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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 29, 2019 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Articles INCOME TAX RETURNS WITH CLAIM FOR CREDIT OF TDS AND TCS NEED MORE TIME – DUE DATE SHOULD BE POSTPONED IN SUCH CASES. A Gist of Workshop on Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 News CBDT clarifies differential regime between domestic investors (including AIF category III) and FPIs existed even prior to General Budget 2019 and was not creation of the Finance (No. 2) Act, 2019 Notifications DGFT 14/2015-2020 - dated 28-8-2019 - FTP Insertion of a new policy condition under Chapter 87 of ITC (HS), 2017 - Schedule - 1 (Import Policy) 13/2015-2020 - dated 28-8-2019 - FTP Amendment of import policy of polymethyl methacrylate under Exim code 39169032 of ITC (HS) 2017 - Schedule - 1 (Import Policy) Circulars / Instructions / Orders Income Tax 21/2019 - dated 27-8-2019 Clarifications in respect of filling-up of the ITR forms for the Assessment Year 2019-20 IBC IBBI/LIQ/024/2019 - dated 26-8-2019 Applicability of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 notified on 25th July, 2019 IBBI/RV/022/2019 - dated 13-8-2019 Valuation under the Insolvency and Bankruptcy Code, 2016: Appointment of Registered Valuer DGFT 28/2015-2020 - dated 28-8-2019 Enlistment under Appendix 2E to issue Certificate of Origin (Non-Preferential) and Change of Office Address (location) Highlights / Catch Notes GST Providing services of financial assistance in the form of Loan - Benefit of exemption from GST - The said notification neither talks about related-unrelated party nor about notional consideration. Therefore the question of charging GST on notional consideration does not arise in this case. Visit to Get Source GST is applied on supply of goods or services. If there are two values of any supply, then GST is to be taxed on the higher value of supply. Hence in this case, the higher of the two value i.e. the actual cost of Freight and insurance or the pre contracted fixed freight per unit of the product, shall be included in the value of composite supply. Visit to Get Source Supply or not - Refundable Interest Free Deposit (assume ₹ 2500) - the amount of ₹ 2500/- will not attract the GST being the deposit unless the supplier applies such deposit as consideration, however the monetary value of the act of providing this deposit of ₹ 2500/- will attract GST Visit to Get Source Rate of IGST - export of single super phosphate(SSP) - fertilizer - since the SSP being exported is not to be used as fertiliser in India, as the place of supply, according to section 11(b) of the IGST Act, will be the location outside India - IGST rate is 18% Visit to Get Source Classification of goods - tarpaulins made from High Density Polyethylene - classifiable as textile or plastic - a woven fabric if completely embedded in plastics or entirely coated or covered on both sides with such material, and if such coating or covering can be seen with the naked eye, is not to be treated as textile material for classification under the Tariff Act Visit to Get Source Income Tax Fresh claim of business expenses in return u/s 153A - because of disallowing the original claim of deferred revenue expenses the assessee has rightly raised the alternate claim of expenses incurred during the year under consideration for the first time under 153A proceedings as the provisions applicable in return filed u/s 139(1) would also continue to apply in the case of a return filed u/s 153A - duly allowable Visit to Get Source Clarifications in respect of filling-up of the ITR forms for the Assessment Year 2019-20 Visit to Get Source Liability of Registry of court to deduct TDS (withhold tax) on interest on deposits - Once a claim merges into a decree of the Court it transcends into a judgment-debt and, therefore, only those adjustments and deductions can be made which are permissible under the Code of Civil Procedure, 1908 - Registry directed to release the amount without TDS Visit to Get Source Violation of Section 144C - draft assessment order passed alongwith notice of demand and penalty notice - though he AO said that he is passing draft assessment order and the assessee was also at liberty to file the objections before the DRP or accept the same, but in actual fact, the order passed by the AO was complete assessment order which is not envisaged u/s 143(3) r.w.s. 144C - order is invalid Visit to Get Source Stay of demand - Misc. Application to recall the stay order - when the stay orders has expired due to lapse of six month time period from the date of the order, the orders have outlived their utility and lost their force in course of time, nothing survives for either recall or modification - MA is infructuous Visit to Get Source TP Adjustment - outstanding receivables having delay beyond 30 days - Since the receivables have been received within ordinary time period, it cannot be recharacterized as unsecured loans and accordingly, no adjustment on account of delay in receipt of receivable can be made in the income of the assessee considering the fact that delay is not inordinate but reasonable - no addition Visit to Get Source Allowability of expenses of abundant project - there is no allegation that the expenditure incurred by the assessee is capital in nature - It is also not the case of the revenue that the assessee has not incurred the expenditure at all or these expenditure are not pertaining to this year - the expenditure incurred by the assessee for the abandoned project as allowable during the year Visit to Get Source Deemed dividend u/s 2(22)(e) - taxability in hand of concern - proper reading of Section 2(22)(e) can only lead to one conclusion that the amount which is borrowed by the Assessee from VCIPL, in which Verizon Singapore holds more than 10% of voting power can if it all, be taxed only as deemed dividend in the hands of Verizon Singapore and not the Assessee - no substantial question of law arises Visit to Get Source Addition on cash deposits - availability of funds for re-depositing - no evidence has been made available by the Revenue to support the possibly unarticulated suspicion that the funds have been utilised elsewhere - a gap of about four months by itself in the peculiar circumstances does not lead to any conclusion which detracts from the merits of the claims made - no addition Visit to Get Source Capital Gain - addition u/s 50C - third proviso to Section 50C inserted w.e.f 1-4-2019 - benefit of variation of 5% - even when the statute does not specifically state so the insertion of third proviso to Section 50C is declaratory and curative in nature, can only be treated as retrospective and effective from the date related statutory provisions was introduced i.e. from 1st April 2003 - retrospective Visit to Get Source Exemption u/s 11 - Allowability of foreign Tour expenses incurred by the assessee in foreign currency is outside India for the purpose of educational tours undertaken by the students of the assessee - as beneficiaries of the education imparted outside India were the assessee’s students, it is application for charitable purpose - duly allowable Visit to Get Source Non consideration of objections to the draft assessment order u/s 144 - since the objections were well within time, the action of the AO in proceeding with the final assessment order and the action of the DRP in rejecting the objections, on the same ground, therefore cannot be countenanced - final assessment order quashed and directed to the DRP to issue necessary directions to the AO after considering the objections Visit to Get Source Proceedings u/s 179 - AO held that the petitioner(director) is jointly and severally liable towards the tax/penalty imposed on company - a perusal of Section 264 makes it clear that writ petitioner has an effective and efficacious alternate remedy as the Revisional Authority has powers to pass orders which are not prejudicial to the assessee by revising the impugned order - directed to file revision Visit to Get Source Challenge of assessment order passed in remand proceeding in writ - bogus donation - It is a fit case to relegate the petitioner to alternate remedy making it clear that all questions raised including questions pertaining to cross-examination can be raised before CIT-A and the issue of whether the cash was rerouted to the writ petitioner against payment of donation being a factual dispute can also be gone into by CIT-A Visit to Get Source Penalty u/s 271AAB - undisclosed investment - the assessee is a salaried person who is not required to maintain any books of accounts and there is no mechanism to report the investment in the tax return, hence the investment found in property cannot be held as undisclosed investment and more so, undisclosed income so defined in section 271AAB - no penalty Visit to Get Source DGFT Import Policy of polymethyl methacrylate under Exim code 39169032 of ITC (HS) 2017 - Schedule - 1 (Import Policy) is revised from 'Free' to 'Prohibited' Visit to Get Source Registration of vehicles imported by the vehicle manufactures or through their authorised representatives in India or by the organisation / citizen for personal use, demonstration, testing, research or scientific use etc. shall comply with the Central Motor Vehicles (Eleventh Amendment) Rules, 2018. Visit to Get Source Service Tax Refund of service tax - The application for refund of Service Tax having been moved beyond the period of limitation prescribed, was rightly rejected and further the appellant had himself conceded before the CESTAT that Service Tax was not deposited under protest nor was there any provisional assessment. Visit to Get Source Central Excise CENVAT Credit - capital goods which are used exclusively for the manufacture of exempted products - Decanter for Gluten - CENVAT Credit cannot be availed by the appellant in view of the explicit provisions of Rule 6(4) of CCR 2004. Visit to Get Source Refund of central excise duty paid on the exported goods - time limitation - it cannot be pleaded that the duty amount deposited by them should be construed as ‘mere deposit’ in the hands of the Government and for grant of the said refund amount, the provisions of Section 11B ibid would not be applicable. Visit to Get Source Case Laws: GST 2019 (8) TMI 1224 Release of seized vehicle alongwith the goods - driver was unable to furnish E-way Bill - sub-section (3) of section 129 and section 130 of CGST Act - HELD THAT:- For the purpose of release, we can ask the writ applicant to deposit the amount of tax as determined and equivalent amount towards penalty subject of-course to the right of the adjudication so far as the confiscation proceedings under section 130 of the Act, 2017 is concerned. We direct the writ applicant to furnish Bank Guarantee of the amount of ₹ 2,05,768/-. Upon furnishing of a Bank Guarantee, the authority shall release the vehicle as well as the goods. We also direct that the authority shall not proceed further with the show cause notice which has been issued for the purpose of confiscation of the vehicle and the goods under section 130 of the Act, 2017. 2019 (8) TMI 1223 Release of seized vehicle alongwith the goods - Sections 129 and 130 respectively of the GST Act, 2017 - HELD THAT:- An amount of ₹ 2,29,520/has been deposited by the writ-applicant towards the tax and penalty - the respondents are directed to immediately release the truck as well as the goods seized by them under the provisions of the GST Act. 2019 (8) TMI 1222 Permission for withdrawal of Advance Ruling application - Classification of goods/service - input tax credit - determination of tax liability - HELD THAT:- Since the applicant has withdrawn the application, therefore no ruling is given. 2019 (8) TMI 1221 Providing services of financial assistance in the form of Loan - related party transaction or not - providing financial assistance in the form of loan to various Government of Gujarat entities - whether such Gujarat Stated owned entities and GSFS become related persons in GST? - HELD THAT:- The relationship between Gujarat State Financial Services Ltd. and Government or Government entities is that of related person as defined under Section 15 of Central Goods and Services Tax Act 2017 and Gujarat Goods and Services Tax Act 2017. Levy of GST - notional processing fees/ notional any other charges, provided by way of loans to Gujarat state owned entities - Applicant is not charging any processing fees/ any other charges, for providing to Government of Gujarat State owned entities, and interest being charged as full consideration. HELD THAT:- The applicant makes the supply of loan and for which consideration is only interest. As stated by the applicant there is no other consideration so even if the service is provided to related party the applicant will be eligible for exemption under sub entry (a) of entry 27 of Notification No. 12/2017-Central Tax (Rate) under CGST Act 2017 and corresponding State notification No. 12/2017- State Tax (Rate) under GGST Act 2017. The said notification neither talks about related unrelated party nor about notional consideration. Therefore the question of charging GST on notional consideration does not arise in this case. If they actually charge processing fee or any other charges, other than interest, then applicant will be liable for GST. 2019 (8) TMI 1220 Classification of supply of services - pure services or not - services provided to Local Authorities, Urban Development Authority, Dist. Panchayat R B Div. and other Government Departments which are entrusted with the functions mentioned under article 243G and 243W of the Constitution of India - exemption from CGST and Gujarat GST Act - HELD THAT:- The services are exempted from the CGST and SGST Tax if they are Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. From the documents submitted by the applicant, it appears that the services provided by them do not involve any supply of goods and hence the services appear to be falling in the definition of Pure Services . However, the definition of pure services requires the verification of facts involves in the execution of contract. Similarly whether the contract is related to the function covered under the Article 243G and 243W is to be interpreted as to how the Local Authority is going to utilize the services provided under the contract, it is also therefor the question of interpretation of fact that the services provided by the applicant are actually utilized by the Local Authority for the function covered by Article 243G and 243W. 2019 (8) TMI 1219 Classification of goods - FANTA FRUITY ORANGE - whether the product FANTA FRUITY ORANGE with 10.5% Orange juice, would be classifiable under Tariff Item 2202 99 20 as Fruit pulp or fruit juice based drinks or under 220210 at Sl. No. 12 under Schedule IV as All goods [including aerated waters], containing added sugar or other sweetening matter or flavoured ? - N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 (as amended) and Notification No. 1/2017- State Tax (Rate) dated 30.06.2017 (as amended). HELD THAT:- As per the label of the product, Orange Juice Concentrate is 1.6% of the product. As submitted by the applicant, the Orange Juice is reconstituted out of this Orange Juice Concentrate. Under the circumstances, a question arises whether the product Fanta Fruity Orange can be termed as Fruit pulp or fruit juice based drinks . It is pertinent to note that the terms used in the said tariff item is Fruit pulp or fruit juice based drinks and the said entry do not refer to the term Fruit juice concentrate based drinks. Therefore, the said entry would cover the Fruit pulp based drinks or Fruit juice based drinks only. The Fruit juice concentrate based drink are not covered under the said entry. It is not the case of the applicant that the product Fanta Fruity Orange is manufactured from Fruit pulp or Fruit juice as the said product is undisputedly manufactured from Orange Juice Concentrate . Under the circumstances, the said product do not fall under the Tariff Item 2202 99 20. Thus, the product Fanta Fruity Orange would not fall under Tariff Sub Heading 2202 10, but it would fall under Tariff Sub Heading 2202 99. Further, the said product is not a Fruit pulp or fruit juice based drinks , therefore it would not fall under Tariff Item 2202 99 20. The said product is neither Soya milk drinks nor beverage containing milk therefore it would also not fall under Tariff Item 2202 99 10 or 2202 99 30. Therefore, the product Fanta Fruity Orange is appropriately classifiable under Tariff Item 2202 99 90 as Other non-alcoholic beverages, other than tender coconut water and would attract Goods and Services Tax @ 18% as per Sr. No. 24A of Schedule- III of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, as amended and Notification No. 1/2017-State Tax (Rate) dated 30.06.2017, as amended. 