TMI Tax Updates - e-Newsletter
August 2, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. Impact of Kerala Flood Cess

   By: Spudarjunan S and Mahadev R

2. FAQ ON KERALA FLOOD CESS

   By: Ganeshan Kalyani

3. GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XXIII)

   By: Dr. Sanjiv Agarwal

News

1. First Audit Report of CAG (Indirect Taxes-GST) for the year ended March 2019

2. FAQ ON KERALA FLOOD CESS

3. Pension Adalat 2019 - Income Tax Office Kerala

4. Exchange Rate of conversion of the Foreign Currencies relating to Imported and Export Goods notified

5. Lok Sabha passes amendments to Insolvency and Bankruptcy Code

6. India to conduct 1st National Time Release Study to enable faster movement of cargo across borders to benefit traders

7. Commerce & Industry Minister holds discussions with CEOs of Indian IT Companies; urges them to explore new markets

8. Mr. Girraj Prasad Gupta takes over as the Controller General of Accounts (CGA)

9. The Banning of Unregulated Deposit Schemes Act, 2019

10. THE COMPANIES (AMENDMENT) ACT, 2019

11. Extension of time of the Task Force for drafting a New Direct Tax Legislation

Notifications

Customs

1. 55/2018 - dated 1-8-2019 - Cus (NT)

Exchange Rates Notification No.55/2019-Custom (NT) dated 01.08.2019

2. 54/2019 - dated 1-8-2019 - Cus (NT)

Amendments to Sea Cargo Manifest and Transhipment Regulations, 2018

GST

3. 13/2019 - dated 31-7-2019 - CGST Rate

Seeks to exempt the hiring of Electric buses by local authorities from GST.

4. 12/2019 - dated 31-7-2019 - CGST Rate

Seeks to reduce the GST rate on Electric Vehicles, and charger or charging stations for Electric vehicles

5. 13/2019 - dated 31-7-2019 - IGST Rate

Seeks to exempt the hiring of Electric buses by local authorities from GST

6. 12/2019 - dated 31-7-2019 - IGST Rate

Seeks to reduce the GST rate on Electric Vehicles, and charger or charging stations for Electric vehicles.

7. 13/2019 - dated 31-7-2019 - UTGST Rate

Seeks to exempt the hiring of Electric buses by local authorities from GST.

8. 12/2019 - dated 31-7-2019 - UTGST Rate

Seeks to reduce the GST rate on Electric Vehicles, and charger or charging stations for Electric vehicles.

SEBI

9. SEBI/LAD-NRO/GN/2019/27 - dated 29-7-2019 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) (SECOND AMENDMENT) REGULATIONS, 2019

Circulars / Instructions / Orders

FEMA

1. 05 - dated 1-8-2019

Exim Bank's Government of India supported Line of Credit of USD 38 million to the Government of the Republic of Mozambique

DGFT

2. 22/2015-20 - dated 31-7-2019

Automatic Reduction/Enhancement upto 10% Duty saved amount and pro rata Reduction / Enhancement in export obligation

Highlights / Catch Notes

GST

• Single Invoice Billing Classifies Activities as Mixed Supply u/s 2(74) of CGST Act, 2017.

  Case-Laws - AAAR : Classification of services - Since all these activities undertaken by the Respondent could have been performed separately and independently with each other, the fact that the assessee is raising a singly consolidated invoice, in accordance with the Service Agreement, makes these supplies stipulated under this Agreement as mixed supply in terms of the provision of Section 2(74) of the CGST Act, 2017
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• Appellant's Role in OIDAR Services Classified as Intermediary Under GST; Essential for Supply Chain Continuity.

  Case-Laws - AAAR : Classification of supply - intermediary services or not - If we take out the role played by the Appellant in this entire transactional chain, there would be no supply of any services at all, as there would not be any recipient of the OIDAR services in India, for it is the Appellant who identifies and thus arranges for the recipient of this OIDAR Services provided by Sabre APAC - it is established beyond doubt that the activities undertaken by the Appellant are primarily in the nature of those of the intermediary.
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• Local Authorities Seek GST Exemption for Electric Bus Purchases to Boost Sustainable Transport Initiatives.

  Notifications : Seeks to exempt the hiring of Electric buses by local authorities from GST.
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• Proposal to Reduce GST on Electric Vehicles and Chargers to Boost Adoption and Promote Sustainable Transportation.

  Notifications : Seeks to reduce the GST rate on Electric Vehicles, and charger or charging stations for Electric vehicles
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• Food at Club Events Taxed 18% Under GST, Different From Regular Restaurant Services.

  Case-Laws - AAAR : Classification of supply - rate of tax - food supplied at social gatherings - The services provided by the Club at these social get-togethers are not regular restaurant services - The supply of food at events organised by the Appellant in the club premises is taxable - taxable @18% of GST
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• GST Not Applicable on Delayed Payment Charges for Securities Trading; Considered Deferment of Liability, Not Service Provision.

  Case-Laws - AAAR : Levy of GST - Delayed payment of tharges which are overdue from the client towards trading of securities and reimbursed to them - It is purely a deferment of liability only which arose since the payment was not made within the stipulated period of time by the client to the Stock Exchange for purchase of Securities. - not liable to GST
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• Delayed EMI Penalty Classified as Penal Charges, Subject to GST Under CGST Act Schedule II, Clause 5(e.

  Case-Laws - AAAR : Levy of GST - Penal Interest for delayed payment of EMI - The penalty recovered by the appellant does not get covered by the term ‘penal interest’ as used by the appellant in his grounds of appeal, as per se it is not interest but it is penalty / penal charges. - it is adequately covered under clause 5 (e) of the Schedule II of the CGST Act, and will attract GST.
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• Court Rules: Imaging Products Equally Essential; Ink Not Principal in Supply Classification; No Composite Supply Status.

  Case-Laws - AAAR : Classification of supply of goods - Electrolnk supplied along with consumables - all the Imaging products are equally necessary and it is not that any one of them is a Principal supply. Therefore, we cannot say that this is a composite supply where the supply of Ink is a principal supply.
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• GST Exemption Debate: Toilet Use Qualifies, but Construction Doesn't Meet Criteria Under Service Code 9994 or Notification 12/2017.

  Case-Laws - AAR : Benefit of exemption from GST - grant-in-aid or not - use and construction of toilets - use of toilets may be exempted but the construction of toilets is not covered under Service Code heading 9994 or in the Service description given in S. No. 76 of the Notification No. 12/2017.
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Income Tax

• Reopening assessments u/s 147 can't be justified by new reasons introduced via affidavits or oral submissions in court.

  Case-Laws - HC : Reopening of assessment u/s 147 - The reasons recorded cannot be supplemented by the time the matter reaches the Court by filing of any affidavit or making any oral submission. In the premises, it is not open to the revenue to seek to sustain the re-opening notice on a new reason, namely, dis-allowance of deduction of expenditure since the whole activity was illegal.
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• Court Rules 10% Interest on Wrongful Fund Retention; Section 244-A Interest Provision Not Applicable.

  Case-Laws - HC : Interest on refund - Money wrongly attached - the provision of interest in Section 244-A would have no applicability in the present case because it is a case of illegal attachment and retention - interest 10% for wrongful retention of money for a period of about 15 months, cannot be said to be excessive by any standards - directed to pay interest within two months otherwise further interest @ 9%
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• Tax Exemption Granted u/s 54F Despite Builder's Delay in Flat Allotment; Assessee Not at Fault.

  Case-Laws - AT : Exemption u/s 54F - delay by the builder - It was not the case of the AO that the assessee has not booked the flat with the builder or not not made the payment in time - assessee cannot be denied benefit of section 54F on account of delay by the builder or on account of the reason for delay in allotment/construction of the flat, which are not attributable to the assessee
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• Payment Not Subject to TDS u/s 195; Not Considered Royalty Until Production and Sales Start.

  Case-Laws - HC : TDS u/s 195 - the payment was for the supply of material and their use or Royalty - by entering into the agreement and by supplying the material PUCH authorized its use but its actual use would start only when production and sale commenced and that would be the stage at which royalty would be payable - not royalty at this stage - no TDS
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• Court Rules Property Not Deemed Dividend u/s 2(22)(e); Belongs to Company, Not Shareholder-Director.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - purchase of property in the name of shareholder-director - the Board Resolution coupled with the entries in the books of account and Balance Sheets as at 31.3.2012 and 31.03.2013 constitute the clinching evidence to show that the said property really belongs to the Company and the assessee merely held the same for and on behalf of the Company - cannot be treated as deemed dividend
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• Tribunal Must Ensure Prima Facie Case and Irreparable Hardship for Interim Stay in Income Tax Recovery Cases.

  Case-Laws - HC : Stay of recovery - ground for stay - Tribunal should have borne in mind while granting an interim order is that the assessee should have made out a prima facie case; the balance of convenience should have been in his favour; and if stay is not granted in favour of the assessee, he will be put to irreparable hardship - these are mandatorily required to be addressed, while granting stay
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• Tribunal's Tax Recovery from Non-Party Debtor Ruled Illegal Due to Lack of Notice and Hearing Opportunity.

  Case-Laws - HC : Stay of recovery - recovery of tax from its debtors - Tribunal could not have directed recovery of tax from its debtor, who was not a party to the proceedings before the Tribunal - If the Tribunal was of the view that the debt has to be recovered from a third party, it should have issued a notice to the third party, heard the third party and then taken a decision - direction is illegal
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• No penalty u/s 271(1)(c) due to lack of further inquiry and no income discrepancy after survey disclosure.

  Case-Laws - HC : Penalty u/s 271(1)(c) - survey team did not make further enquiries nor was it established that these represented any other income - the amount disclosed during the survey was duly included in the original return of income filed after the date of survey hence there is no difference as such in the return of income and assessed income - no penalty
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• Taxpayer Eligible for Deduction u/s 54B After Selling and Reinvesting in Agricultural Land for Grass Cultivation.

  Case-Laws - AT : Deduction u/s 54B - assessee purchased agricultural land from the sale proceeds - the impugned land on which Ghas / Grass is shown as per revenue record was in the nature of agricultural land on which agricultural activities were being carried out in the form of grass and same was irrigated by ‘well’ - assessee is entitled for deduction u/s 54B
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• Taxpayer Denied Deduction u/s 80IB(10); Surrendered Amount Classified as Income from Other Sources.

  Case-Laws - AT : Deduction u/s 80IB(10) - there could be no presumption that surrendered amount would represent business income unless and until assessees satisfies the authorities below that assessees have complied with the conditions of Section 80IB(10) while earning the impugned undisclosed income - Since assessee failed to prove through any evidence or material on record, same will be income from other sources - no deduction
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• Payment for copyrighted software to parent company not royalty u/s 9(1)(vi), no TDS deduction u/s 195 required.

  Case-Laws - AT : TDS u/s 195 - copyrighted software products - payment made by the assessee to its parent company for purchase of copyrighted software to be distributed in India for end users cannot be considered as royalty as defined u/s 9(1)(vi) consequently, the assessee is not required to deduct TDS u/s 195 - hence, no disallowance u/s 40(a)(ia)
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• PCIT Revises Assessment Order u/s 263 Due to AO's Failure to Initiate Penalty Proceedings u/s 271(1)(c.

  Case-Laws - AT : Revision u/s 263 - AO not initiated Penalty u/s 271(1)(c) - assessment order passed u/s 143(3)is erroneous and prejudicial to the interest of revenue - Ld. PCIT was right in exercising the power conferred to him u/s 263 and setting aside the assessment order
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• Conversion of Partnership to Private Limited Company Sparks Compliance Questions u/s 47(xiii) of Income Tax Act.

