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TMI Tax Updates - e-Newsletter
August 14, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Power of arrest - the powers of arrest u/s 69 of the CGST Act, 2017 are to be exercised with lot of care and circumspection and prosecution should normally be launched only after the adjudication is completed - notice issued to the respondents
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Validity of Section 129 of the CGST Act - restraint on encashment of the Bank Guarantee - if accepted it will defeat the interest of the respondents who ordered release of the goods by securing the probable amount which may be due after the adjudication - there is no illegality, error or impropriety in the judgment of the learned Single Judge
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Validity of summons issued under CGST Act - relief from arrest - respondent authorities are investigating the cognizable offence under the CGST Act - not inclined to grant any protection to the petitioner from his arrest
Income Tax
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TP adjustment - TPO accepted ALP based on TNMM but sought separate benchmarking of notional interest on the outstanding receivables - if the impact of extended credit period on working capital was factored in the pricing/profitability, then any credit period allowed to AE gets subsumed in TNMM and there is no tax leakage or evasive tactics adopted by the taxpayer while transacting with the AE, and there is no need for a separate benchmarking
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Stay of demand - if the assessee makes a request to grant an absolute stay, the ITAT has to apply its mind to all the possible avenues that are available for the dispensation of justice and If absolute stay is not possible, parameters of conditional stay has to be examined and an appropriate decision has to be taken in the circumstances of the case - a cryptic order passed by the ITAT without assigning valid reasons is not sustainable
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Addition u/s 68 - non consideration of evidence - it is apparent that specific issue relating to the documents furnished by the assessee has not been addressed by the Authorities albeit a specific ground raised in the appeal memo - It is well settled law that reasons are the heart beat/soul of an order and any order passed by the quasi judicial Authority sans reasons is void ab initio - order set aside
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Levy of fees u/s 234E - when the amendment made u/s 200A which has come into effect on 1st June, 2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee u/s 234E could be made for the TDS deducted for the respective assessment year prior to 1st June, 2015
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Income derived from property held under trust - Provisions u/s 11(1)(a) of the Act speaks about the actual receipt of the income and actual expenses incurred for that and deemed income is not to be assessed hence no deemed rent is liable to be assessed in the case of the assessee
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Applicability of provisions of Section 44BBB - Once the provisions and Section 44BBB are not applicable to domestic company, there were no justification even to place reliance upon the said provision while making the addition against the assessee - A.O. has neither given reasons as to why the losses incurred by the assessee are not allowable nor the applicability of provisions of transfer pricing - addition not sustainable
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Computation of Period of holding - Transferable Development Rights(TDR) - for the purpose of determination of period of holding, the holding of the TDR from the date of acquisition of property by the municipal authorities has to be considered, not from the date, when MOU was cancelled, then the period of holding of the asset is more than 36 months and hence, surplus is rightly assessable under the head lTCG
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Stay of demand - when Pr. CIT has not mechanically required the Petitioners to pay 20% of the total demand, but has used the discretion, and passed a reasoned order, determining the amount payable at around 14% of the total demand - no interference is called for
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Non passing draft order u/s 144C - the failure to pass a draft assessment order, would violate Section 144C(1) and as a result order of set aside and further this failure is not a curable defect in terms of Section 292B - the impugned order is hereby set aside
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Allowability of alleged fictitious loss by way of Client Code Modification (CCM) - nothing has been brought on record to suggest that the said losses were purchased and the party were given cheque or cash payment in view of such favours - such co-relation was necessary to fasten any liability upon the assessee - loss is duly allowable
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Allowability of difference of conversion of FCNR loan into rupee loan - the original term loan availed by assessee has not changed and remain same and there is no impact on the value of fixed assets since it is acquired in Indian currency - the assessee has absorbed the exchange difference, it definitely falls falls within the ambit of section 37 - deduction allowable
Customs
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Recovery of export benefits given under Incentive and Reward Schemes under Chapter 3 of FTP on re-import of exported goods
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Issuance of Detention certificate - the shipping agency/the cargo custodian considers the request of petitioner for reduction or waiver of demurrage charges if sufficient proof is given - the limited object for which the detention certificate by reference to proceedings is insisted upon by the petitioner is convinced that the first respondent could be directed to issue a certificate
IBC
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CIR process - the parties have settled the matter prior to the constitution of the ‘Committee of Creditors’ and the Adjudicating Authority has failed to notice that the principal amount has already been paid and original plea of the CD was that no interest was payable in terms of the Agreement/ Contract - impugned order set aside
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Liquidation and appointment of Liquidator - Liquidator will ensure that ‘Corporate Debtor’ remains a going concern - directed to approach the Union of India through the concerned Department for realization of the funds to ensure that the ‘Corporate Debtor’ remains a going concern or through scheme or arrangement u/s 230 of the Companies Act or through sale as a going concern along with its employees/ workmen to a third party
Service Tax
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Levy of service tax on perquisite paid to MD - Form 31 and 25C filed under company’s act show the and salary and perquisites payable or paid to MD - there is force in that Appellants claim that only due to the fact that taxable income is shown in Form 16, it cannot be said that other perquisites are not part of remuneration to the employee and are paid for consultation etc. - no service tax
Central Excise
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Clandestine removal - TMT Bars - statements accepting that goods are dislodged from the factory without following procedure was duly recorded u/s 14 of the CE Act, was ignored or not taken into consideration by the appellate Tribunal - it is a case of acceptance and failure to explain the huge variation in the stock and the variations were not having been disputed, the demand so made and calculated by the AO was in conformity with the law
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Quantification of interest and imposition of penalty - duty deposited on old registration number instead of new one - mere mentioning of wrong code in the process cannot result into harsh consequence of entire payment not being recognized as valid - levy of interest and penalty is not sustainable
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Maintainability of appeal - compliance with the pre-deposit - what happens post facto cannot cure the defect as on the date on which the appeal was dismissed by CESTAT by the impugned order, the appellant had not complied with the pre-deposit condition - The impugned order as such is unassailable
VAT
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Whether the expression ‘shall’ partakes the character of ‘may’ depends upon the intent of legislation, which requires to be achieved not only from the phraseology of the provision, but considering its nature, design and the consequences. Applying this principle, the word ‘shall’ used in rule 20(2) requires to be read as ‘may’
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Validity of assessment order - principles of natural justice - the petitioner has been repeatedly stating that the information has to be gathered from more than one source to answer the allegation and has requested for two more months - if respondent is of the view that further time is intended to delay the assessment proceedings, ought to have passed a conditional order and granted reasonable time - order set aside
Case Laws:
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GST
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2019 (8) TMI 627
Power of arrest - assessment and adjudication of alleged evasion of GST as contemplated under Section 61, Section 73 of under Section 74 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The powers of arrest under Section 69 of the Act, 2017 are to be exercised with lot of care and circumspection. Prosecution should normally be launched only after the adjudication is completed. To put it in other words, there must be in the first place a determination that a person is liable to a penalty . Till that point of time, the entire case proceeds on the basis that there must be an apprehended evasion of tax by the assessee. The emphasis has been laid on the safeguards as enshrined under the Constitution of India and in particular Article 22 which pertains to arrest and Article 21 which mandates that no person shall be deprived of his life and liberty for the authority of law. Let Notice be issued to the respondents returnable on 18th September, 2019.
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2019 (8) TMI 595
Validity of Section 129 of the Central Goods and Services Tax Act, 2017 - Release of goods on the basis of Bank Guarantee - Section 129 of the CGST Act - restraint on encashment of the Bank Guarantee - HELD THAT:- The interim relief sought for in the writ petition is to restrain encashment of the Bank Guarantee. If it is granted, it will amount to an order in anticipation that the adjudication will culminate in imposition of penalty. If such an anticipatory restrainment is put on the respondents, as observed by the learned Single Judge, that will be in a manner defeating the interest of the respondents who ordered release of the goods by securing the probable amount which may be due after the adjudication, in accordance with the provisions contained in Section 129 of the Act - there is no illegality, error or impropriety in the judgment of the learned Single Judge. The interest of justice on equitable basis can be achieved by issuing a direction to the respondents not to encash the Bank Guarantee furnished by the appellant, if ultimately the adjudication goes against them and if penalty is imposed in such proceedings, until the expiry of 14 days from the date of service of order on such adjudication.