2019 (8) TMI 1218 Classification of supply - Composite supply or not - Ex works plus freight and insurance - CBEC C Flyer no. 4 dtd. 01.01.2018 - HELD THAT:- It is specifically mentioned in the illustration that Goods packed and transported with insurance, then supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected is also indicative of bundling of services in ordinary course of business as mentioned in the CBEC C Flyer no. 4 and the case of the applicant is the similar one - The above is applicable to the case of the applicant and hence Ex works plus freight and insurance to be treated as composite supplies. Levy of GST - showing and charging freight and insurance portion separately in invoice - HELD THAT:- If freight and insurance portion are shown and charged separately in invoice, it would not change the fact that the supply is a composite supply and hence there cannot be different type of treatments of tax liability of supply of different goods/services naturally bundled together - it is very clear that freight and insurance, charged by the supplier to the recipient of a supply, is included in the value for charging of tax under The Central Goods and Service Tax Act, 2017 and Gujarat Goods Services Tax Act, 2017. Inclusions specified in section 15(2) which is to be added to the transaction value under GST - HELD THAT:- The arranging of delivery of goods is the responsibility of supplier and accordingly transportation insurance (anything done before delivery of goods) being arranged by supplier. The actual freight cost incurred by supplier varies with pre contracted price with buyer - GST is applied on supply of goods or services. If there are two values of any supply, then GST is to be taxed on the higher value of supply. Hence in this case, the higher of the two value i.e. the actual cost of Freight and insurance or the pre contracted fixed freight per unit of the product, shall be included in the value of composite supply. 2019 (8) TMI 1217 Government Entity or not - applicant is formed by Government of Gujarat along with Government of India with a single object to develop Industrial City in Dholera Special Investment Region and Government is having 100% control by way of holding of equity in the company - Whether applicant can claim benefits available to Government Entity? - HELD THAT:- Since the applicant is constituted by the participation share of 51% of State Government and 49% of Central Government, hence being, fully constituted by the share of Government, the applicant is covered under the definition of Government Entity . Input tax credit - credit of GST charged by contractors - HELD THAT:- Clause (c) of Section 17(5) of CGST Act, 2017 provides the eligibility of input tax credit in case of works contract service where it is an input service for further supply of works contract service. Considering the extent of business of construction erection, maintenance, repair to be conducted by the applicant, the eligibility of input tax credit can only be decided after ensuring that the further supply of works contract service is made by the applicant on a case to case basis. Classification of supply - amount recovered from contractors on account of breach of conditions specified in the contract - Liability to to collect GST - HELD THAT:- Clause (e) of Para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 provides the following activity be treated a supply of services - the transaction shall be treated as supply of services. Moreover, as violation charges are payable by the contractors, the same are required to be treated as consideration. Therefore, this transaction is liable to GST. Classification of supply - amount recovered from contractors on account of not achieving milestone - Liability to to collect GST - HELD THAT:- Clause (e) of Para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 provides the following activity be treated a supply of services - the transaction shall be treated as supply of services. Moreover, liquidated damages are payable by the contractors, therefore, the same are to be treated as consideration. Therefore, this transaction is liable to GST. Classification of supply - interest amount received for deferring the liquidated damages recovered from contractors - Liability to to collect GST - HELD THAT:- Clause (e) of Para 5 of Schedule II of the Central Goods and Services Tax Act, 2017 provides the following activity be treated a supply of services - the liquidated damages are liable to tax and interest on liquidated damages is a part of liquidated damages, therefore the interest is also liable to tax. 2019 (8) TMI 1216 Transitional Credit - validity of period of limitation - CENVAT credit of excise duty paid on capital goods which were in transit as on 01.07.2017 - it was held that The statute in any manner do not violate Article 14 or 19(1)(g) of the constitution - HELD THAT:- SLP dismissed. 2019 (8) TMI 1215 Classification of goods - tarpaulins made from High Density Polyethylene - whether classifiable as textile under Section Xl of the First Schedule of the Customs Tariff Act, 1975 and, if so, whether it is classifiable under HSN 6306, 6301 or 5903 of the Tariff Act? - HELD THAT:- Tarpaulin made from HDPE woven fabric is a composite of plastics and textile. It combines a plastic component with textile material. Classification of such composite goods is governed by Note 1 (h) to Section Xl (Textile and Textile Articles) and Note 2 to Chapter 59. A combined reading of the two notes reveals that a woven fabric if completely embedded in plastics or entirely coated or covered on both sides with such material, and if such coating or covering can be seen with the naked eye, is not to be treated as textile material for classification under the Tariff Act (refer to the Explanatory Notes to Chapter 39 of the Harmonised System of Nomenclature, Brussels). Tarpaulin made from HDPE woven fabric of the variety the Applicant supplies, therefore, is not tarpaulin made from textile material, and not to be classified under Heading 6306. The tarpaulin the Applicant supplies is made from HDPE woven fabrics, coated or covered with LDPE melt. Heading 5903 and Note 2 to Chapter 59 are relevant for ascertaining whether the above fabric is textile material. Had it been so, the tarpaulin made from such material would have been classifiable under Heading 6306 - The fabric being no textile material, the question of classifying the tarpaulin made from it as a madeup textile article under Heading 6301 does not arise. 2019 (8) TMI 1214 Rate of IGST - Classification of goods - export of single super phosphate - taxable territory - N/N. 1/2017 - IT (Rate) dated 28/06/2017 - Circular No. 54/28/2018-GST dated 09/08/2018 - HELD THAT:- IGST payable on SSP is 18% under Sl No. 43 of Schedule III the Rate Notification, provided it is clearly not to be used as fertiliser . Otherwise, it is taxable @ 5% under Sl No. 182B of Schedule I of the Rate Notification. Circular No. 54/28/2018-GST dated 09/08/2018 clarifies the phrase to be used as fertiliser . Whether the benefit of concessional rate is available when the goods are not to be consumed in India? - HELD THAT:- No provisions of the Act, beneficial or otherwise, are applicable beyond the taxable territory defined under section 2(22) of the IGST Act. Therefore, tax under the Act can be imposed on supplies, other than the zero rated ones, only when the goods or services are consumed within the taxable territory, which extends to India under section 1(2) of the IGST Act. Reference to the consumption of SSP as fertilizer in the Rate Notification, therefore, is limited to consumption in India only. Clearly, the SSP being exported is not to be used as fertiliser in India, as the place of supply, according to section 11 (b) of the IGST Act, will be the location outside India. The applicable rate of IGST is, therefore, 18% under Sl.No. 43 of Schedule III of the Rate Notification. 2019 (8) TMI 1213 Supply or not - Refundable Interest Free Deposit received - whether refundable interest free deposit can be considered as Consideration for the services provided by RNSB to their demat account holders? - HELD THAT:- From the definition of Consideration under Section 2(31) of CGST GGST Act, 2017, it can be said that deposit is excluded from definition of the consideration by the provisio to Section 2(31) of CGST GGST Act, 2017 - However, the notional interest/monetary value of the act of providing refundable interest free deposit will be considered as consideration. Whether the amount of ₹ 2500/- being Refundable interest free deposit, which allows depositor some benefits, would attract GST? - HELD THAT:- It appears that the amount of ₹ 2500/- will not attract the GST being the deposit Unless the supplier applies such deposit as consideration. However the monetary value of the act of providing this deposit of ₹ 2500/- will attract GST. Value of taxable supply - Whether first 10 free transactions subject to maximum of rupees 5 Lakh allowed to the Demat account holder depositing Refundable interest free deposit would attract GST? - HELD THAT:- The first 10 free transaction allowed to the demat account holders are in the nature of discount and will not attract GST subject to the fulfillment of the conditions prescribed under Section 15(3) of the CGST GGST Act. Income Tax 2019 (8) TMI 1226 TP Adjustment - direction of the CIT(A) to compute the arm's length price (ALP) of the rate of interest charged by the assessee on loan advanced to its Associated enterprise (AE) situated in Germany by adopting the average EURIBOR rate of 4.42% as applicable to the assessment year 2007-08 - HELD THAT:- The Hon'ble Bombay High Court in CIT Vs. The Great Eastern Shipping Company Ltd. . [ 2017 (6) TMI 1207 - BOMBAY HIGH COURT] has reiterated that the arm's length rate of interest is to be considered with reference to the country in which the loan is received and not from where it is paid. In view of these precedents, it is palpable that the view point of the AO in considering the rate of interest prevalent in India, being, the lender country, as determinative of the ALP of rate of interest charged by the assessee, is not correct. To this extent, we uphold, in principle, the view canvassed by the ld. CIT(A) that the rate of interest prevalent in Germany, being, the country in which the loan was consumed, is determinative of the arm's length rate of interest charged by the assessee-lender. Determination of the arm's length rate of interest - CIT(A) has held that average EURIBOR for the A.Y. 2007-08 should be considered as a benchmark - HELD THAT:- While calculating EURIBOR, 15% of the lowest and 15% of the highest interest rates collected by a panel of European banks are eliminated and the remaining 70% form the basis for its calculation. In such circumstances, EURIBOR, being, not an average rate at which the loans are advanced by European banks to borrowers, cannot per se be characterized as a comparable uncontrolled rate of interest at which loans are advanced in Germany. On lines of EURIBOR, there is LIBOR (London Inter-bank Offered rate), another rate which is applied on behalf of British Bankers Association. Similar to EURIBOR, LIBOR is also a rate at which major global banks lend to one another in the international inter-bank market on short-term basis. In calculation of LIBOR, 25% of lowest and 25% of the highest values are eliminated and the remaining 50% are considered for determining LIBOR. LIBOR, as such, can also not be construed as a comparable uncontrolled transaction - in CIT Vs. Aurionpro Solutions Ltd. [ 2017 (6) TMI 1087 - BOMBAY HIGH COURT] approved the action of the Tribunal in considering LIBOR +2% as the arm's length rate as against the TPO applying LIBOR plus 3%. Drawing an analogy from this position, we hold that EURIBOR+2% should be considered as arm's length rate of interest for determining the ALP of the international transaction of interest received by the assessee from Mascot Systems GmbH, Germany. Before parting with this issue, we would like to clarify that the CIT(A) has considered 4.42% as EURIBOR applicable for the assessment year under consideration by relying on an order of the Tribunal, in which the average LIBOR was considered at this level. Equality of LIBOR and EURIBOR could not be substantiated from any material on record. In the given circumstances, we set-side the impugned order and remit the matter to the file of the AO for considering EURIBOR +2% as arm's length rate of interest to be applied on loan advanced by the assessee to Mascot Systems GmbH, Germany. In case EURIBOR +2% turns out to be lower than 4.42% as directed to be applied by the ld. CIT(A) on the understanding of the same being EURIBOR simplicitor, then the addition should be restricted with reference to 4.42% rate of interest, as the assessee is not in appeal on this issue. In the otherwise scenario, the relief allowed by the ld. CIT(A) will be restricted pro tanto. Computation of deduction u/s.10A - HELD THAT:- There cannot be any dispute on the correctness of the proposition put forth on behalf of the Revenue. However, it is found on facts that the AO has nowhere held that some eligible units having profits had any linkage with some other eligible units suffering losses. Neither it has been the contention of the assessee at any stage. In such circumstances, we cannot permit the ld. DR to set up a new case. We, therefore, approve the view taken by the ld. CIT(A) on this issue and dismiss this ground of appeal. Exclusion of telecommunication charges and payment to employees at foreign branches from the amount of export turnover in the computation of deduction u/s.10A - HELD THAT:- Since the amount of telecommunication charges etc. has been held by the AO himself as not forming part of `export turnover', the sequitur is that the same would also not form part of `total turnover', as there cannot be two different figures of `export turnover', one as an independent numerator in the formula and the other constituting part of total turnover in the denominator. To put it simply, telecommunication expenses etc. which have been excluded by the AO from the ambit of `export turnover' would also require exclusion from `total turnover'. Apart from the Hon'ble Karnataka High Court in Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] , the Hon'ble Delhi High Court in CIT Vs. Genpact India [ 2011 (11) TMI 119 - DELHI HIGH COURT] has also held that communication expenses reduced from export turnover should also be reduced from total turnover for the purpose of deduction u/s.10A. Computation of deduction u/s.10A - as contended that since income from DTM and onsite services was not derived from export of computer software, the same did not qualify for the benefit of deduction - HELD THAT:- The expression 'profits of the business of the undertaking' as used in sub-section (4), in fact, gives meaning to the expression `derived from export of computer software' as used in sub-section (1) and amplifies the scope of the latter by mitigating the rigor and making the provision