Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 15, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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GAAR and GST - reporting under clause 30C and clause 44 of the Tax Audit Report shall be kept in abeyance - Order under section 119 of the Income-tax Act, 1961
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Stay of demand - application of comparables in transfer pricing - in previous assessment year, the very same Tribunal allowed an appeal in favour of assessee - this case would not fall under the category of a case where the application for stay deserved to be rejected outright - stay granted subject to condition
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Deduction u/s. 54 - the booking of bare shell of a flat is a construction of house property and not purchase, therefore, the date of completion of construction is to be looked into which is as per provision of section 54 - time window of three years period available to assessee - deduction allowed
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Approval u/s 80G(5)(vi) - donations being liable to be misused wholly on the basis of the assessee-society being prosperous - While that may invite a charge of the promoters being over-zealous or over ambitious, it surely does not lead to the inference of seeking donation for admission, i.e., of the approval u/s. 80G(5)(vi) being liable to be misused a distinct possibility - approval granted
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Receipts from sale of spontaneous growth of trees - it is a capital receipt not liable to tax - The provisions of section 55(2)(a) cannot be applied to spontaneous growth of trees and is to be applied only to goodwill, trade mark, brand name, right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carriage permits or loom hours etc.
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Attachment orders u/s 281B - no sale of immovable property can be made after the expiry of three years from the end of the financial year in which the order giving rise to a payment of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached - the properties attached were not brought to sale within three years - attachment order lost their potency
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TDS u/s 195 - Disallowance u/s 40(a)(ia) on account of professional consultancy fees - AO has failed to point out in what manner the professional income has arisen or accrued in India or the said party had any PE or business connection in India or rendered any services in India - TDS u/s 195 does not arise - no disallowance
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Assessment u/s 153A - Unexplained cash credit u/s 68 - The addition of share application money was on the basis of Bank account found in search - the said Bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed - addition sustainable being outside the scope of section 153A and not based on any incriminating material found
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Addition towards interest u/s. 244A on income tax refund - in mercantile system of accounting same is to be taxed in the assessment year under consideration as the income was accrued and received by the assessee - cannot postpone on the reason that it would be withdrawn or reduced by the Department subsequently - If there is withdrawal or reduction, the remedy lies elsewhere and not at this stage
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Penalty u/s 271(1)(c) - the assessee had declared LTCG and had claimed it as exempt u/s 10(38) as it suffered STT but subsequently withdrew the claim - at the most it may be considered as an unsubstantiated or wrong claim but it cannot be held to be furnishing of inaccurate particulars of income or concealment of income - no penalty
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Penalty u/s 271D - Accepting cash loans - contravention of the provisions of section 269SS ad 269T - Penalty u/s 271D is subject to the provisions of section 273B and not automatic - when the assessee provides a reasonable explanation, the penalty is not leviable
Customs
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Seeks to further amend notification No. 50/2017-customs dated 30th June 2017 to postpone the implementation of increased customs duty on specified imports originating in USA from 16th May, 2019 to 16th June, 2019.
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Prohibited goods or not - the import of plant growth regulators is not prohibited absolutely. They may actually fall under the category of “restricted goods”, and the restriction is with regard to registration - once conditions are not complied with, they become prohibited goods.
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Classification of goods - Electronic Nicotine Delivery systems (ENDS) including e-Cigarettes, Heat-Not Burn devices, Vape, e-Sheesha, e-Nicotine Flavoured Hookah, and the like devices - Drugs or not - circular dated 27.11.2018, all Customs Authorities have been requested to ensure import consignments of 'ENDS' are referred to drug control authorities - circular stayed till final determination that 'ENDS' is drug or not
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Imposition of penalty u/s 112(b) of Customs Act, 1962 - goods were duly covered by prescribed job work documents and the same were also taken on record in the books of the accounts of the appellant - the quantities which have been received were not liable for confiscation u/s 111 of the Customs Act as the same were covered by legitimate documentation - not liable for the penalty
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Refund of SAD - appellant has not adopted the same code while describing the product in their sale invoices - the adjudicating authority has not come to a conclusion that the product sold was entirely different - there was nothing on record to disbelieve the Chartered Accountant's certificate which certified that both products are one and the same - claim for refund was sustainable
DGFT
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Imports of Maize (feed grade) under the TRQ Scheme for 2019-20.
FEMA
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Foreign Direct Investments (FDI) - Non-compliance of the condition of minimum capitalization - Since the business of development and construction of township could not be commenced due to the action of the respondent, the period of compliance with the condition had yet to commence. The allegation is, therefore, premature and, therefore, the question of contravention does not arise.
Corporate Law
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Creation of the encumbrance over the assets of the Respondent Company - if the Respondents want to block out Petitioner, hiding behind the Arbitration clause, in equity, they cannot claim discretionary relief to create such a huge liability of ₹ 1250 Lakhs, riding on the back of NCLT Order which, prima facie, is against the Articles of Association.
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Restoration of name of the Company - name struck off from the Register of Companies u/s 248(5) - in the light of huge investment made by the directors/company and the appellant is continuously making efforts to set up the industry and also still depositing the instalments towards land, it would be just that the name of the company is directed to be restored
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Compounding of offence - non-compliance with the CSR initiatives - for violation of provisions of section 134(3)(o) r.w.s 135 of the Companies Act, 2013 - prosecution instituted by ROC in the Court of Special Judge - As per section 441(1) Tribunal has power to compound an offence even after institution of any prosecution - offence compounded
Indian Laws
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Dishonor of Cheque - cheque issued by a proprietorship firm - Proceedings againt the individual / proprietor - There was no requirement to implead his sole proprietary concern as an accused person nor there was any need to additionally implead the applicant by his trade name.
IBC
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Liquidation - expiry of lime limit of 270 days for resolution - the ‘Resolution Plan’ under I&B Code was not submitted within time and therefore, the ‘Committee of Creditors’ declined to consider the same - the Adjudicating Authority having ordered for liquidation, it cannot be held to be illegal
PMLA
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Offence under PMLA - attachment of Appellant's residential property - PMLA is a preventive measure and not a punitive measure. In the present case inspite of admitted fact that the amount in far excess of the alleged POC is secured with the CBI Court, the appellant cannot be compelled to again secure the amount.
Service Tax
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Principles of natural justice - imposing a liability under Section 73(2) after amalgamation - The lack of knowledge on the part of the petitioner about the proceedings, is bona fide in this case - Matter restored before the adjudicating authority.
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Rejection of VCES Application - combined declaration for more than one ST-3 return periods - non payment of tax as for part of declaration - While it is possible to split the period in respect of which the declaration is filed, it is not possible to split the declaration itself - Petition dismissed.
Central Excise
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Classification of goods - Laces - while determining the classification by the CRCL, no process of manufacturing was examined and retest of the samples were denied - There is a gross violation of principle of natural justice - demand set aside.
VAT
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Levy of penalty - Recording of transaction in the books of accounts - It was not a case where the penalty proceedings could legally be initiated and in fact, the Assessing Authority as well as the Tribunal were illegally and arbitrarily proceeded to impose and confirm the penalty.
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The petitioner cannot rest his case based on the clarifications which were issued much prior to the amendment and those clarifications were assessee specific and does not bind the Court.
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Refund of VAT - refund claimed on the ground that its output tax liability is less than the input tax paid - there is no mismatch between the selling and purchasing dealers. Yet a demand is sought to be raised in respect of alleged mismatch. - Petition allowed.
Case Laws:
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GST
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2019 (5) TMI 834
Transitional credit - time limitation - Form GST Tran-1 - Rule 117 of the CGST Rules - HELD THAT:- Learned advocates for the State and the Union of India prays time to file affidavit-in-opposition. Let the matter appear in the monthly list of June, 2019.
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Income Tax
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2019 (5) TMI 860
Deduction u/s 80HHC - Netting of Interest for the purpose of applying Explanation (baa) to Section 80HHC - HELD THAT:- In view of the decision of the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. [ 2012 (2) TMI 101 - SUPREME COURT] , the Question of Netting of Interest , now admitted by us, deserves to be answered in favour of the Assessee and against the Revenue as ninety per cent of not the gross interest but only the net interest, which has been included in the profits of the business of the assessee as computed under the heads `Profits and Gains of Business or Profession' is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business.
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2019 (5) TMI 859
Rejection of stay of demand - application of comparables in transfer pricing - HELD THAT:- Out of seven companies which are taken as comparables, some of them stood excluded by the Tribunal in respect of the previous year and some of them were excluded by the DRP itself. This aspect has not been taken into account by the Tribunal. Therefore, we are of the view that this case would not fall under the category of a case where the application for stay deserved to be rejected outright. Outright rejection of the application for stay is not proper, we may in normal circumstances remand the matter back to the Tribunal for a fresh consideration of the application for stay. But, the same would motivate the Tribunal only to take up the application for stay first, leading to another round of litigation. Instead of having one more round of litigation at the stage of stay application, we think it better to put the petitioner on terms for the grant of stay. The total liability fixed under the order of assessment i.e., pending appeal before the Tribunal is ₹ 39,92,21,960/-. It is seen that there are also interest components under Section 234B and 234C. Writ Petition is disposed of directing the petitioner to pay a sum of ₹ 4,00,00,000/- (Rupees Four Crores) within a period of four weeks from the date of receipt of a copy of this order. Upon such payment is made, there will be an interim stay of collection of the balance of tax. However, the Tribunal shall endeavour to expedite the hearing of the appeal.
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2019 (5) TMI 858
Right in property purchased of purchaser landlord - property under development by developer - attachment orders u/s 281B passed by Income tax department against developer by orders dated 07.10.2011 - Tax Recovery proceedings - ownership of property - HELD THAT:- Insofar as the challenge to the orders dated 07.10.2011 passed under Rule-48 is concerned, the main contention of the petitioners is that neither on the date of the provisional order of the attachment nor on the date of order of attachment passed under Rule 48, was the sixth respondent the owner of the property and that therefore the orders of attachment and the consequent directions issued under Section 22-A of the Registration Act, 1908 were null and void. Under Rule 68-B (1) of the Second Schedule to the Act, 1961, no sale of immovable property can be made after the expiry of three years from the end of the financial year in which the order giving rise to a payment of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached. The period of three years from the date of the order of attachment had already passed. The properties attached were not brought to sale within three years. Therefore, the orders of attachment dated 07.10.2011, have lost their potency. In addition, the counter proceeds on the footing that what was ordered to be attached was the property that was the subject matter of development agreement. In other words, whatever was the subsisting interest that the sixth respondent had on the date of the order of the attachment alone could be the subject matter of attachment. The petitioners in the first writ petition appear to have purchased the individual plots, even before the provisional order of attachment was passed. On both grounds viz., (a) that under Rule 68-B (1), no further steps were taken within three years and (b) that on the date of order of attachment, the petitioners in the first writ petition had already purchased the properties, the petitioners are entitled to succeed. W.P. allowed.
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2019 (5) TMI 857
Rectification u/s 154 - surrendered amount of the assessee was subjected to tax @ normal rate OR rate as per the provisions of section 115BBE - debatable issue - HELD THAT:- SHRI LOVISH SINGHAL, SHRI VASU SINGHAL, SHRI PRAMOD KUMAR SINGHAL AND SHRI VINOD KUMAR SINGHAL VERSUS INCOME TAX OFFICER, WARD-2 AND A.C.I.T., CIRCLE- SRIGANGANAGAR [ 2018 (5) TMI 1646 - ITAT JODHPUR] held that the provisions of section 115BBE were not applicable if the surrender was made on account of excess stock found during the course of survey. So, the issue was a debatable, therefore, the CIT(A) was not justified in confirming the action of the AO for making the rectification u/s 154. Accordingly, the impugned order is set aside and it is held that the provisions of section 154 of the Act were not applicable in the present case and the AO was not justified in making the rectifications u/s 154. - Appeals of the assessee are allowed.
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2019 (5) TMI 856
Ex-parte CIT-A orders - HELD THAT:- Assessee has stated at Bar that the appellate proceedings before the First Appellate Authority could not be attended since the notices issued for hearing of the appeals were not received by the assessee. As noted the fact that the appeals in the case of other companies and in the case of director of the companies belonging to the same group as the assessee, which was searched and in which case also, the orders passed by the authorities below were ex-parte orders, have been restored back by the ITAT to the A.O. for adjudication afresh. We have also noted that even the Revenue is aggrieved by the ex-parte orders of the CIT(A) in two assessment years i.e. assessment year 2012-13 and assessment year 2014-15. We consider it fit to restore the impugned appeals back to the A.O. with a direction to pass a speaking order in accordance with law after affording reasonable and effective opportunity of hearing to the assessee. While so directing, it is made clear that the assessee shall not abuse the trust reposed on it, in which case the A.O. shall be free to pass an order on the basis of material available on record. Appeals of the assessee and the Revenue are allowed for statistical purposes.
