Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 16, 2021
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Exempt supply of service or not - printing of Pre examination items - printing of Post examination items - scanning and processing of results of examinations - In the instant case, the educational institutions as referred to by the applicant for whom the supplies of the services of printing of examination related material are made/ intended to be made are Mumbai university examination Committee, Bihar University Examination Committee, JNTU, Kakinada. All of the three institutions invariably fall under the category of educational institution" as they fulfil the criterion of 'institution providing services by way of,- (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;'. - Benefit of exemption available - AAR
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Valuation of supply - mining services - The contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) qualify as consideration towards supply of mining service by Andhra Pradesh Government and they being includible under value of supply, are chargeable to GST under the Reverse Charge Mechanism in the hands of the applicant, i.e., service recipient. - AAR
Income Tax
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Assessment u/s 153A - The impugned assessment order refers only to the cash book found during the survey purportedly conducted on 12th February, 2016 i.e. two weeks prior to the date of search. The Panchanama of the search proceedings unambiguously shows that nothing incriminating was recovered in the course of the search. Even in the counter affidavit of the Opposite Parties does not dispute this position. - In view of the settled legal position the Court has no hesitation in concluding that the impugned assessment order is entirely without jurisdiction - HC
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Rectification u/s 154 - MAT applicability u/s 115JB on banking companies - We are inclined to allow the grounds of appeal raised by the assessee even though the calculation submitted by the assessee is not proper. - However, the provisions of section 115JB of the Act are not applicable to a scheduled bank. - AT
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Disallowances of the interest of late deposit of tax deducted at source - The Assessee has failed to pay his statutory dues in time and therefore, there is an interest liability. Therefore, such expenditure is not at all allowable to the Assessee as deduction u/s 37(1) - Even otherwise this deduction is not allowable in any of the section u/s 30 to 36 of the Act - AT
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Ad hoc disallowance of 10% of expenses - Since the AO or the Ld. CIT(A) has not rejected the books of account of the assessee they could not have estimated (ad hoc disallowance of 10%) the expenses claimed to have been incurred by the assessee. Moreover, the AO has made the ad hoc disallowance on the supposition that there might be personal expenditure - AO did not notice that the assessee is a company and not a Firm or proprietary concern etc. So, his reason for disallowance also fails - AT
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Whether sales promotion expenditure was incurred wholly and exclusively for the purpose of business? - The assessee submitted list of 320 persons stating that they are employees of the assessee company and went to Sri Lanka to launch the product of the company. - Assessee failed to prove its case - additions confirmed - AT
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Addition in respect of employees contribution to ESI & PF - delayed deposits of contributions - addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees’s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) - AT
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Rectification of mistake u/s 154 - Merger of mistake in the order passed by the AO into the order passed by the CIT(A) - We find that Ld.CIT(A) has passed a cryptic order on this issue. On what principle, he found that the mistake got merged in this order, needs due elaboration in light of the submissions of the Ld. Counsel of the assessee above. The aspects also need actual verification of assessment records. - AT
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Reopening of assessment u/s 147 - Tribunal took note of the fact that the assessee has furnished all necessary details required for completing the assessment including the photostat copies of the Sale Deed. - Tribunal was fully justified in holding that the reopening of the assessment could not have been made in the facts and circumstances of the case - HC
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Benefit of deduction u/s 10-B - revenue contended that, assessee is not engaged in manufacture of any article or thing - exercise of processing and not that of manufacture undertake by assessee - In the case on hand, the CIT(A) had elaborately examined the process through which the quarried rough stone goes through before it becomes a polished granite slab or tile or any other article - Tribunal was right in confirming the order passed by the CIT(A) - HC
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E-Proceeding facility introduced by the Income Tax Department - Single member bench of the HC granted relief to the assessee - There is nothing placed before us to show that the respondent herein-assessee made a specific request in terms of paragraph 4 of the above Note stating that they require a physical hearing for a particular reason. In such circumstances, the sweeping observations and remarks are not called for especially when the system has been implemented and all the assessee through out the country have switched over from manual procedure to e-procedure - HC
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Reopening of assessment u/s 147 - Denial of natural justice - the intricacies involved in the issues require an elaborate adjudication and admittedly, the petitioner is falling under the large tax payer unit and certain intricacies in deeper manner requires more adjudication with reference to the issues raised. Such an elaborate adjudication cannot be done with reference to the issues as the Assessee has to avail the opportunities to be provided, while proceeding with the reassessment proceedings and it is for the Assessee to participate in the reopening proceedings and avail the opportunities to be provided for the purpose of completion of reopening proceedings. - HC
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Attachment of properties u/s 132(9B) - Single member bench of HC granted interim relief to the Assessee - No proper opportunity given to the department - The various grounds raised in the Writ Appeals are touching upon the merits of the matter, which need to be agitated in the writ petitions, for which, a counter affidavit of the Department is essential. - For the reasons set out, these Writ Appeals are allowed and the impugned common order is set aside. - HC
Service Tax
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Levy of service tax - taxable service or not - information technology software - appellant developed anti virus software - The definition of 'information technology software' is wide enough to bring within its fold the anti virus software, which has to be obviously installed in the hardware and it would interact whenever the user of the computer engages the system. Therefore, the learned Single Judge is right in holding that the stand taken by the appellant herein does not merit consideration. - HC
Case Laws:
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GST
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2021 (8) TMI 596
Freezing of petitioner bank account - Jurisdiction to pass order u/s 83 of the Central Goods and Service Tax Act, 2017 - contention of the petitioner is that Deputy Director not being of the rank of Commissioner did not have jurisdiction to pass such an order or issue such communication - HELD THAT:- The petition need not be entertained and is dismissed.
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2021 (8) TMI 581
Maintainability of Advance Ruling application - issue already pending with proper officer - Supply of goods and/or services - Requirement of registration or not - HELD THAT:- It is evident from the application that the applicant approached the Authority for Advance Ruling on an issue which has already been pending with the proper officer. It bars this authority to take up or admit an application which has been already pending or decided in any proceedings in case of the applicant under any of the provisions of the Act under proviso to section 98 (2) - the applicant's plea for admission of his application for advance ruling in terms of provisions of sub section (2) of section 98 of CGST Act, 2017 is rejected.
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2021 (8) TMI 580
Valuation of supply - mining services - Contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 ( NMETR ) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 - inclusion of consideration towards supply of mining service by Andhra Pradesh Government or not - Reverse Charge Mechanism - HELD THAT:- Contribution to National Mineral Exploration Trust (NMET) forms part of the Consolidated Fund of India. The applicant contends that the NMET collections by the Mining Department are not proceeds from business since there is no supply by the Government, but revenues collected by the Government of India. Hence, the question of Levy of GST does not arise. Contribution to District Mineral Foundation (DMF) is nothing but payment of tax and not a consideration towards supply. The applicant submits that contribution to the DMF is not consideration towards supply of services but a statutory levy of taxes - Contribution to District Mineral Foundation (DMF) is paid to the non -profit trust (DMF Trust) established by the State Government and not to the State Government even if it is assumed that DMF contribution is a consideration towards supply, the applicant submits that the DMF Trust and the State Government are two different persons. The payment of tax under Para 5 of Notification 13/2017 dated 28th June 2017 on RCM basis is not applicable to the DMF Trust. Hence, the applicant being recipient of service from DMF Trust is not liable to pay the GST on RCM basis. The levy if at all applicable is on forward charge and shall be liable to be paid by the supplier of service i.e. DMF Trust. DMF Trust is not local authority within the scope of Section 2 (69) of the GST Law. Royalty is only a measure of NMET and DMF contributions and cannot be equated with NMET and DMF and that NMET and DMF are not in respect of single supply of service i.e. licensing that warrants clubbing of all amounts i.e. Royalty, NMET and DMF under Section 15 of the GST law for the purpose of valuation - There is no correlation between the Royalty payments and the NMET and DMF except for measurement of NMET and DMF which is based on Royalty. The charges levied under MMDR Act are meant to be the charges levied under any law other than the GST Act. Thus, the payments made to DMF and NMET are very well includible under the value of supply in addition to the royalties paid and can be called a total consideration received for granting mining and leasing rights - The service provided is only the license to extract mineral ore and also the right to use such minerals extracted is a single service where the consideration is payable under three heads and in case any one of the payments is not made, the service provider, that is the Government would not issue the permit to use the mineral ore so extracted. Hence it forms the value of the supply under Section 15 and the charges for DMF and NMET being compulsory payments, would only amount to application of the amounts paid and still would form the value of the taxable services. The service is a single service there are no separate service providers for royalty, DMF and NMET and in all cases the Government which has provided the license to mine mineral ore and permitted the use of such mineral ore mined would be the person who has provided the service - As per Entry No. 5 of Notification No. 13/2017-Central Tax (rate), GST on services supplied by Central Government State Government or Local Authority, to a business entity needs to be paid by such business entity under RCM.
