TMI Tax Updates - e-Newsletter
August 6, 2019

Case Laws in this Newsletter:

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

Articles

1. Two years of GST implementation

   By: Ganeshan Kalyani

2. Extend the due date for filing GSTR-9, 9A & GSTR-9C for the year 2017-18

   By: Kishankant Yadav

News

1. THE JAMMU AND KASHMIR REORGANISATION BILL, 2019

2. Consumer Protection in a digital financial world – Initiatives and beyond (Shri M K Jain, Deputy Governor, Reserve Bank of India - June 21, 2019 - Annual Conference of Banking Ombudsman – 2019, Mumbai)

3. Finance Minister meets Bankers, reviews the performance of banks

Notifications

GST - States

1. 13/2019 - FD 47 CSL 2017 - dated 18-7-2019 - Karnataka SGST

Seeks to extend the last date for furnishing FORM GST CMP-08.

2. 573/2019/10(120)/XXVII(8)/2019/CTR-11 - dated 23-7-2019 - Uttarakhand SGST

Duty free sale to international tourists at airports are liable for refund for inward supplies

3. 572/2019/10(120)/XXVII(8)/2019/ON-06 - dated 23-7-2019 - Uttarakhand SGST

Uttarakhand Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019

4. 571/2019/10(120)/XXVII(8)/2019/CT-31 - dated 23-7-2019 - Uttarakhand SGST

Uttarakhand Goods and Services Tax Fourth (Amendment) Rules,2019

5. 570/2019/10(120)/XXVII(8)/2019/CT-30 - dated 23-7-2019 - Uttarakhand SGST

Person from outside India supplying online services to any person in India , will be considered as the class of registered person

6. 569/2019/10(120)/XXVII(8)/2019/CT-27 - dated 23-7-2019 - Uttarakhand SGST

Enhancement of time for filing GSTR-1 till 31-10-2019 for registered person with aggregate turnover upto 1.5 Cr

7. 568/2019/10(120)/XXVII(8)/2019 CT-25 - dated 23-7-2019 - Uttarakhand SGST

Amendment in notification no. 431/2019 dated 31-5-2019 (21-6-2019 substituted by 21-8-2019)

Indian Laws

8. G.S.R. 551(E) - dated 5-8-2019 - Indian Law

Constitution (Application to Jammu and Kashmir) Order, 2019

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 28 /2019-20 - dated 5-8-2019

Mechanism to apply for additional claims under MEIS for certain HS codes for which enhanced rates were notified with retrospective effect

2. 23/2015-2020 - dated 5-8-2019

Provision for claiming additional benefits under MEIS for HS Codes for which rates were enhanced with a retrospective effect

Customs

3. PUBLIC NOTICE NO. 18/2019 - dated 16-7-2019

Sea Cargo Manifest and Transhipment Regulations, 2018

4. F. No.: S/6-B-17/2019 EA - dated 3-7-2019

Implementation of New Sea Cargo Manifest and Transhipment Regulations (SCMTR), 2018 in IECE

5. File No.: S/6-B-17/2019EA - dated 17-6-2019

Implementation of new Sea Cargo Manifest Regulation, 2018 in ICES

Highlights / Catch Notes

Income Tax

• Court Dismisses Case on Unfiled Tax Return; Unabsorbed Depreciation Claim u/s 148 Deemed Irrelevant.

  Case-Laws - HC : Non-filing of a return under sections 139(1) or 139(2) - weather unabsorbed depreciation cannot be claimed in a proceeding u/s 148 - We strongly resent the wastage of precious time of this Court by trying to whip up a dead horse.
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• Penalty Confirmed u/s 271(1)(c) Due to Discovery of Loose Papers and Additional Income Admission.

  Case-Laws - AT : Penalty u/s 271(1)(c) - the assessee has admitted discovery of loose papers, documents/electronic data and whose basis he has prepared his return showing additional income. In the face of the above discovery of evidence, it could not be said that Explanation 5A is not applicable - Penalty confirmed.
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• Penalty u/s 271(1)(c) Not Imposed Due to Lack of Evidence Beyond Section 132(4) Statement in Tax Discrepancy Case.

  Case-Laws - AT : Penalty u/s 271(1)(c) - difference of income in the return filed u/s.139(1) and 153A - there was no such allegation that of assessee was found to be the owner of any money, bullion, jewellery or other valuable article or thing or any income based on any entry in any books of account or other documents or transactions, either in the assessment or penalty or the CIT (A) order - no penalty 271 (1) (c) r.w. the explanation 5A merely on the basis of the statement u/s 132(4)
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• Penalty u/s 271-D Overturned: Crop Sale Transactions Not Considered Loan or Deposit, Section 269SS Inapplicable.

  Case-Laws - AT : Penalty u/s 271-D - default u/s 269SS - transactions between the assessee and the Commission Agent who sale agriculture crops - receipt by the assessee against the sale of the crops was neither the loan nor the deposit, therefore the provisions of Section 269SS were not applicable and as such penalty levied u/s 271D is not sustainable
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• Valid Reasons Needed for Reopening Assessment u/s 147 of Income Tax Act; Mere Verification Not Allowed.

  Case-Laws - AT : Reopening of assessment u/s 147 - Notice u/s 148 cannot be issued for verification of information, but here the jurisdictional satisfaction of the essential requirement has to be shown that there has been ‘reason to believe’ that there was income ‘chargeable to tax’ - reasons must be self-speaking and self-defending - reasons recorded by the AO, are no reasons in the eye of law for assuming jurisdiction
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• PTU-Affiliated Learning Centers Qualify for Tax Exemption u/s 10(23C)(iiiad) by Meeting Educational Obligations.

  Case-Laws - AT : Exemption u/s 10(23C)(iiiad) - learning centre affiliated with PTU - an authorized learning centre has to honour the obligations set out by PTU for providing education to enrolled students and has to employ teachers for taking classes of enrolled students - such centre of PTU would fall within the realm of the definition of the term ‘education’ as envisaged in Sec. 2(15) - exemption allowable
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• Exemption Allowed: No Evidence of Revoked Registration u/ss 11, 12; Section 12A Certificate Initially Missing.

  Case-Laws - AT : Exemption u/s 11/12 - claim denied due to non-furnishing of certificate u/s 12A - nothing has been placed by the Revenue on record to show that the Registration granted to the assessee vide order dated 23.04.1982 has been subsequently cancelled or revoked - exemption allowed
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• Assessee not in default for failing to deduct TDS u/s 201(1) if conditions met; no disallowance u/s 40(a)(ia).

  Case-Laws - AT : Assessee in default u/s 201(1) for failure to deduct TDS u/s 194C - Scope of second proviso of Section 201(1) inserted vide the Finance Act, 2012 w.e.f 01.04.2013 - as per judicial pronouncements it will be applicable retrospectively and if assessee satisfies the conditions envisaged in sub-section (1) of Sec.201, then it cannot be held to be an assessee in default - no disallowance u/s 40(a)(ia)
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• Section 194C: TDS Must Be Deducted on Payments to Dealers for Services via Free Service Coupons to Avoid Disallowance.

  Case-Laws - AT : TDS u/s 194C - payment to dealer against free Service Coupon - in fact payment is in the nature of consideration pursuant to a contract, as per which the dealer provides such services to the ultimate customers, accordingly, the assessee was obligated to have deducted TDS at the time of making of such payments - failure will certainly invite disallowance u/s 40(a)(ia)
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• Penalty Imposed u/s 271AAA for Failure to Specify Manner of Undisclosed Income After Search Statement.

  Case-Laws - AT : Penalty u/s 271AAA - sum surrendered in statement recorded u/s 132(4) during the search - since assessee cannot be said to have not satisfied the condition of specifying the manner of deriving undisclosed income as per section 271AAA, he cannot escape the penalty
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• Court Recommends Lifting Attachment Order u/s 281B After Significant Demand Collection in Assessment Case.

  Case-Laws - HC : Provisional attachment to protect revenue u/s 281B - it was only meant to protect the interest of the revenue during the pendency of the assessment proceedings - after assessment and finalization of demand the year-wise percentage of demand collected by revenue is over 21% - hence in the circumstances the Court sees no reason why the attachment order should be allowed to continue
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• Court Rules No New Tax Liability on Partnerships from Post-Filing Amendments; Cost of Acquisition Based on Succession Value.

  Case-Laws - AT : Capital gain - cost of acquisition of assets when partnership succeeded to company - Section 49 amended after filing of return - a new tax liability cannot be created by a subsequent amendment in respect of a transaction as well as the return of income filed when such law was not in the Statute book - cost of acquisition will be the value at which assets was booked at time of succession not the cost incurred by partnership firm
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• Assessee Denied Deduction u/s 54F for Purchasing Two Properties Within One Year of Asset Transfer.

  Case-Laws - AT : Deduction u/s 54F - assessee purchased two properties - the requirement of the proviso is that if the assessee purchases any residential house other than the new asset within the period of one year after the date of transfer of original asset, deduction is not allowable u/s. 54F (1) - hence assessee is not eligible for deduction
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• Supreme Court: CIT(A) Can Allow Loss Set-Off via Revised Computation, Not Restricted by Section 139(5) Revised Return Rule.

  Case-Laws - AT : Power of CIT(A) to allow set off of the losses during the course of assessment proceedings by way of revised computation instead of revised return u/s 139(5) - Supreme court decision restrict power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the appellate authority - CIT(A) rightly allowed the claim
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• Depreciation Rate for Life-Saving Medical Equipment Set at 40%, Limited to Items in Appendix; Others at 15.

  Case-Laws - AT : Depreciation on life saving equipment - @15% OR 40% - list of life saving medical equipments has been given in this Appendix on which deprecation at the rate of 40% is permissible - it is not to be granted on each and every machinery installed at the hospital - depreciation on other machines will be restricted to 15% only
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Customs

• Board Issues Clarifications Preventing Revenue from Contesting Their Own Circulars; Legal Position Clearly Established.

  Case-Laws - HC : The Board, in the series of Corrigendums and Clarifications has put the position of law beyond pale of doubt and therefore, the Revenue cannot be permitted to argue against their own Circulars and Clarifications.
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• Rejection of Transaction Value for Imports Deemed Inappropriate Due to Exclusion from Market Enquiry Process, Violating Customs Valuation Rules.

  Case-Laws - AT : Valuation of imported goods - rejection of transaction value - as the appellants were not made part of market enquiry; copy of the report was not provided to them and values of contemporaneous imports of identical/similar goods were not considered/examined - values of disputed items were arrived at without following the CVR and without giving any cogent reasons then OIO is not maintainable
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DGFT

• Exporters Can Claim Enhanced MEIS Benefits for Certain HS Codes with Retrospective Rate Changes per DGFT Updates.

  Circulars : Provision for claiming additional benefits under MEIS for HS Codes for which rates were enhanced with a retrospective effect
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FEMA

• Petition Deemed Maintainable Despite No Absconder Declaration or Red Corner Notice Under FEMA Regulations.

  Case-Laws - HC : Maintainability of petition - Petition by a person who refuses to subject himself to Indian Laws - Petitioner has not been declared an absconder by the Indian State till date nor red corner notice has yet been issued in respect of the Petitioner - petition maintainable
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Corporate Law

• Creditor Defined: Stock Purchase Agreement Fits 'Otherwise' in Section 434(1)(a), Affecting Companies Law and Creditor Rights.

