Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 21, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST Council Decisions - as updated on 20-9-2019 after 37th Meeting
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GST Rate on Services as Recommended by The GST Council in Its 37th Meeting
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GST Rate on Goods as Recommended by The GST Council in Its 37th Meeting
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Recommendations approved by the GST Council in its 37th Meeting held on 20.09.2019.
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Classification of services - agricultural produce - service of “logging” - forestry operation - plants grow up to become trees - they are harvested to yield timber, poles, billets, firewood, pulpwood, etc. which are raw material - CGST and SGST must be charged as the place of supply and the location of the supplier are in the same State - AAR
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Classification of goods - rate of tax - composite supply - supply of goods i.e. fire control systems - The contract includes services like Installation and Commissioning, Training and rehosting test programmes - Since the principal supply is supply of goods i.e. fire control systems, the entire composite supply need to be treated as the supply of goods fire control systems. - AAR
Income Tax
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Reopening of assessment u/s 147 - in cases where the primary facts as asserted by the assessee for framing of assessment are subsequently discovered as false, the reopening of assessment may be justified. - AT
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Permanent Establishment (‘PE’) in India - income accrued in India - the profits of the PE should be determined on the basis of what an independent enterprise under similar circumstances might be expected to derive on its own- AT
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Profits arising on sale of land - ‘business income’ OR 'capital gains' - after purchase of land assessee got if converted to NA land - the assessee also got a lay out plan approved from competent authority initially for plotting of land and subsequently to build the residential blocks with small business centre in the intervening period. The facts and circumstances of such sequential events give rise to an infallible impression that the driving force for purchase of land was to exploit it commercially. - AT
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TDS u/s 194L - TDS on the payment of non-compete fee - non compete fee did not confer any exclusive right to carry-on the primary business activity. The right is restricted only to the particular party or individual and does not have the exclusivity over the rest of the world. Thus, non-compete fee cannot be termed as intangible asset. - AT
Customs
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Clarification regarding duty drawback allowed in cases of short realisation of export proceeds due to bank charges deducted by foreign banks
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Refund claim - order of assessment / Bill of entry in appeal not challenged - the endorsement made on the bill of entry is an order of assessment. It cannot be said that there is no order of assessment passed in such a case - the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings - SC
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Classification of imported goods - all parts of the fan except the fan blades as a set. The packing also describes the goods as electric fan. The rotors and stators, down case, top case and down rod of motor are also designed specifically to be a part of the fan. In these circumstances, following Rule 2(a), the goods are classifiable under heading 84.14 as unassembled, incomplete fan. - AT
DGFT
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Imports of Maize (feed grade) under the TRQ Scheme for 2019-20
Indian Laws
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Taxation Laws (Amendment) Ordinance 2019
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Corporate tax rates slashed to 22% for domestic companies and 15% for new domestic manufacturing companies and other fiscal reliefs
Service Tax
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Service Tax Audit - Rule 5A - Balance of convenience is also in favour of this petitioner. - Irreparable loss will be caused to the petitioner, if the stay as prayed for, is not granted. - HC
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Renting of Immovable Property Service - After the amendment, renting itself became taxable with retrospective effect from 01.6.2007 itself. When the law itself did not cover taxation of renting of immovable property services, it is inconceivable that the assessee could have anticipated the retrospective amendment and paid service tax accordingly - the demand on this head is not sustainable beyond the normal period of limitation. - AT
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Demand of service tax - construction of Mahatma Gandhi Cancer Hospital and Research Institute - It is clearly covered by section 65(105)(zzzza)(ii)(b) as a new building meant for the purpose of commerce or industry - demand upheld - AT
Central Excise
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Doctrine of Promissory Estoppel - withdrawal of exemption - the withdrawal of the exemption to the pan masala with tobacco and pan masala sans tobacco is in the larger public interest. As such, the doctrine of promissory estoppel could not have been invoked in the present matter - The larger public interest would outweigh an individual loss, if any - SC
Case Laws:
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GST
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2019 (9) TMI 824
Classification of services - agricultural produce - service of logging - forestry operation - plants grow up to become trees - they are harvested to yield timber, poles, billets, firewood, pulpwood, etc. which are raw material - levy of SGST and CGST Act - Is it legally correct to infer that the service of logging and its components described before do not attract any SGST under the CGST Act, 2017? If not, what is the correct position by law? - HELD THAT:- The term agricultural produce is crucial in the instant case. In common parlance it means growing of crops. The applicant submits in their application that the service being received by them yields timber, firewood etc.. However the yields of timber, firewood etc do not qualify as agricultural produce and are more specifically in the nature of forest produce - it is clearly evident that the activity of Logging does not yield agricultural produce and hence is not covered under entry number 24 of the Notification No. 11/2017 - Central Tax (Rate) dated 28 th June 2017, effective from 01.07.2017. The services received by the applicant are of composite in nature and the principal supply is covered under sub-entry (ii) of entry no.26 of the Notification No. 11/2017-Central tax (Rate) dated 28.06.2017 which reads Manufacturing services on physical inputs (goods) owned by others, other than (i) above and taxable at 9% under the CGST Act and 9% under SGST Act. Similarly it is taxable at 18% under the IGST Act. In case the trees have grown from plants not planted by the Karnataka Forest Department, but that which grew by natural regeneration but were nurtured, managed and protected by the Karnataka Forest Department, does the same nil rate of SGST and CGST apply to them too? If not, what would be the rate? - HELD THAT:- The activity of the Government Corporation done to the Forest Department is independent of the nature of the activity involved in the growing of trees and hence what applies to the naturally grown trees applies to the trees which are nurtured, managed and protected by the Forest Department. In case of sale of forest produce or any other goods belonging to Karnataka Forest Department, where the buyer is registered or is based in and transports the goods to outside the State of Karnataka, what should be charged under the CGST Act, 2017, (A) SGST and CGST, or (B) IGST? - In case of sale of forest produce or any other goods belonging to Karnataka Forest Department, where the buyer is registered or is based outside the State of Karnataka, but uses the goods within the State of Karnataka, what should be charged under the CGST Act, 2017? (A) SGST and CGST, or (B) IGST? - HELD THAT:- Since the location of the supplier, [Department of Forests, Government of Karnataka is within the state of Karnataka], is Karnataka and the place of supply (as per the conclusion arrived in the preceding paragraphs), is also Karnataka, as per section 8(1) of the IGST Act, 2017, the nature of supply would be an intra-State supply within Karnataka State and hence CGST and SGST would be applicable on the transaction and not IGST - But, if the disclosure of destination is part of the supply contract and the contract makes it mandatory to issue transport permit to the place of such destination, then the place of supply would be the place of termination of movement of such goods and if both the place of supply and location of the supplier is within the same state, then it would amount to an intra-State supply and CGST and SGST would be chargeable. If the place of supply and the location of the supplier are in different states, then the transaction would amount to an inter-State supply and IGST would be chargeable. CGST and SGST must be charged as the place of supply and the location of the supplier are in the same State, in the reference transaction provided in the application.
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2019 (9) TMI 823
Classification of goods - rate of tax - composite supply - various systems, sub-systems and onboard spares supplied by the applicant for use in the Warships, Vessels and Submarines meant for Indian Navy and Shipbuilders -whether the supplies made by the applicant qualify to be composite supplies wherein the goods being the principal supply and whether the said goods form parts of goods of heading 8906, the warships or not? - taxable at the rate of 5% or otherwise? - applicability of Sl.No. 252 of Schedule I of Notification No. 1/2017- Central tax (Rate) and No. 1/2017. HELD THAT:- The price is inclusive of the packing charges, freight charges and transit insurance charges and are includible in the price. The contract includes services like Installation and Commissioning, Training and rehosting test programmes. Hence the entire contract is a composite supply of supply, installation, commissioning, training and rehosting the test programmes with the principal supply being the supply of Fire Control Systems. It also includes the service to be provided during the warranty period. In the instant case the Applicant supplies the goods such as Fire Control Systems, Radar Systems etc., and also provides the services of the installation, commissioning, Training etc.. The equipments/ systems supplied by the applicant are custom made for warships and hence the applicant alone is qualified to install and commission them and also to train the recipients. Therefore the two supplies that of supply of goods and supply of related services, are taxable as well as naturally bundled and hence qualify as a Composite Supply. The principal supply is undoubtedly that of goods i.e. the systems. Since the principal supply is supply of goods i.e. fire control systems, the entire composite supply need to be treated as the supply of goods fire control systems. Whether the systems and assemblies (goods), supplied by the applicant qualify to be classified as parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 or not? - HELD THAT:- Chapter 89 does not have a provision for parts or accessories and hence any, system / sub-system or article or product by whatever name it is called, that is fitted to the ship or boat or a floating structure becomes either part or accessory of the said ship, irrespective of its classification. In the instant case the Applicant at para 5 of Annexure A to the application clearly admitted that all the systems being supplied by them are meant for use ON BOARD SHIPS of the Indian Navy and hence it can be construed that all the supplies are meant for warships, falling under Chapter 8906 - Therefore it implies, as admitted by the applicant, that all the supplies are meant for the goods of headings 8901, 8902, 8904, 8905, 8906, 8907 but not meant for goods of headings 8903, 8908. Various systems, sub-systems and onboard spares supplied by the applicant for use in the Warships, Vessels and Submarines meant for Indian Navy and Shipbuilders (excluding consumables and raw materials) are appropriately covered under sl.no.252 of Notification No. 01/2017-Central Tax(Rate) dated 28.06.2017, and accordingly attracts 5% GST.