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2019 (5) TMI 855
Denial of approval u/s 80G(5)(vi) - denial of approval for the reason that since it had a large asset base there was no valid reason for taking donation - HELD THAT:- CIT(E) has not considered the application of the assessee in accordance with that prescribed under the Act and the Rules read alongwith it. There is no finding in the entire order vis a vis the genuineness of the activities carried out by the applicant/assessee. All the findings of the CIT(E) whether regarding no reason being given by the applicant for seeking donations considering that it had enough funds, or that it was receiving fees in cash, or that it intended opening a vridh ashram which was not its object, do not impinge on its charitable character or the genuineness of the activities carried out by it. The section does not state that the applicant has to justify taking donations. Similarly how receiving fees in cash impinges its charitable character, we fail to understand ,in the absence of any finding that such cash receipts were not being recorded in its books of accounts. Also the vision/plan of the applicant/assessee to undertake a project in the future of opening vridh ashram cannot be the reason for denying approval as being not part of its stated object, since as rightly pointed out by the assessee, the assessee has not undertaken the activity and it cannot be denied approval for contemplating carrying out in the future an activity not as per its stated objects since it can very well modify its objects when doing so . In the absence of any finding of the CIT(E), as required by law for granting approval u/s 80G regarding the charitable character and genuineness of the activities carried out by the assessee/applicant, we consider it fit to restore the issue back to the CIT(E) to reconsider the application of the assessee afresh and thereafter pass an order in accordance with law. We may add that the assessee be given due opportunity of hearing in this regard. Appeal of the assessee allowed for statistical purposes.
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2019 (5) TMI 854
Long term capital gain - Nature of land sold - agricultural land or capital asset - no object in the Memorandum Articles of Association to purchase agricultural land and to do farming etc - not undertaken any agricultural activities - HELD THAT:- Perusal of the map annexed by the retired/reemployed official Jugal Kishore, the distance is 7.8 Kms. plus 50 meters and the distance of road and arerial road is almost in a straight line. Taking into consideration we are inclined to accept the claim of the assessee that the land in question is situated beyond 8 kms. from the municipal limits of Jodhpur Nagar Nigam and, since the land being agricultural property, consequently the sale consideration is exempt from LTCG. Therefore, the appeal of assessee is allowed.
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2019 (5) TMI 853
Addition of unexplained payable sundry creditors - as alleged identity, creditworthiness and genuineness of the transactions had not been proved during assessment proceedings - HELD THAT:- We note that there is a difference between credit representing a liability payable by the assessee and a credit representing monies received from another person. It is because of this distinction a liability which arises as a consequence of any purchase resulting in a corresponding credit to the account of the supplier cannot be added u/s. 68 We note the entire turnover on transportation of ₹ 11,70,63,030/- has been accepted by the AO as genuine, so question of addition of the sum of ₹ 78,22,863/- which represented the liability to pay the truck owners by assessee cannot be added u/s. 68. Therefore, we do not find any infirmity in the order of the CIT(A) and we agree that section 68 was wrongly invoked in the present case in respect of the outstanding liability payable by the assessee to the truck owners. - dismissed ground of appeal of the revenue. Addition on account of showing low bilty charges - assessee failed to produce any books of account - HELD THAT:- Assessee had already declared bilty charges which is 0.98% of the total receipt. As brought to our notice that in the previous assessment year 2013-14 when the freight receipt was ₹ 8,.10,32,496/- bilty charges was ₹ 8,65,025/- which was 1.06% whereas in this assessment year 2014-15 freight receipt was ₹ 11,70,63,030/- bilty charges was reflected by the assessee at ₹ 11,55,100/- which is 0.99%. The assessee has produced all the books of account etc. without finding any defect or irregularities therein, the AO ought not to have gone for estimation of income, without rejecting the books as per the procedure prescribed u/s. 145(3) read with sec. 144 and, therefore, the action of the AO was arbitrary in nature and so vitiated, therefore, the action of the CIT(A) who after due verification made by him does not require any interference from our part and, therefore, we confirm the action of CIT(A) and dismiss this ground of appeal of revenue.
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2019 (5) TMI 852
Disallowance of Long Term Capital Loss (LTCL) of shares - HELD THAT:- In the light of the said observations of the Hon'ble jurisdictional ITAT in similar and identical facts in the own case of the assessee for the assessment Year 2009-10 [ 2016 (4) TMI 300 - ITAT KOLKATA] in terms of the binding decision of Hon'ble jurisdictional High Court in the case of Smt. Nandini Nopany, [ 1997 (12) TMI 102 - CALCUTTA HIGH COURT] it is held that the action of the Ld. AO in making the impugned disallowance of losses of ₹ 6,07,02,817 claimed on sale of shares of group companies and the recomputation of the Profit from the said transactions in the sum to be unsustainable in law. The grounds of appeal are therefore allowed. Calculating gains on sale of land - LTCG OR STCG - section 50C application - AO admittedly applied sec.50 stipulating capital gains computation on transfer of depreciable assets to assess the said gains as STCG - HELD THAT:- AO admittedly applied sec.50 of the Act stipulating capital gains computation on transfer of depreciable assets to assess the said gains as STCG. The CIT(A) s order in both cases has partly accepted the assessee s arguments that they had not claimed any depreciation regarding land in question by including in their respective block of assets for the purpose of computing depreciation. He has directed the AO to verify the relevant fact in this regard. We conclude these peculiar facts that the Revenue cannot be held to be an aggrieved party against the CIT(A) s findings at this stage since the issue is very much open before the Assessing Officer as to whether assessee had included the relevant land in their block of assets or no so as to attract sec. 50 Disallowance u/s 14A r.w.r 8D - HELD THAT:- This tribunal s decision in REI Agro Ltd. vs. DCIT [ 2013 (9) TMI 156 - ITAT KOLKATA] as upheld in CIT vs. Reliance Utilities and Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] holds that necessary presumption that arises in such a case is of deployment of interest free investments funds only in exempt income yielding investments. We do not find any merit in Revenue s former argument regarding Rule 8D(2)(ii) of the Income Tax Rules, 1962 proportionate interest issue therefore Administrative expenditure disallowed under third limb of Rule 8D - both parties fail to dispute that the CIT(A) has directed the Assessing Officer to re-compute the impugned disallowance qua the exempt income yielding investment only as per this tribunal s co-ordinate bench s decision in REI Agro Ltd. vs. DCIT (supra) upheld in hon'ble jurisdictional high court. The Revenue s third substantive ground in both these two appeals is declined therefore. Non recording mandatory satisfaction us/1 4A r.w.s. 8D disallowance before computing the impugned disallowance - We find that the assessee had suo motu disallowed administrative expenditure whose correctness failed before the Assessing Officer as per the prescribed formula under Rule 8D. He declined the said computation therefore to arrive at the impugned administrative head expenditure of ₹44,45,411/-. We observe in these facts that the Assessing Officer had duly taken note of assessee s computation as well as its relevant books of account before arriving at the impugned administrative disallowance. The assessee s cross-objection is rejected therefore. We make it clear before parting that we have not touched upon the first head of direct expense (supra). The Revenue as well as latter assessee in their respective pleadings therefore. The assessee s cross-objection 44/Kol/2018 raising the instant sole substantive ground fails therefore. MAT adjustment u/s 115JB on the 14A r.w.s. 8D disallowance - HELD THAT:- This tribunal s special bench decision in ACIT vs. Viveet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] holds that said statutory provision does not cover any disallowance made u/s 14A read with Rule 8D. We according affirm the CIT(A) s findings qua instant last issue as well.
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2019 (5) TMI 851
Disallowance of deduction u/s. 54 - proof of construction - construction of flat and not purchase of flat as held by the AO - HELD THAT:- We note that it has been clarified by the CBDT in Circular No.672 dated 16.12.1993 in which it has been made clear that the earlier circular No. 471 dated 15.10.1986 in which it was stated that acquisition of flat through allotment by DDA has to be treated as a construction of flat would apply to co-operative societies and other institutions. The builder would fall in the category of other institutions as held by Mumbai Bench of Tribunal in the case Smt. Sunder Kaur Sujan Singh Gadh [ 2005 (4) TMI 518 - ITAT MUMBAI] and therefore booking of the flat with the builder has to be treated as construction of flat by the assessee. It is it is clear that the facts of the present case that it was a case of construction of flat and not purchase of flat as held by the AO. Since, the case pertains to construction, benefit of section 54 of the Act are available to assessee. In view of above, the booking of bare shell of a flat is a construction of house property and not purchase, therefore, the date of completion of construction is to be looked into which is as per provision of section 54 , therefore, the Ld. CIT(A), has rightly directed the AO to allow benefit to the assessee as claimed u/s.54 , which does not require any interference on our part, hence, we uphold the action of the ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue. Disallowance of deduction u/s.54EC - HELD THAT:- The restriction of ₹ 50,00,000/- in a financial year was placed for evenly distributing the invest into the capital gains bonds on continued basis throughout the year. Therefore, the alternative was put into operation were in the capital gain bonds are available on tap throughout the year without stopping but the limit of investment has been capped to ₹ 50,00,000/- per assessee per financial year. This has resulted in even distribution of benefit to public at large. Had the intention of the legislation was cap the total investment to ₹ 50,00,000/-, the amendment in statute would have prescribed the limit on deduction allowed under the section 54EC and not on investment allowed u/s 54EC. We find that the judgement of the Hon ble Madras High Court in COROMANDEL INDUSTRIES LIMITED [ 2014 (12) TMI 852 - MADRAS HIGH COURT] is applicable on the facts of the present case. Therefore, following the decision of Hon'ble High Court, Ld. CIT(A) has rightly allowed the ground. Addition on account of rental income received from D.T. Cinemas - Income from business Profession OR house property - alleged that maintenance charged received and clubbed with rent - HELD THAT:- Assessing Officer as presumed that the assessee is in receipt of certain amount towards the provisioning of certain services which have not been disclosed which is patently false and based on his own conjecture and surmises, and without fully appreciating records and explanations placed before him. Further, the Assessing Officer has not made any inquiry or undertaken any exercise to prove the evidences / confirmations placed before him to be incorrect or false. We find that no maintenance charges were received by the assessee as confirmed by the tenant. This fact also gets confirmed from perusal of the bank statement, TDS certificate and details reflected in Form 26AS. Since, no maintenance charges were received or receivable by the assessee, hence, CIT(A) has rightly directed the AO to delete the addition in dispute. - Appeals filed by the Revenue stand dismissed.
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2019 (5) TMI 850
Assessment u/s 153A - Unexplained cash credit u/s 68 - whether search and seizure did disclose any incriminating material? - HELD THAT:- Addition by treating the share application money as unexplained cash credit u/s 68 was made by the Assessing Officer in the assessment completed u/s 153A on the basis of Bank account found during the course of search and since the said Bank account as well as the transactions reflected therein were duly disclosed by the assessee in its return of income originally filed for the year under consideration, we find ourselves in agreement with the contention of the assessee that the same cannot be treated as incriminating material found during the course of search. The addition made by AO u/s 68 and confirmed by the ld. CIT(Appeals) thus was not based on any incriminating material found during the course of search and the same, in our opinion, is not sustainable being outside the scope of section 153A - Decided in favour of assessee.
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2019 (5) TMI 849
Penalty u/s 271(1)(c) - LTCG is bogus and pre-determined method only to bring back the unaccounted money - exemption from taxation u/s 10(38) initially allowed by AO but subsequently came to the conclusion that the income has escaped the assessment on receipt of the report of the DIT (Inv.) Hyderabad - in the re-assessment proceedings, assessee has offered the LTCG to tax - penalty levied for furnishing of inaccurate particulars of income or concealment of income? - HELD THAT:- We do not find that it is a case of furnishing of inaccurate particulars of income or concealment of income, because, the assessee had declared LTCG and had claimed it as exempt u/s 10(38) on the ground that shares have suffered STT, but subsequently withdrew the claim of exemption. This may, at most be considered as an unsubstantiated or wrong claim but it cannot be held to be furnishing of inaccurate particulars of income or concealment of income. See COMMISSIONER OF INCOME-TAX VERSUS RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee.
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2019 (5) TMI 848
Levy of penalty u/s 271D - Accepting cash loans - not aware of the provisions of section 269SS ad 269T - reasonable cause for accepting loans in cash u/s 237B - HELD THAT:- Assessee has stated before the CIT (A) that the loans were taken in cash on account of his sister s marriage and that the loans were repaid through banking channels by way of RTGS and therefore, the genuineness of the loan and the identity of the creditor has been established. Penalty u/s 271D is subject to the provisions of section 273B. Therefore, penalty u/s 271D is not automatic and when the assessee provides a reasonable explanation, the penalty is not leviable. The assessee s contention that the loans were taken for the marriage of his sister has not been found to be incorrect and also the fact that the loans have been repaid by cheques is not controverted. Further, we also find that the notice u/s 271D was issued after nearly four years and therefore, it is to be seen if it was within a reasonable period . See MS LOKAIAH VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX [ 2016 (8) TMI 810 - ITAT HYDERABAD] We are satisfied that there existed reasonable cause for the assessee accepting the loans in cash and particularly since the loans have been repaid by way of RTGS. - Decided in favour of assessee.
