Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 10, 2019
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - Partially completed fiats having identified customers before GST regime - applicant is liable to pay service tax under the FA 1994 proportionate to the services provided up to 30.06.2017 and to pay GST proportionate to the services provided effective from 01.07.2017, in terms of Section 142(11)(b) of the CGST Act 2017
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Applicability of Tool Amortisation cost (Transaction Value) in GST Regime - applicant is not under any obligation to use their own tools/ moulds for manufacture of the components and the same are supplied to them free of cost and on returnable basis - applicant is not required to be added to the value of the parts supplied by the Applicant and hence the said value is not liable for GST
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Requirement of deposit of a sum of ₹ 1 Crore for grant of bail - alleged offence u/s 132(1)(a) CGST Act even if SCN to the applicant in respect of alleged evasion of Tax of ₹ 94 Crores - no interference is required by this Court in the impugned orders passed by the court below
Income Tax
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Valuation of property u/s 50C - The mandatory language of Section 50C does not allow the AO to avoid making a reference thereunder and in surmising that the valuation report would not be received before the time limit for completion of assessment - Reference to DVO is mandatory.
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Addition by invoking the provisions of Section 56(2)(viia) which is applicable from 01/06/2010 - nothing is brought on record to substantiate that the shares were transferred in the month of November 2010, on the contrary the annual return filed by the Seller of the shares clearly established that the transfer of the shares took place on 10/05/2010 - no addition
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Penalty u/s 271 (1) (c) - adoption of multiple year data OR single year data for determining ALP - the fact remains that the legislature thought it necessary to clarify that the data that was required to be used had to necessarily relate to the financial year in question and not to multiple year data - during the AY in question, the issue was debatable - no penalty
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Capital gain on land sold - absolute ownership or not - It is not open for the Revenue to contend that to the exclusion of lessee, assessee alone must receive the entire sale consideration ignoring the leasehold rights held by lessee for 99 years in respect of the very same property which was the subject matter of the sale - entire consideration is not taxable in hand of assessee
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TDS u/s 195 - payment was made towards quality rebate on export - assessee has established that it is a quality rebate with relevant documents which goes to reduce the sale and as per Article VII of DTAA between India and UK, the business profits are taxable in contracting state as the recipient is foreign company having no PE - neither TDS required nor disallowance u/s 40(a)(i)
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TDS u/s 195 - compensation paid for breach of contract for supply of material to foreign buyer - assessee’s failure to supply the export order which constitutes business transaction - There is no evidence brought on record that the sum paid to foreign buyer is income within the meaning of Article VII of DTAA to be taxable in India - neither TDS required nor disallowance u/s 40(a)(i)
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Disallowance of homologation expenditure - approval of technical variation in any existing vehicle or any of the components - it were not only the initial stage for which specifications need to be approved from ARAI but even for the existing vehicles, random checks were made that the assessee was manufacturing the same in conformity with the procedure laid down - laid out was for smooth running of business hence the revenue expenditure
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Penalty u/sec. 271B - assessee had entered into only a single transaction and has bonafide belief that the transaction entered into by her leads to capital gains and not business transaction AO consider the same as business income then it attracts the provisions of section 44AB - since explanation given by the assessee is bonafide and also justified, no penalty can be levied u/s 271B
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Disallowance of depreciation - revenue doubts existence of plant and machinery - assessee has neither able to substantiate by way of any agreements entered into by it, with parties to which plant and machinery has been released on hire purchase nor able to establish existence of plant and machinery by way of corroborative evidences - no depreciation
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TDS u/s 195 - addition u/s.40(a)(i) - commission payable to the foreign agent - a person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the Act - neither TDS nor disallowance
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Addition u/s 68 - LTCG on sale of penny stock - considering the vortex of evidences, the assessee has successfully discharged the onus cast upon him by provisions of section 68 - discharge of onus u/s 68 is purely a question of fact and therefore the judicial decisions relied upon by the DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand - no addition
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Reopening of assessment u/s 147 - Validity of Direction of CIT(A) u/s 150 - as per provisions of section 149(1)(b), notice u/s 148 could have issued by the end of assessment year 2018-19 which had already elapsed when the direction was issued - since direction of CIT(Appeals) is not in accordance with law reopening was also not valid
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Treatment of income surrendered during the survey - income subject to special rate of tax OR Business income - provisions of section 115BBE without allowing set off of expenses or any allowance or set off of losses of earlier year, w.e.f. 1.4.2017 is in prospective in nature and not applicable to earlier years - in present case, the surrender had been made on account of undisclosed debtors hence will be treated as business income
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Reopening of assessment u/s 147 - return processed u/s 143(1) - Addition u/s 68 - Mere disclosure of receipt of unsecured loans would not be sufficient to avoid reassessment in case where the return was accepted without scrutiny - Reopening valid
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Scope and applicability of Section 64(1)(iii) w.e.f. 1.4.1976 - from the date mention of that FY OR AY - liability can only be fastened on an individual if the same was existing at the time of accrual and not at the time of assessment and new liability under the IT Act cannot be given a retrospective effect - applicable in FY 1976-77 i.e AY 1977-78 not in AY 1976-77
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Cessation of liability u/s 41(1) - conversion of the loan as well as the unpaid interest into share capital - when there was no writing off of liabilities and only the sub-head, under which, the liability was shown in the account books of the assessee was changed and it continued to remain liable to pay even after change of entries, there could be no cessation of liability - not taxable
Customs
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Valuation of imported goods - Without any specific evidence of contemporaneous imports the assertion of contemporaneous price is baseless.
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Reversal of Cenvat Credit under coercion and threat of arrest - rule of law has to be followed and no officers of the respondent can take law in his own hands or take extralegal steps or manoeuvre so as to collect amounts which have not yet been held by judicial and/or quasi judicial order as payable by the petitioners to the respondent - directed to re-credit
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Refund claim - mere admission of an appeal would not by itself lead to the stay of the order being appealed against before this Court, it only indicates that the issue raised in the appeal requires consideration and does not denying the benefits available to the respondents by virtue of the impugned order of the Tribunal - no stay for refund
Indian Laws
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Benami transaction - beneficial owner - The transfer of money through RTGS in the account of the appellant, who after due enquiry,returned the money next day, in our view is not a benami transaction.
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Complaints against various members of ICAI - litigants, such as the petitioner, who have made litigation their business/vocation ought to be discouraged - the present petition is dismissed with costs quantified at ₹1,00,000/-.
Service Tax
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Nature of activity - service or sale - supply of Tangible Goods services or not - work-wear rented out always remains within the exclusive possession of their clients and nobody else can use the those workwear at the same time and hence effective control to lie with the user/ clients - not liable to service tax.
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CENVAT Credit - During the period, the credit cannot be utilised in excess of 20% of the amount of service tax payable on taxable output services. Therefore, if service tax is paid utilising the CENVAT, it does not amount to paying service tax and service tax can be demanded.
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Demand of service tax post GST regime - Section 174(2)(c) prima-facie seems to preserve the levy in so far as any liability to pay tax was incurred by the individual or concern, prior to its enactment w.e.f. 1.7.2017. - writ petition dismissed
Central Excise
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Reversal of CENVAT Credit - non-excisable/exempt goods - Zinc Dross/Cyclone/Ash which comes into existence during the manufacture of Galvanized Steel Pipes/Tubes - Rule 6 of the CCR, 2004 is not applicable to the waste products which arises during the process of manufacture and is sold for some consideration - hence appellant is not required to pay the amount of 6% of the exempted goods
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Process amounting to manufacture - cutting of jumbo roll into small sizes and then packs the same as paper napkins and facial tissues in the unit containers - the amended definition of manufacture u/s 2(f)(iii) of the CE Act, w.e.f. 01.03.2003, the activity undertaken by the assessee would amount to manufacture - duty payable on the clearance of paper napkin, paper towel, etc.
VAT
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The inmplimentation of scheme by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favoritism or nepotism shall not influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State.
Case Laws:
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GST
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2019 (8) TMI 473
Permission for withdrawal of Advance Ruling application - Zero rated supply of service or not - providing research report on activity carried out as a study of a chemical or biological entity that is still in research stage - HELD THAT:- The Applicant have requested to permit them to withdraw the application filed for advance ruling. The application filed by the Applicant for advance ruling is disposed off as withdrawn.
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2019 (8) TMI 472
Levy of GST - Activity of construction related to immovable property - works contract - applicability of GST - Partially completed fiats having identified customers before GST regime - Partially completed flats, where customers are identified after implementation of GST regime - Partially completed flats, where no customers are identified - Pre and post GST regime - section 142(11) of CGST/KGST Act 2017 - transitional provisions. Levy of GST - Partially completed fiats having identified customers before GST regime i.e., 1/7/2017 - HELD THAT:- In this situation, the agreement with the customer was executed in pre-GST regime i.e., prior to 1/7/2017. Therefore the applicant is liable to pay service tax under the Finance Act proportionate to the services provided upto 30/06/2017 and from 1/7/2017 onwards liable to pay GST proportionate to the services provided effective from 1/7/2017 in terms of section 142(11)(b) of CGST Act, 2017. Levy of GST - Partially completed flats, where customers are identified after implementation of GST regime- HELD THAT:- In these case, agreements for supply has been entered with the probable customers on or after 1/7/2017. It implies that the agreement has been entered prior to completion of the construction and also before issuance of completion certificate from BBMP, the competent authority - in the event that the agreements are entered into after 1/7/2017, the provisions of section 13 of the said act shall come into force and the applicant shall become liable to pay applicable tax. Value of supply for Partially completed flats, where customers are identified after implementation of GST regime - HELD THAT:- The applicant was engaged in the activity of construction on his own account - there was no event of supply to anyone - the value to be adopted for the computation of tax amount has to be the transaction value, i.e., the value at which the supply has been agreed upon. Levy of GST - Partially completed flats, where no customers are identified- HELD THAT:- The applicant admits that no customers are identified. Here we again draw attention to the provisions of Para 5 of Schedule II of the CGST Act, 2017. If the applicant completes the activity of construction and also obtains the occupancy/completion certificate from the competent authority and then -enters into a transaction with a recipient then the applicant is not liable to pay GST as such an activity/transaction then falls under Para 5 of Schedule III. In case the transactions are initiated prior to the issue of completion/ occupancy certificate then the scenario becomes identical to the second issue.
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2019 (8) TMI 471
Clarification regarding applicability of Tool Amortisation cost (Transaction Value) in GST Regime - Capital Goods received freely on returnable basis from the recipients (Customer) for parts production and supply - HELD THAT:- The CBIC in its Circular No 47/21/2018-GST dated 08.06.2018 has clarified that Moulds and dies (Tools) owned by OEM that are provided to a component manufacturer on FOC basis do not constitute supply as there is no consideration and in such cases, the value of goods provided on FOC basis shall not be added to the value of supply of components. However, in case the contractual obligation is cast upon the component manufacturer to provide moulds/ dies but the same have been provided by the OEM on FOC basis, then the amortized cost of the moulds/dies is required to be added to the value of the components supplied. The issue raised by the applicant is covered under Issue number I and Clarification 1.1 and 1.2 of the Circular No 47/21/2018-GST dated 08.06.2018 - This Ruling is based on examination of the contract / purchase order furnished by the Applicant in the case of their customer M/s. Tata Autocomp systems Ltd., (OEM) where the applicant is not under any obligation to use their own tools/ moulds for manufacture of the components and the same are supplied to them free of cost and on returnable basis. This ruling will apply to other contracts entered into by the Applicant if and only if the terms and conditions contained therein are the same as those contained in the contract placed before us. The cost of the tool/s supplied by the OEM on FOC basis, under the situations discussed in para 11 and 14, to the Applicant is not required to be added to the value of the parts supplied by the Applicant and hence the said value is not liable for GST.
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Income Tax
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2019 (8) TMI 474
Assessment u/s 153A - HELD THAT:- ITAT noticed inter alia that all the additions were not based upon any fresh materials seized during the course of search. That was the first ground for setting aside the order ; the ITAT also considered and decided in favour of the assessee on the merits of the additions. The approach of the ITAT of setting aside the search assessment on the ground that no fresh materials was seized or discerned in the course of search is correct and conform to the view taken by the Delhi High Court in the case of CIT (Central)-III vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] . That judgment has been followed by various High Courts including this Court.
