Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 20, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
CST, VAT & Sales Tax
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Benefit of exemption (NIL rate) from GST - frozen seafood sold in packages to institutional customers, without bearing the brand name - even by removing the brand names from packaging of the seafoods, the applicant still enjoys the advantage attached to the brand name ‘ABAD’ - Benefit of exemption not allowed.
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GST registration for multiple companies from same address - There is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office, if the land lord permits such sub leasing as per the agreement - As the GST registration is based on PAN, identification of tax payer is not a difficult thing - allowed provided they follow all GST rules related to Principal place of business
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Classification of supply - as per the definition of "person" under the GST Act, club/organization and member are distinct entities - the amount collected as membership subscription and admission fees from members is liable to GST as supply of services as such supply is made by them in lieu of consideration and secondly, such supply has been made in the course or furtherance of business since business includes provision by club, association, society, etc.
Income Tax
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TDS u/s 195 - payment towards 'fees for technical services' (FTS) - payment to the scientists who were non-resident Indians, residing in Switzerland - they have not stayed in India for 183 days or more and have no fixed PE in India - TDS is not required to be deducted.
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Bogus transaction relating to purchase of computer software from DSTPL - the allegation of the Assessing Officer that VAT has not been paid on the said transaction is factually incorrect - No additions.
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Rectification u/s 154 - carry forward of the losses - consequential effect to be given by the AO of the reassessment order passed for the assessment year 2008-09 - there is no substance or merits in the objection raised by the assessee.
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Condonation of delay in filing application for Revision u/s 264 - power of CIT delay could have been condoned for one assessment year viz., 2012-13 and both matters could have been taken up and heard out on merits deserves to be accepted.
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Levy of interest on the default u/s 201 - failure to deduct TDS in respect of a company in liquidation - the appellant Bank was definitely an assessee in default in not having deducted tax at source on the interest generated on the fixed deposits made by the Official Liquidator.
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Taxability of interest income from short term fixed deposits - funds were deposit in the bank for a short period for the purpose of utilizing the same in the project and raising the interest is clearly on account of business exigency - the interest income is business income of the assessee
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Disallowance of Club expenses - since, the nexus of the expenditure incurred at Clubs with its business was established by the assessee then in the absence of any tenable or cogent material to rebut or controvert the same, the disallowance made by the AO on account of Club expenses was not tenable
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Weighted deduction @ 200% u/s 35(2AB) - once a certificate of approved issued by the competent authority that would be sufficient to hold that the assessee fulfills the conditions laid down in the aforesaid provisions - hence revenue expenditure incurred on in-house research and development facility is duly allowable
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Revision u/s 263 - additional depreciation - once on the basis of details and documents it is clear invoice were raised by the concerned supplier only after 01.04.2002 it is is sufficient to show that the machinery in respect of which additional depreciation was claimed by the assessee had been acquired after 01.04.2002 - no error in the order of the AO allowing add. dep. order u/s 263 is set aside
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Addition of delayed payment of employees’ contribution of EPF and ESI - paid before the due date of filing of return - the CIT(A) was duty bound to follow the binding precedent available of the jurisdictional High Court in favour of assessee and has erred in ignoring the same and relying upon the decision of the non jurisdictional High Court - deduction duly allowable
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Penalty u/s 271G - failure to furnish documentation as required under the Rule 10D(1) and Section 92D(3) - the assessee had substantially complied with the directions of the TPO and had placed on his record the requisite information to the extent the same was practically possible in light of the very nature of its trade - not effecting absolute compliance on account of practical difficulties is a reasonable cause within the realm of Sec. 273B - no penalty
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Effect of not passing speaking order by CIT(A) - it was incumbent upon CIT(A) to pass a speaking order after proper appreciation of the facts before her and have to examine the observations of the AO vis-a-vis the objections/ contentions of the assessee - since CIT(A) failed to do so appeal is remanded to pass a speaking order after duly examining and considering all the contentions
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Expenditure incurred for giving new look to the channel Aaj Tak - no doubt some enduring benefit will accrue to the assessee but giving a fresh look to the existing logo, no new asset was created and there was no addition to or expansion of the profit making apparatus of the assessee - it is a routine expenditure allowable as revenue expenditure
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Disallowance u/s 2(24)(x) r.w.s. 36(1)(va) - assessee shall within fifteen days of the close of every month pay the same to the fund such contribution and the expression “the close of every month” therefore must be interpreted as the month, for which, the wages are required to be paid with corresponding duty to deduct PF & ESI, not the following month in which such wages are paid - the liability will not deferred by another month
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Registration u/s 12AA - generation of surplus - nothing is discernible from the records of the lower authorities which would irrefutably prove that generation of such surplus and not rendering of the education was the predominate object of the assessee society - once surplus generated had been ploughed back by the assessee society for the furtherance of its object, CIT(E) had erred in declining to grant registration
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Interpretation of will - executor of the will had directed to distribute the money - to interpret the will in other fashion would be doing injustice to the intention of the testator and the interpretation given by the CIT is wholly erroneous as the CIT appears to rewriting the last will and testament, having done the same "cherry picking" in the last will and testament which is not the manner in which a will needs to be interpreted
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Revision u/s 263 - determination of assessee share as per will of father - the assessee had filed the copy of the last will and testament of his father, sale deed of the Bangalore property and the legal opinion and after perusal of the same, the AO has taken a stand and passed the order - it is not the case of the CIT that there was a lack of inquiry or inadequate inquiry - not a case of revision
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Validity of assessment u/s 153C - incriminating material related to assessee - at the first instance, while calling upon the assessee to show cause as to why non compete fee of ₹ 10 Crores should not be brought to tax, placed reliance on the seized material and AO has specifically recorded the materials which were seized during the search operations - assessment validly made
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Genuineness of sale price of shares - transfer of same share at different price - a much higher price in the hands of Empee Sugars & Chemicals Ltd., was undoubtedly to benefit to set off against capital gains against huge accumulated losses and at substantial lower price for benefit to the assessee by way of splitting up of the consideration for shares and non compete fee thereby being a device employed to evade tax - non compete fee is part of sales consideration
Customs
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Levy of rent or demurrage for consignment - Used Dialysis Machine with supplies and accessories - for all practical purposes, writ petitioner is providing free medical treatment with a 50 bedded hospital and in instant case, consignment imported itself is a Used Dialysis Machine. - demurrage and detention charges waived.
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Condonation of delay in filing petition - The remarks of the Commissioner on the condonation application would not amount to rejection of the condonation application in absence of any order to such effect - order quashed and set aside
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Release of imported Consignments - Peas and Dhall - since the relevant date for reckoning the import of the consignments of peas is the date of Bill of Lading - the consignments in question are liable to be released, though conditionally
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Unconditional Release of imported goods - SCN not issued within 6 months of detention of goods - scope of the second proviso to Section 110(2) of Customs Act - since the provisional release order of goods was made in terms of second proviso to Section 110(2) before expiry of six months, no valuable right of the Petitioner had yet accrued for seeking unconditional release of the goods
IBC
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CIRP cannot be initiated against the Company when it is prepared to pay or settle the claim of the Petitioner.
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Admissibility of application - initiation of CIRP - before the admission of the application, the Respondent was ready with the draft against dues - However, the Appellant is not inclined to accept the same - Appellant initiated ‘corporate insolvency resolution process’ with fraudulently and malicious intent - Application dismissed.