liberal and more inclusive. There is no gainsaying that `profits of the business of the undertaking' are not only the profits derived from the export of computer software but also those which are attributable to the business of undertaking. So long as there exists a direct link between the eligible undertaking and some income, the same is profit of the business of undertaking, even if may not be derived from the export of computer software etc. Without accepting, even if we presume the contention of the ld. DR as correct that income from DTM and onsite software services rendered abroad cannot be considered as derived from the export of computer software, it, in any case, will have to be regarded as `profits of the business of the undertaking'. In view of the foregoing discussion, we uphold the impugned order on this score. Disallowance u/s. 14A - HELD THAT:- The Hon'ble Supreme Court in CIT Vs. Essar Teleholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] has held that Rule 8D is prospective. In view of this precedent, we accord our imprimatur to the conclusion drawn by the ld. CIT(A) on non-applicability of Rule 8D to the year under consideration. As regards the quantum of disallowance u/s.14A, it is found that for the preceding year the AO made disallowance at 25% of salary paid to Financial Controller as attributable to the exempt income, which came to be countenanced up to the Tribunal level. If the same yardstick is applied, 25% of salary paid to the Financial Controller for the year under consideration comes to ₹ 10,16,255/-. In addition to this, the assessee himself offered disallowance at ₹ 54,000/-. The sustenance of addition by the CIT(A) at ₹ 10,70,255/- on this score is in order, which does not warrant any further interference. This ground is, therefore, not allowed. Discount on lapsed ESOPs taken to General Reserve instead of transferring it to the Profit and loss account in the computation of `book profit' u/s.115JB - HELD THAT:- It is evident that, firstly, the accounts are required to be made in accordance with Parts II and III of Schedule VI to the Companies Act and secondly, once the accounts are drawn in such a way and then approved in the Annual General Meeting, then the AO is bound to accept the amount of net profit as shown in the Profit and loss account, as starting point for computing book profit as per Explanation 1 to section 115JB of the Act. Now let us examine the treatment to be given in accounts on reversal of lapsed ESOPs. It is found that the SEBI guidelines, as clarified, and ICAI Guidance Note now provide for taking such amount to General Reserve Account. Initially, there was some non- meeting point between the SEBI guidelines and the ICAI Guidance Note on the treatment to discount on lapse of the ESOPs. Vide para (ii)(b) of its letter No. SEBI/CFD/DIL/ESOP/4/2008/04-08, dated 04-08-2008, the SEBI has clarified the position by amending the SEBI guidelines with immediate effect so that it is in line with the accounting treatment provided by ICAI. This position has been discussed by the ld. CIT(A) in para 256 of the impugned order, which has remained uncontroverted. Thus, it is seen that both the SEBI and ICAI guidelines are now alike and provide that the amount of discount on lapse of ESOPs should be credited to the General Reserve Account. We see no reason in not approving the action of the ld. CIT(A) in holding that such amount of ₹ 57,71,000/- was righty taken to the General Reserve Account instead of crediting it to the Profit and loss account and hence the same cannot be added to the amount of net profit shown by the assessee for computing `book profit' u/s 115JB of the Act. In so far as the argument of ld. DR to the applicability of clause (b) of Explanation 1 to section 115JB is concerned, the same, in our opinion, does not advance the case of the Revenue because what is required to be added to the net profit is the amount carried to any reserve which is otherwise debited to the Profit and loss account. Since the amount in question was not debited to the Profit and loss account for the year, the same cannot be added to the net profit for computing `book profit' u/s.115JB of the Act. We, therefore, approve the view taken by the CIT(A) on this score. Thus, the ground concerning section 41(1) is allowed and that concerning section 115JB is not allowed. 2019 (8) TMI 1225 Penalty u/s 271AAB - surrender of additional income - HELD THAT:- Penalty u/s 271AAB of the Act is not mandatory as the provisions of section 274 of the Act have been made applicable in relation to the penalty referred to section 271AAB of the Act. It has been held that the penalty u/s 271AAB will not be attracted if the surrendered income would not fall in the definition of undisclosed income as defined under explanation to section 271AAB - See M/S SEL TEXTILES LIMITED VERSUS THE DCIT, CENTRAL CIRCLE-III, LUDHIANA [ 2019 (4) TMI 1719 - ITAT CHANDIGARH] No incriminating material is found during the search action and the surrendered income does not fall in the definition of undisclosed income as defined u/s 271AAB of the Act, the penalty is not warranted. The Coordinate Bench of the Tribunal has also discussed the proposition of law laid down in the Principal CIT vs Sandeep Chandak and Ors. [ 2017 (12) TMI 70 - ALLAHABAD HIGH COURT] and has held that the facts of the said case are distinguishable and do not apply to the facts of the case in which no incriminating material is found during the search action. Assessee has been fair enough to admit that it is not in all the cases that no incriminating material was found. That certain items of jewellery of silver were found / noticed during the search action, the source of income from which as held by the Assessing Officer also stood explained and also the manner of earning of the income was also substantiated. He, therefore, has been fair enough to admit that penalty under the provisions of section 271AAB (1)(a) of the Act was liable to be confirmed to the extent of the property / material found during search action. In the case of Mrs. Rama Rani for assessment year 2016-17, as noted from the above chart, jewellery worth ₹ 1.33 crores was found, whereas, income surrendered by her during the search action was of ₹ 2 crores. In view of the discussion made above, the penalty us 271AAB(1)(a) of the Act is restricted to the value of the jewellery found during search action i.e. ₹ 1.33 crores, the 10% of which comes to ₹ 13.30 lacs, hence, the penalty in the case of Mrs. Rama Rani is restricted to ₹ 13.30 lacs as against ₹ 20 lacs imposed by the Assessing Officer. In the case of Mrs. Veena Rani for assessment year 2016-17, the total income surrendered was of ₹ 1.90 crores, whereas, the jewellery found during search action was of the value of ₹ 54.23 lacs and silver found of ₹ 8.40 lac. Hence, the penalty leviable on the aforesaid gross amount of 6.263 lacs ( ₹ 54.23 lcs + ₹ 8.40 lacs), which is calculated @ 10% at ₹ 6.263 lacs. Hence, the penalty is calculated and restricted to ₹ 6.263 lacs in this case. In the case of Sudkharan Kumar for the assessment year 2016-17, neither any incriminating material nor valued property was found, hence, no penalty in this case under the provisions of section 271AAB (1)(a) of the Act is exigible. The penalty in this case is ordered to be deleted. In the cases of M/s R.D. Palace Pvt. Ltd, Ludhiana for the assessment years 2015-16 and 2016-17, since, no incriminating material or valued property was found in these cases and further no unaccounted property was found during the search action, hence, the penalty is not leviable in these cases and the same is accordingly ordered to be deleted. 2019 (8) TMI 1212 Carry forward of unabsorbed depreciation - Circular No.14 of 2001 - amendment to the Finance Act was prospective or retrospective - HELD THAT:- Issue squarely covered by the decision of this Court in the case of General Motors India Private Limited Vs. Dy CIT [ 2012 (8) TMI 714 - GUJARAT HIGH COURT ]. Entitled to claim of deferred revenue expenditure - HELD THAT:- So far as the second question as proposed by the revenue is concerned, appellant invited our attention to the order passed by the CIT(A), Ahmedabad, wherein observed - the appellant's ground for allowing 1/10th of amortized expenses for A.Y.08-09 to 12-13 would stand dismissed. In view of what has been observed by the CIT(A), Mr. Bhatt pointed out that the second question as proposed would not survive. 2019 (8) TMI 1211 Deemed dividend u/s 2(22)(e) - Whether Assessee should be held to be a beneficial shareholder which can compel Verizon Singapore to vote in a particular way? - HELD THAT:- In the present case the Assessee is only a borrower from VCIPL of a sum of ₹ 16.73 crores (which the AO has restricted to ₹ 6.40 crores to the extent of available accumulated profits). ITAT further held that merely because Verizon Singapore holds more than 10% of the voting power in both VCIPL as well as the Assessee will not permit the Revenue to tax the aforementioned loan as a deemed dividend in the hands of the Assessee which is only the borrower. A proper reading of Section 2(22)(e) can only lead to one conclusion, which is also what the ITAT concluded, viz., that the said amount which is borrowed by the Assessee from VCIPL, in which Verizon Singapore holds more than 10% of voting power can if it all, be taxed only as deemed dividend in the hands of Verizon Singapore and not the Assessee. No substantial question of law arises 2019 (8) TMI 1210 Non issue of notice u/s 143(2) in block assessment - Tribunal held that full opportunity was afforded to assessee to substantiate his claim, thus, the want of issue of notice u/s 143(2) on the part of AO was only a procedural error to be cured by suitable directions, and no prejudice was caused to the assessee - HELD THAT:- The case of the assessee is covered by the decision of the Apex Court in case of Assistant Commissioner of Income-Tax and another vs. Hotel Blue Moon [2010 (2) TMI 1 - Supreme Court ] as Assessing Officer did not issue notice as contemplated under Section 143(2) of the Act in block assessment proceedings under Section 158BC, which was mandatory and non service thereof is fatal. The order of the Tribunal dated 13.10.2005 as far as non-issuance of notice under Section 143(2) of the Act is set aside. - Decided in favour of the assessee 2019 (8) TMI 1209 Non consideration of objections to the draft assessment order u/s 144 - time limit(30 day) to file objection - validity of final assessment order - HELD THAT:- We may note that Section 144C provides for forwarding of the draft assessment order to the assessee so that he could, within thirty days from the date of receipt thereof, file objections before the DRP and the AO as to the variation sought to be made by the AO to the income or loss returned. The draft assessment order was served upon the petitioner company only on 27.12.2018, the objections filed by it on 24/25.01.2019 were well within time. The action of the AO in proceeding with the final assessment on the ground that the said objections were filed beyond time and the action of the Dispute Resolution Panel in rejecting the said objections, on the same ground, therefore cannot be countenanced. The writ petition is accordingly allowed setting aside the final assessment order dated 27.02.2019 passed by the Assistant Commissioner of Income Tax, Circle-1(1), Hyderabad. The Dispute Resolution Panel-1, Bangalore, shall consider the objections of the petitioner company submitted on 24.01.2019 as per Section 144C(5) and (6) and issue necessary directions to the AO to complete the assessment of the petitioner company for the A.Y.2015-16. Pending miscellaneous petitions, if any, shall stand closed in the light of this final order. 2019 (8) TMI 1208 Challenge of assessment order passed in remand proceeding in writ - bogus donation - alternate remedy of statutory appeal - Procedure in appeal - HELD THAT:- It is a fit case to relegate the writ petitioner to alternate remedy making it clear that all questions raised by the writ petitioner including questions pertaining to cross-examination can be raised by the writ petitioner before CIT-A and the issue of whether the cash was rerouted to the writ petitioner being a factual dispute can also be gone into by CIT-A for taking a decision on writ petitioner's request for cross-examination. This Court deems it appropriate to exclude the period spent by the writ petitioner in the instant writ petition i.e., the period from 22.01.2019 to the date on which copy of this order is made available, by applying the principle adumbrated in Section 14 of Limitation Act. Notwithstanding such exclusion, even if delay occurs, the same is condonable under Section 249(3) and there is no cap for the same. The power to condone the delay is vested with CIT-A. If the need arises to the writ petitioner to seek condonation of delay, notwithstanding exclusion of time spent in the instant writ petition, it is open to the writ petitioner to file a delay condonation application before CIT-A and the same shall be decided by CIT-A on its own merits and in accordance with law. As this Court is now relegating the writ petitioner to alternate remedy of a statutory appeal before CIT-A, though obvious it is made clear that all questions raised by the writ petitioner in the instant writ petition, including grounds canvassed and contentions urged are left open. With regard to scope of the appeal itself, the same has been alluded to and set out supra elsewhere in this order. If the writ petitioner chooses to file a statutory appeal, the same shall be decided by the Appellate Authority namely CIT-A keeping in mind observations of this Court regarding the scope of the appeal, more particularly, Section 250(4). - Writ petition is disposed of with the above directions 2019 (8) TMI 1207 Proceedings u/s 179 against director in respect of demand of company - vide impugned order, AO held that the writ petitioner, a natural person, is jointly and severally liable towards the tax liability and penalty imposed on company - alternate remedy - revision u/s 264 - HELD THAT:- A perusal of provision i.e., Section 264 reveals that said Revisional Authority has powers to enquire into the correctness or otherwise of the impugned order and said Revisional Authority has powers which includes powers to make orders which are not prejudicial to the assessee. Therefore, it is clear that u/s 264 writ petitioner has an alternate remedy by way of a statutory revision u/s 264 to said Revisional Authority. The rule of alternate remedy no doubt is a self imposed restraint by Courts exercising writ jurisdiction. In other words, rule of alternate remedy is not a rule of compulsion, but it is a rule of discretion. This Court has no hesitation in holding that alternate remedy though a rule of discretion and not a rule of compulsion, has to be applied with utmost rigour when it comes to fiscal law statutes and in the instant case it applies with all force for two reasons. First reason is, though it is a rule of discretion, Court would interfere on the teeth of alternate remedy only when it falls within the exceptions set out in the long line of authorities. Those exceptions are, (a) lack of jurisdiction on the part of the Authority passing the order, (b) violation of principles of natural justice, (c) a well settled position of law being disregarded and (d) alternative remedy being ineffectual or not efficacious. To be noted, this adumbration of exceptions is not exhaustive, but is only a broad outline which is imperative for appreciating the instant order. The instant case does not fall under any of the exceptions. The other reason is, a perusal of SCN, reply and impugned order reveals that the matter turns heavily on factual disputations. As already alluded a perusal of Section 264 makes it clear that writ petitioner has an effective and efficacious alternate remedy as the said Revisional Authority has powers to pass orders which are not prejudicial to the assessee by revising the impugned order. This position is reiterated by learned Revenue counsel. Time frame prescribed u/s 264 - As per time frame prescribed u/s 264(3), the writ petitioner has to file revision within one year from the date on which the impugned order was communicated to the writ petitioner. From the narrative thus far, it comes to light that the impugned order is dated 24.01.2019 and learned counsel for writ petitioner submits, on instructions, that it has been served on/communicated to the writ petitioner on 31.01.2019. Therefore, it is clear that the writ petitioner is well within the time to file a revision u/s 264 before said Revisional Authority. This writ petition is disposed of preserving the rights of the writ petitioner to avail alternate remedy by way of a statutory revision u/s 26. Though obvious, it is made clear that all contentions raised by the writ petitioner are left open and can be raised before the statutory Appellate Authority. It is also made clear that such a course is being adopted as perusal of the impugned order and reply to the SCN reveals that it turns heavily on facts as already alluded to supra. There shall be no order as to costs. Consequently, connected miscellaneous petition is closed. 