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2019 (5) TMI 847
Bonus paid to one of its Director - deduction u/s 36(1)(ii) - assessee company has paid salary and other allowances to its Directors as per the Board Resolutions - HELD THAT:- In assessee s own case for the assessment year 20010-11 [ 2018 (2) TMI 1885 - ITAT DELHI] Delhi Bench of the Tribunal reveals that Sh. Sanjay Mehta had rendered services to the assessee company during the financial year 2009-10 relevant to assessment year 2010-11 and allowed the bonus payment to him and allowed the same as deductible business expenditure. Keeping in view of the facts and circumstances of the case as explained above and adhering to the doctrine of Stare decisis, we do not find any infirmity in the impugned orders of the Ld. CIT(A), hence, we uphold the action of the Ld. Commissioner of Income Tax(A) of deleting the additions - Decided in favour of assessee.
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2019 (5) TMI 846
Reopening of assessment - Income accrued in India - reopening based on allegation as appellant has permanent establishment in India - fixed place PE in India - DTAA - interpretation of direction of Supreme Court - HELD THAT:- The reopening proceedings were challenged by the assessee before the honourable Supreme Court of India in HONDA MOTOR CO. LTD, JAPAN, THROUGH ITS AUTHORISED REPRESENTATIVE [ 2018 (5) TMI 265 - SUPREME COURT] along with batch of other appeals which were disposed of vide as held that in view of the judgment of the honourable Supreme Court in NEW DELHI VS E-FUNDS IT SOLUTIONS INCORPORATION, [ 2017 (10) TMI 1011 - SUPREME COURT] once arm s-length principle has been satisfied, there can be no further profit attributable to a person, even if it has a permanent establishment in India. The honourable Supreme court was further pleased to hold that since the impugned notice is for the reassessment are based only on the allegation that the appellant has permanent establishment in India, notice cannot be sustained Once arm s-length price procedure has been followed. The honourable Supreme court also noted that the counsel for the revenue stated that he does not have complete instructions. Therefore, the honourable court gave the liberty that if the revenue disputes the above factual position, it will be at the liberty to move this court. Even if, as per the revenue, the transaction are not at arm s-length, it is required to approach the honourable Supreme Court only. In view of this, all these appeals against the orders of the reassessment becomes infructuous as reassessment notices have been quashed by the honourable Supreme Court as per above order. - Decided in favour of assessee.
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2019 (5) TMI 845
Deduction u/s 80IB(10) - claim denied solely for the reason that the deduction has not been claimed in the return - HELD THAT:- If the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. On a comprehensive reading of the judgments and the legal position laid down thereof in the case of National Thermal Power Company Ltd [ 1996 (12) TMI 7 - SUPREME COURT] ,Pruthvi Brokers Shareholders Pvt. Ltd [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] , Goetze (India) Limited [ 2006 (3) TMI 75 - SUPREME COURT] and considering the fact that the assessee is eligible for claim of deduction which was otherwise eligible, which was denied solely for the reason that the deduction has not been claimed in the return, is hereby allowed. Method of calculation in determining the eligible deduction - As gone through the rationale and the method of calculation in determining the eligible deduction by the Ld. CIT(A) and find that the Ld. CIT(A) has determined the deduction based on the aggregate build up area, percentage of completion work, and the expenditure involved Accordingly out of the deduction claim of ₹ 2,25,43,724/- claimed by the assessee an amount of ₹ 21,10,455/- has been found to be taxable (as per the table below) and the remaining amount is hereby held to be eligible for deduction under section 80IB(10) Disallowance of contribution to pension fund u/s 36(1)(iv) - HELD THAT:- As brought to our notice that the ld. CIT, Shimla has accorded approval under Sub Rule (1) of Rule 2 of Part-B of the Fourth Schedule of Income Tax Act,1961 w.e.f 31/03/2008 i.e; from the date of creation of fund under section. Hence the assessee would be eligible for the deduction as the approval has been given retrospectively. Appeal of the assessee on this ground is allowed. AO is hereby directed to allow the deduction after due verification of the approval granted by the Ld. CIT, Shimla. Appeal of assessee allowed.
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2019 (5) TMI 844
Addition of excess capital balance - difference between balance of capital shown closing in earlier year and opening in current year - entry made current year - HELD THAT:- AO referred to the excess capital shown by the assessee as on 01-04-2008 by ₹ 4.00 lakh which formed the basis for the addition. Instantly, we are considering the A.Y. 2008-09 covering the period 01-04-2007 to 31-03-2008. It is revealed that on 31-03-2008, the assessee had correctly shown closing balance of capital at ₹ 19.20 lakh. The excess amount of ₹ 4.00 lakh was shown on 01-04-2008, which is the first day of the financial year 2008- 09 with the corresponding assessment year of 2009-10. Since such excess capital was recorded in the books for the financial year relevant to the A.Y. 2009-10, no addition on this score could have been made for A.Y.2008-09 under consideration. We, therefore, order to delete this addition. Reopening of assessment - no addition based on reasons deleted by tribunal - validity of other addition and reassessment proceedings - addition on account of excess capital balance and also Tax Evasion Petition (TEP) detailing undisclosed investment made by the assessee in certain properties - HELD THAT:- If the grounds set out in the re-assessment notice are nonexistent, i.e., either no addition is made on such grounds or the addition so made does not finally pass the scrutiny by the appellate forums, then, obviously, no further addition can be made for income which comes to his notice during the course of proceedings u/s 147 - If the AO fails to acquire a valid jurisdiction to make re-assessment on the basis of his reasons, then, he is also debarred for making additions for other incomes chargeable to tax which escaped assessment and come to his notice subsequently in the course of proceedings u/s 147. Only addition made by the AO out of the recorded reasons stands deleted. As in Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] we order to delete the addition since the sole addition made by the AO on the foundation of the recorded reasons has not passed the judicial scrutiny by the Tribunal in an earlier para. Thus, there can be no question of making any other addition to the income. We, therefore, hold that the initiation of reassessment was bad in law. Non-service of notice u/s.143(2) - HELD THAT:- CIT(A) called for a remand report from the AO. The AO confirmed that not only notice u/s.143(2) was issued but the same was also served on the assessee. A copy of acknowledgment issued by the postal authorities in this regard was sent back to the ld. first appellate authority, which has been reproduced on page 7 of the impugned order - notice u/s.143(2) of the Act was issued and served as affirmed by the postal authorities, we hold that no exception can be taken to the view adopted by the ld. CIT(A) on this score. Validity of initiation of re-assessment proceedings - AO failed to obtain sanction before the issue of notice u/s.148 - HELD THAT:- Notice u/s.148 was issued on 15-03-2016 which is within a period of four years from the end of the relevant assessment year and further no scrutiny assessment was done earlier. He further observed that the requirement of approval is only when there is previous scrutiny assessment and the period of more than four years from the relevant assessment year has elapsed. The ld. AR could not point out any infirmity in the raison d etre given by the ld. CIT(A). We, therefore, refuse to interfere in the impugned order to this extent. Not passing a separate order to the objections taken by the assessee against the initiation of re-assessment - HELD THAT:- Notice u/s.148 was issued on 15-03-2016 which was served on 16-03-2016. No reply was filed in response to notice u/s.148. It is not coming either from the assessment order or from any other material that assessee raised any objection to the initiation of re-assessment proceedings, which could have warranted the passing of a separate order by the AO before espousing the assessment on merits. It is further pertinent to note on a perusal of the grounds taken before the CIT(A) that no such issue was taken up. AR has not invited our attention towards any material divulging the raising of objections before the AO against the initiation of reassessment proceedings.There could have been no occasion for the AO to pass a separate order disposing the objections to the re-assessment. We, therefore, dismiss this ground of appeal. Surrender of additional income - income filed after the conclusion of survey - HELD THAT:- The assessee admitted excess salary of ₹ 4,21,500/- for the assessment year under consideration and offered the same as additional income. Thus, it is evident that this component of additional income towards excess salary claimed by the assessee amounting to ₹ 4,21,500/- is not in the air. The assessee himself admitted to have made false claim in his Profit and loss account filed along with the original return of income for the year. In our considered opinion, such amount is rightly chargeable to tax. Advertisement expenses - TDS u/s 194C - HELD THAT:- When there was failure on the part of the assessee to deduct tax at source attracting the provisions of section 40(a)(ia), there could have been no reason to be aggrieved by such a surrender made during the course of survey without further showing as to why the disallowance be not made. As such, the surrender to this extent cannot be said to be devoid of any substance. Surrender of suppressed receipts - receipts from tuition fee - HELD THAT:- This component of additional income is properly backed by the evidence in as much as the assessee, in fact, received higher tuition fee to this extent but did not include the same in his receipts chargeable to tax. Investment in purchase of flat - HELD THAT:- There is no doubt that the assessee agreed to surrender a sum of ₹ 5.00 as additional income. However, the fact of the matter is that the amount of ₹ 5.00 lakh represents application of undisclosed income. While dealing with the suppressed receipts shown by the assessee to the tune of ₹ 27,48,310, we have held that the assessee, in fact, earned income to this extent which was not included in the tuition fee receipts shown in the Profit and loss account. Once there is an earning of some undisclosed income and simultaneously there is an application of this undisclosed income through undisclosed expenditure, it is only the higher amount of unexplained income which can be added and not lower amount of utilization of such undisclosed income in the form of unexplained expenditure. As the amount of ₹ 5.00 lakh offered by the assessee as an unexplained investment is less than the amount of undisclosed tuition fee receipts of ₹ 27.48 lakh, we hold that the surrender to this extent could not have been obtained. We sustain the addition towards undisclosed professional receipts + bogus salary expenditure claimed towards the amount not allowable u/s.40(a)(ia). The remaining addition to be deleted. Appeal partly allowed.
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2019 (5) TMI 843
Receipts from sale of spontaneous growth of trees - Capital receipt or income from other sources - non taxability of receipt - HELD THAT:- As relying on AMBAT ECHUKUTTY MENON [ 1979 (9) TMI 2 - SUPREME COURT] this issue was settled by the above judgment wherein it was held that receipts from sale of spontaneous growth of trees is a capital receipt not liable to tax. Even section 55(2)(a) has no relevance in the case of spontaneous growth of trees. See M/S. NATRAJ VERSUS DCIT, CIR. 10 AHMEDABAD. [ 2013 (1) TMI 970 - ITAT AHMEDABAD] The provisions of section 55(2)(a) cannot be applied to spontaneous growth of trees and is to be applied only to goodwill, trade mark, brand name, right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carriage permits or loom hours etc. In the case of State of Kerala vs. Karimtharuvi Tea Estates Ltd. [ 1965 (12) TMI 36 - SUPREME COURT] held that High Court had confirmed that gravelia trees were grown and maintained for the sole purpose of providing shade to the tea bushes in the tea estates of the assessee. That such shade is essential for the proper cultivation of tea cannot be disputed; and hence, we consider it to be a part of the capital asset of the company and tea bushes themselves are the equipment of tea factories. Some of the gravelia trees became old and useless with the expiry of time and naturally to be cut for sale. In view of the above order of the Tribunal and the judgments of the Supreme Court, we are inclined to dismiss the grounds of appeals of the Revenue.
