TMI Tax Updates - e-Newsletter
August 28, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Time of supply under GST - whether the mobilisation advance is earnest money or not is of little relevance - deemed to have supplied service

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• Service of printing on trade advertisement material is the Principal Supply - use of paper is mere ancillary - taxable as service under GST

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• Penalty u/s 271B - Tax audit - If no accounts book or any accounts are maintained, the question of its audit does not arise - no penalty

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Articles

1. Section 292BB will not protect all irregularities committed by tax officers. Tax Officers must be more careful to ensure timely and proper proceedings.

   By: DEVKUMAR KOTHARI

2. Brief overview of INC –22A

   By: KANIKA LOHIYA

3. APPELLATE ADVANCE RULING ON INTERMEDIARY / ZERO RATED SERVICES

   By: Dr. Sanjiv Agarwal

News

1. Extension of Due Date to 30th November, 2019 for furnishing ‘Annual Return and Reconciliation Statement’ for FY 2017-18

2. Ministries of Tourism and Culture meet the 15th Finance Commission

3. RBI Central Board accepts Bimal Jalan Committee recommendations and approves surplus transfer to the Government

4. Auction for Sale (Re-issue) of ‘7.32% Government Stock 2024’, Auction for Sale (Re-issue) of ‘7.57% Government Stock 2033’,Auction for Sale (Re-issue) of ‘7.69% Government Stock 2043’, and Auction for Sale (Re-issue) of ‘7.72% Government Stock 2049’

Notifications

Customs

1. 33/2019 - dated 26-8-2019 - ADD

Seeks to impose provisional anti-dumping duty on imports of "Chlorinated Polyvinyl Chloride Resin (CPVC)-whether or not further processed into compound" originating in or exported from China PR and Korea RP for 06 months , in pursuance of anti-dumping investigation by DGTR

GST

2. Order No. 7/2019-Central Tax - dated 26-8-2019 - CGST

Central Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019

GST - States

3. 11/2019-State Tax (Rate) - dated 29-6-2019 - Arunachal Pradesh SGST

Specifies retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist.

4. 19/2019-(State Tax) - dated 28-6-2019 - Arunachal Pradesh SGST

To provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (OIDAR services).

5. 18/2019-(State Tax) - dated 28-6-2019 - Arunachal Pradesh SGST

Payment of taxes for discharge of tax liability as per FORM GSTR-3B.

6. 17/2019-(State Tax - dated 28-6-2019 - Arunachal Pradesh SGST

Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1.

7. 16/2019-(State Tax) - dated 28-6-2019 - Arunachal Pradesh SGST

Notifies the registered persons having aggregate turnover of up to 1.5 crore rupees person shall furnish the details of outward supply of goods or services or both in FORM GSTR-1.

Circulars / Instructions / Orders

GST - States

1. Circular No. 30/2019/GST - dated 22-8-2019

Corrigendum to Circular No. 20/2019/GST, Dated 16.4.2019 issued vide CCTs Ref.in CCW/GST/74/2015.

2. Circular No. 29/2019/GST - dated 22-8-2019

Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members.

3. Bikri-kar/Vividh-28/2018-2346 - dated 13-8-2019

GST applicability on Seed Certification Tags.

4. Bikri-kar/Vividh-28/2018-2350 - dated 13-8-2019

Processing of refund applications in FORM GST RFD-01A submitted by taxpayers wrongly mapped on the common portal.

5. Bikri-kar/Vividh-28/2018-2347 - dated 13-8-2019

GST exemption on the upfront amount payable in installments for long term lease of plots, under Notification No. 12/2017 - State Tax (Rate) S. No.41 dated 29.06.2017.

6. Circular No. 30/2019/GST - dated 30-7-2019

Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion.

7. Circular No. 29/2019/GST - dated 30-7-2019

Clarification on doubts related to supply of Information Technology enabled Services (ITeS services).

8. GSL/GST/B.54 - dated 30-7-2019

Corrigendum to Circular No. 97/16/2019-GST dated 8th April, 2019 issued vide No. GSL/GST/S.168/B.37, as amended vide Corrigendum dated 02.07.2019.

DGFT

9. 27/2015-2020 - dated 26-8-2019

Amendment in Para 6.34(14) of Chapter 6 of Handbook of Procedure 2015-20

Customs

10. 25/2019 - dated 27-8-2019

IGST refunds- mechanism to verify the IGST payments for goods exported out of India in certain cases

11. 26/2019 - dated 27-8-2019

IGST Export Refunds — extension in SB005 alternate mechanism and revised processing in certain cases including disbursal of compensation Cess

Highlights / Catch Notes

GST

• Deadline Extended for FY 2017-18: Submit GSTR-9, GSTR-9A, and GSTR-9C by November 30, 2019.

  News : Last date for furnishing of Annual Return in the FORM GSTR-9 / FORM GSTR-9A and Reconciliation Statement in the FORM GSTR-9C for the Financial Year 2017-18 extended till 30th November, 2019.
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• GST Act: Mobilisation Advances as Consideration Impact Supply Timing and Value, Regardless of Earnest Money Status.

  Case-Laws - AAR : Time and value of supply - levy of GST - mobilisation advance - ‘consideration’ under the GST Act has a wider scope and includes deposits if applied as consideration. In that context, whether the mobilisation advance is earnest money or not is of little relevance.
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• Authority Must Assess Eligibility u/s 129(1) of GST Act 2017 for Detention Order Ownership Claims.

  Case-Laws - HC : Detention order - claim of ownership - the concerned authority will have to consider the applicability of sub-section (1) of Section 129 and if prayed to that effect, whether the appellant is entitled to the benefit of clause (c) of sub-section (1) of Section 129 of the said Act of 2017.
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• Assessee admits unrecorded goods at business location; release upon 50% tax, penalty payment, and security for balance.

  Case-Laws - HC : Jurisdiction/power to seize goods - Once it was admitted to the assessee during the course of the survey that it had not recorded the goods found stored at his disclosed place of business in the regular books of account, a presumption of the goods having been "secreted" did arise, constructively, however this presumption is rebuttable - directed to release the goods after paying 50% tax & penalty and security for balance
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• Nodal Officer to Review Petitioner's GST Registration Amendment Complaint; Decision Expected Within Two Weeks Under GST Rules 2017.

  Case-Laws - HC : Amendment in respect of the registration application - GST Rules, 2017 - The Nodal Officer is directed to consider the complaint/representation made by the petitioner and to take a decision in accordance with law preferably within a period of two weeks from the date of receipt of certified copy of this order
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• Evacuation and Disposal of Ash from Thermal Power Station to Purba Medinipur Zilla Parishad Exempt from GST.

  Case-Laws - AAR : Classification of supply - pure service or composite supply - governmental authority or a government entity - the work of evacuation and disposal of settled ash from the ash ponds/decantation ponds of Thermal power Station - the Applicant's supply to Purba Medinipur Zilla Parishad, is a composite supply classifiable under SAC 995433 and exempt from GST
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• Printing Trade Ads on PVC: Composite Supply with Printing as Principal Service, Entirely Taxable as a Service.

  Case-Laws - AAR : Classification of supply - printing of trade advertisement material - the Applicant loads the content in a digital image printer, prints the image on the PVC material, it is a composite supply, where the service of printing is the principal supply and the goods supplied, having no use other than displaying the printed matter, is ancillary to the principal supply of printing - taxable as service
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• Authorities Must Provide Seized Document Copies; Claims of Prejudice Need Substantial Reasons; Affected Parties Need No Justification.

  Case-Laws - HC : Refusal to supply documents seized - A mere statement that it will prejudicially affect the investigation would be only chanting the language of the section, there must be cogent reasons to withhold giving of copies and the said person need not give justification why he needs the copies of the documents seized - If the right to get copies of the documents and the power of the authorities to refuse the same has to be balanced - refusal unjustified
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• GST Exemption Denied for Loading and Unloading Yellow Peas; Not Considered Agricultural Produce at Port of Entry.

  Case-Laws - AAR : Benefit of Exemption from GST - the service of loading, unloading etc. of agricultural produce - the Applicant renders the service of loading, unloading etc. after the cargo of yellow peas, imported from a foreign land after procured from the farmers in the foreign land, reaches the port of entry in India - exemption not available
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Income Tax

• Assessing Officer wrongly imposed late filing fee u/s 234E before June 1, 2015, due to Section 200A limitations.

  Case-Laws - AT : Late filing fee u/s 234E - The late fee has been charged by the AO while processing the TDS statement u/s 200A on 14.06.2013, which is indeed prior to 01.06.2015 - a perusal of bare provisions of Section 200A show that prior to 01.06.2015, it did not empower the AO to levy the fee u/s 234E while processing the statement of TDS - levy not chargeable at the relevant point of time
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• ITAT to Reassess Classification of Payment to ITC Limited: Capital vs. Revenue Expenditure in Hotel Management Case.

  Case-Laws - HC : Nature of expenditure - the amount paid by assessee to ITC Limited at the time of termination of the agreement to manage the hotel, ought to be allowed, as a revenue expenditure or entitlement to depreciation @10 % as building - if the expenditure is not to be treated as ‘capital expenditure’, then it will have to be treated as ‘revenue expenditure’ was perhaps not addressed in the manner it should have been treated by the ITAT - remanded to ITAT
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• Penalty Upheld: Death of CA in 2016 Not Valid Reason for Audit Failure in 2009-2010 u/s 271B.

  Case-Laws - AT : Penalty u/s 271B - The demise of the Chartered Accountant in the year 2016 cannot be a reason for not auditing the books of account for assessment year 2009-2010.Therefore, there was no reasonable cause as mandated u/s 273B for deletion of the penalty
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• Severance fees for ending IP and trade name use are prior period revenue expenses, not capital, per ICAI standards.

  Case-Laws - AT : Expenses towards severance fees - prior period revenue expenditure - severing the tie from using intellectual property as well as trade name - severance fee not covered under any specific head of capital expenditure as per accounting standard (AS) issued by ICAI - claim of expenditure allowed.
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• Tenancy Rights Not Eligible for Depreciation as Intangible Assets u/s 32 of Income Tax Act.

  Case-Laws - AT : Disallowance of depreciation of tenancy rights - the tenancy right is not an intangible asset eligible for deprecation u/s 32.
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• Transactions Deemed Legitimate: Evidence Supports Purchase, Dematerialization, and Sale of Shares; No Contradictory Evidence Found.

  Case-Laws - AT : Bogus LTCG - since the assessee produced all relevant evidence to substantiate the transaction of purchase, dematerialization and sale of shares then, in the absence of any contrary material or record, the same cannot be held as bogus transaction merely on the basis of report of Investigation Wing
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• Income Tax Act Section 68: Unexplained Share Application Money or Premiums Can Be Taxed If Source Is Not Proven.

  Case-Laws - AT : Addition u/s 68 - share application / premium money - Money allegedly received on account of share application can be roped in u/s 68 if the source of the receipt is not satisfactorily established by the assessee.
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• Income Addition Rejected: AO Cannot Rely Solely on Retracted Loan Statement Without Witness Cross-Examination Opportunity for Assessee.

  Case-Laws - AT : Unexplained cash credit u/s 68 - AO made addition of loan based on statement of a person who retract subsequently - it is the revenue which had placed reliance on the statement hence it is the duty of the revenue to produce the party as their witness in order to enable the assessee to cross examine the said party, if it so desires and this responsibility cannot be shifted to the assessee by the AO - no addition based on that statement
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• Court Upholds CIT(A) Decision: No Evidence of Excessive Management Fees u/ss 40A(2) and 37; Adjustment Deleted.

  Case-Laws - AT : TP Adjustment u/s 40A(2) r.w.s 37 - management fee - Neither the TPO nor the AO have brought any material on record indicating the assessee’s excessive impugned payments as the statutory provision in question is applicable only for excessive component of the relevant heads of the expenditure than that in entirety - the CIT(A) action deleting the upward adjustment is affirmed
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• Reassessment u/s 147 quashed due to mechanical approval by authorities u/s 151, lacking proper scrutiny.

  Case-Laws - AT : Reassessment u/s 147 - approval u/s 151 - Recommended for approval u/s 147 of the Act/Yes. I am satisfied - both the approving authorities have given approval in a mechanical manner without due application of mind, therefore, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed
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• Bengaluru METRO Granted Tax Exemption: Revenue from Rent and Ads Supports Public Utility, Not Profit - Section 11.

  Case-Laws - AT : Exemption u/s 11 - Bengaluru METRO - revenue derived from renting of space and advertisements - Keeping in mind of the provisions of the KIDA Act and precedents, the Assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility, hence the proviso to Sec.2(15) is therefore not applicable - Exemption granted
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• Penalty u/s 271B Not Applicable Without Book Maintenance; Section 271A Applies Instead for Non-Maintenance.

  Case-Laws - AT : Penalty u/s 271B - non-audit of books of account - if a person has not maintained the accounts book or any accounts the question of its audit does not arise and in such an event the imposition of penalty is under the provision contained in section 271A, hence, the penalty proceedings u/s 271B would not apply - no penalty
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• Assessing Officers Must Get Approval to Expand Limited Scrutiny Beyond Initial Issues: CBDT Guidelines Clarified.

