Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 21, 2019
Case Laws in this Newsletter:
GST
Income Tax
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
GST
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Demand of Interest - Section 50 of the CGST Act - The Assessing Authority was bound to decide the objections of the Assessee, to determine the correct liability of interest to be paid by the Assessee and without doing so, the garnishee proceedings could not have been initiated.
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Classification of goods - to consider "Narcotic Chewable Tablet"(NCT) as "Nicotine Polacriliex Lozenge" in their application - the instant product basically consists of nicotine which is not an edible/ food preparation, therefore, the instant product classifiable in chapter heading 38.24 - to be taxed at the rate of 18% of GST.
Income Tax
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Validity of penalty u/s. 271-C - LTA exemption for TDS under head salary - Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty.
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Addition u/s 68 - search u/s 132(1) - amount received on the occasion of marriage of his brother-in-law’s daughter or as commission income - merely because the assessee is inconsistent in his explanation does not ifso facto and on its own alone lead to the conclusion that a particular noting represents the income of the assessee. There has to be some material on record, more importantly, in the absence of any explanation by the assessee, to form the basis of making the addition.
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If the expenditure is capitalized, the income earned on temporary parking of the funds being capital in nature will go to reduce the capital work-in-progress. - similarly, market research expenses and depreciation on leasehold improvements not to be allowed as business expenditure and and will be the part of capital work-in-progress.
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Legality of assessment passed u/s 144/143(3) - the AO is vested with the power to assess the assessee’s income and mere mention of wrong provisions will not render the assessment order invalid.
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Levy of Penalty for advances received against the export of goods - more than 3 years gone - The assessee could not give any explanation even before us that why till date no export has been made or the advance received has been refunded back - Penalty confirmed.
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Bogus loss from client code modification (CCM) and stage- managing - when there is no such violation pointed out during the course of hearing that assessee’s broker carried out the relevant client code modification as per prescribed rules or not - loss is duly allowable
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Best Judgement assessment u/s 144 - estimation of income @12 or 8% - keeping in mind the judicial guideline available on issue, that after rejection of accounts, the income of the assessee is to be estimated on some reasonable basis for which comparable case and history of the assessee can be taken as a guide - it is fair, reasonable and logical to apply an average rate of two earlier years(@3.5%)
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Disallowance of interest u/s 36(1)(iii) - advance to subsidiary companies - there is no finding by the AO that the subsidiary companies have not utilised the borrowed money for their respective businesses - in addition to interest free funds available with the assessee in the form of share capital and reserves and surplus is sufficient for making interest free funds in subsidiary companies no disallowance
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Addition u/s 68 - share application money - when the identity, creditworthiness and genuineness of the transaction was placed before the AO with documentary evidence, the onus shifted to AO to disprove the materials placed before him, without doing so, the addition made by the AO based on conjectures and surmises cannot be justified
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Anonymous donations u/s 115BBC - the onus as well burden of proof is entirely on the assessee to provide to the AO all relevant details as contemplated u/s 115BBC to the satisfaction of the AO as to genuineness of the said donation - the assessee is directed to furnish PAN, addresses and all other relevant details of all the donors before the AO
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Exemption u/s 11 - contravention of Section 13(1)(d) and 11(5) - shares were donated to the Trust with a condition that it should be retained for at least 5 years - the Tribunal took note of the factual position and held that it is not for the assessee to sell the shares and law cannot compel one to do the impossible - no substantial question of law arising
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Penalty u/s 158BFA(2) - period of limitation - relevant date - on the issue of additions, ITAT and HC decided the matter in favor of assessee whereas Supreme Court has finally decided the matter in favor of Revenue - The notice is well within six months from the date of the order of Hon'ble Supreme Court and therefore, it cannot be gainsaid that impugned order is barred by limitation - penalty upheld
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Penalty u/s 271AAA - assessee in statement u/s 132(4) stated that he is dealing in land, therefore, the cash balance available with him was generated due to various purchase and sale transactions, merely put the income under the head business income, which does neither specify nor substantiates the manner in which the undisclosed income was derived by him - the statutory requirement u/s 271AAA(2) not satisfied - penalty upheld
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Assessment u/s 153C - scope of amendment in Section 153C(1) - unless the documents or material seized ‘belonged’ to the Assessee, the assumption of jurisdiction u/s 153C qua such Assessee would be impermissible, the change brought about prospectively with effect from 1st June, 2015 by the amended Section 153C (1) did not apply to the search in earlier years
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Cancellation of Registration u/s 12AA - showing it has concern towards the Christians of Patna in the Board’s meeting the association - since there is no satisfaction recorded by the CIT either that the activities of the petitioner was not genuine or that it was not being carried in accordance with the objects for which it was set up, the conclusion drawn by the authorities in the order impugned in reference to the provision of Section 13(1)(b), is a confirmation of perversity
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Income from house property - notional rent - deemed ALV - merely for the reason that no depreciation has been claimed on the property, the claim of the assessee cannot be disregarded, when the assessee has demonstrated with evidences that said property has been used in his profession - no deemed ALV taxable for that property
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Disallowance u/s 40 (a) (ia) when books of accounts was rejected - if the profit is estimated on any ground, it is not open to the Revenue to assert any right to allow or disallow any deductions once the books of accounts are rejected, such an option would arise only in the event the books of accounts are accepted
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Taxability of withdrawals from private discretionary trust - So far as the beneficiary is concerned, once the source of funds received by beneficiary is explained, taxation could possibly be confined only to the income component - but the settlor has to explain the investments also, which were not accounted for in his books of accounts or disclosed earlier, detected during the search operations
Corporate Law
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Investor Education and Protection FundAuthority (Accounting, Audit, Transfer and Refund)Second Amendment Rules, 2019
Indian Laws
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Levy of Vehicle Tax - Vehicle registered in different state - Motor Vehicle Taxation Act, 1976 permits plying vehicles without the incidence of tax for a period of thirty days from the date of entry into State. The vehicle, if is kept in the State of Kerala beyond thirty days the incidence under Section 3(6) read with Schedule and Annexure III is attracted and vehicle tax payable under Section 3(6) of Act 1976.
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Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - the accused had discharged the onus of proving that the cheque was not received from her by the complainant in discharge of a debt or liability. Under the circumstances, the onus or burden had shifted on the complainant.
Service Tax
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Levy of service tax - manufacture of engineering goods at client place - When information was available with revenue that the appellant is doing job work on job work challan in their factory, to treat entire transaction to be consideration for providing Erection, Commissioning & Installation Service is not sustainable
Central Excise
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Refund of CENVAT credit - Period of limitation for second refund application where the first application is within prescribed period of limitation - claiming CENVAT credit refund cannot be rejected on the ground that it is beyond one year from the relevant date
Case Laws:
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GST
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2019 (8) TMI 861
Extension of time period for filing of GST Tran-1 - transition to GST regime - transitional credit - petitioner has alleged in the petition that despite making several efforts on the last date for filing of the application, the electronic system of the respondent no.2 did not respond, as a result of which the petitioner is likely to suffer loss of the credit that it is entitled to by passage of time - HELD THAT:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. List this matter on 20.09.2019.
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2019 (8) TMI 860
Detention of truck along with the goods - applicability of Sections 129 and 130 respectively of the Act, 2017 - HELD THAT:- Taking into consideration the fact that the goods are of perishable nature being the agricultural product and also considering the fact that the writ applicant has deposited an amount with the respondent No.2 towards the tax and penalty, as determined, we are inclined to order release of the goods as well as the vehicle - the respondent No.2 is directed to release the vehicle as well as the goods at the earliest.
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2019 (8) TMI 859
Attachment of bank accounts - Criminal prosecution proceedings - Principles of natural justice - proceedings against the writ petitioner under CGST Act - stand of petitioner is that the representation has not evoked any response or reply and that there is inaction on the part of the first respondent - HELD THAT:- This writ petition is disposed of with a direction to the first respondent to dispose of writ petitioner's representation dated 18.06.2019 (received by the first respondent on 27.06.2019) on its own merits and in accordance with law as expeditiously as possible.
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2019 (8) TMI 858
Payment of GST - the contract forms subject matter of these two petitions is dated 23.01.2015, which is prior to the GST regime - Construction Services - demand of difference of 10% GST on the original agreed contract value, so that the tax liability is in accordance with law that has become operational when contract was in vogue and work pursuant to the contract was in progress - HELD THAT:- This Court is informed that the aforesaid challenge to G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 has been given legal quietus and therefore, G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 is now operating. This takes us to the question as to which portion of G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 is applicable - Here again, the task in instant writ petition is cut out as there is no disputation that paragraph 10(a) is applicable up to 30.06.2017 and paragraph 12 is applicable post 30.06.2017 i.e., on and from 01.07.2017. Therefore, the parties will now stand governed by paragraph 10(a) and paragraph 12 of aforesaid G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 - The exercise of quantification qua para 10(a) shall be completed by both the parties as expeditiously as possible within 12 weeks from the date of receipt of a copy of this order. Though obvious it is made clear that work under the aforesaid contract shall continue without being impeded by this exercise. Petition disposed off.
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2019 (8) TMI 857
Demand of Interest - Section 50 of the CGST Act - alleged delay in filing returns under CGST Act - objections of the Assessee not decided - principles of natural justice - HELD THAT:- Even though only a direction has been given by the learned Single Judge to consider the objections of the Assessee dated 10.5.2019 and 29.3.2019 and pass orders in accordance with law, once the admitted interest liability is paid by the Bank, the Assessing Authority, without deciding the objections of the Assessee and re-computing the interest liability, has unnecessarily filed the present intra-court Appeals. The Assessing Authority was bound to decide the aforesaid objections of the Assessee, to determine the correct liability of interest to be paid by the Assessee and without doing so, the garnishee proceedings could not have been initiated - appeal dismissed - decided against Revenue. Interest on delayed payment of tax - Section 50 of CGST Act - Assessee had filed the Returns belatedly as they could not make the payment of GST on time - HELD THAT:- Section 50 speaks about the liability to pay interest on one contingency viz., to pay tax or any part thereof within the prescribed period, whereas in the present case, it is admitted by the Assessee in his reply dated 10.5.2019 that he has not paid tax, despite which the learned Single Judge has given the directions in the order impugned before us. When once admission is made that Returns have not been filed in time, the interest for the delay in filing the Returns automatically arises and there cannot be any explanation for the same - the appellant has raised an arguable point which requires deeper consideration of the scope of Section 50 of the Central Goods and Services Tax Act, 2017 and consequently, the summary dismissal of the Writ Appeal at the admission stage itself by my learned Brother and the view taken by the learned Single Judge require to be revisited. The matter is, therefore, referred to the Hon'ble the Chief Justice under Clause 36 of the Letters Patent, on the issue as to whether under Section 50 of the CGST Act, the interest on delayed filing of the Returns arises automatically or on assessment and after considering the explanation offered by the Assessee and whether at all that explanation has to be considered by the Assessing Officer and then pass further orders.
