TMI Tax Updates - e-Newsletter
September 2, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Imported goods from Pakistan allowed to be released as the goods received in India before the NTF. was issued/uploaded at 8.45 PM on 16.2.19

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• Income–tax Rules amended - deemed application for allotment of PNA where Aadhaar number has been furnished or intimated or quoted

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Articles

• DIFFERENCE OF OPINION IN APPELLATE ADVANCE RULING

News

• CBDT constitutes Start-up Cell for redressal of grievances related to Start-ups

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• Clarification on applicability of Tax Deduction at Source on cash withdrawals

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• Govt announces mega merger of PSBs, bringing down their number to 12

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Notifications

Central Excise

• G.S.R. 606(E) - dated 29-8-2019 - CE (NT)
  CORRIGENDUM – Notification No. 03/2019-Central Excise (NT), dated 18th July, 2019

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Customs

• 2/2019-Customs (CVD) - dated 30-8-2019 - CVD
  Seeks to impose countervailing duty on imports of 'Saccharin in all its forms' originating in or exported from People’s Republic of China in pursuance of countervailing duty/anti-subsidy investigation issued by DGTR.

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DGFT

• 15/2015-2020 - dated 31-8-2019 - FTP
  Amendment of import policy of "Agarbatti" and other odoriferous preparations which operate by burning under Exim code 33074100 and 33074900 of ITC (HS) 2017 - Schedule - 1 (Import Policy).

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GST

• 41/2019 - dated 31-8-2019 - CGST
  Seeks to waive the late fees in certain cases for the month of July, 2019 for FORM GSTR-1 and GSTR-6 provided the said returns are furnished by 20.09.2019.

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• 40/2019 - dated 31-8-2019 - CGST
  Seeks to extend the last date in certain cases for furnishing GSTR-7 for the month of July, 2019.

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• 39/2019 - dated 31-8-2019 - CGST
  Seeks to bring Section 103 of the Finance (No. 2) Act, 2019 in to force.

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• 38/2019 - dated 31-8-2019 - CGST
  Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19.

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• G.S.R. 611(E) - dated 30-8-2019 - CGST Rate
  Corrigendum – Notification No. 03/2019- Central Tax (Rate), dated the 29th March, 2019

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• G.S.R. 612(E) - dated 30-8-2019 - IGST Rate
  Corrigendum – Notification No. 03/2019-Integrated Tax (Rate), dated the 29th March, 2019

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• G.S.R. 613(E) - dated 30-8-2019 - UTGST Rate
  Corrigendum – Notification No. 03/2019-Union Territory Tax (Rate), dated the 29th March, 2019

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GST - States

• 77/GST-2 - dated 28-8-2019 - Haryana SGST
  Notification to extend the date from which the facility of blocking and unblocking of e-way bill facility as per the provision of Rule 138E of HGST Rules, 2017 shall be brought into force to 21.11.2019 under the HGST Act, 2017.

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• 73/GST-2 - dated 5-8-2019 - Haryana SGST
  The Haryana Goods and Services Tax (Sixth Amendment) Rules, 2019.

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• 35/2019-State Tax - dated 20-8-2019 - Himachal Pradesh SGST
  Amendments in the Notification of the Government of Himachal Pradesh, No. 21/2019- State Tax, dated the 30th May, 2019.

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• 13/2019-State Tax (Rate) - dated 20-8-2019 - Himachal Pradesh SGST
  Amendments in the Notification of the Government of Himachal Pradesh, No.12/2017- State Tax (Rate), dated the 30th June, 2017.

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• 12/2019-State Tax (Rate) - dated 20-8-2019 - Himachal Pradesh SGST
  Amendments in the Notification of the Government of Himachal Pradesh, No.1/2017-State Tax (Rate), dated the 30th June, 2017.

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• EXN-F(10)-22/2017 - dated 3-8-2019 - Himachal Pradesh SGST
  Supersession of this Department notification No. EXN-F(10)-22/2017 dated 29th May, 2018.

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• EXN-F(10)-22/2017 - dated 3-8-2019 - Himachal Pradesh SGST
  Supersession of this Department No.EXN-F(10)-22/2017 dated 17th July, 2018.

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• 34/2019-State Tax - dated 3-8-2019 - Himachal Pradesh SGST
  Amendments in the notification of the state of Himachal Pradesh, No. 21/2019- State Tax, dated the 30th May, 2019.

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• 33/2019-State Tax - dated 3-8-2019 - Himachal Pradesh SGST
  Himachal Pradesh Goods and Services Tax (Fifth Amendment) Rules, 2019.

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• 31/2019-State Tax - dated 17-7-2019 - Himachal Pradesh SGST
  The Himachal Pradesh Goods and Services Tax (Fourth Amendment) Rules, 2019.

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• S.O. No. 69 - 27/2019-State Tax - dated 21-8-2019 - Jharkhand SGST
  Notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year furnish the details of outward supply of goods or services or both in FORM GSTR-1.

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• S.O. No. 68 - 30/2019-State Tax - dated 21-8-2019 - Jharkhand SGST
  Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”).

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• S.O. No. 67 - 29/2019-State Tax - dated 21-8-2019 - Jharkhand SGST
  Extends the time limit for furnishing the details of FORM GSTR-3B months from July, 2019 to September, 2019.

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• S.O. No. 66 - 28/2019-State Tax - dated 21-8-2019 - Jharkhand SGST
  Extends the time limit for furnishing the details of outward supplies in FORM GSTR-1 persons having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year.

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• S.O. No. 64. - 11/2019-State Tax (Rate) - dated 21-8-2019 - Jharkhand SGST
  Specifies retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods.

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• 15/2019 No. FD 47 CSL 2017 - dated 20-8-2019 - Karnataka SGST
  Seeks to extend the date from which the facility of blocking and unblocking of e-way bill facility as per the provision of Rule 138E of CGST Rules, 2017 shall be brought into force to 21.11.2019.

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• F-A-3-31-2019-1-V-(58) - dated 21-8-2019 - Madhya Pradesh SGST
  Extends the time limit for furnishing the details of FORM GSTR-3B months from July, 2019 to September, 2019.

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Income Tax

• 59/2019 - dated 30-8-2019 - IT
  Income–tax (Fifth Amendment) Rules, 2019

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Highlights / Catch Notes

GST

• Requirement of pre-deposit of 10% of the disputed amount u/s 107(6) of the CGST Act - the disputed amount now remains secure through the Bank Guarantee furnished, hence directed to keep in abeyance encashment of the Bank Guarantee furnished until the disposal of the appeal, provided the appellant keeps the same valid until disposal of appeal against
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Income Tax

• Income–tax (Fifth Amendment) Rules, 2019 - deemed application for allotment of permanent account number where Aadhaar number has been furnished or intimated or quoted in lieu of PAN
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• Revision u/s 263 - Non-submission of form 3CEB electronically - as result of non filing the case of the assessee could not be referred to the TPO by the AO - ld. Pr. CIT was justified in invoking the provision of section 263 holding that the order passed by the AO as erroneous and prejudicial to the interest of revenue to the extent of non-filing of form 3CEB report
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• Addition to the valuation of unsold flats - the valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period and can in no sense be regarded as the source of such profits - valuing unsold flats at the average of sale price and assessed profit attributable to unsold flats is not permissible
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• Inclusion of land in Working of cost of the real estate development project - if the cost of land is included in the percentage of the project completion, then it would show that the project has been substantially completed say, to the extent of 50-60% at the beginning itself - Hence, for working out percentage of completion, land value should not be included - directed to accept percentage of work as determined by the assessee
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• Addition of service tax payable u/s 43B - not debited to the P&L A/c - once the assessee has not claimed it as an expenditure, the disallowance of the same u/s 43B of the Act would not arise - in fact, the AO is not disallowing the expenditure, but is bringing it to tax, which is not the purpose of the section - addition is deleted
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• Allowability of set off of unabsorbed depreciation with ‘Income from house property’ and ‘income from other sources’ - duly allowable
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• Validity of the order passed u/s 143(3) r.w.s 144C - since the AO issued notice of demand at the stage of the draft order, which, actually ought to have been done at the stage of passing the final order, thereby assigning the finality to the assessment at the stage of draft order itself, resultant final assessment order got vitiated in the eyes of law and hence cannot stand
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• Penalty u/s 271D - default of provisions of section 269SS - recording of satisfaction - since the assessment order as well as the order of the JCIT are devoid of any satisfaction regarding initiation of penalty proceedings u/s 271D - no penalty can be levied
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• Deprecation on goodwill - assessee has fully written off goodwill in the books of accounts - section 32(1)mandates that the block of assets should exists to claim depreciation - Since, goodwill is not treated as an asset in its books of accounts, the question of allowing depreciation on such non existing asset does not arise
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• Revision u/s 263 - non consideration of the provisions of Section 40(a)(i-a) in respect of land development expenses - the CIT had proceeded to remand the matter back to the AO while the appeal of the assessee was pending u/s 250 and the power of exercise u/s 263 was barred by Clause (c) to Explanation 1 of Section 263 - no interference in the order of the ITAT called far
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• Penalty u/s 271(1)(c) - addition u/s 68 on gift received - AO had discarded and doubted the genuineness of gifts on ground of human probabilities and no authority has recorded any finding to the effect that details furnished by the assessee to be incorrect, erroneous or false - it is not a case of either concealment of income or of furnishing inaccurate particulars
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• Condonation of delay of 27 months - factory premises was under attachment by the Excise department - Neither the AO has acted in a fair manner nor the assessee has prosecuted its income tax proceedings before the ld.Revenue authorities diligently - If something has been done illegally against it, then that illegality should not be regularized on account of technicalities - condoned the delay subject to cost of ₹ 50,000/-.
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• Addition u/s 68 - conversion of preference share into equity share - the only doubt is that the value of share premium charged is not truly reflecting the intrinsic value of the equity shares of the company - the amount of preference shares credited in the earlier year and no cash/sum credited in the books of accounts in current year which is the essential condition to apply the provisions of u/s 68 - no addition
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• TDS u/s 194C - flight handling charges - being the beneficial provision second proviso to sect. 40(a)(ia) r.w. first proviso to sect. 201(1) inserted w.e.f. 1.4.2013 having retrospective effect and assessee has filed certificate in Form No. 26A of the CA of Air India certifying that amount paid to Air India by the assessee has been credited in its books of accounts - neither disallownace is called for nor any need to remand for verification
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Customs

• Demand of interest on recovery of excess duty drawback claim - Section 75A(2) - when the petitioner realized that there was an excess claim and grant of drawback, he had deposited the same prior to issuance of SCN - Since the petitioner had repaid the drawback even prior to the demand, the respondents will not be empowered to claim any interest.
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• Revocation of CHA licence - forfeiture of security deposit - period of limitation for issuing SCN - Once the notice was sent out of the office of issuing authority, it was definitely out of the control of the said authority. Hence, the obligation of said authority for issuing the same stands discharged with the said dispatch - the service of notice cannot be covered under the word “shall issue”
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• Limitation - a period of more than 7 years has expired from the date of SCN by DRI - in the absence of passing any order in terms of proviso to Section 28(9) or Section 28 (9A), the Department cannot absolve itself from its statutory duty - SCN quashed
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• Cancellation of CHA License - there is no corroborative evidence or statement of anybody that the CHA had information, knowledge or has connived in the alleged forgery of invoices, mis-declaration and under-valuations - the Customs Broker/ CHA merely acts as a facilitator or agent for carrying out import operations - the CESTAT fell into error in directing cancellation of the CHA license of the Appellant
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• Release of imported goods from Pakistan - the Petitioners placed import orders prior to 16.02.2019 and received goods in India on or before 16.02.2019, admittedly before the impugned Notification was issued/uploaded at 8.45 PM on 16.02.2019 after the working hours. If the impugned notification is made applicable to them, it would amount to retrospective application which is not permissible in law.
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Indian Laws

• Dishonor of cheque - seeking 20% of the amount of dishonoured cheque as interim compensation - The said Section was inserted in the statute Book on 1/9/2018 whereas in the present case the offence was committed much prior to that. Hence the provisions of Section 143A will not be attracted in the present case.
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Service Tax