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2019 (8) TMI 594
Validity of summons issued under CGST Act, 2017 - cognizable offences - basic contention of the petitioners is that the respondent authority cannot commence investigation without following procedure u/s 154 or 155 of the Code of Criminal Procedure - relief from arrest - HELD THAT:- The respondent authorities are investigating the cognizable offence under the CGST Act. The Hon ble Apex Court in case of SAPNA JAIN ORS VERSUS UNION OF INDIA ORS. [ 2019 (5) TMI 1610 - BOMBAY HIGH COURT] , it was an appeal carried to the Apex Court from the judgment and order passed by this Court on 11th April 2017, though has refused to entertain the Special Leave Petition and showed its disinclination to interfere, it had observed that the High Courts while entertaining the request of prearrest bail will keep in mind that the Apex Court by order UNION OF INDIA VERSUS SAPNA JAIN AND ORS. [ 2019 (6) TMI 58 - SC ORDER] had dismissed the SLP filed against the judgment and order of Telangana High Court in [ 2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT] a similar matter where the High Court of Telangana has taken a view contrary to the view of the Apex High Court - Since the said order is passed by the Apex Court on 29th May 2019, we are not inclined to grant any protection to the petitioner from his arrest since we are bound by the order passed by the Apex Court. Petition dismissed.
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2019 (8) TMI 593
Maintainability of petition - statutory remedy of appeal under Section 107 of the Goods and Services Tax Act - non-consideration of documents placed on record by the petitioners before the assessment order - principles of natural justice - HELD THAT:- The writ petition is disposed of by relegating the petitioner to work out the remedy of appeal under Section 107 of the Goods and Services Tax Act. The respondents are directed not to encash the bank guarantee for a period of 90 days from today and it is open to the petitioner to obtain orders as may be necessary in this behalf after the appeal and the stay petition are moved before the appellate authority. Petition disposed off.
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2019 (8) TMI 592
Release of seized goods alongwith vehicle - Sections 129 and 130 of the GST Act, 2017 - HELD THAT:- The writ-applicant is entitled to some interim order. This writ-application has something to do with the Sections129 and 130 of the GST Act, 2017. This Court is looking into the larger issue, which has been raised in a batch of writ-applications, however, as on date, we are inclined to release the conveyance and goods on the condition that the writ-applicant deposits an amount of ₹ 3,11,016/with the concerned authority.
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2019 (8) TMI 591
Invocation of Bank Guarantee - Section 129 of the Kerala State Goods and Service Tax Act - filing appeal under Section 107 of the GST Act - HELD THAT:- A direction could be issued to respondents not to encash bank guarantee for a period of four weeks from today and it is also directed that the respondent communicates the decision taken under Section 129 within one week from today. Petition disposed off.
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Income Tax
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2019 (8) TMI 626
Stay of demand - pre-deposits - HELD THAT:- The appeals now filed before the second respondent are statutory appeals which ought not to be shut out except for valid reasons noted and recorded by the second respondent. While recording the above statement, this Court hastens to add that all issues in this behalf are at large before the second respondent. The second respondent exercises his jurisdiction in accordance with law and no guidance is warranted from Court. Any observation made in this behalf ought not to be appreciated as expressing a view by this Court on the conduct of the petitioner. All the bank accounts of the petitioner are frozen. The petitioner offers to deposit 10% of the amount determined in Exts.P1 and P2. Now the apprehension voiced by the petitioner is that the first respondent will go to the next step and withdraw the entire tax amount payable by the petitioner from the frozen account. Keeping in view the balance of convenience and also enable the petitioner to work out the remedy of appeal, the writ petition is disposed of by this judgment. The case no doubt presents on both sides singular facts, therefore the discretion of this Court is also exercised in a measured way ensuring preservation of the interest of all the parties during the pendency of consideration of delay petitions or disposal of appeals. a) The petitioner deposits 10% of the tax amount demanded through Exts.P1 and P2 within one week from today. b) The petitioner accompanied by a copy of this judgment and also proof of payment of 10% as directed by this Court, appears before the second respondent and requests for consideration and disposal of delay condonation petitions within one week thereafter.
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2019 (8) TMI 625
Non passing draft order u/s 144 (C ) - Whether AO can proceed straightway on the basis of the report of the Transfer Pricing Officer (TPO) u/S 92 (CA) to pass a final assessment order? - HELD THAT:- JCB India Limited v. Dy. CIT [2017 (9) TMI 673 - DELHI HIGH COURT] and Turner International India Private Limited v. DCIT [ 2017 (5) TMI 991 - DELHI HIGH COURT] and numerous other orders it has been explained time and again that once there is a clear order of setting aside of an assessment order with the requirement of the AO/TPO to undertake a fresh exercise of determining the arm s length price, the failure to pass a draft assessment order, would violate Section 144C (1) of the Act result. This is not a curable defect in terms of Section 292B as held by this Court in Pr. CIT VERSUS CITI FINANCIAL CONSUMER FINANCE INDIA PVT. LTD. [ 2015 (8) TMI 53 - DELHI HIGH COURT] . The fact remains that the officer in question in the present case has failed to follow the legal requirement spelt out so clearly u/s 144 (C) as has been explained by this Court in the above judgments. - the impugned order is hereby set aside
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2019 (8) TMI 624
Deduction of certain amount u/s 80 IB/IC as part of trading profits for the bated unit - HELD THAT:- The record shows that the assessee derived this income from the sale of boxes manufactured by it to house electric meters. It is not disputed that the deduction under Section 80 IB/IC was for manufacture of electric meters. The manufacture and supply of boxes, which are essentially for housing electronics meters so as to make it convenient for use by the consumers is an activity intrinsically connected with the business qualifying for deduction. As a consequence, it is held that this question of law does not arise. Dis-allowance under Section 14 A - HELD THAT:- Decision of Godrej Boyce Manufacturing company ltd. Vs. Deputy Commissioner of Income Tax Anr. [ 2017 (5) TMI 403 - SUPREME COURT] covers the question of dis-allowance against the revenue under Section 14 A. ALP determination and adjustment , the question does not arise in view of the recent decision of this Court in Pr. Commissioner of Income Tax, Udaipur Vs. M/s Secure Meters Ltd., E-Class, Pratapnagar Industrial Area, Udaipur [ 2019 (8) TMI 512 - RAJASTHAN HIGH COURT] Adjustment on account of the corporate guarantee provided by the assessee to its A.E , does not arise. The reasoning is that such corporate guarantee is part of the commercial activity of the assessee and no cost was incurred by the assessee when it provided this benefit to its A.E. By all accounts it appears, therefore, to be book transaction. Deduction u/s 80IB / 80IC in respect of other income, apportionment of depreciation made on assets of Head Office used also for activities of different eligible industrial undertaking and apportionment of expenses on product development for activities of different eligible industrial undertaking for deduction u/s 80IB / 80IC - question of law admitted - List the appeals for hearing on 03.09.2019.
