TMI Tax Updates - e-Newsletter
June 12, 2019

Case Laws in this Newsletter:

GST Income Tax Insolvency & Bankruptcy Service Tax CST, VAT & Sales Tax Indian Laws

Articles

1. CIT.A – DIRECTION FOR REOPENING ASSESSMENT FOR OTHER YEARS IS NOT VALID – Discussion in view of provisions and Tribunal order.

   By: DEVKUMAR KOTHARI

2. SPECIAL PROVISIONS FOR MANUFACTURNG PROCESS OF EXPLOSIVES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Transition plan to the new GST Return

2. Finance Minister holds Second Pre-Budget Consultation with the Representatives of Industry, Services and Trade Groups

3. Finance Minister holds First Pre-Budget Consultation on Agricultural and Rural Development; FM stresses on the measures to boost Economic and Social Infrastructure of Rural Sector and ways to eradicate unemployment and poverty through development of Agriculture and Allied Sectors as well as Non-Farm Sector; Reiterates that the concerns of Agriculture Sector are high on the priority of the present Government

4. Committee to Review the ATM Interchange Fee Structure

5. All Measures to Make Steel Manufacturing Sector Competitive- Piyush Goyal

Notifications

Customs

1. 22/2019 - dated 10-6-2019 - ADD

Seeks to extend levy of anti-dumping duty till 24.06.2019, on imports of "Paracetamol" originating in or exported from china PR, imposed vide notification No. 39/2018 Customs (ADD), dated the 20th August, 2018,in pursuance order of Hon'ble High Court of Gujarat in the matter of SCA 5278/2019

GST - States

2. ERTS(T) 65/2017/Pt.1/298 - dated 10-5-2019 - Meghalaya SGST

CORRIGENDUM - Notification No.3/2019-State Tax issued vide No.ERTS(T) 65/2017/Pt.1/293, dated the 29th January, 2019.

3. ERTS(T) 4/2019/235 - dated 25-4-2019 - Meghalaya SGST

CORRIGENDUM - Notification No. 3/2019 - State Tax (Rate) No.ERTS (T) 4/2019/195, dated the 29th March, 2019.

4. 15804 – FIN-CT1-TAX-0064/2017/FIN - S.R.O. No. 141/2019 - dated 16-4-2019 - Orissa SGST

Amendment in the Notification of the Government of Odisha in the Finance Department No. 25994-FIN-CT1-TAX-0064/2017, dated the 5th September, 2017 S.R.O. No. 382/2017.

5. 427/2019/04/(120)/XXVII(8)/2019/CT-16 - dated 31-5-2019 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (second amendment) Rules, 2019

Circulars / Instructions / Orders

GST - States

1. Circular No. 07/2019 - dated 30-5-2019

Scrutiny of self assessed returns filed by registered persons -Discrepancies noticed - Failure to take corrective measures to rectify the discrepancies - Completion of assessments - guidelines issued.

DGFT

2. 09/2015-20 - dated 11-6-2019

Withdrawal of the Merchandise Exports from India Scheme (MEIS) benefit for 'Onions Fresh or Chilled' under ITC (HS) code 07031010 with immediate effect

Highlights / Catch Notes

GST

• Conservancy and solid waste management services to Howrah Municipal Corporation are GST exempt as pure services.

  Case-Laws - AAR : Classification of supply of services - providing conservancy/solid waste management service to the Conservancy Department of the Howrah Municipal Corporation - Being a Pure service, GST is exempt.
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• GST Exemption for Applicant's Supply to HMC: Section 51 and TDS Notifications Not Applicable.

  Case-Laws - AAR : TDS under GST - As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply.
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• No ITC for GST on Motor Vehicles Used in Rent-a-Cab Services per Section 17(5)(b)(i) of GST Act.

  Case-Laws - AAR : Input tax credit (ITC) - GST paid on the purchase of motor vehicles for supplying rent-a-cab service is not admissible for credit in terms of section 17(5)(b)(i) of the GST Act.
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• Contract Supply of Goods Only 2%: Classified as "Pure Service," Exempt from IGST Under Eleventh Schedule, Sl No. 5.

  Case-Laws - AAR : Pure Service - in the course of which goods are to be supplied, constitutes only 2% of the value of the contract - The services are relatable to the function listed under Sl No. 5 of the Eleventh Schedule, especially when undertaken by a department of the State Government - Benefit of exemption from IGST allowed.
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Income Tax

• Interest Expense Disallowance Not Applicable for Assessee with Sufficient Interest-Free Funds u/s 14A(2) of Income Tax Act.

  Case-Laws - AT : Disallowance u/s 14A - when assessee has huge interest-free funds available which can take care of investment made by the assessee - assessee had shown interest expenses of ₹ 10. 99 crores as against interest income of ₹ 20. 99 crores - in such situation, as per sub-clause(2) to Section 14A he could not make disallowance out of interest expenditure
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• Tax Case Remanded for New Valuation: LTCG to be Reassessed by DVO Using Accurate FMV Methodology.

  Case-Laws - AT : Computation of LTCG - the valuer has taken the stamp value rate of year 2012 and worked its backward @ 10% growth rate to obtain FMV at 1.4.1981 - CIT(A)’s acceptance of the said valuer’s report as sacrosanct despite the papable lack of veracity of the valuer or method of valuation is not at all sustainable - remanded to AO to obtain valuation report from the DVO
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• Penalty u/s 271(1)(c) Not Automatic for Non-Inclusion of Tax Refund Interest; Negligence Not Always Misconduct.

  Case-Laws - AT : Penalty u/s 271(1)(c) - non inclusion of interest on IT refund received u/s 244A - failure to look into the 26AS at the time of filing return would not indicate any contumacious or obstinate conduct on the part of the assessee, but possibly reflect laxity or some carelessness - A bonafide error or mistake does not necessarily invite penalty proceedings in every case
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• Petitioners Charged u/s 276-C for Tax Evasion; Trial Court's Decision Upheld, Criminal Revision Dismissed.

  Case-Laws - HC : Offence u/s 276-C - failure to pay tax to the credit of the Central Government under Chapter XVIIB - charges framed against the petitioners - the trial Court does not suffer from any infirmity or illegality - the petitioners may make a representation to the authority concerned if the offence is compoundable in nature for getting the same compounded - Criminal Revision dismissed
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• Court Orders Appellate Authority to Evaluate Petitioner's Hardship Over 20% Tax Demand Payment Under Instruction No.4(B)(b) 2016.

  Case-Laws - HC : Stay petition - directed to the (Respondent) appellate authority to consider the genuine hardship that would be caused to the petitioner in case the he is directed to pay 20% of the disputed demand placing reliance on Instruction No.4(B)(b) of the Circular dated 29.2.2016 - protected from coercive action till a decision is taken by AA
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• Investor Companies Validated, No Shell Entity Evidence; Pr.CIT Cannot Override AO's Decision Without Basis u/ss 263 & 68.

  Case-Laws - AT : Revision u/s 263 - addition u/s 68 - in the present case the investor companies are not paper/shell companies and AO has invoked proper and sufficient enquiries by issuing notices u/s 133(6) which are duly complied with - the source of source of investment has been established by the assessee - Pr.CIT cannot invoke powers to substitute the view taken by the AO merely on the basis of the presumption
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• +5% Benefit for Arm's Length Price on Management Fees Applicable for AY 2010-11 Per Section 92C(2) Amendment.

  Case-Laws - AT : Availability of +-5% benefit in determining the ALP - NIL ALP of the international transaction of Payment of management fees - Second proviso to section 92C(2) substituted by the Finance (No.2) Act, 2009 w.e.f. 01-10-2009 - it is overt that even for the assessment year, namely, 2010-11, the benefit of the second proviso would be available by virtue of the Explanation given at the end of Section 92C(2)
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• Rebate u/s 88E Only Applies to Income from Taxable Securities Transactions, Not Other Income Types.

  Case-Laws - AT : Rebate u/s 88E - Rebate in respect of STT payment - rebate is admissible to the assessee only in respect of the income of an assessee in a previous year, chargeable under the head “Profits and gains of business or profession”, arising from taxable securities transactions - no ambiguity in restricting the rebate and not allowing for other income
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• 324-Day Filing Delay Condoned Due to Trustee's Illness; Quality of Reasons Over Duration Matters for Condonation.

  Case-Laws - AT : Condonation of delay of 324 days - on account of illness of one of Trustee of the assessee-trust during the relevant period - It is a settled proposition that it is not the length of the delay, but the quality of the reasons for delay, which shall prevail in order to adjudicate whether a condonation of delay is merited - delay condoned
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• No Deduction Allowed: Section 80A(5) Blocks CIT from Granting Section 80-IB Claims in Revisional Jurisdiction u/s 264.

  Case-Laws - HC : Revision u/s 264 - deduction u/s 80-IB - Provision of Section 80A(5) is a statutory interdict which would prevent the CIT from granting any such claim in exercise of his revisional jurisdiction u/s 264 - even High Court in exercise of Writ jurisdiction under Article 226 of the Constitution of India would not issue directions contrary to statutory provisions - no deduction
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• Notice u/s 263 Set Aside Due to Excessive Delay; No Limitation Period u/s 153(3) for Reassessment.

  Case-Laws - HC : Revision u/s 263 - impugned notice which seeks to give effect to an order u/s 263 for revision u/s 143(3) falls u/s 153(3) and not u/s 153 (2A) - there is no limitation prescribed u/s 153(3) for reassessment or recomputation - However, the delay of 8 years and 7 months in initiating such proceedings is inordinate and therefore fatal to the Department - notice set aside
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IBC

• Adjudicating Authority Can't Block Claims or Intervene in Criminal Cases Under Insolvency Code Section 60(6) Jurisdiction.

  Case-Laws - AT : Power of Adjudicating Authority(AA) - RP has approved by the COC - The AA has neither jurisdiction to pass any order with regard to any matter pending before the Court of criminal jurisdiction nor prohibit the aggrieved person to file a claim against the ‘Corporate Debtor’ u/s 60(6) of the ‘I&B Code’ before the competent Court/appropriate Forum
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• RP Cannot Reject Creditor Claims Post-COC Approval; File u/s 60(6) or Claim u/s 40.

  Case-Laws - AT : Power of Resolution Professional to decide or reject the claim of one or other 'Financial Creditor' or 'Operational Creditor' - once resolution plan has been approved by the COC and the 'RP' had placed the same before the Adjudicating Authority then RP has no power to either admit or reject such claims - appellant can file suit u/s 60(6) before any court after completion of the period of moratorium or claim u/s 40 of I&B Code before Liquidator
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Service Tax

• CENVAT Credit Denial Overturned: Location Shouldn't Dictate Eligibility Without Output Services from Delhi Unit.

