TMI Tax Updates - e-Newsletter
July 29, 2019

Case Laws in this Newsletter:

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

TMI SMS

• New Wage Code Bill - THE CODE ON WAGES, 2019 - Notes on Clauses - MEMORANDUM REGARDING DELEGATED LEGISLATION

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Articles

1. NO GST ON ROAD CONSTRUCTION UNDER DBOT MODEL

   By: Dr. Sanjiv Agarwal

2. IMPORT, EXPORT AND TRANSHIPMENT OF NARCOTIC DRUGS AND PSYCHOTROPIC SUBSTANCES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST rate on all Electric Vehicles reduced from 12% to 5% and of charger or charging stations for EVs from 18% to 5%

2. THE CODE ON WAGES, 2019 - Notes on Clauses - MEMORANDUM REGARDING DELEGATED LEGISLATION

3. New Wage Code Bill - The salient features of the Code on Wages, 2019

4. Governor’s Remarks at the Book Release of Shri V. Srinivas (India’s Relations with the International Monetary Fund 25 Years in Perspective 1991-2016 at New Delhi)

Notifications

SEBI

1. SEBI/LAD-NRO/GN/2019/23 - dated 25-7-2019 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF INSIDER TRADING) (SECOND AMENDMENT) REGULATIONS, 2019

Highlights / Catch Notes

GST

• Hospital Pharmacy Supplies to Outpatients Taxable, Not Part of Healthcare Services Composite Supply Under GST Rules.

  Case-Laws - AAR : Classification of supply - Composite supply or not - supply of healthcare treatment - sale to out-patients by the pharmacy located in the hospital is not covered under the ambit of health care services. Hence, such supply of medicine and allied goods are taxable.
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• De-oiled Mahua Cake Classified for 5% GST; Eligible for Input Tax Credit, Confirmed as Non-Waste Product.

  Case-Laws - AAAR : Classification of goods - Input Tax Credit - waste or not - Mahua De-oiled cake/ De-oiled Rice Bran - GST @ 5% is applicable on the supply of de-oiled Mahua cake - ITC is available.
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• Commission Agents Must Pay Tax on Raw Cotton via Reverse Charge u/s 22(1) When Registered.

  Case-Laws - AAR : Supply of Raw cotton - reverse charge mechanism - a commission agent who becomes liable for registration under Section 22(1) of the Acts ibid, shall also become liable to pay tax on supply of raw cotton by an agriculturist on reverse charge basis being a registered person.
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• Security Services at Visvesvaraya National Institute of Technology, Nagpur Not Exempt from GST Under Notification No. 12/2017.

  Case-Laws - AAR : Exemption of security service - to Visvesvaraya National Institute of Technology, Nagpur - Sr. No. 66 of Notification No. 12/2017 clearly states that only services provided to an educational institution which provides services by way of pre-school education and education up to higher secondary school or equivalent, will be exempt - hence not exempt in this case
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• Printing Services on Storage Media Taxed at 18% Under Service Code 998386.

  Case-Laws - AAR : Classification of services - printing or reproducing - the activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media will be classifiable under Service Code 998386 and liable to tax @ 18%
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• Court Orders 9% Interest on Delayed CGST Refunds; Payment Due Within Two Months.

  Case-Laws - HC : Delay in grant of refund under CGST Act - the writ applicants are entitled to 9% per annum interest from the date of filing of the GSTR38 - directed to pay within a period of two months
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• GST Rate for Motor Vehicle Door Components: Door Handles, Plastic Fittings, and More Taxed at 18% Under Chapter 3926.

  Case-Laws - AAR : Classification of goods - rate of tax - Door-handle of motor vehicle; Fittings made of plastic for motor vehicle’s doors such as bracket, housing, bracket housing, stator, gasket; and Glove box locking - all the goods mentioned above are classifiable under Chapter 3926 as other goods made of plastic and will be taxable to GST 18%
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Income Tax

• TPO's 'NIL' Assessment of Management Services from AEs Challenged; Case Remanded for Proper Benchmarking.

  Case-Laws - AT : TP Adjustment - receipt of management services from AEs - It is difficult to prove the services in terms of numbers but it can be seen only in ease of doing business in India and satisfaction of the farmers who are availing the services - TPO taken ALP is ‘NIL’ and analysed the management services on benefit test which is not a method in the TP study - TPO should bench mark this transaction separately - remanded
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• Reassessment Under Sec 147 Invalid: Lack of Independent Judgment and Nexus in Sec 148 Notice.

  Case-Laws - AT : Reassessment u/s 147 - the suggestion of DDIT(Inv.) does not confer power to assume jurisdiction upon the AO to initiate reassessment proceedings - notice u/s 148 was issued without any application of mind and examination of the so called material and information received from the investigation wing to establish any nexus, even prima facie, with such information, by way of borrowed satisfaction - not sustainable
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• Revenue Department's Attempt to Reopen Assessment u/ss 147 and 154 Quashed Due to Change of Opinion.

  Case-Laws - AT : Reopening of assessment u/s.147 - revenue department wanted to initiate the proceedings both u/s.147 as well as u/s.154, which itself has established that the information as well as the accounts were very much on record, which were very much in the notice of the AO - on the basis of change of opinion, the AO has not resorted to section 147 - proceedings quashed
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• ITAT's Arm's Length Price decision in TP adjustment case upheld; no substantial question of law raised.

  Case-Laws - HC : TP adjustment - determining the Arm’s Length Price - if the ITAT has given detailed reasons for not remanding the issue to the TPO and the view taken is a plausible one then order of ITAT does not give rise to any substantial question of law
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• High Court's Jurisdiction u/s 260A Limited; Tribunal's Decision Stands Due to Assessee's Missing Declaration Forms.

  Case-Laws - SC : Jurisdiction of High Court u/s 260A - assessee has been unable to present declaration forms that had been filled in by him at the time of his visits to India from abroad - based on one fact it cannot possibly be said that the Appellate Tribunal’s judgment and findings therein are perverse - it is the only entry on facts for the High Court exercising its appellate jurisdiction u/s 260-A - High Court ought not to have interfered
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• Know-how assignment income is non-taxable u/s 55(2)(a); no capital gains on self-generated know-how assets.

  Case-Laws - AT : Taxability of consideration received on assignment of know-how - section 55(2)(a) of the Act makes no reference to know-how - the cost of acquisition of know-how under development being a self-generated asset is not ascertainable, and hence, no chargeable capital gains would arise
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• Assessee Proves Authenticity of Loan Transactions u/s 68; No Income Addition Justified Due to Lack of Evidence.

  Case-Laws - AT : Addition u/s 68 - unsecured cash credit - when assessee had sufficiently discharged the ‘onus’ u/s 68 that was cast upon him for proving the authenticity of the loan transactions then in the absence of any ‘material’ placed on record by the A.O to dislodge the said duly substantiated claim of the assessee, no addition is called for
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• No Penalty Imposed for Human Error in Omitting LTCG from Income Return u/s 271(1)(c) of Income Tax Act.

  Case-Laws - AT : Penalty u/s 271(1)(c) - inadvertent omission - when the assessee had disclosed the deduction pertaining to sale of the three shops from the ‘block of assets’ in its balance sheet then there is substantial force in its claim that the failure to offer LTCG on the sale of the said shops had inadvertently remained omitted to be shown in the return of income - only be described as a human error - no penalty
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• Special Audit Deemed Necessary Due to Complex Accounts u/s 142(2A) of Income Tax Act for Revenue Interest.

  Case-Laws - HC : Special audit u/s 142(2A) - satisfaction - The question of complexity of accounts has to be judged applying the yardstick or test; whether the accounts would be complex and difficult to understand to a normal AO - AO had applied his mind to various aspects like the nature of accounts, method of maintaining accounts, entries recorded etc. and reached to the conclusion that the accounts were complex and it was in the interest of the Revenue that the special audit u/s 142(2A) should be directed
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• Previous Orders Guide AO's Income Assessment, But Independent Scrutiny of Materials Still Required for Accurate Tax Determination.

  Case-Laws - HC : Rule of consistency - the past year or years, the orders made no doubt provide a guide as to the nature of business and the manner in which the AO adopted the method of assessing income but does not preclude in any manner the conducting of independent scrutiny of the material presented before the assessee in later years to determine the amounts legally chargeable as tax
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Customs

• No Penalty for Cotton Import u/s 114AA: Lack of Evidence on Intentional Use of False Information.

  Case-Laws - AT : Levy of penalty u/s 114AA of the Customs Act, 1962 - First PSC which directed for deportation/destruction of the imported cotton but 2nd PSC same issuing authority has remarked differently and cleared the cotton for home consumption - unless it is proved that the person to be penalized has knowingly or intentionally implicated himself in use of false and incorrect materials, there can be no justification for penalty under this Section
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• Amendments to Section 28: Sub-sections (9) & (9A) Apply Retroactively, Impacting Pending Show Cause Notices from March 28, 2018.

  Case-Laws - HC : Jurisdiction - non adjudication of SCN - scope of amended Sub-section (9) and newly inserted (9A) of Section 28 w.e.f. 28.03.2018 - amendment is not retrospective but it is certainly retroactive - mandatory limitation would be applicable treating pending show cause notice as if issued on 29/03/2018 - SCN will have to be accepted as lapsed
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Corporate Law

• Contempt Petition Dismissed Due to Lack of Undertaking or Directions from NCALT in Withdrawal of Appeal Case.

  Case-Laws - AT : Contempt petition - disobedience of NCALT’s order - Appellate Tribunal had allowed the appeal to be withdrawn in view of the consent terms reached between the parties but there was no undertaking given by any party before this Appellate Tribunal nor any direction was issued - No case is made out for initiation of contempt proceedings
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Indian Laws

• India's Code on Wages, 2019: Ensures National Minimum Wage, Equal Pay, and Timely Payments for All Workers.

  News : New Wage Code Bill - The salient features of the Code on Wages, 2019
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• India Updates Insolvency and Liquidation Regulations to Boost Efficiency and Clarity for Corporate Stakeholders.

