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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter July 20, 2019 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles DEEMED REGISTRATION UNDER CENTRAL GOODS AND SERVICES TAX ACT, 2017 Income tax return (ITR) form wise applicability and no applicability for the FY 18-19 AY 19-20 News Gurugram Zone DGGI arrests two businessmen for fraudulent issuance of around ₹ 40 crores of input tax credit Finance Commission to visit Chhattisgarh Commerce & Industry Minister to Launch GII on 24th July 2019 Principal Scientific Adviser Holds Meeting with Leading MNCs to Position India as a Favoured Destination for R&D Commerce and Industry Minister reviews action plan to achieve Rs. One Lakh Crore GMV on GeM in FY 2019-20 Notifications Companies Law S.O. 2564(E) - dated 17-7-2019 - Co. Law Central Government Jurisdiction as Special Court in Maharashtra GST 34/2019 - dated 18-7-2019 - CGST Seeks to extend the last date for furnishing FORM GST CMP-08 33/2019 - dated 18-7-2019 - CGST Seeks to carry out changes in the CGST Rules, 2017. GST - States S.O. 346 - dated 18-7-2019 - Bihar SGST Seeks to amend notification S.O. No. 212, dated the 08th May, 2019 S.O. 345 - dated 18-7-2019 - Bihar SGST Bihar Goods and Services Tax (Fifth Amendment) Rules, 2019. S.O. 321 - dated 3-7-2019 - Bihar SGST Bihar Goods and Services Tax (Fourth Amendment) Rules, 2019. Order No. 06/2019- State Tax - dated 3-7-2019 - Bihar SGST Bihar Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019. 11/2019- State Tax (Rate) - S.O. 316 - dated 1-7-2019 - Bihar SGST Refund mechanism for outgoing international tourist S.O. 315 - dated 28-6-2019 - Bihar SGST Seeks to amend Notification S.O. No.213, dated the 08th May, 2019 SEBI S.O. 2570(E) - dated 17-7-2019 - SEBI Designation of courts to be Special Courts S.O. 2569(E) - dated 17-7-2019 - SEBI Central Government Jurisdiction as Special Court Circulars / Instructions / Orders SEBI CIR/CFD/CMD1/ 80 /2019 - dated 19-7-2019 Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity SEBI/HO/CFD/CMD1/CIR/P/2019/78 - dated 16-7-2019 Modification of circular dated September 24, 2015 on ‘Format for compliance report on Corporate Governance to be submitted to Stock Exchange (s) by Listed Entities’ Customs Public Notice No. 60/2019 - dated 16-7-2019 Exemption from charges for late filing of Bill of Entry Public Notice No. 61/2019 - dated 16-7-2019 Procedure in respect of 24x7 Direct Port Delivery (DPD)/Direct Port Entry (DPE) by Rail movements between NSD & Balmer Lawrie CFS Public Notice No. 62/2019 - dated 16-7-2019 Rectification of Invoice Mis-match (SB005), GSTN Number Mis- match (SB003), EGM/Stuffing errors (SB002), Mis-match in Shipping Bill details (SB001) and filing of claim for IGST Refund Public Notice No. 57/2019 - dated 8-7-2019 Introduction of 'Project Imports module' in ICES -regarding PUBLIC NOTICE NO. 55/2019 - dated 4-7-2019 Mandatory implementation of e-SANCHIT in Export Public Notice No. 50/2019 - dated 29-6-2019 Procedure for implementing renewal of Self Sealing Permission to the Exporters PUBLIC NOTICE NO. 51 /2019 - dated 29-6-2019 Procedure to be followed in cases of manufacturing or other operations undertaken in bonded warehouses under section 65 of the Customs Act, 1962 Public Notice No. 47/2019 - dated 21-6-2019 Implementation of Export Transhipment (ET P) Module for movement of export cargo from Kolkata Port to Gateway Port in ICES - clarification. Public Notice No. 44/2019 - dated 20-6-2019 Implementation of PGA eSANCHIT- Paperless Processing under SWIFT- Uploading of Licenses/ Permits/ Certificates/ Other Authorizations (LPCOs) by PGAs TRADE NOTICE No. 02/2019 - dated 18-6-2019 Registration of Contract for assessment Under CTH-98.01 and registration of Project Import Bond Public Notice No. 42/2019 - dated 18-6-2019 Rectification of Invoice Mis-match (SB005), GSTN Number Mis- match (SB003), EGM/Stuffing errors (SB002), Mis-match in Shipping Bill details (SB001) and filing of claim for IGST Refund Public Notice No. 41/2019 - dated 14-6-2019 Simplified auto-registration of beneficiaries (IEC holders) on ICEGATE for eSANCHIT and other benefits Public Notice No. 39/2019 - dated 29-5-2019 Mandatory implementation of e-SANCHIT in exports Public Notice No. 30/2019 - dated 1-5-2019 Export General Manifest to be submitted on ICEGATE without hard copy to Customs Public Notice No. 29/2019 - dated 1-5-2019 Rectification of Invoice Mis-match (SB005), GSTN Number Mis- match (SB003), EGM/Stuffing errors (SB002), Mis-match in Shipping Bill details (SB001) and filing of claim for IGST Refund Public Notice No. 28/2019 - dated 30-4-2019 Transport of containers by Rail from Kolkata/ Haldia Docks to Bathnaha and onwards to Biratnagar, Nepal under Electronic Cargo Tracking System (ECTS) in terms of Public Notice No. 08/2019 dated 25/01/2019 Public Notice No. 31/2019 - dated 30-4-2019 Phasing out of physical copies of Merchandise Exports from India Scheme (MEIS)/ Services Exports from India Scheme (SEIS) Duty Credit Scrips issued with EDI port as Port of registration Highlights / Catch Notes GST Maintainability of appeal of Income Tax - appeal remedy - requirement of e-way bill for movement of new vehicle under Rule 138 of the CGST Rules - appellate authority can very well decide as to whether there existed any statutory obligation on the part of the appellant in generating the e-way bill, while transporting the goods in question - liberty given to availing the statutory remedy Visit to Get Source Income Tax Income recognition from contract activity - recognition income on reimbursement - AS-7 - there is no change so far as “cost based” percentage completion method in concerned - in the case of reimbursement, there is no profit element, consequently, recognition income of such reimbursement is not appropriate Visit to Get Source TP Adjustment - ALP of the royalty paid AE - royalty paid by other group entities are controlled transactions whereas, rule 10B(1)(a) mandates that the price charged for an uncontrolled transaction/transaction should be considered as a CUP - the determination of arm's length price as approved by the RBI/SIA is valid Visit to Get Source Deduction on the payments of interest to partners u/s 40(b) - when income was taxed u/s 176 (3A) - as per Section 176(3A) income received subsequent to the discontinuance of business need to be charged for tax as if such sum was received before the discontinuance of the business and there is nothing in above section that deductions are not allowable - hence deductions u/s 40(b) are allowable Visit to Get Source Condonation of delay 1131 days - sufficient cause - assessee acted bonafide under the advice from his consultants - contents of the affidavit were sufficient to show that the assessee had acted bonafide under the advice from his consultants and there was no negligence nor any deliberate or intentional act on his part to delay in filing of appeals - delay condoned Visit to Get Source Disallowance of provision for post-retirement medical expenses - actuarial basis - provision has been created on the basis of actuarial calculation on a scientific basis the liability is not contingent but definite - duly allowable Visit to Get Source Rate of depreciation - housing colony for accommodation of staff of power project - SLM or WDV - the rates of dep. on all such assets of the undertaking engaged in the power projects have to be computed on SLM basis and the assessee cannot pick and choose certain assets and claim dep. on SLM and on other assets, claim depreciation on WDV basis - directed to allow dep. @3.02% on SLM Basis Visit to Get Source Addition u/s 40A(3) - cash payment for the purchase of land - On the day of transaction, purchaser demanded cash - registration of land took place in the afternoon of 07-03-2009 that the day happens to be Saturday followed by public holiday Sunday - fall under exception as per Rule 6DD - no addition Visit to Get Source Taxability of tenancy transfer fees - incoming tenants had obtain tenancy rights from outgoing tenants for a consideration and paid a sum of ₹ 5 Lacs to landlord/assessee being consenting party - assessee was pursuing only one project which was at the above stated site - receipt is in furtherance of carrying out the stated project only and part and parcel of the unified construction activity - will be adjusted with WIP Visit to Get Source Service of notice u/s 148 of Income Tax - no service effected on address as per PAN - dept was aware of address in bank - by virtue of the further proviso to sub-rule (2) of Rule 127, the communication had to be delivered at the address as available with the banking company - since no such steps were taken for service of notice before the last date envisaged u/s 149 - reopening of assessment was invalid Visit to Get Source Deduction u/s 54B - part of land was not cultivable- Sec.54B does not specify that the entire land should be used for cultivation, if any part of the land is under cultivation for two years immediately two preceding years prior to the date of transfer, it would be sufficient to claim benefit u/s 54B. Visit to Get Source Disallowance of interest on TDS, VAT, entry tax and professional tax - as these expenses normally incurred by the assessee in doing the business, hence allowable expenditure u/s 37(1) - no infirmity in the order passed by the ld. CIT(A) Visit to Get Source Addition under the head ‘income from house property - property not forming part of block of assets - property was purchased for the purpose of resale and lying vacant under head ‘inventory’ and meanwhile used for purpose of business then The FMV of the property used by appellant for business purpose admittedly cannot be determined u/s 23(1) - not taxable Visit to Get Source Disallowance finance cost - borrowings through debentures issued - objection that quantum of borrowing made together with the period of borrowings such rates of interest are highly excessive - Once it has been established through documentary evidence that borrowing has been made through the debentures and utilized for the purpose of business - cost incurred on redemption of debentures is allowable u/s 36(1)(iii) Visit to Get Source Customs Confiscation - the undeclared ‘drill bits’ constituted just a mere 5% of the total consignment, it would appear that there has been no deliberate attempt to mis-declare on the part of the importer - the confiscation of the goods under section 112(m) of Customs Act, 1962 and the imposition of redemption fine, along with penalties, does not appear to be sustainable in law. Visit to Get Source Bill Amendment of Act 51 of 2007 (PAYMENT AND SETTLEMENT SYSTEMS) - Clause 194 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 45 of PMLA - Clause 190D of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 44 of PMLA - Clause 190C of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 18 of PMLA - Clause 190B of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 17 of PMLA - Clause 190A of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Insertion of new section 12AA of PMLA - Clause 189 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 3 of PMLA - Clause 187A of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 2 of PMLA. - Clause 187 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Commencement of this Part (PMLA) - Clause 186A of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 47 of BENAMI PROPERTY. - Clause 174C of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 46 of BENAMI PROPERTY. - Clause 174B of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 30 of BENAMI PROPERTY - Clause 174A of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of Section 198 of Income Tax - Clause 48A of the FINANCE (No. 2) BILL, 2019 - New Clause inserted while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 10 of Income Tax. - Clause 6 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Insertion of new sections 194M and 194N of Income Tax. - Clause 46 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 194-IA of Income Tax. - Clause 45 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 115R of Income Tax. - Clause 37 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 56 of Income Tax. - Clause 21 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 47 of Income Tax - Clause 17 of the FINANCE (No. 2) BILL, 2019 - Clause amended while passing the Finance Bill in the Loksabha Visit to Get Source Amendment of section 9 of Income Tax - incomes which shall be deemed to accrue or arise in India. - Clause 4 of the FINANCE (No. 2) BILL, 2019 - Amendment while passing the Finance Bill in the Loksabha Visit to Get Source Indian Laws Dishonor of Cheque - Company declared as sick unit - The offence not complete, not because there was a statutory bar, but because the directors of the company were prevented by reasons beyond their control from honouring the cheques - issuing process for offence u/s 138 quashed and set aside. Visit to Get Source Service Tax Waiver of penalty u/s 80 - the assessee will have to demonstrate that there are reasonable grounds to suggest that the amount received as a Subcontractor is not liable for the service tax. Mere assumption is not sufficient - Penalty cannot be set aside Visit to Get Source Reversal of CENVAT Credit - providing of taxable as well as exempt service - since the respondent had availed only proportionate credit, the respondent was not legally required to pay 8%/10% amount under rule 6(3) of the Rules, since it can be said to have maintained separate accounts as required under rule 6(2) of the Rules. Visit to Get Source Refund of Service tax - retrospective exemption - The time-limit prescribed u/s 104 (3) is only directory, but however, the time as well as the procedure prescribed u/s 11B applies in full. The Adjudicating Authority is therefore required to grant refund if the refund application is within the time-limit prescribed u/s 11B and not otherwise Visit to Get Source GTA Service - denial of benefit of 75% abatement in the absence of any declaration furnished by the transport agencies - There is no merit in the submissions that even without declaration as stipulated in the notification, the assessee was entitled to such exemption, is over simplifying or glossing over the conditions itself, which cannot be permitted. - Tribunal was perfectly justified in denying such exemption. Visit to Get Source Rebate claim - export of services - denied on the ground that services rendered within India - the supply had been effected to a Special Economic Zone and a recipient operating, or in, a Special Economic Zone is entitled to tax exemption that devolves upon the provider - the appellant was entitle to the refund/rebate of the taxes paid on the services Visit to Get Source Taxability - GTA Service - utilization of lorries for transportation of ‘iron ore’ from their mines to the port of export at New Mangalore - the tax liability will arise only upon the goods transport agency and an individual truck operator who does not accept such responsibility, is merely performing the activity of transport of goods which is not the subject of the tax - falls outside the ambit of section 65(105)(zzp) of FA, 1994 Visit to Get Source Levy of Service tax - collection of toll - there is communications from the Ministry of Finance dated 22-2-2012 and 21-5-2019 clarifying that the service by way of access to a road or a bridge on payment of toll charges is included in the Negative List, which means that no service tax can be levied on the service - the proceedings may go on but no coercive steps shall be taken for recovery Visit to Get Source Central Excise In the absence of element of mens area, the appellant's conduct cannot be construed to fall within the five elements as required for invoking the extended time proviso - the charges of willful suppression or mis-statement of facts cannot be invoked Visit to Get Source Service of order - Period of limitation for filing an appeal - We do not agree with the findings of the ld. Commissioner (Appeals) that the date of the service of the order as per the law is the date of sending of the same by registered post Visit to Get Source VAT Rejection of Refund to the Petitioner on the basis of ‘zero demand orders’ - There is no purpose served in passing such ‘zero demand’ orders as they end up only multiplying litigation needlessly and delaying the grant of refunds to which the dealers are legitimately entitled. Visit to Get Source Escapement or under-assessment under KVAT Act - mistake in reporting purchase turnover - the authorities have not found any discrepancy in the sales figures returned, or any escapement of sales turnover which is taxable - filing of incomplete or incorrect return might have attracted penalization u/s 67 but alone cannot be used to make an addition in the turnover and to demand tax Visit to Get Source Concessional rate of tax - rejection of 'C' Forms - there is no proof regarding verification made or materials collected - Unless and until the Assessing Authority became convinced that the 'C' Forms produced were not genuine, based on any materials collected, the assessments made rejecting the claim for concessional rate of tax, cannot be sustained. Visit to Get Source Case Laws: GST 2019 (7) TMI 947 Collective failure to constitute the GST Tribunal which was their solemn duty under the GST Act, 2017 - HELD THAT:- Since the matter is engaging the attention of the Division Bench of this Court at Allahabad as well and since the stand of the Union is still not clear, list this matter after two weeks. 