  Case-Laws - AT : CENVAT Credit - Territorial Jurisdiction - Rejection of credit on the ground that, the credit of the input services availed at their Delhi unit which was denied on the ground that no output service is provided from Delhi, has been held to be incorrect.
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• Assessee Found Not Liable for Site Services; Only Rented Earth-Moving Machines, Demand Quashed Due to Lack of Evidence.

  Case-Laws - AT : Classification of services - adjudicating authority held the assessee have not been engaged in the activity of Site Formation and Clearances, Excavation and Earth moving service but only supplying earth moving machines like excavators etc. on rental basis and the physical control and possession of these machines have always remained with the clients who hired such machines - the department has not adduced any evidence to controvert the finding - demand quashed
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VAT

• Informer Reward Withheld: Tax Not Irrevocably Due Yet, Says Government.

  Case-Laws - HC : Non-payment of Reward payable to the informer - at this stage, reward amount cannot be released, since tax has not became irrevocably due to the Government.
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• Appellant's ITC Claim Affected by Vendors' Failure to File or Defective Returns; ITC Viewed as Concession, Not Right.

  Case-Laws - HC : Input tax credit - the vendors of the Appellant had not filed their returns and/or had filed defective returns - ITC is not a matter of right but a concession.
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Case Laws:

• GST

• 2019 (6) TMI 488
  Pure Service - supply of goods does not constitute more than 25% of the value - supply of services to government in relation to any function entrusted to a panchayat or a municipality - Exemption under Sl No. 3 or 3A of Notification No 9/2017-Integrated Tax (Rate) dated 28/06/2017 - contract for the resuscitation by re-excavation of river Palaspai from Banskhal to Mahisghata, along with raising and strengthening of embankment on both sides of the river in Block Daspur - 1 2 and P.S Daspur in Paschim Medinipur - recipient is the State Government - HELD THAT:- As such, compacting, in the course of which goods are to be supplied, constitutes only 2% of the value of the contract. It is, therefore, a composite supply primarily of various services, principal supply being the service of resuscitation of the river, where the supply of goods constitutes well below the threshold mentioned in Sl No. 3A of the Exemption Notification. The services are relatable to the function listed under Sl No. 5 of the Eleventh Schedule, especially when undertaken by a department of the State Government, which is primarily entrusted to execute such functions. The Applicant s service to the recipient, therefore, is exempt under Sl No. 3A of the Exemption Notification. The Applicant s supply to the Irrigation and Waterways Directorate, Govt of West Bengal is exempt from the payment of GST under Sl No. 3A of Notification No 9/2017 - Integrated Tax (Rate) dated 28/06/2017, as amended from time to time.

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• 2019 (6) TMI 487
  Input tax credit - purchase of Motor Vehicles for supply of rent-a-cab service in terms of section 17(5)(b)(iii) of the Act - section 17(5)(a)(B) of the GST Act - HELD THAT:- Amended provisions of section 17(5)(b)(iii) of the GST Act do not contain reference to the rent-a-cab service. However, post amendment, input tax credit shall not be available in respect of supply of the service of renting or hiring of motor vehicles in terms of section 17(5)(b)(i) of the GST Act, unless the inward and the outward supplies are of the same category, standalone or as an element of a taxable composite or mixed supply. Passenger transportation service is classified under SAC 9964. Transportation of passengers, with or without accompanied belongings, is taxable under Sl No. 8 of Notification No. 11/2017-CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135 - FT dated 28/06/2017), as amended from time to time (hereinafter collectively called the Rate Notification) - Renting of any motor vehicle, however, is classified under SAC 9966. It is taxable under Sl No. 10(i) of the Rate Notification. The recipient of this service is not a passenger. He is enjoying the service of having provided a motor vehicle, with or without a driver, for use in whatever way he likes for the duration of the renting period. It may remain parked for the entire duration of renting without actual transportation of any person. Even when any person the recipient of the service or someone of his choice - is being actually transported, the consideration is paid not for the distance travelled, but for renting the cab. Rent-a-cab is not defined in the GST Act. Nature of the Applicant s service is, therefore, derived from what is stated in the Application and what can be ascertained from the invoices. The Applicant provides cab rental service inter alia to institutions like West Bengal Postal Service. The recipient, has to pay the Applicant a certain amount per month as consideration irrespective of what distance the cab travels in a particular month. Additional amount has to be paid if the cab is retained for extra hours or requisitioned on holidays. For the purpose of covering the cost of fuel, the distance travelled needs to be brought into play, but only if it crosses a certain threshold. It is, therefore, clear from the above discussion that the nature of the service the Applicant provides is classifiable under SAC 9966 as renting of a motor vehicle. Credit of GST paid on purchase of motor vehicles or other inputs for the supply of the Applicant s service is not, therefore, admissible in terms of section 17(5)(b)(i) of the GST Act. GST paid on the purchase of motor vehicles for supplying rent-a-cab service is not admissible for credit in terms of section 17(5)(b)(i) of the GST Act.

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• 2019 (6) TMI 486
  Classification of supply of services - providing conservancy/solid waste management service to the Conservancy Department of the Howrah Municipal Corporation - pure services or composite supply - recipient of the service - whether government, local authority, governmental authority or a government entity - supply in relation to any function entrusted to a panchayat or a municipality under the Constitution or not? - Applicability of TDS notifications. HELD THAT:- The recipient is a municipal corporation, which is a local authority as defined under section 2(69) of the GST Act - The vehicles used and the fuel consumed and the machinery used do not result in any transfer of property in goods to HMC. The consideration to be paid measures the work only in terms of the quantity of the garbage lifted and removed. Based on the documents, it may, therefore, be concluded that the Applicant s supply to HMC is a pure service. Article 243W of the Constitution that discusses the powers, authority and responsibilities of a Municipality, refers to the functions listed under the Twelfth Schedule as may be entrusted to the above authority. SI No. 6 of the Twelfth Schedule refers to public health, sanitation, conservancy and solid waste management. The Applicant s supply to HMC is a function mentioned under SI No. 6 of the Twelfth Schedule - The Applicant s service to HMC, therefore, is exempt under SI No. 3 of the Exemption Notification Applicability of TDS notifications - HELD THAT:- The TDS Notifications bring into force section 51 of the GST Act, specify the persons under section 51(1)(d) of the Act and have mandated and laid down the mechanism for deduction of TDS. These notifications, therefore, are applicable only if TDS is deductible on the Applicant s supply under section 51 of the GST Act. Section 51(1) of the Act provides that the Government may mandate inter alia a local authority to deduct TDS while making payment to a supplier of taxable goods or services or both - As the Applicant is making an exempt supply to HMC the provisions of section 51 and, for that matter, the TDS Notifications do not apply to his supply.

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• Income Tax

• 2019 (6) TMI 485
  Revision u/s 263 by CIT - non deduction of TDS on reimbursement of cost - assessee had not furnished any facts as to how the time spent by employees was determined and whether the amount was actually spent by the recipient of reimbursement of expenses - HELD THAT:- For earlier assessment years, this Court had by an order [ 2019 (2) TMI 1638 - BOMBAY HIGH COURT] dismissed the Revenue s Income Tax Appeal on the ground that the payment made for reimbursement of costs, deduction at source is not necessary - Decided against revenue

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• 2019 (6) TMI 484
  Revision u/s 264 - deduction u/s 80-IB - HELD THAT:- Petitioners claim cannot therefore be accepted de hors the said statutory provision and ordinary principle of the wide powers of the CIT exercising revisional jurisdiction u/s 264 of the Act cannot be imported. What Section 80A(5) mandates is that, if the assessee fails to make a claim in his return of income for any deduction under the provisions specified therein, the same would not be granted to the assessee. This condition or restriction is not relatable to the Assessing Officer or the Income Tax Authority In absence of the provision contained in Section 80A(5) has held by various decisions of the High Courts noted above, the CIT could entertain a fresh claim in Revision Application even if the claim was not made previously before the AO. Provision contained in Section 80A(5) is a statutory interdict which would prevent the CIT from granting any such claim in exercise of his revisional jurisdiction u/s 264. As is often times stated, even High Court in exercise of Writ jurisdiction under Article 226 of the Constitution of India would not issue directions contrary to statutory provisions. Width of the powers of the CIT u/s 264 would not permit him to ignore the requirement of Section 80A(5) or allow the claim of an assessee in breach of the condition contained therein. We are therefore not in agreement that the expression given by the Income Tax Tribunal in case of Madhav Construction [ 2017 (8) TMI 1122 - ITAT MUMBAI] holding that the restriction contained in Section 80A(5) is to restrict the power of AO and not higher Income Tax Authorities. The Petitioners having given up the challenge to the constitutionality of the retrospectivity to Section 80A (5), cannot bring in the concept of the reading down of the provision in order to save if from unconstitutionally. In plain terms, our duty would be to enforce the provision contained in Sub Section (5) of Section 80A, as it is stands in the statue book. The decision in case of Goetze (India) Limited [2006 (3) TMI 75 - SUPREME COURT] was rendered in different background. The Supreme Court did not have any occasion to interpret the provision of Section 80A (5) in the context of the power of the CIT or the Appellate Tribunal. In the result, we do not find any merit in the Writ Petition, the same is therefore dismissed.

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• 2019 (6) TMI 483
  Disallowance u/s 14-A - the underline investment was for strategic purposes - HELD THAT:- The Income Tax Appellate Tribunal (ITAT) rejected the Revenue s appeal on the ground that income derived through strategic investments, i.e. for the purpose of maintaining minimum or what is deemed to be commercially feasible holding in a subsidiary entity, is exempt. This was based upon the previous understanding of the law. It was in these circumstances that this Court framed the question of law which it did. In Maxopp Investment Ltd. v. CIT [ 2018 (3) TMI 805 - SUPREME COURT] , the question which this Court had formulated in these appeals, was answered. The answer to the question of law framed by this Court, therefore, has to be in the affirmative. It is apparent from a reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning, having regard to the facts of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee s assertion that in fact no expenditure was incurred while investing in the mutual funds that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny. On this aspect, therefore, the Court is of the opinion that the task is better performed by the ITAT. In view of the above discussion, the question of law is answered in favour of the Revenue, but subject to the factual findings recorded above. The matter is remitted to the ITAT for further hearing and findings on the substantive aspect with regard to attributability of expenditure to dividend income earned through the mutual funds in which the assessee invested.

