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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 19, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS ITC on the Motor Vehicle purchased for demo purpose can be availed as a Capital Goods and set off against output tax payable under GST Articles Goods exempted from E-way bill under GST What is 26AS and procedure for discrepancies in actual TDS and TDS credit as per Form 26AS News Finance Commission holds meeting with Ministry of AYUSH Exchange Rates Notification No.52/2019-Custom (NT) dated 18.07.2019 Insolvency and Bankruptcy Code (Amendment) Bill, 2019 Joint Statement of the 13th Meeting of the India-UK Joint Economic and Trade Committee First Trial Shipment of North Indian Mangoes from Lucknow to Italy Notifications Customs 52/2019 - dated 18-7-2019 - Cus (NT) Exchange Rates Notification No.52/2019-Customs (NT) dated 18.07.2019. DGFT 11/2015-20 - dated 17-7-2019 - FTP Merger of Council for Trade Development and Promotion (CTDP) in to Board of Trade (BoT) GST - States 26/2019-GST - dated 28-6-2019 - Assam SGST Prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September, 2019 25/2019-GST - dated 28-6-2019 - Assam SGST Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September, 2019 ORDER No-05/2019-STATE TAX - dated 13-6-2019 - Assam SGST Assam Goods and Services Tax (Fifth Removal of Difficulties) Order, 2019 FTX.56/2017/414 - dated 13-6-2019 - Assam SGST Government of Assam appoints the 21st day of June, 2019, as the date from which the provisions of the Assam Goods and Services Tax (Fourteenth) Amendment Rules, 2018 rule 12 of (notification No. FTX.56/2017/Pt-I/184, dated the 28th February, 2019,], shall come into force. FTX.56/2017/412 - dated 13-6-2019 - Assam SGST Filing of Return CMP-08 for composition dealers till 18th of every quarter 10/2019-STATE TAX (RATE) - dated 11-6-2019 - Assam SGST Seeks to amend Notification No. FTX.56/2017/24 dated the 29th June, 2017 ORDER No. 04/2019-STATE TAX - dated 3-6-2019 - Assam SGST Assam Goods and Services Tax (Fourth Removal of Difficulties) Order, 2019 ORDER No. 03/2019-STATE TAX - dated 3-6-2019 - Assam SGST Assam Goods and Services Tax (Third Removal of Difficulties) Order, 2019 FTX.56/2017/Pt-II/156 - dated 3-6-2019 - Assam SGST Corrigendum - Notification No. FTX.56/2017/Pt-II/135, dated the 28th February, 2019 9/2019-STATE TAX (RATE) - dated 3-6-2019 - Assam SGST Seeks to amend Notification No. FTX.FTX.56/2017/Pt-Il/189 dated the 3rd June, 2019 2/2019-STATE TAX (RATE) - dated 3-6-2019 - Assam SGST Notifies the state tax on the Intra-state supplies of goods or services 08/2019-STATE TAX (RATE) - dated 3-6-2019 - Assam SGST Seeks to amend Notification No. 1/2017 (Rate) [FTX.56/2017/14] dated the 29th June, 2017 07/2019-STATE TAX (RATE) - dated 3-6-2019 - Assam SGST Payment on Basis of Reverse Charge Mechanism for supply of Goods and Services 06/2019-STATE TAX (RATE) - dated 3-6-2019 - Assam SGST Notify certain class of persons by exercising powers conferred under section 148 of Assam Goods and Services Tax Act, 2017 KA.NI-2-985/XI-9(47)/17-2019 - dated 2-7-2019 - Uttar Pradesh SGST Uttar Pradesh Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 KA.NI-2-984/XI-9(47)/17 - dated 2-7-2019 - Uttar Pradesh SGST Amendments in the Notification no.- notification No. KA.NI-2-810/XI-9(47)/17-U.P.Act-1-2017-Order-(38)-2019, dated 28 May 2019. KA.NI-2-983/XI-9(47)/17 - dated 2-7-2019 - Uttar Pradesh SGST Filing of Return CMP-08 for composition dealers till 18th of every quarter. KA.NI-2-982/XI-9(42)/17 - dated 2-7-2019 - Uttar Pradesh SGST Uttar Pradesh Goods and Services Tax (Twenty Ninth Amendment) Rules, 2019 KA.NI-2-829/XI-9(42)/17 - dated 4-6-2019 - Uttar Pradesh SGST Seeks to notify the provisions of rule 138E of the SGST Rules w.e.f 21st June, 2019. 1215/CSTUK/GST-Vidhi Section/2019-20/CT-29 - dated 1-7-2019 - Uttarakhand SGST Extend for timeline for filing of GSTR 3B for the month of July 2019 to September 2019. Income Tax 54/2019 - dated 17-7-2019 - IT Agreement between the Government of the Republic of India and the Government of the People’s Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes Circulars / Instructions / Orders SEBI CIR/CFD/CMD1/ 79 /2019 - dated 17-7-2019 Modification of circular dated July 18, 2017 on ‘Disclosure of divergence in the asset classification and provisioning by banks’ GST - States 24/2019-GST (State) - dated 1-7-2019 Clarification on various doubts related to treatment of secondary or post-sales discounts under GST. 23/2019-GST (State) - dated 1-7-2019 Processing of refund applications in FORM GST RFD-01A submitted by taxpayers wrongly mapped on the common portal. 22/2019-GST (State) - dated 1-7-2019 Clarification regarding determination of place of supply in certain cases. 21/2019-GST (State) - dated 1-7-2019 Clarification regarding applicability of GST on additional/penal interest. GST 107/26/2019-GST - dated 18-7-2019 Clarification on doubts related to supply of Information Technology enabled Services (ITeS services). 108/27/2019 - dated 18-7-2019 Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion DGFT 19/2015-2020 - dated 17-7-2019 Allocation of additional quantity of 1239 MTRV for export of sugar to USA under Tariff Rate Quota (TRQ) Customs PUBLIC NOTICE No. 23/2019 - dated 25-6-2019 Notification of FSSAI's Authorised Officer for Deen Dayal Port at Kandla under Section 47 (5) of FSS Act, 2006 PUBLIC NOTICE No. 21/2019 - dated 11-6-2019 Simplified auto-registration of beneficiaries (IEC holders) on ICEGATE for eSANCHIT and other benefits PUBLIC NOTICE NO. 20/2019 - dated 11-6-2019 Clearance Of Drawback claims pending under Brand Rate PUBLIC NOTICE No. 14/2019 - dated 23-5-2019 Mandatory Implementation of eSANCHIT PUBLIC NOTICE No. 13/2019 - dated 13-5-2019 DGFT's forged Office Order No. 59/2019 dated 04.04.2019 regarding cancellation of Notification No. 26/2015-2020 dated 21.08.2018 for Export Policy of Beach Sand Minerals (BSM) PUBLIC NOTICE NO. 27/2019 - dated 30-4-2019 24 X 7 customs Clearance Operations of Nepal and Bhutan transit cargo from N.S. Docks Kolkata & Haldia Docks Highlights / Catch Notes GST Levy of IGST - Job-work - Exports - Since the place of supply of service is outside India, condition (iii) u/s 2(6) of the IGST Act, 2017 is also fulfilled. Hence the service provided by the applicant falls within the definition of export of service - However, not entitled to refund the unutilized input tax credit. Visit to Get Source Reverse Charge - the brand promotion packages offered by the applicant to partnership firms and body corporate do not fall under the category of sponsorship but purely branding - the applicant shall be liable to pay tax (GST) on such services under normal charge only @18% Visit to Get Source Classification and nature of services - Service provided by the applicant to the delegates and exhibitors - activities involved are, Technical Seminars, Access to exhibition, Hotel Room Accommodation, Cultural programs, lunch & dinner and Airport Pick Up & Drop etc. - classifiable under HSN 998596 (i.e. events, exhibitions, conventions and trade shows organisation and assistance services) - Rate of GST is 18% Visit to Get Source Input tax credit - The demo vehicle is indispensable tools for promotion of sale by providing trail run to the customer. The applicant capitalizes the purchase of such vehicles in the books of accounts - eligible for ITC Visit to Get Source Health care services - The stay for various treatments, supply of medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment are naturally bundled - To be considered as 'Composite Supply” and eligible for exemption under the category of 'health care services”. Visit to Get Source Income Tax Agreement between the Government of the Republic of India and the Government of the People’s Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes Visit to Get Source Penalty u/s 271(1)(c) - Additions based on difference in TDS statement (Form 26AS) - assessee failed to submit reconciliation between the books of account and Form 26AS before the AO either during assessment proceedings or during the penalty proceeding or even before the first appellate authority and even before at the time of hearing of the instant appeal - penalty upheld Visit to Get Source Rectification u/s 154 by CIT(A) - date of applicability of provision of Section 56(2)(viib) - we are not interpreting the provision as such as to the date of applicability but only examining the issue as to whether the issue is debatable - since it is debatable issue in view of the contrary view taken by the Hon’ble Jurisdictional High Court - not a mistake apparent on record - CIT(A) wrongly rectified the order. Visit to Get Source LTCG - surrender of right sue under MOU and withdrawal of complaint before criminal court - compensation along with interest, towards loss of profit/liquidated damage for loss of opportunity to develop the property and sale of flats in the open market and towards the cost of litigation - amount received by the assessee in excess of advance is on account of compensation for extinction of its right to sue the owner, the receipt is a Capital receipt Visit to Get Source Bogus LTCG - addition u/s 68 - exemption of LTCG u/s 10(38) - penny stock - neither the assessee nor his broker are named as illegitimate beneficiary to bogus LTCG in any of the alleged statements of the operators/brokers or reports/orders of SEBI or INV wing - AO has also failed to produce any material/evidence to dislodge or controvert the genuineness of the conclusive documentary evidences - no addition Visit to Get Source Rectification u/s 254(2) - one of ground was not disposed - since the appeal against the order of the Tribunal has already been admitted and a substantial question of law has been framed by the Hon'ble High Court, the Tribunal cannot proceed with the Miscellaneous Application u/s 254(2) Visit to Get Source Disallowance of additional depreciation - use of machinery in the actual process of manufacture of food products/sweets/namkeens - items of the assets installed at retail outlets(sweet shops) - retail outlets are not either office promises or residential accommodation in the nature of the guesthouse excluded u/s 32(1)(iia) for the additional depreciation - claim allowed. Visit to Get Source Income accrued in India - PE - India-USA DTAA - taxability of ‘Instructor Fee’ earned from ‘GIA India Lab’ - GIA India Lab is not acting in India on behalf of the assessee company nor having any authority to conclude contracts, it has neither concluded any contracts nor has it secured any orders for the assessee company in India, thus, cannot be regarded as agency PE - not taxable in India Visit to Get Source Expansion of scope of Limited scrutiny - notice u/s. 143(2) under CASS - requirement of written approval from the Administrative Commissioner - In the instant case before us, nowhere on record, it is seen that prior written approval was obtained from the CIT - in absence of such prior written approval any assessment order passed should have to be declared null and void Visit to Get Source Disallowing STCG on mutual funds - lower authorities completely failed to rebut evidences and explanations so filed by these agencies so as to conclude that it was a colourable device or any connivance with the companies to evade tax by booking loss - if the assessee do not fall/suffers from restrictions under law, the assessee could not have been denied that benefit as claimed - loss allowable Visit to Get Source TDS u/s 194H on payments made to Banks towards cash pick up charges - charges for cash pick up ( or also called as cash management services) paid by assessee to Banks are analogous to credit card charges so far as requirements of Chapter XVII-B of the 1961 Act is concerned - There is no TDS liability, no addition u/s 40(a)(ia). Visit to Get Source Reopening of assessment - High Court dismissed writ against notice u/s 148 - the proper remedy of the petitioner would be to raise all pleas before the AO in assessment proceedings and if it is decided against him then to carry appeal to CIT (A) and then to the Tribunal and then to the High Court u/s 260A - not inclined to interfere with impugned order passed by the High Court Visit to Get Source Characterization of income - subscriptions received from the public at large under a collective investment scheme - assessee shown these as income in P/L account - it is clear that on general principles also such subscription cannot possibly be treated as income and it would not be possible to go only by the treatment of such subscriptions in the hands of accounts of the assessee itself - receipts in question were capital receipts and not income. Visit to Get Source Dismissal of appeal for non-prosecution by CIT(A) - documents were e-filed - dismissed on the grounds that the impugned assessment order, demand notice and challan of appeal fee had not been placed on record - CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merits and e-filed documents submitted time of e-filing of appeal must be treated as part of the record - remanded to CIT(A) Visit to Get Source Undisclosed income - addition based on entries in diary found in search of other person - if the income of the entries which were found in the diary during the course of search in the premises of Other Person, who had been declared the same as his own income, in such circumstances, no addition should sustain in the hands of the assessee Visit to Get Source Maintainability of the appeal u/s 260A before HC whereas the rectification application u/s 254(2) is pending before the ITAT - there are substantial questions of law to be decided, hence pendency of a petition for rectification u/s 254(2) can have no impact - appeal is maintainable. Visit to Get Source Power of Tribunal for enhancement - The AO at no point of time, disputed the date on which the business of the assessee was set up but disputed allowability of certain expenses on ground that assessee not commenced its commercial activity - Tribunal has no jurisdiction in venturing into an issue which was never an issue before the AO and cannot take away the benefit given to the assessee by the AO Visit to Get Source Taxability of subsidy receipt under West Bengal Incentive Scheme, 2000 - mode of computation/form of subsidy is irrelevant - the entire reason behind receiving the subsidy is setting up of plant in the backward region of West Bengal, namely, Bankura - not taxable being capital receipts Visit to Get Source DGFT Allocation of additional quantity of 1239 MTRV for export of sugar to USA under Tariff Rate Quota (TRQ) Visit to Get Source Service Tax Health and fitness services - the appellant has not contested the demand therefore the extended period has rightly been invoked and penalty under Section 77 & 78 has rightly been imposed. Visit to Get Source Franchise Service or not - sharing of profit - the agreement between the appellant and the licensee/dealer is in nature of share of profit in the ratio of 25% and 75% and in cases where there is a loss, the appellant does not received any amount towards the activity - not taxable under the category of ‘Franchise Service’ Visit to Get Source Central Excise Clandestine removal - The cross examination of tempo driver was already allowed earlier and therefore there was no reason for the adjudicating authority to grant cross examination again and again and cannot be considered to be violative of principles of natural justice. Visit to Get Source 100% EOU - Valuation - material found unaccounted in the premises - proviso to section 3 applies only to goods manufactured or produced by a 100% EOU. It therefore cannot be applied to the said goods which were clearly not produced by the appellant. Visit to Get Source Case Laws: GST 2019 (7) TMI 848 Levy of IGST - Job-work - import of iron ore for conversion into pellets and export the resultant product (Iron ore pellets) back to the same supplier - import duty is not applicable in view of the exemption under General Exemption No. 66 (Exemption Notification No. 32/97-Cus dated 01 st April, 1997) - HELD THAT:- In the instant case, goods are temporarily imported into India for the process of conversion into pellets and arc exported after such process, the exclusion clause provided under Section 13(3) of the IGST Act, 2017 is applicable. Hence the place of supply of service is determined as per Section 13(2) of the IGST Act, 2017 which is the location of the recipient of the service i.e. outside India. Since the place of supply of service is outside India, condition (iii) under Section 2(6) of the IGST Act, 2017 is also fulfilled. Hence the service provided by the applicant falls within the definition of export of service as defined under Section 2(6) of the IGST Act, 2017. Whether the applicant is eligible to take refund of the unutilized input tax credit or not is determined as per the provisions of Section 16 of the IGST Act, 2017 and Section 54 of the CGST Act, 2017? - HELD THAT:- The Government of India vide Notification No. 1-2016/Customs dated 04th Jan 2016 reduced the rate of export duty on Iron Ore Pellets from 5% to Nil. It is a settled law that NIL rate of tax is also a rate of tax. Since the goods exported are covered under Second Schedule of the Export Tariff appended to the Customs Tariff Act, 1975 the same goods are to be considered as subjected to tax - the exclusion clause provided under Section 54(3)(ii) is applicable in the instant case - the applicant is not eligible for the refund of unutilized input tax credit. 