Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 30, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
GST
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Scope of Advance Ruling application - their query is with respect to “‘assessment of their supplies based on taxability”. Such query does not fall under any of the clauses mentioned from (a) to (g) of subsection (2) of section 97 of CGST ACT - Query not answered.
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Grant of Bail - offence punishable u/s 132 of GST - admittedly, charge sheet has not been filed, therefore, right of `default bail' accrued to the applicant after completion of 60 days.
Income Tax
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Exemption to specified persons from requirement of furnishing a return of income u/s 139(1) for assessment year 2019-20 - income chargeable from any investment in an investment fund set up in an International Financial Services Centre (IFSC) located in India.
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Depreciation on LED wall - @15% or @ 60% - Since no separate rate of deprecation has been prescribed for LED wall, projectors / accessories etc, therefore, these will come under the head other plant and machinery and accordingly entitled for deprecation @ 15% only.
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Exemption u/s 54B - assessee claimed to have purchased land through an agreement to sale which is unregistered and the payment in cash - when there is no subsequent sale deed, then the unregistered agreement which has managed only a day before the expiry of the period, will not transfer any title to the assessee of the agricultural land - no deduction
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Addition u/s 68 - cash deposit in bank account - assessee claimed deposit relates to substantial cash withdrawn and out of opening cash in hand - in absence of any evidence with the AO that the assessee has infact consumed such huge cash and incurred huge expenditure for some other purpose addition not justified specially when assessee is showing huge income and also having agricultural income in the preceding years as well as current year
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Penalty imposed u/s 271B - delayed audit of accounts - reasonable cause - surely, ignorance of law is no excuse, but, then, it needs to be borne in mind that we are here concerned with penalty proceedings, in which the conduct is of essence - this is the 1st year of business operation of the assessee, and assessee was misguided by his accountant, hence penalty should not be imposed
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Sale proclamation /auction of property by department to collect tax - limitation in Rule 68B of the Schedule II - the attachment of the immovable properties was ordered in the year 1997 and the sale proclamation was made in February, 2019 - thus, hit by the period of limitation prescribed under Rule 68B and by virtue of Rule 68B(4) the attachment would be deemed to have been vacated - The auction sale, could not have been carried out
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Deemed dividend u/s 2(22)(e) - beneficiary of the advance was itself not a shareholder of the company - Tribunal follow decision of a High Court which approved by supreme court and this issue is referred by SC itself to larger bench - decision of this Court approved by SC holds the field, no error committed by the ITAT in following the same - no substantial question of law arises
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Taxability of interest income - ‘Interest on bank deposits, inter-corporate deposits, debentures, from sister concerns and ‘other interest - the surplus money, unless and until it is pulled out totally from the business and having absolutely no nexus with the amount or ancillary business activity and thereby the same is deposited with the bank only and solely with a view of earning interest by keeping the said funds idle, then it can be treated as non- business income or income from the other sources otherwise it is business income
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TDS u/s 194H - disallowance u/s 40(ia) - discount to the distributors for starter packs and recharge coupons for its prepaid services - apart from CIT(A)’s order setting aside the order passed u/s 201 was not carried in appeal tribunal independently find that transaction was on principal to principal basis, TDS u/s 194H, would not be made since the payment was not for commission or brokerage - no disallowance is called for
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Addition u/s 68 - one of director of company admitted that the entire investment was bogus - Blank receipts after cash deposit were obtained from the share holders - when two Revenue authorities and the Tribunal concurrently came to the conclusion that the assessee failed to discharge the initial burden envisaged u/s 68 - additions should be confirmed as there is no perversity in findings
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Constitutional validity of 35AC(7) - approval to the appellant's hospital project for a period of three financial years but due to amendment benefit not available for third year - Neither the appellant nor the assessee has any right to set up a plea of promissory estoppel against the exercise of legislative power such as the one exercised while inserting above provision - constitutional valid
Service Tax
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CENVAT credit - input services - event management services received as co-host with SAP - the same is in the nature of sales promotion activity. Accordingly, sales promotion is eligible activity for availing the Cenvat credit - Credit allowed.
Central Excise
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Challenging the proceedings pursuant to Show Cause Notices ('SCNs' in plural and 'SCN' in singular) - Rebate claim - Rule 18 of CER - manufacture and export of cotton yarn (exempted goods) - The impugned SCNs do not deserve to be interfered with.
Case Laws:
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GST
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2019 (7) TMI 1388
Liability of GST - Export of services - assessment of tax on supplies based on taxability as accorded to Zero rated supply - scope of Advance Ruling application - HELD THAT:- This authority can give rulings only as per the provisions mentioned in Sections 95 and 97 of the Act. Section 95 says that the term advance ruling means a decision provided by this authority to the applicant on matters or questions specified in subsection 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. From the provisions of section 95 it is seen that, there are the conditions for filing of advance ruling application i.e. the applicant shall ask the question in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by them on matters or questions specified in subsection 2 of Section 97, and to that extent only shall the authority answer/give a ruling to those category of issues. From the perusal of the question it is seen that their query is with respect to assessment of their supplies based on taxability . Such query does not fall under any of the clauses mentioned from (a) to (g) of subsection (2) of section 97 of CGST ACT. The question does not fall within the purview of Section 97 of the CGST Act and is therefore not answered.
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2019 (7) TMI 1387
Release of detained goods - Sections 129 and 130 of the G.S.T Act., 2017 - HELD THAT:- We are inclined to pass an interim order of release of the goods and vehicle as the writ applicant has deposited an amount of ₹ 2,12,246/- towards the tax and penalty. In such circumstances, the authorities are directed to release the goods and the vehicle at the earliest.
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2019 (7) TMI 1386
Release of detained goods - goods as well as the conveyance has been seized by the authorities for the alleged violation of the provisions of the G.S.T Act - HELD THAT:- As the goods have been detained, we deem fit to order release of the goods at the earliest, keeping in mind that the writ applicant has deposited an amount of ₹ 1,27,820/- towards the penalty and tax. This order is subject to the final outcome of this petition.
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2019 (7) TMI 1385
100% EOU - benefits of the concessional rate of duties - case of the department is that the assessee being a EOU is guilty of availing benefits of concessional rate of duty without any prior permission of the Development Commissioner, KASEZ, Gandhinagar for manufacturing - HELD THAT:- The writ applicants have been able to make out a strong prima facie case to have an interim order in their favor. Let Notice be issued to the respondents returnable on 16/10/2019 .
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2019 (7) TMI 1384
Confiscation of vehicle alongwith the sonography machine - Section 130 of the GST Act - HELD THAT:- As on date, the vehicle as well as the machine is in custody of the authorities. It appears that in the case on hand, proceedings came to be initiated straight-way under Section 130 of the GST Act. The confiscation proceedings are pending as on date. However, it is not in dispute that the writ applicant has deposited amount of ₹ 3,32,144/- towards tax and penalty. This Court is examining the larger issue as regards Section 129 and Section 130 of the GST Act. The batch of writ applications is to come up for final hearing on 7th August, 2019. Having regard to the fact that the goods involved in the case on hand is a sonography machine and the same is lying with the authorities past more than one month, we are of the view that the same should be released subject to the final outcome of this petition. We direct the respondent authorities to release the sonography machine at the earliest as the writ applicant has deposited the amount of ₹ 3,32,144/- towards tax as well as penalty.
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2019 (7) TMI 1383
Refund of unutilized CENVAT Credit - transitional credit - registered person - mandate of Section 54(3) of the CGST Act, 2017 - HELD THAT:- Prima facie, it appears that the Commissioner has overlooked the issue with regard to Transitional Cenvat Credit of ₹ 79,89,56,035/- which was availed upto 30.06.2017 and was transferred as CGST. Let Notice be issued to the respondents returnable on 16th October, 2019.
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2019 (7) TMI 1382
Vires of Rule 89(5) of the Central Goods and Services Tax Rules, 2017 as amended vide Notification No. 21/2018-Central Tax dated 18.4.2018 and Notification No.26/2018-Central Tax dated 13.6.2018 - grant of refund of unutilized tax credit in respect of tax paid on input services - HELD THAT:- Let notice be issued to the respondents returnable on 31.7.2019.