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2021 (8) TMI 579
Valuation of supply - mining services - Contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 ( NMETR ) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 - inclusion of consideration towards supply of mining service by Andhra Pradesh Government or not - Reverse Charge Mechanism - HELD THAT:- Contribution to National Mineral Exploration Trust (NMET) forms part of the Consolidated Fund of India. The applicant contends that the NMET collections by the Mining Department are not proceeds from business since there is no supply by the Government, but revenues collected by the Government of India. Hence, the question of Levy of GST does not arise. Contribution to District Mineral Foundation (DMF) is nothing but payment of tax and not a consideration towards supply. The applicant submits that contribution to the DMF is not consideration towards supply of services but a statutory levy of taxes - Contribution to District Mineral Foundation (DMF) is paid to the non -profit trust (DMF Trust) established by the State Government and not to the State Government even if it is assumed that DMF contribution is a consideration towards supply, the applicant submits that the DMF Trust and the State Government are two different persons. The payment of tax under Para 5 of Notification 13/2017 dated 28th June 2017 on RCM basis is not applicable to the DMF Trust. Hence, the applicant being recipient of service from DMF Trust is not liable to pay the GST on RCM basis. The levy if at all applicable is on forward charge and shall be liable to be paid by the supplier of service i.e. DMF Trust. DMF Trust is not local authority within the scope of Section 2 (69) of the GST Law. Royalty is only a measure of NMET and DMF contributions and cannot be equated with NMET and DMF and that NMET and DMF are not in respect of single supply of service i.e. licensing that warrants clubbing of all amounts i.e. Royalty, NMET and DMF under Section 15 of the GST law for the purpose of valuation - There is no correlation between the Royalty payments and the NMET and DMF except for measurement of NMET and DMF which is based on Royalty. The charges levied under MMDR Act are meant to be the charges levied under any law other than the GST Act. Thus, the payments made to DMF and NMET are very well includible under the value of supply in addition to the royalties paid and can be called a total consideration received for granting mining and leasing rights - The service provided is only the license to extract mineral ore and also the right to use such minerals extracted is a single service where the consideration is payable under three heads and in case any one of the payments is not made, the service provider, that is the Government would not issue the permit to use the mineral ore so extracted. Hence it forms the value of the supply under Section 15 and the charges for DMF and NMET being compulsory payments, would only amount to application of the amounts paid and still would form the value of the taxable services. The service is a single service there are no separate service providers for royalty, DMF and NMET and in all cases the Government which has provided the license to mine mineral ore and permitted the use of such mineral ore mined would be the person who has provided the service - As per Entry No. 5 of Notification No. 13/2017-Central Tax (rate), GST on services supplied by Central Government State Government or Local Authority, to a business entity needs to be paid by such business entity under RCM.
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2021 (8) TMI 578
Valuation of supply - mining services - Contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 ( NMETR ) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 - inclusion of consideration towards supply of mining service by Andhra Pradesh Government or not - Reverse Charge Mechanism - HELD THAT:- Contribution to National Mineral Exploration Trust (NMET) forms part of the Consolidated Fund of India. The applicant contends that the NMET collections by the Mining Department are not proceeds from business since there is no supply by the Government, but revenues collected by the Government of India. Hence, the question of Levy of GST does not arise. Contribution to District Mineral Foundation (DMF) is nothing but payment of tax and not a consideration towards supply. The applicant submits that contribution to the DMF is not consideration towards supply of services but a statutory levy of taxes - Contribution to District Mineral Foundation (DMF) is paid to the non -profit trust (DMF Trust) established by the State Government and not to the State Government even if it is assumed that DMF contribution is a consideration towards supply, the applicant submits that the DMF Trust and the State Government are two different persons. The payment of tax under Para 5 of Notification 13/2017 dated 28th June 2017 on RCM basis is not applicable to the DMF Trust. Hence, the applicant being recipient of service from DMF Trust is not liable to pay the GST on RCM basis. The levy if at all applicable is on forward charge and shall be liable to be paid by the supplier of service i.e. DMF Trust. DMF Trust is not local authority within the scope of Section 2 (69) of the GST Law. Royalty is only a measure of NMET and DMF contributions and cannot be equated with NMET and DMF and that NMET and DMF are not in respect of single supply of service i.e. licensing that warrants clubbing of all amounts i.e. Royalty, NMET and DMF under Section 15 of the GST law for the purpose of valuation - There is no correlation between the Royalty payments and the NMET and DMF except for measurement of NMET and DMF which is based on Royalty. The charges levied under MMDR Act are meant to be the charges levied under any law other than the GST Act. Thus, the payments made to DMF and NMET are very well includible under the value of supply in addition to the royalties paid and can be called a total consideration received for granting mining and leasing rights - The service provided is only the license to extract mineral ore and also the right to use such minerals extracted is a single service where the consideration is payable under three heads and in case any one of the payments is not made, the service provider, that is the Government would not issue the permit to use the mineral ore so extracted. Hence it forms the value of the supply under Section 15 and the charges for DMF and NMET being compulsory payments, would only amount to application of the amounts paid and still would form the value of the taxable services. The service is a single service there are no separate service providers for royalty, DMF and NMET and in all cases the Government which has provided the license to mine mineral ore and permitted the use of such mineral ore mined would be the person who has provided the service - As per Entry No. 5 of Notification No. 13/2017-Central Tax (rate), GST on services supplied by Central Government State Government or Local Authority, to a business entity needs to be paid by such business entity under RCM.
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2021 (8) TMI 577
Valuation of supply - mining services - Contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 ( NMETR ) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 - inclusion of consideration towards supply of mining service by Andhra Pradesh Government or not - Reverse Charge Mechanism - HELD THAT:- Contribution to National Mineral Exploration Trust (NMET) forms part of the Consolidated Fund of India. The applicant contends that the NMET collections by the Mining Department are not proceeds from business since there is no supply by the Government, but revenues collected by the Government of India. Hence, the question of Levy of GST does not arise. Contribution to District Mineral Foundation (DMF) is nothing but payment of tax and not a consideration towards supply. The applicant submits that contribution to the DMF is not consideration towards supply of services but a statutory levy of taxes - Contribution to District Mineral Foundation (DMF) is paid to the non -profit trust (DMF Trust) established by the State Government and not to the State Government even if it is assumed that DMF contribution is a consideration towards supply, the applicant submits that the DMF Trust and the State Government are two different persons. The payment of tax under Para 5 of Notification 13/2017 dated 28th June 2017 on RCM basis is not applicable to the DMF Trust. Hence, the applicant being recipient of service from DMF Trust is not liable to pay the GST on RCM basis. The levy if at all applicable is on forward charge and shall be liable to be paid by the supplier of service i.e. DMF Trust. DMF Trust is not local authority within the scope of Section 2 (69) of the GST Law. Royalty is only a measure of NMET and DMF contributions and cannot be equated with NMET and DMF and that NMET and DMF are not in respect of single supply of service i.e. licensing that warrants clubbing of all amounts i.e. Royalty, NMET and DMF under Section 15 of the GST law for the purpose of valuation - There is no correlation between the Royalty payments and the NMET and DMF except for measurement of NMET and DMF which is based on Royalty. The charges levied under MMDR Act are meant to be the charges levied under any law other than the GST Act. Thus, the payments made to DMF and NMET are very well includible under the value of supply in addition to the royalties paid and can be called a total consideration received for granting mining and leasing rights - The service provided is only the license to extract mineral ore and also the right to use such minerals extracted is a single service where the consideration is payable under three heads and in case any one of the payments is not made, the service provider, that is the Government would not issue the permit to use the mineral ore so extracted. Hence it forms the value of the supply under Section 15 and the charges for DMF and NMET being compulsory payments, would only amount to application of the amounts paid and still would form the value of the taxable services. The service is a single service there are no separate service providers for royalty, DMF and NMET and in all cases the Government which has provided the license to mine mineral ore and permitted the use of such mineral ore mined would be the person who has provided the service - As per Entry No. 5 of Notification No. 13/2017-Central Tax (rate), GST on services supplied by Central Government State Government or Local Authority, to a business entity needs to be paid by such business entity under RCM.