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RP direction to ONGC(R1) to supply of Natural Gas to Corporate Debtor - when supply of gas by Rl to the Corporate Debtor does not fall within the ambit of Section 14 of the I&B Code, this Bench has no right to interfere with the rights and interests of R1 or any other person because such jurisdiction has not been conferred upon this Authority - application is dismissed
Case Laws:
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GST
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2019 (8) TMI 819
Nature of activity - supply or not - classification of supply - supply of goods or supply of services - contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments - Principles of Mutuality - taxable person or not - person responsible under GST, as office bearers - collection of funds under common pool and spending back on the same said contributors, whether supply or not. HELD THAT:- As per the definition of person under the GST Act, 2017, there are two persons namely, the applicant and the other person being the member of the applicant. Hence the club/organization and member are distinct entities. The GST law has given very wide connotation for services, which will cover any activity other than which involves goods, money and securities. Therefore the activity of the applicant in as much as they are striving to set high ethical standards in business and profession, recognition of worthiness of all useful occupations, dignifying each Rotarian's occupation as an opportunity to serve society, application of the ideal of service in each Rotarian's personal, business and community life, exclusively for their members can clearly be considered as service being provided by the respondents to its members. From the inclusive definition of the term 'consideration' it can decisively be construed that the membership fee collected by the club from members is not only meant for meeting administrative expenses, but is also towards setting high ethical standards in business and profession, recognition of worthiness of all useful occupations, dignifying each Rotarian's occupation as an opportunity to serve society, application of the ideal of service in each Rotarian's personal, business and community life, exclusively for their members. Thus, any membership fee collected by the applicant from its members will definitely be understood as 'consideration' as the same has been paid for supply of services . Applicant has fulfilled both the conditions prescribed by Section 7 of the CGST Act; firstly that such supply is made by them in lieu of consideration and secondly, such supply has been made in the course or furtherance of business since the term business includes provision by club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members - both the conditions stipulated for 'supply' under the GST Laws having been adequately fulfilled leads to the conclusion that transaction between the applicant its members are nothing but supply, and accordingly will attract GST. Under the GST Law, the intent or objective of any club or association is immaterial in so far as the leviability of GST is concerned. The amount collected as membership subscription and admission fees from members is liable to GST as supply of services.
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2019 (8) TMI 818
Classification of goods - part of fishing vessels Propeller - Shaft/SS Rod - Gun Metal Bush/Bearing - Stuffing Box - Brass Tube/SS Tube - Rudder Shaft and Blade - Sea Cork/Water Strainer - GM Gate Valve - MS Pipe - Propeller Nut/GM Nu - Coupling - SS Rods Square - SS Flat - GM Gland and Ring - MS Plate - HELD THAT:- As per Notification No.1/2017 Central Tax (Rate) dtd.28-06-2017 vide Sl.N0.247 of First Schedule, HSN 8902 fishing vessels, factory ships and other vessels for processing or preserving fishery products and as per Sl.No.252 part of goods of heading 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter ate taxable at the rate of 5% GST. Propeller, Shaft/SS road, Gun metal bush/bearing, Stuffing box, Brass Tube/SS Tube, Rudder Shaft and Blade, Sea Cork/Water Strainer, GM Gate Valve, MS Pipe, Propeller Nut/GM Nut, Coupling, SS Rods Square, SS Flat, GM Gland and Ring and MS Plate used as parts of fishing / floating vessels come under the HSN Code 8902 and are taxable @ 5% under serial No.252 of First Schedule of the Notification No .01/2017 Central (Rate) dtd.28-06-2017.
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2019 (8) TMI 817
Requirement of GST registration - registration for multiple companies from same address - Principal place of business - HELD THAT:- There is no prohibition under GST law for obtaining GST registration to a shared office space or virtual office, if the land lord permits such sub leasing as per the agreement. Each co-working space is demarcated with different suit number or desk number. As the GST registration is based on PAN, identification of tax payer is not a difficult thing. While applying for GST registration for the co-working space, the rental agreement with the land lord and lessee along with the agreement between lessee and sub lessee must be uploaded as proof of address of principal place of business of respective suit or desk number - The GST number assigned to each co-working space must be displayed at a prominent location and books of accounts relating to the activities or business are to be kept in the principal place of business. Thus, separate registration can be allowed to multiple companies functioning in a ' co-working space and which provide services alone. Such companies shall upload the rental agreement with the land lord and lessee. If there is any sub-lease, then rental agreement between lessee and sub lessee should also be uploaded as proof of address of principal place of business of respective suit or desk number assigned to them. In addition to this, the applicants can upload a copy of monthly utility bill in connection with payment towards electricity charges, water charges or other common services availed by the respective suit or desk number.
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2019 (8) TMI 816
Benefit of exemption (NIL rate) from GST - frozen seafood sold in packages to institutional customers, without bearing the brand name - Notification Na 2/2017 (Central Tax Rate / Integrated Tax Rate / Stare Tax Rate) dtd.28th June, 2017 - HELD THAT:- It is established that the goods sold by a brand name holder, without any brand name, has comparable goodwill or reputation in connection with the product, service or business with which it is used - even by removing the brand names from packaging of the seafoods, the applicant still enjoys the advantage attached to the brand name ABAD . The mention of name ABAD on the packages, as manufacturer of these goods clearly indicates the connection between the said goods with the applicant in the course of trade as they are already having a registered brand in the name of ABAD which was being displayed on the packages of frozen seafood till now. The customers, by reading the name on the packages as ABAD , would be in a position to identify the said goods as belonging to the reputed brand ABAD even in the absence of the logo of that brand on the goods. As the product has direct connection with brand name holder, the use of name ABAD on packages can be considered as brand name. The scrutiny of surrounding circumstances clearly shows that the package of frozen seafoods, even though without affixing a registered brand on them, will be considered as bearing the brand ABAD . Therefore, visible manifestation of brand name is not compulsory on the package. Even an ordinary name is sufficient. As per S.R.O.No.361/2017, SI.No.20, and the subsequent amendment by Notification No.42/2017 CT (Rate) dtd.14-11-2017, exemption is eligible only for supply of fresh or chilled fish. Frozen fish sold in unit container under brand name is taxable. The main difference between chilling and freezing is that of temperature. Ice crystals are formed while freezing. This is not so in the case of chilling. Supply of frozen seafood in packages by a brand name holder is not eligible for exemption for the mere reason that the supply to a particular category of customers are made without inscription of Brand or Trade Name. M/s.Abad Fisheries Private Limited, the applicant herein, is a registered brand name holder. The company is selling frozen sea food in packed unit containers under the brand name to retail customers and selling the same products to institutional customers without printing brand or trade name in the packet - the supply of frozen seafood in packages to institutional customers contain name of the company and contact details for customers which are statutory requirements. The presence of company name is sufficient to ensure that the product procured belongs to the brand guardian and it cannot be considered as not bearing a brand name.
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2019 (8) TMI 815
Filing of form GST TRAN-1 - transitional credit - transition to GST regime - Central Goods and Services Tax Act, 2017 - HELD THAT:- The TC available in the account of the Petitioner is a substantial sum. It is not denied by the Respondent that the Petitioner is entitled to carry forward such TC and use it for payment of the taxes under the CGST Act. It is also not in dispute that there have been numerous glitches on the GST Portal in making it difficult for uploading of the TRAN- 1 Forms. This Court has itself issued orders in numerous cases permitting Petitioners to be afforded one more opportunity to either file the TRAN-1 Form electronically or manually. A direction is issued to the Respondent to either re-open the Portal to enable the Petitioner to file its TRAN-1 Form electronically failing which to permit it to file manually on or before 13th September, 2019 - petition disposed off.
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2019 (8) TMI 814
Recovery Proceedings - HELD THAT:- Let NOTICE be issued to the respondents returnable on 04/09/2019 . Till the next returnable date, no coercive action or any coercive steps shall be taken by the authorities against the writ applicant.
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2019 (8) TMI 813
Grant of the refund of the unutilized tax credit in respect of the tax paid on input services - Vires of Rule 89(5) of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Issue Notice returnable on 21/08/2019 .
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Income Tax
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2019 (8) TMI 812
Reopening of assessment - notice beyond four years - interest on fixed deposit undisclosed - HELD THAT:- Since the tax effect involved in this matter is less than ₹ 2 crores, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.
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2019 (8) TMI 811
Disallowance u/s 14A r.w.r 8D - AO has not recorded his satisfaction regarding the correctness of the self disallowance made by the assessee - HELD THAT:- Since the tax effect involved in the matter is less than ₹ 2 crores, going by the latest circular issued by the CBDT, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.
