TMI Tax Updates - e-Newsletter
August 27, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Increase in the salary payable to partner by supplementary deed, was not singed by any witness, is not valid to allow deduction u/s 40(b)

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• Pre-pay penalty towards foreclosure of credit facility (loan) cannot be held as interest, penalty, liquidated damage - liable to service tax

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Articles

1. Are you nursing a grudge against anyone ? Be aware.

   By: KASTURI SETHI

2. INCREASE IN BASE PRICE ON GST RATE REDUCTION – CASE FOR PROFITEERING

   By: Dr. Sanjiv Agarwal

News

1. Trade War: Is it a prelude to deglobalisation? (Shri B.P Kanungo, Deputy Governor - August 10, 2019 - Forex Association of India Conference, Singapore)

2. SYNTHESISED TEXT OF THE MLI AND THE CONVENTION BETWEEN THE GOVERNMENT OF JAPAN AND INDIA

3. Government withdraws enhanced surcharge on tax payable on transfer of certain assets

Notifications

GST - States

1. 76/GST-2 - dated 22-8-2019 - Haryana SGST

Notification to extend the due date for filing of FORM GSTR-3B for the month of July, 2019 under the HGST Act, 2017

2. 75/GST-2 - dated 5-8-2019 - Haryana SGST

Notification to extend the last date for furnishing FORM GST CMP-08 for the quarter April -June 2019 till 31.08.2019 under the HGST Act, 2017

3. 74/GST-2. - dated 5-8-2019 - Haryana SGST

Amendment in notification no. 47/ST-2, dated 30.06.2017 under the HGST Act, 2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/CFD/DIL2/CIR/P/2019/94 - dated 19-8-2019

Non-compliance with certain provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”)

Highlights / Catch Notes

GST

• Party Faces Interest Demand for 7-Month GST Delay; Technical Body to Verify Input Tax Credit Glitch.

  Case-Laws - HC : Demand of Interest - delayed payment of GST for seven months - difficulty in utilizing the Input Tax credit due to technical glitch - it would be appropriate to leave it to the technical body concerned to decide whether there was a technical glitch at all.
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• C&AG Service Tax Audit Stayed: Rule 5A of Service Tax Rules Not Preserved Under CGST Act Section 174(2.

  Case-Laws - HC : Service Tax audit(C&AG Audit) of a private agency - as per Section 174(2) of CGST Act, there was no saving of Rule 5A of STR in such manner that fresh proceedings for audit could be initiated in exercise of powers under the said Rule - order for C&AG Audit was stayed and notice issued
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• Rajasthan-based registrant denied ITC for Central Tax on Haryana hotel services; supply and supplier both in Haryana.

  Case-Laws - AAAR : Input tax credit to a person registered in Rajasthan - Central Tax paid in Haryana(use of Hotel) - ITC of the Central tax charged from the Appellant in Haryana is not available to them as in this case both the location of the supplier and place of supply of the services are in the State of Haryana
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• Solar Energy Water Pumping Systems Classified as Goods and Services with 8.9% GST Rate per Entry No. 234 and 38.

  Case-Laws - AAAR : Classification of supply - GST rate - the activities of supply, design, installation, commissioning and testing of solar energy based water pumping systems, whose time of supply falls after 31.12.2018, are both supply of Goods and supply of Services in terms of entry No. 234, r.w. entry No. 38 ibid with rate of GST as prescribed under these entries - Effective rate of GST - 8.9%
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Income Tax

• Eligibility for Tax Benefits u/s 10AA: Transferred Employees Must Be Under 50% of Total Workforce for Deduction.

  Case-Laws - AT : Deduction u/s 10AA - splitting up and / or re-constructing of existing business - where an undertaking is established by transfer of employees from existing undertaking upto 50% of employee strength, then it cannot be said the case of splitting up or reconstruction of existing business.
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• Resolution to Raise Partner Pay Invalid Without Witness Signature, Lacks Legal Merit, Claims Dismissed.

  Case-Laws - AT : Remuneration to partners - increase / change the quantum of the salary/remuneration by a separate agreement or supplementary deed - validity of resolution increasing the salary not singed by any witness - No merit in law in the assessee’s claim.
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• Income Tax Act Section 263 Order Quashed for Exceeding Statutory Time Limit; Nine-Month Delay Deemed Unreasonable.

  Case-Laws - AT : Revision u/s 263 - limitation provide for passing of order - the delay involved in service was more than 9 months which is unreasonable and the department could not explain the reasons for such long delay in serving the order to the assessee as well as the AO - the order was passed beyond the time limit allowed under the Act, hence, the order passed u/s 263 was unsustainable and quashed
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• Depreciation Disallowed: Log Book Needed to Prove Exclusive Business Use of Vehicle Lacking Evidence.

  Case-Laws - AT : Ad-hock disallowance of depreciation - non maintenance of log book - it was required to demonstrate that the vehicle has been used wholly and exclusively for the business purposes and in the absence of such evidence, it cannot be inferred that the vehicle was not used for personal use - disallowance upheld
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• Assessment Order u/s 143(3) Interpreted as "Order Giving Rise to Demand" in Rule 68B Recovery Proceedings.

  Case-Laws - HC : Recovery proceedings - Sale of the attached property - the phrase “order giving rise to a demand” in Rule 68B to the Second Schedule of the Act should be read as the assessment order u/s 143(3) and not merely an acknowledgment or an intimation u/s 143(1) - hence order of attachment is within period of limitation
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• Delay in Dispatching ITAT Order to CIT Cannot Circumvent Penalty Limitation Period u/s 271(1)(c.

  Case-Laws - HC : Penalty u/s 271(1) (c) - limitation - service to CIT (Judicial) - the mandatory period of limitation u/s 275(1)(a) cannot be sought to be defeated by delaying the dispatch of the relevant order of the ITAT to the concerned ‘jurisdictional’ CIT - what is relevant is when the CIT(Judicial) representing the Department before the ITAT received the order - the impugned penalty orders are clearly without jurisdiction
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• Interest Payments to Trust Not Disallowed u/s 40(a)(ia) Due to Trust's Income Filing.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) - interest payment made to trust, who claimed exemption u/s 10(23C)(vi) - once the recipient had filed the returns of income by including the interest received from the assessee, it satisfied the requirement of not to treat the assessee in default for the purpose of section 201(1) therefore, there is no case for making the addition
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• Penalty u/s 271(1)(c) Not Imposed Due to Non-Deliberate Non-Disclosure of Interest Income by Taxpayer.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - non-disclosure of interest income was not deliberate rather banker of the assessee reported it belatedly - when the income was duly offered in the next year even before the initiation of assessment proceedings - no penalty
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• Interest on Loans Not Added if Year-End Profit Shows Commercial Intent, Prevents Fund Diversion Concerns.

  Case-Laws - AT : Addition of interest on paid on loan - diversion of fund - if the business concern show profit at the end of the year, it is an added feature which proves that the transactions entered by the concern are for commercial expediency and in the regular course of business - no addition
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• Considering Case Merits in Delay Condonation: A Supportive, Not Sole, Factor for Justification.

  Case-Laws - HC : Condonation of delay - merit of the case - It is not completely forbidden to have a cursory look and have a birds eye view qua merits of the matter while testing whether delay in a given case deserves to be condoned - this cannot be the sole determinant but one of the buttressing features in search of an answer to the question as to whether delay is condonable/can be condoned
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• No Hearing Required Before IDS Submission Voided for Misrepresentation u/s 193 of Finance Act 2016.

  Case-Laws - HC : Validity of Declaration made under Income Declaration Scheme, 2016 (‘IDS’) - opportunity of hearing - misrepresentation or suppression of facts - there is no provision as such in the IDS to afford the declarant a hearing prior to passing an order holding such declaration to be void for being in contravention of Section 193 of the FA, 2016
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• High Court Upholds CIT and ITAT's Decision: Disallowance Based on Third-Party Info Without Cross-Examination Dismissed.

  Case-Laws - SC : Disallowance based on third party information gathered by Investigation Wing of the Department - AO denied opportunity of cross examination - High Court affirmed the order of the CIT and ITAT deleting the disallowance - on merits disallowance was based solely on third party information, which was not subjected to any further scrutiny - Petitions are dismissed
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• Section 68 Loan Transaction Ruled as Accommodation Entry; No Question of Law u/s 260A.

  Case-Laws - HC : Addition u/s 68 - alleged that loan transaction was accommodation entry - Two authorities and the Tribunal have evaluated each piece of evidence to conclude that this transaction was not a genuine loan transaction - merely because another view by re-appreciating the evidence is possible, it cannot give rise to a question of law as envisaged u/s 260A
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• Income Tax Assessment Reopened u/s 147 Deemed Legally Flawed Due to Non-Compliance with Statutory Requirements.

  Case-Laws - HC : Reopening of assessment u/s 147 - reply to the audit objections - in fact AO applied his mind to the audit party objection and formed a clear opinion that there is no justification for reopening of the assessment and yet it is only on the insistence of the Addl. CIT Audit that the AO changed his opinion and decided to reopen the assessment - the reopening of the assessment was vitiated in law as it did not satisfy the legal requirement of Section 147
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• Assessing Officer's Evidence Clears Assessee; No Section 69A Addition for Unexplained Money, Says Tribunal and Commissioner.

  Case-Laws - HC : Addition u/s 69A - unexplained money - the evidence placed before the AO clearly indicated that Mr. Chaturvedi confirmed that the draft was given by him to the Assessee and the Assessee had not benefited in any way from any of the above transactions - the CIT (A) and the ITAT was right that the addition to the income of the Assessee was not warranted
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• Section 234E: No Late Filing Fee for TDS Statements Submitted Before June 1, 2015.

  Case-Laws - AT : Late filing fee u/s 234E - if the TDS statements which have been filed earlier to 01.06.2015 then no fee is leviable u/s 234E
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Customs

• Claiming Customs Duty Refund: Section 27 Requires Re-assessment Order, Adheres to Time Limits, and Follows Chapter 14 Guidelines.

  Case-Laws - AT : Refund claim - requirement of re-assessment order of bill of entry - time limitation - As per Chapter 14 of the Customs Manual, Section 27 of the Customs Act, 1962 deals with such refund of duty and interest and therefore, any application filed will have to be processed and disposed of in the manner laid down u/s 27 read with the procedure under the Customs Manual.
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• ARDF report on betel nuts origin unreliable; affects smuggling and seizure case under customs law.

  Case-Laws - HC : Smuggling - Seizure of goods - place of origin of Betel Nuts - The report of the ARDF has been held to be not reliable in as much as it could not be shown with any degree of certainty that the origin of the betel nuts could be established by testing in a laboratory
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• Redemption Fine Cannot Be Upheld if Confiscation Is Unchallenged; Only Applicable as Alternative to Confiscation.

  Case-Laws - AT : Liability of redemption fine when goods are confiscated - redemption fine, is an option in lieu of confiscation and hence, both cannot run simultaneously, which means redemption fine is leviable only as an alternative to confiscation - the confiscation remains unchallenged, the importer accepts the order of confiscation then the redemption fine imposed and upheld by the FAA cannot sustain
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• Duty Exemption Doesn't Waive Compliance with Customs Act Sections 34 & 35; Importers Must Meet All Legal Obligations.

  Case-Laws - HC : Compliance of obligation u/s 34 and 35 of the Customs Act - exempt or nil rate of duty - importing non dutiable goods does not give an importer a licence to violate or flout laws under the Customs Act or grant automatic exemption from complying statutory obligation u/s 34 & 35 or any other provisions of the Customs Act, and penal consequence in violation thereof
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Corporate Law

• NSEL Platform Users Traded Commodities, Not Investments; NSEL Not a Financial Establishment Under Maharashtra Act 1999.

  Case-Laws - HC : The clients trading on the NSEL platform did not invest with the NSEL in form of Fixed Deposits, equity or debentures of NSEL but they traded commodities on the platform of NSEL. - NSEL is not an Financial Establishment within the purview of the Maharashtra Protection of Interests of Depositors in Financial Establishments Act, 1999.
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IBC

• Insolvency Application u/s 7 Not Rejected Due to Pending Debt Recovery Tribunal Case if Debt and Default Exist.

  Case-Laws - AT : Application u/s 7 of the I&B Code - Mere pendency of the case before the DRT for adjudicating of such disputed amount cannot be a ground to reject the application u/s 7 of the I&B Code, if the Adjudicating Authority is satisfied that there is a ‘debt’ and ‘default’ and the application is complete.
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PMLA

• Pre-arrest bail denied in INX Media case due to serious money laundering charges under PMLA.

  Case-Laws - HC : Offence under PMLA - pre-arrest bail seeked in the case of M/s INX Media Pvt. Ltd. - I have pondered over this matter for long and after weighing the pros and cons, as of considered view that the gravity of the offence committed in the instant case amply justifies denial of pre-arrest bail to petitioner.
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SEBI

• Company Violates SEBI 2018 Regulations on Capital Issuance and Disclosure, Risking Market Transparency and Investor Protection.

  Circulars : Non-compliance with certain provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”)
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Service Tax

• Commissioner Wrongly Applied Extended Limitation Due to Appellant's Genuine Belief on Service Tax Collection and Deposit.

  Case-Laws - AT : Extended period of limitation - the appellant could have been under a bona fide belief that neither service tax was required to be collected from the main contractor nor was it required to be deposited with the Government - Such being the position, the Commissioner fell in error in invoking the extended period of limitation.
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• Pre-payment penalties in foreclosures: Are they interest? Examining valuation and tax implications under service tax rules.

  Case-Laws - AT : Valuation - nature of pre-pay penalty towards foreclosure of credit facility (loan) - in the nature of interest or not - The charges which were collected towards the goods not actually lifted by the buyer were held not to be added to the value of the goods that were actually lifted by the buyer - In the case of services, which are intangible in nature the same principle cannot apply.
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• Commissioner Overlooked Appellant's Submissions on Service Tax; Case Sent Back for More Review.

  Case-Laws - AT : Quantification of service tax liability - commissioner has not considered the submissions, accounting practices of the appellant and the agreements in totality - Matter remanded back.
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• Appellants Paid Per Meter Packed, Not Manpower Supply: Contract Details Clarified.

  Case-Laws - AT : Manpower Recruitment or Supply Agency Service or not - The appellants get paid if they pack the meters as per the specifications on per piece basis - There is nothing in the scope of the contract which can remotely suggest that it is a contract for supply of manpower to M/s. L & T.
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• Services Facilitating Sales in India for Foreign Entities Not Classified as Exports Due to Domestic Consumption.