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2019 (8) TMI 470
Addition based on the value adopted by the Stamp Duty Officer in terms of Section 50C - Assessee sought a reference to the DVO only at the last minute and that the AO is justified in declining to accept the request and in proceeding to finalize the assessment - HELD THAT:- CIT(A) in the order dated 1st October, 2014 held that under Section 50 (C)(3) of the Act, the value adopted for payment of stamp duty can be adopted as sale consideration only if the fair market value determined by DVO is less than the value adopted for stamp duty purposes. In the present case since a report had not been obtained by making a reference to the DVO, the addition made by the AO was held not to be in accordance with the Act. This appears to be the consistent view taken by the ITAT in several cases, which have been referred to by the CIT (A) in the aforementioned order. The Court fails to appreciate how an AO can avoid making a reference to the DVO, when it is made more than one month earlier than the final date of completion of the assessment. It is not for the AO to presume that the valuation report would not be received in time. The mandatory language of Section 50C does not allow the AO to avoid making a reference thereunder and in surmising that the valuation report would not be received before the time limit for completion of assessment. That per se would not justify proceeding with making an addition when there was a specific request for reference of the matter to the DVO.
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2019 (8) TMI 469
Penalty u/s 271 (1) (c) - multiple year data by the Assessee in determining ALP of the international transaction using TNMM whereas the Transfer Pricing Officer ( TPO ) had adopted a single year data - HELD THAT:- The Court notes that after the words data relating to the financial year occurring in Rule 10 B (4) of the Rules , there is an insertion made in the Rules with effect from 19th October 2015, which reads hereafter in this Rule and in Rule 10 (C) (a) referred to as the current year . While it could be argued that this was a clarificatory amendment, the fact remains that the legislature thought it necessary to clarify that the data that was required to be used had to necessarily relate to the financial year in question and not to multiple year data. The view taken by the ITAT that during the AY in question, the issue was debatable cannot, in the circumstances, said to be an implausible view. The second ground on which penalty was levied related to the claim of standard deduction by the Assessee at 5%. The ITAT noted that even this was a debatable issue and a clarification was finally issued in Finance Bill, 2012, which clarification has been reproduced in paragraph 11 of the impugned order. The Court concurs with above view of the ITAT that this issue is also a debatable one. No substantial question of law arises for consideration.
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2019 (8) TMI 468
Revision u/s 264 - reasons for non appearance before the Assessing Officer - assessee pointed out that earlier notices were issued at her Malad address which she had changed nearly three years earlier to the knowledge of the Department - Commissioner, by the impugned order, heard Revision Petition only on the ground that the assessee was granted more than sufficient opportunities despite which she failed to appear before the Assessing Officer in response to several notices - HELD THAT:- Having perused the documents on record, in view of the confusion about services of earlier set of notices on the petitioner's correct address and the reasons cited by her in not being able to respond to the later notices which were duly served on her on account of her husband's ill health, we would request the Commissioner to examine her Revision Petition on merits. It is true that the petitioner not having participated before the Assessing Officer, necessary material in support of her contentions, could not be verified. Nevertheless, it would not be difficult for the Commissioner to do so while re-examining her Revision Petition. He could either call for a remand report and decide this issue himself or remand the proceedings before the Assessing Officer for fresh assessment. The petitioner's representation that she had never purchased two properties as suggested by the Assessing Officer needs further examination. Her statement that she had sold one property and purchased another, both transactions being jointly done by her and her husband having equal shares, also requires further examination. The impugned order dated 12.3.2019 passed by the Commissioner is set aside. The Commissioner is requested to examine the Revision Petition on merits and disposed of the same in accordance with law.
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2019 (8) TMI 467
Addition on account of suppression of profit - AO made additions inter alia on the ground of lower GP rate in the present year - CIT(A) granted partial relief being calling for remand report - ITAT deleted the addition - HELD THAT:- Tribunal after detail consideration came to the conclusion that the assessee's books were not rejected. Merely because, in the present year, the assessee had reflected lower margin, would not be a ground for making additions. Most significantly, the assessee had explained the reason for sale of products to its sister concern at a lower rate than that of the assessee had supplied to the other purchasers by pointing out that the price quoted to the sister concern was minus sales tax component since the product was meant for export. The entire issue is based on appreciation of evidence on record. No question of law arises. The Appeal is dismissed.
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2019 (8) TMI 466
Approval u/s.80G - charitable activity u/s 2(15) - registration u/s 80G(5) was granted right from the year 1993 to the year 31st March 2006 on the same kind of activities - rule of consistency - HELD THAT:- The appellate tribunal committed no error not to speak of any error of law in passing the impugned order. The issue is now squarely covered by a decision of the Supreme Court in the case of CIT Vs. Lok Sewa Sansthan Samiti Sonebhadra [ 2018 (8) TMI 1814 - SUPREME COURT OF INDIA] . It is not in dispute that the respondent assessee stands registered as a Charitable Institution under Section 12A. In such circumstances, as a natural corollary, the application under Section 80G(5) would also be liable to be allowed.
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2019 (8) TMI 465
TDS u/s 195 - addition u/s.40(a)(i) - commission payable to the foreign agent - no certificate for non holding of tax u/s.195(2) - HELD THAT:- The questions of law as proposed by the revenue has no longer integreta in view of the decision of this Court in the case MGM EXPORTS [ 2018 (5) TMI 1240 - GUJARAT HIGH COURT]. The ratio of the decision of this Court, which has been applied by the Tribunal is that a person paying interest or any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the Act. Having regard to the findings recorded by the tribunal relying on the decision of this Court referred to above, we are of the view that no error much less an error of law could be said to have been committed by the Tribunal in passing the impugned order warranting any interference in the present appeal. There is no substantial question of law in the present appeal. This Tax Appeal, therefore, fails and is hereby dismissed.
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2019 (8) TMI 464
Maintainability of appeal - Bogus expenditure u/s 69C - HELD THAT:- In view of M/S. SUNGARD SOLUTIONS (I) PVT LTD [ 2019 (3) TMI 676 - BOMBAY HIGH COURT] we are of the view that this appeal is not maintainable before this Court. The Revenue should challenge the order passed by the Income Tax Appellate Tribunal, Mumbai Bench before the High Court of Bombay.
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2019 (8) TMI 463
Carry forward of unabsorbed depreciation beyond the period of eight assessment years - HELD THAT:- The questions of law as proposed by the Revenue are no longer res integra in view of the decision of this Court in the case of General Motors India Pvt. Ltd. vs. Dy CIT [ 2012 (8) TMI 714 - GUJARAT HIGH COURT] , held that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. The decision in General Motors India Pvt. Ltd. (supra), later came to be followed by this Court in the case of Pr. CIT v. Panchmahal Steel Ltd. [ 2018 (9) TMI 1815 - GUJARAT HIGH COURT] . The SLP preferred by the Revenue before the Supreme Court [ 2019 (4) TMI 225 - SC ORDER] against the order passed in Panchmahal Steel Ltd (supra) has been dismissed
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2019 (8) TMI 462
Assessment u/s 153C - maintainability of the petitions - whether Section 153C of the Act as amended with effect from 01.06.2015 would be applicable to the case where search is initiated prior to that date? - Whether the notice u/s.153C of the Act was barred by limitation? - relevant Assessment Years contemplated u/s. 153A of the Act. HELD THAT:- The coordinate bench took the view that the writ-applications were maintainable. With regard to the second question, the Court took the view that the Legislature has specifically made the amended provisions of Section 153C of the Act applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C of the Act by virtue of such amendment. So far as the third question is concerned with regard to the limitation, the Court took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground Notices under section 153C of the Act which have been issued for assessment years beyond the six assessment years referred to herein above, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated under section 153A - See ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3 (2) AHMEDABAD [ 2019 (6) TMI 746 - GUJARAT HIGH COURT] -
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2019 (8) TMI 461
Assessment u/s 153C - maintainability of the petitions - whether Section 153C of the Act as amended with effect from 01.06.2015 would be applicable to the case where search is initiated prior to that date? - Whether the notice u/s.153C of the Act was barred by limitation? - relevant Assessment Years contemplated u/s. 153A of the Act. HELD THAT:- The coordinate bench took the view that the writ-applications were maintainable. With regard to the second question, the Court took the view that the Legislature has specifically made the amended provisions of Section 153C of the Act applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C of the Act by virtue of such amendment. So far as the third question is concerned with regard to the limitation, the Court took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground Notices under section 153C of the Act which have been issued for assessment years beyond the six assessment years referred to herein above, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated under section 153A -See ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3 (2) AHMEDABAD [ 2019 (6) TMI 746 - GUJARAT HIGH COURT]
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2019 (8) TMI 460
Reopening of assessment u/s 147 - Addition u/s 68 - return processed u/s 143(1) - HELD THAT:- During the course of assessment of AY 2013-2014, the AO noticed that the assessee had received loan of ₹ 10.27 crores (rounded off) from various firms and companies in AY 2012-13. Notices u/s 133(6) were issued to such firms also, which were returned back or were not responded to. The assessee also did not submit his reply in connection with the said loans of ₹ 10.27 crores. AO had verified the return of the income of the assessee for the said Assessment Year 2012-2013 and found that the assessee had disclosed having received unsecured loans of ₹ 10.27 crores. According to the AO, this would show that the assessee had received unexplained cash credit of ₹ 10.27 crores in terms of section 68. He, therefore, had reason to believe that the income chargeable to tax had escaped assessment. We do not find that the reasons recorded by the AO are such that it can be stated that the reasons lacked validity. The learned Counsel for the petitioner however submitted that the petitioner had made full disclosures about such unsecured loans and in any case, the assessment for the Assessment Year 2013-2014 is not yet final, the assessee had filed appeal which is pending. Neither of these two grounds permit us to quash the impugned notice of reassessment. Mere disclosure of receipt of unsecured loans would not be sufficient to avoid reassessment in case where the return was accepted without scrutiny . Further, the Assessing Officer has only referred to the assessment of the subsequent Assessment Year to demonstrate the nature of unsecured loans received by the assessee. There is no provision which would require him to await finality of such assessment before issuing the notice of reassessment. - Decided against assessee.
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2019 (8) TMI 459
Revision u/s 263 - order under Section 143(3) of the Act which was found to be erroneous and prejudicial to the interest of the Revenue - HELD THAT:- If the object of the notice was one and the matter was treated for a different purpose in the ultimate order, that may not be the appropriate exercise of the jurisdiction.In the light of a possible view taken on the facts as they presented themselves in such regard, the order of the tribunal in respect of the first of the four heads does not call for any interference. The tribunal found that the Commissioner had not even indicated in the showcause notice that adequate enquiries were not carried out. The tribunal found that the assessing officer had conducted an enquiry regarding the addition of fixed assets. The tribunal referred to the notice issued under Section 142(1) of the Act and the reply of the assessee. The tribunal reasoned that the order passed by the assessing officer in such circumstances could neither be held to be erroneous nor prejudicial to the interest of the Revenue. In such regard, the tribunal referred to a judgment of the Allahabad High Court where it was observed that the Commissioner could exercise his jurisdiction under Section 263 of the Act only in cases where no enquiry is made by the assessing officer. Disallowance u/s 14A read with Rule 8D (2) (ii) - Tribunal found that the assessing officer had netted off the interest paid with the interest income for working out the disallowance under Rule 8D. According to the tribunal, the assessing officer had applied his mind to the issue and it was not something that escaped the attention of the assessing officer for the Commissioner to assume jurisdiction under Section 263 of the Act on the ground that no enquiry in such regard had been conducted by the assessee. Trade discount - the tribunal found that the Commissioner had issued the notice for addition of trade discount on the ground that the assessee s claim for trade discount was not in order. The tribunal also found that details of the trade discount had been furnished by the assessee to the assessing officer at the time of assessment under Section 143(3) of the Act and the details of such discount had been included in the paper-book filed before the tribunal - the tribunal found that the Commissioner had changed his stand as indicated in the notice and at the time of passing the order under Section 263 of the Act. For the same reasons, as in respect of the first head pertaining to fixed assets, the tribunal found that the Commissioner had acted without basis. Depreciation claim - tribunal found that the Commissioner had raised the issue in the notice under Section 263 of the Act for excess depreciation but concluded in his order that proper enquiries had not been made by the assessing officer. Again, the tribunal found that there was a change in stand with regard to the notice and in the revision order, which was impermissible. In matters of the present kind where there is a specialized tribunal in place for dealing with matters pertaining to a particular subject, the scope of interference is limited in the present jurisdiction. Once it is seen that a plausible or reasonable view has been taken by the tribunal upon a fair discussion of the matter, this Court in exercise of the authority available in this jurisdiction would not supplant its view in place of the tribunal s unless the error is apparent and palpable. The tribunal has given adequate reasons, and relied on precedents, as to why the manner in which the jurisdiction exercised by the Commissioner under Section 263 of the Act was found to be erroneous. There does not appear to be any legal error committed by the tribunal in either taking up the appeal or in deciding the same, particularly since cogent grounds have been indicated for interfering with the order of the Commissioner passed under Section 263 of the Act.
