TMI Tax Updates - e-Newsletter
May 25, 2019

Case Laws in this Newsletter:

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

Articles

1. DISTINCTION BETWEEN COMMISSION AND DISCOUNT FOR PURPOSE OF TDS UNDER SECTION 194H

   By: Dinesh Kumar

News

1. ​Extending due date for TDS Odisha - Order u/s 119 of the Income Tax Act, 1961

2. Payroll Reporting in India – A Formal Employment Perspective

Notifications

Companies Law

1. F. No. 1/4/2016 CL-I - G.S.R. 377 (E) - dated 22-5-2019 - Co. Law

National Financial Reporting Authority (Meeting for Transaction of Business) Rules, 2019

2. F. No. 1/21/2013 CL-V - G.S.R. 376 (E) - dated 22-5-2019 - Co. Law

Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019

GST - States

3. Order No. 05 (State Tax) - F-10-19/2019/CT/V(48) - dated 23-4-2019 - Chhattisgarh SGST

The Chhattisgarh Goods and Services Tax (Fifth Removal of Difficulties) order, 2019.

4. 22/2019 - State Tax - F-10-19/2019/CT/V(47) - dated 23-4-2019 - Chhattisgarh SGST

Seeks to notify the provisions of Rule 138E of the Chhattisgarh Goods and Services Tax Rules, 2017 w.e.f. 21.06.2019.

5. 21/2019 - State Tax - F-10-19/2019/CT/V(46) - dated 23-4-2019 - Chhattisgarh SGST

Notifies the registered persons paying tax under the provisions of section 10. who shall follow the special procedure for furnishing of return and payment of tax.

6. Order No. 04/2019-State Tax - F-10-17/2019/CT/V(44) - dated 29-3-2019 - Chhattisgarh SGST

The Chhattisgarh Goods and Services Tax (Forth Removal of Difficulties) order, 2019.

7. F-10-17/2019/CT/V(43) - 16/2019-State Tax (Rate) - dated 29-3-2019 - Chhattisgarh SGST

The Chhattisgarh Goods and Services Tax (Second Amendment) Rules, 2019

8. F-10-17/2019/CT/V(40) - 07/2019-State Tax (Rate) - dated 29-3-2019 - Chhattisgarh SGST

Prescribing persons liable to pay tax on reverse charge for the Chhattisgarh Goods and Services Tax Act, 2017.

9. F-10-17/2019/CT/V(39) - 06/2019-State Tax (Rate) - dated 29-3-2019 - Chhattisgarh SGST

Notifies the following classes of registered persons.

10. F-10-17/2019/CT/V(38) - 05/2019-State Tax (Rate) - dated 29-3-2019 - Chhattisgarh SGST

Amendments in the Notification No. 13/2017-State Tax(Rate)-F-10-43/2017/CT/V(81), dated the 28th June, 2017.

11. 04/2019-State Tax (Rate) - F-10-17/2019/CT/V(37) - dated 29-3-2019 - Chhattisgarh SGST

Amendments in the Notification No. 12/2017-State Tax(Rate)-F-10-43/2017/CT/V(80), dated the 28th June, 2017.

Circulars / Instructions / Orders

GST - States

1. 56/2019-GST (CT/GST-15/2017/372-A) - dated 10-5-2019

Submission of Form for one time option to pay tax on construction of apartments in a project by the promoters at the rate as specified for item (ie) or (if), against serial number 3 in the Table in the rate notification no. 03/2019, as the case may be, by 20th of May, 2019

2. 54/2019-GST (CT/GST-15/2017/363-A) - dated 6-5-2019

GST on Seed Certification Tags

3. 55/2019-GST (CT/GST-15/2017/367-A) - dated 6-5-2019

GST exemption on the upfront amount payable in for long term lease of plots, under Notification 12 — State Tax (Rate) Sl. No.41 dated 29.06.2017 (No. FTX.56/2017/25 dated 29.06.2017)

4. 50/2019-GST (CT/GST-15/2017/342) - dated 28-3-2019

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

5. 49/2019-GST (CT/GST-15/2017/340) - dated 28-3-2019

Verification of applications for grant of new registration

6. 48/2019-GST (CT/GST-15/2017/337) - dated 28-3-2019

Clarifications on refund related issues

7. 47/2019-GST (CT/GST-15/2017/324) - dated 14-3-2019

Clarification on certain issues related to refund

8. 46/2019-GST (CT/GST-15/2017/323) - dated 14-3-2019

Nature of Supply of Priority Sector Lending Certificates (PSLC)

9. 45/2019-GST (CT/GST-15/2017/317) - dated 14-3-2019

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

10. 22/2019-GST (ST/Tech//2019/2635) - dated 27-2-2019

GST on Services of Business Facilitator (BF) or a Business Correspondent (BC) to Banking Company

11. 21/2019-GST (ST/Tech//2019/2634) - dated 27-2-2019

Clarification on GST rate applicable on supply of food and beverage services by educational institution

FEMA

12. 34 - dated 24-5-2019

‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt

Customs

13. 12/2019 - dated 24-5-2019

Guidelines for launching of Prosecution in relation to offences punishable under the Customs Act, 1962 - foreign currency, foreign nationals.

Highlights / Catch Notes

GST

• Court Orders Release of Detained Goods Under CGST Act Section 129(3) Upon Bank Guarantee; Expedites Inquiry and Decision.

  Case-Laws - HC : Detention Order - Section 129 (3) of CGST Act - though writ was rejected, court order to release the goods detained and subjected to enquiry within twelve hours from the date and time of receipt of bank guarantee - also direct to pass order in time bound manner
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• Court Orders Release of Detained Goods and Vehicle with Bank Guarantee and Bond per Rule 140(1) CGST Rules.

  Case-Laws - HC : Detention of goods alongwith vehicle - the validity of the e-way bills had expired - directed to release the petitioner's goods and vehicle on its furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed u/R 140(1) of the CGST Rules
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Income Tax

• Donors Can Claim Tax Deduction u/s 35(1)(ii) Even If Research Institute's Registration Is Later Revoked.

  Case-Laws - AT : Deduction u/s 35(1)(ii) - retrospective withdrawal of registration/approval - If at the time of giving the donation to the research Institute it had a valid registration granted under the Act, subsequent withdrawal of such registration/approval with retrospective effect would not be a reason to deny deduction claimed by the donor - deduction allowable
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• Depreciation Disallowed for Unused Machinery Before September 30, 2010; Entitled to 50% Depreciation Rate.

  Case-Laws - AT : Disallowance of depreciation - asset ready to use VS put to use - the use of the plant and machinery depended upon the operation of the furnace which was not put to use before 30th September 2010, hence No ambiguity that the plant & machinery under question were not put to use before 30th September - entitled to depreciation at the rate of 50%
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• AO Must Prove Undisclosed Investment in Furniture; No Evidence Means No Income Addition.

  Case-Laws - AT : Undisclosed investment in furniture and fixture - surrender in survey subsequently retracted - onus of proof - If the assessee has denied making any such investment other than investment shown in the books, then onus shifts upon the AO to bring on record either by way of inquiry or any material which has been found during the course of survey that there was certain Undisclosed investment - if not done, no addition
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• Soapstone Crushing Qualifies as Production, Eligible for Tax Deductions Under Income Tax Act Sections 80I/80IA.

  Case-Laws - AT : Addition u/s 80I/80IA - crushing of shop stone - the outcome being the soap stone powder of different grades is a different and distinct marketable article from the input which is raw boulder soap stone - the process which is undertaken by the assessee is production and manufactured eligible for deduction U/s 80I & IA
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• Court Rules No Cessation of Liability for Sundry Creditors u/s 41(1); Taxpayer's Debt Remains Ongoing.

  Case-Laws - AT : Addition u/s 41(1) - no material has been brought on record to establish that the assessee’s liability with respect to Sundry Creditors ceased to exist, in any manner - the balance amount has been paid in subsequent years - nothing would suggest that there was remission or cessation of liability within the meaning of Sec. 41(1)
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• No Penalty u/s 271(1)(c) for Income from Retrospective Law Changes in Finance Act, 2012.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - the income arising on retrospective applicability of section 13(8) inserted by Finance Act, 2012 - returns for all the assessment years in question were filed before amendment, hence penalty cannot attract by any stretch of imagination - deletion of penalty upheld
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• Penalty Order u/s 271AAB Void Due to Lack of Prior Approval from Joint Commissioner of Income Tax.

  Case-Laws - AT : Penalty u/s 271AAB - relevant column of ‘approval letter No.’ and ‘Date’ had been left blank in the penalty order which have been filled with pen on receipt of said approval of JCIT vide letter no. 1036 dt. 30/09/2016 - it is crystal clear that the penalty order passed by the AO on 29/09/2016 was before taking the approval - penalty order is void ab-initio
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• Court Upholds Revision u/s 263 Due to AO's Failure to Investigate Unexplained Cash Deposits Thoroughly.

  Case-Laws - AT : Revision u/s 263 - unexplained cash deposits - AO is not only an adjudicator, but also an investigator who failed to investigate the source and truth behind the cash deposits in assessee’s bank account and endorsed the offer of the assessee without making any enquiry - it is a case of lack of enquiries on the part of AO - rivision upheld
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• Income Tax Appeals: Purchases Validated, No Section 69C Application; Addition Deleted Due to Existing Evidence.

  Case-Laws - AT : Additions u/s 69C - CIT(A) contended that the purchases are duly recorded in the books supported by invoices therefore Section 69C do not apply - power of the CIT(A) are co terminus to that of the A.O and, therefore, he should have examined the transaction if he wanted to invoke Section 68 - no second innings should be given to examine the same set of facts which were very much before the lower authorities - addition deleted
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• Assessing Officer's claim of underinvestment u/s 69B dismissed due to lack of evidence; no income addition for assessee.

  Case-Laws - HC : Addition u/s 69B - assessee purchased the land directly from PISCO at the prevalent circle rate - the presumption of the AO could not lead to a conclusion of under investment by the assessee, liable for addition - The burden was on the department to prove understatement of sale consideration which was not discharged - no addition
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• Prosecution Upheld for Failure to Deposit TDS on Time u/ss 276B/278B; Penalty Determination Not Required First.

  Case-Laws - HC : Prosecution u/s 276B r.w.s. 278B - failure to deposit TDS deducted to govt account within the prescribed time - the petitioners cannot escape from the rigour of Section 276B - argument that no prosecution without determining the penalty cannot be accepted for the reason that the petitioners/accused have not disputed their liability and remit the TDS
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• Rent Deduction Disallowed: Assessee Fails to Prove Landlord Ownership or Provide Lease Agreements, No TDS Deducted.

  Case-Laws - AT : Disallowance of rent payment - assessee neither produce evidence of ownership of the property by those persons(land lord) nor furnish the copies of lease a agreements - TDS was also not deducted stating that individual payment was below the limit - the genuineness of the claim of deduction pertaining to rent expenditure remained unverified - disallowance upheld
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• Re-assessment Valid u/s 147 of Income Tax Act; No Sanction Needed as Initiated Within Four Years.

