TMI Tax Updates - e-Newsletter
September 25, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Constitution of the GST Appellate Tribunal - qualification & composition - Sec. 110(1)(b)(iii), 109(3), 109(9) of CGST Act, 2017 struck down

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• Recovery of erroneous Duty Drawback after 5 years - Rule 20(2) does not save the SCN relating to demand of already paid duty drawback - HC

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Articles

1. SVLDRS- WHEN PARLIAMENT POINTED TO THE MOON THE PARLIAMENTARY DRAFTSMAN SAW ONLY THE FINGERS!

   By: Jayaprakash Gopinathan

2. HIGHLIGHTS OF LAW & PROCEDURE RELATED CHANGES PROPOSED IN GST COUNCIL MEETING HELD ON 20.09.2019

   By: Ganeshan Kalyani

3. REDRESSAL OF PUBLIC GRIEVANCES IN INSUANCE SECTOR

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. The Fifteenth Finance Commission holds meeting with the Government of Sikkim

2. Regulatory and Supervisory Expectations on Compliance Function in Banks (Shri M. K. Jain, Deputy Governor, Reserve Bank of India - Tuesday, August 20, 2019 - at Financial institution Benchmarking and Calibration (FIBAC) 2019 – the Annual Global Banking Conference organised by IBA and FICCI, Mumbai)

3. CCI approves Combinations under Section 31(1) of the Competition Act, 2002

Notifications

Companies Law

1. G.S.R. 682(E) - dated 23-9-2019 - Co. Law

National Company Law Tribunal (Salary, Allowances and other Terms and Conditions of Service of President and other Members) Amendment Rules, 2019.

Customs

2. 48/2019-Customs (N.T./CAA/DRI) - dated 23-9-2019 - Cus (NT)

Appointment of CAA by DGRI

3. 47/2019-Customs (N.T./CAA/DRI) - dated 20-9-2019 - Cus (NT)

Seeks to amend Notification No. 19/2018- Customs (N.T./CAA/DRI) dated 05.09.2018

4. 46/2019-Customs (N.T./CAA/DRI) - dated 20-9-2019 - Cus (NT)

Appointment of CAA by DGRI

GST

5. 42/2019 - dated 24-9-2019 - CGST

Seeks to bring rules 10, 11, 12 and 26 of the CGST (Fourth Amendment) Rules, 2019 in to force.

Income Tax

6. 72/2019 - dated 23-9-2019 - IT

E-Assessment - CBDT directs that the Income-tax Authority having its headquarters at the place shall exercise and perform, concurrently, the powers and functions of the Assessing Officer

Highlights / Catch Notes

GST

• CGST Fourth Amendment Rules 2019: Key Updates on Rules 10, 11, 12, and 26 for Streamlined GST Refund Procedures.

  Notifications : Refund - Seeks to bring rules 10, 11, 12 and 26 of the CGST (Fourth Amendment) Rules, 2019 in to force.
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• GST Classifies Exam and Certification Services as Composite Supply; Conduct of Exams is Principal Supply.

  Case-Laws - AAR : Classification of services - Composite supply or Mixed Supply - business of providing exam, certification and other allied services including various types of surveys, assessments, and exam services - Supply can be considered to be a composite supply - The conduct of examination can be considered as principal supply. - AAR
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• GST Exemption for Educational Conferences Doesn't Cover Catering, Security, Cleaning, Housekeeping, and Transportation Services.

  Case-Laws - AAR : Exemption from GST - fee for participation of their students and staff in the conference - Exemption provided to service providers of catering, security, cleaning, house-keeping, transportation etc. to an educational institution up to higher secondary shall not be available for services provided for such conference. - AAR
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• Court Invalidates Sections of CGST Act on GST Appellate Tribunal Composition and Judicial Member Appointment Criteria.

  Case-Laws - HC : Constitution of the GST Appellate Tribunal - Section 110(1)(b)(iii) of the CGST Act which states that a Member of the Indian Legal Services, who has held a post not less than Additional Secretary for three years, can be appointed as a Judicial Member in GSTAT, is struck down - Section 109(3) and 109(9) of the CGST Act, 2017, which prescribes that the tribunal shall consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State), is struck down. - HC
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• GST Appellate Tribunal Formed: Judicial Members to Outnumber Experts for Balanced Decisions under CGST Act.

  Case-Laws - HC : Constitution of the GST Appellate Tribunal - to decide issues regarding interpretation of notifications and sections under the CGST Act a properly trained judicially mind is necessary which the experts will not have. The number of expert members therefore cannot exceed the number of judicial members on the bench. - HC
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Income Tax

• CBDT Directive: Income-tax Authority to Share Assessing Officer Duties for Efficient e-Assessment Process.

  Notifications : E-Assessment - CBDT directs that the Income-tax Authority having its headquarters at the place shall exercise and perform, concurrently, the powers and functions of the Assessing Officer
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• Deemed dividends not exempt under Income Tax Act Section 10(34); taxed u/ss 2(24)(ii), 2(22)(e), and 56.

  Case-Laws - AT : Deemed dividend - Being not a regular dividend, declared and paid by company, the same does not fall to be covered u/s. 10(34) and, thus, is not excepted u/s. 56. The same has, accordingly, been rightly brought to tax u/s. 2(24)(ii) r/w ss. 2(22)(e) and 56
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• Deemed Dividend Rules u/s 2(22)(e) Apply to Loans with Short Retention Period; Assessee's Argument Lacks Evidence.

  Case-Laws - AT : Deemed dividend addition u/s (2)(22)(e) - loans or advances - ‘low’ retention period - the provision in no manner seeking to impinge on genuine business transactions - The assessee’s argument, which is even otherwise not backed by any material and only in the nature of a bald statement, is therefore without merit.
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• Court Upholds CIT(A) Decision on Adjusting Tax Refunds and Interest Calculations u/s 244A of Income Tax Act.

  Case-Laws - AT : Validity of Adjustment of refund against interest payable and balance, if any, with the tax payable while computing the interest u/s. 244A - order of CIT(A) sustained.
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• No TDS required on stock exchange transaction charges u/s 194J of Income Tax Act for facilities provided.

  Case-Laws - AT : Non-deduction of TDS on transaction charges on payment made to Stock Exchanges - transaction charges are in the nature of payments made for facilities provided by the Stock Exchange and no TDS on such payments would be deductible u/s 194J
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• ICICI Bank Ltd. not a 'related party' to ICICI Securities u/s 40A(2)(b), impacting transaction disallowance.

  Case-Laws - AT : Disallowance towards Client Maintenance Charges - ‘related party’ - ICICI Bank Ltd. does not fall in the definition of ‘related party’ in terms of Section 40A(2)(b) of the assessee ICICI Securities Ltd.
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• Section 80G Approval: Spending on Charitable Activities Not Mandatory for Tax Exemption Eligibility.

  Case-Laws - AT : Grant of approval u/s 80G - mere fact that the applicant has not spent substantial amount for charitable work cannot be held against the assessee so far as the approval under section 80G of the Income Tax Act is concerned.
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• AO's Decision on Sale Deed Review Stands; No Need for Repeated Scrutiny u/s 263 Revision.

  Case-Laws - AT : Revision u/s 263 - AO in this case on examining the sale deed came to a conclusion at the first stage which was well within his power as it is not mandatory that for each and every aspect the Ld. AO has to doubt the transaction and call for information again and again.
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• Court Disallows 15% of Construction Expenses Due to Supplier Sales Turnover Discrepancies in Expense Claims.

  Case-Laws - AT : Bogus expenses/purchase - genuineness of various expenses incurred for the construction - sales turnover of the suppliers are not matching - sustaining of disallowance @ 15% of the alleged amount will meet the end of justice.
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Customs

• High Court Rules on Recovery of Wrongly Paid Duty Drawbacks; New Rule 20(2) Changes Government Intention Under Drawback Rules.

  Case-Laws - HC : Recovery of erroneous Duty Drawback - Rule 16 of the Drawback Rules, 1995 - By inserting Rule 20(2) government has shown its different intention and Rule 20(2) of Drawback Rules, 2017 does not save show cause notices relating to demand of already paid duty drawback - HC
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• Rule 16: Duty Drawback Recovery Notice Invalid if Issued After Five Years from Export Date.