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2021 (8) TMI 576
Valuation of supply - mining services - Contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 ( NMETR ) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 - inclusion of consideration towards supply of mining service by Andhra Pradesh Government or not - Reverse Charge Mechanism - HELD THAT:- Contribution to National Mineral Exploration Trust (NMET) forms part of the Consolidated Fund of India. The applicant contends that the NMET collections by the Mining Department are not proceeds from business since there is no supply by the Government, but revenues collected by the Government of India. Hence, the question of Levy of GST does not arise. Contribution to District Mineral Foundation (DMF) is nothing but payment of tax and not a consideration towards supply. The applicant submits that contribution to the DMF is not consideration towards supply of services but a statutory levy of taxes - Contribution to District Mineral Foundation (DMF) is paid to the non -profit trust (DMF Trust) established by the State Government and not to the State Government even if it is assumed that DMF contribution is a consideration towards supply, the applicant submits that the DMF Trust and the State Government are two different persons. The payment of tax under Para 5 of Notification 13/2017 dated 28th June 2017 on RCM basis is not applicable to the DMF Trust. Hence, the applicant being recipient of service from DMF Trust is not liable to pay the GST on RCM basis. The levy if at all applicable is on forward charge and shall be liable to be paid by the supplier of service i.e. DMF Trust. DMF Trust is not local authority within the scope of Section 2 (69) of the GST Law. Royalty is only a measure of NMET and DMF contributions and cannot be equated with NMET and DMF and that NMET and DMF are not in respect of single supply of service i.e. licensing that warrants clubbing of all amounts i.e. Royalty, NMET and DMF under Section 15 of the GST law for the purpose of valuation - There is no correlation between the Royalty payments and the NMET and DMF except for measurement of NMET and DMF which is based on Royalty. The charges levied under MMDR Act are meant to be the charges levied under any law other than the GST Act. Thus, the payments made to DMF and NMET are very well includible under the value of supply in addition to the royalties paid and can be called a total consideration received for granting mining and leasing rights - The service provided is only the license to extract mineral ore and also the right to use such minerals extracted is a single service where the consideration is payable under three heads and in case any one of the payments is not made, the service provider, that is the Government would not issue the permit to use the mineral ore so extracted. Hence it forms the value of the supply under Section 15 and the charges for DMF and NMET being compulsory payments, would only amount to application of the amounts paid and still would form the value of the taxable services. The service is a single service there are no separate service providers for royalty, DMF and NMET and in all cases the Government which has provided the license to mine mineral ore and permitted the use of such mineral ore mined would be the person who has provided the service - As per Entry No. 5 of Notification No. 13/2017-Central Tax (rate), GST on services supplied by Central Government State Government or Local Authority, to a business entity needs to be paid by such business entity under RCM.
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2021 (8) TMI 575
Valuation of supply - mining services - Contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 ( NMETR ) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 - inclusion of consideration towards supply of mining service by Andhra Pradesh Government or not - Reverse Charge Mechanism - HELD THAT:- Contribution to National Mineral Exploration Trust (NMET) forms part of the Consolidated Fund of India. The applicant contends that the NMET collections by the Mining Department are not proceeds from business since there is no supply by the Government, but revenues collected by the Government of India. Hence, the question of Levy of GST does not arise. Contribution to District Mineral Foundation (DMF) is nothing but payment of tax and not a consideration towards supply. The applicant submits that contribution to the DMF is not consideration towards supply of services but a statutory levy of taxes - Contribution to District Mineral Foundation (DMF) is paid to the non -profit trust (DMF Trust) established by the State Government and not to the State Government even if it is assumed that DMF contribution is a consideration towards supply, the applicant submits that the DMF Trust and the State Government are two different persons. The payment of tax under Para 5 of Notification 13/2017 dated 28th June 2017 on RCM basis is not applicable to the DMF Trust. Hence, the applicant being recipient of service from DMF Trust is not liable to pay the GST on RCM basis. The levy if at all applicable is on forward charge and shall be liable to be paid by the supplier of service i.e. DMF Trust. DMF Trust is not local authority within the scope of Section 2 (69) of the GST Law. Royalty is only a measure of NMET and DMF contributions and cannot be equated with NMET and DMF and that NMET and DMF are not in respect of single supply of service i.e. licensing that warrants clubbing of all amounts i.e. Royalty, NMET and DMF under Section 15 of the GST law for the purpose of valuation - There is no correlation between the Royalty payments and the NMET and DMF except for measurement of NMET and DMF which is based on Royalty. The charges levied under MMDR Act are meant to be the charges levied under any law other than the GST Act. Thus, the payments made to DMF and NMET are very well includible under the value of supply in addition to the royalties paid and can be called a total consideration received for granting mining and leasing rights - The service provided is only the license to extract mineral ore and also the right to use such minerals extracted is a single service where the consideration is payable under three heads and in case any one of the payments is not made, the service provider, that is the Government would not issue the permit to use the mineral ore so extracted. Hence it forms the value of the supply under Section 15 and the charges for DMF and NMET being compulsory payments, would only amount to application of the amounts paid and still would form the value of the taxable services. The service is a single service there are no separate service providers for royalty, DMF and NMET and in all cases the Government which has provided the license to mine mineral ore and permitted the use of such mineral ore mined would be the person who has provided the service - As per Entry No. 5 of Notification No. 13/2017-Central Tax (rate), GST on services supplied by Central Government State Government or Local Authority, to a business entity needs to be paid by such business entity under RCM.
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2021 (8) TMI 574
Exempt supply of service or not - printing of Pre examination items like question papers, OMR sheets (Optical Mark Reading), Answer booklets for conducting of an examination by the educational boards - printing of Post examination items like marks card, grade card, certificates to educational boards (up to higher secondary) after scanning of OMR Sheets and processing of data in relation to conduct of an examination - scanning and processing of results of examinations - Serial Number 66 of Notification No. 12/2017-CGST [Rate] dated 28-06-2017 as amended. HELD THAT:- In the instant case, the educational institutions as referred to by the applicant for whom the supplies of the services of printing of examination related material are made/ intended to be made are Mumbai university examination Committee, Bihar University Examination Committee, JNTU, Kakinada. All of the three institutions invariably fall under the category of educational institution as they fulfil the criterion of 'institution providing services by way of,- (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;'. Further, with reference to the services provided by the applicant, they are nothing but 'services relating to admission to, or conduct of examination by, such institution' falling under Si.No.66 of the said exemption notification of No. 12/2017-CGST [Rate] dated 28.06.2017 as amended. Thus, all supply of services are exempt supply.
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2021 (8) TMI 573
Scope of Advance Ruling application - Appropriateness of tax paid at wrong jurisdiction - Refund of accumulated GST paid on Lime Stone Royalty under RCM - GST is liable to pay @18 % under RCM on Lime Stone Royalty whereas GST is set off @ 5 % on transfer of Lime Stone from Mines (A.P) to Cement Factory (T.G) - HELD THAT:- The applicant sought Advance Ruling on questions of 'appropriation of taxes' and 'refund' which is outside the purview of the Advance Ruling Authority as per Section 97(2) of CGST Act, 2017. The application is not admitted under Sec 98 (2) of CGST Act, 2017 and APGST Act, 2017.
