Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 18, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of wrongly paid CGST and SGST - Court directed to refund of CGST and SGST or consider the request for adjusting the amount towards IGST
Income Tax
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Taxability of interest on FDRs - mutually aided co-operative society to build houses for its members - funds collected from the members are in the nature of capital - capital required for the project are kept in the bank and interest earned can be applied for the purpose of meeting administration cost of the project or can reduce the capital cost of the project - not taxable
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Capital gain computation - adoption of fair market value as on 01.04.1981 - FMV is to be determined by the DVO instead of determining the value by the AO/CIT(A) without taking the technical expert’s opinion - remanded to AO to get the valuation report from the DVO and decide the issue afresh
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Compensation/ additional sum received for delay in payment of proceeds of shares tendered under the open offer - the reason for increasing the offer by the said sum may be on account of delay in issuance of the shares, nevertheless, the same was nothing but part of the sale price of the share - cannot be seen as an interest on delayed payment on price of the share - clearly a capital receipt
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Condonation of delay of 122 days - If explanation is not satisfactory, the Tribunal has to weigh balance of justice. No prejudice will be caused to respondents if delay is condoned; if not, petitioner will suffer. In such circumstances reasonable costs would balance the scale of justice - cost imposed and delay condoned
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Penalty u/s 271(1)(c) - claim of depreciation at 10% is under the bonafide belief that the residential quarters were utilized for the hospital purpose and formed part and parcel of hospital premises - mere making of a bonafide claim would not amount to furnishing of inaccurate particulars of income - no penalty - no substantial question of law arises
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Nature of loss - business loss or short term capital loss - the fact remains that the assessee is engaged in property development business and developing residential projects throughout all preceding assessment years - mere book treatment of the land in issue as a fixed asset cannot form the sole criteria to hold that the same gives rise to capital loss - considered as business loss
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Reassessment u/s 148 - time limit for notice - change of opinion - case on hand is one that of the mixed question of law and facts - AO is empowered to consider the issue relating to jurisdiction, time limit and all other legal grounds raised by the writ petitioner at the time of passing the final orders - writ petitions dismissed
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Penalty u/s 271B - delay in filing the tax audit report u/s 44AB - reasonable cause - statutory audit of the financial statements was not completed within the stipulated period due to frequent change of Managing Director - also seeking extension of time from ROC for convening the AGM and adoption of books of account - reasons were beyond the control of the assessee being a State Government Undertaking - no penalty
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Revision u/s 263 - cash expenditure , prior period expenses, provisions for incentive etc. - CIT has not exercised jurisdiction u/s 263 on the ground of ‘no enquiry’ or ‘lack of enquiry’ made by the AO but on conclusions drawn by the AO in allowing expenditure set out in the SCN u/s 263 ought not to have been allowed as deduction - jurisdiction validly invoked
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Revision u/s 263 - bogus purchases - documents like invoices, given details of stocks, payments through the banking channels and confirmation from parties examined by AO - before revising the assessment u/s 263, the CIT ought to have made some inquiry of his own such as noticed u/s 133(6) or examination of concerned parties declared as hawala parties - revision quashed
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Condonation of delay of 179 days - reasonable cause - assessee has accepted bonafide advice of the tax consultant who was regularly looking after its tax matters but subsequently other consultant advised for filing appeal - mistake of counsel or wrong advice by counsel constitutes reasonable cause - delay condoned
Customs
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Illegal obtaining of duty credit license for various fraudulent export - duty free scrips - It would be practically impossible for any buyer to verify as to whether the person to whom the licence has been issued has been existing or otherwise by conducting enquiries.
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Valuation of imported goods - import and distribution of LPG - Canalising charges are includible in the assessable value of imports.
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Levy of penalty - Export through baggage under claim of drawback - Imposition of huge penalties ranging from 2 lakhs to 35 lakhs on individuals appears to be harsh, looking in to the fact that none of them were proved to be the ultimate beneficiary.
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Valuation of imported goods - dry containers - Since the replacement cost represent the intrinsic value of container, agreed upon between the lessor and lessee in the one way lease, the same is basis of value.
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Confiscation & redemption fine - when the appellants have followed the practice in manner of making the declarations in Import Manifest, and existence of such practice is admitted by the Commissioner JNCH, Nhava Sheva, in his Public Notice, case of appellants cannot be covered under clause “f” of Section 111.
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Classification of the goods - redemption fine & penalty - Wireless Data Device or mobile phones - procedural relaxations and facilitation measures are for facilitating the speedy clearance of the imported goods should not be taken into account while adjudging the offence against them deliberate perpetuating fraud/ misdeclaration leading to misclassification - fine & penalty sustained
Indian Laws
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Criminal breach of trust - statutory auditor - disciplinary proceedings by ICAI pursuant to a complaint filed by the SFIO - violation of accounting standards cannot be gone into a criminal trial and the same is required to be examined by the ICAI - request for stay of disciplinary proceedings before ICAI pending the decision in the criminal trial is unmerited
IBC
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Corporate insolvency process - assignment of debt - even assuming that the Standard Chartered Bank was not registered under the SARFAESI Act nor having license to business of ARCs in India being registered with the RBI, there can be no bar for assignment and transfer of the debt by the Principle Lender to another bank or to a financial institution for enforcing/recovery of such debt
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Exclusion of the time period spent in litigation - the proposition which emerges therefore is that certain period can be excluded from the total period of 270 days permissible u/s 12 of the Code - If there is a Resolution Applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible
Service Tax
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Mandap Keeper service - The demand is thus raised on the basis of mere assumption and presumption that premises were rented against such entry. In absence any such corroborative evidences to support the allegation, demand is not sustainable.
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Valuation - Franchise service - inclusion of amount of sale of books, admission kit, curriculum etc. - benefit of N/N. 12/2003-ST - There is no requirement in the notification that the supply of the goods/ materials should be under a separate contract. Notification does not talk about dominant nature of contract for allowing the exemption under this notification.
Central Excise
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Reversal of CENVAT Credit - Bagasse - Bagasse not to be a manufactured product, and therefore Rule 6 of the CENVAT Credit Rules, 2004 shall have no application - The circular treating Bagasse to be a non-excisable good, is clearly erroneous, is liable to be quashed with regard to Bagasse.
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CENVAT Credit - mere non-maintenance of input account in SAP (the accounting software) cannot be the basis to deny the credit and rnore so as credit availed is reflected in the ER-1 returns. As the use of inputs in manufacture of pre-series cars is not in dispute - Credit allowed.
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CENVAT Credit - write off of inputs - It can be argued only on the basis of accounting standards that the impugned goods are written off. Therefore, the provisions of Rule 3(5B) of CENVAT Credit Rules, 2004 are not attracted.
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Effect of Notification - Retrospective or Prospective effect - CENVAT Credit - capital goods - The Circular as relied upon by the Department to give this Notification a retrospective effect is not binding and in fact cannot be looked into in view of the statute itself.
Case Laws:
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GST
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2019 (5) TMI 1010
Consideration of other grounds apart from Constitutional validity of Section 174 of the KSGST Act - Time limitation - power to cancel the compounding etc. - HELD THAT:- The issue decided in the case of M/S. SHEEN GOLDEN JEWELS (INDIA) PVT. LTD. VERSUS THE STATE TAX OFFICER (IB) -1, AND OTHERS [ 2019 (2) TMI 300 - KERALA HIGH COURT ] where it was held that the petitioner's plea is rejected that the State lacks the vires to graft Section 174 into KSGST Act, 2017. It is submitted that the learned Single Judge has not adverted to the other grounds raised in the writ petition. The fact that no grounds other than the constitutional validity of Section 174 of the KSGST Act was considered by the learned Single Judge, is fairly admitted by the Special Government Pleader (Taxes). Under such circumstances, we are of the opinion that a remittance of the writ petition for fresh consideration on the questions other than the validity of Section 174, is necessary. Hence, the above writ appeal is hereby allowed. The impugned judgment in WP(C) No. 15898/2018 is hereby set aside to the limited extent as mentioned above. The writ petition is restored on the files of this Court for fresh consideration by the learned Single Judge on the limited extent as mentioned above.
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2019 (5) TMI 1009
Refund of wrongly paid CGST and SGST - adjustment of the said amount towards IGST - HELD THAT:- A decision shall be taken on the request for refund of CGST and SGST within a period of one week. It is also open for the respondent to consider the request for adjusting the amount towards IGST as well. Petition disposed off.
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Income Tax
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2019 (5) TMI 1008
Expenditure on airfare booked under technical guidance fee - capital expenditure OR revenue expenditure - HELD THAT:- Questions have already been answered against the Revenue by the order passed by this Court on 2nd August 2017 in the Revenue s appeal in the Assessee s own case for AY 2009-10 in The Commissions of Income Tax LTU v. Honda Cars India Ltd. [ 2018 (5) TMI 1875 - DELHI HIGH COURT] Addition u/s 14A - HELD THAT:- The issue stands answered against the Revenue by the decision in Cheminvest Ltd. v. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] Royalty and lump sum fee paid by the assessee - capital expenditure OR revenue expenditure as claimed by the Assessee - HELD THAT:- ITAT has rightly drawn a distinction between the royalty payments made by the Assessee to the principal during its formative years and those made in subsequent years when the Assessee was fully operational. While the former payments were characterised as capital expenditure, the latter could not and were rightly treated as revenue expenditure. For the earlier AY 2008-09 this Court [ 2018 (5) TMI 1875 - DELHI HIGH COURT] has remanded the matter to the ITAT for a fresh determination of the above issue, it cannot be said that for the present AY i.e. 2010-11, the ITAT has not given cogent reasons for treating the expenditure as a revenue expenditure.
