TMI Tax Updates - e-Newsletter
June 21, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Exemption u/s r.w.s. 2(15) - A playschool cannot, by any stretch of imagination, be regarded as scholastic / educational instruction

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• Waiver of loan amount - addition u/s 41/ 56(2)(vi) - payment of settlement amount against the total dues is the consideration - not taxable

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Articles

1. How to fill up point 14 in Point IV. in GSTR-9C

   By: Ganeshan Kalyani

2. GST Composition Scheme

   By: Dinesh Kumar

3. GST: CLASSIFICATION OF HDPE WOVEN FABRICS

   By: Dr. Sanjiv Agarwal

4. WEALTH TAX – SOME NEW THOUGHTS – wealth tax as a fees or service charge link basic exemption to inflation and provide no other exemptions.

   By: DEVKUMAR KOTHARI

News

1. Introduction of manual checks in IGST refunds aimed at preventing unscrupulous exporters from defrauding the exchequer

2. FM chairs the 20th Meeting of the Financial Stability and Development Council (FSDC; Financial Regulators gave their proposals for the Union Budget 2019-20

3. Exchange Rate of conversion of the Foreign Currencies relating to Imported and Export Goods notified

4. NABCB secures international equivalence for personnel certification

5. Finance Commission to visit Karnataka from 23rd to 26th June, 2019

6. Seminar on International Patents Filing in Dehradun Today

Notifications

Customs

1. 45/2019 - dated 20-6-2019 - Cus (NT)

Exchange Rates Notification No.45/2019-Custom(NT) dated 20.06.2019

2. 44/2019 - dated 19-6-2019 - Cus (NT)

Manufacture and Other Operations in Warehouse Regulations, 2019

Circulars / Instructions / Orders

Income Tax

1. 11/2019 - dated 19-6-2019

Clarification regarding non-allowability of set-off of losses against the deemed income under section 115BBE of the Income-tax Act, 1961 prior to assessment-year 2017-18

2. 12/2019 - dated 19-6-2019

'Assessment of Firms'-some of the important issues to be kept under consideration by the Assessing Officers while framing assessment

Highlights / Catch Notes

GST

• Gujarat Commissionerate to Verify TRANS1 Form for Pre-July 2017 Input Tax Credit and Issue Confirmation Certificate.

  Case-Laws - HC : Filing of TRANS1 - Input tax credit of the duties for the period prior to 01.07.2017 though reflected in the declaration filed by the petitioner in Tran1 form is not shown in the electronic credit ledger account - directed the Gujarat Commissionerate to verify the credit availed by the petitioner and issue a certificate in this regard
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• Court Orders Review of Taxpayer's Registration Cancellation u/s 30, Pending Return Submissions Required for Reconsideration.

  Case-Laws - HC : Cancellation of registration u/s 30 - non filing of return October 2018 to April 2019 - Karnataka Goods and Services Act, 2017 - direct the petitioner to submit the returns relating to the tax periods October 2018 to April 2019 and the same shall be considered by the respondent-authority in accordance with law and the cancellation of registration can be revoked in terms of Section 30 of the Act.
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• Court to Decide on Interest Liability for Late Tax Payments After ITC Adjustment; Review Due in One Week.

  Case-Laws - HC : Demand of interest on delayed payment of tax - when return was file belatedly - liability to pay interest on ITC - respondent shall consider all the points raised in writ petitioner's reply dated 29.03.2019, more particularly the annexed working sheet i.e calculation of interest after adjustment of ITC, pass an order in a manner known to law within one week
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Income Tax

• Key Issues for Income Tax Assessment: Accurate Income Reporting, Valid Deductions, Compliance, and Updated Legal Precedents.

  Circulars : 'Assessment of Firms'-some of the important issues to be kept under consideration by the Assessing Officers while framing assessment
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• Losses Can't Offset Deemed Income u/s 115BBE for Pre-2017-18 Tax Years.

  Circulars : Clarification regarding non-allowability of set-off of losses against the deemed income under section 115BBE of the Income-tax Act, 1961 prior to assessment-year 2017-18
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• Penalty u/s 271AAB deleted as no discrepancies found; surrender alone doesn't warrant penalty without undisclosed income.

  Case-Laws - AT : Penalty u/s 271AAB - surrender of ₹ 50 lacs an account of any other discrepancy or irregularity - no such discrepancy or irregularity was found by the AO then the mere surrender U/s 132(4)will not ipso facto attract the penalty U/s 271AAB until and unless the same is qualified as undisclosed income as per definition provided in the explanation to Section 271AAB - Penalty deleted
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• Penalty u/s 271AAB: Reconsideration of Personal Jewellery Valuation in Undisclosed Income Case During Search Operation.

  Case-Laws - AT : Penalty u/s 271AAB - Surrender of entire jewellery and silver items during search - benefit of the personal jewellery of various family members is required to be given while considering the undisclosed income on account of jewellery as well as valuation of the same has been based on the cost of acquisition for treated as undisclosed income -remanded to AO for reconsidering the above benefit for determination of penalty
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• Penalty Upheld u/s 271(1)(c) of Income Tax Act for Inaccurate Income Details and Concealment by Assessing Officer.

  Case-Laws - AT : Penalty U/s 271(1)(c) - definite charge - as regards the certainty of charge is concern, since the penalty was initiated in respect of all three additions made by the AO out of which some additions fall in the category of furnishing of inaccurate particulars of income and other one falls in the category of concealment of particulars of income - Therefore, the question of definite charge does not arise - penalty sustained
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• Section 68: No Addition for Loans via Banking Channels Due to Lack of Adverse Info or Cash Deposit Allegations.

  Case-Laws - AT : Addition u/s 68 - proof of identity, creditworthiness and genuineness of the loan obtained - loans have been advanced by the companies through banking channels or from their own funds and there is no allegation of the AO that there was cash deposits in the bank accounts by these lenders before providing loans and there was no adverse information with the AO in respect of the lenders - no addition
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• Taxpayer Must Prove No Income Concealment Under MAP; Section 92C Compliance Essential; Section 271(1)(c) Penalties Valid.

  Case-Laws - HC : Penalty u/s 271(1)(c) - the onus lies on the assessee to establish that the addition sustaied by Mutual Agreement Procedure(MAP) under DTAA with India and other sovereign countries is not due to concealment of income or furnishing of inaccurate particulars and the computation was made u/s 92C in the manner prescribed under that Section, in good faith and with due diligence - penalty provision relating to this is not ultra virus
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• Reassessment Invalid: Notice Issued Without Commissioner Approval u/s 147, Rendering Section 148 Reopening Flawed.

  Case-Laws - AT : Reopening of assessment u/s 147 - approval of the concerned CIT after date of issuance of notice - since notice has been issued prior to the approval. Thus, reopening u/s 148 is without the approval of the designated authority and as such reassessment itself is bad and without any jurisdiction
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• Playschool Denied 12AA Registration: Fails to Meet 'Education' Criteria u/s 2(15) of Income Tax Act.

  Case-Laws - AT : Registration u/s. 12AA - Mother’s Pride School on a franchise basis - A playschool cannot, by any stretch of imagination, be regarded as scholastic instruction. ‘Education’, as the word appears in s. 2(15), though not to be understood pedantically, has to have the elements of structured courses, designed to impart knowledge/training; accreditation; examination, etc., and cannot be understood in a loose sense - registration rightly denied
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• Assessment Reopening Quashed: No Valid Reasons or Proper Notice Service by AO u/s 147 and 148.

  Case-Laws - AT : Reopening of assessment u/s 147 - there was no reason for the satisfaction of the AO that the alleged notice cannot be served in an ordinary way/registered post and without waiting for the outcome of the service of notice sent through ordinary way, AO issued the affixture order on the same day - affixture was also without ascertaining last known address and independent witness - no service of notice u/s 148 - quashed
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• Loan Waiver in Settlement Not Taxable u/s 56(2)(vi) for Unrecoverable Balances.

  Case-Laws - AT : Waiver of loan amount - addition u/s 56(2)(vi) - amount received by the individual or HUF without consideration - It is not just a case where the bank has simply waived or remitted the loan amount, rather the bank to secure payment of remaining part of the loan, which otherwise the bank was feeling difficult to recover, was the consideration for settlement of the loan account - not taxable
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• Assessee entitled to Section 10A deduction for prawn processing despite Tribunal error, supported by Jurisdiction High Court decision.

  Case-Laws - AT : Rectification u/s 254 - the assessee would be entitled to claim deduction u/s. 10A for the unexpired period even if it relates to IQF with regard to processing of prawns, provided the assessee had made claim u/s 10A and the A.O. had granted deduction for the assessment year’s prior to amendment - Tribunal decision to disallow the deduction is a error apparent on record in view of decision of Jurisdiction High Court
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• No Deductions Granted: Business Activities Not Eligible u/s 80IA(4) of Income Tax Act for Infrastructure Facilities.

  Case-Laws - AT : Deduction u/s 80IA(4) - On perusal of the balance sheet it was found that the there is no income earned from eligible business of developing, operating and maintaining any infrastructural facilities as laid down in sub-section (4) of section 80IA - no deduction
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Customs

• 2019 Regulations Enhance Manufacturing and Operations in Customs-Bonded Warehouses, Streamlining Compliance and Boosting Economic Growth.

  Notifications : Manufacture and Other Operations in Warehouse Regulations, 2019
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• SEZ Supplies Recognized as Exports Despite Missing Bill of Export; EPCG Committee's Rejection Overturned.

  Case-Laws - HC : Rejection of application for waiver of submission of bill of export to evidence the supplies made to SEZ - absence of bill of export by itself will not lead to denial of the supplies made to SEZ as exports - minutes of the EPCG Committee to the extent it held the benefit of export to SEZ will not be available due to absence of bill of export is set aside
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• Court Upholds Show Cause Notice for Duty Drawback; No Jurisdictional Overreach or Malicious Intent Found in Issuance.

  Case-Laws - HC : Validity of SCN - Demand of duty drawback - limitation - no time frame has been prescribed in the said Rules - not a fit case for interfering at the SCN stage as it is not a case that SCN being issued without jurisdiction or attempting to re-open settled position of law or has been issued with malafide intentions or has been issued in a manner that leads one to believe that it is pre-determined the issue
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IBC

• CIRP Application Admissible; Operational Creditors' Claims Evaluated Post-Admission, No Right to Be Heard at Admission Stage.

  Case-Laws - AT : Admissibility of application - Initiation of CIRP - Operational Creditors claim will be considered by the ‘Resolution Professional’ once application is admitted as they have no right to be heard at the time of admission of the application u/s 7 of the I&B Code -
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Service Tax

• EOUs Can Claim CENVAT Credit Refund for Input Services Linked to Output Services u/s 11B of Central Excise Act.

