Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 5, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Clarifications on filing of Annual Return (FORM GSTR-9)
Income Tax
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Commission paid to director u/s 36(1)(ii) - as a part of remuneration package of the executive director - based on his performance evaluation and also considering his contribution in meeting the financial performance of the company - There is substantial increase in profit before tax as compared to earlier years - duly allowable
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Disallowance of interest u/s 36(1)(iii) - assessee has a stake in the performance and profit making of wholly owned subsidiaries - it cannot be denied that the advancement of loan is in connection with assessee’s business - the difference in the interest rate between the borrowed funds and loans advanced is only 3.25% and the advanced of loan in connection with its business - no disallowance
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Addition u/s 68 - bogus share capital and share premium - The financial statements, Annual Reports as well as bank statements of the all the investors was made available to Ld. AO and nothing on record suggest that any cash was exchanged/transacted between the assessee and the investor entities - Notices issued u/s 133(6) have been responded to - assessee has duly discharged the initial onus - no addition
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Bogus purchases - department had neither disputed the assessee's sales nor shown any discrepancy between the purchases shown and the sales declared - the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader - correctly restricted the additions @ of G.P. rate on purchases at the same rate of other genuine purchases
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Registration u/s 12AA - Tribunal had noticed that the poor patients were being treated at the hospital which was supported from the list of the patients and fund had been utilized for the charitable purposes which was clear from the visiting fees paid to various doctors for giving free consultations/treatments which was not even controverted by the revenue - no substantial question of law arise
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Addition u/s 68 - share capital and share premium - no enquiries were conducted by the ld AO u/s 133(6) and/or 131 from the share subscribers - the assessee by producing necessary documents viz. detailed chart of inflow and outflow of funds, IT records, audited Balance Sheets, bank statement copy etc of self and all other parties involved - sufficiently established the identity and creditworthiness of the share subscribers and the genuineness of the share transaction - no addition
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Deduction u/s 80IB - investment threshold limits in Plant and Machinery - assessee has to fulfill criteria as laid down u/s 80IB(14)(g) every year as every assessment year is a separate unit - the Section 80IB(14)(g) in turn refers to IDR Act, 1951 and not MSME Act, 2006. Thus, notifications issued under IDR Act, 1951 will hold the field
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Monetary limit - Low tax effect - circular No. 03/2018, dated 11. 07. 2018 issued CBDT - withdrawal of the appeal by the revenue shall not be taken to be affirmation of order of the Tribunal on merits
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Monetary limit - maintainability of appeal - litigation for approaching the High Court shall be of a minimum value of ₹ 50,00,000/- - this Court is aware of the fact that the circular was considered by the Apex Court and in terms of the contents of such circular, it has been held that the same is having retrospective application i.e. in respect of the pending litigations as well
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Stay of demand - recovery notice during the pendency of the stay applications - Instruction No.1914 dated 02.12.1993 of the Board would make it clear that the stay petition filed with the AO must be disposed of within two weeks of the filing of petition by the taxpayer - recovery notice is obviously contrary to the Instructions and the Office Memorandum issued by the Board - calls for interference by this Court
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Addition u/s 68 - Bogus LTCG - penny stock purchases - list of beneficiaries submitted by the brokers/entry providers before the investigation wing substantiates that the assessee is one of the beneficiary - AO explained the entire working of the flow of conversion of black money into white using LTCG tax exemption in a circular pattern and back to him - exempt u/s 10(38) denied and entire sale consideration is taxable u/s 68
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Exemption u/s 11- taxability of unregistered trust - AO has brought gross receipts to tax which is against the basic tenets of law where only the real income which is determined after deducting expenses from gross receipts i.e only net income can be brought to tax - remanded AO to examine the claim of the expenditure against the gross receipts
Customs
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Implementation of PGA eSANCHIT— Paperless Processing under SWIFT-Uploading of Licenses/Permits/Certificates/Other Authorizations (LPCOs) by PGAs
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Simplified auto-registration of beneficiaries (IEC holders) on ICEGATE for eSANCHIT and other benefits
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Free Trade Agreement [FTA] - goods imported from South Asian Association for Regional Co-operation [SAARC] countries - the subject goods are not fulfilling the Origin Criteria as prescribed in the said notification and hence not eligible for the benefit of Customs Notification No.105/1999-Cus.
Corporate Law
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Restoration of name of company in the ROC - company under litigation - Pending litigation in itself has been judicially recognized as a ‘just’ ground for restoration of a Company struck off the ROC - the matter was to be approached from a broader perspective keeping in view the interests of various stakeholders and larger social interest which can be better subserved by restoring a Company struck off for mere statutory non-compliances, which is admittedly not a Shell Company
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Oppression and mismanagement - member - When the Respondent No.1 being a shareholder with 25% shareholding at the time of incorporation and also being one of the founding Directors of the Company is admitted, it cannot be contended that he ceased to be a “member” upon reduction of his share capital and that too when the transfer of shareholding is alleged to be clandestine and product of fabrication and forgery
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Proceedings under I&B Code - Maintainability of suit - Rejection of application on the ground of pre-existing dispute - whether the suit is maintainable or not, such question cannot be determined by NCLT or by Appellate Tribunal - once on fact being there is pre-existing dispute, the application u/s 9 is not maintainable
Indian Laws
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Extended due dates for filing TDS statement in Form 24Q & issue of TDS certificate in Form 16
IBC
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Setting aside the transaction - Preferential or undervalued - no case is made out by the RP that any business of the CD has been carried out with the intent to defraud the creditors or for any fraudulent purpose - Respondents are not a related party nor the transactions were made during relevant period - A so called alleged violation of Section 43 or Section 45 or Section 46 cannot be termed to be made for fraudulent purpose
Service Tax
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Challenge to show cause notice (SCN) - Intellectual Property Right service - producers/purchasers of cinematograph films who have assigned some part of their copyright in the cinematograph films to television channels - SCN and order in original set aside.
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Management Consultancy Service - logistic management or access control system of the organization - the services provided will qualify under the category of Management Consultancy Services
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Services in relation to digital signature certificates (DSC) - Sub Certifying authorities - mere act of collecting the applications and verification of the same for onward submission to the appellant cannot be termed as “grant of representational rights” - Cannot be held as Franchisee Service.
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Recovery of interest - Extended period of limitation - The show cause notice is bad, both for invocation of extended period of limitation and also for non-invocation or non-mentioning of proper Section 73(1) with proviso.
Central Excise
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Valuation - value of the raw material declared by the principal manufacturer cannot be questioned in the hands of the receiver unless there is allegation of connivance or collusion between the raw material supplier and receiver of the same is established.
Case Laws:
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GST
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2019 (6) TMI 164
Application for withdrawal of Advance Ruling application - Classification of goods - PVC Carpet Mats - HELD THAT:- The application filed by the Applicant for advance ruling is disposed off as withdrawn.
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2019 (6) TMI 117
Return of records seized at the time of inspection - HELD THAT:- The petitioner through Exts. P11 and P12 requested the 2nd respondent to examine the seized records including the CD in the presence of the Authorized Representative of the petitioner. The reason for making a request for verification of record in the presence of Authorized Representative of petitioner is that, the petitioner would have opportunity to explain the omissions or commissions if any otherwise erroneously noticed by the 2nd respondent without further enquiry in this behalf - Government Pleader does not oppose the prayer for verification of record in the presence of Authorized Representative of petitioner. The 2nd respondent considers the request of the petitioner made through Exts. P11 and P12, intimates a particular day and time to the petitioner for undertaking the verification of record in the presence of Authorized Representative of petitioner-Company - Petition disposed off.
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2019 (6) TMI 116
Release of seized goods - violation of Rule 138 of CGST Rules, 2017 - valid E-way bill or not - HELD THAT:- The petitioner submits bank guarantee for the tax and penalty as shown in Ext. P3 and applies for release of goods by enclosing a copy of this order within two days from today. The second respondent shall release the goods detained under Ext. P3 and subjected to enquiry in Ext. P3 within twelve hours from the date and time of receipt of bank guarantee. The bank guarantee shall be kept valid for six weeks from today. The second respondent shall complete the enquiry, afford fair and reasonable opportunity as envisaged under the Act to petitioner and pass and communicate this order within four weeks from today. The handwritten endorsement made on Ext. P4 is set aside and the second respondent considers the objection strictly in accordance with law, affords opportunity, passes order and communicates to the petitioner.
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Income Tax
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2019 (6) TMI 163
Deduction claimed u/s 80IA - allocation of expenses - HELD THAT:- CIT(A) rightly held that there was no justification on the part of the Assessing officer to disallow the entire claim of deduction claimed by the assessee. If the Assessing officer was of the view that the assessee had exaggerated the profits of the units eligible for deduction u/s 80IA , at the most, he could have allocated some part of the profits to non eligible units but without making any such exercise, he disallowed the entire claim of deduction. The Ld. CIT(A) has also observed that even otherwise though the profits of the eligible units were at ₹ 59.29 crores, however, since the gross income of the assessee from all units was at ₹ 25.60 crores, the claim was restricted to that extent. The Ld. CIT(A) observed that any minor variation in the profits of the eligible units would not make any difference. Even otherwise, if the profits of the eligible units are to be computed on turn over basis, the resultant effect will be the enhancement of the profits than that has been declared by the assessee. - Decided against revenue Addition u/s 14A r.w. Rule 8D - expenditure incurred for earning of tax exempt dividend income - CIT(A) restricted the disallowance u/s 14A to the extent of tax exempt income - HELD THAT:- disallowance u/s 14A cannot exceed the tax exempt income earned by the assessee. See WINSOME TEXTILE INDUSTRIES LTD. [ 2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] and CHEMINVEST LIMITED [ 2015 (9) TMI 238 - DELHI HIGH COURT]. Disallowance of notional interest u/s 36(1)(iii) - investment made on CWIP - HELD THAT:- We find from the chart that in the year under consideration the paid up capital of the assessee for the year under consideration was at ₹ 10.42 crores, reserves and surplus at ₹ 297 crores and apart form that profit during the year was of ₹ 101 crores totalling ₹ 408 crores. Apart from the aforesaid work in progress, the total investments of the assessee at the end of the year was at ₹ 6.36 crores. The total amount incurred by the assessee on investments as well as capital work in progress is a meager amount as compared to the own funds available with the assessee. The issue is now squarely covered by the various decisions of the High Courts including that of the decision of CIT Vs. Kapsons Associates [ 2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT] and the latest decision of the Coordinate Bench of the Tribunal in the case of ACIT Vs. Janak Global Resources Pvt Ltd [ 2018 (12) TMI 902 - ITAT CHANDIGARH] holding that that if the assessee is possessed of sufficient own interest free funds to meet the investments / interest free advances, then, under the circumstances, presumption will be that interest free advances / investments have been made by the assessee out of own funds / interest free funds There is no basis to apply the presumption that the assessee might have used the borrowed funds for CWIP, when as noted above, the assessee was possessed sufficient own funds. - Decided in favour of assessee Disallowance of interest u/s 14A r.w. Rule 8D - HELD THAT:- So far as the disallowance in respect of interest expenditure under Section 14A r.w. Rule 8D(2)(ii) is concerned, since the assessee was possessed of sufficient own funds to meet the investment, hence, the issue is covered by the decision of the Coordinate Bench of the Tribunal in the case of ACIT Vs. Janak Global Resources Pvt Ltd [ 2018 (12) TMI 902 - ITAT CHANDIGARH]. This issue is also now squarely covered by the latest decision of CIT (LTU) Vs. Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] wherein, reiterated the proposition that if there are interest funds available with the assessee, which are sufficient to meet the investment, it can be presumed that the investments are made from the interest free funds available with the assessee. So far as the action of the CIT(A) in directing to calculate the disallowance under Rule 8D(2)(iii) in respect of administrative expenditure incurred on earning of tax exempt income is concerned no infirmity in the order of the CIT(A) on this issue.
