TMI Tax Updates - e-Newsletter
July 1, 2019

Case Laws in this Newsletter:

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

Articles

1. IMBROGLIO OF 'SAME MONTH' UNDER RCM

   By: KASTURI SETHI

2. GST RETURNS

   By: DR.MARIAPPAN GOVINDARAJAN

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. Revision of interest rates for Small Savings Schemes

2. Jun 29, 2019 Development of Viable Capital Markets – The Indian Experience - Dr. Viral V. Acharya, Deputy Governor, Reserve Bank of India - June 29, 2019 - at the Indian School of Business, Hyderabad

3. Delegation of Indian Tobacco Exporters Visits China

4. Governor's Speech on the occasion of the Annual Statistics Day Conference on June 28, 2019, Mumbai

Notifications

Money Laundering

1. S.O. 2194 (E) - dated 15-5-2019 - PMLA

U/s 43(1) of the Prevention of Money-laundering Act, 2002 Central Government designates High Court of Karnataka as Special Court

Circulars / Instructions / Orders

FEMA

1. 37 - dated 28-6-2019

Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies

DGFT

2. 14/(2015-2020) - dated 28-6-2019

Extension of validity of Pre-shipment Inspection Agencies (PSIAs)

Highlights / Catch Notes

GST

• New GST Form PMT-9 Allows Taxpayers to Transfer Funds Between Account Heads in Electronic Cash Ledger Efficiently.

  Forms : FORM GST PMT - 9 - Transfer of amount from one account head to another in electronic cash ledger - New Form inserted
  Visit to Get Source

  ---

• Amended GSTR-9 form simplifies annual GST return filing, enhancing compliance and efficiency for taxpayers.

  Forms : Annual Return - FORM GSTR-9 amended
  Visit to Get Source

  ---

• Rule 138E Limits E-Way Bill Generation by Restricting Info in PART A of FORM GST EWB-01.

  Act-Rules : Restriction on Generation of e-way bill - restriction on furnishing of information in PART A of FORM GST EWB-01 - Rule 138E of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• E-way bill validity can be extended within 8 hours post-expiration u/r 138 of CGST Rules, 2017.

  Act-Rules : E-way bill - the validity of the e-way bill may be extended within eight hours from the time of its expiry - Rule 138 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Amendments to Anti-Profiteering Order u/r 133 of CGST Rules, 2017 aim to boost compliance and fair pricing.

  Act-Rules : Anti Profiteering - Scope and extent of the Order of the Authority amended - Rule 133 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• "Proper Officer" Definition Expanded in GST Rules 2017 to Include Authority for Anti-Profiteering Measures u/r 132.

  Act-Rules : Anti Profiteering - Power to summon persons to give evidence and produce documents - Scope of the term "Proper Officer" extended to include "Authority" - Rule 132 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Anti-Profiteering Investigation Period Extended to Six Months u/r 129 of GST Rules 2017 for Thorough Probes.

  Act-Rules : Anti Profiteering - Initiation and conduct of proceedings - Initial investigation period extended from 3 months to 6 months - Rule 129 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• GST Committees Review Anti-Profiteering Application; Focus on Rule 128 Limitation Changes for Compliance.

  Act-Rules : Anti Profiteering - Examination of application by the Standing Committee and Screening Committee - Certain changes in period of limitations - Rule 128 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• New Rule 95A enables tax refunds for retail outlets in international airport departure areas, promoting tax-free shopping for travelers.

  Act-Rules : Refund of taxes to the retail outlets established in departure area of an international Airport beyond immigration counters making tax free supply to an outgoing international tourist - New Rule 95A of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Refund Sanctioned u/r 92 of CGST Rules 2017; Amount to be Credited Electronically to Applicant's Bank Account.

  Act-Rules : Order sanctioning refund - Payment order - amount of refund same shall be electronically credited to bank accounts of the applicant on the basis of "a consolidated payment advice" from the date of notified. - Rule 92 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Refund Sanctioned; "Payment advice" to be Replaced with "Payment order" u/r 92 of GST Rules 2017.

  Act-Rules : Order sanctioning refund - The term "Payment advice" to be replaced with "Payment order" from the date to be notified - Rule 92 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Payment advice to be replaced with payment order for provisional refunds u/r 91 of CGST Rules 2017.

  Act-Rules : Grant of provisional refund - The term "Payment advice" to be replaced with "Payment order" from the date to be notified - Rule 91 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Electronic Cash Ledger Allows Transfer Between IGST, CGST, SGST with FORM GST PMT-09, u/r 87, CGST Rules 2017.

  Act-Rules : Electronic Cash Ledger - Transfer of Amount (cash paid) between IGST, CGST and SGST - To be effective from date of notified through FORM GST PMT-09 - Rule 87 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Electronic Cash Ledger Payment Option Withdrawn for OIDAR Services as per Rule 87, CGST Rules 2017.

  Act-Rules : Electronic Cash Ledger - Alternate option (facility) for making payment of Tax, interest etc. in case of OIDAR withdrawn - Rule 87 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Access TCS Credit Under GST Only After Filing Form GSTR-8, as per Rule 67 of CGST Rules 2017.

  Act-Rules : Credit of TCS under GST - details shall be made available after filing of Form GSTR-8 by the person liable to collect TCS - Rule 67 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Credit for TDS available post Form GSTR-7 filing under GST, as per Rule 66 of CGST Rules, 2017.

  Act-Rules : Credit of TDS - details shall be made available after filing of Form GSTR-7 by the person liable to deduct TDS under GST - Rule 66 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Bill of supply to require QR code inclusion, pending notification, u/r 49 of GST Rules 2017.

  Act-Rules : Bill of supply - the bill of supply shall have Quick Response (QR) code, from the date to be notified - Rule 49 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• QR Code Mandatory on Tax Invoices u/r 46 of GST from Notified Date.

  Act-Rules : Tax invoice - e-Invoicing - the tax invoice shall have Quick Response (QR) code, from the date to be notified - Rule 46 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Rule 32A Clarifies Valuation of Supply Including Kerala Flood Cess Under GST Framework.

  Act-Rules : Value of supply in cases where Kerala Flood Cess is applicable - Rule 32A of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• GST Registration Cancellation Now Includes Bank Details Requirement u/r 21, CGST Rules 2017.

  Act-Rules : Non furnishing of Bank Account details may lead to cancellation of GST Registration (4th condition added) - Rule 21 of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Rule 10A CGST Rules: Businesses Must Submit Bank Details After GST Registration Certificate Issuance for Compliance.

  Act-Rules : Furnishing of Bank Account Details, after a certificate of registration in FORM GST REG-06 has been made available- New Rule 10A of the Central Goods and Services Tax Rules, 2017
  Visit to Get Source

  ---

• Extra Cigarette Packs Supplied to Distributors Without Additional Cost Are Not Subject to GST Charges.

  Case-Laws - AAR : Levy of GST - Supply of extra packs of Cigarettes without recovering any additional cost from the Distributors - the extra packs of Cigarettes will not be leviable to GST.
  Visit to Get Source

  ---

• Court to Review Deputy Commissioner's Authority to Issue Show Cause Notices u/s 74(1) of GST Acts.

  Case-Laws - HC : Power of Dy. Commissioner of State Tax to issue SCN under u/s 74(1) of Gujarat GST Act and CGST Act - “proper officer” as provided in Section 2 (91) - will be consider by Court on 17th July 2019
  Visit to Get Source

  ---

• Petitioner Seeks Refund for Zero-Rated Sales Under IGST; Authorities to Decide on ITC Re-Credit in 15 Days.

  Case-Laws - HC : Re-credit of the amount of input tax credit to the electronic credit ledger account after rejection of refund claim - petitioner had affected zero rated sales as per section 16 of the IGST Act without payment of tax and claimed full refund of the utilized ITC u/S 54 of the CGST which was rejected - directed to take decision in accordance with law within a period of 15 days
  Visit to Get Source

  ---

• Vehicle Seized for Missing E-Way Bill: Key GST Act Sections 129 & 130 Interpretation in Upcoming Hearing.

  Case-Laws - HC : Seizure of vehicle alongwith the goods - detained on the ground that E-Way Bill was not produced when demanded - there are many larger issues involved in this petition, more particularly, with regard to the interpretation of Sections 129 and 130 of the GST Act - posted with other petition on 24th July 2019
  Visit to Get Source

  ---

Income Tax

• No penalty u/s 271AAB: Search operation finds no incriminating evidence; assessee's statement leads to additional income offer.

  Case-Laws - AT : Penalty u/s 271AAB - no incriminating evidence, papers/documents/stock/cash were found during the search operation other than the statement of the assessee - additional income offered neither represented by any assets found in the course of search nor represented by any entry made in the books of accounts or other documents or transactions found in the course of search - no penalty
  Visit to Get Source

  ---

• Court Rules AO Can't Reject Independent Valuer's Report u/s 56(2)(viib) and Rule 11UA(2)(b) of Income Tax Act.

  Case-Laws - AT : Addition of share premium u/s 56(2)(viib) - Rule 11UA(2)(b) - rejection of valuation - there is no enabling provision under the Rule or the Act where AO has been given a power to tinker with the valuation report obtained by an independent valuer - if law provides the assessee to get the valuation done from a prescribed expert as per the prescribed method, then the same cannot be rejected because neither the AO nor the assessee have been recognized as expert under the law
  Visit to Get Source

  ---

• Capital Gains Not Applicable on AOP to Company Conversion Due to Lack of Transferor and Transferee u/s 45(1).

  Case-Laws - AT : Addition on account of capital gain - conversion of AOP/trust in company - transfer of the assets u/s 2(47) - till the time of conversion, the AOP remained in existence and the moment conversion took place, the company came into existence - the AOP and company never remained in existence simultaneously - transfer of a capital asset u/s 45(1) is possible only when there is a transferor and the transferee - no capital gain
  Visit to Get Source

  ---

• Court Rules No Adjustment Needed in Transfer Pricing as 5% Mark-Up Falls Within Permissible Range for Management Fees.