  Case-Laws - HC : Scope the term “Creditor” - expression 'creditor, by assignment or otherwise' - the stock purchase agreement certainly qualifies and neatly / snugly fits into the expression 'otherwise' occurring in Section 434(1)(a) of the said Act.
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IBC

• CIRP Application Blocked Due to Pre-Existing Dispute in Ongoing Bombay High Court Litigation Over Foreign Decree Claim.

  Case-Laws - AT : Admissibility of CIRP application - pre-existing dispute - Admittedly, Appellant is pursuing the litigation before the Bombay High Court in regard to the foreign decree and claim payable - adjudication is sought in regard to foreign decree obtained ex-parte falls within the purview of a pre-existing dispute placing an embargo on the powers of Adjudicating Authority to initiate CIRP at the instance of a Corporate Debtor
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Service Tax

• Exemption Denied for Technology Transfer Services Due to Non-Compliance with R&D Cess Payment and Record-Keeping Requirements.

  Case-Laws - AT : Availment of exemption Notification against payment of R&D Cess - receipt of transfer of technology services from abroad - when the appellants have admittedly not fulfilled both the conditions as regards payment of R & D Cess before payment of service tax and maintenance the records so as to establish the linkage between the invoices of the R & D challans - benefit of exemption not available
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• EPF and ESI Contributions Excluded from Gross Amount for Service Tax u/s 67.

  Case-Laws - AT : Valuation - inclusion of component of EPF, ESI - statutory dues - the appellant has deducted the contributions on behalf of principal employer, that is recipient of the service, for remittance to the competent authority - The contributions made towards PF & ESI is, therefore, not required to be added for the purpose of calculation of the gross amount u/s 67
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Central Excise

• CENVAT Credit Allowable for Expansion of Existing Production Capacity; Services Not Excluded Under Post-April 2011 Rules.

  Case-Laws - AT : CENVAT Credit - setting up of the factory OR expansion of existing production capacity - since the factory is already existing and running its production, it is only expansion of existing production capacity then the services were not excluded in the exclusion category as brought in definition of input service w.e.f. 01.04.2011 - credit allowable
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• CENVAT Credit Approved for Factory Telephone and Mobile Services Used by Staff, Bills in Company's Name.

  Case-Laws - AT : CENVAT Credit - telephone/ mobile services - There is no dispute that telephone is installed in the factory of the appellant and the same is used by the staff for the factory activities and the bills of the telephone/ mobiles are in the name of the Company - credit is admissible
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• Court Sets Aside Order Due to Lack of Cross-Examination in Goods Classification Case; Violates Natural Justice Principles.

  Case-Laws - AT : Wrong classification of goods - Cigar or Cigarette - cross-examination of witnesses - it is incumbent on the adjudicating authority to cross examine the persons whose statements were recorded by the investigating agency, only thereafter such statements can be used for adjudication of the SCN - Since admittedly cross examination of 17 persons has refused, there is clear violation of principles of natural justice - impugned order set aside the remanded
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• 1434-Day Appeal Delay Condoned Due to Illness and Document Misplacement Under Central Excise Act Section 35B(3.

  Case-Laws - HC : Condonation of delay of 1434 days - Section 35B(3) of CEA - delay due to illness of concern persons and misplacement of paper due to loss of memory - sub-section (5) gives discretion for the Tribunal to condone the delay but no outer limit is prescribed, curtailing the power of the Tribunal to condone the delay beyond a period - being satisfied that there was sufficient cause - delay condoned
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Case Laws:

• GST

• 2019 (8) TMI 246
  Seizure of goods with vehicle - Sections 129 and 130 respectively of the GST Act, 2017 - HELD THAT:- This writ-application has something to do with the Sections129 and 130 respectively of the GST Act, 2017. This Court is examining the larger issues involved so far as the applicability of the two sections referred to above is concerned. An amount of Rs. 2,06,680/Plus (+) Rs. 26,440/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.

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• 2019 (8) TMI 245
  Maintainability of petition - detention under Section 129 (1) of KGST/CGST and IGST Act - HELD THAT:- At threshold, writ petitions are premature without giving breathing time for the respondent, petitioner has rushed to this Court. Petitioner is permitted to file additional explanation, if any, within a period of ten days from today on receipt of additional explanation of the petitioner concerned, authority is hereby directed to pass speaking order and communicate the same at the earliest since seized materials are stated to be perishable goods. The above exercise shall be completed within a period of four weeks from today. Petition disposed off.

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• Income Tax

• 2019 (8) TMI 244
  Provisional attachment to protect revenue u/s 281B - AO also treated Long Term Capital Gains as a business receipt - demand of Rs. 873.4 crores outstanding - It was only meant to protect the interest of the revenue during the pendency of the assessment proceedings and prior to the determination of the final tax demand - petitioner contended that demand is finalized hence attachment is illegal - HELD THAT:- Respondents have already collected over Rs. 185 crores from the Petitioner, as against the total demand raised of around Rs. 873.4 crores. The year-wise percentage of demand collected for the years 2012-13, 2016-17 and 2017-18 is over 21%. In the circumstances the Court sees no reason why the attachment order under Section 281-B of the Act should be allowed to continue. Likewise, the attachment of the two bank accounts of the Petitioner under Section 226 (3) of the Act also does not appear to be justified. The Court accordingly sets aside the impugned order dated 19th January, 2019 passed by Respondent No. 1 under Section 281-B of the Act, thereby removing the attachment of the Petitioner s assets mentioned therein and in particular also removing the attachment of the bank accounts by Respondent No.1 in exercise of powers u/s 226 (3) of the Act. Aggrieved by the order declining to stay the demand, the Petitioner has approached the Principal CIT by way of a petition, which is pending consideration. The said petition may now be disposed of expeditiously, in accordance with law. Writ petition is allowed in the above terms.

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• 2019 (8) TMI 243
  Opportunity of personal hearing before the Appellate Authority - notice of hearing unserved - HELD THAT:- This is a case where, it is mentioned in the impugned orders that notice of hearing was sent to the writ petitioner, but the same was returned unserved. This according to the impugned orders was on 19.02.2019. Though it is mentioned in impugned orders that notices remained unserved, it has also been recorded in the impugned orders that an adjournment was sought on 08.03.2019. Learned Revenue counsel, pointing out this aspect of the matter, submitted that it cannot be gainsaid that the writ petitioner has not been given an opportunity as the writ petitioner has sought adjournment. However, the writ petitioner contends that the notices said to have been sent regarding personal hearing were never served on the writ petitioner and therefore, contentions to the contrary are untenable. Without entering upon the factual dispute and embarking upon the exercise of resolving the factual dispute regarding service of notice regarding personal hearing, this Court is of the considered view that it would serve the ends of justice and would serve the purpose of the writ petitioner assessee as well as protect the interests of revenue, if one opportunity of personal hearing is granted to the writ petitioner. This course is being adopted as there is no disputation that it is statutorily imperative to give a personal hearing, while disposing of an appeal u/s 250. This Court is of the considered view that it would be appropriate to put the writ petitioner on terms or in other words, it would be appropriate to direct the writ petitioner to pay costs as a condition precedent for the personal hearing. To be noted, this was the alternate submission of Revenue counsel made without prejudice to the main contention.

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• 2019 (8) TMI 242
  Proceedings under Rule 11(1) - recovery proceedings - attachment orders - alternative remedy - HELD THAT:- In the light of the respondent now dealing with the matter in accordance with the procedure prescribed / adumbrated under the Rules (as already alluded to supra) this Court refrains itself from expressing any view or opinion on the merits of the matter as that will impact the proceedings before the respondent. Though obvious, it is made clear that orders passed by the respondent under Rule 11(4), which will be culmination of the writ petitioner s application dated 25.03.2019, will be open to challenge in a manner known to law, if it is adverse to the writ petitioner. Obviously, if it is in favour of the writ petitioner, that would be the end of the matter as far as writ petitioner s campaign qua impugned order is concerned. In the light of no opinion being expressed on merits, it is made clear that other legal recourse, if any available to the writ petitioner in law if resorted to, post respondent passing orders on 25.03.2019 claim / objections of writ petitioner will not be impeded by the instant order. This writ petition is disposed of, recording the submissions of the lone respondent that orders under Rule 11(4) of Schedule II will be passed within a fortnight from the date of receipt of a copy of this order, obviously order in 25.03.2019 claim / objections filed by the writ petitioner.

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• 2019 (8) TMI 241
  Non-filing of a return under sections 139(1) or 139(2) - weather unabsorbed depreciation cannot be claimed in a proceeding u/s 148 - HELD THAT:- Non-filing of a return under sections 139(1) or 139(2) of the said Act was not involved. Neither is there any ratio in favour of the assessee in HARYANA HOTELS LTD. [ 2005 (2) TMI 63 - PUNJAB AND HARYANA HIGH COURT] . This passage from the judgment can in no way be taken to be a statement of a legal proposition that on failure to file a return under section 139(1) and 139(2) of the said Act, the claim of unabsorbed depreciation can be entertained in a section 148 proceeding. More importantly, we are bound by the said Division Bench judgment of our Court. We strongly resent the wastage of precious time of this Court by Mr. Bhaumik by trying to whip up a dead horse. All the questions referred to in this reference application are answered in favour of the revenue and against the assessee.

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• 2019 (8) TMI 240
  Penalty u/s 271-D - default u/s 269SS - HELD THAT:- Assessee is an agriculturist selling his crop through M/s Kundan Lal Sons, Panchkula and he was receiving the amount against the crops from the said Commission Agent, therefore it cannot be said that the assessee received or paid amounts in cash as a deposit or loan rather the amounts received in cash were against the agriculture crops, therefore the provisions of Section 269SS and 269T of the Act were not applicable to the facts of the assessee s case. See HISSARIA BROTHERS. [ 2006 (7) TMI 163 - RAJASTHAN HIGH COURT]. In the present case also the amount in question was received by the assessee against the sale of the crops so it was neither the loan nor the deposit, therefore the provisions of Section 269SS of the Act were not applicable and as such penalty levied by the A.O. and sustained by the Ld. CIT(A) under section 271D of the Act was not justified, accordingly the same is deleted. Penalty u/s 271E - contravention of the provisions of Section 269T - making the payments of the amount received by the assessee against the crop from the Commission Agent - HELD THAT:- As already mentioned in the former part of this order while deciding the issue relating to the levy of penalty under section 271D of the Act, that the transactions between the assessee and the Commission Agent were relating to the sale of agriculture crops, therefore, there was no receipt or repayment of loan or deposit, accordingly penalty levied by the A.O. and sustained by the CIT(A) under section 271E of the Act is also deleted. - Decided in favour of assessee.

