TMI Tax Updates - e-Newsletter
June 11, 2019

Case Laws in this Newsletter:

Income Tax Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise

Articles

1. Charitable Trust, Association & Societies – Analysis of Income-tax and GST Provisions

   By: RameshKumar Patodia

2. ISSUE OF SECURITIES IN DEMATERIALIZED FORM BY UNLISTED PUBLIC COMPANIES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Press Note : Clarification regarding the Statistical reforms and the existing GDP series

2. Auction for Sale (Re-Issue) of Government Stocks

3. Commerce Minister emphasizes on reciprocal market access for Indian goods

4. Prudential Framework for Resolution of Stressed Assets

5. Indian Banking Sector: Current Status and the Way Forward (Shri Shaktikanta Das, Governor, Reserve Bank of India - June 8, 2019 - Delivered at the NIBM, at the 15th Annual Convocation of Post Graduate Diploma in Management, Pune)

6. Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman attends the G20 Finance Ministers and Central Bank Governors meeting and associated events and meetings during June 8-9, 2019 at Fukuoka, Japan

Notifications

GST - States

1. G.O.Ms.No. 277 - dated 15-4-2019 - Andhra Pradesh SGST

Andhra Pradesh Goods and Services Tax (Removal of Difficulties) Order No. 6 of 2019 - In Filing TCS Statement By E-Commerce Operators.

2. G.O.Ms.No. 276 - dated 15-4-2019 - Andhra Pradesh SGST

Andhra Pradesh Goods and Services Tax (Removal of Difficulties) Order No. 5 of 2019 - In Computing Aggregate Turnover for Determining Eligibility for Composition Scheme Under Section 10.

3. 428/2019/04(120)/XXVII(8)/2019/ON-04 - dated 31-5-2019 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019

4. 426/2019/04(120)/XXVII(8)/2019/CTR-09 - dated 31-5-2019 - Uttarakhand SGST

Amendment in Notification No. 281/2019 dated 09/04/2019

5. 425/2019/04(120)/XXVII(8)/2019/CTR-08 - dated 31-5-2019 - Uttarakhand SGST

Amendment in Notification No. 514/2017/9(120)/XXVII(8)/2017 dated 29th June, 2017

6. 424/2019/04(120)/XXVII(8)/2019/CTR-06 - dated 31-5-2019 - Uttarakhand SGST

Classification of classes of registered person w.r.t. Promoter , w.e.f 01-4-2019

7. 423/2019/ 04(120)/XXVII(8)/2019 CTR-05 - dated 31-5-2019 - Uttarakhand SGST

Amendment in Notification No. 526/2017/9(120) /XXVII(8)/2017dated 29th June, 2017

8. 422/2019/04(120)/XXVII(8)/2019/CTR-04 - dated 31-5-2019 - Uttarakhand SGST

Amendment in Notification No. 530/2017/9(120)/XVII (8)/2017 dated 29th June, 2017

9. 420/2019/04(120)/XXVII(8)/2019/ CTR-07 - dated 31-5-2019 - Uttarakhand SGST

Payment on Basis of Reverse Charge Mechanism for supply of Goods and Services

Highlights / Catch Notes

Income Tax

• Club's Income from Members Assessed for Tax Exemption; Administrative Expense Retention Not Taxed Under Mutuality Principle.

  Case-Laws - HC : Income of the Club from Members - whether the same was exempt under principle of mutuality? - While making payment to the caterer from the amount collected from the members, the club had retained a small portion to meet with its administrative expenses - This amount was not taxed rightly.
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• CBDT Circular No.6/2016 guides on classifying income from share trading as Capital Gains for consistent tax treatment.

  Case-Laws - AT : Classification of income - share trading - The majority of the investments has been funded out of own capital and earned substantial dividend income, further the average holding period is more than 100 days and the long-term gains earned on similar activity has been accepted by the revenue as Capital Gains only - latest CBDT Circular No.6/2016, directs AO not to disturb the stand taken by assessee provided the same is applied consistently - STCG
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• Software Expenses Classified as Revenue Expenditure Due to Annual Use and No Enduring Benefit Under Agreement.

  Case-Laws - AT : Disallowance of software expenses - revenue or capital expenditure - payment was made for maintenance/hosting services not resulted in any enduring benefit and there was no acquisition of right in software as spelt out in Software Maintenance & Support Agreement - same services has been availed by the assessee in future years on annual basis and was not a one-time payment - revenue expenditure
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• Court Upholds Assessing Officer's Interpretation of "Residential House" u/s 54, Quashes Revision u/s 263.

  Case-Laws - AT : Revision u/s 263 - interpretation of ‘a residential house’ u/s 54 - AO with due application of mind, after making requisite inquiries, accepted assessee’s claim u/s 54 which is apparent on relevant material on record including specific queries and the documents/information supplied by assessee - revision quashed
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• Electrical fittings classified as plant and machinery for depreciation purposes, eligible for 15% rate. Not furniture and fixtures.

  Case-Laws - AT : Depreciation on electrical fitting - plant and machinery v/s furniture and fixtures - It is necessary to have electrical fittings for the power supply to the machineries and plant, without electrical fittings and power supply, there is no use of plant and machinery - depreciation allowable@ 15% by treating it as part of plant and machinery
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• Appeals Filing Delay of 303 Days Excused Due to Chartered Accountant's Illness; Ex Parte Orders Passed u/s 144.

  Case-Laws - AT : Condonation of delay of 303 days - illness of the CA - The assessee has stated that his CA was sick and hence, there was delay in filing the appeals before the CIT(A) apart from the fact the assessment orders were passed ex parte by the AO u/s. 144 which itself shows that there is no proper presentation from the Counsel of the assessee - delay condoned
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• No Penalty for Income Escapement: Taxpayer's Revised Return Pre-Notice u/s 271(1)(c) Shows Non-Contumacious Conduct.

  Case-Laws - AT : Penalty u/s 271(1)(c) - escapement of income come to notice in different year assessment proceedings - the assessee has duly submitted the revised return before the issue of notice u/s. 148 - assessment has been made on the basis of sums already declared - the assessee cannot be said to have acted contumacious manner so as to warrant levy of penalty
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• Section 254(2) of Income Tax Act: Rectification of Clear Errors Only, No Re-evaluation Allowed by ITAT.

  Case-Laws - AT : Rectification u/s 254 - an order u/s. 254(2) only permits rectification of mistake apparent from record - by submitting elaborate arguments in the realm of review of the order of ITAT is not permissible
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• Tribunal Accepts Assessee's Calculation, Finds No Further Disallowance u/s 14A, Rule 8D Conditions Not Met.

  Case-Laws - HC : Disallowance u/s 14A - disallowance u/r 8D was made of ₹ 2.19 Crores against total expenditure of ₹ 24.19 Lakhs - voluntarily disallowance by assessee of ₹ 7.79 Lakhs - for applicability of sub-rule (2) of Rule 8D, the requirements of sub-rule (1) would have to be satisfied i.e satisfaction of correctness of the claim of expenditure - Tribunal accepted such working out - no further disallowance
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• Court Quashes Reassessment Notice for Lack of Jurisdiction u/s 147 of the Income Tax Act.

  Case-Laws - HC : Reopening of assessment u/s 147 - non taking of certain objections in response to the notice - If there is legal contention which goes to the root of the matter and which would render the action of the AO of issuing notice of reassessment without jurisdiction, such a ground cannot be showed out merely because in the written objections, the petitioner had not thought of raising it - notice quashed.
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• Reassessment Notice u/s 147 Invalidated Due to Full Disclosure of Facts by Assessee for Section 80-IB(10) Deduction.