2019 (7) TMI 847 Classification and nature of services - Service provided by the applicant to the delegates and exhibitors - activities involved are, Technical Seminars, Access to exhibition, Hotel Room Accommodation, Cultural programs, lunch dinner and Airport Pick Up Drop etc. - N/N. 11/2017- CT(R) dated 28.06.17 - Principal supply - composite supply - HELD THAT:- In the instant case the provision applicable is ' a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply - Hence, the composite supply provided by the applicant to the delegates shall be treated as a supply of service of organization of conference - The services by the applicant to the delegates which is a composite supply involving principal supply of organising conference is as per provisions of the GST act cited above is classifiable under HSN 998596 and taxable at the rate of 18% GST. The consideration, i.e. exhibition participation fees will be paid by the exhibitors to the applicant. The participation fee for exhibition is charged from the exhibitors against the service of organizing trade show. Hence such service shall be classifiable under HSN 998596 (i.e. events, exhibitions, conventions and trade shows organisation and assistance services) and applicant is liable to pay tax at the rate of GST (SGST 9%+ CGST 9%). Brand promotion packages - nature of service and classification - N/N. 11/2017-CT(R) dated 28.06.17 - Whether the applicant is liable to pay tax on services provided to the brand promoters or the liability to pay tax on such services falls on recipient under reverse charge according to Notification No. 13/2017 - Central Tax (Rate)? - HELD THAT:- The brand promotion packages offered by the applicant should be classifiable under HSN 998397 having description Sponsorship services and brand promotion services taxable at the rate of GST (SGST 9%+ CGST 9%). The sponsorship service is specifically covered under services liable to tax on reverse charge basis under Section 9(3) of CGST Act, 2017 vide Notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017 - the brand promotion packages offered by the applicant to partnership firms and body corporate do not fall under the category of sponsorship but purely branding. The applicant is liable to pay tax on such services under normal charge only (not under reverse charge basis). The service of brand promotion is classifiable under the combined entry HSN 998397 having description Sponsorship services and brand promotion services taxable at the rate of 18% GST (SGST 9%+ CGST 9%). and the applicant shall be liable to pay tax on such services under normal charge only. Bundling of services - HELD THAT:- The bundle of services shall qualify as a composite supply by the hotel where accommodation service shall be the principal supply since it is the predominant element of supply made by the hotel. According to Section 8 of GST Act, 2017 such composite hotel shall be treated as supply of accommodation service (accommodation being the principal supply). Input tax credit - Services provided by the hotel including accommodation, food beverages - Supply of food and beverages by outside caterers - Services provided by event manager like pickup drop, exhibition stall setup, tenting, etc. - HELD THAT:- Input Tax Credit of CGST and SGST charged by the hotel on the composite supply of accommodation service shall be available to the applicant since such supply will be used in the course of business and it is an eligible credit in terms of Section 16 of GST Act, 2017. Input tax credit - food and beverages supplied by outside caterers - Section 17 (5) of GST Act, 2017 - HELD THAT:- It can be concluded that ITC of tax paid on food and beverages will be available to the applicant because the applicant will use such inward supply as an element of an outward supply of event organization which is a taxable composite supply. Input tax credit - rent-a-cab service - HELD THAT:- Since the applicant will use such inward supply of rent-a-cab service as an element of outward supplies of event organization and brand promotion which are taxable composite supplies, therefore ITC of tax paid on rent-a-cab service shall be available to the applicant. 2019 (7) TMI 846 Withdrawal of Advance Ruling application - Adjustment of service tax - mobilization advances in Pre-GST regime - HELD THAT:- The application filed by the Applicant for advance ruling is disposed off as withdrawn. 2019 (7) TMI 845 Classification of goods - rate of GST - Slabs of Quartz (Artificial Stone) - HELD THAT:- The classification of floor and wall tiles of agglomerated stone is dependent on the precise type of binding material used in the products. Subheading 6810.19. 12 provides for floor and wall tiles of stone agglomerated with binders other than cement (e.g. plastic resins). Floor and wall tiles of stone agglomerated with cement are classifiable in subheading 6810.19.14. The slabs supplied by the applicant are however not made of stone but quartz. The slabs supplied by the applicant are composed of 92% quartz and 8% resin binder - the product can merit classification under the residuary category of tariff entry 68101990 - The applicable rate of GST on Quartz Slabs (Artificial Stone) is 18%. 2019 (7) TMI 844 Input tax credit - capital goods - Motor Vehicle purchased for demonstration purpose - credit availed on Capital Goods and set off against output tax payable under GST - HELD THAT:- The availability of input tax credit shall be subject to the provisions of section 18(6) of the GST Act. In the case of supply of capital goods on which input tax credit has been taken the register person shall pay an amount equal to the input tax credit on the said capital goods reduce by such percentage of points as may be prescribed or the tax on transaction value of such capital goods determined as value of taxable supply, whichever is higher. In the instant case, the applicant purchases demo vehicles against tax invoices from the supplier after paying taxes. The demo vehicle is indispensable tools for promotion of sale by providing trail run to the customer. The applicant capitalizes the purchase of such vehicles in the books of accounts. The capital goods which are used in the course or furtherance of business is entitled for Input Tax Credit. The Input Tax Credit on the Motor Vehicle purchased for demonstration purpose can be availed as Input Tax Credit on Capital Goods and set off against output tax payable under GST. 2019 (7) TMI 843 Maintainability of Advance Ruling application - HELD THAT:- This Authority is of the opinion that the questions raised by the applicant are in nature of seeking an advice on the procedures to be followed by the assessee and are not covered under sub section 2 of section 97 of advisory nature and are not covered under sub section 2 of section 97 of the Act - Therefore, questions asked in the application are not covered under the mandate of this authority. The application for Advance Ruling is rejected. 2019 (7) TMI 842 Classification of services - health care services - composite services - intra-state supplies - Whether the service provided by the applicant (including all incidental services) amounts to a composite service under the classification of health care services exempted under Entry No. 74 of the N/N. 12/2017-Central Tax? HELD THAT:- In the instant case, the applicant provides health care services by way of appropriate diagnosis, appropriate medicines as well as relevant consumables or implants as part of treatment under supervision of qualified doctors till discharge. Therefore, medicines, implants etc. used in the course of providing health care services to in-patients is undoubtedly naturally bundled in the ordinary course of business. Hence, the stay for various treatments, supply of medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment are naturally bundled and are provided in conjunction with each other, would be considered as 'Composite Supply and eligible for exemption under the category of 'health care services . 2019 (7) TMI 841 Detention order - Section 129 (1) of CGST Act, 2017 - Jurisdiction - HELD THAT:- This Court is not convinced to entertain the writ petition and adjudicate upon merits at this stage. To confirm to the scheme under the Act, the writ petition is disposed of by this order. The petitioner submits bank guarantee for the tax and penalty as shown in Ext.P5 and applies for release of goods by enclosing a copy of this order within two days from today. The respondent shall release the goods detained under Ext.P4 and subjected to enquiry in Ext.P5 within twelve hours from the date and time of receipt of bank guarantee. 2019 (7) TMI 840 Grant of Bail - wrongful availment of input tax credit - HELD THAT:- In the case in hand, applicant / accused is stated to be the proprietor of M/s. Swift Enterprises, whereas, his father and brother are stated to be the Directors of M/s. Megabyte I.T. Pvt. Ltd. and his employee Rakesh Kumar Gupta is stated to be the proprietor of firm namely M/s. I.T. Solution. The applicant/ accused is stated to be managing entire affairs of all the three firms and IO has mentioned in his reply that by way of circular movement of invoices by way of fictitious sales without actual supply of goods, input tax credit (ITC) to the tune of more than ₹ 20 crores has been wrongfully availed by the applicant/ accused causing loss to the government exchequer. The evidence has been collected by the IO showing that various invoices were issued (inter-se) by the abovesaid three firms and all the said three firms are allegely being manged by the applicant / accused. Considering the totality of the facts and circumstances, nature of allegations and the initial stage of investigation, I am not inclined to grant bail to the applicant/ accused Supreet Singh Bakshi. Bail application dismissed. Income Tax 2019 (7) TMI 881 Reopening of assessment - whether notice u/s 148 in respect of assessment year 2008-2009 to the petitioner (assessee)is legal or not? - HELD THAT:- The proper remedy of the petitioner-assessee would be to raise all pleas before the AO in assessment proceedings and if it is decided against him then to carry the issue further in appeal to CIT (Appeals) and then to the Tribunal in second appeal and then to the High Court under Section 260-A of the Income Tax Act, if the occasion so arises in appeal. We are not, therefore, inclined to interfere with impugned order passed by the High Court in view of the liberty granted above. Assessing Officer shall decide all the issues strictly in accordance with law on merits if the assessment proceedings are still pending. 2019 (7) TMI 880 Characterization of income - subscriptions were received in the years in question from the public at large under a collective investment scheme - receipts of subscriptions in the hands of the assessee -NBFC Company to be treated as income OR capital receipts - assessee has in its books of accounts shown this sum as income - impact of forfeiture clauses of subscription - HELD THAT:- It is true that there was no direct focus of the Court on whether subscriptions so received are capital or revenue in nature, we may still advert to the fact that this Court has also, on general principles, held that such subscriptions would be capital receipts, and if they were treated to be income, this would violate the Companies Act. It is, therefore, incorrect to state, as has been stated by the High Court, that the decision in Peerless General Finance and Investment Co. Limited [ 1992 (1) TMI 337 - SUPREME COURT] must be read as not having laid down any absolute proposition of law that all receipts of subscription at the hands of the assessee for these years must be treated as capital receipts. We reiterate that though the Court s focus was not directly on this, yet, a pronouncement by this Court, even if it cannot be strictly called the ratio decidendi of the judgment, would certainly be binding on the High Court. Even otherwise, as we have stated, it is clear that on general principles also such subscription cannot possibly be treated as income. Mr. Ganesh is right in stating that in cases of this nature it would not be possible to go only by the treatment of such subscriptions in the hands of accounts of the assessee itself. The theoretical aspect of the present transaction is the fact that the assessee treated subscription receipts as income. The reality of the situation, however, is that the business aspect of the matter, when viewed as a whole, leads inevitably to the conclusion that the receipts in question were capital receipts and not income. In the circumstances, we set aside the judgment of the High Court and restore that of the Income Tax Appellate Tribunal. 2019 (7) TMI 879 Deduction u/s 80IC - 'initial assessment year - 100% deductions after first five year - substantial expansion is undertaken - HELD THAT:- As decided in M/S. AARHAM SOFTRONICS [ 2019 (2) TMI 1285 - SUPREME COURT] substantial expansion is carried out as defined in clause (ix) of sub-section (8) of Section 80-IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become initial assessment year , and from that assessment year the assessee shall be entitled to 100% deductions of the profits and gains. Such deduction, however, would be for a total period of 10 years, as provided in sub-section (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes initial assessment year once again. However, this 100% deduction would be for remaining three years, i.e., 8th, 9th and 10th assessment years. 