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2019 (8) TMI 856
Extension of date of submitting declaration electronically in Form GST-TRANS-I - benefit of Input Tax Credit - HELD THAT:- The petitioner is directed to prefer a representation before the Goods Service Tax Council, New Delhi as also before the Commissioner of State Taxes, Jharkhand for extending the time for submitting Form GST-TRANS-I electronically for the Input Tax Credit. Petition disposed off.
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2019 (8) TMI 855
Classification of goods - rate of tax - to consider Narcotic Chewable Tablet (NCT) as Nicotine Polacriliex Lozenge in their application - benefit of N/N. 01/2017-Central Tax (Rate), dated 28-06-2017 - applicant submits that their product is classifiable under chapter heading 3004 and claims the applicable rate of 12% GST in terms of entry no.63 of schedule-II of Notification 01/2017-Central Tax (Rate) dated 28-06-2017, effective from 01.07.2017. HELD THAT:- Nicotine is an alkaloid present in tobacco leaves and it can also be obtained by synthesis. It is a colourless liquid, which turns brown when exposed to air, having a characteristic penetrating odour. It is a strong base, toxic, forms crystalline salts and can be used as a fungicide and insecticide for plants, as per the Explanatory Notes to the heading 29.39 at Sr. (G) of the Harmonised Commodity Description and Coding System. Further, the instant product is a chemical preparation made out from Nicotine and poly acrilix acid (carboxylic acid) having IUPAC name of Poly 1-Carboxycthelene. The said item does not fall under the Heading 3004. Accordingly it is not covered under Serial number 63 of Schedule 11 of Notification No.01 /2017-Central Tax (Rate) dated 28.06.2017 - The Chapter Notes and Explanatory Notes provide that preparation intended to assist smokers to stop smoking shall be covered by heading 21.06 or 38.24. We find that Chapter 21 deals with Miscellaneous edible preparations and heading 21.06 deals with food preparations not elsewhere specified or included. The instant product basically consists of nicotine which is not an edible / food preparation. Therefore the only alternative left for the classification of the instant product is chapter heading 38.24. Thus, the instant product, Nicotine Polacriliex Lozenge, is rightly classifiable under the heading 38.24. Accordingly the product is covered under Serial number 97 of Schedule III to Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and attracts GST at the rate of 18%.
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2019 (8) TMI 820
Scope of the contract / Bid - Applicable rate of tax post GST - Validity of Government order - clarifications and procedural requirements about implementation of the new GST regime - Order of Single Member bench of HC challenged - HELD THAT:- We are satisfied that no intereference is called for in the said order, by us in any manner, as apparently no cause of action has arisen to the petitioner / appellant. The existing Government Contractors have to follow the said GST procedures, which was stated in the said G.O.Ms.No.296 dated 09.10.2017. If any specific cause arises to the petitioner / appellant with regard to the illegal implementation of the provisions of the GST Act, the petitioner / appellant has departmental and appellate remedies in the said law itself for redressal of its grievances. This Court is not inclined to examine the academic questions at the instance of the appellant - The appeal is devoid of any merit and is liable to be dismissed - Appeal dismissed.
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Income Tax
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2019 (8) TMI 854
Cancellation of Registration u/s 12AA - charitable activity us 2(15) - cancellation on the ground that in the Board s meeting the association reiterated its emphasis on the undisputed fact that being a catholic school run by the assessee association, the members of which are Christians, it has concern towards the Christians of Patna - HELD THAT:- Commissioner has got mixed up in between the stipulations warranting exercise under Section 12AA(3) and Section 13(1) (b) in so far as it dis-entitles a trust or a charitable institution to the exclusion from the total income of the previous year, any income, if the same is used for benefit of any particular religious community or caste. It is correctly canvassed by Mr. Pathy that any such issue can be a subject matter of assessment proceeding but certainly cannot lay a foundation for cancellation of registration of the institution altogether unless the two prerequisites as present in sub-Section 3 of Section 12AA are satisfied. Having considered the matter in its entirety we are in no doubt to hold that the order dated 22.07.2015 of the Tribunal in confirming the order dated 28.06.2012 of the CIT to cancel the registration of the petitioner granted u/s 12AA is an order passed de-hors, the statutory provisions of Section 12AA(3) and since there is no satisfaction recorded by the CIT either that the activities of the petitioner was not genuine or that it was not being carried in accordance with the objects for which it was set up, the conclusion drawn by the authorities in the order impugned in reference to the provision of Section 13(1) (b), is a confirmation of perversity. - Order to cancel the registration of the petitioner u/s 12 AA is quashed and set aside. - Decided in favour of assessee.
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2019 (8) TMI 853
Penalty u/s 158BFA(2) - period of limitation - relevant date - on the issue of additions, ITAT and HC decided the matter in favor of assessee whereas Supreme Court has finally decided the matter in favor of Revenue - HELD THAT:- While it is clear that relevant provision relied on by learned counsel for writ petitioner talks only about first appeal to the first appellate authority, the order of ITAT and stops with the same, there is another provision which deals with a scenario which does not fall in such a factual setting. That provision is Section 158BFA(3)(e). A careful analysis of this provision makes it clear that this provision itself provides for two periods of limitation qua penalty under section 158BFA(2). One period is the end of assessment year in which assessment proceedings came to be passed. In this case, assessment order came to be passed on 31.8.2004 and therefore, that financial year ended on 31.3.2005. In the considered view of this court, this limb of time frame does not apply to instant case on hand as two successive appeals, namely statutory appeal to CIT(A) and statutory appeal to ITAT u/s 253 did not get completed in less than a year. From the date on which penalty proceedings are initiated? - In the instant case, if it is construed that penalty proceedings were initiated on 31.8.2004, as already alluded to supra, the same could not be continued owing to writ petitioner assessee's appeal before first appellate authority. To be noted, first appellate authority confirmed the tax levy, but reduced the interest component, resulting in both assessee and Revenue carrying the matter in appeal to ITAT. Obviously, Revenue had to wait for the outcome of appeals before ITAT. As already mentioned supra, the outcome of appeals before ITAT was in favour of writ petitioner assessee. Absent assessment order, the question of penalty proceedings does not arise and therefore, penalty proceedings initiated on 31.8.2004 continued to lie dormant. Further notice dated 12.9.2018 continuing penalty proceedings which was involuntarily lying dormant was issued. This 12.9.2018 notice is well within six months from the date of the order of Hon'ble Supreme Court and therefore, it cannot be gainsaid that impugned order is barred by limitation. For the purpose of enhanced clarity and specificity, this Court deems it appropriate to mention that limitation qua penalty proceedings under IT Act is prescribed under two provisions with regard to two different types of penalties. With regard to penalty u/s 271(1)(c), limitation is statutorily prescribed in section 275, with regard to penalty u/s 158BFA(2) as in the instant case, limitation is statutorily prescribed u/s 158BFA(3)(c). With regard to both these provisions, namely Sections 275 and 158BFA(3)(c) which prescribe different periods of limitation for two different types of penalties, both these provisions were brought into statute books in their present form before section 260A was brought into statute books. To be noted, section 260A provides for a statutory appeal to High Court and this was brought into statute books only on 01.10.1998. To put it differently, when two different periods of limitation for two different kinds of penalties were statutorily prescribed under IT Act, ITAT was the last forum qua statutory appeals. The discussion and dispositive reasoning leads us to an inevitable conclusion that the impugned order is not barred by limitation and the same is not liable to be set aside as time barred.
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2019 (8) TMI 852
Assessment u/s 153C - scope of amendment with effect from 1st June, 2015 in Section 153C (1) - HELD THAT:- It can straightaway be noticed that the crucial change is the substitution of the words books of account or documents, seized or requisitioned belongs to or belong to a person other than the person referred to in Section 153A by two clauses i.e. a and b, where clause b is in the alternative and provides that such books of account or documents, seized or requisitioned could pertain to or contain information that relates to a person other than a person referred to in Section 153A. The trigger for the above change was a series of decisions u/s 153C, as it stood prior to the amendment, which categorically held that unless the documents or material seized belonged to the Assessee, the assumption of jurisdiction u/s 153C qua such Assessee would be impermissible. The legal position in this regard was explained in Pepsi Foods Pvt. Ltd. v. ACIT [ 2014 (8) TMI 425 - DELHI HIGH COURT] Notice to the Assessee was issued u/s 153C on 19th November 2010. This was long prior to 1st June, 2015 and, therefore, Section 153C as it stood at the relevant time applied. The change brought about prospectively with effect from 1st June, 2015 by the amended Section 153C (1) did not apply to the search in the instant case. Therefore, the onus was on the Revenue to show that the incriminating material/documents recovered at the time of search belongs to the Assessee. It is not enough for the Revenue to show that the documents either pertain to the Assessee or contains information that relates to the Assessee. Unexplained cash credit u/s 68 - relevance of document seized in search of other persons for the purposes of determining escapement of income - can statement given in search be documents belong to other assessee to confer jurisdiction u/s 153C? - HELD THAT: - In the present case, the Revenue is seeking to rely on three documents to justify the assumption of jurisdiction u/s 153 C against the Assessee. Two of them, viz., the licence issued to the Assessee by the DTCP and the letter issued by the DTCP permitting it to transfer such licence, have no relevance for the purposes of determining escapement of income of the Assessee for the AYs in question. Consequently, even if those two documents can be said to belong to the Assessee they are not documents on the basis of which jurisdiction can be assumed by the AO u/s 153C. As far as the third document, being Annexure A to the statement of Mr. D. N. Taneja, is concerned that was not a document that belonged to the Assessee. Admittedly, this was a statement made by Mr. Taneja during the course of the search and survey proceedings. While it contained information that related to the Assessee, by no stretch of imagination could it be said to a document that belonged to the Assessee. Therefore, the jurisdictional requirement of Section 153C as it stood at the relevant time, was not met in the present case. This Court concludes that the ITAT committed no legal error in holding that the AO had wrongly assumed jurisdiction u/s 153C qua the Assessee.