  Case-Laws - HC : Conversion of the partnership firm into a Pvt. Ltd. company - Violation of the conditions u/s 47(xiii) - part capital was allotted as shares to erstwhile partners and balance by way of loan credits - when a firm is succeeded by a company with no change either in the number of members or in the value of assets with no dissolution of the firm - unless and until the first condition of transfer by way of distribution of assets is satisfied, Section 45(4) will not be attracted
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• Income Disclosure u/s 132(4) Not Concealed; No Penalty Imposed Per Section 271(1)(c) of the Income Tax Act.

  Case-Laws - AT : Penalty u/s 271(1)(c) - assessment u/s 153A - addition was made on the basis of admission of additional income in the statement u/s 132(4) - admission is not akin to disclosure of money, bullion, jewellery or diary and income disclosed representing this statement is not to be considered as concealed income - no penalty
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Customs

• Importing E-Waste Without EPR Authorization Leads to Confiscation u/s 111(d) of the Act.

  Case-Laws - HC : Import of Electronic waste (e-waste) - non-production of EPR-Authorisation under the Rules at the time of import of the goods constitutes sufficient ground for confiscation of the goods under Section 111(d) of the Act
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• Ex-parte order remanded for reconsideration due to failure to address appellants' grievances in appeal memos.

  Case-Laws - HC : Non-speaking order - ex-parte order- impugned order does not mention even a single ground/grievance urged by the Appellants in their memos of appeals before it even if on similar fact Tribunal had cancelled the revocation of a Customs House Agents License which was even brought to notice - in the absence of the grievance of the parties before it being considered, the impugned order is a nonspeaking order - remanded for reconsideration
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DGFT

• New Directive Allows 10% Automatic Adjustment in Duty Saved and Export Obligations for Exporters.

  Circulars : Automatic Reduction/Enhancement upto 10% Duty saved amount and pro rata Reduction / Enhancement in export obligation
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IBC

• Tribunal Rules on Excluding Time from CIRP for Voting Share Decision, Limits Exclusion to 90 Days for Allottees' Protection.

  Case-Laws - AT : Liquidation of Corporate debtor - time limitation - exclusion of time taken by Tribunal to decide to how the voting share of thousands of Allottees will be counted - the period from the date of application filed by the Association till the final decision can be excluded for the purpose of counting the 270 days but in interest of the Allottees not inclined to exclude total period and directed to exclude 90 days for counting the period of 270 days of ‘CIRP’
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• CIRP Petition Dismissed: Invoice Error Shows Buyer as "Perfect IT Solution," Not Respondent "Sify Technologies Limited" u/s 9.

  Case-Laws - AT : Admissibility of CIRP petition under I&B code - as per invoice buyer is ‘Perfect IT Solution’ and not ‘Sify Technologies Limited’ (Respondent herein) - a disputed question of fact can be decided by a Court of Competent Jurisdiction and not by the Adjudicating Authority or by this Appellate Tribunal, hence the application u/s 9 is not maintainable
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SEBI

• SEBI's 2019 Amendment Enhances Transparency and Fairness in Share Acquisitions and Takeovers, Protecting Investor Interests and Market Order.

  Notifications : SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) (SECOND AMENDMENT) REGULATIONS, 2019
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Service Tax

• No Service Tax on Employee Deputation from Japan to India, Pre or Post-Negative List Period.

  Case-Laws - AT : Levy of service tax - deputation/secondment of employees from a group company in Japan to the appellant in India - neither during the pre-negative list nor post negative list, Service Tax could not be levied on deputation of employees from a group company in Japan to the Appellant in India.
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• Tenants of Panchayat Shop Rooms Must Pay Service Tax as per Lease Agreements Terms and Conditions.

  Case-Laws - HC : Liability of service tax - agreement of lease - tenants of shop rooms constructed by the Panchayat - The petitioners have signed the Lease Deeds knowing the terms, with open eyes. The petitioners, therefore, cannot wriggle out of their liability.
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• Assessee Entitled to Refund on CENVAT Credit; Reversals Made Under Protest to be Returned by Authorities.

  Case-Laws - HC : Refund claim - remaining CENVAT credit - once the assessee is not required to reverse any credit availed by him on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by the assessee under protest cannot be retained by the Revenue authorities and those have been refunded to him
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Central Excise

• Court Remands Case for Reconsideration of Statements u/s 9D of Central Excise Act, 1944; Rebates in Focus.

  Case-Laws - AT : Recovery of erroneously grant of Rebate claim - reliability on statements - procedure prescribed u/s 9D of Central Excise Act, 1944 is mandatory to follow - matter remanded back with respect to the statements and also consider any other additional evidence that may be produced by the appellants.
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• Rice Milling Machinery Parts Classified Under Chapter 8437 of Central Excise Tariff Act Deemed Legally Sound.

  Case-Laws - SC : Classification of goods - The belt conveyors and bucket elevators specifically manufactured as the part of rice milling machinery along with other machinery of rice mill by the appellants merit classification under chapter heading No. 8437 of CETA, 1985 - There is no legal infirmity in the impugned judgment and order
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VAT

• Assessing Authority's Rectification Invalid Without Issued Assessment Order u/s 31; Entire Process Nullified.

  Case-Laws - HC : Rectification of mistake - in absence of any assessment order issued by him there existed no basis to invoke the power of rectification u/s 31, by the assessing authority. Consequently, the assessing authority never acquired any jurisdiction to issue any notice or pass any order of rectification - The entire exercise carried by the assessing authority was a nullity and it must therefore necessarily fall.
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• Director's Personal Surety Not Binding on Company in Tax Matters Without Statutory Provision.

  Case-Laws - HC : Liability of surety under VAT, CST or sales tax matters - in the absence of any specific provision in the statute, company cannot be held liable for the surety given by its director in his individual and personal capacity.
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• Chhattisgarh Entry Tax Amendment 2014 Unworkable Without State Notification on Market Value; Cannot Justify Reopening Assessments.

  Case-Laws - HC : Scope of amendment - Chhattisgarh Entry Tax (Amendment) Act, 2014 - the amendment of 2014 is unworkable unless the State notifies the market value of "such goods" which has been done only on July 1, 2014 - hence definition so given to the word "market value" is not clarificatory and can not be used as the basis for reopening the assessments as the amendment in no manner can form the reason to believe for reassessment
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• Tax Evasion Case Highlights Delivery Note Defects and Accounting Discrepancies; Order Upheld Despite Evidence Suppression Concerns.

  Case-Laws - HC : Evasion of tax - demand based on the defect noted in the Delivery Note - entries contained in the books of account, which could have made after the interception cannot be accepted as a clear proof - Since the best evidence was suppressed i.e the Delivery Note Book, which would indicate that it was drawn in triplicate, even though double sided carbon was not used - order cannot be term as illegal, erroneous or improper
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Case Laws:

• GST

• 2019 (8) TMI 33
  Classification of supply - rate of tax - food supplied at social gatherings - HELD THAT:- Under the provisions of serial no. 7(v) of the Rate Notification it is seen that any supply of food or beverage at any event, whether or not served at an outdoor or an indoor function, squarely falls under the said category. A social get-together held at the Club premises as explained by the Appellant, is an event or a function of occasional nature. An event is a planned public or social occasion whereas, a function means an official ceremony or a formal social event, such as a party or a special meal, at which a lot of people are usually present - The provisions of serial no.7(v) of the Rate Notification is not restricted to Exhibition Halls or Marriage Hails and includes all indoor and outdoor functions. The services provided by the Club at these social get-togethers are not regular restaurant services as envisaged from the submissions made by the Appellant. So. the supplied at events which are occasional in nature like the social get-togethers arranged at the Club premises will unambiguously fall under serial no. 7(v) the Rate Notification. The supply of food at events organised by the Appellant in the club premises is taxable under serial no. 7(v) of the Notification no. 11/2017-C.T (Rate) dated 28-06-2017 under the Central Goods and Services Tax Act. 2017 Notification No. 1135-FT dated 28-06-2017 under the West Bengal Goods and Services Tax Act, 2017 and taxed @ 18%.

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• 2019 (8) TMI 32
  Levy of GST - Delayed payment of tharges which are overdue from the client towards trading of securities and reimbursed to them - HELD THAT:- Where The client makes delay (i.e. beyond T+ 1 statutory time limit for payment as per SEBI regulations) in reimbursing the expense (being purchase consideration of the securities bought for client and already collected from stock broker by stock exchange with T+ 1 time limit) to the broker and broker charges amount on delay of such reimbursement of expense, for securities purchased from the client - It is purely a deferment of liability only which arose since the payment was not made within the stipulated period of time by the client to the Stock Exchange for purchase of Securities. Since the service of buying and selling of securities which is exempted under GST, as per the definitions of goods and services under the Section 2(52) and 2(102) of CGST Act, 2017, the corresponding delayed payment charges which are also linked to the above service of trading of securities should also stand exempt under GST. Applicant is not liable to pay GST on the delayed payment charges on reimbursement of amount by client to Applicant, where client failed to pay amount paid to Stock Exchange for purchase of securities with T+1 (trading day plus one day) under SEBI Regulation norms and deducted by Stock Exchange from Applicant account being purchase consideration of securities which are neither goods nor services under GST.

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• 2019 (8) TMI 31
  Levy of GST - Penal Interest for delayed payment of EMI - interest for the purpose of exemption under Sr. No. 27 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, Sr. No. 27 of Maharashtra State Notification No. 12/2017-State Tax (Rate) dated 29.06.2017, and Sr. No. 28 of Notification No. 9/2017-lntegrated Tax (Rate) dated 28.06.2017 - taxable supply or not - Tolerate an act or a situation - Challenge to AAR decision. HELD THAT:- The agreement between appellant and customers has clearly defined the terms therein and the terms (Default Interest , Penal Charges and Bounce Charges are defined separately and therefore are exclusive of each other. A further reference to the clause 16 and schedule referred therein shows that the appellant recovers the charges for delay in payment of EMI and for continuing of non-payment as a penalty not exceeding 3% per month on amount due calculated on pro-rata basis from due date till date of actual payment. In clause 3 (iv) of the agreement also the appellant mentioned that he is entitled to recover the penalty as above in the event of default and delay in payment of EMI. Thus, it is evident that although the agreement between appellant and customer has defined separately the terms Default Interest , Penal Charges and Bounce Charges , but they are exclusive and what appellant recovered or recovers from his customer is only the penalty for delayed payment of EMI under the term Penal Charges . The penalty recovered by the appellant does not get covered by the term penal interest as used by the appellant in his grounds of appeal, as per se it is not interest but it is penalty / penal charges. What is exempted vide N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 is the interest as construed under definition provided in the said notification. By abiding to the correct interpretation of term interest as discussed herein above, the penal charges / penalty being not construed as interest, will not qualify for such exemption. The provisions of clause (d) of sub-section (2) of Section 15 of the CGST Act would apply in these cases where interest is not defined separately anywhere else in a specific context. A separate carving out of the word interest in the notification in the context of this case sets it apart from drawing a general meaning from Section 15. Entry 5 (e) of the schedule II to the CGST Act, 2017 - HELD THAT:- There is mutual agreement between the Appellant and the borrower. Thus, here it can be said that the Appellant have tolerated an act or situation of default by the borrowers, for which they are recovering some amount in the name of the penal charges / penalty. Hence, such activity of tolerance is against consideration - As regards the contention of the appellant that there is no separate agreement, we are of the view that though there is no separate agreement between the Appellant and the borrower, for the said act of tolerance of the delay by the borrower, there is clear provision laid out at entry 3 (a) of the above discussed agreement, in this regard, in the loan agreement itself which clearly proposes the remedy available for the default by the borrower. Thus, this argument of the Appellant is devoid of my rationale or merit, and hence is not worth considering. Clause 5 (e) of the Schedule II of the CGST Act includes the activities to be treated as services and it covers the very activity in the form of expression to tolerate an act or a situation and thereby an act of tolerating delay in payment of EMI is brought into ambit of supply by treating it as supply of services. There shall not be confusion in the mind of anyone that legislature intentionally brought this activity of tolerating an act in the scope of supply of services - the very activity of tolerating act or situation of delay in payment of EMI is covered under clause 5 (e) of the Schedule II without such obligation as contended by the appellant. The penal charges / penalty recovered by the Appellant from their borrowers on account of the delay in payment of EMI by borrowers are adequately covered under clause 5 (e) of the Schedule II of the CGST Act, and will attract GST.

