TMI Tax Updates - e-Newsletter
June 13, 2019

Case Laws in this Newsletter:

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

Articles

1. Sample Management Representation Letter - GST Audit

   By: Pragya Rajpurohit

2. CANCELLATION OF PROVISIONAL ALLOTMENT OF A RESIDENTIAL FLAT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and Combined for the Month of May 2019

2. Quick Estimates of Index of Industrial Production and Use-Based Index for the Month of April, 2019 (BASE 2011-12=100)

3. National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) systems – Waiver of charges

4. Income Tax Department strikes again in J&K Region

Notifications

Customs

1. 23/2019 - dated 11-6-2019 - ADD

Seeks to extend the levy of anti dumping duty imposed on 'PVC (resin) suspension grade' imported from China, Thailand and USA till 12th August, 2019.

GST - States

2. G.O. (Ms) No. 68 - dated 3-6-2019 - Tamil Nadu SGST

Constitution of the Tamil Nadu Authority for Advance Ruling

3. 431/2019/03(120)/XXVII(8)/2019/CT-22 - dated 31-5-2019 - Uttarakhand SGST

Enactment of section 12 of notification no. 95 dated 24-1-2019 from 21-6-2019

4. 430/2019/03(120)/XXVII(8)/2019/CT-21 - dated 31-5-2019 - Uttarakhand SGST

Filing of Return CMP-08 for composition dealers till 18th of every quarter

5. 429/2019/03(120)/XXVII(8)/2019/CT-20 - dated 31-5-2019 - Uttarakhand SGST

The Uttarakhand Goods and Services Tax (Third Amendment) Rules, 2019

6. 421/2019/04(120)/XXVII(8)/2019/CTR-03 - dated 31-5-2019 - Uttarakhand SGST

Amendments in G.O. No. 525 dated 29-6-2017 regarding Real Estate Residential Project

Highlights / Catch Notes

GST

• GST Ruling: Drainage Channel Work Classified as Composite Supply, Exempt from GST as Pure Service.

  Case-Laws - AAR : Pure service or a composite supply - it is a composite supply of various services, where excavation and re-excavation of the drainage channel is the principal supply. Supply of goods, if any, is purely incidental, and is not accounted for separately in the price schedule - Benefit of pure supply and exemption from GST allowed.
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• Jalda Kothi Landing Centre Upgrade Exempt from GST under Sl No. 3A of Notification No 9/2017 for Fisheries Development.

  Case-Laws - AAR : GST on development of fisheries - Exemption under Sl No. 3A of Notification No 9/2017 - Works Contract Service - the up-gradation of Jalda Kothi Landing Centre and the related work awarded to the Applicant has a direct nexus with fisheries development a function listed under Sl No. 4 of the Eleventh Schedule, and, therefore, entrusted to a panchayat under Article 243G of the Constitution of India - exempt from GST
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Income Tax

• Tribunal's Order Recalled: Procedural Error as Assessee Denied Hearing Opportunity u/s 254 Warrants Rectification.

  Case-Laws - AT : Rectification u/s 254 - Tribunal has referred to certain decisions without giving opportunity of being heard - assessee was not given an opportunity to explain his case vis-a-vis the decision relied by Tribunal, thus a mistake has crept into the impugned order of the Tribunal - order passed by the Bench is recalled
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• Income Tax Act Section 132(4) Statements Need Corroborating Evidence for Additions to be Valid.

  Case-Laws - AT : Addition on account of income surrendered as per statement u/s 132(4) - though the statement recorded u/s 132(4) has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement, there has to be some material corroborating the contents of the statement - absence of such material no addition permissible
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• TDS on Event Management Expenses Classified u/s 194C, Not 194J, as No Technical Services Involved.

  Case-Laws - HC : TDS on event management expenses - 194C or 194J - the payments were essentially for domestic ticketing, reimbursing hotel expenses, tour leaders’ expenses which were essentially in the nature of travel agent who had arranged the ticket booking and hotel facilities and not for any technical services availed by the assessee - TDS u/s 194C - No question of law arises
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• TDS on Outsourcing Expenses: Section 194C Applies for Clerical Services, Not Section 194J, No Substantial Legal Question.

  Case-Laws - HC : TDS on the payment of outsourcing expenses - 194C OR 194J - assessee had hired the services for various works such as storage of data, scanning of documents, processing charges, call centre operations etc. - it was basically clerical services of repetative nature of work and neither for managerial nor for technical services - TDS u/s 194C - No question of law arises
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• Tribunal Can Recall Order to Address Overlooked Grounds in Appeal u/s 254(2.

  Case-Laws - AT : Rectification u/s 254 - mistake apparent from record - non adjudication of specific ground taken by the assessee in its memorandum of appeal constitutes a mistake apparent from record which can be rectified u/s 254(2) - order recall for adjudication of this ground
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• Rectification Issue u/s 154: Non-Operating Expenses Mistakenly Classified as Operating; TPO to Reassess on Merits.

  Case-Laws - AT : Rectification u/s 154 - treating certain non–operating expenses as operating in nature - difference in the rate of depreciation between itself and the comparables - the issue relating to the incorrect computation of margin of the comparables constitutes a mistake apparent on the face of record - directed the TPO to dispose of the application u/s 154 on merits
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• Assessing Officer Rightly Invoked Section 147 for Reassessment, Despite Lack of Direct Materials from S.K. Jain's Search.

  Case-Laws - AT : Reassessment u/s. 147 or 153C - the information of alleged accommodation entries was passed on to the AO of the assessee by the investigation wing - no material belonging to the assessee was either found from the residence of this S. K. Jain or handed over to the AO of the assessee by the AO of the searched person - AO has rightly invoked jurisdiction u/s. 147 and not u/s 153C of the IT Act
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• No Penalty u/s 271AAB: Cash Payments Alone Don't Qualify as Undisclosed Income; No Stock Discrepancy Found.

  Case-Laws - AT : Penalty u/s 271AAB - undisclosed income - there was no discrepancy found in the physical stock as well as stock recorded in the books of account despite the physical verification and inventorization carried out of investigating team - mere details of payment for purchases in cash would not constitute undisclosed income as per the definition provided in explanation to Section 271AAB - no penalty
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• ITAT Rules No Substantial Law Question in TP Adjustment of AMP Expenses; Assessee Adequately Compensated by Associated Enterprises.

  Case-Laws - HC : TP Adjustment - AMP expenses - analysis carried out by the ITAT, having regard to the details pertaining to the comparable entities, is fairly exhaustive and reasonable and correctly recorded its findings that the assessee had been suitably compensated by its AEs - no substantial question of law
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• Unexplained Investments u/s 69: No Addition This Year for Deferred Payments in Property Transactions.

  Case-Laws - AT : Unexplained investment u/s 69 - cashless transaction - the land owners, power of attorney holders and the assessee firm are all inter related - four immovable properties registered without payment and sale consideration is paid in the subsequent years - transfer u/s 2(47) should be construed to have taken place at the most when part consideration is paid coupled with handing over possession of the land - no addition in current year
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• Court Upholds Allowance of Advertisement Expenses for 2008; Expenses Incurred Before March Align with Assessment Year.

  Case-Laws - AT : Disallowance of advertisement expenses - bills received of the said expenses is of April and May 2008 - There is no dispute that the assessee is following Mercantile system of accounting - the expenses relates to the advertisement made prior to March 2008 i.e. related with the assessment year under consideration - no disallowance
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• Income from AOP not taxable under normal Income Tax Act provisions; exempt from MAT u/s 115JB.

  Case-Laws - AT : Taxability of share of income from AOP u/s 115JB - Book Profit - when the share of AOP was not taxable under the normal provision of the Income Tax Act than it cannot be brought to be taxed under MAT
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• Service Provider's Bandwidth Payments Classified as Business Profits, Not Taxable in India Under DTAA, No TDS Required.

  Case-Laws - AT : TDS u/s 195 - for providing standard bandwith services - royalty or business income - The amount received by RJIPL from the assessee for providing standard bandwith services could not be characterised as ‘royalty’ as per the India- Singapore DTAA, and was in fact the “business profits”, which is not taxable as RJIPL did not have any business connection or a PE in India - No TDS
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• Advances to Subsidiary in Hospitality Industry Written Off as Revenue Expenses; Authorities Urged Not to Interfere with Business Decisions.

  Case-Laws - AT : Allowability of advances written off - there is nexus between assessee’s business and advances given to the subsidiary which was also engaged in the hospitality industry was revenue in nature - Revenue should not sit in the shoes of businessmen and decide what is appropriate for the business of the assessee - Non-recovery thereof is liable to be allowed as revenue expenses
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• Interest Disallowance Rejected: Assessee's Own Funds Covered Advances, No Non-Business Diversion Found.

  Case-Laws - AT : Disallowance of interest - diversion of funds for a non-business purpose - owned fund of the assessee as on 31st March 2013 and 31st March 2014 is more than the amount of advances given at a lower rate of interest which is not in dispute - a presumption can be drawn that the assessee has advanced the money to the relatives of the partners out of its fund - no disallowance
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• Income Tax Case: Addition of Capital u/s 68 Deleted Due to Lack of Credited Sum Evidence in Assessee's Books.

  Case-Laws - AT : Addition of capital employed in the business u/s 68 - addition on presumption - the assessee requires no capital of his own for running business and allows his customer a credit period less than the credit period he enjoys - there is no sum which is found credited in the books of accounts of the assessee - on this ground itself, the addition can be deleted
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• Section 148 Notice Invalid: No Failure to Disclose in Original Assessment, Invalidates Reassessment u/s 147.

  Case-Laws - AT : Reassessment u/s 147 - original assessment u/s 143(3) - notice u/s 148 after expiry of four years - A bare perusal of the recorded reasons shows that there is no whisper in the reasons recorded that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment - issuance of notice u/s 148(2) as well as order passed u/s147 is bad in law
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Customs

• High Court demands explanation for non-compliance with order on Anti-Dumping Duty extension per Notification No. 39/2018.

  Case-Laws - HC : Non-compliance with the orders of High Court - direction to extend the AAD as mentioned in Notification No. 39/2018 Custom (ADD) - nothing prevented the respondents from approaching this Court or Supreme Court for obtaining appropriate orders but in absence thereof the authority themselves cannot decide not to comply with the order - directed to file an affidavit explaining as to why appropriate action be not initiated for non-compliance with the orders of this Court
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• Gujarat High Court Extends Anti-Dumping Duty on Paracetamol for Two Months Under Notification No.39/2018 Custom(ADD.

  Case-Laws - SC : Extension of anti-dumping duty (ADD) - Gujarat HC has directed that the ADD in Notification No.39/2018 Custom(ADD) for the product paracetamol shall be extended for a further period of two months that would take care of hearing aspect as by then the pleading would be completed - We are not inclined to interfere all more so since this stage
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Corporate Law

• NCLT Orders ROC to Prosecute u/s 73(4) for Deposit Repayment Failure; SFIO Investigates Fund Siphoning Claims.

  Case-Laws - AT : Failure to make repayment of deposit with interest u/s 74(3) - NCLT directed the ROC to initiate prosecution u/s 73(4) - ROC also referred to the SFIO to make an inquiry into the allegations of siphoning off the funds - Appellants have compromised with the Respondent - liberty granted to request the District Sessions Court, Dwarka or to move any other authority before which any enquiry or action is pending for suitable relief - no relief for SFIO proceedings
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IBC

• CIRP begins despite non-compliance with Sections 56 and 57 of Companies Act; Adjudicating Authority prioritizes Resolution Plan implementation.

  Case-Laws - AT : Initiation of CIRP - non-compliance of the provisions of Sections 56 & 57 of the Companies Act, 2013 - In view of proposal of taking over the shares of the Promoters as approved by the Adjudicating Authority, it is not required to comply with the provisions of Sections 56 & 57 being a formality which can be completed even after the approval of the ‘Resolution Plan’, at the stage of implementation of the plan
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• NCLT Liquidation Order Overturned; 21 Days Excluded from Resolution Period, Saving 700 Jobs with COC's 71% Approval.