2019 (7) TMI 878 Characterization of receipt - subsidy receipt under West Bengal Incentive Scheme, 2000 and West Bengal Incentive to Power Intensive Industries Scheme, 2005 - capital v/s revenue receipts - HELD THAT:- The mode of computation/form of subsidy is irrelevant. The mode of giving incentive is re-imbursement of energy charges. The nature of subsidy depends on the purpose for which it is given. Hence the assessee draws support from the decisions already discussed earlier as the same principle will apply here. Thus, the entire reason behind receiving the subsidy is setting up of plant in the backward region of West Bengal, namely, Bankura. Accordingly we hold the aforesaid incentive subsidies are capital receipts and is not an income liable to be taxed in relevant assessment year 2010-11 on the basis of discussion made above and further taking into consideration the definition of Income u/s 2(24) where subclause (xviii) has been inserted including subsidy for the first time by Finance Act, 2015 w.e.f. April, 2016 i.e assessment year 2016-17. The amendment has prospective effect and had no effect on the law on the subject discussed above applicable to the subject assessment years. MAT computation - whether the aforesaid incentive subsidies received from the Government of West Bengal under the schemes in question are to be included for the purpose of computation of book profit u/s 115 JB? - HELD THAT:- In this case since we have already held that in relevant assessment year 2010-11 the incentives Interest subsidy and Power subsidy is a capital receipt and does not fall within the definition of Income u/s 2(24 and when a receipt is not on in the character of income it cannot form part of the book profit u/s 115JB In the case of Appollo Tyres Ltd. [ 2002 (5) TMI 5 - SUPREME COURT] the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation u/s 115JB - For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit u/s 115JB. Power of the Appellate Tribunal u/s 254 - Tribunal entertaining / allowing the claim which was made by the assessee before the AO by filing a revised computation instead of filing a revised return - HELD THAT:- As in the case of CIT Vs. Britannia Industries Ltd. [ 2017 (7) TMI 502 - CALCUTTA HIGH COURT] held that Tribunal has the power to entertain the claim of deduction not claimed before the AO by filing revised return. Respectfully following the aforesaid decision as well as the view already taken by us in this case that the aforesaid subsidies are capital receipt and not an income and not liable to Tax Tribunal in exercise of its power u/s 254 justified this claim though no revised return u/s 139 (5) was filed before the AO. We answer both the question Nos. 1 and 2 in negative and in favour of assessee . 2019 (7) TMI 877 Maintainability of the appeal u/s 260A - impact of pendency of rectification before Tribunal - HELD THAT:- To be noted that the power under Section 254(2) of the Act is a power given to rectify errors. The scope of the said power is no longer res integra and by now, is well settled. The present appeal is u/s 260A of the Act wherein, the Court on being prima facie satisfied that there are substantial questions of law to be decided, has admitted the appeal, vide order dated 21.12.2018. In such circumstances, the pendency of a petition for rectification u/s 254(2) can have no impact on this appeal. Accordingly, we hold that this appeal is maintainable. Power of Tribunal for enhancement - AO disallowed of operating expenses, financial expenses and depreciation for the reason that the commercial operation of manufacture and sale of commercial vehicles has not been commenced - CIT(A) held the claim of assessee for set of business as it had already commenced activities relating to design and also the pre-activities essential for commencement of manufacture - HELD THAT:- The AO at no point of time, disputed the date on which the business of the assessee was set up. The only dispute raised by the AO was that the assessee has not commenced its commercial activity, viz., manufacture and sale of vehicles. Thus, the Tribunal proceeded on basis, which is prejudicial to the assessee in the sense what was not the subject matter of dispute before the AO has been raised by the Tribunal for the first time. In other words, the benefit which accrued to the assessee not only in the assessment year under consideration, but also the earlier assessment year 2009-10 has been taken away by the Tribunal. The question is whether this can be done. The definite answer to this question is an emphatic no. Tribunal committed an error in venturing into an issue which was never an issue before the AO and unsettling the date on which the business of the assessee was set up and as the Tribunal has no jurisdiction to do so and the said finding has necessarily to be set aside. Set up of business by appellant or not - HELD THAT:- We fully endorse the view taken by the CIT(A) in holding that the assessee had commenced, performed activities relating to designing of commercial vehicles and related products R D, buying and selling of parts and in the process of construction of factory building for manufacture of commercial vehicles. Thus, the test laid down in the aforementioned decisions if applied to the facts of the case, we have no hesitation to hold that the business of the assessee had been set up in the previous assessment year for which the assessment had been completed by the Assessing Officer. Therefore, the Tribunal erred in holding that merely because the manufacturing and sale of the vehicle did not take place, the business of the assessee has not been set up. The manufacturing activity of the assessee is a part of the composite business activities of the assessee and this was not commenced because, the construction of the building and installation of plant and machinery was in progress. Disallowance of expenses under the head operating expenses, financial expenses and depreciation - assessee not yet started commercial operations - meaning of composite business and allowability of expenses - HELD THAT:- A new line of business was also treated to be a composite business when it is established that there is a unity of control and management and common fund apart from other features. The unity of control, management, etc., of the assessee in respect of each of its activity has not been disputed by the Revenue. In such circumstances, the assessee on showing that it has commenced several of its activities in the bunch of activities for which it was incorporated would definitely qualify for deduction of the expenditure incurred by it under the head operating expenses, financial expenses and depreciation. AO committed an error in disallowing the expenses. The Tribunal went on to decide an issue which was never disputed by the Assessing Officer, viz., as to whether the business of the assessee was set up or not. As held by us earlier, the Tribunal cannot take away the benefit given to the assessee by the AO and therefore, the order of the Tribunal is without jurisdiction - Decided in favour of the assessee. 2019 (7) TMI 876 Stay of recovery - writ against direction/condition of CIT (A) to stay of recovery after payment of 10% of the demand by 30. 04. 2019, and another 10% by 31. 05. 2019 will be stand extended for a further period of one month - HELD THAT:- The said condition is also not complied with. This Court is not pursued to interfere with the condition imposed in Ext. P6 order particularly keeping in view the CBDT circular issued which stipulates 20% of disputed tax could be imposed as condition for granting the stay. The challenge hence fails. After the order is dictated Sri. Sivadas, the learned counsel for the petitioners requests for expeditious disposal of the appeals pending before the 1st respondent for the assessment year 2016-2017. Respondents opposes issuing a direction for disposal of appeal within time frame as may be stipulated by this Court; for, according to him, the petitioners cannot be allowed to have it both ways, i. e. not paying any tax and at the same time insist for expeditious disposal of appeals. Taken note of the order dated 30. 4. 2019 passed by this Court in these writ petitions and also the issue for consideration before the 1st respondent. This Court as an exceptional case directs the 1st respondent to dispose of the appeals within three months from the date of receipt of copy of this judgment. The petitioners, if complies with the condition of depositing 10% within four weeks from today, the petitioners are entitled to the stay of the assessment orders under challenge in the subject appeals till its disposal thereof. 2019 (7) TMI 875 Addition u/s 68 - unexplained share capital - as alleged shareholders premises were found locked and in some cases summons could not be served remain on complied - Search and survey operation u/s 132 /133A - addition of commission that was claimed to be paid thereon to the entry operator - HELD THAT:- AO has made enquiry by issuing letter under section 133 (6) and which were found to be replied created suspicion in the mind of the AO. Further, the directors were not produced by the assessee. In response to summons u/s 131 on the companies, no replies were received. There is no indication that how these companies have managed to invest in the appellant company, which is a private limited company where there is no dividend, issued or there is any likelihood of substantial investment return to these companies - information of the investment by the shareholders was unearthed during the course of search on Shri SK Jain. The assessee being private limited company should be in the know of things of the investors when they have made such a huge investment in the assessee company. CIT A has not even looked at the fact that what the assessee company is doing and what is the reason that nine companies operated by one person, comes together, and invest ₹ 70,00,000/- in the assessee company as share capital, in short span of time, which does not have any chance of return or earning huge dividend. All these facts considered in one compass clearly show that the identity of the creditors, creditworthiness of those creditors and genuineness of the transaction is just a make-believe story. AO is correct in making an addition u/s 68 representing unexplained share capital and consequent addition of the commission thereon. - Decided in favour of revenue 2019 (7) TMI 874 Exemption u/s 11 - charitable activity u/s 2(15) or not? - AO held that the assessee was not a regular educational institute and therefore, not entitled for exemption u/s 11 - HELD THAT:- So far as the object of the assessee are concerned, our attention has been drawn to the fact that the trust was established for charitable purpose of education and for encouraging and promoting theoretical and practical education in gemology and scientific study of precious stones of all types and the assessee was established to impart education. Another plea raised is that the assessee was engaged in carrying out Research Development Activities during the year and as a part of the same, carried out testing activities with a view to address the problem of imitation being faced by the Gem industry and therefore, the said activities would merely be an incidental activity carried out in furtherance to achieve pre-dominant objective of Research Development. We are of the considered opinion that the issue would require reappreciation by Ld. AO in view of the fact that the main objects of the assessee trust as well as the connection of testing activities vis- -vis main objects, has not been brought on record by lower authorities. Onus would be on assessee to establish that the testing activities were merely incidental to the attainment of the prime objective of the trust i.e. education and separate books were maintained by the assessee in respect of such business. On the other hand, if the objects of the assessee are found to be covered by last limb i.e. advancement of any other object of general public utility, the 1st proviso of Section 2(15) would squarely apply to the case of the assessee since the assessee is providing service in relation to any trade, business or commerce. In that case, the case has to be adjudicated in the light of the binding judicial pronouncements from the point of view of profit motive as cited by us in the opening paragraphs. Needless to add that, in the event of activity of testing fees found to be having no connection with assessee s primary objectives, the same would be a separate line of business activity for the assessee and no deduction would be available to the assessee u/s 11 on account of this activity. With these directions observations, the matter would stand reverted back to the file of Ld. AO for re-adjudication - Assessee' appeal stands allowed for statistical purposes. 2019 (7) TMI 873 Validity of the reassessment proceedings u/s.147/148 - name of assessee found in diary of other person searched u/s 132 - assessee contended that AO should have resorted to proceedings u/s 153C instead of reopening - impact of word belong to OR pertain to in Section 153C(1)(b) - HELD THAT:- Assessment order in the case of the assessee was passed on 16.12.2011. During that time, therefore, the word belong was there and as facts and situation in this case, the diary recovered during the course of search from the premises of the Chhoriya Group did not belong to the assessee and therefore, provisions of Section 153C(1)(b) is not applicable to the case of the assessee since amendment itself come into place on 01.06.2015 In assessee s own case itself in assessment year 2008-09 [ 2015 (3) TMI 1278 - ITAT PUNE] , it is specifically analyzed regarding the applicability of Section 153C. Respectfully following the aforesaid decision wherein the facts and circumstances in this relevant assessment year 2003-04 are similar, we dismiss the contention of the assessee regarding applicability of Section 153C and uphold the validity of the reassessment proceedings by the Revenue Authorities u/s.147/148. Thus, ground No. 2 and 3 raised in appeal by the assessee are dismissed. Addition based on entries in diary found in search of other person - diary recovered during the course of search u/s.132 from the premises of Chhoriya - Mr. Chhoriya had also filed an affidavit stating no loans were taken from the assessee - HELD THAT:- If the income of the entries which were found in the diary during the course of search in the premises of Chhoriya group, had been declared by Mr. Chhoriya as his own income, in such circumstances, no addition should sustain in the hands of the assessee. However, if it is found that there is a contrary scenario in that case, addition has to be sustained in the hands of the assessee. This issue, therefore needs detailed factual verification. We therefore, set aside the order of the CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for proper verification as herein above directed by us and re-adjudicate the matter in conformity with the principles of natural justice. Thus, grounds No. 5 and 7 raised in appeal by the assessee are allowed for statistical purposes. 2019 (7) TMI 872 Unexplained cash deposits - assessee claimed that partly deposit are from earlier withdrawal - AO alleged that withdrawal from the Bank for the purpose of construction of a bar hotel at Thodupuzha and no cash was available with assessee to deposit - HELD THAT:- Admittedly, the assessee had introduced ₹ 6,44,55,000/- into cash book for the assessment year 2012-13 as per the narration written on the back side of the cheque. Out of the above amount, ₹ 3,17,00,000/- was withdrawn by the assessee from the Bank account for the purpose of construction of bar/hotel in Thodupuzha. This was evidenced by copies of cheques obtained from the Bank by the AO. As such, AO observed that the sum of ₹ 3.17 crores which was introduced into the cash book was not at all available with the assessee as it was used for the construction of bar/hotel. To support this, the AO relied on the sworn statement recorded from Shri Rajendra Babu K.V. in whose name the bearer cheque was issued in most of the cases who admitted that the signature on the back side of the cheque belonged to him and money was withdrawn as per the instructions of the assessee, Shri Jayakrishnan. AO observed that construction of hotel was going at Hotel Vysali in Thodupuzha and construction was managed by one Shri Abhilash. However, contrary to this, the CIT(A) observed that there was no construction activity with regard to Hotel Vysali in Thodupuzha and the said hotel was owned by the assessee and two more partners and not by the assessee himself. The building was taken on rent and no construction work has been carried out at the said hotel. For this purpose, he relied on the certificate issued by Secretary, Thodupuzha Municipality. Each entry in the cash book for introduction of cash was not at all explained by the assessee. The assessee made a general statement that there was no construction activity at Hotel Vysali and the amount was available for introduction into the cash book. The assessee has to explain each entry in the cash book. AO has to prove that if there is construction activity, how much amount has been spent for construction activity at the said hotel after providing opportunity of cross-examination of the person whose statement was relied on by the AO for making such additions for these assessment years under consideration. With this observation, we remit the entire issue in dispute in all these appeals to the file of the AO for fresh consideration. This ground of appeals of the Revenue is partly allowed for statistical purposes. 