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• 2019 (8) TMI 30
  Classification of supply of goods - Electrolnk supplied along with consumables - time and value of supply of Electrolnk with consumables under the Indigo press contract - composite supply or Mixed supply - naturally bundling of services. HELD THAT:- The Agreement is between HP and its Reseller and as per the agreement, HP appoints Reseller as an authorized, nonexclusive Reseller for the purchase and resale of Supplies subject to the terms and conditions of the Agreement. As per SUPPLIES under Section C, the resellers have a choice to go for A la -carte or the Tier programs. In the definitions, A-La-carte Program is defined as a supplies purchase program defined in Section E. Section G of the agreement lays down the main features of the Tier program, where the click of the printer is a chargeable unit for a Single Colour Separation transferred onto substrate. Clause 6 of Section G say that HP shall have the right, at its discretion, to recover Supplies on-hand at Reseller s site in excess of its and its Customers aggregate two months requirements based on the Maximum Usage per Impression or delay delivery to Reseller of additional supplies beyond the amounts in excess of two months requirements based on maximum usage Per Impression for Reseller and its Customers. - HP supplies Imaging Products to its Resellers based on the Maximum Usage per Impression. As per the appellant, these Imaging products are supplied as a naturally bundled supply in conjunction and therefore are a composite supply as per Section 2 (30) of the CGST Act. Mixed supply or Composite supply - HELD THAT:- A composite supply is defined as supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods and services or both , or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is the principal supply - In the present case what immediately comes to mind is that all the products are equally important for the printing to happen. It is not that the printing can take place with only Ink and that the other products are not necessary. One of the major ingredients of a composite supply is that, one of the supplies is a principal supply and the others are subservient or incidental to it. The example given in the CGST Act is that of supply of goods alongwith freight [insurance where the supply of the goods is the principal supply. Such is not the case here. In a supply of goods, the customer agrees to purchase the goods and then agrees to pay for the insurance/freight and it is not that the supply of goods would not be complete without the insurance/freight but it is rather vice versa. The supply of insurance/freight depends on the supply of goods. In the present case, all the Imaging products are equally necessary and it is not that any one of them is a Principal supply. Therefore, we cannot say that this is a composite supply where the supply of Ink is a principal supply.

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• 2019 (8) TMI 29
  Classification of supply - classification of goods or services - grant-in-aid or not - use and construction of toilets - services by way of any charitable activity - entities registered under Section 12AA of the Income Tax Act, 1951 Whether the activities of the applicant can be considered as supply of goods or services and whether the applicant is liable to pay GST on the amount received by them from AICL if the Said amount is treated as consideration towards supply of goods or services. Also, whether the amount received from AICL can be treated as grant-in-aid, which may be non-taxable? - HELD THAT:- In the present case, there is a direct link between the amount paid and the supply of taxable service of installation of solar pumps, solar street lights and construction of toilets. The MoU clearly provides that the amount of 20,35,76,800 is to be paid by AICL to the applicant for installation of specific numbers solar pumps and solar street lights and for construction of Specific numbers of toilets. Further, the MoU specifies the details of the beneficiaries and guidelines to ensure that such services are delivered to them. Hence, it is not a case where IACL has donated lump sum to the applicant for carrying out activities which the applicant may be persuing. The amount paid in this case is linked to specific taxable activity. Use and Construction of toilets - Whether the said supply of goods or services by the applicant is exempted under S. No. 1 or under S. No. 76 of the Notification No. 12/2017 -Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The exemption under Section 12A / 12AA and Section 10 (23C) and (v) of the Income Tax Act, 1961 does not cover all incomes or activities of the applicant. The exemption under said provisions are admissible based on the nature of activity and source of such incomes. In the present case, such income has not been received by the applicant for either any Charitable purpose of for running any Institute. Hence, exemption under CGST Act, 2017 on income is admissible only if the Same is towards charitable activity - for the said services to be covered in clause (iv) of the above definition of charitable activities, these must be relating to the preservation of environment. However, in the present case, the purpose of said services is to provide infrastructural facilities in the villages to improve quality of life of the rural population. It has been observed that most of the villages lack basic amenities like education, health, sanitation, roads, civil infrastructure and facilities, availability of adequate electricity, potable water and other necessary facilities. The said services are not covered in the definition of charitable activities and impugned services rendered by the applicant are not covered under S. No. 1 of Notification 12/2017 - Central Tax (Rate) dated 28.06.2017. Hence, in cases where the service provider is permitting use of toilet facility for a consideration from the user, the same may be possibly exempted from payment of CGST under the said exemption notification - However, construction of toilets is not covered under Service Code heading 9994 or in the Service description given in S. No. 76 of the said Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017.

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• 2019 (8) TMI 28
  Scope of Advance Ruling - lack of Jurisdiction - Requirement of E-way bill - consignments pertaining to multiple invoices to multiple customers moved in the same conveyance - the value of each invoice is less than the limits for generation of e-way bill but in aggregate, the value of the multiple invoices exceeds the specified limit - HELD THAT:- The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) and no other issue can be decided by the Advance Ruling Authority - The issue for which Advance Ruling is sought depends on the Provisions of e-way bill , which is not in the ambit of this authority. The Application is therefore rejected without going into the merits of the case, on the issue of lack of jurisdiction.

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• 2019 (8) TMI 27
  Profiteering - case of the Petitioner is that it is a mere distributor of the products of M/s Patanjali Ayurveda Limited (PAL) and it is PAL which has increased its base price over which Petitioner has no control - HELD THAT:- The Court is of the view that the Petitioner has made out a prima facie case for grant of interim relief. Subject to the Petitioner paying 3 lacs i.e. 1.5 lakhs to the CGST fund and 1.5 lakhs to SGST fund within four weeks on or before 31st August, 2019, the impugned order shall remain stayed - The penalty proceedings may go on but the outcome thereof will be subject to the result of this petition. List before the Joint Registrar on 17th September, 2019for completion of pleadings - List before the Court on 3rd February, 2020.

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• Income Tax

• 2019 (8) TMI 61
  TDS u/s 195 - payment made for supply of designs, drawings and specifications was in the nature of royalty or not - case of the assessee that the payment of 3 million Austrian Schilling was for the supply of material and their use would arise when the vehicles would be started to be produced - main plank on which the Tribunal passed its decision was its interpretation of the word supply and it held that supply includes use - HELD THAT:- To our mind royalty is a payment to an owner for the ongoing use of its assets or property such as patents or natural resources for business purposes. Word royalty has been defined by the Supreme Court in the case titled as Entertainment Network (I) Ltd. v. Super Cassette Inds. Ltd [ 2008 (5) TMI 671 - SUPREME COURT] as the remuneration paid to an author in respect of the exploitation of a work, usually referring to payment on a continuing basis (i.e. 10 percent of the sale price) rather than a payment consisting of a lump sum in consideration of acquisition of rights. Word Royalty has been defined in Oxford Advanced Learner s Dictionary (New 9th Edition) as a sum of money that is paid by an oil or mining company to the owner of the land that they are working on Thus understood, the assessee would have to pay a certain amount of money to PUCH for every vehicle which is sold using its designs. Tribunal has given an unnatural and strained meaning to the expression supply . Yes, by entering into the agreement and by supplying the material PUCH authorized its use but its actual use would start only when production and sale commenced and that would be the stage at which royalty would be payable. - Decided in favour of assessee.

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• 2019 (8) TMI 60
  Interest on refund - Money wrongly attached and retained by the Revenue and was duly refunded - Tax recovery against Patiala Development Authority - attachment made of the amount belonging to the petitioner - HELD THAT:- The arguments of the petitioner must prevail. The provision of interest in Section 244-A of the Income Tax Act would have no applicability in the present case because it is a case of illegal attachment and retention. In the written statement, the Revenue has accepted that the money was wrongly attached and retained. There can be no escape from the payment of interest. The rate of interest claimed also cannot be said to be excessive by any standards. The petition is allowed. The interest of 3.68 crores be now paid to the petitioner within two months from the date of receipt of certified copy of this order, failing which there would be further interest applicable thereafter @ 9% per annum on this amount.

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• 2019 (8) TMI 59
  Penalty u/s 271(1)(c) - assessee filed the return of income consequent to the survey u/s 133A and included income surrendered in survey - HELD THAT:- CIT(A) held that the survey team did not make further enquiries nor was it established that these represented any other income. It is not a case where it was found / established that the income disclosed was not full and true. Further, the department has not built a case where the explanation of the appellant has been proved to be false or not bona fide. Even the conditions or Explanation 1 of section 271(1)(c) are not applicable in such a case. The Tribunal took notice of the fact that in the case on hand, the amount disclosed during the survey was duly included in the original return of income filed after the date of survey. It took the view that there is no difference as such in the return of income and the income. In the peculiar facts of the present case, the Tribunal arrived at the conclusion that the case is not one of furnishing inaccurate particulars of income. Also in the case of Pr. CIT vs. Valibhai Khanbhai Mankad, Tax [ 2015 (9) TMI 849 - GUJARAT HIGH COURT] held that in the absence of any concealment of the particulars of income or furnishing of inaccurate particulars of income on the part of the assessee, no infirmity can be found in the impugned order passed by the Tribunal in confirming the order passed by the CIT(A) in deleting the penalty u/s 271(1)(c) We have reached to the conclusion that no error not to speak of any error of law could be said to have been committed by the Tribunal in passing the Impugned order. No interference is warranted in this appeal u/s 260-A - Decided in favour of assessee.

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• 2019 (8) TMI 58
  Conversion of the partnership firm into a private limited company - Violation of the conditions stipulated u/s 47(xiii) - transfer by way of distribution of assets - partners of the erstwhile firm derived benefit other than allotment of shares by way of loan credits in their favour on conversion of the partnership firm into a private limited company - HELD THAT:- In our considered view, the legal position having been well settled that when vesting takes place, it vests in the company as they exist. Therefore, unless and until the first condition of transfer by way of distribution of assets is satisfied, Section 45(4) will not be attracted. Therefore, in the facts and circumstances of the case, we find that there is no transfer by way of distribution of assets. We find that the CIT(A) did not take into consideration the legal issue involved i.e. when a firm is succeeded by a company with no change either in the number of members or in the value of assets with no dissolution of the firm and no distribution of assets with change in legal status alone, whether there is a transfer as contemplated u/ss 2(47) and 45(4). This issue was rightly decided by the Tribunal by taking into consideration the decision of a Division Bench of this Court in the case of CADD Centre Vs. ACIT [ 2016 (5) TMI 422 - MADRAS HIGH COURT] , in which, the decision of a Division Bench of the Bombay High Court in the case of CIT Vs. Texspin Engineering and Manufacturing Works [ 2003 (3) TMI 56 - BOMBAY HIGH COURT] , was taken into consideration. The vital difference is that shares worth of 10 lakhs alone were allotted and that the remaining was given as credit of loan to the partners of the erstwhile firm in the same proportion as their share capital of the firm. In our considered view, what is required to be considered is the effect of vesting as held in the case of Texspin Engineering and Manufacturing Works, which followed the decision of the Hon ble Supreme Court in the case of Malabar Fisheries Co. Vs. CIT [ 1979 (9) TMI 1 - SUPREME COURT] and there can be no distribution of assets when a partnership firm vests in a company under Part IX of the Companies Act, 1956. Thus, we are of the view that the Tribunal rightly followed the decision in the case of CADD Centre. - Decided against revenue.

