Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 27, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Profiteering - purchase of a flat - allegation that GST @12% was charged instead of 8% - as noticed from the demand letter Applicant had charged GST @ 12% on the taxable value which was 2/3rd of the total value. Therefore, the effective rate of GST was 8% on the total value of ₹ 3,21,124/-will be to 8% - applicant has admitted her mistake and withdrawn her complaint
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Classification of goods - rate of tax - Polypropylene Non-woven Bags manufactured by the Applicant from ‘Non-woven fabric’ under HSN 5603 falls under HSN 6305 33 00 and the applicable rate for the bags of value not exceeding ₹ 1000/ per piece is taxable at the rate of 5%
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Rate of GST - the Appellant is supplying works contract services to IWAI, a government entity, for an original work that is meant for infrastructural development of waterways of India and is not meant for commerce and business - satisfies the conditions laid down under Serial No. 3(vi)(a) of the Rate Notification - GST @12%
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Rejection of registration application - Rule 9(5) of the CGST Rules, 2017 - reason states that the petitioner needs to produce authorization to deal with the lottery Service under various statutory provisions - such matters could not be insisted from an applicant as there is no provision under the GST Act or Rules insisting production of any documents as referred in reason - reasons set aside - direct to reconsidered de hors
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Levy of IGST on the goods sold by Duty free shops (DFS) - goods sold to passengers DFS are not cleared for home consumption nor for removal to another warehouse or otherwise provided in the Customs Act, 1962 and hence the goods are cleared without payment of duty only for export u/s 69 of the Customs Act under an invoice which is also deemed to be a shipping bill - no IGST is payable
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Duty free shops (DFS) - the warehouse goods are supplied by the DFS to the International arriving passengers before its clearance for home consumption - the passengers clears the same for home consumption - hence no customs duty is payable by the DFS and therefore under proviso of Section 5 (1) of the IGST Act r.w.s 12 of the Customs Act 1962, No IGST is payable
Income Tax
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Reopening of assessment u/s 147 - disposal of objection - CIT held assessment order is bad in law and quashed the same as A. O. has not passed any speaking order in disposing the assessee’s objections against the notice u/s 148 - order upheld by ITAT
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TDS u/s 192 - employee of Mahatma Gandhi University, kerala - The salary, pension and retirement benefits are paid from the consolidated fund of the state government through the budget of the State - there exists an employer employee relationship between the government and the employee - provisions of section 10(10)(i), 10(10A) and 10(10AA) will be applicable as government employee - No TDS
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TDS u/s 195 - addition u/s 40(a)(i) - if services are simplicitor for procurement of some contract, and fulfillment of certain export obligations like logistic, warehousing etc., then these will not be termed as service in the nature of technical services or managerial and consultancy services” - no TDS required
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Penalty u/s 271(1)(c) - Addition of bogus purchases - Tribunal in quantum proceedings reduced to 12.5% of such purchases - since income has been estimated by applying a percentage, hence the penalty u/s 271(1)(c) can not be imposed in such cases
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Penalty u/s 271(1)(c) - there is no ‘tax sought to be evaded’, in terms of Explanation 4 to section 271(1)(c), on which penalty could be levied - even as the asessee has not furnished any explanation during the penalty proceedings or in the appellate proceedings no penalty is leviable
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Unexplained cash credit u/s 68 - revenue have not disputed about the creditworthiness and identity of cash creditor nor genuineness is in doubt - merely for entering the transaction in March, 2011 and the cheque getting cleared in August 2011 cannot be a reasonable basis to treat the loan amount as unexplained because the validity of cheque was for 6 months at that point of time
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Computation of capital gain - date of holding of property - registered sale deeds OR completion/occupation certificate of the properties - Merely because the occupation certificate was issued by the competent authority at a later stage, for whatever may be the reason, it will not mean that the assessee was not held the property from the date of execution of the registered sale deeds - LTCG
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Addition u/s 69C - excess stock - 69B OR 69C - mentioning of wrong section would not upset the Additions made by the AO as all these provisions have been enacted with a view to bring to tax the unexplained debit balances in the Balance Sheet of the assessee either in the form of Unexplained Investments, Expenses or Stocks, etc., or unexplained Assets, Money, Bullion, Jewellery, etc
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Addition u/s 69C - When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because such purchases had already been recorded in the books of accounts - the excess stock, per se, has to be naturally brought to tax as 'undisclosed income' by itself
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Accrual of income - recognition of revenue - change in method of accounting policy from recognition of Commission for insurance agency business from month of insurance/renewal of the policy and on payment of premium by the policy holder to only payment of premium by the policy holder - since this change was accepted by Department in subsequent four AY u/s 143(3) - no substantial question of law arises
Customs
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Levy of duty - goods recovered from a ship that was wrecked off the shores of India - There is no duty liability on goods that are not sought to be cleared for home consumption. Wrecks are not imported but any wreck or part thereof sought to be imported are. To that extent, remission on the wreck that remains has no consequence.
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Conditions to grant of Bail - The customs officer u/s 104 of the Customs Act is exercising the very same powers of an officer in charge of a Police station as provided u/s 436 of the Cr.P.C - being persons accused of only a bailable offence, have a right to be enlarged on bail without they being burdened with onerous conditions - condition for surety and appearance are set aside
Corporate Law
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New and Revised Auditors’ reporting standards (w.e.f. accounting periods starting 01/04/2018)
Service Tax
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Refund of unutilized CENVAT Credit - intermediary service or not - export of services - The Revenue has not produced any evidence as to why providing of back office process outsourcing should be treated as intermediary.
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CENVAT Credit - capital goods - transfer and merger - capital goods have been transferred to the group company and the same were used by the appellant for providing output service - Rule 3(5) - Reversal is not required.
Central Excise
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Area Based Exemption - The investigation was not conducted at the end of the Jammu based manufacturer and whole case has been based on the investigation conducted at Commissioner Central Excise, Merrut-II. Without investigation, it cannot be held that the Jammu based manufacturer were not manufacturer during the impugned period.
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Extended period of limitation - the investigation was started by the department only after receipt of intimation by HVTL regarding the payment of differential duty as per their own computation. - There is no justification for issue of SCN by alleging suppression on the part of HVTL.
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Refund of excise duty paid - SEZ unit - Jurisdiction - As per Rule 47 of SEZ Rules read with section 51 of the Act ibid, the refund ought to have been filed before the Central Excise authorities having jurisdiction over the SEZ Unit
Case Laws:
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GST
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2019 (5) TMI 1399
Rate of GST - works contract service supplied for construction of the a multi-modal terminal at Haldia, West Bengal - N/N. 24/2017-CT (Rate) dated 21/09/2017 and 31/2017-CT (Rate) dated 13/10/2017 - whether or not the civil structures created by the Appellant are meant for commerce, industry, or any other business or profession? - HELD THAT:- It is clear from the very nature of the project that it creates infrastructure for commercial utilization of the national waterway. Though the Multi-modal IWT Terminal will facilitate commerce and business in and around Haldia, West Bengal, its creation is not for propagating any business or commercial interests of IWAI. IWAI is facilitating the vision of Government of India s Jal Marg Vikas Project for creating infrastructure for economic development of the country. The Appellant is supplying works contract services to IWAI, a government entity, for an original work that is meant for infrastructural development of waterways of India and is not meant for commerce and business. It therefore satisfies the conditions laid down under Serial No. 3 (vi) (a) of the Rate Notification. The amendment to Serial No. 3(vi) of Notification No. 11/2017-CT (Rate) dated 28/06/2017, brought about by Notification No. 24/2017-CT (Rate) dated 21/09/2017 and 31/2017-CT (rate) dated 13/10/2017 are applicable to the Appellant s supply of Works Contract Service towards IWAI for construction of the Multi-modal IWT Terminal at Haldia, West Bengal. Appeal disposed off.
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2019 (5) TMI 1398
Classification of goods - rate of tax - Polypropylene Non-woven Bags - whether classified under Sub Heading 3923 29 or not - taxability at 18 % rate under Serial No. 108 of Schedule III of Notification no. 01/2017-C.T (Rate) dated 28-06-2017 under the CGST Act, 2017 Notification No.1125-FT dated 28/06/2017 - challenge to AAR decision - HELD THAT:- The P P Non-woven bags manufactured by the Applicant from Non-woven fabric under HSN 5603 falls under HSN 6305 33 00 and the applicable rate for the bags of value not exceeding ₹ 1000/ per piece is taxable at the rate of 5% under Serial No. 224 of Schedule-I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and Serial No. 224 of Schedule-I of Notification No 1125-FT dated 28/06/2017 under WBGST Act, 2017. In the instant case the polypropylene non-woven bags are manufactured from the non-woven polypropylene fabrics. Hence, the WBAAR erred in holding that PP Non-woven Bags , specifically made from non woven Polypropylene fabric are plastic goods to be classified under Sub Heading 3923 29. The decision of Advance Ruling is modified - application allowed in part.
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2019 (5) TMI 1397
Levy of IGST on the goods imported into the territory of India - Duty free shops - Inter-state supply or not - Time of supply - petitioner alleged that the respondent no.3 herein, has been operating at the arrival and departure termination of Airport since 2004 and the operations of these shops are governed in accordance with the provisions of Customs Act 1962 - HELD THAT:- The warehouse goods are supplied by the DFS to the International arriving passengers before its clearance for home consumption. The arriving passengers thereafter cross the customs frontier at the airport along with the goods and only then clears the same for home consumption. The passenger is therefore liable to pay the applicable duties of customs. The goods being a part of passenger's bonafide baggage are cleared for home consumption by the passenger under the Baggage Rules, 2016 and not by the DFS, hence no customs duty is payable by the DFS and therefore under proviso of Section 5 (1) of the IGST Act read with Section 12 of the Customs Act 1962, No IGST is payable either. The supply of warehoused goods by the DFS at the departure terminal is to departing International passengers i.e. the passengers travelling from India to a foreign destination. Thus, the goods supplied are never cleared for home consumption and the warehoused goods are exported by the DFS, therefore the levy Customs duty and of the IGST do not arise. The above observations conclude that IGST is not payable on the supply either to or from the DFS located at the arrival or at departure terminal. It is clear that the goods sold to passengers at the International departure terminal DFS are not cleared for home consumption nor for removal to another warehouse or otherwise provided in the Customs Act, 1962 and hence the goods are cleared without payment of duty only for export under Section 69 of the Customs Act under an invoice which is also deemed to be a shipping bill - Hence the sale/supply at the International departure terminals DFS would be export of goods under Customs Law and therefore will be considered as exports of goods under GST Act, since the definition of export and export of goods under both the laws is the same. In the present case of DFS, it is very clear that if a foreign destination of the foreign going passenger, the passenger also acts as a carrier and the goods are appropriated outside India. In view thereof, it is clear that the decisions relied upon by the petitioner are misplaced, have no relevance to the facts of the present PIL and therefore cannot be relied upon in the context of the business undertaken by the answering respondent no.3. The exemption under GST on goods supplied to and from DFS is rightly conferred and the claims of any accumulated unutilized ITC are refundable to respondent no.3 - petition dismissed.