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2019 (5) TMI 1007
Characterization of income - compensation received by the appellant from Oracle Global (Mauritius) Ltd. for delay in payment of proceeds of shares tendered under the open offer - Capital Gains or Interest Income - HELD THAT:- Undisputed facts are that the sum of ₹ 16/per share which resulted into additional receipt of ₹ 2.20 Crores to the Assessee, was part of the offer for sale of shares made by the Assessee. The reason for increasing the offer by the said sum of ₹ 16 per share may be on account of delay in issuance of the shares, nevertheless, the same was nothing but part of the sale price of the share. The revised offer which the company announced for issuance of the shares quoted the price of the share at ₹ 2,100/. This included the additional component of ₹ 16/per share. Looked from any angle thus, the shares were sold @ ₹ 2,100/per share. The component of ₹ 16/per share was embedded in the share price. This component cannot be seen as an interest on delayed payment on price of the share. This amount of ₹ 16/, thus, was part of the sale price of the share and would retain the same character as the original price of the share. The receipt of ₹ 2.20 Crores relatable to this component of ₹ 16/per share was thus clearly a capital receipt. In case of Genesis Indian Investment Company Ltd. [ 2013 (8) TMI 838 - ITAT MUMBAI] were somewhat different. Under the circumstances, we have proceeded to dispose of this Appeal, despite the fact that this Court has admitted the Revenue's Appeal in case of Genesis Indian Investment Company Ltd. ( supra ). - Decided against revenue.
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2019 (5) TMI 1006
Condonation of delay - delay of 122 days - reasons for the delay with reference to the illness of the Secretary of the Society - HELD THAT:- The petitioner must demonstrate cogent reasons to condone the delay. Need upset finding on facts. It is well considered order. If explanation is not satisfactory, the Tribunal has to weigh balance of justice. No prejudice will be caused to respondents if delay is condoned; if not, petitioner will suffer. In such circumstances reasonable costs would balance the scale of justice. Accordingly, delay is ordered to be condoned on payment of cost of ₹ 25,000/-. The cost shall be deposited before the 1st respondent within three weeks and produce the receipt before the Tribunal. On condonation of delay, stay application shall be taken up and disposed within three weeks therein. Till such time coercive steps pursuant to impugned order in appeal shall be deferred.
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2019 (5) TMI 1005
Levy of penalty u/s 271 (1) (c) - depreciation on hospital building - CIT (Appeals) allowed the appeal holding that the assessee had not furnished any material particulars of the income which could be said to be inaccurate confirmed by ITAT - HELD THAT:- Assessee s claim of depreciation at 10% is under the bonafide belief that as the residential quarters were utilized for the hospital purpose and formed part and parcel of hospital premises, the same would be eligible depreciation as hospital building. The assessee has huge loss and therefore there cannot be malafide intention to make such excess claim to evade tax. Besides the assessee had not furnished any material particulars of income which could be said to be inaccurate. It is well settled principle that a mere making of a bonafide claim would not amount to furnishing of inaccurate particulars of income. It is clear that the two authorities viz., CIT (Appeals) and the Tribunal have recorded findings of fact for setting aside the penalty under Section 271 (1) (c) . Hence no substantial question of law arises for consideration. Therefore, the appeal is dismissed.
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2019 (5) TMI 1004
Taxability of interest on FDRs along with interest on SB accounts - mutually aided co-operative society - mutual concept application - addition as Income from other sources - distinction between mutual and non-mutual transactions - assessee is a registered cooperative society under Andhra Pradesh Cooperative Societies Act, 1964 with the primary object to build houses for its members - HELD THAT:- This society is established with the purpose of providing house for the cine workers for a reasonable and affordable cost. No doubt the property is developed with the mutual contribution. Important is, not all the members of the society are participating in the particular project, only the investor-cum-beneficiary of the project. Once the project is complete, the allottees will get the respective houses. The participation of the same member in the other project is very remote. This is basically charitable activity with mutual concept to carry on the object of providing affordable houses for the members. This activity is carried on continuously by the governing council. The capital contribution collected from members are applied exclusively for the project. Till the project is completed, the additional funds are kept in the banks for future application. Some times, kept in bank for complying with the court direction or for guarantee. As soon as the purpose of the society is complete, the funds are withdrawn from bank. AO applied the principle of mutuality by relying on case Secunderabad Club [ 2011 (8) TMI 752 - ANDHRA PRADESH HIGH COURT] but there are considerable differences in both type of associations - in the present given case, the funds are not surplus, but, additional funds which are required for completion of the project. These funds collected from the members are in the nature of capital. The capital required for the project are kept in the bank as a necessity not for the sole aim of making any profit. The interest earned by the society are surplus, which can be applied for the main purpose of the society or it may reduce the cost of the project. Therefore, applying the ratio of Secunderabad Club, in the present case, is not proper. The assessee has not collected any charges from the participants of the project to carry out the project, the participants/members have only contributed for the project, all the relevant cost has to be absorbed from the project investment. The project capital has earned certain income i.e. interest, which can only be applied for the project and society never claimed anyway as they are functioning as mutual concern. They exist because of mutual object of providing affordable houses for the members but the activities are restricted to complete the housing project. The earning of interest is incidental, not the purpose to earn additional income. The interest earned by the society can only be treated as capital receipt, can be applied for the purpose of meeting administration cost of the project or can reduce the capital cost of the project. Therefore, in our opinion, applying the mutual concept relying on the decision of Secunderabad Club and Bengaluru Club [ 2013 (1) TMI 343 - SUPREME COURT] is farfetched. Therefore, the grounds raised by the assessee are allowed and the addition made by the assessee is deleted.- Decided in favour of assessee.
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2019 (5) TMI 1003
Exemption u/s. 54 - treating the house as being Constructed by the assessee - assessee has entered into buyer seller purchase agreement on 10.02.2006, thereby purchasing the said house on 10.02.2006 only - 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. 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 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 CIT(A) on the issue in dispute and reject the ground raised by the Revenue. Disallowance of deduction u/s.54EC - scope of provisions of latest amendments made to section 54EC by the Finance Act 2014 - AO had restricted the deduction claimed u/s.54EC in part - HELD THAT:- This is to be understood 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 u/s 54EC and not on investment allowed under section 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 1002
Addition u/s 68 - HELD THAT:- The assessee has deposited INR 1,700,000 as addition to capital in a partnership firm namely M/s M S Traders. The assessee has also deposited a sum of INR 2,200,000 in the state bank of India bank account of the assessee. From the state bank of India bank account assessee has issued cheques for deposit into the partnership firm of INR 17, 00,000. Therefore out of the deposit of INR 2,200,000 in cash in the bank account with state bank of India which is the source, the assessee after depositing the above sum in cash has issued the cheques of INR 1,700,000 in favor of the partnership firm as his capital. Therefore it is apparent that INR 2,200,000 has been added by the assessing officer as an income and once again the addition of INR 1,700,000 is also made, therefore it is apparent that there is a double addition in the hands of the assessee. For this reason we direct AO reversing the order of the CIT A, to delete the addition of INR 1,700,000 on account of deposit in the partnership firm as his capital. In view of this ground number 1 and 2 of the appeal of the assessee are allowed. Agricultural income - HELD THAT:- Assessee is having an agricultural land which can result in to agricultural produce. Admittedly, the assessee is having the agricultural land of more than 38 acres, the documents for which have already been submitted before the learned CIT A. As originally the assessee stated that he is having agricultural land of only 23 acres, despite the documents of the agricultural land holding produced before the learned CIT A, only for the reason that assessee is initially not aware about the area of land, he disbelieved the holding of 38 acres of the land. As assessee has produced the documentary evidence of 38 acres of the land in the name of the assessee on which the agricultural activities are carried on, the land holding of the assessee cannot be denied. Therefore the CIT A committed an error by not accepting the ownership of the land despite having the title deeds placed on record. Production of lemon on already planted trees - HELD THAT:- Year to year assessee is showing an agricultural land and agricultural income deriving there from. During the year the assessee produced the sale bill of 36722 kg of lemons INR 1062700. The sale bill is not disputed by the AO of CIT appeal but the original production of the lemon is disputed. When assessee has sold the lemon and produces the bills before the lower authorities without examining and proving the bill of the lemon sale falls it cannot be stated that the assessee has not sold lemon at all. This is so also because of the reason that in earlier years also the assessee has sold lemon and same have been accepted in assessment proceedings under section 143 (3) of the act for assessment year 2006 07. Even otherwise till to date the assessment under section 143 (3) for assessment year 2006 07 has not been disturbed. Expenditure on agriculture - HELD THAT:- With respect to the agricultural expenditure the assessee has stated that he has deputed the farmers who contribute for the cost of agricultural activities including seeds and they keep one third of the agricultural produce as their share for labour and expenditure. The two third of the share of the agricultural produce remains with the assessee and which has sold. The assessee submitted that this is an oral agreement and there is no written agreement with the cultivators. Just because there is no written agreement with those persons, in view of the sale bill of the lemon, consideration of which has been received by the assessee, holding of the agricultural land sufficient to generate so much of agricultural produce the claim of the assessee cannot be rejected. Agricultural income accepted by revenue in earlier years - HELD THAT:- In the earlier year the assessee has shown agricultural income of rupees 1124800/ for assessment year 2006 07 which has been accepted by the assessing officer, therefore the revenue has accepted the claim of the assessee that assessee is agricultural income. This year the agricultural income shown by the assessee is less than what has been shown by the assessee in earlier years despite being the same area of the agricultural land. Sale of agricultural produce to various parties from whom cash is received - CIT A instead of making enquiries from these 4 persons, he merely referred to the various telephone numbers mentioned on those bills and held that this belongs to different locations - HELD THAT:- It is true that all these observations of the learned CIT A on the basis of the information submitted by the assessee, however, when the learned CIT A so much of account on the veracity of the bills, before saying that the bogus, he should have asked the assessee to either produce those parties or made independent enquiry with respect to the buyers. In absence of these it is merely an allegation is which has not substantiated. Merely on allegation and doubts the addition cannot be made. They needs to be substantiated by due enquiry. Whether provision of section 68 applies when the assessee has not maintained the book of accounts? - HELD THAT:- This issue is no more an issue of debate in view of the decision of Honourable Mumbai High court in case of Arun J Muchalla V CIT [ 2017 (8) TMI 1137 - BOMBAY HIGH COURT] where in it has been held that even in case of deposits in bank accounts provision of section 68 applies. The Hon Bombay High court in that case relied up on the decision of Honourable Supreme court in Sudhir Kumar Sharma (HUF) v. CIT [ 2016 (5) TMI 928 - SC ORDER] Therefore we reject that argument of the assessee that provision of section 68 does not apply when the amounts are credited in the bank account as assessee has not maintained the books of accounts.