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2019 (9) TMI 822
Permission for withdrawal of Advance Ruling application - Classification of goods - Fusible Interlining fabric - classified under HSN 5903 or should be classified as per the blend of yarn in chapter 52-55 58 or 60? - HELD THAT:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed, without going into the merits or detailed facts of the case. Application dismissed as withdrawn.
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2019 (9) TMI 821
Permission for withdrawal of Advance Ruling application - Classification of goods - Fusible Interlining fabric - classified under HSN 5903 or should be classified as per the blend of yarn in chapter 52-55 58 or 60? - HELD THAT:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed, without going into the merits or detailed facts of the case. Application dismissed as withdrawn.
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2019 (9) TMI 820
Permission for withdrawal of Advance Ruling application - Classification of goods - Fusible Interlining fabric - classified under HSN 5903 or should be classified as per the blend of yarn in chapter 52-55? - HELD THAT:- The request of the applicant to withdraw the application voluntarily and unconditionally is hereby allowed, without going into the merits or detailed facts of the case. Application dismissed as withdrawn.
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2019 (9) TMI 819
Maintainability of Advance Ruling application - Classification of services - rate of tax - work of Development of Infrastructure facility for Passenger Water Transport Terminal - whether the activity fall under chapter heading 9954 (construction service) with serial no.3(iv)(a) or 3(vi)(a) of the Notification No. 11/2017-Central Tax (Rate)? HELD THAT:- It is the Joint Venture Company and not the applicant which has been awarded the contract and therefore supply of goods or services or both being undertaken or proposed to be undertaken will be by the Joint Venture Company, and not the applicant. Thus the person who can make such application is the Joint Venture Company since as per existing laws of the land, a Joint Venture Company, which is formed by 2 or more entities have a separate existence than that of the said entities. The CIDCO has awarded the construction contract of the project of Development of Infrastructure facility for Passenger Water Transport Terminal at Nerul, Navi Mumbai to Ajwani-Kargwal Joint Venture , and not to the applicant. Thus the applicant is not a person competent to apply for ruling as provided under Section 95 of the GST Act. The Application in GST ARA form No. 01 of Ajwani Infrastructure Pvt. Ltd, vide reference ARA No. 138 dated 23.03.201 is a rejected as being not maintainable.
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2019 (9) TMI 818
Non-constitution of the GST Tribunal - Held that:- The learned Central Government Counsel, has brought on record copy of a communication dated 07.09.2019 issued by the Director, GST Council Secretariat - The same has been marked as 'X' and retained on record. By that, it has been stated that the next meeting of the GST Council is proposed to be held on 20th of this month, wherein, by way of Agenda Item (ii), the said Council may consider constitution of regional and area Benches in Uttar Pradesh. Also, he would submit that opinion of the Law Ministry has been sought with respect to the decision of the Division Bench of this Court (sitting at Lucknow) in Public Interest Litigation No. 6800 of 2019. In such facts, it appears proper that the present petition alongwith connected matters may remain provisionally maintained by this Court. List again on 16 October 2019
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2019 (9) TMI 817
Permission for manual filing of GST TRAN-1 - Transitional credit - migration to GST regime - Section 140 (3) of the CGST Act, 2017 - HELD THAT:- The Court is satisfied in the present case that the Petitioner was unable to fill the TRAN-1 Form on account of bonafide difficulties and that, therefore, the Petitioner should be afforded one more opportunity to do so. Accordingly, a direction is issued to the Respondents to permit the Petitioner to either submit the TRAN-1 form electronically by opening the electronic portal for that purpose or allow the Petitioner to tender said form manually on or before 15th October, 2019 and thereafter, process the Petitioner s claim for ITC in accordance with law. Petition disposed off.
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Income Tax
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2019 (9) TMI 816
Substantial question of law or fact - addition on account of difference of job work - non production of day to day stock/production records by assessee before the Assessing Officer as well as the CIT(A), the correctness of the claim of the assessee remained unverifiable - addition of suppressed production - HELD THAT:- Revenue and having gone through the materials on record, we are of the view that none of the two questions as proposed by the Revenue could be termed as substantial questions of law. Both the questions proposed are pure questions of fact. The Revenue, after due consideration of all the relevant aspects, has recorded the finding of fact in favour of the assessee - no substantial question of law involved in the present Tax Appeal
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2019 (9) TMI 815
Entitlement to deduction u/s 80P - whether the petitioners' Society is entitled to deduction under Section 80(P)? - HELD THAT:- There is no dispute to the fact that the Division Bench of this Court in NO. 3324, NERINJIPETTAI PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WARD-2 (1) , ERODE DISTRICT [ 2019 (7) TMI 389 - MADRAS HIGH COURT] has answered on such question in favour of the Society. However, it is stated that the said order of the Division Bench is put to challenge before the Apex Court where the matter is pending in SLP The respondents shall keep the impugned assessment orders in abeyance till the disposal of the above S.L.P. by the Apex Court. It is open to either party to work out their remedy/action, subject to the outcome of the aforesaid S.L.P.
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2019 (9) TMI 814
Deduction u/s 80P - Substantial question of law - HELD THAT:- we formulate the following substantial question of law. Was Totgar s [ 2010 (2) TMI 3 - SUPREME COURT] made applicable to Co-operative Societies carrying on the business of banking or providing credit facilities to its members, by South Eastern Railway Employees Co-operative Credit Society Ltd. [ 2016 (9) TMI 814 - CALCUTTA HIGH COURT] ? The appeal is admitted on above question. Notice of appeal is waived by Mr. Majumdar, learned senior advocate, Additional Advocate General appearing for respondent assessee. Requirement of paper books and all other formalities are dispensed with. The application is disposed of but the record be retained for purpose of the appeal.
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2019 (9) TMI 813
Disallowing scientific expenditure incurred on research and development - whether AO had rightly rejected the assessee s deduction claim since it had purchased the corresponding R D items for carrying out its normal business activity than that any scientific research and development (R D only)? - HELD THAT:- We find no merit in the Revenue s instant grievance. The relevant assessment order dated 31.12.2010 nowhere indicates that the assessee had put to use the impugned plant and machinery in regular business operations and vice versa . It is made clear that the Department of Scientific and Industrial Research (DSIR) had duly granted approval to the taxpayer s capital expenditure as per rules. We conclude in this factual backdrop that the CIT(A) has rightly deleted the impugned scientific research and development disallowance made u/s 35(1)(i) made during the course of assessment without any material but on assumptions and presumptions - Decided against revenue Addition u/s 68 of bogus / sundry liability - HELD THAT:- We find that only 24 out of the said 109 creditors did not contain the complete addresses. It further emerges that the Assessing Officer is himself very fair in making it clear in his assessment order that the total credit figure in respect of these 109 parties as against closing balance in issue which stand treated as bogus. This action of Assessing Officer part is hardly acceptable being an instance of mutual contradictory findings. We make it clear that the Assessing Officer has treated the differential figure in case of very parties as correct. The fact also remains that the assessee has not completely discharged its onus of proving liability by filing all the necessary particulars as well. Faced with this peculiar situation, we deem it appropriate that a lump sum disallowance of ₹5 lac only than ₹90,53,743/- in issue would meet the ends of justice with a rider that same shall not be treated as precedent in any other assessment year Addition u/s14A r.w.s. Rule 8D - addition of proportionate interest and administrative expenditure figure(s) under Rule 8D(2)(ii) (iii) - HELD THAT:- The assessee appears to have acquired shares of M/s J.K. Industries Ltd. and M/s J.K. Paper Ltd. including 667524 and 4525553 units; respectively. It derived dividend income in respect of these two companies in assessment year 2004-05 as well. The CIT(A) s corresponding lower appellate order held that the above stated amalgamation scheme involved zero coupon bonds and zero coupon preference shares not including any interest at all. This clinching fact has not been rebutted in either of the lower proceedings nor before us. We therefore direct the AO to delete the impugned proportionate interest expenditure disallowance in respect of assessee s dividend income relating to these two entities. Assessee s remaining dividend income in respect to M/s Ashim Investment Co. Ltd., JK Lakshmi Cement Ltd. it emerges that AO has nowhere given a clear-cut finding about its non interest bearing fund available at the time of making tax free income yelding investments. We therefore deem it appropriate to restore the instant remaining component of proportionate interest disallowance back to the Assessing Officer for finalizing consequential computation as per law in view of interest free funds available in the taxpayer s balance-sheet. Necessary computation to follow as per law. Disallowance of administrative expenditure - assessee s other income and income from investments - the impugned head of administrative expenditure is an indirect one wherein the necessary computation pro rata basis cannot be faulted. We hold in these facts that both the lower authorities have erred in going by the statutory computation than taking into consideration the relevant actual figure(s) hereinabove. We therefore direct the Assessing Officer to delete the impugned administrative expenditure disallowance. This second substantive grievance is taken as partly accepted in foregoing terms. TDS u/s 194H r.w.s 40(a)(ia) disallowance - failure in deducting TDS on seed purchases treated as brokerage and commission payments in both the lower proceedings - HELD THAT:- Both the lower authorities haves treated the assessee s payments to its growers for the purpose of crops / seeds trials as commission / brokerage payments requiring TDS deduction u/s. 194H. We find that the CIT(A) himself is very fair in holding that growers / recipients enjoy title on their own agricultural lands, they have themselves carried out all activities of cultivation, harvesting and seed processing at their own risk. It is therefore an instant of outright purchase of the seed produce between the assessee and said seed growers without involving an agent or middleman. This tribunal s co-ordinate bench s decision in Additional Commissioner of Income-tax, Rang-4, Visakhapatnam vs. Pearl Bottling (P) Ltd. [ 2011 (2) TMI 42 - ITAT, VISAKHAPATNAM] holds that 194H does not apply in case of principal-to-principal relationship between the buyer and the recipient . We therefore direct the Assessing Officer to delete the impugned sec. 194H disallowance
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2019 (9) TMI 812
Reopening of assessment u/s 147 - reasons recorded after the expiry of 4 years from the end of the assessment year - HELD THAT:- In the present case the central bureau of investigation has made the detailed enquiry and found that the financing of the appellant to the extent stated in the reasons recorded are not what is disclosed by the assessee but a camouflage transaction. It is also interesting to note in the para number 16 of the order of the honourable High Court where in it relied upon the decision of CIT vs Multiplex trading and industrial company limited [ 2015 (10) TMI 23 - DELHI HIGH COURT] and stated that where in cases where the primary facts as asserted by the assessee for framing of assessment are subsequently discovered as false, the reopening of assessment may be justified. In the present case, the primary facts stated by the assessee in the original assessment proceedings are found to be false. In the present case the assessing officer has received a specific information about the huge cash deposit in the bank account of the assessee and through Mr SK Sharma and backed by the statement of the donors, statement of the chartered accountant, statement of the entry operator et cetera, reasons are recorded. Unexplained income in treating the donation is bogus donation - HELD THAT:- Apparently if the trusts has credited alleged donation to the income and expenditure account, provisions of section 68 cannot be applied. Therefore in such cases from 1-4-2007 u/s 15 BBC the provisions of anonymous donation and its taxability at a different rate applies. However if the donation is not credited to the income and expenditure account on provisions of section 68 are rightly applied by the lower authorities. We confirm the actions of lower authorities in taxing the sum of INR 4,000,000 as unexplained income being bogus donation credited to the general fund in the balance sheet. In the result ground number 2 of the appeal is dismissed.