  News : IBBI amends the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016
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Case Laws:

• GST

• 2019 (7) TMI 1335
  Classification of goods - Input Tax Credit - waste or not - Mahua De-oiled cake/ De-oiled Rice Bran being used as an ingredient of Cattle Feed, Poultry Feed and other animal feeds - Waste generated during the Solvent Extraction process or not? - scope of supply - HELD THAT:- The sale of de-oiled cake is undoubtedly supply . Activities which are not supply are categorically outlined in the GST Act itself. Anything not covered by the exclusion will fall under the ambit of supply. Therefore, it is hard to comprehend the rationale of the appellant in not considering de-oiled cake as supply, since the definition (as quoted above) leaves no ambiguity that anything that is sold with or without consideration, is supply. Having settled the issue of sale of de-oiled cake being supply, it can be concluded that Section 17(2) of the GST Act, 2017 is very much applicable. De-oiled Rice Bran has been fully exempted from CGST vide Entry No. 102A of Notification No. 7/2018-C.T. (R), dated 25-1-2018. so, in terms of Section 17(2) of CGST Act, 2017, the input credit attributable to the supply of this exempted goods i.e. de-oiled rice bran has to be reversed by the appellant. Classification of de-oiled mahua cake - HELD THAT:- The product de-oiled mahua cake is not covered under Heading 2304 or 2305 as different products have been classified under the same. Accordingly, we find support in the claim of the noticee that De-oiled Mahua cake is classifiable under Heading 2306 of Chapter 23 of Customs Tariff Act - Since 5% GST is applicable on file goods falling under Chapter Heading 2306, under Notf. No. 1/2017-Central Tax (Rate), dated 28 June, 2017, as amended, the appellant is required to pay GST @ 5% on the supply of de-oiled Mahua cake accordingly entitled to avail input tax credit on the same.

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• 2019 (7) TMI 1334
  Classification of goods - rate of tax - Door-handle of motor vehicle - Fittings made of plastic for motor vehicle s doors such as bracket, housing, bracket housing, stator, gasket - Glove box locking - HELD THAT:- The expression parts and parts and accessories (whether or not they are identifiable as for the goods of this Section), do not apply to parts of general use, as defined in Note 2 to Section XV of base metal (Section XV) or similar goods of plastic Chapter 39). In other words, the parts of general use will not be classified as parts of the goods of the section XVII that covers the chapters 86 (Railways), 87 (Automobiles), 88 (Aircrafts, Spacecrafts) and 89 (Ships and Boats), even if they are identifiable with the goods of these headings - Once an item is a part of general use, it will be classified according to its constituent material as per Explanatory Note 2 (b) to Section XVII. Door handle - HELD THAT:- Explanatory Note to 8302 lists door handle for automobiles as includible under heading 8302 even if they are designed for use in automobiles. Door handle thus will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the door handle is made of plastic will merit classification under the heading 3926. Brackets - Housing and Bracket Housing - HELD THAT:- Brackets suitable for automobiles find mention in the explanatory note (C) under heading 8302, Similarly, Housing and Bracket Housing are covered under sub-heading 8302 30 under the description mountings and fittings . Thus Brackets, Housing and Bracket Housing will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to their constituent material, In the instant case as the Brackets, Housing and Bracket Housing are made of plastic, they will merit classification under the heading 3926. Washers - HELD THAT:- Washers are mentioned in the heading text of 7318, The item gasket is similar to washer both being placed between two objects where the former is placed between two objects to prevent friction and the latter to prevent leakage. Therefore washers and gaskets will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the washers and gaskets are made of plastic, they will merit classification under the heading 3926. Stator - HELD THAT:- The item Stator is a part of an automobile lock. As the Automobile locks are specifically mentioned in the heading 8301.20, the stator being its part merits classification under 8301.60 (parts). Therefore stators will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the stators are made of plastic, they will merit classification under the heading 3926. Glove box locking - HELD THAT:- Glove box locking is also a lock of an automobile of heading 8301. Therefore will be categorized as part of general use as per Note 2 to Section XV and hence will be classified according to the constituent material. In the instant case as the Glove box locking are made of plastic, they will merit classification under the heading 3926.

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• 2019 (7) TMI 1333
  Classification of services - activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media - whether classifiable under Service Code 998912 or 998386? HELD THAT:- The Applicant is merely printing or reproducing the content given by the photographers or retail customers on a recorded media like pen drive, CD, Memory card or other storage area, etc. The editing or processing is done by the professionals or retail customers themselves. The Applicant merely does colour printing of images from film or digital media and supplies colour prints to the customers. The CBIC Circular No. 84/03/2019 GST dated 01.01.2019 issued under F.No. 354/428/2018-TRU very clearly states that such colour printing of images from film or digital media of 998386 are exclusively excluded from the service code 998912 i.e. Printing and reproduction services of recorded media, on a fee or contract basis . Applying the provisions of the CBIC Circular No. 84/03/2019 GST dated 01.01.2019 issued under F.No. 354/428/2018-TRU to the subject case at hand, it is found that the applicant is supplying services falling under SAC 998386 and the subject transaction is therefore covered under Entry 21 of Notification No. 11/2017- C. Tax (Rate) dated 28.06.2018 and attracts GST @ 18%. The activity of merely printing or reproducing the content given by the photographers / retail customers on pen drive, CD, memory card or any other storage media will be classifiable under Service Code 998386 and liable to tax @ 18%.

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• 2019 (7) TMI 1332
  Educational Institution - services provided to Visvesvaraya National Institute of Technology, Nagpur - exemption under Serial No. 66 of Notification No. 12/2017 - Central Tax (Rate) dated 28 th June 2017 - Rate of tax. Whether the services provided to Visvesvarayya National Institute of Technology, Nagpur will qualify for exemption under Serial No. 66 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017, considering it to be an educational Institution? - HELD THAT:- The applicant is of the opinion that the said Sr.No. 66 is not applicable in their case but VNIT has informed them that GST is not applicable on security services provided by the applicant to them. As per Sr.No.66 (b) (iii) security services or cleaning services or housekeeping services supplied to an educational institution attracts NIL rate of GST. Hence to avail of the benefit of Sr. No.66 mentioned above in the subject case, since the security services are provided by the applicant to VNIT, the latter must fall under the definition of an educational institution . VNIT as per the submissions made by the applicant is not engaged in providing preschool education and education up to higher secondary school or equivalent. Since VNIT as a technical institute is engaged in imparting under-graduate courses, post-graduate courses and Ph. D programs in the field of engineering, architecture and science thereby being engaged in imparting education as a part of a curriculum for obtaining a qualification recognised by law for the time being in force, it would get covered under the definition of educational institution vide clause (ii) mentioned above and therefore it is seen that the security services as in the subject case are provided to an educational institution i.e. VNIT. The applicant has been given the status of a Deemed University by the University Grants Commission. The UGC was formally established 1956 as a statutory body of the Government of India through an Act of Parliament for the coordination, determination and maintenance of standards of university education in India. Since the VNIT has been recognized by the UGC, this would imply that the courses conducted by the applicant are recognized by law - the education provided by VNIT is a part of a curriculum for obtaining a qualification recognised by any law for the time being in force. The proviso to Sr. No. 66 mentioned above very clearly states that only services provided to an educational institution which provides services by way of pre-school education and education up to higher secondary school or equivalent, will be exempt. In the subject case the applicant is not providing services, as an educational institution, by way of pre-school education and education up to higher secondary school or equivalent. Hence Security services provided in the instant case will not be exempt from payment of GST. Whether rate of tax on services provided to Visvesvaraya National Institute of Technology, Nagpur (VNIT) is nil as per Serial no 3 of Notification No 12/2017-Central Tax (Rate) dated 28th June 2017? - HELD THAT:- Sr. No. 3 of Notification No. 12/2017, exempts pure services provided to a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243 W of the Constitution. Thus it is seen that not all services supplied to Governmental authority are exempt from the provisions of goods and services tax. The services supplied should be in nature of, or conform to the function entrusted to them under the Constitution. VNIT has neither been set up by an Act of Parliament or a State Legislature; nor has been established by any Government, with ninety percent or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243 W of the Constitution or to a Panchayat under Article 243G of the Constitution. Hence they cannot be considered as a Governmental Authority - Sr. No. 3 of Notification No, 12/2017 is also not applicable in the subject case.

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• 2019 (7) TMI 1331
  Classification of supply - Composite supply or not - supply of healthcare treatment - supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy, as well as food, room on rent to the in-patients - supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy to the out-patients. Whether the supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment; and hence not taxable under CGST/SGST? - HELD THAT:- In-house patients are patients are admitted by the hospital to receive treatment from disease, illness, etc. Such patients are provided with stay facilities, medicines, consumables, implants, dietary food and other surgery items required for treatment. These patients receive medical facility as per the scheduled procedure and have strict restriction to ensure, quality/quantity of items for consumption. These in-patients are provided medicines, implants, surgical items and other allied items, dietary food advised by nutritionist etc. During the course of such treatment after admission in to the hospital they are also provided rooms on rent. Hence such patients live in the hospital during the course of provision of healthcare services by hospital to the to the patients admitted for diagnosis or treatment in hospital. There is no doubt that the supply of medicines, consumable, implants and allied items provided by the hospital through the pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment - the subject hospital is considered as a clinical establishment under the GST Laws and since it is providing health care services, such services are exempt in view of Sr. No. 74 mentioned above, The entire supply of services by the hospital, like supply of medicines, surgical items, implants, consumables and other allied items, treatment procedures, diagnostic procedures, supply of food to patients, room on rent to the in-patients is part of composite supply of health care treatment. The supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment and hence not taxable under GST Laws. Whether the supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy to the out-patients, is part of composite supply of health care treatment; and hence not taxable under CGST/SGST? - HELD THAT:- The pharmacy run by hospital dispensing medicine to outpatients or bye standers or others can be treated as individual supply of medicine and it is not complete full chain of treatment activity as given to the admitted inpatients for the specific illness by the Doctors or Hospitals. There is major differences are found in connection with in patient and out patients. Hence the criteria given in Sr. No. 74 of Notification No. 12/2017 is not satisfied. Hence sale to out-patients by the pharmacy located in the hospital is not covered under the ambit of health care services. Hence, such supply of medicine and allied goods are taxable. Further, Board s circular also has not considered that such services given to the OPD patients by the Hospitals would be covered under part of composite supply of health care. The transaction is not covered under composite supply, and is therefore out of purview of the Sr.No.74 mentioned above and GST is liable to be paid on such sale effected by the pharmacy.

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• 2019 (7) TMI 1330
  Principles of Natural Justice - order passed without hearing to the petitioner - HELD THAT:- Natural justice is a branch of public law. It is a formidable weapon which can be wielded to secure justice to citizens. Rules of natural justice are basic values which a man has cherished throughout the ages. They are embedded in our constitutional framework and their pristine glory and primacy cannot be allowed to be submerged by exigencies of particular situations or cases. Principles of natural justice control all actions of public authorities by applying rules relating to reasonableness, good faith and justice, equity and good conscience. Natural justice is a part of law which relates to administration of justice. Rules of natural justice are indeed great assurances of justice and fairness - The golden rule which stands firmly established is that the doctrine of natural justice is not only to secure justice but to prevent miscarriage of justice. Its essence is good conscience in a given situation; nothing more-but nothing less. Petition allowed.

