TMI Tax Updates - e-Newsletter
July 6, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Securities / SEBI Service Tax Central Excise CST, VAT & Sales Tax

News

• Meity-NITI launches Digital India Aatma Nirbhar Bharat App Innovation Challenge to realise PM's vision of Digital India – Aatma Nirbhar Bharat

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• SEBI notifies Amendments to SEBI (Investment Advisers) Regulations, 2013

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• Sovereign Gold Bond Scheme 2020-21 (Series IV) – Issue Price

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• Shri Piyush Goyal lauds the efforts of Exporters as the country makes fast recovery in Exports

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Notifications

GST - States

• 38/1/2017-Fin(R&C)(153) - dated 2-7-2020 - Goa SGST
  Government of Goa appoints the 18th day of May, 2020, as the date on which the provisions of section 11 of the Goa Goods and Services Tax (Amendment) Ordinance, 2020, shall come into force.

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• Order No. 01/2020-State Tax - dated 29-6-2020 - Gujarat SGST
  Gujarat Goods and Services Tax (Removal of Difficulties) Order, 2020

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• 54/2020–State Tax - dated 1-7-2020 - Maharashtra SGST
  Seeks to extend due date for furnishing FORM GSTR-3B for supply made in the month of August, 2020 for taxpayers with annual turnover up to ₹ 5 crore.

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• 53/2020–State Tax - dated 1-7-2020 - Maharashtra SGST
  Seeks to provide relief by waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods for months from March, 2020 to June, 2020 for monthly filers and for quarters from January, 2020 to June, 2020 for quarterly filers.

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• 52/2020–State Tax - dated 1-7-2020 - Maharashtra SGST
  Seeks to provide one time amnesty by lowering/waiving of late fees for non furnishing of FORM GSTR-3B from July, 2017 to January, 2020 and also seeks to provide relief by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to July, 2020.

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• 51/2020–State Tax - dated 1-7-2020 - Maharashtra SGST
  Seeks to provide relief by lowering of interest rate for a prescribed time for tax periods from February, 2020 to July, 2020.

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• 19381 - FIN-CT1-TAX-0002/2020 - dated 30-6-2020 - Orissa SGST
  Odisha Goods and Services Tax (Removal of Difficulties) order, 2020.

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• 19377 - FIN-CT1-TAX-0002/2020 - dated 30-6-2020 - Orissa SGST
  Notification to provide relief by waiver of late fee for delay in furnishing outward statement in FORM GSTR-1 for tax periods for months from March, 2020 to June, 2020 for monthly filers and for quarters from January, 2020 to June, 2020 for quarterly filers.

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• 19373 - FIN-CT1-TAX-0002/2020 - dated 30-6-2020 - Orissa SGST
  Notification to provide one time amnesty by lowering/waiving of late fees for non- furnishing of FORM GSTR-3B from July, 2017 to January, 2020 and also to provide relief by conditional waiver of late fee for delay in furnishing returns in FORM GSTR-3B for tax periods of February, 2020 to July, 2020

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• 19369 - FIN-CT1-TAX-0002/2020 - dated 30-6-2020 - Orissa SGST
  Notification to provide relief by lowering of interest rate for a prescribed time for tax periods from February, 2020 to July, 2020.

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• 5740-I-Legis-24/2020/L - dated 29-6-2020 - Orissa SGST
  Odisha Goods and Services Tax (Second Amendment) Ordinance, 2020

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Income Tax

• 43/2020 - dated 3-7-2020 - IT
  Income-tax (16th Amendment) Rules, 2020.

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SEBI

• SEBI/LAD-NRO/GN/2020/22 - dated 3-7-2020 - SEBI
  Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2020.

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Highlights / Catch Notes

GST

• Levy of GST - charitable trust - appellant providing legal, medical, psychological and financial support to the women and their children surviving violence and abuse - supply of services or not - The applicant does not charge any consideration for facilitating the legal aid and other assistance. Such activities of the applicant, therefore, does not result in ‘supply’ of service.
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• IT software related consulting services - Export of services or not - services provided by the applicant to the foreign client through the Principal - ITC claim - payment of fees received by him in INR from the Principal - the said activity satisfies the conditions of Section 7(1){a) and is a supply under GST. As per Para 5 of Schedule II read with Section 7(1A), this supply is a supply of services.
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• Applicability of GST on Deposit Contribution Works - generation and distribution of electricity - DCW involve shifting service/line, Structure and equipment as per the request of the consumer, the charges for which are billed separately from the consumer. The works undertaken are Installation of transformers/lines and other accessories and are in the nature of installation of the structure and equipments classifiable under SAC 99873.
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• Refund of excess amount - transitional credit - he question of payment of interest by the petitioner under Section 50 of the said Act, does not arise as the said amount is sought to be refunded.
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Income Tax

• Treatment to loss from the unit in Trump Hotel International under ‘income from other sources' - Although the principle of res judicata does not strictly apply to Income tax proceedings, the revenue cannot disturb and alter issues which have already been settled in previous years if there is no change in the facts and circumstances.
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• Taxability of receipt from sale of 'off-the shelf' software as 'Royalty' - India-Finland Tax Treaty - amount received by the assessee from its distributor for sale of specialized software and maintenance and support services (including upgrades) cannot be held as being in the nature of ‘royalty’
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• Allowable expenses - Liability as ascertained liability or not - assessee has itself shown the amount as provision for discount not debited to accounts of respective parties - the assessee demonstrated by producing the copies of the deals of some of the parties and shown that it is not an asset or liability but actual expenditure - Expenses allowed.
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Customs