  Case-Laws - AT : Re-assessment u/s 147 - AO was clinched with tangible information in the shape of information from Sales Tax Authorities which prima-facie suggested possible escapement of income - sanction u/s 151(2) is not required as proceedings were triggered within 4 years and first proviso to Section 147 was not applicable since the original return was processed u/s 143(1) - reopening upheld
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Customs

• Goods Held at Port Over Classification Delays; Missing Import Documents Alleged; Directive Issued for Resolution.

  Case-Laws - HC : Retention of goods at Port - inaction on the part of revenue to classify the goods - it was alleged that the import is not accompanied by essential documents required for this product - Direction issued.
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• Officer's Bail Denied for Alleged Manipulation of Duty-Free Liquor Sales Data; Court Finds Arrest Fears Unfounded.

  Case-Laws - HC : Bail application - allegation on appellant(officer) that Passenger Manifest Data from from Airline Operators had handed over to the licensee to enable them to manipulate their sales data in respect of foreign made foreign liquor sold by them from the duty free shops - apprehension that he would inevitably be arrested and tortured appears to be misconceived - no anticipatory bail
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• Refund Denial for Anti-Dumping Duty Ruled Incorrect Post-Amendment to Sections 17 & 27 of Customs Act 1962.

  Case-Laws - AT : Refund of Anti-Dumping Duty paid - After the amendment in Section 17 and 27 of the Customs Act 1962 w.e.f. 08.04.2011, there is no need to challenge the self-assessment made by the importer as there is no assessment order - impugned order rejecting refund is plainly erroneous and not sustainable in law
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• Appellant Wins Refund for Anti-Dumping Duty on Tiles Filed Before April 2016 Notification.

  Case-Laws - AT : Refund of Anti-Dumping Duty paid - Polished Porcelain Tiles - A Notification comes into force only from the date of its publication, since Anti-Dumping duty Notification was published on 02.04.2016 - the appellant was not liable to pay Anti-Dumping duty on 29.03.2016 when he filed the Bill of Entry and the said duty paid by him is paid under mistake - refund allowable
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IBC

• Separate Bank Account for CIRP Costs Shielded from Enforcement Attachment; Not Part of Defaulter Company's Assets.

  Case-Laws - Tri : Opening of a separate Bank Account - contributed by the Member of the CCOC towards CIRP cost - asset now so generated is in compliance of the Order of the Code can not be attached by any other Authority under law - This is not an asset of the defaulter company hence otherwise also beyond attachment by Directorate of Enforcement
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• Debt Recovery Case Denied: Emails Reveal Pre-Existing Dispute from 2014 Under Insolvency and Bankruptcy Code.

  Case-Laws - Tri : Recovery of debt under I & B Code - pre-existing dispute - copies of emails placed on record revealed that as early as in October, 2014 about some of the defects noticed in the work done by the Petitioner - It is clear that there is an existing of ‘dispute’ (default) in this case prior to the date of raising of Invoices by the Operational Creditor - Petition not admitted
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Service Tax

• Assessees can claim refunds for unutilized CENVAT Credit u/r 5 without showing debited amounts in ST-3 returns.

  Case-Laws - AT : Refund of unutilized CENVAT Credit - Rule 5 of the CCR, 2004 - The condition does not require the assessee to reflect the amount debited in their ST-3 returns. It is sufficient if the assessee debits the amount claimed as refund in their accounts.
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• New Definition for "Specified Services" in Service Tax Refunds for Export Goods: Not to be Confused with "Input Services.

  Case-Laws - AT : Rebate Claim/refund of service tax - export of goods - When separate definition is given in notification with regard to the “specified services” for which refund can be claimed, the definition of “input services” cannot be imported to the application of refund.
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• Land Development Rights Transfer Not Taxable u/s 65B(44) of Finance Act; Service Tax Demand Unfounded.

  Case-Laws - AT : Taxability -Transfer of of Land Development Rights - Tri-partite agreement - The activity in question which is only acquisition of land, therefore, no service tax is payable by the appellant in terms of Section 65B(44) of the Finance Act - demand is not sustainable
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Central Excise

• Assessee's CAS-4 Certificate Omission Deemed Revenue Neutral; Demand Set Aside as Credit Eligible for Sister Unit Clearances.

  Case-Laws - AT : Valuation - clearances to sister units - Assessee has not produced CAS-4 certificate - The entire issue is revenue neutral. The appellant would be eligible for credit for the duty paid on the goods i.e., cleared to their sister Units - Demand set aside.
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• Court Grants Refund Due to Lack of Unjust Enrichment; Assessee Did Not Pass Duty to Others.

  Case-Laws - AT : Refund of amount paid under protest - undervaluation - the case of the assessee that it has not passed on the duty element stands established - there is no scope to allege unjust enrichment.
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Case Laws:

• GST

• 2019 (5) TMI 1334
  Detention Order - Section 129 (3) of CGST Act - Part B/E-Way Bill was also generated and produced for inspection - HELD THAT:- The issues raised are at preliminary stage and this Court is not convinced to entertain the writ petition and adjudicate upon merits at this stage. To confirm to the scheme under the Act, the writ petition is disposed of by directing that petitioner submits bank guarantee for the tax and penalty as shown in Ext.P12 and applies for release of goods by enclosing a copy of this order within two days from today. The 1st respondent shall release the goods detained under Ext.P11 and subjected to enquiry in Ext.P12 within twelve hours from the date and time of receipt of bank guarantee. The bank guarantee shall be kept valid for six weeks from today. The 1st respondent shall complete the enquiry, afford fair and reasonable opportunity as envisaged under the Act to petitioner and pass and communicate this order within four weeks from today. The 1st respondent, if fails to pass the order as directed by this Court the petitioner is not under obligation to keep the bank guarantee alive beyond six weeks.

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• 2019 (5) TMI 1333
  Detention of goods alongwith vehicle - the validity of the e-way bills had expired - HELD THAT:- A Division Bench of this Court in RENJI LAL DAMODARAN, DAMU SONS SALES CORPORATION VERSUS STATE TAX OFFICER, KOTTARAKKARA AND ASST. STATE TAX OFFICER, KARUNAGAPALLY [ 2018 (8) TMI 1145 - KERALA HIGH COURT] had occasion to deal with an identical issue, where It is directed to release the goods on the appellant furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules. The respondent authorities are directed to release the petitioner s goods and vehicle on its furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules. Petition disposed off.

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• Income Tax

• 2019 (5) TMI 1332
  Exemption u/s 11 - ITAT held that the Assessee was involved in imparting education when it was engaged in activities of selling and publishing, which was in the nature of business and trade within the meaning of Section 2 (15) as amended? - Assessee is the Association of Indian Universities, a charitable trust registered under the societies Registration Act, 1860 and Section 12A since 28th January 1981 - Assessee has got an approval under Section 80G (5) (vi) with effect from AY 2010-11 - HELD THAT:- CIT (A) holding that the Assessee was a charitable association. AO was directed to allow the exemption u/s 11 (1) as it was found as a matter of fact that the Assessee was not involved in any trade, commerce or business activities, so as to be denied the exemption. ITAT has in the impugned order taken note of the fact that in the case of the Assessee itself for AY 2010-11, a co-ordinate bench of ITAT had decided the issue in favour of the Assessee and against the Revenue. Adopting the rule of consistency, the ITAT dismissed the appeal of the Revenue. Having heard learned counsel for the Revenue and having perused the impugned orders of the CIT (A) and the ITAT, the Court is not persuaded that any substantial question of law arises for determination. No substantial question of law arises for determination.

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• 2019 (5) TMI 1331
  TP Adjustment - royalty payment - withdrawal of appeal - principle of aggregation of closely linked transactions using Transactional Net Margin Method - HELD THAT:- Petitioner has placed before this Court copy of a letter dated 2nd May 2019 received by the Petitioner from the office of the Deputy Commissioner of Income Tax Section 13(2) in regard to the settlement reached between the Assessee and the department under the Mutual Agreement Procedure ( MAP ) between the Competent Authority (CA) of India and CA of UK under Article 27 of the India UK Double Taxation Avoidance Agreement ( DTAA ). This specifically deals with the issue of royalty failed by the Assessee during the AY in question. Assessee having agreed to abide by the settlement reached is required to withdraw the present appeal as far as the Question No.1 framed by the Court is concerned. The above fact has not been disputed. Mr. Ruchir Bhatia, learned Senior Standing Counsel for the Revenue, has no objection to the Court permitting the Appellant to withdraw his appeal as far as Question No.1 is concerned. Whether the Income Tax Appellate Tribunal erred in law in adjudicating upon Issues not arising from the order under challenge in relation to Section 37? - HELD THAT:- Since the remand to the TPO, in terms thereof no longer survives on account of the settlement reached under MAP between the Assessee and its department, the Court is not called upon to answer the second question since it no longer survives.

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• 2019 (5) TMI 1330
  Remand made by the ITAT to the AO - addition of unexplained expenditure based on seized document HELD THAT:- It is seen that the ITAT remanded the matter to the AO was after examining the complete books of accounts and vouchers of M/s. Rashiwa International Ltd. asked to be produced by the Assessee. The ITAT was of the view that the exercise of reconciling the amounts appearing in the seized documents with the books of accounts of M/s.Rashiwa International Ltd. had to be actually carried out by the AO. That not having been done, due to failure of the Assessee, the matter required to be remanded to the AO. The Court is, therefore, unable to accept the plea of the learned counsel for the Revenue before us that the ITAT had mechanically remanded the above issue to the AO for redetermination. The Court is not persuaded that the impugned order calls for any interference. No substantial question of law

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• 2019 (5) TMI 1329
  Prosecution u/s 276B r.w.s. 278B - failure to deposit TDS deducted to govt account - consequences of failure to deduct or pay u/s 201 - HELD THAT:- In order to get over the penal consequences that follow on account of non-payment of tax deducted at source, it is open for the accused persons to come clean of the said charge by showing reasonable cause for failure to deposit the said amount. In the light of this provision, contentions urged by the learned counsel for the petitioners cannot be accepted. Since the material placed on record prima facie discloses that the petitioners have deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, the petitioners cannot escape from the rigour of Section 276B. Alternative argument canvassed by the petitioners that without determining the penalty, the respondent was not entitled to resort to criminal prosecution of the petitioners u/s 276B, also cannot be accepted for the reason that the petitioners/accused have not disputed their liability. The question of determining the liability and consequent imposition of penalty would arise only in case of dispute with regard to the liability to remit the deducted tax. In the instant case, the facts alleged in the complaint clearly indicate that the amount was credited subsequent to the survey. As a result, even this defence is not available to the petitioners. Lastly, the contention urged by the petitioners that the circular/instruction issued by the department have binding force though needs to be accepted as a principle of law, but in the instant case, none of the parties have placed the said instruction or circular for perusal of this Court. No material is available to show that the petitioner No.1-Company has deposited the amount within the extended time. On the other hand, the allegations are to the effect that survey itself was conducted on 20.09.2014. According to prosecution, the amount was deposited subsequent to survey conducted by the Department. Under the said circumstances, even on question of fact, the above principle does not come to the aid of the petitioners. As a result, no merit in the contentions urged by petitioners. - Decided against assessee.