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2019 (8) TMI 458
Scope and applicability of Section 64(1)(iii) w.e.f. 1.4.1976 - whether cardinal principle of tax laws that the law to be applied is that which is in force at the commencement of the assessment year is correct for new liability - from the date of amendment/insertion OR from date of accrual - from the date mention of that Financial year OR Assessment year - income of individual to include income of spouse, minor child, etc. - HELD THAT:- Reading the judgment of the Apex Court in the case of Kesoram Industries and Cotton Mills Ltd. [ 1965 (11) TMI 41 - SUPREME COURT] in case of Karimtharuvi Tea Estate Ltd [ 1965 (12) TMI 35 - SUPREME COURT] this Court would observe that the argument advanced by Counsel for the assessee (Amicus Curriae) as well as the Department can be made only in respect of a rate prescribed under a Finance Act or an Act providing a surcharge if the same is brought into force on the lst of April of the assessment year in which assessment for the previous year is being done as the same would only provide for ascertaining the rate, for existing liability under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1)(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual if the same was existing at the time of accrual and not at the time of assessment. The observations of the Apex Court in paragraph 33 of the judgment in the case of Keshoram Industries and Cotton Mills (supra), clarifies this position. In view of the judgments of the Apex Court in the case of Keshoram Industries (supra) as well as Karimtharuvi Tea Estate Ltd (supra) this Court would have no hesitation in holding that for deciding the liability of a particular provision of the Income Tax Act, the date of accrual of income would be relevant. If the provision comes into force in a particular financial year, it would apply to the assessment for that year but cannot be made applicable in respect of assessment for a previous year. The Amending Act introduced a new Section 64(1) (iii) in the Income Tax Act with effect from 1.4.1976. The tax liability under the said provision could therefore be charged on the assessee, in the assessment which was to be made for that accounting year i.e. 1976-77, which would be done in the assessment year 1977-78. The Amending Act introducing a new tax liability which came into force with effect from 1.4.1976 could not be given a retrospectivity and be made applicable to the previous accounting year i.e. 1975-76 corresponding to the assessment year i.e. 1976-77. In view of the foregoing discussions and conclusions arrived at by us, that the judgment rendered in the case of Badri Prasad [ 1990 (2) TMI 29 - PATNA HIGH COURT] does not lay down the correct law.
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2019 (8) TMI 457
Rejection of modification of order granting conditional stay u/s 254 - assessee claims to have paid the entire demand of tax, the interest amount still remains unpaid for which request of stay was made - HELD THAT:- The powers, which have been conferred on the Tribunal u/s 254 should be interpreted in the widest possible amplitude and it has to be held that by necessary implication, all powers and duties incidental and necessary to make the exercise of those powers fully effective, are conferred on the Tribunal. Therefore, we do not agree with the finding of the Tribunal that it has no jurisdiction to consider the relief sought for by the assessee. As of now, the entire demand of tax namely ₹ 22,305.89 lakhs for all the seven assessment years has been paid. It is true that the demand for interest and the demand for payment of penalty cannot be placed on the same pedestal, as, in several Statutes, payment of interest would be automatic. However, considering the fact that the entire demand of tax has been paid by the assessee post November 2018, we are of the considered view that the balance of demand should remain stayed till the appeals are heard and disposed of by the Tribunal. Considering the fact that the demand of tax and interest is substantial and the fact that the assessee complied with the direction issued by the Tribunal, we are of the view that the balance amount as demanded for the seven assessment years shall remain stayed. For the above reasons, we are also of the view that the common order passed by the Tribunal calls for interference. In the result, the above tax case appeals are allowed, the common order passed by the Tribunal is set aside and there will be an order of stay of the remaining amount as demanded from the assessee in respect of all the seven assessment years. The substantial questions of law are answered in favour of the assessee
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2019 (8) TMI 456
Exemption u/s 11 - corpus donations whether regarded as income under Section 2(24)(iia) ? - HELD THAT:- Substantial question of law which is sought to be raised by revenue would not arise for consideration, as it is a question of fact which has been resolved by First Appellate Authority as well as Tribunal in favour of assessee, by arriving at a conclusion that voluntary contribution received for a specific purpose cannot be regarded as income under Section 2(24)(iia) since they are capital receipt and tied up grants for specific purpose. Tribunal noticed that assessee has considered the said voluntary contribution as a loan and had refunded the same to the donors though would not have any relevancy to the facts on hand, since it is held that this is a capital receipt and cannot be regarded as income under Section 2(24)(iia) of the Act and it would be immaterial as to whether same amount was converted by the assessee as loan and refunded to the donors. Tribunal has held, and rightly so, that said amount cannot be subjected to tax on the ground that assessee was not granted registration under Section 12-AA of the Act, inasmuch as, assessee did not claim eligible for exemption under Section 11 of the I.T. Act, but on the other hand, claim of the assessee was to the affect that it was a voluntary contribution and not liable to tax and it is not an income.
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2019 (8) TMI 455
Cessation of liability u/s 41(1) - conversion of the loan as well as the unpaid interest into share capital - HELD THAT:- When there was no writing off of liabilities and only the sub-head, under which, the liability was shown in the account books of the assessee was changed, there could be no cessation of liability. As pointed out earlier, remission is a positive conduct on the part of the creditor and cessation may accrue either by operation of law and it may also accrue by way of a judicial pronouncement, absolving the assessee from the liability or if there is a contract between the parties whereby the liability gets extinguished or it may come to an end by discharge of the debt. However, some benefit accrued to the assessee by virtue of remission or cessation of liability, as the case may be. When the assessee company was liable to pay and it continued to remain liable even after change of entries in the books of account, no benefit would accrue to the assessee company merely on account of change of nomenclature and consequently the question of treating the same as profit and gain would not arise. The decision in Auto Kashyap India (P) Ltd [ 2010 (4) TMI 53 - DELHI HIGH COURT] is applicable in full force to the assessee's case. As decided in M/S INDO WIDECOM INTERNATIONAL LTD. [ 2017 (12) TMI 678 - ALLAHABAD HIGH COURT] the fact that the assessee adjusted subsequent sales to the holding company with share application money then held that Section 41 would not be applicable. By virtue of the Government Order in G.O.No.18 dated 07.03.2001 where the Government converted the existing Government loans, advances and interest outstanding into equity share capital, the assessee company had discharged its interest liability in the sense that instead of making payment in cash, it issued share capital to Government. Consequently Section 41(1) not stand attracted to the case of the assessee. Therefore, the finding rendered by the Tribunal is perfectly valid. Taxability of conversion of the loan and unpaid interest into share capital u/s 28(i) - whether the Revenue could be permitted to raise alternate submission at this juncture, for the first time, without even raising a supplementary ground in this appeal? - HELD THAT:- The decision in CIT VERSUS JINDAL EQUIPMENTS LEASING AND CONSULTANCY SERVICES LTD. [ 2009 (12) TMI 364 - DELHI HIGH COURT] will, in no manner, render assistance to the Revenue's case. They would be entitled to raise an alternate plea when Section 28(iv) stands attracted. Such a belated plea without amendment of the ground and raising the same for the first time before this Court during the course of argument cannot be permitted. Therefore, we reject the alternate submission made by the learned Senior Standing Counsel for the Revenue. - Appeal filed by the Revenue is dismissed
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2019 (8) TMI 454
Condonation of delay - delay of 419 days - HELD THAT:- Wife of Sri P.B. Srinivas, who is the Managing Partner of the firm is suffered with cancer, not only that another partner Smt. P. Satya Shanti, who is the sister of Sri P.B. Srinivas was also found suffering from breast cancer. She was already a heart patient. As her condition was serious, taken to Apollo hospitals in Ahmedabad and Sri P.B. Srinivas being the only brother, had to attend her treatment. Ultimately she died on 04/06/2017. Under these facts and circumstances of the case, the assessee has not drawn attention on the order passed by the ld. CIT(A). When the Income-tax Department pursued the matter in respect of collection of tax, it came to the notice of the assessee and immediately filed appeal against the order of the ld. CIT(A). By considering the affidavit filed by the assessee and also the details explained by the assessee, we find that there is a sufficient cause for the assessee in non-filing the appeal in time. In our opinion, it is a fit case to condone the delay. Admission of additional ground - penalty u/s 271(1)(c) levied - HELD THAT:- We find that the issue raised by the assessee is a legal issue and all the facts are available on record. In this context, the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT [ 1996 (12) TMI 7 - SUPREME COURT] has considered the issue and held that where the tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee‟. From the above, it is very clear that there is no fresh investigation on facts is required, the additional ground raised by the assessee has to be adjudicated, hence, the same has to be admitted by following the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., (supra), the additional ground raised by the assessee is admitted. Penalty u/s 271(1)(c) - non-striking of the irrelevant portion of the notice issued u/sec. 274 - whether the notice issued by AO is valid or not? - HELD THAT:- The decision of Hon'ble High Court of Telangana A.P. in the case of Smt. Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] has considered the very same issue and held that non-striking of the irrelevant portion of the notice issued u/sec. 274 is invalid. The very same judgment has been followed by the coordinate bench of this tribunal in the case of Konchada Sreeram [ 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM] . Therefore, respectfully following above referred to judicial precedents, we hold that the notice issued under section 274 read with section 271, dated 30/03/2014 is invalid and, therefore penalty order passed by the Assessing Officer, dated 26/09/2014 is hereby cancelled.
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2019 (8) TMI 453
Penalty u/sec. 271B - whether 271B levied by the Assessing Officer is correct or not ? - assessee has received advance on account of selling of immovable property as capital gains or business transaction - HELD THAT:- It is a fact that the assessee had entered into only a single transaction. It is also a fact that she has bonafide belief that the transaction entered into by her leads to capital gains and not business transaction. It is also a fact that during the year under consideration, the assessee entered into a single transaction though the amounts received by her attracts the provisions of section 44AB. Under these facts and circumstances of the case, we are of the opinion that the explanation given by the assessee is bonafide and also justified, no penalty can be levied u/sec. 271B of the Act. In a similar circumstances, the coordinate bench of the tribunal in the case of K.V.V. Prasad [ 2019 (6) TMI 1095 - ITAT VISAKHAPATNAM] who is also entered into agreement along with the assessee, held that no penalty can be levied u/sec. 271B. - Decided in favour of assessee.
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2019 (8) TMI 452
Denial of deduction u/s 80P(2) - allegation that assessee was engaged in transacting in banking business and thus it is a primary cooperative bank and does not form the second category of co-operative credit societies - HELD THAT:- Respectfully following the decisions of the Co-ordinate Bench in the assessee s own case for Assessment Year 2012-13 [ 2018 (10) TMI 1028 - ITAT BANGALORE] restore the matter to the file of the AO for re-examination / re-adjudication of the assessee s claim for deduction under section 80P(2), for the 4 Assessment Years involved, i.e., Assessment Years 2011-12, 2013-14, 2015-16 and 2016-17; in the light of the directions / observations issued by the earlier Co-ordinate Bench in the case of Udaya Souharda Credit Co-operative Society Ltd., Vs. ITO [ 2018 (8) TMI 1063 - ITAT BANGALORE] as to whether or not the assessee is entitled to deduction under section 80P(2). It is accordingly ordered. Assessee s appeals allowed for statistical purposes.