  Case-Laws - AT : Initiation of liquidation of the CD by NCLT - appellants have made out a case of exclusion of 21 days for counting the period of 270 days - having received the opinion of COC and taking into consideration that the Resolution Plan has been approved with 71.029% of voting shares and that the 700 workmen of CD can be saved from retrenchment - set-aside the impugned order of NCLT
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Service Tax

• Sub-contractors must pay Service Tax even if the main contractor has paid; CENVAT allows credit to avoid double taxation.

  Case-Laws - AT : There is no reason as to why a sub-contractor should not pay Service Tax merely because the main contractor has discharged the tax liability - there can be no possibility of double taxation because the CENVAT Rules allow a provider of output service to take credit of the Service Tax paid at the preceding stage.
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• SEZ Unit's Refund Claim Disputed Due to Misclassification of DTA Sales Affecting Service Tax Refund Calculation.

  Case-Laws - AT : Refund claim - services availed by the SEZ Unit - the lower authority has wrongly considered DTA sale from SEZ unit as part of DTA operation for the purpose of calculating proportionate service tax refund on common input services.
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Central Excise

• Tax Statute's Remedy with Time Limit Bars Civil Court Jurisdiction Under Specific Conditions.

  Case-Laws - HC : When a specific statutory remedy is provided, especially in a tax statute, which is to be exercised within a prescribed time limit, the said remedy necessarily excludes the exercise of jurisdiction by a Civil Court.
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• No Interest on Interest: Revenue Not Required to Pay Compounded Interest for Delayed Refunds Beyond Statutory Period.

  Case-Laws - AT : It is a misinterpretation the Revenue is obliged to pay interest on interest in the event of its failure to refund the interest payable within the statutory period
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• Items Assessed on Condition at Factory, Not Future Use, Unless Entry Requirements Specify Otherwise.

  Case-Laws - AT : An item is required to be assessed in the form the same is cleared from the manufacturer’s factory and not on the basis of its future use, after clearance, unless it is the requirement of entry.
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VAT

• Strict Interpretation Required for Statutes: "Foreign Origin" Not Synonymous with "Imported" in Legal Language.

  Case-Laws - HC : The meaning of words in a statute, in general, and, in particular, in a tax statute, should be gathered from the language used therein and the expression “goods of foreign origin” or “aircraft of foreign origin” cannot be substituted for or read into the words “imported items”.
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Case Laws:

• GST

• 2019 (6) TMI 550
  Pure service or a composite supply - recipient of service is the State Government / Govt Entity - Exemption under Sl No. 3 or 3A of Notification No 9/2017 - Integrated Tax (Rate) dated 28/06/2017 - Works contract services - composite contracts - contract for resectioning of river Jamuna from the upstream of Charghat Bridge to the downstream of Ghonja Haspur Bridge in Block and P.S Swarupnagar, Habra - 1 and Gaighata in North 24 Parganas - functions of a panchayat under the Constitution HELD THAT:- It is evident from the description of the work that it is a composite supply of various services, where excavation and re-excavation of the drainage channel is the principal supply. Supply of goods, if any, is purely incidental, and is not accounted for separately in the price schedule. The recipient is engaged in the development of irrigation and waterways, which includes activities in relation to the function listed under Sl No. 5 of the Eleventh Schedule, and, therefore, entrusted to a panchayat under Article 243G of the Constitution of India. The recipient certifies that the work awarded to the Applicant, involving drainage of channels and riverbeds, is an activity undertaken in relation to the function. The Applicant s service to the recipient, therefore, is exempt under Sl No. 3A of the Exemption Notification.

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• 2019 (6) TMI 549
  GST on development of fisheries - Exemption under Sl No. 3A of Notification No 9/2017 - Integrated Tax (Rate) dated 28/06/2017 - Works Contract Service - contract for up-gradation of Jalda Kuti Landing Centre by protection to Mandarmani River and up-gradation of navigability by dredging of Mandarmani River in Purba Medinipur - Composite supply - service to Governmental authority - functions of a panchayat under the Constitution - HELD THAT:- The recipient is engaged in the development of fisheries. The term fisheries is typically defined in terms of the people involved, species or type of fish, area of water or seabed method of fishing, class of boats, the purpose of the activities or a combination of the preceding features. The occupation of fishing and fishermen are included in the ambit. The up-gradation of Jalda Kothi Landing Centre and the related work that has been awarded to the Applicant has a direct nexus with fisheries development, as evident from a reference in the reports mentioned in para 2.4 to the mass petition of the fishermen. It is, therefore activity in relation to the development of fisheries - a function listed under Sl No. 4 of the Eleventh Schedule, and, therefore, entrusted to a panchayat under Article 243G of the Constitution of India. Exemption under Sl No. 3A of the Exemption Notification is, therefore, applicable to the Applicant s supply of the above works contract service.

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• 2019 (6) TMI 548
  Profiteering - applicability of provisions of section 171 of the CGST Act, 2017 - it was alleged that the Respondent had charged extra VAT, EDC (External Development Charges) and IDC (Internal Development Charges) - benefit of reduction in the tax rate or additional input tax credit had not been passed - HELD THAT:- The complaint of the Applicant No. 1 was related to the pre-GST period and that the specific charges on the basis of which the said complaint arose pertained to VAT, EDC and IDC. Since the project has been completed before coming into force of the GST w.e.f 01.07.2017, anti-profiteering provisions contained in Section 171 (1) of the CGST Act, 2017 are not attracted. There is no merit in the application filed by the Applicants - application dismissed.

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• Income Tax

• 2019 (6) TMI 551
  Capital gain computation - FMV determination - whether this was the fair market value of the property at the time of sale? - HELD THAT:- The issue ultimately boils down to whether a prudent seller dealing at arms length with a prudent buyer in ordinary market conditions, in relation to a property similarly situated in the same area, would have got, about 30 lakhs only by its sale or a much higher price determined to be 72 lakhs or so by the valuation officer. We are of the opinion that more evidence is to be produced and considered for coming to the conclusion. For this reason, we set aside that part of the order of the learned Tribunal dealing with the valuation u/s 50C and the matter back to it to consider the valuation aspect in accordance with law by a reasoned order within one year from the date of communication of this order. It will be open to the Tribunal to refer the matter to the departmental Valuation Officer for a fresh valuation upon considering the evidence adduced by the parties.

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• 2019 (6) TMI 547
  TDS u/s 194C OR 194J - deduction of tax at source on the payment of outsourcing expenses - as per ITAT tds is to be deducted u/s 194C instead of section 194J - HELD THAT:- CIT (Appeals) and the Tribunal examined the nature of expenditure and came to the conclusion that the assessee had hired the services for various works such as storage of data, scanning of documents, processing charges, call centre operations etc. Looking to the nature of services outsourced, it was held that the same were basically clerical services of repetative nature of work and payments were therefore, neither for managerial nor for technical services. Having perused the documents on record and looking to the nature of services described, we do not find that the Tribunal has committed any error. The work outsourced was in the nature of clerical work. No question of law arises. TDS u/s 194C or 194J - Short deduction of tds - charges of the event management expenses paid by the assessee - HELD THAT:- CIT (Appeals) and the Tribunal noted that the assessee had arranged conference at Agra. The payments were essentially for domestic ticketing, reimbursing hotel expenses, tour leaders expenses. Such services were essentially in the nature of travel agent who had arranged the ticket booking and hotel facilities. The Tribunal therefore held that payments were not for any technical services availed by the assessee and TDS deductible u/s 194C instead of 194J . No question of law arises. Quantum on which the deduction of tax at source would be made - deductible from payment of net insurance commission to the agents, after excluding the service tax component from the gross commission - HELD THAT:- Tribunal referred to the CBDT circular essentially providing that the deduction of tax at source has to be made in relation to the income of the payee. The service tax component not being the part of the income, liability of deducting tax on this component therefore does not arise. Special reference was made to the case of the landlord and tenant where the rent paid would require deduction of tax at source, but excluding the service tax component. In the CBDT circular it has been clarified that where the service tax component is separately indicated, the same would not find part of the payment inviting deduction of tax at source - No error in view of the Tribunal. In the present case, the payment made to the agent was the net commission payable excluding the service tax component which in the law the assessee was required to directly deposit with the Government.

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• 2019 (6) TMI 546
  Deduction u/s 10A - Exclusion from the export turnover as well as the total turnover - telecommunication charges and the expenditure incurred towards technical services rendered outside the India - HELD THAT:- Expenditure incurred towards technical services rendered outside the India, is already covered against the revenue by a judgment of the Supreme Court in C.I.T v. HCL Technologies Ltd . [ 2018 (5) TMI 357 - SUPREME COURT] . As held therein that if deductions on certain services were allowed only in respect of export turnover but not from the total turnover, it would give raise to an inadvertent, unlawful, meaningless and illogical result, causing grave injustice to the assessee. Therefore, following the same, the first question of law is answered against the revenue.

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• 2019 (6) TMI 545
  Penalty u/s 271AAB - treating the declared income during the course of search as undisclosed income - search and seizure action u/s 132(1) - HELD THAT:- No question was raised or asked about the undisclosed income for purchase of iron ore as recorded in the exehibit-2 page 25 at the time of search then the disclosure made by the assessee vide letter dated 25.01.2013 on account of the cash purchases cannot be considered as undisclosed income for the purpose of levy of penalty u/s 271AAB. Neither the investigating team nor the AO during the assessment proceedings detected any excess stock or discrepancy in the stock as recorded in the books of accounts by the assessee in comparison to the stock which was found at the time of search and seizure action. Even there is payment for purchase of raw material the said outgo of money itself cannot be treated as undisclosed income of the assessee in the absence of corresponding asset found at the time of search. There was no discrepancy found in the physical stock as well as stock recorded in the books of account despite the physical verification and inventorization carried out of investigating team at the time of search then the mere details of payment for purchases in cash would not constitute undisclosed income as per the definition provided in explanation to Section 271AAB. Accordingly, the penalty levied u/s 271AAB is not sustainable and the same is liable to be deleted. - Decided in favour of assessee.

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• 2019 (6) TMI 544
  Disallowance u/s 14A - HELD THAT:- The limited contention raised by the learned counsel for the assessee is that the actual dividend income earned by the assessee during the year under consideration was only 9,687/- and, therefore, the disallowance u/s 14A should be restricted 9,687/-. However, as pointed out by the learned DR from the order of the Assessing Officer, the amount of exempt income was mentioned by the AO as 1,49,519/-. Direct the AO to verify the actual amount of exempt income earned by the assessee during the year under consideration and restrict the disallowance u/s 14A to that extent. Ground No. 1 of the assessee s appeal is accordingly treated as allowed for statistical purpose. Unexplained cash credit - loan received by the assessee as unexplained - HELD THAT:- In the case of Orissa Corporation Pvt. Ltd. [ 1986 (3) TMI 3 - SUPREME COURT] as held that merely because summons issued to some of the creditors could not be served or they fail to appear before the AO cannot be the basis to treat the loans taken by the assessee from those creditors as non-genuine. It was also held that if the AO was not satisfied about the cash amount deposited by those creditors in their bank account, the proper course should have been to make assessments in the case of those creditors by treating the cash deposits in their bank account as unexplained investment of those creditors u/s 69. Decision in the case of Orissa Corporation Pvt. Ltd. [ 1986 (3) TMI 3 - SUPREME COURT] is squarely applicable in the facts of the present case and respectfully following the same, delete the addition treating the loan in question received by the assessee as unexplained cash credit u/s 68 - Decided in favour of assessee.