  Case-Laws - AT : Export of services or not - place of consumption of services - the customers of foreign entity are located in India and assessee are receiving the commission in respect of the goods of these foreign entities sold by them in India. Thus services provided by the appellant facilitate the conduct of business of the Foreign Entities in India - Cannot be held as export of services.
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• Home Loan Pre-Payment Charge Subject to Service Tax and Interest, Not a Penalty or Liquidated Damages.

  Case-Laws - AT : Valuation - nature of pre-pay penalty towards foreclosure of home loan - The contract specifies a charge levied for exercising the option the said charge cannot be penalty or liquidated damage to compensate the loss - Demand of service tax with interest confirmed.
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VAT

• Court Rules Refund Under DVAT Act Cannot Be Withheld Post-Reassessment; Orders Rs. 50,000 Compensation for Delay.

  Case-Laws - HC : Refund claim - DVAT Act, 2004 - The refund due could not have been stopped by creating a fresh demand pursuant to such reassessment exercise - In case of failure to pay the refund before 14-9-2019, Respondent will pay an additional compensation of ₹ 50,000/- to the Petitioner.
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Case Laws:

• GST

• 2019 (8) TMI 1085
  Classification of supply - Supply of goods or supply of services - activity of supply, design, installation, commissioning and testing of solar energy based water pumping systems - rate of GST - Challenge to AAR decision - HELD THAT:- The Solar Energy based bore well water pumping system deserve classification under entry No. 234 of the Notification No. 01/2017-Central Tax (Rate) as Solar Power based devices . Benefit of Notification Nos. 24/2018-Central Tax(Rate) and 27/2018- Central Tax(Rate) inserting Explanation in the entry No. 234 ibid and inserting entry No. 38 ibid - HELD THAT:- The benefit is available only when the Solar Power based devices i.e. the System is supplied along with other goods and Services, one of which being a taxable service specified in the entry at S. No. 38 ibid. A standard Solar Energy based bore well water pumping system comprises SPV panels, Structures, Storage tank, Controller, Pipe and Cables. The Appellant is also adding De-fluoridation unit (DFU) and also accomplishing the task of installation, commissioning, operation and maintenance of the System including DFU. DFU qualifies for other goods while Installation and Commissioning of the System are the Services which are not only taxable but are also being provided in relation to setting up of the System, a requirement of the Explanation to entry No. 234 ibid and entry No.38 ibid - Thus, the condition precedent to availment of the benefit of these entries i.e. supply of other goods and Services also, one of which should be a taxable service specified in the entry No. 38 , stands fulfilled. Thus, with respect to a Tender, identical to the Tender-Document No. 17/2016-17 ibid, which has been enclosed with the application dated 14.11.2018 filed by the Applicant/Appellant before the AAR, in terms of supply of Goods and Sendees, the activities of supply, design, installation, commissioning and testing of solar energy based water pumping systems, whose time of supply falls after 31.12.2018, are both supply of Goods and supply of Sendees in terms of entry No. 234, read with entry No. 38 ibid with rate of GST as prescribed under these entries.

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• 2019 (8) TMI 1084
  Input tax credit - Central Tax paid in Haryana - Applicant registered in Rajasthan State - Territorial Jurisdiction - location and place of supply - Challenge to AAR decision - HELD THAT:- The credit of input tax is admissible to a registered person, subject to conditions and restrictions, and input tax inter alia is Central tax charged on inward supply of a registered person . Going further, Central tax is Central GST levied under Section 9 of the CGST Act. After going through the Section 9(1), it is found that the Central GST is a tax levied on all intra-State supplies of goods or services or both Going ahead, Intra-state supply of service, as per Section 8(2) of the Integrated GST Act, 2017 means supply of services where the location of the supplier and place of supply of services are in the same State. Thus crux of the matter is that for a person registered in Rajasthan, Central GST or Central tax is a tax levied under Section 9 ibid on supplies having both location of the supplier and place of supply in Rajasthan. At this point it becomes absolutely clear that ITC of the Central GST or Central tax would be available to a person registered in Rajasthan if the location of the supplier and place of supply of the services are in Rajasthan. Thus, ITC of the Central tax charged from the Appellant in Haryana is not available to them as in this case both the location of the supplier and place of supply of the services are in the State of Haryana. AAR ruling upheld - appeal dismissed.

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• 2019 (8) TMI 1083
  Rectification of mistake - error apparent from the face of record - while pronouncing the ruling at para no.06, ARA has ruled that goods listed only at Sr.NO. A, B, C, D, G, H, l, K, M and S essential parts of the ship and entitled to concessional rate of tax at 5%. It appears that goods listed down at Sr. No. J has been erroneously omitted to be included in the above list - HELD THAT:- The issue brought to notice by the applicant by filing of the rectification application dt. 13.11.2018 is verified from the record and order passed by this Advance ruling authority on 18.7.2018. Accordingly we find that the Sr. No. J mentioned in the table of the para 5 under the heading Observations of the said order in which the product [equipment like satellite communication / Fleet Board Band are covered under entry 252 of Schedule I of GST Notification No. 01/2017-central tax (rate) dt. 28.6.2017 and liable to GST @5 % which is inadvertently omitted while pronouncing the ruling. The issue raised by the applicant is found correct. This is an apparent mistake in the order. The Authority vested with the power to rectify the advance ruling order under the section 102 of CGST ACT/MGST 2017 rectifies the said mistake which is apparent from the record - thus in the Order, in the answer portion, after alphabet I , the alphabet J shall be included.

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• 2019 (8) TMI 1082
  Service Tax audit of a private agency - Rule 5A of the Service Tax Rules, 1994 - The issue covered by the decision in the case of M/S OWS WAREHOUSE SERVICES LLP THROUGH ASADULLAH SIDDIQUE S/O VASIULLAH SIDDIQUE VERSUS UNION OF INDIA [ 2018 (10) TMI 1008 - GUJARAT HIGH COURT] where it was held that There was no saving of Rule 5A in such manner that fresh proceedings for audit could be initiated in exercise of powers under the said Rule. We, therefore, have serious doubts whether, with the aid of Rule 5A of the Service Tax Rules, 1994, the CAG can carry out compulsory Service Tax audit of private agencies like the petitioner. Let NOTICE be issued to the respondents returnable on 17/10/2019 .

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• 2019 (8) TMI 1081
  Statutory remedy of appeal - GST Tribunal has yet not been constituted. - section 107 of U.P. GST Act, 2017 - HELD THAT:- Though initially certain orders had been passed in the present proceedings requiring the State and the Union to make their stand known with respect to constitution of the Tribunal, at present, in view of the subsequent developments noted above and cognizance having been taken by the division bench of this Court whereupon a Full Bench has been constituted, no further orders are required to be passed in the present proceedings with respect to constitution of the Tribunal. The present writ petitions would be remain entertained, in absence of the Tribunal.

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• 2019 (8) TMI 1080
  Unable to claim transitional credit under DVAT Act - input tax credit - technical glitches in uploading Form TRAN 1 - HELD THAT:- The Court would urge the ITGRC to review the policy it has adopted in such cases, and acknowledge instances like the present one, where the Petitioners are not able to link with the Portal and therefore, the fact of a technical glitch is not able to be accounted for in the system. The Court therefore, directs that the Respondents to either open the Portal to enable the Petitioner to again file the TRAN-1 Form electronically, failing which they will accept the TRAN 1 Form already filed manually by the Petitioner - petition disposed off.

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• 2019 (8) TMI 1079
  Unable to avail Input Tax Credit - Form TRAN 1 - HELD THAT:- There appear to be technical errors or technical glitches of various kinds in the GST system, which is still in the trial and error phase. There is merit in the contention of the Petitioner that in its case, if it was not able to even connect with the server, then at the end of the Respondents, the fact of a failed attempt at filing a return may not even be registered on the system. Added to this is the fact that the Petitioner s eligibility to claim CGST input in the sum of Rs. 3,82,08,278.53 has not been disputed by the Respondents in their reply. The Court therefore, directs that the Respondents to immediately process the Petitioner s representation dated 28th March 2019 and either reflect the ITC claim of the Petitioner in the electronic credit ledger or communicate to the Petitioner the reasons for its inability to do so on or before 13th September 2019. Petition disposed off.

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• 2019 (8) TMI 1078
  Provisional attachment of Bank Accounts - Direction to dispose of a representation dated 06.05.2019 sent by the writ petitioner - proceedings against the writ petitioner under Central Goods and Services Act, 2017 including criminal prosecution - HELD THAT:- This writ petition is disposed of with a direction to the first respondent to dispose of writ petitioner s representation dated 06.05.2019 (received by the first respondent on 08.05.2019) on its own merits and in accordance with law as expeditiously as possible and in any event within six weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2019 (8) TMI 1077
  Demand of Interest - delayed payment of GST for seven months - difficulty in utilizing the Input Tax credit due to technical glitch - CGST Act - transitional input tax credit - whether the writ petitioner encountered technical glitch in payment of monthly GST for the aforesaid seven months i.e., from July 2017 to January 2018? HELD THAT:- Prima facie, the aforesaid complaint made by the writ petitioner to the GST Seva Kendra as well as the screen shots which have been reproduced show that the writ petitioner had encountered difficulty, but in the light of the disputation, this Court is of the considered view that it would be appropriate to leave it to the technical body concerned to decide whether there was a technical glitch at all - With regard to the technical body which would decide/resolve such issues, attention of this Court is drawn to a circular dated 03.04.2018 issued by the Government of India, Ministry of Finance, Department of Revenue Central Board of Indirect Taxes and Customs. Adverting to the opening paragraph and paragraph four of this Circular, it is submitted that Government has formed an IT-Grievance Redressal Mechanism. This Court is informed that any complaint to the aforesaid ITA Grievance Redressal Committee should be given to the jurisdictional Principal Commissioner, who in turn will forward it to the aforesaid Committee through the GST network or what is the known as GSTN. Writ petitioner shall provide a bank guarantee for Rs. 25 lakhs in a format required by the first respondent within one week from the date of receipt of a copy of this order - One of the share holding directors of the writ petitioner company shall provide a personal bond in a format as required by first respondent for the balance sum within one week from the date of receipt of a copy of this order. To be noted after deducting 25 lakhs bank guarantee, the balance sum is Rs. 1,39,49,541/-. Petition disposed off.

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• Income Tax

• 2019 (8) TMI 1086
  Deduction u/s.80P(2) - Assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959 providing credit facilities to its members - HELD THAT:- We set aside the order of CIT(A) and restore the matter back to his file for fresh decision in the light of above discussion, by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides. CIT(A) is directed to pass a speaking and reasoned order after comparing the facts of present case with the facts in the case of The Citizen Co-operative Society Ltd. Vs. ACIT [ 2017 (8) TMI 536 - SUPREME COURT] He is also directed to examine the facts of present case in the light of these two judgments of Hon ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] and PCIT and Another Vs. Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] and pass necessary order as per law in the light of above discussion after providing adequate opportunity of being heard to both sides - Appeal filed by the assessee is allowed for statistical purposes.

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• 2019 (8) TMI 1076
  Entitlement to the benefit of deduction u/s 80IB(10) - assessee had undertaken the housing project known as Jai Hind - date of approval of the said project by the local authority was given on 30th September 1998, just one day prior to the cut off date given under Section 80IB(10) - HELD THAT:- Since the tax effect involved in this matter is less than Rs. 2 crores, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.

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• 2019 (8) TMI 1075
  Credit of TDS on the basis of evidences produced for deduction of tax at source - HELD THAT:- The operative part of the direction issued by the High Court is as under: - Resultantly, the Tribunal only directed the Assessing Officer to verify the correct facts and give credit of TDS to the assessee. Since the matter is now pending verification of correct facts, we see no reason to interfere in this matter.

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• 2019 (8) TMI 1074
  Revision u/s 263 - AO while passing the original assessment order had not examined the issue of allowability of the expenditure to acquire marketing rights of CD s - ITAT was justified in quashing the order passed by CIT u/s. 263 also confirmed by HC - HELD THAT:- SLP dismissed.

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• 2019 (8) TMI 1073
  Revision u/s 263 - disallow the claim of exemption u/s 54EC and 54F - if the AO has taken one plausible view, the Commissioner cannot interfere with such view, merely because he has taken a different view - HELD THAT:- Keeping in view the tax effect involved in this matter, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.

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• 2019 (8) TMI 1072
  Review of order - dismissed considering low tax effect - HELD THAT:- We have perused the review petition and find that the tax effect in this case is above Rs. 1 crore, that is, Rs. 6,59,27,298/-. Ordinarily, therefore, we would have recalled our order dated 17th September, 2018, since the order was passed only on the basis that the tax effect in this case is less than Rs. 1 crore. Disallowance based on third party information - addition based on third party information gathered by Investigation Wing of the Department - AO denied opportunity of cross examination - CIT(A) and ITAT deleted the disallowance stating that assessee has prima facie discharged the initial burden of substantiating the purchases through various documentation - HELD THAT:- We find that on merits a disallowance of Rs. 19,39,60,866/- was based solely on third party information, which was not subjected to any further scrutiny. The High Court by the impugned judgment [ 2017 (7) TMI 774 - DELHI HIGH COURT] affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. - the Review Petitions are dismissed

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• 2019 (8) TMI 1071
  Addition u/s 69-A - undisclosed bank account balances - HELD THAT:- One of the essential conditions in Section 69A is that the Assessee should be the owner of the money and it should not be recorded in his books of accounts. This was a pre-condition to the next step of the Assessee offering no explanation about the nature and source of the acquisition of such money. In the present case the evidence placed before the AO clearly indicated that Mr. Chaturvedi confirmed that the draft of Rs. 1,02,95,000/- was given by him to the Assessee and that the transactions of purchase of units were done by the Assessee on his behalf. Books of accounts maintained by Mr. Chaturvedi confirmed the above statement. As rightly noted by the CIT (A) there was no evidence to show that the 24 cheques stated to have been issued by the Assessee on behalf of Mr. Chaturvedi were utilised by the Assessee and were meant for the benefit of the Assessee. There was nothing to show that the Assessee had benefited in any way from any of the above transactions. As regards the test of human probabilities if there was no evidence whatsoever to the contrary it could have been resorted to draw certain inference. In the present case there appears to be overwhelming evidence to show the involvement of Mr. Chaturvedi acting on behalf of Mrs. Sneh Pathak for SMI. The CBI also did not choose to proceed against the Assessee and that discounts the case of any collusion between the Assessee and Mr. Chaturvedi along with Mr. Pathak. It does appear that the Assessee was at the highest used as a conduit by the other parties and did not himself substantially gain from these transactions. The concurrent view of both the CIT (A) and the ITAT that the addition of the aforementioned sum to the income of the Assessee was not warranted, does not call for interference. The question of law framed is accordingly answered in the affirmative i.e. in favour of the Assessee and against the Revenue.