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2019 (5) TMI 1396
Rejection of registration application - Rule 9(5) of the Central Goods and Services Tax Rules, 2017 - deemed registration - scope of GST Act and Rules - HELD THAT:- Since the entire process of registration is through online and there is no physical mode, the fifth respondent suggested that the petitioner will have to file a fresh application. Then what remains is the reasons on which the application has been rejected. The learned Special Government Pleader submits that if this Court decides the issue now on rejected application that would be more an academic exercise. The learned counsel for the petitioner submitted that these reasons stare at him. This Court has to interfere with such irrelevant reasons; if not the petitioner would be denied registration again. It is to be noted that the petitioner was denied an opportunity to raise objection. Therefore, this Court ought to have relegated the matter for reconsideration by the officer concerned. But that is not possible. Then the only question is whether this Court need to interfere at this stage as a preemptive action; this is a delicate question. The learned senior counsel, in fact, had argued that though this Court has jurisdiction to set aside irrelevant consideration in an order, the Court cannot issue mandamus to give a registration. It is true proposition of law. However, it is to be noted that the rejection is now forming part of the record. The respondents are not willing to withdraw the aforesaid rejection order. In such circumstances, the Court has to consider this matter to the extent on the irrelevant consideration made. The petitioner will have to satisfy all other relevant materials like proving ownership of business through such documents which may be required and also such details which they may be required to be furnished under the GST Act and Rules which are relevant. Since, this rejection would stand in the way of the petitioner, this Court is of the view that the matter shall be reconsidered de hors any reasons as stated in the impugned order and a fresh decision shall be taken in accordance with the GST Act and Rules on submitting the application by the petitioner - Petition allowed by way of remand.
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2019 (5) TMI 1395
Profiteering - purchase of a flat - benefit of Input Tax Credit (ITC) had not been passed on - increased benefit of ITC or not - contravention of provisions of section 171 of CGST Act, 2017 - HELD THAT:- The service rendered by the Respondent by way of construction of the project Habitat-78 was not in existence during the pre-GST regime and that the project was, in fact, launched only after the implementation of GST. Annexure 8 of the DGAP's Report clearly shows that buyer's agreement with the Applicant No. 1 for the Apartment No. A4806 was signed on 17th November 2017 where it was written that the allotment was made vide letter dated 01.11.2017. The buyer's agreement also states that 'the company had since registered the project under the provisions of the Real Estate (Regulation and Development) Act, 2016 read with the Rules notified there under by the Haryana Real Estate Regulatory Authority on 22.08.2017 under registration no. 78 of 2017'. The project was launched only after the implementation of GST. As there was no comparative pre-GST ITC that was accumulated or utilized by the Respondent the question of profiteering does not arise. The main allegation of the above Applicant was that GST @12% was charged instead of 8%. However as noticed from the demand letter dated 16.04.2018 which the above Applicant had quoted the total value was shown as ₹ 3,21,124/- and the taxable value was shown as ₹ 2, 14,083/- (2/3rd of the total value of ₹ 3,21,124/, separately for calculating the tax liability and the Respondent had charged GST @ 12% on the taxable value which was 2/3rd of the total value. Therefore, the effective rate of GST was 8% on the total value of ₹ 3,21,124/-, which clearly shows that the Respondent had reduced the GST rate from 12% to 8% w.e.f 25.01.2018, in terms of Notification No. 01/2018 Central Tax (Rate) dated 25.01.2018. It is also observed that based on the above clarification the Applicant No. 1 has admitted her mistake and withdrawn her complaint. Thus, it is clearly established that the Respondent had not contravened the provisions of Section 171 of the CGST Act, 2017 - application dismissed.
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2019 (5) TMI 1367
Prohibition order - detained goods forthwith along with exemplary damages and costs of litigation to the petitioner - release of goods - HELD THAT:- In view of the enquiry proceedings having been initiated by respondent No. 2 to ascertain the genuineness of the ownership of the goods stored in the cold storage in question and certain release orders being passed, this Court is of the considered opinion that the ends of justice would sub-served in directing respondent No. 2 to conclude the enquiry relating to the goods in question in an expedite manner, in any event, not later than two weeks from the date of receipt of certified copy of this order and is ordered accordingly. This order is required to be passed keeping in mind that the petitioner is providing the cold storage facility for different traders/persons and is also a registered dealer under the KGST and CGST Act, 2017. Accordingly, it is necessary for the authorities to release prohibition order in accordance with law, in an expedite manner. Petition disposed off.
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2019 (5) TMI 1366
Profiteering - supply of construction service related to purchase of Apartment - benefit of Input Tax Credit (ITC) not passed on - contravention of provisions of section 171 of CGST Act, 2017 or not - whether the Respondent had passed on the benefit of ITC by way of commensurate reduction in price, on implementation of GST w.e.f. 01.07.2017 or not? - Quantum of profiteering. HELD THAT:- It is clear from the plain reading of Section 171 (1) mentioned above that it deals with two situations one relating to the passing on the benefit of reduction in the rate of tax and the second pertaining to the passing on the benefit of the ITC. On the issue of reduction in the tax rate, it is apparent from the DGAP s Report that there has been no reduction in the rate of tax as the same was 8.02% in the pre GST period and 12% in the post GST period hence the only issue to be examined is as to whether there was any net benefit of ITC with the introduction of GST. On this issue it has been revealed by the DGAP s Report that the ITC as a ratio of Respondent s taxable turnover had decreased from 7.56% to 7.09% as is evident from Table B above that there was no additional benefit of ITC which had accrued to the Respondent post-GST as compared to pre-GST period. In view of the fact that there was no reduction in the rate of tax nor there was increased additional benefit on account of ITC, the provisions of Section 171 of CGST Act, 2017 could not be invoked in this case. The Respondent had not availed any additional benefit of ITC post-GST as compared to pre-GST therefore there was no contravention of the provisions of Section 171 (1) of the CGST Act, 2017. Moreover the Applicants No. 1, 2 and 4 through their emails dated 09.04.2019 and 11.04.2019 had categorically stated that they agreed with the Report of the DGAP and they were not entitled to the benefit of ITC as per the provisions of the above Section. Application dismissed - decided against appellant.
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Income Tax
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2019 (5) TMI 1394
Accrual of income - recognition of revenue - change in method of accounting - linked the commission income to the payment of premium by the policy holder - change enabled the reduction of tax liability of the assessee on income earned by way of insurance agency commission - AS-9 - ITAT held that the commission which is to be accrued and due and payable in the next financial years only cannot be taxed in the year under assessment - HELD THAT:- It is pointed out by learned counsel appearing for the assessee on advance notice, that the change adopted by the Assessee in the method of accounting, has been accepted by the Revenue for the four subsequent AYs, which were all scrutiny assessments. The Court is not persuaded that any substantial question of law arises for consideration of the Court. - Decided against revenue
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2019 (5) TMI 1393
Disallowance on account of the change in percentage of profit from 10% to 8% - CIT(A) deleted the addition upheld by ITAT - Assessee is engaged in a business of constructions of hospitals, leasing and sale of medical equipments and deals in chemicals, medicines and drugs - HELD THAT:- One of the issues that arose was the agreement entered into between the Assessee and the aforementioned M/s Devki Devi Foundation on 10th December 2011, where the profit sharing percentage for the period of 30 years was 10%. The Assessee pointed out that for the AYs in question on account of the business exigencies the profit sharing percentage had been reduced from 10% to 8%. Although, the AO did not accept the explanation offered by the Assessee, it has been found to be acceptable both by Commissioner of Income Tax CIT (A) in the order dated 22nd April 2014 and the ITAT in the impugned order. The impugned order in fact discusses the relevant clauses of the agreement and concludes that the explanation offered by the Assessee as accepted by the CIT A was believable. The points raised against the views of the CIT A and the ITAT are essentially factual and the Court sees no substantial question of law arising in the present appeal.
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2019 (5) TMI 1392
Addition u/s 69C - excess stock found during the Survey - unexplained Expenditure OR investments - mentioning of wrong section - 69B OR 69C - HELD THAT:- We are of the clear opinion that mentioning of wrong section would not upset the Additions made by the Assessing Authorities below in the present case. All these 5 provisions enumerated above have been enacted with a view to bring to tax the unexplained debit balances in the Balance Sheet of the Assessee either in the form of Unexplained Investments, Expenses or Stocks, etc., or unexplained Assets, Money, Bullion, Jewellery, etc., and therefore, such unexplained investments and expenses intended to be brought to tax as Undisclosed Income, these provisions are not only clearly worded but also indicated to plug the loopholes and check the menace of black money. Likewise, unexplained credits in the Balance Sheet are also brought to tax u/s 68. Addition u/s 69C - allowing deduction of purchases corresponding to the alleged excess stock found during the Survey - HELD THAT:- Contention raised by the Assessee has essentially emanated from a misconception that the Additions made u/s 69B/69C have to be reduced to some extent by giving leverage to the Assessee to claim some deductions from these Additions as well. If the contention of the learned counsel for the Assessee was to be accepted viz., by allowing the purchases corresponding to the alleged excess stock, the Assessee will have to now record verifiable purchases in his Books of Accounts and for that he will have valid purchase Invoices from genuine and existing Sellers which is not possible. When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because such purchases had already been recorded in the books of accounts of the Assessee. Therefore, the excess stock, per se, has to be naturally brought to tax as 'undisclosed income' by itself and there is no question of any corresponding deduction from that in such cases. Tribunal as well as the Authorities below were justified in bringing to tax the Undisclosed Income u/s 69B/69C and such findings of fact do not give rise to any substantial question of law. The order passed by the learned Income Tax Appellate Tribunal, Ahmedabad Bench [ 2018 (10) TMI 292 - ITAT AHMEDABAD] does not enure to the benefit of the arguments advanced by the learned Senior Counsel as there also Tribunal has rightly held that the value of excess stock of ₹ 58,02,095/- should suffer tax and by inclusion of those Stocks in the value of Closing Stock the Assessee has recognised income over and above recorded in its Books of Accounts. Such Additions of the excess Stocks declared by the Assessee during the course of search in the closing stock does not amount to double taxation as contended. Mere remand of the case by the Ahmedabad Bench of Income Tax Appellate Tribunal to the Assessing Authority for verifying the figures, does not lay down any principle as contended by the learned Senior Counsel for the Assessee.
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2019 (5) TMI 1391
Deduction u/s 80HHC - Computation of deduction - reducing the 'Export Profit' proportionately -Total Turnover of the assessee should be restricted to the Turnover of the Units engaged for export only - HELD THAT:- In view of the clear position of law as held by IPCA LABORATORY LTD [ 2004 (3) TMI 9 - SUPREME COURT] we are of the view that the Total Turnover of the business carried on by the Assessee has to be placed in the denominator in the formula given in sub-section (3) of Section 80HHC quoted above and there is no question of treating the Export Profit from the Export Units as separate units of the Assessee for the purpose of computing the benefit of deduction under sub-Section (3) of Section 80HHC. The very purpose of reducing the 'Export Profit' proportionately which may be from one or four units as in the present case is to give the average effect by arriving at the 'Export Turnover' as divided by the 'Total Turnover' of the Assessee of the Assessee during the year. Therefore, the entire Turnover of the business of the Assessee including the Export Turnover of the Appellant has to be included in the denominator of the formula stipulated in sub-section (3) of Section 80HHC of the Act viz., Export Profit x Export Turnover (of all Export Units)/Total Turnover (of Entire Business of Assessee including Export and other Turnover). Case of the Assessee not acceptable that the Turnover of the Assessee should be restricted to the Turnover of the Units engaged for export only. - Decided against assessee Deduction of expenditure u/s 35(I)(ii) - whether it is to be charged from the profits first and then only deduction u/s 80 HHC is to be computed? - HELD THAT:- No merit in the contention of Assessee so long as the Assessee carries on business and has business profits as declared by him and the expenditure incurred by way of contribution made to some approved institution for Scientific Research is concerned, the Assessee cannot claim it as a donation covered by the provisions of Section 80GGA so as to take it out from the scope of computation of business profits under Chapter IV Part D within which Section 35 (I)(ii) also is included. The object of raising such a contention before us appears to be to take some expenditure to be treated as donation so as to take it within the scope of Chapter VI-A which provides for deduction from the Gross Total Income, so that a higher profit can be treated as eligible for deduction u/s 80HHC. The said change of stand by the Assessee, particularly when the said Expenditure by way of contribution made to the approved Scientific institution has been claimed by the Assessee as business expenditure only, cannot be permitted. Therefore, the second question also deserves to be answered against the Assessee
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2019 (5) TMI 1390
Deduction u/s 80IA - excluding income from sale of V-SAT equipments - HELD THAT:- Respectfully following the directions of the Hon ble High Court of Delhi [ 2012 (6) TMI 34 - DELHI HIGH COURT] viz-a-viz the directions of the Coordinate Bench, we restored the issue to the files of the AO. AO is directed to decide this issue afresh in the light of the directions given by the Hon ble High Court of Delhi in AY 2005-06 after giving a reasonable and sufficient opportunity of being heard to the assessee. Appeal filed by the assessee is treated as allowed for statistical purpose.