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• 2019 (7) TMI 1329
  Maintainability of petition - alternative remedy - Jurisdiction - Validity of Detention Order and Penalty Order - seizure of consignment - Section 129 of UPGST Act, 2017 - HELD THAT:- In the proceedings based on the impugned notice, final order has been passed under the provisions of CGST Act, 2017 and against the said order, the petitioners have got a statutory remedy of appeal under Section 107 of CGST Act, 2017. So, in view of the same, the present writ petition filed by the petitioner is not maintainable and is liable to be dismissed. In view of the fact that the final order has been passed against which petitioners have got a statutory remedy of appeal, we are not inclined to entertain the present writ petition. Petition dismissed.

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• 2019 (7) TMI 1328
  Delay in grant of refund - compensation and interest for delay in grant of refund - HELD THAT:- The issue is identical as decided in the case of M/S SARAF NATURAL STONE VERSUS UNION OF INDIA [2019 (7) TMI 1282 - GUJARAT HIGH COURT] where it was held that the provisions relating to an interest of delayed payment of refund have been consistently held as beneficial and non-discriminatory and it was held that respondents are liable to pay simple interest on the delayed payment at the rate of 9% per annum. This writ application is allowed to the extent that the writ applicants are entitled to the interest for the delayed payment at the rate of 9% per annum - On the aggregate amount of refund, the writ applicants are entitled to 9% per annum interest from the date of filing of the GSTR38 - application disposed off.

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• Income Tax

• 2019 (7) TMI 1327
  Jurisdiction of High Court u/s 260A - reversal of finding of facts - unexplained income - unexplained deposits - HELD THAT:- The impugned judgment has added as unexplained income basically on the ground that the assessee has been unable to present declaration forms that had been filled in by him at the time of his visits to India from abroad. Keeping in mind the fact that these declaration forms were asked for long after such expenditure had, in fact, been incurred, it cannot possibly be said that the Appellate Tribunal s judgment and findings therein are perverse, which is the only entry on facts for the High Court [ 2006 (1) TMI 120 - MADHYA PRADESH HIGH COURT] exercising its appellate jurisdiction under Section 260-A of the Income Tax Act, 1961. Having heard learned counsel for both the parties, we are clearly of the view that the High Court ought not to have interfered with the Appellate Tribunal s Judgment as no substantial question of law arose therefrom.

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• 2019 (7) TMI 1326
  TP adjustment - determining the Arm s Length Price - department requested to remand before TPO as per earlier year - HELD THAT:- The Court finds that in the impugned order, the ITAT has given detailed reasons for not remanding the issue to the TPO. In particular, the ITAT noted that in AYs 2010-11 to 2012-13 the Dispute Resolution Panel ( DRP ) accepted the Assessee s determination of the ALP with regard to two intra group services received by the Assessee viz., Ticketing HUB and VIPFS. As regards the other intra group services, the ALP was ascertained to be NIL by application of the CUP. Court finds that the ITAT has given detailed reasons for accepting the case put forward by the Assessee. The view taken is a plausible one and does not give rise to any substantial question of law. Other submission made is that the ITAT in fact did not consider the materials placed before the TPO and the decision taken thereon by the TPO in relation to each of the intra group services received by the Assessee from its AEs. The Court finds that the ITAT has in fact applied its mind to the evidence on record and given factual findings which this Court does not find to be perverse. No substantial question of law arises

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• 2019 (7) TMI 1325
  Disallowance of commission expenditure - Rule of consistency - the commission amounts were deposited on a particular date and within two day the same or marginally higher amounts were withdrawn - HELD THAT:- This Court notices that the issue of disallowance has been consistently and concurrently ruled against the assessee. The CIT(A) in this regard noticed that the assessee was impressed upon with the need for verification of commission expenses repeatedly in December, 2016 and January, 2017. Despite this, the assessee did not produce a single witness. Summons were issued to ten witnesses under Section 131. Three from the list of ten persons replied. None of these individuals, in fact, appeared before the AO for verification and inquiry. Even the replies by the three parties were unsatisfactory. On this aspect, this Court notice that CIT(A) has extracted relevant details with respect to the concerned parties which shows, prima facie, that the amounts were deposited on a particular date and within two day the same or marginally higher amounts were withdrawn. This Court is of the opinion that all three authorities i.e. AO, CIT(A) and ITAT scrutinized the record and held that the commission claimed, was not supportable in law and therefore, disallowed the deduction claimed, the only ground on which the court could, if at all entertain the appeal is that the basis for such disallowance was entirely nonexistent. Such an argument in the opinion of the court is insubstantial in cases like present. In court s opinion, the reliance upon the so called rule of consistency in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] did not bar the revenue authorities from carrying out their task independently and as they did discharge in respect of the assessment in question. That in the past year or years, the orders made no doubt provide a guide as to the nature of business and the manner in which the assessing authorities adopted the method of assessing income. The method adopted by AO for completing the task, however, does not preclude in any manner the conducting of independent scrutiny of the material presented before the assessee in later years. The rule of consistency in the opinion of the court does not preclude the AO from conducting inquiry which he is bound by law to do, for determining in law what are the true and correct amounts, to determine the amounts legally chargeable as tax - No substantial question of law arises and the appeal is dismissed.

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• 2019 (7) TMI 1324
  Special audit u/s 142(2A) - satisfaction recorded by the Assessing Office - Power of AO to pass audit orders - HELD THAT:- The question of complexity in accounts, we have to apply the test of reasonable man by replacing the word and qualities of a reasonable man, with the word and qualities of a reasonably competent AO. The question of complexity of accounts has to be judged applying the yardstick or test; whether the accounts would be complex and difficult to understand to a normal AO who has basic understanding of accounts etc., without the aid, assistance and help of a Special Auditor. Thus due regard has to be given to nature and character of transactions, method of accounting, whether actuarial were adopted for making entries, basis and effect thereof, etc., though mere volume of entries might not be a justification by themselves as volume and complexity are somewhat different. The satisfaction recorded by the AO as reflected would indicate that the same is not just an eyewash. We are convinced that in the case on hand, the Assessing Officer had applied his mind to various aspects like the nature of accounts, method of maintaining accounts, entries recorded etc. and reached to the conclusion that the accounts were complex and it was in the interest of the Revenue that the special audit u/s 142(2A) should be directed. It will be too much for this Court to try and understand the complexity for and on behalf of the AO. We are of the view that we should not disturb the order passed by the AO in exercise of his powers u/s 142(2A). Writ-application fails and is hereby rejected. The interim order earlier granted stands vacated forthwith. Applicability of law and scope of amendment in Section 142(2A) - HELD THAT:- There has been substantial expansion of scope and ambit of Special Audit u/s 142(2A) of the Act with effect from 1st June 2013. The amended section has been widened to include volume of accounts, doubts about correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of an assessee. These amendments by Finance Act, 2013, with effect from 1st June 2013, substitute the words nature and complexity of accounts of the assessee . We are not concerned with the said amendment in the present case as the impugned order in question directing special audit was passed on 11th May 2007 i.e. before the amendments became effective.

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• 2019 (7) TMI 1323
  Deduction u/s 80IA in respect of AMC charges, other income and in erroneously adding back interest income - HELD THAT:- As decided in M/S. DIEBOLD SYSTEMS P. LTD. VERSUS THE ACIT [ 2019 (7) TMI 543 - MADRAS HIGH COURT] assessee was not able to establish before the AO by producing records. AO after examining the facts of the case, found that the income earned from AMC (Annual Maintenance Charges of ATM), installation and technical charges, consultation charges and licence fee of software do not constitute income from the industrial undertaking since this was not derived from the industrial undertaking, as the men, material and machinery of the Pondicherry industrial undertaking were not used to earn income and therefore, correctly denied deduction u/s 80IA - Decided against assessee. Reopening of assessment u/s 147 - HELD THAT:- On a perusal of the re-assessment order dated 16.03.2006 and the reason for reopening is based on the information which came to the notice of the AO during the course of the assessment proceedings for the assessment year 2001-02 during which the AO came to know that the assessee does not carry out any maintenance work from its industrial unit at Pondicherry. Thus, the reason for reopening in the instant case was based upon the tangible material which came to the notice of the Assessing Officer subsequent to the intimation u/s 143(1). Therefore, the re-assessment initiated u/s 143(3) r.w.s 147 is perfectly legal and valid. We hold that the decision in Tanmac India [ 2017 (1) TMI 122 - MADRAS HIGH COURT] and Orient Craft Ltd. [ 2013 (1) TMI 177 - DELHI HIGH COURT] cannot be applied to the assessee s case and the decisions of the Hon ble Supreme Court in Rajesh Jhaveri Stock Brokers Pvt. Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] and Zuari Estate Development and Investment Co Ltd., [ 2015 (8) TMI 480 - SUPREME COURT] are a clear answer to the case of the assessee. Decided against the assessee.

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• 2019 (7) TMI 1322
  Revision u/s 263 - Addition u/s 14A r.w.r. 8D - whether the order passed by the AO u/s 153A/143(3) dated 30.03.2015 is erroneous as well as prejudicial to the interest of the revenue? - HELD THAT:- Disallowance under Rule 8D(2) (i) is concerned, as it relates to expenditure directly related to the exempted income. Since the direct expenditure is nil therefore disallowance is not required. Hence, order passed by the AO is neither erroneous nor prejudicial to the interest of Revenue so far Rule 8D (2) (i) disallowance is concerned. We note that Rule 8D (2) (ii) relates to disallowance of interest expenditure. The ld Counsel submitted before us the Balance Sheet for A.Y.2013-14, where we note that total own funds consisting share capital and reserve and surplus are which is more than the total investments of 20,69,06,913/-. - Bombay High Court in the case of CIT Vs Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that if there were funds available both interest free and over draft/loans are taken, then a presumption would arise that investment would be out of the interest free funds generated or available with the assessee, if the interest free funds were sufficient to meet the investment. Therefore, so far Rule 8D (2) (ii) is concerned, order passed by the AO is neither erroneous nor prejudicial to the interest of Revenue. Coming to the third limb, that is, so far Rule 8D (2) (iii) is concerned, we note that the Co-ordinate Bench of ITAT Kolkata in the case of REI Agro Ltd. [ 2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investment which yields dividend during the previous year that has to be considered while adopting the average value of investment for the purpose of Rule 8D(2)(iii). The aforesaid view of the Tribunal has since been affirmed by the Hon ble Calcutta High Court as correct in [ 2014 (4) TMI 713 - CALCUTTA HIGH COURT] in the appeal against the order of the Tribunal in the case of REI Agro Ltd (supra). Therefore, assessing officer is supposed to take dividend bearing investments for the purpose of disallowance under Rule 8D(2) (iii) of the Rules, which he had not done, therefore order passed by him is erroneous and prejudicial to the interest of the Revenue, so far third limp Rule 8D(2) (iii) is concerned. That is, AO has not made disallowance under rule 8D(2) (iii) of the Rules, at all. Therefore, we direct the AO to compute the disallowance under rule 8D (2) (iii) taking into account only dividend bearing securities as narrated in the judgment of the Coordinate Bench in the case of REI Agro (supra). - Decided in favour of assessee.