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• 2019 (6) TMI 543
  Reassessment proceedings u/s. 147 as against 153C - Addition u/s 68 - proof of identity and creditworthiness of the share applicants and the genuineness of the transaction - HELD THAT:- It is an admitted fact that in the instant case the information was passed on by the DDIT (Investigation) and not by the Assessing officer of the S. K. Jain Group i.e. the AO of the searched person. No documents belonging to the assessee was found and S. K. Jain Group had never stated that the documents so seized from their premises do not belong to them. We find the coordinate bench of the Tribunal in the case of Surya Financial Services Limited Vs. PCIT [ 2018 (1) TMI 1360 - ITAT DELHI] while deciding an identical issue on the validity of reassessment proceedings u/s. 147 as against 153C on the basis of the same S. K. Jain Dairies. Further in the instant case it can be seen that no material belonging to the assessee was found from the residence of Shri S. K. Jain and only evidence of accommodation entries given by Sh. S. K. Jain Group of cases, through their various shell companies was found during the course of search and post search enquiries. The information was passed on to the AO of the assessee by the investigation wing and no material belonging to the assessee was either found from the residence of this S. K. Jain or handed over to the AO of the assessee by the Assessing Officer of the searched person. Therefore, the Assessing Officer in the instant case has rightly invoked jurisdiction u/s. 147 and not u/s 153C of the IT Act,1961. The ground appeal No. 1 by the assessee is accordingly dismissed. Bogus share capital and share premium - the assessee was not provided with the copy of the statement given by Sh. S. K. Jain / Virender K. Jain which has been utilized against the assessee. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore this issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and creditworthiness of the share applicants and the genuineness of the transactions. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Further while doing so the Assessing Officer shall keep in mind the decision of M/s. NRA Iron Steel (P) Limited [ 2019 (3) TMI 323 - SUPREME COURT] and NDR Promoters Limited [ 2019 (1) TMI 1089 - DELHI HIGH COURT] . The ground of appeal No.2 is accordingly allowed for statistical purpose.

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• 2019 (6) TMI 542
  Depreciation claimed on non compete fee - claim of depreciation on non compete fee @ 25% by treating it as an intangible asset is acceptable or not? - HELD THAT:- As decided in assessee s own case [ 2019 (5) TMI 411 - ITAT MUMBAI] allowed assessee s claim of depreciation by treating the non compete fee as an intangible asset. The same view was reiterated by the Tribunal while deciding assessee s appeal for subsequent year also. Therefore we uphold the decision of the learned Commissioner (Appeals) on the issue in allowing claim - we direct the A.O. to allow deprecation on non compete fee @ 25% by treating it as an intangible asset. - Decided against revenue Disallowance of depreciation on various fixed assets on the basis of wrong actual cost - HELD THAT:- while deciding identical issue in the preceding assessment years in assessee s own case, the Tribunal has restored the issue to the Assessing Officer for fresh adjudication. In this context, we may refer to the latest order passed by the Tribunal for the assessment year 2006 07 [ 2016 (10) TMI 1037 - ITAT MUMBAI] . Facts being identical, respectfully following the consistent view expressed by the Tribunal in the preceding assessment years, we restore the issue to the Assessing Officer for de novo adjudication. Disallowance of interest expenditure u/s 36(1)(iii) - investment of funds in sister concerns - HELD THAT:- While deciding identical issue in the latest order passed by the Tribunal in assessee s own case for the assessment year 2005 06 [ 2019 (5) TMI 411 - ITAT MUMBAI] decided the issue in favour of the assessee by holding that the investment of funds in sister concerns are for the purpose of business - we delete the disallowance made by the Assessing Officer. Disallowance of interest on account of interest free loans to the subsidiary - HELD THAT:- This is a recurring issue between the assessee and the Department from the preceding years. In the latest order passed by the Tribunal in assessee s own case for the assessment year 2006 07 [ 2016 (10) TMI 1037 - ITAT MUMBAI] Unutilized credit of Central Value Added Tax (CENVAT) u/s 145A - HELD THAT:- As decided in assessee s own case in the assessment year 2006 07 [ 2016 (10) TMI 1037 - ITAT MUMBAI] direct the Assessing Officer to value the closing stock strictly in terms of section 145A, keeping in view the principle laid down in judicial precedents referred to above and only after providing due opportunity of being heard to the assessee. TPA - adjustment to the arm s length price of interest fee loan advanced to Piramal Glass, U.K. and corporate guarantee provided to the Associated Enterprise (AE) - HELD THAT:- As regards the rate at which interest on interest free loan is to be computed, we find that learned DRP has directed the Assessing Officer to compute interest at LIBOR plus 3%. We find that while deciding identical issue in assessee s own case in assessment year 2007 08 [ 2019 (5) TMI 411 - ITAT MUMBAI] the Tribunal has directed to compute interest on interest free loan advanced to the AE at LIBOR plus 200 basis points. Insofar as adjustment on account of corporate guarantee commission is concerned, the Tribunal has directed the Assessing Officer to compute the corporate guarantee fee @ 0.5%. Similar view was expressed by the Tribunal while deciding assessee s appeal in assessment year 2011 12. Respectfully following above, we direct the AO to compute interest on interest free loan to AE at LIBOR plus 200 basis points and corporate guarantee commission @ 0.5%. Addition on account of foreign exchange gain arising out of loan given to the subsidiary companies - DRP directed the Assessing Officer to delete the addition - HELD THAT:- As per section 144C(13) of the Act, the Assessing Officer is duty bound to implement the directions of learned DRP. In view of the aforesaid, we direct the Assessing Officer to comply with the statutory mandate by implementing the directions of learned DRP on the issue and delete the addition. Short grant of TDS - HELD THAT:- We direct the AO to verify the facts relating to assessee s claim and grant credit for TDS as per law.

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• 2019 (6) TMI 541
  Allowability of advances written off - amount due from the subsidiary not recoverable - business loss OR capital loss - assessee is in hospitality business - CIT(A) deleted the advances - HELD THAT:- We note that learned CIT(A) has found that advance was very much in line of the assessee s business. He also found due nexus between advances given to the subsidiary and assessee s business. He found that these advances to the subsidiary cannot be treated as advances which could derive benefit of enduring nature. Learned CIT(A) placed reliance upon several case laws for the proposition that advances to the subsidiary in line of assessee s business and non-recovery thereof should be allowed as business loss. Hence, learned CIT(A) deleted the advances. We find that the above action of learned CIT(A) does not suffer from any infirmity. Assessee s advance to subsidiary which was also engaged in the hospitality industry was revenue in nature as mentioned here in above. Non-recovery thereof is liable to be allowed as revenue expenses. While disallowing assessee s claim the AO has commented that by giving those advances to the subsidiary the assessee was doing charity at the cost of revenue. This we find is unsustainable proposition. It is settled law that Revenue should not sit in the shoes of businessmen and decide what is appropriate for the business of the assessee. No infirmity in the order of CIT(A). Disallowance for delay in payment of contribution received from employees towards PF and ESIC - AO disallowed impugned payments on the ground that these payments were not made within stipulated time under respective Act - HELD THAT:- These payments were made before the due date of filing of return. Learned CIT(A) has decided the issue in favour of the assessee by referring to Hon ble Jurisdictional High Court decision in the case of CIT Vs. Hindustan Organics Chemicals Ltd. [ 2014 (7) TMI 477 - BOMBAY HIGH COURT] and CIT Vs. Ghatge Patil Transport Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] .

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• 2019 (6) TMI 540
  Unexplained investment u/s 69 - cashless transaction - four immovable properties registered with Sub-Registrar, Melapalayam, Tirunelveli - HELD THAT:- It is not in dispute that the land owners, power of attorney holders and the assessee firm are all inter related. Assessee firm is the concern of the land owners and the power of attorney holders and these facts are not in dispute - cashless transaction is quite possible as explained by the assessee and further evidenced by affidavits of all the concerned parties. Further, it was explained before the AO that the assessee company paid the sale consideration to the land owners during the subsequent two financial years. It appears that neither the Ld.AO has verified the same nor disputed the same. AO has arrived at his decision only based on the registered document closing his eyes on all other events and transactions. From the conduct of the AO it appears that the assessee has paid the sale consideration in the two subsequent years which the AO has taken note off as it was brought to his notice by the assessee however the AO has restrained to address or comment on the same. If the sale consideration is not paid then it cannot be said that the sale had taken place. In the case of the assessee it appears that the sale consideration is paid only in the subsequent years and therefore transfer as per Section 2(47) of the Act should be construed to have taken place at the most when part consideration is paid coupled with handing over possession of the land. - Decided against revenue.

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• 2019 (6) TMI 539
  Disallowance of interest - diversion of funds for a non-business purpose - interest-bearing fund @15.10% diverted at a lower rate of interest @ 12%- sufficiency of own funds - HELD THAT:- As owned fund of the assessee as on 31st March 2013 and 31st March 2014 stands at 9,20,43,295.00 and 15,09,83,383.00 which is more than the amount of advances of 7,66,40,811 given at a lower rate of interest. The details of the own fund and the amount of impugned advances are not in dispute. Therefore a presumption can be drawn that the assessee has advanced the money to the relatives of the partners out of its fund. See RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT], HDFC BANK LTD. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] and UTI BANK LTD. [ 2013 (8) TMI 238 - GUJARAT HIGH COURT] - Decided in favour of assessee.

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• 2019 (6) TMI 538
  Rectification u/s 154 - incorrect computation of margin of the comparables - difference in the rate of depreciation between itself and the comparables - TP Adjustment - adjustment made to the arm s length price of the import of capital assets - HELD THAT:- The assessee had never raised the issue of difference in the rate of depreciation between itself and the comparables either before the TPO or before learned DRP. Though, we find substantial force in the submissions made on behalf of the assessee, however, since the aforesaid contention was raised for the first time before us, we are inclined to restore the issue to the Assessing Officer for considering assessee s claim of depreciation adjustment after verifying the rate at which the assessee and the comparables have claimed depreciation and keeping in view the ratio laid down in the decision of the Tribunal, Delhi Bench, in Honda Motorcycle Scooters India Pvt. Ltd. [ 2015 (4) TMI 502 - ITAT DELHI] As regards assessee s claim of incorrect computation of its margin by treating certain non operating expenses as operating in nature as well as assessee s contention that margin of the comparables have been computed wrongly, we are of the view that the TPO was not justified in rejecting assessee s application filed u/s 154 on the ground that they are not in the nature of mistake apparent on the face of record. In our view, aforesaid decision of the TPO is unacceptable. Moreover, the issue relating to the incorrect computation of margin of the comparables constitutes a mistake apparent on the face of record. Therefore, we direct the TPO to dispose of the application filed by the assessee u/s 154 on merits by correctly computing the margin of the assessee and the comparables. TP adjustment - ALP of management service charges - HELD THAT:- Arm s length price of an international taxation has to be determined not only with reference to the stated income and expenditure but also by applying any one of the methods prescribed under section 92C - TPO has not stated, by adopting which method he has determined the arm s length price of management service charges at nil. Though the assessee had furnished a number of evidences before learned DRP by way of additional evidences, learned DRP has neither examined them at their level nor the TPO has examined them properly in the course of remand. In any case of the matter, as per the statutory mandate the duty of the TPO is to determine the arm s length price of the international transaction by applying any one of the prescribed methods as per section 92C. The Transfer Pricing Officer has failed to do so in the present case. Therefore, restore the issue to AO/TPO to properly examine the benchmarking of the assessee and all other documentary evidences furnished by the assessee and if they are not satisfied with assessee s benchmarking, they may determine the arm s length price by applying any of the prescribed methods. Not allowing assessee s claim of set off of brought forward business loss - HELD THAT:- in the draft assessment order has allowed set off of brought forward loss along with unabsorbed depreciation. However, in the final assessment order, the Assessing Officer has omitted to allow set off of brought forward business loss without any valid reason. In view of the aforesaid, we direct the Assessing Officer to allow assessee s claim of brought forward business loss and after set off of such brought forward business loss may set off the unabsorbed depreciation of prior years. Grounds are allowed.