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2019 (8) TMI 623
Assessment u/s 153C - maintainability of petition - whether proceedings initiated by issuance of notice u/s 153C are wholly without jurisdiction? - effective and efficacious appeal remedy - HELD THAT:- HELD THAT:- With regard to the first question, 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 applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C by virtue of such amendment 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. While answering the last question, the Court held in case any notices u/s 153C 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 u/s 153A. The impugned notices issued u/s 153C in each of the petitions are hereby quashed and set aside. In cases where the assessment orders are subject matter of challenge, the impugned assessment orders are hereby quashed and set aside on the ground that the very initiation of proceedings u/s 153C was without jurisdiction. See ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ACIT [ 2019 (6) TMI 746 - GUJARAT HIGH COURT]
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2019 (8) TMI 622
Assessment u/s 153A - period of limitation - scope of amended provisions of Section 153C - effective and efficacious appeal remedy - THAT:- With regard to the first question, 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 applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C by virtue of such amendment 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. While answering the last question, the Court held in case any notices u/s 153C 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 u/s 153A. The impugned notices issued u/s 153C in each of the petitions are hereby quashed and set aside. In cases where the assessment orders are subject matter of challenge, the impugned assessment orders are hereby quashed and set aside on the ground that the very initiation of proceedings u/s 153C was without jurisdiction. See ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ACIT [ 2019 (6) TMI 746 - GUJARAT HIGH COURT]
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2019 (8) TMI 621
Stay of demand - Pr. CIT directed to deposit approximately 14% of outstanding demand - Instruction No. 1914 dated 2nd February, 1993 issued by the CBDT - HELD THAT:- As far as the issue regarding the prima facie case in favour of the Petitioners is concerned, the Court notes that by the impugned order, the PCIT has not mechanically required the Petitioners to pay 20% of the total demand, but has used the discretion, and passed a reasoned order, determining the amount payable at around 14% of the total demand. Having considered the submissions in light of the documents placed on record, and without expressing any opinion whatsoever on the merits of the above contentions on behalf of the Petitioners, the Court is of the view that the impugned order cannot said to be unreasonable warranting interference by this Court. - petitions are dismissed
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2019 (8) TMI 620
Stay petition dismissed - proof of financial hardship faced by the petitioner assessee - HELD THAT:- It is ex-facie apparent that the order impugned is a cryptic order passed by the ITAT without assigning valid reasons. No stay petition would have been dismissed outrightly for recovery of the outstanding demand. Even if the petitioner-assessee makes a request to grant an absolute stay, the ITAT has to apply its mind to all the possible avenues that are available for the dispensation of justice. If absolute stay is not possible, parameters of conditional stay has to be examined and an appropriate decision has to be taken in the circumstances of the case. For the foregoing reasons, the order impugned cannot be approved and the same deserves to be set aside. Accordingly, the order at Annexure-G [ 2019 (2) TMI 1379 - ITAT BANGALORE] is set aside and the proceedings are remanded to ITAT for re-consideration. The ITAT shall re-consider the matter in accordance with law and decision shall be taken in an expedite manner preferably within a period of six weeks from the date of certified copy of the order. All the rights and contentions of the parties are left open.
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2019 (8) TMI 619
Reopening of assessment u/s 147 - ITAT upheld the reopening but deleted addition on merit - revenue not filed appeal against deletion of addition on merit - HELD THAT:- Substantial question of law framed for consideration is not required to be answered in the light of the fact that the Tribunal granted relief to the assessee on the merits of the case. However, with regard to the reopening of assessment under Section 147 of the Act, the Tribunal held against the assessee, as against which, the above appeals have been preferred. It is further submitted that the Revenue has not preferred any independent appeal questioning the order of the Tribunal, which was decided on merits in favour of the assessee. Issue raised in these appeals has become academic and it is not required to be answered, as the assessee succeeded before the Tribunal and it has become final. Further, the Revenue has not preferred any appeal on the finding rendered in that regard on merits.
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2019 (8) TMI 618
Addition u/s 68 - unsecured loans - non consideration of evidence produced by assessee - HELD THAT:- There was no application of mind by the Authorities while arriving at a decision insofar as this issue is concerned. It is the specific case of the assessee that the letter of confirmation [Annexure-B series] issued by various persons to establish the hand loans received by the assessee has not been considered. It is apparent that this specific issue relating to the documents furnished by the assessee has not been addressed by the Authorities albeit a specific ground raised in the appeal memo. It is well settled law that reasons are the heart beat/soul of an order. Any order passed by the quasi judicial Authority sans reasons is void ab initio. The cryptic orders passed by the Assessing Authority as well as the Appellate Authority cannot be approved. It is necessary for the quasi judicial authorities to pass a speaking order giving reasons for the decision while arriving at a decision. Reasons would reflect the mind of the quasi judicial authorities and the same would be helpful to the appellate Forums while adjudicating upon such orders. In the absence of reasons, both the orders at Annexures- A and C deserve to be set aside.
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2019 (8) TMI 617
Levy of fees u/s 234E as per demand/intimation u/s 200A - petitioner submit that Section 234E was introduced with effect from 01.07.2012 and the mechanism to levy such late fee was introduced by virtue of the amendment to Section 200A with effect from 01.06.2015, hence, the said levy of late fee in respect of the period prior to 01.06.2015 is illegal HELD THAT:- This Court in the case of Fatheraj Singhvi and others vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held that when the amendment made u/s 200A of the Act which has come into effect on 1st June, 2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee u/s 234E could be made for the TDS deducted for the respective assessment year prior to 1st June, 2015. In view of the settled legal position as aforesaid, the writ petitions are allowed and as the amount demanded by the authorities as per Annexures A, B, C, D, E and F would penalize the petitioner, they are set aside and the proceedings are restored to the file of respondent No.2 to re-compute and raise demand accordingly, in terms of Section 234E read with Section 200A of the Act, and in the light of the observations made herein above.
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2019 (8) TMI 616
Condonation of delay - Tribunal power to condone the delay in filing the appeal by invoking Section 5 of the Limitation Act - HELD THAT:- Rules of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life span for such legal remedy for the redress of the legal injury so suffered. There is no presumption that delay in approaching the court is always deliberate. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, utmost consideration shall be shown to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the explanation offered for the delay need not be accepted. It is also a salutary guideline that when delay occurred due to laches on the part of a litigant is condoned, the opposite party shall be compensated by payment of costs for the loss and hardship suffered by him (See Balakrishnan v. Krishnamurthy [ 1998 (9) TMI 602 - SUPREME COURT] ). It is always not necessary to adduce medical evidence in applications filed under Section 5 of the Limitation Act to prove illness of a party. In the present case, there is nothing to show that the delay in filing the appeal before the Tribunal was deliberately caused by the assessee. In fact, the assessee would have derived no advantage or benefit by causing delay. In such circumstances, we are of the view that, the Tribunal should have adopted a liberal approach and condoned the delay of 132 days in filing the appeal before it. We find that the Tribunal failed to construe the expression sufficient cause occurring in Section 5 of the Limitation Act in its proper perspective. The substantial question of law raised in the appeal is answered in favour of the assessee and against the revenue.