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2019 (5) TMI 1389
Reopening of assessment u/s 147 - disposal of objection by AO - CIT held assessment order is bad in law and quashed the same as A. O. has not passed any speaking order in disposing the assessee s objections against the notice u/s 148 - HELD THAT:- There is no dispute that the Assessing Officer has not dismissed the objections of the assesssee by any speaking order. This is clearly in violation of the ratio laid down by the Hon ble Supreme Court in the case of M/s. GKN Drivesharfts [ 2002 (11) TMI 7 - SUPREME COURT] clearly laid down that where the notice u/s. 148 was issued and the assessee filed objections. The Assessing Officer was bound to dispose of the same by a speaking order. We find that the CIT(A) has rightly considered the decisions of Hon ble Supreme Court (supra) and the Hon ble High Court Gujarat [ 2003 (10) TMI 17 - GUJARAT HIGH COURT] , therefore, no interference is called for Exemption u/s 11 - Application of income by a charitable society - Uttaranchal legislature passed an Act called the ICFAI University Act, 2003, permitting ICFAI to set up a University in Uttaranchal - HELD THAT:- If the objections of the assessee are considered in the light of the factual matrix in their true perspective there remains no doubt that the payment being made to the sponsor society is on account of the MOU entered into between the sponsor society and the university with regard to the creation of infrastructure for the university and its ultimate transfer to the university after clearing of all liabilities in this regard. Therefore, it can be safely concluded that the assessee is right when it says that that all the money expenditure is applied for creation that infrastructure facilities of the university. The sponsor society is also registered u/s. 12AA of the Act which means that contributions by the one society to another having similar objects have to be considered a legitimate application of income by a charitable society. No error or infirmity in the findings of the CIT(A). Ground No. 2 is dismissed.
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2019 (5) TMI 1388
Deduction u/s 10A - deduction was set off against the brought forward losses - AO was of the opinion that the brought forward losses should be set off before claiming deduction u/s 10A while computing income of the assessee - HELD THAT:- A perusal of the order of the CIT(A) shows that he has simply extracted the order of the Tribunal in TECNOVATE ESOLUTION PRIVATE LTD. [ 2015 (9) TMI 120 - ITAT DELHI] and dismissed the appeal of the assessee. Since the decision, which was the basis for the dismissal of the appeal by the CIT(A) has been reversed by the Hon ble High Court of Delhi [ 2015 (12) TMI 1184 - DELHI HIGH COURT] . We are of the considered view that in the interest of justice, the CIT(A) should now decide the appeal of the assessee afresh after giving a reasonable opportunity of being heard to the assessee. The appeal is restored to the file of the CIT(A) accordingly. - Assessee's appeal treated as allowed for statistical purpose.
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2019 (5) TMI 1387
Benefits of section 80P - HELD THAT:- The issue was considered by the Jurisdictional High Court in the case of Mavilayi Service Co-operative Bank Ltd. vs. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] wherein it was held that the AO is not obliged to grant deduction by merely looking at the certificate of registration issued by the competent authority under the Co-operative Societies Act. Instead, he has to conduct an enquiry into the factual situation as to the activities of the assessee and arrive at a conclusion whether the benefits of section 80P can be extended or not. Thus, the Full Bench overruled the earlier judgment of the Jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Ltd. vs. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] . The Full Bench had followed the judgment of the Supreme Court in the case of Citizen Co-operative Society Ltd. vs. ACIT [ 2017 (8) TMI 536 - SUPREME COURT] . In view of the latest judgment of the Jurisdictional High Court cited supra, this issue is remitted to the file of the Assessing Officer with the direction to examine the actual activities carried on by the assessee so as to grant deduction u/s. 80P of the Act. Accordingly, the issue in dispute is remitted to the file of the AO for fresh consideration in accordance with the above direction. This ground of appeals of the Revenue is partly allowed for statistical purposes. Deduction u/s. 80P(2)(a)(i) - HELD THAT:- With regard to the interest income earned by the assessee from other Banks and Treasury on which deduction u/s. 80P(2)(i)(a) is to be granted, there is no dispute that the assessee has made investments in the course of banking activities and such interest income was received on investments made with cooperative banks and other scheduled banks. The co-ordinate bench of the Tribunal in the case of Kizhathadiyoor Co-operative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that such interest income received by the assessee should be assessed as income from business instead of income from other sources . In view of the order of the co-ordinate bench, we hold that the CIT(A) is justified in holding that interest income received by the assessee should be assessed as income from business . Unexplained cash credits u/s. 68 - HELD THAT:- CIT(A) has taken a different view for this assessment year 2014-15 which is not proper. Judicial discipline requires consistency in its proceedings. Being so, we are inclined to remit this issue to the file of the AO for this assessment year in conformity with the order of the CIT(A) with a direction to the assessee to provide details of the depositors along with the proof of identity to the Assessing Officer. The Assessing Officer is directed to verify the identity of the depositors and if the assessee proves the identity of the parties, then the addition is to be deleted in view of the order of the Tribunal in the case of This ground of appeal of the assessee is partly allowed for statistical purposes. Non granting of deduction u/s. 80P(2) - treating the unexplained credits as income from other sources - HELD THAT:- This issue was considered by the Jurisdictional High Court in the case of Kerala Sponge Iron Ltd. [ 2015 (9) TMI 233 - KERALA HIGH COURT] wherein the income had been treated as unexplained cash credit u/s 68. Once it was so done for the purpose of set off or any other purpose, the unexplained income could not be treated as business income under any one of the heads provided under section 14 in which case the question of set off did not arise. Therefore, the order of the Tribunal to the extent it had set aside the order of the Commissioner (Appeals) directing the Assessing Officer to allow the set off of the current year s business loss as well as brought forward business loss and unabsorbed depreciation against income assessed u/s 68 was to be set aside. In view of this, we are of the opinion that deduction u/s 80P(2) cannot be allowed for the unexplained income assessed as u/s 68 of the Act and the said income cannot be treated as business income. With this observation, we remit this issue to the file of the Assessing Officer with reference to the addition made u/s. 68 - Ground of appeal of the assessee is partly allowed for statistical purposes.
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2019 (5) TMI 1386
Computation of capital gain - LTCG or STCG - sale of properties - period of holding - date of holding of property reckoned from registered sale deeds OR completion/occupation certificate of the properties - HELD THAT:- The assessee should be deemed to be the owner of the properties from the date of execution of the registered sale deeds. The definition of short term capital asset u/s 2(42A) means a capital asset held by the assessee for not more than 36 months immediately preceding the date of its transfer. In the facts of the present case, the assessee having held the property from 23rd December 2005 till the date of transfer on 22nd January 2010, it has to be held as a long term capital asset. Merely because the occupation certificate was issued by the competent authority at a later stage, for whatever may be the reason, it will not mean that the assessee was not held the property from the date of execution of the registered sale deeds. The Hon'ble Jurisdictional High Court in Bina Indra Kumar [ 2014 (12) TMI 1110 - BOMBAY HIGH COURT] has held that even where the assessee has executed an agreement of sale, the date of holding of property has to be reckoned from the date of agreement of sale. While expressing such opinion, the Hon'ble Jurisdictional High Court did not accept the contention of the Department that the holding period of the property should be reckoned from the date of issuance of occupation certificate by the Municipal Corporation. Thus assessee was holding the properties from the date of execution of registered sale deeds i.e., 23rd December 2005. Hence, the assessee held the property for a period of more than 36 months prior to the date of transfer. That being the case, the gain derived from the sale of properties have to be assessed as long term capital gain. Deduction u/s 48(1) - cost of improvement and expenditure incurred in connection with the transfer of property - HELD THAT:- Claim of the assessee requires verification on the basis of evidences furnished by the Assessing Officer. If the assessee can demonstrate through supporting evidences that the expenditure was incurred prior to the date of sale of property, the deduction claimed can be allowed. Accordingly, we restore this issue to the Assessing Officer for fresh verification. As regards the pre operative expenditure after verifying the details of such expenditure has submitted before us by the learned Authorised Representative, we are of the view that such expenditure is not in connection with the transfer of property but are routine expenditure related to the business of the assessee. Therefore, we agree with Commissioner (Appeals) that pre operative expenditure is not allowable. Insofar as payment of brokerage and professional fee are concerned, assessee s claim was disallowed mainly due to lack of any supporting evidence. AR has submitted that all the bills relating to such expenditure were filed before the Departmental Authorities. Without entering into the controversy whether supporting evidences relating to these expenditures were filed or not, we are inclined to restore the issue to the AO for enabling the assessee to justify its claim by furnishing supporting evidence - Appeal is partly allowed for statistical purposes.
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2019 (5) TMI 1385
Dismissal of appeal ex-parte for non prosecution - neither any one appeared nor there was any adjournment application filed on behalf of assessee - HELD THAT:- On perusal of the order dt. 30.11.2018, we find that in spite of service of notices by the Registry neither any one appeared nor there was any adjournment application filed on behalf of assessee for the hearing on 18.10.2018. Thus, following the various decisions in the cases of Multiplan India (P) Ltd [ 1991 (5) TMI 120 - ITAT DELHI-D] , Hon'ble Madhya Pradesh High Court in the case of Estate of late Tukojirao Holkar Vs. CWT [ 1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT] the Tribunal dismissed the appeal of assessee by passing ex parte order for non prosecution. We find that there was sufficient reason for the assessee in not appearing before the Tribunal on the said date of hearing [10.10.2018]. Therefore, in view of submission of assessee we recall the order dated 30.11.2018 by allowing this Misc. Application filed by the assessee.
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2019 (5) TMI 1384
Rectification u/s 254 - Penalty u/s 271(1)(c) - unexplained investment in property - concealment and furnishing of inaccurate particulars in the belated return filed against the notice u/s 153A - HELD THAT:- The assessee did not offer any credible and cogent explanation for not offering the income in the form of unexplained investment in property pertaining to previous years ending before the search and such unexplained investment came into light only during the course of search operation and thus, tantamount to concealment of particulars of income within the meaning of Explanation 5 to section 271(1)(c). Moreover, the assessee had no valid reason for concealment and furnishing of inaccurate particulars in the belated return filed against the notice u/s 153A . In the absence, of any valid reason for not filing the return of income within the time stipulated u/s 139 or declaring complete particulars of income in the belated return filed by the assessee, the penalty levied u/s 271(1)(c) was sustained by the Tribunal. While adjudicating the appeal, the Tribunal has considered all the grounds relating the effective ground raised by the assessee. In view of the above, we find no merit in the miscellaneous petition filed by the assessee.
