Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 18, 2020
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Notifications
Customs
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25/2020 - dated
17-8-2020
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ADD
Seeks to amend notification No. 42/2015-Customs (ADD), dated 18th August 2015 to extend the levy of ADD on imports of "Caustic Soda" originating in or exported from China PR and Korea RP, for a period of three months i.e. upto 17th November, 2020.
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24/2020 - dated
14-8-2020
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ADD
Seeks to amend notification No. 41/2015-Customs(ADD) to extend the levy of anti-dumping duty on imports of Diketopyrrolo Pyrrole Pigment Red 254 (DPP Red 254) originating in or exported from China PR for a period of three months.
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74/2020 - dated
17-8-2020
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Cus (NT)
Appointment of CAA in case of M/s Handen Climate Systems India Private Limited.
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73/ 2020 - dated
17-8-2020
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Cus (NT)
Appointment of CAA in case of M/s Sanden Vikas India Private Limited.
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72/2020 - dated
14-8-2020
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Cus (NT)
Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver
GST - States
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(29/2020)-FD 03 CSL 2020 - dated
10-8-2020
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Karnataka SGST
Seeks to amend Notification No. (07/2020) No. FD 03 CSL 2020, dated the 27th March, 2020
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61/2020-State Tax - dated
11-8-2020
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Maharashtra SGST
Seeks to amend Notification no. 13/2020-State Tax in order to amend the class of registered persons for the purpose of e-invoice
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60/2020-State Tax - dated
11-8-2020
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Maharashtra SGST
Maharashtra Goods and Services Tax (Ninth Amendment) Rules, 2020.
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POL-41/1/2017-Policy-6051/CT - dated
26-6-2020
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Orissa SGST
Extension of time for filling of return in Form GSTR-3B upto 03-10-2020
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120/Leg/2020-LD - dated
7-8-2020
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Puducherry SGST
Puducherry Goods and Services Tax (Second Amendment) Act, 2020
Income Tax
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F. No.173/165/2020 -ITA-I - dated
14-8-2020
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IT
Guidelines for the implementation of Faceless Assessment Scheme, 2019
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Release of detained goods - detention on the ground that the consignment was not supported by the original invoice and there was variation detected in the goods transported from the description in the invoice - Goods directed to be released on furnishing bank guarantee - HC
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Provisional attachment of Bank Accounts - Period of one year has expired - Although no specific date has been mentioned in the impugned order of provisional attachment of the bank account, yet having regard to the statement made by the learned counsel that the attachment came into force from 2-8-2019, we take it that the order of provisional attachment has come to an end. - HC
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Provisional attachment of Bank Accounts - Section 83 of the CGST Act - Expiry after a period of one year - As on 22.06.2020, the provisional attachment of bank account of the petitioners, the communication/order dated 28.05.2019 ceases to operate with the effect from 27.05.2020 - Respondents directed to defreeze the petitioners’ bank account within a period of two weeks - HC
Income Tax
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Condonation of delay in filing an appeal - delay of 442 days - The explanation for delay of 442 days in our view is insufficient, unsatisfactory and unreasonable. Therefore, the vague explanation without any particulars or details cannot be accepted as a reasonable cause. - HC
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Rejection of books of accounts - The material purchased in cash or part payment made in cash is fully supported by invoices or vouchers. The same invoices were produced during the assessment proceeding. Each payment duly supported by the external invoices. Hence, this is incorrect contention that these are supported by internal vouchers only - Rejection of books of account on the basis of insignificant defects in all respect, is not justified u/s 145 - AT
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Capital gain from sale of commercial property - intra-head adjustment of loss - Benefit of carry forward of long term capital loss on the sale of shares for the current year - if, after work out of deduction u/s 54F if the capital gain arose on sale of certain assets is not chargeable to capital gain than the loss arose to assessee on sales of another assets cannot set off from gain of such assets. It is not necessary that one should first apply Section 70(3) and thereafter only, the assessee could invest the capital gain arising from the long term capital asset. - AT
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Production Services Agreement - Permanent Establishment (PE) in India - the contract between the two entities was primarily that of a principal and agent. - M/s DBPL was acting as an independent entity which was required to carry out the assigned work independently and the assessee could not said to be PE of that entity in India. - AT
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Penalty u/s 271B - non-furnishing of the Audit Report before the specified date - As the AO has failed in his duty in verifying whether books of account were audited before the specified date and only emphasized on the fact of furnishing the audit before the specified date , we do not find any reason for confirming the penalty levied u/s 271B - AT
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Income from other sources - Addition u/s.56(2)(viib) - The revenue authorities cannot force the assessee to adopt particular method for valuing the fair market value of the share especially when Rule 11UA(1)(c)(b) provides that it is the option of the assessee to chose any method either discounted or book value method for estimating the fair market value of the shares issued by it during the relevant financial period. - AT
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Block assessment u/s 158BC - period of limitation u/s 158BE - In the case of the assessee herein on 07-11-2001, the investigation wing of department after almost one year has only converted the non-existent prohibitory order into deemed seizure, and therefore in the present case the panchnama dated 07-11-2001 is only for the purposes of extending the limitation period. - Therefore, the assessment order dated 28-11-2003 is barred by limitation - AT
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LTCG - As explained the reasons for not-depositing the amount in Capital Gains Accounts Scheme which is also not disputed. Since the assessee has substantially complied with section 54(1), therefore, a mere non-compliance of a procedural requirement under section 54(2) itself cannot stand in the way of the assessee in getting the benefit under section 54. - AT
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Depreciation on the assets acquired under slump sale - when two or more words which are susceptible of analogous meaning are coupled together, they are understood to be used in their cognate sense. The words take colour from each other and are quantified by the meaning of each other, more general is restricted to a sense analogous to that looks of the less general - Invocation of 5th proviso to section 32 is correct to the extent of computation of depreciation on the WDV of assets taken over from the transferor company. - AT
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Determination of Income from house property - Suppression of rental income - We could appreciate the case of the AO, if he has made reference to the rent deed of adjoining properties and pointed out that this leased property could be fetch this much rent, and therefore, the annual letting value of the assessee’s house property is to be determined equivalent to the amount on which original rent fixed between the assessee and BWP. - AT
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Capital gain computation - There was an amendment under the provisions of section 55A where the word ‘variance’ was inserted but such amendment is applicable with effect from 01-07-2012 which is prospective in nature.- AT
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Disallowance being commission on sales paid to the shareholder Director(s) - If directors in terms of Board resolution are entitled to receive commission for rendering services to the company and if it was in terms of employment on the basis of which they have been rendering services, then such remuneration/commission is part and parcel of salary. - AT
Customs
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Levy of Ground Rent on Containers - steamer agents - scope of the term owner - distinction between storage of goods and demurrage charges - time limitation for de-stuffing the goods and return of the container - scope of the term "May" - can it be treated as "Shall" - Held No - SC
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Requirement to make pre-deposit - undue hardship in making payment - appellant contends that there has been no production, and that there are various liabilities on the appellant - on the basis of the contentions advanced and the facts stated, we are of the view that it would cause undue hardship if the appellant is directed to make the pre-deposit. - Relief granted - HC
IBC
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Approval of Resolution Plan - Corporate Debtor is MSME - CIRP process - there was compromise of confidentiality regarding liquidation value which appears to have been known to the Respondent No.2 before submitting the Resolution Plan. Apart from this the plant and machinery were not owned by the Corporate Debtor, and the Resolution Plan submitted on the hypothesis that the plant and machinery would be available for business and explanation is clearly a Plan which is not feasible and viable. - matter remitted back to the Adjudicating Authority with a direction to send back the Resolution Plan to the Committee of Creditors to resubmit the Plan - AT
Service Tax
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Recovery of service tax - Before adjudicating the issues raised in the show-cause notice, if the respondents proceed u/s 87(b) of the Finance Act and Section 79(1)(c)(i) of the Act read with Section 142(8)(a) of the CGST Act, 2017, the petitioner will indeed be put to hardship. Such proceedings are ordinarily to be initiated only after adjudication process is over. - HC
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Works Contract Service - composition scheme is optional at the option of the assessee - The appellant is not entitled to composition scheme as they have not opted for the same; secondly, they are disputing the addition of material components supplied free by the principal as required under the composition scheme; the details and actual cost of the material thus supplied needs to be arrived at. - AT
Central Excise
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Waiver of pre-deposit - undue hardship to make the deposit - Section 35F - Undisputedly, the assessee has stopped production from the year 2013. Ever since then, there is neither production, nor generation of any income. In the absence of any income being generated, we are of the view that it would cause undue hardship if the appellant is directed to make the pre-deposit. - Partial relief granted - HC
VAT
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Validity of assessment order - deemed assessment - 'assessment' in Section 9(2) includes reference to a deemed assessment and the timelines set out for the bar of limitation under TNVAT Act would apply with equal force in matters of CST. - HC
Case Laws:
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GST
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2020 (8) TMI 335
Release of detained goods - detention on the ground that the transportation of the goods having been covered by two e-way bills, when there was only one invoice covering the transportation - misdeclaration of mode of transportation shown as per the e-way bills - HELD THAT:- The writ petition is disposed off by directing the 1st respondent to permit the petitioner to clear the goods and the vehicle on furnishing a bank guarantee for the amount demanded in Ext.P4. Thereafter, the 1st respondent shall forward the files to the adjudicating authority for an adjudication of the dispute under Section 130 of the GST Act, which adjudication shall be completed only after hearing the petitioner, within a period of one month from the date of the files being forwarded to the 2nd respondent. Petition disposed off.