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• 2019 (5) TMI 1328
  Benefit of deduction u/s 80IA - condition laid down in Section 80IA(4) - recognised as transferee or assignee of the principal contractor - HELD THAT:- Controversy involved in the present Appeal is covered by the Judgment of this court in the case of the same Assesse reported in M/S. CHETTINAD LIGNITE TRANSPORT SERVICES PRIVATE LIMITED [ 2019 (4) TMI 683 - MADRAS HIGH COURT] wherein this court has has held that the power generating companies are entitled to deduction u/s 80IA of the Act in different sub clauses viz., under Section 80IA(4)(iv) of the Act. Where there is no such Proviso, as is available in clause (i) of Section 80IA(4) of the Act, which deals with deduction to enterprise involved in developing, operating and maintaining the infrastructure facilities. We are, therefore, of the considered opinion that there is no merit in these appeals filed by the Revenue and the questions of law framed above deserve to be answered in favour of the Assessee and against the Revenue

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• 2019 (5) TMI 1327
  Addition u/s 69B - Amount of investments, etc., not fully disclosed in books of account - HELD THAT:- As categorically recorded by the Tribunal that the agreement seized was only a photo copy of the original which was not seized from the assessee. The seller, buyer and the witnesses refused to identify the same. The assessee was neither a party nor witness to the agreement. The assessee was not related to either party. The assessee purchased the land directly from PISCO at the prevalent circle rate. In the purchase deed of the assessee, the rate was Rs. 4 crore per acre = Rs. 2.50 lacs per marla as against that of Rs. 11.05 crore per acre as mentioned in the agreement seized. The land purchased by the assessee was different from that mentioned in the agreement seized. The burden was on the department to prove understatement of sale consideration which was not discharged. Thus, the presumption of the Assessing Officer could not lead to a conclusion of under investment by the assessee, liable for addition. - Decided against revenue. Disallowance of interest u/s 36(1)(iii) - CIT(A) recorded that the entire set of circumstances showed that the assessee had avoided to give data from the books of account to show the business use of interest bearing funds - HELD THAT:- CIT(A) has observed that as available from the calculation chart given by the assessee, even the amount of capital of Shri Kulwinder Singh brought into the business was taken to be a part of the calculation, treating this amount to be funds available free of interest and that the capital is meant to earn profits and separate interest thereon to decide the issue of disallowance could not have been done. It was on this basis that the learned CIT(A) held that no interest was payable to the assessee on this amount . We do not find any error in the order of the learned CIT(A) - Decided against revenue.

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• 2019 (5) TMI 1326
  Additions u/s 69C - fresh opportunity to examine addition u/s 68 - treatment of alleged purchases as bogus expenses - HELD THAT:- Purchases were debited in the regular books of account of the assessee. The sales out of the purchases were accepted by the A.O. Find that the notices issued by the A.O on the address of M/s Kumar Sales were duly served. Nothing prevented the A.O to issue summons to M/s Kumar Sales to force its attendance and examine the transaction. I further find that the CIT(A) realizing that Section 69C is not applicable on the facts of the case invoked Section 68 The power of the CIT(A) are co terminus to that of the A.O and, therefore, he should have examined the transaction if he wanted to invoke the provisions of Section 68. Failing which the action of the CIT (A) cannot be upheld. The contention of the DR that fresh opportunity should be given to the CIT (A) to examine the transaction does not have any force. No second innings should be given to examine the same set of facts which were very much before the lower authorities. No merit in the order of the CIT(A). Direct the A.O to delete the addition - Decided in favour of assessee.

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• 2019 (5) TMI 1325
  Penalty u/s 271(1)(c) - AO make addition of payment made towards sub brokerage by treating it as bogus and not incurred for the purpose of business - Tribunal deleted 90% of addition and sustain 10 % on estimated basis - HELD THAT:- It is relevant to observe, against the aforesaid decision of the Tribunal, the Revenue went in appeal before the Hon ble Jurisdictional High Court u/s 260A. While deciding the appeal of the Revenue, the Hon ble Jurisdictional High Court not only sustained the decision of the Tribunal in allowing 90% of the sub brokerage payment but has also observed that there is no dispute regarding the genuineness of expenditure and has held that disallowance was purely on estimate basis. Thus, when the genuineness of the payment is not doubted and 90% of the expenditure has been allowed, penalty cannot be imposed u/s 271(1)(c) on the disallowance of balance 10% made purely on estimate basis. - Decided against revenue.

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• 2019 (5) TMI 1324
  Penalty u/s 271(1)(c) - tax liability of the assessee is ultimately computed on the book profit under section 115JB - whether penalty imposed u/s 271(1)(c) on the basis of disallowance made under the normal provisions of the Act would survive? - HELD THAT:- On the basis of additions/disallowances made under the normal provisions of the Act, AO imposed penalty u/s 271(1)(c). However, while giving effect to the order passed by the Commissioner (Appeals), AO in his order dated 26th July 2017, a copy of which is placed before us by the AR has computed the total loss of the assessee under the normal provisions of the Act at Rs. 74,77,297, and has ultimately computed the tax liability of the assessee on the book profit determined under section 115JB. If we examine the legal position, it can be seen that the Hon ble Delhi High Court in CIT v/s Nalwa Sons Investment Ltd. [ 2010 (8) TMI 40 - DELHI HIGH COURT] has held that when the income of the assessee is computed u/s 115JB of the Act, penalty under section 271(1)(c) of the Act on the basis of additions / disallowances made under the normal provisions of the Act would not survive. - Decided in favour of assessee.

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• 2019 (5) TMI 1323
  Disallowance of deduction claimed u/s 35(1)(ii) - retrospective withdrawal of approval granted by the prescribed authority - Donation to the research Institute - HELD THAT:- If at the time of giving the donation to the research Institute it had a valid registration granted under the Act, subsequent withdrawal of such approval would not be a reason to deny deduction claimed by the donor. In case of Chotatingrai Tea [ 2002 (10) TMI 3 - SUPREME COURT] the Hon ble Supreme Court while dealing with the deduction claimed under section 35CCA of the Act, held that retrospective withdrawal of approval granted by the prescribed authority would not invalidate assessee s claim of deduction. Similar view was expressed by the Hon ble Supreme Court in Suresh Trading Co. [ 1996 (2) TMI 451 - SUPREME COURT] while dealing with the issue of effect of retrospective cancellation of registration certificate. A reading of Explanation to section 35(1)(ii) would make it clear that if the assessee acting upon a valid registration/approval granted to an Institution has donated the amount for which deduction is claimed, such deduction cannot be disallowed if at a later point of time such registration is cancelled with retrospective effect. Thus, we have no hesitation in holding that assessee is entitled to claim deduction under section 35(1)(ii) of the Act. Accordingly, we delete the disallowance of Rs. 17.50 lakh.- Decided in favour of assessee.

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• 2019 (5) TMI 1322
  Penalty u/s. 271(1)(c) - CIT-A exparte order - HELD THAT:- There is no doubt that assessee remained non-cooperative before the lower authorities and therefore, CIT(A) has passed the exparte order, without discussing in detail the facts and circumstance of the case and also did not deal the issue on merit and passed a non-speaking order, which in my opinion, is not in accordance with the principles of natural justice and it is an erroneous approach. After reading Section 250(6), I am also of the considered view that Assessee s case should be decided on merits, which the Ld. CIT(A) has not done. Remit back the issues in dispute to the files of the Assessing Officer with the directions to consider each and every aspects of the issues involved in the Appeal and decide the same afresh, after considering the Paper Book which is containing copy of the the affidavit by authorised representative CA Pramod Singahal; PAN of the assessee; copy of letter to AO requesting copy of assessment order dated 12.5.2017; copy of letter to AO requesting copy of penalty order dated 01.5.2017; copies of medical certificate; copies of Form No. 35 for appeal filed before CIT(A) against the assessment order; copies of Form No. 35 for appeal filed before CIT(A) against the order u/s. 271(1)(c) and give adequate opportunity of being heard to the assessee. - Appeals filed by the assessee stand allowed for statistical purposes.

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• 2019 (5) TMI 1321
  Penalty u/s 271(1)(c) - AO had not struck off the relevant column of the show cause notice - HELD THAT:- AO had not struck off the relevant column of the show cause notice cannot be a valid reason for deletion of the penalty u/s.271(1) (c) of the Act We are of the considered opinion that ld.CIT(A) ought not have deleted the penalty based on the decision of Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and therefore we remand the matter back to the ld. Commissioner of Income Tax (Appeals) for adjudication of the appeal on merits. Appeal of the Revenue is partly allowed for statistical purpose.

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• 2019 (5) TMI 1320
  Assessment of trust - Set off brought forward excess application of income and carry forward the excess application of income - HELD THAT:- This issue is no longer res-integra as per the decision of Hon ble Supreme Court in the case of CIT vs. Subros Educational Society, [ 2018 (4) TMI 1622 - SC ORDER] wherein it is held that eligible trust which are enjoying the registration u/s.12AA of the Act are entitled to carry forward and set off of the excess application of income. Thus, we do not find any merits in the grounds of appeal. Therefore grounds of appeal No.2.1 to 2.4 filed by the Revenue are dismissed. Depreciation as application of income before the amendment - HELD THAT:- This issue is also covered in favour of the assessee by the decision of Hon ble Supreme Court in the case of CIT vs. Rajasthan Gujarti Charitable Foundation [ 2017 (12) TMI 1067 - SUPREME COURT] wherein it was held that the income of the trust is required to be computed u/s.11 of the Act on commercial principles after providing for allowance for normal depreciation, affirmed the view of the Hon ble Bombay High Court in the case of DIT (Exemption) vs. Framjee Casasjee Institute [ 1992 (7) TMI 331 - BOMBAY HIGH COURT] and differing with the view expressed in the case of Lissie Medical Institutions vs. CIT [ 2012 (4) TMI 115 - KERALA HIGH COURT] . Therefore in view of the settled legal proposition in favour of the assessee trust, we do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). - Decided against revenue

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• 2019 (5) TMI 1319
  Revision u/s 263 - unexplained cash deposits - lack of enquiry - HELD THAT:- The assessee was unable to substantiate the source of deposits and he accepted 8% net profit of the total deposits. AO is not only an adjudicator, but also an investigator. It is the duty of the Assessing Officer to ascertain true facts stated in the return when the circumstances of the case are such as to provoke any enquiry. From the order of the AO, it is clear that the assessee has taken different stands at different points of time. At once occasion, the assessee states that different parties deposited cash in assessee s account so as to facilitate the payments by withdrawing the same through ATM while at other place, the assessee admitted the entire deposit as his business turnover and offered it for taxation @ 8%. AO had, however, not made any enquiry as to the actual business of the assessee. He has also failed to investigate the source of deposits in assessee s bank account, but straightway accepted the contention of the assessee without ascertaining the truth behind the cash deposits. The Assessing Officer has only endorsed the offer of the assessee without making any enquiry. Therefore, it is a case of lack of enquiries on the part of AO before accepting the offer of the assessee in the instant case. - Decided against assessee.