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• 2019 (8) TMI 1070
  Reopening of assessment u/s 147 - reopening based on audit party objection - in reply to the objections of an audit party AO state that this was not a case fit for reopening of the assessment - change of opinion - HELD THAT:- It is clear from the correspondence with Audit Party that there was no independent decision arrived at by the AO to form reasons to believe for reopening of the assessment after being satisfied that there was an escapement of income. The above correspondence also indicates that not once but on two separate occasions the AO clearly formed the opinion that this was not a case fit for reopening of the assessment and that the AO was constrained, notwithstanding that opinion, to reopen the assessment on the express instructions issued to him vide letter dated 11th December 2012 of the Addl. CIT Audit-1 referred to herein before. We find that AO had in fact applied his mind to the audit party objection and formed a clear opinion that there is no justification for reopening of the assessment and yet it is only on the insistence of the Addl. CIT Audit that the AO changed his opinion and decided to reopen the assessment. Consequently, the reopening of the assessment in the present case, which was based on a change of opinion was vitiated in law as it did not satisfy the legal requirement of Section 147. In the circumstances, the view taken by the ITAT calls for no interference. No substantial question of law

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• 2019 (8) TMI 1069
  Validity of Declaration made under Income Declaration Scheme, 2016 ( IDS ) - whether such declaration to be void for being in contravention of Section 193 of the FA, 2016 - as per petitioner no prior notice was issued to either of the Petitioners before passing the impugned order rejecting the declarations of undisclosed income under the IDA scheme - HELD THAT:- The mere fact that an acknowledgement may have been issued in Form- 4 by the CIT, CPC did not provide any immunity to the Petitioners if it was found that the declaration was contrary to Section 193 of the FA, 2016 which begins with a non-obstante clause. There is no merit in the objection to the jurisdiction of the PCIT, Delhi to issue the impugned order. The fact remains that the Petitioners declarations were uploaded electronically at Delhi where both Petitioners reside. Their assessments were completed in Delhi. The explanation offered in the counter affidavits of the Respondent that the PCIT-30, New Delhi had by an order dated 10th January, 2017 under Section 127 of the Act transferred jurisdiction to Additional Commissioner of Income Tax, Special Range-4 who in turn was authorised to make the impugned order merits acceptance. Moreover, since this is a case of suppression of material facts the Respondent No.1 was duty bound to give effect to the provision provided under Section 193 of the FA, 2016. Therefore, where the jurisdictional Pr. CIT/CIT finds a declaration to be based on such misrepresentation or suppression of facts, he would not be precluded from holding the declaration itself to be void in terms of Section 193 of the FA, 2016. The Court accepts the contention of the Respondent that there is no provision as such in the IDS to afford the declarant a hearing prior to passing an order holding such declaration to be void for being in contravention of Section 193 of the FA, 2016. For all of the aforementioned reasons, the Court finds no error having been committed by Respondent No.1 in passing the impugned order.

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• 2019 (8) TMI 1068
  Penalty u/s 271(1) (c) - bar of limitation for imposing penalties - service to CIT (Judicial) - HELD THAT:- If an officer of the Department is allowed to choose a date on which a copy of the order which has to be given effect to or acted upon is sent to the officer concerned, it will defeat the very purpose for which the legislature has stipulated definite time limits in various provisions of the Act for the authorities to perform their statutory tasks in a time bound manner. In other words, the mandatory period of limitation u/s 275 (1) (a) cannot be sought to be defeated by delaying the dispatch of the relevant order of the ITAT to the concerned jurisdictional CIT. What is relevant is when the CIT (Judicial) representing the Department before the ITAT received the order, which in any event is generally made available in the public domain soon after the order is pronounced. This is purport of the decision of the Full Bench of this Court in CIT v. Odeon Builders Private Limited (FB) [ 2017 (3) TMI 1266 - DELHI HIGH COURT] , the ratio decidendi of which will apply to the case on hand as well since the language of Section 260 A (1) and Section 275 (1) (a) is identical. The impugned orders of penalty dated 26th April 2018 were issued far beyond the six-month period of limitation in terms of Section 275 (1) (a) of the Act and were, therefore, invalid. On the date that the said orders were issued, i.e. 26th April, 2018 they were without jurisdiction. Maintainability of writ petitions - HELD THAT:- This Court negatives the objection of the Respondents to the maintainability of the present writ petitions. In CIT v. Chhabil Das Agrawal [ 2013 (8) TMI 458 - SUPREME COURT] , the Supreme Court took note of the fact that normally the existence of an alternative remedy should discourage writ petitions under Article 226 of the Constitution being entertained. However, as explained by the Supreme Court in Whirlpool Corporation v. Registrar of Trademarks [ 1998 (10) TMI 510 - SUPREME COURT] there are exceptions to this rule one of which is that the order under challenge is itself without jurisdiction. In the present case the impugned orders are, for the reasons explained, clearly without jurisdiction. - Decided in favour of assessee.

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• 2019 (8) TMI 1067
  Reopening of assessment u/s 147 - HELD THAT:- In the present case, the Court is satisfied that there was no omission or failure on the part of the Petitioner to disclose all material facts relevant to the original assessment proceedings under Section 143(3) of the Act. Accordingly, in terms of the proviso to Section 147 of the Act, the assumption of the jurisdiction by the AO for reopening the assessment was bad in law. Consequently, the impugned notice dated 31st March 2017 and the consequential order rejecting the objections of the Petitioner are hereby set aside. - Decided in favour of assessee.

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• 2019 (8) TMI 1066
  Admissibility of deduction u/s 80IC - review application - HELD THAT:- The review applications are allowed in terms of M/s Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] and it is held that as regards questions No.(iii) and (iv) regarding claim of 100% deduction under Section 80IC of the IT Act for the assessment year 2011-2012 [ 2019 (2) TMI 56 - PUNJAB AND HARYANA HIGH COURT] are answered in favour of the Assessee and against the Revenue.

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• 2019 (8) TMI 1065
  Admissibility of deduction u/s 80IC - review application - HELD THAT:- Though the argument raised by the counsel for the revenue can not be said to be technically wrong but in case this plea is accepted it would only lead to multiplicity of litigation and in the circumstances of the case, and in our considered opinion, it would be in the interest of justice to allow the review application. Resultantly, the review applications are allowed in terms of M/s AARHAM Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] and it is held that as regards questions of law claimed regarding claim of 100% deduction under Section 80IC of the IT Act for the relevant assessment years are answered in favour of the Assessee and against the Revenue.

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• 2019 (8) TMI 1064
  Liability of directors of private company u/s 179 - Tax due to the Company to be recovered from its Directors - the petitioner had made a detailed representation contending that such recovery cannot be attributed to his gross neglect, misfeasance or breach of duty - attaching the petitioner s bank accounts for recoveries - HELD THAT:- It is an agreed position between the parties that the issue arising in this petition is identical to one arising in the case of Mr.Vanraj Shah [ 2019 (7) TMI 31 - BOMBAY HIGH COURT] i.e. the other Director of the Company wherein it was held that without recalling the earlier order, his action to dispose of the petitioner s objections would amount to nothing more than post-decisional consideration . Therefore, for the reasons indicated in the order dated 24 June 2019, the order dated 18 September 2018 and corrigendum thereto dated 8 March 2019 issued by Respondent No.1- Dy. CIT are set aside. Consequently, the attachment of Petitioner s bank accounts is also set aside. We have not examined the merits of the case. Therefore, nothing stated in this order, will prevent the Revenue from passing a fresh order in accordance with law after issuing fresh notice to the petitioner.

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• 2019 (8) TMI 1063
  Penalty u/s 271(1)(c) - depreciation on a property which it did not own, but utilized for its business - AY 2002- 2003 - HELD THAT:- As in own case [ 2018 (7) TMI 1259 - CALCUTTA HIGH COURT] where this particular issue regarding depreciation for the said assessment year was remanded to the tribunal for reconsideration. Now, if the main issue has been remanded to the tribunal, it is required to decide it afresh. That part of its order is set aside. The question of penalty would only arise after its decision. The order setting aside the penalty based on the earlier adjudication is also of no consequence. Therefore, in our considered opinion, there is no merit in the appeal with regard the order of the tribunal with regard to the assessment year 2002- 2003. We dismiss the same with regard to that assessment year. Admit the appeal in relation to the assessment year 2003-2004 on the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the tribunal has interpreted and applied Section 271[1][c] of the Income Tax Act, 1961 correctly? 2. Whether on the facts and in the circumstances of the case, the tribunal has applied the ratio of the judgment of the Supreme Court in Union of India Ors. Versus- Dharmendra Textile Processors Ors., [ 2008 (9) TMI 52 - SUPREME COURT] correctly?

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• 2019 (8) TMI 1062
  Addition u/s 68 - claim of the Appellant it is dealing with Moxdiam was not for accommodation entry, but a genuine loan transaction - HELD THAT:- It is now an admitted position that Moxdiam was indulging in accommodation entries. Majority of the activities of Moxdiam are of accommodation entries. It is the Appellant which seeks to assert a deviation from Moxdiam s regular activity of accommodation entry to contend that in Appellant s case it was not an accommodation entry, but a genuine loan. The burden on the Appellant to show the genuineness of the entry was thus heavier than situation where no such established evidence regards the lender indulging into accommodation entries exists. Such a burden cannot be casually shifted as contended. Merely because certain entries have been shown in the books of accounts of Moxdiam, they cannot be held to be conclusive and must be construed in light of all surrounding circumstances. The genuineness of the loan transaction, financial capacity, and the surrounding circumstances are some criteria for determination in such matters. It is in this background that the claim of the Appellant it is dealing with Moxdiam was not for accommodation entry, but a genuine loan transaction, had to be tested by the authorities. Two authorities and the Tribunal have evaluated each piece of evidence to conclude that this transaction was not a genuine loan transaction. If the Tribunal has given more weight to some pieces of evidence vis-a-vis others, the conclusion is in the realm of assessment of the evidence. It cannot be said that the pieces of evidence relied upon by the Tribunal are irrelevant. The view taken by the Tribunal is thus on the assessment of evidence is not perverse, and merely because another view by re-appreciating the evidence is possible, it cannot give rise to a question of law as envisaged under Section 260A of the Income Tax Act. Tribunal has noted the decisions referred to by the Appellant and also by the Revenue. Following the principles laid down in the decisions in the case of CIT v. Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] and Sumati Dayal v. CIT [ 1995 (3) TMI 3 - SUPREME COURT] that the nature of the transaction will depend on facts and circumstances, the Tribunal rightly did not get weighed down by multiplication of decisions dealing with separate sets of fact. This approach adopted by the Tribunal would not lead to a substantial question of law as proposed by the Appellant.

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• 2019 (8) TMI 1061
  Disallowance of claim u/s 80JJA - principle of consistency - denial of deduction in fifth year - ITAT deleting the disallowance of claim - HELD THAT:- Appellate Tribunal committed no error, not to speak of any error of law in passing the impugned order. When the department thought fit to grant the deduction for four consecutive years, there was no reason to raise any objection with regard to admissibility of such deduction under Section 80JJA in the fifth and the final assessment year 2008-09. This appeal fails and is hereby dismissed. The substantial question of law, formulated by this Court, is answered in favour of the assessee and against the Revenue.

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• 2019 (8) TMI 1060
  Recovery proceedings - Sale of the attached property - the meaning of phrase order giving rise to a demand in Rule 68B, order u/s 143(1) OR 143(3) - period of limitation - department putting the attached properties for sale by issue of proclamation for the purpose of recovery of the tax amount due and payable by the Company, in which, the writ applicant is one of the Directors - Whether an acknowledgment or an intimation u/s 143(1)(a) can be treated as an order giving rise to a demand for the purpose of the applicability of Rule 68B in the Second Schedule of the Act? - intimation u/s 143(1) to be deemed to be a notice of demand of tax u/s 156 - Whether an intimation u/s 143(1) (a) can be equated with an assessment framed u/s 143(3)? - Whether the phrase order giving rise to a demand in Rule 68B of the Second Schedule in the Act should be construed as a final assessment order u/s 143(3)? HELD THAT:- The proviso to Rule 68B (1) provides for extension of one more year in certain cases where the sale falls through.If the sale held within the period of three years could not be completed for some reason set out therein, then, under the proviso to rule 68B(1) extension of one more year is available for effecting the sale. Rule 68B(2) provides for exclusion of the period during which the demand is stayed by any Court. The period of limitation under Rule 68B(1) for sale of the attached property commences from the date on which the demand of any tax interest, fine, penalty or any other sum for the recovery of which the immovable property has been attached has become conclusive under the provisions of section 245 I or under the provisions of Chapter XX of the I.T. Act. We find it extremely difficult to take the view that the intimation or an acknowledgment u/s 143(1) should be construed as an order giving rise to a demand for the purpose of the applicability of Rule 68B. Under the Income Tax Act, the tax, as such, becomes due and payable only when an assessment order is passed and a liability is created followed with a demand notice u/s 156 The phrase order giving rise to a demand in Rule 68B should be construed as the final assessment order, determining the tax liability of the assessee with interest, fine, penalty or any other sum. With the commencement of the proceedings u/s 143(2), the intimation u/s 143(1)(a), which in the absence of the proceedings u/s 143(2) r.w.s 143(3) would have taken the shape of regular assessment. But once the proceedings commenced under Section 143(3), the intimation u/s 143(1)(a) remains an intimation only of self-assessment with prima facie adjustments, if any, made by the Assessing Officer and becomes adjustable as per the regular assessment. The initial intimation u/s 143(1), which according to the learned counsel appearing for the assessee, should be understood as an order giving rise to a demand for the purpose of Rule 68B merges into the regular assessment and once the proceedings for the regular assessment u/s 143(3) is commenced, there cannot be any recourse to bring into existence any order u/s 143(1)(a). See UDAIPUR DISTILLERY CO. LTD. (NO. 1). [ 2003 (4) TMI 17 - RAJASTHAN HIGH COURT] We hold that the phrase order giving rise to a demand in Rule 68B to the Second Schedule of the Act should be read as the assessment order under Section 143(3) and not merely an acknowledgment or an intimation u/s 143(1). Computation of limitation - Period of limitation will have to be counted accordingly. It is not in dispute that against the final order of assessment u/s 143(3), an appeal was preferred by the writ applicant before the Commissioner (Appeals), which came to be dismissed and, as on date, an appeal is pending before the Income Tax Appellate Tribunal. In such circumstances, it cannot be said that the order became conclusive. The period of limitation would reckon only from the date, the order becomes conclusive. - both the writ applications fail and are hereby rejected

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• 2019 (8) TMI 1059
  Disallowance of business loss - sale of shares of Comfort Fincap Ltd. - bogus loss - HELD THAT:- Assessee has purchased and sold shares through recognized broker. Copies of Contract notes, copies of payment through banks, De-mat statement and other evidences were filed in support of the genuineness of the transactions AO has disallowed the claim of assessee on the sole reason that this scrip was suspended by Calcutta Stock Exchange from April, 2013 onwards. However, it has been brought on record by the assessee to demonstrate that the scrip is being traded even today. Moreover, from the contract note placed at Page 34-36 PB it is noted that the transaction took place at Bombay Stock Exchange and not at Calcutta Stock Exchange. So the foundation of the reason given by the AO is based on wrong assumption of fact and so is erroneous. Thus, the basis on which the Assessing Officer has made the disallowance, cannot be upheld. CIT(A) relied on the so-called rules of suspicious transactions and confirmed the order of the Assessing Officer. In my view, such disallowance cannot be sustained. Thus delete this addition as the entire addition was made on wrong assumption of fact - Decided in favour of assessee.