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2019 (7) TMI 1381
Desealing of premises of the petitioner - sub-section (2) of section 76 of the Act - HELD THAT:- We propose to dispose of this writ application with a liberty to the writ applicant to make appropriate application under section 76(6) of the Act for the release of the goods so seized on the provisional basis upon execution of a bond and furnishing of a security. Application disposed off.
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2019 (7) TMI 1380
Works contract - pre and post GST implementation situation - Scope of tender / contract between parties - Standard Bidding Document (SBD) applicable in the Works Departments of the Government of Bihar - Model Bidding Document (MBD) - such contracts in which the estimates were prepared and agreement were executed prior to 01.07.2017 i.e. the date of commencement of GST Act, but the work continued even after that - HELD THAT:- This court finds that initially when the writ application was filed the petitioner(s) had been complaining that they were being burdened to pay the GST in respect of the works allotted to them on the basis of the SOR which did not take care of the implication of the GST . The rate of GST or any other issue were not in question and learned counsel for the petitioners has reiterated before this court that his grievance is limited to payability of the differential amount, if any, arising out of and by virtue of implementation of the GST . It has been shown that the grievance of the petitioners had in fact been redressed, learned counsel for the petitioners has agreed at the bar that if Clause (vii) of the minutes of the meeting of the Rural Works Department is followed by all other works department of the Government of Bihar, the grievance of the petitioners shall be taken to have been redressed. This court is of the considered opinion that now nothing remains for adjudication by this court as the grievance of the petitioners as framed in these writ applications are to be taken to have been redressed - application disposed off.
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2019 (7) TMI 1379
Transitional Credit - inaction on the part of the respondents in accepting TRAN-1 - HELD THAT:- The petitioner is granted liberty to ventilate his grievance by forwarding complete documents along with the representation stating his grievances to the Nodal Officer/GST-N, Indore who in turn will forward the matter to the higher authority, constituted by the Department to look into all such grievances. Petition disposed off.
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2019 (7) TMI 1378
Grant of Bail - offence punishable under Sections 132 of the Central Goods and Service Tax Act, 2017 and 467, 471 and 120B of the Indian Penal Code - It is the submission of learned counsel for the applicant that on the basis of false case, applicant is in confinement since 6.2.2019 - HELD THAT:- This is a case where the applicant is facing heat of investigation under Section 132 of the Act. Section 132 of the Act prescribes punishment for certain offences and maximum sentence which can be awarded, is five years. Section 167 (2) of the Cr.P.C provides 60 days time to the investigating agency to submit charge sheet for the offences where investigation relates to any offence other than total imprisonment for life or imprisonment for a term of not less than 10 years - Here the maximum sentence punishable is imprisonment for five years therefore, respondent had to file the charge sheet within 60 days. But admittedly, charge sheet has not been filed, therefore, right of `default bail' accrued to the applicant after completion of 60 days. It was the duty of the investigating agency to submit charge sheet within the stipulated period, but same has not happened. This application is allowed and it is directed that the applicant be released on bail on furnishing a personal bond in the sum of ₹ 5,00,000/- - Application allowed.
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Income Tax
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2019 (7) TMI 1393
Assessment u/s 153A - Whether there is no incriminating material found qua the addition made on account of share application money in the course of the search? - HELD THAT:- Revenue itself is not disputing that in respect of the share capital no incriminating documents were found in the search proceedings. The Court s attention has been drawn to the decision of the Supreme Court in CIT v. Singhad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] where in the context of Section 153C of the Act it was held that the incriminating material which was seized had to pertain to the AY in question. It is further held that documents seized had to establish a co-relation documents wise with the assessment years for which the addition was sought to be made. The requirement that the incriminating material to have the co-relation to the particular addition sought to be made is a logic that will hold good not only for Section 153C but in relation to Section 153A of the Act as well. Consequently, this Court does not find any error having been committed by the ITAT in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the share capital. Therefore, the jurisdictional requirement of Section 153 A of the Act was not satisfied.
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2019 (7) TMI 1392
Addition u/s 69 - unexplained cash transactions between the Assessee and the Amrapali Group - HELD THAT:- ITAT had found that the Assesee was never found to be in possession of any real money. The addition having been made only on the strength of some notings found in some file extracted from the computer of Sh. Rohtash, clearly establish that the provisions of section 69A of the Act do not apply. It was further found that on the date of receipt of the impugned amount, the same was returned to the Amrapali Group by the M/s Bihari Ji Group. The determination by the ITAT is based on facts and there is nothing to indicate that it is perverse. Unexplained share application money u/s 68 - CIT (A) accepted the explanation offered by the Assessee and came to the conclusion that the Assessee had satisfactorily explained to the AO that was in the normal course of business and nothing adverse was found so as to conclude that the source of money used for payment to the Assessee was unaccounted. This again is a factual determination and does not give rise to any substantial question of law. Disallowance of bogus‟ expenses - ITAT deleted the addition - HELD THAT:- ITAT noted that the said addition was made on the premise that the Assessee had claimed rent payment to M/s Trinity Shipping and Allied Services Pvt. Ltd. which according to the AO was not properly explained. The CIT (A), however, deleted the addition after finding that no rent or hire charges were in fact paid to either of the above entities. Before the ITAT, the Revenue was unable to show anything to the contrary. This too being a purely factual determination concurrently by the CIT (A) and the ITAT in favour of the Assessee - No substantial question of law.
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2019 (7) TMI 1391
Reopening of assessment u/s 147 - Incorrect claim of depreciation - use less than 180 days - HELD THAT:- The original assessment proceedings were under Section 143(3) of the Act. As held by the ITAT that in the original assessment proceedings itself the issue concerning claim of depreciation had been thoroughly examined by the AO and therefore there was no failure on the part of the Assessee to disclose fully and truly all the material facts relevant for the assessment. ITAT noted that in the order re-opening the assessment, the AO referred to the documents already produced in the course of the original assessment proceedings and inferred that the proportionate amount of depreciation should have been disallowed because of de-leasing of certain assets and claim of depreciation on new assets that were used for less than 180 days. Accordingly, the ITAT concurred with the CIT (A) that this was a mere change of opinion on the part of the AO. The Court is not persuaded that any legal error has been committed by the ITAT in the impugned order. No substantial question of law - Decided against revenue.
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2019 (7) TMI 1390
Deduction u/s 80P(2) - Whether co-operative societies and co-operatives are different and that co-operative registered as Souharda Sahakari cannot be regarded as co-operative societies? - HELD THAT:- Realizing the vital role of the cooperative movement in the progress of the society, the Central Planning Commission set up a committee by appointing Shri Chaudari Brahmaprakash as its head with a task of drafting a Model Cooperative Act which will prevent interference of the governments. This committee, after a detailed study of the Cooperative Acts of various states, drafted a Model Cooperative Act in 1991 and Central Government recommended the state governments to adopt this. Accordingly, in 1997 a bill on parallel cooperative act was tabled in the state legislature of Karnataka. Demanding an early approval of this bill by both the houses of Karnataka Legislature, a committee Souharda Samvardhana Samithi under the chairmanship of Justice Rama Jois came into existence. It was due to the combined efforts of Sahakara Bharathi Karnataka and Souharda Samvardhana Samithi, The Karnataka Souharda Sahakari Act 1997 (KSSA, 1997) was passed in the legislature. The Souharda Cooperatives enjoy functional autonomy in design and implementation of their Business plans, customer service activities, etc., based on the needs of their members. Unlike other forms of cooperatives in India, the interference of State / Central in day-to-day operations of Souharda Cooperatives is almost minimal. Souharda co-operatives are also one form of co-operative societies registered under a law in force in the State of Karnataka for registration of co-operative societies. Therefore the conclusion of the revenue authorities that co-operative societies and co-operatives are different and that co-operative registered as Souharda Sahakari cannot be regarded as co-operative societies is unsustainable. Assessee should be allowed deduction u/s.80P(2)(a)(i) of the Act, as the ground on which the same was denied to the Assessee is held to be incorrect. However, the other conditions for allowing deduction u/s. 80P(2)(a)(i) of the Act needs to be examined by the AO. Therefore, remand the question of allowing deduction u/s. 80P(2)(a)(i) to the AO, except the issue already decided above. - Appeal by the Assessee is allowed for statistical purposes.