  Case-Laws - HC : Recovery of Duty Drawback - Period of 5 years for all purposes is reasonable period so we hold that any notice issued under Rule 16 of Drawback Rules, 1995 beyond 5 years from the date of export is bad in the eyes of law and barred by limitation - HC
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PMLA

• Banks Caught in Unnecessary Attachment Orders Under PMLA; Call for Protection Against Undue Legal Burdens and Civil Penalties.

  Case-Laws - AT : Offence under PMLA - attachment orders - The banks are innocent parties. One is failed to understand after filing the reply, the banks are un-necessary dragged in the litigation. Their duty amount has to be secured. They cannot be harassed in this fashion. No civil death should be given to banks without their involvement. The banks money is a public money.
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• High Court Reviews Bail Plea in Money Laundering Case, Highlights Unique Approach for Economic Offenses.

  Case-Laws - HC : Bail plea in a money laundering case - white collar crimes/economic offenders - The economic offences like the one in hand constitute a class part and they are not like other criminal cases and need to be visited with a different approach. - HC
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VAT

• Entry Tax Liability on Machinery Imported in 2000-2001 Unaffected by Export in 2004-2005.

  Case-Laws - HC : Demand of Entry Tax - machinery imported by the assessee during the A.Y. 2000-2001, but exported outside the country in the year 2004-2005 - The event of subsequent export of machinery outside the country during the A.Y. 2004-05, had no bearing on the unit of assessment being the A.Y. 2000-01.
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Case Laws:

• GST

• 2019 (9) TMI 990
  Application for GST registration - services provided are export of services - Zero rated supply - pure agent services - supply of such services under LUT - levy of GST - reimbursement of expenses such as salaries, rent, office expenses, travelling cost etc. - management fees charged by us to the Company for managing the job outsourced. HELD THAT:- The question with regard to services provided are export of services and supply of such services under LUT are withdrawn and not dealt with. Whether GST is applicable on the reimbursement of expenses such as salaries, rent, office expenses, travelling cost etc.? - HELD THAT:- The applicant is not a pure agent. In the subject case the applicant is making payments to vendors for supply received by them. The applicant is not making payment to the third party for the services rendered by such third party to the recipient of supply, under a contract for supply. In the subject case the recipient of supply is not liable to make payment to third parties and therefore it can be said that the applicant is not making payments on behalf of the recipient of supply. The applicant has cited CBDT Circular no. 107/26/2019-GST of CBDT dated 18th July, 2019 and have contended that they are providing ITes services as defined in Section 10TA of Income Tax Rules, 1962 to MSS Marine Ltd on their own account. The said Circular is not applicable to GST Laws and therefore we are not discussing the same in this order. The reimbursement received by the applicant pertains to establishment costs which would be incurred by them for running their office in India. In any normal business such expenses are borne by the supplier of service and it is but natural that they would include such costs in the value to be received from the recipient of their services - In the subject case the said costs, are termed as reimbursements and are recovered in addition to management fees from their clients and therefore it is nothing but additional consideration charged for the supply in this case. The provisions of Section 15 of the CGST Act, which deals with the transaction value are very clear and as per the said provisions the valuation of supply will include all costs, including the employee cost provided by one distinct entity to the other distinct entities. Whether GST will be applicable on the management fees charged by us to the Company for managing the job outsourced to us? - HELD THAT:- Since, the applicant is an intermediary, as per the provisions of Section 13 (8)(b) of IGST Act, the place of provision of the service in the subject case is the location of the supplier of services i.e. the applicant and since the place of supply is in taxable territory, we hold that they will be liable to discharge GST on such services provided by them. Therefore we hold that GST will be applicable on the management fees charged by the applicant.

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• 2019 (9) TMI 989
  Applicable rate of GST - sale of aircraft by an NSOP holder to a private company who have applied for NSOP license, to be used for purposes such as corporate leisure, pilgrimage, cargo chartered flights - HELD THAT:- As can be seen from Serial No. 244 of Schedule I of Notification No. 1/2017-CT (Rate) dated 28.06.2017 is in respect of Other aircraft (for example, helicopters, aeroplanes), other than those for personal use, falling under Chapter 8802 of the GST Tariff and Serial No. 176 of Schedule IV of Notification No. 1/2017-CT (Rate) dated 28.06.2017 is in respect of Aircrafts for personal use, falling under Chapter 8802 of the GST Tariff. Since at this point of time, the intended use of the aircraft to be sold is not known and is only speculated as use, by the applicant, for non-personal purpose by the purchaser we will not be able to answer their question. However we are of the opinion that Serial No. 244 mentioned above will be applicable when the said aircraft will be for other than those for personal use and Serial No. 176 mentioned above will only be applicable if the said aircraft will be for personal use. Hence at this point of time it is not possible for us to answer their question due to lack of sufficient and conclusive information supplied by the applicant.

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• 2019 (9) TMI 988
  Levy of GST or IGST - Marine Duty hydraulic equipment, which is being designed and custom built by us for being fitted on a Barge - Serial No 246 of Schedule. I of GST Notification No 1/2017 dated 28th June 2017 - Input tax credit - indigenous and imported inputs which are being used for manufacture of the above equipment. HELD THAT:- The Marine Duty Hydraulic Cylinders and Hydraulic Power Packs will be supplied by them to their client M/s Mandovi Drydocks who will be using the same for the barges being manufactured by them. The barges that will be manufactured will be used for transporting cargo/goods to mid-sea where they would be unloaded/dumped. Hence there is no doubt that such barges would fall under Chapter 8901, as claimed by the applicant. The barge will be carrying materials which will be discharged in mid-sea. Therefore it can be assumed that the barge will be used for transporting materials to be unloaded at mid-sea. We also find that the said products, being tailor made for being fitted only on such barges, cannot be used elsewhere and without the same the barge will not be able to function for the purpose for which it is built, namely for unloading materials in mid-sea. Hence the subject products i.e. Marine Duty Hydraulic Cylinders and Hydraulic Power Packs, can be considered as an integral part of such barge and therefore would fall under Sr. No. 252 of Schedule I of GST Notification No. 1/2017 as Parts of goods of headings 8901. GST @ 5% (CGST of 2.5% and SCGT of 2.5%) or IGST @ 5% [under Serial No. 252 of Schedule I of GST Notification No. 1/2017], will be applicable for the above mentioned Marine Duty hydraulic equipment, which is being designed and custom built for being fitted on a Barge falling under Serial No 246 of Schedule. I of GST Notification No 1/2017 dated 28th June 2017. Input tax credit - indigenous and imported inputs which are being used for manufacture of the above equipment - HELD THAT:- Chapter V of the CGST Act, 2017 comprising of Sections 15 to 21, contains provisions pertaining to availment and utilization of Input Tax Credit. Subject to satisfying the provisions of Chapter V, we are of the opinion that the applicant can claim input tax credit in such a situation.

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• 2019 (9) TMI 987
  Works contract - Construction of Tunnel and Its applied works for NIRA-BHIMA Link No.5 of Taluka-Indapur, Dist -Pune, Under Krishna-Bhima Stabilisation Project Awarded by Godavari Marathwada Irrigation Development Corporation, Aurangabad - whether the said Contract is covered Under SI No.3 A, Chapter No.99 As per Notification No. 2/2018 - Central Tax (Rate) Dated 25.01.2018 w.e.f.25/01/2018? - whether the contract involves earth work? HELD THAT:- From the meaning assigned the expression earth work as per Dictionary, the term earth work means the structure made from earth especially an embankment or construction made of earth. On perusal of tender documents, the present work is the construction of tunnel and its allied work and therefore said work cannot be considered as earth work contemplated by entry no. 3(vii) above. The function and power of the corporation have been listed in the Maharashtra Act XXIII of 1998. In general, it has been entrusted with the work of investigation, Planning, Designing of Projects, Maintenance of Completed Projects, Construction of Projects and irrigation Management of the Major, Medium and Minor projects in the Godavari River Basin. The projects comprise of Irrigation Hydroelectric projects (Except Bhandardara (Phase-I and II) and Ghatghar Hydro Electric Power Projects) along with the command area development and multipurpose schemes. The projects are to be State during the project time slice, it is expected to increase the performance efficiency of the completed projects and to complete further on going and new works, so as to utilize the water from Godawari Basin. The present transaction can be considered as other irrigation work.