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2019 (6) TMI 162
Addition u/s 68 - Bogus LTCG - penny stock purchases - exemption u/s 10(38) was denied - HELD THAT:- In the assessment order, the Assessing Officer explained the entire working of the flow of conversion of black money into white using long term capital gains tax exemption and penny stock from the assessee in a circular pattern and back to him. Moreover, out of the list of beneficiaries submitted by the brokers/entry providers received from share brokers/directors/dummy directors of bogus companies before the investigation wing substantiates that the assessee is one of the beneficiary. the decision in the case of ITO v. Shamim M. Bharwani [ 2015 (4) TMI 257 - ITAT MUMBAI] is squarely applicable against the assessee. In this case, the assessee had purchased the shares of penny stocks companies purchased at lesser amount and within a year sold such shares at much higher amount and the assessee had not tendered cogent evidence to explain as to how shares in an unknown company had jumped on higher amount in no time and also failed to provide details of persons who purchased the said shares, as the said transactions were attempt to hedge undisclosed income as long term capital gains. In the case of Sanjay Bimalchand Jain v. PCIT, [ 2017 (5) TMI 983 - BOMBAY HIGH COURT] has laid down the law that if the assessee has not tendered cogent evidence to explain as to how the shares in an unknown company had jumped to such an higher amount in no time when the fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise and if the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain, such gain has to be assessed as undisclosed credit u/s 68 We find that the AO has rightly withdrawn the amount which has been claimed by the assessee as exempt u/s 10(38) and assessed the entire sale consideration u/s 68 - Decided against assessee.
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2019 (6) TMI 161
Adjournment applications - reasonable cause - CIT-(A) fixed the hearing of the appeals on 8 occasions, out of which on 7 occasions the adjournment applications were filed and granted adjournments on 6 occasions but refused to grant the adjournment on last occasion i.e. 20.11.2018 - contesting election of Central Council of ICAI - HELD THAT:- We note that though sufficient opportunities were granted by the ld. CIT (A) to the assessees for presenting their cases, however, when the assessee has explained a reasonable cause for not appearing on 20.11.2018 and also filed an application in advance wherein it was stated that the ld. A/R of the assessees was contesting election of Central Council of ICAI scheduled for 8th 9th December, 2018, then one more opportunity ought to have been granted by the ld. CIT (A). Having considered the facts and circumstances of the case as well as in the interest of justice, we grant one more opportunity to the assessee's subject to cost of ₹ 2500/- each and set aside the matters to the record of the ld. CIT (A) for deciding the same afresh after hearing the assessee's. The assessee's are also directed not to take any further adjournment before the ld. CIT (A). - Assessee appeals are allowed for statistical purposes.
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2019 (6) TMI 160
Assessment of suppressed sales - Gross profit or net profit - HELD THAT:- As relying on MAN MOHAN SADANI [ 2007 (10) TMI 246 - MADHYA PRADESH HIGH COURT] , BALCHAND AJIT KUMAR. [ 2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] and SHRI HARIRAM BHAMBHANI [ 2015 (2) TMI 907 - BOMBAY HIGH COURT] we direct the AO to assess the income from undisclosed sales in question by applying the net profit rate in place of the gross profit rate as undisclosed sales. The net profit rate shall be that which the assessee had disclosed in its regular books of account for the said Assessment Year on recorded sales. In the result, this ground of the assessee is allowed in part. Disallowance u/s 40A(3) and Section 40(a)(ia) - whether addition can be made when profits have been estimated as a percentage of turnover, in the case of the assessee? - HELD THAT:- As decided in M/S PRADEEP SINGH WAZIR VERSUS COMMISSIONER OF INCOME TAX AND ANR. [ 2017 (3) TMI 1268 - SUPREME COURT] as income of the assessee on the total contract receipts had been reached at by applying the net rate of profit after reduction and, thus, no further addition could be made under Section 40(a)(ia) of the Act. Taxation of excess stock found by the revenue during the course of survey - survey done u/s 131 wherein the survey team found difference between the physical stock and the book stock - HELD THAT:- We find this issue to be no more res integra as co-ordinate bench of this tribunal in M/s Subarna Rice Mill vs. ITO [ 2015 (7) TMI 522 - ITAT KOLKATA] holding only the profit element liability to be added in such circumstances; stand upheld by hon'ble jurisdictional high court's recent judgment 2018 (8) TMI 1475 - CALCUTTA HIGH COURT] . We therefore conclude that the impugned former addition of the entire discrepancy in stock deserves to be deleted. Thus we direct the Assessing Officer to tax only the gross profit embedded in the excess stock found for the Assessment Year
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2019 (6) TMI 159
Addition towards non-compete agreement - there was an agreement for payment of ₹ 5,00,000/- per year for the period of 10 years with condition of termination and annual review - subsequently a supplementary non-competition agreement entered payment term was changed - HELD THAT:- Admittedly, the non-compete arrangement between the assessee and VSIN was originally for a period of 10 years for which an initial amount of ₹ 50,00,000/- was paid. Thereafter, the Parties mutually decided that the said amount would not be subject to annual review although the non-compete agreement would hold good for the period of 10 years. Under the supplementary agreement dated 14.01.2002, the assessee and Vossloh agreed that the condition for annual option to terminate was removed with the result the amount lying in deposit of ₹ 35,00,000/- at the time became fully due to the assessee. JV itself was re-negotiated w.e.f. 08.08.2003 under which the Non-Competition Agreement along with all other documents were terminated and fresh agreements were put in place. Under the new arrangement, the Parties did not negotiate a separate non-compete fee for the assessee. The reason for entering into a supplementary non-competition agreement on 14.01.2002 as noted by the Ld. CIT(A) was on account of the takeover of Vossloh, Germany by Matsuhita, Japan. That the supplementary non-competition agreement was executed on 14.01.2002 is also borne out by the fact that in the minutes of the meeting of the Board of Directors of VSIN held on 27.02.2002, the said supplementary non-competition agreement was approved. The above facts are not in dispute. The AO has made the addition of ₹ 5,00,000/- towards non-compete agreement because of insertion of sub-clause (va) to section 28 by the Finance Act, 2002 w.e.f. 01.04.2003. As the reason given by the AO is not a plausible one as described above, we dismiss the 1st ground of appeal. Correct head of income -Termination Fee and 'Severance' payment received by the assessee pursuant to the Termination Agreement - 'Capital Gains, Income from Other Sources or Salary receipt - HELD THAT:- As the sum as termination fee and as severance fee have been received by the assessee towards termination of Joint Venture, it has rightly treated the same as capital receipt and offered the entire amount as income from LTCG in the relevant assessment year. See KETTLEWELL BULLEN AND COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX, CALCUTTA [ 1964 (5) TMI 4 - SUPREME COURT] Accordingly, the 2nd ground of appeal is dismissed.
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2019 (6) TMI 158
Addition u/s 68 - share capital and share premium - unexplained cash credit - HELD THAT:- The ld AO is duty bound to confront the assessee with the enquiries made and information gathered and the principal of nature justice demands that the assessee should be allowed an opportunity to give its rebuttal and/or explain its case in light of the enquiries allegedly made by the ld AO. In the present case, we find that the ld AO merely stated that he had made discreet enquiries which led to him forming conclusion that the share application monies received during the year were in nature of accommodation entries. However the nature findings of enquiries were unknown. The ld AO never confronted the assessee with the information borne out of the so called discreet enquiries . In fact from the material on record, we find that no enquiries were conducted by the ld AO under the provisions of Section 133(6) and/or 131 from the share subscribers who had actually paid the monies to the assessee. The ld AO seems to have sat back with folded hands just so as to arbitrarily reject the documents evidences placed by the assessee at the end of the assessment proceedings with a pre-conceived notion in order to reach to pre-decided destination. The ld AO was unable to bring an iota of evidence so as to substantiate his allegation that the capital raised by the assessee was in the nature of accommodation entries or that the monies were routed back to SGJHL and its associates as alleged in the impugned order. In the course of assessment proceedings, the assessee had furnished the documentary evidences as were made available to the assessee by the share subscribing companies. The documents furnished proved the identity creditworthiness of the shareholders. The transactions were carried through banking channels. Although the documents were submitted before the ld AO, no enquiry was conducted by the ld AO either from the Departmental records or from the bankers of the share subscribers. Hence it could be safely concluded that the adverse inference drawn by the ld AO was based on surmise conjecture having no relation whatsoever with the facts of the case. It is well established that the assessee by producing necessary documents viz. detailed chart of inflow and outflow of funds, IT records, audited Balance Sheets, bank statement copy etc of self and all other parties involved., has sufficiently established the identity and creditworthiness of the share subscribers and the genuineness of the share transaction. As such, the addition made by the ld AO is sheerly based on surmises and wrong appreciation of the facts of the case. Hence we find that the ld CITA had rightly appreciated the contentions of the assessee, which in our considered opinion, does not require any interference. Accordingly, the grounds raised by the revenue are dismissed.
