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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 1, 2019 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles Self invoicing under GST SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 – AN OVERVIEW State GST website link News Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified Atal Innovation Mission (AIM) launches Atal Community Innovation Centre (ACIC) Program Monthly Review of Accounts of Union Government of India upto the month of June 2019 for the Financial Year 2019-20. Income Tax Department conducts search on group connected with VVIP Chopper Scam Sudden demise of Dr. SUBIR V. Gokarn, Executive Director (India) at the International Monetary Fund Notifications Customs 53/2019 - dated 31-7-2019 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver GST F. No. 349/52/2017-GST - G.S.R. 533 (E) - dated 29-7-2019 - CGST CORRIGENDUM – Notification No. 14/2017-Central Tax, dated the 01st July, 2017 F. No. 349/52/2017-GST - G.S.R. 532(E) - dated 29-7-2019 - CGST Corrigendum – Notification No. 02/2017-Central Tax, dated the 19th June, 2017 SEBI SEBI/LAD-NRO/GN/2019/28 - dated 29-7-2019 - SEBI SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) (FOURTH AMENDMENT) REGULATIONS, 2019 SEBI/LAD-NRO/GN/2019/26 - dated 29-7-2019 - SEBI SECURITIES AND EXCHANGE BOARD OF INDIA (BUY-BACK OF SECURITIES) (AMENDMENT) REGULATIONS, 2019 SEBI/LAD-NRO/GN/2019/25 - dated 29-7-2019 - SEBI SECURITIES AND EXCHANGE BOARD OF INDIA (DELISTING OF EQUITY SHARES) (AMENDMENT) REGULATIONS, 2019 SEBI/LAD-NRO/GN/2019/24 - dated 29-7-2019 - SEBI Renewal of recognition to Multi Commodity Exchange Clearing Corporation Limited for for three years commencing on the 31st day of July, 2019 and ending on the 30th day of July, 2022 Circulars / Instructions / Orders SEBI SEBI/HO/CFD/DIL2/CIR/P/2019/85 - dated 26-7-2019 Streamlining the Process of Public Issue of Equity Shares and convertibles-Implementation of Phase II of Unified Payments Interface with Application Supported by Block Amount FEMA 04 - dated 30-7-2019 External Commercial Borrowings (ECB) Policy – Rationalisation of End-use Provisions Highlights / Catch Notes GST Classification of goods - rate of tax - Fan Coil Unit consists of 3 basic components namely fan motor, heat exchanger coils and PCB - FCUs are used in the air conditioning unit and not in refrigerating unit hence cannot be covered under heading 8418 - further Fan described under 8414 do not at all have any resemblance with a FCU - would be covered under the HSN Code 8415 as air conditioning machines Visit to Get Source Levy of GST - classification of supply - Appellant has entered into the Agreement with manufacturer (PIL) to brew/manufacture, package and supply Products - fixed fees and costs are for manufacture and supply of alcoholic liquor for human consumption - the activities performed by the PIL, on the goods of Appellant, are in the nature of the Job work and accordingly attract 18% GST Visit to Get Source Alternative remedy - requirement of way bill for goods transported which was a new vehicle (Autorickshaw) transported from the principal place of business to its branch by specifically raising a 'delivery note' - appellate authority can very well decide as to whether there existed any statutory obligation on the part of the appellant in generating the e-way bill, while transporting the goods in question - writ dismissed Visit to Get Source Income Tax Addition u/s 68 - Additions based on pen drive etc found from the third party - revenue authorities have failed to establish any connection either business or personal of the assessee with the Accountant or with the Directors of CHL group nor incriminating material was found during the search - assessee has denied to have entered into the alleged transaction through an affidavit - no addition Visit to Get Source Disallowance u/s 14A - exempt income is out of investments in mutual funds - in the case of a mutual funds, administrative and managerial expenses are factored in the investments itself, hence separate disallowances towards administrative expenses is not called for Visit to Get Source Disallowance of provision for maintenance and free service/warranty in computation of book profit u/s 115JB - such liabilities cannot be regarded as contingent liability, what is certain is the incurring of liability notwithstanding estimation thereof with reasonable certainty irrespective of actual quantification latter on - the liability is in praesenti though it is likely to be discharged at a future date - no adjustment Visit to Get Source Acquisition of property by central government - order u/s 269UD - upon the passing an order u/s 269UD(1) by Appropriate Authority, the land would vest in the Government and the question of payment or tendering the sale consideration would arise later - Department accepted that there would be no objection to making such payment if the owner is ready to handover peaceful vacant possession - since possession was not handed over, no revesting of the property Visit to Get Source Characterization of income - interest earned on ICDs - assessee is not in money lending business - when it is accepted that the assessee has taken a prudent business decision to earn some income by utilizing the idle business funds, no differentiation can be made between the investments made in banks and ICDs - the interest income earned on ICDs should be treated as income from business Visit to Get Source Allowability of write off of obsolete and non-usable inventory which is 10% of the total inventory - there can be no denial that assessee is entitled to claim loss towards obsolete stock in a given year, it is also the corresponding duty of the assessee to prove the existence of such obsolete material by direct or circumstantial evidences - the assessee has totally failed in its corresponding duties - disallowance restricted to 5% Visit to Get Source Penalty u/s 271(1)(c) - return filed disclosing higher income u/s 153A - no incriminating material found - when the Revenue could not lay hands on any tangible material except conditional and tacit averments, which confession in itself is seen to be non-admission of any ingenuity - no hesitation to hold that such confession u/s 139(4) cannot be the basis for imposition of onerous penalty Visit to Get Source Lower withholding certificate u/s 197 - requirement of reasoned order - the decision of the AO u/s 197(1) is quasi-judicial in nature, has to be taken on objective criteria and be based on relevant material provided by the applicant and available with the Department - It must be supported by reasons available on the file which conform to the requirement of Section 197 r.w. Rule 28 AA - reasons must be communicated to the applicant also Visit to Get Source Disclosure of reasons to belief for conducting search u/s 132 - impact of insertion of Explanation to Section 132(1) by the FA, 2017 with retrospective effect - the High Court is precluded from seeing the note or discussing it in a judgment where there is a challenge to the search itself - disclosure made in order will not be treated as a precedent Visit to Get Source Addition of unexplained expenditure u/s 69C - AO not verified the actual contents of seized material and addition made based on Report of the Special Auditor - AO is duty bound to examine all aspects before reaching the conclusion - the transactions mentioned on the seized documents were only proposals sent by broker for the land deal for approval of the management and on the basis of such rough proposals no addition permissible Visit to Get Source Revision u/s 263 - specified domestic transactions - effect of omission of 92BA(1) w.e.f. 1.4.2017 - the order has been revised purely on the basis that the AO has not referred to determine the ALP to the TPO - Since the provision itself stood omitted at the time when the order was passed by the Pr. CIT, the impugned order cannot be sustained, hence is hereby quashed Visit to Get Source Corporate Law Constitution of CSR committee for the Board - as per the appellant’s own calculation the net profit is apparently more than ₹ 5 crores i.e. threshold limited prescribed u/s 135(1) - the company was liable to constitute Corporate Social Responsibility Committee of the Board Visit to Get Source IBC Initiation of CIRP - Non-consideration of resolution plan submitted after limitation but before the expiry of 270 days - the Resolution Professional and the COC should make all possible efforts towards Insolvency Resolution of a Corporate Debtor company and its liquidation can only be lost resorts - directed to consider within 30 days Visit to Get Source CIR process - Non filing of FIR and action against offenders steeling goods, machineries and equipments, etc. of the CD - this Bench is conferred with power to direct Police/DM to provide assistance to the RP as contemplated u/s 429 of the Companies Act, 2013 r/w regulation 30 of CIRP Regulations, 2016 - State Machinery is under obligation to take action against the culprits causing loss to CD and also to protect the assets of the CD - direction issued Visit to Get Source Service Tax Claim of small scale exemption upto ₹ 10 Lakhs - renting of Immovable Property service - risks and rewards are not shared as each of the co-owner brought money from their own sources to buy properties and they are receiving rents separately - the threshold exemption is available for each individual co-owner Visit to Get Source Non-payment of Service tax - gross fee collected for Commercial Coaching and Training Services - the assessee is not entitled to deductions on account of sale of books, registration fee, examination fee etc., because no amounts were collected under these heads and gross amount for total services rendered were invoiced to the students by the assessee. Service tax is leviable on the gross amount charged Visit to Get Source Extended period of Limitation - when the activities of the appellant were well within the knowledge of the Revenue, then, there no question of suppression of any fact - SCN having been admittedly issued after the prescribed period of one year was clearly barred by limitation Visit to Get Source Central Excise CENVAT Credit - clean energy cess on Coal - A plain reading of Rule 3 of CCR, 2004 shows that it does not include CEC imposed in FA, 2010 in list for Cenvat credit - If the CEC collected by the Government is returned through the backdoor in the form of CCR, 2004, we will be doing a great disservice to the country by replacing the principle of ‘Polluter pays’ with ‘Pollution pays’ - credit not allowed Visit to Get Source Refund of CENVAT Credit - unjust enrichment - It is not understood when no duty was paid and only credits availed were refunded, how come a case of unjust enrichment could come into play - amount has been shown as receivable as “Loan & Advances” from the department - it can be safely concluded that incidence of duty has not been passed on by the appellant to any other person - refund allowable Visit to Get Source Case Laws: GST 2019 (7) TMI 1507 Levy of GST - classification of supply - supply of goods or supply of services - Fixed fees and costs are for supply of alcoholic liquor for human consumption - PIL is providing job work services to the Appellant - effective ownership of the raw materials and inputs used for manufacture of the Products or not - HELD THAT:- In the instant case, it is expressly clear that PIL is being paid a fixed amount of fee for undertaking the manufacturing and other allied activities required for the manufacturing of the Product i.e. beer for the Appellant and not for the sale of the manufactured beer. In fact, the manufactured Product i.e. beer is sold to the buyers identified by the Appellant. Thus, there is no sale taking place between PIL and the Appellant. Thus, the contention of the Appellant that the consideration received by PIL from the Appellant is for supply of alcoholic liquor for human consumption, is factually incorrect and fallacious, and hence not tenable. Purchase transaction of the raw materials and other ingredients required for the brewing of beers is undertaken by PIL - HELD THAT:- It is aptly clear that though PIL is undertaking the purchase transaction of the raw materials and other ingredients used in the manufacture of beers, it is the Appellant, who is deciding not only the qualities and varieties of the materials, but also the suppliers from whom these materials are to be purchased along with the terms and conditions for the purchase transaction. PIL is undertaking these purchase transaction simply as an agent or representative of the Appellant as they do not enjoy any autonomy, whatsoever, while performing these transaction. Further, it is germane that the cost of the purchase of the entire raw materials and other inputs is also incurred to the Appellant, as is submitted by the Appellant. All the goods, on which PIL is undertaking the manufacturing process, belong to the Appellant and certainly not PIL. Thus, this contention of the Appellant is not tenable and hence not considered. Applying the provision of Job-Work in the present case, it is abundantly clear that the activities of PIL as contemplated under the said Agreement are those of the job worker as they are carrying out their entire activities of brewing, bottling and packaging on the goods belonging to another registered person, in this case, the Appellant. The final manufactured Products i.e. beer also belong to and are owned by the Appellant, as the final products are delivered by PIL to the buyers, which are identified by the Appellant and entire sale consideration against the same is credited to the designated bank account meant for manufacturing expenses and sale proceeds of the Product i.e. beer. The activities performed by the PIL, on the goods of Appellant, are in the nature of the Job work and accordingly attract 18% GST. Also, the benefit of exemption under entry no. 26(f) of Notification 11/2017-C.T.