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2019 (8) TMI 451
Reopening of assessment - HELD THAT:- Original assessment order is totally silent whether any inquiry was conducted by the AO or not. The assessee failed to place on record questionnaire if any issued u/s 142(1) whereby it was brought to the notice of the AO that it has ceased to carry out business of banking. Assessee, though pointed out that specific questionnaire may not have been asked, but this fact was in the knowledge of the AO, because he has noticed that the bank is under liquidation. For this purpose, she brought to our notice the assessment order dated 12.9.2011. However, no details have been placed before us pointing out the fact that the AO has called for specific details and applied his mind. Therefore, the allegation against the AO that he has reopened the assessment on the basis of change of opinion is not sustainable. Revenue authorites have considered this aspect elaborately. We do not find any merit in this ground of appeal. Exemption u/s 80P(2)(a)(i) - HELD THAT:- No doubt the status of the assessee as a cooperative credit society is intact. It has been prohibited to carry out the banking business. In such situation, inherently, it is entitled for exemption u/s 80P(2)(a)(i) being a cooperative credit society. But such exemption will be only on the activities confined to a cooperative credit society viz. if an assessee has earned interest income from its members, it may qualify for grant of exemption u/s 80P(2)(a)(i). If it has earned any other income from its activities as a cooperative society, for which it existed, then the income on such activity would also qualify. In the present years, the assessee has only interest income from the deposits made with nationalized bank. Such interest income does not qualify for grant of exemption u/s 80P(2)(a)(i) as held by the Hon ble jurisdictional High Court in the case of SBI Employees Co-op. Credit Supply Society Vs. CIT, [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] that it is the only interest derived from the credit provided to its members, which is deduction under section 80P(2)(a)(i), and the interest derived by depositing surplus with nationalized banks not being attributable to the business carrying on by the assessee, could not be deducted under section(2)(a). In view of the decisions of Hon ble jurisdictional High Court, we do not find any merit in this ground of appeal, but we accept alternative contention that only net interest income be excluded from the computation of 80P(2)(a)(i). Whether the assessee is entitled for carry forward of unabsorbed loss - With regard to this aspect, we find that the assessee has already discontinued its banking business in which it has suffered loss. Therefore, it is not entitled for carry forward of such business loss. The authorities have rightly rejected its claim. Income from profit on sale of locker and vault will not qualify for exemption u/s 80P(2)(a)(i) - HELD THAT:- Even if this profit on sale of locker and vault is to be treated as business income under section 50 of the Act, then also nothing would change. It will not qualify for exemption under section 80P(2)(a)(i). It is to be assessed as a separate income. The assessee failed to demonstrate that it was carrying on an organized activity in the nature of business, and therefore, the Revenue authorities have rightly treated the income from other activities as income from other sources. In view of the above, we do not find any error in this order on this issue. It is upheld.
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2019 (8) TMI 450
Addition u/s 68 - LTCG on sale of penny stock - unexplained cash credit - bogus LTCG - HELD THAT:- Shares of M/s. Esteem Bio Organic Food Processing Ltd were suspended from trading in the stock exchange but that was from 29.06.2015 which is date of the order of the SEBI. The shares of two companies were purchased by the assessee in the month of February 2013 and November, 2012 which were sold in the month of February/ March 2014 and these transactions took place much before the report of the Investigation Wing and also before the order of the SEBI. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore the judicial decisions relied upon by the DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand and hence the judicial decisions relied upon by both the sides, though perused, but not considered on the facts of the case in hand. We accordingly direct the Assessing Officer to accept the long term capital gains declared as such. As mentioned elsewhere the facts of all the appellants are identical, the companies whose shares have been purchased / sold giving rise to long term capital gain are same, though the quantum may differ. For our detailed discussion here in above, the appeals of all the appellants are allowed with the direction to accept the long term capital gain declared as such. Since we have accepted the long term capital gains we do not find any merit in the additions on account of alleged payment of commission to the brokers and, therefore, additions made on this account is also directed to be deleted.
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2019 (8) TMI 449
Levy of penalty u/s 271(1)(c) - assessment completed under normal provisions of the Act was subject to levy of tax on book profit u/s 115JB - HELD THAT:- There is also no dispute that the penalty proceedings have been initiated to levy penalty on the tax made under normal provisions of the Act. The dispute is now well settled in favour of the assessee and against the revenue by the decision of the Hon'ble High Court of Delhi in the case of Nalwa Sons Investment Ltd. [ 2010 (8) TMI 40 - DELHI HIGH COURT] which has been accepted by the CBDT vide its Circular No. 25/2015. In the light of Circular of the Board and the decision in the case of Nalwa Sons Investment Ltd [ 2010 (8) TMI 40 - DELHI HIGH COURT] we do not find any merit in the levy of penalty. We, accordingly, direct the AO to delete the penalty. The ground raised by the assessee is allowed.
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2019 (8) TMI 448
TP Adjustment - Royalty payment to its Associated Enterprises (AEs) - HELD THAT:- As admitted position that the assessee paid Royalty to its AEs as per the rates approved by the RBI. The TPO determined Nil ALP simply on the ground that the AEs to whom the assessee paid Royalty had discontinued production of such products and the assessee was making exports to them also. Such reasons are not germane in the determination of the ALP. TPO is required to determine the ALP of an international transaction under one of the methods mandated under rule 10B of the Income-tax Rules, 1962. Nothing of the sort has been done in the instant case. TPO got influenced with extraneous reasons, which have no bearing on the determination of the ALP of an international transaction. It is further observed that similar issue of payment of royalty came up for consideration before the Tribunal in assessee s own case [ 2019 (8) TMI 369 - ITAT PUNE] for the earlier assessment years in which deletion of transfer pricing addition on payment of royalty by FAA has been upheld. Considering that the payment of Royalty to the AEs was as per RBI norms, we are satisfied that the view taken by the ld. CIT(A) is unassailable. This ground, therefore, fails. TP addition in the international transaction of 'Export of manufactured finished goods - HELD THAT:- ALP of the international transaction of Export of manufactured finished goods is required to be separately done. We have held above that the CUP is not the most appropriate method in the given circumstances. In such a condition, there is a need for resorting to another suitable method for determining the ALP of international transaction of Export of manufactured finished goods. We, therefore, set aside the impugned order and remit the matter to the file of the AO/TPO for a fresh determination of ALP of the international transaction of Export of manufactured finished goods by the assessee. It is, however, made clear that the transfer pricing adjustment, if any, resulting from such fresh determination of the ALP should be restricted only to the value of international transactions of ₹ 3.09 crore. The other part of the international transaction of Export of manufactured finished goods with the value of ₹ 47.86 crore, which has been accepted by the TPO at ALP, cannot be now interfered with. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh proceedings. TP addition in respect of international transaction of Receipt of indenting commission - HELD THAT:- As the transaction is that of earning commission, ideally, the benchmarking should also have been done with reference to an uncontrolled transaction of earning commission only. Notwithstanding the fact that the TPO was required to take the comparable uncontrolled transaction as that of rendering of marketing services alone, he started with the entity level figures of the assessee which also include sale of self goods ostensibly involving altogether different functions, assets and risks vis- -vis earning commission on sale for AEs. Thereafter again, he went off the mark by excluding the amount of raw material costs etc. and depreciation from the base of total costs by overlooking the fact that the figure of profit taken up by him also included profit from sale of manufactured goods. DR was fair enough to accept that the amount of depreciation ought to have been included. Even if we presume the initial step of adoption of the entity level profit of the assessee, including that from sale of self goods as correct, with which we do not otherwise agree, then also the total costs contributing to the manufacturing profit should have been considered, which obviously include raw material cost and depreciation, as has been held in the first appeal. CIT(A) has found the ALP of commission income at ₹ 13.79 crore as against the transacted value of commission income at ₹ 13.38 core, which is within plus minus 5% range, not calling for any transfer pricing addition. We, therefore, accord our imprimatur to the view taken by the ld. CIT(A) on this score. This ground is not allowed. Disallowance u/s 35DD - 1/5th of the fees paid to Registrar of Companies for increasing the authorized capital on amalgamation - HELD THAT:- Both the sides are in agreement that the facts and circumstances of the instant ground are mutatis mutandis similar to those of the preceding years, in which similar ground has been allowed in favour of the assessee. Following the precedents, we allow this ground of appeal. Disallowance being, 40% of expenses on premises considering the same as capital in nature - HELD THAT:- Both the sides agree that similar issue has been decided by the Tribunal against the assessee in its order for the A.Y. 2004-05. In the absence of the ld. AR pointing out any difference in the facts or law on this issue for the instant and the preceding year, following the view taken for the A.Y. 2004-05 [ 2019 (8) TMI 369 - ITAT PUNE] we uphold the capitalization of expenses in relation to the premises @ 40%. At the same time, it is directed that the assessee be allowed depreciation on such capitalized amount. Disallowance of Miscellaneous expenses - HELD THAT:- Similar issue came up for consideration before the Tribunal for earlier years as well. After allowing full deduction towards software expenses and fees for handling share record and making full disallowance for warranty expenses, Gifts and Donation, the Tribunal has restricted the addition to 15% of the balance expenses. Following the same view, we set aside the impugned order on this score and direct the AO to compute the amount disallowable out of Miscellaneous expenses in accordance with the directions given for the immediately two preceding years on this score. Addition on account of commission - HELD THAT:- Here again we find it is an admitted position that similar issue has been determined by the Tribunal in favour of the assessee in its orders for the A.Ys. 2002-03 to 2004-05. Following the same, we countenance the impugned order on this score. This ground is not allowed. Disallowance of payment of VRS as not eligible for deduction u/s 35DDA - HELD THAT:- Similar issue came up for consideration before the Tribunal in assessee s own case for earlier years as well. The Tribunal has held the assessee to be entitled to deduction u/s.35DDA on the basis of incurring of liability. A further direction has been given to ensure that the assessee does not get deduction on actual payment basis.The impugned order is set aside to this extent and the matter is remitted to the AO for allowing deduction only towards incurring of liability, i.e. on accrual of liability towards VRS u/s.35DDA and that no amount should be allowed as deduction on payment basis. Deduction u/s.35DD of amalgamation expenses - stamp duty for transfer of immovable assets - HELD THAT:- Both the sides are consensus ad idem that similar issue has been determined by the Tribunal in favour of the assessee in earlier years. Following the precedents, we dismiss this ground of appeal by the Revenue Deduction towards provision for warranty - HELD THAT:- The Tribunal has discussed this aspect in para no. 15 onwards of its order for the A.Y. 2003-04 and restored the matter to the file of the AO holding, inter alia, that the provision for warranty should be allowed at 0.4% of net sales and further no deduction should be allowed for actual expenses. As the facts are similar, we direct the AO to follow the same course of directions to the extent applicable for the year under consideration. Education cess on income-tax paid for the year - Addition u/s 40(a)(ii) - HELD THAT:- It is seen that relying on Circular F. No. 91/58/66-ITJ(19) dt. 18th May, 1967, the Hon ble Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] has held that Education cess is not disallowable u/s 40(a)(ii). Depreciation on the amount of capital expenditure - HELD THAT:- For the A.Y. 2004-05 [ 2019 (8) TMI 369 - ITAT PUNE] Tribunal noticed that the assessee purchased a property during the year and carried out suitable repairs/renovation to make it fit for use. The decision of the ld. CIT(A) capitalizing 40% of the expenditure as against 80% done by the AO, was approved by the Tribunal. Once a particular amount has been held to be capital expenditure on a building purchased by the assessee, the same has to be subjected to depreciation. As the Tribunal has approved the capitalizing of certain amount to Building account, we, therefore, direct the AO to allow depreciation on such amount as per law.