2019 (8) TMI 1206 Liability of Registry of court to deduct TDS (withhold tax) on Interest on deposits - Income accrued in India - whether compensation received by the decree holder towards breach of contract is liable for taxation in India as it is a windfall gain and hence is covered under Article 22(3) of the Double Taxation Avoidance Agreement ( DTAA ) subsisting between India and Switzerland? - HELD THAT:- A plain reading of Article 22(3) of the DTAA shows that the amounts received by the decree holder as compensation, towards breach of contract cannot fall within its ambit. The language of Article 22(3) is unambiguous. What falls within its ambit is only income received from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any nature. It is only such income which can be taxed, if at all, in India. Inclined to accept the stand of the income tax department with respect to this aspect of the matter, as indicated hereinabove by me. Insofar as the monies received towards arbitration costs and legal costs are concerned, the aforementioned tabular chart would show that the income tax department proceeded on completely erroneous view of the matter. The income tax department has treated monies received under the award towards arbitration costs and legal costs as income of the decree holder and thereby proceeded to take the stand that the same will be taxable as fee for technical services , both under the provisions of Income Tax Act, 1962 (in short 1962 Act ) and the DTAA. Clearly, nothing can be further from reality. Therefore, the stand taken by the income tax department on this score would also have to be rejected.This brings me to the last aspect which relates to the interest. Taxability qua interest would also be the subject matter of Article 22(3) of the DTAA. In my opinion, this stand is plainly wrong. The language of Article 22(3) of the DTAA does not support the stand of the income tax department. Assessment proceedings, if any, can only commence against the judgment debtor i.e. the Indian entity. At that stage, the judgment debtor would be free to take every defence that may be available to it in law including the defence that withholding tax need be deducted as the award has morphed into a decree. Once a claim merges into a decree of the Court it transcends into a judgment-debt and, therefore, only those adjustments and deductions can be made which are permissible under the Code of Civil Procedure, 1908. The judgments encapsulate the theme that a decree should be executed according to its tenor unless modified by a statute such as the 1962 Act. Accordingly, the Registry is directed to release the balance amount available with it along with accrued interest to the decree holder without deducting any sum towards withholding tax. 2019 (8) TMI 1205 Disallowance of interest u/s 57(iii) - A.O. alleged that the assessee could not explain to his satisfaction that the interest paid on the loans was having any nexus with interest income earned u/s 57 - business expenditure - HELD THAT:- Referring to claim of the assessee is that interest bearing funds were utilized for the business purposes and the interest paid in similar circumstances was allowed in the earlier year i.e 2012- 13 by the ITAT in assessee s own case [ 2019 (5) TMI 274 - ITAT CHANDIGARH] , copy of the said order was furnished which is placed on the record. However the said order was not available either to the A.O. or to the Ld. CIT(A), I therefore deem it appropriate to set aside this limited issue to the file of the A.O. to be adjudicated by keeping in view the observations given in the aforesaid order, in accordance with law. - Appeal of the Assessee allowed for statistical purposes. Disallowance of car expenses, depreciation, telephone and travelling expenses - assessee himself had disallowed a sum partially out of the above said expenses - HELD THAT:- In such type of cases the use of Telephone and Car for personal purposes cannot be ruled out, however the disallowance made by the A.O. and sustained by the Ld.CIT(A) @ 1/5th of the expenses appears to be excessive, I therefore to meet the ends of justice, deem it appropriate to restrict the disallowance to 1/10th of the expenses incurred by the assessee on Telephone, Car and depreciation instead of 1/5th worked out by the A.O. while restricting the above disallowance the A.O. should also give the benefit of the disallowance already made by the assessee 2019 (8) TMI 1204 Stay of demand - Misc. Application to recall the stay order - HELD THAT:- Operation of both the stay orders has expired due to lapse of six month time period from the date of the order. Therefore, when the orders have outlived their utility and lost their force in course of time, nothing survives for either recall or modification. That being the case, the present application filed by the Department seeking modification/variation of order dated 8th February 2019, in S.A. no.32/Mum./2019, has become infructuous. For the aforesaid reasons, we are unable to accede to the request of the Revenue to club this application with the stay application filed by the assessee. The fresh stay application filed by the assessee has to be considered on its own merit and it is open to the Revenue to put forward all its submissions objecting to grant of stay to the assessee. However, that is altogether an independent proceeding and has to be decided keeping in view the respective contentions of the parties. In view of the aforesaid, the present application filed by the Revenue having become infructuous deserves to be dismissed. 2019 (8) TMI 1203 Penalty u/s.271(1)(c) r.w.s. 274 - addition made on receipts as repairs and maintenance grant from the Government of Maharashtra and rental income by the assessee - HELD THAT:- We hold that once the quantum is deleted [ 2019 (6) TMI 1370 - ITAT MUMBAI] , the penalty will have no legs to stand. Accordingly, we direct the ld. AO to delete the penalty levied in the case of the assessee in respect of these two additions. - Decided in favour of assessee. 2019 (8) TMI 1202 Validity of Reassessment order u/s 144 r.w.s 147 - tangible material - addition on account of non genuine purchases - HELD THAT:- Undisputedly, in assessee s case there was no scrutiny assessment earlier and the return of income filed by the assessee was only processed u/s 143(1). Subsequently, material came to the possession of the Assessing Officer indicating that the assessee had availed accommodation entries by way of bogus purchase bills. Therefore, in our considered opinion, the AO had sufficient tangible material available before him to form belief that income chargeable to tax has escaped assessment. That being the case, the re opening of assessment u/s 147, in our view, is valid. Bogus purchases - HELD THAT:- Undisputedly, before AO the assessee had not furnished any evidence to prove the genuineness of purchases allegedly made from hawala operators. Therefore, he added such purchases to the income of the assessee. Commissioner (Appeals) has even added back the rest of the purchases to the income of the assessee. To a query from the Bench as to whether the assessee can furnish quantitative details to show purchases and consumption of material in construction activity, the learned Authorised Representative submitted, given an opportunity, the assessee would furnish the details before the AO. In view of the aforesaid submission of the learned Authorised Representative, we are inclined to restore the issue to the AO for de novo adjudication after due opportunity of being heard to the assessee. Accordingly, grounds raised in the memorandum of appeal are allowed for statistical purposes. Penalty u/s 271(1)(c) - HELD THAT:- Restored the issue relating to the addition made on account of non genuine purchases to the Assessing Officer for de novo adjudication. Thus, for the present, the addition made does not survive. That being the case, penalty imposed u/s 271(1)(c) on such addition cannot survive. Accordingly, we set aside the impugned order of learned Commissioner (Appeals) sustaining the penalty imposed u/s 271(1)(c) 2019 (8) TMI 1201 Deduction u/sec. 80IA - allocation of consumption of husk in between the power plant and the rice mill - attribution of husk consumption to the power plant by the assessee at 10% is correct or not - HELD THAT:- There is no logic in sagregating the cost into two parts and allocating the normal loss in the generation of steam at 50-50 and therefore allocating the husk expenses at 15.75% to the power generation plant and 84.25% to the rice mill. Once we come to our conclusion that 10% of the steam is utilized by the power generation plant, then all the cost i.e. attributable and relatable to the generation of steam has to be allocated only on that basis. The cost of steam cannot be saggregated into that which is incurred up to a particular point and cost incurred after a particular point. This to our mind is not logical. Thus the allocation made by the assessee to our mind is justified. Hence, we allow this ground of the assessee 2019 (8) TMI 1200 Deduction claim raised u/s 80IE - initial assessment year - HELD THAT:- The assessee s very unit s production of asbestos sheet has been held to be entitled for sec. 80IE deduction itself wherein initial assessment year stand taken as assessment year 2008-09. We are in assessment year 2014-15 wherein the assessee has already succeeded on the issue in assessment years 2012-13 and 2013-14. This clinching finding of the initial assessment year involved herein for the purpose of 80IE deduction to be assessment year 2008-09 has attained finality so far the tribunal is concerned. We therefore adopt judicial consistency in these peculiar facts and circumstance. The Revenue argument seeking to carve out an exception fails accordingly. Our agreement with the Revenue s argument regarding initial assessment year 2002-03 in facts of instant case, would lead to an anomaly wherein the asbestos unit s initial assessment year has been taken as 2008-09 in assessment years 2012-13 and 2014-15 whereas the Revenue seeks to adopt assessment year 2002-03. We go by consistency principle as per hon'ble apex court s landmark decision in Union of India vs. Azadi Bachao Andolan Anr. [ 2003 (10) TMI 5 - SUPREME COURT] and direct the Assessing Officer to treat the assessee as entitled for sec. 80IE deduction in issue. We make it clear before parting that the Revenue s reliance on sec. 80IE(5) of the Act in seeking to restore the assessee s deduction claim carries no substance since the latter s relief nowhere exceeds ten assessment years time span since initial assessment year taken is 2008-09 only. The Revenue s arguments to this effect are declined. As during the course of hearing is that CIT(A) has directed the Assessing Officer to treat assessee as not entitled for the impugned deduction in corresponding subsequent assessment years as well.We feel that no further adjudication is required on this issue once we have held the assessee as entitled for sec.80IE in the impugned assessment year. The assessee s corresponding ground is allowed in foregoing terms therefore. Treatment to interest income from bank fixed deposits - HELD THAT:- We find that this very issue regarding interest income derived from fixed deposit account as a pre-condition for letter of credit also stands decided in earlier co ordinate bench s order accepting the taxpayer s grievance having regard to hon'ble jurisdictional high court in case of CIT vs. Universal Pipes Pvt. Ltd. . [ 2012 (12) TMI 603 - GAUHATI HIGH COURT] . We therefore delete the impugned disallowance by adopting judicial consistency herein as well. 2019 (8) TMI 1199 Grant of registration u/s 12AA denied - hostel facility provided to the students by charging fees cannot be regarded as charitable activity in view of proviso to section 2(15) - HELD THAT:- No finding has been recorded by the CIT(E) that the students of Shekhawati Public Senior Secondary School are provided accommodation and stay facility by the assessee society. There is nothing on record which helps determine the reasonability of hostel fees vis- vis similar facilities provided by any other service provider and in absence thereof, it would be difficult for us to examine the aforesaid contention so raised by the ld AR. During the course of hearing, in order to examine the rent payment made by the assessee society, the Bench has asked the ld AR to submit copies of rent agreement which has been entered into by the assessee society which has subsequently been placed on record and on perusal of the same, it is noted that three of these rent agreements have been entered into with related parties so defined in section 13(3) even as per the audit report for the financial year ended March 31, 2017 relevant to assessment year 2017-18. It needs to be examined whether the rent payment to related parties are commensurate with the area taken on rent and local market/locality conditions where such premises is situated. Such examination will help determine the intent behind setting up of hostel facilities as to whether the hostel facility has been set up as an charitable activity or the rental arrangement has been so structured by way of a cash extraction mechanism where the hostel fees so collected is paid by way of rental payments beyond the acceptable and commensurate amount vis- -vis area/premises taken on rent so as to benefit the related persons. Merely because there is nominal surplus at the end of the financial year is not determinative of the charitable nature of the activity, however, the whole financial structure which has been designed need to be examined to see the real intent behind such activities. Where the financial structure is so designed to benefit the trustees directly or indirectly through any such rental arrangements which are finally held to be unreasonable or not commensurate with the market conditions, it would be difficult to hold that the hostel facilities are not run with profit motive. However, we are leaving the matter open for the ld CIT(E) to examine taking into consideration the aforesaid discussion. CIT DR also pointed that in the fixed asset schedule of the financial statements for the year ended March 31, 2017, the assessee society has shown asset block of building with written down value of ₹ 43,45,512. It was submitted that on perusal thereof and the fact that there is also rental arrangements, it is not clear in respect of which all properties, the assessee is paying rent and which all properties/building are owned by the assessee society. We find that these are also matters which require to be examined as the same will again have a bearing on the overall financial structure which has been put in place by the assessee society which is an existing running society. Matter is set-aside to the file of the ld CIT(E) to examine the same afresh taking into consideration the aforesaid discussion - Appeal of the assessee is allowed for statistical purposes. 