(Rate) dt. 28.06.2017 is not available to alcoholic liquor for human consumption. 2019 (7) TMI 1506 Classification of goods - rate of tax - Fan Coil Unit - whether the product is covered under HSN Code 8418 under Goods and Service Tax Act, 2017? - challenge to AAR decision. HELD THAT:- FCU is a part of the Air Conditioning System. It does not have anything in common with the refrigerating unit. The HSN Code 8418 covers refrigerators, freezers and heat pumps. The essential elements of refrigerator are listed as compressor, condenser and evaporators whereas it is seen from the description of the FCU that it is commonly a part of the Air Conditioning System and Heading 8418 does not include Air Conditioning Systems . Therefore, we are unable to agree with the contention of the appellant that the FCU will be covered under Heading 8418 - It is easily seen from the description that the Fan described under 8414 do not at all have any resemblance with a FCU. Therefore, there is no reason to believe that FCU will be covered by heading 8414. As per the explanatory note, this sub heading also includes both indoor and outdoor units for split system or conditioning machines when presented separately, The explanatory notes also state that in accordance with the provision of Note-2 (b) of Section XVI this heading includes separately presented indoor units and outdoor units in split system or conditioning machine of this heading. In view thereof, the FCU would be covered by HSN Code 8415. Appeal dismissed - Ruling given by the AAR is upheld and warrants no interference. 2019 (7) TMI 1505 Confiscation of the goods stored in the warehouse of the writ applicant - Sealing of the warehouse - power of Officer to affix the seal - HELD THAT:- This writ application is disposed off 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. 2019 (7) TMI 1476 Classification of services - Support services or Intermediary Services - export of services - scope of services - Composite/Mixed supply - maintainability of Advance Ruling - HELD THAT:- Only those application will not be admitted before the Advance Ruling Authority, wherein the questions raised in the application are already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act. Since there is no issue pertaining to the GST Act which is pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act, the Advance Ruling application filed by the Respondent before the Advance Ruling Authority is clearly maintainable. Whether the service supplied by the Respondent under the Service Agreement dated 1 March 2013 constitute a supply of Support Services falling under HSN code 9985 or Intermediary service classifiable under HSN code 9961/9962? - HELD THAT:- Since all these activities undertaken by the Respondent could have been performed separately and independently with each other, the fact that the Respondent is raising a singly consolidated invoice in accordance with Clause 9 of the Service Agreement dated 01.03.2013 as amended on 05 January 2017 makes these supplies stipulated under this Agreement as mixed supply in terms of the provision of Section 2(74) of the CGST Act, 2017 - it may verily be inferred that the services performed by the Respondent in terms of the above Service Agreement dated 01.03.2013 as amended on 05.01.2017 is the mixed supply - The service supplied by the Respondent under the Service Agreement dated 1 March 2013 constitutes a mixed supply of services falling under the Heading accounting services having SAC 9982, and under the Heading other professional, technical and business services having the SAC 9983. Whether the service supplied by the Respondent under the Marketing Services Agreement dated 1 December 2012 constitute a supply of Support services falling under HSN code 9985 or Intermediary service classifiable under HSN code 9961/9962? - HELD THAT:- The Respondent is performing a spectrum of services, of which the following services can be classified under the service Heading Research and Development services having SAC 9981 - Respondent is arranging or facilitating the business of its parent company i.e. Asahi Kasei Japan by liaising with the customers, prospective customers of its parent company i.e. Asahi Kasei Japan by way of collecting their product development plans and strategy and road-maps , as well as their product specifications, and reporting these information to its parent company, by connecting Customers with representatives of the service recipient for the purpose of obtaining orders and establishing and maintaining close commercial relationships between service recipient and customers, and by providing information on products and its functioning or similar such services to service recipient s customers and notifying service recipient of any consumer complaints. Thus, it can conclusively be deduced that the Respondent is playing a very significant role in this supply chain of the Products manufactured and distributed by its parent company to its distributors located in India - The service supplied by the Respondent under the Marketing Services Agreement dated 1 December 2012 constitutes a mixed supply of Services falling under the Heading Research and Development services having SAC 9981, under the Heading Other professional, technical and business services bearing SAC 9983, and under the Heading other miscellaneous services bearing SAC 9997. Whether the service provided by the Respondent is an export of services as defined under Section 2(6) of the Integrated Goods and Service Tax Act 2017? - Scope of Advance Ruling application - HELD THAT:- It is observed that whereas the determination of the place of supply of services is one of the prerequisites for determining any supply of services to be export of services, determining the place of supply of services or goods is not in the jurisdiction of the Advance Ruling Authority as is clearly evident from Section 97(2) of the CGST Act, 2017, which prescribes the set of 7 questions in respect of which Advance Ruling can be sought under the provision of the CGST Act, 2017 and the said 7 questions excludes the question related to the determination of the place of supply - the Advance Ruling Authority has clearly transcended its scope and jurisdiction by deciding upon the question related to the export of services. 2019 (7) TMI 1475 Classification of supply - intermediary services or not - composite supply - services provided by the Appellant to Sabre APAC, their parent company located in Singapore - composite supply or not wherein the principal supply is the supply of intermediary service, or otherwise - HELD THAT:- It is amply evident that all the marketing and promotional activities, viz.- advertising, PR, Sponsorships, any special events and trade shows etc. are solely aimed to create the customer base for Sabre APAC, the Appellant s parent company, to augment its business in India, by way of identifying the potential subscribers of Sabre System and thereby enhancing business opportunities for Sabre APAC, the Appellant s parent company. The prime responsibility of the Appellant is to identify the potential subscribers viz.-travel agents across the country, for the Sabre System, wherein the sales team of the Appellant approaches the potential subscribers to explain the remarkable features, functionality and specialty of the Sabre System and based upon the response from the potential subscribers, the Appellant initiates the subscription process of the Sabre System for the potential customers by placing a request for subscription in respect of the Sabre System, in the favor of potential subscribers in the website, called Subscriber Communication Management System (SCMS), maintained by Sabre APAC - it is very much clear that by carrying out all the activities as per the said Agreement, Appellant is arranging for the supply of services, which, in the instant case, is online information and database access and retrieval services (OIDAR Services) provided by Sabre APAC, by way of identifying the potential subscribers. The Appellant is facilitating the supply of the online information and database access and retrieval services (OIDAR Services), which is provided by Sabre APAC, their parent company to the potential subscribers, which are eventually identified by the Appellant as described and submitted above by the Appellant themselves, as the activities of installation of interfaces to the CRS Software, consultancy, assistance, provision of information services, etc., entrusted upon the Appellant by Sabre APAC, are the essential and indispensable elements of the above mentioned OIDAR Services, which are actually performed by the Appellant on behalf of Sabre APAC, their parent company - it is abundantly clear that the Appellant is arranging as well as facilitating the supply of services between Sabre APAC and the potential subscribers. Intermediary services or not? - HELD THAT:- The Appellant play a key role in the supply of the OIDAR Services to the subscribers of the Sabre System, on behalf of another person, in the present case Sabre APAC and thus acting as an agent in the present case. If we take out the role played by the Appellant in this entire transactional chain, there would be no supply of any services at all, as there would not be any recipient of the OIDAR services in India, for it is the Appellant who identifies and thus arranges for the recipient of this OIDAR Services provided by Sabre APAC - it is established beyond doubt that the activities undertaken by the Appellant are primarily in the nature of those of the intermediary. Place of supply of services - export of services or not - HELD THAT:- We do not have jurisdiction to decide whether any particular supply of service is export or otherwise. However, the Advance Ruling Authority has commented on the place of the supply of service, transcending their jurisdiction - no ruling passed on this issue. Income Tax 2019 (7) TMI 1503 Lower withholding certificate u/s 197 - existing and estimated liability - certificate for TDS for the immediate earlier AY @ 1.5% where as in current year it was directed TDS @ 5% - HELD THAT:- Two factors require to be noted here. One that without any change in the circumstances, between 24th May 2019 when he first saw the file and 28th May 2019 when he next saw it, the CIT reviewed his earlier decision instructing his subordinate to put up the file again proposing a 2% TDS. Secondly, his comments were cryptic. That there was a PE of the Petitioner in India was not a new development. The second, that accounts have not been given, he failed to acknowledge that till that date accounts were not even called for from the Petitioner. Yet the decision was given: Issue at 5% . The arbitrary nature of such decision is thus self-evident. In the present case the impugned withholding certificate which directs TDS to be deducted at 5% on the payments made by the Indian entities to the Petitioner is unsustainable in law, inasmuch as it is not based on valid reasons and is contrary to the legal requirement spelt out in Section 197(1) of the Act read with Rule 28AA of the Rules. The impugned certificate is hereby quashed. The Court directs Respondent No.1 to once again consider the application made by the Petitioner on 30th April 2019 for issuance of a lower withholding certificate under Section 197(1) afresh in accordance with law. - Till such time the fresh decision is communicated to the Petitioner, the decision in respect of TDS for the immediate earlier AY @ 1.5% will continue to apply. Requirement of reasoned order u/s 197 - application made for @ nil rate of TDS or alternative @ 1.04% - AO posted certificate @5% - no reasons communicated to assessee - Whether posting rate of TDS on Traces website is sufficient - HELD THAT:- Even if one were to accept the explanation offered by Mr. Bhatia that on the online portal only a certificate is posted and not the reasons for the decision, then surely there should be a separate written order communicated to the Petitioner giving the reasons for fixing the TDS rate under Section 197(1) since this is mandated by law. To reiterate, that decision which is quasi-judicial in nature, has to be taken by the AO u/s 197(1) on objective criteria and be based on relevant material provided by the applicant and available with the Department. It must be supported by reasons available on the file which conform to the requirement of Section 197 of the Act read with Rule 28 AA of the Rules. Those reasons must be communicated to the applicant. 