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2019 (8) TMI 851
Revision u/s 263 - disallowance u/s 40 (a) (ia) when books of accounts was rejected - HELD THAT:- As decided in M/S. HYCONS INFRASTRUCTURE (INDIA) LTD. [ 2014 (7) TMI 1306 - ANDHRA PRADESH HIGH COURT] while dismissing the Revenue s appeal, the Division Bench observed that amendment or no amendment, if the profit is estimated on any ground, whether ignoring books of accounts or rejection thereof, then there is no scope for allowability/disallowability of any deduction. In our considered view, the above provision mentions how to consider the same when the books of accounts are available and the same shall be accepted on fact by the authorities below. We are now informed by Ms. K. Mamatha, learned senior counsel for Revenue, that the aforestated order of the Division Bench has been confirmed by the Supreme Court by virtue of the dismissal of the SLP at the threshold. It is not open to the Revenue to assert any right to allow or disallow any deductions once the books of accounts are rejected. Such an option would arise only in the event the books of accounts are accepted. In the light of the aforestated decision, which we are not inclined to disagree with, the main questions of law sought to be raised presently stand settled against the Revenue.
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2019 (8) TMI 850
Attachment of property by Income Tax Department - immovable properties already been securitised - department rights of realisation is subject to such securitisation - HELD THAT:- As decided in Indian Overseas Bank [ 2016 (12) TMI 373 - MADRAS HIGH COURT] this has no difficulty in accepting the submission made by learned Revenue Counsel that it is clear that order of Hon'ble Full Bench does not place any fetters on the rights of the Income Tax Department to attach a property which has already been securitised if the Income Tax Department chooses to attach a property which is already securitised. Post attachment, anything that is realized from the attachment by Income Tax Department is subject to such securitisation and the creditor thereunder. In the instant case, the third respondent, which according to the writ petitioner company is the creditor, who has secruitised the immovable properties, has not even chosen to come before this Court to assert its rights and say that it has securitised immovable properties which are subject matter of provisional attachment. Therefore, the question as to whether the immovable properties, which are subject matter of provisional attachment qua impugned orders have already been securitised with third respondent Bank as the creditor, itself is not clear and even if that be so, the question of apportioning the monies realized from the attached properties, if such a scenario unfurls need to be gone into only at that stage. The issue as to the date of securitisation and as to whether it is appropriate to pass impugned orders are the determinants which may govern this apportionment aspect. However, it is not necessary to go into these aspects in this order. Suffice to say that it is clear that there are no fetters on the powers of the Income Tax Department with regard to original attachment. As this is the last point that has been canvassed, this Court finds no infirmity, more so at the instance of a writ petitioner company qua the impugned orders. Therefore, this Court considers that this is not a fit case for interfering with impugned orders.
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2019 (8) TMI 849
Exemption u/s 11 - when the shares were donated to the Trust with a condition that it should be retained for at least 5 years, holding of such shares in contravention of Section 13(1) (d) - HELD THAT:- Entire matter is wholly factual. AO vide an order dated 21.12.2006 by referring to Section 11(5) of the Act held that the assessee trust was required to dispose or convert the assets not conforming to the requirement of Section 11(5) into permissible investment within one year from the end of the financial year in which such bonus shares or other assets are received or 31.03.1992 whichever is later and also held that the income over expenditure derived by the assessee during the previous year relevant to the assessment year 2001-02 is assessable at the maximum marginal rate. The assessee filed an appeal before the Tribunal, this issue arose not only for the assessment year under consideration (2001-02), but also for the assessment year 2002-03. So far as the order passed by the Tribunal for the assessment year 2002-03, admittedly, the revenue did not prefer any appeal. The learned Senior Standing Counsel for the appellant/revenue, on instructions, submitted that appeal was not preferred on account of low tax effect. It is not known as to how the appeal could not have been filed for two reasons namely the issue is a recurring issue, apart from that the Tribunal followed the decision in the case of CIT Vs. Nagi Reddy Charities [1998 (9) TMI 30 - MADRAS HIGH COURT ] which according to the revenue was distinguishable. In any event, the order passed in the assessee's own case which was affirmed by the Tribunal has become final. So far as, present appeal is concerned, the Tribunal took note of the factual position and held that it is not for the assessee to sell the shares and law cannot compel one to do the impossible. We are of the considered view that decision arrived at by the Tribunal is upon appreciation of the factual position and we find that there is no substantial question of law arising for consideration in this appeal.
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2019 (8) TMI 848
Validity of penalty u/s. 271-C - LTA exemption for TDS under head salary - High Court has admitted the question whether the Assessee is guilty of non deduction of tax at source or not - debatable issue - HELD THAT:- As decided in SYNDICATE BANK, NGV KORAMANGALA AND ORS VERSUS ACIT (TDS) [ 2019 (7) TMI 1266 - ITAT BANGALORE] admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible u/s 271(1)(c). Merely because the claim of the assessee has been rejected by the revenue authorities would not make the assessee liable for penalty - levy of penalty u/s.271C of the Act, in the given facts and circumstances of the case, cannot be sustained and the same is directed to be deleted. - Decided in favour of assessee.
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2019 (8) TMI 847
Unexplained cost of construction in the building - AO proposing to adopt the cost of construction of building at ₹ 1.70 crores as valued by the DVO- valuation based on rates of construction of CPWD - HELD THAT:- The AO instead of verifying the facts from the books of accounts and vouchers, summarily rejected the contention of the assessee which is incorrect and unjustified. AO ought to have decided the year wise cost of construction after verifying the books of accounts and the details instead of finding easy way of estimating the cost of construction on the basis of original cost of construction declared by the assessee. DVO calls for information from the assessee to determine the cost of construction and estimates the cost of construction of the building. The value determined by the DVO with regard to cost of construction of the building has evidentiary value and the AO should not disturb the valuation without having valid reason. The AO is obliged to consider the explanation and the evidences placed before him to arrive at the finding with regard to the accounted expenditure on construction of the building. When the evidences are available, the AO is not permitted to reject the submission of the assessee merely on the premise that the assessee had already intimated the cost of construction to the DVO. In the instant case though initially the assessee has intimated the DVO that she had incurred the cost of construction till the date of inspection at ₹ 111.10 lakhs, subsequently reexamined the facts and found that the actual expenditure incurred was ₹ 136.06 lakhs but not ₹ 110.10 lakhs and submitted the same before the AO with relevant evidences and the books of accounts. The AO without causing any inquiry rejected the contention of the assessee which is incorrect and unreasonable. Therefore, we hold that there is no reason for rejecting year-wise cost of construction declared by the assessee aggregating to ₹ 136.06 lakhs and accordingly we direct the AO to accept the cost of construction declared by the assessee at ₹ 136.06 lacs for arriving the unexplained investment in place of ₹ 111.10 lakhs adopted by the AO. AO increased the cost of construction without taking account of a total cost of construction declared by the assessee in the F.Y.2015-16 and 2016-17 - We find no reason to increase the cost of construction for the F.Y.2011-12 relevant to the A.Y.2012-13. It is also unjustified to estimate the cost of construction when the assessee has maintained the books of accounts without verifying the same and giving valid reasoning. Further after giving rebate for rate difference and discount for self supervision, the cost of construction of the building worked out to less than the revised cost of construction declared by the assessee. Since we have already directed the AO to adopt the revised cost of construction in the earlier paragraphs, we find no reason to uphold the order of the Ld.CIT(A), accordingly we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. Thus, the appeal of the assessee is allowed for the A.Y.2012-13. Deduction u/s 54F - residential unit has already come into existence before the transfer of capital asset - two floor constructed prior to sale and other two after the sale - no bar in commencement of construction prior to sale - HELD THAT:- The assessment order passed by the AO for the A.Y.2012-13 and the allocation of cost of construction for various assessment years establishes that the assessee had completed the building after transfer of the capital assets and incurred the cost to the extent of ₹ 101.14 lakhs during the F.Y.2013-14 to 2016-17 as per the page No.8 of the assessment order of A.Y.2012-13. Having determined the cost of construction and assessed the unexplained investment if any, for the F.Y.2013-14 to 2016-17, the AO is not permitted to take different stands for the purpose of assessment and for the purpose of deduction u/s 54F which shows the inconsistent approach of the department and it is against the justice. In view of the fact that the AO himself determined the cost of construction incurred for the A.Y.2013-14 to 2016-17 in the assessment order of A.Y.2012-13, we are under the considered opinion that the residential unit was constructed after transfer of capital asset and we do not find any merit to uphold the order of the Ld.CIT(A) and the same is set aside and direct the AO to allow deduction u/s 54F. As decided in SRI BOLLINA SRIHARI RAO AND VICE-VERSA [ 2017 (4) TMI 117 - ITAT VISAKHAPATNAM] assessee would be entitled for deduction u/s 54F even though the amount is invested in construction prior to the transfer of original asset.