2019 (8) TMI 1198 Expenditure u/s 37 (1) - power project expenditure - HELD THAT:- Merely because assessee has capitalized all the expenditure, relating to the power project there is no reason to capitalize all the expenditure, which are not even related to the power project, should also be capitalized. Further it is not the case of the revenue that assessee has not incurred these expenditure. Further, no evidence has been brought on record by the revenue to show that this expenditure is related to the power project only. The revenue also could not controvert that field study report and feasibility report expenditure incurred by the assessee under the head legal and professional expenditure is any way connected to the power project. With respect to the salary of employees the assessee has given the designation of those employees who salary has been reimbursed to the holding company, the nature of the services rendered by them as shown in the designation. We reverse the finding of the lower authorities and allow ground number 1 and 2 of the appeal of the assessee holding that employs remuneration on legal and professional fees has been correctly debited in the profit and loss account and is allowable to the assessee as a deductible expenditure u/s 37 (1) of the income tax act. Interest income assessment - capital receipt OR revenue reciept - HELD THAT:- NTPC SAIL POWER COMPANY PVT. LTD. VERSUS CIT [ 2012 (10) TMI 524 - DELHI HIGH COURT] held that if the receipt is inextricably linked to the setting up of the project then it would be capital receipt not liable to tax but ultimately be used to reduce the cost of the project. In the present case, the assessee has given advances to fellow subsidiaries. Further, assessee also could not establish that how the above advance given to the subsidiary companies from womb the interest income has been earned are inextricably linked to the setting up of the project. Further assessee has also treated it as a regular income and offered to tax in the computation of income by crediting it as other income in the profit and loss account. In view of this ground number 3 of the appeal of the assessee is dismissed. Nature of expenses - expenses of abundant project - revenue or capital expenditure - HELD THAT:- As relying on CHEMPLAST SANMAR LIMITED [ 2018 (9) TMI 75 - MADRAS HIGH COURT] and JAY ENGINEERING WORKS LTD. [ 2007 (10) TMI 286 - DELHI HIGH COURT] wherein held that where assessee company set up a new project which was subsequently abandoned, since new project was managed from common funds, control over all business units was in hands of assessee and there was unity of control, it could not be said that pre-operative expenditure incurred by assessee was on a new line of business, thus, same was to be allowed as revenue expenditure. In the present case also, there is no allegation that the expenditure incurred by the assessee is capital in nature. It is not also the case of the revenue that the assessee has not incurred the expenditure at all. It is not also the case of the revenue that these expenditure are not pertaining to this year. Therefore, respectfully following the decision of the honourable Madras High Court and Delhi High Court, we do not find any infirmity in the order of the learned CIT A in allowing the expenditure incurred by the assessee for the abandoned project as allowable during the year. 2019 (8) TMI 1197 TP Adjustment - mean/average ratio of AMP/sales of the comparables chosen by the assessee itself as the CUP to determine the routine AMP expenditure with companies in similar business profile of manufacture and sale of liquor - HELD THAT:- Following the judgment of the Hon'ble High Court of Delhi in WHIRLPOOL OF INDIA LTD. VERSUS DY. CIT [ 2015 (12) TMI 1188 - DELHI HIGH COURT] , we hold that BLT has no mandate under the Act and accordingly, the same cannot be resorted to for the purpose of ascertaining if there exists an international transaction of brand promotion services between the assessee and the AE. Considering the facts of the case in hand, in the light of judicial decisions discussed hereinabove, we are of the considered opinion that the Revenue needs to establish on the basis of some tangible material or evidence that there exists an international transaction for provisions of brand building services between the assessee and the AE. Mere agreement or arrangement for allowing use of their brand name by the AE on products does not lead to an inference that there is an action in concert or the parties were acting together to incur higher expenditure on AMP in order to render a service of brand building. Such inference would be in the realm of assumption/surmise. In our considered opinion, for assumption of jurisdiction u/s 92 of the Act, the condition precedent is an international transaction has to exist in the first place. The TPO is not permitted to embark upon the bench marking analysis of allocating AMP expenses as attributed to the AE without there being an agreement or arrangement for incurring such AMP expenses. The Hon'ble High Court of Delhi in the case of Sony Ericsson Mobile Communications India Pvt Ltd [ 2015 (3) TMI 580 - DELHI HIGH COURT] has held that if an Indian entity has satisfied Transactional Net Margin Method (TNMM), i.e., as long as the operating margins of the Indian enterprise are higher than the operating margins of comparable companies, no further separate compensation for AMP expenses is warranted Adjustment on account of mark-up on reimbursement of marketing support services - HELD THAT:- ECD Guidelines at clause 7.36 provides that it would be sufficient for the AEs to reimburse such costs to the assessee without any mark-up for efforts expended by the assessee in undertaking marketing support and coordination activity for which it is already getting commission paid on sales. Moreover, it is not the case of the revenue that the assessee is in the business of providing advertisement, marketing and sales promotion services to unrelated parties. We, further find that the costs of running marketing support services and coordination services plus costs reimbursed considered together do not comprise a significant proportion of the total cost of the assessee. In our considered view, any benefit arising to the AEs is purely incidental and not intentional so as to warrant any mark up on the costs incurred by the assessee. Considering the facts of the case in the light of the agreement, we do not find any merit in the adjustment on account of mark-up on reimbursement of marketing support services and the same is directed to be deleted. We, therefore, do not find it necessary to dwell into inclusion/exclusion of the comparables. Treating the outstanding receivables from AEs as loan and thereby imputing interest at the rate equal to SBI PLR + 150 basis points - AO charged interest on receivable having delay beyond 30 days - HELD THAT:- Indebtness cannot be construed to have arisen out of a loan transaction and interest is involved only in relation to a debt created out of loan transaction. For this proposition, we draw support from the decision of Hon'ble Supreme Court in the case of Bombay Steam Navigation [ 1964 (10) TMI 12 - SUPREME COURT] . This view further finds support from the decision of Hon'ble High Court of Delhi in the case of Kusum Healthcare Private Limited [ 2017 (4) TMI 1254 - DELHI HIGH COURT] wherein the Hon'ble High court, in the context of receivables held that not every item of receivable will be considered as an international transaction of receivable and each receivable has to be seen on case to case basis Since the receivables have been received by the assessee within ordinary time period, it cannot be recharacterized as unsecured loans and accordingly, no adjustment on account of delay in receipt of receivable can be made in the income of the assessee considering the fact that delay is not inordinate but reasonable. Considering the facts in hand, in totality, in light of the factual matrix discussed hereinabove, vis a vis the judicial decisions on the point of issue, we are of the considered opinion that resorting to Explanation (1)(c) to section 92B is uncalled for. We, accordingly direct the Assessing Officer/TPO to delete the adjustment Additional claim of expenses u/s 37(1) - HELD THAT:- Ratio laid down by Hon'ble Supreme Court in the case of Goetz [India] Ltd [ 2006 (3) TMI 75 - SUPREME COURT] does not put any fetter on the appellate authorities to consider a legitimate claim even if the same is made by way of a letter. We, accordingly, restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to examine /verify the genuineness of the claim made by the assessee after affording reasonable opportunity of being heard to the assessee. The assessee is directed to furnish all details in support of its claim. Ground treated as allowed for statistical purposes. 2019 (8) TMI 1196 Penalty u/s 271AAB - undisclosed investment - HELD THAT:- In M/S SILVER ART PALACE VERSUS THE DCIT, CENTRAL CIRCLE-4, JAIPUR [ 2019 (4) TMI 634 - ITAT JAIPUR] held that the undisclosed investment by way of purchase of land can be subject matter of addition in the quantum proceedings but the same does not fall strictly within the meaning of undisclosed income as so defined in section 271AAB and deeming fiction u/s 69B cannot be extended and applied automatically in the context of section 271AAB The fact that the transaction so found recorded in a document has not been disputed by the Revenue. Given that the assessee is a salaried person who is not required to maintain any books of accounts and there is no mechanism to report the investment in the tax return, the said investment cannot be held as undisclosed investment and more so, undisclosed income so defined in section 271AAB. In light of the same, the investment so found in purchase of Villa at Suncity Township at Sikar Road, Jaipur cannot be termed as undisclosed income within the meaning of undisclosed income as so defined u/s 271AAB and penalty levied thereon is liable to be set aside. Penalty for cash deposit in bank account - In respect of cash of ₹ 9 lacs, it is not in dispute that the said cash has been physically found in possession of the assessee, however the question remains is where the assessee is a salaried person who is not required to maintain books of accounts, merely having cash in hand of ₹ 9 lacs, can it be held that the same represents his undisclosed income. In the present case, it is true that the assessee is not required to maintain books of accounts and there is no mechanism to report cash in hand in the tax return or otherwise to the Revenue authorities. The factum of the matter is that there is no explanation which has been advanced by the assessee in terms of source of such cash physically found in his possession at the time of search in terms of past savings or cash withdrawals from his bank account. In absence thereof, there can be no dispute that the same falls in the definition of undisclosed income and the penalty levied thereon is sustained. - Appeal of the assessee is partly allowed. 2019 (8) TMI 1195 Computation of deduction u/s 10A - non-allowance of carry forward losses - HELD THAT:- Respectfully following the aforesaid decision of the Hon ble Apex Courts in the case of CIT Vs. Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] wherein the settled position in law is laid out, we also hold that the losses and unabsorbed depreciation of the Non-STPI Units shall not be adjusted against the profits of the STPI Unit for the purposes of computation of the deduction u/s 10A to be allowed to the assessee. Deduction u/s 10A treatment of enhanced Assessed income - HELD THAT:- additions / disallowances have led to enhancement of the taxable business income of the assessee and consequently the assessee is entitled for deduction u/s 10A on such enhanced income. Therefore, respectfully following the decision of the Hon ble Karnataka High Court in the case of CIT Vs. M. Pact Technology Services Pvt. Ltd., [ 2018 (8) TMI 202 - KARNATAKA HIGH COURT] we hold that the deduction u/s 10A shall be allowed on the assessed income. The AO is accordingly directed. Deduction u/s 10A Expenses to be reduced from both Export Turnover and Total Turnover - HELD THAT:- Respectfully following the decision of the Hon'ble Apex Court in the case of CIT Vs. HCL Technologies L td. [ 2018 (5) TMI 357 - SUPREME COURT] , we direct the AO to allow assessee' s claim for deduction u/s 10A. Consequently, the grounds raised by revenue are dismissed. 2019 (8) TMI 1194 Exemption of income u/s 11 - Disallowance of depreciation to assessee trust - Whether when deduction u/s 35(2)(iv) is allowed in respect of capital expenditure on scientific research, no depreciation is allowable u/s 32 on the same asset? - impact of amendment by the Finance (No.2) Act, 2014 w.e.f. 1.4.2015 - HELD THAT:- 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. The amendment by way of by insertion of sub-section (6) to section 11 is prospective and will apply only from A.Y. 2015-16. Set off of carry forward expenditure incurred in excess of its income of the succeeding years - HELD THAT:- The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. The High Court relied on the decision in the case of CIT Vs. Society of Sisters of ST. Anne [ 1983 (8) TMI 44 - KARNATAKA HIGH COURT] - no merit in grounds raised by the revenue in this regard and the same is dismissed. Computing accumulation of income of 15% u/s 11(1)((a) - whether one has to take the gross receipts or gross receipts after expenditure for charitable purpose i.e., the net receipts? - HELD THAT:- This is issue is no longer res integra and has been decided in the case of Bai Sonabai Hirji Agiary Trust Vs. ITO [ 2004 (9) TMI 300 - ITAT BOMBAY-E] held as per the requirement of s. 11(1) of the IT Act, as it prevailed at that point of time, the assessee had to apply 75 per cent of its income for the objects and purposes of the trust and the assessee was permitted to accumulate or set apart up to 25 per cent of its income, which was subject to fulfilment of other conditions. Having found that trust is entitled to exemption under section 11(1), we are to go to the stage of income before application thereof and take into account 25% of such income. The relevant ground of appeal of the revenue is accordingly dismissed. Allowability of repayment of loan as application of income - Whether the amount borrowed by the assessee which was used for acquiring capital asset should not be allowed as application of income for the purpose of charitable purposes? - HELD THAT:- We are of the view that since the AO in asst. year 2012- 13 has considered repayment of amount borrowed for acquiring capital asset his application of income for charitable purpose also gave similar treatment for the capital expenditure incurred in asst. year 2010-11 and 2011-12 and treat repayment of loans as application for charitable purposes. We hold and direct accordingly. Allowability of foreign Tour expenses as application of income - expenditure incurred by the assessee in foreign currency is outside India for the purpose of educational tours undertaken by the students of the assessee disallowed - income has not been applied for charitable purposes in India within the meaning of sec. 11(1) (a) - HELD THAT:- As we have already seen under the provision of sec. 11(1)(a) exemption is allowed only to the extent income of charitable trust is applied to such purposes in India. OHIO UNIVERSITY CHRIST COLLEGE [ 2018 (11) TMI 1055 - KARNATAKA HIGH COURT] dealing with an identical situation held that when teaching services were rendered to assessee educational trust by faculty members of foreign university and when such services were utilized for the purpose of trust objective of imparting education in India payment made to foreign university towards faculty teaching charges was allowable as deduction. We are therefore of the view that in the light of the decision that Hon ble Karnataka High Court the deduction claimed should be allowed. It cannot be said that the assessee has not applied the income for charitable purposes outside India as beneficiaries of the education imparted outside India where the assessee s students. Accordingly the relevant grounds of appeal for the assessee are allowed. Allowability of capital expenditure as application - assessee incurred capital expenditure for acquisition of capital assets but the payment for acquisition of the aforesaid capital assets were outstanding and were not paid - HELD THAT:- Plea of the assessee deserves to be accepted. As the decision of the Hon ble Andhra Pradesh High Court in the case of Nizzam Trust [ 1981 (1) TMI 52 - ANDHRA PRADESH HIGH COURT] supports the plea of the assessee. The law is well settled that the income of a trust has to be computed keeping in mind commercial principles as per the accepted commercial principles amount due but not paid and should also to taken into consideration for determining income. 