2019 (7) TMI 1502 Disclosure of reasons to belief for conducting search u/s 132 - impact of insertion of Explanation to Section 132(1) by the FA, 2017 with retrospective effect - assessment u/s 153A - Revenue points out that while discussing the satisfaction note in the judgment [ 2018 (12) TMI 292 - DELHI HIGH COURT] and that the reproduction of the said reason to believe recorded in the satisfaction note, may not be consistent with the above Explanation - HELD THAT:- It appears that the purport of the said Explanation is against a disclosure of what may be contained in a file to any person, authority or Appellate Tribunal. However, the High Court is precluded from seeing the note or discussing it in a judgment where there is a challenge to the search itself. It is clarified that although in paragraph 16 of the judgment, a portion of the note may have been reproduced, this will not be treated as a precedent for a Petitioner in a future case challenging a search to insist that the contents of the note should be reproduced in the order/judgment. 2019 (7) TMI 1501 Acquisition of property by central government - order u/s 269UD - petitioner submitted that since the Government did not pay the apparent sale consideration to the original owner, the land would revest in him - HELD THAT:- Under Section 269UE(1) of the Act, upon the Appropriate Authority passing an order u/s 269UD(1), the land would vest in the Government. The question of payment or tendering the sale consideration would arise later. Since the vesting had taken place before payment of sale consideration, the legislature advisedly provided in Section 269UH for revesting of the land in the owner if sale consideration or part thereof was not paid or tendered within the time prescribed. The original purchaser had conveyed his willingness to withdraw the petition and obtain vacant and peaceful possession from the tenants and handover the same to the Department upon release of the consideration of ₹ 1.40 Crores. The Department accepted such proposal under letter dated 15.7.1997 stating that there would be no objection to making such payment if the owner is ready to handover peaceful vacant possession of the land in question. However, nothing materialized out of this correspondence. The concept of revesting of the property in the original owner upon the Department failing to tender or deposit the apparent sale consideration cannot be applied in the present case. We cannot lose sight of the fact that the Department has also contributed substantially to this complication. It is an agreed position that after passing the order u/s 269UG, the Department took no further steps to safeguard its interest in the land. In the property records, there was no indication of the land having vested in the Government. No claim, no charge, no interest of the Government was recorded in the property records. The least that the Department could have done was to have its name entered in the property records. No doubt that the petitioner society or its members do not have any legal title to the land in question. The erstwhile owner upon being divested of his title, could not have passed on any valid title in the developer and in turn, the developer could not have passed valid title to the petitioner society. Despite this, particularly looking to the inaction on the part of the Income Tax Department in safeguarding its rights in the property by having the appropriate entries made in the property records, we are of the opinion that some conciliation has to be found. We would, therefore, request the CBDT to sympathetically examine these facts and take appropriate decision in terms of its powers u/s 119(2). If the Department had auctioned the property soon after it was acquired u/s 269UD, the Department could have reasonably expected to take an additional sum of ₹ 24,36,000/- over and above the base figure of ₹ 1.40 Crores which would in any case be paid over to the original owner and the prospective purchasers in their respective shares. Thus, the Department would have earned a profit of ₹ 24.36 Lakhs. We have noticed that as per the sale agreement dated 18.7.1994, the purchasers had paid sum of ₹ 14 Lacs to the owner. This amount shall also have to be accounted for since the same must be returned to them. Therefore, if the petitioner society agrees to pay a sum of ₹ 39 Lakhs (which would comprise of ₹ 25 Lakhs to be retained by the Department rounded off from ₹ 24.36 Lakhs and ₹ 14 Lakhs to be refunded to the heirs of original purchases) along with simple interest @ 8% p.a. from the date of the order dated 21.10.1994 till actual deposit and a further sum of ₹ 10 Lakhs to the Department (without interest) towards cost of litigation and other costs, in our opinion, the CBDT should consider whether the ownership of the petitioner society and the possession of the residential units by the members of the society can be regularized. For such purpose, the proceedings be placed before the CBDT. If the petitioner society is agreeable to deposit the amounts mentioned above, it may indicate the same to the CBDT within a period of four weeks from today. Such declaration would be accompanied by a formal request for regularization of the ownership and possession. The CBDT would dispose of such application preferably within four months of its receipt. If the petitioner do not show such willingness, the petition would automatically be dismissed. Original purchasers and / or their heirs must receive a sum of ₹ 14 Lacs they had paid to the owner way back in July 1994. Therefore, if the CBDT accepts the request of the society mentioned in the previous paragraph, from the amount that the society may deposit with the Income Tax Department, the original purchasers and their heirs may be paid over a sum of ₹ 14 Lacs with interest. If the petitioner society does not show willingness to deposit such amount, this attempt to find solution will in any way fail and in such circumstances, out of the amount of ₹ 1.40 Crores deposited by the Government of India with the Appropriate Authority, a sum of ₹ 14 Lacs would be paid over to them with accrued interest. This would be done after due verification of their identity. It would not be necessary to pay any amount to erstwhile owner since he has clearly defrauded the Department as well as indirectly the members of the petitioner society. 2019 (7) TMI 1500 Condonation of delay - HELD THAT:- As find from the affidavit-in-opposition filed by the respondent that they have been unable to show that the order of the tribunal dated 31st December 2002 was received at an earlier point of time than 23rd August 2011. Mr. Khaitan states that the tribunal in its order dated 13th May 2016 has held that the legal heir of the assessee received a copy of the said order on 23rd August 2011. The appellant/applicant ought to have been much more vigilant in prosecuting his case. But considering the fact that the said order dated 31st December 2002 was received after nearly nine years admittedly and that on advice the appellant/applicant was conducting proceedings before the tribunal, we allow him to advance the merits of his case by condoning the delay. The appellant/applicant will pay consolidated costs of ₹ 25,000/- for this matter and two connected matters to the Income Tax Department through the proper officer authorised to receive the same. 2019 (7) TMI 1499 Assessment u/s 153C - maintainability of the petitions - scope of Amended provisions of Section 153C - HELD THAT:- 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 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. The issue involved in the present petition is identical. We propose to apply the very same principles of law as laid down and explained ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3 (2) AHMEDABAD [ 2019 (6) TMI 746 - GUJARAT HIGH COURT] and allied matters to the facts of the present case. Petition is allowed. The impugned notice at Annexure ' A' is hereby quashed and set aside. 2019 (7) TMI 1498 Proportionate rent in respect of amortization of payment for acquisition of leasehold rights - HELD THAT:- As decided in MUKUND LTD. [ 2007 (2) TMI 358 - ITAT MUMBAI] in case of termination of lease, the premium was non-refundable and, therefore, the same could not be considered as advance payment of rent. There was no clause in the agreement to show that the amount of ₹ 2.04 crore was paid by the assessee as advance rent for all future years and the lump sum payment of future years rent had been paid to avail some concession for advance payment of rent or for some other business consideration. The land in question was inheritable also as per the terms and conditions of the agreement with the MIDC. Therefore, the consideration of ₹ 2.04 crore was paid to the MIDC as a price for obtaining the leasehold rights for a period of 99 years from the MIDC in favour of the assessee. Parties will be heard whether this is a case for restoration of the matter to the Tribunal for finding on facts. 2019 (7) TMI 1497 Addition made u/s 68 - addition made on the basis of specific information of providing loan to the CHL Group which was revealed during search operation and opportunity of cross examination was also provided to the assessee - HELD THAT:- Hon ble jurisdictional High Court in THE PR. CIT VERSUS SHRI PUKHRAJ SONI [ 2019 (2) TMI 733 - MADHYA PRADESH HIGH COURT] held that the additions cannot be made merely based on the basis of random sheets, loose papers, computer prints, hard disk and pen drive etc found from the third party without there being any nexus with other incriminating material establishing the live link of the assessee with the alleged transaction. In the instant case also the addition has been made only on the basis of pen drive seized from the third person i.e. Accountant of BHL group. Revenue authorities have failed to establish any connection either business or personal of the assessee with the Accountant or with the Directors of CHL group. No efforts were made by the revenue authorities to summon the Directors of CHL group. Assessee has denied to have entered into the alleged transaction through an affidavit. No other incriminating material was found during the search. Therefore in our considered view CIT (A) was justified in deleting the addition made by the A.O. No interference is therefore called for in the finding of Ld. CIT(A) and the same is confirmed. In the result the appeal of the revenue stands dismissed. 2019 (7) TMI 1496 Disallowance of employees contribution of PF and ESI u/s. 2(24)(x) r.w.s. 36(1)(va) - payment of the said contribution was made after due date as provided in respective statute - HELD THAT:- In view of the decision of CIT vs. Gujarat State Road Transport Corporation [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] we do not find any merit in the grievance of the assessee on this score. Ground No. 1 (supra) for the assessee s appeal is dismissed. Disallowance of provision for maintenance and free service/warranty in computation of book profit u/s. 115JB - assessee contended that such provision cannot be stated to be an unascertained liability so as to add it back in terms of clause (c) to Explanation 1 to section 115JB - HELD THAT:- We find ourselves in agreement with the aforesaid contention of the assessee that such liabilities cannot be regarded as contingent liability. What is certain is the incurring of liability notwithstanding estimation thereof with reasonable certainty. Although actual quantification may not be always be possible, the liability is in praesenti though it is likely to be discharged at a future date. Similar issue has come up in the case of DCIT vs. Inox Leisure Ltd. [ 2013 (2) TMI 353 - GUJARAT HIGH COURT] where it was held that ascertained liabilities cannot be subjected to the adjustment under clause (c) to explanation 1 to section 115JB. Thus, we find merit in the grievance of the assessee on this score. Disallowance of depreciation towards goodwill - HELD THAT:- The assessee has claimed certain costs towards goodwill being extra consideration paid towards acquisition of net value of assets of Alps Technologies Ltd. on slump sale basis with a view to acquire its business operations.There can be no quarrel that extra consideration paid for acquisition of assets and the business of a concern represents cost of goodwill. This being so, the assessee would be entitled in law for claim of depreciation thereon in view of the decision of DCIT vs. TGB Banquets Hotels Ltd. [ 2016 (7) TMI 174 - GUJARAT HIGH COURT] and also case of Smiffs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] . Therefore, we find no infirmity in the conclusion drawn by the CIT(A) in favour of the assessee. Hence, we decline to interfere. Depreciation at the rate of 60% on software being customized license product - HELD THAT:- The computer and computer software and licenses are not differentiated in the table of depreciation as provided under the Income Tax Act. Thus, CIT(A) in our view has rightly recorded the findings in favour of the assessee. We decline to interfere therewith. Ground No. 2 of Revenue s appeal is dismissed. 