2019 (7) TMI 946 The writ applicant has been able to make out a strong prima facie case to have some interim order in his favour. Till the next returnable date, no coercive action or any coercive steps shall be taken by the authorities against the writ applicant - Let NOTICE be issued to the respondents returnable on 24/07/2019. 2019 (7) TMI 945 Filing of the TRAN-1 Form - Carry forward credit of eligible duties, both CGST and the GST - glitches in the online system - HELD THAT:- In similar circumstances, this Court in BHARGAVA MOTORS VERSUS UNION OF INDIA ORS. [ 2019 (5) TMI 899 - DELHI HIGH COURT] permitted the filing of the TRAN-1 Form manually - Learned counsel for the Respondents has no objection if similar directions are issued in the present petitions as well. A direction is accordingly issued to the Respondents to either open the portal so as to enable the Petitioners to again file the TRAN-1 Forms electronically, failing which the Department will accept the manually filed TRAN-1 Forms on or before 31st July, 2019. The Petitioners claims will thereafter be processed in accordance with law. Petition disposed off. 2019 (7) TMI 944 Maintainability of appeal - availability of alternative remedy - whether the relegation made by the learned single Judge to avail the alternative remedy, was justified or not? - requirement of e-way bill for movement of new vehicle - Release of seized vehicle alongwith the goods - Section 129(3) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Contention of the appellant is that the appellate authority may not be able to look into the grounds raised, being a question of law to be decided - We cannot accept such a contention because the appellate authority can very well decide as to whether there existed any statutory obligation on the part of the appellant in generating the e-way bill, while transporting the goods in question. The liberty reserved by the learned single Judge for availing the statutory remedy, is not in any way illegal, erroneous or improper. Appeal dismissed - decided against appellant. 2019 (7) TMI 943 Constitution of the Authority for Advance Ruling - Constitutional validity of Section 96(2) of the Rajasthan Goods and Service Tax Act, 2017 and Section 96 of the Central Goods and Services Tax Act, 2017 - Levy of IGST on transportation services - import of goods on FOB basis - reverse charge mechanism - vires of notification dated 28.6.2017 - It is submitted that, the impugned notification has been illegally shifted the liability to pay IGST on the importer who is not the recipient of the services in case of import on CIF basis. Held that:- Issue notice, returnable by 10th July, 2019. 2019 (7) TMI 942 Grant of Interim Bail - offences under Sections 131(1)(B)(C)(D)(F)(I) and (1) read with Sections 132(1) (I)(IV) of Goods and Services Tax Act 2017 - case of petitioner is that the wife of the petitioner has to undergo an operation and petitioner be granted interim bail for two months to enable him to get his wife operated - HELD THAT:- As per the opinion of the Doctor, oral medicines can be prescribed for the problem faced by the wife of the petitioner and in case they fail, then surgery would be required. Patient was refusing to take medicines. In view of the medical report of the wife of the petitioner placed on record, no ground for grant of interim bail to the petitioner is made out - Petition dismissed. Income Tax 2019 (7) TMI 941 Service of notice u/s 148 - reopening of assessment - notice dated 15.3.2018 was despatched to the petitioner s address as contained in her PAN card but returned by the postal department on or around 22.3.2018 with the remark left - HELD THAT:- It is also an admitted position that the petitioner had not intimated to the Department about her change of address. After receiving the envelope containing the notice from the postal department, till 31.3.2018 which was the last date for service of such notice, the department took no further steps. Since the delivery of the notice could not be made at the address of the assessee available in PAN database, by virtue of the further proviso to sub-rule (2) of Rule 127, the communication had to be delivered at the address as available with the banking company. It is undisputed that the Department had access to the petitioner s bank account. It is precisely from the activities in such bank account that the department had gathered the material prima facie believing that the income chargeable to tax had escaped assessment. In terms of Rule 127 and in particular, sub-rule (2) therefore, having regard to the further proviso therein, the Department had to deliver the notice of reassessment at the petitioner s address given by her to the bank where her account was maintained No such steps were taken. Service of notice, therefore, was not complete. In absence of service of notice before the last date envisaged under section 149 for such purpose, the AO could not have proceeded further with the reassessment proceedings. His consequential steps of attempting to serve the notices of scrutiny assessment were of no consequence. Reopening of assessment was invalid. No valid assessment thereon could have been framed. - Decided in favour of assessee. 2019 (7) TMI 940 Revision u/s 263 - proof of AO's order to be erroneous or prejudicial - As decided in [ 2017 (12) TMI 1349 - ITAT KOLKATA] Principal CIT passed the impugned order u/s 263 without giving any finding or conclusion as to how the order of the Ao was erroneous on merits in respect of the issue raised in the notice issued u/s 263 and set aside the same on the ground of lack of enquiry by the Assessing Officer without even putting the assessee on notice - HELD THAT:- If that be the case, it ought to have decided the question itself or remanded the matter back. It has done neither. It has simply allowed the appeal. We are minded to remand the matter to the tribunal for de novo consideration. This is our tentative view subject to hearing the respondent. The advocate-on-record for the appellant is directed to give notice to the respondent of this appeal along with the gist of this order. The appeal is formally admitted. Let the appeal appear for orders on 22nd July, 2019. 2019 (7) TMI 939 Condonation of delay - delay of 497 days in filing the miscellaneous petition - reasons assigned by the petitioner for not appearing before the Tribunal due to some mis-communication between the petitioner company and its Chartered Accountant - HELD THAT:- Undisputably, the miscellaneous petition was filed with the delay of 497 days before the Tribunal and the Tribunal has no power to condone the delay beyond 6 months, if so, the petitioner approaching this Court under Articles 226 and 227 cannot be held to be unjustifiable. The Division Bench of this Court in identical circumstances in the case of M/S.PRACTICE STRATEGIC COMMUNICATIONS INDIA PRIVATE LIMITED vs. THE COMMISSIONER OF SERVICE TAX, BANGALORE [ 2017 (1) TMI 659 - KARNATAKA HIGH COURT] has held that remedy available to the assessee to seek for condonation of delay beyond the statutory period of limitation is only under Article 226 and 227 of Constitution of India. In the circumstances, the writ petition deserves to be entertained. As regards the reasons assigned by the petitioner to condone the delay of 497 days may be unsatisfactory, but the same requires to be considered in the light of disposal of the original appeal by the Tribunal for non prosecution. It is well settled law that Tribunal is bound to dispose of the matter on merits even in the absence of the appearance of the assessee or its counsel. It is thus clear that the dismissal of the appeal for non prosecution has resulted in failure of justice, which necessarily requires to be rectified. Hence, considering the same, the delay of 497 days in filing the miscellaneous petition has to be condoned subject to imposing costs of ₹ 5,000/- to the petitioner. 2019 (7) TMI 938 Taxability of income received after disolution of firm - income derived after discontinuance of the business is governed u/s 189 as well as u/s 176(3A) - HELD THAT:- Since the discontinuance of the business of the firm in cases at hand was with effect from 1.4.2004, we are in agreement that the assessment of the income received in any subsequent year need to be made in accordance with the procedure contemplated in Section 176 (3A). In the cases at hand, the income was received during the previous years corresponding to the assessment years 2005-06 and 2006-07. Going by Sub-Section (3A) of Section 176, such income shall be deemed to be the income of the recipient, which in the cases at hand is the partnership firm. The said provision stipulates that such income need to be charged to tax in the year of the receipt, which in these cases are the previous years corresponding to the above said assessment years. Such sum received should be included in the total income of the firm as if it is the income received before such discontinuance. Therefore there cannot be any dispute that the income received during the relevant years is to be charged to tax in accordance with the provisions contained in Section 176(3A). Whether such income received is profit and gains derived out of the business, coming within the purview of Section 28 ? - The receipts in the cases at hand are derived by way of income out of the business activities carried on by the firm before its discontinuance. Therefore it has to be construed that the receipts are profits and gains arose out of the business activity of the firm. Hence the finding of the Assessing Authority as well as the Tribunal that it is not an income coming within the purview of Section 28, as it is not profit or gains arising out of the business, cannot be accepted. The income charged to tax, which were received in the subsequent years of the discontinuance of the business, can only be treated as profit and gains arose out of the business of the firm, coming within the purview of Section 28. Deduction on the payments of interest to partners u/s 40(b) when income was taxed u/s 176 (3A) - HELD THAT:-There is nothing to indicate that in the case of an assessment u/s 176 (3A), such deductions are not allowable. We notice that, under Section 176(3A) the assessment on income received subsequent to the discontinuance of business need to be charged for tax as if such sum was received before the discontinuance of the business. So also, u/s 189 with respect to the assessment of firm which discontinued business, it is provided that, the total income of the firm shall be assessed as if no such discontinuance had taken place. Therefore we are of the considered opinion that, either u/s 189 or u/s 176 (3A), there is no restriction provided against allowing the deductions. Hence, while assessing the tax leviable on the income received by the assessee firm during the years after its discontinuance of business under Section 176(3A), deductions are allowable as contemplated u/s 40(b) Hence both the questions of law framed above, are answered in favour of the appellant/assessee and against the revenue. It is not clearly discernible as to whether the deductions claimed with respect to interest paid to the partners of the firm would satisfy all the stipulations and restrictions contained under clause (iv) of Section 40(b). Therefore we are of the opinion that the matter requires a remand to the Assessing Officer for recomputing the extent of deductions allowable with respect to both the years, in terms of Section 40(b)(iv). Both the above appeals are hereby allowed. 2019 (7) TMI 937 Stay of demand - Single Judge order directing deposit of 40% of total enforceable demand and to furnish 35% of the enforceable total demand - Reopening of assessment u/s 147 - HELD THAT:- The petitioner filed assessment relating to the assessment year 2010-11 showing NIL income. The case of the petitioner was taken up for reassessment under Section 143(1) and further u/s 147 the assessment was reopened and demand was raised. Against the reopening and re-assessment the petitioner filed appeal before the Appellate Authority. Along with the appeal, the petitioner also filed an application seeking for stay of the entire enforceable demand. The petitioner had also deposited 20% of the demand before the Appellate Authority. On the stay application of the appellant, order was passed under Section 220(6) of the Act. In the order it is noticed that based on the material, ACIT was of the view that it is a fit case for recovery of the entire demand raised, since the assessee had failed to prove genuineness of the credits in the Books of Accounts. The assessee could not prove the identity, creditworthiness of the Companies, who contributed to the share capital as well as the genuineness of the transaction. Taking note of the petitioner s argument and taking note the Circular No.1914, the learned Single Judge modified the order of the Assistant Commissioner passed under Section 220(6) demanding the entire enforceable demand to that of deposit of 40% of the total enforceable demand and furnishing of security to an extent of 35% of the enforceable total demand which in our view is an equitable order passed by the learned Single Judge. Petitioner has not made out any good ground to interfere with the equitable order passed by the learned Single Judge. 