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2019 (8) TMI 846
Condonation of delay of 46 days - no proper advice by tax consultant within the reasonable period of time to file the appeal - HELD THAT:- Taking into account the principles laid down by the Hon ble Apex Court in the case of MST Katiji and Others [ 1987 (2) TMI 61 - SUPREME COURT] wherein laid down the principles for dealing with matters relating to condonation of delay; the decision of the Hon ble Karnataka High Court in the case of ISRO Satellite Centre [ 2011 (10) TMI 737 - KARNATAKA HIGH COURT] and the reasons the assessee has laid out in his Affidavit seeking condonation of delay (supra), we are of the view that the assessee was prevented by reasonable and sufficient cause from filing the appeal for AY 2014-15 on time before the Tribunal. In this view of the matter and respectfully following the principles laid down by the Hon ble Apex Court in the case of MST Katiji and Others (supra), we condone the delay of 46 days by the assessee in filing the appeal before the Tribunal and accordingly admit the assessee s appeal for consideration and adjudication. LTCG computation - applicability of provisions of section 50C - HELD THAT:- In the case on hand, the circumstances are even more acute as the AO who had admittedly made a reference to the DVO vide letter No.ACIT C-3(2)(1)/16-17/105 dated 13.12.2016, strangely did not wait for the DVO s valuation report and hurriedly proceeded to pass the impugned order of assessment on 27.12.2016; just 14 days later; when the DVO had already initiated valuation proceedings by calling for details to be filed by the assessee on 02.01.2017 and had time to submit his Valuation Report upto 30.06.2017. Hon ble Calcutta High Court in the case of Sunil Kumar Agarwal Vs. CIT [ 2014 (6) TMI 13 - CALCUTTA HIGH COURT] has held that there is no reason why the machinery provided by Legislature should not be used and the benefit thereof refused, even in a case where no prayer has been made by the assessee, who may not have been properly instructed. Since the AO, discharging a quasi-judicial function, has the bounden duty to act fairly; he should in all fairness make a reference to the DVO to have the valuation of the said property contemplated under section 50C. The orders passed by the authorities below i.e., CIT(A) and AO are set aside and we restore the matter of computation of LTCG on sale of the said property by the assessee to the file of the AO. AO shall obtain the DVO s Valuation Report, as called for by him in his reference dated 13.12.2016 , and after such valuation is made by the DVO, the computation of LTCG shall be made on this issue, de novo in accordance with law and after affording the assessee adequate opportunity of being heard in the matter by both the DVO for valuation proceedings and the AO and to file details required which shall be duly considered by the DVO / AO before deciding the issue. Grounds raised by the assessee are allowed for statistical purposes.
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2019 (8) TMI 845
Levy of penalty u/s 271(1)(c) - Disallowance u/s 14A - assessee accepted disallowance to the extend of dividend income - HELD THAT:- Under the very scheme under section 14A, the apportionment of the expenditure attributable to earning exempt income, was difficult for identifying exactly on the precise, numerical and mathematical basis and to have rationality in the disallowance, the rule 8D has been introduced by the CBDT, but that too is a kind of estimate only. The difference between the suo-motu disallowance by the assessee in the return of income and the amount upheld by the AO, can be termed as variation in the estimate of expenditure attributable to earning exempt income by the assessee and by the AO and same cannot be tantamount to furnishing of any inaccurate particulars of income. Merely making a claim, which is held as non-sustainable under the law, should not lead to penalty under section 271(1)(c) of the Act, when the assessee has furnished details of particulars in the return of income. The assessee is not found to be involved in camouflaging or filing inaccurate details of expenses. Every disallowance made does not justify and mandate levy of penalty u/s 271(1)(c) - in the case of CIT versus Reliance Petro Products Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] held that where no information given in the return of income is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars and by no stretch of imagination making an incorrect claim can tantamount to furnishing inaccurate particular of income. - Decided in favour of assessee.
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2019 (8) TMI 844
Income from house property - notional rent - Additions towards deemed ALV of three house properties - taxability of property assessee use for its profession but not claimed any depreciation - AO estimated ALV at 8%, the books value of the property - CIT(A) reduced @4% - HELD THAT:- No doubt, when a property used for his own business or profession necessary depreciation on said property has to be claimed under the Act, but merely for the reason that no depreciation has been claimed on the property, the claim of the assessee cannot be disregarded, when the assessee has demonstrated with evidences that said property has been used in his profession. Therefore, we are of the considered view that there is no error in the findings recorded by the CIT(A), in so far as residential bungalow at Lonawala and accordingly, we are inclined to uphold the findings of Ld.CIT(A) and reject ground taken by the revenue. Residential flat at MHADA, S.V.P.Nagar and residential Flat at Millat Nagar, the Ld. CIT(A) recorded categorical findings, while estimating 4% on book value of assets to determine deemed ALV, that those two properties are situated in slum area and also not in a posh area to estimate higher rental value. We further noted that the flat at MHADA, S.V.P.Nagar was not having necessary occupation certificate, because of this it cannot be let out for normal rental value. Likewise, the flat at Millat Nagar is surrounded by slum area and which was purchased at a cost of very nominal amount of ₹ 1,50,000/-. Therefore, he came to the conclusion that adopting 8% on book value of the property is higher rate and accordingly, reduced to 4% of books value. Facts remains unchanged, the revenue fails to bring on record any contrary evidences to counter the findings of facts recorded by the CIT(A). Hence, we are inclined to uphold findings of CIT(A) and reject ground taken by the revenue. Capital gain from sale of office premises - period of holding - date of allotment OR date of registration - HELD THAT:- When the property has been allotted and also, the assessee has made initial payment, the subsequent payment and registration of property is a follow up action and for the purpose of determination of period of holding, the date of allotment of the property by the developer should be considered. If date of allotment has been considered for the purpose of period of holding, then the property is held for more than 36 months and accordingly, the surplus from sale of property is assessable under the head long term capital gain. This legal proposition is supported by the decision of CIT vs Hilla J.B.Wadia [ 1993 (3) TMI 7 - BOMBAY HIGH COURT ] and also the circular issued by the CBDT 672 of 16/12/1993, where it was clarified that for the purpose of date of acquisition of property, the date of allotment of property needs to be considered. CIT(A) after considering relevant facts has rightly held that property in question was a long term capital asset and surplus from sale of such property is assessable under the head long term capital gain. Adoption of full value of consideration as per ready reckoner value - We find that the Ld. CIT(A) has recorded categorical finding in light of valuation report filed by the assessee and also contention of the assessee that the property in question was not having proper electrical installation and water supply and also the municipal authorities have not issued valuation certificate and accordingly, ready reckoner value cannot be considered as full value of consideration. CIT(A) has held that the AO has adopted ready reckoner value without appreciating various facts about the property and therefore, by following the decision of Hon ble High Court of Karnataka in the case of Jyoti Prakash vs Addl.CIT [ 2016 (6) TMI 649 - KARNATAKA HIGH COURT ], came to the conclusion that there is no reason to adopt ready reckoner value, as against sale consideration received by the assessee, for the purpose of computation long term capital gain. CIT(A) had further held that AO has mechanically applied ready reckoner value without any corroborative material in his position to suggest that the value determined by the stamp duty authority is in fact correct market value of the property in the given facts and circumstances. On the other hand, the assessee has filed necessary evidences to prove that the correct market value of the property is at ₹ 1,60,00,000/-, which was further supported by valuation report issued by the registered valuer . Although, there is a difference in sale consideration received by the assessee and value determined by the registered valuer, but search difference is less than 5% of the property and hence, the Ld. CIT(A) held that no reason to replace ready reckoner value in place of sale consideration actually received for sale of property. Fact remains unchanged. The revenue fails to bring on record any evidences to counter findings of facts recorded by the CIT(A). Hence, we are inclined to uphold the findings of Ld. CIT(A) and reject ground taken by the revenue.
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2019 (8) TMI 843
Taxability of interest income from short term fixed deposits - interest earned on short term fixed deposits is necessarily should be reduced from work in progress OR taxable under the head income from other sources - HELD THAT:- We find that the assessee has earned interest income from short term fixed deposits kept in bank out of unutilized funds available in respect of money borrowed for the purpose of execution of project and the same has been reduced from working progress. We, further noted that an identical issue has been considered by the Co-ordinate Bench in the case of Hazaribag Ranchi Expressway Ltd Vs. ITO [ 2018 (11) TMI 1660 - ITAT MUMBAI] , where under identical set of facts and also after considering various judicial precedents, including the decision of Hon ble Supreme Court in the case of Tuticorin Alkali Chemicals fertilizer Ltd. vs CIT [ 1997 (7) TMI 4 - SUPREME COURT] held that interest income from short term fixed deposits kept in bank out of funds borrowed for the purpose of project is assessable under the head income from business, consequently during construction period of project, it needs to be reduced from working progress. - appeal filed by the assessee is allowed
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2019 (8) TMI 842
