Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 25, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of goods - rate of tax - pen parts - Primarily ‘Tips and balls’ are part of refill, and since there is no specific Sub-heading allotted to these parts these should be classified under residuary Sub-heading as ‘Others- in 9608 99. attracting tax @ 18%.
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Classification of goods - Steel Mugs with a plastic outer body - The subject goods fall under Chapter Heading 7323, as the material which is giving the essential character to the steel cups with plastic body is the presence of steel, which is 75% of the total value and composition of the goods - covered under Sr. No. 184 of Schedule II of amended Notification 1/2017 Central Tax (Rate) - GST @12%
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Levy of GST - monthly maintenance charges payable by way of reimbursement of charges or share of contribution by a Member to a resident welfare association/ housing society - in the event the charges /contribution goes above 7500 rupees per month per member, such service is not exempt and then fully chargeable to GST at the applicable tax rate
Income Tax
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Review of order - originally held that since the impugned notice for the reassessment is based only on the allegation that the appellant(s) has permanent establishment in India, the notice cannot be sustained once arm's length price procedure has been followed - there is no error apparent on the face of the record, warranting reconsideration of the order impugned
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Allowability of Foreign exchange fluctuation loss u/s 37 - difference between amount given by it as loan to its subsidiary in the USA and the amount realized due to fluctuation is claimed as ‘exchange loss’ - duly allowable
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TP adjustment - exclusion and inclusion of comparables - since in respect of each of the comparables, the ITAT has given detailed reasons why the comparables should be rejected either because of failing the filter or because of functional dissimilarity and also followed earlier decisions concerning assessee - no substantial question of law arises
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Rectification u/s 254 - violation of the provisions of section 255(3) - appeal heard by a Single Member Bench instead of Division Bench - since the income assessed in the hands of assessee was more than ₹ 50 lakhs, the appeal ought not to have been heard by a Single Member Bench - order suffers from a mistake apparent on the face of record - recalled
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Assessment of income of shipping company - though the representative assessee has filed the return of income u/s 172(3), he has not furnished any evidence to show that the assessee’s income was taxed on accrual basis in Singapore or filed the evidence including the income relating to voyage undertaken in India - matter remanded
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Power of TRO in recovery proceedings - personal attendance pursuant to the summons under Rule 83 of the Second Schedule to the Act - for effective and expeditious disposal of the recovery proceedings, it is always permissible for the TPO to call for necessary and relevant information and conduct an inquiry by securing and enforcing the personal attendance of the assessee/defaulter - writ dismissed
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TP adjustment to payment of interest on ECB loan - TPO himself has stated that while granting permission to the assessee for availing ECB loan, the RBI has fixed the interest rate at six months USD LIBOR plus 350 basis points - directed to determined interest rate at six months USD LIBOR rate plus 300 basis points
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TP adjustment in export of finished goods to AE - comparison of the price charged to non–AEs located in India with the price charged to AEs in foreign countries cannot be considered to be a CUP to determine the ALP being situated in different geographical locations, as there may be various factors/reasons which could have influenced the price charged - CUP rejected
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TP Adjustment - ALP of interest on receivables - no credit period was agreed between the parties - TPO should not calculate the collection period selectively which are beyond 90 days, he has to calculate the average of collection for the year under consideration of all the transactions - the adjustment only to the extent it crossed 90 days
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Penalty u/s 271(1)(c) - defective notice - the show cause notice u/s 271(1)(c) AO had neither strike out the inappropriate words nor specify the charges against the assessee as to whether it is for “concealing particulars of income” or “furnishing inaccurate particulars of income - imposition of penalty cannot be sustained
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Allowabiltry of depreciation - not claimed deprecation in either its original return or in its revised return - Tribunal allowed the depreciation - no substantial question of law arises
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Power of Tribunal when it disagree with earlier decision of Tribunal - there are only two methods to disagree is either the decision is per in-curium or the decision is distinguishable on the factual matrix - if for other than these two reasons, in view of the Court or the Tribunal the earlier decision is not acceptable to it, then the option is to refer it to a Larger Bench of the Court or the Tribunal
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Income recognition - interest income on 'non-performing assets' - AS 9 - For AY 2004-05 it is to be seen is whether the assessee has got non-performing asset in terms of the definition in the notification issued by MCA dated 26.07.2001 and circular of the CBDT dated 09.10.1984 have no application - no accrual of income
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Nature of expenditure - payment for non compete fee - the tenor of the agreement was only 18 months and it could not be stated that the assessee derived any enduring benefit due to the payment for obtaining certain commitments from payee and restricting himself from indulging in any competition or from weaning way the employees - revenue expenditure
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Depreciation on software license - intangible and depreciation allowable @25% or software application depreciation allowable @60% - if a particular article would fall within the description by the force of the words used, it is impermissible to ignore the word 'description' and going by the usage of the equipment - there is no error in the taking note of the specific entry in contra distinction with the general entry - allowable @60%
Corporate Law
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Removal of Director - Offence of defamation - it is obligatory upon the Magistrate that before summoning the accused residing beyond its jurisdiction, he shall enquire into the case himself or direct the investigation to be made by a police officer or by such other person as he thinks fit for finding out whether or not there is sufficient ground for proceeding against the accused.
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Compounding of offences u/s 134(3)(o) r.w.s 135(2) - violation of disclosure of Director’s Report and the details of the CSR Policy developed and implemented - since, Tribunal having taken lenient view has calculated penal amount is less than 33% of the total maximum penal amount payable - no merit in the appeal
Indian Laws
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Jurisdiction of the tribunal - petitioner contends that the impugned orders were passed without the presence of a judicial member - notwithstanding, that a judicial member is required to be appointed to CCI, the orders passed by the CCI pending such appointment cannot be called into question.
IBC
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Admissibility of petition - claim submitted beyond 90 days after the CIRP begins - RP has not committed any error or illegality in rejecting the claim applying Regulation 12(2) of the Regulations of 2016 - Adjudicating Authority has no power to reopen the resolution process which has already been closed
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CIR Process - allegation and counter allegation on RP & erstwhile management/operational creditor - Voluminous evidences filed by the parties in support of their contentions - the proceedings before this Tribunal are summary in nature hence not possible to conduct an in-depth investigation and examine the veracity of these documents and averments - directed Central Gov. to investigation u/s 210(2) of the Companies Act
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Liquidation u/s 33 of the I&B Code - resolution plan from promoters - no such Plan can be admitted as more than 270 days have passed and in absence of any viable and feasible ‘Resolution Plan’, there was no option to the Adjudicating Authority, but to pass an order u/s 33 - it will be open to the Appellant/ Members to propose any arrangement/ scheme in terms of Section 230 of the Companies Act before Liquidator
Central Excise
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Refund claim - amount paid on reversal of credit alongwith interest and penalty - no intimation of appellant accepting their liability - if at all the Revenue is of the view that the amount is legally payable, it was incumbent on the Revenue to issue a SCN which they failed to do so - appellant is entitled for refund of the amount of Cenvat Credit, interest and penalty paid by them
VAT
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Best Judgement Assessment - the estimation made by the Tribunal was found to be not based on any material, whereas the estimation made by the first appeal authority was found to be based on material and evidence on record - order of the tribunal set aside to that extent.