  Case-Laws - AT : 100% EOU - Refund of CENVAT credit - nexus of input services with their output services - services used in relation to authorized operation in SEZ would be eligible to refund under Section 11B of the Central Excise Act, 1944 as applicable to service tax vide Section 83 of Finance Act, 1994
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• Appellant's Claim to Unutilized CENVAT Credit Valid After All Services Became Taxable Per Rule 6(3) Interpretation.

  Case-Laws - AT : Utilization of CENVAT Credit - appellant utilize 20% of the same while carrying forward the balance 80%, under erstwhile Rule 6(3)(c) of CCR, even though they were providing both taxable as well as exempted services - after 1.4.2008 all service became taxable - appellants claim to the unutilised credit is correct on merits as existing Rule 6(3) of the Cenvat Credit Rules does not explicitly bar the utilization of the accumulated credit
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• Tribunal Rules No Service Tax Due; Refund Should Not Go to Consumer Welfare Fund Due to Unjust Enrichment Principle.

  Case-Laws - AT : Refund of service tax paid - unjust enrichment - Tribunal on merit of claim held that no service tax is payable - the adjudicating authority did sanction the refund but it directed the said amount to be deposited in the Consumer Welfare Fund - This is contrary to the consistent view of the Courts/Tribunal that amount deposited during the pendency of adjudication/investigation is in the nature of a deposit and principles of unjust enrichment is not applicable - refund allowed
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• Appellant Penalized for Service Tax Evasion on Residential Complex Construction from 2010-2015; Intent to Evade Confirmed.

  Case-Laws - AT : Construction of Residential Complex Service - for the entire period from 31 July, 2010 to 31 March, 2015, appellant never paid due service tax on due date - the allegations of suppression are proved and since the appellant had not deposited service tax on due date and not paid interest when deposited belatedly, intention to evade is established - demand of duty & penalty upheld.
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Central Excise

• Court Allows CENVAT Credit Claim Due to Revenue's Inadequate Investigation of Allegedly Fake Invoices and Input Sources.

  Case-Laws - AT : CENVAT Credit - fake invoices - revenue could not exhibit any discrepancy of total inputs reflected in two ledgers put together with entries of inputs in RG-23 records. Further, the revenue has neither investigated that where 9112.500 MT of quantity of inputs gone from M/s Ruby Steels and who was the transporter nor investigate that from where M/s Nidhi Auto has procured inputs for manufacture of goods which were cleared on payment of duty if not procured from M/s Ruby Steels - in absence of these enquiry credit is duly allowable
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• CENVAT Credit Allowed for Service Tax on Overseas Sales Commission; No Suppression or Misstatement Found per RCM Rules.

  Case-Laws - AT : CENVAT Credit - duty paying invoices - ST paid under RCM - circumstances under which the service tax was paid for the value of sales commission paid to the overseas buyers under RCM, it can be concluded that there was no suppression, mis-statement etc on the part of the Appellant in discharging the service tax even though it was paid after being pointed by the department - credit allowable
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• Court Rules No Legal Issue Arises: Goods Removal Inference Supported by Records, Not Just Missing Challan.

  Case-Laws - HC : Clandestine removal - removal of goods to the job worker - inference of removal of goods drawn concurrently by all the three authorities is not based merely on absence of any challan but even contemporaneous records such as entries in loading Register, Gate outward Register and Returnable Register make no entries in relation to the goods in question - no question of law arises
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VAT

• Refund Ordered for Charges on Free Fly Ash Supply; No Legal Basis Under Article 265 of Indian Constitution.

  Case-Laws - HC : Refund claim - amount paid under protest - on administrative charges collected towards supply of fly ash free of cost - Since the amount is deposited under protest and no order of assessment, reassessment or revision is passed till date, the amount retained by the authority is not backed by any authority of law in the light of Article 265 of the Constitution of India - directed to refund
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• Legal Rep Pays Deceased Dealer's Dues Under GVAT Sec 57(1)(b); Spouse's Property Not Liable if Not in Estate.

  Case-Laws - HC : Recovery of dues - from the assets of wife of deceased dealer - section 57(1)(b) of the GVAT Act, the legal representative is liable to pay the dues out of the estate of the deceased - in the absence of any power vested in the respondents to recover the dues from the property of the petitioner(wife) other than estate of the deceased, the charge created over the subject property of the petitioner is without any authority of law
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Case Laws:

• GST

• 2019 (6) TMI 936
  Filing of TRANS1 - Input tax credit of the duties for the period prior to 01.07.2017 though reflected in the declaration filed by the petitioner no.1 in Tran1 form is not shown in the electronic credit ledger account - HELD THAT:- We direct the Gujarat Commissionerate to verify the credit availed by the petitioner and issue a certificate in this regard. Let this exercise be undertaken and completed within four weeks of the receipt of this order. Post the matter on 24th July 2019.

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• 2019 (6) TMI 935
  Let notice be issued to the respondents, returnable on 17.07.2019. Let this petition be tagged along with bunch of petitions notified today on the board at serial No.7.

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• 2019 (6) TMI 934
  Cancellation of registration of the petitioner - Karnataka Goods and Services Act, 2017 - HELD THAT:- The petitioner s grievance could be redressed by the respondent authority as provided under Section 30 of the Act. In the circumstances, to meet the ends of justice this Court deems it appropriate to direct the petitioner to submit the returns relating to the tax periods for October 2018 to April 2019 within a period of two weeks from the date of receipt of the certified copy of the order before the respondent - authority and on such submission of the returns by the petitioner, the same shall be considered by the respondent - authority in accordance with law and the cancellation of registration can be revoked in terms of Section 30 of the Act. Petition disposed off.

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• Income Tax

• 2019 (6) TMI 933
  Penalty u/s 271(1)(c) - non grant exemption u/s 11 and 12 - pendency of SLP against order of quantum deletion - HELD THAT:- In view of the decision of this Court in the case of C.I.T. vs. G.I.D.C. [ 2017 (7) TMI 811 - GUJARAT HIGH COURT] the assessee would be entitled for benefit under Sections 11 and 12 of the Act. As Revenue submitted that the decision in the case of Commissioner of Income Tax vs. G.I.D.C. on which the Appellate Tribunal has placed reliance is a subject matter of challenge before the Supreme Court. Pendency of the S.L.P. before the Supreme Court by itself would not be the reason to admit this appeal. Since the quantum addition has been deleted by this Court in the case of C.I.T. vs. G.I.D.C, the penalty being consequential would not survive. We see no good reason to admit this appeal. The Tribunal cannot be said to have committed any error in passing the impugned order. - Decided against revenue

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• 2019 (6) TMI 932
  Penalty u/s 271(1)(c) - amounts determined pursuant to Convention for avoidance of Double Taxation between Union of India and other sovereign countries which is enforced in Indian territory by Section 90 - Price charged or paid in such international transaction was computed in accordance with the provisions contained in Section 92C - HELD THAT:- Penalty proceedings are distinct from assessment proceedings and independent there from. The proceedings for imposition of penalty though emanating from proceedings of assessment are independent and separate aspects of the proceedings. Merely alternative dispute resolution has been opted by the assessee, it would not invalidate the penalty proceedings unless it has been considered, analyzed and a decision is arrived at by the two sovereign States under the MAP. The order passed by the mechanism provided under Section 90 can be construed as an adjustment to the assessment order but not an annulment of the assessment order. If by such an adjustment, the assessment order is annulled in its entirety, setting aside the tax levied on income, then the arguments of the petitioners can hold good prohibiting the authorities to invoke the penal proceedings irrespective of any explicit finding regarding the penal consequences in the order of MAP. However, in the present set of facts, such a situation would not arise in view of the adjustment made to certain extent in the order passed under Rule 44H(5), implementing the order of MAP reducing the transfer pricing adjustment to 91,80,00,000/- as against 240,11,91,692/-. The onus lies on the assessee to establish that the said addition now finally decided by MAP is not due to concealment of income or furnishing of inaccurate particulars and moreover, the computation was made under Section 92C in the manner prescribed under that Section, in good faith and with due diligence. At the same time, Explanation 7 would not empower the concerned authorities to levy penalty automatically for such transactions. A decision has to be taken by the authorities after application of mind. These aspects involving questions of fact requires to be considered by the Authorities concerned and rightly the petitioner has preferred an appeal against the penalty proceedings ORDER i) Section 271(1)(C) of the Income Tax Act, 1961 is held intra vires the constitution in so far as imposing of penalty on amounts determined pursuant to Convention for avoidance of Double Taxation between Union of India and other sovereign countries which is enforced in Indian territory by Section 90 of the Income Tax Act, 1961 and the Rules made thereunder. ii) Appellate Authority shall consider the appeal preferred by the petitioner against the order of penalty on merits and shall take a decision in accordance with law in an expedite manner.

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• 2019 (6) TMI 931
  Disallowance of deduction u/s 10A on account of disallowances made u/s 40(a)(ia) and 43B - HELD THAT:- As decided in JOHN DEERE INDIA PVT. LTD. [ 2019 (1) TMI 1580 - BOMBAY HIGH COURT] it is an agreed position between the parties that the issue raised herein stands concluded in favour of the Respondent-Assessee by the decision of this Court in CIT V/s. Gem Plus Jewellery India Pvt. Ltd. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] In the above view, as the issue stands concluded by the decision of this Court in Gem. Plus Jewellery India Pvt. Ltd. (Supra), the question as proposed does not give rise to any substantial question of law. Thus, not entertained. Comparable selection - HELD THAT:- Companies functionally dissimilar wit that of assessee need to be deselected from final list. Include the instance of one SIP Technology and Exports Limited in the set of comparables - HELD THAT:- In this context, the objection of the Revenue was that the said SIP Technology was a loss making company and therefore, had to be excluded. The Tribunal however, held that the Company was not constantly loss making Company. It had suffered losses only in one out of the last three years under consideration. The Tribunal therefore, refused to exclude the said Company from the list of comparables Deduction u/s 10A - allocation of expenditure between two units i.e. eligible and non-eligible units - HELD THAT:- Assessee had questioned this allocation before the Tribunal. The Tribunal appears to have deleted this addition, restoring the expenditure allocation as claimed by the assessee. However, having perused the impugned judgment of the Tribunal with the assistance of the learned Counsel for the parties, we do not find any discussion on this issue in the entire decision. Tribunal appears to have totally lost sight of this contentious issue. We would therefore, request the Tribunal to decide this ground of Appeal of the assessee confined to the question of allocation of operative expenses between assessee s two units i.e. eligible and non-eligible units for deduction u/s 10A - The Tribunal would entertain this ground and give its opinion on merits. For such limited purpose, the proceedings are placed back before the Tribunal.