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2019 (8) TMI 810
Levy of interest on the default u/s 201 - failure to deduct TDS in respect of a company in liquidation - deduction of tax at source on the interest paid by the appellant on the deposits made by the Official Liquidator appointed by the Patna High Court on behalf of the Company in liquidation - absence of any returns filed by the Official Liquidator declaring losses and/or filing of a certificate under section 197A to declare NIL income.- HELD THAT:- There is no dispute that the interest on fixed deposit are chargeable to tax, the appellant was under duty to deduct the same in absence of any returns filed by the Official Liquidator declaring losses and/or filing of a certificate under section 197A to declare NIL income. That the fixed deposits generated an interest which constituted income of the company in liquidation and deductable to tax in absence of the documents/ certificate present to justify the non-deduction, the Bank was legally bound to discharge the obligation. The pleadings on record confirm that the appellant Bank was held the assessee in default in respect of the four depositors, namely, BIADA, IDA, the Bihar State Housing Board and the Official Liquidator of Patna High Court. The order of the Assessing Officer, the Assistant Commissioner of Income Tax at Annexure 1 passed in purported exercise of jurisdiction under sections 201(1) and 201(1A) of the Act gives the details of interest generated on deposits in each case as well as the tax deductable against the same. The statutory ladder through which the case has moved confirms that while a demand in its entirety on default of such deduction was raised by the Assistant Commissioner of Income Tax, the same was modified by the order passed under section 154 of the Act in view of the certificates of exemption submitted under section 197A by M/s BIADA and by M/s IDA. The matter moved in appeal as against the remaining two depositors i.e. the Bihar State Housing Board and the Official Liquidator and the Commissioner of Income Tax (Appeals) having noted the losses returned by the Bihar State Housing Board has interfered with the default of the appellant in not deducting tax and thus while modifying the demand in so far as tax element was concerned, the Commissioner of Income Tax (Appeals) upheld the interest chargeable thereon. The order passed by the assessing authority as it stood modified by the order passed under section 154 stood further modified but in so far as the issue in hand is concerned, the appellate authority bearing note of the interest generated of ₹ 44,76,182/- and in absence of any document or a certificate under section 197A found no infirmity in the order passed by the assessing authority and which view of the CIT (Appeals) has been affirmed by the Appellate Tribunal as well which in our considered opinion does not require any interference because in our opinion the appellant was definitely an assessee in default in not having deducted tax at source on the interest generated on the fixed deposits made by the Official Liquidator, Patna High Court in respect of the company in liquidation with the appellant Bank. In so far as the case in hand is concerned, there is absolutely nothing on record in form of return filed by the Liquidator or a certificate to such effect under section 197A of the Act which would justify the default by the appellant in deduction of tax at source on the interest generated on the deposits made by the Official Liquidator on behalf of the company in liquidation. The substantial question of law is answered accordingly.
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2019 (8) TMI 809
Disallowance u/s 14A r.w.r. 8D - addition of expenditure incurred in relation to exempt dividend income - provision for non-performing assets allowability - transfer to special reserve in terms of section 45-IC of the Reserve Bank of India Act 1934 was to be excluded from total income under the normal computation provisions - MAT applicability - capital profit/loss on account of sale of investments, transfer of business and sale of assets to be considered in computing the book profit under section 115JB - sum as transferred to special reserve out of statutory compulsion in accordance with section 45-IC of the Reserve Bank of India Act, 1934 was required to be excluded in computing the book profit under section 115JB - HELD THAT:- We are of the view that interest of justice would be subserved if the matter is remanded back to the tribunal to reconsider the above issues afresh upon hearing the parties and by passing a reasoned order within six months of communication of this order. Only that part of the order of the tribunal dated 27th February 2019 dealing with the above questions is set aside.
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2019 (8) TMI 808
Revision u/s 264 - CIT dwelt the issue cryptically - HELD THAT:- Though true it is that the exercise of power under section 264 is confined to; (i) to have exercised a jurisdiction not vested in it by law; or (ii) to have failed to exercise a jurisdiction so vested; or (iii) to have acted in the exercise of its jurisdiction illegally or with material irregularity. The Revisional Authority is however expected to dwell on the issue by adverting to merit. Apparently, the impugned order does not deal with the issue in right perspective and in consonance with the stipulation contained under section 264 of 1961 Act. - Matter restored before the CIT for the decision afresh in accordance with law.
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2019 (8) TMI 807
Disallowance u/s 2(24)(x) r.w.s. 36(1)(va) - delay in payment of employee's contribution to PF and ESI - whether it was deposited before due date of filling return of income? - HELD THAT:- The issue raised as aforesaid is squarely covered by a decision of this Court in the case of M/s Checkmate Facility And Electronic Solutions Pvt. Ltd. Vs. Deputy Commissioner of Income Tax Circle 1 [ 2018 (10) TMI 994 - GUJARAT HIGH COURT ] as held provision requires an employer before paying the employee his wages to deduct the employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. After deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. The expression within fifteen days of the close of every month therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. Appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month. - Decided against assessee
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2019 (8) TMI 806
Revision u/s 263 - interpretation of will - exclusion of payment to charities by applying the principle of diversion of income by overriding title - HELD THAT:- CIT while issuing the show cause notice did not rely upon any independent material nor on any interpretation of law but on perusal of the records was of the view that the expenditure cannot be allowed as deduction. Along with the filled in questionnaire, the assessee had filed the copy of the last will and testament of his father, sale deed of the Bangalore property and the legal opinion given by the learned counsel for the assessee. After perusal of the same, the Assessing Officer has taken a stand and passed the order. Therefore, it cannot be stated that the AO did not apply his mind to the issue, after all the AO cannot be expected to write a judgment. Admittedly there was an inquiry conducted by the AO and it is not the case of the CIT that there was a lack of inquiry or inadequate inquiry. On a reading of the order passed u/s 263 one can easily form an opinion that the order is based upon the interpretation which the CIT has given to the terms and conditions of the last will and testament of the assessee's father dated 30.10.2008. Thus, it is evident that the CIT has made a roving enquiry and substituted his view to that of the view taken by the AO who had done so after conducting an enquiry into the matter and after calling for all documents from the assessee, one of which is the last will and testament executed by the assessee's father. Therefore, we are of the clear view that this is not a case where the Commissioner could have invoked the power u/s 263. For all the above reasons, the Substantial Questions of Law 1 and 4 are answered in favour of the assessee. Interpretation of will - Exclusion of payment to charities by applying the principle of diversion of income by overriding title - HELD THAT:- The assessee at no point of time was entitled to receive the entire sale consideration. The sale was to be executed by the executor of the will who was directed to distribute the money to the respective organisations, defray the expenses, pay the property tax, deduct his professional fee and the remaining amount was directed to be paid to the assessee. Therefore, to interpret the will in any other fashion would be doing injustice to the intention of the testator and the interpretation given by the CIT is wholly erroneous as the CIT appears to have done the same cherry picking in the last will and testament which is not the manner in which a will needs to be interpreted. The intention of the testator was very clear as the assessee was not entitled to the entire sale consideration. In fact if the interpretation of the CIT and the Tribunal were to be accepted, we would be rewriting the last will and testament. The testator did not bequeath the Bangalore property but bequeathed part of the sale consideration which was left behind after meeting the commitments mentioned in the will to be truly and faithfully performed by the executor of the will. Thus, we can safely conclude that the major portion of the sale consideration on being received from the purchase of the property stood diverted before it reached the assessee and under the will there was no obligation cast upon the assessee to receive the sale consideration and distribute the same in the manner desired by the testator. For the above reasons, we answer the Substantial Question of law No.2 in favour of the assessee. Allowability of expenditure u/s 48(i) - The assessee had produced documents before the AO who had scrutinized the same and accepted the genuinity of the claim and granted the benefit. The CIT disallowed the expenses on the ground that the AO did not make an indepth inquiry. A similar finding was tested for its correctness by the High Court of Delhi in the case of CIT vs. Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT] and it was held that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was an inquiry, even adequate that would not by itself give occasion to the Commissioner to pass orders u/s 263 merely because he has a different opinion in the matter and it is only in cases of lack of inquiry that such a course of action would be open. As mentioned by us in the preceding paragraphs, the assessee has responded to the notice issued u/s 142 and produced documents and records including their statement of total income wherein they had given the entire details including the receipts issued by the respective persons to whom payments were effected, all of which were through banking channels. Therefore CIT was perverse which ought not to have been affirmed by the Tribunal more so for the reason that there was no evidence with regard to the expenses like professional fee, etc. The Tribunal failed to note that the assessee had produced the copies of the receipts signed by the respective party before the AO who was satisfied with the same and in the absence of any fraud being alleged with regard to the authenticity of those documents, the CIT could not have revised the assessment by invoking Section 263. For the above reasons, the Substantial Question of law No.3 is answered in favour of the assessee.