• Classification of imported goods - the appellants contention that no product known as “Skin Barriers Micropore Surgical Tapes” exists and there should have been a comma (,) in between doesn’t hold water. When such products are sold and used as such, it cannot be inferred that the notification was wrongly worded and therefore, it is to be interpreted to mean Skin Barriers, Micropore Surgical Tapes is not acceptable.
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• Valuation of imported goods - LED TV of different models and empty pendent box - enhancement of value of goods based on NIDB data - As the Ld. Adjudicating Authority has completely ignored the provisions of Customs Act and Valuation Rules, the impugned order is not sustainable.
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Service Tax

• Waiver of Interest - Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - scheme rejected without affording any opportunity of hearing by stating “the date of communication declared is 05.09.2019 which is beyond the cut-off date (i.e. 30.06.2019) - Respondent directed to afford opportunity of hearing.
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Case Laws:

• GST

• 2020 (7) TMI 113
  Levy of GST - charitable trust - appellant providing legal, medical, psychological and financial support to the women and their children surviving violence and abuse - supply of services or not - reverse charge mechanism - HELD THAT:- The applicant makes payments not to the supplier of the services, but as financial support in the form of reimbursement to the recipient survivor. It is, therefore, not liable to pay GST based on reverse charge mechanism on such payments - The applicant does not charge any consideration for facilitating the legal aid and other assistance. Such activities of the applicant, therefore, does not result in supply of service as defined under section 7 (1) of the GST Act. The applicant is not, therefore, liable to pay tax thereon.

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• 2020 (7) TMI 112
  IT software related consulting services - Export of services or not - services provided by the applicant to the foreign client through the Principal - ITC claim - payment of fees received by him in INR from the Principal - Export Remittance - levy of IGST or CGST and SGST - HELD THAT:- In the instant case, the applicant provides IT software related consulting services in the area of Oracle ERP w.r.t Oracle Financials to Doyen for a consultancy fee laid down in the consultancy agreement. Therefore, the said activity satisfies the conditions of Section 7(1){a) and is a supply under GST. As per Para 5 of Schedule II read with Section 7(1A), this supply is a supply of services. Therefore, the applicant is liable to pay GST at appropriate rates on the supply of consultancy services to Doyen. In respect of the questions whether, such supply of services is export of services . zero-rated supply and eligibility of refund, this authority cannot answer the questions as they are not covered in Section 97(2) of the CGST/TNGST Act.

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• 2020 (7) TMI 111
  Maintainability of Advance Ruling application - issue pending before the Jurisdictional authority - Classification of goods - Unmanufactured Chewing Tobacco - applicability of N/N. 01/2()17-Compensation Cess-(Rate) - HELD THAT:- As per the first proviso to Section 98(2) of CGST/SGST Act, 2017 the authority shall not admit the application where the question raised in the application is already pending or decided in any proceeding in the case of an applicant under any of the provisions of this Act. In the case at hand, it is established that on the issues raised by the applicant before this authority, the Central Tax authorities have initiated proceedings and the same is pending before the Jurisdictional authority at the time of filing of this application. Therefore, the application cannot be admitted and is to be rejected without going into the merits of the issue.

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• 2020 (7) TMI 110
  Residential Complexes or not - building consists of more than one residential unit - One unit is occupied by the customers and the other units are occupied by his father, brother and sister, who are all not depending upon the customer, Single residential unit or not - N/N. 11 of 2017-CT(Rate) dated 28.06.2017. HELD THAT:- Advance ruling can be extended only in respect of supplies made or intend to be made by the applicant based on the facts of such supply. As the details or transaction of supply on which advance ruling is sought is not furnished the application cannot be admitted and Accordingly rejected. The application is not admitted as the applicant failed to furnish the details of supply made or proposed to be made by him for which ruling was sought.