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• 2019 (6) TMI 482
  Addition u/s 10(37) and 145A - interest and the compensation amount were declared on accrual basis - HELD THAT:- Method of computation of the income came to be settled in the case of Commissioner of Income Tax Vs. Ghanshyam [ [ 2009 (7) TMI 12 - SUPREME COURT] wherein the Hon ble Apex Court was pleased to lay down the law that the computation of income sought to be made on receipt basis. 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) 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. The substantial question of law is answered in the affirmative.

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• 2019 (6) TMI 481
  Revision u/s 263 - delay of 8 years and 7 months for initiation of proceedings initiated u/s 143(3) pursuant to direction by CIT - limitation u/s 153(2A) - whether the revision sought to be made under the impugned notice by the Assessing Authority, would fall u/s 153(2A) or 153(3)? - HELD THAT:- In the instant case in hand, the Commissioner had given certain directions with determined findings and thereby, directed the AO to carry out such directions. In consequence to these findings and directions of the Commissioner, AO will be required to exercise his powers u/s 153 (3) and not u/s 153 (2A). As such, it cannot be said that the impugned proceedings now initiated by the AO is barred by limitation u/s 153(2A) . The first ground raised by the learned counsel for the petitioner is answered accordingly. Consequence of the delay of 8 years and 7 months - inordinate and unreasonable - One of the settled proposition of law, as decided in various decisions of the Hon ble Apex Court as well as many High Courts is that where no limitation is prescribed for completion of reassessment, such process must be completed within a reasonable time and this proposition would depend on the facts and circumstances of each and every case. In Mohamad Kavi Mohamad Amin v. Fatmabai Ibrahim [ 1996 (8) TMI 537 - SUPREME COURT] observed that where no time limit is prescribed for exercise of a power under a statute, it does not mean that it can be exercised at any time; such power has to be exercised within a reasonable time. According to the respondents, after the Commissioner had passed orders u/s 263, the Assessee had consistently changed its name on various occasions which resulted in the delay. A further vague reason has also been stated in the counter that after the original assessment order was passed, appeals came to be filed before the CIT and ITAT. Thereafter, when the Assessee sought for refund, the old files of the Assessee were retrieved. Such an explanation cannot be at any stretch of imagination deemed to be sufficient cause for the delay. Insofar as the consistent change of the Assessee s name is concerned, it is nobody s case that the PAN number of the Assessee was also undergoing a change. When the relevant files and documents pertaining to the PAN number of the Assessee was before the AO, we are unable to comprehend as to how the change in names could result in delay of more than 8 years. Hence, the reason of change in name of the Assessee, cannot be accepted as a sufficient cause for the delay and consequently, could only be termed as inordinate or unreasonable . The second reasoning that the Assessee s files were traced only when they made a claim for refund goes to show that the respondents were admittedly sleeping over the matter. The very fact that they had commenced tracing of the old files of the Assessee, when they had filed their claim of refund would amount to an admission on the part of the Department that they were not proceeding any further in the matter. Accordingly, this reason will also not amount to a satisfactory explanation for the delay. When the delay by itself is 8 years and 7 months without any reasonable explanation whatsoever, it can be termed as inordinate . Though there is no limitation prescribed u/s 153(3) for reassessment or recomputation, in view of the unreasonable delay in initiating the proceedings, the impugned notice dated 18.09.2003 is liable to be set aside. This Court, holds that the impugned notice which seeks to give effect to an order u/s 263 for revision u/s 143(3) falls u/s 153(3). However, the delay of 8 years and 7 months in initiating such proceedings is inordinate and therefore fatal to the Department. Accordingly, the impugned notice passed by the first respondent is set aside.

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• 2019 (6) TMI 480
  Stay petition - directing the petitioner to pay 20% of the outstanding demand - HELD THAT:- It is necessary to direct the respondent No.3 to consider the stay application filed by the petitioner on 15/16.5.2018 and take a decision in the matter considering the genuine hardship that would be caused to the petitioner in case the petitioner is directed to pay 20% of the disputed demand placing reliance on Instruction No.4(B)(b) of the Circular dated 29.2.2016. Assessment order being unreasonably high-pitched and the matter is heard by the appellate authority, the assessee is required to be protected from coercive action, if any, to be initiated by the Department until a decision is taken by the appellate authority. Under these circumstances the respondent No.3 is directed to consider the stay application filed by the petitioner on 15/16.5.2018 and take a decision in the matter in an expedite manner keeping in mind the observations made hereinabove.

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• 2019 (6) TMI 479
  Offence u/s 276-C - failure to pay tax to the credit of the Central Government under Chapter XVIIB for the financial year 2009-2010 - charges can be framed against the petitioners - petitioners were responsible and in-charge for day to day affairs of firm - HELD THAT:- The order passed by the trial Court does not suffer from any infirmity or illegality, therefore, there are no grounds for entertaining this Criminal Revision Case. However, in view of the submissions made by the learned counsel for the petitioners, the petitioners may make a representation to the authority concerned if the offence is compoundable in nature for getting the same compounded. With these observations, the Criminal Revision Case is disposed of.

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• 2019 (6) TMI 478
  TPA - computation of ALP of the Manufacturing as well as Trading segment by excluding Foreign Exchange Gain/Loss (forex) - inclusion or otherwise of forex gain/loss in the computation of operating margin under the TNMM both for the assessee as well as the comparables - HELD THAT:- There is no doubt that in such rules, forex gain/loss has been treated as non-operating. However it is pertinent to note that such rules are not applicable to the assessment year under consideration. Even the reliance of the DR on certain decisions taking cognizance of safe harbour rules for the period anterior to their insertion in other contexts, does not improve the case of the Department. Following the judgment in Principal Commissioner of Income Tax Vs. Ameriprise India Private Limited [ 2016 (3) TMI 1272 - DELHI HIGH COURT] holding foreign exchange gains earned by the assessee, which is in relation to trading items and emanating from international transactions, cannot be treated as non-operating losses and gains, the Hon ble Delhi High Court in Pr. CIT VS. B.C. Management Services Pvt. Ltd. [ 2017 (12) TMI 255 - DELHI HIGH COURT] reiterated held that foreign exchange fluctuation in relation to trading transactions, prior to safe harbor rules from 2013, is operating gain or loss. The amount of foreign exchange gain/loss arising out of trading transactions is required to be considered as an item of operating revenue/cost, both for the assessee as well as the comparables. The ground taken by the assessee is, therefore, allowed. Availability of +-5% benefit in determining the ALP - NIL ALP of the international transaction of Payment of management fees - HELD THAT:- Second proviso to section 92C(2) provides that if the variation between the ALP and the price at which the international transaction has actually been undertaken does not exceed the specified margin, which at the material time was 5%, then the price at which the international transaction has actually been undertaken shall be deemed to be the ALP. The effect of this proviso is that so long as the difference between the ALP as determined by applying one of the specified methods and the price at which the international transaction was undertaken is within the prescribed percentage, no transfer pricing adjustment can be made. This proviso was substituted by the Finance (No.2) Act, 2009 w.e.f. 01-10-2009. Explanation to sub-section (2) of section 92C has clarified : that the provisions of the second proviso shall also be applicable to all assessment or reassessment proceedings pending before the Assessing Officer as on 1st October, 2009 . Thus, it is overt that even for the assessment year under consideration, namely, 2010-11, the benefit of the second proviso would be available by virtue of the Explanation given at the end of sub-section (2) of 92C. We, therefore, hold that the CIT(A) was justified in extending the benefit of +/-5% margin in determining the ALP of the international transactions. This ground of the Revenue fails. Exclusion of additional companies selected by the TPO from the list of comparables - HELD THAT:- AR, at the very outset, submitted that even if all the companies directed to be excluded by the ld. first appellate authority, against which the Revenue has come up in appeal before the Tribunal, are included, its profit margin would be within the permissible range of +/-5%, if forex gain is treated as an item of operating nature. DR did not dispute this position. In view of the rival but common submissions, though we technically accept the ground of the Revenue, but it would not lead to increase in the total income by reason of any transfer pricing addition. We set aside the impugned order and remit the matter to the file of AO/TPO for a fresh determination of the ALP of the international transaction of Trading segment in conformity with the foregoing discussion.

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• 2019 (6) TMI 477
  Deduction u/s 80IA(4) - operating and maintenance of the infrastructure facility i.e. Container Freight Station (CFS) - objection regarding agreement with the Government and the status of CFS as port - allegation that the assessee has not entered into an agreement with Govt. of India or State or local authority for the purpose of developing the infrastructure - HELD THAT:- Respectfully following the view taken by this Tribunal and the decision of Hon ble Madras High Court in CIT Vs. AL Logistics (P) Ltd. [ 2015 (1) TMI 401 - MADRAS HIGH COURT] and CIT Vs. Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT] we hold that the assessee is entitled for deduction u/s 80IA(4).

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• 2019 (6) TMI 476
  Condonation of delay of 324 days - on account of illness of one, Shri Sameer Kadam, Trustee of the assessee-trust during the relevant period - HELD THAT:- It is a settled proposition that it is not the length of the delay, but the quality of the reasons for delay, which shall prevail in order to adjudicate whether a condonation of delay is merited. The Hon ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji Ors. [ 1987 (2) TMI 61 - SUPREME COURT ] held that the substantive cause of justice should prevail over technical considerations, while dealing with the condonation of delay applications. Therefore we deem it fit and proper to condone the delay in filing of the appeal. Recognition u/s 80G - charitable activity of not? - Assessee-trust was granted registration as a charitable institution u/s 12A - whether the Director was justified in denying the continuation of recognition u/s 80G ? - As per the Director, the assessee has not spent any money towards the objects of the Trust - HELD THAT:- The said objection of director is quite otiose to the requirements which are required to be evaluated by the Director at the stage of considering application u/s 80G(5). Some of the germane issues in the present case which clearly stand out are as follows; that the assessee continues to be a charitable institution u/s 12A - assessee has been regularly filing its return of income and claiming exemption u/ss 11/12 - there is no adverse order by the AO with regard to assessee s claim for exemption u/ss 11/12 - since Assessment Year 1997-98 and till Assessment Year 2008-09, assessee was granted recognition u/s 80G there is no allegation, much less a finding by the Director, that the activities of the assessee have undergone any change from the past years, we do not find any justification on the part of the Director in denying the recognition sought u/s 80G Even otherwise, we find that the observation of the Director that the assessee is not engaged in charitable activities or that money has not been spent towards attainment of the objects is quite misplaced. Various activities being carried out by the assessee-trust, namely, weekly meetings and library, Sky observation programmes, exhibitions, slide shows, basic and advanced courses in astronomy for students, conducting of study tours, workshops, conference and special events, etc. It was also explained by the Learned Representative that since its inception 20 years ago, assessee-trust has been publishing a bulletin called Khagol Warta in Marathi, which is very well received by the researchers and students of Astronomy. Our attention has also been drawn to the list of publications since 1986, which has been brought out by the assessee-trust. All these aspects, in our view, do not lend support to the perception of the Director that the assessee-trust is not incurring expenditure towards its objects. Assessee is earning incomes from carrying on activities which are in the field of popularising Astronomy and, therefore, to say that there is no expenditure incurred towards the furtherance of its objects is obviously an incorrect assertion on the part of the Director. In any case, we find that the Director has made only a bald assertion without referring to any specific material in support of his plea that assessee has not incurred any expenditure towards the objects of the trust. Therefore, on facts also, we are not inclined to uphold the stand of the Director - Decided in favour of assessee.