2019 (7) TMI 936 Disallowance of expenditure on purchase of shares and Keyman Insurance - AO repeated the disallowance in original assessment u/s 143(3) in the assessment completed u/s 153A/143(3) - HELD THAT:- Aspect of colourable device adopted by the assessee to claim the expenditure on purchase of shares was not looked into by the Tribunal in its order [ 2016 (9) TMI 592 - ITAT KOLKATA]. We note from the assessment order passed by the AO u/s 153A/143(3) that both these additions were repeated by the AO just to maintain judicial consistency and there was no incriminating material found during the course of search to support and substantiate the same. We, therefore, find no infirmity in the impugned order of the CIT(Appeals) deleting both the additions made by the AO on account of disallowance of expenditure on purchase of shares and Keyman Insurance and upholding the same, we dismiss this appeal filed by the Revenue and allow the Cross Objection filed by the assessee. 2019 (7) TMI 935 Penalty u/s 271(1)(c) - defective notice - absence of any specific mention in the show-cause notice regarding guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income - HELD THAT:- Notice issued under section 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. To arrive at this conclusion, Hon ble Calcutta High Court relied on the decision of Amrit Foods vs.- Commissioner of Central Excise UP [ 2005 (10) TMI 96 - SUPREME COURT] as well as their own decision in the case of Principal CIT vs. Dr. Murari Mohan Koley [ 2018 (9) TMI 1 - CALCUTTA HIGH COURT] The issue raised by the assessee in this appeal thus is squarely covered by the said judicial pronouncements - Decided in favour of assessee. 2019 (7) TMI 934 Condonation of delay 1131 days - sufficient cause - assessee acted bonafide under the advice from his consultants - HELD THAT:- It is now well settled that the expression sufficient cause is to be construed liberally in order to advance the substantial cause of justice and not strictly to defeat it. In the case of Concord of India Insurance Co. Limited vs.- Smt. Nirmala Devi Others [ 1979 (4) TMI 29 - SUPREME COURT] it was held by the Hon ble Supreme Court that the legal advice tendered by the members of the legal profession/consultant and the assessee acting upon it one way or other could be a sufficient cause to seek condonation of delay and the same coupled with the other circumstances and factors for applying liberal principles can be a ground for condoning the delay. In the present case, the applications filed by the assessee before the CIT(A) seeking condonation of the delay in filing the appeals for all the three years under consideration were duly supported by an affidavit filed by the assessee as well as the medical certificates and since the contents of the same were sufficient to show that the assessee had acted bonafide under the advice from his consultants and there was no negligence nor any deliberate or intentional act on his part to delay in filing of appeals, we are of the view that there was a sufficient cause for the delay on the part of the assessee in filing the appeals before the ld. CIT(A) for all the three years under consideration. We, therefore, condone the said delay and remit the matter back to the ld. CIT(A) for disposing of the appeals of the assessee for all the three years under consideration on merit in accordance with law after giving proper and sufficient opportunity of being heard to the assessee. - Decided in favour of assessee. 2019 (7) TMI 933 Revision u/s 263 - CIT directed to bring to tax interest received on compensation / enhanced compensation - interest received by the assessee u/s 28 of the Land Acquisition Act, 1894 was to be taxed u/s 56(2)(vi) - HELD THAT:- In the instant case, no interest has been awarded by the Sub Court u/s 34 of the Land Acquisition Act, 1894. It is a fact that the Pr.CIT had agreed that the interest was received u/s 28 of the Land Acquisition Act, 1894. The issue has been correctly decided by the Assessing Officer in the light of the judgment of the Hon ble Supreme Court in the case of Ghanshyam (HUF) [ 2009 (7) TMI 12 - SUPREME COURT] and hence there was no need for the Pr.CIT to invoke revisionary jurisdiction u/s 263 of the I.T.Act to set aside the assessment completed u/s 143(3) of the I.T.Act. In the instant case, the Assessing Officer had applied his mind on the assessability of interest received u/s 28 of the Land Acquisition Act, 1894 in the light of the judgment of the Hon ble Apex Court on the subject. Thus order u/s 263 of the I.T.Act passed by the Pr.Commissioner of Income-tax is quashed. - Decided in favour of assessee. 2019 (7) TMI 932 Rectification of mistake - Charging of interest u/s 220(2) - As per assessee s submissions, the interest was to be charged after expiry of 35 days from the issue of fresh assessment order passed pursuant to the directions of the Tribunal in set aside proceedings and not from the date of issue of original assessment order dated 27/03/1995 - chargeability of interest under Sec. 234A, 234B 234C HELD THAT:- We have perused the cited order of Tribunal rendered in cross appeals in assessee s own case for AY 1992-93 [ 2019 (2) TMI 1198 - ITAT MUMBAI] passed in the matter of assessment framed u/s 143(3) r.w.s. 254 of the Act. We find that the issue of charging of interest u/s 234A, 234B, 234C 220(2) has already been delved into by the co-ordinate bench wherein the revenue authorities have been directed to follow the order passed in the case of Late Harshad S. Mehta and charged interest accordingly. As held that interest u/s 220(2) was to be charged from the date of default of fresh demand notice issued after the fresh assessment made in consequent of the orders of the appellate authorities. Similarly, the issue of charging of interest u/s 234A, 234B 234C has also been dealt with by the coordinate bench, in other paras. Since a view has already been taken by the coordinate bench in the matter, refraining from delving into the issues any further, we direct Ld. AO to follow the cited order of the Tribunal. Appeal stands dismissed. 2019 (7) TMI 931 Exemption u/s. 11 (1) - assessee has shown receipts from Sponsorship Income Sale of Liquor, Income from Corporate Boxes, Sale of Tickets and Advertising/Contractual Receipts which are purely commercial in nature - HELD THAT:- Coordinate Bench of the Tribunal in AYs 2009-10 2010-11 [ 2015 (1) TMI 608 - ITAT DELHI] and [ 2018 (9) TMI 1311 - ITAT DELHI] has addressed exactly similar kinds of objections raised by the revenue before us and after dealing with each and every issue Tribunal has come to conclusion that the assessee is not carrying out any business activities and none of its receipts can be termed as an activity in the nature of 'trade, commerce and business'. Once such a finding of fact has been given on similar set of facts, then we do not find any reason to deviate from such a finding in assessee s own case, therefore, following the aforesaid decision, we find no illegality or perversity in the impugned order passed by the CIT (A) extending benefit of sections 11 12, hence findings returned by the CIT (A) in the impugned order are upheld. Consequently, the appeal filed by the Revenue is hereby dismissed. 2019 (7) TMI 930 Addition on account of receipt of cash payments - Search and seizure action u/s 132 in Vipul group - assessee company are 50 % partners in the project with Vipul group - from residence of Shri Moti S Masand, director of M/s Vipul Ltd, several documents were seized which are MIS receipts of collection of customers money for different projects of Vipul - documents show cash receipts of INR 40.56 crore - similar addition was also made in M/s Vipul Ltd - HELD THAT:- We found that on the same seized material the addition has been deleted by the coordinate bench in case of the Vipul Ltd who is also the 50% owner of the various projects. The facts and circumstances of the case of the addition in the hands of the assessee are identical and are on the same seized material and the statement of the party. The learned departmental representative could not controvert the above fact and could not show us any reason to deviate from the decision of the coordinate bench. In view of this, respectfully following the decision of the coordinate bench, we direct the learned AO to delete the above addition of ₹ 43.76 crore in the hands of the assessee based on the seized paper found from Mr. Moti S Masand.- Accordingly, ground numbers 1 3 of the appeal of the learned AO are dismissed. Assessment u/s 153C - no documents and material seized during the various searches could be said to be belonging to the assessee - HELD THAT:- The learned DR could not show us from the documents seized from Shri Moti Masand that there is any reference of the assessee in those documents. Therefore, it is apparent that they do not belong to the assessee. As such we have confirmed the order of the learned CIT A wherein the addition of ₹ 43.76 crores have been deleted following the order of the coordinate bench in case of Vipul Ltd, Even Otherwise those documents does not belong to the assessee. Thus, no addition can be made in the hands of the assessee based on these documents. The assumption of jurisdiction by the ld AO u/s 153C is also devoid of merit. Recording of satisfaction note by the AO in the file of the person searched as well as in the file of the person covered u/s 153C - HELD THAT:- On careful consideration of the rival arguments it is apparent that the issue is squarely covered against the assessee in view of the decision of the honourable Delhi High Court in case of Ganapathi Fincap services private limited 2017 (5) TMI 1425 - DELHI HIGH COURT] Addition u/s 69B - undisclosed payments for the purchase of the land at from various person - HELD THAT:- Apparently in this case the documents are based on which the addition has been made are not seized from the possession of the appellant but are seized from Messer SVS Promart private limited being a property dealer. It neither has the reference of the appellant or any of its employees. Furthermore the document seized shows the land at Zirakpur and the land owned by the assessee is at Raj para therefore there is a locational difference also between the documents seized and the actual facts. The learned CIT A further noted that the documents have been seized from a third-party and in spite of the request made by the assessee for examination of that party, no such opportunity was given to the assessee. Further, the learned assessing officer also did not examine the sellers of the land to find out whether there is any consideration received by them. The statement of the estate broker Shri Vipin, is recorded at the back of the assessee and never confronted to the assessee to rebut the same. In fact, actually the addition made by the learned assessing officer is not supported by any material credible evidence. Therefore, the addition was deleted. Addition of interest paid on the bank overdraft utilized for non business purposes - HELD THAT:- In the present case, the interest free funds available with the assessee far exceeded the alleged non-interest-bearing advances given by the assessee to other parties. In view of this the presumption arises in favour of the assessee that the amount of interest free advances given are out of non-interest-bearing funds available with the assessee which have far exceeded the amount of non-interest-bearing advances. The learned CIT A deleted the above disallowance relying upon the decision of the honourable Bombay High Court in RELIANCE UTILITIES POWER LTD. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] - The learned departmental representative could not point out any infirmity in the order of the learned CIT A. In view of this we also do not find any infirmity in the order of the learned CIT A and confirm his order deleting the addition because of interest paid to the banks. Addition based on substantial basis - assessee has already disclosed INR 31.50 crores based on seized material - addition that has been made by the learned assessing officer of INR 11.21 crores is less than INR 3 1.50 crores - HELD THAT:- The document seized from Mr. Saraf placed at page number 41 42 of the paper book does not have any reference of the appellant company, the name of the assessee company was not at all mentioned on those documents. Therefore, the learned CIT A has also held that these documents do not belong to the assessee company. Further, with respect to RTGS mentioned, no correlation or corroboration was made to show that it belongs to the assessee company. The learned departmental representative could not show us that how the seized documents belongs to the assessee. On reading the assessment order itself, the learned assessing officer has also not stated that how these documents belong to the assessee. The learned departmental representative also could not controvert the infirmity in the order of the learned CIT A. In view of above facts, we confirm the order of the learned CIT A , for the reason that the disclosure of INR 31.50 crores subsumed the above addition of INR 11.21 crore , to the extent of INR 9.33 crore set off to Mr. Saraf has not been granted, the seized document does not contain any reference of the appellant company, revenue failed to establish that the documents belong to the assessee. In the result, the ground number 1 of the appeal of the learned AO is dismissed. 