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• 2020 (7) TMI 109
  Classification of goods - rate of GST - Knitted Fabrics - Woven Fabrics - Woven Fabric bonded with Non-woven Fabric - Covers for pillow, latex block, mattresses - Foot Runner - Pillow Sheet - Chenille Yarn - Poly Propylene Extrusion Yam - Poly Propylene Texturized Yarn - Polyester Texturized Yarn. Knitted Fabrics - HELD THAT:- Knitted Fabrics manufactured and Supplied by the applicant is classifiable under CTH 60. Further classification is not possible as only further technical details are not provided. The applicable rate is 2.5% CGST provided vide Sl.No.221 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 221 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No.62 dated 29.06.2017. Woven fabric - HELD THAT:- Woven fabric manufactured and supplied by the applicant is classified under CTH 5407. Further classification is not possible as only further technical details are not provided The applicable rate is 2.5% CGST provided vide SI.No.217 of Schedule I of Notification 1/2017 CT( R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Woven Fabric backing with Non-woven Fabric falls under CTH 5407 - HELD THAT:- Woven Fabric backing with Non-woven Fabric falls under CTH 5407. Further classification is not possible as only further technical details are not provided. The applicable rate is 2.5% CGST provided vide Sl.No.217 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and 2.5% SGST provided vide S.No. 217 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Covers for pillows made of knitted or woven fabrics - HELD THAT:- Covers for pillows made of knitted or woven fabrics are classifiable under CTH 63049239. Covers for latex blocks made of knitted or woven fabrics are classifiable under CTH 63049289. Cover for mattress made of knitted or woven fabrics are classifiable under CTH 63041990. The Goods attract CGST @ 2.5% in case selling price is less than ₹ 1000/piece as per SI.No.224 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @2.5% in case selling price is less than ₹ 1000/ piece as per Sl.No. 224 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 and in case of selling price more than ₹ 1000/piece then it will attract 6% CGST as per S.No. 171 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @6% as per S.No. 171 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Foot runners - pillow sheet made of knitted or woven fabrics - HELD THAT:- Foot runners, pillow sheet made of knitted or woven fabrics are classifiable under CTH 63021090. They will attract CGST @ 2.5% in case selling price is less than ₹ 1000/piece as per Sl.No.224 of Schedule I of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST 42.5% in case selling price is less than ₹ 1000/ piece as per Sl.No. 224 of Schedule I of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No.62 dated 29.06.2017 and in case of selling price more than ₹ 1000/piece then it will attract 6% CGST as per S.No. 171 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST @6% as per S.No. 171 of Schedule II of Notification Ms. No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Chenille yarn made of Polyester - HELD THAT:- Chenille yarn made of Polyester is classifiable under CTH 56060020. The applicable rate of CGST is 6% as per SI.No.138 of Schedule II of Notification 1/2017 CT(R) dated 28.06.2017 as amended and SGST -6% as per S.No. 138 of Schedule II of Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. Poly Propylene Extrusion Yarn - Poly Propylene Texturized Yarn - Polyester Texturized Yarn - HELD THAT:- Poly Propylene Extrusion Yarn: Poly Propylene Texturized Yarn; Polyester Texturized Yarn are synthetic yarns classifiable under CTH 5402 when not put up for retail sale and under CTH 5406 when put up for retail sale. The applicable rate of tax is CGST @ 9% vide S.No. 159 of Schedule III of Notification 1/2017 CT(R) dated 28.06.2017 and SGST 9% vide S.No.159 of Schedule III of Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. Ms No. 62 dated 29.06.2017 up to 12 th October 2017 and thereafter leviable to CGST @ 6% as per Sl. No. 132B of Schedule -II of Notification No. 01/2017-CT (R) dated 28.06.2017 as amended by Nation No. 34/2017-C.T. (R) dated 13 th October 2017 and SGST @ 6% as per Sl.132B of Schedule -II of Notification No. II(2)/CTR/532(d-41/2017 vide G.O. (Ms} No. 62 dated 29.06.2017 as amended.

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• 2020 (7) TMI 108
  Classification of goods - Chewing Tobacco - product intended for manufacture - applicable rate of Compensation Cess - HELD THAT:- The cutting process prescribed in this note is along with the remarks but not tobacco ready for smoking . This explanation of HSN clearly brings out the classification in the Customs tariff at 240120, which covers tobacco products for further manufacture and not for consumption as such as in the case of the applicant. From the explanation given by ICAR-CTRI Central Tobacco Research Institute and Explanatory General notes to chapter 24, it is seen that only tobacco which is cured at farm level for before supply to market would fall under this classification as Unmanufactured tobacco . The fermentation that the applicant claims is by adding jaggery water does not get covered under this. As seen in the the Explanatory General notes to chapter 24, only natural fermentation is covered. Therefor, the product of the applicant doesnot fall under CTH 2401. The product in question is a processed one in as much as the same is cured in jaggery water, undergoes the process of stalking and semi-drying, then cut into small pieces in minced form which is stored in a separate area for a few hours/days on which some natural/agricultural preservatives for maintaining the product in wet form is applied, packed in pouches/pottlams for supply. Also, the test reports of the chewing tobacco- before processing and after processing furnished by the applicant shows that the chemical parameters Moisture, total ash and acid insoluble ash are different in % content, indicating the product has been subjected to processing. Therefore, the product of the applicant does not merit classification as unmanufactured tobacco under CTH 2401 but rightly classifiable under CTH 2403 9910 as Chewing tobacco . Rate of Compensation cess applicable to the Product - HELD THAT:- The rate of Compensation cess is provided vide Notification no. 01/2017-Compensation Cess/rate) dated 28.06.2017 and Sl.No. 26 provides the Compensation Cess Rate as 160% for the product chewing tobacco which is supplied without lime tube .