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2019 (6) TMI 157
Stay petition - HELD THAT:- It is noticed that in the impugned order [ 2019 (1) TMI 214 - ITAT DELHI] itself, the ITAT had stated that no unnecessary adjournment would be sought by the Assessee. The Court finds from the order sheets that adjournments have been sought on several dates thereafter by the Revenue. It appears that a special counsel has appointed for the Revenue in the said appeal. Although the appeal was listed before the ITAT since the record was requisitioned by this Court, a further date of hearing could not be fixed. The original record has been returned in Court to Mr. Vikram Dutt, Assistant Registrar, ITAT who is present. The Court directs that ITA be listed before the ITAT on 3rd June, 2019 at 10.30 am. The ITAT will endeavour, with the co-operation of counsel for the parties, to dispose of the appeal as expeditiously as possible.
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2019 (6) TMI 156
Monetary limit - low tax effect - maintainability of appeal - HELD THAT:- When the matter is taken up for consideration, learned Standing Counsel for the Revenue fairly concedes that the appeal was filed way back in June, 2018. By virtue of the 'new litigation policy' and the circular issued subsequently on 11.07.2018 by the Central Board of Direct Taxes (CBDT), the subject matter of litigation for approaching the High Court shall be of a minimum value of ₹ 50,00,000/- which requirement is not satisfied in the instant case, as in the present case, the tax effect is to the extent of ₹ 34,01,999/- only. This Court is also aware of the fact that the scope of the said circular was considered by the Apex Court and in terms of the contents of such circular, it has been held that the same is having retrospective application i.e. in respect of the pending litigations as well. Standing Counsel seeks permission of this Court to withdraw this appeal.
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2019 (6) TMI 155
Assessment u/s 153A - petitioner contends that the impugned demand notices are liable to be struck down though the petitioners had filed the Returns much before the prescribed date, the respondent-Income Tax Officer conveniently has ignored the same and wrongly stated that no Returns were filed - alternate and efficacious remedy of appeal - HELD THAT:- The Constitution Bench of the Apex Court in the case of Garikapati Veeraya V. N.Subbiah Choudhry and Other [ 1957 (2) TMI 54 - SUPREME COURT] , has held that the right of appeal is a creature of law and where the law prescribes certain conditions, the right is conditioned/curtailed and that the litigant can avail his right of appeal subject to complying with such conditions if any. That being so, the explanation offered by the petitioners for not availing the statutory appeal remedy, does not constitute a valid ground. The contention of the petitioner that he had sought for reasons for issuing the impugned notices from the Revenue and that the said solicitation having not been complied with, the action of the Revenue is vulnerable, is sustainable. However, much is not deliberated on this issue in as much as the learned counsel for the Revenue fairly submits that the petitioner would be furnished the reasons in view of the fact that he has now filed the Returns. There is one aspect of equity which the Writ Court needs to take into account; the petitioner has invoked the writ jurisdiction of this Court much before the Re-assessment Orders were passed by the first respondent-Income Tax Officer; there appear to be some procedural defects in making these orders, as pointed out by learned counsel for the assessee; however, deeper consideration at the hands of the Appellate Authority, if and when an appeal is filed, may be warranted in this regard. In view of this, the petitioner need to be given some limited protection in order to make his right of appeal meaningful as held by the Hon ble Bombay High Court in the case of UTI Mutual Funds Vs. Income Tax Officer [ 2012 (3) TMI 333 - BOMBAY HIGH COURT] These writ petitions succeed in part; the respondent-Income Tax Officer shall furnish reasons to the petitioners for issuing of the subject notices forthwith; the petitioner is reserved liberty to lay challenge to the Re-assessment Orders in appeal before the Commissioner of Income Tax (Appeals) or such other competent authority within a period of four weeks; if appeals are accordingly filed, the issue of limitation and delay shall not be raised by the Appellate Authority; the petitioner shall not be coerced with the Re-assessment Orders or the impugned notices to make payment for a period of four weeks so that the filing of the appeal is meaningfully facilitated.
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2019 (6) TMI 154
Stay of demand - imposed the condition of depositing 30% of the demand - HELD THAT:- As in the case of TURNER GENERAL ENTERTAINMENT NETWORKS INDIA PVT. LTD. VERSUS INCOME TAX OFFICER WARD NO. 76 (1) , NEW DELHI ORS. [ 2019 (1) TMI 1365 - DELHI HIGH COURT] it says that some reasonable time could be considered by this Court for depositing 20% and appropriate directions are issued for disposing of the appeals. There shall be stay of recovery of tax determined for the assessment year 2013-2014 subject to the petitioner depositing 10% of the tax demanded within six weeks from today and another 10% within six weeks thereafter. The petitioner continues to enjoy the protection granted by this Court subject to complying with the condition imposed by the order. In default without reference to court the stay shall be deemed to have been vacated. The 2nd respondent considers and disposes of appeal as expeditiously as possible preferably within six months from the date of receipt of a copy of this order.
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2019 (6) TMI 153
Recovery proceedings - seeking time to make payment of the dues towards the amount ordered at Ext. P2 by the issue of a writ of mandamus - HELD THAT:- The circumstances though are not encouraging straight away in exercising discretion in favour of the petitioner, but appreciating the bonafides to clear the last instalment without further recourse to law by the Department, this Court is satisfied that the first respondent considers and disposes of Ext. P3 request in both the writ petitions to the limited extent of considering the time prayed by the petitioner for discharging the last instalment as expeditiously as possible, preferably within two weeks from the date of receipt of a copy of the judgment.
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2019 (6) TMI 152
Registration u/s 12AA - the immovable property of the hospital was owned by one of the trustees - one of the trustees, is running clinic in Shri Ujjagar Singh Aulakh Hospital and the trust was created later on 1.4.2015 primarily to arrange funds for the payments to the specialist doctors visiting the hospital - whether ITAT has erred in directing the registration to be accorded instead of reverting it back for re-examination? - HELD THAT:- The Tribunal had noticed that the poor patients were being treated at the hospital and the said fact was supported from the list of the patients and the CIT(E) was not required for further confirmation from the beneficiaries of the trust. During the financial year 2015-16, the trust was at nascent stage having received donations of ₹ 1,12,000/- only and maximum of ₹ 1,03,250/- which had already been utilized for the charitable purposes as was clear from the visiting fees paid to various doctors for giving free consultations/treatments which was not even controverted by the revenue. The trust was created on 1.4.2015 and the application for registration u/s 12AA was filed on 26.9.2016. As further noticed that the assessee does not have much funds at the initial stage to pursue its objects, however, some of the objects, i.e. treatment of poor and weaker sections of the society, irrespective of their caste or creed and religion, were undertaken by the assessee and the reasoning of the CIT (E) that neither the objects seemed to have been pursued nor the activities of the trust got corroborated cannot be considered as logical reasoning. Accordingly, the Tribunal directed the CIT(E) to grant registration to the assessee u/s 12AA No error could be pointed out by learned counsel for the revenue in the findings recorded by the Tribunal which may warrant interference by this Court. No question of law, much less, substantial question of law arise in the appeal. No merit in the appeal, the same is hereby dismissed. Needless to say, it shall be open for the revenue to initiate action under sub-section (3) to Section 12AA for withdrawal/cancellation of the registration granted herein above, in case it comes to the notice of the revenue that the activities undertaken by the assessee are not genuine or are not being carried out in accordance with the objects of the trust or Institution or are not charitable in nature in terms of the provisions of the Act.
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2019 (6) TMI 151
Disallowance u/s 14A read with Rule 8D - alleged that investments in various equity funds and shares of different companies was made indirectly from the loan funds - HELD THAT:- Similar issue decided in Principal Commissioner of Income Tax-I, Chandigarh v. M/s Vardhman Chemtech Private Limited, Chandigarh [ 2018 (10) TMI 1037 - PUNJAB AND HARYANA HIGH COURT] wherein the appeal filed by the revenue against the deletion of disallowance under Section 14A of the Act read with Rule 8D of the Rules, was dismissed.
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2019 (6) TMI 150
Stay of demand exceeding 365 days - HELD THAT :- matter in issue is no longer res integra and stands concluded by the decision of this Court in M/S CARRIER AIR CONDITIONING AND REFRIGERATION LIMITED [ 2016 (5) TMI 396 - PUNJAB AND HARYANA HIGH COURT] wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases
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2019 (6) TMI 149
Monetary limit - Low tax effect - HELD THAT: - The appellant who has filed a copy of letter received from the Income Tax Department, Aayakar Bhawan, Panchkula showing that the tax effect is less than ₹ 50,000,00/-. Appellant-revenue states that since the tax effect involved is ₹ 44,67,837/-, he has instructions to withdraw the present appeal in view of circular No. 03/2018, dated 11. 07. 2018 issued by ITA-178-2016 Board of Direct Taxes, New Delhi. However, he has prayed that liberty be granted to the revenue to file an application for revival of the appeal, in case something survives therein. Dismissed as withdrawn with liberty as prayed for. It is, however, clarified that withdrawal of the appeal by the revenue shall not be taken to be affirmation of order of the Tribunal on merits.