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2019 (9) TMI 811
Reopening of assessment u/s 147 - notice on the basis of audit objection after getting approval - addition invoking provision of section 40A(3) - HELD THAT:- As gone through the reasons recorded by the Assessing Officer/ITO, Ward-Katihar for reopening and the approval thereof by the Ld. Jt.. CIT, Range-1, Bhagalpur and found that the AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. AO has mechanically issued notice u/s. 148 of the Act, on the basis of audit objection. The reopening in the case of the assessee for the Asstt. Year in dispute is bad in law and deserves to be quashed. The superior authority has to examine the reasons, material or grounds and to judge whether they are sufficient and adequate to the formation of the necessary belief on the part of the assessing officer. If, after applying his mind and also recording his reasons, howsoever briefly, the Commissioner is of the opinion that the AO's belief is well reasoned and bonafide, he is to accord his sanction to the issue of notice u/s. 148 of the Act. In the instant case, find from the perusal of the order sheet which is on record, the Jt. CIT has simply put Yes and signed the report thereby giving sanction to the AO. Nowhere the Jt. CIT has recorded a satisfaction note not even in brief. Therefore, it cannot be said that the Jt. CIT has accorded sanction after applying his mind and after recording his satisfaction - no hesitation to hold that the reopening proceedings vis- -vis provisions of Sec. 151 of the Act are bad in law and the assessment has to be declared as void ab initio. - Decided in favour of assessee
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2019 (9) TMI 810
Permanent Establishment ( PE ) in India - income accrued in India - AO alleged that LO was engaged in executing/negotiating contracts for the appellant in India and was not merely undertaking preparatory and auxiliary activities and, therefore, the LO was Permanent Establishment ( PE ) of the appellant in India in terms of Article 5 of the India Singapore Double Taxation Avoidance Agreement ( DTAA ) - whether DRP exceeded direction issued by tribunal - HELD THAT:- As considered the relevant documentary evidences brought on record. We have also perused the judicial decisions relied upon by both the rival representatives. In our considered opinion, the DRP has simply followed the directions of the Tribunal in readjudication proceedings to assist the Assessing Officer in determining the issues raised before the Tribunal in the first round of litigation. We find that in doing so, the DRP has not done any enhancement. The provisions of section 251(2) of the Act are different from the provisions of section 144C(8) (11) of the Act. The ld. CIT(A) is an appellate authority, whereas the DRP is a continuation of the assessment proceedings where the DRP acts as a corrective mechanism to guide the Assessing Officer for making error free assessments. The role of a DRP, in our humble understanding, is to assist the Assessing Officer in determining the correct income so that correct tax may be levied. Whether the appellant can be put to worse off positions as a result of filing the appeal before the Tribunal ? - HELD THAT:- We agree with the ld. DR that there was no enhancement of income by the DRP, but, at the same time, the assessed income of the year under consideration, having been exhibited elsewhere, clearly puts the assessee in a worse off situation that it was before filing the appeal. If the assessee had not filed any appeal against the total assessed income of all the assessment years under consideration, the income would have been ₹ 7.21 crores only. However, after filing appeal and after readjudication, the total assessed income of all the years under consideration is ₹ 123.16 crores. In all fairness, the entire proceedings should now be restricted to adjudication upon the assessed income of all the years under consideration to the extent of ₹ 7.21 crores. Business connection/ PE in India - India-Singapore DTAA - Facts of the case in hand clearly show that the documents impounded in the survey proceedings were very much confronted to the assessee. Whether the assessee violated the conditions of RBI or FEMA is not relevant in determining the LO as a PE under the I.T. Act. Attribution of profit to PE - even if the orders were placed directly with the Head Office of the assessee, any profit arising from such transactions can be taxed in India to the extent any part is played by the PE of the assessee in India. Article 7(2) of the India Singapore DTAA requires that the PE of non resident enterprise be treated as a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment - PE, though a distinct and a separate enterprise, is to be treated as an associated enterprise under Article 9 of the DTAA read with sections 92B and 92F of the Act. Therefore, the PE is subject to the provisions of section 92, which require that any international transaction be carried out at Arm s Length. Determine the Arm s Length profit that the appellant s PE would have earned if it had been operating as an independent enterprise in India - MAM selection - HELD THAT:- The undisputed fact is that to boost sales for Advance and Analytical Systems [AAS] business division, the appellant entered into arrangements with agents in India for specific marketing and promotion and one of such agent was ForeVision. We find force in the contention of the ld. counsel for the assessee that the LO is performing routine and limited functions and is operating in a risk immune environment and considering the intensity of functions, attribution made by the Revenue which ranges from 163% to 2357% is not only excessive but absurd and abnormal. When a PE is treated as if it is an independent enterprise, its profits should be determined on the basis as if it is an independent enterprise. Meaning thereby, the profits of the PE should be determined on the basis of what an independent enterprise under similar circumstances might be expected to derive on its own Looking to the business profile of ForeVision and in the absence of complete details, the same is not a good comparable. In our understanding of the facts and considering that the LO is performing routine and limited functions and is operating in a risk immune environment, the allocation of profit should be done by applying TNMM as most appropriate method. The assessee is directed to furnish necessary details and the Assessing Officer is directed to recompute the attribution of profit to [LO] PE by applying TNMM as most appropriate method. It is made clear that sales through ForeVision and sales to Videocon should not be considered for the purposes of attribution of profits. To sum up: i) The DRP has done no enhancement and has simply adjudicated upon following directions of the Tribunal which directed the DRP to adjudicate the objections raised by the assessee by a speaking order. ii) Yes, the assessee has been put in a more worse situation than what it was before filing appeal in the first round of litigation. Therefore, we have held, as mentioned elsewhere that the additions made in the first round of litigation will only be considered which is ₹ 7.21 crores. iii) Yes. There is a PE in India. iv) Attribution has to be done by applying TNMM as most appropriate method on the profits attributable to the sales excluding ForeVision and Videocon. Charging of interest u/s 234B - HELD THAT:- An assessee must first be liable to pay advance tax under the provisions of section 208 of the Act. As per the provisions of section 208 read with section 209(1)(d) of the Act, advance tax payable has to be computed after reducing from the estimated tax liability the amount of tax deductible/ collectible at source on income which is included in computing the estimated tax liability. Under section 195 of the Act, tax is deductible at source from payments made to non-residents. Appellant is a non-resident and thus, tax is deductible at source from the payments made to it under section 195 of the Act. Since tax was deductible at source on all the payments made to Appellant, no advance tax was payable as per the provisions of the Act. Amendment to the provisions have been brought by the Finance Act, 2012, w.e.f. 1.4.2012 by which a proviso below section 209(1)(d) of the Act has been added but applicable from A.Y 2013-14. Considering the law on this issue, we direct the Assessing Officer not to charge interest u/s 234B of the Act. In A.Y 2004-05, interest has also been levied u/s 234A of the Act. Such levy is consequential and we direct the Assessing Officer to charge interest after giving appeal effect as per the provisions of the Act
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2019 (9) TMI 809
