TMI Tax Updates - e-Newsletter
May 6, 2019

Case Laws in this Newsletter:

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

Articles

1. New and Revised Auditors’ reporting standards (w.e.f. accounting periods starting 01/04/2018)

   By: CAGOPALJI AGRAWAL

2. GST ON CANTEEN SERVICES FOR EMPLOYEES

   By: Dr. Sanjiv Agarwal

3. NYAY: Will it take off?

   By: Varsha Balasubramanian

Notifications

Customs

1. 20/2019 - dated 3-5-2019 - ADD

Seeks to impose definitive anti-dumping duty on Saccharin’ originating in or exported from Indonesia

GST - States

2. S.O. 84 - dated 9-4-2019 - Bihar SGST

Bihar Goods and Services Tax (Second Amendment) Rules, 2019.

3. G.O. (Ms) No.57 - dated 29-4-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction services - Rate of Tax on Services - Errata to Notification - Issued.

4. G.O. (Ms) No.53 - dated 23-4-2019 - Tamil Nadu SGST

GST - Tamil Nadu Goods and Services Tax Act, 2017 - Special procedure for a class of registered persons for furnishing of return and payment of tax - Notification - Issued

5. G.O. (Ms) No. 54 - dated 23-4-2019 - Tamil Nadu SGST

GST - Tamil Nadu Goods and Services Tax Act, 2017 - Notifying the provisions of Rule 138E - Notification - Issued.

6. G.O. (Ms) No. 51 - dated 23-4-2019 - Tamil Nadu SGST

GST - Tamil Nadu Goods and Services Tax Act, 2017 - Extension of time limit for filing an application for revocation of cancellation of registration for specified taxpayers - Tamil Nadu Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019 - Notification - Issued.

7. G.O. (Ms) No. 49 - dated 29-3-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction services - Tamil Nadu Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 - Notification - Issued.

8. G.O. (Ms) No. 47 - dated 29-3-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction services - Rate of state tax on goods - Amendments - Notification - Issued.

9. G.O. (Ms) No. 46 - dated 29-3-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction Services - Reverse charge on supply of services - Notification - Issued

10. G.O. (Ms) No. 45 - dated 29-3-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction Services - Certain class of registered persons in whose case the liability to pay state tax arises - Notification - Issued.

11. G.O. (Ms) No. 44 - dated 29-3-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction services - Reverse charge on supply of services - Amendments - Notification - Issued.

12. G.O. (Ms) No. 43 - dated 29-3-2019 - Tamil Nadu SGST

Goods and Services Tax - Tamil Nadu Goods and Services Tax Act, 2017 - Construction Services - Services exempt from state tax - Amendments - Notification - Issued.

Income Tax

13. 38/2019 - dated 3-5-2019 - IT

Corrigendum – Notification No. 36/2019 dated 12 April 2019

Circulars / Instructions / Orders

GST - States

1. 20/2018 - dated 2-5-2019

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

2. 21/2019 - dated 2-5-2019

GST on Seed Certification Tags

3. 22/2019 - dated 2-5-2019

GST exemption on the upfront amount payable in for long term lease of plots, under Notification 1136-F.T. [12/2017 – State Tax (R)] S. No. 41 dated 28.06.2017

4. Corrigendum to TC 54/2018 - dated 2-5-2019

Corrigendum to Trade Circular No. 54/2018 (Circular No. 76/50/2018-GST) dated 31st December, 2018.

5. 933/GST-2 - dated 30-4-2019

Clarification in respect of utilization of input tax credit under GST.

6. 930/GST-2 - dated 30-4-2019

Order for delegation of powers for provisional attachment of property as per provisions of section 83 of HGST Act, 2017.

7. 936/GST-2 - dated 30-4-2019

Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (RoD)) issued vide Notification no. 59/GST-2. dated the 26th April, 2019

8. 18/2019 - dated 26-4-2019

Clarification in respect of utilization of input tax credit under GST

9. 19/2019 - dated 26-4-2019

Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (RoD) number 05/2019-State Tax dated 23.04.2019 published vide Notification No. 678 F.T. dated 23.04.2019.

10. 99/18/2019-GST - dated 25-4-2019

Clarification regarding filing of application for revocation of cancellation of registration in terms of Removal of Difficulty Order (ROD) number 05/2019-State Tax dated 24.04.2019.

11. 927/GST-2 - dated 16-4-2019

Clarification regarding exercise of option to pay tax under notification No.32/GST-2, dated 08.03.2019.

12. 31/2018-19 - dated 25-3-2019

Scope of principal and agent relationship under Schedule I of KGST Act. 2017 in the context of del-credere agent

13. 32/2018-19 - dated 25-3-2019

Collection of tax at source by Tea Board of India

Highlights / Catch Notes

GST

• Prosecution Can Start Immediately Upon Offense Discovery u/s 132 of CGCT Act, No Preliminary Steps Needed.

  Case-Laws - HC : Prosecution u/s 132 of CGCT Act - This Court is in complete agreement with the stand taken by the department that Section 132 can be directly resorted, wherever offence is committed and it is not necessary to follow the procedure of assessment, demand and recovery or penalty proceedings - the moment a competent officer on inspection and search, finds any offence committed u/s 132, prosecution can be directly launched
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• Construction of Residential Complex as Composite Supply: Dwelling Unit Construction is Principal, Includes Location, Parking, and Facility Access.

  Case-Laws - AAR : Classification of supply - construction of residential complex - dominant element in the bundle - service of construction of a dwelling unit in a residential complex, bundled with services relating to the preferential location of the unit and right to use car parking space and common areas and facilities - composite supply, construction service being the principal supply
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• GST Rates Applied to Sweetshop Goods Not Linked to Restaurant Services; Input Credit Permitted.

  Case-Laws - AAAR : Supply from shop of restaurant - All goods which are supplied to customers through sweetshop counter have no direct or indirect nexus with restaurant service - GST rates of the items being sold and input credit will be allowed on such supply.
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• Edible items sold in restaurants or as takeaways are a 'composite supply'; GST rate follows restaurant service.

  Case-Laws - AAAR : Supply in/through restaurant - When the goods such sweets, namkeens, cold drinks and other edible items are supplied to customers in the restaurant or as takeaway from the restaurant counter and which are being billed under restaurant sales head should fall under 'composite supply' with restaurant service being the principal supply - GST rate as per restaurant service - no input credit
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Income Tax

• Taxpayer's Appeal Leads to Reduced 20% Deposit Requirement in High-Pitch Assessment Case; Grievances Reviewed by Pr. CIT.

  Case-Laws - HC : Stay of demand - high pitch assessment - Pr. CIT ought to have examined grievances of the assessee before deciding whether case is a fit one where the requirement of deposit of 20% of the disputed tax pending appeal can be reduced - stay granted
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• Appellate Authority Must Examine Section 40(a)(ia) TDS Issues, Distinguish Purchase vs. Job Work u/s 194C.

  Case-Laws - HC : Addition u/s.40(a)(ia) - TDS u/s 194C - purchase or job work - duty of appellate authority - legal rights of the Assessees to raise its contentions - it is incumbent on the part of the appellate forums, to thrash out the facts and legal contentions, with the aid of statutory provisions discussed in detail as may be canvassed before them
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• Gold Commission Agent's Profit Estimate Upheld at 3.5% Due to Lack of Evidence; No Legal Issues Found.

  Case-Laws - HC : Best judgment assessment - dealing in gold as commission agent - Estimate of Profit Ratio - In the absence of any evidence placed by the Assessee, he cannot simply contend that Estimate of Income at 3.5% is unreasonable or perverse - The three authorities below have consistently upheld the said 'Ratio of Profit' - no Substantial Question of Law arise
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• Income from BSE Shares: Long-Term Capital Gains or Business Income? Classification Depends on Holding Period from 'BSE Card' Acquisition Date.

  Case-Laws - AT : Acquisition of BSE shares - LTCG OR business income - holding period of the asset is to be calculated from the acquisition of date of ‘BSE card’ and not from the date of conversion of ‘BSE card’ into equity shares - held as LTCG
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• Income from hostels and transport for students and staff is tax-exempt, supporting education u/s 11.

  Case-Laws - AT : Exemption of income u/s 11 - running of hostels and providing transportation facilities to the students - facilities to the students and staff is incidental to achieve the charitable object of providing education - provisions contained in Section 11(4A) are not applicable
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• Tribunal Deletes Penalty for Delayed TDS Returns Due to Financial Crisis and NPA Issues u/s 272A(2)(k.

  Case-Laws - AT : Levy of penalty u/s 272A(2)(k) - substantial delay in filing quarterly TDS return - the development project was dropped because of financial crisis and liquidity crunch, loan became NPA - reduced its number of offices and had retrenched certain employees - reasonable cause on the part of the assessee for delay - penalty deleted
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• Server Subscription Fees to USA Non-Taxable in India: No TDS Needed u/s 40(a)(ia) and Article 12 DTAA.

  Case-Laws - AT : Disallowance u/s. 40(a)(ia) - TDS u/s 195 - no PE - Article 12 of DTAA between India and USA - Royalties and Fees for Included Services - payments for subscription fees for accessing the server of Intelliqip for the pump data - payments is non-taxable in India and therefore no TDS is deducted which in the nature of subscription
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• Assessee Rightly Used DTAA Tax Rate Over Section 206AA for Payments to Non-Residents Without PAN, Per Section 90(2.

  Case-Laws - AT : Rate of TDS - payments made to non-resident entities not having PAN - assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA because the provisions of the DTAAs was more beneficial - section 206AA does not override the provisions of section 90(2)
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• Capital Gain from Development Rights Deemed Long-Term Due to Original Agreement Recognition and Subsequent Confirmation.

  Case-Laws - AT : Nature of capital gain - long term vs short term - recognition of consideration given by earlier agreement of development rights in land in the later registered document establishes the case of assessee that he had acquired the rights way back at a time of original agreement - the gain arising on transfer of such development rights is to be assessed as ‘Long term capital gains’
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• Insurance Claim for Fire Damage Not Considered Export Profit u/s 10AA; Deduction Denied.

  Case-Laws - AT : Deduction u/s 10AA - insurance claim for damage of fixed assets in a fire accident - amount received towards insurance claim cannot be considered to be a profit derived from export of articles produced or services rendered - deduction denied
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• Running Hospital Medical Shop Deemed Charitable, Eligible for Section 12AA Registration, Says Income Tax Authority.

  Case-Laws - AT : Exemption u/s 11 - Registration u/s 12AA - to grant registration the objects of the assessee society is to be examined - to run the medical shop inside the hospital is fully charitable purpose and not for commercial purpose - not maintaining separate books of account for the shop does not mean that the assessee is not entitled for obtaining registration u/s. 12AA - eligible for registration
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• Penalty Deleted: Lack of Inquiry Invalidates Concealment Claims u/s 271(1)(c) of Income Tax Act.

  Case-Laws - HC : Penalty u/s 271(1)(c) - Revised Return surrendering the amounts as income - coercion of the authorities in survey - assessee furnished a plausible explanation, which required an investigation and inquiry - without holding any inquiry finding of guilty animus or concealment of income could not have been rendered by the AO - penalty deleted
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Customs

• Consortium Partner Entitled to Duty-Free Import of Hot Mix Plant Due to Lack of Legal Authority in Exemption Denial.

  Case-Laws - AT : Import of speco hot mix plant - eligibility of a consortium partner to be entitled for import of goods required for construction of roads without payment of duty - The denial of exemption notification does not have the authority of law.
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• Appellant Wins Refund for Excess Duty Paid Due to System Error, Department Can't Benefit from Its Own Mistake.

  Case-Laws - AT : Refund of excess paid duty in cash - re-credit in FPS licence - licence was debited by department but the same was not reflecting in the system and as a result the appellant had to pay in cash - mistake was detected and appellant compelled to seek refund - It is a settled law that the Department cannot take advantage of its own wrong - directed to grant refund
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• Import Duty Liability Falls on Importer, Not Subsequent Car Owner; Section 125 Clarifies Redemption Responsibility.

  Case-Laws - HC : Demanding differential custom duty on account of correct valuation of the car - import of second hand car - liability of importer vs liability of subsequent owner - The demand of duty could only be made upon the importer of the goods and not upon the person in whose possession / ownership the confiscated goods were found when the owner/ possessor of the confiscated goods does not seek to redeem the offending goods u/s 125
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Service Tax

• Cargo Handling Services Include Transportation: Cannot Separate Activities for Agricultural Produce.

  Case-Laws - AT : Classification of service - it cannot be held that providing the cargo handling service in which the transportation of goods is also an ancillary activity, can be vivisected into transportation service and other services, such as loading and unloading of the goods, in this case agricultural produce.
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• Ayurvedic Center Services Classified as Medical Treatment, Demand Set Aside by Kerala Authorities.

  Case-Laws - AT : Classification of service - the massages are provided under the medical supervision of the trained doctors and proper record regarding the treatment is maintained by the appellant. The appellant has been certified as Ayurvedic Center by the District Medical Officer of Kerala - Demand set aside.
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• VCES Application Rejected Due to Alleged Audit Initiation; Department Fails to Prove Audit Commencement.