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• 2019 (8) TMI 239
  Exemption u/s 11/12 - claim denied due to non-furnishing of certificate u/s 12A - HELD THAT:- Section 12AA governs the procedure for Registration and revocation of Registration once granted. Sub-section (3) of the said Section mandates that Commissioner or the Principal Commissioner as it may, without affording a hearing to the Trust or Institution in terms of the said provision, the Certificate once granted u/s 12A cannot be cancelled. The Statute mandates that a written order be passed and that too only after giving the assessee a reasonable opportunity of being heard. No such written order revoking the Registration has been made available by the Revenue in the present proceedings. In the facts of the present case, nothing has been placed by the Revenue on record to show that the Registration granted to the assessee vide order dated 23.04.1982 has been subsequently cancelled or revoked. When the above facts, submissions and the conclusion of the CIT(A) are taken into consideration we are of the view that the inference drawn by the CIT(A) that the assessee had been granted registration u/s 12AA has to be upheld. Accordingly, we find no good reason available on record to vary the conclusion arrived at. - The departmental ground in view thereof is dismissed. Exemption u/s 10(23C)(iiiab) - request for remand as the said claims were never considered by the AO as no such claim was made before the AO - HELD THAT:- AO has examined the facts and rejected the claim holding that the assessee cannot change its stance and claim exemption in a different section and noting the fact that in earlier years, no such claim was made and in the year under consideration it was made, due to non-furnishing of Certificate u/s 12AA. He further took note of the fact that the term substantially financed by the Government has been defined from 01.04.2015 prospectively through explanation below section 10(23C)(iiiab). Considering the provisions, he holds that, No benefit of it can be claimed retrospectively for any earlier year. In view of this reasoning, he relies to hold that, I am not inclined to grant exemption u/s 12A or 10(23C)(iiiab) of the I.T.Act to the assessee - Thus, we see that the departmental arguments that the claim was not made before the AO and the CIT(A) having considered the claim afresh warrants a remand, we find is not borne out from record. The prayer has to be rejected. Substantially financed by the Government of Haryana - percentage of government grant is 60% of the total receipts - covered u/s 10(23C)(iiiab) - scope of amendment - HELD THAT:- In the facts of the present case, the position on facts as considered and available on record is that about 60% of the institution s total receipts have been received from the Government. This finding of fact as noted has not been upset by the Revenue. Thus, where on facts the finding of fact arrived at by the CIT(A) that the assessee has received government aid to the tune of 60% of its receipts remains unrebutted by the Revenue, we find no merit in the departmental appeal. Though we have concluded on a consideration of facts, provisions and position of law in favour of the assessee we may also make a reference to the decision of the Hon ble Bombay High Court in the case of DIT(E) Vs Tata Institute of Social Sciences [ 2019 (3) TMI 1619 - BOMBAY HIGH COURT] in support of the conclusion drawn. It is unambiguously clear that even though the provision was held to be prospective, the Court held that the legislative intent could well be used as an aid in construing the provision which had remained ambiguous in the absence of the amendment. Thus, on a consideration of the facts, provisions and the position of law, we find that the second issue framed by us also has to be decided in favour of the assessee by way of an affirmative yes The departmental ground, accordingly, in view thereof fails. Said order was pronounced on the date of hearing itself in the presence of the parties. - Decided against revenue.

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• 2019 (8) TMI 238
  Levy of penalty u/s 271AAA - statement recorded u/s 132(4) - sum surrendered during the search - HELD THAT:- Assessee does not satisfy the one limb of first condition of section 271AAA(2) of the Act, i.e., admission of undisclosed in a statement u/s 132(4). As far as second limb of first condition that to specify manner of deriving the undisclosed income and second condition of substantiating the manner in which undisclosed income was derived is concerned, the Assessing Officer during assessment proceeding asked the assessee to specify and substantiate the manner of deriving the undisclosed income, however, details were not provided except the claim that the surrender/declaration was to buy peace. We are the view that the assessee cannot be said to have not satisfied the condition of specifying the manner of deriving undisclosed income as per section 271AAA in respect of surrender of amount of Rs. 20 lakh and Rs. 5 lakh against investment in property and jewellery respectively. But, if the assessee fails to satisfy any one of the conditions of section 271AAA(2), the assessee cannot escape the penalty under section 271AAA(1). Since we have already answered that the assessee failed to satisfy the one limb of first condition of section 271AAA(2), i.e., admission of undisclosed income in a statement u/s 132(4), the assessee is liable for penalty under section 271AAA. The grounds of the appeal are accordingly dismissed.

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• 2019 (8) TMI 237
  Gain earned on sale of investments - sale of shares - Capital gain or business income - assessee is not trading in shares and securities and shares in these companies were held as investment in the balance sheet - dept. alleged that that shares were purchased as part of business strategy with clear intention to sell them at profit - HELD THAT:- Assessee invested in shares of specific healthcare provider companies, as mentioned hereinabove during years under consideration. From objectives of assessee in Memorandum of Association placed in paper books, it is observed that assessee was to purchase, lease or otherwise acquire, establish, maintain, operate, run, manage or administer hospitals, Medicare, health care, diagnostic, healthcare and research centres. Assessee thus invested in these companies with clear intention of furthering primary objective in expanding its business in healthcare sector. Further, it is also not denied that, these investments in specific companies are part of business agreement, as per its commitment to subscribe to shares, subject to fulfilment of certain conditions. Further, it is observed that assessee sold shares invested in these companies to India Advantage Fund-V, a trust holding majority of shares of assessee. To verify actual intention of assessee behind these investments, we called for agreements entered into by assessee with these companies. Ld.AR produced all agreements relevant for years under consideration, and also submitted that, these were not considered by Ld.AO/Ld.CIT (A). We are therefore inclined to set aside this issue back to Ld.AO. Ld.AO shall verify agreements and ascertained true intention of assessee behind such huge investments. Assessee shall by way of corroborative evidences establish its claim and if satisfied Ld.AO shall consider the issue on the tests laid down by various courts relied upon by assessee. Appeal filed by assessee allowed for statistical purposes.

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• 2019 (8) TMI 236
  Allowable business expenses - Disallowance of business promotion expenses, gift to doctors and entertainment expenses - HELD THAT:- As decided in own case [ 2018 (10) TMI 54 - ITAT AHMEDABAD] looking to the nature of expenditure and nature of business activity of the assessee, it would reveal that these expenditures were not wholly required, in a sense, for the purpose of business or could it be termed that these expenses were exclusively incurred for the purpose of business. CIT(A) has examined this aspect in details and made reference to the decision of Hon ble Himachal Pradesh High Court, and thereafter held that these expenses were not incurred for the promotion of the business. As pointed out by the ld.counsel for the assessee, similar expenses were disallowed to it in earlier assessment years upto the level of the Tribunal, though order of the Tribunal has not been placed on record by either parties. But statement made at the Bar is sufficient for holding that such expenditure has been disallowed in the past also. Thus, in order to maintain consistency, these grounds of appeals are rejected in both the assessment years. Depreciation on life saving equipment - @15% OR 40% - HELD THAT:- As decided in own case [ 2018 (10) TMI 54 - ITAT AHMEDABAD] we find that a list of life saving medical equipments has been given in this Appendix on which deprecation at the rate of 40% is permissible. Where rate of depreciation has been provided on specific machinery, it is not to be granted on each and every machinery installed at the hospital. Thus, the ld.CIT(A) has rightly rejected the stand of the assessee. The depreciation is to be granted on the basis of rate provided in the table given in the Income Tax Rules. The machinery on which depreciation has been claimed by the assessee at 40% is not being provided in the Appendix. Therefore, the depreciation on such machinery is at 15% which has rightly been upheld by the ld.CIT(A) Disallowance of depreciation on certain electronical installation - rate of 15% which has been restricted by the AO to 10% also confirmed by CIT -A - HELD THAT:- We find that depreciation has been restricted at the rate of 10% by the ld.AO because the assessee failed to demonstrate that electrical panel installed by it was part of the machinery. He considered electrical installation as independent asset than the medical equipments. CIT(A) has considered all these aspects in right perspective and no interference is called on this issue. Hence, this ground of appeal is also rejected. Assessee appeal dismissed.

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• 2019 (8) TMI 235
  Penalty u/s 271(1)(c) - immunity available to the assessees under sub-clause (a) and (b) of Explanation 5A - During the course of search various loose papers, documents electronic data were found and seized - assessments were finalized u/s 153A r.w. section 143(3) vide which the ld.AO has accepted the returned income - disclosure of additional income - HELD THAT:- Tribunal in was unanimous in its approach in holding that if during the course of search any incriminating material; money, bullion or jewellery was not unearthed, then additional income declared by the assessee in response to notice under section 153A, the deeming fiction of concealment under Explanation 5A would not be attracted. We do not have any hesitation in concurring with the above construction of Explanation 5A. But basic difference of applying it on the facts would arise as under in the present appeal. A perusal of Note No.3 would indicate that the assessee has admitted discovery of loose papers, documents/electronic data and whose basis he has prepared his return showing additional income. In the face of the above discovery of evidence, it could not be said that Explanation 5A is not applicable. Therefore, the facts in the present appeal are quite distinguishable. Explanation 5A has been invoked on the basis of seized material admitted by the assessee persuading it to disclose additional income. - Decided against assessee.

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• 2019 (8) TMI 234
  Disallowance on account of set off of the losses - claimed during the course of assessment proceedings by way of revised computation instead of revised return u/s 139 (5) - HELD THAT:- We find the AO rejected the claim of the assessee on the ground that the loss on Futures and Options cannot be claimed by filing a revised computation since assessee has not filed a revised return within the meaning of section 139 (5) and, therefore, following the decision of Hon ble Supreme Court in the case of Goetz India Limited [ 2006 (3) TMI 75 - SUPREME COURT] he rejected the claim. We find the Ld. CIT(A) following the decision of Hon ble Supreme Court in the same case allowed the loss claimed by the assessee to be set off against the business profit. We do not find any infirmity in the order of the Ld. CIT(A) in allowing the claim of the assessee on account of loss of future and option by filing a revised computation during the assessment proceedings instead of filing a revised return of income. Hon ble Delhi High Court in the case of Jai Parabolic Springs Ltd. [ 2008 (4) TMI 3 - DELHI HIGH COURT] that the Hon ble Supreme Court in the case of Goetze (India) Ltd. (supra) has made it clear that the decision was limited to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the appellate authority. The ground raised by the revenue is accordingly dismissed. Bogus expenses addition - construction material purchased - assessee failed to prove the identity, credit worthiness and genuienss of the transaction - AO issued notices u/s 133(6) to these parties, in most of the cases notices were received back with remarks no such party exists in some there were huge differences - CIT(A) find that GP rate of each property is more or less 8% to 13% except two properties - HELD THAT:- We are of the considered opinion that out of the total disallowance of Rs. 4,33,89,009/- only the amount of Rs. 52,85,490/-relating to the project J-174 is doubtful and the balance amount should not have been added by the Assessing Officer especially when the assessee has made payments against the sundry creditors in the subsequent years or has offered to tax the same in the return of income of subsequent years. We, therefore, uphold the order of the CIT(A) to the extent of Rs. 3,81,03,519/- (i.e. Rs. 4,33,89,009- 52,85,490). So far as the amount of Rs. 52,85,490/- relating to the project J-174 is concerned, it is the submission of the assessee that assessee has declared this amount in financial year 2018-19 as income i.e. assessment year 2019- 20 after court matter was settled. We, therefore, deem it proper to restore this issue to the file of the AO for the limited purpose of verification of the property in dispute i.e.J-174, the outcome of the court case, the settlement arrived at by the assessee and subsequent offer of the assessee for taxation during financial year 2018-19. AO shall decide the issue of allowability of Rs. 52,85,490/- as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the revenue on this issue is accordingly partly allowed for statistical purpose. Addition made on account of cessation of liability u/s. 41 (1) - addition being the static creditors on the ground that the assessee has offered the same for taxation during the course of assessment proceedings - assessee subsequently retracted the surrender - HELD THAT:- CIT(A) deleted the addition on the ground that assessee in the subsequent letter to the AO has not only retracted from the surrender but also had filed detailed explanation that the creditors were not static since some of the creditors in subsequent period were squad off / either paid off or written off on account of building material of J-174 project. Since the assessee had already retracted from the surrender made before the AO and the AO is fully aware of the same, therefore, ignoring such letter of retraction the AO could not have made the addition on account of static creditors by invoking the provisions of section 41 (1). Since the order of the CIT(A) on this issue is based on facts and the order is a reasoned one and since the Ld. DR could not bring any material to take a contrary view than the view taken by the CIT(A) on this issue, therefore, we do not find any infirmity in the order of the CIT(A) on this issue and accordingly uphold the same. The ground raised by the revenue is accordingly dismissed.