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Penalty u/s 47(6) of the KVAT Act - The failure to accompany the transport with Form 8FA declaration - the authority is bound to make a probe in order to arrive at a finding that there existed an attempt for evasion for payment of tax, at the time when the transport was made to levy penalty - non-declaration was purposeful or not, is a matter which require detailed enquiry - remanded
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Penalty - mere a technical omission or violation of law would not empower the authority to impose penalty - since there is only a technical defect of non-submission of form, while the entire transactions are reflected in the book of accounts submitted voluntarily to the dept. - there was no intention to evade tax hence no penalty
Case Laws:
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GST
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2019 (7) TMI 1160
Levy of GST - Quantum of abatement - monthly maintenance charges payable by a Member of the association - If the monthly maintenance charges payable by a Member of the association exceeds ₹ 7,500 per month, the applicant is liable to pay GST only on the amount in excess of ₹ 7,500 or on the entire amount? - S.No. 77 of N/N. 12/2017 - Central tax (Rate) dated 28.06.2017 as amended by N/N. 2/2018 - Central Tax (Rate) dated 25.01.2018. HELD THAT:- In the instant case , this exemption is applicable only if the service by the applicant , a resident welfare association/ housing society to its members by way of reimbursement of charges or share of contribution ,for sourcing of goods or services from a third person for the common use of its members, is up to an amount of 7500 rupees per month per member. In the event the charges or share of contribution goes above 7500 rupees per month per member, such service will not fit the above description and hence, such service is not exempt. Such services are then fully chargeable to GST at the applicable tax rate. Any service either falls within the scope of the description in column (3) or it does not. If a service by the applicant to its members by way of reimbursement of charges or share of contribution ,for sourcing of goods or services from a third person for the common use of its members, is such that it is above 7500 rupees per month, it squarely falls outside the description of Sl No 77 (c) of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended for CGST and of Sl.No. 77 (c) of Notification No. II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended for SGST - GST at appropriate rates are to be charged on the full amount of reimbursement of charges or share of contribution.
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2019 (7) TMI 1159
Classification of goods - rate of tax - Steel Mugs with a plastic outer body supplied by the applicant - Sl. No 184 of Schedule II of N/N. 1/2017 of Central Tax (Rate) dated 28th June, 2017 (as amended) - HELD THAT:- The subject product, even though a household article is not manufactured exclusively with the use of a single material. The materials used are iron/steel and plastics. In the present case, the product is manufactured using more than one substance [mainly steel (close to 75%) and for outer body plastic (with plastic and other components amounting to only 25% of the total cost of the product)]. In view of the provisions of Rule 3 (a), Chapter Headings 7323 and 3924, both appear to be equally specific in relation to the subject goods, in as much as the subject goods can definitely be treated as household articles and therefore we now have a look at Rule 3 (b), which states that composite goods consisting of different materials or made up of different components, (in this case iron steel and plastics) and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. The subject Steel Mugs with plastic body are advertised and sold as steel mugs. It is the steel that gives the essential characteristic to the subject product. Liquids specially, is they are boiling are not preferred to be poured in plastic containers. Hence in such a case it would be appropriate to consider the element of steel as the major element which are used in such conditions. Further, the plastic with its varied colours would seem to be lending to only visual attraction of the steel mugs and the essential characteristic remains to be steel. The subject goods fall under Chapter Heading 7323, since according to us, the material which is giving the essential character to the steel cups with plastic body is the presence of steel, which is 75% of the total value and composition of the subject goods - the said product is therefore covered under Sr. No. 184 of Schedule II of Notification 1/2017 Central Tax (Rate) dated 28th June, 2017.
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2019 (7) TMI 1136
Classification of goods - rate of tax - tips and balls, both being pen parts, used in manufacturing process of ball point pens - whether classified under HSN Chapter Head 9608 and taxable at the rate of 12% or not? - N/N. 12/2017-CentraI Tax dated 28.06.2017 (corresponding State Notification No. 1152-FT dated 29.06.2017) - challenge to ruling pronounced by the WBAAR. HELD THAT:- The Appellant s interpretation of N/N. 12/2017-CentraI Tax dated 28.06.2017 (corresponding State Notification No. 1152-FT dated 29.06.2017) for classification of any item up to 4 digits and not beyond is on the wrong footing as the said Notifications were issued for mentioning of MSN codes on the invoice by the registered person depending on the Annual Turnover in the preceding financial year and hence not applicable in their present case. The tips and balls of ball point pens are essentially parts of refills and the refills are parts of ball point pens. Ball point pens are classified under Sub-heading no. 9608 10 attracting tax @ 12% while Refills for ball point pens comprising the ball point and ink-reservoir are classified under Sub-heading no. 9608 60 attracting tax @ 18%. Pen nibs and nib points as per HSN entry 9608 91 are very different from ball point tips and balls as used by the Appellant. Primarily Tips and balls are part of refill, and since there is no specific Sub-heading allotted to these parts these should be classified under residuary Sub-heading as Others- in 9608 99. attracting tax @ 18%. It is clear from the table in para 11 that the tips and halls dealt with by the Appellant fall under entry no. 453 of Schedule III. There is no infirmity in the ruling pronounced by the WBAAR - appeal dismissed - decided against appellant.
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2019 (7) TMI 1135
Profiteering - information sought on the product, Dettol HW Liquid Original 900 ml - grievance of the Petitioner is that the Director General of Anti Profiteering (DGAP) has by the impugned notice dated 8th/9th April, 2019 sought information on all products of the Petitioner - vires of Section 171 of the CGST Act - HELD THAT:- The Court is of the view that the Petitioner has made out a prima facie case for granted of limited interim relief. It is directed that, till the next date, it will not be required to furnish information to the DGAP pursuant to the impugned notice other than information pertaining to the Complained Product. It is, however, clarified that the NAPA s inquiry as far as the Complained Product is concerned will proceed in accordance with law. List on 22nd August, 2019.
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Income Tax
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2019 (7) TMI 1158
Allowability of Foreign exchange fluctuation loss u/s 37 - difference between amount given by it as loan to its subsidiary in the USA and the amount realized due to fluctuation is claimed as exchange loss - non conducting any enquiry - HELD THAT:- Without conducting any inquiry of the fact whether there was any loss on account of the fluctuation in the foreign exchange and rate of the US Dollar within the relevant time, the AO simply disallowed the above amount. This is despite the return being scrutinized under Section 143(3) of the Act. The disallowance could not have been without a preceding inquiry into the claim made by the Assessee. In fact the ITAT in its order noted the submission on behalf of the Assessee that as against US $ 10 million given as loan it received US$10,01,50,000 and US$ 1,50,000 was offered as income of the Assessee for the current AY which was accepted by the AO. However, due to fluctuation in the rate of $ vis-a-vis Rupee, the Assessee realized ₹ 443,07,10,000/-. The difference between the Rupee value of the 10 million US$ advanced in 2008 and received back in 2010 was ₹ 35,42,20,000/- (478,49,30,000 minus 443,07,10,000). This difference was claimed as loss on account of foreign exchange fluctuation. Therefore, the CIT and ITAT were right in reversing the above disallowance.- Decided against revenue
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2019 (7) TMI 1157
Power of TRO in recovery proceedings - personal attendance of the assessee/defaulter for the purpose of necessary inquiry pursuant to the summons under Rule 83 of the Second Schedule to the Act, 1961 - HELD THAT:- The plain reading of Rule 83 makes it clear that the tax Recovery Officer or other officer, acting under the provisions of Schedule-II, are conferred with the powers of a Civil Court while trying a suit for the purpose of receiving evidence, administering oaths, enforcing the attendance of witnesses and compelling the production of documents. Section 136 further clarifies that the proceedings before the Income Tax Authorities are in the nature of judicial proceedings. The mere absence of the word 'assessee' or 'defaulter' would not make any difference. It is always open for the Tax Recovery Officer to seek necessary information from the assessee himself and any other witness or witnesses, if any. We are convinced that no case is made out by the writ applicant for the purpose of getting the impugned summons under Rule 83 of the Second Schedule to the Act, 1961 declared as illegal or erroneous in law. We hold that it is permissible for the authority concerned to secure and enforce the personal attendance of the assessee/defaulter for the purpose of necessary inquiry pursuant to the summons under Rule 83 of the Second Schedule to the Act, 1961. To put it in other words, for effective and expeditious disposal of the recovery proceedings, it is always permissible for the Tax Recovery Officer to call for necessary and relevant information and conduct an inquiry by securing and enforcing the personal attendance of the assessee/defaulter. In the result, this writ application fails and is hereby rejected. Notice is discharged.
