Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 8, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
-
Rate of GST on Supply of ice cream - whether taxable @5% without ITC - Not eligible in respect of Party orders: sale of bulk ice creams to caterers as takeaway. - Benefit available in respect of Party orders: Serving of ice creams with incidents like fruits or topping as per the guest requirements or taste.
-
Levy of GST - ex-factory inter-State supplies - The place (in the other state) where the goods are destined turns out to be the ‘place of supply’ in terms of Sec. 10(1)(a) - Consequently, the ‘location of supplier’ and the ‘place of supply’ fall under different states and the supply qualifies as inter-State supply
-
Imposition of GST and penalty - transfer of goods - transfer of consignment only for “demo approval” - section 7 of IGST Act - Since the impugned order is a non-speaking one, matter restored back.
Income Tax
-
Income accrued in India - sale of shares in Flipkart - DTAA between India and Mauritius - the entire arrangement made by the applicants was with an intention to claim benefit under India - Mauritius DTAA, which was not intended by the lawmakers, and such an arrangement was nothing but an arrangement for avoidance of tax in India.
-
Deduction u/s 80-O - royalties, etc. - Merely for having a contract with a foreign enterprise and mere earning foreign exchange does not ipso facto lead to the application of Section 80-O of the Act. - Circular No.700 is neither of any application to this case nor of any assistance to the appellant
-
ITAT deleted additions in Block assessment - Surprisingly for the Grounds raised before the learned Tribunal that the undisclosed income did not belong to the Assessees in their Individual capacity but it could be attributed to the HUF, one of the Assessees, the learned Tribunal, in our opinion, fell in the error in upholding such a contention made on behalf of the Assessees merely because HUF of Assessee might have existed.
-
Condonation of delay - delay in filing revision petition u/s 264 - CIT(A) has given proper reasons for refusing to condone the delay. In fact, the assessee has taken different stands in pursuing the matter and hence the Ld CIT(A) has observed that the assessee has given misleading statements. We also notice that there is huge time gap in between different steps taken by the assessee and the delay during those periods has not been explained properly.
-
Disallowance u/s 40(a)(ia) - non-deduction of tax at source (TDS) from the payment made towards Harvesting charges - assessee is acting on behalf of the farmers for Sugarcane procurement - assessee is not liable to deduct tax at source from the harvesting charges paid by it on behalf of the farmers in both the years.
-
Recognition u/s 80G - already granted registration u/s 12AA - trust is generating surplus year after year and majority of receipts are by way of tuition fee and others. - reasons cited by Ld.CIT(E) are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee’s application for recognition under section 80G.
Customs
-
Classification of imported goods - yeast extract, Egyptian Basil, Soy Sauce Powder etc. - Whether the customs authorities are empowered to differ the classification as sought by the petitioner for the purpose of charging of the higher duty? - the alleged cause of action based only on the apprehension not supported by any documents to make out the case warranting interference under Article 226 of the Constitution of India.
-
Valuation of imported goods - software tools and softwares - the original adjudicating authority need to undertake a detailed examination of the individual software and its related literature, specifications etc. for determining whether they fall under the category of ‘packaged software’ or not.
-
Revocation of Customs Broker License - Limitation prescribed under Regulation 17 of CBLR, 2018 - A perusal of Regulation 17 clearly shows that the period of limitation starts when the Principal Commissioner of Customs or Commissioner of Customs receives the offense report.
-
Advance Authorization Scheme - restrictions upon issuance of the advance authorisation for the Gold Medallions and Coins - Power of DGFT - The categorisation or re-categorization cannot be done by the policy circulars, such exercise has to be undertaken by specific amendment to the Foreign Trade Policy under Section 5 of the Act.
Central Excise
-
Refund of CENVAT Credit - export of goods - The condition 5 of the aforesaid Notification No. 11/2002-CE (NT) does not mean that the appellant should not be able to utilize the credit at all. It is to be read harmoniously to mean that the refund should be allowed for the manufacturer if the assessee is not in a position to utilize the Cenvat credit within a reasonable period.
-
CENVAT Credit - the Cenvat credit of service tax paid on rental charges of warehouse cannot be denied as the same is admissible in respect of service provided by them to their buyers. The transfer of credit from the ISD registration to the manufacturing unit or service provider is immaterial as they are a single entity.
VAT
-
Reduction in tax liability - payment of tax at compounded rate - The assessee with open eyes applied under the scheme and obtained permission. There was no cause for any exclusion since the closed down branch had business in the previous year for which tax was also paid at the compounded rate. - he closure of branch on 31.03.2010 is irrelevant insofar as the tax liability determined in the years 2011-12 and 2012-13 on the basis of the tax conceded or paid in the three consecutive years preceding the year under option.