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2019 (5) TMI 842
Claim for exemption u/s. 10B OR 80HHC - assessee had not opted for benefits u/s. 10B in that year - deduction u/s. 80HHC was not granted on exports made through export houses on the ground that no disclaimer certificates were filed - appeal before CIT(A) dismissed on technical ground which was restored by ITAT - in second round assessee claimed deduction u/s. 10B - HELD THAT:- Admittedly, the assessee claimed deduction u/s. 80HHC in the return of income which was duly granted. Subsequently, before the first appellate authority, the assessee made a claim of deduction u/s. 10B in respect of the profit of the CAPs Sea Food Unit which is said to be 100% EOU, without withdrawing the claim u/s. 80HHC . The assessee may exercise his option before the due date of furnishing the return of income u/s 139(1) for the assessment year commencing form 1st April, 1989, furnishes to the Assessing Officer a declaration in writing that the provisions of sub-section (1) of section 10B may be made applicable to it for the relevant assessment year and if it does so, then the provisions of sub-section (1) of section 10B shall be made applicable to it for the relevant assessment year. Accordingly, the provisions of sub-section (4) of section 10B shall also apply while computing the total income of the assessee for the relevant assessment year immediately succeeding the last of such assessment year or in subsequent years. In the present case, the assessee has not opted for the deduction u/s. 10B in its return of income and also has not filed the relevant details so as to avail deduction u/s. 10B before framing of the assessment. As such the assessee cannot be granted deduction u/s. 10B. So long as the assessee has not made available the audit report and other documents pointed out by the CIT(A) in terms of section 10B before framing of the assessment, the claim of deduction u/s. 10B cannot be granted. Further, the assessee cannot claim the exemption u/s. 10B without withdrawing the claim which was already granted u/s. 80HHC - Decided against assessee Addition towards interest u/s. 244A on income tax refund as income from other sources - CIT(A) rejected this ground of the assessee on the reason that since the interest was actually granted to the assessee, the same is taxable irrespective of any pending assessments - HELD THAT:- Admittedly, in the present case, the assessee was in receipt of interest on refund. Since the assessee was actively following the mercantile system of accounting and the income was accrued and received by the assessee, the same is to be taxed in the assessment year under consideration. The assessee cannot postpone the liability of payment of tax on the income tax refund on the reason that it would be withdrawn or reduced by the Department subsequently. If there is withdrawal or reduction by the Department, the remedy lies to the assessee elsewhere and not at this stage - Decided against assessee
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2019 (5) TMI 841
Bogus LTCG - sale of shares after payment of Security Transactions Tax (STT) - bogus unexplained cash credits u/s 68 - HELD THAT:- The fact remains that neither the department had supplied copy of alleged entry operator statement nor there is any material on record that they have named this taxpayer as the beneficiary of the impugned capital gains derived by rigging scrip s share prices. Both the AO as well as CIT(A) are fair enough in observing that the said two persons have named the scrip rather than the assessee in their respective search statement. We therefore quote this tribunal s decision in Prakash Chand Bhutoria vs. ITO [ 2018 (7) TMI 46 - ITAT KOLKATA] deleting identical addition for lack of any evidence against the concerned assessee. Bogus capital gains against the taxpayer based on circumstantial evidence. Hon'ble jurisdictional high court s judgment ALPINE INVESTMENTS [ 2008 (8) TMI 961 - CALCUTTA HIGH COURT] taken into consideration in learned co-ordinate bench s order hereinabove has held as the contrary that any addition of this nature not based on evidence is not sustainable. We therefore direct the Assessing Officer to delete the impugned addition by following above detailed reasoning mutatis mutandis . - Decided in favour of assessee.
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2019 (5) TMI 840
Deduction u/s 35(1)(ii) denied - donation paid to M/s Heribicure Healthcare Bio Herbal Research Foundation - survey u/s 133A - statement was recorded from Shri Swapan Ranjan Dasgupta, Founder Director of HHBRF who admitted that they had received such donation and thereafter returned these donations in cash through some operators, to the donor, in lieu of a commission - HELD THAT:- Nowhere in the statement recorded, the name of the assessee is stated, and there is no comment or evidence given against the assessee. What is clear is that donation was received by cheque from HHBRF, when the certificate issued to it by CBDT was still valid. There is no proof that this particular assessee, Shri Raj Karan Dassani, had got back the money in question in cash. On these facts the ratio laid down by the Hon ble Gujarat High Court in the case of Pr. CIT Surat vs. Tejua Rohit Kumar Kapadia [ 2017 (10) TMI 729 - GUJARAT HIGH COURT] applies. The entire allegations made by Shri Swapan Ranjan Dasgupta, founder director of HHBRF is denied by Shri Kishan Bhawsinngka. No additions would be made on such statements which are not supported by corroborative evidence. The copies of the statements are not furnished nor was the assessee given a chance of cross-examination. Evaluating the evidence relied upon by the parties, we uphold the contention of the assessee that he is entitled to deduction u/s 35(1)(ii) - Decided in favour of assessee.
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2019 (5) TMI 839
TDS u/s 195 - addition u/s 40(a)(i) - disallowance of foreign commission expenses - expense paid to non-residents - income accrued in India - HELD THAT:- As decided in assessee's own case [ 2019 (5) TMI 705 - ITAT AHMEDABAD] Commission payments made to the non-resident agents did not have any taxability in India, even under the provisions of the domestic law i.e. Section 9. Once we come to the conclusion that the income embedded in these payments did not have any tax implications in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the Assessing Officer for order u/s 195. In our considered view, the assessee, for the detailed reasons set our above, did not have tax withholding liability from these payments. - Decided in favour of assessee. TDS u/s 195 - Disallowance u/s 40(a)(ia) on account of professional consultancy fees - HELD THAT:- the said consultancy fee was paid to Momaja SRO for the professional services having rendered outside India. It further appeared that in European country the import of chemicals from outside country is subjected to restriction establishing office there or by first registering the assessee company under REACH (EU Regulations, 1907/2006). Thus, to export in these countries is for making income from sources outside India, otherwise, it would not be able to earn any Income by exports to these EU countries. The said Momaja SRO already completed all necessary formalities in making compliance with REACH in EU Regulations to make the appellant eligible to export in EU countries and thus section 9(1)(vii) does not apply. CIT(A) came to a conclusion that the aforesaid service was rendered by the processional outside India and therefore the income has not accrued in India u/s 195 and thus the question of obligation to make the TDS u/s 195 does not arise. AO has failed to point out in what manner the professional income has arisen or accrued in India or the said party had any permanent establishment or business connection in India or rendered any services in India, in absence of which the case made out by the assessee has been accepted and the application of provisions of section 195 r.w.s. 40(a)(ia) as made by the Learned AO has been rejected by the first appellate authority upon deleting the addition correctly - Decided in favour of assessee.
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2019 (5) TMI 838
TP adjustment - comparable selection - TNMM as the Most Appropriate Method (MAM) selected - HELD THAT:- Mitco has incurred expenses on providing vocational training and IT training, which changes its profile, thus is not a suitable comparable vis- -vis the taxpayer, hence ordered to be excluded. IBI Chematur inter alia fails 75% service revenue filter applied by the taxpayer and also accepted by the TPO; that it has various segments but no segmental financials are available; that IBI Chematur is not merely providing engineering services as its only business is of high end engineering services with the use of specific technologies and huge research and development expenditure along with R D centre. As relying on BECHTEL INDIA PVT. LTD. VERSUS DCIT, CIRCLE 4 (2) , NEW DELHI. [ 2015 (12) TMI 1560 - ITAT DELHI] this company is to be excluded on ground of non-availability of financial segmental and substantial expenditure on R D activities Mahindra Consulting Engineers Limited - As following the decision rendered by the coordinate Bench of the Tribunal in BG Exploration and Production India Ltd. [ 2017 (4) TMI 1145 - ITAT DELHI] we are of the considered view that the TPO has rightly retained the Mahindra as a comparable after examining the contentions raised by the assessee. However, we are of the considered view that in view of the settled principle of law, the assessee is entitled for benefit of working capital adjustment in order to benchmark its international transaction. Disallowance of misc. expenses like Diwali gifts and presents given - HELD THAT:- When undisputedly taxpayer has incurred these expenses allegedly on gifts and presents by way of cash, the same cannot be attributed to Diwali gifts and presents etc. which is also against the provisions contained u/s 40A(3). So, we hereby confirm the addition made by the AO and consequently, corporate grounds are decided against the taxpayer.
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2019 (5) TMI 837
Denial of approval u/s 80G(5)(vi) - need of the assessee to seek donations, i.e., in view of its huge surplus and cash reserves - apprehension that the donations shall be misused as ground for denying the said approval - HELD THAT:- In the facts of the case, the ld. CIT(E) has based his decision of the donations being liable to be misused wholly on the basis of the assessee-society being prosperous and, consequently, in no apparent, or shown, need for donations to support its activities. While that may invite a charge of the promoters being over-zealous or over ambitious, it surely does not lead to the inference of seeking donation for admission, i.e., of the approval u/s. 80G(5)(vi) being liable to be misused a distinct possibility. This is particularly so as the same is in fact illegal, in view of the decision by the Apex Court as in TMA Pai Foundation v. State of Karnataka [ 2002 (10) TMI 739 - SUPREME COURT] referred to during hearing, emphasizing that the admission is in any case is to be merit based, and Modern Dental College and Research Center [ 2016 (5) TMI 1366 - SUPREME COURT]. Why should a management, in no dearth of funds, risk its reputation and, rather, even the future of its institution, by asking for such ill gotten money? Clearly, we are unable to regard the present case as one of distinct possibility i.e., the test or the threshold which, in our view, must characterize the impugned transactions of donations which the applicant-appellant targets while seeking benefit u/s. 80G(5), so as to oust its case for being a eligible for approval thereunder. In our view, therefore, the assessee cannot be denied approval u/s. 80G. We, accordingly, setting aside the impugned order, direct the competent authority to grant the said approval. The assessee shall, however, give a legal undertaking to the Revenue that it shall not seek contributions, directly or indirectly, from persons who (or whose wards seek admission) to various educational or training institutions run, or may be run, by the assessee-society. - Decided in favour of assessee.
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2019 (5) TMI 836
Income from other sources u/s 56(2)(viib) - shares issued at premium - discounted cash flow method for valuation of shares - FMV of the shares as per Rule 11UA of the Income tax Rules, 1962 or as may be substantiated by the company to the satisfaction of the AO, based on the value on the date of issue of shares of its assets, including intangible assets being goodwill, know how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature, whichever is higher - HELD THAT:- Admittedly, the value of the shares was determined by the assessee as per the discounted cash flow method . In so far the adoption of the discounted cash flow method for valuation of shares by the assessee is concerned, we find that the same has been accepted by the A.O while framing the assessment u/s 143(3) in the case of the assessee for the immediately succeeding year i.e. A.Y 2014-15, wherein too the shares had been issued at a premium of ₹ 140/- per share. No infirmity does emerge from the determining of the FMV of the shares by the assessee company as per the recognized method of valuation i.e discounted cash flow method envisaged in Sec. 56(2)(viib) r.w Rule 11UA of the Income tax Rules, 1962. Apart therefrom, we are unable to comprehend that now when the revenue itself has accepted the said method of valuation of shares and the issuance of the same at a premium of ₹ 140/- per share in the assessment framed in the case of the assessee for the immediately succeeding year viz. A.Y 2014-15, then how in the absence of any distinguishing facts it could have whimsically declined to accept the same for the year under consideration. No infirmity emerges from the well reasoned order of the CIT(A), who had rightly deleted the addition made by the A.O u/s 56(2)(viib) during the year under consideration. We thus finding ourselves to be in agreement with the view and the reasoning adopted by the CIT(A) while deleting the addition of ₹ 2,80,00,000/- made by the A.O, uphold his order - Decided against revenue
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2019 (5) TMI 835
Bad debts written off for non-rural branches claimed under clause (vii) of Section 36(1) - whether claim has to be allowed only in excess of the provision made for rural branches under clause (viia) of Section 36(1)? - HELD THAT:- Special Leave Petitions under Article 136 of the Constitution of India dismissed.
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2019 (5) TMI 792
Condonation of delay - reasonable cause for late filing of these appeals - HELD THAT:- It is duly supported with the affidavit of Shri Gurmeet Sodhi, Director of the company, wherein it has been deposed that there was not any intentional default on the part of the assessee company, rather the impugned order of the CIT(A) was never served upon the assessee and that the project of the assessee company had been since abandoned, there was no regular employee of the assessee company. The assessee company has a reasonable cause for late filing of these appeals. In our view, the delay in filing these appeals, in the interest of justice, is required to be condoned. Assessment u/s 153A - HELD THAT:- Assessee has filed a separate affidavit of Shri Gurmeet Sodhi, Director of the assessee company, wherein identical pleadings have been made and it has been deposed that due to the aforesaid reasons explained, the assessee company could not appear and present its case during assessment proceedings carried out by the A.O. u/s 153(3) r.w.s. 144/143(3). Interest of justice will be served if the assessee is given an opportunity to properly present its case and give due explanation to the A.O. and the matter be decided on merits by the A.O. In view of this, ex-parte orders of the lower authorities are hereby set aside and the matter in this appeal is remanded back to the A.O. for an assessment afresh. Since the facts and circumstances in other appeals are identical and even identical pleadings have been made for condonation of delay, hence, the findings given above will apply to all the appeals and accordingly, the matter in all the appeals is remanded to the file of the A.O. for assessment afresh. All the appeals filed by the assessee are, therefore, treated as allowed for statistical purposes.