2019 (7) TMI 871 Reopening of assessment - as alleged non issue of notice u/s 143(2) - HELD THAT:- We are of the view that the AO is not depended upon the assessee to commence assessment proceedings. Once he has given an opportunity to the assessee to submit return in 30 days or in a particular time along with notice u/s 148, and the assessee failed to file return in that time, then he has set the assessment machinery in motion. Thereafter assessee cannot complain that on that return he has not issued notice u/s 143(2). Let us take an example; the assessee did not choose to file return in response to the notice under section 148, and the assessment would be going to be time barred on 31st December; the assessee filed the return on 29th December; can the assessee expect that the AO should have issued notice u/s 143(2) and on his failure the assessment deserves to be quashed. Answer to the above is NO, because the assessment proceeding has to be conducted in accordance with the procedure and not depended upon the mercy of the assessee. Therefore, we do not find any merit in the first fold of contention raised by the assessee. Approval, the JCIT without recording a satisfaction - HELD THAT:- Due procedure has been followed. JCIT has gone through the record and applied his mind, and thereafter granted the approval. There is no merit in the contentions of the ld.counsel for the assessee. Reasons to belief - wrong facts - HELD THAT:- In the present case, no doubt there is an error at the end of the AO while taking cognizance of the fact which goad him to harbor a belief that income has escaped the assessment, and that error is that the assessee has not filed return whereas the assessee has filed the return. Now question is, whether such an error is so fatal that re-assessment is to be quashed ? We have perused the return. The assessee did not disclose the sale transaction of the property and did not offer income under the head capital gain on transfer of real-estate. We are of the view that even if the return would have been perused, the opinion would be the same because capital gain has not been shown by the assessee in the return. Therefore, the assessee cannot draw any benefit from any of the judgments cited before us. We do not find any error in the finding of the Revenue authorities, and this appeal is devoid of any merit. It is dismissed. - Appeal of the assessee is dismissed. 2019 (7) TMI 870 Rectification u/s 254 - allowability of revenue expenses - whether assessee has set up its business or not during the year under consideration, which had a bearing on allowability of expenses as claimed by assessee while computing income of the assessee for relevant AY? - HELD THAT:- Tooling are part of capital expenditure for setting up manufacturing and assembly unit for aircraft structures at Hyderabad albeit same were provided by Lockheed Martin, USA under JV agreement, The Lockheed Martin shall continue to be the owner of these tools and will be dealt with in its books of accounts by Lockheed Martin. The assessee was to be provided with these tools by Lockheed Martin free of cost without any rent. The Lockheed Martin in order to provide these tools to assessee vide its contractual obligation, instead purchased these tools from assessee who inturn got it fabricated from TCS, Tata Technologies Limited and TAL Manufacturing Solutions Limited. Thus, the assessee in order to get these tools manufactured granted further sub-contract to TCS,TTL and TAL. Thus, to the extent the tribunal order dated 08.08.2018 held that these tools are to be capitalised in the books of accounts of the assessee is definitely an mistake which crept in the order dated 08.08.2018 dehors JV agreement and Tooling agreement now produced before the Bench in MA proceedings and we hold that this mistake where-ever it occurs in the appellate order dated 08.08.2018 passed by tribunal stands corrected, because these tools were the property of Lockheed Martin, USA and not the assessee and accordingly shall be accounted for in the books of accounts of Lockheed Martin. This MA is to be partly allowed so far as to correct mistake which crept in tribunal order dated 08.08.2018 which were owing to non production of JV agreement and Tooling agreement before the tribunal when the appeal was originally heard on 10.07.2018, which mistakes we dealt with as above and ordered for their correction but so far as ultimate decision/conclusions taken by tribunal vide order dated 08.08.2018 that the business of the assessee was not set up till the end of previous year and the assessee cannot be allowed deduction of ₹ 2,10,11,032/- as revenue expenses for the year under consideration had not been shaken in this MA proceedings as these mistakes as pointed out by assessee which crept in the aforesaid order dated 08.08.2018 passed by tribunal are not significant to recall the order of the tribunal qua ground no. 2(a) to 2(c). The scope under Section 254(2) of the 1961 Act is very limited to correcting mistakes apparent from records and not to review the decision taken earlier by tribunal. We have ordered rectification of mistakes which crept in the order dated 08.08.2018 passed by tribunal vide this MA order which in our considered view shall redress grievance of the assessee but we are afraid that the final decision taken by the tribunal vide its order dated 08.08.2018 cannot be changed as it remained unshaken. Thus, this MA is partly allowed as indicated above. 2019 (7) TMI 869 Dismissal of appeal for non-prosecution by CIT(A) - appeal held non-maintainable on the grounds that the impugned assessment order, demand notice and challan for payment of appeal fee in compliance of section 249 had not been placed on record - all the above documents were e-filed - power of CIT(A) - HELD THAT:- We come to the conclusion that the CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merits. Once the Assessee files an appeal U/s 246A, the Assessee sets in motion the machinery designed for disposal of the appeal under Sections 250 and 251. If the appeal filed by the assessee fulfills the requirements of maintainability and admissibility prescribed under Sections 246, 246A, 248 and 249 of I.T. Act; neither the Assessee can stop the further working of that machinery as a matter of right by withdrawing the appeal, or by not pressing the appeal, or by non-prosecution of the appeal; nor the first appellate authority, CIT(A) in this case, can halt this machinery by ignoring either the procedure in appeal prescribed U/s 250 or powers of Commissioner (Appeals) prescribed U/s 251. CIT(A), the first appellate authority, cannot dismiss assessee s appeal in limine for non- prosecution without deciding the appeal on merits through an order in writing, stating the points of determination in the appeal, the decision thereon and the reason for the decision. It is well-settled that powers of Ld. CIT(A) are co-terminus with powers of the AO. DR did not express any objection to the prayer made on behalf of the assessee for setting aside the order of the Ld. CIT(A) with a direction to Ld.CIT(A) to pass fresh order. We expressly hold that e-filed documents and other attachments, as well as other information submitted by the assessee at the time of e-filing of appeal before the CIT(A) must be treated as part of the record of the Ld.CIT(A) and must receive proper consideration at the end of the CIT(A). If the Ld.CIT(A) is satisfied about admissibility and maintainability of the appeal filed by the assessee before the Ld.CIT(A); then the Ld.CIT(A) is further directed to pass order on merits; stating the points for determination; the decision thereon, and reasons for the decision. - For statistical purposes, the appeal of the assessee is partly allowed. 2019 (7) TMI 868 Reopening of assessment u/s 147 - addition towards share capital and share premium raised during the year u/s 68 - investing company is a registered NBFC - in case of investing company AO taken reassessment proceedings on the ground that company had received share premium of ₹ 30.94 crores source of which was not proved but after verification the AO has accepted the returned income without any addition - HELD THAT:- As in CIT vs. Gagandeep Infrastructure Pvt. Ltd. [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] wherein the Hon ble Courts have held that once the steps have been taken by the Revenue against the shareholder no action lies against the company on the ground that income has escaped assessment by the reason of investments/subscription in the share of the assessee company by the investors whose cases have been taken up by the Revenue in order to verify the transactions. We find merit in the arguments of the Ld. A.R. that there has to be live link between the material coming to the possession of the AO and formation of belief regarding escapement of income and is squarely covered by the ratio laid down by the jurisdictional High Court in the case of Pr. CIT vs. Shodiman Investment Pvt. Ltd. [ 2018 (4) TMI 1287 - BOMBAY HIGH COURT] . As perused the decision relied upon by the Revenue and found that they have been rendered on the different facts and are not applicable to the present case. We, therefore, in view of the aforesaid facts and ratio laid down by the various judicial forums hold that reopening as made by the AO is not proper and without valid jurisdiction and accordingly we set aside the order of Ld. CIT(A) on this issue. Accordingly we hold that the re-assessment proceedings u/s 147 are without any valid jurisdiction invalid and is quashed. Ground No.1 is allowed. Addition u/s 68 - proviso to section 68 as amended by Faiance Act 2012 w.e.f. 1.4.2013 is effective from assessment year 2013-14 - HELD THAT:- The assessee has proved the source of investments by the investors to be out of share capital and reserves and source of source is not to be proved. As in Aditya Birla Telephone Ltd. [ 2019 (4) TMI 63 - BOMBAY HIGH COURT] held source of source is not required to be proved. In the present case, the AO has not conducted any enquiries with respect to identities and creditworthiness of the investors and genuineness of the transactions despite the fact that assessee has filed all the evidences with the AO. The facts of the assessee s case are clearly distinguishable from the facts in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] and therefore the ratio laid down by the Hon ble Supreme Court is not applicable as the AO has not investigated the matter despite assessee having filed all the evidences. In view of the aforesaid facts and circumstances and the ratio laid down by the various decisions we are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue. Accordingly, we hold that the addition as confirmed by the Ld. CIT(A) under section 68 is wrong and consequently can not be sustained. - Decided in favour of assessee. 2019 (7) TMI 867 Bogus LTCG - denying the exemption claimed by the assessee u/s 10(38) - HELD THAT:- Purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit. In the light of the documents filed by the assessee before the AO/Ld. CIT(A) and before me, which could not be controverted by any material by AO, so respectfully following the ratio laid by the Hon ble jurisdictional High Court and other High Courts and the ratio laid by the Hon ble Supreme Court and this Tribunal, and the decision in the case of Navneet Agarwal [ 2018 (8) TMI 509 - ITAT KOLKATA] wherein the claim of LTCG for sale of shares of M/s. Cressenda Solutions Ltd. which was allowed by the Tribunal. Respectfully following the same, allow the claim of the assessee in respect of Long Term Capital Gain in respect of sale of shares of M/s. Cressanda Solutions Ltd and direct deletion of addition for AY 2015-16. Grounds of appeal of assessee challenging the addition made on this issue are allowed. - Appeals of assessee are allowed. 2019 (7) TMI 866 TDS u/s 194H - payments made towards credit card charges - non deduction of TDS - HELD THAT:- We decide this issue in favour of the assessee by confirming the appellate order passed by CIT(A) by Respectfully following the decision of the Mumbai-tribunal in assessee s own case [ 2017 (5) TMI 1558 - ITAT MUMBAI] and holds that no income-tax was required to be deducted at source u/s 194H on credit card charges paid by assessee to Banks on payments received from customers on purchases made through credit card. Addition u/s 40(a)(ia) - non deduction of TDS on payments made by assessee to Banks towards cash pick up charges - HELD THAT:- We have observed that Central Government has issued notification no. 56/2012 dated 31.12.2012 (F.No. 275/53/2012-IT(B)), wherein cash management services charges are also covered as an exemption from deduction ofTDS under Chapter XVII of the 1961 Act in case such payments are made by a person to a bank listed in Second Schedule to the RBI Act, 1934, excluding a foreign bank. The aforesaid notification issued on 31-12-2012 by Central Government was later superseded by another notification issued on 17.06.2016. We have elaborately discussed these notifications in preceding para s of this order while adjudicating disallowance of credit card charges. We are of the view that charges for cash pick up ( or also called as cash management services) paid by assessee to Banks are analogous to credit card charges so far as requirements of Chapter XVII-B of the 1961 Act is concerned. We have adjudicated in preceding para s of this order issue of allowability of credit card charges on which no income-tax was deducted at source under Chapter XVII-B of the 1961 Act. Our decision while adjudicating disallowance of credit card charges in preceding para s of this order shall apply mutatis mutandis to the disallowance of charges for cash pick up facility( or also called as cash management services) paid by assessee to banks for availing these services. Thus this issue being covered by ground no. ix raised by Revenue in its appeal filed with tribunal is effectively decided in favour of the assessee. The Revenue fails on this ground Disallowance of expenses u/s 14A r.w.r. 8D - HELD THAT:- No additions by way of disallowance of expenses incurred in relation to earning of an exempt income are warranted u/s 14A read with Rule 8D(2)(iii) of the 1961 Act as assessee has admittedly not earned any exempt income during the year under consideration and hence we order deletion of additions as were made by the AO u/s. 14A of the 1961 Act read with Rule 8D(2)(iii) of the 1962 Rules and uphold the appellate order passed by learned CIT(A) on this issue for reasons cited by us in this order. 