• Voluntary Compliance Entitlement Scheme - the Department have enough evidence to prove that the VCES declaration made by the appellant for financial year 2009-2010, 2010-2011 has been substantially false as the appellant have not come clean in making a declaration - declaration have correctly been rejected
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• Service tax on turnover achieved through the main contractor - in the case of works contract there is one transaction, one sale. The work may be done either by the main contractor or through the subcontractor. Service tax being the other part of the same type of transaction, there cannot be two services and/or two transfers of service - demand set aside.
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Central Excise

• Principles of natural justice - The remand cannot be ordered in such a casual manner, particularly, in a matter in which the CESTAT itself records that the Adjudicating Authority has made extensive examination and after granting fair opportunity of hearing to the parties came to the conclusion that there was violation of provisions of the Customs Act, 1962 and Central Excise Act, 1944. - Order of CESTAT not sustainable.
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• Inordinate delay in adjudication of SCN - delay of eleven years from issuance of SCN - the petitioner cannot be blamed for non adjudication of the SCN as he had never requested to transfer it to the Call Book or he has never delayed any proceedings pending adjudication - there shall not be any hanging sword, without any justifiable reasons - impugned order quashed
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Case Laws:

• GST

• 2019 (8) TMI 1421
  Maintainability of appeal - stay of recovery - requirement for pre-condition for deposit - Section 107(6) of both the CGST Act and the KSGST Act - HELD THAT:- This was not an issue agitated before the learned Single Judge. Further, a statutory appeal is yet to be filed. If the petitioner is intending to seek exoneration or waiver from the pre-conditions stipulated, it is them for to take steps if any available, either before the Appellate Authority or before any other appropriate forum. Since such an issue was not raised at the time of disposal of the writ petition and since no such ground was seen raised either in the writ petition or in the writ appeal, we are not deciding anything on the merit of such an issue. In view of the fact that the disputed amount now remains secure through the Bank Guarantee furnished, we are inclined to modify the impugned judgment by directing to keep in abeyance encashment of the Bank Guarantee furnished until the disposal of the appeal, provided the appellant keeps the same valid until disposal of a validly constituted appeal against Ext.P5 within a period of one month from today. Appeal disposed off.

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• 2019 (8) TMI 1396
  Seizure of the convenience and the goods - Section 129 of the Central Goods and Service Tax Act 2017 - HELD THAT:- It appears that despite such deposition of the amount referred to the authority declining to release the goods and the vehicle, a notice came to be issued under Section 130 of the Act. We direct the release of the vehicle as well as the goods at the earliest. If the proceedings have been initiated for the purpose of confiscation under Section 130 of the Act, they may continue subject to the final outcome of this petition.

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• 2019 (8) TMI 1395
  Rectification of Form GST TRAN-01 - CENVAT Credit available in terms of Section 140 of the CGST Act - transitional credit - HELD THAT:- From perusal of Annexure-F it is evident that the concerned Authority has requested the petitioner to approach Nodal Officer, GST in order to set right the technical breach. Learned counsel for the petitioner has relied on the decision in M/S. MANJUNATHA DESIGNER TILES VERSUS THE NODAL OFFICER/PRINCIPAL CHIEF COMMISSIONER DIVISION 7, CENTRAL GOODS AND SERVICE TAXES BENGALURU AND OTHERS [ 2019 (7) TMI 140 - KARNATAKA HIGH COURT] , wherein direction has been issued to the Nodal Officer GST - From perusal of Annexure-F it is evident that the concerned Authority has requested the petitioner to approach Nodal Officer, GST in order to set right the technical breach - The aforesaid decision relied upon by the learned counsel for the petitioner has already reached the next stage relating consideration of the grievance of the petitioner therein. Therefore, the cited decision has no assistant to the present petition. Petition dismissed as pre-mature.

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• Income Tax

• 2019 (9) TMI 1
  Permission for dispensation with his personal appearance before the trial Court - age of the petitioner is 70 years - Section 362 of Cr.P.C. - HC refused to interfere - The issue involved is, Whether prosecution can be launched where penalty has been reduced from 300% to 100% by the CIT(A) as per section 279(1A) - HELD THAT:- Issue notice, returnable within four weeks.

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• 2019 (8) TMI 1420
  Reopening of the assessment for u/s 147 - whether the impugned notice under Section 148 of the Act for the purpose of reopening of the assessment deserves to be quashed and set aside? - HELD THAT:- There is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. AO could be said to have applied his mind to the same. AO could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. No merit in the vociferous submission of the learned counsel appearing for the writ applicant that the contents of the reasons recorded by the AO for the reopening of the assessment is merely an introduction about the investigations conducted by the Investigation Wing, the modus operandi of the entry provided, the summing up of inquiry of the Investigation Wing, the information received from the Investigation Wing etc. As examined the belief of the AO to a limited extent to look into whether there was sufficient material available on record for the AO to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the AO, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials.

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• 2019 (8) TMI 1419
  Penalty u/s 271(1)(c) - addition u/s 68 on gift received - HELD THAT:- In the present case, the Assessing Officer did not record any finding as to incorrect, erroneous or false return of income filed by the assessee which could lead to the fact that assessee has furnished inaccurate particulars of income and make him liable for penalty under Section 271(1)(c) of the Act. AO had only doubted the genuineness of the gifts on ground of human probabilities and had also doubted the creditworthiness of donors and genuineness of transaction. The Tribunal on the other hand had recorded finding regarding the identity of creditors, their creditworthiness and genuineness of the transactions which were before the AO but he had not properly appreciated the same and discarded and doubted the genuineness of gifts on ground of human probabilities, though they were tax payers and the amounts gifted had been disclosed in their tax return for relevant year. Instant case, is not a case of either concealment of income or of furnishing inaccurate particulars as neither the assessing authority nor first appellate authority recorded any finding to such effect that details furnished by the assessee to be incorrect, erroneous or false. We are of the considered opinion that the Tribunal had recorded finding of fact that no penalty can be imposed u/s 271(1)(c) of the Act as Revenue has failed to establish that assessee has concealed income or furnished inaccurate particulars. - Decided in favour of assessee.

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• 2019 (8) TMI 1418
  Revision u/s 263 - non consideration of the provisions of Section 40(a)(i-a) in respect of land development expenses - non compliance ofT.D.S. provisions - HELD THAT:- The Tribunal rightly arrived at the finding that all the material in regard to land development expenses was before the AO who had required the assessee to produce all the documents in relation to the same and after inquiring about the details of contract and the contract executed by assessee, the bill submitted and payment schedule made, the AO accepted the books of account and only disallowed ₹ 1,20,000/- and added to the income of the assessee, which was also set aside by order of the CIT(A), while exercising the power u/s 263 CIT did not have any material for invoking the said provision and it merely did the same on suspicion and presumption. As, Clause (c) of Explanation 1 to Section 263 provides that when an appeal is pending before the CIT(A), the exercise of jurisdiction u/s 263 CIT is barred. Thus, in the present case, the CIT wrongly exercised jurisdiction u/s 263 by remanding back the matter to assessing authority on 25.3.2013, while the appeal was decided by CIT (A) on 5.6.2013. Thus, the order passed by the ITAT does not suffer from any irregularity and needs no interference. As far as the word record appearing in Clause (b) of Explanation-1 to Section 263 is concerned, it means the record available at the time of examination by the CIT and not any material or record available subsequent to his examination or exercise of power u/s 263. Thus, any order passed by the AO in the assessment proceedings after the remand by the CIT cannot be looked upon and the argument made by the counsel for the revenue for relying upon the fresh assessment order made on 7.3.2004 u/s 263/143(3) cannot be accepted in view of the above provision of law. In the present case, the Tribunal had recorded specific finding of fact that the assessing authority had examined each and every aspect of the case on which the remand order hinges, as such the remand order was not sustainable in the eyes of law. The revenue has failed to make any case for interference in the order of the ITAT, as the CIT had proceeded to remand the matter back to the assessing authority while the appeal of the assessee was pending u/s 250 and the power of exercise u/s 263 was barred by Clause (c) to Explanation 1 of Section 263. Further, the remand order by the CIT was based merely on suspicion and presumption - Decided in favour of assessee.

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• 2019 (8) TMI 1417
  Reopening of assessment u/s 147 - Reasons to believe - whether the AO, at the time of making the original assessment, could or could not have found by further inquiry or investigation whether the transactions were genuine or not? - HELD THAT:- It cannot be said that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. AO could be said to have applied his mind to the same. AO could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. No merit in the vociferous submission of the learned counsel appearing for the writ applicant that the contents of the reasons recorded by the AO for the reopening of the assessment is merely an introduction about the investigations conducted by the Investigation Wing, the modus operandi of the entry provided, the summing up of inquiry of the Investigation Wing, the information received from the Investigation Wing etc. As examined the belief of the AO to a limited extent to look into whether there was sufficient material available on record for the AO to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the Assessing Officer, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials. No case is made out by the writ applicant for interference.

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• 2019 (8) TMI 1416
  Enhancement of profit by enhancing sales value - AO disbelief sales of books and other study material sold at a discount/distributed free of cost even then then some were obtained on discount - HELD THAT:- Since the assessee is working on a missionary spirit, he is required to sell the books/stationery free of cost to the needy students on the recommendations of Principal of each school and for which the list was given to the AO and along with that necessary confirmation from the Principal were filed during the course of assessment proceedings and which have not been doubted by AO. In the circumstances, the contention that there was no material is wrong. The AO disbelieved the material while the Commissioner and Tribunal believed the same. The view taken by the Commissioner and the Tribunal can not be said to be perverse or based on no evidence

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• 2019 (8) TMI 1415
  Validity of the order passed u/s. 143(3) r.w.s 144C - effect of issuance of notice of demand penalty notice with draft order - HELD THAT:- An overview of section 144C deciphers that a draft order passed under sub-section (1) is only a tentative order which does not fasten any tax liability on the assessee. In case variations to the income in the draft order are accepted by the assessee or no objections are received within 30 days, the AO completes the assessment under section 144C(3) on the basis of draft order and the matter ends. In case the assessee objects to the variations in the income as proposed in the draft order and approaches the DRP, the final assessment order is passed by the AO u/s.144C (13) giving effect to the directions given by the DRP under sub-section (5). In case the assessee seeks to take the route of seeking redressal of its grievances through the channel of the CIT(A), in that case, again the AO has to pass a separate assessment order, which is obviously distinct from the draft order. Thus it follows that, irrespective of the course of action followed by the assessee, whether or not accepting the variation in the draft order or choosing the route of the DRP or the CIT(A), a draft order has to be necessarily followed by an assessment order on the basis of which a notice of demand is issued and it is then that the assessment is said to have come to an end. On going through the precedents in KALYANKUMAR RAY VERSUS CIT [ 1991 (8) TMI 291 - SUPREME COURT] and AUTO AND METAL ENGINEERS AND OTHERS VERSUS UOI [ 1997 (4) TMI 11 - SUPREME COURT] , it is manifested that the assessment proceedings come to an end on the issue of notice of demand u/s 156. Once a notice of demand is issued, the AO becomes functus officio in so far as the completion of assessment is concerned. It consequently follows that issue of notice of demand marks the completion of the assessment. As the AO in the instant case issued notice of demand at the stage of the draft order, which, actually ought to have been done at the stage of passing the final order, thereby assigning the finality to the assessment at the stage of draft order itself, we hold that the resultant final assessment order got vitiated in the eyes of law and hence cannot stand. To sum up, we set-aside the assessment order by declaring it to be null and void. Thus, the income offered in the return becomes total income of the assessee.

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• 2019 (8) TMI 1414
  Allowability of set off of unabsorbed depreciation - with Income from house property and income from other sources - HELD THAT:- A comparative study of pre-amendment and post amendment provisions of Sec. 32(2) suggests that prior to the amendment, the set off was restricted to the profits and gains, if any, of any business or profession whereas post amendment (i.e. the law applicable for the year under consideration) the set off is available from profits or gains chargeable for the previous year. In A.Y 2007-08, the CIT(A) has allowed the claim of set off in assessee's own case and in A.Y 2013-14, AO himself has allowed the claim of set off. Considering the facts of the case in hand in light of the relevant provisions of the Act and considering the decision of SURESH INDUSTRIES (P.) LTD. VERSUS ACIT [ 2012 (11) TMI 674 - ITAT MUMBAI] we direct the Assessing Officer to allow the claim of set off of unabsorbed depreciation by setting aside the findings of the CIT(A). - Decided in favour of assessee.