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2020 (8) TMI 334
Release of detained goods - detention on the ground that the consignment was not supported by the original invoice and there was variation detected in the goods transported from the description in the invoice - HELD THAT:- The writ petition is disposed off by directing the 1st respondent to permit the petitioner to clear the goods and the vehicle on furnishing a bank guarantee for the amount demanded in Ext.P5 - Thereafter, the 1st respondent shall forward the files to the adjudicating authority for an adjudication of the dispute under Section 130 of the GST Act, which adjudication shall be completed only after hearing the petitioner, within a period of one month from the date of the files being forwarded to the 2nd respondent. Petition disposed off.
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2020 (8) TMI 333
Provisional attachment of Bank Accounts - attachment came into force from 2-8-2019, but no specific date has been mentioned in the impugned order of provisional attachment of the bank account - Section 83(2) of the Gujarat Goods and Services Tax Act, 2017 - HELD THAT:- A perusal of the aforesaid Sub-Section-2 of Section 83 makes it abundantly clear that the provisional attachment would cease to have effect after the expiry of a period of one year from the date of the order made under Sub-Section-1 - Although no specific date has been mentioned in the impugned order of provisional attachment of the bank account, yet having regard to the statement made by the learned counsel that the attachment came into force from 2-8-2019, we take it that the order of provisional attachment has come to an end. Thus, no further adjudication is necessary as regards the other contentions raised in the writ application - the State Bank of India i.e. the respondent No.3 is directed to take notice of this order and permit the writ applicant to operate his Bank Account - application allowed.
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2020 (8) TMI 332
Validity of Section 130 of the Kerala Goods and Service Tax Act, 2017 and the Central Goods and Service Tax Act - interim order has been complied with and the vehicle has been released based on Bank guarantee furnished by the petitioner - petitioner submits that, the petitioner doesn't propose to press for the challenge on Section 130 of Kerala Goods and Service Tax Act and the proceedings initiated under Exts. P4 and P5 may be continued. HELD THAT:- The writ petition is disposed of permitting the respondents to pursue Exts. P4 and P5 proceedings under the CGST/SGST Act, 2017.
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2020 (8) TMI 331
Reopening of portal for filing of FORM GST TRAN 1 within the time stipulated - transitional credit - transition to GST regime - applicability of Circular No.39/13/2018-GST dated 03.04.2018 - HELD THAT:- The issue has to be considered first by the learned Single Judge. Considering the stalemate now occasioned by reason of the earlier Writ Petitions numbered as W.P.(C). 9081/2018 and W.P.(C). 9067/2018, the learned Counsel seeks for withdrawing these writ petitions, without prejudice to their contentions. We are of the opinion that Writ Petition Nos. 9081/2018 and 9067/2018 can be permitted to be withdrawn - The Writ Appeals are disposed off recording the prayer for withdrawal and our permission so to do, with the reservation that it would be without prejudice to their contentions in the later writ petition, as raised to allow the input tax claim on the stock where tax has been paid under the VAT Act. The assessees cannot claim under the Circular and their case has to be considered on the other contentions raised independently. The order impugned in those orders need not detain the learned Single Judge in considering the merits of the contentions raised. But the department would be entitled to resist the claim of the petitioners on the very same reasoning that their defeault cannot be rectified - the Writ Appeals are disposed off with the above observation and direct the Registry to post the Writ Petitions before the learned Single Judge.
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2020 (8) TMI 330
Constitutional validity under section 16 (2) (c) of the U.P. Goods and Service Tax Act, 2017 - Bye-passing of statutory remedy - Section 107 of the U.P. Goods and Services Act, 2017 - HELD THAT:- As per Rule 1-A Order XXVII of Code of Civil Procedure, 1908 a notice is required to be issued either to the Attorney General or to the Advocate-General, as the case may be, before granting a declaration about its invalidity by the High Court in exercise of its jurisdiction under Article 226 or 227 of the Constitution of India. Issue notice to learned Advocate General - List after eight weeks.
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2020 (8) TMI 329
Provisional attachment of Bank Accounts - Section 83 of the CGST Act - whether Annexure-A, communication /order dated 28.05.2019 in respect of provisional attachment of Bank Account of the petitioners under Section 83 of the CGST Act, is existing in the eye of law as on this day or not? - HELD THAT:- By virtue of the Sub Section 2 of Section 83 of the aforesaid Act, 2017, the impugned provisional attachment of Bank account of the petitioners dated 28.05.2019 passed by respondent No.1 under Section 83 of the CGST Act, 2017 is in vogue till 27.05.2020. Whereas, the petitioners have presented the present petition on 22.06.2020. As on 22.06.2020, the provisional attachment of bank account of the petitioners, the communication/order dated 28.05.2019 ceases to operate with the effect from 27.05.2020. Respondent Nos.1 and 2 are hereby directed to defreeze the petitioners bank account within a period of two weeks from the date of receipt of this order - Petition disposed off.
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2020 (8) TMI 328
Revocation of the cancellation of registration order - contention of the learned counsel for the petitioner is that the orders of the Assessing Authority and of the First Appellate Court cannot be sustained now in view of the Central Goods and Services Act (Removal of Difficulties Order), 2020 issued under Section 172 of the Act - HELD THAT:- The order dated 13.11.2019 passed by the Assistant Commissioner, Goods Sales Tax, Allahabad and the order dated 17.12.2019 passed by the Additional Commissioner (Appeal) Judicial Side IInd, State Goods and Service Tax, Prayagraj, are set aside. The application dated 24.10.2019 which was filed by the petitioner for the revocation of the cancellation order dated 24.12.2018 shall now be decided in accordance with law within a period of 15 days from the date of production of a copy of this order. Petition disposed off.
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Income Tax
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2020 (8) TMI 327
Exemption u/s 11 - Form No.10 filed by the Assessee belatedly about the accumulation of income by the respondent Assessee - Whether form 10 can be accepted by the assessing officer during the reassessment proceedings as held by ITAT? - HELD THAT:- Even otherwise we are satisfied that against the impugned order of the learned Tribunal, no question of law arises for our consideration under Section 260A of the Act, since a Coordinate Bench has already held that Form No.10 filed belatedly could be taken into account by the Assessing Officer and has remanded the case back to the Assessing Authority in the case of Chandraprabhuji Maharaj Jain -vs- Deputy Commissioner of Income-tax, (Exemptions), Chennai [ 2019 (8) TMI 363 - MADRAS HIGH COURT ] . Therefore, we are of the opinion that the learned Assessing Authority has rightly taken into account the Form No.10 filed by the Assessee in the present case albeit belatedly and has granted the desired relief to the respondent Assessee, which is a Government Company incorporated for promotion of Industrial Development in the State. - Decided against revenue.
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2020 (8) TMI 326
Withholding refund u/s 241A - petitioner seeking refund as determined under intimation issued by Centralised Processing Center (C.P.C.) under Section 143(1) - HELD THAT:- Revenue, on instructions states that the respondents, without prejudice to their rights and contentions and without admitting to any illegality are willing to re-consider as to whether Section 241A of the Act is attracted to the present case and pass a fresh order in accordance with the judgments passed in Maple Logistics Private Limited [ 2019 (11) TMI 340 - DELHI HIGH COURT] and Ericsson India Private Limited [ 2020 (3) TMI 606 - DELHI HIGH COURT]. Accordingly, we set aside the impugned order dated 01st June, 2020 as well as the reasons given by the Assessing Officer dated 04th February, 2020 and the approval given by PCIT u/s 241A - We also grant six weeks' time to the respondents to re-consider the aspect whether the amount found due to be refunded, or any part thereof, is liable to be withheld under Section 241A in line with the decisions of this Court -The entire consideration, with the approval of the Principal Commissioner of Income Tax to the withholding of the refund amount, or any part thereof, should be completed within six weeks from today, failing which, we direct that without awaiting any further orders, the respondents shall transmit the amount of refund determined under section 143 (1) of the Act along with interest to the petitioner. In the eventuality of the respondents recording any reasons for withholding a part thereof, or the entire amount due for refund to the petitioner under Section 143(1), the reasons thereof as approved by the Principal Commissioner of Income Tax shall be provided to the petitioner forthwith.
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2020 (8) TMI 325
Condonation of delay - delay of 442 days - Exemption u/s 11 denied - exemption u/s 12A allowed - HELD THAT:- The negligence on the part of the assessee for not taking necessary steps for filing the appeal within the limitation period provided by statute cannot be considered as a reasonable or sufficient cause. Even the assessee is very casual in explaining the reasons in the application of condonation of delay which is not supported by a affidavit. The cause explained by the assessee is much less then the sufficient cause as to why the appeal was not filed within the limitation or immediately after expiry of limitation period. In the absence of any detail as to what steps the assessee took to reach to the decision of challenging the impugned order and filing the present appeal and why the assessee has not filed the present appeal as soon as possible even after expiry of the limitation period. The explanation for delay of 442 days in our view is insufficient, unsatisfactory and unreasonable. Therefore, the vague explanation without any particulars or details cannot be accepted as a reasonable cause. Accordingly, the application for condonation of delay is dismissed and consequently the appeal of the assessee is not maintainable being barred by limitation. Since the appeal of the assessee is found to be barred by limitation, therefore, we do not propose to go to the merits of the appeal. Appeal of the assessee is dismissed.