Disallowances of expenditure on non commencement of business - expenditure debited into the profit and loss account under various heads, including salary, administrative and other expenses, operating expenses and depreciation - said expenditure are in the nature of capital expenditure and also in the nature of pre-operative expenses, which cannot be allowed as deduction, while computing income under the head income from business or profession - HELD THAT:- When the assessee itself had admitted the fact that its project are under construction up to AY 2012-13, then it cannot be said that its business has been setup merely, for the reason that it has shown some revenue from road transport/sea transport, that too from its group company. We further noted that the revenue generated from other stream of business is not regular, which is evident from the fact that for some years, the assesee shown revenue from road transport and for some years, it has shown revenue from sea transport, but both revenues are claims to have been received from Pipavav shipyard Ltd., a group company of the assessee. AO, as well as the Ld. CIT(A) after considering relevant facts has rightly held that the business of the assessee has not been setup and ready for commencement of business, consequently expenditure debited into profit and loss account cannot be allowed as deduction u/s 28. Case laws relied upon by the assessee, we find that none of the case laws are comes to rescue the assessee, because all judgments cited by the assessee have clearly held that the term setup of business and commencement of business largely depend upon facts of each case and nature of business undertaken by the assessee. Further, in all the cases, it has been categorically held that in case of manufacturing company that business said to have been setup, when the plant is ready for use. In cases, where the company involved in services sector, the business said to have been setup only, when the primary conditions for commencement of business is put in place. - Decided against assessee. Disallowances of expenditure incurred, in relation to exempt income u/s 14A r.w.s.Rule 8D(2)(ii) (iii) - HELD THAT:- In this case, the fact with regard to details of exempt income was not coming forward from the orders of the lower authorities. At the same time, the Ld.AR for the assesee pleaded for restricting disallowances contemplated u/s 14A r.w.Rule 8D(2) of the I.T.Rules 1962, to the extent of exempt income, therefore we are of the considered view that the issue needs to be set aside to the file of the AO with a direction to recompute expenses incurred in relation to exempt income u/s 14A r.w.Rule 8D of the I.T.Rules, 1962,in light of our discussion hereinabove, but restrict such disallowances to the extent of exempt income earned by the assessee for the relevant assessment years. Further, in case, if there is no exempt income for the relevant assessment year, then there shall be no disallowances of expenditure in relation to exempt income u/s 14A MAT computation for addition u/s 14A r.w.Rule 8D - Whether computation under clause (f) of the explanation 1 to section 115JB (2) is to be made without resorting to computation as contemplated u/s 14A r.w.Rule 8D - HELD THAT:- As decided in ACIT vs Vireet investments Pvt.Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] had considered an identical issue and held that computation under clause(f) of explanation 1 to section 115JB (2) is to be made without resorting to computation as contemplated u/s 14A r.w.Rule 8D. Therefore, AO was erred in recomputed book profit u/s 115JB by adding disallowances computed u/s 14A r.w.Rule 8D of I.T.Rules 1962. As noted that since, the issue of disallowance of expenditure u/s 14A r.w.Rule 8D has been set aside to the file of the AO to determine disallowances in light of our discussions in the proceeding paragraphs, we set aside this issue also to the file of the AO and direct him to first determine disallowances of expenditure in relation to exempt income in light of our discussions in proceedings paragraphs and then, find out amount of disallowances and thereafter, recompute book profit u/s 115JB
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2019 (8) TMI 841
Suppression of sales - suppression of production of biscuits in Mumbai Unit - assessee s Contract Manufacturing Units(CMUs) have given average yield of 90.26%. Whereas, the assessee has shown the yield of biscuits at its own unit at Mumbai @ 82.92% - HELD THAT:- As compared to the yield of Mumbai unit in the preceding assessment years as noted above, the assessee has shown a higher yield for the Mumbai unit in the impugned assessment year. Therefore, on over all consideration of facts and circumstances of the case, we are of the considered opinion that rejection of books of account and addition made on estimate basis alleging suppression of sale is not in accordance with law. Therefore, even a part of addition made by the AO cannot be sustained. Accordingly, we delete the addition made by the AO fully. Disallowance of depreciation on plant and machinery - HELD THAT:- As decided in own case [ 2017 (12) TMI 298 - ITAT MUMBAI] and [ 2018 (1) TMI 1077 - ITAT MUMBAI] Tribunal has allowed assessee s claim. Undisputedly, learned CIT(A) has allowed the claim of deprecation in consonance with the order passed by the tribunal in assessment year 1996 97. That being the case, we do not find any infirmity in the decision of learned CIT(A) on the issue. Accordingly, ground raised is dismissed. Accrual of income - treating the amount received towards trademark, non compete fee, etc., as revenue receipts - HELD THAT:- The Hon'ble Jurisdictional High Court in Fernhill Laboratories and Industrial Establishment [ 2012 (7) TMI 463 - BOMBAY HIGH COURT] has held that sale of self-generated trademark is not chargeable to capital gain tax prior to 1st April 2002. It is further relevant to observe, while deciding identical issue in case of Parle Biscuits Pvt. Ltd. [ 2010 (8) TMI 881 - ITAT MUMBAI] for the very same assessment year, learned CIT(A), vide order dated 30th March 2015, has held that the amount received towards non compete fee and trade mark cannot be treated as income either u/s 28(va) or subjected to capital gain tax. Pertinently, the Revenue has accepted the aforesaid decision of learned CIT(A). Thus, on overall consideration of facts and material on record, we are of the view that the amount received by the assessee towards trademark and non compete fee being a capital receipt is not taxable. Therefore, the decision of learned CIT(A) on the issue is sustained, though, on the basis of our independent reasoning. Ground raised is dismissed. Suppression of sales of biscuits and confectionary - HELD THAT:- Undisputedly, there was a difference between the sales figures as reflected in RT 12 statement and the books of account of the assessee. Though, the assessee has tried to explain the difference by attributing it to inter depot transfer and destruction of goods, however, fact remains that the assessee has not been able to reconcile the difference with supporting evidence. In these circumstances, the decision of learned CIT(A) in sustaining the addition to the extent of 0.05% of the total turnover is reasonable, hence, it does not require interference from this forum. This ground is dismissed. Disallowance on account of foreign travel expenses - HELD THAT:- No doubt, while deciding assessee s appeal in the assessment year 1996 97, the Tribunal has upheld part disallowance of foreign travel expenses. However, in assessment year 1997 98, it was argued by the assessee that the foreign travel expenses incurred was not only for directors but also for other employees purely for business purpose. Considering the submissions of the assessee, the Tribunal restored the issue to the AO [ 2018 (1) TMI 1077 - ITAT MUMBAI] . Before us also, learned Authorised Representative has submitted that facts involved in the impugned assessment year are similar to assessment year 1997 98. In view of the aforesaid, we restore the issue to the AO for denovo adjudication.
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2019 (8) TMI 840
Penalty u/s. 271(1)(c) - disallowances on the reduction on account of reversal of excess billing, coal cost freight issue and addition of the provision of difference in oil stock - revised return of income filed by the assessee company - HELD THAT:- Addition on account of provision for difference in oil stock had been vacated by the CIT(A) while disposing off the quantum appeal of the assessee therefore, the CIT(A) had rightly observed that the issue as regards the levy of penalty under Sec. 271(1)(c) in respect of the said addition does not survive any more. Addition on account of reversal of excess billing as per MERC order we find that as the same had been deleted by the Tribunal while disposing off the quantum appeal of the assessee for the year under consideration viz. Maharashtra State Power Generation Company Ltd. Vs. ACIT, Central -10(1), Mumbai [ 2017 (3) TMI 1675 - ITAT MUMBAI ] , therefore, the penalty imposed by the A.O on the said count will have to meet the same fate and thus stands vacated. Penalty in respect of coal cost freight issue-Bhusaval - We find that in the course of the penalty proceedings as well as the appellate proceedings emanating therefrom before the CIT(A), the assessee had satisfactorily explained that the coal cost freight issue - Bhusaval of ₹ 16,31,85,000/- was an expenditure pertaining to the year under consideration. As a matter of fact, the assessee had in its revised return of income claimed the said amount as an expenditure on the basis of the remarks and report of its statutory auditors. In the backdrop of the aforesaid facts, we are of a strong conviction that the aforesaid claim of expenditure raised by the assessee was based on a bonafide and justified grounds. We are also of a strong conviction that as the issue pertaining to coal cost rate Bhusaval was never discussed in the assessment order, therefore, the said fact also supports the claim of the assessee that no penalty u/s 271(1)(c) could have been validly levied in its hands in respect of the said issue. Also, we find that the assessee in the course of the penalty proceedings before the A.O, and also in the course of the appellate proceedings before the CIT(A) had satisfactorily explained that the coal cost freight issue-Bhusaval of ₹ 16,31,85,000/- was an expense allowable u/s 37(1), which for the said reason was claimed as a deduction in its revised return of income on the basis of the audit report - no infirmity in the order of the CIT(A) wherein he had rightly vacated the penalty imposed by the A.O u/s 271(1)(c), we uphold the same. - Decided against revenue
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2019 (8) TMI 839
Anonymous donations u/s 115BBC - assessment of trust - whether the donations received by the assessee under the head Yogeshwar Krishi are in the nature of anonymous donations, or not? - HELD THAT:- We find that as the facts and the issue involved in the present case remains the same as were there before the Tribunal in the assesses own case for A.Y. 2011-12 [ 2017 (4) TMI 1147 - ITAT MUMBAI ] wherein held the assessee in the instant case could not provide addresses, father s name and PAN of the donors and the assessee is also not a religious trust to be covered under exception. The assessee has come forward with a request that if an opportunity is given to the assessee, the assessee can produce the donors before the AO as directed by the AO. It is also submitted that PAN and addresses of all the donors for verification by the A.O. will also be furnished for verification by the AO. Keeping in view the provisions of Section 115BBC and in the interest of justice and fair play, we are of considered view that this matter needs to be set aside and restored to the file of the A.O for necessary enquiry and verification of the said donations so received by the assessee as to genuineness and also for verifying compliance of the relevant section 115BBC. The onus as well burden of proof is entirely on the assessee to provide to the AO all relevant details as contemplated under section 115BBC to the satisfaction of the AO as to compliance of Section 115BBC and as to genuineness of the said donation. The assessee is directed to furnish PAN, addresses and all other relevant details of all the said donors before the AO to satisfy mandate of Section 115BBC - Appeal of assessee is allowed for statistical purposes
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2019 (8) TMI 838
Penalty u/s 271AAA r.w.s 274 - specify and substantiate the manner in which undisclosed income was earned - undisclosed income was declared in his statement recorded u/s 132(4) during the course of the search proceedings - HELD THAT:- As the assessee had failed to specify and also substantiate the manner in which the undisclosed income of ₹ 1 crore that was admitted in his statement recorded under sub-section (4) of Sec.132, was derived by him, therefore, the conditions envisaged in clause (i) and clause (ii) of sub-section (2) of Sec.271AAA, had not been satisfied. General statement of the assessee that as he was mainly dealing in land, therefore, the cash balance available with him was generated due to various purchase and sale transactions can by no means be comprehended to have satisfied the aforesaid statutory requirement contemplated in sub-section (2) of Sec. 271AAA. Accordingly, the affidavit , dated 22.01.2015 filed by the assessee merely making a mention of the aforesaid facts would also not come to the rescue of the assessee insofar satisfaction of the conditions envisaged in clause (i) and clause (ii) of sub-section (2) of Sec.271AAA is concerned. Even in the return of income filed by the assessee the undisclosed income of ₹ 1 crore that was declared by him in his statement recorded u/s 132(4) had been merely put under the head business income , which also does neither specify nor substantiates the manner in which the undisclosed income that was declared in his statement recorded under Sec.132(4) , was derived by him. Accordingly assessee had failed to both specify and substantiate the manner in which the undisclosed income of ₹ 1 crore declared in his statement recorded u/s 132(4) was derived by him, therefore, the CIT(A) vide his order dated 16.10.2017 had rightly upheld the penalty u/s 271AAA - Decided against assessee.