  Case-Laws - HC : Reassessment u/s 147 - deduction u/s 80IB(10) - validity of reasons - petitioner had produced full accounts inter-alia shown separately sum from sale of car parking also shown full details including built up area of the flats sold further Section 80-IB(10)(f) would apply in case of allotment to an individual - assessee to disclose truly and fully all material facts and reasons recorded are on the basis of the material already on record - notice set-aside
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• Tax Department Halts Further Recovery; 38% Already Recovered, Appeals Pending Over Two Years, Awaiting Resolution.

  Case-Laws - HC : Stay of demand - already recovered 38% of demand - appeals are pending since over 2 years - Departmental circulars also envisage stay pending appeal before the CIT(A), ordinarily upon deposit of 20% of the disputed tax - No special circumstances are pointed out to permit the Department to carry out full recoveries - not permitted to any further recoveries till the disposal of appeals
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• TPO Exceeded Authority by Evaluating Business Justification for Royalty Payments Instead of Using Scientific Methods, Section 92CA(3.

  Case-Laws - HC : TPA - ALP of payment of royalty u/s 92CA(3) - TPO instead of applying of the specified scientific methods went on to the justification of the purchase made in the context of the incremental benefit earned out of such know-how which was clearly not within his purview as he could not replace the assessee and question its business decision - payment within RBI approved limit - ALP accepted
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• Penalty Upheld for Cash Loans: Assessee Fails to Prove Urgent Financial Need u/s 271D, Violates Section 269SS.

  Case-Laws - HC : Penalty u/s 271D - cash loans from farmer friends - assessee relied on mere oral assertions of urgent requirement of funds without producing any material to establish such assertion - the details of purchase orders required to be executed within time and most significantly did not co-relate the purchases made from such cash loans - no reasonable explanation for failure of Section 269SS - penalty upheld
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• Tribunal Applies Real Income Theory, Rules No Income Tax on Unpaid Claims Due to Parent Company's Financial Crisis.

  Case-Laws - HC : Accrual of income - since parent Company was in severe financial crisis, the assessee could not receive any payment for a long time and even after delay of nearly four years received only 8.58% of the total claim - with respect to the larger amount, the bill/claim was for damages for pre mature termination of the contract which contracted party did not even accepted - Tribunal has correctly applied the real income theory, no income tax can be leviable
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• High Court Declines Detailed Review of Section 153C Proceedings; Dismisses Writ, Advises Petitioner to Appeal Instead.

  Case-Laws - HC : Notice & assessment u/s 153C - High Court would not like to carry out thread bare inquiry by going into the factual aspects of sufficiency of material in order to initiate proceedings u/s 153C or of co-relating the incriminating material found during search on the basis of which additions are made in the assessment orders - relegated the Petitioner to the appeal remedy - writ dismissed
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IBC

• Adjudicating Authority Must Accept CoC-Approved Resolution Plan with 66% Vote; Binding on Debtor and Stakeholders.

  Case-Laws - Tri : The approval of a Resolution Plan by the CoC is to be accepted in toto by the Adjudicating authority if a 66% voting share approves the said plan - The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved - Revival of the Debtor company ordered.
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Central Excise

• Appellants Must Seek Refund for Double Payment of Excise Duty on Transformer Oil u/s 11B.

  Case-Laws - AT : Suo moto credit of Excise duty paid twice or Refund claim - Since the issue involved in this case pertains to double payment of duty on transformer oil, the only recourse left to the appellants was to claim refund of the excess duty paid by it, in terms of Section 11B - Demand confirmed.
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Case Laws:

• Income Tax

• 2019 (6) TMI 447
  Disallowance u/s 14A -Tribunal deleted the disallowance confirmed by the CIT(A) and holding that the AO should examine the matter on this issue on the assessee s point of view - HELD THAT:- Tribunal has merely remanded the issue before the Assessing Officer for fresh consideration. We do not find any error. This question is, therefore, not entertained. Addition on account of water charges paid to BMC - Tribunal deleted the disallowance and not upholding the order of CIT(A) confirming the said disallowance, on the ground that the said expenditure was allowable u/s 23(1) being incurred for conducting specific event - HELD THAT:- Expenditure was towards water charges paid by the assessee to the Bombay Municipal Corporation in relation to rented premises. The Assessing Officer was of the view that this did not form the part of the Corporation charges and therefore was to be disallowed. Section 128A of the Maharashtra Municipal Corporation Act inter alia provides that property tax leviable on buildings and lands under the Act shall include water tax, sewerage tax etc. Thus, statutorily water tax was a component of the property tax to be paid to BMC. The Commissioner (Appeals) and the Tribunal, therefore, committed no error in disallowing the claim. Addition on account of club share income of assessee from caterer - whether the same was exempt under principle of mutuality? - CIT(A) deleted the addition - HELD THAT:- CIT, while deleting such disallowance came to the conclusion that the club had collected money from the members for food and refreshment out of which a sum of 9.20 Lakhas was retained while releasing the payment in favour of the caterer. This was, thus, a sum collected from the members on the principle of mutuality. This amount was, therefore, not taxed. While making payment to the caterer from the amount collected from the members, the club had retained a small portion to meet with its administrative expenses. We find no error in the view of the Commissioner as upheld by the Tribunal. - Revenue appeal dismissed.

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• 2019 (6) TMI 446
  Assessment u/s 153C - entertained the factual aspect in Writ Petition - HELD THAT:- We would not like to carry out thread bare inquiry by going into the factual aspects of sufficiency of material in order to initiate proceedings u/s 153C or of co-relating the incriminating material found during search on the basis of which additions are made in the assessment orders. The assessment orders prima facie would suggest that the Assessing Officer is silent on this issue of co-relation between addition made and the material found during such search. In the case of Commissioner of Income Tax V/s. Vijaybhai N. Chandrani [2013 (7) TMI 740 - SUPREME COURT ] Supreme Court reversed the Judgment of the High Court observing that the High Court ought not to have entertained the Writ Petition and should have directed the Assessee to file Reply to the Notices and upon receipt of a decision from the assessing authority, if for any reason it is aggrieved by the said decision, to question the same before the forum provided under the Act. Having perused the material on record and in particular the orders of assessment passed by the Assessing Officer pursuant to the Notices u/s 153C, while relegating the Petitioner to the appeal remedy, we would like to make an interim formula in the peculiar facts of the case. It would be open for the Petitioner to file Appeals against the assessment orders. If such Appeals are filed before 25th June, 2019, the same shall be entertained on merits without having reference to limitation.

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• 2019 (6) TMI 445
  Accrual of income - real income theory - Incomes arising on account of contractual work performed before termination of contract and pendency of litigation - demobilization and winding up of site operation costs - HELD THAT:- Tribunal noted that the parent Company was in severe financial crisis; the assessee could not receive any payment for a long time; eventually after delay of nearly four years, the Assessee could recover only 8.58% of the total claim. Interalia on such factors, the Tribunal applied the theory of real income and deleted the addition. In the meantime, the Assessee had also in the later year, claimed same amount by way of bad debts. The Tribunal while giving relief to the Assessee ensured that such claim of bad debts would stand deleted. We are broadly in agreement with the view of the Tribunal. With respect to the larger amount of 59.51 Crores, the claim was for damages for pre mature termination of the contract. The bills were raised after the termination of the contract and the contracted party did not even accepted the bills. With respect to the remaining amount of 26.47 Crores, the Tribunal has applied relevant facts and held that in view of the real income theory, no income tax can be levied on the Assessee at the relevant time. Any further, examination of the issue would be wholly academic in nature since in any case, the Assessee could have claimed the said amount by way of bad debts. Infact, such a claim was allowed, but in view of the further development, pursuant to the impugned decision taken by the Tribunal, such claim was ordered to be adjusted - Decided against revenue.