Exemption u/s 11 - charitable activity u/s 2(15) - carrying on the activities of establishment of educational institute for strengthening the cause of education by providing the didactical (designed or intended to teach) facilities etc. - HELD THAT:- The assessee is carrying on object of establishing and helping universities, colleges, schools and other institutions for strengthening the cause of education by providing didactical facilities provide consultancy support in the area of educational planning and administration for opening, diversifying and developing the existing or new institutions. It also provides mutual and technical cooperation for implementing and supplementing for establishment of universities. It has entered into an MOU with the Global Open University, Nagaland for helping the university in the areas of instructional material and resource development, research design, publications and collaborative programme development. As assigned duty of preparation and publication of study material including its distribution to the students from time to time. It was also helping in coordinating the development activities of the universities. The trust has appointed 200 teachers who guide the students in studying course material and their queries of study material. It also helps the students in preparation for examination. Such facts are stated before the ld AO per letter dated 08.06.2016. The assessee also submitted the details of course material expenses of ₹ 72.37 lakhs, which was for the course material, it can be said to be an educational activity or not. Admittedly, in the earlier years the claim of the assessee is accepted. The issue is discussed in case of DIT Vs. The Delhi Public School Society [ 2018 (4) TMI 714 - DELHI HIGH COURT] , wherein, the issue is examined that when the assessee is carrying out opening and running around 120 schools through franchise agreement and franchise charges received with the assessee for using the name of Delhi Public School by the satellite schools in and outside India and assessee earned franchisee fees is an educational activity or business activity. The memorandum of association of DPS society as well as the joint venture agreement entered by DPS society with the satellite schools is having motive of an educational purpose. It is an educational activity which qualifies as a charitable purpose within the meaning of section 2(15) of the Act. It further held that the objected activity were an activity incidental to the dominant educational purposes. Further, in ITO (E), TRUST WARD II, DELHI VERSUS SOCIETY FOR ESSENTIAL HEALTH ACTION TRAINING [ 2014 (3) TMI 101 - ITAT DELHI] for Assessment Year 2009-10, the coordinate bench also held that when a trust entered into an agreement with the assessee society in providing research services is also engaged in charitable purpose even if it incidentally involves the carrying on of commercial activity. Admittedly, the assessee is also receiving examination fees, conducting such examination, providing help to the university, and incurring expenses on them. Admittedly, it is not shown by the ld AO that the revenue surplus generated by the assessee is not utilized for the purposes of educational activities. Thus, prima facie assessee is carrying on the educational activities and not the business as facilitator. Accordingly, orders of the lower authorities are reversed and appeal of the assessee is allowed.
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2019 (9) TMI 808
Rectification application u/s 154 - carry forward of the losses - HELD THAT:- We set-aside the impugned order and direct AO to consider the aforesaid claim u/s 154 as urged by assessee before us. AO is directed to allow the carry forward of the losses, if found admissible as per law, after due verification. The assessee is directed to substantiate the same including quantification thereof.
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2019 (9) TMI 807
Profits arising on sale of land - Correct head of income - business income OR 'capital gains' - CIT(A) upholding the action of the AO for treating the profits arising on sale of land as business income instead of capital gains as claimed by the assessee - HELD THAT:- In the present case, what has been done is not merely a realization or a change of investment but an act done in what is truly the carrying on of business in commercial sense. It may be pertinent to notice here the purport and intent of Section 2(13) which defines the expression business in an inclusive manner. The expression business as defined in Section 2(13) does not merely include any trade, commerce or manufacture but is elastic and wider to include the adjunct adventure in the nature of trade, commerce etc. Thus, the legislature has made a conscious inclusion to expand the scope of business to include certain actions akin to business in addition to normal business. The activity of the assessee herein has engaged the time, attention and the labour of the assessee apart from money. The profit arising on sale is nearly 30 times of investment in a period of 3-4 years owing to such concerted and planned action. Thus, when functional test is applied, the transaction of purchase and sale of land has been rightly regarded as business activity by the AO. The issue is essentially factual and is governed by the facts of each case. Judicial utterances made in the setting of the facts of a case would thus not supply unless it is shown that facts are identical. We are thus not required to delineate the nicety of law de hors the facts of such case. The reliance placed by the assessee on judicial precedents before the CIT(A) as well as before us are rendered in the fact situation which are substantially different. Thus, no abstract principle can be applied in the present facts. On the contrary, the fact situation is closure to the facts in Raja J. Rameshwar Rao [ 1961 (3) TMI 4 - SUPREME COURT] and therefore the issue is required to determine in parity therewith. We thus find that the CIT(A) has rightly endorsed the action of the AO. We find no reason to interfere with the conclusion drawn by the CIT(A). - Decided against assessee.
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2019 (9) TMI 806
Addition u/s 69A - deposits in foreign bank - No English translated version of all the documents relied upon by the revenue in foreign language - HELD THAT:- The content of the paper book clearly states that the beneficial owner had deposited the monies into the foreign bank account wherein the assessee s name, along with other brothers, is also included as one of the beneficiaries in the said list. Revenue stated that the background information of Dryade Stiftung mentioning the purpose of starting the said foundation as Estate Planning and source of the deposited assets as Family Money . Bank statement of ABN Amro Bank maintained by Dryade Stiftung which admittedly contained the deposit entry on 17.4.2002 and the closing balance as on such date was USD 4387146.86, which is the subject matter of addition in the impugned assessment to the extent of assessee s share. We find that the entire contents are purported to be in German language as admitted by the ld Special Counsel for the Revenue and he tried to translate the contents reflected therein through his independent research made with the assistance of Google . It is not in dispute that the translated version of those contents were not made available either to the assessee or to the bench at or before the time of hearing. We find that the ld AR had tried to take shelter from the observation of the ld AO that Dryade Stiftung is a Discretionary Trust and that any monies could be sought to be taxed in the hands of the assessee, purported to be beneficiary, only in the event of any actual receipt of money from the said discretionary trust. We find that the ld Special Counsel for the Revenue on the contrary had argued that a Trust is different from Foundation and hence the argument of the ld AR that Dryade Stiftung is a Discretionary Trust cannot be appreciated Admittedly, the contents of various papers as detailed above in German language were produced by the ld AO to the assessee and hence it is the duty of the revenue to furnish the translated version of the said documents to the assessee for his effective rebuttal. We hold that all the relevant facts were not brought on record by both the parties in the instant case. It is just and fair that the English translated version of all the documents relied upon by the revenue need to be given to the assessee by the revenue in order to enable the assessee to understand the contents of the documents furnished by the revenue for his effective rebuttal. Considering the totality of facts and circumstances and the various elaborate averments made by the learned counsels from both the sides, we deem it fit and appropriate, in the interest of justice and fair play, to remand this appeal o the file of the ld AO for de novo adjudication - Appeals of the assessee are allowed for statistical purposes.
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2019 (9) TMI 805
Disallowance u/s 14A read with Rule 8D - CIT-A deleted the disallowance - HELD THAT:- There is clear finding of the AO as well as the CIT(A) that there is no exempt income. Thus, there is no need to interfere with the findings of the CIT(A). - decided in favour of assessee. TDS u/s 194L - disallowance on non-deduction of TDS on the payment of non-compete fee - HELD THAT:- From the perusal of the decision of Sharp Business System [ 2012 (11) TMI 324 - DELHI HIGH COURT] it can be seen that non compete fee did not confer any exclusive right to carry-on the primary business activity. The right is restricted only to the particular party or individual and does not have the exclusivity over the rest of the world. Thus, non-compete fee cannot be termed as intangible asset. The Hon ble High Court has also set out the differences between the rights conferred by goodwill and rights acquired by the non compete agreement. Therefore, depreciation claimed on the said non compete fee cannot be allowed. The case laws cited by the Ld. AR will not support the case of the assessee has the jurisdictional High Court decision has given a clear finding relating to noncompete fee. Hence, Ground No. 2 of the revenue s appeal is allowed.
