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TMI Tax Updates - e-Newsletter July 11, 2019 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS If the authority has reason to believe that goods liable to be confiscated are likely to be secreted, prohibition order can be issued - GST Refund of IGST - Export - simultaneous duty drawback claim - circular dated 9.10.18 will not save the situation for revenue - Refund allowed TMI Short Notes Income Tax: Reopening of assessment - Substance over Form - Failure to disclose material fact - Duty of the AO to make an enquiry to test the correctness of the disclosure made even if the statutory forms signed and certified by the Chartered Accountant GST: Evasion of GST - Jurisdiction of inspect and search - Power to issue Seizure (prohibition) order - Proper authorization –Section 67 of the Goods and Service Tax Act, 2017 GST: Refund of IGST - Export of goods - only because the exporter had claimed drawback @ 1% in regard to the exported goods, no power to deny refund of IGST Articles Time limit for availing ITC for F.Y. 2017-18 - Last date of filing annual return (31/08/2019) CHANGES IN CUSTOMS ACT BROUGHT BY THE FINANCIAL (NO.2) BILL, 2019 OPC - Regulated form of Sole Proprietorships Definition of approved modes of payment and receipts is desirable for simplicity of provisions including proposed amendments. News Pharmaceutical and Export Promotion Council Second India-Russia Strategic Economic Dialogue held Cabinet approves the Banning of Unregulated Deposit Schemes Bill, 2019 Misuse of Export Promotion Schemes SEZs in Karnataka Import Duty on Apple FDI in Multi - Brand Retail Violation of FDI Norms Increase in Economic Growth Rate NPAs Written Off By PSBs Jan Dhan Accounts in Private/Public Sector Banks Waiving off Loans of Farmers in Drought Prone Areas Financial Problems in Banks Due to Frauds and NPAs Safety of Cash Vending Machines Waiving off Charges on NEFT and RTGS Minimum KYC Wallets for Low Value Transactions Bank Reforms to Check Frauds Extension of last date for filing IT returns Rise in NPAs of PSBs Liquidity Situation in NBFCs Persons Held Responsible for Bank Frauds Increase in Infrastructure Investment Notifications Customs 49/2019 - dated 9-7-2019 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver 28/2019 - dated 9-7-2019 - Cus (NT) Appointment of CAA by Pr. DGRI GST - States CT/LEG/GST-NT/12/17/20 - 09/2019 - dated 28-6-2019 - Nagaland SGST Seeks to extend the due date for furnishing FORM GSTR-1(1.5 crore and above) CT/LEG/GST-NT/12/17/19 - 08/2019 - dated 28-6-2019 - Nagaland SGST Seeks to extend the due date of filing returns in FORM GSTR-7 22728-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 225/2019 - dated 1-7-2019 - Orissa SGST Seeks to specify retail outlets established in the departure area of an international airport. 22611-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 223/2019 - dated 29-6-2019 - Orissa SGST The Odisha Goods and Services Tax (Fourth Amendment) Rules, 2019. 22607-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 222/2019 - dated 29-6-2019 - Orissa SGST Seeks to extend the due date for furnishing FORM GSTR-1 (1.5 crore and above) 22603-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 221/2019 - dated 29-6-2019 - Orissa SGST Seeks to provide exemption from furnishing of Annual Return Reconciliation 22599-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 220/2019 - dated 29-6-2019 - Orissa SGST The Odisha Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019. 8481/CT/POL-41/1/2017-Policy - dated 28-6-2019 - Orissa SGST Furnishing of return Form GSTR-3B for the month July to September 2019 electronically. 22265-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 217/2019 - dated 27-6-2019 - Orissa SGST Amendments in the Notification of the Government of Odisha in the Finance Department No.19869-FIN-CT1-TAX-0022/2017/FIN., dated the 29th June, 2017. 22261-FIN-CT1-TAX-0043/2017/FIN - S.R.O. No. 216/2019 - dated 27-6-2019 - Orissa SGST Amendment in the Notification of the Government of Odisha in the Finance Department No.16540-FIN-CT1-TAX-0043/2017/FIN., dated the 24th April, 2019. S.O.71/P.A.5/2017/S.172/2019 - dated 6-6-2019 - Punjab SGST Punjab Goods and Services Tax (Removal of Difficulties) Order, 2019. S.O.70/P.A.5/2017/S.9/2019 - dated 6-6-2019 - Punjab SGST Notify that the registered person or unregistered supplier shall pay tax on reverse charge basis as recipient of such goods or services or both. S.O.69/P.A.5/2017/S.148/2019 - dated 6-6-2019 - Punjab SGST Notify the following classes of registered persons. S.O.68/P.A.5/2017/S.11/Amd./2019 - dated 6-6-2019 - Punjab SGST Amendment in the Punjab Government, Department of Excise and Taxation, Notification No. S.O.37/P.A.5/2017/S.11/2017, dated the 30th June, 2017. S.O.67/P.A.5/2017/S.172/2019 - dated 31-5-2019 - Punjab SGST The Punjab Goods and Services Tax (Removal of Difficulties) Order, 2019 S.O.66/P.A.5/2017/S.148/2019 - dated 31-5-2019 - Punjab SGST Filing of Return CMP-08 for composition dealers till 18th of every quarter. G.S.R.25/P.A.5/2017/S.164/Amd.(30)/2019 - dated 31-5-2019 - Punjab SGST The Punjab Goods and Services Tax (5th Amendment) Rules, 2019. S.O.65/P.A.5/2017/S.172/2019 - dated 9-5-2019 - Punjab SGST The Punjab Goods and Services Tax (Removal of Difficulties) Order, 2018 S.O.64/P.A.5/2017/S.172/2019 - dated 9-5-2019 - Punjab SGST The Punjab Goods and Services Tax (Removal of Difficulties) Order, 2019. S.O.63 /P.A.5/2017/S.172/2019 - dated 9-5-2019 - Punjab SGST The Punjab Goods and Services Tax (Removal of Difficulties) Order, 2019. S.O.62/P.A.5/2017/S.128/Amd./2019 - dated 9-5-2019 - Punjab SGST Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.7/P.A.5/2017/S.128/2018, dated the 07th February, 2018. S.O.61/P.A.5/2017/S.128/Amd./2019 - dated 9-5-2019 - Punjab SGST To waive the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR-3B. S.O.60/P.A.5/2017/S.128/Amd./2019 - dated 9-5-2019 - Punjab SGST Amendments in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.13/P.A.5/2017/S.128/2018, dated the 27th February, 2018. G.S.R. 24/P.A.5/2017/S.164/Amd.(29)/2019 - dated 9-5-2019 - Punjab SGST The Punjab Goods and Services Tax (Fourth Amendment) Rules, 2019. Circulars / Instructions / Orders VAT - Delhi 02 of 2018-19 - dated 10-7-2019 System based Assessment of mismatch of Annexure 2A-2B in respect of Composition dealers covered under section 16 of DVAT Act 2004 Highlights / Catch Notes GST Evasion of GST - Jurisdiction of inspect and search - cotton seeds and bales - even if the authority has reason to believe that the goods liable to be confiscated are likely to be secreted, the authority will have the power to pass an order of prohibition pursuant to the order of seizure. Visit to Get Source Refund of IGST - Export of goods in July 2017 - zero rated supplies - simultaneous duty drawback claim - circular dated 9.10.2018 explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents - Refund to be allowed with 7% interest. Visit to Get Source Search and seizure - pure service - parking lots - under Article 3 of the Notification, pure service by way of any activity in relation to any function entrusted to a Municipality under Article 243W of the Constitution is exempted from payment of GST Act - interim order staying all further proceedings for realization of GST for municipal parking lots which, prima facie, is not payable Visit to Get Source Income Tax Reopening of assessment - Substance over Form - Failure to disclose material fact - Duty of the AO to make an enquiry to test the correctness of the disclosure made even if the statutory forms signed and certified by the Chartered Accountant Visit to Get Source Dis-allowance of the commission paid to non-resident foreign agents - under invoicing - Non disclosure of Commission to the agent paid at the time of import - There is no tax effect whatsoever by reason of the expenditure made by foreign buyers by way of commission paid outside India. - Claim cannot be denied. Visit to Get Source Non adjudication of grounds by tribunal - Liability of TDS u/s 194C - Tribunal ought to have rendered a finding on the grounds raised by the assessee with regard to the applicability of Section 194C on the IUC paid to the other telecom operators and remanded on alternative ground - without any finding on the applicability of Section 194C the order passed by the Tribunal should be and shall be read as an open remand to the AO Visit to Get Source Exemption u/s 11 - registration u/s 12AA - the assessee is carrying out certain activities which can be termed as religious activities but in our considered opinion can also be construed as a charitable activities - there is no bar in granting a registration u/s 12AA to the Application trust for religious purposes - directed to grant registyration Visit to Get Source Allowability of interest expenditure u/s 36(1)(iii) - prior to its amendment by Finance Act, 2015 - prohibition of claim of interest on revenue account only where capital was borrowed for acquisition of an asset for ‘extension of existing business or profession’ - since capital borrowed resulted in acquisition of asset without resulting in extension of existing business per se - revenue expenditure Visit to Get Source Exemption u/s 10(20A) - Delhi metro - the assessee failed to satisfy the condition of “authority constituted by under any Central, State of Provincial Act”, it is merely registered or incorporated under the Companies Act, 1956 - no exemption Visit to Get Source Deduction u/s 54F - claim made for the first time before the CIT(A) - the appellate authority has power to consider a claim not made in the return and deduction u/s 54F was duly allowable where the property was purchased in the name of the wife of the assessee Visit to Get Source Interest earned on short term deposits - capital receipt OR Income from Other Sources - two Authorities below and the Tribunal, proceeded on the legal principle without making an in-depth study on the facts - the settled legal principle is that the law has to be applied to the facts of the given case and not in the reverse - remanded to AO to record his finding on facts Visit to Get Source Capital gain on sale of Floor Space Index(FSI)/transfer of development rights(TDR) - FSI/TDR rights have accrued in favour of the assessee following promulgation of Development Control Rules for Greater Mumbai, 1991 and generated by the plot itself and there is no cost of acquisition - not liable for any capital gain tax Visit to Get Source Deduction u/s 80IA - claim not made in the return of income - records clearly show that all the details were available with the AO and no fresh details were required to be filed or taken into consideration - the appellate authorities can allow additional grounds to be canvassed, if it is found to be bonafide and the omission to seek for such relief was a bonafide omission - deduction allowed Visit to Get Source Addition u/s 69 - value of gold and diamond in Peak in WPS account - the details were culled out from the books maintained by the assessee - no doubt, assessee did not offer convincing explanation before the AO, but Tribunal was convinced with the explanation read with the statements given by the customers and job workers in remand report - no addition called far Visit to Get Source Revision u/s 263 - Addition u/s 2(22)(e) - alleged loan & advances to concern - in assessment proceedings the Assessee had in fact placed audited statements which showed that sum received through AAIPL had been converted to shares allotted to AAIPL during AY 2014-15 - revenue has not been able to persuade this Court that the amount remained in the nature of loans and advances - no revision Visit to Get Source Deduction u/s 80IB - process involved in converting Carcass into meat - final product produced is commercially different from the raw-material (Buffalo Carcasses) and the process of production involved a number of steps and processes which resulted not only in qualitative changes, but also a distinct product for end-use of the consumer - deduction allowable Visit to Get Source Compensation received on termination of network participation agreement from Citibank - Income deemed to accrue or arise in India - received does not fit into any of the definition of royalty either under IT Act or as per DTAA - it falls u/s.28(va)(b) as the business receipt and As per Article 7 of Indo-US DTAA, same is taxable only in USA and not in India - matter however, remanded to inquire for existence of PE in India Visit to Get Source Customs Anti dumping duty - imports of extra Float glass and processed glass - ADD has been imposed upon ‘clear’ and ‘tinted’ variety of float glass - since both types of glasses are different and ‘extra clear glass’ is not manufactured in India then there is no reason to cause injury to the domestic glass industry - not liable of ADD Visit to Get Source Indian Laws Dishonor of cheque - insufficiency of funds - present petitioners were Directors and were in charge of and responsible for day to day affairs and management of accused company and therefore, they are liable for prosecution. Visit to Get Source IBC The Liquidator has rightly rejected the claim of the Applicant on the ground that the Applicant is not a Financial Creditor of the Corporate Debtor and the liability of the Corporate Debtor is restricted to the pledge of shares only which has already been meted with. Visit to Get Source Service Tax Applicability of exemption Notification - pure service - service was rendered in relation to establishment of electric sub-stations and construction of boundary wall of a vacant piece of land for NOIDA Authority - construction activity related to the services provided to Noida Authority, which is admittedly not for commercial purpose - exempt Visit to Get Source Residential Complex Service - no positive evidence on record to establish that there were any common facilities such as park, lift, parking space, community hall or affluent treatment system - not a Residential Complex Service - ST demand cancelled Visit to Get Source Classification of services - Manpower Recruitment/Supply service - the contract is for handling the agricultural produce which is a Work Order though the payment has been made on the strength of man-days provided and not for supplying the manpower service - demand on the said service is set-aside along with penalty and interest Visit to Get Source Condonation of delay of more than 2½ years - not aware of order - concur with the findings arrived by the Tribunal that the appellant had failed to offer proper explanation but at the same time, the Tribunal also could have considered about allowing the petitions on taking a liberal attitude, in terms of cost, in order to compensate the prejudices which may be caused to the opposite side - condoned the delay with cost Visit to Get Source Central Excise Classification of goods - Power Gold - Bio Gold - NPK Fertilizer, Organic Manure and Soil Conditioner - No reason to classify the products under 38249090, which is a residuary entry for miscellaneous chemical products. Visit to Get Source Re-credit of CENVAT - the Respondent had paid service tax from cenvat credit, but the same was objected by the department then paid the said service tax amount in cash - Once they paid the service tax in cash, they become eligible for the re-credit of amount paid by them from cenvat Visit to Get Source CENVAT Credit - input service - the distributor/commission agent appointed by the appellant outside India has to make every effort to promote the products manufactured by the appellant - it is thus not merely an activity of sale of finished products - explanation added with effect from 03.02.2016 was merely clarificatory in nature applicable to commission paid for sales commission activities prior to 03.02.2016 - eligible for credit Visit to Get Source Time Limitation of Rectification Application - Section 35C(2) of the Central Excise Act, 1944 - the period of limitation of six months was substituted for a period of four years by the Finance Act 2002 with effect from 11.05.2002 - no merit in the contention that the period of limitation cannot be applied, where the application filed by the Assessee Visit to Get Source VAT Audit assessment u/s 34(8A) of the VAT Act - The provisions of section 34(8A) cannot be understood or interpreted as enabling or empowering the Assessing Officer to correct an error, which might have been committed in the course of passing the audit assessment order- not permitted Visit to Get Source Case Laws: GST 2019 (7) TMI 472 Refund of IGST - Export of goods in July 2017 - zero rated supplies - simultaneous duty drawback claim - refund was rejected without any valid reason rejecting the claim - rejection of claim only on the basis of the circular issued dated 9th October 2018 - principles of natural justice - HELD THAT:- We are not impressed by the stance of the respondents that although the writ-applicant might have returned the differential drawback amount, yet as there is no option available in the system to consider the claim, the writ-applicant is not entitled to the refund of the IGST. Rule 96 of the CGST Rules provides for a deeming fiction. The shipping bill that the exporter of goods may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India. Section 54 should be read along with Rule 96 of the Rules. Rule 96(4) makes it abundantly clear that the claim for refund can be withheld only in two circumstances as provided in sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017:- (a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of subsection (10) or sub-section (11) of Section 54; or (b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962. Reliability on Circular No.37/2018-Customs dated 9th October 2018 - HELD THAT:- Apart from being merely in the form of instructions or guidance to the concerned department, the circular is dated 9th October 2018, whereas the export took place on 27th July 2017. Over and above the same, the circular explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents. The writ-applicant is entitled to claim the refund of the IGST - respondents are directed to immediately sanction the refund of the IGST paid in regard to the goods exported, i.e. 