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2021 (8) TMI 554
Maintainability of petition - HELD THAT:- The Writ Petitions are, accordingly, dismissed with costs of ₹ 50,000/- (Rupees Fifty Thousand) in each case, to be paid to the Supreme Court Legal Services Committee within two weeks from today. SLP dismissed.
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Income Tax
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2021 (8) TMI 594
Assessment u/s 153A - document found during the course of the search or not? - HELD THAT:- In the present case, the impugned assessment order does not refer to any document unearthed during the course of the search on 26th February, 2016. Therefore, the assumption of jurisdiction under Section 153A of the Act for reopening the assessment for the AY 2015-16 was without legal basis. The impugned assessment order refers only to the cash book found during the survey purportedly conducted on 12th February, 2016 i.e. two weeks prior to the date of search. The Panchanama of the search proceedings unambiguously shows that nothing incriminating was recovered in the course of the search. Even in the counter affidavit of the Opposite Parties does not dispute this position. In view of the settled legal position the Court has no hesitation in concluding that the impugned assessment order is entirely without jurisdiction - the impugned assessment order and the consequential demand notice set aside. - Decided in favour of assessee.
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2021 (8) TMI 593
Adjustment of refund against outstanding demand - statutory interest under Section 244 (A) - HELD THAT:- The fact that respondent has not followed the mandatory prior requirement of intimation under Section 245 of the Act would make the adjustment wholly illegal and therefore, respondent was clearly in error in not refunding the amount. As per the Office Memorandum [F. No. 404/72/93 ITCC] issued dated 29th February, 2016, amended by another Office Memorandum dated 25th August, 2017 the assessing officer shall grant stay of demand where the outstanding demand is disputed on assessee paying 20% of the disputed demand. Admittedly, petitioner has filed an appeal disputing the outstanding demand for A.Y. 2015-16 and A.Y. 2016-17 and have deposited 20% of the amount demanded. Therefore, there is a stay of demand in force. The effect of this deposit would mean that the time to make the payment stands extended and petitioner is not deemed to be an assessee in default for the recovery provisions to be set in motion. Respondent to refund the amounts to petitioner as determined for A.Y. 2019-20 under intimation issued under Section 143 (1) of the Act with interest thereon as per law within a period of four weeks from the date of receipt of this order.
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2021 (8) TMI 585
Penalty u/s 271(1)(c) - defective notice u/s 274 - whether the impugned proceedings were initiated on the ground that the Appellant has concealed particulars of its income or on the ground that it furnished inaccurate particulars of its income? - HELD THAT:- Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c). That is clearly not the intendment of the LegislatureAO has not brought any material on record to prove that the assessee has furnished inaccurate particulars of income or concealed particulars of income. In our opinion, this is not a fit case for levy of penalty u/s. 271(1)(c) of the Act - Decided in favour of assessee.
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2021 (8) TMI 583
TDS u/s 194C - Addition u/s 40(a)(i) on account of payment made to International Freight Forwarding Agents - HELD THAT:- As decided in own case [ 2019 (4) TMI 2000 - ITAT KOLKATA] expenses/payments were in the nature of reimbursement with no element of income chargeable to tax in India or no part of such payment was made towards carrying on any work by the parties /vendors and, therefore, taxes need not to be withheld by assessee on such payments - Decided against revenue.
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2021 (8) TMI 582
Rectification u/s 154 - MAT applicability u/s 115JB on banking companies - establishing / determining the MAT credit and application of the unabsorbed depreciation / brought forward losses for the purpose of computation of tax as per MAT - mistake of carry forward of unabsorbed depreciation - HELD THAT:- As per the Explanation 3 to section 115JB of the Act considering huge loss carried forward by the assessee and in few assessment years the assessee has earned net profit, the assessee is allowed to adjust the above said profits only to the extent of unabsorbed depreciation or business loss whichever is less. Keeping the Explanation in mind, in our considered view, the computation determined by the Assessing Officer is just and proper. However, we notice that the assessee is a scheduled bank and as per the decision of the Hon'ble Jurisdictional High Court in Union Bank of India [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] held that the provisions of section 115JB of the Act as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company. We are inclined to allow the grounds of appeal raised by the assessee even though the calculation submitted by the assessee is not proper. However, the provisions of section 115JB of the Act are not applicable to a scheduled bank. Consequently, we set aside the impugned order passed by the learned CIT(A) and allow the grounds of appeal raised by the assessee.
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2021 (8) TMI 572
Attachment of properties u/s 132(9B) - Single member bench of HC granted interim relief to the Assessee - No proper opportunity given to the department - Department sought few days for production of records as directed on 01.04.2021, as the concerned officer has returned from Election duty only the previous day - HELD THAT:- The order lifting the attachment forthwith would amount to allowing the writ petition itself, as what was impugned in the writ petition is the order of attachment under Section 132(9B) of the Act. If the order of attachment is lifted, then the respondent/assessee would get the entire relief as prayed for in the main writ petition. Thus, in our considered view, the prayer for interim stay of the order of attachment, if granted before filing the counter and before adjudicating the issues, would result in granting the main relief at the interim stage itself, which is normally not granted unless and until the pleadings are complete and the arguments are heard on the prayer for interim relief. In the Memorandum of Grounds of Writ Appeal, it is stated that the scope of provisional attachment under Section 132(9B) is wide and should not be construed to be limited to the searched persons alone, as the scheme of search assessment under the Act is not limited to the searched persons alone and it will include any other person to whom the seized materials may relate. - Several other grounds have also been raised touching upon the merits of the matter. The above ground and the other grounds raised in the Writ Appeals are touching upon the merits of the matter, which need to be agitated in the writ petitions, for which, a counter affidavit of the Department is essential. As reasonable opportunity was not afforded to the appellant/Department to place their submissions on record in the form of counter affidavit. In fact, in the impugned order, the Court has directed counter to be filed. Therefore, we are inclined to interfere with the impugned order. For the reasons set out, these Writ Appeals are allowed and the impugned common order is set aside. No costs. Consequently, connected miscellaneous petitions are closed. The appellant/Department is granted eight weeks' time to file their counter affidavit and after serving copies of the counter along with Annexures, if any, in the form of Typed Set of Papers, the counter is to be filed in the Registry. List the writ petitions before the appropriate Single Bench after twelve weeks.
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2021 (8) TMI 571
Reopening of assessment u/s 147 - Denial of natural justice - HELD THAT:- Absolutely, there is no dispute regarding the proposition of law relied on by both the respective counsel regarding the judgments cited. Principles in this regard are settled and the judgments relied on by both the parties to the lis, are considered by this Court. Recording of those judgments repeatedly by this Court may not be required for the purpose of considering the facts and circumstances established in the present case on hand. The reasons furnished and disposal of reasons would play a pivotal role in arriving a decision. Considering the reasons furnished, the objections submitted by the petitioner and the disposal of the objections by the Competent Authority, this Court is of an opinion that the intricacies involved in the issues require an elaborate adjudication and admittedly, the petitioner is falling under the large tax payer unit and certain intricacies in deeper manner requires more adjudication with reference to the issues raised. Such an elaborate adjudication cannot be done with reference to the issues as the Assessee has to avail the opportunities to be provided, while proceeding with the reassessment proceedings and it is for the Assessee to participate in the reopening proceedings and avail the opportunities to be provided for the purpose of completion of reopening proceedings. This being the factum and the principles to the followed, this Court has no hesitation in arriving a conclusion that the Assessing Officer in the present case has established that he has reason to believe for reopening of assessment and there is no infirmity, as such, in reopening of the assessment u/s 147/148 - The petitioner has to cooperate for the early completion of the reopening proceedings. WP dismissed.