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2019 (8) TMI 837
Taxability of withdrawals from private discretionary trust as income in hands of beneficiary and settlor - differentiating between the trust corpus and accretion of income - explanation of source of funds in the hands of the trust - assessment of trust - Penalty u/s 271(1)(c) - HELD THAT:- No doubt, Dr A T Patel has made a statement, during the course of search operation recorded on 29.9.2011- and more specifically in response to question no. 3, that during seven years of his and his wife s employment in the United Kingdom, the assessee had accumulated funds, on which taxes were duly paid in the UK, which were parked in a bank account in British Virgin Islands. It was also explained that these monies were kept in BVI bank account since, in accordance with the legal requirements then in existence, they could not have kept these monies in the UK. Once this position is found to be correct, the taxation will no doubt be confined to the accretion part but that stage has not yet come. As for the impact of Pratibha Pankaj Patel [ 2018 (12) TMI 272 - ITAT AHMEDABAD ] on the facts of this case, that was a case in which the assessee before us was only a beneficiary and not the settlor. So far as the beneficiary is concerned, once the source of funds received by beneficiary is explained, taxation could possibly be confined only to the income component, and but that would not essentially hold good for the settlor as well. He has to explain the investments, which were not accounted for in his books of accounts or disclosed to the income tax authorities at any stage earlier, detected during the search operations. There is no escape from the onus of explaining the investments made by the assessee. The trust investments were made much earlier but since these investments were unaccounted and undisclosed, the assessee has to explain the source of these investments now. When the investment in trust itself stands unexplained and uncorroborated, the legal position with respect to taxability of such trust funds is altogether at a different level. As we so observe, we are conscious of the fact that the evidence of trust investments is found in the search proceedings and these investments in the trust were prima facie unaccounted and undisclosed to the tax authorities. Learned representatives fairly agree that the matter can be remitted to the file of the AO for examination de novo on all these aspects, including, but not limited to, in respect of the subsequent taxation of entire trust funds in the hands of the beneficiaries. All aspects remain open.
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2019 (8) TMI 836
Addition u/s 68 - search u/s 132(1) - contradictory stand taken by the assessee - amount received on the occasion of marriage of his brother-in-law s daughter or as commission income - HELD THAT:- the CIT(A) has categorically stated that it is very clear that the figure is relating to marriage . Having accepted that the amount represented surplus collections by way of shagun, etc. on the occasion of marriage, we fail to understand how the same can be treated to be in the nature of income of the assessee. The amounts collected by way of gifts on the occasion of marriage do not partake the character of income. Contention of the Revenue that the addition was warranted on account of the inconsistent stand of the assessee claiming the amount to represent the receipts on the occasion of marriage and subsequently claiming it to be his commission income, does not in our view alter or make any difference to our findings above. The reason being that firstly ,before us, the assessee has accepted that the amount represented the collections from marriage, which is corroborated by the contents of the notings also, therefore, his other stand taken subsequently is irrelevant. Also merely because the assessee is inconsistent in his explanation does not ifso facto and on its own alone lead to the conclusion that a particular noting represents the income of the assessee. There has to be some material on record, more importantly, in the absence of any explanation by the assessee, to form the basis of making the addition. We, therefore, do not find any merit in the arguments of the Revenue. Addition u/s 69 made on the basis of certain figures mentioned on Annexure A-4 - house hold expenses - HELD THAT:- The assessee has attributed the notings in document A-4 to be representing household expenses while the Revenue has treated them as investment. We find that the only reason for the Revenue for treating the same as investment is the statement given by the assessee as reproduced above. But as noted above, the statement does not say that the notings in other diaries represents only the investment made by the assessee. The assessee has stated that they also represents household expenses. Therefore, this interpretation of the Revenue is based on incorrect appreciation of the facts; Moreover even if the said figures are said to represent the investment made by the assessee, the statement itself clearly brings out the source of the investment as being made from the savings of ₹ 20 lacs after the marriage of Chitra. This sum of ₹ 20 lacs, we have held in ground No.1 2 above to be not in the nature of the income of the assessee. Further the source having stood explained, we see no reason for making the addition of the same on the ground of unexplained investment made by the assessee -Vaddition made on account of notings in document A-4 deserves to be deleted. Addition made on notings made in Annexure A-6 - admission of additional evidence in the form of two affidavits of the daughter of the assessee and of the son-in-law of the assessee stating on oath that the bills found during the course of search and forming part of Annexure A-6 denied - HELD THAT:- We are of the view that the assessee has made out a case that he was denied opportunity to file the evidences before the AO.As rightly pointed out by the Ld.Counsel for the assessee the Income tax returns of the daughter and son in law of the assessee were part of record of the Department itself and did not constitute additional evidence at all. The affidavits of the two persons admitting on oath that the bills mentioned in the document found belonged to them was in affirmation of the consistent contention of the assessee in this regard and it has been duly demonstrated that the non filing of the same before the AO was for the reason that adequate opportunity was not given since the two did not stay with the assessee and time for procuring the same was required which was not afforded by the AO who passed the order within 15 days of filing of reply by the assessee explaining the contents of the impugned document. We, therefore, admit the same for adjudication and restore the issue back to the AO to verify the evidences, now filed and decide the issue afresh after considering
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2019 (8) TMI 835
TP adjustment - interest on fixed deposits in bank as income from other sources - AO in the instant case, held that the assessee is developing a property for its use in the business of letting them on hire and is not developing the property for future sale - construction of mall - HELD THAT:- So far as the disallowance of various other expenses debited to the Profit Loss Account is concerned, the DRP held that except marketing research expenditure which is directly related to the project, the other expenses are allowable as business expenditure. The DRP also did not allow the claim of interest on overdraft as business expenditure. It is the submission of the ld. counsel for the assessee that when the A.O./DRP have already held that the assessee has set up its business, therefore, there was no need for having this divergent treatment of the income and expenses. As relying on INDIAN OIL PANIPAT POWER CONSORTIUM LIMITED, NEW DELHI VERSUS ITO [ 2009 (2) TMI 32 - DELHI HIGH COURT] , we hold that the funds raised by the assessee are inextricably linked with setting up of its mall at Bangalore and, therefore, the interest earned by the assessee by parking the said funds temporarily with bank cannot be treated as Income from other sources. Since the income was earned in a period prior to commencement of business, it was in the nature of capital receipt and, therefore, it would go to reduce the capital work-in-progress. We, therefore, accept the above contention of the ld. counsel for the assessee that if the expenditure is capitalized, the income earned on temporary parking of the funds being capital in nature will go to reduce the capital work-in-progress. Allowability of market research expenses and depreciation on leasehold improvements as business expenditure - HELD THAT:- Since, in the preceding paragraphs, we have already held that the interest income should go to reduce the capital work-in-progress where all the expenses are capitalized, therefore, following similar reasoning we hold that the assessee should not have any grievance in treating this expenditure as work-in-progress since it is getting the benefit of reduction to the extent of the interest income. Ground of appeal therefore, dismissed. Claim of expenses on account of interest on overdraft facility - the same also, in our opinion, has to be capitalized and the assessee will get only the benefit of set off to the extent of interest income. - the appeal filed by the assessee is partly allowed
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2019 (8) TMI 834
Legality of assessment passed u/s 144/143(3) - since the assessee has complied with the notices the order u/s 144/143(3) of the Act is not appropriate - the typographical error is curable u/s 292B - HELD THAT:- It is well settled principle of law that mention or application of a wrong provision of law to a given facts of case itself does not make an authority incompetent to deal with the factual situation unless there is no provision which can take care of the jurisdictional fact or the jurisdiction of the authority itself. Here in this case, the AO is vested with the power to assess the assessee s income and mere mention of wrong provisions will not render the assessment order invalid. For this proposition of law we rely on the order of the Hon ble Supreme Court in L. Hazari Mal Kuthiala vs ITO [ 1960 (9) TMI 7 - SUPREME COURT] . Therefore, we find force in ground no. 1 and 2 of the revised grounds of appeal of Revenue and we allow these grounds of appeal of the Revenue. Addition u/s 68 - alleged that subscribers of the share capital lacked financial credibility to make investment of this magnitude - no rely pursuant to notice u/s 133(6) - the directors of the share subscribers did not turn up before AO even after summon - HELD THAT:- In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee cannot be brushed aside by the AO to draw adverse view cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance. Applying the propositions laid down in these case laws to the facts of this case, we are inclined to uphold the order of the Ld. Commissioner of Income Tax (Appeals) To sum up section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. No addition was warranted under section 68 - Decided in favour of assessee.
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2019 (8) TMI 833
Penalty u/s 271(1)(c) - bogus share capital addition - Suppression of the cash receipt - HELD THAT:- As decided in own case [ 2019 (1) TMI 1344 - DELHI HIGH COURT] has upheld the order of the coordinate bench confirming the addition of bogus share capital. In view of this, the assessee has concealed income to the extent of the above sum and penalty has been rightly levied and confirmed by the lower authorities. Suppression of the cash receipt of INR 3,300,000, the above sum was never disclosed by the assessee in the return of income, therefore it is a concealed income of the assessee and penalty has been rightly levied by the lower authorities on the sum. Therefore we confirm the penalty u/s 271 (1) (c) on the above addition of bogus and capital as well as the suppression of the sales receipt of INR 3,300,000. With respect to the 3rd addition the coordinate bench set aside the whole issue back to the file of the learned assessing officer as per para number 26 of the order. As the issue has been set aside to the file of the learned assessing officer for re-examination of the full facts, for the time being we delete the penalty with a direction to the learned assessing officer, to re-examine the issue of penalty after making compliance with the direction of the coordinate bench only. Accordingly, the issue of levy of penalty on the above sum is restored back to the file of the learned AO. Suppressed sales and receipt - HELD THAT:- AO made the above addition which was confirmed by the learned CIT(A). As the above sum was disclosed by the assessee himself before the settlement commission as undisclosed income of the assessee, we do not find any merit in the argument of the learned authorised representative that assessee has not concealed the above income. In view of this the penalty u/s 271 (1) ( c) is confirmed on the above amount and the order of the learned CIT(A) is confirmed. Penalty for disallowance u/s 40 A (3) - HELD THAT:- Out of the above cash sales assessee has incurred expenditure which are in violation of the provisions of section 40A (3). Therefore the addition was made. In the present case the AO made the addition on account of undisclosed sales whereas the learned CIT(A) found that the undisclosed sales has been properly accounted by the assessee in the books of accounts , however out of those undisclosed sales, certain expenditure in Cash were made and on those expenditure the provisions of section 40A (3) was invoked and disallowance was made. Merely because the expenditure are disallowed the assessee does not make himself exposed to the provisions of section 271 (1) (c) for concealment of income. The assessee has disclosed the complete details of that expenditure in its books of accounts. In view of this, the learned assessing officer has wrongly levied penalty for concealing the income. Penalty for advances received against the export of goods - HELD THAT:- The assessee could not give any explanation even before us that why till date no export has been made or the advance received has been refunded back. It is also pertinent to note that the sum was received by the assessee in financial year 2006 and this matter was heard in financial year 2019. The assessee also could not show before us or before the lower authority, any efforts made by the assessee for refunding the above sum. In view of this we have no hesitation in confirming the penalty levied by the learned assessing officer and confirmed by the learned CIT(A) on the above sum. Penalty for deduction of deferred revenue expenditure - HELD THAT:- The expenditure incurred by the assessee could not be established by the assessee before the learned lower authorities that those expenditure have been incurred by the assessee wholly and exclusively for the purposes of the business. However, the lower authorities have not reached to a conclusion that assessee has furnished any inaccurate particulars of the income or has concealed any income on that score. Mere disallowance of the expenditure claimed by the assessee cannot result into concealment of income. In view of this, we reverse the finding of the lower authorities and direct the learned AO to delete the penalty levied on this sum.