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• 2019 (9) TMI 986
  Classification of goods - Dialyzer - to be treated as Disposable sterilized dialyzer or micro barrier of artificial kidney as mentioned under Entry No. 255 of Schedule I to N/N. 1/201 7-CentraI Tax (Rate), dated 28 June 2017 and N/N. 1/2017-lntegrated Tax (Rate), dated 28 June 2017? - Whether classified under Chapter 90 (i.e. Tariff item 9018 90 3 1) or Chapter 84 (i.e. Tariff item 8421 29 00)? The Applicant is of the view that the product Dialyzer merits classification under Tariff item 9018 90 31 and consequently as Disposable sterilized dialyzer or micro barrier of artificial kidney under Entry No. 255 of Schedule I to the Rate Notifications. HELD THAT:- In medical parlance, dialysis is considered to be the process of removing excess water, solutes- and toxins from the blood in people whose kidneys can no longer perform these functions naturally. A Dialysis machine is a machine used in dialysis that filters a patient s blood to remove excess water and waste products when the kidneys are damaged, dysfunctional, or missing. The dialysis machine consists of plastic tubing that carries the removed blood to the dialyser which is a bundle of hollow fibers that forms a semipermeable membrane for filtering out impurities. In the dialyser, blood is diffused with a saline solution called dialysate, and the dialysate is in turn diffused with blood. When the filtration process is complete, the cleansed blood is returned to the patient. Dialyzers are not used for filtration or purification of any liquids or gases. Chapter Heading 9018 covers Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scientographic apparatus, other electromedical apparatus and sight-testing. Renal dialysis equipment (artificial kidneys, kidney machines and dialyzers) are classified under CSH 9018 90 31 - From the submissions made by the applicant, it is found that the subject product does not make up a Renal Dialysis Equipment but it can very definitely be considered as a part of a renal Dialysis Equipment. Since a dialyzer is used in performing the functions of a kidney, it goes without saying that it is required to be sterilized and free from contamination. We are also of the opinion that given the importance of the subject product in performing the work of a kidney albeit externally, the same should not be reused. The table above mentions that the sterilized dialyzer should be disposable i.e for a single use purpose only - In normal circumstances and in all situations such dialyzers should not be reused and in fact are not being reused which therefore implies that they are disposed of after a single use. The subject product, namely, dialyzers are used in sterilized form and are also disposable after single use - the same will be covered under Entry No. 255 of Schedule I to the Rate Notifications.

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• 2019 (9) TMI 985
  Classification of services - Composite supply or Mixed Supply - business of providing exam, certification and other allied services including various types of surveys, assessments, and exam services to various clients including individuals, educational institutions, firms, corporate bodies, government undertakings etc. - conduct of examination, principal supply or not - exemption provided under entry 66 of Notification 12/2017 - Central Tax (Rate) as amended vide Notification No 02/2018- Central Tax (Rate) w.e.f. 25.01.2018 - applicability of exemption in respect of all agreements entered by Applicant or only applicable to services provided to educational institution. HELD THAT:- The subject services provided by them satisfy the definition of Composite Services in as much as they provide services to completely manage the conduct of examinations electronically like facilitation of online booking of examination slots by the candidates, setting up questions based on question bank management, conduction of online examinations in their authorized examination centers, invigilation and exam evaluation services, etc. Applicability of Entry No 66 of Notfn. No. 12/2017 - CT (Rate) as amended w.e.f. 25.01.2018 - HELD THAT:- The University of Delhi satisfies the definition of an Educational Institution as required under the GST Laws. We have already found that the subject services supplied by the applicant are composite services where the principal service is conduct of exams. Hence, we find that, under this work order, such services are supplied to an Educational Institution and therefore as per Entry No. 66 mentioned above, the said services will be exempt from payment of tax in respect of this work order. Whether services provided by Applicant can be considered to be a composite supply as defined under Sec. 2(30) of the CGST Act, or a mixed supply u/s 2(74)? - HELD THAT:- The services provided by Applicant can be considered to be a composite supply as defined under Sec. 2(30) of the CGST Act If the services provided by Applicants are considered as composite supply, ether conduct of examination can be considered as principal supply? - HELD THAT:- The conduct of examination can be considered as principal supply. If services are considered as composite supply conduct of examination is considered as principal supply, whether exemption provided under entry 66 of Not 12/2017 -CT(Rate) as amended vide Not No 02/2018-CT(Rate) w.e.f. 25.01.2018 shall be granted? - HELD THAT:- The exemption under Entry No. 66 will be available to them only when the provisions mentioned therein are satisfied by the Applicant. In case the exemption is applicable to the Applicant, whether the exemption shall be applicable in respect of all agreements entered by Applicant or only applicable to services provided to educational institution? - HELD THAT:- The exemption under Entry No. 66 will be available to them only in respect of the Work Order issued by the University of Delhi.

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• 2019 (9) TMI 984
  Exemption from GST - consideration received by the school from the participant school(s) for participation of their students and staff in the conference - entry No. 66 or entry No. 1 or entry No. 80 or any other entry of the Notification No. 12/2017 - Central Tax (Rate) - appropriate category of the service - appropriate Tax Rate - Place of supply of services - exemption provided to service providers of catering, security, cleaning, house-keeping, transportation etc. to an educational institution upto higher secondary be available to the Service Providers of the Applicant for services related to such conference - ITC on input services. Will the consideration received by the school from the participant school(s) for participation of their students and staff in the conference would be exempted under Entry No. 66 or Entry No. 1 or Entry No. 80 of the Notification No. 12/2017-Central Tax (Rate)? - HELD THAT:- It is clear that Supply of all services to an Educational Institution are not exempt. Only the specified services are exempt. For example, even the entrance examinations conducted by an Educational Institution will not be exempt, if there is no specific clause for its exemption - Similarly, supply of services pertaining to transportation of students, faculty and staff is exempt only because of eligibility of an Educational Institution for exemption for educational services for pre-school education and education up to higher secondary school or equivalent - supply of such services to an Educational Institution for any other purpose, say for education beyond higher secondary level, shall not be exempt. If not exempted then what would be the appropriate category of the service and the appropriate Tax Rate? - HELD THAT:- The authority is of opinion that various services provided for organizing an educational conference / gathering of students and staff of other Schools, shall be liable to tax at the rate applicable to the respective services. For example, the catering services shall be liable to tax @ 5% (2.5% + 2.5%) without eligibility for Input tax credit. Similarly, the services of security or cleaning or house-keeping services shall be liable to tax @ 18%. What would be the Place of Supply for such services? - HELD THAT:- According to the provisions of the Act to decide the Place of supply is beyond the jurisdiction of AAR. Whether exemption provided to service providers of catering, security, cleaning, housekeeping, transportation etc. to an educational institution up to higher secondary be available to the Service Providers of the Applicant for services related to such conference? - HELD THAT:- Authority is of the opinion that Exemption provided to service providers of catering, security, cleaning, house-keeping, transportation etc. to an educational institution up to higher secondary shall not be available for services provided for such conference. Whether ITC would be eligible of all the input services availed for the purpose of the above conference? - HELD THAT:- On this question the provision of the act very clear that no ITC shall be available on food and catering, as rate is 5% without ITC. ITC in respect of other services shall be available as per provisions of the GST Act and the Rules.

