rejected. Deduction u/s 10A computation - exclusion of tele-communication charges that the payments were made to the service provider for connectivity within India and therefore the expenditure was not attributable to the delivery of article or things incurred in foreign exchange - HELD THAT:- Taking into consideration the decision rendered in the case of CIT v. Tata Elxsi Ltd [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that communication charges should be excluded both from export turnover and total turnover. We are of the view that as of today, law declared by the Hon ble High Court of Karnataka which is the jurisdictional High Court is binding on us. Moreover, the order of the Hon ble Karnataka High Court has been upheld in the case of CIT v. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] . In view of the acceptance of Gr.No.3, We are of the view that Gr.NO.2 that the expenditure in question ought not to be excluded from the Export Turnover is academic and therefore left open without any decision. Addition of Special Additional Duty of Customs at 4% - HELD THAT:- We are of the view that in the light of the statutory provisions cited for getting an order of refund of SAD, the mere fact that it was recognized as income in the books of accounts by the Assessee would not be sufficient to bring the same to tax. The decisions cited by the Assessee in this regard supports the plea that there would be no accrual of income unless the authorities concerned, pass an order sanction of refund and that the entries in the books of accounts by the Assessee are not conclusive in the matter of deciding the point of time at which income can be said to have accrued to an Assessee. Apart from that, we find that out of the total SAD refund. Aggregating to Rs. 5,74,87,167, the amount sanctioned by the custom authorities amounted to Rs. 5,71,37,509 only. Out of total sanctioned amount, Rs. 4,27,71,514 was offered to tax by the Assessee in assessment year 2009-10 and Rs. 1,43,65,995 was offered to tax in assessment year 2010-11, as and when the order in this regard was passed by the Custom authorities. The issue is therefore revenue neutral and do not affect the tax liability of the assessee likely to be collected by the Department as a whole - addition made is unsustainable Depreciation on the cost of assets incurred while taking over the Road development Business - asset acquired through slump sale - HELD THAT:- Global acquisition of RDB by Volvo group entities worldwide, there is no basis for the AO to invoke Explanation-3 to Sec.43(1) that is motive for valuation of depreciable assets at higher value is to get benefit of higher depreciation and avoid tax. The fair market value of the assets on which depreciation has been claimed by the Assessee, as on the date of transfer, has not been disputed by the revenue authorities on germane grounds. The reasons given by the AO for invoking Explanation-3 to Sec.43(1) in our view are very vague. The valuation report is given by experts in the respective fields. Their conclusions cannot be brushed aside on mere surmises and conjectures. It is undisputed that but for invoking Explanation-3 to Sec.43(1) there is no other basis for not allowing the claim for depreciation as made by the Assessee. On the facts of the case, we are convinced that the AO has not established the existence of facts to justify invoking Explanation-3 to Sec.43(1) and therefore, we hold that the depreciation on the cost of acquisition of various assets as claimed by the assessee in the return of income should be allowed. Non-compete fee paid to IRIL pursuant to BTA agreement - revenue expenditure - HELD THAT:- There was specific agreement not to compete and the consideration was fixed as per the terms of the agreement. In the present case however, there exists no such agreement. Since the transfer of business was on a slump sale basis, the transferee has split the lump sum consideration as attributable to several tangible and intangible assets acquired consequent to slum sale. The consideration paid for acquiring business is sought to be characterized as revenue expenditure, which does not appear to be appropriate. Nevertheless, the intangible benefit to the Assessee as a result of existence of agreement not to compete with business of the Assessee can be said to be an intangible right, which can be characterized as commercial rights and the Assessee should be allowed the benefit of depreciation on the value as estimated by the Assessee in its valuation report u/s 32(1)(ii) as laid down in several decisions which we will refer to while dealing with claim of depreciation on goodwill. Depreciation on Goodwill - claim as revenue expenditure or in the alternative treat is as commercial right on which depreciation should be allowed - HELD THAT:- In our view, the decisions in AREVA T D INDIA LTD. VERSUS DCIT [ 2012 (4) TMI 79 - DELHI HIGH COURT] Triune Energy Services Private Limited vs. DCIT [ 2015 (11) TMI 1218 - DELHI HIGH COURT] are squarely applicable to the facts of the present case since in the present case also, the appellant had acquired the business