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• 2019 (6) TMI 537
  Disallowance of advertisement expenses - year of assessment - addition of expenses on the ground that expenses pertains to the subsequent year as the dates on the bills of the said expenses is of April and May 2008, which does not fall in previous year relevant to the assessment year under consideration - HELD THAT:- There is no dispute that the assessee is following Mercantile system of accounting. Further it is not in dispute that invoices related to the advertisement expenses were received by the assessee in the month of April and May 2008, though the expenses relates to the advertisement made prior to March 2008. Considering the fact that expenses relates to the advertisement expenses are related with the assessment year under consideration, the disallowance made by AO and confirmed by learned CIT (A) are deleted. - Decided in favour of assessee. Addition of provision for warranty - HELD THAT:- A provision is recognized when a enterprises has a future obligation as a result of past events, it is probable that a out flow of the recourses will be required to settle the obligation and a reliable estimation can be made for such obligation. All such factors are missing in the present case. Neither the assessee is manufacturer nor have a past history in respect of the claim of warranty. Thus, we do not find any illegality or infirmity in the order of ld. CIT (A) for our interference. - Decided against assessee. Addition of provision of Gratuity - AO disallowed the provision of gratuity holding that mere provision covered by section 40A(7) and has not been debited in Profit Loss A/c - HELD THAT:- The assessee has shown the provisions of gratuity as on 31.03.2008 as a liability taken over from its Associated Enterprieses (Brother International Singapore Pvt. Ltd.). In our view, the disallowance made by AO and confirmed by CIT(A) is not correct. The disallowance was made only on the ground that it was not routed through Profit Loss A/c and was a balance-sheet item. We are conscious of the fact that balance-sheet are not sacrosanct. The assessee claimed the provision of gratuity of 13,37,283/-. During the remand proceeding assessee furnished actuarial certificate showing amount of 16,12,347/- which has been reflected in the balance-sheet. The assessee claimed provision for payment of gratuity on the basis of actuarial valuation. AO at the time of passing assessment order on 20.12.2011 has not verified, if the similar amount is claimed in next Assessment Year, therefore, this issue is restored to the file of AO to decide it afresh in accordance with law. Needless to order that before passing the order, the AO shall allow proper opportunity of hearing to the assessee. MAT computation - addition of provision of warranty and gratuity to the book profit while computing income u/s 115JB - HELD THAT:- We have already confirmed the addition regarding provision for warranty and restored the addition/disallowance regarding gratuity. Therefore, the AO is directed to make consequential adjustment accordingly with regard to the disallowance of gratuity. As we have directed the AO to decide the issue of provision of gratuity afresh. Therefore, the AO shall pass the order for adjustment u/s 115JB with regard to provision of gratuity after deciding the issue afresh.

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• 2019 (6) TMI 536
  Taxability of share of income from AOP u/s 115JB - Book Profit - income be brought to tax under MAT liability - whether in case of Member of AOP, when no income is payable on the share of member of AOP in certain situation? - HELD THAT:- In accordance with the provision of section 86, should the same income be brought to tax under MAT liability. We have noted in Goldgerg Finance Pvt. Ltd. [ 2017 (2) TMI 643 - ITAT MUMBAI] vide consideration, the similar issue held that when the share of income member of AOP was not taxable in term of section 86 then it should not be taxed under MAT also. Considering the fact of the present case, when the share of AOP was not taxable under the normal provision of the Income Tax Act than it cannot be brought to be taxed under MAT. No contrary law would brought to over notice to take the other view. Therefore, respectively following the decision of Co-ordinate Bench in Goldgerg Finance Pvt Ltd (supra), we direct the AO to not to brought income received by the assessee from AOP. In the result, the ground raised by the assessee is allowed.

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• 2019 (6) TMI 535
  Unexplained credit u/s. 68 - unexplained source of income - HELD THAT:- The allegation of AO is that the confirmation letters are dated 27/04/2015 and 16/08/2016 which are almost ten years later than the year in which the loan was taken. These confirmation letters were furnished by the brother and mother of Late Mr. Subair Khan and it cannot be doubted without examining these parties. AO has made the addition without providing any evidence contrary to the submissions made by the assessee which is not correct. There is no reason to suspect the bonafides and genuineness of the transactions. There is also no basis to suspect the credit worthiness of Late Subair Khan. To that extent, there are no grounds to suspect the transactions with him. CIT(A) also accepted 10 lakhs assessed for AY 2005-06 as satisfactorily explained. Since the construction of M/s. Killi Tower had just begun and funds were contributed by several contributors, the earning of unexplained income even during the construction period is a clear imaginary situation. During the life time of Late, Subair Khan, he had confirmed the transactions with M/s Killi Constructions, however, AO never wanted him to be examined or any evidence collected. Accordingly, we are inclined to delete the addition - Decided in favour of assessee.

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• 2019 (6) TMI 534
  Deduction u/s 80IB denied - treating the interest income on LC, FD and bank guarantee, interest on VAT, refund and interest on HDFC asset management as income from other sources - HELD THAT:- Assessee being in the business of manufacturing of aluminum ingots has availed various credit facilities in the form of cash credit, buyer credit, LC, bank guarantee etc. from State Bank of India for which it has to keep the necessary deposits as securities as per the bank mandate and the assessee has earned interest income as has been stated hereinabove. CIT(A) in A.Y. 2010-11 has decided the issue in favour of the assessee by following the decision of CIT vs. Koshika Telecom Ltd. [ 2006 (2) TMI 140 - DELHI HIGH COURT] wherein it has been held that interest flowing from deposits made by the assessee which are in extricably linked to the business of the assessee can not be treated as income from other sources. In the case of CIT vs. Jaypee Dsc Ventures Ltd. [ 2011 (3) TMI 309 - DELHI HIGH COURT] it has been held that where the money is deposited into bank not as surplus money but out of business exigencies and necessities, then the interest acquires the character of business receipts. In the case of CIT vs. Indo Swiss Jewels Ltd. [ 2005 (9) TMI 47 - BOMBAY HIGH COURT] the interest earned on short term deposits kept apart for the purpose of business has to be treated as income earned from business and can not be treated as income from other sources. Similarly, in the case of CIT vs. Koshika Telecom [ 2005 (9) TMI 47 - BOMBAY HIGH COURT] which has been relied upon by the predecessor CIT(A) to decide the appeal in favour of the assessee in A.Y. 2010-11 has the same ratio. Accordingly, we respectfully following the decisions as discussed hereinabove direct the AO to treat the interest and the various deposits as stated hereinabove as income from business and not from income from other sources. Accordingly, the assessee is entitled to deduction under section 80IB. - Decided in favour of assessee.

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• 2019 (6) TMI 533
  Rectification of mistake u/s 254 - Non exclusion of CFC Grant from the total income - mistake apparent from record - HELD THAT:- We find that the Tribunal inadvertently failed to adjudicate ground 20 taken by the assessee challenging order of Ld.CIT(A) in confirming non exclusion of CFC grant from total income. We further note that non adjudication of specific ground taken by the assessee in its memorandum of appeal constitutes a mistake apparent from record which can be rectified u/s 254(2) of the Act. Hence, we recall our order passed for AY 2002-03 [ 2018 (10) TMI 1288 - ITAT MUMBAI] for the limited purpose of adjudication of ground 20. The other part of the order would stand, as it is.

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• 2019 (6) TMI 532
  Characterization of income - TDS u/s 195 - amount received by RJIPL from the assessee for providing standard bandwith services - royalty or business income - India-Singapore DTAA - PE in India - HELD THAT:-There is substantial force in the contention advanced by the ld. A.R that though the term royalty as used in Article 12 of India-Hungary DTAA takes within its sweep transmission by satellite, cable, optic fibre or similar technology , however, the definition of royalty in the India-Singapore tax treaty with which we are concerned has a narrow meaning. Despite the fact that the India-Singapore tax treaty was amended by Notification No. SO 935(E), dated 23.03.2017, however, the definition of royalty therein envisaged had not been tinkered with and remains as such. The amount received by RJIPL from the assessee for providing standard bandwith services could not be characterised as royalty as per the India- Singapore DTAA, and as rightly observed by the CIT(A), was in fact the business profits of RJIPL. Insofar the taxability of the aforesaid business profits is concerned, we find that as RJIPL did not have any business connection or a PE in India, therefore, the same as per Article 7 of the India-Singapore DTAA could not have been brought to tax in India. The order of the CIT(A) that amount received by RJIPL from the assessee for providing standard bandwith services was its business profits , which in the absence of its business connection or PE in India could not be brought to tax in India is upheld in terms of our aforesaid observations and the appeal of the revenue is dismissed.

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• 2019 (6) TMI 531
  Deduction u/s.54F - multiple flats acquired under a JDA - HELD THAT:- We are of the view that the facts of the Assessee s case are identical to the case decided by the Tribunal in the case of Smt.Netravati [ 2018 (4) TMI 1617 - ITAT BANGALORE] . Respectfully following the same, we hold that the Assessee is entitled to benefit of deduction u/s.54F of the Act, on the 13 flats which he got as his share of built up area from the developer under the JDA. The LTCG brought to tax by the revenue authorities is accordingly directed to be deleted. STCG or LTCG - sale of 14 flats out of 27 flats which were earmarked as share of the assessee under the JDA - HELD THAT:- The share of 27 flats which were to be allotted to assessee was identified and it is shown as Item No. 2 in Schedule-B of the supplementary agreement. The admitted factual position is that the sum of 1,46,15,100/- was received as consideration of 14 flats by the assessee for giving up his rights in favour of the developer. The said sum was received within a period of three years from the date of JDA. In such circumstances, the 14 flats on which rights were given up in favour of the developer by the assessee were held by assessee for a period of less than 36 months and therefore, those flats assume the character of Short Term Capital Asset . The act of giving of rights over those 14 flats would amount to a transfer and since such transfer is of a Short Term Capital Asset, the gain on such transfer was rightly assessed by the Revenue authorities as STCG. Fair Market Value (FMV) as on 01-04-1981 of the 14 flats that were given up in favour of the developer - HELD THAT:- It is no doubt true that the Revenue authorities claim for adopting FMV as on 01-04-1981 at 1/- per Sq. Ft., has the backing of the sale instance. We are however, of the view that in such matters, it is not possible to identify identical property as that of assessee for determination of FMV as on 01-04-1981, giving the benefit of doubt to assessee, We are of the view that it would be just appropriate in the given facts and circumstances of the case to adopt the FMV as on 0104-1981 at 50/- per Sq. Ft. AO is accordingly directed to compute STCG on sale of 14 flats by the assessee to the developer. Ground partly allowed Capital gain computation - Cost of improvement of land, the cost of improvement to the land which should be taken into consideration while determining the capital gain - HELD THAT:- The admitted position is that no evidence in support of such claim was filed before the Revenue authorities or before the Tribunal. In the given facts and circumstances of the case, we are of the view that there is no merit in Ground raised by the assessee. Accrual of income - refundable deposit under the JDA - HELD THAT:- The admitted factual position stated by the AO in para 7 of the assessment order is that this sum was never returned by the assessee to the developer. In these circumstances, we uphold the orders of Revenue authorities and find no merit in Ground raised by the assessee

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• 2019 (6) TMI 530
  TP Adjustment - interest on loans advanced to Associated Enterprise (AE) - adjustment u/s 92CA(3) - Appellant has charged interest at 6 months LIBOR + 400 bps on the advances given to the AE after considering the internal CUP - HELD THAT:- As decided in assessee s own case [ 2015 (11) TMI 741 - ITAT MUMBAI] and [ 2016 (6) TMI 636 - ITAT MUMBAI] has accepted floating rate of LIBOR +2% for bench marking. It has been duly submitted that AE has raised finance at LIBOR +350bps which has not been controverted by T.P.O. DRP also has discussed and rejected the rate of loan taken by the assessee from SBI. But it has not dealt with assessee s submission that AE itself has raised finance in foreign country on LIBOR+350 bps. Accordingly the rate adopted of LIBOR+400 bps in the present case is adequate on the fact and circumstance of the case and precedents referred above. The assessee succeeds on its alternative ground also. DRP has given a direction that the period computed by the TPO for application of interest on loan was to be verified and interest was to be computed for the actual period the loan was outstanding. A.O./TPO has failed to address this issue. So the amount of adjustment made by the A.O./TPO being erroneous is not sustainable. - Decided in favour of the assessee. Non grant of credit of dividend distribution tax - additional ground raised - HELD THAT:- We find that both the above grounds were not raised before the D.R.P. The issues raised cannot be made to be a part of appeal before the ITAT. Nevertheless on the touchstone of the Hon ble Apex Court decision in the case of CIT v/s. Shelly Products [ 2003 (5) TMI 4 - SUPREME COURT] we direct that the A.O. may consider the issue raised as per law and factual verification.