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2020 (8) TMI 324
Stay petition - orders to pay 20% of the disputed amounts as a condition for grant of stay for recovery of the balance amount, pending consideration of the stay application by the appellate authority - HELD THAT:- We dispose the writ petition by directing the 1st respondent to consider and pass orders on Exts.P3, P8 and P13 appeals within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the petitioner. It is made clear that till such time as orders are passed by the 1st respondent as directed, and the order communicated to the petitioner, the recovery steps for recovery of amounts confirmed against the petitioner by the assessment orders in question shall be kept in abeyance. Set aside Exts.P4, P9 and P14 orders of the 2nd respondent that direct the petitioner to remit 20% of the disputed amounts, pending disposal of the appeal.
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2020 (8) TMI 323
TPA - Comparable selection - HELD THAT:- Because of the extraordinary events that took place in the period under considerationwe direct the Assessing Officer/TPO for exclusion of Infosys BPO and TCS E serve Ltd from the finalist of comparables. So long as a company is functionally similar to the assessee merely because it does not match with the turnover, it cannot be rejected. Adjustment in respect of interest on receivables - HELD THAT:- If working capital adjustment is granted, then no separate adjustment or interest receivables is required. We are fortified in our decision by the decision of Kusum Healthcare P. Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT]. Claim of deduction u/s 10A - HELD THAT:- This Tribunal following the earlier decision of the Tribunal held that assessee was entitled for deduction u/s 10A on the ground that it has established a new unit. Once already deduction u/s 10A on the same unit has been allowed in the earlier years by the Tribunal, therefore, no different view can be taken for the same unit on similar set of facts for denying the deduction in Assessment Year 2009-10. TDS u/s 195 - Disallowance u/s 40(a)(i) - payments in respect of certain amounts, such as, technology service, fee charge out, receipt of services, professional charges and relocation expenses - HELD THAT:- It is true that most of the relocation expenses are in respect of salary paid to employees of the assessee who travelled abroad for business of the appellant. However, in our considered opinion, these details need verification. We, accordingly, restore this issue to the file of the AO and is directed to very details and examine whether the payments have been made by the assessee to its own employees who travelled abroad and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. Grant of TDS - HELD THAT:- We direct the Assessing Officer to give credit of TDS as per provisions of law.
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2020 (8) TMI 322
Rejection of books of accounts of assessee invoking the provisions of Section 145(3) - HELD THAT:- Assessee Company has purchased few materials locally on urgent basis in cash or part payment made for the same in cash which constitutes 1.15% only of total revenue and 1.30% of total material purchased by the assessee Company during the relevant year. These materials were used in projects only. The material purchased in cash or part payment made in cash is fully supported by invoices or vouchers. The same invoices were produced during the assessment proceeding. Each payment duly supported by the external invoices. Hence, this is incorrect contention that these are supported by internal vouchers only. Rejection of books of account on the basis of insignificant defects in all respect, is not justified and books of account deserves to be accepted. Before invoking the provisions of Section 145(3) of the Act, the AO has to bring on record material on the basis of which he has arrived at the conclusion with regard to correctness or completeness of the accounts of the assessee or the method of accounting employed by it. In the instant case, it was not the case that the assessee had not followed either cash or mercantile system of accounting. It was also not the case that the Central Government had notified any particular accounting standard not followed by assessee. Hence, the second part of sub-section (3) of section 145 would not apply to the instant case. Addition on estimation basis by applying NP rate of 8% subject to depreciation and interest - HELD THAT:- Assessee company declared income of ₹ 35,10,760/- after depreciation of ₹ 5,31,296/- and finance or interest expenses of ₹ 40,75,834/-. Thus, company has shown gross income of ₹ 81,17,890/- i.e. 6.68% of gross contractual receipt of ₹ 12,16,08,395/- which is significant looking to second year of the operation in the contract business and particularly when the contracts were awarded by private parties in remote area. There is no justification for estimation of income made by the AO @ 8% of gross contractual receipts. Separate receipts on account of consultancy income and estimated income after deduction of certain expenses - HELD THAT:- We direct the AO to allow deduction of 40,75,384/- instead of ₹ 29,84,683/- as interest cost while income derived according to net profit formula. Disallowance treating the late deposit of employee contribution as income u/s 2(24)(x) read with section 36(1)(va) - HELD THAT:- It is clear that entire contributions received from the employees have been deposited before filing of return of income u/s 139(1) of the Act. Accordingly, no disallowance is warranted - Appeal of the assessee is allowed.
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2020 (8) TMI 321
Penalty levied u/s 271(1)(c) - investment in unaccounted purchases made by the AO pursuant to survey conducted at the premises of the assessee - HELD THAT:- Tribunal in the quantum proceedings has however held that it was not a case of unexplained investment/unaccounted purchases as wrongly understood by the authorities below and it was only the suppressed sales made out of recorded purchases and in respect of undisclosed sales, only profit element can be added and the AO was accordingly directed to restrict the addition to the extent of ₹ 28,240/-, being the profit element on unaccounted sales. Where the very basis of levy of penalty, being the quantum addition, has been restricted to ₹ 28,240/-, the consequent levy of penalty shall also stand restricted to ₹ 28,240/-. No other arguments have been taken or canvassed during the hearing in support of ground no. 2, hence the same is dismissed. In the result, the AO is directed to restrict the penalty to ₹ 28,240/- and the remaining penalty is hereby directed to be deleted - Appeal of the assessee is partly allowed.
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2020 (8) TMI 320
Capital gain from sale of commercial property - intra-head adjustment of loss - Benefit of carry forward of long term capital loss on the sale of shares for the current year - whether it is lawful to first compute capital gain after doing intra head adjustments and whether the deductions u/s 54F should be allowed from the net income computed after intra head adjustments? - HELD THAT:- As per provisions of section 54F (1) on fulfilment of certain conditions the capital gain arose on sales of such assets will not be chargeable to capital gain under the section 45 of the Act. The scheme of Sections 45 to 55A provide for the computation of capital gains, and the effect has to be given first to the provision of capital gains as given under the above scheme and then apply the provisions of Section 70. Section 70 would come into play only when the capital gains have been computed in accordance with the provisions contained in Sections 45 to 55A. Thus, if, after work out of deduction u/s 54F if the capital gain arose on sale of certain assets is not chargeable to capital gain than the loss arose to assessee on sales of another assets cannot set off from gain of such assets. It is not necessary that one should first apply Section 70(3) and thereafter only, the assessee could invest the capital gain arising from the long term capital asset. We set aside the orders of lower authorities and direct the AO to compute the capital gain from sale of commercial property by not doing intra-head adjustment for the loss suffered from sale of shares and allow to carry forward the long term capital loss for the current year on sale of shares. Appeal of the assessee is allowed.
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2020 (8) TMI 319
Disallowance u/s 14A - assessee received exempt income which is not part of the taxable income and it is clear from the computation of income - HELD THAT:- As relying on MAXOPP INVESTMENT LTD. [ 2018 (3) TMI 805 - SUPREME COURT] we restrict the disallowance u/s.14A of the Act upto the exempt income received by the assessee during the impugned assessment year.
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2020 (8) TMI 318
TDS u/s 195 - Default u/s 201(1) 201(IA) - Production Services Agreement - Permanent Establishment (PE) in India - India-UK DTAA - commissioning agreement with another UK based non-resident corporate entity namely M/s Desi Boyz Production Ltd. (in short DBPL ) on 01/09/2010 to produce, complete and deliver a feature film namely Desi Boyz (in short film ) - responsibility to produce the film was on M/s DBPL against certain lump-sum consideration - DBPL entered into one production services agreement on same datewith another resident entity namely Eros International Films Private Limited (EIFPL / service company) as a producer of the proposed film, with a view to avail certain specific and limited production services from M/s EIFPL, entered into this contract. HELD THAT:- M/s DBPL could not said to be solely dependent upon the assessee for finance requirements. In financial year 2011-12, the revenue earned by M/s DBPL from the assessee on account of commissioning of film has been reflected as its turnover. M/s DBPL has reflected loss of 1.67 million pounds as loss on ordinary activities before taxation. This is sole activity being carried out by M/s DBPL. Therefore, the provision of Article-10 of the treaty, in our considered opinion, could not be applied in such a situation since it could not be said that the assessee participated directly or indirectly in management, control or capital of M/s DBPL. Further, M/s DBPL was a loss-making entity coupled with the fact that the assessee was assessed u/s 143(3) on 27/01/2014 wherein its returned income was duly accepted by the revenue and there was no allegation of over / under payment to M/s DBPL. Therefore, the assessee could not be said to be Associated Entity of M/s DBPL in terms of Article-10 of the Treaty. Hence, the conclusion drawn by Ld. AO, in this regard, could not be sustained as per the Treaty terms. In our considered opinion, M/s DBPL was acting as an independent entity which was required to carry out the assigned work independently and the assessee could not said to be PE of that entity in India. So far as the terms of service agreement between M/s DBPL and M/s EIFPL are concerned, we have concluded that the contract between the two entities was primarily that of a principal and agent. M/s EIFPL, acting on behalf of producer, was required to provide limited production services against lump sum fee of ₹ 300 Lacs. The said services were to be provided under control, supervision as well as the direction of the producer. Status of M/s EIFPL would be that of independent agent and not a dependent agent as alleged by AO. We concur with AR s submissions that the said agreement was merely to assist the production of the film and to provide limited services in relation to delivery of a feature film. M/s EIFPL was entrusted with the responsibility of arranging the crew and the requisite equipment which were to be procured from India. The said contract was given to the Indian entity in order to perform the Indian part of the production services and M/s DBPL was to pay the requisite fees. M/s EIFPL carried out its activities as an independent agent. Therefore, it could not be termed as Permanent Establishment for M/s DBPL in terms of Article-5 of the Treaty. This view, as taken by lower authorities, could not be concurred with. On the facts and circumstances, we hold that the assessee and M/s DBPL could not be held to be Associated Enterprises in terms of Article-10 of the Treaty. The assessee could not be treated as PE of M/s DBPL in India. Further, the status of M/s EIFPL vis- -vis M/s DBPL would be that of an independent agent and M/s EIFPL could not said to be PE of M/s DBPL. No profit could be said to have accrued to M/s DBPL in India as alleged by the revenue. As a logical consequence, the assessee could not be treated as assessee-in-default in terms of Sec.201(1) 201(1A) of the Act. Therefore, by deleting the impugned demand, we allow the appeal of assessee.