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2019 (5) TMI 1001
TDS u/s 194H - Trading margin allowed by the assessee to the distributor on selling a pre-paid SIM card/recharge coupon - whether would constitute commission and brokerage? - whether the relationship between the assessee and the distributors is a Principal to Principal and not Principal to Agent ? - HELD THAT:- In the present case the issue is squarely covered against the assessee by the decision of CIT VS IDEA CELLULAR LTD [ 2010 (2) TMI 24 - DELHI HIGH COURT] wherein it has been held that the payment made by the assessee constitutes the commission and tax is required to be withhold u/s 194H of the income tax act. - Decided against assessee.
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2019 (5) TMI 1000
Penalty levied u/s.158BFA(2) - additions towards undisclosed income has been sustained in the hands of the assessee purely on estimated basis - whether penalty u/s 158BFA(2) is justified where alleged undisclosed income was finalized on the basis of estimation alone - Whether the payment of interest under s.158BFA(1) is mandatory, levy of penalty is discretionary? - whether penalty u/s 158BFA(2) is justified where alleged undisclosed income was finalized on the basis of estimation alone? - whether penalty should be levied must be considered on the basis of the judicial determination? - HELD THAT:- Authority concerned is vested with the discretion towards levy of penalty. It is trite position of law that any discretion vested in an authority has to be exercised in a reasonable and rational manner depending upon the facts and circumstances of each case. It is also trite that the process of imposition of penalty is not automatic in the eventuality of estimated income. All the attendant circumstances of the case requires to be carefully scrutinized. The question whether penalty should be levied must be considered on the basis of the judicial determination. It must be proved beyond the shadow of doubt that there was actually income and further such income was not disclosed. The mere fact of addition on estimated basis particularly when the undidsclosed income is concluded on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty. An estimation so made may be correct or may not be correct. The degree of proof required for imposition of penalty is quite different from and is on a much higher pedestal, then required for the purpose of making additions on estimated basis and de hors sufficient evidence, penalty cannot be levied. Such view has been expressed in CIT vs. Dr.Giriraj Agarwal Giri [2012 (8) TMI 617 - RAJASTHAN HIGH COURT] and CIT vs. Becharbhai P.Parmar [2012 (4) TMI 418 - GUJARAT HIGH COURT] relied upon on behalf of the assessee. Undisclosed income has been ultimately determined purely on estimated basis shorn of adequate reference to underlying material. The estimation has been made with caveats like to put an end to the litigation and meet the ends of justice in the given peculiar facts etc . Such basis of addition, in our view, cannot entail onerous burden in the form of penalty. In the circumstances, the statutory discretion vested with the revenue authorities, in our opinion, requires to be exercised in favour of assessee. Therefore, we set aside the order of the CIT(A) and direct the AO to cancel the penalty imposed under s.158BFA(2) - Appeal of the assessee is allowed.
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2019 (5) TMI 999
Condonation of delay - sufficient cause - DRM was not aware whether any order can be passed against it and whether such order is appealable - HELD THAT:- Factual matrix of the case with regard to condonation of delay. We had also carefully gone through the evidences placed on record for the efforts done by the assessee for furnishing requires returns which includes the internal communication of the assessee to the senior employees for submitting PAN details, intimation by the Income tax Department for deputing personnel for verification of TDS and TCS details etc. After going through the detailed reasons given for delay in filing the appeal before the ld. CIT(A), we observe that there was a reasonable and bonafide cause for delay. In MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT] held that in Sufficient cause for the purpose of condonation of delay should be interpreted with a view to even-handed justice on merits in preference to approach which scuttles a decision on merits. The more power to condone the delay is conferred with a view to enable the courts to do substantial justice to litigants by disposing of the cases on merits. Considering we condone the delay and matter is restored back to the file of the CIT(A) for deciding on merit after giving due opportunity of hearing to the assessee. - Appeals of the assessee are allowed for statistical purposes.
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2019 (5) TMI 998
Levy of penalty u/s 271B - delay in filing the audit report as per section 44AB on or before the due date of filing the return of income u/s 139(1) - reasonable cause for delay in getting the accounts audited u/s 44AB - main reason for delay is that there were frequent change of the Managing Director of the company and for a considerable period there was no regular Managing Director - HELD THAT:- Assessee has explained the reason for delay in filing the audit report as due to the delay of statutory audit of the financial statements of the assessee undertaking the audit u/s 44AB was not completed within the stipulated period. The assessee has further explained that there is a frequent change of Managing Director of the company and we find from the details as reproduced in the foregoing para that there are as many as 5 changes during the period from 01.04.2014 to 15.11.2014 which has caused the delay in convening the Board Meeting for adopting the financial statements of the assessee and consequent statutory audit to be completed by the auditors appointed by the CAG. The delay in getting the accounts audited as per the provisions of section 44AB was due to the reasons as explained by the assessee which were beyond the control of the assessee being a State Government Undertaking. The assessee has also filed a copy of resolution for seeking extension of time from ROC for convening the AGM and adoption of books of account. Thus the assessee has explained all the relevant facts and reasons for not getting the accounts audited u/s 44AB within the stipulated period. We are of the considered opinion that the assessee has explained a reasonable cause for delay in getting the accounts audited u/s 44AB and consequently in view of the provision of section 273B, the penalty levied u/s 271B is deleted. - Decided in favour of assessee.
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2019 (5) TMI 997
Penalty levied u/s. 271(1)(c) - addition on account of excess deduction claimed u/s. 36(1)(viia)(a) Non specification of charge - defective notice - HELD THAT:- Following the decision of Coordinate Bench of this Tribunal in the case of Jeetmal Choraria Vs. ACIT [2017 (12) TMI 883 - ITAT, KOLKATA] where it is held that the show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - thus in these circumstances, we are of the view that imposition of penalty cannot be sustained - Decided in favor of assessee.
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2019 (5) TMI 996
Capital gain computation - adoption of fair market value as on 01.04.1981 by assessee - ascertaining the fair market value of the property - non reference to DVO - assessee sold 75.046 cents of land together with two residential houses for a total sale consideration of ₹ 4,75,52,850/- and land was purchased prior to 1981. The assessee estimated the fair market value of land as on 01.04.1981 - CIT(A) was of the view that the AO was not justified in restricting the FMV of the subject land as on 01.04.1981 at ₹ 2992/- per cent and directed the AO to adopt ₹ 50,000/- per cent as Fair Market Value of land as on 01.04.1981 for the purpose of computation of capital gains - HELD THAT:- It cannot be said that the value of the property which was considered by the Tribunal in the case of Kurian Joseph [ 2015 (3) TMI 484 - ITAT COCHIN] is identical. As such, in the present case, the CIT(A) cannot determine the fair market value determined on the basis of the Tribunal order in the case of Kurian Joseph. Accordingly, we vacate the findings of the CIT(A) on this issue. In our opinion, the fair market value is to be determined by the DVO instead of determining the value by the Assessing Officer/CIT(A) without taking the technical expert s opinion. Hence, we remit this issue to the file of the Assessing Officer and direct him to get the valuation report for the impugned property from the DVO and decide the issue afresh. Needless to say that the DVO has to consider the various actual transactions which took place during the relevant period and in the immediate vicinity of the impugned property. Hence, this ground of appeal of the Revenue is partly allowed for statistical purposes.