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• 2019 (6) TMI 529
  Trading addition - adopting the N.P. rate of 5% on an estimated sales - what should be the turnover of the assessee for the year under consideration? - HELD THAT:- The assessee has reported a turnover of 13,82,346 and the undisclosed balance with the debtors as on 31 March 2004 comes to 13,20,574 basis the diary found during the course of survey which has been owned up by the assessee. There is nothing on record to show that corresponding sales relating to the undisclosed balance with the debtors as on 31 March 2004 forms part of the reported turnover and thus, the same is clearly the undisclosed turnover of the assessee. Given that the Revenue is not in appeal, we are of the view that the ld CIT(A) is reasonable enough to determine the turnover of the assessee at 25,00,000. In the result, the ground of appeal is dismissed. Addition of capital employed in the business u/s 68 - assessee must be requiring the funds to run the business as he makes credit sales - sales are made on credit basis and funds would be required/tied up in sundry debtors and also for purchase of material - HELD THAT:- Such an addition cannot be sustained by invoking the provisions of section 68 which talks about any sum found during the books of accounts and in respect of which the assessee offers no explanation or the explanation so offered is not found satisfactory. In the instant case, there is no sum which is found credited in the books of accounts of the assessee and hence, on this ground itself, the assessee deserve the relief and the addition so made is hereby deleted. In view of the same, we have not dealt with other contentions so raised by the ld AR. In the result, the ground of appeal is allowed. Estimation of turnover - addition based on dairy found during the course of survey - HELD THAT:- AO basis the dairy found during the course of survey which has been owned up by the assessee has determined the undisclosed sales for the year amounting to 29,91,458 as against the reported turnover of 21,69,740 in the return of income. The matter relating to sales return are considered but not found established and hence, not acceptable. Therefore, the turnover is determined at 29,91,458 as against the figure of 35,00,000 sustained by the ld CIT(A). The assessee thus get s the consequent relief on profit determination on the turnover of 29,91,458 and the ground is thus partly allowed.

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• 2019 (6) TMI 528
  Reopening of assessment u/s 147 - issuance of notice u/s 148 after expiry of four years from the end of relevant assessment year - period of limitation - HELD THAT:- We find that in the instant case reopening of assessment has been made after expiry of four years from the end of relevant assessment year after passing original assessment order u/s 143(3) on 31.10.2010. Proviso to section 147 states that where an assessment is made u/s 143(3), no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. A bare perusal of the above recorded reasons shows that there is no whisper in the reasons recorded by the Assessing Officer that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Therefore, reopening of assessment by issuance of notice u/s 148(2) on 27/3/2015 is bad in law and consequently the order passed in pursuance to such notice is also bad in law. - Decided in favour of assessee.

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• Customs

• 2019 (6) TMI 527
  Extension of ADD for a further period of two months - - Relevant date of notification - notification of 20.8.2018 - HELD THAT:- The application before the High Court has been fixed on 12th June, 2019. We are not inclined to interfere all more so since this stage, the order impugned was passed on 24th April, 2019. These matters are adjourned till 17th June, 2019.

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• 2019 (6) TMI 526
  Non-compliance with the orders of High Court - Suspension of N/N. 19/2019-Customs (ADD) dated April 16, 2019 - issuance of necessary notification so as extend the anti dumping duty as mentioned in Notification No. 39/2018 Custom (ADD) - implementation of the orders passed by this Court. HELD THAT:- The Court is of the view that nothing prevented the respondents from approaching this Court for seeking appropriate relief / clarification. Unfortunately, close perusal of Office Memorandum dated 6.5.2019 reproduced hereinabove rather indicates the authority s conduct in avoiding the compliance with the Court s order. The author of the Office Memorandum clearly reveals uncanny and enigmatic recalcitrant approach on the part of the authority in complying with the order of this Court when these orders being not subjected to any further challenge or sought to be reviewed. The resultant effect of the two orders i.e. 24.4.2019 and 26.4.2019 left no room for any other option to the authority but to pass appropriate order and extend the anti-dumping duty notification. We are at pain to observe that para-6 of the Office Memorandum clearly betrays an unlawful and illegal examining by authority examining the orders of this court. Nothing prevented the respondents from approaching this Court or Supreme Court for obtaining appropriate orders but in absence thereof the authority themselves cannot decide not to comply with the order. Against these backdrops, we are called upon to examine the prayers made in this application. If these prayers are not granted, it would amount to permit the respondents to render petition infructuous solely on account of their omission to file reply and without adjudication, which cannot be permitted in a society wedding to rule of law. The respondents cannot be permitted to arrogate any jurisdiction and power, which they did not have to thwart and impead the operation of Court s order. The respondent no. 1 through an officer not below the rank of Secretary of the concerned department shall file an affidavit explaining as to why appropriate action be not initiated for non-compliance with the orders of this Court. NOTICE returnable on 12.6.2019.

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• 2019 (6) TMI 525
  Clearance of the vehicle imported by the petitioner - petitioner contends that the Department is withholding every action as on date against the vehicle imported by the petitioner - completion of adjudication under Section 124 of the Customs Act - HELD THAT:- This Court is of the view that the respondents can be directed to complete the adjudication within four months from the date of receipt of copy of this order. In the enquiry the petitioner is heard and reasonable opportunity provided in accordance with Customs Act. Petition disposed off.

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• 2019 (6) TMI 520
  Release of passport - prayer for speedy completion of investigation - HELD THAT:- This Court is not proposing to examine the stage of investigation or delay thereof. The investigation now is completely seized by the respondent under the Act. The fact of the matter is depending on the nature of allegations and also the intensity of these allegations, detailed investigation certainly is required but the investigation ought to be completed within some reasonable definite time and necessary orders are passed in accordance with law. This Court is of the view that the respondent can be directed to complete the investigation pending as expeditiously as possible, preferably within three months from the date of receipt of a copy of this judgment - Petition disposed off.

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• 2019 (6) TMI 506
  Valuation of export goods - deemed export - undervalued clearances of PTA made to deemed export category buyers - whether the transfer of advance licenses are to be considered as a consideration for sale of the goods by the appellant to the buyers? - HELD THAT:- The transferred advance license, can be beneficial for the appellant for duty free inputs of the raw materials required for manufacture in the appellant s factory. Hence, certain benefit accrued to the appellant through the receipt of transferred advance licenses. Time bar - HELD THAT:- In the Haldia Petrochemicals [ 2018 (12) TMI 1031 - CESTAT KOLKATA ] case, the Tribunal held that the appellant will be entitled to the benefit of time bar. Revenue neutrality - HELD THAT:- The appellant will not be entitled to the benefit of revenue neutrality. The demand for differential duty on merit upheld - the demand for duty beyond the normal time limit set aside - penalties set aside - Appeal allowed in part.

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• 2019 (6) TMI 502
  100% EOU - Duty free imports under N/N. 52/2003-CUS dated-March 31, 2003 - Job-work - Department took the view that the appellant s act of clearing chemicals imported by them under Notification No. 52/2003 did not satisfy conditions stipulated in para 4 of the Notification - HELD THAT:- The Notification No. 52/03 provides for import of various goods for use in the manufacture of goods in 100% Export Oriented Unit for the purpose of export. As per terms of this notification, the appellant imported various goods for use in the manufacture of Fire Retardant garments. Para No. 4 (3 iii) of the said Notification permits the imported goods, to be taken outside the EOU for certain permissible processes including job work. After carrying out such processing goods are required to be returned to the unit for carrying out the remaining processes to ready the goods for export. The appellant sought permission under the above paragraph of the Notification for sending out certain goods for job workers. The expression of job work has been interpreted in liberal terms by the Tribunal and Hon ble High Courts. In the present case, the fire retardant chemicals imported duty free has been supplied to the job workers. Such chemicals were coated on the fabrics manufactured by the job workers. But it is seen that the Fabrics are shown to have been purchased by the appellant as evidenced by the invoices issued for such fabrics. In respect of the main job worker, M/s. JCT Faguara, it is further seen that the procurement of Fabrics from JCT is also supported by issue of CT-3 certificates issued by the Jurisdictional Superintendent for the appellant. This clearly evidences the fact that fabrics have been manufactured by JCT for supply to the appellant. The activity carried out at the premises of job workers will be squarely covered within the para 4 (iii) of the Notification under which due permission has been granted by the Development Commissioner. There is no dispute that the processed fabrics on which the imported chemicals coated has been duly received in the premises of appellant - there is no justification for raising the demand for Customs duty, not paid at the time of import on the chemicals. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 491
  Vires of N/N. 19/2019-Customs (ADD) dated April 16, 2014 - effect and implementation of Notification No.19/2019Customs (ADD) dated April 16, 2014 - HELD THAT:- he Court is of the view that the development in this matter and the passing of the orders time and again clearly indicate that the matter was to be decided finally on or before 26/04/2019. However, on account of respondents inability to place on record their version of reply, the matter was required to be adjourned and that adjournment and posting of the matter unfortunately has resulted into passing of the notification of 16/04/2019 which if not suspended would amount to rendering the Court s order and proceedings infructuous without there being adjudication which situation cannot be permitted to prevail in any circumstances especially when the High Court is examining the final finding under Article 226 of the Constitution of India and when the Court has informed all the concerned by way of orders that the notice was being issued for final finding it was expected of all to be mindful of the time line fixed by the Court so as to contribute in the proceedings of hearing and adjudication which was subject matter of the main petition. The said subject matter cannot be permitted to be rendered infructuous only on account of, may be inadvertence, on part of the Union of India. Nor would any order of recording import hereafter be of any help to the petitioner as the petition would become infructuous if the impugned notification in this application is permitted to be remained operative. The Court is constrained to suspend the notification dated 16/04/2019 till final disposal of the main petition which is ordered to be placed on 12/06/2019.

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• 2019 (6) TMI 489
  Extension of ADD for a further period of two months - Relevant date of notification - notification of 20.8.2018 - HELD THAT:- This Court is of the view that while issuing the notice on 13.3.2019 an order was passed indicating therein that the notice was being issued for final disposal and it was made returnable on 27.3.2019 the Court did advert there into the requirement of issuing of notice for final disposal bearing in mind that the notification of 20.8.2018 would expire on 26.4.2019. The matter thereafter was required to be adjourned at the instance of respondent as could be seen from the order of 11.4.2019 wherein also the Court in fact had reproduced the earlier order only with a view to infuse the sense of urgency which appears to have worked but not to the fullest as though the reply has come but in a soft copy which cannot be placed on record and there is a justification on the part of the counsel for the petitioner with respect to the appropriate direction for extending the anti-dumping duty so that the subject matter of petition may not be rendered infractions and irretrievable situation may be avoided. The Court is, therefore, of the view that let there be a direction to respondent No.1 that the anti-dumping duty as mention in Notification No.39/2018 Custom(ADD) for the product paracetamol dated 20.8.2018 at page 119 shall be extended for a further period of two months that would take care of hearing aspect as by then the pleading would be completed - The anti-dumping duty as mentioned in the notification dated 20.8.2018 be extended for a further period upto 24.6.2019.