'zero rated supplies', with 7% simple interest from the date of the shipping bills till the date of actual refund - application allowed. 2019 (7) TMI 471 Evasion of GST - Jurisdiction of inspect and search - Power to issue Seizure (prohibition) order - Proper authorization or not - Violation of the principles of natural justice - powers conferred under the provisions of Section 67(2) of the Goods and Service Tax Act, 2017 - reasons to believe - goods in the nature of cotton seeds and bales - HELD THAT:- Clause (2) of section 67 of the Act, 2017 makes it clear that if the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books. The first proviso to clause (2) further clarifies that if it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. Clause (6) provides that the goods so seized under sub-section (2) can be released on a provisional basis upon execution of a bond and furnishing a security in such manner and on such quantum as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. Even at this stage, the authority concerned is empowered to release the seized goods on a provisional basis upon asking the writ applicant to execute a bond and also furnishing security of a particular quantum. Thus, even if the authority has reason to believe that the goods liable to be confiscated are likely to be secreted, the authority will have the power to pass an order of prohibition pursuant to the order of seizure. The Assistant Commissioner is the person who has been authorised by the Proper Officer under section 67 of the Act to carry out the search and seizure. We fail to understand why it has been stated in the Form that he had reason to believe that certain goods were liable to confiscation and are secreted in the place mentioned in the order. The reasonable belief was entertained by the the Proper Officer. The Assistant Commissioner appears to have merely carried out the orders of the superior officer namely the Appropriate Officer not below the rank of the Joint Commissioner. In the case on hand, it appears from the stance of the respondent No.4, as indicated in the Affidavit-inreply that the Assistant Commissioner of State Tax was authorised by the office of the Commissioner of State Tax (Enforcement) to inspect and carry out the search and seizure. To this extent, the orders of prohibition and seizure / Form - GST-INS-02 as well as the Form GST-INS-03 appears to be defective. The writ applicant is permitted to invoke clause (6) of section 67 of the GST Act and prefer an appropriate application before the appropriate authority for release of the seized goods on provisional basis upon execution of a bond and furnishing a security to the satisfaction of the concerned authority. Application disposed off. 2019 (7) TMI 470 Jurisdiction - exercise of power by the respondent no. 8 who is below the rank of the Joint Commissioner in the case of such seizure - Search and seizure - pure service - parking lots - HELD THAT:- The exercise commenced by the respondent no.8 and his associates under the thin disguise of legality is prima facie without jurisdiction and violates the law as applicable in West Bengal as I have briefly summarized above. The dispute arises in respect of parking fees which are collected by Mr. Bhattacharya s client, members and employees in respect of the Municipal parking lots under the Kolkata Municipal Corporation and Mr. Bhattacharya is not at present challenging the payment of GST in respect of parking lots in the Railways, which he may have done in view of the same notification. There shall be an interim order staying all further proceedings in respect of annexure P/21 of the search and seizure conducted in the premises of the petitioners and its employees and directors shall not be subjected to any coercive process for realization of GST for municipal parking lots which, prima facie, is not payable. Petition disposed off. Income Tax 2019 (7) TMI 443 Revision u/s 263 - Addition u/s 2(22)(e) - ITAT quashing the order passed by PCIT u/s 263 holding that the provision of Section 2 (22) (e) in respect of the issue of deemed dividend would not be attracted in the facts and circumstances of this case - HELD THAT:- Exercise of sending the matter back to the AO for a fresh assessment pursuant to the impugned order of the PCIT under Section 263 is not warranted. The Revenue has not been able to persuade this Court that the amount received from AAPIL was not converted to share capital and remained in the nature of loans and advances. That fact is reflected as such in the balance sheet. Consequently, the observation of the ITAT that the order passed by the AO is not erroneous and Section 2(22)(e) of the Act is not attracted, does not call for interference. It would be a mere academic exercise to require the AO to undertake a fresh assessment - no substantial question of law 2019 (7) TMI 442 Non adjudication of grounds by tribunal - Liability of TDS u/s 194C - IUC paid to the other telecom operators - Tribunal remanded to examine that the payees included the amounts received from the assessee in their return of income and paid due taxes - HELD THAT:- If a litigant raises a legal issue before a court or a tribunal as a principal ground of challenge and without prejudice and not in derogation with the said plea, the litigant is also entitled to raise alternate submissions. So far as the taxation matters are concerned, the grounds raised by the assessee can, at times, be contradictory and there is no reason to reject the grounds. In any event, the Tribunal ought to have rendered a finding on the grounds raised by the assessee with regard to the applicability of Section 194C on the IUC paid to the other telecom operators. Had the Tribunal considered and rendered a finding that it was not convinced with the submissions made, then, it would have been well justified to proceed to consider the alternate submissions. We find from the impugned order that the Tribunal has not rendered any finding with regard to the contentions advanced by the assessee relating to the applicability of Section 194C. Tribunal remanded the matter to the AO. The Tribunal set aside the orders of the Lower Authorities in their entirety. Thus, if the remand is for a limited purpose, the Tribunal ought to have very well indicated in its order. In our understanding, the remand order passed by the Tribunal is after setting aside the orders passed by the Lower Authorities and necessarily, the AO has to consider the matter afresh in its entirety. Tribunal added a rider after setting aside the orders passed by the Lower Authorities stating that a verification has to be done as to whether the payees included the amounts received from the assessee in their return of income and paid due taxes thereon. In our considered view, the further direction issued by the Tribunal cannot be construed to be restrictive in nature thereby preventing the AO to consider all grounds and more particularly, when the Tribunal has not rendered any finding on the applicability of Section 194C . Hence, we are of the considered view that the order passed by the Tribunal should be and shall be read as an open remand to the AO to consider all the issues that were pleaded by the assessee before the Tribunal. Above tax case appeal is disposed of by clarifying that the AO shall consider all the issues that may be raised by the assessee and take a fresh decision on merits 2019 (7) TMI 441 Reopening of assessment u/s 147 - intimation was issued under Section 143(1) - no opportunity to contest the reopening of the assessment - whether intimation passed under Section 143(1) was not an assessment order ? - HELD THAT:- As find from the assessment order that the notice sent was not responded by the assessee and consequently, the Assessing Officer completed the assessment. Further, there was a gross delay in filing the appeal before the CIT(A) and a faint plea was raised by the assessee before the CIT(A) objecting to the issuance of notice for reopening. There was no finding rendered by the CIT(A) as to the validity of the reopening except by observing that such a contention was not raised before the Assessing Officer and that the contention could not be entertained at the appellate stage. CIT(A), being the First Appellate Authority, is entitled to examine the entire facts and the validity of reopening of assessment being a mixed question of law and fact, the same can very well be entertained by the CIT(A). Even before the Tribunal, we find that the respondent/assessee did not specifically contest the reopening proceedings by placing decisions nor there was any contest with regard to the stand taken by the Revenue that only intimation under Section 143(1) of the Act was issued and that no assessment order was passed under Section 143(3) - Assessee should be granted an opportunity to contest the reopening of the assessment, for which purpose, we deem it appropriate to remand the matter to the CIT(A) for a fresh consideration. 2019 (7) TMI 440 Addition u/s 69 - value of gold and diamond in Peak in WPS account - addition based on materials available on record including the seized material - Tribunal deleted the addition after calling remand report - HELD THAT:- In the instant case, the details were culled out from the books maintained by the assessee. The assessee, no doubt, did not offer convincing explanation before the AO, but raised a plea before the Tribunal that they are willing to produce all the names of their customers as well as their workers who can be examined. Tribunal was convinced with the stand taken by the assessee and therefore, granted an opportunity to the assessee to do so and called for a remand report. Statements were recorded from the customers and the job workers and the identity of the customers and job workers was not disputed by the Revenue, as they had produced proper proof of identity. The explanation offered by the assessee read with the statements given by the customers and job workers was found to satisfactory to the Tribunal. This satisfaction being recorded by the Tribunal is a satisfaction on the facts placed before it. Exercising power u/s 260A, we cannot venture into the factual thicket to state that the satisfaction recorded by the Tribunal was unfounded. Therefore, in our considered view, the Tribunal was right in granting relief to the assessee. - Decided against revenue 2019 (7) TMI 439 Nature of expenses - Software License Fees and Maintenance Fees - revenue or capital expenditure - HELD THAT:- Factual finding recorded by the CIT(A) clearly reveals that the expenditure incurred by the assessee is recurring in nature and has to be treated as revenue in nature. Though the Tribunal has referred to the decision of the Division Bench in Southern Roadways Ltd. [ 2007 (6) TMI 193 - MADRAS HIGH COURT] yet it has gone through the findings recorded by the CIT(A) and affirmed the findings. Very recently, we had an occasion to consider somewhat a similar question in the case of CIT, Trichy vs. The Lakshmi Vilas Bank Ltd., [ 2018 (9) TMI 1094 - MADRAS HIGH COURT] and dismissed the tax case appeals filed by the Revenue. This decision of ours has been confirmed by the Hon'ble Supreme Court in CIT vs. Lakshmi Vilas Bank Ltd., [ 2019 (4) TMI 839 - SC ORDER] by which the special leave petitions were dismissed. - Decided in favour of assessee. 2019 (7) TMI 438 Deduction u/s 80IA - claim not made in the return of income , after insertion of provisions vide Sec. 80A(5) in the Finance Act 2009 - CIT-A held that the appellate authorities can allow additional grounds, if to be raised by the assessee in the appeal if it is found that those grounds were not raised on account of any wilful omission and the assessee has a reasonable explanation - HELD THAT:- On a reading of the assessment order dated 17.03.2015, it is evidently clear that books of accounts and all the details were furnished to the AOr which was perused by the AO and the case was discussed with the authorized representative of the assessee. In such situation, the assessee's case was foreclosed solely on the ground that he had not filed revised return of income. With regard to the loss incurred on cancellation of forward contract, on facts, the CIT(A) found that it is an act of omission on account of erroneous belief of complex legal position. With regard to the claim of deduction under Section 80IA, in respect of the income free windmills, the CIT(A) noted that legal disputes were pending before the Hon'ble Supreme Court and various Courts at the time of filing of returns and there was uncertainty in the legal position which could be taken as a reasonable cause for the assessee not claiming the deduction in the return of income. Further, it noted that all the facts are already recorded in the books and are available for verification. This very issue was considered and it was held that the appellate authorities can allow additional grounds to be canvassed, if it is found to be bonafide and the omission to seek for such relief was a bonafide omission. In the instant case, the records clearly show that all the details were available with the AO and no fresh details were required to be filed or taken into consideration. In such circumstances, we agree with the view taken by the Tribunal in confirming the order passed by the CIT(A). - Decided against the Revenue 2019 (7) TMI 437 Interest earned on short term deposits - equity funds for purchase of assets, prior to commencement of business - capital receipt OR Income from Other Sources - HELD THAT:- On a perusal of the Assessment Order, the orders passed by CIT(A) and that of the Tribunal, we have no hesitation to hold that the two Authorities below and the Tribunal, proceeded on the legal principle without making an in-depth study on the facts situation. The settled legal principle is that the law has to be applied to the facts of the given case and not in the reverse. We find that such an exercise has not been undertaken by the AO at the first instance, as a result of which the matter was proceeded solely based upon the interpretation of the law laid down by the Hon'ble Supreme Court in various decisions. We are of the firm view that the fact situation is required to be considered and the Assessing Officer has to then apply legal principle laid down in various decisions and come to a conclusion. Authorities and the Tribunal had made a fact finding exercise to ascertain as to whether there was an inextricable link with the setting up the business. As pointed out by us earlier, in the instant case, the Assessing Officer did not examine such aspect though the assessee has specifically stated in the written submissions dated 18.03.2015. In our considered view, the matter shall be considered afresh by the AO steering clear of the factual position, record his finding on facts and then apply the legal principle. As we have found that such procedure was not followed in the instant case, we deem it appropriate to remit the matter back to the AO for fresh consideration. 