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2019 (7) TMI 1156
Exemption u/s 11 - Whether the ITAT erred in upholding the order of CIT (A) which held that the objects and activities of the Assessee were to promote sports persons in the Ministry of Railways and participation in sports events outside India is not covered under Section 11 (1) (c) ? - HELD THAT:- As held that the expenditure was applied for the purposes of outside India and accordingly the deletion as ordered by the CIT (A) except ₹ 6,68,300/- was upheld. Having heard learned counsel for the Revenue and having examined the impugned order of the ITAT, the Court is of the view that it suffers from no legal infirmity. No substantial question of law arises for consideration of the Court the Appeal is accordingly dismissed.
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2019 (7) TMI 1155
Deprecation on paper and copier disallowed - Assessee has not claimed deprecation in either its original return or in its revised return - ITAT allowed the claim - HELD THAT:- ITAT has in the impugned order noted the fact that the order of the Coordinate Bench of the ITAT, deciding the similar issues in favour of the Assessee for AY 2010-11 [ 2019 (2) TMI 893 - ITAT AMRITSAR] , was upheld by the Punjab and Haryana High Court [ 2017 (8) TMI 1511 - PUNJAB HARYANA HIGH COURT] . Reference is also made to another judgement passed by the Punjab and Haryana High Court in case of CIT v. Ramco International [ 2008 (12) TMI 413 - PUNJAB AND HARYANA HIGH COURT] which in turn considered the case in Goetze India Ltd. v. CIT [ 2006 (3) TMI 75 - SUPREME COURT] relied upon by the Revenue. No substantial question of law arises for consideration of the Court. The appeal is dismissed.
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2019 (7) TMI 1154
Rejection of its books of account - imposition of Gross Profit Rate at 1.03% (with the corresponding Gross Profit Margin of 7.98%) based upon the previous assessment years returned and accepted rate - HELD THAT:- There was a steep down turn in the declared gross profit margin; the net profit increased only by rupees one lac or as against, the turn over increased by more than 100%. This clearly seems to have alerted the AO to examine the record and based upon his assessment of the ledger and other documents available on record rejected the books of accounts. All that the ITAT did in this case was to correct the error evident on the face of the record, in the Revenue s appeal, evident in CIT (A) order. The Court is also satisfied that the main ground of the assessee of denial of opportunity to appear before the ITAT, is unpersuasive and cannot be accepted. A notice of hearing clearly was served on 24.07.2013; the hearing was to take place on 02.09.2013. There is no document relied upon by the assessee to show that he was incapacitated; he was prevented from instructing his counsel to appear before the ITAT on the date of hearing fixed for that purpose on which he was aware. For these reasons, the ground of denial of opportunity is also unsubstantiated. The Court is of the opinion that the ITAT s findings are pure findings of fact and do not call for any interference. No substantial question of law arises in this appeal.
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2019 (7) TMI 1153
Depreciation on software license acquired - @60% or 25% - AO of the view that assessee were only licenses, which are intangible and depreciation allowable @25% -Tribunal held that the software license acquired by the assessee are in the nature of software application and eligible to claim depreciation at 60% ? - HELD THAT:- If a particular article would fall within the description by the force of the words used, it is impermissible to ignore the word 'description' and going by the usage of the equipment purchased by the assessee, a decision has to be arrived at. We find that there is no error in the decision arrived at by the Tribunal by taking note of the specific entry in contra distinction with the general entry. Therefore, the first substantial question of law has to be necessarily answered against the Revenue. Nature of expenditure - payment for non compete fee - revenue expenditure or capital expenditure - AO alleged that assessee derived any enduring benefit - HELD THAT:- Tribunal accepted the case of the assessee by interpreting the non compete clause in the agreement, which has been reproduced in paragraph 25 of the impugned order. After analyzing the same, the Tribunal held that the tenor of the agreement was only 18 months and it could not be stated that the assessee derived any enduring benefit due to the payment effected by it for obtaining certain commitments from one Mr.V.Shankar and restricting himself from indulging in any competition with the business of the assessee or from weaning way the employees. The Tribunal took note of the decision a Division Bench of this Court in the case of M/s.Asianet Communications Ltd. Vs. CIT [ 2018 (8) TMI 1554 - MADRAS HIGH COURT] to which, one of us (TSSJ) was a party, wherein this Court considered a similar condition imposed in a non compete agreement. Therefore, we find that the Tribunal, on appreciation of the factual position, rightly held that a non compete fee has to be treated as a revenue expenditure. Hence, the second substantial question of law is to be necessarily answered against the Revenue.
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2019 (7) TMI 1152
Income recognition - interest income on 'non-performing assets' - AS 9 - for determination of NPA relevant is three years' period as per CBDT circular dated 09.10.1984 OR 6 months as per RBI notification dated dated 31.01.1998 / MCA notification dated 26.07.2001 - HELD THAT:- In this appeal, we are concerned about the assessment year 2004-05. Therefore, the circular of the CBDT dated 09.10.1984, should not have been applied, as by then the statutory direction issued by the Reserve Bank of India dated 31.01.1998 was in vogue and held the field. That apart, the Ministry of Law, Justice and Company Affairs issued a notification dated 26.07.2001, in exercise of the powers conferred under Section 637 A(1) of the Companies Act, 1956. In our view, the decision which should have been applied by the Tribunal to the facts of the present case is the decision in Elgi Finance Ltd. [ 2007 (6) TMI 180 - MADRAS HIGH COURT] where there is a specific reference to AS-9. In fact, this aspect has been noted by the Assessing Officer himself in paragraph 1 of the assessment order dated 29.12.2006. In any event, we are concerned with the assessment year 2004-05 and what is required to be seen is whether the assessee has got non-performing asset in terms of the definition in the notification issued by Ministry of Law, Justice and Company Affairs dated 26.07.2001. Needless to state that the applicability of the said notification can also be considered while undertaking such an exercise. For the above reasons, the appeal filed by the assessee is allowed
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2019 (7) TMI 1151
Power of Tribunal when it disagree with earlier decision of Tribunal - TDS liability on trust - Tribunal not followed earlier decision which held that surplus disputed not taxable in the trust's hands and the assessee-trusts were not liable to deduct TDS - HELD THAT:- In our considered view, there are only two methods of dealing such a situation. Firstly, if the decision is per incurium, a finding to the said effect has to be given. Secondly, the Court or the Tribunal can refuse to follow the decision by distinguishing it on the factual matrix. If for other than these two reasons, the Court or the Tribunal is of the view that the decision rendered earlier is not acceptable to it, then the option is to refer it to a Larger Bench of the Court or the Tribunal. The Methodology adopted by the Tribunal, while passing the impugned order, is incorrect. Therefore, we are inclined to remand the matter to the Tribunal for fresh consideration. We left it open to the Tribunal to take note of the decision in Sarvodaya Mutual Benefit Trust [ 2013 (11) TMI 1270 - ITAT CHENNAI] and if for reasons acceptable to it, the decision can be applied to the facts of the case which is well open to do so, or for if any other reasons, the decision is found to be not acceptable to the Tribunal, then the matter may be referred to the Larger Bench of the Tribunal for consideration in an appropriate manner. We have not ventured into the merits of the matter, nor we have made an attempt to answer the substantial questions of law. It is made clear that when the matter is taken up for consideration, we are confident that the Tribunal will not be carried away or in any manner influenced by the observations made in the impugned order which we have set aside. Appeal filed by the assessee is allowed the impugned order is set aside and the matter is remanded to the Tribunal for fresh consideration.