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2019 (7) TMI 1389
Depreciation on LED wall - @15% or @ 60% - disallowance of 60% depreciation as claimed by the assessee on the ground that these are not integral part of computer to qualify for higher rate of depreciation - HELD THAT:- CIT(A) upheld the action of the Assessing Officer in not allowing deprecation @ 60% on such LED wall, projectors and accessories etc. No infirmity in the order of the CIT(A) on this issue. The rate of depreciation has been prescribed under the new appendix-1 of Income Tax Rules 1962 where different rates are prescribed for different plant, machinery and other equipment. There are certain instruments/ equipments wherein lesser rate of depreciation has been prescribed which are also operated by computers/ laptops. There are a number of items which attract 40% depreciation although those items cannot be operated without help of computer such as life saving medical equipments, energy saving devise etc. There are also certain plant and machinery on which 30% depreciation has been prescribed which also cannot operate without the help of computers. Therefore, the arguments of the Ld. Counsel for the assessee that since the LED walls, projectors, accessories etc cannot function without the help of computer/ laptop and therefore is entitled for depreciation @ 60% is not correct. Since no separate rate of deprecation has been prescribed for LED wall, projectors / accessories etc, therefore, these will come under the head other plant and machinery and accordingly entitled for deprecation @ 15% only which has been adopted by the Assessing Officer and upheld by the CIT(A). Therefore, do not find any infirmity in the order of the CIT(A) on this issue - Decided against assessee.
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2019 (7) TMI 1377
Constitutional validity of sub-section (7) of Section 35AC - principle of promissory estoppel - Whether once the Committee granted an approval to the appellant's hospital project for a period of three financial years, the same could not be withdrawn qua the appellant on the strength of insertion of subsection (7) in Section 35AC? - challenge was on the ground that subsection (7) of Section 35AC is essentially prospective in nature and, therefore, it will have no application to those projects which were approved by the Committee prior to insertion of subsection( 7), i.e., 01.04.2017 - HELD THAT:- It is not in dispute that 28 projects were approved by the Committee by notification dated 07.12.2015 but none of them (27) has come forward to question the constitutional validity of subsection (7) except the appellant herein. In other words, out of 28 projects owners whose projects were approved by the Committee by notification dated 07.12.2015, only the appellant herein has felt aggrieved and filed the petition in the High Court. As rightly argued by Revenue the real aggrieved parties, which should have felt aggrieved by insertion of subsection (7) in Section 35AC were those assesses, i.e., Donors who despite paying the donation to the appellant were not allowed to claim deduction of the said amount from their total income during the financial year 2017-2018. One of the main objects for which Section 35AC was enacted was to allow the assessees to claim deduction of the amount paid by them to the appellant for their project. None of the assessees (Donee), who claimed to have paid amount to any eligible projects came forward complaining that despite their donating the amount to the appellant for their project, they were denied the benefit of claiming deduction of such amount from their total income by virtue of subsection (7) of Section 35AC of the Act during the financial year 2017-2018. Benefit of the deduction available u/s 35AC was duly availed of by all the assessee for two financial years, namely, 2015-2016 and 2016-2017. For third financial year, i.e., 2017-2018 because for this year, the assessees were not allowed to claim deduction of the amount paid by them to the appellant on account of insertion of subsection( 7) in Section 35AC of the Act with effect from 01.04.2017. Subsection (7) is prospective in its operation and, therefore, all the assessees were rightly allowed to claim deduction of the amount paid by them to eligible projects from their total income during two financial years, namely, 2015-2016 and 2016-2017. If subsection (7) had been retrospective in its operation then the deduction for 2015-2016 and 2016-2017 too would have been disallowed. Admittedly, such is not the case here. As rightly argued by Revenue a plea of promissory estoppel is not available to an assessee against the exercise of legislative power and nor any vested right accrues to an assessee in the matter of grant of any tax concession to him. Neither the appellant nor the assessee has any right to set up a plea of promissory estoppel against the exercise of legislative power such as the one exercised while inserting subsection (7) in Section 35AC of the Act (see M/ s Motilal Padampat Sugar Mills Co. Ltd. [ 1978 (12) TMI 45 - SUPREME COURT] . It is more so when we find that this subsection was made applicable uniformly to all alike the appellant prospectively. It is not in dispute that now time to donate the amount to eligible projects for claiming deduction from the total income for the year 2017-2018 has expired. It is now no longer available due to efflux of time. In this view of the matter, even if the appellant received any amount from any assessee for their project, no deduction could be allowed to such assessee either for the period 2017-2018 or for any subsequent period. In a taxing statute, a plea based on equity or/and hardship is not legally sustainable. The constitutional validity of any provision and especially taxing provision cannot be struck down on such reasoning.We are afraid, we cannot accept this submission for more than one reason. First, as held above, in tax matter, neither any equity nor hardship has any role to play while deciding the rights of any taxpayer qua the Revenue; Second, once the action is held in accordance with law and especially in tax matters, the question of invoking powers under Article 142 of the Constitution does not arise; and third, the appellant's Donors were admittedly allowed to claim deduction of the amount paid by them to the appellant u/s 35AC during the two financial years 2015-2016 and 2016-2017. It is for all these reasons, the matter must rest there.
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2019 (7) TMI 1376
Addition of deemed dividend u/s 2(22) (e) - Whether beneficiary of the advance was itself not a shareholder of the company in question ? - ITAT deleted the addition - impact of reference of decision to larger bench - HELD THAT:- ITAT has followed the decision of this Court in CIT v. Ankitech Private Limited [ 2011 (5) TMI 325 - DELHI HIGH COURT] which has been approved by the Supreme Court in CIT v. Madhur Housing and Development Corporation [ 2017 (10) TMI 1279 - SUPREME COURT] As Revenue submits that in National Travel Services vs. CIT [ 2018 (1) TMI 1159 - SUPREME COURT] a two Judge bench of the Supreme Court has doubted the correctness of the view expressed by this Court in CIT v. Ankitech Private Limited [ 2011 (5) TMI 325 - DELHI HIGH COURT] which has been approved by Supreme Court in Madhur Housing [ 2017 (10) TMI 1279 - SUPREME COURT] and has accordingly referred the matter to a larger bench of the Supreme Court. The fact further remains that as of date the decision of this Court in Ankitech Private Limited (supra) approved by the Supreme Court in Madhur Housing (supra) holds the field. Therefore, the Court is unable to find any error committed by the ITAT in following the aforementioned decisions and deciding the issue in favour of the Assessee. No substantial question of law arises. The appeal is dismissed.
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2019 (7) TMI 1375
Sale proclamation /auction of property by department to collect tax - Scheme for attachment and sale of immovable property of an assessee in default - limitation as prescribed in Rule 68B of the Schedule II - HELD THAT:- Appreciating the said Rule in the light of the purpose for which the same was inserted would show that under sub-rule (1), the legislature has now provided for the first time w.e.f. 1.6.1992 a time limit of a period of three years for sale of attached immovable property starting from the end of financial year in which the order giving rise to a demand of tax, interest etc has become conclusive. Sub-rule (4) of Rule 68B provides for the consequences of the immovable property not being sold within such time. As per this sub-rule in such a situation, the attachment order in relation to the said property would be deemed to have been vacated on the expiry of the time limit specified. In the present case, Rule 68B would apply with full force. The attachment of the said immovable properties was ordered way back in the year 1997. The sale proclamation which was made in February, 2019 was thus, hit by the period of limitation prescribed under such Rule. By virtue of sub-rule (4) of Rule 68B therefore, upon completion of the period of limitation, the attachment would be deemed to have been vacated. The auction sale, therefore, could not have been carried out. In the judgment in the case of Sanjay Khetan [ 2003 (12) TMI 42 - ALLAHABAD HIGH COURT] , of course, the Allahabad High Court has observed that Rule 68B of the IInd Schedule would not apply to the certificates issued prior to 1.6.1992. To this extent, we are unable to persuade ourselves to follow the same line. Sub-rule (3) of Rule 68B makes it clear that the limitation prescribed under sub-rule (1) would apply also to past instances, with necessary modification provided therein which we have already discussed earlier. The consent given by the petitioner to sale the properties will not prevent her from pursuing their petition. Firstly, it was not an unconditional consent. In her letter dated 23.1.2019, she had raised the issue of owner charging of interest and or no-due certificate issued in the past. Her consent was thus subject to these objections. Further, the question of limitation would go to the root of the matter. If the auction was barred by limitation, the Department was prevented by law from carrying out the same. Under these circumstances, we are of the opinion that by virtue of Rule 68B of the IInd Schedule, the impugned sale proclamation is barred by limitation. The same must be quashed.