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2019 (8) TMI 615
Condonation of delay - delay of 658 days in filing appeal before the Tribunal - illness of assessee - sufficient cause within the meaning of section 5 of the Limitation Act - HELD THAT:- Although, there is no supporting evidences filed in support of contents of affidavit explaining reasons for not filing the appeal, but a sworn statement in form of affidavit cannot be ignored in total. Further, when we go through, the reasons given by the assessee for not filing appeal in time, we find that the assessee was hospitalized for sickness, which is evident from the fact that during the period from 24/07/2008 to 11/09/2009, he was in hospital for three occasions for different treatments. We, further noted that when health issues and income tax matter comes together, certainly the matter concerning health issues needs to be given preference. In this case, it is not in dispute that the assessee is aged more than 82 years and obviously, the age old related sickness/health issues will follow. Therefore, we do not find anything suspicious about reasons given by the assessee for condonation of delay in filing of appeal. Nature of assets sold - computation of Period of holding - Transferable Development Rights (TDR) issue in lieu of acquisition of immovable property by the Municipal Corporation of Pune - as per assessee right in TDRs is a capital asset as defined u/s 2(14) - assesse has sold right in TDR by virtue of a MOU dated 17/08/1996 which was cancelled by way of cancellation deed dated 14/06/2004, the same right in TDR sold to third party vide agreement dated 14/06/2006 - HELD THAT:- In this case, there is no doubt, with regard to the fact that the assessee has derived right in TDR by virtue of acquisition of immovable property by the municipal authorities in the year 1986 and such right is conferred on the assessee from the date of acquisition of the property. The subsequent cancellation and sale of TDR to third party cannot be considered as purchase of TDR from a third party. Therefore, we are of the considered view that, for the purpose of determination of period of holding, the period of holding of the asset from the date of acquisition of property by the municipal authorities has to be considered, but not from the date, when MOU was cancelled in the year 2004. If you take, the original date of acquisition of property, then the period of holding of the asset is more than 36 months and hence, surplus from transfer of asset is rightly assessable under the head long term capital gains. Benefit of exemption u/s 54EC - AO never discussed, the issue of exemption and CIT(A) not allowed as he consider sale of TDR as speculative business profit - HELD THAT:- The assessee has filed copies of capital gain bonds issued by NABARD for amounting to ₹ 25 Lacs. However, the facts with regard to purchase of NABARD capital gain bonds within prescribed limit provided u/s 54EC, has not been examined by the Ld.AO, as well as the Ld. CIT(A). Therefore, we are of the considered view that the issue needs to be re-examined by the AO, in light of the evidences filed by the assessee and hence, we set aside the issue to the file of the AO, for the limited purpose of verification on facts with regard to the investments in NABARD capital gain Bonds for the purpose of exemption claimed u/s 54EC. In case, AO found the investment is within stipulated time and it has fulfilled all other conditions, then AO is directed to allow benefit of exemption u/s 54EC, as claimed by the assessee Appeal filed by the assessee is allowed for statistical purpose.
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2019 (8) TMI 614
Income from house property - ALV computed by the A.O @ 8% of the cost of the flat - assessee treating it as self occupied and exempt - property is covered under the Maharashtra Rent Control Act, 1999 - HELD THAT:- We find that the factual matrix is squarely covered in assessee s favor by catena of judicial pronouncements wherein it has been held that municipal rateable value is a recognized basis for determination of ALV. The said proposition has duly been approved in CIT V/s Tip Top Typography [ 2014 (8) TMI 356 - BOMBAY HIGH COURT ] as well as in Smt. Smitaben N.Ambani V/s CWT [ 2009 (1) TMI 430 - BOMBAY HIGH COURT ] which has subsequently been followed by Hon ble Court in number of decisions. Therefore, no infirmity could be found in the impugned order, in this regard. The other decisions of this Tribunal also support the said proposition. Additionally, no fault could be found in the reasoning of Ld. first appellate authority in paragraph 5.1.1 that the property under co-ownership was encumbered property and could not be expected to be let out at fair market value. Also, no fallacy could be found in the logic that due to the indivisibility of living space of co-owned property, it could be said that 60% of the property was notionally occupied by the assessee and hence, was to be treated as self-occupied property of the assessee. - Decided against revenue.
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2019 (8) TMI 613
Allowability of difference of conversion of FCNR loan into rupee loan - assessee has to absorb the exchange difference at the time of conversion of FCNR loan into rupee loan - AO stated that restatement of the loan resulted in enhancement of principle amount being related to acquisition of plant and machinery, the conversion loss has direct nexus with the acquisition of capital asset and hence, it is a capital loss - CIT(A) dismissed the appeal holding that the provisions of section 43A is applicable in this case - HELD THAT:- In our view, section 43A has no application considering the fact that the fixed assets were purchased in Indian currency and only the term loan was converted into FCNR and back to rupee loan. The provisions of section 43A are applicable only when the assessee acquires any asset in any previous year from a country outside India and in consequence of a change in the exchange rate, there may be increase or decrease in the liability as expressed in Indian currency as compared to the liability at the time of acquisition of such asset and at the time of settlement. Since, the assets acquired by assessee are not in foreign currency, the provisions of section 43A are not applicable. Let us consider that the assessee has availed rupee loan of ₹ 1 lakh from Syndicate Bank @ interest cost of 10% and later assessee converts the same into FCNR loan with the interest rate of 5%. The assessee services the FCNR loan and at the time of availing the FCNR loan, assessee aware that it is taking interest rate benefit but at the same time, there is exposure of foreign rate fluctuation. Subsequently, assessee converts the FCNR loan into rupee loan during this AY and due to exchange fluctuation, the liability of the assessee towards term loan increases to, let us say, ₹ 1,05,000/-. The original term loan availed by the assessee remains same but due to exchange fluctuation, the assessee takes the additional burden of ₹ 5,000/-. The question before us is, how to treat the above loss of ₹ 5,000/-. The assessee has converted the rupee loan into FCNR in order to take the interest benefit. It is purely a business decision and at the time of conversion, it is aware that there is exposure to the fluctuation of currency rates. Again, assessee converted the FCNR loan into rupee loan, the assessee has absorbed the exchange difference, it definitely falls under business decision and falls within the ambit of section 37. As explained earlier, the original term loan availed by assessee has not changed and remain same and there is no impact on the value of fixed assets since it is acquired in Indian currency. Therefore, it cannot be held that the capital value of the asset or liability has undergone change. Hence, as per the above decision, we allow the grounds raised by the assessee.
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2019 (8) TMI 612
Applicability of provisions of Section 44BBB on domestic company - assessee filed return declaring loss whereas AO applied profit of 11% of the cost and computed the profit from business - HELD THAT:- We do not find any justification to accept the contention of the Ld. D.R. Once the provisions and Section 44BBB are not applicable to domestic company as in the case of assessee, therefore, there were no justification even to place reliance upon the same provision while making the addition against the assessee. A.O. has not given any reasons as to why the losses incurred by the assessee are not allowable deduction. Further the assessee has clearly explained that the parties to the contract are not associated concerns of the assessee, therefore, provisions on International Taxation Law would not apply in the case of the assessee. A.O. has not given any finding against the assessee as to how the provisions of transfer pricing are applicable in the case of the assessee. CIT(A) has examined the issue in detail and in his findings has specifically held that the consideration received by assessee from the contract awarded could not be termed as an international transaction. A.O. did not point-out to any material to show as to how the transaction were international transaction in the matter. Since the A.O. failed to point-out that any of the party to the contract were associated concern of the assessee, there were no justification to apply such provisions of Law against the assessee. In case there would have been any international transaction between assessee and other parties to the contract, the A.O. shall have to refer the matter to TPO for getting his Opinion into the matter. But, A.O. did not do anything and framed regular assessment against the assessee. Therefore, on this sole reason itself, the Ld. CIT(A) was justified in holding that such provisions are not applicable in the case of the assessee. The Ld. D.R. failed to point-out any error in the Order of the Ld. CIT(A) in deleting the entire addition. No justification to interfere with the Order of the Ld. CIT(A) in deleting the addition. - decided in favour of assessee.
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2019 (8) TMI 611
Addition on account of unpaid interest on the loan granted by the Government of India to the assessee company - HELD THAT:- As in assessee s own case [ 2019 (1) TMI 935 - ITAT DELHI] in the present case the assessee company has not claimed waiver of interest on GOI Loan, Guarantee Fee and commitment fee as its expenditure. It is pertinent to note that the waiver of the Interest on loan by the Government of India as well as waiver of LIC guarantee fee along with waiver of Government of India loan has been rightly indicated in the financial statements produced before the AO and the same were reflected in the books of accounts. Therefore, addition on account of Section 41(1) does not sustain. AO as well as the CIT(A) are not correct in making and confirming the addition. We also decide the issue in dispute in favour of the assessee and dismiss the ground of appeal filed by Revenue.