Case Laws:
-
GST
-
2020 (6) TMI 163
Rate of GST on Supply of ice cream - whether taxable @5% without ITC - Applicability of provisions of Not. No. 46/2017-CT(R), dated 14.11.2017 Ice cream and ice cream allied products, milk shakes served in the parlour with or without adding ingredients like fruits or topping sauces according to the customer taste or requirements - HELD THAT:- The parlour would fall within the term eating joint and the supply of ice cream along with the service activities by the applicant therein squarely falls under the aforesaid definition of restaurant service . Further, as per the statement of the applicant, it can also be deciphered that supplies are not made in the specified premises - the supplies mentioned in the above transaction fall under Sl. No. 7(ii) of Not. No. 11/2017 -CT (R), dated 28.06.2017 (as amended) and attract 5% GST (2.5% CGST + 2.5% SGST) w.e.f. 1.10.2019 and earlier under Sl. No. 7(i) from 15.11.2017 to 30.09.2019 without availment of credit of input tax charged on goods and services used in supplying the service. Ice cream and ice cream allied products sold in the parlour as such i.e. cups, cones, bars, sticks, novelties, litre packs, party pack and bulk packs etc. - HELD THAT:- These supplies since provided in parlours to customers for dining or take away purposes also fall under Sl. No. 7(ii) of Not. No. 11/2017-CT(R) dated 28.06.2017 (as amended), since the activities narrated under this head are covered under restaurant service . Accordingly, we hold that supplies under this category attract 5% GST w.e.f. 1.10.2019 without availability of credit of input tax as they fit in the definition of restaurant service and are not supplied in the specified premises. The same holds good for earlier period (i.e. from 15.11.2017 to 30.09.2019) also as the subject supplies fall under Sl. No. 7(i) of notification. Party orders: sale of bulk ice creams to caterers as takeaway - HELD THAT:- Ice cream in this case, is supplied by the supplier in bulk quantities to caterers, who in turn supply the same to their customers in party events. The said transaction visibly does not indicate involvement of any service and therefore the same has to be reckoned as supply of goods [i.e. ice cream].Consequently, we hold that the provisions of Not. No. 11/2017-CT(R), dated 28.06.2017 (as amended) are not applicable to the supply of ice cream supplied in bulk quantities to caterers on takeaway basis. Party orders: Serving of ice creams with incidents like fruits or topping as per the guest requirements or taste - HELD THAT:- The suppliers, in the case on hand, are not located in specified premises and also do not provide hotel accommodation at specified premises . Hence, supply of ice cream in the falls under Sl. No. 7(iv) of Not. No. 11/2017-CT(R), dated 28.06.2017 (as amended) and attracts 5% GST without availability of credit of input tax charged on goods and services used in supplying the service. We observe that the subject supply falls under Sl. No. 7(v) for the period from 15.11.2017 to 30.09.2019 and attracts 18%. Ice cream products of cups, cones bars, sticks, novelties etc. Sold to pushcart vendors, who in turn sell to their customers - HELD THAT:- Since, there is no element of service in the stated transaction, the provisions of N/N. 11/2017-CT(R), dated 28.06.2017 (as amended) are not applicable.
-
2020 (6) TMI 162
Levy of GST - ex-factory inter-State supplies - What tax should be charged on ex-factory inter-State supplies? - HELD THAT:- In case of ex-factory inter-State sales affected by the applicant, the goods are made available by the supplier to the recipient at the factory gate, but this is not the point where movement terminates since the recipient subsequently assumes the charge for transportation of the goods up to the destination in another state. Thus, termination of the movement of goods evidently takes place at the location (in a different state) to which the goods are consigned/destined and such movement is effected by the recipient or by any other person such as transporter authorized by the recipient. The place (in the other state) where the goods are destined turns out to be the place of supply in terms of Sec. 10(1)(a) ibid. Consequently, the location of supplier and the place of supply fall under different states and the supply qualifies as inter-State supply - the supplier in the stated instance is liable to charge IGST in respect of ex-factory inter-State supplies made by them.
-
2020 (6) TMI 161
Bail application - applicant could not be released for want of sureties as per the conditions mentioned in the bail order - pandemic COVID-19 situation - HELD THAT:- The applicant, namely, Pradeep Kumar is directed to be released on bail in Case Crime No.- 30 of 2020 (State v. Pradeep Kumar) under Section 132(1)1 Central Goods and Services Tax Act, 2017, P.S.- Commissionerate, District- Meerut on his furnishing a personal bond only to the satisfaction of the jail authorities, where the applicant is languishing - It is further provided that this order as well as the bail order available on the official website of the High Court will be taken to be the authentic one.
-
2020 (6) TMI 160
Imposition of GST and penalty - transfer of goods - transfer of consignment only for demo approval - section 7 of IGST Act - Non-speaking order - HELD THAT:- Since there was no taxable event, which had occurred, the question of having to pay the tax would not arise. Despite the fact that the said contention was raised by the petitioner, the respondent No.1 has failed to deal with the said contention. Moreover, the respondent No.1 has not even assigned any reason for ignoring the said contention. Therefore, the impugned order is clearly a non-speaking order, as the material contention has been totally ignored by the respondent No.1. Since the impugned order is a non-speaking one, this Court has no other option, except to set aside the said impugned order, and to remand the case back to the respondent No.1 with a direction to decide the issue - petition allowed by way of remand.
-
Income Tax
-
2020 (6) TMI 159
Income accrued in India - gains arising to the Applicants (a private company incorporated in Mauritius) from the sale of shares held by the Applicants in Flipkart Private Limited (a private company incorporated in Singapore) to Fit Holdings S.A.RL. (a company incorporated in Luxembourg) - DTAA between India and Mauritius - identify the beneficial owner of the shares sold - tax liability cannot be decided in the proceeding under section 197 - HELD THAT:- There was no abuse of process of law or dubious ingenuity on the part of the applicant to circumvent any provision of law, if it had approached the AAR after passing of order under section 197 of the Act. This Authority in the case of SEPCO III [ 2011 (8) TMI 213 - AUTHORITY FOR ADVANCE RULINGS] had held that mere pendency of the proceedings under section 195 or section 197 of the Act or even a final order thereon does not stand in the way of an application of advance rulings being entertained. The finding that the order under section 195 of section 197 of the Act does not stand in the way of Authority for entertaining the application for advance ruling was reaffirmed by this Authority in the case of CTCI [ 2012 (8) TMI 744 - AUTHORITY FOR ADVANCE RULINGS] as well. The provisions of the Act do not provide a bar that an applicant can't approach this Authority after the matter has been examined in the proceeding u/s 195 or u/s 197 of the Act. The bar is only in respect of pending proceeding and as already discussed earlier there was no pending proceeding on the date of filing of present applications. We don't find any merit in the objection of the Revenue to reject the applications under clause(i) of proviso to section 245R(2) of the Act and the objection raised is found to be unsustainable. Whether determination of Fair Market Value (FMV) involved?- The exercise of valuation of shares (if at all necessary) and the computation of capital gains has to be undertaken by the assessing officer only when the issue of taxability of capital gain on sale of shares is decided in the favour of the revenue. We do not find any involvement of determination of Fair Market Value of any property (shares) in the question raised in the application. In the case of Worldwide Wickets [ 2018 (2) TMI 1428 - AUTHORITY FOR ADVANCE RULINGS, MUMBAI] has held that the computation of capital gains is embedded in the concept of valuation of shares and merely for this reason the question of capital gains arising in application cannot be held to be barred by clause (ii) of the proviso to section 245 R (2) of the Act. Considering the precise question raised by the applicants on the taxability of capital gains and the decision of the Authority on the issue, the objection raised by the revenue on the issue of involvement of determination of fair market value of the property is rejected. Whether transaction / issue designed prima facie for avoidance of tax? - HELD THAT:- The objective of India-Mauritius DTAA was to allow exemption of capital gains on transfer of shares of Indian company only and any such exemption on transfer of shares of the company not resident in India, was never intended by the legislator. Further, as discussed earlier the actual control and management of the applicants was not in Mauritius but in USA with Mr. Charles P. Coleman, the beneficial owner of the entire group structure. Therefore, we have no hesitation to conclude that the entire arrangement made by the applicants was with an intention to claim benefit under India - Mauritius DTAA, which was not intended by the lawmakers, and such an arrangement was nothing but an arrangement for avoidance of tax in India. Therefore, the bar under clause (iii) to proviso to section 245R(2) of the Act is found to be squarely applicable to the present cases. Accordingly, the applications are rejected.