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2019 (5) TMI 995
Allowable business expenses u/s 37(1) - rental payments for office space and software made to non-resident - payment of the rent which has been treated to be for non business purpose by AO owing to the absence of any agreements filed before him - assessee has filed additional evidences under Rule 29 consisting of rent agreements invoices issued by the company - HELD THAT:- We find that the additional evidences are required for adjudication of the matter at hand and goes to the root of the addition made by the Assessing Officer and as upheld by the Ld. CIT(A). Since, the Revenue did not get the opportunity to go through the evidences filed for the first time before us, in the fitness of things we deem it proper to refer the matter back to the file of the Assessing Officer to adjudicate and pass an order on this issue in accordance with the provisions of the Income Tax Act,1961 after taking due consideration of the additional evidences filed and on giving proper opportunity to the assessee to make any other submission on this issue. Disallowance of interest paid u/s 36(1)(iii) - money advanced to wholly owned subsidiaries of the assessee company - 'commercial expediency' - HELD THAT:- As in SA BUILDERS LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 2006 (12) TMI 82 - SUPREME COURT] endorsed the view that since a holding company has a deep interest in its subsidiary and if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the assessee is entitled to deduction of interest on the borrowed funds. In the present case, there is no dispute about the fact that the amounts have been advanced to the wholly owned subsidiaries of the assessee company and there is no fact brought on record by any of the lower authorities that the amounts have been used by these subsidiary companies for any purpose other than their business purposes. In view of this, we are inclined to hold that the amounts given to subsidiary companies were on account of commercial expediency. Therefore, no disallowance invoking the provisions of section 36(1)(iii) of the Act can be made in this case - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - TDS u/s 195 - payment on account of commission, legal and professional charges, marketing and selling expenses and outstanding and business development expenses - income accrued in India - HELD THAT:- The argument of the learned D.R. that even if the provisions of DTAA are applied, in the absence of any services coming out from the evidences, it should be presumed that non-residents have 'made available' certain technical services to the assessee, is too farfetched. We are not inclined to entertain such a plea at this stage. In view of this also, we hold that the services rendered by the non-residents are not in the nature of technical services, no income deemed to have accrued to the non-resident entities, there is no liability on the assessee to deduct tax at source on such payment. Therefore, the provisions of section 40(a)(i) not exigible - Decided in favour of assessee. Additional depreciation on computers u/s 32(ii)(a) denied - A.O held that additional depreciation is available to plant and machinery and not to computer and software as the same have not been used in the production/manufacture of an article/things - computers and merely used in processing of date or preparing software which is not manufacture into a new article/things and therefore additional depreciation was disallowed - HELD THAT:- The computers have to be treated as plant and machinery in the case of the assessee as is in the business of Software Development And Export as per the order of the Hon ble High Court in STATRONICS AND ENTERPRISES PVT. LTD. [ 2006 (8) TMI 111 - GUJARAT HIGH COURT] . The computers have been mentioned at the Item No. V under the head no. III plant and machinery in the part-A of the Schedule of Depreciation for tangible assets. Hence, the Assessing Officer is directed to allow him the depreciation as per the rate allowed on computers under the head plant and machinery in the schedule and further allow the benefit of additional depreciation @ 20% as stipulated by the provisions of the Income Tax Act,1961. - Decided in favour of assessee.
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2019 (5) TMI 994
TDS u/s 194-IA - demand u/s. 201(1)/201(1A) - assessee buyer/transferee has not deducted tax in the hands of the Joint Owners of the property but deducted in the hand of POA holder - demand raised @ 20% applying Section 206AA - HELD THAT:- Even though the admitted position is that the assessee buyer/transferee has not deducted tax in the hands of the Joint Owners of the property, still we note that sub-section(2) of sec. 194-IA provides an exception from deducting tax of 1% of the sale consideration, when the sale consideration for the transfer of an immovable property is less than ₹ 50 lacs. Therefore, in the instant case, we note that the total sale consideration is only ₹ 60,12,000/- and the admitted fact as taken note by AO Ld. CIT(A) is that Shri Anant Ram Kumawat and Smt. Seema Kumawat are the co-owners, and jointly owning the immovable property. So, the sale consideration has to be divided equally into two by virtue of sec. 46 of the Transfer of Property Act which prescribed that where immovable property is transferred for a consideration by persons having distinct interest therein. In this case consideration for each transferor comes to ₹ 30,06,000/- each, which is below the prescribed limit of ₹ 50 lacs given by the statute as aforesaid and, therefore, in the light of the same, we are of the opinion in the facts as discussed, supra, that the provisions of sec. 194 IA are not applicable In any case, we note that when the department was knowing the PAN details of the Power of Attorney holder Shri Vijay Kumawat who was none other than the son and brother of the Joint Owners Shri Anant Ram Kumawat and Smt. Seema Kumawat the AO could have easily found out whether these co-owners have reflected the sale consideration as discussed above in their respective Return of Income, if he had made some enquiry or referred the case to the AO who has jurisdiction over the POA holder Shri Vijay Kumawat, (who had obtained the entire sale consideration in his bank account or as to whether POA has shown it as his capital gain or not). Then only picture would be clear and the apprehension of income/gain escaping from the hands of co-owners could have been easily addressed rather than finding fault with the assessee s omission of not doing due diligence to track down the PAN details of the co-owners of the immovable property and in any case the department is now also empowered to find out the reality of the facts discussed above if the statute permits and in accordance to law. Therefore, we are of the considered opinion that in this case, sec. 194-IA of the Act is not applicable and we find force in the ground no. 3 of the assessee s appeal which is hereby allowed and addition is directed to be deleted - Decided in favour of assessee.
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2019 (5) TMI 993
Income recognition - Project Completion Method - Accounting Standards (AS) 9 - Undisclosed sales addition - advances received from the two customers - HELD THAT:- The assessee builder/ developer had rightly not recognized advances received from the two customers as income ongoing by project completion method as per its past practice accounting system regularly followed. More so in view of the fact that it had actually sold the flats in issue in AY 2016-17. We therefore confirm the CIT(A) s findings deleting the impugned addition of undisclosed sales. The Revenue fails in this former ground. Nature of loss - business loss or short term capital loss - assessee s books treating the land in issue as a fixed asset than stock-in-trade - HELD THAT:- No reason to accept the Revenue s instant arguments. The fact remains that the assessee is engaged in property development business. It has been developing residential projects throughout all preceding assessment years. We therefore are of the view that the assessee s mere book treatment of the land in issue as a fixed asset cannot form the sole criteria to hold that the same gives rise to capital loss. As decided in KEDARNATH JUTE MANUFACTURING COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX (CENTRAL), CALCUTTA [ 1971 (8) TMI 10 - SUPREME COURT] an assessee s book treatment cannot form the sole guiding factor giving rise to a tax incidence. This tribunal s decision in Canara Bank v/s. JCIT [ 2017 (11) TMI 1425 - ITAT BANGALORE] also holds that any treatment given at the assessee s behest in books of account; item-wise on expenditure, has no relevant to decide taxability or otherwise thereof under the provisions of the Income-tax Act, 1961. We reject Revenue s instant substantive ground as well and cured that the assessee is entitled to treat its land as stock-in-trade than fixed assets/investments. DR contended that the AO in his assessment order had recorded assessee s consent on the instant issue during scrutiny - No substance in the technical plea as well as the purpose of a scrutiny assessment is to determine appropriate taxable income as per provisions of the Act only. This tribunal s co-ordinate bench s decision in Canara Bank (supra) holds that estopple does not apply in income-tax proceedings. The Revenue s latter substantive ground is rejected therefore. - Decided against revenue.
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2019 (5) TMI 992
Disallowance u/s 14A - investments as made in investments in units and shares which generates tax-free income - HELD THAT:- The contention of the assessee that it has made investments in subsidiary companies/strategic investments and hence section 14A will not be applicable, lacks merit keeping in view decision in the case of Maxopp Investments Limited v. CIT [ 2018 (3) TMI 805 - SUPREME COURT] and hence this contention of the assessee stood rejected. Only those investments which actually yielded tax-free income shall be considered for computing disallowance u/s 14A read with Rule 8D(2)(iii) of the 1962 Rules, keeping in view decision of Special Bench of ITAT, Delhi in the case of Vireet Investments Private Limited [ 2017 (6) TMI 1124 - ITAT DELHI] and AO is accordingly directed in above lines to recomputed disallowance u/s 14A of the 1961 Act read with Rule 8D(2)(iii) of the 1962 Rules. - Appeal of the assessee is partly allowed.
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2019 (5) TMI 991
Revision u/s 263 - no enquiry v/s lack of enquiry - HELD THAT:- CIT has not exercised jurisdiction u/s 263 of the Act on the ground of no enquiry made by the AO or lack of enquiry made by the AO. CIT has held that conclusions drawn by the AO in allowing expenditure set out in the show cause u/s 263 of the Act ought not to have been allowed as deduction. We, therefore, hold that the jurisdiction u/s 263 of the Act was validly invoked by the CIT. Contribution to Bellary DC for formation of ring road - even though it was shown as donation in the profits and loss account can be considered as contribution for formation of roads and has to be held as revenue expenditure allowable as a deduction keeping in mind commercial expediency - assesses s plea is that the development of roads would help transportation of iron ore from mine by the assessee - HELD THAT:- Keeping in mind the decision of Lakshmiji Sugar Mills Co. Pvt. Ltd. [ 1971 (8) TMI 13 - SUPREME COURT] we are of the view that this expenditure was rightly allowed by the AO while concluding the assessment and exercise of jurisdiction u/s 263 of the Act which is not justified as far as this sum is concerned. Other items of expenditure for which jurisdiction u/s 263 of the Act is invoked, we do not find any material which can justify the action of the AO in allowing these items of expenditure as deduction.Therefore, the CIT was justified in directing the AO to examine the allowability of these items of expenditure. The assessee is always at liberty to show as to how items of expenditure made in cash were not hit by the provision of sec. 40A(3) of the Act and as to how the personal expenses of salary wages and bonus is not in the nature of provision. The assessee is also at liberty to show as how the prior period expenses is in fact liability which crystallized only during the relevant previous year. In the given circumstances of the case, we are of the view that the order u/s 263 of the Act in so far as aforesaid 3 items of expenditure are concerned is valid and deserves to be sustained. AO was directed to do denovo assessment, the same can be only be in respect of item set out in the order u/s 263 of the Act. We accordingly modify the order u/s 263 of the Act by restricting the enquiry in respect of items other than the expenditure incurred for payment of ₹ 10 cores for formation of road. - Decided partly in favour of assessee.