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2019 (8) TMI 610
Bogus LTCG - bogus accommodation entry - statement of witness relied upon - AO has not disputed part sale of same share on which short term capital gain was offered to tax by the assessee - HELD THAT:- We further note that this is not a case of purchase of penny stock of a company and within a short period there is an unprecedented hike in the sale price of the shares, but in case the assessee purchased the shares of unlisted company which was subsequently amalgamated with a listed company and, therefore, the value of the amalgamated entity is certainly very higher than the value of share of unlisted company though there can be a question about the sweep ratio of the shares. However, the same has not been doubted by any authority and the scheme of amalgamation was duly approved by the Hon ble High Court. Thus there is an extraordinary event in this case of amalgamation of unlisted company with a listed company and consequently there is a sudden increase in the price of the shares of amalgamated entity. As held in Shri Pramod Jain vs. DCIT [ 2018 (2) TMI 300 - ITAT JAIPUR] addition made by the AO based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Thus when the assessee has produced all the supporting evidences which has not been controverted or disputed by the AO, then we do not find any error or illegality in the order of the ld. CIT (A) qua this issue. - Decided in favour of assessee.
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2019 (8) TMI 609
TP Adjustment - acceptance/rejection of certain comparables by learned Commissioner (Appeals) - functionally dissimilarity - HELD THAT:- Vishal Information Technologies Ltd. - It is now fairly well settled that this company cannot be a comparable to other companies due to its completely distinct business model. Time and again, it has been established that this company does not undertake ITeS itself, but, gets the work done by outsourcing to third party vendors. This is evident from the low employee cost of the company, as revealed from the annual report for the relevant period. The Co ordinate Bench in DBOI Global Services Pvt. Ltd. [ 2016 (8) TMI 1292 - ITAT MUMBAI] , noticing that the employee cost of the company as a percentage of total cost works out to a meager 1.36% which proves the outsourcing of work, excluded the company as a comparable. Considering all the very same assessment year and were rendered on the basis of more or less common facts, respectfully following the cited decisions of the Tribunal, we uphold the decision of the learned Commissioner (Appeals) in excluding this company as a comparable, though, on the basis of our own reasoning. Cepha Imaging Pvt. ltd. - From the facts and materials placed on record including the annual report of this comparable, it is evident, the company is in the business of development and sale of software. That being the case, it is functionally different from the assessee as the assessee is admittedly an ITeS provider. The Co ordinate Bench in DBOI Global Services Pvt. Ltd. [ 2016 (8) TMI 1292 - ITAT MUMBAI] having found that the company is engaged in software development service, excluded it as a comparable. Similar view was expressed by the Tribunal in other decisions cited by the learned Authorised Representative. Since, the aforesaid decisions are for the very same assessment year and the facts on the basis of which the company was excluded as a comparable are more or less common, respectfully following the aforesaid decisions of the Tribunal, we uphold the decision of the learned Commissioner (Appeals) on the issue. Assessee has furnished a chart before us computing the margin of the rest of the comparables after exclusion of Vishal Information Technologies Ltd. and Cepha Imaging Pvt. Ltd. As per the said chart, after exclusion of the aforesaid two companies, the average margin of the rest of the comparables works out to 18.53%. According to the learned Authorised Representative, the margin shown by the assessee would fall within 5% range of the arithmetic mean of the rest of the comparables @ 18.53% requiring no further adjustment. - Decided against revenue
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2019 (8) TMI 608
Income derived from property held under trust u/s 11 - deemed rental income - AO made addition of difference of deemed rental and actual rent received by the appellant - HELD THAT:- Provisions u/s 11(1)(a) of the Act speaks about the actual receipt of the income and actual expenses incurred for that and deemed income is not to be assessed. In the present case, the factual situation is not different such as land has been allotted by the Collector vide letter dated 24.07.1979 and the valuation has been done in view of the valuation report dated 27.01.1986 in which the valuation assessed of the carpet area which was accepted by Charity Commissioner as per the clause-8 of the order lies at page no 33 to 50 of the paper book. The consent terms has been executed before the Hon ble High Court of Bombay - The notification dated 11.06.1988 is on the file which lies at page no. 25 of the paper book speaks about this fact that the provisions of Part-II of the Act Bombay Rents, Hotel and Lodging House Rates Control, Act, 1947 is not applicable to the case of the assessee trust, therefore, in the said circumstances and in view of above discussed law, no deemed rent is liable to be assessed in the case of the assessee, hence, the finding of the CIT(A) is not justifiable, hence, is hereby ordered to be set aside. Accordingly, all the issues are decided in favour of the assessee against the revenue.
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2019 (8) TMI 607
Penalty u/s.271(1)(c) - Introduction of additional capital - Assessee was unable to explain the source for the additional capital introduced - HELD THAT:- A perusal of the reply given by the assessee in the penalty proceedings show that certain details were filed by the assessee before the Assessing Officer. The assessee had also asked for further opportunity to explain the additional capital and the disallowance of the consultancy charges. No other explanation has been given. Though the assessee says that he has submitted the details, what is the nature of the details also not being coming out of the reply filed by the assessee. It is in the absence of the details being filed, the addition has been made in the course of original assessment. It is because of non-production of the details that the addition has got sustained also. A perusal of the order of the Co-ordinate Bench of this Tribunal in the assessee s own case in the quantum proceedings show that explanation has not been given. The Tribunal has also categorically given a finding that the assessee has not produced any evidence in support of her claim. This being so, even the decision of the Hon ble Bombay High Court in the case of Nayan Builders and Developers [ 2014 (7) TMI 1150 - BOMBAY HIGH COURT ] cannot be applied in so far as the very facts that have led to the addition are not being explained by the assessee. However, considering the fact that the assessee has asked for another opportunity to explain her case before the Assessing Officer, in the interest of justice, the issues in the appeal are restored to the file of the Assessing Officer for re-adjudication of the penalty proceedings after granting the assessee adequate opportunity of being heard. The assessee shall provide all the details as called for and as required to substantiate her case for non-levy of penalty U/s.271(1)(c) of the Act. Appeal of the assessee is partly allowed for statistical purposes.
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2019 (8) TMI 606
TP adjustment - assessee had adopted TNMM for determining theALP for principal amount of exports to AE, same was also accepted by AO - separate benchmarking of notional interest on the outstanding receivables - HELD THAT:- Assessee had adopted TNMM method for determining the arm s length price for principal amount of exports to AE and it was duly accepted by the TPO. No adjustment under section 92 CA of the Act was suggested in respect of the price for their exports to AE. TPO had taken the notional interest on the outstanding receivables as a separate international transaction and suggested for the adjustment, which the assessee has been assisting basing on the decision of Kusum HealthcarePvt.Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] It is the settled principle of law, after the decision of Kusum Healthcare Pvt.Ltd. (supra), that in TNMM, the net margin earned was exposed with appropriate working capital adjustment to comparable companies; that the receivable mentioned in the Explanation to Sec.92B can be taken up for transfer pricing scrutiny only when it is a standalone activity or a demonstrated approach is adopted by the assessee to use Accounts Receivable to have free working capital funding; and that if the impact of extended credit period on working capital was factored in the pricing / profitability, then there is no tax leakage or evasive tactics adopted by the taxpayer while transacting with the AE. With this view of the matter, we find it difficult to countenance the argument that, had the funds been received in time and deployed would have earned interest income, which would have been relevant only when the original transaction of sale or services provided to the AE was benchmarked under CUP method. We are of the considered opinion that, if the impact of extended credit period on working capital was factored in the pricing / profitability, then any credit period allowed to AE gets subsumed in TNMM and there is no tax leakage or evasive tactics adopted by the taxpayer while transacting with the AE, and there is no need for a separate benchmarking. - Decided in favour of assessee.