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• 2019 (8) TMI 1413
  Penalty u/s 271D - default of provisions of section 269SS - settlement Commission accepted the offer made by M/s Spaze Towers Pvt Ltd pursuant to search u/s 132 of additional income of ₹ 52.74 crores on account of bogus purchases and allowed the benefit of telescoping of personal expenses of promoters/directors aggregating to ₹ 16.43 crores - while deciding the appeal of above company CIT(A) suggested the AO to imposed penalty - recording of satisfaction - HELD THAT:- There is no dispute about the sources of money wherefrom the expenditure had been incurred which has already suffered taxation in the hands of the company Spaze Towers and the very same money cannot be considered as representing undisclosed income of the appellants for which false explanation is being given as loan to attract the provisions of section 269SS r.w.s 271D. On a perusal of the assessment order in the quantum proceedings, the order of the first appellate authority deciding the quantum additions and also the order of the JCIT levying penalty u/s 271D, we find that the assessment order as well as the order of the JCIT are devoid of any satisfaction regarding initiation of penalty proceedings u/s 271D The Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills Ambala City [ 2015 (11) TMI 1453 - SUPREME COURT] has held that penalty u/s 271D is without any satisfaction and, therefore, no such penalty can be levied We, accordingly, direct the Assessing Officer to delete the penalty levied in respect of the captioned appellants for all the assessment years under consideration.

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• 2019 (8) TMI 1412
  Addition of service tax payable u/s 43B - not debited to the P L A/c - HELD THAT:- We find that u/s 43B, certain deductions are allowable on actual payment. By not debiting the service tax to the P L A/c, the assessee has not claimed it as an expenditure. Therefore, the disallowance of the same u/s 43B of the Act would not arise. In the case before us, the AO is not disallowing the expenditure, but is bringing it to tax, which is not the purpose of the section.Therefore, the addition made u/s 43B is deleted. Disallowance of interest payment u/s 40(a)(ia) - an assessee in default u/s 201(1) - second proviso to section 40(a)(ia) - HELD THAT:- As w.e.f. 1.4.2013, 2nd proviso has been appended to section 40(a)(ia) according to which where an assessee is not deemed to be an assessee in default under the 1st proviso to sub-section 1 of section 201, it shall be deemed that the assessee has deducted and paid tax on such sum on the date of furnishing of such income by the recipient in the said proviso. It is the case of the assessee that the recipient has offered the income to tax in his hands and therefore, the proviso to section 201(1) applies and the assessee cannot be deemed to be an assessee in default. Admittedly, the assessee has not been treated as an assessee in default u/s 201(1) and the proviso to section 201(1) has been held to be retrospectively applicable. Therefore disallowance u/s 40(a)(ia) cannot be made subject to verification that the recipient has offered the income to tax in its hands. Thus, the ground is allowed for statistical purposes. Addition u/s 14A r.w.Rule 8D - HELD THAT:- This issue is covered in favour of the assessee by the decision of the various Courts particularly the Hon'ble Delhi High Court in the case of Cheminvest Limited vs Commissioner Of Income Tax-Vi [2015 (9) TMI 238 - DELHI HIGH COURT] and also the decisions of the Coordinate Benches of this Tribunal to which I am also a signatory. Respectfully following the same, I delete the disallowance made u/s 14A of the Act. Payment of ESI and PF on account of disallowance u/s 36(1)(va) i.e. employees contribution - HELD THAT:- Assessee has made the payment before filing of the return of income and as held the disallowance u/s 36(1)(va) is deleted.

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• 2019 (8) TMI 1411
  Penalty u/s 271(1)(c) - quantum addition deleted - HELD THAT:- As perused the orders of the lower authorities and the material available on record. We find that the Tribunal while disposing off the quantum appeal of the assessee for the year under consideration i.e. A.Y. 2010-11 had vacated the addition that was confirmed by the CIT(A). We are of the considered view that now when the quantum addition had been vacated by the Tribunal, therefore, the penalty imposed by the A.O under Sec.271(1)(c) in respect of the said addition cannot be sustained and is accordingly deleted.

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• 2019 (8) TMI 1410
  Deprecation on goodwill - assessee has fully written off goodwill in the books of accounts on the asset ceased to exist - the written down value of such goodwill is continued to be remain in the books of accounts - HELD THAT:- As claimed by the assessee itself, it has fully written off goodwill in the books of accounts on the asset ceased to exist in the books of accounts and the last date of the previous year. Once, a particular asset is ceased to exist in the books of account and also, the assessee is not getting any enduring benefit from such assets, then the question of depreciation on such non existing asset does not arise. We find that the Tribunal in assessee s own case has allowed deprecation on goodwill by following the decision of Hon ble Supreme Court in the case of Smifs Securities Limited vs CIT [2012 (8) TMI 713 - Supreme Court] on the ground that goodwill is an asset under the expression used in explanation 3(b) to section 32(1) and therefore, deprecation is allowable on such asset as intangible assets being any other business or commercial rights of similar nature. There is no dispute with regard to allowability of deprecation on goodwill, but when you compare the facts of the current year, the question of allowability of deprecation has to be examined, in the light of provision of section 32(1), where it mandates the block of assets should exists to claim depreciation. Since, goodwill is not treated as an asset in its books of accounts and also, the assessee is not getting any enduring benefit out of such goodwill, the question of allowing depreciation on such non existing asset does not arise. AO as well the CIT(A), after considering relevant facts has rightly disallowed depreciation claimed on non-existing asset being goodwill. - Decided against assessee.

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• 2019 (8) TMI 1409
  Ex-parte dismissal of appeal by CIT(A) - penalty u/s 271(1)(c) - Addition of loss, additions towards disallowances of certain payments u/s 40A(2)(b) and disallowances of cash payments u/s 40A(3) - HELD THAT:- CIT(A) had dismissed appeal filed by the assessee ex-parte for non prosecution by the assessee, even though various notices were issued fixing the case for hearing as narrated by the CIT(A) in his appellate order - although, the Ld.CIT(A) had dismissed appeal filed by the assessee ex-parte, but decided the issue of levy of penalty u/s 271(1)(c) on merit by discussing the issue, in light of facts brought out by the AO. But, fact remains that the Ld.CIT(A) has decided appeal behind the back of the assessee, without hearing from the aggrieved party. No litigant would derive any benefit by not prosecuting its appeal filed before the appellate authorities, rather it would cause inconvenience to the aggrieved party, in case appeal is dismissed for non prosecution. Therefore, when the party is not appear for hearing, there should be some compelling reasons, beyond the control of the assessee, which prevented from appearance before the authorities to explain the case. In this case, assessee submitted that the assessee could not appear before the AO, due to the reasons beyond its control - restore the appeal to file of the CIT(A) and direct him to decide the appeal on merits - Decided in favour of assessee for statistical purposes.

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• 2019 (8) TMI 1408
  Disallowance u/s. 80IB(10) - assessee was not entitled for deduction under Sec. 80IB(10) in respect of the residential project under consideration - HELD THAT:- A.R had tried to impress upon us that as the residential housing project in the case of the assessee had been approved on 19.07.2003 i.e much prior to the insertion of the definition of built-up area in clause (a) to Sec.80IB(14) as was made available on the statute vide the Finance Act, 2004 w.e.f 01.04.2005, therefore, the same would not be applicable in its case. We have perused the afore stated judgment of the Hon ble Supreme Court in the case of CIT-19, Mumbai Vs. Sarkar Builder [ 2015 (5) TMI 555 - SUPREME COURT] and find substantial force in the contention advanced by the ld. A.R. Hon‟ble Apex Court had observed that that as the definition of built-up area in clause (a) of Sec. 80IB(14) that was made available on the statute, vide the Finance (No. 2) Act, 2004, w.e.f 01.04.2005 was inextricably linked with the approval and construction of the housing project, therefore, an assessee cannot be called upon to comply with the said condition when it was not in contemplation of either the assessee or even the legislature at the time when the housing project was accorded approval by the local authorities. However, at the same time, we also cannot remain oblivious of the fact that the factual position in the case of the assessee before us, as had been canvassed by the ld. A.R, cannot be summarily accepted and would require to be verified. Accordingly, in all fairness, we restore the matter to the file of the A.O who is directed to adjudicate the issue as regards the entitlement of the assessee towards claim of deduction under Sec. 80IB(10) after considering the aforesaid judgment of Sarkar Builders - Appeal of the assessee is allowed for statistical purposes.

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• 2019 (8) TMI 1407
  Condonation of delay in filling appeal before the CIT(A) - delay of 27 months - specific objection against the reopening of the assessment - As per the stand of the assessee its factory premises was put under attachment by the Excise department on 28.8.2012 and no business has been carried out by the company thereafter. Thus, notice sent on that address was not received by anyone because the factory premises was closed down - HELD THAT:- Though equity in taxation matters is not a sound principle for adjudicating the controversy, but it is always to be kept in mind that where it is possible to draw two inferences from facts and where there is no evidence of intentional dishonesty or improper motive on the part of the assessee, then it would be just and equitable to draw such inference in such a manner that would lead to equity and justice. Neither the AO has acted in a fair manner nor the assessee has prosecuted its income tax proceedings before the ld.Revenue authorities diligently; nothing will happen to the authorities, but the punishment in the shape of tax liability on an addition of ₹ 27 crores amplified with the penalty of ₹ 9 crores, is in our understanding a quite disproportionate to the negligence of the assessee. If we weigh scale keeping in mind both these facts, then to our mind scale would tilt in favour of the assessee because by condoning the delay nothing is being taken away on merit from the department. It will be a just an opportunity to the assessee to explain its case. If something has been done illegally against it, then that illegality should not be regularized on account of technicalities. The other side could be compensated with some cost for lingering the litigation. Therefore, evaluating all these aspects, we are of the view that delay in filing the appeals before the CIT (A) deserves to be condoned subject to payment of cost of ₹ 50,000/- (Rupees fifteen thousand only). We accordingly condone the delay in filing the appeals before the CIT(A) and set aside the impugned orders. CIT(A) is a first appellate authority, it has not applied its mind on facts on the merit of the issues, therefore, we remit both the issues to the file of the CIT(A) for fresh adjudication on merit. It is needless to say that observation made hereinabove will not impair or injure the cast of the AO and will not cause any prejudice to the defence/explanation of the assessee on merit. The assessee will be liberty to raise any plea on merit for both the appeals, and the ld.CIT(A) shall decide appeals after providing due opportunity of hearing to the assessee. In the result, subject to payment of ₹ 50,000/- (Rupees fifty thousand only) by the assessee, appeals are allowed for statistical purpose

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• 2019 (8) TMI 1406
  Addition on account of broken period interest - HELD THAT:- Tribunal in turn, relying on the ratio laid down by the Hon ble Bombay High Court in CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT ] had held that broken period interest was allowable as deduction. We hold that the assessee is entitled to claim the deduction on account of broken period interest and dismiss the ground of appeal No.1 raised by Revenue. Disallowance of payments made to retiring staff i.e. on their voluntary retirement - assessee had claimed the said expenditure as ex-gratia payment as in the nature of profits and in lieu of salary, and on the same, TDS was also deducted - AO disallowed the said expenses in view of section 35DDA of the Act and also held that they were not allowed as deduction under section 37(1) - HELD THAT:- This issue also arose before the Tribunal in assessee s own case in assessment year 2011-12 [ 2016 (5) TMI 970 - ITAT PUNE] and the Tribunal vide paras 9 to 14 had decided the issue and allowed the claim of assessee. We are referring to the said paras but not reproducing the same for the sake of brevity. Accordingly, we find no merit in the ground of appeal No.2 raised by the Revenue and the same is dismissed.