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2019 (8) TMI 805
Genuineness of sale price of shares - the entire share holding of Empee Distilleries Ltd., had been transferred to McDowells and while 51% of the shares held by the assessee and his family were valued at ₹ 14.25 shares, the balance held by another company owned by the assessee, that is, Empee Sugars Chemicals was sold at ₹ 127 - assessee apart from sales consideration received non compete fee of ₹ 10 Crores - whether payment of non compete fee is a device to avoid tax - HELD THAT:- We are at a loss to understand as to how the Tribunal came to the conclusion that the price for which the shares are agreed to be sold is a justified reasonable price. Apparently, there was no material which was placed before The Tribunal to arrive at such a finding. More importantly, as rightly pointed out by the AO, there was no compulsion on the assessee or Empee Breweries Ltd., to sell their shares at a low price after initiating the arrangements for handing over Empee Breweries Ltd., and the AO noted that nothing has changed since their sale for such low prices till the time the shares were sold for ₹ 127.35 paise. Therefore, the finding rendered by the Tribunal that the price for which the shares were agreed to be sold is a justified reasonable price is a finding not supported by any document and therefore, perverse. Validity of assessment u/s 153C - assessee contended that no incriminating material related to assessee found in search - HELD THAT:- The Tribunal had failed to note that the AO, at the first instance, while calling upon the assessee to show cause as to why non compete fee of ₹ 10 Crores should not be brought to tax, placed reliance on the seized material in file no. Ann/MP/D D/S.35. There is a specific reference to the same in paragraph 4.2 of the assessment order. Therefore, we fail to understand as to how the Tribunal came to the conclusion that there was no material to frame the assessment u/s 153C. There has been no attempt made by the Tribunal to examine the seized material which was the basis of the assessment proceedings, papers and documents were recovered from the residence of the assessee and the companies controlled by by him. Therefore, to say the least, the finding of the Tribunal, in this regard, is wholly unsubstantiated and without any material and consequently, perverse. The price of the shares which was shown at a much higher price in the hands of Empee Sugars Chemicals Ltd., was undoubtedly to benefit the company which had huge accumulated losses and consequently, the same could be set off against capital gains. The benefit which will accrue to the assessee is by lowering and splitting up of the consideration for shares and non compete fee thereby being a device employed to evade tax. In the preceding paragraphs, we have analysed the factual details as culled out by the assessee and found that the assessee has specifically recorded the materials which were seized during the search operations which were brushed aside by the Tribunal in a single line order. Therefore, the decision in Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT] , can be of no assistance to the case of the assessee. Taxability of non compete fee - assessee claimed as a capital receipt - HELD THAT:- Reliance was placed on Guffic Chem (P) Ltd. [ 2011 (3) TMI 6 - SUPREME COURT] to state that non compete fee is a capital receipt. We cannot be compelled to go thus far because, we have concurred with the view taken by the AO that the payment of non compete fee was a colourable device adopted by the assessee to avoid tax. Therefore, the decision in Guffic Chem (P) Ltd. (supra) does not in any manner help the case of the assessee. - the Revenue has to succeed in these appeals
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2019 (8) TMI 804
Condonation of delay in filing application for Revision u/s 264 - power of CIT to condone delay - similar matter for two assessment years - peculiar facts and circumstances - HELD THAT:- One of the peculiar facts and circumstances turns on the aspect that writ petitioner's income that has been processed, primarily turns on agricultural income. It may not be necessary to advert in great detail to the other peculiar facts and circumstances of instant case on hand. Suffice to say that one technical aspect of the matter is, while one revision is within time, the other was filed with a delay, where undisputedly, the revisional authority is vested with powers to condone delay without any statutory cap qua length of delay. There is no disputation or disagreement that the impugned orders or in other words, impugned order-I and impugned order-II arise out of common factual matrix and only the assessment years are different (obviously numerical values are also different). Therefore, this Court, in the light of the peculiar facts and circumstances of instant case on hand, is of the considered view that the submission of learned counsel for writ petitioner that delay could have been condoned for one assessment year viz., 2012-13 and both matters could have been taken up and heard out on merits deserves to be accepted. Delay condoned with cost of ₹ 12,500/- each - Matter restored before CIT for disposal on their own merit.
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2019 (8) TMI 803
Disallowance of accrued incentive to staff - HELD THAT:- We find that similar issue was considered by the Tribunal in assessee s own case [ 2019 (4) TMI 204 - ITAT DELHI] wherein it was held that it is a definite and accrued liability of the assessee for the year for which the services have been rendered by the employees. It is nothing but additional variable salaries payable to the employees. Same partakes character of salary. As no distinguishing facts have been brought to our notice, respectfully following the findings of the coordinate bench. The appeals by the revenue for both the assessment years are dismissed. Addition u/s.14A - investment in mutual funds - AO assumed 15% of the exempt income as expenditure - rule 8D which is not applicable for the relevant assessment year - HELD THAT:- It is true that the AO has not recorded any satisfaction as regards to the accounts of the assessee. It is equally true that the assessee has also not disallowed any expenditure for earning the exempt income. Though the entire investment as per schedule of the balance sheet is towards mutual funds of various companies but in our considered opinion the assessee must have incurred some expenditure in making these investments. Some employees must have been engaged for selecting the mutual funds for making the investments. In our considered view some element of expenditure cannot be ruled out. We are of the considered view that a disallowance of ₹ 1,00,000/- should meet the ends of justice. - - ground of assessee is partly allowed Expenditure incurred for giving new look to the channel Aaj Tak - AO consider capital expenditure and allowed deprecation @15% - HELD THAT:- The Aaj Tak channel which started from 1999 with a logo needed fresh look because of the passage of time and cut throat competition and for improving the viewership the logo was given a fresh look for which the assessee had incurred impugned expenditure. In our considered opinion the Aaj Tak logo was already there and by incurring the impugned expenditure the assessee has only enhanced its look by giving fresh and improved technical face. We are of the considered view that such expenditure is a routine expenditure. No doubt some enduring benefit will accrue to the assessee but giving a fresh look to the existing logo, no new asset was created and there was no addition to or expansion of the profit making apparatus of the assessee. Considering the facts of the case in the light of the ratio laid down by Hon ble Supreme Court in the case of Empire Jute Co. Ltd [ 1980 (5) TMI 1 - SUPREME COURT] we direct the AO to treat the impugned expenditure as a revenue expenditure and allow the same after withdrawing the depreciation. - ground of assessee is allowed Disallowance of bad debt and advances written off - the advances were given in the ordinary course of business and could not recovered - HELD THAT:- It is true that the write off of advances do not fulfill the conditions laid down for claiming the bad debts but it is equally true that the said write off should not be considered as bad debts but has to be considered as business loss. Considering the facts of the case in their true perspective we are of the considered view that the write off should be allowed as business loss u/s. 28. - ground of assessee is allowed
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2019 (8) TMI 802
Penalty u/s 271(1)(c) - defective notice - non specification of exact limb for which the assessee was being penalized - capital gains on sale of property - HELD THAT:- We find that penalty has been deleted by Ld. CIT(A), inter-alia, by observing that although the penalty was initiated for furnishing of inaccurate particulars of income but finally the penalty has been levied for concealment of income which is impermissible under law. As settled in catena of binding judicial precedent, these two terms carry different meaning / connotations and failure to specify the exact limb for which the assessee was being penalized, would be fatal to the penalty proceedings. The Ld. first appellate authority, in the process of adjudication, has relied upon binding judicial precedents of various Hon ble High Courts such as CIT VERSUS SHRI SAMSON PERINCHERY [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] , CIT VERSUS M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS. [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] etc. The revenue is unable to controvert the fact that the said rulings squarely apply to the facts of the present case. No distinguishing facts or features could be pointed by the revenue. Therefore, no fault could be found in the adjudication of Ld. First appellate authority - the revenue s appeal stands dismissed
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2019 (8) TMI 801
Rectification u/s 154 - carry forward of the losses - consequential effect to be given by the AO of the reassessment order passed for the assessment year 2008-09 - HELD THAT:- There was reduction in the carry forward of the losses - In any case the carry forward of losses for the assessment year 2008- 09 are to be considered only in the year when the assessee reports positive income and the said loss brought forward from the earlier years is claimed to be set off against the profit of the year in future. Accordingly, we do not find any substance or merits in the objection raised by the assessee against the impugned order passed U/s 154 of the Ac by the AO - the appeal of the assessee has no merits and deserves to be dismissed.