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• 2019 (7) TMI 1321
  Reopening of assessment u/s.147 - difference in gross receipt in TDS credit(26AS) and profit loss Account - AO vide order u/s.143(3)/154 rectified the discrepancy in the order u/s.143(3) - on same ground notice u/s 148 was issued - change of opinion - no fresh information came to the knowledge of the AO - HELD THAT:- Revenue department wanted to initiate the proceedings both u/s.147 as well as u/s.154, which itself has established that the information as well as the accounts were very much on record, which were very much in the notice of the AO as he wanted to invoke the provisions of section 154 to rectify the mistake. Because the AO had issued notice u/s.154, therefore, it was also not in dispute that the alleged discrepancies were nothing but mistake apparent from record. Considering the peculiar situation under which the proceedings were started u/s.147/148 hereby hold that the law does not permit a settled issue to get unsettled by reopening the same I also find that law relating to change of opinion being not permissible for invoking proceedings u/s 147 of the Act is now well settled in the case of Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] . In this case, on the basis of change of opinion, the Assessing officer has resorted to section 147 in reopening of assessment and, therefore, quash the reassessment proceedings u/s.147 and allow this ground of appeal of assessee.

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• 2019 (7) TMI 1320
  Disallowance for provision made for Non-Performing Assets (NPA) - CIT(A) denied deduction u/s 36(1)(viia) being the population of Midnapore Town being much higher than 10,000, and not a Rural Branch - assessee submitted additional evidence stating that population mentioned by CIT(A) is factually incorrect - admission of additional evidence - HELD THAT:- Documentary evidence as additional evidence before the Tribunal along with an application seeking admission thereof on the ground that the same obtained by the assessee after passing of the impugned order of the ld. CIT(Appeals) is relevant to decide the issue involved in Grounds No. 1 to 3 of the assessee s appeal. He has also submitted that this issue may be sent back to the AO for deciding the same afresh after verifying the additional evidence filed by the assessee. Keeping in view the relevance of the additional evidence filed by the assessee, the same is admitted by us. D.R. has also not raised any objection for the admission of the additional evidence as well as for sending the matter back to the AO for verification of the additional evidence. We accordingly set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the AO for deciding the same afresh after verifying the additional evidence filed by the assessee. Grounds are accordingly treated as allowed for statistical purposes. Disallowance of provision made for leave encashment - HELD THAT:- As the issue involved in the present case as well as the material facts relevant thereto are similar to the case of the SRB Associates LLP [ 2017 (9) TMI 1833 - ITAT KOLKATA] , we respectfully follow the order of this Tribunal passed in the said case and restore the matter to the file of the AO for fresh adjudication as per the direction as given in the case of M/s. SRBC Associates LLP. Addition of provision made for difference in General Ledger (GL) and Detailed Ledger (DL) - HELD THAT:- Provision made by the assessee on account of difference between General Ledger and Detailed Ledger as per the guidelines of the RBI is such that the same cannot be said to be a provision made for any obligation or liability. As rightly held by the authorities below, there is no provision in the Income Tax Act under which the said provision can be allowed as deduction. No infirmity in the impugned order of the ld. CIT(Appeals) confirming the disallowance made by the Assessing Officer on account of provision made by the assessee for the difference in its General Ledger and Detailed Ledger and upholding the same, we dismiss Ground No. 5 of the assessee s appeal. Addition of interest accrued on investment - already offered for taxation on receipt basis which was accepted by department - HELD THAT:- We direct the AO to verify the claim of the assessee of having offered the amount in question to tax in A.Y. 2014-15 on receipt basis. If it is found on such verification that the said amount is already assessed to tax in A.Y. 2014-15 and the matter has reached its finality, the AO shall delete the addition of the same amount made in the year under consideration. - Ground is accordingly treated as allowed for statistical purposes.

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• 2019 (7) TMI 1319
  Penalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT:- Having regard to the manner in which the Assessing Officer has issued notice under section 274 r.w.s. 271(l)(c) for assessment year 2011-12 without mentioning that whether the assessee had concealed the particulars of his income or furnished inaccurate particulars of income, it is of the considered view that when the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) of the Act is not sustainable.The proceedings show a non-application of mind by the Assessing Officer and is, thus, unsustainable. - Decided in favour of assessee.

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• 2019 (7) TMI 1318
  TP Adjustment - comparable selection - comparables namely IBN18 and Raj TV inclusion /exclusion - HELD THAT:- IBN18 - After going through Balance Sheet of IBN18 Broadcast Limited, we have observed that the said company has no doubt made losses on overall basis but so far as relevant segment is concerned, the OP/OC is positive at consolidated level , while the company has operating losses at standalone basis. These aspects which go to root of the matter are not looked by authorities below nor contended by assessee before authorities below. Thus, we are of the view that this need to be restored to the AO/TPO to consider this comparable again for denovo adjudication for its inclusion/exclusion as to comparable for determining ALP, after considering standalone as well consolidated results vis- -vis FAR analysis.The assessee is directed to present all explanations/evidences to substantiate for its inclusion as comparable. The AO/TPO are directed to adjudicate on this comparable unhindered by any opinion expressed by us in this order, on merits in accordance with law. We order accordingly. Inclusion of Raj Television Network Limited as comparable cannot be excluded as it is not persistent loss making company because after the exclusion of exceptional losses , the said company Raj TV is in profits in the year under consideration while for immediately preceding year admittedly it was in losses. Thus, we direct inclusion of Raj TV after making adjustment of these exceptional expenses to the tune of 1628.79 lacs, wherein PLI is to be recomputed by AO/TPO. The AO/TPO are directed to include Raj TV as comparable after making adjustment for exceptional item of expenses to the tune of 1628.79 lacs. Applying profitability of 28% on transactions of the assessee with its non-AE s - Respectfully following aforesaid decisions of the ITAT in assessee s own case [ 2016 (9) TMI 1328 - ITAT MUMBAI] and keeping in view similar facts and circumstances for the year under consideration before us, we hold that no adjustment to income is required by computing ALP @28% on transactions of the assessee with non AE s.

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• 2019 (7) TMI 1317
  TP Adjustment - computing Arms Length Price in relations to international transactions entered into by assessee with its AE - Comparable selection - HELD THAT:- Kidde India Limited - We have observed that Kidde India Limited has not only incurred losses for both the years (as per audited financial statements for the year ended 31.03.2010 placed on record) but its networth has also been eroded completely due to accumulated losses exceeding networth. The accumulated loss are to the tune of 92.99 crores as against share capital and reserves and surplus, which are to the tune of 69.91 crores. The said Kidde India Limited has also been dealing in sale of products and spares which is as much as 32% of operating income. No doubt consistency is to be followed in income-tax proceedings but principles of res judicata are not applicable in income-tax proceedings. The onus is on the assessee to bring on record cogent material to substantiate inclusion of Keddy India Limited as comparable for computing ALP. Nitin Fire Protections Limited - So far as Nitin Fire Protections Limited is concerned, perusal of audited financial statements for the year ended 31.03.2010 will reveal that apart from providing turnkey solutions including procurement, designing, system integration, commissioning and installation of safety and security solutions, is also in manufacturing and trading activities. As submitted before us that in these turnkey projects, the project cycle is of 2-3 years and comparable profits for last three years should be taken, as assessee is into executing turnkey project which take two to three years to execute/complete. It is also claimed that assessee has incurred extraordinary expenses due to delay in DIAL project and these extraordinary expenses incurred should be excluded while computing PLI of the assessee. New comparables namely New Fire Engineers Pvt. Ltd. and Logicon Building Systems Pvt. Ltd. - These were not accepted by learned DRP as comparables mainly on the grounds that these comparables were not selected by assessee while conducting its TPSR through Prowess. The learned counsel has prayed that in the interest of justice, matter may be restored to the file of the AO/TPO for fresh adjudication on merits in accordance with law after considering all the contentions of the assessee. DR has also fairly submitted that the issues in this appeal can be set aside and restored to the file of the AO/TPO for fresh adjudication of the issue on merits in accordance with law. In our considered view also keeping in view facts and circumstances of the case, end of justice will be met in this case if the matter is restored back to the file of AO/TPO for fresh adjudication of all the issues which had arisen in this appeal, in accordance with law on merits.

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• 2019 (7) TMI 1316
  TP Adjustment - ALP determination - MAM selection - receipt of management services from AEs - HELD THAT:- We do not agree with the TPO that ALP is NIL and he analysed the management services on benefit test. There is no such method in the TP study. You cannot adopt a method which is not embedded in the study. It is difficult to prove the services in terms of numbers but it can be seen only in ease of doing business in India and satisfaction of the farmers who are availing the services. Without the integrated services, the assessee would not have achieved the results. TPO should have made separate bench marking for all the international transactions. But, he chose to accept the TNMM on the basis for allowing other international transactions. In our view, for the management services, TPO should evaluate the nature of services and the compensation for the same and should be bench marked separately considering the compensation adopted by the assessee. It may be classified under Royalty or FTS. We noticed that the additional evidences submitted by the assessee in paper book are all relating to assistance to assessee on the regular business and assistance in processing and administration issues. This is in support of overall system introduced in the business i.e. like ERP solutions. TPO should bench mark this transaction separately and we do not agree with TPO that the ALP for this transaction as NIL . Accordingly, this issue is remitted to the file of TPO to bench mark the transaction separately and grounds raised by the assessee are partly allowed. Recharacterization of Compulsory Convertible Debentures interest thereon - TPO noted that the assessee has stated that it paid interest @12% on the debentures allotted to its AE and compared the same with PLR and concluded the transaction is within arm s length as the PLR is more than the interest charged by the assessee company to it s AE - HELD THAT:- As in assessee s own case [ 2017 (1) TMI 893 - ITAT HYDERABAD] coming to the issue of adopting the benchmark rate in Indian context, assessee has justified the ALP not only on the basis of SBI PLR, which was at 12.26% for the year under consideration, but also from the data from NSDL website in which average coupon rate ranged from 0.50% to 16.50% with an arithmetic mean of 12.50%. These rates were already before the TPO. Therefore, we are of the opinion that there is no need to restore the matter to the file of the AO for re-examination, when assessee has justified the issuance of CCDs at 12%. In view of that we are of the opinion that the rate at which the CCDs were given are within the range, therefore, no further addition can be considered under the TP provisions. In view of that, the addition so made is deleted and grounds of the assessee considered allowed Interest on outstanding receivables - average collection period computation - 90 days or 6 months - HELD THAT:- As relying on NETCRACKER TECHNOLOGY SOLUTIONS (INDIA) PVT. LTD., VERSUS ASST. COMMISSIONER OF INCOMETAX, CIRCLE 16 (1) , HYDERABAD. [ 2019 (1) TMI 1598 - ITAT HYDERABAD] we remit this issue back to the file of TPO to calculate the average collection period for this AY and determine the adjustment as per the above directions. Accordingly, the grounds raised by the assessee on this issue are treated as allowed for statistical purposes. Addition u/s 14A - HELD THAT:- Assessee has not incurred any direct expenditure and with regard to interest expenditure, all the interest paid were towards committed loans like CCD, working capital loan etc. there is no other interest payment towards general category and there was no fresh investment in this year. We are in agreement with the assessee and we direct the AO not to disallow interest under rule 8D(2)(ii). With regard to disallowance under rule 8D(2)(iii), we are not in agreement with the assessee that there is no administrative expenses for the investment, even though, there is no fresh investment, still assessee has to follow up with the investment. Therefore, we sustain the disallowance under rule 8D(2)(iii). Accordingly, ground raised by the assessee is partly allowed.