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• 2019 (6) TMI 475
  Bogus LTCG - Exemption u/s. 10(38) denied - Addition u/s 68 - off market transaction for purchase of shares - HELD THAT:- We note that 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. The assessee has furnished all evidences in support of the claim of the assessee that it earned LTCG on transactions of his investment in shares. The purchase of shares had been accepted by the AO in the year of its acquisition and thereafter until the same were sold. The off market transaction for purchase of shares is not illegal as was held by the decision of Co-ordinate Bench of this Tribunal in the case of Dolarrai Hemani vs. ITO [ 2016 (12) TMI 1074 - ITAT KOLKATA] and PCIT Vs. BLB Cables Conductors Pvt. Ltd. [ 2018 (8) TMI 525 - CALCUTTA HIGH COURT] wherein all the transactions took place off market and the loss on commodity exchange was allowed in favour of assessee. The transactions were all through account payee cheques and reflected in the books of accounts. The purchase of shares and the sale of shares were also reflected in Demat account statements. The sale of shares suffered STT, brokerage etc. In the facts and circumstances of the case, it cannot be held that the transactions were bogus.- Decided in favour of assessee.

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• 2019 (6) TMI 474
  Allowability of Gratuity payments - whether expenditure in respect of so called gratuity can be said to be incurred wholly and exclusively for business purposes? - HELD THAT:- It is pertinent to note that at the time of incorporation, some of the employees from Bharti, Vodafone and Idea group companies were transferred to the assessee and were enrolled as full time employees. The assessee was required to pay ex-gratia/gratuity amount in terms of the terms and conditions of appointment for such employees. Sample employment contracts, details of all the employees transferred from Bharti, Vodafone and Idea group companies, period of employees continuous service and the amount of gratuity paid were duly furnished before CIT(A). CIT(A) called for the remand report and the AO has not pointed out any fault with the evidence produced by the assessee. In present case, gratuity was actually paid. AR relied upon the decision of CIT vs. Premier Cotton Spg. Mills Ltd. [ 2002 (7) TMI 66 - MADRAS HIGH COURT] wherein it was held that if the entire amount is not allowable u/s 36(1)(v), the balance amount would necessarily have to be allowed as a business expenditure u/s 37 of the Act and also that section 40A(7) has no application when there was an actual payment to an approved gratuity fund. Ground No. 1 of Revenue s appeal is dismissed. Taxability of Lease equalization reserve -t he additional expenditure/revenue is nothing but an average of increase in future lease rental over the lease term, which is credit to special account revenue/lease equalization reserve under AS 19 - which is part of the lease rent to be paid or payable to the owner of the premise on which telecom sites (towers) are installed - HELD THAT:- The assessee debited an additional amount of 16,21,45,355 to P L over and above the actual lease expenditure/revenue during the assessment year as the assessee adopted AS 19. The liability to pay increased payments is contingent upon use of the premises in future. Thus additional expenditure representing lease equalization reserve is a notional expense not allowable u/s 37. AR relied upon the decision in case of CIT vs. Shoorji Vallabhdas Co. [ 1962 (3) TMI 6 - SUPREME COURT] wherein it was held that If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income , which does not materialize . The Ld. AR also relied upon the decision of Godhra Electricity Co. Ltd. [ 1997 (4) TMI 4 - SUPREME COURT] wherein it was held that only real income can be brought to tax. Both these decision are applicable in the present case as the assessee has made hypothetical income and is not a real income which cannot be taxed. Hence, Ground No. 2 of the Revenue s appeal is dismissed. Disallowance of interest on loan - whether any part of loan taken is used to finance activity of construction of communication towers - statements of the assessee that on an average the tower is constructed within 45 days - HELD THAT:- Construction of towers began in April 2008 whereas IRU agreement was entered into 1st January, 2009. AO was factually incorrect in observing that assessee commenced business through lease of towers under IRU agreement. The submission AR that Receipt of equipment and services is accounted for as CWIP while the telecom site is under construction and are capitalized to fixed assets only after site is completed and starts generating revenue and the assessee gets an average credit period of 90 days from its suppliers for various material and services while erection and commissioning of telecom sites normally takes approx. 45 days for being ready to use is correct as per the records submitted before the CIT(A). Accordingly, a telecom site is ready to use even before the suppliers are paid. Hence no loan needs to be drawn when the site is under construction. Details of 14,484 self-constructed towers were submitted as additional evidences before CIT(A) and sample RFAI certificates were furnished to CIT(A). Thus, after going through the evidence, the CIT(A) arrived at a proper finding and correctly deleted this addition - Ground No. 3 of the Revenue s appeal is dismissed. Disallowance of IRU charges - allowable revenue expense - HELD THAT:- Amount paid as confirmed by various parties is no case less than amount as per IRU agreement and in most cases same as stated in IRU agreement. AO in his notice u/s 133(6) did not ask for number of tower confirmation. AO only asked for amount confirmation. From the records it can be seen that the confirmations filed by the assessee was not properly verified either by the CIT(A) as well as by the AO and both the authorities take the cognizance of the relevant clauses of the IRU agreement. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer to take into account all the relevant evidence. Allowability of Loans processing fees as revenue expenditure u/s 37 - interest u/s 2(28A) - HELD THAT:- Business need funding from time to time and thus this expense is routine business expense claimed as revenue in nature. In fact, CIT(A) gave finding with respect to disallowance of interest and depreciation that none of the loans related to incomplete towers shown as CWIP as the appellant has yet to make payment for such suppliers i.e. loans were not utilized for construction of telecom towers. Expense related to loan cannot be capital in nature and allowable as revenue expenditure. These contentions of the AR are acceptable as the funding is required in business necessities from time to time and these expenses are regular business expenses claimed by the assessee. The assessee has filed the relevant evidence before the Revenue authorities as to the expenses and there is no adverse finding that these expenses are not utilized for the business. - Decided in favour of assessee.

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• 2019 (6) TMI 473
  Rebate u/s 88E - Rebate in respect of securities transaction tax - claim admissible in respect of income of an assessee, chargeable under the head Profits and gains of business or profession , arising from taxable securities transaction. restriction of claim by CIT-A - allocation of expenses towards incomes on which rebate U/s 88E not allowed to the assessee - HELD THAT:- There is no ambiguity regarding statutory provisions U/s 88E, to the extent that rebate u/s 88E is admissible to the assessee only in respect of the income of an assessee in a previous year, chargeable under the head Profits and gains of business or profession , arising from taxable securities transactions. Orders of the lower authorities, CIT(A) and AO, restricting the rebate u/s 88E to income chargeable under the head Profits and gains of business or profession , arising from taxable security transaction, is upheld. The assessee s claim to allocate expenses against such incomes which had been excluded from the profits of the business in computing rebate u/s 88E is a reasonable claim. Merely, because income on which rebate U/s 88E was not allowable was only 3.32% of the total income, such allocation of expenses cannot denied. The opinion expressed by the AO as well as Ld. CIT(A) that such incomes would not require expenditure of substantial amounts is not based on any credible materials. Neither the AO nor the CIT(A) has supported this view, on the basis of facts of the case. We disapprove this approach adopted by the AO and CIT(A), in refusing to allocate any expenses towards incomes on which rebate u/s 88E was not allowed to the assessee. Direct the AO to allocate expenses to incomes on which rebate u/s 88E has been denied to the assessee and re-compute the rebate U/s 88E, accordingly. For this limited purpose, we are setting aside the order of the Ld. CIT(A) and remanding the matter to the file of the AO. - Appeal of the assessee is partly allowed for statistical purposes

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• 2019 (6) TMI 472
  Reassessment proceedings u/s 147 - AO in the instant case after receiving information from the Investigation Wing has duly applied his mind and recorded reasons before issue of notice u/s 148 - share application money from entry providers - HELD THAT:- Notices u/s 148 were issued, however, it is seen that because of certain clerical mistake, the name of the company was wrongly mentioned which was corrected on the same date and fresh notice was issued at correct postal address mentioning the correct addresses. Therefore, concur with the finding of CIT(A) that it was a bonafide mistake or small irregularity which was immediately corrected/rectified by the AO within the time available and without hampering the legality of the reassessment proceedings. Since the assessment was reopened on the basis of specific information received that the assessee is a beneficiary of taking accommodation entry of 30 lakhs in the garb of share application money from entry providers Shri Surendra Kumar Jain / Virendra Kumar Jain which was identified by Investigation Wing of the department after thorough investigation and enquiries and the AO after due application of mind has recorded the reasons for reopening of the assessment, therefore, in view of the detailed reasoning given by CIT(A), no infirmity in the same. Accordingly, grounds relating to validity of reassessment proceedings are dismissed. Addition u/s 68 - share application money - commission u/s 69C - HELD THAT:- It is an admitted fact that due to non-production of the Directors of the Investment Companies in the shares of assessee company and non-fulfillment of conditions laid down in terms of provisions of S.68, the AO made addition of 30 lakhs u/s 68 in respect of the share application money received from the five investing companies and further made addition of 60,000/- u/s 69C being the commission expenses incurred for arranging the accommodation entries. Subsequent to passing of the order of CIT(A) two decisions have come viz., the decision of Hon ble Delhi High Court in the case of PCIT vs. NDR Promoters P.Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] and the decision of PCIT vs. NRA Iron Steel P. Ltd. [ 2019 (1) TMI 1089 - DELHI HIGH COURT] . Neither the assessee nor the AO/Ld.CIT(A) had the benefit of the above two decisions wherein the issue relating to bogus share application money/share capital have been considered and certain observations were made. Restore the issue to the file of AO with the direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and credit worthiness of the share applicant companies and genuineness of the transaction. - Appeal of assessee allowed for statistical purposes.