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• 2019 (5) TMI 1318
  Levy of penalty u/s 271AAB - no prior approval taken from the concerned Joint Commissioner of Income Tax (JCIT) - HELD THAT:- Penalty u/s 271AAB which falls in Chapter XXI of the Act shall not be imposed by the Assessing Officer until and unless prior approval is taken from the concerned Joint Commissioner of Income Tax (JCIT). The use of word shall make it mandatory to take the prior approval of the JCIT / Additional CIT before passing the order imposing the penalty under section 271AAB of the Act. In the present case it is crystal clear from the penalty order passed by the Assessing Officer that the order was passed on 29/09/2016 while the approval from the Additional CIT, Range Ludhiana was accorded vide letter no. 1036 dt. 30/09/2016, which clearly established that the penalty order was passed by the Assessing Officer on 29/09/2016 before taking the approval from the concerned Additional CIT / J.C.I.T. The contention of the Ld. DR that the same may be a typographical mistake is not tenable because the relevant column of approval letter No. and Date had been left blank in the penalty order which have been filled with pen on receipt of said approval letter and the date mentioned falls after the date of pronouncement of impugned penalty order. Therefore, the penalty order passed by the Assessing Officer for levying the penalty under section 271AAB of the Act is void abinitio - Decided in favour of assessee

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• 2019 (5) TMI 1317
  Disallowance of interest paid expenses u/s. 36(1)(iii) - Contention of the assessee s counsel that borrowed funds were not used for the purpose of giving advance and that the advances were given out of reserves and surplus - HELD THAT:- It is evident that the interest bearing funds were used for the purposes of giving advance for non business purposes. Therefore, the disallowance was made by the AO was accordingly rightly confirmed by the CIT(A), which does not need any interference hence, the ground no. 2 is dismissed. Disallowance on account of rent payment - assessee had failed to furnish any documentary evidence with regard to his claim of payment of rent to the 7 persons as recorded in the assessment order - HELD THAT:- No evidence of ownership of the property by these persons was furnished. The assessee had also failed to furnish the copies of lease a agreements. In these circumstances, the genuineness of the claim of deduction pertaining to rent expenditure remained unverified. Even during the course of appellate proceedings, no evidence of ownership of property by the 7 persons to whom the rent was claimed to have been paid was furnished. Out of the 3 persons in whose names the electricity bills were filed only one person figured in the list of 7 persons to whom the rent paid. In the case of remaining 2 persons there was no rent payment. The rent agreement filed by the assessee is in the name of Sh. Kurma whereas no payment has been made to him. From all the aforesaid facts, it is evident that the genuineness of the rent expenses claimed by the assessee has not been established. The disallowance made by the AO on this account was rightly confirmed by the Ld. CIT(A), which does not need any interference on hence, the ground no. 3 is dismissed.

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• 2019 (5) TMI 1316
  Penalty u/s. 271(1)(c) - denial of exemption under s.11 12 - difference of opinion regarding applicability of proviso to section 2(15) r.w.s. 13(8) of the Act in respect of such cricket bodies and consequently the action of the assessee is to be regarded as bonafide - whether penalty action can be taken against the assessee while fastening liability to tax as a result of any retrospective amendment in law especially when the assessee could not foresee such law at the time of filing of return of income? - HELD THAT:- Coordinate Bench in a detailed and voluminous order in Gujarat Cricket Association [ 2019 (1) TMI 1522 - ITAT AHMEDABAD] after taking note of several judicial decisions holding the field in this regard came to the conclusion that proviso to section 2(15) has been wrongly invoked against such cricket bodies. Thus, where the issue towards applicability of proviso to section 2(15) which seeks to restrict and exclude the exemption under s.11 12 itself has been approved in favour of assessee, one cannot say that the issue is free from doubt, to say the least. A question arises as to whether an assessee can be imputed with clairvoyance where some amendment has been brought with retrospective effect whereby tax liability is sought to be imposed on assessee. In the instant case, section 13(8) of the Act has been enacted by Finance Act, 2012 with retrospective effect from 01/04/2009. As per aforesaid enactment, benefit of section 11 12 will not be available to the assessee where such assessee is in receipt of income which falls under proviso to clause (15) of section 2 of the Act. Admittedly, the aforesaid amendment seeking to deny benefit of s.11 to the assessee was not in existence at the time of filing of return of income. The action of the AO fails on both counts, namely; (i) the penalty is rightly held to be not applicable where the issue involved is so complex and debatable and the assessee had adopted a view which is quite plausible and endorsed favourably by judicial precedents at many instances. (ii) The income arising on retrospective applicability of section 13(8) inserted by Finance Act, 2012 i.e. at a time when the returns for all the assessment years in question were already filed by assessee cannot attract penalty by any stretch of imagination. We thus, find no infirmity in the action of the CIT(A) in deleting the penalty in all the three appeals of the Revenue.

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• 2019 (5) TMI 1315
  Disallowance u/s 14A r.w.r. 8D - non recording requisite satisfaction as to how the computations made by the assessee were not correct - HELD THAT:- As relying on Godrej Boyce Manufacturing Company Ltd. Vs. DCIT [ 2017 (5) TMI 403 - SUPREME COURT] and MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT] AO, without having recorded requisite satisfaction as to how the computations made by the assessee were not correct, could not be clinched with the blanket jurisdiction to apply Rule 8D. Therefore, the additional disallowance made by Ld. AO could not be sustained under law. By deleting the additional disallowance of Rs. 6.80 Lacs, we allow the appeal.

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• 2019 (5) TMI 1314
  Penalty u/s 271(1)(c) - claim of deduction u/s 54 - quantum addition deleted by Tribunal - HELD THAT:- It is evident, the basis for imposition of penalty under section 271(1)(c) of the Act is the disallowance of assessee s claim of deduction under section 54. Tribunal while deciding assessee s quantum appeal in the order referred to above has allowed assessee s claim of deduction under section 54 - the very foundation on which the penalty under section 271(1)(c) of the Act was imposed no longer exists. That being the case, the penalty imposed under section 271(1)(c) of the Act cannot also survive. Accordingly, we delete the penalty imposed under section 271(1)(c) of the Act for the impugned assessment year. Assessee s Grounds are allowed.

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• 2019 (5) TMI 1313
  Penalty u/s. 271(1)(c) - bogus purchases from Hawala dealers - plausible explanation - HELD THAT:- Upon perusal of assessee s submissions during appellate proceedings, we find that the assessee s plea revolve around the fact that the purchases were made under bona-fide belief and in good faith that the suppliers were genuine. The suppliers used to visit assessee s shop to supply the material as per routine practice. The TIN of the suppliers was found active at the time of purchase of goods. We find the explanation to be plausible one and the overall conduct of the assessee do not inspire us to confirm the penalty

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• 2019 (5) TMI 1312
  Unexplained jewellery - addition based no source of the jewellery given - HELD THAT:- Gold jewellery which was intercepted by the Police Authorities under suspicious circumstances, has been declared by Hon ble Judicial Magistrate as belonging to Sh. Dhiraj Kumar, the possessor thereof which is evident from the orders of Hon ble court as placed on record. Nothing on record suggest that Sh. Dhiraj Kumar was not an employee of the assessee company and the said jewellery did not belong to assessee company. In fact, the statement of Sh. Dhiraj Kumar as well as the director of the assessee company, in unison, confirm the said facts. Proceeding further, the said jewellery was duly accounted for in the stock registers submitted by the assessee during assessment proceedings and the assessee produced documentary evidences in the shape of sales invoices, authorization letter issued by assessee in respect of goods to be delivered to the aforesaid parties, copy of issue vouchers for gold bars weighing 796.810 grams issued by M/s Swasthikas Jewelers. The stock of gold jewellery under dispute, upon release by judicial authorities, has been received back in the stock register maintained by the assessee and hence, duly accounted for. Lastly, the whole basis of making additions i.e. denial by the 3 parties as to placing any work order with the assessee, was never confronted to the assessee which was in violation of principle of natural justice. It is trite law that no addition could be made merely on the basis of suspicion, conjectures or surmises. In fact, the assessee has supplied the jewellery to few of these parties subsequently during the impugned AY itself which further weakens that stand of Ld.AO. The given factual matrix convinces us to concur with the stand taken by Ld. first appellate authority in the impugned order. By confirming the same, we dismiss revenue s appeal.

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• 2019 (5) TMI 1311
  Re-assessment proceeding u/s 147 - reopening within period of four years - no sanction u/s 151(2) - Bogus purchases - HELD THAT:- We concur with the stand taken by Ld. first appellate authority. The proceedings were triggered within 4 years from the end of relevant AY and therefore, sanction u/s 151(2) was not required and also, the first proviso to Section 147 was not applicable since the original return was processed u/s 143(1). AO was clinched with tangible information in the shape of information from Sales Tax Authorities which prima-facie suggested possible escapement of income in the hands of the assessee. Hence, no infirmity could be found in triggering reassessment proceedings against the assessee - Decided against assessee Violation of principle of natural justice would stand dismissed since nothing on record suggest that the assessee was not provided with sufficient opportunity of being heard and defend his case. Rejection of books of accounts - HELD THAT:- AO has only disturbed the purchases and partial relief has already been provided by first appellate authority. Therefore, there could be no occasion to be aggrieved by rejection of books since the issue is limited to estimation on account of alleged bogus purchases only. This ground stand dismissed. Bogus purchases - Quantum additions - there could be no sale without actual purchase of material keeping in view the assessee s nature of business. The sales turnover was not disputed by AO and the assessee was in possession of primary purchase documents viz. copies of invoices and the payments were through banking channels. At the same time, notices issued u/s 133(6) elicited no satisfactory response. The assessee failed to produce any of the suppliers to confirm the transactions. In fact, the assessee, in statement u/s 131, could not even identify the suppliers. Therefore, Ld. CIT(A), in our opinion, clinched the issue in right perspective. Keeping in view the fact that the applicable VAT rate on iron steel was on lower side and the assessee was trading in low-margin item, we reduce the estimation to 5% of alleged bogus purchases of Rs. 2,78,12,020/- which comes to Rs. 13,90,601/-. The balance addition stand deleted. Ground partly allowed.