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• 2019 (7) TMI 1315
  Penalty u/s 271(1)(c) - inadvertent omission in not offering the LTCG on the sale of the aforesaid shop - HELD THAT:- Chart filed by the assessee alongwith balance sheet, reveals beyond any doubt, that the deduction pertaining to building premises was duly disclosed by the assessee in the aforesaid block of assets . Assessee in the course of the assessment proceedings on learning about its aforesaid inadvertent omission in not offering the LTCG on the sale of the aforesaid shops had worked out its income under the said head and offered the same for tax. When the assessee had disclosed the deduction of 67,00,000/- pertaining to sale of the aforesaid three shops from the block of assets in its balance sheet for the year under consideration, therefore, there is substantial force in its claim that the failure to offer LTCG on the sale of the said shops had inadvertently remained omitted to be shown in the return of income for the year under consideration. We are of the considered view that imposition of penalty u/s 271(1)(c) would be unwarranted in a case where the assessee had committed an inadvertent and a bonafide error, and had not intended or attempted to either conceal its income or furnish inaccurate particulars. As relying on Price Waterhouse Coopers (P.) Ltd. Versus CIT - [2012 (9) TMI 775 - Supreme Court ] failure on the part of the assessee could only be described as a human error which all are prone to make. Further, it was observed that though the assessee should have been careful, but the absence of due care would not mean that the assessee is guilty of either furnishing inaccurate particulars or had attempted to conceal its income. We find that the facts of the case before us clearly falls within the four corners of the aforesaid view taken by the Hon ble Apex Court. - Decided in favour of assessee.

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• 2019 (7) TMI 1314
  TP Adjustment - in relation to export of finished goods - HELD THAT:- In assessee s own case for AY 2013-14 in [ 2019 (2) TMI 1666 - ITAT MUMBAI] had an occasion to consider an identical issue in light of the facts brought out by the AO and rule 10B of I.T. Rules, 1962 and held that while considering the issue of comparability with an uncontrolled transaction, the condition prevailing in the market for which the respective parties to the transaction operate, including the geographical location alongwith other factors relevant to decide which method is suitable for benchmarking transaction. We are of the considered view that the TPO as well as the Ld.DRP were erred in applying CUP as most appropriate method to determine the arm s length price of transactions of the assessee with its AEs for sale of finished goods. Accordingly, we direct the AO / TPO to delete TP adjustment of 3,18,81,702 in relation to export of finished goods. Payment of royalties for use of technical know how - HELD THAT:- We find that the Tribunal had an occasion to consider an identical issue in assessee s own case for AY 2013-14 [ 2019 (2) TMI 1666 - ITAT MUMBAI] and after considering relevant submissions of the assessee and also by following its earlier order in assessee s own case for AY 2012-13 held that CUP is not most appropriate method for benchmarking royalty payment for use of technical know how because of geographical differences. We direct the AO / TPO to delete TP adjustment in relation to payment of royalty for use of technical know how. Payment of interest on external commercial borrowings (ECB) loan - HELD THAT:- As in assessee s own case for AY 2013-14 [ 2019 (2) TMI 1666 - ITAT MUMBAI] had considered an identical issue and by following its earlier decision in the case of ION Exchange India Ltd vs ADIT [ 2014 (2) TMI 1331 - ITAT MUMBAI] held that arm s length price of the interest to be charged on the ECB loan availed from the AE has to be determined at six months USD LIBOR rate (+) 300 points. We direct the AO / TPO to delete TP adjustment made in relation to payment of interest on external commercial borrowing loan. TP adjustment in relation to availing of information systems (IS) services - HELD THAT:- We find that the coordinate bench of the ITAT, Mumbai Bench K in assessee s own case for AY 2012-13 [ 2018 (9) TMI 1007 - ITAT MUMBAI] had considered an identical issue. We further noted that the Tribunal in assessee s own case for AY 2013-14, after considering relevant facts, held that the TPO was erred in not following any one of the most appropriate method prescribed under the statute to determine arm s length price of international transactions of the assessee with its AE, but made adjustment on an adhoc or estimate basis without any valid reasons. We direct the AO / TPO to delete TP adjustment in relation to availing of information system services. Disallowance in respect of employees contribution to provident fund - not paid within the due dates specified under the respective Act u/s 2(24)(x) r.w. Explanation to section 36(1)(viia) - HELD THAT:- This legal proposition is supported by the decision of Hon ble Bombay High Court in the case of CIT vs Ghatge Patil Transport [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] . This legal proposition is further supported by the decision in the case of CIT vs Jaipur Vidyut Vitran Nigam Ltd [ 2018 (7) TMI 1327 - SC ORDER] where the Hon ble Supreme Court has dismissed SLP filed by the revenue against the decision of Hon ble Rajasthan High Court [ 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] by holding that amount claimed on payment of PF ESI having been deposited on or before due date of filing of return, same cannot be disallowed u/s 43B or u/s 36(1)(viia). In this view of the matter and respectfully following the case laws discussed hereinabove, we are of the considered view that the AO was erred in disallowing employees contribution to PF u/s 43B, even though such payment has been made on or before due date of filing return of income u/s 139(1) . Hence, we direct the AO to delete addition made towards disallowance of employees contribution to PF.

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• 2019 (7) TMI 1313
  Addition u/s 68 - unsecured cash credit - authenticity of the loan transactions under consideration - Addition based on search proceedings conducted on accommodation entry provider and their statement - HELD THAT:- assessee placed on record supporting documentary evidence viz. (i) copies of the returns of the lender companies; (ii) copies of their audited financial statements; (iii) copies of the bank accounts of the lender companies; and (iv) the affidavits of the principle officers of the lender companies, wherein they had confirmed the loan transactions. On a perusal of the bank accounts of the aforementioned lender companies, all of which we find were being assessed to income tax, therein revealed that there was no immediate cash deposits in their respective bank accounts in order to facilitate advancing of the loans to the assessee. In nutshell it is neither the case of the revenue, nor a fact borne from the records, that the assessee had routed his own money in the garb of the unsecured loans raised from the aforementioned parties. As observed by the CIT(A), the assessee had also deducted tax at source at the time of payment/crediting of the interest on the loans raised from the aforementioned companies. Accordingly, in the backdrop of the aforesaid facts, we are of a strong conviction that the assessee had sufficiently discharged the onus that was cast upon him as regards proving the authenticity of the loan transactions under consideration. A.O except for harping on the fact that the assessee had raised the loans from the companies which were controlled by Shri Praveen Kumar Jain, had absolutely done nothing which would conclusively prove that no genuine loans were raised by the assessee from the aforesaid companies. On the contrary, the notices which were issued by the A.O under Sec.133(6) to the aforementioned companies, wherein they were called to share certain information viz. nature of activities of the lender companies, source for giving the loans etc., were duly complied with by the said concerns and the requisite documents were placed on the record of the A.O by the aforementioned companies. We find that the A.O who ought to have made necessary verifications as regards the authenticity of the loan transactions by summoning the principal officers of the aforementioned companies u/s 131, and also carrying out field inquiries/investigations as regards the identity and creditworthiness of the investor companies, and also the genuineness of the transactions, had however, not even done the bare minimum. We find, that the CIT(A) observing that as the assessee had duly discharged the onus that was cast upon him under Sec. 68 for proving the authenticity of the loan transactions, therefore, in the absence of any material placed on record by the A.O to dislodge the said duly substantiated claim of the assessee, there was no occasion for him to have to re-characterised the loans raised by the assessee as accommodation entries. - Decided in favour of assessee.

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• 2019 (7) TMI 1312
  Consideration received on assignment of know-how - assignment of know how relating to scientific, medical and technical documents relating to development and manufacture of non-pegylated liposomal doxorubicin an oncology product under development - characterization of income - the assessee claimed as exempt as capital receipt - AO taxed u/s 41(1) - in appeal CIT(A) taxed as capital gain as self generated assets - HELD THAT:- CIT(A) has held that the cost of acquisition is to be determined in the present case by relying on the fiction contained in section 55(2)(a). According to him the capital asset which was transferred in the present case was a right to manufacture, produce or process any article or thing and hence, the cost of acquisition must be deemed to be Nil. In the present case, first of all the know-how was under development and therefore, as a consequence of its transfer, the transferee did not acquire any right to manufacture, produce or process any article or thing at this stage. Further, the simplicitier transfer of knowhow cannot be equated to a right to manufacture as contemplated by section 55(2)(a). The know-how when fully developed would nable manufacture or production or processing of an article or thing. However, it would not give any right in respect thereof. It is well settled position in law that know-how with respect to a product would give knowledge about how the product is to be manufactured. The said know-how is not registered. Therefore, it does not confer any rights on its owner. The said knowledge only enables the manufacture of the product but does not confer any manufacturing rights. In view thereof, transfer of know-how cannot be regarded as transfer of right to manufacture or produce or process an article or thing for the purposes of Section 55(2)(a) of the Act. What the section contemplates is the grant of a right to manufacture say by grant of a license to use a patent. Moreover, section 55(2)(a) of the Act makes no reference to know-how, which is the asset under consideration. Hence, the CIT(A) was not justified in holding that the capital gains should be computed with the cost of acquisition in respect of the said asset being taken as Nil. He ought to have held that the cost of acquisition of know-how under development being a self-generated asset is not ascertainable, and hence, no chargeable capital gains would arise

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• 2019 (7) TMI 1311
  Reopening of assessment u/s 147 - as recorded in reasons AO has reopened the assessment solely on the basis of suggestion/dictum of DGIT(Inv.), New Delhi - non application of mind being constitutes borrowed satisfaction - HELD THAT:- From the reasons recorded by the AO, it is evident that he has formed reason to believe that income of 85,00,000/- has escaped assessment within the meaning of section 147 based on the suggestion of DDIT(Inv.), New Delhi that in the case of the assessee, notice u/s 148 of the Act for AY 2010-11 is required to be issued to bring to tax the undisclosed income regarding accommodation entry of 85,00,000/- obtained by the assessee. The provisions of section 147 mandates that reassessment proceedings can be attracted only if the AO has reason to believe that any income chargeable to tax has escaped assessment. It is the opinion and belief of the AO which initiates reassessment proceedings and not the suggestion of any superior or parallel authority. The suggestion of DDIT(Inv.) does not confer power to assume jurisdiction up on the AO to initiate reassessment proceedings. Therefore, in the present case, the reasons for initiating reassessment proceedings are against the spirit of provisions of section 147 of the Act and the notice issued u/s 148 of the Act on the suggestion of DDIT(Inv.) by the AO is bad in law. AO has proceeded to initiate reassessment proceedings u/s 147 of the Act and to issue notice u/s 148 of the Act without any application of mind and examination of the so called material and information received from the investigation wing to establish any nexus, even prima facie, with such information, by way of borrowed satisfaction and following Deepraj Hospital Pvt. Ltd. [ 2018 (6) TMI 496 - ITAT AGRA] we accept the grievance of the assessee justified. As such, the impugned order, notice u/s 148 of the Act and reassessment proceedings u/s 147 are not sustainable in the eyes of law. - Decided in favour of assessee.