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2019 (8) TMI 800
Deemed dividend u/s 2(22)(e) - assessee was in receipt of loan from an entity namely M/s Lucky Vyapar and Holdings Pvt. Ltd - admittedly common shareholder hold substantial interest in both the entities - appellant is not a registered shareholder in lender company - HELD THAT:- We have carefully heard the rival submissions and perused relevant material on record. We find that Ld. first appellate authority has deleted the impugned additions by relying upon the decision of jurisdictional High Court in CIT VERSUS IMPACT CONTAINERS PVT. LTD AND OTHERS [ 2014 (9) TMI 88 - BOMBAY HIGH COURT] . Therefore, respectfully following the binding judicial precedent in the shape of decisions of Hon ble Bombay High Court and the decision of coordinate bench of the Tribunal, we confirm the stand of Ld. first appellate authority in deleting the impugned addition and dismiss revenue s appeal.
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2019 (8) TMI 799
Disallowance of credit notes for software consulting and support services to AE - the assessee stated that he has earned more margin than the margin prescribed under the safe harbour rules - assessee claimed that no TP adjustment required as it satisfied ALP - AO considering the credit notes as undisclosed income and also state that this is not a international transaction - CIT(A) not adjudicated all grounds and dismissed appeal just stating that she found force in the arguments of the AO - effect of not passing speaking order by CIT(A) - HELD THAT:- The Ld. first appellate authority has simply dittoed the observations of the AO and has upheld the findings of the AO without even examining the observations of the AO vis-a-vis the objections/contentions of the assessee. It is our considered opinion that it was incumbent upon Ld. first appellate authority to pass a speaking order after proper appreciation of the facts before her. Hon'ble Apex Court in the case of Kapoorchand Shrimal [ 1981 (8) TMI 2 - SUPREME COURT] had stated in connection with the appeal before the Ld. CIT (A) that it is the duty of appellate authority to remove the errors in the order of authorities below and remit the issue with or without direction for reconsideration unless prohibited by law. Accordingly, since the Ld. CIT (A) has not passed a speaking order on this issue, we are of the considered opinion that the interest of justice will be served if this issue is remitted to the file of the Ld. CIT (A) with a direction to pass a speaking order after duly examining and considering all the contentions raised by the assessee. Accordingly, the appeal is restored to the file of the Ld. First Appellate Authority with directions. - the appeal of the assessee stands allowed for statistical purposes
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2019 (8) TMI 798
Revision u/s 263 - as per CIT additional depreciation on the plant machinery wrongly allowed by the AO - additional depreciation was allowed on assets purchased before 01.04.2002 but installed after 01.04.2002 - additional depreciation was introduced by the Finance Act, 2002 and it was to be allowed only if assets are acquired and installed after 01.04.2002 - HELD THAT:- It is noted that the date of purchase of machinery as given in the audit report and relied upon by CIT in the order u/s 263 was given on the basis of the date of proforma invoices. Proforma invoice is a kind of quotation given by the seller in order to help the buyer in taking decision regarding whether to place an order or not. It thus is not a confirmation of sale and the delivery of goods cannot be associated or inferred on the basis of proforma invoice so as to ascertain the date of acquisition of machinery. The delivery of goods is generally associated with the final invoices raised by the supplier and the same, in our opinion, is the relevant document on the basis of which the delivery of machinery can be ascertained or inferred. In the present case, a perusal of the summary of details and documents furnished on record clearly shows that the relevant invoices in respect of the machinery in question were raised by the concerned supplier only after 01.04.2002 except in case of one machine of small value of ₹ 2.6 lacs and the same, in our opinion is sufficient to show that the machinery in respect of which additional depreciation was claimed by the assessee had been acquired after 01.04.2002. Keeping in view the legal position emanating from the judicial pronouncement in Pr. CIT vs IDMC Ltd. [ 2017 (2) TMI 644 - GUJARAT HIGH COURT] and Lakra Fabrics (P) Ltd.[ 2014 (1) TMI 591 - ITAT CHANDIGARH] and having regard to the facts of the present case, we are of the view that the assessee was entitled to additional depreciation u/s 32(1)(iia) on the plant machinery in question for the year under consideration i.e. AY 2003-04 when the installation was completed and there was no error in the order of the AO passed u/s 143(3) in allowing the same. In that view of the matter, we set aside the impugned order passed by the Ld. CIT u/s 263 on this issue - Decided in favour of assessee.
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2019 (8) TMI 797
Bogus transaction relating to purchase of computer software from DSTPL - HELD THAT:- It is factually established that the sales effected by the DSTPL to different parties are genuine. If in case of DSTPL, the sales effected are accepted as genuine, the same cannot be treated as bogus in case of assessee as they like two sides of the same coin. That being the case, the purchases effected from DSTPL by the assessee cannot be held as bogus. The allegation made by the AO that the assessee has not furnished various evidences including VAT payment does not appears to be correct as the material placed before us proves otherwise. In fact, learned Authorised Representative has demonstrated that the assessee has paid VAT on the said transaction. Therefore, the allegation of the Assessing Officer that VAT has not been paid on the said transaction is factually incorrect. It is further relevant to observe, in respect of various other assessees, AO relying upon very same information received from CBI treated similar transactions as non genuine and made additions. However, the appellate authorities after considering various evidences and material brought before them have held that the transactions relating to purchase and sales of computer software are genuine. In this context, we may refer to a number of decisions of the Tribunal cited before us by the learned Authorised Representative. Order of CIT(A) sustained - Decided against the revenue.
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2019 (8) TMI 796
Penalty u/s 271G - failure to furnish documentation as required under the Rule 10D(1) and Section 92D(3) - CIT(A) taken view that when the rough/polished diamonds were traded on lot wise basis, it was difficult to identify and say whether a polished diamond came out of a particular lot of rough diamonds or the other and/or out of the polished diamonds purchased locally or imported by the assessee - HELD THAT:- We find that the assessee to the extent possible in the backdrop of the nature of its business had furnished several details on number of occasions with the TPO. We thus are of the considered view that the assessee had substantially complied with the directions of the TPO and had placed on his record the requisite information to the extent the same was practically possible in light of the very nature of its trade. We though are not oblivious of the fact that the assessee may not have effected absolute compliance to the directions of the TPO and furnished all the requisite details as were called for by him on account of practical difficulties as had been deliberated by us at length hereinabove, but in the backdrop of our aforesaid observations, we are of the considered view that the failure to the said extent on the part of the assessee to comply with the directions of the TPO can safely be held to be backed by a reasonable cause which would bring its case within the realm of Sec. 273B. We thus in the backdrop of our aforesaid observations find ourselves to be in agreement with the view taken by the CIT(A), and finding no reason to dislodge his well reasoned order, therefore, uphold the same. Accordingly, we uphold the deletion of the penalty by the CIT(A) - appeal of the revenue is dismissed
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2019 (8) TMI 795
Deduction u/s 80IA(4) - profits earned from power generation from windmill - CIT(A) treating the windmills set up at different place in different year as separate undertaking and that such windmill do not constitute as single business undertaking for the purpose of deduction u/s 80IA - HELD THAT:- The claim of deduction was denied by AO but when the matter was carried before Ld.CIT(A), she following the order of her predecessor in assessee s own case for A.Ys. 2011-12 and 2012-13 allowed the claim of assessee as held that the initial assessment year for the assessee for claiming deduction u/s.80IA (4) r.w.s (5) is the issue adjudicated by the Tribunal in favour of the assessee. While granting relief in para 65 of the Tribunal order, the Tribunal relied on the decision of Coordinate Bench of the Tribunal in the case of Poonawala Estate Stud Agro Farm Pvt. Ltd. [ 2010 (9) TMI 1080 - ITAT PUNE] and Velayudhaswamy Spinning Mills Pvt. Ltd [ 2010 (3) TMI 860 - MADRAS HIGH COURT] . As such, Ld. DR could not bring any contrary decision on the issue under consideration. Thus, the initial assessment year constitutes the assessment year in which the deduction u/s.80IA of the Act is first claimed by the assessee after exercising his option as per the provisions of Section 80IA(2) of the Act. Therefore, we are of the opinion that the relief granted by the CIT(A) on this issue does not require any interference - Decided against revenue.