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• 2019 (8) TMI 233
  Exemption u/s 11 - withdrawal of registration u/s 12AA from AY 2009-10 - allegation of no charitable activities and is carrying out commercial activities - payment to specified person - whether the assessee is holding the benefit of registration u/s 12A of the income tax act or not? - HELD THAT:- Merely submissions of the agreement by the assessee did not prove that the services are at fair market value and no benefit of accrued to the specified persons. For the CIT exemption, merely reproducing the clauses of the agreement also does not justify that there is any benefit accrued to the specified persons. There is no reason to hold that in absence of any benefit to the specified persons, the registration granted to the assessee trust can be withdrawn. Further if the benefit is granted to the specified persons, then after 01/10/2014, the CIT exemption is empowered to withdraw the registration u/s 12 AA. We set aside the whole issue back to the file of the learned CIT exemption with a direction to the assessee to substantiate before him that by making such a huge payment to the specified persons from assessment year 2009 10, no benefit has accrued to the specified persons as envisaged u/s 13 (1) - set aside to the file of the learned CIT exemption for fresh determination about withdrawal of registration u/s 12 AA (3) r.w.s. 12 AA (4) with effect from assessment year 2009 10. Appeal of the assessee partly allowed for statistical purposes.

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• 2019 (8) TMI 232
  Deduction u/s 54F - assessee purchased two properties - whether the assessee is eligible for deduction u/s. 54F in respect of both the house property purchased by the assessee or not? - scope of amendment - HELD THAT:- In view of the specific provision of section 54F, after the amendment w.e.f. 01.04.2015 i.e. Assessment Year 2015-16, deduction is allowable u/s. 54F(1) only in respect of one residential house purchased or constructed by the assessee and hence, on this aspect, we find no infirmity in the order of CIT(A) and we hold that the assessee is not eligible for deduction u/s. 54F(1) in respect of both the house properties purchased by the assessee. In fact, the requirement of the proviso is this that if the assessee purchases any residential house other than the new asset within the period of one year after the date of transfer of original asset, deduction is not allowable u/s. 54F (1). Hence whether the deduction u/s. 54F (1) is allowable in respect of second property or first property, it is not material because in both the situations, the proviso will be operating and as a result, the assessee will not be eligible for deduction u/s. 54F (1). In view of these facts and legal position, we hold that there is no infirmity in the order of CIT(A) as per which he has held that assessee is not eligible for deduction u/s. 54F (1) in the facts of present case. - Decided against assessee.

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• 2019 (8) TMI 231
  Rectification u/s 254 - income from sale of shares have been treated as capital gains OR business income - HELD THAT:- A perusal of the above facts clearly indicate that the applicant has not pointed out any mistake apparent from the record. A mistake apparent on the record must be an obvious mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. This view is supported by the decision of the Hon ble Supreme Court in T.S. Balaram, ITO v. Volkart Bros . [ 1971 (8) TMI 3 - SUPREME COURT] , Master Construction Co. P. Ltd. v. State of Orissa , [ 1965 (12) TMI 108 - SUPREME COURT] , Karam Chand Thapar Bros. (Coal Sales) Ltd. v. State of U.P. [ 1976 (7) TMI 143 - SUPREME COURT] . In fact, not a single error in the impugned order has been pointed out by the applicant. What the applicant wants is a review of the order passed by the Tribunal. The Tribunal is a creature of the statute. The Tribunal cannot review its own decision unless it is permitted to do so by the statute. The Hon ble Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji [ 1970 (3) TMI 163 - SUPREME COURT] that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It is a settled law that the Tribunal has no power to review its order in the garb of section 254(2) of the Act

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• 2019 (8) TMI 230
  TDS u/s 194C - Disallowance of Service Coupon u/s. 40(a) (ia) - default u/s 201(1) - HELD THAT:- Payments made by the assessee to its dealers for providing free services in lieu of service coupons is not in the nature of any reimbursement of expenditure incurred by such dealers, and is in fact in the nature of payment of consideration pursuant to a contract, as per which the dealer provides such services to the ultimate customers. Accordingly, in our considered view the assessee was obligated to have deducted tax at source at the time of making of such payments towards service coupons to its dealers. As is discernible from the orders of the lower authorities, as the assessee had failed to deduct tax at source as per mandate of Sec.194C, therefore, the lower authorities had rightly concluded that the said amount was liable to be disallowed under Sec. 40(a)(ia) of the I-T Act. As the assessee which remained under an obligation to deduct tax at source under Sec.194C had failed to comply with the said statutory obligation, therefore, subject to our observations recorded herein below the provisions of Sec.40(a)(ia) were clearly attracted. Disallowance u/s 40(a)(ia) is assessee is not a Assessee in default under the first proviso to sub-section (1) of Sec.201 - Scope of second proviso of Section 201(1) inserted vide the Finance Act, 2012 w.e.f 01.04.2013 - HELD THAT:- As per the second proviso of Sec. 40(a)(ia), where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum, but is not deemed to be an assessee in default under the first proviso to sub-section (1) of Sec.201, then, for the purpose of Sec. 40(a)(ia) it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee, subject to the condition that the said resident payee satisfies certain conditions viz. (i) has furnished his return of income under Sec.139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income. At this stage, we may herein observe that though the second proviso had been made available on the statute vide the Finance Act, 2012 w.e.f 01.04.2013, however, the same as held in the case of CIT Vs. Ansal Land Mark Township (P) Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] shall be applicable retrospectively, i.e even for the years prior to A.Y 2013-14. A similar view had also recently been taken by the Hon ble High Court of Punjab Haryana in the case of PCIT Vs. Mobisoft Telesolutions Pvt. Ltd. [ 2018 (10) TMI 989 - PUNJAB AND HARYANA HIGH COURT] while disposing off the appeal of the assessee before them for A.Y 2011-12. We are of the considered view that in case the assessee satisfies the conditions envisaged in sub-section (1) of Sec.201, then it cannot be held to be an assessee in default, and as per the second proviso of Sec. 40(a)(ia) no disallowance would be called for in its hands. We thus for the said limited purpose restore the matter to the file of the A.O for making necessary verifications. In case the assessee is able to demonstrate before the A.O that it had duly complied with the conditions envisaged in the second proviso of Sec.40(a)(ia) r.w.s 201(1), then the disallowance to the said extent made under Sec. 40(a)(ia) in its hands shall stand vacated.

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• 2019 (8) TMI 229
  Determination of capital gain in the hands of company who has succeeded partnership firm - cost of acquisition - Applicability of a subsequent amendment brought after the filing of the return of income - scope of amended provisions of section 49(1)(iii)(e) - retrospective or prospective - Addition of capital gain arising from sale of immovable property - considering the cost of acquisition as in the hand of the predecessor partnership firm which was succeeded by the assessee - Assessee claimed that cost of acquisition will the value on which assets was taken from partnership firm - HELD THAT:- Since the transfer of capital asset by a firm to the company as a result of succession of the firm by the company falls under section 47(xiii) was not covered by the pre amended provisions of section 49, and therefore, to bring the nature of transfer as provided under section 47(xiii), the amendment was brought into Statute whereby sub-clause (e) to section 49(1)(iii) was inserted. In the absence of this amendment, the case of transfer falling under section 47(xiii) was outside the ambit of mischief of deeming fiction of section 49. Therefore, the purpose of the amendment was to bring all these cases in the ambit of deeming fiction as provided u/s 49. It is also not in dispute that at the time of filing the return of income on 30th September, 2009 the law which was amended by Finance Act, 2012 was not in the Statute. Hon ble Supreme Court in case of CIT vs. Hindustan Electro Graphites Ltd [ 2000 (3) TMI 2 - SUPREME COURT] while dealing with the question of applicability of a subsequent amendment brought after the filing of the return of income has held that the law prevailing at the time of filing of the return has to be applied and the amendment which could not have been known before the Finance Act came into force cannot be applied for additional tax liability to be levied. It will amount to punishing the assessee for no fault of his. Law to be applied which is in force in the relevant assessment year unless and otherwise provided expressly or by necessary implication a clarificatory amendment by insertion of an explanation can be read into the main provision but if a change is brought in the existing law by insertion of a new provision then the same cannot be applied in the case when no such law was in force at the relevant point of time and, therefore, a new tax liability cannot be created by a subsequent amendment in respect of a transaction as well as the return of income filed when such law was not in the Statute book. Hence we hold that the amended provisions of section 49(1)(iii)(e) cannot be applied in the case of the assessee simply because at the time of filing of the return of income the said provision was not in force. Accordingly, the addition sustained by the ld. CIT (A) by applying the amended provisions of section 49(1)(iii)(e) is not sustainable and liable to be deleted. - Decided in favour of assessee.

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• 2019 (8) TMI 228
  Exemption u/s 10(23C)(iiiad) entitlement - charitable activity u/s 2(15) - surplus/excess of income - assessee is an educational institution working as authorized learning centre of PTU [ Punjab Technical University] - HELD THAT:- Assessee is an authorized learning centre of PTU under the distance education programme. As per the module of operation, the assessee as a learning centre affiliated with PTU is obligated to carry out educational programmes as prescribed by the university and make necessary provisions as connected with responsibility for education delivery. The assessee society being an authorized learning centre has to honour the obligations set out by PTU for providing education to enrolled students and has to employ teachers for taking classes of enrolled students. In fact, the assessee which is an educational institution is imparting education through distance learning route in the society by running a learning centre affiliated to PTU. We are unable to persuade ourselves to subscribe the observations of the lower authorities that the distance learning provided by the assessee to the students in its capacity as a learning centre of PTU would not fall within the realm of the definition of the term education as envisaged in Sec. 2(15). As per the literal meaning education is a process for facilitating learning or the acquisition of knowledge, skills, values and habits. Insofar the activities of the assessee society in its status as that of a learning centre are concerned, we find that the assessee in order to facilitate delivery of education provides the infrastructure along with the faculty as specified by the university; carries out timely completion of the courses; maintains records of the students; designs presentations, projects, assignments; conducts internal exams and provide internal assessment; conduct seminars and open house discussions from time to time and does all necessary acts as required by the university, therein rendering it responsible for delivery of education to the students. I mpact of deduction of TDS u/s 194H by PTU - agreement between centre and university that centre will get 45% of semester fee paid to University - HELD THAT:- Now when as per the PTU distance education programme/arrangement between PTU and the assessee learning centre, it has been specifically stated that the assessee would be entitled to the share of 45% of the semester fee collected by the university (after separating exam fee), therefore, the mere fact that PTU had deducted TDS under Sec. 194H while making the said payment to the assessee would in no way lead to recharacterization of the said amount in the hands of the assessee. In sum and substance, the nature of receipt/amount in the hands of the assessee learning centre would continue to be governed and regulated as per its arrangement with the university, and not by the nomenclature given by the university i.e. PTU while making the said payment. Tribunal after deliberating at length on the aforesaid facts observed that the lower authorities had erred in concluding that the services rendered by the assessee were to be equated with that of a coaching institute. In fact, it was observed by the Tribunal that as the assessee was rendering formal education, therefore, it clearly fell within the realm of charitable activities as defined under Sec. 2(15). As the assessee in the case before us was providing formal education, therefore, the lower authorities had erred in taking a contrary view and had wrongly concluded that the surplus shown by the assessee was not eligible for exemption under Sec. 10(23C)(iiiad) - Decided in favour of assessee.