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• 2019 (6) TMI 444
  Penalty u/s 271D - default u/s 269SS - cash loans from friends - AO doubted various sundry creditors claimed by the assessee - HELD THAT:- The assessee finally made written submissions. In such written submissions also on facts the assessee stated that having exhausted the bank cash credit limits, the assessee was forced to accept cash loans from farmer friends to purchase raw material to execute time bound orders. This was the mere assertion made on the part of the assessee without any backing through material. The assesssee did not bring on record the financial position, the details of purchase orders required to be executed within time and most significantly did not co-relate the purchases made from such cash loans. This aspect has been highlighted by the Tribunal in the impugned judgment when the Tribunal recorded that the assessee has not given the dates on which he accepted the loans and the dates of purchase of raw material in the gray market and whether on such dates the funds were available with the assessee as per his account. Thus assessee relied all along on mere oral assertions of urgent requirement of funds without producing any material to establish such assertion. The Tribunal did not accept such bald assertion and has essentially came to the conclusion that the explanation offered by the assessee was not acceptable. We do not find any error in the view of the Tribunal. Tribunal might have cast certain aspersions on the transaction itself. However, some passing remarks in the order would not vitiate the very foundation of the order. The Tribunal found that the assessee had not giving reasonable explanation for failure to fulfill the requirement of Section 269SS of the Act due to which the penalty under section 271D of the Act had to follow. No question of law arises - Decided against assessee

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• 2019 (6) TMI 443
  TPA - ALP of payment of royalty u/s 92CA(3) - ITAT allowing the assessee s contention that as the payments of Royalty were approved by the Reserve Bank of India ( RBI ), the same was at Arm s Length - HELD THAT:- Transfer Pricing Officer could have applied any of the specified methods for determining Arm s Length Price of the transaction, in case he was of the opinion that the purchase of knowhow made by the assessee from the associated enterprise was not at Arm s Length. Instead of carrying out any such scientific exercise, the Transfer Pricing Officer went on to the justification of the purchase made in the context of the incremental benefit earned by the assessee out of such know-how. This was clearly not within the purview of the Transfer Pricing Officer. Transfer Pricing Officer could not replace the assessee and question its business decision. In the context of the purchase being at Arm s Length, the CIT(Appeals) had permitted the assessee to produce additional evidence which was taken on record after remand report and such evidence proved that the price paid by the assessee was at Arm s Length. No question of law arises. Income Tax Appeal is dismissed.

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• 2019 (6) TMI 442
  Stay of demand - already recovered approximately 38% of disputed tax amount - recoveries would not cause undue financial hardship to the petitioner - HELD THAT:- Pending appeal the Department has recovered approximately 38% of disputed tax amount. Secondly, the appeals are pending since over 2 years by now and lastly, this Court has more than one year back passed interim order preventing the Department from carrying out further recoveries pending appeals. Departmental circulars also envisage stay pending appeal before the Commissioner (Appeals), ordinarily upon deposit of 20% of the disputed tax. This requirement has also been fulfilled in the present case. No special circumstances are pointed out to us to permit the Department to carry out full recoveries. We further record, as stated by the counsel for the revenue that some of the appeals are already decided by the Commissioner (Appeals) and also by the Income Tax Appellate Tribunal, which are in favour of the petitioner-assessee. That being the position, pending disposal of remaining appeals, we would not permit the Department to carry out any further recoveries.

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• 2019 (6) TMI 441
  Reopening of assessment u/s 147 - allowability of deduction u/s 80IB(10) - reasons relates to income on sale of car parking, area of flat allotment of more than one flats - HELD THAT:- The petitioner had produced full accounts. In the profit and loss account, the petitioner had showed income of 112.58 Crores from sale of flats. A separate sum of 4,48,50,0000/- was shown by way of receipt from sale of car parking. Along with the return, the petitioner had also produced accounts dully attached in From 3CD which also contained such details. In plain terms, there was no failure on the part of the assessee to disclose truly and fully all material facts. AO in his reasons recorded for issuing the impugned notice has proceeded on the basis of the material already on record clearly indicating there was no material alient to the record on which he had placed reliance in order to form a belief that income chargeable to tax had escaped assessment. The objections with respect to not providing built up area details and breach of clause (f) to Section 80-IB(10) of the Act are unsustainable factually and legally respectively. The assessee had provided full details including built up area of the flats sold contrary to what the AO had asserted in the reasons recorded. Further, the clause (f) of Section 80-IB(10) would apply in case of allotment to an individual as the Section itself clearly provides which is not a case in the present case. Contention of the Revenue that certain objections not having been taken by the assessee in response to the notice issued would preclude him from raising a contention that the petition is not borne out from any authority or statutory provision. If there is legal contention which goes to the root of the matter and which would render the action of the AO of issuing notice of reassessment without jurisdiction, such a ground cannot be showed out merely because in the written objections, the petitioner had not thought of raising it. Accepting any such contention would enable the revenue to proceed further with the reassessment which at a later relatably stage when shown to be without jurisdiction, would be liable to be quashed. - Decided in favour of assessee.

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• 2019 (6) TMI 440
  Disallowance u/s 14A - Tribunal restricting the disallowance to the extent of expenses claimed - disallowance u/r 8D was made of 2.19 Crores against total expenditure of 24.19 - voluntarily disallowance by assessee of 7.79 Lakhs - HELD THAT:- Sub-section (2) of Section 14 of the Act provides that the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. Sub-rule (1) of Rule 8D also makes similar provision provides that where the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of expenditure made by the assessee or that the assessee claims that no expenditure has been incurred in relation to income which does not form part of the total income, the Assessing Officer would determine the amount of expenditure in terms of sub-rule (2). For applicability of sub-rule (2) of Rule 8D, the requirements of sub-rule (1) would have to be satisfied. Only then, the formula provided in the unamended clause would apply. In the present case, as noted, the assessee s entire claim of expenditure in relation to its business activities was 24.19 Lakhs out of which, the assessee had voluntarily reduced sum of 7.79 Lakhs in relation to income not forming part of the total income. The Tribunal accepted such working out. Quite apart the correctness of the approach of the Tribunal, accepting stand of the Assessing Officer would lead to disallowance of expenditure far in excess of what is claimed by the assessee itself. No question of law arises.

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• 2019 (6) TMI 439
  Accrual of income - interest and compensation amount receipt - Sections 145A and 10(37) applicability - method of computation of the income - HELD THAT:- It is not in dispute that under the amended provision of sub-section 37 of section 10 of the Income Tax Act the income in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head Capital Gains arising from the transfer of agricultural land and such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and where such income has arisen from the compensation or consideration for such transfer received by such assessee on or after received, such income would not form part of the total income. During the course of arguments, the learned Senior counsel placed reliance on the provisions of Section 10(37) of the Income Tax Act which undoubtedly came to be inserted vide amendment dated 01.04.2005 and the provision of Section 145A came to be substituted with effect from 01.04.2010. Substantial question of law is answered in the affirmative. Appeal is allowed in part. The order under challenge is set aside. The appeal is remitted back to the competent authority for re-assessment in accordance with law and more particularly with reference to Sections 10(37) and 145A

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• 2019 (6) TMI 438
  Addition u/s 68 - unexplained deposits in the bank account - creditor submitted that the amount was given out of her streedhan received from her father - HELD THAT:- No evidence was furnished by the assessee either before the Assessing Officer or before the ld.CIT(A) or before the Tribunal to establish that she had received streedhan of 50,000/- and given the same as hand loans to the various persons. The creditor is not an income-tax assessee. No details such as names and addresses of the persons to whom the hand loans were given, date of lending, interest received and the date of repayment etc. were filed. The letter filed by the creditor is a general letter without furnishing specific information, such as the date of receipt of streedhan and the cash flow till April, 2014. Therefore, we are unable to accept the contention of the assessee that the loan received from Smt. G.Lakshmi Bhavani as a genuine. The assessee failed to prove the creditworthiness and genuineness of the source, hence, we do not find any infirmity in the order of the ld. CIT(A) and the same is upheld. Loan from Sri Kodali Murali Mohan - the assessee has furnished the confirmation letter and also evidence for agricultural land holdings. The Assessing Officer simply scrutinized the confirmation letter and made the addition instead of examining the donor. Since the assessee prima-facie has furnished the evidence for agricultural land holdings and also explained in the confirmation letter that creditor was having salary income and agricultural income, the Assessing Officer required to examine the source in detail in the hands of the donor before making the addition. Therefore, we are of the considered opinion that the issue should be remitted back to the file of the Assessing Officer to examine the creditworthiness and genuineness of the source of gift and decide the issue on merits. - Appeal of the assessee allowed for statistical purpose.