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• 2019 (8) TMI 57
  Stay of recovery - directions to Petitioner to deposit 20% of the disputed tax pending Appeal against the order of the assessment subject to which the remaining recovery would stand stayed - HELD THAT:- As appears from the record that in response to the notice of reassessment, the Petitioner had not produced the documents or reply during pendency of such proceedings. The Assessing Officer therefore passed the ex-parte assessment order. He has imposed the tax of 42 Lacs (round off), 20% of which, would come to close to 8 Lacs. Thus the Petitioner is required to deposit the sum of 8 Lacs subject to which the remaining tax recovery would stand stayed. Petitioner had received no consideration at the time of transfer of the tenancy of immovable commercial property of which he is the owner and that therefore no tax could have been demanded from him, would be subject matter of the Appeal proceedings. This is not a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending appeal. The Petition is therefore dismissed.

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• 2019 (8) TMI 56
  Stay of recovery - Tribunal directed the department to recover its dues from its debtors - HELD THAT:- The cardinal principle that should have been borne in mind by the Tribunal while granting an interim order is that the assessee should have made out a prima facie case; the balance of convenience should have been in his favour; and if stay is not granted in favour of the assessee, he will be put to irreparable hardship. Unfortunately, the Tribunal did not address any of these grounds, which are mandatorily required to be addressed, while granting an interim order. That apart, the Tribunal did not take note of its earlier orders wherein, the Tribunal has specifically recorded that the assessee has not shown any financial difficulty, nor the assessee has made out a prima facie case. Tribunal could not have directed recovery of tax from Mr.Darmendra Bafna, who was not a party to the proceedings before the Tribunal. If for any reason, the Tribunal was of the view that the debt has to be recovered from a third party, it should have issued a notice to the third party, heard the third party and then taken a decision. Thus, the procedure adopted by the Tribunal is wholly unknown to law and is clearly illegal. To say the least, the order is utterly perverse.Tribunal in the impugned order took a different stand and directed recovery of the disputed tax from a third party who was not heard in the matter. Though the present appeal has become infructuous, as the main appeal itself has been disposed of by the Tribunal, we thought fit to make the above observation so that the Tribunal in future, does not resort to passing such arbitrary and illegal orders. Can Tribunal issue direction which goes beyond the time limit prescribed under the first proviso in Section 254(2A) - As rightly contended by Mr.T.R.Senthil Kumar, this direction issued by the Tribunal goes beyond the time limit prescribed under the first proviso in Section 254(2A). This will also make the impugned order as illegal. As we have observed that the appeal has become infructuous, but nevertheless, the impugned order can never be treated as a precedent, nor such procedure can be resorted to by the Tribunal in any other matter.

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• 2019 (8) TMI 55
  Addition u/s 68 - unsecured loans - confirmation was not provided as lender was expired - HELD THAT:- Subject loan from Shri Paras Ram Khatri and Vineet Poddar was taken in the assessment year 2010-11, and the revenue has not rebutted the submissions. Moreover, Ld. CIT(A) recorded the fact that bank statement was enclosed to prove that the money was credited into the bank account on 14.9.2007. In respect of loan of 5,25,000/-, it is stated that the amount was received during the year under consideration by way of account payee cheque but the confirmation could not be obtained due to untimely demise of the lender. Hence, looking to the peculiarity of the facts and more particularly when the A.O. has not made any enquiry regarding demise of the lender and the money credited in the account during the assessment year 2010-11 as claimed by the assessee. The issue is restored back to the A.O. to decide it afresh after making proper enquiry. The assessee would cooperate in the proceedings before the A.O. The grounds raised in the appeal are allowed for statistical purposes.

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• 2019 (8) TMI 54
  Exemption u/s 54F denied - delay by the builder or on account of the reason for delay in allotment/construction of the flat - construction was delay by builder due to NOC from HAL and litigation - HELD THAT:- It was not the case of the AO that the assessee has not booked the flat with the builder. It is also not the case of the AO that he has not made the payment to the builder in time. It is also not the case of the Revenue that there was no stay by the High Court and the matter is not sub-judice before the High Court. The only reason given by the AO is that in case the writ petition is disallowed and the relief sought is declined then the assessee would not be entitled to flat. What is required to be seen is intention of the assessee at the time of making the investment in the building project. If there was no inhibition or embargo at the time of investment, at that time the assessee was entitled to the title of the residential unit, then the assessee is entitled to benefit of section 54F. Assessee cannot be denied benefit of section 54F on account of delay by the builder or on account of the reason for delay in allotment/construction of the flat, which are not attributable to the assessee. Undisputedly, the assessee had invested the amount for purchase of flat pursuant to illegally binding agreement. However, on account of withdrawal of NOC by HAL, project could not be completed and the flat was not allotted to the assessee. Section 54F is a beneficial legislation and has been inserted with a view to promote investment of the long term capital gains in the building of residential premises. On account of technical reasons, as mentioned above or on account of fraud or unscrupulous activities of the builder where said residential units without having proper clearance (not disclosed to the assessee at the time of booking or subsequent thereto) cannot be made a ground for denial of benefit of section 54F. In our view, the assessee is entitled to benefit of section 54F. However, on account of interdiction by Karnataka High Court, the possession had not been handed over to the assessee. We may fruitfully apply the mechanism that no order of the court was intending to harm any person. For no fault of the assessee, the assessee cannot be denied benefit of section 54F merely because the clearance of the project is pending before the Hon ble Karnataka High Court. Hence, the appeal of the assessee is allowed. We rely upon the decision of Karnataka High Court in the matter of Dileep Ranjrekar [ 2019 (1) TMI 158 - KARNATAKA HIGH COURT] and Tribunal order in the matter of Balkishan Atal vs. ACIT 1 [ 2019 (3) TMI 476 - ITAT DELHI]. - Decided in favour of assessee

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• 2019 (8) TMI 53
  Penalty u/s 271(1)(b) - non-compliance of the notices issued u/s 142(1) - HELD THAT:- In terms of the section 142(1), AO called for certain information for completion of the assessment proceeding in the case of the assessee, but the assessee had not provided those information and continued to object the initiation of the proceeding in the case of the assessee. This conduct of the assessee led to completion of the assessment proceeding ex parte . In assessment proceedings, the role of the AO is both of the investigator and adjudicator. If the assessee obstruct and create hurdles in the investigation process of the Assessing Officer, true and complete facts may not be available for adjudication and the adjudication would be on incomplete facts. Not only the assessee stopped the Assessing Officer for examining the issue in dispute judiciously in assessment proceeding but also filed wrong information before the CIT(A) claiming that it had complied notices issued by the Assessing Officer. CIT(A) has pointed out one such instance of letter dated 18/02/2015 and observed that said letter bears no proof of submission before the Assessing Officer and appears to be an afterthought and crafted especially to wriggle out the penalty levied on it for non-compliance of notice under section 142(1) of the Act. Before us, the assessee has not represented and not rebutted this misconduct on the part of the assessee. The assessee has not made out a case of any reasonable cause for failure in furnishing the information before the Assessing Officer. - Decided in favour of assessee.

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• 2019 (8) TMI 52
  Penalty u/s 271(1)(c) - Assessment u/s 153A - addition was made on the basis of admission of additional income in the statement u/s 132(4) - HELD THAT:- There is no debate with regard to the proposition that in order to attract Explanation 5A appended to section 271(1)(c) there should be a search and during that search assessee should be found to be owner of any money, bullion, jewellery and other valuable article or things and the assessee claims such assets has been acquired by him by utilizing wholly or partly of his income of any previous year or any income based on any entry in any books of accounts or other documents or transaction found during the course of search, and the assessee claims that such entries in the books of accounts or other documents or transaction represent his income from any previous year, which has ended before the date of search, then notwithstanding such income is declared by him in any return of income furnished on or after the date of search, he shall for the purposes of imposition of a penalty under clause (c) of sub-section (1) would be deemed to have concealed the particulars of income or furnished inaccurate particulars of income. If any money, bullion, jewellery or valuable showing income in the hands of the assessee, and such income was not from explained source, then after search in response to the notice u/s 153A, if the assessee has admitted that income, then deeming fiction for concealment of income would attract. The question before us is that no money, bullion, jewellery or book entry was found at the time of search. The only evidence against the assessee is that an admission of additional income was made in the statement u/s 132(4). The question is this admission akin to disclosure of money, bullion, jewellery or diary and income disclosed representing this statement is to be considered as concealed income ? This aspect has been considered in both these orders VASCROFT DESIGN PVT. LTD. VERSUS ACIT [ 2019 (2) TMI 1671 - ITAT AHMEDABAD] , wherein it has been held that on the strength of authoritative pronouncement of Hon ble High Courts in KAILASHBEN MANHARLAL CHOKSHI VERSUS CIT [ 2008 (9) TMI 525 - GUJARAT HIGH COURT] that solely on the basis of declaration addition is not possible unless the assessee did not retract the statement. - a corroboration for such disclosure would require - we find force in the contentions of the ld.counsel for the assessee and delete the penalty. - Decided in favour of assessee.

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• 2019 (8) TMI 51
  Revision u/s 263 - AO not initiated Penalty u/s 271(1)(c) - HELD THAT:- As relying on INDIAN PHARMACEUTICALS [ 1978 (10) TMI 12 - MADHYA PRADESH HIGH COURT] A.O failed to initiate the penalty proceedings u/s 271(1)(c) towards the income concealed by the assessee. Therefore in our considered view Ld. PCIT was right in exercising the power conferred to him u/s 263 and setting aside the assessment order u/s 143(3) treating it as erroneous and prejudicial to the interest of revenue. Accordingly the grounds raised by the assessee are liable to be dismissed. - in the result appeal of the assessee is dismissed.

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• 2019 (8) TMI 50
  Penalty levied u/s 271(1)(c) - assessing the interest income as income from other sources - HELD THAT:- Since the order of the Tribunal, on which reliance has been placed by the ld. CIT(A) while disposing of the appeals filed by the assessee against levy of penalty under section 271(1)(c) of the Act, has been reversed by the Hon ble Allahabad High Court, we set aside the consolidated order of the ld. CIT(A) and restore the matter to his file, with a direction to decide the issue in the light of the order of the Hon ble Allahabad High Court [ 2017 (9) TMI 824 - ALLAHABAD HIGH COURT] and after affording due opportunity of hearing to the assessee. - Appeals of the Revenue are allowed for statistical purposes.

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• 2019 (8) TMI 49
  TP adjustment - adoption of most appropriate method - RPM v/s TNMM - assessee had adopted Resale Price Method (RPM) whereas TPO had adopted Transactional Net Margin Method (TNMM) in the distribution segment of the assessee - HELD THAT:- As find from the TP study report that assessee had separately benchmarked its international transactions with AE under manufacturing segment as well as under distribution segment. We find from Paper Book that assessee had duly submitted the segmental profitability statement from manufacturing segment and trading segment before the TPO vide letter dated 16/12/2015. All the aforesaid evidences would squarely go to prove that assessee had separately benchmarked its manufacturing segment and its distribution segment. Only for its distribution segment, the assessee had applied resale price method as most appropriate method. The fact of the assessee holding inventories , paying excise duty are all relevant for its manufacturing segment and has got absolutely nothing to do with the transactions carried out in its distribution segment. Hence, we hold that the lower authorities have proceeded the entire issue on total misconception of facts ignoring the relevant materials on record. We direct the ld. TPO to apply RPM as the most appropriate method and recompute the margins of the assessee accordingly and make any adjustment to ALP thereon, if warranted. Accordingly, grounds raised by the assessee are allowed for statistical purposes.