2019 (7) TMI 436 Deduction u/s 54F - property has been purchased by the assessee in the name of his wife - claim made for the first time before the CIT(A) - HELD THAT:- The Hon ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. [ 2012 (7) TMI 158 - BOMBAY HIGH COURT] has held that the appellate authorities have power to consider a claim not made in the return of income. There was no prohibition on the powers of the Tribunal to entertain an additional ground which is according to the Tribunal arose in the matter and for the just decision of the case. Finding of the CIT(A) that the appellate authority has no power to consider a claim not made in the return is incorrect and not in accordance with law. Agree with the assessee that the appellate authority has power to consider a claim not made in the return. Allowability of deduction u/s 54F on account of purchase of the residential property by the assessee in the name of his wife is concerned, it has been held in various decisions that assessee cannot be denied the benefit of deduction u/s 54F when the property has been purchased in the name of the wife of the assessee instead of purchasing the same in the name of the assessee himself. Case of CIT vs. Shri Kamal Wahal [ 2013 (1) TMI 401 - DELHI HIGH COURT] has held that the new residential house need not be purchased by the assessee in his name nor is it necessary that it should be purchased exclusively in his name for claiming deduction u/s 54. Accordingly, the deduction u/s 54F was allowed where the property was purchased in the name of the wife of the assessee. Assessee should not be denied the benefit of deduction u/s 54F merely because the property has been purchased in the name of the wife of the assessee when the money has been flown from the bank account of the assessee, wherein the sale proceeds were deposited. However, this fact needs verification. Restore this issue to the file of the AO with a direction to verify the bank account of the assessee that the sale proceeds of the land sold was deposited in the bank account and has been utilized for the purchase of the residential property in the name of the wife of the assessee. If the AO finds the same to be correct then he is directed to allow the claim of deduction u/s 54 - Assessee are accordingly allowed for statistical purposes. 2019 (7) TMI 435 Levy of penalty u/s. 271 (1) (c) - cash deposits in the bank accounts - ex-parte order - no explanation - HELD THAT:- CIT(A) has given valid reasons for sustaining the penalty levied by the AO u/s. 271 (1) (c). Assessee had not given any proper explanation either before the AO or before the CIT(A) for such huge cash deposits in the bank accounts. There is nothing on record to controvert the penalty sustained by the CIT(A). Under these circumstances the order of the CIT(A) is in accordance with law therefore, uphold the same and grounds raised by the assessee are dismissed. 2019 (7) TMI 434 Levy of penalty u/s. 271(1)(c) - assessee sold jewellery and had earned long term capital gain which was not offered to tax - maximum penalty levied @ 300% - HELD THAT:- It is an admitted fact that despite sale of jewellery and earning long term capital gain, the assessee has not disclosed the same in the return of income which was added by the AO and thereafter initiated penalty proceedings u/s. 271 (1) (c) and levied penalty of ₹ 71,886/- being 300% of the tax sought to be evaded. In my opinion levy of penalty @ 300% is not justified - Therefore, restrict the same to 100% tax sought to be evaded which amounts to ₹ 23,962/-. - Decided partly in favour of assessee. 2019 (7) TMI 433 Ex parte order of the CIT(A) - non-appearance on the date fixed for hearing - Penalty u/s 271(1)(c) - defective notice - variation in the charge levied for imposition of penalty in the notice issued U/s 274 r.w.s. 271(1)(c) vis a vis charge levied in the penalty order passed U/s 271(1)(c) - HELD THAT:- A.O. has levied penalty for the addition so made in the quantum order. However, the ld. CIT(A) has confirmed the penalty by passing ex parte order. CIT(A) has mentioned three occasions when the appeal was fixed for hearing. On first occasion, notice was issued fixing the date of hearing on 30/12/2018 wherein the assessee did not attend. On the date fixed for hearing on 08/01/2019, the assessee asked for adjournment. When the appeal was again fixed for hearing on 06/2/2019 then no body appeared before the ld. CIT(A), therefore, the ld. CIT(A) after considering the material placed on record, dismissed the appeal filed by the assessee. As per the reasons advanced for non-appearance, we are satisfied that the assessee has reasonable ground for non-appearance on the date fixed for hearing. We also found that the ground raised before us with regard to defect in notice so as to invalidate the entire penalty order by having a variation in the charge levied for penalty in the show cause notice U/s 274 vis a vis charge levied in the penalty order so passed U/s 271(1)(c) of the Act was not before the CIT(A). Therefore, in the fitness of things and in the substantial interest of justice, we set aside the ex parte order of the CIT(A) and the matter is restored back to the file of ld. CIT(A) for deciding afresh on merit - Appeal of the assessee is allowed for statistical purposes only. 2019 (7) TMI 432 Re-opening of assessment u/s 147 - bogus STCG - solely on the basis of the report / statements of the persons of Mahasagar Group - no opportunity to present its rebuttal, and / or cross examination of any person whose statement was relied upon - HELD THAT:- Hon ble Karnataka High Court in the case of M/s. Chandra Devi Kothari [ 2015 (2) TMI 1313 - KARNATAKA HIGH COURT] has held that assessee has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount, hence the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the assessee and by furnishing the details / copy of the statement based on which the impugned assessment order has been passed. The facts noted by the High Court appears to be similar to the fact situation in the case on hand and therefore by respectfully following the judgment in the case of Chandra Devi Kothari (Supra), I set aside the impugned order of learned CIT(A) for Assessment Year 2007-08 and restore the matter to the file of the AO for fresh adjudication with the same directions as were issued by the Hon ble Karnataka High Court in above judgment. In view of this decision, no adjudication is called for at this stage in respect of other grounds; both legal and on the merits of the addition. - the assessee s appeal is allowed for statistical purposes 2019 (7) TMI 431 Exemption u/s 10(20A) - Status of DMRC - assessee should be an authority constituted in India by or under Central, State or Provincial Act - HELD THAT:- In the instant case before us the assessee has not produced before us any notification issued by or under any Central, State or Provincial Act for constitution of the assessee. In our considered view, the assessee-company has been merely registered or incorporated under the Companies Act, 1956 and not created as a consequence of the Companies Act,1956. In the said case the Hon ble Supreme Court has observed that said assessee-company was created under the Gujarat Industrial Development Act, 1962, [ 1997 (8) TMI 3 - SUPREME COURT] whereas in the instant case, the assessee has been registered with the Companies Act only and not created under the Companies Act or any other Central or State Act and thus the ratio of the said decision cannot be imported over to the fact of the instant case. We reject the contention of assessee that the language employed in section 10(20A) of the Act is wider and it is not necessary that the assessee be creature of Central or State Act, as provided in section 10(23BB) and section 10(23BBA) of the Act. The assessee failed to satisfy the condition of authority constituted by under any Central, State of Provincial Act . In view of the failure to satisfy this condition, the assessee cannot be granted benefit of exemption under section 10(20A). - ground No. 1 raised in all the respective appeals is dismissed. Commencement of business - no set up of business - adjustment of interest income earned on fixed deposit against the cost of the project, allowance of expenses claimed in profit and loss account including consultancy and professional expenses, claim of deduction u/s 35D - HELD THAT:- We hold that business of the assessee was set up only in the period immediately before the date when the assessee carried on commercial run of the Metro rail. AO has reported this date of running the Metro train as 25/12/2002 on page 8 of the assessment order for assessment year 2002-03. This factual information has not been disputed by the assessee before us. The date of setting up of business can only be in period immediately prior to commencement of business. That date may be the date of announcement of inauguration of the Metro Rail network or may be any days slightly before that. Since the business was commenced in 25.12.2002 , the business can be treated as set up in any date in FY 2002-03 corresponding to AY 2003-04 and not in AY 2002-03 or any assessment year prior to that. Accordingly, we hold that the business of the assessee was not set up in any of the assessment years of appeals before us. Taxability of interest income earned on fixed deposit with banks - correct head of income - income from other sources OR business income - HELD THAT:- Following the ratio in the case of Tuticorin Alkali Chemical and Fertilizers Ltd [ 1997 (7) TMI 4 - SUPREME COURT] we reject the contentions made while arguing the grounds as well as additional grounds related to the issue in dispute claiming the interest income as part of business income and also that adjustment of interest on fixed deposits against the capital work in progress and uphold the finding of the CIT(A) on the issue in dispute for assessing the interest income from funds invested in bank deposits during the assessment years from AY 1996-97 to 2002-03 as income taxable under the head Income from other sources . Addition u/s 57(iii) - Allowing expenses for earning interest income on fixed deposits with banks taxed under the head Income from other sources - HELD THAT:- As under the provisions of section 57(iii) any expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income is deductible against the said income assessed under section 56 i.e under the head Income from other sources . AO estimated the expenditure incurred on the basis of number of employees. In absence of a specific demonstration by the assessee that particular expenses relates to the interest income and in absence of any documentary evidence in support of such a claim, we may not like to disturb the expenses already allowed by the Ld. CIT(A), in view of the fact that there is no appeal of the Revenue before us in which the quantum of expenses allowed under the head Income from other sources has been contested by the Revenue. Disallowance of deduction of 1/10th of preliminary expenses u/s 35D - HELD THAT:- The issue of deduction u/s 35D is also connected with the setting up of the business, because previous year in case of newly setup business starts from the setting up of the business and business income under the head profit in gains of the business is computed thereon as per the provisions of section 28 to 44 . As we have already held that business of the assessee was not set up during the period assessment years 1996-97 to 2002-03 and thus the assessee was not entitled to claim the deduction u/s 35D in the these relevant assessment years, however the assessee is eligible to claim such deduction u/s 35D after setting up of the business. CIT(A) in assessment year 1998-99 has confirmed the disallowance on similar grounds. Disallowing deduction in respect of expenses claimed in the profit and loss account including professional and consultancy charges incurred by the assessee - HELD THAT:- CIT(A) in relevant years has held that company was in the process of setting up the business and therefore the Assessing Officer were justified in holding that professional or consultancy charges paid were preoperative expenses eligible for amortisation u/s 35D(2)(a). It is now well settled law that, once business is set up , then only expenditure is allowable as business expenditure, as has also been held the judgment of Jurisdictional High Court in the case of CIT vs. Dhoomketu Builders Development Pvt. Ltd. [ 2013 (4) TMI 668 - DELHI HIGH COURT] . We are of the view that the other expenses which have been debited in the profit and loss account and are related directly or indirectly to the plant and machinery or other capital assets constructed or built or purchased by the assessee, then those expenses are eligible for capitalization and eligible for inclusion in written down value of those fixed asset. Deduction of depreciation claimed on office equipments etc - HELD THAT:- In the case of National Thermal power Corporation [2012 (10) TMI 720 - DELHI HIGH COURT] issue involved whether as an asset though ready to use but not put to use , can depreciation be allowed on such asset. The Hon ble High Court held that the expression used for the purposes of the business in section 32 of the Act has been judicially interpreted to include a case where the asset is kept ready for use, but is not actually put to use. But in the instant case before us as we have already held that business of the assessee was not set up in AY 1996-97 to AY 2002-03, the question of carrying of the business does not arise and in such circumstances the assessee is not eligible for deduction of depreciation u/s 32. We concur with the finding of the Ld. CIT(A) on the issue in dispute and accordingly depreciation claimed from AY 1997-98 to 2002-03 is denied. Revision u/s 263 - non examining whether expenses incurred were in relation to earning of the interest income - HELD THAT:- Commissioner cannot substitute his opinion in place of the AO particularly when view taken by the AO is one of the legally possible views. But in the instant case, we find that the Assessing Officer has not examined whether the expenses incurred were in relation to earning of the interest income. At least from the record, it is apparent that the AO has not carried out an enquiry on this issue. The expenses claimed include all sorts of expenses including bank charges, brokerage, Honorarium, ground rent, insurance, membership, security expenses, vehicle hiring and running expenses etc. From a prima-facie perusal of these expenses, one can infer that all those expenses are not related to earning of the interest income on fixed deposits made with banks. In such circumstances, it cannot be said that the commissioner has substituted his opinion in place of that of the AO but the commissioner has found that those expenses cannot be allowed without an enquiry. The assessee has challenged the estimating of quantum of expenses allowable deduction by the Ld. CIT. But we find that, the CIT asked specifically to the assessee for submitting the expenses related to the interest income, however no such details were furnished by the assessee before the CIT. Even such detail has not been furnished before us also. In such circumstances, we are of the opinion that the Ld. CIT is justified in estimating the expenditure relatable to the interest income, which could be allowed u/s 57. The Hon ble Supreme Court in the case of Maharaja BP Singh Deo [ 1969 (12) TMI 2 - SUPREME COURT] held that assessment must be based on some relevant material and it is not a power that can be exercised under the sweet will and pleasure of the concerned authorities. We find that in the instant case before us the CIT has identified the advertisement expenses as not related to the earning of interest income and in respect of the balance expenses also, he identified the employees engaged in looking after the project work of the assessee and made estimate of the expenses allowable against interest income on rational basis. Thus the ratio of the said decision of the Hon ble Supreme Court cannot be applied over the facts of the instant case. As far as the decisions relied upon by assessee on the issue of allowability of the expenditure u/s 37(1) is concerned, we are of the opinion that the Ld. CIT has considered the expenses relatable to the earning of the interest income as per the provisions of section 57, thus, the decisions relied upon by the assessee cannot be applied in the instant case. We uphold the order of the CIT passed u/s 263 for AY 1998-99 and 1999- 2000. 