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2019 (8) TMI 794
Addition of delayed payment of employees contribution of EPF and ESI - payment made late, though the same was paid before the due date of filing of return - addition making reliance on decision of the non jurisdictional High Court - HELD THAT:- Admittedly on facts, there is no dispute that as per the requirements of the specific Acts there was a delay in depositing the employees contribution which had been collected by the assessee. The fact that the amounts were deposited before the filing of the return is also an admitted fact and is not in dispute. Thus, on a consideration of the position of law as repeatedly enunciated by the different High Courts as well as the Apex Court, we hold that the CIT(A) has erred in ignoring the decision of the jurisdictional High Court on the issue and relying upon the decision of the non jurisdictional High Court when he was duty bound to follow the binding precedent available of the jurisdictional High Court in the case of Hemla Embroidery Mills P.Ltd. [ 2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] which decision stands in the eyes of law as on date. Accordingly, the grounds raised by the assessee is allowed. Said order was pronounced in the Open Court at the time of hearing itself. - Appeal of the assessee is allowed.
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2019 (8) TMI 793
Alternative claim of deduction u/s 35(1)(iv) - expenditure incurred on construction cost of the Laboratory Building - assessee has claimed weighted deduction @ 200% u/s 35(2AB) - HELD THAT:- The ld. CIT(Appeals), in our opinion, therefore, was fully justified in entertaining the claim of the assessee for deduction under section 35(1)(iv) and allowing the same on merit by following the decision of the Coordinate Bench of this Tribunal at Cochin in the case of ACIT vs.- Merchem Limited [ 2014 (5) TMI 1030 - ITAT COCHIN] . At the time of hearing before us, even the ld. D.R. has not raised any contention to dispute this position. We, therefore, uphold the impugned order of the ld. CIT(Appeals) allowing alternative claim of the assessee for deduction u/s 35(1)(iv) and dismiss Ground No. 1 of the Revenue s appeal. Weighted deduction @ 200% u/s 35(2AB) - revenue expenditure incurred on scientific research - approval given in Form No. 3CM by the competent authority for in-house research and development facilities of the assessee for the period 1s t April, 2009 to 28t h March, 2011 only for the purpose of capital expenditure incurred on research and development facilities - HELD THAT:- We find that this issue relating to the assessee s claim for weighted deduction under section 35(2AB) of the Act is squarely covered in favour of the assessee by the decision of the Hon ble Delhi High Court in the case of Sandan Vikas (India) Limited (supra), wherein it was held once a certificate by the DSIR is issued that would be sufficient to hold that the assessee fulfils the conditions laid down in the aforesaid provisions. Accordingly, we uphold the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for weighted deduction under section 35(2AB) in respect of revenue expenditure incurred on in-house research and development facility, which was duly approved by the competent authority. Grounds No. 2 to 5 of the Revenue s appeal are accordingly dismissed. Disallowance u/s 14A read with Rule 8D - assessee also made suo-moto disallowance - HELD THAT:- Keeping in view all the facts of the case including especially the fact that the disallowance of ₹ 1,02,481/- offered by the assessee u/s 14A was much more than the exempt income in the form of dividend of ₹ 1,850/- only earned by the assessee during the year under consideration, we are of the view that the further disallowance of ₹ 4,19,614/- made by the AO u/s 14A by applying Rule 8D was not sustainable and the ld. CIT(Appeals) was fully justified in deleting the same. We accordingly uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 6 of the Revenue s appeal. Disallowance of belated payment of employees contribution to P.F and ESI - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of the Hon ble Calcutta High Court in the case of CIT vs.- Vijay Shree Limited [ 2011 (9) TMI 30 - CALCUTTA HIGH COURT] , wherein it was held that the due date of deposit should be considered as due date of filing of return u/s 139(1). Since the payments in question towards employees contribution to P.F. and ESI were made by the assessee before the due date of filing of its return of income u/s 139(1), we respectfully follow the decision of the Hon ble Jurisdictional High Court (supra) and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the AO on account of belated payment of employees contribution to P.F. and ESI. Ground No. 7 of the Revenue s appeal is accordingly dismissed Disallowance of Club expenses - HELD THAT:- As rightly held by the ld. CIT(Appeals), the nexus of the expenditure incurred at Clubs with its business was established by the assessee and in the absence of any tenable or cogent material to rebut or controvert the same, the disallowance made by the AO on account of Club expenses was not tenable. Judicial pronouncements relied upon by the ld. CIT(Appeals) in CIT VERSUS SUNDARAM INDUSTRIES LTD. [ 1999 (4) TMI 50 - MADRAS HIGH COURT] also support the case of the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appals) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 8 of the Revenue s appeal for A.Y. 2011-12. Disallowance of short-term capital loss by applying the provisions of sections 94(7) and 94(8) - it had incurred capital loss of ₹ 10,19,224/- and the same was set off against the capital gain arising on the sale of securities wherein AO taxed it as income from other sources - HELD THAT:- We find that the impugned addition was made by the AO without giving any sound or cogent reason and the amount of capital gain was treated by him as income from other sources on the basis of mere conjectures and surmises. On the other hand, the relevant facts pertaining to this issue were properly explained by the assessee before the ld. CIT(Appeals) and after having satisfied with the claim of the assessee, relief was allowed by the ld. CIT(Appeals) to the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss Grounds No. 2 3 of the Revenue s appeal for A.Y. 2010-11.
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2019 (8) TMI 792
TDS u/s 195 - payment towards 'fees for technical services' under Article 12 of DTAA with Swiss Confederation - assessee being engaged in manufacturing of master batches and engineering plastic compounds made payment to Dr. Werner Stibal and Hans Peter Meyer both scientists and non-resident Indians, residing in Switzerland - number of days stay in India - no fixed PE in India - HELD THAT:- As decided in assessee's own case Services rendered by Dr. Werner Stibal and Hans Peter Meyer are covered under Article 14 of the DTAA which are independent scientific activities. Moreover, finding on facts have been returned by the coordinate Bench of the Tribunal that the assessee has no fixed PE in India and it is undisputed case of the assessee that both Dr. Werner Stibal and Hans Peter Meyer have not stayed in India for 183 days or more and as such, no tax is required to be deducted at source, hence disallowance made by the AO/confirmed by the ld. CIT (A) is ordered to be deleted. Consequently, the appeal filed by the assessee is hereby allowed.
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2019 (8) TMI 791
Registration u/s 12AA - charitable activity u/s 2(15) - educational institution where the surplus generated during the year is ploughed back for education purposes - HELD THAT:- We find that except for the fact that the assessee society in furtherance of objects of providing education had consistently generated surplus during the last three preceding year, nothing is discernible from the records of the lower authorities which would irrefutably prove that generation of such surplus and not rendering of the education was the predominate object of the assessee society. Surplus in the hands of the assessee society (after claim of depreciation) ranges from 15% to 23%. The aforesaid surplus we find had been ploughed back by the assessee society for the furtherance of its object. We thus in terms of our aforesaid observations are of the considered view that the generation of surplus by the assessee society in furtherance of its predominate object of rendering education can in no way help to arrive at a conclusion that the emphasis of the assessee society was on generation of excessive surplus and not rendering of education. We are unable to subscribe to the view taken by the CIT(E) that the genuineness of the activities of the assessee society was not proved. In terms of our aforesaid observations, we are of the considered view that the CIT(E) had erred in declining to grant registration under Sec. 12AA to the assessee society. We thus set aside the order of the CIT(E) and direct him to grant registration under Sec. 12AA to the assessee society. - Decided in favour of assessee.