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2019 (5) TMI 791
Dismissing the appeal ex-parte - non affording an opportunity of hearing - denial of Principals of Natural Justice - HELD THAT:- Admittedly, specific opportunity was provided by the A.O. In the appellate proceedings, we note that the dates of hearing had been mentioned. However, the mode of communicating the same to the assessee is not found discussed. Further taking note of the impugned order it is seen that it has been dismissed on the grounds of non-representation, relying upon the decision of the Hon'ble Apex Court in the case of B.N. Bhattachargee Other [ 1979 (5) TMI 4 - SUPREME COURT] Considering the same we find that the procedure followed by the CIT(A) is not as per the statutory mandate, as set out in sub-section(6) of section 250. Further taking note of the fact that the necessary evidence is to be considered by the A.O., accordingly, in the light of the submissions of the parties before the Bench, accepting the oral undertaking given by the Ld. AR, the impugned orders are set aside and the issues are remanded back to the file of the A.O. with the direction to pass a speaking order in accordance with law. - Appeals of the assessee are allowed for statistical purposes.
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2019 (5) TMI 790
Stay of outstanding demand - recovery proceedings - HELD THAT:- On careful verification of the financial statements submitted by the assessee, the projected inflow of funds for the month of March 19 would be ₹ 138,96,85,812 as against the projected payments of ₹ 138.50 crores under various heads. The assessee expressed its inability to make any payment of tax. The assessee did not submit the balance sheet to verify the other receivables as on the date of hearing. From the funds available with the assessee, we are of the view that the assessee has no financial difficulty to make the payment of outstanding demand and it is also the responsibility of the assessee to make the payment of taxes due. Therefore, in our considered view, AR did not make out a case for granting of stay of demand and hence, we are not inclined to grant the stay. SA filed by the assessee is dismissed.
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Customs
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2019 (5) TMI 833
Detention of imported goods - consignment of miscellaneous items including Flavour for Hookah, E-Sheesha Pen E-Liquid - detention on the ground that the Petitioner had failed to get a No objection Certificate from the concerned authority under the Drugs and Cosmetics Act, 1940 as was mandated by a circular dated 27th November, 2018 issued by the Department - HELD THAT:- The Court sees no reason why the Petitioner s goods should not be released considering that the Circular in terms of which they were detained has been stayed by the learned Single Judge. The Respondent is directed to release the goods detained under the aforementioned Bill of Entry dated 4th January, 2019 to the Petitioner subject to such terms as the Respondent may think appropriate. Petition dismissed.
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2019 (5) TMI 832
Prohibited goods or not - requirement of registration - Redemption of goods for the limited purpose of re-export to the supplier - confiscation of the imported product - main grounds on which the impugned order is assailed are that a direction for re-export is beyond the purview of Section 125(1) of the Customs Act, 1962 and that so long as the imported goods do not fall under the category of prohibited goods, there cannot be a direction to re-export. HELD THAT:- It is no doubt true that the petitioner offered to re-export the goods, in view of the circumstances in which they were placed. By the time an order was passed giving them an option to pay fine and reexport the goods, the supplier seems to have taken a different position. It is seen from the papers that the petitioner also made attempts to reexport the goods. This is why they sought extension of time by three months. But, the supplier seems to have rejected the request. Therefore, after having invited an order for re-export, it is not open to the petitioner to contend that section 125 (1) does not entitle the respondent to order the re-export. Whether the goods in question are prohibited goods or not? - HELD THAT:- It is only those goods which are subjected to any prohibition under the Customs Act or any other law, that are taken to be prohibited goods. It is not the case of the respondents that the goods in question are prohibited for import under the Customs Act - the import of plant growth regulators is not prohibited absolutely. They may actually fall under the category of restricted goods , and the restriction is with regard to registration. Whether the condition regarding registration will make the goods prohibited goods? - HELD THAT:- It is interesting to see that even goods which are prohibited for import under the Customs Act or any other law for the time being in force, will not automatically become prohibited goods within the meaning of Section 2 (33) of the Customs Act, 1962, if such goods are imported after complying with the conditions for their import. In other words, even goods which are prohibited for import will shed the character of being prohibited goods, if they are imported after complying with the conditions for such import. There are no fault with the respondents in treating the requirement of registration as a restriction on the free import and consequently treating the goods, imported without registration, as prohibited goods. Petition dismissed.
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2019 (5) TMI 831
Defaulter Order - Rule 7 of Foreign Trade (Development Regulations) Act, 1992 - HELD THAT:- The Additional Director General of Foreign Trade, Ministry of Commerce and Industry, being the respondent no.2 in the instant application, to consider the application made by the petitioners on 2nd January, 2019 and pass necessary orders within a period of two weeks from the date of communication of this order by the petitioners to the respondent no.2. The respondent no.2 will give an opportunity of hearing to the petitioners, consider the submissions made by the petitioner and pass a reasoned order in the light of the submission made by the learned Advocate appearing for the respondent no.2 that there is no order of stay in respect of the order dated 14th March, 2012 and that the petitioners are suffering a deterrent action under the Foreign Trade (Development Regulation) Act, 1992 for last six years without any reason whatsoever. Petition disposed off.
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2019 (5) TMI 830
Refund of SAD - N/N. 102/2007 dated 14.09.2007 - compliance with Condition No.2 (e) (iii) of Notification - correlation of 'goods imported' versus 'goods sold in India' - discrepancy in the description of goods was in the nature of curable effect - appellant has not adopted the same code while describing the product in their sale invoices - HELD THAT:- A Notification which grants refund was an exemption notification, should be construed strictly and the conditions contained should be scrupulously adhered to. There are three documents which the importer has to produce for being entitled for refund of SAD, they being, (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. The adjudicating authority appears to have done a thorough scrutiny of the documents and granted refund in full. In respect of the remaining portion, the only reason for rejection is that the appellant has not adopted the same code while describing the product in their sale invoices. The explanation offered by the appellant/importer is that the numbers which followed the letters HDPE/LDPE/LLDPE are relevant only for person who is importing goods from the foreign country on orders being placed by the appellant and is of no consequence on the sale while selling the product in the local market - the adjudicating authority has not come to a conclusion that the product sold was entirely different. In fact, there was nothing on record to disbelieve the Chartered Accountant's certificate which certified that both products are one and the same. If the adjudicating authority had to disbelieve such certification, then there should have been material to do so. However, the larger question would be whether at all such jurisdiction is vested with the adjudicating authority, when there is no allegation of any fraud or misrepresentation against the appellant. The finding of the Tribunal is not sustainable, considering the facts and circumstances of the case, as the adjudicating authority himself was satisfied that substantial amount of claim for refund was sustainable - Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 829
Refund of SAD - N/N. 102/2007 dated 14.09.2007 - compliance with Condition No.2 (e) (iii) of Notification - correlation of 'goods imported' versus 'goods sold in India' - HELD THAT:- A Notification which grants refund was an exemption notification, should be construed strictly and the conditions contained should be scrupulously adhered to. There are three documents which the importer has to produce for being entitled for refund of SAD, they being, (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is claimed; (iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods. The adjudicating authority appears to have done a thorough scrutiny of the documents and granted refund in full - The findings of the first appellate authority and the Tribunal are not sustainable, considering the facts and circumstances of the case, as the adjudicating authority himself was satisfied that amount of claim for refund in full was sustainable. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 828
Imposition of penalty u/s 112(b) of Customs Act, 1962 - violation of import conditions - alleged diversion of duty free imported raw material into domestic area - HELD THAT:- We find that the appellant have received raw material from a 100% EOU firms namely M/s Royal Industries Ltd. under proper job work challan and entire quantity has been taken on the records by the appellant in his statutory books of accounts. It is also a matter of record and an admitted fact that after the conversion of Acrylic Fibre into yarn, a part of the manufactured quantity has been returned back to the raw material supplier namely, M/s Royal Industries Ltd. and balance quantity which was also got converted into yarn, as per the assertion of the appellant, was not lifted by the supplier and therefore, the appellant have cleared the same after taking the same in the statutory record namely RG-1 Register and on payment of appropriate Central excise duty. For invoking the provisions of Section 112(a) or 112(b) of the Customs Act, 1962 the subject goods need to be made liable of confiscation - so far as the appellant is concerned the goods were duly covered by prescribed job work documents and the same were also taken on record in the books of the accounts of the appellant, therefore, the quantities which have been received by the appellant were not liable for confiscation as the same were covered by legitimate documentation. There was no violation of any provisions of Customs Act with regard to the raw materials received by them from the 100% EOU firm and thereby legally it cannot be alleged that the raw material namely acrylic fibre received by him was liable for confiscation - Since we find that the goods received by the appellant were not liable for confiscation u/s 111 of the Customs Act, therefore, the appellant is not liable for the penalty u/s 112(b) of the Customs Act, 1962. Penalty cannot be sustained - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 793
Classification of goods - Electronic Nicotine Delivery systems (ENDS) including e-Cigarettes, Heat-Not Burn devices, Vape, e-Sheesha, e-Nicotine Flavoured Hookah, and the like devices - Drugs or not - circular dated 27.11.2018, all Customs Authorities have been requested to ensure import consignments of ENDS are referred to drug control authorities - HELD THAT:- A plain reading of Clause (b) of Section 3 of the said Act indicates that it covers all medicines for internal or external use, and all substances intended to be used for or in the diagnosis, treatment mitigation or prevention of disease or disorder. It does not appear that the devices in question are sold as therapeutic devices, or as having any medicines for internal or external use of human beings, or animals intended to be used for in the diagnosis treatment of any disease. The said products do not have any medicinal value - this Court is, prima facie, of the view that the products do not fall within the definition of a drug , as defined under section 3(b) of the Drugs and Cosmetics Act 1940. If the product in question is not a drug, respondent no.1 would not have the jurisdiction to issue the impugned circular. In this view, the impugned communication and the impugned circular are stayed, till the next date of hearing. List on 17.05.2019.
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Corporate Laws
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2019 (5) TMI 827
Compounding of offence - non-compliance with the CSR initiatives - for violation of provisions of section 134(3)(o) read with section 135 of the Companies Act, 2013 - delay in amount required to be spent for CSR Activities - HELD THAT:- As per section 441(1) this Tribunal has power to compound any offence under the Companies Act, 2013 except an offence punishable with imprisonment only or punishment with imprisonment and also with fine. The present offence does not fall in the above two categories and hence the offence can be compoundable. The respondent already instituted prosecution in the Court of Special Judge for Economic Offences at Hyderabad. As per section 441(1) of the Companies Act, 2013 this Tribunal has power to compound an offence even after institution of any prosecution. Hence this offence can be compounded. I have seen the certified copy of the extract of board resolution dated January 23, 2018 of the petitioner-company wherein the board of directors resolved for filing the compounding petition. After considering the material on record and after taking into account the submissions made by counsel that lenient view may be taken, I hereby levy a compounding fee for delay in complying section 135 of the Companies Act, 2013 on the company and directors - the compounding fee levied shall be paid by the company and directors within 15 days from the date of this order. Call this matter on May 6, 2019 for compliance.
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2019 (5) TMI 826
Striking off of name of Company - Section 560 of the Companies Act, 1956 - HELD THAT:- The appellant has not filed the statutory returns and financial statement as required under Companies Act, 1956. We noted that the consent of the shareholders and the creditors have been filed by the appellant. We noted that the shareholders and creditors are all family members. As regards the plea taken by the appellant that the appellant has deposited lease rentals with the HSIDC, we further observe that the lease rentals have been deposited only after when the NCLT asked for proof in its order dated 19.5.2017. Subsequent event to deposit the lease rental after the proof has been asked for cannot be taken a good ground to assert that the company has already been in business or in operation. Appeal dismissed.
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2019 (5) TMI 825
Restoration of name of the Company - allotment of land - appellant submitted that even though the appellant company is not carrying on any business, the appellant company should be considered to be fully operating and that the same is sufficient in view of Section 252(3) of the Companies Act to restore the appellant company - HELD THAT:- The appellant is continuously taking efforts to set up industry and also observing that the appellant had applied for land and submitted project report in 2013 and the land was allotted in 2016. Further the company is depositing balance instalments towards the allotment of land. However, we observe that the amount deposited by the appellant has not been reflected in the Balance Sheets but as the appellant argued that the amount has been invested by the Directors, therefore, the same should have been reflected in the Balance Sheet. We expected that the Balance Sheets to be filed with the ROC are true and fair reflecting all transactions of the company. We have come to the conclusion that in the light of huge investment made by the directors/company and the appellant is continuously making efforts to set up the industry and also still depositing the instalments towards land, it would be just that the name of the company is directed to be restored. - appeal allowed.