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2019 (5) TMI 1383
Addition u/s 14A read with rule 8D - disallowance of expenses attributable to earning of exempt income - assessee has made disallowance suo-moto which has been tabulated by the tax auditor in the tax audit report - AO has not recorded any objective satisfaction as to how the disallowance as calculated by the assessee is wrong - HELD THAT:- AO has not recorded any satisfaction as to how the disallowance worked out by the assessee is wrong having regards to the books of accounts of the assessee. Co-ordinate bench of the Tribunal while deciding the case of the assessee [ 2019 (4) TMI 1654 - ITAT MUMBAI] wherein it has been held that the AO has not recorded any objective satisfaction as to how the disallowance as calculated by the assessee is wrong by referring to the books of accounts of the assessee. Accordingly, we, respectfully, following the decision of the Hon ble Bombay High Court [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] and also the co-ordinate bench of the Tribunal in the assessee s own case in A.Y. 2009-10 and 2010-11, set aside the order of Ld. CIT(A) and direct the AO to accept the disallowance as calculated by the assessee. The ground no. 1 is allowed. Excess interest charged u/s 234C - excess interest charged under section 234C which has occurred due to non granting of credit of TDS - HELD THAT:- We observe that in this case the only issue is excess interest charged u/s 234C which has occurred due to non granting of credit of TDS to the tune of ₹ 14,85,028/-. In our opinion, this interest needs to be calculated correctly as per the provisions of law. Therefore, the issue is restored to the file of the AO with the direction to calculate the interest after allowing credit of TDS as per facts and law after affording a reasonable opportunity to the assessee.
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2019 (5) TMI 1382
Penalty u/s 271(1)(c) - additional income declared by the assessee during the assessment proceedings after filing the return of income u/s 153A - HELD THAT:- In this case the penalty has been initiated by the AO in the assessment order for both the charges i.e. concealment of income or for furnishing of inaccurate particulars of income. AO has initiated penalty under both the charges. Similarly, the penalty was imposed under both the charges in the penalty order dated 07.03.2014 passed u/s 271(1)(c). Though the notice issued u/s 274 r.w.s. 271(1)(c) is not before us so we are not able to comment on whether the assessee has mentioned both the charges or specific limb was pointed out but after perusal of the order of assessment passed u/s 143(3) r.w.s. 153A dated 31.12.2010 and the penalty order u/s 271(1)(c) dated 07.03.2014, we observe that the penalty was initiated for both the charges as well as imposed on both the charges which is not permissible under the Act as both these limbs are mutually exclusive. Under these circumstances, we are not in a position to sustain the order of CIT(A) confirming the penalty imposed u/s 271(1)(c) as the same is in violation of the ratio laid down by the Hon ble Bombay High Court in the case of Mrs. Piedade Perinchery [ 2017 (1) TMI 1458 - BOMBAY HIGH COURT] Shri Samson Perinchery vs. CIT [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2019 (5) TMI 1381
Rectification u/s 154 - time barring order - passing the order in 6 months - HELD THAT:- The provision (s. 154(8)) is not cast in negative terms, which is indicative, and also one of the tests as pointed out by the Hon ble Court [ 2011 (4) TMI 511 - PATNA HIGH COURT] , of the provision being directory. Contrast this with s.154(7), cast in negative terms, which is mandatory. Rather, a reading of section 154(8) makes it abundantly clear that an order u/s. 154(1) r/w s. 154(4) is to be a result, as afore-stated, of a conscious decision. This is even otherwise apparent as the order is appellable and, in fact, being an order covered u/s. 154(1)(a), itself subject to rectification, as where it bears a mistake apparent from record. The said Grounds would not hold. Rectification u/s 154 - the circle rate (of land) could not be applied as it is a case of a composite sale - HELD THAT:- The only course therefore available, where the said adjudication is considered erroneous, is for the effected party to take the matter in further appeal. True, the ld. CIT(A) has, in arriving at his decision, regarded the land sold as not appurtenant to the Feed Mill, while the assessee states of the same being a part and parcel of the factory building sold . Further, it may also be that the ld. CIT(A) considers so as land, if regarded as part of the units sold, would be subject to provision of section 50B, in which case no indexation benefit would be available to the assessee and, two, only the net worth, as certified by an Accountant, of the relevant undertaking (i.e., excluding the plant and machinery of the other unit), allowed as a deduction. It is for these reasons that the ld. CIT(A) states it to raise a contentious issue and, in any case, covered u/s. 154(1A). Rectification u/s 154 - the correct commercial rate to be applied is ₹ 15,000 per marla, as the Collector had himself applied the said rate - HELD THAT:- The assessee s letter dated 09.01.2018 is, to that extent, a separate application, since undisposed. It is open for the assessee to, where so advised, seek disposal of the said application dated 09.01.2018. I say so, i.e., where so advised as, as it appears, it may be of no consequence. The value (out of the total consideration of ₹ 280 lacs) imputed to the other assets is the balance after deducting that ascribed to land. As such, a change in the said rate, impacting land value (cost), would imply a corresponding increase in STCG; in fact, to exactly the same extent. How, one wonders, would it assist the assessee in any manner? Penalty u/s 271(1)(c) - tax sought to be evaded - HELD THAT:- It is precisely this that would cause the assessee s appeal agitating the levy of penalty as being liable to be accepted at the threshold. The primary (and the sole) reason for the assessment of the capital gain in a sum higher than that returned by the assessee (by ₹ 25.90 lacs), on which the impugned penalty is levied, is, as a narration of the fore-going facts makes it clear, on account of non-allowance of the WDV of the entire block of asset, i.e., of both the units, i.e., as against only of the Feed Mill Unit. The difference between the two sets of the WDV allowed by the ld. CIT(A), is ₹ 26.06 lacs (₹ 71 lacs ₹ 44.94 lacs), i.e., more than the difference for which the penalty is being levied and which is due to the allowance of (indexed) cost of land (at ₹ 0.16 lacs). Therefore, even as the asessee has not furnished any explanation during the penalty proceedings, nor indeed in the appellate proceedings, there is no tax sought to be evaded , in terms of Explanation 4 to section 271(1)(c), on which penalty could be levied. The assessee, accordingly, succeeds.
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2019 (5) TMI 1380
Nature of expenses - expenditure incurred on shelved project and expenses incurred on preliminary studies, feasibility reports etc. on the projects which have not taken off - revenue or capital expenditure - HELD THAT:- As decided in assessee's own case [ 2012 (4) TMI 731 - ITAT MUMBAI] we allow the said expenses as business expenses of the assessee and uphold the decision of learned CIT(A). This issue is decided in favour of the assessee Accrual of income - Addition of foreign exchange gain on repatriation of certificates of deposits (Euro Notes) - assessee has received an income being surplus on buy back of Euro notes - HELD THAT:- The assessee had raised Euro Notes in 1997 towards incurring capital expenditure. The said Euro Notes were partly redeemable in 2007 and remaining in 2017. On being asked, it is admitted by the assessee that the projects for which Euro Notes were raised were completed and interest expenditure has been claimed as an Revenue expenses. The assessee has prematurity redeemed the said Euro Notes at discount in the year under consideration and surplus has arisen on said premature buy back of Euro Notes. As observed that the assessee has filed a decision of Hon‟ble Bombay High Court, 2 [ 2014 (7) TMI 12 - BOMBAY HIGH COURT] for AY 2001-02 concerning profit on foreign exchange fluctuation on repatriation of proceeds of certificate of deposit to India, while presently we are concerned with gains arising on discount on buy back of Euro Notes due to premature redemption of aforesaid Euro Notes. Thus, issue in both the years were different. Surplus on buy back of Euro Notes - As observed in the case of Mahindra Mahindra Ltd. . [ 2018 (5) TMI 358 - SUPREME COURT] has held in favour of the tax payer that waiver of loan for acquiring capital asset cannot be brought to tax either by invoking provisions of Section 28(iv) or Section 41(1) of the 1961 Act as noted that the tax-payer did not claimed deduction by way of interest expenditure u/s 36(1)(iii). However, in the instant case it is admitted by the assessee that the projects for which Euro Notes were raised were completed and the assessee had claimed deduction towards interest expenses u/s 36(1)(iii) as business/revenue expenses. Thus in our view this matter needs to be restored back to the file of the AO for re-adjudication of this matter denovo Ground of Revenue is allowed for statistical purposes Disallowance of provision for wages - accrued/crystallized liability and not an contingent liability - HELD THAT: - It is not the case of the Revenue that the assessee has fraudulently inflated its claim by way of higher wages to defraud Revenue than what will be reasonably expected to emerge under the new revised wage settlement agreement which has to become effective from 01.01.2002. The assessee on its part has given a detailed computation of expected higher wages/salaries under revised wage settlement agreement to be entered into with employees effective from 01.01.2002, based on past experience and demand of workers/employees during negotiations. No fault was found by authorities below in the said computational working submitted by the assessee towards provision for wages made by it. The case of the revenue is that this provision for wages is only a contingent liability and not liability in praesenti, which we respectfully do not concur as in our considered view this is an liability in praesneti and is an accrued/crystallized liability which the assessee will be required to pay as only quantification is postponed to the signing of new revised wage settlement agreement. Under these circumstances we are in agreement with the decision of Ld. CIT(A) in granting relief to the assessee by following the decision of tribunal in assessee‟s own case for AY 1999-00 as this liability towards provision for wages is not a contingent liability but a liability in praesenti which is an crystallized /accrued liability of the assessee based on mercantile system of accounting by following matching principle of costs with income. Grant of deduction u/s. 80IA - Assessee has earned other income‟ in the case of Jojobera 67.5 MW unit and Belgaum 81.5MW unit respectively which was disallowed by learned CIT(A) on the grounds that the details have not been furnished by the assessee and certain income arose from the advances given to the employees and staff which could not be considered as income derived from undertaking for allowing deduction u/s 80IA - HELD THAT:- Now the assessee has come forward and has submitted details to the tune of ₹ 23,43,201/- which is claimed to have been earned from sale of sludge arising from Belgaun unit and ledger account of sale of sludge account in books of account of Belgaun unit is produced for the first time before the tribunal. The said document albeit was part of books of accounts was not been verified by authorities below as contention of said other income‟ being derived from sale of sludge was not furnished/claimed before authorities below. CIT(A) has granted relief with respect to income from sale of scrap arising from the Jojobera Unit for granting deduction u/s. 80IA of the Act. Thus in our considered view this issue need to be set aside and restored to the file of AO for verification of the claim of the assessee that said income was earned from sale of sludge which was derived from Belgaun unit eligible for deduction u/s 80IA Allowability of deduction u/s 80IA on the taxable income after setting off brought forward unabsorbed depreciation of the units eligible for deduction u/s 80IA albeit assessee is claiming that said depreciation is already been set off against the income of the company as a whole in earlier assessment years - HELD THAT:- As decided in own case [ 2016 (5) TMI 1476 - ITAT MUMBAI] held that the notionally brought forward losses/ depreciation of the Jojobera 67.5 MW power generating unit for the period from the assessment year 1997-98 to 2001-02 which are already set off against the other business income in earlier years and set-off being allowed by the Revenue shall not be adjusted from the profit so computed by the assessee company with respect to Jojobera 67.5MW power generating unit for the assessment year 2002-03 for the purposes of computing deduction u/s.80IA of the Act. Thus issue decided in favour of the assessee. Treatment to income earned from broadband project during trial runs and income on scrap sale before capital projects were installed - revenue income or setting off such income against capital work-in-progress - HELD THAT:- Both these income were inextricably linked with broadband project which was under installation and these income were earned during trial run phase/pre-installation phase and the assessee rightly reduced both the aforesaid income‟s from the capital work in progress and the same cannot be brought to tax as revenue income as were sought to be done by lower authorities. The assessee has rightly relied upon the decision of Hon‟ble Supreme Court in the case of Bokaro Steel Limited [ 1998 (12) TMI 4 - SUPREME COURT] No hesitation in holding that income from broadband project during trial run phase as well income from sale of scrap during pre-installation of the project was rightly reduced by the assessee from capital work in progress and cannot be brought to tax as revenue receipts chargeable to tax. - Decided in favour of assessee Addition u/s. 40A(9) for payments made by assessee to local schools - assessee has suo motu voluntarily disallowed these expenses while filing return of income - Admission of additional evidence - HELD THAT:- We are inclined to hereby admit this additional claim of the assessee towards deductions for making payment to local schools and then to restore this issue to the file of the AO for fresh adjudication on merits in accordance with law. AO shall admit all additional evidences/explanations submitted by the assessee during denovo proceedings in connection therewith the aforesaid claim of deduction and adjudicate the same on merits in accordance with law. The assessee is also directed to file all relevant details before the AO during denovo proceedings as to the payments made to local schools as well details of children of the employees who were studying in the said local school during the year under consideration to prove that these expenses were inextricably linked with the business of assessee and is wholly and exclusively incurred for the purposes of the business of the assessee and comply with the mandate of provision of Sec. 40A(9) and/or Section 37(1)
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2019 (5) TMI 1379
Disallowance u/s 14A r.w. Rule 8D - Appellant Company has suo motto disallowed towards such expenditure - Whether while computing the disallowance under section 14A rule 8D2(iii) of the Act, only those investments are required to be included for the purpose of calculating the average investments which yield exempt income during the year? - HELD THAT:- We find merit in the submissions of the Ld. A.R. and that only those investments yielding exempt income has to be considered for calculating the average investments. The issue is squarely covered by the decision of Tribunal in the case of ACIT vs. Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that only those investments are to be considered for computing average value of investments which yielded exempt income during the year. We, therefore, respectfully following the co-ordinate bench of the Tribunal, direct the AO to compute the disallowance after taking into account only those investments which yielded exempt income and for the purpose of average investment.