  Case-Laws - AT : Scrutiny through CASS - converting limited scrutiny to complete scrutiny - as per the CBDT, the AO cannot travel beyond the issues for which the case was selected and in case the AO wants to expand its scope of enquiry/ investigation other than the issues on which the case was selected for scrutiny, then in that case mandatory approval from the PCIT/CIT/PDIT/DIT has to be obtained
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• No TDS on Export Commission to Non-Residents Without Indian Establishment; No Disallowance Per Section 40(a)(ia).

  Case-Laws - AT : TDS u/s 195 - export commission paid to foreign parties - the payment of commission are made to non-resident overseas agents who have no PE or business activities in India and the services are also rendered outside India as such no income is arising to the non-resident commission agent in India and as such no TDS is deductible u/s 194-H - no TDS and no disallowance u/s 40(a)(ia)
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• Revised Deduction Claim u/s 80IA Accepted as Audit Reports Submitted During Assessment; Form 10CCB Rules Amended.

  Case-Laws - HC : Deduction u/s 80IA - assessee raised revised claim before AO - audit reports under Form No. 10CCB filed at the time of assessment - returns required filed electronically not to be accompanied by any document and rules for filing was amended subsequently and Form were filed in the course of assessment - deduction duly allowable
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• Assessee's Cash Purchases in First Year Not Taxable Due to Exceptional Circumstances u/s 40A(3) and Rule 6 DD(j.

  Case-Laws - HC : Addition u/s 40A(3) - substantial cash purchases - the parties have confirmed the sales made to the assessee and this was the first year of assessee’s business - assessee was constrained to make the cash purchases due to ‘exceptional or unavoidable circumstances’, as envisaged in 6 DD (j) of the Rules - no addition
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• Interest on Deposits with Regional Rural Banks Qualifies for Deduction u/s 80P(2) of Income Tax Act.

  Case-Laws - HC : Deduction u/s 80P(2) - interest on deposits with a Regional Rural Bank(RRB) - Section 22 of Regional Rural Banks Act, 1976 in uncertain terms categorically deems RRBs as Cooperative Societies for the purposes of Income Tax Act - In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation - deduction allowable
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• Reopening of assessment u/s 147 set aside due to lack of basis; audit report not filed electronically.

  Case-Laws - HC : Reopening of assessment u/s 147 - audit report was not filed electronically in Form 10CCB for claiming deduction u/s 80IA - when deduction claimed was not allowed in the first instance while passing the intimation u/s 143(1), then the question of any income escaping assessment on that score did not arise - the impugned notice sets aside
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Customs

• New IGST Verification Mechanism Introduced to Streamline Export Refunds for Indian Exporters, Enhancing Efficiency and Transparency.

  Circulars : IGST refunds- mechanism to verify the IGST payments for goods exported out of India in certain cases
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• Commissioner Overrules CBEC Guidelines on Freight Costs for Daughter Vessels, Causing Duty Shortfall in Petroleum Imports.

  Case-Laws - AT : Short payment of duty on import of petroleum products - non-inclusion of freight incurred in respect of smaller vessels called the daughter vessels - the Learned Commissioner has ignored this direction of the Board and has reckoned a different value on the ground that the appellant has recovered a higher amount towards freight. Such an order is contrary to the directions of the CBEC which are binding upon him.
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State GST

• New Circular Clarifies GST Classification and Taxation of IT-enabled Services, Aims to Streamline Compliance and Reduce Disputes.

  Circulars : Clarification on doubts related to supply of Information Technology enabled Services (ITeS services).
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Indian Laws

• Objections to Arbitration Agreement Validity Must Be Raised u/s 16; Civil Courts Lack Jurisdiction.

  Case-Laws - SC : Validity of appointment of Arbitrator - any objection with respect to existence or validity of the arbitration agreement, can be raised only by way of an application under Section 16 before the arbitrator and Civil Court cannot have jurisdiction to go into such question.
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• Cheque Dishonor: Presumption of Debt u/s 139 if Accused Acknowledges Signature; Burden on Accused to Disprove.

  Case-Laws - HC : Dishonor of Cheque - existence of debt or not - once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated u/s 139 of the Negotiable Instruments Act has to be raised.
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• Advisory Board Opinions Are Not Judicial Rulings; They Don't Assess Detention Validity Like Courts Do.

  Case-Laws - SC : Scope and validity of opinion of the Advisory Board - the nature of opinion given by the Advisory Board is neither judicial nor quasi judicial; that it would be erroneous and unsafe to treat the opinion expressed by the Advisory Board as amounting to a judgment of a criminal court; that the Advisory Board does not try the question about the propriety or validity of the citizen’s detention as a court of law would, but, its function is limited.
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IBC

• Account Holders Can Appeal Unfavorable Decisions to the Review Committee Within a Specified Timeframe.

  Case-Laws - HC : Wilful Defaulters - If the decision of the Identification Committee is adverse to the account holder, then, the account holder is at liberty to prefer an appeal before the Review Committee, within the period stipulated. On such an appeal, the Review Committee is to decide such appeal in accordance with law.
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SEBI

• Entity Denied Extension for Refunds Due to Operating Unregistered Investment Scheme and Delaying Verification Tactics.

  Case-Laws - AT : Running a Collective investment scheme [CIS] without obtaining the certificate of registration - Appellant resorted to all kinds of dilatory tactics in not getting the repayments verified, namely, whether the appellant had actually refunded the amount to the investors - the application for extension of time to refund the amount was rightly rejected
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VAT

• Writ Petitioner Claims Unawareness of Late Father's Business; Unable to Contest Property Used for Tax Recovery Auction.

  Case-Laws - HC : Auction or property to recovery tax dues - as it is the stated position of writ petitioner that he does not know anything about the business transactions of his late father, writ petitioner obviously is not in a position to dispute that said property was offered as a security to the respondent.
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Case Laws:

• GST

• 2019 (8) TMI 1156
  Works contract - classification of supply - supply of goods or supply of service - printing of trade advertisement material - composite supply - principal supply - classification of the trade advertisement material if its transaction is a supply of goods - Circular No. 11/11/2017-GST dated 20/10/2017. HELD THAT:- There is no dispute that the Applicant s supply is a composite contract - a transaction involving both services and transfer of property in goods, and the two are inseparable in the execution of the contract. It was a works contract in terms of section 2(57)(d) of the West Bengal Value Added Tax Act, 2003. The legal fiction created by insertion of Art 366(29A) through the 46th Amendment of the Constitution enabled the State Government to split up such contracts into a contract for the sale of goods and a service contract, and levy VAT on the sale of goods. Works contract, as defined in 2(119) of the GST Act, excludes from its ambit all such composite contracts that do not involve building, construction, repair, alteration etc. of any immovable property. Under the GST Act, therefore, the Applicant s supply is no longer works contract, or, for that matter, any other composite contract to which Art 366(29A) of the Constitution applies. Composite contracts that are not covered by Art 366(29A) cannot be split up for taxation into a service contract and a contract for the supply of goods unless the transaction represents two distinct and separate contracts that are discernible as such. The test, therefore, for all such contracts is whether the parties have in mind or intend separate rights arising out of the supply of goods. It is to be ascertained from the substance of the contract. The Applicant loads the content in a digital image printer, prints the image on the PVC material, and supplies the printed material. The goods so supplied have no utility other than displaying the printed content. Service of printing, therefore, is the predominant element of the composite supplies the Applicant is making - Services by way of printing of the goods falling under Chapter 48 and 49 are classifiable under SAC 9989 and taxable under Sl No. 27(i) of Notification No. 11/2017 - CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135 - FT dated 28/06/2017). The Applicant, being a printer of trade advertising material classifiable under heading 4911 of the Tariff Act, is making a composite supply, where the service of printing classifiable as above, is the principal supply. The goods supplied, having no use other than displaying the printed matter, is ancillary to the principal supply of printing. Thus, the Applicant is making a composite supply, where the service of printing is the principal supply. The goods supplied, having no use other than displaying the printed matter, is ancillary to the principal supply of printing.

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• 2019 (8) TMI 1155
  Classification of supply - pure service or composite supply - recipient of service, government, local authority, governmental authority or a government entity? - in relation to any function entrusted to a Panchayat or a Municipality under the Constitution - Reverse charge mechanism - eligibility of exemption under Sl No. 3 or 3A of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 - Circular No. 51/25/2018-GST dated 31/07/2018. HELD THAT:- Circular No. 51/25/2018-GST dated 31/07/2018 leaves no doubt that the phrase in relation to any function , as applied to Sl No. 3 or 3A, makes no substantial difference between Sl No. 25(a) of the ST Notification and Sl No. 3 or 3A of the Exemption Notifications (Service). Under the previous service tax regime, the exemption was limited to certain functions specified in Sl No. 25(a) of the ST Notification, whereas, under the GST the ambit has been broadened to include any such functions that are performed by a Panchayat or a Municipality under specific provisions of the Constitution - These functions are in the nature of public welfare service that the governments on their own, and sometimes through governmental authorities/entities, do provide to the citizens - When the activity is in relation to any such function, the supply to the governments or governmental authorities/entities or local authorities is exempt from paying GST under Sl No. 3 or 3A of the Exemption Notifications (Service), provided it is either a pure service or a composite supply, where supply of goods does not constitute more than 25% of the value. Scrutiny of the work reveals that the work involves earthwork, excavation, sloping and earthmoving services involving making of embankments or cuttings for laying down pathways to access the ash ponds, and other excavating and earthmoving work services. Transportation of the excavated earth and ash is ancillary to the principal supply of excavation and earthmoving service (SAC 995433). Evacuation and disposal of settled ash by mechanical means from the ash ponds is, therefore, a composite supply of services. Supply of goods, if any, is incidental to the main supply, and does not constitute any significant percentage. The recipient, being a Panchayat, is entrusted under section 153 of the 1973 Act with such powers and responsibilities as provided under Art 243G of the Constitution. Art 243G of the Constitution empowers the State Government to enact laws enabling the Panchayat to act as an institution of local self-government for implementing schemes for economic development and social justice as may be entrusted, including those in relation to matters listed in the Eleventh Schedule of the Constitution - Unless an activity is directly concerned with a matter listed in the Eleventh Schedule, the State Government entrusts the Panchayat by specific order a work that advances the cause of economic development and social justice. In the discharge of its functions, the Zilla Parishad shall, therefore, be guided by such instructions or directions as the State Government may give from time to time under section 212 of the 1973 Act. The Applicant s service to PMZP, therefore, is exempt under Sl No. 3A of the Exemption Notifications (Service) - The question of liability to pay tax on the Applicant s supply of service to PMZP being thus answered, further probing with respect to tax KTPS is paying on reverse charge basis is not necessary.

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• 2019 (8) TMI 1154
  Benefit of exemption from GST - activities related to agriculture produce - service of loading and unloading of imported raw whole yellow peas - Circular No. 16/16/2017-GST dated 15/11/2017 of CBIC - HELD THAT:- Services relating to the cultivation of plants, inter alia, for agricultural produce are exempt under Sl No. 54 of the Exemption Notification and classified under SAC 9986. They include, among others, loading, unloading, packing, storage or warehousing of agricultural produce [clause 54(e) of the Exemption Notification]. The agricultural produce means any produce out of cultivation of plants etc. for food, fibre, fuel, raw material or other similar products on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. It, therefore, appears that the service of loading, unloading etc. of agricultural produce is admissible for exemption under Sl No. 54(e) of the Exemption Notification, provided such loading/unloading service is related to the cultivation of plants and classifiable under SAC 9986. The scope of such support services extends to post-harvest crop services such as preparation of crops for the primary markets - Circular No. 16/16/2017-GST dated 15/11/2017 of CBIC clarifies that the process of de-husking or splitting of pulses is usually not carried out by farmers or at the farm level but by the pulse millers and, therefore, such products are not to be considered agricultural produce . The emphasis, therefore, is on the processes and services that are applied till the goods are at the farmer s hand. As soon as they leave the farmer s hand and the primary market, the services rendered thereafter are not to be considered related to cultivation of the plant and classifiable under SAC 9986. The Applicant renders the service of loading, unloading etc. after the cargo of yellow peas, imported from a foreign land, reaches the port of entry. The produce has been procured from the farmers in the foreign land and exported to India. Clearly, it is, whether processed in a mill, no longer in the domain of the primary market or at the farmer s hand. Exemption under Sl.No. 54(e) of the Exemption Notification, therefore, is not applicable to the Applicant s services.