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2020 (8) TMI 317
TP Adjustment - addition made on application of CUP method for determination of ALP of international transactions by the AO - payment to its parent company on account of management service fees on which taxes were deducted at source - According to AO assessee has not submitted any evidence to substantiate that the services were actually received - assessee has failed to furnish a cost benefit analysis demonstrating the benefits derived from services received from the AE AND documentation produced by the assessee to support its claim for receipt of services is too generic - DR stated that the issue may be restored to the file of the AO as in his remand report, the AO has not made any comment on the cost benefit analysis - as per CIT-A AO was not justified in adopting CUP method and determining the ALP of the transaction as NIL and consequently making an adjustment to the income - HELD THAT:- We do not find any force in this contention of the ld. DR. In our considered opinion, no second innings should be given to appreciate the same set of facts which were already before the Assessing Officer. Moreover, in the remand report, the Assessing Officer himself has accepted that if the management fees had not been paid by the appellant, the true up adjustment received would have been ₹ 2.51 crores only and profits of the appellant would have been less than the profits returned but it. Cost benefit analysis was furnished by the assessee during the remand proceedings but the Assessing Officer did not care to examine the same and now the ld. DR is asking for remand. But the ld. DR could not point out any factual defect in the findings of the first appellate authority. In light of remand report and factual findings of the ld. CIT(A), and considering the treatment given in subsequent A.Y by the Transfer Pricing Officers, we do not find any reason to interfere with the findings of the ld. CIT(A). - Decided against revenue.
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2020 (8) TMI 316
Penalty u/s 271B - non-furnishing of the Audit Report before the specified date - violation of the provisions of section 44AB - Assessee contended that in terms of CBDT circular dated 21/05/2019, the assessee was not required to furnish physical copy of the Tax Audit Report under section 44AB to the Income Tax Department along with the return of income on or before the due date of furnishing of the return of income and no penalty was to be initiated or levied - HELD THAT:- From various provisions of Rules along with CBDT circulars, it is evident that during the relevant assessment year i.e. assessment year 2010-11, the assessee was not required to furnish the tax Audit Report along with the return of income and it was to be produced only on being asked by the Income Tax Authorities. The mandatory uploading of the Audit Report electronically has been made effective only from assessment year 2013-14. In the instant case before us, the assessee did not file return of income for the year under consideration on or before the due date of the filing of the return of income (i.e. 30/09/2010). The assessee filed return of income for the first time on 06.11.2017 in response to notice under section 148 of the Act issued by the Assessing Officer. During reassessment proceeding, the assessee furnished the tax Audit Report dated 2/09/2010. Assessee was required to get his books of accounts audited on or before the due date of filing of the return of income. There was no relaxation in getting the books of account audited by a Chartered Accountant and relaxation was given only for furnishing the Tax Audit Report. The requirement of furnishing the audit report before the specified date has been dispensed with for the relevant assessment year. But AO emphasized only on the fact Audit Report was not furnished on or before the due date of filing of return of income. He did not examine whether the books of account were audited before the due date of return of Income. He has even not verified authenticity of the Audit Report from the Chartered Accountant, whose name is appearing on the Audit Report. AO has not verified the records of the Chartered Accountant like, register of dispatch of Audit Report or team member engaged in Audit, records on the basis of which report was prepared, correspondence or comment of the assessee on the deficiencies pointed out by the team etc. AO has even not verified whether these details have been incorporated by the assessee in return of Income filed by the assessee on 06.11.2017. As the AO has failed in his duty in verifying whether books of account were audited before the specified date and only emphasized on the fact of furnishing the audit before the specified date , we do not find any reason for confirming the penalty levied u/s 271B - CIT(A) has insisted for obtaining the Audit report before the specified. We find that word obtain before has been susctitued in section 44AB by the word furnish by w.e.f 1-7-1995 and therefore for the relevant obtaining the report before the specified date is not relevant - we set aside the order of the learned CIT(A) and delete the penalty levied u/s 271B for violation of the provisions of section 44AB - Appeal filed by the assessee is allowed.
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2020 (8) TMI 315
Income from other sources - Addition u/s.56(2)(viib) - basis of valuation of equity shares for issuing at a premium of ₹ 170/- against the face value of ₹ 10/- - following net value method as per Rule 11UA (2)(a) of the I.T.Rules, 1962 - As per AO market value of the shares was required to be determined as per Rule 11 UA(1)(c)(b) and not as per Rule 11UA(2) - HELD THAT:- As per Rule 11UA(1)(c)(b) of the Rules, it is the prerogative of the assessee to estimate the fair market value of the shares issued by it adopting one method out of two methods i.e. discounted cash flow method or book value method. The revenue authorities cannot force the assessee to adopt particular method for valuing the fair market value of the share especially when Rule 11UA(1)(c)(b) provides that it is the option of the assessee to chose any method either discounted or book value method for estimating the fair market value of the shares issued by it during the relevant financial period. In this case, the assessee has adopted the discounted free cash flow method as prescribed under Rule 11UA (2)((b) of the Act. Jaipur Bench of ITAT in the case of Safe Decore Pvt Ltd. [ 2018 (2) TMI 1274 - ITAT JAIPUR] has held that the assessee cannot be denied the benefit of discounted free cash flow method only because the consideration amount was received much before Rule 11UA(2) came into force, which is one of the method to be adopted by the assessee for valuing the fair market rate. The above decision has been followed by the ld CIT(A) in the impugned order in deleting the addition. In the present case shares have been issued by the assessee at ₹ 180/- per share as against the fair market value of ₹ 189/- determined as per discounted free cash flow method and, therefore, no addition is required to be made in the hands of the assessee u/s.56(2)(viib) - no infirmity in the impugned order of the ld CIT(A) to interfere. Accordingly, we uphold the findings of the ld CIT(A) and reject the ground of appeal of the revenue.
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2020 (8) TMI 314
Deduction u/s 80IB - claim denied when the project was not completed within time limit - HELD THAT:- In assessment year 2010 11 and 2011 12, the assessee had preferred appeals before the Tribunal. In the course of hearing of appeal before the Tribunal, the assessee had furnished completion certificate issued by the competent authority as additional evidences. The Tribunal having found the completion certificate to be in order and being convinced with the fact that the conditions of section 80IB(10) of the Act have been fulfilled in all respect, allowed assessee s claim of deduction under the said provision while disposing off the appeals[ 2017 (1) TMI 445 - ITAT MUMBAI ]. It is worth mentioning, the aforesaid decision of the Tribunal was brought to the notice of the Assessing Officer in the course of the assessment proceedings for the impugned assessment year. However, the Assessing Officer has declined to follow the decision of the Tribunal on the flimsy grounds that he has not received a copy of the said order officially and further, that the Revenue reserves its right to contest the decision before the High Court. Once the Tribunal, being the last fact finding authority, has recorded a factual finding that the housing project was completed within the stipulated time frame and such finding of fact has also been upheld by the Hon'ble Jurisdictional High Court in assessee s own case, there is no scope for the Assessing Officer to deny assessee s claim of deduction under section 80IB(10) of the Act. No infirmity in the decision of learned Commissioner (Appeals) in allowing assessee s claim of deduction under section 80IB(10) - Decided against revenue.
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2020 (8) TMI 313
Block assessment u/s 158BC - period of limitation u/s 158BE - search and seizure action under section 132 of the Act was carried out on the residential and business premises - Panchnama issued by the Investigation Wing of the Department on various dates - HELD THAT:- In the present case of the assessee the period between the second last panchnama and the last panchnama is almost one year for which there is no explanation given by the Revenue and as per section 132(8A) of the Act the said prohibitory order has come to an end around 04-12-2001. Even prohibitory order dated 04-12-2000 comes to an end after 60 days and there is no extension after the expiry of 60 days. In the case of the assessee herein on 07-11-2001, the investigation wing of department after almost one year has only converted the non-existent prohibitory order into deemed seizure, and therefore in the present case the panchnama dated 07-11-2001 is only for the purposes of extending the limitation period. During the period of one year no examination of any items was done whereas in the case of VLS Finance Ltd. [ 2006 (12) TMI 77 - HIGH COURT, DELHI] the Revenue was scrutinising 5000 documents during the intervening period. It is, therefore, submitted that the facts before the Delhi High Court being totally different than the facts of the present assessee, limitation should start, even in the worst case, from 04-12-2000. Therefore, the assessment order dated 28-11-2003 is barred by limitation. Hence, we quash the block assessment order and on this jurisdictional issue and allow the appeal of the assessee.