  Case-Laws - AT : ALP of the international transaction of payment of Fees for Management services - 5% mark-up under Cost plus method - Even if, we proceed with the assumption that the mark up of 5% is not at ALP, which should be as low as 1% or even less than that, still the difference arising on account of such mark-up going even up to 0% in a comparable uncontrolled situation, would be within +/-5% range, not requiring any TP adjustment
  Visit to Get Source

  ---

• Court Rules FMS Payments Must Be Separately Benchmarked in TP Cases; No Offsetting with Other Transactions' Income.

  Case-Laws - AT : TP adjustment - fees for management services(FMS) - TNMM - it is quite possible that a probable addition on account of TP adjustment arising from one or more of the international transactions may be grabbed by the income from another international transaction giving higher income on transacted value - accordingly, international transaction of payment of FMS cannot be clubbed with other international transactions for showing the same at ALP - It needs to be benchmarked separately
  Visit to Get Source

  ---

• CIT(A) Issues Non-Speaking Order in Transfer Pricing Case, Fails to Address Taxpayer's Detailed Submissions Adequately.

  Case-Laws - AT : TP Adjustment - non speaking order - silent in considering submissions of the assessee - the ld.CIT(A) reproduced 40 pages of written submission given by the assessee, and thereafter concluded the finding in five-six lines - it is apparent that such finding does not contain any adjudication on the submissions of the assessee and not sustainable
  Visit to Get Source

  ---

• Section 23(4) Dispute: Flats at Lake Town Deemed Capital Assets, Not Business Assets, Affecting Rental Income Claims.

  Case-Laws - AT : Deemed rental income of residential house u/s 23(4) - claimed that flats owned are stock in trade - CIT(A) while upholding the addition has given a finding that three flats at Lake Town were held by the assessee as capital assets and were not business assets - assessee owned more than one house during the year and therefore additions u/s 23(4) is sustainable
  Visit to Get Source

  ---

• Taxpayer's Commission Claim Upheld: Address, PAN, MOU, and Invoices Validate Genuineness of Transactions. No Disallowance Imposed.

  Case-Laws - AT : Disallowance of commission - assessee cannot keep track of the person with whom she had done transactions - AO in the remand report confirms that the address given by the assessee is same on which payee obtained in his PAN card and filed his return of income - even the genuineness of the transactions is proved by the fact an MOU was entered and that in each of the bills/invoices raised, the details of services rendered - no disallowance
  Visit to Get Source

  ---

• Assessing Officer and CIT(A) Fail to Justify Inapplicability of Section 44AD; No Addition u/s 68 Permissible.

  Case-Laws - AT : Addition u/s 68 - assessee opted to declare income u/s 44AD @ 8% - Section 44AD was introduced to help the small traders to tax on presumptive basis who have difficulties in maintaining books of account and other records - neither AO nor the CIT(A) have given any reason as to why the provisions of Section 44AD are not applicable to this case - no addition u/s 68 when income has been estimated
  Visit to Get Source

  ---

• Land Value Credited as Partner Loans Violates Income Tax Act Section 47(xiii); Successor Company Liable for Capital Gains Tax.

  Case-Laws - HC : Capital gain - crediting the enhanced value of the land, which belonged to the firm, to the current account of the partners of the firm and by treating it as loan from the partners in the accounts of the company, there was violation of proviso to Section 47(xiii)(a) and (c) capital gain is leviable - tax liability will be fallen on the successor company
  Visit to Get Source

  ---

• No Penalty for Misclassifying Stock Appreciation Rights as Capital Gains u/s 271(1)(c) of Income Tax Act.

  Case-Laws - HC : Penalty u/s 271(1)(c) - assessee shown stock appreciation rights and gain as capital gain in place of perquisites under salary despite considering employer as perquisite - there had been a difference of opinion or difference in interpretation - it cannot be stated that the conduct of the assessee amounted to deliberate concealment of income with certain mala fide intentions or furnished inaccurate particulars of income - no penalty
  Visit to Get Source

  ---

Customs

• Detention Order Under COFEPOSA Act 1974 Challenged Due to Non-Service of Grounds and Documents as Required by Section 3(3).

  Case-Laws - HC : Bail application - Service of detention order - section 3(3) of COFEPOSA Act, 1974 - Detaining authority was aware of the requirement of serving orders of detention and grounds of detention with relied upon documents - non compliance will render the order of detention unsustainable
  Visit to Get Source

  ---

FEMA

• Indian Companies Must File Annual Return on Foreign Liabilities and Assets Under FEMA Regulations to Avoid Penalties.

  Circulars : Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies
  Visit to Get Source

  ---

Indian Laws

• Complaint Dismissed: Respondent Not Classified as 'Wakf'; Cheque Dishonor Case Non-Maintainable.

  Case-Laws - HC : Dishonor of Cheque - Complaint by Power of Attorney (POA) Holder - whether respondent is a ‘wakf’ or not - the respondent is not a Wakf - complaint is not maintainable.
  Visit to Get Source

  ---

Service Tax

• CENVAT Credit Allowed for GTA Services: Can Be Used for Service Tax Payment Under Reverse Charge Mechanism.

  Case-Laws - HC : CENVAT Credit - input services - Goods Transport Agency service - Cenvat credit available could be utilised by the respondent to discharge its obligation of payment of service tax on GTA service on reverse charge mechanism
  Visit to Get Source

  ---

VAT

• Court Upholds Commissioner's Authority to Issue Circulars for Electronic Info Uploads under VAT & Sales Tax Rules.

  Case-Laws - HC : Constitutional validity - power vested with the Commissioner to issue circulars - Through the proviso, the Commissioner is empowered to direct the relevant information in the electronic format to be uploaded. Such proviso is a part of the Rule which is framed by the Government by which it provides for the Commissioner to issue appropriate directions. - The same cannot be considered as sub-delegation of the power.
  Visit to Get Source

  ---

• Waiver of Pre-Deposit Required for Revision Petition u/s 82(2A) of AVAT Act; Reasoned Orders Mandatory.

  Case-Laws - HC : Application for waiver of pre-deposit - condition to entertain the revision petition u/s 82(2A) of AVAT Act - the requirement of giving a reason for granting or not granting the exemption is also an indication that any such application made u/s 82(2A) would necessarily have to be entertained and considered - directed to pass a reasoned order
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (6) TMI 1380
  Seizure of vehicle alongwith the goods - consignment of betel nuts - detained on the ground that E-Way Bill was not produced when demanded - HELD THAT:- There are many larger issues involved in this petition, more particularly, with regard to the interpretation of Sections 129 and 130 of the GST Act. Many petitions have been admitted and are pending for consideration in this regard - We propose to pass an order directing the respondent authorities to release the goods on the writ-applicant depositing the balance amount, i.e. 3,57,000. Post this matter for further hearing on 24th July 2019.

  ---

• 2019 (6) TMI 1379
  Seizure of vehicle alongwith the goods - consignment of betel nuts - detained on the ground that E-Way Bill was not produced when demanded - HELD THAT:- There are many larger issues involved in this petition, more particularly, with regard to the interpretation of Sections 129 and 130 of the GST Act. Many petitions have been admitted and are pending for consideration in this regard - We propose to pass an order directing the respondent authorities to release the goods on the writ-applicant depositing the balance amount, i.e. 2,08,250. Post this matter for further hearing on 24th July 2019.

  ---

• 2019 (6) TMI 1378
  Re-credit of the amount of input tax credit to the electronic credit ledger account - rejection of refund claim - inaction on the part of the respondent authority in not passing an order in accordance with Rule 86(4) of the CGST Rules, 2017 - HELD THAT:- Having heard the learned counsel appearing for the parties and having gone through the materials on record, we propose to dispose of this writ application with a direction to both, the Deputy Commissioner of State Tax, Range-15, Surat as well as to the Assistant Commissioner of State Tax, Range- 1, Surat to look into the matter and take an appropriate decision in accordance with law within a period of 15 days from the date of receipt of writ of this order. The Deputy Commissioner of State Tax, Range-15, Surat shall see to it that the Assistant Commissioner of State Tax, Range-1, Surat gives effect to the communication dated 02/11/2018.

  ---

• 2019 (6) TMI 1377
  Jurisdiction - power of Dy. Commissioner of State Tax to issue SCN - absence of any specific notification issued by the State Government appointing the Dy. Commissioner of State Tax - Section 74(1) of the Gujarat GST Act, 2017, and Section 74(1) of the CGST Act, 2017 - scope of the expression for use in the context of sale of LPG for domestic use - HELD THAT:- The writ-applicant has been able to lay down a strong prima facie case to have an interim order in its favour in terms of Para 48 (c). Let Notice be issued to the respondents, returnable on 17th July 2019.

  ---

• 2019 (6) TMI 1358
  Maintainability of Advance Ruling application - Scope of Advance ruling - Classification of imported goods - Threaded metal nuts which function same as standard nut - Plastic rivets not only being capable of being used in the fitment of trims on the body of a motor vehicle but in other industries for similar functionality - Quick Adapter not only capable of being used to connect pipes and tubes in the interior of a motor vehicle, but also for similar functionality in other industries - Plastic pipe clips - Brackets and Channels - Non-Return Valve - Metal U Clips - Fasteners and Spoilers - Bracket - Whether the Subject Product merits classification under Tariff item 7220 20 90 despite being capable of being classified under Chapter 87 of the First Schedule, and not under Tariff item 8708 99 00? Scope of Advance ruling - whether or not the activities undertaken by the applicant pertains to matters or questions specified in Section 97(2)? - HELD THAT:- The applicant has raised questions for classification of their inputs imported from out of India and which are used by them in the manufacturing process to produce products which are then supplied to the market. We find primarily that, as per provision of section 95 of CGST ACT, this authority can give a ruling to the applicant on matters or questions raised, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Supply of goods or not - Section 7 of the GST Act - Scope of supply - HELD THAT:- From a reading of the said section it is very apparent that, import of services are alone considered as a supply , not import of goods. Further we find that Section 5 of the IGST Act, the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the CTA, 1975 on the value as determined under the said act at the point when duties of Customs are levied on the said goods under Section 12 of the Customs Act, 1962 - Since the subject proposed transaction is itself not a supply under the GST Act, in view of the provisions of Section 95 read with Section 97 of the GST Act, the issue is not within the purview of this authority. This authority is not allowed to answer the question on classification of imported goods since the same is out of the purview of Sec. 95 of CGST Act. Application rejected as not maintainable.