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Customs
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2019 (8) TMI 790
Condonation of delay in filing petition - delay incurred in the process of gathering information from its marketing location covering different Land Customs Station - no order was passed giving reasons to denied condonation - powers vested under Rule 17 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 -sufficient reasons for condonation of delay or not - HELD THAT:- On perusal of the file, we were surprised to note that no formal order was passed in this regard although the consideration of condonation application and its disposal was a quasi judicial discharge by the Commissioner of Central Excise. There is no contest on merits of the claim as well as on the entitlement of the petitioner to seek a brand rate rather the only impediment on such relief is the delay whatsoever. In other words, if the delay is condoned, the relief is consequential. It is through a file noting and a simple query by the Commissioner as to the grounds for condonation which has been interpreted as a rejection of the application. The file noting confirms that the Commissioner has simply noted that a condonation can be considered where an applicant had provided adequate evidence of being prevented by sufficient cause in filing the application within the prescribed time but if no reason has been cited then on what grounds the condonation can be granted - other lacuna of the proceeding is that in case the Commissioner was not satisfied on the reasons assigned by the petitioner in his condonation application, he should have afforded an opportunity to the petitioner to clarify the position but certainly the manner of disposal of the condonation application leaves much to be desired. The remarks of the Commissioner on the condonation application would not amount to rejection of the condonation application in absence of any order to such effect. Besides, the fact that such remark was interfered by the Commissioner (Appeals) to find merit in the explanation to the delay given by the petitioner coupled with the revised time limit under the Circular dated 24.6.2010, the order of the Joint Secretary dated 16.11.2015 in purported exercise of revisional jurisdiction impugned at Annexure-5 together with letter dated 03.05.2017 of the Under Secretary, Government of India in its Ministry of Finance impugned at Annexure-7 are on complete misappreciation of the legal position and are accordingly quashed and set aside. Petition allowed.
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2019 (8) TMI 789
Unconditional Release of imported goods detained illegally - time limitation - it is alleged that SCN not issued within 6 months of detention of goods - scope of the second proviso to Section 110 (2) of Customs Act - HELD THAT:- It appears to the Court that the legislative intent was to ensure that the person whose goods are seized is not left in a state of uncertainty, with neither the goods being released nor an SCN being issued despite six months having elapsed since the date of seizure. The second proviso states that where any provisional release of the seized goods is ordered under Section 110A of the Act, then the specified period of six months, as indicated in Section 110 (2) of the Act, would not apply. This is only to make sure that at least there is a provisional release of the seized goods as quickly as possible. In the present case, a valuable right might have accrued to the Petitioner for unconditional release of the goods if no provisional release order had been passed before the expiry of six months from the date of seizure of the goods. In such event, the Petitioner could have argued that the valuable right accrued to the Petitioner cannot be taken away by passing a provisional release order beyond the period of six months from the seizure of the goods - the second proviso did not take away what was already available to the Petitioner. In that sense, the second proviso in the present case cannot be said to have applied retrospectively in order to deprive the Petitioner of a valuable right that had accrued to the Petitioner. The court is unable to accept the plea of the Petitioner for unconditional release of the goods in question - Petition dismissed.
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2019 (8) TMI 788
Classification of imported consignments - Relay - Automatic Regulating or Controlling Instruments and Apparatus' - Circular dated 18.07.2019 - It is the specific submission of learned counsel for writ petitioner that paragraph 5 of the said Circular takes the wind out of the sails qua the impugned order - HELD THAT:- As there is no contest regarding the said circular and as the manner in which the said Board has read the order of Hon'ble Supreme Court in ASIAN RESURFACING OF ROAD AGENCY PVT. LTD. AND ANR. VERSUS CENTRAL BURUEAU OF INVESTIVATION [ 2018 (4) TMI 3 - SUPREME COURT ] , has not been put in issue in the instant case, this Court refrains itself from expressing any view or opinion about the said circular. Having said this, it is made clear that this question is left open to be decided in an appropriate case where there is contest about the manner in which said Board has understood the order of Hon'ble Supreme Court in Asian Resurfacing of Road Agency Private Limited case. Petition disposed off.
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2019 (8) TMI 787
Levy of rent or demurrage for consignment - purchase of a Used Dialysis Machine with supplies and accessories - Section 125 of Customs Act, 1962 - Rule 6(1)(l) of 'Handling of Cargo Customs Areas Regulations, 2009' - HELD THAT:- A perusal of the said regulations reveals that it has been made by the 'Central Board of Excise and Customs' ['CBEC' for brevity] in exercise of regulation making powers under Section 141(2) read with 147 of said Act. Therefore, said regulations clearly have the character of subordinate legislation. To be noted, it has been averred in the counter affidavit of the Revenue that the aforesaid communication signed on 25.04.2018 was issued under 6(1)(l) of the said Regulations. Therefore, it follows as a sequitur that the said regulations apply to the instant case in all force. Section 2(b), which defines Customs Cargo Services Provider says any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in section 45 of said Act and persons as referred to in sub-section (2) of Section 141 of the said Act - A perusal of Section 2(b), read in conjunction with Sections 45 and 141(2) of said Act leaves no doubt in the mind of this Court that both CFS and the Steamer Agent would qualify as Customs Cargo Services Provider. There is also no disputation that they function under the control of the Customs Department. The import of the petitioner is for a hospital which is being run for economically less privileged strata of the society and it provides medical help by charging only actual cost of basic disposable products alone. In other words, for all practical purposes, writ petitioner is providing free medical treatment with a 50 bedded hospital and in instant case, consignment imported itself is a Used Dialysis Machine. This leaves this Court with the considered view that there are unique and peculiar facts and circumstances in this case. The consignment namely Used Dialysis Machine is directed to be given delivery to the writ petitioner without insisting on demurrage and detention charges even post 23.03.2018. The above direction shall be complied with by the respondents as expeditiously as possible and in any event, with a period of four(4) weeks from the date of receipt of a copy of this order. Petition allowed.
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2019 (8) TMI 786
Maintainability of Settlement Application - requirement of fulfilment of condition precedent that an applicant should pay differential customs duty for said Settlement Commission to entertain the application - Section 127-B of Customs Act - Valuation of imported goods - Import of consignment - Christmas Gift Items - HELD THAT:- This Court notices that there is no disputation that Bank Guarantees have been renewed from time to time and that they are subsisting. This Court also notices that consignment is Christmas Decoration Items even according to Customs Department and therefore, it is not a case of contraband or prohibited item. In other words, this Court is also of the considered view that said consignment is extremely innocuous and there is no issue regarding importability of said consignment - Writ petitioner has also shown his bona fide by not only furnishing Bank Guarantees for a total sum of ₹ 25,50,000/-, but also by renewing the same from time to time. This Court is left with the considered view that this is an appropriate case for directing the second respondent Settlement Commission to entertain the application of writ petitioner being application dated 16.10.2018, after first respondent appropriates the Bank Guarantees for a total sum of ₹ 25,50,000/- - After encashment of Bank Guarantees in the aforementioned manner by first respondent, the second respondent/ Settlement Commission shall take up application of the writ petitioner being application dated 16.10.2018 under Section 127-B of the said Act, seeking waiver of fine, penalty and immunity from prosecution qua said consignment, hear the application of the writ petitioner on its own merits and dispose of the same. Petition disposed off.