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• 2019 (5) TMI 1310
  Disallowance of legal professional fees - assessee was advertising agency rendering various services - payment to a marketing and PR consultants - HELD THAT:- We find that the assessee, during assessment proceedings, had placed on record the copies of bills issued by Ms.Sharon Dias indicating the nature of expenditure etc. The copy of agreement entered into with Percept Ltd. for provision of services was also placed before Ld. AO. However, the Ld. AO, completely disregarding the same, proceeded on wrong footing that the assessee had not carried out any business during the year and therefore, the expenditure was not allowable either u/s 37(1) or u/s 57(iii). The stated facts also controvert the argument of the revenue that the Ld. first appellate authority erred in admitting additional evidences. Another undisputed fact is that the assessee has made similar payments to these payees in AY 2009-10 which has been allowed as business expenditure by revenue in an assessment u/s 143(3) and therefore, the additions, in our opinion, on similar facts, was not justified. No infirmity in the stand of Ld. first appellate authority, in this regard. Accordingly, ground Nos. 1 to 3 stands dismissed. Addition u/s 41(1) - substantial accounts of Sundry Creditors have been squared off by the assessee during impugned AY itself - HELD THAT:- The balance amount has been paid in subsequent years. Therefore, under the circumstances, nothing would suggest that there was remission or cessation of liability within the meaning of Sec. 41(1), in any manner. In fact, AO, in the process of making addition u/s 41(1), has disallowed entire expenditure claimed by the assessee against those Sundry Creditors, which was never the case of AO. No material has been brought on record to establish that the assessee s liability with respect to Sundry Creditors ceased to exist, in any manner. Further, during assessment proceedings, the assessee had placed on record most of the account confirmations from these parties. This being the case, no infirmity could not be found in the impugned order with respect to this addition. By upholding the stand of Ld. first appellate authority, we dismiss the revenue s grounds of appeal.

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• 2019 (5) TMI 1309
  Penalty u/s 271(1)(c) - Addition of interest received on fixed deposit and interest received from other parties - HELD THAT:- Undisputedly, in the assessment order, while initiating penalty proceedings under section 271(1)(c) in respect of the aforesaid addition, AO has not recorded any satisfaction with regard to the exact offence committed by the assessee requiring imposition of penalty under section 271(1)(c) - AO has simply mentioned initiate penalty u/s 271(1)(c) . He has not stated whether initiation of penalty proceeding is for furnishing of inaccurate particulars of income or for concealment of income or for both. Only in the penalty order passed under section 271(1)(c), he has stated that penalty is imposed for furnishing inaccurate particulars of income. AO has failed to record any satisfaction with regard to the nature of offence committed by the assessee requiring imposition of penalty under section 271(1)(c) of the Act. For this reason alone, the order imposing penalty under section 271(1)(c) of the Act is unsustainable. Disputed addition on the basis of which penalty imposed is on account of deduction claimed towards interest paid to partners @ 15% as against the admissible rate of interest of 12% - addition made is on account of differential interest amounting to 3% - the contention of the assessee is that the claim of deduction of interest payment @ 15% is a bona fide error since in no other assessment year the assessee has claimed such deduction at a higher rate. We find the aforesaid explanation of the assessee plausible. Moreover, full particulars regarding the payment of interest were available with the Assessing Officer. It is also not the case of the AO that interest payment to partners is inadmissible. In the aforesaid view of the matter, we hold that the assessee cannot be accused of furnishing inaccurate particulars of income so as to attract the provisions of section 271(1)(c)

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• 2019 (5) TMI 1308
  Addition u/s 80-I 80-IA - in respect of industrial unit No. 1 2 - grinding units for soap stone - AO denied the claim by holding that the process of crushing boulders to obtain stones of smaller size termed as gitti cannot be regarded as a process manufacturing or production - CIT(A) upheld on the ground that primarily the certificate in Form No. 10CCB was incomplete to the extent of computing of amount of deduction was not mentioned in the said certificate and secondly unit no. 2 was not having the necessary infrastructure to carry out the activity has been claimed by the assessee - proof of production or manufacturing HELD THAT:- Once, the books of accounts of the assessee are audited then the computation of deduction cannot be questioned without find out any apparent mistake. Therefore, this technical objection of the ld. CIT(A) in the certificate in Form No. 10CCB cannot be a reason for denial of deduction U/s 80I IA of the Act in the reassessment and set aside proceedings when the AO has already allowed the claim of the assessee while passing the assessment U/s 143(3) of the Act. The AO has reopened the assessment to deny the claim only on the ground that in view of the decision of Hon ble Bombay High Court in case of CIT vs. Premier Construction Co. (supra) the activity carried out by the assessee does not ambit production or article. Hence, the AO never disputed the nature of actually activity carried out by the assessee. Thus, question of genuineness of the activity in the set aside proceeding that too arising from reassessment proceeding after allowing the claim in the assessment frame U/s 143(3) of the Act is not permitted. Hence, in the facts and circumstances of the case, we do not concur with view of the ld. CIT(A) on this objection of incomplete certificate in Form No. 10CCB. The assessee is undertaking the process of broking the big boulders into small size of required dimension then removing the impurities from the surface of the lumbs through machinery boulders, the process is known as dressing process of lumbs then washed by water to remove siliceous and other impurities and therefore, these are crushed to reduce in the desired size and grade of soap stone powder. These different grades of soap powder is being used by different industries and the assessee is accordingly converting raw soap stone into powder as per requirement of industries. Therefore, the outcome being the soap stone powder of different grades is a different and distinct marketable article from the input which is raw boulder soap stone. Accordingly, the process which is undertaken by the assessee is production and manufactured eligible for deduction U/s 80I IA of the Act. AR has also filed the balance sheet of these years to show the closing stock of the preceding year is reflected as opening stock of the subsequent year in the financial accounts of the assessee and therefore, the assessee has produced all the requisite details and material to show that the claim of deduction under the provisions of U/s U/s 80I IA of the Act is in order. Accordingly, we set aside the orders of the authorities below and allow the claim of the assessee - Decided in favour of assessee.

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• 2019 (5) TMI 1307
  Bogus purchases - purchased materials for its construction/road contracts - huge turnover of assessee to the tune of Rs. 606.49 cr. which has been accepted by the AO - notice u/s. 133(6) issued all the parties have duly replied and had confirmed the purchases made by the assessee - HELD THAT:- Without purchasing the construction materials, the assessee could not have constructed the roads etc. and since the assessee s turnover has been accepted in toto and when the parties M/s. SRDL as well as M/s. KIPL has given the confirmation along with the fact that payments were through banking channel and other documents as aforesaid, question of disallowance of the expenses claimed by the assessee does not arise. It goes without saying that entire contract receipt can never be the income and only the net income after deducting corresponding expenses can be taxed. Disallowances have been made only on suspicion; and suspicion howsoever strong cannot take the place of the proof. CIT(A) by giving partial relief to the assessee has recognized the genunity of purchases on the bills submitted, which goes against the theory of bogus purchases as held by the AO and cannot be sustained and, therefore, we are inclined to allow this ground of appeal of the assessee and confirm the action of the CIT(A) to the partial relief granted by him and direct the AO to allow claim of expenditure of the assessee incurred for purchases from M/s. SRDL and M/s. KIPL. Thus, the assessee succeeds and the revenue fails in this ground. Addition for payment made to M/s SREI Infrastructure Finance Ltd. - HELD THAT:- We note that M/s. SREI is regularly filing its returns with the Registrar of Companies and the payments have been made by the assessee to M/s. SREI by account payee cheques or through RTGS. Taking note of all these facts and taking note of the fact that the inconsistency/mismatch highlighted by the AO has been also rightly addressed by the Ld. CIT(A) in the form of a chart placed at page 26 of his order and the Ld AR, pain stakingly took us through the Paper-book and explained to us and reconciled the figures before us. - Decided against revenue

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• 2019 (5) TMI 1306
  Disallowance u/s 14A r.w.r. 8D - no exempt income is received or receivable during the previous year - HELD THAT:- On a perusal of the decision of the Coordinate Bench, we find that identical issue came up for hearing for the A.Y. 2011-12 wherein the Tribunal sustained the order of the CIT(A) in restricting the disallowance u/s. 14A r.w.r. 8D to the dividend income earned by the assessee during the relevant Assessment year. In view of the order of the Tribunal for the A.Y. 2011-12 [ 2019 (3) TMI 1583 - ITAT MUMBAI] and the facts being identical, we uphold the order of the CIT(A) in restricting the disallowance u/s. 14A r.w. Rule 8D to the dividend income earned by the assessee during these three Assessment years which are under appeal before us. Accordingly, we sustain the order of the CIT(A) and uphold the findings. Grounds raised by the Revenue are dismissed.

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• 2019 (5) TMI 1305
  Undisclosed investment in furniture and fixture - addition on the ground that assessee during the course of survey has offered towards investment in furnishing and in equipments in showroom over and above the investment already recorded in the books of account which was subsequently retracted - second round of proceedings after remand by High Court to examine investment - onus of proof - HELD THAT:- Once, the basis of surrender and letter written by the AO stands negated by the Tribunal later on by the High Court in the sense that the Hon ble High Court has directed the AO to consider the issue of purported investment afresh and assessee is open to challenge the said proposed addition on the ground that there is no basis for making such addition, then it was not open for the AO to again make the addition on same reasoning. If the assessee has denied making any such investment and had shown certain investment in the books, then onus shifts upon the AO to bring on record either by way of inquiry or any material which has been found during the course of survey that there was certain investment in fixture and furniture during the relevant Assessment Years. Even in the DVO s report the subject matter of valuation was not the investment in fixture and furniture but was only restricted to the investment made in the construction of building. Thus, even the DVO s report does not support the case of the AO Once there is no material to support such addition then addition cannot be made on certain estimate or presumption and accordingly same is directed to be deleted. - Decided in favour of assessee.

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• 2019 (5) TMI 1304
  Disallowance of commission expenses - HELD THAT:- We find force in the contention AR for the assessee that the turnover of the assessee was quite huge amounting to Rs. 24,31,54,719/- which is not possible without the involvement of the commission agents in this kind of trade. The learned DR has not brought anything on record against the contention of the assessee. We also disagree with the contention of the DR to refer the matter to the AO for conducting the necessary inquiries from the commission agents. It is because the AO had sufficient details in its possession during the assessment proceedings. Therefore, we are reluctant to provide further opportunity to the Revenue for making the fresh inquiries on the same set of documents. We are not impressed with the finding of lower authorities. Therefore, we reverse the order of the authorities below - delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. Addition on account of capital contribution - HELD THAT:- In the instant case, the assessee failed to furnish the supporting evidence for the capital contribution of Rs. 90,000 only. Indeed there was a credit amount reflected in the bank statement of the assessee amounting to Rs. 90,000/- but the onus is on the assessee to substantiate the same as a gift received from his brother on the basis of documentary evidence. AR before us has also not provided any details to adjust the same with the telescoping benefit. Thus in the absence of any documentary evidence, we are not inclined to disturb the finding of the authorities below. Hence the ground of appeal of the assessee is dismissed. Disallowance of depreciation - asset put to use - assets which are ready to use but were not put to use because their use depends upon the operation of other machinery which were not actually ready to use before 30th September - HELD THAT:- In this regard, we note that the use of the plant and machinery depended upon the operation of the furnace which was not put to use before 30th September 2010. No ambiguity that the plant machinery were not put to use before 30th September. Accordingly, we hold that the assessee was entitled to depreciation at the rate of 50%. Thus we do not find any infirmity in the order of authorities below. Hence the ground of appeal of the assessee is dismissed. Ad-hock disallowance @20% of telephone and administrative expenses - HELD THAT:- The learned counsel for the assessee has also not produced any documentary evidence to justify that there was no personal element in the aforesaid expenses. However, in our considered view the AO before making the disallowance of the expenses on an ad-hoc basis should have referred the claim made by the assessee in the earlier years as well as in the subsequent years which he failed to do. However, we are of the view that the disallowance at the rate of 20% is slightly on the higher side. Therefore, in the interest of justice and fair play we restrict the disallowance to the extent of 10% of the total expenses.