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• 2019 (8) TMI 1405
  TDS u/s 194C - Disallowance of expenses u/s 40(a)(ia) - flight handling charges - HELD THAT:- Second proviso to section 40(a)(ia) read with first proviso to section 201(1) which has been inserted in the statute w.e.f. 1.4.2013, is a beneficial provision and has to be given retrospective effect. Here in this case, the disallowance u/s 40(a)(ia) has been made by the AO on the ground that assessee while making the payment to Air India has not deducted TDS. The assessee s case has been that, it is purely reimbursement of expenses given on behalf of its clients which has been reimbursed. At the stage of CIT (A) assessee has filed certificate in Form No. 26A of the Chartered Accountant of Air India certifying that amount paid to Air India by the assessee has been credited by the Air India in its books of accounts for the financial year 2011-12 and has been taken into account the return of income filed by Air India for Asstt. Year 2012-13 and same has been included in the gross total income. Once there is a categorical finding of fact based on material placed before CIT (A), i.e., certificate in Form No. 26A of the Chartered Accountant which is the statutory requirement, then there is no point to sending it back to the AO once again. Accordingly the order of the Ld. CIT (A) is confirmed and the grounds raised by the revenue are dismissed.

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• 2019 (8) TMI 1404
  Addition u/s 68 - conversion of preference share into equity share - alleged that assessee did not submit proper explanation about the nature and source of sums credited in its books - HELD THAT:- Assessee has credited the amount of preference shares in the earlier year which has now converted into equity-shares capital. The AO nowhere doubt over the identity and creditworthiness of the investor and genuineness of the transaction. The only doubt is that the value of share premium charged is not truly reflecting the intrinsic value of the equity shares of the company. Valuation of charging of shares premium could not be basis for making addition u/s 68. The assessee nowhere credited the cash/sum in the books of accounts which is the essential condition to apply the provisions of u/s 68 - assessee submits the certificate obtained from the CA in which the valuation of the share has been duly assessed. The assessee also produced the letter dated 14.06.2010 produced before the RBI and also submitted the certified copy of resolution of Extra Ordinary Meeting of Member s for obtaining consent for conversion which has been marked as annexure-C. The assessee has also produced the concerned letter of preference shareholder for conversion marked as annexure-D CIT(A) has decided the matter of judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is being decided in favour of the assessee against the revenue.

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• 2019 (8) TMI 1403
  Addition u/s. 69B - receipt of on-money - arguments of the assessee challenging the addition in the impugned assessment years are, that the document seized in search operation carried out the premise of Tapadia family does not bear the name or signatures of the assessee/appellant - HELD THAT:- The assessee had entered into transaction for purchase of land with Tapadias. The assessee made no effort either to obtain clarification from Ajay B Tapadiya regarding onmoney payments nor the assessee could ensure presence of Ajay B Tapadiya before the Assessing Officer to dispel that there was no involvement of on-money in the transaction. The assessee has failed to dislodge the allegation of on-money payments. The documents seized from the premises of Tapadias during search operation coupled with unrebutted statement of Ajay B Tapadiya explaining the entire transaction as recorded on seized document clearly indicates assessee‟s involvement in on-money payment for purchase of land. No infirmity in the order of Commissioner of Income Tax (Appeals) in confirming the addition with respect to on-money payment for purchase of land, in the hands of assessee. Accordingly, the impugned order is upheld - Decided against assessee.

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• 2019 (8) TMI 1402
  Low tax effect - maintainability of appeal - HELD THAT:- This is purport of litigation policy wherein appeals filed by Revenue below threshold limits of tax effects are withdrawn by Revenue before Hon ble Courts/tribunal. Thus keeping in view CBDT circular no. 3/2018 dated 11-07-2018 and as modified vide communication dated 20.08.2018, we are inclined to dismiss these three appeal filed by Revenue due to low tax effect involved in this appeal which is below ₹ 20 lacs being covered by circular dated 11.07.2018 as further modified on 20.08.2018. While disposing of these three appeals filed by Revenue due to low tax effect vide CBDT Circular no. 3/2018 dated 11.07.2018 and as further modified by communication dated 20.08.2018, we clarify that we have not commented on the merits of the issue s in these three appeals. We are granting liberty to Revenue that if at any stage Revenue wants to agitate the matter/issue in these three appeals in accordance with the clauses as are contained in the afore-stated circular number 3/2018 dated 11.07.2018 and modification dated 20.08.2018 based on cogent reasons/evidences that these appeals are covered under exceptions carved out in aforesaid CBDT circular , the Revenue is hereby granted liberty to file miscellaneous application(s) praying for recall of these orders in accordance with law

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• 2019 (8) TMI 1401
  Revision u/s 263 - non-deduction of TDS in respect of export fright made to Inter Ocean Shipping and Logistics Services - non furnishing of audit report in form 3CEB - AO accepted return income - HELD THAT:- We have gone through material on record placed in the paper book which was furnished before the AO during the course of assessment year. Regarding issue of non-deduction of TDS in respect of export fright made to Inter Ocean Shipping and Logistics Services, it is discerned from the detail that as per page no. 11 of the paper book, the assessee has called copies of ledger account of parties along with detail of TDS payment in respect of payment of export freight. The assessee has furnished the ledger account of export payment along with copies of sample invoices. Further, it is noticed that Indian Ocean Shipping and Logistics Services was an India agent acting on behalf of non-resident shipping company for collecting freight demurrage and other charges and reimburse the same to the shipping company. CBDT Circular No. 723 dated 19th Sep, 1995 also clarifies that where payment is made to the shipping agents of non-resident, ship owner or charter, the agent steps into the shoe of the Principal i.e. shipping company. Accordingly, provision of section 172 shall apply and section 194C or 195 shall not be applicable. On identical issue and facts, the ITAT (Chennai) in the case of T. Mathimaran Vs. CIT ( 2015 (10) TMI 311 - ITAT CHENNAI ) held that as per Circular issued by the CBDT No. 723 dated 19th Sep, 1995 where the provision section 172 apply provisions of section 194C and 195 relating to tax deduction at source are not applicable. Similarly, the ITAT Ahmedabad in the case of Steelco Gujarat Ltd. vs. ACIT (2017 (1) TMI 1573 - ITAT AHMEDABAD) after giving reference to circular no. 723 held that where provision of section 172 applies and provisions of section 194C or 195 are not applicable. CIT has failed to consider that during the course of assessment proceedings the assessee has furnished the relevant material in respect of export freight payment and the ld. Pr. CIT has also not controverted the these undisputed facts and findings brought to his notice by the assessee during the course of proceedings u/s. 263 - we observe that the Pr. CIT has failed to justify how the order passed u/s. 143(3) of the act in respect of non-deduction of tax on payment of export freight was erroneous and prejudicial to the interest of revenue. Therefore, we are not inclined with the decision of Pr. CIT on the issue of non-deduction of TDS on freight payment as the Ld. Pr. CIT has failed to substantiate that order passed by the assessing officer is erroneous and prejudicial to the interest of Revenue. Therefore, the decision of Pr. CIT to revise the order u/s. 263 on the issue of export freight payment is not justified. This part of ground of appeal of the assessee is allowed. Non-submission of form 3CEB electronically - assessee submitted that it has filed form 3CEB manually on 30th Sep, 2013 - HELD THAT:- We consider that the assessee has not filed the aforesaid report electronically and as result the case of the assessee could not be referred to the TPO by the AO. We consider that this issue was not examined by the assessing officer as the assessee has also not brought on record that why the aforesaid report in 3CEB was not filed electronically. To this extent, we find that ld. Pr. CIT was justified in invoking the provision of section 263 of the act holding that the order passed by the assessing officer as erroneous and prejudicial to the interest of revenue to the extent of non-filing of form 3CEB report. The assessee may submit corresponding reasons for not filing the form 3CEB electronically before CIT(A) at the time of appellate proceedings. In the light of the above facts and circumstances, we do not find any anomalies in the decision of the ld. CIT(A) for revision u/s 263 of the act to the extent of default in filing form 3CEB report in electronic mode as prescribed in the I.T. Rule 1962. - Appeal of the assessee is partly allowed

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• 2019 (8) TMI 1394
  TP Adjustment - operating margin - market support services - comparable selection - HELD THAT:- cost of marketing team should be bifurcated based on revenue of AE from its operations in India vis a vis revenue generated by the assessee from its sales to third party vendors. We, accordingly, restore this issue to the file of the Assessing Officer/TPO. The assessee is directed to submit the India Specific Profit and Loss Account, network equipment sales to Indian telecom operators of the AE duly certified by an authorised public accountant of Finland. The TPO is directed to examine the same and decide the issue afresh after giving reasonable and sufficient opportunity of being heard to the assessee. TP Adjustment - TSS segment - Warrantee support services - Held that:- the FAR analysis of the year under APA applicable from assessment year 2010-11 can also be used for the year under consideration since the TP adjustment is of a very small amount being 1.01 crores. Considering the facts in totality, we direct the TPO to accept the TSS segment as part of network division for bench marking the international transaction which means that this segment should be taken with the main network division of aggregated approach for bench marking. TP Adjustment - ITES Segment - Remote network Management services - Held that:- even the Legislature accepts that two segments cannot be mixed up, which means that most of the comparables used by the TPO have to be rejected. In all fairness, we deem it fit to restore the matter to the file of the TPO with a direction to use only those comparables which fit in Rule 10TA(e) of the Rules and decide the issue afresh after giving reasonable and fair opportunity of being heard to the assessee. The assessee shall be at liberty to bring any new comparables which fit into Rule 10TA(e) of the Rules.

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• 2019 (8) TMI 1393
  Additions towards Unexplained gold jewellery found during the course of search action - personal effect - HELD THAT:- The probability of any part of the gold jewellery having been received by the assessee or his family members as gifts was also ruled out by the A.O, who observed that except for a gift deed for 100 gms of gold gifts received by Smt. Swati Joshi Vora from her parents, no other confirmations of gifts received by the assessee or his family members was placed on record. As the assessee could not put forth an explanation as regards the gold jewellery (weight 938.03 gms) of a value of ₹ 22,70,314/-, therefore, the A.O after considering gold jewellery (weight 100 gms) of a value of ₹ 2,80,000/- as explained, made an addition of the balance gold jewellery (weight 838.03) of a value of ₹ 19,90,313/- as an unexplained investment in the hands of the assessee. CIT(A) after taking cognizance of the CBDT Instruction No. 1916, dated 11.05.1994, had observed that as observed by various courts, gold jewellery found to the extent of the limit mentioned in the aforesaid instruction was to be treated as explained and no addition could be made to that extent. On the basis of his aforesaid observations, the CIT(A) had after considering 600 gms of gold jewellery [500 gms for assesses wife (+) 100 gms for the assessee] as explained jewellery, therein restricted the addition as regards the balance jewellery (weight 338.03 gms) of a value of ₹ 8,18,134/-. CIT(A) by adopting a liberal approach had already granted substantial relief to the assessee. As is discernible from the orders of the lower authorities, the CIT(A) had after giving benefit of gold jewellery of 600 gms [500 gms for the assesses wife (+) 100 gms for assessee], had rightly observed that balance gold jewellery (weight 338.03 gms) of a value of ₹ 8,18,134/- was to be treated as an unexplained investment in the hands of the assessee. No infirmity arises from the aforesaid well reasoned order of the CIT(A), therefore, finding no merit in the appeal filed by the assessee, we dismiss the same. - Decided against assessee.