  Case-Laws - AT : VCES - Department rejected the VCES application for the reason that audit was initiated as departmental internal audit team had visited the appellant’s Unit - Department failed to prove the visit for audit - A letter merely requesting for furnishing of documents cannot be considered as initiation of audit.
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• Key Service Tax Classification Hinges on Agreement Type: Representative Office vs. Consultancy Management. Crucial Distinction Made.

  Case-Laws - AT : Classification of services - the agreement under question is nothing but a Representative Office Agreement and not a Consultancy Management Agreement.
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• Flying Training for Commercial Pilot License Exempt from Service Tax, Not Classified as Commercial Training or Coaching Services.

  Case-Laws - AT : Taxability - providing flying training to candidate for obtaining commercial pilot license - service not leviable to Service Tax under the category of Commercial training or coaching service since the same is recognized by law.
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Central Excise

• CENVAT Credit Allowed for Cleaning Services at Factories, Depots, and Marketing Offices to Maintain Pest-Free Areas.

  Case-Laws - AT : CENVAT Credit - input services - cleaning services - the factory, depots as well as marketing offices have to be kept ‘free of pest’. Therefore, the credit availed on these services are eligible for credit - credit allowed.
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• CENVAT Credit Approved for Profile Sheets Used to Meet Pollution Control Laws, Protect Machinery from Hazards.

  Case-Laws - AT : CENVAT Credit - the profile sheets have been used to comply with the statutory requirement of Pollution Control Laws and if they are not used and the machineries are left open in the area it may cause hazardous - credit allowed.
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Case Laws:

• GST

• 2019 (5) TMI 312
  Classification of supply - supply of goods or supply of services - supply of pure food items such as sweetmeats, namkeens, cold drink and other edible items from a sweetshop which also runs a restaurant - Composite supply - rate of tax - items supplied from ground floor of a sweetshop in which restaurant is also located on the first floor - input tax credit. HELD THAT:- The applicants are running sweetshop and a restaurant in two distinctly marked separate parts of the same premises and are also maintaining separate accounts as well as separate billings for the two types of business. The goods sold from the sweetshop are being billed exclusively as sweetshop sales whereas the goods supplied from the restaurant are billed under restaurant head. In such a situation, nature of the business establishment making supply of food, drinks and other articles for human consumption will not determine whether the same is a supply of goods or services but will depend on the constituents of each individual supply and whether same satisfies the conditions/ ingredients of a composite supply or mixed supply , as defined under Section 2(30) and 2(74) of the CGST Act respectively. Supply in/through restaurant - When the goods such sweets, namkeens, cold drinks and other edible items are supplied to customers in the restaurant or as takeaway from the restaurant counter and which are being billed under restaurant sales head should fall under composite supply with restaurant service being the principal supply. Since supply of food in this case, is naturally bundled with the restaurant service. The taxability of all such goods supplied to or through the restaurant will be governed by the principal service i.e. restaurant service and GST rate with applicable conditions will also be applicable to all such goods also. Input credit will not be allowed in this case. Supply from shop - All goods which are supplied to customers through sweetshop counter have no direct or indirect nexus with restaurant service. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. The billings of such sales are also done separately. Thus such sales, by no stretch of imagination, can be clubbed with restaurant service. Sale of sweets, namkeens, cold drinks and other edible items from sweetshop counter will be treated as supply of goods with applicable GST rates of the items being sold and input credit will be allowed on such supply.

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• 2019 (5) TMI 311
  Classification of supply - supply of construction services - Bundled services - composite supply - principal supply/main supply - HELD THAT:- There is no doubt that the Applicant is a taxable person and the services offered in the bundle described in para 3.1 are taxable services. It is also clear from the context that construction service is the dominant element in the bundle - Moreover, the recipient, while agreeing to buy these services as a bundle, cannot enjoy the other services unless he agrees to buy the service of constructing the allotted dwelling unit. Furthermore, developers of residential complexes usually offer these services in a bundle. Although one has the option not to pay for the right to use car parking space, he cannot buy it, or for that matter any other service in the bundle, separately. The recipient has to buy these services only as a package, where the construction service remains the predominant element. Thus, the services are naturally bundled and offered in conjunction with one another in the ordinary course of business, and the other services of the bundle are ancillary to the supply of the construction service, which describes the essential character of the bundle of services being supplied. The Applicant is providing a composite supply of the bundle of services, construction service being the principal supply. Entire value of the composite supply is, therefore, to be treated, for the purpose of taxation, as the supply of construction service, taxable under Sl No. 3(i) read with Paragraph 2 of the Rate Notification.

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• 2019 (5) TMI 310
  Prosecution u/s 132 - without determining tax, default, adjudication and penalty, straightway prosecution permissible - comparison with service tax law - HELD THAT:- This Court has carefully considered the submissions made on either side. This Court is in complete agreement with the stand taken by the department that. Section 132 of the Act. can be directly resorted, wherever offence is committed and it is not necessary to follow the procedure of assessment, demand and recovery or penalty proceedings. In the scheme of the Act, Section 132 stands independently and the moment a competent officer on inspection and search, finds any offence committed under Section 132 of the Act, prosecution can be directly launched. The Court was also dealing with the scheme of the service Act, wherein the Court found that both the penalty proceedings and prosecution proceedings will have to be preceded by adjudication for the purposes of determining the evasion of service tax. It was so held because the case involved non-payment of service tax collected which according to the Delhi High Court should have involved a process of determination of the tax payable and only thereafter the prosecution should have been launched. Both the above judgments are clearly distinguishable from the facts of the present case end under the scheme of the present Act. Grant of Anticipatory Bail - Outward supply of goods from 02.06.2018 to 09.01.2019, was shown without, movement, of goods on the basis of false and bogus E-way bills - inward supply from 02.06.2018 to 09.01.2019, was also fraudulently shown without actual movement of goods by bogus E-way bills - HELD THAT:- Section 132 of the Act will apply with all force the moment an invoice or a bill is issued without, movement of goods or Input Tax Credit has been wrongly availed. In the present case the preliminary investigation reveals that the entities have formed a cartel by doing circular trading between seven Companies whereby nearly 98 per cent of the transactions are among themselves and 2 per cent of the supply have been wade to other entities. In other words, the very same goods are being repeatedly shown as being supplied by way of purchase/sales amongst the entities only with a view to defraud the revenue and to distribute the credit illegally and fraudulently. There are also prima facie materials to show that the E-way bills generated by the entities are found to be totally false since on verification it was found the so-called movement of goods which is Iron and Steel has been done in vehicles which are two wheelers/three wheelers, vehicles which have already been seized by the finance companies and vehicles where the transporter himself says that no such movement of goods took place - The total turnover shown by the petitioners and the corresponding tax paid by them after adjusting the Input Tax Credit is almost minuscule. This Court in the light of the nature and gravity of the accusations put forth by the prosecution and also the fact that the investigation is at a very early stage, is not inclined to entertain these anticipatory bail petitions - Petition dismissed.

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• Income Tax

• 2019 (5) TMI 327
  TP adjustment - clubbing service agreement income with provision of consulting services - Re-characterising the subsidy income as income received from provision of services - HELD THAT:- As per Schedule 1 of the agreement it can be seen that the subsidy received by the appellant company is directly linked to the outcome of this agreement by which the appellant company agrees to provide all or some of the services listed in Schedule 1 hereinabove. No doubt, the assessee has shown this service charge subsidy in its profit and loss account, but the same has been shown separately without any bench marking. It is true that no third party would have paid such a subsidy to an unrelated party but the fact of the matter is that the appellant did receive this service charge subsidy which is directly related to services provided by it to its AEs. This service agreement income is part of provision of consulting services rendered by the assessee and, therefore, we do not find any error in clubbing service agreement income with provision of consulting services - This ground is accordingly dismissed. MAM selection - assessee has applied CUP as MAM for bench marking provision of consulting services - Rejection of Comparable Uncontrolled Price [CUP] method thereby applying Transactional Net Margin Method [TNMM] as the MAM - HELD THAT:- No force in the contention that the evidences are not brought on record. The invoices raised to AEs and non AEs are exhibited in the paper book. Whether the same person is providing service to both the AEs and non AEs is irrelevant, so as long as the evidences of services provided are available. The services are provided by different set of personnel, having different qualification and it would not be justifiable to ask for invoices of the same person who has provided service to AEs and also to non AEs. A proper team composition is there to take care of the nature and technical difficulties of the project. Even the OECD Guidelines of July 2010 preferred internal CUP over other methods, since it bears a more direct and closer relationship to the transaction under review. Considering invoices relating to AEs and non AEs exhibited in the paper book, we are of the considered opinion that CUP is the MAM and has been rightly adopted by the assessee to bench mark its transactions for provision of consulting services rendered. This grievance is, accordingly, allowed. Addition of unreconciled entries in the AIR information - HELD THAT:- Assessing Officer is directed to decide this issue afresh after verifying the AIR information with detailed submissions made by the assessee. The Assessing Officer is further directed to allow eligible brought forward business losses and unabsorbed depreciation as per provisions of law. These issues are treated as allowed for statistical purposes.

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• 2019 (5) TMI 320
  Disallowance u/s 14A r.w.r. 8D - no exempt income earned - DR contended that since CBDT Circular No. 5 of 2014 mandates that disallowance u/s. 14A should be made irrespective of earning or not of any exempt income - HELD THAT:- The issue involved in the appeal is covered by the judgment of Principal Commissioner of Income Tax-I, Chandigarh v. M/s Vardhman Chemtech Private Limited, Chandigarh [ 2018 (10) TMI 1037 - PUNJAB AND HARYANA HIGH COURT] wherein the appeal filed by the revenue against the deletion of disallowance under Section 14A of the Act read with Rule 8D of the Rules, was dismissed.

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• 2019 (5) TMI 319
  Penalty u/s 271(1)(c) - TP adjustment - arithmetic mean of the profit margin of the comparable was at 13.41% only. However, the assessee offered the amount lower than that, on the basis of its actual income to the profit margin - ITAT set aside the penalty imposed - Revenue emphasised that Explanation (7) was for the purpose of international transactions undergoing transfer pricing and u/s 92CA, if a larger amount was determined by the TPO, the difference between what is offered and what ought to have been offered becomes not only taxable but subject to penalty - HELD THAT:- This Court is of the opinion that in the given facts of this case, the issue at best is debatable. It is also important to notice that during the proceedings, it became evident that the assessee had wound up the operations. What the TPO and later the AO desired the assessee to do, was to include in hindsight, the income amounts which it had not received and offer a higher rate of return or profit. The Court is of the opinion that the setting aside of the penalty amount cannot be characterised as unreasonable. No substantial question of law arises.

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• 2019 (5) TMI 318
  Disallowance u/s 14A read with Rule 8D - assessee has not earned any exempt income in this assessment year - DR contended that since CBDT Circular No. 5 of 2014 mandates that disallowance u/s. 14A should be made irrespective of earning or not of any exempt income - HELD THAT:- As relying on M/S VARDHMAN CHEMTECH PRIVATE LIMITED, CHANDIGARH [ 2018 (10) TMI 1037 - PUNJAB AND HARYANA HIGH COURT] find no merit in the contention of the DR that in the light of the CBDT Circular No. 5 of 2014 disallowance u/s. 14A of the Act is mandatory irrespective of the fact whether the assessee earns exempt income or not. Since the law declared by the Hon ble High Court cannot be overridden by the Circular of the CBDT, the addition made in this behalf is directed to be deleted. Therefore, the appeal of the assessee succeeds and stands allowed.

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• 2019 (5) TMI 317
  Condonation of delay - delay of 175 days - Sufficient cause for delay - HELD THAT:- The delay is not of a few days but of 175 days. Besides, there is absolutely no valid explanation/reason for the delay. In the case of CIT v. Ram Mohan Kabra [ 1999 (1) TMI 4 - PUNJAB AND HARYANA HIGH COURT] has observed that where the Legislature spells out a period of limitation and provides for power to condone the delay as well, such delay can only be condoned only for sufficient and good reasons supported by cogent and proper evidence. It is a settled principle of law that provisions relating to the specified period of limitation must be applied with their rigor and effective consequences. In this case, delay for filing the appeal late for only a few days was not condoned. Assessee failed to explain that delay in filing the appeals was due to sufficient cause. CIT(A) correctly dismissed the appeal of assessee by holding them to be time barred. No interference is required in the matter. Appeals of assessee are dismissed.

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• 2019 (5) TMI 316
  Addition of interest on advances given to the sister concern - calculation of notional interest taking rate of interest at 6% on the advance given to the sister concern - HELD THAT:- Assessee has interest free fund of Rs. 3,22,11,819/- out of which it could be construed that the assessee must have given advance without charging interest. Since interest free funds are more than the interest free advance given by the assessee, therefore, there should not be any interest expenditure require to be disallowed from the claim of the assessee. As fortified by the decision of Cit Vs. Reliance Utilities and Powers Ltd., [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] allow the appeal of the assessee and delete disallowance.

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• 2019 (5) TMI 315
  Rectification u/s 154 of CIT-A s order - CIT(A) considering the issue in detail, partly allowed the appeal of assessee and assessee did not file any further appeal before ITAT against this Order - HELD THAT:- No justification to interfere with the Order of the CIT(A) in rejecting the application under section 154 of the I.T. Act. Since the CIT(A) decided the appeal on merits vide Order dated 24.07.2018 as is contended by the D.R., therefore, there was no jurisdiction with the CIT(A) to review its own order or to re-appraise the issue already decided on merits. CIT(A), therefore, correctly dismissed the application under section 154 - Appeal of assessee is accordingly dismissed.