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• Corporate Laws

• 2019 (6) TMI 524
  Failure to make repayment of deposit with interest u/s 74(3) - registration of original Applicant Lal Chand Singhal as a client/constituent member of the Company - HELD THAT:- In view of the fact that the original Applicant Lal Chand Singhal has compromised with the Appellants and has received his dues and has no more grievances against the Appellants, we intend to quash the Impugned Order. As the original Applicant has compromised with the Appellants, any action purely on the basis of the grievances of the Respondent original Applicant Lal Chand Singhal of failure to pay deposit, should not survive - However, if after the Impugned Order was passed, if the ROC has collected any other material against the Appellants, relating to any other similar failure to repay deposits or any other failures on the part of the Appellants under the Companies Act, we do not intend to protect the Appellants from action on the basis of any such other material. As the Appellants have compromised the matter with the Respondent original Applicant relating to his grievances under Section 73(4) of the Companies Act, 2013 and now the Respondent original Applicant has been repaid his deposits with interest, we give liberty to the Appellants to request the District Sessions Court, Dwarka or to move any other authority before which any enquiry or action is pending for suitable relief, if, in case the same is purely founded on the basic grievance of Respondent Applicant that the Company had failed to repay his deposit. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2019 (6) TMI 523
  Initiation of liquidation of the Corporate Debtor - absence of approved Resolution Plan - HELD THAT:- The Appellants have made out a case of exclusion of 21 days for counting the period of 270 days i.e. the period during which the Resolution Process could not proceed. Now having received the opinion of Committee of Creditors and taking into consideration that the Resolution Plan has been approved with 71.029% of voting shares and that the 700 workmen of Corporate Debtor can be saved from retrenchment, we set-aside the impugned order dated 11th March, 2019 passed by the Adjudicating Authority as also the consequential order(s) and remit the case to Resolution Professional to place the Resolution Plan before the Adjudicating Authority for order under Section 31 of the I B Code. Appeal allowed.

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• 2019 (6) TMI 522
  Initiation of Corporate Insolvency Resolution Process - maintainability of Resolution Plan filed by the Operational Creditor - non-compliance of the provisions of Sections 56 57 of the Companies Act, 2013 - HELD THAT:- We have noticed that though time was allowed to Mr. Sunil Jain to pay the NPA amount of the Corporate Debtor in terms of Clause (c) of Section 29A but he expressed his inability to pay the same. So far as right of Shareholders are concerned, from the record we find that shareholders claim have been taken into consideration by Successful Resolution Applicant in the Resolution Plan submitted by him. In view of proposal of taking over the shares of the Promoters as approved by the Adjudicating Authority, it is not required to comply with the provisions of Sections 56 57 of the Companies Act, 2013 being a formality which can be completed even after the approval of the Resolution Plan , at the stage of implementation of the plan. We find no merit in the appeal Payment of supplied the goods during the period of the CIRP - As per Regulation 31 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, if the Appellant has supplied the goods during the period of the Corporate Insolvency Resolution Process to keep the company as a going concern, it was the duty of the Resolution Professional to include such cost towards Resolution Process Cost for payment in favour of Appellant for non-inclusion of the same, it can be held that the Resolution Plan in question is in violation of Section 30(2) (a) of the I B Code . However, taking into consideration the fact that it is failure on the part of the Resolution Professional who had not included the same nor looked into the matter, we do not want to put blame on Successful Resolution Applicant . However, to uphold the Resolution Plan and to hold that the plan is in accordance with law, subject to some modifications.

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• 2019 (6) TMI 519
  Maintainability of application - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor committed default in paying the financial debt - section 7 of the Insolvency Bankruptcy Code, 2016 - HELD THAT:- Since insolvency resolution process is altogether different than the proceeding of the execution of award or decree, it cannot be said that the applicant has filed the same proceeding before two different forums and trying to have a forum shopping. I hold that this application is maintainable. The corporate debtor is liable to pay the financial debt of more than 1 lakh to the financial creditor and they committed default in paying the debt. Application admitted.

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• Service Tax

• 2019 (6) TMI 518
  Liability of service tax on Sub-contractor when the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor - Construction services - Commercial or Industrial Construction services - Works Contract services - Transport of Goods by Road in a Goods Carriage services - matter was placed before the Larger Bench for decision. HELD THAT:- In the scheme of Service Tax, the concept of CENVAT Credit enables every service provider in a supply chain to take input credit of the tax paid by him which can be utilized for the purpose of discharge of taxes on his output service. The conditions for allowing CENVAT Credit have been provided for in Rule 4. The mechanism under the CENVAT Credit Rules also ensures that there is no scope for double taxation - In the face of various provisions, it may not be open to a sub-contractor to contend that he should not be subjected to discharge the Service Tax liability in respect of a taxable service when the main contractor has paid Service Tax on the gross amount, more particularly when there is no provision granting exemption to him from payment of Service Tax. It is not in dispute that a sub-contractor renders a taxable service to a main contractor. Section 68 of the Act provides that every person, which would include a sub-contractor, providing taxable service to any person shall pay Service Tax at the rate specified. Therefore, in the absence of any exemption granted, a sub-contractor has to discharge the tax liability. The service recipient i.e. the main contractor can, however, avail the benefit of the provisions of the CENVAT Rules. When such a mechanism has been provided under the Act and the Rules framed thereunder, there is no reason as to why a sub-contractor should not pay Service Tax merely because the main contractor has discharged the tax liability - there can be no possibility of double taxation because the CENVAT Rules allow a provider of output service to take credit of the Service Tax paid at the preceding stage. It would also be useful to refer to a larger Bench decision of the Tribunal in VIJAY SHARMA CO. VERSUS. COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH [ 2010 (4) TMI 570 - CESTAT, NEW DELHI] . The issue that arose before the larger Bench was as to whether service provided by a sub-broker are covered under the ambit of Service Tax and taxable or not. After noticing that a sub-contractor is liable to pay Service Tax, the larger Bench examined as to whether this would result in double taxation if the main contractor has also paid Service Tax and observed that if service tax is paid by a sub-broker in respect of same taxable service provided by the stock broker, the stock broker is entitled to the credit of the tax so paid in view of the provisions of the CENVAT Credit Rules. It is not possible to accept the contention of the learned Counsel for the Respondent that a sub-contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub-contractor - All decisions, including those referred to in this order, taking a contrary view stand overruled. Thus, A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract.

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• 2019 (6) TMI 517
  Refund claim - services availed by the SEZ Unit - time limitation - whether the refund claims are to be filed within one year from the date of payment or from the end of the quarter, for which payments were received? - period July, 2014 to September, 2014. HELD THAT:- The refund application relates to the period July, 2014 to September, 2014. The refund application was filed by the Appellant on 30.09.2015. The Ld. Counsel of the Appellant had relied on Para 3(III)(e) of the Notification No. 12/2013-ST dated 01.07.2013, which provides that a refund application shall be filed within one year from the end of the month in which actual payment of service tax was made by a SEZ unit to the registered service provide. Moreover, sub clause(f) of the Para 3(III) of the impugned provides that a SEZ unit is required to submit only one claim of refund for every quarter. In the light of overlapping in the impugned Notification, I am of the view that the adjudicating authority has not considered such technical and practical aspects, nor is there a finding in this regard. Accordingly, as the refund application has been filed within the end of the quarter from one year, such delay should be condoned and consequential refund allowed. Refund claim - common input services - HELD THAT:- Services which are common in nature not exclusively used for authorized operation have to be dealt in a manner prescribed. Clause (a) of Paragraph III of the said Notification provides that the service tax paid on specified services that are common to the authorized operation in an SEZ and the operation is domestic Tariff Area (DTA units) shall be distributed amongst the SEZ unit and DTA units in the manner as prescribed in Rule 7 of Cenvat Credit Rules. Moreover, it further provides that for the purpose of distribution, the turnover of the SEZ unit shall be taken as the turnover of authorized operation during the relevant period - In the instant case, it is the argument of the Appellant s Counsel that they do not have any DTA units, however, they do have DTA operations wherein they are providing erection and commissioning service. Moreover, DTA sale undertaken by them forms part of authorized operation, in terms of provisions of SEZ Act. The turnover of DTA sale shall be considered as part of authorized operation and forms an integral part of turnover of SEZ unit for the purpose of calculating proportionate refund of service tax used for the authorized operation. Thus, the lower authority has wrongly considered DTA sale from SEZ unit as part of DTA operation for the purpose of calculating proportionate service tax refund on common input services. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 516
  Construction services - inclusion of value of goods/material free of cost - benefit of abatement - whether, the value of goods/material supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex, is to be included in computation of gross amount (charged by the service provider), for valuation of the taxable service? - Section 67 of Finance Act. HELD THAT:- Hon ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] where it was held that The value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 515
  Imposition of penalty u/s 78 of FA - rental income from immovable property - Service tax paid on being pointed out - intent to evade present or not - HELD THAT:- The appellants have deposited service tax on being pointed out by the Department. Regarding payment of service tax on rendering service of renting of immovable property, they expressed that they had bonafide belief that the service tax was not payable as Hon ble Delhi High Court has stayed the provisions. It was through retrospective amendment only that the tax was made applicable. It is clear that the appellants have made a good case for waiver of penalty in respect of service of renting of immovable property. There are no ingredients of misstatement, suppression of facts etc. with an intent to evade payment of service tax. In respect of imposition of penalty relating to delay in payment of service tax on the service of renting of immovable property, no mala fides are proved and the issue being of interpretational nature, penalty is not imposable. There is no case of leviability of penalty under Section 78 of the Finance Act, 1994. Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 514
  Classification of services - Cargo Handling Service or not - Hiring of pay loaders for mechanical transfer of finished coal from Railway siding inside mines into Railway Wagons - HELD THAT:- The classification of the identical activity in respect of coal mines, have been the subject matter of several decisions. In the case of GAJANAND AGARWAL VERSUS COMMISSIONER OF CENTRAL EXCISE, BBSR [ 2008 (6) TMI 163 - CESTAT KOLKATA] , the Tribunal has taken the view that the activity of loading of coal into Railway wagons for onward transportation of coal to the area outside the mines, will be liable for payment of service tax under the category of Cargo Handling Service . Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 513
  CENVAT credit - input services - Haulage charges - place of removal - extended period of limitation - service tax law as made applicable to Central Excise laws - HELD THAT:- The Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [ 2018 (3) TMI 993 - SUPREME COURT] held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot for the customer, has to be allowed. In the case of COMMR. OF CUS. C. EX., HYDERABAD-III VERSUS GREY GOLD CEMENTS LTD. [ 2014 (9) TMI 673 - ANDHRA PRADESH HIGH COURT] the Hon ble High Court of Hyderabad held that Service Tax and Excise Duty are consumption taxes to be borne by the consumer and therefore if credit is denied on transportation service the levy of service tax on transportation will become a tax on business rather than being a consumption tax. The Tribunal observed that the submission of the Revenue that the CENVAT credit cannot be allowed for service if the value thereof does not form part of the value subjected to excise duty runs counter to the fundamental concept of Service Tax. Considering the fundamental concept of Service Tax, it cannot be said that Cenvat credit cannot be allowed for service if the value thereof does not form part of the value subjected to Excise duty. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 512
  Classification of services - Cargo Handling Service or Business Auxiliary Services - work of loading and transportation of raw/waste coal from Piparwar to Bachra Siding - HELD THAT:- We discuss the activity carried out under the agreement dt. 01/06/2004. As per this agreement, the appellant was required to carry out loading/unloading and transportation of coal from Piparwar to Bachra Siding. The agreement makes it clear that the contract is for the work of transportation of coal. Such activity is to be classified only under the category of Goods Transfer Agency , since it involved mere transportation of goods. Agreement dt. 13/01/2005 - HELD THAT:- As per this agreement, the appellant was required to carry out the activity of extraction and transfer of coal, by deploying Surface Miners . From the description of the Service, it is evident that the Service provided is in the nature of mining. Mining as a separate category of service liable to Service Tax was introduced only w.e.f. 01/06/2007. Since the demand made in this case is prior to this date, no Service Tax liability will arise on the appellant. The transport of coal within the mine was held to be under GTA Service by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR VERSUS SINGH TRANSPORTERS [ 2017 (7) TMI 494 - SUPREME COURT] . Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 511
  Valuation - photography services - inclusion of value of material in assessable value - period 16.07.2001 to 31.03.2004 - HELD THAT:- The issue with reference to the inclusion of value of material in view of the provision of service, stands decided in favour of Revenue in the Larger Bench decision of the Tribunal in the case of AGGARWAL COLOUR ADVANCE PHOTO SYSTEM VERSUS COMMISSIONER OF CENTRAL EXCISE, BHOPAL [ 2011 (8) TMI 291 - CESTAT, NEW DELHI (LB)] - decided in favor of Revenue. Extended period of limitation - HELD THAT:- Tribunal s decision in the case of M/S. TRUVISION COLOUR LAB VERSUS C.C.E., INDORE [ 2016 (12) TMI 286 - CESTAT NEW DELHI] wherein, in identical circumstances, it was held that the longer period of limitation would not be available to the Revenue - the appellant will be entitled to bonafide belief and longer period of limitation will not be available to the Revenue to raise the demand in this case. The show-cause notice dated 08.08.2006 has been issued for demand of service tax for the period 16.07.2001 to 31.03.2004. Consequently, no demand will survive within the normal period of limitation. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (6) TMI 510
  Whether the jurisdiction of the Civil Court is expressly or impliedly barred? HELD THAT:- On perusal of the Central Excise Act, it is clear that there is no express bar to the exercise of jurisdiction by the Civil Court. Therefore, it is necessary to consider whether the jurisdiction is impliedly barred. This question is no longer res integra. The Hon ble Apex Court in the case of DHULABHAI VERSUS STATE OF MADHYA PRADESH AND ANOTHER [ 1968 (4) TMI 64 - SUPREME COURT] laid down the principles to decide whether the jurisdiction of the Court is barred under Section 9 of C.P.C. and held that Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. When the present case is analyzed in light of the stated binding and authoritative judgments of the Hon ble Supreme Court, as already stated, it is clear that the Assessment Orders in each of the cases is an appealable order. When a specific statutory remedy is provided, especially in a tax statute, which is to be exercised within a prescribed time limit, the said remedy necessarily excludes the exercise of jurisdiction by a Civil Court. Otherwise, it would be possible for parties to circumvent and bypass the statutory mechanism for resolution of disputes, including the time limit for availing such remedies. This is a fit case for the exercise of jurisdiction under Article 227 of the Constitution of India so as to ensure proper administration of justice without permitting parties to circumvent the dispute resolution mechanism established under the tax statute - petition allowed.