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2019 (8) TMI 447
Disallowance of depreciation - revenue doubts existence of plant and machinery - no agreement place that plant and machinery given on lease by assessee in course of its business - whether claim of depreciation against the assets was owned by assessee and/or it was put to use for purposes of business? - HELD THAT:- In facts of present case, authorities below rejected claim of depreciation for the reason that, there is no asset, as has been claimed by assessee, and that, no such assets has been used for purposes of business which generated any income, on which claim of depreciation could be computed. Mere existence of plant and machinery on which depreciation is claimed has been doubted, and assessee has not been able to substantiate the same by way of any agreements entered into by it, with parties to which plant and machinery has been released on hire purchase. Even in the preceding years assessee has not been able to establish existence of plant and machinery by way of corroborative evidences. Before us, Ld.AR was called to file documents in respect of existence of plant and machinery on which depreciation is claimed. No evidence to establish prima facie existence of machinery has been brought on record. Under such circumstances ratio of decisions relied upon by Ld. ar is not applicable to the facts of present case. - Decided against assessee. Addition u/s 14A in computing book profit u/s 115 JB (2) Explanation 1 clause (f) - HELD THAT:- Admittedly, there is no exempt income earned during the year by assessee. This issue therefore stands covered by the ratio laid down by Delhi Special Bench in case of ACIT vs Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] . We therefore direct AO to delete disallowance computed under section 14 A while computing book profits. Suo-moto disallowance computed by assessee u/s 14A in regular provisions - HELD THAT:- It is a legal claim of assessee that by assessee inadvertently even though no exempt income was earned during the year under consideration may be deleted by following the ratio laid down by Hon able Delhi High Court in case of CIT vs Chem Investment [ 2015 (9) TMI 238 - DELHI HIGH COURT] . As the issue is set aside to Ld.AO in respect of book profit computation, we direct Ld.AO to consider assessee s claim of disallowance under section 14A, as there is no exempt income earned by assessee. This ground raised by assessee stands allowed. Disallowance of interest u/s 36 (1) (iii) - HELD THAT:- As AR tried to make a point on disallowance by submitting that loan advanced by assessee to Vectra Advanced Engineering Pvt.Ltd was due to prior commitments, being a group concern. Further there is no dispute regarding loan having not been advanced by assessee. Revenue is aggrieved with the fact that, assessee borrowed loan at 14% and advanced to Vectra Advanced Engineering Pvt.Ltd at 9% and thereby holding loan transaction, not at market price. One has to look into the transaction in an holistic way taking into consideration Commercial expediency. It is an agreed position that assessing officer cannot dictate a businessman how to conduct its business. However it also cannot be denied that the interest at which assessee has extended borrowed funds to its group concern is much low than SBI rate. Restricting the disallowance to 2% being difference between the rate at which assessee borrowed funds and 12% being SBI rate during relevant period. Accordingly this ground raised by assessee stands partly allowed
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2019 (8) TMI 446
Deduction u/s 10B for the Pune Unit without adjusting the loss of Nashik Unit - whether the deduction under section 10B of the Act has to be allowed Unit wise or after aggregating the profit/loss of both the Units? - HELD THAT:- Facts being identical and no contrary decision on the issue having been brought to our notice by the learned Departmental Representative, respectfully following the aforesaid decision of the Co ordinate Bench in assessee s own case [ 2012 (1) TMI 372 - ITAT MUMBAI] , we direct the A.O. to allow assessee s claim of deduction u/s 10B of the Act for the Pune Unit without adjusting the loss of Nashik Unit. Accordingly, grounds are allowed.
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2019 (8) TMI 445
Determination of ALV of house property @10% of original cost of property - House property - HELD THAT:- We find that the Tribunal has considered identical issue for AY 2009-10 and after considering relevant facts and also by following the decision in the case of CIT vs. TIP TOP Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] has restored the issue to the file of the AO for Denavo adjudication in light of findings of the Hon ble Bombay High Court that the AO is not bound by Municipal reatable Value, but he can proceed to determine ALV of the house property on the basis of market rate prevailing as on the date. Adhoc disallowance of business promotion expenses - AO has disallowed business promotion expenses on the ground that a similar disallowance has been made for AY 2006-07 by considering the fact that the assessee has debited various business promotion expenses which are in personal nature like hotel expenses, entertainment expenses, gifts and restaurant bills and by no stretch of imagination it can be construed to be incurred for business purpose - HELD THAT:- Tribunal has considered identical issue and after considering relevant facts came to the conclusion that considering nature of business of the assessee expenditure incurred towards business promotion is in significant and also it is a customary that the assessee which is in the entertainment business has to incurred certain expenditure for the customers/clients to keep them in good relations - In this view of the matter and consistent with view taken by the Coordinate bench, we direct the AO to delete the additions towards business promotions expenses. Addition u/s 14A - disallowance of expenditure incurred in relation to exempt income - HELD THAT:- This year, the assessee has made out a case with necessary details that its own funds is in excess of investments in shares, therefore, no part of interest bearing funds has been used to make investments in shares consequently, no disallowance could be made in respect of interest expenditure. We direct the AO to delete additions made towards proportionate interest expenditure under Rule 8D(2)(ii) I.T. Rules 1962. In so far as disallowance of expenditure under Rule 8D(2)(iii) @ 0.5% of average value of investments, we find that the Tribunal has sustained additions made by the AO towards other expenses on the ground that no convincing arguments have been made either before lower authorities or before us. Facts remain unchanged. Assessee failed to controvert the findings of facts recorded by the Tribunal is incorrect with any evidences. We are of the considered view that there is no error in the findings of fact recorded by the CIT(A) in respect of disallowance of other expenses being 0.5% of average value of investments and hence, the same is confirmed. - Appeal filed by the assessee is partly allowed for statistical purposes.
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2019 (8) TMI 444
Validity of reopening of the assessment - original assessment u/s 143(3) - non independent application of mind by AO - Bogus purchases - CIT (A) applying 12.50% of the Purchases as alleged bogus purchase - HELD THAT:- On perusal of reasons recorded by the AO ,we find that there is no iota of observations from the AO regarding failure, on the part of assessee to fully and truly disclose all material facts necessary for assessment. On the other hand, the assessee has filed various details to prove that the information regarding purchase from certain parties was already disclosed to the AO in original assessment proceedings u/s 143 (3), where in response to query, the assesee has filed complete details about purchase. Therefore, we are of the considered view that reopening of assessment after four years from the end of relevant assessment year without any allegation in the reasons recorded or in the notice issued u/s 148, that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, is bad in law and liable to be quashed. Borrowed satisfaction by AO - The reopening of assessment cannot be held to be valid, even on this ground ,because if you go through reasons recorded by the AO, it is very clear that the AO has not applied his mind to the information received by him from the DGIT(Inv.). AO has merely issued reopening notice, on the basis of information received from the DGIT(Inv.). This is clearly breach of the settled position of law that reopening notice has to be issued by the AO on his own satisfaction and not on borrowed satisfaction. Case followed M/S. SHODIMAN INVESTMENTS PVT. LTD., [ 2018 (4) TMI 1287 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2019 (8) TMI 443
TP Adjustment - MAM - TNMM OR RPM - Royalty payment made by assessee - HELD THAT:- in the present year also the transactions undertaken by assessee are to be benchmarked under the umbrella of manufacturing activity on aggregate basis and TNMM method has to be applied and margins shown by assessee have to be compared with mean margins of finally selected concerns. The royalty payment made by assessee is also to be aggregated as part of transaction. In earlier years, the matter of selection of comparables and adoption of their mean margins was remitted back to the file of Assessing Officer. Following the same parity of reasoning, though in the present case, the TPO had selected some concerns as comparables but since it had applied RPM method to compare the margins of CBUs with margins of spare parts, we deem it fit to restore this issue back to the file of Assessing Officer/TPO who shall compare the margins shown by assessee on aggregate basis with finally selected mean margins of comparables and in case it is to be found to be within +/- 5% range, then no addition is warranted in this regard. Treatment of balance royalty - whether the same is to be allowed as revenue expenditure? - HELD THAT:- Similar issue arose before the Tribunal in assessee s own case in the hands of assessee, wherein the balance royalty was disallowed as capital expenditure. The said issue has been dealt with by Tribunal starting from assessment year 2002-03 onwards and following the same parity of reasoning, we hold that balance royalty payment is to be allowed as revenue expenditure in the hands of assessee. Disallowance of homologation expenditure - allowable revenue expnses - HELD THAT:- In case of any technical variation in any existing vehicle or any of the components that the assessee wants to introduce in the existing vehicles, it was incumbent upon the assessee to get homologation certificate before any change was so introduced. Another expenditure which was incurred was that ARAI may in random, choose any car (as produced) for conducting conformity of production. Hence, it were not only the initial stage for which specifications need to be approved from ARAI but even for the existing vehicles, random checks were made that the assessee was manufacturing the same in conformity with the procedure laid down. The expenditure thus, laid out was for the purpose of smooth running of business and the revenue expenditure merits to be allowed in the hands of assessee. The assessee had also filed breakup of homologation expenses incurred during the year under consideration and we have perused the same. Hence, there is no merit in the stand of authorities below in disallowing the same on the ground that the said expenditure may have enduring benefit to the business of assessee. The Hon'ble Supreme Court in Empire Jute Co. Ltd. Vs. CIT [ 1980 (5) TMI 1 - SUPREME COURT] had laid down that test of enduring benefit cannot be applied blindly and mechanically, without regard to particular facts and circumstances. Merely because the aforesaid expenditure results in an enduring benefit would not make such expenditure as capital in nature, as while allowing any expenditure in the hands of assessee, the intent and purpose of expenditure is to be kept in mind and whether the same is incurred for smooth running of business, then, such expenditure is revenue in nature. Accordingly, we direct the Assessing Officer to allow homologation expenses as revenue expenditure. Abnormal foreign exchange movement - TPO while computing PLI of assessee had treated the foreign exchange loss as operating in nature - HELD THAT:- We find merit in the claim of assessee in treating foreign exchange loss as non-operating in nature. There was fluctuation in the rate of Euro / INR rates when compared to the previous year and the market witnessed around 14.10% increase in Euro / INR rates. In such facts and circumstances, where the phenomenon was unique, then the same is to be excluded while computing PLI of assessee. We find that same ratio has been laid down by the Tribunal in Demag Cranes Components (India) Pvt. Ltd. Vs. DCIT [ 2017 (10) TMI 1471 - ITAT PUNE] . The year under appeal in the case of Demag Cranes Components (India) Pvt. Ltd. Vs. DCIT (supra) and the assessee is same. Following the same parity of reasoning, we direct the exclusion of foreign exchange loss while computing PLI of assessee company. Upholding the order of DRP, we dismiss the ground of appeal No.2 raised by Revenue.