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2021 (8) TMI 570
Validity and scope of E-Proceeding facility introduced by the Income Tax Department - Single member bench of the HC granted relief to the assessee - Proper opportunity was not afforded to the department - addition made under Section 69A of the Act on the demonetized cash deposit by the respondent herein in the bank - HELD THAT:- E-Proceeding does not foreclose the conduct of a physical hearing, but has circumscribed four conditions, on which, such hearing shall be conducted manually. In terms of Clause 5 of the Note, the assessee, who did not have e-filing account, were requested to get themselves registered. Admittedly, the respondent herein registered themselves and returns were filed through e-portal and the response to the notice u/s 142 of the Act was sent through the E-portal. It will be too late for the respondent herein now to state that all is not well with the E-Proceeding facility. There is nothing placed before us to show that the respondent herein assessee made a specific request in terms of paragraph 4 of the above Note stating that they require a physical hearing for a particular reason. In such circumstances, the sweeping observations and remarks are not called for especially when the system has been implemented and all the assessee through out the country have switched over from manual procedure to e-procedure. The Court can take judicial notice of the fact that all recruitments conducted by various specialized recruitment agencies as well as this Court have been accepting applications from candidates only as e-copies through e-portal and it has been many years since physical applications have been done away with. The e-filing of such applications for recruitment to various posts in this Court as well as the District Judiciary have made the process very transparent and user friendly. When such is the present state of affairs and when all persons have equipped themselves to handle such procedure, we feel that the observations made in paragraphs 15 and 17 of the impugned order are not required. Writ appeal is allowed and the impugned order passed in the said writ petition is set aside. All observations and findings regarding the effectiveness of the E-Governance implemented by the ITD are set aside. Likewise, the observations and findings rendered in the impugned order touching upon the merits of the assessment are also set aside.
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2021 (8) TMI 569
Benefit of deduction u/s 10-B - revenue contended that, assessee is not engaged in manufacture of any article or thing - exercise of processing and not that of manufacture undertake by assessee - process through which the quarried rough stone goes through before it becomes a polished granite slab or tile or any other article - Tribunal allowed benefit as confirmed by CIT-A - HELD THAT:- The law on subject is no longer res integra and in this regard, we refer to the decision of the Hon'ble Supreme Court in Income-Tax Officer, Udaipur v. Arihant Tiles Marbles (P) Ltd. [ 2009 (12) TMI 1 - SUPREME COURT] and the decision in the case of Commissioner of Income-Tax, Chennai v. Pallava Granite Industries (I) (P) Ltd. [ 2013 (12) TMI 1210 - MADRAS HIGH COURT] . Both the above mentioned decisions deal with granite and marble blocks. In the case on hand, the CIT(A) had elaborately examined the process through which the quarried rough stone goes through before it becomes a polished granite slab or tile or any other article. We are of the considered view that the Tribunal was right in confirming the order passed by the CIT(A) - Decided against revenue.
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2021 (8) TMI 568
Reopening of assessment u/s 147 - no failure on the part of the assessee to disclose fully and truly the details and particulars necessary for completing the assessment u/s 143(3) - HELD THAT:- Reopening of the assessment was after years and there was no tangible material to establish that the assessee failed to disclose fully and truly all materials, which are required for the assessment at the first instance. Tribunal took note of the fact that the assessee has furnished all necessary details required for completing the assessment including the photostat copies of the Sale Deed. Tribunal observed that the original Sale Deed will always be with the buyer of the property and the assessee will have only a certified copy and the AO did not insist upon production of the original Sale Deed while completing the assessment under Section 143(3) - Therefore, it was held that there was no case for reopening the assessment. Tribunal was fully justified in holding that the reopening of the assessment could not have been made in the facts and circumstances of the case and we find no question of law, much less substantial question of law arising for consideration in this appeal.
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2021 (8) TMI 567
Deduction u/s 10A - exclusion of establishment and maintenance expenses pertaining to foreign branch from export turnover - Whether Tribunal was right in holding that 50% of the telecommunication expense both from the export turnover and total turnover is to be made while computing deduction u/s 10A? - Tribunal was right in granting deduction u/s 10A without setting of brought forward losses especially when Section 2(45) clearly defines the total income as an amount referred to in Section 5 computed in the manner laid down under the Income Tax Act and therefore the total income to be worked out after giving effect to provisions of Sections 71 and 72 contained in Chapter VI of the Income Tax Act - HELD THAT:- It is not disputed before us that all the substantial questions of law, which have been framed for consideration in these appeals, have been considered by the Division Bench of this Court in the case of CIT vs. SRA Systems Ltd [ 2019 (2) TMI 57 - MADRAS HIGH COURT] - Decided against revenue.
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2021 (8) TMI 566
Rectification of mistake u/s 154 - Merger of mistake in the order passed by the AO into the order passed by the CIT(A) and subsequent orders - Excess deduction u/s.36(1)(viia) - HELD THAT:- We find that this is a concept being expounded by the Ld.CIT(A) that if a mistake has occurred in an order, the same is said to have merged in all the subsequent orders for that assessment year. In this regard, assessee pleaded that the AO, when he passed the order u/s.143(3) r.w.s. 147 has never proposed to correct the earlier error. As reopened for a specific reason. Even in the body of the order AO did not consider this issue of earlier mistake and in the computation, he only started with the income as per the last assessment order dated 13/10/2010. Hence, Ld. Counsel pleaded that by no stretch of imagination, it can be said that the AO while making the reassessment was proposing a correction. Hence, the earlier mistake cannot get merged with this reassessment order. We find that Ld.CIT(A) has passed a cryptic order on this issue. On what principle, he found that the mistake got merged in this order, needs due elaboration in light of the submissions of the Ld. Counsel of the assessee above. The aspects also need actual verification of assessment records. It is settled law that Ld. CIT(A) needs to pass a speaking order. Hence, we remit this issue to the file of Ld. CIT(A). The Ld.CIT(A) shall elaborate how the mistake can be said to have got merged in the reassessment order giving the jurisdiction u/s 154 with reference to a mistake, which actually occurred much earlier. At what stage, the proposal to correct the error was mooted. CIT(A) shall give the assessee proper opportunity of being heard and also examining the reassessment and other records. Thereafter, he shall pass an order as per law. As regards that assessee pleading on merits. We find that in a proceeding u/s. 154, the merits of the issue cannot be adjudicated. Moreover, in the order of Tribunal referred by assessee in grounds of appeal the matter was remitted to the file of AO. In the result, this appeal filed by the assessee stands allowed for statistical purpose. Disallowances u/s 14A - HELD THAT:- It is apparent that said decision of Hon ble Supreme Court in Maxopp Investment Ltd [ 2018 (3) TMI 805 - SUPREME COURT] does not give a carte blanche to withdraw the relief granted u/s 14A. Or in other words that it mandates that without considering these aspects disallowances has to be done. There is no doubt that Hon ble Supreme Court held that relief granted from disallowances u/s 14A on the plank that the investment being stock in trade cannot be upheld. Hence, no relief can be granted to assessee on this account. But, it is still deserved relief on the other issue for own interest free funds for the purpose of u/s 8D(ii) and restricting the disallowances with that extent exempt income. These cannot be said to be a subject matter of rectification u/s 154. Hence,upon careful consideration, we hold that the disallowance is not coming under the realm for rectification of mistake u/s 154 and the AO order u/s 154 cannot be presumed to have considered these aspects. We agree with the submissions of the assessee that order passed by the AO is not sustainable as the issue was debatable and it was not liable for rectification of mistake u/s .154. Hence, we hold that order passed to withdraw the relief granted u/s 14A earlier is bereft of jurisdiction. Hence, we set aside the order of Ld.CIT(A) and decide the issue in favour of the assessee.
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2021 (8) TMI 565
Penalty u/s 271(1)(c) - Defective notice u/s 274 - HELD THAT:- As in the cases of CIT vs. SSA s Emerald Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd. [ 2016 (8) TMI 1145 - SC ORDER] , we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act the same has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Hon ble Apex Court in case of Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] held that, by no stretch of imagination can making an inaccurate claim tantamount to furnishing of inaccurate particulars when none of the information given in the return is found to be incorrect or inaccurate. In the instant case, it was a mere case of difference of opinion taken by the AO. We are of the considered view that there is no perversity or infirmity in the impugned order passed by the ld. CIT (A), hence appeal filed by the Revenue is dismissed.