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• 2019 (8) TMI 1153
  Time and value of supply - levy of GST - mobilisation advance - GST implication on the lump-sum so received before the implementation of GST and its recovery by KMRCL against the Applicant s sales invoices issued post introduction of the GST - whether GST shall be charged on the gross amount of the invoice or the net amount after adjusting the lump-sum amount outstanding as on 30/06/2017? HELD THAT:- The Finance Act, 1994 allowed the contractor to pay service tax on that portion of the works contract, which was attributable to the actual provisioning of service, arrived at applying Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006. Under this method, the value of the taxable service was the residual amount that remained after deducting from the gross amount charged for the works contract the actual value of the property in goods transferred in the course of executing the contract. The value of the taxable service was, therefore, not ascertainable before the contractor raised the invoice - As the value of the taxable service was not ascertainable before the invoice was raised, no payment received in advance could be included in the gross amount charged for such taxable service except the portion adjusted in the service bills - Therefore, no service tax was leviable on the mobilisation advance except the portion adjusted in the service bills. As the Applicant apparently raised no service bill, the unadjusted part of the advance as on 01/07/2017 has not suffered tax under the pre-GST regime under Finance Act, 1994. After the GST comes into force, the works contract is no longer divisible into a contract for the supply of goods and a service contract. It is a service contract and the entire unadjusted mobilisation advance as on 01/07/2017, according to the Contract, applies towards payment of consideration for the works contract service - The contract provides a mechanism in the form of a bank guarantee that ensures that the advance is not diverted or misappropriated. Its application as payment for inducing the supply is, therefore, direct and unambiguous. It is, therefore, consideration, whether or not in the form of a deposit, for the supply of the works contract service. The Contract makes it amply clear that the entire amount is applied as consideration for provisioning works contract service. The valuation of works contract no longer requires a rule separate from other services. The Contract, therefore, is to be valued as provided under section 15(1) of the GST Act, which does not restrict in any way the scope of time of supply, as provided under section 13(2) of the GST Act. Moreover, consideration under the GST Act has a wider scope and includes deposits if applied as consideration. In that context, whether the mobilisation advance is earnest money or not is of little relevance. The Applicant is, therefore, deemed to have supplied works contract service to KMRCL on 01/07/2017 to the extent covered by the lump-sum that stood credited to its account on that date as mobilisation advance. As the supply to the extent of the above amount is deemed to have been made on 01/07/2017 and tax is leviable thereon accordingly, the value of the supply of works contract service in the subsequent invoices as and when raised should, therefore, be reduced to the extent of the advance adjusted in such invoices.

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• 2019 (8) TMI 1152
  Validity of assessment order - KGST Act - case of petitioner is that either the mere filing of appeal or mere pendency of appeal does not amount to granting stay by the appellate authority - HELD THAT:- The appellate authority/2nd respondent considers and disposes of Ext.P3 application as early as possible, preferably within two months from the date of receipt of copy of this judgment - The recovery, including realisation of any amount due towards tax arrears, which is pending before the appellate authority is stayed for two months. Respondents issue communications recalling the attachment of bank account of petitioner if attached.

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• 2019 (8) TMI 1151
  Detention order - claim of ownership - Section 129 of the Central Goods and Services Tax Act, 2017 - whether the appellant is either a consignee or a consignor and whether the invoice and other documents are genuine documents? - HELD THAT:- the appellant can always contend before the concerned authority that in view of the circular dated 31st December 2018, in particular clause (6) thereof, the appellant will have to be treated as the owner of the detained goods and therefore, the penalty payable will be as per clause (a) of sub-section (1) of Section 129 of the said Act of 2017. Though the notice proceeds on the footing that clause (b) of sub-section (1) of Section 129 is applicable, the concerned authority will have to consider the applicability of sub-section (1) of Section 129 and if prayed to that effect, whether the appellant is entitled to the benefit of clause (c) of sub-section (1) of Section 129 of the said Act of 2017. While passing a speaking order in terms of the order of the learned Single Judge, the aforesaid aspects shall also be taken into consideration by the concerned authority. Appeal disposed off.

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• 2019 (8) TMI 1150
  Stay order - interim order - HELD THAT:- The writ-applicant has been able to make out a strong prima facie case to have an interim order in his favour. The order passed by the Commercial Tax Officer dated 17.6.2019 in Form GST DRC-07 shall remain stayed from its operation, implementation and execution. Let Notice be issued to the respondents returnable on 8.8.2019.

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• 2019 (8) TMI 1136
  Refusal by the Officers of the Director-General of GST Intelligence, Mumbai to supply documents to the Petitioner seized by the officers - handing over copies of the documents seized - input tax credit - affirmation and utilization of input tax credit by various firms on the strength of invoices allegedly issued by non-existing entities - power of the authorities to carry out an investigation, search and seizure - section 67 of CGST Act. HELD THAT:- There are two facets of the opinion of the Proper Officer as contemplated under section 67(5) of the Act. Firstly, the opinion, which would be a decision, should be reflected in the record. The opinion cannot be a mere ipsi-dixit of the Proper Officer. There must be cogent reasons to withhold giving of copies to the person. A mere statement that it will prejudicially affect the investigation would be only chanting the language of the section. An offer is made by the Respondents that the Chartered Accountant of the Petitioner can visit the office of the Respondents, and there is no need to give such copies. Section 67(5) of the Act creates a right to receive the copies by a person from whose custody the documents are seized. The said person need not give justification why he needs the copies of the documents seized. Therefore, the argument that the Petitioner must show a cogent reason why the Petitioner needs copies and only an inspection by the Chartered Accountant will suffice has to be rejected. Tampering of evidence - HELD THAT:- It is not explained how, when the originals are with the respondent-authorities, the said documents will be tampered by the Petitioner. Second, if the soft copies are available with the Petitioner, the argument that if the copies are given, now the Petitioner will alert its associates is also not explained - The Note states that giving of copies would prevent investigation. This is only a reproduction of the language of the section. Further, the Note is prepared on 7 August 2019, i.e. one month after the present writ petition was filed. Therefore, first, no reasons are given in the said note as to how giving of copies will prejudice the investigation and second, the record is created subsequently. In the light of the provision of section 67(5) of the Act creating right in the person, the denial of copies must be a reasonable action. The legislative intent is clear that the documents or books seized must not be kept in the custody of the officer for more than the period necessary for its examination and copies thereof need to be given to the person from whose custody the said documents or books are seized. The reasonableness of the action depends on the facts of each case. If the right to get copies of the documents and the power of the authorities to refuse the same has to be balanced, then the balance may shift by the passage of time and continuing withholding of copies can become unreasonable assuming it is justified at the inception. The documents were seized in January 2019, and the petition is being heard in the middle of August 2019. The prejudice to the Petitioner has been demonstrated. The refusal by the respondent- authorities to give copies of the documents to the Petitioner which are seized under Panchanama dated 9/10 January 2019 is not justifiable and the Petitioner is entitled to the mandatory direction as prayed for - petition disposed off.

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• 2019 (8) TMI 1135
  Jurisdiction - power to seize goods - Section 67(2) of the UP GST Act, 2017 - goods seized from the disclosed place of business - goods secreted in any place or not - HELD THAT:- The power to seize the goods has been given under sub-section (2). The Joint Commissioner or an officer higher in rank, may, either in pursuance of an inspection that may have been carried out or otherwise forms reason to believe that any goods liable to confiscation or any documents or books or things that may be useful for or relevant to any proceeding under the Act, may be seized though they may be secreted in any place - Under sub-section (6) of Section 67 of the Act, the goods seized under sub-section (2) may be released provisionally against execution of bonds and furnishing of security. In the present case, there is no ground of challenge raised by the learned counsel for the assessee that an authorization to inspect search and seize did not exist - Once it was admitted to the assessee during the course of the survey that it had not recorded the goods found stored at his disclosed place of business in the regular books of account, a presumption of the goods having been secreted did arise, constructively. It may be added here itself that the presumption, as has been considered here, would remain rebuttable. However, at this stage its existence may not be denied. The object of the provision being clearly to ensure that dealers would disclose their stocks in their books of account and not indulge in any undisclosed trading, the interpretation as suggested by learned counsel for the assessee would, if accepted, defeat that object and encourage conduct of undisclosed business from disclosed place/s of business. Demand of security - HELD THAT:- In view of the fact that the seizure was made from the disclosed place of business as also semi finished goods were found; the assessee claims to be a manufacturer and further, in view of the fact that the proceedings are yet to be finalized, it is desirable that the goods may be released in favour of the assessee, subject to his furnishing security in the shape of cash for the amount of tax and penalty contemplated to the extent of 50% and for the balance amount, the security may be furnished in the shape of indemnity bond, subject to the satisfaction of the concerned authority. Petition disposed off.

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• 2019 (8) TMI 1134
  Amendment in respect of the registration application - GST Rules, 2017 - HELD THAT:- The Nodal Officer is directed to consider the complaint / representation made by the petitioner and to take a decision in accordance with law as expeditiously as possible, preferably within a period of two weeks from the date of receipt of certified copy of this order. The petitioner is at liberty to approach this Court again in case he is still aggrieved in the matter. Petition disposed off.

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• 2019 (8) TMI 1087
  Scope of proceedings - judicial review - HELD THAT:- At present, learned Standing Counsel states that in absence of the Tribunal having been constituted by the Union, the assessee as well as the revenue authorities are compelled to approach this Court by filing such writ petition against the order of the first appellate authority - Learned Standing Counsel is permitted to implead Union of India as respondent no.2 in the present proceedings, during the course of the day. Let a notice copy of this writ petition be served on learned A.S.G.I., within next 48 hours, who may file his response specifically on the issue why the Tribunal has yet not been constituted.

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• Income Tax

• 2019 (8) TMI 1149
  Credit of TDS on the basis of evidences produced for deduction of tax at source - deductor has not issued TDS certificates or had failed to uphold the correct details in Form 26AS - HELD THAT:- Special leave petition is dismissed.

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• 2019 (8) TMI 1148
  Disallowance of the entire business expenditure - whether the assessee company has to necessarily and directly operate the businesses as mentioned in the Memorandum of Association so as to qualify as carrying out business activity or whether making of investment in subsidiaries which in turn are operating in the business as referred in the Memorandum of Association of the appellant company? - HELD THAT:- Since the tax effect involved in the matter is less than two crores as stipulated in the latest CBDT Circular dated 8.8.2019, no interference is called for. The special leave petition is dismissed.

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• 2019 (8) TMI 1133
  Reopening of assessment u/s 147 - reason to believe - the audit report was not filed electronically in Form 10CCB for claiming deduction u/s 80IA - the same was already disallowed in intimation passed u/s 143 (1) - HELD THAT:- The Court finds that in the objection raised by the Petitioner vide letter dated 7th May, 2019 addressed to the AO, the Petitioner clearly stated that the case was processed u/s 143(1) disallowing the deduction claim u/s 80IA(4)(iv)(a) of 1,24,04,182/- and demand of 42,83,943/- has been raised. There is an obvious non-application of mind by the AO to the above fact. If indeed the above deduction claimed by the Petitioner was not allowed in the first instance, and the intimation sent to the Petitioner u/s 143(1) indicated this, then the question of any income escaping assessment on that score did not arise. - the impugned notice sets aside - Decided in favour of assessee.

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• 2019 (8) TMI 1132
  Assessment u/s 153A - whether the amount paid by assessee to ITC Limited at the time of termination of the agreement to manage the hotel, ought to be allowed, as a revenue expenditure ? - entitlement to depreciation @10 % as building - whether it was for acquisition of an intangible asset - HELD THAT:- The Court finds merit in the contention that this aspect of the matter, viz., if the expenditure is not to be treated as capital expenditure , then it will have to be treated as revenue expenditure was perhaps not addressed in the manner it should have been treated by the ITAT. On this aspect, therefore, the Court considers it appropriate to remit the matter to the ITAT for decision afresh on the treatment to be accorded to the expenditure incurred by the Assessee of the aforementioned sum of 30.86 crores and whether in particular, it should be treated as a revenue expenditure or as capital expenditure . The Court makes it clear that it has not expressed any view one way or the other on the respective contentions of the Revenue or the Assessee on the issue, and, it will be open to the ITAT, after examining the entire records, including the original return filed by the Assessee to come to a fresh decision independent of its earlier decisions and any observations in the instant order. Characterization of income - income shown by the assessee as business income should be taxed as income from house property or as income from other sources? - HELD THAT:- The Court is of the view that the findings both of the CIT (A) as well as the ITAT are consistent that the only business of the Assessee was its hotel business and, therefore, the income shown by the Assessee should be treated as income from house property and not as income from other sources. Consequently, Question (ii) is answered in the affirmative i.e. in favour of the Assessee and against the Revenue.

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• 2019 (8) TMI 1131
  Deduction u/s 80P(2) - interest income derived from deposits, made with Regional Rural Bank (RRB) - Assessee, a milk cooperative society - scope of CBDT Circular (No.6/2010 dated 20.9.2010) - Section 22 of the Regional Rural Banks Act, 1976 - HELD THAT:- CBDT reasoning appears to be that Section 80P was amended w.e.f. 1.4.2007 introducing specifically that the benefit of exemption would not apply to any cooperative bank other than Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. The circular then stated that in the light of this inclusion to Section 80P by way of introduction of Section 80P(4), the exemption could not be availed of by the banks invested in Regional Rural Banks. This Court is of the opinion that the revenue s contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act. In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it - no substantial question of law involved.