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• 2019 (6) TMI 930
  Addition u/s 68 - proof of identity, creditworthiness and genuineness of the loan obtained - HELD THAT:- Each of the two creditors have sufficient funds and assessee has lead all the evidences to discharge its onus under section 68 in respect of identity, creditworthiness and genuineness of the loan obtained by it, because the lenders had sufficient income at their disposal to provide loans to the assessee which is substantiated by their return of income. Lenders are either Pvt. Ltd. Company or a Public Company whose details are available on public domain and the loans have been advanced by the companies through banking channels or from their own funds. However, there is no allegation of the AO that there was cash deposits in the bank accounts by these lenders before providing loans to the assessee and there was no adverse information with the AO in respect of the lenders. CIT(A) has rightly deleted the addition - Decided in favour of assessee. Addition u/s 68 - creditor had little or no income - HELD THAT:- The judgment of the Supreme Court in the case of NRA Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] and Delhi High Court in Pr. CIT vs. NDR Promoters Pvt. Ltd. [ 2019 (1) TMI 1089 - DELHI HIGH COURT] are different on facts and distinguishable In the present case, the assessee company has taken loan and on which it is paying interest so there is a justification for the lender company to advance money to the assessee company. Such loan and interest has been duly reflected by the lender company. Nothing adverse has come against the lender company. Further, bank statement of lender company have been submitted to establish the source of the funds along with the balance sheet and the profit and loss account. Evidences and the explanation has been rejected by the AO merely on the basis of doubt without bringing any material to discredit the document and information on record. CIT(A) has also arbitrarily rejected the explanation of the assessee company ignoring the above facts. The assessee has lead all evidences in support of its contention and the identity, creditworthiness and genuineness of the transaction stand established and hence the addition made by the AO is directed to be deleted. In the result, the appeal of the assessee is allowed.

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• 2019 (6) TMI 929
  Registration u/s. 12AA - denial of registration as applicant society is running a franchise purely on the basis of a well defined business model with no intent of imparting education to public at large - no way the genuineness of activities of the society can be corroborated with the stated aims and objects given that the society s activities are in the nature of business and can t be covered under the term charitable purpose - assessee, registered under the Societies Registration Act, 1860 is running a school under the name and style of Mother s Pride School at Bathinda school being run on a franchise basis, entering into a franchise agreement (not on record) with M/s. Mother s Pride Education Personna Pvt. Ltd - HELD THAT:- A playschool cannot, by any stretch of imagination, be regarded as scholastic instruction. Education , as the word appears in s. 2(15), though not to be understood pedantically, has to have the elements of structured courses, designed to impart knowledge/training; accreditation; examination, etc., and cannot be understood in a loose sense. One gets educated, as explained in Sole Trustee, Lok Sikshan Sansthan [ 1975 (8) TMI 1 - SUPREME COURT] even by seeing pictures, visiting galleries, museums, etc.; life itself being a great school. The same, however, it opined, cannot be regarded as education u/s. 2(15) of the Act. The competent authority has, in our clear view, rightly alluded to the said decision, stating that what stands imparted cannot be regarded as education u/s. 2(15). The assessee has not controverted the finding by the ld. CIT(E) that the Mother s Pride chain is of a playschool or that the agreement does not provide for a primary school and, besides, not furnished any evidence toward the said upgradation of the school to an elementary school, i.e., class 1 onwards (up to class 5), i.e., as claimed. The first and the principal objection of the competent authority is thus valid. Dominant object of the assessee-society is to make profit, which therefore cannot be regarded as charitable per se - As already opined that the only activity being pursued in furtherance of its objects is of a playschool, which would not qualify as education under the Act. The question of examining the predominant object which is purely a matter of fact, in running the said school, thus, does not arise for consideration. This is as only where the said activity qualifies to be education , that the pre-dominant object in pursuing the same falls for being examined in-as-much as where and to the extent it is profit making, the same may defeat the claim to being a charitable institution. Membership of the society, from which its governing board is selected - While the competent authority states it to be limited to one family, the assessee claims it to be comprised of three families. In our view this is a largely irrelevant consideration. What is relevant, irrespective of who manages the society, is that its activities inure to the benefit of general public. While certain sections of the public would get excluded for economic reasons, that may by itself not oust its claim as a public institution. It is to provide inclusiveness, breaking social and economic barriers, that the RTE Act, inapplicable to the asessee s school, being a playschool, has been enacted and made applicable to all types of schools. That is, that the assessee does not qualify to be a school there-under is a different matter, so that all that assumes relevance, under the circumstances, is if the activity pursued in fulfillment of/in achieving its object qualifies to be education , which we have found it as not. - Decided against assessee.

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• 2019 (6) TMI 928
  Penalty u/s 271(1)(c) - defective notice - addition of bogus purchase of the assessee without actual supply of goods - HELD THAT:- The Chhattisgarh High Court in the case of CIT v. Vijay Kumar Jain [ 2010 (4) TMI 386 - CHHATTISGARH HIGH COURT] has held that the assessee declared the net profit by estimating it at the rate of 6.36 per cent. of his gross receipt while it was estimated at the rate of 10 per cent of gross receipts by the Assessing Officer and on these facts held that penalty for concealment cannot be levied as the assessee cannot be said to have concealed any particulars of income or furnished any inaccurate particulars of income. Also decided in SHRI NAVEEN AGARWAL VERSUS I.T.O., KISHANGARH. [ 2019 (4) TMI 674 - ITAT JAIPUR] A.O. made addition by estimating the profit @ 22.7% on the alleged unrecorded sales. After considering the entire facts and circumstances while disposing the quantum appeal hereinabove we have directed the A.O. to estimate the profit @ 15% and upheld the addition only to that extent. It is clear that the addition to the income is based on estimate of profit rate when the A.O. passed order vis a vis when we dispose the quantum appeal. In such estimated addition, no penalty is to be levied - thus we delete the penalty levied U/s 271(1)(c) of the Act for the assessment year 2010-11. - Decided in favour of assessee. Levy of penalty u/s 271AAA - assessee has submitted once the Tribunal has restricted the addition to 15% alleged /bogus purchases then the income of the assessee was estimated the addition to the income of the assessee is based on presumption and estimation - HELD THAT:- We note that the addition made by the AO is identical to the addition for the assessment year 2010-11. We already produced the order of this Tribunal as well as judgment of Hon ble Jurisdictional High Court in the quantum appeals. Accordingly, in view of our finding for the assessment year 2010-11 the penalty levied U/s 271AAA of the Act against the addition made to the income of the assessee based on estimation/presumption is not sustainable consequently the same is deleted. - Decided in favour of assessee.

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• 2019 (6) TMI 927
  Levy of penalty U/s 271(1)(c) - additions inter alia on account of undisclosed sale consideration received in cash - HELD THAT:- As regards the non disclosure of the sale consideration received in cash, we find that the assessee has admitted the non disclosure of the same in the return of the income and it was detected by the AO only during the course of assessment proceedings and inquiry conducted by the AO. Therefore, the addition made by the AO on account of sale consideration received in cash which is subject matter of the appeal before us is clearly a case of concealment of particulars of income. Hence, at the time of recording the satisfaction the AO has clearly set out of the charges of major disallowance in respect of claim of deduction U/s 54B 54F which falls in the category of furnishing of inaccurate particulars of income. So far as the satisfaction recorded by the AO in view of Section 271(1B) once the AO has clearly recorded the satisfaction in the assessment order the same shall be deemed to constitute a satisfaction for initiation of penalty proceeding under clause (c) of Section 271(1). Hence, so far as the satisfaction of record by the AO in the assessment order there is no infirmity. As regards the certainty of charge since the penalty was initiated in respect of all three additions made by the AO out of which some additions fall in the category of furnishing of inaccurate particulars of income and other one which is the subject matter of the proceeding before us falls in the category of concealment of particulars of income. Therefore, the question of definite charge being furnishing of inaccurate particulars of income or concealment of particulars of income does not arise. It is a case of default on the part of the assessee falling under both limbs. In the penalty order U/s 271(1)(c) the AO has clearly made out in a case in para 3 by holding that the non disclosure of sale consideration of 59,04,000/- received in cash is clearly concealment on the part of the assessee. The AO has levied the penalty in respect of all additions on which both the limbs were attracted then we do not see any error or illegality in the order passed by the AO U/s 271(1)(c). The decision relied upon the ld. AR will not help the case of the assessee. As regards the alternate plea of the assessee that is a bonafide mistake, we find that the sale consideration in cash cannot be detected from the sale documents until and unless the assessee who was knowing a true facts disclosed the same to his tax consultant for the purpose of computing the capital gain. It is not the case of the assessee that the assessee has brought this fact to the knowledge of the tax consultant therefore, simply handing over the sale deed to the tax consultant would not discharge the assessee of his obligation to disclose the true and correct fact for the purpose of filing the return of income. Accordingly, we do not find any merit or substance in this plea of the ld. AR. Hence, the impugned order of the ld. CIT(A) sustaining the penalty levied U/s 271(1)(c) is upheld. Disallowance made U/s 54B 54F - HELD THAT:- We find once the addition itself was detected and the order of this Tribunal was confirmed by the Hon ble High Court then there is no need to file the appeal against the deletion of penalty by the ld. CIT(A) as in case the Revenue succeed before the Hon ble Supreme Court in the quantum proceedings the penalty proceeding can again be initiated accordingly, the appeal of the Revenue s is dismissed.