2019 (7) TMI 430 Income from house property - taxability of deemed rent in respect of six unsold flats / bunglows held in stock-in- trade by the assessee u/s 23 - HELD THAT:- Identical issue arose in the case of assessee s sister concern i.e., M/s. Kolte Patil Developers Limited [ 2019 (5) TMI 675 - ITAT PUNE] in A.Y. 2012-13, wherein the issue was decided in favour of the assessee as held when the business of the assessee is to construct the property and sell it or to construct or let out then that would be the business and the business stocks which may include movable and immovable properties would be taken to be stock-in- trade and any income derived from such stocks cannot be termed as income from house property Thus no addition on account of deemed rent of 6 unsold flats/bunglows can be made in the hands of assessee. We therefore set aside the addition made by the AO. Thus, the grounds of assessee are allowed. 2019 (7) TMI 429 Exemption u/s 11 denied - Sale consideration for assignment of lease - Accrual on Income - AO found that the assessee had sold immovable property however the assessee failed to disclose this transaction while filing its return of income for the impugned assessment year - HELD THAT:- The grounds of appeal filed by the assessee can be seen through the lens of deductive inference, in which it is asserted that the conclusion is guaranteed to be true if the premises are true. In the present case, it is the contention of the assessee vide the 2nd ground of appeal that the Ld. CIT(A) failed to note that the amount of ₹ 3,55,45,600/- was not factually received during the year under appeal. This premise is not true as evident from the finding above that the assessee has received ₹ 3,55,45,600/- during the financial year 2010-11 relevant to the impugned assessment year. The inference drawn by the assessee is not a correct one as it is based on wrong premise. In view of the above facts and position of law, we uphold the order of the Ld. CIT(A) in holding that the amount accrued to the Appellant as income for the year under appeal and was also received. - Decided against assessee. 2019 (7) TMI 428 Capital gain on sale of Floor Space Index(FSI)/transfer of development rights(TDR) - whether FSI/TDR fall under the definition of capital asset u/s 2(14) - whether no cost of acquisition incurred of TDR/FSI as these are generated by the plot itself? - HELD THAT:- As perusing the material on record including the decision of the Hon ble Bombay High Court in the case of CIT vs. Sambhaji Nagar Co-op. Hsg. Society Ltd. [ 2014 (12) TMI 1069 - BOMBAY HIGH COURT] as held that in case of sale of FSI/TDR rights by the assessee to the developers which have accrued in favour of the assessee following promulgation of Development Control Rules for Greater Mumbai, 1991 and the said developmental right were generated by the plot itself and there is no cost of acquisition and therefore not liable for any capital gain tax. In the present case , the facts are similar to the facts in the case as discussed hereinabove wherein the Hon ble Bombay High Court has held that no capital gain tax is attracted in the case of sale of FSI/TDR, we therefore, respectfully following the same uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue. 2019 (7) TMI 427 Disallowance of depreciation claimed on special software - @ 25% OR 60% - HELD THAT:- It is the case of the Revenue that the depreciation on computer softwares is allowable @ 25% being intangible assets and not @ 60% applicable to computer softwares as claimed. We straightaway notice that the identical issue has come up before the Tribunal in large number of cases including M/s.Navneet Publications (I) Ltd. vs. Addl. CIT [ 2011 (1) TMI 1550 - ITAT MUMBAI] ACIT vs. Zydus Infrastructure (P.) Ltd. [ 2016 (8) TMI 696 - ITAT AHMEDABAD] wherein it was held that licenced software is also eligible for depreciation @ 60%. In view of the issue has already been adjudicated in this fashion, we do not see any perceptible reason to interfere with the order of the CIT(A). the appeal of the revenue is thus bereft of any merits. Disallowance of rent equalization reserve treating the same as mere provision in the books - HELD THAT:- Assessee is entitled for bifurcation of lease rentals as per Guidance Note prescribed by ICAI, in the absence of any express bar in the Income Tax Act regarding the application of such Accounting Standards/Guidance Notes. Therefore, we find merit in the action of assessee based on recognized accounting guidance of ICAI. The Income can be deduced by assessee based on such Accounting Standards/Guidance Notes where the statute is silent. CIT(A) is accordingly set aside and the Assessing Officer is directed to allow the claim of the assessee towards rent equalization reserve Allowability of interest expenditure as revenue expenditure u/s 36(1)(iii) - HELD THAT:- Noticeably, the pre-amended proviso to section 36(1)(iii) applicable for the relevant assessment year in question (prior to its amendment by Finance Act, 2015) prohibited claim of interest on revenue account only where capital was borrowed for acquisition of an asset for extension of existing business or profession and therefore, so long as the capital borrowed resulted in acquisition of asset without resulting in extension of existing business per se , the deterrence embodied in proviso was not applicable and consequently the claim was governed by main provision of section 36(1)(iii) of the Act. In view of the aforesaid position of law subsisting for the assessment year 2010-11 in question, we do not see any infirmity in the action of the CIT(A) in upholding the claim of the assessee under s.36(1)(iii) on revenue account. An enunciation of law in this regard is available in Vardhman Polytex Ltd. vs. CIT [ 2012 (9) TMI 519 - SC ORDER] wherein referred to another decision of Core Healthcare Ltd. [ 2008 (2) TMI 8 - SUPREME COURT] and answered the issue in favour of assessee. It was held that interest paid in respect of borrowings for acquisition of capital assets is an allowable deduction under s.36(1)(iii) of the Act regardless of the fact that the capital assets acquired were not put to use in the concerned Financial Year in question. In the light of position of law explained by the Hon ble Supreme Court, we decline to interfere with the order of the CIT(A). Ground raised by the Revenue is dismissed. 2019 (7) TMI 426 Addition of unexplained expenses - Labour Charges - payment to the sub-contractors and deducted TDS thereon - in some case no TDS due to payment less than the threshold limit - HELD THAT :- Genuineness of the muster rolls were though doubted, the books of accounts were never rejected by the AO. Besides this the assessee explained the reason for decline in net profit during the AO which was never doubted by the AO. The assessee filed Auditors certificate certifying that said mistake was that of wrong classification and also produced muster rolls of the labourers in photocopy as well as in original. This was never considered by the AO as well as the CIT(A). Therefore, it will be appropriate to remand back this issue to the file of AO to verify the genuineness of the assessee s claim in light of the muster rolls and the auditor s certificate. Thus, Ground No. 1 is partly allowed for statistical purpose. Ad hoc disallowance of wages @ 10% - Labour Expenses - there is an increase in the labour expenses in the month of February March - HELD THAT :- Assessee has given month wise details of labour charges and the same is quoted by the AO on Page 4 Para 15 of the Assessment Order. As per these month-wise details, it is evident that the AO has ignored that there are payments in the month of November, May January and therefore it cannot be said that there is sudden increase in the amount of labour charges. Besides this, the Assessing Officer also ignored that the company has been regularly maintaining books of accounts which are duly audited and the same has been accepted by the Assessing Officer. There is no adverse finding of the AO in relation to these documents. It is a well settled law that the ad hoc additions cannot be made in the hands with the company. AO as well as the CIT(A) was not correct in making this addition. Ground No. 2 is allowed. Ad hoc disallowance of 20% of Machine Running Expense - increase in the expenses in the month of March, These expenses are high considering the size of operation of the company and Assessee has purchased 'valve manifold however could not provide any detail or explanation to explain the nature of the item - HELD THAT :- AO completely ignored the fact that assessee has submitted copy of bill of Valve Manifold Machine ₹ 619,645/-. The assessee also submitted the Parts wise structure of Hydraulic Assembly in which Valve Manifold used as only a Part . AR pointed out that the said parts are used in Hydraulic Assembly. Part at Serial no.3 is Valve Manifold which can also be verified from structural diagram of Hydraulic Assembly. From the details fixed by the assessee. Therefore, from the above observations, the Ld. AR pointed that Valve Manifold is a part which is used in running of Machine. From the perusal of records it can be seen that the company has been regularly maintaining books of accounts there are duly audited and the same has been accepted by the Assessing Officer there is no adverse finding of the Assessing Officer in relation to these documents. AO as well as the CIT(A) was not correct in making this addition. Ground No. 3 is allowed Addition in respect of non-reconciliation of balance of Creditors - HELD THAT :- The documents submitted by the Assessee during the assessment proceedings were not at all considered by the AP as well as by the CIT(A). Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer and decide it a fresh. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 4 is partly allowed for statistical purpose. Disallowance of Machinery Hire Charges-DG Sets Hire charges as bogus - AO observed that these charges are bogus as there is no detail of service tax, telephone number and there is no entry for TDS - failure to furnish any evidence in support of the claim that payment were made by A/c Payee Cheque - HELD THAT :- From the perusal of records it can be seen that there is name, address of the vendor mentioned on the bill and merely not mentioning telephone number cannot be reason for treating the invoice as bogus. The the Assessing Officer and the CIT (A) has not at all considered the aspect that in the confirmation given by Creditor i.e. Chaudhary Generator and Elec. Services the same is duly signed. Thus, it is evident that payment was made through A/c Payee Cheque, and the details of cheque was also shown in confirmation. Thus, Ground No. 5 is allowed. Addition on account of difference between contract revenue as per 26AS and credited to profit and loss account - Addition on account of undervaluation of WIP - HELD THAT :- From the records it can be seen that the Assessee submitted before the AO the difference of ₹ 2,14,28,277/- which was on account of Service Tax, Work-in-progress and retention Money. All the differences were duly explained along with all necessary supporting evidences. AO allowed credit of work-in-progress of ₹ 1,40,54,583/- only and added the balance amount of ₹ 73,73,696/- which represents service tax of ₹ 72,75,803/- and retention money of ₹ 97,978/- without taking into cognizance of the evidences produced by the Assessee. Besides this, assessee has valued Closing stock of WIP at ₹ 1,01,30,003/- excluding Service Tax and Gross Profit as against the amount of ₹ 1,40,54,583/- appearing in From 26AS. This aspect was also ignored by the AOr. The CIT(A) also has not taken into consideration these evidences and simply confirmed the additions. Therefore, Ground is allowed. Enhancing the value of closing WIP - adding sum on account of Service Tax and on account of gross profit to be earned - AO in this issue has added the difference of WIP as per Form 26AS and the amount of WIP declared by the assessee in its books - HELD THAT :- AO in this issue has added the difference of ₹ 1,40,54,583/- of WIP as per Form 26AS and the amount of WIP of ₹ 1,01,30,003/- declared by the assessee in its books which comes to ₹ 39,24,580/- which amount to double addition since the amount of ₹ 37,63,820/- has already been added by him in previous issue. But we have taken a view in the previous issue that this amount cannot be added for the reasons set out therein, therefore, Ground is allowed. Nature of expenditure - purchase of machine - revenue or capital expenditure - HELD THAT :- From the records it can be seen that there is no dispute by the Assessing Officer that the assessee is holding heavy machinery in its construction business and considering the nature of assessee s business frequent use of the spare parts of the machinery. Thus, it is an admitted fact. The assessee in his reply filed before AO has given justification for each item purchased during the Assessment Proceedings and the AO as well as the CIT(A) did not point out any contradictory records to that effect. Details of Machinery parts/ attachments etc. used in repairing of machinery above ₹ 1 lakh along with copy of bill was submitted before the Assessing Officer. AO identified five bills amounting to ₹ 37,72,886/- and asked the assessee to show cause why the same be not capitalized for which the assessee filed the reply. Being a contractor who deals in laying of pipelines for sewer and cables, it is necessity to replace the broken parts which are damaged in transportation and has to purchase the new parts for carrying out the work. However, the Assessing Officer treated the purchase of machine spare parts as a capital expenditure instead of revenue expenditure on the basis that these are heavy parts of machine and added the amount of ₹ 32,09,510/- after deducting depreciation @15% on the value of ₹ 37,72,886/- which is not correct as it is an integral part of the business of the assessee. Therefore this ground is allowed. Ad hoc disallowance of 5% of Labour Charges paid - AO disallowed 5% of the total expenditure of ₹ 3,35,31,286/-on the basis that the copies of vouchers produced were unsigned and thus assessee failed to prove genuineness - HELD THAT :- From the perusal of records it can be seen that there is no doubt raised by the Assessing Officer that these labour charges have not been paid by the assessee and vouchers of the same has been produced before the Assessing Officer. The copy of ledger A/c of Labour Expenses were submitted before the Assessing Officer which was ignored by the Assessing Officer as well as by the CIT(A). The fact remains that the company has been regularly maintaining books of accounts which are duly audited and the same has been accepted by the Assessing Officer. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for fresh adjudication - Ground allowed for statistical purpose. Addition treating 50% of electricity expenses as personal expenses of directors - common expenses for the residence of directors and office premise - based on earlier year - HELD THAT :- For the year under consideration, facts are different as assessee has suo-motto not claimed Electricity Expenses for the premises at A1/31, Janakpuri, New Delhi, the registered office of the company. The assessee has claimed Electricity Expenses only with respect to administrative office of the company at A1/B-6, Local Shopping Complex, Janakpuri, New Delhi where directors are not reside. Therefore, Electricity Expenses disallowed by the AO entirely on the basis that electricity expenses are common expenses for the residence of directors and office premise while ignoring the fact that Assessee has not claimed any expense for the residence where registered office is situated and the same is upheld by the CIT(A) is not correct. Thus, Ground is allowed. 2019 (7) TMI 425 Exemption u/s 11 - Depreciation claim of assessee trust - HELD THAT:- Since the question of law involved in this issue is no longer res Integra and in view of the decisions in the cases of Indraprastha Cancer Society [ 2014 (11) TMI 733 - DELHI HIGH COURT] and Rajasthan and Gujarati Charitable Foundation, Poona [2017 (12) TMI 1067 - SUPREME COURT] we are of the considered opinion that there is nothing illegality are regularity in the findings returned by the Ld. CIT(A) while deleting the addition made on account of depreciation - Decided in favour of assessee Surplus of hostel receipts - assessee has been running the hostel along with the educational institution, which activity AO found to be a business activity and not charitable activity within the definition of section 2 (15) - HELD THAT:- As following the decision of the Hon ble Karnataka High Court in the case of Karnataka Lingayat education society [ 2015 (5) TMI 260 - KARNATAKA HIGH COURT] we are of the considered opinion that the findings of the authorities below that the running of hostel facility amounts to business activity or that the surplus generated has to be considered as business income, cannot be sustained. We therefore allow the claim of the assessee and direct the assessing officer to delete the addition made on this score. Disallowance of expenses incurred on a travel by the top official and office bearer of the society - CIT(A) confirmed the findings of AO to the effect that the travel by chartered flight is definitely unreasonable expenditure particularly by an assessee who enjoys tax benefit for charitable activities - HELD THAT:- Neither the impugned order nor the assessment order show that the assessee had justified the claim with any evidence to show the purpose of travel or the circumstances forcing the official of the assessee to travel by chartered flight. For want of evidence we find it difficult to take a different view from the view taken by the authorities below. We therefore confirm the same and dismiss the relevant ground of assessee s appeal. As contended on behalf of the assessee that the 85% of the total receipt of ₹ 49,37,48,941/- for applicability of section 11 comes only ₹ 41,96,86,599/- whereas the total sum utilised by the assessee was ₹ 48,01,53,736/- much more than the statutory requirement, the disallowance of this travel expense does not impact the assessee at all. Appeal of the assessee is allowed in part. 2019 (7) TMI 424 Disallowance of interest u/s. 36(1)(iii) - no nexus between the interest payment and the investment made which is non-current investment - as per assessee even if there is to be any disallowance AO should have disallowed the same u/s. 14A and not u/s. 36(1)(iii) - HELD THAT:- Assessee in its balance sheet clearly indicates that it has made long term investment and has not demonstrated it has involved in any trading activities in shares, therefore, we decline to entertain the ground raised by the assessee. Expenditure claimed by the assessee is allowed to carry forward and can be adjusted out of income generated in the investment activities. Assessee has raised ground claiming the investment activities as business. We are in agreement with the assessee but can only be treated as income from activities which are exempt from tax. With regard to interest expenditure, it is not an expenditure from the activities which is taxable under Income-tax Act. Assessee has not declared any exempt income but made investment, which can only earn exempt income. In such situation, the expenditure relating to that part of activities cannot be claimed. Section 14A is applicable only when assessee declares exempt income. In the given case, there is a clear distinction in the activities itself. Hence, ground raised by the assessee is dismissed. 2019 (7) TMI 423 Deduction u/s 80IB - process involved in converting Carcass into meat - 'manufacturing or production - difference in between input and the output in the name, character and use - different marketable product - HELD THAT:- Final product produced by the assessee-company is commercially different from the raw-material (Buffalo Carcasses), the process of production involved a number of steps and processes. The raw-material used by the assessee cannot be substituted by the final product. The production process as explained by assessee resulted not only in qualitative changes, but also a distinct product for end-use of the consumer. Thus, in our considered view, the assessee fulfilled the requisite requirement i.e. manufacturing or producing an article of things for the purpose of section 80IB of the Act. In the result, ground no.1 of the appeal raised by assessee is allowed. Disallowance of deduction u/s 80HHC - CIT(A) confirmed the action of AO that if the export house is not entitled to claim deduction u/s 80HHC, it cannot pass the benefit to the supporting manufacture - HELD THAT:- We have noted that Bangalore Tribunal in case of Shamanur Kallappa Sons Vs ACIT . [ 2008 (8) TMI 455 - ITAT BANGALORE-A] held that wherein the assessee being supporting manufacture claimed deduction u/s 80HHC on the basis of disclaimer certificate issued by State Trading Corporation (STC) certifying that it has not claimed deduction on the export of trading goods. The assessee apparently complied the statutorily requirement provided under section 80HHC(1A) it was held that only condition stipulated by the legislation is that the same benefit should not be claimed by both the export house and the supporting manufacture. To ensure the same, it was made a pre-condition that export house should furnishes a certificate of disclaimer in respect of export turnover, and the amount of deduction available to the export house would be accordingly reduced in the specified manner. The decision of Tribunal was upheld by Hon ble Karnataka High Court [ 2015 (8) TMI 507 - KARNATAKA HIGH COURT] - additional grounds of appeal raised by the assessee are allowed. The assessing officer is directed to re-compute the deduction under section 80IB 80 HHC in accordance with law. - Decided in favour of assessee. 2019 (7) TMI 422 Addition of Peak credit -t he assessee net result in share broking business was loss hence not shown and claimed in the return - on a query, the assessee filed ledger account for commodity share broking, copy of bank account with Axis Bank, statement of account with Aditya Birla Commodities Broking Ltd., profit loss account, personal account and balance sheet etc. - AO worked out the peak credit of ₹ 17,84,920/- and added the same to the total income - HELD THAT:- The case of the assessee before the Assessing Officer was that in respect of commodity share broking, he has suffered loss therefore, same is not claimed in the return of income. CIT(A) it was submitted that his wife has given cash, amounting to ₹ 16.00 lakhs, which was received from her mother and submitted that same may be considered. We find that in the first instance, his case before the AO is that due to loss, transaction is not reflected in the return of income. At appellate stage, he changed his version completely and submitted that his wife has received gift from her mother and the same is given to the assessee. Inconsistent plea taken by the assessee cannot be accepted. CIT(A) has examined the alternative plea of ₹ 16.00 lakhs received from his wife and observed that the assessee failed to prove the creditworthiness and genuineness of the transaction. Therefore, confirmed the order of the Assessing Officer. That apart, return filed by the assessee was beyond due date of filing of return, therefore, the assessee cannot claim business loss after due date. CIT(A) by examining all the facts and details submitted, confirmed the order of the Assessing Officer - Decided against assessee. 2019 (7) TMI 421 Exemption u/s 11 - grant of registration u/s 12AA rejected - formed for the purposes of religious activities - whether activities falls in the categories of Charitable Purpose as envisaged in section 2(15) ? - HELD THAT:- As observed by CIT(E) that the assessee trust has been formed for the purposes of religious activities i.e., Dhian, Sadhana, Prayer, Bhajan Sandhya and Preachings and at present temple has been constructed. Further as claimed by the assessee, the funds have been utilized for construction of Aradhana Bhawan/Prayer center cum temple for the use of public for prayer, pravachan, bhajan kirtan and discussion of spiritual and religious subjects, which goes to show that the assessee is carrying out certain activities which can be termed as religious activities but in our considered opinion can also be construed as a charitable activities. As there is no bar in granting a registration u/s 12AA of the Act to the Application trust for religious purposes , therefore, we are not in agreement with the observations of the impugned order as mentioned by us in para not 7(i) and 7(ii). Objection with regard to the name of the trust whereby CIT(A) has held that from the very name of the trust, it appears to be family trust pursuing religious activities of a private nature. This observation is against the aims and objects of the assessee trust. In our considered view, the aims and objects cannot be determined on the basis of name of the trust, until and unless there must be some restrictions, in ensuing the aims and objects and trust's activities are of private in nature which we realized from activities and the aims and objects of the assessee trust do not appears so, as held by the Ld. CIT(A), hence, the said ground of rejection is also not sustainable. Absence of dissolution clause in the trust deed , our attention was drawn by Assessee to the Memorandum of Association and Rules and Regulation of Trust, wherein so from the clause No.45 of the trust deed, the dissolution clause is exists hence the instant ground of rejection is also not sustainable. CIT(E) in the concluding part of its order also observed that no evidence has been adduced in favour of the entity existing for the benefit of the general public. From the aims and objects, it clearly reflects that there is no restriction for any caste, colour, creed, sector, sex, age and/or other natural or man-made differences and further the aims and objects of the trust is beneficial to the public at large, hence this ground of rejection is also not sustainable. - Decided in favour of assessee. 2019 (7) TMI 420 Deduction u/s 54EC - amount of investment made in the purchase of REC Bonds - denial of claim as assessee has not invested in the REC bonds within the time prescribed under section 54EC, i.e., within a period of 6 months from the date of transfer - HELD THAT:- In the instant case the assessee has not invested the amount in the specified bonds within the specified period prescribed as per the provisions of section 54EC. It is not the case of the assessee that the bonds were not available in the market at the stipulated time. Although the assessee had filed certain legal notices as available in the paper book the copy of the agreement to sell of the said property is not filed in the paper book. The argument of the assessee that beneficial provisions should be interpreted liberally is also not applicable in the instant case since in my opinion such interpretations cannot be stretched to an extent so as to make the provisions of the Act redundant. In any case, since the assessee has not fulfilled the conditions laid down in the provisions of section 54EC by not depositing the amount in the specified bonds, therefore, the assessee is not eligible for the claim of exemption under section 54EC - Decided against assessee. 2019 (7) TMI 419 Characterization of income - Income deemed to accrue or arise in India - compensation received by the assessee on termination of network participation agreement from Citibank N.A. - royalty OR business income - PE in India - Indo-US DTAA - HELD THAT :- We find that the compensation received by the assessee does not fit into any of the definition of royalty either under the provisions of the Act or as per the definition contained in DTAA. We find from Article 7 of Indo-US DTAA that the subject mentioned compensation is to be taxed only in USA and not in India. Hence it can be safely concluded that the subject mentioned receipt is only a business receipt falling under the head profits and gains of business or profession of the assessee. CIT(A) had erroneously applied the provisions of Section 28(ii)(a) which only talks about the termination of terms and conditions of managerial remuneration by way of an agreement or understanding and is absolutely not relevant to the issue under dispute before us. The relevant provision that is applicable in the instant case is 28(va)(b). CIT(A) has also observed that there is no provision in the original agreement dated 30/06/2008 for early termination. In this regard, we find that this observation of the CIT(A) is incorrect in as much as Article 4 containing the term of agreement impliedly provided for earlier termination As already held that the compensation received by the assessee is only business receipt in the hands of the assessee - whether the assessee is having a permanent establishment in India or not has not been verified by the lower authorities. This was only a claim of the assessee right from the beginning commencing from the level of the AO. We find that since the lower authorities did not accept the subject mentioned compensation as a business receipt, there was no occasion for them to look into the aspect of the existence of permanent establishment in India for the assessee. We find that as per Article 7 of Indo-US DTAA, the subject mentioned compensation is to be taxed only in USA and not in India. Assessee s case falls u/s.28(va)(b) and hence the compensation received by the assessee is to be treated only as the business receipt. As per Article 7 of Indo-US DTAA, the compensation is taxable only in USA and not in India in the hands of the assessee. We also find that the existence of permanent establishment in India for the assessee requires factual verification by the ld. AO. Hence, we deem it fit and appropriate in the interest of justice and fair play to remand this issue to the file of the ld. AO with the following directions:- - AO to verify whether the assessee is having a Permanent Establishment in India or not - evidences in this regard are to be provided by the assessee. - Assessee should also provide evidence before the ld. AO to prove that the said compensation has been duly subjected to tax in USA as per the relevant Article 7 of Indo-US DTAA. - Decided in favour of asssessee for statistical purposes. 