-
2020 (6) TMI 158
Deduction u/s 80-O - Royalties etc. - income received by the appellants in foreign exchange, for the services provided by them to foreign enterprises - High Court has essentially held that the assessees were merely marine product procuring agents for the foreign enterprises, without any claim for expertise capable of being used abroad rather than in India and hence, the services rendered by them do not qualify as the services rendered from India , for the purpose of Section 80-O - HELD THAT:- In the setup of the present case, for a proper comprehension of the contents and text of the relevant provision of Section 80-O and Explanation (iii), which are carrying even the minute distinction of the expressions from India and in India , recourse to lexical semantics has been inevitable. However, in all fairness, the High Court has not only discussed semantics and dictionary meanings but, has equally looked at the object and purpose of Section 80-O of the Act. Hence, without further expanding on this issue, suffice it to say for the present purpose that the submissions against the approach of High Court with reference to the decision in Abhiram Singh [ 2017 (1) TMI 1419 - SUPREME COURT] does not advance the cause of the appellant. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. Though the expressions expert information and advice , analysis , technical guidance etc., have been used in the agreements but, these expressions cannot be read out of context and de hors the purpose of the agreement. All the clauses of the agreements read together make it absolutely clear that the appellant was merely a procuring agent and it was his responsibility to ensure that proper goods are supplied in proper packing to the satisfaction of the principal. All other services or activities mentioned in the agreements were only incidental to its main functioning as agent. Significantly, the payment to the appellant, whatever label it might have carried, was only on the basis of the amount of invoice pertaining to the goods. There had not been any provision for any specific payment referable to the so-called analysis or technical guidance or advice. Viewed from any angle, the services of the appellant were nothing but of an agent, who was procuring the merchandise for its principals; and such services by the appellant, as agent, were rendered in India. Even if certain information was sent by the assessee to the principals, the information did not fall in the category of such professional services or information which could justify its claim for deduction under Section 80-O of the Act. In other words, in the holistic view of the terms of the agreements, we have not an iota of doubt that the appellant was only a procuring agent, as rightly described by the High Court. Default clauses effectively demolish the case of the appellant and fortify the submissions of the revenue that the appellant was merely a procuring agent and nothing more. Merely for having a contract with a foreign enterprise and mere earning foreign exchange does not ipso facto lead to the application of Section 80-O of the Act. Circular No.700 dated 23.03.1995 is neither of any application to this case nor of any assistance to the appellant. The appellant is not entitled to claim deduction under Section 80-O of the Act. High Court has rightly analysed the entire matter with reference to the relevant questions and has rightly proceeded on the law applicable to the case. The impugned judgment calls for no interference.- Decided in favour of revenue.
-
2020 (6) TMI 157
Additions made in the Block Assessment in respect of investments found as a result of the search - claim of the assessee that the Investments came out of withdrawals of deposits made in fictitious names in four finance firms - Tribunal held that since the existence of HUF of Dr.Rajkumar was admitted by the Assessing Authority himself during the course of course of Assessment, the additions of the undisclosed income should not be made in the individual hands of both the Assessees - HELD THAT:- Merely because the Assessees' names are included in the Financial Firms alleged to have been run by the HUF and the name of the Assessee, Dr.N.Rajkumar was included as a Managing Parter of the Firms run by the Family, (one does not know what about the professional misconduct by him of being a Professional Doctor and doing the Business) it does not mean that the entire undisclosed income could be attributed to such Financial Firms and even their Deposits and Withdrawals in the fictitious names could be believed as Gospel Truth forming basis of the explained cash available at the beginning of the Block Period in the hands of HUF of Assessee Dr.Rajkumar. If such explanations were to be treated as pieces of evidence and believable facts in Search cases, such false and flimsy defences can be created in almost all Search cases rendering all the Assessments of undisclosed income nugatory exercise altogether. The admission of the Assessee, which was the best evidence against him, that the Deposits in the Financial Firms and withdrawals thereof were in the fictitious names itself was sufficient to treat the same as Undisclosed Income (UDI) in the hands of the Assessees and that is what the Assessing Authority has done. But, surprisingly for the Grounds raised before the learned Tribunal that the undisclosed income did not belong to the Assessees in their Individual capacity but it could be attributed to the HUF of Dr.N.Rajkumar, one of the Assessees, the learned Tribunal, in our opinion, fell in the error in upholding such a contention made on behalf of the Assessees merely because HUF of Assessee might have existed. We do not think that such finding of facts, if at all they can be called as one, can be sustained in the Appeals filed by the Revenue aggrieved by such orders of the Income Tax Appellate Tribunal. We are not able to, with great respects, subscribe to such findings returned by the learned Tribunal especially reversing the findings of the two Authorities below. While, a fact finding Body is expected to give its own reasons even in affirming the findings of the Authorities below, the burden is heavier for the higher Appellate Authority when it decides to reverse the findings of the Authorities below. We are not able to reconcile the such alleged reasons, which prompted the learned Tribunal to reverse the findings of the two Authorities below in the present cases and therefore, we are unable to sustain the said order of the learned Tribunal. With the above observations, we have no other option but to allow the present Appeals filed by the Revenue. Accordingly, the Appeals filed by the Revenue are allowed.