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• 2019 (6) TMI 926
  Reopening of assessment - original assessment u/s 143(3) - addition on account of Depreciation in the value of investment - AO merely give a reason that the closing stock is valued at cost or market whichever is less and the assessee has not filed security wise details of valuation of investments - HELD THAT:- This claim of the assessee was made in the regular books of accounts and the claim was also appearing in the audited balance sheet. During the course of assessment proceedings u/s 143(3) on 5.11.2012 a letter was submitted along with necessary evidences to the Ld. DCIT, Circle 1(1), Indore in compliance to the notices issued/s 142(1) against specific query raised by the Ld. A.O during the course of assessment proceedings. A.O after considering the submissions of the assessee accepted the claim of diminution in the value of investment at 16,36,000/- and accepted the returned income of the assessee vide order u/s 143(3) dated 28.12.12. There remains no doubt that proper disclosure of the claim of depreciation in the form of diminution of value of securities was made by the assessee in the regular return of income, specific query was raised by the Ld. A.O for the alleged claim and detailed reply was filed along with necessary evidences in the form of circular issued by RBI and the accounting standards applicable for disclosure of such type of investments. Thus Proviso of Section 147 is not applicable on the assessee and the reopening of the assessment by issuance of notice u/s 148 is bad in law and the assessment made u/s 147 r.w.s. 143(3) dated 13.12.2017 deserves to be quashed. In the result Ground No.1 of the assessee is allowed. Depreciation in the valuation of investment of securities - HELD THAT:- We observe that the assessee is engaged in the business of banking and providing credit facilities. As per the guidelines of RBI the assessee is required to invest in securities to be kept as fluid securities and are available for sale and are to valued every month on periodical basis. As per the RBI guidelines, circular named classification in valuation of investments dated 26.11.2008 vide instruction No.17/2008, such security are required to be marked to market on the specified dates. Any diminution/increase in the value of the securities on the valuation date are to be debited/credited to Profit Loss Account as depreciation on investment or increment in investment as the case may be. Thus the investment held by the bank are nothing but in the nature of current assets which are regularly valued at the end of the month and diminution/increase in their valuation is booked as expenditure/income Similar issue came up before various judicial forums and we too have adjudicated similar issue in the case of Jhabua Dhar Kshetriya Gramin Bank, Jhabua [ 2018 (9) TMI 533 - ITAT INDORE] wherein we have allowed the claim of depreciation of diminution of investment . Thus as in the present case direct the revenue authorities to allow depreciation of diminution in the valuation of investment claimed by the assessee - Decided in favour of assessee.

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• 2019 (6) TMI 925
  Addition of share premium u/s 56(2)(viib) - valuation of the projected cash flow - Valuation method prescribed viz Discounted Cash Flow(DCF) method - AO as well as the CIT(A) both certainly could not understand the valuation method prescribed under the rule 11UA(2)(b) i.e. DCF method and found out various discrepancies in the valuation report submitted by the assessee which was made by an expert , Chartered Accountant - CIT(A) considered himself an expert and made his own valuation HELD THAT:- AO as well as the CIT(A) observed that projected figures are not verifiable. But during the course of assessment proceedings, the assessee had provided the clarifications dated 16.12.2016 as to from where the projected figures were taken. As per the contentions of the AR, the projected cash flows were based on the various reports/data gathered by the analyst and management and after analyzing and verifying the same by the valuer. But the same was not considered either by the AO as well as by the CIT(A). From the records it can be seen that the AO as well as the CIT(A) never asked for furnishing the data from the Assessee at any point of time. Thus, they have not given any opportunity to the assessee to further clarify the projected cash flows. It is agreed that valuation is not mechanical process but, determined from market trends and other factors and after considering them, the valuer can determine the value of share. Even if the said is doubted, the AO should have given proper opportunity to the assessee for allowing the assessee to clarify the aspects of the valuation of the projected cash flow, which the AO failed to do so as well as the CIT(A) also did not take into account the submissions made by the Assessee. Thus, it will be appropriate to remand back all the issues contested herein to the file of the Assessing Officer with a direction to decide the same afresh - appeal of the assessee is partly allowed for statistical purpose.

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• 2019 (6) TMI 924
  Taxability under Article 23(4) of India - computing profits and gains in connection with the business of exploration, etc., of mineral oils u/s 44BB - Norway DTAA - assessee provided a vessel i.e. tugboats for ONGC work - HELD THAT:- As decided in assessee s own case for A.Y. 2005-06 the assessee provided a vessel i.e. tugboats for ONGC work. Assessing Officer has given a very restricted meaning of Article 23(4) by ignoring the second of the two limbs of the Article. It amply covers the tugboats services provided by the assessee to ONGC. In our view CIT(A) has rightly considered the issue allowing the relief to the assessee, which we uphold. CIT(A) rightly held that Article 23(4) of the Norway DTAA speaks of a case whereby transportation of personnel or materials to an oil drilling site would attract lesser rates of tax. The Assessing Officer wrongly placed reliance on the isolated clause (d) of the contract with M/s GSPC to deny the benefit to the assessee. In fact the entire contract should have been considered properly by the Assessing Officer which he failed to do so. Therefore, in light of the decision of the Tribunal which is having identical facts in the present year as well, this issue is decided in favour of the assessee. Computation of profits - whether Service Tax would not form part of gross receipts for the purpose of computation of profits under the presumptive provisions u/s 44BB ? - HELD THAT:- As decided in MITCHELL DRILLING INTERNATIONAL PVT. LTD. [ 2015 (10) TMI 259 - DELHI HIGH COURT] purpose of Section 44BB, the service tax collected by the Assessee on the amount paid to it for rendering services is not to be included in the gross receipts in terms of Section 44BB(2) read with Section 44BB(1). Besides that the CIT(A) also held that the issue is covered in favour of the assessee due to the cases of M/s Sedco Forex [ 2012 (7) TMI 250 - ITAT, DELHI] allowed this ground with direction to exclude service tax from the purview of computation of income u/s 44BB. Ground No. 2 of the Revenue s appeal is dismissed. Liability to pay interest u/s 234B - HELD THAT:- As decided in MAERSK CO. LTD. [ 2011 (4) TMI 886 - UTTARKHAND HIGH COURT] stage for making payment of tax could only arise at the stage of self-assessment which is to be made in a later assessment year as is clear from section 190 of the Act, whereas advance tax is liable to be paid in a financial year only and not thereafter. We are consequently of the view that if the employer fails to deduct the tax at source while paying any income chargeable under the head Salaries , would be responsible for payment of interest under section 201(1A) of the Act. The assessee would not be liable to pay interest under section 234B of the Act since he was not liable to pay advance tax under section 208 of the Act - Ground No. 3 of the Revenue s appeal is dismissed.

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• 2019 (6) TMI 923
  Penalty u/s 271AAB - residual surrender of income made during recording of statements u/s 132(4) - Surrender on account of jewellery and silver items found at the residence of the assessee - HELD THAT:- When the benefit of the personal jewellery of various family members is required to be given while considering the undisclosed income on account of jewellery as well as valuation of the same has been based on the cost of acquisition for treated as undisclosed income. Since, the valuation as well as the year of acquisition was not ascertained either during the course of search or in the subsequent prevailing even in the penalty proceeding. Therefore, this issue of levy of penalty U/s 271AAB in respect of surrender made on account of jewellery and silver items is set aside to the record of the AO to verify and consider all the relevant facts as discussed above and then decide the same afresh at the giving an opportunity of hearing to the assessee. The penalty in respect of surrender of 50 lacs an account of any other discrepancy or irregularity:- It is clear from the record that the assessee has made a surrender of 50 lacs on account of any other irregularity or discrepancy if any found. There is no dispute that no such discrepancy or irregularity was detected either by the department during search proceedings or by the AO during the assessment proceedings and penalty proceedings then mere surrender of the amount without any incriminating material or any undeclared assets it cannot be treated as undisclosed income of the assessee in terms of Section 271AAB. See SHRI RAJENDRA KUMAR GUPTA VERSUS THE DCIT, CENTRAL CIRCLE-2, JAIPUR. [ 2019 (1) TMI 1545 - ITAT JAIPUR] In the case in hand when no such discrepancy or irregularity was found by the AO then the mere surrender U/s 132(4) will not ipso facto attract the penalty U/s 271AAB until and unless the same is qualified as undisclosed income as per definition provided in the explanation to Section 271AAB. The levy of penalty U/s 271AAB is not mandatory but the AO is required to take a decision based on the facts and material and then to arrive to the conclusion that the income disclosed by the assessee falls in the definition of undisclosed income as provided in the explanation to Section 271AAB. Since, we have decided the issue of levy of penalty on merits in favour of the assessee therefore, we do not propose to go into the issue challenging the validity of initiation of the penalty U/s 271AAB. - Decided in favour of assessee.

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• 2019 (6) TMI 922
  Penalty u/s 271AAB - residual surrender of income made during recording of statements u/s 132(4) - Surrender on account of jewellery and silver items found at the residence of the assessee - HELD THAT:- When the benefit of the personal jewellery of various family members is required to be given while considering the undisclosed income on account of jewellery as well as valuation of the same has been based on the cost of acquisition for treated as undisclosed income. Since, the valuation as well as the year of acquisition was not ascertained either during the course of search or in the subsequent prevailing even in the penalty proceeding. Therefore, this issue of levy of penalty U/s 271AAB in respect of surrender made on account of jewellery and silver items is set aside to the record of the AO to verify and consider all the relevant facts as discussed above and then decide the same afresh at the giving an opportunity of hearing to the assessee. The penalty in respect of surrender of 50 lacs an account of any other discrepancy or irregularity:- It is clear from the record that the assessee has made a surrender of 50 lacs on account of any other irregularity or discrepancy if any found. There is no dispute that no such discrepancy or irregularity was detected either by the department during search proceedings or by the AO during the assessment proceedings and penalty proceedings then mere surrender of the amount without any incriminating material or any undeclared assets it cannot be treated as undisclosed income of the assessee in terms of Section 271AAB. See SHRI RAJENDRA KUMAR GUPTA VERSUS THE DCIT, CENTRAL CIRCLE-2, JAIPUR. [ 2019 (1) TMI 1545 - ITAT JAIPUR] In the case in hand when no such discrepancy or irregularity was found by the AO then the mere surrender U/s 132(4) of the Act will not ipso facto attract the penalty U/s 271AAB until and unless the same is qualified as undisclosed income as per definition provided in the explanation to Section 271AAB. The levy of penalty U/s 271AAB is not mandatory but the AO is required to take a decision based on the facts and material and then to arrive to the conclusion that the income disclosed by the assessee falls in the definition of undisclosed income as provided in the explanation to Section 271AAB. Since, we have decided the issue of levy of penalty on merits in favour of the assessee therefore, we do not propose to go into the issue challenging the validity of initiation of the penalty U/s 271AAB - Decided in favour of assessee.