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• 2019 (8) TMI 48
  TDS u/s 195 - disallowance of payment made to Aveva Solutions Ltd. UK for copyrighted software products u/s 40(a)(ia) - non-deduction of tax at source as required - HELD THAT:- The issue of non-deduction of TDS at source on payment made to its parent company Aveva Solutions Ltd., England, in light of provisions of section 201(1) and 201(1A) and held that the assessee was not liable to deduct tax at source and also it cannot be treated as assessee in default for the impugned year in respect of payment made for purchase of copyrighted software. Therefore, considering all and in assessee s owns case [ 2017 (9) TMI 513 - ITAT MUMBAI] we are of the considered view that payment made by the assessee to its parent company for purchase of copyrighted software to be distributed in India for end users cannot be considered as royalty within the definition of royalty as defined u/s 9(1)(vi) consequently, the assessee is not required to deduct tax at source u/s 195 of the Act and hence, no disallowance could be made u/s 40(a)(ia). Therefore, we direct the Assessing Officer to delete additions made towards disallowance u/s 40(a)(ia) of the Act. Short credit of TDS - HELD THAT:- Assessee submitted that the issue may be setaside to the file of the Assessing Officer to verify the facts to ascertain whether is there any credit for TDS and also to grant credit, therefore, we set-aside the issue to the file of the AO and directed the Assessing Officer to call necessary enquiries in light of evidence filed by the assessee including TDS certificate if, any and grant relief accordingly. Levy of interest u/s 234B and 234C is mandatory and consequential in nature, therefore, we direct the AO to verify the facts in light of provisions of section 234B and compute interest as applicable on the basis of total income computed for the year under consideration. We further direct the Assessing Officer to compute 234C interest on returned income.

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• 2019 (8) TMI 47
  Deduction u/s 80IB(10) - undisclosed receipts/income surrendered during the course of survey - business income OR income from other sources - HELD THAT:- There could be no presumption that surrendered amount would represent business income of the assessees. Unless and until assessees satisfies the authorities below that assessees have complied with the conditions of Section 80IB910) while earning the impugned undisclosed income, assessee would not be entitled for such benefit as per Law. Authorities below have rightly concluded that impugned undisclosed income is income from other sources. Since assessee failed to prove through any evidence or material on record that undisclosed income has any nexus with any housing project of the assessee therefore, assessee would not be entitled for deduction under section 80IB(10). No error in the Orders of the authorities below in denying the deduction under section 80IB(10) on the undisclosed receipts so surrendered for taxation during the course of survey. There is no merit in both the appeals of the assessee. Appeals of the Assessee are dismissed.

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• 2019 (8) TMI 46
  Addition on account of labour cess - addition in the hands of the client or in the hands of the assessee - HELD THAT:- The said issue is covered by the order of the Tribunal in the assessee s own case for assessment year 2010-11 wherein held it remains undisputed that the labour cess is part of the contract account. That being so, the assessee is correct in contending that the addition, if any, is maintainable only in the hands of the client of the assessee Corporation and not in the hands of the assessee. The provisions made for labour cess, do not stand debited to the profit loss account and the profitability of the Corporation in the form of centage earned as gross profit, is not affected. The assessee Corporation is only a collecting agency for the purposes of the labour cess and deposit thereof with the Government account. Thus, the action of the ld. CIT(A) in confirming the addition for the provisions for labour cess, is reversed and the addition is deleted. The sole ground raised by the assessee in its appeal is allowed Addition by working out a notional centage @12.5% - Cost related to Dr. B. R. Ambedkar Multi Speciality Hospital, Noida - HELD THAT:- We find from breakup of contract account, that amount of 16,78,78,589/- is mentioned under code 8357 under the head laboratory and testing charges, which in fact were contract expenses pertaining to Dr. B. R. Ambedkar Multi Specialty Hospital and which were wrongly clubbed with laboratory and testing expenses. The Assessing Officer though accepted this fact but made notional addition of 12.5% towards centage on these work expenses. While do so, he ignored the fact that centage on this work contract was already declared by the assessee in its contract account, a copy of which, declaring total receipt of 36,80,71,97,530/-. The break-up of this amount giving code wise and name wise jobs undertaken during the year has also been filed by Learned A.R., which tallies with the gross total of the turnover declared in contract account. The name of Dr. B. R. Ambedkar Project appears at page 20. Therefore, CIT(A) has rightly allowed relief to the assessee. Addition of prior period expenses - HELD THAT:- We find that the liability arose in the year under consideration, as is evident from the bill raised by the Electricity Department on 30/10/2019. Moreover, as claimed by the assessee, the amount pertains to the contract account and therefore, in case the addition is made, the equivalent amount is to be reduced from the work-in-progress. We, therefore, find no infirmity in the order of the ld. CIT(A) on this issue. Accordingly, we confirm his order on this issue and reject ground of the Revenue s appeal Addition on account of interest on unlisted machinery - HELD THAT:- We find that in schedule-12 to the profit loss account, placed at page 28, the assessee, under the head other receipts , has declared as income of 19,34,458/- and the total of all other receipts including the interest on unlisted machinery has been declared as income in the contract account. Therefore, learned CIT(A) has rightly allowed relief to the assessee. In view of the above, ground No. 3 of the Revenue is dismissed. Addition on account of interest on client s fund account - HELD THAT:- Amount shown in the balance sheet as interest accrued on deposits was the running balance of the accrued interest on the funds of the clients of the assessee. The assessee maintains its books of account on mercantile basis and it makes provision of interest on accrual basis. The assessee also credits such interest to the respective clients accounts as per Government Order dated 11/4/1076 - CIT(A) has rightly observed that the interest earned by the assessee on unutilized fund is credited to the respective accounts and are the income of the concerned clients and not of the assessee. Disallowing the depreciation on unlisted assets - HELD THAT:- Assessee has added back at its own, an amount of 7,31,66,085/- under the head depreciation added back , which fact is also verifiable from the computation of income where the assessee itself has added back depreciation of the equivalent amount, which included the depreciation of 2,41,64,170/-. Therefore, there is no infirmity in the order of CIT(A). Allowability of provision of gratuity - HELD THAT:- As against a provision of gratuity of 16,24,45,315/- upto assessment year 2012-2013 the appellant has already added back an amount of 16,87,26,673/- in the computation of income. The amount added back is more than the amount claimed as provision for gratuity. The addition made by the Assessing Officer for 3,57,97,224/- is therefore not sustainable and is deleted giving relief to the appellant

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• 2019 (8) TMI 45
  Long Term Capital Gain - treating the rural agricultural land as capital asset u/s.2(14) - Nature of land sold - HELD THAT:- As per the certificate received from SUDA regarding the distance of land situated within the limit of the SMC, we find that impugned land situated within the limit of SMC, therefore it is chargeable to long term capital gain. Accordingly, this ground of appeal of the assessee is dismissed. Deduction u/s 54B - assessee purchased agricultural land from the sale proceeds - copy of Form No.7/12 which indicates agricultural use of land and submitted that entries in the revenue record are prima facie evidence to indicate that the land in question is agricultural land - use of grass for grassing of the cattle is in the nature of agricultural income - HELD THAT:- It was an admitted position that in the area round about, there was no building activity. The land was no building activity. The land was not approachable by any road to the residential locality of Navrangpura and other societies to which reference was made by the Appellate Assistant Commissioner in his order in that case. It was further in evidence that neither the assessee nor the person to whom the assessee had sold different plots of land had, at any time, made any attempt to put the land to non-agricultural use. Therefore we are of the considered opinion that the impugned land on which Ghas is shown as per revenue record was in the nature of agricultural land on which agricultural activities were being carried out in the form of grass and same was irrigated by well . Therefore, the assessee is entitled for deduction u/s.54B, accordingly this ground of appeal is allowed in the appeal of the assessee.

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• 2019 (8) TMI 44
  Addition u/s 14A r.w.r. 8D - sufficiency of own funds - HELD THAT:- The assessee nowhere earned any exempt income, therefore, no disallowance is required in view of the provisions u/s 14A r.w. Rule 8D of the Act. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue.

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• 2019 (8) TMI 43
  Deemed dividend u/s 2(2)(e) - purchase of property in the name of shareholder-director - concept of beneficial owner vis- -vis a registered owner - HELD THAT:- Board Resolution is the most crucial and clinching evidence to show that it is the Company that is the beneficial owner of this properly and not the assessee, who merely holds the same in her name for and on behalf of the Company, being a Director of the Company. The Board Resolution coupled with the entries in the books of account and Balance Sheets as at 31.3.2012 and 31.03.2013 constitute the clinching evidence to show that the said property really belongs to the Company and the assessee merely held the same for and on behalf of the Company. In view of the above facts clearly spell out that the property does not belong to the assessee and where the property does not belong to the assessee, then where is the question of the company making payment on behalf of the assessee so as to attract the provision of section 2(22)(e). Hence, we are of the view that the AO and CIT(A) clearly erred in holding that the moneys paid by the Company to Godrej was for the benefit of the assessee and hence, to be treated as deemed dividend u/s.2(22)(e). As in case of ACIT vs. Harshad V. Doshi [ 2010 (4) TMI 677 - ITAT, CHENNAI] wherein the Tribunal held that provisions of section 2(22)(e) of the Act did not apply to advances made by the company to the assessee, who was the Managing Director thereof and also holding substantial interest therein, to acquire land in his name for the purpose of development by the company so as to reduce the incidence of stamp duty on the ultimate sale of flats to the customers. Tribunal held that the company advanced money to the MD out of commercial expediency to reduce the cost and be more competitive, and therefore it was clearly motivated by business exigencies, and that did not amount to loan or advance within the meaning of section 2(22)(e). This addition cannot be sustained hence, we delete the addition made by AO and confirmed by CIT (A). Appeal of the assessee is allowed.

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• 2019 (8) TMI 26
  Addition u/s 68, 69 and 69A - incremental peak credit - money launderer or hawala operator - assessee maintained a stoic silence insofar as the source of the amounts deposited in the accounts as also the destination of the said amounts - HELD THAT:- SLP dismissed.

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• 2019 (8) TMI 25
  Existence of an alternative remedy - bar for this Court to exercise its writ jurisdiction under Article 226 of the Constitution - power of the judicial review, conferred upon the High Court under Article 226 of the Constitution of India - HELD THAT:- The special leave petition is dismissed as withdrawn, along with all pending applications.

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• 2019 (8) TMI 24
  Condonation of the delay of 1656 days in re-filling - eligible reasons for delay - as stated that recently the Appellant came to know that the appeal had not been listed before the Court and it is only thereafter on 19th November, 2018 that the CIT (Judicial) reallocated the appeal to the present counsel. Even thereafter the appeal was not refiled till 3rd January, 2019 - HELD THAT:- Display of lackadaisical attitude on the part of the Appellant in pursuing the appeal, knowing fully well that even in the first instance the filing of the appeal itself was inordinately delayed. The explanation given for the delay of 928 days in filing the appeal is that it was first filed in the High Court of Punjab and Haryana, which held by its order dated 11th October, 2012 that it did not have territorial jurisdiction, since the order was passed by the Assessing Officer ( AO ) at Delhi. Even accepting this position, it is seen from para 7 of the application for condonation of delay that the present appeal was filed only in August 2014 i.e. nearly 2 years after the order of the High Court of Punjab and Haryana. There is not even a single line of explanation for this delay. No convincing explanation has been given by the Appellant for the extraordinary delay in filing and refiling the present appeal. The applications are dismissed.