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2020 (8) TMI 312
LTCG - Benefit of deduction u/s 54 - entitled for the benefit of deduction in respect of the disputed sum, when she has utilized such sum towards purchase of the new house on 26-8-2016 and thus complied with the provisions of section 54(1), even though the said sum was not deposited in the capital gains account scheme as required under section 54(2) - HELD THAT:- For seeking benefit of deduction under section 54 of the Act, the assessee should have substantially complied with section 54(1). In this case, the assessee should have purchased the residential house within two years from 19-10-2015, ie the date of transfer. She has utilized such sum towards purchase of the new house on 26-8-2016 itself. As explained the reasons for not-depositing the amount in Capital Gains Accounts Scheme which is also not disputed. Since the assessee has substantially complied with section 54(1), therefore, a mere non-compliance of a procedural requirement under section 54(2) itself cannot stand in the way of the assessee in getting the benefit under section 54. Therefore, we do not find any reason to interfere with the order of the learned CIT (A). The Grounds raised in the appeal of the Revenue stand dismissed.
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2020 (8) TMI 311
Addition u/s.69 - unexplained cash deposits - Maintainability of appeal by revenue - HELD THAT:- We endorse the order of CIT(A) that it is a trading receipt. Even otherwise, the appeal of the Revenue is also not maintainable as the tax effect in the appeal is below the tax limit prescribed by the CBDT Circular No.17/2019, dated 8th August, 2019. Thus, we dismiss the grounds of appeal of the Revenue and consequently appeal of the Revenue is dismissed.
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2020 (8) TMI 310
Estimation of income - bogus purchases - AO made 12.5% addition towards alleged bogus purchases on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers - HELD THAT:- Both authorities have taken uniform rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Further, the rate of profit adopted by the AO is appears to be on higher side when compared to nature of business of the assessee. Considering facts and circumstances of this case and consistent with view taken by the Co-ordinate Bench in number of cases, we are of the considered opinion that rate profit adopted @ 12.50% on alleged bogus purchases is on higher side going by the nature of business of the assessee and hence, we order the Assessing Officer to restrict the addition at the rate of 5% on alleged bogus purchases. Appeal of the assessee is partly allowed.
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2020 (8) TMI 309
Assets acquired under slump sale - depreciation on the assets acquired under slump sale - invocation of the 5th proviso to section 32(1) to the case of Slump Sale - section 170 applicability - acquisition cost of (i) Motor Vehicle and (ii) Furniture and Fixture acquired under Slump Purchase as per Valuation Report - CIT-A directing the AO to adopt the acquisition cost of Motor Vehicle and Furniture and Fixture as per corresponding WDV of the Seller instead of their fair value as per the Valuation Report - HELD THAT:- When there is no mention whatsoever about the issue of depreciation on assets acquired under slump sale under section 5OB the natural, corollary is that the depreciation on assets acquired under slump sale is to be governed by the general provisions given in the income tax act for the depreciation on assets. In the present case we find that assessee had acquired the said assets under slump sale. There is a business transfer agreement and by way of this agreement the assessee has purchased an undertaking under slump sale. In our considered opinion the facts in the present case clearly show that the assessee company has acquired the assets under a business transfer agreement. Hence it has succeeded the transferee company. The provisions of section 170 are clearly applicable on the facts of the present case. The submission of the assessee that there are separate provisions for dealing with slump sale is not sustainable with regard to the depreciation on assets obtained under slump sale. As we have already noted above the concerned sections that is section 2(42)c and section 50B referred by the learned counsel of the assessee do not deal with the issue of depreciation on assets acquired under slump sale. As submitted by learned Counsel of the assessee the Assessing Officer has accepted the value of goodwill attributed by the assessee as a balancing figure in the value of sump sale and value attributed to specific asset taken over. 5th proviso to section 32 is evidently applicable for the computation of depreciation on assets which have been taken over from the transferor company. Hence the computation of depreciation on assets which have been taken over has to be in accordance with the said proviso. Hence the computation of depreciation on these assets transferred in terms of the said proviso by the assessing officer is correct. Treatment of difference between the WDV of assets taken over and the slump sale amount - Honourable Supreme Court in the case of Arevat T D India Ltd. [ 2015 (7) TMI 620 - SC ORDER] has confirmed the order of honourable Delhi High Court. The Hon ble High Court held that excess amount paid over and above the tangible assets for acquisition of various business and commercial rights under slump sale can be categorised under the head goodwill. This view also supported by Hon'ble Delhi High Court decision in the case of Triune Energy Services Pvt. Ltd. Vs. DCIT [ 2015 (11) TMI 1218 - DELHI HIGH COURT] held that the same being a balancing figure the value of goodwill was to be allowed. Hence the direction to treat the balance amount of WDV of assets taken over and slump sale as goodwill is correct and in accordance with the above case law. Accordingly we conclude as under: Invocation of 5th proviso to section 32 is correct to the extent of computation of depreciation on the WDV of assets taken over from the transferor company. Balancing figure between the value of slump sale and the value of WDV of assets taken over shall qualify as goodwill, and eligible for consequent depreciation.
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2020 (8) TMI 308
Determination of Income from house property - Suppression of rental income - Whether assessee is statutorily entitled to deduction of standard deduction @30% u/s 24 from the aforesaid alleged suppressed rental income? - HELD THAT:- AO was required to follow the procedure laid down in section 23 of the Act. He has to call for the evidence and prove that this property could fetch this much rent instead of unnecessarily pointing out peripheral defects in the agreement of the assessee. He could have determined annual letting value of the property. Both the Revenue authorities have miserably failed to follow procedure contemplated in section 23. The assessee has given a concession in rent to its tenant on the basis of some hard facts. It has been brought to my notice that this project never materialized, and M/s.Bharti Wallmart Pvt.Ltd. could not open the business centre. Inspite of that, they have paid rent for five years on the basis of this agreement. We could appreciate the case of the AO, if he has made reference to the rent deed of adjoining properties and pointed out that this leased property could be fetch this much rent, and therefore, the annual letting value of the assessee s house property is to be determined equivalent to the amount on which original rent fixed between the assessee and BWP. After going through all the details no addition is required to be made by the AO. Rental income shown by the assessee deserves to be accepted in the absence of any other material collected by the AO. The addition by the AO is hereby deleted, and the ground of appeal of the assessee is allowed.
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2020 (8) TMI 307
Unexplained cash credit u/s 68 - addition being cash balance as reflected in balance sheet - HELD THAT:- The provisions of section 68 can be invoked with respect to the sum found credited in the books of accounts and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory. Thus it is very clear that the provisions of section 68 can be attracted in relation to the credit entries found in the books of accounts. Closing cash balance shown at the end of the financial year cannot be subject matter of addition under the provisions of section 68 - addition made under 68 of the Act deserves to be deleted. Assessee has declared her income from the activity of tailoring/embroidery which has been duly accepted by the revenue. Once the revenue disbelief the activity of the assessee, then it has to disturb the entire income offered by the assessee in her return of income. For the income offered to tax from the activity of embroidery business, the revenue has not made any negative remark but for the cash balance shown by the assessee as on 31 March 2015 the revenue doubts on the genuineness of the business activity of the assessee. In our considered view the revenue cannot give different treatment for part of the transaction of the assessee. We are not convinced with the finding of the authorities below. We set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
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2020 (8) TMI 306
Penalty u/s 271(1)(c) - non-disclosure of interest income - HELD THAT:- Regarding the non-disclosure of interest income by the assessee in the income tax return, we note that the assessee has declared taxable income in the income tax return amounting to ₹ 41,99,530/- whereas interest income stands at ₹ 34,912/- which is less than 1% of the income declared by the assessee. Thus, we are of the view that the assessee failed to disclose such interest income in the income tax return without any dishonest intent. Thus in such circumstances, we are of the view that there cannot be any penalty for the addition made to the total income on account of such interest income. See KANBAY SOFTWARE INDIA (P) LIMITED. [ 2009 (4) TMI 499 - ITAT PUNE-A] Disallowance of the expenses for accounting charges and other expenses respectively against the interest income received from the partnership firm - Deduction claimed by the assessee has been held as false. Thus at the most, the claim made by the assessee can be wrong/inaccurate claims which cannot be treated as concealment/inaccurate particular of income. In holding so we find support and guide from the judgment in case of Reliance Petro Products Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] held a mere making of the claim, which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. We disagree with the finding of the authorities below. Accordingly we set aside the finding of the learned CIT (A) with the direction to the AO to delete the penalty imposed by him. Hence the ground of appeal of the assessee is allowed.
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2020 (8) TMI 305
Capital gain computation - Assessment order framed by the AO u/s 143(3) as erroneous insofar prejudicial to the interest of revenue - AO power to substitute the value shown by the assessee as on 1 April 1981 under the provisions of section 55A - making reference or substituting the value shown by the assessee as on 1 April 1981 - HELD THAT:- From the provisions of section 55A reveals that the AO can substitute the value shown by the assessee as on 1 April 1981 if he has shown less value whereas the assessee in the present case has shown the higher value. Thus the question of making reference or substituting the value shown by the assessee as on 1 April 1981 in the given facts and circumstances does not arise. There was an amendment under the provisions of section 55A where the word variance was inserted but such amendment is applicable with effect from 01-07-2012 which is prospective in nature. Thus amended provisions cannot be applied in the year under consideration. Accordingly, we do not find any infirmity in the assessment order framed under section 143(3) of the Act. Accordingly we hold that the order framed under section 263 of the Act is not sustainable and hence we quashed the same. Thus the ground of appeal of the assessee is allowed.