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• 2019 (8) TMI 1130
  Addition u/s 40A(3) - substantial cash payments towards purchases - ITAT held that the parties have confirmed the sales made to the assessee and this was the first year of assessee s business, therefore, there was all the more reason for the suppliers to insist for cash payments - HELD THAT:- If the AO had a doubt about the genuineness of the above purchases, the AO could have summoned one or all of those three parties and asked them questions in relation to the confirmation letters, to satisfy himself that the contents thereof were, in fact, based on actual purchases for which cash was paid by the Assessee. He could have asked them to produce their books of accounts, bill books, etc. On its part, the Assessee appears to have made the effort of producing the confirmation letters from the three parties before the CIT (A) and it was on that basis the CIT (A) rendered the factual finding that the Assessee was constrained to make the cash purchases due to exceptional or unavoidable circumstances , as envisaged in 6 DD (j) of the Rules. The Court is unable to find any legal infirmity in the impugned order of the CIT (A), which has been confirmed by the ITAT in the order under appeal.- Decided in favour of assessee.

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• 2019 (8) TMI 1129
  Benefit of deduction u/s 80IA - assessee raised revised claim before AO - audit reports under Form No. 10CCB filed at the time of assessment - whether ITAT had overlooked Section 80AC read with 80IA (7) ? - HELD THAT:- Deduction under sub-Section 1 of 80IA shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant and the Assessee furnishes on furnishing his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant. The admitted position that the Assessee did not furnish such audited report form as originally filed. It has been explained by the Assessee that in view of Rule 12(2) of Income Tax Act, 1962, which required returns filed electronically not to be accompanied by any document, the audit reports under Form No. 10CCB of Windmill Project I and II were in fact not required to be filed along with return of income of 2009-10. The requirement was subsequently introduced by amending the Rules by the Income Tax (Seventh Amendment) Rules 2013 with effect from 1st April, 2013. As a result these audit reports were filed in the course of assessment by letter dated 9th November, 2011 and this has not been disputed by the Revenue. Whether the claim can be raised in a revised return, it seems to be answered in favour of the Assessee and against the Revenue by the judgment of this Court in CIT v. Jai Parabolic Springs Limited [ 2008 (4) TMI 3 - DELHI HIGH COURT] . In the said decision this Court has recognized that the powers of the ITAT are wide enough to admit a claim for deduction to be made by way of a revised return. - Decided in favour of assessee.

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• 2019 (8) TMI 1128
  Implementation of the directions issued by DRP by the TPO instead of AO - whether subsequent order passed by AO order is time barred? - direction to deal the objection of assessee was issued to DRP by ITAT in first round of litigation - HELD THAT:- TPO implemented the DRP s directions, which, in turn, were given effect to by the AO. Thus, the assessee, having understood the factual and legal position in a proper manner, on their own volition, submitted before the TPO a representation dated 10.4.2014 requesting to take on record their submissions and give effect to the directions of the DRP. Further, the assessee undertook to provide any clarifications required. TPO took into consideration the modified order passed by the DRP and the submissions of the assessee, passed a giving effect to order dated 10.2.2015 and communicated the same to the AO, who, in turn, passed the final assessment order dated 26.2.2015. We are of the clear view that the Tribunal was right in holding that there is no jurisdictional error to invalidate the proceedings in toto and the communication of a copy of the directions of the DRP dated 12.3.2014 to the AO, stated to have been received by the AO on 21.3.2014, is not a direction within the scope of Sub-Section (5) of Section 144C. The directions issued by the DRP were to the TPO, who was, in turn, required to do the computation after considering the objections of the assessee and it is thereafter they mature into directions under Sub-Section (5) of Section 144C , which were required to be implemented in terms of Sub-Section (5) of Section 144C. Tribunal was right in rejecting the plea raised by the assessee before it. Furthermore, the case of the assessee has to be tested for its correctness in the light of the earlier proceedings and more particularly the order of the Tribunal, which remanded the matter for a fresh consideration. Thus, the assessee has not made out any ground to interfere with the order of the Tribunal.

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• 2019 (8) TMI 1127
  Maintainability of appeal - low tax effect - concession extended by the CBDT applicability - HELD THAT:- The tax effect is below monetary limits of 50 lakhs as prescribed under the CBDT circular No.3/2018 dated 8th August, 2019. As relying on DINESH MADHAVLAL PATEL [ 2019 (8) TMI 752 - ITAT AHMEDABAD] we hereby dismiss the above appeals of the revenue in limine without going to the merits of the case.

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• 2019 (8) TMI 1126
  TDS u/s 195 - addition on account of export commission paid to foreign parties u/s 40(a)(ia) - PE in India - HELD THAT:- CIT(A) rightly observed that the payment of commission are made to non-resident overseas agents who have no PE or business activities in India and the services are also rendered outside India as such no income is arising to the non-resident commission agent in India and as such no TDS is deductible u/s 194-H which is applicable for resident Indians only. Thus, there is no need to interfere with the findings of the CIT(A). The appeal of the Revenue is dismissed.

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• 2019 (8) TMI 1125
  Benefit of exemption u/s 11 - Charitable activity u/s 2(15) - Bengaluru METRO - on the basis of source of revenue derived from renting of space and advertisements the revenue authorities came to the conclusion that the assessee was not existing for charitable purpose - HELD THAT:- It can be seen from the various provisions of the RTC Act, 1950 which we have set out in the earlier part of the order that the dominant and prime objective of the Assessee is not profit making. Prior to the introduction of the proviso to Section 2(15), there was no dispute that the Assessee was established for charitable purposes. The stream of traffic revenue and non traffic revenue by itself would demonstrate that the Assessee does not exist for profit. Keeping in mind the above factual aspects and the provisions of the KIDA Act, and principle laid down in the aforesaid decision of India Promotion Organization [ 2015 (1) TMI 928 - DELHI HIGH COURT] will clearly show that the Assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility. The proviso to Sec.2(15) is therefore not applicable to the case of the Assessee. We therefore hold that the Assessee is entitled to the benefits of Sec.11. The AO has not disputed the conditions necessary for allowing exemption u/s.11 of the Act, except the applicability of proviso to Sec.2(15). The said proviso is not applicable to the case of the Assessee, we hold that the Assessee s income is entitled to the benefits of Sec.11. In view of the above conclusion on the preliminary issue, the other grounds of appeal become academic and require no consideration. Allowance of depreciation when the cost has already been recovered by way of exemption as application of income - HELD THAT:- As decided in M/S. CUTCHI MEMON UNION [ 2013 (9) TMI 404 - ITAT BANGALORE] u/s. 11(1), income has to be computed in normal commercial manner and the amount of depreciation debited in the books is deductible while computing such income. The Hon ble Supreme Court in the case of CIT Vs. Rajasthan Gujarati Charitable Foundation Poona, [ 2017 (12) TMI 1067 - SUPREME COURT] has since confirmed the view that depreciation has to be allowed as a deduction even when the cost of acquisition of the depreciable asset has been treated as application of income in the year of its acquisition.

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• 2019 (8) TMI 1124
  Penalty u/s. 271(1)(c) r.w.s 274 - quantum addition deleted - addition made on account of income accrued but not due - HELD THAT:- It is pertinent to note that the quantum appeal has been allowed by the Tribunal. Thus, the addition, on which penalty has been imposed by the Revenue does not survive. Therefore, present penalty appeal of the assessee is allowed.

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• 2019 (8) TMI 1123
  Penalty u/s 271(1)(c) - defective notice - show cause notice has not struck off the irrelevant portion as to whether the charge against the assessee is concealing particulars of income or furnishing of inaccurate particulars of income - HELD THAT:- Evidently the show cause notice u/s. 274 r.w.s 271 of the Act dated 24.12.2009 issued for Assessment Year 2007-08 is defective as it does not spell out the grounds on which the penalty is sought to be imposed The Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] wherein following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. Show cause notice issued in the case on hand under section 271(1)(c) does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income . The show cause notice under section 271(1)(c) does not strike out the inappropriate words .Imposition of penalty cannot be sustained. - Decided in favour of assessee.

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• 2019 (8) TMI 1122
  Penalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT:- Show cause notice u/s. 271(1)(c) of the Act dated 09.04.2013 for Assessment Year 2009-10 is defective as it does not spell out the grounds on which the penalty is sought to be imposed. The Hon ble Karnataka High Court in the case of CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] wherein following its own decision in the case of CIT vs Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] took a view that imposing of penalty u/s 271(1)(c) of the Act is bad in law and invalid for the reason that the show cause notice u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income. Show cause notice issued in the case on hand under section 271(1)(c) of the Act dated 09.04.2013 for Assessment Year 2009-10 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income . The show cause notice under section 271(1)(c) does not strike out the inappropriate words .Imposition of penalty cannot be sustained. - Decided in favour of assessee.

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• 2019 (8) TMI 1121
  Reopening of the assessment u/s 147 - whether obtaining necessary approval u/s 151? - borrowed satisfaction - non independent application of mind - HELD THAT:- Both the approving authorities have given approval in a mechanical manner without due application of mind, therefore, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed. Perusal of the reasons recorded show that the notice has been issued in a mechanical manner without independent application of mind by the AO and the satisfaction by the Assessing Officer is based on borrowed satisfaction of the Investigation Wing. AO without applying his mind, has simply, on the basis of the information of the Investigation Wing, jumped to the conclusion that there is escapement of income. The reasons so recorded do not show that there is any application of mind by the Assessing Officer for reaching the conclusion that there was escapement of income except the information from the Investigation Wing. The Hon ble Delhi High Court in a number of decisions has held that reopening of assessment on the basis of report of the Investigation Wing without independent application of mind by the Assessing Officer is not in accordance with law and accordingly the reassessment proceedings have been quashed. Tribunal in the case of M/s SBS Realtors (P) Ltd. vs. ITO [ 2019 (4) TMI 357 - ITAT DELHI] has also quashed the reassessment proceedings based on the information provided by the Investigation Wing without any independent application of mind. It was held that there was no tangible material which formed the basis for the belief that income has escaped assessment. - Decided in favour of assessee.

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• 2019 (8) TMI 1120
  Scrutiny through CASS - No approval taken - the loss on sale of shares was not shown in the original return but claimed in revised return - HELD THAT:- The case of the assessee was selected for limited scrutiny to examine the issue of commodity transaction/ derivatives (futures) transactions as mentioned by the AO in the body of the assessment order itself. AO in the instant case converted the limited scrutiny case to a full fledged scrutiny case which is evident from the assessment order. CBDT vide Instruction No.5/2016 dated 14.07.2016 and instruction No.225/402/2018 dated 28.11.2018 has issued certain guidelines for converting a limited scrutiny case to complete the scrutiny which is binding on the department. The Board has clearly mentioned that in a limited scrutiny case the AO cannot travel beyond the issues for which the case was selected and in case the AO wants to expand its scope of enquiry/ investigation other than the issues on which the case was selected for scrutiny, then in that case mandatory approval from the PCIT or CIT or PDIT or DIT has to be obtained. A perusal of the Assessment Order shows that no such approval has been taken. Deem it proper to restore the issue to the file of the AO with a direction to verify as to whether such approval has been taken and in case no such approval has been taken then the addition so made by the Assessing Officer and upheld by the CIT(A) stands deleted.The additional ground raised by the assessee is accordingly allowed. Revised return - AO alleged that assessee cannot take the advantage of provisions of section 139(5) by deliberately making the omission or wrong statement - HELD THAT:- It is not a deliberate omission but an inadvertent error. Further, there is no decision of the Hon ble Jurisdictional High Court on this issue. It is the settled proposition of law that when two views are possible on an issue, the view which is favourable to the assessee has to be followed. CIT(A) should not have upheld the action of the AO in not considering the revised return filed. I, therefore, set aside the order of the CIT(A) and direct the AO to consider the revised return as in accordance with law. The ground raised by the assessee is accordingly allowed.