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• 2019 (8) TMI 23
  Reassessment of notices issued u/s 147/148 - non disposal of objections - non following procedure laid down in GKN Driveshafts (India) Ltd. v. ITO [ 2002 (11) TMI 7 - SUPREME COURT] - HELD THAT:- In the present case, the AO has not chosen to dispose of the objections, filed by the Petitioner against the reopening of the assessment but has proceeded to the stage of passing the reassessment order itself. In almost an identical fact situation in Smt. Kamlesh Sharma v. B.L. Meena, Income-Tax Officer . [ 2006 (8) TMI 140 - DELHI HIGH COURT] where the AO did not pass any speaking order but straightaway passed an assessment order, and simultaneously rejected the contention of the Petitioner. This Court has, therefore, no hesitation in setting aside reassessment order dated 29th December, 2018 for the Assessment Year AY 2011-12. Consequently, a direction is issued to the AO to once again take up for consideration, the Petitioner s objections to the reopening of the assessment for the aforementioned AY and dispose of those objections by a reasoned order not later than four weeks from today.

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• 2019 (8) TMI 22
  TPA - AMP expenses - International transaction - Bright Line Test - whether the ITAT erred in remanding the issue of Advertising Marketing Promotion (AMP) expenses to the file of the Transfer Pricing Officer (TPO) for re-determination of the issue whether there is at all an international transaction involving the Assessee and its Associated Enterprise ( AE )? - HELD THAT:- The facts of the present case need not be discussed in great detail because essentially, what the ITAT has done is to remand the matter to the TPO, and this by itself does not give rise to any substantial question of law. ITAT has noted that the Assessee is incurring its own selling and distribution expenses and there was no advertisement in the media nor were its products available in the shops. The issues of Reader s Digest were made available only through mail orders which had to be placed separately. ITAT has pointed out that there exists a distinction between product promotion and brand promotion and that the mechanism used by the Assessee is altogether different for its product promotion. Since the Bright Line Test has now been jettisoned by this Court in Sony Ericsson Mobile Communications India Pvt. Ltd. v. Commissioner of Income Tax-III [2015 (3) TMI 580 - DELHI HIGH COURT] the ITAT was of the view that the entire exercise should be undertaken afresh by the TPO. - No substantial question of law

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• 2019 (8) TMI 21
  Revision u/s 263 - PCIT requiring AO to revisit the assessment made earlier of the Assessee u/s 147/143 (3) - addition u/s 68 - ITAT setting aside the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 - HELD THAT:- ITAT noted that the AO did undertake a detailed inquiry and got the entire records from the 15 companies and therefore, it could not be said that he failed to investigate the genuineness and creditworthiness of the source of funds. The identities of the parties were not in dispute. The genuineness of the transaction was held to have been fully proven by the fact the companies had given shares to the Assessee in lieu of the shares allotted to them. And lastly, there was no requirement to examine the creditworthiness of any sum advanced or invested because in fact, there was no transaction in terms of cash/money. Having examined the impugned orders of the PCIT and the ITAT, and having considered the submissions of Revenue, this Court is of the view that in the facts and circumstances of the case on hand, the interpretation placed by the ITAT on Section 68 of the Act, its reasoning and conclusions in the impugned order are consistent with the legal position and cannot be said to be suffering from any legal infirmity. No substantial question of law arises from the impugned order. - Decided against revenue.

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• 2019 (8) TMI 20
  Disallowance of Amortized Premium - HELD THAT:- As decided in RAJKOT DIST. CO-OP BANK LTD. C/O. AD. VYAS AND CO. [ 2014 (3) TMI 110 - GUJARAT HIGH COURT] the assessee as a cooperative bank was bound by the RBI directives - As per the directives, the assessee had to invest certain amounts in Government securities and to hold the same till maturity - In the process of acquisition, if there was any premium paid on the face value of the security, the loss had to be amortised - The instructions clearly provide for amortisation of premium paid on acquisition of securities when the same are acquired at the rate higher than the face value - Such amortisation would have to be for the remaining period of maturity - This precisely the Tribunal had directed in the order - no contrary instructions of CBDT are brought to notice - The instruction in question having been issued under section 119(2) of the Income Tax Act, 1961, would bind the Revenue - Decided against Revenue.

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• 2019 (8) TMI 19
  Alternate remedy of a statutory appeal - Deduction u/s 80P - whether Primary Agricultural Societies carrying on the business of providing credit facilities to its members are entitled to claim deductions under Section 80P? - HELD THAT:- Alternate remedy is available to the writ petitioner by way of an appeal under Section 246A of IT Act. There is a time limit of 30 days prescribed for preferring an appeal under Section 246A of IT Act, which lies to Commissioner (Appeals). At the request of writ petitioner, time that has been spent in the instant writ petition i.e., time from the date of filing of instant writ petition to the date on which this order is made available shall stand excluded for computing limitation for filing an appeal under Section 246A. Even after such exclusion, if there is a delay, it is open to the writ petitioner to seek condonation of the same under Section 249(3) of IT Act and such a prayer for condonation of delay shall be dealt with by the Appellate Authority on its own merits. It is necessary to mention that alternate remedy rule qua exercise of writ jurisdiction is a self imposed restraint. It is a rule of discretion and it is not a rule of compulsion.

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• 2019 (8) TMI 18
  Allowable business expenses u/s. 37 - payment of service charges - HELD THAT:- Unless and until the other test laid down by law are satisfied, the question of claiming the same as a deduction does not arise. In the instant case two authorities and the Tribunal concurrently disbelieved the case of the assessee and to say the least, the stand of the assessee was utterly false. Therefore, the question of claiming deduction does not arise. Hon ble Apex Court in the case of Commissioner of Income Tax vs. P.Mohanakala [ 2007 (5) TMI 192 - SUPREME COURT] pointed out that when the finding of fact arrived by the authorities below were based on proper appreciation of facts, material available on record and surrounding circumstances, it would not call for any interference - doubtful nature of transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee had been duly taken into consideration by the authorities below and the transaction though apparent were held to be not real one. It was further pointed out that it may be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. This decision applies on all fours to the assessee s case where also the assessee pleaded that the amounts paid as service charges to those third parties should disclose the same in their income tax return. This can hardly validate such invalid and doubtful transactions. - Decided in favour of revenue.

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• 2019 (8) TMI 17
  Gain on sale of land - nature of land sold - business income or capital gain - sale of agricultural land - reliance on patta issued by tehsildar - HELD THAT:- Adangal extract is a true copy of the Adangal register. Therefore, if he has given false certificates contrary to the entries in the Adangal register, the VAO has to be proceeded departmentally as well as criminal action has to be initiated against him. However, that would not arise in the instant case because, the Tahsildar who submitted a report to the AO on 27.01.2014, has enclosed the copies of the Patta which clearly show that the lands are wet lands. Patta is a document which proves possession and classification of the land. The copy of the patta issued is a computerised patta. There is a presumption to the validity of such official document and if a party states that the entry is incorrect or the document is false, the onus is on the party to prove the same. There is no allegation made by the Assessing Officer that the patta, copy of which was furnished by the Tahsildar, is a bogus patta. Even going by the Adangal extracts, which were furnished by the VAO, on being summoned under Section 131 of the Act, we find that in column no.19 of the Adangal extract, the land has been described as Tharisu . Therefore, even going by the subsequent records, the character of the land is not stated to be non agriculture. A land, which is an agricultural land, at many at times, cannot be put to use for agricultural purposes. Merely because an agriculture activity could not be carried on for various reasons including natural causes, it will not cease to be an agricultural land. In the instant case, the CIT(A) and the Tribunal have done an elaborate exercise, assessed the documents placed before it and given a categorical finding that the land continues to remain as an agricultural land. Apart from that, the land in question upon being transferred to the purchaser, still continues to remain as agricultural land. Therefore, we cannot be called upon to examine the factual findings recorded by the Tribunal while affirming the factual findings rendered by the CIT(A) as if we are third appellate authority. Revenue having miserably failed to establish the factual matrix before the CIT(A) and the Tribunal, cannot call upon this Court to embark upon a fact finding exercise. Therefore, the assessee has discharged the onus caused upon him to establish that the lands are agricultural lands. The revenue record, via., the patta issued, shows that the land is an agricultural land. Thus, the assessee having discharged the onus caused upon him, it is for the Department to prove that the entries in the revenue records and the patta were false or bogus. The two authorities have concurrently found that the Revenue has not been able to make any headway in this regard. - Decided against revenue

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• 2019 (8) TMI 16
  Reopening of assessment u/s 147 - validity of notice u/s 148 - Eligibility of reason to believe - HELD THAT:- As our Court in the case of Hindustan Lever Ltd. V/s. R.B. Wadkar [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] has made it clear, the reasons, with a view to assess their reasonableness, are required to be read as they are recorded by the Assessing Officer; no substitution or deletion is permissible; no addition can be made to those reasons; and no inference can be allowed to be drawn based on these reasons which is not recorded. It is for the assessing officer to form an opinion as to whether there was escapement of income from assessment and whether such escapement occurred from failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year; and it is for him to put his opinion on record in black and white. The reasons recorded must disclose his mind and they should be self explanatory. The reasons recorded cannot be supplemented by the time the matter reaches the Court by filing of any affidavit or making any oral submission. In the premises, it is not open to the revenue to seek to sustain the re-opening notice on a new reason, namely, dis-allowance of deduction of expenditure since the whole activity was illegal. In the premises, the impugned notice issued by the Assessing Officer under Section 148 of the Act cannot be sustained and must be set aside.

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• 2019 (8) TMI 15
  Disallowance of claim of deduction u/s 80 IA (4)(ii) - profit generated from the operation of private telephone exchange in the computation of taxable total income - HELD THAT:- The substantial question of law arising in these appeals was considered in the case of Sabdhagiri Telecom Vs. Income Tax Officer, Ward-1(1) Coimbatore [ 2018 (12) TMI 644 - MADRAS HIGH COURT ] wherein it was held that the assessee, an authorised franchise of BSNL, operating telephone exchange and providing basic telecommunication services to its customers in pursuance of agreement entered into with BSNL was entitled to deduction under 80-IA(4)(ii). In the said decision, the decision of CIT Vs. Himanshu V. Shah [ 2014 (12) TMI 1331 - GUJARAT HIGH COURT] was quoted with approval held that the assessee is a franchisee of BSNL, engaged in installing, maintaining and operating EPEX system to support functioning of BSNL could be treated to have provided basic telephonic services and thus, was eligible for deduction under Section 80- IA(4)(ii). - Decided in favour of assessee.

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• 2019 (8) TMI 14
  Low tax effect - monetary limit - deduction u/s 54F for the entire value of the commercial building constructed - Whether ITAT is right in law in directing the AO to grant the benefit of deduction u/s 54F of the Income Tax Act without adjudicating on the grounds taken by the Revenue in respect of allowance of the deduction on the value of land? - appellant submitted that in the event it is found that these appeals are not hit by the monetary limit of the circular, the Revenue should be permitted to restore these appeals - HELD THAT:- The submission made by the learned counsel for the appellant is accepted and liberty is granted to the appellant to restore the appeals, in the event they found out that these appeals are not hit by the monetary limit in the circular. For such liberty, if applications are filed for restoration, the Registry is directed to list those applications along with the appeals without insisting upon any applications for condonation of delay or for such other matters. Consequently, the substantial questions of law are left open. No costs. Consequently, the connected miscellaneous petition is closed.