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2020 (8) TMI 304
Penalty u/s 271(1)(c) - CIT-A deleted penalty - HELD THAT:- Penalty has been deleted on the basis of the ratio laid down in the matter of Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] whereby and whereunder imposition of penalty on the sole reason of wrong claim or excess claim for deduction which was not found sustainable by the authority has been nullified. It also appears and as submitted by the Ld. Counsel appearing for the assessee that in assessee s own case, the Jurisdictional High Court [ 2011 (10) TMI 745 - GUJARAT HIGH COURT] has been pleased to decide the identical issue in favour of the assessee by and under its judgment and order dated 18.10.2011. The photo copy of the said order has also been annexed to the Paper Book filed before us by the assessee which we have already perused and considered. We find no discrepancy in the order passed by the Ld. CIT so as to warrant interference. Hence, the appeal preferred by Revenue is found to be devoid of any merit and thus dismissed. - Appeal filed by the Revenue is dismissed.
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2020 (8) TMI 303
Disallowance of Sales Promotion Expenses - appellant could not furnish necessary evidences in support of expenses incurred - HELD THAT:- Except for the finding that assessee has not been able to produce the parties no cogent material has been brought by the assessing officer to make the disallowance. Assessee is engaged into the business of sales and marketing. No material is on record that these expenses are excessive or abnormal. The parties to whom the payments are made are well-established parties. It is beyond comprehension as to how the assessing officer's notes that he is not in possession of the correct address of Google India. The assessee has duly furnished the addresses. When there was no response, the assessing officer could very well have issued the summons under section 131. Without issuing any summon to the concerned parties the ignorance of all the documentary evidence for the payment and its genuineness is not at all sustainable. The disallowance is based upon surmise and conjecture. CIT(A) has not applied any mind. He has copied the order of the assessing officer and thereafter virtually dismissed the appeal for non-prosecution. Such an order is not at all legally sustainable. As regards the lack of evidence is concerned, when there are invoices and books of account, what else is required has not been spelt out by learned CIT(A). He has not at all referred that the AO was actually looking for the assessee to produce these parties. An appellate order showing such lack of application of mind is not sustainable. - Decided in favour of assessee.
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2020 (8) TMI 302
Estimation of Income - bogus purchases - CIT-A restricted addition to 12.5% as against 100% addition made by the A.O. - HELD THAT:- As relying on SIMIT P SHETH [ 2013 (10) TMI 1028 - GUJARAT HIGH COURT] CIT(A) has rightly applied the profit rate at the rate of 12.5% and now, before us Revenue could not find any fault in the order of CIT(A) in estimating the profit at the rate of 12.5% of the bogus purchases - we confirm the same. This issue of Revenue s appeal is dismissed.
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2020 (8) TMI 301
Disallowance being commission on sales paid to the shareholder Director(s) - whether CIT (A) has failed to appreciate that the shareholder director was entitled to dividend in view of accumulated profit available and the commission so paid is clearly prohibited by the provisions of section 36(l)(ii)? - HELD THAT:- There is no dispute on fact that the Directors were given commission for promoting sales and increasing the sale of the company by their efforts and over the period of time the assessee's turnover has increased manifold and also the profit. Similar commission paid to the Directors in terms of same agreement has been allowed in the past by the AO himself in orders passed in scrutiny proceedings u/s 143(3). If directors in terms of Board resolution are entitled to receive commission for rendering services to the company and if it was in terms of employment on the basis of which they have been rendering services, then such remuneration/commission is part and parcel of salary. It is also not disputed that TDS has been deducted on such commission as salary. Otherwise also, the payment of dividend is made in terms of Companies Act, 1956 which has to be paid to all the shareholders equally and dividend is basically a return of investment and not salary or part thereof. As decided in AMD METPLAST P. LTD.[ 2011 (12) TMI 320 - DELHI HIGH COURT] payment of dividend is made in terms of the companies Act, 1956, Dividend has to be paid to all shareholders equally. This position cannot be disputed by the Revenue. Dividend is a return on investment and not salary or part thereof. Herein the consideration in the form of commission which, was, paid to Ashok Gupta was for services rendered by him as per terms of appointment as a managing director. Similar view was taken on the concept of bonus payment following the judgment of AMD Metplast (P.) Ltd. (supra) in the case of CIT v. Carrer Launcher India Ltd. [ 2012 (4) TMI 440 - DELHI HIGH COURT] has decided this issue in favour of the assessee, interpreting section 36(1)(ii) - Decided against revenue.
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Customs
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2020 (8) TMI 300
Levy of Ground Rent on Containers - steamer agents - scope of the term owner - distinction between storage of goods and demurrage charges - time limitation for de-stuffing the goods and return of the container - scope of the term May - can it be treated as Shall - interpretation of statute - sections 61 and 62 of the MPT Act - whether the liability to pay ground rent on containers unloaded at Cochin Port, but not cleared by the consignees/importers and refused to be destuffed by the Port, on the ground of inadequate storage space, can be imposed on the owners of the vessel/steamer agents beyond the period of 75 days, fixed by the Tariff Authority of Major Ports [TAMP], a statutory body constituted under Section 47-A of the Major Port Trusts Act, 1963? HELD THAT:- It is not possible to apply the doctrine of noscitur a sociis to the definition of owner under section 2(o), as was contended by the learned Senior Advocates appearing on behalf of the steamer agents. - As the definition of owner is inclusive, as stated hereinabove, the non-mention of the ship-owner in the first part of the definition makes no difference, as it would be incongruous to hold that the shipowner s agent is included in the latter part of the definition, but not the ship-owner itself, which would indicate that the maxim noscitur a sociis cannot apply. A container, being a receptacle in which goods are imported, cannot be said to be goods that are imported as it does not become part of the mass of goods within the country on the facts of these cases. Thus, once destuffing takes place, the container has to be returned either to the ship-owner s agent, or to the person who owns such container. May versus Shall - Held that:- while it may not be correct to say that may has to be read as shall in sections 61 and 62 of the MPT Act, yet in all future cases the Board is under a constitutional duty to sell the goods in its custody within a reasonable time from which it takes custody of those goods. Ordinarily, the time of four months from the date of landing of the goods mentioned in section 63(1)(c) of the MPT Act should be the outer-limit within which such goods should be put up for sale. If not put up for sale within such time, the Board must explain as to why, in its opinion, this could not be done, which explanation can then be tested by the Courts. If the explanation is found to be reasonable, and the owner or person entitled to the goods does not remove the goods thereafter, penal demurrage may then be levied and collected by the Board. To this extent, therefore, while overruling the impugned judgment of the Kerala High Court [ 2011 (9) TMI 991 - KERALA HIGH COURT] on the aspect of may being read as shall in sections 61 and 62 of the MPT Act, yet the hovering omnipresence of Article 14 over the Board must always be given effect to, and there must be a very good reason to continue detention of goods beyond the period of four months as mentioned hereinabove before they are sold. Conclusion: The point of time at which title to the goods passes to the consignee is not relevant to determine the liability of the consignee or steamer agent in respect of charges to be paid to the Port Trust; The bill of lading being endorsed by the steamer agent is different from the bill of lading being endorsed by the owner of the goods. In the first case, the endorsement leads to delivery; in the second case, the endorsement leads to passing of title. For the reasons mentioned in the judgment, both stages are irrelevant in determining who is to pay storage charges we have held that upto the point that the Port Trust takes charge of the goods, and gives receipt therefor, the steamer agent may be held liable for Port Trust dues in connection with services rendered qua unloading of goods, but that thereafter, the importer, owner, consignee or their agent is liable to pay demurrage charges for storage of goods; The statutory scheme of the MPT Act now becomes crystal clear. Until the stage of landing and removal to a place of storage, the steamer s agent or the vessel itself may be made liable for rates payable by the vessel for services performed to the vessel. Post landing and removal to a place of storage, detention charges for goods that are stored, and demurrage payable thereon from this point on, i.e. when the Port Trust takes charge of the goods from the vessel, or from any other person who can be said to be owner as defined under section 2(o), it is only the owner of the goods or other persons entitled to the goods (who may be beneficially entitled as well) that the Port Trust has to look to for payment of storage or demurrage charges. A container which has to be returned is only a receptacle by which goods that are imported into India are transported. Considering that the container may belong either to the consignor, shipping agent, ship-owner, or to some person who has leased out the same, it would be the duty of the Port Trust to destuff every container that is entrusted to it, and return destuffed containers to any such person within as short a period as is feasible in cases where the owner/person entitled to the goods does not come forward to take delivery of the goods and destuff such containers. What should be this period is to be determined on the facts of each case, given the activities of the port, the number of vessels which berth at it, together with the volume of goods that are imported. While it does not lie in the mouth of the Port Trust to state that it has no place in which to keep goods after they are destuffed as in the facts in the present case yet a court may, in the facts of an individual case, look into practical difficulties faced by the Port Trust. This may lead to the short period in the facts of a particular case being slightly longer than in a case where a port is less frequented, and goods that are stored are lesser in number, given the amount of space in which the goods can be stored. Appeal of the Port Trust allowed.