  ---

• 2019 (6) TMI 1357
  Levy of GST - Supply of extra packs of Cigarettes without recovering any additional cost from the Distributors - Promotional scheme for distributors - taxable value attributed to such extra packs of Cigarettes for of GST - exempt supplies or free samples - section 17 (2) of the CGST Act, 2017 read with Rule 42 of the CGST Rules, 2017 or clause (h) of Section 17 (5) of the CGST Act, 2017. HELD THAT:- Appellant are contemplating a promotion scheme for the clients/distributors wherein they intend to supply additional packs of cigarettes along with regular supply of cigarettes of a particular quantity, without receiving any additional consideration for the additional packs. Applicability of Circular No. 92/11/2019-GST dated 07.03.2019 issued vide F. No. 20/16/04/2018-GST - HELD THAT:- The Circular is clearly applicable to the facts of the subject application. From a reading of the above Circular and the facts of the matter i.e. the facts of the promotion scheme proposed by the applicant we find that their scheme of Buy 100 Get 10 free OR Buy 1000 Get 150 free is clearly covered by Para B of the said Circular. Hence in such cases it will not be an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply. It can at best be treated as supplying two goods for the price of one. In the case of Buy 100 Get 10 free it will be 2 individual supplies, each of 100 packs and 10 packs for the price of 100 packs. In such a case taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of Section 8 of the said Act - Further, ITC shall also be available to the supplier for the inputs, input services and capital goods used in relation to supply of goods or services or both as part of such offers. The situation mentioned at Para(C) of the Circular mentions situations whether value discounts are envisaged and therefore will not be applicable in the subject case where value discounts are not contemplated - The situation mentioned at Para(D) of the Circular mentions situations where discounts are not known at the time of supply or where discounts are offered after the supply is over. In the subject case the discounts are known well before the supply is effected. Thus the extra packs of Cigarettes will not be leviable to GST - The extra packs of cigarettes will not be considered as exempt supplies or free samples and hence the provisions Of 17(2) read with Rule 42 of the CGST Rules, 2017 or clause (h) of Section 17 (5) of the CGST Act, 2017 will not be applicable.

  ---

• Income Tax

• 2019 (6) TMI 1376
  Capital gain computation - conversion of firm into company - before conversion land was revalued and enhanced value of the capital asset credited to the current account of the partners of the firm - after conversion current account of the partners was treated as loan from the partner - violation of clause (c) of the proviso to Section 47(xiii) - whether the transaction amounts to transfer of a capital asset within the purview of Section 45 of the Act? - HELD THAT:- we are of the considered view that by crediting the enhanced value of the land, which belonged to the firm, to the current account of the partners of the firm and by treating it as loan from the partners in the accounts of the company, there was violation of the provisions contained in clauses (a) and (c) of the proviso to Section 47(xiii). Therefore, the aforesaid transaction amounts to transfer of a capital asset within the purview of Section 45 and the profits or gains obtained by the transfer of the asset by the firm to the company has to be treated as capital gains. The first and the second substantial questions of law raised are answered in favour of the revenue and against the assessee. As department contend that, applicability of Section 47A(3) would arise only at a stage subsequent to the assessment of tax, when it is later discovered that there was violation of the provisions contained in the proviso to Section 47(xiii) we are not impressed with this contention. It is true that exemption already granted can be withdrawn by virtue of the provision contained in Section 47A(3) of the Act on discovery of violations of the conditions provided in the proviso to Section 47(xiii). But, if the assessing authority finds at the time of assessment, that there is violation of the provisions contained in the proviso to Section 47 (xiii), then transfer of capital assets made in that manner, comes within the ambit of Section 45 and assessment has to be done accordingly. In making such assessment, the authority concerned is obliged to take note of the provisions contained in Section 47A(3) and then the liability to pay tax has to be imposed not on the erstwhile firm but on the successor company. We find that the assessee firm is not liable to be assessed for the capital gains brought within the ambit of Section 45 as a result of violation of the conditions provided in clause (xiii) of Section 47 but the tax liability in that regard had fallen on the successor company. The third substantial question of law raised is answered in favour of the assessee and against the revenue. Appellant firm is not liable to be assessed to tax on capital gains.

  ---

• 2019 (6) TMI 1375
  Penalty u/s 271(1)(c) - furnishing of income under an incorrect head - assessee shown stock appreciation rights and gain as capital gain in place of perquisites under salary - whether short payment of taxes does not amount to concealment of income or furnishing of inaccurate particulars of income? - HELD THAT:- Assessee that there had been no deliberate concealment nor there had been deliberate non disclosure and that the assessee disclosed the amount, which, according to the Department, should have been shown as a perquisite because the employer had treated it as a perquisite and deducted tax at source. Though the assessee offered an explanation, it was not found to be acceptable by the AO. CIT(A), when he proposed to confirm the findings of the AO, should record his own independent reasons as to how the conduct of the assessee was deliberate in not disclosing the perquisites shown by the employer in Form 16 and as to how such a deliberate conduct would amount to concealment of income. CIT(A) did not give independent reasons in support of his conclusions except stating that the assessee s conduct was deliberate. This would be sufficient to set aside the orders passed by the CIT(A). The Tribunal, in our considered view, examined the conduct of the assessee. The assessee, who is a salaried employee, had disclosed the value of the stock appreciation rights and gain thereof and claimed the same as capital gain. AO treated the gain as a revenue receipt and levied tax. In such circumstances, whether it could have been stated that there was concealment of income or whether the assessee furnished inaccurate particulars of income. Tribunal rightly held that it is nobody s case that the assessee concealed the allotment of stock appreciation rights or gain arising out of such appreciation. In fact, there had been a difference of opinion or difference in interpretation of the manner, in which, the assessee interpreted the returns. Therefore, when there were two opinions possible, it cannot be stated that the conduct of the assessee amounted to deliberate concealment of income with certain mala fide intentions.

  ---

• 2019 (6) TMI 1374
  TP Adjustment - non speaking order - silent in considering submissions of the assessee - HELD THAT: - The ld.CIT(A) reproduced grounds of appeal on page no.1 and 2, and thereafter reproduced submissions of the assessee upto page no.44. In other words, he has reproduced 40 pages of written submission given by the assessee, and thereafter concluded the finding in five-six lines. This order has been followed blindly in other years without any application of mind. Thus, it is a just non-speaking order at the end of the ld.CIT(A). Full Bench of the Hon ble Punjab Haryana High Court in the case of Roadmaster Industries of India P.Ltd. Vs. ACIT, [ 2006 (5) TMI 86 - PUNJAB AND HARYANA HIGH COURT] has considered large number of judgments at the end of Hon ble Supreme Court as well as at the end of Hon ble High Courts in order to propound why reasons are necessary in support of conclusions of any adjudicating authority. If we visualize written submissions and finding given by the ld.CIT(A), then it is apparent that such finding does not contain any adjudication on the submissions of the assessee and not sustainable. Therefore, we set side finding of the ld.CIT(A) on this issue in all three years and restore for readjudication. Deduction u/s 80HHC - HELD THAT:- Deduction u/s 80HHC is to be computed after reducing deduction allowed u/s 80IA and 80IB (b) excise duty and sales-tax are to be included in the total turnover for the purpose of calculating 80HHC as required under the formula, and (c) sale proceeds of DEPB licence is to be reduced from profit of the business to the extent of 4,89,81,959/-. For this purpose, the AO has relied upon the amendment brought in Finance Act, 2005 with retrospective effect. It was pointed out that this amendment has been held as unconstitutional by Hon ble Gujarat High Court in the case of Avani Exports [ 2012 (7) TMI 190 - GUJARAT HIGH COURT] . The matter was set aside to the AO by the Tribunal with a direction to recompute the deduction in view of amendment by the Taxation Law. AO has passed a fresh assessment order on 30.12.2011. The ld.CIT(A) has taken cognizance of the decision of Hon ble jurisdictional high Court which was rendered on 2.7.2012. Thus, the sale proceeds of DEPB licence are not required to be excluded from the profit of the business for calculating 80HHC. CIT(A) has followed the decision of the Hon ble jurisdictional High Court, and there is no error in appreciating the facts and circumstances. Therefore, we do not find any merit in this ground of appeal. Addition u/s 14A - HELD THAT:- As far as the finding of the CIT(A) that disallowance cannot be made with help of Rule 8D is concerned, we do not find any error in his order, because Rule 8D has been made applicable w.e.f. 1.4.1981 [Hon ble Bombay High Court judgment in the case of Godrej Boyce vs. CIT, [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] Whether the interest expenses could be allocated for disallowance of earning of exempt income - HELD THAT:- CIT(A) made an analysis and observed that the assessee has more surplus funds out of which it can be inferred that the investment was made - CIT(A) has made reference to the decision of Hon ble Bombay High Court in the case of Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT]. We do not find any error in the order of the CIT(A) on this issue for placing this reliance as well as for holding that since the assessee was having more interest free funds, then the interest expenses cannot be carved out with help of formula given in Rule 8D. The ld.CIT(A) has rightly deleted the disallowance with regard to the interest expenditure is concerned. Disallowance worked by the CIT(A) is concerned, it is not on sound footing. The details of dividend income has been placed in tabular form and reproduced on page no.13 of the impugned order. According to the ld.counsel for the assessee these are old investments, and this year only activity relating to such exempt income is receipt of six cheques. There is no other activity which requires incurrence of expenditure. Estimation of expenditure at 12.51 lakhs is on the higher side. We scale down it to 1,50,000/- which can take care of all other necessary expenditure, if any, incurred by the assessee. In view of the above discussion, we do not find any merit in the ground raised by the Revenue. It is rejected.