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2019 (8) TMI 832
Revision u/s 263 - addition of accumulated profits as deemed dividend u/s 2(22)(e) - HELD THAT:- It is a well settled proposition that a document should be read as a whole in order to understand the intent and purpose of the parties and to arrive at conclusion there-from. The said law is equally applicable to an assessment order. It should be read as a whole to understand as to whether or not the Assessing Officer has applied his mind on the facts before him. On going through the order passed u/s 143(3) we find that the AO after considering the plea of the assessee accepted that the transaction between the assessee and NGEPL was in the course of normal business, arrived at a conclusion that provisions of section 2(22)(e) are applicable only to the extent of funds utilised by the assessee for purchase of car and not for the balance amount. Thus, Assessing Officer has a possible view. We find that the decision relied upon by the assessee is relevant in the present case as the Assessing Officer has very much applied his mind on the issue and arrived at conclusion. Further, the Hon'ble Jurisdictional High Court in the case of CIT vs. Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] held that there must be material before the Commissioner to satisfy himself that two requisites provided u/s. 263 are present, otherwise power cannot be exercised at the whims and caprice of the Commissioner. It is not permitted u/s 263 of the Act to substitute the judgment of the Commissioner for that of Assessing Officer unless the conditions stipulated therein are satisfied. The order of the Assessing Officer cannot be termed as erroneous simply because Commissioner does not agree with the conclusion drawn by the Assessing Officer. In another case from Hon'ble Jurisdictional High Court in CIT vs. Development Credit Bank Limited [ 2010 (2) TMI 161 - BOMBAY HIGH COURT] , in a similar situation, wherein assessment order was passed after considering all details called for and furnished by the assesses, the Commissioner invoked revisional jurisdiction on the ground that enquiry was not conducted; and the Hon'ble High Court held that the Commissioner was not justified in invoking the revisional jurisdiction. In view of the above discussion, the impugned order of the Commissioner is untenable in the eyes of law. Resultantly, we set aside the order of the Commissioner and restore the assessment order qua the issue relating to the enhancement of addition on account of deemed dividend u/s 2(22)(e) - Decided in favour of assessee.
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2019 (8) TMI 831
Assessment framed u/s 153A r.w.s 143(3) - assessee contended that there was no search in his premises - HELD THAT:- As per the noting in the assessment order, we find that a search and seizure operation u/s 132 was conducted on 23.07.2015. The assessee has challenged the assumption of jurisdiction on the ground that its premises were never searched and, therefore, assessment framed u/s 153A is bad in law. The challenge of jurisdiction was dismissed by the AO as well as by the CIT(A). We find that on identical set of facts, the assessee was assessed for A.Y 2012-13 and in that year, the assessee has not challenged the jurisdiction of the AO u/s 153A for want of search at its premises. Once the assessee has accepted the search and seizure operation and consequent assessment orders in earlier years, the assessee cannot challenge the same for the year under consideration. This ground is, accordingly, dismissed. Disallowance of interest u/s 36(1)(iii) - advance to subsidiary companies for the business exigencies - HELD THAT:- Non-current investments, which were a appearing in A.Y 2014-15 at ₹ 9.53 crores came down to ₹ 6.62 crores in A.Y 2015-16 and ₹ 3.91 crores in A.Y 2016-17. This, in addition to interest free funds available with the assessee in the form of share capital and reserves and surplus is sufficient for making interest free funds in subsidiary companies. In our considered opinion, looking after the business exigencies of the subsidiary companies is also a primary responsibility of the holding company. In the case of Hero Cycles [ 2015 (11) TMI 1314 - SUPREME COURT] has held that advance given to a subsidiary company on business expediency establishes the nexus between expenditure and the purpose of business and, therefore, interest paid on borrowed money cannot be disallowed. The Hon'ble Supreme Court in the case of Reliance Industries [ 2019 (1) TMI 757 - SUPREME COURT ] has held that where interest free funds were available to the assessee which were sufficient to meet the investments in subsidiary companies, interest u/s 36(1)(iii) cannot be disallowed. There is no finding by the AO that the subsidiary companies have not utilised the borrowed money for their respective businesses. In fact, in earlier A.Ys, i.e. A.Y 2013-14, assessment was framed u/s 153A r.w.s 143(3) and no such disallowance was made by the AO. Considering the facts in totality and also the past history of the assessee, we set aside the findings of the CIT(A) and direct the AO to delete the disallowance of interest u/s 36(1)(iii). This ground raised by the assessee in both the appeals is allowed.
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2019 (8) TMI 830
Assessment u/s 144 - estimation of income - trading addition by application of N.P rate @12% on contract receipts subsequently reduced by CIT(A) @8% - HELD THAT:- Keeping in mind the judicial guideline available on issue, that after rejection of accounts, the income of the assessee is to be estimated on some reasonable basis for which comparable case and history of the assessee can be taken as a guide. Keeping in mind the entire factual matrix of the case and finding no evidence or reason for application of N.P rate of 8% we consider it fair, reasonable and logical to apply an average rate of two years referred above i.e (A.Y 2009-10 N.P rate of 1.88% and A.Y 2010-11 N.P rate of 5.25%) which gives N.P rate of 3.50% as against 2.04% shown by the assessee on turnover of ₹ 14,35,07,199/-. See SMT. ARCHANA DUTTA, PROP. M/S DUTTA DUTTA CONSTRUCTION, CO. VERSUS ACIT, CIRCLE-3, MATHURA [ 2018 (5) TMI 954 - ITAT AGRA] after due consideration of past history average N.P rate was arrived and applied by the Division Bench. In the referred case, material facts have been found to be same, as assessee therein was also from Mathura and the Assessing officer being the same in person, impugned order was also on same lines and so is the Assessment Year i.e. A.Y. 2011-12 - Decided partly in favour of assessee. Addition u/s 68 - AO has made the addition on account of his finding that M/s Easyway Solutions (P) Limited has no capacity and creditworthiness to advance sum to the assessee and the same is unexplained cash credit assessable in the hands of the assessee u/s 68 - HELD THAT:- The assessee has thus discharged his onus in the matter. None of the evidence furnished by the assessee has been found to be nongenuine and the evidence has been discarded on the basis of conjectures and hypothesis only. Nothing prevented the authorities to go beyond the transaction and look into the affairs. The assessee in fact made request both at assessment stage as well as appellate stage for examination of the party, but his request was not acceded to without assigning any reason, much less for valid and convincing reason. The assessee could not be punished merely for the reason that advance was received in cash whereas he could do so under the law, prevailing at that time and therefore, the transaction was fully in accordance with the law. The transaction was duly disclosed in the Audited Balance Sheet. In the totality of facts and in the circumstances of the case we are of the view that assessee has sufficiently discharged the burden which lay upon it in terms of section 68 and no evidence has been brought on records to prove that the amount represents undisclosed money of the assessee. - Decided in favour of assessee.
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Corporate Laws
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2019 (8) TMI 829
Dispensation of meetings of Unsecured Creditors of Appellant No. 4 and Shareholders and Unsecured Creditors of Appellant No. 5 - Section 421 of the Companies Act, 2013 - HELD THAT:- It is well settled that a Coordinate Bench is bound to follow the law enunciated by another Coordinate Bench and if it feels that the earlier view requires reconsideration, it may refer the matter to a larger bench for reconsideration. Following of the judicial precedent and observing the judicial view propounded by a Coordinate Bench in compliance is a matter of judicial discipline and the only course open to a Coordinate Bench of equal strength taking a different view is to refer the matter to a larger Bench. This is the law of the land declared by the Hon ble Apex Court and has to be observed and adhered to strictly. The impugned order falling within the purview of per incuriam cannot be supported. The Tribunal should have applied its mind in the light of judicial precedents brought to its notice by way of an affidavit, and in the event of the views expressed by the Coordinate or Larger Benches being squarely applicable, followed the same. Such application of mind being abysmally absent, the impugned order is unsustainable and has to be set aside to the extent it relates to directions for convening of the meetings of Unsecured Creditors of Appellant No. 4 and the meetings of the Equity Shareholders, Secured and Unsecured Creditors of Appellant No.5. The matter is remanded to the Tribunal for fresh consideration of the first joint motion application preferred by the Applicants/Appellants having regard to the settled position of law and the views and precedents of Coordinate or Larger Benches of the Tribunal - Appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2019 (8) TMI 828
Approval of Resolution plan - feasibility and viability of the resolution plan - Appellants also earlier raised the question of ineligibility of the resolution applicant , which was not accepted by this Appellate Tribunal and the appeals preferred by the two Appellant Banks were dismissed as withdrawn without any liberty to raise such issue again before this Appellate Tribunal - HELD THAT:- As the Committee of Creditors , by majority voting share of 78.50%, has approved the plan after taking into consideration the techno economic report relating to viability and feasibility of the resolution plan and viability of the Corporate Debtor , this Appellate Tribunal cannot sit in appeal in absence of any discrimination or unequal treatment of similarly situated Financial Creditors or Operational Creditors . Appeal has no merits - appeal dismissed.