undertaking on a going concern basis and the goodwill acquired upon acquiring the business which is nothing but the difference between the consideration paid in excess of the book value of the assets is eligible for depreciation u/s 32(1)(ii) . The Hon ble Karnataka High Court in the case of CIT v. Manipal Universal Learning (P.) Ltd [ 2013 (7) TMI 169 - KARNATAKA HIGH COURT] following the decision of the Supreme Court in Smiffs Securities [ 2012 (8) TMI 713 - SUPREME COURT] held that goodwill is an asset under Explanation 3(b) to section 32(1) and therefore depreciation is allowable on goodwill. We hold that the purchase consideration paid in excess of the value assigned to the tangible assets, has to be regarded as payment towards acquisition of goodwill which is a specie of business and commercial rights and depreciation as claimed by the Assessee should be allowed. Disallowance of the value assigned to license, permits, certification, accreditation etc. acquired from IR - allowable revenue expenses - HELD THAT:- The claim of the Assessee before us is that if the aforesaid payment is held to be capital in nature, then, depreciation may be directed to be allowed in terms of section 32(1)(ii). The details of the licenses and permits and certifications are set out which is part of the valuation of intangibles report of Bizworth. The basis of valuation is set out of this report and in our view, it is in fact an intangible acquired by the Assessee and the basis of estimation of its value is reasonable and acceptable. We therefore direct that depreciation be allowed on this intangible treating it as commercial right u/s.32 Deduction of slump consideration towards the rights acquired for supply of spare parts to customers of Ingersoll Rand - HELD THAT:- Depreciation on the value of right of supply of spare parts to customers of IR is concerned, we have considered the submission of the Assessee. The valuation report of Bizworth explains the method of valuation in paragraph 11 of its report. It is explained that on acquisition of IRIL s RDB several equipments already manufactured and sold by IRIL existed in the market and the Assessee gets a right to sell spare parts for such equipments. Expected sale of spare parts and the margin likely to be earned on such sale has been estimated and value assigned to such right and allocated out of the lump sum consideration paid on slump sale. The claim of the Assessee before us is that if the aforesaid payment is held to be capital in nature, then, depreciation may be directed to be allowed in terms of section 32(1)(ii) . The basis of valuation is set out in para-11 of the valuation report of Bizworth in our view is in fact an intangible acquired by the Assessee and the basis of estimation of its value is reasonable and acceptable. We therefore direct that depreciation be allowed on this intangible treating it as commercial right u/s.32 Allowability of provision for warranty - deduction towards obsolescence of inventory - HELD THAT:- Actual payment of warranty claims needs to be allowed as deduction as it was revenue expenditure incurred wholly and exclusively for the purpose of business of the Assessee. As far as the Assessee is concerned, it is liability of the Assessee and since it is in relation to the business of the Assessee, the same deserves to be allowed. Deduction of provision for obsolete inventory is concerned, the claim of the Assessee that the sum reversed was not claimed as deduction by IRIL needs to be verified and if found correct, the same should not be taxed as the conditions precedent for invoking the provisions of Sec.41(1) are not satisfied. Determination of Arm s Length Price (ALP) in respect of an international transaction of rendering captive engineering design services to its Associated Enterprise (AE) - it is not in dispute that the TNMM was chosen as the MAM - exclusion of comparable - HELD THAT:- Coral Hubs Ltd. comparability of this company in the case of an Assessee providing ITES to its AE such as the Assessee was considered, in the light of the very same objection that this company outsources major portion of its activities, in the following decisions and it was held that this company is not comparable with a company providing ITES to its AE such as the Assessee, thus company should be excluded from the list of comparable companies Wipro Ltd. from the list of comparable companies company was excluded from the list of comparable companies in the case of companies providing ITES such as the Assessee on the aforesaid ground in the case of Pr. CIT vs Oracle (OFSS) BPO Services Pvt Ltd [ 2018 (3) TMI 222 - DELHI HIGH COURT] on the basis that the company has a significant brand presence and brand value of an entity has a significant role in the ability to garner profits and negotiate contracts. We hold that this company should be excluded from the list of comparable companies. TPO is directed to compute the ALP after excluding the aforesaid two companies from the list of comparable companies and also provide permissible variation of (+) (-) 5% margin in accordance with the provisions of Sec.92CA .