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• 2019 (8) TMI 1119
  TP Adjustment - project Management (Pre-operative) service fees and pre-operating management fee - HELD THAT:- We find that the Revenue s identical plea in support of adjustment of such payments arising out of arm s length price being determined at Nil stands declined by the tribunal s coordinate bench in NLC Nalco India Ltd V/s. DCIT [ 2016 (3) TMI 639 - ITAT KOLKATA] CIT(A) has also taken note of above various judicial precedents whilst coming to the conclusion that the TPO could not have adjusted assessee s twin expenditure claims by holding that the arm s length price thereof was nil in uncontrolled market conditions. We therefore confirm the CIT(A) s findings under challenge as far as first head of project management (service fee) is concerned. Neither the TPO nor the AO have brought any material on record indicating assessee s excessive element in the assessee s excessive impugned payments. There is hardly any dispute that the statutory provision in question is applicable only for excessive component of the relevant heads of the expenditure than that in entirety. The Revenue s further reliance on section 37 also carries no merit in view of our preceding findings taking into consideration various judicial precedents. The CIT(A) action deleting the upward adjustment is affirmed on both counts. Disallowance of assessee s success fee payment - HELD THAT:- There existed an agreement between the assessee and the payee(s) regarding payment of Success Fee to M/s. HSBC. We further notice there is no rebuttal to the learned CIT(A) clinching findings that the sum in question is not 6 crores as per by the Assessing Officer, but 22.29 crores. It is for this correct figure that the assessee has paid the impugned success fee payment to M/s. HSBC going by corresponding agreement. Learned departmental representative fails to indicate any material in the case file which could suggest that the assessee s corresponding agreement is not a valid one. As relying on WALCHAND AND COMPANY PVT. LIMITED. [ 1967 (3) TMI 2 - SUPREME COURT] to conclude that it is not open for the department to question commercial expediency of an assessee s day to day running of business affairs We uphold the CIT(A) s findings under challenge deleting the impugned addition. Disallowance of severance fees - prior period revenue expenditure - severing the tie from using intellectual property as well as trade name - DR reiterates the assessment findings that the Assessing Officer has rightly treated assessee s severance expenditure as capital and not revenue expenditure - HELD THAT:- We see no substance in Revenue s instant argument. It is clear from a perusal of corresponding agreement s clauses that assessee had not acquired any asset but made the impugned payment in order to ensure smooth day to day running of its business affairs. It has chosen to part its ways with the payee in other words in lieu of the impugned severance fee not covered under any specific head of capital expenditure as per accounting standard (AS) issued by the Institute of Chartered Accountants of India. We thus affirm the CIT(A) findings qua this last issue as well.

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• 2019 (8) TMI 1118
  Revision u/s 263 - Unexplained cash credits - Addition u/s 68 - share application / premium money - HELD THAT:- CIT has held in very clear terms that the Assessing Officer had nowhere examined identity, genuineness and creditworthiness of the assessee s share application / premium neither in sec. 143(3) nor in re-assessment proceedings. We notice in this backdrop that the tribunal s co-ordinate bench s decision in Rajmindir Estate Pvt. Ltd. vs. PCIT [ 2016 (5) TMI 801 - CALCUTTA HIGH COURT] has decided the very issue in Revenue s favour stating that, Money allegedly received on account of share application can be roped in u/s 68 if the source of the receipt is not satisfactorily established by the assessee. It was further held that the evidence as tabulated, which was before the AO which should have provoked him to make further investigation. The AO did not attach any importance to that aspect of the matter. We therefore adopt the above extracted detailed discussion mutatis mutandis to affirm the CIT s action to a AO treating the assessee s share application / premium as unexplained cash credits - Decided against assessee. Penalty u/s 271(1)(c) - HELD THAT:- The assessee did not appear in the lower proceedings as per para-3 of the CIT s order. Nor there is any discussion in the impugned penalty order as to whether it had filed any representation against the proposed penal action. We thus conclude that the CIT s has rightly imposed the impugned penalty forming subject-matter of the instant. - assessee s appeals are dismissed

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• 2019 (8) TMI 1117
  Bogus LTCG - sale proceeds of shares of Kailash Auto Finance Limited (KAFL) treating the same as income from undisclosed sources - HELD THAT:- once the assessee produced all relevant evidence to substantiate the transaction of purchase, dematerialization and sale of shares then, in the absence of any contrary material brought on record the same cannot be held as bogus transaction merely on the basis of report of Investigation Wing, Kolkata wherein there is a general statement of providing bogus long term capital gain transaction to the clients without stating anything about the transaction of allotment of shares by the company to the assessee. In that case of SANJAY BIMALCHAND JAIN VERSUS THE PR. CIT [ 2017 (5) TMI 983 - BOMBAY HIGH COURT] , the purchases were made by the assessee in cash for acquisition of shares of companies and the purchase of shares of the companies was done through the broker and the address of the broker was incidentally the address of the company. The profit earned by the assessee was shown as capital gains which was not accepted by the A.O. and the gains were treated as business profit of the assessee by treating the sales of the shares within the ambit of adventure in nature of trade. Thus, it can be seen that in the decision relied upon by the ld. DR, the dispute was whether the profit earned on sale of shares was capital gains or business profit. It is clear from the above that the facts of the case of the assessee are identical with the facts in the above case wherein the co-ordinate bench of the Tribunal has deleted the addition in the case of Shri Manish Baid [ 2017 (10) TMI 522 - ITAT KOLKATA] in respect of sale of shares of M/s KAFL. Therefore, respectfully following the same and the facts in the instant case as taken note in para 7 supra and discussions, is inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital on sale of shares of M/s KAFL as bogus and delete the consequential addition. - Decided in favour of assessee.

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• 2019 (8) TMI 1116
  Penalty u/s 271B - non-audit of books of account within the prescribed time limit provided - AY 2004-2005 - the penalty order was barred by limitation - HELD THAT:- The assessee got his books of accounts audited on 28/03/2014 which was made available to the AO and no prejudice has been caused to the Revenue. Now the short question that arises is whether in this scenario, penalty u/s. 271B can be levied or not. In our considered opinion, the assessee had only committed technical venial breach which does not create any loss to the exchequer as the audit report was available to the AO before the completion of the assessment proceedings. Assessment Year 2008-2009 - It was held by the Hon ble High Court in the case of Bisauli Tractors [2007 (5) TMI 181 - ALLAHABAD HIGH COURT ] that the if a person has not maintained the accounts book or any accounts the question of its audit does not arise and in such an event the imposition of penalty is under the provision contained in section 271A. Therefore, it was concluded by the Hon ble Allahabad High Court that the penalty proceedings u/s 271B would not apply. No contrary judgment of the Hon ble jurisdictional High Court has been brought to our notice, hence, by following the judgment of the Hon ble Allahabad High Court in the case of Bisauli Tractors (supra) , we delete the penalty imposed u/s 271B in respect of assessment year 2008-2009. It is ordered accordingly. AY 2009-2010 - The search and seizure in assessee s case was conducted on 06. 01. 2009. The assessee had obtained the copy of all the seized records. The demise of the Chartered Accountant in the year 2016 cannot be a reason for not auditing the books of account for assessment year 2009-2010.Therefore, there was no reasonable cause as mandated u/s 273B for deletion of the penalty imposed u/s 271B for this AY.

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• 2019 (8) TMI 1115
  Disallowance of depreciation of tenancy rights - HELD THAT:- As seen from record, the dispute relating to assessee s claim of depreciation on tenancy right is a recurring issue from the earlier assessment years. While deciding the issue in earlier assessment years, the Tribunal has consistently held that the tenancy right is not an intangible asset eligible for deprecation u/s 32. In fact, in the latest order passed for the assessment year 2011 12 the Tribunal, following its earlier view has disallowed assessee s claim of depreciation on tenancy rights. Facts being identical, respectfully following the consistent view of the Tribunal in assessee s own case in the preceding assessment years, we uphold the decision of learned Commissioner (Appeals) on the issue. Disallowance of payments made to the legal heirs of the deceased partners - HELD THAT:- Allowability of payment made to the legal heirs of deceased partners towards share in goodwill is a recurring issue between the parties continuing from the preceding assessment years. Though, the AO in the preceding assessment years has made similar disallowance, however, when the issue came up for consideration before the Tribunal, it was held that the payment made to the legal heirs of the deceased partners is allowable as deduction. In the latest order passed for the assessment year 2011 12 the Tribunal following its earlier orders has upheld the decision of Commissioner (Appeals) in allowing assessee s claim of deduction. Facts being identical, respectfully following the consistent view of the Tribunal in assessee s own case as referred to above, we uphold the decision of learned Commissioner (Appeals) on this issue. Grounds raised are dismissed.

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• 2019 (8) TMI 1114
  B ook profit adjustment u/s. 115JB - difference in depreciation - exclusion of amount credited in P/L account under the head Earlier years adjustment- Difference in depreciation provision while determining book profit - HELD THAT:- Identical issue considered in the case of ACIT Vs. Srinivas Synthetics Packers (P) Ltd. [ 2008 (9) TMI 446 - ITAT AGRA ] . The ITAT after careful analyzing found that the entire amount written back can be claimed as a reduction under the proviso to clause (i) of Explanation (1). No contrary decision has been shown. Hence we affirm the order of learned CIT(A). - Decided against revenue

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• 2019 (8) TMI 1113
  Unexplained cash credit u/s. 68 - addition on statement on oath of third party (person) recorded u/s.131 - HELD THAT:- There is no case of any cash deposits made either at the time of receipt of loan in the account of M/s. Grafton Merchant Pvt. Ltd., or in the account of assessee while making repayment of loan or payment of interest. Hence, there is no need to suspect the entire gamut of transactions before us. Entire addition of principal amount of loans of 3.75 Crores and disallowance of interest on loans has been made by the AO with surmise and conjecture and without any basis. No deficiencies whatsoever were found in the documentary evidences submitted by the assessee before the AO which admittedly included copy of PAN, ITR acknowledgement, audited financial statements, computation of income, confirmation from lender, bank statements evidencing the immediate source of credit of the lender etc. All these documents clearly prove the identity, creditworthiness of the lender and genuineness of the transaction in the peculiar facts of the instant case. Hence, it could be safely concluded that assessee had indeed complied with all the three necessary ingredients of Section 68. With regard to non-production of Shri Jagdish Prasad Purohit by the assessee before the Ld. AO for the purpose of cross examination of him by the assessee, we hold that it is the revenue which had placed reliance on the statement of Shri Jagdish Prasad Purohit. Hence, Shri Jagdish Prasad Purohit becomes the witness of the revenue. Hence, it is the duty of the revenue to produce the party as their witness in order to enable the assessee to cross examine the said party, if it so desires. This responsibility cannot be shifted to the assessee by the AO. CIT(A) had rightly deleted the addition made u/s.68 of the Act and disallowance of interest on loans, which in our considered opinion, does not call for any interference. Accordingly, the grounds raised by the revenue are dismissed.

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• Customs

• 2019 (8) TMI 1147
  Rejection of petitioner s application for setting up CFS - approval to the fourth respondent to shift its existing CFS from Madhavaram to Vallur village - primary contention of writ petitioner is that if a policy decision has been taken to not to encourage CFS close to Chennai and some other Ports, the same should be applied uniformly / evenly irrespective of whether it is a case of shifting a CFS or opening a new CFS - HELD THAT:- Factual position that location where writ petitioner wants to commence CFS and location where fourth respondent wants to shift its existing CFS are virtually adjacent to each other and equidistant from Port is also not in dispute - It is the stated position of official respondents that it makes no difference qua convenience of trade or public safety with regard to locations of writ petitioner and fourth respondent. Therefore, it follows as a sequittur that official respondents are neither interested nor indifferent to the location. This court has no difficulty in accepting the argument that the nature of applications of writ petitioner and fourth respondent are different as one is for a new CFS and the other is for shifting the existing CFS. This court also notices that the location is one in which official respondents are neither particular nor indifferent. Therefore, it boils down to commercial interests of writ petitioner and fourth respondent. Safe conclusion reached is writ petitioner cannot impede the application of fourth respondent for shifting, though writ petitioner is entitled to say that it should be given an opportunity as there is no disputation that there is nothing to demonstrate that writ petitioner was called / put on notice to attend 6.2.2019 meeting. Petition allowed in part.

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• 2019 (8) TMI 1146
  Short payment of duty - import of petroleum products - non-inclusion of freight incurred in respect of smaller vessels called the daughter vessels - scope of remand - imposition of penalty u/s 114A of the Customs Act by Bench - this Bench in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2007 (6) TMI 48 - CESTAT, CHENNAI ] remanded the matter to the Commissioner directing him to pass a speaking order after finalization of provisional assessments - bonafide belief for non-payment of duty - HELD THAT:- In the Final Order of INDIAN OIL CORPORATION LTD., the Bench had categorically held that Section 114A of the Customs Act 1962 does not apply in this case and no penalty can be imposed upon the appellant. We are not aware of any order of a higher judicial forum setting aside this finding of this Bench. The imposition of penalty by the Commissioner in the impugned order is a clear violation of this direction by this Bench and therefore, the same needs to be set aside. Inclusion of freight of the daughter vessels - HELD THAT:- The method has been prescribed by the Board and the aforesaid Circular No. 04/2006 which is binding upon the departmental officers including the Commissioner. Wherever WSO rates are available, it has been categorically held that those rates must be applied and alternative method can be used only if these rates are not available - In the instant case, the Learned Commissioner has ignored this direction of the Board and has reckoned a different value on the ground that the appellant has recovered a higher amount towards freight. Such an order is contrary to the directions of the CBEC which are binding upon him. The duty liability needs to be worked out directly from the WSO rates which, according to the appellant, are available for the period and any demand made on the basis of some other calculation is not sustainable - the matter must be remanded to the original authority for the limited purpose of calculation of the differential duty payable as per the WSO rates duly attested on the basis of AFRA rates during the relevant period. Appeal allowed by way of remand.