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2019 (7) TMI 1374
Assessment u/s 153C - notice u/s. 153C was barred by limitation - validity of notice u/s 153C - HELD THAT:- The coordinate bench in ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ACIT, [ 2019 (6) TMI 746 - GUJARAT HIGH COURT] took the view that the writ applications were maintainable. With regard to the second question, the Court took the view that the Legislature has specifically made the amended provisions of Section 153C applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C of the Act by virtue of such amendment. So far as the third question is concerned with regard to the limitation, the Court took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground. Assessment Order has been passed u/s 153C the same is also quashed and set aside
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2019 (7) TMI 1373
Deduction u/s 80IA(4) - rate of power purchase from captive power plant - rate on GEB supplied power to its customers OR the rate at which the power generating company supplied to the GEB - Tribunal held that the rate at which G.E.B. supplied power to its consumers will be the rate - HELD THAT:- The proposed issues are no longer res integra as they are directly covered by the decision of this Court in the case of CIT vs. Gujarat Alkalies and Chemicals Ltd [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT] wherein as Under sub-Section(8) of Section 80IA, if it is found that where any goods or services held for the purposes of the eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the eligible business and in either case the consideration for such transfer does not correspond to the market value of such goods as on the date of the transfer, then for the purposes of deduction under Section 80IA in case of the eligible business as if the transfer had been made at the market value of such goods or services. It is in this context that the question of substituting the actual consideration by the market value comes into picture. In view of the aforesaid, this appeal fails and is hereby dismissed.
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2019 (7) TMI 1372
Addition u/s 68 - bogus investments - Blank receipts were obtained from the share holders - non discharge of initial burden envisaged u/s 68 - HELD THAT:- The entire issue is based on appreciation of evidence and record and does not give rise to any substantial question of law. We notice that during the original assessment as well as the remand proceedings, the assessee was given ample opportunities to produce the share investors which the assessee failed to do. AO thereupon issued the summons to the share purchasers calling upon them to supply necessary details and documents. Only some of them have responded to such notice. Even they did not or could not supply necessary details and documents to establish their genuine investment in the assessee company. AO recorded that there was no reason for high premium of ₹ 30 per share being paid by the investors. The assessee company had carried out no business during the entire period, except for collection of share application money. The responding investors also could not explain the source of their investments. It was noticed that before issuance of payment by them, deposits were made in their bank accounts and immediately the investments in purchase of the assessee's shares were made. The investors could not provide photocopies of the share certificate issued by the Company and did not submit the share numbers which were allotted to them. During the search action against the Directors of the Company, the statement of Mr. Faria was recorded which showed that he was the main person actively involved in the Company. He admitted that the entire investment was bogus. Blank receipts were obtained from the share holders. Their signatures were obtained on blank transfer forms. There was no evidence to show that such share certificates were issued. He also admitted that the share subscription is nothing but the book entries obtained from various persons against cash payments. Such a statement was never retracted. When two Revenue authorities and the Tribunal concurrently came to the conclusion that the assessee failed to discharge the initial burden envisaged under Section 68 of the Act and that therefore, it is a fit case where the additions should be confirmed, we do not find any perversity in such findings - Decided against assessee.
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2019 (7) TMI 1371
TDS u/s 194H - disallowance u/s 40a(ia) - Transaction between two persons on principal to principal basis - discount allowed by the assessee to the distributors in respect of starter packs and recharge coupons for its prepaid services - HELD THAT:- We do not find any error in the view of the Tribunal. The Tribunal, as noted, besides holding that the Commissioner s order setting aside the order passed u/s 201 was not carried in appeal, had also independently examined the nature of the transaction and come to the conclusion that when the transaction was between two persons on principal to principal basis, deduction of tax at source as per section 194H, would not be made since the payment was not for commission or brokerage. Disallowance us 14A - HELD THAT:- Assessee had not earned any exempt income and there is, therefore, no question of disallowance under section 14A that would arise. The Tribunal had relied on the decision of the Delhi High Court in the case of Cheminvest Ltd. vs. CIT, [ 2015 (9) TMI 238 - DELHI HIGH COURT] . No error in the view of the Tribunal. The decision of the Delhi High Court in the case of Cheminvest (supra) has been followed by this Court on numerous occasions. In the result, no question of law arises. Income Tax Appeal is dismissed.
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2019 (7) TMI 1370
Deduction u/s 80HHC - exclude 90 % of net' interest income excess of interest received or paid provided there is direct nexus between interest earned and paid after establishing the fact that all the interest income except the interest on income tax is forming part of the profits of the business and not income from other sources - HELD THAT:- The learned Counsel for the parties agree that these substantial questions of law be taken up for consideration together. Both the learned Counsel have further agreed and jointly submit that this issue stands covered by the Judgment of the Apex Court in the case of ACG Associated Capsules Pvt. Ltd. v/s. The CIT [ 2012 (2) TMI 101 - Supreme Court] in favour of the Respondent-Assessee and against the Revenue. Therefore, the substantial questions of law at (I), (II), (V), (VII) and (VIII) are answered against the Revenue and in favour of the Respondent-Assessee. Taxability of interest income - Interest on bank deposits, inter-corporate deposits, debentures, from sister concerns and other interest' is forming the part of the head Profits and gains of business or profession - HELD THAT:- This question stands answered in favour of the Assessee and against the Revenue in the decision of a Division Bench of this Court in assessee own case [ 2014 (9) TMI 1195 - BOMBAY HIGH COURT] wherein it was held that the money of the company was used for making investment in the bank deposits or call money market or inter-corporate deposits with the objective for availing short term loans or for keeping deposits for the purpose of LC's and said money had always retained its character as business assets. In our opinion, the surplus money, unless and until it is pulled out totally from the business and having absolutely no nexus with the amount or ancillary business activity and thereby the same is deposited with the bank only and solely with a view of earning interest by keeping the said funds idle, then it can be treated as non- business income or income from the other sources Computation of sec 80HHC deduction - Receipts on account of professional services' and proceeds from electronic data processing' - whether are not income falling within the exclusionary provisions of clause (baa) of Explanation to section 80HHC, is right in law? - HELD THAT:- The question of law has, in fact, been answered in favour of the Revenue in the case of Sesa Goa Ltd. vs. The CIT [ 2015 (5) TMI 621 - BOMBAY HIGH COURT] TDS u/s 195 - applying the provision of Section 172 in holding that section 40(a)(i), is not applicable - HELD THAT:- There is no dispute that the issue stands covered by the ruling of the Full Bench of this Court in assessee own case [ 2016 (2) TMI 308 - BOMBAY HIGH COURT] .This substantial question of law is, therefore, to be answered in favour of the Assessee and against the Revenue.