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• 2019 (5) TMI 1298
  Penalty u/s 271[1][c] - excessive deduction claimed under Section 10B - Additions made in the income on account of alleged excess stock - HELD THAT:- SLP dismissed.

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• 2019 (5) TMI 1297
  TDS u/s 194C OR 194J - placement fees / carriage fees paid to cable operators / MSO / DTH Operators - payments for work contract OR fees for technical service u/s 194J - IITAT and HC held the payments for work contract covered u/s 194C and not fees for technical service u/s 194J - HELD THAT:- No question of law arises. The Special Leave Petition is dismissed.

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• 2019 (5) TMI 1279
  Whether compensation payable for acquisition of land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is amenable to income tax and if so whether at the time of payment of compensation there is a requirement for deduction of Tax at Source (TDS)? - HELD THAT:- The compensation having been determined to be paid to each of the Petitioners under the 2013 Act is not liable for deduction of Income Tax, much less TDS. A direction is issued to refund to the Petitioners in WP(C) No. 13960/2018 the TDS amount deducted on or before 31st May, 2019 together with simple interest at 6% p.a. from the date of deduction of the TDS amount till the date of payment, which should not be later than 31st May, 2019. If the refund is delayed beyond that period simple interest at 9% p.a. will be paid by the CALA on the said sum for the period of delay. Petition disposed off.

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• Customs

• 2019 (5) TMI 1303
  Bail application - specific allegation is that the applicant herein, while holding a high office in the office of customs, collected Passenger Manifest Data from from Airline Operators and handed it over to the licensee to enable them to manipulate their sales data in respect of foreign made foreign liquor sold by them from the duty free shops - HELD THAT:- The allegations against the applicant, cannot, at this stage, be stated to be frivolous or vexatious. Certain incriminating materials are produced before this Court showing his complicity. The contention of the learned senior counsel appearing for the applicant that his personal relationship with the licensee and their employees cannot have any bearing in the facts and circumstances cannot be accepted. A deeper probe into the allegations are not warranted at this stage. The notice having been issued by a senior officer, the applicant will have to appear and comply with the directions. His apprehension that he would inevitably be arrested and tortured appears to be misconceived. The power to arrest is circumscribed by objective considerations and cannot be exercised on whims, caprice or fancy of the officer. The nature and gravity of the allegations are such that I am not persuaded to arm the applicant with an order of anticipatory bail. Application dismissed.

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• 2019 (5) TMI 1302
  Refund of Anti-Dumping Duty paid - Polished Porcelain Tiles - Central Government vide Notification No. 12/2016 Cus. (ADD) dated 29.03.2016 notified Anti-Dumping Duty on Polished Porcelain Tiles, but on the date of filing of Bill of Entry, the Notification was not in force - application for refund was rejected on the ground that the date of Notification appearing in the Gazette is 29.03.2016 and since the appellant has neither challenged the original assessment in the Bill of Entry nor had paid the duty under protest hence not eligible for refund in terms of Circular No. 24/2004 Cus. dated 18.03.2004. Effective date of Notification of Anti-Dumping duty - HELD THAT:- The appellant has proved on record that the said Notification No. 29/2016 dated 29.03.2016 was not in force on the date when the Bill of Entry was filed and this is clear from the reply given by the Publication Department of the Central Government on RTI application filed by the appellant confirming that the Notification was published on 02.04.2016 at 9.11 am. A Notification comes into force only from the date when the said Notification is published in the Official Gazette and in the present case the Anti-Dumping duty Notification was published on 02.04.2016. Therefore, the appellant was not liable to pay Anti-Dumping duty on 29.03.2016 when he filed the Bill of Entry and the said duty paid by him is paid under mistake. Rejection of refund on the ground of non challenging the assessment order - HELD THAT:- After the amendment in Section 17 and 27 of the Customs Act 1962 w.e.f. 08.04.2011, there is no need to challenge the self-assessment made by the importer as there is no assessment order. Hon ble High Court of Delhi in the case of Micromax Informatics Ltd. [ 2016 (3) TMI 431 - DELHI HIGH COURT] has held that after 8th April, 2011, as long as customs duty or interest has been paid or borne by a person, a claim for refund made by such person u/s 27(1) of the Act as it now stands, will have to be entertained and an order passed thereon by the authority concerned even where an order of assessment may not have reviewed or modified in appeal. Accordingly, the impugned order of the rejecting the refund claim of the petitioner on the ground of maintainability was, for the aforementioned reasons, plainly erroneous. In view of my discussion above and by following the ratios as laid down in the decision cited supra, I am of the considered view that the impugned order is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant with consequential relief, if any. - appeal allowed

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• 2019 (5) TMI 1301
  Provisional release of goods - allegation of the Department that the price value declared as well as the classification declared by the appellant is incorrect, is without any factual basis - Powers of Tribunal under Rule 41 of the CESTAT - HELD THAT:- It is seen that the Bill-of-Entry was filed on 09.11.2016. The appellant has not filed any application for provisional release of the goods during the pendency of the proceedings before the authorities below. In case the appellant had filed such an application and the same was rejected, the appellant could have filed an appeal before the Tribunal against such rejection of provisional release application. The appellant has not opted for provisional release at the earliest opportunity i.e., during the pendency of proceedings before the adjudicating authority. After passing the impugned Order and confirming the mis-declaration, mis-classification of the goods and also confirmation of the duty demand and imposing redemption fine, the appellant cannot at this stage request for provisional release - Further, to consider the issue of provisional release at this stage, it would be necessary to hear the arguments in detail and the decision would touch the merits of the case itself. The issue of mis-declaration and mis-classification are the main allegations in the Show Cause Notice. The goods are not in the nature of easily perishable goods. The appellant has waited for around two years and four months to file this application for provisional release - Application for provisional release of the goods is therefore dismissed.

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• 2019 (5) TMI 1296
  Retention of goods at Port - inaction on the part of revenue to classify the goods - it was alleged that the import is not accompanied by essential documents required for this product - Sl.No.36 of official gazette notification dated 13.08.2018 - sum and substance of the grievance is continuous inaction of the respondent in dealing with Exts.P5 and P11 bills of entries submitted by the importers/petitioners - HELD THAT:- Though some attempt has been made to convince this Court with the respective versions of the parties, this Court is not persuaded to examine these submissions, however is of the view that the respondent could be directed to complete classification of goods covered by Exts.P5 and P11, within three months from today. Petition disposed off.

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• Insolvency & Bankruptcy

• 2019 (5) TMI 1300
  Recovery of debt from Corporate Debtor - pre-existence of dispute or not - Change of address of registered office of Corporate Debtor from Mumbai to Gujarat - Jurisdictional change for chamge in registered office - HELD THAT:- Although the Registered Office of the Corporate Debtor allowed to be changed from Mumbai to Gujarat in Order dated 30.01.2017 of the Registrar of Companies, Mumbai, the Order specifically mentioned that, quote, (b) Further as regards dispute between the Company and M/s. APDAX Constructions, there will be no jurisdictional change for initiating any legal action, even after change in registered office of the Company. Accordingly, the impugned Petition deserves to be adjudicated in Mumbai. It is worth to mention that since this is a Petition under Section 9, therefore, the element of pre-existence of Dispute has to be examined before Admission of the Petition. It is an ascertainable position, as is emerging from the evidences on record, that all the six Invoices against which payments of Rs.72,83,566/-(inclusive of Service Tax) are allegedly pending, were raised by the Operational Creditor on 06.12.2014 and followed up through various emails subsequently. It is clear that there is an existing of dispute (default) in this case prior to the date of raising of Invoices by the Operational Creditor. The impugned Invoices are dated 06.12.2014 whereas the communication of defects from the Respondent was in October, 2014. Therefore, it is an undisputed fact that there is an existing dispute in this matter. The petition does not deserve admission and is dismissed.

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• 2019 (5) TMI 1295
  Initiation of Corporate Insolvency Resolution Process - Service of Demand Notice - sub-sections (1) and (2) of Section 9 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- The petitioner has filed the copies of the invoices demanding payment from the respondent in respect of the delivery of goods supplied by the petitioner, which were delivered to the respondentcorporate debtor, as already observed, thereby complying with Section (3) of Section 9 of the Code. Mr. Prashant Pathak, Managing Director duly authorised by the petitioner has filed the affidavit dated 03. 08. 2018 (Annexure 13) stating that the corporate debtor has neither disputed the existence of or the amount of unpaid operational debt nor provided the details of the pendency of the suit or arbitration proceedings in relation to any such dispute filed. It is further stated that there is no notice given by the corporate debtor in relation to a dispute of unpaid operational debt. The petitioner has satisfied the requirement of clause (b) of Section 9 (3) of the Code. The petitioner has also filed a copy of the bank statement from 26. 06. 2018 onwards. The petitioner, therefore, has complied with the requirement of Section (c) of Section 9 (3) of the Code. The petitioner being the operational creditor is not obliged to propose the name of the Resolution Professional to be appointed as the Interim Resolution Professional by this Tribunal. Therefore, the Tribunal has to proceed in terms of clause (a) of Section 16 (3) of the Code in case the petition is admitted - all the requirement of Clause (i) of Section 9 (5) of the Code stand fulfilled. The petition is admitted under Section 9 of the Code.

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• 2019 (5) TMI 1294
  Liquidation of the corporate debtor - Section 33(1) of the Code - required percentage of the voting share not present - HELD THAT:- As per Section 33(2) of the Code, the decision of the COC to liquidate the corporate debtor is required to be approved by not less than 66% of the voting share - In the present case, it is stated that in the second meeting of the COC held on 29.09.2018, only 36.87% of the total voting share of COC were present and unanimously decided for liquidation of the corporate debtor. The decision of the COC to liquidate the corporate debtor does not therefore, have the approval of the required percentage of the voting share. Section 33(1)(a) of the Code inter alia states that where the Adjudicating Authority, before the expiry of the CIRP, does not receive a resolution plan under Section 30(6) of the Code, it shall pass an order requiring the corporate debtor to be liquidated in the manner as laid down in Chapter 3 of the Code - In the present case, no such resolution plan has been received. The corporate debtor to be liquidated in the manner as laid down in Chapter III of the Code. Ratification of expenses and fee of IRP/RP during the CIRP - HELD THAT:- So far as the claim with regard to expenses of RP is concerned, the learned counsel for the RP submits that the same would be made part of the liquidation cost or the cost of Corporate Insolvency Resolution Process and therefore, the prayer presently is confined only with regard to the liquidation of the corporate debtor for which the COC has taken a decision on 29.09.2018. In accordance with Regulation 13 of the Liquidation Process Regulations, 2016, the Liquidator shall file his preliminary report within 75 days and to file regular progress reports as per Rule 15 of the Liquidation Process Regulations 2016 every fortnightly thereafter - It is clarified that the Financial Creditors are not debarred from having recourse to enforce the personal guarantees and to take proper steps in this regard. Application disposed off.