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2021 (8) TMI 564
Reopening of assessment u/s 147 - Addition on account of Capital Gains - procedure contemplated u/s. 50C - case was reopened on receipt of information of Central Information Bureau (CIB) regarding non disclosure of Capital Gains by issuing notice u/s.148 of the Act which was served on the assessee - HELD THAT:- Assessee having failed in establishing the sale effected through sauda chitti (agreement), we find no infirmity in the reasons given by the CIT(A) in this regard. We note that the AVO, Nagpur submitted its valuation of the subject land at ₹ 77,94,000/-. The assessee also submitted another valuation report dated 05-06-2015 issued by M/s. Vastukala Consultants (I) Pvt. Ltd. wherein we note that the valuation of the subject land was determined at ₹ 37,24,000/- in 2008. As it appears from the record that the assessee reported no objection to the value determined by the AVO at ₹ 77,94,000/- and it is also apparent from the record the AVO considered the valuation report of M/s. Vastukala Consultants (I) Pvt. Ltd. Since, the assessee put up no objection before the AVO regarding the determination of value of the subject land and since AVO considered the valuation report submitted by the assessee through its M/s. Vastukala Consultants (I) Pvt. Ltd. We find no infirmity in the order of CIT(A) in determining the valuation of the subject land by holding the valuation adopted by the AVO is correct and proper. We are of the view that the CIT(A) considered all the submissions and contentions of the assessee and also the mandate contemplated under the provisions of section 50C of the Act in determining the valuation of the subject land for computation of Capital Gains. Thus, we agree with the reasons recorded by the CIT(A). Therefore, the grounds raised by the assessee are fails and are dismissed.
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2021 (8) TMI 563
Addition in respect of employees contribution to ESI PF - delayed deposits of contributions - HELD THAT:- As noted that the assessee has deposited the employees s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. The issue is no more res integra in light of series of decisions rendered by the Hon ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner Jaipur [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] and subsequent decisions. Also see JAIPUR VIDYUT VITRAN NIGAM LTD AND RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD [ 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] as been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. Thus addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) - Decided in favour of assessee.
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2021 (8) TMI 562
Enhancement of assessment - disallowance of sales promotion expenditure - HELD THAT:- The implication of proposed action of CIT(Appeals) was brought to the notice of assessee at the time of proceedings before the CIT(A).Therefore, it is not correct to say that the CIT(Appeals) has not issued any show cause notice before making enhancement of disallowance. Since there is no statutory notice prescribed under the Act and the assessee has been allowed full opportunity of hearing before enhancing the addition, there is no illegality in the action of the CIT(Appeals). Law only requires the assessee must be made aware of the proposed action of the CIT(Appeals) in enhancing the addition and explanation to be obtained and considered. In our opinion, the assessee has not brought anything to show that the enhancement of addition as made unilaterally by the CIT(Appeals). Thus, it has to be inferred that the assessee was duly put to notice before making the enhancement of income. Accordingly, this plea of the assessee is rejected. Whether sales promotion expenditure was incurred wholly and exclusively for the purpose of business? - The assessee submitted list of 320 persons stating that they are employees of the assessee company and went to Sri Lanka to launch the product of the company. However, there is no documentary evidence to show that 320 persons are employed by the assessee as the assessee has not filed any appointment orders or any correspondence of these persons stated to be employees of assessee company. We failed to find out names of persons in this bill in the list of 320 persons submitted by the assessee. Further it is to be noted that the assessee has not been able to lead any evidence and explain what is the product launched by the assessee with reference to sales bill raised by the assessee in subsequent sales. There is no evidence about the enquiries received for the product during the course of launch or any product sold in that region subsequent to this launch. In such circumstances, it could not be presumed that the assessee has sold any product in this region where the alleged product launch took place. There is nothing on record to show that any sales increased during this alleged launch of product in Sri Lanka. There does not appear to be any trade practice undertaken by the assessee to launch the assessee s product in Sri Lanka. Since the assessee failed to establish that expenditure was incurred wholly and exclusively for the purpose of business, the same could not be allowed as business expenditure. In the absence of any evidence and material on record, we are of the view that the assessee made attempts to claim some expenditure in Sri Lanka for some obvious purpose as sales promotion expenditure which cannot be allowed. - Decided against assessee.
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2021 (8) TMI 561
Disallowance of Employee Stock Option Scheme Compensation - CIT-A deleted the addition - HELD THAT:- We find that CIT(A) while deciding the issue in favour of the assessee has noticed that her predecessor in assessee s own case for A.Y. 2011-12 2012-13 had allowed the claim of the assessee. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. Revenue has also not placed any material on record to demonstrate that the order of CIT(A) for A.Y. 2011-12 2012-13 has been set aside by higher judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of the Revenue is dismissed. Disallowance u/s 14A r.w.r.8D - CIT-A deleted the addition - HELD THAT:- We find that CIT(A) while deciding the issue in assessee s favour has given a finding that AO has applied the provisions of Rule 8D mechanically and has not demonstrated as to how the suo moto disallowance made by the assessee was incorrect or inadequate. He has further given a finding that the suo moto disallowance made by the assessee was in accordance with the decision of Jurisdiction High Court. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the grounds of the Revenue are dismissed.
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2021 (8) TMI 560
Addition of manufacturing, selling and administrative expenses on ad hoc basis - disallowance of 10% of expenses - HELD THAT:- We note that the AO nowhere has given a finding of fact that assessee has not followed the method of accounting as mentioned u/s. 145(1) of the Act. It is also not the case of the AO that assessee has not computed the income in accordance with the accounting standard notified u/s. 145(2) - conditions for invoking section 145(3) of the Act (estimation) of income has not been fulfilled/satisfied. And since the AO has not disputed the correctness and completeness of the books of the assessee, the AO could not have estimated the income by ad hoc disallowance as done in this case. CIT(A) as well as the AO has said there was certain deficiency in verifying the expenses for non-production of supporting vouchers etc. According to us, if there is deficiency in the vouchers or the bills supporting the incurrence of an expenditure, at the most, the expenses to the extent which are not supported by the vouchers could be regarded to be non-genuine and can be disallowed by the AO. Since the AO or the Ld. CIT(A) has not rejected the books of account of the assessee they could not have estimated (ad hoc disallowance of 10%) the expenses claimed to have been incurred by the assessee. Moreover, the AO has made the ad hoc disallowance on the supposition that there might be personal expenditure - AO did not notice that the assessee is a company and not a Firm or proprietary concern etc. So, his reason for disallowance also fails - action of the AO as well as the Ld. CIT(A) making ad-hoc disallowance is per se arbitrary and whimsical, therefore, the action of the CIT(A) confirming the 10% disallowance in respect of delivery charges as well as miscellaneous charges are directed to be deleted. Therefore, the appeal of the assessee stands allowed.
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2021 (8) TMI 559
Deduction u/s 80IA - denial of deduction of as Assessee Company was merely a contractor - HELD THAT:- CIT(A) after taking note of the Tribunal s decision in assessee s own case [ 2018 (1) TMI 1571 - ITAT KOLKATA] and the ratio laid by the Tribunal in Simplex Somdutt Builders [ 2013 (6) TMI 813 - ITAT KOLKATA] has allowed the claim of the assessee u/s. 80IA of the Act which we find to be as a plausible view and, therefore, we confirm it and Revenue s ground of appeal is dismissed. Deduction u/s. 80IB - AO was of the opinion that the hot mixing plant used for mixing the raw material for construction of road and chips of different sizes and minerals filler are mixed with Bitumen in the hot mix plant as per the required temperature for laying the base course for construction of road is nothing but mixing of basic ingredients for laying at the top layer of the road, therefore, it is not a manufacturing or is production of article or thing, so the assessee did not satisfy the condition of section 80IB - HELD THAT:- In view of the ratio laid by the Hon ble Supreme in Court Empire Industries Ltd.[ 1985 (5) TMI 215 - SUPREME COURT] we do not agree with the view of the AO that the assessee s Hot Mixed Plant is not engaged in the activity of manufacturing or production. Since the view of the Ld. CIT(A) is a plausible view, we confirm the same that the assessee is eligible for deduction u/s. 80IB of the Act which does not require any interference from our part. Therefore, ground no. 2 of both the appeals are dismissed.