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2019 (5) TMI 1378
Penalty u/s 271(1)(c) - Addition of bogus purchases - HELD THAT:- In this case the assessment was framed by the AO after making ex-parte addition of ₹ 16,54,146/- towards 100% of the bogus purchases which the co-ordinate bench of the Tribunal in quantum proceedings reduced to 12.5% of such purchases. This a clear cut case where the income has been estimated by applying a percentage of 12.5% and therefore the penalty under section 271(1)(c) can not be imposed. We are, therefore, setting aside the order of Ld. CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.
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2019 (5) TMI 1377
Bogus LTCG - sale of scrip of M/s. Tuni Textile Mills Ltd. as exempt u/s. 10(38) of the Act which was held by AO to be bogus - HELD THAT:- We note that in a number of cases, this Tribunal has held that the scrip of M/s. Tuni Textile Mills is not bogus and has allowed the claim of assessee in respect of LTCG claim on the sale of this scrip i.e. M/s. Tuni Textile Mills Ltd. (in short M/s. TTML). We note that the issue is no longer res integra as the Tribunal in Ramesh Chandra K. Shah Vs. ACIT [ 2019 (2) TMI 798 - ITAT KOLKATA] wherein the Tribunal has held that the scrip of M/s. TTML is not a bogus scrip. Unexplained expenditure u/s 69C - Addition being commission @ 0.5% expenditure incurred - HELD THAT:- Since we have already allowed the claim of LTCG on sale of scrip of M/s. TTML as exempt u/s. 10(38) of the Act, and held it as a genuine transaction, consequently, the addition as unexplained expenditure is directed to be deleted.
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2019 (5) TMI 1376
Bogus Short term capital gain - penny stock - addition of Short term capital loss arising from sale of shares STT paid - claimed as set off against short term capital gain on in the matter of compensation received from govt. of Haryana against acquisition of land - genuineness of share transactions on both purchase and sale aspects - lack of cross examination - HELD THAT:- Assessee has filed all the requisite details on record in support of her share transactions. The Revenue s case questions the genuineness of assessee s details particularly in the light of search statement by Shri Anil Agarwal in the light of SEBI s proceedings finalized on 2-4-2018 regarding M/s. First Financial Services Ltd. Rutron International Ltd (supra). Learned departmental representative fails to dispute that there is no direct evidence against the assessee to have indulged in artificial rigging of any of the 7 scrips shares. Or that said statement of Shri Anil Agarwal has nowhere quoted the assessee s name adopting any of the alleged dubious means for artificial rigging of scrips prices. This tribunal s recent decision in Mahavir Jhanwar V/s. ITO, [ 2019 (3) TMI 210 - ITAT KOLKATA] held that addition should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. Thus we conclude that such a disallowance has to be based on evidence rather as alleged suspicion circumstances. We accordingly direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee.
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2019 (5) TMI 1375
Penalty levied u/s 271(1)(c) - Lack of the specification of charge for the levy of penalty - treatment of interest on fixed deposit - assessee has adjusted the interest earned with the interest expenditure and thereafter adjusted the resultant figure with the WIP - bonafide conduct of assessee HELD THAT:- The assessee s accounting was not totally unacceptable the same cannot lead to levy of penalty u/s. 271(1)(c). In this regard, Hon'ble Apex Court decision in the case of Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] supports the case of the assessee. In this case it was held by Hon'ble Apex Court that if the Assessing Officer does not accept a claim of the assessee that will not ipso facto be a reason to initiate penalty proceedings. We note that assessee has agreed for the said treatment in the assessment proceedings. It is also the plea of the assessee that the said accounting treatment can be said to be an inadvertent error. In these circumstances also assessee deserves to succeed on the touchstone of Hon'ble Apex court decision in the case of Price Waterhouse Cooper [ 2012 (9) TMI 775 - SUPREME COURT] Another limb of the assessee s plea is that Assessing Officer has mentioned that assessee has furnished inaccurate particulars of income in the assessment order. While in the penalty order Assessing Officer is not sure of the charge in as much as he has concluded that penalty has been levied for concealment of income or furnishing of inaccurate particular of income. In this view of the matter the assessee deserves to succeed on the touchstone of Hon'ble Jurisdictional High Court in the case of Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] . CIT has erred in distinguishing this decision from the Jurisdictional High Court, on the facts of this case. In the background of aforesaid discussion and precedent we set aside the orders of the authorities below and delete the penalty. - Decided in favour of assessee.
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2019 (5) TMI 1374
Levying penalty u/s 271(1)(c) - notice was issued in a mechanical manner without application of mind as the AO failed to strike off the inappropriate words in the notice - HELD THAT:- The notice was issued in a standard format without any application of mind and the inappropriate/redundant words were not deleted by the AO. Thereafter, the penalty was imposed for concealment of particulars of income by invoking Exp 1 and 4 to section 271(1)(C) of the Act By these acts of the AO in not striking off the inappropriate limb in the notice is clear cut in violation of principle of natural justice as the assessee was deprived of reasonable opportunity to respond and deal with the particular charge on which the penalty was levied. In our view, the penalty order in such a scenario is clearly bad in law and can not be sustained. The case of the assessee is clearly supported by the decision relied upon by the assessee as stated hereinabove in the case of Shri Samson Perinchery vs. CIT [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] and CIT vs. Mrs. Piedade Perinchery (Bom-HC) [ 2017 (1) TMI 1458 - BOMBAY HIGH COURT] has held that where the AO has failed to state particularly the one of the two limbs on which the penalty was proposed to be levied then the penalty order would be bad in law as the assessee was not given proper opportunity to respond to the charge on which the penalty was levied. - Decided in favour of assessee.
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2019 (5) TMI 1373
TDS u/s 192 - Default u/s 201(1) and 201(1A) - TDS liability on the payments made to employee on the Death cum Retirement Gratuity (DCRG), Commutation of Pension and leave salary after allowing exemption provided u/s. 10(10)(iii), 10(10A)(ii) and 10(10AA)(ii) - assessee's plea of bonafide belief - AO rejected the arguments of the assessee that the assessee is covered under the definition of State - Assessee submitted that the provisions of section 201(1) and 201(1A) not attracted in the present case because non-deduction of tax at source by the university is based on a bonafide estimate of the tax liability of its employees HELD THAT:- In Part II if the Mahatma Gandhi University statutes 1997, the employees belonging to Classes I and II shall have the status of Gazetted Officers of the Kerala Government Service and accordingly, the pay of the employees of the university is fixed and also revised in accordance with and at par with pay revision of the state government employees. The employees of this university are also governed by the Kerala Government Pension Rules. These Rules are the same as the Central Civil Services (Pension) Rules 1972 {CCS Pension Rules 1972). The salary, pension and retirement benefits are paid from the consolidated fund of the state government and the grant for payment of salary and retirement benefits are provided by the Legislature through the budget of the State. The amount is specifically provided under the head 'salaries' in the state budget which was placed on record. Thus, there exists an employer employee relationship between the 'payer' and 'payee' i.e. the government and the employee. In our opinion, the employees of the assessee are found to be holding civil posts under the State Government, therefore, the provisions of section 10(10)(i), 10(10A) and 10(10AA) are fully attracted. Once the assessee falls under the above provisions of the Act, the same cannot be subject to TDS. We, therefore hold that payments made by the assessee to its employees towards death cum retirement gratuity, commutation of pension or leave salary shall not be liable for TDS to the extent permitted under the provisions of section 10(10)(i), 10(10A) and 10(10AA) Facts and circumstances of the present case are identical to the case of Indian Institute of Science vs. DCIT [ 2015 (2) TMI 1272 - ITAT BANGALORE] wherein held reliance placed by the AO on the expression actually incurred found in Sec. 10(5) and proviso (iv) to Sec. 17(2), in our view cannot be sustained. In any event, the interpretation of the word actually paid is not relevant while ascertaining the Quantum of tax that has to be deducted at source u/s.192. As far as the Assessee is concerned, his obligation is only to make an estimate of the income under the head salaries and such estimate has to be a bonafide estimate. In the present case, as pointed out by the Ld. AR, there has been no observation by the Assessing Officer with regard to estimate of salary made by the assessee. Further, the assessee has deducted tax on the basis of bona fide estimate of the salary to its employees. The various case laws cited by the assessee also supports the contentions of the assessee - if tax is deducted based on a bonafide estimate or if there is no observation that the estimate is not honest or fair, the deductor cannot be held to be assessee in default u/s. 201(1). Thus, in our opinion, deduction of tax at source by an employer is always a tentative deduction of income-tax subject to regular assessment in the hands of the payee/recipient. Accordingly, the Cross Objections filed by the assessee are allowed.