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2019 (8) TMI 442
Rectification u/s 254 - addition u/s 56 - Valuation of shares - certificate of recognition granted to the assessee company on 24.10.2017 recognising the assessee company as a startup company valid up to 7 years from the date of incorporation on 09.06.2011 - HELD THAT:- As we examine the grounds raised by the assessee before the tribunal in these two years to find out whether this issue was raised by the assessee that the provisions of clause (viib) of sub section (2) of section 56 are not applicable to the assessee because I am deciding the M. Ps. and therefore, if this issue was not raised in these two appeals, the same cannot be raised in M. P. proceedings. The issues raised in these appeals as per various grounds are regarding rejection of the report of valuation, adoption of value of shares at ₹ 100/- in A. Y. 2014 15 and ₹ 714.38 in A. Y. 2015 16 and regarding the adoption of valuation method and there is no such ground raised in any year about non applicability of the provisions of clause (viib) of sub section (2) of section 56 of Income tax Act, 1961. Hence, these arguments are not relevant for the purpose of deciding these two M. Ps. because in M. P. proceedings, new issue cannot be raised. Not deciding of certain grounds - There is no merit in this claim that these grounds are not decided. The claim as per Ground No. 5 is this that the assessee can adopt any method of valuation of shares. This is admitted position of facts that the assessee adopted DCF method of valuation of shares. The assessee adopted the value of shares at ₹ 400/- per share and in support thereof, the assessee submitted a report of the valuer dated 15.11.2013. As per another report of a different valuer dated 02.02.2012, the value determined as per DCF method was ₹ 100/- per share. The AO and the tribunal did not accept the valuation report dated 15.11.2013 because this report is by the auditors of the assessee company and as per Rule 11 U (a), any Fellow member of ICAI other than the auditor can be a valuer. The earlier report dated 02.02.2012 is by an eligible Chartered Accountant and as per this report, the value determined as per DCF method was ₹ 100/- per share. Hence, it is seen that the value ultimately adopted by the AO and approved by the tribunal is under DCF method and hence, there is no change in method. Therefore, these grounds being Ground No. 5 of original grounds and Ground No. 1, 2 and 3 of additional grounds do not survive and therefore, this is not correct to say that these grounds were not decided. Method of valuation of shares - adopting the value of shares at ₹ 714.38 per share as per NAV method as against the value of premium of ₹ 1528.55 per share as per assessee s valuation report dated 02.05.2014 based on DCF method - HELD THAT:- Valuation report is prepared by M/s Amarnath Kamath Associates, Chartered Accountants. The audited accounts of the assessee company for the year ending as on 31.03.2014 dated 30.08.2014 is available on pages 3 to 37 of the paper book and both are by the same firm of Chartered Accountants and therefore, this is not a valid report in view of Rule 11 U (a) of Income Tax Rules, 1962. In this year, the tribunal approved the action of the AO of adopting NAV as against DCF method by the assessee by observing that since no valid report of a valuer is available, the AO determined FMV of share on the basis of NAV method and taxed the excess amount received by the assessee and learned CIT (A) has confirmed such addition and in view of these facts, no interference is called for in the order of CIT (A). There is no specific discussion or decision on this aspect that whether the AO can adopt NAV method when the assessee has adopted DCF method. In this year, I find force in this claim that Ground No. 3 5 of Original grounds and Grounds No. 1 to 3 of additional grounds were not decided by the tribunal in A. Y. 2015 16.
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2019 (8) TMI 441
TDS u/s 195 - compensation paid for breach of contract for supply of material to foreign buyer - disallowance u/s 40a(ia) - HELD THAT:- There is no dispute that the payment was made towards the assessee s failure to supply the export order which constitutes business transaction. As per the DTAA between India and Malaysia, as per Article vii, business profits of an enterprise of one of the contracting states should be taxable only in the contracting state, unless the enterprise carries on business in other contracting state through a permanent establishment situated theirin. There is no evidence brought on record that the sum paid to foreign buyer is income within the meaning of Article VII of DTAA to be taxable in India. The department did not establish that foreign company has a permanent establishment in India, therefore, we hold that the sum paid to the foreign buyer does not attract TDS u/s 195 and there is no case of making disallowance u/s 40(a)(ia). Accordingly, the addition made by the AO is deleted and the appeal of the assessee is allowed. TDS u/s 195 - Addition u/s 40(a)(i) - payment was made towards quality rebate on export - HELD THAT:- The assessee placed copies of invoices of export. The assessee also placed copy of letter dated 19.12.2016. addressed to SBI, Hyderabad informing them that due to some quality problems, the assessee had agreed to give discount of USD 2500 to the party. Since it is a quality rebate towards discount, the assessee argued that the same does not attract TDS. Since the assessee has established that it is a quality rebate with relevant documents which goes to reduce the sale, there is no case for deduction of tax at source. Apart from the above it is established that the payment was quality rebate on sales and business transaction. As per Article VII of DTAA between India and UK, the business profits are taxable in contracting state and in this case, the recipient is foreign company having no permanent establishment. The case law relied upon by the Ld.AR is squarely applicable in the assessee s case. Hence, we hold that there is no case for deduction of tax at source and making the addition u/s 40(a) (i). Accordingly addition made by the AO is deleted and the appeal of the assessee is allowed.
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2019 (8) TMI 440
Capital gain on land sold - absolute ownership or not - assessee purchased a property which was already given by seller to another concern on lease for 99 years and lease period lease still pending - rights acquired by the assessee must be understood to be subject to the leasehold rights - during the yeas same land was sold and assessee as well as lessee got consideration as per settlement - AO consider entire consideration taxable in hand of assessee - CIT-A deleted the addition HELD THAT:- It is not for the AO to say that de hors the leasehold rights held by M/s ESS ESS Metals and Electricals for 99 years, the assessee had to receive the entire sale consideration to the exclusion of M/s ESS ESS Metals and Electricals or that the consideration paid to M/s ESS ESS Metals and Electricals was excessive. It is open for the Revenue to verify whether the sale consideration said to have been received by M/s ESS ESS Metals and Electricals was offered to tax or not in the scrutiny of the return of income of M/s ESS ESS Metals and Electricals. It is not open for the Revenue to contend that to the exclusion of M/s ESS ESS Metals and Electricals, assessee alone must receive the entire sale consideration ignoring the leasehold rights held by M/s ESS ESS Metals and Electricals for 99 years in respect of the very same property which was the subject matter of the sale. CIT(A) had reached a right conclusion on proper appreciation of the facts available on the record and the reasoning or conclusion of the Ld. CIT(A) in the impugned order is beyond the pale of challenge by the Revenue - Decided against revenue.
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2019 (8) TMI 439
Reopening of assessment u/s 147 - Addition u/s 56(2)(viia) - investment in unquoted shares with difference of FMV and the actual consideration paid - no incriminating material was found during survey u/s 133A - HELD THAT:- The said provision of Section 56(2)(viia) of the Act were applicable from 01/06/2010. It is evident from the annual report in Form No. 20B of M/s Bharatnet Technology Limited furnished to the Registrar of the Companies, copy of which is placed at page no. 42 to 55 of the assessee s compilation that 719681 shares were transferred to the assessee on 10/05/2010. Therefore the reasons recorded on the basis of application of provisions of Section 56(2)(viia) read with Rule 11UA were not applicable to the assessee s case. In the present case nothing is brought on record that any incriminating material was found during the course of search and survey to substantiate that any payment exceeding ₹ 1/- per share was made by the assessee. Therefore the reasons recorded by the A.O. were based as suspicion only. Reassessment proceedings was initiated by the A.O. on suspicion which cannot be a ground for reopening of the assessment. See KROWN AGRO FOODS PVT. LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 5 (1) NEW DELHI [ 2015 (3) TMI 1030 - DELHI HIGH COURT] Addition by invoking the provisions of Section 56(2)(viia) - Nothing is brought on record to substantiate that the shares were transferred in the month of November 2010 on the contrary the annual return filed by the Seller of the shares M/s Bharatnet Technology Limited clearly established that the transfer of the shares took place on 10/05/2010 and even the certificate issued by the practicing company secretary also confirmed that the shares were transferred on 10/05/2010 and not in the month of November 2010 as presumed by the A.O. therefore on merits also the addition made by the A.O, on the basis of presumption and by invoking the provisions of Section 56(2)(viia) of the Act which were applicable w.e.f 01/06/2010, was not justified. In view of the aforesaid discussion, we are of the view that on merits also the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. Therefore, by considering the totality of the facts, we are of the view that the reopening made by the A.O. on the basis of suspicion was not valid and the addition made by invoking the provisions of section 56(2)(viia) which were not applicable to the facts of the assessee s case, was not justified. Accordingly the same is deleted. - Decided in favour of assessee.
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2019 (8) TMI 438
Treatment of income surrendered during the survey - deemed income u/s 69 69B - whether in the nature of Business Income or deemed income - whether eligible to set off of losses against the same - HELD THAT:- The I.T.A.T. in the case of Famina Knit Fabs [ 2019 (5) TMI 8 - ITAT CHANDIGARH] has further held that besides the nature of income, the Act also recognizes certain incomes which are deemed to be so on account of fact that any investment asset, income or expenditure incurred by the assessee is not disclosed in its books and the source of which is also not explained. These deemed incomes are subjected to tax u/ss 69, 69A, 69B, 69C 69D and the I.T.A.T. further held that such incomes are subjected to tax at a special rate as per the provisions of section 115BBE without allowing set off of expenses or any allowance against the same and w.e.f. 1.4.2017 without allowing set off of losses also against the same. The I.T.A.T. held this amendment to section 115BBE as prospective in nature and not applicable to earlier years. In the facts of the present case, it is not disputed that the surrender had been made on account of undisclosed debtors. Since the facts are identical to that in the case of Famina Knit Fabs (supra) and no distinguishing facts have been brought to our notice by the Ld.DR, the decision rendered in that case will also apply to the present case, following which we hold that the Ld.CIT(A) had rightly treated the surrendered income as in the nature of business income of the assessee and accordingly, allowed the benefit of set off of losses against the same. The order of the Ld.CIT(A) is accordingly, upheld. The ground raised by the Revenue is dismissed. Disallowance u/s 36(l)(iii) on investment made in the sister concern - HELD THAT:- We have gone through the order in the case of Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] and we find that it is now settled law that where sufficient own funds are available, the presumption is that the same were used for the purpose of making the investment calling for no disallowance of interest u/s 36(1)(iii)- CIT(A) in the present case, we find, has given factual findings of there being sufficient own interest free funds with the assessee in the form of share capital and reserves amounting to ₹ 1.49 crores against the investment of ₹ 10 lacs in relation to which disallowance of interest expenses was made. The factual findings of the CIT(A) have not been controverted by the Ld. DR before us. Therefore, in view of the settled position of law as above and the uncontroverted factual findings of the Ld.CIT(A) regarding the sufficiency of own funds available with the assessee, we find no reason to interfere in the order of the CIT(A) in deleting the disallowance of interest made u/s 36(1)(iii) - Decided against revenue.
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2019 (8) TMI 437
Reopening of assessment u/s 147 - Validity of Direction of CIT(A) u/s 150 - period of limitation - limitation of six years provided in section 149 - HELD THAT:- In the present case, the impugned order was passed on May 3, 2019. The assessment year involved is assessment year 2011-12. Thus, in accordance with the provisions of section 149(1)(b) of the Act, notice under section 148 could have issued by the end of assessment year 2018-19. This period had already elapsed when the impugned order came to be passed. Therefore, the law not permitting initiation of proceedings under section 147 when the order under appeal was passed, the direction of CIT(Appeals) is not in accordance with law. It is a nonest direction. It is well-settled that an appellate authority cannot confer jurisdiction which the Assessing Officer does not have, e. g., as in the case of an assessment being barred by limitation. See BENGAL TEA AND FABRICS LIMITED VERSUS ASSISTANT COMMISSIONER OF TAXES [ 1996 (9) TMI 110 - GAUHATI HIGH COURT] Reopening u/s 147 on direction of superior Officer - As per the provisions of section 147 it is only if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, that he may assess or reassess such income. Thus, the reason to believe escapement of income has necessarily to be that of the AO only and not of any other authority. In CIT v. SFIL Stock Broking Ltd. [ 2010 (4) TMI 102 - DELHI HIGH COURT] it has been held, inter alia, that the Assessing Officer cannot reopen a completed assessment merely because he has been directed to do so by a superior Officer. Therefore too, the direction issued by the learned CIT(A) cannot entitle the AO to initiate proceedings under section 147. Grievance of the assessee to be justified, the same is accepted. - Decided in favour of assessee.