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• 2019 (5) TMI 772
  Deduction u/s 80P(2)(d) - interest earned from deposits in Co-operative Banks and nationalised Banks - HELD THAT:- As fairly admitted by the assessee, this issue for consideration before us has been considered and decided against the assessee by a Co-ordinate Bench of this Tribunal in the case of Karnataka State Government House Building Cooperative Society Ltd., Vs. ITO [ 2019 (5) TMI 704 - ITAT BENGALURU] following the decision of THE TOTAGARS CO-OPERATIVE SALE SOCIETY, [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] we hold that the assessee is not entitled for being allowed deduction under section 80P(2)(d) of the Act on interest income earned on deposits made with Co-operative Banks and nationalized Banks - Decided against assessee.

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• 2019 (5) TMI 771
  Penalty u/s 271(1)(c) - disallowance at the rate of 12.5% being gross profit of the bogus purchases - CIT(A) made enhancement of the bogus purchases and directed the AO to add the balance amount of bogus purchases and also imposed penalty - ITAT [ 2017 (10) TMI 1451 - ITAT MUMBAI] deleted the enhancement made by CIT(A) but sustain the addition @ 12.5% made by AO - HELD THAT:- Tribunal has deleted the addition whatever was enhanced by CIT(A). Hence, the penalty levied by CIT(A) on enhancement vide order dated 27.07.2017 will not survive as the quantum addition has been deleted by the Tribunal. The penalty imposed by CIT(A) was Rs. 28,68,970/-. When these facts were confronted to the learned Sr. Departmental Representative, he could not controvert the above factual findings. After hearing the rival contentions and going through the facts of the case, we are of the view that once the quantum is deleted by the Tribunal, the penalty levied by CIT(A) on enhanced income will not survive. - Decided in favour of assessee.

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• 2019 (5) TMI 770
  Exemption u/s 11 - Registration and approval u/s 12AA and 80G denied - applicant company has been established to comply with the CSR obligations thus no charitable activities u/s 2(15) - HELD THAT:- Merely because of the fact that the applicant company has been established to comply with the CSR obligations, the registration u/s 12AA cannot be denied, particularly when CSR activities are also charitable activities as defined under the Act. See PROCESS-CUM-PRODUCT DEVELOPMENT CENTRE, MEERUT VERSUS ADDL. CIT, CIRCLE 2, MEERUT [ 2019 (2) TMI 1129 - ITAT DELHI] Following the decision in case cited as Nanak Chand Jain Charitable Trust vs. CIT (2018) [ 2018 (2) TMI 874 - ITAT DELHI] and CIT vs. IILM Foundation Academy [ 2016 (9) TMI 920 - PUNJAB AND HARYANA HIGH COURT] we are of the considered view that imparting skill development training , by the applicant company which is also a flagship project of the Government of India for sustaining its growth rate and to create the pool of skill worker to further enhance its growth and development is a charitable activity following within the definition education u/s 2(15) entitling the applicant company for registration u/s 12AA of the Act and consequent approval u/s 80G of the Act, hence both the appeals filed by the applicant company are allowed directing the CIT (E) to provide registration u/s 12AA to the assessee and grant consequent approval u/s 80G of the Act. - Decided in favour of assessee.