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2019 (5) TMI 824
Buy Back of shares - restoration of appellant as Director in the Company - HELD THAT:- It was for the respondents to make the initial offer within time specified on a rate for which they had to take their own risk as the appellant would have then got a chance to make counter offer on a discounted price. This is clearly from the order dated 21.7.2017. Annexure A-7 filed by the appellant shows that the valuer has given report on 21.7.2017 itself (which incidently happened to be the date of judgement passed by this Tribunal) giving valuation (as at page 158) of Rs/1322.60. The respondents appear to have offered @ ₹ 1440/- per share. When we peruse the order dated 21.7.2017 passed by this Tribunal, there is nothing that on offer being made by Respondents, petitioner would be entitled to claim that his objections should be heard on the valuation and only then he would take a call whether or not he wants to purchase at the value made/offered by the respondents. The claim that the appellant wants to see the accounts so as to decide whether or not to buy or be bought out, such options were not left open by the order passed by this Tribunal on 21.7.2017. The appellant has not challenged the order dated 21.7.2017 in Supreme Court. Thus that order is final for the purposes mentioned. Restoration as Director in time - HELD THAT:- The impugned order shows that the NCLT looked into the claim made by the respondents that in August 2017 they had decided in the Board Meeting to restore the appellant and ROC in court pointed out difficulties regarding filing on the portal of the MCA. This is in para 18 of impugned order. In any case the NCLT has recorded in para 15 of the impugned order that the claim of the appellant regarding non restoration is already filed before the High Court by way of COCP . It is seen that petitioner raised this and other grievances in NCLT only when Respondents sought to buy his shares. Appeal dismissed - decided against appellant.
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2019 (5) TMI 823
Creation of the encumbrance over the assets of the Respondent Company - Section 8 of the Arbitration and Conciliation Act, 1996 - Company Petition has been filed claiming right to be on the Board and also to restrain the Respondents from entering into transactions without express consent of the Investor s Nominee Director, violating Articles of Association - HELD THAT:- When the NCLT had itself said that the disputes being raised were arbitral and the matter was before Hon ble Supreme Court and refrained passing further Orders, in our view, it was inappropriate for the NCLT to have modified the Order dated 16th August, 2017. The Impugned Order did not consider the case, which was put up by the Appellant Petitioner, and how in the face of Articles of Association as they existed, Respondents could be allowed to unilaterally proceed creating huge liabilities without a shred of protection to the cause of Appellant Petitioner who had brought in substantial amounts. We are aware that interest of Company is matter of priority, but parties in management cannot be heard taking adamant stand in the name of interest of Company and expect Orders which prima facie do not appear to be in line with its Articles of Association. The case of the Petitioner is not merely based on the Agreements, but it is also based on the Articles of Association which binds both sides. Prima facie, we find that the Petitioner has made out a good case in its favour based on the Articles of Association. Admittedly, now on the Board, there is no nominee of the Investor. We find that, looking to the prima facie case as appearing in favour of the Petitioner, if the Respondents want to block out Petitioner, hiding behind the Arbitration clause, in equity, they cannot claim discretionary relief to create such a huge liability of ₹ 1250 Lakhs, riding on the back of NCLT Order which, prima facie, is against the Articles of Association. The Impugned Order is quashed and set aside. Earlier Order dated 16.08.2017 passed by NCLT is restored - appeal allowed.
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Insolvency & Bankruptcy
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2019 (5) TMI 822
Liquidation - expiry of lime limit for resolution - case of appellant is that without placing the matter under provisions of Section 30(2) of the I B Code before the Committee of Creditors for voting, the Resolution Professional applied for liquidation - HELD THAT:- The Corporate Insolvency Resolution Process against the Corporate Debtor was initiated on 9th January, 2018 and on 13th November, 2018, when the Resolution Professional filed Miscellaneous Application under Sections 33 34 of the I B Code by that time approximately 270 days had passed - the Adjudicating Authority having ordered for liquidation, it cannot be held to be illegal. It was informed to the Committee of Creditors on 5th October, 2018 but due to late submission of the Resolution Plan , the Committee of Creditors declined to consider the same - thus, the Resolution Plan submitted by M/s. Grandvalult Enterprises, Bengaluru was not submitted within time and therefore, the Resolution Plan of the said M/s. Grandvalult Enterprises, Bengaluru was not considered. We are not inclined to interfere with the impugned order dated 5th December, 2018, we direct the Liquidator to act in accordance with law - appeal disposed off.
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2019 (5) TMI 821
Admissibility of petition - corporate debtor - amount due to the financial creditor from the corporate debtor - matter heard ex-parte - HELD THAT:- There is existence of default in the sense that debt is due. The default is defined in section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount, as the debt is a liability and obligation on the part of the corporate debtor towards financial creditor. The Code gets triggered the moment default is of rupees one lakh or more (section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A financial creditor has been defined under section 5(7) as a person to whom a financial debt is owned and a financial debt is defined in section 5(8) to mean a debt which is disbursed against consideration for the time value of money. The application is complete in all respect as per the Rules and in such a form and manner as prescribed in the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The petitioner/financial creditor having fulfilled all the requirements of section 7 of the Code, the instant petition deserves to be admitted.
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2019 (5) TMI 820
Permission to withdraw application - Non-constitution of Committee of Creditors when the parties reached the settlement - HELD THAT:- As the parties have settled the matter prior to constitution of the Committee of Creditors , in the light of the decision of the Hon ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] , we allow the prayer as made on behalf of the Respondent to withdraw the application as was filed by him under Section 7. Appeal allowed.
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2019 (5) TMI 819
Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 9 of the Insolvency and Bankruptcy Code, 2016 - there is nothing on the record to suggest that the Adjudicating Authority has issued notice to the Corporate Debtor and it was served on them - HELD THAT:- In the present case, as nothing on the record to suggest that notice was served on the Corporate Debtor and the impugned order has been passed in violation of natural justice, we set aside the order dated 8th June, 2018. In effect, order (s), passed by the Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium, freezing of account, and all other order (s) passed by the Adjudicating Authority pursuant to impugned order and action, if any, taken by the Interim Resolution Professional , including the advertisement published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. Appeal allowed.
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FEMA
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2019 (5) TMI 818
Maintainability of appeal - alternative statutory remedy - Penalty for contravention of Section 7 (1)(a) of the FEM 1999 read with Regulation 16(1) (i) (iii) of Foreign Exchange Management (Exports of Goods and Services) Regulations, 2000 - HELD THAT:- An appeal against the order impugned herein is maintainable before the Special Director (Appeals), O/o the Commissioner of Income Tax (Appeals), Aayakar Bhawan, Delhi. In view of the above, we are not inclined to entertain the present writ petition and dispose of the same by relegating the petitioner to avail alternative statutory remedy in accordance with law.
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2019 (5) TMI 817
Foreign Direct Investments (FDI) - Non-compliance of the condition of minimum capitalization - requirement of prior permission and allowing automatic route for FDI by foreign companies in township development - Guilty of the charge in respect of the transaction of transfer of shares - liability of director - guilty of the provisions of Reg. 3 Reg. 5(1) r/w Schedule 1 of FEMA 20/2000 - Restriction on issue or transfer of security by a person resident outside India - HELD THAT:- The minimum amount of FDI is required to be brought in within a period of six months of commencement of business of the company . It is evident from the Complaint that the respondent had initiated investigation against the appellant company soon after the first installment of USD 2.5 Million, thereby frustrating further compliance with the condition of minimum capitalization by their own action. The amount of USD 10 Million is required to be brought in within six months from the commencement of the business of the company. Since the business of development and construction of township could not be commenced due to the action of the respondent, the period of compliance with the condition had yet to commence. The allegation is, therefore, premature and, therefore, the question of contravention does not arise. In the light of above, we are of the considered opinion that the Adjudicating Authority has misapplied the condition of Sl. no. 23 in respect of FDI in township development to NRIs contrary to FDI in township development under Sl. no. 2 of Annexure B which is without any condition whatsoever. The impugned order is quashed and set-aside as the appellant no.1 is not guilty of alleged contravention. The penalty imposed was not called for. As regards Ashok Jain is concerned, he has been held guilty by fastening vicarious liability on him. There is no specifically averment of incriminating acts of commission or omission in his part, as the impugned order holding the company is not guilty of contravention. The order against Ashok Jain is also set-aside, even otherwise he is not liable to be punished for contravention as he has carried out the transaction with due diligence and complied with every formality including the post transaction reporting condition prescribed by RBI. There is no evidence of any disregard or neglect in observing and complying with the provisions of the law. Therefore, the impugned order is set-aside against the appellant no. 2. The appeal filed by the respondent has become infructuous in view of appeals filed by the private parties are allowed on the reasons already given. Hence, the same is dismissed.
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PMLA
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2019 (5) TMI 816
Offence under PMLA - attachment of Appellant's residential property - . Procedure prescribed under Section 5 of the PMLA was not followed by the Adjudicating Authority - HELD THAT:- Copy of reason to believe were not produced before this tribunal nor any copy was served. The same were not re-produced in the notice issued under section 8(1) of the Act nor those are either mentioned in the counter-affidavit or annexed therewith. Counsel of respondent submits that there is no requirement to record the reasons to believe separately. The same are to be mentioned in the provisional attachment order only. PMLA is a preventive measure and not a punitive measure. In the present case inspite of admitted fact that the amount in far excess of the alleged POC is secured with the CBI Court, the appellant cannot be compelled to again secure the amount. The attachment of appellant premises was not called for. The immovable worth more than 50 crores could not have been attached against the alleged proceed of crime.
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2019 (5) TMI 815
Offence under PMLA - attachment orders - denial of natural justice - immovable property of a person has been made part of a prosecution complaint for confiscation without making that person as a party and affording that person an opportunity to defend his case - HELD THAT:- It is clear from the written submission of the respondent as well as oral submissions made by the respondent that ED has filed Prosecution Complaint only against Shri Bimal Ramgopal Agarwal, not against the present appellant but the property of present appellant has been made part and parcel of the said prosecution complaint. It is strange to note here that an immovable property of a person has been made part of a prosecution complaint for confiscation without making that person as a party and affording that person an opportunity to defend his case. Section 8(3)(a) of PMLA has been amended by the Act 13 of 2018, wherein a limitation period has been provided for continuation of attachment or retention of property or record post confirmation of attachment/retention. It is the intention of the legislature not to allow the Investigating Authority to get the property attached or retained the record/documents/items indefinitely in the name of investigation. It has been admitted, during the course of oral submissions, by the learned counsel for the respondent that no Prosecution Complaint is pending against Shri Sanjay Kumar, the present appellant till 12.04.2019 when the appeal was finally argued. The submissions made by the parties are considered. The relevant provisions of law are also considered along with the factual and legal issues raised by the parties. The impugned order was passed on 24.07.2018 and no Prosecution Compliant is pending against the appellant even though more than 250 days from the date of impugned order have already been passed. Since, we have decided the appeal in the light of amendment brought in the statute as mentioned above hence, we have not gone into other legal issues raised herein. Under these circumstances, the appeal is allowed. The impugned order is set aside. The appellant may move the concerned Special Court for appropriate remedy, wherein the Prosecution Complaint is pending and his property has been made part and parcel of that complaint, in accordance with law.