2019 (7) TMI 929 Disallowance finance cost - borrowings were raised through debentures issued - expenditure of ₹ 104.50 crores was incurred for redemption of debenture - eligible business expenditure u/s 36(1)(iii) - objection that quantum of borrowing made together with the period of borrowings such rates of interest are highly excessive - HELD THAT:- Once borrowing has been made through the debentures and utilized for the purpose of business, it has been established through documentary evidence in the shape of agreements and correspondences for which, no contrary evidence has been placed on record, then surmises, conjectures and suspicion should not be made a basis to reject the claim of the appellant company. Thus, the judgment as relied upon has no application to the facts of the instant case. In view of the foregoing, we conclude that the appellant is entitled to deduction of ₹ 104.50 crores incurred on redemption of debentures u/s 36(1)(iii). Furthermore, we also hold that ₹ 1 crores earned by the appellant on redemption of debentures by M/s. Vatika Ltd. in respect of investment made by the appellant company was taxable as business income as declared in the return of income. As a result, grounds raised by the appellant are allowed. Addition in respect of sale of commercial area - collaboration agreement was also entered between the appellant and M/s. DLF Ltd. to develop the land - agreement for proportionate expenditure on account of advertisement and marketing - out of proportionate sale proceeds was ₹ 103.42 crores. M/s. DLF deducted ₹ 13.92 crores and credited ₹ 89.50 crores to appellant - HELD THAT:- The aforesaid agreements supported by independent confirmation obtained u/s 133(6) by the learned Officer in the remand proceedings, to which, no contrary evidence has been placed on record, we are of the opinion sum taxable is ₹ 89.50 crores and not at ₹ 103.42 crores as taxed in the impugned orders. In our considered opinion, income accrued is only ₹ 89.50 crores which is also supported by an audited certified statement and thus, addition so made is not in accordance with law and therefore, is deleted. Grounds raised by the appellant are allowed. Addition under the head income from house property - property left left vacant and not forming part of block of assets - HELD THAT:- In the present case, we are concerned with the property which is purchased for the purpose of resale and lying vacant under head inventory and meanwhile used for purpose of business. The FMV of the property used by appellant for business purpose admittedly cannot be determined u/s 23(1). In identical case coordinate bench of Delhi Tribunal in case of Ashok Kumar Gupta vs. ITO [ 2017 (10) TMI 1077 - ITAT DELHI] has held that FMV of properties used by appellant for business purpose could not be determined u/s 23(1). In the said case, properties under consideration were the properties which which are lying vacant or were under construction or were let out or were self occupied for the purpose of business purpose and in respect of properties which were used by the assessee for his own office/ business purpose it was held that FMV of the properties used by the assessee for business purpose admittedly cannot be determined u/s 23(1) We are of the opinion that addition made by erroneously determining annual value u/s 23(1) is not in accordance with law and is therefore deleted. 2019 (7) TMI 928 Addition u/s 40A(3) - cash payment for the purchase of land - exception as per Rule 6DD - On the day of transaction, purchaser demanded cash - registration of land took place in the afternoon of 07-03-2009 that the day happens to be Saturday followed by public holiday Sunday - HELD THAT:- We noticed that assessee has completed the registration on 07/03/2009 and the document indicates that it was prepared on 02/03/2009. The registration formalities were completed only on 07/03/2009 and suitably modifying the document in hand writing. The argument of AO is that the document and transaction was completed on 02/03/2009 but only registration was made on 07/03/2009. The CIT(A) has clarified the above observation of AO as improper and gave a finding that the substantial money would not be given without registration. No prudent purchaser will pay such huge funds without proper registration. No purchaser will make payment without registration on 02/03/2009 and make registration on 07/03/2009. The facts and sequence of events are in favour of assessee that the actual transaction took place only on 07/03/2009 and not on 02/03/2009. Therefore, we are inclined to accept the findings of ld. CIT(A) and the order of CIT(A) is upheld dismissing the grounds raised by the revenue. - Decided in favour of assessee. 2019 (7) TMI 927 Reopening of assessment - denial of natural justice - opportunity for cross examination denied - Unverifiable purchases of diamonds - GP rate determination - HELD THAT:- We found that the A.O. has reopened the case merely on the basis of information without conducting any independent enquiry. Thus, the reopening was not based on own satisfaction of the A.O. but on the borrowed satisfaction which can be clearly seen from the in his reasons for reopening. During the course of reassessment proceedings, the assessee had specifically requested the A.O. for copies of statement on which the A.O. was relying and an opportunity to cross examine the relevant parties. A.O. ignored the same and no opportunity was provided to the assessee. In reply to the assessee s request, the A.O. in his order has rejected the same by specifically writing that the assessee s right to cross examination of parties is not a part of reasonable opportunity of being heard. As per our considered view, seeking opportunity for cross examination of the party on whose statement the A.O. is relying upon is a right of the assessee in view of the principles of natural justice. ANDAMAN TIMBER INDUSTRIES VERSUS CCE [ 2015 (10) TMI 442 - SUPREME COURT] which held not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice. We also found that even same request was made before the ld. CIT(A) but the same was not considered and plea of the assessee was rejected. Therefore, the judgment of the Hon ble Supreme Court is hold precedent and the assessee s right to seek an opportunity for cross examination is justified and the rejection of the same resulted into nullity of the assessment itself in view of the decision of the Hon ble Supreme Court in the case of Andaman Timber Industries (Supra). GP estimation on bogus purchases - in so far as the profit declared in respect of purchases from these alleged parties were more than the profit declared in respect of other parties and the average profit declared during the year under consideration. We also found that the assessee had consistently shown profit between 6 to 8% in the A.Y. 2013-14 and 7.80% in the A.Y. 2012-13, thus overall profit rate was 7.8%. The A.O. has made addition of 25% on alleged bogus purchases without any basis, by the impugned order, the ld. CIT(A) restricted the addition on the basis of past profit to 9.5% of alleged bogus purchases in A.Y. 2013-14 and 8.5% in the A.Y. 2012-13. We also found that over all profit declared by the assessee being 7.32% and 7.80% is substantially higher in both the years keeping in view the nature of business and industry standard. Therefore, this is not a case where it may be presumed that the assessee has made alleged bogus purchases in order to reduce its profit margin. - Decided in favour of assessee. 2019 (7) TMI 926 Condonation of delay of 1159 days - reasonable cause - misplacement of the files by department - HELD THAT:- Being a huge Department, all the standard procedures have been laid down and all the officers are required to follow the same and maintain the files accordingly. The learned CIT (DR) had submitted that this is a single case which had got misplaced and that the Department has taken due care in all the cases to file the appeal without any delay. He submitted that it was only due to the huge workload holding other charges and it escaped the attention and it was only after the file got traced out that the appeal could be filed. We find this contention of the learned DR to be acceptable and the reasons explained by the Department are satisfactory. We also accept the assessee s contention that the proceedings of 2014-15 could be trigger point for tracing of the file and filing of the appeal with delay. However, we are of the opinion that it should not come in the way of considering the reasonable cause for condonation of delay and we accept the contention of the learned DR. Therefore, we condone the delay of 1159 days in filing of the appeal before the ITAT. Arms Length rate of interest - Investments in debentures - rate of interest of 15.75% paid by the assessee in respect of debentures of its associate concern M/s Watermarke Residency Private Ltd - AO reduced it to 11.20% and balance taxed as income - CIT upheld rate @15.75% also admitted certain additional evidence - HELD THAT:- We find that the assessee had filed additional details before the CIT (A) but the CIT(A) has not called for any remand report from the AO but has accepted the assessee s contention. Though the powers of the CIT (A) are co-terminous with the AO, the CIT (A) has failed to verify the details himself, nor has he called for a remand report, particularly when the AO in the assessment order had clearly brought out that he is not considering the additional information filed by the assessee because it was filed after passing of the draft assessment order. This acceptance of additional evidence without giving the AO an opportunity to verify the same clearly in violation of Rule 46A of the I.T. Rules. Further, it is the case of the assessee that the investments in debentures were made in rupees and therefore, the SBI PLR rate should be adopted. We find that all these contentions need consideration by the AO/TPO along with the additional evidence filed before the CIT (A). Therefore, we deem it fit and proper to remand the issue to the file of the AO/TPO for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing. Revenue s appeal is allowed. 2019 (7) TMI 925 Disallowance u/s 36(1)(va) read with 2(24)(x) for late payment of Employees Contribution to PF/ESI - paid within due date of filing of return - HELD THAT:- If the assessee deposits PF and ESI before the due date of filing of return of income then it would be considered sufficient compliance and no addition should be made on account of late payment of PF and ESI. For that we rely on the judgment of the Jurisdictional Hon ble Calcutta High Court in the case of Vijay Shree Ltd. [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] wherein it was held that if the assessee deposited PF and ESI within the due date prescribed it u/s 139(1) then no disallowance should be made. That being so, we decline to interfere in the order passed by the Ld. CIT(A), his order on this issue, is hereby upheld and grounds raised by the revenue is dismissed. Disallowance under the head interest on TDS, VAT, entry tax and professional tax - HELD THAT:- We note that the interest on VAT, TDS and interest on entry tax and interest on professional tax are allowable expenditure u/s 37(1) of the Act, as these expenses normally incurred by the assessee in doing the business. We also note that the interest on arrears of sales tax is compensatory in nature and therefore allowable expenditure u/s 37(1) as has been held by the Hon ble Supreme Court in the case of Lachmandas Mathurdas vs. CIT [ 1997 (12) TMI 16 - SUPREME COURT] Disallowance under the head interest on service tax and service tax RCM - HELD THAT:- We note that interest on service tax is an allowable expenditure. Not only that interest on service tax is compensatory in nature and it is not in the nature of penalty therefore the same is allowable expenditure as held by the Hon ble Supreme Court in the case of Lachmandas Mathuradas (supra). Therefore respectfully following the judgment of the Hon ble Supreme court, we do not find any infirmity in the order passed by the ld. CIT(A) therefore we confirm the order passed by the ld. CIT(A). - Decided against revenue 2019 (7) TMI 924 Deduction u/s 54B - Denial of claim for the reason that the part of land was not cultivable - HELD THAT:- We find that the Co-ordinate Bench of the Tribunal in the case of Shri Mahesh Danabhai Patel [ 2018 (1) TMI 1514 - ITAT PUNE] has held that provisions of Sec.54B does not specify that the entire land should be used for cultivation for claiming benefit u/s 54B. It held that if any part of the land is under cultivation for two years immediately two preceding years prior to the date of transfer, it would be sufficient to claim benefit u/s 54B. Before us, Revenue has not placed any contrary binding decision in its support nor has placed any material on record to demonstrate that the aforesaid decision in the case of DCIT Vs. Shri Mahesh Danabhai Patel (supra) has been set aside or stayed by the higher Judicial Authorities. Impact of acceptance of proportionate disallowance before AO - HELD THAT:-It is assessee s contention that the statement of AO of the A.R having agreed for disallowance is factually incorrect. In the present case, we are of the view that since the issue on merits is covered in assessee s favour by the decision of Pune ITAT, cited hereinabove, then merely because of admission of disallowance, the assessee cannot be denied the benefit to which he is eligible. Thus, the grounds of assessee are allowed. 2019 (7) TMI 923 TP Adjustment - MAM selection -ALP of the royalty paid AE - assessee has benchmarked the payment of royalty by applying CPM - DR arguing in favour of applicability of CUP submitted that since the assessee failed to furnish rates at which royalty was paid by other group entities, TPO determined the arm's length price at nil - HELD THAT:- The aforesaid argument of the learned DR is unacceptable simply for the reason that the Transfer Pricing Officer could not have determined the arm's length price under CUP by applying the rate of royalty paid by other group entities since they are controlled transactions. Whereas, rule 10B(1)(a) mandates that the price charged for an uncontrolled transaction / transaction should be considered as a CUP. As regards the justifiability of payment of royalty qua RBI/SIA approvals, we must observe that in the decisions cited by the learned AR, the Tribunal has held that the rate at which payment of royalty was approved by the RBI/SIA can be considered as arm's length price. In the case of A.W.Faber Castell India Pvt. Ltd. [ 2017 (4) TMI 1011 - ITAT MUMBAI] cited by the learned DR, though, the Tribunal has observed that arm's length price of royalty needs to be determined in accordance with the Transfer Pricing regulations, however, the bench also observed that if an authority by way of specific approval has allowed a particular rate of payment, it does carry persuasive value and can act as one of the supportive tools for carrying out benchmarking of transaction relating to payment of royalty. Insofar as the decision of the Tribunal in Skol Breweries [ 2013 (1) TMI 623 - ITAT MUMBAI] cited by the learned DR, we must observe that the Tribunal has observed that press note of Ministry of Commerce fixing rate of royalty under FDI policy cannot be considered to be relevant for determination of arm's length price under the Act. Thus following the well settled proposition of law that the view favourable to the assessee has to be taken, we are inclined to follow the decisions cited by the learned AR holding that the determination of arm's length price as approved by the RBI/SIA is valid. On the basis of the aforesaid reasoning, we uphold the decision of the learned Commissioner (Appeals) in deleting the addition made on account of transfer pricing adjustment. - Decided against revenue 2019 (7) TMI 922 Disallowance of provision for post-retirement medical expenses - actuarial basis - HELD THAT:- As decided in RURAL ELECTRIFICATION CORPN LTD. [ 2018 (3) TMI 1572 - ITAT DELHI] where the provision has been created on the basis of actuarial calculation on a scientific basis the liability is not contingent but definite. We do not find any infirmity in the order of the Id CIT(A) in deleting the above disallowance. Disallowance of Management fee and trusteeship fees u/s 14A - not claimed in computation - HELD THAT:- Since the CIT(A) has given his decision based on factual finding that said expenses have not been claimed in the profit and loss account, and said finding has not been disputed by the learned DR, though in the ground it is submitted that disallowance has been deleted without affording an opportunity to the AO. However, we find that before us no material has been brought on record to dispute this factual finding that those expenses were not claimed in the profit and loss account. In view of the above, we do not find any error in the