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2019 (5) TMI 1372
TDS u/s 195 - assessee has failed to deduct TDS while making payment to the non-resident commercial agent - addition u/s 40(a)(i) - HELD THAT:- Nature of services rendered by foreign agents required to be determined on the basis of the agreement, and if these services are simplicitor for procurement of some contract, and fulfillment of certain export obligations like logistic, warehousing etc. then these will not be termed as service in the nature of technical services or managerial and consultancy services . These activities will not generate on invent any information which could be used in India for augmentation of manufacturing of drugs. On an analysis of the services rendered by CACMILSA, we are of the view that no element of managerial consultancy or technical services were being rendered by the commercial agent and the assessee was not required to deduct TDS on receipt - Decided in favour of assessee Allowable revenue expenditure - expenses incurred by the assessee in foreign country for registration of its products for marketing and promoting sales - HELD THAT:- As relying on TORRENT PHARMACEUTICALS LTD. [ 2013 (4) TMI 570 - GUJARAT HIGH COURT] expenses incurred by the assessee towards registration fees, evaluation and analysis charges, translation notarization of dossiers require to be allowed to the assessee. TDS liability on Market research of new pharma products and market survey charges debited by the assessee - Held that:- These are the information which will be used by the assessee for exploring new business venture and enhancing its capacity to conduct new business. Certainly, such information will fall within the managerial, technical consultancy services, therefore, the assessee was required to deduct TDS. Since the assessee has failed to deduct TDS on these payments, they deserve to be disallowed.
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2019 (5) TMI 1371
TP adjustment - selection of MAM - CUP OR TNMM - CIT(A) stated that CUP should not be the most appropriate method for sale of finished goods - HELD THAT:- As decided in assessee's own case [ 2018 (6) TMI 962 - ITAT KOLKATA] whereby the issue of CUP method Vs. TNMM has been discussed and upheld that TNMM is most appropriate method (MAM). Selective application of CUP Method by TPO is ad hoc, and without any cogent basis, hence the entire approach followed in rejecting the TP study memorandum of assessee for application of TNMM method is unjustified - Decided in favour of the assessee Corporate guarantee fee extended by the assessee company to its Associate Enterprise (AE) - international transaction - HELD THAT:- . We rely on the judgment of the Co-ordinate Bench of ITAT, Delhi in the case of Bharti Airtel Ltd. vs. ACIT [ 2017 (1) TMI 172 - ITAT DELHI] wherein the definition of international transaction in view of the amendments, vide Finance Act, 2012, had been discussed and it was held that the provision of corporate guarantee is not an international transaction. - Decided in favour of the assessee
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2019 (5) TMI 1370
Unexplained cash credit u/s 68 - loan receipts through prior dated cheque - HELD THAT:- The loan amount is duly reflected under the list of unsecured loans. The account payee cheque have been cleared through proper banking channel in August, 2011. Revenue authorities have not disputed about the creditworthiness and identity of cash creditor Gajanand Ramlal Agrawal. Even the genuineness is not in doubt because the cheques are actually cleared in the bank account. Merely for entering the transaction in March, 2011 and the cheque getting cleared in August 2011 cannot be a reasonable basis to treat the loan amount as unexplained u/s 68 because the validity of cheque was for 6 months at that point of time. The alleged transaction is duly reflected in the books of both the parties, duly confirmed by the cash creditor Gajanand Ramlal Agrawal, bank statements and bank reconciliation statements clearly shows the alleged transactions and from all four corners, we can safely conclude that the alleged transactions of loan of ₹ 1.70 crores is duly explained and identity, genuineness and creditworthiness of the cash creditor is not doubtful. No inconsistency in the finding of Ld. CIT(A) deleting the addition and thus we uphold the same and dismiss the appeal of the revenue.
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2019 (5) TMI 1369
Disallowance of depreciation - assets purchased in slump sales - as per AO transaction was materialized during the accounting period relevant to the Asstt.Year 2013-14 - HELD THAT:- Since in the case of vendor it has been held that wind energy division was sold in the Asstt.Year 2012-13, therefore, it is to be construed that the assessee has acquired this asset in this year and entitle for depreciation. Following the order of the Tribunal in the case GFL [ 2018 (8) TMI 857 - ITAT AHMEDABAD] , we allow the claim of the assessee, and direct the AO to grant depreciation to the assessee in this year. - Decided in favour of assessee.
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2019 (5) TMI 1365
Exemption u/s 11 denied - assessee trust was not carrying on educational activities falling within the definition of education as contemplated under Section 2(15) - AO cannot examine the objects to the Society as long as there is valid registration u/s 12A granted to the assessee - HELD THAT:- SLP dismissed on the ground of low tax effect.
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Customs
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2019 (5) TMI 1368
Conditions imposed with regard to grant of Bail - surety and appearance - smuggling of Gold/foreign currency - bailable or non-bailable offences? - HELD THAT:- Provisions as regards bail can be broadly classed into 2 categories: (1) bailable cases and (2) non-bailable cases. In the former class, grant of bail is a matter of course. It may be given either by the Police officer in charge of a Police station having the accused in his custody or by the Court. The customs officer in exercise of powers under Section 104 is exercising the very same powers of an officer in charge of a Police station as provided under Section 436 of the Code of Criminal Procedure. Section 436 of the Code states that the officer or the Court has no discretion in the matter except to release the accused on bail when produced before them. Even the Court has no discretion while granting bail under Section 436 of the Cr.P.C to impose any condition except the demand for security with sureties. In appropriate cases, the Court has discretion to release the accused by taking only a personal bond without insisting for surety for his appearance. In no event, can onerous conditions be imposed by either the officer or by the Court while releasing the accused in a bailable offence. The petitioners, being persons accused of only a bailable offence, have a right to be enlarged on bail without they being burdened with onerous conditions. For the very same reason, the customs officer is bereft of jurisdiction to impose a condition which is not a term as to bail. Condition Nos. 2 to 4 imposed by the Assistant Commissioner of Customs in Annexures-A2 A3 orders produced in these cases are, therefore, set aside. - petition allowed.
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2019 (5) TMI 1364
Furnishing of bank guarantee of ₹ 6 lakh for release of vehicle - detention of Hummer H2 car imported by an NRI - release of seized vehicle - HELD THAT:- This Court tried to find out from the learned Standing Counsel about the basis for either percentage or the value upon which ₹ 6 lakh is directed to be deposited. He fairly states that the letter dated 05.03.2019 does not disclose those details. However he refers to Ext.P2 and states that the officer has undertaken notional exercise and fixed ₹ 6 lakh. The investigation pursuant to Exts.P3 and P4 are still pending, therefore, the petitioner cannot be allowed to seek release of vehicle without conditions. Hence this Court is also of the view that the conditions covered by the paragraph 1(i) to (iii) are tenable. Condition No. 2 calling upon the petitioner to furnish bank guarantee for a sum of ₹ 6 lakh is examined by this order. This Court upon careful consideration of the taxes/duties alleged to have been paid on the vehicle, the value of the vehicle etc., imposing a further condition of ₹ 6 lakh for releasing the vehicle appears to be onerous on the petitioner to enjoy the possession of the vehicle in the interregnum.
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2019 (5) TMI 1363
Clandestine removal - malpractice in the duty free shops - huge malpractice of selling of Foreign made Foreign Liquor( FMFL) which were allotted to the DFS Trivandrum were diverted and sold to others - non-submission of returns under various statutes - HELD THAT:- It is an admitted fact that there were several malpractices in the DFS. It seems that in the search conducted, discrepancies were found out and several records were seized. Even the petitioners herein in his bail application has pleaded that, to defeat the interest of the company, the employees in connivance with M/s.Flemingo have committed various irregularities. It is surprising that the petitioners who were regularly verifying the accounts and details of sale did not notice this. The petitioners have a specific pleading that computer system was hacked. This is demolished by the report obtained by the customs authorities that there was no hacking. The allegations against the petitioners are serious. Apart from the allegations of misuse of licence, allegations under the Official Secret Act, Passports Act, Money Laundering Act are also now raised. There is another allegation that the entire records were not produced. Though the first petitioner was questioned under summons, thereafter, he did not report in spite of issuance of repeated summons. There is a further allegation that he did not produce the entire records for the purpose of investigation. All the above allegations are the offshoot of the main allegation of malpractice in the DFS. Considering the facts, specific allegation of bias and considering the fact that allegation of prosecution is serious which need to be pleaded and also considering the fact that all most all the transactions are covered by documentary evidence, I am inclined to direct the petitioners to surrender before the investigating officers - The petitioners shall surrender before the investigating officers within ten days from today. If they so surrender, after interrogation, if they are proposed to be arrested, Petitioners shall be released on bail on each of the petitioner executing a bond for a sum of ₹ 5,00,000/- with two sureties for the like sum each. Anticipatory Bail application disposed off.
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2019 (5) TMI 1362
100% EOU - demand of Customs Duty on imported POY - case of the department is that PTY covered by the above consignments did not reach the premises of EOUs and were diverted in DTA - HELD THAT:- The duty on finished goods (PTY) has already been demanded under the proviso to Section 3(1) of the Act, on the ground that the same did not reach the premises of EOUs and were diverted in DTA. From the adjudication proceedings initiated against the above EOUs, it transpires that the imported goods were consumed as per the requirement of the impugned notification and thus, no duty can be demanded on raw material used in the manufacture of such finished goods. Confiscation of POY - HELD THAT:- Since the conditions of the notification dated 03.06.1997 has not been contravened. Material available in the case record proves the fact that the POY were used for the intended purpose and there was no contravention of post import condition. Even otherwise, the imported POY was not available for confiscation at the time of initiation of show cause proceedings, and as such - no redemption fine can be imposed in the absence of goods being available for confiscation. There is no reason to uphold the impugned order as no duty can be demanded on the inputs as no violation has been brought out on record vis- -vis raw material consumption in EOUs for the required purpose. Further, the impugned order imposing redemption fine and penalties on the appellants cannot also be sustained for judicial scrutiny. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1361
Levy of duty - goods recovered from a ship that was wrecked off the shores of India - finalization of provisional assessment - HELD THAT:- The intent of importing the impugned vessel for breaking up is not on record to evince. Intent is an inextricable element of heading no. 8908 of the First Schedule to Customs Tariff Act, 1975 and, absent such qualification, the sole alternative is heading no. 8901 of the First Schedule to Customs Tariff Act, 1975 which cannot apply to wrecks. The impugned order has erred by considering only these two alternatives. The admittance of bills of entry to which section 21 of Customs Act, 1962 applies suffices for consideration of the third option. The disposal of articles that were landed India on salvage from the vessel would need appropriate treatment under Customs Act, 1962. There is no duty liability on goods that are not sought to be cleared for home consumption. Wrecks are not imported but any wreck or part thereof sought to be imported are. To that extent, remission on the wreck that remains has no consequence. The discharge of duty liability on the goods that were removed from the wreck and whose quantity or value is not in dispute, would be the appropriate discharge of appropriate duties. The impugned order is therefore set aside and remanded back to the original authority with a direction to restrict the decision to the contents of such bills of entry that were presented or such bills of entry that should have been presented under section 21 of Customs Act, 1962 - Appeal allowed by way of remand.
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2019 (5) TMI 1360
Valuation of imported goods - inclusion of royalty and lumpsum fees in the assessable value of imports - Section 17 of the Customs Act, 1962 - HELD THAT:- The time of finalization that should inevitably take place is also, as yet, uncertain. It is also apparent that procedure does not deter the finalization of an assessment for want of decision by the Tribunal or, should such need arise, by the Hon ble Supreme Court. The internal process of the customs administration that enables the proper officer, under section 17 or section 18 of the Customs Act, 1962, to be assisted in the discharge of the statutory obligation and, which, legally, may not even bind the proper officer does not merit our attention. To the extent that we accord approval or disapproval at this stage, we would be appropriating the exercise of powers under section 18 of Customs Act 1962 for finalization of the assessment to ourselves and, thereby, would also erase one level of remedial jurisdiction that would, otherwise, be available to either side. This is not the intent of section 128 of Customs Act, 1962. The impact of the impugned order has been to transfigure a final assessment of the future to provisional assessment at the insistence of the Commissioner of Customs. Any grievance arising from finalization does have appellate remedies commencing with the first appellate authority. Appeal dismissed.