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• 2019 (9) TMI 983
  Constitution of the Goods and Services Tax Appellate Tribunal and the qualification and appointment of members - Vires/Validity of Sections 109 and 110 of CGST Act, 2017 and Tamil Nadu Goods and Services Tax Act, 2017 - exclusion of advocates from being considered for appointment as a Judicial Member in GST Appellate Tribunal - eligibility of Indian Legal Service, to be appointed as a Judicial Member of the appellate tribunal - composition of the National Bench, Regional Benches, State Bench and Area Benches of the GST Appellate Tribunal. HELD THAT:- An appeal from the adjudicating authority lies to an appellate authority under Section 107 of the CGST Act. Section 107 (16) states that the order of the appellate authority, subject to the provisions of Section 108 or Section 113 or Section 117 or Section 118, is final. The revisional authority subject to the provisions of Section 121 and any rules made thereunder, may, on his own motion or upon information received by him or on request from the Commissioner of State tax, or the Commissioner of Union Territory Tax, shall call for and examine the record of any proceedings, and if he considers that any decision or order passed under this Act or under the State Goods and Service tax Act or the Union Territory Goods and Services Tax Act, by any officer subordinate to him is erroneous and is prejudicial to the interest of revenue or it is illegal or improper or has not taken into account certain material facts, shall stay the operation of the order for such period as he deems fit and after giving the person concerned, an opportunity of being heard, can pass order as he thinks just and proper, including enhancing or modifying or annulling the said decision or order. The order of the appellate authority and the order of the revisional authority, are taken to the appellate tribunal. The appellate tribunal is constituted under Section 109 of the CGST Act - A perusal of Section 109 shows that it consists of a National Bench or the Regional Benches and State bench or the Area Benches. Section 109(5) provides that the National Bench and the Regional Benches, shall hear the appeals against the orders passed by the Appellate Authority or the Revisional Authority in cases where one of the issues involved relates to the place of supply and order of the National Bench or the Regional Benches can be challenged only in the Hon ble Supreme Court. The orders of the National Bench or the Regional Benches are not subjected to any appellate jurisdiction of High Court. It is therefore similar to an order passed by a Central Administrative Tribunal. It is a different question as to whether such an order would be subjected to Article 227 of the Constitution of India or not and we are not going into the controversy. This Court is aware of the fact that the National Tribunal cannot adjudicate the vires of the notifications issued under the Act or the constitutional validity of the notifications / regulations and the very consequences of the Act, but nevertheless, it cannot be said that the National Bench is only an extension of the mechanism to determine only the quantum of tax, which is only a subject matter of experts. The quantum of tax is determined on the interpretation of various sections and notifications - It also involves adjudication upon the orders of the appellate authority. It has to be borne in mind that the decision making process has to be scrutinised by the tribunal. In doing so, judicial principles have to be kept in mind. The appellate tribunal is constituted also to see whether the legal principles and the decision making process are correct and fair. The expert members who are not well trained in law, cannot be permitted to overrule the judicial member on these aspects. A Hon ble Division Bench judgment of this Court in S. MANOHARAN VERSUS THE DEPUTY REGISTRAR, CENTRAL ADMINISTRATIVE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI AND THE REGISTRAR, CENTRAL ADMINISTRATIVE TRIBUNAL, CHENNAI, UNION OF INDIA, REP. BY THE COMMANDING OFFICER, INS KATTABOMMAN, NAVAL BASE, VIJAYANARAYANAM, TIRUNELVELI, J. SOOSAIRAJ [ 2015 (2) TMI 1273 - MADRAS HIGH COURT] , while considering an issue as to whether the number of administrative members can be more than the judicial members in the Central Administrative Tribunal, compared the composition of the National Green Tribunal constituted under the National Green Tribunal Act, 2010. Proviso to Section 4 (4)(c) of the National Green Tribunal Act provides that number of expert members shall be equal to number of judicial members. The principle which emerges is that while deciding issues as to whether the decision making process by the adjudicating authority or the appellate authority was just, fair and reasonable and to decide issues regarding interpretation of notifications and sections under the CGST Act a properly trained judicially mind is necessary which the experts will not have. The number of expert members therefore cannot exceed the number of judicial members on the bench. Thus, Section 110(1)(b)(iii) of the CGST Act which states that a Member of the Indian Legal Services, who has held a post not less than Additional Secretary for three years, can be appointed as a Judicial Member in GSTAT, is struck down - Section 109(3) and 109(9) of the CGST Act, 2017, which prescribes that the tribunal shall consists of one Judicial Member, one Technical Member (Centre) and one Technical Member (State), is struck down. The argument that Sections 109 110 of the CGST Act, 2017 and TNGST Act, 2017 are ultra vires, in so far as exclusion of lawyers from the scope and view for consideration as members of the tribunal, is rejected. However, we recommend that the Parliament must consider to amend section for including lawyers to be eligible to be appointed as Judicial Members to the Appellate Tribunal in view of the issues which are likely to arise for adjudication under the CGST Act and in order to maintain uniformity in various statutes. Petition disposed off.

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• 2019 (9) TMI 982
  Inability to upload TRAN 1 and TRAN 2 - input tax credit - technical glitch in the syste m - HELD THAT:- Mr. Kantharia states that he would file an affidavit in reply and annex the entire order passed by the ITGRC rejecting the Petitioner s application. At his request the Petition is adjourned to 10 October 2019.

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• 2019 (9) TMI 981
  Functioning of the GSTN system - Unable to upload various forms - technical glitches on GST Portal - grievance of the petitioner is that there is no effective IT Grievance Redressal Mechanism in place, and whenever the assessee /members of the petitioner s association have sought to address their grievances, they were met with disappointment - HELD THAT:- Learned counsel for the GSTN states that she has prepared an affidavit in terms of the last order which shall be filed by tomorrow. Let the same be done with an advance copy to the petitioner. The aforesaid directions should be implemented in the next four weeks. List on 15.10.2019.

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• 2019 (9) TMI 980
  Validity of Detention Notice - Section 129(3) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In view of the fact that the challenge made in this writ petition is only against the goods detention notice and that the goods are also released by proceedings dated 05.03.2019 as discussed supra, it is for the petitioner to work out his further remedy if any by pursuing the same before the appropriate authority in a manner known to law. Petition disposed off.

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• 2019 (9) TMI 979
  Permission to withdraw petition - Furnishing of photocopy of seized documents - restraint on respondents from taking coercive steps against summoned Director of petitioner Company - HELD THAT:- The learned counsel for petitioner Company prays for permission to withdraw writ petition to enable his client to take action in accordance with law. Petition dismissed as withdrawn.

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• Income Tax

• 2019 (9) TMI 978
  Eligibility for deduction u/s 80P(2)(b) - primarily objects and activities of the appellant society - HELD THAT:- Admittedly, it appears that the assessee is not the primary co-operative society but its activities are depending upon the primary co-operative societies. As such the primary co-operative societies can also not operate without the assessee being a district level society. As such the activities of the assessee are interlinked with the activities of the primary co-operative societies. The primary co-operative societies will be eligible only when they supply milk to a federal co-operative society. To our mind, the assessee is not federal co-operative society to whom these primary cooperative societies are supplying the milk. Thus, even the primary cooperative societies in the given facts and circumstances will not be eligible to enjoy the benefit of the deduction provided under section 80P(2)(b) of the Act. Thus in such a situation we are of the view that the provisions of section 80P(2)(b) of the Act should be read liberally. We also note that the assessee has been claiming the deduction under section 80P(2)(b) of the Act consistently for the last several assessment years and there was no disallowance even in the assessment framed under section 143(3) of the Act pertaining to the assessment years 2004-05, 2005-06, 2007-08 and 2009-10 and 2010- 11. The assessment orders for the assessment years mentioned. Therefore we are of the view that claim of the assessee should be allowed on the basis of principles of consistency. We are of the view that the assessee is eligible for deduction under section 80P(2)(b) of the Act. Accordingly we reverse the order of the authorities below. AO is directed to allow the claim of the assessee as per the provisions of law. Hence the ground of appeal of the assessee is allowed. Disallowance on account of delay in deposit in the contribution of employees Provident fund and employees state insurance - HELD THAT:- Issue is covered against the assessee by the Hon ble Gujarat High Court in the case of CIT vs. GSTRC [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] tribunal has erred in deleting respective disallowances being employees contribution to PF Account / ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees contribution to the employees account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act - Decided against assessee Addition u/s 40A(3) - Disallowance on account of cash payment exceeding Rs.20,000 - HELD THAT:- As consideration of these documents as discussed above is necessary for adjudication the issue on hand. Therefore we admit the same and restore the issue to the file of the AO for fresh adjudication as per the provisions of law. It is needless to mention that the assessee should co-operate in the proceedings before the AO. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Treating the profit on sale of land as business income and without allowing the indexation benefit under section 48 - HELD THAT:- The facts regarding the impugned dispute are arising from the order of the AO. But there was no discussion in the order of the learned CIT (A). We also note that the AO has not observed the provisions of section 50C and 48 of the Act. Therefore we restore the issue to the file of the AO for fresh/de-novo adjudication as per the provisions of law. It is needless to mention that the assessee should co-operate in the proceedings before the AO. Hence the ground of appeal of the assessee is allowed for the statistical purposes. Non providing deduction of interest u/s 80P(2)(d) - whether the assessee is entitled for the deduction on account of interest income on the deposits made with the nationalized banks/private banks/co-operative banks? - HELD THAT:- There is no mention about any interest income from whatever source. Therefore, we are not in agreement with the argument of the learned counsel for the assessee that the assessee is eligible for the deduction of interest income under section 80P(2)(b). Assessee can claim the deduction of interest /dividend income if it is derived from the investments with any other co-operative society. Thus the possibility of claiming the deduction under section 80P(2)(d) of the Act on account of interest income from the deposits made with the nationalized/private banks is ruled out. Taking up the matter further regarding the interest income from the deposits made with the co-operative banks, we note that a cooperative bank is basically a cooperative Society only. It becomes a cooperative bank upon getting a license from the Reserve Bank of India. Therefore, in our considered view such amount of interest income from the deposits made with the co-operative bank is eligible for deduction under section 80P(2)(d) of the Act. See THE SURAT VANKAR SAHAKARI SANGH LTD. VERSUS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-5. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] We are also conscious to the fact that the assessee has shown interest income as part of the business income, therefore if the same is treated as income from other sources, then the same should be reduced from the business income. But the AO has not done so. Thus in the given facts circumstances, the amount of interest income has been added twice resulting the double addition to the total income of the assessee. Therefore, we direct the AO to be careful in effect giving order. We also make it clear that in case there arises some loss from the activity carried on by the assessee i.e. procuring and supplying the milk on account of the adjustment as discussed above, then such loss can be set off against the income from any other head as per the provisions of law. In view of the above, we hold that the assessee cannot claim the benefit of section 80P(2)(d) of the Act in respect of the interest earned by it from the deposits made with the nationalized/private banks. But the assessee is eligible for deduction under section 80P(2)(d) of the Act in respect of the interest income on the deposits made with the co-operative bank. We direct the AO, while working out the amount of disallowance with respect to the interest income earned on the deposits made with the nationalized/private banks, to allow the direct corresponding expenses incurred by the assessee with respect to such income. Accordingly, for this limited purpose, we are setting aside the impugned issue to the file of the AO for fresh verification/examination the amount of disallowance under section 80P(2)(d) of the Act as per the provisions of law after providing a reasonable opportunity of being heard to the assessee. Hence the ground of appeal of the assessee is partly allowed for the statistical purposes.