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2019 (8) TMI 605
Disallowance of claim of loss which was not part of return filed U/s 153A - Addition has been made by the A.O. in respect of loss which was appearing in acknowledgement of return filed U/s 139 which was also appearing in the Schedule CFL of the ITR-6 filed U/s 153A, however, inadvertently the same did not add up in the Total loss carried forward column of Form HELD THAT:- As decided in M/S O.K. SILK MILLS LTD. VERSUS D.C.I.T. [ 2019 (5) TMI 749 - ITAT JAIPUR] claim of the assessee for earlier years loss, which is inclusive of the loss of the preceding AY has been duly allowed by the AO and the same has not been disputed by Ld. CIT(A). This further strengthens our conclusion that the current years losses were not shown in the acknowledgement generated for returns filed u/s 153A were due to some inadvertent technical error, and in no manner ought to have been considered as additional income declared by the assessee pursuant to the search operations carried out in the group. It is not a case where the claim of any deduction has not been lodged in the original return filed u/s 139(1) and now the assessee wants to take the benefit of the same in the return of income filed u/s 153A. Assessee has claimed the business loss and carried forward the loss in the original return of income filed u/s 139(1) and again in the return filed in response to notice issued u/s 153A, however due to some error the claim was not properly appearing in the acknowledgment of return generated and for such genuine error the assessee should not be penalized. Respectfully following the order of the Tribunal in O.K. SILK MILLS LTD(supra), we do not find any merit in the addition so made by the A.O. by ignoring the assessee s claim of loss so filed in the return U/s 139(1) - decided in favour of assessee.
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2019 (8) TMI 604
Allowability of alleged fictitious loss by way of Client Code Modification (CCM) - commission paid to brokers to obtain fictitious loss through CCM - HELD THAT:- AO has not brought on record that even the instructions for CCM was ever given by the assessee. Hence, in these circumstances, the assessee can t be held responsible for CCM if any done at the end of the broker. AO except for the fact of receiving information from the DIT (I CI), has not considered the other aspects of the transaction to be considered as the transactions of the assessee. The other relevant aspect i.e. receipt and /or payments of monies, the time gap between the actual transactions on the stock exchange and the modification of the client code numbers of such transactions by the office of the registered share and stock broker, non-prohibition of client code modification by either the stock exchange or SEBI. AO in the present case has mechanically added amounts as income of assessee without verifying furnishing evidences on record that all the above steps have actually happened in the case of all the transactions which he has added as assessee s income. In our view, by no stretch of imagination can any AO consider a transaction on the Stock Exchange as income of a person other than the one who has either actually received monies in his bank account (in case of profit) and/or paid any monies from his bank account (in case of losses). Nothing has been placed on record by the AO to demonstrate that any proceedings were ever initiated against the assessee by the SEBI or any stock exchange. It was also clarified by the Ld. AR that the broker, through whom the assessee carried on share transactions, were also not imposed any penalty. No co-relation between the assessee on the one hand and the other parties on the other hand has been brought on record to co-relate that the parties to whom the alleged profits or loss is supposed to have been diverted to reduce the taxable income of the assessee, has been brought on record to show that there was any collusion with each other and were known to each, so that one party diverted its profit or loss to the other parties. Even nothing has been brought on record to suggest that the said losses were purchased and the party were given cheque or cash payment in view of such favours. According to us, such co-relation was necessary to fasten any liability upon the assessee. We rely upon the decision in the case of M/s.Sambhavanath Investment v. ACIT [ 2014 (1) TMI 84 - ITAT MUMBAI] wherein it was held that CCM within 1 % is absolutely normal. Accordingly the addition was deleted. In the facts of the present case also, CCM is within 1 % No new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT. Therefore, there are no reasons for us to interfere into or deviate from the findings so recorded by the Ld. CIT. Hence, we are of the considered view that the findings so recorded by the Ld. CIT are judicious and are well reasoned. - Decided against revenue.
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Customs
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2019 (8) TMI 603
Issuance of Detention certificate - waiver or reduction in demurrage charges - whether the petitioner is entitled for a certificate for the detention period from 12.04.2019 to 12.06.2019? - department contended that delay in released of goods are attributed to petitioner hence the first respondent cannot be compelled to issue a detention certificate - HELD THAT:- This Court after appreciating the limited object for which the detention certificate by reference to proceedings is insisted upon by the petitioner is convinced that the first respondent could be directed to issue a certificate referring to the dates of detention and the release order made in this behalf on subsequent bills of Entry and issues a certificate to petitioner. The petitioner is given liberty to enclose a copy of this judgment together with a request to Ist respondent and upon receipt of such a request, certificate is issued by first respondent within three days therefrom. Petition disposed off.
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2019 (8) TMI 602
Jurisdiction - power too issue SCN - HELD THAT:- The impugned order dated 12th July, 2017 of the CESTAT is hereby set aside and appeal is restored to the file of the CESTAT for a fresh disposal on merits without taking into consideration the decision of this Court in M/S MANGALI IMPEX LTD., M/S PACE INTERNATIONAL AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2016 (5) TMI 225 - DELHI HIGH COURT ] - Appeal disposed off.
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2019 (8) TMI 601
Refund claim - provisional release of seized imported machinery - prayer to process the refund claim within a time frame - there is no disputation that the order of CESTAT has become final and it has been given legal quietus HELD THAT:- Learned counsel for writ petitioner submits that the second respondent who has to process the refund application has not done so and there has been inaction on the part of the second respondent. Saying so, learned counsel made a simple and innocuous prayer requesting to mandamus the second respondent to consider the refund application dated 05.10.2018 made by the writ petitioner and take a decision on the same within a time frame. In the light of the innocuous prayer and the narrow compass on which this matter now turns, the second respondent is directed to consider the refund application of the writ petitioner being refund application dated 05.10.2018 and pass an order on the same within four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2019 (8) TMI 590
Condonation of delay in filing appeal - time limitation - delayed Service of order - HELD THAT:- The respondent has proved on record that he received the Order-in-Original only on 25.01.2018. Further the Order-in-Original dated 27.09.2016 was sent to their old address as per the dispatch register filed by the Revenue in spite of the fact that the respondent has intimated the change of its address to the Department in the year 2015 and that said letter is also on record. Further the Department was also aware of the change in address and sent the personal hearing notice dated 12.04.2016 to the new address of the respondent but in spite of this the Order-in-Original was sent to the old address which was not received by the respondent and finally the respondent received the Order-in-Original only on 25.01.2018 and thereafter filed the appeal before the Commissioner with a delay of 28 days which was condoned by the Commissioner. Before the Commissioner (Appeals) the Department did not raise the objection of limitation. Further, the Department has not been able to bring on record any evidence regarding the proof of delivery of the Order-in-Original. There is no infirmity in the impugned order passed by the Commissioner (Appeals) condoning the delay of 28 days - Appeal dismissed - decided against Revenue.