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• 2019 (5) TMI 314
  Disallowance u/s 14A r.w.Rule 8D - assessee did not earn exempt income in the impugned assessment years - HELD THAT:- The expenditure in the form of investment was incurred by the appellant. It is also equally not in dispute that there is no exempt income in the form of dividend received by the appellant for the respective assessment years. There is no controverting material before the AO regarding the exempted income. The overwhelming judicial view regarding disallowance u/s.14A r.w.r. 8D is that no disallowance can be made in the absence of deemed dividend . See M/S. REDINGTON (INDIA) LTD. VERSUS THE ADDITIONAL COMMISSIONER OF INCOME TAX [ 2017 (1) TMI 318 - MADRAS HIGH COURT ] and M/S. CHETTINAD LOGISTICS PVT. LTD. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] - Decided in favour of assessee.

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• 2019 (5) TMI 313
  TPA - comparable selection - functional profile assessment - HELD THAT:- The appellant before The assessee is involved in rendering the software development services to its assessee, thus companies functionally dissimilar with that of assessee need to be deselected from final list. We direct the TPO to exclude these four comparables namely., (a) Genesys International Corpn. Ltd., (b) Infosys Ltd., (c) Larsen and Toubro Infotech Ltd., and (d) Persistent Systems Ltd. from the list of comparable. Appeal of the assessee is allowed.

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• 2019 (5) TMI 309
  Deduction u/s 80IC - substantial expansion - initial assessment year for availing the deduction - exemption at the same rate of 100% beyond the period of five years on the grounds that the assessee has now carried out substantial expansion in its manufacture unit - HELD THAT:- Issue involved herein is covered by the decision of M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] as held deduction, would be for a total period of 10 years, as provided in sub-section (6). If the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes initial assessment year once again. However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years. - Decided in favour of assessee.

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• 2019 (5) TMI 308
  Scope of remand proceeding - issues remanded back by High Court before Tribunal with direction with further remand if needed - Though tribunal make further remand but order appear to decided merit of case which prejudice the remand - fresh reconsideration relating to advertising, marketing and promotion (AMP) expenses - assessee is aggrieved that though characterized as an interim order and not conclusive of the merits, yet, the finality precludes the assessee/petitioner from urging the grounds with respect to the precise issues - HELD THAT:- This Court is of the opinion that till the remand directed by the ITAT is worked out and a report on that aspect is received, the ITAT s observations in the impugned order, particularly the ones quoted above, or any other observation like them which tend to indicate finality, shall in no way be treated as conclusive of the merits. All rights and contentions of the parties are accordingly kept open. The concerned Bench of the ITAT dealing with the final merits shall be uninfluenced by the said observations.

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• 2019 (5) TMI 307
  Penalty u/s 271-C - assessee failed to deduct on lease rent and interest paid to Yamuna Expressway Industrial Development Authority u/s 194-I, 194-A - sufficient/reasonable cause as contemplated u/s.273-B for the assessee s failure to deduct tax at source - tribunal deleted the penalty imposed as no addition of tax at source could make prior to the year of survey on 24.2.2014 and no other order against the assessee required deduction of tax at source at that time when the assessee made payment of lease rental, was existing - HELD THAT:- Apex Court in the case of NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY (NO.2) VERSUS COMMISSIONER OF INCOME TAX (APPEALS) AND OTHERS 2018 (8) TMI 1374 - SUPREME COURT OF INDIA] has opined that word rent means any payment by whatever name called under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land and came to the conclusion that lease money or annual rent is rent within the meaning of section 194-I of the Act. The matter requires fresh consideration by the tribunal. We therefore remand the matter back to the tribunal and the matter remand shall be reconsidered by the tribunal within a period of three months from the date of issuance of a certified copy of this order.

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• 2019 (5) TMI 306
  Stay of demand - high pitch assessment - commission rate of 8% in the cheque discounting activity - non consideration of petitioner grievance - Pr. CIT insists that the petitioner must deposit 20% of the disputed tax demand pending appeal - HELD THAT:- Order passed by the Commissioner is rather cryptic and devoid of reasons. In the present case, when the petitioner pointed out that in a high pitched assessment order, the A.O. has adopted the commission rate of 8% in the cheque discounting activity, which simply does not prevail, the Principal Commissioner, in our opinion, ought to have examined such grievances of the assessee before deciding whether the present case is a fit one where the requirement of deposit of 20% of the disputed tax pending appeal can be reduced. Petition is disposed of with the impugned order of Commissioner dated 29th March 2019 is quashed and set aside. The Commissioner is requested to pass a fresh order bearing in mind the observations made herein and taking into consideration the case of the petitioner. This must be done preferably before 31st May 2019. Attachment on bank account of the petitioner shall be lifted forthwith. There shall be no recovery against the petitioner for a period of two weeks, pursuant to the order passed by the Commissioner after the same is communicated to the assessee/ petitioner.

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• 2019 (5) TMI 305
  Disallowance of advertisement expenses - HELD THAT:- We find that the materials produced before the Assessing Officer would clearly reveal that there was no dispute with regard to the works in relation to the publicity effected. In so far as there is no dispute as to the publicity effected and so far as the payment was effected through crossed cheques and since all these cheques have been encashed, we are of the view that this is not a fit case where interference is to be made with the finding and reasoning given by the Tribunal. See APOLLO TYRES LIMITED [ 2019 (4) TMI 82 - KERALA HIGH COURT ] Loss sustained on sale of NHPC bonds - HELD THAT:- Almost similar question was raised in M/S. APPOLLO TYRES LTD. [ 2019 (4) TMI 294 - KERALA HIGH COURT ] where it was in respect of IRFC bonds. The question was answered against the Revenue - question itself is not factually correct. The facts and figures have been meticulously analysed by the Tribunal. No substantial question of law, so as to warrant interference in terms of Section 260A

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• 2019 (5) TMI 304
  Stay of demand exceeding 365 days - delay in disposal of appeal as not attributable to the assessee - HELD THAT:- Wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases Se PRINCIPAL COMMISSIONER OF INCOME TAX, GURGAON VERSUS M/S CARRIER AIR CONDITIONING AND REFRIGERATION LIMITED [ 2016 (5) TMI 396 - PUNJAB AND HARYANA HIGH COURT]. No substantial question of law.

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• 2019 (5) TMI 303
  Addition u/s.40(a)(ia) - TDS u/s 194C - purchase or job work - major part of the materials viz., Gold and Nickel for undertaking the job work was purchased only by M/s.Spectronic Plating (P) Ltd., from the third parties and not from the Assessee and therefore composite Invoice was raised charging sales tax - duty of appellate authority - HELD THAT:- CIT (Appeals) has not at all answered to the contentions raised before him and has not especially not dealt with the exclusion part in the Explanation to Section 194C; whether the said Section applies to the present case or not, in view of the definition Work as defined in the Explanation to Section 194C, where apparently the material used for electroplating viz., Gold and Nickel were purchased by the job worker M/s.Spectronic Plating Pvt., Ltd., Bangalore from third parties and for which a composite Sale Invoice consequent to the Purchase Order of the Assessee was raised, and in respect of the same, then property in goods has been transferred to the Assessee along with job work charges of electroplating undertaken by the said Company. Whether such works would attract the provisions of Section 194C or not was a debatable question and unless a finding of fact was arrived at by the CIT (Appeals) independently discussing the contentions raised before him, the mere affirmation of the finding of the Appellate Authority that provisions under Section 194C are attracted and that the Assessing Officer was justified in making disallowance to the extent of Rs. 2,76,67,052/- is not at all a satisfactory disposal of the Appeal by the First Appellate Authority, who was under an obligation to discuss the facts and legal contentions in detail and the FAA cannot affirm the order passed by the lower Assesseing Authority just like that. The Tribunal is also equally duty bound to discuss the facts and legal contentions in detail. Cutting short their findings by merely affirming the order of the lower Appellate Authority, shows total non-application of mind and the failure to discharge their legal duty provided under the Act. Assessing Authorities are adopting a pro-revenue approach to raise demands of tax, interest and penalty, perhaps to fetch more revenue to the coffers of the Treasury, but at the same time, we cannot ignore the legal rights of the Assessees to raise its contentions. Therefore, it is incumbent on the part of the appellate forums, to thrash out the facts and legal contentions, with the aid of statutory provisions discussed in detail as may be canvassed before them, under the Income Tax Act - we are constrained to remit the matter back to the learned CIT (Appeals) for passing fresh orders in accordance with law, after dealing with the contentions of the Assessee in an appropriate, fair and objective manner by proper application of mind.

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• 2019 (5) TMI 302
  Best judgment assessment - Estimate of Profit Ratio - non furnishing of evidence - Substantial Question of Law - addition on provision of Section 69A - HELD THAT:- Estimate of Profit Ratio remains a fact finding exercise and unless the perversity in the findings of the Tribunal, from which the Substantial Question of Law can be said to be arising, is established by the Assessee on the basis of material on record or evidence adduced by him, in our considered opinion, no Substantial Question of Law arises in such matters. This Court does not have any material on record to establish either 1% or 3.5%, as being the reasonable rate of income. It is for the Assessing Authority to make any such Estimate of Income in the hands of the Assessee. Assessee, claiming to be only acting as an Agent, in the absence of any disclosure about the identity of the purchasers, could only be treated as engaged in the said business of his own and, therefore, the Estimate of Income in the business of purchase and sale of gold was required to be assessed by the Assessing Authority. Estimate of Income, in such cases, even undertaking Best Judgment Assessment exercise while rejecting the Books of Accounts and Profits of the Assessee, is a fact finding exercise to be made, based on material to be placed on record by the Assessee. In the absence of any evidence placed by the Assessee in this regard, the Assessee cannot simply contend that Estimate of Income at 3.5% is unreasonable or perverse. The three authorities below have consistently upheld the said Ratio of Profit , to be assessable in the hands of the Assessee, and the Assessee has consistently failed before the authorities below to produce any cogent material to establish that 1% was reasonable Ratio of Profit in the said trade. Therefore, we do not find any Substantial Question of Law arising in this case and, accordingly, we do not find any merit in this Appeal filed by the Assessee.

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• 2019 (5) TMI 301
  Penalty u/s 271(1)(c) - penalty was imposed for two reasons viz., (i) Unvouched Expenses and (ii) Unexplained Credits - Revised Return surrendering the amounts as income - coercion of the authorities concerned - fair investigation - income in the Revised Return as Cessation of Liability u/s 41 (1) - HELD THAT:- We are satisfied that the authorities below, right from the Assessing Authority, have abused their powers u/s 271 (1) (c) in the present case. The explanation furnished by the Assessee for both the additions made to the declared income in the Revised Return filed by the Assessee was a plausible explanation which required consideration at the hands of the Assessing Authority. Part of expenses, which were not at all even claimed as deduction from the profits of the Assessee, were said to have been incurred by the Assessee-the forwarding Agent- to be reimbursed by his customers. Without holding any inquiry in the matter from the said customers as to whether they were reimbursed or not, no such finding of guilty animus or concealment of income could have been rendered by the Assessing Authority in such cases. The surrender on the part of the Assessee appears to be under the coercion exercised by the Survey Authority at the time of survey or the Assessing Authority. The Assessee furnished a plausible explanation, which required an investigation and inquiry. Instead of undertaking such fair exercise, the Assessing Authority and subsequently the Appellate Authorities just imposed and upheld the penalty in question to the extent of 100% of tax on such surrendered income, which was not at all called for. The reconciliation of the accounts of the Sundry Creditors is a routine accounting practice in day-to-day business and it was a matter for scrutiny and, therefore, the explanation of the Assessee that there were some unreconciled balances only required further examination and an opportunity was to be given to the Assessee to reconcile such account balances with creditors. Such unreconciled balances could not have been added as income on account of Cessation of Liability to be brought to tax u/s 41 (1) and invoking of Section 41 (1) in the present case was wholly erroneous. The said provision applies if a liability has completely ceased for Assessee, de facto and de jure. Having carefully gone through the order of the Tribunal, we are sorry to observe that it was passed by the final fact finding body comprising of responsible Members. The tenor of the order does not impress us at all and leaves much to be desired. The said order seems to be a cut and paste order, taking pieces from here and there and as if quoting some of the judgments of Supreme Court and High Courts would be enough for the final fact finding body. Further, we are sorry to notice this quality of order passed by the learned Tribunal in this case. The very premise on which the penalty u/s 271 (1) (c) was imposed by the Assessing Authority should have invoked the good conscience of the learned Members of the Tribunal, who should have either sent back the matter to the Assessing Authority for investigating into the affairs once again or set aside the penalty in the fair exercise of their discretion in the matter. It seems, the learned Tribunal chose to uphold the order of penalty, which was passed wholly on erroneous premises, just by citing and quoting some judgments and not giving any of their own findings. The said order of the Tribunal, therefore, cannot be sustained in the eye of law. Present Appeals filed by the Assessee deserves to be allowed with costs, quantified at Rs. 10,000/-, to be borne by the Assessing Authority, who passed the impugned penalty orders in the present case to be paid to the Appellant-Assessee within three months from today and Compliance Report should be sent to this Court.