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• 2019 (5) TMI 769
  Assessment u/s 153A - proof of seizure of document - addition based on loose papers - unexplained cash payments - HELD THAT:- In the present case, as is clear from the answer given by Smt. Adlene Kagoo, it is clear that the document was neither written by her nor she is aware of the content, nor she is aware who had written the document and it is also not the case of the revenue that the assessee had taken and kept said document in the custody of Smt. Adlene Kagoo. On the other hand, the sole case of the revenue is this that the said document was allegedly kept by Shri Dayananda Pai. To prove the live link by the revenue , the statement of Shri Dayananda Pai should have been recorded categorically mentioning that this document belonged to the present assessee. In fact, the assessee under statement u/s. 131 had denied of the execution of this document and also the content. The document is required to be proved in accordance with principle of Evidence Act as applicable in Income Tax proceedings, either by primary evidence or secondary evidence. In the present case, none has been done by the revenue to prove seizure of document and contents thereof, so as to enable revenue to build up its case for the purpose of treating the document to be incriminating document. The document relied upon by the revenue has not been proved by the revenue that it belong to the assessee nor it was proved that it contain incriminating material on the basis of which addition can be made. Further we would like to put on record that neither Smt. Adlene Kagoo has admitted this document nor the assessee admitted this document during the course of recording of statement reproduced herein above. Therefore onus of proving the document belonging to the assessee lies on the revenue to prove that the document belonged to the assessee and is correct hence it can be relied upon in accordance with law. In our view, the revenue has failed to discharge its onus. The best case of the revenue that amount of Rs. 4.50 Crores was paid as an on money for purchase of Jakkur land, admittedly this was allegedly paid on 13.10.2006 whereas the sale deed were executed on 30.03.2007 and also on 06.08.2009. This amount of Rs. 4.50 Crores can be said to be on money given by the assessee for the purchase of the said land, if the said money is paid subsequent or at the time of registration of sale deeds. Further we may bring on record that the details of cheques given in the sale deed dated 30.03.2007, as per para 2 of sale deed on page no. 96 of paper book, cheque of Rs. 2.60 Crores bearing no. 719275 drawn on ICICI Bank is dated 30.03.2007 and in respect of second property the cheque of Rs. 60 Lakhs was paid for which a separate receipt was executed. If we compare the two cheque amount, one is of Rs. 2.60 Crores and the other is of Rs. 60 Lakhs then it is clear that the annexure AK/PDP/12-pg 125 does not have either the figure of Rs. 2.60 Crores or the figure of Rs. 60 Lakhs. Moreover there was no date of 30.03.2007 mentioning the cheque no. 719275 in annexure AK/PDP/12-pg 125. In view of the above, the observation recorded by the assessing officer that the transactions carried out in cheque which were reflected in the books of account were true, the seized evidence gains strength is also not correct. In view of the above, the conclusion drawn by the assessing officer was without any basis as neither the document AK/PDP/12-pg 125 was proved nor it pertains to the payment of on money on the jakkur land transactions nor the transactions were forming part of the sale transactions mentioned. In view of the above, the appeal of the revenue is without any merit and is liable to be dismissed and we accordingly dismiss the same. - Decided in favour of assessee.

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• 2019 (5) TMI 768
  Disallowance u/s 40(a)(ia) - TDS u/s 194C - payments towards the hiring charges of cranes - HELD THAT:- We are persuaded to subscribe to the contention advanced by the Ld. A.R that a simpliciter payment towards hiring charges of cranes cannot be brought within the sweep of the definition of the term work as envisaged in Sec. 194C In our considered view, as the assessee was under no obligation to deduct tax at source u/s 194C in respect of the payments made towards hiring charges of cranes, therefore, the lower authorities had erred in disallowing the same for the said reason by invoking the provisions of Sec. 40(a)(ia). We thus not being in agreement with the view taken by the lower authorities that it was obligatory on the part of the assessee to deduct tax at source u/s 194C on the payments made towards simpliciter hiring charges of cranes, set aside the order of the CIT(A) and vacate the disallowance of Rs. 9,50,600/- made by the A.O u/s 40(a)(ia). - Decided in favour of assessee.

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• 2019 (5) TMI 767
  Reassessment proceedings against dead person - Validity of issue of notice u/s 148 on a dead person - - DR argued that communication regarding the death of the assessee was received after serving the notice on the legal representative, Hence, the same is in accordance with the provisions of section 159 - HELD THAT:- In the instant case the proceedings were initiated against the dead person after the death of the assessee, hence the notice issued on the dead person cannot make the legal heirs binding unless a proper notice is issued on the legal heirs. After the death of the assessee, proceedings must be initiated against the legal heirs to treat the legal heirs as deemed assessee. As per section 159 (2)(b), the AO is free to initiate proceedings against the legal representatives which could have been initiated against the deceased and determine the tax liability of the deceased person and the same is binding on the Legal representatives. Any notice issued in the name of a deceased person is invalid and cannot be enforced in the law. Hon ble Mumbai High Court in the case of Sumit Balkrishna Gupta. v.Assistant Commissioner of Income-tax, Circle 16(2), Mumbai [ 2019 (2) TMI 1209 - BOMBAY HIGH COURT] held that the notice issued on a dead person is invalid unenforceable in law - thus notice u/s 148 on a dead person is invalid and accordingly quashed. - Decided in favour of assessee.