2019 (7) TMI 1495 Allowability of write off of obsolete and non-usable inventory - 10% of the total inventory - HELD THAT:- No real time correspondence has been brought on record (which is an ordinary feature of e-governance of corporates these days) to suggest creation of non-moving and obsolete stock of such magnitude which represents nearly 10% of the total inventory. Prima Facie, the onus is on the assessee to establish that the stocks of staggering amount have lost its usable value. The issue is factual and while there can be no denial that assessee is entitled to claim loss towards obsolete stock in a given year, it is also the corresponding duty of the assessee to prove the existence of such obsolete material by direct or circumstantial evidences. The assessee has totally failed in its corresponding duties. The Auditor in the instant case while stating that, inventories have been physical verified by the management, have not pointed out such large scale recognition of obsolete item. On conspectus of facts noted above, we find it difficult to entertain the claim of the assessee in entirety when tested on the touchstone of evidences in this regard. However, keeping in mind the narrative of the assessee and difficulty posed in furnishing objective justification of many items in practice, we consider it appropriate to assume loss on account of obsolete item at 5% of the closing stock to be fair and plausible which works out to ₹ 58,65,680/-. The assessee thus gets relief to this extent. It shall be open to the assessee to make amends in the opening stock of subsequent financial year in accordance with law. While holding so, we are not inclined to discuss various case laws cited on behalf of the assessee which are rendered in totally different facts. Disallowance of bad debt written off in respect of excise duty refund - HELD THAT:- We find merit in the claim of the assessee. The excise duty received as refund naturally forms part of the revenue operations of the assessee. The version of the assessee has been confirmed by the Auditors requires to be ordinarily believed. The action of the Revenue authorities are accordingly reversed. Disallowance u/s 14A - disallowance to extent of the exempt income - HELD THAT:- Disallowance is restricted to the aforesaid amount in view of the decision of the Hon ble Delhi High Court in Joint Investment [ 2015 (3) TMI 155 - DELHI HIGH COURT] Adjustment to the book profit towards disallowance u/s 14A - HELD THAT:- In view of the decision of the Special bench in ACIT vs. Vireet Investments Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] and having regard to Clause (f) to Explanation below 115JB, the adjustment to the books profit is restricted to the extent of ₹ 1134/- only. 2019 (7) TMI 1494 Disallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - HELD THAT:- AO cannot mechanically apply the formula under Rule 8D(2)(iii) without examining the merits of the assessee s stand. We, however, agree with the plea on behalf of the Revenue that conditions of regarding satisfaction under s. 14A(2) was satisfied for invoking the provision. We are of the considered view that under the circumstances the disallowance of 50% of the expenditure incurred on professional that is 50% of 6,61,800/- would be sufficient to cover appropriate disallowance towards administrative expenses. The assessee has already disallowed 10% thereof. Therefore, another disallowance of 40% on the aforesaid amount which works out to ₹ 2,64,720/- would thus meet the object in this regard. The assessee accordingly, gets partial relief. Adjustments made on account of disallowance computed u/s 14A while computing book profit u/s 115JB - HELD THAT:- We find merit in the plea of the assessee on this score. The Special Bench of Tribunal in the case of CIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] has observed that disallowance computed u/s 14A cannot be imported to the provisions of sec. 115JB. However, at the same time, the claim of the assessee that no adjustment is called for while computing book profit is voilative of Explanation 1 (f) referred to in sec. 115JB of the Act and thus cannot be entertained. No blanket exemption can be read in the Special Bench decision in Vireet s case in this regard. Thus, the adjustment to the tune of ₹ 3,30,900 shall be taken into account by the AO for the purposes of Clause (f) to sec. 115JB in tune with disallowance sustained under normal provision. The second issue is accordingly allowed in partly. 2019 (7) TMI 1493 Disallowance expenses u/s 14A - disallowance of interest expenses deleted by the CIT(A) but, estimated administrative expenses retained in terms of Rule 8D(2)(iii) - HELD THAT:- We straightway notice that exempt income is out of investments in mutual funds. The Co-ordinate Bench in Academy for Computer Training [ 2016 (11) TMI 1527 - ITAT AHMEDABAD] has taken a view that separate disallowances towards administrative expenses is not called for where exempt income is generated from mutual funds. It was held that in the case of a mutual funds, administrative and managerial expenses are factored in the investments itself. In such a scenario, the explanation offered by the assessee of no expenditure incurred appears to be in congruity with the market practice. Accordingly, we do not find it a fit case for resorting to double disallowance of the similar expenditure in the garb of Rule 8D(2)(iii) of the IT Rules. In consonance with the view also taken on the subject, we find merit in the plea taken by the assessee for deletion of disallowance. The order of the CIT(A) is thus set-aside and the AO is directed to delete the disallowance made towards administrative expenses under s. 14A r.w.r 8D(2)(iii) of the Rules - cross objection of the assessee is allowed. 2019 (7) TMI 1492 Rectification u/s 254 - capital gain computation - need for reference to the DVO - taking cost of acquisition as on 1.4.1981 on the basis of registered valuer s report - According to the assessee, the Tribunal has deleted the addition made by the AO, but not deleted the addition made by the ld.CIT(A) by way of enhancement - HELD THAT:- There is no apparent error in the order of the Tribunal. The Tribunal has deleted the addition, if any, computed on the basis of DVO s report because the Tribunal has observed that if the value of the property shown by the assessee as on 1.4.1981 is more than the fair market value, then the AO has no jurisdiction to make reference to the DVO. In the absence of any reference to the DVO, capital gain has to be computed on the basis of registered valuer s report submitted by the assessee. For this proposition, the Tribunal has relied upon the decision of CIT Vs. Gauranginiben S. Shodhan [ 2014 (2) TMI 78 - GUJARAT HIGH COURT] The Tribunal has taken into consideration amendment effected in section 55A w.e.f. 1.7.2012. This finding of the Tribunal, though covered the addition made by the AO as well as the ld.CIT(A), but if it does give any confusion while determining the taxable income of the assessee, then, we may reiterate that once reference to the DVO is invalid, then both the reports submitted by him are required to be ignored and the capital gain in the hands of the assessee is to be computed by taking cost of acquisition as on 1.4.1981 on the basis of registered valuer s report. In other words, the addition made by the AO as well as enhanced by the ld.CIT(A), both are not sustainable. MA of the assessee is allowed. 2019 (7) TMI 1491 Deduction u/s.10B - whether DEPB benefits are eligible for deduction ? - HELD THAT:- As relying on ACIT, CIRCLE-2, GURGAON VERSUS M/S QH TALBROS LTD. [ 2015 (11) TMI 737 - ITAT DELHI] consider the export benefits for the purpose of deduction under Section 10B of the Act. Therefore, the reasoning of CIT(A) while allowing these grounds of appeal is upheld. Hence, the ground of appeal file the Revenue is dismissed. Disallowance of interest on account of interest on investments - HELD THAT:- AO has merely made the disallowance following the ratio laid down in the case of CIT vs. Abhishek Industries Ltd. [ 2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] whereas the fact of the matter was that assessee is not given any interest free loan but made investment in M/s. Talbros Automotive Company Ltd. out of its own surplus funds. Thus, there could not be case of giving any interest free loan. Moreover, we find that this issue has been decided in favour of the assessee not only in the Assessment Year 2007-08, but also in the Assessment Year 2010-11, wherein this issue has been decided in favour of the assessee. Accordingly, disallowance of interest made by the AO has rightly been deleted by the ld. CIT (A). Disallowance of interest under proviso to Section 36(1)(iii), being interest @12% on capital-work-in-process - After invoking proviso to Section 36(1)(iii), Assessing Officer disallowed interest @12%. - HELD THAT:- We find that in Assessment Year 2007-08, the Tribunal has deleted the similar addition not only in the Assessment Year 2007-08, but also in the Assessment Year 2010-11. Otherwise also, once this fact has not been disputed that interest for the period between the date of disbursement of loan and date of putting the assets in use has been disallowed as per Section 36(1)(iii) by the assessee itself, then without there being any factual infirmity either for the period up to putting the asset in use or in the computation, no such disallowance can be made. Accordingly, this issue is decided in favour of the assessee. Disallowance u/s.14A - HELD THAT:- Assessee has earned dividend of ₹ 11,19,530/- and AO has mechanically applied Rule 8D for making the disallowance u/s.14A without any satisfaction having regard to the accounts maintained by the assessee as mandated in Section 14A(2). The Tribunal in the earlier years has deleted the disallowance on the ground that AO has not given any reasons as to how he is not satisfied with correctness of the claim of the assessee. Now it is well settled principle laid in the case of Maxopp Investment Ltd. vs. CIT, [ 2018 (3) TMI 805 - SUPREME COURT] that recording of satisfaction by the AO is mandatory before proceeding to make any disallowance u/r 8D which here in this case has not been done. Accordingly, disallowance of Section 14A has rightly been deleted. 2019 (7) TMI 1490 Characterization of income - interest earned on ICDs - Income from other sources or business income - assessee is not in money lending business - HELD THAT:- There is no dispute that the assessee has parked surplus business funds, which is not immediately required for utilization in business, in short term deposits with bank or IDCs. The entire purpose of such deposits was not to keep the funds idle and earn some income. If the aforesaid reasoning of the assessee is valid for the interest earned on fixed deposits, the same cannot be invalid or unacceptable in case of interest earned on ICDs. When it is accepted that the assessee has taken a prudent business decision to earn some income by utilizing the idle business funds, no differentiation can be made between the investments made in banks and ICDs. In view of the aforesaid, we hold that the interest income earned on ICDs should be treated as income from business. This ground is allowed. Disallowing expenditure incurred for earning interest and other income - CIT (A) has disallowed interest expenditure on borrowed fund is, it is not directly related to the interest income earned on ICDs - HELD THAT:- It is a fact on record that the assessee had borrowed the funds for development of the SEZ project. Therefore, the interest on such borrowed funds is allowable as business expenditure. It is also relevant to observe, learned CIT (A) has accepted that the assessee had mixed funds. On a careful perusal of the order of learned CIT (A), it is also noticed that he has completely overlooked assessee s main claim that the interest expenditure should be allowed as business expenditure. When there is no dispute that the borrowed funds were utilized for the purpose of business, the interest expenditure on such borrowed funds has to be allowed as business expenditure. In any case of the matter, since while deciding ground no.1, we have held that the interest earned on ICDs is to be treated as business income of the assessee, logically, the interest expenditure has to be allowed. Accordingly, the ground raised is allowed. Alternative claim of deduction under section 57(iii) of the Act in respect of interest expenditure - HELD THAT:- While deciding grounds no.1 and 3, of assessee s appeal, we have held that interest earned on ICDs are to be treated as income from business. Consequently, the interest expenditure claimed by the assessee has to be allowed. Therefore, the alternative claim of deduction u/s 57(iii) becomes redundant. Suffice it to say, assessee s claim of deduction u/s 57(iii) in respect of interest expenditure has been allowed by learned CIT (A) in assessment years 2009 10 and 2010 11 and the issue has attained finality as neither the assessee nor the Revenue has contested the order of learned CIT (A). Therefore, even otherwise also, assessee s claim of deduction u/s 57(iii) is allowable. Disallowance u/s 14A r/w rule 8D - no exempt income - HELD THAT:- The factual position which emerges is, in the year under consideration the assessee has not earned any exempt. That being the case, as per settled principle of law, no disallowance u/s 14A r/w rule 8D can be made. In this context, we may refer to the decision of PCIT v/s Rivian International Pvt. Ltd. [ 2017 (12) TMI 811 - BOMBAY HIGH COURT] . In view of the aforesaid, we delete the disallowance made by the Assessing Officer and sustained by learned CIT (A). This ground is allowed. Disallowing differential interest - proof of commencement of business - admission of additional ground - reference to the provisions of section 40A(2)(b) - advance given to the sister concern - HELD THAT:- CIT(A) has held that assessee s business has commenced from the assessment year 2003 04. Therefore, when assessee s business has already commenced, there is no question of allowing or disallowing capitalization of interest expenditure. Undisputedly, the assessee has debited the interest expenditure to the Profit Loss account. Therefore, such expenditure has to be set off against the business income. As regards the submission of the learned DR that the AO has applied section 40A(2)(b), we do not find such submission to be factually correct. Neither the AO nor learned CIT(A) has made any reference to the provisions of section 40A(2)(b). On the contrary, the Departmental Authorities have simply disallowed capitalization of the interest expenditure. In view of the aforesaid, assessee s claim is allowed. Additional ground is allowed. 