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2019 (9) TMI 804
Maintainability of appeal - low tax effect - Monetary limit - scope of Circular No. 17/2019 dated 08/08/2019 - HELD THAT:- We find that the tax effect involves in the appeal of the Revenue is below ₹ 50 lakhs. There is no dispute that the Board s instructions or directions issued to the Income-tax authorities are binding on those authorities, therefore, the Department should have withdrawn/not pressed the present appeal in view of the aforesaid instruction since the tax effect in the instant appeal is less than the amount of ₹ 50 lakhs. The issue of applicability of the above circular to pending appeals has been decided by the coordinate bench in Dinesh Madhavlal Patel [ 2019 (8) TMI 752 - ITAT AHMEDABAD] In view of the above, Circular No. 17/2019 dated 08/08/2019 will apply to all pending appeals. Therefore the precedent, it is held that the appeal is not maintainable in the instant case as the tax effect is less than ₹ 50 lakhs. Accordingly, it is held that appeal filed by the revenue is not maintainable
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2019 (9) TMI 803
Disallowance u/s.14A r.w. Rule 8D in respect of exempt income - suo motto disallowance is made by the assessee on account of expenses relatable to exempt income - HELD THAT:- We noted that the CIT(A) has categorically given a finding that whatever the investments made by assessee out of own funds are the interest free funds available with the assessee in the instruments giving rise to exempt income, the same should not be disallowed. This view has support of Hon ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] Clearly, the available interest free funds with the assessee i.e. the own funds are more than the investment made in the instrument giving rise to exempt income and investment is out of mixed funds. Hence, the presumption is in favour of assessee Disallowance of administrative and other expenses under Rule 8D2(iii) - We noted that the assessee has made suo motto disallowance of ₹46,85,029/-, this will meet any anticipated cost that some expenditure was incurred by the company. At best cost of the funding and investment department of the company which has been assigned the task of managing the investment portfolio of the company as one of their many responsibility could possibly be covered. The said funding and investment department is in-charge of the financial activities of the company besides handling strategic function. Hence, we are of the view that the expenditure attributable to the earning of dividend income which has been offered by assessee suo motto for disallowance u/s.14A of the Act r.w.r. 8D2(iii) is reasonable. Order of CIT(A), directing the AO to take the average rate of investment by excluding from the total investments, the investment income from which are subject to tax and the investment in subsidiary companies, excluding investments which are giving rise to income which are subject to tax - We are of the view that the assessee suo motto disallowed a sum which is quite reasonable and AO is directed to restrict to that extent only. This issue of assessee s appeal is allowed and that of Revenue is dismissed. MAT computation - expenses relatable to exempt income u/s.14A r.w.r.8D(2) while computing book profits u/s.115JB - HELD THAT:- This issue is squarely covered in favour of assessee and against Revenue by the decision of the Special Bench of this Tribunal in the case of ACIT Vs. Vireet Investment Pvt. Ltd., [ 2017 (6) TMI 1124 - ITAT DELHI ] wherein it was held that - the provisions of Section 14A r.w.r.8D(2) of the Rules will not apply wherever book profit is computed u/s.115JB of the Act. Respectfully following the said decision we direct the AO not to make any disallowance under rule 8D(2) while computing book profits u/s.115JB of the Act. This issue of assessee s appeal is allowed. Disallowance of amortization premium paid for Leasehold land - HELD THAT:- It is observed that the issue involved therein relating to disallowance amounting made by the A.O. and confirmed by the CIT(A) on account of amortization of premium paid by the assessee for leasehold land is squarely covered against the assessee by the orders of the Tribunal in assessee s own case for earlier years i.e. A.Ys. 2006-07 to 2010-11. Respectfully following the said orders of the Tribunal, we confirm the disallowance made by the A.O. and sustained by the CIT(A) on this issue Addition of un-utilized CENVAT Credit - CIT-A deleted the addition directing the AO to recast the accounts of excise duty and other taxes - HELD THAT:- We find that this issue is squarely covered in favour of assessee and against Revenue in assessee s own case by the decision of the Hon'ble Bombay High Court [ 2019 (1) TMI 1623 - BOMBAY HIGH COURT ] assessee got credit in the excise duty already paid on the raw materials purchased by it and utilized in the manufacturing of excisable goods. The assessee was adopting the exclusive method, i.e., valuing the raw materials on the purchase price minus (-) the Modvat credit. The same would be permissible. The apex court in the case of Indo Nippon Chemicals Co. Ltd [ 2003 (1) TMI 8 - SUPREME COURT ] while affirming the order of the High Court, has observed that the income was not generated to the extent of Modvat credit or unconsumed raw material. Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials, that would not amount to income which was liable to the taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same - Decided in favour of assessee Depreciation on the opening written down value of the block of assets - HELD THAT:- As observed that the issue involved therein relating to assessee s claim for depreciation on the opening written down value of the block of assets as per the appellate order for immediately preceding assessment year is also squarely covered against the assessee by the decision of the Tribunal in assessee s own case for A.Ys. 2003-04 to 2010-11, this has also been affirmed by the ITAT. Respectfully, following the same, we uphold the impugned order of CIT(A) on this issue. This issue of assessee s appeal is dismissed.
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2019 (9) TMI 784
Revenue recognition - Income recognition method followed by the assessee from contract activity - HELD THAT:- The assessee is following percentage completion method in line with Accounting Standard 7. The Authorities below rejected revenue recognition method of the assessee. We find that similar issue had come up before the Tribunal in assessee s own case for assessment year 2004-05 wherein, the Authorities below were in disagreement with the assessee on the revenue recognition policy. The Tribunal accepted assessee s method of recognition of profit by observing AS-7 which existed prior to letter dated 01st April, 2003 continues to remain the same; but for minor changes. There are minor changes in relation to the computational issues. However, there is no change so far as cost based percentage completion method in concerned. Therefore, the computation of recognition income is concerned, the order of the CIT(A) is fair and reasonable and the same does not call for any interference. Accordingly, relevant grounds stand allowed in favour of the assessee. Claim of Prior period expenses - HELD THAT:- We observe that in the past as well the assessee has been claiming prior period expenditure . After being unsuccessful before the Commissioner of Income Tax (Appeals), the assessee carried the issue in appeal before the Tribunal. The Tribunal adjudicated this issue in favour of the Revenue. The Tribunal has been taking a consistent view in rejecting assessee s claim of prior period expenses in the past. Thus, following the order of Tribunal in assessee s own case, the assessee s claim of prior period expenses is rejected. Liquidated damages - assessee has been claiming penalty paid to customers for delay in delivery of consignment as liquidated damages - We find this issue is recurring in the past several assessment years. The Co-ordinate Bench in appeal of assessee for assessment year 2004-05 decided the issue in favour of the assessee by placing reliance on assessee s own case . [ 2019 (3) TMI 1608 - ITAT PUNE] Commercial expediency is a term of wide import and has been held to include such expenditure as a prudent businessman incurs for the purpose of business. The expenditure incurred though not under any legal obligation but still it is allowable as a business expenditure if incurred on the grounds of commercial expediency and the method of recognition is followed from year to year. Before us, no material has been placed by the Revenue that the expenditure is not a genuine expenditure or has been incurred to benefit any group concerns. Considering the totality of the facts we are of the view that the expenditure is allowable D isallowance of depreciation claimed at 80% on plant and machinery used for manufacturing of air/gas/fluid heating systems being renewable energy devices - HELD THAT:- since both the parties have admitted that the facts of the case in the present ground are identical to that of earlier years, we therefore following the decision of the Co- ordinate Bench of the Tribunal in assessee s own case for A.Y 2002-03 and for similar reasons hold that assessee is eligible to claim depreciation @ 80% with respect to plant and machinery used Plant Nos.4 and 8 in the manufacture of air / gas / fluid systems but is not eligible for 100% depreciation in respect of plant and machinery used in the manufacture of heat pumps. Disallowance made u/s.14A in respect of exempt income earned - HELD THAT:- AO made disallowance @2.5% of exempt income earned. The Ld.AR fairly admitted that in preceding assessment year i.e. assessment years 2002-03, 2004-05, the Tribunal has upheld the disallowance made by the Assessing Officer @ 2.5%. We find no reason to deviate from the view taken by the Co-ordinate Bench of the Tribunal in confirming disallowance @2.5% of the exempt income. Accordingly, ground No.5 raised in appeal by the assessee is dismissed being devoid of any merit. Disallowance of provision for warranty - assessee has created provision on account of provision for warranty - HELD THAT:- AR has pointed that no disallowance in respect of warranty provision was made in assessment years 2002-03 to 2004-05 as no incremental provision was made by the assessee. Rather there was reversal of provision during the aforesaid assessment years. The ld. DR has failed to controvert the findings of the Tribunal on this issue [2016 (8) TMI 1449 - ITAT PUNE] . Thus, respectfully following the decision of the Co-ordinate Bench, we allow assessee s claim in entirety. Disallowance of legal and professional expenditure paid to Mckinsey Co . - allowable revenue expenditure - HELD THAT:- In view of the facts of the present case and the various decisions discussed above, we are of the considered view, consultancy charges paid by assessee to Mckinsey Co. for enhancing efficiency, efficacy, profitability and market penetration is revenue in nature . The Commissioner of Income Tax (Appeals) has rightly reversed the findings of Assessing Officer and has held that the expenditure is not capital in nature. We are in agreement with the observation of the First Appellate Authority that no intangible asset has come in existence and hence, expenditure is allowable as revenue. However, we do not subscribe to the observation of the First Appellate Authority that the expenditure is allowable as deferred revenue expenditure . In the light of the judgments discussed above, we hold the expenditure is on revenue account and hence, entirely allowable in the impugned assessment year. Disallowance of sales commission - HELD THAT:- As the assessee has not furnished cogent evidence to substantiate rendering of services by the aforementioned two parties. For the parity of reasons, we reverse the findings of Commissioner of Income Tax (Appeals) on this issue. Hence, ground No.5 raised in appeal by Revenue is allowed.
