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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter May 9, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Taxation of Artistes, Entertainers and Sportspersons UNJUST INTIMATION AND ADJUSTMENTS BY CPC – an unexpected, new source and style of harassment of taxpayers. TRADE UNION – AN OPERATIONAL CREDITOR? News Meeting of the 15th Finance Commission with the Reserve Bank of India CBIC organises meeting of Regional Heads of Customs Administration of Asia Pacific Region of the World Customs Organisation (WCO) in Kochi Notifications DGFT 5/2015-2020 - dated 7-5-2019 - FTP Import policy for Electronics and IT Goods under Schedule - I (Import Policy) of ITC (HS), 2017 GST - States 09/2019-State Tax (Rate) - dated 6-5-2019 - Himachal Pradesh SGST Seeks to amend Notification No. 02/2019- State Tax (Rate), dated the 7th March, 2019, ERTS(T) 4/2019/230 - 22/2019-State Tax - dated 23-4-2019 - Meghalaya SGST Seeks to notify the provisions of rule 138E of the SGST Rules w.e.f 21st June, 2019. ERTS(T) 4/2019/229 - 21/2019-State Tax - dated 23-4-2019 - Meghalaya SGST Seeks to notify procedure for quarterly tax payment and annual filing of return for taxpayers availing the benefit of Notification No. 02/2019-State Tax (Rate), dated the 7th March, 2019. ERTS(T) 4/2019/228 - 20/2019-State Tax - dated 23-4-2019 - Meghalaya SGST The Meghalaya Goods and Services Tax (Third Amendment) Rules, 2019 ERTS(T) 4/2019/203 - Order No. 04/2019-State Tax - dated 29-3-2019 - Meghalaya SGST Meghalaya Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019 ERTS(T) 4/2019/202 - dated 29-3-2019 - Meghalaya SGST The Meghalaya Goods and Services Tax (Second Amendment) Rules, 2019. ERTS(T) 4/2019/199 - 07/2019-State Tax (Rate) - dated 29-3-2019 - Meghalaya SGST Seeks to notify certain services to be taxed under RCM under section 9(4) of CGST Act as recommended by Goods and Services Tax Council for real estate sector. ERTS(T) 4/2019/198 - 06/2019-State Tax (Rate) - dated 29-3-2019 - Meghalaya SGST Seeks to notify certain class of persons by exercising powers conferred under section 148 of MGST Act, 2017. ERTS(T) 4/2019/197 - 05/2019-State Tax (Rate) - dated 29-3-2019 - Meghalaya SGST Seeks to amend MGST Act so as to specify services to be taxed under Reverse Charge Mechanism (RCM) as recommended by Goods and Services Tax Council for real estate sector. ERTS(T) 4/2019/196 - 04/2019-State Tax (Rate) - dated 29-3-2019 - Meghalaya SGST Seeks to amend MGST Act so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector. ERTS(T) 4/2019/195 - 03/2019-State Tax (Rate) - dated 29-3-2019 - Meghalaya SGST Seeks to amend MGST Act so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector. CT/LEG/GST-NT/12/17/1209 - 07/2019 - dated 22-4-2019 - Nagaland SGST Extention of due date for furnishing of FORM GSTR-3B for the month of Mar,2019 by three days Circulars / Instructions / Orders GST - States FIN/REV-3/GST/1/08 (Pt-1)(Vol.1) - Order No. 03/2019-State Tax - dated 8-3-2019 Third Removal of Difficulties order,2019 for removing difficulty in implementation of Notification No 2 of 2019-Central Tax (Rate) Highlights / Catch Notes GST Profiteering - the argument that that the price of the product was not increased at the time of introduction of GST when the rate of tax was increased to 28% and hence the question of reducing the prices when the rate of tax was decreased from 28% to 18% does not arise is legally not sustainable in view of the provision of section 171 of CGST Act, 2017 Visit to Get Source Re-credit of amount in the Electronic Credit Ledger after rejection of GST refund claim - non filing of appeal against rejection order - The amount has not been recredited not on account of non compliance with the provisions of the Explanation to rule 93 of the CG&ST Rules, but since there is no mechanism for recrediting the amount to the Electronic Credit Ledger. - Relief granted to the petitioner. Visit to Get Source Income Tax Reassessment u/s 148 - EPF not paid within time as per section 2(24)(x) r.w.s 36(1)(va) - duly disclosed in TAR and allowed in assessment - no new fact is brought on record by the AO and nor there is any failure on part of the petitioner to disclose fully and truly all material facts necessary for assessment - as per First Proviso to section 147, AO cannot assume jurisdiction. Visit to Get Source Dismissal of appeal for non-prosecution - non filing of compulsory e-filing of appeal despite notice - assessee failed to appear before the Tribunal on the date of hearing - appellant cannot take benefit of ones own inaction - the orders passed by the ITAT is neither perverse nor erroneous - No substantial question of law would arise. Visit to Get Source Power to file Revised returns of income pursuant to the scheme of arrangement and amalgamation approved by the NCLT - scheme approved u/s 391 of the Companies Act gives statutory force to enable the assessee to file the revised returns of income beyond limitation u/s 139(5), Circular No. 9 of 2015 issued u/s 119(2)(b) is not applicable and it is not necessary to file revised returns electronically Visit to Get Source Non est TDS return - appeal against charging of interest u/s 234E - fee should be paid u/s 234E before the return of TDS is filed u/s. 200(3) - This provision does not confer power on the CIT(A) to declare the return of TDS as non est in law - CIT(A) cannot travel beyond the subject matter of the appeal - order of the CIT(A) declaring TDS filed by the assessee is non est in law is not valid in the eyes of law Visit to Get Source Writ against order of department rejecting issuance of certificate u/s 197 - who obtains a certificate u/s 197 for no deduction of tax at source or for deduction of tax at low rate would be to receive full payment from the payer without exposing the payer to the possibility of being declared as deemed defaulter - adequate protection of recovery of the possible tax component is necessary for balancing the equities Visit to Get Source Review petition before High Court - reliance on a decision from which High court was in disagreement in other decision and overlooked the judgment in the assessee’s case - Court is of the opinion that the main judgment contains errors apparent on the record - review petition allowed and order recalled Visit to Get Source Long Term Capital Gain - possessory right - transfer of ownership by co-owner(not the assessee) of his share - in registered conveyance deed, it was acknowledged by all the concerned parties that assessee held a possessory right in the property - transfer of such rights or interest in the property is taxable under the head “Capital Gains” Visit to Get Source Disallowance of interest expenditure - loans used for construction of additional building in an already existing facility and that there is no extension of an existing business - proviso to section 36(1)(iii) not applicable - disallownace deleted Visit to Get Source Reassessment u/s 147 - reopening by the AO on the basis of vague and irrelevant information, which was indefinite and far-fetched for the formation of any belief that sale of agricultural land was chargeable to tax - reasons recorded by the AO for the belief which was formed by him failed to satisfy the mandatory requirements of section 147 - order was bad-in law Visit to Get Source Validity of order passed u/s 143(3) r.w.s. 92CA without passing draft order of assessment - eligibility of assessee - once TPO passed order u/s 92CA, assessee is an “eligible assessee” and the issuance of a draft order of assessment is a sine-qua-non before the AO can pass the regular / final order of assessment u/s 143(3) r.w.s. 144C - mandatory requirement under law, cannot be termed as a mere procedural irregularity and is not curable Visit to Get Source Income accrued in India - the sale proceeds cannot be characterized as 'Royalty' as per Article 12 of the India- Ireland DTAA, as the same is towards the use of 'copyrighted article' and not towards the use of 'copyright' - it is not towards the use of or right to use any industrial, commercial or scientific equipment - where the end-user acquires only the right to run the programme and does not acquire any rights to use the copyright in the programme may not be construed as 'royalties'. Visit to Get Source Addition u/s 40A(3) - cash payments in excess of the limit prescribed - each payment, on each day to each person was less than ₹ 20,000/- in cash - There were both purchases and sales from each of the parties and it was only the difference that was settled in cash on various dates - no violation of Section 40A(3) Visit to Get Source Customs Customs Broker License - Right of revenue to file an appeal - Whether an appeal filed by the Revenue is maintainable under Section 129A of the Customs Act against the Order of Commissioner of Customs passed under Customs Brokers Licensing Regulations or not? - Held No Visit to Get Source Claim of refund - both the authorities have not given any valid reason for retaining the said amount - The officers of the Department are duty bound to explain as to under which Head, the said amount has been allocated but no reason, whatsoever, has been given in both the orders as to the collection, appropriation, utilization of the amount collected from the appellant. - Refund allowed. Visit to Get Source DGFT Import policy for Electronics and IT Goods under Schedule - I (Import Policy) of ITC (HS), 2017 Visit to Get Source Corporate Law Transfer of shares - Appellants failed to convince the learned NCLT and have failed to convince us that OP1 gifted the shares and that due procedures under the Companies Act have been followed regarding change in the Register of members. Visit to Get Source Public interest - compulsory amalgamation - The expression “public interest” would mean the welfare of the public or the interest of society as a whole, as contrasted with the “selfish” interest of a group of private individuals. - “Public interest” in this context would mean the combining of resources of two or more companies so as to impact production and consumption of goods and services and employment of persons relatable thereto for the general benefit of the community. Visit to Get Source Compulsory amalgamation of companies by a Central Government order - It is the Central Government that has to be “satisfied” that its order is in public interest and such “satisfaction” must, therefore, be of the Central Government itself and must, therefore, appear from the order itself - The order dated 12.02.2016 is ultra vires Section 396 of the Companies Act, and violative of Article 14 of the Constitution of India. Visit to Get Source Indian Laws Quantum of punishment - NDPS - The punishment awarded by the trial court of a sentence higher than the minimum relying on the quantity of substance cannot be faulted even though the Court had not adverted to the factors mentioned in clauses (a) to (b) as enumerated under Section 32B. Visit to Get Source IBC The purpose of resolution is maximization of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximization of value for a 'stakeholder' or 'assets of a stakeholder' such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is 'resolution'. The second objective is 'maximization of the value of assets of the 'Corporate Debtor' and third objective is 'promoting entrepreneurship, availability of credit and balancing the interests'. Visit to Get Source Operational debt - claim of interest on the basis of terms mentioned in the Invoice - Especially when the applicant has not entered into any agreement regarding payment of interest, claim of the applicant for 24% interest per annum does not hold valid ground to file the instant application. Visit to Get Source Service Tax Refund of service tax paid wrongly - The appeal is rejected as a refund claim under Section 11B of Central Excise Act,1944 read with Section 83 of the Finance Act, 1994 is not maintainable for any amount paid beyond the scope of the Finance Act, 1994 itself. Visit to Get Source Central Excise Valuation - related party transaction - directors are members of Hindu Undivided Family (HUF) - The relationship of directors has no relevance whatsoever - The statute requires that the assessee and buyers should be related and not that the directors of the two entities should be related. Visit to Get Source Method of valuation - supply of medicaments to institutional buyers - Section 4 or 4A of CEA - the provisions are attracted only on goods ‘offered for retail sale’. In the impugned order, it is seen that the words ‘offered for retail sale’ appearing in DPCO 1995 have been overlooked. Visit to Get Source Recovery of Excise dues from erstwhile owner - the movable and immovable assets purchased by auction purchaser/petitioner - recovery cannot be made from purchaser of the movable and immovable assets of the respondent in auction. Visit to Get Source VAT Attachment of property - Recovery of outstanding dues (tax liability) of the company from the Directors - There is no provision in the Act fastening the liability of the Company to pay its sales tax dues to its Director - attachment notice quashed and set aside. Visit to Get Source Suspension of certificate of registrations - non-payment of Entry tax / VAT - As the impugned order of suspension of registration of the petitioner under VAT act and CST Act is without jurisdiction, the same is hereby quashed and set aside Visit to Get Source Auction of cars by bank - whether the disposal at an auction by the bank of cars that have been hypothecated with it and later repossessed on default of repayment of the loan, is a ‘sale’? - Prima facie case is against the assessee bank. Visit to Get Source Principles of natural justice - Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. Visit to Get Source Imposition of VAT - deemed sale - unless possession and control of the vehicle is transferred there can not be transfer of right to use the goods under Section 3-F of the Act. Visit to Get Source Case Laws: GST 2019 (5) TMI 567 The present petition of the Solar Power Developers Association be placed for consideration before the GST Council at its next meeting. List before the Court on 6th August 2019. 2019 (5) TMI 566 Appointment of Members of GST Tribunal - HELD THAT:- Considering that the matters were to be heard finally today an adjournment is sought, it is directed that the Respondents shall not, without prior intimation to this Court, proceed to appoint persons to the GST Appellate Tribunal till the next date. List on 26th July 2019. 2019 (5) TMI 565 Permission to file Form Tran- I and Tran-II - input tax credit - HELD THAT:- The Tran- I and Tran-II forms claiming the credit will be permitted to be filed manually by the Petitioners and accepted as such by the Department, subject to the final outcome of these petitions. The annual return will be filed online without reflecting the above credit claimed in modified Tran-I and Tran-II forms, and this too would be subject to the final outcome of these petitions. Application disposed off. 2019 (5) TMI 564 Implementation and recommendation of the GST Council - circular dated 1st April 2019 issued by the Central Board of Excise and Customs - HELD THAT:- Mr. Bansal states that the case of the Petitioner would be considered in terms of the said circular and the decision taken will be produced before this Court on the next date. List on 28th May 2019. 2019 (5) TMI 563 Profiteering - constitutional validity of Section 171 of the CGST Act - HELD THAT:- Mr. Rohatagi states that without prejudice to the rights of the contentions of the Petitioners the above undertaking would be abided by and the payment of the aforementioned sum would be made within 10 days from today the Central Consumer Welfare Fund subject to further orders of this Court. There shall be a stay of further proceedings against the Petitioners pursuant to the impugned order dated 5th March 2019 - List on 22nd August 2019. 2019 (5) TMI 562 Compliance with the pre-deposit - the first instalment of ₹ 50 crores has been deposited by the Petitioner in the Central Consumer Welfare Fund. It is clarified that the balance amount of ₹ 40 crores will also be deposited with the Central Consumer Welfare Fund. HELD THAT:- Permission is granted to the Respondents to further transfer 50% of the amount of ₹ 90 crores deposited by the Petitioner into the State Consumer Welfare Funds as per the ratio determined by the Respondents. The interim order passed by this Court on 16th January 2019 is made absolute during the pendency of this petition. The application is disposed of. 2019 (5) TMI 561 Re-credit of amount in the Electronic Credit Ledger after rejection of refund claim - non filing of appeal against rejection order - GST PMTO3 has already been issued - whether the petitioner is entitled to recredit of the amount of ₹ 17,55,13,818/on the basis of Form GST RFDPMT 03 issued by the respondents in its Electronic Credit Ledger? HELD THAT:- Subrule (2) of rule 93 of the CG ST Rules provides that where any amount claimed as refund is rejected under rule 92, either fully or partly, the amount debited, to the extent of the rejection, shall be recredited to the Electronic Credit Ledger by an order made in FORM GST PMTO3. The Explanation thereto says that for the purposes of the rule, a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal. In the present case, it is an admitted position that the petitioner has not filed any appeal, and hence, the question of the appeal being rejected does not arise. Filing of an undertaking - HELD THAT:- Insofar as giving an undertaking in writing to the proper officer that the petitioner shall not file an appeal is concerned, the learned counsel for the petitioner has stated before this court that the petitioner shall not file an appeal against the order rejecting its refund. Moreover, with a view to comply with the requirements of the Explanation to rule 93 of the CG ST Rules, it would also file an undertaking as required. The amount has not been recredited not on account of non compliance with the provisions of the Explanation to rule 93 of the CG ST Rules, but since there is no mechanism for recrediting the amount to the Electronic Credit Ledger. In either case, the court is of the view that the petitioner is entitled to the alternative relief prayed for in the petition. Petition allowed - decided in favor of petitioner. 