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• 2019 (6) TMI 471
  Disallowance of amortised expense of loaner set - revenue or capital expenditure - HELD THAT:- A decided in assessee s own case [ 2017 (4) TMI 293 - ITAT DELHI] treating loaner sets expenditure as capital expenditure was not in accordance with law and therefore, directed to be deleted. Disallowance of 50% of advertisement and sales promotion expenses - HELD THAT:- A decided in assessee s own case [ 2017 (4) TMI 293 - ITAT DELHI] once the genuineness of the expenditure is not in dispute, the commercial expediency cannot be rejected on the ground of suspicion. No material was led by the revenue to allege that the expenditure incurred in the course of business is not an eligible expenditure. We accept the contention of the Ld. counsel that it is not possible to get receipt of keychains either from the doctors or distributors distributed for the purpose of development of the business of the assessee. The entire action of the authorities below is based on suspicion and therefore found untenable Disallowance of 4/5th of the recruitment and training expenses - HELD THAT:- No asset was created by incurring expenditure on recruitment and training and, therefore, there was no reason for treating this expenditure as capital expenditure. The finding of the Assessing Officer has not been found by the Ld. CIT-A in accordance with accounting principles. He also found the disallowance made by the Assessing Officer against the principle of consistency. Disallowance of conference expense - HELD THAT:- Expenditures have been incurred towards convention expenses, education support expenses, seminar sponsorship fees, symposium/ workshop expenses. We find that this issue, on similar factual matrix is covered by the order of the Tribunal for AY 2011-12. The Tribunal has concluded the matter in assessee s favor by following the judgment of this Tribunal rendered in India Medtronics Pvt. Ltd [ 2018 (1) TMI 1033 - ITAT MUMBAI]. Since nothing on record suggest any change in nature of expenditure, respectfully following the binding judicial pronouncements, we delete the impugned additions. This ground stands allowed. TP Adjustment - Advertisement, Marketing and Promotion ( AMP ) expenses - HELD THAT:- We concur with the submissions that this issue is covered in assessee s favor by the order of Tribunal for AY 2009-10 wherein held that in the absence of any agreement, these transactions would not constitute international transaction. This decision has subsequently been followed in AY 2011-12. Facts circumstances being pari-materia the same, respectfully following the consistent view of the Tribunal, we hold that in the absence of any agreement between the assessee and its AEs, these transactions could not be termed as international transactions and accordingly, could not be subject to determination of ALP. By deleting impugned additions, this ground stands allowed. Allowable business expenditure u/s 37(1) - expenditure towards purchase of gift card of Reliance Digital Retail Ltd. - HELD THAT:- We are of the opinion that additions could not be made on mere allegations or presumptions. No doubt, the onus was on assessee to prove that the aforesaid expenditure fulfills the conditions as envisaged by Section 37(1). It appears that no details, in this regard, has been submitted by the assessee and no record has been maintained to show as to whom these cards were issued. Nevertheless, keeping in view the principal of natural justice, we remit this matter back to the file of Ld. AO for re-adjudication with a direction to the assessee to substantiate his stand, in this regard. This ground stand allowed for statistical purposes. The appeal stands partly allowed.

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• 2019 (6) TMI 470
  Disallowance u/s 40(a)(i) 40(a)(ia) - payment made for freight on raw material - payments of professional fees to foreign parties for services rendered abroad - HELD THAT:- Undisputed position that emerges is the fact that issue of disallowance u/s 40(a)(i) 40(a)(ia) stood covered in assessee s favor by the decision of this Tribunal for AY 2007-08. It has been brought to our notice that the revenue further contested the issue of disallowance on account of import / local purchases freight payment before Hon ble Bombay High Court [ 2013 (3) TMI 820 - BOMBAY HIGH COURT] wherein the question of law, as urged by the revenue, has not been admitted by Hon ble High Court. Further, similar issue of disallowance on account of import / local purchase arose in AY 2009-10 which was agitated before this Tribunal wherein the view taken in AY 2007-08 was followed by the Tribunal. Nothing has been demonstrated before us to suggest any change in material facts or circumstances. Disallowance u/s 14A - assessee offered suo-moto disallowance - HELD THAT:- It was incumbent on the part of Ld.AO to form an opinion as to why the disallowance offered by the assessee, having regards to its accounts, was not satisfactory or correct. The aforesaid satisfaction of AO, is sine-qua-non before clothing Ld. AO the power to acquire jurisdiction u/r 8D. Therefore, finding no infirmity in the decision on this issue, we dismiss ground nos. 5 6. Addition of discount received on Foreign Currency Convertible Bonds [FCCB] buyback u/s 28(iv) - HELD THAT:- In the present case, it is a matter of record that the amount having received as cash receipt due to the waiver of loan. Therefore, the very first condition of Section 28(iv) which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount can be taxed under the provisions of Section 28(iv) - benefit to be received by the assessee has to be in some form other than in the shape of money so as to bring the same within the ambit of Section 28(iv). See M/S. XYLON HOLDINGS PVT. LTD. [ 2012 (9) TMI 449 - BOMBAY HIGH COURT] Grant of deduction u/s 80-IB - assessee claimed deduction being 30% of profit earned from M-seal unit situated at Daman - AO opined that since the assessee had unabsorbed depreciation in respect of said windmills, the same should have been first set-off against the profit for the years before claiming deduction u/s 80IA - HELD THAT:- we find that this issue stood covered in assessee s favor by the aforesaid decision of Hon ble Bombay High Court rendered for AYs 2006-07 2007-08, as rightly observed by Ld.CIT(A). The Hon ble Court has followed its own decision rendered in CIT V/s Hercules Hoists Ltd. [ 2017 (6) TMI 1125 - BOMBAY HIGH COURT] while adjudicating the assessee s appeal. Further, following the same reasoning, the stated issue has also been adjudicated in assessee s favor by the Tribunal in its latest order for AYs 2008-09 2009-10 .

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• 2019 (6) TMI 469
  Disallowance of Long Term Capital Loss - sale of land at Kalyan - correctness of FMV as on 1.4.1981 adopted for computing the Long Term Capital Loss - HELD THAT:- Valuation has not been obtained from a registered valuer. In this view of the matter, entire premise of learned CIT(A) that valuation has been done by the registered valuer and hence its veracity cannot be doubted, is found to be untenable at the threshold. However, assessee has subsequently furnished a letter from the said valuer claiming be is a registered valuer. Admittedly this is an additional evidence. Furthermore, valuer has adopted a bizarre method. The valuer has taken the stamp value rate of year 2012 and worked its backward @ 10% growth rate to obtain fair market value at 1.9.1981. In our considered opinion this is not at all an acceptable method. This submission of valuation report by unregistered valuer later on claiming to be a registered valuer without any sale instances of the period has to be looked into by taking into account the surrounding circumstances. The assessee has duly booked huge profit on the transaction in its books of account. The transaction has been done to group concern to whom land was already leased out. CIT(A) s acceptance of the said valuer s report as sacrosanct despite the papable lack of veracity of the valuer or method of valuation is not at all sustainable. The lack of cogency of the valuation report is further highlighted by the huge difference found by the AO when compared to data noted from website of Megabricks. The surrounding circumstances couple with these information clearly indicate towards of lack of veracity in said valuer s determination - the issue needs to be remitted to the file of the Assessing Officer. The Assessing Officer is directed to consider the issue afresh after obtaining valuation report from the departmental valuer. Needles to add assessee should be provided adequate opportunity of being heard. Bogus short term capital loss and long term capital loss on sale of shares - Assessee has got higher price than the NAV of such share - HELD THAT:- We find that the Assessing Officer has no material whatsoever with him to conclude that transactions of sale are not genuine or that the price based on the sale is understated rather he has not at all doubted the fact that net asset of the company was negative and NAV was minus 3.18/-. The findings of CIT(A) and case laws relied upon by him are flawless and duly support the case of the assessee. Hence, we do not find any infirmity in the order of learned CIT(A) and accordingly we uphold the same - Decided in favour of assessee.

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• 2019 (6) TMI 468
  Nature of income - rental income - income under the head Income from house property or Income from other sources - Addition of rent service charges - Letting out of property to a corporate member of the appellant-club - benefit of mutuality principle - HELD THAT:- As in assessee s own case [ 2016 (12) TMI 1718 - ITAT KOLKATA] held that the principle of mutuality will not have application to the appellant s transaction with M/s Reliance Industries Limited for letting out its premises for the purpose of using the same for its business purposes. Since the factual matrix of the case and the legal provisions governing the principles of mutuality have remained same in the year under consideration, we are not inclined to depart from the view already taken by this Tribunal in the appellant s case for the latter year. Accordingly we uphold orders of the authorities below denying the benefit of mutuality principle in respect of receipts by way of rent service charges from M/s Reliance Industries Ltd. Taxability of service charges - part of rental income - HELD THAT:- From perusal of the service agreement we note that appellant was under no obligation to provide any service, facility or amenity to M/s Reliance Industries Ltd for earning service charges. Moreover we find that both the agreements were co-terminus and ran concurrently. It was expressly provided that the service agreement will remain valid so long as license agreement was in force. We therefore agree with the Ld. AR s submissions that both rent service charges were having the same character and both were being charged on per square feet basis without incurring any corresponding expenditure. Therefore, Ground No. 1 is dismissed and Ground No. 2 is partly allowed. Addition on account of letting out of property to M/s. Organon India Ltd. - HELD THAT:- From Note No. 23.1 of the annual audited accounts of the appellant, we find that the assessee had made a disclosure about institution of legal case against M/s Organon India Ltd for vacating the club premises occupied by them. It was clarified that amount of 5,80,879/- received till 31.03.2011 from M/s Organon India Ltd was shown under Liability . We find that nowhere in the audited accounts Here was an admission that sum was received from M/s Organon India Ltd during FY 2011-12. We also note that even though the assessee had instituted eviction suit against the tenant it continued to retain possession and did not pay any rent. In the circumstances notional annual value of the property was also not assessable as the property was not capable of being let on the ground of adverse possession - the authorities were not justified in assessing sum under the head House Property Treatment of hoarding rent - Business income OR Income from House Property . - HELD THAT:- Since even in the case of M/s. Sai Media Ventures P. Ltd the amount was received for letting out specified area for display of advertisements, there was no reason for the AO to assess the amount received from M/s. Sai Media Ventures P. Ltd under the head Business income when in the case of M/s Tapan Art Centre the identical receipt was assessed under the head House Property . For the reasons set out in the foregoing therefore, the AO is directed to assess the hoarding rent received from M/s. Sai Media Ventures P. Ltd under the head House Property . Addition of commission received - commission received from M/s. Agarwal Merchandise Tie-up Pvt. Ltd out of the sales made by them to the club members - principle of mutuality applicability - HELD THAT:- On consideration of permitting a vendor to operate within the club premises, it is common to charge a percentage of their revenues derived from the members as fees / commission which is then utilized by the club for the benefit of its members. This question whether such commission / fee qualifies for the benefit of mutuality principle in the hands of the club was considered by the coordinate Bench of this Tribunal in the case of ITO Vs Kamala Vihar Sports Club [ 2013 (12) TMI 302 - ITAT MUMBAI] and answered in favour of the assessee. Netting off of expenses against receipts by way of sponsorship/advertisement - HELD THAT:- Sponsorship fees are paid to enable social organizations like clubs to meet part of the costs that they incur for organizing the events or festivals for their members. Being sponsors these corporate are also permitted to display their advertisements or promote their products at these events. Having regard to these facts, we are of the considered opinion that the lower authorities were unjustified in considering the receipts by way of sponsorship fees / advertisement fees in isolation and without allowing the benefit of set off of the department wise expenses accounted in the books of the appellant. We also note that in all the past assessments as well as in the subsequent assessments the Revenue had allowed the benefit of netting off of receipts against expenses and only the net amount was considered for taxation purposes without allowing the benefit of mutuality principle. It was only in AY 2009-10 when the AO did not allow the benefit of netting off but on appeal this Tribunal in [ 2016 (12) TMI 1718 - ITAT KOLKATA`] allowed the deduction. Following the same, we direct the AO to allow the deduction for department-wise expenses against the sum received by way of sponsorship fees / advertisement fees - Ground No. 7 is therefore allowed.