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• 2020 (7) TMI 107
  Classification of goods - Tank and all Tank parts supplied by applicant - whether classified under the HSN code 87100000-Tank and other armoured fighting vehicles, motorized, whether or not fitted with weapons and parts of such vehicles ? - Whether parts manufactured specifically by applicant for TANK shall be considered under 87100000? - Whether parts and accessories supplied by their vendor specifically manufactured for Tank Parts and the same is not supplied to any other company will come under the HSN 87100000? - HELD THAT:- Tank is classified under CTH 8710 0000 while parts which satisfies the essential conditions i.e., they must be identifiable as being suitable for use solely or principally with Tanks and must not be excluded by the provisions of the Notes to Section XVII and must not be more specifically included in elsewhere in the Nomenclature are only to be classified as Parts under CTH 8710 0000. Whether tank parts shall be considered under 87100000 or not? - HELD THAT:- Retainer Steel, Valve Assembly, Casing Assembly, Hydraulic items(all types), Mandrel assembly, Nozzle Assembly, Plate assembly, Panel assembly, Support Assembly and Sleeve Assembly are classifiable as parts under CTH 8710 0000 - Dowel Pin, Gasket Assembly, Stiffner, Clip Assembly, Connector Assembly, Needle Bearing and Planet Pinion are not classifiable under CTH 8710 000. If the vendor is supplying parts under an HSN code other than 87100000, is it necessary that it has to be supplied under the same HSN code on what the vendor is charging? - HELD THAT:- Classification is independent of the buyer or seller and depends only on the goods.

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• 2020 (7) TMI 106
  Applicability of GST - transactions between TANGEDCO Ltd. TANTRANSCO Ltd, engaged in the generation and distribution of electricity - Deposit Contribution Works - TANGEDCO, Government Entity or not - Transmission Charges for Natural Gas. GST applicability on the transactions between TANGEDCO Ltd. TANTRANSCO Ltd - HELD THAT:- Activity of payment of expenses incurred by TANTRANSCO relating to vehicle hire charges, maintenance of sub-stations, salary payments, etc and paid by TANGEDCO accounted as receivable in the books of the applicant. The said activity is not one involving services of distribution of electricity and therefore the exemption under Sl. No. 25 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 is not available for the stated transactions - Activity at Sl.No. 5 of Para 5.2 relates to receipt of Services from TANTRANSCO for which the payment is to be made by the applicant. Since the applicant is not the person supplying, this part do not fall within the purview of the Advance Ruling as per Section 95(a) of the CGST Act 2017 and hence not answered. Applicability of GST on Deposit Contribution Works - HELD THAT:- DCW involve shifting service/line, Structure and equipment as per the request of the consumer, the charges for which are billed separately from the consumer. The works undertaken are Installation of transformers/lines and other accessories and are in the nature of installation of the structure and equipments classifiable under SAC 99873. Whether TANGEDCO ltd can be considered a Government Entity - HELD THAT:- TANGEDCO Ltd is established by Government of Tamil Nadu vide G.O. Ms. No. 94 Energy (B2) Department dated 16.11.2009 with the primary object to function as generation and distribution utility in terms of the provisions of Electricity Act 2003. It is a public company wherein 99 percent shares are held by TNEB, the Holding Company, which is established by Government of Tamil Nadu with more than 90 percent equity shares and control. The appointments of the directors to TANGEDCO are by the Government. Thus TANGEDCO is a Public Limited Company established by Government of Tamil Nadu with more than 90 percent control for the purposes of generation and distribution of electricity. Hence, TANGEDCO Ltd is a government Entity for the purposes of Notification No.11/2017 Central Tax (Rate) dated 28.06.2017 and 12/2017-C.T.(Rate) as amended vide Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 and Notification No. 32/2017-C.T.(Rate) dated 13.10.2017 effective from 13.10.2017. Applicability of GST on Transmission Charges for Natural Gas - HELD THAT:- An applicant can seek an Advance Ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken by the applicant. Further, as per Section 103 (1) of the CGST Act, the ruling is binding only the applicant and the concerned officer or the jurisdictional officer of the applicant. In the case at hand, the applicant is the recipient of the services and not supplier of such service. Accordingly, this question is not liable for admission and therefore rejected.

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• 2020 (7) TMI 105
  Credit of CGST sanctioned previously - final refund of balance amount - HELD THAT:- They pray for and are permitted to obtain instructions on or before the next date of hearing. List the matter on 10th July, 2020.

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• 2020 (7) TMI 104
  Refund of excess amount - transitional credit - HELD THAT:- The respondent vide order dated 24.06.2020 has now categorically accepted that there was excess amount, which is liable to be refunded to the petitioner. The petitioner had also adjusted the same from transitional credit availed by the petitioner towards its tax liability - the question of payment of interest by the petitioner under Section 50 of the said Act, does not arise as the said amount is sought to be refunded. The writ petition is therefore liable to be closed in the light of the subsequent order dated 24.06.2020 of the respondent. Petition disposed off.

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• Income Tax

• 2020 (7) TMI 103
  Time limit for making assessment order - lockdown as well as COVID-19 pandemic - HELD THAT:- This Court finds that the orders dated 19th December, 2019 were passed on the premise that the time limit for making assessment order in the present cases was (as stated by learned counsel for the respondent) 31st December, 2020. However, now it transpires that the time limit for making the assessment orders is 31st March, 2022. Consequently, the orders dated 19th December, 2019 are modified to the effect that the Assessing Officer would expedite the assessment proceedings and would pass the assessment orders at the earliest, but not later than 31st December, 2020. Accordingly, present applications stand disposed of.