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• 2019 (5) TMI 300
  Withdrawal of approval granted u/s 10(23C)(vi) - violating the provisions of Section 10(23C) (vi) - show cause notice has to contain details of the allegations made against the noticee in order to effectively answer the notice - reasonable opportunity of being heard - principal of natural justice - HELD THAT:- In MR.S.N. SINHA Vs. THE STATE OF KARNATAKA, BY ITS SECRETARY DEPARTMENT OF REVENUE AND OTHERS [ 2011 (12) TMI 721 - KARNATAKA HIGH COURT] it is held that for a notice to be valid in law, should be clear and precise so as to give the party concerned adequate information of the case he has to meet. The adequacy of notice is a relative term and must be decided with reference to each case. The test of adequacy of notice will be whether it gives sufficient information so as to enable the person concerned to put up an effective defence. If a notice is vague or it contains unspecified or unintelligible allegations, it would imply a denial of proper opportunity of being heard. Natural Justice is not only a requirement of proper legal procedure but also a vital element of good administration. On a careful perusal of the notice issued by the Income Tax Department and the law laid down by the Hon ble Apex Court and this Court in GORKHA SECURITY SERVICES VERSUS GOVT. OF NCT OF DELHI ORS. [ 2014 (8) TMI 1081 - SUPREME COURT] MR.S.N. SINHA (supra), we are of the considered view, that the respondent-revenue has not given reasonable opportunity to the appellants to put forth their case effectively. In the circumstances, the notice dated 28.11.2017 is unsustainable in law - Appeals are allowed

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• 2019 (5) TMI 299
  Acquisition of BSE shares - LTCG OR business income - holding period of capital asset being equity shares allotted in pursuance to demutualisation or corporatisation of a recognised stock exchange in hand - period of holding of asset - Calculation of Indexation benefit cost of acquisition of BSE card - HELD THAT:- As per the section 2(42A)(ha) supra, for determining the holding period of capital asset being equity shares allotted in pursuance to demutualisation of a recognised stock exchange in hand, the period for which the assessee was a member of the recognised stock exchange prior to such demutualisation shall also be included. Hence, the holding period of the asset is to be calculated from the acquisition of date of BSE card and not from the date of conversion of BSE card into equity shares. As per the section 55(2)(ab) of the Act, the cost of acquisition in relation to equity shares allotted to a shareholder under a scheme of demutualisation shall be the cost of acquisition of his original membership of the exchange. So from the express provisions, it is clear that the cost of acquisition of BSE card shall be the cost of acquisition of BSE shares and the shares are deemed to be acquired on the date of acquisition of BSE card and not from the date of their conversion. Hence, the date of holding/acquisition of an asset being equity shares allotted pursuant to demutualisation or corporatisation of a recognised stock exchange will be the date of acquisition of original BSE card and we note that CIT(A) have given relief to assessee by following the decision in M/s. Parag Parikh Financial Advisory Services Ltd. No other decision was cited before us by Revenue, to persuade us to to take a different view. Therefore, respectfully following the decision of M/s. Parag Parikh Financial Advisory Services Ltd. [ 2014 (2) TMI 686 - ITAT MUMBAI] the lis is decided in favour of the assessee.

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• 2019 (5) TMI 298
  Condonation of delay of 441 days - valid explanation/reason for the delay - sufficient cause of delay - HELD THAT:- There is absolutely no valid explanation/reason for the delay. In the case of CIT v. Ram Mohan Kabra [ 1999 (1) TMI 4 - PUNJAB AND HARYANA HIGH COURT] has observed that where the Legislature spells out a period of limitation and provides for power to condone the delay as well, such delay can only be condoned only for sufficient and good reasons supported by cogent and proper evidence. It is a settled principle of law that provisions relating to the specified period of limitation must be applied with their rigor and effective consequences. In this case, delay for filing the appeal late for only a few days was not condoned. In the case of Asstt. CIT vs. Taggas Industries Development Ltd. . [ 2000 (9) TMI 212 - ITAT CALCUTTA-E] Tribunal, Calcutta Bench, Calcutta, did not condone the delay for filing the appeal late by 13 days because the delay was not due to sufficient cause. Assessee failed to explain that delay in filing the appeals was due to sufficient cause. Ld. CIT(A) correctly dismissed the appeal of assessee by holding it to be time barred. No interference is required in the mater. Appeal of assessee is dismissed.

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• 2019 (5) TMI 297
  Validity of Assessment u/s 153C - recording of satisfaction of AO of assessee or AO of search person - no specific satisfaction recorded by the AO as to how the seized material belonged to the assessee - HELD THAT: - The satisfaction note was apparently recorded by the Assessing Officer of the assessee and not by the Assessing Officer of the searched person as required by the provision of section 153C. A perusal of the said note, which is reproduced hereinabove, shows that the documents referred therein and identified as IIPL/13 to IIPL/19 were found and impounded during the course of survey operation carried out at the business premises of the assessee and there is no specific reference in the said satisfaction note to any documents found during the course of search and seizure action conducted in Prakash Group of cases. There is nothing even to indicate as to how these vaguely referred documents were found to be belonging to the assessee. There is no recording about the contents of these documents allegedly pertaining to the assessee and AO nowhere has explained the steps taken by him to determine that the seized material belonged to the assessee. There is no specific satisfaction recorded by the Assessing Officer as to how the seized material belonged to the assessee. There is a failure on the part of the AO to provide clear and cogent reasons, which can explain why the seized material belonged to the assessee apart from saying that the documents belonged to the assessee and he was satisfied that it was a fit case for issuing of notice u/s 153C - If all these facts of the case are considered in the light of the decision of the Hon ble Delhi High Court in the case of N.S. Softwares [ 2018 (4) TMI 1005 - DELHI HIGH COURT] and Pepsi Foods Pvt. Limited [ 2014 (8) TMI 425 - DELHI HIGH COURT] , we find that the satisfaction recorded by the Assessing Officer is neither adequate nor proper and since it does not meet the requirement of the concept of satisfaction as used in section 153C, we hold that the initiation of proceedings u/s 153C itself was bad-in-law and the assessments completed in pursuance of such initiation are liable to be cancelled being invalid - Decided in favour of assessee.

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• 2019 (5) TMI 296
  Levy of penalty u/s 271(1)(c) - non specification of charge - show cause notice before levy of the penalty against the assessee - HELD THAT:- A.O. issued show cause notice dated 30.11.2016 before levy of the penalty against the assessee which is bad in law as it did not specify in which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. As relying on SSA S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SUPREME COURT] the orders of the authorities below are set aside and penalty is cancelled. - Decided in favour of assessee.

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• 2019 (5) TMI 295
  Admission of additional legal ground raised by the assessee - HELD THAT:- As in the case of National Thermal Power Co. Ltd. Vs. CIT ( 1996 (12) TMI 7 - SUPREME COURT] has considered the issue and held that where the tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee . From the above, it is very clear that there is no fresh investigation on facts is required, the additional ground raised by the assessee has to be adjudicated - Additional ground raised by the assessee is admitted. Penalty u/s 271(1)(c) - defective notice - Whether the notice issued by the AO is valid or not? - HLD THAT:- From notice it is not clear whether Assessing Officer has initiated penalty proceedings for concealment of particulars of income or for furnished inaccurate particulars. Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed in the light of the decision of the Hon ble Jurisdictional High Court in the case of Smt. Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] and also case of SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SUPREME COURT]. Also see KONCHADA SREERAM VERSUS INCOME TAX OFFICER, WARD-1 (1) , VISAKHAPATNAM [ 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM] - Decided in favour of assessee.

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• 2019 (5) TMI 294
  Nature of capital gain - long term vs short term - transfer of development rights acquired by assessee in pieces of land - execution of registered document happen subsequently - period of holding of rights - HELD THAT:- Whatever rights the assessee had acquired in the said pieces of land start from 1997, on which date for one of the transactions the amount was also paid through cheque of Rs. 6 lakhs. The said consideration of Rs. 6 lakhs was recognized in the later registered document which establishes the case of assessee of having acquired the rights way back in 1997. Accordingly, the gain arising on transfer of development rights in the hands of assessee is to be assessed as Long term capital gains . Denying deduction u/s 54EC - as per AO amount which was put into capital gains account has been transferred to some person - HELD THAT:- We hold that the assessee is entitled to the claim of deduction under section 54ED of the Act on account of investment in Bonds issued by Rural Electrification Ltd. and 54F of the Act on account of investment in construction of joint family property. The said claim of assessee cannot be rejected by the Assessing Officer observing that the amount which was put into capital gains account has been transferred to some person. The explanation of assessee in this regard was that the amount has been transferred to joint bank account of his brothers and himself, wherein the money was utilized for construction of joint ancestral house. We thus, direct the Assessing Officer to allow the said claim also in the hands of assessee. - Decided in favour of assessee.

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• 2019 (5) TMI 293
  Penalty u/s.271(1)(c) - quantum additions have been set aside to the file of AO - HELD THAT:- In so far as the quantum additions in both these appeals are concerned for assessment years 2007-08 and 2008-09 [ 2019 (4) TMI 857 - ITAT PUNE] , the Pune Bench of the Tribunal has remitted the matter back to the file of Assessing Officer. DR fairly submitted that since quantum addition has been remitted back to the file of Assessing Officer for readjudication, similarly penalty issue should also be restored back to the file of Assessing Officer in the interest of justice. We set aside the orders of the CIT(Appeals) for both the years and remit the matters back to the file of AO to adjudicate in view of the quantum matter already in front of him as per law and after providing reasonable opportunity of hearing to the assessee. Both the appeals of the Revenue are allowed for statistical purposes.

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• 2019 (5) TMI 292
  Denial of deduction u/s.80IB(10) - denial for want of valid Completion /Occupancy Certificate - production of Completion Certificate in appellate proceedings - HELD THAT:- The assessee was not in possession of the Completion Certificate at the relevant point of time when the proceedings were going on before the Revenue Authorities. However, at present the assessee has filed Completion Certificate before us and has pleaded that in view of earlier decision of M/S. RAJ KASLIWAL VERSUS DCIT- CENTRAL, AURANGABAD [ 2019 (4) TMI 1031 - ITAT PUNE] , the matter may be restored back to the file of Assessing Officer for proper adjudication in the interest of justice. We set aside the order of the CIT(Appeals) and restore the matter back to the file of Assessing Officer to adjudicate the issue after considering the Completion Certificate which is now in possession of the assessee and as per law after providing reasonable opportunity of hearing to the assessee. - Appeal of the assessee is allowed for statistical purposes.

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• 2019 (5) TMI 291
  Penalty levied u/s.271(1)(c) - disallowance u/s.14A - HELD THAT:- Penalty has been imposed on making disallowance of certain expenses. But for that, there is nothing on record to show that the assessee lodged bogus claims in respect of these expenses. That apart, the expenses were claimed by the assessee in a bona fide manner. The mere fact that the above disallowances have been made do not bring a case within the parameters set out in section 271(1)(c) of the Act. The Hon ble Supreme Court in CIT VS. Reliance Petro Products Private Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] has held that a mere making of a claim which is not sustainable in law, by itself will not attract penalty 271(1)(c) of the Income-tax Act, when the assessee furnishes all the relevant particulars in his return which are not found to be inaccurate. There is no dearth of decisions holding that penalty under section 271(1)(c) cannot be imposed on disallowance of expenses, which were not otherwise bogus - See SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2019 (5) TMI 290
  Transfer pricing adjustment - comparable selection of Apitco Ltd. as a Government Company / PSU - HELD THAT:- On a perusal of the material on record including the annual report of the company, we are of the considered opinion that Apitco Ltd. has to be treated as a Government Company / PSU. In fact, in the case of International SOS Services India Pvt. Ltd. v/s DCIT, [ 2015 (12) TMI 1548 - ITAT DELHI] the Tribunal, Delhi Bench, has excluded Apitco Ltd., by treating it as a Government Company. The aforesaid decision of the Tribunal was upheld by the Hon ble Delhi High Court while deciding Revenue s appeal [ 2017 (5) TMI 1588 - DELHI HIGH COURT] . It is relevant to observe, though the Department challenged the aforesaid decision of the Hon ble Delhi High Court before the Hon ble Supreme Court, however, the SLP was dismissed by the Hon ble Supreme Court finding no merit therein [ 2018 (7) TMI 643 - SUPREME COURT OF INDIA] Thus, in view of the judicial precedents referred to above, Apitco Ltd., cannot be considered to be a comparable. Even otherwise also, in various other decisions, Apitco Ltd., has been rejected as a comparable due to functional dissimilarity and lack of segmental break up. In view of the aforesaid, we direct the Assessing Officer to exclude Apitco Ltd., from the list of comparables and compute the arm s length price of business support service segment. Addition u/s 40(a)(ia) - TDS u/s 194J - channel placement fee - HELD THAT:- Undisputedly, assessee has deducted tax on payment of channel placement fee applying the provision of section 194C. The issue in dispute is, whether channel placement fee is in the nature of royalty requiring deduction of tax u/s 1994J. As could be seen from the material on record, this dispute arose for the first time in assessee s own case in assessment year 2009 10. Tribunal held that channel placement fee is not in the nature of royalty, hence, there is no requirement for deduction of tax at source u/s 194J We have also noted that in respect of other assesses also dispute of identical nature have been decided in their favour by the Tribunal and the Hon ble Jurisdictional High Court [ 2019 (5) TMI 229 - BOMBAY HIGH COURT] ]. That being the case, we direct the Assessing Officer to delete the disallowance made u/s 40(a)(ia) Short credit of TDS - HELD THAT:- We direct the Assessing Officer to verify relevant facts and grant credit for TDS as per law.