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Customs
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2019 (5) TMI 990
Monetary amount involved in the appeal - maintainability of appeal - HELD THAT:- The disputed duty involved in these cases is below the monetary limit of ₹ 10 lakhs which has been notified by the Government vide Circular No.390/Misc./163/2010-JC(17-12-2015) dated 17th December, 2015 and F.No.390/Misc./116/2017-JC dated 04.04.2018 - Accordingly, the appeals are dismissed under litigation policy.
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2019 (5) TMI 989
Scope of SCN - Classification of imported goods - Wireless Data Device or mobile phones - whether classified under CTH 85176290 or otherwise? - HELD THAT:- In their appeal revenue has raised the issue which was never there before the adjudicating authority. In the present case no show cause notice has been issued and matter adjudicated by the Commissioner on the basis of waiver to show cause given by the importer. The impugned order does not refer even remotely to the issue sought to be raised by the revenue in appeal. In our view such approach cannot be justified. Classification of the goods - HELD THAT:- When the product catalogue and other documents in relation to the imported goods do not describe the goods as mobile phone, then the act of describing the goods as Mobile Phone on the Bill Of Entry cannot be anything other act of deliberate misdeclaration as have been held by the Commissioner - Since the present case is not of misclassification simplicitor but case of deliberate misdeclaration leading to misclassification we do not find any merits in such submissions of the importer. Importer has in the appeal raised lot of procedural safeguards built in the system of assessment and has claimed that, all these should be taken into account while adjudging the offence against them. In our view procedural relaxations and facilitation measures are for facilitating the speedy clearance of the imported goods and are not for the purpose of perpetuating fraud/ misdeclaration. In our view such an argument should be rejected at the very first stage. The appeal filed by the importer is allowed to the extent of reducing redemption fine imposed to ₹ 10,00,000/- - other part upheld - appeal allowed in part.
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2019 (5) TMI 988
Valuation of imported goods - misdeclaration of value - rejection of declared value - valuation of the imported goods was proposed on the basis of value of contemporaneous imports of identical goods - principles of natural justice - HELD THAT:- The matter needs to be reconsidered by the Commissioner on the basis of all the facts and documents on record. Principles of Natural Justice - HELD THAT:- There is no evidence available on record to show that documents that revenue intended to rely against the appellants were ever given to them. Non supply of the documents relied against the appellant to them before passing the impugned order is denial of natural justice to them. Matter remanded back to adjudicating authority for reconsideration of matter after following the principles of natural justice - appeal allowed by way of remand.
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2019 (5) TMI 984
Absolute Confiscation - illicit possession of the rough diamonds and that diamonds are not permitted to be imported without Kimberley Processing Certificate (KPC) - seizure of rough diamonds weighing 10,510.60 carats - whether the applicant has made out a case for staying the impugned order or whether the seized goods can be ordered to be released subject to certain terms and conditions? HELD THAT:- If the order of absolute confiscation is upheld by the court, the goods would not be available for confiscation is concerned, in any case, even if there is absolute confiscation of goods, ultimately, the same would be auctioned by the authorities and, at best, the same would fetch the market price. In this case the value of the goods has already been determined as reflected in the orderinoriginal and hence, in case of absolute confiscation of goods, the applicant may be entitled to recover the entire value of the goods from the respondent. When the respondent has succeeded before the Tribunal and rough diamonds are otherwise freely importable and are duty free, the court is of the view that a case of absolute stay of the order of the Tribunal has not been made out. However, to protect the interest of the revenue, the goods may be permitted to be released subject to certain conditions. Application allowed in part.
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2019 (5) TMI 983
Illegal obtaining of duty credit license for various fraudulent export - duty free scrips - TRA Confirmation reports forged by utilising services of telephone department and by forging stamp of customs duty officers - recovery of customs duty with interest and penalty - HELD THAT:- The Department has taken up the matter for cancellation of this FPS license with DGFT by the DRI on 08.12.2016. However, it appears that the license has not been cancelled by DGFT as yet. In other words, the above FPS license is a genuine licence in the record of DGFT even as of now. In so far as the appellant is concerned they have purchased the license in question from M/s Nilesh International on 26/12/11 on payment through banking channel. As per record the appellant was not involved in the fraud. The contention of the Department that the appellant has obtained the said license without verifying the existence of M/s Nilesh International before purchase thereof is not sustainable on account of the fact that the various licences issued by the DGFT are being traded by the Broker as trading commodities which is permitted under DGFT policy. It would be practically impossible for any buyer to verify as to whether the person to whom the licence has been issued has been existing or otherwise by conducting enquiries. At the best what buyers could do is to verify the existence of license issued from DGFT. In case at hand, even now the license has not been cancelled by the DGFT in spite of specific request being made by the DRI. The appellant cannot be held responsible for payment of import duty and interest along with the imposition of penalty under the provisions of Customs Act as has been held in the impugned order. Invocation of Extended period for recovery of the Customs Duty - HELD THAT:- It is evident that the appellant has not suppressed any fact from the Department to the extent that the license which was submitted for clearance of import consignment is issued by the DGFT, although the claimed to have been obtained fraudulently by the transferee and utilised on 06/12/11 on ICD Patpargang. The Show Cause Notice has been issued in this case on 02/12/2016, that is after the lapse of normal period of raising demand under the provisions of Section 28 of the Customs Act 1962 - the demand is also time barred. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 982
Imposition of penalty on the proprietorship concern - concealment of consignment 289.9 kg of ketamine hydrochloride was found - role of proprietor in the attempted unauthorised export of ketamine hydrochloride from Air Cargo Complex - HELD THAT:- It is a settled legal position that the proprietor and the concern are not deferent entities. They are one and the same. It is not legally correct to impose penalty on the form while holding that the proprietor had no role in the affair at all - the penalty imposed on M/s. Neelkanth Exports is not maintainable and thus needs to be set aside. Penalty on Shri Khalil - HELD THAT:- Shri Khalil was giving conflicting statements; Shri Khalil met Shri Mr. Simon many times; he facilitated the attempted export of restricted item. On-going through the record of the case, Shri Khalil did not submit anything to absolve himself of the allegations - Shri Khalil is not made of to be the main culprit and nothing has been placed on record to show as to how he was to be benefitted in the illegal export, the penalty imposed on Shri Khalil needs to be reduced - the penalty imposed on Shri Khalil reduced to ₹ 5 lakhs. Appeal allowed in part.
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2019 (5) TMI 981
Valuation of imported goods - import and distribution of LPG - inclusion of canalizing charges paid to IOCL in the assessable value - computation of Landing Charges - shore quantity or invoice quantity of the liquid cargo - grant of refund on finalization of provisional assessment - levy of interest. Whether shore quantity or invoice quantity of the liquid cargo has to be considered for valuation and computation of import duties? - HELD THAT:- All the assessments are to be done on the basis of shore tank quantity only - reliance placed in the decision of Hon'ble Supreme Court in the case of Mangalore Refinery Petroleum [ 2015 (9) TMI 245 - SUPREME COURT ]. Valuation - computation of Landed Cost - addition of 1% of the assessable value or the actual cost/ to arrive at the landed cost? - inclusion of Landing fees, Berthing fees and Tug attendance charges in the assessable value - HELD THAT:- All these charges are not in the nature of pre-importation charges, therefore, all of them are not includable in the assessable value in terms of Rule 9(2)(b) of Customs Valuation Rules, 1988. Each of these expenses are to be separated and those items of expenses which pertain to import handling charges, handling fee, berthing fee and tug attendance fee which are in the nature of pre-importation cost only need to be included. Items of cost or expenditure with regards to the constructions and maintenance of shore tanks for storage of LPG, Transportation of LPG etc. which are in the nature of expenditure post importation need not be included - For the purposes of identifying the elements of pre-import charges or expenditure, the issue needs to go back to the original adjudicating authority. Whether the Canalization charges paid to M/s. Indian Oil Corporation Ltd. (canalizing agent), are to be added to the price to arrive at the assessable value? - HELD THAT:- Such charges are includable in the assessable value - issue squarely settled by the decision in the case of Hyderabad Industries Ltd. vs. Union of India [ 2000 (1) TMI 46 - SUPREME COURT ] wherein it was held that Canalising charges are includible in the assessable value of imports. Automatic grant of refund on finalization of assessments - non-applicability of unjust enrichment - non-applicability of interest in the case of provisional assessments - Department has submitted that the issue was not taken up by the appellant before the original or appellate authority - HELD THAT:- This being a question of law the appellants have in their right to raise the issue at this level. However, for a proper appreciation of the facts and for computation of the refund view to the appellants the matter needs to go back to the original authority. Appeals are allowed by way of remand to the original adjudicating authority.