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2019 (5) TMI 1359
Valuation of imported goods - enhancement of value based on NIDB data - Confiscation - redemption fine - penalty - HELD THAT:- The enhancement of value has been ordered by the First Appellate Authority on the basis of concurrence given by the importer for such enhancement. There is no challenge to the order of confiscation, but Revenue is challenging the quantum of redemption fine and penalty, which stand reduced by the ld.Commissioner (Appeals). The ld.Commissioner (Appeals) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by the Three Member Bench of CESTAT, Delhi in the case of M/S. OMEX INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (4) TMI 112 - CESTAT NEW DELHI (LB)] - The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions - there is no reason to interfere with the findings of the ld.Commissioner (Appeals) on the basis of such decision. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 1358
Valuation of imported goods - enhancement of value based on NIDB data - Rule 5 of the Customs Valuation (Determination of the Value of Imported Goods) Rules, 2007 - HELD THAT:- There are number of decisions which hold that NIDB data is not substantive material to enhance the value. Commissioner (Appeals) has held that the exact nature of the import of the goods is not very clear. The copy of the test report was not provided to the importer. The NIDB data on which basis the enhancement of declared value was done was also not informed to the respondent. There are any number of decision of higher appellate forum which have consistently reiterated that reliance on NIDB data for the purpose of enhancement of declared value of imported goods is not in order. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 1357
Valuation of imported goods - PU Belts - enhancement of value based on NIDB data - HELD THAT:- In respect of the same product, supplied by the same supplier M/s. Wenzhou Wensen Leather Company Limited, Zhejiang, China, the Customs department made out various cases for enhancement of the value on the same facts and law point - In the case of M/S. SRR INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, MUNDRA [ 2018 (12) TMI 392 - CESTAT AHMEDABAD] , M/S. SUMIT ENTERPRISES, M/S. LIBERTY ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, MUNDRA [ 2018 (12) TMI 447 - CESTAT AHMEDABAD] , this Tribunal has allowed the appeals of the assessee. Since the common issue and facts are involved, we need not to discuss the same again and again. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1356
Smuggling - Gold of foreign origin - recovery from her registered baggage - Confiscation - redemption fine - penalty - HELD THAT:- The Indian Origin remolten gold/gold ornaments could not be legally confiscated as the possession of the same is not prohibited under any provision of law - In the present case, the seized gold do not bear foreign markings and do not have uniform weight/purity. It is observed that the respondent belongs to a respectable and a well to do family. She is also a regular Income Tax assessee. The seized gold rods were made from the gold ornaments belonging to her. Every piece of gold possessed by a person in India cannot be considered to be of smuggled nature and that the possessor of such gold cannot be made to discharge the onus u/s 123 of the Customs Act, 1962. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2019 (5) TMI 1355
Oppression and mismanagement - Appellant is aggrieved by the fact that NCLT passed protection Order in favour of the original Petitioners directing Respondents not to encumber shares of Omaxe (Respondent No.14) held by Respondent No.1 Company only limited to 1,48,59,726 and not 4,11,81,726 shares which should have been treated as unencumbered as on 19th December, 2018 - HELD THAT:- The learned NCLT while dealing with the defence of the Respondent Company, did not consider that the Company under the Regulations was filing information with the Bombay Stock Exchange and also National Stock Exchange which did not match with the defence which was being taken. If there were any committed shares, nothing stopped the Company from disclosing the same on the given date in the format which has been prescribed as annexed to letter dated 19th December, 2018 (Page 696 to 698 of the paper book). What was being informed to the Authorities could not be simply ignored. The Regulations have bene made in exercise of powers conferred under Section 30 read with Section 11(2)(h) of Securities and Exchange Board of India Act, 1992 with the object of regulating acquisition of shares. Incomplete information submitted would be matter of concern. The figure 1,48,59,726 used by NCLT in the Impugned Order paragraph 35 and Paragraph 38 is deleted and the Impugned Order dated 15th March, 2019 stands modified accordingly - appeal disposed off.
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2019 (5) TMI 1354
Oppression and Mismanagement - Restraint from alienating, encumbering, transferring, selling, disposing, parting, or creating any third party interest right, title of any nature whatsoever upon the assets of M/s Guild Builders Pvt. Ltd. (Guild) including pledging of shares of Omaxe Ltd. (Omaxe) held by Guild - HELD THAT:- The instances of oppression and mismanagement are given in para 7 thereof. It is stated that through a chain of unfair and inequitable acts, all grossly oppressive, the petitioner No.1 (representing interest of petitioners) has been systematically ousted by the respondent No.2 from the affairs of Guild and through it of Omaxe to gain control over the company and all its subsidiaries. It is further stated that Guild has failed to safeguard its interest as shareholders of Omaxe and that the primary source of income of Guild is dividend and Guild did not object to nonpayment of dividend to promoter shareholders (including Guild) in 2017. Oppressive and illegal actions while holding 15Annual General Meeting and failure to provide information sought by the shareholders were also stated to be made. Notice of the petition was directed to be issued by order dated 19.09.2018. The petitioners have contended that as a result of continuous and indiscriminate pledging of shares of Omaxe held by Guild coupled with failure of Guild to question the decision of declaration of dividend by Omaxe only to public shareholders has resulted in erosion of net worth and valuation of Guild and consequently loss to the petitioners and that any default in the loans by Omaxe and consequent invocation of pledge would result in irreparable loss to the petitioners, especially when the petitioners have no control in the management of Guild or Omaxe. As regards the pledging of shares of Omaxe, Guild has stated that during the period when the petitioner No.1 was Joint Managing Director, he never objected to the practice of pledging. As regards non declaration of dividend for the Financial Years 2017 and 2018, it is submitted that Omaxe has duly explained the rationale behind the non-declaration of dividend in its AGMs being due to the impact of GST, RERA on real estate sector and the consequent market crash and that Guild did not vote in the said resolution. We hold that a prima facie case for interim relief is made out in view of the petitioner s contention that the pledging of shares of Omaxe Ltd. held by Guild is resulting in erosion of net worth and valuation of Guild and consequent loss to the petitioners. Taking into consideration that the shareholding of the petitioners in Guild is 24.64%, we direct that Guild will not make any type of encumbrance whether by way of pledge/lien/Non Disposal Undertaking or otherwise of 1,48,59,726 shares of Omaxe held by Guild except on account of top-up required and/or margin calls. We further direct that in case further pledge of the shares is required in order to top-up and/or margin calls, Guild would file the statement to that effect before this Tribunal within one week of doing so with copy advance to the counsel opposite - The directions given by order dated 19.09.2018 that Guild shall not issue fresh equity shares are continued. The remaining prayers for interim relief are declined. Application disposed off.
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Insolvency & Bankruptcy
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2019 (5) TMI 1353
Recall of Interim Order - the impugned order dated 18th March, 2019 was not stayed by this Appellate Tribunal - HELD THAT:- The order dated 18th March 2019 if read with order dated 15th March, 2019 and as the impugned judgement particularly the observations as made at para 22 and para 28 having not been stayed, the Resolution Plan is to be implemented in terms with the direction of the Adjudicating Authority which shall be subject to the decision of this Appellate Tribunal. Aforesaid order was passed to ensure that during the pendency of the appeal the Successful Resolution Applicant do not suffer. The Resolution Professional is required to call for the meeting of the Committee of Creditors for its decision in terms of the decision of the Adjudicating Authority, which shall be subject to the decision of these appeals. Post these appeals for admission on 27th March, 2019 at 2.00 p.m.
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Service Tax
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2019 (5) TMI 1352
Levy of service tax - NSE/BSE transaction charges taken as reimbursement from the clients - period April 2007 to September 2007 - HELD THAT:- The issue whether the NSE/BSE transaction charges paid to National Stock Exchange and Bombay Stock Exchange and the same was collected from the client is liable to service tax or otherwise in the hands of stock broker has been settled in the judgments in the case of M/S J.V. CAPITAL SERVICES (P) LTD. VERSUS CST, DELHI [ 2017 (3) TMI 1156 - CESTAT NEW DELHI] where it was held that the NSE/ BSE charges is not taxable. Demand set aside - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1351
Refund of unutilized CENVAT Credit - intermediary service or not - export of services - sole allegation of the Revenue is that the respondent provided intermediary service, therefore the benefit of export services is not available to them - HELD THAT:- The activity of computer networking is networking service which is an application running at the network application layer and above, that provides data storage, manipulation, presentation, communication or other capability which is often implemented using a client-server or peer-to-architecture based on application layer network protocols. There is no arrangement or facilitation of the main service between two parties by a third person under the category of computer networking services. The activity of the appellant is routine back office process out sourcings activities and are completely based on instructions/guidelines provided by ENSIL/AEs in this regard. The Revenue has not produced any evidence as to why providing of back office process outsourcing should be treated as intermediary - the respondent is not providing any intermediary service, therefore, no service tax is payable by the respondent. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 1350
CENVAT Credit - capital goods - transfer and merger - capital goods have been transferred to the group company and the same were used by the appellant for providing output service - Rule 3 (5) of the Cenvat Credit Rules, 2004 - extended period of limitation - HELD THAT:- It is a fact on record that these capital goods have not been removed from the premises where they were initially installed. Reliance placed in appellant own case M/S. VODAFONE MOBILE SERVICES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2017 (12) TMI 29 - CESTAT AHMEDABAD] , where it was held that appellant is not required to reverse the Cenvat credit as the goods have not been physically removed from their premises to their sister unit. Thus, the appellant is not required to reverse Cenvat credit as the capital goods have not been physically removed from the premises where they were initially installed. Extended period of limitation - HELD THAT:- The whole of duty has been confirmed by invoking the extended period of limitation - the extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1349
Application seeking out-of-turn hearing of the appeal - HELD THAT:- Since the amount involved is above ₹ 5 crores, the appellant is given an out-of-turn hearing. The Miscellaneous Application for early hearing is allowed. Registry is directed to list the case for hearing on 11.06.2019. Application allowed.
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2019 (5) TMI 1348
Business Auxiliary Services - appellants role as distributors for M/s. Amway India Enterprises P. Ltd. (M/s. Amway) whereby the appellant promoted the products of M/s. Amway - suppression of facts or not - extended period of limitation - HELD THAT:- On merits we are constrained to hold against the assessee, but however, since no evidences are brought out on record to justify the allegation of suppression, the Revenue could not have invoked the extended period of limitation. Hence, the appeals of the assessee are allowed for the larger period, but however the same will not apply for the normal period of limitation`- penalties also set aside. Appeal allowed in part.