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2019 (7) TMI 1150
Penalty u/s 271(1)(c) - defective notice - HELD THAT:- Evidently the show cause notice u/s. 271(1)(c) of the Act dated 31.12.2008 is defective as it does not spell out the grounds on which the penalty is sought to be imposed. The Hon ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] wherein following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. The Id. Counsel further brought to our notice that as against the decision of the Hon ble Karnataka High Court the revenue preferred an appeal in SLP [ 2016 (8) TMI 1145 - SC ORDER] dismissed the SLP preferred by the department. As already observed that the showcause notices issued in the case on hand under section 274 read with Section 271(1)(c) dated not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income . The show cause notice under section 271(1)(c) of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee.
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2019 (7) TMI 1149
Disallowance of expenditure u/s. 14 r.w. Rule 8D - assessee made suo-moto disallowance - while computing disallowance under Rule 8D(2)(iii) only these investments on which the assessee has earned dividend income should be considered - HELD THAT:- We find merit in the submissions of assessee. The Special Bench of Tribunal in the case of ACIT Anr. Vs. Vireet Investment Pvt. Ltd. Anr. [ 2017 (6) TMI 1124 - ITAT DELHI] has held that only those investments are to be considered for computing average value of investment which have yielded exempt income during the year. The ground raised by the assessee is allowed in principle. The issue is restored back to the file of AO to determine disallowance under Rule 8D in line with the decision of Special Bench of Tribunal (supra). Addition on account of liquidated damages - whether liquidated damages claimed by the assessee are in the nature of penalty for late delivery of Gensets, therefore, the said expenditure is not allowable? - HELD THAT:- The issue is recurring in nature. Similar disallowance was made by the AO in the case of assessee in the past. The Tribunal in assessment years 2002-03, 2003-04, 2007-08 and 2008-09 has already considered this issue of liquidated damages/late delivery charges. The Co-ordinate Bench in assessment year 2008-09 [ 2019 (3) TMI 1612 - ITAT PUNE] has restored this issue back to the file of AO for fresh adjudication. Since, the nature of payment of liquated damages in assessment year under appeal is identical, we deem it appropriate to restore this issue to the file of AO to decide the issue on similar lines. Accordingly, ground No. 1 of the appeal by the Revenue is allowed for statistical purpose. Allowability of depreciation @ 60% on UPS and other allied items - HELD THAT:- The depreciation @ 60% was allowed to the assessee on UPS and other allied items in preceding assessment years. No material has been placed on record by the Revenue to controvert the findings of Co-ordinate Bench in assessment year 2008-09. We find no reason to take contrary view. Hence, we uphold the findings of CIT(A) in allowing depreciation @ 60% on UPS and other allied items. Accordingly, ground No. 2 of appeal by the Department is dismissed. Disallowance u/s. 40A(2) on commission paid to Directors - HELD THAT:- We observe that similar disallowance was made in assessee s own case for assessment years 2007-08 and 2008-09. The Co-ordinate Bench of Tribunal in appeal by the Revenue in assessment year 2008-09 [ 2019 (3) TMI 1612 - ITAT PUNE] upheld the findings of CIT(A) in deleting such disallowance. Since, the disallowance u/s. 40A(2) on the commission paid to the Directors has been consistently decided against the Revenue, and in the assessment year under appeal there is no distinguishing feature, we find no merit in the said ground by the Department. The ground No. 3 of the appeal is rejected for the parity of reasons given in assessment year 2008-09 in assessee s own case by the Tribunal. Accordingly, ground No. 3 of the appeal is dismissed. Set off of brought forward capital losses against Long Term Capital Gain of the current assessment year - HELD THAT:- In assessment year 2007-08 similar disallowance was made by the AO. The CIT(A) granted relief to the assessee. In appeal before the Tribunal, the Department was unsuccessful in contesting the issue. No material has been placed on record by the Revenue to show any change in facts or distinguishing the nature of transactions in the assessment year under appeal. Respectfully, following the order of Tribunal, ground No. 4 of the appeal by the Revenue is dismissed. Deduction u/s. 80IA(4) - assessee has installed windmill and claimed deduction u/s. 80IA(4) - AO disallowed assessee s claim on the premise that the prior period losses of eligible business are required to be set off against the income from eligible business only - HELD THAT:- Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT [ 2010 (3) TMI 860 - MADRAS HIGH COURT] has held that loss or depreciation in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business for computing the deduction u/s. 80-IA. The Tribunal has been consistently following the law laid down by the Hon ble Madras High Court and similar view has been taken in the case of Poonawala Estate Stud Agro Farm Pvt. Ltd. Vs. ACIT [ 2010 (9) TMI 1080 - ITAT PUNE] - Decided against revenue. Subsidy received under Government of Maharashtra Package Scheme of Incentive, 2001 - characterization of receipt - revenue or capital receipt - HELD THAT:- After considering catena of judgments the Tribunal held that the incentive received by the assessee under Package Scheme of Incentive, 2007 is in the form of refund of Sales Tax and is a capital receipt not liable to tax. The Commissioner of Income Tax (Appeals) has granted relief to the assessee by following the aforesaid decision of Tribunal of INNOVENTIVE INDUSTRIES LIMITED VERSUS DCIT, [ 2017 (4) TMI 44 - ITAT PUNE] . We find no reason to interfere with the findings of CIT(A). Accordingly, the same is upheld and the ground of the appeal is dismissed.
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2019 (7) TMI 1148
Assessment of income of shipping company - tax demand raised u/s 172 - profits derived from operation of ship or international traffic - taxability in the contracting state - (DTAA) with Singapore - assesse claimed exemption whereas AO treat income as taxable alleging not filing of remittance proof - HELD THAT:- Since the assessee is non-resident and he is the owner of the ship, income is taxable in Singapore, but not in India. However, there is no evidence as per information filed by the assessee to show that the income representing voyage undertaken in India in June 2014 was admitted in the income tax return of the assessee filed in Singapore. In the instant case, though the representative assessee has filed the return of income u/s 172(3), he has not furnished any evidence to show that the assessee s income was taxed on accrual basis or filed the evidence including the income relating to voyage undertaken in India. Therefore, in our considered opinion, the issue requires further examination with regard to admission of income on accrual basis in the contracting state. Hence, we deem it fit to remit the matter back to the file of the AO to re-examine the issue with regard to admission of income and filing the return in the contracting state and decide the same on merits. We direct the assessee to file necessary information or certificate confirming that the income relating to the voyage undertaken in India, in respect of the vessel, M. V. Arwad Queen was included in the return of income filed by the assessee or to obtain the certificate from the Inland Revenue Authority that in the assessee s case also, the shipping income is taxed on accrual basis on similar lines of ST Shipping Company referred to in the case law relied upon by the assessee. Appeal of the assessee is allowed for statistical purpose.
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2019 (7) TMI 1147
TP adjustment - exclusion and inclusion of comparables for the purposes of determining the Arm s Length Price ( ALP ) of the international transactions involving the Assessee - HELD THAT:- Having perused the charts, the Court finds that in respect of each of the comparables, the ITAT has given detailed reasons why the comparables should be rejected either because of failing the filter or because of functional dissimilarity. In some instances, the earlier decisions concerning this very Assessee have been followed. The Court is not persuaded that on the issue of exclusion and inclusion of comparables, particularly when the decisions of this Court on the topic including those concerning this very Assessee for AY 2010-2011 have been followed by the ITAT, the impugned order of the ITAT gives rise to a substantial question of law.