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• 2019 (5) TMI 289
  Transfer pricing adjustment - re characterizing the closing balance of preferential shares held by the assessee as interest free loan to the Associated Enterprises (AE) - HELD THAT:- Transfer Pricing Officer while making the disputed adjustment has re characterized the investment made in preferential shares held by the assessee with its overseas AE as interest free loan and has accordingly determined the arm s length price of interest chargeable on such loan at 11.91%. While doing so, the TPO, though, has taken note of the fact that the Tribunal while deciding assessee s appeal in the assessment year 2009 10 has disapproved such re characterization of preferential shares to loan, however, he did not follow the decision of the Tribunal on the reasoning that the appeal filed by the Revenue against the said order of the Tribunal is pending before the Hon ble Jurisdictional High Court. As brought to our notice by the AR, in the meanwhile, the has disposed of the appeal filed by the Revenue for the assessment year 2009 10, [ 2019 (4) TMI 858 - BOMBAY HIGH COURT] upholding the decision of the Tribunal - we hold that re characterization of preferential shares as interest free loan is invalid. Accordingly, we delete the addition made on account of adjustment made by the Transfer Pricing Officer on this account. Grounds are allowed. Disallowance of interest expenditure u/s 36(1)(iii) - HELD THAT:- As regards the interest free loans advanced to the related parties in India amounting to Rs. 51,56,903, it is seen from the material on record that the assessee had huge surplus fund available with it amounting to Rs. 1844,95,00,000. Therefore, it is manifest, own funds available with the assessee was far in excess to the interest free loans advanced to the related parties. That being the case, no disallowance under section 36(1)(iii) can be made out of the interest expenditure in view of the ratio laid down in the decision of the Hon ble Jurisdictional High Court in Reliance Utilities And Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . Notably, similar disallowance was made by the AO in assessee s own case in assessment year 2009 10. The Tribunal having found that the assessee had sufficient fund available with it to advance interest free loan, deleted the disallowance made by the Assessing Officer. We hold that disallowance of interest expenditure cannot be made on account of interest free loan advanced to the related parties in India. Loan advanced to the overseas A.E., undisputedly, the assessee has charged interest @ 9% on such loan. It is also a fact on record that the Transfer Pricing Officer in the order passed under section 92CA(3) of the Act has accepted the interest charged @ 9% on the loan advanced to the AE to be at arm s length. That being the case, the Assessing Officer could not have disallowed any interest expenditure by applying the interest rate of 11.91% on ad hoc basis. No justification in the disallowance made u/s 36(1)(iii). Accordingly, we delete the addition.

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• 2019 (5) TMI 288
  Disallowance of deduction u/s 10AA - insurance claim for damage of fixed assets in a fire accident - as per AR insurance claim received by the assessee was for repairing assets damaged in the fire and the assessee has not purchased any new assets. Therefore, it cannot be said that it is not related to the business activities of the assessee - HELD THAT:- On going through the provisions of section 10AA introduced in to the statute by virtue of Special Economic Zones Act, 2005, the amount received towards insurance claim cannot be considered to be a profit derived from export of articles produced or services rendered. That being the case, assessee s claim of deduction under section 10AA of the Act in respect of such income cannot be allowed. Decisions relied upon by AR are rendered in different factual context, hence, not applicable to the facts of the present appeal. Insofar as assessee s claim that the insurance claim cannot be reduced from the block of assets the claim of the assessee in this regard has not been substantiated through proper supporting evidence, therefore,unable to accept the contention of the learned Authorised Representative. That being the case, the grounds raised are dismissed. Alternative claim that if the insurance claim is treated as income from other course, then expenditure relating to such income have to be allowed under section 57 - claim raised in the additional ground needs factual verification by the Assessing Officer. Therefore, while admitting the additional ground raised by the assessee, restore the issue to the file of the Assessing Officer for considering assessee s claim after verifying the relevant facts on record. These grounds are allowed for statistical purposes.

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• 2019 (5) TMI 287
  Disallowance u/s. 36(1)(iii) - AO disallowed the proportionate interest treating it as related to capital work-in-progress - HELD THAT:- CIT(A) confirmed the order of AO; without considering the fact that assessee has its own funds. Out of total Term Loan of Rs. 35.00 crore taken for Bellary Project, Rs. 27.88 was disbursed up to 31.07.2009 and the interest on same has already been capitalized. The balance loan of Rs. 7.12 crore was disbursed between 01.08.2009 to 31.03.2010 and the interest of Rs. 15.11 lakhs on this portion is charged to revenue. In worst case the amount which can be disallowed towards interest on capital WIP (work in progress) is to be Rs. 15.11 lakhs only. Balance loan amount of Rs. 7.12 crore, which was disbursed between 1.8.09 to 31.03.10 and interest on such loan of Rs. 15.11 lakh needs to be verified by AO, whether it falls in revenue zone or capital zone. Assessee treated Rs. 15.11 lakh as revenue expenditure. If this interest of Rs. 15.11 lakh is before put to use an asset, then it may be capitalized. Otherwise, it would be revenue expenditure. Therefore, AO should examine this factual aspect and to adjudicate the issue in accordance to law. Disallowance of interest u/s. 36(1)(iii) - AO held that assessee had utilized borrowed capital invested in SBI Mutual Fund of Rs. 5 crores - HELD THAT:- As we already sent the issue back to the file of AO to examine whether the interest is to be capitalized or not in respect of balance loan of Rs. 7.12 crores ( Rs. 35 crores Rs. 27.88 crores), which was disbursed between 01.08.2009 to 31.03.2010. Therefore, disallowance of Rs. 2,93,580/- amounts to double addition/double taxation. Issue needs to be examined by AO whether investment for one month is not from borrowed fund. AO should verify whether investment of Rs. 5 crores is from own sources. Therefore, we direct the AO to examine this factual aspect and to adjudicate the issue in accordance to law. Hence, ground no. 4 raised by the assessee is allowed for statistical purpose. Disallowance u/s. 14A - Counsel pointed out that the assessee did not claim any exempt income. Assessee has offered the exempted income for taxation, therefore, there is no any question arises to disallow exempted income - HELD THAT:- This factual aspect should be examined by AO to ascertain whether assesse has offered for taxation the entire exempt income or not. If the assesse has offered the entire exempt income, no disallowance is warranted; otherwise AO is directed to compute disallowance as per the provisions of section 14A r.w.rule 8D . This ground of assessee s appeal is allowed for statistical purpose.

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• 2019 (5) TMI 286
  Penalty u/s 271(1)(c ) - defective notice issued u/s. 274 - non specification of charge - HELD THAT:- We find that the notice dt. 19.03.2013 issued u/s 274 r.w.s 271 of the Act, copy of the same is on record, does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [ 2017 (12) TMI 883 - ITAT, KOLKATA] and M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2019 (5) TMI 285
  Penalty u/s. 271(1)(c) - Non specification of charge - defective notice - HELD THAT:- Following the decision of Coordinate Bench of this Tribunal in the case of Jeetmal Choraria Vs. ACIT [2017 (12) TMI 883 - ITAT, KOLKATA] where it is held that the show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - thus in these circumstances, we are of the view that imposition of penalty cannot be sustained - Decided in favor of assessee.

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• 2019 (5) TMI 284
  Penalty u/s 271(1)(c) - deemed dividend addition u/s 2(22)(e) - Non specification of charge - additions made for treating the transactions of current in nature as loan to the assessee by M/s SSP Enterprises P Ltd - HELD THAT:- From perusal of the show cause notices we find that the A.O has merely mentioned the section but the specific charge i.e. whether the penalty have been initiated for concealment of particulars of income or for furnishing inaccurate particulars of income has not been mentioned. Now whether such type of notice which does not speak about the specific charge leveled against the assessee is valid and tenable in the eyes of law needs to be examined. As relying on SHRI VARAD MEHTA VERSUS DCIT 1 (1) , BHOPAL [ 2018 (12) TMI 1091 - ITAT INDORE] notice issued u/s 271(1)(c) dated 29.04.2015 is invalid, untenable and suffers from the infirmity of non application of mind by the AO. We accordingly direct to delete the penalty for Assessment Years 2012-13 imposed u/s 271(1)(c) on this ground itself. We accordingly allow the additional legal ground raised by the assessee on the legality of the penalty proceedings initiated u/s 271(1)(c) of the Act. Since the issue of penalty u/s 271(1)(c) has been dealt by us on the preliminary points, other arguments of the assessee dealing with the merits of the levy of penalty are not been dealt with, as the same are rendered academic in nature and thus the appeal of the assessee for the Assessment Year 2012-13 is allowed. - Decided in favour of assessee.

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• 2019 (5) TMI 283
  Exemption of income u/s 11 - charitable activity u/s 2(15) or not? - running of hostels and providing transportation facilities to the students - whether incidental to the education and receipt therefrom or income from independent business - AO was of opinion that for providing transportation facilities, students are charged on commercial basis - applicability of provisions of Section 11(4A) 11(4) - HELD THAT:- In the case at hand, it is undisputed case of the assessee that hostel and transportation facilities are only being provided to the students of the Institute and as such is incidental to achieve the object of providing education in compliance to the aims and objects of the assessee trust. So, in these circumstances, provisions contained u/s 11 (4A) invoked by the AO are not applicable to the facts and circumstances of the case. We are of the considered view that activity of assessee society in providing transport and hostel facilities to the students and staff is incidental to achieve the charitable object of providing education. Addition of repair and maintenance of buses on ad -hoc basis - fuel charges for running the buses are on higher side as the assessee society is owning only two buses - HELD THAT:- Since both AO/CIT (A) have disallowed/confirmed the expenses on ad hoc basis only on the ground that the same are on higher side without disputing the incurrence of the expenses it is not permissible under law. Moreover, maintenance charges as well as fuel charges of the buses depends upon the age and condition of the vehicle which has not been examined by the AO. So, we are of the considered view that these expenses are liable to be allowed it is a matter of record that when the assessee society has been claimed exemption u/s 11, no such question has been raised by the AO regarding disallowance of exemption claimed on account of hostel and transportation facilities as is evident from assessment order for AYs 2009-10, 2012-13 and 2013-14 passed u/s 143 (3) . When there is no change in the facts and circumstances of the case, the Revenue is also bound to follow rule of consistency. Disallowance of exemption of receipt from the activities of providing hostel and transport facilities to the students of the institution is not sustainable in the eyes of law being intrinsic part of the educational activities of the assessee society - Decided in favour of assessee Disallowance of depreciation on fixed assets while computing total amount utilized and applied towards charitable purposes - HELD THAT:- Following the decisions rendered in Vishwa Jagriti Mission [ 2012 (4) TMI 289 - DELHI HIGH COURT] and Rajasthan and Gujarati Charitable Foundation Poona [ 2017 (12) TMI 1067 - SUPREME COURT] we are of the considered view that while computing income from those assets of which full expenditure has been allowed in the year of acquisition, in the subsequent years depreciation in respect of those assets has also to be taken into account. AO/CIT (A) have erred in making disallowance on account of depreciation on fixed assets claimed during the year under assessment because application of income is not computation of income and the provisions of application of income would come into play only after the income chargeable to tax is determined and the income has to be in the general sense and depreciation is one of the deductions availed under law and there is no reason for disallowing the same. - Decided in favour of the assessee.

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• 2019 (5) TMI 282
  Levy of penalty u/s 272A(2)(k) - failure to deliver quarterly TDS returns as required to be filed under the provisions of section 200(3) - delay in filing return in Form No.24Q for all the four quarters by 940 days and in Form No.26Q for all the quarters by 1324 number of days - delay of 2264 number of days cumulatively - reasonable cause on the part of the assessee for delayed deposit of the TDS and non-furnishing of the TDS returns HELD THAT:- Bank account of the assessee was declared as NPA and public notices were given. The assessee company has drastically reduced its number of offices and had retrenched certain employees due to the financial crisis that it had undergone. The development project was also dropped because of financial crisis and liquidity crunch. There is also default on the part of the assessee to adhere to the one time settlement of its secured loan outstanding. All these facts indicate that there was some problem going on in the financial affairs of the assessee company. Under these circumstances, we are of the considered opinion that there was a reasonable cause on the part of the assessee for delayed deposit of the TDS and non-furnishing of the TDS returns in Form No.24Q and 26Q for all the four quarters during F.Y. 2010-11. As relying on JCL INFRA LTD. C/O. M/S. DEEPAK JAIN CO. [ 2018 (7) TMI 1315 - ITAT DELHI] and M/S. AQUAFIL POLYMERS CO. PVT. LTD., [ 2016 (2) TMI 1079 - ITAT AHMEDABAD] there was a reasonable cause on the part of the assessee for non submission of the TDS returns in Form No.24Q and 26Q for F.Y. 2010-11 within the meaning of provisions of section 273B - Decided in favour of assessee.