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• 2019 (8) TMI 1058
  Revision u/s 263 - provisions of section 69 of the Act are applicable - HELD THAT:- Ld. Pr. CIT has not made any enquiry from Smt. Smriti Chauhan. Except that the accounts of Ms. Chauhan, no other evidence supporting that the assessee had not advanced a sum of Rs. 59,73,000/- to Ms. Chauhan. The Ld. Pr. CIT has accepted the disclosure of Rs. 59,23,000/- by Ms. Smriti Chauhan. CIT has not observed any other defect, error or mistake in the assessment order sought to be revised. Under these undisputed facts, the action taken by the Ld. Pr. CIT could not be sustained. The law is well settled that the order of the A.O. should be erroneous and so far it is prejudicial to the interest of the revenue. In the case in hand, the Ld. Pr. CIT could not bring on record material evidence suggesting that the figure of the loans and advances as claimed by the assessee is incorrect and the figure of loans and advances as disclosed by Ms. Smriti Chauhan is correct. In the absence of the same and looking to the smallness of figure, the Pr. CIT ought not to have revised the order for the assessment year 2011-12. One of the argument of the revenue was that no prejudice is caused to the assessee - Decided in favour of assessee Revision u/s 263 - Availability of deduction u/s 54B - order being barred by limitation - HELD THAT:- We do not find any merit in the ground raised by the assessee as the impugned order is well within limitation as prescribed under the law. The order so revised was passed on 23.3.2016. The impugned order u/s 263 is dated 16.11.2017. As per the section 263(2) of the Act, no order can be passed u/s 263(1) of the Act after the expiry of 2 years from the end of the financial year in which the order sought to be revised was passed. In the present case, the impugned order was passed on 16.11.2017, which is well within time. Hence, ground No.1 is dismissed being devoid of any merit as the law speaks of the order sought to be revised but not the issue decided. Deduction u/s 54B - The basis of treating the agricultural land by the Pr. CIT as capital asset is that no evidence was placed on record proving that the agricultural activity was being carried out by the assessee. We find that a bare reading of section 54B of the Act makes it clear that for being eligible for deduction u/s 54B of the Act, the land ought to have been used for agricultural purposes for 2 years immediately preceding the date on which the transfer took place. The assessee has not brought any material on record suggesting that the land was being used for agricultural purposes. Pr. CIT has merely restored the issue to the A.O. for decision afresh. Under these undisputed facts, no interference is called for. However, the assessee is at liberty to produce evidences in support of his claim for deduction. The grounds raised in this appeal are dismissed.

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• 2019 (8) TMI 1057
  Addition of interest on paid on loan - diversion of fund - advanced it to sister concern/group at lower rate - commercial expediency in such transaction - HELD THAT:- The assessee in the instant appeal is a NBFC registered with its object of taking loans and advancing loans for earning interest or other income from investments. In both the years in appeal the assessee has taken loans from financial institutions on varying interest rates. It has also issued debentures in the past. Amounts have been advanced as loans as well as investments to other concerns which presently are only to the group/sister concerns. It is not the case that interest free loans have been given. Assessee has charged interest at varying rate depending on the market conditions and based on the needs of the concerns taking loan. Though it is not necessary that earning of profit is mandatory for the business concern to prove that the transactions entered into by it are for commercial expediency but still if the business concern show profit at the end of the year, it is an added feature which proves that the transactions entered by the concern are for commercial expediency and in the regular course of business. No inconsistency in the order of Ld. CIT(A) deleting the addition of notional interest made - Decided in favour of assessee.

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• 2019 (8) TMI 1056
  Levy of penalty u/s 271 (1) (c) - defective notice - non specification of charge - Non-disclosure of interest income - HELD THAT:- We find that no such objection was raised before the authorities below by the assessee. Hon ble Karnataka High Court in the case of Sundaram Finance Limited Vs. ACIT [ 2018 (5) TMI 259 - MADRAS HIGH COURT] has held that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued u/s 274 r/w section 271. In the light of the judgement of the Hon ble Karnataka High Court (supra), the plea of the assessee regarding notice being defective cannot be entertained at this stage. As in the present case as well the Assessee did not object against the notice being defective rather it filed reply making averments on merit. The assessee ought to have objected against the notice being defective at the first instance. Non-disclosure of interest income was not deliberate rather banker of the assessee reported it belatedly. It was not the fault of the assessee. The assessee has submitted that income was duly offered in the next year even before the initiation of assessment proceedings. He relied on the judgement of Hon ble apex court rendered in the case of Price Water Home Cooper Pvt. Ltd. Vs. CIT [2012 (9) TMI 775 - Supreme Court ] Looking to the peculiarity of facts of the present case and coupled with the fact that after discovering the mistake offered income for tax in the subsequent year. Under these facts, levy of penalty would not be justified. Therefore, respectfully following the judgement of Hon ble Supreme Court in the case of Price Water Home Cooper Pvt. Ltd. Vs. CIT[ 2012 (9) TMI 775 - Supreme Court ] we hereby direct the A.O. to delete penalty. This ground of assessee s appeal is allowed.

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• 2019 (8) TMI 1055
  Unexplained credit balance - HELD THAT:- As submitted that these balances relate to earlier years and assessee has repaid the amount in subsequent years. This fact, in our view, requires verification at the end of the A.O. Hence, the issue of credit balance related to Navin Com. Bhanpura, Maa Annapurna Traders, Pachor and Ajay Prahalad Aggarwal, Garoth is restored to the file of the A.O. for decision afresh. A.O. to verify claim of the assessee whether credit balances are related to earlier years and those have been repaid in the subsequent years. If this fact is found to be correct, the A.O. would delete the additions. These grounds of the assessee s appeal are allowed for statistical purposes. Disallowance of depreciation claimed on vehicles for want of log book - HELD THAT:- As stated that both the A.O. and the CIT(A) failed to appreciate that depreciation allowance is a statutory allowance and no disallowance could have been made by the A.O. specially without there being any positive evidence of personal use of vehicles by the authority. D.R. supported the orders of the authorities below and submitted that the claim of depreciation is made by the assessee. It was required to demonstrate that the vehicle has been used wholly and exclusively for the business purposes. In the absence of such evidence, it cannot be inferred that the vehicle was not used for personal use. The assessee has not brought any material on record suggesting that the vehicle was used exclusively for the business purposes. In the absence of such evidence, the inference drawn by the authorities below is correct. No interference is called for. This ground of the assessee s appeal is rejected.

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• 2019 (8) TMI 1054
  Revision u/s 263 - period of limitation - limitation provide for passing of order - impact of unreasonable delay in service of order - HELD THAT:- In the instant case, though the Ld.PCIT stated to have passed the order on 27.03.2017, the department could not place any evidence to show that the order was dispatched for service to the assessee within reasonable time. The proceedings would be completed only after passing he order and communicated the same to the assessee. Unless the communication is sent to the assessee by serving the order, it could not be held to be passed and does not serve the intended purpose. The department could not demonstrate with tangible evidence that the order was passed within time limit permitted in the act and failed to explain the reasons for such a long delay in serving the order to the assessee. Even to the AO the order was served on the on 18.12.2017, which supports the contention of the assessee that the order was back dated. No other evidence was produced by the departmental representative to show that the cited order was passed u/s 263 before 31.03.2017 and sent for dispatch within a reasonable time. Delay involved in the instant case was more than 9 months which is unreasonable and the department could not explain the reasons for such long delay in serving the order to the assessee as well as the AO, we hold that the order was passed beyond the time limit allowed under the Act, hence, the order passed u/s 263 was unsustainable and quashed. Accordingly the appeal of the assessee is allowed.

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• 2019 (8) TMI 1053
  Violation of Section 144C - validity of the order passed u/s.143(3) r.w.s. 144C stating that the Assessing Officer had passed draft assessment order without following the mandate as laid down u/s.144C - HELD THAT:- Firstly, assessment order in the present case was passed u/s.143(3) r.w.s. 144C of the Act. There is no such demand notice that is being sent and therefore, the character of the assessment order is that of the draft assessment order. Therefore, there is no violation of Section 144C. We, therefore, uphold the validity of assessment order passed u/s. 143(3) r.w.s.144C of the Act. Thus, additional ground No.1 is dismissed. Non- disallowance of Educational Cess - HELD THAT:- It is seen that relying on Circular F. No. 91/58/66-ITJ(19) dt. 18th May, 1967, the Hon ble Rajasthan High Court in Chambal Fertilisers and Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT] has held that Education cess is not disallowable u/s 40(a)(ii) of the Act. The said judgment has also been followed by the Pune bench of the Tribunal in DCIT vs. Bajaj Allianz General Insurance Company Ltd. [2019 (8) TMI 370 - ITAT PUNE] , a copy of which has been placed on record by the ld. AR. No contrary precedent has been brought to our notice by the ld. DR. Following the precedent, we allow this additional ground of appeal Depreciation on the amount of capital expenditure incurred by the assessee on certain premises - HELD THAT:- For the A.Y. 2004-05 in which the Tribunal noticed that the assessee purchased a property during the year and carried out suitable repairs/renovation to make it fit for use. The decision of the ld. CIT(A) capitalizing 40% of the expenditure as against 80% done by the AO, was approved by the Tribunal. Once a particular amount has been held to be capital expenditure on a building purchased by the assessee, the same has to be subjected to depreciation. As the Tribunal has approved the capitalizing of certain amount to Building account, we, therefore, direct the AO to allow depreciation on such amount as per law. Sales to Associated Enterprises (AEs) - HELD THAT:- Assessment year 2005-06 and demonstrated that the subject matter and facts for both these assessment years are similar. It is seen that sales to AEs is always more. At Page 661 onwards Volume-I of the Paper book, the entire details of sales have been placed before us. AR further contended that for assessment year 2005-06, the Tribunal in assessee s own case (supra.) in detailed has determined this issue restoring the matter to the file of the AO/TPO for deciding it afresh giving certain directions.That on similarity of facts and circumstances, first ground is remitted back to the file of Assessing Officer/TPO with similar directions as referred hereinabove. Thus, first ground of appeal by the assessee is allowed for statistical purposes Royalty payment made by the assessee to its AEs - HELD THAT:- As in assessment year 2005-06 in assessee s own case TPO is required to determine the ALP of an international transaction under one of the methods mandated under rule 10B of the Income-tax Rules, 1962. Nothing of the sort has been done in the instant case. The TPO got influenced with extraneous reasons, which have no bearing on the determination of the ALP of an international transaction. It is further observed that similar issue of payment of royalty came up for consideration before the Tribunal in assessee s own case for the earlier assessment years in which deletion of transfer pricing addition on payment of royalty by the ld. first appellate authority has been upheld. Considering the entire conspectus of the case, including the fact that the payment of Royalty to the AEs was as per RBI norms, we are satisfied that the view taken by the ld. CIT(A) is unassailable International transaction of receipt of indenting commission - HELD THAT:- In the present facts and circumstances, we have analyzed that no such calculation has been taken into account by the Sub-ordinate Authorities in any of their respective orders either by the Assessing Officer/TPO or DRP. Hence, in the present facts and circumstances, this issue is remitted back to the file of Assessing Officer/TPO for fresh adjudication and the assessee is directed to submit calculation before the Assessing Officer on the issue and thereafter, the Assessing Officer shall adjudicate the same after considering our decision as rendered in assessee s own case for assessment year 2005-06(supra.). Needless to say, AO/TPO shall grant reasonable opportunity of hearing to the assessee in accordance with law. Thus, this ground of appeal is allowed for statistical purposes. Expenditure on premises-Treated as Capital - HELD THAT:- We uphold the capitalization of expenses in relation to the premises @40% in this year also. It is directed that the assessee be allowed depreciation on such capitalized amount. Thus, this ground of appeal of the assessee is partly allowed. Ad-hoc disallowance of miscellaneous expenses @ 10% - HELD THAT:- Assessing Officer to the amount disallowable out of miscellaneous expenses in accordance with the directions given in the immediately two preceding years on this score.That for this year also, the impugned order is set aside and the matter is remitted back to the file of Assessing Officer with similar directions and the Assessing Officer shall decide the issue accordingly after providing reasonable opportunity of hearing to the assessee. As the AO has himself disallowed 10% of the remaining expenses, we direct that the disallowance for this year should be restricted to 10% instead of 15%. The Assessing Officer is also directed to verify the gifts. Thus, this ground of appeal is allowed for statistical purposes. Payment of VRS expenditure is allowable or not for deduction u/s.35DDA - HELD THAT:- In assessee s own case for earlier years as well. The Tribunal has held the assessee to be entitled to deduction u/s.35DDA on the basis of incurring of liability. A further direction has been given to ensure that the assessee does not get deduction on actual payment basis. The impugned order is set aside to this extent and the matter is remitted to the AO for allowing deduction only towards incurring of liability, i.e. on accrual of liability towards VRS u/s.35DDA and that no amount should be allowed as deduction on payment basis.