2019 (7) TMI 865 Deduction u/s 10A on delayed realization of Export proceeds - whether the assessee can be allowed deduction u/s 10A in respect of such export sales, the proceeds of which have not been remitted in foreign exchange, which have not been received within the period stipulated in the Act? - HELD THAT:- The facts of the case on hand are also similar to the aforesaid case of Wipro Ltd. [ 2015 (10) TMI 826 - KARNATAKA HIGH COURT] the assessee has made exports and certain foreign remittances on export sales have not been received within the specified time limit of six (6) months and application for extension of time for receiving such foreign remittances have been filed with the authorized bankers and the applications have not been rejected. However, the foreign exchange remittances have been received and credited to the assessee s account. Respectfully following the aforesaid decision of the Hon ble Karnataka High Court in the case of Wipro Ltd., (supra), we also hold that notwithstanding the fact that there is no express order granting approval by the authorized bankers extending the time limit of six months for receipt of foreign remittances on account of export sales, the assessee is entitled to the benefit of deduction u/s 10A - ground No.3.1 of the assessee s appeal is allowed. Excluding export sales from export turnover, even though the proceeds of these export sales were realized within the time limit specified u/s 10A(3) - HELD THAT:- As we have already held that those export sale proceeds that were realized within the time limit and those export sales proceeds for which extension of time limit was applied for by the assessee to the authorized bankers are eligible for deduction u/s 10A, this ground is also covered by the aforesaid decision in the case of Wipro Ltd. [ 2015 (10) TMI 826 - KARNATAKA HIGH . Consequently, ground No.3.2 raised by the assessee in this appeal is allowed. Exclusion of Expenditure incurred in foreign currency from Export Turnover - HELD THAT:- While the assessee has given some break-up of details of expenses incurred in foreign currency, the details do not establish that all of these expenses were not incurred for rendering technical services outside India; as claimed by the assessee. In the absence of details, the issue is only academic. Further, we do not consider it necessary to adjudicate on issue which is academic in nature, as the CIT(A) has addressed the assessee s grievance and allowed the alternate claim of the assessee on this issue. Consequently, ground No.4 raised by the assessee is dismissed as academic. Deduction u/s 10A to be on assessed income - HELD THAT:- The disallowance of expenses has been made under section 40(1)(i) towards non-deduction of tax at source and such disallowance automatically enhances the taxable income of the assessee and consequently the assessee is entitled for deduction u/s 10A on such enhanced income. Therefore, respectfully following the decision of CIT Vs. M. Pact Technology Services Pvt. Ltd [ 2018 (8) TMI 202 - KARNATAKA HIGH COURT] we hold that the deduction under section 10A of the Act shall be allowed on the assessed income. The AO is accordingly directed. Consequently, ground No.5 of the assessee s appeal is allowed. TDS u/s 195 - disallowance of commission paid to foreign parties u/s 40(a)(i) - HELD THAT:- Services are provided outside India, the commission payments made to non-residents cannot be treated as income deemed to accrue or arise in India and therefore the provisions of Section 195 have no application and are not attracted in the case on hand. In order to invoke the provisions of Section 195, the income in question should be exigible to tax in India. In the case on hand, the commission payments to non-residents are not chargeable to tax in India and therefore the provisions of Section 195 are not applicable / attracted. - Decided in favour of assessee Charging of interest u/s 234B - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B Disallowance of employees contribution to Provident Fund (PF) - HELD THAT:- Employer shall get deduction for payment of employees contributions to PF provided they are deposited before the due date for filing the return of income under section 139(1) of the Act. It has further held that Parliament has not made any distinction between employees contribution and employer s contribution to PF and that the above conditions / time specified for payment thereof apply to both these contributions to PF. Respectfully following the aforesaid judgments in the case of Sabari Enterprises [ 2007 (7) TMI 169 - KARNATAKA HIGH COURT] and Spectrum Consultants India Pvt. Ltd. [ 2014 (2) TMI 127 - KARNATAKA HIGH COURT] we uphold the decision of the CIT(A) and dismiss ground Nos.2 and 3 of Revenue s appeal. Deduction u/s 10A Export turnover / total turnover computation - HELD THAT:- High Court of Karnataka in the case of CIT v Tata Elxsi Ltd [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that when certain expenses are excluded from the export turnover for the purposes of computing deduction admissible under the Act; like u/s. 10A , such expenses are also to be excluded from total turnover, as export turnover is a part of total turnover. This issue is no longer res integra, and has been decided in favour of the assessee and against revenue by the decision of the Hon'ble Apex Court in the case of CIT V. HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] - we direct the AO to allow assessee's claim for deduction u/s 10A. Consequently, the grounds raised by Revenue are dismissed. 2019 (7) TMI 864 Appellate order is antedated - allegation to not follow CBDT Instructions that CIT(As) have been advised to pass and issue orders within 15 days from the date of last hearing - alleged that order passed in July,2013 - ld. CIT(A)-II, Pune actually concluded the hearing on 20-03-2013 and passed the order on 25-03-2013, but the same was dispatched late, along with several other orders passed by him in the month of March, 2013 - HELD THAT:- If, for a moment we accept the contention of the assessee for quashing the impugned order, being, illegal on the raison d etre advanced, a contention with which we do not actually agree, a fortiori which would follow is that the assessment order would revive in the absence of there being any valid first appellate order. It would again require direction from our end to the CIT(A) to pass an order as the appellant urging the quashing of the impugned order in this case is the assessee and the impugned order has been passed against him. On a specific query as to how the assessee was prejudiced by the supposed antedating of the impugned order in terms of either some limitation setting in or the right to file appeal against it being jeopardized, the AR candidly admitted that no such legal right of the assessee was impaired. In view of the foregoing discussion, we hold that the allegation levelled by the assessee that the impugned order was antedated by the ld. CIT(A), is not correct and is hereby rejected. The first additional ground is, ergo, dismissed. Non-service of notice u/s.143(2) - validity of reopening of assessment - HELD THAT:- The assessee has placed on record a copy of his letter dated 28-11-2011 addressed to the DCIT objecting to the service of notice dated 08-09- 2010 purportedly issued u/s. 143(2) and served upon him and stated that I would like to state that the said notice 08-09-2010 has not been received by me . The assessment order in this case was passed on 30-12-2011. Thus, it is proved that the assessee did raise objection of the non-service of notice before the AO before the completion of assessment and such an objection has not been disposed of by the AO either in the assessment order or otherwise. It is evident from the assessment folder that notice u/s.143(2) dated 08-09- 2010 was issued but never served upon the assessee and, in fact, returned by the postal authorities. It is further clear that no other notice u/s. 143(2) was issued by the AO before the cut-off date of 30-09-2010. Accordingly, proviso to section 292BB gets magnetized and the deemed service of notice u/s.143(2), by virtue of the main part of the section 292BB, is erased. Since the requirement of service of notice u/s. 143(2) and not its issue , is a jurisdictional condition, which is unfortunately lacking in the instant case, the sequitur is that the AO lacked jurisdiction to make the assessment. Ex consequenti , the assessment order passed in absence of a valid jurisdiction has to be and is hereby quashed. - Decided in favour of assessee. 2019 (7) TMI 863 Disallowing short term capital loss on mutual funds - investment was made after taking loan from IIFL - loss was set off against capital gain on sale of immovable property - AO alleged colorable device just to set off the capital gain earned on sale of immovable property and also by claiming exemption on the dividend - notices were issued U/s 133(6) to M/s JM Financial Mutual Funds, HDFC Bank Ltd, IIFL, SEBI, JM Financial Trustee Co. Ltd. and replies received - HELD THAT:- In view of documentary evidence, we found that the lower authorities completely failed to rebut evidences and explanations so filed by these agencies so as to conclude that it was a colourable device or any connivance with the companies to evade tax by booking loss. In this case, once the authorities below admittedly found, that subjected transaction completely falls out of the clutches of Sec. 94(7) i.e. the restrictions placed by the legislature, it is beyond one s comprehension as to how they still bent upon to deny the claims made by the assessee. An utter disregard shown by the revenue when the legislature in its wisdom, being fully aware of the fact that some of the assessees might make use of the transactions to their benefit and plan their affair, put some restriction by the prospective amendment by introduction of Section 94(7) w.e.f. 1st April, 2002 but when the case of the assessee do not fall/ suffers from those restrictions, it has to be inferred that the assessee could not have been denied that benefit as claimed. No merit in the disallowance of assessee s genuine claim of loss incurred on redemption of mutual funds. The A.O. is directed to delete the same and allow set off such loss against the long-term capital gains so earned. Disallowance on account of employee benefit expenses - HELD THAT:- As carefully gone through the orders of the authorities below and found from the record that as per material placed on record, it is wrong to say that the assessee was not engaged any business in as much as the assessee has already declared business income of ₹ 59.91 Lakh. This was the income generated in connection with various mutual funds (other than the mutual funds purchased through JM Financial Ltd.). There apart, the assessee company has declared huge interest income of ₹ 21.06 lac (PB 229) from several debtors to whom interest bearing loans were advanced and interest on FDR of ₹ 7.74 lac totaling to ₹ 28,80,856/- was also declared. To carry out the activities at such a large scale, one certainly needs some persons to manage the show. The observation of the paper formalities, accounting and banking transaction and receiving/delivery of the papers/documents, consultation with counsel and other government agencies/investment advisors, was not possible in absence of employees. Otherwise also, out of the salary paid of ₹ 10 lac, remuneration paid to the extent of ₹ 5.47 lac related to the directors only. Such expenditure thus having been incurred exclusively for business purposes was fully allowable. It is not the case of the A.O. that any personal element was involved in these expenses. We also found that the same A.O. was also assessing these incomes as business income only. Moreover, the borrowed funds having been utilized wholly and exclusively for business purposes and the AO not having pointed out any personal user or diversion for non-business purposes, the subjected interest was fully allowable u/s 36(1)(iii). It was also contended by the ld AR that no disallowance for such expenses made in the A.Y. 2014-15 while finalizing the scrutiny assessment U/s 143(3) of the Act. Keeping in view the totality of the facts and circumstances of the case vis a vis observation of the A.O., we restrict the disallowance to the extent of 10% of the expenditure so incurred amounting to ₹ 15,42,282/-. - Accordingly, the A.O. is directed to restrict this disallowance to ₹ 1,54,228/-. Disallowance on account of other expenses - HELD THAT:- From the record we found that the assessee claimed expenses of ₹ 8,63,428/- [₹ 18,38,428/- less ₹ 9,75,000/- (reduced from income in computation)] on total business income of ₹ 60,53,568/- this year as against expenses of ₹ 4,67,361/- claimed on total business of Rs.(-) 4,58,003/- in last year i.e. A.Y. 2014-15 in the preceding year. The claim made this year, was proportionately much lower because qua the business income such expenses stood at 14.26% only as against 102% claimed last year. Further, though there is some increase if only quantum is compared but there are sufficient and justifiable reasons behind such an increase. To achieve such a huge income the assessee has to incur such a meagre expense. Such expenses were mainly incurred on Travelling, Electric Expenses and Repair Maintenance. No specific instance of disallowable nature was pointed out by the A.O. Donation paid of ₹ 51,000/- has been reduced while computing the income under the head Business Profession. In other words, the entire donation of ₹ 51,000/- has been added back to the business income as evident from the computation of the total income. Hence there is no addition to this extent also. It is settled law that a businessman is the best judge to take care of its own interest to take decisions. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. 2019 (7) TMI 862 Disallowance of sales promotion expenses - distribution of costly articles /freebies to doctors and professionals - violation of CBDT circular no. 5/2012 dated 01.08.2012 and are against regulations issued by Medical Counsel of India - HELD THAT:- In this view of the matter and consistent with view taken by the coordinate bench in assessee s own case for AY 2011-12 M/S ARISTO PHARMACEUTICALS PVT. LTD. VERSUS ASST. CIT-2 (1) MUMBAI AND VICE-VERSA [ 2018 (7) TMI 1883 - ITAT MUMBAI] wherein it was held that in the absence of any sanction or authority of law on the basis of which it could safely be concluded that the assessee company which is engaged in the business of manufacturing and sale of pharmaceuticals and allied products, had in the garb of sales promotion expenses incurred expenditure in respect of articles distributed to the stockists, distributors, dealers, customers and doctors, for a purpose which is either an offence or prohibited by law, are thus of the considered view that such expenditure incurred by the assessee would not be hit by the Explanation to Sec. 37(1) We are of the considered view that there is no error in the findings recorded by the Ld.CIT(A) insofar as deletion of addition made by the AO towards sales promotion expenses and hence, we are inclined to uphold the findings of the CIT(A) and dismiss the appeal filed by the revenue. - Decided in favour of assessee. 2019 (7) TMI 861 Expansion of scope of Limited scrutiny - notice u/s. 143(2) under CASS - non obtaining the written approval of the concerned CIT as directed by the Circular of CBDT dated 8th September, 2010 and Board Instruction No. 7/2014 dated 26. 09. 2014 - HELD THAT:- In the instant case before us, nowhere on record, it is seen that prior written approval was obtained from the Commissioner of Income Tax. On perusal of the order in SURESH JUGRAJ MUTHA VERSUS ADDL. CIT, [ 2018 (5) TMI 1855 - ITAT PUNE] , the Tribunal clearly has considered therein the Board s Instruction No. 7/2014 dated 26. 09. 2014 and CBDT Circular dated 08th September, 2010 and on the basis of these Board s Circulars, it is necessary to take written approval from the Administrative Commissioner in a case where scrutiny has been done on the basis of CASS. In absence of such prior written approval from the Administrative Commissioner any assessment order passed should have to be declared null and void. In the instant case, the assessment order suffers the same fate. Accordingly, we hold that the assessment order passed in the case of the assessee without any prior written approval from the Administrative Commissioner makes the assessment order void-ab-initio. We direct to quash the assessment order. The legal issue raised in the additional ground of appeal by the assessee is answered in his favour. 2019 (7) TMI 860 Unexplained cash deposits in the Bank Account u/s 69 A - rejection of higher agricultural income - HELD THAT:- DR relying upon the impugned order submitted that already more than adequate relief has been granted to the assessee and nothing is placed on record to justify any further relief. As submitted that even if the issue had to be decided on the basis of the estimates, even then the general arguments that the cash withdrawals constituted the source of the deposits without any evidence cannot out rightly be accepted. Nothing has been placed before the ITAT to assail the said finding or grant any further relief. I have heard the submissions and perused the material available on record, I find that the Ld. CIT(A) in the order passed has been more than fair.There is no argument, evidence or fact on record justifying any further relief. Accordingly the grounds raised for want of any justification for modifying the order passed are rejected. The finding under challenge is upheld. Said Order was pronounced on the open Court at the time of hearing itself. In the result, the appeal of the assessee is dismissed. 