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• 2019 (6) TMI 467
  Assessment u/s 153A - alleged unaccounted business income alleged to be earned on sales of plots in Kediaz Corridor computed on the basis of noting found in AS-9 impounded u/s 133(6) - HELD THAT:- As documentary evidences that the booking in the name of parties, as mentioned in the seized document, in above cases was cancelled and the plots were later on sold to some other party. Once it is proved that the booking has been cancelled then it is admitted fact that upon cancellation of booking whatever amount was received from such party either against plots or JDA charges etc. will have to be refunded back to such party and in such a situation there cannot be income and no addition can be made against alleged cash receipt of these plots. Further sales of the parties to whom these plots were subsequently sold is verifiable from books of accounts and affidavit submitted by such parties and there is no material available on record that the assessee received some payment from such parties over and above to whatever recorded in books of accounts. From the record we also found that the cash receipt against such plots as recorded in books of accounts is equal to or more than the cash receipt in seized documents. There is no reason to presume that the receipt recorded in books of accounts is different from the cash as per seized document. Further the cash receipt from the parties to whom these plots were sold is verifiable from books of accounts and affidavit submitted by such parties and there is no material available on record that the assessee received some payment from such parties over and above to whatever recorded in books of accounts. Cash was either not received actually or refunded by the assessee. We also found that proper documentary evidence like affidavits etc. were filed before the A.O. in support of the explanation so filed. Since, the assessee had filed the affidavit in the case of almost all the plot holders and the sale consideration received to assessee against sales of plots is duly verifiable from such affidavits, the CIT(A) was not justified in upholding addition by estimating the G.P. at 31% for sustaining the addition and rejecting the evidences submitted by the assessee in the form of affidavit of the parties. CIT (A) did not give any cogent reason or did not referred any evidence/material/document to prove that the assessee actually received amount against sales of plots over above to whatever recorded in books of accounts. - Decided in favour of assessee Gain on sale of land - unaccounted payment received against sales of the plots - capital gain or business income - alleged brokerage income @ 4% earned on the sale of plots - HELD THAT:- We also found from the record that the plots belonging to the assessee was accepted by the A.O. herself as capital assets, therefore, whatever gain was assessable on sale of such plots is liable to be taxed under the head capital gains as against the income from business. Accordingly, the A.O. was not justified in bringing to tax such income from sale of plots held by the assessee as capital asset under the head business income. From the record we found that in the case of the assessee there is no tangible material available on record to form a reasonable belief that amount of sale consideration worked out by AO against the sales of plots mentioned in the impounded record was actually received by assessee. Further also there is no material that any consideration against the plots owned by third party was received by the assessee. However, the CIT(A) had confirmed the addition of 4,49,644/- on account of alleged brokerage income @ 4% earned on sale of plots of 1,12,41,839/- (which does not pertain to the assessee) on the basis of document marked as 21-22 of Exhibit-9. Nothing was placed on record by the ld DR before us so as to persuade us to deviate from the findings so recorded by the ld. CIT(A), accordingly, we confirm the action of the ld. CIT(A) for deleting the addition made on account of sale of plots. So far as he has upheld the addition by estimating brokerage income @ 4% earned on sale of such plots. Keeping in view nature of assessee s business and prevailing market condition, we estimate the brokerage income at 1% in place of 4% estimated by the ld. CIT(A). Income from long term capital gains - working out the alleged unaccounted receipts on the basis of amount found noted in Exhibit-9 (in relation to plots which pertaining to the assessee) - HELD THAT:- Whatever amount was received by the assessee against the sales of plot is duly recorded in books of accounts and except to that no amount was received by the assessee. We found that for sustaining the addition and rejecting the evidences submitted by the assessee in the form of affidavit of the parties the CIT (A) did not give any cogent reason nor he referred any evidence/material/ document to prove that the assessee actually received amount against sales of plots over above to whatever recorded in books of accounts. Accordingly, we direct the A.O. to delete the addition under the head income from long term capital gains. Addition on account of undisclosed receipts from sale of plots - HELD THAT:- Addition so sustained by ld. CIT (A) is based only on the basis of presumption and assumption without considering the submission, evidences and explanation filed by the assessee in the right judicial perspective. From examination of the assessment order as well as order of CIT (A) it will reveal that the entire addition was made on the basis of presumptions, assumption, without having any material to prove the same to be correct. The submission and documents submitted by the assessee completed ignored and rejected without any cogent reason. Accordingly, we do not find any justification for the addition upheld by the ld. CIT(A) by estimating profit of 31% on the alleged receipt, which was even found by the ld. CIT(A) having not actually received by the assessee. Accordingly, we direct to delete the addition of 26,69,539/- upheld by the ld. CIT(A). Addition made by the A.O. on account of purchase of mobile phone - HELD THAT:- As per the balance sheet and ITR, we observe that there was a total withdrawal of the family members with regard to household expenses was 9,19,207/-. Looking to the household withdrawal of 9,19,207/-., the expenses of 71,500/- so incurred by the assessee on purchase of mobile phone is duly explained. Furthermore, detailed finding to this effect has also been recorded by the ld. CIT(A) at para 17.2 of his appellate order which has not been controverted by the ld DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) in deleting the addition made by the A.O. on account of purchase of mobile phone as found during the course of search. Addition u/s 69C - estimation of income at 2% against the alleged expenditure - HELD THAT:- Since the A.O. and the ld. CIT(A) has made addition of income as well as expenses both, the benefit of telescoping of income earned by the assessee is to be allowed against the alleged expenses so incurred by the assessee. It is admitted position of law that the income as well as expenses cannot be added and due credit of income should be given to assessee against the unaccounted expenses. There is no material with the department to show that the undisclosed income in the hands of the assessee was utilized for other purposes except to undisclosed expenses of the assessee. In absence of any evidence otherwise for utilization of undisclosed income, it can prudently be presumed that such income was utilized for incurring undisclosed expenditure. Thus, we direct the A.O. to allow credit of 3,66,000/- being commission income confirmed by us hereinabove by estimating the same at 2% against the alleged expenditure of 4,08,781/-. Accordingly, we confirm addition of 42,781/- (4,08,481 3,66,000) under the head Section 69C. We direct accordingly. Addition on account of alleged excess silver found at the time of search - Section 69A r.w.s. 115BBE - addition was made by rejecting the submission evidences submitted by the assessee - HELD THAT:- No reason to interfere in the findings so recorded by the ld. CIT(A) which are as per material on record. Furthermore, no any positive material was brought on record by the ld. DR so as to persuade us to deviate from the findings so recorded by the ld. CIT(A) while deleting the addition made on account of excess silver jewellery found. Unaccounted business income alleged to be earned on sales of plot - noting found on Page 1 of exihibit-8, seized from 1, Gayatri Nagar, Main Tonk Road, Sanganer, Flyover, Jaipur - HELD THAT:- In the case of the assessee there is no tangible material available on record to form a reasonable belief that amount of sale consideration presumed to be received in cash against the sales of plot noted on the seized document was actually received to assessee. Further also there is no material that any consideration against the plots owned by third party was received by 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 against alleged sale of plot noted on the paper. No reason to interfere in the order of the ld. CIT(A) deleting the addition Undisclosed business income admitted in his statements recorded during search which was later on retracted - HELD THAT:- From the record we found that except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee made undisclosed investment in jewellery. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by assessee is correct, therefore the same cannot be relied upon. The Hon ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala Another [ 1971 (9) TMI 64 - SUPREME COURT] has held that admission is an extremely important piece of evidence but it can t be said that it is conclusive. It is upon to the assessee to show that it is incorrect. The Hon ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni [ 2006 (7) TMI 162 - RAJASTHAN HIGH COURT] has held that admission in statement during search is not conclusive proof of fact and can always be explained. As finding of the ld. CIT(A), which has not been controverted by the ld DR by bringing any positive material on record, we do not find any reason to interfere with the findings so recorded by the ld. CIT(A) for deleting the addition

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• 2019 (6) TMI 466
  Penalty u/s 271(1)(c) - interest on income-tax refund received u/s 244A and not included in the Return of Income - bonafide error or mistake - HELD THAT:- As submitted by assessee that it did not not have requisite details of interest embedded in refund amount and came to know about the same only from system generated Form 26AS - there was no willful submission of false return with tested on the touchstone of preponderance of probabilities. As submitted on behalf of the assessee that it is large taxpayer alleged and concealments is disproportionately miniscule which is an indicator that it is a bonafide error. We find merit in the circumstances narrated on behalf of the assessee. A bonafide error or mistake does not necessarily invite penalty proceedings in every case. It will not be out of context to recollect the observation in the case of Hindusthan Steel Ltd. vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] wherein it was held that penalty cannot be imposed merely because it is lawful to do so. In the absence of any intentional omission of the taxable income from the return of income as reasonably demonstrated on behalf of the assessee, we are disposed to hold that statutory discretion vested with the AO for imposition of penalty ought to have been exercised for the assessee. We see force in the plea of the assessee that a person of his stature diligently paying large taxes would not imagine to keep away something from the very Department which issued the refund and which would be making the assessee s assessment. Failure of the assessee to look into the aforesaid form at the time of filing return would not indicate any contumacious or obstinate conduct on the part of the assessee, but possibly reflect laxity or some carelessness. Under these circumstances, we are of the view that benefit of doubt should go to the assessee - AO directed to cancel this penalty - Decided in favour of assessee.