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• 2019 (6) TMI 921
  Deduction u/s 80IA(4) - no income from the eligible business - as per revenue assessee basically engaged in the activities of sale of land and flats in the relevant period and all its receipts are from the sale of land and from other income - HELD THAT:- We note that the assessee has no income from the activities of infrastructure development as contemplated in sub-section (4) which is pre-requisite qualification u/s 80IA. Therefore, the assessee being involved in development, operation and maintenance of infrastructural facilities and its income was earned almost entirely from such business activities i.e. development, operation and maintenance of infrastructural facilities is contrary to record i.e. P L A/c. Therefore, as rightly found by the AO that the assessee is not eligible to claim deduction u/s 80IA(4) as confirmed by the CIT(A) in his impugned order. On perusal of the balance sheet of the assessee, the CIT(A) found that the balance sheet does not reflect any income earned from other developing, operating and maintaining or developing, operating and maintaining any infrastructural facilities. It is also clear that the assessee did not earn any income as laid down in sub-section (4) of section 80IA. Therefore, the surplus income is eligible for deduction u/s 80IA(4) - No infirmity in the finding of CIT(A) in its impugned order that the assessee had no income from eligible business to claim deduction u/s 80IA The assessee failed to substantiate its claim before the two lower authorities. It is noted from the record that the Co-ordinate Bench of this Tribunal vide its order dated 02.12.2015 remanded the matter to the file of AO to examine all the requirements for allowing the aforesaid deduction with a direction to the assessee to provide all the details to substantiate its claim for the deduction u/s 80IA(4)(i). As rightly pointed out by the Ld.DR that there were no such details provided by the assessee before the AO in claiming the said project in New Town is an integral part of highway project. Therefore, in our opinion, the assessee is not entitled to claim deduction u/s 80IA - Decided against assessee.

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• 2019 (6) TMI 920
  Rectification u/s 254 - deduction u/s. 10A - claim of unexpired period of 10 consecutive assessment years as available in the unamended provision - whether the assessee had claimed and obtained exemption in the years earlier to the amendment of section 10A by Finance Act, 2000 with effect from 01.04.2000? - HELD THAT:- The assessee was eligible to the benefit of claim u/s. 10A for the assessment year 2002-2003, even after amendment to section 10A. Further, the ITAT stated that deduction u/s. 10A cannot be granted if it relates to Individual Quick Freezing (IQF), even though it relates to unexpired period of entitlement as per the provisions prior to the amendment. The observation of the Tribunal in its order dated 06.03.2019 is error apparent. It clear that for the unexpired period of entitlement of deduction u/s. 10A the assessee would be entitled to the said claim, even if it relates to IQF, provided the assessee had made claim u/s 10A and the A.O. had granted deduction for the assessment year s prior to amendment. The above view was also taken by the Hon ble High Court in assessee s own case [ 2018 (8) TMI 985 - KERALA HIGH COURT] . The judgment of the Hon ble High Court, regarding 10A deduction claim that it is entitled to IQF with regard to processing of prawns undertaken by the assessee for the unexpired period of 10 consecutive years as available in the unamended provision. We direct the AO to compute deduction u/s. 10A in respect of the unexpired period of 10 consecutive assessment years as available in the unamended provision.

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• 2019 (6) TMI 919
  Reopening of assessment - addition u/s 68 in respect of share capital received under foreign direct investment (FDI) group - HELD THAT:- CIT(A) had ignored various submissions and documentary evidences filed by the assessee before the AO as well as before him and had not given any finding with regard to those evidences on merits. Assessee has filed documents to prove the identity and creditworthiness of the shareholders and genuineness of the transaction like Names of permanent account members alongwith copy of PAN card, addresses of domestic shareholder as well as Mauritius shareholder, Form FCGPRs filed with RBI for investment by Mauritius shareholder in the assessee company together with the following details in relation to Mauritius shareholder i.e. certificate of incorporation, tax residence certificates, audited financial statements, Copy of return of allotment filed by the assessee with Registrar of Companies and Copy of bank statements of Mauritius shareholder as well as the assessee company We find that these documents were not considered by the CIT(A) while disposing off the appeal for the A.Y.2008-09. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this appeal to the file of the CIT(A) for denovo adjudication of the entire issues - Decided in favour of assessee for statistical purposes.

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• 2019 (6) TMI 918
  Rectification u/s 254 - levy of penalty u/s 271(1)(c) - HELD THAT:- We find that Tribunal [ 2016 (11) TMI 1623 - ITAT MUMBAI] only set aside the findings of CIT(A) on the issue of disallowance of commission expenses and directed AO to decide the matter afresh. Brief facts as emanates from record are that the assessee has suffered quantum addition on account of commission for 147.45 Lacs which was contested by assessee before the Tribunal wherein the matter was restored back to the file of Ld. AO for fresh consideration. However, the penalty levied by AO u/s 271(1)(c) was deleted by CIT(A) which was contested by the revenue in M/S ALLWILER INDIA PVT. LTD. [ 2018 (12) TMI 1658 - ITAT MUMBAI] wherein the same was also restored back keeping in view the fact that quantum additions were also restored back by the Tribunal. We do not find any infirmity in the same and the decision was quite logical one because the penalty appeal was filed by the revenue and not by the assessee since the penalty was already deleted by Ld.CIT(A). Therefore, the said order, in our opinion, would require no interference on our part. As the quantum order has been passed by Ld. AO u/s 143(3) r.w.s. 254 on 31/12/2017 wherein same addition has been repeated and fresh penalty proceedings has been initiated. The same is also in order since the earlier penalty order would not survive and the only penalty which survive against the assessee would be pursuant to this order only. The miscellaneous application for AY 2008-09 stand dismissed. AY 2010-11 - the revenue agitated that relief granted by fits appellate authority qua commission expenditure. The same was also restored back to the file of Ld. AO for re-adjudication. The plea of Ld. AR is that rendering of service has not been doubted by Ld. AO and secondly, similar issue agitated by revenue for AYs 2012-13 2013-14 has been dismissed in M/S TUSHACO PUMPS PVT. LTD. [ 2019 (2) TMI 1648 - ITAT MUMBAI] No prejudice has been caused to the assessee by way of restoration of issue to the file of Ld. AO and the assessee is free to substantiate his stand, in any manner. Secondly, the cited order of the Tribunal is subsequent to the order under question - no mistake apparent from record, the application stands dismissed. .

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• 2019 (6) TMI 917
  Reopening of assessment u/s 147 - notice issued without the approval of the designated authority Addition u/s 68 on account of share capital - Failure to prove the genuineness and creditworthiness of the shareholders who have invested in the Company - summons u/s 131 issued to Director of assessee company and also to the shareholder, remained uncomplied with - HELD THAT:- The notice has been issued prior to the approval. Thus, reopening u/s 148 is without the approval of the designated authority and as such reassessment itself is bad and without any jurisdiction. The mandatory conditions of Section 148 has not at all followed by Revenue. Therefore, the re-opening itself is void ab initio and does not survive. - Decided in favour of assessee.

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• 2019 (6) TMI 916
  Addition on account of excess stock found in respect of grey fabrics, finished fabrics and yarn - non-posting of grey folding data entries in the computer - addition in respect of excess stock and found that the addition of Grey Fabrics of 10,797.20 Meters valued @ 37.60 - HELD THAT:- Substantial difference is on account of non-posting of grey folding data entries in the computer for the period 24.09.2012 to 25.09.2012, due to search going on the search premises and the difference of 10797.20 Meters and the same is explained by the appellant by the accounting entries in its books. Accordingly, he held that there is no excess stock to the extent of 10797.20 Meters. However, that still leave a miner difference of 86.10 Meters, the AO is directed to tax the same @ 37.60 amounting to 3,237.36. No infirmity in the finding so recorded by the CIT(A) in deleting the addition which relate to non-posting of grey folding data entries in the computer for the period 24.09.2012 to 25.09.2012. Accordingly, we uphold the order of the CIT(A) for confirming addition of 86.10 Mtrs. Found excess @ 37.60 resulting into upholding addition to the extent of 3,237.36. Addition made on account of finished fabrics - CIT(A) found that it was on account of calculation mistake done by the department while applying blanket rate of 100 per meter on various items of sample - HELD THAT:- After recording detailed findings, CIT(A) upheld the addition of 616.10 meters resulting into addition of 5,662.80 out of total addition of 1,13,380.90 made by the A.O.. We do not find any infirmity in the order of the ld. CIT(A) so far as the grey fabrics and finished fabrics is concerned. Addition made in respect of yarn - CIT(A) has deleted the addition to the extent of 82,82,552.60 - HELD THAT:- CIT(A) has observed that the department has taken incorrect value of yarn purchase for the month of July 2012, the said explanation of the assessee was found correct supported with documents and substantially explain the excess stock to the extent of 47148.36 Kg. After giving effect of the correct value of yarn purchase for the month of July 2012. There is no infirmity in this part of finding of the ld. CIT(A), accordingly, we uphold action of the ld. CIT(A) to the extent of deleting the addition of 87,93,007.44 under the head yarn. Stock of yarn - HELD THAT:- Assessee has included yarn of 11182.31 KG which was actually waste and found during the course of survey. However, the department has valued it as stock of fresh yarn. Accordingly, we do not find any justification in upholding the addition of 11182.31 KG of yarn amounting to 19,64,396.40. Accordingly, we do not find any merit in the action of the CIT(A) for upholding this addition of 19,64,396.40. We direct the A.O. to delete the entire addition of 1,02,46,949.32 made under the head of Yarn.

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• 2019 (6) TMI 915
  Waiver of loan amount - Characterization of receipt - Applicability of provisions of section 28 (iv) and 41(1) or of section 56(2)(vi) - HELD THAT:- Addition u/s 28(1) - The loan was taken for the purpose of business but the same was never taken in the course of business or to say that the loan sourced was not linked to the trading receipts or the like. Similarly the waiver of the loan amount was not in the course of business or in exercise of a profession. A part of the amount was waived by the bank in a one-time settlement because there were little chances of recovery of the entire amount. This one-time settlement was not done as part of the business activity of the assessee, rather, the transaction of the loan and waiver was a separate transaction. Under the circumstances, the waiver of part of the loan amount cannot be said to be a benefit or perquisite arising from business or profession to the assessee. Addition u/s 41(1) - The loan in question was not the trading liability of the assessee and, hence, the bank has not waived any loss / expenditure of trading liability of the assessee. What has been waived is a part of the loan amount in one-time settlement as the loan asset has been declared as NPA and there were little chances of the recovery of the loan. Moreover, the assessee did not take any benefit in the shape of allowance or deduction in earlier years of such principal loan amount which has been waived. Under the circumstances, the provisions of Section 41(1) are not applicable to the facts and circumstances of the case. Addition u/s 56(2)(vi) - It was not a simple case of waiver without consideration, rather, the consideration of the waiver was the condition of depositing immediately the remaining part of the loan i.e. 140 lacs and performance of certain other formalities as per the agreement. It is not just a case where the bank has simply waived or remitted the loan amount, rather the bank to secure payment of 140 lacs, which otherwise the bank was feeling difficult to recover, was the consideration for settlement of the loan account. Hence, the amount received by the assessee as waiver or remission of loan amount cannot be said to be without consideration. Hence, in our view, the provisions of section 56(2)(vi) are not applicable to the case in hand. Neither the remission of the aforesaid amount in the facts and circumstances of the case is taxable as business income or as income from other sources . Moreover, it is not a case where other party / banker out of his free will had decided to give some benefit to the assessee, rather, the settlement was arrived at by the bank out of compulsion. The other party in this case is a nationalized bank, hence, it cannot be said that the waiver was a sham transaction or a colourful device to give benefit to the assessee. Under the circumstances, though the assessee has got some benefit by way of waiver of the principal amount but the same cannot be termed as income of the assessee exigible to tax. However, it is made clear that our observations made above are in the peculiar facts and circumstances of this case and, hence, cannot be simply applied in each and every type of waiver of the loan amount. Whether the assessee had earned profit or incurred losses in the business activity, it has no relevancy so far as the source of capital is concerned which, in fact, was a loan from the bank on interest. Since the assessee was running into losses, hence the waiver of part of the loan in a settlement, is towards the capital receipt of the assessee and cannot be said to be out of business activity nor the same can be said to be in the nature of trading receipts. In view of this, we do not find any justification on the part of the lower authorities in taxing the amount or part of the loan amount waived in one time settlement by the bank. The addition made by the AO and confirmed by the Ld. CIT(A) is accordingly ordered to be deleted. - Decided in favour of assessee.