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2019 (6) TMI 148
Stay of demand - refund of ₹ 76,56,400/- for the AY 2015- 16 has been adjusted towards the demand - assessee requested to refund the amount in excess of 15% of the demand adjusted and also prayed to stay the remaining demand of 85% till the disposal of the appeal - coercive steps towards recovery of the disputed tax - HELD THAT:- Respondent No.1 has proceeded to issue the recovery notice during the pendency of the stay applications pending before the respondent No.2, when an appeal is preferred before the Commissioner of Income Tax [Appeals] against the Assessment order for the year 2013-14. Instruction No.1914 dated 02.12.1993 of the Board would make it clear that the stay petition filed with the Assessing Officer must be disposed of within two weeks of the filing of petition by the taxpayer.. The assessee must be intimated of the decision without delay. In terms of Clause 4 of the Office Memorandum [F.NO.404/72/93-ITCC] dated 29.02.2016, in order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT [A], the following modified guidelines are being issued in partial modification of Instruction No.1914: [Office Memorandum dated 31.07.2017] where the outstanding demand is disputed before the CIT[A], the assessing officer shall grant stay of demand till disposal of first appeal on payment of 20% of the disputed demand The action of respondent No.1 in initiating the recovery notice is obviously contrary to the aforesaid Instructions and the Office Memorandum issued by the Board. Hence, the same cannot be held to be justifiable which necessarily calls for interference by this Court. This Court deems it appropriate to quash the recovery notice at Annexure-A and to direct the respondent No.2 to dispose of the stay application filed by the petitioner on 09.05.2016 and 04.02.2017 vide Annexures-B and E respectively to the writ petition. - The recovery notice dated 20.11.2018 is quashed
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2019 (6) TMI 147
Addition u/s 68 on account of bogus share capital and share premium - receipt of certain information from DIT(Investigation)-II, Mumbai that the assessee indulged in certain bogus transactions with hawala entities - HELD THAT:- The assessee had filed plethora of documents as mentioned in para 3.2 to prove the identity of the investor, creditworthiness of the investor and genuineness of the transactions. All the four entities were corporate entities and filing their respective return of income under unique Permanent Account Number. The financial statements, Annual Reports as well as bank statements of the all the investors was made available to Ld. AO. Nothing on record suggest that any cash was exchanged / transacted between the assessee and the investor entities. The perusal of bank statements of all the four entities, as placed on record, reveal that there is no immediate cash deposit in the respective bank accounts which has later been transmitted to the assessee in the shape of Share Application Money. The investments were duly reflected in the financial statements of the investor companies. The factum of investment was confirmed by all the four entities. The three parties responded to notice u/s 133(6) and confirmed the transactions whereas new address was provided with respect to the fourth entity. However, no further inquiry has been made by AO so as to confirm the transactions. The Ld. DR has relied upon the judgement of Hon ble Apex Court rendered in PCIT Vs. NRA Iron Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] which we have carefully studied. However, the factual matrix, before us, in the present case is quite different. In the present case, we find that the assessee has duly discharged the initial onus of proving the identity of the investors, creditworthiness of the transactions and genuineness of the transactions. Notices issued u/s 133(6) have been responded to. In such a scenario, the onus to dislodge the assessee s claim, in our opinion, was shifted back to Ld. AO and he was duty bound to investigate the case further. However, the facts on record nowhere establishes that such further inquiries / investigations have subsequently been conducted by AO in the present case. Additions could not be made merely on the basis of doubts, conjectures or surmises See KALE KHAN MOHAMMAD HANIF [ 1963 (2) TMI 33 - SUPREME COURT], ROSHAN DI HATTI. [ 1977 (3) TMI 3 - SUPREME COURT] AND ORISSA CORPORATION PVT. LIMITED [ 1986 (3) TMI 3 - SUPREME COURT] - Decided against revenue.
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2019 (6) TMI 146
Disallowance of interest u/s 36(1)(iii) - difference in rate of interest between the borrowals made by the assessee from bank and interest charged on loans advanced to subsidiary - HELD THAT:- It is not disputed that Patel Engineering Ltd. and Patel Realty Ltd. are wholly owned subsidiaries of the assessee. Therefore, the assessee has a stake in the performance and profit making of these companies. That being the case, it cannot be denied that the advancement of loan to the aforesaid subsidiaries is in connection with assessee s business. Moreover, it is not a case where the assessee has advanced loans to subsidiaries without charging any interest. In fact, the assessee has charged interest @ 12% on the loans advanced to the subsidiaries. Therefore, the difference in the interest rate between the borrowed funds and loans advanced is only 3.25%. In any case of the matter, since the assessee had advanced the loan in connection with its business, no disallowance u/s 36(1)(iii) could be made as per the ratio laid down in the decisions cited by the learned Authorised Representative. - Ground raised is allowed. Disallowance u/s 14A r/w rule 8D - HELD THAT:- There is no dispute that in the previous year relevant to the assessment year under dispute, the assessee had earned exempt income by way of dividend amounting to ₹ 3,663 only. Whereas, the AO computed disallowance under rule 8D(2) r/w section 14A. As per the settled legal principle, disallowance of expenditure attributable to earning of exempt income in terms of section 14A cannot exceed the exempt income earned during the year. In this context, we refer to the decision cited by the AR. That being the case, the order passed by the learned Commissioner (Appeals) on the issue deserves to be upheld. Grounds are dismissed.
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2019 (6) TMI 145
Income recognition - year of taxability - Addition of advisor s fees received from India Value Investment Ltd. (INVIL) - there was uncertainty with regard to receipt of investment advisory fee due to dispute between the parties, as per AS 9, assessee recognized the revenue when the dispute was settled and the assessee received the amount - CIT(A) deleted the addition - HELD THAT:- It is an undisputed fact that the assessee has received rupee equivalent of GBP 12,14,022 in the financial year relevant to the assessment year 2010 11 and has also offered it for taxation in the said assessment year. It is also a fact on record that the said income has been assessed at the hands of the assessee in the assessment year 2010 11 vide assessment order passed u/s 143(3) on 10th January 2013. Since, the income actually accruing to the assessee has been assessed in the assessment year in which it was received, it cannot be taxed again in the impugned assessment year as it will amount to double assessment of the same income. Therefore, in these circumstances, since the income has been assessed in assessment year 2010 11, there is no need to tax it in the impugned assessment year as per the decision of the Hon'ble Supreme Court in Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] Therefore, we do not find any need to interfere with the decision of learned CIT(A) on the issue. Violation of rule 46A - HELD THAT:- This issue was raised for the first time by learned CIT(A) during the appeal proceeding before him. While restoring the issue back to the file of the learned CIT(A), the Tribunal had given specific direction to verify the actual amount of investment advisory fee received by the assessee from INVIL on settlement of dispute and further, to examine the assessment year in which the said income is taxable. From the impugned order of learned CIT(A) it is evident, she has fully complied with the directions of the Tribunal by factually verifying the amount received by the assessee from INVIL on settlement of dispute and further, on the basis of material on record she has also formed an opinion with regard to the assessment year in which the income is taxable. That being the case, there was no need to refer the issue to the Assessing Officer for verification. Therefore, in our considered opinion, there is no violation of rule 46A in the instant case. Penalty u/s 271(1)(c) - addition of investment advisory fees in the impugned assessment year - HELD THAT:- We have concurred with the view expressed by the learned CIT(A) that investment advisory fee received from INVIL is not taxable in the impugned assessment year. Therefore, the penalty imposed u/s 271(1)(c) was rightly deleted by the learned CIT(A). - Revenue appeal dismissed. Reopening of assessment u/s 147 - to tax the investment advisory receivable from INVIL - HELD THAT:- While deciding the appeal of the Revenue for the assessment year 2009 10 in the earlier part of the order, we have upheld the decision of learned CIT(A) that the investment advisory fees received by the assessee from INVIL on settlement of dispute is assessable in the assessment year 2010 11. Therefore, the income has already been assessed in the assessment year 2010 11. That being the case, learned CIT(A) was justified in holding that in the absence of any escapement of income, there cannot be any re opening of assessment u/s 147 . Grounds are dismissed.
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2019 (6) TMI 144
TP Adjustment - working capital adjustment - Credit period ratio of 85 days of comparables the credit period ratio of the assessee is 1118 days - HELD THAT:- In principle, we agree with the contention of the learned Authorised Representative that adjustment on account of working capital has to be made while computing the margin of the comparables. The Tribunal, Kolkata Bench, in Dong Fang Electric India Pvt. Ltd. [ 2019 (4) TMI 1427 - ITAT KOLKATA] has laid down certain parameters for working capital adjustment. It is the contention of AR, that a working of margins of the comparables after providing for working capital adjustment following the parameters laid down in case of Dong Fang Electric India Pvt. Ltd. (supra) has been placed on record vide paper book Page no. 81. In view of the aforesaid, we direct the Assessing Officer/Transfer Pricing Officer to verify the computation of working capital adjustment made by the assessee and compute the margin of the comparables and determine the arm's length price of the international transaction. Accordingly, this ground is allowed. Inclusion of unutilized MODVAT credit to the value of the closing stock/opening stock u/s 145A - HELD THAT:- Tribunal in assessee s own case [ 2018 (4) TMI 35 - ITAT MUMBAI] while deciding identical issue, in the order referred to above, has upheld the decision of learned Commissioner (Appeals) in directing the Assessing Officer to include the unutilized MODVAT credit to the value of closing stock and allow consequential effect to the opening stock.
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2019 (6) TMI 143
Penalty proceedings u/s 271AAA - undisclosed income - Notice was issued initiating penalty proceedings u/s 274 r.w.s. 271AAA of the Act and the penalty imposed thereon u/s 271AAB - AR submitted that at the time of search seizure operation, no incriminating documents were seized and the transactions were recorded in the books and argued that there was no concealment of income by the assessee - HELD THAT:- As decided in GANPATI INDUSTRIAL PVT. LTD., JEKAY INTERNATIONAL PVT. LTD. VERSUS DCIT, CIRCLE-4 (2) , KOLKATA [ 2019 (2) TMI 1631 - ITAT KOLKATA] there is no dispute regarding the payment of tax together with interest in respect of such undisclosed income and the specified date of filing return of income. So, therefore, it is clear from the record that the assessee admitted undisclosed income and the statement was recorded u/s 132(4) of the Act to that effect. The assessee also explained the manner of such earning i.e. out of commodity profit in AO s order. In our opinion, the assessee is liable to pay penalty as the facts and circumstances of the present case fulfilled the conditions that required to attract penalty @ 10% in terms of clause (a) of sub-section (1) of section 271AAB The Hon ble Supreme Court has upheld the above judgement and is reported as Sandeep Chandak vs Pr.CIT [ 2018 (6) TMI 106 - SC ORDER] pleased to hold that the provisions of Section 271AAB automatically attracts and the proceedings are to be carried out/completed where a search and seizure operation is carried out in which the assessee have surrendered the amount u/s 132(4) statement of undisclosed income, specify the manner in which this income was derived, filed return of income, admit the same and had paid taxes and interest on the same. No infirmity in the order of CIT(A) and it is justified. Thus, ground no-1 raised by the assessee is dismissed.