2019 (5) TMI 560 Profiteering - supply of Glass Kit Hood Curved Black-90 Cm GHK 900CS Electric Chimney - benefit of GST rate reduction not passed on - contravention of the provisions of Section 171 of CGST Act, 2017 - N/N. 41/2017-Central Tax (Rate) dated 14.11.2017. HELD THAT:- Central Govt. vide Notification No. 41/2017- Central Tax (Rate) dated 14.11.2017 had reduced the rate of GST from 28% to 18% in respect of the above product with effect from 15.11.2017, the benefit of which was required to be passed on to the recipients by the Respondent as per the provisions of Section 171 of the CGST Act, 2017. The Respondent's submissions that the price of the product was not increased at the time of introduction of GST when the rate of tax was increased to 28% and hence the question of reducing the prices when the rate of tax was decreased from 28% to 18% does not arise is legally not sustainable in as much as Section 171 of the CGST Act, 2017 is very clear that the benefit of reduction in tax has to be necessarily passed on to the recipient by commensurately reducing the prices - Secondly the argument that the pre GST prices and the post reduction prices should have been compared will also not hold good as the DGAP has rightly taken into consideration the prices before the rate reduction and the prices after the reduction of tax rates to analyse and estimate the extent of benefit passed on to the recipient. The amount shall be deposited within a period of 3 months by the Respondent, from the date of receipt of this order, failing which the same shall be recovered by the corresponding field formations of Central and State GST Authorities, as per the provisions of the CGST/SGST Act, 2017 - The Authority as per the provisions of Rule 136 of the CGST Rules, 2017 also directs the respective Commissioners of CGST/SGST to monitor the implementation of this order. Penalty - HELD THAT:- The Respondent had issued incorrect invoices while selling all the above product to his customers as he had not correctly shown the basic price which he should have legally charged from them. The Respondent had also compelled them to pay additional GST on the increased price through the incorrect tax invoices which would have otherwise resulted in further benefit to the customers which he had failed to pass on - also the Respondent has deliberately and consciously acted in contravention of the provisions of the CGST Act, 2017 by issuing incorrect invoices which is an offence under Section 122 (1) (i) of the above Act. Hence, he is liable for imposition of penalty under the above Section read with Rule 133 (3) (d) of the CGST Rules, 2017 - In the interest of natural justice, notice may be issued to the Respondent to show cause as to why penalty should not be imposed on him. Application disposed off. Income Tax 2019 (5) TMI 559 Disallowance of short term capital loss in view of provisions of Section 2(14) and 2(42) - issue of warrants convertible into equity share at any time within the period of 18 months upon payment of the remaining amount of ₹ 280.75 per warrant - AO rejected the claim on the ground that at the end of the period of 18 months, the warrant had become valueless and that, therefore, there is no transfer of capital asset - HELD THAT:- We notice that in the case of Deputy Commissioner of Income Tax Vs. BPL Sanyo Finance Ltd. [ 2008 (2) TMI 386 - KARNATAKA HIGH COURT] under similar circumstances, had held that the loss suffered by the Assessee on forfeiture of its rights in the share was a capital loss. Delhi High Court, relying on the said decision of Karnataka High Court in the case of BPL Sanyo Finance Ltd. (supra), in case of Commissioner of Income Tax Vs. Chand Ratan Bagri [ 2010 (1) TMI 123 - DELHI HIGH COURT] under similar circumstances, had held that the forfeiture of payment towards convertible warrant was a short term capital loss - Decided against revenue. 2019 (5) TMI 558 Power to file Revised returns of income pursuant to the scheme of arrangement and amalgamation approved by the National Company Law Tribunal - applicability of limitation to file revised return - effect of circular issued u/s 119(2)(b) of the Income Tax Act namely Circular No. 9 of 2015 in light of scheme of amalgamation approved by the NCLT under Section 391 of the Companies Act ? - HELD THAT:- Section 139(5) is not applicable in cases where revised returns of income have been filed pursuant to the scheme of arrangement and amalgamation approved by the National Company Law Tribunal. The circular No. 9 of 2015 issued by the Central Board of Taxes under Section 119(2)(b) of the Income Tax Act, 1961, is not applicable in cases where revised returns of income have been filed pursuant to the scheme of arrangement and amalgamation approved by the Court. There is also no statutory bar under the Income Tax Act, to disable the assessee from filing revised returns of income pursuant to the scheme of arrangement and amalgamation approved by the Court under Section 391 of the Companies Act. The rules of procedure are handmaid of justice. It should not be an obstruction in the aid of justice. As rightly observed by Krishna Iyer, J. , in the case of Sushil Kumar [ 1975 (3) TMI 137 - SUPREME COURT] , the procedure should be the handmaid, not the mistress of legal justice which vests with residuary power in the Judges to act ex debito justitiae, where the tragic sequel otherwise would be wholly inequitable. It is settled law that while dealing with the taxing provision, when two interpretations are possible, the Court would interpret the provisions in favour of the tax payer and against the revenue. In cases of doubt or dispute, the construction should be made in favour of the tax payer and against the revenue. In the case on hand, there is no express statutory bar in cases where revised returns of income have been filed belatedly pursuant to the scheme of arrangement and amalgamation approved by the Court. When there is no such express bar under the Income Tax Act, 1961 or its Rules, the respondent cannot override the approved scheme of arrangement and amalgamation which has a statutory force by rejecting the revised returns of income filed by the respective petitioners as invalid. Just because the website of the Income Tax Department does not entertain revised returns of income after the prescribed period, as stipulated u/s 139(5) the respective petitioners cannot be rendered remediless. Procedures are handmaid of justice. They have to be interpreted to carry forward the objects of the enactment. If not for the website of the Income Tax Department's refusal to accept revised returns of income beyond the prescribed period as stipulated u/s 139(5) the respective petitioners in the normal circumstances would have been able to file the revised returns of income, pursuant to the approval of the scheme of arrangement and amalgamation by the National Company Law Tribunal. Procedures aid the effective implementation of the Act of the legislature. Rule 12(3) of the Income Tax Rules stipulates that returns of income can be filed only electronically. But the case on hand is an exceptional case where it has necessitated the respective petitioners to file the revised returns of income manually since the website of the income tax department refuses to accept the returns of income which has been filed beyond the prescribed period under Section 139(5) of the Income Tax Act, 1961. As already observed, Section 139(5) of the Income Tax Act, is not applicable for the facts of the instant case. Therefore, this Court is of the considered view that the respondent ought not to have rejected the filing of the revised return of income by the respective petitioners on the ground that the same has been filed manually instead of electronically. Therefore, Rule 12(3) of the Income Tax Rules, 1962 will not bar the respective petitioners to file the revised returns of income manually as the revised returns of income have been filed only pursuant to the scheme of arrangement and amalgamation approved by the National Company Law Tribunal. For the foregoing reasons, this Court answers the points for consideration framed at the outset in these Writ Petitions in the following manner: a) The scheme of arrangement and amalgamation approved by the National Company Law Tribunal under Section 391 of the Companies Act gives statutory force to enable the respective petitioners to file the revised returns of income beyond the prescribed period and Section 139(5) of the Income Tax Act, 1961 is not applicable for cases where revised returns of income have been filed pursuant to approval of scheme of arrangement and amalgamation by the Competent Court. b) The Circular issued under Section 119(2)(b) of the income tax act, namely, Circular No. 9 of 2015 is not applicable for filing of revised returns of income pursuant to a scheme of arrangement and amalgamation approved by the Court under Section 391 of the Companies Act. c) Rule 12(3) of the Income Tax Rules which requires filing of revised returns of income electronically is not applicable to cases where revised return of income has been filed by the assessee pursuant to scheme of arrangement and amalgamation approved by the Court. The impugned orders in all the writ petitions are hereby quashed and the respondent is directed to receive the revised returns of income filed by the respective petitioners pursuant to the scheme of arrangement and amalgamation approved by the National Company Law Tribunal, Chennai and complete the assessment for the assessment years 2015-2016 and 2016-2017 in accordance with law within a period of twelve [12] weeks from the date of receipt of the revised returns of income from the respective petitioners. 2019 (5) TMI 557 Writ against order of department rejecting issuance of certificate u/s 197 - certificate for lower rates or no deduction of income tax (TDS) - petitioner referred to the DTAA between India and Mauritius to argue that as per the provisions contained in the said treaty, the income out of sale of shares cannot be taxed in the hands of the assessee in India - in absence of the certificate issued by the Authority u/s 197 the payer would be under obligation to deduct tax at source in terms of Section 195 - HELD THAT:- Had the AO in the present case sufficient prima facie material to demonstrate that the entire transaction from the inception was sham and colourable device and a bogus transaction to simply avoid tax, it was still open for him to express his opinion accordingly and refuse to grant certificate u/s 197. In the present case, as perusal of the impugned order would convince us that the material at his command fell short of this requirement. We have summarized principle factors which the AO pressed in service. Mere fact that the assessee company has not transacted any other business by itself may not be conclusive. The reference to the assessee unable to produce TRC of the companies which hold shares in the assessee company is erroneous. The petitioner would point out that such certificates were produced before the AO. The observation that mere transfer of money though banking channel would not be conclusive, may be quite correct but the same cannot be a ground against the assessee unless there is adverse material. It is true that the extent of administrative expenditure and the employment structure may be some of the factors which eventually would go to establish whether the transaction was sham and the very existence of the assessee was fraudulent, however by themselves may not be sufficient. All these aspects can and need to be gone into in the assessment proceedings. Provisions contained in Section 197. One of the main benefits for an assessee who obtains a certificate u/s 197 for no deduction of tax at source or for deduction of tax at low rate would be to receive full payment from the payer without exposing the payer to the possibility of being declared as deemed defaulter. Yet another purpose of Section 197 would be to secure the interest of the Revenue. We fully share the anxiety of the Revenue that without adequate protection of recovery, the possible tax component should not be released in favour of the assessee. In view of the discussion above, we propose to quash the impugned order dated 20.6.2018 passed u/s 197 and after balancing the equities, direct the respondents to release the withheld payment subject to adjustment in the assessment. AO shall issue necessary certificate of no requirement of deducting tax at source to the petitioner u/s 197.The tax already deducted by the payer as per the directives of the Assessing officer and deposited in the Government revenue shall be released in favour of the petitioner along with interest if any payable as per law latest by 15.6.2019. 2019 (5) TMI 556 Reopening of assessment u/s 147 - reasons recorded for reopening the assessment related to the Assessment Year in question on 20.12.2018 - HELD THAT:- AO ought to have provided some breathing time to the petitioner to furnish the objections and then to have proceeded to conclude the re-assessment. On the day of furnishing the reasons recorded, the re-assessment order is said to have been passed. The copy of the re-assessment order made available before the court at Annexure-F to the writ petition does not bear the date of order. This court is of the considered view that the respondent AO has proceeded to conclude the re-assessment in a hasty manner. The preliminary objections filed by the petitioner on 27.12.2018 remains unconsidered as such, the re-assessment order cannot be held to be justifiable. Accordingly, the impugned re-assessment order at Annexure-F and the demand notice at Annexure-G are set-aside. The proceedings are restored to the file of the respondent-AO to redo the assessment considering the preliminary objections filed by the petitioner to the reasons recorded by the respondent as per Annexure-E to the writ petition dated 27.12.2018 and conclude the assessment thereafter in accordance with law in an expedite manner preferably within a period of eight weeks from the date of receipt of the certified copy of the order. 2019 (5) TMI 555 TDS under the correct provision - TDS U/S 194C OR 194J - payment of subscription fees paid to the channels - HELD THAT:- Such an issue had been examined by the Division Bench of Punjab and Haryana High Court in case of Kurukshetra Darpans (P) Ltd. Vs. Commissioner of Income Tax Cited Cases [ 2008 (3) TMI 48 - HIGH COURT PUNJAB AND HARYANA] the Court referred to the Explanation (3) below Section 194C(2) of the Act, explained the term Work as to include advertising, broadcasting and telecasting including production of programmes etc. The Court was of the opinion that the deduction made by the payer under section 194C of the Act was correct. TDS u/s 194C on carriage fees by treating it as contract work by resorting to interpretative reasoning and not under section 194H - HELD THAT:- Issue covered by Judgment of this Court in case of Commissioner of Income Tax Vs. UTV Entertainment Television Limited and ors. [ 2016 (1) TMI 213 - ITAT MUMBAI] 2019 (5) TMI 554 Condonation of delay - delay of 8 days in filing the Appeal before the CIT (A) and 145 days in filing the Appeal before the Tribunal - Medical Ailments of the Assessee - disallowance of Cash Credit entries - HELD THAT:- Both the Appellate Forums have failed to consider the case of the Assessee on merits and decide his Appeal with regard to the Cash Credit entries of which disallowance was made by the Assessing Authority. Assessee submitted before us that as against the demand of ₹ 7,27,210/-, a substantial amount viz., ₹ 4,75,000/- stands paid by the Assessee during the period from May 2010 to June 2018 as per the details furnished in the Memorandum of Appeal filed by the Assessee and even after filing of the present Appeal, further payments have been made and in total, around ₹ 7,00,000 has been paid. Therefore, we are of the opinion that the matter deserves to be remitted back to the Tribunal for deciding the Appeal on merits. Accordingly, we condone the delay in filing the said Appeal and we request the learned Tribunal to decide the Appeal on merits and in accordance with law within a period of 6 months from today 2019 (5) TMI 553 Review petition before High Court - maintainability of review as Court considered the merits of the case and delivered a reasoned judgment - exclusion of relative comparables held to be relevant for the purpose of ALP determinations - assessee seeks review are firstly that the question of charging interest on delayed receipt of receivables is a separate international transaction under Explanation to Section 92B - HELD THAT:- It is evident that the observation in Khoday India [ 2019 (3) TMI 232 - SUPREME COURT] , is applicable in the present case, wherein it was held that rejection of the special leave petition by a non-speaking order, did not preclude the maintainability of the present writ petition. As far as the first argument by the review petitioner, i.e., the answer to the question of bringing to tax the interest amounts goes, this Court is of the opinion that the fact that the order to Kusum Health Care [ 2017 (4) TMI 1254 - DELHI HIGH COURT] had expressly remitted the matter for consideration to the ITAT supports the assessee s submission. All that the court had stated was that the matter required re-examination by the ITAT in the light of the Kusum Health Care (supra) For these reasons, the judgment to the extent it deals with adjustments made by the TPO, and regarding interest on delayed receipt of receivables, is a clear error. The court also furthermore notes the submissions made with respect to inapplicability to Explanation of Section 92B and its prospective operation. As the order of 07.02.2018 reserved by contentions, this Court does not propose to disturb the effect of that matter. The matter will be considered by the ITAT on its own merits. Exclusion of comparables and whether the assessee rendered services were akin to that of KPO rather than a BPO - here too the court is of the opinion that two clear errors have crept into the judgment. The reliance on Maersk Global [ 2014 (3) TMI 891 - ITAT MUMBAI] was clearly an error in view of the submission that Rampgreen [ 2015 (8) TMI 931 - DELHI HIGH COURT] had disagreed with the view of the Special Bench. Furthermore, the court also overlooked the judgment dated 27.03.2015 in the assessee s case [ 2015 (3) TMI 1226 - DELHI HIGH COURT] . Lastly, the Court also is of the opinion that the assessee s argument with respect to separate benchmarking of the knowledge management system, as part of the IT Support segment, is an aspect that requires examination. The judgment sought to be reviewed, clearly is at variance; the view in Rampgreen (supra) about the soundness of Maersk Global (supra) was doubted- as aspect that escaped the main judgment in this case. This Court is of the opinion that the main judgment contains errors apparent on the record. The review petition has to be and accordingly allowed; judgment dated 09.08.2018 is hereby recalled. The appeal is restored to original file of this Court and shall be heard on its merits. 