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2021 (8) TMI 558
Disallowances of the interest of late deposit of tax deducted at source - HELD THAT:- Assessee has deposited the tax deducted at source from various payees but has not deposited the same in time provided by the law. As it is deposited late the Assessee was liable to pay interest thereon. Firstly, the payment of the interest cannot be said to be an expenditure wholly and exclusively incurred for the purpose of the business. It is expenditure on which tax is deductible might be an expenditure incurred for the purpose of the business. But the interest on late deposit of tax deducted at source cannot be said to be an expenditure incurred wholly and exclusively for the purpose of the business. Such deduction cannot be allowed u/s 37(1) of the Act. Even otherwise late payment of TDS is infraction of law and therefore, any payment made for infraction of law cannot be considered as expenditure incurred by the Assessee wholly and exclusively for the purpose of the business. Here in this case the Assessee has been saddled with the statutory liability to deduct tax at source and deposit to the credit of the Govt of India in time. The Assessee has failed to pay his statutory dues in time and therefore, there is an interest liability. Therefore, such expenditure is not at all allowable to the Assessee as deduction u/s 37(1) Even otherwise this deduction is not allowable in any of the section u/s 30 to 36 of the Act. AO has correctly applied decision of the Hon ble Madras High Court in CIT Vs. Chennai Properties [ 1998 (4) TMI 89 - MADRAS HIGH COURT] in making the disallowance. CIT(A) also correctly confirmed the same. Accordingly, ground No. 2 of the appeal is dismissed. Disallowance of consultancy charges - HELD THAT:- Liability to pay commission to this party arises on account of the assessee only at the time of receipt of the payment for equipment from the customers. Assessee received orders from Usha Martin Ltd for supply of the goods in the month of August and November 2010. Supplies were made from month of November 2010 to September 2012. Payments were received from 19 October 2010 till 20th of August 2014. Thus payments were also last received on 20 August 2014. Therefore on the date of the payment received by the assessee the liability to pay consultancy charges arises. In the present case the invoices were raised by the consultant on 31st of March 2014 for commission of ? 6,042,000. However as claimed by the assessed the liability to pay consultancy charges arises on receipt of the payment by the assessee which has happened from 19 October 2010 till 20th of August 2014. The assessee has claimed the complete amount of commission/consultancy charges of ₹ 6,042,000 during the year despite receipt of payment from the customers till 20th of August 201 - assessee is entitled to deduction of all the payments received till 31st of March 2014 from the customers and commission thereon is allowable to the assessee in assessment year 2014-15. Thus we find that out of the total commission of ₹ 6,042,000 claimed by the assessee during the year only the commission which relates to the payment received by the assessee from its customers till 31st of March 2014 assessee is entitled for deduction of commission/consultancy charges to that extent only. In view of this we set-aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to submit the details of payment received till 31st of March 2014 and due commission thereon. The learned assessing officer may examine the same and granted deduction of consultancy charges to that extent. In the result ground number 3-4 are allowed with above directions.
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2021 (8) TMI 557
Validity of order of AO - AO has failed to make the addition on those issues for which the Tribunal has set aside the appeal to the file of the AO and AO has made altogether different additions and thus exceeded his jurisdiction - HELD THAT:- Undisputedly the additions made in the set aside assessment order passed under section 144 read with section 254 of the Act dated 27.11.2018 were totally different than what have been restored by the tribunal to the file of the AO vide order [ 2018 (3) TMI 1929 - ITAT MUMBAI] . In our opinion the order of Ld. CIT(A) is not correct and the appellate order is not sustainable on the ground that AO have made all new additions than what have been restored to the file of the AO by the Tribunal. AO jurisdiction to make assessment with regard to the issues which are referred to the AO by the tribunal is very limited and confined to the set aside issues and AO has no power to add any other amount other than what has been restored. If the AO does so he exceeds the jurisdiction which he is not empowered under the law. Thus we are inclined to set aside the order of Ld. CIT(A) and hold that order passed by the AO is invalid and void ab-initio.
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2021 (8) TMI 556
Estimation of income - Bogus purchases - CIT- A confirmed the addition @12.5% of purchased value - HELD THAT:- Estimation of G.P by CIT(A) at 12.5% on bogus purchases is on higher side - addition is restricted to 6% of the bogus purchases in each of the assessment years. The impugned order is modified, accordingly. The appeals of the assessee are partly allowed in the terms aforesaid.
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2021 (8) TMI 555
Penalty u/s 271(1)(c) - Monetary limit for filing appeal - assessee had obtained accommodation entries in the form of certain bogus purchase bills from certain hawala parties which were in the business of providing bills without delivery of goods etc - HELD THAT:- Admittedly, it is a settled position of law that quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the circular w.r.t penalty also, it could by no means be construed that penalty was to be treated at par with the quantum additions. As is discernible from Clause 10(e) of the aforesaid CBDT Circular No. 3/2018 (as amended on 20.08.2018), the same applied only to additions which were based on information received from external sources. As noticed since the levy of penalty by no means could be construed as an addition within the meaning of Clause 10(e) of the aforesaid circular, therefore, we do not find any merit in the contentions advanced by the ld. D.R that the aforesaid exception carved out in the CBDT Circular No. 3/2018 (supra) would also take within its realm a penalty imposed under Sec. 271(1)(c) w.r.t the additions made by the A.O towards bogus purchases on the basis of information received from Sales Tax Department, i.e an external agency. Accordingly, finding favour with the claim of the ld. A.R that the appeal of the revenue is covered by the CBDT Circular No. 17/2019, dated 08.08.2019, the same, thus, in our considered view is not maintainable. Accordingly, we herein dismiss the appeal of the revenue, for the reason, that the tax effect therein involved is lower than that contemplated in the aforesaid CBDT Circular fixing the monetary limit of filing of appeals by the revenue before the Tribunal. Appeal of the revenue is dismissed.
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Customs
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2021 (8) TMI 589
Rejection of revision application filed by the petitioner under Section 129 DD of the Customs Act, 1962 - Jurisidction - impugned order has been passed by the Joint Secretary (Revision Application), Government of India, who was also in the same rank of Commissioner of Central Excise and Customs, who had passed the Order-In-Appeal - HELD THAT:- The matter is remitted to the present Revisional Authority under Section 129 DD of the Act for fresh consideration of the matter. It shall be incumbent upon the Revisional Authority, after affording full opportunity of hearing to the petitioner, deal with each of the contentions raised and pass reasoned orders on merits and in accordance with law, inhibited and uninfluenced by the impugned order which has been set aside and communicate the decision taken to the petitioner. Petition allowed by way of remand.
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2021 (8) TMI 588
Rejection of revision application filed by the petitioner under Section 129 DD of the Customs Act, 1962 - Jurisidction - impugned order has been passed by the Joint Secretary (Revision Application), Government of India, who was also in the same rank of Commissioner of Central Excise and Customs, who had passed the Order-In-Appeal - HELD THAT:- The matter is remitted to the present Revisional Authority under Section 129 DD of the Act for fresh consideration of the matter. It shall be incumbent upon the Revisional Authority, after affording full opportunity of hearing to the petitioner, deal with each of the contentions raised and pass reasoned orders on merits and in accordance with law, inhibited and uninfluenced by the impugned order which has been set aside and communicate the decision taken to the petitioner. Petition allowed by way of remand.