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Benami Property
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2019 (8) TMI 414
Benami transaction - beneficial owner - alleged cash/banking transaction trail of AMPL that huge amount of cash was deposited in the bank account of the benamidar, M/s. AMPL and within no time the same got routed through bank account of DMPL to reach its final destinations - Section 2(9) of the Prohibition of Benami Property Transactions Act, 1988. HELD THAT:- The transfer of money through RTGS in the account of the appellant, who after due enquiry,returned the money next day, in our view is not a benami transaction falling within the definition as prescribed under the Act. From the above, it is clear that there was no benami transaction so far as the appellant is concerned so there is no question of the appellant becoming the beneficial owner. No material has been placed before us nor available on record proving that the appellant has entered into any benami transaction or in any way a beneficial owner. It is the limited grievance of the appellant before this Tribunal is that when the Authority has come to the findings that the Initiating Officer has not said anything substantial against the present appellant and that the appellant has nothing to do with the M/s. Apsara Merchandise Pvt. Ltd. or the amount lying in the bank account of benamidar which is not legally claimed by the appellant, the Adjudicating Authority ought to have held that the appellant is not a Beneficial Owner with regards to the amount of ₹ 28,10,625/- lying in the aforesaid account of SBI and attached by the Initiating Officer and that the appellant‟s name ought to have been removed as a Beneficial Owner - It is clear from the impugned order that the learned Adjudicating Authority, on the basis of material, facts and circumstances has held that the Initiating Officer has not said anything substantial against the appellant and also has considered the plea of the appellant that it is not claiming the amount lying in the bank account of benamidar.The most important aspect is also that the Initiating Officer has not challenged the aforesaid findings of the learned Adjudicating Authority. The appellant is not a Beneficial owner within the meaning of the definitions defined under Sections 2(12) of PBPT Act, 1988 - appeal allowed.
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Customs
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2019 (8) TMI 436
Maintainability of petition - remedy of appeal - HELD THAT:- The 3rd respondent considers and takes a decision on Ext.P7 at the earliest preferably within two weeks from the date of receipt of a copy of this judgment. In so far as the order dated 20.07.2019 is concerned, the petitioner is given liberty to avail the remedy of appeal with all of contentions available in this behalf. Petition disposed off.
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2019 (8) TMI 435
Refund claim - time limitation - applicability of amendment of 11.05.2007 prescribing time limit of six months for filling a refund claim - HELD THAT:- Mere admission of an appeal would not by itself lead to the stay of the order being appealed against before this Court. The admission of the appeal only indicates that the issue raised in the appeal requires consideration and it does not in any manner reflect finally on the merits of the order of the Tribunal. The issue raised in appeal would require consideration which would be done at the final hearing of the appeal - In the present case, no circumstances have been shown which could justify denying the benefits available to the respondents by virtue of the impugned order of the Tribunal before the impugned order of the Tribunal has been fully considered at the final hearing of the appeal and set aside. Motion dismissed.
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2019 (8) TMI 434
Reversal of Cenvat Credit under coercion and threat of arrest - even before any SCN was issued the Petitioners reversed the Cenvat credit - Whether in the facts, the grievance of the Petitioners that the recovery of the Cenvat Credit under the threat of arrest is true? HELD THAT:- The Petitioners claim, was under pressure from the officers of the Revenue, more particularly because of the threat of arrest. This we find is evident from the fact that the Petitioners had sought opinion of legal experts, whether on the facts of the case, is it possible for the Revenue to arrest them. This opinion was also furnished on 2 May 2018 to the Officers of the Revenue, this fact is recorded in the Petitioners' letter dated 7 May 2019 along with the fact of continuing pressure of the Revenue to reverse the credit. The aforesaid letter dated 7 May 2018 was not disputed by the Revenue, in spite of the serious charge of threating to arrest the Petitioners' director. - Thus, in these facts, we find that the Petitioners were coerced to reverse the Cenvat Credit under the threat of arrest. Whether such action on the part of the Revenue is at all permissible? - HELD THAT:- The contentions of the Revenue is that the Petitioners are builders and could not be coerced in reversing the Cenvat Credit on the threats of arrests. This is no explanation for the unbecoming conduct of the officers of the State who are duty bound to treat all equally. The officers' perception about, whether the Petitioners would act upon the threat or not, cannot give a licence to the Respondents to act in such illegal and high handed manner. The Supreme Court as well as our High Court has repeatedly held that rule of law has to be followed and no officers of the respondent can take law in his own hands or take extralegal steps or manoeuvre so as to collect amounts which have not yet been held by judicial and/or quasi judicial order as payable by the petitioners to the respondent. Threats of arrest - HELD THAT:- This serious allegation was not responded to by any denial on the part of the Respondents at that time. The events as well as the material placed on record by the Petitioners, after considering the affidavits filed by the Respondents, lead us to conclude that the Respondents have acted in a high handed manner and forced the Petitioners under the threat of arrest to reverse the Cenvat Credit of ₹ 11.25 crores before the show cause notice was issued or before any adjudication order thereon was passed - we direct the Respondents to allow the Petitioners to re-credit the amount of ₹ 11.25 crores in their Cenvat Credit account. - the Petitioners are prohibited from utilising the same till the adjudication of the show cause notice dated 28 September 2018 by the Commissioner, GST CX. Petition allowed.
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2019 (8) TMI 433
Valuation of imported goods - Polyester Knitted Fabrics (mixed lot) - rejection of declared value on the strength of contemporary imports - HELD THAT:- The order-in-original in the instant case was passed on the basis of assertion that they were on contemporaneous imports of ₹ 148 per Kg. The order-in-original shows that there is no mention of name of importer or number of Bills of Entry on the basis of which said observation has been made. Without any specific evidence of contemporaneous imports the assertion of contemporaneous price is baseless. The order-in-original does not disclose the documents, the data, quantity, price etc. of the contemporaneous imports. Thus, the order-in-original was without any evidence. Appeal dismissed - decided against Revenue.
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2019 (8) TMI 432
Valuation of imported goods - 100% Knitted Polyester Fabrics - rejection of declared value - enhancement of value based on NIDB data - no evidence that the transaction value was not correct - HELD THAT:- We do not find anything in the order of the Asst. Commissioner to establish that the invoice value declared by the appellant is not the correct transaction value and therefore can be rejected. Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007 states that the declared value can be rejected if the proper officer has reasonable doubt about the truth and accuracy of the declared value. Simply because the value declared by the appellant is lower than the value found in the NIDB database, the value cannot be revised by the department. Such difference in value does not constitute in itself a reasonable doubt needed to reject the transaction value under Rule 12 - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2019 (8) TMI 431
Maintainability of application - initiation of Corporate Insolvency Resolution Process - recovery of dues by way of deduction of its instalments through exercising its right to lien on the accounts of the Corporate Debtor - HELD THAT:- The plea taken by the Appellant is that they can recover the amount even during the period of Moratorium and, on the other hand, is making some sort of statement that the amounts have not been recovered during the Moratorium period, being conflicting, the stand taken by the Appellant- Canbank Factors Limited cannot be accepted. Appeal dismissed.
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Service Tax
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2019 (8) TMI 430
Demand of service tax post GST regime - change in tax regime from service tax regime to GST regime - section 174 of CGST Act - HELD THAT:- The legality of the development, was the subject matter of decision in UDAIPUR CHAMBERS OF COMMERCE AND INDUSTRY VERSUS THE UNION OF INDIA, THE SUPERINTENDENT, CENTRAL EXCISE AND OTHERS [ 2017 (10) TMI 975 - RAJASTHAN HIGH COURT] when the levy and collection of service tax on that activity was upheld - Post the introduction of the Central Goods and Service Tax Act, the Finance Act has been repealed. Nevertheless, Section 174(2)(c) prima-facie seems to preserve the levy in so far as any liability to pay tax was incurred by the individual or concern, prior to its enactment w.e.f. 1.7.2017. This Court is of the opinion that the present writ petition cannot be maintained - petition dismissed.
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2019 (8) TMI 429
CENVAT Credit - common input services used in trading activity/exempt service - periods from September 2004 to March 2011 - Rule 6(3) of the CENVAT Credit Rules - HELD THAT:- The trading activity is an exempted service to which Rule 6(3) applies. This position has not changed with the introduction of explanation (3) to Rule 6(1) - trading activity has always been an exempted service both prior to and after introduction of this explanation - the assessee is not entitled to CENVAT credit to that extent. Reversal of common credit - HELD THAT:- A plain reading of Rule 6(3)(c), shows that the restriction on utilisation of CENVAT under Rule 6(3)(c) is not confined to any form of CENVAT credit but is related to the value of output taxable services rendered by the appellant. The credit cannot be utilised in excess of 20% of the amount of service tax payable on taxable output services. Therefore, if service tax is paid utilising the CENVAT, it does not amount to paying service tax and service tax can be demanded. Credit on banking and financial services, insurance/auxiliary services and security agency services - Rule 6(5) OF CCR - HELD THAT:- On a plain reading of Rule 6(5) shows that exception has been made with respect to some services in it and if the services on which the appellant claimed credit are covered by Rule 6(5), they are entitled to full credit to that extent. Extended period of limitation - Suppression of facts or not - HELD THAT:- The allegation of suppression of facts does not stand. Considering this fact and that the assessee was not required in their ST-3 returns to declare the breakup of the CENVAT credit availed by them, there is a force in the argument of the learned counsel that extended period of limitation cannot be invoked in their case. Penalty - HELD THAT:- The appellant had a bonafide belief that they are entitled to the benefit of CENVAT credit even if it is decided against them in the current proceedings - they had a reasonable cause for their failure in over-using CENVAT credit in violation of Rule 6(3) and thereby not discharging full amount of service tax - Penalty not warranted. The demand within the normal period is only upheld - demand upheld subject to verification and requantification of the credit eligible to the appellant under Rule 6(5) - interest on the demands gets modified accordingly - appeal allowed in part - part matter on remand.
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2019 (8) TMI 428
Refund of service tax - excess payment of service tax - time limitation - section 11B of CEA - HELD THAT:- In the present case, the appellant has deposited ₹ 22,49,339/- towards service tax and ₹ 5,74,130/- towards interest liability. After appropriation of the tax liability and interest demand for the normal period, the appellant has applied for refund of a total amount of ₹ 11,84,105/-. Thus, when computed from the date of adjudication by the Additional Commissioner, who is directed to re-quantify the demand for normal period, the refund claim is filed within time. It is also to be considered that the amount deposited during pendency of the litigation is nothing but a pre-deposit. It is incumbent for the department to conduct an adjudication for quantifying the demand pursuant to the directions of the CESTAT. Thus, only after the adjudicating authority re-quantifies the amount for the normal period, the appellant would be eligible for refund. In case, there is no excess amount, the appellant would not be eligible for refund. Thus, it is only after re-quantification as per the direction of the Tribunal, the issue of refund would arise. Appeal allowed by way of remand.
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2019 (8) TMI 427
Nature of activity - service or sale - supply of Tangible Goods services or not - effective possession and control - cum-tax benefit - providing work-wear solution to the various industrial customers in terms of various agreements where there is transfer of effective control to the client - whether the transaction entered into between the appellant and the customer is transferring the right to use by the appellant or allowing the customer to use the work-wear? HELD THAT:- The agreement has the terms conditions with the customers for the lease the work-wear from the appellant and the appellant owns the lease product, will have exclusive right to wash the work-wear and also the Noticee shall have exclusive right to serve the work-wear - It is necessary to have transfer of right to use involving both transfer of possession and also effective control of the goods by the user of the goods. The transaction for allowing another person to use the goods without giving legal right of possession cannot be treated as deemed sale of the goods, and thus has to be treated as service only. It is also the contention of the Department that after introduction of the negative list based tax regime, the activity of the supply of goods without transfer of right liable to tax by virtue of Section 66E (f) of Finance Act. The similar issue come up for consideration before this Hon ble Tribunal in case of M/S. GIMMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NAGPUR (VICE-VERSA) [ 2016 (12) TMI 394 - CESTAT MUMBAI] . The issue involved in that case was regarding the renting of earth moving equipments to various Customers by the M/s Gimmco Limited and based on the clauses in the agreement, there was restriction of use by the lessee as skilled workers to operate the equipment was being provided by the lessor and maintenance and repair of the equipments were also by the lessor and it has been held that there is no service involved in this case. It is evidently clear that the some of the activities of regarding the maintenance and washing of work-wear rented to the clients, by the appellants will not mean that effect control as been retained by the appellant - in the instant case, in terms of agreement work-wear rented out always remains within the exclusive possession of their clients and nobody else can use the those workwear at the same time and hence effective control to lie with the user/ clients. The appellant, therefore, does not have control over the use of the work-wear. Thus the activity is not in the nature of service under the Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned order. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (8) TMI 426
Condonation of delay of 1005 days in filing the revision application - Section 35EE of the Central Excise Act, 1944 - HELD THAT:- There is no reason to disbelieve the statement of the Petitioner on oath that the order dated 15 March 2011 of Commissioner (Appeals), being impugned before the revisional authority, was received on 18 December 2013. This particularly in the absence of any evidence being led by the Revenue, that the order dated 15 March 2011 of the Commissioner (Appeals) was served in the manner provided in Section 37C of the Act. Therefore, the period of three months for filing of the revision in terms of Section 35EE of the Act has to be computed from the communication of the order dated 15 March 2011 to the parties which has taken place only on 18 December 2013. Thus the revision application is in time. The Petitioner's revision application restored before Respondent No.1 for the consideration on merits - Respondent No.1 was not justified in rejecting the Petitioner's application on account of delay, as, in fact, there is no delay on the part of the Petitioner in filing the revision from the order dated 15 March 2011 - petition allowed.