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• 2019 (9) TMI 977
  Reopening of assessment u/s 147 - HELD THAT:- If the reasons for reopening are (a) and (b) and during fresh assessment proceedings u/s. 147 of the Act, income is found to have escaped from assessment for some other reason say (c) and (d), then, if reasons (a) and (b) do not survive and no addition can be made for such reasons, can additions be made on the basis of reasons or grounds (c) and (d). In the present case also, this is the objection of the assessee before us that reasons were recorded in respect of under invoicing and no addition has been made on that account and therefore, the reopening itself is not valid. In our considered opinion, the facts of present case are similar to the facts in the case of Shri N. Govindaraju Vs. ITO Anr. [ 2015 (8) TMI 271 - KARNATAKA HIGH COURT] and hence, respectfully following this judgment of Hon ble Karnataka High Court, we decide this issue against the assessee and hold that the reopening is valid in the present case and accordingly ground nos. 1 to 10 are rejected. Disallowance of depreciation - assessee has acquired the mining lease and license for extraction of Iron Ore and license no. 2552 was granted by the Government of Karnataka - HELD THAT:- This is true that mining lease has been obtained by the assessee but the impugned payment paid to Chief Conservator of Forests was not on account of acquiring mining lease and right for extraction of iron ore by mining lease. This payment is on account of Compensatory Afforestation in future for which present net value has been paid by assessee to State Forest department and hence, this argument has no merit. Consortium members commenced hydrocarbons operations in the Sakhalin Block and they held 40% interest in the hydrocarbon project. Later on, the assignment agreement dated 10.02.2001 was entered into and as per this agreement, 50% of their share in the Sakhalin PSA and in a joint operating agreement to OVI for a consideration of Rs. 15,590.96 million. Consequent to the acquisition of such rights and licenses, the assessee became a consortium member and the assignors were relieved from obligation under the Sakhalin PSA to that extent. The dispute in that case was regarding this that the rights and licenses acquired by that assessee, it was claimed that it is intangible asset and on it, depreciation @ 25% should be allowed. This claim was rejected by the AO and also by CIT(A) - Tribunal decided the issue in favour of the assessee on this basis that the assessee has acquired business/commercial rights of similar measure. In the present case, we have seen that the impugned expenditure is not for acquiring any intangible asset but the payment of net present value of Compensatory Afforestation in future for which deduction is allowed by the AO to the extent of 1/20 in the present year because the assessee is eligible for carrying on mining activities for 20 years - Tribunal order does not help the assessee in the present case. Various other Tribunal orders are also cited assessee. In our considered opinion, these Tribunal orders are also not applicable in the present case because the facts are different. Revision u/s 263 - amortisation u/s 35D - HELD THAT:- In the present case, once the AO held that the expenditure incurred by the assessee for obtaining the mining lease licence cannot be categorised as preliminary and preoperative expenditure and thereafter, allowing amortisation u/s 35 D is nothing but incorrect application of law. In the case of CIT vs. Sasken Communication Technologies Ltd. [ 2014 (11) TMI 884 - KARNATAKA HIGH COURT] , it is noted that at the relevant point of time, two views were existing on the word profit in section 80HHC and this section was amended eleven times and there was a great complication and hence, two views were inherently possible and hence, subsequent amendment in the year 2005 even though retrospective would not attract the provisions of section 263. In the present case, the facts are entirely different and therefore, in our considered opinion, this judgment also does not render any help to the assessee in the present case.

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• 2019 (9) TMI 976
  Assessment proceedings initiated u/s. 153C r.w.s. 143(3) - HELD THAT:- Revenue s case accordingly is that the CIT(A) has erred in holding that the impugned assessment(s) are also invalid on account of no satisfaction having been recorded at the AO s behest. We find these Revenue s arguments to be not sustainable since the AO s above extracted satisfaction note has nowhere indicated that the relevant category of assets or books of account etc. belongs to the assessee / a third person than that subjected to the search in issue. We make it clear that the legislature has included relates to by in sec. 153C way of an amendment by the Finance Act, 2015 with effect from 01.06.2015 whereas the satisfaction in issue was recorded much earlier than that on 16.03.2015. We hold that the CIT(A) s findings under challenge to this effect deserve to be upheld. We order accordingly. Disallowance of sec. 35(1)(ii) deduction on account of its contribution made to the School of Human Genatics and Population Health - HELD THAT:- The general statement of Shri Swapan Ranjan Dasgupta against donation made the claim of assessee for deduction suspicious. However, when the AO investigated, Shri Swapan Ranjan Dasgupta has confirmed that M/s. Herbicure was in receipt of the donation and it has not given any refund in cash, then the sole basis of disallowance of claim as a matter of fact disappeared. It should be remembered suspicion howsoever strong cannot take the place of evidence. The confirmation from Shri Swapan Ranjan Dasgupta fortifies the claim of the assessee for weighted deduction u/s. 35(1)(ii). The sole basis of the addition/disallowance based on statement recorded on oath during survey cannot be allowed as held by Hon ble Supreme Court in Kader Khan sons [ 2013 (6) TMI 305 - SC ORDER] . Moreover, we note that if the AO was hell bent determined to disallow the claim of the assessee, then he should have granted an opportunity to cross examine Shri Swapan Ranjan Das Gupta and Shri Kishan Bhawasingka as held by Hon ble Supreme Court in Andaman Timber.

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• 2019 (9) TMI 975
  Additions made u/s 68 - unexplained cash credits - HELD THAT:- In the present case, the entire evidence has to be appreciated in a wholesome manner and even when there is a documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and conduct or human probabilities. There is difficulty in rejecting the assessee s plea as opposed to the normal course of human conduct. The evidence collected by the lower authorities was not enough to establish their stand that the main transactions carried out by the assessee with the above parties were only paper transactions and only accommodation entries. There is no evidence which was brought on record to directly show that these transactions are accommodation entries. Therefore, no addition could be made on account of these alleged transactions in the hands of the assessee by treating them as unexplained credits u/s. 68 - Transaction shall be accepted to be real as there is no evidence showing otherwise. The surrounding circumstances apart from the direct evidence in the instant case did not contain anything which belied the claim of the assessee. In view of this we are of the opinion that the addition made by the AO cannot be sustained. - Decided in favour of assessee.