  ---

• 2019 (6) TMI 1373
  TP Adjustment - adjustment made on the basis of Share Purchase Agreement ( SPA / Agreement ) - HELD THAT:- As decided in assessee s own case for AY 2010-11 [ 2018 (8) TMI 1708 - ITAT MUMBAI] same are not applicable to the facts of the present case and we are of the view that since chapter 10 pre-supposes the existence of income and lays down machinery provison to compute ALP of such income, if it arises from an International transaction . Section 92 is not an independent charging section to bring in a new head of income or to charge tax on income which is otherwise not chargeable under the Act. Accordingly, since no income had accrued to or received by the assessee u/s 5, no notional income can be brought to tax u/s 92 - direct for deletion of impugned TP adjustment. Ground No. 1 stands allowed. Disallowance u/s 14A - assessee earned exempt dividend income of 9.16 Lacs during the impugned AY and held investment of 668.69 Lacs - HELD THAT:- Since no disallowance was offered by the assessee against the same, AO compute expense disallowance of 3.21 Lacs, being 0.5% of average investments, in terms of Rule 8D(2)(iii). The same upon, confirmation by Ld. first appellate authority is under appeal before us. CIT(A) has directed AO to exclude those investments which may not be capable of yielding exempt income to the assessee. AR, briefly submitted that keeping in view the decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] AO may be directed to take into consideration only those investments which have actually yielded any exempt income during the year. Concurring with the same, we direct AO to take into consideration only those investments which have actually yielded any exempt income during the year. The assessee is directed to provide requisite information, in this regard. This ground stand partly allowed.

  ---

• 2019 (6) TMI 1372
  Deduction u/s 54F - claim of deduction disallowed by the AO for the reason that on the date of transfer of land, assessee has owned more than one residential house - assess contention that he has demolished one house for new comstruction - HELD THAT:- As noted that assessee has produced application that was filed by the assessee only in November 2009 requesting for permission for development of plot and in the building plan submitted before PMC authorities, the existing building, which was claimed to have been demolished in May, 2009 was shown as to be demolished . He therefore concluded that to be demolished proved beyond doubt that the existing bunglow was not demolished till June / July 2010. He also noticed that the property tax in respect of the said property was paid as applicable for residential house and not for open plot even for the year 2009 and 2010. CIT(A) therefore did not accept the claim of the assessee that the existing construction of the property was demolished and the property became a vacant plot on the date of transfer of land. With respect to other residential properties owned by assessee, CIT(A) has given a finding that assessee owns three flats and that since the assessee was the owner of more than one residential house as on the date of transfer of land, he was not eligible for deduction u/s 54F of the Act. - Decided against assessee. Depreciation on the civil foundation work of windmill - rate of depreciation applicable is 10% as civil structure or 80% being the rate applicable to windmill - HELD THAT:- We find that the identical issue has been decided by the Hon ble Bombay High Court in the case of CIT Vs. Cooper Foundary Pvt. Ltd [ 2011 (6) TMI 837 - BOMBAY HIGH COURT] in assessee s favour wherein it had upheld the order of Tribunal granting depreciation @ 80% on the foundation cost incurred for installation of windmill. Before us, Revenue has not placed any contrary binding decision in its support. We therefore relying on the aforesaid decision of Hon ble Bombay High Court hold that on the cost incurred for installation of windmill, the depreciation is to be allowed at the rate which is applicable to windmill. We direct accordingly and thus, the ground of the assessee is allowed. Deemed rental income of residential house u/s 23(4) - Case of assessee that the residential houses owned by assessee are his stock-in-trade and therefore, no addition on account of deemed rent can be made - HELD THAT:- We find that Ld.CIT(A) while upholding the addition has given a finding that three flats at Lake Town were held by the assessee as capital assets and were not business assets of the assessee. With respect to bunglow at Prabhat Road, he has noted that the bunglow was not demolished as on 31.03.2010 and thus the assessee owned more than one house during the year and therefore additions made by AO was as per the provisions of Sec.23(4). Before us, no material has been placed by Ld.A.R. to point out any fallacy in the findings of Ld.CIT(A). We therefore find no reason to interfere with the order of Ld.CIT(A) and thus the ground No.3 of assessee is dismissed. Disallowance u/s 14A - HELD THAT:- We find that while upholding the disallowance, Ld.CIT(A) has noted that proper satisfaction was recorded by AO before disallowing expenses. He has further noted that substantial investments were made by the assessee and therefore the contention of the assessee that no expenses have been incurred for earning exempt income cannot be accepted. He has also noted that disallowance has been made for administrative expenses under Rule 8D(2)(iii) of the I.T. Rules. Before us, no fallacy in the findings of Ld.CIT(A) has been pointed out by Ld.A.R. We therefore find no reason to interfere with the order of Ld.CIT(A) and thus, the ground No.4 of assessee is dismissed. Disallowance on adhoc basis on account of personal element - HELD THAT:- We find that while upholding the order of AO, CIT(A) has noted that assessee was not in a position to furnish any log book indicating the use of vehicles for exclusive and wholly for the purpose of business and that assessee was also not having any personal vehicles to show that it was used for personal purposes. Even with respect to disallowance on account of conveyance and travelling, he has noted that no evidence to support his case was filed before Ld.CIT(A).

  ---

• 2019 (6) TMI 1371
  TP adjustment - fees for receipt of management services - TNMM - TPO did not approve the aggregation of the international transaction and opined that such transaction was required to be benchmarked separately - TPO recomputed profit margins under the Manufacturing and Trading segments by excluding payment of Fees of Management services HELD THAT:- It is the higher of actual income or the arm s length income from an international transaction, which is taken into consideration for computing the total income. It does not mean that an actual more income from an international transaction visa- vis its arm s length income should be combined with another unrelated transaction which gives actual income less than its arm s length income and then both of them be processed together so as to set off the income (Transacted income minus arm s length income) from the first transaction with the potential income arising from the second transaction (arm s length income minus transacted income). When we consider more than one separate transaction under the combined umbrella of TNMM, it is quite possible that a probable addition on account of transfer pricing adjustment arising from one or more of the international transactions may be grabbed by the income from another international transaction giving higher income on transacted value. In the case of Magneti Marelli Powertrain India Pvt. Ltd. vs. DCIT [ 2016 (11) TMI 123 - DELHI HIGH COURT] , the Hon ble High Court did not approve clubbing of `Technical fees with other transactions under the Manufacturing segment as without technical know-how even the production could not have been possible. Extantly, we are dealing with a situation in which the assessee is trying to club the transaction of payment of Fees for Management services with others, which is a step further away from technical knowhow, in the process of manufacturing. It is held that the international transaction of payment of Fees for Management services cannot be clubbed with other international transactions for showing the same at ALP. It needs to be benchmarked separately as has been held by the authorities below. Any services were actually availed by the assessee - Each monthly invoice runs into several pages with complete description of the services rendered with date of rendition of services, employee s name who rendered the service, level of service, description of service, place at which service was rendered, duration for which service was rendered, hourly rate at which payment was to be made, and total amount payable for such service. There is proper recording of the Minutes of meetings. Copies of such Minutes have been placed in the paper book, exhibiting complete details such as location, date, participants, minutes and detailed accounts of issues discussed. The details of workshops for Technical Competence, so on and so forth is also given. From the above discussion, there is absolutely no doubt in our mind that Schaeffler China did render management support services to the assessee and ex consequenti, it is held that the ld. CIT(A) was fully justified in accepting the rendition of Management support services by Schaeffler China to the assessee. Whether such services are in the nature of stewardship activity as has been held by TPO ? - each monthly invoice runs into several pages with complete description of the services rendered with date of rendition of services - HELD THAT:- We have noticed the description of services performed by Schaeffler China under the broader heads by observing that such activities extend to Business Development , Finance Controlling Services , Human Resources services, Purchasing/Procurement services , Supply chain Management services , Process and Information services and Distribution sales services etc. It is ergo patent that such services are in the nature of normal business services performed with a view to enable the assessee to carry out its business operations producing effect on the assessee company. In our opinion, these do not qualify as `stewardship activities . The impugned order is overturned pro tanto. ALP of the international transaction of payment of Fees for Management services - NIL ALP - HELD THAT:- we find that the Hon ble jurisdictional High Court in CIT Vs. Lever India Exports Ltd. [ 2017 (2) TMI 120 - BOMBAY HIGH COURT] has also held that the TPO s jurisdiction is to only determine the ALP of an International Transaction. It is not a part of the TPO s jurisdiction to consider whether or not the expenditure passed the test of Section 37 of the Act and/or genuineness of the expenditure, which has to be done by the AO. Respectfully following the judgment of the Hon ble jurisdictional High Court , we hold that the transfer pricing addition based on the Nil ALP determination by the TPO by treating the services rendered by the AE as shareholder services, is vitiated. The authorities below have not disputed the correctness of the invoices raised by Schaeffler China. Though no separate ALP determination of the international transaction of payment of Management services fees is available for the year under consideration, but one thing which is clear is that the payment of 5,65,53,971/- and odd to Schaeffler China is towards actual expenses incurred plus 5% mark-up, which is in the nature of Cost plus method prescribed under rule 10B(1)(c) of the I.T. Rules. Even if, we proceed with the assumption that the mark up of 5% is not at ALP, which should be as low as 1% or even less than that, still the difference arising on account of such mark-up going even up to 0% in a comparable uncontrolled situation, would be within +/-5% range, not requiring any transfer pricing adjustment. It is held that the assessee entered into an agreement with Schaeffler Holding (China) Co., Ltd for receipt of Management support Services , for which separate benchmarking was required to be done. Such services were actually rendered. These services are not in the nature of stewardship or shareholder activity. The payment to Schaeffler Holding (China) Co. Ltd. at the actual costs incurred in providing such services plus 5% mark-up is at ALP, which does not require any transfer pricing addition. We, therefore, set aside the impugned order by holding that the international transaction of payment of Fees for Management services at 5,65,53,971/- is at ALP, which does not require any transfer pricing addition. - In the result, appeal of the assessee is partly allowed and that of the Revenue is dismissed.