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• 2019 (6) TMI 914
  Addition on unreasonable of expenses - expenditure incurred under the head, Deepavali expenses , donation, general charges, marketing management specialisation expenses, travelling expenses, business promotion and other expenses - CIT-A deleted addition - HELD THAT:- Substantial increase in certain expenditure incurred under the head Deepawali expenses, donation, general expenses and other expenses. It is also an admitted fact that the turnover of the assessee has been increased from 184 crores to 387 crores. The AO has disallowed expenditure incurred under various heads without recording any observation as to incorrectness in books of account maintained by the assessee for the relevant financial year or supporting evidence filed in justifying expenditure incurred under those heads. AO has compared increase in expenditure to previous financial year without taking note of corresponding increase in business turnover of the assessee. On the other hand, the assessee has filed necessary details of expenditure and also explained reasons for increase in expenditure. The Ld.CIT(A), after considering relevant facts and also taking note of the fact that there is no observations by the AO in regard to the incorrectness of books of account scaled down disallowance to 10% for such expenses. We do not find any reason to interfere with the findings recorded by the CIT(A) while deleting addition made by the AO towards disallowance of expenditure. - Decided in favour of assessee.

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• 2019 (6) TMI 913
  Reopening of assessment u/s 147 - no valid service of the notice u/s 148 - service of the notice u/s 148 by way of affixture at place where the assessee is known to have last resided or carried on his business or personally worked for gain - HELD THAT:- A perusal of the affixture order reveals that Shri Swaran Singh, ITO, Ward-III, Khanna directed Shri Pamam Vir Singh Duggal, Income Tax Inspector to effect the service of the notice u/s 148 of the Act by way of affixture under Order V Rule 20 of CPC, 1908 on the conspicuous part of place where the assessee is known to have last resided or carried on his business or personally worked for gain. No address of such place has been mentioned in the said affixture order. It is not clear from where the Income Tax Inspector would come to know about the last known address of the assessee either of his residence or of his working place. Even in the report of the Inspector of the same date i.e. 26.3.2013, he has simply written affixed by me . Even he has not mentioned as to where he had gone to affix the notice, to say whether it was affixed at the last known residential address of the assessee or at the last known work place of the assessee. Though the signature of one Shri Mangat Ram have also been appended but who that Mangat Ram is/was, has not been mentioned; whether he was an independent witness available at the place where the affixation was done or was an employee of the income Tax office, is not coming out. Even as mentioned above, the notice by registered post as well as by way of substituted service was allegedly served on the same date. There was no reason for the satisfaction of the AO that the alleged notice cannot be served in an ordinary way. AO issued the affixture order on the same day without waiting for the outcome of the service of notice sent through ordinary way i.e. by way of registered post. Service could not be effected at the village address of the assessee, the AO thereafter served the notice u/s 142(1) at his office address which means that the Assessing officer had come to know the office address of the assessee at which service can be effected but admittedly no notice u/s 148 of the Act was served on the assessee at his office address also. Under the circumstances, it is clear that there was no valid service of notice u/s 148 on the assessee. The issue, therefore, is squarely covered by the recent decision of Sumit Balkrishna Gupta Vs. ACIT [ 2019 (2) TMI 1209 - BOMBAY HIGH COURT] has held that the issue of a notice u/s 148 is a foundation for reopening of assessment and condition precedent for framing of the assessment u/s 147 of the Income Tax Act. Since there was no valid service of the notice u/s 148, therefore, the consequent assessment proceedings framed u/s 147are not sustainable in the eyes of law and the same are accordingly quashed. The appeal of the assessee is hereby allowed.

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• 2019 (6) TMI 912
  Assessment u/s 153A - No incriminating material unearthed for undisclosed income seized during the search and seizure - HELD THAT:- The case of the assessee was covered u/s 132 on the basis of search and seizure operation conducted on 14.03.2012 and in view of the fact that assessment of the assessee for AY 2009-10 was completed assessment as on 14.032012 and no incriminating material to unearth any undisclosed income was seized during the search and seizure operation, the present addition made on account of credit cards expenses qua AY 2009-10 is not sustainable in the eyes of law in view of the law laid down in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] . The case of the assessee is also covered by the order passed by the co-ordinate Bench of the Tribunal in the case of Satinder Singh Madhok, husband of the assessee .[ 2018 (7) TMI 1996 - ITAT DELHI] - Decided in favour of assessee.

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• 2019 (6) TMI 891
  Depreciation on payment of non-compete fees - as per Revenue, this being an intangible asset, no depreciation u/s 32 was available - HELD THAT:- Similar issue has been considered by the different High Courts and held in favour of the Assessee. A reference can be made to the decision of the Division Bench of the Gujarat High Court in the case of Pr. CIT v. Ferromatice Milacron India (P.) Limited 2018 (10) TMI 1955 - GUJARAT HIGH COURT . It was also the case where the Assessee had incurred expenditure pursuant to the non-compete agreement and claimed depreciation on such asset. Rights acquired by the assessee under the said agreement not only give enduring benefit, protected the assessee s business against competence, that too from a person who had closely worked with the assessee in the same business. The expression or any other business or commercial rights of similar nature used in Explanation 3 to sub-section 32(1)(ii) is wide enough to include the present situation. - decided in favour of assessee. Expenditure incurred for gaining controlling interest of a subsidiary company - Allowable business expenditure - HELD THAT:- This Court in the case of CIT v. Phil Corpn. Limited [ 2011 (6) TMI 912 - BOMBAY HIGH COURT] held that the Assessee was entitled to deduction of interest on overdraft under Section 36(1)(iii) of the Act when the investment was made by the Assessee in shares of subsidiary of the company to have control over the said company. Madras High Court in the case of CIT v. Shriram Investments (Firm) Moogambika Complex, Chennai [ 2014 (11) TMI 55 - MADRAS HIGH COURT] has taken similar view - decided in favour of assessee. Disallowance of interest on the borrowed funds given to the sister concern and its directors - assessee failure to prove that each of the loan on which the assessee paid interest in the accounting year was utilized for the purposes of the business - HELD THAT:- Tribunal by the impugned Judgment followed the decision of the Supreme Court in case of S.A. Builders Limited v. CIT [ 2006 (12) TMI 82 - SUPREME COURT] and held that such expenditure was made for the purpose of business. - decided in favour of assessee.

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• 2019 (6) TMI 890
  Assessment u/s 153A - nothing found during the search i.e. incriminating material revealing undisclosed income - HELD THAT:- No addition can be made to the income of the assessee that has already been assessed except on the basis of some any incriminating material. In the absence of any incriminating material the completed the assessment can be reiterated while framing u/s 153A. AO is not permitted to disturb the income has finalized in the completed assessment dehors incriminating material while making the assessment U/s 153A. The reassessment U/s 153A shall have connection with something found during the search i.e. incriminating material revealing undisclosed income. Therefore, any addition or disallowance can be made only on the basis of material gathered during the search and requisition and in case has no incriminating material is found the earlier assessment would have to be reiterated while completed U/s 153A. Since, in the case in hand, no incriminating material was found indicating undisclosed investment by the assessee on account of on money for purchase of agricultural land then the addition made by the AO on the basis of the information received from the ACB and consequential inquiry conducted by the AO during the assessment proceedings cannot be treated as incriminating material to justify the addition on account of on money when the assessment was completed and not pending at the time of search. Accordingly, in the facts and circumstances of the case and in view of the binding precedents the addition made by the AO is not sustainable in law and the additional ground is hereby allowed in favour of assessee.

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• 2019 (6) TMI 889
  Penalty u/s 271(1)(c) - AO rejected books of account by invoking provisions of Section 145(3) and made trading addition - HELD THAT:- Trading addition has been upheld by the Tribunal by estimating the GP rate at 15% on the alleged unverifiable purchases. It is settled proposition of law that merely confirmation of the trading addition made on estimate basis does not lead to the conclusion that assessee has furnished inaccurate particulars of income or concealed any income. Estimation is always on presumptions and assumptions and without proper and specific linking with any evidence in support of such estimation assessee cannot be fastened with liability of penalty. Accordingly, it is well settled that no penalty is leviable u/s 271(1)(c) on the basis of trading addition due to disturbance in the G.P. rate disclosed by the assessee. Therefore, additions were made in the assessment order not on the basis of any concealment being detected in assessment but only on Ad hoc Basis. Hence it cannot be deemed to concealed income for the purpose of penalty u/s 271(1)(c) in the case of CIT Vs. Super Metal Re-Rollers Pvt. Ltd. [ 2003 (9) TMI 51 - DELHI HIGH COURT] - No merit in the penalty so imposed with regard to the addition upheld on estimation basis, therefore, we direct to delete the same. - Decided in favour of assessee.

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• Customs

• 2019 (6) TMI 911
  Validity of Government of India Notification dated 13th October 2017 - Advance Authorization scheme - imposition of pre-import condition - HELD THAT:- Division Bench of this Court in MESSRS MAXIM TUBES COMPANY PVT LTD. VERSUS UNION OF INDIA [ 2019 (2) TMI 1445 - GUJARAT HIGH COURT] has held that the Notification, which is a subject matter of challenge, has been struck down as ultra vires . Nothing remains to be adjudicated in this petition - Petition disposed off.