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• 2019 (7) TMI 1310
  Assessment u/s 153A - disallowance of claim of agricultural income earned from the lands taken on lease - the assessee did not even furnish any proof of agricultural activities was being carried out at the said lease hold land - HELD THAT:- When the assessee has claimed to have been carrying out agricultural activity at such a large scale, the normal corollary would be that assessee might have incurred huge expenses in the form of purchase of seed, tilling/cultivation of land, electricity bills and transportation of the agricultural produce and above all proof of sale of agricultural produce. In our considered view, the evidences so furnished by the assessee in support of his claim are not sufficient to come to a conclusion that the assessee has been carrying out any agricultural activity at the lease hold land and earning agricultural income there from. Therefore, the finding of fact as arrived at by the authorities below cannot be disturbed. This ground of the assessee s appeal is dismissed. Addition of opening cash balance - HELD THAT:- It is undisputed fact that the revenue has assessed business income from transport business by applying a net profit @ 8%. Therefore, it cannot be presumed that assessee was not having opening cash balance. Considering the totality of the facts, we delete this addition. Assessment of business income from transport business by applying a net profit @ 8% - HELD THAT:- We find that the A.O. has estimated the profit without comparing with similarly situated persons. We find that the Tribunal in one of the cases has taken a view of net receipt @ 5.5%. We therefore taking a consistent view direct the A.O. to adopt the net profit @ 5.5% and re-compute the addition accordingly. 37. Ground No.3 is general in nature and needs no separate adjudication. Unsecured temporary loans - proof of returning the same was filed - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. The assessing officer has not given any finding whether these amounts were repaid during the year under consideration despite the matter was restored to the A.O. The assessee has placed on record proof of returning of amount through banking channel which is not rebutted by the revenue, therefore, we direct the A.O. to delete this addition Addition u/s 68 - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. It was incumbent upon the assessee to prove genuineness of the transactions, identity and creditworthiness of the creditors. The assessee has failed to discharge onus as placed on him to prove. Therefore, we do not see any infirmity in the order of the Ld. CIT(A) and the same is hereby affirmed. Unexplained bank a/cs of Fareeda Sultan - HELD THAT:- As perused the materials available on record and gone through the orders of the authorities below. We find that the money credited to in the account of wife of the assessee amounting to 45,000/- has been added to the income of the assessee. In our view, the A.O. was not justified to make addition in the hands of the assessee. Without considering the fact that such a small amount could be saving from the gifts, etc. therefore, we direct the A.O. to delete this addition.

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• 2019 (7) TMI 1309
  Taxability of the management fee received as fees for technical services - India Singapore DTAA - business profit or FTS - nature of management fee earned from its Indian subsidiary DDIL - Existence in PE in India - HELD THAT:- The AO while completing the proceedings for the assessment year 2011 12 in pursuance to the directions of the Tribunal [ 2017 (5) TMI 720 - ITAT MUMBAI] and Hon ble Jurisdictional High Court [2018 (7) TMI 1256 - BOMBAY HIGH COURT ] has also held that the management fee received by the assessee is in the nature of business profit and not fees for technical services. Therefore, following the decision of the Tribunal in assessee s own case for the assessment year 2012 13 and 2013 14 [ 2018 (12) TMI 57 - ITAT MUMBAI] we hold that the management fee received by the assessee from DDIL is not in the nature of fees for technical services but business profit. Having held so, it is necessary to examine whether such business profit is taxable in India. In this regard, the contention of the learned Authorised Representative is, as per Article 5(6)(b) of India Singapore Tax Treaty if the employees of the assessee for rendering services to the AE in India for a period of more than 30 days, it will constitute PE. He submitted, in the relevant previous year, only two employees of the assessee have stayed in India for rendering services for 18 man days and 15 solar days. Thus, he submitted, in neither of the cases, the stay of the employees in India has exceeded 30 days. That being the case, no PE existed in India to bring to tax the business profit earned by the assessee. In our view, the aforesaid claim of the assessee has neither been considered by the Assessing Officer nor by learned DRP, as; they have treated the management fee received by the assessee as fees for technical services. In view of the aforesaid, we direct the Assessing Officer to examine assessee s claim that there is no PE in India in terms of Article 5(6)(b) of the India Singapore Tax Treaty. In case assessee s claim is found to be correct, no part of the management fee would be taxable in India. Therefore, subject to the aforesaid verification, the grounds raised are allowed. Interest u/s 234B - HELD THAT:- As decided in favour of the assessee by the Tribunal while deciding assessee s appeals for the assessment years 2011 12, 2012 13 and 2013 14. While deciding the issue, the Tribunal has held that liability to pay advance tax is not on a non resident as the liability is on the payer to deduct tax at source under section 195 of the Act while making such payment. Following the decision of the Co ordinate Bench in assessee s own case, we hold that interest under section 234B is not chargeable.

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• Customs

• 2019 (7) TMI 1337
  Principles of natural justice - non-furnishing of the communication dated 25.5.2017 - HELD THAT:- The material which was not furnished to the petitioner has been taken into account while passing final impugned order, thereby, violating the fundamental principles of natural justice, counsel for the parties have agreed for remanding the matter back to the Settlement Commission for a fresh adjudication in accordance with law. On the alternative prayer of the counsel for petitioner for referring the matter back to the Adjudicating Authority, it is also agreed that in case of non-consensus of claim/counter claim i.e. duty declared by petitioner vis-a-vis duty proposed by DRI, the Settlement Commission shall also consider the aspect of referring back the matter to the adjudicating authority in view of the provisions of Section 127-I of the Customs Act, 1962 and case law on the issue. The impugned order dated 31.7.2017, (Annexure P13), passed by the Customs, Central Excise and Service Tax Settlement Commission, is set aside with a direction to the Settlement Commission to decide the issue afresh in accordance with law.

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• 2019 (7) TMI 1308
  Non-fulfilment of export obligations in respect of the goods imported without payment of duty - benefit of N/N. 47/02 dated 22nd April, 2002 - basic grievance of the petitioners is that the impugned order was never served upon the petitioners nor was the demand / Show-cause Notice or notices of hearing which preceded the impugned order were ever served upon the petitioner - HELD THAT:- In the facts of this case, no occasion can arise to relegate the petitioner to adopt the alternative remedy of statutory appeal. This as the decision making process leading to the impugned order dated 7th June, 2017 was bad. Therefore, the impugned order dated 7th June, 2017 is set aside - In case, the respondents are desirous of proceeding against the petitioners alleging breach of Notification No.47/02 dated 22nd April, 2002 then they would serve an appropriate Show-Cause / Demand Notice upon the petitioners and pass an order after hearing the petitioners. Petition disposed off.

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• 2019 (7) TMI 1307
  Jurisdiction - power of DRI to issue SCN - non adjudication of SCN - scope of amended Sub-section (9) and newly inserted (9A) of Section 28 w.e.f. 28.03.2018 - retrospective or retroactive - HELD THAT:- From the bare perusal of amended Sub-section (9) and newly inserted (9A) of Section 28 w.e.f. 28.03.2018, it is evident that authorities are bound to pass order within one year from the date of Show Cause Notice in cases of Custom Duty not paid/short levied and said period may be extended for a further period of one year by any officer senior in rank to the proper officer having regard to the circumstances under which proper officer was prevented from passing an order before the expiry/lapse of the initial stipulated one year. Still further in case any circumstance as noticed in Sub-section (9A) exists, the extended period of one year provided in Sub Section 9 shall commence from the date when such reason ceases to exist provided the proper officer informs the person concerned of the reason for such non determination of amount of duty or interest under Sub Section 8. The only outcome of non adjudication by the proper officer within one year without invoking of Sub-section (9A) or within the extended period of one year, if any, by a senior officer in terms of the first proviso to Sub Section (9) would be lapsing of notice, as provided in the second proviso to the Sub Section (9) of the amended Section 28 of the 1962 Act. The contention of the counsel for the respondents that amended Section 28 is not applicable in the case of Petitioners deserves to be rejected because amendment is not retrospective but it is certainly retroactive. Mandatory limitation would be applicable treating pending show cause notice as if issued on 29/03/2018. In the present writ petitions, the Respondent-DRI issued Show Cause Notice on 20.02.2009 ( P-6 ) 19.03.2009 ( P-9 ) for short levied custom duty and interest due to mis-declaration of description and value of goods relating to the two partnership firms/petitioners and at that point of time the proper officer was required to pass an order within one year i.e. By 2010 where it was possible to do so. However after the Amendment w.e.f. 29.03.2018, the Respondent was bound either to pass an order within one year i.e. by 28.03.2019 in terms of clause (b) of Sub Section (9) of amended Section 28 or within the extended time of one year in terms of first proviso , which is concededly not the case at hand or the extended period in terms of requirement of Sub Section (9A) which also is not the case at hand - the inevitable conclusion is that the show cause notices ( P-6 ) and ( P-9 ) in respective writ petitions will have to be accepted as lapsed. Petition allowed.

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• 2019 (7) TMI 1306
  Imposition of Pre-import condition on imports made under the advanced authorization licenses - vires of Government of India Notification dated 13.10.2017 - recording of statements u/s 108 of the Customs Act - HELD THAT:- The issue raised in this petition is no longer resjudicata in view of the decision of this Court in the case of MESSRS MAXIM TUBES COMPANY PVT LTD. VERSUS UNION OF INDIA [ 2019 (2) TMI 1445 - GUJARAT HIGH COURT] where it was held The preimport condition contained in paragraph 4.14 of the Foreign Trade Policy, 20152020 inserted vide Notification No.33/20152020 dated 13.10.2017, and inserted vide clause (xii) in Notification No.18/2015Cus vide Notification No.79/2017Cus dated 13.10.2017, are hereby struck down as being ultra vires the Advance Authorisation Scheme as contained in the Foreign Trade Policy, 20152020 as well as the provisions of the Handbook of Procedures. Consequently, all proceedings initiated for violation of preimport condition would no longer survive. Under such circumstances, no further adjudication is necessary in the present matter. Petition disposed off.