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2019 (7) TMI 1369
Reopening of assessment u/s 147 - unexplained cash deposits and cash withdrawals - HELD THAT:- Assessing Officer, on the basis of AIR information received that the assessee has deposited cash in his bank account reopened the assessment. While doing so he had observed that no return has been filed by the assessee for A. Y.2010-11 which is discernable from the copy of the reasons placed at paper book pages 4 5. It is also an admitted fact that the assessee was having two PAN numbers, the reason of which is best known to the assessee. When AO had information related to the other PAN number not being used by assessee for filing of return of income, and since the assessee has not surrendered the duplicate PAN, therefore, it cannot be said that the Assessing Officer reopened the assessment based on wrong information. AO in the instant case had done due verification with respect to the PAN number and had found that no return of income was filed in that PAN. In view of the above and in view of the detailed reasoning given by the CIT(A) while upholding the validity of reassessment proceedings no infirmity in the same. Accordingly the same is upheld. The various decisions relied the assessee are not applicable to the facts of the present case especially when in non of the cases, the assessee was having two PAN numbers.The ground raised by the assessee on the issue of reopening is accordingly dismissed. Addition u/s 68 - cash deposit in bank account - assessee claimed deposit relates to substantial cash withdrawn and out of opening cash in hand - HELD THAT:- The assessee has declared income of ₹ 23,48,906/- which includes agricultural income of ₹ 4,39,876/-. The assessee during the current year has declared an income of ₹ 26,79,460/- after claiming deduction chapter VI-A. I find the assessee during the course of assessment proceedings has also filed the following cash flow statement to substantiate the deposit of cash in the bank account Rejection of the cash flow statement is due to non consideration of the opening cash balance and non consideration of the earlier cash withdrawals which were utilized again for deposit in the bank account. As find from the assessment order that the AO had presumed that the earlier cash withdrawals were consumed for house hold expenses and not available for re-deposit. This, in my opinion, cannot be accepted in absence of any evidence with the AO that the assessee has infact consumed such huge cash and incurred huge expenditure for some other purpose such as any capital expenditure or for some marriage function in the family etc. When the assessee is showing huge income and also having agricultural income in the preceding years as well as during the current year, therefore, non consideration of the opening cash balance as on 01.04.2009 in my opinion is also incorrect. So far as the cash flow statement is concerned the assessee has shown the opening balance at ₹ 10,82,297/- and closing cash balance at ₹ 6,79,942/-. Even if the opening cash balance at ₹ 10,82,297/-is considered to be higher, however, the same cannot be considered as nil. If a reasonable amount of opening cash balance of 50% of the above amount is considered and the withdrawal from the bank made earlier is considered as available for redeposit in the bank account then also there appears to be sufficient cash balance available to the assessee for deposit in the bank account. No addition is called for on account of cash deposit made in the bank account and the assessee in my opinion has successfully explained the source of cash deposit in the bank account. Therefore, set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee.
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2019 (7) TMI 1368
Penalty imposed u/s 271B - delayed audit of accounts - reasonable cause - misguided by his accountant - HELD THAT:- It has not been shown that the assessee s sales at any time in the past exceeded the threshold monetary limit required for tax audit. An assessee would normally heed to the advice by his counsel, who, it is stated, failed to advise him in the matter. Surely, ignorance of law is no excuse, but, then, it needs to be borne in mind that we are here concerned with penalty proceedings, in which the conduct is of essence This is the 1st year of business operation of the assessee, and assessee was misguided by his accountant, hence penalty should not be imposed. Therefore, respectfully following the judgment of the Coordinate Bench, on the similar facts, in the case of Ramesh Kumar [ 2018 (5) TMI 1907 - ITAT AMRITSAR] we are of the view that it is not a fit case to levy penalty u/s 271B of the Act and therefore we delete the penalty - Decided in favour of assessee.
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2019 (7) TMI 1367
Penalty u/s 271(1)(c) - defective notice for not mentioning the specific charge - HELD THAT:- Following the decision of Coordinate Bench of this Tribunal in the case of Jeetmal Choraria Vs. ACIT [2017 (12) TMI 883 - ITAT, KOLKATA ] where it is held that the show cause notice issued u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income - the show cause notice u/s 274 does not strike out the inappropriate words - thus in these circumstances, we are of the view that imposition of penalty cannot be sustained - Decided in favor of assessee.
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2019 (7) TMI 1366
Penalty u/s 274 r.w.s 271(1) (c) - defective notice for not mentioning the specific charge - HELD THAT:- We find the notice dated 11/09/2015 issued u/s. 274 r.w.s 271 of the Act, placed on record, does not specify the charge of offence committed by the assessee viz. whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. See M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2019 (7) TMI 1365
Deemed dividend addition u/s 2(22)(e) - proof of record that the assessee is a substantial shareholder in both the companies [lender and receiver] - advance given under agreement to finance a milk related product project pursuant to appointment of sole selling agent of milk business for seven years - project was not kicked of and advance was refunded - HELD THAT:- Position of Revenue cannot be accepted as section 2(22)(e) itself provides by way of an exception under clause (2) of the exceptions that any advance or loan made to a shareholder or to the said concern by a company in the ordinary course of its business where lending is substantial part of business of the company cannot be treated as deemed dividend. Similarly the CBDT Circular referred supra has also stated that trade advances which are in the nature commercial transactions would not fall within the ambit section 2(22)(e). Therefore, we find that the agreement entered into between the two companies which is placed on record by virtue of which the funds have been lend is clearly a relevant piece of document which needs to be examined. Given that the said agreement has not been taken into consideration by the lower authorities, we are setting aside the matter to the file of the AO to examine the same afresh. In view of the same, various contentions raised by the Ld. AR are left open and the assessee is free to raise the same before the AO. In the result, the ground is allowed for statistical purposes.
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2019 (7) TMI 1364
Penalty u/s 271(1)(c) - non specification of charge - HELD THAT:- Bare perusal of the assessment order dated 28-03-2014, whereby the penalty proceedings have been imitated and notice dated 28-03-2014 issued u/s 274 apparently goes to prove that the AO initiated the penalty proceedings in the assessment order and issued the notice u/s 274/271(1)(c) without specifying whether the assessee has concealed '' the particulars of income or the assessee has furnished the inaccurate particulars of income , so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c). Further the assessing officer while imposing the penalty also, used both the limbs by mentioning oblique such as concealment of particulars of income/furnishing the particular of income , therefore it goes to prove that even the mind of the AO, while recording the satisfaction in Assessment Order, issuing the notice dated 28-03-2014 u/s 274 and while imposing the penalty as well, was indecisive and unclear under which limb, the penalty proceedings have to be initiated and under which limb the assessee had to reply in order to defend its case and under which limb the penalty warranted and supposed to be levied, therefore we are of the view that under these facts and circumstance, the penalty is not leviable as held by the various Courts including the Apex Court, hence, we have no hesitation to delete the penalty levied by the AO and affirmed by the CIT (A). - Decided in favour of assessee.
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2019 (7) TMI 1363
Reassessment u/s 147 r.w.s. 144 - proof of valid service of notice u/s 148 - HELD THAT:- We find that the contention of the assessee is contrary to the record and further once the AO has issued a notice u/s 148 dated 29.12.2009 which is also established from the Despatch Register filed before us, then the dispute of the service of the same will not render the assessment proceedings null and void. The notice u/s 148 was duly issued by the AO and it was also attempted to serve on the assessee at the given address. The address is not disputed though the assessee has claimed to have shifted from the said address. However, all subsequent notices issued by the AO even one dated 01.12.2010 was received by the assessee in person issued at the same address, then the notice issued at the correct address with the report of the process server in the light of the subsequent notice issued at the same address received by the assessee would be deemed to be a proper service of the notice issued u/s 148 . Accordingly, we do not find any error or irregularity in the impugned order of the ld. CIT (A) qua this issue. Exemption u/s 54F and 54B - assessee claimed to have purchased land on 23rd September, 2009 through an agreement to sale with alleged agreement to sale is unregistered and the payment is also claimed to have been made in cash - HELD THAT:- Though the agreement to sale which has finally culminated in sale deed is relevant only for the purpose of the date of investment, but the alleged agreement to sale itself is not a title document transferring the ownership of land. Therefore, in the absence of subsequent sale deed, the claim of deduction u/s 54B and 54F cannot be allowed based on such unregistered agreement to sale. The assessee has failed to prove that he has acquired the new asset within the prescribed period after the sale of the existing asset. Further the purchase of agricultural land through agreement to sale dated 23rd September, 2009 clearly shows that the assessee has managed that agreement only a day before the expiry of the period. However, when there is no subsequent sale deed, then the unregistered agreement will not transfer any title to the assessee of the agricultural land. Accordingly we do not find any merit or substance in the claim of deduction u/s 54B and 54F. - Decided against assessee
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2019 (7) TMI 1362
Claim for amortisation of spares - ITAT deleted the addition - HELD THAT:- ITAT has noticed in the impugned order that the Assessee has consistently adopted the straight line method to determine depreciation in respect of spares. Based on the rule of consistency therefore, the ITAT found no reason to interfere with the order passed by the CIT (A) in favour of the Assessee. The Court for the same reason also finds no ground to interfere with the impugned order of the ITAT. No substantial question of law arises.