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Securities / SEBI
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2019 (8) TMI 589
Disclosure by company to stock exchanges - consequences of non disclosures - Violation of Section 23A of the Securities Contracts (Regulation) Act, 1956 ( SCRA ) - violation of Section 23E of the SCRA for failure to comply with Clause 36 of the Listing Agreement - penalties under Section 15A(b) of the SEBI Act, 1992 as well as under Section 23A(a) and Section 23E of the SCRA for violation of Regulation 13(6) of SEBI (Prohibition of Insider Trading) Regulations read with Clauses 2.1 and 7.0(ii) of Schedule II for Code of Corporate Disclosure Practices for Prevention of Insider Trading specified in Schedule II read with Regulation 12(2) of PIT Regulations as well as violation of Clause 36 of the Listing Agreement - HELD THAT:- Guidance Note indicates that the listed company is required to consider the impact of such disclosure on legal/ court proceedings while making the disclosure and if the listed entity is of the opinion that making any such disclosure was not in the interest of the listed entity then such disclosure may be limited to the extent of stating the occurrence of the event. Thus, a discretion was given to the Company to decide whether full disclosure should be made to the Exchange and where such information was not in the interest of the listed entity, then limited disclosure should be made. Further, the Guidance Note clearly indicates that the listed entity was required to notify the Stock Exchange where such assessment, etc. had a material impact and shall continue to inform the Stock Exchange till the cessation/conclusion/settlement of the event/dispute. In the light of the above, we find that the assessment order and the demand raised pursuant thereto is a material event and had a material impact on the profitability / financials of the company. It has come on record that the networth of the company was ₹ 365 crores and a demand of ₹ 450 crores was made in the assessment order. Such demand which eats away the networth of the company is in our opinion a material event and the assessment order had a material impact which the company was required to report to the Exchange promptly and which was required to be made public immediately . We also find that in the instant case a conscious decision was taken by the management of the company not to disclose the said information under Clause 36 of the Listing Agreement. In fact, when clarification was sought by the Stock Exchanges it is only then the information was provided at a belated stage on May 26, 2014 and May 29, 2014 after more than 3 months of the final assessment order dated February 21, 2014. Thus, we are of the opinion, there was gross failure on the part of the appellant in not making the disclosure under Clause 36 of the Listing Agreement. The contention that the information was supplied belatedly is misconceived and an afterthought. No such stand was taken before SEBI and the appellant cannot be allowed to change its stand at this stage. Under Section 23A, a penalty of ₹ 25,00,000/- (Rupees Twenty Five Lakhs only) has been imposed for failure to furnish the information within the time specified. In the instant case, there has been a gross failure to furnish the information and, in our opinion, there was a total non-disclosure on the part of the appellant in furnishing the information. A penalty of a maximum of ₹ 1 crore could have been imposed for such failure but the AO considering all aspects of the matter has imposed a penalty of ₹ 25,00,000/- (Rupees Twenty Five Lakhs only) which is just and fair and, is neither arbitrary, nor is unreasonable. We thus do not find any error in the quantum of penalty. Under Section 23E of the SCRA the penalty is a minimum of ₹ 5 lakh upto a maximum of ₹ 25 crores. We find that in the instant case, the appellant failed to comply with the listing conditions and considering the factors the AO imposed a penalty of ₹ 1,75,00,000/- (Rupees Once Crore Seventy Five Lakhs only). We do not find any reason to hold that the said quantum was unreasonable or arbitrary. In our opinion, considering the material event which was not disclosed we are of the opinion, that the penalty imposed is just and proper in the circumstances of the case. The contention that Rule 5 of Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005 was not taken into consideration while adjudging the quantum of penalty is wholly erroneous. The factors contemplated under Rule 5 of the Rules 2005 are the same as factored in Section 23J of the SCRA. These factors were duly considered based on which the authority has not imposed the maximum penalty. Thus, the contention that the factors were not taken into consideration is patently erroneous. Appeal filed by the Company NDTV, its Directors and Compliance Officer - non-disclosure of ₹ 450 crores demand raised by the Income Tax Department under Clause 36 of the Listing Agreement as well as delayed disclosure by the Appellant No. 1 under PIT Regulations and non-compliance by all the appellants under Clauses 2.1, 3.2 and 7.0 (ii) of Schedule II for Code of Corporate Disclosure Practices for Prevention of Insider Trading read with Regulation 12(2) of SEBI (Prohibition of Insider Trading) Regulations ( PIT Regulations for convenience) Regulations - HELD THAT:- No error in the finding given by the AO that the appellant company had violated Regulation 13(6) and Clauses 2.1, 3.2 and 7.0 (ii) of Schedule II for Code of Corporate Disclosure Practices for Prevention of Insider Trading read with Regulation 12(2) of PIT Regulations. no such disclosure has been filed to show that a particular authority was nominated for such purpose. On the other hand the stand of the appellants was that a conscious decision was taken by the management not to disclose the material event. Imposition of ₹ 2 lakh upon the Compliance Officer for violation of Clause 36 of the Listing Agreement was unjustified. The Compliance Officer works under the direction of the Board of Directors of the Company. It was not open to the Compliance Officer to comply with Clause 36 of the Listing Agreement. At the end of the day, the Compliance Officer is only an employee of the Company and works on the dictates and directions of the management of the Company. Thus, when the entire management is being penalized, it was not open to the AO to also book the Compliance Officer for the said fault. We accordingly, hold that the imposition of penalty of ₹ 2 lakh on the Compliance Officer cannot be sustained and, to that extent, the order cannot be sustained. The Compliance Officer was however liable to comply with the disclosure under Regulation 13(6) and Clauses 2.1, 3.2 and 7.0 (ii) of Schedule II for Code of Corporate Disclosure Practices for Prevention of Insider Trading read with Regulation 12(2) of PIT Regulations and, to that extent, the penalty imposed by the AO is affirmed.
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Insolvency & Bankruptcy
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2019 (8) TMI 588
Existence of resolution plan - Liquidation passed u/s 33 of the Insolvency and Bankruptcy Code, 2016 - condonation of delay of 11 days in filing appeal - HELD THAT:- We direct the Liquidator to take steps of Liquidation in terms of the order of this Appellate Tribunal in Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS [2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that that the liquidator is required to act in terms of the aforesaid directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members or the Corporate Debtor or the creditors or a class of creditors like Financial Creditor or Operational Creditor approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench Appeal disposed off.
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Service Tax
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2019 (8) TMI 600
Levy of service tax on perquisite paid to MD - scope of 'service' - remuneration paid in excess of the salary reflected as per Form 16 - reverse charge mechanism - HELD THAT:- There is force in that Appellants claim that only due to the fact that taxable income is shown in Form 16, it cannot be said that other perquisites are not part of remuneration to the employee and are paid for consultation etc. rendered by him - No case is made out by the department that such remuneration, other than salary paid to him, was not for the routine work he performs as Managing Director, but was for the consultation he provides. Therefore, the instant case is squarely covered by the exclusion contained under Section 65(44) (b) of Finance Act, 1994. Appeal allowed - decided in favor of assessee.
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2019 (8) TMI 587
Reversal of CENVAT Credit - petitioners compelled to reverse credit before issuance of SCN - Learned Counsel for the Respondents, states that on affidavit the officer of the Respondents stated that there was no threat of arrest ever issued to the Petitioners - HELD THAT:- We are, in the facts of the case and evidence placed before us, not impressed with the submissions made on behalf of the Respondents and were proceeding to pass an order finally. At that time, Mr. Kantharia, learned Counsel for the Respondents, sought time to take further instructions and prepare himself better, as this petition was shown under the caption of admission. We grant time at the request of the Revenue - petition will be taken up for final hearing on 30 th July 2019.
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Central Excise
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2019 (8) TMI 599
Maintainability of appeal - compliance with the pre-deposit - HELD THAT:- The main ground on which the appellant seeks indulgence of this Court is that after the impugned order of the CESTAT, the predeposit condition has been complied with in full. But what happens post facto cannot cure the defect. On the date on which the appeal was dismissed by CESTAT by the impugned order, the appellant had not complied with the pre-deposit condition. The impugned order as such is unassailable. It is only because of this fact that the appellant has subsequently complied with the conditional order. Therefore, no question of law much less any substantial question of law arises for consideration in the above appeal - Appeal dismissed.
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2019 (8) TMI 598
Clandestine removal - TMT Bars - major shortage of finished goods revealed in stock taking - shortage of raw material - statements recorded were not taken ito consideration and was ignored by the Tribunal - principles of natural justice - HELD THAT:- The Court therefore fails to appreciate as to why the statements duly recorded under statutory provisions of Section 14 of the Central Excise Act, 1944 was ignored or not taken into consideration by the appellate Tribunal - No where did the private Respondents plead that the allegation of clandestine removal was made against them. The department all along sought clarity from them for such huge difference in the physical stock vis a vis their book of accounts and only explanation offered by the Respondents- Company was that the goods have been dislodged . Since it is a case of acceptance and failure to explain the huge variation in the stock and the variations were not having been disputed, the demand so made and calculated by the assessing authority was in conformity with the law - The ratio relied upon by the Tribunal that it will be governed by the principle of clandestine removal seems to be misplaced in the facts and circumstances of the case. Tax case allowed - decided in favor of Revenue.