-
2020 (6) TMI 156
Assessment u/s 153A - bank account unearthed during the course of search and seizure operation - HELD THAT:- We observe that in the assessment order the AO has mentioned that there was two bank account unearthed during the course of search and seizure operation which are supported by the statements recorded during the course of search and seizure procedings that there was two bank accounts have been maintained in the name of the assessee in Andhra Bank and State Bank of India. In the impugned assessment year, the assessee has deposited cash in both the bank accounts and has utilized for certain payments, which are evident from the cash-flow statements filed by the assessee along with date-wise cash book. - Decided against assessee. Addition of opening cash balance - HELD THAT:- On perusal of the assessment order, we find that the AO has considered the income for the assessment year 2009-2010 and has arrived at opening balance of ₹ 6,62,000/-. Further on perusal of the CIT(A) s order, the assessee has filed return of income for the assessment year 2008-2009 also. This return of income has been accepted by the department but the CIT(A) has not given the effect of net cash accruals for the assessment year 2008-2009 for considering the return of income for the A.Y.2008-2009 and cash accruals during the assessment year 2008-2009, the assessee has not produced any balance sheet in the impugned assessment year as well as preceding assessment years. The assessee is directed to produce correct net cash accruals for the assessment year 2008-2009 only to which the assessee will get benefit from the additions made by the AO for doubting the opening cash shown by her. Further we noted from page No.16 of the paper book, the assessee has not shown the details of bank accounts which will effect the cash balance of the assessee. Accordingly, we restore the issue to the file of CIT(A) as per our observations made hereinabove. This ground of appeal of the assessee is allowed for statistical purposes. Sale of shares from hotel Sai International Private Limited - AO has made addition for want of supporting documents to substantiate the claim and the assessee was also unable to substantiate the same before the CIT(A) with supporting evidence - HELD THAT:- We observe from the paper book filed by the assessee before us containing page No.1 to 77, Annexure-6 7 which were not filed before the authorities below and Annexure-8 relates to the copy of the sale certificates regarding transfer of shares of Hotel Sai International Private Limited, which was also not produced before the authorities below. In the interest of justice, this issue is also sent back to the file of AO for proper adjudication of the case after affording reasonable opportunity of hearing to the assessee. The assessee is also directed to cooperate with the AO for early disposal of the case. This ground of appeal of the assessee is allowed for statistical purposes. Entire deposits into the bank account resulting into difference added to the total income of the assessee - HELD THAT:- The assessee has produced date-wise cash flow statement and related ledger accounts to substantiate the credit which has not been denied by the authorities below. If all the entries of bank statement are entered into the bank accounts then why the assessee could not explain the difference therefore, in the interest of justice one more opportunity should be given to the assessee to substantiate her claim before the AO. Accordingly, this matter is sent back to the file of AO to decide the same afresh after providing reasonable opportunity of hearing to the assessee. The assessee is also directed to substantiate her claim with sufficient evidence in respect of difference of accounts.This ground of appeal of the assessee is allowed for statistical purposes. Addition made on account of undisclosed investment in gold jewellery - HELD THAT:- CIT(A) held that the source of 100 gms. of gold jewellery belonging to the sister-in-law of the assessee, who resides at Rayagada is also treated as explained on the strength of her affidavit and for the reasons that she does not have locker at a place where she resides. Accordingly, the CIT(A) granted relief 1650 grams of gold and jewellery to the assessee. Further, we noted that the AO has also clearly mentioned in the assessment order that 682 grams of gold and jewellery has been explained by the assessee before him. Once the revenue authorities accept the source explained by the assessee, in such case there is no further room for treating the same as undisclosed investment of the assessee. Now, the remaining 85.29 grams of gold and jewellery has not been explained by the assessee. Therefore, we confirm 85.29 grams of gold and jewellery out of 767.29 grams upheld by the CIT(A) and direct the AO to delete the addition on the exact value of 682 grams gold and jewellery.
-
2020 (6) TMI 155
Condonation of delay - delay in filing revision petition u/s 264 of the Act - delay of only 34 days in filing appeal - assessee received an order u/s 245 for adjusting refund - HELD THAT:- As noticed that the assessee has filed revision petition u/s 264 before Pr. CIT on 14.07.2015. The assessee was constrained to file the above said revision petition, since he received an order u/s 245 for adjusting refund of some of the year against the demand raised in AY 2007-08. It is noticed that the date of order passed/s 245 was 06-11-2014, meaning thereby, the assessee was aware of the intimation passed u/s 143(1) for AY 2007-08 by 06.11.2014 itself and hence he has filed revision petition u/s 264 of the Act before Ld Pr. CIT. It appears that the assessee did not take any step at that point of time. It is also not clear as to how the assessee could file revision petition u/s 264 of the Act without a copy of intimation, which was sought to be revised. CIT(A) has held that the delay is about 8 years. Assessee was aware of the intimation by the time he filed revision petition and the delay is about 18 months from that date. Accordingly, he has refused to condone the delay in filing appeal before him. CIT(A) has given proper reasons for refusing to condone the delay. In fact, the assessee has taken different stands in pursuing the matter and hence the Ld CIT(A) has observed that the assessee has given misleading statements. We also notice that there is huge time gap in between different steps taken by the assessee and the delay during those periods has not been explained properly. We notice that the assessee has, in fact, mentioned in Schedule E1 of the return of income that the long term capital gain is exempt. However, the same was not properly carried forward to the summary page of the return of income resulting in denial of exemption. After that, we notice that the assessee has not properly handled the matter, resulting in delay in filing appeal before Ld CIT(A). CIT(A) was justified in refusing to condone the delay and dismissing the appeal of assessee.