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2019 (6) TMI 142
Assessment u/s 153A - search and seizure action u/s 132 - addition regarding share capital including share premium u/s 68 - HELD THAT:- Since the addition in the instant case was not based on any incriminating material found during the course of search, but, on the basis of balance sheet filed by the assessee in the return of income, therefore, we hold that the addition made by the Assessing Officer u/s 68 on account of increase in share capital which has been upheld by the CIT(A) is not justified. Accordingly, the order of the CIT(A) is set aside and the Assessing Officer is directed to delete the addition. see MOON BEVERAGES LTD. AND HINDUSTAN AQUA LTD. VERSUS ACIT, CENTRAL CIRCLE- 15, NEW DELHI [ 2018 (6) TMI 471 - ITAT DELHI] - Decided in favour of assessee.
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2019 (6) TMI 141
Penalty u/s 271(1)(c) - no specific charge had been mentioned in the show cause notices issued u/s 274 r/w 271(1)(c) - HELD THAT:- It is evident from the both the notices u/s 274 r.w.s. 271 for the impugned year that the AO has not specifically mentioned as to under which limb of Section 271(l)(c) the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Hon ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton Ginning Factor [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] We are of the considered view that the AO is required to specify which limb of Section 271 (1)(c), the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notices, it is clear that the AO has not specified as to under which limb of the section the penalty was imposable. The notices, in fact, are in the standard pro forma wherein the irrelevant clauses have not been struck off. This indicates non application of mind on the part of the AO while issuing the penalty notices. Thus, in the circumstances and facts of the case, the penalty proceedings initiated by the AO are bad in law - Decided in favour of assessee.
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2019 (6) TMI 140
Deduction u/s 80IB denied - assessee is claiming to be a small scale industrial undertaking eligible for deduction u/s 80IB(3)(ii) - investment threshold limits in Plant and Machinery - 11B of the IDR Act OR MSME Act, 2006 - deduction denied on the grounds that its investments in Plant and Machinery exceeded the threshold limit for being classified as small scale industrial undertaking - HELD THAT:- The assessee has to fulfil criteria as laid down u/s 80IB(14)(g) every year as every assessment year is a separate unit before claiming deduction u/s 80IB(3). The Section 80IB(14)(g) of the 1961 Act in turn refers to IDR Act, 1951 and not MSME Act, 2006. Thus, notifications issued under IDR Act, 1951 will hold the field. We are inclined to restore this issue back to the file of the learned CIT(A) for denovo adjudication of this issue on merits in accordance with our aforesaid decision and reasoning as stipulated in preceding para s of this order . The assessee is directed to produce all relevant material/evidences before learned CIT(A) including relevant notifications issued u/s 11B of the IDR Act, 1951 which is applicable to the previous year relevant to impugned assessment year to support its case in its defence . The learned CIT(A) is also directed to make necessary verifications of facts to determine whether assessee is a small scale industrial undertaking as per applicable notifications for the relevant period based on notifications issued u/s 11B of IDR Act, 1951 including computing exclusions as are provided under relevant notifications issued under IDR Act, 1951. Appeal of the assessee is allowed for statistical purposes.
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2019 (6) TMI 139
Exemption claimed u/s 11 and 12 - taxability of unregistered trust - objects activities of the trust in AY 2013-14 to 2016-17 remains the same as in the FY 2018-19 when the registration granted u/s 12AA - Charitable activity or not ? - gross receipt taxable or income - HELD THAT:- What can be brought to tax is the net income in the hands of the assessee trust and not the gross receipts. In all these years, we find that while denying the exemption u/s 11 and 12 for want of registration u/s 12AA, AO has brought gross receipts to tax which is against the basic tenets of law where only the real income which is determined after deducting expenses from gross receipts can be brought to tax. We therefore agree with the alternate contention so advanced by the AR and without going into merit of the other contention which is left open, the matter is set-aside to the file of the AO to examine the claim of the expenditure so claimed by the assessee trust against the gross receipts for each of the relevant years and where the AO determines the net receipts as not exceeding the maximum amount not chargeable to tax, allow the necessary relief to the assessee trust. - Appeals filed by assessee trust are allowed for statistical purposes.
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2019 (6) TMI 138
Addition of commission paid to director u/s 36(1)(ii) - the payments was more than other directors - CIT-A deleted the addition - HELD THAT:- We noted that the Alpesh Gandhi, is an executive director of the assessee company and is paid annual salary of 36 lacs along with variable component of commission computed at the rate of 15% of the net profit earned by the assessee company, which is paid in lieu of functions performed / services rendered. In this year the commission computed on profit was to the tune of ₹ 42,11,363/-. We noted that the variable component of commission was a part of remuneration package of the executive director as part of all shareholders. This variable commission is based on his performance evaluation and also considering his contribution in meeting the financial performance of the company. Alpesh Gandhi is a highly qualified person and detail of his qualification, functions performed and services rendered were filed before AO as well as before CIT(A). The sales of assessee company have increased by ₹ 2,15,92,232/- as compared to total sales of FY 2010-11 i.e. by 25.58%. The assessee company filed details that there is an increase in customer basis by 76 customers, where sales are more than of ₹ 50,000/- - out of increase in total sales of ₹ 2,15,02,232/- as narrated above the sales of ₹ 1,07,25,036/- i.e. almost 50% is from this new customers. It was contended that even the export sales have grown by 45.52%.There is substantial increase in profit before tax as compared to earlier and i.e. by 48.23%. In view of this facts, were are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. This issue of Revenue s appeal is dismissed. Disallowances of interest u/s 36(1)(iii) - utilization of interest free funds in capital work in progress - HELD THAT:- noted that the assessee s own capital i.e. interest free funds available as on 31.03.2012 is ₹ 5,30,46,131/- as against the investment made in capital work in progress at ₹ 2,32,02,581/-. Even non business investment is ₹ 36,49,657/-. It means that the assessee s own interest free funds are more than the investment made in non-business investments. The CIT(A) has rightly deleted the addition. - Decided in favour of assessee Disallowance u/s 14A r.w Rule 8D - expenses relatable to exempt income - adjustment in book profit u/s 115JB - HELD THAT: -The assessee has earned the dividend income of ₹ 19,500/- and disallowance should be restricted to the extent of exempt income earned by assessee and this issue is squarely covered by the decision of Pr. CIT vs. Ballarpur Industries Limited [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT] , wherein this issue has been considered and finally following the judgment of Hon ble Delhi High Court in the case of Cheminvest Limited vs. CIT 2015 (9) TMI 238 - DELHI HIGH COURT] Wherein held that the provisions of Section 14A would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the AO that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income. The provisions of section 14A r.w Rule 8D will not apply, where income is computed on the basis of book profit u/s 115JB as held by special bench of this Tribunal in the case ACIT vs. Vireet Investments (P.) [ 2017 (6) TMI 1124 - ITAT DELHI] Disallowance of PF and ESIC - beyond the respective due date u/s 36(i) (va) r.w.s. 2(24(x) - CIT(A) deleted the disallowance by noting the actual date of payment - HELD THAT:- We noted that the payments made by assessee on account of PF and ESIC is within the due date of filing of return of income u/s 139(1) , as is evident from the above chart. Hence, we are of the view that the issue is squarely covered by the decision of Hon ble Bombay High Court in the case of CIT vs. Hindustan Organics Chemicals Ltd [ 2014 (7) TMI 477 - BOMBAY HIGH COURT]. As the issue is squarely covered as the payments made within the due date of filing of return of income we confirm the order of CIT(A). This issue of Revenue s appeal is dismissed.
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Customs
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2019 (6) TMI 115
Restoration of appeal - Service of Notice of Motion - order passed by the Prothonotary and Senior Master - HELD THAT:- There is sufficient explanation for delay. Moreover, the objections were removed within the stipulated time. Therefore, a case is made out for restoration of the appeal. A conditional order cannot expect the party to do something which is not within its control. A conditional order can be always passed granting conditional time to remove office objections. However, onus of getting the matter numbered and registered cannot be put to a party. That is the job of the Registry. It will be appropriate if the learned Prothonotary and Senior Master takes a note of these observations. The delay of 2,386 days in filing notice of motion is only a technical delay which deserves to be condoned. Accordingly, notice of motion is made absolute in terms of prayer clauses (a) and (b) - the appeal shall not be dismissed under Rule 986 only on the ground that the appellant has failed to get the appeal numbered and registered.
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2019 (6) TMI 114
Classification of imported goods - Fortinet Secured Indore Wireless access point - appellant claims bonafide impression - Whether the Fortinet Secured Indore Wireless access point, the impugned goods, required a licence from Wireless Planning and Coordination Wing of Ministry of Telecommunication i.e. a WPC licence? - HELD THAT:- Though vide latest clarification of DGFT dated 16 April 2019 there is a mention that no separate licence is required from WPC Wing but the said clarification being a post-event than the holding of the impugned goods, we are of the opinion that the same cannot be given retrospective effect. The appellant though has contended that the item as have been held no more require the WPC licence, as being same as that of the goods, mentioned in letter dated 16 April 2019 the benefit may be extended to the appellant also. Keeping in view the said contention but simultaneously the above observations that at the relevant time, the WPC licence was required for wireless products. Also observing that the orders of the authorities below were solely based on a public notice and that we are not the technical person to appreciate the applicability of the clearances to the specifications of the impugned goods. It is deemed appropriate that the samples from the impugned consignment be sent to the Wireless Planning and Coordination Wing of Ministry of Telecommunication. The department shall be giving random four samples to WPC within 15 days of this order. WPC in 15 days thereafter, that is after receiving the said samples, shall give a technical report about the specifications of the impugned goods with a clear finding of the necessity of the WPC licence for the import of the said item at the relevant time. Appeal allowed by way of remand.
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2019 (6) TMI 113
Refund of duty - amount paid under protest - rejection of the ground of time limitation and unjust enrichment - HELD THAT:- The order of Tribunal dated 01/04/2005 dispatched to the appellant on 05/04/2005, and the refund claim has been filed on 04/10/2005. In our view, communication of order is relevant for computing the period of six months. Accordingly, the refund claim is within time - refund cannot be rejected on the ground of time bar. Unjust enrichment - HELD THAT:- The learned Advocate produced the CA certificates and other evidences to establish that the burden has been discharged - Even though the authorities below considered CA certificate but not accepted it observing that the supporting evidence like balance sheet and profit and loss accounts, etc. had not been produced before them - Learned Advocate fairly submits that all the relevant documents/evidence would be produced, including the balance sheet. In the interest of justice, it is appropriate that the matter be remanded to the adjudicating authority to analyze the certificates that were produced earlier and the certificate dated 18/12/2018 placed. Appeal allowed by way of remand.