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• Service Tax

• 2019 (5) TMI 1299
  Taxability -Transfer of of Land Development Rights - Tri-partite agreement - it was alleged that the appellant has transferred development rights, therefore, they are liable to pay service tax on the said activity - Imposition of penalty - whether the appellant has transferred any land development right in favour of M/s DLF Ltd. or not? HELD THAT:- As per the business module of M/s DLF Ltd. they are engaged in the business of Real Estate Development of integrated township and construction. As per their business module, they appointed the appellant to purchase the land on their behalf and thereafter to obtain certain permissions from various Govt. Department and to handover the land to DLF Ltd. as per agreement dated 02.08.2006 for further development and thereafter to transfer the same to the appellant for construction and sale the flats/properties developed by M/s DLF Ltd to various prospective buyers. At the time of transferring the constructed property to prospective buyers, there is a tri-pirate agreement between the land owning company, M/s DLF Ltd. and the prospective buyers and documents of transfer of title were executed at that time. It shows that in the entire transaction, the LOCs remain the owner of the land and as per the agreement, the development activities is taken place and thereafter developed property was sold by M/s DLF Ltd as per tri-pirate agreement to the prospective buyers upon execution of sale deed of land by the LOCs. Admittedly, from the facts of the case, it emerges that the advance to purchase of land given by M/s DLF Ltd to the appellant which has been further given to the LOCs to purchase the land who ultimately purchased the land. The activity of the appellant would have been started only after acquisition of land and thereafter to procure NOC from the various Govt. Authorities and thereafter development activities on the land. The agreement which is based in this case dated 02.08.2006 does not say that the appellant have actually transferred the development rights - when the appellant never remain the owner of the land at the time of receiving the advance from M/s DLF Ltd. against purchase of land by the appellant, how can be the appellant transfer the land development right to M/s DLF Ltd. It is a fact on record that the appellant is not the owner of the land, therefore, how can he transfer development rights to M/s DLF Ltd. and as per the records, the amount given by M/s DLF Ltd. has been transferred by the appellant to various LOCs for purchase of the land. Therefore, it is mere transaction of the sale and purchase of land or purchase of land by the appellant for DLF Ltd. for further development. As appellant did not get any ownership of the land, in that circumstances, transfer of development right does not arises. Under the Development Agreement dated 05.12.2006, it is stated that there would be transfer of Development Rights in future and the Developer were permitted to carry out the developmental activities as per clause 2.2 of the Development Agreement, wherein the developer is permitted to enter the scheduled property for carrying out developmental activities. After the developmental activities have been carried out, sale deed is executed among the three parties namely Landowner, Developer and the Purchaser under which the title to the undivided portion of the land is transferred to the various vendees/purchasers from time to time as and when the Conveyance Deed/Sale Deed is executed in future. We further observe that it is not only the possession, which stood transferred with the right to use, enjoy and construct building/super structure, but, at the same time, undivided right, title and interest in the land also stand transferred under the Deed of Conveyance on which stamp duty has been paid and the Deed of Conveyance has been registered before the Sub-Registrar. Thus, it is a factual aspect of the case that the amount remitted by M/s DLF Ltd to the appellant is towards the acquisition of land by the LOCs which the said payment received from M/s DLF. Ltd was transferred to LOCs for acquisition of land. Further, no physical acquisition of land was taken over by the appellant. Consequently, the appellant have no right to transfer land development to M/s DLF Ltd. - it is clear that the appellant has not transferred any land development right to M/s DLF Ltd. or its subsidiary nominees etc. The immovable property includes land benefit arising out of land. In the case of transfer of development rights of the land, therefore, it is to be seen in the legal aspect whether the benefit arising out of land can be equated to transfer of development rights of land or not? - the transferrable development right is immovable property, therefore, the transfer of development rights in the case in hand is termed as immovable property in terms of Section 3 (26) of General Clauses Act, 1897 and no service tax is payable as per the exclusion in terms of Section 65B(44) of the Finance Act, 1994. Extended period of limitation - HELD THAT:- From time to time the query was made to the Revenue by the trade organization as well as M/s DLF Ltd whether they are liable to pay service tax on transfer of development right of land or not and the same was not answered till yet which means revenue itself is not clear whether the said activity is taxable service or not. In that circumstances, we hold that the extended period of limitation is not invokable and it cannot be said that the appellant did not pay service tax with malafide intentions. The activity in question which is only acquisition of land, therefore, no service tax is payable by the appellant in terms of Section 65B(44) of the Finance Act. Therefore, whole of the demand against the appellant is not sustainable. Consequently, the impugned order is set-aside. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1293
  Refund of accumulated CENVAT Credit - Rule 5 of the Cenvat Credit Rules, 2004 - denial on account of nexus between input services and output services exported - HELD THAT:- CBEC Circular No. 334/1/2012-TRU dated 16.03.2012 elaborately explains the changes made in the service tax the Government of India, Tax Research Unit. The impugned order to the extent it is contested is liable to be set aside and accordingly set aside - appeal is allowed

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• 2019 (5) TMI 1292
  Refund of unutilized CENVAT Credit - input services - Construction Services - rejection on the ground that no documentary evidence was filed to substantiate the nature of work involved and that no nexus established between input service and the output - HELD THAT:- There is force in the contention of the appellant that the requirement of establishing nexus between input service and the output has been done away with by the Board itself vide D.O.F. No. 334/1/2012-TRU dated 16.03.2012. There is no requirement to demonstrate the nexus between the input services and the output - Construction Services were used in modernization and renovation of the premises has not been doubted by the Revenue - refund allowed. CENVAT credit - input services - Interior Decorator Services - HELD THAT:- The authorities below have held that the same was not an input service covered by the inclusive part of the definition and not even under the illustration of activities relating to business as defined under Rule 2(l) of the CCR, 2004; that Interior Decorator Service was nowhere related to the registered output service. The authorities below therefore rejected the refund holding that there was no nexus between the input and the output, with Interior Decorator Service not being a must for carrying out the appellant s output service. Input services - Works contract service - HELD THAT:- Though the appellant has given details which are also noted by the adjudicating authority, the said contention has not been held to be wrong, but the only reason for denial is that the same was excluded by Rule 2(l) ibid. On going through the definition in terms of Rule 2(l) ibid as amended with effect from 01.04.2011, I find that the provision makes it clear that the services utilized in relation to modernization, renovation and repair of the factor would definitely fall within the meaning of input services even though the construction of a building or of a civil structure or part thereof is placed under the exclusion clause - Board vide Circular No. 943/04/2011-CX dated 29.04.2011 clarified that the input service used in modernization, renovation or repair has been clarified to be eligible for credit. Input services - Air Travel Services - denial on the ground that the appellant was unable to establish the nexus - HELD THAT:- The Board itself has clarified vide D.O.F. No. 334/1/2012-TRU dated 16.03.2012, which is binding on the authorities below and the authorities below having not followed, the impugned order cannot sustain - Credit allowed. Input services - Rent-a-Cab Services - appellant submits that it was not an issue taken up for adjudication and therefore, the Commissioner (Appeals) has gone beyond the scope of both the Show Cause Notice as well as the adjudication order - HELD THAT:- After going through the orders of the lower authorities, the same was never an issue right from the beginning, the same was also not even a part of the grounds of appeal urged before the first appellate authority and also before this forum. Therefore, no order is passed. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1291
  Refund of unutilized CENVAT Credit - Rule 5 of the CCR, 2004 read with Notification No. 27/2012-CE (NT) dated 18.06.2012 - rejection on the ground that the appellant has not complied with Clause 2(h) of the Notification - HELD THAT:- The only issue on which the refund claims have been rejected is that the appellant has not complied with condition 2(h) of Notification No. 27/2012-CE (NT) dated 18.06.2012. The said condition does not require the assessee to reflect the amount debited in their ST-3 returns. It is sufficient if the assessee/appellant debits the amount claimed as refund in their accounts. There is no dispute that the appellant has not debited the amount in their account. The rejection of refund claim on the allegation that the appellant has not complied with condition 2(h) of the Notification is unjustified - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1290
  Rebate Claim/refund of service tax - export of goods - para 3 of Notification No.41/2012-ST, dated 29.06.2012 - services availed beyond the place of removal - HELD THAT:- The words beyond the place of removal has been deleted and instead by the amendment notification the definition of specified services is defined to mean as the taxable services that have been used beyond factory or any other place or premises of production or manufacture of the said goods for their export . Thus when the taxable services have been used beyond factory or beyond any other place, the same would be eligible for rebate/refund. The interpretations of the authorities below that these services are input services and, therefore, when such services are used beyond the place of removal, they are not eligible for credit is misconceived. The definition of input services as given in Cenvat Credit Rules lay down the law with regard to eligibility of credit. When separate definition is given in notification with regard to the specified services for which refund can be claimed, the definition of input services cannot be imported to the application of refund. It is also to be said that the intention of the said notification granting refund/rebate is to make the export of goods free from duty and taxes. The rejection of refund claim on the specified services is against law and unjustified - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1289
  CENVAT Credit - duty paying documents - credit availed on the basis of manufacturer s invoices - extended period of limitation - suppression of facts - HELD THAT:- A perusal of the Show Cause Notice dated 19.10.2016 reveals that even though the same refers to the appellant s reply dated 05.12.2013 wherein the details of the credit taken by the appellant were submitted, the only lacuna pointed out is the non-production of original documents. Undisputedly, the appellant did not import ATM machines and consequently, there was no Customs Duty liability on the appellant. A perusal of the reply also makes it very clear that based on the original invoices only the CENVAT Credit was availed, which were maintained at various branches and the Head Office had only obtained the photocopies of the invoices for the sake of convenience. Extended period of limitation - HELD THAT:- The same has been acknowledged by the audit party of the Department and apparently, there is no action by the Revenue till 19.10.2016, which is the date of the Show Cause Notice, which is clearly beyond the perceivable period of limitation. The purchase took place in the year 2011. The Internal Audit enquired about it, issued questionnaire (in 2013) and got replies thereafter. If anything was wrong, then nothing prevented the Revenue from issuing soon thereafter, after entertaining a doubt, from issuing Show Cause Notice. From 2013 to 2016, hands changed and mind also, hence, it is clearly a case of change of opinion, which is covered by the above decision. The stand of the Revenue as to suppression is, therefore, only on imaginations, which is not supported by any documentary evidence. The Revenue has miserably failed to justify invoking larger period of limitation - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (5) TMI 1288
  Was the CESTAT justified in declining to extend the benefit of the order passed by the Settlement Commission to the present Appellant? - HELD THAT:- The Court is of the view that the mere fact that the Settlement Commission permitted the Department to proceed against the co-noticees in accordance with law did not mean that the co-noticees could not rely on the said order to argue, on the basis of the judgment of this Court in M/S. LESAG HBB (I) LTD. OTHER VERSUS COMMR. OF CENTRAL EXCISE DELHI OTHER [ 2016 (11) TMI 681 - DELHI HIGH COURT] that the proceedings against them ought to have been dropped under the KVS scheme Was the CESTAT obliged to deal with the appeal on merits notwithstanding the preliminary objection raised by the Department on issue above? - HELD THAT:- Once the CESTAT accepted the plea of the Department that the benefit of the order of the Settlement Commission should not be extended to the Appellant, the logical sequitur was that the appeal had to be then considered on merits. The Court fails to understand how the CESTAT could observe that nothing further remained to be decided in the appeals in view of the order of the Settlement Commission. Both the issues require reconsideration by the CESTAT - appeal allowed by way of remand.