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• 2020 (7) TMI 102
  Disallowance of excess depreciation - depreciation on software @60% - HELD THAT:- No infirmity in the order of the ld CIT (A) in upholding that depreciation on software is allowable @60%. However, for working out actual block of asset on which depreciation is to be allowed, he directed the ld AO to verify the same. We find no infirmity in the decision the ld CIT (A), therefore, ground No. 1 of the appeal is dismissed. Deduction of ESOP expenses - Additional claim before the AO by way of letter and did not made a claim by filing revised return - HELD THAT:- As carefully looking to the claim of the assessee it was found that the assessee has claimed deduction at ₹ 1,79,19,730/- whereas the amount of expenditure pertaining to the FY 2011-12 was only ₹ 10,45,671/-. Balance claim was of earlier years. CIT(A) directed the ld AO to restrict the claim of deduction of ₹ 10,45,671/- only against the claim of the assessee at ₹ 1,79,19,730/-. Further, surprisingly he also directed the ld AO to consider the claim of other earlier years when such claim is made by the appellant. We find that above further direction are not warranted pertaining to earlier years for the reason that ld CIT (A) does not have any power to direct ld AO for allowability of such claim for earlier years. If assessee wishes to claim, there is no fetter on the right of the assessee, but the claim should be in accordance with the law. If assessee makes a claim for deduction of balance expenditure in earlier years, whenever such a claim is made, the ld AO may examine the same and decide the issue on merits in accordance with law. - Decided against revenue.

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• 2020 (7) TMI 101
  Disallowance of business promotion expenditure - AO observed that the explanation of the assessee was not found acceptable as the assessee was unable to establish that these business promotion expenses has helped in promoting business - assessee has neither submitted the details of customers to whom these gifts were given and against which what was the quantum of the sales - HELD THAT:- It is the opinion of the lower authorities that the assessee could not establish a link between the gifts given and the sales orders received. It may not be practically possible for all businesses to maintain a complete list of the gifts given to their various customers and demonstrate that a particular sales order was received as a result of a particular gift. Act also does not prescribe demonstrating such live linkage. There is no denial b the department that the assessee has been carrying on business regularly, the department also does not allege that there is any personal element involved in the impugned expenditure. It is also an accepted business practice in India that customary gifts are usually handed out during festive occasions. Although, handing out gold items or semi-precious items may be frowned upon by the revenue authorities, all the same it cannot be a reason for disallowing the expenditure, especially when it is settled law that the revenue cannot step into the shoes of a businessman and direct how the business should be conducted. Reasonableness of quantum of expenditure vis a vis the turnover would have to be justifiable. Accordingly, it is our considered opinion that interest of justice would be served if the disallowance is restricted to 40% of the initial total disallowance. Appeal of the assessee stands partly allowed.

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• 2020 (7) TMI 100
  Treatment to loss from the unit in Trump Hotel International under income from other sources' - HELD THAT:- As evident from the conduct of the assessee that the assessee was not intending to run a unit in Trump Hotel International himself but rather he had purchased the unit while he was employed with an Oil Exploration Company in USA and he has given this unit for being run under the Hotel Operations and Maintenance Agreement to be run by the managing company. At no point of time has the assessee ever been engaged in running the Hotel Unit on his own. It is also evident that the control of the affairs of the assessee s unit like to whom the unit is to be let out, what kind amenities are to be provided within the unit, what tariff has to be charged from the unit etc. are beyond the control and decision making powers of the assessee. Unit under consideration cannot be considered to be a business undertaking of the assessee. Admittedly and undisputedly, the Department has also accepted this position in the preceding two assessment years. Although the principle of res judicata does not strictly apply to Income tax proceedings, all the same, the Hon ble Apex Court in the case of Radha Soami Satsang Vs. CIT, [ 1991 (11) TMI 2 - SUPREME COURT] as held that the revenue cannot disturb and alter issues which have already been settled in previous years if there is no change in the facts and circumstances - unable to accept the view taken by the Ld. CIT (A) and we set aside his finding on the issue and direct the Assessing Officer to treat the loss from the unit in Trump Hotel International under income from other sources . Determining the head of income for share of loss from LLCs situated in the USA - assessee had made investment in two limited liability companies in the USA - HELD THAT:- Assessee, by virtue of being the whole time employee Director in an oil exploration company, could not have made the capital outlay in the two limited liabilities company for the purpose of business and, apparently, this was only for the purpose of an investment. AO seems to have overlooked this factor and somehow failed to appreciate that in the case of outlays of this nature, it is important to determine as to whether the investment was in the realm of business or not. AO has at no point of time established that the intention of the assessee was to earn out of business - also has chosen to ignore the fact that in the preceding assessment years, the investment of this nature have consistently have not been treated as business. Even on the ground of consistency, the impugned loss should have been treated as loss under other sources. Also it is well-settled that the onus is on the Revenue to prove that the particular time of income or loss is from business. However, in the present case such a finding by the Assessing Officer is entirely absent. Accordingly, there is no foundation for AO to have treated the impugned loss as business loss and we have no option but to disagree with the findings of the Ld. CIT (A). - Decided in favour of assessee.

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• 2020 (7) TMI 99
  Taxability of receipt from sale of 'off-the shelf' software as 'Royalty' - India-Finland Tax Treaty - whether the payments received by the assessee from its distributor for sale of specialized software and maintenance and support services (including upgrades) could be held as royalty as per Article 12 of the India-Finland tax treaty, and also as per the Explanation 2 to Sec. 9(1)(vi)? - HELD THAT:- As decided in own case [ 2019 (12) TMI 1315 - ITAT MUMBAI] amount received by the assessee from its distributor for sale of specialized software and maintenance and support services (including upgrades) cannot be held as being in the nature of royalty as per Article 12 of the India-Finland tax treaty. Levy of interest u/ss. 234A and 234B - HELD THAT:- As the calculation of the interest liabilities would be consequential to the determining of the tax liability of the assessee, therefore, the same is being restored to the file of the A.O.