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• 2019 (8) TMI 1357
  Revenue recognition - the percentage of completion method - Inclusion of land in Working of cost of the real estate development project - developing and constructing residential buildings - HELD THAT:- We find that the acquisition of land is the very first step for the commencement of the project. The work on the project takes place after the acquisition of land. Generally, cost of land constitutes a very large portion but by the acquisition of land itself, there is no work-in-progress. At the stage where land only is acquired, it cannot be said that the project has commenced but if the cost of land is included in the percentage of the project completion, then it would show that the project has been substantially completed say, to the extent of 50-60% at the beginning itself. Hence, for working out the stage of completion of the project land value should not be included. Hence we hold that the CIT-A is justified in excluding the value of land while working out the percentage of work completed. We find that the AO had considered the sale area while determining the percentage of completion method as against the cost incurred upto 31.3.2010. Hence we hold that the percentage of work completed upto 31.3.2010 should be considered at 67.38% as determined by the assessee in the return of income. Addition to the valuation of unsold flats as on 31.3.2010 - HELD THAT:- We find that the Hon ble Supreme Court in the case of Chainrup Sampatram vs CIT [ 1953 (10) TMI 2 - SUPREME COURT] and United Commercial Bank vs CIT [ 1999 (9) TMI 4 - SUPREME COURT] had accepted the basis of valuation of inventories at lower of cost or market value and had also held that no profit could arise out of valuation of closing stock. Their Lordships held that valuation of unsold stock at the close of an accounting period is a necessary part of the process of determining the trading results of that period and can in no sense be regarded as the source of such profits. CIT-A by valuing unsold flats at the average of sale price CIT(A) had assessed profit attributable to unsold flats which is not permissible. We direct the ld AO to accept the valuation of unsold flats as on 31.3.2010 as done by the assessee. Addition based on price rate difference of Flat - The assessee had sold flat D-5 to Mr. Bharat D. Shah and others on 29.12.2009 at the rate of ₹ 28,750 per sq. ft., whereas approximately 28 months earlier, the assessee had sold 2 flats bearing No. D- 3 D- 4 to Mr. Bharat Daftary and Gautam Daftary at the rate of ₹ 33,750 per sq. ft. - HELD THAT:- Merely by showing that the first condition is satisfied, the revenue cannot ask the Court to presume that the second condition too is fulfilled, because even in a case where the first condition of 15 per cent difference is satisfied, the transaction may be a perfectly honest and bona fide transaction and there may be no understatement of the consideration. The fulfilment of the second condition has, therefore, to be established independently of the first condition and merely because the first condition is satisfied, no inference can necessarily follow that the second condition is also fulfilled. Each condition has got to be viewed and established independently before sub-section (2) can be invoked and the burden of doing so is clearly on the revenue. It is a well-settled rule of law that the onus of establishing that the conditions of taxability are fulfilled is always on the revenue and the second condition being as much a condition of taxability as the first, the burden lies on the revenue to show that there is understatement of the consideration and the second condition is fulfilled. Moreover, to throw the burden of showing that there is no under statement of the consideration on the assessee would be to cast an almost impossible burden upon him to establish a negative, namely, that he did not receive any consideration beyond that declared by him. AO had not brought any material on record to prove that the assessee had indeed received onmoney to the exten of ₹ 4 crores from Mr Bharat D Shah and others. Infact the ld AO had not even bothered to make any examination of Mr Bharat D Shah by summoning him to understand the truth in the matter. Hence it could be safely concluded that the entire addition of ₹ 4 crores has been made merely on suspicion , surmise and conjecture and not backed by any material evidences and accordingly, the addition cannot be sustained in the eyes of law. Hence we hold that the CIT-A had rightly deleted the addition in the sum of ₹ 4 crores in the facts and circumstances of the instant case, which in our considered opinion, does not call for any interference. - Decided in favour of assessee.

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• Customs

• 2019 (8) TMI 1400
  Release of imported goods from Pakistan - rate of duty - Vires of N/N. 5/2019-Customs dated 16.02.2019 - clearance / release of their goods, imported/originating from Pakistan and detained at the customs station Attari Border - stay of auction proceedings during the pendency of present petitions - Although the Petitioners have challenged vires of Notification No. 5/2019, however, counsel for the Petitioners at the time of arguments do not press their challenge to impugned notification and confine their prayer for release of goods on payment of duty applicable at the time of filing of bill of entry coupled with the entry of imported goods within the territory of India at the Attari Border in view of the provisions of Section 15 of the Customs Act, 1962. HELD THAT:- The intent and purport of impugned notification was to discourage import from Pakistan and not to penalize Indian importers. All the Petitioners presented bill of entry on 16.02.2019 during working hours and duty liability was assessed on the same day because goods were presented alongwith bill of entry. There is no writ petition where bill of entry was filed prior to entry inward of vehicle carrying imported goods. In all the present cases/writ petitions, the Petitioners placed import orders prior to 16.02.2019 and received goods in India on or before 16.02.2019, admittedly before the impugned Notification was issued/uploaded at 8.45 PM on 16.02.2019 after the working hours. If the impugned notification is made applicable to them, it would amount to retrospective application which is not permissible in law. Without going into vires of impugned notification, it is held that all the Petitioners would be liable to pay duty as was applicable at the time of filing of bill of entry coupled with the fact of the imported goods having entered territory of India on 16.02.2019 prior to the issuance of the impugned notification. The Respondent shall release goods within seven days on payment of duty as declared and assessed, if not already paid, ignoring the impugned N/N. 5/2019. Petition allowed.

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• 2019 (8) TMI 1399
  Cancellation of CHA License - validity of statements recorded under Section 108 of the Customs Act - Whether the CESTAT fell into error in attributing the statements of Rajender Kumar @ Raju to the appellant and whether the finding with respect to the omission and negligence was of such magnitude as to call for revocation of the CHA licence in the circumstances of the case? HELD THAT:- There is nothing to show that the appellant, or any of its employees, could be attributed any conscious or deliberate mis-statement on behalf of the importer. In the instant case, there is no corroborative evidence or statement of anybody that the CHA had information, knowledge or has connived in the alleged forgery of invoices, mis-declaration and under-valuations. It has been observed in several decisions of this Court that an element of mens rea, or any direct or indirect involvement attributable to the CHA through active knowledge or connivance is required to be proved in a proceeding for revocation of license of a Customs Housing Agent/ Customs Broker. The Customs Broker/ Customs Housing Agent merely acts as a facilitator or agent for carrying out import operations. Thus, it appears that there is no reason to attribute any negligence to the appellant in the instant case. The CESTAT fell into error in attributing the statement of Rajender @ Raju to the appellant and on that basis, directing cancellation of the CHA license of the Appellant - there is no negligence which would be attributed to the appellant who acted on the basis of the instructions of the importer while filing the documents for clearance of the import - appeal allowed.

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• 2019 (8) TMI 1398
  Jurisdiction - power of DRI to issue SCN - delayed/no adjudication of impugned Show Cause Notices - mis-declaration of description and value of goods - Limitation - a period of more than 7 years has expired from the date of SCN Maintainability of writ in view of alternative remedy - HELD THAT:- The present petitions are raising question of reasonable period of limitation as well retroactive amendment and as per judgment of Hon ble Supreme Court in the case of State of Punjab Vs. Bhatinda District Co-Op. Milk P. Union Ltd. [ 2007 (10) TMI 300 - SUPREME COURT ] writ is maintainable because question of reasonable period of limitation cannot be decided by authorities appointed under relevant statute, thus we find it appropriate to entertain present writ Petitions under article 226 of the Constitution of India. In the present petitions, show cause notice(s) were issued on 02.04.2009, 31.03.2009 19.02.2011. Adjudication was never stayed by this Court or any other Court so Respondents were always free to adjudicate show cause notice. The excuse of non- adjudication tendered by counsel for the Respondents might be ground to extend limitation by passing order in terms of proviso to Section 28 (9) or Section 28 (9A), however in the absence of passing any such order, the Respondent-Department cannot absolve itself from its statutory duty. Petition allowed.

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• 2019 (8) TMI 1392
  Interpretation of statute - correct interpretation of the term preserved - export under duty entitlement scheme - HELD THAT:- Leave granted.

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• 2019 (8) TMI 1391
  Classification of imported goods - import of natural Rutile Ore/ Leucoxene Sand of different grades - HELD THAT:- Issue notice on the application for condonation of delay as well as on the appeal, returnable within four weeks.

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• 2019 (8) TMI 1390
  Classification of Excursion Boat - Bayliner 325 SB - it was held that classification of the impugned boat under CTH 8903 upheld - HELD THAT:- There is no ground to interfere with the impugned order - appeal dismissed.

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• 2019 (8) TMI 1389
  Discharge of contaminated Naphtha oil/ Slop oil/Sludge oil - arrest order - HELD THAT:- We direct the respondents No.1, 2 and 3 to consider the applications of the petitioner as well as the respondents and dispose of the same within 10 days from today.

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• 2019 (8) TMI 1388
  Demand of interest on recovery of excess duty drawback claim - Section 75A (2) of the Customs Act, 1962 - when the petitioner realized that there was an excess claim and grant of drawback to the extent of ₹ 4,92,251/-, he had deposited the same on 18.10.2004 and the show cause notice came to be issued subsequently on 13.12.2004 - Demand raised without issuance of SCN - HELD THAT:- Section 75A(2) stipulates that if any erroneous drawback has been paid, the claimant shall repay the said amount within two months from the date of demand and shall also pay interest from the date after the expiry of the said two months till the date of recovery - Admittedly, such a deposit has been made by the petitioner even prior to the demand of drawback under the show cause notice. Section 75A(2) contemplates payment of interest from the date of demand of the erroneously paid drawback. Since the petitioner had repaid the drawback even prior to the demand, the respondents will not be empowered to claim any interest. On this ground, the claim for interest is liable to be quashed. No SCN issued - HELD THAT:- The Supreme Court of India in the case of UNION OF INDIA AND OTHERS VERSUS MADHUMILAN SYNTEX PVT. LTD. [ 1988 (5) TMI 38 - SUPREME COURT] had held that a demand raised without notice or hearing, would be invalid - As such, the interest levied by the first respondent without the prior show cause notice for proposed interest is invalid. Petition allowed.

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• 2019 (8) TMI 1387
  Prohibited goods or not - opium poppy or bread seed poppy - public notice No. 9/2019 - guidelines for registration of sales contract in regard to poppy seed imports from Turkey - HELD THAT:- The guidelines are specific to poppy seed imports from Turkey. They speak, in clause I, of a determination of a country cap. This cap is to be approved by the Department of Revenue, based on a recommendation by the Narcotics Commissioner, a representative of the Directorate General of Foreign Trade, and a representative of the Department of Revenue. The clause clearly says that the country cap will be based on stock and production of poppy seeds as communicated by the Turkish Grain Board (TMO) or the Turkish Embassy in India. Clearly, therefore, this cap is not ad hoc or without basis. The power to impose quantitative restrictions can be traced to Chapter III-A of the Foreign Trade (Development Regulation) Act 1992. This was inserted by a 2010 amendment, and confers power on the Central Government to impose quantitative restrictions on imports. Section 9-A says that the Central Government may, after conducting a suitable enquiry, if satisfied that any goods are imported into India in large quantities and under such conditions as injure or threaten to injure domestic industry, it may impose quantitative restriction. These restrictions can continue for a maximum of four years, extendable by a like period - Once, therefore, we find that there is a power to regulate and a power to impose quantitative restrictions, and there is no challenge to the exercise of that power, it is difficult to see what remains in the Petition. Merely saying that a certain clause is, in the Petitioner s view, sub-optimal, or leaves something to be desired, is not enough to warrant a striking down of the notification. We cannot, equally, substitute our view for government policy framed in legitimate exercise of statutory power. Once, therefore, we see that the presently impugned Guidelines are but a step towards implementing a policy that has not only been in place in some form for many years previously, but is in furtherance of a policy to promote the larger public interest, then the narrow commercial interests of the Petitioners must yield. Petition is entirely without merits and is dismissed.

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• 2019 (8) TMI 1386
  Mis-declaration of the countries of destination so as to claim the incentives under a scheme which otherwise was not permitted - Section 108 of the Customs Act, 1962 - HELD THAT:- DRI had sought time to seek instructions with regard to withdrawing of the said complaint at Ahemdabad, the proceedings of which are not warranted in view of the subsequent developments. In the light of the investigations having been transferred to Ludhiana and the counsel for DRI having undertaken to get the aforesaid complaint withdrawn within next one month, no further adjudication is required in the present writ petition.