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• 2019 (5) TMI 766
  Appeal dismissed for non-prosecution by Tribunal - remedy against such order - writ before HC or appeal u/s 260A or rectification before Tribunal - HELD THAT:- As seen from the impugned order that the same was passed for non-prosecution. The appeal was dismissed on the very first date of hearing for non-prosecution. But a passing observation was also made as though nothing has been brought on record to rebut the findings of the CIT (A). But, passing reference made as indicated above, cannot be treated as the dismissal of an appeal on merits. Therefore, the petitioner cannot be asked to file an appeal u/s 260A . The provisions of proviso to Rule 24 of the Rules, 1963 cannot also be invoked in this case. In fact, the substantial provision, viz., Section 254 (1) mandates the Appellate Tribunal to pass orders on an appeal after giving both the parties to the appeal an opportunity of bearing heard. The impugned order does not disclose that the same was passed on merits after giving both the parties the opportunity of being heard. Sub-section (2) of Section 254 enabling the Tribunal to rectify any mistake or to amend any order, is not an answer to the failure to comply with sub-section (1) of Section 254. In fact, if the substantial provision contained in the statute mandates the disposal of an appeal on merits, the Rules cannot empower a mere dismissal for non-prosecution, without going into the merits of the dispute. Therefore, cases of this type do not fall either u/s 254 (2) or under the proviso to Rule 24 of the Rules, 1963. Hence, the Writ Petition has to be held to be maintainable. It is seen from the impugned order that the appeal has been dismissed for non-prosecution on the very first date. Though we cannot say that the Tribunal did not have the power to do so, this is not the way to answer substantial issues - Writ Petition is allowed

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• Customs

• 2019 (5) TMI 765
  Inspection of documents based on which SCN was issued u/s 124 of CA - Inspection of Import General Manifest (IGM) - Relied upon documents (RUD) - HELD THAT:- This Court is of the considered view that even though the impugned letter is only a communication, but since the communication discloses that the first respondent has rejected the request of the petitioner to inspect the Import General Manifest, allegedly filed by the petitioner nor satisfied the requirements of Section 124 of the Customs Act, 1962 that reasonable opportunity will have to be given to the petitioner before final orders are passed, this Court deems it fit that the petitioner must be furnished with a copy of the Import General Manifest allegedly filed by them, which is relied upon by the first respondent for their Show Cause Notice dated 14.02.2013, issued by them to the petitioner under Section 124 of the Customs Act, 1962. The first respondent is directed to furnish a copy of the Import General Manifest referred to in their Show Cause Notice dated 14.02.2013, to the petitioner within a period of two weeks from the date of receipt of a copy of this order. After furnishing a copy of the Import General Manifest to the petitioner, the first respondent shall pass final adjudication orders after affording sufficient opportunity to the petitioner, including granting them right of personal hearing within a period of eight weeks thereafter. Petition disposed off.

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• 2019 (5) TMI 764
  Grant of Customs Broker Licence - Interpretation of statute - Regulation 7(1) of CBLR, 2013 - HELD THAT:- It is clear from the said provision that after passing written as well as oral examination for obtaining the licence in Form-B, the candidate is required to deposit Rs. 5,000/- fee and on deposit of such fee, the Commissioner of Customs shall issue a Licence within a period of two months. The respondents are giving wrong interpretation for those applicants who have passed the examination and did not submit an application for grant of licence within a period of two months. The examinations passed under Regulations 1984 and 2004 have been treated to be a valid by virtue of proviso-2 of Regulation 6(1) of CBRL,2013 hence there can t be a two months period for submitting the applicant for grant of licence. The applicant is not required to apply for grant of licence under Regulation 7. He is only required to deposit the fees of Rs. 5,000/- because an application for grant of licence has already been submitted under Regulation 4 of Regulation, 2013 and thereafter, the candidate is required to appear in the examination. After declaration of the result, the candidate is required to deposit the fees of Rs. 5,000/- for issuance of licence. The Language of Regulation 7 is plain and simple and according to which, the Commissioner of Customs shall grant a licence in Form-B within a period of two months on payment of fees of Rs. 5,000/- by an applicant who has passed the oral examination. The Commissioner is liable to grant the licence in Form -B within two months from the date of deposit of fee Rs. 5000/- by the applicant who has passed the oral examination. The applicant is not required to submit an application for grant of licence under Regulation 7(1). Petition allowed - The respondents are directed to issue Customs Broker Licence to the petitioner forthwith.