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• 2019 (8) TMI 1052
  Real Income - electricity bill raised at higher price but recognised in income at lower price approved by ATE - differential was shons as contingent sales - HELD THAT:- Ld.CIT(A) allowed the appeal of the assessee following the decision of this Tribunal in the assessee s own case [ 2017 (5) TMI 531 - ITAT VISAKHAPATNAM] wherein it was held that sale on account of differential sale price claimed by the assessee which was pending before the ATE for adjudication is not accrued to the assessee as revenue for the relevant financial year. The assessee has rightly recognized the revenue as per the sale price fixed by the state government which is the real income accrued to the assessee as per the prevailing situation. The additional claim made by the assessee is a mere claim which was not settled by the authorities. Unless the issue is settled, the assessee cannot recognize its revenue merely based on its claim, The assessee has rightly treated the difference between sale price claimed and the price paid by the APTRANSCO as contingent sales. Since, there is no change in the facts and the Ld.CIT(A) allowed the appeal of the assessee following the order of this Tribunal, we do not find any reason to interfere with the order of the Ld.CIT(A) and uphold the same. - Decided in favour of assessee.

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• 2019 (8) TMI 1051
  Disallowance u/s 40(a)(ia) - interest payment made to trust, who claimed exemption u/s 10(23C)(vi) - applicability of second proviso to section 40(a)(ia) - HELD THAT:- The recipient had admitted the impugned interest and filed in the return of income. The assessee had also filed acknowledgement of returns for the A.Y. 2008-09 and 2009-10 admitting the said income. This fact was not disputed by the AO. AO s grievance is that the income of the assessee was exempt u/s 10(23C)(vi), therefore, contended that the recipient has not paid the tax, thus not complied with the directions. Irrespective of the payment of tax, the question is it is to be seen whether the recipient had admitted the income representing the interest paid by the assessee or not. If the interest is included and exemption u/s 10(23C)(vi) is allowed, the assessee satisfied the requirement of not to treat the assessee in default for the purpose of section 201(1) of the Act. In the instant case, there is no dispute that the recipient had filed the returns of income by including the interest received from the assessee. Therefore, there is no case for making the addition u/s 40(a)(ia), hence the orders of the lower authorities are set aside and the appeal of the assessee is allowed.

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• 2019 (8) TMI 1050
  Additions towards being income corresponding to alleged unreconciled TDS amount as per the Form 26AS - TDS u/s 194J - differential in income as was extrapolated from TDS as is reflected in for No. 26AS information per income-tax department data base and income as is reflected in books of accounts maintained by the assessee - reconciliation statement / AIR information not provided to assessee - HELD THAT:- No defect in the books of accounts are pointed out by the authorities below nor were books of accounts rejected by the authorities below. No cogent incriminating material were brought on record by the authorities below to evidence/prove that the assessee has received/earned any income outside its books of accounts. The authorities below also did not dislodge/rebutted the contentions of the assessee. The assessee s case was also scrutinised under the provisions of Section 143(2) read with Section 143(3) of the 1961 Act for immediately preceding year as well immediately succeeding year,but no such additions were made on account of mismatch of income vide TDS as is reflected in Form No. 26AS information per income-tax data base maintained by department and the income as is reflected in assessee s books of accounts. The assessment orders for AY: 2010-11 and 2012-13 are placed on record in file. We are presently concerned with ay: 2012-13. No doubt every assessment year is a separate unit and principles of res judicata are not applicable but indications can be drawn/gathered from assessment orders of the other years as to behaviour pattern of the tax-payer and modus operandi of the tax-payer adopted to defraud Revenue/conceal income, if any. No such incriminating information is brought on record by Revenue. Thus we accept contentions of the assessee and are of the considered view that no additions to the income are warranted in the hands of the assessee for impugned ay: 2011-12 owing to differential in income as was extrapolated from TDS as is reflected in for No. 26AS information per income-tax department data base and income as is reflected in books of accounts maintained by the assessee. The assessee succeeds on these ground number 2-4 raised by assessee in its memo of appeal filed with the tribunal. Adhoc disallowance @ 10% of various expenses incurred by the assessee - HELD THAT:- The assessee has discharged its onus by bringing on record complete details of the expenses incurred by it albeit the same was brought on record during the course of appellate proceedings before learned CIT(A)/remand proceedings conducted by the AO under directions of learned CIT(A). The powers of learned CIT(A) are co-terminus with powers of the AO. No enquiries were conducted by the AO/learned CIT(A) even during appellate/remand proceedings. The books of accounts were not rejected by authorities below nor any defect is pointed out by the AO/learned CIT(A) in the books of accounts maintained by the assessee. There is no allegation by Revenue that the assessee claimed any bogus expenses or any attempt is made to defraud Revenue. We are of the considered view that aforesaid adhoc disallowance of expenses under various heads of expenses to the tune of 10% of the total expenses incurred by the assessee under these heads of expenses is not warranted and we order deletion of the said adhoc disallowance of expenses. - Decided in favour of assessee.

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• 2019 (8) TMI 1049
  Late filing fee under section 234E - period relating to financial year 2014-15 - after the due date for filing the quarterly TDS statement, the penalty/fee is leviable u/s 234E for each days default - HELD THAT:- TDS statements which have been filed earlier to 01.06.2015 then no fee is leviable u/s 234E of the Act. All the judgments have been passed on the basis of the decision of the Hon ble Karnataka High Court in case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ] . In view of the said discussion and by relied upon the decision mentioned above, we are of the view that the finding of the CIT(A) is not justifiable, therefore, we set aside the finding of the CIT(A) in all the appeals and delete the fee u/s 234E of the Act. - Decided in favour of assessee.

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• 2019 (8) TMI 1048
  Addition u/s 43B - bonus payable shown by the assessee - whether the same has not been paid on or before due date of filing return of income - HELD THAT:- Assessee has transferred the amount of bonus payable to bonus fund account of various branches in the month of May 2013 and thereafter, amount of bonus payable to employees has been transferred to their respective bank account in the month of May 2013. All these entries have been duly verified by the CIT(A) and no discrepancy has been pointed out by the DR before us, in respect of the amount transferred in the bank account of the various employees, which is appearing in the various pages of the paper-book filed by the assessee. In our opinion, the assessee has complied requirement of section 43B for payment of the bonus payable before due date of filing of return of income, which was 30/09/2013 in this case and accordingly, we uphold the finding of the CIT(A) on the issue in dispute. The ground of the appeal of the Revenue is accordingly dismissed. Addition of closing allowance - uncertain liabilities / expenses - whether the same is not found to be paid within the year under consideration and order for provision of Closing Allowance was passed on 24.06.2013, much after the end of year under consideration? - HELD THAT:- The assessee has claimed before us that the amount of closing allowance has been paid to the employees from year to year in percentage terms of salary and therefore duly quantifiable provision. DR also could not controvert this fact that the amount of closing allowance is quantifiable in respect of the each employee. It is also not in dispute that the amount was incurred wholly and exclusively for the purpose of the business. In our opinion, when amount of provision is quantifiable, same cannot be said as an unascertained liability. Accordingly, same is allowable under section 37(1) of the Act as incurred wholly and exclusively for the purpose of the business of the assessee. The ground of the appeal of the Revenue is accordingly dismissed.

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• 2019 (8) TMI 1047
  Addition on account of excess price paid on purchase of sugarcane - Addition u/s 37 and 40A - HELD THAT:- Issue of payment of excessive price on purchase of sugarcane by the assesses is no more res integra in view of the recent judgment of Hon ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. [ 2019 (3) TMI 321 - SUPREME COURT] - thus we set-aside the impugned orders on this score and remit the matter to the file of the AO for deciding it afresh as per law in consonance with the articulation of law by the Hon ble Supreme Court in the aforenoted judgment. AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon ble Supreme Court supra

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• 2019 (8) TMI 1046
  Deduction u/s 10AA - undertakings established by splitting up and / or re-constructing of existing business - HELD THAT:- One undertaking was established in assessment year 2009-10 and the second undertaking was established in assessment year 2011-12. The Tribunal while deciding the issue in the case of assessee in assessment year 2011-12 has allowed the plea of assessee and held that the said undertakings were not established by splitting up and / or re-constructing of existing business and had allowed the claim of assessee under section 10AA of the Act. Coming to third undertaking i.e. new undertaking which was established in the current year at Magarpatta, Pune SEZ. The assessee has placed the list of employees who were transferred from old unit. As per the said list, 38% of employees have been so transferred. The CBDT in this regard has issued circular, under which it is said that where an undertaking is established by transfer of employees from existing undertaking upto 50% of employee strength, then it cannot be said the case of splitting up or reconstruction of existing business. We have applied the said principle in earlier years and while deciding the issue of establishment of new undertaking at Hyderabad in assessment year 2011-12 has held that since the employees transferred from existing unit were less than 50%, then it cannot be said to be case of splitting up and re-constructing of existing business and has also allowed the claim of deduction under section 10AA of the Act holding it to be new undertaking. Following the same parity of reasoning, we allow the claim of assessee in respect of new undertaking established during the year at Magarpatta, Pune SEZ. The ground of appeal No.1 raised by Revenue is thus, dismissed. Disallowance u/s 10AA(9) r.w.s. 80IA(10) - HELD THAT:- The case of Revenue was that the profit margins shown by assessee were higher than the mean margins of comparables selected for benchmarking international transactions, hence provisions of section 10AA(9) r.w.s. 80IA(10) of the Act were invoked. The Tribunal in earlier year have deleted the aforesaid disallowance made by the Assessing Officer. Following the same parity of reasoning, we hold that this issue also stands covered in favour of assessee in line with orders of earlier years and in the absence of Assessing Officer failing to demonstrate that any arrangement existed between the assessee and comparable companies selected which enabled the assessee to earn more profits. The ground of appeal No.2 raised by Revenue is thus, dismissed. Disallowance made under section 14A - HELD THAT:- Assessing Officer had invoked the provisions of section 14A of the Act, however, had not recorded proper satisfaction before invoking the aforesaid provisions as to why suo motu disallowance made by assessee was not sufficient. In the absence of satisfaction in earlier years also, the Tribunal has held that there is no merit in making the said disallowance made under section 14A read with Rule 8D of the Rules. The Tribunal has decided this issue in assessment year 2011-12 wherein deleted the addition. Addition on account of ESOP cost - HELD THAT:- The said issue has been remitted back to the file of Assessing Officer with directions by the Tribunal in assessment year 2009-10 and even in succeeding years. Following the same parity of reasoning, we remit this issue also back to the file of Assessing Officer to decide the same in line with earlier directions of Tribunal in assessment year 2009-10. The ground of appeal No.4 raised by Revenue is thus, allowed for statistical purposes. Disallowance u/s 40(a)(i) - foreign remittances made to software and other services where TDS was not deducted - HELD THAT:- Since the nature of payments are same as in earlier year and JOHN DEERE INDIA PVT. LTD.[ 2019 (3) TMI 458 - ITAT PUNE] following the same parity of reasoning, we hold that no tax is to be deducted out of such overseas payments and consequently, no disallowance is warranted for non deduction of tax under section 40(a)(i) of the Act Disallowance of FBT paid in Australia - HELD THAT:- The Tribunal in assessment year 2011-12 has also considered the said issue and have held that FBT paid in Australia is to be allowed as business expenditure. Following the same parity of reasoning, we uphold the order of CIT(A) and dismiss the ground of revenue.

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• 2019 (8) TMI 1045
  Remuneration to partners - increase / change the quantum of the salary/remuneration by a separate agreement or supplementary deed - validity of resolution increasing the salary not singed by any witness - scope of the Partnership Act, 1932- Deduction u/s. 28 read with section 40(b) - reason for the disallowance is that the same is not admissible in view of section 40(b) - HELD THAT:- The assessee s conduct, i.e., in first continuing with an impermissible clause (in the partnership deed) even years after clarification by the Board and, then, in not defining the manner of quantification, but passing resolutions, with no record as to the time when they were actually passed, stating to be valid amendment/s to the partnership agreement, itself betrays its case of having passed the resolutions on the date from which they are made effective, i.e., prospectively. The resolution/s also does not qualify the term partners with the word working , so that in terms thereof, the salary is to be paid irrespective of whether a particular partner is a working partner or not, and which is not sustainable in view of section 40(b)(i). The entries in the books of account, even otherwise not decisive of the matter, also do not support the assessee s case. The said resolution, or the one stated to be passed earlier thereto, cannot, in view of the fore-going factual and legal incidents, be regarded as a valid partnership deed, i.e., as a valid instrument of partnership, or as a valid amendment to the partnership deed dated 05.6.2007. One could argue that even ignoring the resolution/s the total salary provided in the partnership accounts could be regarded as agreed to by the partners, i.e., from time to time. The same implies that there is no need for a separate written agreement, which cannot be accepted in view of the same being a requirement of law for a firm to be assessed as a firm (ss. 184, 185). The decision in Suman Constructions [ 2008 (12) TMI 275 - ITAT PUNE-A] as well as ITO v. Kakkar Cold Storage [ 2002 (12) TMI 194 - ITAT AMRITSAR] which pertains to AY 1993-94 (for which exception has been made by the Board circular (supra) itself), would, accordingly, be of no consequence, as would be the assessee s reliance on Durga Dass Devki Nandan v. ITO [ 2011 (3) TMI 20 - HIMACHAL PRADESH HIGH COURT] would be of little assistance to the assessee. In fact the latter two decisions are distinguishable in-asmuch as in these cases the partnership deed provided for allowance of salary to the working partners in terms of the relevant clause of the Act (s. 40(b)(v)), and which is precise and definite, so that the salary could be quantified with reference thereto, even as explained in and therefore consistent with the board circular (supra), upheld by the Hon ble jurisdictional High Court. Section 40(b)(v) defines the maximum remuneration admissible to the working partners of a partnership firm, assessed as such. The said decisions are thus distinguishable on facts. No merit in law in the assessee s claim qua the allowance of remuneration to the working partners, i.e., in the facts and circumstances of the case. The salary allowed having however been, as given to understand during hearing, assessed in the hands of the partners (to whom it stands allowed), they shall be allowed relief by the AO in terms of s. 155 of the Act. - Decided against assessee.