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2019 (7) TMI 1146
Review of order - reopening of assessment - originally held that since the impugned notice for the reassessment is based only on the allegation that the appellant(s) has permanent establishment in India, the notice cannot be sustained once arm's length price procedure has been followed - HELD THAT:- Having carefully gone through the Review Petitions, the order under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record, warranting reconsideration of the order impugned.
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2019 (7) TMI 1118
Penalty u/s 271(1)(c) - whether additions made to the income of the assessee can be set aside on the mere premise that with respect to the major addition the mother of the assessee had filed a return of income conceding a capital gain on a property, the sale of which resulted in the deposit of ₹ 60 lakhs in the bank account of the assessee? - HELD THAT:- The assessment year is 2006-07. The sale of the property was in the previous year of the assessment year. The return of income filed by the mother was on 27.08.2013. Though the return was filed, there was nothing done by the Department on the same especially since six years had elapsed by the time the return was filed. If at all, the Department could take up proceedings, for the assessment year 2006-07, it could have been only prior to 31.03.2013. The return was filed by the mother, on 27.08.2013. In such circumstance, it cannot be said that the income that was added on to the assessee had already suffered capital gains tax at the hands of the mother. The fact remains that the amounts were credited to the account of the assessee and it remained as undisclosed income insofar as the assessee having returned only ₹ 1,17,830/- in the subject assessment year. Assessee would in fact point out an order issued under Section 271(1)(c) of the Income Tax Act, 1961 wherein the Income Tax Officer had found that since there was an explanation offered for the source of ₹ 60,00,000/-, the assessee could be absolved from penalty to that extent. It is, hence, the submission of the assessee that the explanation could be taken note of for the purpose of assessment also. It is to be noticed that the mother, who was the owner of the property who sold the property, did not return the income from the sale of the property. The amounts also were credited to the accounts of the assessee, who also did not disclose the income before the Assessing Officer. In such circumstances, there cannot be said to be a double taxation on the very same income. The mother obviously did not file any return within time for the assessment year 2006-07. The return filed on 27.08.2013 could not also be processed by the Department for reason of expiry of six years. In such circumstances, the assessee having admitted to the credit of the amounts, it has to be taken as income earned in the said year and assessed accordingly. We set aside the order of the Tribunal to that extent and restore that of the first appellate authority, answering the question of law in favour of the Revenue and against the assessee.
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2019 (7) TMI 1117
Undue delay in granting the refund - Credit to the refund due to the petitioner and the interest u/s 244A (1) and 244 (1A) - additional compensation due to the petitioner - HELD THAT:- SLP Dismissed.
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2019 (7) TMI 1116
Penalty u/s 271(1)(c) - assessment under Section 153C - proof of addition to the declared income - HELD THAT:- No reason to interfere in the matter. The special leave petition is, accordingly, dismissed. Pending application(s), if any, shall stand disposed of.
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2019 (7) TMI 1115
TDS u/s 194H - payment of Guarantee Commission paid by the Assessee to the Banks - HELD THAT:- No reason to interfere in these matters. The special leave petition are, accordingly, dismissed. However, all questions of law are kept open.
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2019 (7) TMI 1114
TDS u/s 194C - disallowance u/s 40(a)(ia) - requirement of statutory audit in case of the assessee - HELD THAT:- No reason to entertain this petition. Accordingly, the special leave petition is dismissed.
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2019 (7) TMI 1113
Method of Valuation of closing stock - FIFO or LIFO method - as per the assessee undervalued the stock which was below the average cost price of gold - sole question arises in the present appeal as confined to LIFO method - CIT(Appeal) concurrently held that such method was already recognised in law and in any case consistently followed by CIT(Appeal) in several orders - HELD THAT:- SLP dismissed.
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2019 (7) TMI 1112
Interest of refund u/s 244A - responsibility for delay in the refund claim - AO was wholly incorrect in invoking sub-section (2) of Section 244A since we do not find any reasons attributable to the assessee which delayed his refund claim - HELD THAT:- SLP dismissed.
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2019 (7) TMI 1111
Gain arising from the sale of capital asset as Long Term Capital Gain - exemption u/s 54F entitlement - when the assessee can be stated to have acquired the capital asset? - The date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property - HELD THAT:- SLP dismissed.
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2019 (7) TMI 1110
Unexplained fixed deposits - Commissioner of Income-tax (Appeals) admitted the fixed deposit register as a fresh evidence without giving an opportunity of being heard to the Assessing Officer as prescribed under Rule 46A(3) - HC held FAA erred in having so deleted the addition on mere assumption based on surmises and conjectures; without actually verifying the genuineness of the transactions - HELD THAT:- We are not inclined to interfere with the order impugned in the special leave petition. The same is, accordingly, dismissed.
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2019 (7) TMI 1109
Residential status of the assessee - as per revenue the assessee was a resident of India whereas the Tribunal held assessee to be Non resident of India - Unaccounted investments - additions made on the basis of documents allegedly found in the possession of 3rd parties - payment made to the assessee s estranged wife - Addition u/s 68 - Cash credit - HELD THAT:- We are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution of India. The Special Leave Petitions are accordingly dismissed.
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Customs
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2019 (7) TMI 1134
100% EOU - Effect of notification - N/N. 65/99-Cus., dated 19-5-99 - HELD THAT:- There are no grounds to entertain this SLP against the impugned order - SLP dismissed.
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Corporate Laws
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2019 (7) TMI 1145
Compounding of offences u/s 134(3)(o) r.w.s 135(2) - violation of disclosure of Director s Report and the details of the CSR Policy developed and implemented - Application u/s 441 of the Companies Act, 1956 - HELD THAT:- The Tribunal on hearing the parties and taking into consideration the fact that the provision of law being newly introduced under 2013 Act and that the appellants had not much clarity on it and the default had been subsequently made good, deemed it fit, just and equitable to impose the fine for compounding the offence for three years If the total amount is calculated, we find that penal amount is less than 33% of the total maximum penal amount payable. The Tribunal having taken lenient view on the ground that new Act has been introduced, we are not inclined to accept the same though we are of the view that the provisions of Act of 2013 are practically similar to the provisions as were there already in Companies Act, 1956. Hence, we find no merit in the appeal. The appeal is dismissed. No cost.