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Customs
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2019 (9) TMI 802
Maintainability of Refund claim - order of assessment in appeal not challenged - whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty can be entertained? Whether in the case of self-assessment without passing a speaking order, it can be termed to be an order of self-assessment? - HELD THAT:- In Escorts Ltd. v. Union of India Ors. [ 1994 (2) TMI 74 - SUPREME COURT ] the question arose for consideration as to the Bill of Entry classifying the imported goods under a certain tariff item and paying the duty thereon. This Court held that in such a case signing of the bill of entry itself amounted to passing an order of assessment. Hence, the application seeking a refund on the ground that imported goods fell under a different item attracting a far lower rate of duty, having been filed more than six months after the payment of duty, was rightly rejected as timebarred. What is of significance is that an entry made in the bill of entry has been held to be an order of assessment passed by the Assessing Officer. Thus, the endorsement made on the bill of entry is an order of assessment. It cannot be said that there is no order of assessment passed in such a case. When there is no lis, speaking order is not required to be passed in across the counter affair''. Procedure of assessment of duty as prevailed before the amendment of the Act prior to the amendment made in section 17(1) by the Finance Act of 2011 - HELD THAT:- No doubt about it that the expression which was earlier used in Section 27(1)(i) that in pursuance of an order of assessment has been deleted from the amended provision of Section 27 due to introduction of provision as to self-assessment. However, as self-assessment is nonetheless an order of assessment, no difference is made by deletion of aforesaid expression as no separate reasoned assessment order is required to be passed in the case of self-assessment. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression Any person' is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of reassessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment. The order of self-assessment is an order of assessment as per section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of reassessment has to be passed under section 17(4). Section 128 has not provided for an appeal against a speaking order but against any order which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts. The provisions under section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or reassessment proceedings at all. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. The applications for refund were not maintainable - Appeal dismissed.
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2019 (9) TMI 801
Violation of principles of Natural Justice - request for adjournment of the counsel on 05.06.2008, rejected - opportunity of personal hearing not granted - HELD THAT:- The counter filed by the respondent does not dispute the sequence of facts but only states that, in the opinion of the respondent, an opportunity for either cross-examination, as sought for by the assessee, or for a hearing, is not mandatory - I am unable to accept this contention, as a personal hearing during the conduct of adjudication, particularly when specifically sought for, is in line with the principles of natural justice, and ought to have been granted. There has been a breach of the principle of natural justice in the matter and I thus, have no hesitation in setting aside the impugned order - petition allowed.
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2019 (9) TMI 800
Classification of imported goods - rotors, stator, down case, top case and down rod etc. imported together - whether the goods merits classification under heading 8414 or under 8503? - earlier imports of similar goods were assessed by the Revenue under heading 84.14 whereas the appellant had sought classification under 85.03 - change in classification. HELD THAT:- Whatever was imported by the appellant was specifically designed for ceiling fan. The marking on the corrugated box in which the said goods were imported is Orpat Ceiling Fan with Air Queen Model also mentioned. It is seen that Customs tariff headings include within purview the items incomplete, unfinished where presented unassembled or disassembled, if the said have the essential character of finished goods - In the instant case, from the observations given by the original adjudicating authority, it is seen that all parts of the fan except the fan blades as a set. The packing also describes the goods as electric fan. The rotors and stators, down case, top case and down rod of motor are also designed specifically to be a part of the fan. In these circumstances, following Rule 2(a), the goods are classifiable under heading 84.14 as unassembled, incomplete fan. Imposition of penalty, redemption fine and confiscation - HELD THAT:- The appellant had earlier sought classification under heading 85.03 and the matter can be a subject matter of opinion and therefore, in these circumstances, imposition of penalty and confiscation is not justified - Confiscation, redemption fine as well as penalty set aside. Appeal allowed in part.
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Securities / SEBI
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2019 (9) TMI 799
Non furnishing the information pursuant to the summons - Violation of Section 11C(3) read with Section 11(2)(i) of SEBI Act, 1992 - penalty under Section 15A(a) of the SEBI Act, 1992 - HELD THAT:- We find that admittedly the information sought by summons dated December 9, 2014 was eventually supplied after more than one and half years on February 17, 2016 in adjudication proceedings. Prior to that such information was not supplied. Information is required to be furnished to the investigating authority. If information is not furnished, it would hamper the investigation which was precisely being done in the instant case. The alleged irregularities in the trading in the scrips of the appellant Company could not be investigated on account of non-furnishing of the information. Such non-furnishing of the information hampered the investigation and, therefore, penalty becomes leviable. We find that it is not a case where it could be said that there was total non co-operation on the part of the appellant Company. Admittedly, most of the information was submitted though the information as per summons dated December 9, 2014 was furnished only at the stage of hearing in the adjudicating proceedings. Thus, even though information was provided by the appellant Company belatedly, we also find that even after the issuance of the show cause notice in the adjudication proceedings no reply was filed and therefore the violation of the alleged provisions stood admitted by the appellant Company. Thus, we are of the opinion that imposition of penalty is justified. However, in the circumstances since eventually the information was supplied during the pendency of the adjudication proceedings coupled with the fact that the Managing Director of the Company had appeared and cooperated in the proceedings the penalty of ₹ 5 Lakhs appears to be on the higher side. We, accordingly, reduce the quantum of penalty from ₹ 5 Lakhs to ₹ 2 Lakhs.
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Insolvency & Bankruptcy
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2019 (9) TMI 798
Whether the claim of the Applicants based on an unregistered sale agreement dated 02.08.2016 and claim acknowledgement letter dated 02.08.2016 is admissible as evidence in the absence of entry in the Books of Account of the Corporate Debtor? HELD THAT:- It becomes clear that an unregistered document pertaining to immovable property, which is compulsorily required to be registered under Section 17 of the Registration Act, may be received in evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument. In the case on hand the sale agreement dated 02.08.2016 is written on the non-judicial stamp paper of ₹ 100/- which as per Article 5 (j) of Schedule I of the Indian Stamp Act, 1899 is held to be sufficiently stamped and even if the same is unregistered, it is admissible in evidence for collateral purpose i.e. for proving the payment of ₹ 15,00,00,000 (15 Crores) by the Applicant/Financial Creditor to the Corporate Debtor. This fact is also corroborated by the 'claim acknowledgement letter' dated 02.08.2016. Moreover, this authority has also noted that a communication dated 22.07.2016 was sent by the Managing Director to Indian overseas Bank, which goes to state that the Managing Director has identified an investor, who is willing to pay bank dues and immediately thereafter on 02.08.2016 the sale agreement was executed between the Applicant/Financial creditor and the Corporate Debtor represented by the Managing Director and Director. The signatures of the above mentioned Directors and the seal of the Corporate Debtor on the sale agreement and claim acknowledgement letter are genuine, whereas the recitals in the said documents are disputed. However, the said suspended Directors or the Resolution Professional(s) of the Corporate Debtor have failed to substantiate their reasoning with any documentary evidence on the basis of which the claim of the Applicant/Financial Creditor was rejected. The exercise under taken by the Resolution Professionals to reject the claim of the Applicants/Financial Creditors is without any basis. Moreover, the Resolution Professional(s) has no adjudicatory power for deciding the issue pertaining to the claim made. The Resolution Professional is directed to treat the Applicants at par with other unsecured financial creditors and make the appropriate provision for payment to which they are entitled, in consultation with the CoC and the Resolution Applicant, and file the supplementary affidavit to that effect before this authority, or to withdraw the Resolution Plan and constitute the CoC afresh to get the Resolution Plan(s) approved with suitable modifications, as may be required.
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2019 (9) TMI 797
Liquidation of Corporate Debtor - offence of money laundering - allegation is that the persons having misappropriated/ diverted bank funds, committed criminal breach of trust and laundered the money so diverted - proceeds of crime - HELD THAT:- The issue is decided in the case of Varrsana Ispat Limited vs. Deputy Director, Directorate of Enforcement [ 2019 (5) TMI 1468 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI ] where it was held that the Prevention of Money Laundering Act, 2002 relates to different fields of penal action of proceeds of crime , it invokes simultaneously with the I B Code , having no overriding effect of one Act over the other including the I B Code . Appeal dismissed.
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2019 (9) TMI 796
Admissibility of petition - Initiation of CIRP - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - unpaid amount claimed by the Applicant/Financial Creditor from the Corporate Debtor - Financial Debt or not - time limitation. HELD THAT:- The evidence placed on record is sufficient to ascertain the default on the part of the Corporate Debtor, which the Corporate Debtor could not rebut. The Financial Creditor has fulfilled all the requirements of law including the name proposed for appointment of IRP after obtaining consent in Form-2. Therefore, the Application stands admitted. The commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.
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Service Tax
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2019 (9) TMI 795
Service Tax Audit - Rule 5A - Held that:- Looking into the facts and circumstances of the case and looking to the provisions in Chapter V of the Finance Act, 1994 and Rule 5A of Service Tax Rules read with Sections 6(1) and (2) of the General Clauses Act and Sections 173 and 174 of the Central Goods and Services Tax Act, 2017, there is a prima facie case in favour of the petitioner. Balance of convenience is also in favour of this petitioner. - Irreparable loss will be caused to the petitioner, if the stay as prayed for, is not granted. - Audit proceedings stayed. Application disposed off.