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• 2019 (6) TMI 437
  TPA - comparable selection - functional similarity - inclusion of Vama Industries Ltd. in the final set of comparables - HELD THAT:- Software Development Services segment of Vama Industries Ltd., which has been considered as comparable not only includes revenues from Software development services but also from I.T. enabled services as well. It goes without saying that I.T. services and I.T. enabled services are as distinct in connotation and nature as north pole is from the south pole. Whereas IT services include software development services, IT enabled services means services rendered with the already developed software. As IT and ITeS services are not comparable, the assessee rendering only IT services cannot be compared with a company which renders both IT and ITeS. In view of the foregoing discussion, we are satisfied that Vama Industries Ltd. is not a functionally comparable company and the same should be excluded from the list of comparables. AR submitted that if Vama Industries Ltd. is excluded then its profit margin would fall within +/-5% range and there would be no need to examine other comparables challenged in the instant appeal. In view of our decision on exclusion of Vama Industries Ltd., we do not deem it appropriate to delve into other companies from the angle of comparability. We set-aside the impugned order and restore the matter to the file of the AO for recomputing the ALP of the international transaction of the assessee of rendering software development services by excluding Vama Industries Ltd. from the final set of comparables. Appeal of assessee allowed for statistical purposes.

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• 2019 (6) TMI 436
  Penalty u/s. 271(1)(c) - addition of undisclosed sale of jute bags Non specification of charge - defective notice - HELD THAT:- Following the decision in the case of Jeetmal Choraria Vs. ACIT [ 2017 (12) TMI 883 - ITAT, KOLKATA] where it is held that the show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - thus in these circumstances, we are of the view that imposition of penalty cannot be sustained - Decided in favor of assessee.

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• 2019 (6) TMI 435
  Addition u/s 14A r.w.r. 8D(2) - whether any interest expenditure can be attributed to earning of exempt income ? - HELD THAT:- It is noted that assessee has deployed own funds to the tune of 4.39 cr. and investment to earn exempt income is only to the tune of 46 lacs, so, no disallowance need to be made under Rule 8D(2)(ii) of the Rules. For that we rely on the decision of CIT-vs.- Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] . Further, in respect of disallowance under Rule 8D(2)(iii) the AO is directed to compute 0.5% on the investment on which the assessee earned dividend income as held by this Tribunal in REI Agro Ltd. [ 2013 (9) TMI 156 - ITAT KOLKATA] Income from house property - annual letable value of the house property which the assessee stated to have inherited from his mother on which the AO has calculated the annual letable value invoking sec. 22 and 23 - HELD THAT:- No inquiry was carried out by the AO before estimating the annual letable value of the house despite the assessee pointed out this fact to the AO that the house in question is an old house, which is in a dilapidated condition and so it is not habitable and therefore, the question of letting out of the property does not arise. In the interest of justice and fair play set aside the order of CIT(A) and restore the matter to the file of AO to verify the contention of the assessee that the house in question is in a dilapidated condition and not habitable. AO after making enquiries finds the contention of the assessee to be correct then no deemed provision of sec. 22 read with section 23 should be saddled on the assessee. If the contention of the assessee fails and the house is habitable then the AO to make reasonable annual letting value considering the location and rent which the house could fetch in that locality in accordance to law after hearing the assessee. - Appeal of assessee is allowed for statistical purpose.

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• 2019 (6) TMI 434
  Penalty u/s 271(1)(c) - limb of of inaccurate particulars of income filed by assessee - interest received on income tax refund but not offered for tax - HELD THAT:- Revenue has to clearly state as to which particulars are not being filed accurately. Form 26AS is the document issued by the Revenue and in the said document the interest portion has been shown as not applicable . If the department itself has not given a proper quantification, it will not be appropriate on part of the Revenue to take a plea that the assessee filed inaccurate particulars of income. In fact the assessee has offered the refund amount to the tax authorities. Therefore, the Assessing Officer as well as the CIT(A) was not correct in imposing penalty u/s 271(1)(c) of the Act. Therefore, the appeal of assessee stands allowed.

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• 2019 (6) TMI 433
  Penalty u/s 271(1)(c) - non specification of exact charge viz. concealing the particulars of income or furnishing of inaccurate particulars of income - defective notice - Addition of contingent liability and assessee could not adduce any evidence to demonstrate that the debts became bad during the year - assessee has revised its computation of income during assessment proceedings on the basis of audited financial statements which has resulted into certain additions in the hands of the assessee - HELD THAT:-Explanation 1 is a deeming provision and is applicable only when an amount is added or disallowed in computation of total income which is deemed to represent the income in respect of which particulars have been concealed. Explanation 1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income. Therefore, the action of AO in invoking the same for furnishing of inaccurate particulars of income would not stand the test of law. The facts of the present case would reveal that the penalty was initiated on the basis that the assessee has furnished inaccurate particulars of income whereas the penalty has finally been levied in terms of Explanation-1 on account of concealment of income. Keeping in view the above findings and reasoning, we hold that the impugned penalty could not be sustained under law since AO has failed to specify that the exact charge in the show-cause notice and secondly, the penalty has been invoked for one limb but finally levied on another limb, which is not in accordance with law. The perusal of show-cause notice dated 26/02/2015 as placed on record reveal that neither the appropriate clause was marked nor appropriate lime was ticked, for which penalty proceedings were being initiated against the assessee. The assessee, in his submissions, drew attention to the aforesaid fact and stressed that the notice was bad in law. See SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2019 (6) TMI 432
  Classification of income - share trading as business income or capital gains share - STCG - Period of holding - HELD THAT:- It is settled law that there is no bar for the assessee to maintain two separate portfolios-one for investment and one for trading See GOPAL PUROHIT [ 2010 (11) TMI 222 - SC ORDER] The perusal of assessee s personal Balance Sheet as placed on record would reveal that majority of the investments have been funded out of assessee s own capital. The assessee has earned dividend income of 34.45 Lacs during impugned AY. Another pertinent fact to be noted that the assessee has income from garment business to the tune of 47.30 Lacs which would prima-facie, establish that share trading was not the only activity carried out by the assessee during impugned AY. Apart from this, the assessee was also carrying on the business of finance investment in another proprietorship concern during impugned AY. The average holding period is more than 100 days. Further, the long-term gains earned on similar activity has been accepted by the revenue as Capital Gains only. Moreover, latest CBDT Circular No.6/2016, which is clarificatory in nature, applies to listed securities and directs AO not to disturb the stand taken by assessee provided the same is applied consistently. Hence, we find that there could not be any straight jacket formula to distinguish the same and further there cannot be any single decisive factor to determine the same but an overall view has to be taken keeping in mind peculiar facts and circumstances of the case. Accordingly, after weighing all the factors as cited above, we find ourselves in agreement with the submissions of Ld. AR and therefore, inclined to hold that the impugned gains were rightly offered as Capital Gains. By reversing the stand of lower authorities, we allow this ground of appeal. See GOPAL PUROHIT [ 2010 (1) TMI 7 - BOMBAY HIGH COURT] Disallowance u/s 14A - HELD THAT:- AR has submitted that in terms of decision of Delhi Tribunal (Special Bench) in ACIT Vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] only exempt income yielding investments were to be considered to arrive at the said disallowance. Concurring with the same, Ld. AO is directed to compute the disallowance by considering those investments which have yielded exempt income during the year.