  ---

• 2019 (6) TMI 1370
  Deduction u/s 80IAB - interest from fixed deposit - HELD THAT:- we are of the view that the issue has been squarely covered by the decision of the Hon ble ITAT [ 2014 (8) TMI 959 - ITAT MUMBAI] and subsequently the issue has been decided by the CIT(A) in favour of the assessee in the Assessment years of 2011-12 2012-13 which are not subsequently changed and varied. It was held that the FDs were made out of funds received for the business of the appellant in the form of grants for land acquisition or non-convertible debentures and not out of any surplus funds generated from the business of the appellant.The facts are not distinguishable at this stage also. No decision the contrary to the said decision has been placed on record, therefore, in the said circumstances, we set aside the finding of the CIT(A) on this issue and decide this issue in favour of the assessee against the revenue. Deduction u/s 80IAB - interest income arise out of advances to contractor - HELD THAT:- Since the matter of controversy has duly been covered in favour of the assessee by the decision of the Hon ble ITAT in the assessee s own case for the A.Y.2008-09 [ 2014 (8) TMI 959 - ITAT MUMBAI] , therefore, by honoring the said decision we allowed the claim of the assessee. Deduction u/s 80IAB - income from processing fees and lease premium - HELD THAT:- Issue has duly been covered by the decision of the Hon ble ITAT in the assessee s own case for the A.Y.2007-08 in [ 2013 (11) TMI 933 - ITAT MUMBAI] . We also find support of the decision in case of Shreeji Exhibitors Vs. ACIT [ 2015 (8) TMI 886 - ITAT MUMBAI] , Asiatic Stores Soda Fountain Vs. ITO, [ 2017 (10) TMI 1080 - ITAT MUMBAI] . Taking into account all the facts and circumstances, we are of the view that the income in question is liable to be treated as income from business. Taxability of grant from government under head business and rental income - deduction u/s 80IAB - HELD THAT:- Taking into account all the facts and circumstances and by relying upon the above mentioned law in City and Industrial Development Corporation of Maharashtra Ltd. Vs. ACIT [ 2012 (9) TMI 331 - ITAT MUMBAI] , we are of the view that the grant in sum of 1 crores released by Government of Maharashtra on account of repairs and maintenance of airports is not liable to be treated as income of the assessee being in the nature of capital receipt. We noticed that the main object of the assessee is sale and leasing of land. Taking into account all the facts and circumstances, we are of the view that the rental income to the tune of 1,05,000/- is liable to be treated as income business. Accordingly, we decide this issue in favour of the assessee against the revenue. Addition u/s 14A - HELD THAT:- The factual position is not in dispute as the assessee did not earn any exempt income. It is quite clear that the assessee did not earn exempt income in the relevant Assessment Year, therefore, there should not be disallowance in view of the provisions u/s 14A r.w. Rule 8D of the Act. Accordingly, we set aside the finding of the CIT(A) on this issue and hold that the no disallowance is required in view of the provisions u/s 14A r.w. Rule 8D of the Act. Accordingly, this issue is decided in favour of the assessee against the revenue.

  ---

• 2019 (6) TMI 1369
  Addition of transfer of accumulated profit - charitable institution - accumulation of income u/s 11(2)/(3) - HELD THAT:- Hon ble High Court, while quashing the notice u/s 148 for assessment years 1998-99 to 2000-01, held that any accumulated profit u/s 11(3) in the hands of the assessee of the past years is liable to be taxed in assessment year 2001-02. Thus, the limited question which we are required to adjudicate in this appeal is whether there were any accumulated profits in the hands of the assessee within the meaning of Section 11(3) which can be taxed on account of merger of the assessee with EHIRC, Chandigarh. We further find that learned CIT(A) has given the finding that there was no accumulated profit u/s 11(2). Learned CIT(A), after considering the facts of the case in detail including the application of income in each assessment year beginning from assessment year 1986-87, has arrived at the conclusion that there was no accumulation of income in any of the years. On the other hand, the application of income was more than the prescribed limit of 85%. The above finding of fact recorded by the CIT(A) has not been controverted by the Revenue. The assessee has stated before the learned CIT(A) as well as before us that the assessee has not accumulated any income in any of the past assessment year by filing application as prescribed in that Section. The Revenue neither in the assessment order nor during appellate proceedings before the CIT(A) including the remand report before learned CIT(A) has been able to establish that there was any accumulation of income as provided in Section 11(2). Before us also, no evidence is brought on record by the Revenue to establish any accumulation of profit u/s 11(2) by the assessee society. In view of the above, we do not find any justification to interfere with the order of the learned CIT(A) in this regard. The same is sustained and all the grounds raised by the Revenue in this appeal are dismissed. Addition on account of capital gain - EHIRC, Delhi merged with the assessee and all the assets and liabilities vested with the assessee society was converted into a company limited by shares - AO concluded that there is transfer of the assets owned by the assessee AOP to another legal entity within the meaning of Section 2(47) which would attract capital gain u/s 45(1) HELD THAT:- We find the issue to be squarely covered in favour of the assessee by the decision of Hon ble Bombay High Court in the case of Texspin Engineering and Manufacturing Works [ 2003 (3) TMI 56 - BOMBAY HIGH COURT] . The ratio of their Lordships would be squarely applicable to the case of the assessee because in this case also, the assessee AOP was converted into a company under Part IX of the Companies Act. Thus, till the time of conversion, the AOP remained in existence and the moment conversion took place, the company came into existence. However, the AOP and company never remained in existence simultaneously. Section 45(1) would be applicable on transfer of a capital asset. The transfer of a capital asset is possible only when there is a transferor and the transferee. In the absence of existence of the two entities, the transferor and the transferee, there cannot be any transfer. Similarly, in the absence of two entities, the consideration cannot pass from transferor to the transferee. In view of the above, we hold that the above decision of Hon ble Bombay High Court would be squarely applicable to the case of the assessee and has rightly been followed by the learned CIT(A). No contrary decision is brought to our knowledge. In view of the above, we, respectfully following the above decision of Hon ble Bombay High Court in the case of Texspin Engineering and Manufacturing Works (supra), uphold the order of learned CIT(A) and dismiss the appeal filed by the Revenue.

  ---

• 2019 (6) TMI 1368
  Addition of business promotion expenses - purchase of diamond set and watches - personal purposes - HELD THAT:- The AO merely doubted nature of two expense vouchers incurred on account of purchase of diamond set and watches, aggregate of which comes to 8,82,684/-, came to a conclusion that the entire expenditure was not wholly incurred for business purposes. Thus the AO made the disallowance of expenditure on ad-hoc basis. The concept of ad-hoc disallowance has been repeatedly deterred by the Hon ble High Court and addition made on such basis is liable to be set aside. The Hon ble Delhi High Court in case of CIT vs. Ms. Shehnaz Hussain, [ 2003 (7) TMI 27 - DELHI HIGH COURT] held that addition made on estimate and hypothetical grounds without any concrete material or evidence cannot be sustained. Addition made u/s 40A(3) - reimbursements made b to various employees of the company and no single payment exceeds 20,000/- - HELD THAT:- It is pertinent to mention that the amount booked by the assessee company is in the form of reimbursement and not the payment to the outside party in excess of 20000. From the records it can be seen that no single expenditure incurred by Mr. P. Bala Krishnan is in excess of 20000/-. All these facts were taken into consideration by the CIT(A) and has rightly given the findings by deleting the disallowance. Addition of legal and professional charges for compliance - ignoring the fact that separate auditing fees has been paid - HELD THAT:- The assessee had duly furnished supporting evidences in the form of ledger, confirmation from other part, etc. Payments were made vide banking channel. TDS was duly deducted on the said payments. The said receipts were made part of its income by the other company. All these facts and evidences were not controverted by the Assessing Officer in the remand report. The assessee also clarified before the Revenue that the services received from such party were not on account of auditing but on account of monthly accounting services and Annual Compliance Services to take care of statutory functions as mentioned in the order of the CIT(A). Thus, there is no need to interfere with the findings of the CIT(A). Addition of legal and professional charges paid to sister concern - no written agreement with the sister concern from whom the company takes services. - HELD THAT:- M/s ND Satcom Grintex Communication Ltd. has provided services to the company related to proposals which include satellite communication component for the projects the company proposes to take up with the Indian Navy, Air Force, Army DSA, ISRO and with system integrators such as BEL, ECIL, Tata, HCL, L T etc. The parties have confirmed that the services were rendered and responded to notice u/s 131 of the Act. Therefore, the CIT(A) has rightly deleted this addition. Addition of office expenses - HELD THAT:- The Assessing Officer merely on the basis of conjectures and surmises made the ad-hoc additions without bringing any specific reasons to that effect. The CIT(A) has rightly deleted this addition and there is no need to interfere with the findings. Addition of travelling and conveyance expenses - HELD THAT:- In the remand report itself, the Assessing Officer remarked that I have examined the bills and vouchers of the assessee company which seems to be genuine.. Thus, the Assessing Officer has not disputed the genuineness of the evidences produced before the CIT(A). Therefore, after going through the evidences and Remand Report, the CIT(A) has arrived at a proper conclusion of deleting the said addition. - Revenue is dismissed.