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2019 (9) TMI 794
Service Tax Audit - Rule 5A - Held that:- Looking to the provisions in Chapter V of the Finance Act, 1994 and Rule 5A of Service Tax Rules read with Sections 6(1) and (2) of the General Clauses Act and Section 173 and 174 of the Central Goods and Services Tax Act, 2017, there is a prima facie case in favour of the petitioner. Balance of convenience is also in favour of this petitioner. - Irreparable loss will be caused to the petitioner, if the stay as prayed for, is not granted. - Audit proceedings stayed. Application disposed off.
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2019 (9) TMI 793
Construction services - construction of residential complexes - Landowners portion of Construction of Complex Services - Renting of Immovable Property - Management, Maintenance or Repair Services - demand of service tax alongwith interest - imposition of penalties as well. Construction of residential complexes - Landowners portion of Construction of Complex Services - HELD THAT:- The established legal position is that Works Contract Service can be charged as works contracts only under Section 65 (105) (zzzza) and only with effect from 1.6.2007. In the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] , the question which arose was whether a demand can be made on commercial and industrial construction service under Section 65 (105) (zzzh) of the Finance Act, 1994 after 1.6.2007 where the nature of contract is a composite contract involving both supply of materials and rendition of services. It has been held that For the period post 1.6.2007, service tax liability under the category of commercial or industrial construction service under Section 65 (105) (zzzh), Construction of complex service under Section 65 (105(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. Thus, if the services rendered are in the nature of composite works contracts, they cannot be charged to service tax prior to 1.6.2007 and can be charged post this date only under this head 65 (105) (zzzza) and not under any other head. Thus, as far as service tax, under construction of complex service in respect of residential complexes is concerned, prior to 1.7.2010 (when the explanation was inserted), no tax could be levied. This was also clarified by the CBEC in circular No. 108/2/2009-ST dated 29.1.2009 - thus, with respect to construction of complex services were rendered prior to 01.7.2010, no service tax is chargeable and the demand to this extent needs to be set aside. Renting of Immovable Property Service - the relevant period is 2007-08 to 2009-10 and the SCN was issued on 22.10.2010 invoking extended period of limitation - HELD THAT:- Renting of immovable property per se was not taxable prior to 08.5.2010 but only services rendered in relation to renting of immovable property. After the amendment, renting itself became taxable with retrospective effect from 01.6.2007 itself. When the law itself did not cover taxation of renting of immovable property services, it is inconceivable that the assessee could have anticipated the retrospective amendment and paid service tax accordingly. Failure to pay service tax in this manner cannot be alleged to be fraud or collusion or wilful misstatement or suppression of facts with intent to evade payment of service tax - the demand on this head is not sustainable beyond the normal period of limitation. Management, maintenance or repair services - HELD THAT:- This demand was made based on the information available in the books of accounts of the appellant themselves and their ledgers which show the amounts as having been received from management services. The audited balance sheets of the appellant themselves show that they have earned income on maintenance and repair services. They cannot now claim that the income is not so - Learned counsel for the appellant tried to impress upon the bench that the income is actually income from interest etc. However, from the papers presented before us, he could not establish that the income which was recorded in their audited balance sheets as maintenance and repair services was not so and in fact, it has been misdeclared by their auditor and it pertains to interest income. It is also not in dispute that the appellants have neither declared these amounts as services rendered by them nor have they paid service tax nor have they filed their ST-3 returns with these amounts - the demand under the head management, maintenance and repair services invoking extended period of limitation is sustainable. Extended period of limitation - Interest - penalty - HELD THAT:- Extended period is invokable in the case of management, maintenance and repair services and is irrelevant in respect of the construction of residential complex services and construction of complex services as the same has been held to be not taxable at all - As far as renting of immovable property is concerned, the extended period of limitation, cannot be invoked - Consequently, the amount on interest, if any, is payable and the penalties under Section 77 78 also need to be upheld. Appeal is remanded to the original authority for the limited purpose of re-computation of liability - appeal allowed by way of remand.
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2019 (9) TMI 792
Works Contract Service - construction of residential and commercial/non-commercial buildings and complexes - composite works contract - Demand of service tax - Composition scheme - Invocation of Extended period of Limitation - imposition of penalties - HELD THAT:- There is no dispute that in all these cases the appellant not only supplied materials but also rendered services related to the works contract. Therefore, these are all composite works contracts. It is not in dispute that the appellant has not sought or followed the procedure required for composition scheme. Demand of service tax - residential complex services - HELD THAT:- It is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no service tax can be levied on construction of residential complex prior to 01.7.2010. Learned counsel would submit that for the period post 01.7.2010, they have been discharging service tax appropriately. This is a fact which can be verified to ascertain the full tax liability for the period post 01.7.2010 or otherwise - Matter on remand. Demand of service tax - construction of Mahatma Gandhi Cancer Hospital and Research Institute - HELD THAT:- There are no reason to hold that the activity of a corporate hospital does not amount to commerce or industry. In fact, health care and hospitals is one of the most profitable and fast growing service industries in the country - there are no reason to hold that the construction of hospital building of a corporate hospital is excluded from the definition of works contract service. It is clearly covered by section 65 (105) (zzzza) (ii) (b) as a new building meant for the purpose of commerce or industry - demand upheld. Demand of service tax - construction of administrative building for Indian Registrar of Shipping - HELD THAT:- The Indian Registrar of Shipping is regulatory body who registers ships and vessels in the country and also classifies them and does related activities. These cannot be termed as an act of commerce or industry. Learned departmental representative submits that the IRS charges fees for its activities. Even if it does so it is similar to that of other regulatory agencies such as RT officer, Transport Authority charging fees for issuing a driving license or for registering a vehicle. It is neither an organisation involved in commerce or industry nor does the organisation make any profit - the demand on construction of administrative building for IRS is liable to be dropped. Composition scheme - HELD THAT:- The assessee has the option of paying service tax under the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, if he chooses to do so. The mere fact that they have not opted for this earlier does not reduce their entitlement to opt for this scheme now - The demand of service tax needs to be recomputed, after following principles of natural justice and giving the assessee an opportunity to present their case including, indicating if they desire to avail the benefit of composition scheme. Interest as applicable will have to be paid on the differential service tax, if any. Imposition of penalties - HELD THAT:- All the demands, with respect to major portion, is already held in favor of the assessee - Of the demand which are upheld, the assessee claims that they have already paid service tax on residential complex services from 01.7.2010 onwards - Penalties set aside. The matter is remanded to the original authority for the limited purpose of calculation of service tax liability and interest as above, after following principles of natural justice - appeal allowed by way of remand.
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Central Excise
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2019 (9) TMI 791
Doctrine of Promissory Estoppel - withdrawal of exemption N/N. 71 of 2003 dated 09.09.2003 - Exemption from duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts as was equivalent to the amount of duty paid by the manufacturer of the said goods, other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002 - whether, by invoking the doctrine of promissory estoppel, can the Union of India be estopped from withdrawing the exemption from payment of Excise Duty in respect of certain products, which exemption is granted by an earlier notification; when the Union of India finds that such a withdrawal is necessary in the public interest? HELD THAT:- This Court in a catena of decisions has considered the issue with regard to inapplicability of the doctrine of promissory estoppel, when the larger public interest demands so. In the case of KASINKA TRADING VERSUS UNION OF INDIA [ 1994 (10) TMI 64 - SUPREME COURT] , this Court was considering the case of the appellant, who were manufacturing certain products, requiring PVC resin as one of the raw materials for its manufacturing process. By Notification No. 66 dated 15.03.1979 issued under Section 25 of the Customs Act, 1962 which is pari materia with Section 5A of the Central Excise Act, the PVC resin was exempted from basic import duty. The exemption was to be effective till 31.03.1981. However, by Notification No. 205 dated 16.10.1980 issued under Section 25 of the Customs Act, the exemption granted earlier came to be withdrawn. This Court has clearly held that the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to see all aspects including the objective to be achieved and the public good at large. It has been held that while considering the applicability of the doctrine, the courts have to do equity and the fundamental principle of equity must forever be present in the mind of the Court while considering the applicability of the doctrine. It has been held that the doctrine of promissory estoppel must yield when the equity so demands and when it can be shown having regard to the facts and circumstances of the case, that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation. The withdrawal of exemption in public interest is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the public interest. It has been held that, where the Government acts in public interest and neither any fraud or lack of bona fides is alleged much less established, it would not be appropriate for this Court to interfere with the same. Ultimately, this Court came to the conclusion that the withdrawal of the exemption was in the public interest and, therefore, refused to interfere with the order of the Delhi High Court dismissing the petitions. Thus, when withdrawal of the exemption is in public interest, the public interest must override any consideration of private loss or gain. In the said case, the change in policy and withdrawal of the exemption on the ground of severe resource crunch have been found to be a valid ground and to be in public interest. It could thus be seen that, it is more than well settled that the exemption granted, even when the notification granting exemption prescribes a particular period till which it is available, can be withdrawn by the State, if it is found that such a withdrawal is in the public interest. In such a case, the larger public interest would outweigh the individual interest, if any. In such a case, even the doctrine of promissory estoppel would not come to the rescue of the persons claiming exemptions and compel the State not to resile from its promise, if the act of the State is found to be in public interest to do so. Thus, it is concluded that the withdrawal of the exemption to the pan masala with tobacco and pan masala sans tobacco is in the larger public interest. As such, the doctrine of promissory estoppel could not have been invoked in the present matter. The State could not be compelled to continue the exemption, though it was satisfied that it was not in the public interest to do so. The larger public interest would outweigh an individual loss, if any. In that view of the matter we find that the appeals deserve to be allowed. Appeal allowed.