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• 2019 (5) TMI 1287
  Manufacture of disposable syringe as also syringe components - N/N. 6/2006-CE dated 01/03/2006 - Revenue entertained a view that parts of syringes were being cleared by the appellant to only two companies of the appellants group at Gorakhpur and Guwahati - HELD THAT:- If the Jurisdictional Commissioner (Appeals) of the buyers unit of the appellants has held the processes undertaken at the buyer s premises as amounting to manufacture, it has to be held that the manufacture of the complete syringe takes place at the buyer s premises. In such a scenario, it cannot be held that what was being cleared by the appellant was a complete syringe - The findings of the Lower Authorities are only based upon the fact that the packaging material sent by the appellant alongwith various parts of the syringe bears the name of the buyer s unit. The matter has not been investigated thoroughly and the various submissions made by the appellant has not been adverted to by the Lower Authorities. Extended period of limitation - HELD THAT:- The entire demand is barred by limitation having been raised beyond the normal period. The issue involved is bona fide issue of interpretation and inasmuch as the various parts cleared by the appellants were under going further processes of manufacturer at the buyer s premises, appellants cannot be held guilty of non-payment of duty by way of any suppression or misstatement - the demand is also time barred. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1286
  Clandestine removal - shortage of 3135 Kgs of writing and printing paper - demand of duty has been confirmed on the basis of documents/ledger recovered during the course of investigation and on the basis of the records recovered from Transport Union Munsi Shri Mohan Singh - cross-examination denied - imposition of penalties - HELD THAT:- The appellants sought cross examination of the persons from whom the documents have been recovered and the buyers of the goods whose statements have been relied upon by the Revenue, but no such cross examination has been granted, therefore, there is a gross violation of procedure laid down under Section 9-D of the Central Excise Act, 1944. As it is a matter of 17 years old, therefore, no purpose shall be served by remanding matter back to the adjudicating authority for cross examination as held by this Tribunal in the case of M/S. MANISH VINYLS, SHRI O.P. KHETAN, DIRECTOR VERSUS CCE, FARIDABAD [ 2019 (4) TMI 434 - CESTAT CHANDIGARH ], in that circumstances, as demand is on the basis of the documents which have not been proved by the Revenue with corroborative evidence, the demand of Rs. 33,27,521/- is not sustainable. The said demand is set-aside and remaining demand of duty is confirmed as admitted by the appellant - further as the appellant has paid an amount of Rs. 5,64,611/- alongwith interest and 25% penalty within 30 days of the passing of the order, the said demand is confirmed alongwith interest and penalty is reduced to 25% of Rs. 5,64,611/- against M/s Shreyans Industires Ltd. Penalty imposed on Shri Anil Kumar, Executive Director - HELD THAT:- No statement has been able to prove that Shri Anil Kumar was ever having knowledge of clandestine removal of goods, therefore, the penalty on Shri Anil Kumar is not sustainable. Penalty imposed on the other appellants - HELD THAT:- As per the statements recorded during the course of investigation and admission by the appellants, therefore, they cannot escape from their liability of penalizing on them who were engaged in clandestine removal of goods, therefore, the penalty is imposable on the appellants, but, a penalty of Rs. 2,00,000/- has been imposed on M/s Gian Chand Krishan Chand, the penalty is on higher size, the same is reduced to Rs. 25,000/-. Penalty imposed on Shri Raman Marwaha - HELD THAT:- The penalty is reduced to Rs. 50,000/-, penalty imposed on Shri R. K. Mahajan and Shri Vivek Shirotiya to 20,000/- each and penalty imposed on Shri Puneet Kumar is reduced to Rs. 10,000/-. Appeal allowed in part.

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• 2019 (5) TMI 1285
  Clandestine removal - chewing Tobacco and packing - It appeared to revenue that said quantity of packed chewing tobacco had been clandestinely manufactured and was intended to be removed clandestinely - Cross-examinations denied - extended period of limitation. HELD THAT:- The Original Adjudicating Authority did not allow the cross examination of any of the whiteness, whose statements were relied upon for issue of show cause notice. The Original Authority has relied upon statements recoded on 12.09.2014 which is date the search was conducted in the premises situated at 328 KA Churamanpur, Varanasi, premises belonging to Shri Srikant Chaurasia. Revenue could not make out a case bringing no evidences as required for establishment of clandestine clearance as held in the case of Arya Fiber Pvt. Ltd. [ 2013 (11) TMI 626 - CESTAT AHMEDABAD ] - Further, the Original Authority has refused to accept the invoices issued by M/s Anmol Packaging and M/s Ambey Engineering even when revenue could not produce any positive evidence about the procurement of said FFS machines in the month of December, 2013 and January, 2014. Further, revenue did not find a single pouch of the finished goods in the market as per available record. Further, Revenue did not establish that the electric connection required for four FFS Machines was available with Shri Srikant Chaurasia since January, 2014 and he had paid electricity bill required for manufacture of goods involving duty of around Rs. 9 crores. We therefore, come to a conclusion that the impugned order is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1284
  Valuation - clearances to sister units - cost of production arrived by taking 16.96% of the material cost as shown in the invoices for the goods cleared - Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - HELD THAT:- The demand of duty is calculated on the basis of cost of production arrived after taking 16.96% of the value of goods cleared as the material cost. There is no provision in the Valuation Rules to arrive at such valuation of materials on such basis. Assessee has not produced CAS-4 certificate. It is the bounden duty of the department to appoint a Cost Accountant and obtain a CAS-4 certificate. The valuation has then to be done on the basis of CAS-4 certificate. Time limitation - revenue neutrality - HELD THAT:- The entire issue is revenue neutral. The appellant would be eligible for credit for the duty paid on the goods i.e., cleared to their sister Units. The Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY VERSUS M/S. ANGLO FRENCH TEXTILES [ 2018 (8) TMI 896 - SC ORDER] had decided that in the case of revenue neutral situation, the demand cannot sustain. The duty demand is not based on provisions of law, and the demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1283
  Refund of amount paid under protest - undervaluation - principles of unjust enrichment - HELD THAT:- It is an undisputed fact that the payment was made under protest by the assessee during investigation and a perusal of one of the earliest Order-in-Original dated 30.01.2014 clearly reflects appropriation of payments made by the appellant towards the duty liability and the said order also incorporates the major payment being recovered by way of appropriation, except perhaps penalty. There are no disputes with regard to the CA certificate furnished by the assessee, on which the adjudicating authority has tried to make an issue. But on the other hand, the appellate authority has not discussed about it - The case of the adjudicating authority that the duty was passed on to the appellant s unit at Baddi, Himachal Pradesh, does not hold water since while issuing the remand order, the Commissioner (Appeals) himself in his order dated 03.01.2017 has clearly observed that the amounts which were claimed as refund were relating to the amounts paid after clearance of goods and not passed on. Apparently, there is no challenge against this finding by the Revenue nor has the impugned order found anything wrong with the above findings. Thus, the case of the assessee that it has not passed on the duty element stands established - there is no scope to allege unjust enrichment. The appellant is entitled for refund - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1282
  Refund of CENVAT Credit - Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-C.E. (N.T.) dated 18.06.2012 - rejection on the ground that there was delay in reversing the availed credit - case of appellant is that this requirement was nothing but a procedural requirement - HELD THAT:- This very Bench in the case of M/S. SYNTHESIS HEALTHCARE SERVICES LLP VERSUS THE COMMISSIONER OF GST CE, (CHENNAI SOUTH) [ 2019 (3) TMI 1323 - CESTAT CHENNAI] Chennai has considered an identical issue in the light of the very same Notification No. 27/2012 ibid. where it was held that the condition in question is not such that it could debar the appellant from claiming the refund. The denial of refund is clearly bad and unsustainable, for which reason the impugned order is set aside - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 1281
  Refund of CENVAT Credit - Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-C.E. (N.T.) dated 18.06.2012 - rejection on the ground that there was delay in reversing the availed credit - case of appellant is that this requirement was nothing but a procedural requirement - HELD THAT:- This very Bench in the case of M/S. SYNTHESIS HEALTHCARE SERVICES LLP VERSUS THE COMMISSIONER OF GST CE, (CHENNAI SOUTH) [ 2019 (3) TMI 1323 - CESTAT CHENNAI] Chennai has considered an identical issue in the light of the very same Notification No. 27/2012 ibid. where it was held that the condition in question is not such that it could debar the appellant from claiming the refund. The denial of refund is clearly bad and unsustainable, for which reason the impugned order is set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (5) TMI 1280
  Refund claim - finalization of provisional assessment - power to remand the matter to the VATO - refund is sought to be denied by creating fresh demands which for some periods is nil and for others on completely untenable grounds for which orders have already been set aside by the OHA and ATVAT - HELD THAT:- The order passed by the OHA remanding the matter to the VATO is dated 21st February 2017. Although no time limit was set, it is clear that the fresh order to be passed within 1 year from the date of the order was not passed. As far as the order passed by the ATVAT is concerned, it is dated 30th July 2015 and within 1 year thereafter the fresh assessment order had to be passed. Again, the VATO failed to do so. Consequently, with the earlier demands already having been set aside by the OHA and the ATVAT and no fresh orders having been passed by the VATO pursuant to the remand during the time stipulated, there is no justification whatsoever in denying the refund due to the Petitioner. A direction is issued to the Respondents to refund to the Petitioner the sum of Rs. 1,58,99,041/- within a period of 8 weeks from today together with interest from the expiry of 1 month from the filing of respective returns in terms of Section 42 of the DVAT Act. If the above directions are not followed it will make the Respondents liable to pay further simple interest @ 6% per annum on the aforesaid sum for the period of delay - Petition disposed off.

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