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Insolvency & Bankruptcy
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2019 (8) TMI 785
Dissolution of the Corporate Debtor - fullest extent of the assets of the Corporate Debtor satisfied and there being no further assets to be utilized for recovery of dues of the Creditors/Stakeholders - HELD THAT:- In view of the details provided in the application under consideration and the record placed on file, this Adjudicating Authority in exercise of the powers conferred under Sub-Section (2) of Section 54 of the Code, hereby, orders the dissolution of the Corporate Debtor viz. New Tech fittings Private Limited from the date of this order and the Corporate Debtor stands dissolved. Since bank account in the name of New Tech Fittings Pvt. Ltd., in Liquidation bearing No. 0960002105018806 opened with Punjab National Bank, Ahmedabad, Ashram Road Branch has balance of ₹ 17,637.12, the Liquidator is hereby directed to transfer the said amount of ₹ 17,637.12 in the Public account of India in Reserve Bank of India under Section 555(2) of the Companies Act, 1956. Liquidator stands relieved.
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2019 (8) TMI 784
Functions of Resolution Professional - supply of Natural Gas to Corporate Debtor - scope of 'aggrieved person' - HELD THAT:- In the present case, R1 i.e. ONGC, is at liberty to take action under law or as per the contractual terms in between them to protect the interest of that Institution especially when such action is not prohibited u/s 14 of IBC. In this backdrop, the Corporate Debtor cannot further inflict ONGC to incur loss by supplying Gas to it that has already been not paying for the gas supplied to it. When it is clear that supply of gas by Rl to the Corporate Debtor does not fall within the ambit of any of the provisions of Section 14 of the Code, this Bench has no right to interfere with the rights and interests of this Public Sector Undertaking or any other person because such jurisdiction has not been conferred upon this Authority to interfere with the affairs of Rl. As to Public Sector Undertaking, when a person is pitted against public institution, public interest will always prevail over the interest of a private person. In any event, it is only a discussion over the effect of an order against public institution. This concept will become an issue if order does not violate the rights of adverse party. This Bench has no jurisdiction to pass any orders in respect to the reliefs sought by the Applicant, henceforth this application is hereby dismissed in limine.
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2019 (8) TMI 783
Admissibility of application - initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - failure to make repayment -Taking into consideration the fact that the Respondent (Corporate Debtor) was ready to pay the amount subject to the process of the GST, the Adjudicating Authority refused to entertain the application under Section 9 of the I B Code - HELD THAT:- We find that the Respondent had taken a plea before the Adjudicating Authority that it is agreeable to pay the amount subject to the registration of the Operational Creditor under the GST Act, 2017 . It further appears that before the admission of the application, the Respondent was ready with the draft for ₹ 3,36,978.48. However, the Appellant is not inclined to accept the same. From the aforesaid action of the Appellant i.e., Operational Creditor , we find that the Appellant initiated corporate insolvency resolution process with fraudulently and malicious intent for any purpose other than the resolution of insolvency or liquidation and, therefore, it is clearly covered under Section 65 of the I B Code. Appeal dismissed.
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2019 (8) TMI 782
Admissibility of petition - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor defaulted in repayment of the sum - Section 9 of Insolvency and Bankruptcy Code, 2016, R/w Rule 6 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 - main contention of the Learned Counsel, Respondent is not a Corporate Person within the meaning of Section 3 (7) of IBC, 2016 - HELD THAT:- The Respondent is a Financial Service Provider within the meaning of section 3 (17) of the Code and that it is exempted from the purview of I B, Code. The contention of Operational Creditor that Respondents withheld payment for June, 2017 even before the advent of GST Act. Thus, Respondent committed default. As far as bill for June, 2017 is concerned, the Respondent is contending that action cannot be initiated against it under the Code. Secondly, consolidated claim is made over when genuine dispute was raised and claim may include the dues for June 2017. However, the main grounds urged that Petitioner / Operational Creditor cannot initiate action against Respondent under provisions of I B Code - the present Application under Section 9 of the Code is not maintainable against Respondent. The Petitioner stated that Respondent did not pay the money due to him when demanded. It is interesting to note that Respondent was prepared to pay the money and settle the claim of Petitioner before admission. He ought to have accepted the same and one cannot be permitted to take recourse to the provisions of the Code for settling personal vendetta. CIRP cannot be initiated against the Company when it is prepared to pay or settle the claim of the Petitioner. Petition rejected.
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PMLA
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2019 (8) TMI 781
Money Laundering - Attachment of property - utilization of proceeds of crime (POC) - whether the properties attached are acquired from proceed of crime or not - ultimate beneficiary of the POC - doctrine of privity of contract - Section 45 of PMLA - HELD THAT:- The facts remains that the payments made for the services provided to the M/s KB. Bhise Co. during 2004 to 2006 were actually received between 06.02.2004 to 08.04.2006 whereas the properties attached by the Respondent were purchased during 2003, 2009, 2010 and 2011. It is stated on behalf of appellant that the properties in question were not purchased during the period of 2004-2006. Hence, the attached property can be construed as 'proceeds of crime' u/s 2(1 )(u) of PMLA. It is stated by the appellant that the source of acquisition of all these properties are duly disclosed to the Income Tax Department and the ITRs for the relevant period were duly furnished to the Respondents during the course of investigation and also placed on record before the Tribunal with prior service to Counsel for ED. Role of the accused person as per respondent in the offence of money laundering - HELD THAT:- This Tribunal is of the view that in view of material placed on record, it is not fit case to release the attachment though there has been an inordinate delay of 7 years between the filing of the FIR and passing of the Provisional Attachment Order. Their balance is to be strike in light of facts involved in the matter in view of non-action by the ED against M/s. H.B. Bhise and Company. In the present case is that the specific complaint of NMMC is against M/s. H.B. Bhise and Company, who had submitted the forged bill. The appellant firm has received the amount from H.B. Bhise and Company who has allegedly committed the fraud and other schedule offence, however, no action was taken by the ED against the said company. The ED has not attached the property of M/s. H.B. Bhise and Company, nor any prosecution complaint has been filed. When this situation is confronted to the learned counsel and IO appearing on behalf of respondent, there was very vague answer. Firstly, it was admitted that no action under PMLA was taken against him. Secondly, it was mentioned that he may become approver. One is failed to understand that as per complaint, the FIR was registered and thereafter, on the basis of averment made in the complaint of NMMC, the charge sheet was filed against him also, how he can become approver as per allegation made against him. Only ED is aware why no action was taken if any case is made out on the basis of complaint and charge-sheet. Role of appellant - HELD THAT:- No doubt, the PMLA investigation is also against the appellant. However, the said allegations are to be established in trial of schedule offence and PMLA charge-sheet - All the allegations of both authorities are to be tested as per law. It is a matter of fact that no valid explanation is given by the respondent, why the provisional attachment was passed after the gap of seven years and at the same time, the benefit is given to M/s. H.B. Bhise and Company by not attaching its property and why no prosecution complaint has been filed as per allegations available on record. No case is made out to release the property although there are certain issues raised by the appellant have some force - the appeal is disposed of by modifying the impugned order - It is directed that as far as attachment of properties are concerned, the same shall continue, however, the respondent is restrained to take the physical possession. Appeal allowed in part.
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CST, VAT & Sales Tax
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2019 (8) TMI 780
Principles of natural justice - Random scrutiny under Section 22(3) of TNVAT Act - case of petitioner is that writ petitioner had not received any notice prior to the impugned orders - requirement for calling for the accounts of the dealer, scrutinize the same and then pass appropriate orders - HELD THAT:- While there can be no disputation that Section 22(3) of TNVAT Act itself provides for revision of assessment as the same has to be preceded by the procedure of calling for accounts of the assessee and as the impugned orders as placed before this Court do not mention any where that it was preceded by a notice much less a notice calling for the accounts, this Court deems it appropriate to send the matter back to the respondent with a direction to call for the accounts from the writ petitioner for detailed scrutiny and redo the revised assessment in accordance with the mandate in Rule 10(11) of TNVAT Rules. The impugned orders are set aside solely on the ground that there is no mention in the impugned orders that accounts of the assessee (writ petitioner) were called for detailed scrutiny prior to revision of assessment - Respondent is directed to call for the accounts of the writ petitioner assessee for detailed scrutiny and pass revised assessment order as expeditiously as possible - petition allowed by way of remand.
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