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Service Tax
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2019 (8) TMI 827
Recovery of service tax - liability of sub-contractor to pay service tax - case of appellant is that main contractor has paid service tax on entire quantum of service including services rendered by subcontractor - Circular dated 23.08.2007 issued by CBEC - HELD THAT:- The issue decided in the case of SAI CONSULTING ENGINEERS PVT. LTD. VERSUS C.C.E. S. TAX, AHMEDABAD [ 2018 (2) TMI 230 - CESTAT AHMEDABAD ] where it was held that if the main contractor has paid the service tax on the entire contract value which also include the value of the contract as given to sub-contractor, there is no necessity to pay the service tax by the sub-contractor - appeal allowed - decided in favor of appellant.
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2019 (8) TMI 826
Levy of service tax - Erection, Commissioning and Installation Service - job-work also done for principal manufacturer - amount earned for job-work was treated as consideration for providing Erection, Commissioning and Installation Service - HELD THAT:- The appellants were engaged in the manufacture of engineering goods and they were receiving job for job work on Central Excise Job work Challans and after the job was done the manufactured goods were returned to the principal manufacturer on the basis of said job work challan and whenever the jobs were so heavy that the job cannot be sent to the manufacturing unit, the appellant used to complete the job at site. In the said statement Proprietor of the appellant has clearly mentioned that since the manufacturing activity was being done by the appellant for principal when the inputs were received by the appellant on job-work challan, there was no question of payment of excise duty by the appellant. When such information was available with revenue that the appellant is doing job work on job work challan in their factory, to treat entire transaction to be consideration for providing Erection, Commissioning Installation Service is not sustainable. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (8) TMI 825
Refund of CENVAT credit - Period of limitation for second refund application where the first application is within prescribed period of limitation - period between October 2010 and March 2012 - relevant date - HELD THAT:- Refund applications have been rejected only by taking into account relevant date within the meaning of clause (ec) of explanation B to Section 11B of CE Act holding that the refund applications have not been made within one year from the relevant date - In the instant case, in the light of Hon'ble Division Bench Judgment i.e.,case of COMMISSIONER OF CUSTOMS VERSUS M/S. SPIC LTD. [ 2014 (12) TMI 1121 - MADRAS HIGH COURT] that second refund application is not necessary this basis itself pales into insignificance. To be noted, SPIC judgment arises under Customs Act, 1962, but the principle governing refund nonetheless is the same. This Court is convinced that the impugned orders are liable to be set aside holding that the refund applications of the writ petitioner claiming CENVAT credit refund cannot be rejected on the ground that it is beyond one year from the relevant date - petition allowed.
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CST, VAT & Sales Tax
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2019 (8) TMI 824
Deemed assessment - Section 22(2) of TNVAT Act - defects in the monthly returns - Form X - filing of appeal in prescribed form u/s Section 51(2) of TNVAT Act - HELD THAT:- A perusal of the prescribed form reveals that an appellant has to set out the grounds of appeal. It is submitted that the only ground of appeal that can be pointed out is that the respondent has not given reasons as to why, the objections/reply of the writ petitioner dealer has not been accepted. It is pointed out that grounds can be raised only if the respondent articulates in the order reasons for not accepting the reply/objections of the writ petitioner. It follows as a natural sequitur that if this is the only ground raised before the appellate authority, the appellate authority will also be left with the inevitable option/Hobson's choice of remitting the matter back to the respondent with a direction to redo the revised assessment adverting to the writ petitioner's objections and setting out the reasons as to how and why the reply/objections of the writ petitioner are not accepted. This would only delay the entire process qua revised assessment. The impugned orders are set aside on the sole ground that it does not advert to the objections and give reasons for not accepting the writ petitioner's reply to the revisional notice. In other words, it is made clear that this Court is not expressing any view or opinion on the merits of the matters - respondent shall pass the revised assessment orders afresh adverting to writ petitioner's reply/objections to revisional notices and giving reasons for not accepting the reply/objections of the writ petitioner - petition allowed by way of remand.
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2019 (8) TMI 823
Time Limitation - Sections 27(1)(a) and 27(1)(b) of TNVAT Act - TNVAT Act, 2006 - relevant date for inspection and giving of reports - Best Judgement assessment u/s 22(2) of TNVAT Act - whether inspection by the Enforcement Wing Official on 16.12.2016 and the report given by the Enforcement Wing Official on 16.04.2018 can be construed as 'determination' by adopting best judgment method within the meaning of Section 27(1)(a) of TNVAT Act? HELD THAT:- The learned Revenue/State Counsel does not dispute that if revisional notice and date of impugned orders i.e., 27.09.2018 and 30.05.2019 are taken, the impugned orders are barred by six years. Saying so, learned SGP wanted this Court to construe dates of inspection/report of/given by Enforcement Wing as reckoning dates to arrive at dates on which limitation stood arrested. Interpretation of statute - scope of term 'determine' occurring in Section 27(1)(a) of TNVAT Act - HELD THAT:- Taking the date of revisional notice as the reckoning date, it is clearly after six years from the date of assessment had elapsed. This Court hastens to add that, to test with exactitude, the date of service of revisional notice on writ petitioner is relevant. In cases on hand the exact date of service has not been set out in the case file, but that pales into insignificance as the very date of revisional notice is beyond the period of limitation. Obviously service of a notice on the noticee cannot be prior to the date of the notice itself. This Court is of the considered view that reckoning date can at best be only the date of revisional notice i.e., 27.09.2018. This Court has no difficulty in coming to the conclusion that impugned assessment orders which are admittedly under Section 27(1)(a) of TNVAT Act, are barred by limitation as contained in the very provision under which the revised assessments have been made i.e., Section 27(1)(a) of TNVAT Act, as the same have been determined after six years have elapsed from the date of assessment - To be noted, limitation is based on public law principle and it is based on the public law principle that one cannot be kept guessing in eternity. This public law principle also enures in favour of the interpretation and the considered view this Court has taken. Petition allowed.
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Indian Laws
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2019 (8) TMI 822
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - existence of loan or not - section 138 of NI Act - rebuttable presumption - acquittal of accused - HELD THAT:- In the instant case, the accused has succeeded in discharging her burden to rebut the presumption under Section 139 of the Act by leading evidence and also by relying upon the improbabilities in the case set up by the complainant. The evidence of DW1 proves that she had sold 10 cents of property to the father of the complainant in the year 2002 and at the time of the sale, there was liability towards the bank which was a charge on that property. PW1 has admitted on cross examination that his father had purchased 10 cents of property from the mother of the accused. DW1 has given evidence regarding the sale of 10 cents of property by her to the father of the complainant and the payment of the amount due to the bank by the father of the complainant. There is no cross examination of DW1 on these aspects. The complainant has no case that the amount paid by his father to discharge the liability towards the bank was adjusted in the sale consideration - In such circumstances, the evidence of DW1 that she had given Ext.P1 cheque to the father of the complainant as security for the amount due to him, is reliable and trustworthy. It is significant that there is no averment in the complaint that the accused had borrowed ₹ 1,50,000/- from the complainant on 15.02.2004 or on any other date. The averment in the complaint is only that the accused owed ₹ 1,50,000/- to the complainant. In the particular circumstances of the present case, absence of averment in the complaint on that aspect, is fatal to the case of the complainant - In view of the presumption envisaged under Section 139 of the Act, absence of averment in the complaint regarding any subsisting liability, will not affect the maintainability of the complaint. But, it may help the accused to prove that the plea raised by him is probable and that the case set up by the complainant in evidence is highly improbable. Thus, the accused had discharged the onus of proving that Ext.P1 cheque was not received from her by the complainant in discharge of a debt or liability. Under the circumstances, the onus or burden had shifted on the complainant. The complainant did not produce any material to prove that he had, in fact, given ₹ 1,50,000/- to the accused as a loan - thus, the complainant had failed to establish his case. Appeal dismissed.
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2019 (8) TMI 821
Levy of Vehicle Tax - Vehicle registered in different state - Concurrent powers of center and state - Vires of Entries 57 and 35 of List II and III of Seventh Schedule of Constitution of India, the Motor Vehicles Act, 1988, The Central Motor Vehicles Rules, 1989, the Kerala Motor Vehicles Taxation Act, 1976 and the Kerala Motor Vehicles Rules - vehicle tax allegedly due and payable under Act 1976 is not paid or remitted to State of Kerala - case of the petitioner is that the petitioner is entitled or free to register the vehicle according to his choice, subject however to complying with the requirements of Section 40 of Act 1988. HELD THAT:- The State legislature firstly is competent to legislate on Motor Vehicle Taxation and secondly authorised by Entry 16 to administer roadways etc. In the process, the State has to not only lay the roads but maintain the roads for general use and public good. It is this expenditure, to the extent the State decides, is realised through vehicle tax. In other words, Section 3 as a whole deals with regulatory or compensatory collection of amount by way of tax from the vehicles 'used' or 'kept for use'. The levy of vehicle tax being regulatory and compensatory, it is left to the wisdom of State Legislature to decide the taxes payable on vehicles. The petitioners have paid tax under Pondicherry Motor Vehicles Act, 1967 - the challenge to Section 3(6) as laid by petitioners could not be taken the logical conclusion. The registration fee or registration certificate cannot be understood as exonerating an incidence which as a matter of fact arises within the territorial State limits of a State in this case, State of Kerala under Entry 57 of List II read with Act 1976. As on date vehicle tax is left to the discretion of State Legislature and State Legislature is authorised to legislate on matters relating to vehicles used or kept for use in Kerala. Motor Vehicle Taxation Act, 1976 permits plying vehicles without the incidence of tax for a period of thirty days from the date of entry into State. The vehicle, if is kept in the State of Kerala beyond thirty days the incidence under Section 3(6) read with Schedule and Annexure III is attracted and vehicle tax payable under Section 3(6) of Act 1976. The registration of a non-transport vehicle and payment of registration fee under Act 1988 or payment of motor vehicle tax under a State legislature continues to be valid so long as the vehicle is kept and used in the State in which it is registered. These vehicles if enter State of Kerala and stay beyond the period stipulated by the State enactment, the vehicle is required to pay vehicle tax as per Section 3(6) read with Annexure III of Schedule of Act 1976. The impugned orders calling upon the petitioners to register the subject vehicles in State of Kerala and pay life tax are set aside as illegal, arbitrary and violative of principles of natural justice, the matters are restored to the file of respective Regional Transport Officer/ respondents for consideration and disposal by keeping in view the principles stated supra. Petition disposed off.
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