2019 (7) TMI 418 Assessment u/s 153A - addition made by the A.O. without incriminating material and the assessment was completed and not pending on the date of order - violation of principles of natural justice due to non-allowing the cross examination of the witness - addition made U/s 68 of the Act in respect of the unsecured loan and share capital received from M/s Jalsagar Commerce Pvt. Ltd - benefit of telescoping, recycling and rotation of funds by rejecting the peak credit theory - HELD THAT:- As relying on M/S. KOTA DALL MILL VERSUS THE DEPUTY COMMISSIONER OF INCOME-TAX AND VICE-VERSA [ 2019 (1) TMI 344 - ITAT JAIPUR] and M/S. BARAN ROLLER FLOUR MILLS P. LTD. AND VICE-VERSA [ 2019 (1) TMI 1543 - ITAT JAIPUR] addition made by the A.O. U/s 153A of the Act is not sustainable and liable to be deleted when the assessment for the A.Y. 2010-11 was completed U/s 143(3) of the Act and was not pending as on the date of search on 02/7/2015. grounds of the assessee s appeal stands allowed. Disallowance u/s 14A - HELD THAT:- The fact recorded by the ld. CIT(A) that the assessee has not earned any exempt income during the year under consideration has not been disputed by the department and therefore, in view of the settled proposition of law on this point and particularly the decision of Hon ble Delhi High Court in the case of Chemvest Ltd. Vs CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT] we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, we uphold the same. Disallowance on account of depreciation - assessee company has not carried out any business activity during the year - HELD THAT:- In the immediate preceding year, the assessee has disclosed substantial amount of turnover and business income and the A.O. has allowed the depreciation. Therefore, merely because there is no turnover during the year under consideration, cannot be a reason for disallowance of deprecation once the asset was already put to use in the preceding years. We find that the disallowance of depreciation on the ground of the asset not to put use can be considered only at the first year of acquisition of asset but once the asset was duly used in the business of the assessee then in the subsequent year if there is no business activity due to temporary suspension of activity or lull in the business, the claim of depreciation being a statutory allowance cannot be disallowed. Accordingly, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. 2019 (7) TMI 417 Addition u/s.41(1) r.w.s 28(iv) - assessee had availed deferred scheme for sales tax liability called interest free sales tax deferral scheme introduced by Tamil Nadu Government in May, 1990 - CIT- A deleted addition - Option to persons taking the benefit of deferral scheme, to pay the deferred tax in one lumpsum at the discounted rate of 8% as availed by assessee - HELD THAT:- See CIT Vs. Balkrishna Industries Ltd. [ 2017 (11) TMI 1626 - SUPREME COURT] wherein dismissing the appeal filed by the revenue as held what the assessee was required to pay after 12 years in 6 equal instalments was paid by the assessee prematurely in terms of the NPV of the same. That the State may have received a higher sum after the period of 12 years and in instalments. The statutory arrangement and vide section 38, 4th proviso does not amount to remission or cessation of the assessee's liability assuming the same to be a trading one. Rather that obtains a payment to the State prematurely and in terms of the correct value of the debt due to it. There is no evidence to show that there has been any remission or cessation of the liability by the State Government - Decided against revenue. 2019 (7) TMI 416 Dis-allowance of the commission paid to non-resident foreign agents - under invoicing - Non disclosure of Commission to the agent paid at the time of import - The DRI found that customs duty was paid on such net amount remitted to the Assessee; the FOB value disclosed, on which customs duty was paid, did not include the commission paid to the foreign agents. - HELD THAT:- In the present case, there is no question of the Assessee claiming any deduction by filing of a revised return. It is the case of the Revenue that the Assessee had not disclosed the expenditure incurred by a foreign agent on its behalf. What the Assessee received from its foreign buyers was the net FOB value; the Assessee was not claiming any expenditure on account of commission paid. There is, thus, no question of any revised return. There is no tax effect whatsoever by reason of the expenditure made by foreign buyers by way of commission paid outside India. There is no substantial question of law arising for consideration of this Court in the present appeal. The appeal is, accordingly, dismissed. 2019 (7) TMI 415 Reopening of assessment - Deduction u/s 10B - substance over form - failure to provide conclusive picture regarding commencement of manufacturing activity - Single member bench of the HC has observed that, Every non disclosure of material facts will not or cannot be a justifiable reason for reopening sustainable under judicial scrutiny. - HELD THAT:- There has been a discrepancy in the dates mentioned in Form 56G filed by the assessee. There can be no escape from this fact and the assessee should accept this mistake. In fact this Form is required to be submitted through the Chartered Accountant as a report under Section 10B - Utmost care should have been taken before the details are submitted. It may be true that the assessee can now take a stand that substance over form is to be considered but what is important is that the assessee at the first instance had a duty to give proper and correct details. We may say that the assessee failed in doing so. Be that as it may, what is required on the part of the Assessing Officer is not to go mechanically by the details disclosed by the assessee in the statutory form and or for that matter signed and certified by the Chartered Accountant. AO being cast with a statutory duty an enquiry is required to test the correctness of the disclosure made in such statutory forms. This is why the concept of substance over form was always preferred by Courts while dealing with such matters. The second mistake which the assessee committed, which had invited the problem, was not mentioning the correct date of commencement of commercial production in its reply dated 02.02.2007 and this again was submitted through the very same Chartered Accountant. In the reply, there is a vague statement with regard to the commencement of manufacturing activity and what has been stated is that the assessee commenced manufacturing activity only after 01.04.2000. Thus assessee appears to have not been very seriously contesting the matter at the relevant point of time. Wisdom dawned upon the assessee only after the appellant passed the order dated 13.02.2017. It is thereafter the assessee through their Chartered Accountant gave the exact date of production/manufacture as 25.05.2000. Keeping aside all these issues, we have examined the correctness of the order passed by the learned Single Bench and we note with approval the findings of the learned Single Bench in paragraphs 16 and 17 of the impugned order. The above finding rendered by the learned Single Bench is just and proper. 2019 (7) TMI 414 Application u/s 245C(1) to Settlement Commission - petitioner contends that the total unaccounted amount declared (over ₹ 10 crores) should have been accepted - HELD THAT:- Leave granted. Hearing expedited. Learned counsel is permitted to file Rejoinder Affidavit and additional documents, if any, within four weeks from today. 2019 (7) TMI 413 Addition of undisclosed income on the basis of loose sheets found at the time of search - HELD THAT:- SLP dismissed. 2019 (7) TMI 412 Condonation of delay of 1625 days - sufficient reasons for delay - issue on merit is covered in favour of the assessee - order was received by the peon as partner was outstation, who forgot to bring this to the notice of anyone - HELD THAT:- No reason to interfere in the matter. The Special leave petition is dismissed. 2019 (7) TMI 411 Addition u/s 68 - unexplained money receipt in the form of share capital/share premium - addition was deleted by the CIT (A) on the ground that the assessee had been able to establish identity, creditworthiness of the shareholders and genuineness of the transactions - HELD THAT:- SLP dismissed. 2019 (7) TMI 410 Addition u/s 68 - Unexplained cash credit - Burden to explain the source of cash deposit was on the appellant-assessee, who as per the finding has not been able to discharge this burden - HELD THAT:- SLP dismissed. 2019 (7) TMI 409 Capital Gains - Transfer u/s 2(47) - Tribunal held that the transaction or sale was not complete in the year under consideration - Tribunal was right in its conclusion that on facts, the agreement executed on 14th February, 2011 is but an agreement for sale of immovable property - HELD THAT:- SLP dismissed. 2019 (7) TMI 408 Entitlement to deduction of provision made in respect of doubtful and loss assets u/s 36(1)(viia)(c) - assessee did not have any positive profits to set it off from - scope of amendment - Tribunal allowed claim - HC unable to accept the stand taken by the Revenue for the reason that the proviso to sub-Clause (c) in Section 36(1)(viia) uses the word at its option - HELD THAT:- SLP dismissed. 2019 (7) TMI 407 Disallowance u/s 14A r.w.r 8D - Expenses incurred on earning exempt income or no - as per HC Tribunal has correctly assessed the materials on record and found that no interest bearing funds were diverted for making tax free income - HELD THAT:- SLP dismissed. 2019 (7) TMI 406 Assessment u/s 153A - addition u/s 68 - additions made in silver bullion account - GP rate application - HELD THAT:- Though the tax implication in the present case is ₹ 50,00,000/- (Rupees fifty lakhs only), learned counsel for the petitioner submits that the other two connected appeals which have been disposed of by the common impugned order raised question of substantial amount of revenue for the Union of India. It is further submitted that separate special leave petitions have been filed against the said common order in the connected appeals, which are pending consideration of the Court. List all the matters together after two weeks, subject to curing of defects in the other two special leave petitions. 2019 (7) TMI 405 Reopening of assessment beyond 4 years u/s 147 - computation of Capital Gain - sale of four agricultural lands - revenue contended that, assessee had no agriculture land for more than two years before transfer and there was no evidence that the land was put to agriculture use in the last two years before sale - HC held there is nothing on record to suggest that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment - HELD THAT:- In view of the low tax effect, the instant special leave petition is dismissed. However, the question of law is left open. 2019 (7) TMI 404 Allowability of bad debts - carried forward and set off of loss as claimed by the assessee for the current assessment year - Revenue to contest the claim of the assessee even after passing of the order under Section 171 cannot be accepted - reason for entering into a family arrangement was with the hope to avoid all future disputes and litigations inter se between the members of the HUF - HELD THAT:- SLP dismissed. 2019 (7) TMI 403 Reopening of assessment - assessee had adjusted the interest income against the interest expenditure which according to AO was not permissible - eligibility of reason to believe - HELD THAT:- SLP dismissed. 2019 (7) TMI 402 Income accrued in India - Reimbursement of cost - whether taxable as fees for technical services (FTS) - Assessee company is a tax resident of France - HELD THAT:- We are confronted with a situation in which Mr. Franck Euvrard was employed by Faurecia India as its CEO. It is not as if Mr. Franck Euvrard was rendering services to Faurecia India on behalf of the assessee for which the amount in dispute was received by the assessee company. Rather, it is a case of Mr. Franck Euvrard working as an employee of Faurecia India. The assessee had no role to play in the rendition of services by Mr. Franck Euvrard to Faurecia India, except that a part of salary payable by the Indian entity was initially paid by the assessee in France to Mr. Franck Euvrard, which was later on recovered without any profit element. Thus, it is held that the sum of ₹ 47.30 lac received by the assessee from Faurecia India is not in the nature of fees for technical services u/s.9(1)(vii) of the Act. Sum received by the non-resident assessee from the Indian entity is not chargeable to tax in its hands as the same is in the nature of reimbursement of cost and does not fall within the purview of `Fees for technical services u/s. 9(1)(vii) of the Act. We, therefore, overturn the impugned order on this score and order to delete the addition. Taxability towards receipt of Support services - consideration for technical and managerial services - royalty or FTS - nature of services rendered by the assessee to Faurecia India in terms of Services Agreement - India UK DTAA - HELD THAT:- As adverted to the nature of services rendered by the assessee to Faurecia India and found them to be Managerial and also Technical in nature. Managerial services are concerned, the consideration for them goes out of the purview of `Fees for technical services , as the term managerial is absent in Article 13(4) of the DTAA with UK. Case of the AO rests on treating consideration for such services as `Royalty or `Fees for technical services only. Resultantly, payment for the Managerial services cannot be brought with in the scope of the term `Fees for technical services under Article 13 of the DTAA with France as read in conjunction with the DTAA with the UK. As far as the remaining Technical services rendered by the assessee to Faurecia India are concerned, it is seen that these are of coordinating the Information system and assisting Faurecia India in computerisation of systems, office automation and utilisation of personal computers which fall into the aforesaid three categories namely, Operations, Technical support and Studies. On going through the nature of such services, it is manifested that these do not result in making available any technical knowhow etc. to the Faurecia India. When we advert to the nature of the Technical services rendered by the assessee, it gets axiomatic that no technical knowledge was made available by the assessee to Faurecia India for its use thereafter. Rather, it is a case of providing a service involving technical knowledge, which got consumed with its provision itself. Since such services simply involve use of technical knowledge and do not result into handing over some technical knowhow to Faurecia India, the same, in our considered opinion, cannot be termed as Fees for technical services under the DTAA. Total amount received by the assessee for rendition of services to Faurecia India, which is a mixed bag of Managerial and Technical services, does not eventually make available any technical knowledge, experience, skill, know-how etc. to the India entity and hence the same cannot in our considered opinion be considered as `Fees for technical services under Article 13(4) of the DTAA with France when read with the Protocol and Article 13(4) of DTAA with the UK. As the extant payment received by the assessee can neither be construed as `Royalty u/s 9(1)(vi) of the Act nor as `Fees for technical services under the DTAA, the same cannot be included in the total income of the assessee. Ex consequenti, we overturn the impugned order on this score and order the deletion of the addition. - Decided in favour of assessee. Customs 2019 (7) TMI 469 Imposition of ADD - imports of Float glass and processed glass - Appellant contended that since the glass imported by them is of extra clear variety which is different from ordinary float glass and moreover such extra float glass is not manufactured in India, hence the anti dumping duty is not imposable on their imports - HELD THAT:- Vide Notification No.4/2009 Cus dated 06.01.2009, the Anti Dumping duty has been imposed upon clear and tinted variety of float glass which is imported into India which is originated or imported from Peoples Republic of China and Indonesia. We find that as per the literature produced before us the extra Clear glass is altogether a different variety of glass. The glass making technique and the raw material itself are different as the clear glass contains more iron, the extra clear glass contains less iron. From the literature on such glass manufacturing from STEGBAR Data Sheet VI we find that a difference in products as well as clarity of vision has been shown. The Appellant has also produced a certificate issued by Federation of Safety Glass certifying that both types of glasses are different and extra clear glass is not manufactured in India. In such situation there is no reason to hold that the importation of such goods would cause injury to the domestic glass industry. The Tribunal in case of INDIAN REFRACTORY MAKERS ASSOCIATION VERSUS DESIGNATED AUTHORITY [ 2000 (2) TMI 344 - CEGAT, NEW DELHI] has held that if dumped import of an article does not or is not capable of causing injury to the domestic industry, imposition of Anti Dumping duty is not warranted as it only increases cost to Indian importer without affording any protection to Indian manufacturers of like article. The imports are not liable of anti dumping duty and accordingly the impugned orders are set aside - appeal allowed - decided in favor of appellant. 