order of the Ld. CIT(A) and accordingly we uphold the same . D isallowance under rule 8D(2)(ii) and 8D(2)(iii) - HELD THAT:- Investment out of interest-free funds available exist in the year under consideration, thus respectfully following the finding of the Tribunal, the disallowance for indirect interest expenses under rule 8D(2)(ii) amounting to ₹ 14,64,536/- is deleted. On the issue of 0.5% of average investment, the Tribunal [ 2018 (3) TMI 1572 - ITAT DELHI] has upheld the disallowance under rule 8D(2)(iii), thus respectfully, following the finding, the disallowance in the year under consideration of ₹ 6,24,445/- is sustained. Addition interest accrued on the Special Reserve Fund created and maintained by various cooperative electrical societies - HELD THAT:- As decided in assessee's own case CIT(A) has deleted the addition with respect to those societies whose confirmation of offering the interest income in the hands of those societies was finished by those societies. In absence of those certificates the additions were confirmed. DR could not point out any infirmity in the order of Id CIT(A). We are also of the considered view when the income has been offered by those societies in their own hand it cannot be taxed in the hands of the assessee. In the result, we do not find any merit in the appeal of the revenue Addition treating the interest income earned by the Cooperative Electric Society, Siricila on the special reserve fund as income of the assessee - HELD THAT:- As decided in RURAL ELECTRIFICATION CORPN LTD. [ 2018 (3) TMI 1572 - ITAT DELHI] Tribunal not only on the principle of the judicial discipline, but also relied on the finding of the coordinate bench that rules and other criteria related to creation of the special reserve fund and its control established that interest accrued in the hands of the assessee. Thus, respectfully following the above decision, the ground No. 3 of the appeal of the assessee is dismissed. Computation of the deduction under section 36(1)(viii) and 36(1)(viia)(c) - HELD THAT:- CIT(A) has only given direction to verify that additions to the income are in the nature of the income from long-term finance and then allow the benefit accordingly. Since the CIT(A) has directed to verify the quantum of deduction available on long-term finance in accordance with law, we do not find any error in the order of the CIT(A) on the issue in dispute, and we, accordingly, uphold the same. The ground of the appeal of the Revenue is accordingly dismissed. 2019 (7) TMI 921 Disallowance of interest - whether the appellant had sufficient non-interest bearing funds to give the advances? - HELD THAT:- The perusal of financial statements as placed on record reveal that the assessee s free funds in the shape of Share Capital and Reserves far exceeds the interest free deposits granted by the assessee. Another feature to be noted is that there is very minor increase in the deposits during the impugned AY. Therefore, a presumption was to be drawn in assessee s favor that the stated deposits were made out of free funds available with the assessee unless the nexus of borrowed funds vis - vis interest free deposits granted by the assessee could be proved by the revenue. The said proposition is in line with the recent decision of Hon ble Supreme Court rendered in CIT Vs Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] . Respectfully following the same, we delete disallowance u/s 36(1)(iii) made by Ld. AO. AO is directed to nullify the adjustment of the same from WIP. Ground No. A stands allowed. Taxability of Rent received from tenant and tenancy transfer fees - adjustment and reduction from WIP - in the opinion of Ld. AO, was assessable as Income from other sources - both received in respect of project of assessee - incoming tenants has agreed to obtain tenancy rights from outgoing tenants for a certain lump sum consideration and landlord, as a consenting party, received of a sum of ₹ 5 Lacs - HELD THAT:- It also emanates from the record that the assessee was pursuing only one project which was at the above stated site. All costs under the project have been capitalized by the assessee under the head stock-in-process following project completion method of accounting. No expenditure has been claimed in the Profit Loss Account during impugned AY. The perusal of Schedule 13 Other Expenses reveal that the assessee has paid compensation of ₹ 3 Lacs to tenants which has also been capitalized under the same head and not claimed as an expenditure. The aforesaid factors would reveal that all the activities transactions being carried out by the assessee, in unison, were in furtherance of carrying out the stated project only and part and parcel of the unified construction activity. This being so, the action of the assessee in reducing the stated amounts from WIP was justified. Therefore, by reversing the stand of lower authorities, we direct Ld. AO to delete the stated additions and reduce WIP by corresponding amount. Ground Nos. B D stands allowed. Ground No. C, being without prejudice ground, becomes infructuous. 2019 (7) TMI 920 Addition of share premium u/s addition 56(2)(viib) r.w. Rule 11UA - Income from other sources - excess amount received by the assessee over and above the FMV of preference shares - HELD THAT:- As gone through the provisions of section 56(2)(viib) and it dosen t make any distinction between equity shares and preference shares and therefore, the first contention of the AR cannot be accepted. Regarding the valuation of the preference shares, the valuation should be determined as per Rule 11UA(1)(c) which requires the assessee to obtain a report from a merchant banker or a Chartered Accountant to determine the price which preference shares will fetch if sold in the open market on the valuation date. Revenue has not disputed the adoption of the NAV method by the assessee. Therefore, once the NAV method has been accepted, what has to be determined is the valuation of the preference shares based on net asset value as on the date of issue of such preference shares. The valuation date thus has to be the date of issuance of preference shares and not as per the last balance sheet date as has been adopted currently. The net asset value is determined by applying the formula where difference between the total assets and total liabilities as on the date of issuance of shares is divided by total amount of paid up capital of the company and multiplied by paid up value of new shares. In the instant case, given that there are existing equity and preference share capital, paid capital in respect of both of these category of shares shall be considered for determining total paid up capital of the company. In the result, we set-aside the matter to the file of the AO who shall determine the value of the preference shares as per the NAV method based on formula discussed above and such valuation has to be determined as on the date of issuance of such preference shares. Rate of depreciation - SLM or WDV - housing colony for accommodation of staff involved in the power project - HELD THAT:- The rates of depreciation on all such assets of the undertaking engaged in the power projects thus have to be computed on SLM basis and the assessee cannot pick and choose certain assets and claim depreciation on SLM and on other assets, claim depreciation on WDV basis. The housing colony is very much part of the business assets of the undertaking involved in the power projects and thus, depreciation thereon has to be computed on SLM Basis. As far as rate of depreciation is concerned, the housing colony will fall in the residuary category (vi)- others under clause (d) Buildings and civil engineering works of permanent nature and the rate of depreciation which has been prescribed is 3.02%. In light of the same, the AO is directed to compute the depreciation on housing colony at the rate of 3.02% on SLM Basis. In the result, the ground of appeal no. 4 is dismissed and ground no. 5 is allowed. 2019 (7) TMI 889 Allowable deduction u/s 37 - reinsurance payments to non-residents are prohibited by law and therefore hit by Explanation 1 to section 37 of the Act? - TDS liability on reinsurance premium paid to non-resident - disallowing the re-insurance premium under Section 40(a)(i) - HELD THAT:- Application seeking exemption from filing certified copy of the impugned order is allowed. Issue notice. There shall be stay of remand in the meantime. 2019 (7) TMI 888 Penalty u/s 271(1)(c) - assessment under Section 153C - proof of addition to the declared income - HELD THAT:- SLP dismissed. 2019 (7) TMI 886 Condonation of delay in filing claim of carry forward losses u/s 119(2)(b) - After realising the mistake after change of CA petitioner filed an application before the CBDT for condonation of delay in filing the return of income claiming loss - rejected by CBDT stating that petitioner was not prevented from any circumstances beyond its control, no external factors preventing the petitioner from filing its revised return and petitioner is continuously earning profits and it cannot be said that payment of taxes will cause any genuine hardship to the bank - HELD THAT:- Special leave petition is dismissed. However, the question of law is left open 2019 (7) TMI 885 Assessment of trust - Benefit of section 112 read with section 164 - proceeds received from the employees - income assessable under the head capital gain - whether the share held by the assessee trust and transferred to the employee were in the nature of capital asset and not stock in trade? - HELD THAT:- SLP dismissed. 2019 (7) TMI 884 Claim of deduction as interest - amount credited to decommissioning Reserve fund - assessee collected decommissioning costs from its customers - Assessee had to account for 12% interest on such decommissioning charges collected by it - HELD THAT:- SLP dismissed. 2019 (7) TMI 883 Reopening of assessment - unexplained source of fund under Section 68 and cash fund under Section 269SS - HELD THAT:- SLP dismissed. 2019 (7) TMI 882 Disallowance of proportionate premium in respect of leasehold land amortized - HELD THAT:- Similar issue has been decided against the assessee by the Tribunal in the past years and in this context referred to the recent order of the Tribunal dated 03.09.2014 [ 2014 (9) TMI 1006 - ITAT PUNE] pertaining to assessment year 1997- 98. It was also an accepted position that the issue regarding assessee s claim for deduction of proportionate premium of leasehold land amortized and charged to the Profit Loss Account for the year under consideration is liable to be decided in terms of the judgement of the Hon ble Supreme Court in the case of Govind Sugar Mills Ltd. vs. CIT, [ 1997 (7) TMI 16 - SC ORDER] against the assessee. Income recognition from contract activity - method of accounting - recognition income on reimbursement - HELD THAT:- We find the AS-7 which existed prior to letter dated 01st April, 2003 continues to remain the same; but for minor changes. There are minor changes in relation to the computational issues. However, there is no change so far as cost based percentage completion method in concerned. Therefore, the computation of recognition income is concerned, the order of the CIT(A) is fair and reasonable and the same does not call for any interference. Accordingly, relevant grounds stand allowed in favour of the assessee. Adjustments to the estimated cost is concerned, the CIT(A) already granted part relief to the assessee. With reference to the freight outward to be included in the estimated total cost, we find it is a case of reimbursement of the actual cost incurred by the assessee. The inclusion in the total estimated cost when the same is returned has no effect on the income aspect. Therefore, being the case of reimbursement, there is no profit element. Consequently, recognition income of such reimbursement is not appropriate. Therefore, the order of the CIT(A) on this issue requires to be reversed. Accordingly, assessee is entitled to get relief on this issue also. Thus, ground no.2 of the assessee is allowed and the ground no.1(a) and 1(b) of the Revenue is dismissed. Disallowance of prior period expenses - HELD THAT:- This issue is perennially being adjudicated by the Tribunal [ 2019 (3) TMI 1608 - ITAT PUNE] and the same is decided in favour of the Revenue. Considering the commonness of the facts as well as the settled legal proposition, we are of the opinion that the issue should be decided in favour of the Revenue for the year under consideration also. Thus, ground No.3, raised in appeal by the assessee is dismissed. Addition of liquidated damages - allowable as business expenditure - HELD THAT:- Pune Bench of the Tribunal [ 2019 (3) TMI 1608 - ITAT PUNE] has decided this issue in favour of the assessee. Now, it is a settled law that such expenditure is allowable as business expenditure if it is incurred on the grounds of commercial expediency . Commercial expediency is a term of wide import and has been held to include such expenditure as a prudent businessman incurs for the purpose of business. The expenditure incurred though not under any legal obligation but still it is allowable as a business expenditure if incurred on the grounds of commercial expediency and the method of recognition is followed from year to year. Before us, no material has been placed by the Revenue that the expenditure is not a genuine expenditure or has been incurred to benefit any group concerns. Considering the totality of the facts we are of the view that the expenditure is allowable. Disallowance of claim for depreciation @100% on Plant Machinery - HELD THAT:- Claim of depreciation with respect to impugned Plant Machinery is allowable protonto. Considering the commonness of the facts as well as the settled legal proposition, we are of the opinion that the Assessing Officer needs to be directed to follow the said order of the Tribunal [ 2019 (3) TMI 1608 - ITAT PUNE] Short Term Incentive Plan (STIP) on account of provision for performance incentive payable to employees - HELD THAT:- Considering the totality of facts and circumstances of the case, the direction of Tribunal s order in assessee s own case [ 2019 (3) TMI 1608 - ITAT PUNE] and observation of the Ld. CIT(A) to the effect that the STIP scheme has been approved by the Company Board on 28.05.2003, we are of the considered view that the assessee is eligible for claiming deduction. Accordingly, we direct the Assessing Officer to allow the deduction as claimed by the assessee Deduction u/s.80HHC - HELD THAT:- CIT(Appeals), while dealing with this issue, has not considered the submissions of the assessee that loss of foreign representative offices should go to increase the profits of the business eligible for deduction u/s.80HHC instead of ignoring the same. On perusal of the records, it reveals that there needs certain clarification while exclusion of 90% of the claims and refunds, balances written off now recovered, premium of forward contracts, other receipts and Export Incentives under Explanation (baa). It is also clear that the Assessing Officer as well as the Ld. CIT(Appeals) did not clarify the matter corresponding with the decisions of the Hon'ble Supreme Court of India as mentioned above as Explanation (baa). We are of the view that this issue needs certain clarification in response to the Explanation (baa) as well as the decisions of M/S AVANI EXPORTS ANR. [ 2015 (4) TMI 193 - SUPREME COURT] - remit this issue back to the file of Assessing Officer for fresh adjudication Addition made on account of lease rentals - HELD THAT:- When the assets were not leased out like in the assessment year 2002-03 [ 2019 (3) TMI 1608 - ITAT PUNE] the lease income cannot be taxed as directed by the Tribunal the issue in favour of the assessee. Ad-hoc disallowance on account of public relation expenses, miscellaneous expenses, Vehicle expenses, Foreign Travel expenses and Telephone expenses - HELD THAT:- No distinguishing feature in the facts of the case under consideration and that of earlier years has been pointed out by the revenue. Before us, the submission of Ld AR that in subsequent years CIT(A) has deleted the adhoc deletions made by AO has not been controverted by Revenue. In such circumstances and following the reasoning as given while deciding the Assessee s appeal for AY 2002-03 and for similar reasons, hold that no disallowance of expenses on adhoc basis is called for in the present case. We therefore direct its deletion. Addition of provision for Medical Expenses - HELD THAT:- We find that CIT(A) while deciding the issue in assessee s favour had relied upon the order of his predecessor for AY 2002-03. Before us, Ld AR submitted that in AY 2002-03 CIT(A) on identical facts had decided the issue in assessee s favour and the issue was not agitated by the Revenue. The aforesaid contention of the Ld AR has not been controverted by the Revenue. We further find that identical issue in AY 2002-03 was decided in Assessee s favour. Deduction u/s.80HHC can be reduced by the amount of deduction allowed u/s.80IB - HELD THAT:- Assessing Officer has primarily reduced the entire amount of profits allowed as deduction u/s.80-IA from the profits eligible for deduction u/s.80HHC and computed deduction u/s.80HHC on such reduced profits and this issue is now settled by the decision ASSOCIATED CAPSULES P. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [ 2011 (1) TMI 787 - BOMBAY HIGH COURT] wherein it has been held that deductions u/s.80-IA and 80HHC are to be computed in the manner prescribed in those sections; only it should be ensured that in relation to the profits derived by the 80IA undertaking the two deduction taken together should not exceed the profit of the undertaking. In view of the above, we are of the view that the order of the Ld. CIT(A) is fair and reasonable and it does not call for any interference. Accordingly, ground No.9 raised in appeal by the Revenue is dismissed. Disallowance u/s.14A in respect of interest in the past - HELD THAT:- Only interest incurred was by way of post shipment credit which is always levied on credit utilized for specific purpose for which it is granted no proportion thereof can be disallowed under section 14A as attributable to exempt income. In the present year Rule 8D is not applicable. Therefore, expenses related to earning of exempt income are required to be estimated. CIT(A) while restricting the disallowance to 2.5% of the exempt income, has placed reliance on the earlier appellate order. It is a well settled law that the rule of consistency should be followed. Considering the above facts and circumstances, we are of the considered view that the order of the Ld. CIT(A) is well reasoned and it does not call for any interference. Hence, ground No.10 raised in appeal by the Revenue is dismissed. Addition on account of commission paid on sales when the same were not justifiable and also when no proof of services rendered were furnished - HELD THAT:- during assessment proceedings, as required by the Assessing Officer, parties failed to submit proof of rendering of services while they are in constant touch with the respective parties in subsequent years. Despite sufficient and reasonable opportunities, the said five parties have not been in a position to furnish requisite documentary evidences to demonstrate that the services were actually rendered by them to the assessee. It is also apparent from the order of the Ld. CIT(A) during First Appellate proceedings that the parties were not able to provide any proof of rendering of services. Therefore, it is evident from the assessment order as well as appellate order that the said five parties have not rendered any services to the assessee. Regarding rendering of services by the said five parties, the order of the CIT(A) is very silent and does not deal with the issue in proper perspective. - Decided in favour of revenue. Customs 2019 (7) TMI 913 Initiation of proceedings for assessment and adjudication of the consignments in question - HELD THAT:- Expressing any opinion on the merits of the case may prejudice the rights of the parties at this stage, since the case has admittedly been remitted back to the adjudicating authority for adjudication of various issues. Appeal disposed off. 2019 (7) TMI 912 Confiscation - Drill Bits - classification and valuation - non-declared goods - HELD THAT:- The goods, admittedly, were not declared as such but subsequently found to be usable and serviceable. It is seen from the orders of the lower authorities that, despite the quantities being in excess of declaration and the appellant herein having been placed on notice about its capability of being used, no steps were taken by the importer to seek a technical or expert opinion. In these circumstances, examination report to the effect that the undeclared drill bits were new and serviceable must be accepted - There is no evidence on record to show that the drill bits, weighing 1107 kgs and assessed as such, would not have been used for that purpose. Accordingly, the classification ordered by the lower authorities cannot be faulted. Confiscation - redemption fine - penalty - HELD THAT:- There is no doubt that the goods that were imported were also drill bits but described as scrap. There is also no evidence that the drill bits were sold or disposed off as drill bits . From the unescapable fact that the undeclared drill bits constituted just a mere 5% of the total consignment, it would appear that there has been no deliberate attempt to mis-declare on the part of the importer - the confiscation of the goods under section 112(m) of Customs Act, 1962 and the imposition of redemption fine, along with penalties, does not appear to be sustainable in law. Appeal allowed in part. 2019 (7) TMI 911 Time Limitation - invocation of proviso to section 28(1) of Customs Act, 1962 - service of notice - classification of goods - HELD THAT:- On a perusal of the notice that the first appellate authority found to be sufficient, we observe that this is a summons for document to complete the process of post clearance audit and, that instead of enumerating the documents, an order for recovery was included. This clearly, therefore, is not a notice to show cause as to why the duty allegedly short-paid should not be recovered but is a demand itself. Demand without a notice is legal unsustainable. The show cause notice dated 4th November 2009 does not place on record any of the ingredients warranting invoking of the extended period. Consequently, that show cause notice is barred by limitation. Classification of goods - HELD THAT:- The principle of classification is that a declared heading can be unsettled only if the alternative heading proposed by the assessing officer in a show cause notice is found to be appropriate. In the absence of such a finding, the declared heading would have to be the only available substitute which, notwithstanding any doubt of its appropriateness, will remain until unsettled in proper proceedings in accordance with law. Appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2019 (7) TMI 910 Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - corporate debtor - matter is heard ex-parte - service of notice - HELD THAT:- On perusal of the material available on record it is found that, the notice issued through the Registry has been served upon respondent on 11.02.2019 and notice issued by the petitioner to the respondent is served on 23.02.2019. Therefore, the service of notice is complete. Since no representation is received from the side of the corporate debtor/respondent, the matter is heard in absence of the respondent. Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Sub-section (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Insolvency Resolution Professional. This Adjudicating Authority directs the Insolvency Resolution Professional to make public announcement of initiation of Corporate Insolvency Process and calls for submission of claims under Section 15 as required by Section 13(l)(b) of the Code - it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code. Petition admitted - moratorium declared. Service Tax 2019 (7) TMI 919 Levy of Service tax - collection of toll - SCN is challenged on the ground that the respondent No.3 has no authority to collect the service tax which has already been abolished/repealed with effect from 1-7-2017 - HELD THAT:- The learned counsel for the petitioner has invited our attention to the communications from the Ministry of Finance dated 22-2-2012 and 21-5-2019 clarifying that the service by way of access to a road or a bridge on payment of toll charges is included in the Negative List, which means that no service tax can be levied on the service. The petitioner shall be at liberty to file the reply to the show cause notice. The proceedings may go on; however, no coercive steps shall be taken for recovery of the amount, if any order is passed. 2019 (7) TMI 918 Waiver of penalty - benefit of section 80 of FA - Taxability - amount received by the petitioner as a Subcontractor - amount received by the petitioner as a Subcontractor - bonafide belief - HELD THAT:- Section 80 as it stood then provides that no penalty shall be imposed on the assessee for any failure referred in the said provisions. If the assessee proves that there was reasonable cause for the said failure. For an assessee to bring his case within the ambit and purview of a reasonable cause, the assessee will have to demonstrate that there are reasonable grounds to suggest that the amount received as a Subcontractor is not liable for the service tax. Mere assumption is not sufficient. It is not that the petitioner was guided by any opinion of an expert nor it is a case that the position of law was shaky or that petitioner was guided by some dictum of the Courts. It was merely an assumption without any sufficient cause. The same cannot be termed as a reasonable cause so as to invoke Section 80 of the Act. Penalty cannot be set aside - petition dismissed. 2019 (7) TMI 917 Taxability - GTA Service - utilization of lorries for transportation of iron ore from their mines to the port of export at New Mangalore - HELD THAT:- The tax liability will arise only upon the goods transport agency i.e., one who undertakes responsibility, in full legal sense, for the cargo despatched by it and an individual truck operator who does not accept such responsibility, is merely performing the activity of transport of goods which is not the subject of the tax. It is, of course, necessary to point out, from the history of the tax on this service, that the blanket intent to tax the operators led to widespread agitation and, conscious of the problems of implementation, the Central Government, upon reintroduction of the levy, restricted it to agencies. Also, the reference to goods consignment number in the trip sheet does not constitute the issue of goods consignment note which is essential pre-requisite for taxation of the service. The activity performed for the appellant by transporters falls outside the ambit of section 65(105)(zzp) of Finance Act, 1994 and is not taxable in their hands - Appeal allowed - decided in favor of appellant. 2019 (7) TMI 916 Rebate claim - export of services - denied on the ground that the activity involves rendering of services within India and, hence, not covered within the scope of Export of Service Rules, 2005 - scope of SCN - HELD THAT:- In so doing and rendering a finding that the activity of the appellant does not constitute exports, the adjudicating authority has, doubtlessly, travelled beyond the scope of the show-cause notice. The appellant has not been placed on notice of the intent of the service tax authorities to reject their claim for rebate on the ground of exports not having taken place and that the services have been rendered within the country. It may not be out of place to take notice that, even considering that the issue could be decided on merit, the supply had been effected to a Special Economic Zone and a recipient operating, or in, a Special Economic Zone is entitled to tax exemption that devolves upon the provider. In any case, the appellant was entitle to the refund/rebate of the taxes paid on the services. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 909 Maintainability of appeal - monetary amount involved in the appeal - Refund claim of un-utilized cenvat credit - cenvat credit on Professional Indemnity Insurance (PII) - no proceedings were initiated against the respondent for denial of cenvat credit on Professional Indemnity Insurance (PII) - whether at the stage of filing refund claim of un-utilized cenvat credit in their cenvat credit account could be challenged? HELD THAT:- The appellant admits that in view of instructions dated 11.7.2018 issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell) the instant appeal is not maintainable before this Court, the monetary limit being below ₹ 50,00,000/-. Appeal dismissed as withdrawn. 