-
2020 (6) TMI 154
TP Adjustment - selection of comparable - HELD THAT:- We have gone through the T.P order and also DRP s directions and have also considered the argument of the learned Counsel for the assessee that most of these companies are not comparable to the assessee in the light of the various decisions of the Tribunal in similar cases. We find that the assessee has returned a margin of 9.02% as against the average margin of the final comparables adopted by the TPO at 22.69%. It is the case of the assessee that the decisions of the ITAT on various comparables though cited by the assessee, have not been considered by the authorities below. Since both the parties have tentatively agreed for a remand of the issue to the TPO, we deem it fit and proper to set aside the issues to the TPO for denovo consideration. We make it clear that the TPO shall examine whether the assessee s case is similar to the cases on which he has placed reliance upon and whether thedistinguishable factors for exclusion of the comparables in those cases also existed in the assessee s case. If it is found that the assessee s case is similar and the distinguishing factors exist, then the TPO shall exclude such companies from the final list of comparables and the TPO shall be free to adopt any other comparable companies if they are so comparable to the assessee. Provisions for bad debts being considered as non-operating expenditure in computing the margin of only 3 companies - HELD THAT:- We direct the AO/TPO to reconsider the same and bring out the reasons for considering the same as nonoperating in the case of these three companies only, because the AO/TPO have to follow a uniform and consistent manner in adopting a filter and cannot deviate from the same in respect of some companies. Foreign exchange loss - Whether an extraordinary item for the year and hence adjustment should be provided for the same? - HELD THAT:- We are not convinced that the foreign exchange loss is an extra-ordinary item in the year to the assessee alone. Similar foreign exchange loss would have been incurred by the comparable companies as well and therefore, it is not a distinguishing factor to be considered for arriving at the ALP of the international transaction.
-
2020 (6) TMI 153
Order passed u/s 144C - whether the order passed on 27/11/2015 is a draft assessment order or a final assessment order? - HELD THAT:- The attachment of a Notice of Demand in Form No. 7 cannot be taken as the deciding circumstances, which leads us to a conclusion that the order in question is a Final Assessment Order passed u/s 143(3) of the Act. In fact at para 1 of the Notice of Demand u/s 156 of the Act, the AO has clearly stated has been determined to be payable by you u/s 144C of the I.T. Act 1961 . Non-striking of para 6 or para 7 in Form No. 7, does not take us to conclusive proof that the order is not a draft assessment order. In fact it is a Draft Notice of Demand attached to the Draft Assessment Order. This notice of demand is non-est in law as no demand can be created by an order passed u/s 144C of the Act. Hence such notice has not bearing on the order. Levy of penalty u/s 274 - HELD THAT:- We find that none of the columns in the notice have been struck off by the Assessing Officer. Under such circumstances such a notice is illegal and bad in law. This notice is also non-est in law. AO has not even mentioned whether he proposed to levy penalty for non-filing of a return of income u/s 139(1) of the Act by the assessee, or for failing to comply with the notice issued u/s 142(1)/143(2) of the Act etc. Thus, such non-est notice cannot be a basis for coming to a conclusion that the assessment order is a final assessment order and not a draft assessment order. Grant of relief u/s 199 - HELD THAT:- In respect of credit of tax withheld in foreign countries, we agree with the submissions of the ld. D/R that the matter cannot be remanded to the file of the AO. The assessee has not furnished any details in support of his claim either before the AO or the DRP or before us. When no details are furnished till date, we are not in a position to accept the request of the assessee. Thus, this ground of the assessee is dismissed. Short credit of TDS - HELD THAT:- No reconciliation statement has been filed by the assessee before us nor has it demonstrated as to how the AO has erred in granting the tax deducted at source. If there is a mistake in granting of tax, the AO may be approached with a suitable application for rectifications. In the result, this ground of the assessee is dismissed. Granting of tax credit of taxes paid in USA - We find that the facts are not on record either before the Assessing Officer or before the DRP or before us. We cannot admit the additional ground of appeal when the facts are on record. As the facts supporting the claim of the assessee are not on record, we do not admit this ground of the assessee. Assessee after considerable arguments, has not pressed his claim that the foreign AE to be made the tested party. Hence, we dismiss this ground of the assessee. No arguments were made on the question of adjustment, Most Appropriate Method (MAM), Comparables etc. The Transfer Pricing adjustments made by the TPO on facts is not disputed by the assessee. As already stated, no arguments were advanced on the same. Hence, we uphold the same. Appeal of the assessee is allowed in part.
-
2020 (6) TMI 152
Disallowance u/s 40(a)(ia) - non-deduction of tax at source from the payment made towards Harvesting charges - HELD THAT:- Sugarcane purchase agreement makes it clear that the responsibility of harvesting sugarcane and transporting them to the factory of the assessee is placed upon the farmers. It is further stated that the assessee can also arrange harvesting and transportation on behalf of the farmers on the request of the farmers and in such case, the costs incurred in that connection shall be adjusted against the Cane bill. This clause makes it clear that the assessee shall be acting on behalf of the farmers and hence the payment of harvesting charges is also made on behalf of the farmers only, which shall be adjusted against the Sugarcane bill. Hence there is merit in the submission of the assessee that the harvesting charges do not constitute its own expenditure. Following the decision rendered by the co-ordinate bench in the case of M/s NSL Sugars Ltd [2019 (11) TMI 595 - ITAT BANGALORE ] we hold that the assessee is not liable to deduct tax at source from the harvesting charges paid by it on behalf of the farmers in both the years. Accordingly, we set aside the orders passed by Ld CIT(A) in both the years and direct the AO to delete the impugned additions in both the years. - Decided in favour of assessee.
-
2020 (6) TMI 151
Addition of sundry creditors - HELD THAT:- Assessee could not provide suitable explanation with respect to differences in the cases of 15 parties. Appellant s claims that debit note was issued has not been established as neither party has submitted the debit note neither there is no posting of debit note in their ledger account and the amount of debit balance is Nil in the ledger account of the party. As such, there is no basis in the claim of Appellant. - Decided against assessee.