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• 2019 (6) TMI 431
  Revision u/s 263 by CIT - Directing the AO to verify as to whether the new acquired flats are independent units and re-examining the claim of the Appellant u/s 54 - HELD THAT:- As perused relevant material on record including question put to assessee in notice u/s 142(1) during original assessment framed u/s143(3) specific queries were raised by Ld.AO regarding assessee s eligibility to claim exemption u/s 54 and the documents / information were duly supplied by the assessee. Therefore, we form an opinion that Ld. AO with due application of mind, after making requisite inquiries, accepted assessee s claim. This being so, the action of Ld. Pr.CIT could not be justified. Nothing on record would suggest that the action of Ld.AO was not in conformity with statutory provisions or not in line with the binding judicial precedents prevailing at the time of framing assessment u/s 143(3). As per extant provisions of Section 54 as interpreted by various judicial authorities, the expressions a residential house would not mean to indicate a singular number. The same is also evident from the fact that the words a residential house were replaced with one residential house only with effect from 01/04/2015 and accordingly, the amendment was not applicable to impugned AY. Simply because, Ld. Pr.CIT hold adverse view in the matter, in our opinion, would not be a ground to invoke jurisdiction u/s 263 unless any perversity is established in the order of Ld. AO. Once a plausible legally sustainable view has been taken by Ld. AO in the matter, the revisional jurisdiction u/s 263 would not be warranted. - Decided in favour of assessee.

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• 2019 (6) TMI 430
  TDS u/s 194C OR 194J - short deduction of tds channel placement/carriage fees - non deduction of tds - disallowance u/s. 40(a)(ia) - HELD THAT:- In assessee s own case 2017 (11) TMI 915 - BOMBAY HIGH COURT] has held Carriage Fee/Channel Placement Fees to be covered within scope of Work defined under sub-clause (b) to clause (iv) of the Explanation to Section 194C. We have also observed that in the case of CIT v. Times Global Broadcasting Co. Ltd. [2018 (8) TMI 1810 - BOMBAY HIGH COURT] has held Carriage Fees/ Channel Placement Fees paid to cable operators /MSO/DTH operators being payment for work contract covered u/s 194C by relying on the decision of Hon ble Bombay High Court in the case CIT v. UTV Entertainment Television Ltd. (supra). Also confirmed by SC [ 2019 (5) TMI 1297 - SUPREME COURT OF INDIA] As concerned with Carriage Fees/ Channel Placement Fees paid by the assessee to cable operators for putting channel on certain frequency to enhance viewership of the said channel. These payments were held by Hon ble Bombay High Court to be standard fees paid for broadcasting channel on certain frequency. We have also observed that Hon ble Jurisdictional High Court has consistently held that payments of Carriage Fees/ Channel Placement Fees are covered under the definition of work under sub-clause (b) to clause(iv) to Explanation to Section 194C and income-tax is deductible at source u/s 194C. Reference is drawn to decision of Hon ble Bombay High Court in the case of CIT v. Zee Entertainment Enterprises Limited [ 2018 (3) TMI 317 - BOMBAY HIGH COURT] - Decided in favour of the assessee

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• 2019 (6) TMI 429
  Exemption u/s 11 - charitable activity u/s 2(15) - Bangalore Development Authority (BDA) - real estate developer - scope of amendment of section2(15) w.e.f. 01.04.2009 - existence for Charitable Purpose objects of the assessee as per BDA Act, was to develop the City of Bangalore and areas adjacent thereto - as per AO focus of the Assessee has been more on selling sites by auction to the highest bidder and was not for providing affordable housing to the public - HELD THAT:- As decided in assessee s own case [2019 (3) TMI 1300 - ITAT BANGALORE] the fact of surplus or shortfall is not to be reckoned as the test for applicability of the proviso to section 2(15); but rather, whether the activity is embarked upon solely with the view to earn profit or not; which the AO and CIT(A) have not done. We hold that the activities of the assessee, i.e., Bangalore Development Authority are not hit by the proviso to section 2(15) of the Act. Having held so, we direct the AO to allow the assessee the benefits of section 11 while giving effect to this order. Consequently, grounds raised by the assessee on this issue are allowed.

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• 2019 (6) TMI 428
  Disallowance of provision for leave encashment u/s 43B(f) - HELD THAT:- A decided in M/S. S.R. BATLIBOI CO [ 2012 (3) TMI 585 - ITAT KOLKATA] s et aside the orders of the authorities below on this point and restore the matter back to the file of the AO with the direction that he will readjudicate this issue as per decision of the Hon ble Apex Court in the case of M/s. Exide Industries Ltd. [ 2009 (5) TMI 894 - SC ORDER] Disallowance on account of software expenses - nature of expenses - revenue or capital expenditure - HELD THAT:- It is observed that the payment was made for maintenance/hosting services and there was no acquisition of right in software as spelt out in Para 7(a) of Software Maintenance Support Agreement dated 1stJuly, 2009. We find that the AO has misunderstood the facts of the case. The payment made by the assessee has not resulted in any enduring benefit and are only for annual maintenance and support services. The same services has been availed by the assessee in future years also which suggests that the same were availed on annual basis and was not a one-time payment. Hence, we do not find any possible reason to treat the expense as capital expenditure since the payment is made only for maintenance and support services, necessary for using the application efficiently. - Decided against revenue Disallowance of commission expenses - allowable business expenses or not? - HELD THAT:- A.O. has made various allegations and the assessee has submitted rebuttal to each such allegation during the appellate proceedings. It is observed that the A.O. has not brought any corroborative evidence in support of his allegation except making only such allegation. On perusal of statement by third parties no adverse inference could be drawn. In absence of any evidence of payments being not genuine, we do not find any justification in the action of the A.O. in treating the impugned commission payments as not being expended wholly and exclusively for the purpose of business. In view of the facts narrated above, we note that the addition made on account of commission payments rightly deleted by ld CIT(A) - Decided against revenue. Addition of warranty expenses - unrecovered warranty cost - HELD THAT:- We note that pursuant to the agreement entered into between the Caterpillar and the assessee, the assessee is entitled to claim reimbursement of warranty expenses from Caterpillar claimed by its custom. The assessee incurred total warranty cost claimed as reimbursement from Caterpillar out of which warrant only claim of 15,17,74,140/- was accepted by the Caterpillar. Balance warranty claim of 82,02,019/- was denied by the Caterpillar and was not reimbursed to the assessee. The assessee in its books of accounts has not debited the full amount of warranty expenses but what has been debited is only the unrecovered warranty cost of 82,02,019/-. In this regard, we find no merits in the contention of the AO that the assessee has violated the principle of accounting by only recording the expense without any credit. Since the unrecovered warranty cost represented business expense of the assessee, the same was debited to Profit and Loss Account and in view of the above, since the expenditure is incurred for business purpose, warranty expenses should be allowed. - Decided in favour of assessee.