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2019 (5) TMI 980
Export through baggage under claim of drawback - Readymade Garments - It was found that the value of the export goods was overstated with a view to obtain more drawback and there was misdeclaration of quantity also - confiscation - imposition of penalty - HELD THAT:- It is seen that out of the ten persons of which penalty was imposed, Shri Prakash Golatkar, Shri Khalik Mohamed, Ibrahim ARE dab, Shri Karam Hussain Khan and Shri Mohamed Kasim Ibrahim did not file any appeal. Even though ail the persons had some role, or the other, in the alleged act of export through baggage under claim of drawback, the fact remains that none of them are proved to be the ultimate beneficiaries had the offence been successfully committed. Penalties levied are not commensurate with the roles of individuals. Moreover, the acts of omission and commission were in related to attempt of fraudulent availment of drawback to the tune of 6 lakhs. Imposition of huge penalties ranging from 2 lakhs to 35 lakhs on individuals appears to be harsh, looking in to the fact that none of them were proved to be the ultimate beneficiary. Penalties imposed should be commensurate with the role played by each of the individual in the fraud. Therefore, though imposition of penalties on five appellants is justified, the quantum of penalty is not justified and maintainable - penalty imposed on Shri Ibrahim Umar Sayed, restricted to ₹ 3 lakhs; penalty imposed on Shri Dilip V. Hemrajani restricted to ₹ 50,000 and penalties imposed on M/s Shashmira Edwin Pandya, Shri Santosh Mishra Shri V Joshi restricted to ₹ 25,000 each. Appeal allowed in part.
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2019 (5) TMI 979
Valuation of imported goods - dry containers - undervaluation - rejection of declared value - Rule 12(1) of the Customs (Determination of the value of Imported Goods) Rules, 2007 issued vide Notification No 94/2007-Cus (NT) dated 13.09.2007 - HELD THAT:- The issue of under valuation has been in depth examined by the Commissioner in his impugned order as is evident from the paras of order reproduce above. Nothing has been brought on record to show that the value determined by the Commissioner is erroneous. The value has been determined by the Commissioner on the basis of replacement cost agreed between Appellant 1 and Appellant 2. Since the replacement cost represent the intrinsic value of container, agreed upon between the lessor and lessee in the one way lease, the same is basis of value. Confiscation redemption fine u/s 111 (d), (f) and (m) and Confiscation Penalty u/s 112 (a) and (b)(iii) - HELD THAT:- The goods imported are not prohibited goods or subjected to any import restrictions in terms of Custom Act, 1962 or under any other law for time being in force, hence clause d to Section 111 is not applicable. Similarly the goods were assessed to duty by the Custom Authority and cleared on payment of duty assessed. There cannot be misdeclaration when there is no dispute about the that entries made in the Bill of Entry were on the basis of an invoice of foreign supplier without holding that the invoice was forged or manipulated. Since it is not so clause m of Section 111 will not be applicable. Similarly when the appellants have followed the practice in manner of making the declarations in Import Manifest, and existence of such practice is admitted by the Commissioner JNCH, Nhava Sheva, in his Public Notice, case of appellants cannot be covered under clause f of Section 111. In our view the order of Commissioner holding goods liable u/s 111 (d) (f) and (m) is bad in law and cannot be sustained. Since we have held that imported dry containers are not liable for confiscation u/s 111, penalties u/s 112 (a) and (b) (iii) cannot be sustained and hence they are set aside. Thus, while upholding the demand of duty and interest against Appellant 1, we set aside the order confiscating the goods, fine imposed and penalties imposed - appeal allowed in part.
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Corporate Laws
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2019 (5) TMI 978
Misfeasance proceedings against the Ex-directors of the Company (In Liquidation) - HELD THAT:- The office reports, regarding investigation against ex-directors of the company (in liquidation), as submitted by auditor, in absence of statutory books and records of the company prior to liquidation period, it is difficult for the auditor to detect quantum of misfeasance. Ms. Das De, learned advocate appearing on behalf of Official Liquidator relies on section 455 of Companies Act, 1956, which provides for official liquidator to file preliminary report, report thereafter and, if necessary, further report - The report filed does not satisfy or correspond to any of the provisions in said section. The report has been filed. Let it be kept on record - The application be shown to have been disposed of.
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Securities / SEBI
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2019 (5) TMI 977
Fraudulent activities in the securities market - profits earned through this illegal trading activity - Execution of the scrips or any manipulation of the price of the scrips - HELD THAT:- The appellant was integral part of this collusive trading as he was one of the channels through which sensitive information was passed on to KB and is equally responsible for front running. Even though there is no conclusive proof as regard the contents of communication between DP and the appellant, nonetheless an irresistible inference can be drawn that sensitive information regarding forthcoming trades of Passport was passed on by DP to KB and the appellant. The proximity of time when the mobile calls were made between DP and AB and the trading of the shares at the time when Passport was also placing the orders leads to an irresistible conclusion of the involvement of the appellant as part of the front running. The modus operandi was such that DP was in constant touch with KB and the appellant and was passing on the sensitive information which was being utilized by KB from his trading activity. The appellant is the beneficiary of the profits from the trading activities done by KB. We find that the profit received by KB was transferred to Bhoomi Industries in which the appellant was a partner. We further find that the same amount was again transferred to the personal account of the appellant. Thus an irresistible conclusion can be drawn that the profits earned through this illegal trading activity by KB was shared with the appellant. In this regard, a vague reply was given by the appellant to the extent that the fund received by the appellant from Bhoomi Industries could have been in the nature of loan or repayment or withdrawal from capital account. No details were furnished in this regard and, therefore, an irresistible conclusion drawn by the Adjudicating Officer that there was a sharing of profits cannot be faulted. The standard of proof is preponderance of probability and the proof of manipulation always depends on the inferences drawn from a host of circumstances. A finding has to be arrived at from the pattern of trading. The cumulative analysis determines the modus operandi which can lead to an inference regarding the conduct of the parties while manipulating the securities market and thereby arrive at a conclusion of manipulation. Circumstantial evidence could be sufficient to raise a presumption with regard to the existence of a fact which is sought to be proved. A transaction has been executed with the intention to manipulate the market or defraud its mechanism will depend on the intention of the parties which could be inferred from the attending circumstances since direct evidence in such cases are not available. As held in SEBI vs. Kanaiyalal Baldevbhai Patel [ 2017 (9) TMI 1269 - SUPREME COURT] held that it is between inducement and criminal law and the wider meaning thereof under the SEBI Act is that to make inducement an offence. The intention behind the representation or misrepresentation of facts must be dishonest whereas in the latter category of cases the element of dishonesty needs not be present or proved. Further in the latter category of cases (under SEBI Act) a mere inference rather than proof that the person induced would have acted in a manner that he did for the inducement was sufficient. The element of dishonesty or bad faith in the making of inducement was not required. In the light of the above, the decisions cited by the learned counsel for the appellant is distinguishable and are not applicable in the facts and circumstances of the present case. It is clear that the information passed on by DP induced the appellant to connive with his brother KB. The sharing of the profits leaves no manner of doubt that KB and the appellant had acted in connivance with DP to encash the benefit of the information parted with by DP. The appellant was not only part of the front runner but was involved in the fraud committed by DP and had aided and abetted the same.
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Insolvency & Bankruptcy
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2019 (5) TMI 987
Submission of resolution plan as approved by the Committee of Creditors (CoC) - prayer in this application is for withdrawal of CA No.364 of 2018 in the light of the fact that Liberty House Group PTE (LHG) has been unable to comply with even the basic requirement of furnishing the Performance Guarantee, which was required to be given by the resolution applicant on approval of the resolution plan by the CoC - to exclude the time period spent, in negotiating with LHG and in litigation w.e.f. 18.05.2018 till passing of the final order HELD THAT:- There is a clear default by the LHG in not complying with the essential terms and conditions of the LoI and the process memorandum. The terms of the process memorandum as well as the LoI duly signed by the LHG would show that furnishing of the performance guarantee was the essential term. Copy of the LoI is at Annexure-7 filed with CA No.364/2018, as per which the LHG was bound to furnish within 10 business days from the date of issuance of LoI a performance guarantee as defined and in the manner as given in clause 14 of the process memorandum and that clause has already been referred while narrating the facts of the case. There is no indication in these communications that LHG does not understand the import of the word performance guarantee or the process memorandum to be a bank guarantee. The very use of the word performance guarantee implies that it is to be in the form of bank guarantee as it is preceded by the word performance. It cannot be accepted that for the total amount to be made available by LHG for the resolution plan of ₹2505 crore, the guarantee can be furnished by way of simple contract of guarantee and not the bank guarantee of ₹ 100 crores for the purpose of meeting out the requirement of performance guarantee. The prayer made by the applicant-Financial Creditor submitted by the Resolution Professional for withdrawal of CA No.364 of 2018 being basically not contested, deserves to be allowed. Exclusion of the time period spent, in negotiating with LHG and in litigation w.e.f. 18.05.2018 till passing of the final order - HELD THAT:- The proposition which emerges therefore is that certain period can be excluded from the total period of 270 days permissible under Section 12 of the Code. It is alleged in the application filed by State Bank of India on behalf of a Financial Creditor in CA No.592 of 2018 that the period from the date of the acceptance of LHG as the preference bidder i.e. 18.05.2018 upto the disposal of the instant application may be excluded. The original period of 270 days expired on 13.09.2018 and therefore, there still remains sufficient time for the Resolution Professional and the CoC to take further decisions in order to ensure that the CIR Process becomes ultimately successful. Therefore, we hold that the period from 18.05.2018 till receipt of the copy of this order should be excluded by for counting the period of 270 days in completion of the insolvency resolution process. Application allowed.