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2020 (8) TMI 299
Requirement to make pre-deposit - undue hardship in making payment - appellant contends that there has been no production, and that there are various liabilities on the appellant - HELD THAT:- The non-functioning of the assessee is undisputed. The material on record would indicate that the appellant has also sustained various other losses - We do not intend to go into the merits of the Appeal, since the same is within the jurisdiction of the Tribunal. Suffice to hold that, on the basis of the contentions advanced and the facts stated, we are of the view that it would cause undue hardship if the appellant is directed to make the pre-deposit. Therefore, the same constitutes a hardship to the appellant. The impugned order passed by the CESTAT, New Delhi is modified. The payment of ₹ 40,00,000/-, as demanded by the learned Tribunal, is reduced to a sum of ₹ 5,00,000/-. The appellant to pay a sum of ₹ 5,00,000/- within a period of five months from today with the respondent - Appeal disposed off.
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2020 (8) TMI 298
Maintainability of petition, challenging the Mahazar - seizure of certain goods relating to parts of sewing machine - petitioner pays a sum of ₹ 2 lakhs and also furnishing a bank guarantee to the extent of ₹ 1.80 lakhs - HELD THAT:- The issue as to whether the writ petition could be maintained or not does not require consideration at this stage, since the respondents have chosen to proceed with the demand of the differential duty and the second respondent had also issued a show cause notice in this regard on 27.10.2017, to which the petitioner claims to have given his reply on 15.12.2017. If the respondents are directed to further adjudicate on this issue, the ends of justice could be secured. As such, without going into the question as to whether the writ petition could be maintained, there shall be a direction to the Joint/Additional Commissioner of Customs, Commissionerate, Chennai - 600002, to consider the petitioner's reply dated 15.12.2017, pursuant to the show cause notice dated 27.10.2017 and take further course of proceedings in accordance with law, after giving due opportunity to the petitioner - Petition disposed off.
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Insolvency & Bankruptcy
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2020 (8) TMI 297
Approval of Resolution Plan - Corporate Debtor is MSME - CIRP process - time limitation - HELD THAT:- The Appellant and Respondent No.3 are claiming that the Plan was received on 9th February, 2019 itself and directly placed before COC. On earlier date of 30.01.2019, SRA was still only a prospective Applicant (See Annexure A-30 Page 217). The RP has not put up material to show that the RP had examined the Plan as required under Section 30(2) of the IBC. There is substance in the claim of the Appellant and Respondent No.3 that the Plan was received on 9th February, 2019 and the same being the only Plan, was rushed through the COC meeting and in two three hours, it was approved without duly examining the Resolution Plan by the Resolution Professional and without the COC being satisfied as required under Section 30(4) of IBC that the Plan is feasible and viable. We are not interfering with the commercial wisdom of the COC but what appears to us from the record is that the COC did not consider feasibility and viability of the Resolution Plan in case the plant and machinery are taken away by the Respondent No.3. The Respondent No.3 is still insisting on taking away the plant and machinery and there is already judicial Order in view of Respondent No.3 in this regard - Apparently the Corporate Debtor cannot function without the Ethanol plant machinery. Thus, there was compromise of confidentiality regarding liquidation value which appears to have been known to the Respondent No.2 before submitting the Resolution Plan. Apart from this the plant and machinery were not owned by the Corporate Debtor, and the Resolution Plan submitted on the hypothesis that the plant and machinery would be available for business and explanation is clearly a Plan which is not feasible and viable. Thus, the CIRP suffered from material irregularities and the Resolution Plan approved suffers from feasibility and viability. For such reasons, the Resolution Plan as approved deserves to be set aside - matter remitted back to the Adjudicating Authority with a direction to send back the Resolution Plan to the Committee of Creditors to resubmit the Plan - appeal allowed by way of remand.
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Service Tax
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2020 (8) TMI 296
Recovery of service tax - initiation of recovery proceedings without adjudication of SCN - HELD THAT:- According to the respondents, the dues from the respondents were due to the failure of the petitioner in carrying forward opening balance of CENVAT credit and filing proper returns. The petitioner cannot therefore raise any grievance - Be that as it may, the petitioner has been issued with Ext.P8 show-cause notice invoking Section 73(1) of the Finance Act, 1994 read with Section 174(2) of CGST Act, 2017. The petitioner has the opportunity to explain its stand and position before the 4th respondent. Before adjudicating the issues raised in Ext.P8 show-cause notice, if the respondents proceed under Section 87(b) of the Finance Act and Section 79(1)(c)(i) of the Act read with Section 142(8)(a) of the CGST Act, 2017, the petitioner will indeed be put to hardship. Such proceedings are ordinarily to be initiated only after adjudication process is over. The writ petition is disposed of directing the 4th respondent to give opportunity to the petitioner to adduce such evidence before the 4th respondent in order to explain the deficiencies pointed out in Ext.P8.
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2020 (8) TMI 295
Interpretation of statute - Method of computation of tax liability - Works Contract Service - disputed period is 16.06.2005 to 31.03.2009 - abatement under N/N. 18/2005-ST read with subsequent Notification no. 1/2006-ST - demand alongwith interest and penalty - HELD THAT:- When the impugned order was passed, the law was not settled as regards classification of service, particularly in the case of composite contract involving supply of both labour and material. Even different benches of this Tribunal were having difference of opinion with regard to taxability of works contract under the Finance Act prior to 01.06.2007 when Section 65 (105) (zzzza) was introduced in the Finance Act providing for bifurcation of a composite contract and taxing of the service element - The law was finally settled in August, 2015 by Hon‟ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] whereby it was held that in the cases of composite contract involving labour and materials, the same are not taxable under the existing category of services prior to 01.06.2007. It was further held that the service in such cases is classifiable only under the heads Works Contract Service‟ and tax leviable w.e.f. 01.06.2007 (and not prior to this date). Benefit of abatement - HELD THAT:- The appellant shall be entitled to deduction of material component actually supplied by them in execution of the works contract, which is verifiable from their sales tax record/ assessment order. As regards construction of club, it is held that the same is exempt from service tax being non-commercial in nature. Levy of penalty - HELD THAT:- The issue involved is of interpretation in nature and there was lot of confusion prevailing with respect to taxability of works contract, and law was settled finally in August, 2015. Therefore, the penalty under Section 76 and 78 are not sustainable and are liable to be set aside. Accordingly, the same is set aside. The appellant is not entitled to composition scheme as they have not opted for the same; secondly, they are disputing the addition of material components supplied free by the principal as required under the composition scheme; the details and actual cost of the material thus supplied needs to be arrived at. Further, composition scheme is optional at the option of the assessee - Service Tax liability shall be recomputed for the period from 01.06.2007 under Rule 2A of Service Tax (Determination of Value) Rules. No Service Tax is chargeable for the period prior to 01.06.2007 under the head Works Contract Service‟. However, if the appellant has collected service tax from the principal and deposited the same, they shall not be entitled for refund for the period prior to 01.06.2007 - appeal allowed by way of remand.
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Central Excise
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2020 (8) TMI 294
Waiver of pre-deposit - undue hardship to make the deposit - Section 35F of the Central Excise Act, 1944 - HELD THAT:- As per Section 35F of CEA, there was no compulsion for payment of the pre-deposit at the relevant point of time. The provision prescribed that, if the appellant was to make out a case of undue hardship, pre-deposit could be waived keeping in mind the interest of the Revenue. Undisputedly, the assessee has stopped production from the year 2013. Ever since then, there is neither production, nor generation of any income. In the absence of any income being generated, we are of the view that it would cause undue hardship if the appellant is directed to make the pre-deposit. Therefore, the same constitutes a hardship to the appellant. Payment of 7 % of the duty demanded - HELD THAT:- This would roughly work out to be about ₹ 28,00,000/-. However, on considering the fact that the assessee has stopped production since the year 2013 and keeping in mind the long passage of time, it is deemed just and appropriate to direct the appellant to deposit a sum of ₹ 20,00,000/- with the Commissioner, G.S.T, Dehradun within a period of three months from today - The CESTAT to thereafter consider the matter on merits. Appeal disposed off.
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2020 (8) TMI 293
Exemption of Education Cess Secondary and Higher Education Cess - whether in view of the exemption granted to the excise duty the petitioner would also be entitled to an exemption to the payment of Education Cess Secondary and Higher Education Cess? - HELD THAT:- The said question was decided by the Supreme Court inits pronouncement in SRD Nutrients Pvt. Ltd. Vs. Commissioner of Central Excise, Guwahati [ 2017 (11) TMI 655 - SUPREME COURT ] wherein in paragraph 27 of the said judgment it was held that the appellants therein were entitled to refund of education cess and higher education cess which was paid along withthe excise duty once the excise duty itself was exempted from levy. In view of the subsequent judgment of the Supreme Court in Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT ] the respondent authorities had issued the demand cum show cause notice dated 02.06.2020 to the petitioners by which a question was raised that the earlier refund of the Education Cess Secondary and Higher Education Cess given to them has now become erroneous refunds and therefore, a recovery be made under section 11(A-1) of the Central Excise Act 1944 - The demand cum show-cause notice dated 02.06.2020 is assailed in this writ petition on the ground that the condition precedent to invoke the power under section 11(A-1) is that the refund made must be erroneous - the condition precedent of section 11(A-1) of the Excise Central Act, 1944 is not satisfied. A question for determination would be as to whether the proposition of law laid down in Unicorn Industries (supra) would render the refunds made to the petitioners to be erroneous. Until further orders we stay the operation of the demand cum show-cause notice dated 02.06.2020 - List on 08.09.2020.