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• 2019 (6) TMI 465
  Addition of Long Term Capital Gain - relinquishment of the right to the total income of the assessee - assessee claimed to have relinquished his right in bungalow No. 15 without any consideration in favor of his relatives - benefit under section 54 - AO was of the view that the assessee received consideration of 27 Lacs on account of relinquishment of his right in the property which was not disclosed in the income tax return - HELD THAT:- The assessee has invested in another property dated 29-09-2009 bearing address Bungalow No. 16, Neelkanth Green Bungalow for rupees 93,00,000.00 in the year under consideration along other two co-owners being family members. Accordingly, the assessee claimed to have invested in his share the property for 31 lakhs only. Assessee before the CIT (A) claimed to allow the benefit of exemption under section 54 of the Act if the sum of 27 Lacs is treated as his income on account of relinquishment of his right the property. But the CIT (A) rejected the contention of the assessee by observing that the assessee has made a contradictory statement. As such the assessee before the learned CIT (A) claimed to have received consideration of 27 Lacs against the sale of bungalow No. 16 and which was invested in 16, Neelkanth Green Bungalow on 29/09/2009. CIT (A) misunderstood the claim of the assessee and observed in his order that the assessee after selling bungalow No. 16 Ashwamegh Ahmedabad to Manoj Kumar Vasudeo Sompura had purchased again after a gap of 41 days. Indeed the assessee has invested after 41 days of bungalow No. 16 Ashwamegh Ahmedabad sale, but the same was not repurchased by him as alleged by the ld. CIT-A. In fact, the assessee has invested in the bearing number 16, Neelkanth Green Bungalow on 29/09/2009. This fact for the purchase of bungalow No. 16, located at Neelkanth Green Bungalow on 29/09/2009 was not doubted by the authorities below. Relinquishment deed was made on 27/05/2008 FY 2008-09 corresponding to AY 2009-10 as evident from the relinquishment deed placed. Thus if any tax is required to be levied, then it has to be levied in the AY 2009-10. We conclude that the assessee was entitled to the benefit under section 54 of the Act in the given facts and circumstances. Addition to be deleted - Decided in favour of assessee.

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• 2019 (6) TMI 464
  Revision u/s 263 - enquiry on the part of the AO in examining the creditworthiness of shareholders and genuineness of transaction - notices u/s 133(6) - HELD THAT:- It is an admitted material fact on record that the observation of the ld. Pr.CIT regarding the issue of notices u/s 133(6) that the Assessing Officer has issued said notices on test check basis is factually incorrect, as the assessee has received share application money from the three share subscribers during the year under consideration and so notice u/s 133(6) were sent to all the subscribers. From the bank statement of the subscribers companies, it is revealed that there was no cash deposit in this accounts and there was sufficient balance available to make investment in share capital of the assessee company and that the bank statement of the companies itself cannot determine the creditworthiness of the company, in-fact, the reference has to be made to the balance sheet whereas there is no satisfaction of the ld. Pr.CIT in this regard. Pr.CIT relating to sources of source, it is seen that the documentary evidences furnished along with supporting evidences such as bank statement, audited statement of account, balance sheet, profit and loss account, clearly established the fact that the tangible net worth of the disputed companies was more than sufficient and was much more than the amount invested in the shares of the assessee company. Therefore, the source of source of investment has been established by the assessee and after being satisfied with the submission of the assessee, the AO did not opt to make addition u/s 68 of the Act. Pr.CIT has wide supervisory power u/s 263 however, he cannot invoke such powers to substitute the view taken by the Assessing Officer merely on the basis of the presumption. The case laws relied on by the Pr.CIT are distinguished in peculiar facts of the case as the facts of those cases were related to the paper shell companies to convert it unaccounted money into accounted funds/income and no enquiry was invoked by the Assessing Officer by way of issuing notices u/s 133(6), whereas in the present case the investor companies are not paper/shell companies and Assessing Officer has invoked proper and sufficient enquiries by issuing notices u/s 133(6) which are duly complied with by the assessee. - Decided in favour of assessee.

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• 2019 (6) TMI 463
  Rejection of books u/s 145(3) - applicability of method of accounting - project completion method OR percentage completion method - HELD THAT:- Where the AO himself has confirmed production of books of account and other details before him, there seems no reason for the AO to hold that no books of account or bills/vouchers or evidences for the impugned year were produced before him. Moreover, when the revenue could not bring before us any contrary material against the view held by the Ld. CIT(A) in the impugned order, the rejection of books of account of the assessee is uncalled for and this question is answered against the revenue. Adoption of project completion method of accounting by the assessee - Assessee s business came into existence from 11.03.2003 and since then it has been consistently following project completion method of accounting - assessee has never deviated from such method of accounting since the inception of the business and that the revenue had also accepted project completion method and profit shown by the assessee during the assessment proceedings for AY 2014-15 in assessee s own case It is well settled that the project completion method is one of the recognized method of accounting and as the assessee has consistently been followed such recognized method of accounting thus in the absence of any prohibition or restriction under the act for doing so, it can t be held that the decision of the CIT(A) was erroneous or illegal in any manner. The judgement in the case of CIT vs. Realest Builders Services Ltd. [ 2008 (5) TMI 6 - SUPREME COURT] relied by the ld. DR on method of accounting is rather in favor of the assessee and against the revenue in the peculiar facts of the present case. From computation of income and factual matrix of the case, it is evident that the AO has committed error in estimation of profit from sale of shops by wrongly adopting area sold to be 4,500 sq. yards as against 92.90 sq. mts. of actual sales which has been demonstrated by the Ld. AR before us (APB, Pgs. 1 to 4). We also find merit in the argument of the Ld. AR that during the impugned year under consideration only one shop measuring 92.90 sq. mts. was sold for 7,50,000 as against sale of 6,77,26,260 wrongly worked out by the AO in his order. No merit and substance in the submissions of the revenue. Addition u/s 68 - assessee could not establish the genuineness of advances from customers as the letters issued for verification were received back unserved - HELD THAT:- The assessee in fact has not taken any advances from customers during the impugned assessment year but these were old balances brought forward from previous assessment years which is supported by the copies of ledger accounts of the advances received from customers. Considering all it is a trite principle of law that addition of 50,10,000 regarding credit balances brought forward from earlier assessment years cannot be made. No merit in the ground raised by the revenue in respect old credit balances and therefore we upheld the order of the CIT(A) in deleting the addition. - Decided in favour of assessee.

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• 2019 (6) TMI 462
  Disallowance of provision for GSEC Securities, provision for standard assets, provisions for statutory reserve, provisions of bad doubtful debts and education reserve - HELD THAT:- Regarding provision for GSEC Securities, we find that these are, in effect, valuation differential in the carrying value of the GESEC securities held by the assessee bank and which has been determined as per RBI guidelines and even the CBDT in its instruction no. 17/2008 dated 26.11.2008 has accepted the said valuation methodology so guided by the RBI. Accordingly, the same is directed to be allowed subject to verification by the Assessing officer. See M/S HDFC BANK LTD AND VICE -VERSA [ 2011 (6) TMI 774 - ITAT MUMBAI] - Decided in favour of the assessee and against the revenue. Education reserve - charge on the profits - as per section 48 of the Rajasthan Co-operative Society Act, the assessee is mandatorily required to contribute 1% of its profits every year - HELD THAT:- We find that the liability to pay the amount paid towards the education fund is after quantification of profits by the assessee bank under the Rajasthan Cooperative Society Act. It is only after the net profit reaches the bank that the question of its disposal in terms of the provisions arises under the Act and not earlier thereto. The net profit is to be apportioned by transferring part of it as may be prescribed by Rules to the reserve fund or to the education fund constituted under the Rules. Apparently, there is no charge in the year in which assessee incurs losses. It is only when there are profits, the amount has to be paid towards the education fund. If it is to be considered as diversion at source by overriding title, whether assessee incurs profits or loss, the said amount has to be paid. In the present case, the amount towards education fund at 1 per cent is payable only when assessee has profits in any year which leads us to a considered view that this is not a diversion at source but an appropriation of profits which is not allowable for tax purposes. Therefore, respectfully following the principles laid down in case of Jodhpur Co-operative Marketing Society [ 2004 (4) TMI 21 - RAJASTHAN HIGH COURT] the matter is decided in favour of the Revenue and against the assessee. Provision for standard assets, statutory reserve and bad and doubtful debts have been rightly disallowed by the AO as deduction u/s 36(1)(viia) and 36(1)(viii) have separately been allowed and we donot see any infirmity in the action of the ld CIT(A) in confirming the same. Calculation of deduction u/s 36(1)(viia) and u/s 36(1)(viii) - as submitted that the AO has given no reasons while reducing the provision for standard assets and provision for GSEC while computing such deductions - HELD THAT:- In the instant case, the AO has reduced the provision for standard assets and provision for GSEC while computing the net profits instead of adding the same on the belief that these provisions are not allowable. As we have held above, provision for standard asset is not allowable, however the provision for GSEC is allowable subject to verification. Therefore, for the purposes of quantifying the deduction u/s 36(1)(viia) and U/s 36(1)(viii), only the amount which has been finally so determined as disallowable towards such provisions should be added back in the net profits. The AO is directed to recomputed the deductions u/s 36(1)(viia) and U/s 36(1)(viii) accordingly. In the result, the ground is allowed for statistical purposes. Depreciation on computers - @ 33.33% OR 60% specified in the Income-tax rules - HELD THAT:- We find that depreciation on computers has been provided @ 60% in the Income-tax Rules.Accordingly, the AO is directed to compute the depreciation on computers @ 60% and the ground of appeal is thus allowed.