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2019 (7) TMI 1133
Removal of Director - Offence of defamation - damage of reputation - offences punishable under Section 500 read with 34 of the Indian Penal Code - HELD THAT:- There is no prima facie case of defamation in the present case as there was no intent on the part of the petitioners to cause harm to the reputation of the respondent as contemplated by Section 499 of the IPC nor can we discern any actual harm caused to his reputation, since the element of mens rea being absent and since the publication was only limited to the Board of Directors of the holding Company and the respective shareholders of these Companies, it could not be said that it was circulated widely over a section of general public. Publication of the news about a resolution being passed by a well acclaimed business house happened to be a business news for the media and both the petitioner no.1 and respondent no.2 being well known business personalities, they drew the attention of the media and the allegations/imputations and the story of removal of the respondent no.2, no wonder, happened to be a hot topic for media. The allegations of the respondent no.2 in respect of disparaging remarks/comments being widely circulated is also not correct since it was only circulated to the shareholders and they had a right to know the background of the resolution on which they were supposed to vote. The Magistrate before issuing the process, has failed to take into consideration the conspectus of the matter and though it is the duty cast upon him to be satisfied before issuance of a process, he had concluded without any material being placed before him that the statement is defamatory. The object of investigation under Section 202 Cr.P.C. is for the purpose of deciding whether or not there is sufficient ground for proceeding . The enquiry under Section 202 Cr.P.C. is to ascertain the fact whether the complaint has any valid foundation calling for issuance of process to the person complained against or whether it is a baseless one on which no action need be taken. The law imposes a serious responsibility on the Magistrate to decide if there is sufficient ground for proceeding against the accused - Under the amended sub section (1) to Section 202 Cr.P.C., it is obligatory upon the Magistrate that before summoning the accused residing beyond its jurisdiction, he shall enquire into the case himself or direct the investigation to be made by a police officer or by such other person as he thinks fit for finding out whether or not there is sufficient ground for proceeding against the accused. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The application of mind has to be indicated by disclosure of mind on the satisfaction. The impugned order passed by the Magistrate looked at from this angle also suffers from non- application of mind but we would not deliberate on the issue further since we have already formed an opinion that the Magistrate has failed to take into consideration the very genesis of exercise of his power about being satisfied that the allegations in the complaint constitute an offence of defamation and there is no indication in the impugned order demonstrating his satisfaction based on the material placed before him. The order passed by the Magistrate is without application of mind and cannot be sustained - petition allowed.
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Insolvency & Bankruptcy
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2019 (7) TMI 1144
Initiation of Corporate Insolvency Resolution Process - insolvency or liquidation of the Corporate Debtor - HELD THAT:- There are serious allegations made by the Resolution Professional in the instant CA and supporting evidence for the same was shown to us during the multiple hearings in the case. In their reply, Respondent 1, 2 and 3 have countered these allegations and filed documents in support of their stand. Respondent 4, being the Operational Creditor on whose application the CIRP was initiated, has also filed reply countering the allegations made by the RP in the instant application. It is also seen that there have been two unsavory incidents at the premises of the CD namely fire at the factory premises on 12.02.2018 and subsequent attack on the security guard at the office of the CD on 15.03.2018. Voluminous documents and vouchers have been filed by the parties in support of their contentions. The proceedings before this Tribunal are summary in nature and it is not possible for us to conduct an in-depth investigation and examine the veracity of these documents and averments. Without an in-depth investigation, it is not possible to arrive at a correct appraisal of the State of Affairs of the Corporate Debtor and to adjudicate upon the allegations made by the RP. The affairs of the Corporate Debtor ought to be investigated. Accordingly, the Central Government is directed to order an investigation into the affairs of the Corporate Debtor under Section 210(2) of the Companies Act, 2013 - application disposed off.
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2019 (7) TMI 1143
Validity of Liquidation Order u/s 33 of the Insolvency and Bankruptcy Code, 2016 - no resolution plan - Appellant submits that the Corporate Debtor (M/s BKR Hotels Resorts Pvt. Ltd.) can be saved from liquidation if a Plan, which is with the Promoter is accepted - HELD THAT:- We are not inclined to make any observation with regard to such Plan as it is admitted that more than 270 days have passed and in absence of any viable and feasible Resolution Plan , there was no option to the Adjudicating Authority, but to pass an order under Section 33. In the circumstances, while we are not inclined to interfere with the impugned order dated 3rd May, 2019 directing the Liquidator to act, it will be open to the Appellant/ Members to propose any arrangement/ scheme in terms of Section 230 of the Companies Act, 2013. Appeal disposed off.
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2019 (7) TMI 1142
Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - IRP rejected the claim on the ground of violation of Regulation 12(2) of the Regulations of 2016 and that the proof of claim had been submitted more than ninety days after the insolvency resolution process date - HELD THAT:- As per the amended Regulation 12(2), which has come into force on 04.07.2018, the RP could not receive any claim submitted beyond 90 days after the CIRP begins. The CIRP begins in this case on 01.05.2018. Therefore, the submission of claim by the applicant on 20.11.2018 is no doubt beyond 90 days from 01.05.2018 when the CIRP has been initiated and, therefore, the rejection of the claim, applying Regulation 12(2) of the Regulations of 2016, is found perfectly legal and proper and the RP has not committed any error or illegality in rejecting the claim. Moreover, the resolution plan has been approved by the Adjudicating Authority on 07.12.2018. Therefore, an application of this nature cannot be entertained as this Adjudicating Authority has no power to reopen the resolution process which has already been closed. Therefore, the remedy available to the applicant is lying elsewhere. This application deserves an order of dismissal - Application dismissed.
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2019 (7) TMI 1132
Admissibility of application - Initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors not constituted - HELD THAT:- We set-aside the impugned order dated 16th May, 2019 and allow Respondent No.1 to withdraw the application under Section 9, which stands disposed of as withdrawn. The Adjudicating Authority will close the proceedings.
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2019 (7) TMI 1131
Admissibility of petition - initiation of Corporate Insolvency Resolution Process (CIRP) - corporate debtor - HELD THAT:- The Operational Creditor has fulfilled all the requirements of law for admission of the Application. This Authority is satisfied that the Corporate Debtor has committed default in making payment of the outstanding debt claimed by the Operational Creditor. Therefore. Application is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted.
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2019 (7) TMI 1130
Admissibility of application - initiation of Corporate Insolvency Resolution Process (CIRP) - Section 7 of I B Code, 2016 - Whether the claim of the Applicant firm to the tune of ₹ 17,07,99,230/- arising out of contract dated 31.01.2005 entered with the Corporate Debtor, when the Applicant firm was unregistered, is admissible? HELD THAT:- The object of the section appears to be to protect public against a firm carrying on business under a name which does not disclose to the public the names of the actual partners. In other words an unregistered firm has no legal basis to enter into the contract with third party, because such agreement cannot create legal relationship between the parties, and even registration of the firm subsequent to the signing of the contract will not cure the initial defect, as registration per se shall not validate the agreement. Therefore, a contract entered into by the unregistered firm with the third party is hit by the provisions of Section 69(2) of The Indian Partnership Act, 1932. On this score alone the claim of the Applicant firm is not admissible. The claim submitted by the Applicant firm is not substantiated with any documentary evidence. In spite of the request of the Respondent/Resolution Professional made vide email communication dated 07.05.2018, for production of document in support of claim, no proof has been submitted by the Applicant firm till the rejection of the claim. Application dismissed.
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2019 (7) TMI 1129
Admissibility of petition - approval of resolution plan - Initiation of Corporate Insolvency Resolution Process - corporate debtor - default in paying the financial debt - section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The resolution plan of Sunil Ispat and Power Ltd.* as approved by the CoC under sub-section (4) of section 30 of the I and B Code meets all requirements as stated under sub-section (2) of section 30 of the I and B Code, hence the same is approved.
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2019 (7) TMI 1128
Maintainability of application - initiation of Corporate Insolvency Resolution Process - change the format for treating application under Section 7 - existence of debt or not - HELD THAT:- For the purpose of application under Section 7 in the Form-1 no advance notice or demand notice is required to issue, like Section 8(1) notice. In such case, it is always open to the parties to file Format-1 i.e. application under Section 7 after serving a copy of the same to the other side. It is not in dispute that after change the copy was not served on the Corporate Debtor. Therefore, prima facie one may accept that the party can take leave of the Adjudicating Authority to file a separate application under Section 7 after service of the same. Even if there is a dispute about debt amount, if it is rupees one lakh or more, Respondent may proceed for initiation of insolvency resolution process against the Corporate Debtor - one opportunity provided to the Appellant to state whether they intend to settle with the Respondent. Post the case for orders on 25th February, 2019.