2019 (8) TMI 1193 Deduction u/s.80P(2)(a)(i) - assessees are Co-operative Society registered under Karnataka State Co-operative Societies Act - HELD THAT:- Identical issue was considered by a co-ordinate Bench of ITAT Bangalore in the case of M/S.Hemmadi Fishermen s Primary Co-operative Society Ltd. Vs. The ITO, Ward-2, Udupi [ 2019 (8) TMI 1086 - ITAT BANGALORE] and it was held therein that the decision of the Hon ble Supreme Court in the case of Citizen s Co-operative Society Ltd. [ 2018 (1) TMI 290 - SC ORDER] was rendered in the context of Co-operative Societies Act as prevalent in a different state and not the State of Karnataka and the issue needs to be adjudicated having regard to the provisions of the Karnataka State Co-operative Societies Act. The issue was remanded for fresh consideration in the light of the law applicable to Co-operative Societies in the State of Karnataka. Since the facts and circumstances are identical, we deem it fit and proper to restore the issue to the AO for fresh consideration in the light of the observations made in the case of M/S.Hemmadi Fishermen s Primary Co-operative Society Ltd. (supra). Examination of claim for deduction in respect of interest income received on deposits with Co-operative banks and deduction on interest income being interest on deposits other than co-operative banks, will be made only u/s.80P(2)(a)(i) and in so far as deduction u/s.80P(2)(d) of the Act is concerned, the same becomes not allowable in view of the decision of Karnataka High Court in the case of PCIT Vs. Totgars Co-operative Sale Society Ltd. [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] 2019 (8) TMI 1192 Addition u/s 50C - sale consideration received as a result of the transfer of a capital asset is less than the market value as per stamp duty valuation - third proviso to Section 50C inserted w.e.f 1-4-2019 is retrospective or prospective - HELD THAT:- Coordinate Bench of ITAT Mumbai, in the case of M/s John Flower ( India) Pvt. Ltd [ 2019 (8) TMI 1086 - ITAT BANGALORE] held that if the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%, the same should be ignored and no adjustments shall be made. Accordingly, we hold that the insertion of third proviso (noted above) to Section 50C is declaratory and curative in nature. That is, the third proviso to Section 50C of the Act relates to computation of value of property as explained by us above, hence it is not a substantive amendment, it is only a procedural amendment therefore the Coordinate Benches of the ITAT used to ignore the variation up to 10%, therefore, the said amendment should be retrospective. Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, the third proviso to Section 50C should be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which Section 50C was introduced. We note that Finance Act, 2018, w.e.f. 01.04.2019 provided that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than 5% of the sale consideration. In the assessee s case under consideration, the stamp duty valuation is ₹ 3,27,01,950/- and sale consideration is ₹ 3,15,00,000/-. The difference of ₹ 12,01,950/- is not more than 5% of the sale consideration. That is, it is at 3.81% [12,01,950 / 3,15,00,000 x 100] of sale consideration, therefore, we delete the addition Bogus loss incurred in share trading - HELD THAT:- Assessee s case is covered by the judgment of Co-ordinate Bench of ITAT Kolkata in the case of Sanjib Kumar Patwari(HUF) [ 2019 (5) TMI 1670 - ITAT KOLKATA] . Revenue has failed to controvert the findings of the Coordinate Bench (supra) therefore, respectfully following the judgment of the Co-ordinate Bench of ITAT, Kolkata (supra), we deleted the addition . 2019 (8) TMI 1191 Addition on cash deposits - availability of funds for re-depositing in the said bank accounts - HELD THAT:- Admittedly, there is no law that funds withdrawn from the banks cannot be held/retained in cash by the parties. There can also be no blanket period which can be judicially considered to be a reasonable time. The fact that there is a gap of about four months by itself in the peculiar circumstances does not lead to any conclusion which detracts from the merits of the claims made. The reasonableness of the explanation has to be decided considering the facts and the peculiar circumstances of each case. On a perusal of the decision of the jurisdictional High Court in the case of Smt. Kavita Chandra Vs CIT, Panchkula [ 2017 (3) TMI 1253 - PUNJAB AND HARYANA HIGH COURT] relied upon by the Revenue, it is seen that the said decision prevails in peculiar facts and circumstances of the case wherein it was a consistent finding of fact available on record to the Hon'ble High Court that the withdrawals made were for the purpose of business and thus, were not available for redeposit back in the bank account. In the said circumstances, claim of re-deposit after a gap of 2-3 months was held to be not possible. In the facts of the present case, it is seen that there is no such allegation. No evidence has been made available by the Revenue to support the possibly unarticulated suspicion that the funds have been utilised elsewhere. - Appeal of assessee of allowed. 2019 (8) TMI 1157 Capacity Utilization Adjustment - HELD THAT:- As relying on own case [ 2019 (6) TMI 663 - ITAT PUNE] we set aside this issue to the file of the Assessing Officer/ Transfer Pricing Officer and direct that the procedure led out in the order of the Tribunal be applied in working out the adjustment on account of capacity utilization. Comparable selection - HELD THAT:- We have already examined and directed regarding issue of capacity utilization to be done by the TPO/AO after following the decision of the Co-ordinate Bench of the Tribunal, Pune in assessee s own case. Therefore, that issue is set aside to the file of Assessing Officer/ TPO. In view of the matter, we upheld the TPO s observation in excluding three comparables i.e. Force Motors Limited, Hindustan Motors Limited and Kerala Automobiles Limited and accepting only Mahindra Mahindra Limited and Tata Motors Limited. Violation of Section 144C - along with this draft assessment order, the AO had issued notice of demand u/s.156 and penalty notice u/s.274 r.w.s.271(1)(c) - HELD THAT:- As decided in REHAU POLYMERS PVT. LTD. AND VICE-VERSA [ 2017 (8) TMI 1294 - ITAT PUNE] undoubtedly, the said assessment was framed as draft assessment but in actual fact, the Assessing Officer had made the assessment in the hands of assessee by not only assessing the income but also determining the demand payable. In the case of draft assessment order, proposed additions are to be made and the assessee is show caused either to accept the same or file the objections before the DRP. However, in the present facts, there was not a proposal for making addition but final assessment order was passed. Undoubtedly, the AO said that he is passing draft assessment order and the assessee was also at liberty to file the objections before the DRP or accept the same, but in actual fact, the order passed by the AO was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C. Accordingly, we hold that draft assessment order passed in the case is invalid in law. Thus, the Cross Objection No.2 raised by the assessee is allowed. Customs 2019 (8) TMI 1190 Valuation of imported goods - Misdeclaration of imported goods - serviceable CRGO strips misdeclared as heavy melting scrap - rejection of declared value - claim of the appellant is that the goods were imported solely for melting and that the serviceability of the imported goods, even if admitted, does not detract from the intended utilization - HELD THAT:- No evidence is forthcoming in the appeal to counter the finding that the imported goods were serviceable. Serviceable CRGO strips would not be covered within the description of heavy melting scrap and the finding of mis-declaration is, therefore, beyond the scope of challenge. However, in determining the value of the goods consequent upon rejection of the declared value owing to the finding of misdeclaration, the proper officer has failed to offer justification, acceptable under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, for adoption of that proposed by the appraising officers. In the absence of exposition of the judgement, in adherence to which the revised value was arrived at, the enhancement upheld in the impugned order fails the test of law - the confiscation of imported goods, the enhancement of value and the imposition of penalty are without sanction of law - appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2019 (8) TMI 1189 Maintainability of application - initiation of Corporate Insolvency Resolution Process - operational creditor - existence of dispute or not - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- A reply to the petition has been filed by the respondent and a rejoinder has also been filed by the petitioner. The respondent- corporate debtor has pointed out certain defects in the petition and the same have been successfully controverted by the petitioner- operational creditor. Further, the respondent has submitted that complaint under Sections 138 and 139 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 is pending consideration before the Patiala House Court, New Delhi and therefore there is an existence of a dispute. The default stands established and there is no reason to deny the admission of the petition. Petition admitted - moratorium declared. Service Tax 2019 (8) TMI 1188 CENVAT Credit - common inputs used in taxable as well as exempt service - non-maintenance of separate records for trading spare parts of helicopter and sale of scrape, being considered as exempted service - Proviso 6(3)(b) of the CENVAT Credit Rules 2004 - HELD THAT:- This order is erroneous for the reason that appellant was not provided with the opportunity to exercise either of the two options of Rule 6 though it was willing to go for proportional reversal that would have substantially reduced the demand. However, having regard to the fact that trading, being not a service, reversal of proportionate credit is uncalled for. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 1187 Refund of service tax - appellant had filed a refund claim after one year from the date of let export order in respect of exported goods - rejection of refund on the ground of time limitation - N/N. 41/2012-ST. - HELD THAT:- The relavant date to be considered for one year for filing refund claim under Notification No. 41/2012-ST is the date of let export order . The entire benefit of refund accrues to the appellant only from the notification but for which no refund is admissible in this case. Any notification, being an exception to the general rule, must be strictly construed. If the notification prescribes any time limit it must be complied with. It is not open to this Bench to change the notification to enlarge, constrict or otherwise modify it. The vires of the notification has not been questioned or tested nor has any portion of it been declared ultra vires. In this case, the refund application was filed more than one year after the export. Accordingly, the refund is not admissible as per the Notification No. 41/2012-ST. Refund cannot be allowed - appeal dismissed. 2019 (8) TMI 1186 Works Contract - Construction services - it was alleged that that the appellant has paid the service tax only on the civil construction part of the contract and that has artificially bifurcated the turnkey project into three separate contracts - HELD THAT:- The findings of this Bench for the previous period M/S. ALSTOM T AND D INDIA LTD. VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE CHENNAI [ 2018 (9) TMI 1669 - CESTAT CHENNAI] on similar issue has held that the appellant will be entitled to the benefit of abatement under Sl.No. 7 of the Notification ibid. - demand do not sustain. Benefit of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - prior intimation of such option as per Rule 3 to the department not filed - HELD THAT:- In the above stated case it was held that it is only a procedural one and that the substantial benefit cannot be denied for procedural lapse - demand do not sustain. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 1185 Restoration of appeal - appeal was dismissed for non-prosecution - HELD THAT:- In view of the submissions as made by the Ld. Advocate, the Order dt. 16/02/2018 is recalled and restored to its Original number - Appeal restored. Condonation of delay in filing appeal - time limitation - HELD THAT:- The applicant/appellant had filed the appeal before the Lower Appellate Authority almost after expiry of six months and hence, the appeal was rejected as time barred - Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] held that the Tribunal cannot condone the delay, beyond the condonable period, in filing the appeal before the Lower Appellate Authority - Appeal dismissed. 2019 (8) TMI 1184 Club Membership - Doctrine of Mutuality - Levy of service tax - amounts collected by the appellants from its members such as Bar account collection charges, Bar sundry collection, Cards account collection charges, Bar dining collection charges, Guest House amenity charges etc. - HELD THAT:- The ratio laid down by High Court of Jharkhand in RANCHI CLUB LTD. VERSUS CHIEF COMMISSIONER OF CENTRAL EXCISE SERVICE TAX [ 2012 (6) TMI 636 - JHARKHAND HIGH COURT] and also by Hon ble High Court of Gujarat in SPORTS CLUB OF GUJARAT LTD VERSUS UNION OF INDIA 3 [ 2013 (7) TMI 510 - GUJARAT HIGH COURT] has not been stayed by the Hon ble Apex Court - It was held in the cases that Section 65(25a), Section 65(105) (zzze) and Section 66 as incorporated / amended to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 1183 Commercial Industrial Construction Service - Construct work carried out alongwith materials - deduction of VAT - HELD THAT:- Though there is mention about the deduction of VAT at source still there is no record available that the entire contract was to be executed alongwith material. We, therefore, are of the opinion that in so far as the confirmation of service tax under Commercial Industrial Service is concerned, the matter needs to be re-verified at the level of Original Authority who shall take into consideration the facts of the case and provisions of law. Penalty u/s 78 of FA - HELD THAT:- The penalty under Section 78 of Finance Act, 1994 equal to the amount of service tax of Business Auxiliary Service the same is set aside. Appeal allowed by way of remand. 2019 (8) TMI 1182 Imposition of penalty u/s 73(4) read with Section 78 of the Finance Act, 1994 - non-payment of service tax - HELD THAT:- Issue notice on the special leave petition as also on the prayer for interim relief, returnable in four weeks. 