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2019 (8) TMI 597
Quantification of interest and imposition of penalty - duty deposited on old registration number instead of new one - deposit of the duties with the correct registration number - whether this rectifiable mistake amounts to short payments or delayed payments inviting interest or imposition of penalty? - HELD THAT:- It is seen that Hon ble Gujarat High Court in the case of DEVANG PAPER MILLS PVT. LTD. VERSUS UNION OF INDIA [ 2016 (1) TMI 389 - GUJARAT HIGH COURT] has held that mere mentioning of wrong code in the process cannot result into harsh consequence of entire payment not being recognized as valid. As such, it was held that levy of interest and penalty is not sustainable - The said order stands subsequently followed by the Hon ble Gujarat High Court in the case of AURO PUMPS PVT. LTD. VERSUS UNION OF INDIA [ 2017 (7) TMI 24 - GUJARAT HIGH COURT] . In the present case, the appellant had already deposited the dues with the Revenue, the confirmation of interest and imposition of penalty upon them is not justifiable - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 586
Review petition - Condonation of delay in filing appeal - suspension of advocate license - HELD THAT:- No case is made out within the parameters indicated in the decision of this Court in RUPA ASHOK HURRA VERSUS ASHOK HURRA ANOTHER [ 2002 (4) TMI 889 - SUPREME COURT] - curative petition dismissed.
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2019 (8) TMI 585
Imposition of penalty - wrong availment of credit, immediately reversed - bonafide belief - HELD THAT:- Since the appellant has reversed the CENVAT credit along with interest and there was no mala fide intention in taking the CENVAT credit, in such circumstances, imposition of penalty is not warranted under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Penalty set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (8) TMI 596
Validity of assessment order - principles of natural justice - Section 25(1) of Kerala Value Added Tax Act, 2003 - mis-classification of taxable item - petitioner failed to produce the documents, accounts etc. - HELD THAT:- The petitioner has been making efforts to get full information and simultaneously from the correspondence made with respondent shows that was requesting for grant of reasonable time. Order in Ext.P5 substantially rests on hearing dated 26.11.2018. There could not have been hearing on 26.11.2018 on a request alone was made for time. Ext.P5 does not satisfy the requirement of principles of natural justice and also not in accordance with the prescription of Section 25 of the Act. The dates chronologically adverted to in the judgment demonstrate that Ext.P5 order is made without giving sufficient opportunity or following procedural fairness while determining the further tax liability on the petitioner. The petitioner has been repeatedly stating that the information has to be gathered from more than one source to answer the allegation against the petitioner and has requested for two more months from 24.12.2018. The respondent is of the view that further time of two months, if is intended to delay the assessment proceedings, ought to have passed a conditional order and granted reasonable time from 24.12.2018. Ext.P5 order is set aside as violative of principles of natural justice and Section 25 of the Act - Petition disposed off.
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2019 (8) TMI 584
Reopening/revival of proceedings - the order has otherwise become final by the declaration of the Appellate Tribunal - denial of opportunity and the objection raised in this behalf - HELD THAT:- As the Tribunal is interdicting the order in Ext.P6 on the ground of violative of principles of natural justice, the Appellate Tribunal did not consider any other point on which the parties are at issue with each other in Tax Appeal. Therefore, as a necessary consequence the Tribunal has rightly restored to file the proceedings of re-assessment initiated through Ext.P2 and Ext.P4 notices. The Tribunal has made it clear that the petitioner if fails to produce the records as directed by the Tribunal within the time limit of two months the original assessment order will stand restored. There is no dispute on the assessee/petitioner producing the record. Ext.R2(a) calls upon the petitioner to produce books of accounts. The assessee, in fact, did not produce the record. Therefore, the consequence of omission to produce books of accounts, by referring to the emphatic conclusion, it can be concluded that Ext.P6 assessment order is restored so far as assessment year 2008-09 is concerned. The Tribunal has restored Ext.P6 order and it is not within the competence of the second respondent to ignore Ext.P6 order and independently pass order of re-assessment in Ext.P13. In the considered view of this Court by giving the contextual meaning to the word 'restore' or 'restoration' used in Ext.P7 order, the order in Ext.P13 is illegal and beyond the jurisdiction of second respondent. The respondents do not contend that independent of Exts.P2 and P4, the respondents could have initiated proceedings for re-assessment through Ext.R2(a) at this length of time as such initiation is beyond the period of limitation. Ext.P13 order, for the above reasons, is set aside as illegal and beyond the jurisdiction of second respondent. As per the scheme under the Act, in the three tier system provided for determination, appeal, appeal to Tribunal etc, the final decision taken in the hierarchy of forums is binding on the officers and the assessee. In the case on hand, the Tribunal has taken the final decision. Therefore, that decision alone is binding between the parties for the assessment year 2008-09. Petition disposed off.
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2019 (8) TMI 583
Vires of Rule 20(2) of the Karnataka Excise (Possession, Transport, Import and Export of Intoxicants) Rules, 1967 - delay caused in furnishing of EVCs collected from the Excise authorities of the destination States - export of liquor - time limit for furnishing of EVCs within the time prescribed i.e., sixty days/ninety days (defence supplies). HELD THAT:- There is no fetter on the Government to frame rules exercising the power to regulate the export of intoxicants which includes regulatory measure to insist for EVCs as a proof of export of liquor to the other destined States. The power delegated by the legislature to the executive vide Rule 20(2) cannot be held to be excessive, arbitrary or illegal. The next question would be whether such production of EVCs within a prescribed period is mandatory or directory. In the present set of facts, the respondents have not alleged any misuse of the export permits and the quantity of exported liquor did not reach the destinations. It is the specific case of the petitioners that the EVCs were submitted belatedly beyond the period of time prescribed and thus the same are rejected. For the Excise year 2018-19, out of about 1,405 export permits said to have been issued, approximately in 51 cases, EVCs were submitted belatedly for which explanation offered shows that destination States issued the EVCs belatedly due to various factors which was beyond the control of the petitioner and the same can not be rejected outrightly. As could be seen, furnishing of verification certificates is only for proof of the export and the quantity exported. This Court is of the considered opinion that production of EVCs is mandatory to avail the benefit of reduced duty pursuant to export of liquor to other States. Some proof is necessary to substantiate the liquor exported has reached the destination/other States. However, describing the time limit of sixty/ninety days for production of EVCs can be held to be directory, since the production of such EVCs within the prescribed period is dependant on the functioning of the authorities of different States, which is beyond the control of the person exporting the liquor. Any EVCs submitted beyond the prescribed period with sufficient cause shown requires to be considered, if it is otherwise established that the liquor was exported to other States by adequate material evidence - the credit has to be adjusted depending upon the facts and circumstances of the case. Furnishing of such EVCs belatedly would not disentitle the petitioner to avail the reduced rate of duty to which he is otherwise entitled to. Whether the expression shall partakes the character of may depends upon the intent of legislation, which requires to be achieved not only from the phraseology of the provision, but considering its nature, design and the consequences. Applying this principle, the word shall used in rule 20(2) requires to be read as may . Furnishing of EVC Forms in terms of Rule 20(2) of the Export Rules is mandatory, but the time prescribed of sixty/ninety days (defence supplies) for furnishing of such EVC Forms is merely directory. Subject to the same, Rule 20(2) of the Export Rules is held to be intra vires the Constitution - the demand of excise duty as per Annexure A dated 11.02.2019 stands quashed. Petition disposed off.
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