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• 2019 (7) TMI 1305
  Levy of penalty u/s 114AA of the Customs Act, 1962 - when admittedly no fault is found by the authority, can its report be still held to be available, if not for anything, but for levying penalty alone under Section 114AA ibid? - HELD THAT:- The impugned penalty is for an express default and when the report itself has a clean slate, there cannot be any penalty, at least with respect to that report. This is also for the reason that the Commissioner (Appeals) has, in her first order, set aside the entire issue for passing fresh adjudication order in the light of the second report. The natural corollary is that the first report becomes non-est. Hence, I do not find any basis for imposition nor has the Revenue brought out any raison detre for imposition of the impugned penalty on record since the very basis i.e., the alleged fake report is itself not there on board anymore. The Adjudicating Authority has been injudicious and peremptory in imposition of the impugned penalty under Section 114AA ibid, since, unless it is proved that the person to be penalized has knowingly or intentionally implicated himself in use of false and incorrect materials, there can be no justification for penalty under this Section. This requirement of factual finding itself is not there and nor has it been answered satisfactorily either in the Show Cause Notice or in the orders of the lower authorities - impugned order set aside. Penalty deleted - appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 1303
  Non-compliance with the requirement of pre-deposit and penalty - pre-amendment benefit of Section 129E of the Customs Act, 1962 - whether the petitioner would be entitled to the benefit of the pre-amended Section 129E of the Customs Act, 1962 since the right to file an appeal had accrued prior to the amendment to Section 129E of the Customs Act, 1962? HELD THAT:- It could be seen that after the amendment, the appellant has to deposit 7.5% of the duty, in case where duty or duty and penalty are in dispute, or penalty, whether such penalty is in dispute, in pursuance to a decision or an order passed by an officer of customs - There is no provision to waive, the pre-deposit of 7.5% on the alleged duty and penalty payable. The amended Section also makes it clear that this Section shall not apply to stay applications and appeals pending before the appellate authority prior to commencement of Finance (Nos.2) Act, 2014. Prior to amendment, there was a discretion given to the tribunal, to dispense with the pre-deposit. A right to appeal, is only a statutory right. The right to file an appeal can be hedged by conditions. If the argument of the petitioner is accepted then it would mean that there is a vested right in any appellant to claim the benefit of waiver of pre-deposit. Reading of Section 129E, as it stood prior to amendment shows that the appellant, before the tribunal, would apply to the tribunal for waiver of the entire pre-deposit and it was the discretion of the tribunal, whether to waive it or not. Further the proviso to section 129E after amendment does states that the pre-amended section will apply only to appeals. Pending on the commencement of Finance (No.2) Act 2014. Therefore, an appeal filed after the amendment should be governed by the old Section The entire Section 129E now stands substituted by the amended Act 25 of 2014. In such a case, the appeal would be governed only by the Section which stands on the date, when the appeal is sought to be filed - Section 6 of the General Clause Act, which deals with repeal cannot be applied to situations where the entire Section has been substituted. Petition dismissed.

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• Corporate Laws

• 2019 (7) TMI 1304
  Contempt petition - contempt of disobedience of this Appellate Tribunal s order - wilful breach of the undertaking given by the Contemnors - Terms of Settlement - HELD THAT:- Company Appeal (AT) No. 99 of 2018 was not decided by this Appellate Tribunal on merit and was allowed to be withdrawn on 29th May, 2018 as the parties reached the Terms of Settlement . Subsequently on 29th June, 2019, though Interlocutory Application was not filed for any decision, the appeal having withdrawn, it was taken on record and the Consent Terms , which parties treated as final decree and in absence of any date shown therein, this Appellate Tribunal merely stated that we treat it as an agreement reached between the parties on 15th June, 2018. From bare perusal of the orders passed on 29th May, 2018 and 29th June, 2018, it is clear that no undertaking was given by any of the parties before this Appellate Tribunal. In fact the appeal was allowed to be withdrawn in view of the Consent Terms reached between the parties. Similar issue fell for consideration before the Hon ble Supreme Court in Babu Ram Gupta vs. Sudhir Bhasin and another [ 1979 (4) TMI 164 - SUPREME COURT ] , wherein the Hon ble Supreme Court observed that in absence of a written undertaking given by the contemnor to the court or incorporation of the same by the court in its order, mere non-compliance of a consent order or compromise decree, would not amount to civil contempt. The consent terms agreed upon by the parties if not carried upon, can be a ground for execution of a compromise decree or the Consent Terms but it cannot be a ground for initiation of a contempt proceeding. This Appellate Tribunal had not gone in to merit and allowed the appeal to be withdrawn on 29th May, 2018 in view of the consent terms reached between the parties. In the disposed of appeal, Interlocutory Application was filed to show that the parties have reached the final consent terms, but there was no undertaking given by any party before this Appellate Tribunal nor any direction was issued - Petitioners filed the Contempt Petitions for execution of their consent terms , which will be apparent from the fact that companies namely Reliance Communications Infrastructure Limited ; Reliance Infratel Limited and Reliance Communications Limited, have also been impleaded as contemnors, though it is not maintainable against the companies. No case is made out for initiation of contempt proceedings against any of the alleged Contemnors Respondents - application dismissed.

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• Insolvency & Bankruptcy

• 2019 (7) TMI 1302
  Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - default in repayment of amount - HELD THAT:- It is evident that the default has occurred, which meets the requirement of Section 3(11) and (12) of the I Code to trigger the CIRP in respect of the Corporate Debtor company - it is established that there is default of debts which comes to Rs.l47,04,98,496.01ps. Hence, the present application can be considered for its Admission. Petition admitted - moratorium declared.

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• 2019 (7) TMI 1301
  Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - eligibility of Corporate Debtor for filing an application u/s 10 of Insolvency Bankruptcy Code 2016 - HELD THAT:- From the record, it appears that there is income and profit generated by the Company in the financial year 31st March, 2017, we are not inclined to interfere with the impugned order. Appeal dismissed.

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• Service Tax

• 2019 (7) TMI 1300
  100% EOU - refund of CENVAT Credit - input services - pre-publication services and related services for books and journals - reverse charge mechanism - HELD THAT:- The decision of the Hon ble High Court of Judicature at Madras in the case of M/s. 3E Infotech [ 2018 (7) TMI 276 - MADRAS HIGH COURT ] comes to the rescue of the appellant despite the fact that there was no application for condonation of delay and despite the fact that the so-called advice was not even an obiter. This is because the refund accrued to the assessee-appellant by virtue of its export and not as a consequence of an order of the Tribunal. The impugned order and the rejection cannot sustain - appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 1299
  Refund of CENVAT Credit - export of service - periods from April 2016 to September 2016 and October 2016 to March 2017 - Rule 5 of the CENVAT Credit Rules, 2004 - HELD THAT:- Issue decided in the case of M/S. GLOBAL ANALYTICS INDIA PVT. LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE [2019 (7) TMI 1185 - CESTAT CHENNAI] where it was held that the denial of refund is not justified - refund is to be allowed. Scope of SCN - HELD THAT:- The Adjudicating Authority has clearly travelled beyond the Show Cause Notice, for which reason also the rejection of refund cannot sustain - Moreover, the Revenue has granted refund on the very same set of facts, that too, for a later year, which is also a fact on record. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (7) TMI 1298
  Condonation of delay of 2743 days in filing appeal - reasonable reason to condone such delay or not - HELD THAT:- To a pointed query it is not denied that notice of the appeal filed by the department had been received by the appellant in the year 2010 itself, therefore, mere fresh receipt of the notice of the date of hearing issued by the Tribunal would not constitute a sufficient ground at all to urge that fresh cause of action had accrued so as to condone the previous delay since the year 2010 upon taking up a fresh decision to file an appeal - the reasons recorded by the Tribunal in not condoning such a huge delay of 2743 days does not suffer from any infirmity. No question of law much less substantial question of law arises for determination in the present appeal which is hereby dismissed.

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• 2019 (7) TMI 1297
  CENVAT Credit - input which was not used by it in the manufacture of any dutiable products - Rule 6 (1) of the CENVAT Credit Rules, 2004 - fact of wrongly availing CENVAT Credit came to light only during verification/audit in October 2015 - suppression of facts or not - extended period of limitation - penalty - HELD THAT:- The undisputed fact therefore remains that the allegation of wrong availment was detected only from the Books/records of the assessee; there is no whisper about finding the alleged irregularity not in the context of the Books/records of the assessee but otherwise and there is also no whisper about any independent enquiry yielding any result. Further also it is not the case of the Revenue nor is there any finding that there was an act of suppression by which the appellant intended to evade the tax/duty or successfully evaded the payment of duty. Albeit Show Cause Notice alleges contravention of Rule 6 (1), there is nothing beyond this; no whisper about suppression, fraud, etc., much less even intention to evade payment of duty, in the Show Cause Notice. In the case on hand, there is no dispute about the fact that the ER-1 return disclosed the availment of CENVAT Credit and even though it is filed under self-assessment system, the Officers are supposed to scrutinize the same. Just because the assessee had taken CENVAT Credit in respect of certain input services which according to the Revenue was not admissible, it cannot be concluded that such credit had been taken knowing very well that the same was inadmissible unless some evidence is brought on record. Penalties - HELD THAT:- The appellant, upon being pointed out, did reverse the above credit and duly reflected the same in their ER-1 return filed for the month of January 2016 - Section 11AC of the Central Excise Act, 1944 provides that where any duty of excise has not been levied or paid or has been short-levied or short-paid, etc., by reason of fraud, collusion, etc., with an intent to evade payment of duty, such person is liable to pay a penalty equal to the duty determined - As per the provision of Rule 15 (2) of the CENVAT Credit Rules, 2004, in a case where the CENVAT Credit has been taken and utilized wrongly by reason of fraud, suppression, etc., and in contravention of any of the provisions of the Central Excise Act or of the rules made thereunder with an intent to evade payment of duty, the manufacturer shall also be liable to pay penalty in terms of the provisions of Section 11AC of the Central Excise Act. Extended Period of Limitation - HELD THAT:- In the case on hand, the SCN issued without the specific allegation of suppression, fraud, etc., invoking the larger period of limitation cannot therefore sustain - The impugned order for the period from December 2012 to October 2014 cannot sustain and therefore, the same is set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 1296
  CENVAT Credit - input services - Insurance Agency Service - Telephone Service - Business Auxiliary Service - Travel Agency Service - Cost Accountant Service - Courier Service - Construction Service - Repairs and Maintenance Service - Air Travel Agency Service - period from October 2010 to March 2011. CENVAT Credit - input services - Courier/Transportation (GTA) Service - HELD THAT:- There is no agreement/contract on record and hence, in all fairness, both the assessee as well as the Revenue should have the benefit of the same and therefore, the issue requires re-adjudication - matter on remand. Pest Control service - HELD THAT:- This Bench in the case of M/S. HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI OUTER [ 2019 (2) TMI 404 - CESTAT CHENNAI] covers the issue on hand wherein it was held that the pest control services availed by the appellant are input services and therefore the same are eligible for credit. Employee Medical Maintenance Service - HELD THAT:- The appellant enables its employees to undergo medical examination twice in a year keeping in mind the health of its employees, which is also in tune with the Factories Act, 1948 which makes it mandatory for an employer to take care of the health, safety and welfare of each of its employees - Credit allowed. Hotel Service - HELD THAT:- Mumbai bench of the Tribunal in the case of WARBURG PINCUS INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX-I, MUMBAI [ 2018 (4) TMI 482 - CESTAT MUMBAI] has held that the services are input service for providing the output service - credit allowed. Appeal allowed in part and part matter on remand.