2019 (5) TMI 552 Dismissal of appeal for non-prosecution - non filing of compulsory e-filing of appeal despite notice - assessee failed to appear before the Tribunal on the date of hearing - no request for further date - HELD THAT:- Neither the assessee nor her representative made any efforts to e-file the appeal, even though it was brought to their notice that e-filing of appeal is compulsory from 01.03.2016. It is to be observed here that the assessee had filed returns electronically and as such the husband of the appellant who represented before the Appellate Authority could not have stated that he was not aware of e-filing of the appeal. When the Appellate Authority brought to the notice of the assessee that e-filing of appeal is compulsory and when the assessee had failed to file e-appeal even after assessee was made known that e-filing is compulsory, we find no error or illegality in dismissing the appeal of the assessee as invalid by the Appellate Authority. The Tribunal noting the absence of the assessee and observing that the assessee is not interested in prosecuting the case dismissed the appeal for non-prosecution. It is the case of the assessee that the assessee was out of country and she returned to India only on 08.01.2019 and as such she could not be present before the Tribunal on the date of hearing. If that is so, the assessee could have made arrangements to represent her before the Tribunal by any authorized representative or she could have addressed a letter seeking for another date of hearing as she was out of country. The assessee failed to make arrangement to represent her before the Tribunal and failed to seek for another date of hearing. When there was no representation on behalf of the assessee, the Tribunal had no option but to dismiss the appeal for non-prosecution observing that the assessee had no interest in prosecuting the case. There are no bonafides and the appellant cannot take benefit of ones own inaction. Hence, we are of the view, that the orders passed by the ITAT is neither perverse nor erroneous. No substantial question of law would arise. - Decided against assessee. 2019 (5) TMI 551 Reopening of assessment u/s 148 - payment of EPF contribution was not made in the prescribed time and added to the total income the aforesaid amount according to section 2(24)(x) read with section 36(1)(va) - deduction for belated payment of EPF contribution paid before due date of filing the return allowed in original assessment - HELD THAT:- For any sum received by the assessee from any of his employees to which the provisions of subclause (x) of clause 24 of section 2 apply, deduction thereof can be allowed only if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date as per the provisions of the Employees' Provident Fund Act. AO however, formed a belief that income has escaped assessment without considering the fact that the assessee has fully and truly disclosed all material facts which is evident from the impugned notice itself. Therefore, the Assessing Officer cannot issue notice under section 148 to reopen a concluded assessment i.e. scrutiny assessment u/s 143(3) of the Act beyond a period of four years in absence of existence of any tangible material outside of the existing record and in absence of failure on part of the petitioner to disclose truly and fully all material facts necessary for assessment for the relevant assessment year. Admittedly, no new fact is brought on record by the Assessing Officer and nor there is any failure on part of the petitioner to disclose fully and truly all material facts necessary for the relevant assessment year and, therefore, as per First Proviso to section 147 of the Act, Assessing Officer cannot assume jurisdiction. The record of the case shows that the respondent has called for all the details during the assessment proceedings including the tax audit report and computation of income which were duly submitted and were considered at the time of original assessment proceedings. Petitioner was claiming deduction for belated payment of Employee's Provident Fund contribution as it was paid before due date of filing the return. The petitioner also relied upon various decisions which were available at the relevant point of time for filing the return of income. Therefore, as all the relevant details called for were submitted and perused during the course of original assessment proceedings and the Assessing Officer after considering the same, accepts the claim of the petitioner. The respondent, therefore, now seeks to reopen the assessment on mere change of opinion, which is not permissible in law and on that count also the impugned notice cannot be sustained.- Decided in favour of assessee. 2019 (5) TMI 550 Special audit u/s 142(2A) - assessee is an individual, he is not required to maintain any books of account - as submitted in terms of CASS Module, scrutiny was required to be carried out to the limited extent of the issues for which the case was selected and hence, the question of clubbing the assessment for assessment year 2017-18 with the assessment years for which the notices had been issued u/s 153A, would not arise - merely because time limit for assessment u/s 153A was coming to an end, that the AO has resorted to the provisions of section 142(2A) with a view to extend the period of limitation despite the fact that there is no warrant for referring the matter to the accountant in view of the fact that petitioner assessee is not required to maintain any books of account - HELD THAT:- Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 29th April, 2019. By way of ad-interim relief, further proceedings pursuant to the communication/order dated 30.12.2018 (Annexure U to the petition) are hereby stayed. 2019 (5) TMI 549 Condonation of delay of 482 days in filing appeal - sufficient cause for delay - after the receipt of the impugned order, the case was sent to the appropriate authority for appointment of counsel - the case could not be pursued and the file remained unprocessed - HELD THAT:- The purpose behind enacting law of limitation is not to destroy the rights of the parties but to see that the uncertainty should not prevail for unlimited period. Under Section 5 of the 1963 Act, the courts are empowered to condone the delay where a party approaching the court belatedly shows sufficient cause for not availing the remedy within the prescribed period. The meaning to be assigned to the expression sufficient cause occurring in Section 5 of the 1963 Act should be such so as to do substantial justice between the parties. The existence of sufficient cause depends upon facts of each case and no hard and fast rule can be applied in deciding such cases. No ground to condone the colossal delay of 482 days in filing the appeal. The question regarding whether there is sufficient cause or not depends upon each case and primarily is a question of fact to be considered taking into totality of events which had taken place in a particular case. In the present case after appreciating the matter it cannot be said that there was sufficient cause for condonation of delay. However, the appeal was required to be filed within the stipulated period of limitation of 120 days. But the appellant filed the appeal before the Tribunal on 19.2.2018, after a delay of 482 days. The plea of the appellant as mentioned above would not satisfy the test of sufficient cause. The explanation of the appellant is bereft of justification for the delay caused in filing the appeal keeping in view the totality of facts and circumstances of the present case. Finding no merit in the application for condonation of 482 days' delay in filing the appeal, the same is hereby dismissed 2019 (5) TMI 548 Payment of compete fee - nature of expenditure - revenue or capital expenditure - HELD THAT:- The payment of non-compete fee was held to be allowable as revenue expenditure. See [ 2018 (8) TMI 1803 - PUNJAB AND HARYANA HIGH COURT ] Expenses on account of expansion of business of healthcare division and expansion of Maxxon business, Max Foil Division - HELD THAT:- Expenses incurred for starting entirely different line such as health care division and for expansion of business are revenue expenditure. See M/S MAX INDIA LTD. [ 2016 (1) TMI 784 - PUNJAB AND HARYANA HIGH COURT ] Disallowance of speculation loss in trading of shares - Explanation to Section 73 - conversion of stock into investment - HELD THAT:- . The CIT(A) decided the issue in favour of the assessee by holding that the assessee was at liberty to classify shares received on amalgamation as stock in trade or investment. The Tribunal held the aforesaid conversion from stock in trade to the investment as valid and upheld the order of the CIT(A) treating the loss on sale of investment arising in the assessment year 2001-02 as not speculative business loss. Explanation to Section 73 of the Act invoked by the Assessing Officer was held to be not applicable in relation to sale of investments in the appeal for the assessment year 2001-02. Learned counsel for the appellant-revenue has not been able to show that the findings recorded by the Tribunal are illegal, erroneous or perverse warranting interference by this Court. - answered in favour of the assessee Signing of negative covenant for not carrying out a speciality business - whether it does not amount to transfer of right to carry on business, the consideration of which is liable to be taxed as capital gain - AO held that since the assessee extinguished its right to re-enter the market of plating chemicals and process for general metal finishing and electronics plating for consideration, the same amounted to transfer of right to carry on business and therefore the amount of consideration received was liable to be taxed under the head capital gains - CIT(A) held that undertaking a restrictive convenant not to carry on business without transfer of any business was not in the nature of right to carry on business to be regarded as transfer of capital asset - CIT(A) held non compete fees received as capital receipt not exigible to tax under the provisions of the Act - HELD THAT:- Identical issue was considered by the Tribunal in assessee s own case for the assessment year 1998-99 and the Tribunal held that taking over a restrictive obligation did not amount to transfer of right in any business and therefore non compete fee could not be considered as resulting in capital gains. Even Section 55(2)(a) of the Act which was prospective in nature was not held to be applicable to the facts of the present case in the absence of any capital asset being transferred by the assessee in lieu of which the assessee had received the impugned amount of non compete fee. Learned counsel for the appellant has not been able to show that the findings recorded by the Tribunal are illegal or perverse warranting interference by this Court. - answered in favour of the assessee 2019 (5) TMI 547 Rectification u/s 254 - assessee has filed an affidavit stating that the notice of hearing for the appointed date was not served on the assessee and the assessment order was passed ex parte in the absence of the assessee - HELD THAT:- Considering the circumstances pointed out on behalf of the assessee, we deem it appropriate to recall the appeal for fresh hearing as matter should be recalled for fresh hearing after giving opportunity to the assessee to defend its appeal. Miscellaneous application filed by the assessee is allowed. 2019 (5) TMI 546 Unaccounted value of work in progress - year of assessment - double taxation - AO made addition purely on the reasoning that the bill dated 18th April 2007, raised by the assessee on Diageo India Pvt. Ltd., for the amount should have been accounted for by the assessee as work in progress for the impugned assessment year and offered to tax - HELD THAT:- As in assessee's own case [ 2019 (4) TMI 1506 - ITAT MUMBAI] AO has not disputed the fact that the aforesaid amount remained unbilled in AY 2007 08 and bill for the said amount was raised by the assessee on 18th April 2007, i.e., in the financial year relevant to assessment year 2008 09. It is also not disputed by the Department that the amount in dispute was not only offered as income by the assessee in assessment year 2008 09, but it was also assessed at the hands of the assessee in the said assessment year. This fact has not only been verified by the Commissioner (Appeals) in course of proceedings before him but on a query from the Bench, AR has furnished before us relevant documentary evidences which demonstrate that not only the assessee has offered the disputed amount as income in assessment year 2008 09, but has also claimed the corresponding TDS in the said assessment year. Tax rate for assessment year 2007 08 and 2008 09 are the same. That being the case, whether the amount is taxed in the impugned assessment year or in assessment year 2008 09, will have no effect on the Revenue. On the contrary, if the amount is taxed in the impugned assessment year, it has to be excluded from the income of the assessee in assessment year 2008 09, since, it has already been assessed in that assessment year. This is due to the settled legal principle that the same income cannot be assessed in two assessment years. Since the amount in dispute has already been offered as income by the assessee in assessment year 2008 09 and assessed to tax, we do not find any reason to interfere with the decision of the first appellate authority on the issue. - Decided against revenue Admission of additional evidence - violation of rule 46A - Disallowance due to failure on the part of the assessee to co relate the reversal of entries - fresh evidences were admitted and considered without giving opportunity to the AO - assessee has filed fresh material reconciling the differences pointed out by AO and the Commissioner (Appeals) after considering the observations of the AO in the remand report, the submissions made by the assessee and evidences filed was satisfied that the assessee has properly reconciled / co related the reversal of entries for an amount - HELD THAT:- As decided in assessee's own case [ 2019 (4) TMI 1506 - ITAT MUMBAI] every single piece of evidence furnished by the assessee in the course of appeal proceedings were sent for verification / examination of the AO and the AO after verifying these evidences has furnished a remand report. The remand report furnished by the assessee was taken note of by the learned CIT(A) while disposing off the appeal of the assessee. CIT(A) has strictly complied to the provisions of rule 46A of the rules insofar as it relates to admission of additional evidence. Assessee has filed fresh material reconciling the differences pointed out by the Assessing Officer and the learned Commissioner (Appeals) after considering the observations of the Assessing Officer in the remand report, the submissions made by the assessee and evidences filed was satisfied that the assessee has properly reconciled / co related the reversal of entries for an amount - Decided against revenue Disallowance on account of Deloitte Touche Tohmatsu (DTT) subscription - HELD THAT:- As decided in assessee's own case [ 2019 (4) TMI 1506 - ITAT MUMBAI] the assessee has paid the subscription to run and manage its business activity more effectively, efficiently and profitably - similar subscription was paid by the assessee in the preceding as well as succeeding assessment years. Notably, on verifying the scrutiny assessment orders passed u/s 143(3) for the assessment years 2006 07, 2009 10 and 2010 11 and 2011 12, copies of which have been submitted before us, it is observed that no such disallowance was made by the Assessing Officer in the aforesaid assessment years - applying the rule of consistency also, the expenditure claimed by the assessee has to be allowed, since, the nature of expenditure as revenue has been accepted by the Department in all other assessment years except the impugned assessment year. - Decided in favour of assessee. 2019 (5) TMI 545 Addition towards un-reconciled AIR entries - AO had observed that AIR information was received from ITD database and the assessee was given the same to reconcile it with its books of accounts - HELD THAT:- As decided in assessee's own case [ 2018 (4) TMI 1698 - ITAT MUMBAI] we do not find any valid reason for the Assessing Officer to make addition towards unreconciled income as the addition was solely based on AIR information and without making proper enquiries, without submitting the information as requested by the assessee. In the circumstances, we direct the Assessing Officer to delete the addition. Non- grant of depreciation on computer peripherals at the rate of 60% - HELD THAT:- We find that the items in Serial Numbe₹ 1,2,3,4,6 8 are certainly integral part of computer thereby eligible for depreciation at 60%. The other two items in Serial Numbers 5 7 would be eligible for depreciation at 15%. Our finding is in consonance with the decision in the case of DCIT vs Datacraft India Ltd r [ 2010 (7) TMI 642 - ITAT, MUMBAI] and CIT vs BSES Yamuna Powers Ltd [ 2010 (8) TMI 58 - DELHI HIGH COURT] Accordingly, we direct the AO to recomputed the depreciation as per the aforesaid directions given by us specifically mentioning the serial numbers. Accordingly, the Ground No. 2 raised by the assessee is partly allowed. Disallowance of bad debts - disallowance was sustained by the ld CITA was with regard to the fact that the assessee had not proved the debt as irrecoverable in respect of these 54 parties - HELD THAT:- We find that pursuant to amendment made in section 36(1)(vii) of the Act with effect from 1.4.1989, it is enough if the debt had been written off as irrecoverable by the assessee to claim the same as bad debt u/s 36(1)(vii) of the Act. There is no need to prove that the said debt had become irrecoverable after 1.4.1989. Reliance in this regard is placed on case of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] . Accordingly, we direct the ld AO to delete the disallowance of bad debts Claim of deduction u/s 35AD - AO in the remand report had stated that assessee had not claimed any deduction u/s 35AD of the Act in the return of income and that the assessee had made this claim for the first time only during the course of assessment proceedings and filed revised computation HELD THAT:-CIT-A had placed reliance on the decision of Hon ble Supreme Court in the case of Goetze (India) Ltd vs CIT[ 2006 (3) TMI 75 - SUPREME COURT] for denying the claim of deduction u/s 35AD of the Act to the assessee. We find that the Hon ble Supreme Court had made it clear in its order that the claim made by the assessee otherwise than by way of a valid return is not applicable to the appellate authorities. Hence we hold that the ld CITA ought to have considered the claim of deduction u/s 35AD of the Act in the instant case. Reliance in this regard is also placed on the decision of CIT vs Pruthvi Brokers Shareholders [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] . But we find that the lower authorities had not examined the claim of the assessee on merits. Hence we deem it fit and appropriate to remand this issue to the file of ld AO for adjudication of this issue on merits 2019 (5) TMI 544 Penalty u/s 271(1)(c) - Disallowance u/s 14A - HELD THAT:- We agree with the submissions of AR that the factual matrix would not warrant penalty since there was no furnishing of inaccurate particulars of income or concealment of income on the part of the assessee rather a disallowance u/s 14A was made in the hands of the assessee, which was on estimated basis. Therefore, we hold that the penalty to the extent as directed by Ld. first appellate authority would not be sustainable. - Decided in favour of assessee. 