2019 (7) TMI 1489 Penalty u/s 271(1)(c) - non disclosure of interest income - in these assessment years the assessee deposited the tax on interest income at the time of filing of returns of income in response to the notices issued under section 148 - HELD THAT:- The explanation of the assessee for not depositing the tax earlier is, the time limit for re opening the assessment even by the Department for these assessment years was not available, hence, the assessee could not have paid the tax for these assessment years. It is relevant to observe, the time limit to re assess the income arising in foreign country by issuing notice under section 148 of the Act was extended to 16 years by virtue of introduction of section 149(1)(c) of the Act by Finance Act, 2012, w.e.f. 1st July 2012. Thus, with introduction of the aforesaid provision the Assessing Officer became empowered to re open the assessment for the impugned assessment years. Keeping in view the aforesaid facts, the assessee s explanation with regard to its inability to deposit the tax for the impugned assessment years earlier needs to be examined. Moreover, the assessee has filed additional ground challenging the validity of the penalty proceedings. Considering the fact that the issue raised in the additional ground is a purely legal issue going to the root of the matter, we are inclined to admit the additional ground in all these appeals. However, since, the issue raised in the additional ground is raised for the first time before us and the assessee had not raised it before learned Commissioner (Appeals). Therefore, in all fairness, the issue raised in the additional ground needs to be restored to the learned Commissioner (Appeals) for adjudication. Even, in our view, the issue relating to merits of imposition of penalty also requires fresh adjudication in the light of the argument made by the learned Authorised Representative before us. 2019 (7) TMI 1488 Penalty u/s 271(1)(c) - quantum addition deleted - disallowance of speculation loss and disallowance u/s 14A - HELD THAT:- As in the assessee s own case has deleted the quantum, therefore, the CIT(A) has deleted the penalty. The contention of the Ld. Representative of the Department is that the Department has not accepted the decision of the Hon ble ITAT on the quantum deletion but it is a matter on record that at this stage, the quantum nowhere exists. Since the quantum has been deleted by Hon ble ITAT in the assessee s own case, therefore, we are of the view that the CIT(A) has rightly deleted the penalty. Accordingly, we uphold the decision of the CIT(A) in question and dismissed the appeal of the revenue 2019 (7) TMI 1487 Disallowance u/s 14A r/w rule 8D - Commissioner (Appeals) directed the AO to compute disallowance under rule 8D(2)(iii) by taking into account only those investments on which the assessee had received exempt income during the year - HELD THAT:- Direction of the Commissioner (Appeals) with regard to the computation of disallowance under section 8D(2)(iii) is fully in conformity with the ratio laid down in CIT v/s Vireet Investment Pvt. Ltd., [ 2017 (6) TMI 1124 - ITAT DELHI] wherein as held that while computing disallowance under rule 8D(2)(iii), only those investments which have yielded exempt income during the year under consideration can be considered. That being the case, we do not find any infirmity in the decision of the learned Commissioner (Appeals). - Decided against revenue 2019 (7) TMI 1486 Revision u/s 263 - Non reference of transfer pricing related issues/specific domestic transactions to TPO - whether the A.O. is authorised by law to examine and compute arm s length price related to specified domestic transactions ? - effect of omission of 92BA(1) w.e.f. 1.4.2017 - HELD THAT:- Pr. CIT is of the view that the A.O. is under obligation to refer the issue to the Transfer pricing officer for computing the ALP. In the absence of the ALP computed by the TPO, the A.O. could not have adjudicated the issue. If in a given case sale is found to be within the ALP determined by the TPO, under such situation whether still there would be need to examine the ALP of purchases? This question has to be decided on the basis of the factual aspect of the matter. We find no finding on this issue. We are of the view that this aspect in the present case should have been examined. As contended by the assessee that assessee had entered into specified domestic transactions but not in international transactions. Thus, the transaction would be governed by the provisions of section 92BA(1) of the Act. The provisions of section 92BA(1) of the Act has been omitted w.e.f. 1.4.2017. It is vehemently argued that the impact of omission of this provision would be that it has to be construed that such provision was never on the statute book.It is a settled principle that where provision is omitted, it should be deemed to have never been part of the statute at any point of time. The reliance is placed on the decision of the Hon'ble Apex Court rendered in the case of General Finance Company Vs. ACIT [ 2002 (9) TMI 3 - SUPREME COURT] . In view of the Ld. Pr. CIT is not correct. In view of the aforesaid discussion, moreover, the coordinate bench has also examined the issue in the case of Texport Overseas Pvt. Ltd. [ 2017 (12) TMI 1719 - ITAT BANGALORE] . Admittedly, in this case, the order has been revised purely on the basis that the assessing officer has not referred to determine the arm s length price to the TPO. Since the provision itself stood omitted at the time when the order was passed by the Pr. CIT, under these undisputed facts in the light of the Judgement in the case of General Finance Company (supra) as well as the order of the coordinate bench rendered in the case of Texport Overseas Pvt. Ltd. (supra), the impugned order cannot be sustained, hence is hereby quashed. The order impugned is thus quashed and the grounds raised in the appeal are allowed. 2019 (7) TMI 1485 Admission of additional evidence under Rule 46A - additions made by the AO u/s. 69C and 40A(3) - HELD THAT:- Since the documents filed by the assessee as additional evidences are of the nature that may advance the interest of justice and vital to decide the issue under consideration, the same need to be admitted and considered on merits. Hence, the documents filed as additional evidence in the course of appeal proceedings were rightly admitted for consideration and adjudication of the issues under consideration by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground no. 1. Addition on account of unexplained expenditure u/s. 69C - AO not verified the actual contents of seized material and addition made based on Report of the Special Auditor - HELD THAT:- It is noted that the assessee has incurred expenditure which was not recorded in the books of accounts and the AO is duty bound to examine all these aspects before reaching the conclusion, which he failed to do so. It is also noted that the transactions mentioned on the seized documents were only proposals sent by broker for the land deal for approval of the management and on the basis of such rough proposals no adverse conclusion should have been drawn by the AO. CIT(A) has rightly held that AO was not justified in making the impugned addition merely on the basis of the observations of the Auditors without going into the veracity of the same, hence, the addition made by the AO u/s. 69C was rightly deleted by the CIT(A), which does not need any interference on our part Addition u/s 2(22)(e) - HELD THAT:- As perusing the aforesaid findings of the Ld. CIT(A) for the assessment year 2007-08 in assessee s own case, we find that since the facts involved in the assessee s present case are identical to the facts of the above case in respect of assessment year 2007-08 in assessee s own case, hence, following the above order of the earlier Ld. CIT(A) of the assessment year 2007-08 in the case of M/s Samag Construction Ltd., a company of Saamag Group, Ld. CIT(A) has rightly deleted the addition made by the AO u/s. 2(22)(e) in the case of the assessee, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issues in dispute and reject the ground raised by the Revenue. Addition of cash payment for purchase of land - observations of the Auditor made in his Report u/s. 142(2A), which were based on the document seized during the course of search proceedings - HELD THAT:- AO observed that the reply of the assessee has been considered, which, for the same reasons as given for making the addition u/s. 69C, was not found to be acceptable and, therefore, the impugned addition as made u/s. 69C. Since we have already confirmed the findings of the CIT(A) of deleting the addition hence, the addition in dispute is not tenable, because the same was made on surmises and conjectures on the basis of a document seized during the course of search which was nothing but was a dumb paper on which rough notings have been recorded which is normal in the real estate business. However, the amounts mentioned on the seized document was unexplained expenditure without analyzing and verifying the contents thereof was not justified, hence, the addition made by the AO was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and accordingly, reject the ground raised by the Revenue. Scrutiny assessment - non service of notice u/s. 143(2) within the prescribed time limit - HELD THAT:- AO failed to discharge the onus of proving the service of notice upon the assessee u/s. 143(2) of the Act within the statutory period of limitation. We note that in the case of the assessee a speed post booking list is lying in the assessment record indicating the issuance of notice to the assessee but there was no evidence on record to show that either the same was received back by the AO or the same was served upon the assessee on or after the prescribed time limit. Thus, in this case, the notice u/s. 143(2) of the Act was not proved to have been served upon the assessee on or before 30.9.2012. - Decided against revenue 2019 (7) TMI 1474 Deduction u/s 80IB(10)(a) - decision of the Assessing Officer to disallow the said deduction is upheld - Issuance of completion certificate, after the cut off date by the Local Authority but, mentioning the date of completion of project before the cut off date, does not fulfil the condition specified in clause (a) of Section 80IB (10) read with Explanation (ii) thereunder - HELD THAT:- Stay granted. 2019 (7) TMI 1454 Preemptive purchase order - applicability of section 269 UD (1) of the Income tax act where the market value is more than purchase value of the property - whether the High Court (Single Judge, Division Bench and Review Bench) was justified in dismissing the appellants writ petition, intra court appeal and review petition and thereby was justified in upholding the pre-emptive order dated 30.03.1994 passed by the appropriate authority? - HELD THAT:- It is not in dispute that the appropriate authority laid a factual foundation in the show cause notice to prove the value of suit land, which, according to the authority, was 15% higher than the apparent consideration. It is also not in dispute that a categorical finding was recorded by the appropriate authority that the fair market value of the suit land was 15% more than the apparent consideration mentioned in the agreement of sale by the parties. As mentioned above, these findings were examined by the writ Court, intra appellate Court and lastly the review Court in their respective jurisdiction. They were upheld. These findings are based on appreciation of evidence. We do not find these findings to be either arbitrary or illegal or against any statutory provisions and nor they can be regarded as being perverse to the extent that no reasonable man could ever reach to such conclusion. We also find that these findings are in conformity with the requirements of Section 269 UD of the Act. Appeal dismissed. Customs 2019 (7) TMI 1473 Service of Order - non receipt of an order made by the lone respondent - imposition of penalty u/s 112(a) of Customs Act - It s the case of the writ petitioner that though the writ petitioner came to know about this order in the course of his business, a certified copy of the order was never served on the writ petitioner - Error in the address of petitioner - HELD THAT:- A perusal of the file reveals that the despatch of said order by the office of the respondent has infact happened and it is in a window envelope. Though it is in a window envelope, the name of the writ petitioner and the postal address is handwritten by the side of the transparent window - While the writ petitioner's residence is in '2nd North Street, Thiru.V.Ka.Nagar', the aforementioned returned envelope describes the same as 'Kennedy Street, TVK Nagar'. No elaboration is required to say that there is a world of difference between '2nd North Street, Thiru.V.Ka.Nagar' and 'Kennedy Street, TVK Nagar'. Writ petitioner counsel on instructions, emphatically asserted the aforesaid envelope was not refused by the writ petitioner - Obviously, it has been taken to another individual, who has refused it as he is not the intended recipient. In this backdrop, this Court deems it appropriate to accede to the prayer of the writ petitioner, holding that certified copy of said order has not been duly served on the writ petitioner. The respondent is directed to provide a certified copy of the said order by despatching it by Speed post with acknowledgment due to the full / complete and correct address of writ petitioner within a fortnight from today - petition allowed. 