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• CST, VAT & Sales Tax

• 2019 (7) TMI 1295
  Validity of Deemed Assessment - Section 27 of TNVAT Act - reversal of Input Tax credit - HELD THAT:- What is of importance is mismatch. In the instant case, after hearing both the learned counsel, there is no disputation that this matter is covered by an order made by this Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [ 2017 (3) TMI 536 - MADRAS HIGH COURT] where the Matters are remanded to the respective Assessing Officers, to undertake a fresh exercise by conducting a thorough enquiry in consultation with the Assessing Officers of the other end dealer. Impugned order is set aside and remitted back to the respondent - petition allowed by way of remand.

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• 2019 (7) TMI 1294
  Validity of deemed assessment - cancellation of Registration Certificates of dealers - dealers from whom writ petitioner had purchased taxable goods post-assessment year - HELD THAT:- Impugned revised assessment order shall now be treated as a Show Cause Notice - Writ petitioner shall send his reply/objections to the aforesaid SCN along with 15% proposed tax payable (excluding penalty) within a fortnight from the date of receipt of a copy of this order. Petition disposed off.

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• 2019 (7) TMI 1293
  Validity of reassessment order - reversal of Input tax credit - Section 27 of TNVAT Act - HELD THAT:- There is no disputation or disagreement before this Court in the hearing today that the writ petitioner, who was issued with revisional notices prior to the impugned revised assessment orders did not send any objections - As the writ petitioner did not send objections in spite of being given an opportunity, it may be unfair to examine the impugned revised assessment orders on various submissions, which are now being made in the instant writ petitions as these submissions are more in the nature of reply to the revisional notice. Impugned orders are not disturbed or interfered with. However, it is made clear that impugned orders are not sustained on merits.

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• 2019 (7) TMI 1292
  Validity of assessment order - grievance of the petitioner is that the impugned orders both dated 29th March, 2019 are nonspeaking orders - principles of natural justice - HELD THAT:- It would be evident that the impugned orders have not dealt with the petitioner s submissions. In the above view, no useful purpose would be served by relegating the petitioner s to file an appeal to the statutory Authorities under the Act. This is so as the decision making process is flawed as it does not consider the petitioner s submissions. Unless the petitioner s submissions are dealt with by the Assessing Officer at the original stage, the petitioner would be handicapped in pleading its case before the Appellate Authority as it would have no clue as to why the submissions of the petitioner were not accepted. Besides, the Appellate Authority would also be at a loss to know the exact reasons which weighed with the original Authority to discard the submissions made by the petitioner. Both the impugned orders set aside - the assessment for the period 2010-11 restored to the Assessing Officer for fresh consideration under the MVAT and CST Act - petition allowed.

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• 2019 (7) TMI 1291
  Stay order on part payment / deposit - grievance of the petitioner is that the impugned order on stay has not considered the facts of this case - HELD THAT:- The impugned order has been passed is on the application for stay. Therefore, the in depth examination of the petitioner s submission was not done at the time of disposing of the stay application. The submissions of the petitioner would be considered in detail at the time of final hearing of the appeal. At this stage, no fault can be found with the impugned order of the Tribunal. The petitioner is pleading grave hardship in view of the huge demand for no fault on its part. We would request the Tribunal to take up the petitioner s pending appeal for final disposal as early as possible preferably within a period of eight weeks from today. It is made clear that we have not examined the merits of the petitioner s case. This would be done by the Tribunal and any observation made herein should not influence the Tribunal in deciding the appeal. Petition disposed off.

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• 2019 (7) TMI 1290
  Levy of Entry Tax - Whether any entry could have been levied on the assessee for import of machineries and spare parts individually valued at less than 10,00,000/-? - HELD THAT:- Under the schedule entry 2, entry tax has been imposed on a machinery that may be imported into a local area of value more than 10,00,000/- or a single spare part of a machinery whose value may be more than 10,00,000/-. Therefore, by way of example (only), if value of a single machinery is more than 15,00,000/-, the same would remain taxable for the purposes of the Entry Tax Act, even if the assessee chooses to knock down such machinery before its import and cause its entry into the local area in three different parts with value of each part at 5,00,000/-. The interpretation made by the revenue authority and the appellate authorities would allow the parties to alter and present a transaction as taxable or otherwise by creating artificial bifurcations and unity (amongst different transactions), so as to avoid or create existence of a taxable event. Even otherwise, the rule of strict construction of taxing entry suggests that the taxing entry seeks to impose entry tax on input of machinery of value more than 10,00,000/-. Therefore the valuation of the taxable goods is determinative of their taxability or otherwise. Once the taxing entry identifies the total of value of a single machine (which would be more than the sum total of value of it s parts), as the factor giving rise to it s taxability, the same test of value would determine the taxability or otherwise of the spare parts. The taxing entry 2 of the schedule to the entry tax act would apply and entry tax may be imposed only on import of such single machinery whose value exceed 10,00,000/- or on such individual spare parts of any machinery whose value exceeds 10,00,000/-. The composite value of different machinery and spare parts being compositely imported would not be relevant to determine existence of a taxable event. The matter remitted to the Assessing Authority to re-examine the issue - revision allowed by way of remand.

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• 2019 (7) TMI 1289
  Condonation of delay of 59 days in filing appeal - case of petitioner is that either the mere filing of appeal or mere pendency of appeal does not amount to granting stay by the appellate authority - Section 25(1) of the KVAT Act - HELD THAT:- A case is made out for issuing necessary directions to 2nd respondent to dispose of the delay condonation petition and stay petition in Exts.P4 and P3 respectively. The appellate authority/2nd respondent considers and disposes of Exts. P4 and P3 applications as early as possible, preferably within two months from the date of receipt of copy of this judgment.

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• 2019 (7) TMI 1288
  Waiver of pre-deposit - excess Input Tax Credit on Purchase Tax - reassessment order (A-2) was challenged on the ground that it was without jurisdiction as the basis for amendment of assessment does not fall under the purview of re-assessment as provided under Section 29(7) of the Punjab VAT Act - HELD THAT:- The issue involved in this appeal stands settled by a Division Bench of this Court M/s Punjab State Civil Supplies Corporation, Amritsar v State of Punjab and another [2019 (6) TMI 492 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that as per Section 62 (5) of the Punjab VAT Act, 2005, 25% of the tax amount has to be deposited for entertaining an appeal and that the First Appellate Authority has a power to waive off the precondition in appropriate cases . The condition of deposit of 25% of the tax amount was held to be reasonable and justified. No further adjudication in the matter is required - Appeal dismissed.

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• Indian Laws

• 2019 (7) TMI 1338
  Dishonor of Cheque - rebuttal of presumption - statutory presumption under Sections 118 and 139 of the NI Act - HELD THAT:- The presumptions under Section 118 or under Section 139 are rebuttable. Section 139 allows a presumption that the cheque referred to in Section 138 was given to discharge the debt in whole or in part. But the question is whether the debt or other liability under Section 139 is presumed to be a legally enforceable debt. The existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability. It has also held that the prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof to prove an accused s defence is preponderance of probabilities. If the accused can raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution will fail. So the accused can rely on the materials submitted by the complainant to raise such a defence and it is conceivable that sometimes the accused may not need to adduce evidence of his/her own. Appeal allowed.

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• 2019 (7) TMI 1336
  Commission of inquiry report - Section 8-B and 8-C of the Commission of Inquiry Act, 1952 - It is the grievance of all the Petitioners that prejudicial findings, which tend to affect their reputation, have been rendered by the Commission against them without following these mandatory provisions - Principles of natural justice - HELD THAT:- In the present case, both Union of India and the State Government make it clear, at the very outset, that they do not propose to take any action against the individuals named in the report of the Commission only on the basis of the findings of the report. Both Union and State submit that they shall in every individual case make their own assessment of facts and give opportunity of hearing to affected parties in their defence, whenever an action is proposed against such affected parties. The report of the Commission does not call for any interference in the writ jurisdiction of this Court. The grievance of the Petitioners is primarily of a possible illegal action based exclusively on the findings and recommendations of the Report. If these grievances are addressed in terms of the statements noted above of the Union and the State, there is no particular reason why this Court should still exercise its writ jurisdiction and quash and set aside the report. Petition disposed off.

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• 2019 (7) TMI 1287
  Territorial Jurisdiction - venue of arbitration in different state - Whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 despite the fact that the agreement contains the clause that venue of arbitration shall be Bhubaneswar? HELD THAT:- Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case, the parties have agreed that the venue of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other courts. As held in Swastik, non-use of words like exclusive jurisdiction , only , exclusive , alone is not decisive and does not make any material difference - When the parties have agreed to have the venue of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Act. Since only Orissa High Court will have the jurisdiction to entertain the petition filed under Section 11(6) of the Act, the impugned order is liable to be set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (7) TMI 1286
  Termination of services - industrial dispute - instant writ petition raised an industrial dispute against the petitioners claiming that he was employed as peon by the petitioners on 22.2.1993 and that his services were illegally terminated on 7.10.1998 - HELD THAT:- The reference as was made by the State Government was essentially erroneous. Since I have found that the reference itself was bad, no finding is required to be given on the issues as to whether the petitioners were an industry and as to whether there was a relationship of an employee and employer existing between the parties. The petitioners were a body which got its existence because of a central enactment being Act No. 38 of 1949. If one goes by Section 2(a)(ii) of the Industrial Disputes Act, 1947, it becomes clear that even an autonomous body which was doing industrial work and was governed by the Central Government then the appropriate Government for making the reference of the dispute was the Central Government. In this regard since the Act No. 38 of 1949 definitely shows that the petitioners were a body which was a result of a Central enactment because of which the petitioners found their identity, any dispute which arose vis-a-vis the parties had to be, therefore, necessarily referred by the appropriate government i.e. the Central Government. This having not been done, the reference was bad and, therefore, the subsequent award also becomes bad in law. The award dated 22.1.2010 passed by the respondent no. 2 is set aside - writ petition allowed .

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