2019 (8) TMI 1181 Levy of Service Tax - construction of residential flat - it was held in the case that particularly the remittance/payments made to the builder (respondent No.2) at relevant times; having regard to the invoices raised as well as the bank accounts statement in this regard. HELD THAT:- Issue notice. 2019 (8) TMI 1180 Waiver of penalty - Manpower Recruitment Supply Agency Services or manufacture - respondent not registered with the Department for rendering the service - non-payment of service tax - HELD THAT:- Delay condoned. Issue notice. 2019 (8) TMI 1179 Scope of remand order - Whether the order-in-original while confirming the demand raised by the first three show-cause notices have traveled beyond the scope of remand order or Commissioner was right in confirming the said demand as has been done by him? - HELD THAT:- Delay condoned. Appeal admitted. 2019 (8) TMI 1178 Levy of service tax - activity / privilege to sell eatables and collect empty liquor bottles - agency commission - Grant of Privilege to Run the Bar - payments made by Bar Contractors - devolution of sovereign rights of the State through the appellant. HELD THAT:- Issue notice on the special leave petition as also on the prayer for interim relief, returnable in two weeks. 2019 (8) TMI 1177 Refund of service tax - logistic charges - period 2009-10 to 2010-11 - time limitation - Section 11B of the Act, 1944 - HELD THAT:- The controversy with regard to the issue as to whether a transaction would be amenable to Service Tax or VAT has drawn the attention of the Hon ble Supreme Court in a number of cases. In the case of Bharat Sanchar Nigam Ltd vs Union of India [2006 (3) TMI 1 - SUPREME COURT] , where the issue was as to whether on the sale of SIM card, Sales Tax could be leviable or the same was a service subjected to Service Tax , the Hon'ble Supreme Court after extensively dealing with all the constitutional provisions, in paragraph 87 of the judgment concluded that the same would depend upon the intention of the parties. But we are not called upon to adjudicate this issue in the present case in as much as only the question of refund of Service Tax has been raised by the appellant on the ground that VAT has already been levied by the Commercial Tax Authorities. From a bare perusal of Section 11B of the Act, 1944 it is clear that an application for refund has to be made within a period of one year from the relevant date. The appellant made an application for refund on 21/04/2012 for the refund of Service Tax deposited for the financial year 2009-10 and 2011-12 (April June). The application for refund of Service Tax having been moved beyond the period of limitation prescribed, was rightly rejected and further the appellant had himself conceded before the CESTAT that Service Tax was not deposited under protest nor was there any provisional assessment. Even otherwise, the application for refund should have been moved within a period of one year, which was admittedly moved beyond the stipulated period. As already held by the Apex Court the application moved beyond the statutory period prescribed in Section 11-B of the Act, 1944, would be time barred and the claim of the appellant could not have been admissible on this score also. Appeal dismissed. Central Excise 2019 (8) TMI 1176 Service of order - non-receipt of copy of the Order-in-Original - stand of the department is that the said Order-in-Original was served personally on the appellant on 16.07.2010 and the same was duly acknowledged by him - time limitation. HELD THAT:- It appears the Superintendent (Adjudication) had sent a letter C.No.V(15)21/ADJ/HQRS/GHY/09/3564 dated 15.07.2010 to the Superintendent (Anti-Evasion), Gp.-1, Central Excise Service Tax, Hqrs. Office, Guwahati, requesting him to cause personal delivery of the aforementioned Order-in-Original dated 14.07.2010 with acknowledgement and to send the receipt of acknowledgement to the office - It is to be noticed that the letter number appearing at page-47 with the signature of the Additional Commissioner is the same letter dated 15.07.2010 issued by the Superintendent (Adjudication). Having regard to the endorsement of Additional Commissioner, the author of the Order-in-Original, that the order is being sent by registered post with A/D, it is not understood under what authority the Superintendent (Adjudication) altered the mode of service and sought to effect service of the order through a special messenger. When a particular mode for service is prescribed by the author of the Order-in-Original, we are of the considered opinion that such mode has to be complied with and no other mode is permissible, though a number of modes, otherwise, is provided in Section 37-C of the Central Excise Act, 1944. The computation of period of limitation will begin from 01.09.2017, the date on which, the appellant undisputedly was furnished with a certified copy of the Order-in-Original. So computed, the appeal filed before the Commissioner (Appeals) on 10.10.2017 is within the prescribed period of limitation - the orders passed by the Commissioner (Appeals) and CESTAT cannot be sustained in law - Appeal allowed - decided in favor of appellant. 2019 (8) TMI 1175 Entitlement to Input Tax Credit - failure of the assessee/respondent to exercise option under Rule 6(3A) of the Cenvat Credit Rules, 2004 - revenue s argument is that Rule 6(3A) is not merely procedural but was binding upon the assessee, who could not have claimed the benefit of even proportionate credit or it would have otherwise been entitled to inputs service for which Cenvat Credit was admissible, without following the procedure - HELD THAT:- The show cause notice, in this case, covers two different periods substantial part of that period was when Rule 6(3A) did not exist. During this time, adjudicating authorities were bound to follow the rule while granting inputs credit in respect of services that qualify for it, even while excluding the credit for noneligible services and activities. All that Rule 6(3A) has done is to streamline the procedure for apportioning credits to ensure that proportionate credit, to the extent admissible could be claimed for the business and ensure that the concerned adjudicating officers do not have to spend time on carrying out the exercise. The amendment i.e. procedure for apportionment under sub-rule 3(A) was facilitative and procedural. The entitlement to credit otherwise is in Rule 3 of the Cenvat Credit Rules. It is not disputed that Cenvat credit can be given in respect of services only when the inputs services qualify for that benefit and not for other inputs which are not eligible for the process of manufacture. Appeal dismissed - decided against Revenue. 2019 (8) TMI 1174 Extended period of limitation - CENVAT Credit - trading activity - exempt services or not - bonafide belief - HELD THAT:- The position was clarified by the Government by insertion of Explanation only with effect from 1.4.2011 that the trading activity will be Exempted Services. The Explanation is clarificatory in nature and can be held to be applicable even for the past period. Thus, at the relevant period of time, viz., from April 2009 to March 2011 , the Assessee was, obviously, under bona fide belief in view of the conflicting decisions of the Tribunals during that period and taking the trading activity as Exempted Services, availed the CENVAT Credit which is sought to be reversed and recovered by the Department invoking the extended period of limitation. Such a bona fide belief cannot be held to be done with ulterior purpose for evading the Duty and therefore, the extended period of limitation would not be available to the Revenue Authority in view of the aforesaid decision rendered by the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXICSE, VAPI VERSUS M/S. KOLETY GUM INDUSTRIES [ 2016 (5) TMI 275 - SUPREME COURT] . Appeal dismissed - decided against Revenue. 2019 (8) TMI 1173 Process amounting to manufacture - business of collecting used oil which has become unfit for use and hence drained down the engines and equipment from motor workshops of Kerala State Electricity Board Industrial Units, etc. - legal fiction as created by Chapter Note 4 to Chapter 27 of Central Excise Tariff Act, 1985 - HELD THAT:- It is not clear as to what extent the appellant has manufactured lubricants and other products as well. It is also not clear if the appellant had manufactured lubricants and whether these were marketable to consumers or whether the same has been sold in bulk form to bulk users only. It is also not clear whether any label has been fixed on the containers / barrels, if lubricants are sold to bulk / industrial users. There is no doubt that the Trade Mark has been obtained by the appellant for JEEZOL as lubricating oil and grease. The factual aspects have to be verified by the Department from the invoices, etc. - it is deemed appropriate to lay down the principles based on which the duty liability has to be determined after the aforesaid factual verification. Penalty u/r 25 of the Central Excise Rules, 2002 - scope of SCN - HELD THAT:- While the SCN proposes to impose a penalty under Rule 25 of the Central Excise Rules, 2002, no specific reasons has been given in the show-cause notice for this proposal - there is a case to set aside the penalty imposed under Rule 25 of Central Excise Rules, 2002. The appeal is disposed of by way of remand to the original authority with a direction to re-determine the amount of differential duty and interest, if any, payable after ascertaining the nature of goods which have been cleared as above and their excisability. 2019 (8) TMI 1172 CENVAT Credit - capital goods which are used exclusively for the manufacture of exempted products - Decanter for Gluten - CPD (Flash Dryer) used for drying the Gluten - Tubular Dryer or Rotary Dryer used for drying maize fibre/Germ taken by them during the period November 2007 to April 2008 - Rule 6(4) of CCR 2004 - HELD THAT:- The case of RANA SUGAR LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2012 (11) TMI 299 - CESTAT, NEW DELHI] sought to be relied upon by the appellant was on a different footing where the sugar factory was manufacturing denatured alcohol which is dutiable and the intermediate product in the process of manufacturing was ethyl alcohol which was exempted. It has been held by the Tribunal that CENVAT Credit on the inputs and capital goods used in the manufacture of exempted intermediate product cannot be denied when the final product is dutiable. In the present case, the starch is the dutiable final product and gluten maize germ are final products which are exempted. What is sought to be denied is CENVAT Credit of capital goods on such machinery which is used for processing the exempted products after they are separated from the raw material. Ld. Counsel for the appellant sought to impress upon the Bench that the entire process is an integrated one and therefore CENVAT Credit cannot be denied on the capital goods. Appeal dismissed - decided against appellant. 2019 (8) TMI 1171 Refund of central excise duty paid on the exported goods - time limitation - Section 11B of the Central Excise Act, 1944 - appellants did not deposit the duty amount under protest and not opted for the provisional assessment - HELD THAT:- Section 11B ibid provides the mechanism for filing of refund application and consideration of the same by the statutory authorities. The statutory provision inter alia, mandates that the refund application should be filed by the claimant before the expiry of one year from the relevant date. As per the explanation contained in Section 11B ibid, the term relevant date for consideration of the present dispute can be itemized either under clauses (eb) or (f) of the above reproduced explanation. In this case, it is an admitted fact on record that the appellants did not resort to the provisional assessment for payment of duty in question on removal of final product from the factory. Thus, the case of the appellants will not be governed under clause (eb) above for consideration of the relevant date differently - Admittedly, in this case, the appellants had filed the refund applications beyond the period of one year from the date of payment of duty attributable to exportation of goods. Since the provisions of Section 11B ibid have not prescribed any specific relevant date for consideration of filing of refund claim after obtaining the proof of export of goods, the relevant date for such purpose should be governed only under clause (f) contained in the explanation appended to Section 11B ibid. In this case, the appellants had deposited the central excise duty on removal of excisable goods from the factory premises. Such amount of duty was deposited into the Central Government account under proper accounting code. Thus, under the circumstances, it cannot be pleaded that the duty amount deposited by them should be construed as mere deposit in the hands of the Government and for grant of the said refund amount, the provisions of Section 11B ibid would not be applicable. Appeal dismissed - decided against appellant. 2019 (8) TMI 1170 Demand of Interest and penalty - irregular availment of CENVAT Credit - input services used in the manufacture of exempted /non-excisable products - credit reversed as soon as being pointed out, before utilization - period April 2006 to December 2006 - HELD THAT:- The appellant had, without utilizing the credit reversed the same on being pointed out by the Department. Therefore, in terms of the ratio laid down by the Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] no interest or penalty can be imposed upon the appellant. Reversal of CENVAT credit which has been taken before its utilization is as good as not taking the credit at all - Interest and penalty set aside. Demand of Central Excise duty - MS gratings - job-work - It is the case of the department that the appellant had got these MS gratings manufactured through job workers and they were, therefore, liable to pay central excise duty on these goods - assessee claims the goods to be capital goods and exempt from tax - HELD THAT:- It is true that as per the definition of capital goods in the CENVAT Credit Rules, 2004 only goods falling under Chapter 82, 84, 85 and 90 of the Central Excise Tariff are covered. However, components, spares and accessories of the aforesaid goods are also covered as capital goods in the definition itself. No restriction of the Central Excise Tariff heading of these components, spares or accessories is given in the definition - For this reason, the gratings manufactured by the appellant through their job workers and used in their plant mainly as stairs and platforms meant for workers to walk around and climb up and down in the plant, do qualify as accessories of the plant itself. Therefore, they get covered by the definition of Capital Goods - the exemption under N/N. 67/95-CE is available to them. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 1169 CENVAT Credit - Job-Work - furnace oil is used in the manufacture of final product on job work basis - denial of credit on the ground that since the job work goods is exempted from payment of duty, credit in respect of furnace oil is not admissible - liability to pay 10% of the value of the goods - N/N. 214/86-CE dated 25.03.1986 - HELD THAT:- The credit is allowed in respect of inputs used in the manufacture of goods under N/N. 214/86-CE despite the fact that job worker is not supposed to pay the duty when the goods are manufactured under N/N. 214/86-CE. This is for the reason that goods manufactured under N/N. 214/86-CE is not otherwise exempted as the notification contained a condition that the job work goods subsequently shall be used in the further manufacture by the principal and the same would be cleared on payment of duty. Therefore, N/N. 214/86 has practically not given any exemption to any goods. There is no doubt that in case the goods manufactured under job work under N/N. 214/86-CE, credit cannot be denied on the ground that goods manufactured under N/N. 214/86-CE is exempted. Appeal allowed - decided in favor of appellant. 