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• 2019 (5) TMI 281
  Penalty u/s 271(1)(c) - assessee contented as no notice u/s 274 r.w.s. 271(1)(c) was issued along with assessment order - no prima-facie satisfaction recorded by AO - HELD THAT:- As no copy of such notice issued has been produced by the Revenue. We find that the Tribunal in the case of Shambhu Dayal [ 2015 (11) TMI 1776 - ITAT DELHI] relied on the decision of Madhushree Gupta Vs. Union of India [ 2009 (7) TMI 38 - DELHI HIGH COURT] as held absence of any prima-facie satisfaction recorded by the AO for initiation of penalty in the assessment order, the penalty levied by the AO is without any jurisdiction and void ab-initio, therefore, order of the learned Assessing Officer passed under 271(1)(c ) of Act is quashed and the ground of the assessee is allowed Penalty u/s 271(1)(c ) - addition of depreciation or additional appreciation - remaining two claims relate to disallowance of interest on capital work in progress and disallowance of research and development expenses - CIT(A) pointed out that regarding the depreciation the assessee has fully disclosed all the particulars of claim not only in the statement of income but in the audited balance sheet and 3CD reports also. In respect of the capital work-in-progress and research and development expenses also all details have been filed by the assessee in notes to account annexed to balance sheet - HELD THAT:- We concur with the observation of CIT(A) that merely rejection of the claim may not invite the assessee to penalty under section 271(1)(c) of the Act. The Ld. DR could not controvert the observation of the Ld. CIT(A). In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same and accordingly, we uphold the same. Accordingly, the ground of the appeal is dismissed. - Decided in favour of assessee.

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• 2019 (5) TMI 280
  Penalty u/s 271(1)(c) - appeal against quantum addition remanded by ITAT - Proof of concealment of particulars of income and furnishing inaccurate particulars of his income assessable to tax - as alleged assessee has not admitted bank account with Lakshmi Vilas Bank, Sankarapuram in its books of account and in turn in the balance sheet - HELD THAT:- As against the quantum addition, the assessee preferred further appeal before the Tribunal and vide order [ 2017 (8) TMI 1532 - ITAT CHENNAI] the Tribunal remitted the matter back to the file of AO for fresh consideration, we are of the considered opinion that the issue of levy of penalty needs to be remitted back to the file of the AO for fresh adjudication after deciding the quantum. We remit the matter back to the file of the Assessing Officer for fresh consideration after allowing an opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.

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• 2019 (5) TMI 279
  Disallowance u/s. 40(a)(ia) - professional and technical services payments to non-residents - TDS u/s 195 - payments for subscription fees for accessing the server of Intelliqip for the pump data - Income accrued in India - DTAA with USA - PE in India - HELD THAT:- Payments is not in the nature of fees including services is covered under Article 12 of DTAA and same falls under Article 7 as business profit and Intelliquip non-resident company does not have any permanent establishment in India and therefore it is not taxable in India. The payments made by the assessee are in the nature of subscription fees and on verifying the invoices demonstrated by the ld. AR of assessee. Prima facie the payment is for the usage of data by the assessee. Therefore we are of the opinion that the payments as discussed in the above paragraphs is non-taxable in India and therefore no TDS is deducted and in the nature of subscription, therefore we set aside the order of CIT(A) on this ground and direct the Assessing Officer to delete the addition. Exemption u/s. 10(23FB) - income received from Venture Capital Fund - provisions of section 115U - HELD THAT:- We found that the income received from the Venture Capital Fund is exempted. We found that the assessee has made investments into the Venture Capital fund and received profits which are exempted. CIT(A) though considered the aspects of Joint venture but dealt only on the findings of the AO by treating the same as income of the assessee and the observations of the CIT(A) that the assessee could not satisfy with evidence i.e. how the assessee is entitled to claim exemption; Even before us the assessee has not filed any information in respect of investment made in Joint Venture and no material filed, we found that this issue has to be verified and examined and accordingly we restore this issue for limited purpose to the file of Assessing Officer and allow the ground of appeal for statistical purposes. Disallowance u/s. 14A r.w. Rule 8D - HELD THAT:- As decided in PRAGATHI KRISHNA GRAMIN BANK VERSUS THE JOINT COMMISSIONER OF INCOME TAX, BELLARY RANGE [ 2018 (6) TMI 1283 - KARNATAKA HIGH COURT] shall be on a reasonable proportion to exempted income and we restore this issue to the file of AO to recompute the disallowance after verification of details and accordingly the ground of appeal is allowed for statistical purposes.

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• 2019 (5) TMI 278
  Depreciation on Customer Relationship Rights (Non-compete fee) - customer relationship rights (non-compete fees) which was considered as an intangible asset by the Appellant - HELD THAT:- As decided in assessee s own case [ 2016 (3) TMI 1347 - ITAT BANGALORE] the claim of the assessee is required to be considered by treating the said payment as goodwill. We found strength in the submissions of the learned AR on the claim of depreciation on Customer Relationship Rights supported with observations of the Co-ordinate bench and following the judicial discipline, we set aside the order of the CIT(A) and direct the AO to grant depreciation on Customer Relationship Rights treating the same as Goodwill and allow the grounds of appeal of the assessee.

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• 2019 (5) TMI 277
  Rate of TDS - payments made to non-resident entities not having PAN - TDS liability @10% OR 20% - tax prescribed under the DTAAs OR as per 206AA - scope of provisions of section 90(2) - India UK DTAA - override the DTAAs provisions - AO was of the view that the assessee ought to have TDS on remittances at the higher rate as per Section 206AA - HELD THAT:- Consideration before us is squarely covered in favour of the assessee by the decision of the Hon ble Delhi High Court in the case of Danisco India (P) Ltd., Vs. UOI [ 2018 (2) TMI 1289 - DELHI HIGH COURT] as held section 206AA of the Act does not override the provisions of section 90(2) and that in the impugned cases of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA because the provisions of the DTAAs was more beneficial. Thus, we hereby affirm the ultimate conclusion of the CIT(A) in deleting the tax demand relatable to difference between 20% and the actual tax rate on which tax was deducted by the assessee in terms of the relevant DTAAs. Double Taxation Avoidance Agreement acquires primacy in such cases, where reciprocating states mutually agree upon acceptable principles for tax treatment, the provision in Section 206AA (as it existed) has to be read down to mean that where the deductee i.e the overseas resident business concern conducts its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be-a dictated by the provisions of the treaty. - Decided against revenue.

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• 2019 (5) TMI 276
  Royalty receipt - maintenance fees from customer - sale of software by itself by group company - the group company transferred the entire maintenance contract in respect of the software sold by them in India to the assessee - right to use contemplated by the Article 12(3) of the DTAA - fees for included services - HELD THAT:- In the light of the conclusions in the case of M/s. i2 Technologies (Netherlands) BV Vs. ACIT (International Taxation) [ 2017 (3) TMI 1748 - ITAT MUMBAI] which would hold good for AY. 2006-07 also as the facts are identical, the sum-in-question cannot be regarded as royalty because the receipts in question cannot be said to be ancillary to supply of software which was regarded as royalty. The assessee directly sold software and also carried out maintenance services under agreements with the persons to whom software licenses were sold. Consequently, the maintenance services which were also in connection with the supply of software were regarded as royalty. In the present case, however, the supply of software has already been held to be not in the nature of royalty by the decision of ITAT, Mumbai. We have not gone into the question regarding the applicability of Article 12(3) and also the definition of royalty is given in Explanation-2 to Section 9(1)(vi) and our conclusions in these appeals and are guided only by the ruling of the Mumbai Bench of the ITAT in the case of M/s. i2 Technologies (Netherlands) BV Vs. ACIT (International Taxation) (supra). We are of the view that the maintenance revenue received by the assessee cannot be regarded as a royalty chargeable to tax in India. The addition made is therefore directed to be deleted. - Appeal of assessee is allowed.

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• 2019 (5) TMI 275
  Reopening of assessment u/s 147 - no relevant fresh material - original assessment u/s 143(3) - failure on part of assessee to disclose necessary material fact for assessment - addition u/s 68 - cash deposit in bank account - admission of additional evidence by CIT(A) - HELD THAT:- In the instant case there was no relevant and sufficient material to make satisfaction for initiation the process of re-assessment u/s 147 hence, we do not find any infirmity, impropriety or illegality in the action of the CIT(A) in not sustaining the action u/s 147 by the Assessing Officer. Proper opportunities have been offered to the AO to file the remand report by verifying the documents and claim of the assessee, however, he did not make any effort to do so and ultimately the CIT(A) not only considered the normal practice of the assessee qua receiving of the advances from the customers as well as audited balance sheets of the preceding and succeeding assessment years but also considered the financial statements of the year under consideration reflected the advances from customers which were duly audited by the Chartered Accountant and opined that the appellant/assessee has fully explained the details of the deposits in the Bank Account and therefore, deleted the additions, which according our mind does not suffers from any perversity, illegality and impropriety. Hence, the action of the CIT(A) in non-sustaining of the action of the AO, on merit also does not require any inference and consequently stands affirmed. - Decided against revenue

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• 2019 (5) TMI 274
  Disallowance u/s 36(1)(iii) - proportionate interest disallowance on interest free advances - nexus been established by AO in between the interest free advances and the interest bearing borrowed fund? - HELD THAT:- AO himself admitted that on the loans and advances given by the assessee out of the borrowed funds by using the OD facility the interest was earned, he therefore allowed the interest expenditure to the extent of Rs. 7,17,875/-. As regards to the other interest free advances, the bank statement of the assessee placed at page no. 16 of the assessee s compilation reveals that the capital of the assessee as on 31.3.2012 was at Rs. 3,48,04,747/- and the Assessing Officer pointed out in the assessment order that the assessee had given interest free advances to the family and relatives for a sum of Rs. 2,79,00,000/- which shows that the interest free funds in the form of capital were more than the interest free loans given to the family and relatives. In the present case, no nexus had been established by AO in between the interest free advances and the interest bearing borrowed funds, therefore, the disallowance made by the Assessing officer out of the interest paid by the assessee and sustained by the CIT(A) was not justified. Accordingly the same is deleted. - Decided in favour of assessee. Disallowance of car expenses - AO was of the view that 1/5th of the expenses were personal in nature - assessee submitted that the disallowance made by the Assessing Officer and sustained by the Ld. CIT(A) was highly excessive - HELD THAT:- Major disallowance was worked out on account of depreciation amounting to Rs. 2,79,870/- which is a statutory deduction. If such figure is reduced from the figure worked out by the Assessing Officer the remaining amount comes at Rs. 1,38,995/- while the assessee has already disallowed suo motu a sum of Rs. 1,92,230/-. Therefore the disallowance made by the Assessing Officer and sustained by the CIT(A) at Rs. 2,26,635/- (Rs. 4,18,665 Rs. 1,92,230/ ) appears to be excessive.Therefore, to meet the ends of justice restrict the addition made by the Assessing Officer and sustained by the Ld. CIT(A) at Rs. 50,000/- instead of Rs. 2,26,635/-. - Decided in favour of assessee partly.

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• 2019 (5) TMI 273
  Exemption u/s 11 - Registration application u/s 12AA rejected - assessee is running medical shop inside the hospital - No separate books of accounts were maintained for Pharmacy inside the hospital, which was for inhouse consumption of medicines and treatment packages and for the urgent need of medicines to in-house patients - HELD THAT:- Assessee society is also providing medical relief and facilities to every person, conducting blood donation, eye operation, tikakaran, family planning, mother child safety, AIDS, malaria, T.B, Kustorog and awareness to general public by way of awareness of medical camps. Therefore, to run the medical shop inside the hospital is fully charitable purpose and not for commercial purpose. The assessee is not maintaining separate books of account for the said medical shop does not mean that the assessee is not entitled for obtaining registration u/s. 12AA. We note that in order to grant registration the objects of the assessee society is to be examined. Therefore, the ld. CIT(E) should not deny the grant of registration u/s. 12AA merely because assessee is running medical shop inside the hospital. Therefore, we direct the ld. CIT(E) to grant the registration u/s. 12AA, in accordance with law. - Decided in favour of assessee.

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• Customs

• 2019 (5) TMI 272
  Demanding differential custom duty on account of correct valuation of the car - confiscation of Car - import of second hand car - importer of the car not traceable - Transfer of Residence Rules - liability of importer vs liability of subsequent owner - HELD THAT:- It is an admitted position that since then the said car is in possession of the DRI as the option to redeem has not been exercised. The importer of the said car is Mr. Dholakia who had filed the bill of entry and cleared the said car on payment of customs duty as assessed by the Officers of the customs - The demand of duty could only be made upon the importer of the goods and not upon the person in whose possession / ownership the confiscated goods were found when the owner/ possessor of the confiscated goods does not seek to redeem the offending goods u/s 125 of the Act - decided in favor of the appellant and against the respondent Revenue. Penalty u/s 112(a) of the Customs Act,1962 - HELD THAT:- It is not the case of the Department that the appellant had done any act or omission which has rendered the goods confiscated u/s 111 of the Act. There is no finding in the impugned order or even allegation in the showcause notice to the above effect. Similarly, the basis of the Revenue s contention that the appellant had abetted the illegal import of the said car by having financed the same is contrary to the facts on record - the appellant could not have in any manner abetted improper importation of the said car by financing it. Consequently, there is no basis to impose a penalty u/s 112(a) of the Act upon the appellant. Appeal allowed in toto - All issues decided in favour of the appellant and against the respondent Revenue.