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• Customs

• 2019 (8) TMI 1044
  Refund claim - requirement of re-assessment order of bill of entry - time limitation - condonable period of delay - section 27 of Customs Act - HELD THAT:- Admittedly, the lower authorities have not found that the appellant is not entitled for the refund on merits and I find that the communications issued by the Assistant Commissioner, requiring the obtaining of re-assessment order, are not as per the procedure prescribed under Chapter 14 of the Customs Manual which is relating to Customs refunds, especially when an application for refund is filed under Section 27 of the Customs Act. As per Chapter 14 of the Customs Manual, Section 27 of the Customs Act, 1962 deals with such refund of duty and interest and therefore, any application filed will have to be processed and disposed of in the manner laid down under Section 27 read with the procedure under the Customs Manual. There is no dispute that the application for refund filed vide acknowledgement dated 11.03.2013 was within the prescribed period of one year and as regards the other conditions under Section 27, the same are not disputed by the Revenue - the rejection by the Ld. First Appellate Authority of the appeal as time-barred cannot sustain and accordingly, the same is set aside. Refund claim - Section 11B of the Central Excise Act - HELD THAT:- The appellant is entitled to refund subject to the guidelines issued by the Hon ble jurisdictional High Court in the case of M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) [ 2018 (7) TMI 276 - MADRAS HIGH COURT] where it was held that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. The matter is therefore remanded to the file of the Adjudicating Authority - appeal allowed by way of remand.

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• 2019 (8) TMI 1043
  Smuggling - Seizure of goods - place of origin of Betel Nuts - whether they are of foreign origin, or they have been purchased locally as asserted by the respondents before the authorities below? - HELD THAT:- The CESTAT after considering all the material on record including the orders passed by the authorities below, have given a concurrent finding of fact that the Revenue could not establish the foreign origin of the betel nuts . The documents produced by the respondents indicated that the goods in question were purchased from local markets, and in support of the purchases they produced the market receipts which has not been doubted by the Revenue Authorities themselves at any stage of the proceedings. The report of the ARDF has also been held to be not reliable in as much as it could not be shown with any degree of certainty that the origin of the betel nuts could be established by testing in a laboratory, as is clear by the answer to the RTI query given by Directorate of Arecanut And Spice Development, Ministry of Agriculture and Farmers Welfare, Government of Kerala. The Revenue did not argue or place any material to indicate that the betel nuts in question were smuggled into India, even if, for a moment, it is assumed that they were of foreign origin, in order to sustain the order of confiscation and penalty. Appeal dismissed.

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• 2019 (8) TMI 1042
  Release of Bank Guarantee - Detention of consignment - classification of goods - goods are blanket or fabric? - it is grievance of the petitioner that the dispute having been finally adjudicated by the Tribunal, the respondents are not releasing the bank guarantee furnished by it - HELD THAT:- On 19.7.2019 counsel for the respondents sought time with the assurance that before the next date the respondents would release the bank guarantee furnished by the petitioner. Petition dismissed as infructuous.

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• 2019 (8) TMI 1041
  Compliance of obligation u/s 34 and 35 of the Customs Act - Dutiable or exempt goods - interpretation of statute - scope of NIL rate of Duty - whether the goods leviable at NIL rate of Duty also comes under the category of dutiable goods? - Confiscation of goods - imposition of penalty. Whether, goods leviable at NIL rate of duty comes within the definition of Dutiable goods under Section 2 (14) of the Customs Act, 1962? - HELD THAT:- Any goods can be called Dutiable goods under Section 2 (14) of the Customs Act only when it is chargeable to duty and on which duty has not been paid and NIL rate of Duty does not come under the category of Dutiable goods . In the instant case imported goods i.e. Yellow Peas in question were exempted from Duty and not chargeable - decided in favor of respondent importer. Whether goods not chargeable to duty gets immunity from compliance of the statutory obligation under Section 34 and 35 of the Customs Act, 1962 and from penal action in consequences thereof under Section 111 and 112 of the said Act? - HELD THAT:- Importing non dutiable goods does not give an importer a licence to violate or flout laws under the Customs Act or grant automatic exemption from complying statutory obligation under Section 34 35 or any other provisions of the Customs Act, 1962 and penal consequence in violation thereof. The action of condonation by the tribunal of the aforesaid violations by the importer by holding that it was procedural violation and secondly that imported goods in question were not chargeable to Duty and hence no contravention of Section 111 (h) of the said Act is not sustainable in law since the language of Section 34 of the Act is Imported goods shall not be loaded.. and in Section 35 of the Act is No imported goods shall be.. The legislator has not used the expression specifically Dutiable goods or Duty exempted goods . The view of the Tribunal that if no Duty is chargeable or exempted from Duty confiscation and penalty would not be justified is wholly incorrect and not legally sustainable in view of the facts and circumstances involve in this case. There was clear violation of Section 34 35 of the Customs Act and penal action under Section 111 and 112 of the Act is justified and the importer cannot take advantage of quoting wrongly Section 111 (h) of the Act by the adjudicating authority and escape penalty in the above admitted factual position. Appeal disposed off.

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• 2019 (8) TMI 1040
  Smuggling of human embryos into India - Release of petitioner on Bail - handing over to the Petitioner the Petitioner s Passport at the time of Bail - refund of amount taken from the petitioner at the time of releasing the Petitioner on bail - HELD THAT:- The purpose for his visit to India on eight different dates is not brought on record by the Petitioner. There are serious allegations against the Petitioner that the Petitioner is involved in smuggling of human embryos. The learned counsel for Respondent No.1 submitted that during the course of investigation, the mobile of the Petitioner was seized and from the messages of the Petitioner s phone, it is revealed that the Petitioner was to deliver the human embryos to the Indo Nippon IVF Clinic in Bandra (W), Mumbai, and when the investigation went to the said clinic and taken a search they found four documents relevant to the investigation. Thereafter at the relevant time, the Petitioner voluntarily and willingly surrendered his Malaysian passport bearing A37044226 to the DRI. It is pertinent to mention at this stage that a show cause notice has been issued to the Petitioner. Petitioner is a Malaysian National, and if his passport is returned to him, he will leave India and may not return for adjudication, and it will be very difficult to secure his presence in India for the purpose of adjudication and trial. The offence in which the Petitioner is alleged to have been involved is a serious one i.e. the smuggling/illegal import of human embryos into Indian from Malaysia by mis-declaring the same to the Malaysian Customs authorities as stem cells. The presence of the Petitioner for adjudication and trial is necessary. Petition dismissed.

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• 2019 (8) TMI 1039
  Liability of the appellant to redemption fine under Section 125 of the Customs Act, 1962 over and above confiscation - penalty u/s 112 (a) ibid - HELD THAT:- As the heading itself points out, the fine i.e., redemption fine, is an option in lieu of confiscation and hence, both cannot run simultaneously, which means redemption fine is leviable only as an alternative to confiscation. The appellant here in this case has not questioned the confiscation and hence, there is no option available to it. Consequently, there is no question of exercising any option in lieu of confiscation. When the order as to the confiscation remains unchallenged, the importer accepts the order of confiscation and even the exporter offers willingness to accept back (re-export) the consignment, there cannot be any question of redemption fine. Therefore, the redemption fine imposed and upheld by the First Appellate Authority cannot sustain and is accordingly set aside. Penalty under Section 112 (a) of the Customs Act - HELD THAT:- A reading of the above Section makes it clear that the penalty under Section 112 (a) would be imposed in the case of improper importation of goods which has rendered the imported goods liable to confiscation under Section 111 and for this, I am of the opinion that abetment is not a criterion. Apparently, Clause (a) of Section 112 has two limbs the first being improper importation of goods by any person who, in relation to any goods..would render such goods liable to confiscation ; and the second limb starts with or abets the doing or omission or such an act. Hence, a mere importation that would render such goods liable to confiscation, as indicated above, is sufficient to attract penalty - Penalty upheld. The impugned order as regards the redemption fine is set aside - The impugned order as regards the penalty under Section 112 (a) is modified - appeal allowed in part.

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• Corporate Laws

• 2019 (8) TMI 1038
  Financial Establishment or not - National Spot Exchange Limited (NSEL) - whether the NSEL is a financial establishment within the meaning of Section 2(d) of MPID Act? - HELD THAT:- The NSEL has not accepted any deposit and if it has not accepted any deposit, then it would not fall within the definition of financial establishment . The NSEL has received money from the buyers at T+2 date and it was immediately paid to the sellers at T+2 date. However, on T+25 date, the parties who were sellers on T+2 date, and who were under obligation to make payment on T+25 date, failed to do so and it is not the NSEL but the sellers who receive the money from the buyers on T+2 date with an underlying obligation to make the payment of T+25 date but failed to do so and therefore, at the most, they could be referred to as financial establishment . The petitioner has admitted that the amount used to come to NSEL to be paid to the respective traders on the T+25 settlement date and the NSEL was entitled to charge its transaction charges. This would clearly dispel the case of the respondent State that the NSEL was accepting deposit and therefore, it was a financial establishment. The clients trading on the NSEL platform did not invest with the NSEL in form of Fixed Deposits, equity or debentures of NSEL but they traded commodities on the platform of NSEL. The NSEL has always voiced its stand by stating that it is not a Financial Establishment and in response o the notices issued to it, it pin pointed towards the defaulters who are responsible for the loss to the investors and the said contention of the NSEL was found to be substantiated by the audit reports. The NSEL has even instituted recovery suits against the defaulters. Since the investors raised an alarm about the losses caused to them, as a knee jerk reaction, the NSEL and its promoter came to be proceeded under the provisions of the MPID Act without deliberating on the core issue to be determined as a jurisdictional fact as to whether the entity was a Financial Establishment, thereby permitting the authorities to proceed against it under the statue intended to govern Financial Establishments. Thus, it can be concluded that the NSEL is not an Financial Establishment within the purview of the Maharashtra Protection of Interests of Depositors in Financial Establishments Act, 1999.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 1037
  Withdrawal of the Corporate Insolvency Resolution Process - Section 12A of the Insolvency and Bankruptcy Code r.w 30(a) - the Petitioner Bank was able to make E-auction of the assets(property) of the company and full satisfaction of its debts realised - HELD THAT:- This Adjudicating Authority in exercise of its powers conferred under Section 12A of the Insolvency and Bankruptcy Code allow the present application for recording settlement and recalls the Corporate Insolvency Resolution Process but with such observation so as to safeguard adequate the interest of third party stakeholders that the present order shall not prejudice or affect right of others creditors, stakeholders as the case may be and they shall be at liberty to agitate their right and claim before appropriate forum including this Court in accordance with the law. - order dated 31.05.2019 recalled. Application allowed.

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• 2019 (8) TMI 1036
  Application u/s 7 of the I B Code - Appellant submitted that the recovery proceeding is already pending before the Debt Recovery Tribunal ( DRT ) which is the subject matter of the application u/s 7 of the I B Code. - Appellant submits that the amount of debt is also in dispute and it cannot be held that there is a default as the matter is pending for consideration in the Revision Application, which is pending before the DRT - HELD THAT:- Even if a claim is disputed and if the amount payable is more than Rs. 1 lakh, the application u/s 7 of the I B Code is maintainable. Mere pendency of the case before the DRT for adjudicating of such disputed amount cannot be a ground to reject the application u/s 7 of the I B Code, if the Adjudicating Authority is satisfied that there is a debt and default and the application is complete. On the other hand, in view of Section 14 all such proceedings in respect of any debt will remain stayed and cannot proceed during the period of moratorium. For the reasons aforesaid, we are not inclined to interfere with the impugned order in appeal.

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• 2019 (8) TMI 1035
  Maintainability of appeal - appeal preferred by Corporate Debtor - SARFAESI Act, 2002 - HELD THAT:- A person may be assignee under the SARFAESI Act, 2002. On that ground the application u/s 7 cannot be rejected. The action, if any, taken under SARFAESI Act, 2002 will not proceed in view of the order passed, in view of provisions of Moratorium passed under I B Code. Appeal dismissed.

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• 2019 (8) TMI 1034
  Maintainability of application - Initiation of Corporate Insolvency Resolution Process - pre-existing dispute or not - Corporate Debtor - HELD THAT:- There is no dispute about deficiency of service rendered by the Respondents. Clearance of Bank Guarantee for the purpose of EPCG Scheme is concerned, there is nothing on the record to suggest that such job was entrusted to the Respondents and they failed to do so. In absence of any such agreement placed on record, it cannot be held that apart from the services rendered, this is also the job to be performed by the Operational Creditor to get the money cleared from the Corporate Debtor . In the absence of any pre-existing dispute, the Adjudicating Authority has rightly admitted the application under Section 9 and for that no interference is called for - appeal dismissed.

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• 2019 (8) TMI 1033
  Disciplinary proceedings against professional member of the ICSI Institute of Insolvency Professionals and an insolvency professional - regulation 11(6) of the IBBI (Insolvency Professionals) Regulations, 2016 - principles of natural justice - HELD THAT:- DC finds that Mr. Vats misrepresented certain facts to mislead the Board, as explained in Para 5.1 above, which has serious bearing on a time bound CIRP, displayed utter contempt of law, authority and discipline, took shelter under a typographical error, when the corporate debtor and the stakeholders were suffering, and moratorium had come into force in a time bound CIRP. In view of his conduct as explained in Para 5.1 above, the Disciplinary Committee, in exercise of the powers conferred under section 220 (2) of the Code read with sub-regulations (7) and (8) of regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, hereby directs as under Mr. Vats shall work for at least six months as an intern with a senior insolvency professional, to improve his knowledge and understanding of the Code and the regulations made thereunder to appreciate the importance of time in a CIRP and Mr. Vats shall not seek or accept any assignment or render any services under the Code till he complies with the direction as at (i) above. He shall, however, continue to conduct and complete the assignments / processes he has in hand as on date of this order.