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• 2019 (8) TMI 1145
  Demand of Customs Duty and cesses - Section 28(8) of the Customs Act, 1962 - courier agencies - HELD THAT:- The SCN were issued to various courier agencies on the same allegation and this Tribunal in the case of M/S. RPS GLOBAL COURIER SERVICES AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX TRIVANDRUM [ 2014 (10) TMI 330 - CESTAT BANGALORE] has remanded the case back to the original authority for passing the fresh order. Since the issue involved in the present case is also same, this case also needs to be remanded back to the original authority for de novo adjudication. The present case to the original authority for de novo adjudication - appeal allowed by way of remand.

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• 2019 (8) TMI 1144
  Mis-declaration of description of goods - case of the appellant is that the appellant did not raise the ground of corrigendum before the Commissioner(Appeals) as well as before this Tribunal - HELD THAT:- The issue raised by the appellant is purely legal in nature and can be raised first time before this appellate Tribunal at the time of argument and the Tribunal has the power to examine the legal issue even if not raised in the grounds of appeal. Further, the Jt. Commissioner while passing the Order-in- Original on 07/03/2008 imposed redemption fine of 10,000/-, 8000/- and 3000/- in respect of different Bills of Entry in terms of Section 125 of the Customs Act, 1962. Similarly, he imposed penalty of 1 lakh, 30000/- and 80000/- in respect of different Bills of Entry under Sectgion 112(a)(ii) of the Act. Thereafter on 28/03/2008, he has passed a corrigendum changing the amount of redemption fine and penalty without giving any notice to the parties. The original order passed by the Jt. Commissioner and the corrigendum passed on 28/03/2008 are not sustainable in law and therefore we set aside the same and remand the case back to the original authority to pass a fresh order after giving an opportunity of hearing to the appellant. and after following the principles of natural justice - Appeal allowed by way of remand.

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• Securities / SEBI

• 2019 (8) TMI 1143
  Running a Collective investment scheme [CIS] without obtaining the certificate of registration - order of refund of the monies collected illegally under the CIS Scheme - direction of WTM directing refund of the monies collected under the CIS - appellant seeking to circulate the information memorandum under Regulation 73 to its investors - HELD THAT:- Regulation 73 is not applicable in the instant case in as much as it was not an existing scheme as on the date of incorporation of the Regulations which came into effect on January 25, 1995. The appellant s CIS scheme came into effect much after 2005. In SEBI vs. Gaurav Varshney and Ors. . [ 2016 (7) TMI 642 - SUPREME COURT] has categorically held that an existing collective investment scheme within the meaning of Section 12(1B) as also within the meaning of collective investment regulations, comprise of only such collective investment scheme which has come into existence prior to January 25, 1995. In the instant case, the appellant s scheme came into existence much after January 25, 1995 and, thus, Regulation 73 of the CIS Regulations is not applicable. Once there is an order to refund the money collected by the appellant under the scheme, the question of circulating the information memorandum to the contributories under Regulation 73(6) and requiring the contributors / investors to give their consent under Regulation 73(7) does not arise. Such exercise would be defeating the order of refund of the monies collected illegally under the CIS Scheme. Merely quoting a wrong provision of the Statute while exercising power under an Act would not invalidate the order passed by the authority if it is shown that such order could be passed under other provisions of the Statute When there was a clear cut direction of WTM directing refund of the monies collected under the CIS, the question of continuing with the scheme by distribution of information memorandum under Regulation 73 does not arise. The application of the appellant seeking to circulate the information memorandum under Regulation 73 to its investors was patently misconceived and was rightly rejected. Request for extension of time to refund the monies, we are of the opinion that the WTM rightly rejected the application. Enough latitude has been given to the appellant to refund the amount. More than five years have elapsed and the order of SEBI dated June 21, 2013 is yet to be implemented in full. Upon consideration of the material that has been brought on record, we find that even though the independent auditor was appointed on August 6, 2015, for almost three months, the appellant did not schedule a meeting with the auditor. As a result, the auditor had to intimate SEBI that they were unable to continue with the audit on account of non-cooperation by the appellant. Based on this non-cooperation, a show cause notice dated November 20, 2015 was issued to show cause as to why the order dated May 27, 2015 should not be revived. In this show cause notice, it was categorically indicated that the auditor had made request on September 2, 2015, October 6, 2015, October 20, 2015 and November 2, 2015 for holding a meeting which the appellant failed to adhere. The record also indicates that the audit recommenced on March 21, 2016 and inspite of auditor taking a sample of 49282 out of 257477 investors, the company failed to provide the necessary certificates and only provided 8471 certificates and that too without providing the bank statements for cross verification. Appellant resorted to all kinds of dilatory tactics in not getting the repayments verified, namely, whether the appellant had actually refunded the amount to the investors. WTM also took note of the income tax report in which it was indicated that monies have not been refunded to the investors and have been diverted to a sister company of the appellant. In the light of the conduct of the appellant, we are of the opinion that admittedly the entire amount has not been repaid to the investors and whatever has been alleged by the appellant to have been repaid has not been verified. The appellant is guilty of adopting dilatory tactics in getting the repayments verified. Thus, we are of the opinion that the application for extension of time to refund the amount was rightly rejected. It may be stated here that more than 1900 crores were collected which till date has not been refunded inspite of the order being passed by SEBI on June 21, 2013. Thus, no relief can be granted to the appellant.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 1142
  Wilful Defaulters - Master Circular on Wilful Defaulters of Reserve Bank of India dated July 1, 2015 - Validity of decision of the Review Committee established under the provisions of the Master Circular on Wilful Defaulters issued by the Reserve Bank of India - HELD THAT:- In neither of the two writ petitions before the Court, the petitioners therein have challenged the decision of the Identification Committee or the steps and procedures taken upto the decision of the Review Committee. The Master Circular on Wilful Defaulters dated July 1, 2015 contemplates two tier decision making process for the purpose of identification of a wilful defaulter. The Master Circular contemplates establishment of an Identification Committee consisting of the specified number of personnel with the requisite qualifications and the Constitution of a Review Committee, again of the requisite number and qualification. Once such committees are established, the Master Circular requires that a bank having material to proceed against an account, to have the same declared as a wilful defaulter, under such Master Circular, to place such material before the Identification Committee. Upon the Identification Committee being satisfied with the sufficiency of the materials placed before it, and is of the view that, there are sufficient grounds to suspect that, the account can be classified as a wilful defaulter, then, it is required to issue a show-cause notice to the account holder, for such account holder to respond thereto. The response is thereafter considered by the Identification Committee. If the decision of the Identification Committee is adverse to the account holder, then, the account holder is at liberty to prefer an appeal before the Review Committee, within the period stipulated. On such an appeal, the Review Committee is to decide such appeal in accordance with law. In the present case, the decision of the Review Committee under challenge, is not informed with reasons. Although, the Review Committee is at liberty to concur with the finding of the Identification Committee, it has to deal with the representation made by the borrower before it - The challenge of the petitioners being limited to the order of the Review Committee, the same is quashed. Petition disposed off.

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• 2019 (8) TMI 1141
  Maintainability of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor failed to repay an amount - existence of Debt and Default - section 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- When we have asked the Corporate Debtor counsel as to whether any defence is lying with the Corporate Debtor, he has not disputed the existence of debt and default. Since no defence has come from the Corporate Debtor side regarding existence of debt and default, we are of the considered view that it is a fit case for admission, whereby, this Bench hereby admits this Company Petition to initiate CIRP against the Corporate Debtor with the following directions by appointing Mr. R. Ragavendran as Interim Resolution Professional basing on the consent given by him. This Petition is admitted.

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• 2019 (8) TMI 1140
  Maintainability of petition - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - HELD THAT:- The aforesaid submission cannot be accepted in absence of any relationship between the Impex India Inc. (Financial Creditor) and Seajaan Logistics Private Ltd. (Corporate Debtor) and the Corporate Debtor has failed to bring on record any evidence to show that it was a friendly loan and not to be refunded. So far as the maturity of the loan is concerned, admittedly, the loan have been taken on 15th November, 2015 vide cheque No. 002334. As the loan amount is 15 Lakhs and the part amount has not been paid, the Adjudicating Authority rightly held that the Corporate Debtor defaulted in paying the debt , which was more than 1 Lakh. As pleaded that the Financial Creditor has admitted that they have received the amount of 11,60,000/- but it was not disputed that the rest of the amount, which is more than 1 Lakh, has not been paid. Appeal dismissed.

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• 2019 (8) TMI 1139
  Admissibility of petition - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate Debtor - pre-existing dispute - supply of goods (Batteries) supplied by the Operational Creditor - HELD THAT:- There is no dispute about the quality or short supply of the goods and the communication relates to the warranty to be given by the respondent. The other e mail dated 1st March, 2018 are subsequent to the Demand Notice dated 4th January, 2018, we are not taking into consideration the communication between the parties. While we are not inclined to interfere with the impugned order dated 17th December, 2018. However, this order will not come in the way of the Appellants to settle the matter with M/s. Jay Ace Technologies Ltd. and other Financial Creditors and Operational Creditors and thereafter move an application u/s 12A of the I B Code before the Committee of Creditors. Appeal disposed off.

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• PMLA

• 2019 (8) TMI 1138
  Prevention of Money Laundering - denial of natural justice - denial of supply petitioner s statement recorded under Section 50(2) - HELD THAT:- Investigation in this sensitive case is in progress and is at a crucial stage. Rules of Natural Justice cannot be invoked at this stage as an accused has no say in the manner and method of investigation. Under the Code of Criminal Procedure, statements recorded under Section 161 of Cr.P.C. are not supplied during the course of investigation and are supplied alongwith the charge-sheet filed. In the instant case also, after completion of investigation in this case, copy of petitioner s statement under Section 50 of The Prevention of Money Laundering Act, 2002 would be supplied. Petitioner is accused of an offence under The Prevention of Money Laundering Act, 2002 which poses serious threat not only to the financial system of the country but also its integrity and sovereignty. Keeping in view the object of The Prevention of Money Laundering Act, 2002 refusal to supply petitioner s statement recorded under Section 50 of The Prevention of Money Laundering Act, 2002 to him at this initial stage is justified. This Court is of the considered view that it would not be in the interest of justice to direct supply of petitioner s statement under Section 50 of The Prevention of Money Laundering Act, 2002 to him when the investigation of this case is at a crucial stage.

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• 2019 (8) TMI 1137
  Offence under PMLA - pre-arrest bail - HELD THAT:- Severity of the punishment alone cannot be the criteria to determine as to whether bail has to be granted or not. Gravity of the offence is a relevant criteria which has to be considered while granting or refusing the bail. During the course of hearing, reliance was placed by learned ASG upon Section 265-A of Cr.P.C. to urge that in an offence punishable with term up to seven years, plea bargaining can be entertained, is misplaced as proviso to Sub-Section (1) (b) of Section 265-A of Cr.P.C. contains a rider that plea bargaining is not available where the offence committed affects socio and economic conditions of the country. A bare perusal of petitioner s statement recorded u/s 50 of the PMLA reveals that he is evasive in his replies. However, gravity of the offence committed can be gauged from the contents of the aforesaid statement recorded under Section 50 of PMLA. In any case, it cannot be prima facie said that petitioner s statement recorded under Section 50 PMLA does not incriminate him. This Court is of the prima facie opinion that custodial interrogation of petitioner is required for an effective investigation. Mere attachment of petitioner s property in Income Tax proceedings would not justify grant of pre-arrest bail to petitioner, who is not only evasive in his replies but is trying to influence the witnesses. It is so evident from the statement of witnesses recorded by respondent, which has been provided to this Court in sealed cover. Upon considering this case in its entirety, this Court finds that grant of pre-arrest bail to petitioner would stall effective investigation in this case.

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• Service Tax

• 2019 (8) TMI 1110
  Valuation - inclusion of discount allowed by the IGL to DTC - HELD THAT:- Issue notice on the application for Stay as well as on the Civil Appeal, returnable within four weeks.

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• 2019 (8) TMI 1109
  Valuation - Ayurvedic medicaments manufactured on job work basis - Rule 10A of Central Excise Rules, 2000 - period 01.04.2007 to 29.02.2008 - extended period of limitation - HELD THAT:- Issue notice.

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• 2019 (8) TMI 1108
  Valuation - includibility - finance charges - additional finance charges - Fleet Card issued by the appellant to the customer, who availed vehicle loan facilities from them, is for facilitating the customers to procure fuel from the outlets of petroleum companies, with whom the appellant-assessee had prior arrangement - HELD THAT:- Appeal admitted. Leave granted - Issue notice on the prayer for interim relief also.

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• 2019 (8) TMI 1107
  Levy of service tax on Royalty - rule 64D of the Mineral Concession Rules. HELD THAT:- Issue Notice.

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• 2019 (8) TMI 1106
  Sharing of resources and cost / expenses with the group companies - Business Support Services provided for the period 2006-07 and 2007-08 - Section 65(105)(zzzq) of the Finance Act, 1994 - HELD THAT:- Issue notice on the application of condonation of delay as also on the appeal, returnable in four weeks.