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Service Tax
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2019 (5) TMI 814
Rejection of VCES Application - Voluntary Compliance Encouragement Scheme, 2013 - rejection of the application on the ground that the payment of the amount of service tax as disclosed in the returns, was not made - The learned Counsel for the petitioner produced material to show that the tax liability for the period October 2010 to March 2011 arrived at as ₹ 3,30,43,821/- was wrong and that as per the return, the liability disclosed was only ₹ 3,27,09,978/-. HELD THAT:- The main part of sub-Section (1) of Section 106 of Chapter VI of the Act entitles every person to declare his tax dues, if no notice or determination of the same had been made before 01.03.2013 under Sections 72 or 73 or 73A. Therefore, if the first proviso had not been there, all persons including (1) persons who never filed any returns (2) persons who filed returns which did not disclose the true liability and (3) persons who furnished returns and disclosed their true liability, but not paid the disclosed amount, would all be entitled to file a declaration - But, the first proviso to sub-section (1) to Section 106 of Chapter VI of the Act excludes from the eligibility under Sub-Section (1), persons who belong to the third category, namely, those who filed returns under Section 70 of the Chapter and disclosed their true liability, but had not paid the disclosed amount. Persons belonging to the first and second category, namely, (1) those who never filed returns and (2) those who filed returns but did not disclose the true liability are not excluded by the first proviso. The learned Counsel for the petitioner produced material to show that the tax liability for the period October 2010 to March 2011 arrived at as ₹ 3,30,43,821/- was wrong and that as per the return, the liability disclosed was only ₹ 3,27,09,978/- - Therefore, we directed the learned Senior Standing Counsel to check-up. After checking up, the Assistant Commissioner made a working and communicated to the Senior Standing Counsel by his letter dated 06.02.2019 that there was a mistake on the side of the Department and that for the period October 2010 to March 2011, the total liability as per the tax return was only ₹ 3,27,09,978/- and that the petitioner had made payment of a sum of ₹ 3,27,09,979/-. In other words, the petitioner has paid Re.1/- in excess of the total liability as disclosed in the return for the period October 2010 to March 2011. Therefore, it is now admitted by the Department that the liability disclosed in the returns for four periods, namely, (1) October 2010 to March 2011, (2) October 2011 to March 2012, (3) April 2012 to September 2012 and (4) October 2012 to March 2013, have been fully paid by the petitioner, partly by way of cash and partly by way of cenvat credit. Liability for the Interregnum period, namely, the period from April 2011 to September 2011 - whether on account of this default in respect of the period from April 2011 to September 2011, the entire declaration under VCES was liable for rejection or whether the declaration under the VCES was liable to be accepted atleast in respect of the period covered by the other four returns, namely, (1) October 2012 to March 2011, (2) October 2011 to March 2012, (3) April 2012 to September 2012 and (4) October 2012 to March 2013? - HELD THAT:- This period of five years and three months will be covered by ten half yearly returns and a portion of the eleventh half yearly return. The ten half yearly returns that would cover the period to which the scheme relates are October 2007 to March 2008, March 2008 to September 2008, October 2008 to March 2009, March 2009 to September 2009, October 2009 to March 2010, March 2010 to September 2010, October 2010 to March 2011, March 2011 to October 2011, October 2011 to March 2012, March 2012 to October 2012 Section 106 does not contemplate the filing of multiple declarations, each co-relating to one half yearly return. Section 106 provides for the filing of only one declaration. Such a declaration could be in respect of the entire period covered by the scheme namely October 2007 to December 2012 or for a part thereof. While it is possible to split the period in respect of which the declaration is filed, into 10 half yearly returns and a part of the 11th half yearly return, it is not possible to split the declaration itself - V The petitioner filed one single composite declaration for the tax dues in respect of the period October 2010 to March 2013. This period is covered by six returns. While five out of those six returns do not fall within the first proviso to Section 106 (1) of Chapter VI of the Act, one return falls within the purview of the first proviso. Therefore, the declaration becomes defective, as Chapter-VI does not enable the authorities to split up the declaration into several parts - But, as we have already pointed out, the returns are divisible, but the declaration is indivisible. A declaration under the Scheme may have to be dealt with as a single sealed basket of apples and it may not be possible to accept the basket as a whole after throwing out those apples which are rotten. Therefore, we find that the order impugned in the writ petition is unassailable. Service of notice on the declarant calling upon him to pay the taxes due - Section 111 (1) of Finance Act - HELD THAT:- The order dated 10.02.2016 is not one under Section 111 of the Act. Section 111 (1) of the Act applies only to cases where the declaration is found to be substantially false. In this case, the petitioner is not accused of filing a false declaration. The case of the respondents is that the declaration of the petitioner would fall within the first proviso to Section 106(1) of Chapter VI of the Act. Therefore, this contention does not hold good. Petition dismissed - decided against petitioner.
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2019 (5) TMI 813
Principles of natural justice - imposing a liability under Section 73(2) after amalgamation - petitioner were not served with the show cause notice nor with any notices of personal hearing - Amalgamation took place - compliance with Section 37(C) of the Central Excise Act, 1944 or not - HELD THAT:- Petitioner herein is a Company with which the assessee got amalgamated in the year 2017 and the factum of amalgamation was made known to the respondents only on 03.04.2017. Therefore, the lack of knowledge on the part of the petitioner, which appears to be genuine, would require one more opportunity to be given to them. The lack of knowledge on the part of the petitioner about the proceedings, is bona fide in this case, since the petitioner could not have checked up before the Orders of amalgamation, whether the procedural requirements under Rule 4 (5A) of the Service Tax, 1994, had been complied with or not. - Matter restored before the adjudicating authority. Petition allowed.
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Central Excise
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2019 (5) TMI 812
Whether the impugned order passed by CESTAT confirming the assessment of the Respondent without appreciating the monthly submission of ER-1 Form by the Appellant valid through the eye of law? - HELD THAT:- An appeal before this Court challenging the correctness of the order passed by the Tribunal can be entertained only if this Court is satisfied that there is a substantial question of law to be decided in the appeal. In other words, this Court cannot act as a third appellate authority and examine the factual details as recorded by the first appellate authority and the Tribunal, re-appreciating the same to come to a different conclusion. Thus, unless and until the assessee is able to convince the Court that there is a substantial question of law arising for consideration, the appeal cannot be entertained. On facts, the original authority, the first appellate authority and the Tribunal noted the conduct of the assessee and recorded a factual finding that there is suppression of fact with an intent to evade payment of duty. The entire matter revolves on factual issues which have been considered by the original authority, affirmed by the first appellate authority and the Tribunal. Thus, there is no question of law, much less a substantial question of law arising for consideration in this appeal. Appeal dismissed - decided against appellant.
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2019 (5) TMI 811
Rectification of mistake - Demand of interest and penalty without appropriation of service tax - HELD THAT:- Although the appellant has reversed the Cenvat credit, but there is no proposal for appropriation of the same. In that circumstance, there are no merit in the application for rectification of mistake filed by the Revenue - ROM application dismissed.
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2019 (5) TMI 810
CENVAT Credit - Capital goods/Inputs - M.S. Plate, M.S. Angle, M.S. Bars, etc., which were used for fabrication of capital goods for use in the factory of the appellant - Revenue is of the view that the appellant has not produced any evidence with regard to use of these items for fabrication of capital goods - HELD THAT:- The sole reason to deny cenvat credit is that the steel items on which cenvat credit has been taken by the appellant are neither capital goods or not inputs in terms of Rule 2(k)/2(a) of CCR, 2004 as these items are not used for manufacture of paper and soda ash (the final product), there is no other reason has been stated why these are not capital goods or inputs for fabrication of capital goods - also it has not been alleged in the show cause notice that these items have not been used for fabrication of capital goods. The appellant are entitled to avail cenvat credit on the steel items used in question in terms of Rule 2(k)/2(a) of CCR, 2004 - credit allowed - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 809
Classification of goods - Laces - whether the goods manufactured are Laces and not Braid - retesting of samples denied - whether classified as lace under Chapter Heading No. 58.04 of CETA, 1985 or otherwise? - HELD THAT:- Although CRCL given a report, but, the said report has been challenged by the appellant vide its letter dated 17.05.2004 on the basis of various case laws and requested to visit their factory to know the manufacturing process as well as the machinery is used, but, the said request has not been accepted - In the CBEC Central Excise Manual, the procedure for retested is provided. Admittedly, in this case, the appellant has ask for retest and same has been denied on the flimsy ground, therefore, there is a violation of principle of natural justice. In the case of M/S ORIENT APPARELS PVT. LIMITED VERSUS CCE, DELHI [ 2017 (4) TMI 689 - CESTAT NEW DELHI] this Tribunal has examined the issue and after relying on the report of Department of Textile Technology, IIT, Delhi and the Technological Institute of Textile Sciences, Bhiwani observed that to determine the classification in the case of braid and laces, examination of process of manufacture is required. Admittedly, in the present case, while determining the classification by the CRCL, no process of manufacturing was examined and retest of the samples were denied - There is a gross violation of principle of natural justice. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 808
Compounding of duty - sub-rule (3) of Rule 96ZO of the Central Excise Rules, 1944 - HELD THAT:- It is seen that at the time of adjudication before the Additional Commissioner, it has never contended by the respondent-assessees that they have opted out the scheme provided under Rule 96ZO(3)(i) from 01.04.1998. The main argument taken by the respondent-assessees at the time of original adjudication was that they have filed an abatement claim for the period in dispute of the duty amounting to ₹ 23,50,000/- which was pending for consideration before the Commissioner of Central Excise, Chandigarh; and therefore the demand of duty need to be reduced by this amount. It has also been admitted by the respondent-assessees that the amount of claimed abatement is reduced from the total amount, the only duty payable by them comes to ₹ 44,00,000/-. After perusal of the order of learned Commissioner (Appeals), it is noticed that while deciding the matter, he has relied on the certain facts, which were actually not present before the Original Adjudicating Authority nor they have contended/presented before the Original Adjudicating Authority by the respondent-assessee. The Order-in-Appeal is devoid of any merits - appeal allowed - decided in favor of Revenue.
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2019 (5) TMI 807
CENVAT credit - common inputs used in relation to manufacture of dutiable as well as exempted goods - reversal of proportionate credit/payment of 6 % of value of exempted goods - Rule 6 (3D) of Credit Rules - HELD THAT:- The issue is settled in favour of the appellant in case of M/S. SPENTEX INDUSTRIES LTD. VERSUS CCE ST, INDORE [ 2016 (9) TMI 282 - CESTAT NEW DELHI] wherein it is held that conjoint reading of the condition stipulated in the said Notification and Rule 6(3D) of the Credit Rules, make it clear that payment of 6 % of value of exempted goods under Rule, 6 (3)(i) of the Rule ibid, would be sufficient enough for availing exemption under the said Notification. CBEC in its Circular No. 845/03/2017 CX dated 01/02/2007 and 858/10/07- CX dated 8.11.2007 relied upon by Commissioner(Appeal), is not applicable on account of the fact that the Rule, 6(3D) of the credit Rule was inserted with effect from 01/04/2007 vide Notification No 3/11-CE(NT) dated 01/03/11. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (5) TMI 806
Rate of tax - cream milk mixed and flavoured milk - taxable at 8% or 16%? - classification of the goods - HELD THAT:- It is not in dispute that the dealer/assessee has sold flavoured milk and cream milk mixed - The department itself has issued a circular clearly holding that the flavoured milk is covered by the entry 'milk'. In the instant case, the Tribunal has rightly dismissed the appeal filed by the Commissioner while affirming the order of the first appellate authority. The first appellate authority has quashed the proceedings under Section 21 of the Act. Assessee itself has admitted the tax on cream milk mixed and flavoured milk at the rate of 8%. The revision filed by the Commissioner Trade Tax U.P. is dismissed.
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2019 (5) TMI 805
Refund of VAT - refund claimed on the ground that its output tax liability is less than the input tax paid - inter-state sales - concessional rate of tax - C-Forms - HELD THAT:- The default assessment order has been generated only to defeat the refund claim of the petitioner, which, in any event, ought to have been paid well before the impugned orders were made. The impugned default assessment orders expressly state that there is no mismatch between the selling and purchasing dealers. Yet a demand is sought to be raised in respect of alleged mismatch. In the case of PRADEEP ENTERPRISES VERSUS COMMISSIONER OF TRADE TAXES ANR. [ 2017 (4) TMI 1438 - DELHI HIGH COURT] where a default assessment order was set aside as being in abuse of statutory powers. The impugned default assessment orders dated 14.11.2018 and the refund adjustment order dated 15.11.2018 cannot be sustained, and the same are hereby set aside - petition allowed - decided in favor of petitioner.
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2019 (5) TMI 804
Payment of tax by hotels, restaurants and sweet-stalls - scope of Section 3-D of the TNGST Act - petitioner is one selling food and drinks at any other eating house - TNGST Act - HELD THAT:- Section 3-D of the TNGST Act forms part of a fiscal statute and there is no room for adding words or phrases in the statutory provision. The first requirement for Section 3-D(1) of the TNGST Act to apply is the total turnover of the dealer should not be less than twenty five lakhs of rupees. The second aspect is that the provision stands attracted on the first point of sale - for being entitled to the concessional rate of tax at 2%, the first point of sale of food and drinks should be in a hotel or in a restaurant or in a sweet stall orany other eating houses. Therefore, what is contemplated is sale of food and drinks in these named establishments and any other eating houses cannot be read disjunctively, but to be read conjunctively along with hotels, restaurants and sweet stalls. This is more so because Section 3-D of the TNGST Act deals with payment of tax by hotels, restaurants and sweet stalls. Section 3-D of the TNGST Act does not state any other eating house but this is found in Subsection (1) of Section 3-D. Therefore, necessarily the interpretation for the words any other eating houses should be tandem with with a hotel, a restaurant or a sweet stall - The point of first sale is to the establishment which has set up the facility for its employees or the people who visit the establishment such as shopping malls. Therefore, the petitioner would not stand qualified for concessional rate of tax under Section 3-D(1) of the TNGST Act. The second limb of argument is based upon the amended Section 3-D of the TNGST Act which came into effect from 01.04.2002. Admittedly, the assessment years under consideration in these cases are 2002-2001 and 2001- 2002. Therefore, the amended Section 3-D of the TNGST Act would have no application to the cases on hand. There are several features which have been added in the amended Section 3-D, as it originally stood related only to the sale of food and drinks in the establishments named therein. Whereas the amended Section 3-D deals with sale of ready to eat unbranded foods including sweets, savouries, unbranded non-alcoholic drinks and beverages. The amended provision also includes serving in or catered indoors or outdoors by hotels, restaurants, sweet stalls, clubs, caterers and any other eating houses other than those falling under item 29 of Part C of the First Schedule. Thus there is entire change in the scheme as provided under the amended Section 3- D(1) of the TNGST Act and this is one more reason to hold that the amended provision cannot be retrospective or retroactive prior to 01.04.2002. The petitioner cannot rest his case based on the clarifications which were issued much prior to the amendment and those clarifications were assessee specific and does not bind the Court. Thus, the three main issues which we had taken up for consideration have to be decided against the petitioner - the questions of law framed for consideration have to be answered against the petitioner/assessee. The tax case revisions are dismissed and the substantial questions of law framed for consideration are answered against the petitioner/assessee.