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2019 (6) TMI 112
Free Trade Agreement [FTA] - goods imported from South Asian Association for Regional Co-operation [SAARC] countries - benefit of notification No.105/99-Cus. - rejection of benefit of notification on the ground that when the importer is claiming Special Origin Criteria under para 10 of the Schedule, letter D should have been mentioned in box 8 of the Country of Origin Certificate [COO]; whereas, the COO certificate submitted shows Origin Criteria as B 65.83%. HELD THAT:- As per the said notification in question, the imported goods should fulfill the Origin Criteria even in Notification No.73/95 (NT). As per which, the non-contracting party s cost/materials involved in the imported goods should not exceed 60% of the F.O.B. value of the goods - Ld. advocate has contended that the said Tariff notification has been amended by Notification No.68/2000 (NT), dated 10.11.2000, whereby, the percentage limit of 60% has been increased to 70%. Even the Division Bench of the High Court of Kerala, in the case of Director-General of Foreign Trade, New Delhi Vs M/s. Mustafa Traders [ 2016 (9) TMI 669 - KERALA HIGH COURT ] , has reiterated that DGFT had jurisdiction to issue notification under section 5 of the FTDR Act. Percentage content in respect of non-origin material - HELD THAT:- As per II (b)(3) of the Schedule to the Customs Notification No73/1995 (NT), dated 07.12.1995 when the importer is claiming Special Origin Criteria under para 10 of the said Schedule in the box 8 of the Country of Origin Certificate letter D should be entered. Whereas, the Country of Origin Certificate submitted by the importer shows Origin Criteria as B 65.83% - Therefore, the subject goods are not fulfilling the Origin Criteria as prescribed in the said notification and hence not eligible for the benefit of Customs Notification No.105/1999-Cus. Appeal dismissed.
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2019 (6) TMI 111
Benefit of CVD under Sl. No.263A (amended) - Import of Mobile Phones - HELD THAT:- The ratio of the Apex Court judgment in M/s. Thermax Pvt. Ltd.[ 1992 (8) TMI 156 - SUPREME COURT ], and M/s. SRF Ltd., [ 2015 (4) TMI 561 - SUPREME COURT ] will be applicable on all fours to the facts of the present appeal, where it was held that benefit of CVD is to be allowed. The order of the Commissioner (Appeals) is only by way of directing the assessment authority to recall and reassess the bills after applying the ratio of the decision of the Hon ble Apex Court in M/s. SRF Ltd., [ 2015 (4) TMI 561 - SUPREME COURT ]. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2019 (6) TMI 137
Oppression and mismanagement - waiver of requirement specified in Section 244 of the Companies Act, 2013 - Scope of 'Member' - shareholding of Respondent No. 1 being zero percent - HELD THAT:- Admittedly, Respondent No. 1 was a shareholder of the Company since its incorporation. It is not the Appellant s case that Respondent No.1 was holding shares below the threshold limit. Appellants have not also been able to demonstrate that the number of members of the Company exceeded 10. Admittedly, the parties belong to one family. Respondent No.1 and Appellant No.1 are brothers while Appellant No. 3 and 4 are their parents. It is not disputed by the Appellants that both brothers i.e. Respondent No.1 and Appellant No.1 held 25% shareholding each in the Company while their father Appellant No. 3 held 50% shareholding. Whether the shareholding of parents stated to have been increased between year 2009 to 2011, the substantial hike resulting in reduction of shareholding of Respondent No. 1 to 0.33% was an act of manipulation on the part of Appellant No.1 or had been done with the consent and approval of Respondent No.1 who too was the Director of the Company, is the core issue in the Company Petition, which, alongwith other contentions raised may or may not establish oppression as alleged by Respondent No.1 - In the absence of relevant record, being withheld and explanation for such withholding not being found plausible and convincing, Respondent No.1 cannot be held as having been divested of the status of a member of the Company for limited purpose of waivement of the requirement as specified in Section 244(1)(a) of the Act. When the status of Respondent No.1 being a shareholder with 25% shareholding at the time of incorporation of the Company and also being one of the founding Directors of the Company is admitted, it cannot be contended that he ceased to be a member upon reduction of his share capital and that too when the transfer of shareholding is alleged to be clandestine and product of fabrication and forgery. Appeal dismissed.
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2019 (6) TMI 136
Restoration of name of appellant company in the the Register of Companies - the name was struck off for failure on the part of Appellant to file its annual returns and balance sheets since incorporation - HELD THAT:- A suit has been filed against the Appellant Company by S. G. Nichelos and others which is pending adjudication before Ld. Subordinate Judge of the Nilgiris. Proceedings in the suit have been kept on hold by Hon ble High Court at Madras which is hearing an appeal against dismissal of interim injunction application preferred by the opposite party. It is nobody s case that the Appellant Company is a Shell Company. It is also not denied that the Company is locked in a litigation not commenced by it and further proceedings in the suit have been stayed by the Hon ble High Court of Madras. There is nothing in the Report of ROC to even suggest that the Appellant Company was not in existence. The documents relied upon by the Appellant, some of which were not before the Tribunal, unmistakably demonstrate that the Appellant Company is a living entity and its operations have come to a grinding halt, one of the reasons being the pending litigation and the order of stay passed by the Hon ble High Court of Madras - Pending litigation in itself has been judicially recognized as a just ground for restoration of a Company struck off the Register of Companies. Appellant has been able to demonstrate that the Appellant Company has been carrying on business of sale and purchase of property though the instances given are few and far between and such transactions cannot be said to be substantial and of respectable magnitude. However, that does not detract from the fact that the Appellant was carrying on business which was seriously affected because of pending legal process. In the given circumstances, it would be just to restore the struck off Appellant Company at the instance of Company itself or its Shareholder or Director. The Tribunal appears to have been oblivious of the proposition that it had power to order restoration of the Appellant Company in the Register of Companies on a just ground notwithstanding the fact that it failed to transact business for the assigned reasons. The matter was to be approached from a broader perspective keeping in view the interests of various stakeholders and larger social interest which can be better subserved by restoring a Company struck off for mere statutory non-compliances, which is not a Shell Company as is the admitted position in the instant case. Appellant Company is restored to its original status - appeal allowed.
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2019 (6) TMI 135
Compounding of offences - alleged violation of Section 217(1) of the Companies Act, 1956 - HELD THAT:- By perusal of the material available on record, the alleged contravention seems to be technical in nature and due to some procedural lapses on the part of its directors for not enclosing board's report along with the company's balance sheet as on 31.03.2011. However, the applicants have now attached the Board's Report for the Financial Year 2010-2011 along with this compounding application. Thus, they have made good of alleged lapses. The applicants have further explained that non-attaching of Board's Report of the Company with the Balance Sheet was erroneous, but without having any wrongful intention to its Directors. Thus, it may be seen that the applicants have admitted their default, but has sought compounding of offence. The present application deserves to be allowed as the alleged offence is made compoundable and can be compounded well by this Court, because it is made punishable with imprisonment up to six months or with fine alone or with both. The present Company Petition is conditionally allowed and stands disposed of.
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Insolvency & Bankruptcy
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2019 (6) TMI 134
Setting aside the transaction entered into by the Corporate Debtor - Preferential or undervalued - transfer carried out with a view to defraud the creditors - HELD THAT:- The Respondents are not a related party nor the transactions were made with any person during one year preceding the insolvency commencement date and in fact were made about 8-9 years back, the application under Section 45 r/w Section 46 preferred by Resolution Professional was uncalled for. It is not the case of the Resolution Professional that it is an extortionate credit transaction involving the receipt of financial or operational debt during the period within two years preceding the insolvency commencement date. Therefore, the Resolution Professional cannot allege violation of Section 50. In the present case, no case is made out by the Resolution Professional that any business of the Corporate Debtor has been carried out with the intent to defraud the creditors of the Corporate Debtor or for any fraudulent purpose. A so called alleged violation of Section 43 or Section 45 or Section 46 cannot be termed to be made for fraudulent purpose - the Adjudicating Authority has found that transactions were made in the year 2009-10 and the purchasers also taken possession and perusal of the documents reflects that agreements for sale are duly registered documents with adequate stamp duty paid. Appeals dismissed.
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2019 (6) TMI 133
Maintainability of suit - Proceedings against the Operational Creditor - Rejection of application on the ground of pre-existing dispute - section 9 of the Insolvency Bankruptcy Code 2016 - HELD THAT:- Hon ble Supreme Court in Innoventive Industries Ltd. Vs. ICICI Bank [2017 (9) TMI 58 - SUPREME COURT] observed that the moment the Adjudicating Authority finds that there is a pre-existing dispute, the Operational Creditor gets out of clutches of the Court. Admittedly the suit in question relates to same agreement pursuant to which the claim has been made by the Operational Creditor . The suit has been filed by the Respondent prior to issuance of Demand Notice u/s 8(1). Whether the suit is maintainable or not, such question cannot be determined by National Company Law Tribunal (NCLT) or by this Appellate Tribunal - the argument that the suit is not maintainable cannot be raised nor to be decided. The application u/s 9 is not maintainable - appeal dismissed.
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2019 (6) TMI 132
Initiation of Corporate Insolvency Resolution Process - Operational debt within the meaning of Section 5, sub-section (21) of the Code - existence of Debt or not - Service of notice on Corporate debtor - HELD THAT:- The respondent is having knowledge of pendency of the case as the respondent has made part payment during pendency of the application as also refused to accept the notice sent by the applicant. That, despite repeated efforts by the applicant the respondent has neither come forward for settlement nor appeared before the Bench. That, the records available shows that the amount due to the Applicant from the Respondent is in respect of supply of goods. Therefore, the amount claimed by the Applicant from the Respondent is operational debt within the meaning of Section 5, sub-section (21) of the Code. The operational debt is due to the Applicant. Therefore, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default. Petition admitted - moratorium declared.