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• 2019 (9) TMI 974
  Income recognition in hire purchase transaction - Internal Rate Return (IRR) method OR Equated Sum (ESM) method - Whether tribunal was right in holding that the interest income on hire purchase transactions accrued only under the Internal Rate Return (IRR) method and form part of the mercantile system of accounting? - HELD THAT:- As relying on M/S. SUNDARAM FINANCE LIMITED. [ 2019 (3) TMI 1068 - MADRAS HIGH COURT] we direct the AO to tax the interest income on EMI method or ESM, which has been consistently followed by the assessee and allow the consequential relief in accordance with law. Thus, the assessee s appeals on this issue are allowed. Provision for non-performing assets (NPAs) - HELD THAT:- Since the assessee s claim require verification, we deem it fit to restore this matter back to the AO for a fresh examination and due decision after affording adequate opportunity to the assessee. Thus, the assessee s appeal grounds on this issue are treated as partly allowed for both assessment years 2004-05 and 2005-06. Disallowing amount recovered in respect of bad debts written off in the books of amalgamating companies as an exempt income in its hands - HELD THAT:- After the amalgamation, the amalgamated company i.e., the assessee company, has all the rights the amalgamating companies had in their business which were transferred to it and also it owes all the liabilities the amalgamating companies owe and transferred to it. In exercise of such rights only, the assessee company recovered sum during the assessment years 2004-05 2005-06 respectively, from the bad-debts written off by the erstwhile amalgamating companies and therefore such recoveries are nothing but the business receipts of the amalgamated company i.e., the assessee and hence they are assessable in it its hands. This decision is also in accordance with the decision of CIT v. T. Veerabadra Rao [ 1985 (7) TMI 2 - SUPREME COURT] relied on by the Ld.CIT(A), supra. Disallowance of the business origination costs actually incurred by the assessee during the assessment year 2005- 06 - HELD THAT:- As per the decision normally revenue expenditure incurred in a particular year has to be allowed in that year and if the assessee claims that expenditure in that year, the Department cannot deny the same. Fact that assessee has deferred the expenditure in the books of account is irrelevant. However, if the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of Matching Concept is satisfied. Since the assessee claimed the entire amount on the ground that it is a revenue expenditure instead of spreading over the amount to the period of contract, applying the case TAPARIA TOOLS LIMITED VERSUS JOINT COMMISSIONER OF INCOME TAX [ 2015 (3) TMI 853 - SUPREME COURT] balance may also be allowed. Capital loss on account of sale of Sundaram Mutual Fund (dividend option) - whether CIT(A) erred in directing the Assessing Officer to allow the capital loss without reducing the dividend income which was claimed as exempt, in contravention to the provision of sec. 94(7) ? - HELD THAT:- In the light of the decision of Walfort Share Stock Brokers Ltd. [ 2008 (8) TMI 222 - BOMBAY HIGH COURT] and the Hon ble Apex court s decision In Commissioner Of Income-Tax. vs Walfort Share And Stock Brokers (P) Limited. . [ 2010 (7) TMI 15 - SUPREME COURT] we find that on the facts and circumstances, supra, the reasonings of the Ld.CIT(A) on both issues, supra, do not require any interference and hence dismiss the corresponding grounds of the revenue on both issues. Disallowance of broken period interest on purchase/sale of securities - HELD THAT:- Assessee is in the business of regular sale and purchase of Government securities, however, has classified them as investment. The sale and purchase of government securities have been considered for computation of capital gain or loss, as the case may be, and in almost every sale or purchase of government security capital loss has been booked after taking the benefit of indexation. For the impugned assessment years also the assessee company has claimed capital loss despite these instruments being in the nature of having fixed rate of return at the tenure of the instrument. The broken period interest on purchase and Sale of securities were accounted as revenue items in the books in accordance with the Accounting Standard-13 issued by the Institute of Chartered Accountants of India. However, for tax purpose, the assessee treated them as part of cost/consideration as the case may be, based on the decision of Supreme Court in Vijaya Bank s case [ 1990 (9) TMI 5 - SUPREME COURT] rendered u/s 18 of the Act which is no more in the statute from 01.4.1989 and hence it is clear that the Ld.CIT(A) has not appreciated the facts and circumstances of this issue properly. The courts have held that if the securities are regularly purchased and sold they could be stock in trade in such case the income or loss could be revenue in nature etc. In the facts and circumstances, these issue requires readjudication afresh and hence we deem it fit to remit the issues back to the AO for a fresh examination for the assessment years 2004-05 2005-06

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• 2019 (9) TMI 973
  TP Adjustment - comparable selection - functionally dissimilarity - HELD THAT:- Assessee is a captive service provider to its AE, Infor Global Solutions Inc. Transaction of Software Development Services was at ALP because the margin of the assessee was higher than the average margin of the comparables and hence no adjustment was required. Hartron Communications Ltd be excluded on account of exceptional year of performance i.e. peculiar circumstances filter. Microgenetics Systems Ltd and particularly Schedule-F thereof placed in Paper Book filed by the assessee relating to production expenses, we find that during the relevant previous year the assessee has incurred Rs. 22,03,823 towards medical transcription charges. Though, it is not 23% of the expenses incurred by the assessee as observed by the DRP, the payments were for outsourcing of the activity and hence is involved in a different functional model as compared to the assessee Infosys Technologies Ltd is into ITeS and its entire revenue is from BPO services only. Therefore, factual findings of the DRP that it falls income of less than 75% of the total operating revenue filter is not correct. Therefore, we remand this issue of comparability of this company to the TPO for reconsideration of the issue by considering only the operating revenue. As regards inclusion of Ace BPO Services Ltd is concerned, it is the case of the assessee that this company satisfies all the filters applied by the TPO and therefore, is functionally comparable to the assessee company. He pointed out that the TPO and the DRP have rejected this company on the ground that no information as to the RPT filter has been reported in its Annual Report and therefore, complete information is not available. The learned Counsel for the assessee has drawn our attention to page 507 and 508 of the paperbook wherein details of the RPT transactions are given. Having regard to the fact that the details with regard to the RPT transaction of the company have been given, we are of the opinion that the findings of the DRP TPO are factually incorrect. Therefore, we remand the comparability of this company also to the AO/TPO for reconsideration. Needless to mention that the assessee should be given a fair opportunity of hearing. Company functionally similar with that of assessee ITeS Company need to be selected.

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• 2019 (9) TMI 972
  TP Adjustment - comparable selection - HELD THAT:- Assessee is engaged in providing IT Support (ITES), account reconciliation services etc to Morgan Stanley group entities/its AEs. In the international transaction of assessee was accepted at the ALP in earlier years, thus companies functionally with that of assessee need to be deselected from final list.

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• 2019 (9) TMI 971
  Deemed dividend addition u/s (2)(22)(e) - subsequent repayment (of loan/advance) relevant, i.e., in determining if the amount received from the payer-company is to be, or is not to be, considered as dividend u/s. 2(22)(e)? - length of the period over which the credit obtains, being at 45 days (i.e., from 15.10.2013 to 29.11.2013) in the instant case - HELD THAT:- The exclusion of a business advance, referred to earlier, i.e., even as the provision speaks of any payment by way of a loan or advance, covering therefore advances of all types, is only on the premise that the said word, read conjunctively with the word loan , applying the principle of ejusdem generis, should only include payments in the nature of loans, excluding business transactions, which have, as a matter of course, if not necessarily, to be settled by remitting funds; the provision in no manner seeking to impinge on genuine business transactions. Finally, it is stated that the entries in the books of account are not determinative. The same seeks to perhaps meet the reflection of the outstanding sum (as at the year-end) as a loan or advance in the balance-sheet of the lender or the borrower company. It is nobody s case that the provision stands invoked on account of such reflection, which has not been shown to be incorrect, so that there is no factual basis to the argument. The provision would in fact apply even if the shareholder does not, as is usually the case for an individual shareholder, maintain books of account, and which is so in the present case only because of it being a corporate entity. On the contrary, it is the assessee who draws on the accounts, stating it to be a running account and, further, a low retention period, and on that basis plead that the provision shall not apply. The provision is applicable qua any payment and, therefore, would (or would not) apply with reference to each specific sum. It is immaterial whether such payment/s is recorded in the books of account or not, and the only thing relevant is if it is in the nature of a loan/s or advance/s. The assessee s argument, which is even otherwise not backed by any material and only in the nature of a bald statement, is therefore without merit. Chargeability of the dividend under section 2(22)(e) as income from other sources u/s. 56 - HELD THAT:- Only the dividend declared, distributed or paid by a company, on which tax u/s. 115-O has been suffered, that falls u/s. 10(34), and would therefore not stand to be assessed u/s. 2(24)(ii) r/w s. 56 of the Act. The said dividend would only be that envisaged u/s. 2(22)(a), i.e., as declared observing the required procedure in its respect under the Companies Act, 1956 (or, as the case may be, Companies Act, 2013), to all the shareholders, i.e., in proportion to their shareholding. This would certainly not cover dividend which gets included within its definition under the Act in view of the extended meaning of the term dividend by virtue of a legal fiction. The dividend deemed as such u/s. 2(22)(e) would, therefore, stand to be assessed and, accordingly, has been rightly brought to tax, u/s. 56 Being not a regular dividend, declared and paid by company, the same does not fall to be covered u/s. 10(34) and, thus, is not excepted u/s. 56. The same has, accordingly, been rightly brought to tax u/s. 2(24)(ii) r/w ss. 2(22)(e) and 56 of the Act by the Revenue, whose action is upheld. The assessee, in this view of the matter, fails. We decide accordingly.