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Central Excise
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2019 (5) TMI 1347
Cenvat Credit - input services - processing fee and upfront fee for providing the facility of loan - HELD THAT:- The processing fee and the up-front fee was paid to the Bank for providing Term Loan and facility of Cash Credit Account. This was necessary for running the business of the appellant/assessee and also for purchase of capital goods, required for manufacture of the final products. It is not in dispute that the assessee availed the bank loans which were very essential to meed the business expenditure and to run the business. These loans facilities are taken and the charges of the Bank under various heads have to be paid and there is no alternative to it. The Bank charges in the name of loan processing fee and up-front fee is in respect of business exigencies only and the service tax paid by them on this account falls within the ambit of activities relating to business - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1346
CENVAT Credit - capital goods - plates, angles, beam, bars, etc. falling under chapter 72 and 73 of the First Schedule to the Central Excise Tariff Act, 1985 - whether a support provided to a roof is intended to be covered by the term civil structure ? - HELD THAT:- Civil structure is primarily used to house either people or goods or equipments. The roofing in a mine, on the other hand, offers protection from the possibility of mud shifting in the area that has been drilled. It, therefore, hardly conforms to the expression civil structure . Moreover, such roofing and stitching in underground mines is a statutory requirement, and the adjudicating authority, while acknowledging it to be so, has disregarded the undeniable essentiality by mere reference to definitions. It has been held judicially that any statutorily mandated activity is essential for manufacture and hence, the product inputs/input service are eligible for availment of CENVAT credit. Accordingly, the denial of CENVAT credit for roofing and roof support and roof stitching has no basis in law. The matter remanded back to the original authority for a fresh ascertainment of the entitlement to the extent permissible - appeal allowed by way of remand.
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2019 (5) TMI 1345
Vires of Rule 8(3A) of Central Excise Rules, 2002 - Bar on utilization of CENVAT Credit - HELD THAT:- The decision in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] , though, admittedly, under challenge by Revenue, cannot be disregarded, where it was held that Condition contained in sub-rule (3A) of rule 8 for payment of duty without utilizing the cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional. Therefore, the portion without utilizing the cenvat credit of sub-rule (3A) of rule 8 of the Central Excise Rules, 2002, shall be rendered invalid. The impugned order is set aside - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1344
CENVAT Credit - manufacture of dutiable goods as well as exempted goods - export of goods - reversal of inputs proportionate to their use in manufacture of dutiable goods or exempted goods, which are exported - HELD THAT:- In the assessee s own case ASTRIX LABORATORIES LTD., VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, HYDERABAD-I AND VICE VERSA [ 2018 (3) TMI 837 - CESTAT HYDERABAD ], this Bench has decided that the assessee can take credit in proportionate to the quantity of inputs used for manufacture of dutiable goods. Availability of CENVAT Credit on exempted goods which are exported out of India - HELD THAT:- The Hon ble High Court of Bombay has, in the case of REPRO INDIA LTD. VERSUS UNION OF INDIA [ 2007 (12) TMI 209 - BOMBAY HIGH COURT ] decided that such credit is available in Rule 6(6)(v) of CCR 2004. Goods cleared under Chapter X procedure - HELD THAT:- This Bench has, relying upon the judgment of Hon ble High Court of Rajasthan in the case of Hindustan Zinc Limited vs. Union of India [ 2007 (1) TMI 94 - HIGH COURT RAJASTHAN ] upheld by Hon ble Apex Court at [ 2014 (5) TMI 253 - SUPREME COURT ] held that the goods cleared under Chapter X procedure are not exempted goods and there is no need to reverse credit under Rule 6(3)(i) of CCR 2004. Credit allowed - appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1343
Valuation - undervaluation - cost of the grey fabric supplied by M/s KHDCL for which a lower price is given in their price declarations sent to M/s Sanghi and a higher price is indicated in the delivery challans - HELD THAT:- The price declaration may not be the actual rate of the fabric and if the actual rate of fabric is different excise duty on the same is agreed to be reimbursed to M/s Sanghi by M/s KHDCL in full on a demand being raised by the excise authorities M/s KHDCL was not in dispute. This price declaration further gives M/s Sanghi a right of lien on stocks lying with them until such reimbursement is made in full. The price declaration indicates only a tentative price and not actual price of the goods. The actual price of goods may differ. Since there is no sale/purchase between M/s Sanghi and M/s KHDCL there is no actual sales value. A second price is indicated in the delivery challans. Since there is no sale of grey fabric at all, either by M/s KHDCL or by respondent assessee, the value of the raw material becomes relevant only in case the material is damaged by M/s Sanghi and they have to reimburse the cost of the material to M/s KHDCL. This should reflect the true value of the goods because M/s Sanghi will be making up for any loss on their account at this price - the price in the delivery challan should, therefore, be considered as correct price of the raw material. The demand of Central Excise duty on the differential value is liable to be recovered under Section 11A(1) of Central Excise Act 1944 read with Rule 4,5,6 8 of the Central Excise Rules 2001-2002. Consequently, the deemed CENVAT credit, if any, also needs to be disallowed - the interest under Section 11AB also needs to be recovered from the respondent herein. Extended period of limitation - penalty - HELD THAT:- It is not in dispute that the appellant has declared the value which is lower than the value in the price declaration and therefore has clearly mis-declared the value and the same is liable to be recovered - Penalties also set aside. Appeal disposed off.
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2019 (5) TMI 1342
Refund of duty paid - no manufacturing activity taking place - fake supplier - demand based on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J K based units and absence of evidence of power by the appellants - HELD THAT:- As the allegations made in the show cause notice are vague and on assumption and presumption, without any cogent evidence. On the contrary, the appellant has produced enough evidence to show that the appellant has manufactured goods and paid the duty by availing the benefit of Notification No. 56/2002-CE dated 14.11.2002. No proceedings are sustainable against the appellants - Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1341
Refund of duty paid under protest - time limitation - appellant has filed refund within one year from the date of order of the Hon ble Apex Court - HELD THAT:- The appellant has filed refund within one year from the date of order of the Hon ble Apex Court. Admittedly, prior to that, the Revenue has challenged the order of classification, in that circumstance, the time limit is to be taken from the date when the Hon ble Supreme Court has settled the issue. Admittedly, the assessee has filed refund claim within one year from the date of order of Hon ble Supreme Court. The refund claim filed by the assessee is in time. Therefore, the refund has rightly been sanctioned by the Commissioner (Appeals). Appropriation of refund - HELD THAT:- The demand itself has been set aside by this Tribunal, therefore, the order of appropriation is not sustainable and the same is set aside. Appeal dismissed - decided against Revenue.
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2019 (5) TMI 1340
Refund of duty paid - no manufacturing activity taking place - fake supplier - demand based on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J K based units and absence of evidence of power by the appellants - HELD THAT:- As there is no adverse report against the appellant by the Jurisdictional Central Excise Authorities, therefore, the appellant M/s Aar Bee Industries is a manufacturer located in the state of Jammu Kashmir and is entitled to claim refund of the duty paid in cash in terms of Notification No. 56/2002-CE dated 14.11.2002. No proceedings are sustainable against the appellants - Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1339
Area Based Exemption - CENVAT credit - benefit under N/N. 56/2002-CE dated 14.11.2002 availed - it was alleged that J K based units are not purchasing raw material, so there is no question of manufacture of finished goods by J K based units, the goods manufactured were sold to UP based manufacturers who in turn partially exported their finished goods and partially sold in domestic market - demand confirmed on the grounds that the farmers are non existence ensuring non supply of raw material by commission agents to J K based units and absence of evidence of manufacture by the Jammu based manufacturer. HELD THAT:- The investigation was not conducted at the end of the Jammu based manufacturer and whole case has been based on the investigation conducted at Commissioner Central Excise, Merrut-II. Without investigation, it cannot be held that the Jammu based manufacturer were not manufacturer during the impugned period. Moreover, the entries of vehicles at the toll barriers also certified that the movements of raw material and finished goods. Further during the period of investigation itself, the Jammu based manufacturer were allowed continue their activity by procuring inputs from UP based supplier and selling goods manufacturing to their buyer/appellant. During the course of investigation, itself shows that the allegation is only on the basis of the assumption and presumption, therefore, it cannot be held that the appellants were not manufactured the goods during the impugned period. The Jammu based manufacturer were manufacturer during the impugned period and paid the duty on the goods manufactured by them. Consequently, the cenvat credit can t be denied to the recipient of goods located in the State of U.P i.e. M/s Sangam Aromatics - the allegations against the appellants are based on assumption presumption which is not sustainable - penalty also not imposable. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1338
Time Limitation - Valuation - supply of goods by HVTL to TML - HVTL became the subsidiary of TML - Section 4 of the Act read with the Central Excise Valuation Rules, 1975 - HELD THAT:- It is seen from the extract of the SCN above that the department has made a bland allegation that the assessee has resorted to short payment of duty with intent to evade payment of duty. Nowhere the SCN records any specific act on the part of HVTL for such allegation. In fact perusal of the SCN reveals that the investigation was started by the department only after receipt of intimation by HVTL regarding the payment of differential duty amounting to ₹ 55 lakhs as per their own computation. There is no justification for issue of SCN by alleging suppression on the part of HVTL. Since no demand for differential duty survives within the normal period of limitation, the entire differential duty demand raised is liable to be set aside. CENVAT Credit - duty paying documents - credit availed on the basis of supplementary invoices issued by HVTL at the time of payment of differential duty - Rule 7(1)(b) of CCR 2001 - HELD THAT:- There is no dispute that the differential duty has been paid by HVTL and the supplementary invoices issued. The reason cited by the Adjudicating Authority for denying the credit to TML is that the relevant Central Excise Rules did not provide for availment of Cenvat credit on such supplementary invoices. There is no justification for invoking extended period of limitation under Section 11A since there is nothing on record to allege suppression of facts. The Tribunal has also been consistently taking the view that credit is permissible on the basis of supplementary invoice even prior to 29.08.2000 when notification No. 51/2000 was issued - credit rightly availed. Appeal allowed - decided in favor of appellant.
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2019 (5) TMI 1337
Refund of excise duty paid - Jurisdiction - refund application was rejected observing that the same ought to have been filed before the Central Excise authorities having jurisdiction over the SEZ Unit in Gujarat whereas the refund was filed before the Central Excise, Trichy Division - HELD THAT:- The rejection of claim is only on technical ground for lack of jurisdiction. The learned Authorised Representative has pointed out that the original authority had issued intimation to the appellant within 20 days stating that lack of jurisdiction. The appellant, however, opted to contest the issue of jurisdiction. As per Rule 47 of SEZ Rules read with section 51 of the Act ibid, the refund ought to have been filed before the Central Excise authorities having jurisdiction over the SEZ Unit - the refund has been filed before the wrong authority and the rejection on this ground of lack of jurisdiction does not call for interference. Appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2019 (5) TMI 1336
Principles of natural justice - Validity of assessment order - TNVAT Act - suppression of purchases - HELD THAT:- This Court has perused and examined the impugned Assessment Order. The second respondent proposed to revise the assessment of the petitioner for the Assessment year 2014-15 based on an inspection carried out by their Enforcement Wing officials on 19.09.2016, wherein according to the second respondent, it was found that the petitioner has suppressed purchases effected from the other end seller and had claimed excess input tax credit. According to the second respondent, due to the suppression of purchase and claim of excess input tax credit, the same will have to be reversed - admittedly, no reply was sent by the petitioner to the pre-revision notice issued by the second respondent on 03.01.2019 proposing the revision of assessment for the assessment year 2014-15. In the instant case, neither personal hearing was afforded to the petitioner nor an independent enquiry was held by cross verifying the sales effected by the other end seller to the purchaser based on which a pre-revision notice dated 03.01.2019 was sent by the second respondent proposing to revise the assessment of the petitioner for the assessment year 2014-15. From the above, it is clear that the second respondent has violated the principles of natural justice and has also not applied his mind before passing the impugned assessment order. This matter is remanded back to the second respondent for fresh consideration - petition allowed by way of remand.
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2019 (5) TMI 1335
Validity of assessment order - Section 25(1) of KVAT Act - HELD THAT:- The respondent is directed to dispose of Exts.P3 and P3(a) appeals as expeditiously as possible - Petition disposed off.
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