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2019 (6) TMI 131
Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - default in repayment of the debt amount i.e. ₹40, 49, 72, 485/- - section 7 of Insolvency Bankruptcy Code, 2016 - HELD THAT:- The respondent s contentions raised in the Affidavit in reply are unsustainable. The existence of debt is clear from the Letter of the Corporate Debtor, its affidavit in reply filed in Hon ble Bombay High Court, loan agreements, various documents relating mortgage deed, hypothecation deed, certificate of creation of charge and personal guarantee agreements - The Petitioner has proved the existence of debt as well as the default. The Application under sub-section (2) of Section 7 of IBC, 2016is complete. The existing debt of more than oneRs lac against the corporate debtor and its default is also proved - the petition filed U/S 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency process against the corporate debtor deserves to be admitted. Petition admitted - Moratorium declared.
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2019 (6) TMI 130
Initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - Default in repayment of amount by Corporate Debtor - Section 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Financial Creditor is able to establish through voluminous documentary evidence that Corporate Debtor availed loans and Corporate Debtor further committed default. The Petitioner/Financial Creditor has proved the existence of financial debt and also default. DRT also vide order dated 10.05.2018 held that Corporate Debtor is liable to pay the outstanding dues. The amount claimed by the Financial Creditor in the petition is ₹ 26,60,58,116 (after the claim was amended). The Financial Creditor/Petitioner suggested the name of IRP who has given consent. The Petition is complete. There are no disciplinary proceedings pending against the proposed Interim Resolution Professional. Therefore, Petition is to be admitted. Petition admitted - Moratorium declared.
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PMLA
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2019 (6) TMI 129
Offence under PMLA - Non compliance of mandatory Sections and Rules - seizure of documents - validity of recording the reasons to believe, issuance of notice under Section 8(1) of the Act and seizure memos - HELD THAT:- It is evident that the appeal under section 26 may be maintainable. This Tribunal is of the view that the same may only be maintainable in exceptional circumstances where there is a great hardship and is case of abuse of law, injustice, irreparable loss and great prejudice if (party concerned) would suffer on the face of the record and material available and if the appeal is not entertained, it does not mean that the appeal against any issuance of notice under section 8(1) in every case is maintainable where exception is not created. Thus, this Tribunal is of the view that it depends upon case to case basis and nature of the hardships at this stage. In the present cases, the respondent has merely seized two files containing papers. The appellants at the appropriate time is entitled to receive the copies thereof under sub section 2 of Section 21 of the Act. This Tribunal is of the view that no exception in the present appeals has been created by the appellants. In the present appeals, having considered the nature of the seizure at present this tribunal is of the view that there is hardly any hardship if the objections raised by the appellants be decided by the Adjudicating Authority within time-bound manner. The Appellants inter-alia have challenged the validity of recording the reasons to believe, issuances of notice under Section 8(1) of the Act and seizure memos. As far as objections raised by the appellants are concerned, no doubt, prima facie, there is some substance in the arguments of the counsel for the appellants. However, in my view, the same can be raised before the Adjudicating Authority who will have to consider and decide the same. It is clarified that objection and contention if raised by the appellants before the adjudicating authority and same are not decided as per law, the appellants have always remedy to challenge the same in appeal after the retention order under section 17(4) is passed. With regards to other submission of the appellants that the discrepancies are so glaring, the same hearing officer may not be able to go against his own finding as the reason to believe orders passed by him on the face of record are defective and the notice under section 8(1) has been issued on the basis of the said defective reason to believe which would show that while issuing the notice, even the authorised officer has not cared to see the materials which were seized, otherwise such a mistake would not have happened. This tribunal directs that after filing the reply, the hearing shall be conducted by other Hon ble Member(Law), who shall consider all the contentions of the appellants and decide the same on merit. The present appeals and all pending applications are disposed of. The Adjudicating Authority is at liberty to fix the matters for further proceedings.
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2019 (6) TMI 128
Freezing bank account of appellants - scheduled offence bearing Sections 120B r/w 420 of IPC and Sections 13(2) r/w 13(1)(d) of Prevention of Corruption Act against the appellants and other persons - HELD THAT:- Having gone through the earlier two appeals, the present appeals are disposed of with the direction that all four accounts are de-freezed. We also direct the appellants that they shall not deal with the balance amount lying with the said accounts. Only to this aspect, the impugned order is modified with regard to appellants. All four appeals are disposed of along with pending applications.
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Service Tax
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2019 (6) TMI 127
Classification of services - Consulting Engineer or not - period prior to 16 July 2001, namely, from 1 April 2000 to 15 July, 2001 - HELD THAT:- The definition of CE services as it stood prior to 16 July, 2001 was not amended when a new service namely, STC was inserted on 16 July, 2001. It cannot, therefore, be alleged that STC service had been carved out from CE Services. In fact, the definition of CE services continued to remain the same, till it was amended in 2006. Thus, the Show Cause Notice proceeded on an incorrect premise that even prior to 16 July, 2001, the nature of service provided in STC services was the same as CE Service. The definition of CE as it stood at the relevant time means any professionally qualified engineer or an engineering firm who either directly or indirectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. The Appellant is neither professionally qualified engineer or an engineering firm . It cannot, therefore, be said that the Appellant had been providing CE services. In fact, the nature of service provided by the Appellant would clearly fall under the category of STC services and the Appellant had paid service tax when this service was introduced on 16 July 2001. Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 126
Recovery of interest - Extended period of limitation - whether for recovery of interest under Section 75 of the Finance Act, 1994, show cause notice could be issued invoking extended period of limitation? - HELD THAT:- The show cause notice is bad, both for invocation of extended period of limitation and also for non-invocation or non-mentioning of proper Section 73(1) with proviso - show cause notice is held to be non-maintainable - Appeal allowed - decided in favor of appellant.
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2019 (6) TMI 125
Demand of Service Tax - Miscellaneous reimbursements - HELD THAT:- The Tribunal had remanded the matter to the Adjudicating Authority to pass a fresh order. The Adjudicating Authority was, therefore, required to re-determine the quantum of tax for two services, namely man power and security services. There was no occasion for Adjudicating Authority to determine the quantum of tax for miscellaneous reimbursement as that was not even an issue before the Tribunal. The appellant is therefore, justified in ascertaining that the order passed by the Adjudicating Authority to the extent it quantifies the amount of service tax for miscellaneous reimbursement needs to be set aside. The order dated 20 February 2013 to the extent it quantifies the amount of service tax towards miscellaneous reimbursement is set aside - Appeal allowed.
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2019 (6) TMI 124
Demand of Service tax - Renting of immovable property services - HELD THAT:- Admittedly proprietary concern and Proprietor are one and the same person in the eyes of law. If Shri Varun Ratra has already deposited service tax liability, no further liability can be fastened against the Proprietary unit. However, the fact whether the rented premises were the same and one in respect of which Shri Varun Ratra has already discharged service tax liability is required to be verified - matter remanded to the Commissioner for denovo adjudication. Beauty Parlour Services - appellant has contended that the services provided by them are not regular Beauty Parlour Services inasmuch as the same are provided under the guidance of Doctors and Dermatologist - HELD THAT:- The type of activities undertaken by the appellant is the essential character to classify their services either under Beauty Parlour Services or Cosmetic or Plastic Surgery Services. The invoices raised by them indicating the type of services are required to be examined and verified. Similarly, the appellants stand that they are working under the medical doctors and the Dermatologists is also required to be examined - matter on remand. Appeal allowed by way of remand..
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2019 (6) TMI 123
CENVAT Credit - input services - rent-a-cab service - club and association service - insurance service - period between 2008-09 and 2011-12 - HELD THAT:- On club and association service , there are no new grounds other than that taken up during the adjudication proceedings. The adjudicating authority has concluded, and rightly so, that the utilization of that service could hardly be said to have been related to the business of rendering service. Insurance service - HELD THAT:- The appellant appears to have submitted the segregation of the premium attributable to the employees and to their families - the conclusion arrived at in the impugned order may require a fresh ascertainment - Matter requires remand. Rent-a-cab service - HELD THAT:- The contention that the payments made for rent-a-cab service pertain to the period prior to the amendment in the definition of inputs under CENVAT Credit Rules, 2004 has not been considered by the original authority. This is particularly relevant as the appellant had made a submission that the CENVAT credit had not been availed on the said service at any time after the amendment - matter requires remand. Appeal allowed in part and part matter on remand.
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2019 (6) TMI 110
Challenge to show cause notice (SCN) - Intellectual Property Right service - producers/purchasers of cinematograph films who have assigned some part of their copyright in the cinematograph films to television channels - Maintainability of appeal - alternative remedy - HELD THAT:- It is all too well settled that where a legal infirmity is pointed out and established, there is no fetter on this Court to consider the validity or otherwise of such order of assessment of even a show cause notice. The golden rule of guidance is that, as a rule, the court will exercise extreme restraint in interfering in such matters, except where the petitioner satisfies the Court that one or more of the following exceptions exist in the case in question, bearing in mind that the flaw alleged should go to the root of the matter and should be purely legal in nature. Instances of such illegality may be culled from several judgements of the Supreme Court to be (a) a challenge to the constitutionality or vires of a statutory provision (b) a bar of limitation (c) assumption of jurisdiction by the officer where none exists (iii) patent and apparent illegality in the framing of the order, in contravention of the statutory provisions in play. The applicable provisions in question straddle two statutes the Finance Act 1994 levying Service tax and The Copyright Act 1957. The interpretation and interplay adopted by the Revenue is wholly contrary to the basic scheme of the statutes, particularly the CR Act, and if such interpretation is left untouched, the purport and scheme of both statutes would stand distorted. It is on the aforesaid premise that the writ petitions have been filed. Whether the petitioners are correct in their averments and allegations against the Revenue is a different matter. However, one thing is clear. The lis before the Division Bench is entirely different from the lis projected before me. Taxability of IPR and copyright service - HELD THAT:- In the present case, there is no dispute with the position that the petitioners are producers or purchasers, and thus, owners of the copyright in cinematograph films - The cinematograph film holds a copyright in its own right, as a whole. However, the film, as an asset, comprises of various smaller but equally important components, such as the script, screenplay, background score, song lyrics, melody, instrumentation, orchestration, the use of light and camera work, to name a few. While the sum total of these inputs results in a film, the copyright of which will be held by the producer, each component thereof carries an independent and distinct copyright. This has given rise to the expression, bundle of rights , as per which the film holds a copyright by itself and also comprises of small, but equally distinct rights within itself. It is the lack of appreciation of the aforesaid point that, in my view, is the fundamental and fatal flaw in the impugned show cause notice and orders of assessment. It is thus, too well settled, that an asset, such as a cinematograph film, comprises of a bundle of rights. Setting this principle against the context and purpose of Section 65(105)(zzzzt), the right mentioned therein, relates to the right in the film as well as each of such rights comprised in the film. The interpretation accorded by the Department tends to ignore the fact that the taxable service under Service Tax Law is of any copyright denoting all rights, that which vests in film as a whole, or any of the smaller but equally important rights comprised in the making of the film itself. The impugned notice and orders-in-original, to the extent to which they do not indicate appreciation as well as application of the aforesaid, are erroneous in law and are liable to be quashed. In the present case admittedly all agreements use the term perpetual transfer and some transfer the asset specifically for a period of 99 years, both in excess of the period of 60 years set out under the provisions of the CR Act. The assignment is, simplicitor, permanent/perpetual and seen not temporary. In this backdrop, the conclusion of the respondents to the effect that a perpetual transfer or a transfer for 99 years, though in excess of the period stipulated in the Act, is temporary, appears, to me, fundamentally unsound and defies logic. Petition allowed.