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• 2019 (9) TMI 950
  Rectification u/s 254(2) - Assessment u/s 153C - non considering admission of additional ground - HELD THAT:- There was not a word uttered by the learned AR during the course of original hearing of the appeals inviting our attention to the evidence required to consider the additional ground by the Tribunal. Rather as noted by the Tribunal in its order, the assessee only argued on the point of admission of additional ground. Since the production of additional evidence required by the assessee as additional ground is directly linked to the examination of the original records by the Tribunal, the Tribunal considered the additional ground and observed that the additional ground cannot be admitted in the absence of bringing on record the additional evidence pertains to recording satisfaction so as to issue notice u/s 153A. Tribunal considered every material fact, for and against the assessee, with due care and given a finding that the additional ground could not be admitted at that stage. Therefore, the factual conclusion drawn by the Tribunal are not open to review by way of application u/s 254(2) of the I.T.Act. If the assessee wants to challenge the conclusion or finding given by the Tribunal on rejection of the additional ground, which is not supported by any evidence on record, the remedy lies to the assessee elsewhere. Order of the Tribunal could be challenged as it considered all relevant details minutely and drew necessary factual inferences in a fair, reasonable and impartial manner. We, therefore, see no reason to entertain the miscellaneous applications, as there is no mistake apparent on record within the meaning of section 254 - miscellaneous applications filed by the assessee are dismissed.

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• 2019 (9) TMI 949
  Addition u/s 68 - small trade deposit taken from small dealers - HELD THAT:- Loan amount of Rs. 80,000/- constitutes deposits of Rs. 10,000/- each from 5 parties and Rs. 5,000/- each from 6 parties. The payments were received through cheques and were part of the trade deposits. Looking to the turn-over of the assessee which stood at Rs. 225.9. crores and the profit before the tax at Rs. 57.87 crores, we do not find any reason to doubt the genuineness of the small trade deposits receivedin normal course of business and thus direct the Assessing Officer to delete the same. In the result ground no. 2 of the assessee-appeal stands allowed and additions u/s 68 is deleted. Addition u/s 92CA(3) - Upward Adjustment for the notional interest calculated on the extended credit period provided to the Associate Enterprise (IMPCO) (Mexico) - HELD THAT:- We are of the view that since that the extended credit period provided by the assessee has been adjusted by the higher sale price charged to the AE and such transactions of providing extended credit period for more than 90 days or above cannot be considered as a separate International transaction, do not call for and any Upward Adjustment. We accordingly direct the AO to delete the additions for Upward Adjustment made u/s 92CA(3)

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• 2019 (9) TMI 948
  Bogus expenses/purchase - genuineness of various expenses incurred for the construction - sales turnover of the suppliers are not matching - HELD THAT:- The assessee in order to claim that all the expenses claimed and paid to the above parties are genuine has filed ledger account of construction material for all the three years, copy of invoices of all the parties, bank statement through which the payments has been made and the details about the contractor who carried out the work. In respect of the parties which have shown Tax Identification No.(TIN) in their bills AO called information from the Commercial Tax Department. As far as the identity of the alleged suppliers is concerned their was on assessee favouring report from the Commercial Tax Department but with regard to the sales turnover it was not matching with the sales shown by these suppliers. This was the main reason which created doubts in the mind of the assessing authority. However, the assessee placed all the documentary evidences before the AO along with photographs of the land and the work carried out thereon. As requested during the assessment proceedings by the assessee to the Ld AO to depute inspector for site visit so that the issue relating to genuineness of development expenses can be resolved but the request was declined by the Ld. AO. No summons was issued to the alleged suppliers of the Ld. AO directly and only report of Commercial Tax Department was taken as the basis. AO failed to consider the fact that all the payments were made through account payee cheques. After receiving respective bills issued by the parties as well as a contractor it was incumbent on the AO to carry out the investigation by summoning the suppliers. In the body of the assessment order AO observed that the alleged suppliers are small retail suppliers hardly having the capacity to store the building materials. We find such remarks to be very general and casual with no homework. As far as the claim of the assessee is concerned, apart from placing the copy of invoices, ledger account, bank statement and few photographs, the assessee could not file any confirmation from the alleged suppliers. In the sale deed also there is no mention about the Boundary Wall, land leveling work carried out which could have justify the assessee s claim. No valuation report was filed. Payments for various expenses made after a period of 12 months also raises doubts. However, merely for the payments being late and the suppliers having retail business, and not produced before the AO cannot be a sound basis to disprove the claim of expenses made by the assessee. Thus sustaining of disallowance @ 15% of the alleged amount will meet the end of justice - Decided partly in favour of assessee.

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• 2019 (9) TMI 947
  Revision u/s 263 by CIT - assessment u/s 147/ 143 - addition u/s 68 - HELD THAT:- AO had made enquiries during the assessment proceedings by issuing various notices alongwith questionnaire, as aforesaid and the assessee had given detailed replies/explanation and Assessing officer on being was satisfied with the explanation of the assessee and completed the assessment at NIL, hence, such decision of the AO cannot be held to be erroneous ; and therefore cannot be revised u/s. 263 of the Act. We further note that Assessing officer even enquired from seller independently u/s. 133(6) of the Act from whom assessee has purchased shares which has been further sold to M/s Virgin Capital Services Ltd. and others. We further note assessee has sold the shares of M/s Allders Khannas (P) Ltd to M/s Parikatha Buildwell Pvt. Ltd.; Sadabhujs Realtors Pvt. Ltd.; RG Enterprises and Sunita Bindal which has been accepted in order of Assessment and has not been disputed in proceedings u/s. 263 Show cause notice itself would show that it has not been denied or disputed that all relevant information including books of accounts have been furnished / obtained in the course of assessment proceedings. We note that section 263 of the Act cannot be invoked to make deeper enquiry. We note that notice u/s. 263 of the Act issued by the Pr. CIT is vague and only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect and untenable and the conditions or the factors enabling the Ld. Pr. CIT to invoke his jurisdiction u/s 263 have not been satisfied. There must be positive material for the Commissioner to consider objectively and not subjectively that the order of the Assessing Officer was erroneous, in so far as it was prejudicial to the interest of revenue. - Decided in favour of assessee.