2019 (7) TMI 908 Reversal of CENVAT Credit - providing of taxable as well as exempt service - maintenance of separate records for providing taxable service and exempted service - procedures to be followed under the provisions of Rule 6(3) of the CCR, 2004 when failed to maintain separate records for taxable and exempted services - Rule 2(1) of Cenvat Credit Rules 2004 pertaining to input service not taken into cognizance - HELD THAT:- With effect from 13.4.2016, Explanation 3 was amended specifically dealing with a situation as in the present case, where a deeming fiction was created that for the purposes of Rule 6 of the Rules, exempted services as defined in clause (e) of rule 2 shall include an activity, which is not a service as defined in section 65B(44) of the Finance Act, 1994 provided that such activity has used inputs or input services. However, there was no such stipulation prior to 13.4.2016 in law and prima facie, such situation was not to be treated as exempted service and did not attract the mischief created under rule 6 of the Rules. Therefore, for the period prior to 13.4.2016, the situation would be governed by rule 3 of the Rules for availing Cenvat Credit till such time i.e. till the time rule 6 was specifically made applicable by virtue of the deeming fiction created. As per rule 3 of the Rules, Cenvat credit of service tax paid on input services used to provide output service, is eligible. In the facts of present case, it is evident that the respondent has started taking only proportionate credit after receipt of completion certificate which was after due intimation to the revenue department and also certified by independent CA. Therefore, rule 6 of the Rules in toto cannot apply prior to 13.4.2016 to the facts of the case since sale of immovable property is not exempt service at all. Thus, in the light of the provisions of Rule 3 of the Rules, respondent cannot avail full Cenvat credit on input services received after obtaining completion certificate. Hence, the respondent cannot be expected to pay an amount equal to 8%/10% of sale price of immovable property after obtaining such completion certificate where no service tax is paid as if it is sale of immovable property since Rule 6 of the Rules perse does not apply to the present case until 13.4.2016 at all - Even after 13.4.2016, since the respondent had availed only proportionate credit, the respondent was not legally required to pay 8%/10% amount under rule 6(3) of the Rules, since it can be said to have maintained separate accounts as required under rule 6(2) of the Rules. Cenvat credit availed in respect of input service is not required to be paid back under any circumstances and therefore, the respondent was not legally required to reverse any credit which was availed by them during the period 2010 till obtaining completion certificate i.e. during the period when output service was wholly taxable in their hands, merely because later on, some portion of the property was converted into immovable property on account of receipt of completion certificate and on which no service tax would be paid in future - Tribunal therefore, rightly held that once the respondent are not required to reverse any credit availed by them on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by them under protest cannot be retained by the revenue authorities and have to be refunded to the respondent. Appeal dismissed - decided against Revenue. 2019 (7) TMI 907 Refund of Service tax - period of limitation due to retrospective exemption - main crux of the arguments of the assessee through its Ld. Advocate is that Section 104 is under Chapter VA of the Finance Act, 1994, whereas Section 83 falls under Chapter V of the Finance Act, 1994, and therefore, the right of the service recipient to claim refund is governed by Section 83 read with Section 11B of the Central Excise Act, 1944 and not by Section 104 (3) ibid. - HELD THAT:- A harmonious reading of the provisions points to one and only conclusion that though Section 104 is a special provision, it is practically dependent on Section 11B and Section 83 connects both the above provisions and thus, all procedures as in Section 11B would apply. There may be applications within six months, as contemplated in Section 104 (3), but that cannot take away the applicability of Section 11B. Interpretation of statute - the word shall used in Section 104 (3) - HELD THAT:- When the power itself not being there to collect the tax, retention of such tax collected is the challenge. The purpose of the very insertion of Section 104 would become redundant if such an artificial fetter is allowed to prevent the administration of beneficial legislation, by which the very purpose gets defeated. Hence, shall could and is only directory - Section 104 is not a self-contained one even though it is a special provision since filing application for refund and the Form required thereto not being prescribed, it rests on Section 11B and the rules and regulations therein. It is a special provision for extending the benefit and hence, when the eligibility otherwise is not questioned, the benefit cannot be denied. It cannot be said that only the limitation clause applies and not when it comes to the Form of application since it is the settled position of law that a Section has to be applied in full and that there is no scope for selective application. The time-limit prescribed under Section 104 (3) is only directory, but however, the time as well as the procedure prescribed under Section 11B applies in full. The Adjudicating Authority is therefore required to grant refund if the refund application is within the time-limit prescribed under Section 11B and not otherwise - appeal allowed in part and part matter on remand. 2019 (7) TMI 906 100% EOU - Refund of CENVAT Credit - export of services or not - services of identification and evaluation of potential investment opportunities in Indian real estate companies - Para 2 of CBEC Circular No.141/10/2011 dated 13.05.2011 - reverse charge mechanism - rule 5 of CENVAT Credit Rules read with Notification No.27/2012 CE dated 18.06.2012 - period April 2012 to June 2012, July 2012 to Sept 2012 and Oct. 2012 to Dec. 2012 - HELD THAT:- It has already been held by the court below that the Appellant have exported the services. Further under the scheme of the refund, there is no requirement of one-to-one co-relation of the input services or input credit with the export of service. The reasons for rejection by the authorities below are erroneous and the same are set aside - Refund allowed - appeal allowed - decided in favor of appellant. 2019 (7) TMI 905 GTA Service - Benefit of N/N. 32/2004 ST dated 03.12.2004 - abatement of 75% from the gross freight value - denial of benefit in the absence of any declaration furnished by the transport agencies from whom the services in question were availed by the assessee, to the effect that the transport agents had not taken CENVAT credit on inputs / capital goods - Circular No.5/1/2007 -S.T. dated 12.03.2007 - HELD THAT:- It is very clear that for availing the exemption in terms of the said notification No.32/2004, satisfying the conditions stipulated in the said proviso with the help of the declaration of the service provider viz., transport agency was necessary and they could not be ignored - If such exemption was allowed to the assessee, without satisfying all the conditions of the proviso, it would violate the very basis of the exemption provided in the Notification No.32/2004 dated 03.12.2004. It is trite law that the exemption notifications are to be strictly construed to the conditions stipulated in the notification for availing exemption and has to be complied with by the concerned assessee. There is no merit in the submissions made at Bar by the learned counsel for the assessee that even without declaration as stipulated in the notification, the assessee was entitled to such exemption, is over simplifying or glossing over the conditions itself, which cannot be permitted. The learned Tribunal was perfectly justified in denying such exemption in the cases where no such declaration from the service providers viz., transport agency was forthcoming from the assessee - Appeal dismissed - decided against appellant. 2019 (7) TMI 887 Construction services - works contract service - appellant was not rendering any service to their clients but they had collected the amount representing as service tax HELD THAT:- Issue notice on the appeals as well as on the application for stay. Central Excise 2019 (7) TMI 904 Manufacture of Gutkha - duty discharged under the provisions of Pan Masala Packing Machines (Capacity Determination and collection of duty) Rules, 2008 as amended - Mis-declaration of the value of production - case of assessee is that In the present case the highest MRP Goods i.e. ₹ 3 MRP were not manufactured for whole month but only for a day - Section 3A and PMPM Rules, 2008 - imposition of penalties - HELD THAT:- The Unit had filed declaration on 01.04.2011 in terms of Rule 6 of PMPM Rules wherein they declared the details of packing machines to be used for packing of Gutkha along with specific MRP of the pouches. However the unit was found to be engaged in packing pouches of higher MRP in contravention of declaration filed by them under Rule 6 of PMPM Rules, 2008 - Clearly the Appellant unit contravened the provisions of Rule 6 (6), 7 and 9 of the PMPM Rules, 2008 and since the notified goods were manufactured in contravention of their declaration, therefore as per the provisions of Rule 9 of the PMPM Rules, 2008 the rate of duty applicable to goods of Highest RSP, ₹ 3 in this case will be applicable in respect of all packing machines operated by the Appellant and they are liable to pay duty as per said RSP on all machines. Personal penalty imposed upon the Appellant Shri Dilipkumar Amrutlal Jani, director of the Appellant Unit and Shri Jagdishprasad Mohanlal Joshi and Shri Sachin Joshi - HELD THAT:- The impugned goods were manufactured in violation of Rule 6 of PMPM Rules, 2008 and since Shri Dilipkumar Amrutlal Jani being involved in violation of subject rules being director of the unit is liable for penalty. However considering the amount of duty and imposition of penalty on the company, we are of the view that personal penalty imposed upon Shri Jani is on higher side, which requires reduction - penalty imposed upon Shri Dilipkumar Amritlal Jani is reduced from ₹ 5,00,00,000/- to ₹ 4,00,00,000/-. Penalty on Shri Jagdish M Joshi and Shri Sachin Joshi - Applicability of section 270 - HELD THAT:- No involvement of above persons is on record. We do not find any act committed by both Appellants to evade payment of duty or to violate the Pan masala packaging Rules. Shri Dilipkumar Amrutlal Jani has not named any of these persons to be involved in any act of violation of law nor any of the persons whose statements has been relied upon i.e. production Manager or Supervisors has named the Appellants to be involved in any act of violation - In absence of any evidence of involvement of both of these persons in any act of violation of Pan masala Packing Machinery Rules, 2008 or central excise law, we do not find any reason to impose penalty upon them. We therefore set aside the impugned order only to the extent, it imposes penalty upon Shri J.M. Joshi and Shri Sachin Joshi, resultantly the penalty on both of these persons is set aside. Appeal allowed in part. 2019 (7) TMI 903 CENVAT Credit - input - High Speed Diesel (HSD) - period October 2011 to March 2015 - input services - garden maintenance service - HELD THAT:- As per the definition of input, the credit on HSD is not eligible. It is brought out from the records that the appellant has availed credit only on two invoices. When they have purchased huge quantities of HSD and have availed credit only on two invoices, it can be presumed that the said availment of credit to be an inadvertent error - Credit not allowed - however, the penalty imposed is unwarranted and requires to be set aside. CENVAT credit - garden maintenance service - HELD THAT:- The Hon'ble High Court in the case of RANE TRW STEERING SYSTEM LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND CENTRAL TAX, CHENNAI OUTER COMMISSIONERATE [ 2018 (2) TMI 1745 - MADRAS HIGH COURT] , which is a group company of the appellant, has held that the said credit is eligible - the disallowance of credit is unjustified and requires to be set aside. Appeal allowed in part. 2019 (7) TMI 902 Irregular reversal of CENVAT Credit - the bone of contention between the appellant and the Department is the quantum of the amount to be reversed under Rule 6(3A) of CENVAT Credit Rules - reversal as per formula as specified in Clause (c) of sub rule (3A) of Rule 6 of Cenvat Credit Rules, 2004 or not - HELD THAT:- The Commissioner (Appeals) has observed that the appellants have not produced sufficient document to verify the reversal but the appellant has given full details of reversal in the appeal memorandum with detailed worksheets but the same was not allegedly produced before the Commissioner (Appeals). As per the Department the appellant has less reversed ₹ 1,77,784/- and the appellant in order to settle the issue has agreed to reverse the ineligible cenvat credit aggregating ₹ 1,77,785/- which mainly arose due to difference in computation as per the Central Excise Department and as per the certificate issued by the Chartered Accountant. Further the appellant has also agreed to make payment of the interest aggregating ₹ 2,25,962/- due to delay in reversal of cenvat credit as per the computation given at the time of argument. Since as per the details given by the appellant, he has reversed specific amount for the disputed period except ₹ 1,77,784/- which is liable to be reversed along with interest of ₹ 2,25,962/-. Penalty - HELD THAT:- The Department has not brought any material on record to show that the appellant has suppressed the material fact with intent to evade the payment of duty. All the details were given in the books of accounts and also in ER-1 return from time to time which was audited by the Department - the substantial amount of cenvat credit was reversed before the issuance of show-cause notice, therefore the appellant is not liable to pay penalty - the appellants are not liable to pay the penalty under Rule 15(2) of Cenvat Credit Rules read with Section 11AC of the Central Excise Act. The appeal of the appellant is allowed subject to the verification of the reversal of ineligible credit made by the appellant as per the formula specified in clause (c) of sub-rule (3A) of Rule 6 of Cenvat Credit Rules 2004. Appeal allowed by way of remand. 2019 (7) TMI 901 Valuation - related party transaction - Job-work or supply on principal to principal basis - price for levy of Central Excise duty on the clearance effected by the appellant to M/s. Zydus Wellness Ltd. - time limitation - HELD THAT:- The appellants have been filing their ER 1 return regularly before the Department and declaring the price which have been charged by them from M/s. Zydus Wellness Ltd., on the invoices and the price on which the Central Excise duty has been paid. The Department has not challenged the authenticity, genuineness of such invoices neither they have proved that the appellants have received any other consideration other than the price which is indicated on the invoices for clearance of excisable goods. The ingredients which are the pre-requisite for invoking the extended time proviso under section 11A (4) of the Central Excise Act, 1944 are absent in the facts of this case. Thus, in the absence of element of mens area, the appellant‟s conduct cannot be construed to fall within the five elements as required for invoking the extended time proviso - the charges of willful suppression or mis-statement of facts cannot be invoked The SCN is barred by limitation - appeal allowed - decided in favor of appellant. 2019 (7) TMI 900 Imposition of the oil cess and National Calamity Contingent Duty (NCCD), education cess (EC), secondary and higher secondary education cess (SHE) - condensate which emerges out during the process of processing of the natural gas in the appellant s natural gas processing plant - HELD THAT:- The appellant have been classifying the product under chapter sub-heading 2709 of the Central Excise Tariff Act claiming it as a form of natural gas - The assessee have been filing the required ER-1 returns for the same, wherein they have claimed that the condensate being form of the gas is nil rated so far as central excise duty is concerned and therefore other duties such as all cess, NCCD, education cess, secondary and higher secondary cess, on the quantities of condensate cleared by them is not leviable. The issue has previously been decided by this Tribunal in the appellant s own case M/S FOCUS ENERGY LTD. OTHERS VERSUS C.C.E. JAIPUR [ 2018 (12) TMI 1168 - CESTAT NEW DELHI] where it was held that oil cess is not leviable on the condensate and under OIDA either on merits or also on limitation. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 899 Maintainability of appeal - service of order - Period of limitation for filing an appeal - Section 37C of the Central Excise Act, 1944 - HELD THAT:- A plain reading of the provisions of Section 37 C makes it clear that it is mandatory for any decision or order to be served by sending it by registered post with acknowledgement due. The requirement of acknowledgement is there to ensure that the notice or decision or an order which has been sent to the assessee or any party has been received by them. In this case, we find that though the Order-in-Original has been dispatched by registered post on 26.07.2016, but the Department has not been able to produce any evidence to show that the registered post which was sent on 26.07.2016 was actually delivered to the appellant - It is also matter of fact that the appellant came to know of such Order-in-Original only when the recovery proceedings were started against it and immediately it made an effort to get the copy of the Order-in-Original dated 26.07.2016 and thereafter the appeal had been filed in time before Commissioner (Appeals). We do not agree with the findings of the ld. Commissioner (Appeals) that the date of the service of the order as per the law is the date of sending of the same by registered post - The requirement of the acknowledgement due ensures that the decision or order which has been sent to any assessee has actually been served on him. Therefore, the Order-in-Appeal dated 30th November, 2017 deserves to be set aside and it has to be held that the Appeal was filed within time. The appeal of the appellant before the Commissioner (Appeals) should be restored to its original number and same should be heard and decided on merits - appeal allowed by way of remand. 2019 (7) TMI 898 Refund of the amount paid against the Cenvat Credit - Credit pertaining to one unit utilised by other separate unit for payment of duty on goods cleared prior to common single registration - HELD THAT:- The issue has already been settled by this Tribunal in the case of M/S MANGALAM CEMENT LTD. VERSUS CCE, UDAIPUR [ 2017 (5) TMI 745 - CESTAT NEW DELHI] and it has been held that cenvat credit of capital goods and other input services which have been taken by the appellant with regard to the setting of Mangalam Grinding Unit (MGU) even prior to obtaining single registration, will be available to the appellant firm for utilisation of these credits for payment of Central Excise duty for the finished goods cleared from Unit No. 1. Appeal dismissed - decided against Revenue. 2019 (7) TMI 897 CENVAT Credit - the entire case of the Department is made on the basis that the appellant have obtained the invoices for supply of inputs without actual receipt thereof - reliance placed on confessional statement - HELD THAT:- The appellant has obtained the various inputs on which the Cenvat Credit were availed, from the registered dealers, on payment through normal banking channels and the material was transported in their own trucks. The Department has not been able to prove that the inputs required for manufacturing of finished excisable goods were procured from different alternate source. The Department has also accepted the Central Excise Duty on the manufactured excisable goods by the appellant. The reasonable precaution was taken by the appellant in procuring the goods from the registered dealers who were registered with the Department. The penalty imposed on Shri Jugal Kishor, Director of the Appellant Company is also set aside. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (7) TMI 915 Concessional rate of tax - genuineness of the 'C' Forms produced by the revision petitioner - validity of assessment order - powers vested under Section 35 of the Kerala General Sales Tax Act on Deputy Commissioner - years 2003-04 and 2004-05 - HELD THAT:- Section 35 of the KGST Act enables the Deputy Commissioner to pass an order directing to make such enquiry as he deem fit. The re-assessment on the basis of such an order has to be made only based on an enquiry and only based on convincing materials. As pointed out in the order of the first appellate authority, the Department, under special instructions from the Commissioner, had undertaken some cross verifications with respect to 'C' Forms filed by the Plywood dealers in the state. It is mentioned that special Inter-state Investigation Team was deputed to the issuing states to find out the genuineness of the 'C' Forms. But in the case at hand, as observed by the first appellate authority, there is no proof regarding such verification made or materials collected with respect to the disputed 'C-Forms' in order to arrive at any conclusion that those 'C' Forms were bogus. Unless and until the Assessing Authority became convinced that the 'C' Forms produced were not genuine, based on any materials collected, the assessments made rejecting the claim for concessional rate of tax, cannot be sustained. The matter requires an in-depth verification by the original authority itself - revision petition allowed by way of remand. 2019 (7) TMI 914 Reversal of assessment - excess of purchase turnover - Section 25 of the Kerala Value Added Tax Act, 2003 - annual return rejected for the reason that, discrepancy was noted in the amount of total purchase reflected in the annual return with that of the audited statement - the authorities have not found any discrepancy in the sales figures returned, it cannot be found that there occurred any escapement of sales turnover which is taxable HELD THAT:- The Department has no case that the materials covered under the omitted purchase were not converted into finished goods, which was not reflected in the sales turnover and which had escaped assessment. Therefore, we perfectly agree with the findings of the Tribunal that, at the most the filing of incomplete or incorrect return might have attracted penalization under Section 67 of the KVAT Act. But that alone cannot be used to make an addition in the turnover and to demand tax with respect to the sales turnover of such purchase omitted to be included in the return. We are not convinced that the Tribunal had failed to decide any question of law or had erroneously decided any question of law, which will attract interference of this Court in a revision petition filed under Section 63 of the KVAT Act - revision petition dismissed. 2019 (7) TMI 896 Refund to the Petitioner on the basis of zero demand orders - DVAT Act - HELD THAT:- The fact of the matter is that the only ground on which refund has been refused to the Petitioner is the passing of zero demand orders , which have been enclosed by the Respondents themselves to the additional affidavit filed by them. The Court is further informed that the copies of such orders were handed over in Court on the first date of hearing of the writ petition itself. When repeatedly asked as to what is the purpose of passing such zero demand orders, and then requiring the dealer to challenge such orders in accordance with law before the OHA, the learned counsel for the Respondents was unable to give any satisfactory answer - There is no purpose served in passing such zero demand orders as they end up only multiplying litigation needlessly and delaying the grant of refunds to which the dealers are legitimately entitled. The pleas raised by the Respondents to deny the Petitioner the refunds are not sustainable in law and are hereby rejected - Petition allowed - decided in favor of petitioner. 2019 (7) TMI 895 Principles of natural justice - petitioner contends that the order is passed quite mechanically without adverting to the grounds raised and without any proper application of mind with respect to merits of the appeal - quantum of interim payment - HELD THAT:- Even though we are convinced that the prima facie appreciation of merit is not reflected in the impugned order, we are not proposing to remit the matter for fresh consideration and for passing fresh orders, because we are of the opinion that the appeal itself can be heard on an early date. As an equitable relief, we think it appropriate to reduce the quantum of interim payment directed, pending disposal of the appeal. Petition is disposed of by modifying the impugned order of the Tribunal by directing the petitioner to deposit 20% of the amount due, which is disputed in the appeal and to execute a simple bound for the balance amount, within 30 days from today. 2019 (7) TMI 894 Deemed Assessment - stock taking - TNVAT Act - HELD THAT:- This Court is of the view that it will not serve any purpose in embarking upon the exercise of ascertaining the exact date on which impugned order was served on the writ petitioner. The impugned order has been passed on the basis of the statement given by the writ petitioner dealer to the Enforcement Wing officials - The principles in the case of NARASUS ROLLER FLOUR MILLS VERSUS THE COMMERCIAL TAX OFFICER [ 2015 (4) TMI 361 - MADRAS HIGH COURT] comes to the aid of the writ petitioner in a slightly difference manner in the instant case. The impugned order shall be treated as SCN - Writ petitioner shall deposit 15% of the differential tax (excluding penalty) within a fortnight from the date of receipt of a copy of this order. Post payment of 15% of differential tax, in the aforesaid manner, writ petitioner shall send in its objections along with proof of payment of 15% differential tax within another fortnight therefrom. Petition disposed off. 2019 (7) TMI 893 Revised assessment order - Section 27 of TNVAT Act - opportunity of personal hearing - HELD THAT:- In the instant case, as this Court is convinced that on the peculiar facts and circumstances of this case i.e., lull between the first revisional notice on 27.02.2015 and reply thereto on 10.04.2015 besides further lull after production of 23 purchase bills in 2017 itself pursuant to notice dated 29.11.2017 and comparison of 23 purchase bills 1 years after they were produced, the prayer for personal hearing has to be acceded to. The impugned order is set aside solely on the ground of personal hearing - By consent of both sides, personal hearing is fixed on 18.07.2019 at 12 Noon. Venue shall be the office of the sole respondent. Writ petitioner undertakes to avail the personal hearing on the aforesaid date, time and venue - petition disposed off by way of remand. 2019 (7) TMI 892 Best Judgement assessment - Form 'WW' - the writ petitioner did not file report from the Auditor being Auditor's statement in the prescribed form - Section 63A of TNVAT Act and Rule 16 of TNVAT Rules - HELD THAT:- In the instant case, unlike TVL. NITHRA FURNITURE P. LTD., VERSUS THE ASSISTANT COMMISSIONER (CT) , CHENNAI. [ 2015 (8) TMI 1467 - MADRAS HIGH COURT] best judgment assessment was not revisited solely because of Form 'WW' issue. This becomes clear from the personal hearing notice issued by the respondent dated 12.03.2018 captioned 'PERSONAL HEARING NOTICE'. A perusal of this notice reveals that the respondent has asked for atleast three documents with clarity and specificity. Therefore, in the instant case, the respondent has asked for at least three distinct / specific documents and the same has not been furnished by the writ petitioner dealer. It is not a case of mere non submission of Form 'WW'. Therefore, it comes out clearly that even while making the proposal, vide notice dated 01.02.2018, the respondent has made some approximation and has taken into account whatever material was available before him. Writ petitioner has not produced any contra material thereafter though the respondent had specifically asked for three different sets of documents, which were not produced - this Court is inclined to accept the submission that the instant case is distinguishable on facts from 'Tvl.Nithra Furniture case'. In the instant case, it is nobody's case that while making best judgment assessment, it has been made arbitrarily. Respondent had added 50% of the returns taken out from the web report, but that is based on absence of documents, which were sought for under 12.03.2018 notice. In the absence of documents, the respondent has no option other than making approximation. Petition dismissed. Indian Laws 2019 (7) TMI 891 Dishonor of Cheque - Section 138 of the Negotiable Instruments Act, 1881 - Company declared as sick unit - whether a company and its directors can be proceeded against for having committed an offence punishable under Section 138 of the Act after the company has been declared sick under the provisions of the SICA before the expiry of the period for payment of the cheque amount? - HELD THAT:- The Apex Court in KUSUM INGOTS ALLOYS LTD. VERSUS PENNAR PETERSON SECURITIES LTD. [ 2000 (2) TMI 724 - SUPREME COURT] has held that Section 22 only deals with the proceedings for recovery of money or for enforcement of any security or guarantee in respect of any loans or advance granted to the company and a proceedings for winding up of the company and there is no reference to any criminal proceedings - The Apex Court then referred to its earlier decision in BSI LTD. VERSUS GIFT HOLDINGS (P.) LTD. [ 2000 (2) TMI 719 - SUPREME COURT] which holds that pendency of proceedings under Section 22(1) of the SICA alone is not sufficient to get absolved from the liability under Section 138 of the Act (emphasis supplied). The offence under Section 138 of the Act was not complete and the order of issuance of process is unsustainable. The offence not complete, not because there was a statutory bar, but as explained by the Apex Court, because the directors of the company were prevented by reasons beyond their control from honouring the cheques. The repeal of SICA, cannot breathe life in the complaint which was still born since the offence was not complete as on the date of the issuance of process by the learned Magistrate. The order for issuance of process is quashed - petition allowed. 2019 (7) TMI 890 Condonation of delay in filing appeal - Dishonor of Cheque - Section 138 of the Negotiable Instruments Act, 1881 - power to try cases summarily - time limitation - HELD THAT:- As rightly contended by the learned counsel for the second Respondent that, cases under Section 138 of the NI Act are required to be tried summarily and trial is required to be conducted as expeditiously as possible and endeavor shall be made to conclude the trial within six months from the date of filing of complaint. The legislature intented to expedite the trial of the cases arising out of dishonor of cheque for insufficiency of funds in the account, and conclude the trial within six months from the date of filing of the complaint. In the present case the Petitioner belatedly filed the Revision after six months from the date of issuance of process by the learned Metropolitan Magistrate. As already observed, there was no sufficient cause disclosed before the Sessions Court to condone the delay and therefore, the Sessions Court has rightly rejected the Application of the Petitioner for condonation of delay - As already observed the order of issuance of process is dated 23.10.2017 and the petitioner has received the summons on 17.02.2018. Belated attempt of the Petitioner to invoke Revisional jurisdiction cannot be countenanced. This Court is not inclined to entertain the Petition - Petition dismissed.
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