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• 2020 (7) TMI 98
  Revision u/s 263 - denial of the tax-holiday benefit - CIT holding a conviction that as per the proviso to Sec. 92C(4), the suo motto addition made by the assessee towards deemed mark-up having regard to the ALP of the international transactions would not qualify for deductions u/ss. 10A and 10B of the Act? - HELD THAT:- We are unable to comprehend as to how the view of the A.O as regards allowing of the assessee s claim for deductions u/ss. 10A and 10B of the Act, which as observed by us hereinabove is found to be in conformity with the view taken in the case of CIT Vs. I-Gate Global Solutions Ltd. [ 2014 (6) TMI 1007 - KARNATAKA HIGH COURT] could be held to be erroneous. In fact, we find that the aforesaid order of the High Court of Karnataka in the case of I-Gate Global Solutions Ltd. (supra),was available on the date when the assessment was framed by the A.O, vide his order passed u/s 143(3) r.w.s 144C(13), dated 27.02.2015. At this stage, we may also observe that no judgment of any High Court taking a contrary view has been brought to our notice by the ld. D.R. Be that as it may, we hold strong conviction that as the implicit view of the A.O while allowing the assessee s claim for deduction u/ss. 10A and 10B of the Act, cannot be held to be erroneous , therefore, the CIT was divested of exercising his revisional jurisdiction u/s 263 of the Act. - Decided in favour of assessee.

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• 2020 (7) TMI 97
  Treating the sale receipts of shrink-wrap software as royalty - 'sale of copyrighted article' OR 'transfer of copyright right' - whether nature of royalty under the provisions of section 9(l)(vi) of the Act as well as Article 12(3) of the Double Taxation Avoidance Agreement ( DTAA ) between India and USA? - HELD THAT:- As decided in own case [ 2020 (1) TMI 611 - ITAT MUMBAI] we herein conclude that the addition made by the A.O by treating the sale receipts of shrink-wrap software as royalty cannot be sustained, and is hereby vacated. - Decided in favour of assessee.

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• 2020 (7) TMI 96
  Late filing fee u/s 234E - intimation u/s 200A - HELD THAT:- This appeal is covered in favour of the assessee by the judgment of M/s.Sarala Memorial Hospital v. ITO (TDS) [ 2018 (12) TMI 1818 - KERALA HIGH COURT ] as held that fees u/s 234E could not have been computed for assessment prior to 01.06.2015. In the instant case, the assessment year being 2013- 2014, there cannot be any levy of fees u/s 234E - Decided in favour of assessee.

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• 2020 (7) TMI 95
  Allowable expenses - Liability as ascertained liability or not - assessee has itself shown the amount as provision for discount not debited to accounts of respective parties - CIT (A) relying the order of his predecessors and by treating the liability as ascertained liability without appreciating the fact that the assessee has itself shown the amount as provision for discount not debited to accounts of respective parties - HELD THAT:- The assessee company gave various schemes to its advertiser like consumption incentive, series discount etc. In case of consumption incentive, the advertisers are given an offer that in case if it consumes particular amount of time during the given period for broadcasting and advertising then it will be entitled to the consumption incentive. During the year, assessee has passed on this consumption incentive of ₹ 34059992/-. Learned CIT (A) has held that this is the expenditure in the nature of incentive to the advertiser and the assessee has also shown income against this expenditure. Before the Learned CIT-A the assessee demonstrated by producing the copies of the deals of some of the parties and shown that it is not an asset or liability but actual expenditure. In view of this, he held that assessee is eligible for deduction of the above expenditure. Disallowance on account of software expenses - revenue or capital expenditure - HELD THAT:- CIT-A who held that software expenditure incurred by the assessee is an application software for upgradation. The assessee has not incurred any expenditure on acquiring any asset of enduring nature. No infirmity in the order of the CIT-A in deleting the above disallowance. - Decided against revenue.

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• 2020 (7) TMI 94
  Addition of outstanding sundry creditors u/s 68 - HELD THAT:- Assessee has furnished the copy of sale invoice pertaining to Kankane Oil Mill and copy of contract note, copy of challan, copy of receipt of the agricultural production of marketing committee, copy of form no. 403 of the commercial sales tax department certifying that goods were distributed from Kankane Oil Mill to place of the assessee Assessee has placed in the paper book copy of transporter receipt along with payment of transport charges for delivering the goods from the consigner to the assessee, copy of bank account statement showing that payment was made by the assesee to Kankane Oil Mill. Party namely Kankane Oil Mill was based in Uttar Pradesh and for any further verification the assessing officer should have issued commission u/s.131(i)(d) of the act after keeping into consideration the distance from the place of the assessee and the place of the assessee. AO has neither given any commission nor disproved a number of evidences furnished by the assessee in supported of its claim of purchasing the goods from the aforesaid parties. CIT(A) has not disproved the relevant supporting evidences furnished in respect of other party namely Westwind Shipping Logistics Pvt. Ltd. in spite of the fact that assessing officer has clearly mentioned in his remand report that bills were verified and TDS was deducted. We are not inclined with the decision of the ld. CIT(A) for sustaining the additions on assumption basis without disproving the relevant material submitted by the assessee. - Decided in favour of assessee.