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• 2019 (5) TMI 271
  Import of speco hot mix plant 200 TPH 2500 FFW - eligibility of a consortium partner to be entitled to the benefit of the said notification for import of goods required for construction of roads without payment of duty - Benefit of N/N. 21/2002-Cus dated 1st March 2002 - HELD THAT:- The notification itself specifies that deployment for construction of roads for five years is a mandatory qualification of eligible importer at the threshold as well as for continual exemption. The Tribunal, in GAMMON INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT), NHAVA SHEVA [ 2013 (4) TMI 598 - CESTAT MUMBAI] , has segregated the dichotomous condition - one at the threshold for eligibility to import without payment of duty by the entities listed therein and the other for continuing eligibility based on specified deployment for a specified time - before holding that both are mutually exclusive. The procedure following the award in the impugned project required establishment of a special purpose vehicle and it is that special purpose vehicle which takes the bid process to its logical conclusion by entering into an agreement with the awarding agency. Restricting the eligibility to the subsequently created artificial person, emerging from the contractual compulsion to fulfil a structuring requirement, would incapacitate the execution of the work and the original intent of the extent of the notification was thus amplified, and articulated, in the referred clarification. The denial of exemption notification does not have the authority of law - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 270
  Refund of excess paid duty in cash - case of Revenue is that the excess duty paid through FPS licence dt. 26/08/2013 can be refunded by way of recredit in the license and not in cash - HELD THAT:- The observation of the Commissioner(Appeals) in the impugned order that the appellant has claimed the refund by way of recredit in the licence is factually incorrect because in the application for refund, which is on record, it is nowhere mentioned that the appellant has claimed the refund by way of credit whereas the fact of the matter is that the appellant has filed the application seeking refund of the excess duty paid by them by debit in the license No.1510019864 dt. 26/08/2013 which was left over while considering the amount of duty paid. Further, it is found that the whole situation has arisen due to the fact that licence was debited but the same was not reflecting in the system and as a result the appellant had to pay in cash. Subsequently, mistake was detected but the authorities did not correct the same on their own but the appellant was compelled to seek refund - It is a settled law that the Department cannot take advantage of its own wrong. Appeal allowed - decided in favor of appellant.

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• Service Tax

• 2019 (5) TMI 269
  Imposition of penalty - reversal of CENVAT Credit with interest on being pointed out before issuance of Demand notice - Section 73(3) of the Finance Act, 1994 - HELD THAT:- Section 73(3) of the Finance Act, 1994, provides that where a party pays its tax and the interest thereon before the issue of show cause notice, then there is no occasion for the Revenue to issue a show cause-cum-demand notice can arise. However, by virtue of Section 73(4) of the Finance Act, 1994, which begins with the non- obstance clause clearly provides that Section 73(3) of the Finance Act,1994 would not be applicable to an assessee where there has been suppression/ mis-declaration etc. with an intention to evade tax. In the present facts, the show cause notice as well as the orders of the authorities under the Act have on facts held that there was suppression of facts on the part of the Appellant to evade payment of tax - the issuing of show cause-cum-demand notice and imposition of penalty is justified and in accordance with the clear mandate of the law. Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 268
  CENVAT Credit - input services - outdoor catering services - HELD THAT:- The issue of availment of CENVAT credit prior to 01.04.2011 and post 01.04.2011 has been addressed by the Larger Bench of the Tribunal in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III. [ 2018 (4) TMI 149 - CESTAT BANGALORE] . In para 7.1 of the said order, it was noted by the Larger Bench that admittedly such services prior to 01.04.2011 have been held to be covered by the definition of input service - For the post amendment period, it was held that such outdoor catering service is not eligible for input service credit. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 267
  Taxability - providing flying training to candidate for obtaining commercial pilot license - taxable under the head Commercial Training And Coaching Services or otherwise? - HELD THAT:- Such training provided by the appellant has been held non-taxable in the various judgments by Courts/Tribunal. Reliance placed in the case of M/S INDIAN INSTITUTE OF AIRCRAFT ENGINEERING VERSUS UNION OF INDIA ORS [2013 (5) TMI 592 - DELHI HIGH COURT], where it was held that Section 65(27) excluded from the domain of commercial training or coaching centers, training centers or establishments issuing any certificate or diploma or degree or any educational qualification recognized by law. Holding the petitioner to be assessable to Service tax is contrary to section 65(27) and the notification dated 25/04/2011. Service not leviable to Service Tax under the category of Commercial training or coaching services - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 266
  Interpretation of Agreement - Classification of services - Representation services or Management Consultancy Services? - HELD THAT:- The agreement itself is named as Representative Office Agreement. Preamble of the agreement also states that the intention of the agreement is that appellant is to have their persons in U.K. to represent them in its dealing with lawyers, bankers, consultants and revenue and other authorities. Thus, the intention of the Representative Office Agreement is to have a Representative Office for the appellants overseas. Clause 2 of the agreement mentions about the fees that has to be paid by appellant to M/s. Vdeanta. The fees is the consideration for performing its duties as a Representative Office. The fees is fixed as US$20 lakhs. Thus, from the agreement, it is very much clear that the intention of the parties is that appellants is to have Representative Office overseas. The department cannot pick and choose sentences from the agreement to interpret the meaning of the agreement to be a Consultancy Agreement. The issue would be more clear from the Consulancy Agreement entered into between the appellants and M/s. Vedanta. In clause (c) of the preamble of the Consultancy Agreement, it is stated that M/s. Vedanta is willing to provide Strategic Planning and Consultancy Services to appellant and each of its subsidiaries and for such Consultancy Agreement, the fees are fixed US$ 30 lakhs. The appellants have discharged service tax on the amount paid under this agreement. Thus, on analysis of both agreements, we have no hesitation to conclude that the agreement under question is nothing but a Representative Office Agreement and not a Consultancy Management Agreement. The demand of service tax on the amount of US$ 20 lakhs, which was paid by the appellant to M/s. Vedanta as Representative Office cannot be subject to levy of service tax under the category of Management Consultancy Services. The demand therefore cannot sustain on merits. Time Limitation - Revenue Neutrality - HELD THAT:- The service tax, in the present case, is discharged under reverse charge mechanism. In case, the appellants pay the service tax, they would be eligible for credit of the same. Thus, the entire exercise is revenue neutral situation - The show-cause notice has been issued invoking the extended period alleging suppression of facts with intention to evade payment of service tax. When the situation is revenue neutral one, wherein, the appellants would be eligible for credit, it cannot be said that the appellants are guilty of suppression of facts with intention to evade payment of service tax - The invocation of extended period is without basis. The appeal succeeds on limitation also. Appeal allowed - decided n favor of appellant.

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• 2019 (5) TMI 265
  Condonation of delay in filing appeal - power of Commissioner (A) to condone delay - HELD THAT:- Admittedly in the present case there is a delay of 15 days beyond 90 days which is prescribed in Section 35 of the Central Excise Act for filing the appeal before Commissioner (A) - The Apex Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT OF INDIA] where it was held that Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period. Appeal dismissed - decided against appellant.

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• 2019 (5) TMI 264
  Works contract service - activities mainly related to widening of Highways and electrification along road side - demand raised under Erection, Installation or Commissioning Services - HELD THAT:- The Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] observed that Works Contract Service was not a taxable service prior to 1 June 2007. Even after 1 June 2007, service tax could not be levied upon the appellant under the Works Contract Service because the Show Cause Notice that was issued to the appellant was under Erection, Commissioning or Installation service. The impugned order that seeks to recover service tax for the service rendered by the appellant under Erection Commissioning or Installation service prior to 1 June 2007 and Works Contract Service after 1 June 2007 cannot, therefore, be sustained - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 263
  Voluntary Compliance Entitlement Scheme - Department rejected the VCES application for the reason that audit was initiated as departmental internal audit team had visited the appellant s Unit on 26.11.2013 and that VCES application cannot be entertained in view of section 106(2) of the Finance Act, 2013 - CBEC Circular No.170/5/2013-ST, dated 08.08.2013 - HELD THAT:- In the present case, the department though contends that they have visited the premises on 26.11.2012 no documents have been produced to establish the same. From the Circular, the department is duty bound to maintain register of visit for audit purposes. The learned Authorised Representative for Revenue represented that though two letters were sent to the department no reply has been received so far. It has to be then concluded that the department has no documents to establish their contention that they have visited the premises on 26.11.2012. More so, in the reply to the show-cause notice itself, the appellant has taken the plea that there has been no visit of audit party on 26.11.2012. It is also submitted that the father of the appellant had passed away on 08.11.2012 and the office was closed during the said period. The department then has to establish that they had visited the premises on 26.11.2012. A letter merely requesting for furnishing of documents cannot be considered as initiation of audit as clarified by the Board in the said Circular, dated 08.08.2013. There is no hesitation to conclude that the rejection of VCES stating the reason that audit has been initiated is against the facts of the case - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 262
  Refund of service tax - N/N. 41/2016-ST, dated 22.09.2016 - rejection on the ground of time limitation - HELD THAT:- SIPCOT has informed the appellant to file refund claim only with much delay. The last date for filing the refund claim is 30.09.2017. The letter has been issued by SIPCOT only on 12.09.2017 although notification was issued on 22.09.2016. However, the appellant has taken efforts to file the refund claim on 03.10.2017. It is also submitted by the consultant that they were directed by SIPCOT to file the refund claim before divisional office of the appellant/assessee. The last date for filing the refund claim according to the department is 30.09.2017. It is brought to the notice that 29th, 30th of September, 2017 as well as 1st and 2nd October, 2017 were Government holidays and non-working days in the State of Tamil Nadu. Therefore, the next working day was only 03.10.2017. The appellant has approached the Alandur office on 03.10.2017 and from there they were directed to approach the Egmore office. Thus, the appellant has taken all steps to make the refund claim within time. Only because they had to file the refund claim at Egmore office, the delay of one day, if any, has occurred. There has been delay on the part of the SIPCOT to inform the appellant and also taking note of the fact that the last date for filing the refund claim was a holiday, in the interest of justice, the delay of one day, if any, has to be condoned. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 261
  Classification of services - services of installation of electrical devices and other civil work like construction of road - Works Contract Service or Erection, Commissioning or Installation Service? - period prior to 01.06.2007 - HELD THAT:- Considering the fact that the contract included both service as well as supply of materials, under works contract service, but the period is clearly prior to 01.06.2007 and hence, the Ld. Advocate is correct in his assertion that the issue is squarely covered by the decision of Hon ble Apex court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] where it was held that demand do not sustain prior to 01.06.2007 - demand set aside. Whether the service provided to NIT, Bharadhidasan University, BHEL School are liable to service tax under the category of Erection, Commissioning or Installation Services prior to 01.06.2007 and dropped for the subsequent period? - HELD THAT:- The demand on this is not sustainable in view of the Hon ble Supreme Court judgment in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] - from 01.06.2007, the demand on activity undertaken at BHEL school/hospital is not sustainable. Whether services regarding conversion of single phase into three phase service connection for BHEL quarters and laying of HT cables at the residential township are liable to be taxed? - HELD THAT:- Laying of cables beyond the distribution point of residential complexes alone becomes taxable but, in the impugned order we do not see any discussion or analysis of the actual facts involved but, fasten the liability - this issue is required to be remanded for factual verification to be placed on record and therefore to determine the tax liability, if any. Imposition of penalty - HELD THAT:- The issue involved was clearly of interpretation which came to be settled only by the Hon ble Supreme Court and therefore benefit of Section 80 could be extended - penalty deleted. Appeal allowed in part and part matter on remand.

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• 2019 (5) TMI 260
  Classification of service - various services offered by Ayurmana - whether fall within the meaning of therapeutic massage and hence are not liable to service tax? - HELD THAT:- The massages offered by the appellant fall in the category of therapeutic and are not liable to pay service tax. Further, the massages are provided under the medical supervision of the trained doctors and proper record regarding the treatment is maintained by the appellant. The appellant has been certified as Ayurvedic Center by the District Medical Officer of Kerala - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 259
  Valuation - inclusion of reimbursable expenses in assessable value - Rule 5(1) of the Service Tax (Determination of Value) Rules - HELD THAT:- This issue is no more res integra and has been settled by the Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT OF INDIA] where it was held that The plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 01, 2006) or after its amendment, with effect from, May 01, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 258
  Demand of service tax - transportation activities which is being conducted by the appellant through their H T Contractor - HELD THAT:- Revenue cannot split the cargo handling services into transport services and other services while vivisecting the contract entered by the appellant with H T contractor M/s Durgesh Shukla, for charging service tax under GST category on the RCM basis - CBEC itself vide their Circular dated 8.1.2002 has clarified that for storage, warehousing keeper is required to pay tax under the category of cargo handling services only. Thus, it cannot be held that providing the cargo handling service in which the transportation of goods is also an ancillary activity, can be vivisected into transportation service and other services, such as loading and unloading of the goods, in this case agricultural produce. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 257
  Classification of service - re-trading of tyres - whether classifiable under Business Auxiliary Service or Management and Maintenance, Repair Services ? - HELD THAT:- Central Board of Excise and Customs vide its Circular dated 27/07/2012 has clarified that the re-trading of tyres is covered under the ambit of service Management, Maintenance and Repair Service - Since the CBEC has clarified the issue regarding classification of re-trading of old and used tyre under Management, Maintenance and Repair Services , we do not find any justification in classifying the service under Business Auxiliary Service - Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 256
  Valuation - inclusion of fuel surcharge, administrative charge, passenger services fee, and airport taxes for the computation of assessable value - HELD THAT:- The issue decided in the case of M/S. ASIAN AIRLINES. VERSUS CST, DELHI I [ 2019 (1) TMI 1172 - CESTAT NEW DELHI ] , where the Tribunal held against the inclusion of these charges in the taxable value for air travel service by the appellants - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 255
  Rectification of mistake - typographical error - HELD THAT:- Both sides submit that the error is only typographical and will not alter the outcome of the final order in SHRIRAM LIFE INSURANCE COMPANY VERSUS CC, CE ST, HYDERABAD IV AND CC, CE ST, RANGAREDDY GST (VICE-VERSA) [ 2019 (2) TMI 868 - CESTAT HYDERABAD] - The errors which are sought to be typographical error they are rectified - ROM Application allowed.