2019 (5) TMI 543 Reopening of assessment u/s 147 - nature of land sold gain arising from the said land was claimed to be exempt on the ground that the said land being an agricultural land was not a capital asset within the meaning of section 2(14) - HELD THAT:- Assessments completed originally in case of the two assessee were reopened by the Assessing Officer on the basis of vague and irrelevant information, which was indefinite and far-fetched for the formation of any belief that was entertained by the Assessing Officer that the land sold by the assessee was not an agricultural land within the meaning of section 2(14)(iii) and that the gain arising from such sale was chargeable to tax. It is thus abundantly clear that the reasons recorded by the Assessing Officer for the belief which was formed by him failed to satisfy the requirements of section 147 and the initiation of reassessment proceedings without satisfying this mandatory requirement was bad-in law. The assessments completed by the Assessing Officer under section 147/143(3) in case of both the assessee in pursuant to such invalid initiation thus are liable to be cancelled being bad-in-law. - Decided in favour of assessee. 2019 (5) TMI 542 Addition of interest - diversion of interest bearing fund for giving interest free advance - HELD THAT:- CIT(A) examined the record and found satisfied with the arguments of the assessee. Further, he found that the immediate preceding assessment proceedings for Ay 2012-13 2013-14, no objection was raised by the AO in respect of alleged interest free loans and the CIT(A) accepted the submissions of the assessee and held that it was a trade account with the said both concerns on account of pure commercial expediency and in the case of S.A. Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT] and in the case of S.P. Jaiswal Estates Pvt.Ltd. [ 2012 (5) TMI 622 - ITAT KOLKATA] deleted the addition made on account of interest free loans. Addition made on account of payment of commission - commission agents represent themselves as our sales managers - HELD THAT:- According to CIT(A) on examination of the record found that the agents replied in response to the notices u/s 133(6) of the Act and found that they submitted fair amount of details and documentary evidences before the AO such as tax invoices of the commission, proof of payment, TDS certificate and P L A/c of the parties. The CIT(A) by placing reliance on the decision of Hon ble High Court of Calcutta in the case of Rajarani Exports Pvt. Ltd. 2013 (5) TMI 410 - CALCUTTA HIGH COURT] and deleted the addition. We find no infirmity in the order of CIT(A) and it is justified. Addition under the head cutting charges - HELD THAT:- Appellant's contentions made in the matter are on record and found to be correct. In any case the necessary TDS has been effected, and the legality of the disallowance made by the AO gets questionable. On careful consideration of the appellant s submission along with the supporting details/evidences furnished, perusing the facts of the case including the impugned Assessment order thereon and other materials available on record, I find that the disallowance made by the AO was without any sustainable basis, and therefore, the grounds of appeal is allowed in favour of the appellant-assessee Addition of telephone and fax charges for personal use - CIT(A) deleted the said addition by observing that the AO failed to specifically pinpoint as to which the voucher for personal use and not for business use, deleted the addition made under the head disallowance by holding not maintainable - HELD THAT:- We find admittedly that there was no evidence before the AO and the CIT(A) explaining the said expenditure under the head telephone and fax charges were incurred wholly for the business purposes and the disallowance made by the AO in our opinion is reasonable not excessive. Addition made on account of motor car fuel expense and depreciation for personal use - CIT(A) deleted the said addition as it is made on the basis of estimation without specifying any pointing as to which vouchers was for personal use - HELD THAT:- We find that no evidence whatsoever filed before the AO CIT(A) and even before this Tribunal. Therefore, in the absence of any evidence showing that the car has been used for the purpose of business purpose only. Therefore, the order of CIT(A) is not justified in deleting the addition made by the AO and the addition made by the AO in our opinion is reasonable and not excessive. Therefore, the order of AO is restored. Ground raised by the Revenue is allowed. Addition made under the head carriage inward - HELD THAT:- CIT(A) after examination of record found fault with the AO for observing that no evidence is filed in this respect and held that the assessee filed all relevant documents vide covering letter dated 21.12.2016 along with documentary evidences i.e. ledger copy of ledger inward, bills, vouchers services, tax return etc. Therefore, it is clear that the assessee submitted the relevant evidence before the AO but it was not considered by the AO in the assessment proceedings. Since the CIT(A) examined the record and found the same in support of the expenditure claimed under carriage inward. Therefore, we find no infirmity in the order of CI(TA) and it is justified. Thus, Ground No.6 raised by the Revenue is dismissed. Addition on account of undisclosed TDS - According to CIT(A), the said details of TDS is not reflected in 26AS and the addition is not maintainable when the assessee denies the transactions with the said parties - HELD THAT:- Responsibility is upon the AO to conduct independent inquiry in respect of those parities regarding the information with the said transactions. We find no independent inquiry as rightly pointed out by the CIT(A). Therefore, when there is no proper inquiry by the Assessing Officer in proper perspective and the addition deleted by the CIT(A) is justified. We find no infirmity in the order of CIT(A). - Ground raised by the Revenue is dismissed. 2019 (5) TMI 541 Disallowance of provision for retirement benefits - such provision is not permissible for not complying with Section 43B - although the provision made on scientific basis but it could be allowed in view of Section 43B - HELD THAT:- Only the provision for employee s benefits being in the nature of gratuity, superannuation, provident fund leave encashment are subject to Section 43B(b) (f) and therefore allowable only on actual payment basis. Unable to agree with the contention of the DR that all the provisions for employee s post retirement benefits payable to employees are subject to application of Section 43B - since the employee s benefits in form of medical reimbursements, foreign pension and staff pension do not find mention in any of the specific clauses of Section 43B, the same is held to be allowable u/s 37 on mercantile basis. We find merit in the Ld. AR s submissions that when the provision for leave encashment had been separately added back u/s 43B(f) while assessing the taxable income, the AO could not have again disallowed the said provision in light of AS-15 (Revised) and that the impugned addition amounted to double disallowance. For the reasons set out in the foregoing therefore we find no infirmity in the order of the Ld. CIT(A) deleting the disallowance of provision for leave encashment made by the AO in light of AS-15 since it had already been added back separately u/s 43B(f). No infirmity in the reasoning and conclusions of the CIT(A) deleting the disallowance of provision for employees retirement benefits. This ground of the Revenue is therefore dismissed. Allowability of marked-to-market loss arisen on realignment of open foreign exchange derivative contracts as on the year-end - notional and contingent - HELD THAT:- Loss debited in the P L account by an assessee on account of restatement of foreign currency denominated trade payables or receivables pursuant to exchange rate variation at the yearend is defined or ascertained loss and not contingent loss and hence allowable as deduction from the business profits. Applying the ratio laid down in OIL NATURAL GAS CORPORATION LTD. [ 2010 (3) TMI 81 - SUPREME COURT] and M/S WOODWARD GOVERNOR INDIA P. LTD. M/S HONDA SIEL POWER PRODUCTS LTD. [ 2009 (4) TMI 4 - SUPREME COURT] to the facts of the present case, in our considered view since the underlyings of the derivative contracts entered into by the assessee were export bills loan commitments, the gain/loss arising its restatement as on 31st March was real in nature and in the revenue field. In respect of the interest rate derivative, we additionally note that when such contract was finally settled in AY 2010-11 the assessee had accounted for a profit of ₹ 97.39 lacs after taking into re-aligned position of the derivative contract i.e. after accounting for the MTM losses of earlier years. In the income tax assessment order passed u/s 143(3) for AY 2010-11 which was much later than passing of the impugned order for AY 2008-09, the AO assessed such profit of ₹ 97.39 lacs without allowing the deduction for the MTM losses disallowed in the earlier AYs 2008-09 2009-10. We therefore note that the Revenue authorities did not faithfully follow the proposition incorporated in the CBDT Instruction of 2010 in the subsequent year but adopted a selective criteria by assessing the profit arising in AY 2010-11 (computed based on the re-aligned position) without allowing for the deduction of MTM losses which was disallowed in the prior years. - Decided against revenue. Interest income under the head Business - whether interest income earned by the assessee from FDs and financial institutions had no nexus with the assessee s business of growing manufacturing tea? - HELD THAT:- As relying on assessee's own case [ 2019 (2) TMI 1617 - ITAT KOLKATA] interest from FDs and financial institutions was assessable under the head Business and the benefit of Rule 8 was granted to the assessee. - Decided against revenue 2019 (5) TMI 540 TDS u/s 195 - payment made to the non-residents - Disallowance u/s 40(a)(i) in respect of consultancy and supervision charges - HELD THAT:- As decided in assessee's own case [ 2019 (5) TMI 458 - ITAT AHMEDABAD] to be decided in favour of assessee Disallowance of additional depreciation - used less than 180 days - entire plant and machinery was on lease - HELD THAT:- As decided in assessee's own case [ 2019 (5) TMI 458 - ITAT AHMEDABAD] it is an undisputed fact that the assessee is engaged in the manufacturing business as well as in the business of leasing. Therefore the condition imposed under section 32(iia) of the Act gets fulfilled for claiming the additional depreciation. While claiming the deduction under Section 32(1)(iia) of the Income-tax Act setting up wind-mill has nothing to do with the power industry and what is required to be satisfied in order to claim additional depreciation is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing. Considering relevant provisions of Section 32(1)(iia) which was prevailing at the relevant time, i.e. during the year under consideration, it cannot be said that the ITAT by applying the ratio of decision of VTM Ltd. [ 2009 (9) TMI 35 - MADRAS HIGH COURT] and Hi Tech Arai Ltd. [ 2009 (9) TMI 60 - MADRAS HIGH COURT] has committed any error in deleting the additionon account of disallowance of additional depreciation of Wind Electric Generator. Disallowance on account of unutilized CENVAT credit - appellant has been following exclusive method for accounting CENVAT as against inclusive method mandated under section 145A - HELD THAT:- T he identical issue has already been decided in the identical facts and circumstances of the case in the matter of CIT-vs-Bell Granito Ceramica Ltd. [ 2012 (6) TMI 879 - GUJARAT HIGH COURT] by the Hon ble Jurisdictional High Court in favour of the assessee as held under the scheme of the excise duty, the assessee incurs liability to pay excise duty only upon both the events taking place, namely manufacture of excisable goods and removal of excisable goods; excise duty is not therefore includible in the valuation of closing stock. We find that the issue is squarely covered in favour of the assessee and against the Revenue by the decision of Hon'ble jurisdictional High Court in Narmada Chematur Petrochemicals Ltd. [ 2010 (8) TMI 263 - GUJARAT HIGH COURT]. - Decided against revenue Disallowance u/s 14A r.w.r. 8D - no claim for expenditure - HELD THAT:- As perused the relevant materials available on record and also the judgment passed by the Jurisdictional High Court in the matter of Corrtech Energy Pvt. Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] . It is settled principle of law that when there is no claim for expenditure addition of notional disallowance expenditure is all the more illogical and unsustainable in the eye of law, particularly when the AO has not been able to prove that any expense has been made to earn the income nor has disproved the claim of the appellant in this regard. - Decided in favour of assessee. 2019 (5) TMI 539 Assessment u/s 153A - disallowance of short payment of TDS u/s. 40(a)(ia) - proof of incriminating material as found against the assessee in search - two searches happened - HELD THAT:- The second search happened on 18.02.2013, undisputedly no assessment was pending before the AO and therefore this assessment year is an unabated assessment. Settled position of law is that no addition can be made for an unabated assessment unless incriminating material is unearthed during search qua the assessment year under consideration. Our aforesaid finding is fortified by the decision of KABUL CHAWLA [ 2015 (9) TMI 80 - DELHI HIGH COURT] Thus in the absence of any incriminating materials, the completed assessment cannot be disturbed Disallowance u/s 40(a)(ia) - HELD THAT:- Only information on the basis of which the addition was made was ITS data for the FY 2006-07 and nothing else. The said ITS data for the relevant year was available to the AO even at the time of original assessment dated 31.12.2009 and therefore it was not a case that any new and incriminating material was unearthed as a consequence of the second search carried out against the assessee u/s 132 in February 2013. We therefore find merit in the contention of the Ld. AR that no incriminating material was found against the assessee which was unearthed qua this assessment year for making the impugned disallowance - Decided in favour of assessee. Addition u/s 68 - whether there was any incriminating materials unearthed during the search qua the assessment year ? - HELD THAT:- no evidence was brought on record to prove that the cash deposited in bank accounts of entities forming part of this trail either belonged to the assessee company or originated from the assessee. Moreover, no material whatsoever was brought on record to demonstrate that the alleged cash deposit made in the bank accounts of third parties actually belonged to the assessee company or was provided by the assessee company. No opportunity to cross-examine any of these entities was provided to the assessee. The bank statements based on which the cash trail was prepared were part of the disclosed documents/accounts and therefore cannot be held as incriminating material. Thus, we note that during the search and seizure operation conducted u/s. 132of the Act, no incriminating documents/papers in respect to additions made were seized or found. We therefore find merit in the AR s argument that the addition of ₹ 90,00,000/- [reduced to ₹ 70,00,000/- after verification] made u/s 68 in impugned order was without the aid of any incriminating material and therefore unsustainable in law. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - HELD THAT:- We also find merit in the primary contention of the assessee that such disallowance was legally untenable as the AO was unable to correlate the same with any incriminating document or evidence found in the course of search. We therefore hold that the impugned addition was both legally as well as factually unsustainable. Addition on account of undisclosed interest on deposits - HELD THAT:- Issue involved stands in favour of the assessee in view of the factual findings given by the AO in his order u/s 251 of the Act. We also find merit in the primary contention of the assessee that such addition was legally untenable as the AO was unable to correlate the same with any incriminating document or evidence found in the course of search. We therefore hold that the impugned addition was both legally as well as factually unsustainable. - Decided in favour of assessee. Disallowance of loss on sale of fixed assets - HELD THAT:- The impugned order of the CIT(A) that in arriving at the returned income the assessee had suomoto added back the loss on sale of fixed assets which was added back again by the AO while passing the order u/s 153A. Taking note of the double disallowance, the CIT(A) directed the AO to delete the same. At the time of hearing the Ld. CIT, DR could not controvert this factual finding of the CIT(A) and in that view of the matter we find no reason to interfere with the order of the CIT(A). This ground therefore stands dismissed. Addition u/s 68 - receipt of share application monies from four bodies corporate which inter alia included sum of ₹ 64,45,11,500/- received from M/s. Mundat Securities Services Pvt. Ltd. - AO disbelieved the genuineness of the transaction principally because in his opinion payer of the application monies was not a group entity belonging to the promoter - HELD THAT:- The AO s action to single out the subscription monies received from M/s. Mundat Securities Services Pvt. Ltd for differential treatment. For the reasons discussed in detail in the foregoing therefore we also do not find any merit in the Ld. DR s pleading to the effect that the matter needs to be restored to the file of the AO for decision afresh. This is particularly in view of the fact that in the orders u/s 153C/143(3), the AO of M/s. Mundat Securities Services Pvt. Ltd had accepted the genuineness of the transaction and therefore it was not open for the same AO to question the genuineness of the receipt of monies in the hands of the appellant. We therefore direct the AO to delete the addition - Decided in favour of assessee. Addition of commission paid on obtaining accommodation entries in the form of share capital. - HELD THAT:- The impugned addition was made by the AO purely on suspicion and there was no material available on record to justify the same. We note that the AO was unable to correlate them with any incriminating document or evidence found in the course of search. Instead the addition was made purely on conjecture. We note that there is nothing on record to suggest that such expenditure was actually incurred by the assessee. The impugned addition is therefore deleted - Decided in favour of assessee. 