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2020 (8) TMI 292
Applicability of instructions F.No.390/Misc/116/2017-JC dated 22.08.2019 to pending appeals - monetary limit fixed for filing appeals - HELD THAT:- The Instructions having been made applicable to pending appeals also. In light of the monetary limit having been fixed by the Department indicating that, where the value of subject matter in dispute being less than One Crore, such appeals cannot be prosecuted and in view of the fact that said issues having attained finality before this Court, entertaining of these appeals would be in violation of conditions stipulated under the Instructions F.No.390/Misc/116/2017-JC dated 22.08.2019, issued by Central Board of Indirect Taxes and Customs. Appeal dismissed as not maintainable.
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CST, VAT & Sales Tax
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2020 (8) TMI 291
Maintainability of appeal - Failure to make pre-deposit - HELD THAT:- The requisite amount to be paid towards the pre-deposit is to the tune of ₹ 4,36,28,894/- being 20% of the assessed liability. We are informed that the department has been able to recover more than ₹ 1.00 crore in this regard. The learned counsel appearing for the writ applicant makes a statement that his client would deposit an additional amount of ₹ 60,00,000/- within a period of two weeks from today. The appellate orders dated 3-7-2020 passed by the respondent No.2 are hereby quashed and set aside and the appeals are restored to their original files on the condition that the writ applicant shall deposit an amount of ₹ 60.00 lakhs with the respondent No.2 within a period of two weeks from today - Application allowed.
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2020 (8) TMI 290
Levy of Luxury Tax - houseboat at Kottayam taken on lease and is registered - time limitation - tax had been paid for the houseboat at Kottayam - HELD THAT:- It is to be noted that permission to pay tax as per Exhibit P2 was issued on 1.6.2011 and Exhibit P1 lease agreement is dated 6.6.2011. Since a doubt had arisen as to whether the houseboat registered in the name of the petitioner's husband at Kottayam and the houseboat of the petitioner, which is the subject matter of proceedings under Exhibit P3 are different, the learned counsel for the petitioner was required to produce evidence that the very same houseboat was registered at Kottayam - the contention is liable to be rejected, since Exhibit P1 can only be a self serving document, created with the intention of misleading the authorities and this Court. Time Limitation - HELD THAT:- As rightly contended by the learned Senior Government Pleader, the bar of limitation would apply only if the petitioner is an assessee registered in accordance with the provisions of the Act. Having clandestinely operated the houseboat without registration to avoid payment of tax, the petitioner cannot wriggle out of the tax liability by raising the plea of limitation. The conduct of the petitioner in having attempted to mislead this Court on the strength of Exhibit P1 agreement is deprecated in the strongest terms. The petitioner is absolved from payment of cost only because of the forthright submissions made by the learned counsel for the petitioner - Petition dismissed.
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2020 (8) TMI 289
Validity of assessment order - deemed assessment - principles of natural justice - time limitation - HELD THAT:- Respondent would defend the impugned order stating that the present impugned proceedings had been initiated only pursuant to the order of this Court and would thus survive, particularly since, according to her, there had been no challenge on the aspect of limitation at the first instance. The second limb of the submission is factually incorrect, where the petitioner has specifically raised the bar of limitation - Fairly, she does not dispute the legal position that in terms of Section 9(2) of the CST Act, the provisions of TNVAT Act would apply in matter of assessments relating to CST as well. Thus, 'assessment' in Section 9(2) includes reference to a deemed assessment and the timelines set out for the bar of limitation under TNVAT Act would apply with equal force in matters of CST. Petition allowed.
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Wealth tax
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2020 (8) TMI 288
Validity of the assessment framed u/s 16(3) read with section 17 of WT Act - wealth tax officer was in possession of the information about the acquisition of 2 adjoining residential plots of urban land at Bopal which were subject to the wealth tax as per the provisions of section 2(ea) of the Act - assessee before us contended that the assessee has acquired membership in Bopal Shobhan Cooperative Housing Society Limited and not the lands as alleged by the authorities below - HELD THAT:- On perusal of the orders of the authorities below, we find that it was alleged that the assessee has acquired 2 adjoining piece of lands and there was no mentioned whether such pieces of land was acquired in Bopal Shobhan Cooperative Housing Society Limited. Accordingly a query was posted to the learned AR for the assessee to justify whether the land in dispute is the same which were acquired in the Bopal Shobhan Co-operative Housing Society Limited through the membership. But the learned AR failed to substantiate the same based on the documentary evidence. Our apprehension is that there can be a possibility that the assessee has acquired other pieces of land other than the lands from such society. For this purpose, we have also perused the reason recorded for reopening the impugned assessment and found that there was also no reference made to the lands acquired from the society Matter needs to be re-examined at the level of the wealth tax officer in the light of the above stated discussion and as per the provisions of law. Both the learned AR and the DR did not raise any objection on remitting the matter back to the file of the wealth tax officer. Accordingly, at this stage, we do not find any reason to adjudicate the issue raised by the assessee on merit. Hence, the ground of appeal of the assessee is allowed for statistical purposes.
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Indian Laws
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2020 (8) TMI 287
Exercise of Equity Jurisdiction - Return of property which had been taken over as bought-in land (by Government) after accepting amount towards the Abkari Workers Welfare Fund dues - principles of restitution - remedy of rescission - HELD THAT:- Admittedly, the sale was conducted on the basis of a notice showing arrears of Abkari Workers Welfare Fund and Sales tax. It is later on admitted that there were no sales tax dues actually pending from the petitioner. That is to say, there was no proper notice as envisaged under Section 34 as also under Section 49(2)(iv) of the Revenue Recovery Act prior to the sale and the sale was for that very reason vitiated. It is admitted that the purchase was made on behalf of the Government and not on behalf of the requisitioning authority. On that ground also, the sale was vitiated. An application for re-conveyance of the bought-in land had been made within 3 months from the confirmation of the sale. It is also a fact that the Government decided in principle to return the bought-in land as per Exhibit P3. Even though Exhibit P3 was issued in 2011, admittedly, the actual amount of arrears was made known to the petitioner only as per Exhibit P5 on 4.11.2016. Apart from the fact that the sale has to be held to be invalid since the same has been completed without following the procedure prescribed by law, even on the principles of equity, it is a case coming within the remedy of rescission - While holding that the sale is vitiated, it cannot be forgotten that the petitioner has liabilities to the Government. In my view, equity requires that the petitioner is directed to pay the amount of ₹ 5,54,045/- along with simple interest at the rate of 6% from 4.11.2016 to 29.8.2019, and that on receipt of the same the respondents return possession of the land taken possession as bought-in land from the petitioner. It is declared that the proceedings under Section 50(2), which culminated in the taking over of the petitioner's lands as bought-in-land on behalf of the State is vitiated - respondents are directed to restore the lands to the petitioner after receiving a sum of ₹ 5,54,045/- along with simple interest at the rate of 6% per annum from 4.11.2016 to 29.8.2019 - petition disposed off.
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2020 (8) TMI 286
Dishonor of Cheque - insufficiency of funds - Power to pass revisional orders - Section 420 of IPC - HELD THAT:- In the instant case it is admitted fact that complainant respondent filed criminal complaint under Section 200 202 to initiate the proceedings against the petitioner accused under Section 138 read with Section 142 of NI Act. Learned trial court took cognizance under Section 138 of Negotiable Instrument Act against the petitioner accused. Thereafter petitioner accused appeared before the trial court. He adduced his evidence. The statement of accused was recorded. Petitioner-accused adduced defence witness - There is no evidence on record to give a conclusion that any document has been forged or fabricated. Thereafter, respondentcomplainant filed a revision before Additional Sessions Judge, Raisen. Additional Sessions Judge, Raisen allowed the revision presented by the respondent-complainant and it was held that petitioner-accused cheated the complainant-respondent by giving a cheque from another person i.e. Santosh Malviya and Santosh Malviya also gave his cancelled cheque to the present petitioneraccused to cheat the respondent- complainant, so prima facie case is made out under Section 420 of IPC against the petitioner and Section 120-B 420 of IPC against one Santosh Malviya and trial court is directed to take cognizance against the present petitioner and Santosh Malviya according to law. It is not disputed that offence under Section 420 of IPC is maintainable in lieu of pendency of proceeding under Section138 of NI Act. Plea of double jeopardy on the ground that appellant was convicted under Section 138 of NI Act is not tenable - if any offence is committed by the petitioner-accused for IPC then complainant respondent is very competent to initiate separate proceeding under IPC against the petitioner-accused and another. It is clear from the record that complainant respondent-complainant did not allege any fact against Santosh Malviya in his complaint under Section 138 of NI Act and during his evidence before trial court any witness did not allege any fact against Santosh Malviya, so it is not proper to implead Santosh Malviya as an accused under Section 319 of Cr.P.C. If Santosh Malviya is added as an additional accused there would be denovo trial. It is admitted fact that his case is fixed for final arguments since 2014, so in these circumstances when the complainant-respondent did not allege any act of cheating in his complaint and his evidence so it would not be appropriate to start denovo trial. The impugned order dated 11.09.2014 passed by learned 3rd Additional Session Judge, Raisen is allowed, whereby learned Sessions Judge allowed the revision presented by respondent-complainant and directed to take cognizance under Section 420 of IPC against the petitioner-accused according to law and also to take cognizance under Section 120-B read with Section 420 of IPC against one Santosh Malviya is hereby set-aside - criminal revision allowed.
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