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• Customs

• 2019 (8) TMI 42
  Non-speaking order - Appeal decided without opportunity of being heard provided to the appellants - principles of natural justice - Imposition of penalty u/s 112(a) of CA - HELD THAT:- There has been no consideration whatsoever of the issues raised by the Appellants in their appeals. In fact, the impugned order only records the submissions made on behalf of the Respondent-Commissioner. The revocation of the CHA Licence was on account of breach of the obligation under the Customs House Agents Licensing Regulations. At the time of the hearing, this was a relevant factor and even this was not pointed out by the Revenue at the hearing before the Tribunal - Thus the impugned order does not even indicate grievance of the Appellants before the Tribunal - In the absence of the grievance of the parties before it being considered the impugned order is a nonspeaking order. Appeal allowed - matter restored for fresh consideration - decided in favor of assessee.

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• Corporate Laws

• 2019 (8) TMI 13
  Compromise - release of properties - HELD THAT:- Respondent No.2 appears to have done what was in his capacity. Considering the observations of Learned NCLT in Order dated 13.7.2017 based on letter of the Bank and considering reasons recorded in impugned order we agree with NCLT. Thus basically the company petition was dismissed as withdrawn because of the compromise and if that is kept in view it was not an order which required execution as such. Still the Learned NCLT tried to help the appellant, in interest of justice and passed orders dated 13.7.2017. Finding recorded therein with regard to Respondent doing needful was not challenged. The final impugned order could naturally not be different. Appeal dismissed.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 41
  Liquidation of Corporate debtor - time limitation - Whether in the interest of the Allottees, which is of primary importance in this Corporate Insolvency Resolution Process , the Jaypee Infratech Ltd. (Corporate Debtor) should be allowed to go for Liquidation on the ground that 270 days has expired on 6th May, 2019 or the period from 17th September, 2018 to 4th June, 2019 during which the matter remained pending for consideration before the Adjudicating Authority relating to voting share of the Allottees should be excluded for the purpose of counting 270 days? HELD THAT:- Admittedly, no regulation was framed under the Insolvency and Bankruptcy Code as to how the voting share of thousands of Allottees will be counted, all of whom come within the meaning of Financial Creditors and thereby are members of the Committee of Creditors . It was in this background the Allottees Association preferred the application before the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench on 17th September, 2018 to decide such issue. The two Hon ble Members of NCLT differed on the principle on 13th December, 2018 as noticed above and referred the matter to the Principal Bench for placing the matter before Third Hon ble Member who has delivered its decision by the order dated 24th May, 2019. In the meantime, 270 days lapsed, if counted from the date the proceeding was remitted by the Hon ble Supreme Court, i.e. 6th May, 2019. The period from 17th September, 2018 i.e the date of application filed by the Association of the allottees for clarification for the order and till the final decision i.e. 4th June, 2019 i.e. the date the matter was finally decided by the Third Hon ble Member (Total 260 days), can be excluded for the purpose of counting the 270 days. However, as the matter is pending since long, we are not inclined to exclude the total period of 260 days and instead in the interest of the Allottees, we exclude 90 days for the purpose of counting the period of 270 days of Corporate Insolvency Resolution Process , which should be counted from the date of receipt of the copy of this order. The aforesaid period is excluded to enable the Resolution Professional / Committee of Creditors to call for fresh resolution plans and to consider them, if so required after negotiations pass appropriate order under sub-section (5) of Section 30 of the I B Code preferably within a period of 45 days. Rest of the period of 45 days margin is given to remove any difficulty and appropriate order as may be passed by the Adjudicating Authority. Appeal disposed off.

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• 2019 (8) TMI 40
  Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - non-availability of evidence relating to debt and default - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The invoice has been taken into consideration by the Adjudicating Authority to come to a definite conclusion that the buyer is Perfect IT Solution as shown in the invoice and not Sify Technologies Limited (Respondent herein) - Learned counsel for the Appellant submitted that Perfect IT Solution is agent of Sify Technologies Limited , which the Respondent has also admitted in their Demand Notice. However, such disputed question cannot be decided either by the Adjudicating Authority or by this Appellate Tribunal, as in the invoice the name of the buyer has been shown as Perfect IT Solution and not Sify Technologies Limited . There being a disputed question of fact, we are of the view that it is a case which can be decided by a Court of Competent Jurisdiction, hence the application under Section 9 is not maintainable - appeal dismissed.

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• 2019 (8) TMI 39
  Maintainability of petition - Initiation of Corporate Insolvency Resolution Process - default in repayment of amount - specific case of Financial Creditor is that the corporate debtor had paid only a sum of 1,60,00,000/- by way of instalments and there after committed default. If really corporate debtor paid over and above the sum of 1,60,00,000/- it could be proved through its accounts - HELD THAT:- Financial Creditor relied on letter from M/s. Intercontinental Infrastructure Limited which is party to the MOU stating that corporate debtor has not paid any amount to this company and if payment is not made within 7 days by corporate debtor the MOU stands cancelled. No amount was paid by corporate debtor to Intercontinental Infrastructure Limited in terms of MOU. The said MOU is deemed to have been cancelled. Corporate debtor cannot take any protection under this MOU which was deemed to have been cancelled due to its own default. Mere issue of notice for arbitration which is not constituted then corporate debtor can t prevent Financial Creditor for initiating CIRP. The Financial Creditor has suggested the name of IRP who has filed consent in Form 2 and there are no disciplinary proceedings pending against proposed IRP - The Financial Creditor is able to establish debt which was due and default by corporate debtor which is 7, 88,15,181/- which includes interest. Petition admitted - moratorium declared.

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• PMLA

• 2019 (8) TMI 12
  Provisional Attachment of Land - development of Ports - proceeds of crime - illegal gratification - main submissions of the Respondent was that the name of Matrix Enport Holdings Pvt. Ltd. was changed to Vanpic Projects Pvt. Ltd. without any involvement of Government of Ras al Khaimah ( GoRAK ), which was based on the board resolution dated 30.06.2008 - HELD THAT:- From the impugned order as well as provisional attachment order and from the stand of respondent no. 1, it appears that the submissions are not correct as the allotment of the VANPIC Project was not to Mr. Nimmagadda Prasad, but, to Ras Al Khaimah, the sovereign Emirate of United Arab Emirates, which had engaged Mr. NimmagaddaPrasad as its Local Partner under the MOU and Concession Agreement, the rationale for identifying a sum of 267.45 Cr. (instead of which 274.45 Cr. approx. has been actually attached) is found at pages 82-87 of the Complaint. As per appellants, two sets of investments made and a donation by the Appellants have been wrongly identified as illegal gratification paid to Y. S. Jagan Mohan Reddy. Section 35 of PMLA provides the Procedure and powers of the Appellant Tribunal which says that Tribunal shall not be bound by the procedure laid down by Code of Civil Procedure but shall be guided by the principles of natural justice and subject to the other provisions of this Act and Appellant Tribunal shall have powers to regulate its own procedure.One of the main objects and reasons of this Act is to confiscate of proceeds of crime apart to the criminal liability if the accused has committed under the provisions of this Act and schedule offense. Till the time final order is passed by the Special Courts, if a valid case is made by ED, the proceeds of crime must be preserved so that after final order it should be confiscated for the benefit of State. Sub-section (1) of the said provision mandates that any stage if the defendant has absconded or left the local limit of the jurisdiction or is about to abscond or leave and has disposed of his property or part thereof in order to obstruct the execution of decree against him, the court under those circumstances may issue warrant to arrest to bring him before court and ask him to furnish security for his appearance. if the defendant fails to furnish security under sub section 4, under sub section 5, the court if satisfies may direct the defendant for furnish security for production of property in order not to allow the defendant to obstruct the decree - The provisions of Section 5 and 8 of PMLA are not exactly similar but principles and intend to incorporate the said provision to some are the guiding factors. In the present situation, the balance can be strike as admittedly the investment in BCCL had got net profit of 274.95 crores on an investment of 342 crores which was sold for 617.45 crores with an IRR of 30% to the French Company, who is admittedly not charge-sheeted and its money was clean money as admitted by the respondent no. 1. However, in view of allegations by CBI, in order to strike balance, certain directions are necessary to be passed, unless the same are disposed or set-aside. The Appeal of Nimmagadda Prasad and group are partly allowed, subject to the condition that the said group of appellants shall furnish the Indemnity Bond for a sum of 274.95 crores with the respondent within four weeks from today as surety amount with an undertaking that in case the final order is passed by the final Court under PMLA against the said appellants, they shall secure the said amount with the respondent. The said Indemnity Bond shall be furnished without prejudice. The rest of attachment of Nimmagadda Prasad and group are setaside and properties are released - Admittedly, the attachments at the hands of Jagati Publications are wholly unnecessary as per Orders of the Hon ble High Court at Hyderabad dated 23.05.2012 made in Cr.LP No. 4523 of 2012 restrain the alienation of any assets of the company Jagati Publications who is a media house employing numerous persons. The present order has been passed only in relation to attachment of properties of the appellants and confirmation thereof.

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• 2019 (8) TMI 11
  Money Laundering - Attachment of immovable properties - proceeds of Crime - remuneration paid to appellants as a director of M/s Bharathi Cement Corporation Private Limited, in the year 2009 after the commissioning of the plant - validity of remuneration paid. HELD THAT:- There is no evidence on record that the sale consideration paid for the purchase of the aforesaid Immovable Properties was obtained from illegal sources - There are no findings against the majority shareholder of M/s Bharathi Cement Corporation Private Limited concerning any apprehended involvement in any of the alleged illegal activities either in the present proceedings or in the proceedings of the CBI . The bona fides of the purchase of shares by PARFICIM, France, has not been questioned or challenged either by the CBI in the charge sheet filed by them or in the PAO itself, and further that there is not even a single averment on the source of the money used by the Appellant to purchase the shares of M/s Bharathi Cement Corporation Private Limited - In absence of any question on the source of funds used for purchase of the shares by the Appellant and in absence of any question on the bona fides of the purchase made by PARFICIM, France to whom the Appellant sold his shares, the money earned by the Appellant cannot be classified as proceeds of crime . No case of continuation of attachment of properties of the appellant is made out - As far as allegations of CBI are concerned, this tribunal does not wish to express any opinion on merit. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 10
  Vicarious liability for the offences punishable under Sections 120-B read with 420 I.P.C. and Section 12 of the Prevention of Corruption Act - nonapplication of judicial mind - HELD THAT:- This Tribunal is of the view that let the final outcome of Supreme Court is come, thereafter these appeals be heard and are decided, because one of the parties, who is party to common order, is contesting the appeals filed by CBI, let the further proceedings be adjourned till the said order is passed. This Tribunal is of the opinion that once the view has already been taken, it is appropriate not to disturb the same. As far as interim order is concerned, the appellants have made a strong case in their favour.

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• Service Tax

• 2019 (8) TMI 38
  Refund claim - the rules of CENVAT Credit, Rule 6(1), Rule 6(2) and Rule 6(3) of CCR as well as Rule 2(I) of Cenvat Credit Rules 2004 not taken into cognizance - HELD THAT:- The ratio of the decision of this Court in THE PRINCIPAL COMMISSIONER VERSUS M/S ALEMBIC LTD. [ 2019 (7) TMI 908 - GUJARAT HIGH COURT ] is that once the assessee is not required to reverse any credit availed by him on valid input services availed during the period 2010 till obtaining of completion certificate, the said amounts reversed by the assessee under protest cannot be retained by the Revenue authorities and those have been refunded to him. Appeal dismissed.