2019 (7) TMI 467 100% EOU - Debonding of EOU - Enhancement of value of imported goods - Benefit of N/N. 25/02-Cus dated 01/03/2002 and N/N. 25/99-cus dated 28/02/1999 - HELD THAT:- There was substantial compliance on the part of the respondent in regard to the conditions prescribed for availing the benefit of the exemption notification for converting the 100 per cent Export Oriented Unit as a Domestic Tariff Area Unit. The Tribunal having allowed the benefit of the notification, we are not inclined to entertain the Civil Appeal, in the facts and circumstances of the present case. Appeal dismissed. 2019 (7) TMI 466 Smuggling - Gold - waiver of penalty u/s 112(b) of Customs Act - acquittal of the appellant passed by a criminal court giving the benefit of Doubt - launching of prosecution of Section 135(1)(b) of the Act - HELD THAT:- Clause (b) of Section 112(b) and Section 135(1b) of the Act unambiguously requires the acquiring of possession by the person concerned of the goods, which are liable to confiscate under Section 111 of the Act. Two consequences follow upon these ingredients be found available. One is imposition of penalty under Section 112(b) of the Act, another is prosecution in the Criminal Court, which may result in an imprisonment. There is no dispute before us that on the same set of facts and evidence, the concerned Criminal Court has already acquitted the respondents before us giving them the benefit of doubt. The appeal filed by the Revenue/prosecution against such acquittal has also failed. The learned counsel for the Revenue could not point out any additional evidence or material available with the Revenue other than the one, which was considered by the Courts with regard to the prosecution of Respondents under Section 135 of the Act. The reason of such double jeopardy to be avoided is obvious, even though the two proceedings may operate in different fields and may have different nature. The Departmental proceeding on civil side, which is based on preponderance of probability premise based, whereas on the criminal side, it is the proof beyond the reasonable doubt, which forms the basis of conviction or acquittal, are different but the distinguishing feature to allow the two proceedings to go ahead parallely is that the different set of facts and evidence should be available before the concerned authorities proceeding in two parallel proceedings. The same principles would apply in a taxing statute like the Customs Act, 1962, also because the ingredients sought to be satisfied for imposition of penalty as well as for prosecution of the concerned accused persons is same and identically worded, as it would appear from the quotation of the two provisions. In the absence of any additional or further material with the Revenue, we do not find any error committed by the learned Tribunal to set aside the penalty under Section 112 (b) of the Act on the basis of the order of acquittal by the concerned trial court below - Penalty rightly set aside. Appeal dismissed - decided against Revenue. Insolvency & Bankruptcy 2019 (7) TMI 465 Admissibility of application - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - approval of Resolution Plan by CoC - HELD THAT:- Sub-section 2 of Section 30 casts duty on the Resolution Professional to examine the resolution Plan received by him to confirm that such Resolution Plan provides for the payment of insolvency resolution process costs, provides for the payment of the debts of the operational creditors in such manner as may be specified, provides for the management of the affairs of the corporate debtor after approval of the Resolution Plan; the implementation and supervision of the Resolution Plan, that the Resolution Plan does not contravene any of the provisions of the law, and that the Resolution Plan conforms to such other requirements as may be specified by the Board. The Resolution Professional has filed compliance certificate in Form H and inter alia has confirmed that he has examined and verified the Resolution Plan approved by the CoC, in the light of the requirements of the Code and Regulations and that it is compliant to the relevant provisions of the Code and Regulations. It is pertinent to state here that Section 29A of the Code prescribes certain eligibility criteria and disqualifications for persons who submit a resolution plan. Resolution applicants have given adequate declaration and undertaking on their eligibility to submit the Resolution Plan. Resolution Professional has also certified that he has verified that the Resolution Applicant and the persons in management and control of the company and the other Connected Persons are eligible to submit resolution plan and does not fall under any of the category as mentioned in Section 29A as inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2017. All the requirements of Section 30 (2) are fulfilled and no provision of the law for the time being in force has been contravened - the Resolution Plan meets the requirements of Section 30 (2) of the Code and that the resolution plan has provisions for its effective implementation. The resolution plan, as approved by the requisite super majority of members of CoC, is in accordance with the sub-section 2 of Section 30 read with Section 31 of the Code and as the Resolution Applicant is not disqualified under Section 29A of the Code and as no infirmity seems to have brought out upon screening of the Resolution Plan; we hereby approve the Resolution Plan under sub-section (1) of Section 31 of the Code. Application disposed off. 2019 (7) TMI 464 Appeal against the decision of liquidator - rejection of claim submitted by the Applicant as a Financial Creditor under Regulation 18 read with Form-D of the IBBI (Liquidation Process) Regulations, 2016 - Section 42 of the I B Code - time limitation - condonation of Delay in filing application. Whether the delay in filing this application can be condoned or not? - HELD THAT:- Because the liquidation proceedings are yet to be finalized in the present case, no prejudice will be caused if the claim of the applicant is adjudicated - Further, it cannot be said that the requirement of sufficient cause is not met out in this case as the Applicant was not sleeping over its rights, but was continuously following up with the Liquidator for the perusal of its claims and this process caused the delay in filing this application - the delay in filing this application is condoned. In the present case, what is denied by the RP is not the existence of security in the form of Pledge of shares towards the debt granted by the applicant to Borrower, but the Applicant s status as a Guarantor/Financial Creditor of the Corporate Debtor in the light of section 5(8) of the Code. Hence, being a Secured Creditor of the Corporate Debtor, the option to move U/s 52(1)(b) of the I B Code is always open to the Applicant for realising the security interest on its own. The Liquidator has rightly rejected the claim of the Applicant on the ground that the Applicant is not a Financial Creditor of the Corporate Debtor and the liability of the Corporate Debtor is restricted to the pledge of shares only which has already been meted with - application dismissed. Service Tax 2019 (7) TMI 463 Refund claim - time limitation - monetary amount involved in the appeal - HELD THAT:- As the tax amount involved is insignificant, we decline to entertain this special leave petition whilst keeping the questions of law open. SLP dismissed. 2019 (7) TMI 462 Demand of service tax - Freight charges - extended period of limitation - penalty - HELD THAT:- There is no reason to entertain this Special Leave Petition under Article 136 of the Constitution of India. SLP dismissed. 2019 (7) TMI 448 Condonation of delay in filing appeal - sufficient cause - Whether the Tribunal had failed in considering the question as to whether the delay could have been condoned in terms of awarding cost? - HELD THAT:- We have to concur with the findings arrived by the Tribunal that the appellant had failed to offer any proper explanation with respect to the delay caused, which is convincing to the Appellate Tribunal. But at the same time, the Tribunal had failed to consider whether a lenient view could have been taken based on the settled legal principles. While considering whether there exists any 'sufficient cause' for condoning the delay, the Tribunal also could have considered about allowing the petitions on taking a liberal attitude, in terms of cost, in order to compensate the prejudices which may be caused to the opposite side. It is only just and proper to permit the appellant to pursue the appeals on merits after condoning the delay occurred. However, we take note of the fact that the prejudices which may be caused to the respondent Department need to be compensated in terms of cost. On a reasonable estimation, we think it appropriate to impose cost of ₹ 7,500/- each in the above cases, for condoning the delay. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 447 Classification of services - Manpower Recruitment/Supply service or Business Auxiliary Service? - service provided by the appellant for handling agricultural products - HELD THAT:- It is seen that this specific assertion was made before the lower authorities but the same is not contested or refuted by the impugned order. The agreement with Reliance Fresh Limited also indicates that the contract is a Work Order though the payment has been made on the strength of man-days provided. The contract is for handling the agricultural produce and not for supplying the manpower. In the case of M/S. SHRI RAMADHAR SINGH VERSUS C.C.E., RAIPUR [ 2017 (5) TMI 1536 - CESTAT NEW DELHI] in similar circumstances, it has been held that such services are not liable to tax under Manpower Recruitment or Supply Agency Service. The service provided to M/s. Reliance Fresh Limited does not qualify as Manpower Recruitment and Supply Agency Services and the demand in so far as it relates to such service cannot be upheld - the demand on the said service provided to M/s. Reliance Fresh Limited is set-aside along with penalty and interest - Penalties also set aside. Appeal allowed in part. Central Excise 2019 (7) TMI 461 SSI Exemption - clubbing of clearances - determination of value of clearance to related parties - HELD THAT:- From the impugned decision of the Tribunal and particularly from the submissions which have been recorded on the aspect of valuation, we do not find that this point was specifically recorded as having been raised. If at all such a submission was addressed before the Tribunal during oral arguments but has not been dealt with, the appellants must make that grievance before the Tribunal. The Tribunal would be at liberty to consider any such application as may be made on behalf of the appellants. In order to enable the appellants to move the Tribunal, no coercive steps shall be taken to realise the balance of the demand for a period of four weeks from today, since it has been stated before this Court that 50 per cent of the demand has already been deposited. Matter restored before tribunal. 2019 (7) TMI 460 CENVAT Credit - MS items/iron and steel used for fabrication of goods or support structures - extended period of limitation - penalty - HELD THAT:- The remand of the Tribunal to the Adjudicating Authority was only for the purpose of computation of figures of such cenvat credit. The Revenue does not dispute before us the entitlement of assessee to avail such cenvat credit. In these circumstances, the finding of the learned Tribunal that the case would not call for any imposition of penalty, which was found to be unwarranted on account of interpretational issues involved it cannot be beyond the scope of power of the learned Tribunal under Section 35C of the Act. So long as the question of entitlement of Assessee to avail such cenvat credit is not validly disputed or questioned by the Revenue, which in the present case has not so been done, the Revenue cannot insist upon a open remand for leaving the question of penalty of imposition also free to be reconsidered by the Adjudicating Authority - there is no illegality committed by the learned Tribunal in this regard and therefore, we find the present appeal by Revenue being without any merit. The questions are answered in favour of the Assessee and against the Revenue - Appeal dismissed. 2019 (7) TMI 459 Classification of goods - Power Gold - Bio Gold - NPK Fertilizer, Organic Manure and Soil Conditioner - product Power Gold classified under CETSH 3103 9000 and Bio-Gold under CETSH 310290 90 or not? - benefit of Sl. No. 40 of Notification No. 1/2011 - CE dated 1.3.2011 till 16.3.2012 - Revenue proposed to classify the Soil Conditioner and Organic Manure products as Chemical products not elsewhere specified or included under CETSH 38249090 and to demand duty of ₹ 3,72,78,082/- for the period October 2011 to March 2016 on NPK Fertilizers, Soil Conditioner and Organic Manure along with interest and penalty u/s 11AC and Rule 25 of Central Excise Rules, 2002 - extended period of limitation - penalty. HELD THAT:- A bare perusal of both the entries under Chapter 31 and Chapter 38 when read with Chapter Note -3 to Chapter 31 would clearly reveal that Chapter 31 deals with Fertilizers whereas 3824 deals with miscellaneous chemical products. The impugned products as per Annexure- 4 to show cause notice consists of various constituents. As per chemical examiner test report in case of NPK Fertilizer the composition of goods is Nitrogen 29.70%, Phosphorous (as P 2 O 5 ) 11.60%, Potassium (as K20) 10.37, In Power Gold the composition is Calcium (Ca)-21.1%, Magnesium (Mg)-5.9%, Sulphur (S)20.9% and in Bio-Gold composition is Carbon-13.92%, Moisture-12%, Ash-76%. In case of Bio Gold the report also says that the sample is composed of carbon bearing material and small amount of Phosphorous, Potassium and nitrogen bearing inorganic compounds alongwith clay matter. However the test report does not give percentage of same. Coming to the constituents we find that as far as NPK Fertilizer is concerned there is no doubt about its classification based upon constituents. Even the show cause notice accepted its classification under CETSH 3101 but it is not known as to why the duty was demanded. Nor the impugned order discusses anything about its classification and hence there is no case of revenue for classification under any other chapter. In case of Power Gold from test reports the constituents are apparent i.e. it consists of Single Super Phosphate (SSP), Gypsum and other inorganic substances, viz. calcium, magnesium, sulphur, mud, dolomite and bentonite and thus it clearly meets the requirement of Chapter Note-3 (a) (iii) (c). to cover it under CETSH 3103. The contention of adjudicating authority that Power Gold is a Soil Conditioner and therefore not a fertilizer is clearly untenable in law as CETSH 31.03 covers the phosphatic fertilizer whether mineral or chemical. There is no basis for holding that soil conditioner is not a fertilizer. The certificate issued by the Directorate of Agriculture, Gandhinagar clearly considers Power Gold as a Fertilizer. Since Power Gold is made from Superphosphate and is on test found to contain phosphorous, it will clearly fall under Heading 31.03 - As regard Bio Gold (organic manure), we find that the same is made from poultry manure. On test, it is found to contain phosphorous, potassium and nitrogen. We also find that the test report of Bio Gold matched with the specifications of organic manure given in Schedule IV (S.No. 4) of Fertilizer Control Order 1985. The certificate issued by the Directorate of Agriculture, Gandhi Nagar also considers Bio Gold as fertilizer. Extended period of limitation - penalty - HELD THAT:- The issue involved is of classification and hence no case of suppression or intention to evade duty is made out. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 458 SSI Exemption - non-inclusion of value of goods which was manufactured by them on job work basis on behalf of the various principals - crossing of threshold exemption - non-filing of declaration/ undertaking under N/N. 214/86-CE. by the suppliers - Extended period of limitation - Penalty - HELD THAT:- As per the decision of THERMAX BABCOCK AND WILCOX LTD., THERMAX LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (12) TMI 266 - CESTAT MUMBAI] the liability to pay duty in respect of goods produced on job work basis lies with the appellant being manufacturer of goods. However, since the issue regarding liability of duty on manufacturer vis a vis principal was referred to Larger Bench of Tribunal in case of Thermax Babcock Wilcox Ltd. extended period of limitation cannot be invoked in view of the decision of Tribunal in case of MARSHA PHARMA PVT. LTD. VERSUS COMMISSIONER OF C. EX., VADODARA [ 2009 (6) TMI 818 - CESTAT, AHMEDABAD] . The demand beyond the normal period of limitation is set aside - penalty is also set aside - appeal allowed in part. 2019 (7) TMI 457 Taxability/Excisability - samples which are withdrawn for testing within the factory premises - HELD THAT:- Reliance placed in the case of THERMAX CULLIGAN WATER TECHNOLOGIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2013 (12) TMI 977 - CESTAT MUMBAI] where it was held that samples mandatorily drawn for testing and getting used up/destroyed during testing cannot be considered as excisable goods liable to duty. Demand set aside - appeal allowed - decided in favor of appellant. 2019 (7) TMI 446 Time Limitation of Rectification Application - the application was filed beyond a period of limitation of six months - Section 35C(2) of the Central Excise Act, 1944 - HELD THAT:- There is no merit in the present appeal filed by the Assessee. Sub Section (2) of Section 35C of the Act, does not envisage any such distinction of the rectification application being made by the party or rectification proceedings undertaken by the Tribunal suo-motu on its own. The period of limitation of six months was substituted for a period of four years by the Finance Act 2002 with effect from 11.05.2002. We are concerned with this post amendment limitation of six months only - The application for rectification apparently can be filed either by Revenue Authority or by the other party to the appeal (the Assessee concerned). The provision does not even provide for a suo-motu rectification by the learned Tribunal. Therefore, restricting the application of a period of limitation only if the learned Tribunal itself undertakes such rectification proceedings cannot be applied, as contended by the learned counsel for the Assessee. Admittedly, in the present case, the orders sought to be rectified was passed on 19.02.2010, for which the application for rectification by the Assessee was filed beyond the period of limitation but no date of filing of such rectification application was given by the Assessee. Decided against assessee and in favor of Revenue. 2019 (7) TMI 445 CENVAT Credit - input services - commission paid to agents working abroad for sale of their goods - denial of credit on the ground of nexus - HELD THAT:- The distributor/commission agent appointed by the appellant outside India has to make every effort to promote the products manufactured by the appellant. It is thus not merely an activity of sale of finished products - the Board vide Circular No. 943/4/2011-CX dated 29.04.2011 has clarified that the remuneration paid to sales commission agents is linked with actual sale and it involves an element of sales promotion. The decision of the Hon ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD II VERSUS M/S CADILA HEALTH CARE LTD. [ 2013 (1) TMI 304 - GUJARAT HIGH COURT] , therefore, has no application in the present facts of the case as it was held in the case that though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agents not being analogous to the activities mentioned in the definition, would not fall within the ambit of the expression activities relating to business . The Tribunal in the case of CGST, C CE, ALWAR VERSUS M/S KRISHI ICON [ 2018 (7) TMI 97 - CESTAT NEW DELHI] had occasion to analyse the application of the explanation added with effect from 03.02.2016 and had observed that it was merely clarificatory in nature and that commission paid for sales commission activities prior to 03.02.2016 is also eligible. The denial of credit is unjustified - credit allowed - appeal allowed - decided in favor of appellant. 2019 (7) TMI 444 Re-credit of CENVAT - recovery of credit availed by them on the ground that they have availed inadmissible credit without the valid documents - Rule 14 of Cenvat Credit Rules - penalty - HELD THAT:- The Respondent had paid service tax from cenvat credit, but the same was objected by the department. The Respondent then paid the said service tax amount in cash. Once they paid the service tax in cash, they become eligible for the re-credit of amount paid by them from cenvat. The issue is no more res - integra and the same stands decided in various judgments of Hon ble High Court and Tribunal wherein it was held that when the tax stands paid twice, the excess amount is not a tax but has to be considered as deposit. It is further observed that the revenue itself did not treat the amount paid thru cenvat as service tax as the respondent was insisted to pay in cash. Accordingly, once the revenue discarded the payment thru cenvat as service tax and got the equal amount deposited from respondent thru cash, the amount initial utilised from cenvat amount stand re-creditable to the respondent. The Appellant s suo moto availment of credit cannot be found fault with - Appeal dismissed - decided against Revenue. CST, VAT & Sales Tax 2019 (7) TMI 468 Special assessment / Audit Assessment u/s 34(8A) of the VAT Act - Assessment of turnover - Interpretation of statute - non-obstante clause present or not - A.Y. 2012-13 - HELD THAT:- The provision of sub-section (8A) of Section 34 of the VAT Act cannot be understood or interpreted as enabling or empowering the Assessing Officer to correct an error, which might have been committed in the course of passing the audit assessment order - the powers under sub-section (8A) of Section 34 of the VAT Act would be available when a certain claim or a transaction has not been subjected to audit assessment under sub-section (2) of Section 34 of the VAT Act. It is also clear that to invoke the provision of sub-section (8A) of Section 34 of the VAT Act, some proceedings must be pending. On the date of issuance of the impugned notices, no proceedings were pending under the VAT Act. If such proceedings are permitted, it would amount to permit the Assessing Officers to sit in a appeal over his own orders. In such circumstances, the respondent could not have invoked the provisions of subsection (8A) of Section 34 of the VAT Act and issued the impugned show cause notices. The impugned notice seeking to carry out assessment of turnover of the petitioner under section 34(8A) of the Gujarat Value Added Tax Act, 2003 for the A.Y. 2012-13 and A.Y. 2011-12, respectively, are quashed and set aside - petition allowed - decided in favor of petitioner. 2019 (7) TMI 456 100% EOU - Imposition of penalty U/s 15 (A) (o) of U.P. Trade Tax Act, 1948 - mere technical defect in Form-31 - absence of any intention to evade payment of tax - HELD THAT:- The Act clearly stipulates that a penalty under Section 15-A-(1) (O) of the Act may be imposed if the Assessing Officer is satisfied that the offending dealer had intention to evade tax. Such satisfaction must be recorded in the penalty order itself and not outside it. In the facts of the present case, other than mentioning the default noted by the Assessing Officer, there is no satisfaction recorded of such intention to evade tax. A satisfaction required to be reached by the Act, cannot be a matter of interference to be drawn in revision proceedings but the same must be found to be in existence on a plain reading of the order passed by the Assessing Authority. There can be no presumption on such satisfaction having been reached and there can be no argument to infer its presence. Even otherwise, in the facts of the present case, it appears difficult to accept the presence of such intention, as the assessee is a 100% export oriented unit whose export sales were found to be exempt and there is no allegation that the assessee was engaged in trading of goods that were being imported. Revision allowed. 2019 (7) TMI 455 Service of order - mode of service - petitioner contends that the Revisional notice preceding the impugned order has not been served on the writ petitioner - HELD THAT:- The impugned order is set aside solely on the ground of non-adherence to the principle of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] - no view or opinion is expressed on merits of the impugned order. Petition disposed off. 2019 (7) TMI 454 Concessional rate of tax - purchase of High Speed Diesel Oil for use in generation and distribution of electricity and other forms of power - C-Forms could not be downloaded - HELD THAT:- There is no disputation or disagreement that the instant writ petition falls clearly within the four corners of M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] where it was held that The respondents are directed to permit these petitioners to download 'C ' forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of 'C' declaration forms. Petition allowed - decided in favor of petitioner. 2019 (7) TMI 453 Maintainability of petition - alternative remedy of appeal - Revision of assessment - Section 27 of TNVAT Act - the objections given by the writ petitioner have not been considered by the second respondent in passing the impugned order - principles of natural justice - Whether the objections have been considered comprehensively and whether the manner in which the objections have been considered is acceptable in law? - HELD THAT:- There is no dispute before this Court that an alternate remedy is available to the writ petitioner i.e., by way of an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act. With regard to alternate remedy, from a long line of authorities it comes out clearly that alternate remedy is not an absolute rule. It is not a rule of compulsion, but it is a rule of discretion. This Court is of the considered view that this is a fit case to relegate the writ petitioner to alternate remedy by way of appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act - Petition dismissed. 2019 (7) TMI 452 Waiver of interest on belated payment of tax liability - CST Act - TNGST Act - HELD THAT:- The power to consider the representation for remission is vested with the Government under Section 31 of TNVAT Act. 'Government' is a term of art qua TNVAT Act as the same has been defined in Section 2(22) of TNVAT Act. There is no dispute that Government, as defined in Section 2(22) of TNVAT Act, has not been arrayed as a respondent herein. This Court deems it appropriate to direct the State counsel to communicate this order to the Government, within the meaning of Section 2(22) of TNVAT Act, for considering the remission application of the writ petitioner being remission application dated 19.06.2019. Writ petitioner shall pay a sum of ₹ 10,00,000/- towards interest due within eight weeks from the date of receipt of a copy of this order - If the writ petitioner pays the aforesaid sum within the aforesaid time frame, the Government shall consider the writ petitioner's application for remission of interest, being application dated 19.06.2019 and dispose of the same in a manner known to law within eights weeks from the date of payment of aforesaid sum albeit within the aforesaid time frame. Petition disposed off. Indian Laws 2019 (7) TMI 451 Restraint on respondent Nos. 1 and 2 from interfering with the working and management of Hamdard Laboratories (India) and its allied institutions in any manner whatsoever - appellant has sought the above directions, inter alia, on the ground that respondent Nos. 1 and 2 are creating impediment in the working and management of Hamdard Laboratories (India) - right to operate bank accounts in terms of Wakf Deed of 1948. HELD THAT:- There is an inadvertent mistake in the judgment dated April 3, 2019 when the Court said that the parties will additionally continue with the arrangements arrived at in respect of the management of the Hamdard in terms of resolution dated April 28, 2015. The resolution was in respect of two bank accounts of Hamdard in the Corporation Bank only. The resolution is in no way in respect of management of Hamdard and even remotely has no connection with the management of the Hamdard. Therefore, the word management is inadvertent mistake of this Court which is required to be substituted by the word banking operations . 2019 (7) TMI 450 Appointment of sole arbitrator - disputes arose between the parties with respect to certain communication issued by the Respondent University, whereby the purchase order in favour of the Petitioner, executed in furtherance of the MoU, was kept in abeyance - HELD THAT:- On the joint request of the parties, we appoint Mr. Justice Pratap Hardas (Retd.) as the Sole Arbitrator, subject to the declarations being made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the period of 12 months. Matter disposed off. 2019 (7) TMI 449 Dishonor of cheque - insufficiency of funds - Section 138 of Negotiable Instrument Act - HELD THAT:- Upon careful perusal of the averments in the complaint and in particular para no. 22 there of, there are specific averments wherein it is stated that at the time the offence was committed accused no. 2 to 9 i.e. present petitioners were Directors and were in charge of and responsible for day to day affairs and management of accused no. 1 and therefore, they are liable for prosecution. The petitioners have no where stated in the petition that they were not Directors of Respondent No. 1 on the date of commission of an alleged offence nor they brought on record unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the petitioners though Director s could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of Court. In the present case, as already observed the petitioners were directors on the date of commission of alleged offence and were responsible for the business of the said company as averred in the complaint. The petitioners have not brought on record unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the petitioners could not have been concerned with the issuance of cheques and asking them to stand the trial would be abuse of process of Court. Therefore, prayer of the petitioners to cause interference in the impugned order deserves no consideration. Petition dismissed.
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