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Insolvency & Bankruptcy
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2021 (8) TMI 586
Approval of Resolution Plan - Appellant claims that the CoC and the Resolution Professional acted arbitrarily to suit the vested interests of creditors and in defiance of the objectives of the IBC, rejected the Resolution Plan of the Appellant - HELD THAT:- The Appeal itself shows that the Appellant had been participating in the CIRP and had on earlier occasion also filed revised plan. The CoC in the Minutes considered e-mail claimed by the Appellant to have been sent on 22nd January, 2021 and having considered e-mail decided to proceeded to consider the Resolution Plan which had been submitted clause by clause. The CoC in its wisdom did not find it appropriate to give more time to the Appellant and discussed the Resolution Plan and rejected the same for reasons recorded. These are commercial decisions and we cannot hear the Appellant claiming that he was offering bigger amount and so the CoC should be directed to consider his plan. Section 7 Application was admitted on 8th November, 2019 and the order of liquidation came to be passed on 31st May, 2021. Keeping Section 12 of the IBC in view and the time frame within which CIRP should be completed, we do not find the Appellant making out any case for us to entertain the Appeal if liquidation order has been passed. Appeal dismissed.
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2021 (8) TMI 584
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Petition filed on the basis of decree passed by the Hon ble Bombay High Court against the Corporate Debtor is maintainable? - existence of debt and dispute or not - HELD THAT:- The decree passed by the Hon ble Bombay High Court is binding on the Corporate Debtor. If at all the Corporate Debtor is aggrieved against the decree passed by the Hon ble Bombay High Court, his remedy is only to file an appeal against the decree. It appears the time for preferring an appeal against the decree is over without any appeal being filed and thus attained finality. It is not out of place to mention here that recently the Hon ble Supreme Court in the case of M/S. ORATOR MARKETING PVT. LTD. VERSUS M/S. SAMTEX DESINZ PVT. LTD. [ 2021 (8) TMI 314 - SUPREME COURT] held that stipulation of payment of interest is not a condition precedent to qualify as a financial debt. This Bench is of the considered opinion that the above Company Petition filed by the Financial Creditor basing on a decree is maintainable and is liable to be admitted - petition admitted - moratorium declared.
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Service Tax
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2021 (8) TMI 591
Levy of service tax - taxable service or not - appellant developed anti virus software in the name of 'K7 Total Security' and 'K7 anti virus' - vires of Section 65(105)(zzzze) of Chapter V of the Finance Act, 1994 - HELD THAT:- Hon'ble Division Bench of this Court in the case of INFOTECH SOFTWARE DEALERS ASSOCIATION VERSUS UNION OF INDIA AND OTHERS [ 2010 (8) TMI 13 - HIGH COURT OF MADRAS] where the said decision of the Hon'ble Division Bench of this Court has dealt with all issues in a comprehensive manner though the prayer sought was for a declaration and such declaratory relief was sought for by the members of an association, who are all software dealers/developers. The definition of 'information technology software' is wide enough to bring within its fold the anti virus software, which has to be obviously installed in the hardware and it would interact whenever the user of the computer engages the system. Therefore, the learned Single Judge is right in holding that the stand taken by the appellant herein does not merit consideration. Appeal dismissed.
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CST, VAT & Sales Tax
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2021 (8) TMI 595
Reversal of Input Tax Credit - invisible loss occasioned during the process of manufacture of Ghee - Section 19(9)(iii) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The issue is decided in the case of M/S. SARADHAMBIKA PAPER AND BOARD MILLS PRIVATE LIMITED VERSUS THE STATE TAX OFFICER GOBICHETTYPALAYAM, THE APPELLATE DEPUTY COMMISSIONER (ST) [ 2021 (7) TMI 341 - MADRAS HIGH COURT] where it was held that Issue decided in the case of M/S. ARS STEELS ALLOY INTERNATIONAL PVT. LTD. VERSUS THE STATE TAX OFFICER, GROUP I, INSPECTION, INTELLIGENCE I, CHENNAI [ 2021 (6) TMI 957 - MADRAS HIGH COURT] where it was held that the reversal of ITC involving Section 17(5)(h) by the revenue, in cases of loss by consumption of input which is inherent to manufacturing loss is misconceived, as such loss is not contemplated or covered by the situations adumbrated under Section 17(5)(h). The above order has been passed in the context of TNVAT and would be applicable to the facts and legal position in this case as well. The sole distinction is that the commodity in that case was steel whereas the product in the present case is Ghee and this difference is not material. Petition allowed.
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2021 (8) TMI 590
Validity of assessment order - it is alleged that the assessment orders passed by the respondent were without jurisdiction - Proviso to Section 22(2) of the TNVAT Act - HELD THAT:- Section 27 of the TNVAT Act deals with assessment of escaped turnover and wrong availment of input tax credit. Sub-Section (2) of Section 27 of the TNVAT Act states that where, for any reason, the input tax credit has been availed wrongly or where any dealer produces false bills, vouchers, declaration certificate or any other documents with a view to support his claim of input tax credit or refund, the Assessing Authority shall, at any time, within a period of five years from the date of order of assessment, reverse input tax credit availed and determine the tax due after making such an enquiry, as it may consider necessary. The General Sales Tax Law of the State of Tamil Nadu in the instant case is the TNVAT Act and therefore, the provisions of the TNVAT Act and the Rules framed thereunder would fully apply and govern the assessment proceedings under the CST Act. Appeal allowed.
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2021 (8) TMI 587
Appropriate Jurisdiction - Demand of sales tax - Department has opined that since the writ petitions pertain to Sales Tax, as per the roster fixed by the Chief Justice, the same ought to be placed before the Division Bench - HELD THAT:- In these writ petitions, orders passed by the Chairman, Administrative and Appellate Tribunal, Daman on proceedings initiated under the provisions of the Daman Diu Value Added Tax Regulation, 2005 are under challenge. It is not in dispute that such orders are passed by a quasi-judicial authority on proceedings arising out of a local law - We do not find that the Central Sales Tax Act or the relevant law under which proceedings were initiated against the petitioners and on which the impugned orders have been passed form part of the excepted category of cases in sub-rule (3) of Rule 18. The roster fixed by the Chief Justice requires this Bench to take up Writ Petitions in indirect tax matters under Central Acts and State Acts (including Excise Duty, Customs Duty and Service Tax) . The Deputy Registrar has not referred to Rule 18(3) of the Appellate Side Rules of this Court, in terms whereof the writ petitions under consideration ought to be placed before the learned Single Judge for consideration and disposal. The office report dated June 09, 2021 is, accordingly, overruled.
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Indian Laws
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2021 (8) TMI 592
Dishonor of Cheque - misused of cheque by the defendants - rejection of plaint under the provisions of Order 7 Rule 11(d) of the Civil Procedure Code even before issuing summons to the defendants - partial rejection of plaint is permissible or not - plaintiff wants to seek a declaration that the cheques- in-question were drawn by him in favour of the defendants by way of security and such instruments be declared as void or voidable or without any lawful consideration - HELD THAT:- Order 7 Rule 11 (d) the Civil Procedure Code, the Court cannot dissect the pleading into several parts and consider whether each one of them discloses a cause of action. Under the Rule, there cannot be a partial rejection of the plaint. Punjab and Haryana High Court in the case of ABN AMRO Bank Vs. the Punjab urban Planning and Development Authority [ 1999 (7) TMI 700 - PUNJAB AND HARYANA HIGH COURT] has held that What evidence the plaintiff would lead to prove his case or what probable defence the defendant would raise is not the concern of Court at that initial stage of proceedings. Cause is the proper generic term. Its construction must and has to be decided keeping in mind the facts and circumstances of each case. The steps taken in the suits are proper in law and on facts of the case, they call for no need to retrace the order passed by the learned trial Court. Thus, the Court in no uncertain terms has held that there could be partial striking out of pleadings but not rejection of the plaint. To bring out the cause of action, a plaint must state the necessary conditions to maintain a suit. The merits of those conditions and/or terms is inconsequential at the stage for consideration of any application at the instance of the defendants for rejection of the plaint. What evidence the plaintiff would lead to prove his case or what probable defense the defendants would raised is not the concern of the Court at that initial stage of the proceedings. The Court below committed an error in rejecting the plaint at the very threshold i.e. even before issuing the summons - Suit is ordered to be restored to its original file. The Court shall now proceed to issue summons to the defendants and thereafter proceed in accordance with law - Appeal allowed.
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