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• 2019 (6) TMI 509
  Short payment of Excise duty - goods manufactured and cleared at the rate of 10% against the actual rate of 12% - demand of differential duty alongwith interest and penalty - HELD THAT:- At the time of clearance from the factory, the chargeable rate of duty was 12% ad valorem on finished energy meters but the appellant had only paid 10% and therefore, both the authorities have rightly demanded the differential duty of 2% - there is no infirmity in the impugned order passed by the Commissioner demanding the differential duty from the appellant because the appellant has failed to prove that after rectification, the appellant got the goods back from the supplier - demand alongwith interest upheld. Penalty - HELD THAT:- The imposition of penalty of 1,25,479/- on the appellant under Rule 25 of the Central Excise Rules, 2002 is not justified in the present case because there is no malafide intention of the appellant to evade payment of duty. The appellant was under a bona fide belief that since he has not sold the goods to the original supplier and he has mentioned in the invoices NOT FOR SALE and has reversed the same duty which was availed as CENVAT credit - penalty set aside. Appeal allowed in part.

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• 2019 (6) TMI 508
  Clandestine removal - spring leaves - shortage of finished goods - process loss - HELD THAT:- Certain amount of process loss is inevitable on account of various reasons such as loss in the process of cutting, sheering, pouring etc. as well as burning loss. Such losses can vary from unit to unit depending upon the process of manufacture and skill of the manpower and also the quality of input used. The Adjudicating Authority had reservations in accepting the certificate of Chartered Engineer who has examined the appellant s factory and opined that the loss can be upto 20%. But he has chosen not to cross examine him during the adjudication proceedings. The entire case has been built on the basis of the mathematical projection of the actual quantum of goods which could have been manufactured by the appellant by using inputs in the form of Plates. The total quantity of inputs procured and issued for manufacture has been ascertained from the appellant s record but the total quantity of goods which could have been manufactured out of such goods is nothing but mathematical projection. Clandestine clearance is required to be substantiated by means of tangible evidence placed on record by Revenue on the basis of investigation. In the present case, we note that other than mathematical projection, no further investigation has been recorded by the Revenue in the form of investigation at the end of the buyers of the allegedly clandestinely cleared goods. As such, we are not inclined to uphold the said demands raised only on the basis of projection. In the case of Ambey Laboratories Vs. Commr. of Central Excise, Delhi-I [ 2017 (6) TMI 374 - CESTAT NEW DELHI] ], one of the issues considered by the Tribunal was allegation of clandestine clearance made on the basis of production estimated based on input output ratio. The Tribunal set aside such demand where no corroborative evidence has been produced by the Revenue supporting the clandestine clearance of goods. The demand for duty arise on the allegation of clandestine removal cannot be sustained - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 507
  Interest on delayed refunds - Refund of accumulated CENVAT credit - claim for interest for the period upto March 16, 2005 - HELD THAT:- it has been held right up to the Hon ble Supreme Court that the insistence on the Department s part that Rasoi paid in cash from PLA the duty was illegal and that Rasoi was entitled to utilize the credit lying in its RG -23B Part II Register and could not be forced to pay the said duty in cash. The interest has been claimed for the period from the respective dates of payments of the said duty in cash vide TR-6 challans upto the date of its refund dated March 16, 2005 when the said duty paid was allowed to be credited back in the PLA - In the instant case we find that the duties were not payable by Rasoi in cash but it was permissible for it to utilize the credit balance in RG-23B Part II Register for paying the same. This legal position was settled in favour of Rasoi right upto the Hon ble Supreme Court. The said duties were paid in cash by making deposits vide TR-6 challans and then entered in PLA. The said duties were paid due to insistence on the Department s part who prevented Rasoi from utilizing the credit lying in RG-23B Part-II Register, although entitled to - the Department is bound to pay Rasoi interest, as has been correctly held by the Commissioner (Appeals). Interest on duties of 4.10 crores for the period from three months after the date of filing the refund application till the date of refund - HELD THAT:- The undisputed facts are that the refund application was filed on January 19, 2006 and the period of three months expired on April 18, 2006, but, however, the refund was granted on December 24, 2009. Hence, as per Section 11BB of the Central Excise Act, the Department is liable to pay statutory interest from April 19, 2006 to December 23, 2009 - the Commissioner (Appeals) has correctly allowed the claim for interest for the period April 19, 2006 to December 23,2009 on the duty amount of 4.10 crores. Claim for interest on delayed payment of interest - HELD THAT:- This issue is no more res integra. It has been held by the Hon ble Supreme Court in the case of COMMISSIONER OF INCOME TAX, GUJARAT VERSUS GUJARAT FLUORO CHEMICALS [ 2013 (10) TMI 117 - SUPREME COURT] , that it is a misinterpretation of this case that the Revenue is obliged to pay interest on interest in the event of its failure to refund the interest payable within the statutory period and that in the said case, considering the inordinate delay in payment, the Hon ble Supreme Court had directed the Revenue to pay compensation for the same and not an interest on interest. Accordingly to the Hon ble Supreme Court it is only interest provided for under the statute which can be claimed by an assessee from the Revenue and no other interest on such statutory interest can be claimed - the Commissioner (Appeals) had rightly rejected the claim of Rasoi for interest on delayed payment of interest. Appeal allowed in part.

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• 2019 (6) TMI 505
  CENVAT Credit - inputs - TMT cutting, MRM Roll Spoils and end cutting - Department took the view that goods classifiable under 7204 are in the nature of melting scrap etc. which are meant for melting in furnace. The Department further held that scrap of this nature cannot be used by the appellant for manufacture of MS Flats, Bars etc. - HELD THAT:- The inputs received by the appellant for use in the manufacture of rolled products have been classified by the supplier under 7204.It is asserted on behalf of the appellant that such goods are capable of being used in the factory for the manufacture of rolled products and hence the credit is admissible. When it is so, without going into the issue of classification, we hold that the appellant is entitled to avail CENVAT Credit in accordance with the Cenvat Credit Rules - Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 504
  Valuation - excise duty on immovable property - inclusion of freight amount in the assessable value - CENVAT Credit - place of removal - It is not in dispute that after completing the process of erection, the tower comes into existence as immovable property. Even though there can be no levy of Central Excise Duty on immovable property, we note that tower is cleared in dismantled form from the factory. As such, we are of the view that the liability for payment of excise duty gets crystalised at the factory gate and such liability is for the goods in the form in which they are cleared from the factory i.e. the tower components. Place of removal - HELD THAT:- The contract dated 18/2/2005 placed by Airtel specifically mentions that the rate will be on FOR site basis . This clearly points to the fact that the sale of goods is deemed to have happened at the site. This further points to the fact that the Place of Removal is to be considered as the site and not the factory gate - In terms of Section 4 as above, read with Rule 5 of the Rules, it emerges that since the place of removal in the present case, in respect of the Airtel contract, is the premises of the site installation, the cost of transportation of the tower materials from the factory gate to the site will need to be included in the value and to be added to the supply cost. Whether the installation, erection and painting charges are required to be added to the supply cost of towers for payment of duty? - HELD THAT:- The Adjudicating authority has held that once place of removal is decided, all expenses incurred upto that place is required to be added. As such, he has loaded the installation cost. We find it difficult to accept this proposition. We have taken the view that the tower is to be assessed in the form in which it is cleared from the appellant s factory i.e. in dismantled form. Once we take the view that the excise duty liability is on the goods in the form it is cleared from the factory, it follows that the installation, erection and painting cost which has been incurred at the site where the goods are taken to form immovable property, cannot be added. The goods are required to be assessed in the form in which they are cleared from the factory at the factory gate. There is no justification for adding erection, commissioning and painting charges - demand set aside. When the Place of Removal is the site of the customer; Appellant will be entitled to the CENVAT Credit of Service Tax paid on transportation cost. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 503
  Demand of interest on delayed payment of refunds - Area Based Exemption Scheme notified under Notification No. 33/99-CE dt. 08/07/1999 - HELD THAT:- The Hon ble High Court in UNION OF INDIA AND 3 ORS. VERSUS AMALGAMATED PLANTATIONS [P] LTD. [ 2016 (8) TMI 124 - GAUHATI HIGH COURT] had examined the claim of interest under Section 11 BB of the Act in respect of delayed payment of refund rising under the Area Based Exemption Notification No. 33/99 and held that the liability of the Revenue to pay interest under Section 11BB commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) and not on the expiry of the said period from the date on which the order of refund is made. Interest allowed - appeal dismissed - decided against Revenue.