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• 2019 (8) TMI 9
  Liability of service tax - agreement of lease - existing and future charges, assessments and outgoings payable in respect of the leased premises - case of respondent is that though the Panchayat is the assessee to service tax, it has to be recovered from those who utilise the services - delay of five or six years in making the demand - HELD THAT:- In the petitioners case, the agreement is of a lease. The petitioners were aware of the terms and conditions of the lease agreement, including Clause 2(2) indicated earlier, at least at the time of executing it. The petitioners have signed the Lease Deeds knowing the terms, with open eyes. The petitioners, therefore, cannot wriggle out of their liability. The argument of the counsel for the petitioners that since the Panchayat is the assessee to service tax, the service tax arrears cannot be recovered from the tenants, cannot stand the scrutiny of law - In RASHTRIYA ISPAT NIGAM LTD. VERSUS DEWAN CHAND RAM SARAN [ 2012 (4) TMI 457 - SUPREME COURT] , the Apex Court held that the provisions concerning service tax are relevant only between the assessee under the statute and the tax authorities. The statutory provisions cannot be of relevance to determine the rights and liabilities of the parties who have entered into a contract between them. The Apex Court held that in the same manner a seller who is a sales tax assessee can recover the tax from buyer, a service tax assessee can recover the service tax from recipient of service, by agreement. In this case, the petitioners-lessees have signed an agreement making themselves liable to pay future charges, assessments, outgoings, etc. of the leased premises. The petitioners are bound by it - demand upheld. Petition dismissed - decided against petitioner.

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• 2019 (8) TMI 8
  Levy of service tax - deputation/secondment of employees from a group company in Japan to the appellant in India - period from 01 April, 2014 to 31 March, 2015 - Manpower Supply Services or not - HELD THAT:- It is not in dispute that the issue involved in this appeal is similar to the issues involved in the appeal that came up for decision before the Division Bench of the Tribunal in M/S INDIA YAMAHA MOTOR PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NEW DELHI [ 2019 (7) TMI 772 - CESTAT NEW DELHI] where Division Bench held that neither during the pre-negative list nor post negative list, Service Tax could not be levied on deputation of employees from a group company in Japan to the Appellant in India. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (8) TMI 37
  Classification of goods - Rice Milling Machinery along with belt conveyors and Bucket Elevator - The belt conveyors and bucket elevators specifically manufactured as the part of rice milling machinery along with other machinery of rice mill by the appellants merit classification under chapter heading No. 8437 of CETA, 1985 - HELD THAT:- There is no legal infirmity in the impugned judgment and order warranting our interference under Section 35L(b) of the Central Excise Act, 1944. Appeal dismissed.

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• 2019 (8) TMI 36
  Condonation of delay of 1994 days in filing the present notice of motion - no explanation for delay provided - HELD THAT:- We note complete absence of any explanation for the delay in taking out the motion and prosecuting it from 2012 to 2017. This is in itself evidence of negligence on the part of the Revenue. No cause has been made out to condone the delay in filing the appeal. Condonation of delay application is rejected - notice of motion is dismissed.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 35
  Evasion of tax - demand based on the defect noted in the Delivery Note - Rule 67 of the Kerala Value Added Tax Rules, 2005 - HELD THAT:- It is the burden of the revision petitioner to discharge such suspicion at the time of enquiry. The suspicion could have been repelled by producing the Delivery Note Book, which the petitioner failed despite opportunity given - Contention that the transport was also accompanied by an invoice and the subsequent production of the books of account, does not by itself can be considered as sufficient discharge of the burden, because any entries contained in the books of account, which could have made after the interception cannot be accepted as a clear proof to arrive at a conclusion that there existed no attempt at evasion of payment of tax. The best evidence which could have produced before the authorities was the Delivery Note Book, which would indicate that it was drawn in triplicate, even though double sided carbon was not used. Since the best evidence was suppressed by the revision petitioner, it cannot be held that the inference drawn by the authorities is in any manner illegal, erroneous or improper. Revision dismissed.

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• 2019 (8) TMI 34
  Scope of amendment - Whether the Chhattisgarh Entry Tax (Amendment) Act, 2014 which was made effective from April 1, 2014 defining to the word market value will have a prospective effect or whether such amendment can be used retrospectively to reopen assessments already made, in exercise of power under sub-section (1) of section 22 of the Act, 2005? HELD THAT:- The court is informed that after the amendment, compliance by these companies are being made in terms of the new meaning having been given to the word market value under section 2(fff) of the Amendment Act, 2014, but to allow the assessing authorities to reopen past assessments on a new definition prospective in nature would be doing violence to law, as in our opinion, the amendment of 2014 in no manner can form the reason to believe which can permit the assessing authority to exercise power under section 22(1) of the Act, 2005. The amendment of 2014 is unworkable unless the State notifies the market value of such goods which has been done only on July 1, 2014. We therefore repel the argument made on behalf of the State that the definition so given to the word market value is only clarificatory and that by itself can be used as the basis for reopening the assessments which have attained finality prior to the amendment dated April 1, 2014. Appeal dismissed.

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• 2019 (8) TMI 7
  Basis of assessment - book/diary during the survey admittedly belonging to the third party - the applicant was not in existence in the assessment in dispute - HELD THAT:- There is clear lack of application of mind and there is clear absence of any necessary finding recorded as to the status of the assessee or the manner in which such liability as has been fixed on the present assessee. Mere existence of blood relationship between persons involved in the two businesses is of no consequence. Though the books of account of the third person may have been relevant for the purpose of assessment of the assessee, however, in absence of any material being found therein representing concealed transaction of the present assessee, neither any rejection of books of account nor any addition may have been made in the case of assessment, for the sale proprietorship concern of the assessee. Revision allowed.

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• 2019 (8) TMI 6
  Validity of assessment - rejection of Books of Accounts - enhancement to the undisclosed turnover - HELD THAT:- In the absence of any credible explanation being submitted with respect to the three non-serialled used invoice, books seized from the assessee which record transactions of about 25,00,000/-, it has to be accepted that the Tribunal had not made any error in affirming the finding of rejection of the books of account as clearly the assessee was found maintaining parallel books. Insofar as the estimation of turnover is concerned, by way of first principle, it remains undisputed that certain amount of guess work is necessarily involved in such cases. Purchase of raw material - assessee would submit that the assessing officer had recorded categorical finding that no physical verification of stock was made at the time of survey and therefore, no adverse inference may be drawn thereon - HELD THAT:- It appears that that finding can never be read in isolation in face of Exhibit Nos.4, 5 and 6, as discussed above. Once the assessee was found to have manufactured and sold goods outside its books, the estimation of undisclosed purchase of raw material was a natural consequence of that finding. The fact that the central excise and state excise authorities may not have found or considered that material to be adverse, may only be relevant for proceedings under those Acts and not for the present proceeding where the assessee has been found to have dealt with goods outside its books. Revision dismissed.

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• Wealth tax

• 2019 (8) TMI 5
  Addition on account of cash in hand - treating the same as taxable wealth u/s 2(ea)(vi) - wealth tax appeal is against the finding of CIT(A) treating the cash in hand held by the assessee in his sole proprietorship concern M/s Kargil Bullion as a taxable asset liable for wealth tax - HELD THAT:- Both the lower authorities erred in including the business asset i.e. cash in hand as wealth of the assessee. Ld. CIT(A) failed to appreciate that the alleged cash was part of regular cash in hand maintained by the assessee for the business purpose and due to the holiday on the last date of financial year and on the 1st 2nd April of the subsequent financial year, the cash received by the assessee on account of sale of gold at Noida and Agra branch on 30.03.2007 31.03.2007 remained as cash in hand which was subsequently, deposited in parts in the bank account on 3rd April 2007 4th April 2007 and 5th April 2007. As a result of which cash in hand as on 30.04.2007 was only 13,230/-. Therefore, the alleged amount being held by the assessee as a business asset in the capacity as proprietor of business concern M/s Kargil Bullion the same is not liable to be included as assets in the wealth of the assessee for the purpose of levying wealth tax. Thus, ground no.1 of the assessee s appeal is allowed.

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• 2019 (8) TMI 4
  Wealth tax assessment - difference between the fixed assets as per the Balance sheet and the assets declared in the wealth tax return - HELD THAT:- From perusal of the assessment order as well as that of the CIT(A) we find that the assessee failed to appear on various occasions and also did not filed necessary details before the A.O. Though the Counsel for the assessee claimed that all necessary details were filed before CIT(A) but CIT(A) has not given due cognizance. We therefore in the interest of justice and to be fair to both the parties accept the request of Ld. Counsel for the assessee which has not been controverted by Ld. Departmental Representative to set aside all the issues raised in all the four appeals to the file of Ld. CIT(A) for afresh adjudication after examining various details and documents to be filed by the assessee. Needless to mention that proper opportunity of being heard should be provided to the assessee and simultaneously also direct the assessee to appear on the given date of hearing and should not seek any adjournment unless otherwise required for reasonable cause and also to cooperate in the appellate proceedings. Appeals allowed for statistical purposes.

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• 2019 (8) TMI 3
  Dismissal of appeal for not filing the appeals online - HELD THAT:- In the A.Y. 2006-07, the ld. WTC(A) as well as the Tribunal have dealt with each and every properties of the assessee threadbare and during the years under consideration, the additions have been made by the A.O. with respect to the very same properties for which both the ld. WTC(A) and the Tribunal have decided in favour of the assessee. Respectfully following the order of the Tribunal, there is no justification for the additions so made by the WTO. It is also pertinent to mention here that when the ld. WTC(A) found that the appeals have not been filed electronically, he has not given any opportunity to the assessees to file the same, accordingly, there is violation of principles of natural justice more particularly when all the issues were already decided by the Tribunal in assessee s own case and which was clear from the grounds of appeals taken before the ld. WTC(A). Accordingly, we direct the WTO to delete the additions with respect to various properties discussed hereinabove.

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• Indian Laws

• 2019 (8) TMI 2
  Smuggling - Opium - contraband item - noncompliance with Section 50 of the NDPS Act - HELD THAT:- Though the Laboratory Report was obtained, but the identity of the sample stated to have been seized from the appellant was not conclusively established by the prosecution - The failure of the prosecution in the present case to relate the seized sample with that seized from the appellant makes the case no different from failure to produce the seized sample itself. In the circumstances the mere production of a laboratory report that the sample tested was narcotics cannot be conclusive proof by itself. The sample seized and that tested have to be corelated. The conviction of the appellant cannot be upheld - appeal allowed.

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• 2019 (8) TMI 1
  Conditional leave to defend upon deposit - dishonored cheques - whether, in the backdrop of the material on record, the learned Judge, City Civil Court, justifiably exercised the discretion to grant conditional leave to defend upon deposit of the amount covered by the dishonoured cheques? HELD THAT:- The defence set up in the case at hand needs to be appreciated so as to determine in which of the categories the defence set up by the petitioner falls. Recourse to the impugned order, at this stage, may be apposite. The learned Judge found that the defence of the defendant that he had delivered blank signed cheques is a sham and moonshine defence - The defence set up by the defendant is required to be appreciated in the backdrop of the fact that there is no qualm over the fact that there were transactions of sale and delivery of the goods between the plaintiff and defendant. It is indisputable that the plaintiff delivered the goods and defendant paid for the price of the bills at serial nos.1 to 15. Thus, the quality of defence of misuse of blank signed cheques needs to be evaluated on the anvil of the contemporaneous record and conduct of the defendant. Undoubtedly the plaintiff placed on record the delivery challans after the defendant alleged that there were no documents to evidence the sale and delivery of the goods. However, this fact itself is not sufficient to jettison away the claim of the plaintiff. The fact that the suit was instituted on the basis of the dishonoured cheques cannot be lost sight of. The plaintiff may adduce evidence in proof of underlying transaction of sale and delivery of goods. However, in view of the presumption of law incorporated in Section 118 of the N. I. Act, the Court is enjoined to presume that the cheques were drawn for consideration - The defence raised by the defendant thus fall in the category of a defence which is plausible but improbable - the learned Judge rightly exercised the discretion to grant conditional leave upon deposit of the amount covered by the dishonoured cheques. Petition dismissed.

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