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• 2019 (8) TMI 227
  Reopening of assessment u/s 147 - validity of notice u/s 148 - HELD THAT:- The text of the reasons recorded do proves that virtually there has been no application of mind by the learned Assessing officer so as to form satisfaction that any income has escaped assessment. The text of the reasons recorded do virtually proves that the reasons recorded in the case in hands are no reasons in the eye of law. The so called reasons instead of being reasons to believe are solely reasons to suspect . The investment in premium paid need not necessarily come from the income. It may be out of past savings, loans, gifts, liquidation of investment or sale of another property etc. Notice under section 148 cannot be issued for verification of information, but here the jurisdictional satisfaction of the essential requirement has to be shown that there has been reason to believe that there was income chargeable to tax . The reasons recorded by the learned Assessing officer should speak his mind and the basis for coming to conclusion that investment in premiums had been sourced from income, which should have been disclosed and had not been shown therefore, there was escapement of income. There must be direct nexus between the material and belief of escapement. This mental exercise must be self-evident from the reasons recorded. Reasons must be self-speaking and self-defending. The purported reasons do not show any such exercise by the learned Assessing officer and hence he wrongly acquired the jurisdiction in the matter. We are of the considered view that the reasons recorded by the Assessing officer, are no reasons in the eye of law for assuming jurisdiction in this case. - Decided in favour of assessee

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• 2019 (8) TMI 196
  MAT computation - MAT credit under Section 115JAA - refusal to allow credit for surcharge and education cess - Department submits that the term Tax as defined under MAT provisions in Section 115JB for calculating book profit cannot be extended to provisions for calculating carry forward and set off of MAT credit. Surcharge and education cess do not fall within the category of income tax - HELD THAT:- Respondent No. 2, being Principal Commissioner of Income Tax, for the same assessment year, that is assessment year 2015-2016, has not considered the order passed by the Commissioner (Appeals) on 1st September, 2016. While passing his order on 28th February, 2019, the respondent No. 2 considered the judgement in Srei Infrastructure Finance Ltd. Vs. Deputy Commissioner Of Income-Tax [ 2016 (8) TMI 967 - CALCUTTA HIGH COURT] but failed to distinguish why both the cases are found different from each other. For the above reasons, I quash the order dated 28th February, 2019 and remand the matter back to the respondent No. 2 being Principal Commissioner of Income Tax, to consider and pass a reasoned order after giving an opportunity of hearing to the petitioner, preferably within a period of eight weeks from date.

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• 2019 (8) TMI 195
  Assessment u/s 153A - absence of any incriminating documents seized during the course of search - HELD THAT:- AO justification in making the addition in non abated assessment orders under Section 153A read with Section 143 has been answered against the Revenue in GAHOI DAL OIL MILLS [ 2019 (7) TMI 1050 - MADHYA PRADESH HIGH COURT] AND VICE-VERSA [ 2018 (8) TMI 1629 - ITAT AGRA]. - Decided against revenue

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• 2019 (8) TMI 194
  Addition on NRI Mobilization expenses - whether said amount was expended towards administrative and other related expenses and the entire expenditure was for the purposes of head office and, therefore, no restrictions in terms of Section 44C? - Addition on account of replacement of shares by the assessee - whether such loss had to be allowed as business expenditure - HELD THAT:- SLP dismissed.

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• 2019 (8) TMI 193
  Accrual of income - Surcharge levied but not realized - Surcharge for delayed payment contemplated in the bills raised by the assessee and its accounts - whether it would invite payment of tax dehors recovery/payment/receipt of surcharge? - assessee following the mercantile system of accounting - HELD THAT:- No reason to interfere with the order of the High Court. The Special Leave Petition is, accordingly, dismissed. Pending application(s), if any, stand disposed of.

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• 2019 (8) TMI 192
  Accrual of income - accounting treatment in respect of prepaid cards - Rendering of Services - Income recognition - Accounting standards - amount received on sale of prepaid cards to the extent of unutilized talk time - assessee was engaged in the business of providing basic telecom services in the State of Rajasthan and had both prepaid and postpaid subscribers - HELD THAT:- No reason to interfere in these matters. The special leave petitions are, accordingly, dismissed. Pending application(s), if any, shall stand disposed of.

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• 2019 (8) TMI 191
  Reopening of assessment - reason to believe - share application moneys received - HELD THAT:- SLP dismissed.

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• 2019 (8) TMI 190
  Penalty u/s 271(1)(c) - defective notice - non specification of charge - non striking irrelevant portion of the notice - HELD THAT:- As carefully gone through the notice issued u/s. 274 r.w.s. 271 of the Act narrated in para 4 of this order. As seen from the above notice issued u/s. 274 of the Act, AO has not struck out the irrelevant portion of the notice. In other words he has not specified whether he is levying penalty for concealment of particulars of income or furnishing of inaccurate particulars of income. As held by the Karnataka High Court in the case of CIT Anr. vs. M/s. SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] that the notice issued by the Assessing Officer u/s. 274 r.w.s 271(1)(c) is to be bad in law as it did not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. This view was confirmed by the Supreme Court in the same case, i.e., CIT Anr. vs. M/s. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] Penalty proceedings initiated by the AO is void ab initio and allow the appeal of the assessee. Since we have quashed the penalty proceedings itself, we refrain from adjudicating the other grounds of appeal raised by the assessee.- Appeal of the assessee is allowed.

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• 2019 (8) TMI 189
  Penalty u/s 271(1)(c) - difference of income disclosed in the return filed u/s.139(1) and return filed u/s.153A - addition of undisclosed income was based on the statement furnished under section 132(4) - HELD THAT:- Penalty under Explanation 5A to section 271 (1)(c), the of the Act can be attracted if the assessee was found to be the owner of any money, bullion, jewellery or other valuable article or thing or any income based on any entry in any books of account or other documents or transactions. But, in the case on hand, there was no such allegation made against the assessee either in the assessment or penalty or the CIT (A) order. Thus the issue arises whether the penalty can be levied under section 271 (1) (c) r.w. the explanation 5A of the Act merely on the basis of the statement furnished under section 132(4) of the Act. There cannot be any penalty under explanation 5 A to section 271(1)C of the Act merely on the basis of the statement furnished under section 132(4) of the Act, until and unless it supported with the incriminating document. Accordingly, we hold that there cannot be any penalty under section 271(1)C of the Act in the given facts and circumstances. Hence the ground of appeal of the assessee is allowed.

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• Customs

• 2019 (8) TMI 226
  Exemption of Customs Duty on import of raw sugar which was manufactured after refining into white sugar by the assessee and was finally exported through the third party - benefit of N/N. 43/2002-Cus. - Clarification by CBEC vide Circular dated 22.01.2007 - anvil of the Foreign Trade Policy for the period from 01.09.2004 to 31.03.2009 - HELD THAT:- The learned Tribunal has rightly held that the assessee could not be denied the benefit of exemption under the said Notification in view of the clarifications issued by the Board and the rigor of the condition No.[v] in the said Notification could not be applied to the assessee in the present case merely because the third party, viz., Merchant Exporter, availed the rebate of the export duty paid against the export made by it. The Board, in the series of Corrigendums and Clarifications has put the position of law beyond pale of doubt and therefore, the Revenue cannot be permitted to argue against their own Circulars and Clarifications. We wondered whether the appeal filed by the appellant/Revenue in the face of these Clarifications issued by the Board, itself could at all be entertained or not. But, since the learned counsel for the appellant/Revenue urged the point on the basis of Foreign Trade Policy, we heard the arguments of the learned counsel for the appellant/Revenue on merits also. But, we find to our dismay that such a point has not even been raised by the appellant/Revenue before the Tribunal or at any point of time except before us for the first time - The Advance License issued in favour of the assessee, admittedly, was issued after the date of Corrigendum issued by the Central Government on 17.05.2005 and this fact not being in dispute, we are afraid that the point raised by the learned counsel for the appellant/Revenue even it it was to be entertained, does not have any merit in it. Appeal dismissed.

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• 2019 (8) TMI 225
  Validity of Confiscation - benefit of exemption is denied to the assessee - case of appellant is that once the benefit of exemption is denied to the assessee, confiscation under section 111[o] of the Customs Act, 1962, could not have been ordered by the learned Tribunal and upheld by the learned Tribunal - HELD THAT:- The learned Tribunal has dealt with the issue of section 111[o] of the Customs Act, 1962, in the case of the assessee and in the facts of the case, has even determined the redemption of goods applicable to the assessee. The assessee, admittedly, did not satisfy the conditions of the Notification by producing the Installation Certificate before the concerned Authority, nor he has sought extension of period for producing such Installation Certificate. Whether the option for payment of fine or redemption of goods, would be available to the assessee or not, is a question that has already been decided by the learned Tribunal vide the aforesaid portion quoted by us - we do not find any error in the order of the learned Tribunal. However, if there is any factual error in dealing with the facts produced by the assessee/appellant herein with evidence, he is at liberty to file an application before the learned Tribunal seeking appropriate review of the order, impugned herein. Appeal disposed off.