2019 (5) TMI 538 Reopening of assessment - disallowance of deduction/exemption claimed u/s 10B and 80HHE - HELD THAT:- It is not in dispute that the assessing officer has examined the claim of deduction under section 80HHE / 10A of the Act in the original assessment proceedings. In fact, the assessing officer had made adjustments to the computation of deduction under section 80HHE / 10A of the Act, as claimed by the appellant. Further, clause (d) of Explanation to section 80HHE of the Act providing that profit of branch/office of the assessee situated outside India, is to be excluded from the profit of the business as also Explanation to sub-section (1) of section 80HHE of the Act with regard to the on-site software services, did exist in the statute when the original assessment proceedings were in progress before the assessing officer. Therefore, it cannot be anybody s case that the assessing officer was not aware of the factual and legal position with regard to the claim of such deduction by the appellant under section 80HHE and 10A of the Act in respect of profit of the overseas branches, which were contended to be profit derived from on-site software services. In fact, it is noted from the statement of profitability of the overseas branches filed with the return of income that the fact that profit of such branches was on account of on-site software services rendered by the appellant, was clearly evident to the AO in the course of the original assessment proceedings before him. We are not inclined to interfere with the findings of the ld. CIT(A) on the ground of re assessment having been made on the basis of change of opinion. Accordingly, the ld. CIT(A) has rightly quashed the reassessment made by the AO being bad in law ab initio. As a result, the appeal of the Revenue deserves to be dismissed on this score only. Since, we have supported the quashing of re-assessment proceedings being invalid, we need not to enter into other grounds of Revenue s appeal as well as the ground of assessee s cross objection on merits of additions. Addition u/s. 10A and 80HHE - DR held that assessee has not provided any technical services. Therefore, expenditure incurred in foreign exchange need not to be reduced from the export turnover or from total turnover - items on which the higher depreciation was claimed were in the nature of electric installation not eligible for depreciation more than 15% - HELD THAT:- No justification in allocating a particular percentage of software development charges towards expenses alleged to have been incurred for providing technical services. We allow this ground of appeal raised by the assessee and reject the ground of appeal raised by the revenue. We direct the assessing officer not to exclude any amount from software development charges under the garb of expenses incurred, towards providing consultancy services. He will not exclude these amounts from the export turnover while computing the deduction admissible under section 10A The overseas branches of the appellant merely act as conduit for rendering of the onsite software development services in relation to software development projects undertaken by the various undertakings located in India. The aforesaid profits of the branches do satisfy the test laid down by the Hon ble Delhi High Court in the case of Interra Software India Pvt. Ltd. [ 2010 (12) TMI 142 - DELHI HIGH COURT] in as much as the overseas branches of the appellant are acting merely as conduit for rendering on site services. The profits of such branches being essentially in the nature of profits derived by the appellant from onsite software development services, is apparently covered by Explanation 3 of Section 10A of the Act and would accordingly qualify for deduction under that Section - Decided against revenue 2019 (5) TMI 537 Long Term Capital Gain - Transfer of the possessory rights of the property under consideration - co-ownership of the property by Sh. Kishore B Dalal and Sh. Ashok Bhatia/his legal heirs - Transfer of a property on the basis of general power of attorneys - portion of property of Sh. Kishore B Dalal was also in possession of legal heirs of Late Sh. Ashok Bhatia - The legal heirs of Late Sh. Ashok Bhatia viz. the assessee i.e Sh. Prem Ashok Bhatia, Smt. Kavita Ashok Bhatia (widow) and Sh. Gaurav Bhatia (son), had in lieu of the aforesaid consideration of ₹ 5,85,00,000/- handed over the actual and physical possession of the plot of land therein described in the third schedule forming part of the registered conveyance deed to the aforementioned purchasers - capital gain OR income from other sources HELD THAT:- As regards the extract of the land records as per the land revenue records and the title search report of Mr. M.S Rodrigues, Advocate, we are of the considered view that as the said documents only affirm the undisputed fact of co-ownership of the property by Sh. Kishore B Dalal and Sh. Ashok Bhatia/his legal heirs, therefore, the same would in no way assist for either supporting or dislodging the claim of the assessee that the actual physical possession of the property under consideration had remained with Sh. Ashok Bhatia and thereafter with his legal heirs. Clause 19 of the registered conveyance deed categorically evidences the fact that the assessee along with the other two legal heirs of late Sh. Ashok Bhatia viz. Smt. Kavita Bhatia (mother of the assessee) and Sh. Gaurav Bhatia (brother of the assessee) had in equal shares received an amount aggregating to ₹ 5,85,00,000/- in lieu of handing over the actual and physical possession of the property under consideration to the purchasers who had agreed to pay the said amount to the legal heirs after obtaining the consent of the vendor i.e. Sh. Kishore B Dalal. In our considered view, it would be relevant to cull out Clause 19 of the registered conveyance deed which contemplates the reason for making of the payment of ₹ 5,85,00,000/- by the purchasers of the property to the legal heirs of late Sh. Ashok Bhatia. As was discernible from the registered conveyance deed, assessee who as acknowledged by all the concerned parties held a possessory right in the property under consideration had received the amount of ₹ 1,95,00,000/- on account of transfer of such rights or interest in the property under consideration, therefore, the same was rightly offered for tax by him under the head Capital Gains . In the backdrop of our aforesaid observations, we thus not finding any infirmity in the order passed by the CIT(A) who had rightly arrived at the aforesaid conclusion after deliberating on the facts of the case and distinguishing the judicial pronouncements relied upon by the A.O, uphold the same. - Decided against revenue 2019 (5) TMI 536 TP Adjustment - disallowance u/s 10A(7) - Adjustment had to be made while working out the eligible profit for the purpose of computation of deduction u/s 10A of the Act of Pune Unit-I? - margins shown by the assessee on its transactions with associate enterprises at 26.40% were held to be higher than mean margins of comparables at 12.68%, while benchmarking the arm s length price of international transactions - AO was of the view that applying the provisions of section 80IA(10) r.w.s. 10A(7) of the Act, the profits earned by the assessee were more than ordinary profits - HELD THAT:- As decided in assessee's own case [ 2017 (12) TMI 1465 - ITAT PUNE] The issue arising in the present appeal is identical to the issue before the Tribunal in the case of M/s. Honeywell Automation India Ltd. Vs. DCIT [ 2015 (3) TMI 494 - ITAT PUNE] and following the same parity of reasoning, we find no merit in the orders of authorities below in restricting the claim of deduction u/s 10A/10B of the Act and held that there is no merit in re-computing the deduction under section 10A of unit 1 of Pune in accordance with the provisions of section 10A(7). Accordingly, we reverse the same and delete addition. - Decided in favour of assessee. Disallowance u/s 14A while computing book profits u/s 115JB - MAT computation - HELD THAT:- Issue raised is squarely covered by the ratio laid down by the Special Bench of Delhi Tribunal in ACIT Vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein the issue was that whether the amount of expenditure relatable to exempt income as contemplated in clause (f) to Explanation 1 to section 115JB(2) could be arrived at by resorting to provisions of section 14A. The Special Bench held that section 115JB is a separate code in itself and Explanation 1(f) of section 115JB requires disallowance of actual expenditure incurred to earn exempt income. The amount derived by using formula as per Rule 8D of the Income Tax Rules, 1962 was not required to be disallowed as the same was not actual expenditure incurred - claim of assessee is allowed 2019 (5) TMI 535 Income accrued in India - consideration received by a non-resident entity for the licensing of copyrighted article/software - royalty under Article 12(3) of the India-Ireland DTAA - existence of PE in India - effect of retrospective amendment made in the provisions of section 9(1)(vi) - HELD THAT:- We note that terms of the definition of 'royalty' provided in Article 12, ordinarily the receipt for sale of software shall be treated as 'royalty' only if it is for the use of a 'copyright'. Given the meaning of the term 'copyright' as has been discussed above in the Copyright Act, 1957, we note that the revenue accruing from supply of software in India is not chargeable to tax in India based on reading of the Article 12(3) of the India-Ireland DTAA. The amount received by the assessee towards sale of software is on account of sale of 'copyrighted article' and not on transfer of any 'copyright right'. The right to use any copyright in the software was never transferred by the company in favor of the Indian customers. Hence, the said sale proceeds cannot be characterized as 'Royalty' as per Article 12 of the India- Ireland DTAA, as the same is towards the use of 'copyrighted article' and not towards the use of 'copyright'. The sale proceeds is also not towards the use of or right to use any industrial, commercial or scientific equipment, as per the provisions of the India-Ireland DTAA. Further, as per the Licensing Agreement entered into between the assessee and its Indian customers, it is apparent that the assessee has not given any right to the customers to use the copyright in the software. The copy of Licensing Agreement is enclosed at pages 16 to 22 of the paper-book vide para 3(b) of the agreement. Payments for any license for simple use of computer software i.e., where the end-user acquires only the right to run the programme, whether on a single computer or on the licensee's computer network, and does not acquire any rights to use the copyright in the programme may not be construed as 'royalties'. Therefore, we note that since assessee`s case is covered by beneficial provisions of the India-Ireland DTAA, hence the retrospective amendment made in the provisions of section 9(1)(vi), which provides that royalty would include consideration for transfer of all or any rights in respect of any right property, (including granting of software)etc, will not override the provisions of the India-Ireland DTAA. We note that the retrospective amendment made in the Act cannot override, the provision of Treaty, finds support from the principles laid down in the case of Director of Income vs Nokia Networks OY [ 2012 (9) TMI 409 - DELHI HIGH COURT] and CIT Vs Siemens Aktiongesellschaft [ 2008 (11) TMI 74 - BOMBAY HIGH COURT] . The amount received by the assessee towards sale of software is on account of sale of 'copyrighted article' and not on transfer of any 'copyright right'. As we have noted above that the right to use any copyright in the software was never transferred by the company in favor of the Indian customers. Hence, the said sale proceeds cannot be characterized as 'Royalty' as per Article 12 of the India-Ireland DTAA. Therefore, we delete the addition. 2019 (5) TMI 534 Disallowance of deduction u/s 54F - whether the new asset is purchased or constructed? - as per AO assessee has not purchased the house in the present case but has made payment installment to the builder for construction of the property thus flat cannot be considered as a new asset - whether the acquisition of an apartment under a builders buyers agreement wherein the builder gets construction done in a phased manner and the payments are linked to construction are a case of purchase of a new asset or construction of new asset ? - HELD THAT:- As decided in KULDEEP SINGH [ 2014 (8) TMI 463 - DELHI HIGH COURT] acquisition of an apartment under a builders buyers agreement wherein the builder gets construction done in a phased manner and the payments are linked to construction is a case of purchase and not construction of new asset. Whether the construction of the house property if commenced before the date of the sale of the original asset whether the assessee is entitled to deduction u/s 54F of the income tax act or not? - As decided in BHARTI MISHRA [ 2014 (1) TMI 446 - DELHI HIGH COURT eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally - Section 54F is a beneficial provision and is applicable to an assessee when the old capital asset is replaced by a new capital asset in form of a residential house - Once an assessee falls within the ambit of a beneficial provision, then the said provision should be liberally interpreted In the present case assessee has purchased a house property i.e. a new asset and is entitled to exemption u/s 54F of the act despite the fact that construction activities of the purchase of the new house has started before the date of sale of the original asset which resulted into capital gain chargeable to tax in the hands of the assessee. Accordingly we reverse the order of the lower authorities and direct the assessing officer to grant deduction under section 54F - Decided against Revenue. 2019 (5) TMI 533 TP adjustments in respect of sale of finished goods and AMP activity - selection of MAM - assessee selected TNMM as the MAM for determination of the ALP of the international transactions with its AEs - issued a show cause notice to the assessee proposing to substitute CPM as the MAM in place of TNMM adopted by the assessee - HELD THAT:- TPO has accepted the fact that in respect of sale of products in India, the assessee has undertaken marketing, selling and administrative functions and the assessee has not performed any such functions in respect of sales to AEs. The number of differences and adjustments to be carried out for comparability purposes are many in number and therefore, where differences are many, CPM cannot be considered as the MAM. In this view of the matter and following the decision of the Co-ordinate Bench of this Tribunal in the assessee s own case for Assessment Year 2011-12 [ 2018 (7) TMI 1964 - ITAT BANGALORE] we hold that TNMM is the MAM. Under the said method, the assessee has earned net margin of 13.39% from exports to its AEs whereas the net loss suffered by the assessee in respect of the personal care division in the domestic segment is (-) 10.16%. As the net margins from the assessee s exports to its AEs is higher when compared to the result of its margins in respect of transactions in the personal care division in the domestic segment, the price of the sale of finished goods are at arms length. In this factual view of the matter, the TP Adjustment made by the TPO by adopting CPM as the MAM is accordingly deleted TP Adjustment on AMP Expenditure - HELD THAT:- Findings of the Co-ordinate Bench in the assessee s own case for Assessment Year 2011-12 [ 2018 (7) TMI 1964 - ITAT BANGALORE] are squarely applicable for the year under consideration as the facts, basis and reasons for the TPO making the AMP adjustment is identical to that of the earlier year, and, therefore, respectfully following the same, we delete the TP Adjustment of ₹ 26,61,11,989/- made on account of AMP expenditure. Further, as the net margin from the assessee s exports to AEs at 13.39% is higher as compared the net loss of (-)10.16% from the personal care division in the domestic segment, the assessee s international transactions with its AEs are at arms length and therefore no separate adjustment for AMP expenditure is warranted. Consequently, ground No.9 of the assessee s appeal is allowed. Disallowance of interest expenditure - revenue or capital expenditure - AO disallowed the said expenditure claimed by the assessee for the reason that the same relates to the period prior to the date on which the fixed assets / installations were put to use - The AO, however, allowed depreciation on the interest capitalized - DRP uphold on the grounds that it was capital in nature - HELD THAT:- The assessee is engaged in the business of manufacture and sale of ayurvedic medicaments and preparations, consumer or personal care products and animal health care products. As per the material on record, no other business is carried on by the assessee. The addition to the building is a part of the already existing factory building located at Makali, Bangalore which included the following viz., (i) new raw material stores (ii) new finished goods stores and (iii) new quality assurance block. This is in addition to the already existing building and ostensibly the same products manufactured at the existing facility were produced at the new facility. Therefore, in our considered view this was an expansion of the existing business - Disallowance of interest expenditure by the AO u/s 36(1)(iii) is untenable and is accordingly deleted. - Decided in favour of assessee. Charging of interest under section 234B - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B 2019 (5) TMI 532 Validity of order passed u/s 143(3) r.w.s. 92CA without passing draft order of assessment - eligibility of assessee - effect of provisions of section 144C - whether once the AO had issued the order of assessment u/s 143(3) r.w.s. 92CA it is open to Revenue to contend that the said assessment order already issued is only a draft assessment order? - HELD THAT:- There has been an order u/s 92CA of the Act passed by the TPO and therefore it is amply clear that the assessee is an eligible assessee entitled to receive a draft order of assessment. In these circumstances, the issuance of a draft order of assessment is a sine-qua-non before the AO can pass the regular / final order of assessment u/s 143(3) r.w.s. 144C . Once a regular order of assessment dated 24.03.2016 for Assessment Year 2012-13 was passed, passing of one more order on 24.05.2016 is legally not tenable. In view of the above factual matrix of the case, we have no hesitation in holding that the order of assessment dated 24.03.2016 is the regular / final order of assessment for Assessment Year 2012-13, in form and substance and shall be treated as such. In regard to the question of what is the impact of an assessment order being directly issued in a situation in which the assessee is an eligible assessee who ought to have been issued / served with a draft order of assessment, as per the requirements of the provisions of section 144C(1) r.w.s. 144C(15)(b), we find that this issue has been considered and decided in several judicial pronouncements cited by the assessee. Where there is an omission on the part of the AO to follow the mandatory procedures laid down and prescribed by the Act, such an omission cannot be termed as a mere procedural irregularity and is not curable. The principles enunciated in the above judicial pronouncements have been followed by Tribunals in decisions cited by the assessee. We are also of the considered view that the above principles apply squarely to the facts of the case on hand. In the case on hand, the assessee was entitled to receive a draft order of assessment, but it is absolutely clear from the unimpeachable facts on record that the AO did not follow the procedure mandated in the Act, thereby rendering the impugned order dated 24.03.2016 for Assessment Year 2012-13 invalid. Issue of the subsequent order dated 24.05.2016 cannot cure the violation of the statutory mandate laid down in the Act in this regard. See VIJAY TELEVISION (P.) LTD. VERSUS DISPUTE RESOLUTION PANEL, CHENNAI [ 2014 (6) TMI 540 - MADRAS HIGH COURT] and ASSTT. COMMNR. OF INCOME TAX VERSUS M/S. ZUARI CEMENT LTD. [ 2013 (9) TMI 1167 - SC ORDER] . Thus we quash the impugned order of assessment dated 24.03.2016 for Assessment Year 2012-13 by holding it to be a legal nullity. - Decided in favour of assessee. 