2019 (7) TMI 859 Income accrued in India - PE in India so as to attribute certain income which is taxable in India - India-USA DTAA - business of diamond grading and preparation of diamond dossiers - taxability of Instructor Fee earned from GIA India Lab , subsidiary company - HELD THAT:- Considering the functions and the risks assumed by GIA India Lab vis - vis its business activities in India (as has been recorded in the transfer pricing study report - which functional and risk analysis has been accepted by the TPO both in the case of GIA India Lab and in the case of the assessee company), GIA India Lab is an independent entity which is rendering grading services to its clients in India. GIA India Lab also bears service risk and all client facing risks vis- -vis the stones sent to the assessee company for grading purposes (as has been recorded in the Transfer Pricing Study Report). Hence, GIA India Lab is not acting in India on behalf of the assessee company. Further, GIA India Lab is not having any authority to conclude contracts and has neither concluded any contracts on behalf of the assessee company nor has it secured any orders for the assessee company in India. Thus, GIA India Lab cannot be regarded as agency PE of the assessee company in India. In view of the aforesaid discussion AO has erred in invoking section 9 of the Act and/or Article 5 of the India-USA DTAA in order to say that the assessee company has a PE in India. Thus, assessee succeeds on this issue. 2019 (7) TMI 858 Bogus LTCG - addition u/s 68 - exemption of LTCG u/s 10(38) disallowed - penny stock companies - AO has not made any enquiry - HELD THAT:- AO failed to bring on record any part of the said report wherein the name of the appellant or his broker has even been named or implicated. The lower authorities have failed to bring on record any evidence to prove that the transactions carried out by the assessee were not genuine or that the said documents furnished in support thereof were not authentic. It would not be out of place to mention here that no specific enquiry or investigation was conducted in the case of the assessee and/or his broker either by the INV Wing or by the AO during the course of assessment proceedings. SEBI looks into irregular movements in share prices and range and warns investors against any such unusual increase in share price. No such warning was issued by SEBI nor there is any evidence that the company ETTL was ever delisted by SEBI or that the transactions in the shares of ETTL were ever suspended by SEBI. AO by making the impugned addition, has acted merely on suspicions and surmises and failed to produce any evidence whatsoever to prove that the proceeds received against the sale of shares represented the assessee s undisclosed income. AO has also failed to produce any material/evidence to dislodge or controvert the genuineness of the conclusive documentary evidences produced by the assessee in support of his claim. Surprisingly, neither the assessee nor his broker are named as illegitimate beneficiary to bogus LTCG in any of the alleged statements of the operators/brokers or reports/orders of SEBI or INV wing. In our considered view, the additions made by AO and confirmed by the CIT(A) are heavily guided by surmises, conjectures and presumptions and therefore, has no legs to stand on. Assessee has successfully discharged the onus cast upon him by provisions of section 68 and as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore, the judicial decisions relied upon by the ld. DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand. We, accordingly, direct the Assessing Officer to accept the LTCG - Decided in favour of assessee. 2019 (7) TMI 857 Exemption u/s 54 - not deposit the capital gain amount in capital gains account scheme before the due dated prescribed u/s 139(1) - capital gain of disallowed ₹ 46,75,657/- - residential plot was purchase for an amount of ₹ 52,65,000 + Stamp duty of ₹ 2,63,250/- on which construction was made within three years - whether assessee constructed the residential house within the stipulated time ? - HELD THAT:- In the present case, the assessee has purchased the residential plot from the sale proceeds of the earlier residential house. The sale proceeds were utilized for construction of residential house with the three years itself. The decision of K. RAMACHANDRA RAO [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT] is apt in the present case as the Hon ble High Court held that it is not a pre-condition to invest the money in the specified Central Govt. Scheme of the sale proceeds if the property is purchased and constructed for residential purposes. DR tried to distinguish the factual matrix but the same is not tenable as the ratio and the facts determined by the Hon ble Karnataka High Court are similar to the present assessee s case as well. Therefore, the appeal of the assessee is allowed. 2019 (7) TMI 856 Disallowance of additional depreciation - items of the assets installed at retail outlets(sweet shops) - use of machinery in the actual process of manufacture of food products/sweets/namkeens - whether additional depreciation is allowable at the rate of 20% of the actual cost of such plant and machinery - HELD THAT:- Additional depreciation cannot be denied to the assessee for installing the items of the assets at retail outlets, because retail outlets are not either office promises or residential accommodation in the nature of the guesthouse as per the proviso to section 32(1)(iia) excluding the additional depreciation. In the year under consideration, also the items of fixed assets have been installed at various retail outlets and there is no dispute between the assessee and the Revenue on this factual aspect. Thus following the finding of the Tribunal in own case [ 2018 (5) TMI 626 - ITAT DELHI] , the additional depreciation in the year under consideration also cannot be disallowed on the ground that those items were not installed at the factory premises of the assessee. There is no doubt that TOP sealer are used for sealing containers for supply of food to the customers, which is part of the process of manufacturing and delivery of the products of the assessee and thus additional depreciation on the same is allowable. The Canopy of Generator is part of the entire plant and machinery engaged for manufacturing. Similarly, there is no doubt that the items Mixi, Lassi machine, Grinder Machine, Charcoal Griller, Table top burner, Gas Plant SS Double Body Tandoor, SS Kadahi Table, SS Selves Barcket Big and small are the items of assets engaged in manufacturing of food products/sweets/namkins etc. The trollys are also used for transferring of raw materials or finished products in the process of manufacturing of food products carried out by the assessee at the retail outlets. We do not find the action of the Ld. CIT(A) in upholding the disallowance of additional depreciation as justified and accordingly, we reject the contention of the CIT(A) in upholding the disallowance. - Decided in favour of assessee. 2019 (7) TMI 855 LTCG - sum received on execution of cancellation deed - surrender of right sue under MOU and withdrawal of complaint before criminal court - receipt of compensation is a capital receipt within the meaning of section 2(47) or capital gain and liable to tax as long term capital gain - HELD THAT:- The Hon ble Supreme Court in CIT Vs Saurashtra Cement Ltd [ 2010 (7) TMI 11 - SUPREME COURT] has held that the amount received by way of damages was directly linked to acquisition of capital asset and led to delay in coming into existence of the profit-making apparatus. Accordingly, it was held that the amount so received was a capital receipt and could not be taxed as income. In the present case from the contents of clause 5 of the cancellation deed dated 11th September 2011, we have noted that the assessee has not transferred any right in favour of the confirming party (third Party) in respect with regard to the rights, which were sought to be confirmed in MOU dated 24th March and 25Th March 2005. In facts all those right were already stand transferred by the owners in favour of M/s Star Habitat Pvt Ltd. The assessee received compensation of ₹ 20 Crore consisting of refund of the amount paid by assessee to the owners in pursuance of the said Development Agreement dated 24th March, 2005 read with supplementary agreement dated 25th March, 2005 along with interest, towards loss of profit/ liquidated damage for loss of opportunity to develop the property and sale of flats in the open market and towards the cost of litigation only. Therefore, in view of the ratio of decisions of CIT Vs J Dalmia [ 1984 (5) TMI 32 - DELHI HIGH COURT] , Bombay High Court in CIT Vs Abbasbhoy A. Dehgamwalla [ 1991 (4) TMI 38 - BOMBAY HIGH COURT] , Hon ble Supreme Court in Saughtra Cement Ltd [ 2010 (7) TMI 11 - SUPREME COURT] and Jackie Shroff [ 2018 (9) TMI 1006 - ITAT MUMBAI] and Bhojison Infrastructure (P ) Ltd [ 2018 (9) TMI 1239 - ITAT AHMEDABAD] the amount received by the assessee in excess of advance is on account of compensation for extinction of its right to sue the owner, the receipt is a Capital receipt not chargeable to tax. Since the assessee has not received the amount in excess of advance in the course of his business it must be construed as capital receipt and not business receipt. - Decided in favour of assessee. 2019 (7) TMI 854 Rectification u/s 154 - mistake apparent on record requiring rectification for the reason that provisions of Section 56(2)(viib) is available from the Assessment Year 2013-14 and not from the Financial Year 2013-14 - debatable issue - HELD THAT:- The Hon ble Jurisdictional High Court in the case of Piu Ghosh [ 2016 (8) TMI 99 - CALCUTTA HIGH COURT] held that the amendment brought into the statute by the Finance (No. 2), 2004 which stated that the sub-section (ia) which was added to Section 40(a) of the Act shall be operative from 01/04/2005, meant that it would be applicable during the Financial Year 2005-06 corresponding to the Assessment Year 2006-07. In the case on hand, the statute lays down that Section 56(2)(viib) of the Act is inserted by the Finance Act, 2012 w.e.f. 01/04/2013. The assessee claims that if the ratio of the judgment in the case of Piu Ghosh (supra) is applied, the amendment is for FInancial Year 2013-14, relatable to the Assessment Year 2014-15. We are not interpreting the provision as such as to the date of applicability but only examining the issue as to whether the issue is debatable for the purpose of Section 154 of the Act. We find force in the arguments of the assessee that this is a debatable issue and cannot be considered a mistake apparent on record for the purpose of Section 154, in view of the contrary view taken by the Hon ble Jurisdictional High Court. Coming to the second ground on which the CIT(A) had granted relief to the assessee, we find that no rectification has been passed u/s 154 reversing the reasons given by the ld. CIT(A), based on which relief was given. Thus the entire decision cannot have been reversed in this order passed u/s 154. Thus, in our view, the order of the ld. CIT(A) is bad in law, as the issue is debatable and it is not a case where there is a mistake apparent on record which can be rectified in terms of Section 154. 2019 (7) TMI 853 Penalty u/s 271(1)(c) - difference between the sales figures as reported in the books of accounts and the corresponding figure reflected in the respective TDS statement - HELD THAT:- Admittedly there is a difference between the sales figures as reported in the books of accounts and the corresponding figure reflected in the respective TDS statement. When the said discrepancy was pointed out to the assessee, a reconciliation statement was filed, the assessee failed to explain the same in his favour whereupon further time for three months was prayed for. Ultimately, the assessee failed to submit reconciliation before the AO neither during the penalty proceeding or even before the first appellate authority. Needless to mention that the assessee failed to submit the same even before us at the time of hearing of the instant appeal. Thus the observation made by the Learned CIT(A) is without any ambiguity while confirming the order of penalty. So far as the argument of specific charge is concerned it is evident on record that while issuing penalty proceeding the specification has expressed by the AO towards furnishing of inaccurate particulars of income by the assessee which is again reflected in the final order of penalty at penultimate paragraph 4.6. Thus we find no force in such argument advanced by the Learned Advocate appearing for the appellant before us. We find no infirmity in the order passed by the authorities below so as to warrant interference. Thus the same is hereby upheld. 2019 (7) TMI 852 Computation of long term capital gain - adopting the full value consideration as per stamp duty valuation u/s 50C - on challenge matter referred by AO to DVO - revised stamp duty valuation based on commercial property adopted - assessee has submitted that the property in question was a residential property as stated in the sale deed whereas the DVO has considered the same as commercial while determining the fair market value of the land in question - HELD THAT:- The rates of the commercial property cannot be applied to a property which is unauthorisedly used for commercial purpose. Though the locational advantage and actual of commercial use are the relevant factor for determining the fair market value but these cannot be the basis for treating the property as commercial one. Therefore, the fair market value of the property has to be determined on the basis of the prevailing rate in the area as well as on the basis of sale instance which can be considered as comparable cases. The DVO has adopted the commercial rate for determining the fair market value of the property whereas the fact remains that the property is a residential area but is being used for commercial purpose. Thus applying the commercial rates on a residential property used for commercial purpose is not proper and justified. Determination of the fair market value by the DVO requires a fresh look based on the prevailing fair market price well as comparable sale instance. Since, the assessee has now filed the site plan as additional evidence, therefore, in the facts and circumstances of the case we set aside this issue of fair market value to the record of the DVO/AO for redetermination of the same as per above observations. It is also pertinent to note that for the purpose of computing the cost of construction the state PWD rates shall be applied as against CPWD rates as the property is situated in the jurisdiction of State PWD and not in the jurisdiction of CPWD. Hence, the DVO is directed to reconsider the determination of fair market value and after giving an opportunity of hearing to the assessee. Determination of cost of acquisition of the property on 01.04.1981 - HELD THAT:- DVO has taken the fair market value as on 01.04.1981 by considering the comparable instances however, the assessee was not confronted with such comparable cases to be adopted by the DVO. Further, the DVO enhanced the value due corner location of the property this was also not confronted with the assessee. Since, the main issue of determining the fair market value as on the date of the sale has been remanded to the DVO/AO, therefore this issue of determining the fair market value as on 01.04.1981 for the purpose of cost of acquisition of the property is also set aside to the record of the DVO/AO for determining the same afresh after consideration the objections of the assessee. - Appeal of the assessee is allowed for statistical purposes. 