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• 2019 (6) TMI 910
  Jurisdiction and validity of notices issued u/s 28(11) of the Customs Act after and before amendment - power of Additional Director General of DRI to issue SCN - HELD THAT:- The issue is pending before the Hon ble Supreme Court - This appeal alongwith the above two cases are placed for directions on 28th June 2019 at 3.00 p.m. for fixing a date for final disposal of the cases along with other similar cases pending in this Court.

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• 2019 (6) TMI 909
  Validity of SCN - Demand of duty drawback - Rule 16A of The Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - time limitation - HELD THAT:- This Court is of the considered view that this is not a fit case for interfering at the SCN stage. This is because the exceptions for interfering in writ jurisdiction at SCN stage have been clearly laid down in a long line of authorities. It should be a case of SCN being issued without jurisdiction or a SCN that is attempting to re-open settled position of law or a SCN which has been issued with malafide intentions or a SCN which has been issued in a manner that leads one to believe that Authority issuing the SCN has pre-determined the issue. While this Court comes to the conclusion that this is not a fit case for interfering in the SCN stage, this Court is also of the view that it would be appropriate to direct the respondent to decide the issue of limitation first and then proceed with the adjudication, subject of course to the decision of limitation; and direct the Authority to complete the adjudication within a time frame. Petition disposed off.

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• 2019 (6) TMI 908
  Rejection of application for waiver of submission of bill of export to evidence the supplies made to SEZ (Special Economic Zone) as fulfillment of its export obligations - redemption of EPCG license not done - HELD THAT:- It is an agreed position between the parties that a similar issue had come up before this Court in the case of UNION OF INDIA ORS. ETC. VERSUS LARSEN AND TOURBO LIMITED ETC. [ 2017 (10) TMI 40 - BOMBAY HIGH COURT] in respect of non grant of waiver of bill of exports to evidence supplies of goods to SEZ by the Policy Relaxation Committee (PRC) at Serial No. 3 of paragraph 2.5 quoted hereinabove. The only difference in facts is that in this case goods supplied to SEZ by the Petitioner has nexus to the import of capital goods, while in the Larsen Toubro Limited, the goods supplied to SEZ had no nexus to import of capital goods by the Petitioner therein. However, it is undisputed that the above factual difference is of no consequence in grant of relaxation to submit bill of exports. The impugned minutes dated 29th August, 2018 of the EPCG Committee to the extent it held the benefit of export to SEZ will not be available due to absence of bill of export is set aside. It is held that the absence bill of export by itself will not lead to denial of the supplies made to SEZ as exports - Petition allowed.

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• Insolvency & Bankruptcy

• 2019 (6) TMI 907
  Initiation of Corporate Insolvency Resolution Process (CIRP) - process initiated against the Corporate Debtor - Section 7 of the I B Code, 2016 - HELD THAT:- The Final Report dated 28.01.2019 filed by the Liquidator provides that during the CIR Process and during Liquidation process, no bank account was opened or operated or maintained and no current account transaction or bank account operation was carried out. It further provides that the Corporate Debtor ceased to do business and the promoters and/or Directors of the Corporate Debtor have not handed over the books of account or provided any material information during the CIR Process and during the proceedings of liquidation. Therefore, the Liquidator could not appoint any valuers in the absence of Financial Records and/or any discoverable assets, as prescribed under the Insolvency and Bankruptcy Code, 2016. This Authority in exercise of the powers conferred under Sub-section (2) of Section 54 of the I B Code, 2016, hereby order the dissolution of the Corporate Debtor, viz., M/s. SKC Retail Limited from the date of this Order, and the Corporate Debtor stands dissolved. Consequently, the Liquidator stands relived - The Liquidator and the Registry are directed to send the copy of this order within 7 days from the date of pronouncement to the RoC with which the Corporate Debtor is registered. Application disposed off.

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• 2019 (6) TMI 906
  Admissibility of application - Initiation of CIRP - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Learned counsel for the Respondents submits that the counsel for the Corporate Debtor appeared on eleven occasions before the Adjudicating Authority thereafter on hearing them the order was passed. So far as the claims of the Operational Creditors are concerned, their claim will be considered by the Resolution Professional once admitted. Otherwise, they have no right to be heard at the time of admission of the application under Section 7 of the I B Code . We are not inclined to interfere with the impugned order dated 1st November, 2018. The Adjudicating Authority is expected to complete the Resolution Process in accordance with law within the stipulated period. The Resolution Professional , the Committee of Creditors will co-operate to ensure that the resolution process succeeds. Appeal disposed off.

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• Service Tax

• 2019 (6) TMI 905
  Construction of Residential Complex Service - service tax collected from the prospective buyers and were not deposited with the exchequer - suppression of facts or not - extended period of limitation - HELD THAT:- The appellants had collected service tax and not deposited the same at the relevant time and in the entire period from 31 July, 2010 to 31 March, 2015 appellant never paid due service tax on due date. Further the allegations of suppression are therefore proved and since the appellant had not deposited service tax on due date and not paid interest when deposited belatedly, intention to evade is established - demand upheld. Appeal dismissed - decided against appellant.

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• 2019 (6) TMI 904
  Refund of service tax paid - Amount deposited during pendency of investigation - applicability of unjust enrichment - Tribunal on merit of claim held that no service tax is payable - refund allowed but the said amount was directed to be credited in the Consumer Welfare Fund under Section 11B(2) of the Central Excise Act, 1944 - HELD THAT:- Any amount deposited during the pendency of adjudication or investigation is in the nature of a deposit and, therefore, cannot be towards payment of service tax or excise duty. The principles of unjust enrichment, therefore, would not apply if a refund is claimed for refund of this amount - reliance placed in the case of COMMR. OF CUS., BANGALORE VERSUS MOTOROLA INDIA PVT. LTD. [ 2006 (4) TMI 390 - CESTAT, BANGALORE ]. In the present case, it is not in dispute that the Appellant had deposited 1 Crore when the raid was conducted on 6 October, 2003 and subsequently an amount of 11,36,840/- on 27 October, 2003. Both the amount were deposited much before the issuance of the show cause notice on 24 August, 2004. It is not in dispute that on the application filed by the Appellant for refund of this amount, the adjudicating authority did sanction the refund of 1,11,36,840/- but it directed the said amount to be deposited in the Consumer Welfare Fund because of the principles of unjust enrichment. This Order was upheld by the Commissioner(Appeals) for the same reason. This view is apparently contrary to the consistent view of the High Courts and the Tribunal. The Appellant would, therefore, be clearly entitled to the refund of 1,11,36,840/-. Amount collected but not deposited to the Government - Applicability of Sections 73A and 73B of the Act - recovery of the amount - HELD THAT:- Section 73 A of the Act which came into effect from 18 April 2006, provides a complete answer to this issue. Section 73 A deals with service tax collected from any person to be deposited with Central Government. While sub-section (1) deals with service tax collected in excess of the service tax assessed or determined, sub-section (2) deals with any person who has collected any amount which is not required to be collected from any other person, in any manner as representing service tax. Sub-section (2) in such a situation would be applicable. Such a person is required to forthwith pay the amount so collected to the credit of the Central Government. It shall, therefore, be open to the Department to proceed strictly in accordance with the provisions of Sections 73A and 73B of the Act to recover the amount alleged to have been collected by the Appellant as service tax after issuance of a show cause notice. The Appellant shall be given an adequate opportunity to substantiate its case that it had not collected service tax but had only collected service charges . Appeal disposed off.

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• 2019 (6) TMI 903
  Utilization of CENVAT Credit - Rules 6 of CENVAT Credit Rules - Whether the appellant could avail of the full Cenvat, and utilize 20% of the same while carrying forward the balance 80%, under erstwhile Rule 6(3)(c) of Cenvat Credit Rules, even though they were providing both taxable as well as exempted services? HELD THAT:- A plain reading of the above provisions indicate that while Rule 6(1) provides that the manufacturer or provider of output service is not entitled for the credit of such quantity of input or input services which are used in the manufacture of exempted goods or exempted service except in the circumstances mentioned in the sub-rule (2) of the said Rules. Sub-rule (2) of Rule 6 provides for maintenance of separate records in respect of inputs, input services substantiating use of input and input services for taxable and exempted goods or services. Sub-rule (3) of Rule 6 provides that in case separate accounts are not maintained, the manufacturer or provider of services shall follow either of the conditions stipulated in sub-rule (3) of Rule 6. It is pertinent to note that after the amendment the only change that could be seen in respect of sub-rule (3) is to the extent of payment in respect of exempted goods produced or exempted services provided. While there is a cap on the utilisation of credit attributable to exempted goods or services, there is no cap whatsoever on the availment of CENVAT credit and there is no mention of any lapse of credit after utilisation of credit of 20% prior to 1.4.2008 or after payment of requisite percentage of value after 1.4.2008. Just because the services provided by the appellants have become taxable with effect from 1.4.2008, it cannot be said that the credit already availed and accrued shall lapse. As submitted by the appellants, we find that sub-rule (3) of Rule 6 begins with a word Notwithstanding anything contained in sub-rules (1) and (2) . The only inference that can be drawn from the non obstante clause is that the provisions of Rule 3 have an overriding nature. The provisions of sub-rule (3) of Rule 6 is very clear that if the provider of output services does not maintain separate accounts, the only restriction is placed is on the extent of utilisation of credit and there is no provision which provides that the balance of credit, if any, shall lapse. It is seen that Tribunal in DHL LOGISTICS PVT. LTD. VERSUS CCE [ 2015 (7) TMI 1039 - CESTAT MUMBAI] has concluded the issue independently and sought to reinforce the decision on the basis of the purported circular. Therefore, we find that the existence or otherwise of the circular is inconsequential. However, it is not clear as to why Madurai Commissionerate has issued such a Trade Notice based on the Circular and as to whether the same was withdrawn subsequently. However, as we find that the appellants claim to the unutilised credit is correct on merits, we do not find any reason to go into the circular. Time Limitation - HELD THAT:- Understandably, the show-cause notices must have been issued after detailed scrutiny of the ST-3 returns. Once such show-cause notice is issued, it is not open for the department to rake-up the issue on a different preposition invoking extended period - the show-cause notice and Order-in- Original does not survive on time bar issue also. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 902
  100% EOU - Refund of CENVAT credit - input services - denial of refund on the ground that the input services have no nexus with their output services - HELD THAT:- Tribunal in the case of TATA CONSULTANCY SERVICES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE ST (LTU), MUMBAI [ 2012 (8) TMI 500 - CESTAT, MUMBAI] has held that services used in relation to authorized operation in SEZ would be eligible to refund under Section 11B of the Central Excise Act, 1944 as applicable to service tax vide Section 83 of Finance Act, 1994 and it cannot be denied on the ground that they were ineligible to claim the same under Notification No.09/2009-ST. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 901
  Reversal of irregularly availed CENVAT credit without utilising it - HELD THAT:- The issue is covered by the judgment of Hon ble Karnataka High Court in the case of Commissioner of Central Excise Service Tax, Bangalore Vs. Bill Forge Pvt. Ltd. [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT ] where it was held that once the entry was reversed, it is as if that the Cenvat credit was not available - demand set aside. CENVAT Credit - common input services which were utilized in dutiable and exempted output services - HELD THAT:- Since the Cenvat Credit of 1,22,561/- was reversed on 29.12.2015, before utilizing the same, transaction does not merit confirmation of amount of 7,26,327/- - demand set aside. CENVAT Credit - input services - Security and Legal Services before beginning of provision of output services - HELD THAT:- The stand taken by Revenue was that when the said Cenvat Credit was availed, the appellant did not provide any output service. Form the provisions of Cenvat Credit Rules, 2004, there is no provision where it is mandatory to have output service being provided simultaneously when the input services being received - demand not sustainable. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (6) TMI 900
  Clandestine removal - removal of goods to the job worker DPPL without following the prescribed procedure and without cover of any prescribed documents, when in fact no such documents were prescribed - minor discrepancy in Appellant s records regarding entry of some of these goods in Appellant s recent records as the goods were manufacture long back in 1999-2000 and were simply lying in Appellant s premises - HELD THAT:- We are satisfied that inference of clandestine removal of goods drawn concurrently by all the three authorities is not based merely on absence of any challan, under cover of which the goods are normally required to be removed. The inference is mainly on account of absence of contemporaneous record backing the theory that the goods were removed for purposes of reprocessing by DPPL on job work basis. The record indicates that Kopran Limited has a well organised system for documentation, when it comes to record of receipt of raw materials, production, stores and despatch. However, when it comes to goods in question, such documentation, is just not to be found. Even contemporaneous records such as entries in loading Register, Gate outward Register and Returnable Register make no entries in relation to the goods in question. This is certainly a circumstance which is required to be held against the appellants. Therefore, even if we were to accept Mr.Agrawal s case that there were no prescribed procedures under the Cenvat Rules or that there was no requirement of removal of such goods only under a cover of challan, that by itself will not suffice to interfere with the concurrent findings of fact recorded by three authorities. The scope of an appeal under Section 35G of Central Excise Act, 1944, is quite limited. The appellants have to make out a case of involvement of a substantial question of law in the context of challenge to findings of fact, perhaps, such a case can be made out only if perversity is demonstrated. In the record of findings of fact - In the present case, there is sufficient material on record to sustain the findings of fact recorded by three authorities concurrently. The view taken by the Tribunal is certainly, a plausible view based upon the material on record. Accordingly, these appeals give rise to no question of law, much less, any substantial question of law. Appeal dismissed - decided against appellant.