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• PMLA

• 2019 (8) TMI 1032
  Offence under PMLA - pre-arrest bail seeked - HELD THAT:- In the instant case, in view of the enormous material placed on record in respect of distinguished entities, various transactions etc, this Court unhesitatingly opines that bail plea of petitioner is not acceptable. Recently, Supreme Court in Rohit Tandon Vs. Directorate of Enforcement [ 2017 (11) TMI 779 - SUPREME COURT] while dealing with the bail plea in a money laundering case, has again reiterated that white collar crimes/ economic offenders have deep rooted conspiracies involving huge amount of public funds and this should be viewed seriously and such offences ought to be considered as grave offences. Pertinently, the bail plea in the case of Rohit Tandon (Supra) was repelled by the Supreme Court while observing that duty of the Court at the bail stage is not to weigh the evidence meticulously but to arrive at a finding on the broad probabilities of the case. This is a classic case of money laundering. The twin factors which have weighed to deny pre-arrest bail to petitioner are: (i) Gravity of offence and (ii) evasive replies given by petitioner to the questions put to him while he was under protective cover extended to him by this Court. The parameters governing pre-arrest bail and regular bail are altogether different. I have pondered over this matter for long and after weighing the pros and cons, as of considered view that the gravity of the offence committed in the instant case amply justifies denial of pre-arrest bail to petitioner. Grant of pre-arrest bail in a serious matter like instant one to an accused simply on the ground that investigation is complete and charge sheet has been filed, would defeat the ends of justice. In bail matters, gravity of the offence is of utmost consideration which weighs with the Court in granting or refusing pre-arrest bail or regular bail. The facts of this case persuades me to decline pre-arrest bail to petitioner while refraining to comment on the merits of the case. Upon considering the case set up against petitioner in its entirety, this Court is of prima facie opinion that it is not a fit case for grant of pre-arrest bail to petitioner.

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• Service Tax

• 2019 (8) TMI 1031
  Valuation - nature of pre-pay penalty towards foreclosure of home loan - inclusion of commitment charges in assessable value - whether these are in nature of interest/ damages or not - case of appellant is that the commitment charges are in nature of interest charges or the damage charges made by them from their customer/ client for making available the said credit facility available to them - HELD THAT:- In view of established practices in banking and financial industry we do not find any merits in the submissions of the appellant that the prepayment levy charged by them for foreclosure of loan is interest charge or in nature of liquidated damages. The basic nature of interest as is understood in the banking and financial industry is that its time value of the money held by the other person. In the case of foreclosure the customer is not holding any money of the appellant, but is returning back the same much before the appointed date. Hence the return of money cannot be subject to interest charge as claimed by the appellant, nor can it be the damages as claimed by them. We are not in position to agree with submissions of the appellant that these charges are in nature damages recovered from the customers. Since it was an option extended at the time of entering into the contract/ loan agreement, the same cannot also be termed as liquidated damages for non performance of the conditions specified in the contract. The contract specifies a charge levied for exercising the option the said charge cannot be penalty or liquidated damage to compensate the loss. Time limitation - HELD THAT:- Appellants have not shown any bonafide reason to show that they entertained such a belief. Further if they claim the issue was clarified by CBEC only in 2011, then what made them pay the service tax in the year 2006. The arguments advanced by the appellants do not establish the existence of such a bonafide belief - the demand of Service Tax made by invoking the extended period of limitation is upheld. Demand of interest - HELD THAT:- Also the demand made in respect of the interest at appropriate rate under Section 75 is upheld. Penalty - HELD THAT:- When the invocation of extended period of limitation in terms of proviso to section 73(1) is upheld, penalty under Section 78 should follow - Also for various contraventions of the provisions of Chapter V of Finance Act, 1994, the penalties imposed under Section 76 and 77 too are justified - the case is fit where provisions of Section 80 should be invoked to set aside the penalties that are imposed under Section 76, 77 78 of Finance Act, 1994. Appeal allowed in part.

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• 2019 (8) TMI 1030
  Franchise Services/ royalty payments - Consulting Engineer Services - Technical Testing and Analysis Services - Business Auxiliary Service (Commission Received) - export of services - reverse charge mechanism - Whether the amounts paid by the appellant under the taxable category of Intellectual Property Right Service can be adjusted against the service tax demand made under the category of Franchise Services ? - Whether the services under the category of Business Auxiliary Services to OC HK and OC A, can be given the benefit of Export of Services as it was available from time to time? HELD THAT:- Undisputed fact is that appellants were engaged in selling the goods manufactured by their foreign counterparts namely OC HK and OC A in India. For undertaking the sale of such goods appellants were receiving certain commissions from those foreign companies. Undisputedly the said commission was received in convertible foreign exchange. Appellants have contended that though the services rendered by them as commission agent to the foreign counterparts fall within the taxable category of Business Auxiliary Services the same should be treated as export of service and hence should not be subjected to any service tax As per the appellants during the period prior to introduction of Export of Service Rules, 2005, i.e. 14.03.2005, the benefit of exemption under Notification No 21/2003 dated 20.11.2003 should have been extended by the Commissioner to them. However Commissioner has denied the benefit under the said notification stating that appellants have not substantiated their claim under the said notification - the above notification exempts all the payments received by a person in connection to taxable service rendered in convertible foreign exchange. Commissioner has in his order not denied the admissibility of the benefit of said exemption notification but has only stated that appellants have failed to substantiate their claim under the said notification. It is for the appellants to satisfy that they fall strictly with the parameters as specified by the exemption notification - the end of justice will be me if appellants are allowed one more opportunity to produce the requisite documents and records before the adjudicating authority for establishing their claim to benefit of the exemption notification No 21/2003-ST dated 20.11.2003. Thus matter for the period 09.07.2004 to 14.03.2005 is remanded back to the adjudicating authority, before whom the appellants should produce all records and documents to establish their claim for exemption under Notification No 21/2003-ST. Export of services or not - place of consumption of services - Held that:- The test, which has been laid down for determination is not the place where the income has accrued but the place where the activity resulting into such business income has taken place. Though the beneficiary of such sale of goods where the foreign counterparts of the appellants but the actual activity of the sale of the said goods have been undertaken by the appellants in India as selling agent/ commission agent. Hence the services of commission agent provided by the appellants to their foreign counterparts have been provided by the appellants for the sale of goods in India, is nothing but service provided/ used by the recipient of service in India. In our view the findings recorded by the Commissioner, in this respect cannot thus be faulted with. In the present case the facts are completely opposite, here the customers of foreign entity i.e. OC HK and OC A are located in India and Appellants are receiving the commission in respect of the goods of these foreign entities sold by them in India. Thus services provided by the appellant facilitate the conduct of business of the Foreign Entities in India. Extended period of limitation - HELD THAT:- There are no merits in the submissions of the appellant that they were under a bonafide belief that service tax was not leviable on the Commission received by them from their foreign counterparts - It is settled law that it is for the appellant tom establish that such a bonafide belief existed - there are no reason to differ from the findings recorded by the Commissioner in his order for invoking the extended period of limitation. Penalties - HELD THAT:- The penalties are leviable on the appellants for the various acts of commission under Section 76, 77 and 78 of the Finance Act, 1994. However since the appellants had paid the service taxes due even prior to issuance of show cause notice in respect of Consulting Engineer Services and Technical Testing and Analysis Services, we are inclined to give the benefit of Section 80 of the Finance Act, 1994 in respect of demands made in respect of these services - also appellants have paid the Service Tax demanded under the category of Franchisee Services, albeit by treating the tax to be payable under the category of Intellectual Property Right Service , we are inclined to extend the benefit of Section 80 in respect of this demand. Effectively the demand which is determined against the appellants is only in respect of Business Auxiliary Services . Since appellants have not provided the details of the said services in their ST-3 return and have not paid the service tax in respect of these service we uphold the penalties levied in respect of the services under the section 76, 77 and 78. However the quantum of penalty need to be redetermined after re-determining the demand in respect of these services. Appeal allowed in part.

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• 2019 (8) TMI 1029
  Valuation - nature of pre-pay penalty towards foreclosure of credit facility (loan) - in the nature of interest or not - Banking and Financial Services - inclusion of commitment charges in assessable value - appellant submitted that the commitment charges are in nature of interest charges or the damage charges made by them from their customer/ client for making available the said credit facility available to them. Since these are in nature of interest/ damages they are not to be included in the value of taxable services provided by them - time limitation - HELD THAT:- The Commitment Charges are neither the interest charges as claimed by the appellant nor the liquidated damages. The clear distinction has been drawn in respect of interest charges and the commitment charges. Interest charges are in respect of the amount availed or drawn /utilized from the clean line of credit facility made available by the appellant to CCIL, whereas commitment charges are in respect of un-availed portion of the credit limit. These charges are also in not nature of liquidated damages but are towards making available the clean line of credit facility available to their client/ customer. There are no merits in the submissions of the appellant that the commitment fees charged by them for extend clean line of credit facility to CCIL is interest charge or in nature of liquidated damages. The reliance placed by the counsel for appellant on the decision of this tribunal in case of COLLR. OF C. EX., BOMBAY VERSUS RAM DECORATIVE INDUSTRIES LIMITED [ 1998 (2) TMI 402 - CEGAT, NEW DELHI] is not of any help. In that decision the tribunal was dealing with goods which are tangible in nature and were produced for sale to the customer on an agreed price. The charges which were collected towards the goods not actually lifted by the buyer were held not to be added to the value of the goods that were actually lifted by the buyer - In the case of services, which are intangible in nature the same principle cannot apply. For levy of liquidated damages the existence of specific contract, whose performance has been vitiated by the actions of the parties to the contract need to be established. In the present case appellants have not been able to establish existence of such a contract whereby CCIL had agreed to borrow the said amount of Rs. 100 Crores from them. On the contrary as banking industry product Clear Line of Credit has been sanctioned by the appellant in favour of CCIL against agreed consideration. Thus the findings recorded by the Commissioner in this respect cannot be faulted with. Time Limitation - HELD THAT:- The only ground urged by the appellant is that was confusion prevailing in respect of levy of Service Tax in respect of the Commitment Charges, which lead to delay in payment of taxes. There are no merits in the submissions of the Appellant. Appellants have not shown any bonafide reason to show that they entertained such a belief. Further if they claim the issue was clarified by CBEC only in 2011, then what made them pay the service tax in the year 2006. The arguments advanced by the appellants do not establish the existence of such a bonafide belief - demand upheld by invoking extended period of limitation. Also the demand made in respect of the interest at appropriate rate under Section 75 is upheld - however penalties set aside. Appeal allowed in part.

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• 2019 (8) TMI 1028
  Manpower Recruitment or Supply Agency Service or BAS service - nature of contract - services relating to supply of manpower for packing of goods at M/s. L T, Mysore - taxable service or not - HELD THAT:- A bare perusal of the terms and contracts of the agreement shows that the contract which the appellant and M/s. L T have is one for packing of the meters manufactured by M/s. L T in the premises of M/s. L T. They do not have any contract for supply of any number of persons. In fact, M/s. L T is not concerned as to how many people they employ. The appellants get paid if they pack the meters as per the specifications on per piece basis - We do not find anything in the scope of the contract which can remotely suggest that it is a contract for supply of manpower to M/s. L T. There is a force in the argument of the learned counsel for the appellant that packing is a process incidental or ancillary to the manufacture and therefore should be considered as part of manufacture as per Section 2(f) of the Central Excise Act. Packing of goods per se may not be manufacture in itself but when it is done along with the manufacture in the factory of the manufacturer, packing is included in the process of manufacture. On the entire value of the goods including the cost of packing, M/s. L T is paying Central Excise duty. The demand on the appellant under the head of Manpower Recruitment or Supply Agency Service cannot survive by any stretch of imagination - Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1027
  Non-payment of service tax - fabrication, erection and commissioning work - wilful suppression of facts - Section 73(1) of Finance Act - Extended period of limitation - HELD THAT:- In fact, under the terms of work order also it was the main contractor who had to discharge the service tax liability and the appellant had also not collected any service tax from the main contractors. This apart, it is not in dispute that the main contractors had actually deposited the service tax. The Commissioner failed to examine the reply filed by the appellant on this issue and has invoked the extended period of limitation in the impugned order only for the reason that facts came to the notice of the Department only when an audit was carried out and that the appellant had also not mentioned the amount in the ST-3 returns - the appellant could have been under a bona fide belief that neither service tax was required to be collected from the main contractor nor was it required to be deposited with the Government. Such being the position, the Commissioner fell in error in invoking the extended period of limitation. The matter, therefore, needs to be remitted to the Commissioner to calculate the service tax liability for the period prescribed under Section 73(1) of the Act without invoking the proviso that seeks to extend the period of limitation - Appeal allowed by way of remand.

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• 2019 (8) TMI 1026
  Quantification of service tax liability - Transportation of passengers by Air Services - appellants submitted final figures vide letter dated 15.04.2013 to the department and have discharged the entire service tax liability; The Ld. Commissioner noted the contents but confirmed the demand in entirety without considering the correct figures - Supply of Tangible Goods for Use Services - Extended period of limitation - Transportation of passengers by Air - Taxable event - date of agreement - period 2009-10, 2010-11 and 2011-12 - Banking and Financial Services - Revenue neutrality - Reimbursement of Fuel - Demand of service tax - appellant argued that there is non-consideration of various facts. HELD THAT:- There is force in the arguments of the appellants - the learned commissioner has not considered the submissions, accounting practices of the appellant and the agreements in totality. It is also seen that the learned Commissioner has not considered the case law submitted by the appellants in so far as the demands raised on certain issues like reimbursement of fuel etc. - also appellants submissions on limitation were not considered. The Commissioner should have gone through the submissions of the appellant and give his findings on the same before coming to a conclusion. The matter needs to go back to the commissioner for a fresh reconsideration of the issues in the light of the submissions made by the appellant and the interpretation given Tribunal and Courts as submitted by the appellants wherever applicable - Appeal allowed by way of remand.

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• 2019 (8) TMI 1025
  Refund of unutilized credit - time limitation - export of services - Section 11B of the Central Excise Act, 1944 - HELD THAT:- As per Section 11B of the Central Excise Act, 1944, the relevant date for computation of period of one year in the case of export of services is not mentioned. The said section deals only with relevant date in cases of export of goods - In the present case, the issue is with regard to computation of the period of limitation in case of export of services. The rejection of refund claims on the ground that it is time-barred is unjustified. The refund claims are within time. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1024
  Interest on delayed refund - section 11BB of FA - HELD THAT:- A plain reading of Sec.11BB also shows that interest has to be paid if the refund is not made within three months from the date of application. It does not say within three months from the date of sanction of refund under Sub-Section (2) of Sec.11B as held by the first appellate authority. The appellant is entitled to interest from three months after the date of application till the date they were paid interest. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (8) TMI 1023
  Non-removal of office objections under Rule 986 of the High Court (Original Side) Rules - Condonation of delay in taking out this application - HELD THAT:- This appeal under Section 35G of the Central Excise Act, 1944 (the Act), challenges the order dated 29th December, 2006 passed by the Central Excise and Service Tax Appellate Tribunal (the Tribunal). CENVAT Credit - inputs - inputs classified under Chapter 39 having 39.20 of the Central Excise Tariff Act, 1985 (Tariff Act) or not - HELD THAT:- The inputs classified under Chapter 39 of the Tariff Act, 1985 as claimed by M/s. Paper Products Ltd., and not under Chapter 40 of the Tariff Act, 1985 as claimed by the Revenue - there is no question, much less any substantial question of law, which remains to be resolved. Appeal dismissed.