2019 (7) TMI 851 Benefit of section 80P(2)(a)(i) - Whether the assessee being a co-operative credit society, in view of its function in providing credit facilities to its members, is into the business of banking and is it not being impeded or hit by the provisions of section 80P(4) of IT Act 1961? - HELD THAT:- As held by Hon ble jurisdictional High Court in EKTA CO-OP CREDIT SOCIETY LTD. [ 2018 (1) TMI 1244 - GUJARAT HIGH COURT] and JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD. [ 2014 (2) TMI 28 - GUJARAT HIGH COURT] the benefit of section 80P(2)(a)(i) cannot be denied in these cases of co-operative credit societies, in view of their functions of providing credit facilities to the members, and the same is not hit by the provisions of section 80P(4) of the Act. The questions before us must be answered in favour of the assessee. The first question before us is answered in affirmative and in favour of the assessee, and the second question before us is answered in negative and in favour of the assessee. As this is the only issue in appeals before us, challenging the relief granted by the CIT(A), with the consent of the parties, we dispose of the appeals on merits. The grievances raised by the Revenue in appeals, in the light of the above discussions, must be dismissed, and the relief granted by the CIT(A) on this point must be upheld. We, therefore, uphold the relief granted by the CIT(A) in all these cases and decline to interfere in the matter. 2019 (7) TMI 850 Rectification u/s 254(2) - one of ground was not disposed - HELD THAT:- In the present case since the appeal against the order of the Tribunal has already been admitted and a substantial question of law has been framed by the Hon'ble High Court, the Tribunal cannot proceed with the Miscellaneous Application u/s 254(2) of the Act. In view of the aforesaid facts and following the decision cited above, the Miscellaneous Application u/s 254(2) of the Act seeking rectification in the order of Tribunal is hereby dismissed, being not maintainable. 2019 (7) TMI 849 TDS u/s 194J - payment made for purchase of software - TDS liability due to retrospective amendment - addition u/s 201(1) / 201(1A) - HELD THAT:- As decided in assessee own case [ 2016 (1) TMI 1025 - ITAT MUMBAI] the dispute with regard to the nature of payment made for purchase of software was settled at rest only by Finance Act 2012 through which Explanation-4 was added to Sec. 9(1)(vii). Although the said amendment was given retrospective effect, legal maxim, lex non cogit ad impossibillia, meaning thereby that the law cannot possibly compel a person to do something which is impossible to perform. As mentioned elsewhere, the amendment was given a retrospective effect but by that time the assessee has already done the transactions without deducting tax at source. On these facts, the assessee cannot be held to have violated the provisions of Sec. 194J of the Act. - Decided in favour of assessee. 2019 (7) TMI 839 Accrued or a contingent liability - liability of the Assessee to pay enhanced licence fee - Revisions of licence fees - Tax treatment of claim of licence fee as deduction - whether licence fee payable to the Railways to be an accrued liability? - Reopening of assessment - HELD THAT:- Special Leave Petition(s) is/are dismissed. 2019 (7) TMI 838 Bogus purchases - Tribunal said the addition should be restricted to 10% of the total purchases - HELD THAT:- What the Tribunal by the impugned Judgment held is that the Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallowing the entire expenditure. We do not find any error in the view of the Tribunal. No question of law arises. Enhancement of GP - ITAT deleting the enhancement of GP made by the CIT(A) from 2.59% to 6.00% of the turnover of ₹ 151 crores thereby giving undue relief of ₹ 4.92 Crores to the assessee - HELD THAT:- Tribunal noted that there was no material to discard the Assessee's book results. No incriminating material or evidence of the Assessee's transactions outside the books have been brought on record. It was under these circumstance, the Tribunal deleted the addition made by the CIT (Appeals). We do not find any error in the view of the Tribunal. There was no evidence on record to disturb the Assessee's book results. No question of law arises. The Income Tax Appeal is dismissed. Customs 2019 (7) TMI 837 Jurisdiction - Mis-declaration of the countries of destination - HELD THAT:- At the time of hearing, counsel for the petitioner states that during the pendency of the present writ petition, the investigations have been transferred to the DRI Zonal Office, Ludhiana where the unit of the private company is situated and engaged in its business. It is submitted that in view of the conceded cooperation by the officers of the aforesaid private company in the pending investigations, the impugned complaint and summoning order are required to be set aside as concededly the documents were furnished before the officials at Ahemdabad, however, it was the non presence of the director which had actuated the initiation of the complaint. On the previous dates of hearing, counsel for the DRI had sought time to seek instructions with regard to withdrawing of the said complaint at Ahemdabad, the proceedings of which are not warranted in view of the subsequent developments - In the light of the investigations having been transferred to Ludhiana and the counsel for DRI having undertaken to get the aforesaid complaint withdrawn within next one month, no further adjudication is required in the present writ petition. Petition disposed off. Corporate Laws 2019 (7) TMI 836 Dissolution of company in liquidation - Winding up order - issuance of Form 69 - HELD THAT:- Form 69 (notice of rejection of proof of debt) was issued to said Om Prakash Rawal by the office of OL. Amount deposited by secured creditor standard chartered bank towards dues of ex-workmen - HELD THAT:- Since no claim was received, therefore, the OL had sent the letter dated 12/9/2018 followed by the reminder dated 9/1/19 to the standard chartered bank to provide the bank account details such as name of beneficiary, name of account, full account number and IFS code of bank branch to remit the said amount. But since the details have not been provided by the Standard Chartered bank therefore, the amount is lying with the OL - In view of the provisions contained in Section 555 of the Companies Act the OL is permitted to deposit this amount into Public Account of India in RBI in separate account to be known as Company s Liquidation Account. It would be just and reasonable to dissolve the company under section 481 of the Companies Act - petition disposed off. Insolvency & Bankruptcy 2019 (7) TMI 835 Validity of Resolution Plan - time limitation - Resolution Professional moved application under Section 60(5) for exclusion of certain period for counting the statutory period for computation of Corporate Insolvency Resolution Process period, wherein only three days has been excluded - HELD THAT:- The resolution process is made successful and not to allow the Corporate Debtor to be liquidated, the delay which took place during the pendency of the application for replacement of the Interim Resolution Professional before the Adjudicating Authority should be excluded for the purpose of counting 270 days of Corporate Insolvency Resolution Process period. The Resolution Professional and the Committee of Creditors are allowed 89 days to conclude the Corporate Insolvency Resolution Process, to be counted from the date of receipt of free certified copy of the present order by learned counsel for the Resolution Professional. It is for the Committee of Creditors to decide whether further Information Memorandum should be issued calling for more Resolution plans or to ask the Resolution Applicant who has already submitted the Expression of Interest to submit the Resolution Plan. Appeal disposed off. 2019 (7) TMI 834 Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate-Debtor - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Corporate-Debtor did not deny its loan liability which is more than of rupees one lakh i.e. ₹ 12,13,360/- but has offered for settlement. Thus the debt-due is admitted and the default is duly established. The present IB. Petition is filed by the duly authorised signatory and it is filed well within limitation. Its filing is in order. The present IB petition filed under Section 9 of the code is found complete for the purpose of initiation of Corporate-Interim- Resolution-Process in respect of Corporate-Debtor-Company - the present IB petition is admitted - Moratorium declared. 2019 (7) TMI 833 Exclusion of period for which the process of corporate resolution process could not be carried out for reasons and circumstances beyond the control of the applicant as well as the Committee of Creditors (CoC) of the corporate debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is strange that when total CIRP is for 270 days (including 90 days) how a RP can expect the extension of another 294 days which is not the mandate of law. It is pertinent to mention herein that IRP or RP was never restrained by this bench to perform his duties during CIRP period. Further, CIRP is time bound proceeding, which has to be completed in a time-bound manner. More so even the Hon'ble Apex Court has observed time and again that time is the essence of Code and it has to be completed within 270 days only. Under such circumstances further prayer for extension of time for another 294 days is not justifiable. That very act itself shows that the RP has not performed his duties diligently. If no resolution plan is received and/or approved, then the only option left is to go for liquidation. The period from the date of filing of the application under Section 27 of the Code till approval of the appointment of the RP by this Adjudicating Authority from 14.02.2018 to 02.04.2018 i.e. 47 days is extended - the period from which the instant application is pending is also exempted - application allowed in part. Service Tax 2019 (7) TMI 832 Validity of rectification application - Recovery of service tax - proviso to Section 73(1) of the Finance Act, 1994 - grounds urged by the petitioners in these writ petitions would not absolve the clear admission of tax liability by the petitioners to the show cause notice issued by the Adjudicating Authority - period December 2012 to March 2016 - in the rectification application it is pleaded that opportunity was prayed but the same was denied but the same is not supported by any material evidence - HELD THAT:- In the rectification application a reference is also made to the circular dated 10.03.2017 issued by the Central Board of Excise and Customs to emphasize that fair opportunity of hearing has to be granted to the assessee. It is also the grievance of the petitioner that the said point has not been addressed by the Adjudicating Authority while dismissing the rectification application. It is well settled that admission of the tax liability by the petitioners would not entail the authorities to provide any opportunity in terms of the Government Order dated 10.03.2017 referred to by the learned counsel for the petitioners. Even if there is any typographical error in the adjudicating order at Annexure-A, the same has been clarified in the order of the rectification dated 19.04.2018 that it was inadvertently mentioned as 24.01.2018 as the date of passing of the order instead of 30.01.2018 . Petitioners cannot take advantage of such typographical error when it is not disputed that the personal hearing was given to the petitioners on 30.01.2018 and the order was passed on the same day. No good grounds made out by the petitioners to interfere with the orders impugned herein. Petition dismissed. 2019 (7) TMI 831 Health and fitness services - appellant is providing taxable service of health club and fitness services without getting registered, without payment of Service Tax, without filing the returns - demand of service tax alongwith interest and penalty - HELD THAT:- The appellant was liable to pay Service Tax for providing taxable service of health club and fitness service but did not get himself registered with the Service Tax Department and did not file the Returns and when the records of the appellant were verified and a SCN was issued demanding Service Tax of ₹ 20,27,851/- for the period 01.04.2011 to 30.09.2014, the appellant paid only ₹ 1,50,000/- during the course of investigation. Penalty u/s 77 and 78 - HELD THAT:- Once the appellant has accepted the liability which was confirmed by invoking the extended period then he is liable to pay penalty as per the provisions of Section 78 of the Act. Since the entire demand is raised on the basis of the books of accounts shown by the appellant where all the transactions were recorded - Since, in the present appeal, the appellant has not contested the demand therefore the extended period has rightly been invoked and penalty under Section 77 78 has rightly been imposed. Appeal allowed in part. 2019 (7) TMI 830 Classification of services - Franchise Service or not - sharing of profit - Management fee and Warranty fee - Revenue entertained a view that the Management fee and Warranty fee are chargeable to service tax under the category of Franchise Service - HELD THAT:- In this case the franchise is providing infrastructure for refurbished the car and also provide facility to the employees and franchise also making efforts to marketing to MTV cars on the basis of market support and guidance provided by the appellant. The appellant only provide guideline how to ascertain the value of car and how to refurbish the car and after the sale of car, the appellant share the profit with the licensee 25% and 75% respectively. As the agreement between the appellant and the licensee/dealer is in nature of share of profit in the ratio of 25% and 75% and in cases where there is a loss, the appellant does not received any amount towards the activity, in that circumstances, we categorically held that the agreement between the appellant and the dealer is in nature of joint venture for which no service tax is payable by the appellant. Warranty service - HELD THAT:- The appellant has undertaken to provide warranty service to the customers and receiving the payment through dealers for warranty during the period of warranty. It is like an assurance given by the appellant to the customers that during the period of warranty, if any, defect arises the same will be make good without any fees - The said activity cannot be termed as Franchise Service and same is not liable to pay service tax under Franchise Service . The management service and warranty fee recovered by the appellant from the dealers is not taxable under the category of Franchise Service - demand set aside - penalty also set aside. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 829 Construction of Residential complex service - appellant has received payment from the prospective buyers before the grant of completion certificate - period 2007-2011 - HELD THAT:- In the present case, the appellants were constructing residential flats on their own land as the building permit was granted to the appellant. Further, the completion and occupancy certificate were also given to the appellant and the initial building tax was also paid by the appellant. This issue is no more res integra and has been settled by this Tribunal in the case of C.C.E C.S.T. -BANGALORE SERVICE TAX- I VERSUS KEERTHI ESTATES PVT. LTD. [2018 (10) TMI 840 - CESTAT BANGALORE] wherein identical facts were involved and the Tribunal has held that Prior to 01.07.2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 828 CENVAT Credit - providing of taxable and exempt services - non-maintenance of separate records - Rule 6(3) CCR, 2004 - suppression of facts - penalty - extended period of limitation - HELD THAT:- From the facts alleged in the SCN, there is no contumacious conduct on the part of the appellant nor there is any act of suppression of any information from Revenue - Whatever laps has occurred, is due to lack of interpretational skill and understanding on the part of the appellant. Further pursuant to the order-in-original the appellant have paid ₹ 9,33,536/- including interest by way of Challan No. 0023 on 1st March, 2018. The penalty as retained by the Commissioner (Appeals) is set aside and the extended period of limitation is not invocable under the facts and circumstances - appeal allowed. 