2019 (7) TMI 1472 Effective implementation of the Rules - Electronic waste (e-waste) - E-waste (Management) Rules, 2016 - Whether non-production of Extended Producer Responsibility - Authorisation under the Rules at the time of import of the goods is a sufficient ground for confiscation of the goods under the Customs Act, 1962? - HELD THAT:- The printers imported by the company were prohibited goods within the meaning of Section 2(33) of the Act as they were goods for which EPR-Authorisation was required under the Rules. Therefore, the customs authority had the power to confiscate them. In the instant case, the company had requested the Commissioner to grant permission for re-export of the goods and exercised the option to redeem the goods for that purpose. Therefore, the Commissioner imposed a redemption fine of ₹ 4,00,000/- on the company to enable it to re-export the goods. The Tribunal has reduced the amount of redemption fine to ₹ 2,00,000/-. We find no sufficient ground to further reduce the amount of redemption fine. Imposition of penalty - HELD THAT:- Section 112(a) of the Act provides that any person, who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, shall be liable to pay penalty not exceeding the value of the goods or ₹ 5,000/-, which is greater. Mens rea is not an essential element/ingredient to impose penalty, unless the language of the statute indicates the need to establish the same - The Tribunal has reduced the penalty from ₹ 50,000/- to ₹ 25,000/-. There is no sufficient ground to further reduce the amount of penalty. Thus, non-production of EPR-Authorisation under the Rules at the time of import of the goods constitutes sufficient ground for confiscation of the goods under Section 111(d) of the Act - appeal dismissed. 2019 (7) TMI 1471 Extension of ADD - initiation of sunset review - Notification dated 24.7.2014 - HELD THAT:- This Court was required to proceed on a premise as if the respondents had continued with Notification dated 24.7.2014 and the sunset review was rejected on that basis. Therefore, this order may not be in any manner construed as giving any new life to the Notification as the earlier order is based upon the premise stated in the petition but that cannot be treated as countenancing or infusing any life. In absence of any review petition or clarificatory petition, we need not further elaborate on this aspect. The present order shall not be treated as an order in review in absence of any proceedings to this effect nor the same may be treated as clarification. It goes without saying that if hiatus result on account of action or inaction affecting the parties legal rights and remedies, the same would always open to be urged as the omission on the part of concerned or the Court proceedings shall not in any manner prejudice the parties' legal right and their enforcement. Application disposed off. 2019 (7) TMI 1470 Valuation of imported goods - used digital copier cum printers - rejection of declared value - whether the department was correct in re-assessing the value of the imported photo copiers? - quantum of redemption fine - quantum of penalty. HELD THAT:- This engineer had confirmed the value of the goods based on the market value of similar goods and taking into account the value of the cartridges after excluding the damaged cartridges. Therefore, the department was correct in reckoning this value for calculating the customs duty payable. Opportunity to cross-examine the Chartered Engineer - HELD THAT:- This report was not collected behind the back of the appellant but the assessment itself was done in the presence of the appellant. We, therefore, find no force in this argument. Therefore, on the questions of value and assessment of duty, we find in favour of the department. Redemption fine and penalty - HELD THAT:- There is no hard and fast rule regarding imposition of redemption fine under Section 125 as long as it does not exceed the market value of the goods. In the present case, the value of the goods is around ₹ 5 lakhs and the redemption find imposed is about ₹ 70,000/-. The appellant has made out a case to get the redemption fine reduced to some extent. Correspondingly, the penalty imposed upon the appellant may also be reduced to some extent - quantum of redemption fine and penalty reduced. Appeal allowed in part. Corporate Laws 2019 (7) TMI 1484 Expenditure on account of CSR - threshold limit of Net Profit mentioned in Section 135(1) of Companies Act, 2013 - whether the appellant is covered under Section 135(1) of the Act or not?. Constitution of CSR committee for the Board - HELD THAT:- Section 135(1) of the Act provides that every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crores or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility of the Board consisting of three or directors, out of which at least one director shall be as independent director - As per the appellant s own calculation as quoted above the net profit is ₹ 5,68,70,023/- for the FY 2013-14 which is apparently more than ₹ 5 crores i.e. threshold limited prescribed under Section 135(1) of the Act. Therefore, the company is covered under Section 135(1) of the Act. As such Appellant was liable to constitute Corporate Social Responsibility Committee of the Board in the year 2014-15. Expend sum towards CSR - it is argued by the appellant that even if it is the company is deemed to be covered under Section 135(1) of the Act, then also it is not liable to expend any sum towards CSR in as much since the company had incurred losses in FY 2011-2012 and 2012-13 and the average net profit calculated for the three FY comes in negative - HELD THAT:- The appellant has submitted the calculation at Page 38 (Annexure 1) of the appeal paper book in which net profit for FY 2011-12 is -2,32,31,787/- and for FY 2012-13 is -1,97,68,641 and for FY 2013-14 is ₹ 5,68,70,023/-. Thus in the last three years the company is made a profit of ₹ 1,38,69,595/- and average net profit of three years will come to ₹ 46,23, 198/- - The method of calculation of average net profit for immediately preceding three years as discussed is applicable - The company is liable to spend money towards CSR. The appellant was liable to constitute Corporate Social Responsibility Committee of the Board in terms of Section 135(1) in 2014-15 as net profit of the company in the preceding year was more than ₹ 5 crores - Appeal disposed off. 2019 (7) TMI 1469 Reference to Arbitration - Compromise decree - Case of appellant is that the respondents refused to honour the terms and conditions of the compromise decree therefore, the appellant had filed Title Execution case No.4 of 2002 for execution of the compromise decree dated 24.12.2001 - diversion of stock by appellant's employee - it was also alleged that compromise decree was obtained by appellant by false inducement and misrepresentation and the same is vitiated on account of fraud. Whether the High Court was right in referring the parties to arbitration by observing that the appellant- Company admits the existence of arbitration clause in the agreement dated 01.05.1997? Whether the appellant is right in contending that the dispute raised in the Money Suit No.73 of 2003 is not covered by the arbitration clause and cannot be referred to arbitration? HELD THAT:- From a reading of the above terms of the compromise deed dated 11.12.2001, it is clear that the parties have substituted a new agreement by way of compromise. As per the agreement dated 01.05.1997, the appellant was the clearing and forwarding agent for the entire north-eastern region; whereas under the terms of the compromise, the appellant has been appointed as stockist of the company only for Guwahati and Agartala and not as clearing and forwarding agent for north-eastern region. The clauses in the compromise memo also clearly state that the appellant handed over all the stocks of goods to the respondent-Company. The appellant had also handed over the entire documents in their possession both used and unused as well as sales tax documents, road permit, C forms from stockists and other documents. When the parties have settled their differences and compromised the matter, in the dispute subsequently arising between the parties, arbitration clause in the prior agreement cannot be invoked. Since the agreement dated 01.05.1997 (agreement for appointing the appellant as clearing and forwarding agent) and the compromise (appointing the appellant as stockist) are different, the arbitration clause in the agreement dated 01.05.1997 cannot be read into the terms of the compromise as per which the parties have entered into a new arrangement and this has not been kept in view by the High Court. The High Court erred in holding that the existence of the arbitration clause has been admitted by the appellant-Company and it is for the arbitrator to decide under Section 16 of the Act whether the arbitration clause applied to the subject matter of the suit or not. An application under Section 8 of the Act can be made only if the subject matter of the suit is also the same as the subject matter of arbitration. In other words, only those disputes which are specifically agreed to be resolved through arbitration can be the subject matter of arbitration; and upon satisfaction of the same, the Court can refer the parties to arbitration - In the present case, the compromise decree does not contain any arbitration clause. The subsequent Suit No.73 of 2003 has been filed by the appellant due to failure of the respondent Company to appoint the appellant as stockist of their products in Guwahati and Agartala and the same has caused substantial loss to the appellant. In the said suit, the appellant also alleged that due to illegal act of the respondent, the appellant has to face the criminal trial unnecessarily due to which the appellant has sustained heavy loss both financially and mentally and also it resulted in loss of goodwill and reputation of the appellant and therefore, the appellant claimed compensation of rupees twenty crores from the respondent. The suit claim is not covered by the arbitration. Since the respondent has raised the plea that the compromise decree is vitiated by fraud, the merits of such a plea could be decided only by the Civil Court upon consideration of the evidence adduced by the parties - there is no arbitration clause relating to the dispute between the parties in not appointing the appellant as stockist and the claim of compensation towards loss of goodwill and reputation. The High Court erred in proceeding under the footing that the dispute falls within the ambit of the agreement dated 01.05.1997 and that the appellant-plaintiff admits the existence of the arbitration clause and the impugned judgment is liable to be set aside. Money Suit No.73 of 2003 shall stand restored to the file of Civil Judge, Senior Division, Kamrup, Guwahati and the trial court shall proceed with the matter in accordance with law - Appeal allowed - decided in favor of appellant. 