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Customs
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2019 (7) TMI 1361
Principles of Natural Justice - grievance of the petitioner is, the impugned order dated 13th July, 2018 passed by respondent no.2, Commissioner of Customs is an order passed in breach of principals of natural justice - demand of custom duty u/s 28 of the Act - HELD THAT:- The objective of giving show cause notice is not an empty formality. The objective is to make the party aware of the case it has to meet. Thus time is given to respond to the same. The reduction of time as given in the notice, certainly causes prejudice to the party. The conduct of the petitioner in not attending the personal hearing would not absolve the Revenue from giving time of thirty days as stated in the notice, on serving the complete show cause notice on the parties. In these circumstances, there has been failure of principles of natural justice inasmuch as the petitioner has not been given sufficient opportunity to meet the show cause notice. In these circumstances, directing the parties to avail of alternative remedy would be unfair as original proceeding is itself in breach of natural justice. SCN restored to the file of Commissioner of Customs, respondent no.2, for fresh disposal in accordance with law - petition allowed.
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2019 (7) TMI 1360
Validity of SCN - Jurisdiction - in most of the cases, the investigations have been transferred to the Zonal Offices where the defaulting units are situated - HELD THAT:- The present writ petition has become infructuous as the demand raised vide impugned show cause notice has since been confirmed vide order dated 31.01.2018 passed by the adjudicating Authority qua which the petitioner would have the remedy of filing an appeal. Petition dismissed as infructuous.
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Corporate Laws
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2019 (7) TMI 1359
Winding up - Misappropriation of funds of the company - HELD THAT:- Admittedly, inasmuch as there being no other assets available with Mr.D.Subramaniam who was the person alleged to have misappropriated the funds of the company in liquidation, and there being no possibility of recovering any further amounts, in the facts of the present case, the company application is closed, with a direction to the Official Liquidator to take necessary steps to complete the liquidation process expeditiously.
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2019 (7) TMI 1358
Confirmation of the sale of the property - Recovery of balance sale consideration - auction of property - HELD THAT:- It is now well-settled that the role of the Official Liquidator is limited to the extent of ensuring protection of the workers interests, in terms of Section 529-A of the 1956 Act (now repealed). This Court, while allowing Company Application No. 820 of 2014, after taking note of the legal position had permitted the applicant company to proceed with liquidating the assets in association with the Official Liquidator. Though it is the argument of the learned counsel for the Official Liquidator that this Court directed sale of assets by following the procedure prescribed under the 1959 Rules, practically, there being not much of variation with respect to the procedure prescribed under the SARFAESI Act and 1959 Rules, in the facts of the present case, the difference, if any in procedure is not of much consequence. A part of the loan was extended to clear the arrears of the Syndicate Bank and the other part for expansion of the unit after revival. By the date of the applicant bank financing the company in liquidation, a part of the machinery was about eight-year old (originally the company was promoted in 1990s). It is but natural that machinery depreciates in value over the years and even under the Income Tax Rules, value becomes depreciated and becomes zero in eight years time. It cannot be said that the valuation provided by the valuers with respect to unit, plant and machinery at ₹ 7 crores, in no way, is low and not justified. In the circumstances, the objections raised by the Official Liquidator are liable to be rejected. Company Application is allowed confirming the sale of the subject property in favour of the 3rd respondent.
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Insolvency & Bankruptcy
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2019 (7) TMI 1357
Voluntary liquidation - dissolution of the applicant company - Section 59 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On perusal of the material available on record, goes on to show that the Board of Directors of the Company has taken a conscious decision to close down the company due to non-availability of business prospects and non-availability of long-term financial resources, thus, as per them, it would not be a wise decision to carry on the business activities of the company from the economic point of view. Therefore, Company s Board of Directors proposed to liquidate the company voluntarily by invoking the provisions of Section 59 of the IBC - It is also made clear through the present petition that the Applicant Company is having no creditors, i.e. either secured creditors or unsecured creditors. Thus the company was having its own resources and net worth, which are already distributed / apportioned of among its shareholders. The company has duly passed necessary Special Resolution in its Extraordinary General Meeting (EOGM) on 08th December, 2017 by confirming the decision of its Board of Directors by proposing its Voluntary Liquidation. As per the material available on record, it is found that the Liquidator, after his appointment duly performed his duties and completed necessary formalities so as to complete process of liquidation, which are well narrated in the present petition and thereafter he sought an order from this Tribunal for dissolution of the applicant company - Since there is no objection received from any angle opposing the voluntary liquidation of the company either from shareholders side or from secured and unsecured creditors side or any adverse comments from public at large against such proposed liquidation, despite a public announcement was made by the liquidator in the website of the Insolvency and Bankruptcy Board of India (IBBI). Since nothing adverse is found from the material available on record in respect of opposing the proposed liquidation of the corporate person, the present application deserves to be allowed - Petition allowed.
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2019 (7) TMI 1356
Admissibility of petition - Initiation of Corporate Insolvency Resolution process - Corporate Debtor - failure in repayment of loan - It is alleged by the Petitioner/Financial Creditor that the Corporate Debtor company was not regular in making repayment of its debts as per the terms and conditions of the loan agreement - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is evident that the Corporate Debtor company has committed default in making repayment of its outstanding debts, which meets the requirement of Section 3(11) and (12) of the I B Code to trigger the CIRP in respect of the Corporate Debtor company - filing of present petition is found to be in order and, thus, it is evident that there is Debt, which has been defaulted by the Corporate Debtor. Hence, the present IB Petition can be considered for its admission. Application admitted - moratorium declared.
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Service Tax
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2019 (7) TMI 1355
Refund of Service tax with compound interest - unjust enrichment - incidence of tax not passed on - HELD THAT:- It appears that without first approaching the Customs, Excise and Service Tax Appellate Tribunal, the petitioner straightway filed the present writ petition seeking quashing of the orders and a mandamus for refund of the service tax deposited by the Housing Board - It is apparent that as a measure of equity, The HBH was permitted to make an application for refund of service tax to be ultimately disbursed to the petitioner(s)-firm(s), in case it was found that the incidence had not been passed on. At the time of resumed hearing today, counsel for the petitioner(s) states that an order dated 11.07.2019 has been passed by the Assistant Commissioner, Goods and Service Tax Division, Hisar, whereby the total amount deducted i.e. ₹ 19,48,553/- by The HBH and deposited with the Tax Authorities stands sanctioned in favour the petitioner-firm towards full and final settlement of the claim as per the aforesaid order dated 30.05.2019 passed by this Court. Although the petitioner may have a right to raise the issue of award of interest, however, we are not inclined to entertain such a plea in writ jurisdiction keeping in view the balance of equities and the peculiar circumstances of this case, as also the graceful approach of the Tax Authorities in not adhering to strict compliance of the statutory provisions. Petitions are disposed of as infructuous .