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• 2019 (8) TMI 224
  Valuation of imported goods - Automotive Consumables - rejection of transaction value - main contentions of the Appellants are that the Appellant was not party to the market enquiry; copy of the report was not provided by him and that the Commissioner has not proceeded sequentially in terms of Customs Valuation Rules - HELD THAT:- The Commissioner has heavily relied on the market enquiry which was not done in the presence of the either the Appellants or their representative. The copy of the market enquiry report was not given to the Appellants. We find that for this reasons the Order in Original suffers from a serious lacuna. The Appellants contended that the Learned Commissioner has not discharged the burden of proof of valuation - We find that Commissioner has brushed aside the contemporaneous value of some items provided by the Appellants. The Commissioner s contention was that such goods were seized and were subjected to adjudication and therefore he was not considering those values. We find that the Learned Commissioner has not analysed the values therein taken in such adjudication of identical / similar goods. We find that for that reasons also the adjudication order suffers from infirmity. The Ld. Commissioner could have gone in to the valuation of contemporaneous imports from NIDB or any other source or she could have examined the values arrived at in such bills of entry provided by the appellants. This was all the more important as the imports were at about the same time and were of similar products - Learned Commissioner could have come to a conclusion after analysing any other evidence in support of market enquiry before arriving at a conclusion. We do not find any mention of the efforts made by Commissioner to have a look at the contemporaneous imports and as to why she was resorting to Rule 7A of CVR. The values of disputed items were arrived at without following the CVR and without giving any cogent reasons for arriving at such a value. We are of the opinion that such a valuation has neither statutory backing nor legal acceptability - the Ld. Commissioner has erred in rejecting the transaction value and in fixing the value of the impugned goods. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2019 (8) TMI 223
  Scope the term Creditor - Termination of agreement - Stock Purchase Agreement - scope of assignment - HELD THAT:- In the instant case, there is no dispute or disagreement that the main company petition was presented in this Court on 15.7.2016 after termination of the master services agreement on 15.1.2016. This takes us to the covenant captioned Term and Termination in the Master Services Agreement and the relevant clause is 4.4 captioned Effects of Termination . A perusal of effects of termination adumbrated therein reveals that it has been covenanted that upon expiration or termination of master services agreement, all obligations of parties shall cease with the exception of obligations that accrued prior to the effective date of termination which shall survive and Agilis shall deliver all deliverables of Megasoft, besides, Agilis being under obligation to destroy all originals and copies belonging to Megasoft if so directed by Megasoft. After such termination on 15.1.2016, statutory notice inter-alia under Section 434(1) of the said Act was issued on 31.3.2016 followed by another demand on 17.6.2016. This position is admitted by Megasoft in the application filed in support of the instant application. The effect of stock purchase agreement dated 03.12.2013 cannot be said to be assignment of master services agreement or performance contemplated thereunder by Agilis to Infogix. To be noted, assignment of master services agreement or performance thereunder alone cannot be done without prior written consent of Megasoft. In the instant case, it is a demand made post termination, i.e., demand vide a statutory notice under said Act. Therefore, there are two reasons as to why the argument of Megasoft is unacceptable. One is, clause 7.5 captioned Assignment , extracted supra, stood terminated. The second reason is, it is not an assignment of agreement or performance contemplated thereunder. Interpretation of statute - expression creditor, by assignment or otherwise , occurring in sub-section (1) Clause (a) of Section 434 of the said Act - HELD THAT:- The term creditor is not a term of art qua said Act. In other words, it is not a term which is defined in the said Act. In Harinagar Sugar Mills Co. Ltd. case, Supreme Court held that the expression otherwise takes in any person to whom another becomes indebted howsoever the relationship of creditor and debtor is brought about between them - the stock purchase agreement dated 03.12.2013 certainly qualifies and neatly / snugly fits into the expression otherwise occurring in Section 434(1)(a) of the said Act. Agilis is alive - HELD THAT:- As I have already negatived the argument that Infogix does not qualify to maintain this company petition on the ground that it had stepped into the shoes of Agilis and in the light of the fact that it neatly / snugly fits into the expression otherwise by applying Harinagar Sugar Mills Co. Ltd. principle laid down by Supreme Court, the submission that Agilis is still alive is of no consequence. In the instant case, in the light of whether the petitioner in the main company petition is a creditor qua respondent also is a triable issue and it cannot be answered on affidavits and counter affidavits. Therefore, it is made clear that this question is not decided finally one way or the other in this order, but it is held to be a triable issue which is left open to be conclusively decided when the main company petition is tested / tried on merits. Application dismissed.

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• 2019 (8) TMI 222
  Occupation of a person in the position as a director of the Company - investment in shares - reduction of capital of company - transfer of shareholding - entitlement to be paid from money of company - guilty of acts of misfeasance, fraud, cheating, breach of trust, misappropriation of funds or not - HELD THAT:- We have carefully perused the reports of the Investigation Officer, and accepted the report with regard to finding given him in respect of Respondent No. 2. While holding that the Respondent No 2. is held responsible for mis-managing the affairs of Company and the Petitioner has contributed a lot in comparison with the Respondent No 2, as detailed supra, simultaneously holding the petitioner is also responsible for loss to the Company for an amount of Rs. 47, 12,500 on par with second Respondent for an amount of Rs. 1,42,84,389/- (Rupees One Crore Forty Two Lakhs Eighty Four Thousand Three Hundred and Eighty Nine only) is not reasonable and justifiable. And we have accepted the Investigator Report in toto except with regard to the findings given in respect of the Petitioner. The Tribunal is of the opinion that the affairs of the Company are being conducted pre-judicially to the interest of the Company as well as to the Petitioner and other stakeholders ,and thus it is a fit case to wind up the Company, which would unfairly prejudice to the interest of the Petitioner as well as the Company. Therefore, it is a fit case to invoke the powers conferred on the Tribunal U/ s 241(1)(a) of the Companies Act, 2013 so as to put an end to the affairs of Company by passing suitable directions. It is declared that the Respondent is liable to compensate of Rs. 1,42,84,389/- to the Company ,within a period of two months from the date of receipt of certified copy of this order - Both the Petitioner and the Respondent are permitted and directed that the petitioner should nominate two of his Directors whereas the Second Respondent can nominee of his Director to the Board of Directors of R 1 Company within a period of one month from the date of receipt Copy of this order.

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• 2019 (8) TMI 221
  Oppression and mismanagement - Section 241-242 of the Companies Act, 2013 - preemptive right of having notice of proposed transfer of shares incorporated in Article 7 of the Articles of Association - HELD THAT:- These provisions are intended to block an outsider from purchasing the shares of a private company through the mode of sale or transfer by any other mode and for achieving this objective these Articles envisage that a stranger/ third party may be allowed to purchase the shares of the company only after the existing shareholders have been given the option to purchase the shares intended to be sold and the existing shareholders/ members have declined to purchase the shares offered for sale. This is the general principle - However, an exception is carved out under Article 8 by providing that previous sanction from Board of Directors would not be required if the sale of shares is made in favour of an existing member/ members, their spouses, children or legal heirs. Admittedly, this case falls within the aforesaid exception. Further, that the alteration of balance of power as a sequel to the transfer of shareholding by a member in favour of an existing member would be a concept alien to the true scope and ambit of these Articles. This is apart from the fact that on facts the Tribunal has not found any material alteration on the aspect of balance of power and such finding is not shown to be erroneous, much less perverse. The impugned order does not suffer from any legal infirmity or factual frailty. The interpretation placed on the language of Article 7 and 8 of the Articles of Association of Respondent No. 1 Company by the Tribunal is perfectly in consonance with the settled position of law - Appeal dismissed.

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• 2019 (8) TMI 220
  Oppression or mismanagement - Reduction of share capital of appellant - deprivation from claiming Directorship in Respondent No. 1 Company - whether profit sharing ratio can be the basis for allotment of shares in the transferee company viz. Respondent No. 1? - HELD THAT:- The gains arising from the transfer of a capital asset effected in the previous year, subject to exceptions, are deemed to be the income of the previous year and chargeable to income tax under the head Capital Gains . However, transfer of capital assets falling within the clauses enumerated under Section 47 including transfer of a capital asset or intangible asset by a firm to a Company as a result of succession of the firm by a Company carrying on the same business as the firm would be exempted from being chargeable to income tax under the head Capital Gains as such transactions are not regarded as transfer of a capital asset within the meaning of Section 45. Appellant has not been able to demonstrate that his capital holding in the firm was different than the one reflected in the books and that there was a basis for allotment of share in Respondent No.1 proportionate to the profit sharing ratio of the partner in the firm. Appellant does not appear to have questioned the allotment of 100 shares to him for about two and a half years. This is apart from the fact that the Appellant holding only 0.009% shareholding and being the only aggrieved member out of 12 was ineligible to file petition under Section 241 of the Companies Act, 2013. Admittedly, no waiver has been sought and obtained from the Tribunal for filing the petition. In these circumstances, the Appellant cannot be heard to say that the acts complained of constituted oppression and any prejudice was caused to him. The impugned order is a reasoned one and does not suffer from any legal infirmity - appeal dismissed.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 219
  Maintainability of petition - Wilful Defaulters - order of review committee - liquidator appointed over the affairs of the Company but the liquidator is not prosecuting the petition - HELD THAT:- In neither of the two writ petitions before the Court, the petitioners therein have challenged the decision of the Identification Committee or the steps and procedures taken upto the decision of the Review Committee. The Master Circular on Wilful Defaulters dated July 1, 2015 contemplates two tier decision making process for the purpose of identification of a wilful defaulter. The Master Circular contemplates establishment of an Identification Committee consisting of the specified number of personnel with the requisite qualifications and the Constitution of a Review Committee, again of the requisite number and qualification. Once such committees are established, the Master Circular requires that a bank having material to proceed against an account, to have the same declared as a wilful defaulter, under such Master Circular, to place such material before the Identification Committee. In the present case, the decision of the Review Committee under challenge, is not informed with reasons. Although, the Review Committee is at liberty to concur with the finding of the Identification Committee, it has to deal with the representation made by the borrower before it. The challenge of the petitioners being limited to the order of the Review Committee, the same is quashed.

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• 2019 (8) TMI 218
  Admissibility of application - Initiation of Corporate Insolvency Resolution Process - existence of dispute or not - default in discharging the debt - whether in absence of adjudication of the foreign decree passed by a court in a non-reciprocating, territory, which is relied upon by the Appellant, the Appellant was legally justified in seeking initiation of Corporate Insolvency Resolution Process under Section 9 of the I B Code against the Corporate Debtor? HELD THAT:- Section 44A of Civil Procedure Code providing for execution of a foreign decree by filing of a certified copy of such decree passed by a superior court in a reciprocating territory in a District Court has no application and the observations of the Adjudicating Authority in this regard cannot be termed as unwarranted. It is well settled that foreign decree either of reciprocating or non-reciprocating territory not passed on merits or not satisfying the requirements of Section 13 of CPC cannot be the basis of winding up petition. An ex-parte decree based on default summary judgment for non-appearance before a foreign court cannot be relied upon for seeking winding up of a company. Such decree cannot be held conclusive as it has not been given on merits of the case. Admittedly, Appellant is pursuing the litigation before the Bombay High Court in regard to the foreign decree and claim payable thereunder. He cannot be permitted to circumvent the appropriate legal remedy, already pursued, by invoking provisions of Section 9 of I B Code, thereby defeating the fundamental provisions of law governing execution of a foreign decree obtained in ex-parte from a court located in a non-reciprocating territory. Such course is neither legally permissible nor warranted as admittedly the matter is not covered under Section 44A of CPC. The argument advanced warrants outright rejection and is accordingly rejected. The adjudication initiated by the Appellant before Bombay High Court wherein adjudication is sought in regard to foreign decree obtained ex-parte falls within the purview of a pre-existing dispute placing an embargo on the powers of Adjudicating Authority to initiate Corporate Insolvency Resolution Process at the instance of a Corporate Debtor - appeal dismissed.

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• 2019 (8) TMI 217
  Admissibility of petition - Initiation of Corporate Insolvency resolution process - Corporate Debtor - default in repayment of the debt - HELD THAT:- On looking at the submissions of either side, it has been proved that the Financial Creditors have not accepted the OTS proposal offered by the Corporate Debtor - The Orders of the Hon ble Apex Court will specifically apply only to those companies against whom insolvency proceedings have been initiated based on RBI Circular. This Bench is of the view that the Corporate Debtor has defaulted in repaying outstanding debt of Rs. 125,89,60,431.52. The defense of Corporate Debtor that they had given a proposal for OTS is not tenable since the Financial Creditor has rejected the OTS proposal. This Bench hereby holds that it is a fit case for admission and orders commencement of Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this order is passed. Petition admitted - moratorium declared.

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• FEMA

• 2019 (8) TMI 216
  Remedy of instituting an appeal to the Special Director (Appeals) - impugned order was served upon Petitioners by pasting on the premises sometime on 23rd February, 2019 and this Petition was lodged in the first week of May, 2019 - time limitation - HELD THAT:- If any issue of limitation arises, we are sure that the Appellate Authority will give due regard to all these circumstances. However, since the Petitioners haves alternate and efficacious remedy available under the FEMA itself, we are not inclined to entertain this Writ Petition. This Petition is disposed of by granting liberty to the Petitioners to institute an appeal against the impugned order, in case the Petitioners so choose. All contentions of the Petitioners are expressly kept open, since we have not examined the merits of the matter.