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• Corporate Laws

• 2019 (5) TMI 763
  Oppression and mismanagement - allotment of shares - Declaration, cancellation and mandatory injunction against the requisition under section 169 of the Companies Act - allotment/transfer of shares - Sections 397/398 of the Act - voting rights - sections 286, 300 and 108 of the Companies Act - financial mismanagement or not - HELD THAT:- The Company Law Board as well as the High Court have found that the provision of notice under Section 286 of the Companies Act was not complied with. The High Court has observed that the interested Directors have participated in the meeting. Mr. R.P. Mittal and Mrs. Sarla Mittal were in a fiduciary capacity they could not participate in the decision where shares were transferred to their own group/company. Even if HQRL were a private limited company, the compliance with the provisions of section 300 of the Act was mandatory. The High Court has also observed that there was undervaluation of HQRL shares. The allotment of shares at par to Moral in the meeting on 10.5.2005 and on the same very date, shares of Moral were transferred to Mr. R.P. Mittal @ Rs. 20 per share. Thus, the High Court has opined that these acts in overall factual matrix of the case, were sufficient to conclude that ground under section 397 had been made out. It was improper for the Directors to allot shares to themselves and to the exclusion of Mr. Ashok Mittal in the facts and circumstances of the case and that too without issuance of notice to him. Section 19(2) of the Companies Act provides that nothing in sections 85 to 89 shall apply to a private company unless it is a subsidiary of a public company and this question has to be finally decided whether it is a private or public limited company in the pending civil suit which have been stated to be transferred to NCLT for decision in accordance with law. Otherwise, section 87 provides that notice has to be issued to preference shareholders also for the meeting and they have a right to participate in the meeting. It appears prima facie even if dividend has not been declared. In that case also, preference shareholders shall have a right to vote in the meeting. Section 108 operates independently of section 286 or section 300. The invalidation of meeting is dependent under the provisions of section 108. There was violation of section 108 of the Companies Act. HQRL did not file share certificate along with the duly executed share transfer form as on 10.5.2005, the date of Board resolution. The plea of Mr. R.P. Mittal has been disbelieved that share certificates were returned on 23.6.2003. The High Court has also ordered the proceedings under section 340 Cr.P.C. against Mr. R.P. Mittal for filing an affidavit to the contrary. The High Court has relied on the affidavit of Mr. Vivek Dixit and Mr. Deepak Sudan, the concerned officials of the Indian Overseas Bank. The High Court has found that the share certificates were delivered to Mr. R.P. Mittal not on 23.6.2003 but on 23.6.2005. No doubt about it that there was violation of the provisions of section. Taking into consideration the overall scenario, the impugned order calls for no interference - Appeal disposed off.

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• Insolvency & Bankruptcy

• 2019 (5) TMI 762
  Eligibility in terms of Section 29A (c) (h) of Insolvency Bankruptcy Code, 2016 - HELD THAT:- We are not inclined to grant any relief in this appeal nor intend to express any opinion with regard to delay in preferring the appeal. However, we are of the view that liquidator is required to act in accordance with decision of this Appellate Tribunal passed in Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS [ 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], where it was held that the liquidator is required to act in terms of the directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members or the Corporate Debtor or the creditors or a class of creditors like Financial Creditor or Operational Creditor approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench. Appeal disposed off.