  ---

• 2019 (6) TMI 1367
  Penalty u/s 271AAB - no incriminating evidence, papers/documents/stock/cash were found during the search operation other than the statement - addition offered for taxation by the assessee suo moto in order to buy peace of mind - AO treated the assessee s additional income to the tune of 31,00,00,000/- to be representing its undisclosed income u/s 271AAB Explanation (c) - HELD THAT:- We find no merit in Revenue s instant arguments in light of decision of Tribunal s coordinate bench s in DCIT vs. M/s. Rashmi Metaliks Ltd. [ 2019 (2) TMI 1651 - ITAT KOLKATA] pertaining to the very search as well as above stated incriminating documents deleting identified penalty. it was held that income offered by the assessee through its joint declaration was neither represented by any assets found in the course of search nor represented by any entry made in the books of accounts or other documents or transactions found in the course of search and income voluntarily offered by the assessee did not come within the ambit and scope of the expression undisclosed income as defined for the purposes of Section 271AAB. It has come on record that the Revenue seeks to rely upon the same very material as it was used in assessee s sister concern s case pertaining to the very search wherein its identical grievance stands declined vide above extracted detailed discussion. We adopt the said reasoning mutatis mutandis in the instant case as well as no distinction on facts and law has been pointed out at the Revenue s behest. The CIT(A) s order under challenge deleting the impugned penalty is confirmed accordingly. - This Revenue s appeal is dismissed.

  ---

• 2019 (6) TMI 1366
  Disallowance of commission payment - payee not found address provided by the assessee during remand proceedings - HELD THAT:- The transactions, in question, relate to F.Y 2008-09 while so, a verification during the month of July 2015 cannot give the correct fact as to whether Mr. Shah was at that address. He would have shifted. The assessee is right when she says that she cannot keep track of the person with whom she had done transactions. AO in the remand report confirms that the address given by the assessee is same that which was given by Mr. Shah in his PAN card. AO also confirms that Mr. D.R. Shah has filed his return of income for that particular assessment year. This confirms the identity of Mr. D.R. Shah. The genuineness of the transactions is proved by the fact an MOU was entered and that in each of the bills/invoices raised, the details of services rendered, the details of transactions for which commission was paid, was mentioned. Disallowance in question is bad in law. We direct the A.O to allow the claim of assessee of payment of commission. In the result, the ground of the assessee is allowed. Disallowance of Written off of bad debts - HELD THAT:- Assessee was not able to substantiate to the revenue authorities, as to whether the amount, in question, was taken into account in computing income of the assessee in any of the previous years. Thus, we hold that the amount was rightly disallowed u/s 36(1)(vii). Be as it may, the assessee had written off this amount as recoverable. This amount was held as a current asset by the assessee and has been written off in books of accounts after a number of assessment years on the ground that the same had been irrecoverable. the amount, in question, has to be allowed as the business loss u/s 37(1). The Assessing Officer is directed to do so.

  ---

• 2019 (6) TMI 1365
  Addition u/s 68 - assessee opted to declare income u/s 44AD @ 8% - HELD THAT:- Section 44AD gives an option to the assessee to offer income on presumptive basis. These are special provisions. The assessee has opted for the same and offered to tax income at the rate of 8% of his turnover. The issue is whether, the AO can examine statement of accounts in such cases, make additions towards undisclosed purchases, undisclosed expenditure, under valuation of closing stock etc., The turnover declared by the assessee is accepted by the revenue. In my considered opinion such additions go against the spirit of the Act. Section 44AD was introduced to help the small traders who have difficulties in maintaining books of account and other records. Tax is levied on presumptive basis. Thus delete the addition in question. The case-law relied upon by the CIT(A) are not applicable to the facts of the case, as in that case what was held is that an addition u/s 68 could be made when income has been estimated. AO nor the CIT(A) have given any reason as to why the provisions of Section 44AD of the Act are not applicable to this case. Hence, we delete all the addition made in this case. The income returned, is directed to be accepted, by the Assessing Officer. - Appeal of the assessee is allowed.

  ---

• 2019 (6) TMI 1364
  Depreciation on Goodwill - AO disallowed as assessee has not claimed depreciation on goodwill at the time of filing of return - HELD THAT:-We find that the Ld. CIT(A) deleted the disallowance by relying on the decision of Hon ble Supreme Court in the case of Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] , wherein it was held that Goodwill is an asset under Explanation 3(b) to section 32(1) and, thus it is eligible for depreciation. We uphold the order of the Ld. CIT(A) on the issue-in-dispute. Accordingly, ground of the Revenue is dismissed.

  ---

• 2019 (6) TMI 1343
  Depreciation on wheel loaders and wheel graders - @ 40% OR 25% - HELD THAT:- The details of the fixed assets on which depreciation has been claimed are also filed before us. On perusal of the same, we find that the wheel loaders and graders are motor vehicles as held by the Coordinate Bench of this Tribunal in the case of NAC Infrastructure Equipment Ltd [ 2016 (7) TMI 1528 - ITAT HYDERABAD] , assessee s sister concern. Therefore, respectfully following the decision of the Coordinate Bench, we do not see any reason to interfere with the order of the CIT (A). Therefore, the Revenue s appeals are dismissed. Disallowance of claim of leave encashment on provision basis - HELD THAT:- Though the issue is covered in favour of the assessee by the decision of the Hon ble Calcutta High Court in the case of Exide Industries Ltd vs. Union of India [2007 (6) TMI 175 - CALCUTTA HIGH COURT] and the Coordinate Bench of the Tribunal in the case of DCIT vs. A.P Seeds Development Corporation Ltd [2014 (3) TMI 1004 - ITAT HYDERABAD] has followed the same to hold that the provisions made towards leave encashment is allowable as a deduction, he submitted that the decision of the Hon ble Calcutta High Court has been stayed by the Hon ble Apex Court [ 2008 (9) TMI 921 - SC ORDER] and the issue is pending for adjudication. As prayed that the issue may be remanded to the file of the AO to pass the final order after the Apex Court decides the issue - we deem it fit and proper to remand the issue to the file of the AO with a direction to give effect to the Hon ble Supreme Court s decision in the case of Exide Industries Ltd (Supra). Thus, ground treated as allowed for statistical purposes Disallowance of labour charges - AO disallowed 5% of the labour charges -CIT (A) restricted the disallowance to 5.00 lakhs - HELD THAT:- AO has made an adhoc disallowance without pointing out any discrepancy or defects in the books of account. The CIT (A) observed that the disallowance on the labour charges is on a higher side and hence restricted it to 5.00 lakhs. We are of the opinion that only such expenditure which is not substantiated by proper bills vouchers or which could not be explained by the assessee can be disallowed. Even for making the adhoc disallowance, there has to be a basis or comparative analysis. Since there is no such material on record, we are satisfied that the adhoc disallowance is not sustainable.

  ---

• Customs

• 2019 (6) TMI 1363
  Bail application - Service of detention order - section 3(3) of Conservance of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - HELD THAT:- Respondent no. 3 Detaining authority was aware of the requirement of serving orders of detention and grounds of detention with relied upon documents. It is in the face of this requirement and knowledge it passed the order which we have mentioned supra. The submission that preparation of pages and bulk of record did not enable the respondents to serve relied upon documents simultaneously with the order of detention upon the petitioners, is therefore, unsustainable. The authorities could have in appropriate cases indicated that because of huge records and necessary clerical work, relied upon documents would be served in terms of section 3(3) of COFEPOSA Act. The order does not carry any mention on these lines and on the contrary it gives an impression to the contrary. The impugned order of detention is unsustainable - appeal allowed.

  ---

• 2019 (6) TMI 1356
  Permission to withdrawal of petition - Refund of IGST paid - duty drawback - inadvertent error - HELD THAT:- The learned counsel appearing in support of the petitioner seeks to withdraw the Petition with a liberty to approach the respondent under the proviso to section 149 of the Customs Act, 1962. We, however, make it clear that the issue of application of proviso to section 149 to the facts of this case would be considered in accordance with the law by the authority to whom the application for rectification is made. Petition is disposed of as withdrawn.

  ---

• 2019 (6) TMI 1355
  Valuation of imported goods - Aluminium waste as raw material for self consumption - rejection of declared value - enhancement of value of imported goods based on contemporaneous imports of NIDB data - HELD THAT:- The appellant is a regular importer and have given the consent for clearance of the goods. On identical facts in the appellant own case for earlier period CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (5) TMI 1152 - SUPREME COURT] it was held that the adjudication order in original is flawed and contrary to law for it does not give cogent and good reason in terms of Section 14(1) and Rule 12 for rejection of the transaction value as declared in the bill of entry. The order in original is not in accordance with Section 14 and Rules 3 and 12 as the mandate of these provisions has been ignored. The enhancement of value is to be set aside - appeal allowed - decided in favor of appellant.

  ---

• Corporate Laws

• 2019 (6) TMI 1354
  Restoration of name in the register of companies - restoration of name rejected on the ground that the company was not in operation and carrying on any business - HELD THAT:- The undisputable legal preposition, as embodied in section 248 (1)(c) of the Companies Act, 2013 being that a company not carrying on any business or in operation for a period of two immediately preceding financial years is liable to be removed from the register of companies, the onus of proof that the appellant company was carrying on business and conducting operations during the aforesaid period lay on the appellant who failed to discharge the same by not even responding to the statutory notice. In absence of any material to dislodge the finding recorded by the NCLT, such finding cannot be termed erroneous much less perverse. We are convinced that the instant case is one where the appellant company, pursuant to its incorporation, failed to carry on business. There is no documentary evidence on record to establish even a semblance of commencement of operations by the Appellant Company from its very inception. Appeal lacks merit and is dismissed.

  ---

• Insolvency & Bankruptcy

• 2019 (6) TMI 1362
  Admissibility of application - initiation of CIRP - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- The documentary evidence placed on the case file is sufficient in order to ascertain the existence of a default on the part of the Corporate Debtor. The Financial Creditor has fulfilled all the requirements of law including the name proposed for appointment of IRP after obtaining consent in Form-2. Hence, the Application stands admitted. The commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Mr. A.R. Ramasubramania Raja is hereby appointed as IRP as has been proposed by the Financial Creditor - The moratorium is hereby declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process - Application admitted.