-
2020 (6) TMI 150
Recognition u/s 80G - already granted registration under section 12 AA - Denial of recognition as trust is generating surplus year after year and majority of receipts are by way of tuition fee and others. The assessee has not made out case for seeking Greg recognition under section 80G - HELD THAT:- Undisputedly, assessee has been granted registration under section 12 AA of the Act, and that there is nothing on record brought out by authorities below, or Ld.CIT DR regarding violation of objects of Trust. Grant of approval/recognition under section 80G can act as catalyst to encourage prospective donors to look at intended activities/objects and possibly provide financial support through donations/contributions. In the facts of present case, assessee was holding valid registration u/s 12 AA as on date of impugned order, which conversely means that Ld.CIT (E) was satisfied with objects of assessee in not disputing the registration under section 12 AA. In our view reasons cited by Ld.CIT(E) are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee s application for recognition under section 80G. We also notice that Ld.CIT(E) has not examined the application of assessee in terms of section 80 G (5) of the Act. As relying on M/S. INDIC SCIENCE RESEARCH TRUST VERSUS THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS) , BENGALURU. [ 2018 (7) TMI 1902 - ITAT BANGALORE] we remand the question of grant of approval under section 80 G (5) (vi) of the Act to Ld.CIT (E) for fresh consideration - Decided in favour of assessee for statistical purposes.
-
2020 (6) TMI 149
Disallowance on account of provisions of section 17(2) of the Act r.w.r. 3(7)(i) - Interest free advance given to Director employee - According to AO said advances are not given or taken during the course of normal business and considering the assessee having employee and employer relationship treated the aforesaid amounts as advances and computed the interest @ 1.02% - HELD THAT:- We hold that the assessee being a proprietary of M/s. S N Enterprises having business transactions with EPIL and treating the closing balance as on 31-03-2009 is interest free advances is not maintainable. Thus, the order of CIT(A) in upholding the view of AO in invoking the section 17(2) r.w.r. 3(7)(i) is not warranted. Thus, the order of CIT(A) is set aside and ground No. 1 raised by the assessee is allowed. Addition on account of capital gains - ingenuine transaction - HELD THAT:- Transaction between Ashok Raghunath Mane and Shri Narendra Bhimsen Agarwal as ingenuine, it was an attempt by the Ashok Raghunath Mane to divert profit to Agarwal and upheld the addition made and confirmed by the AO and CIT(A) therein in the hands of Ashok Raghunath Mane. In order to come to such conclusion this Tribunal examined the Income Tax Return filed by the Agarwal brothers for the year under consideration therein, wherein it was found the business income shown by the Narendra Bhimsen Agarwal at ₹ 3.34 lakhs and opined there is no match to the income of ₹ 1.05 crores. These facts are not disputed by both the parties. Therefore, we find force in the arguments of ld. AR that the addition made in the hands of assessee is not maintainable. - Decided in favour of assessee.
-
2020 (6) TMI 148
Characterization of income - subsidy received by assessee under the PSI, 2007 Scheme - revenue or capital receipt - HELD THAT:- The Tribunal in the case of Innoventive Industries Ltd. Vs. DCIT [ 2017 (4) TMI 44 - ITAT PUNE ] after considering the scheme and various decisions on this issue concluded that incentive received by assessee under the PSI, 2007 Scheme in the form of refund of sales tax is capital receipt not liable to tax. Similar view has been taken by the Tribunal in the case of Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT[ 2015 (3) TMI 1151 - ITAT PUNE ] The First Appellate Authority has held sales tax subsidy received by assessee as capital receipt by placing reliance on the decisions of Tribunal. Thus, no reason to interfere with the findings of CIT(A) in holding sales tax subsidy received by assessee under PSI, 2007 Scheme as capital receipt - Decided against revenue. Disallowance u/s 14A r.w.r. 8D(2)(iii) - HELD THAT:- Disallowance u/s 14A of the Act is restricted to exempt income earned during the relevant period. See Rajmal Lakhichand Jewellers Pvt. Ltd. [ 2018 (3) TMI 1625 - ITAT PUNE ]. The ground is thus partly allowed. Value of subsidy from Written Down Value of fixed assets - CIT(A) concluded that the incentive provided under the scheme is directly linked to acquisition of fixed assets - HELD THAT:- AO in assessment proceedings has rejected assessee‟s claim of treating subsidy as capital receipt at threshold itself. AO has not examined the issue from the perspective purpose of subsidy and its utilization. CIT(A) in the impugned order has not specified as to how the assessee has reflected the amount of subsidy in its books. Since, facts are not emerging from the orders of authorities below, we deem it appropriate to restore this issue back to the file of Assessing Officer for de novo adjudication after affording reasonable opportunity of hearing to the assessee, in accordance with law. Appeal by assessee are thus, allowed for statistical purpose.
-
Customs
-
2020 (6) TMI 147
Classification of imported goods - yeast extract, Egyptian Basil, Soy Sauce Powder etc. - Whether the customs authorities are empowered to differ the classification as sought by the petitioner for the purpose of charging of the higher duty? HELD THAT:- On a plain and simple reading of the prayer as well as the prayer for stay of the presence/summoning of the Managing Director by the officers of the DRI cannot be conjoined in one writ petition. Even otherwise, the provisions of Section 108 only deals with recording of the statements, nothing beyond. Any apprehension can be invoked when the entire action initiated in law except that DRI officers of New Delhi do not have the territorial jurisdiction. Section 110(A) leaves no manner of doubt that the petitioner is not prepared to move an application for provisional release of the goods being perishable in nature. However the writ petition do not disclose any such request so far. Mr.Warrier and Mr. Manu at this stage submits that, the customs authorities would not have any objection in considering the prayer of the petitioner in case such application is made in accordance with law - the alleged cause of action based only on the apprehension not supported by any documents to make out the case warranting interference under Article 226 of the Constitution of India. Petition dismissed.