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• 2019 (5) TMI 761
  Initiation of Corporate Insolvency Resolution Process - Financial Creditor - failure of the Principal Borrower to pay the financial debt taken in the form of term loan - HELD THAT:- There is a debt which is more than Rs. 1 Lakh and the matter has been brought to the notice of the Corporate Debtor , the Adjudicating Authority wrongly rejected both the applications under Section 7 preferred by the Appellant; one against the Principal Borrower - ( M/s. Cedar Infonet Private Limited ) and; another against M/s. Golf Technologies Pvt. Ltd. . Matter remanded to the Adjudicating Authority, New Delhi Bench, for admission of the case if record is complete, after notice to the parties - Once it is admitted, the other case against the Corporate Debtor should not have been entertained for the same amount as the Appellant can claim only before the Resolution Professional and same debt amount cannot be claimed in two different Resolution Process . Appeal allowed.

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• Service Tax

• 2019 (5) TMI 760
  Maintainability of appeal - Section 35G of the Central Excise Act, 1955 - non-compliance with the stay order - dismissal of COD application - HELD THAT:- An appeal under Section 35G, can only be on a substantial question of law. The order under appeal, is one refusing to condone the delay in filing the appeal. The delay was of the magnitude of 812 days. The Tribunal was not satisfied with the sufficient cause shown by the appellant in his application for condonation of delay. The only reason stated by the appellant in his application for condonation of delay was that he was advised that another appeal filed by him as against the conditional order passed on 28.11.2013 would also be taken up together with this appeal. The Tribunal was not satisfied with this reasoning. If the Tribunal is not satisfied with the reasoning stated by the appellant, we do not think that any substantial question of law would arise out of such an Order of the Tribunal. Even if we allow the appeal by taking a lenient view about the reasons for the delay and the hardship caused to the appellant, we do not think that the same would take the appellant anywhere. The reason is that so long as the conditional order on the application for waiver of pre-deposit, passed on 28.11.2013, is not set aside, the consequential order of the Commissioner dismissing the appeal on 20.12.2013, cannot be interfered with by CESTAT. It is well settled that an appeal without complying with the pre-deposit condition, is no appeal in the eye of law. Appeal dismissed.

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• 2019 (5) TMI 759
  SEZ Unit - Refund of service tax paid - service tax amount paid on specified services said to have been used for various operation in the SEZ under Notification No.12/2013-ST dated 1.7.2013 - refund rejected on the ground that the services are not approved by the Unit Approval Committee (UAC) without verifying the usage of the services - HELD THAT:- Both the authorities have not considered the usage of the input services procured by the appellant during the refund period. Further, the original authority should have verified the usage and the nexus of the impugned services with the authorized operations. In the case of TATA CONSULTANCY SERVICES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE ST (LTU), MUMBAI [ 2012 (8) TMI 500 - CESTAT, MUMBAI] , it was held that services provided to SEZ or a unit in the SEZ is deemed as export as per the provisions of Section 2((m)(ii) of the SEZ Act, 2005 and as per Rule 31 of the SEZ Rules, 2006, the assessee is entitled for exemption from payment of service tax on the services which are used or provided to a unit in SEZ. Refund allowed - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (5) TMI 758
  CENVAT Credit - ISD - credit availed on the basis of the invoice issued at its unregistered address at Hyderabad, Andhra Pradesh from where no output service was provided - it was also alleged that address was not registered as Input Service Distributor. HELD THAT:- The service have actually been provided to the Appellant but inadvertently the address of Hyderabad Unit was mentioned on the invoices. Revenue has not disputed that the service in question is an input service. It is also not the case of Revenue that no service tax has been paid. Whether the mentioning of registered premises on the invoice is mandatory in order to claim cenvat credit? - HELD THAT:- This issue is no more res integra. In the matter of mPortal India Wireless Solutions (P) Ltd. Vs Commissioner [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT ], a similar question arises for consideration of the Hon ble High Court of Karnataka and the Hon ble High Court while answering the question in favour of assessee held that In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Since it is merely procedural lapse due to which substantive benefit of Cenvat Credit cannot be denied to the Appellant therefore there is no need to go into this aspect - As the Appellant has rightly availed the cenvat credit therefore there is no question of imposition of penalty or interest and since I am allowing the appeal on this issue itself therefore I am not going into other aspects of the matter viz. Issue of extended period etc. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (5) TMI 757
  Reimbursement of State Sales tax paid - inter-state transaction - refund of the Sales Tax paid on the inter-state purchase of coal - Section 15(b) of the Central Sales Tax Act, 1956 - whether Coal and Coke are same goods or not? - HELD THAT:- The respondent was entitled to be reimbursed the tax paid under the State Law on Coal and, therefore, the respondent had filed an application seeking refund. On the basis of the detailed adjudication by the Assistant Commissioner of Commercial Taxes, the amount refundable to the petitioner under Section 15 (b) of the Act was determined and an amount of Rs. 12,32,496 was determined. Thereupon, the respondent filed an application under statutory Form-XX as prescribed under Rule 35 of the Rules, 1983 but no steps were taken by the respondent for issuance of the Refund Payment Order. Despite repeated requests to process its application for refund and to issue the Refund Payment Order, no steps were taken. The respondent was entitled to claim refund of the said amount with interest @ 9% from the date of expiry of 6 months of the date of receipt of the application. High Court proceeded to consider the petition and pass the order which we have already adverted to. There was absolutely no whisper in the counter affidavit or additional affidavit filed by the appellants seeking to project the dispute that Coal purchased by the respondents was not the same good as Coke manufactured out of Coal and, therefore, on sale of Coke in an inter-state Sale, the respondent is not entitled to get refund of the tax paid on the intrastate purchase of Coal. The question which has been raised by the Appellant-State, was never raised and the writ petition filed by the respondent, was on the basis of the determination of the Refund under Section 15(b) of the Act. In such circumstances, no relief can be granted to the appellant - Appeal dismissed.