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• 2019 (8) TMI 1022
  Search and Seizure - Clandestine removal - admissible evidence in according to the provisions of Section 36(B) of the Central Excise Act,1944 - cross-examination of witnesses - HELD THAT:- It is evident from the panchnama dated 07.08.2012 that the shortage was detected on the basis of eye estimation and also on average weight without physical weighment. The department failed to gather any of documents from the factory of the appellant and also from the residential premises of the Director of the appellant. Further the loose documents which were recovered from the car of the accountant were not put to test for ascertaining to the authorship of these documents. Moreover, these documents could not be corrected with the corroborative evidence. The investigating authority failed to elucidate the system adopted for the preparation of the relied upon documents which were allegedly based on these documents. The details contained on the loose sheets and third party documents are actually not comprehensible and, therefore, cannot be accepted as admissible piece of evidence. Moreover, the Panchnama proceedings have been challenged on the ground of that the Panch-witnesses were not present at the time of the resumption of the evidence. Also, during the cross-examination the Accountant has categorically stated that he has already retracted his earlier statements and he has never stated that the said document pertains to production and clandestine removal of the goods from the appellant factory. The learned Commissioner not only denied the cross- examination of officers who has conducted the raid, but also of other persons whose cross-examination was sought by the appellant. We have also seen that the contents of cross-examination were not at all considered by the learned Commissioner while adjudicating the case. We have also seen from the record that the statements were relied upon by the adjudicating authority without conducting examination in chief of the matter which is the basic requirement of provision of Section 9D. The charges of clandestine removal of the goods cannot be upheld merely on assumptions and presumptions, but has to be proved with positive evidence such as purchase of excess raw materials, consumption of excess electricity, employment of extra labour, seizure of cash, transportation of clandestinely removed goods etc. It has also been held that onus of proof of bringing clinching evidence is on the Revenue. It has been held that the clandestine manufacturing and removal of excisable goods is to be proved by tangible, direct affirmative and incontrovertible evidence relating to receipts of raw materials inside the factory premises, and non-accountal thereof in the statutory records, utilization of such raw materials for clandestinely manufacture of finished goods. manufactured of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, amount received by the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal - All these material evidence are missing in the present case and the evidences brought into the record by the department are incomplete, inconsistent and not a reliable piece of evidence to prove charges of clandestine removal. The shortage which was detected by the officers is the on average weight method basis and, therefore, mere admission by the directors, who deposited the duty for the shortage, is not enough to proof that the goods were clandestinely cleared from the appellant factory. Thus, the shortage was detected on average basis is not sustainable. No material evidence except few statements was brought on record to prove the charges against them. Most of the raw material supplier have enclosed their invoices on the basis of which the goods were cleared by them to the appellant after payment of Central Excise duty. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1021
  Valuation - applicability or non-applicability of provisions of Section 4A of the Central Excise Act - manufacture of chemical for footwear, varnishes, adhesive, polish etc. for footwear - goods in question were for industrial consumers - extended period of limitation - HELD THAT:- Admittedly the appellant s final products were carrying the MRP on the same. The goods were being sold through distributive channels and by displaying the same in retail outlets. The explanation to Section 3 of the Legal Metrology (Packaged Commodities) Rule 2011 define the expression industrial consumers and institutional consumers. A sale would be considered as a sale to institutional consumer or industrial consumer if the packaged commodities are directly purchased from the manufacturer. In the present case admittedly the goods were not being directly purchased by the industrial consumers from the present manufacturer appellant. Extended period of limitation - HELD THAT:- The appellants were maintaining all the records required to be maintained in the ordinary course of their business and in fact it is audit of those records only which led the Revenue to find out that the duty was being paid under Section 4A. In such a scenario no mala fide can be attributed to the appellant so as to invoke the extended period - Extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1020
  CENVAT Credit - non-maintenance of separate account for dutiable as well as exempted goods - Rule 6(3) of Cenvat Credit Rules, 2004 - HELD THAT:- Rule 6(3) is applicable when assessee is manufacturing dutiable as well as exempted final product. In this case, the goods manufactured by the appellant are not exempted goods that these goods are dutiable goods. The said goods were cleared to special category of customer under Notification No. 10/1997-CE dated 01.03.1997. The appellant is not liable to pay any amount, interest and penalty - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 1019
  Principles of Natural Justice - revised Assessment - Section 27(1) of TNVAT Act - reasonable opportunity to show-cause against revised Assessment Order - HELD THAT:- There is no disputation or disagreement before this Court that impugned Assessment Orders have been passed by the respondent in exercise of powers under Section 27(1) of TNVAT Act. Proviso to Section 27(1) of TNVAT Act mandates that a reasonable opportunity to show-cause against revised Assessment Order should be given to the writ petitioner - this Court has no hesitation in holding that the respondent has complied with the requirements in the proviso of giving a reasonable opportunity to the writ petitioner to show-cause before passing the impugned orders. This Court has no hesitation in holding that the respondent has given more than reasonable opportunity to the writ petitioner to show-cause against the impugned orders. However, the problem presents itself in a different form in the instant case. In the impugned orders, after referring to revisional notice and two reminders, the respondent has held that the writ petitioner has not filed objections till the date of impugned orders and have requested for further time. It has also been held that writ petitioner had not filed any document till the date of impugned orders. This Court finds that this is a fit case to remit the matter back to the respondent directing the respondent to redo the revised assessment under Section 27(1) of TNVAT Act on the basis of revisional notice and the objections thereto together with enclosures already filed by the writ petitioner, and pass fresh revised Assessment Orders within a time frame. Impugned order set aside on the ground that it has been passed on the basis that writ petitioner has not filed objections/documents though the writ petitioner has submitted objections and documents - Respondent shall redo the revised assessment under Section 27(1) of TNVAT Act on the merits - petition disposed off.

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• 2019 (8) TMI 1018
  Condonation of delay of 1114 days in filing review application - Revenue appeal - casual approach - HELD THAT:- It is not disputed that there was no fraud, misrepresentation, collusion or jurisdictional error etc., so as to warrant interference by the Revisional Authority and consequent revision of the assessment order. As regards dismissal of the Review Application having been filed after a delay of 1114 days, the learned Tribunal, in paras 4 and 5 of the impugned order (A-4) has already given detailed reasons for not accepting the vague and general grounds given for the inordinate delay. No fault can be found with the same - further, even the present appeal has been filed after a delay of 342 days and again the reason given is the time spent at various levels in obtaining permission to file the present appeal. This casual approach on the part of the appellant is not acceptable, especially when high stakes involving public exchequer are involved. The present appeal is dismissed being devoid of any merits as well as on the ground of delay

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• 2019 (8) TMI 1017
  Levy of penalty - Validity of revised assessment order - Section 27 of TNVAT Act - reasonable opportunity of showing cause - HELD THAT:- It will be clear that there is no mention about proposal to levy penalty under Section 27(4) of TNVAT 2006 - proviso to Section 27(4) of TNVAT Act mandates that a dealer has to be given reasonable opportunity of showing cause before imposition of penalty under Section 27(4) of TNVAT Act. It is made clear that impugned order is set aside solely on the ground that writ petitioner has not been given an opportunity to show cause before passing an order of imposition of penalty under Section 27(4) of TNVAT Act. In other words, no opinion or view of this Court is expressed qua merits of the matter, more particularly qua impugned order. Petition allowed.

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• 2019 (8) TMI 1016
  Refund claim - DVAT Act, 2004 - the Petitioner s refund could not be stopped only because the Respondent chooses to create a demand, pursuant to the reassessment undertaken long after the expiry of the two months period in terms of Section 38 (3) (a) (ii) of the DVAT Act, within which the refund had to be processed - HELD THAT:- The legal position as regards creating a demand at the stage when refund is overdue is well settled in a large number of decisions of this Court. Reliance placed in the case of SWARN DARSHAN IMPEX (P) LTD. VERSUS COMMISSIONER, VALUE ADDED TAX AND ANOTHER [ 2010 (6) TMI 725 - DELHI HIGH COURT] where it was held that because of issuance of notice under Section 59 of the said Act, albeit beyond the prescribed time, the refund was not payable, is not tenable. This Court has no hesitation in holding that the exercise undertaken by the Respondent which resulted in the re-assessment order dated 15th March, 2019, creating a demand afresh for the first quarter of 2017-18 is, unsustainable in law. The reassessment exercise appears to have been undertaken at a stage long after the refund amount was due. The refund due could not have been stopped by creating a fresh demand pursuant to such reassessment exercise - the impugned order dated 15th March, 2019 passed by the VATO, Ward 41, creating a fresh demand for the first quarter of 2017-18 against the Petitioner is hereby set aside. Petition disposed off.

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• 2019 (8) TMI 1015
  Refund claim - time limitation - Section 38 of the Delhi Value Added Tax Act, 2004 - HELD THAT:- The legal position that the refunds to be made in terms of Section 38 of the Delhi Value Added Tax Act, 2004 within the time limit specified in Section 38 (3) thereof not withstanding demands that might be created for other periods other than that for which refund is due and which demands are sought to be raised subsequent to the expiry of the two month period under Section 38 of the DVAT Act, is well settled. It is made clear that the interest should be calculated strictly in terms of the law explained by this Court in the above decision and up to 31st August, 2019 or the date of actual refund whichever is later. If the refund together with the interest is not credited to the account of the Petitioner on or before 31st August, 2019 the Respondents will pay further cost of Rs. 50,000/- to the Petitioner. Petition disposed off.

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• 2019 (8) TMI 1014
  Principles of natural justice - reasonable opportunity to the writ petitioner to show cause against the impugned order - Proviso to Section 27(1) of TNVAT Act - effective and efficacious alternate remedy by way of an appeal to the jurisdictional Appellate Deputy Commissioner - Section 51 of TNVAT Act - alternate remedy - HELD THAT:- With regard to the alternate remedy aspect, there can be no disputation that the rule of alternate remedy and exercise of writ jurisdiction on the teeth of alternate remedy is clearly a self imposed restraint by Courts exercising writ jurisdiction. In other words, it is not a rule of compulsion and it is only a rule of discretion. Though it is a rule of discretion, with regard to fiscal law, the rigour is more. This Court also notices that this writ petition has been presented in this Court on 25.07.2019. Therefore, when writ petitioner goes before the said Appellate Authority (if the writ petitioner chooses to do so,) the period spent in the instant writ petition i.e., period from 25.07.2019 to the date on which the copy of the order is made available shall stand excluded. This is done as a scenario may emerge where the writ petitioner may not even have to seek condation of delay. However, this Court based on the principles adumbrated in Section 14 of Limitation Act excludes the period from 25.07.2019 to the date on which copy of instant order is made available to the writ petitioner for the purpose of enabling the writ petitioner to avail alternate remedy by way of statutory appeal before said Appellate Authority. Petition dismissed.

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• Wealth tax

• 2019 (8) TMI 1013
  Revision u/s 25 by Pr. CIT/CIT - condonation of delay - HELD THAT:- More importantly, writ petitioners have also paid the tax on wealth that has been overstated in the returns. As already been alluded to supra that respondent has even recorded in the impugned orders that the properties which have been erroneously included in the returns by the writ petitioners are clearly exempt u/s 2(ea)(i)(4). It is not completely forbidden to have a cursory look and have a birds eye view qua merits of the matter while testing whether delay in a given case deserves to be condoned. As this cannot be the sole determinant, this Court has considered the same as one of the buttressing features in search of an answer to the question as to whether delay is condonable / can be condoned in the instant cases. Section 25 of said Act is akin to Section 264. This Court has already passed an order RAMUPILLAI KUPPURAJ VERSUS THE ITO [ 2019 (7) TMI 303 - MADRAS HIGH COURT] with regard to condonation of delay in a matter pertaining to Section 264. This Court is informed that as of now there is no intra-court appeal against the said order and therefore, the said order is operating. The circumstances and facts are also more or less similar. The principle nonetheless applies. From a perusal of Section 8 it comes to light that exercise of powers of respondent u/s 25 is clearly comparable with exercise of powers of Pr. CIT/CIT u/s 264. Owing to all that have been set out supra, it follows as a sequitur that this is a fit case to set aside Impugned Order I. Impugned order I being order dated 10.08.2018 is set aside and Writ Petition No.28432 of 2019 is allowed. With regard to Impugned Order II, the same is set aside insofar as it rejects the writ petitioner s request for condonation of delay for Assessment years 2003-04 to 2010-2011. The other part of impugned order II wherein prayer for condonation of delay for Assessment Years 2011-12 and 2012-13 was acceded to is sustained. Now that the delay has been condoned, request of writ petitioner for refund shall be examined on merits, in accordance with law and disposed of as expeditiously as possible and in any event within 12 weeks from the date of receipt of a copy of this order.

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• Indian Laws

• 2019 (8) TMI 1012
  Dishonor of Cheque - insufficiency of funds - rebuttal of presumption - section 138 of NI Act - HELD THAT:- In the present case, there is no dispute about the fact that the cheque in question at Exh.46 was signed by the applicant herein. A perusal of cheque shows that the rubber stamp of Suraj Traders has been affixed on the said cheque. There is also no dispute about the fact that the aforesaid cheque finds mention in the registered sale deed dated 17/09/2009, executed in respect of shop premises in favour of wife of the applicant, wherein the applicant has signed as witness to the said document. There is also no dispute about the fact that the said cheque for an amount of Rs. 1,25,000/ was dishonoured and that there was compliance on the part of the non -applicant as regards the service of statutory notice to the applicant. Accordingly, the requirements of Section 138 of the aforesaid Act stood satisfied, pursuant to which the non -applicant filed such complaint against the applicant. Since, there is no dispute about the fact that the applicant had signed on the said cheque, the presumption under Sections 118 and 139 of the aforesaid Act came into operation in the present case - The presumptions that arose in full force against the applicant under Sections 118 and 139 of the aforesaid Act have not been rebutted in any manner by the applicant and, therefore, it cannot be said that the Courts below committed an error in convicting and sentencing the applicant. Since no error is found in the concurrent orders of conviction passed by the two Courts below, the present revision application is dismissed. Revision application dismissed.

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