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• Central Excise

• 2019 (5) TMI 325
  Clandestine removal - mismatch between production figure of LPG shown in ER1 returns and financial report for the financial year 2004-05 - HELD THAT:- Admittedly appellant is a Public Sector Company engaged in the manufacture of LPG and it claims that the difference of production shown in two different statements was due to non-taking of captive use of LPG into account as well as segregating reprocessing of certain quantity of LPG which were not up to the standard maintained for such production. Respondent-department was appraised of those facts but it had not taken the same into consideration. Show-cause notice does not reveal offering of any such explanation by the appellant but as reveals from Order-in-Original given at para 20, production figures given in ER1 return was taken whereas in the removal column, three type of figures are shown including removal of reprocessed quantity and there is a reference in the same paragraph that quantity reprocessed is accounted separately in ER1 return - law requires that clandestine removal is to be proved beyond all reasonable doubts. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 324
  CENVAT Credit - input - CR stainless steel without receiving the same from M/s Shah Foils Ltd. - rebuttal of statements in cross-examination - denial of cross-examination - HELD THAT:- The proprietor of the job-worker Shri Chhail Singh Deora explaining the meaning of terms Bill Sales , Bombay Sales etc. referred in the private record recovered from premises of the appellant, indicated that the goods were sold without the cover of invoices and payment of duty, hence it is concluded that the material on which the credit availed by the appellant has not been received by them. The appellant vehemently argued to rebut the said statement of M/s Chhail Singh Deora by way of cross-examination. The appellant should be allowed cross-examination of the witness Mr. Chhail Singh Deora, whose evidence is vital and relied in confirming the demand. Matter remanded to the adjudicating authority for cross-examination of the witnesses Shri Chhail Singh Deora and decide the matter accordingly - appeal allowed by way of remand.

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• 2019 (5) TMI 323
  SSI Exemption - use of Brand name of others - whether the aggregate value of clearance of two products viz. catch covers and diaries which were cleared by the Appellant affixing the brand name of others be included in the aggregate value of clearance of all excisable goods during the relevant period so as to determine the eligibility of SSI exemption Notification No.8/2003-CE, dt.01.03.2003, as amended? HELD THAT:- The value of catch cover cannot be included in the aggregate value of clearance in computing the aggregate value of clearance to extend the benefit of SSI exemption during the relevant period. The value of aggregate clearance of diaries be included in computing the exemption limit prescribed under Notification No.8/2003-CE, dt.01.03.2003 for the period in question - the matter is remanded to the Adjudicating authority to determine the aggregate value of clearance and re-compute the demand with interest and penalty - Appeal allowed by way of remand.

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• 2019 (5) TMI 322
  CENVAT Credit - common inputs used in manufacture of dutiable as well as exempt goods (by-products) - press mud and spent wash - Rule 6(3) of CENVAT Credit Rules, 2004 - HELD THAT:- Tribunal in MANAKPUR CHINI MILLS VERSUS CCE., ALLAHABAD [ 2012 (7) TMI 474 - CESTAT, NEW DELHI] case in similar circumstances after analyzing the amendment to Section 2(d) of Central Excise Act, 1944 has held that the demand is not sustainable. In the present case organic manure emerges by physical mixing out of two byproducts viz. press mud and spent wash, hence, the aforesaid judgment is squarely applicable to the facts of the present case. Appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 254
  CENVAT Credit - profile sheets which has been installed above the machines used to manufacture the finished goods - HELD THAT:- Appellants have used the profile sheets for covering the manufacturing area. Further, after the amendment in the definition of input w.e.f. 01.04.2011, the input includes all the goods which are used in the factory of production by the manufacturer as input. Further, in the present case the profile sheets have been used to comply with the statutory requirement of Pollution Control Laws and if they are not used and the machineries are left open in the area it may cause hazardous and therefore the usage of the profile sheets cannot be regarded as having remote connection with manufacture. Extended period of limitation - Suppression of facts or not - HELD THAT:- The appellants have been filing the returns regularly and has been giving all the details of cenvat credit availed and moreover it was also verified by the audit team during the course of audit which happened in the month of July 2012 whereas show-cause notice was issued on October 28, 2014 alleging suppression with intent to evade payment of duty - the appellants have also supplied all the details regarding the cenvat credit availed by him to the Department vide Postal Acknowledgement Annexure-E dated 15.06.2012 which also shows that the Department had complete details regarding the cenvat credit availed by the appellant on profile sheets but in spite of that they did not issue the show-cause notice within the period of limitation. Appeal allowed on merits as well as on limitation.

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• 2019 (5) TMI 253
  CENVAT Credit - input services - outward freight charges - place of removal - HELD THAT:- The assessee was eligible to take credit of service tax paid on the transportation of semi-finished goods from the factory up to the premises of the job-worker in terms of Board Circular No. 97/8/2007 ST dated 23.08.2007. Further the invoice issued by the assessee for dispatch of goods to the job-worker shows that the goods were Stock Transfer against Form F and the respondent have not transferred the title of the goods. Appeal dismissed - decided against Revenue.

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• 2019 (5) TMI 252
  CENVAT Credit - denial on the ground that the bank account maintained by the appellant at Chennai shows the address of their Srikakulam unit - HELD THAT:- The Andhra Bank, Chennai Branch has informed that the account pertains to the appellant at Gummidipoondi only, stating that as per the KYC norms stipulated by RBI, a different address cannot be shown for a Customer ID (PAN registration) with the same name. Such a technical difficulty cannot be a ground for disallowing the credit eligible to them for the service tax paid on the services received as input services. When the accounts are very much clear and when the appellant has furnished the certificate from the Andhra Bank, the Department ought to have accepted the explanation put forward by the appellant - credit rightly availed. Time Limitation - HELD THAT:- Audit was conducted from 22.05.2014 to 29.05.2014. However, the Show Cause Notice has been issued only after two years on 27.06.2016 alleging that the appellant has availed credit on documents which are not issued in their name. In fact, when the appellant has explained the technical difficulty to open an account in their address since the PAN registration is in the address of the Srikakulam unit and when the audit has taken note of this in 2014, the Show Cause Notice issued alleging suppression of facts with intention to evade payment of duty is without any factual basis - present case does not attract any of the ingredients of Section 11AC of the Central Excise Act, 1944 - appeal therefore succeeds on limitation as well. The demand, interest or penalties imposed are required to be set aside - appeal allowed - decided in favor of appellant.

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• 2019 (5) TMI 251
  CENVAT Credit - input services - Event Management Services - HELD THAT:- The period involved is prior to 01.04.2011 and during that period, the definition of input services had a wide ambit as it included the words activities relating to business . It is very much clear that these activities are related to the business of manufacture as the event is for promotion of their finished product - Credit allowed. CENVAT Credit - input services - Housekeeping Services - HELD THAT:- It is indeed necessary for the appellant to keep the premises clean and hygiene. Therefore, credit availed on these services, which is disallowed by the department stating that they do not have any nexus with the manufacturing activity is incorrect - credit allowed. CENVAT Credit - input services - Renting of Immovable Property, which was used for marketing office - HELD THAT:- For availing input services, it is not necessary that the input services have to be availed within the factory itself. Various input services, which are enumerated in the definition are in the nature that they cannot be availed within the factory alone - the credit availed on service tax paid on rent for marketing office, which are used by the appellant for marketing of their finished products is eligible - credit allowed. CENVAT Credit - input services - Business Auxiliary Services - HELD THAT:- It cannot be disputed that the appellant being a factory has to maintain these equipments for ensuring the safety of the premises as well as for the employees working therein - the disallowance of credit on BAS is unjustified and credit is eligible - credit allowed. CENVAT Credit - input services - Brokerage Commission - HELD THAT:- Such officers are essential for marketing of finished products. The service tax paid on Brokerage Commission for real estate brokers is eligible for credit - Credit allowed. CENVAT Credit - input services - Clearing and Forwarding Agency Services - HELD THAT:- This issue is required to be remanded to the adjudicating authority, who is directed to determine the place of removal and then decided the eligibility of credit. CENVAT Credit - input services - Auctioneering Services - HELD THAT:- It is seen that the appellants had availed the services of auctioneers in order to avail the services of Rent-a-Cab Service. Taking note of the fact that the appellant has availed the services as well as paid service tax in respect of such services which were used for the business of manufacture, the credit is eligible. CENVAT Credit - input services - Cleaning services - HELD THAT:- The final products manufactured by the appellant is intended for human consumption. Therefore, the factory, depots as well as marketing offices have to be kept free of pest . Therefore, the credit availed on these services are eligible for credit - credit allowed. CENVAT Credit - input services - Man-power Supply and Recruitment Services - HELD THAT:- The man-power was used by them for loading and unloading activities at the depots as well as marketing offices. Since the man-power is used for loading and unloading of final products, the disallowance of credit is incorrect - The appellant is eligible for credit on these services. Appeal allowed in part and part matter on remand.

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• CST, VAT & Sales Tax

• 2019 (5) TMI 326
  Scope of SCN - Payment of License fee - refund the security amount deposited by the petitioner with respect to Country Liquor Shop - order of cancellation of License. HELD THAT:- The show cause notice issued to the petitioner contained different description of the seized liquor and money - The record clearly reveals that the description of the seized liquor and other materials as mentioned in the seizure memo is different which has been mentioned by the licensing authority in his orders of cancellation of licence of the petitioner. In the opinion of the Court, once such inconsistency was noticed and is found, the proper course was available with the licencing authority to issue fresh show cause notice and to seek petitioner s response before taking a fresh decision. The petitioner was liable to pay the licence fee (for the period with effect from 1.4.2017 till 18.5.17) and, therefore, the licence fee for the remaining period and the total security money deposited by the petitioner has to be refunded to the petitioner - The licencing authority, therefore, is directed to refund the basic license fee as well as security money deposited by the petitioner after deducting the basic licence fee for the period w.e.f. 1.4.2017 to 18.5.2017 - Petition allowed.

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• 2019 (5) TMI 321
  Time limitation - relevant date for initiation of final assessment order - Interpretation of statute - amended provisions of Section 16(1) of the TNGST Act - Assessment of escaped turnover - Whether the proceedings of the Respondent for revised assessment are barred by limitation? HELD THAT:- The amendment would apply to the re-assessment proceedings because the limitation period under the pre-amended Section 16 expired on 31.03.2005 in W.P.No.36497 of 2006, whereas the amendment came into effect on 01.07.2002. As regards W.P.Nos. 36865 and 36866 of 2006, as stated earlier, the re-assessment proceedings were within the period of limitation under the preamended Section 16(1). Even otherwise, in view of the above conclusion regarding the applicability of the amendment, the re-assessment proceedings are not barred by limitation. Petition dismissed.

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• 2019 (5) TMI 250
  Levy of tax - deemed sales of dyes, chemicals, consumable, machinery parts and packing materials involved in the job works of the third parties - HELD THAT:- The issue involved in the present appeal stands concluded against the revenue by a recent judgment of this Court in Excise and Taxation Commissioner, Haryana through Excise and Taxation Officer-cum-Assessing Authority, Panipat Vs. M/s Mittal Processors Private Limited, G.T. Road, Siwah, Panipat and other, [2018 (12) TMI 483 - PUNJAB AND HARYANA HIGH COURT] , wherein after considering the relevant statutory provisions and the entire case law on the point, it has been concluded that the chemicals used in the job work are taxable but the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred. Matter remanded to the Assessing Officer to work out the details of quantity of chemicals, dyes and colours that would get washed out in the process of dyeing and printing of fabrics undertaken by the applicant - appeal allowed by way of remand.

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• Indian Laws

• 2019 (5) TMI 249
  Default in repayment of dues - non-performing asset - SARFAESI Act - role of secured creditor in respect of insolvency proceedings - HELD THAT:- No fetters can be placed on the right of the secured creditor under the SARFAESI Act and further to direct it to deposit the title deeds of the secured assets with the Official Assignee. The view taken that, as an equitable principle, the appellant cannot be permitted to stand outside the insolvency proceedings and realise its dues and it must deposit the title deeds with Official Assignee, cannot be sustained. The impugned order dated 4th December 2018 is quashed and set aside - appeal allowed.

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