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2019 (5) TMI 986
Corporate insolvency process - outstanding debt - Acquisition of financial assets related to corporate debtor by Standard Chartered Bank is defective, illegal and bad in law - application under the IBC 2016 deserves to be rejected on ground and the alleged claims of financial creditor are based on aforesaid deed of assignment which assigns the defective and illegal rights - prescribed procedure under Section 7(5) of the IB Code HELD THAT:- we do not find substance in the objection of the Corporate-Debtor with regard to the assignment of debt by the State Bank of India to the Standard Chartered Bank and further to the present Financial-Creditor. We are of the view that even assuming so that the Standard Chartered Bank was not registered under the SARFAESI Act nor having license to business of ARCs in India being registered with the RBI, there can be no bar for assignment and transfer of the debt by the Principle Lender to another bank or to a financial institution for enforcing/recovery of such debt as per the above decision of the Hon ble Supreme Court, that a debt is an asset in the hand of the bank/lender and NPAs are accounts receivable are treated as NPA. A Bank can always transfer its assets and such transfer (of its debts) and it no manner affect the right or interest of the borrowers. There is no prohibition in the Bank Regulation Act to the bank transferring its assets inter-se nor it can be said the bank are trading in debts. Therefore, such objection of the Respondents in respect of maintainability of the present petition are not legally sustainable; hence is rejected. Procedure under Section 7(5) of the IB Code - The objections raised by the Corporate-Debtor are not legally sustainable in the eyes of Law, as we found that the Corporate Debtor is taking contradictory stands which amount approbate and reprobate on some facts and conditions which not permissible in the eye of the Law. It is also found that clarification as sought for by this Bench by its order dated 19.11.2018 is properly answered and stands satisfied through affidavit of Mr. Nishith Doshi annexing with letter of authority of December, 2018 and other documents. Therefore, it is established that the Corporate Debtor has admitted the amount of debt due to the present applicant to the extent of ₹ 16.5 Crores and further issued cheque for amount of ₹ 2.65 Crores; which are defaulted as such amount is more than rupees one lakh; hence, the present IB. Petition deserves to for admission. Present petition is found complete for the purpose of its admission.
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Service Tax
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2019 (5) TMI 976
Mandap Keeper service - case of appellant is that appellant are not providing such service - HELD THAT:- Both the firms are providing Outdoor Catering Service, whereas Mandap keeper Service is not provided by the Appellant and it is exclusively provided by M/s V.K.Bhandari. Therefore, even if entries of the services provided by the two firms are in the common records, it cannot be held that the Appellant M/s Bhandari Caterer is liable of evasion of tax of Mandap Keeper Service, as this service is being provided exclusively by the another registratant i.e M/s V.K.Bhandari. The Firm M/s V.K. Bhandari is owned by Shri V.K.Bhandari father of Shri Santosh Bhandari (Appellant) and even if he had assisted in the activities of his father s firm M/s V.K.Bhandari, which is a separate legal entity and providing Mandap Keeper Service, demand in respect this service cannot be raised on the Appellant, as they are not providing Mandap Keeper Service. There is no evidence, in the form of statement of any person, whose, names are appearing in the entry to confirm that Mandap Keeper service was provided to them. The allegation of provision of service is made only on the basis of entries in the record without any evidence to support these allegations. The demand is thus raised on the basis of mere assumption and presumption that premises were rented against such entry. In absence any such corroborative evidences to support the allegation, demand is not sustainable. Outdoor Catering Service - Appellant s argument is that as against various entries of the enquires, they have provided catering service for a few entries, however, the Department has presumed that catering was provided against all enquiry appearing in the record - HELD THAT:- The Department has not substantiated the allegation about service provided by conducting further enquiries in the form of statement from the person whose names were appearing in the suggestive menu/quotation for which no bill was raised, to confirm that they have availed catering service from the Appellant. The SCN alleges provision of service for several crore against which tax is not discharged, however, there are no evidence of recovery of unaccounted money. Thus, demand is raised on merely on the assumption that catering was provided by the appellant against all the entries in the resumed document. There are no corroborative evidences for such allegation, in absence of which, allegation as contained in the Show Cause Notice cannot survive. Consequently, demand is not maintainable. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 975
Penalty u/s 78 of FA - Construction of residential complex service - HELD THAT:- In the present case, two factors are working in favour of the assessee; one, they have taken registration voluntarily on 24.10.2011, secondly, the entire amount of Service Tax along with interest and applicable penalty for delay in discharging Service Tax had been discharged much before the commencement of the investigation against them - The adjudicating authority after analyzing the evidence on record and conduct of the appellant imposed penalty under Sections 76 and 77 of the Finance Act, 1994. When all the facts are duly recorded in the Books of Account and the appellants have not collected the Service Tax separately from the buyers during the relevant time and the appellant has not disputed their liability, the order of the adjudicating authority is conformity with law. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 974
Valuation - Franchise service - inclusion of amount of sale of books, admission kit, curriculum and other income/ miscellaneous income etc. in assessable value - benefit of N/N. 12/2003-ST - Whether the consideration received towards sale of goods and equipments under separate invoice on payment of VAT should form the part of taxable service under the category of Franchisee Services provided by the respondents? - HELD THAT:- From N/N. 12/2003-Service Tax, it is clear that the value of goods and materials sold by the service provider to the recipient of service, from the service tax leviable thereon under section (66) of the said Act, subject to condition that there is documentary proof specifically indicating the value of value of the said good and materials. The exemption granted is unconditional and is not circumscribed by any conditions as sought to be argued by the revenue in their appeal. There is no requirement in the notification that the supply of the goods/ materials should be under a separate contract. Notification does not talk about dominant nature of contract for allowing the exemption under this notification. Commissioner has in his order analyzed the relevant agreements very lucidly along with the case laws on the subject and have concluded in favour of the assessee. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 973
Valuation - Business Auxiliary Service - inclusion of reimbursable expenses in the assessable value - Constitutional Validity of Rule 5 of Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- On one hand the Appellate Authority has admitted that Rule 5 has been held to be ultra vires by the Hon ble High Court of Delhi but still he has gone ahead and observed that said decision would not apply in the light of the agreements and the expenses incurred by the assessee. Once Rule 5 has been held to be ultra vires, it has to be read as if the same is not on the Statute book, in which case the same cannot be invoked Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (5) TMI 972
Reversal of CENVAT Credit - Bagasse (non-excisable goods) - reversal of credit of input and input services - Rule 6 of the CENVAT Credit Rules, 2004 - amendment in CENVAT Credit Rules dated 01/03/2015 - Circular No.1027/15/2016-CX dated 25/04/2016 - HELD THAT:- Circular dated 25/04/2016 treats Bagasse as an exempted good for the purpose of reversal of credit of input in terms of rule 6 of the CENVAT Credit Rules 2004. The competent authority deciding the claim of the petitioner consequent to the Show Cause Notice, would be bound by the departmental Circular dated 25/04/2016 and he would not have the liberty of disagreeing with the circular issued by Central Board of Excise and Customs. In this view of the matter it would not be efficacious to relegate the petitioner before the competent authority and, there is no hesitation in holding that the writ petition in the present facts and circumstances of the case would be maintainable. Bagasse not to be a manufactured product, and therefore Rule 6 of the CENVAT Credit Rules, 2004 shall have no application, Section 6 (1) has been amended by inserting the 2 Explanations, which the respondent contends is sufficient to include Bagasse within the fold of Section 6, and further to justify the stand for a reversal of CENVAT Credit Rules, 2004 - A perusal of the Explanation 1 to Rule 6 would indicate that it provides that the exempted good and final product as defined in Clause (d) (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory. In absence of Bagasse being a manufactured final product, the obligation of a reversal of CENVAT period under Rule 6 (1) of the CENVAT Credit Rules, 2004 is not attracted. It has also been noticed that Bagasse has always been an exempted goods under Rule 2 (d) of the CENVAT Credit Rules, 2004. It has been mentioned in Central Excise tariff heading 2303 20 000 and was subjected to NIL rate of duty. It therefore, fell within the definition of exempted goods as defined under Rule 2 (d) and is not a non-excisable good, as mentioned in the impugned Circular - That the Circular dated 25/04/2016 interpreting Explanation 1 to Rule 6 has provided that consequently, Bagasse , dross and skimmings of nonferrous metal or any such byproduct of waste, which are non-excisable goods and are cleared for consideration from the factory need to be treated like exempted goods for purpose of reversal of credit of input and input services, in terms of rule 6 of the CENVAT Credit Rules, 2004. The circular therefore treating Bagasse to be a non-excisable good, is clearly erroneous, and for this reason also the Circular dated 25/04/2016 is liable to be quashed with regard to Bagasse. In absence of Bagasse being a manufactured final product, the obligation of reversal of CENVAT Credit under Rule (1) of the CENVAT Credit Rules, 2004 is not attracted - The Circular No.1027/15/2016-CX, dated 25/04/2016, contained in Annexure - 1 to the writ petition to the extent that it includes Bagasse under the purview of the reversal of credit of input services in terms of Rule 6 of the CENVAT Credit Rules, 2004. Petition allowed - decided in favor of petitioner.