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• Customs

• 2020 (7) TMI 93
  Classification of imported goods - Micropore, Transpore and Tegaderm - whether eligible for exemption contained in notification No. 21/2002-Customs dated 01/03/2002 as amended from time to time or not - contention of the appellants is that their products are rightfully eligible for the exemption contained in the notification under the description Skin Barriers Micropore Surgical Tapes , whereas Department contends that there exists a product which suits the description Skin Barriers Micropore Surgical Tapes and the notification should not be read as per convenience. HELD THAT:- The department has established that a product named and known as Skin Barriers Micropore Surgical Tapes exists. The evidence of the same has been supplied as RUD to the appellants. Under such circumstances, the appellants contention that no product known as Skin Barriers Micropore Surgical Tapes exists and there should have been a comma (,) in between doesn t hold water. When such products are sold and used as such, it cannot be inferred that the notification was wrongly worded and therefore, it is to be interpreted to mean Skin Barriers, Micropore Surgical Tapes is not acceptable. There is no ambiguity in the notification and there is no need to interpret the notification by supplying what is assumed to be missing in the notification. The impugned order is correct as far as it holds that the items imported by the appellants are not eligible for the exemption contained in the notification No.21/2002-Cus dated 01.03.2002. The appellants argue that another part of the notification mentions bag closing clamps karaya seals paste or powder whereas no such products are available and therefore, it need to be understood that notification misses out on certain symbols like (,). We find that as the items described therein are not under discussion, we need not turn our attention to the same. Time Limitation - penalties - HELD THAT:- The fact that the appellants are importing from a long period is not disputed. It is not the case of the department that all the consignments were cleared under self-assessment procedure. It is not the contention of the Revenue that the impugned products were not subjected to examination or assessment any time - the extended period is not invokable and penalties are not imposable. Appeal allowed in part.

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• 2020 (7) TMI 92
  Valuation of imported goods - LED TV of different models and empty pendent box - enhancement of value of goods based on NIDB data - HELD THAT:- We are convinced with the order passed by the Ld.Commissioner, merely on the basis of NIDB Data without following the provisions of Customs Act and Valuation Rules. In various decisions, it has been held that the NIDB Data cannot be substituted for Customs Valuation Rules. In case of CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (5) TMI 1152 - SUPREME COURT] , the Hon ble Supreme Court has given a categorical decision that the valuation has to be ascertained only by complying with the provisions of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007. As the Ld. Adjudicating Authority has completely ignored the provisions of Customs Act and Valuation Rules, we are of the view that the impugned order is not sustainable. Appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2020 (7) TMI 91
  Reimbursement of liquidation expenses of vessels/tugs - winding up of company - HELD THAT:- The official liquidator has rightly rejected the claim for supply of food provision on board on 4th September, 2017 in the sum of ₹ 42,040/-. The claim for port charges in the sum of ₹ 6,51,473/- is rightly rejected on the ground that official liquidator had taken possession on 6th February, 2018 and as the same were neither approved by this Court nor informed to the official liquidator prior to incurring such expenses and thus could not be considered as liquidation expenses. The manning expenses were incurred by the applicant without permission of this Court and without conveying such expenses to the official liquidator before taking possession by the official liquidator. The official liquidator rightly rejected the claim for reimbursement of salary expenses in the sum of ₹ 2,68,927/- as the said claim would fall under Section 529A or 530 of the Companies Act, 1956 depending upon the nature of work. The port dues of ₹ 2,87,675/- and ₹ 22,62,182/- have been rightly rejected under Section 530 of the Companies Act, 1956 being Government dues which shall be paid only after payment of workman and secured creditors - the claim for port dues cannot be admitted and if would have been admitted would result in disturbing the priority mechanism provided as per the provisions of Companies Act, 1956. The report submitted by the official liquidator before this Court being OLR No. 141 of 2018 allowing the claims made by the applicant partly and rejecting the part of the claims shows no infirmity and is based on various orders passed by this Court from time to time. The claims which were not admissible as liquidation expenses have been rightly rejected by the official liquidator. Application dismissed.

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• Securities / SEBI

• 2020 (7) TMI 90
  Inordinate delay in the issuance of the show cause notice for violation of Section 12(A)(a), (b) and (c) read with Regulations 3(a),(b),(c) (d) and 4(1), (4(2)(a) and (g) of PFUTP Regulations - delay of 7 years in issuing the show cause notice - HELD THAT:- There has been an inordinate delay in the issuance of the show cause notice. Even though there is no period of limitation prescribed in the Act and Regulations in the issuance of a show cause notice or for completion of the adjudication proceedings the authority is required to exercise its powers within a reasonable period as held recently in Adjudicating Officer, Securities and Exchange Board of India v. Bhavesh Pabari [ 2019 (3) TMI 197 - SUPREME COURT] . In the instant case, we are of the opinion that the power to adjudicate has not been exercised within a reasonable period and therefore no penalty could be imposed. Without going into the merits of the case, we find that on account of the inordinate delay in the initiation of the proceedings by issuance of a show cause notice, the penalty order cannot be sustained.