-
2020 (6) TMI 146
Valuation of imported goods - software tools and softwares - assessment for payment of Additional duty of Customs (CVD) - whether assessment to be done on the basis of Maximum Retail Price (MRP) / Retail Sales Price (RSP) or on the CIF value declared by the appellants? - HELD THAT:- The order-in-original has failed to analyse the nature of individual software imported by the appellant importer and has not determined individual as to how every consignment of a particular software can be considered as a packaged software - also, the Tribunal is not right forum to undertake primary examination of nature of each individual software to determine whether the same is liable for assessment on the basis of MRP price or RSP value or not. Therefore, the original adjudicating authority need to undertake a detailed examination of the individual software and its related literature, specifications etc. for determining whether they fall under the category of packaged software or not. And to further ascertain whether a particular software requires assessment as per the provisions of Section 4A of Central Excise Act, 1944. In view of the above, the impugned order in original is without any application of mind and therefore, the same is set aside and order that in view of the above instructions, the adjudicating authority needs to undertake re-adjudication of the matter and decide the matter afresh. Appeal allowed by way of remand.
-
2020 (6) TMI 145
Revocation of Customs Broker License - forfeiture on security deposit - imposition of penalty - failure to obtain authorisation from the exporters - HELD THAT:- The impugned order relies on the fact that there is no post/ courier received or evidence of receipt of such authorisation. The impugned order also relies on the fact that date of all authorizations is nearly the same. The impugned order also relied on the fact that exporters were not found and Shri Manoj Kannar is also not traceable. The appellant had produced authorisation during enquiry and Shri Sagar Thakkar, authorised person of the appellant in his reply during the statement stated that they had obtained authorisation. While the facts mentioned in the impugned order may be sufficient to raise suspicion about receipt or genuineness of the authorisation but it is not sufficient to hold that no authorization was received - we are unable to hold the charge made under Regulation 10(a) of the CBLR. Allegation made under Regulation 10(d) of CBLR, 2018 - HELD THAT:- The Adjudicating Authority has not countered the arguments given by the appellant. There is no evidence cited by the Adjudicating Authority to establish that the appellant had any pre-knowledge of the nature of cargo. The statement on which the Adjudicating Authority has relied on, has not been provided to the appellant. In view of the fact that statement has not been provided, the impugned order cannot be upheld as the charge has been confirmed on the basis of said statement - the allegation made under Regulation 10(d) of CBLR, 2018 are set-aside and the issue is remanded to the Adjudicating Authority for fresh decision. CBEC Circular 9/2010 also specifies that KYC is to be done on the basis of documents and not by physical visit of the client s premises. The impugned order holds that customs broker never tried to contact the exporters. We do not find merit in the argument that there is no such requirement under Regulation 10(n) of CBLR 2018 which requires customs broker to directly contact and in touch with the exporters. Accordingly, we are unable to uphold the invocation of Regulation 10(n) and the same are dropped. Limitation prescribed under Regulation 17 of CBLR, 2018 - HELD THAT:- A perusal of Regulation 17 clearly shows that the period of limitation starts when the Principal Commissioner of Customs or Commissioner of Customs receives the offense report. In the instant case, the Principal Commissioner of Customs, Kandla initiated the proceedings and report received by him on 26.03.2019. This fact has not been challenged by the appellant. In view of above, we find there is no delay in initiation of proceedings. Appeal allowed by way of remand.
-
2020 (6) TMI 140
Advance Authorization Scheme - export of items namely Gold Medallions and Coins or Any Jewellery manufactured by fully mechanized process - HELD THAT:- It appears that by impugned public notice No.35/2015-2020 dated 26th September, 2019 (Annexure P-1 to the memo of writ petition) issued by respondent No.1 whereby the Director General of Foreign Trade (DGFT), in exercise of the powers under paragraph 1.03 of the Foreign Trade Policy 2015-2020, disallowed issuance of Advance Authorisations where item of export is Gold Medallions and Coins or any jewellery/articles manufactured by fully mechanized process, has in effect amended the Foreign Trade Policy, in excess of power and jurisdiction of the DGFT. The powers exercised by DGFT while issuing the aforesaid public notice dated 26th September, 2019 which puts restrictions upon issuance of the advance authorisation for the Gold Medallions and Coins is beyond the power, jurisdiction and authority of DGFT. The categorisation or re-categorization cannot be done by the policy circulars, such exercise has to be undertaken by specific amendment to the Foreign Trade Policy under Section 5 of the Act. Hence also, the public notice No.35/2015-2020 dated 26th September, 2019 (Annexure P-1) is beyond the power, jurisdiction and authority of DGFT - the power exercised by DGFT under paragraph 1.03 of the Foreign Trade Policy 2015-2020 is illegal and the same deserves to be quashed and set aside. The public notice dated 26th September, 2019 issued by respondent No.1 and consequential letters dated 1st November, 2019 are set aside which are Annexure P-2 and Annexure P-3 respectively to the memo of writ petition are directed to be decided by respondent No.1 as early as possible and practicable - petition allowed.
-
Service Tax
-
2020 (6) TMI 143
Classification of services - Works Contract or not - Consulting Engineers and Transport of Goods Agency - case of the department is that Erection, Installation and Commissioning service was independently taxable during the periods involved i.e. 01.04.04 to 31.03.2009 hence the same is taxable - Taxability prior to 01.06.2007 - HELD THAT:- This very issue has been finally decided by the Hon ble Supreme Court judgment in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . The adjudicating authority had no occasion to consider the said judgment as the same was delivered after passing the impugned order - As regard the period post 01.06.2007, though the appellant have made categorical submissions before the adjudicating authority on the factual aspect that in some of receipts the service was provided prior to 01.06.07, in some cases the receipt of amount is towards payment of retention money and is some cases though the service tax paid but under different head of Consulting Engineer service. However all the submissions were not considered by the adjudicating authority perhaps for the reason that when he has decided the taxability pre and post 01.06.2007, he did not feel necessary to consider the said factual aspects - appeal allowed by way of remand.