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• 2019 (8) TMI 1385
  Revocation of CHA licence - forfeiture of security deposit - imposition of penalty - forgery in the Bill of lading - change of date of the bill - Regulation 18 read with Regulation 20 and 22 of the CBLR, 2013 - time limitation - only case of appellant is that that the impugned show cause notice is not issued by Commissioner of Customs within 90 days of the date of the receipt offence report as it was put in post after the expiry of 90 days irrespective it was signed by the issuing authorities during the period of limitation itself. HELD THAT:- Admittedly, the incidence report was received by the Commissioner of Customs on 27/10/2017. Admittedly, show cause notice bears 17/01/2018 as the date, period of 90 days as required in the above provision expires on 27/01/2018. As per the department the show cause notice of 17/01/2018 was dispatched on 17/01/2018 itself whereas as per Appellant it was put to Speed Post on 01/04/2018 that is after the expiry of the said period of 90 days. Whether the impugned show cause notice stands issued within the period of 90 days or not? - Regulation 20 (1) of CBLR, 2013 - HELD THAT:- Any notice is set to be issued when it is put in proper form and placed in the hands of a person authorised to serve it and with the bonafide intent to have it served - In the present case, there is no dispute that the show cause notice was signed by Commissioner on 17/01/2018 i.e before the expiry of period of 90 days from the date of receipt of inquest report. No doubt, considering the above definition of word issue mere signing of notice cannot be equated with issuance of notice. As contemplated in the impugned regulation, the date relevant for issue would be the date on which the notice was handed over for service to the proper officer. The department has placed on record the copy of dispatch register maintained by the office of the Commissioner Customs in their regular course of business. Perusal thereof shows that the show cause notice of 17/01/2018 was dispatched for being put in process of post on 17/01/2018 itself. Once the notice was sent out of the office of issuing authority, it was definitely out of the control of the said authority. Hence, the obligation of said authority for issuing the same stands discharged with the said dispatch. The fact that date of service of the show cause notice upon the Appellant that is 07/02/2018 is absolutely not relevant for the impugned controversy, as the same is confined to issuance of notice. Event of issuance has to precede the event of service of notice. Hence the service of notice cannot be covered under the word shall issue - we are not convinced with the arguments put forth on behalf of Appellant about the impugned show cause notice to have been barred by in time. Appeal dismissed.

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• 2019 (8) TMI 1384
  Imposition of penalty u/s 117 of Customs duty - it was alleged that the FOB value declared by the appellant is lesser than the PMV value resulting into excess claim of DEPB, assessment was finalized - HELD THAT:- While finalizing the assessment of the export goods the adjudicating authority has accepted the FOB value as declared by the appellant and allowed the DEPB benefit accordingly. Therefore, imposition of penalty under Section 117 of the Customs Act, 1962 is unwarranted. The penalty is set aside - Appeal allowed.

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• Insolvency & Bankruptcy

• 2019 (8) TMI 1383
  Admissibility of application - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The present appeal has been preferred after delay of 112 days and in the light of the proviso to sub-section (2) of Section 61, this Appellate Tribunal has no jurisdiction to condone the delay. For the said reason, we are not expressing any opinion with regard to the impugned order dated 10th January, 2019. If the application under Section 12A is not entertained by the Adjudicating Authority that may give a fresh cause of action to the Appellant to move against the said order - appeal is dismissed being barred by limitation.

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• 2019 (8) TMI 1382
  Continuation of insolvency proceedings - abatement of proceedings - party became insolvent, but no formal application filed for continuation of proceedings - continuation of proceedings before this Tribunal in compliance with Rule 22 of CESTAT (Procedure) Rules, 1982 - HELD THAT:- A plain reading of Rule 22 makes it clear that for the proceedings to be continued by the company, necessary applications required to be filed to continue the proceedings by the successor or liquidator as the case may be, within sixty days of the occurrence of the event. In the present case, even though the insolvency proceedings has been started in 2017 and Resolution Professional has been appointed, no formal application has been filed to continue the proceedings before this forum - appeals abated.

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• 2019 (8) TMI 1381
  Initiation of Corporate Insolvency Resolution Process - financial debt or not - Section 33(1) of the Karnataka Stamp Act, 1957 - Sections 5(7) and 5(8) of I B Code, 2016 - HELD THAT:- The amount in question has been advanced by the Petitioner, and utilized by the Respondent, based on the loan agreement and in the Real Estate Project or purchase of Flat and hence, it cannot be disputed that he is not a Financial Creditor as also by going through the audited balance sheet as on 31.03.2016 duly submitted by the Advocate for the Petitioner in respect of the Respondent Company the health of the Company does not seems to be very good as Reserve and surplus is only ₹ 34,53,140/- with the Company. The Respondent Company started since 2002 and it is carrying lot of current and non-current liability and is blocked in current assets i.e. inventories, Trade Receivables. All these circumstances suggest, that it is fit case to be admitted, under Section 7 of Insolvency Bankruptcy Code for Corporate Insolvency Resolution Process to be initiated. Petition admitted - moratorium declared.

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• PMLA

• 2019 (8) TMI 1380
  Offence under PMLA - HELD THAT:- The Aim and Object of the Prevention of Money Laundering Act, 2002 is to find out property derived or obtained by any person as a result of criminal activity relating to a scheduled offence and to attach, freeze and confiscate the same subject to the trial under the Prevention of Money Laundering Act, 2002, so that the property cannot be laundered further, which is derived or obtained as a result of criminal activity. Recover the Proceeds of Crime from the person alleged to have holding the same. Without prejudice to the rights and contention of the appellant, the appellant is ready and willing to secure the interest of Enforcement Directorate by Fixed Deposit Receipt of any Nationalized Bank equivalent to an amount with the respondent by way of F.D. No doubt, this tribunal has allowed the similar prayer in number of appeals and even in few appeals, the respondent has given his consent.

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• 2019 (8) TMI 1379
  Offence PMLA - attachment orders - HELD THAT:- It is Special Act, the provisions of this Act have to be considered on the date of offence as well as on the date of passing the orders. The appellants are acquitted from the schedule offence, no appeal has been filed either by the State or ED as admitted by the counsel for the respondent. Admittedly, the State as well as the respondent has not challenged the acquittal order before any Court even after expiry of 3 years. The respondent has merely stated that the Bank was cheated by the appellants as well as the main accused, the Bank has challenged the said order before the High Court and the appeal filed by the bank is pending. It is an admitted position that the Bank is not a party in the present proceedings. Therefore, in case the order was to be challenged, it was to be challenged by the ED or the State. The same has not happened. Thus, attachment of two properties lapses under the operation of law. The impugned order is set-aside by allowing the appeal.

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• 2019 (8) TMI 1378
  Offence under PMLA - Encashment of securities while appeal was pending - HELD THAT:- One day after the receipt of the impugned order on 7.6.2019, the respondent has encashed the mutual funds/securities. - It is evident that the respondent by encashing the mutual funds at the pre-mature stage is directly contrary to Sub-rule (4) of Rule-4 without expiry of period of appeal. It is correct that the respondent is an independent agency and once the order is confirmed, after serving the notice under Section 8(4) and subject to filing of appeal and passing of an order, the respondent is entitled to take the possession. With regard to movable property, the sub-rule 4 of Rule 4 has to be complied very strictly. In case any breach of the said rule, the Appellate Tribunal has a power to interfere with. IO in the matter has encashed the mutual funds at the premature stage which is contrary to rule and it would have been better if IO should have either approached to the High Court to bring to the notice of Court before altering the property or he would have waited the decision of the High Court where CBI has filed the appeal against the order passed by Special Court, CBI, who released the said property subject to certain conditions. At the maximum, mutual funds could have been taken into its possession till the orders are passed by the Hon ble High Court of Delhi. No harm would have caused as the attachment orders are already continuing redundant. IO ought to have informed the Hon ble High Court of Delhi at New Delhi in advance before taking any steps in respect of mutual funds which are the subject matter of appeals filed by the CBI, in order to alter the status of movable property which was released by the Special Court in relation to same subject matter of property. Under these circumstances, prima facie the mutual funds must be restored to the original position with the Reliance Nippon Life Asset Management Ltd. If it is not possible, the IO shall prepare the FD for the same amount in the name of Sandeep Tyagi for the period of one year and shall keep the same with the respondent. It is clarified that once the compliance is made, the status quo order shall continue. The appellants shall not deal the said money or mutual funds after maturity in any manner. The order passed on 11th July, 2019 for status quo is also modified and after compliance, both parties shall maintain status quo in respect of mutual funds or the FD prepared.

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• Service Tax

• 2019 (8) TMI 1377
  Validity of order of CESTAT - appeal came to be dismissed on the specious ground that the issues raised in the appeals have already been adjudicated by the High Court - HELD THAT:- There are no hesitation in taking the view that the subject matter before the High Court of Delhi in the Writ Petition, which was filed by the assessee, was limited to the claim of refund which was rejected by the department. The observations made in the judgment of the High Court, therefore, will have to be understood only in that context; and not as having adjudicated the correctness of the order passed by the adjudicating authority, which was the subject matter of appeals before the Appellate Tribunal at the instance of the department. The impugned order deserves to be set aside and parties relegated before the Appellate Tribunal for reconsideration of the appeals on its own merits and in accordance with law, uninfluenced by any observation made by the High Court - Appeal restored.

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• 2019 (8) TMI 1376
  Imposition of penalty u/s 78 of FA - appellant had paid service tax only on invoices raised for reimbursement of salaries from the service receivers/clients but not on the incentives, rewards and reimbursement (RR) receipts from its clients - contravention of provisions of 67(3)1 of the Finance Act 1994 - HELD THAT:- There is nothing available in the show cause about the intention of the appellant to evade payment of tax except that error was pointed out in the EA-2000 audit which appellant accepted to be an error and made its best efforts to rectify the same as in both Order-In-Appeal and Order-In-Original, it has been noted by the authorities that they had checked the payment and found them accounted in the assessee s account on ACES that has established that the payment details are genuine. Therefore, there if no cogent reason available to impose penalty under section 78 of FA when under section 76 penalty of 10% was imposed and appellant had abided the same by paying the penalty. The transitory provision as contained under section 78(B)(1)(b), provision of section 76 or 78 shall be applicable to the cases where show cause notice was issued but no order has been passed under sub section of 2 of section 73 as section 76 deals with non-payment of tax other than the reason of fraud or collusion or wilful misstatement or suppression of fact or contravention of any other provision of the act or rules while section 78 covers any of these grounds. Penalty set aside - Appeal allowed.

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• 2019 (8) TMI 1375
  Penalty u/s 78 - failure for payment of service tax - failure to take registration - Business Auxiliary Service - commission Agent in promotion and marketing of services of holidays option - Denial of Cum-Tax benefit - extended period of limitation - HELD THAT:- The appellant failed to file ST-3 Returns and did not follow the procedure under chapter 5 of the Finance Act 1994 and rules made there under - also the ignorance of law is not excusable in tax law and a person who is unaware of law cannot escape liability. This being the facts and evidence of record it can very well be said that ingredients of the penal provision contained in section 78 of the Finance Act, is not made out against appellant to impose equivalent penalty on him. Cum-tax benefit - HELD THAT:- The leaf-let of PCL containing terms of payment of commission to its Agents, one can invariably reach at the conclusion that the commission amount received by the appellant was inclusive of the service tax, for which the appellant is entitled to get cum tax benefit for the two subsequent periods i.e. for 2012-13 and 2013-14. Appeal allowed in part. Appeal allowed in part.