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• 2019 (8) TMI 1105
  Classification of services - Dredging Services - Penalty - HELD THAT:- Issue notice on the application for condonation of delay as well as on the Appeal, returnable within four weeks.

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• 2019 (8) TMI 1104
  Scope of Courier Service - non-payment of service tax under the head - service provided worldwide - export of services or not - Circular No 96/7/2007-ST dated 23.08.2007 - HELD THAT:- Issue notice. Until further orders, there shall be stay of operation of the impugned order passed by the Customs, Excise Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Mumbai.

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• 2019 (8) TMI 1103
  Levy of service tax - advertisement services - discount given by the media who sold space in print media to the appellant for advertisement and which they pass on to their client advertisers - HELD THAT:- The service tax has been discharged on the entire amount received by the appellant from their client-advertisers for the services rendered by them. This is in compliance with the judgment of the Hon ble High Court of Madras in the case of ADWISE ADVERTISING PVT. LTD. VERSUS UNION OF INDIA [ 2001 (3) TMI 1 - MADRAS HIGH COURT] inasmuch as they have discharged service tax on the entire consideration which they received for their services - the amount which they have not received as consideration i.e., the amount which they got as discount and passed on their client advertisers, is not chargeable to service tax as the same is not charged for their services - demand set aside. Levy of service tax - advertisement services - appellants have purchased time-slots (FCT) from film producers and serial producers for advertisement in electronic media - HELD THAT:- The same has been made taxable only with effect from Finance Act, 2006 as indicated in CBEC Circular No.334/4/2006-TRU dated 28.2.2006 - Since the entire demand is for the period prior to March 2006, i.e., before the charging Section was introduced on this count, the same cannot be sustained. Accordingly, the demand on this account also needs to be set aside - Accordingly, demand of service tax on both counts in the impugned order needs to be set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (8) TMI 1102
  Imposition of penalty - Clandestine removal - N/N. 8/2003-CE dated 1st March 2003 - compounded levy scheme - Extended period of limitation - HELD THAT:- The inclusion of the value of aluminium circles for the purpose of determining the ceiling for exemption value under notification no. 8/2003-CE dated 1st March 2003 is only a question of fact. It has been established that the value of all the clearances would exceed the threshold prescribed for discharge of duty liability on the two dutiable products - there is no reason to discard the finding of the lower authority on the liability to pay duty on the clearance of aluminium sheets and aluminium fixtures during 2009-10 and 6,48,792/- on the goods clandestinely removed either without invoices or by misdescription in the invoices as aluminium circles for the year 2008-09 and 2009-10. The claim of Shri Bhadresh Sheventilal Shah of being innocent of the involvement in the mis-declaration to be acceptable. As purchaser of aluminium sheets , it would hardly be his place to verify the documents. He was not required to be compliant with central excise procedures, either as a manufacturer or as a registered dealer, and cannot be expected to have any interest other than satisfaction that goods that were supplied as per orders issued by him. In these circumstances, the fastening of a penalty on an uninvolved dealer does not appear to be proper. Appeal dismissed - decided against Revenue.

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• 2019 (8) TMI 1101
  Valuation - submerged arc welded pipes to the extent of charges paid for outsourced inspection by agencies on the insistence of some customers - section 4 of Central Excise Act, 1944 - HELD THAT:- Transaction value is the price that is paid, or payable, for the goods procured by the customers - It is not in dispute that the testing agency, even if nominated by customers, is compensated for by none other than the appellant and that the amount is recovered from the customers as a cost of production and supply. It would, therefore, appear that the assessable value, as computed by the lower authorities, does reflect the transaction value. Appeal dismissed - decided against appellant.

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• 2019 (8) TMI 1100
  Confiscation under Rule 25 of the Central Excise Rules, 2002 - allegations in the SCN restrict to a mere non-entry, as pleaded by the Ld. Advocate and not on the non-recording of production - HELD THAT:- The conditions of Rule 25 ibid remain unsatisfied - When Clause (b) of Rule 25 speaks of account , the adjudicating authority has to find out that the same was not accounted anywhere, not just in RG-1 but even in ERP, since the Central Excise Rules also recognize ERP as a method. The proceedings are concluded in haste, without proper enquiry and without sufficient investigation, which only renders the impugned order unsustainable - appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1099
  Imposition of penalty - CENVAT Credit - Rule 15 (2) of CCR 2004 - HELD THAT:- There is no dispute as to the fact that the appellant had availed the CENVAT Credit on the duty paid on capital goods and also claimed depreciation from the income tax authorities, however, he filed revised income tax returns with the authorities, writing back the depreciation claimed - this would amount to non availment of depreciation as per and in accordance of provisions of CENVAT Credit 2004. The adjudicating authority has taken a conscious note of this and dropped the demand alongwith interest, recording so, very clearly. If that be the case, the question of imposition of any penalty on the appellant does not arise as provisions of Rule 15 (2) of CENVAT Credit Rules 2004 pre- supposes the demand of duty or irregular availment of CENVAT Credit. In the absence of any confirmation of demand, penalty imposed by the lower authorities cannot withstand the scrutiny of law - the appeal is allowed holding that penalty is set aside.

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• 2019 (8) TMI 1098
  Maintainability of petition - non-prosecution of the case - HELD THAT:- None present for the appellant, despite repeated notices issued. The appeal is dismissed for non-prosecution.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 1112
  Requirement of pre-deposit - alternate remedy - Deemed assessment - statutory appeal under Section 51 of TNVAT Act to the jurisdictional Appellate Deputy Commissioner - Section 22(2) of TNVAT Act - HELD THAT:- This Court is of the considered view that it would not be appropriate to delve into those directions given by the said Appellate Authority. Suffice to say that post remand, lone respondent before this Court, namely the Original Authority has now passed a revised Assessment Order. Instant writ petition has been filed assailing the impugned order. This Court is of the considered view that it would be appropriate to relegate the writ petitioner to alternate remedy and hold that it would be appropriate to hold that the writ petitioner can assail the impugned order by way of a statutory appeal before the said Appellate Authority. This Court is informed without disputation or disagreement that statutory appeal is under Section 51 of TNVAT Act. A perusal of Section 51 of TNVAT Act reveals that there is a pre-deposit / pre-condition requirement and that is 25% of the tax liability. From the trajectory of the instant matter, it comes out clearly that writ petitioner has already made the pre-deposit while preferring the first round of statutory appeal before the said Appellate Authority. More importantly, this Court is informed without any disputation or disagreement that besides 25% pre- deposit for preferring the first round of statutory appeal, writ petitioner has paid another 25% pursuant to orders in stay petition before the said Appellate Authority in the first round. This Court deems it appropriate to relegate the writ petitioner to the alternate remedy of statutory appeal before the said Appellate Authority with a rider that 50% of the disputed tax already deposited/ paid by way of pre-deposit and pursuant to stay petition in the earlier round in statutory appeal will suffice and the writ petitioner shall now not be called upon to make further pre-deposit in this regard. If the writ petitioner files a statutory appeal before aforesaid Appellate Authority, as writ petitioner has already made pre-deposit of 25% in the previous round of statutory appeal, writ petitioner shall not be called upon to make 25% pre-deposit again and Appellate Authority shall entertain the appeal without insisting on this pre-deposit. Petition disposed off.

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• 2019 (8) TMI 1097
  Liability of tax - Section 3-F of the U.P. Trade Tax Act - applicant having merely supply and services for setting up tele-networking system - HELD THAT:- It does appear, that part of the reasoning offered by the Tribunal is erroneous, insofar as the Tribunal has observed that the transaction had to be bifurcated into two parts since the assessee was having a godown inside the State of U.P. and since the assessee s name was mentioned as the consigner in the excise documents. Clearly, existence of the godown inside the State of U.P. was not decisive to determine whether the movement of the goods had been occasioned by a preexisting contract for sale of goods. Similarly, mere mention of the assessee s name as the consignor of the goods was largely irrelevant. In face of such finding which have neither been shown to be erroneous nor perverse and in absence of the contract document itself being produced and further in absence of it being established before the authorities that the entire quantities of goods had been imported pursuant to pre-existing contract for sale of those goods, inside the State of U.P., merely because the assessee had executed a single contract inside the State, could not lead to the conclusion that all goods had been imported pursuant to that pre-existing contract for sale especially when undisputedly the assessee had sold/transferred some of those imported goods to outside the State of U.P. at Kerala and Haryana - In cases such as this, the burden to establish that the particular/identified goods had been imported inside the State pursuant to a pre-existing contract rested on the assessee. The facts required to establish such a transaction were facts in the special knowledge of the assessee and those must have been shown to exist amongst others from the books of account and contract documents, before benefit of Sections 3, 4 and 5 of the Central Sales Tax Act, 1956 could be availed. In the instant case, the Tribunal has found absence of the books of accounts of the assessee. There is nothing on record wherefrom it may be inferred that the assessee had infact discharged its burden - As to the case set up under Section 3-F of the Act, clearly, it was for the assessee to have set up a case based on evidence to establish the same. It having not been done, it is too late in the day to allow that case to be pleaded as in exercise of revisional jurisdiction, the Court cannot set the clock back. Revision dismissed.

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• 2019 (8) TMI 1096
  Auction or property - proceedings pursuant to tax liability, penalty for the assessment years 2007-08, 2008-09 and 2014-15 under TNVAT Act - It is the case of the writ petitioner that writ petitioner came to know about the impugned auction notice on 26.07.2019, when an official attached to the office of the first respondent went over to the residence of the writ petitioner and pasted the impugned auction notice - HELD THAT:- A perusal of Section 42 of TNVAT Act reveals that when tax is not paid by a dealer, the penalty shall immediately became a charge on the properties or persons, who are liable to pay the tax or penalty under this Act. There is also no disputation that with regard to said AYs, for assessment years 2007-08 and 2008-09, deemed assessment happened on 30.06.2012 and with regard to assessment year 2014-15, deemed assessment happened on 31.10.2015. Therefore, on 30.06.2012 qua assessment year 2007-08 and 2008-09 and on 31.10.2015 qua the assessment year 2013-14, there was a charge on the said property - From a perusal of Section 26 of TNVAT Act, it becomes clear that writ petitioner, who is a legal heir of the dealer under TNVAT Act, is now holding immovable property i.e., said property of the dealer. The transfer is from father to son by way of a settlement. In the instant case, as it is the stated position of writ petitioner that he does not know anything about the business transactions of his late father, writ petitioner obviously is not in a position to dispute that said property was offered as a security to the respondent - the argument predicated on Sections 39(4) and 39(5) pales into insignificance. Petition dismissed.

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• 2019 (8) TMI 1095
  Validity of revised assessment order - section 16 of TNGST Act - suppression of facts - stock reconciliation - HELD THAT:- The respondent, had earlier sent a communication dated 27.01.2016 with certain enclosures and to be noted, this communication is also post aforesaid earlier order of this Court. Earlier order of this Court is cited as No.2 in the said communication. Said communication mentions about certain enclosures, but as already mentioned supra, records of the Department are before this Court today and on verification, it comes to light that the stock reconciliation statement and more importantly, stock statement taken at the time of inspection does not form part of the enclosures. Petitioner, on instructions, very fairly submits that with regard to suppression aspect i.e., 67,99,404/-, writ petitioner would avail statutory remedy of appeal by approaching the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act - With regard to stock reconciliation aspect of little over 55.53 lakhs, matter is remitted back to the respondent with a direction to furnish to the writ petitioner the stock statement made at the time of inspection as well as stock reconciliation statement and redo that part of the assessment alone. Petition disposed off.

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• 2019 (8) TMI 1094
  Works Contract - sub-contract - tax liability where same transaction is reflected by the Main Contractor and sub-contractor both - adjustment of TDS in the hands of the main contractor against the tax liability of the subcontractor - Scope of the Circular dated 23.12.2014 - Section 62 of the KVAT Act, 2003 HELD THAT:- The fact that the main contractor has not claimed any refund is admitted by the affidavit dated 04.04.2019 filed into Court by the 3rd respondent. The fact remains that it is this amount that is lying in the credit of main contractor is requested to be adjusted towards the tax demand raised against the petitioner/sub-contractor and it is also an admitted fact that though it was a practice amongst the VAT officers to permit such adjustment in respect of the tax demands raised against the subcontractors, in view of the TDS in the hands of the main contractors and which practice came to be prohibited by the said Circular. In the instant case, the facts involved are in the converse. The dealer seeking relief is the subcontractor and the 4th respondent is the main contractor. The facts pertaining to award of work, the sub-contract under agreement dated 14.09.2011 and the execution of the work by the sub-contractor are all admitted facts. It is also pertinent to note that the sub-contractor is one of the two constituents constituting the main contractor which is admittedly a joint venture, and entirely formed for the purpose of executing the works contract awarded under the contract dated 30.08.2011. It is an admitted fact that all throughout the execution of the project spread over several years, the RA bills were raised by the main contractor and the payments were released by the employer to the account of the main contractor and TDS was suffered in the hands of the main contractor only. In the instant case, the facts are peculiar. The execution of the contract is undoubtedly by the petitioner who again is admittedly is a sub-contractor. The RA bills or the running account bills have admittedly been raised by the main contractor and payments in lieu of the running bills are made in favour of the main contractor only and TDS is at the hands of the main contractor only and consequently the accretion of goods to the employer happened at the hands of the main contractor only. That being the case, the taxable event happened at the hands of the main contractor only. Accordingly the writ petition is allowed in so far as it relates to the works contract covered under the contract agreement dated 30.08.2011 and 14.09.2011. We are of the view that the assesses who fall within the scope of Section 9-A(10) and (11) are excepted from the applicability of Rule 44(3)(f). As no challenge is mounted to the validity of Rule 44(3)(f) and the impugned Circular being purportedly in exercise of the powers vested in the Commissioner of Commercial Taxes under Section 59 of the Act, we are unable to grant the relief sought for by the petitioner in respect of the impugned Circular. Accordingly, the writ petition in so far as it relates to the prayer (d) stands rejected. Petition allowed.