2019 (7) TMI 1468 Applicability and compliance or otherwise of Section 236 of the Companies Act, 2013 - fraudulent transfer of shareholding of petitioners - subsequent cancellation of shares - oppression of minority shareholders - HELD THAT:- Sub-Section (2) of Section 236 requires that there should be valuation by a registered valuer in accordance with such rules as may be prescribed . If Section 236 of the Act has to survive, it has to be insisted upon that the valuation must necessarily be by registered valuer and that too in accordance with the rules prescribed. The Legislature appears to have been conscious and careful while using these words because it has made a special Chapter relating to Registered Valuer - The Legislature has taken precautions to ensure that there should be valuers who shall be impartial, exercise due diligence and make valuation in accordance with the rules as may be prescribed. There are also penal provisions if the valuer contravenes the provisions with intention to defraud the company or its members. Clearly there can be no comparison between such valuers and the said reputed Chartered Accountant being relied on by the respondents. We are unable to uphold the findings of NCLT which has not at all either dealt with applicability of Section 236 or the manner in which respondents have tried to enforce the same and simply accepted whatever was claimed by the respondents in their application that they have already taken over the shares of original petitioners and so the petitioners are not shareholders and so they cannot maintain the petition - the petition was maintainable at the behest of original petitioners who were inter alia challenging the manner of take over of their shares and who constituted 2/3rd of the members of the company and were perfectly competent to maintain the company petition. The notices given by the respondents under Section 236 and their subsequent act of cancelling the shares of the original petitioners were illegal and stand set aside. Such acts of Respondent constituted oppression of minority shareholders-the petitioner - the Appellants could maintain the Company Petition under Section 241, 242 of the Act - application disposed off. 2019 (7) TMI 1467 Restoration of name of Appellant in the Registrar of Companies - striking off the name on the ground that the Appellant Company was not in operation and was not doing any business on the date of striking off of the name of the company - whether the Appellant Company could justifiably be restored? HELD THAT:- On the crucial issue of the Appellant Company being in operation and doing business in consonance with its object be it noticed that the financial statements covering fiscal period beginning 2013 through 2017 amply demonstrate that the Appellant Company was not in operation and did not conduct any business of the nature bearing nexus with its intended object. The Tribunal has tabulated the factual position emanating from such financial statements reflecting the assets, liability and turn-over of the Company as NIL . Thus, the finding that the Appellant Company was not doing the intended business cannot be termed erroneous notwithstanding the fact that the Appellant Company is shown to have been engaged in granting short term loans and advances to its sister concern which was not the intended object of the Company. Indulging in business activity not falling within the ambit of object of the Company or not being incidental or ancillary thereto cannot be termed a legitimate business for demonstrating that the Company was in operation. The finding recorded by the Tribunal and the conclusions deducible from the material on record do not warrant interference as no contrary view is possible - A Shell Company or a Company having assets but advancing loans to sister concerns or corporate persons for siphoning of the funds, evading tax or indulging in unlawful business or not abiding by the statutory compliances cannot be allowed to invoke this expression or otherwise which would be a travesty of justice besides defeating the very object of the Company. Such course would neither be just nor warranted. The Appellant has failed to make out a just ground warranting interference with the impugned order which is neither shown to be legally infirm nor are the findings recorded therein shown to be erroneous, much less perverse - appeal dismissed - decided against appellant. Insolvency & Bankruptcy 2019 (7) TMI 1483 CIR process - Non filing of FIR and action against offenders steeling goods, machineries and equipments, etc. of the Corporate Debtor Company - HELD THAT:- This Bench is conferred with power to pass an order directing the Police/District Magistrate to provide assistance to the Resolution Professional as contemplated u/s 429 of the Companies Act, 2013 r/w regulation 30 of CIRP Regulations, 2016 - State Machinery is under obligation to provide assistance to the Resolution Professional in discharging the functions of the Resolution Professional, including taking action against the culprits causing loss to Corporate Debtor and also to protect the assets of the Corporate Debtor. Unless the State Machinery takes active steps in providing appropriate assistance to the Resolution Professional, it is difficult for him to discharge the functions of Resolution Professional so as to hold the value of the asset intact - this Bench hereby suggests the District Collector of Kanchipuram to take cognizance of the incidents happened at the factory premises by verifying the report placed by the Resolution Professional and provide necessary assistance to the Resolution Professional as contemplated under Section 429 r/w regulation 30 of CIRP Regulations, 2016. Application allowed. 2019 (7) TMI 1482 Admissibility of petition - Initiation of CIRP - Non-consideration of resolution plan - HELD THAT:- As per record, it is undisputed position in the matter that the Resolution Professional did not consider the resolution plan of the Applicant for such reason that resolution plan was filed by resolution applicant after expiry of EOI and at a very belated stage i.e. on 268th day. Hence, the main ground for not considering the resolution plan of the applicant is that there was no time left to entertain any resolution plan and to consider at this stage, as the Resolution Professional has conducted the entire process as per timeline defined under IBC and so as he was duty bound to adhere to such timeline thus he refused to consider such resolution plan. The Resolution Professional and the COC should make all possible efforts towards Insolvency Resolution of a Corporate Debtor company and its liquidation can only be lost resorts - application disposed off. 2019 (7) TMI 1466 Maintainability of application - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor committed default in making payment - Section 9 of Insolvency and Bankruptcy Code read with Rule 6 of Insolvency Bankruptcy (Application to Adjudicating Authority)Rules, 2016 - HELD THAT:- This Bench on hearing the petitioner and after going through the documents annexed to the petition is of the view that the Corporate Debtor is liable to pay the amount claimed in the petition and defaulted in making the payment - This Bench having been satisfied with the Petition filed by the Operational Creditor which is in compliance of provisions of section 9 of the Insolvency and Bankruptcy Code admits this Petition declaring moratorium. Petition admitted. Service Tax 2019 (7) TMI 1481 Extended period of Limitation - whether SCN dated 27.03.2008 issued by the Revenue was barred by limitation? - suppression of facts or not - HELD THAT:- The finding recorded by the Commissioner (Appeals) is absolutely in consonance with the facts and circumstances of the case. It is only when the Revenue had the information about the activities of the appellant of providing vehicle on hire, a notice in the year 2004 was issued asking him to get registered within seven days. The notice was responded by the appellant wherein he had made clear that he is not the owner of any tourist vehicle or a tour operator . Not only this took the matter with Director (Technical) NEEPCO to whom he provided vehicle on hire, vide in his communication dated 31.03.2004 mentioning therein that he has not recovered the service tax for vehicle hiring charge from NEEPCO whereas, Central Excise Department had issued notice based on the information from NEEPCO. It appears that the Revenue thereafter has not chosen to initiate any action. The Commissioner (Appeals) has rightly concluded that the activities of the appellant were well within the knowledge of the Revenue, therefore, no question of suppression of any fact. The finding of the Commissioner (Appeals) in our considered opinion is quite apposite - From the record nothing is forthcoming so as to substantiate the action of the Revenue in sleeping over the matter for a period w.e.f. 2004 till 2006 and then on 27.03.2008 when show cause notice was issued. Show cause notice having been admittedly issued after the prescribed period of one year was clearly barred by limitation as rightly concluded by the Commissioner (Appeals). The order of learned Commissioner (Appeals) dated 03.12.2010 being well reasoned and logical is restored - Appeal allowed. 2019 (7) TMI 1480 Non-payment of Service tax - amount collected by them from the students - Commercial Coaching and Training Services - exemption under N/N. 24/2004-ST dated 10.09.2004 - HELD THAT:- The assessee is not entitled to deductions on account of sale of books, registration fee, examination fee etc., because no amounts were collected under these heads and gross amount for total services rendered were invoiced to the students by the assessee. Service tax is leviable on the gross amount charged. Assessee is also not entitled to the benefit of exemption notification 24/2004-ST dated 10.09.2004 for the period prior to 07.06.2005 because they were not clearly covered by the exemption notification. Appeal dismissed - decided against appellant. 2019 (7) TMI 1479 Claim of small scale exemption upto ₹ 10 Lakhs - Association of persons - benefit of exemption to each co-owner - N/N. 6/2005-ST, dt.1.3.2005 as amended - Renting of Immovable Property service - period October 2007 to March 2012 - HELD THAT:- In the present case, risks and rewards are not shared as each of the co-owner brought money from their own sources to buy properties and they are receiving rents separately. In the case of Sarobjen Khusalchand Others vs. CST [ 2017 (5) TMI 240 - CESTAT AHMEDABAD ], CESTAT, Ahmedabad has concluded that the threshold exemption is available for each individual co-owner. Appeal dismissed - decided against Revenue. 2019 (7) TMI 1465 Refund of Service Tax - N/N. 17/2009-ST dated 07.07.2009 - Export of goods or not - HELD THAT:- It is apparent that M/s MMTC Ltd. stands indemnified of all claims, damages etc. of the foreign buyer and/or vessels owner in respect of exports to be made through them and M/s S. K. Sarawagi Co. Pvt. Ltd. (the appellant herein), the owner of the goods, is not allowed to export directly under Section 2 (20) of the Customs Act, 1962 as well as under the definition of exporter in the Foreign Trade Policy, 2009-14 under Chapter 9.26 - The role of M/s MMTC Ltd. in the export of Manganese Ore is a compulsion to be observed by the appellant/assessee and it is not by choice which has led to the present dispute. Refund allowed - appeal allowed - decided in favor of apppellant. 2019 (7) TMI 1464 SEZ unit - Refund of service tax paid on services used for SEZ authorized operations - various input services - Banking and Financial Services - Rent a Cab Service - Technical Inspection and Certification services - Technical Inspection service. Banking and Financial Services - denial of refund on the ground that bank advices issued by the bank based on which the appellant sought refund of service tax did not contain the name of the appellant at all - HELD THAT:- There is a lack of basic information essential even for the banking services - Learned CA submits that he would be in a position to collect relevant information to substantiate his claim that these documents pertain to the services received by them - it is deemed proper to remand the matter to the original authority to examine the documents that may be produced by the appellant - matter on remand. Rent a Cab Service - denial on the ground that the services were availed prior to the UAC approval - HELD THAT:- This denial was only in appeal ST/31215/2018. In appeal ST/31017/2018 the first appellate authority himself has given refund of service tax paid on Rent a Cab services holding that the approval received by the appellant post availment of services is sufficient. Accordingly, the refund of service tax paid on Rent a Cab services may be allowed in appeal ST/31215/2018 also - refund allowed. Technical Inspection and Certification services - denial on the ground that they had not produced any evidence of payment to the vendor - HELD THAT:- The original authority should get an opportunity to examine the evidence that may be produced by the appellant and decide about the entitlement of refund of service tax in respect of these invoices - matter on remand. Technical Inspection service - denial on the ground that the invoices are dated prior to the refund period - HELD THAT:- Learned CA submits that they had claimed refund in terms of Notification 12/2013-ST which does not require the invoices to be dated during the period of claim of refund. It only requires that only one claim of refund is made during the quarter - In view of the clarification provided by the learned CA, I hold that appellant is entitled for refund of service tax in respect of this amount - refund allowed. Appeal allowed in part and part matter on remand. Central Excise 2019 (7) TMI 1478 Refund of CENVAT Credit - unjust enrichment - case of appellant is that appellant reversed CENVAT credit of the above amount in September 1995 on protest at the instance of Excise Authorities and subsequently filed refund claim which went up to the CESTAT stage - HELD THAT:- It is a strange case where a refund claim of the appellant made in 1995 could not be settled till date under one pretext or the other. The entire case record does not bring out a case of unjust enrichment as refund was claimed against reversal of CENVAT credit which was ultimately held to be admissible by the CESTAT itself and that remained unchallenged so far. It is not understood when no duty was paid and only credits availed were refunded, how come a case of unjust enrichment could come into play when the said amount has been shown as receivable under the head Loan Advances receivable from the respondent-department for a continuous period of 10 financial year and when the said amount is adjusted against Profit Loss Account under the heading Administrative, Selling and General Expenses . In the instant case appellant had justified absorbing of the said cost in its administrative expenses overhead and therefore, it can be safely concluded that incidence of duty has not been passed on by the appellant to any other person. Hence the order. Appeal allowed - refund allowed - decided in favor of appellant. 