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• 2019 (6) TMI 427
  TDS u/s 195 - Disallowance of commission paid to non-residence - DTAA provisions - HELD THAT:- CIT(A) has rightly deleted this addition as the commission paid to non-resident cannot be treated as assessee s income from other sources as the assessee had earned income, the said income outside India and also the payment was made to non-resident which cannot be taxable in India when the parameters of DTAAs are applied to such transactions. Besides this in assessee s own case for A.Y. 2010-11 [ 2018 (4) TMI 517 - ITAT DELHI] , the Tribunal has dismissed this ground taken by the Revenue and no contrary or distinguishing facts were pointed out during the hearing in the present assessment by the Ld. DR - Decided against revenue Disallowance of polishing charges - CIT(A) restricting the addition made by disallowing 15% of polishing charges, to 3,87,925/- - HELD THAT:- We have heard both the parties and perused the material available on record. The CIT(A) has rightly allowed the expenses of 22,963/- and upheld the disallowance of 3,73,469/- as the assessee failed to furnish the requisite information in respect of payment made to 5 parties . Therefore, there is no need to interfere with the findings of the CIT(A). Addition of excess claim of depreciation on electrical fitting - plant and machinery v/s furniture and fixtures - HELD THAT:- The depreciation on electrical fittings has rightly been claimed by the assessee at 15% by treating it as part of plant and machinery and not as furniture and fixtures. It is necessary to have electrical fittings for the power supply to the machineries and plant without electrical fittings and power supply, there is no use of plant and machinery. Therefore, Ground No. 2 of assessee s appeal is allowed. Addition on interest free advances - notional interest on interest free advances - CIT(A) upheld the said disallowance made by the AO - HELD THAT:- No addition can be made assessee has its own funds which amount to 22.54 crores as on 31/3/2011 and 23.84 crores as on 31/03/2010. Therefore, advances were given out of its own funds only. Thus, in light of the decision of M/S RELIANCE INDUSTRIES LTD [ 2019 (1) TMI 757 - SUPREME COURT] , no addition on account of notional interest can be made by the Assessing Officer. - Decided in favour of assessee

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• 2019 (6) TMI 426
  Assessment u/s 153A - unaccounted business income alleged to be earned on sales of plot at Ganesh Vihar Scheme - addition computed on the basis of noting found in search proceedings - Proof of ownership of the plots filed before AO - HELD THAT:- In the case of the assessee there is no positive material available on record to form a reasonable belief that the cash component in sale consideration of plots which were owned by third party was income of the assessee. No documents were found from the possession of assessee or from the other one to prove that any consideration was received/receivable to assessee. Detailed finding has been recorded by the ld. CIT(A) in this regard in appellate order which has not been controverted by the ld DR by bringing any contrary material, accordingly, we do not find any reason to interfere to hold that no cash component transaction was received by the assessee. Brokerage @ 4% earned on sale of plots - CIT (A) sustained the addition - HELD THAT:- Keeping in view the nature of business in which the assessee was engaged, it is reasonable to presume that the assessee must have earned some commission on the transactions routed through him. Keeping the case wherein normal part commission is earned by brokerage of seller and part commission is earned by the brokerage of buyer, it is reasonable to presume that the assessee has earned commission @ 2% on the alleged transactions. Accordingly, the A.O. is directed to restrict the addition to the extent of 2% of the brokerage on the alleged transaction of sale of plots. Undisclosed income alleged to be used for making undisclosed payment for purchases of agriculture land purchased from Shri Jai Singh Yadav - addition was made solely on the basis of search statement of Shri Nirmal Kedia partner of the assessee, which were retracted later-on - corroborative evidence/document - HELD THAT:- No corroborative or incriminating material was linked to the addition. The A.O made the addition of 5,00,00,000/- merely on the basis of statement of assessee recorded u/s 131 during the survey at Sanganer Office and was subsequently confirmed in statement u/s 132(4) at residence Kedia House . The AO has not pointed out any material, seized document, incriminating material to support the addition. From the record we also found that the department had carried out survey at 1, Gaytri Nagar-1, Main Sanganer Flyover, Tonk Road, Jaipur on 19.11.2016. During the course of survey, the survey party recorded the statement of partner of assessee u/s 131on 19.11.2016. In answer to question No. 18 and 19 of statement the partner of assessee accepted the undisclosed payment of 5 Crore made to Shri Jainsingh Yadav for purchases of agriculture land. In the case of assessee no any agreement, receipt, material was found to corroborate the surrender made in survey. Neither such material was found from the possession of assessee group nor from the possession of Shri Jai Singh Yadav group where the search was taken place on the same day. The surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. Detailed finding recorded by the ld. CIT(A) in this regard, has not been controverted by the ld. DR by bringing any positive material on record. Considering the judicial pronouncements relied on by the ld CIT(A) vis a vis quoted by the ld AR and ld DR during the course of hearing before us in the context of factual matrix of the case, we do not find any reason to interfere in the finding so recorded by the ld CIT(A) resulting into deletion of addition of 5.00 crores. Hence, this ground of the revenue s appeal is dismissed. Addition on account of alleged unaccounted business income - CIT(A) has upheld the addition by estimating G.P. rate @ 30.6% on the alleged transaction - HELD THAT:- CIT(A) has upheld the addition by estimating G.P. rate @ 30.6% on the alleged transaction. Referring to the weighted NP rate declared by the assessee we modify the order of the ld. CIT(A) and direct for applying profit rate of 6% in place of profit estimated by the ld. CIT(A) at 31% Addition based on dump documents - HELD THAT:- CIT(A) has analysed each and every document and came to the conclusion that these documents are dump documents as name/date or narration return which could lead to an inference that the transaction on these documents are those which have been escaped assessment. Thereafter by following the judicial pronouncements, the ld. CIT(A) has deleted the addition. The detailed findings so recorded by the ld. CIT(A) has not been controverted by the ld DR by bringing any positive material on record. Therefore, we do not find any reason to interfere in the order of the ld. CIT(A) in deleting the impugned additions. Addition on the basis of AS-1 - HELD THAT:- As found from the examination of the document that no name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. There is no reference in this paper that whether the same regarding the revenue of expenses . There is no reference of Cash on this paper as alleged by the AO in the assessment order, therefore from the examination of this paper it cannot be presumed that this paper is containing the unaccounted transactions. The basis details which are required for verification of transactions is not available on this paper, therefore the same is not subject to verification from regular books of accounts and in absence of that the same can only be treated rough noting, deaf dump paper. Had this paper would be having any relation with the real business transaction of the assessee group than there should have been some noting/hints regarding such business transaction but the same is missing in the seized document, therefore the noting on this paper is nothing but only rough noting from which no conclusion can be drawn and no addition can be made. Addition in respect of AS-6 - HELD THAT:- On examination of documents, we observe that no name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee or regarding to sales made by the assessee. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. As during the course of day to day workings, several clients and prospective buyers visit the office of the assessee group and the discussion is held by them with the sale team of the assessee group regarding purchases of plots. During such discussion rough notings were made by the sales team. Had this paper would be having any relation with the actual business transaction of the assessee group than there should have been some noting/narration such as plot No., name of buyer, date etc. but the same is missing in the seized document, therefore the noting on this paper is nothing but only rough noting from which no conclusion can be drawn and no addition can be made. Further the name of the assessee or name of its scheme is not mentioned over this paper than how the same can be treated as belonging to the assessee only. Addition as per Ext.-1 - HELD THAT:- We found that the documents were found and seized from the residence of accountant of assessee group Shri Mohit Vijayvergiya. No name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee or regarding to sales made by the assessee or assessee group. No name of any buyer or name of the scheme has been written over this paper by which it can be conclude that this papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. Assessee has only one scheme Kedia Kingdome wherein size of plot no 40 is 164.21 sq mt as against 196.94 mentioned in the seized paper. Similarly, size of plot no 127 is 115.52 sq mt as against 169.62 mentioned in the seized paper. Similarly, size of plot no 122 is 135.35 sq mt as against 100 mentioned in the seized paper. Most interestingly, plot no 123 mentioned in the seized paper does not exist in the scheme of the assessee. The detail as per books of account of the assessee in respect of sales of plots Addition as per Ext.-10 Annexure-A - HELD THAT:- The scribbling on the paper are in relation to some renovation work which was to be carried out but the same was actually not carried out by the assessee group. The assessee group was planning to carry out some renovation work, therefore the staff of the assessee group send the tentative estimation for such renovation work. At the top of dairy dated 21/05/2014 (PB pg 78) Sardarji mentioned and at the top of dairy dated 23/05/2014 Sohan is mentioned. There is several repetitions of entries like AC, CCTV, Fan, AC platform, Map, etc., this shows that the quotation was obtained from some Sardarji and Sohan . There is noting on the record that the renovation work was actually carried out by the assessee group. No such AC , Sofa and wooden flooring as mentioned in the paper were found installed in the premises of the assessee group. Had this work would be actually carried out then some bills/vouchers in support of that will also found which proves that this work was actually did not carried out. In view of above submission this is to submit that no addition can be made on the basis of these paper and the addition made by AO is wrong and the CIT (A) rightly deleted the addition.