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2019 (7) TMI 1354
Condonation of delay in filing appeal - reasons assigned for the delay is that the office of the petitioner was being shifted from Ulsoor to Marathhalli - bonafides shown for the delay or not - HELD THAT:- The reasons assigned by the petitioner, in our view, constitutes sufficient cause. It is a bonafide error that has occasioned which is beyond the control of the petitioner. There is no deliberate delay caused by the petitioner. Even otherwise, rights of the parties should be determined and not rejected merely on technicalities and that too when there is substantial cause shown for the delay. Furthermore, it is not found find that the petitioner sought to gain by the delay. On the other hand, the condonation of delay would not affect any of the legal rights of the respondent. While condoning the delay, we are of the view that the petitioner requires to be saddled with costs - we deem it just and necessary to direct the petitioner to pay costs of ₹ 50,000/- with the Registry within a period of one week from the date of receipt of a copy of this order. Petition allowed.
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2019 (7) TMI 1353
Condonation of the delay of 96 days in filing an appeal - Section 35G of the Customs Act, 1962 - demand of service tax as per the proviso to Section 73 (1) of the Finance Act, 1994 alongwith interest and penalty - delay properly explained - HELD THAT:- The medical certificate of the person, who filed the affidavit on behalf of the appellant, was produced and the genuineness of the same was not disputed by the Tribunal. But, the Tribunal held that the medical certificate did not instill any confidence as no reasons were assigned except stating that he was suffering from leg pain. Insofar as the delay in making arrangement of the pre-deposit amount is concerned, the Tribunal found that the appellant s office/corporate office is at Hyderabad and, therefore, they could have taken the decision early and that the affidavit did not indicate any financial stress on the appellant for generating the amount to be deposited, and that therefore it was not a case for condonation of delay. Though the aforesaid reasons stated by the Tribunal could not be held entirely to be arbitrary, we think that the appellant cannot also be held to be wholly negligent in pursuing a statutory remedy. Once there is no dispute that the person, who was dealing with the matter, could not attend the office due to ill-health and it is supported by medical certificate filed along with the application, the Tribunal could have taken a liberal approach. The delay in this case is not abnormal but only 96 days. The question of law is answered in favor of the appellant - Appeal allowed.
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2019 (7) TMI 1352
Short payment of service tax - Real Estate Agents - bonafide error in short payment of tax or not - case of appellant is that the impugned order has been passed without properly appreciating the facts and law - principles of Natural Justice - HELD THAT:- The appellant while filing the appeal before the Commissioner(Appeals) has annexed documents in support of their submission i.e. ST-3 returns, summary of service tax paid towards alleged import of service, statement of expenditure incurred in foreign currency and also the case laws relied upon by the appellant, but the Commissioner (Appeals) has not considered them but rather observed that the appellants have not filed documents to justify their claim - Further, in the additional submissions filed before the Commissioner (Appeals), the appellants have filed all the documents but the same has also not been considered. Also it is found that on account of the mistakes, the appellants have short paid the service tax but the mistake was rectified and short payments were made good but there is no finding in the impugned order regarding the short payments made by the appellant - Further the principles of neutrality has also not been considered by the Commissioner (Appeals). Since most of the submissions made by the appellants along with the documents filed by the appellant have not been considered by the Commissioner (Appeals), this case needs to be remanded back to the original authority for passing a de novo order after considering all the submissions as well as the documents and the proof of payment of short service tax. Appeal allowed by way of remand.
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2019 (7) TMI 1351
Refund claim - unjust enrichment - Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No.5/2006-CE dt. 14/03/2006 - Scope of SCN - HELD THAT:- This Tribunal in the case of M/S. XL HEALTH CORPORATION INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2017 (5) TMI 186 - CESTAT BANGALORE] has held the Unjust enrichment principle is not applicable and has been specifically excluded by the proviso to Section 11B providing claim of refund. Further, bar of unjust enrichment is not applicable in the case of export of services - reliance can be placed in the case of CONVERGYS INDIA SERVICES (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX, NEW DELHI [ 2011 (9) TMI 473 - CESTAT, NEW DELHI] where it was held that the unjust enrichment is not applicable to cases involving export of services as per the proviso to Section 11B(2). Scope of SCN - HELD THAT:- Commissioner(Appeals) has also travelled beyond the show-cause notice because in the show-cause notice, the principle of unjust enrichment was not invoked. Appeal allowed - decided in favor of appellant.
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2019 (7) TMI 1350
Refund of CENVAT Credit - refund rejected on the ground that the respondents were not eligible to avail the CENVAT credit on input services in the first place in view of the bar contained in Rule 6 of CCR - HELD THAT:- Commissioner (Appeals) has rightly held that the respondents are entitled to cenvat credit and there is no provisions contained in Rule 6(1) of the Cenvat Credit Rules when the final product is exempted from Central Excise duty by virtue of Notification 4/2006 CE dated 01.03.2006 - further, Commissioner (Appeals) has relied upon various decisions which have consistently held that the assessee is entitled to avail credit of service tax paid on input services when they are producing exempted excisable goods which are chargeable to nil rate of duty. Hon ble Karnataka High Court in the case of COMMISSIONER OF CUSTOMS, BANGALORE VERSUS ANZ INTERNATIONAL [ 2008 (6) TMI 155 - KARNATAKA HIGH COURT] it has been held that the provisions of Rule 6 of Cenvat Credit Rules are not applicable when the goods are exported under bond - The High Court judgment has been maintained by the Hon ble Supreme Court in COMMISSIONER VERSUS ANZ INTERNATIONAL [ 2009 (3) TMI 999 - SC ORDER]. There is no infirmity in the impugned order passed by the Commissioner (Appeals) based on the decision of the Tribunal and the High Court - refund allowed - appeal dismissed - decided against Revenue.
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2019 (7) TMI 1349
Refund of service tax paid erroneously - commission paid to the overseas commission agents - reverse charge mechanism - POPOS Rules - time limitation - unjust enrichment - HELD THAT:- It is not in dispute that the Place of Provision of Service Rules, 2012 has been amended w.e.f. 1.10.2014, whereunder, no service tax is to be paid on the commission paid to the overseas commission agents. Consequently, the Appellants became eligible to claim refund of service tax paid during the period October 2014 to September 2015 - refund allowed. Time limitation - objection of the learned A.R. for the Revenue is that a portion of demand is barred by limitation, being filed beyond the period of one year - HELD THAT:- The amount of service tax paid and covered under the period of one year from the relevant date as laid down under Section 11B of Central Excise Act, 1944 is admissible as the Appellant had reversed the credit availed on the amount of service tax paid - refund rejected for the period under limitation. Unjust Enrichment - HELD THAT:- The issue is covered by the judgment of this Tribunal in the case of NEEDLE INDUSTRIES (INDIA) PVT. LTD. VERSUS COMMISSIONER OF C. EXCISE, SALEM [ 2013 (11) TMI 1688 - CESTAT CHENNAI] where on similar issue, the Appellants were already allowed refund of the service tax paid for their unit situated at Nadiad - refund allowed. Appeal allowed in part.
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2019 (7) TMI 1348
CENVAT credit - input services - event management services received as co-host with SAP - guest house/hotel expenses and chairs/furniture used in their office premises - appellant were engaged in selling and distribution of software SAP - HELD THAT:- So far the event management service is concerned, the same have been received by the appellant for jointly hosting the conference/ workshop for canvassing the old and new customers, thus the same is in the nature of sales promotion activity. Accordingly, sales promotion is eligible activity for availing the Cenvat credit - Credit allowed. Guest house/hotel service - HELD THAT:- The same have been received in the course of rendering the output service and, hence, the same is eligible input in the business of the appellant. Hence, the appellant is eligible for Cenvat credit on this service also - credit allowed. Cenvat on table, chairs/modular furniture - HELD THAT:- The issue is covered in favour of the appellant by the Division Bench of this Tribunal in the case of ICICI LOMBARD GENERAL INSURANCE COMPANY LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2016 (2) TMI 316 - CESTAT MUMBAI] where it was held that Appellant is eligible to avail the CENVAT credit of excise duty paid on Furniture and Fittings - credit allowed. The impugned order is set aside so far the input service is disallowed - The interest and penalty imposed on the appellant is also set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (7) TMI 1347
Challenging the proceedings pursuant to Show Cause Notices ('SCNs' in plural and 'SCN' in singular) - Rebate claim - Rule 18 of CER - manufacture and export of cotton yarn (exempted goods) - consignments that were exported on payment of duty albeit by way of payment from their CENVAT capital goods credit account - HELD THAT:- Instant cases on hand certainly do not fall under rare and exceptional cases warranting interference in impugned SCNs. Though obvious, it is made clear that when adjudication pursuant to impugned SCNs proceed, it will be open to writ petitioners to submit that they have not availed double benefit and obviously, this aspect will also be adjudicated upon on merits - this is one of the main reasons as to why this court has refrained and restrained itself from expressing any opinion on this aspect of the matter. The impugned SCNs do not deserve to be interfered with and that impugned SCNs have to be carried to their logical end. Petition dismissed.