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• 2019 (5) TMI 756
  Refund claim - adjustment of the refunds due to him, towards the dues - HELD THAT:- The Writ Petition is disposed of directing the Commercial Tax Officer to consider the letter of the petitioner dated 25.04.2016 and take appropriate action in accordance with law and pass orders within a period of two weeks from the date of receipt of a copy of this order. The letter dated 25.04.2016 sent by the petitioner to the Commercial Tax Officer is on record.

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• 2019 (5) TMI 755
  Forfeiture of excess tax credit available to the petitioner - according to the petitioner, the excess tax payment was as a result of the excess deduction of tax at source by the main contractors and also on account of the excess input on purchases - years 2015-16 and 2016-17 - HELD THAT:- A careful perusal of the impugned order would show that the same suffers from the vice of non-application of mind. At the outset, the proposal in the show cause notice was for forfeiture of the excess tax credit of Rs. 1,36,2.058,183/-, but the credit ordered to be forfeited is for a sum of Rs. 1,44,03,978/-. An order under the Act cannot exceed the proposal made in the show-cause notice - Moreover, the 1st respondent does not appear to have applied his mind to the very applicability of G.O.Ms.No.11, to a Sub- Contractor. The fact that the petitioner was a Sub-Contractor and the fact that the contract was EPC Turnkey contract, was also not gone into by the respondents. Therefore, the impugned order is liable to be set aside and the matter remanded back. The matter remanded back to the 1st respondent for a fresh consideration - Petition allowed by way of remand.

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• Indian Laws

• 2019 (5) TMI 754
  Common petition against builder - class action or not - Failure to honour commitments of delivering possession of an office space booked by appellant - Section 23 of the Consumer Protection Act, 1986 - According to the National Commission, though all the appellants had a common grievance that the respondent had not delivered possession of the respective units booked by them and thus the respondent was deficient in rendering service, it was not shown how many of the allottees had booked the shops/commercial units solely for the purchase of earning their livelihood by way of self-employment. HELD THAT:- In Chairman, Tamil Nadu Housing Board, Madras vs. T. N. Ganapathy [ 1990 (2) TMI 309 - SUPREME COURT ] it was held by this Court that the persons who may be represented in a Suit under Order 1 Rule 8 of Civil Procedure Code need not have the same cause of action and all that is required for application of said provision is that the persons concerned must have common interest or common grievance. What is required is sameness of interest. It was observed by this Court in T.N. Housing Board1 that the provision must receive an interpretation which would subserve the object for its enactment. It is in this light that the Full Bench of the National Commission held that oneness of the interest is akin to a common grievance against the same person - However, the National Commission in the instant case, completely lost sight of the principles so clearly laid down in the decisions referred to above. In our view, the approach in the instant case was totally erroneous. The application preferred by the appellants under Section 12(v)(o) of the Act is held to be maintainable - Appeal allowed.

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