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2019 (8) TMI 425
Valuation of goods - Odomos Mosquito Repellant Cream supplied to Armed Forces - contention of the department is that the MRP applicable to sale of the goods in open market should be applied even in case supplies made to Armed Forces - Section 4A on Central Excise Act, 1944 - HELD THAT:- The issue decided in appellant own case M/S DABUR INDIA LTD. VERSUS C.C.E. S.T. -VAPI [2018 (5) TMI 1510 - CESTAT AHMEDABAD] where it was held that valuation should be done under Section 4 in respect of goods supplied to Armed Forces/ Para Military Forces for their use only and there is no re-sale of the goods. The impugned order is set aside appeals are allowed by way of remand to the adjudicating authority to decide a afresh in the light of the judgment in the appellants own case - Appeal allowed by way of remand.
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2019 (8) TMI 424
Area based exemption - enhancement of production capacity - excess electricity generated by them was being diverted to M/s S.G. Steel for their use in the manufacture of ingots - imposition of penalty - HELD THAT:- The only reason for imposition of penalty upon the appellant is that they were not in a position to supply adequate power to M/s S.G. Steel, who installed an additional furnace to show enhancement in their production capacity by 50% so as to earn the benefit of the Notification. Otherwise, it stands recorded in the order of Original Adjudicating Authority that the steel plant was not being directly operated/controlled by DSM Sugar and was leased out to M/s S.G. Steel, which fact is confirmatory indicator that the interest of M/s DSM Sugar in the steel plant was restricted to earning revenue through sale of excess electricity only. Merely because the appellant has not been able to provide electricity to M/s S.G. Steel so as to manufacture the ingots, will not call for imposition of any penalty upon the appellant. Penalty set aside - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 423
Clandestine manufacture and removal - mild steel ingots - allegation based on consumption of electricity - period in dispute is from 2003-04 to 2007-08 and beyond - HELD THAT:- The derivation of the average power consumption for manufacture of ingots is based on the study conducted by Indian Institute of Technology, Kanpur which may not be applicable for the disputed period in the regime of Central Excise Rules, 2002. The technical report of Dr NK Batra, which has been relied upon, may have been relevant at the point when norms for consumption could be fixed under rule 173E of the erstwhile Central Excise Rules, 1944. The power consumption of the unit appears to have been computed on the basis of certain private production slips that were seized during the search proceedings. These, as pointed out by Learned Counsel, pertains to 2001 and 2002 whereas the demand stands confirmed for the subsequent period. We are unable to fathom the acceptability of reliance on the data, such as it is, pertaining to an earlier period. There is no evidence of any payments having been received from customers of the goods that were allegedly manufactured clandestinely and as the norms applied for computation of production are not applicable to the period of dispute, the consequence arising from shortage of raw materials of various types would not unerringly lead to confirmation of the allegations proposed in the show cause notice - The finding that evasion of duty did occur based on circumstances that are not established and other supplementary evidence is not maintainable. Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 422
Wrong utilization of CENVAT Credit - credit utilized towards payment of defaulted central excise duty for the earlier months - contravention of proviso to sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004 - recovery u/r 14 of CENVAT Credit Rules, 2004 - HELD THAT:- The appellants have utilized the credit on the capital goods which was availed by them in February 2016 - Further, the Hon'ble High Court of Gujarat in the case of ADVANCE SURFACTANTS INDIA LTD VERSUS UNION OF INDIA [ 2017 (8) TMI 594 - GUJARAT HIGH COURT] has held that the said proviso to sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004 is invalid and unconstitutional. The demand raised invoking proviso to sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004 cannot sustain - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 421
Process amounting to manufacture - cutting of jumbo roll into small sizes and then packs the same as paper napkins and facial tissues in the unit containers - time limitation - HELD THAT:- The definition of manufacture contained in section 2(f) of the Central Excise Act, 1944 was amended with effect from 01 March, 2003 and under the Third Schedule to the Central Excise Act, it has been mentioned that Central Excise Tariff, Chapter Heading 4818 covers cleansing or facial tissue paper, handkerchiefs and towels of paper pulp, paper cellulose wadding or webs of cellulose fibre. The amendment in the definition of manufacture under section 2(f)(iii) of the Central Excise Act, 1944 came into effect from 01 March, 2003 - The type of activity undertaken by the respondent-assessee would amount to manufacture and Central Excise duty was required to be paid on the clearance of paper napkin, paper towel, etc. manufactured by it from Jumbo roll after packing / repacking of the same in the consumer packs. The issue before Supreme Court in COMMISSIONER OF CENTRAL EXCISE, NEW DELHI-I VERSUS S.R. TISSUES PVT. LTD. [ 2005 (8) TMI 111 - SUPREME COURT] was regarding the position existing prior to 01 March, 2003. Thus, the judgement of Supreme Court in the S R Tissues , in view of the amendment made in the definition of manufacture, which included cutting, slitting, packing, repacking of the products falling under 4818, would not be applicable after 01 March, 2003. Time Limitation - demand of Central Excise duty which was made under the extended time limit of 5 years under the proviso to section 11A(4) of the Central Excise Act, 1944 - HELD THAT:- The Department merely by stating that the respondent-assessee had mis-declared, suppressed facts and had evaded Central Excise duty, issued the show cause notice. It cannot be said that the assessee had earlier suppressed and mis-declared facts with an intent to evade payment of duty. Thus, the extended time period under section 11A(4) of the Central Excise Tariff Act, 1944 could not have been invoked. Supplies of finished goods manufactured by the appellant were made to Institutional consumers - HELD THAT:- The issue whether the goods are infact supplied to the Institutional consumers in bulk packs or in retail packs is the subject matter of verification, which can only be done by the field formation. Though the show cause notice mentions that the goods in question are liable for assessment as per the provisions of section 4A of Central Excise Act, 1944, but it does not elaborates the type of consumer packs that have been made by the respondent-assessee - This claim can only be verified by field formations for which purpose it needs to provide the necessary documents, like order of supply, invoices etc. It has also to be ascertained as to how much quantity out of the total quantity manufactured by the respondent-assessee was supplied to the Institutional consumers and how much was supplied to the normal customers. This also needs to be verified by field formations. Appeal allowed in part and part matter on remand.
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2019 (8) TMI 420
Reversal of CENVAT Credit - non-excisable/exempt goods - Zinc Dross/Cyclone/Ash - Rule 6(3) of the CCR, 2004 - HELD THAT:- Rule 6 of the CCR, 2004 is not applicable to the waste products which arises during the process of manufacture and is sold for some consideration. Further, I find that in the present case, the appellant is not the manufacturer of zinc waste/dross which comes into existence during the manufacture of Galvanized Steel Pipes/Tubes. Further, I find that the ratio in the case of APL Apollo Tubes Ltd. [ 2019 (7) TMI 733 - CESTAT CHENNAI] is squarely applicable in the present case and therefore, by following the ratio of the said decisions, I am of the considered view that the impugned order is not sustainable in law. Appeal allowed - decided in favor of appellant.
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2019 (8) TMI 419
CENVAT Credit - waste/residue - exempt goods or not - demand of an amount equivalent to 10%/6%/5% on the clearances of bagasse - HELD THAT:- The issue decided in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT] where it was held that since it is not a manufacture, Rule 6 of Cenvat Credit Rules shall have no application. Demand set aside - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 418
CENVAT credit - captive consumption - electricity used captively for manufacture of excisable goods and the excess/surplus quantity of electricity is sold to outside to power distribution companies for a consideration - Rule 6(3)(i) of the CENVAT Credit Rules, 2004 - HELD THAT:- This issue is no more res integra and has been settled in favour of the assessee by this Tribunal in the case of M/S. VENKATESHWARA POWER PROJECTS LTD., M/S. THE UGAR SUGAR WORKS LTD., M/S. EID PARRY (INDIA) LTD., M/S. SRI SRIVSGAR SUGAR AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX [ 2018 (11) TMI 913 - CESTAT BANGALORE] where it was held that the demand of 6% of the value of electricity sold to various companies is not sustainable in law. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (8) TMI 417
Enactment of Amnesty Scheme - Maharashtra Settlement of Arrears of Tax, Interest, Penalties for Late Fee Act, 2019 - input tax credit - HELD THAT:- The Petitioner's opting for Amnesty Scheme would not have any impact on the disbursement to be made by the State in terms of the assurance given to this court today that they are bound by the assurances given to this court in Mahalakshmi Cotton Ginning Pressing and Oil Industries Ltd. [ 2012 (5) TMI 152 - BOMBAY HIGH COURT ]. The apprehension of Mr.Rungta that the assurance given by the State to this court in Mahalakshmi Cotton Ginning Pressing and Oil Industries Ltd.[ 2012 (5) TMI 152 - BOMBAY HIGH COURT ] would be rendered ineffective in case the Petitioner opts for the Amnesty Scheme is not justified. Petition disposed off.
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2019 (8) TMI 416
Benefit of Composition Scheme - Civil Works Contractors - sale of immovable property in construction scheme - deemed sale or not - HELD THAT:- What needs to be emphasized is that the State and/or its agencies/instrumentalities cannot give largesse to any person according to the sweet will and whims of the officers of the State. Every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well defined policy, which shall be made known to the public by publication in the Official Gazette and other recognized modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefitted by the policy. The inmplimentation of scheme by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favoritism or nepotism shall not influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State. It is clear that the action of the authority denying the benefit of the scheme to the writ applicant in question is totally arbitory and the benefit is required to be given to the writ applicant - petition allowed.
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Indian Laws
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2019 (8) TMI 415
Repeated complaints against various Chartered Accountants - Professional misconduct falling within the meaning of Clauses (5) to (9) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 - activity which may be carried on as incidental or ancillary to attainment of the main object - composition of Board of Directors - statements verified by HA to the effect that Hasham did not have any subsidiary. HELD THAT:- The conduct of ICAI s member (a Chartered Accountant) is to be evaluated by the concerned authorities of ICAI. The object is to ensure that its members measure up to the standards as set by ICAI for continuing as its member. As stated earlier, the matter is, essentially, between ICAI and its members. This is also the rationale for not providing any appellate remedy to the complainant against the decision of the concerned authorities in terms of Section 22G of the Act. This right is only available to an aggrieved Member of ICAI - This court is also of the view that it is not apposite to supplant its views over the views of the concerned authorities (Board of Discipline or Disciplinary Committee), as the case may be. The petitioner has been pursuing complaints against various members of ICAI with relentless fervour and has filed various petitions before this Court in pursuance of its complaints. This Court is of the view that litigants, such as the petitioner, who have made litigation their business/vocation ought to be discouraged - the present petition is dismissed with costs quantified at ₹1,00,000/-. Application disposed off.
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2019 (8) TMI 413
Complaints against Chartered Accountants - HELD THAT:- The petitioner states that the object clause of the petitioner company permits the company to file complaints against random Chartered Accountants as a measure of public welfare. The Memorandum and Articles of Association are not on record. The learned counsel appearing for the petitioner undertakes to produce it on the next date of hearing - List on 01.08.2019.
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