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2019 (7) TMI 1346
Maintainability of appeal - monetary limit involved in the appeal - prayer for withdrawal of appeal - HELD THAT:- The appellant admits that in view of instructions dated 11.7.2018 issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell) the instant appeal is not maintainable before this Court, the monetary limit being below ₹ 50,00,000/-. Appeal dismissed as withdrawn.
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2019 (7) TMI 1345
Compliance with the pre-deposit - Section 35 of the Central Excise Act - power to condone delay - HELD THAT:- The conceded position is that Petitioner made pre-deposit of 7.5% of duty as required under Section 35F of the Act well within normal period of limitation. The appeal was sent through Courier within limitation period, however, Courier Agency did not deliver appeal within limitation period rather returned the same to counsel of the Petitioner who had handed over appeal to Courier, as is evident from the affidavit dated 08.07.2016 (P-9). There is delay of 47 days and Commissioner (A) was competent to condone delay up to 30 days. The demand is not prima facie sustainable whereas if present petition is dismissed, the Petitioner would be liable to pay duty, interest and penalty which otherwise is not payable but for the delay - Having regard to the fact that delay is minor coupled with the fact that pre-deposit was made within time, therefore, there is no lapse on the part of Petitioner and demand is not prima facie maintainable, the present petition deserves to be allowed and accordingly is allowed. Petition allowed.
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2019 (7) TMI 1344
CENVAT Credit - invoices issued by ISD (Sales Offices/Depots of the Appellant) - various input services - various input services availed at their depot and subsequently the credit has been distributed in favour of the manufacturing unit - period 01.03.2009 to 31.08.2009 - HELD THAT:- The credit availed on GTA service is not admissible. But, since the claim of the Appellant is that they have not availed credit on the GTA service in the present case, therefore, the said question does not merit any consideration. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (7) TMI 1343
Whether tax can be imposed on the sales of gunny bags, drums under the entry 'Old, discarded, unserviceable or obsolete machinery, store or vehicles including waste products, when neither gunny bags and drums were old, discarded, unserviceable or obsolete nor the same are machinery, store, vehicles or waste products? HELD THAT:- Merely because the assessee has been found to be a manufacturer or importer on deemed basis, it may not give rise to taxability of any sale performed by him. For the purposes of imposing tax, identification of the point of tax had to be necessarily made in terms of a pre-existing taxing entry. Insofar as, no identification has been made either by the Assessing Authority or the first appeal authority or the Tribunal of that taxing entry, it is difficult to sustain the imposition of tax on the assessee. Since all authorities have failed to examine that essential issue, no order of remand may be made at this stage as that would only amount to give second opportunity to the revenue to set up a new case. Insofar as the Assessing Authority did not find the assessee liable to tax with respect to any particular taxing entry and since appeal authority also failed to identify any pre-existing taxing entry whereunder the assessee had been subjected to tax, the assessee was not liable to suffer tax on old gunny bags, empty drums, film and rolls - Revision allowed.
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2019 (7) TMI 1342
Validity of assessment order - notices of default assessment of tax, interest and penalty - Section 9 of CST Act - contention of the Petitioner is that since the period of 15 days after service of the above DVAT-41 on the OHA expired on 30th October, 2018 and no decision of the OHA was communicated to the Petitioner, the objections should be deemed to be allowed under Section 74 (9) of the DVAT Act - HELD THAT:- In the present case there can be no manner of doubt on account of failure of the OHA to pass an order within 15 days of the receipt of the notice from the Petitioner in DVAT-41. The objections filed by the Petitioner way back on 3rd March, 2011 should be deemed to have been allowed. The demand created by the VATO for the second quarter of 2009-10 stands quashed by virtue of the present order. The Respondent will now proceed to process the refund claims of the Petitioner for the said period including the later periods - The order granting refund together with the interest due on the refund amount shall be passed within four weeks and refund amount together with interest found payable shall be credited to the Petitioner s account not later than 15th September, 2019. The failure to do so will entail the Respondents having to pay compensation of ₹ 50,000/- to the Petitioner. Petition allowed.
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2019 (7) TMI 1341
Interpretation of Statute - Section 74 (7) read with Section 74 (8) and (9) of the Delhi Value Added Tax, 2004 - grant of refund within stipulated time. HELD THAT:- This Court is of the view that Section 34 (2) which has to be read in the context of Section 34 (1) of the DVAT Act would not apply in the facts and circumstances of the present case, which is essentially concerned with the failure of the OHA to dispose of the objections filed under Section 74 (1) of the DVAT Act. It must be recalled that what was set aside by this Court by its judgment dated 28th September 2018 was the decision dated 17th May 2018 of the OHA under Section 74 (7) of the DVAT Act which is a specific provision dealing with objections whereas Section 34 (2) of the DVAT Act appears to be a general provision relating to assessments. In the present case there was no occasion for the Commissioner to pass any order of assessment . As rightly pointed out by the learned counsel for the Petitioner the re-assessment order dated 8th January, 2018 passed by the VATO was not disturbed by this Court when it remanded to the OHA the objections of the Petitioner for a fresh consideration. The Court declares that the objections filed by the Petitioner on 13th March, 2018 should, in terms of Section 74 (7) read with Section 74 (8) and 74 (9) of the DVAT Act be deemed to have been allowed by the OHA - petition allowed.
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2019 (7) TMI 1340
Validity of proclamation of sale - recovery of arrears of sales tax - auction of property - mandatory first charge on the property of the dealer - HELD THAT:- What can be taken to be more than settled is that Section 16(b) of the Act creates a statutory first charge that prevails over any charge that may be in existence. Therefore, the charge thereby created in favour of the State in respect of the sales tax dues of the petitionerSociety prevailed over the charge created in favour of the KCC Bank in respect of the loan taken by the petitioner-Society. Admittedly, instructions are nonstatutory and will have to give way to the statutory provisions as contained in Section 16(b) of the Act. Since respondent No.4 by virtue of Section 16(b) of the Act has a statutory first charge in its favour, which prevails over any charge that may be in existence, therefore, at the first instance is entitled to the sale proceeds realized out of the sale amounting to ₹ 31,25,000/-lying deposited in the registry of this Court and only if further residuary amount is still left undisbursed, only then it would be respondent-KCC Bank, which shall be entitled to such residuary amount. Application disposed off.
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2019 (7) TMI 1339
Validity of assessment order - Stock discrepancy - suppression of facts - levy of penalty - HELD THAT:- The authorities have not recovered any slips or anamath records to substantiate that there were actual suppression of turnover liable to tax. Hence, the circumstances of probable suppression that is estimated, is not at all possible if it is not proved that there is annexure. The assessing authority has not pointed out any suppression of either purchase or sales. It is also found that the above discrepancies is only due to mingling up of material goods of the respondent with that of their sister concerns, which is also duly pointed out by the Inspection officer at the time of inspection and at the later point of time, the appellant cannot raise the issue and the respondent have also produced bought notes, stock register etc., for substantiating the same and convincing that the alleged stock discrepancy so arrived at was due to the prescribed stock kept together for certain processes as their sister concerns and the respondent were functioning at the same place of business. The matter was considered by the Tribunal and they were convinced and found that there was no stock discrepancy. Appeal dismissed.
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