  ---

• 2019 (6) TMI 1353
  Initiation of Corporate Insolvency Resolution Process - default in repayment of total amount alongwith the interest - section 7 of Insolvency Bankruptcy Code, 2016 (I B Code) - HELD THAT:- The present proceedings are not concerned with the validity of the lease deed, the existence of security interest upon an asset of the Corporate Debtor. The present proceedings under section 7 of the I B Code are only concerned with the existence of Debt and Default. The credit facility was extended to the Borrower, and the same was secured by hypothecation and mortgage. Thus, it would not make any difference whether the Petitioner has a secured interest on an asset belonging to the Corporate Debtor or not as it is having a security interest in the assets of the Borrower Company. The Corporate Debtor has admitted that it has executed the Corporate Guarantee dated 06.11.1987 in its letter dated 20.05.2017 addressed to the Petitioner. Thus, the fact of the execution of Corporate Guarantee is admitted by the Corporate Debtor. When the deed was signed at the time of taking a loan, the Guarantor now cannot contend that the deed is treated as revoked based on its notice to the Petitioner and Lenders as this can only be adjudicated by a Court of appropriate jurisdiction. The Petitioner has been assigned the loans by the Lenders of the Borrower Company. The Corporate Debtor is a Corporate Guarantor of the Borrower Company. The Petitioner is thus a Financial Creditor of the Corporate Debtor within the meaning of section 5(7) of the I B Code - The Corporate Debtor has not denied the sanction and disbursement of loan from the Lenders to the Borrower Company. The said loan is in default is also not disputed. The Application under sub-section (2) of Section 7 of I B Code, 2016 is complete - the application is admitted - moratorium declared.

  ---

• 2019 (6) TMI 1352
  Admissibility of petition - Initiation of Corporate Insolvency Resolution process - Corporate debtor - Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short, IB Code, 2016) r/w Rule 6 of the Insolvency and Bankruptcy (Application of Adjudicating Authority) Rules, 2016 (for brevity, IB Rules 2016) - HELD THAT:- On perusal of material documents placed before this Bench, it is clear that the invoices are reflecting supply of materials and also demand for payments towards the materials supplied to the Corporate Debtor herein. Since the Operational Creditor furnished the proof to believe that debt and default are in existence, for their being no dispute from the Corporate Debtor side against the claim made by the Operational Creditor, this Bench, having satisfied with the proof filed by the Operational Creditor in compliance with the provisions of Sections 8 and 9 of the I BC, 2016 admits the instant Company Petition 1243/IB/2018 filed under Section 9 of the I BC. Since the Operational Creditor has not recommended the name of Interim Resolution Professional (IRP), we appoint Mr.S. Sivarama Krishnan as IRP from the list provided by the IBBI Panel. The IRP is directed to take charge of the Respondent/Corporate Debtor management immediately. The IRP is also directed to cause public announcement as prescribed under section 15 of the I B Code, 2016 within three days from the date of copy of this order is received and call for submissions of claim in the manner as prescribed - Moratorium declared.

  ---

• Service Tax

• 2019 (6) TMI 1361
  CENVAT Credit - input services - Goods Transport Agency service - time limitation - reverse charge mechanism - merger of service tax and Cenvat credit as on 30/12/2004 - HELD THAT:- Tribunal, relied on decisions of Delhi High Court in the cases of CST Vs. Hero Honda Motors Ltd. [ 2012 (12) TMI 734 - DELHI HIGH COURT] and CC Vs. Nahar Industrial Enterprises Ltd. [ 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT] to allow the claim. In both the above cases, the court after placing reliance upon Rule 3(4)(e) of the Cenvat Credit Rules, 2004 and section 68 of the Finance Act, 1994 held that the Cenvat credit available could be utilised by the respondent to discharge its obligation of payment of service tax on GTA service on reverse charge mechanism. No distinguishing features in fact or in law are brought to our notice which would justify our taking a different view. The question of law as proposed does not give rise to any substantial question of law. Extended period of limitation - demand of the revenue is time barred - HELD THAT:- On introduction of Cenvat Credit Rules, 2004, the respondent by its letter dtd.19/01/2005 brought to the notice of the authorities that in view of the new Rules, it is permitted to utilise the service tax credit for payment of excise duty on manufactured goods and vice-versa. Tribunal found that the Revenue was aware that the respondent was taking the merged credit in 2004, in view of intimation dtd.19/01/2005. Thus, the Tribunal held that the show-cause notice is time barred and allowed the respondent s appeal before it. This decision of the Tribunal is one on facts and nothing has been shown to us to indicate that the same is perverse. - substantial question of law. - appeal dismissed.

  ---

• 2019 (6) TMI 1351
  Condonation of delay of 387 days in filing appeal - sufficient cause - HELD THAT:- It is imperative to note that the order in original was passed on 12th January 2012. There was a delay in challenging the order in original before the Commissioner (Appeals) and, thus, the said appeal came to be dismissed as having been filed beyond the stipulated period of limitation, on 30th November 2016. The delay of 387 days in assailing the said order before the Tribunal, evidently, occurred at the second stage. It is true that the Court is expected to lean in favour of condonation of delay so that the lis is determined on merits. The Courts and Tribunal generally adopt a liberal approach and the expression, sufficient cause is construed rather generously so as to advance substantial justice. However, the cause ascribed by a litigant must relate to the events which transpired in proximity to the passing of the order sought to be assailed. In the case at hand, the principal reason assigned for not filing the appeal is the death of one of the Partners of the petitioner No.1 firm. The said event occurred in the year 2010. The death of the partner of the petitioner No.1 occurred even before passing of the order in original. Since the order sought to be impugned before the Tribunal, was passed on 30th November 2016, the Tribunal was justified in refusing to condone the delay on account of a cause which had no causal connection with the period in question. If the said cause is discounted, then it seems to be a case of no specific and bonafide explanation relatable to the period of delay - The material on record, on the contrary, indicates that the petitioners have not been diligent in pursuing the remedies as the delay occurred in preferring the appeal against the order in original before the Commissioner (Appeals) and also in assailing the order passed by the Commissioner (Appeals) before the Tribunal. The impugned order cannot be said to be either perverse or unreasonable so as to warrant interference by this Court in exercise of extraordinary jurisdiction under Article 226 and 227 of the Constitution of India - petition dismissed.

  ---

• Central Excise

• 2019 (6) TMI 1350
  Valuation - undervaluation of goods - demand based on consumption of fuel, increase in price of goods after initiation of investigation etc - demand of 3,28,68,656/- has been made on the ground that the Appellant had undervalued the goods on the basis of statements of buyers - HELD THAT:- We find that except the statements of some buyers no evidence has been put on record. The evidence in the form of details of cash receipts from buyers, any document proving cash transaction on account of undervaluation has not been brought on record. We also find from the statement of buyers that the statements were inconsistent as initially they stated that the cash amount was given to Appellant through Angadias or their Tiles dealers. However in subsequent statements they stated that the amount was handed over to Shri Hiteshbhai, employee of Appellant Unit. During investigation no evidence of any unaccounted money having been received by the appellant from any of the tile manufacturers was found. The main plank of investigation was that the excess amount was routed through shroffs, angadias and dealers of tile manufacturers. However, no instance of any money having been received through these agencies have been cited in the show cause notice. Admittedly no evidence of the appellant having received the huge amount in unaccounted manner from more than 26 customers to whom frit was sold from February 2005 to February 2010 was found. Even the cross examination of persons whose statements has been relied upon to allege undervaluation was not provided. Not a single insistence of cash receipt at Appellant s end is on record. In such case when the allegation is based upon the statements of buyers which is not supported by even a single evidence and in the light of the fact that no cross examination of such persons whose statements were relied upon was allowed, thus the demand does not sustain. Also the Appellant has adequately justified the increase in prices in subsequent years due to increase in prices of raw material and change in machinery. We find that no adverse reasoning has been given against such contention of Appellant. Even otherwise the allegation of undervaluation of goods is based merely upon statements and not any evidence. We are thus of the view that the demands on account of undervaluation which is based merely upon the statement of some buyers are not sustainable. Demand of 2,95,33,205/- has been made against the Appellant on the basis of gas consumption - alleged excess consumption of gas - HELD THAT:- Except alleging excess consumption of gas no evidence in the form of procurement or excess consumption of raw materials has been brought on record. Frit is manufactured from eight raw materials and none of the said raw materials has been shown to have been procured in illicit manner or consumed in excess. In such case the demands has no legs to stand - the demands based upon consumption of natural gas is not sustainable as the same is not supported by procurement of any raw material, its processing or transportation and identification of any buyer. Demands of 81,784/- has been made against the Appellant on the ground that they have cleared goods on parallel invoices - HELD THAT:- In case of one of the invoices though the alleged consignee M/s Swagat Ceramics has accepted the receipt of goods, no evidence of such removal has been found from the Appellant s end. Even the format of such alleged parallel invoice is different from the invoice format of the Appellant and there is no corroborative evidence of transportation of goods - In case of other 5 parallel invoices, the buyers of the goods have refused receipt of any goods. The officers had recorded the statement of Shri Samir Parekh, the proprietor of the Appellant concern who also has refused supply of goods and issue of parallel invoice. In such case we do not find any reason to uphold the demand against the Appellant. SSI Exemption - Demand of 62,67,000/- has been made against the Appellant on the ground that after addition of the value of undervalued and clandestine removal, the sale value of the Appellant crosses the SSI Exemption limit and the Appellants are not entitled for SSI exemption in respective years - HELD THAT:- Since the charges of undervaluation and clandestine removal of goods are not sustainable against the Appellant, hence there is no reason to deny them the benefit of SSI Exemption - subject demand is therefore not sustainable. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (6) TMI 1349
  Clandestine removal - confiscation of seized goods loaded in the intercepted truck on the ground that the same has been cleared without payment of duty - Revenue s case is that the said excise invoice was raised subsequently by assessee on receiving the information of interception of the truck - HELD THAT:- There is no dispute with the finished goods intercepted by the officers tallied with the depot challan (transporter copy) accompanying the consignment with regard to the item code, quantity and description of the goods. Though Shri Ajay Kumar Shah who was accompanying the consignment made a call to his factory but the subject matter of the call is not available with the Revenue. Making a call by itself intimating the office persons as regards interception of the truck will not go to prove that the excise invoice was made on receipt of such information. The said findings of the Lower Authorities are based upon the assumption and presumption. As such, inasmuch as the goods found loaded in the truck and intercepted by the officers have already discharged their duty burden, there is no reasons to confiscate the same. Shortages of goods - HELD THAT:- There is no evidence to show that the said goods have been cleared by the assessee without payment of duty - It is well settled law that findings of clandestine removal cannot be upheld on the basis of shortages detected in the stock at the time of visit of the officers - the Central Excise officers have not presented any evidence to show removal of the said goods, the demand of duty cannot be upheld on the basis of only shortages - demand set aside alongwith penalty. Confiscation of Currency - HELD THAT:- Apart from the fact that the Currency in question was not recorded in the cash book records, Revenue has not advanced any reason to show that the same was the sale receipts of the smuggled goods - confiscation of the Indian Currency is set aside. Penalties - HELD THAT:- Inasmuch as the demand have been set aside against M/s Prabhat Zarda Factory (India) Ltd. alongwith setting aside of confiscation of Indian Currency, the penalties imposed upon them as also on the other two appellants are required to be set aside - the confiscation of the truck is also required to be set aside. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (6) TMI 1348
  CENVAT credit - inputs - steel melting scrap - it was alleged that the steel melting scrap which is an input for appellant No.1 does not include any of the items mentioned in the description of the goods found during the course of investigation - HELD THAT:- There is no allegation in the SCN that the goods in question have not been received by appellant No.1 from appellant No.2. In the SCN the only issue is that the goods in question cannot be the inputs to manufacture final products by the appellant No.1. To ascertain such fact, no visit was made by the Revenue in the factory premises of the appellant No.1. No process of manufacturing has been brought on record. Moreover, no evidence has been produced by the Revenue that the said goods have not been diverted to be used by the appellant-manufacturer to manufacture final products, therefore, the allegation made against the appellant is only on the basis of assumptions and presumptions. The Revenue has not come with any evidence to show that the said inputs cannot be used by the appellant-manufacturer to manufacture their final products. No expert opinion has been obtained by the Revenue. No statement of transporter has been recorded to allege diversion of the goods. Therefore, the credit cannot be denied. Diversion of goods and non receipt of goods by the appellant- manufacturer - scope of SCN - HELD THAT:- As there is no such allegation in the show cause notice to allege that the goods were never received by the appellant-manufacturer and supplied by the dealer, in that circumstance, the adjudicating authority has gone beyond the scope of show cause notice. Appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2019 (6) TMI 1360
  Refund alongwith interest - pendency of SLP before Supreme Court - condonation of delay in filing appeal - Time limitation - HELD THAT:- The issue with regard to the entitlement of the claim of interest on refund under section 54(1)(aa) of the Gujarat Sales Tax Act, 1969 came to be set at rest by this Court in June, 2018. However, the SLP came to be preferred in April, 2019. We are informed that the Supreme Court has condoned the delay and the SLP has now been ordered to be posted for hearing. For the present, we adjourn this matter to 03/07/2019 . However, if there is no further development in the Supreme Court, then we may consider to direct the respondents - State to deposit the requisite amount either with the tribunal or with the registry of this Court.