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• 2019 (8) TMI 215
  Maintainability of petition - Petition by a person who refuses to subject himself to Indian Laws - whether the Writ Court should exercise its jurisdiction in case of a Petitioner who has been issued a non-bailable warrant by the Special Court under the Prevention of Money Laundering Act, 2002 (PMLA) - HELD THAT;- This Court by its [ 2018 (2) TMI 762 - BOMBAY HIGH COURT] rejected the above contention and entertained the Petition by this very petitioner. We are informed that the status and condition of the Petitioner viz-a-viz Indian Law continues to remain what it was on 30th January, 2018 i.e. no red corner notice has yet been issued in respect of the Petitioner. These facts are not disputed and distinguished by the Revenue. Thus, this issue having already been considered by a coordinate bench of this Court and no new facts have thereafter have been brought to our notice which would warrant a different view. Rejection of Petitioner s application for copy of the reply filed by BCCI - permission for joint hearing of all the noticee - denial of cross-examination - HELD THAT:- The compliant/ show cause notice relies upon the statement of persons of whose cross examination is sought. Thus, the basic rules of natural justice would require grant of the same, in case, the statements are being relied upon by the Respondent No.1 - the Respondent No.1 would grant cross examination of the five persons in case it seeks to rely upon the same. Permission for joint hearing of all the noticee - HELD THAT:- It gives no reason for refusing the same. It rejects the requirement only by stating that it would cause prejudice. Therefore, the aforesaid directions in the impugned communication dated 8th January, 2018 is set aside and the Respondent No.1 would deal with the above request afresh and dispose of the same in accordance with law. Rejection of the request for a copy of the reply filed by BCCI by only stating it would cause prejudice - HELD THAT:- No reasons in support thereof are indicated therein. Thus, the above communication dated 21st August, 2017 is set aside to the above extent and restored to Respondent No.1 for fresh decision. Petition disposed off.

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• 2019 (8) TMI 214
  Maintainability of petition - initiation of proceedings u/s 7(3) of the Foreign Exchange Management Act, 1999 - availability of alternative and efficacious remedy of appeal - HELD THAT:- It is not in dispute that the proceedings are initiated by the Adjudicating Authority under Section 7(3) of the FEMA and the impugned order passed by the Adjudicating Authority on 31.8.2017 exercising the powers under Section 13(1) of the FEMA. Therefore, the petitioners have got an alternative and efficacious remedy of appeal before the Appellate Authority under Section 17 of the FEMA - Section 17(4) clearly depicts that on receipt of an appeal under sub-section (1), the Special Director (Appeals) may after giving the parties to the appeal an opportunity of being heard, pass such order thereon as he thinks fit, confirming, modifying or setting aside the order appealed against. The contention of the learned counsel for the petitioners that the Appellate Authority cannot expunge the adverse remarks passed by the Adjudicating Authority, cannot be accepted. The Appellate Authority has got every right to confirm, modify or set aside the order appealed against. The writ petitions are disposed of as not maintainable with liberty to the petitioners to avail the alternative remedy of appeal under the provisions of Section 17 of the FEMA within a period of three weeks from the date of receipt of copy of the order.

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• 2019 (8) TMI 213
  Imposition of penalty by Special Director - contravention of Sections 6(4), 6(5), 49, 73(3) of FERA, 1973 r/w NRE Account Rules 1970 - initiation of adjudication proceedings as contemplated under Section 51 FERA, 1973 within 30 days - HELD THAT:- In the Impugned Order the factum of prior to the Notification dated 31.07.1995, the position was that foreign currency could be deposited in NRE Accounts by power of attorney holders of NRIs. The same was requisite requirement to make out the violations under Sections 8(1), 9(1)(a) and 9(1)(f) of FERA are not made out - In the Impugned Order, the Adjudicating Authority has not taken into account the fact that the Adjudicating Authority has in 52 cases against the Appellant, quashed penalty imposed against him and the same have till date not been challenged by the Respondent before the Appellate authorities. The present proceedings, which are based on factually parallel route, atleast all the said orders and facts ought to have been considered in the impugned at the time of passing the order. Repatriation of statement after two days - HELD THAT:- It is well settled law that a retracted confession can never be the basis of any penalty to be imposed upon a person, unless substantially corroborated by independent sources. In the present case, apart from the retracted confessional statement of the Appellant, there is no independent evidence on record to corroborate the retracted confessional statement of the Appellant - Therefore, the said statement cannot be relied upon to impose any penalty upon the Appellant. Appeal allowed.

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• PMLA

• 2019 (8) TMI 197
  Suo Motu Transfer Petition - Transfer of case - sufficient reason provided or not - HELD THAT:- The reason given by the Special Judge is that Ms Gita Bista, Advocate, who had earlier been conducting the case on behalf of the accused nos. 1 and 2, is presently attached to the chambers of Shri N.B. Khatiwada, Senior Advocate, who happens to be his father. Hence, it would not be appropriate on his part to proceed with the matter. In my view, the reason given by the learned Special Judge does not appear to be correct. The fact that Ms Gita Bista is a chamber junior to his father is not a sufficient ground for transfer of the case. Further, no allegation has been made by anyone against the Special Judge. It is also not a case where any of the party has prayed for transfer of the case - request for transfer rejected. Suo Motu Transfer Petition

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• Service Tax

• 2019 (8) TMI 212
  Valuation - Clearing and Forwarding Agent Service - inclusion of charges received as reimbursement on the expenses, in the assessable value - demand of service tax on Franchisee Service? - HELD THAT:- From the sample agreement shown by the Ld. Counsel between the appellant and the service recipient it is observed that there is a separate amount of only service charges for CFA service and some actual amount payable by the service recipient to the appellant on account of various expenses. There is a fixed amount on the quantum of sale towards remuneration for CFA service. From the agreement it is seen that there is a separate charges for the service of CFA and there are additional charges towards the various expenses which appellant has to undertake on behalf of their client, therefore, the remuneration for the CFA service is clearly identified all other charges are paid as reimbursable charges by the service recipient. Since, the other expenses are incurred as per the instruction of the service recipient the same is reimbursed on actual basis by the service recipient to the appellant - Therefore, these charges are over and above the remuneration in respect of CFA service and it is not towards the service of CFA as a reimbursement of expenses. Therefore, it cannot be said that the reimbursable expenses is part of the service charge of CFA . This issue has been considered by the Hon ble Supreme Court in the judgment cited by the appellant in the case of COMMISSIONER OF SERVICE TAX, CHENNAI, TAMIL NADU VERSUS M/S MALABAR MANAGEMENT SERVICES PVT. LTD. [ 2019 (7) TMI 1161 - SC ORDER] , where it was held that reimbursement of salary and infrastructure expenses not be termed as amount charged towards the service provided by the service provider. Therefore, since the details of all reimbursable charges on the agreement needs verification and the matter needs to be remitted back to the adjudicating authority to ascertain the facts regarding the remuneration towards the service and reimbursable expenses and accordingly re-quantify the demand, if any arise. Demand of service tax on Business Auxiliary Service - HELD THAT:- As per the appellant s submission he has raised that one of the service is franchisee for which service tax liability is on the franchisor and not on the franchisee i.e. the appellant, however, we do not find anything, as regard, the franchisee in the impugned order - The impugned order is only on the issue of reimbursable expenses and Business Auxiliary Service i.e. incentive received from Tata Chemicals and courier service, since, there is a contradiction between the submission made by Ld. Counsel and the finding given in the impugned order, these issues are also needs to be re-considered. Appeal allowed by way of remand.

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• 2019 (8) TMI 211
  Valuation - security service and manpower supply services - inclusion of component of salary, EPF, ESI and uniform allowances etc. are not includible in the gross amount charged of assessable value - Section 67 of Finance Act - waiver of penalty - HELD THAT:- It is evident from the provisions of the Acts that the contributions made towards the two Acts are in the nature of statutory contribution and required to be deducted by the appellant as immediate employer on behalf of Principal Employer - following the ratio laid down in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] these contributions cannot be treated as value of such service under Section 67 of the Act. Therefore, there is no authority provided in the law for subjecting these contributions to service tax under Section 67 of the Act. The provisions of the PF and ESI Act makes it clear that it will be the primary responsibility of the principal employer to deduct amount towards the PF and deposit the same with the Central Government. The appellant in this case claimed that it has deducted the contributions on behalf of principal employer, that is recipient of the service, for remittance to the competent authority in terms of the provisions of EPF and ESI Act. The contributions made towards PF ESI is, therefore, not required to be added for the purpose of calculation of the gross amount under Section 67 of the Act, if the same has been deposited with the Government. Thus, the contributions made towards EPF and ESI are not liable to be included for the computation of gross amount under Section 67(1) of the Act. Abatement towards deduction of wages and salaries paid to the personal employees by the appellant - HELD THAT:- The same is covered by the decision of Mumbai Bench of this Tribunal in case of SECURITY GUARDS BOARD FOR GREATER BOMBAY THANE DIST. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE [ 2016 (12) TMI 859 - CESTAT MUMBAI] , wherein it is held that wages and allowance including salary and administrative charge collected from client is excludible from the gross value of taxable service in terms of Section 67 of the Act - the appellant is entitled for the abatement towards the payment made on account of contribution towards ESI, EPF and PF and also towards wages and salaries while computing the assessable value in terms of Section 67 of the Act for the payment of service tax. Appeal by way of remand to the original adjudicating authority to re-determine the service tax required to be paid by the appellant - Matter on remand.

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• 2019 (8) TMI 210
  Availment of exemption Notification against payment of R D Cess - Applicability of N/N.18/2002-ST as amended vide N/N. 46/2011 - Receipt of transfer of technology services from abroad - reverse charge mechanism - whether the availment of exemption by the appellant in terms of the Notification No.46/2011-ST dated 19/09/2011 is appropriate or not? - time limitation - HELD THAT:- It is a well settled position of the law that a person who claims the exemption has to prove that he satisfies all the conditions of the Notification so as to be eligible to the benefit of the same. References can be made to the Hon ble Supreme Court Constitutional Bench decision in the case of CCE VERSUS M/S HARI CHAND SHRI GOPAL [ 2010 (11) TMI 13 - SUPREME COURT] , MYSORE METAL INDUSTRIES VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1988 (5) TMI 42 - SC ORDER] , MOTIRAM TOLARAM VERSUS UNION OF INDIA [ 1999 (8) TMI 68 - SUPREME COURT] , COLLECTOR OF CUSTOMS VERSUS PRESTO INDUSTRIES [ 2001 (2) TMI 133 - SUPREME COURT] and M/S HOTEL LEELA VENTURE LTD. VERSUS COMMR. OF CUSTOMS (GEN) MUMBAI [ 2009 (1) TMI 9 - SUPREME COURT] - It stands held in all the above decisions that onus to prove and show the satisfaction of the conditions of the Notification is on the person who claims the benefit of the same and every exemption Notification has to be read in strict sense. In the present case, the appellants have admittedly not fulfilled both the conditions of the Notification as regards payment of R D Cess before payment of service tax and have not maintained the records so as to establish the linkage between the invoices of the R D challans, as per the requirement of the Notifications - As such, we agree with the Adjudicating Authority that the appellant was not entitled to the benefit of the Notification. Time Limitation - HELD THAT:- This is not a case of any bona fide interpretation inasmuch as the wordings of the Notifications are very clear and required the recipient to pay R D Cess before payment of service tax so as to avail exemption. The appellants have not given any justifiable reasons for not paying R D Cess in time and for availing exemption without such payment of R D Cess - extended period rightly invoked. Penalty - HELD THAT:- The appellants have availed exemption without fulfilling condition of the Notification and without discharging R D Cess liability have admittedly contravened the provisions of the Notification, thus making them liable to penalty - penalty upheld. Appeal dismissed - decided against appellant.