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• Service Tax

• 2020 (7) TMI 89
  Waiver of Interest - Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - scheme rejected without affording any opportunity of hearing by stating the date of communication declared is 05.09.2019 which is beyond the cut-off date (i.e. 30.06.2019) - HELD THAT:- This Court finds that the impugned communication dated 05th March, 2020 has been issued by the respondents without giving an opportunity of hearing to the petitioner and without considering the case put forward by the petitioner. The present writ petition and pending application are disposed of by setting aside the order/communication dated 05th March, 2020 and by directing the respondent No.2 to give a hearing to the petitioner on 09th July, 2020 at 11.30 a.m.

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• 2020 (7) TMI 88
  Works Contract Service - Nature of activity - service or manufacture - levy of VAT or service tax - Construction Service - period from 10.9.2004 to 31.12.2005 - HELD THAT:- The appellant was paying VAT on the amount during the impugned period of the activity undertaken by the appellant. Therefore, in terms of decision of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , wherein Hon ble Supreme Court has held that any activity pertains to construction of service where material has also been supplied alongwith the service, the merit classification of the service is under works contract service and no service tax is payable prior 1.6.2007. Admittedly, in the case in hand, the appellant is engaged in the activity wherein the material has been supplied alongwith service, therefore, the activity undertaken by the appellant merits classification under works contract service and no service tax is payable by the appellant prior to 1.6.2007. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (7) TMI 87
  Maintainability of appeal - requirement to make pre-deposit - Section 35F of Central Excise Act - HELD THAT:- Section 35F requires cash deposit of 7.5% of the dues and there is no provision for adjustment of any other security. Tribunal being a creature of the Act is bound by the provisions of the Act and has no powers or jurisdiction to convert the mandate of Section 35F into any other act. As such, for entertaining the appeals appellants are required to deposit the amounts in terms of Section 35F. At this stage, learned advocate submits that his clients have no finance to deposit the amount in question even if some more time is given to them. He accordingly prays that the appeals may be disposed of as not maintainable for non-compliance of Section 35F. Appeal dismissed as not maintainable.

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• 2020 (7) TMI 86
  Condonation of delay in filing appeal - sufficient cause for delay present or not - HELD THAT:- The order in appeal as has been proposed to be challenged was earlier accepted by the Committee of Commissioners and the Commissioner Jaipur gave the acceptance on 19 December, 2018. The extract of office note-sheet annexed with the time chart reveals that the order in appeal was directed to be reviewed on 15 May, 2019 without stating any reason for proceeding against the acceptance, which was made five months prior to the directions of the review. The limitation statute when specifically provides a time period for filing the appeals, the purpose requires adherence of time line for the same. Irrespective of the fact that Tribunal is empowered to condone the delay in filing the appeal but the sufficient cause has to be shown by the appellant seeking condonation of delay - the reason quoted is not sufficient rather reflects negligence on the part of the Department by first accepting the order proposed to be challenged and subsequently directing the review thereof for no reason. Also the reason quoted today is absolutely contrary to the reason mentioned in the application seeking condonation. None of these classify the criteria of being called as sufficient cause of Section 5 of Limitation Act. COD application dismissed.

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• 2020 (7) TMI 85
  Condonation of delay in filing appeal - time limitation - as against the order dated 10.06.2014, the appeal has been filed on 15.09.2016 - Section 35 of Central Excise Act, 1944 - HELD THAT:- In this case the adjudication order dated 10.06.2014 is not received by the appellant. In reply to the RTI filed by the appellant it has been answered that mode of dispatch of Order-In-Original could not ascertained. In these circumstances, the benefit of doubt goes in favour of the appellant that they have received the adjudication order on 04.08.2016 and they have filed appeal on 15.09.2016 which is well within time limit prescribed under Section 35 of the Central Excise Act, 1944, therefore, there are no force in the impugned order, the same is set aside. The appeal is allowed by way of remand with the direction to the Ld. Commissioner (Appeal) to decide the issue on merits after affording the reasonable opportunity to the appellant to present their case.

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• CST, VAT & Sales Tax

• 2020 (7) TMI 84
  Reopening of assessement - compounding of tax - reversal of tax under Section 25(1) of the 2003 Act - HELD THAT:- It is a matter of record that the second appeal is pending adjudication before the Tribunal. On going through Ext.P4, the demand was stayed subject to deposit of 20% way back in February 2020 and the amount ordered to be deposited in one month expired on 19.03.2020. The petitioner prima facie do not require any concession but, the Tribunal ought to have imposed the condition of 20% as envisaged under Section 55(4) of the 2003 Act, though strictly not applicable to the second appeal, particularly owing to the fact that there was complete lock down and hardy any business carried out during this period and it was very difficult to generate money and pay the amount. The percentage of amount reduced from 30% to 20% which would come ₹ 15,83,000/- an odd, rounded to ₹ 16,00,000/- to be deposited in two instalments. The first instalment to be deposited on or before 25.06.2020 and the second would fall on 25.07.2020. Thereafter on compliance of the direction, the Tribunal shall consider and decide the appeal. In case of any failure to deposit the amount, the respondents shall be at liberty to initiate action for recovery of the amount in accordance with law - petition disposed off.

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