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2019 (5) TMI 971
CENVAT Credit - write off of inputs - denial on the ground that inputs on which such credit was claimed were charged to Launch expense ledger account and hence to be considered as written off - period 01.04.2008 to 31.12.2008 - Rule 3 (5B) of the CCR - failure to produce the information about the usage of inputs in the manufacture and maintaining proper records of receipt, disposal and inventory thereof - HELD THAT:- The allegation of non-maintenance of record is not proved. The only allegation made out in the show-cause notice appears to be that such account has not been maintained in the SAP - there are no merit in this argument that the said records should have been maintained in the SAP. The respondent contended that they have mentioned the receipt of inputs and the credit availed thereof in the ER-1 Returns. Therefore, the provisions of Rule 9(5) of CENVAT Credit Rules, 2004 are by and large complied with. Therefore, there are no reason to interfere with the findings of Learned Commissioner as far as the maintenance of record is concerned. Another allegation in the show-cause notice was that the expenses on account of inputs used in the manufacture of pre-launch series of cars was debited to launch material account and the same amounted to writing off - HELD THAT:- This is a mere accounting practice. Law cannot disregard the practices prevalent in the industry. If a particular industry treats such costs as expenses and denotes the same as expenses in the profit loss account it cannot be held that the same has been written off assuming them to be obsolete. What is to be seen is whether any provisions of Cenvat Credit Rules have been violated. It can be argued only on the basis of accounting standards that the impugned goods are written off. Therefore, the provisions of Rule 3(5B) of CENVAT Credit Rules, 2004 are not attracted. The necessary condition for availing credit is receipt of inputs under the cover of invoice, payment of duty of the same and utilization of the inputs in the manufacture. None of these events have been challenged in the show-cause notice. It is not the case of Revenue that the said inputs have not been received in the factory or not utilized in the manufacture or removed as such from the factory without payment of duty. The Respondents have correctly availed that credit and as rightly held by the Learned Commissioner, the Respondents need not reverse and credit in his regard - Appeal dismissed - decided against Revenue.
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2019 (5) TMI 970
Extended period of limitation - excess deduction on account of quantity discount - penalty - suppression of facts - HELD THAT:- The Tribunal directed the Adjudicating authority to re-calculate the demand by adding the quantum of discount not passed on to sale price of the goods. Since suppression of facts has been confirmed and the demand for the extended period of limitation has been upheld, therefore, there are no reason in the argument of the learned Advocate that penalty under Section 11AC of Central Excise Act, 1944 should not have been imposed. Appeal dismissed - decided against appellant.
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2019 (5) TMI 969
Effect of Notification - N/N.16/2009 dated 07 July, 2009 - Retrospective or Prospective effect - CENVAT Credit - capital goods - MS angles, channels, section, etc. - period from May 2007 to June 2009 - whether N/N. 16/2009 dated 07 July, 2009 can be made applicable retrospectively, the period for demand in the impugned Appeal being from May 2007 to June 2009, i.e., prior the impugned Notification? - HELD THAT:- Clause 1(1) of the Notification reads that the amended Rules shall be called Cenvat Credit (Amendment) Rules, 2009. Rule 1(2) reads that these Rules shall come into force on the date of their publication in the Official Gazette. It is apparent from the Notification that it was published in the Gazette on 07 July, 2009 itself. The bare perusal makes it clear that the intention of legislature while incorporating the amendments in Cenvat Credit Rules, 2004 was for the Notification to take effect from the date of it being officially gazetted. The Circular dated 08 July, 2010 as relied upon by the Department to give this Notification a retrospective effect is not binding and in fact cannot be looked into in view of the statute itself. The Order under challenge holding the Notification to apply retrospectively is hereby set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (5) TMI 968
Imposition of penalty u/s 10-A of the Central Sales Tax Act - purchase of Rough C.I. Casting - HELD THAT:- Hon'ble Apex Court in the case of Commissioner of Sales Tax, U.P. Vs. Sanjiv Fabrics [ 2010 (9) TMI 461 - SUPREME COURT ] . In the said case the Hon'ble Apex Court has held that the penalty provisions are penal in character and unless the filing of an inaccurate return is accompanied by a guilty mind, the section cannot be invoked for penalty. The Apex Court, therefore, concluded that a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10-A. The explanation furnished by the applicant is sufficient and therefore the penalty imposed under Section 10-A of the Act is set aside - revision allowed.
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2019 (5) TMI 967
Belated invocation of writ jurisdiction - Recovery of VAT dues - Form VAT 202 - HELD THAT:- Even on receipt of the demand notice dated 15.07.2016, the petitioner did not choose to question the assessment order. It is not even the petitioner s case, in the writ affidavit, that his illhealth and that of his father had resulted in stoppage on their business. If the petitioner s company could carry on the business, notwithstanding the illness of its directors, there is no justification in not preferring an appeal against the assessment order, or to invoke the jurisdiction of this Court earlier. The power of the High Court to issue a Writ under Article 226 of the Constitution is discretionary and the High Court, in the exercise of its discretion, does not ordinarily assist the tardy and the indolent or the acquiescent and the lethargic. If there is inordinate delay on the part of the petitioner in filing a writ petition, and such delay is not satisfactorily explained, the High Court may decline to intervene and grant relief in the exercise of its writ jurisdiction. The writ jurisdiction of this Court was invoked belatedly i.e. nearly two years after the assessment order was passed, and the explanation furnished for the delay is wholly insufficient, we see no reason to exercise discretion under Article 226 of the Constitution of India to entertain the belated challenge to the assessment order. Petition dismissed.
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Indian Laws
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2019 (5) TMI 985
Criminal breach of trust - disciplinary proceedings commenced by the Institute of Chartered Accountants of India (ICAI) pursuant to a complaint filed by the SFIO with the ICAI - It is the petitioner s case that he was not complicit with the Management but is also a victim of the fraud perpetrated by the Management of RIC - HELD THAT:- This Court is refraining from making any observations regarding the said matter as the same is pending before this Court; but suffice it to state that the petitioner s case is not on identical footing as the case of the petitioners in that case. Even if it is assumed that the petitioner s case has some similarity, the pendency of that petition does not assist the petitioner in any manner as this Court has examined the petitioner s contention in this regard. Challenge to the SFIO report - HELD THAT:- Learned counsel appearing for the petitioner fairly states that the petitioner reserves its right to contest the same in an appropriate proceeding and this Court is not called upon to examine on the same. Petition dismissed.
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2019 (5) TMI 966
Dishonor of Cheque - Section 138 of the Negotiable Instruments Act - recovery of Loan - rebuttal of presumptions - HELD THAT:- When once the first respondent establish the payment of money towards hand loan and issuance of cheque towards the said debt, the presumption under Section 139 of the Act is automatic. Now, it is for the petitioner to prove that no amount has been advanced and the subject cheque has not been issued by him. Therefore, the burden is on the petitioner to prove the same to probabalise the non-existence of consideration by preponderance of probabilities. Though the presumption under Section 118 and 139 of the Act is rebuttal, by way of preponderance of probabilities either through direct evidence or through the material brought on record, the petitioner failed to produce any evidence to rebut the said presumption. Mere denial of existence of debt is not sufficient to rebut the presumption. Further, the petitioner miserably failed to explain the circumstances under which Ex.P-2 was issued to the first respondent. That apart, there is no evidence as to how the promissory note (Ex.P-1) and the subject cheque (Ex.P2) went into the custody of the first respondent. When once the advancement of the amount and the issuance of Exs:P-1 and P-2, are not proved, this Court is of the opinion that the petitioner miserably failed to rebut the presumption as drawn under Sections 118 and 139 of the Act. There are no merits in the revision case - revision dismissed.
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2019 (5) TMI 965
Principles of Natural justice - reopening of evidence of the witness - case of petitioner is that sufficient opportunity is to be afforded to the petitioner to produce certain documents and to recall PW.1 for marking those documents by reopening the case as the said documents are essential to decide the real controversy between the parties - HELD THAT:- No doubt, Section 311 of the Code confers power on the Court to summon any witness or to examine any witness, who was present though not summoned or re-examine any witness subject to recording satisfaction by the Court. At the same time, the Law is wellsettled that this Court cannot exercise such power in casual manner and that the Court must take into consideration the consequence of allowing such applications at belated stage. Section 311 of the Code consists of two limbs. The first limb confers power on the Court to summon, recall and re-examine any witness already examined and record evidence of any witness who was present though not summoned, and the second limb of Section says that when the Court satisfied that the evidence of any witness is essential, the Magistrate may record reasons and recall any witness - The facts in the present case would not fall within the second limb; it would fall within the first limb. The petitioner did not explain the reason for his failure to file documents at the earliest stage and PW.1 was only a power of Attorney Holder of the complainant, whereas the documents pertain to the period prior to execution of Power of Attorney in favour of PW.1 by the complainant. Therefore, PW.1, at best, is entitled to adduce evidence which is within his knowledge after execution of power of attorney, but the documents sought to be produced before the Court below are pertaining to the period prior to execution of General Power of Attorney in favour of PW.1. Therefore, he is not competent to speak about the documents which are sought to be produced by the petitioner - PW.1. However, this Court cannot exercise power under Section 311 of the Code to reopen the evidence of any witness. When the Calendar Case is posted for judgment, filing petitions for reopening etc. does not arise, since the duty of the Magistrate is to pronounce the judgment without involvement of petitioner and respondent - thus, this is not a fit case to quash the impugned order passed by the Court below. Petition dismissed.
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