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• 2019 (8) TMI 209
  Taxability - consideration received as commission agent - N/N. 13/2003-ST dated 20th June, 2003 - HELD THAT:- While the definition of commission agent is of particular relevance to sale or purchase of goods on behalf of another person, the exemption is not restricted to the specific enumeration therein but to every activity of a commission agent . It would, therefore, appear, from a harmonious construction of the definition and the exemption notification, including the eligibility, that any commission agent , who deals in goods is not required to pay tax on any of the activities enumerated under section 65(19) of the Finance Act, 1994. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (8) TMI 208
  Principles of Natural Justice - clandestine removal - shortage of stock - levy of penalty on Director - the grounds of appeal raised in the memo of appeal not adjudicated by the Tribunal - HELD THAT:- The appellants had raised several grounds challenging the order of Commissioner of appeals including the ground that the weight of MS ingots had been determined by eye estimation and not by actual weightment and therefore there could not have been any addition on this score. It was also pleaded that invoice books were also compared in a follow-up action but no discrepancy was found and also that the Director of the applicant had never made admission before the authorities on the basis of which the additions have been made in the order in original - A bare perusal of the impugned judgment clearly shows that the Tribunal has not considered any of the arguments and submissions raised by the appellant but has only dismissed the appeal relying on the show cause notice dated 22/03/13 wherein it has been mentioned that invoices with the same numbers were issued on various dates and certain invoice were issued several times. The Tribunal has concluded by holding that no convincing defence was put forth by the appellant and therefore proceeded to confirm the order passed by the Commissioner (Appeals) I. An order without valid reasons cannot be sustained. To give reasons is engrained in the rule of natural justice - The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him. Opinion of the Court alone can explain the cause which led to passing of the final order. Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. The contention raised before us that absence of reasoning in the impugned order would render the order liable to be set aside, particularly, in face of the fact that the Tribunal found merit and allowed the appeal - the matter is remanded to CESTAT for redetermination, after affording opportunity to the parties. Appeal allowed by way of remand.

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• 2019 (8) TMI 207
  Grant of permission under Erstwhile Rule 56(B) of the Central Excise Rules, 1944 to remove the IV sets as semi finished or finished goods for testing purposes - HELD THAT:- We have thought fit to incorporate paragraph 5 of the order passed by the Tribunal referred to above, keeping in mind that even the Tribunal, at the relevant point of time, was convinced that the goods were exported. The Tribunal being convinced of such fact, ultimately, passed an order for the waiver of the pre-deposit amounts involved - We will be examining the substantial questions of law which have been formulated while admitting the tax appeal. A strong prima facie case has been made out for grant of the interim relief as prayed for in the present civil application. The tax appeal shall be notified for final hearing on 17th September, 2019.

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• 2019 (8) TMI 206
  Refund of duty - time limitation - Section 11B of the Central Excise Act 1944 - period 1984-1985 to 1986-1987 - HELD THAT:- A reading of section 11B shows that according to the first proviso wherein application for refund were made before the commencement of the Central Excise Customs Laws (Amendment Act 1991), then those applications shall be deemed to have been made under Section 11B of the Act as amended by the said Act and they shall be deal with in accordance with the provisions of sub-section (2) substituted by that Act. Under the second proviso, it had been provided that the period of limitation was not applied only when the duty had been paid in protest. In the instant case, the claims had been preferred on 02.02.1988 with respect to the years 1984-1985 to 1985-1986 - They were clearly beyond the prescribed period of limitation of one year. They had also not been paid under protest to enable extension of period of limitation. However the contention of the learned counsel that the period of limitation would commence only when the certificates were actually issued by the Directorate of Sugars cannot be countenanced since they were only enabling certificates and even according to him, the Notification No. 130/1983 relating to the incentive certificate had been issued on 27.04.1983 itself. The amended provisions of the Act came into force on 20.09.1991. The application for refund duty filed on 02.02.1988 was pending before the Original Authority. In that case, the amended provisions of the Act would still be operative and this would prevent the refund since the provisions are retrospectively applicable as stated under Sub-Section (3) of Section 11B of the Act, which had been extracted in the relevant portion referred above in the order of the Hon ble Supreme Court - the refund claim for the period 1983-1984 and 1984-1985 are clearly barred by limitation under Section 11-B of the Central Excise Act 1944 Appeal dismissed.

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• 2019 (8) TMI 205
  Condonation of delay of 1434 days in filing appeal - sub-section (3) of Section 35B of CEA - delay due to illness of concern persons and misplacement of paper due to loss of memory - HELD THAT:- Though sub-section (3) of Section 35B prescribes a period of limitation of 3 months, sub-section (5) gives discretion for the Tribunal to condone the delay. No outer limit is prescribed, curtailing the power of the Tribunal to condone the delay beyond a period. We have gone through the affidavit in support of the application for condonation of delay. We are satisfied that there was sufficient cause for the appellant - the question of law is answered in favour of the appellant and the appeal is allowed and the delay in filing the appeal before the Tribunal is condoned. Appeal allowed.

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• 2019 (8) TMI 204
  Classification of goods - cigarette of brand Golden Cigar - the goods was proposed to be classified under chapter Sub Heading 24022030 as cigarette against the claim of the appellant that product is cigar and classifiable under chapter Sub Heading 24021010 - request of cross-examination denied for 17 persons, and cross-examination of only one person allowed - Principles of Natural Justice - HELD THAT:- The cross examination of witnesses is primary step to complete adjudication process. We completely disagree with the adjudicating authority as provided under Section 9D of the Central Excise Act, it is incumbent on the adjudicating authority to cross examine the persons whose statements were recorded by the investigating agency, only thereafter such statements can be used for adjudication of the SCN. Since admittedly the adjudicating authority has refused cross examination of 17 persons, there is clear violation of principles of natural justice - the appellant should be given opportunity for cross examination of witnesses. The matter remitted to the adjudicating authority for passing a fresh order after observing the principles of natural justice - appeal allowed by way of remand.

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• 2019 (8) TMI 203
  CENVAT Credit - job-work - short receipt of goods supplied for job work - Rule 4 (5) (a) of the Cenvat Credit Rules, 2004 - duty was demanded under Section 11A of Central Excise Act, 1944. Ld. Commissioner (Appeals) though held that the demand was wrongly confirmed under section 11A, however, he has upheld the demand invoking Rule 4 (5) (a) - HELD THAT:- We find that firstly it is not revealed from the entire case that whether the SCN has demanded duty treating the goods as input as such short received or, waste and scrap or finished goods, short receipt, therefore unless until the fact is clear, it cannot be decided that whether the demand is correctly liable under Rule 4(5) (a) or section 11A. The matter needs to be remitted back to adjudicating authority for deciding afresh that on which goods duty is liable on the short receipt, whether it is finished goods, waste and scrap or input as such - appeal allowed by way of remand.

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• 2019 (8) TMI 202
  CENVAT Credit - input services - telephone/ mobile services - HELD THAT:- There is no dispute that telephone is installed in the factory of the appellant and the same is used by the staff for the factory activities. Mobile phones used by the employees - HELD THAT:- The bills of the telephone/ mobiles are in the name of the Company. In various judgments cited by the ld. Counsel, the Cenvat credit in respect of telephone/ mobiles has been considered and held that credit is admissible - credit allowed. Appeal allowed in part.

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• 2019 (8) TMI 201
  Utilization of accumulated credit - lapse of accumulated credit - case of the department is that the appellant was issued show cause notice for the period December 2007 to March 2011, proposing elapsing credit of Rs. 2,86,83,157/- - HELD THAT:- There is no dispute that present demand is out of accumulated credit balance as on 01.03.2007 for which the proceedings were initiated by issuing show cause notice dated 03.04.2012. The Tribunal vide order No. A/10640-10642/2019 dated 04.04.2019 held that the accumulated credit of Rs. 2,86,83,157/- was not lapsed by interpreting Rule 11 (3)(i) of Cenvat Credit Rules, 2004. Since the proposal of elapsing accumulated credit itself has been set aside, the utilization for the credit out of such accumulated credit cannot be questioned. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 200
  CENVAT Credit - input services - Repair and Maintenance service - Erection, Installation and Commissioning service - Consulting Engineering Service used for expansion of the production capacity - credit was denied on the ground that the setting up of the factory has been removed from the inclusion clause of definition - as per assessee it is only expansion of existing production capacity - HELD THAT:- The ground for denial of the cenvat credit by the lower authority is that since setting up has been removed from the inclusion clause of definition, the credit in respect of setting up of the factory is not admissible. As per the facts of the present case, the factory is already existing and running its production, it is only expansion of existing production capacity, therefore, it cannot be said that there is setting up of the new factory. Moreover, the services were not excluded in the exclusion category as brought in definition of input service w.e.f. 01.04.2011. Therefore, all the services were used in or relation to the manufacture of final product as the expanded production capacity is only for manufacture of final product. Credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 199
  Principles of natural justice - revised assessment u/s 22(4) of TNVAT Act done without providing reasonable opportunity of being heard - HELD THAT:- In the aforesaid revisional notice, if the time and date of the personal hearing had been given, that would have been the end of the matter or end of campaign of the writ petitioner qua writ petitioner s challenge to impugned orders. As that has not happened, it has become necessary to peruse the nature of revision qua assessment that has been made. The nature of assessment that has been made owing to the peculiar facts and circumstances of these cases, brings into sharp focus the position that it would have been desirable to send one more communication to the writ petitioner fixing a personal hearing mentioning date, time and venue with specificity. This Court comes to a conclusion that it would be appropriate to give an opportunity of personal hearing to the writ petitioner - respondent shall afford an opportunity of personal hearing by communicating to writ petitioner in advance the date, time and venue, hold personal hearing, hear out all objections, redo the revision of assessment and pass revised assessment orders afresh as expeditiously as possible - petition allowed by way of remand.

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• 2019 (8) TMI 198
  Input tax credit - Branch transfers - section 4(4) of the Telangana Value Added Tax Act, 2005 - HELD THAT:- Perusal of the impugned revisionary order demonstrates that though the appellant was put on notice requiring it to submit its objections, if any, along with documentary evidence, it admittedly failed to do so. In such circumstances, though we cannot find fault with the revisionary authority for proceeding in the matter unilaterally, the fact remains that the revisionary order has adverse financial implications upon the appellant apart from laying down a legal principle with regard to interpretation of the statutory provision. As such an interpretation would have a continuing effect and as the appellant admittedly did not choose to avail the opportunity to put forth its case before the revisionary authority, one last opportunity should be afforded to the appellant to go before the revisionary authority so as to explain its stand with the help of documentary evidence and case law. The Revision initiated by the Commissioner under Section 32 of the Act of 2005 shall stand remitted to the file of the revisionary authority for consideration afresh on merits after giving due opportunity of hearing to the appellant - revision allowed by way of remand.

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