-
Central Excise
-
2020 (6) TMI 144
Refund of CENVAT Credit - export of goods - the sole reason for which the refund has been rejected is that the appellant have utilised a substantial part of the credit while the matter was in dispute - HELD THAT:- The refund has been rejected arbitrarily and on presumption-assumption basis. The appellant had filed refund claim in the year 2004 and matter was under litigation for long time and it is almost for 16 years now. It would be wrong to expect the assessee to hold on to credit for such a long period. The condition 5 of the aforesaid Notification No. 11/2002-CE (NT) does not mean that the appellant should not be able to utilize the credit at all. It is to be read harmoniously to mean that the refund should be allowed for the manufacturer if the assessee is not in a position to utilize the Cenvat credit within a reasonable period. Refund allowed - appeal allowed - decided in favor of appellant.
-
2020 (6) TMI 142
CENVAT Credit - place of removal - whether the warehouse in the instant case is place of removal or otherwise? - HELD THAT:- It is seen that the goods are cleared on payment of duty from the factory gate and thereafter the goods are deposited in the warehouse/ dumpsite. The goods are lifted by the buyers as and when required by the buyers from the dumpsite. The appellant are not only manufacturer but are also service provider. They are also one legal entity. Appellant are paying service tax due as service charges collected by them from their buyers. In these circumstances, the Cenvat credit of service tax paid on rental charges of warehouse cannot be denied as the same is admissible in respect of service provided by them to their buyers. The transfer of credit from the ISD registration to the manufacturing unit or service provider is immaterial as they are a single entity. Appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2020 (6) TMI 141
Reduction in tax liability - payment of tax at compounded rate - Section 8(f) of the Kerala Value Added Tax Act, 2003 - Explanation added in the year 2014 - clarificatory in the nature or not - Section 43B of the Income Tax Act - assessee contended before the learned Single Judge that the only measure that could be adopted by the Assessing Officer to correct the mistake if at all occasioned, was the devise of rectification for which limitation is prescribed of four years - HELD THAT:- Section 8(f)as available in the subject assessment year and as amended in the year 2014 have been extracted by the learned Single Judge which we need not repeat. Suffice it to find that the entire provision itself was substituted, on amendment, but however, sub-clause (i) in its effect remained the same. The tax payable under the year of option was dependent upon the turnover of the previous year and had to be at the rate of 115% of the tax paid or payable, if the turnover for the preceding year was ₹ 10 lakhs or below, 120%, if it were above ₹ 10 lakhs and up to ₹ 40 lakhs, 135%, above ₹ 40 lakhs and up to Rupees one crore and 150% above Rupees one crore. The percentage being determined on the highest tax conceded or paid in the three consecutive years preceding the year under option. In the present case no curative exercise having been carried out by the amendment of 2014. Clause (f) of Section 8 was substituted in its entirety with six explanations where as the original clause (f) had eight explanations. If Explanation 3 in the new clause (f), as introduced in 2014, is found to be clarificatory, it has to be bodily taken out of the amended provision and placed in the un-amended clause (f) which is not a permissible exercise. The Explanation in the amended clause(f) applies to that provision and not to the earlier one. Clause (f) as amended in 2014 can only apply prospectively and the Explanations therein are intended at explaining the meaning and intendment of the section itself, to clarify any obscurity or vagueness thereat, to make meaningful and workable the dominant object of that particular provision and not do any or all of these with respect to the un-amended provision, which had all-together different explanations - Explanation 3, of the amended Section 8(f) if available in the year 2011-12 and 2012-13 would not enable a reduction insofar as the determination of the quantum of the tax payable under the compounding provision for the year under option merely for reason of the closure of the business in the previous year, which in the present case is on the last date of closure, ie, 31st of March. Explanations, of the year 2014, speak only of a closure in the year of option and does not reckon a closure in the previous year. The option available was very clear insofar as the tax payable under the compounding scheme to be at a percentage above the tax liability of the previous year. The assessee with open eyes applied under the scheme and obtained permission. There was no cause for any exclusion since the closed down branch had business in the previous year for which tax was also paid at the compounded rate. Coming to the relevant years, 2011-12 and 2012-13 again the assessee could not have claimed any deduction since the provision remained as such - The assessee however carried on that branch's business for the entire year - there is no such exclusion of a liability for the previous year can be granted under the provisions under Section 8(f) as it existed in the year 2011-12 and 2012-13. The closure of branch on 31.03.2010 is irrelevant insofar as the tax liability determined in the years 2011-12 and 2012-13 on the basis of the tax conceded or paid in the three consecutive years preceding the year under option. Appeal allowed - decided in favor of appellant.
-
Indian Laws
-
2020 (6) TMI 139
Grant of Bail - Smuggling - whether prayer for grant of bail under Section 167(2) of Cr.P.C. can be considered after the learned Trial Judge takes cognizance of offences alleged in the complaint filed under Section 36A of Narcotic Drugs and Psychotropic Substances Act, 1985? - HELD THAT:- It is settled that once a challan is filed, an application under Section 167(2) of Cr.P.C. for grant of bail does not survive for consideration or remain enforceable. Though Mr.Hashmath Pasha, strenuously contended that NCB s complaint having been filed without completing investigation, is a defective one, it cannot be gainsaid that the learned Special Judge has already taken cognizance of the offence and trial is in progress. There is no challenge to the validity of compliant nor the order of taking cognizance. Mr.Hashmath Pasha has relied only on Paragraph No.114 of the complaint and one line in the statement of objections filed by the NCB to buttress his point that investigation is pending - The relied upon documents described in Annexure-III to the complaint run to 586 pages. If the argument advanced by learned Senior Advocate is accepted, then NCB s complaint and learned Special Judge s order taking cognizance will have to be declared illegal and such finding cannot be recorded in this proceedings under Section 439 of Cr.P.C in the absence of specific challenge. The petitioner s prayer for grant of default bail must fail and it is accordingly dismissed.
|
9911796707