  ---

• 2019 (6) TMI 1359
  Requirement of pre-deposit to entertain the revision petition - Section 82(2A) of the AVAT Act, 2003 - HELD THAT:- Upon reading of Section 82(2A) of AVAT Act, 2003, it is discernible that the first paragraph of Section 82(2A) of AVAT Act, 2003 provides that the Commissioner shall not entertain an application for revision without 25% of the demanded amount being deposited. But at the same time the second paragraph containing a proviso, provides that in the event an application is made, the Commissioner may for reasons to be recorded in writing and subject to furnishing of such security as may be deemed fit, admit an application either with part payment or without any payment of the disputed amount of the tax including the penalty. The requirement of giving a reason for granting or not granting the exemption is also an indication that any such application made under the provision of the second paragraph of Section 82(2A) would necessarily have to be entertained and considered, as otherwise the requirement of giving a reason cannot be complied with. In the present case, as the records reveals that the petitioner had filed an application for exempting the payment of the 25% of the demanded amount, the Court is of the view that it is incumbent upon the Commissioner to give a consideration to the said application and pass a reasoned order thereon as deemed appropriate under the law and in the facts and circumstance of the case - petition allowed.

  ---

• 2019 (6) TMI 1347
  Garnishee Order - adjustment of dues - CST Act - HELD THAT:- The petitioner is given liberty to request first respondent to pass orders for recalling the garnishee order issued to Axis Bank. If such a request is made, the petitioner is maintaining minimum balance of 8 lakh rupees towards security for answering the claim of respondents, the Assistant Commissioner of Sales Tax passes an order on the request of the petitioner for recalling the garnishee order within two weeks from the date of receipt of such request. Minimum balance amount of 8 lakhs now directed to be maintained is subject to further or final orders on Ext.P5. Petition disposed off.

  ---

• 2019 (6) TMI 1346
  Enquiry issued under Section 47(6) of the Kerala Value Added Tax Act, 2003 - ex-parte order - denial of opportunity of hearing - principles of natural justice - whether the quick succession of dates from Exts.P1 to P4, amounts to affording reasonable opportunity or there is violation of principles of natural justice? - HELD THAT:- This Court has difficulty in accepting the contention now vehemently put forward by the learned Government Pleader, for the petitioner at no point of time tried to procrastinate the enquiry and the one adjournment, which he is otherwise legally entitled to is also brushed aside in haste. Ext.P4 is set aside as contrary to principles of natural justice - The matter is remitted to first respondent for consideration and disposal in accordance with law - petition allowed by way of remand.

  ---

• 2019 (6) TMI 1345
  Constitutional validity of sub-rule (5) of Rule 41 of the Assam Value Added Tax Rules, 2005 - validity of circulars dated 08.09.2011, 18.11.2011, 14.03.2012, 14.03.2012 and 18.05.2012 - power vested with the Commissioner to issue circulars - HELD THAT:- Through the proviso, the Commissioner is empowered to direct the relevant information in the electronic format to be uploaded. Such proviso is a part of the Rule which is framed by the Government by which it provides for the Commissioner to issue appropriate directions. The same cannot be considered as sub-delegation of the power. Hence, the contention in that regard cannot be accepted and the decisions rendered would not be relevant for the said purpose. Levy of penalty - failure to upload the documents in electronic form - documents required to accompany the goods - Held that:- Though sub-rule (5) to Rule 41 provides for uploading the documents in electronic format, the non-compliance of the same does not indicate any consequence nor the circulars issued in that regard specifies any consequence for non compliance. The circular only indicates the ease with which the checking could be completed at the check posts. In that background, when penalty is to be imposed for non-compliance of the requirement of production of the documents provided for in Section 75(3) and Rule 41(9) and when presumption of evasion of taxes is rebuttable by production of the documents, the Authorities were required to apply their mind to this aspect of the matter. The documents as referred to by the petitioners in their reply dated 7.1.2014 were to be examined to find out as to whether the said documents were genuine and whether the documents were in existence as on the date of movement of the goods. In that regard, if the authorities were satisfied that the documents in the physical form was available as on the date of the movement of the goods, in such event a consideration was necessary to be made as to whether penalty was leviable only because the uploading in the electronic format was not done. In the instant case, no such exercise has been done, but the penalty has been imposed only on the observation that on-line declaration had not been made. Insofar as the tax levied at 50,475/-, in any event, the same was required to be paid and the petitioner having paid the same, has secured the release of the goods through interim order passed by this Court, which has only stayed the recovery of penalty. In that circumstance, it would be appropriate to set aside the orders dated 22.05.2014 and 30.05.2014 and remit the matter to the Superintendent of Taxes to take a decision at the outset and, thereafter, to enable the Inspector of Taxes to take a decision thereafter - petition allowed by way of remand.

  ---

• Indian Laws

• 2019 (6) TMI 1344
  Dishonor of Cheque - Complaint by Power of Attorney Holder who have no knowledge of facts - whether respondent is a wakf or not - Scope of Affidavit filed with complaints - Maintainability of summon orders - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- The affidavits appear to prima facie fulfil the parameters of observations in para 8 of the said verdict (A.K.K. NAMBIAR VERSUS U.O.I. [ 1969 (10) TMI 79 - SUPREME COURT] ) in the circumstances put forth. However, the same does not suffice to bring forth the maintainability of the complaints as of date. The trustees are joint owners of the trust property and a Trust does not have a legal existence of its own and no single trustee can sue in the name of the Trust and all trustees must be impleaded in the suit and the trustees execute a power of attorney empowering one of them to represent all and cannot do so by passing a resolution and that all trustees should join the suit. It is thus indicated that Rabea Begum, Executant No.3 died on 5th October, 1949 and Hakim Mohammad Said, Executant No.2 was declared an evacuee and his share was taken possession of by the Custodian of Evacuee Property and thus Mr. Hakim Abdul Hameed, Executant No.1 became the sole surviving Wakif-Mutawalli and all rights, powers and duties of Wakif Mutawalli conferred by the Deed thus vested in him and it was mentioned thereby that he would be construed to mean the sole surviving Wakif-Mutawalli in relation to the all rights, powers and duties provided for the Wakif Mutawallis in the Wakf Deed as it has been submitted through the submissions made on behalf of the petitioner and which have not been refuted on behalf of the respondent that even the said Shri Hakim Abdul Hameed who executed the Power of Attorney in favour of Javed Akhtar has since expired, there is nothing that has been put forth on the record by the respondent to indicate that there is any other Chief Mutawalli that has been appointed apart from the factum that it has already been laid down by this Court that the respondent is not a Wakf. Petition not maintainable and the summoning orders are thus quashed.

  ---