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• 2019 (6) TMI 425
  Condonation of delay of 303 days - reason given that the CA of the assessee was suffering from backache which was supported by the medical certificate issued by the Orthopedic Surgeon - It was also submitted that there was frequent changes of MD of the assessee Corporation - HELD THAT:- When there was a valid medical certificate issued by the Specialist Doctor, the CIT(A) cannot doubt the same without bringing any material contrary to the facts submitted by the assessee. The assessee s present Managing Director made a petition/affidavit affirming that there were frequent changes of Managing Directors of the assessee-Corporation and it was an inadvertent error on the part of the assessee for not taking steps to file the appeals before the CIT(A). The CIT(A) has not disputed the fact of frequent changes of Managing Directors of the assessee-Corporation. However, the CIT(A) wants to know why the assessee was prevented from filing the appeals before him. The assessee has already stated that his Chartered Accountant was sick and hence, there was delay in filing the appeals before the CIT(A). More so, the assessment orders for these assessment years were passed ex parte by the Assessing Officer u/s. 144 which itself shows that there is no proper presentation from the Counsel of the assessee before the Assessing Officer. Hence, in our opinion, there are good and sufficient reasons for filing the appeals belatedly before the CIT(A). Disallowance u/s 43B - assessee not remitted VAT payable before the due date of filing of the return of income - CIT(A) observed that the provisions of section 43B of the Act are not applicable to the assessee since the assessee had not produced any evidence to show that the provisions of section 43B have been complied by the assessee - HELD THAT:- The assessee has not produced any evidence to show that the provisions of section 43B have been complied with by the assessee. In the absence of the same, the CIT(A) sustained the addition. Before us, the Ld. AR pleaded that the assessee may be given an opportunity to place necessary evidence in support of the claim of the assessee. Considering this request of the assessee, we are inclined to remit this issue to the file of the CIT(A) with a direction to give opportunity to the assessee to produce evidence to show that the provisions of section 43B have been complied with by the assessee - Appeal of the assessee allowed for statistical purposes.

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• 2019 (6) TMI 424
  Penalty u/s 271(1)(c) - Voluntary disclosure of income or not - whether no incriminating materials by the AO during the course of assessment? - HELD THAT:- AO in the penalty order and the assessment order has clearly given a finding that assessee had agreed for the impugned additions only when assessee was confronted with the incriminating materials by the AO during the course of assessment. Furthermore as regards the assessee s claim of aforesaid income under a statement u/s 132(4) is concerned we note that nothing is on the records as to when pursuant to the said admission taxes were paid by the assessee or in which return filed the said disclosure was made. We find that provisions of law u/s 271(1)(c) for search conducted is contained in Explanation 5 Explanation 5A to that section. CIT(A) in his appellate order has not dealt with the concerned section. He has also not dealt with the AO s observation that the offer of income was not voluntarily. We also note that Ld. CIT(A) has not dealt with as to when assessee paid the taxes in accordance with his offered u/s 132(4) of the Act or when pursuant to the said disclosure return of income was filed. We note that in his appellate order, Ld. CIT(A) has referred several case laws and without showing as to how these are comparables or applicable on the facts of the case decided the issue in favour of the assessee. We further note that Hon ble Apex Court has an occasion to consider the issue of levy of penalty u/s 271(1)(c) of the Act with respect to claim of voluntary disclosure in the case of MAK Data Pvt. Ltd. vs CIT [ 2013 (11) TMI 14 - SUPREME COURT ] . In our considered opinion on the facts and circumstances of the case, the issue needs to be remitted to the Ld. CIT(A) to consider the issue in light of observation as above. Ld. CIT(A) shall also consider the case laws and other submissions been made by the Ld. Counsel of the assessee. - Appeal filed by the Revenue stands allowed for statistical purpose.

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• 2019 (6) TMI 423
  Penalty u/s 271(1)(c) - during the course of assessment proceedings for AY 2010-11 it was noticed by the AO that the compensation received by assessee on cancellation of booking of fiat was not disclosed in AY 2007- 08. The assessee has admitted this and paid tax and interest and submitted a revised return along with letter dated 23-03-2013. Since the revised return was out of time notice u/s.148 was issued - HELD THAT:- The said section 271(1)(c) provides for levy of penalty for concealment and furnishing of inaccurate particulars of income. In the present case we note that the assessee has duly submitted the revised return before the issue of notice u/s. 148. That the assessee has also paid taxes accordingly. The assessment has been made on the basis of sums already declared by the assessee. In these circumstances in our considered opinion assessee cannot be said to have acted contumacious manner so as to warrant levy of penalty u/s. 271(1)(c) of the Act. We also draw support from case of Hindustan Steel Ltd. Vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT ], wherein as expounded that the authority may not levy penalty if the conduct of the assessee has not been found to be contumacious. Accordingly in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the levy of penalty. - Decided in favour of assessee.

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• 2019 (6) TMI 422
  Rectification u/s 254 - tangible asset on account of goodwill and commercial rights and registration existed in the books of the firm before Succession - HELD THAT:- Upon careful consideration we find that by submitting elaborate arguments in the realm of review of the order of ITAT, the assessee is seeking an order u/s. 254(2) which only permits rectification of mistake apparent from record. The submission of the assessee herein above, barring a typographic mistake in figures, which though has no affect on the final outcome has duly been rectified by corrigendum, call for immense amount of reasoning and review. The learned Counsel of the assessee has even made further legal submissions. It is settled law that review of the order in the garb of rectification of mistake is not permissible in the Act.

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• Corporate Laws

• 2019 (6) TMI 421
  Direction to the 2nd Respondent Registrar of Companies, Mumbai not to act upon the extract, a copy of which is Exhibit A to the Petition - scope of Section 164 (2)(a) of the Companies Act 2013 - HELD THAT:- he issue whether this provision can be invoked and applied despite the amendment to the Companies Act 2013 been brought into efect from 1st April 2014, can it afect the position of a director who was appointed prior to this provision being brought into efect, is very vital. Secondly, we will have to consider the impact of this provision on a person who is or has been a director of a company which has defaulted in complying with the requirements of the Companies Act 2013. Whether every director of a company in this position should be proceeded against and declared to be ineligible for reappointment or appointment in other companies is the main question. Once it is argued that the disqualification is not automatic and would not result in vacating of the office, then, all the more it is necessary to be clarified until we hear the parties at some length that the documents such as Exhibit A uploaded on the portal of the Registrar of Companies as also any other document which in the nature of the page 23 of the paper-book by itself and without anything more will not prevent or preclude the participation of such directors in the proceedings contemplated in Section 29-A of IBC. The position of the Petitioner in terms of Section 29-A under a distinct statute namely the Insolvency and Bankruptcy Code 2016 shall not be afected by the impugned acts of Respondent No. 2. With this clarification having been issued we do not think that a specific ad-interim or interim order is required in this Petition. This Petition is also to be placed on 13th June 2019.