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• 2019 (8) TMI 1374
  Refund of service tax - upfront exemption for the authorized services wholly consumed in the SEZ - N/N. 12/2013-ST dt. 01/07/2013 - denial of refund only on the ground of non-submission of documents - scope of SCN - HELD THAT:- All the show-cause notices have been issued only on the ground of non-submission of documents mentioned therein and in the show-cause notices, there is no allegation that the impugned services do not incorporate in the approved list of services by Deputy Commissioner. Further in the Order-in-Original, the adjudicating authority has admitted that the appellant has filed all the documents but still the original authority has rejected the refund claims on entirely new grounds which were not in the show-cause notice. In view of the settled law that the Revenue cannot travel beyond the show-cause notice - the impugned order has travelled beyond the show-cause notice and therefore not sustainable. The impugned order services though have been classified under BAS and Management Consultancy Services but in fact some of them are specifically mentioned in the approval list of services and are in the nature of BSS which have been availed in order to provide output services. Further as per Section 26 of the SEZ Act, a unit in the SEZ is exempt from payment of service tax under Chapter V of the Act on any taxable service provided to such unit. Similarly, there is exemption from payment of customs duties and excise duties levied on goods brought into the SEZ - Section 51 of the SEZ Act prevail over the provisions contained in any other law for the time being in force and it is the avowed policy of the Government of India that exports should not bear the burden of taxes. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1373
  Voluntary Compliance Entitlement Scheme (VCES SCHEME) - rejection of the scheme - short payment of service tax - false VCES declaration - it was noticed that the taxable value declared under ST-3 returns was substantially less than what was declared in the financial records and thereby an amount of ₹ 26,12,534/- of the service tax was found recoverable under Section 73 (1) of the Finance Act, 1994 - HELD THAT:- The claim made by the appellant that part of the receipt for the financial year involving 2009-2010, 2010-2011, 2011-2012 and 2012-2013 also involved sales receipts on account of sale of software product, however, it is a matter of record that no details in the form of any invoice or sales tax/VAT/assessment return has been submitted by the appellant to substantiate their claim. It is also a matter of record that so far as the short payment of service tax for the financial year 2013-2014 is concerned, the appellant have admitted their liability and the short payment of the service tax has been deposited by them after issue of the show cause notice. The Department have enough evidence to prove that the VCES declaration made by the appellant for financial year 2009-2010, 2010-2011 has been substantially false as the appellant have not come clean in making a declaration before the Department about their actual service tax liability and therefore we feel that VCES declaration made by the appellant have correctly been rejected - the claims made by the appellant that part of receipts pertains to sale of software product has also not been substantiated by the appellant by adducing the requisite evidences in the forms of invoices or VAT/sales tax returns etc. and therefore we feel that the findings given in impugned order-in-original are legally sustainable. Appeal dismissed - decided against appellant.

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• 2019 (8) TMI 1372
  CENVAT credit - supplementary invoice - Rule 9(1) (bb) of CCR - appellants contention is that there was no fraud on his part and therefore it is not proper to deny credit to them on that count - HELD THAT:- The provisions of the Rule is very clear and clearly talks fraud etc at the end of the service provider and not at the end of the service recipient as in the case of the Appellant. As the Appellants service provider M/s. Datta Enterprises has issued supplementary invoice after the department has initiated an investigation, the provisions of Rule 9(1) (bb) as existing on the date of availing credit by the Appellants are squarely applicable. Time Limitation - HELD THAT:- There is force in the argument of the appellant that the department was well aware of the fraud /suppression etc. committed by M/s. Datta Enterprises. A show cause notice was issued to them on 25.03.2013. The Appellants were regularly submitting the ST-3 Returns. The unit was also audited in 2013-14 and a show cause notice was issued on 31.12.2015 which is clearly beyond the limitation provided - The department was aware of the fact when M/s. Datta Enterprises have issued a supplementary invoice. Moreover, the Appellants were also audited well before the issuance of show cause notice. Under the circumstances, no suppression etc can be alleged on the part of the Appellants - Therefore the show cause notice and the impugned order and liable to be set aside on limitation. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1371
  Classification of services - construction services provided to M/s Bhopal Development Authority and M/s Greater Noida Development Authority - Body corporate or not - whether classifiable under Works Contract Services or not - denial of benefit of Notification No.30/2012-ST dated 20.06.2012 - HELD THAT:- The Appellate Authority is not disputing the fact that Bhopal Development Authority as also Greater Noida Development Authority are Body Corporate. However, he is further observing that they have not been established Body Corporate under Clause (7) of Section 2 of the Companies Act, which is requirement of the notification in question - We have seen the said Clause (7) of Section 2 of the Companies Act the said Section has inclusive definition which include the companies incorporated Out-side India but further excluded certain Body Corporates, which Central Government, may by the notification in the public Official Gazettes, specify in this behalf. The facts is as to whether the appellant has paid 50% of the duty or not, is required to be checked by the Original Adjudicating Authority to whom the matter is being remanded - appeal allowed by way of remand.

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• 2019 (8) TMI 1370
  Taxability - demand of service tax - amount of discount allowed to its customers - inadvertent credit in its books of account - tax on turnover achieved through the main contractor - penalty. Discount allowed by the appellant - HELD THAT:- The learned Commissioner have observed that the appellant have not submitted any evidence such as bills, etc., to indicate that these discount pertains to customers who availed services - Revenue have not brought any evidence on record to disbelieve the books of account of the appellant. The auditor of the appellant, by certificate dated 11th November, 2014, have certified that the appellant have allowed discounts to their customers/clients and service tax will be charged on the net amount of the bill after allowing said discount. A copy of the certificate is available on appeal record - demand set aside. Charge of service tax from the appellant as a subcontractor - HELD THAT:- It is an admitted fact that the appellant received ₹ 37.12 lakhs from M/s A.D. Point, who were the principal advertiser/contractor and they have certified that they have charged service tax on such activity and services which were provided by the appellant through them, from their client/principal. The service tax was further deposited with the Central Government - the issue is decided by Hon ble Patna High Court in the case of Hindustan Dorr Oliver Pvt. Ltd. vs. State of Bihar, volume 75 Sales Tax cases page 211, wherein the Hon'ble High Court in the matter of sales tax under similar facts and circumstances of works contract, were the main contractor had claimed deduction of the turnover achieved through the subcontractor, on the ground that the subcontractor is also registered with the Department and have paid tax on such turnover. The Hon'ble High Court held that in the case of works contract there is one transaction, one sale. The work may be done either by the main contractor or through the subcontractor. Service tax being the other part of the same type of transaction, there cannot be two services and/or two transfers of service - demand set aside. Amount of credit made inadvertently in the books of account - HELD THAT:- It has been demonstrated that in the service receipt account, the accountant inadvertently made two journal entries on date 31st March, 2011, for making adjustment of Cenvat credit adjustment . Thus it is evident that the said credits, which have inflated the service receipt amount, are not actually the amounts pursuant to rendering of the service and are arising from erroneous entries by the accountant - demand set aside. Penalty - HELD THAT:- As the demand is set aside, penalty also set aside. Appeal allowed - decided in favor of appellant.

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• 2019 (8) TMI 1369
  Sale and supply of mud - demand of service tax - covered under Section 66 D of the Finance Act, 1994 - HELD THAT:- The invoices issued by the appellant which are primarily for sale and supply of mud, which activity cannot be termed as service - there is no justification for confirmation of demand on the said count. Stationery items supplied by the appellant to St. Anthony s Sr. Secondary School - demand of service tax - lower authorities have observed that the appellant could not produce any evidence that the said receipt of ₹ 54,725/- from St. Anthony s Sr. Secondary School was on account of supply of stationary and text books - HELD THAT:- There are no reasons to uphold the demand on the said count also, inasmuch as the revenue has also not produced any evidence to show that such receipt of amount was on account of any services provided by the appellant. Sale of stationery of text books etc. cannot by any such of imagination be considered as service liable to tax. Time Limitation - HELD THAT:- The demand is barred by limitation, inasmuch as, SCN for the period of 2011 to 2015 stands issued on 27.02.2017. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (8) TMI 1397
  Inordinate delay in adjudication of SCN - delay of eleven years from issuance of show cause notice - SSI Exemption - clearance bearing brand name of other loan licensees - N/N. 8/2001, dated 1-3-2001, 8/2002, dated 1-3-2002 8/2003, dated 1-3-2003 - extended period of limitation - It is the case of the petitioner that three personal hearings on 17-4-2018, 2-5-2018 and 8-5-2018 were held without issuing notices as prescribed under Section 37C of the Central Excise Act, 1944 - HELD THAT:- Though the show cause notice came to be issued in the present case in the year 2006 and it remained dormant for pretty long years without any adjudication, even after retrieving the case from the Call Book in the year 2009 the adjudication into the case did not conclude till 24-5-2018, the petitioner cannot be blamed for non adjudication of the show cause notice as he had never requested to transfer it to the Call Book or he has never delayed any proceedings pending adjudication. In short, the petitioner is not responsible for the delay in adjudication at all. As such, delay in adjudication is not at all even explained by the Department. There shall not be any hanging sword, without any justifiable reasons on the petitioner to adjudicate the show cause notice at the whims of the Department. The Department has failed to put forth any justification or show any explanation for delay in adjudicating the show cause notice even after it had retrieved the case from the Call Book on 28-9-2009 till the passing of the order impugned in this petition. Issuance of notice as claimed in the affidavit-in-reply by respondent No. 2, though disputed by the petitioner, it is desirable that it is not probed further as the order impugned in this petition pursuant to the show cause notice is required to be quashed and set aside on the ground of delay in adjudication proceedings - Since the impugned order is quashed and set aside on the ground of delay in adjudication proceedings, the argument of alternative remedy raised by the respondent is rejected as the proceedings itself is vitiated for delay in adjudication proceedings. Petition allowed.

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• 2019 (8) TMI 1368
  Classification of goods - mono cartons - whether classified under CETH 48192020 or under CETH 48173090 of Central Excise Tariff Act, 1985? - it was held that the classification on the impugned goods under Chapter Heading of 48192020 of Central Excise Tariff Act, 1985 is appropriate - HELD THAT:- There is no reason to interfere with the impugned order passed by the Customs, Excise Service Tax Appellate Tribunal - appeal dismissed.

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• 2019 (8) TMI 1367
  Manufacture - manufacture of Foots oil, Pressed Wax and Pressed Paraffin Wax classifiable under Tariff item No.27129090, 27122090 of Central Excise Tariff Act - whether the process amounts to manufacture or not? - HELD THAT:- Issue notice on the civil appeal as well as on the application for condonation of delay in filing the appeal, returnable on Monday, the 29th April, 2019.

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• 2019 (8) TMI 1366
  Principles of natural justice - whether in the facts and circumstances of the present case, the CESTAT, was justified in concluding that there was any failure of natural justice so as to warrant setting aside of the orders of Adjudicating Authority and consequent remand to the Adjudicating Authority for fresh adjudication? - HELD THAT:- There is no clarity as to whether this issue of adjournment applied to all the appeals before the CESTAT. Ms. Desai, learned counsel for the Commissioner submits that such a ground clearly did not apply to all the appeals pending before the CESTAT. In any case, mere refusal of an adjournment in proceedings, which were spread over several dates, according to us, will not amount to breach of principles of natural justice and fair play, particularly, when the party concerned has failed to plead and establish any prejudice. Besides, the CESTAT has even made observation with regard to the conduct of the Assessees and observed that they were bent upon delaying the adjudication proceedings. The CESTAT has observed that in other cases proper hearing was given. Setting aside the orders of the Adjudicating Authority and consequent remand on the first ground that in one of the matters, on one of the dates, no adjournment was granted to one of the parties, is in our opinion, is not at all a good ground to set aside the orders of the Adjudicating Authority and to remand the matter for fresh consideration. Whether the CESTAT had jurisdiction and in any case was justified in ordering the retention of the pre-deposit amount after setting aside the order of the Adjudicating Authority and remanding the matter to the Adjudicating Authority for fresh decision? - HELD THAT:- The CESTAT has itself observed that this is a minor deviation in the adjudication order which does not render that order fatal or even require full waiver of the pre-deposit amount on the face of fraudulent transactions leading to loss of customs duty and wrong availment of CENVAT credit which have not been disputed. If the CESTAT has itself recorded a finding that non tallying of entries, is at the highest, only some minor deviation which does not affect the validity of the orders of the Adjudicating Authority, then obviously, there was no reason to set aside the orders of the Adjudicating Authority and order a remand for fresh consideration - The remand cannot be ordered in such a casual manner, particularly, in a matter in which the CESTAT itself records that the Adjudicating Authority has made extensive examination and after granting fair opportunity of hearing to the parties came to the conclusion that there was violation of provisions of the Customs Act, 1962 and Central Excise Act, 1944. - Order of CESTAT not sustainable.