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• Wealth tax

• 2019 (8) TMI 1093
  Wealth tax escapement - Notice issue u/s 17 of Wealth Tax Act - whether the impugned land is not liable for wealth-tax assessment - urban land as per Explanation 1 to section 2(ea) of the Wealth-tax Act, 1957 - HELD THAT:- Wealth is leviable only on unproductive asset and not on commercial asset. This is clear from the provisions of Wealth-tax Act, 1957. The Parliament has in its wisdom foreseen that for commencement of an industrial project, it would take minimum two years for securing permission and approval and hence, such land which is held as per the objects of the company for industrial purposes has to be exempted from the levy of wealth-tax for a period of two years from the date of its acquisition. The word used in the statute is land held for industrial purpose during the initial two years period. There is no requirement that such land should be actually used for industrial purpose during the said period of initial two years. When a company with certain stated objects in its memorandum acquires land to implement the object, undoubtedly, the value of such land has to be excluded from the taxable wealth during the initial two years period. On facts on record, it is clear that the land was held by the assessee for industrial purpose for setting up information technology park which includes conveniences and facilities of a specialized nature for information technology industry. The CWT(A), therefore, was correct in excluding value of the impugned land from the taxable wealth. The finding of the Wealth Tax Officer that the assessee has no intention to undertake setting up of technopark is not based on any tangible material. As mentioned earlier, the main object of the assessee-company for which it was incorporated was to establish technopark and facilities which provided for IT industries. The assessee had made attempt to undertake land filling / leveling. The efforts were stopped as per the stay order dated 23.09.2006 from the District Collector. There have been various correspondences between the assessee and the authorities concerned for lifting the stay granted for land filling / leveling. The observation of the WTO that the assessee had no intention to construct any techopark is without any basis. Even otherwise, when the stated object of the assessee-company in the memorandum of association is to establish techno park, for the initial two years from the date of acquisition of land, the impugned land cannot be brought to tax under the Wealth-tax Act, 1957, irrespective of the fact that the land was not actually used for the industrial purpose during the said period. In the instant case, for assessment years 2007-2008 and 2008-2009, the period of two years has not expired from the date of acquisition of land. Therefore, we are of the view that the same cannot be brought within the definition of urban land as per Explanation 1 to section 2(ea) of the Wealth-tax Act, 1957. - Decided against revenue

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• 2019 (8) TMI 1092
  Wealth tax assessment - valuation of property - whether land in question was Sanad land and the assessee does not have absolute right over the land? - determination of net wealth on the basis of DVO report - whether land in question does not come under the definition of urban land? - HELD THAT:- The facts borne out from records clearly indicates that the land in question was acquired by the Government of Maharashtra through Collector, Thane, for the purpose of setting up Chemical Factory in the year 1957. The said land was converted into non-agricultural purpose in the year 1957, and as per, which the land in question has to be utilized for the purpose of setting up of chemical factory. The conditions, further stipulates that out of total area of land of 1,06,238 sq. yards, land to the extent of only 10,607 sq yards (approximately 10%) should be used of the purpose of industrial activity and the balance land to the extent of 95,630 sq yards (approximately 90%) was to be kept open to the sky. The assessee has utilized land for the purpose of construction of factory and other buildings, as per the terms and conditions of acquisition, accordingly 10% of the land was used for setting up manufacturing facility and 90% of land has been kept open to the sky First arguments in light of Sanad executed between the assessee and Government of Maharashtra and land in question was Sanad land and the assessee does not have absolute right over the land, therefore the same cannot be considered as asset, for the purpose of Wealth Tax Act, 1957, does not hold water, because as per the terms and conditions of Sanad , it was very clear that the assessee is owner of the land subject to certain conditions, therefore merely for the reason of imposition of certain conditions, at the time of acquisition of land, it cannot be said that, the assessee does not have any absolute right over the land and accordingly, the first argument of the AR of the assessee fails. Hon ble Punjab Haryana High Court in the case of CWT vs R.K.Mehra [ 2009 (7) TMI 29 - PUNJAB AND HARYANA HIGH COURT] had considered an identical issue and held that a farm land, on which construction was not permissible under municipal law, would not be includable in definition of urban land chargeable to wealth tax, even though assessee has constructed a farm house on said land. Therefore, we are of the considered view that the land in question does not come within definition of asset as defined u/s 2(ea) of the Act, because 10% of the land has been used for the purpose, for which it has been acquired and also constructed building thereon by the approval of appropriate authority and the remaining 90% of land has been kept open to the sky, as per the terms and conditions of acquisition, as well as conversion order and consequently, the remaining 90% of the land is covered in exclusionary clause (b) of the explanation to section 2 (ea) of the W.T.Act, 1957 We find that the department has determined net wealth of the assessee, on the basis of valuation done by the DVO, in respect of property for AY 1993-94, 1994-95 and 1995-96, whereas from assessment year 2006-07 on wards to till date, the department has not assessed the assessee to wealth tax. From the above, it is very clear that the AO has assessed, the assesse for some year on the basis of report of DVO, whereas for some years, the return filed by the assesee has been accepted without any additions to net wealth declared by the assessee, even though there is no change in facts. It is a well settled principles of law that although, principles of res judicata may not apply to income tax proceedings, but Rule of consistency needs to be followed, unless there is change in facts and circumstances for taking a different view. This legal position is supported by the decision of Radhasoami Satsang vs CIT [ 1991 (11) TMI 2 - SUPREME COURT] as reiterated the principles of consistency in income tax proceedings. Therefore, we are of the considered view that even on this count the AO was incorrect in determination of net wealth on the basis of report of DVO for the impugned assessment years. AO was incorrect in determination of net wealth on the basis of DVO report. CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards valuation of property for the purpose of charging wealth tax. We do not find any error in the findings of ld.CIT(A) and hence , we are inclined to uphold the CIT(A) order and dismissed appeal filed by the revenue.

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• 2019 (8) TMI 1091
  Wealth tax assessment - asset as business asset and not liable for wealth tax - whether 4 6.102 cents of land at Palarivattom, Kochi is not chargeable to wealth tax on the ground that the same was used for parking of vehicles belonging to the employees of the assessee company and hence was a business asset? - admission of additional evidence - HELD THAT:- The affidavit filed by the assessee is a fresh document which was not made available with the lower authorities and it is required to be examined by the Assessing Officer so as to find out whether the impugned land has been used as parking space for the employees of the assessee-Company. It is the duty of the assessee to prove the impugned landed property is a business asset when the assessee claimed it is not liable for wealth tax. On the other hand, the CIT(A) observed that the Assessing Officer has to prove it which is not correct. We vacate this finding of the CIT(A). Since the assessee has filed affidavit which was not made available to the Assessing Officer on earlier occasion, we direct the Assessing Officer to carry out necessary enquiries regarding possibility of using the impugned land as parking space for the employees of the assessee and if the land is used as parking space for the employees of the assessee-Company, then the Assessing Officer should treat the said asset as business asset and not liable for wealth tax. With this observation, we remit this issue to the file of the Assessing Officer for fresh consideration. Thus, the grounds of appeals of the Revenue are partly allowed for statistical purposes.

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• Indian Laws

• 2019 (8) TMI 1111
  Scope and validity of opinion of the Advisory Board - Continued detention of detenue - Section 3 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - nature of power exercised by the Advisory Board when an opinion is given by it pursuant to a reference made to it under Section 8(b) of the COFEPOSA Act - On 22.07.2019 the Advisory Board found that there was no sufficient cause for the continued detention of the respondent detenu and rendered its Opinion. HELD THAT:- It is well settled that wherever a body is exercising judicial/quasi judicial power and is a tribunal within the meaning of the expressions in Article 136 and 227 of the Constitution, the decisions so rendered are amenable to challenge. According to various decisions the nature of opinion given by the Advisory Board is neither judicial nor quasi judicial; that it would be erroneous and unsafe to treat the opinion expressed by the Advisory Board as amounting to a judgment of a criminal court; that the Advisory Board does not try the question about the propriety or validity of the citizen s detention as a court of law would, but, its function is limited. The present petition seeking to challenge the Opinion dated 22.07.2019 of the Advisory Board as not maintainable. SLP dismissed.

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• 2019 (8) TMI 1090
  Appointment of Arbitrator - Jurisdiction of Civil Court to decide the appointment of arbitrator, is null and void - acceptance of bid - conclusion of the contract - binding contract or not. HELD THAT:- any objection with respect to existence or validity of the arbitration agreement, can be raised only by way of an application under Section 16 of the Act and Civil Court cannot have jurisdiction to go into such question. If the first respondent wants to raise an objection with regard to existence or validity of the arbitration agreement, it is open for the first respondent to move an application before the arbitrator, but with such plea, he cannot maintain a suit for declaration and injunction. Though the Trial Court rightly rejected the interim injunction sought for by the first respondent, the same is erroneously reversed by the learned Additional District Judge and such order is confirmed by the High Court, by the impugned order. At the same time, it is to be noted that when the first respondent has not responded to select one of the members as an arbitrator, from the panel, the appellant has appointed Sri C.R. Pradhan, former Chairman-cum- Managing Director of the company itself as an arbitrator, who has commenced arbitration proceedings. Having regard to the Fifth Schedule introduced, by Act 3 of 2016 to the Act, second respondent cannot be continued as an arbitrator, to adjudicate the lis between the parties. Appeal allowed.

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• 2019 (8) TMI 1089
  Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - HELD THAT:- Supreme Court in the case of Adalat Prasad v/s Rooplal Jindal ors [ 2004 (8) TMI 647 - SUPREME COURT ] held that, the Court, who has issued process, has no power of review its order of issuance of process, and hence order of issuing process cannot be recalled - However, in the present case the applicant filed application for discharge/recall of order of issuance of process before the learned Magistrate. The complaint does not contain the basic averment which is sufficient to make out a prima facie case against the present applicant. Because of the absence of more particulars about the role of the applicant as the director, it could not be held that the applicant as director is concerned with the issuance of the cheques in question. Considering the unimpeachable and incontrovertible document i.e. Form No.32 produced by the applicant, this Court is of the view that the Criminal Application deserves to be allowed. The Applicant was not the director of the accused No.1 company at the time of issuance of cheques and therefore is not held to be responsible for the business of the said company as averred in the complaint. Respondent No.2/Complainant has not brought on record any unimpeachable and incontrovertible evidence to show that the applicant is concerned with the issuance of cheques. Application allowed.

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• 2019 (8) TMI 1088
  Dishonor of Cheque - existence of debt or not - insufficiency of funds - conviction of accissed - Rebuttal of presumption - material alteration in the cheque - HELD THAT:- As per the case of the complainant the accused borrowed the hand loan of 1,50,000/- and when it has been demanded to return he has issued the cheque. Insofar as issuance of cheque is admitted by DW1 also. The only contention which has been contended is that there is material alteration of the figure 1 behind 50 . But as could be seen from Ex.P1 the said 1,50,000/- has also been written in words. As per Section 20 of the Negotiable Instruments Act, when once the drawer of the cheque signs and delivers to another, then if it is incomplete negotiable instrument thereby he gives prima facie authority to the holder thereof to make or complete the instrument as a Negotiable Instrument - the figures and words written tallies with each other. Then under such circumstances the contention of the petitioner/accused that there is a material alteration of 1 in the said cheque Ex.P1 does not stand to any reason. It is the specific contention of the learned counsel for the petitioner/accused that the complainant is a stranger to accused and he was not acquainted with the complainant, but the evidence of the accused who has been examined as DW1 in his examination-in-chief has admitted that the signature found on the cheque Ex.P1 belongs to him and it is his specific case that the said cheque has been issued to DW2 Ramesh - It is well proposed principles of law in the case of Rangappa Vs. Sri. Mohan [2010 (5) TMI 391 - SUPREME COURT] wherein it has been observed by the Hon ble Apex Court that once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised, it is a mandatory presumption and if at all any contentions has been taken by the accused, it is the accused who has to rebut the said presumption on preponderance of probabilities. The petitioner/accused has not made out any good grounds so as to interfere with the orders of the trial Court. The orders of the trial Court deserves to be confirmed - petition dismissed.

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