2019 (5) TMI 531 Addition u/s 40A - cash payments in question exceeded the limit prescribed - AO completed assessment u/s 144 - commercial expediency - HELD THAT:- As examined the cash book and ledger account and cross-checked the same with the narrations of the accountant of the assessee that each payment, on each day to each person was less than ₹ 20,000/- in cash. While doing so, he has not made any adverse comment on the claim of the assessee. A perusal of the copy of the ledger account demonstrates the payments made by cash to each of the parties on any single day has not exceeded ₹ 20,000/-. There were both purchases and sales from each of the parties and it was only the difference that was settled in cash on various dates. This copy of the ledger account and the various evidences, such as voucher copies filed were not disputed by the ld. D/R. The factual claims of the assessee supported by the copy of the ledger account etc. could not be controverted by the ld. D/R. The Assessing Officer has not conducted any third party verification. He has given factually incorrect figures in his remand report. Under these circumstances, we are of the opinion that there is no violation of Section 40A(3). As decided in M/S A DAGA ROYAL ARTS VERSUS ITO, WARD-2 (2) , JAIPUR [ 2018 (6) TMI 1240 - ITAT JAIPUR] he consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, no disallowance is called for by invoking the provisions of section 40A(3) - Decided in favour of assessee. 2019 (5) TMI 530 Addition u/s 40(a)(i) - TDS u/s 195 - sale commission paid to the non-residents for the services provided outside India - payment of 'Fee for Technical Services' (FTS) or interest on royalty, - proof of make available any technical knowledge, experience, skill, know-how or processes or consists of the development and transfer of technical plan or a technical design - Permanent Establishment in India or not? - India- Belgium India USA DTAA - HELD THAT:- On application of the settled law to the facts involved in this matter, the irresistible inference that flows is that the commission received by the foreign sales agents is not taxable in India and consequently, the assessee is not under any obligation to deduct TDS, and, therefore, Section 195 has no application to the facts of the case and consequently the disallowance made in this matter cannot be sustained As represented by the assessee that an affidavit showing that neither the assessee nor any of its directors/associated enterprises had any interest in the ownership or management of the agent namely M/s Cee-Jan Beevers and/or his associated enterprises namely M/s Sahasra Europe and the fact that neither he nor his enterprises had Permanent Establishment (PE) in India. This assertion of the assessee was accepted by the learned Assessing Officer in these three years and also was acted upon.M/s Cee-Jan Beevers is a non-resident Indian and resident of Belgium whereas M/s MK group LLC is a resident of USA. In either case the payment of commission would not be 'Fee for Technical Services' (FTS) since such services did not make available any technical knowledge, experience, skill, know-how or processes or consists of the development and transfer of technical plan or a technical design. We find that the services rendered by two foreign entities are outside India and in respect of the sales effected by them, and at the same time neither of these entities had any permanent establishment in India nor does the assessee or its directors/associated enterprises had any interest in the ownership or management of these entities more particularly M/s Sahasra Europe. We, therefore, allow the grounds of appeal of the assessee. 2019 (5) TMI 529 Adjustment to book profit u/s 115JB for calculation of MAT - share of the assessee in the income of joint venture - scope of amendment in Section 115JB - share in the income of AOP or BOI - HELD THAT:- The share of a partner in the total income of the firm is exempt as per provisions of Section 10(2A) and consequently is excluded from the total income of the partner and therefore, the said share shall be excluded while computing the book profit U/s 115JB as envisaged in clause (ii) of explanation (1) to the said Section. The reference in second proviso to Section 86 is made to the association of persons or body of individuals whose total income is exempt U/s 10 of the Act and not otherwise. Once the share in the joint venture which is treated as share in the association of persons is not hit by the second proviso to Section 86 then the same is akin the share from the partnership firm. Thus to bring it to the parity of share in partnership firm, the amendment in Section 115JB vide Finance Act, 2015 was brought by inserting clause (iic) w.e.f. 1/4/2016. Therefore, the purpose and intention to bring the amendment is to remove the mischief or hardship of the assessee on MAT in respect of the income being share in the association of persons or body of individuals which is otherwise not subject to income tax in accordance with the provisions of Section 86 of the Act. As decided in M/S GOLDGERG FINANCE PVT. LTD. VERSUS ACIT- CIRCLE 3, THANE [ 2017 (2) TMI 643 - ITAT MUMBAI] the mischief which has been sought to be remedied is that the share income of the member of the AOP which was not taxable in terms of section 86 was getting taxed under MAT while computing the book profit. This was also never the purpose of section 115JB to tax any income or receipts which is otherwise not taxable under the Act. If the intention of legislature was always that income which is not taxable under the normal provisions of the Act should not be brought to tax under MAT also, then it has to be interpreted that such a benefit has to be given to all and where the income is otherwise not taxable under the Act cannot be brought to be taxed under MAT. Therefore, any remedy brought by an amendment to remove the disparity and curb the mischief has to be reckoned as curative in nature and hence, is to be held retrospectively. Accordingly, this issue is allowed in favour of the assessee. 2019 (5) TMI 528 Action of the CIT(A) in treating the return of TDS filed by the assessee as non est - Fee u/s.234E for delayed filing of return of TDS - Fee for default in furnishing statements - CIT(Appeals) accepted the claim of the assessee and held fee u/s. 234E cannot be charged and cancelled the intimation u/s. 200A r.w.s. 154 of the Act in so far as it relates to levy of fee u/s.234E - CIT(A) using power of enhancement declare TDS return non est in law because it was filed beyond the time prescribed u/s. 200(3) - HELD THAT:- A return of TDS only evidences payment of taxes which are withheld by a payee who, under the provisions of the Act, is bound to deduct tax at source. Declaring a return of TDS as non est, cannot have the effect of treating the payee as an Assessee in default and expose him to other consequences under the Act as an Assessee in default. Section 234E(3) lays down that the fee to be paid u/s. 234E shall be paid before the return of TDS is filed u/s. 200(3). This provision, in our view, does not confer power on the CIT(A) to declare the return of TDS as non est in law in a case where the return of TDS is filed without payment of fee u/s.234E of the Act. Besides the above, in the present case, the levy of fee u/s. 234E has already been deleted by the CIT(A) and therefore these provisions cannot be of any help to the conclusions of the CIT(Appeals) that the return filed without payment of fee u/s. 234E is invalid and can be declared as non est in law. As far as the power of enhancement under Explanation to section 251(1) which was relied on by the ld. DR is concerned, the Explanation is only with regard to clauses (a), (aa) and (b) of section 251(1) and is not applicable to clause (c). CIT(Appeals) in the cases to which the said clause applies can pass such orders as he thinks fit, but that power is circumscribed by the words in the appeal . Therefore, the CIT(Appeals) cannot travel beyond the subject matter of the appeal, which in the present case is as to, whether fee u/s. 234E can be levied or not; and not the question, whether the return of TDS filed by the assessee is non est in law? We are, therefore, of the view that the CIT(Appeals) had no power in the appeal in the present case to declare the return of TDS filed by the assessee as non est in law. In that view of the matter, we are of the view that the conclusion of the CIT(Appeals) holding that return of TDS filed by the assessee is non est in law is not valid in the eyes of law and the said direction is directed to be deleted and the order of the CIT(A) to this extent is held to be bad in law. - Decided in favour of assessee. 2019 (5) TMI 527 Addition u/s 68 - bogus short term capital gain - disallowance of claim for short term capital loss - HELD THAT:- Once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. Since the purchase and sale transactions are supported and evidenced by Bills, Contract Notes, Demat statements and bank statements etc., and when the transactions of purchase of shares were accepted by the ld AO in earlier years, the same could not be treated as bogus simply on the basis of some reports of the Investigation Wing and/or the orders of SEBI and/or the statements of third parties. - Decided in favour of assessee. 2019 (5) TMI 526 Deduction u/s 80IB [10] - assessee developer of the Housing Project - AO disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee - HC held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction u/s 80IB(10) - HELD THAT:- SLP dismissed. 2019 (5) TMI 525 Revision u/s 263 - patent error in the assessment order passed by the AO u/s 143(3) r.w.s. 153A allowing legally wrong claim of additional depreciation - Tribunal was justified in law in quashing the order passed by the Pr.CIT u/s 263 - HELD THAT:- Special leave petition is dismissed keeping the question of law open Customs 2019 (5) TMI 524 Claim of refund - Valuation of imported goods - Earlier, Commissioner of Customs (Appeals) allowed the appeal of the assessee directing to assess the goods at the declared value - HELD THAT:- It is a undisputed fact that the appellant was asked to pay the amount of ₹ 3,23,433/- by the Customs Officer as differential duty and the same was paid vide Challan No. CM 133/07.05.2015 which is also placed on record. Further, after the payment of ₹ 3,23,433/- made by the appellant, he has written a letter dated 07.05.2015 to the Department explaining the reason for different modes of payment and the said letter has not been considered by both the authorities while deciding the case of the appellant. Further, the appellant also produced the Chartered Accountant certificate certifying the payment of the said amount as security deposit in respect of the Bill of Entry but the same has also not been considered. Further, both the authorities have not given any valid reason for retaining the said amount. The orders passed by both the authorities are silent with regard to appropriation of the said amount - The officers of the Department are duty bound to explain as to under which Head, the said amount has been allocated but no reason, whatsoever, has been given in both the orders as to the collection, appropriation, utilization of the amount collected from the appellant. The impugned order rejecting refund of the amount of ₹ 3,23,433/- is not sustainable in law - appeal allowed - decided in favor of appellant. 2019 (5) TMI 523 Customs Broker License - Right of revenue to file an appeal - appeal against the proceedings dropped by the Commissioner of Customs in the impugned order in terms of Regulation 21 of Customs Brokers Licensing Regulations, 2013 - Whether an appeal filed by the Revenue is maintainable under Section 129A of the Customs Act against the Order of Commissioner of Customs passed under Customs Brokers Licensing Regulations or not? HELD THAT:- As per Section 146 (2) of the Customs Act, 1962, the Legislature have empowered the broad the procedure of appeal to be filed against an order of suspension of revocation of license. Admittedly, as per the said provisions, an appeal can be filed before this Tribunal against the revocation of Customs Broker License and it is not the case of revocation of suspension of Customs Broker Licenses. In fact, the proceedings initiated against the customs broker has been dropped by the impugned order by the Commissioner of Customs. An identical issue has been examined by this Tribunal in the case of CCE, (Import General), New Delhi vs. PSB Logistics Pvt. Ltd. [ 2017 (11) TMI 553 - CESTAT NEW DELHI ], wherein this Tribunal has held that Revenue cannot file appeal against the order of the Commissioner issued under CHALR, 2004. The appeal is not maintainable against the impugned order before this Tribunal - Appeal dismissed. Corporate Laws 2019 (5) TMI 522 Applicability and construction of Section 396 of the Companies Act, 1956 - compulsory amalgamation of companies by a Central Government order - HELD THAT:- The Central Government s satisfaction must be as to the conditions precedent mentioned in the Section as correctly understood in law, and must be based on facts that have been gathered by the Central Government to show that the conditions precedent exist when the order of the Central Government is made. There must be facts on which a reasonable body of persons properly instructed in law may hold that it is essential in public interest to amalgamate two or more companies. The formation of satisfaction cannot be on irrelevant or imaginary grounds, as that would vitiate the exercise of power. In the context of compulsory amalgamation of two or more companies, the expression public interest would mean the welfare of the public or the interest of society as a whole, as contrasted with the selfish interest of a group of private individuals. Thus, public interest may have regard to the interest of production of goods or services essential to the nation so that they may contribute to the nation s welfare and progress, and in so doing, may also provide much needed employment. Public interest in this context would, therefore, mean the combining of resources of two or more companies so as to impact production and consumption of goods and services and employment of persons relatable thereto for the general benefit of the community. Conversely, any action that impedes promotion of industry or obstructs growth which is in national or public interest would run counter to public interest as mentioned in this Section. It is the Central Government that has to be satisfied that its order is in public interest and such satisfaction must, therefore, be of the Central Government itself and must, therefore, appear from the order itself. All these valiant attempts made to sustain such order must be rejected. Reading of Section 396(3), (3A), and (4) (aa) that every member or creditor of each of the companies before amalgamation shall have, as nearly as may be, the same interest in or rights against the company resulting from the amalgamation as he had in the original company. To the extent to which the interest or rights of such member or creditor are less than his interest or rights against the original company, post amalgamation, he shall be entitled to compensation which is to be assessed. Post assessment, if such member or creditor is aggrieved, he may prefer an appeal to the appellate authority under sub-section (3A). Under sub-section (4)(aa), no order of amalgamation can be made unless the time for preferring an appeal under sub-section (3A) has expired, or where any such appeal has been preferred, the appeal has been finally disposed of. The order dated 12.02.2016 is ultra vires Section 396 of the Companies Act, and violative of Article 14 of the Constitution of India. 