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• 2019 (6) TMI 501
  Valuation of cess on jute products - inclusion of Departmental charges for inspection as well as supply in the ex-factory price of their products - HELD THAT:- The supply orders placed by DGS D indicate that Service Tax @ 12.36% is payable on such Departmental charges - The appellant has supplied the goods as per the supply orders placed by DGS D and issued sale invoices. Such sale invoices indicate only exfactory price of the goods and nothing extra is indicated or collected from the buyers in the nature of Departmental charges. There is no justification to include such departmental charges in the assessable value under Section 4(3)(d) of the Act - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 500
  Clandestine Removal - demand based on consumption of electricity - no evidence to prove clandestine activity - HELD THAT:- The Order-in-Original is passed upon mere presumption and possibilities and nothing have been proved at all by the Department as specially unaccounted for manufacturing of M.S. Ingot and clandestine removal thereof. The inference of CRC on the basis of loose sheets and private records is perverse as the entries made in the loose sheet and private record, without proper verification do not construed the legal admissible evidence. Unless there is clinging evidence of the nature of purchase of raw materials, use of electricity, sale of final products and mode of flow back of funds etc. Demands cannot be confirmed solely on the basis of presumption and assumption. Clandestine removal is the serious charge against the manufacturer which is required to be discharged by the Revenue by production of sufficient and tangible evidence - In the instant case, the consumption of the electricity was examined by the Department who adopted the shortcut method by raising the demand and levied the penalties. The statement of buyers and transporters are based on memory alone and their statements were not supported by any documentary evidence or any proof. When there was no extra consumption of electricity, purchase of raw materials etc. then manufacturing of extra goods is not possible. No purchase of raw materials outside the paper books have proved. There is no sufficient materials of records to establish clandestine manufacture and clearance - demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 499
  Withdrawal of benefit of Warehousing - withdrawal of benefit of notification by issue of Notification No. 17/2004-CE (NT) dt. 04/09/2004 - HELD THAT:- The dispute has arisen during the period immediately after the withdrawal of warehousing provisions with effect from 06/09/2004. Because of the urgency regarding the supply of petroleum products to Indian Navy/Coast Guard, such supplies were made on payment of duty without benefit of Notification No. 64/95, as amended. The Notification clearly provides for clearance of goods at nil rate of duty for supply for use in the construction of warships for the Indian Navy as well as Coast Guard. The Notification further provides for supply of stores for consumption on board vessels of Navy. From the order passed by the Adjudicating Authority as well as the Commissioner (Appeals), we are unable to come to the conclusion whether all the relevant records as indicated above have been verified. Both the Authorities below have indicated however that the proof of payment of duty on such clearances made to Indian Navy/Coast Guard has not been submitted - the issue needs to be remanded to the Original Adjudicating Authority for verification of the relevant documents. Appeal allowed by way of remand.

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• 2019 (6) TMI 498
  Maintainability of appeal - Compliance with the pre-deposit - Section 35B of the Central Excise Act, 1944 - HELD THAT:- The requirement of Section 35B of the Act has been satisfied by the Revenue while filing this appeal. After perusal of Authorization signed by both the Commissioners constituting the Committee of Commissioners, as required under Section 35B, we are satisfied that the requirement stipulated in Section 35B has been duly satisfied and the appeal filed by the Revenue is maintainable. Valuation - petroleum products - price reduction factor - permissible deduction - Section 4 of the Central Excise Act, 1944 - reduction of the Excise duty rates of MS and HSD by the Government - period w.e.f. 01.03.2002 to 05.09.2004 - extended period of limitation - HELD THAT:- The Commissioner (Appeals), in the impugned order has discussed the issue at length on merit and has concluded that there is no justification for demand of differential duty. He has considered such reduction in assessable value to be in the form of a trade discount , which is admissible in terms of Section 4 of the Central Excise Act, 1944. After carefully considering the findings of the ld.Commissioner (Appeals), we find no reason to interfere with the same and we uphold the same. Extended period of limitation - suppression of facts or not - HELD THAT:- Reduction in assessable value to the extent of Price Reduction Factor has been carried out by the respondent as per the specific direction of the Ministry of Petroleum and Natural Gas vide their letter dated 28.02.2002, which was issued in the backdrop of the proposal in the Budget of 2002 for reduction in duty rates for MS/HSD. Consequently, such reduction in the assessable value could not be said to be by resorting to suppression - In the absence of anything on record to sustain the allegation of suppression, the demand raised in the show-cause notice is hopelessly barred by limitation. Appeal dismissed - decided against Revenue.

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• 2019 (6) TMI 497
  Remission of duty - Rule 147 (for remission of duty) of the erstwhile Central Excise Rules, 1944 - HELD THAT:- Even though it is claimed that the appellant has submitted copies of all supporting documents to the claim such as FIR made before the police authorities regarding the fire incidents; the report of the insurance company indicating the loss of goods in the factory as well as insurance claim paid and settled by the insurance company. There is no reference to such documents in the order dated 24/2/ 2009 passed by the Commissioner. There is no option but to remand the matter yet one more time to the Jurisdictional Commissioner for de novo adjudication taking into consideration all the supporting documents submitted by the appellant - appeal allowed by way of remand.

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• 2019 (6) TMI 496
  Demand of Central Excise Duty - SKO (PDS) - withdrawal of the warehousing facility, for petroleum products - N/N. 17/2004-CE (NT) dated-4/9/2004 - Department was of the view that the quantum of SKO not accounted as such at the other end, is liable to be charged to duty on the prices at which the same has been sold as MS or as HSD - HELD THAT:- Tribunal in the case of M/S. INDIAN OIL CORPORATION LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VADODARA [ 2018 (9) TMI 24 - CESTAT AHMEDABAD] has held that the differential duty demand raised on inter-mixed quantity of SKO is not sustainable. Larger Bench of the Tribunal in the case of M/S JYOTI SALES CORPORATION, M/S PUNJAB FABRICATOR VERSUS CCE, PANCHKULA [ 2016 (11) TMI 767 - CESTAT CHANDIGARH] has held that an item is required to be assessed in the form the same is cleared from the manufacturer s factory and not on the basis of its future use, after clearance, unless it is the requirement of entry. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (6) TMI 495
  Concessional rate of tax - purchase of High Speed Diesel Oil for use in generation and distribution of electricity and other forms of power - unable to download the C forms - HELD THAT:- In the M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] matter, this Court allowed the writ petitions filed by the assessees and directed the Revenue to permit the petitioners assessees to download C forms. There is no dispute or disagreement that the instant writ petition falls clearly within the four corners of Ramco Cements case. In the light of the trajectory, which this matter has taken at the admission stage, it follows as a natural sequitur that the instant writ petition stands allowed - petition allowed.

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• 2019 (6) TMI 494
  Refund of tax already paid - TNGST Act - whether the sale of the aircraft in Tamil Nadu on 08.03.2004 should be considered as the first sale for purposes of the TNGST Act? - whether the said sale in Tamil Nadu is to be considered as the sale of an imported item notwithstanding the fact that the said aircraft was imported into India in July 1992 and, thereafter, changed hands on a couple of occasions by way of domestic sales before being brought into the State of Tamil Nadu on payment of CST? First sale or not - HELD THAT:- The goods in question may lose their character as imported goods for the purposes of the Customs Act, 1962, immediately upon being cleared for home consumption, but do not do so for purposes of the TNGST Act. In effect, if an aircraft was imported into India through Tamil Nadu, and the first sale in Tamil Nadu happens thereafter, sales tax may be imposed at the rate applicable to imported items notwithstanding the clearance for home consumption upon payment of customs duty. Whether Entry 9 of Schedule XI deals with goods of foreign origin irrespective of the manner in which the said goods entered Tamil Nadu? - HELD THAT:- The words of the relevant provision of the tax statute should be construed literally so as to discern the correct meaning and scope thereof. In the instant case, as is evident from the language of Entry 9 of the XI Schedule, the expression used is imported items falling in Parts-D and E of the I Schedule. Therefore, the meaning of the word imported items should be examined. The word imported is not defined in the TNGST Act. However, it is evident from provisions such as Section 9 that the TNGST Act envisages import of goods from other parts of India into Tamil Nadu and also import of goods from outside India into India. In the case of aircraft, it is the admitted position that it would be taxable at 12% if it is treated as a non-imported item, whereas it would be taxable at 20%, if it is treated as an imported item. The meaning of words in a statute, in general, and, in particular, in a tax statute, should be gathered from the language used therein and the expression goods of foreign origin or aircraft of foreign origin cannot be substituted for or read into the words imported items . If the intention of the State Legislature was to tax goods of foreign origin at higher rates notwithstanding the fact that the goods entered Tamil Nadu by way of inter-state sale upon payment of CST, the expression that should have been used is goods of foreign origin. The Impugned Re-assessment Order dated 28.11.2006 is liable to be quashed in so far as it imposes the rate of 20% on the sale of the aircraft by the Petitioner on 08.03.2004 - in view of the finding that it is a first sale for the purposes of the TNGST Act, the tax that was levied and collected earlier at the rate of 12% is valid and not liable to be refunded. Petition allowed.

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• 2019 (6) TMI 493
  Permission to withdraw appeal - Refund claim - HELD THAT:- The petitioner realizing that the main relief sought in the writ petition for refund, no longer survives as the excess amount was adjusted against the demand for assessment AY 2012-2013, submits that he may be permitted to withdraw the writ petition with liberty to file appeal against re-assessment order dated 03.01.2018. Petition dismissed as withdrawn with liberty to avail remedy of appeal available in accordance with law.

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• 2019 (6) TMI 492
  Requirement of pre-deposit - appellant is incurring huge losses as is evident from the Balance Sheets and is not in a position to deposit the amount - reversal of Input tax credit on closing stock of wheat and rice - Section 19(4) of the Punjab VAT Act - reversal of Input Tax Credit on retention of bye products by the Rice Millers - rule 21(6) of Punjab VAT Rules, 2005. HELD THAT:- As per the provisions of Section 62(5) of the Act, 25% of the amount has to be deposited for entertainment of the appeal. However, as per the decision of this Court in PUNJAB STATE POWER CORPORATION LIMITED VERSUS THE STATE OF PUNJAB AND OTHERS [ 2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT ], the First Appellate Authority has a power to waive off the precondition in appropriate cases - It would be pertinent to note here that additional demand in the present case is with regard to tax only and the appellant is required to deposit 25% of the tax amount. The condition imposed by the First Appellate Authority and the Tribunal for entertainment of appeal was reasonable. Learned counsel for the appellant has not been able to point out any perversity in the order of the Tribunal. No interference is called for in the impugned order - The appeals involve no question of law much less a substantial question of law - The appeals have been filed along with applications under Section 5 of the Limitation Act, 1963 for condoning the delay in filing the appeals. As the appeals have been dismissed on merits, no further orders are required to be passed on the applications for condonation of delay. Appeal dismissed.

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• 2019 (6) TMI 490
  Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining C forms - CST Act 1956 - HELD THAT:- The is covered in favour of the assessee by a decision of this Court in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] where it was held that The respondents are directed to permit these petitioners to download C forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of C declaration forms. Till such time the order of this court in the case of M/s Ramco Cements Ltd is either stayed or reversed it is incumbent upon all Assessing Authorities within the State of Tamil Nadu to apply the rationale of the decision to all pending assessments - The Petitioner in this Writ Petition has stated on affidavit that it is unable to download the C forms from the websites as the same stand blocked from use. Upon enquiry with the Assessing Authorities, they have been informed that the benefit of the decision in M/s Ramco Cements Ltd can be extended only to those dealers that are party to the decision - This stand is unacceptable in so far as the decision of this Court as well as other High Courts, one of which has been confirmed by the Supreme Court, are decisions in rem, applicable to all dealers that seek benefit thereunder, of course, in accordance with law. Petition allowed.

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• Indian Laws

• 2019 (6) TMI 521
  Dismissal of complaint - invocation of Section 204(4) of Cr.P.C. - failure to pay the process - HELD THAT:- A perusal of the impugned order dated 25.04.2018 reveals that the provision under Section 204(4) of Cr.P.C. is not complied with. The said provision says that if any fees are not paid within a reasonable time, the complaint may be dismissed In the instant case, the learned Magistrate has not mentioned anything in his order as to when the NBW was issued and when the fee was ordered to be paid. Therefore, the impugned order is cryptic and do not reflect compliance of the provision under Section 204(4) Cr.P.C. - On the other hand, the complainant has already been examined and his evidence as PW.1 was recorded and he was cross-examined by the learned counsel for the Accused. Therefore, the only course left open for the trial Court was to consider the evidence of respondent No.1/Accused as nil and pass orders basing on the evidence available on record. This Criminal Appeal is allowed setting aside the impugned judgment.

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