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• 2019 (6) TMI 899
  CENVAT Credit - fake invoices - It appeared to revenue that M/s Nidhi Auto availed inadmissible Cenvat credit of around 4.66 crores during the period from April, 2011 to January, 2015 without receipt of inputs on the basis of invoices issued by M/s Ruby Steels - HELD THAT:- In the present case, the author of the diary recovered at the residence of the partner of M/s Ruby Steels was not identified and his statement was not recorded and therefore, the diary recovered was not admissible evidence. Further, it was also alleged that M/s Nidhi Auto was maintaining parallel ledgers whereas we find that M/s Nidhi Auto was maintaining two ledgers which was in the regular course of business and that the goods entered were tallying with the total quantity received by them in both the ledgers put together. Further, revenue could not exhibit any discrepancy of total inputs reflected in two ledgers put together with entries of inputs in RG-23 records. Further, the revenue has not investigated as to if 9112.500 MT of quantity of inputs shown in the books of account of M/s Ruby Steels were not delivered to M/s Nidhi Auto and only invoices were given then where did such huge quantity of inputs gone and to whom and who was the transporter. Further, revenue also did not investigate as to if 9112.500 MT of inputs were not received by M/s Nidhi Auto then from where M/s Nidhi Auto has procured inputs for manufacture of goods which were cleared on payment of duty. Impugned order not sustainable - Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 898
  CENVAT Credit - duty paying invoices - Rule 9(1)(b) of CENVAT Credit Rules, 2004 - supplementary invoices issued was only relating to inputs and capital goods . There is no mention of input services in the said provision till the said Rule was amended by insertion of Rule 9(1)(bb) to the said CENVAT Credit Rules, 2004 w.e.f. 01.04.2011 - reverse charge mechanism - HELD THAT:- On being pointed out by the Revenue in July 2009, the Appellants have discharged Service Tax for the services received from overseas clients under Section 66A of Finance Act, 1994. Consequently, they availed CENVAT Credit of the service tax amount so paid considering the same as an input service. Revenue does not dispute the said service as input service but it is their contention that since the Service Tax was recovered from the Appellant, which was initially not paid by the Appellant due to wilful mis-statement or suppression of facts, therefore, the credit of the amount so paid is not admissible to them in view of Rule 9(1)(b) of CENVAT Credit Rules, 2004. Tribunal analysing the circumstances under which the service tax was paid by the Appellant for the value of sales commission paid to the overseas buyers under reverse charge mechanism have arrived at the conclusion that there was no suppression, mis-statement etc on the part of the Appellant in discharging the service tax even though it was paid after being pointed by the department. Appeal allowed - decided in favor of appellant.

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• 2019 (6) TMI 896
  Reversal of CENVAT Credit - condition B of sub rule 3 of Rule 6 of Cenvat Credit Rules, 2004 - credit attributed to the exempted goods - HELD THAT:- The issue has been settled in appellant s own case in MAIZE PRODUCTS VERSUS CCE [ 2007 (1) TMI 583 - CESTAT AHMEDABAD ] where it was held that We are convinced that the demand is highly disproportionate to the credit availed on the common inputs which could be attributed to goods which have been cleared without payment of duty. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2019 (6) TMI 895
  Levy of VAT - Petitioners contract for offshore drilling entered into with ONGC - transfer of right to use goods or not - availability of alternate remedy - HELD THAT:- We are inclined to examine the matter further, for the present ignoring the availability of alternate remedy. Let the notice be issued returnable on 15th July, 2019.

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• 2019 (6) TMI 894
  Deletion/withdrawal of the charge - Recovery of dues - Gujarat Value Added Tax Act, 2003 - whether the respondents are justified in creating a charge over the subject property for recovering the dues of M/s. Umiya Oil Industries of which the petitioner s husband was the Proprietor, which, according to the petitioner, is property purchased by her from her stridhan ? HELD THAT:- In the facts of the present case, it is not disputed that the business carried on by the petitioner s husband was discontinued after his death. Therefore, clause (a) of subsection (1) of section 57 of the GVAT Act will not apply and hence, the legal representative would not be liable to pay the tax, interest or penalty due from such dealer under the Act or in earlier years. Insofar as clause (b) of subsection (1) of section 57 is concerned, the same would be applicable in the facts of the present case as the same provides that where a person, who has been a dealer, liable to pay tax under the Act dies and if the business carried out by such dealer is discontinued, whether before or after his death, then his legal representative shall be liable to pay the dues out of the estate of the deceased to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such dealer under that Act or any earlier law. Thus, under clause (b) of subsection (1) of section 57 of the GVAT Act, the legal representative is liable to pay the dues out of the estate of the deceased to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from the dealer. In the facts of the present case, the respondents do not seek to recover the dues from the dealer or from any estate of the deceased, but seek to recover the same from the property of the petitioner. Evidently, therefore, the provisions of clause (b) of subsection (1) of section 57 of the GVAT Act would not apply - Insofar as subsection (2) of section 57 of the GVAT Act is concerned, the same would not, in any manner, be applicable to the present case since it relates to property being partitioned amongst the members of a Hindu undivided family. In the absence of any power vested in the respondents to recover the dues of the deceased husband of the petitioner from the property of the petitioner, the charge created over the subject property of the petitioner is without any authority of law. In the opinion of this court, merely because the petitioner has challenged the assessment orders and has prosecuted the matter before the appellate authority would not amount to continuance of business, as contemplated under clause (a) of subsection (1) of section 57 of the Act - The respondents are therefore, not justified in seeking to recover the dues of the petitioner s deceased husband from property belonging to the petitioner which renders the charge entered under the GVAT Act on the subject property unsustainable. The respondents are directed to delete/withdraw the charge entered over the subject property belonging to the petitioner located at Survey No.71, Gambhirpura, Taluka Idar, District Sabarkantha for the tax dues of M/s. Umiya Oil Industries - petition allowed.

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• 2019 (6) TMI 893
  Refund claim - amount paid under protest - validity of reassessment order under section 35 of GVAT Act - Petitioner No.1 was however, given to understand by the respondent VAT authorities that they had the liability to pay tax on administrative charges collected towards supply of fly ash made available free of cost to cement and brick manufacturers under the GVAT Act. Therefore, even though no order was passed against the petitioner No.1, it deposited tax with interest on administrative charges for the years 2006-2007 to 2010-2011 under protest. HELD THAT:- There is nothing to show that any reassessment order under section 35 of GVAT Act or any revision order under section 75 of the GVAT Act has been passed by the respondent VAT authorities. The petitioners have deposited the aforesaid amount under protest. There is no return filed by the petitioners which can be considered as self assessed tax in the year 2006-2007. Therefore the question of payment of tax would arise only when VAT liability is crystallized, either by way of self assessment or by way of assessment by the authorities. When the petitioners have deposited the amount of 46,43,174/under protest for which no adjudication order is passed by the authorities, such claim being outside the purview of enactment can be made either by way of a suit or by way of writ petition. As the amount is paid neither by way of self assessment or pursuant to any demand, it is always open for the petitioners to bring it to the notice of the authorities concerned and claim the refund of amount of such deposit - Since the amount is deposited under protest by the petitioners and no order of assessment, reassessment or revision is passed till date, the amount retained by the authority is not backed by any authority of law in the light of Article 265 of the Constitution of India and, therefore, the respondents have no authority to retain the same. Petition is allowed by directing the respondents to refund the amount of 46,43,174/with simple interest at the rate of 6% per annum from 11.11.2015, that is three months from 11.8.2015, viz. the date when the first application for refund was made by the petitioner. Such exercise shall be completed by the respondents latest by 31.7.2019 - petition allowed by way of remand.

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