2019 (5) TMI 521 Transfer of shares - whether the shares were transferred in the first place? - whether the Respondents could rightly claim that all due procedure under the Companies Act was followed for omitting the name of OP1 and entering the name of OR2 in the register of members? HELD THAT:- We are unable to accept the defence of the Appellants in the Company Petition that OP1 had transferred his shares to the Appellant No.1. The Appellants - original Respondents 2 and 3 first took defence to claim that in alleged normal and general practice of the Company, the shares were transferred; then subsequently they took a defence of handing over of shares with transfer forms to claim that there was gift (without referring to any document); and yet subsequently, took a stand that there was also a gift deed executed. They then conveniently take a stand of loss of records, hiding behind a vague FIR filed when the heat from OP1 increased. With such shifting stands, the contesting Respondents Appellants failed to convince the learned NCLT and have failed to convince us that OP1 gifted the shares and that due procedures under the Companies Act have been followed regarding change in the Register of members. No document worth the name showing compliances of the Companies Act effecting change in the Register of Members, has been brought before us and the defence that there was a gift, is also not inspiring confidence. Prima facie, the Appellants failed to prove such defence of gift before NCLT and us that the Appellants have justifiable reasons for their action to omit the name of the original Petitioners from the Register of members and to add that of Appellant No.1 - Smiti Golyan. The learned NCLT rightly decided the matter - appeal dismissed. Insolvency & Bankruptcy 2019 (5) TMI 520 Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - declaration of moratorium - appointment of Interim Resolution Professional - HELD THAT:- The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Bench is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt as claimed by the Operational Creditor. Therefore, the Application is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. The moratorium is declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I B Code, 2016. 2019 (5) TMI 519 Initiation of Corporate Insolvency Resolution Process - default in repayment of loan - Corporate Debtor - HELD THAT:- It is seen that no record or factual material or any document/letters evidencing the existence of a dispute could be found, as claimed by the CD. The statements which have been made in the counter and additional counter appear to be without any basis as the CD has not chosen to file any documentary evidence rebutting the statement of accounts submitted by the FC. On perusal of the process file, it is also seen that when this matter came up for hearing on 01.02.2019, 06.02.2019, 13.02.2019 and 22.02.2019, the CD has stated that they are exploring the possibility of a settlement and that settlement talks are in progress. Since no settlement was forthcoming between the parties, this Tribunal reserved its Orders on 27.02.2019. Petition is admitted. 2019 (5) TMI 518 Initiation of Corporate Insolvency Resolution Process - Submission and approval of the Resolution Plan - Corporate Debtor - HELD THAT:- On perusal of the entire Resolution Plan, we, hereby notice that though there are/were heavy haircut, however, the Resolution Plan provides for payment of insolvency resolution process costs in the manner specified by the Code, in priority to the repayment of the other debts of the Corporate Debtor and also provided for the payment of debts of operational creditors as per the waterfall mechanism mentioned under section 53 of the Code. The present application i.e. IA No 259 of 2018 has been filed for approval of the Resolution Plan under section 30(6) read with section 31(1) of the Code (as amended) read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (as amended for submission and approval of Resolution Plan submitted by JM Financial Reconstruction Company Limited, JMFARAC - March, 2018 - Trust and Reliance Industries Limited in respect of the Corporate Debtor - Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have an edge over the others. The preamble of the I B Code aims to promote resolution over liquidation. The purpose of resolution is maximization of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximization of value for a 'stakeholder' or 'assets of a stakeholder' such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is 'resolution'. The second objective is 'maximization of the value of assets of the 'Corporate Debtor' and third objective is 'promoting entrepreneurship, availability of credit and balancing the interests'. This objective of the I B Code is sacrosanct - The 'I B Code' defines 'Resolution Plan' as a plan for insolvency resolution of the 'Corporate Debtor' as a going concern. It does not spell out the shape, colour and texture of 'Resolution Plan', which is left to imagination of stakeholders. Read with long title of the 'I B Code', functionally, the 'Resolution Plan' must resolve insolvency (rescue a failing, but viable business); should maximize the value of assets of the 'Corporate Debtor', and should promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. On perusal of the Resolution Plan, it is found that it meets the requirement of Section 31 r/w Section 30(2) of the Code. Therefore, the present application IA 259 of 2018 is allowed subject to certain observation with regard to the Clause No. 3.2.3(iii) and clause No. 11 of Resolution Plan and sub-para (n) of paragraph 33 along with the prayers (f) of paragraph 35 of IA 259 of 2018 which cannot be allowed as these are the subject matter of the various Competent Authorities having their own jurisdiction - Approval of the Resolution Plan does not mean automatic waiver or abetment of any legal proceedings which are pending by or against the Company/Corporate Debtor as those are the subject matter of the concerned Competent authorities having their proper/own jurisdiction to pass any appropriate order as the case maybe. The Resolution Applicants on approval of the Plan may approach the Competent Authorities/Courts/Legal Forums/Offices - Govt, or Semi. Govt./State or Central Govt, for appropriate relief(s) sought for in Clause No. 3.2.3 (iii) of the Resolution Plan at Page No. 19. Not allowing the above said Clause No. 3.2.3 (iii) and Clause No. 11.1, 11.1.1 to 11.1.20 of the Resolution Plan, along with the prayers vide sub-para (f) of Paragraph No. 35 and pleadings made thereon in sub-clause (n) of Paragraph No. 33 of application being IA No. 259 of 2018, is not going to make any hindrance for proper implementation of the Resolution Plan as those are the subject matter of the concerned/appropriate Competent Authorities. 2019 (5) TMI 517 Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - rejection of the resolution plan by CoC - HELD THAT:- It is seen from the record that two units of the Corporate Debtor were running smoothly at one point of time during CIRP. The Resolution Professional did not disclose in his final report whether those units are still running or not. If those units are still running then, this Authority would advice the Liquidator to liquidate them as going concern so as to fetch maximum liquidation price. The Corporate Debtor is admitted in process of liquidation - Order of Moratorium declared. 2019 (5) TMI 516 Initiation of corporate insolvency resolution process - Operational debt - claim of interest on the basis of terms mentioned in the Invoice - sub-section (21) of Section 5 of Insolvency Bankruptcy Code, 2016 - HELD THAT:- In the instant appeal, admittedly, the principal amount has been paid before effective hearing of the petition. Especially when the applicant has not entered into any agreement regarding payment of interest, claim of the applicant for 24% interest per annum does not hold valid ground to file the instant application. Petition dismissed. Service Tax 2019 (5) TMI 515 Refund of service tax paid wrongly - time limitation - section 11B as made applicable to service tax by Section 83 of the Finance Act, 1994 - HELD THAT:- The contractor has already paid the service tax and the appellant was not liable to pay service tax under reverse charge mechanism but has wrongly paid so. Under these circumstances, the payment of the amount as representing service tax is beyond the scope of Finance Act 1994 and therefore no provisions of the Acts including Section 11B and the period of limitation therein or the jurisdiction of the Officers to sanction refund claim applies to the present case. The appeal is rejected as a refund claim under Section 11B of Central Excise Act,1944 read with Section 83 of the Finance Act, 1994 is not maintainable for any amount paid beyond the scope of the Finance Act, 1994 itself. 2019 (5) TMI 514 Imposition of penalty - Reversal of CENVAT Credit on being pointed out before issuance of SCN - HELD THAT:- Once the appellant has reversed the CENVAT credit before the issuance of show-cause notice, the penalty is not imposable as there is no suppression of facts with intent to evade payment of duty - penalty set aside CENVAT Credit - input service - construction service - HELD THAT:- On perusal of the invoices for other services relating to works contract for construction of collection tank and RO water and reconstruction of compound wall and construction of overhead tank, it is found that these services are also not new construction and are necessary in order to carry out the manufacturing process and therefore, they are integral to the manufacturing process and is covered under the scope of input service as defined in CENVAT Credit Rules, 2004 - Credit allowed. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 513 Nature of activity - sale or service - hiring charges - deemed sales - principles of natural justice - HELD THAT:- It was submitted before the original authority that the said consideration on which Service Tax was demanded was subjected to sales tax and original authority has not relied upon any evidence to establish that the said contention was unfounded - we have also perused the invoices which were available on record which clearly indicated that the entire transactions in such invoices was subjected to sales tax. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 512 CENVAT Credit - duty paying invoices - credit taken on 'Advance Transfer Debit' (ATD) issued by Central procuring offices - HELD THAT:- This issue is squarely covered in favour of the appellant, by the precedent order of this Tribunal in the case of BHARAT SANCHAR NIGAM LTD. ERODE VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [ 2013 (12) TMI 742 - CESTAT CHENNAI] where it was held that considering the commercial practice which was necessary for efficient procuring the equipment in question, this procedural lapse cannot be considered as a reason to deny Cenvat credit involved - credit allowed. Utilization of Cenvat credit - utilisation of excess of 20% of input tax - HELD THAT:- The issue is no more res integra and the same is covered in favour of the appellant - assessee by precedent ruling of this Tribunal in IDEA CELLULAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, ROHTAK [ 2009 (2) TMI 91 - CESTAT NEW DELHI] wherein the issue was whether the common input services used for providing taxable and exempted output services to be restricted to 20% of exempted services. It was further held that the restriction under Rule 6(3)(c) is not applicable to capital goods credit - also as per CBEC Circular dated 1st October, 2007 the only restriction with respect to Cenvat credit on capital goods was that if the capital goods used exclusively for manufacture or rendering a non taxable services - credit allowed. Short payment of service tax - period of April, 2007 to February, 2008 - Principles of natural justice - HELD THAT:- There is violation of the natural justice as verification was going on and still pending and even further carried out after passing of the impugned order. No such report is discussed in the order nor any reason assigned for none receipt of any report in the matter - appeal is allowed by way of remand to the Adjudicating Authority to hear the appellant, considering the verification reports as may be available, or to give further verification if required and thereafter to pass the reasoned order in accordance with law on this issue. Appeal allowed in part and part matter on remand. 2019 (5) TMI 511 Classification of service - Consulting Engineer Service or not - service of technical know-how for manufacture of plastic extrusion machinery to M/s Kabra Extrusiontechnik - whether the appellant being corporate was not covered under the definition of Consulting Engineer service? - HELD THAT:- The corporate was inserted in the definition of Consulting Engineer only from 2006 onwards. The period involved in the present case is 1999-2002 and at that relevant period, corporate was not taxable under the head of Consulting Engineer - the appellant is not liable to pay service tax under the head of Consulting Engineer service - appeal allowed - decided in favor of appellant. Central Excise 2019 (5) TMI 510 Recovery of Excise dues from erstwhile owner - the movable and immovable assets purchased by auction purchaser/petitioner - HELD THAT:- The petitioner cannot be made liable to pay the excise dues of the erstwhile owner of the property only because the petitioner has purchased the property in auction conducted under the provisions of the Securitization Act. Excise dues is not a liability arising out of land, building or machinery. The excise duty is payable on manufacture of excisable goods. The excise department cannot claim priority charge over the respondent No. 6/bank - at the time the movable and immovable assets of the respondent No. 5 were put to auction by the respondent No. 6 and the petitioner purchased the same in auction till then, the respondent Nos. 2 to 4/Excise Department had not attached any of the movable or immovable property of the respondent No. 5. No charge was created over the assets of the respondent No. 5 of the excise dues. The Central Excise dues were also not crystalized as on the date the property was put to auction and purchased by the petitioner. The order of recovery was passed by the Central Excise Department in the year 2012 that is after the sale of the assets of the respondent No. 5. Therefore, the respondent Nos. 2 to 4 cannot demand the payment of excise dues of the respondent No. 5/Karkhana from the petitioner on the ground that the petitioner is purchaser of the movable and immovable assets of the respondent No. 5 in auction at the behest of the respondent No. 6/secured creditor under the provisions of the Securitization Act. Impugned communication for demand set aside. 2019 (5) TMI 509 Demand of interest - irregularly availed CENVAT Credit, but not utilized - HELD THAT:- The substantial question of law in both the Appeals are answered in the affirmative i.e. in favour of the Respondent-Revenue and against the Appellant-Assessee. 2019 (5) TMI 508 Clandestine removal - reliability of retraction of statements - Section 14 of the Act of CEA - Whether the Tribunal has committed error in holding that there was no material for making the order and whether the Tribunal has committed error in not considering the relevant material, which was produced before the adjudicating authority? HELD THAT:- The circumstance that the proceeding which was started against Jhunjhunwala was dropped could not have made much difference as Jhunjhunwala was examined before the adjudicating authority and there was material like record of M/s. Orian Laminators Limited showing supply of laminated film, which was not accounted by the assessee. There is huge material in support of the statements given, which is already quoted and that record is not at all touched and appreciated by the Appellate Authority. While deciding the appeal, the Tribunal ought to have touched that material and ought to have given reasons for setting aside the findings of the adjudicating authority but that is not done. In such a case, when the material of aforesaid nature is available, the burden or proof also shifts and assessee is required to explain the things made out by the material. For that, the provisions of Sections 106 and 114 of the Evidence Act can be used. This Court holds that the statements recorded under Section 14 of the Act of the witnesses, who were examined before the adjudicating authority can be used as admissions though they are retracted and they can be used in relation to the material, private documents recovered from the premises of the assessee and the premises of the suppliers, who had supplied raw material like laminated films - This Court further holds that the decision of the Appellate Tribunal is bad in law as the relevant material is not considered by the Appellate Tribunal - the decision of the Appellate Tribunal needs to be set aside. The matter needs to be remanded back - appeal allowed by way of remand. 2019 (5) TMI 507 Method of valuation - Clearance made to institutional buyers - Section 4 or 4A of CEA - Revenue under the belief that the supplies to the institutional buyers should also be valued in terms of section 4A of the Central Excise Act, 1944 issued SCN demanding duty - N/N. 2/2005-CE(NT) dated 07.01.2005. HELD THAT:- It is seen that investigations were extended to various customers/ dealers and in para 9 of the impugned order the list of customers has been enumerated. The gist of the investigation is reproduced in para 10, 11, 12 and 13 of the impugned order. The investigations confirmed that no evidence of printing of MRP on institutional supplies made through dealers was found. In fact whatever evidence was produced showed that the products contained the marking hospital supply-not for sale only - It is apparent that what is covered in DPCO is only the items which are sold in retail. If a container is sold in retail, the container must contain retail sale price and if the content of such container are also sold in retail then each such pack sold in retail must have the MRP printed on it. From above it is apparent that the provisions are attracted only on goods offered for retail sale . In the impugned order, it is seen that the words offered for retail sale appearing in DPCO 1995 have been overlooked. In the instant case the evidence brought on record does not dispute the claim that the goods sold to institutional buyers were not sold (or offered for sale) in retail sale - The provisions of para 14 and 15 of DPCO 1995 are not attracted in respect of sales to institutional buyers which are not further offered for retail sale. The demand, therefore, cannot be upheld - penalties set aside. Appeal allowed - decided in favor of appellant. 2019 (5) TMI 506 CENVAT Credit - exemption under N/N. 29/2004-CE as well as 30/2004-CE both dated 09.07.2004 availed by appellant - the department s case is that the capital goods were used exclusively for manufacture of exempted goods, therefore the credit is not admissible - Rule 6(4) of Cenvat Credit Rules, 2004 - Extended period of limitation - HELD THAT:- The appellant in their ER-1 return have been clearly declaring the claim of exemption Notification No. 29/2004-CE as well as 30/2004-CE at the same time they were availing the cenvat credit on the capital goods. It is also observed in the ER-1 return that though the appellant was showing the availment of cenvat credit but were not paying excise duty for the reason that the goods were cleared under exemption notification No. 30/04-CE, therefore, relevant fact that the appellant in one hand availing the exemption notification 30/04-CE and on other hand availing the cenvat credit on capital goods were very much declared in the ER-1 return, therefore, there is no intention coming out from the ER-1 return that the appellant intend to evade any payment of duty, therefore, the entire demand raised for extended period will not sustain on the ground of limitation as the SCN for the period April 2004 to December 2004 was issued much after one year i.e. 01.01.2009. Since the demand is hit by limitation, the merits of the case not addressed - appeal allowed on the ground of limitation. 