2019 (7) TMI 827 Commercial or industrial construction service (CICS) - construction of Sewage Treatment Plant (STP), Effluent Treatment Plant (ETP) and laying down of sewage pipelines for various customers including government bodies - HELD THAT:- Most of these are not for the commercial or industrial activities and, therefore, the same is not liable for service tax under the Finance Act. The appellant has submitted certificate from agencies involved in execution of these projects such as, Delhi Jal Board, Akashardham, Haryana Urban Development Authority, Hyderabad Urban Development Authority, U.P. Jal Nigam Board. These organisations are generally engaged in providing public services which are not in the nature of services for commerce or industry, of course, in some of the project there may be some element of commercial or industrial services as well. Further, a perusal of contract, which is also not disputed by the Revenue indicates that these are in the nature of composite work contract which included supply of material along with the services. This issue has been decided by Hon ble Supreme Court in case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] judgement wherein it is held that the composite work contract is not chargeable to service tax prior to 1.6.2007. It has also been held that if demand is not raised under the category of work contract service for the period after 1.6.2007 the demand under any other services will not be sustainable. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 826 GTA Services - abatement claim - reverse charge mechanism - Department has entertained a view that the appellant have been providing a cargo handling service and mining service to the service recipient namely M/s SECL and, therefore, they are not entitled for the abatement - HELD THAT:- From the work orders that primary nature of the work is loading and transportation of the coal from mining area to railway siding. From the plain reading of the work orders, we infer that the primary nature of the activity undertaken by the appellant for M/s SECL is for the transportation of the coal from the pit heads to the railway siding or within the mining area itself with related ancillary activity of loading and unloading of coal into dippers. The work relating to the loading and unloading is ancillary to the transportation work which has also been clarified by the CBEC vide its Circular dated 6 August 2008 wherein it has been mentioned that the composite service may include various intermediate and ancillary service provided in relation to the principle service of the road transport of goods. Such intermediate and ancillary service may include loading/ unloading, packing/unpacking, trans-shipment or temporary warehousing etc. - These services are not provided as independent activities but are for the purpose of successful completion of the service of transportation of goods by road and, therefore, same is to be classifiable under GTA service. The primary activity of the appellant provided in the above-mentioned work orders is that of Transportation of Goods by Road and not of the cargo handling or of mining service either - for period upto 30 June 2012 the services provided by the appellant does not fall either under the category of cargo handling services or under the mining service and same has properly been classified under the Transport of Goods by Road service and on which M/s South Eastern Coal Fields Limited have already deposited the proper service tax under reverse charge mechanism. Demand post negative era that is 1 July 2012 to March 2013 - HELD THAT:- The matter is also no longer res-integra and it has already been decided in number of decisions of this Tribunal that the activity as undertaken by the appellant is classifiable under transportation of goods service and shall be entitled for abatement of value as provided in the relevant notification - reliance placed in the case M/S H.N. COAL TRANSPORT PVT. LTD., M/S V.N. TRANSPORT PVT. LTD. VERSUS CCE ST, RAIPUR [ 2018 (8) TMI 173 - CESTAT NEW DELHI] . The activity undertaken by the appellant has rightly been classified under the category of Transport of Goods by Road service and the appropriate service tax has already been paid by M/s SECL under the reverse charge mechanism basis - appeal allowed - decided in favor of appellant. Central Excise 2019 (7) TMI 825 Clandestine removal - SSI denied on the ground that the units have suppressed the production / clearances with an intent to evade payment of excise duty - ex-parte order - principles of natural justice - HELD THAT:- Even though the appellants have challenged the demand on the ground that the author of these papers was not investigated but the fact remains that the clearances mentioned in the said papers stand accepted by Shri Mashrubhai Bharwad, tempo driver, who had transported these goods to M/s SCEL. Further Shri Yogeshbhai Shah who is Managing Director of M/s SECL and partner of M/s Mili Detergent Industries himself has accepted that the papers pertained to goods cleared by the three units to M/s SECL. In such case when the partner of the consignor unit and Managing Director of consignee unit has accepted removal of receipt of goods from M/s Mili Detergent to M/s SECL, it leaves no doubt that the details found in loose papers pertain to clandestine clearance by three units to M/s SECL. Principles of natural justice - grant of cross examination - HELD THAT:- The cross examination of Shri Mashrubhai Bharwad was already allowed earlier and therefore there was no reason for the adjudicating authority to grant cross examination again and again and cannot be considered to be violative of principles of natural justice. There is no reason to grant cross examination of the officers as there is no doubt about the investigation proceedings. The clandestine removal stands by the consignors as well as consignee and also by the transporter stands accepted - appeal dismissed - decided against the assessee. 2019 (7) TMI 824 100% EOU - Valuation - material found unaccounted in the premises - raw materials procured by the appellant duty free from others - demand of duty at rates applicable to goods manufactured by 100% EOU - applicability of proviso to section 3 of CEA - HELD THAT:- In the instant case, the appellant are failed to account for a certain quantity of raw material procured by them and consequently, they are liable to pay duty. It is seen that the proviso to section 3 applies only to goods manufactured or produced by a 100% EOU. It therefore cannot be applied to the said goods which were clearly not produced by the appellant. In these circumstances, demand of duty in terms of proviso to section 3 of Central Excise Act cannot be upheld - demand to the extent exceeding the demand of duty forgone on procurement of said goods is set aside. Penalty is consequently, revised under section 11AC to the re-quantified duty. Invocation of penalty u/r 26 of CER - HELD THAT:- In the instant case there was diversion of significant quantity of material procured duty free under CT-3. Joy M. Godiwala was director of the unit and he had also admitted in his statement that all day to day activities of the unit including work related to central excise and customs was carried out as per his direction and instructions. In these circumstances, there is significant force to invoke rule 26 of Central Excise Rules and to impose penalty on Sh. Joy. M. Godiwala. The matter is remanded solely for qualification - appeal allowed in part. 2019 (7) TMI 823 CENVAT Credit - appellant have cleared the goods under exemption N/N. 30/2004-CE dated 09.07.2004 - case of the department is that, since the appellant have claimed Cenvat credit, they have violated the condition of N/N. 30/2004-CE dated 09.07.2004 which stipulates that no credit of such excise duty or additional duty of customs on inputs has been taken by the manufacturer of such goods - HELD THAT:- Though the appellant have availed Cenvat credit in respect of inputs used in the manufacture of Polyester Texturised Yarn and cleared under nil rate of duty but it is also a fact that appellant have reversed the amount equal to 6% as provided under Rule 6(3) of Cenvat Credit Rules, 2004 - the provision of sub Rule (3D) was specifically provided under the statute to meet with the situation as existing in the present case. The appellant have reversed or paid the amount in terms of sub Rule (3) of Rule 6, therefore, as per sub Rule (3D), it will amount to not taking of Cenvat credit and when this be so, the condition of N/N. 30/2004-CE stands complied. The demand denying the exemption N/N. 30/2004- CE does not sustain - Appeal allowed - decided in favor of appellant. 2019 (7) TMI 822 CENVAT Credit - appellant have utilized the balance of Education Cess and secondary and Higher Secondary Education Cess - proviso 6 to Rule 16 of Chewing Tobacco and unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules 2010 - HELD THAT:- Reliance placed in the case of CELLULAR OPERATORS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND ANOTHER [ 2018 (2) TMI 1264 - DELHI HIGH COURT] where it was held that Prior to 01.07.2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service and in the present case, the period involved is from 16.06.2005 to 31.01.2007. Imposition of penalty - HELD THAT:- It was a bona fide mistake of the appellant to utilize the CENVAT credit after the introduction of the Notification No. 12/2015-CE dated 13.04.2015 as the appellant was under impression that they can utilize the CENVAT credit on Education Cess and Higher Education Cess for payment of duty - there was no intention to evade the payment of duty. Appeal allowed in part. 2019 (7) TMI 821 CENVAT credit - shifting of factory - removal of inputs - time limitation - Department has denied the benefit of cenvat credit by merely referring to the phrase within one year from the date of issue of documents - Rule 10 of Cenvat Credit Rules 2004 - HELD THAT:- The appellants have shifted their factory from Peenya to Lakkenahalli village and the same was done after proper intimation to the concerned jurisdictional office on 09.08.2013. The Assistant Commissioner vide letter dated 05.05.2015 has given the permission to transfer the cenvat credit to the new unit. Further I find that the appellant has duly adopted Rule 3(5) of Cenvat Credit Rules 2004 for removal of its inputs from its old plant situated at Peenya to the new location at Lakkenahalli village. Further, the appellant has made a detailed entry for the goods shifted from old plant to the new plant duly in their inventory records to the satisfaction of the officer concerned under Rule 10(3) of Cenvat Credit Rules, 2004 for which the permission was accorded by the Assistant Commissioner. Time Limitation - HELD THAT:- The period of one year is not applicable in the present case because the invoices pertains to the year 2013 and during that relevant time, one year condition was not there in the Rules. Appeal allowed - decide din favor of appellant. CST, VAT & Sales Tax 2019 (7) TMI 820 Validity of assessment Order - grant of stay - case of petitioner is that either the mere filing of appeal or mere pendency of appeal does not amount to granting stay by the appellate authority - HELD THAT:- A case is made out for issuing necessary directions to the 3rd respondent to dispose of the delay condonation petition and stay petition in Exts.P4(a) stay petition and P4(b) delay petition respectively. Petition disposed off. 2019 (7) TMI 819 Validity of assessment order - benefit of Karasamadhan Scheme, 2019 - it is alleged that no statutory Forms were submitted by the petitioner company to avail the reduced rate of tax - HELD THAT:- There is no cavil on the proposition that the declaration Form can be filed at a subsequent point of time and not necessarily along with the returns. It is also well established principle that the declaration Forms can be filed before the Appellate Authority also - If the Assessing Authority is satisfied that the assessee was prevented from sufficient cause which disenabled him to file the Forms in time, the same can be accepted in terms of the proviso to Rule 12(7), albeit rule 12(7) prescribes a time limit of three months after the end of the period to which the declaration has to be filed, but that cannot be extended to decades. Prescribing three months time for furnishing declaration Forms may be directory but the same should be furnished within a reasonable time. However, in the present case, no such declaration Forms are furnished, but it is only permission sought to furnish such declaration Forms before the Assessing Authority beyond the period of limitation to file an appeal before the Authorities. The inordinate delay of decades cannot be condoned merely for the reason that the proceedings were pending before BIFR. The Full Bench of Madras High Court in the case of State of Tamil Nadu, STATE OF TAMIL NADU VERSUS ARULMURUGAN AND COMPANY [ 1982 (11) TMI 143 - MADRAS HIGH COURT ], in the context of furnishing of declaration Forms under Rule 12(7) of the Rules has observed that the assessee did not file statutory Forms before the statutory Authority before the completion of the assessment, however before the Appellate Authority leave to file the relevant declaration Forms was sought for, but was declined. There is no dispute with the aforesaid legal principle enunciated by the Hon ble Court - In the present case, the challenge made to the assessment orders under the writ jurisdiction relating to the assessment years 1995-1996 to 2007-2008 cannot be entertained to enable the petitioner to avail the Karasamadhan Scheme, 2019. Petition dismissed. Indian Laws 2019 (7) TMI 818 Grant of conditional leave to defend - whether on basis of the materials on record, whether their has been just and proper exercise of the discretion to grant conditional leave to defend by deposit of ₹ 30,00,000/after consideration of all material and relevant factors? - HELD THAT:- The fact that there was commercial dealing between the parties was not in issue at all. According to the plaint of the respondent, commercial dealings between the parties ended on 03.06.2011. It stands to reason why outstanding payment in respect of the same came to be made by cheque as late as 01.03.2014. It does not appeal to logic or reason much less to the usual practice in commercial dealings. In any event the respondent has not furnished any explanation with regard to the same. At this stage it becomes necessary to notice the contention of the appellant that the signatures and the contents of the cheques are in different writings. Significantly on 29.10.2015, in the prosecution instituted by the respondent under the Act, the court required the respondent to file certain additional documents because the appellant denied the existence of any legal liability for any sum due. It is only thereafter that the Summary Suit was instituted on 24.11.2015. The prosecution under the Act was subsequently unconditionally withdrawn on 14.12.2015. These facts are not in dispute and are clearly discernible from the records. This coupled with the specific contention of the appellant, not denied by the respondent, that it had returned defective goods and paid the balance dues of ₹ 5,00,000/, we find the conclusion to grant leave to defend as perfectly justified - But the defence raised by the appellant in the aforesaid background was certainly not a sham or a moonshine much less frivolous or vexatious and neither can it be called improbable. The fact that there may have been commercial relations between the parties was the ground for the institution of the summary suit but could not per se be the justification for grant of conditional leave sans proper consideration of the defence from the materials on record. The impugned orders granting conditional leave to defend are held to be unsustainable and are set aside - Appeal allowed.
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