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2019 (6) TMI 109
Demand of Service tax - Management Consultancy Services - Franchisee Services - Commercial Training and Coaching Services - CENVAT Credit - denial of credit on the ground of non-production of documents - Rule 9 of CENVAT Credit Rules, 2004. Franchisee Service - grant of representational right - Services in relation to digital signature certificates (DSC) - Sub Certifying authorities - HELD THAT:- As regards Franchisee Service, the findings recorded by the Commissioner clearly show that he has not been able to appreciate as to what is meant by grant of representational right . Grant of representational right would imply that the person to whom such rights have been granted under takes the entire activity as if it had been undertaken by the person granting such right. In this case the so called Sub Certifying authorities and Sub CA Administrators (Sub CAA), Registering Authorities and RA-Administration appointed by appellants have any authority to issue DSC certificates, representing them to be issued by appellant. Such transfer of right granted to appellant, by the certifying authority in terms of IT Act, 2000, is also not permissible - It is only the Appellants who could have issued the Digital Signature Certificate and this could not have been done by any other person or agency appointed by appellant. Hence mere act of collecting the applications and verification of the same for onward submission to the appellant cannot be termed as grant of representational rights . - Demand set aside. Management Consultancy Service - HELD THAT:- From the scope of work as indicated above, Honeywell has contracted appellants to provide technical support and consultancy for developing a system of smart card for access control. Access Control is part of management system of any organization and is also covered by the term logistic management . Since these services have been provided for logistic management or access control system of the organization the services provided will qualify under the category of Management Consultancy Services - the present case will fall within the category of Management Consultancy Services. Commercial Coaching and Training Services - HELD THAT:- The issue is not whether the training activity is primary activity of the appellant or not is immaterial in terms of the definition. If the training of any type is provided which is not falling within the exclusion category specified by the definition then definitely it is to be classified as taxable under that category - in view of the specific finding that training in the software developed has been provided by the appellant for a commercial consideration the same is covered by the definition of Commercial Training and Coaching Services and is taxable accordingly - Demand upheld. Management Maintenance Repair Service - HELD THAT:- Revenue has sought to brush aside the letter stating that the same was in respect of Chennai Unit and not in respect of Hyderabad Unit, against whom this demand is made. The fig leaf distinction sought to be made do not help the cause of revenue. When a clarification whether write or wrong has been issued by the Board it should apply to all similarly placed units till it is withdrawn. However this letter is enough to give rise to bonafide doubt in the mind of a rationale person/ taxpayer. Issuance of this letter by the Board clearly shows one thing that appellants whether at Chennai or Hyderabad has brought the fact of their undertaking such activities to knowledge of Board - In case the revenue intended to change the opinion or demand the tax in respect of the same they should have done under normal period of limitation. The doubt and confusion in respect of taxation of these services under the category of Management Maintenance and Repair services is enough to uphold the order of Commissioner dropping the demand on ground of limitation. Manpower Recruitment or Supply Services - HELD THAT:- It is not disputed by the appellants that they have in course of their business billed their clients on the basis of time spent by their employees - the Service tax demanded under the category of Manpower Recruitment or Supply Services is maintainable on merits. However the matter needs to be reconsidered by the original authority for determining the issues of limitation and penalty. CENVAT Credit - duty paying documents - denial on the ground of non production of documents - HELD THAT:- Appellants claim that they are in possession of the documents and can produce the same before the adjudicating authority. The end of justice will be met if the matter is remanded back to the adjudicating authority for affording the opportunity to appellants to produce the documents as prescribed by Rule 9 of CENVAT Credit Rules, 2004 for purpose of availment of credit. Commissioner should consider the documents produced by the appellants before him and then decide with regards the admissibility of CENVAT Credit against those documents - matter on remand. Appeal allowed by way of remand.
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Central Excise
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2019 (6) TMI 122
Principles of Natural Justice - Whether in the facts and circumstances of the case and in law was the Tribunal justified in allowing the appeal of the respondent in absence of any reasons to support its conclusion? - HELD THAT:- There is no discussion whatsoever about the respective contentions raised by the parties. It concludes the order of adjudication is bad without having tested the same on the basis of the submissions of the parties. Thus, the impugned order of the Tribunal is in breach of principles of natural justice. The substantial question of law is answered in the affirmative that is in favour of the appellant-revenue and against the respondent-assessee.
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2019 (6) TMI 121
Rectification of Mistake - CENVAT Credit - N/N. 14/97-CE (NT) dated 03.05.1997 - HELD THAT:- The issue involved relates to Notification No. 14/1997-CE (NT), restricting the admissibility of Cenvat credit in certain circumstances. Notification No. 14/97-CE (NT) dated 03.05.1997 was held to be illegal by the High Court of Gujarat, Hon'ble High Court in the case of GUJARAT NARMADA VALLEY FERTILIZER CO. LTD. VERSUS UNION OF INDIA [ 2012 (12) TMI 1117 - GUJARAT HIGH COURT] . In the instant case, there is no dispute that duty has been paid at the rate 15% ad-valorem. It is seen that in the absence of the benefit of ratio of the decision of the Hon'ble High Court in the case of GUJARAT NARMADA VALLEY FERTILIZER CO. LTD. VERSUS UNION OF INDIA [ 2012 (12) TMI 1117 - GUJARAT HIGH COURT] came to a contrary conclusion. ROM Application allowed.
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2019 (6) TMI 120
Valuation - copper scrap - under-valuation - upward revision of price can be done or not - whether the value of copper scrap declared by the raw material supplier for job work would be revised at the end of the job-worker? - HELD THAT:- Undisputedly, the respondent has availed the CENVAT Credit of duty paid on the scrap by the principal manufacturer and there is no objection raised by the jurisdictional Commissionerate on the value declared by the principal manufacturers. The issue is no more res integra and covered by the principles laid down by the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE CUSTOMS VERSUS MDS SWITCHGEAR LTD. [ 2008 (8) TMI 37 - SUPREME COURT] laying down the principle that value of the raw material declared by the principal manufacturer cannot be questioned in the hands of the receiver unless there is allegation of connivance or collusion between the raw material supplier and receiver of the same is established. In the present case, no such allegation is forthcoming. Also, no proceeding has been initiated against the principal manufacturer who supplied the copper scrap for job-work to the respondent alleging undervaluation of the scrap. Upward revision of price cannot be done - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2019 (6) TMI 119
Conditional stay of the disputed amount of tax during pendency of first appeal before the first appellate authority - claim of the applicant is that the applicant is not at all liable to pay any amount in view of overriding provisions of Insolvency Bankruptcy Code, 2016 - HELD THAT:- An appeal has been filed before the Commercial Tax Tribunal, Bench Ghaziabad under Section 57(4) of the Act. The Tribunal vide impugned order dated 14.05.2019 has allowed the appeal in part by directing the applicant to deposit 20% of the disputed amount within a period of 30 days. Since pure legal issue is involved which is to be considered by the first appellate authority in the pending appeal and admittedly a prima facie case on merit is established by the applicant and further both the appellate authority have not applied their mind to consider the issue raised by the applicant, the orders dated 25.04.2014 and 14.05.2019 are liable to be set aside. Revision allowed.
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Indian Laws
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2019 (6) TMI 118
Default in payment of rent - case of the defendant-tenant was that the address on the notice was incomplete, and that the seal affixed on the acknowledgment receipt was that of Alok Cassettes Centre whereas the address of the defendant-tenant was mentioned as Alok Music Centre in the body of the plaint, hence it was asserted that notice could not have been held to have been legally served - HELD THAT:- Counsel for the revisionist has not been able to point out any material error or illegality in the order passed by the trial court so as to warrant interference in exercise of revisional jurisdiction under Section 25 of the Act, 1887. Revision dismissed.
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2019 (6) TMI 108
Acquittal of Offence - Section 3(1)(x) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 - dispute over the enjoinment of the road in Survey No.95 of Dhemda Village belonging to accused No.1. Complainant-Somabhai Rupabhai (PW-3) filed a civil suit in Regular Suit No.131 of 1997 for the land measuring four acres and twenty-two guntas in the Court of Civil Judge, Modasa against accused Nos.1 and 3 - HELD THAT:- Case of prosecution is that as per disclosure statement of accused Nos.1 and 2, a rifle was recovered from the house of accused No.1 which has a single barrel. Similarly, as pointed out earlier in post-mortem certificate (Ex.P-52), a double barrel gun was also recovered from the house of accused No.2. It is merely stated that there were puncture wounds. The post mortem certificate does not state as to whether those gun wounds were caused by rifle or by gun. In the absence of any definite indication as to whether those fatal wounds were caused either by rifle or by double barrel gun, the courts ought not to have held appellantaccused No.1 responsible for the fatal fire arm wounds on the body of deceased Somiben. There was darkness at the time and the place of occurrence making it difficult for the witnesses to identify the assailants. The evidence of eye-witnesses are contradictory to each other as to the firing of the fatal blow. The guilt of the accused has not been proved beyond reasonable doubt and the benefit has to be given to the accused. The conviction of appellant-accused No.1 under Section 302 IPC read with Section 34 IPC and Section 307 IPC read with Section 34 IPC and under Section 25(c) of the Arms Act is set aside and this appeal is allowed - appellant/accused No.1- Ashoksinh Jayendrasinh is ordered to be released forthwith unless his presence is required in any other case.
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