2019 (5) TMI 505 Clandestine removal - the allegation is that the appellant have cleared the coated calcium carbonate in the garb of uncoated calcium carbonate - reliance placed on the cross-examination - HELD THAT:- In view of hard evidence like test report, the statement and cross examination become secondary evidence. It is seen that the appellant have described each product by difference name. The material cleared to M/s Hexon, where the sample was tested, also would have contained specific name of the product which were cleared to them. The said test report can only be applied to the items described identically or cleared under the same description to all other buyers. The test report does not show the exact description under which such goods were cleared. The evidence in the shape of test report can be applied only to the specific grade on which the testing was done. In respect of such product, the statements contradictory to the test report do not have any value. In respect of other item which were not tested, the statements becomes sole evidence. In such case the cross examination need to be granted before the same are relied in terms of Section 9D of the Central Excise Act, 1944. Ld. Counsel has further argued that the goods which the original adjudicating authority held to be traded goods on the basis of CA Certificate have been treated as manufactured goods without examination of full facts. He argued that even if any processes were carried out by the appellant, the Commissioner (Appeals) should have remanded the matter back to the original adjudicating authority for determination if the said processes amount to manufacture - the matter needs to be examined afresh. Appeal allowed by way of remand. 2019 (5) TMI 504 Valuation - related entities - related party transaction - Rule 8 of the Central Excise Valuations Rules - revenue neutrality - allegation is based on the relationship of the directors among each other - whether the appellant are related to the buyers of the goods namely, Quartz Metal Industries (QMI) and Balbir Rolling Metal Pvt. Ltd (BRML)? HELD THAT:- A perusal of the SCN shows the entire foundation of allegation is based on the relationship of the directors among each other and not about the appellant and BRML being related persons. The allegations are essetially that the directors and investors in these two entities are related to each other that the relatives of directors own up to 85% of the equity shares in the said group of companies. We find that the above allegation is totally misrepresentation of the statute. The statute requires that the assessee and buyers should be related and not that the directors of the two entities should be related. It is seen that the allegations of relationship between the two is based on the admission of the directors that they are relatives and that 100% of the product of the unit are being transferred to the Balbeer group of companies , namely QMI and BRML. It has also been asserted that the directors are members of Hindu Undivided Family. These factors are immaterial in so far as relationship between two companies is concerned. The relationship of directors has no relevance whatsoever. Another allegation made in the SCN is that they are using common basic infrastructure and staff. We find that no specific instances have been pointed out. There are no evidences in support of the allegation that M/s VDI and M/s BRML are related in terms of Section 4(3)(b) of the Central Excise Act. Consequently, the demand of duty made against VDI for clearance made to BRML cannot be sustained - In the instant case it is not in dispute that part of the sales during 2010-11 and 2012-13 were to independent buyers. Moreover BRML is not a related entity. Thus, under these circumstances rule 8 can not be invoked - In respect of clearances made by VDI to QMI also Rule 8 of the Central Excise Valuation Rules cannot be invoked as during this entire period part of the clearances were being made to BRML which has been held to be not a related person. Invocation of Rule 8 requires that no clearance should have been made to any independent entity. The appeals of the M/s VDI and Sh. Sharma are allowed - decided in favor of appellant. 2019 (5) TMI 503 Refund of erroneously paid export duty - one of the grounds for rejection was that though the appellant contended that they had exported the same goods under the ARE-1 No. B0183/2015-16 after cancelling their earlier ARE-1 B061/2015-16, but they had not produced any substantial evidence against the allegations made against them - principles of natural justice. HELD THAT:- When admittedly the goods were not cleared at the instance of the first ARE-1 which was cancelled, the question of re-entry of the goods would not arise at all, since the procedures and conditions under paragraph 2.1 of the supplementary instructions would arise only when the goods are removed out of the factory for export and brought back later to the factory on cancellation of the export order and not in a case where the export itself did not take place - The authorities below have without considering the above factual aspects rejected the appellant s plea on the ground of not following the procedure which according to me is not correct. The Revenue should have enquired/investigated about, when the appellants made refund claim or thereafter, when the reason for making refund claim was clearly cancellation of the first ARE-1 - When the SCN itself refers to the fact of intimation about the non-clearance/cancellation of ARE-1 coupled with the fact of lack of enquiry and no finding as to clearing manufactured goods in any other way than reported, the fact of non-clearance of first ARE-1 has to sustain. Impugned order not sustainable - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (5) TMI 502 Imposition of tax u/s 3-F of UPVAT Act - deemed sale - transfer of right to use of goods / vehicle - transport of petroleum products, which are purchased by the parties from Hindustan Petroleum Corporation Limited - contention of the counsel for the applicant is that the control and possession of the truck tanker remained with the applicant and that the maintenance, salary of the driver and every employees, insurance and other expenses are borne by the applicant alone - HELD THAT:- The bare perusal of Section 3-F of the Act shows that the provision of Section 3-F is applicable only in cases where there is transfer of right to use the goods. It is clear that for the transfer of right to use the goods and to invoke the provisions of Section 3-F of the act, it is necessary that there should be transfer of effective control of the goods in favour of the party. Revision allowed. 2019 (5) TMI 501 Exemption under Section 4-A of the U.P. Trade Tax Act, 1948 - Eligibility Certificate - it was alleged that Bill supplied by the applicant for fabrication of moulds were not genuine and as such they can not be relied upon - principles of natural justice - HELD THAT:- A perusal of the order of the Commercial Tax Tribunal, it is clear that they have merely reiterated the order of the first appellate authority and in the conclusion that they have not given any finding on any questions either of fact or law raised by the revisionist and concluded that the revisionist has not discharged his duty and submitted the relevant documents and therefore, the appeal has been rejected. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Whether or not, such judicial discretion has been exercised in accordance with the accepted norms, can only be reflected by the reasons recorded in the order impugned before the higher Court. Often it is said that absence of reasoning may ipso facto indicate whimsical exercise of judicial discretion. The said order has been passed without any application of mind and without considering the grounds raised by the revisionist in the appeal. The Tribunal being a quasi judicial body, it was incumbent upon them to consider all the grounds raised by the revisionist in its appeal and give the finding on each of the issues raised by them. It seems that the Tribunal has not given its finding or even mentioned the grounds raised by the revisionist in the appeal - Matter remanded to the Tribunal to reconsider the same after giving opportunity of hearing to the revisionist and further directed to pass reasoned and speaking order, expeditiously, say within a period of six months from the date of certified copy of this order is produced before him. Revision allowed by way of remand. 2019 (5) TMI 500 Principles of natural justice - case of revisionist is that Tribunal while deciding appeal of the revisionist has not considered any of the grounds raised by him in the appeal - Validity of assessment order - UPVAT Act, 2008 - imposition of penalty - HELD THAT:- Perusal of the impugned order dated 12.09.2014, passed by the Tribunal while deciding appeal of the revisionist has not considered any of the grounds raised by him in the appeal. Perusal of the said order would indicate that the Tribunal has only reiterated the findings of the first Appellate Authority and concluded in paragraph 8 by saying that it agrees with the said findings of the first Appellate Authority and thereby it has rejected the appeal. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice - Providing of reasons in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court to make the remedy of appeal meaningful. It is the reasoning which ultimately culminates into final decision which may be subject to examination of the appellate or other higher Courts. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Whether or not, such judicial discretion has been exercised in accordance with the accepted norms, can only be reflected by the reasons recorded in the order impugned before the higher Court. Often it is said that absence of reasoning may ipso facto indicate whimsical exercise of judicial discretion. The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him - Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. The matter is remanded back to the Commercial Tax Tribunal to decide the appeal of the revisionist in accordance with law, afresh, after giving opportunity of hearing by means of reasoned and speaking order - revision allowed by way of remand. 2019 (5) TMI 499 Auction of cars by the bank - whether the disposal at an auction by the bank of cars that have been hypothecated with it and later repossessed on default of repayment of the loan, is a sale ? - HELD THAT:- Reliance placed in the case of M/S. CITI BANK VERSUS COMMISSIONER OF SALES TAX [ 2015 (12) TMI 1040 - DELHI HIGH COURT ], where it was held that Sale of the repossessed cars by the Appellant Bank is incidental or ancillary or in connection with the Appellant s business. This Court, prima facie, finds no ground to grant any interim relief as prayed for. However, it is clarified that the payments of the amounts by the Petitioner to the Respondents would be subject to the outcome of the petition. Application disposed off. 2019 (5) TMI 498 Restoration of registration of petitioners - suspension of certificate of registrations - non-payment of Entry tax - section (5A) of section 27 of the VAT Act - Jurisdiction - power of Commissioner to suspend the registration of a dealer - HELD THAT:- Sub-section (5A)(1) of section 27 of the VAT Act which grants powers to the Commissioner to suspend the registration of a dealer, it is crystal clear that such power can be exercised only for the failure on the part of the dealer to pay the tax under section 30 of the VAT Act. Further, under sub-section (27) of section 2 of the VAT Act, tax means a tax leviable and payable under the Act on sales or purchase of goods and includes lump sum tax leviable or payable under section 14, 14A, 14B, 14C or 14D. Admittedly, on the facts of the case, the order of suspension of registration of the petitioners is passed on failure of the petitioners in non-payment of Entry tax, which is evident from the documents produced along with the affidavitin- reply filed by the respondents wherein it is revealed that for the year 2014-15, 2015-16 and 2016-17, a total amount of Entry tax not paid by the petitioner was ₹ 16,53,961/- whereas the VAT Act not paid is ₹ 61,186/- - from the aforesaid facts, it is clear that the petitioners certificate of registration has been suspended from 1.6.2016 to 31.3.2017 for non-payment of Entry tax by the petitioner for which the provisions of sub-section (5A) of section 27 of the VAT Act have been invoked by the respondents, which could not have been invoked by the respondents in view of the aforesaid clear provisions of the VAT Act as jurisdiction to suspend certificate of registration of the petitioner under VAT Act can be assumed only in case when any of the clause from (a) to (e) of the section 27(5A) of VAT Act is attracted. In view of the suspension of certificate of registration of the petitioners, the petitioners are unable to generate Form C under section 8(4) of the CST Act which is required to be delivered to the sellers of the goods by the petitioners so as to avail the benefit under the CST Act of reduced rate of tax. As the certificate of registration is not restored after the suspension period is over, the petitioner is also suffering from non-issuance of Form C under the CST Act. As the impugned order of suspension of registration of the petitioner under VAT act and CST Act is without jurisdiction, the same is hereby quashed and set aside - Petition allowed - decided in favor of petitioner. 2019 (5) TMI 497 Attachment of property - Recovery of outstanding dues (tax liability) of the company from the Directors - HELD THAT:- It is not in dispute that the property which is attached by the impugned notice is of the ownership of the petitioner No.1, who is the Director of the petitioner No.2 Company and therefore, as held by the Supreme Court in CHOKSI VERSUS STATE OF GUJARAT [ 2012 (3) TMI 392 - GUJARAT HIGH COURT ], no attachment can be made - There is no provision in the Act fastening the liability of the Company to pay its sales tax dues to its Director and therefore, the impugned attachment notice dated 27.12.2017, is required to be quashed and set aside. Petition allowed - decided in favor of petitioner. 2019 (5) TMI 496 Validity of rectification order - revision of assessment - Jurisdiction - Section 84 of the Tamil Nadu Value Added Tax Act, 2006 - case of petitioner is that the order traverses beyond the jurisdiction imposed under Section 84 of the Act - opportunity of personal hearing was not granted prior to disposal of the application - principles of natural justice - HELD THAT:- The proviso to Section 84 of the Act specifically refers to notice to be issued to the Assessee, which has been done in this case on 27.06.2018. However, the proviso also mentions ' reasonable opportunity ' of being heard which in my view includes a personal hearing. This admittedly has not been granted to the petitioner - The consistent view taken by courts is to the effect that personal hearing is an important component of reasonable opportunity. There is a statutory requirement for such opportunity to be granted, prior to rectification, whether such opportunity has been sought for or not. The petitioner is directed to appear before the authority on 13.03.2019 at 10.30 am, and after affording an opportunity of personal hearing, the respondent shall pass orders, de novo, within a period of four weeks thereafter - petition allowed by way of remand. Indian Laws 2019 (5) TMI 495 Quantum of punishment - conviction and sentence under Section 21(C) of the Narcotic Drugs and Psychotropic Substances Act, 1985 - appellant submits that appellant could not have been awarded sentence of more than ten years which is the minimum sentence provided for offence under Section 21(c), since the Court below did not advert to Section 32B of the Narcotic Drugs and Psychotropic Substances Act, 1985. HELD THAT:- A perusal of different provisions of Act, 1985 indicates that various sections provide for different punishments. In Section 21(c) noticed above the provision provides that rigorous imprisonment shall not be less than ten years but which may extend to twenty years and shall also be liable to fine . In various other sections the punishments are like Section 15(a) which may extend to one year or with fine as in Section 16 which may extend to ten years or with fine. Thus, there are few provisions in which minimum punishment and maximum punishment have been provided for. The different provisions, however, do not indicate any legislative policy regarding sentencing especially when there is minimum and maximum punishment is prescribed, how to peg the punishment. Clauses (a) to (f) as enumerated in Section 32B do not enumerate any factor regarding quantity of substance as a factor for determining the punishment. In the event the Court takes into consideration the magnitude of quantity with regard to which an accused is convicted the said factor is relevant factor and the Court cannot be said to have committed an error when taking into consideration any such factor, higher than the minimum term of punishment is awarded. The punishment awarded by the trial court of a sentence higher than the minimum relying on the quantity of substance cannot be faulted even though the Court had not adverted to the factors mentioned in clauses (a) to (b) as enumerated under Section 32B. However, when taking any factor into consideration other than the factors enumerated in Section 32B, (a) to (f), the Court imposes a punishment higher than the minimum sentence, it can be examined by higher Courts as to whether factor taken into consideration by the Court is a relevant factor or not. Thus in a case where Court imposes a punishment higher than minimum relying on a irrelevant factor and no other factor as enumerated in Section 32B(a to f) are present award of sentence higher than minimum can be interfered with. The punishment higher than the minimum is upheld, however the ends of justice will be sub-served in reducing the sentence from 16 years to 12 years - appeal allowed in part.
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