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2019 (5) TMI 803
Validity of assessment order - principles of natural justice - entitlement to avail the benefit of concessional rate of tax by filing Form-C declaration - tripartite agreement - whether inspite of the triparte agreement between the parties and the names of the parties shown in the invoices, was the Assessing Officer justified in solely relying upon the endorsement Self in the column assessee name and address. ? HELD THAT:- The totality of the transaction is to be considered and not a single line appearing in the lorry way bill. Therefore, the Appellate Authority should consider the entire matter in an independent manner without solely being guided by the observations made by the Assessing Officer and if the same is not complied with, then it would amount to abdicating the powers of the Appellate Authority. While affirming the order passed by the learned Single Bench directing the appellant to go before the Appellate Authority, we direct the Appellate Authority to independently pass an order after all the documents are produced by the appellant and then consider the nature of transaction and if satisfied, extend the benefit of the Form-C declaration which has been filed by the appellant - appeal disposed off.
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2019 (5) TMI 802
Validity of Form-I notice - Andhra Pradesh Revenue Recovery Act, 1864 - seizure and sale of movable property for the arrears of the revenue - HELD THAT:- When arrears of taxes are sought to be recovered as arrears of land revenue, the determination of the liability precedes invocation of the provisions of the Act, 1864. Where a mere land revenue is sought to be recovered, a person may be in the dark as to the determination of the amount but where arrears of taxes are sought to be recovered under this Act, if a determination has preceded the invocation of the provisions of the Act and if such determination has attained a finality, the assessee cannot feign ignorance of their liability. That all the columns in Form-I notice are not filled up can hardly be an excuse for an assessee under the relevant taxing statutes, once it is shown that taxes were assessed after following due process of law and once it is shown that such determination has also been served on the assessee concerned. In this case the notices before passing orders of assessment and penalty were served on the petitioner. The orders of assessments and orders of penalty were sent by registered post. It is not the case of the petitioner that they had no knowledge about the order of assessment or the order of penalty. Therefore, an attack a mere demand made in writing, which is the first step prescribed in Section 8 of the Act, 1864, cannot be sustained. Petition dismissed.
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2019 (5) TMI 801
Principles of Natural Justice - Validity of assessment order - Central Sales Tax Act, 1956 - contention is that the order of assessment was served at the new address and that this clearly demonstrates denial of fair opportunity of hearing - HELD THAT:- It appears that the change of the office premises of the petitioner allegedly happened in the year 2009, but the e-filing was introduced in 2011. Though the petitioner has produced a copy of Form - 112 allegedly filed by them and the same also carries the rubber stamp of the Department, the learned Special Standing Counsel for the Department states that the same is not available in the files - there is no point in trying to find out who was at fault. The same would require a litter more effort on our part, in summoning all the documents and scrutinizing the files. All that the petitioner wants is one more opportunity. Therefore, even if we do not find the respondents at fault, we can always give one opportunity of hearing to the petitioner, since they obviously did not have the opportunity of objecting to the show-cause notice. The matter is remanded back to the Assessing Authority - petition allowed by way of remand.
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2019 (5) TMI 800
Adjustment of excess ITC lying towards deferred payment instalment - deferment of sales tax - non-completion of assessment due to shortage of documents as liability for the assessment year 2014-15 was not quantified - HELD THAT:- While the entitlement for refund has been quantified at a particular amount in 2016, the liability for the assessment year 2014-15 has not been quantified. Unless this is quantified, the amount payable may not be due. Therefore, it is better that the assessment is completed. The writ petition is disposed of directing the petitioner to produce the documents that the department has listed out in their letter dated 23.10.2018. Upon the petitioner producing those documents, and any other document called upon, the assessment shall be completed. Thereafter, the question of refund of payment should be taken up.
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2019 (5) TMI 799
Stay on collection of the disputed tax - Entertainment Tax Act, 1939 - rejection for application of stay - HELD THAT:- In this case, the petitioner is the Tourism Development Corporation wholly owned by the State of Andhra Pradesh. The period in respect of which tax has been levied, was a period when the State was a combined State. Even if the statutory appeals filed by the petitioner get rejected ultimately, the entire liability may have to be apportioned between the petitioner/Corporation and their counterpart in the State of Telangana. These issues have not been taken into account by the Additional Commissioner before rejecting the prayer for stay. Petitioner submitted that the petitioner/Corporation is running into huge losses. He has produced the Income Tax Returns for the financial years 2016-2017 and 2017-2018. They disclose that the petitioner/Corporation has been consistently incurring huge losses running into several crores of rupees. Therefore, undue hardship may be caused to the petitioner/Corporation, if the collection of the disputed tax is not stayed. Even if the statutory appeals are ultimately dismissed and the Assessment Order confirmed, the liability of the petitioner/Corporation may have to be shared by the Telangana Tourism Development Corporation - considering the due financial straits into which the petitioner is placed, some leniency should be shown to the petitioner. The Writ Petitions are allowed, setting aside the impugned Orders and granting stay of recovery of the disputed tax, subject to the condition that the petitioner deposits a sum of ₹ 10,00,000/-.
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2019 (5) TMI 798
Levy of penalty - Recording of transaction in the books of accounts - proof of delivery / dispatch of goods - Purchase and sale of Kirana, Spices and Chemicals - no transfer invoice or challan found as prescribed under Rule 41 of VAT Rules - imposition of penalty u/s 48(5) of the VAT Act - HELD THAT:- From the reading of Sub Section (5) of Section 21, it is clear and it provides that the dealer who is liable to pay tax while consigning or delivering any taxable goods to another dealer, whether as a result of sale or otherwise shall issue to the purchaser or consignee of goods a legible challan or transfer invoice - Rule 41 of the VAT Rule provides the challan or transfer invoice to be prepared so as referred under Sub Section 5 of Section 21. It is further clarified in Rule 41 as to how the challan or transfer invoice to be prepared and as to what would be contained in the said challan or transfer invoice which is required at the time of goods delivered or dispatched. From the bare perusal of the penalty order, which is confirmed by the Tribunal, there is no finding recorded by any of the authorities that any of the aforesaid conditions are not fulfilled or any of the conditions are flouted. In the instant case, it is clearly established that the goods which are purchased or sold by a registered dealers against the proper tax invoice, charging the tax plus Mandi Shulk dispatched from seller place to the cold storage on the instructions of the revisionist (purchaser) and the same are duly recorded in the register of the cold storage and the number of item namely 354 bags of Chilly was found by the (SIB) Authority, at the time of inspection held on 18.12.2014 and immediately in pursuance of the first notice issued by the (SIB) Authority, at the first stage itself, the books of accounts are produced by the Revisionist on the very date fixed, then what further remains to be placed by registered dealer - the entire proceedings namely the seizure and the consequential penalty proceedings is nothing but clearly an abuse of process of law at the hands of the respondent authorities. Rule 41 provides the challan or transfer invoice at the time of an occasion when the goods are delivered or dispatched. In the instant case, neither the goods are delivered nor the same are dispatched by the revisionist therefore, there was no occasion to prepare the challan or the transfer invoice - thus it was not a case where the penalty proceedings could legally be initiated and in fact, the Assessing Authority as well as the Tribunal were illegally and arbitrarily proceeded to impose and confirm the penalty. Revision allowed.
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Wealth tax
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2019 (5) TMI 797
Lands exigible to Wealth-tax Act - 'urban lands' or 'agricultural lands' - AO brought the lands situated at Akkelenahalli- Mallenahalli villages under the ambit of wealth and adopting the guideline value of the lands, brought the same to tax under the Act - calculation of the distance of 8 KMs from BBMP limits - HELD THAT:- The assessee has filed a letter from the Anneshwara Gram Panchayat office confirming that the land does not come within the limits of any Corporation or Municipality and confirmation from the office of the Tahsildar, Devarahalli measuring the distance from BBMP limits. Per contra, Revenue's case is that the said lands are situated within BIAPPA which has an authority as per the definition of 'asset' which proposition has been negative by a co-ordinate bench of this Tribunal in the case of M.R.Seetharam [ 2013 (4) TMI 745 - ITAT BANGALORE] . In the case of CIT vs. Satinder Pal Singh [ 2010 (1) TMI 752 - PUNJAB AND HARYANA HIGH COURT] it was held that the reckoning of urbanization as a factor for prescribing the distance is of significance which would yield to the principle of measuring distance in terms of approach roads rather than by straight line or horizontal plane or as per crows flight'. Thus, it is clear to us that for the period under consideration, in the appeals before us i.e. assessment years 2007-08 and 2009-10 the distance has to be calculated by road and not as the crow flies or by straight line. In this factual and legal matrix of the case, as discussed above, this ground and argument raised by Revenue is dismissed. The said lands in question are not 'urban lands' but 'agricultural lands' and hence not exigible to wealth-tax.
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Indian Laws
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2019 (5) TMI 796
Dishonor of Cheque - cheque issued by a proprietorship firm - Proceedings againt the individual / proprietor - Section 138 of NI Act - case of appellant is that the complaint is wholly incompetent since the cheque (giving rise to the complaint) was issued by the 'company' M/s Manoj Rice Mill that was not impleaded as an accused person - HELD THAT:- In the first place there is no dispute to the fact that the applicant was running a sole proprietary concern in the name M/s Manoj Rice Mill. It was neither a partnership firm nor a company nor any other association of persons. A plain reading of provision of section 141 of NI Act makes it clear, if the person committing the offence is a company , in that event every natural person responsible for such commission as also the artificial person namely the company shall be deemed to be guilty of the offence and be liable to be proceeded against and punished accordingly. Also, certain other natural persons may be held guilty, if so proved - By way of the Explanation (a) attached to that provision of law, the term 'company' (specifically for the purpose of Section 141 of the Act), has been defined to mean a body corporate or a firm or any other association of individuals. In this statutory context, it calls for examination whether a sole proprietary concern, qualifies or falls within the meaning of the term 'company' or a 'firm' used in that provision. In the present case, there is no defect in the complaint lodged against the applicant, in his capacity as the sole proprietor of the concern M/s Manoj Rice Mill. There was no requirement to implead his sole proprietary concern as an accused person nor there was any need to additionally implead the applicant by his trade name. Application dismissed.
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2019 (5) TMI 795
Issuance of Cheque - who was the Managing Director of the company at the relevant time - Reopening of evidence on the side of the plaintiff - the petitioner sought reopening of their evidence on the ground that at the time when the Memorandum of Understanding was entered into between the plaintiff and the 1st defendant, the 2nd defendant was the Managing Director and defendants 3 and 4 were the Directors of the 1st defendant company - Court below rejected the application on the short ground that the evidence available on record was sufficient to show who was the Managing Director at the relevant point of time when the contract was executed and the cheque issued. HELD THAT:- Evidence given by a witness in a judicial proceeding is relevant under Section 33 of the Indian Evidence Act, for the purpose of proving the truth of the facts which it states, provided any one of the following conditions is satisfied; (1) the witness is dead or cannot be found, (2) the witness is incapable of giving evidence, (3) the witness is kept out of the way by the adverse party or (4) the presence of the witness cannot be obtained without an amount of delay or expense - According to the petitioner, the 2nd defendant is kept out of the way by the adverse party. The three conditions laid down in proviso to section 33 are also satisfied, namely, (1) that the proceeding was between the same parties, (2) that the adverse party in the first proceeding had the right to cross-examine and (3) that the questions in issue were substantially the same. At the time when the petitioner examined PW.1, they could not have anticipated that the 2nd defendant would not go to the witness box. If the petitioner had believed that the 2nd defendant being the person, who was the Managing Director of the 1st defendant at the time of entering into the contract, would certainly go to the witness box, they were justified in their belief. Normally, a party to a civil suit would choose to examine a person, who participated in the negotiations at the time of entering into the contract - Rebuttal evidence, by its very nature, can come only after the evidence on the side of the defendant is over. This aspect has been completely lost sight of by the Commercial Court. Hence, the revision is liable to be allowed. The application for reopening of the evidence filed by the petitioner shall stand allowed - revision petition allowed.
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2019 (5) TMI 794
Auction - Conditional order of stay - Due diligence to be taken over by highest bidder. HELD THAT:- Petition is disposed of permitting the petitioners to make payment of the amounts now offered over and above the highest bid amounts in respect of the aforesaid three properties. The petitioners shall make payments on or before 31.03.2019 to avail this benefit. If the petitioners fail to make payment, it will be open to the bank to proceed further. In the event of the petitioners complying with this order, the bank shall refund the moneys paid by the highest bidders in the auction. However, in the circumstances of the case, there shall be no order as to costs.
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