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Service Tax
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2019 (7) TMI 1161
Service tax not leviable on the payments received by appellant from ICICI Bank by way of reimbursements of expenses - reimbursements of actual expenses are not subjected to tax - HELD THAT:- The issue decided in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Appeal disposed off.
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2019 (7) TMI 1141
CENVAT Credit - input services - health club and fitness centre service - principle of doctrine of mutuality - HELD THAT:- The issue that whether as per doctrine of mutuality the appellant is not liable to pay service tax pending before the Larger Bench of Hon ble Supreme Court in case CHIEF COMMISSIONER VERSUS RANCHI CLUB LTD. [ 2017 (12) TMI 1716 - SC ORDER] . Accordingly, no purpose will be served to keep this appeal pending before this Tribunal. The appeal is allowed by way of remand to the adjudicating authority with a direction to decide afresh.
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Central Excise
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2019 (7) TMI 1140
Valuation - inclusion of third party inspection charges in the assessable value - HELD THAT:- Since the same issue has already been remanded by this bench in the case of M/S TRANSFORMERS RECTIFIERS (INDIA) LTD. VERSUS C.C.E. AHMEDABAD-II [ 2019 (2) TMI 1664 - CESTAT AHMEDABAD] , the present matter is also being remanded in the light of the order dated 05.02.2019 for deciding the matter afresh in the line of observations made in the aforesaid order. The appeal is allowed by way of remand to the Adjudicating Authority.
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2019 (7) TMI 1139
Refund claim - amount paid on reversal of credit alongwith interest and penalty - amount was paid without any protest - only reason for rejection of the claim is that the appellant had opted for the provision made under sub-Section 6 7 of Section 11A - HELD THAT:- It is not only the payment of amount, interest and 25% penalty but the appellant needs to give an intimation to the department accepting their liability which the appellant had not given, in such case if at all the Revenue is of the view that the amount is legally payable, it was incumbent on the Revenue to issue a SCN which they failed to do so. Therefore, in these circumstances, the appellant is rightly entitled for refund of the amount of Cenvat Credit, interest and penalty paid by them. The adjudicating authority shall process the refund in accordance with law - appeal allowed - decided in favor of appellant.
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2019 (7) TMI 1127
100% EOU - MODVAT/CENVAT Credit - purchase of capital goods - credit denied on the ground that since it was 100% EOU, Rule 57R or 57T or 57Q of CESTAT Rules does not allow any such MODVAT Credit in respect of duty paid by the Appellant on purchase of capital goods - HELD THAT:- The learned Tribunal failed to address itself to the main contention raised by the Appellant/Assessee before the learned Tribunal as well as this court that Chapter V-A of the Central Excise Rules 1944 itself did not apply the case of the Appellant/Assssee as the clearance of the excisable goods was made by the Appellant/Assessee not for Home Consumption but, for export wheres Chapter V-A apply only if the clearance of excisable goods is made for Home Consumption. The learned counsel for the Appellant/Assessee contended that the Appellant/Assessee has a got a separate manufacturing unit from which the goods are cleared for Home Consumption or for sale within India, whereas from the 100% EOU in question, no such clearance is made for Home Consumption and therefore, Rule 57Q does not stand in the way as per Rule 100H under Chapter V-A of the Act Central Excise Rules, 1944. Matter remitted back to the learned CESTAT for fresh consideration of this aspect - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2019 (7) TMI 1138
Penalty u/s 15-A (1) (o) of the U.P. Trade Tax Act, 1948 - intent to evade any liability of tax or not - HELD THAT:- What is required to be seen is that there should be an intention to evade tax and mere a technical omission or violation of law would not empower the authority to impose penalty. In the present case also, since there is only a technical defect of non-submission of form, while the entire transactions are reflected in the book of accounts submitted by the revisionist voluntarily to the department during his assessment proceedings, it can be safely inferred that there was no intention to evade liability of tax. Thus, the revisionist could not be made liable for any penalty. Revision allowed - decided in favor of revisionist.
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2019 (7) TMI 1137
Imposition of penalty u/s 47(6) of the Kerala Value Added Tax Act, 2003 - failure on the part of the revision petitioner in making the declaration with respect to goods imported - failure to accompany the transport with Form 8FA declaration - HELD THAT:- Going through Section 47(2) of the Act, such an irregularity is sufficient enough to create a suspicion in the mind of the intercepting authority with respect to attempt at evasion of payment of tax. But, while taking the enquiry under sub-section (6) of Section 47, the authority is bound to make a probe in order to arrive at a finding that there existed an attempt for evasion for payment of tax, at the time when the transport was made. The failure to accompany the transport with Form 8FA declaration will definitely create a presumption, with respect to the attempt at evasion of payment of tax. In the case at hand, the original authority who passed the penalty order had verified the documents produced. But the finding rendered by him is only to the effect that there occurred failure to declare the goods and in furnishing Form 8FA declaration and that the furnishing of the bill of entry will not ensure accountability of the transaction. The question as to whether the non-declaration was purposeful or not, is a matter which require detailed enquiry. If the dealer could able to prove that the transaction in question was recorded in the regular books of accounts, even before commencement of the transport, and there was no intention to evade payment of tax at that time, it has to be accepted that the presumption regarding attempt at evasion of payment of tax will be rebutted. The matter requires a reconsideration at the hands of the Enquiring Authority, dehors the conclusion arrived by the Appellate Authority - petition allowed by way of remand.
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2019 (7) TMI 1126
Rejection of books of accounts - estimation of the turn over made by the assessing authority - Job-Work - HELD THAT:- On the issue of job work, learned counsel for the assessee has submitted, neither the assessing authority nor the Tribunal have recorded any cogent finding of fact based on any material found existing on record but have merely recorded those findings on surmises and conjectures. The transaction being of job work, there was no prescribed book of account required to be maintained by the assessee. However, full details of job work transactions were available in the shape of challans of inward and outward movement of the goods. There were also vouchers prepared by the assessee. All of them were produced before the assessing authority. However, the assessing authority has completely ignored the same and rejected the claim of job work without any basis. On a perusal of the orders passed by the three authorities, the submissions advanced by both counsel appear to be correct, inasmuch as none of the authorities has applied its mind as to the claim of job work made by the assessee. While the assessing authority and the Tribunal had rejected the claim of the assessee, the first appellate authority has accepted the claim without recording any specific reasons. Revision disposed off.
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2019 (7) TMI 1125
Imposition of penalty u/s 30A(4) of the U.P. Trade Tax Act, 1948 - transaction of transportation of goods that had been stopped for checking on 7.2.2004 - mere technical and clerical errors noted by the seizing authority - HELD THAT:- In the first place, the penalty order is not based of any reasoning either that the invoices produced by the assessee were not serially numbered, or that, they were not accounted for in the books of account of the assessee, at the relevant time - The assessing authority merely referred to the fact that three columns in Form 49 were not filled up by the assessee and the assessee had not been able to establish what action he had taken against the transporter, for the default committed by the latter, in not filling three columns in Form 49. Once the assessee produced the books of account prior to seizure along with all invoices, it had opened itself to scrutiny by the seizing authority at that stage itself, as to the correctness of the explanation furnished. No adverse inference having been drawn with respect to books of account, the mere absence of certain invoices at the stage of detention of Form 49 is not enough to impose penalty. It does appear that there was no material or evidence to reach a conclusion that the goods were not properly accounted for, by the assessee. In fact, all relevant material having been produced before the authorities, they have failed to record any finding in that regard. The finding of guilt recorded by the assessing authority as sustained by the Tribunal, is found to be perverse and, therefore, the penalty is permitted to be deleted - Revision allowed.