2019 (7) TMI 1477 CENVAT Credit - clean energy cess on Coal - It is the case of the assessee that since CEC is also a form of excise, they are entitled to Cenvat credit even in the absence of an explicit provision under Rule 3 of CCR, 2004 - HELD THAT:- The purpose of levying the CEC is evidently to promote and finance clean energy initiatives by taxing the coal - A plain reading of Rule 3 of CCR, 2004 shows that it did not provide for Cenvat credit of every duty of excise and cess but only of some and this list does not include CEC imposed in Finance Act, 2010. It is undisputed that a plain reading of Rule 3 of CCR, 2004 shows that Cenvat credit is admissible only in respect of some cesses and not in respect of all the cesses and duties of excise. Although it is now settled that taxing statutes must be literally interpreted, I have also examined the spirit and purpose of levying the CEC. It is evident from Section 83 of Finance Act, 2010 that CEC has been levied on coal to discourage use of the polluting forms of energy and encourage use of cleaner forms of energy. This is based on the principle of Polluter pays . If the CEC collected by the Government is returned to the assessee through the backdoor in the form of CCR, 2004, we will be doing a great disservice to the country by replacing the principle of Polluter pays with Pollution pays . We will be encouraging use of polluting forms of energy by undoing the very purpose for which CEC has been levied - The assessee is not entitled to Cenvat credit under Rule 3 of CCR, 2004. Penalty - HELD THAT:- The dispute is an interpretational one and it is perfectly possible for the assessee to have entertained a belief that they are entitled to Cenvat credit of CEC and therefore, there is no justification for imposition of penalty under Rule 15 of CCR, 2004 - Further, they have also, on being pointed out, reversed the credit availed by them under protest. Therefore, the penalty is liable to be set aside. Appeal allowed in part. 2019 (7) TMI 1463 MODVAT/CENVAT Credit - credit denied on the basis of supplier s private register - credit denied alleging short receipt of inputs vis- -vis figures shown in invoices evidenced by so called private register of M/s Vinayak Metal Chemicals - credit denied alleging non-entry of receipt of goods on the basis of appellant s gate register. Maintenance of Gate Register - HELD THAT:- It is not a statutory register and is being maintained by the Guard at the Gate. The Guards were mostly illiterate and they record the details in a very casual manner and sometimes do not record at all. It is further observed that the allegation raised by the Department regarding availment of modvat credit of ₹ 91,917/- is on the basis of investigation of the third party documents - further Department had seized all the documents evidencing to receive the materials at the factory premises of the appellant and there is no dispute regarding genuineness of all the documents and accordingly, it cannot be held that the modat credit has wrongly been availed. Short receipt of materials - allegation based on gate register maintained at the gate of the factory premises of the appellant by the security guard - HELD THAT:- It is observed that the security guard of the Company are not educated and during change of shift etc., there is every possibility of any entering the details in the gate register. Further, all the documents evidencing the receipt of materials, such as, transport receipt, bills, challans etc. of materials, were available with the appellants and most of these documents were already seized by the Department. Thus, the denial of benefit of modvat credit merely on the basis of non-recording of entries in the so-called gate register maintained by the security guard at the gate, is not justifiable. Department has not pointed out any instance of non-receipt of materials, non-uses of materials for final production or manufacture and has not disputed the documents supporting the receipt of materials. Since the gate register is not a prescribed document in terms of Cenvat Credit Rules, 2004 and the purposes of which is only to show the receipt of the materials at the factory gate, it cannot be held to be a conclusive evidence so as to arrive at the finding of the non-receipt of the goods - Further, when the goods have been entered in the statutory records, modvat credit cannot be denied. When the details of inputs stand entered into the statutory register, non-entry of the same in the private record maintained by the third party, will not dis-entitle the appellant assessee to avail credit, specially, when there is no allegation or evidence showing non-receipt of such inputs. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 1462 Excisability/Marketibility - intermediate goods - sugar syrup - case of the department is that since their final products are exempted, the intermediate product i.e., sugar syrup is chargeable to excise duty - HELD THAT:- There are no sufficient evidence to show that the sugar syrup manufactured by appellant is a marketable commodity. Classification of Sugar Syrup - HELD THAT:- Also the fructose content of the sugar syrup has to be at least 50% by weight if it has to be an excisable product classifiable under Chapter heading 1702 9090 - In the case of Anand Food Products Pvt Ltd, the fructose content was tested and found to be below 50%. Therefore, the sugar syrup cannot be classified under Chapter heading 1702 9090. Benefit of N/N. 67/95-CE - HELD THAT:- The notification exempts intermediate products even if the final product is exempt, if the appellant follows the procedure prescribed under Rule 6 of CCR, which the appellants have done in this case. Appeal allowed - decided in favor of appellant. 2019 (7) TMI 1461 Recovery of erroneously grant of Rebate claim - Rule 18 of Central Excise Rules, 2002 - reliability on statements - procedure prescribed under Section 9D of Central Excise Act, 1944 not followed - HELD THAT:- Ld. DR has no objection to the matter being remanded to the original authority in view of the mandatory requirement of following the procedure under section 9D of CEA, 1944. This is a fit case to be remanded to the original authority to enable them to follow the procedure under section 9D with respect to the statements and also consider any other additional evidence that may be produced by the appellants. Therefore, without passing any remarks on the merits of the case and leaving all issues open, we remand the matter to the original authority for adjudication after following the procedure prescribed under section 9D and following the principles of natural justice. Appeal allowed by way of remand. 2019 (7) TMI 1460 Interest on delayed refund - refund claims were sanctioned by the Department with a delay of more than three months from the date of filing of the said claims - HELD THAT:- The admissibility of interest for delayed cash refund of accumulated CENVAT Credit under Rule 5 of CENVAT Credit Rules, 2004 has been settled in favour of the assessee by various High Courts including jurisdictional Bombay High Court. Recently, the Hon'ble Karnataka High Court following the principles laid down by the Hon'ble Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] held that Liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. The interest is admissible on the delayed cash refund sanctioned under Rule 5 of the CENVAT Credit Rules, 2004 - However, the learned AR for the Revenue submits that neither in the adjudication order nor in the Commissioner s (Appeals) finding, exact amount of interest claimed has been mentioned. Therefore, for quantification of interest admissible to the appellant, the matter should go back to the adjudicating authority. Appeal allowed by way of remand. CST, VAT & Sales Tax 2019 (7) TMI 1459 Rectification of mistake - mistake apparent from the record - application of mind - Whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in holding that while passing the original assessment order, the assessing authority has applied the rate of tax after application of mind and the same cannot be corrected under Section 31 of the Act under the heading mistake apparent on the face of record? HELD THAT:- Clearly, for a mistake to be rectified by the assessing officer, it had to be a mistake found in any order that may have been passed by him at an earlier point in time. For exercise of power under section 31, there had to pre-exist an order passed by him, upon conscious exercise of his powers to make assessment/reassessment - In the present case, in absence of any order being passed by the assessing authority, either under Section 28 or 29 of the Act, it cannot be conceded to him that he had any power to make the rectification, as claimed. The alleged order sheet entry dated 09.11.2009, is a rubber stamp noting of no consequence. On that date, first, the period prescribed under section 27 of the Act had not expired. Therefore the legal fiction with respect to payment of admitted tax and his entitlement to claim ITC had itself not arisen. Even otherwise, that note remained only an expression of legal fiction contained in section 27 of the Act. It did not and it could not provide for any effect or consequence more than the legislature contemplated. Thus, it was not an assessment order for any other purpose. It would always remain limited to the twin purpose (noted above), for which it had been created by the legislature - in absence of any assessment order issued by him there existed no basis to invoke the power of rectification under section 31 of the Act, by the assessing authority. Consequently, the assessing authority never acquired any jurisdiction to issue any notice or pass any order under Section 31 of the Act. The entire exercise carried by the assessing authority was a nullity and it must therefore necessarily fall. The question of law (as framed above) is answered in the affirmative i.e. against the revenue and in favour of the assessee. 2019 (7) TMI 1458 Proceedings under Section 48(5) of the U.P. Value Added Tax Act, 2008 - Whether on the facts and circumstances of the case, the Commercial Tax Tribunal was legally justified in remanding the matter back on those grounds which were neither taken by the assessing authority while framing the penalty order nor has been pleaded before the 1st Appellate Authority? - HELD THAT:- Once the Tribunal has set aside the order of the first appeal authority, it should have left open to the first appeal authority to pass a fresh order in accordance with law. However, to dictate to the subordinate authority the manner in which an enquiry is to be done especially in a case such as this where merely an incomplete enquiry has been made, may often stifle the parties to their prejudice in the proceedings on remand. Therefore, it should have been left open to the first appeal authority to pass an order upon making such complete enquiry on the basis of plea and evidence that may be brought before it by the assessee as also the revenue. The submission advanced by learned counsel for the assessee that a new case has been set up, is not correct. Revision allowed. 2019 (7) TMI 1457 Liability of surety under VAT, CST or sales tax matters - Release of payment from the account of petitioner company - company had stood surety of a dealer Gayatri Steel Traders against which dues of VAT and CST of a sum of ₹ 7,87,550/- were outstanding - HELD THAT:- The petitioner company itself did not stand surety for M/s Gayatri Steel Traders, Ambala City nor any resolution was given by it to the Excise and Taxation Department. Infact, one of its Directors Shri Vinod Kumar stood surety for the said firm in his individual and personal capacity for which the petitioner company cannot be held liable - it is well settled that in the absence of any specific provision in the statute, company cannot be held liable for the surety given by its director in his individual and personal capacity. Petition allowed - decided in favor of petitioner. 2019 (7) TMI 1456 Recall of initially issued C-Forms - petitioners submits that, once a C-Form is issued, the same cannot be recalled - HELD THAT:- Nothing is placed on record to suggest that, once a C-Form is issued cannot be revoked. In the event, the C-Forms are obtained by practicing fraud, surely, the authorities upon discovery of such fraud, are entitled to say so and have such C-Forms recalled. It is for the person affected by such decision to satisfy the authorities that, there was no fraud involved. In the present case, the authorities found the C-Forms to be issued in favour of shell companies and have, therefore, taken such steps with the provisions for the petitioners to explain their stand - The petitioners had replied to the show-cause notices. A final decision has since been taken - there are no reason to interfere with such final decision. Petition dismissed. Indian Laws 2019 (7) TMI 1455 Maintainability of application - second application for the same relief, which had already been dismissed - Dishonor of Cheque - HELD THAT:- The Company, of which the appellant was a Director, is a party respondent in the complaint. The interests of the complainant are therefore adequately protected. In the entirety of the facts and circumstances of the case, we are unable to hold that the second application for quashing of the complaint was not maintainable merely because of the dismissal of the earlier application. Appeal allowed - the proceedings against the appellant alone are quashed.
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