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• 2019 (8) TMI 1365
  Rectification of error in the order of CESTAT - Non consideration of the jurisdictional issue of limitation - Tribunal refused to rectify the error as not apparent on record - fraudulent availment of inadmissible credit by willful suppression of relevant facts - HELD THAT:- There is substantial material on record to suggest that the issue of limitation as prescribed under Section 11A of the Central Excise Act was not only raised but was also argued by the assessee before the CESTAT. However, from the perusal of the impugned judgment and order, we find that there is no consideration, much less, any sufficient consideration of this crucial issue which is undoubtedly a jurisdictional issue in a matter of this nature. The records indicate that even after the impugned judgment and order was filed, the assessee immediately applied for rectification pointing out that the issue of limitation was not even adverted to by CESTAT. This rectification application was dismissed by observing that if there was no consideration of issue of jurisdiction, then the same may amount to an error apparent on the face of record and it will be open for the assessee to institute a review petition or a petition for recall of the CESTAT order. The assessee, did institute a petition for recall which was again dismissed on the ground that the scope of a recall application is very limited. In fact the record bears out that the jurisdictional issue of limitation in terms of Section 11 A was not considered by the CESTAT at all. The matter is remanded to the CESTAT for fresh adjudication in accordance with law and on merits.

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• 2019 (8) TMI 1364
  SSI exemption - clubbing of clearances - stock transfer - whether the value of clearances of stock transfer from Delhi unit has also been added in the value of clearances of the Appellant? - HELD THAT:- It is observed that a verification has got done during the original proceeding and the report dated 30.03.2016 negated about the value of stock transfer made by Delhi unit to have been added in the value of clearances of the Appellant relying where upon the proposed demand was confirmed - even Commissioner (Appeals) also sought another report from investigating authorities vide letter dated 23.02.2018 and 03.05.2018 and provided an opportunity to the Appellant to represent qua those investigations' reports. Details of total sales and duty liability for the respective years was provided by the appellant vide letter dated 15.02.2018. However, Commissioner (Appeals) was still of the opinion that no documents enabling necessary verifications were enclosed by the Appellant with the said letter. This information as provided by the Appellant got verified with respect to Annexure A to E of the show cause notice, the invoices were still found lacking to substantiate the claim of duplication of demand. However, the information of stock transfer from Delhi was not in dispute. The documents were still observed insufficient to verify as to whether the said stock transfer was not included in Bhiwadi sale for computation of duty. It is with these observations that the matter has been remanded for the aforesaid limited verification. The issue of show cause notice being time barred and that of imposition of penalty has been adjudicated against the Appellant. The submission about appellant being manufacturer as well as trader of the similar goods as his final goods, is a pure question of facts. The value of traded goods cannot be included in the assessable value of manufactured goods, no doubt is a legal principle, an issue of law but whether or not the appellant herein has any trading activity is purely a question of fact. Hence, the same cannot be taken before the Tribunal for a first time rather would have been raised at the first available opportunity. The matter needs reconsideration by the original adjudicating authority - appeal allowed by way of remand.

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• 2019 (8) TMI 1363
  SSI Exemption - clubbing of clearances - independent Job worker - clubbing of value of clearances made by appellant from its own factory as well as from the factories of the job worker - principal to principal relationship - whether the activity of the job worker amounts to mere processing or it amounts to manufacture as defined under Section 2F of the Central Excise Act, 1944? - HELD THAT:- The Hon ble Apex Court in the case of UNION OF INDIA VERSUS DELHI CLOTH AND GENERAL MILLS CO. LTD. [ 1962 (10) TMI 1 - SUPREME COURT] has held that the word manufacture used as a verb is generally understood to mean as brining into existence a new substance and does not mean merely to produce mere change in the substance however, minor in consequence the change may be. In the present case, the raw material has been supplied by the appellant but the subsequent manufacturing activity is admittedly done by the job worker in his own premises without any supervision and control of the appellant - Admittedly, the clearances were also made from the premises of job worker itself. Circular No. 56/56/94 CX dated 14.09.1994 is a precise clarification with respect to the impugned issue of entitlement to SSI exemption to the manufacturer who is supplying raw material to the another person/ the job worker for the manufacture of same final product as is manufactured by him. It is not disputed that job worker is independently clearing the goods manufactured by him. Except receiving raw material from appellant, there is nothing on record to show that job worker herein was an agent of raw material supplier or a dummy. We are of the opinion that adjudicating authority below has committed an error while denying the relationship of appellant and job worker as the one on principal to principal basis. We are, therefore, of the opinion that job worker in the present case, has independent liability towards excise duty. His clearances have wrongly been clubbed with the clearances of the appellant. In the present case, after the raw material being provided by the principal manufacturer/ the appellant herein, to the job worker there was no further control of the former upon the job worker nor did the goods manufactured by the job worker are returned to the appellant. The question of return within stipulated period of 180 days has no meaning in the given circumstances. Also the principal manufacturer/ the appellant had not tendered any undertaking to pay the duty on the activity of the job worker. It has already been observed about the settled law that the ownership of goods and providing of raw material are not the mere criteria to decide the duty liability - It has also been observed that the job worker is independently manufacturing the final product in its own premises without any help of either labour or machine from the principal manufacturer/ the appellant herein, the activity of job worker is not simply of processing but is that of manufacture. As such it is the job worker, in the present case, who was liable to pay the duty. Since there was no duty liability of the appellant with respect to the goods independently got manufactured by his job worker and got cleared by the job workers, clubbing of those clearances to the clearances of appellant so as to deny the benefit of SSI exemption to him, is an absolutely unjustified and apparently a wrong finding. Time limitation - HELD THAT:- The clearances for the period w.e.f. April, 2007 to August, 2009 has been objected vide show cause notice of 25.04.2011. The show cause notice is definitely beyond the period of one year - there was no reason that the appellant to not to avail the SSI exemption. Hence, there is no act of having any intent to evade duty with the appellant nor any act of suppression. Accordingly, the Department was not entitled to invoke the extended period of limitation. Penalty - HELD THAT:- There is nothing on record which entitles imposition of penalty - penalty set aside. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2019 (8) TMI 1362
  Levy of Interest - belated payment of additional sales tax - It is the case of the petitioner that during the course of the revision of assessment made in the year 1997, tax was levied on the sale of REP licences and thereafter since the petitioner had paid the tax within the due dates, interest cannot be levied in view of Section 24(3) of the TNGST Act - whether the petitioner is liable to pay interest when he had paid the tax within the due date in view of Section 24(3) of the TNGST Act? HELD THAT:- The petitioner's liability to pay the tax on sales of REP licences was very much in existence during the due date for the assessment years 1993- 94 and 1994-95 and the Assessing Officer was unable to confirm the proposal to levy tax on this REP licences only in view of the interim stay orders of the Hon'ble Supreme Court. The revisional authority had also followed this position which was existing even during the time of original assessment, but which came to be stalled for some time, owing to the interim orders of the Hon'ble Supreme Court. Just because the petitioner had chosen to pay the tax within the due date after the revisional authority had assessed the demand raised on sales of REP licences, it cannot be said that there was no liability cast on the petitioner during the time of original proposal to levy tax on REP licences for the relevant assessment years 1993-94 1994-95. Hence, when the question whether REP licences constitute goods came to be resolved by this Court in the year 1994 itself and there were no other contrary view expressed by any of the High Courts, the Hon'ble Supreme Court had only affirmed the views of the High Courts holding that REP licences constitute goods. In the instant case, the petitioner herein had sought for exemption from payment of tax on REP licences and the issue was pending before the Hon'ble Supreme Court in which the petitioner had also filed a SLP. During the pendency of such proceedings, there was no certainty on the decision to be taken in the issue as to whether there is liability cast on the petitioner, in view of the interim orders granted by the Hon'ble Supreme Court. The clarification came only after the final orders were pronounced in favour of the department. The additional ground raised by the petitioner is that the levy of interest on belated payment of additional sales tax is not warranted in the absence of an express provision under the Tamil Nadu Additional Sales Tax Act, providing for levy of interest. Such a contention cannot be sustained since the petitioner has lost sight of the amendment made to the Tamil Nadu Additional Sales Tax Act, wherein a specific provision has been inserted providing for levy of interest in respect of additional sales tax. The Amendment Act also provides for validation of any interest paid or payable for belated payments of additional sales tax with effect from 01.04.1970. Petition dismissed.

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• 2019 (8) TMI 1361
  Maintainability of appeal - statutory deposit not paid within time - Validity of assessment order - HELD THAT:- It was not proper on the part of the Appellate Deputy Commissioner (CT), Secunderabad Division, Hyderabad, to reject the appeal filed by the petitioner-company on the ground of delayed deposit of 12.5% of the disputed amount of tax. The appellate order dated 30.03.2019 passed by the Appellate Deputy Commissioner (CT), Secunderabad Division, rejecting the petitioner-company s appeal on this ground is accordingly set aside and the said appeal is restored to the file of the said appellate authority. The Appellate Deputy Commissioner shall proceed to hear the appeal on merits. Petition allowed.

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• 2019 (8) TMI 1360
  Direction to pay the amount of pre-deposit even though the appellant was not required to pay the same - no reason assigned for imposing condition of deposit - validity of assessment order - HELD THAT:- It appears that the assessee is desirous to pursue its First Appeals against the order of the assessment. It is an admitted fact that more than ₹ 20,00,000/- of refund is withheld by the department which was virtually the amount of the assessee. The appellant assessee to make an application before the First Appellate Authority to treat the refund amount lying in his credit as pre- deposit and the First Appellate Authority to pass order to treat the said refund as pre-deposit. Under the circumstances, there is substance in the submissions of the learned advocate for the assessee. It is ordered that if the assessee makes an application to revive his First Appeals before the First Appellate Authority, the First Appellate Authority shall revive the First Appeals and hear and decide the First Appeals on merits, treating the amount around ₹ 20,00,000/- of the assessee as pre-deposit. Appeal disposed off.

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• Indian Laws

• 2019 (8) TMI 1359
  Dishonor of cheque - discharge of a legally enforceable debt - conviction of the revision petitioner - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- There is no impropriety, illegality or error warranting interference in exercise of the revisional jurisdiction of this Court. Execution of Ext. P1 cheque by the accused was proved by the evidence of PW1. The revision petitioner failed to rebut the presumption under Section 139 of the Act in any manner. The courts below have properly appreciated the evidence of PW1 and the documents marked on his side and reached the correct conclusion. Therefore, conviction of the revision petitioner under Section 138 of the Act is only to be confirmed. The courts below have only imposed a sentence of fine on the revision petitioner. There is also no sufficient ground to interfere with the sentence imposed on him. Learned counsel for the revision petitioner prayed for granting a period of six months to remit the fine amount. Considering the facts and circumstances of the case, a period of three months can be granted for remitting the fine amount. The revision petition is dismissed confirming the conviction and sentence against the revision petitioner under Section 138 of the N.I Act.

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• 2019 (8) TMI 1358
  Dishonor of cheque - seeking 20% of the amount of dishonoured cheque as interim compensation - applicability of provisions of Section 143-A of Negotiable Instruments Act - petitioners submits that provisions of Section 143-A of the Act have been brought in force w.e.f. 1/9/2018 during pendency of the complaint therefore, they will not apply to the pending proceedings and will have prospective effect having application to the proceedings initiated after the amendment - HELD THAT:- Undisputedly the complaint in the present case under Section 138 has been filed on 21/1/2016. By the Negotiable Instruments (Amendment) Act, 2018 published in the notification dated 2nd August 2018, Section 143-A has been incorporated in The Negotiable Instruments Act, 1881 and vide notification published in the gazette dated 16th August 2018, the amended provision has been brought in force w.e.f. 1st September 2018 - In the present case, the complaint under Section138 of Negotiable Instruments Act was filed on 21/1/2016 prior to coming into force of amended provision section 143-A, of the Act, therefore, the sole issue involved in the present case is as to whether the provisions of Section 143-A will apply to a pending complaint under section 138 of Act. The issue has been concluded in the case of G.J. RAJA VERSUS TEJRAJ SURANA [ 2019 (8) TMI 91 - SUPREME COURT ] where it was held that provisions of Section 143A are prospective in nature and can be applied or invoked only in case where the offence under Section 138 of the Act was committed after the introduction of said Section 143A in the Statute Book. The said Section was inserted in the statute Book on 1/9/2018 whereas in the present case the offence was committed much prior to that. Hence the provisions of Section 143A will not be attracted in the present case. Petition allowed.

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