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2019 (7) TMI 1124
Best Judgement Assessment - rejection of books of accounts - Whether, in view of the two challans alleged to be unaccounted for which related to the beginning of the assessment year in question only, the entire books of accounts of the assessee could have been rejected and best judgment assessment made? - HELD THAT:- Insofar as rejection of books of accounts is concerned, there does not appear any error in the orders passed by the Assessing Authority and the Tribunal, inasmuch as the challans did represent sale of goods made by the assessee. His explanation that those goods were rejected for reason of quality and, therefore, no sale took place, was not supported by any evidence produced by the assessee - The explanation being purely factual and based on no evidence, the finding of the last fact-finding authority, i.e. the Tribunal being based on evidence, does not warrant any interference in exercise of the revisional jurisdiction. Quantification - HELD THAT:- The first appeal authority had valued those goods and further determined the tax that may have been payable over them. This finding of fact has not been disturbed by the Tribunal but it has merely made a wild guess work. That exercise does not appear to be founded on any cogent or relevant material. It is also a fact that besides the aforesaid directions pertaining to the two challans, no other challan was detected in the entire year as may reflect that the assessee was engaged in any activity of sale of goods. In such facts, the estimation made by the Tribunal was found to be not based on any material, whereas the estimation made by the first appeal authority was found to be based on material and evidence on record. The order passed by the Tribunal dated 07.01.2008 is set aside to the extent of quantification being found to be not based on any material or relevant consideration - revision allowed.
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2019 (7) TMI 1123
Imposition of state development tax - Benefit of the scheme for composition of tax liability - HELD THAT:- The question of law involved in the present case is no longer res-integra. The same has been authoritatively answered by the Division Bench of this Court in exercise of writ jurisdiction in M/S SYSTEMATIC CONSCOM LIMITED VERSUS STATE OF UP. AND OTHERS [ 2009 (3) TMI 872 - ALLAHABAD HIGH COURT] where it was held that State Development Tax is not payable by the petitioners in addition to the composition amount mentioned in the compounding scheme. Revision allowed - the question of law is answered in negative i.e. in favour of the assessee and against the revenue.
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2019 (7) TMI 1122
Principles of Natural Justice - various issues not been considered by the Deputy Commissioner of Sales Tax in his impugned order - HELD THAT:- The impugned order dated 28 February 2018 passed by the Deputy Commissioner of Sales Tax does not examine much less discuss any of the above or any issues incidental thereto. In the aforesaid circumstances, it is evident that the aforesaid submissions which are a part of the Petitioner's written submissions dated 27 February 2018 have not been considered as is evident from the impugned order dated 28 February 2018. Thus the impugned order is in breach of principles of natural justice. It is a clear case of a flaw in the decision making process, which compels us to exercise our writ jurisdiction in the present facts and not relegate the Petitioner to an alternative remedy under the MVAT Act, 2002. It would be in the interest of justice that the impugned order dated 28 February 2018 of the Deputy Commissioner of Sales Tax is set aside and he is directed to pass a fresh order after hearing the Petitioner - petition allowed by way of remand.
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2019 (7) TMI 1121
Principles of Natural Justice - whether time needs to be granted to the revisionist for making necessary rectifications in the declaration forms issued to it? - over looking of the provisions of Rule 8-A (4) of the Central Sales Tax (U.P.) Rules 1957 - HELD THAT:- Once the application u/s 12-B of the Act has been allowed by the first appellate authority in the context of the power of that authority which is co-extensive with that of the the assessing officer, the applicability of Rule 8-A (4) of the Rules could not have been restricted so as to not allow for any minor omission or mistake to be corrected in the record during the first appeal proceedings. The first appellate authority had to consider whether the correction being sought to be made by the assessee was such as may be treated as minor omission or mistake. In the facts of the present case, perusal of the orders passed by the authority as also the appellate authority, do not in any way, suggest that the claim made by the assessee on the strength of the forms (wherein corrections have been sought), was in any way in doubt - since that correction would have been made subsequent to the submission of the remand report, the first appellate authority could thereafter call for a second remand report from the Assessing Officer with respect to the correction that may have been made by the assessee on statutory declaration forms 'C' and 'F'. Submission of second copy of the statutory form 'C' No.8986892 - HELD THAT:- It remains undisputed that under Rule 12 of the Central Sales Tax (U.P.) (Registration and turnover) Rules 1957, all three copies, namely, the original, duplicate and the counter foil copies of Form 'C' are filled simultaneously by the purchasing dealer. Thus, the same always remains open to verification at all times. The fact that the assessee claimed to have furnished the duplicate copy in place of the original along with his application filed under Section 12-B of the Act owing to certain misunderstandings or mistake by his counsel and he was willing to produce the original copy, the mistake committed by the assessee would not have been fatal keeping in mind Rule 8-A (4) of the Rules. Even those mistake would remain a minor mistake or omission which could be allowed to be rectified within reasonable time. Also, as noted above, even if the assessee were to make such rectification, the same would remain open to verification upon a proper remand - In so far as the assessee had placed on record the original forms or the duplicate copy of the form and not a photocopy or other unreliable evidence, a pragmatic approach ought to have been taken keeping in mind his powers contained under Section 12-B read with Rule 8-A (4) of the Rules. Revision allowed - decided in favor of applicant-assessee and against the respondent-revenue.
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2019 (7) TMI 1120
Input Tax Credit - purchases where the registration of selling dealers, from whom writ petitioner had purchased goods, have been cancelled even prior to the date of purchase - HELD THAT:- This Court with the considered view that respondent has examined the documents in the personal hearing which were given by writ petitioner/dealer though writ petitioner had not responded to the notice and after examining the documents, respondent has returned factual findings, which has already been alluded - reversal of ITC has been ordered under Section 19(15) of TNVAT Act. If there are any errors in the factual findings, it at best qualifies as a ground for appeal and it does not call for interference in writ jurisdiction. Alternative remedy - HELD THAT:- Alternate remedy rule is a self imposed restriction qua writ jurisdiction. Alternate remedy is not an absolute rule. It is not a rule of compulsion, but it is a rule of discretion. Though alternate remedy is a self imposed restriction qua writ jurisdiction and it is only a rule of discretion not being a rule of compulsion - this Court deems it appropriate to not to interfere in the impugned order in this writ petition leaving it to the writ petitioner to assail the impugned order by way of an appeal before the appellate authority. This Court is informed that the alternate remedy is by way of an appeal under Section 51 of TNVAT Act and that the Appellate Authority is the jurisdictional Appellate Deputy Commissioner. Writ petition is dismissed preserving the rights of the writ petitioner to avail appeal remedy, if writ petitioner chooses to do so albeit with the aforesaid caveat regarding delay.
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Indian Laws
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2019 (7) TMI 1119
Jurisdiction - petitioner contends that the impugned orders were passed without the presence of a judicial member - Section 19(l)(a) of the Competition Act, 2002 - HELD THAT:- As per the provisions, no Act or proceedings of CCI would be invalid by reason of any vacancy or any defect in its constitution. Thus, notwithstanding, that a judicial member is required to be appointed to CCI, the orders passed by the CCI pending such appointment cannot be called into question. In the present case, the petitioner had participated in the proceedings before CCI and it has reserved orders after hearing submissions made on behalf of the parties. It is clearly not open for the petitioner to now seek a rehearing of the matter after appointment of a judicial member. The petitioner s contention that the functioning of CCI would not be paralysed if it is interdicted from passing final orders, is unmerited. Whilst, it is correct that CCI is also required to pass administrative orders as well, its principal function is to dispose of cases instituted either on an information or complaints. Plainly, interdicting CCI from passing final orders would effectively bring its functioning to a standstill. Petition dismissed.
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