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• Insolvency & Bankruptcy

• 2019 (6) TMI 420
  Withdrawal of CRIP process initiated against the corporate debtor - section 12A read with section 60(5) of the IBC 2016 - HELD THAT:- Petition disposed off.

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• 2019 (6) TMI 419
  Initiation of Corporate Insolvency and Resolution Process - Corporate Debtor - approval of a Resolution Plan - Appointment of Resolution Plan. HELD THAT:- The Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order in view of the recent judgement of the apex court in K Sashidhar Indian Overseas Bank ors. [ 2019 (2) TMI 1043 - SUPREME COURT ]. The Hon ble Supreme Court in the said order has made the role of COC quite vital for deciding the fate of the company. It has been held that the Adjudicating authority is not required to go into the merits or reasoning of the decision taken by the COC for approval or rejection of a resolution plan. The only benchmark which is set up to be determined by the AA is to see whether the plan has been approved by 75% voting of the COC or not. Therefore, the commercial wisdom is not allowed to be interfered with. The approval of a Resolution Plan by the CoC is to be accepted in toto by the Adjudicating authority if a 66% voting share approves the said plan. Because of the latest decision, the scope of any suggestion or alteration in the impugned resolution plan is very limited. As far as the procedure is concerned, in this case, the same has been followed as per the provisions of the Insolvency Code, therefore, the Resolution Plan has to be approved. The Resolution Applicant has submitted an affidavit as required U/s 30(1) of the Code stating that he is eligible U/s 29A of the Code. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth.

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• FEMA

• 2019 (6) TMI 418
  Review petition - HELD THAT:- There is no provision in law to file review petitions again and again and again against review orders. Review petitions can be filed against an order only for errors apparent on the face of it. This is not the case here. The review order dated 24.06.2015 has attained finality in as much as it has not been challenged in any High Court by these appellants. The review order dated 24.06.2015 is a speaking order which also has reflected as to how the appellants have tried to mislead the Bench. As discussed in the brief facts, the sequence of this case only points towards the appellants trying to take the Bench for granted and make a mockery of the entire system. I cannot allow such travesty of justice. The review application alongwith the condonation of delay for which no cogent reason has been given, is therefore dismissed as rejected.

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• Service Tax

• 2019 (6) TMI 417
  Valuation - Section 67 - Associated enterprises - lease rent equalisation shown in Balance sheet - HELD THAT:- As prayed, reply affidavit be filed within two weeks. List the mater after three weeks.

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• 2019 (6) TMI 416
  Refund claim - Business Auxiliary Services - commission received from foreign based principals for promotion of sale of its products/ goods in India. HELD THAT:- Issue notice.

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• 2019 (6) TMI 415
  Demand of service tax - intellectual property rights - Reverse charge mechanism - whether or not IPR service was received even after 10.09.2004 by M/s DHPL in terms of agreement entered into in 2002 - HELD THAT:- Issue notice on the application for condonation of delay as well as on the Civil Appeal. Tag with Civil Appeal No. 5076 of 2015.

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• 2019 (6) TMI 414
  CENVAT Credit - trading activities - common inputs used for providing taxable services as well as in trading activity - non-maintenance of separate records - Whether the assessee could claim the credit on input which were not services? - extended period of limitation - HELD THAT:- The reason assigned by the High Court in passing the impugned order needs no interference as the same is in consonance with law. Appeal dismissed.

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• 2019 (6) TMI 413
  Business Auxiliary Service - marketing and promotion of pesticides/insecticide manufactured by their principal - extended period of limitation - HELD THAT:- Issue notice on the application for condonation of delay as well as on the Civil Appeal, returnable within three weeks.

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• 2019 (6) TMI 412
  Penalty - CENVAT credit - fictitious invoices - doctrine of severability - Section 73 (1A) of the Act. HELD THAT:- Issue notice.

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• 2019 (6) TMI 411
  Simultaneous penalties u/s 76 and 78 - Commercial coaching and training services - case of Revenue is that the assessee was aware about its service tax liability; despite this knowledge, it filed its returns claiming that no liabilities were attracted - HELD THAT:- Leave granted.

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• 2019 (6) TMI 410
  Business Auxiliary Service - promotion/marketing of the sale of goods belonging to their clients - benefit of exemption under Notification No 14/2004-ST dated 10.04.2009 - time limitation - HELD THAT:- The services provided by the person (service provider) to the client are only exempted in terms of the said notification, and services provided by the appellant to their clients do not fall within the any of the clauses referred at a to d in the said notification the benefit of exemption will not be admissible to the appellants - In the case under consideration Commission Agents were procuring the orders as per which the textile materials was to be manufactured and supplied hence bench concluded that the activities undertaken were incidental and auxiliary to the auxiliary to the activity of production. In the present case appellants do not provide any service in relation to textile processing to their clients. Management and Business Consultancy services - Commission Agent services - N/N. 14/2004-ST - HELD THAT:- The entire defence of the appellants is that if the turnover in respect of Commission Agent services, which as per them is exempted under Notification No 14/2004-ST is excluded then their total turnover will be less then 10 Lakhs and they will be exempted under Notification No 6/2005-ST. Since we do not agree with the contention of the appellants that the services provided by them as commission agent are exempt from payment of service tax the entire defence set up for getting this demand set aside collapses. Time limitation - Bonafide belief - HELD THAT:- We do not find anything placed on record to show the existence of such a bonafide belief - the demands made by invoking the extended period of limitation as provided by Section 73 of the Finance Act, 1994 are sustainable. Demand of interest - HELD THAT:- Since we have upheld the demand of service tax, the demand of interest under Section 75 is natural corollary. Penalties - HELD THAT:- Since service tax has been demanded invoking extended period of limitation under Section 73 of Finance Act, 1994, penalty under Section 78 will follow - Since appellant have failed to take registration and pay the service tax, penalties under section 77(1)(a) 77 (2) of Finance Act, 1994 to are justified and sustained. Appeal dismissed - decided against appellant.

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• Central Excise

• 2019 (6) TMI 409
  Valuation - includibility - value of chassis supplied free of cost by the telecom company - classification of goods - HELD THAT:- There is no merits in the appeal - appeal dismissed.

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• 2019 (6) TMI 408
  Suo moto credit of Excise duty paid twice or Refund claim - Section 11B of the Central Excise Act, 1944 - HELD THAT:- In this case, it is an admitted fact on record that the appellants had paid duty twice, once at the time of removal of transformer from the factory and subsequently on removal of the transformer oil. There is no statutory mandate for double payment of duty and in such cases, a manufacturer of excisable goods is permitted under the statute to claim refund of Central Excise duty paid in excess. Refund claim is governed under Section 11B ibid. The said statutory provision prescribes inter alia, the time limit for filing of refund application and fulfilment of the aspect of doctrine of unjust enrichment. Since the issue involved in this case pertains to double payment of duty on transformer oil, the only recourse left to the appellants was to claim refund of the excess duty paid by it, in terms of Section 11B ibid, which admittedly has not been complied with by the appellants. The applicants have also taken the stand that since they have availed suo motto credit within one year from the date of payment of the duty amount, such availment of credit should be treated as refund claim. We are of the considered view that such stand of the appellants are not legally tenable, for the reason that Section 11B of the Act clearly provides the modalities for filing of refund claim and entertaining of the same by the authorities. Since no formal refund application was filed, the case of the appellants is outside the scope and purview of Section 11B ibid. Appeal dismissed - decided against appellant.

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