2019 (8) TMI 1168 Condonation of delay of 10 days in filing appeal - Time limitation - HELD THAT:- The order-in-original dated- 29/12/2016 was communicated to the appellants on 17/01/2017. They were required to file the appeal before the Lower Appellate Authority on or before 18/03/2017 i.e. within 60 days from the date of communication of the adjudication order. The appeal was filed on 17/04/2017. The Ld. Commissioner (Appeal) rejected the appeal as time barred. The appeal was filed beyond the statutory period of 60 days but within the condonable period of 30 days. Under the circumstances, it would be appropriate to remit the matter to the Lower Appellate Authority to decide the appeal on merit - the matter is remanded to the Ld. Commr. (Appeal) to decide the appeal without going into the aspect of limitation. Appeal allowed by way of remand. 2019 (8) TMI 1167 100% EOU - Illicit/Clandestine removal - confiscation of goods alongwith imposition of redemption fine could not take place due to non-availability of goods - HELD THAT:- The ld. Commissioner (Appeals) did not confiscate the goods on the ground that the same was not available for confiscation, on the basis of judgments in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. CUS., NASIK [ 2009 (1) TMI 124 - CESTAT MUMBAI] , ASSOCIATE MARKETING SERVICES VERSUS COMMR. OF CUS. (AIRPORT), CHENNAI [ 2005 (9) TMI 177 - CESTAT, CHENNAI] - However, we find that both the judgments are related to DTA Units. The ld. Commissioner (Appeals) order for non-confiscation of the goods and non imposition of redemption fine, relying on the judgments of DTA unit, is not proper - Therefore, the matter need to be remanded to the Adjudicating Authority for deciding the confiscation and redemption fine, in the light of above judgments. Appeal allowed by way of remand. CST, VAT & Sales Tax 2019 (8) TMI 1166 Validity of re-assessment proceedings - initiation of proceedings solely on the basis of certain photo-copy invoices, without any further evidence to verify such photo-copies - HELD THAT:- The re-assessment proceedings were initiated on the basis of a reason to believe that the transactions represented by the photocopies of invoices had escaped assessement, the same did not suffer from any jurisdictional error. For the purpose of recording a valid reason to believe, it was neither required nor necessary for the assessing authority to first confirm whether an addition would necesssarily follow. That degree of proof was not required to be satisfied at that stage - Insofar as the assessing authority received information, that assessee had engaged in sales outside books and he further received information in shape of photcopy invoices in support of that allegation, there was relevant material to form the reason to believe that turnover had escaped assessment. It's sufficiency is not a matter to be considered at that stage - answered in the affirmative i.e. against the applicant-assessee and in favour of revenue. Addition on the basis of such photo-copy invoices - no other evidence to establish performance of such transaction - HELD THAT:- Merely, because the re-assessment proceedings may have been validly initiated, may not result in additions. It being undisputed to the revenue that the evidence being relied, was not in the shape of any evidence received from any source, but only alleged photocopy of invoices, a heavy burden lay on the revenue to establish that the transactions mentioned on such photocopied documents had actually being performed. The revenue failed to establish that any turnover had escaped assessment at the hands of the assessee - Therefore, in absence of any other direct or corroborative material or evidence to establish undisclosed turnover, the findings recorded by the Tribunal are found to be perverse and based on no evidence - answered in the negative i.e. in favour of the assessee and against the revenue. Revision allowed. 2019 (8) TMI 1165 Imposition of sales tax - interstate sale of confectionery items from Greater Noida to Delhi - stock transfer or not - correctness of survey claimed to have been conducted by the U.P. revenue authorities, at Delhi - HELD THAT:- Clearly, there was no power under the Act to conduct such a survey independently, i.e. without participation of the Delhi sales tax authorities. Also, as a fact, there does not appear to exist any evidence of such survey having been conducted. Merely because such entries had been recorded in Ex.13, including entries with respect to the sale of goods made inside the State of U.P., it could not and it did not lead to the conclusion that the other entries with respect to transportation of goods to Delhi pertained to sale of those goods. Perusal of the order passed by the Tribunal does not, in any way, bring out evidence or reasoning in support of such conclusion. On the other hand, there does not appear to exist any consideration of the claim made by the assessee supported by Form-F as also assessment orders passed by the Delhi sales tax authorities. Matter requires further reconsideration - revision allowed by way of remand. 2019 (8) TMI 1164 Concessional benefit of tax - purchase of High Speed Diesel from suppliers in other States - difficulty in obtaining 'C' forms - CST Act 1956 - HELD THAT:- The issue is covered in favour of the assessee by a decision of this Court in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] where it was held that The respondents are directed to permit these petitioners to download 'C ' forms, as has been done in the past for the purpose of purchasing petroleum products against the issuance of 'C' declaration forms. It follows as a natural sequitur that instant writ petition stands allowed - petition allowed. 2019 (8) TMI 1163 Service of notices - case of petitioner is that that only one of the two revisional notices referred to in the impugned order have been received by writ petitioner and in any event, the impugned order has proceeded on the basis that writ petitioner dealer has not filed objections though the writ petitioner has sent objections/reply to the received revisional notice under due acknowledgement - principles of natural justice. HELD THAT:- The common proviso to Sub-sections (1) and (2) of Section 27 makes it statutorily imperative that the Assessing Officer has to give a reasonable opportunity to show-cause against a revised Assessment Order - In the instant case, revisional notice dated 11.02.2019 has no doubt been sent to the writ petitioner, but the impugned order has been passed on the basis that the writ petitioner has not sent any reply to this notice though the reply/objection has been sent under due acknowledgement and reply /objections has been received by the office of the first respondent on 08.03.2019. Therefore, it is clear that impugned order proceeds on the basis that the writ petitioner / dealer has not shown cause though two revisional notices have been sent. In the considered opinion of this Court, this does not help the Revenue counsel in defending the impugned order as the impugned order, as mentioned supra, proceeds on the basis that the writ petitioner dealer has not responded at all - with regard to reasonable opportunity which the Assessing officer has to give to a dealer before passing a revised Assessment Order, in the instant case, notwithstanding the revisional notice dated 11.02.2019, first respondent/Assessing Officer in his discretion and wisdom has thought it necessary to send one more revisional notice on 05.04.2019. Thus, it is only proper that 05.04.2019 revisional notice is also now served on the writ petitioner/dealer - impugned order set aside - first respondent shall redo the revised Assessment and pass a revised Assessment Order afresh within six weeks therefrom - petition allowed by way of remand. 2019 (8) TMI 1162 Reversal of input tax credit - reversal on invisible and visible loss qua export sales - TNVAT Act - Section 27(1)(b) of TNVAT Act - Circular No.7 dated 03.02.2014 - reasonable opportunity not being given - principles of natural justice - HELD THAT:- It may not be necessary to delve into those aspects as independent of aforementioned circular and the chronicle of dates as can be culled out from the impugned orders, this is a fit case to grant another opportunity to the writ petitioner as impugned orders have been passed on the 3rd day after the lapse of further time of 10 days that was sought for by writ petitioner. This Court has also borne in mind the position that the writ petitioner has sought for a fortnight's time first and immediately on expiry of fortnight's time, has sought for 10 more days, which means writ petitioner has sought for 25 days time in all. Further more, writ petitioner counsel now submits that he is ready to submit objections within one week from the date of receipt of a copy of this order and also attend a personal hearing if the same is held thereafter without asking for further time. Thus, the impugned orders are set aside solely on the ground of adequate time not being given for the personal hearing which the respondent in her discretion has chosen to give. On receipt of reply/objections from the writ petitioner dealer together with all supporting documents, respondent shall hold a personal hearing within a fortnight therefrom and the date, time and venue of the personal hearing shall be communicated to the writ petitioner in advance - petition allowed by way of remand. 2019 (8) TMI 1161 Permission for generation of Form F for the 2nd and 3rd quarter of financial year 2012-13 online - whether in the admitted facts that the 2nd and 3rd quarters for the financial year 2012-13 suffered defects on the information on stock transfer and though the position was clarified in the annual returns whether it would entitle the petitioner to the relief prayed in the writ petition? HELD THAT:- Section 6A of the CST Act lays the burden of proof in case of transfer of goods claimed otherwise than by way of sale on the dealer who claims that the transfer of the stocks is otherwise than by way of sale and for which purpose he has to obtain a declaration duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority along with the evidence of dispatch of such goods. However, if the dealer fails to furnish such declaration then the movement of transfer would be treated as sale. An onus is cast upon the transferee-dealer to generate Form F by filling up the particulars of the stocks received by him from its branches outside the State and for such purpose the transfereedealer has to fill up the correct figures in the returns so filed in each quarters and not in casual manner. In the present case the petitioner has not only defaulted in furnishing correct particulars for the 2nd and 3rd quarters for the period 2012-13 but also failed to file a revised return within the prescribed time although he claims to have corrected the details of stock transfer in his annual return. The prayer seeking direction to the Commercial Taxes department to permit him to generate Form F on the basis of the figures present in the annual returns cannot be accepted for apart from the fact that the fault is entirely attributable to the petitioner, Section 6A of the CST Act makes it clear that if the burden of establishing such stock transfer is not discharged by production of declaration form, the transfer is to be treated as sale and the petitioner should have been aware of such consequences which are so eloquent on the statute book - Petition dismissed. 2019 (8) TMI 1160 Time limit for completion of re-assessment - Section 7-B of the Tamil Nadu Entertainment Tax Act, 1939 - interpretation of statute - HELD THAT:- The term re-assessment referred to under Section 43-E (1) of the Act, cannot mean to be a final order of assessment and that a mere issuance of a notice for the re-assessment would constitute the process of re-assessment having been initiated, from which point of time, the limitation prescribed under the section requires to be construed. In the present case pertaining to the years Assessment 2003-2004 and 2004-2005, notices of re-assessment have been issued within the period of five years from the end of the respective assessment years and as such, I do not find any infirmity on the authority of the respondent in having issued these notices - Since the present impugned notices have only called upon the petitioner to give his objections to the proposed difference of taxes, it would be appropriate to grant liberty to the petitioner to submit his objections before the respondent herein in consequence to their impugned notices issued. Petition closed. 2019 (8) TMI 1159 Interest on refund - Section 42(5) of TNVAT Act - visible and invisible loss qua the loose fiber/yarn in the course of manufacture - HELD THAT:- A perusal of Section 42(5) of TNVAT Act and Rule 11(2) of TNVAT Rules reveals that while 42(5) of TNVAT Act is the substantive law, Rule 11(2) of TNVAT Rules is the procedural aspect of the matter, as Rule 11(2) deals with verification of the relevant forms viz., Form W. Be that as it may, a perusal of the impugned order reveals that there is a clear reference to Rule 11 of TNVAT Rules. Therefore, in the considered view of this Court, it cannot be gainsaid that Rule 11 of TNVAT Rules has not been looked into. Alternate remedy - HELD THAT:- The writ petitioner should be able to demonstrate that writ petitioner falls under one or some of the specified exception to the rule of alternate remedy. Some of the exceptions are, authority passing order without jurisdiction i.e., order called in question itself turning on a jurisdictional fact, alternate remedy ineffectual or not efficacious and orders disregarding settled position of law - this is not an exhaustive list of exceptions, but is illustrative to the extent that is necessary to dispose of this case on hand. This Court is convinced that it cannot be gainsaid by writ petitioner that a revision will not lie to the first respondent. It also comes out clearly that first respondent has remanded the matter to the third respondent without expressing any opinion or view on the merits of the matter. Therefore, it is also not a case where the revisional authority has already expressed any opinion. The issue regarding refund is concluded and only with regard to interest on the refund is to be considered. Therefore examination of records and certain other supporting documents, with regard to interest liability if any is imperative for arriving at a conclusion one way or the other. It may not be possible to do such an exercise in a writ petition which is decided on affidavits and counter affidavits. In other words, quantification if any cannot be done in this writ petition. Petition dismissed. 2019 (8) TMI 1158 Imposition of penalty u/s 13 A (4) of the U.P. Trade Tax Act - dismissal of second appeal filed by the assessee, after upholding the imposition of penalty under Section 13-A (4) of the Act - HELD THAT:- While learned counsel for the assessee has vehemently urged that present is a case of bona fide dispute or inadvertent mistake and not deliberate conduct offered by the assessee, however, in view of the concurrent finding returned by the authorities and Tribunal, it is difficult to accept the submission, inasmuch as, the goods in question had been detained from the assessee himself in his capacity as a proprietor of the firm Absence of proper explanation at that stage with respect to absence of challan or bill or other documents and the further fact that the said documents were not produced before the seizing authority, immediately or within a reasonable time, in the context of seizure of jewellery in excess of 1 kg. in weight, it appears that the finding recorded by the authority below are proper and that the further explanation submitted latter was an afterthought. Revision dismissed.
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