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2019 (9) TMI 790
Refund claim - unjust enrichment - though the refund was sanctioned, the assessing authority transferred the amount to the Consumer Welfare Fund on the ground that the petitioner had unjustly enriched itself - appeal were filed for two times, and both the times, the appeal was rejected - HELD THAT:- The assessing authority once again rejected the refund claim, as against which an appeal was filed which was allowed by the 1st appellate authority by order dated 31.10.2012 stating categorically that the refund is not hit by the principle of unjust enrichment - This order has become final and in my view, there ends the matter. It is thus incumbent upon the assessing authority to pass a consequential order of relief and grant the refund. Refund allowed alongwith interest - petition allowed.
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2019 (9) TMI 789
CENVAT Credit - input - iron ore - input service - royalty charges - appellant being bona fide purchaser of such iron ore has paid the royalty charges and service tax thereon as charged by the Monitoring Committee, Department of Mines Geology in their tax invoices - HELD THAT:- The appellant has purchased the iron order from the Monitoring Committee, Department of Mines and Geology and has paid the royalty charges and service tax thereon separately as shown in the tax invoice issued by the Monitoring Committee and it is also not disputed that such input was used for manufacture of Sponge Iron by the appellant - further, once the appellant paid the service tax on the royalty charges, then he is entitled to take the CENVAT credit on the same and the CENVAT credit cannot be denied at the appellant s end. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (9) TMI 788
Compliance with the pre-deposit - Section 62(5) of the Punjab Value Added Tax Act, 2005 - power of State to enact Section 62(5) of the PVAT Act - inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits - Whether the State is empowered to enact Section 62(5) of the PVAT Act? - HELD THAT:- In The Anant Mills Co. Ltd. v. State of Gujarat and Others [ 1975 (1) TMI 62 - SUPREME COURT ], a Bench of four Judges of this Court considered inter alia, challenge to the validity of Section 406 of the Bombay Provincial Municipal Corporations Act, 1949 as amended by Gujarat Act No.5 of 1970. As per the relevant provision, no appeal against the ratable value or tax would be entertained unless the amount claimed was deposited with the Commissioner. The proviso to said Section however empowered the Judge considering the appeal to relieve the appellant from the rigour of pre-deposit if in the opinion of the Judge it would cause undue hardship to the appellant. Whether the condition of 25% pre-deposit for hearing first appeal is onerous, harsh, unreasonable and, therefore, violative of Article 14 of the Constitution of India? - HELD THAT:- The decision of the Constitution Bench of this Court in Seth Nand Lal [ 1980 (5) TMI 101 - SUPREME COURT ] did consider whether the requirement of pre-deposit would cause undue hardship. However considering that the liability in question and consequential requirement of pre-deposit was a meagre rate of the annual land-tax payable, the fetter imposed on the right of appeal/revision, even in the absence of a provision conferring the discretion on the appellant/revisional authority to relax or waive the condition was not found to be onerous or unreasonable. Thus, Section 62(5) of the PVAT Act is legal and valid and the condition of 25% of pre-deposit not to be onerous, harsh, unreasonable and violative of Article 14 of the Constitution of India. Whether the first appellate authority in its right to hear appeal has inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits? - HELD THAT:- If the inherent power the existence of which is specifically acknowledged by provisions such as Section 151 of the CPC and Section 482 of the Cr.P.C. is to be read with the limitation that exercise of such power cannot be undertaken for doing that which is specifically prohibited, same limitation must be read into the scope and width of implied power of an appellate authority under a statute. Appeal dismissed.
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2019 (9) TMI 787
Validity of assessment order - Section 25(1) of the KVAT Act - case of petitioner is that either the mere filing of appeal or mere pendency of appeal does not amount to granting stay by the appellate authority - HELD THAT:- Normally this Court considers directing disposal of delay condonation petition and also stay petition where the delay in filing the appeal is about 150 days. In the case on hand, Adv. Hajara draws the attention of Court to the special circumstances which prevented the petitioner from working out the remedy of appeal, firstly within the time granted by Statute, at least within a period of 150 days. On being convinced by the reasons stated by her, prima facie I am satisfied that a case is made out for issuing necessary directions to second respondent to dispose of the delay condonation petitions and stay petitions in Exts.P13 to P16 and P9 to P12 respectively. The appellate authority/second respondent considers and disposes of Exts.P13 to P16 and P9 to P12 applications as early as possible, preferably within two months from the date of receipt of copy of this judgment.
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Indian Laws
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2019 (9) TMI 786
Dishonor of Cheque - section 138 of NI Act - maintainability of application filed under Section 91 Cr.P.C - HELD THAT:- The petitioner/accused is facing trial for an offence under Section 138 N.I Act and he has preferred an application under Section 91 Cr.P.C. with the prayer that the complainant has stated that he has given the aforesaid amount to the petitioner/accused, thus, it is necessary to bring this fact into knowledge of the Court that from which bank, the aforesaid money was withdrawn by complainant and it is also mandatory to call the necessary documents regarding bank statements and income tax return of the relevant years to find out the income of the complainant - at the initial stage of trial when charges are to be stated, application filed under Section 91 Cr.P.C can not be entertained. The Court is empowered to call any documents which are necessary to fair proceeding of the case. The Court can issue summons to the person whom possession the desirable documents are kept. The powers which has given to Court under Section 91 of Cr.P.C. is discretionary in nature and same can be exercised judiciously and in proper manner. It also shows that the power to issue a summons for the production of a document or a thing is to be exercised whenever the Court considers that its production is necessary or desirable for the purposes of investigation, inquiry, trial or other proceeding. Power is available to the Court at every stage of proceedings contemplated under the Code. It has to be noticed that this power is available not only to the Court but also to any officer-in-charge of a police station and the only condition for the exercise of the power is that the production of the document or the thing should be necessary or desirable for purposes of the proceedings. The superior Court can intervene only in case where the discretion exercised by the lower Court neither judiciously nor judicially and there is gross failure to exercise the discretion of the Court. The Superior Court should not interfere in the discretion of the learned lower Court in a routine fashion. It is also manifest from the above cited judgment that the power of Court under Section 91 Cr.P.C. is unlimited but at the same time there is limitation as to which stage or point of time, Court may exercise it power under Section 91 Cr.P.C. The Court has to see the compulsion of necessity and desirability of the document to the context of the purpose which is called for. A police officer may file an application under Section 91 Cr.P.C. at any of the stages but the accused can seek such order only at the stage of defence, he has no right conferred to produce document in his possession to prove his defence at the stage of framing of charge. The present case is originated by filing a private complaint under Section 200 Cr.P.C. and its procedure is quite different with the procedure of warrant trial but bare perusal of impugned order it seems that the in the case particulars of offence are to be stated to accused under section 251 Cr.P.C, thus, the case is said to be in initial stage of trial.' This Court does not found any apparent error to interfere in the discretion of the learned JMFC. The pronouncement referred by the petitioner s counsel is having different set of facts and do not applicable in the present case - petition dismissed.
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2019 (9) TMI 785
Dishonor of cheque - insufficiency of funds - failure to repay borrowed amount - Section 138 of the Negotiable Instruments Act - acquittal of accused - HELD THAT:- In the case at hand, though probable defence with regard to capacity of the complainant to lend money appears to have been taken very casually because, if statement of the accused recorded under S.313 CrPC as well as suggestions put to the complainant during his cross-examination are perused, same clearly suggest that the main defence of the accused is/was that she issued cheque as security, but even if such defence is tested on the basis of evidence led on record by respective parties, same deserves outright rejection - In the case at hand, careful perusal of the complaint filed by complainant under S.138 clearly suggests that he set up a case that he, after having arranged money from his friends namely Raju and Stephen Deen, gave it to the accused. There is no suggestion with regard to capacity of complainant to lend money, who otherwise is a Government employee. Complainant s assertion made in examination-in-chief that he is working as a Carpenter in MES at Jutogh and drawing salary of ₹ 33,000/- per month, remained totally un-shattered, because at no point of time, suggestion, if any, qua aforesaid aspect of the matter came to be put to the complainant. Hon'ble Apex Court in Rohitbhai Jivanlal Patel vs. State of Gujarat Anr , [ 2019 (3) TMI 769 - SUPREME COURT ], has held that in view of statutory presumptions as contemplated under Ss.118 and 139 of the Act, onus is shifted upon the accused and unless accused discharges said onus by leading evidence on record as to show preponderance of probabilities tilting in his favour, complainant s case cannot be disbelieved for want of evidence regarding source of funds for advancing as loan to the accused. In the case at hand, accused has not been able to rebut the statutory presumption under Ss.118 and 139 of the Act in favour of holder of cheque i.e. complainant and as such, there appears to be no illegality or infirmity in the judgments/order of conviction and sentence passed by learned Courts below - All the ingredients of S.138 of the Act stand duly proved in the case at hand, as such, this Court finds no occasion to interfere with the judgments/order of conviction and sentence recorded by learned Courts below, as such, same deserve to be upheld. Petition dismissed.
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