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• Insolvency & Bankruptcy

• 2019 (6) TMI 461
  Initiation of Corporate Insolvency Resolution Process against the Corporate Debtor - rejection of application on the ground that there existed a dispute even before the issuance of demand notice and the said dispute had been brought to the notice of Operational Creditor by the Corporate Debtor in the form of reply notice - HELD THAT:- Initiation of Corporate Insolvency Resolution Process at the instance of an Operational Creditor is provided for under the provision engrafted in Section 9 of the I B Code, whereunder an Operational Creditor may file an application before the Adjudicating Authority for initiating a Corporate Insolvency Resolution Process after complying with the statutory requirements of Section 8. It is the settled position of law that the existence of a pre-existing dispute is a bar to initiation of Corporate Insolvency Resolution Process at the instance of an Operational Creditor. The Adjudicating Authority is required to ascertain whether the Operational Creditor has received the notice of dispute pursuant to service of notice of demand on the Corporate Debtor within the specified time or a dispute emerges from the record of information utility. A suit or arbitration proceeding relating to a dispute may be pending between the parties or the dispute raised qua the claim or the invoices may emerge from the record of information utility or correspondence and communication between the parties. The issue of pre-existing dispute raised by the Corporate Debtor much prior to service of demand notice under Section 8(1) of I B Code requiring adjudication by a competent judicial forum brings the case out of the clutches of Corporate Insolvency Resolution Process - in the given circumstances triggering of Corporate Insolvency Resolution Process at the instance of Operational Creditor was uncalled for and unwarranted - Appeal dismissed.

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• 2019 (6) TMI 460
  Consideration of resolution plan as approved by the Committee of Creditors - appellant claims that total claim of the Appellant was not entertained by the Resolution Professional - HELD THAT:- The Adjudicating Authority has no jurisdiction to pass any order with regard to any matter pending before the Court of criminal jurisdiction. Further, the parties having given opportunity to move against the Corporate Debtor under sub-section (6) of Section 60 of the I B Code , the Adjudicating Authority cannot prohibit the aggrieved person to file a claim before the Court of competent jurisdiction or an application before the appropriate Forum. This Appellate Tribunal having given liberty to the Appellant to file a claim in terms of sub-section (6) of Section 60 and the impugned order aforesaid to the extent as mentioned in paragraph 13 and quoted above being contrary to the decision of this Appellate Tribunal, is fit to be set aside - Appeal allowed in part.

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• Service Tax

• 2019 (6) TMI 459
  Classification of Services - appellant own two Aircrafts/Helicopters, which are being provided by them on chartered hire basis - HELD THAT:- Issue notice. Until further orders, there shall be stay of operation of the impugned order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi.

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• 2019 (6) TMI 458
  Business Auxiliary Service - appellant entered into one such agreement with IGL for giving facility of selling CNG through their outlets; accounting and selling of the said CNG - HELD THAT:- The appeals are admitted.

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• 2019 (6) TMI 457
  Cassification - Supply of tangible goods service under Section 65(105)(zzzj) of Finance Act, 1994 - An agreement was entered by the appellant, which shows Right of possession was with the lessee, the appellant, during the contract period - HELD THAT:- Issue notice, returnable within six weeks.

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• 2019 (6) TMI 456
  Taxability - Storage and warehousing services - Reverse charge mechanism - HELD THAT:- The appeal is admitted. Tag with C.A. No. 4064/2013.

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• 2019 (6) TMI 455
  Works Contract Service - Construction of building or civil structure services - Commercial Building or not - Exemption to the Turnkey Projects - HELD THAT:- Leave granted - To be heard along with Civil Appeal Nos. 3693-3748 of 2016.

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• 2019 (6) TMI 454
  Heard the Learned Counsel for the appellant and perused the relevant material. HELD THAT:- The appeals are admitted.

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• 2019 (6) TMI 453
  Refund of accumulated CENVAT Credit - export of services - rejection of refund claims on the ground that the services rendered by the Appellant is not an export services - Rule 5 of CENVAT Credit Rules 2004 - period October 2008 to March 2009 and October 2009 to September 2009 - HELD THAT:- For the period from April 2009 to September 2009, when the matter reached this Tribunal the Tribunal held that refund was admissible to them. Further, for the period October 2010 to March 2012, the Adjudicating authority initially not allowed the refund claims, but later the claim has been held to be admissible by the learned Commissioner (Appeals). Also, it is stated during the course of hearing that the department thereafter from April 2012 to March 2017 allowed the refund claims considering the services are exported. On going through the earlier refund claims and also subsequent refund claims allowing cash refund of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules 2004, the department has accepted that the service rendered by the Appellant to Qualcomm, USA are export services in terms of Rule 3(iii) of Export of Service Rules,2005. Also, no evidence has been placed before us indicating that on the said issue appeal has been filed against these orders by the Revenue and ultimately it is held to be not an export services by any Appellate forum. Therefore, denial of cash refund of accumulated credit due to export of service for the interregnum period is unsustainable. Territorial Jurisdiction - Whether the CENVAT Credit of Service Tax paid on input services used in their Delhi office is eligible to credit at their Mumbai office? - HELD THAT:- The credit of the input services availed at their Delhi unit which was denied on the ground that no output service is provided from Delhi, has been held to be incorrect and consequently cash refund on this count has been held to be admissible by this Tribunal in their own case M/S QUALCOMM INDIA PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2015 (6) TMI 1004 - CESTAT MUMBAI] - Credit cannot be denied. Refund clam - CENVAT credit on input services - Rent a cab service - Convention service - club or association service - construction service, etc. - HELD THAT:- The credit on the input services viz. Rent a cab service, convention service, club or association service used in rendering output service availed prior to 01.4.2011 held to input service within the definition of input service prescribed under Rule 2(l) of CCR, 2004 - reliance placed in the case of M/S RELIANCE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, LTU, MUMBAI [ 2016 (8) TMI 123 - CESTAT MUMBAI] - credit allowed. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 452
  Classification of services - respondent assessee have been supplying the machines like excavators and other earth moving equipments to their various clients on rental basis and that the clients hiring such equipments have managed and operated these machines themselves - whether the service would be classified under site preparation services or under supply of tangible goods service? - HELD THAT:- The adjudicating authority has reached to the conclusion that the respondent-assessee have not been engaged in the activity of Site Formation and Clearances, Excavation and Earth moving service as alleged in the impugned show cause notice, rather they have been only supplying earth moving machines like excavators etc. on rental basis and the physical control and possession of these machines have always remained with the clients who have actually hired such machines - the department in their appeal has not adduced any evidence to controvert the finding of the learned adjudicating authority. We are in full agreement with the finding of the adjudicating authority with regard to the determination of classification of activity undertaken by the respondent-assessee which has been determined by him on the basis of detailed examination of agreement, invoices and other documents - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2019 (6) TMI 451
  Reversal of Input tax credit - petitioner did not respond to summons and petitions - HELD THAT:- Petitioner not having responded to the summons as well as the preassessment notice, now cannot have the impugned order assailed after one year in the instant writ petition, more so when one and half years have been subsumed in summons and pre-assessment notice being issued for which admittedly there was no response from the petitioner - The petitioner had not even sent a reply seeking time citing illness. This Court is convinced that there is no ground to interfere qua the impugned order - Petition dismissed - decided against petitioner.

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• 2019 (6) TMI 450
  Input tax credit - Appellant has produced tax invoices and its recording in its books of account - the vendors of the Appellant had not filed their returns and/or had filed defective returns. - HELD THAT:- We note that the impugned order of the Tribunal while confirming the order of the 1st Appellate-Authority has upheld the finding of fact arrived at by the 1st Appellate-Authority that the evidence of taxes have been paid by the vendors of the Appellant, were not forthcoming. It is pertinent to note that while referring to the list on Mahvikas (a site of Sales Tax Department, showing the filing of returns etc.), the original authority had found that some of the vendors of the Appellant had not filed their returns and/or had filed defective returns. This led to an independent search and enquiry by the 1st Appellate Authority and on being satisfied that taxes has been paid, it had granted relief. The attitude of the Assessee that it would make no efforts to have his vendors produce their records in the face of the finding of the authorities and claim that it is entitled to ITC as claimed, is not reasonable. This particularly so as ITC is not a matter of right but a concession. The impugned order of the Tribunal on the facts cannot be found fault with as it is not shown to be perverse. This being essentially a finding of fact which is not perverse, does not give rise to any substantial question of law - appeal dismissed.

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• 2019 (6) TMI 449
  Non-payment of Reward payable - matter in dispute and is pending - HELD THAT:- All matters concerning the reward claimed by the Petitioner, are pending at the first or second appellate stage or in reference before the High Court. According to the Respondents, therefore, at this stage, reward amount cannot be released, since tax has not became irrevocably due to the Government. There are no reason to doubt the statement made by the Officer of the Government on affidavit - there are no disobedience of any of the orders passed by the High Court in the present proceedings. Contempt Petition is, therefore, required to be closed. Petition disposed off.

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• Indian Laws

• 2019 (6) TMI 448
  Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - the offences alleged in the complaint are not made out - HELD THAT:- It is not the case of the complainant that by fabricating the cheques, the amount was credited into the account of the accused, thereby resulting in misappropriation of amount. The contention of the complainant that the documents in respect to the liability are fabricated also Prima facie appears to be after thought. There is no evidence of fabrication of documents. Admittedly Civil proceeding are pending before the appropriate Court and the claims of respective parties are subject matter of the said proceeding. The Cheque for an amount of 71,17,132.90/ was dishonoured. The said Cheque was also signed by the complainant. It was dishonoured on 12 09 2000. After receipt of intimation from banker, notice was issued to the complainant demanding the amount in accordance with Section 138 of Negotiable Instrument Act. According to the petitioner the said notice was not replied by the complainant. The defence of respondent No.1 is that there is failure to establish Prima facie that notice was issued by the advocate for the complainant therein and was received by the accused - The fact remains, there was no amount in the account of the complainant and the cheques were dishonoured for insufficient funds. The proceedings under Section 138 were initiated by the accused. The petitioners have relied upon the invoices in support of their claims. Civil proceedings are also pending in the respective Court. Several accused are impleaded in this proceeding. The allegations against them are vague. It would be an abuse of Process of Law to continue the prosecution against the petitioners and hence the proceedings are required to be quashed and set aside - Petition allowed.

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