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• 2019 (9) TMI 946
  Revision u/s 263 - Capital gain computation on joint property sold - sale consideration received from sale of immovable property jointly hold by the assessee s family members - HELD THAT:- Selection of the assessee s case for scrutiny proceedings notice u/s 142(1) of the Act was issued on 18.06.2012 . At point No.7 Ld. AO has asked to furnish the complete details of capital gain if any . We find that against specific query raised by the AO assessee has duly replied with the documentary evidences about the alleged transaction and informing that he has not received any consideration from the sale of property. The fact that he has a dispute with his family is also mentioned. Now on the basis of these information s AO was satisfied and find the reply of the assessee to be genuine and did not raise further inquiry into the matter. Now root cause of this appeal lies on this point. That why the Ld. AO did not inquired further about the alleged transaction and its genuineness. It is not a case that no inquiry was done but it is a case that incomplete inquiry was done. Whether an inquiry was incomplete or complete depends on the person who is examining the transactions. It may be complete for one but may be incomplete for another. As per assessee sufficient inquiry was conducted and all the information relevant thereto was supplied. On the other hand, Ld DR has submitted that the Ld.AO has not inquired about various documents which could prove that the assessee has relinquished his rights in the property. If detailed inquiry has been conducted by the AO and one of the legally permissible view is taken by the AO which may not be revenue favouring, cannot give power to the CIT to assume jurisdiction u/s 263 and to set aside the order of the Ld. AO. In the instant case the assessee had prepared an affidavit on 23.11.2007 duly notarized relinquishing his rights from all the properties jointly held with his father s family. Genuineness of this affidavit has not been doubted by the revenue authorities. In the sale deed assessee has not signed as a seller as has been alleged by the CIT which itself shows that the Ld. CIT has not examined the documents properly. The total sale consideration which was primarily credited in the joint account held in the name of family members has been immediately withdrawn and deposited in the bank account of assessee s father. All the series of documents and transactions also come to conclusion that the assessee was not liable to pay any tax on the capital gain from sale of alleged property. AO in this case on examining the sale deed came to a conclusion at the first stage which was well within his power as it is not mandatory that for each and every aspect the Ld. AO has to doubt the transaction and call for information again and again. It is on the discretion, wisdom and understanding of facts by the Ld. AO which may prompt him to call for more information if any required. In our considered view and in the given facts and circumstances of the case we observe that for the alleged transaction of capital gain sufficient inquiry was conducted by the Ld. AO before accepting the contention made by the assessee. They are the conclusive evidence about the correspondence between Ld. AO and the assessee. Unexplained Cash deposits in bank account held by the assessee and allegation of ld. CIT that the Ld. AO has not inquired with the assessee, we find that all the bank accounts in name of assessee were placed before the Ld. AO.There were certain cash withdrawals in the past which were claimed by the assessee as the source to cover up the alleged cash deposit. The same were found to be satisfactory by the Ld. AO. In the given facts and circumstances of the case and detailed discussion hereinabove, are of the considered view that Ld. AO conducted sufficient inquiry of the impugned transaction and took one of the permissible view provided in the law and therefore Ld. CIT erred in assuming jurisdiction u/s 263 of the Act. We accordingly quash the order of Ld. CIT u/s 263 - Decided in favour of assessee.

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• 2019 (9) TMI 945
  Grant of approval u/s 80G - approval denied as the assessee had incurred only Rs. 6,000/- for charitable activities such as distribution of stationary items Bottles and Tiffin boxes for orphan boys - applicant was engaged in charitable activities [by way of distribution of stationary for the new terms for orphaned girls in a Child Care institution for girls (NGO), and by way of giving of Bottles and Tiffin Boxes for orphaned boys in a Child Care institution for Boys (NGO)] - HELD THAT:- Grounds on which approval under section 80G of the Income Tax Act can be denied to an applicant are specified in Rule 11AA (5) of I.T. Rules which refers to the conditions laid down in clauses (i) to (v) of sub section 5 of section 80G of I.T. Act. Nowhere it is the case of the ld. CIT(E) that any of the conditions laid down in clauses (i) to (v) of section 80G(5) of the I.T. Act are not fulfilled. It is also nowhere the case of the ld. CIT(E) that objects of the applicant trust are not charitable. On perusal of the trust deed, already reproduced in foregoing paragraph (B) of this order, we find that the trust is expressly declared to be a public charitable trust in paragraph (6) of the trust deed. It is nowhere the case of the ld. CIT(E) that the applicant did not comply with procedural requirements prescribed under sub-Rules (1), (2) and (3) of Rule 11AA of I.T. Rules. Moreover, in view of the foregoing paragraph (C.1) of this order, we find that further documents or information called for by the ld. CIT(E) were provided by the applicant trust. When the applicant has limited financial resources (Rs. 19,000/- in this case), the mere fact that the applicant has not spent substantial amount for charitable work cannot be held against the assessee so far as the approval under section 80G of the Income Tax Act is concerned. Unless the learned CIT(E) expresses his satisfaction that one or more conditions laid down in Clauses (i) to (v) of Section 80G(5) of Income Tax Act are not fulfilled; the learned CIT(E) is required to grant approval under section 80G of I.T. Act, when the applicant has complied with procedural requirements prescribed under sub-Rules (1), (2) and (3) of Rule 11AA of I.T. Rules. We are of the view that the learned CIT(E) erred in denying approval under section 80G - Decided in favour of assessee.

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• 2019 (9) TMI 944
  Reopening of assessment u/s 147 - failure to issue statutory notice u/s 143(2) - enhancement of income by the CIT(A) without giving assessee a proper and adequate opportunity of being heard - HELD THAT:- Contentions of the AR that there is failure on part of issuance of statutory notice u/s 143(2) of the Act that does not seem tenable as the Assessing Officer has mentioned in the Assessment Order that notice under Section 143(2) has been issued to the assessee. The Assessee in fact participated in the Assessment Proceedings and got the fair opportunity of hearing to represent the case. Therefore, Ground No. 2 is dismissed. Prior to enhancement, no reasonable opportunity was granted to the assessee as per the requirement of Section 251(2) of the Income Tax Act, 1961. Thus, the contentions of the Ld. AR to that extend are sustainable and Ground No. 3 is allowed. Non-disposal of the objections filed by the Assessing Officer against re-opening of reassessment proceedings - Assessing Officer has not disposed off the objections of the assessee filed at the initiation of assessment proceedings. Thus, in light of the decision in case of Surendra Kumar Jain [ 2019 (8) TMI 23 - DELHI HIGH COURT] we are also of the opinion that the objections filed by the assessee should have been disposed off by the Assessing Officer at the initial stage and then should have proceeded with the completion of the Assessment. Therefore, we remand back the issue of disposing off the objections to the file of the Assessing Officer to first deal with the objections of the Assessee, and thereafter passed an appropriate order itself. - Appeal of the assessee is partly allowed for statistical purpose.

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• 2019 (9) TMI 937
  Transfer Pricing (TP) adjustment in relation to an alleged international of Advertisement, Marketing Sales Promotion (AMP) expenses - HELD THAT:- A copy of the computer generated trademarks certificate report from Govt. of India, Ministry of Commerce Industry, Department of Industrial Policy Promotion, Controller of Patents, Designs Trademarks Website, was filed before us to demonstrate the fact that the trademark Unibic is owned by assessee and application for grant of registration of this trademark was made by the assessee as early as on 23.09.2009. This fact is very vital. If the trademark is owned by assessee, AMP expenses cannot be disallowed consequent to determination of ALP because those expenses would be in the nature of business expenses of assessee. Assessee also filed before us sample advertisements to demonstrate that whatever advertisements were carried out in India were India-specific and by no stretch of imagination said to promote the brand of owned by the AE. Correctness of determination of Arm s Length Price (ALP) in respect of a trading transaction of sale of cookies by the assessee to its Associated Enterprise (AE) - HELD THAT:- DRP ought to have considered the TP study filed by the assessee before it and considered the objections of assessee. We are also of the view that in the light of the fact that net margins on cost of goods sold to unrelated parties being less than the net margins on sale of related parties, the transactions with AE has to regarded as at arm s length. The internal TNMM adopted by the assessee would show that the price charged in the international transaction on sale of cookies to Unibic, Australia was at arm s length. Since the TPO did not have an occasion to examine this report, we deem it fit and appropriate to set aside the order of the ld. DRP on this issue and remand the question of determination of ALP in respect of transaction on sale of cookies to Unibic, Australia for fresh consideration by the AO/TPO keeping in mind the observations made in this order and also taking note of the TP study and other details filed by the assessee and referred to in this order. All the submissions made above are not borne out of the record of AO/TPO/DRP. In these circumstances, we deem it fit and proper to remand this issue also to the TPO/AO for fresh consideration in the light of submissions made by the assessee before us. The TPO will determine the ALP afresh keeping in mind the submissions as made above. We make it clear that in the event of assessee being held to be the owner of Unibic trademark, there can be no addition on account of any deemed international transaction of incurring of AMP expenses. We also make it clear that the issue whether incurring of AMP expenses can be considered as international transaction in the facts and circumstances of the present case is left open for consideration, if the adjudication of that issue becomes necessary.

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• 2019 (9) TMI 936
  Non allowance of depreciation on stock exchange card - whether BSE Card is not an asset? - HELD THAT:- Above issue is covered by the decision of co-ordinate bench in the case of Sino Securities (P.) Ltd. vs. ITO [ 2011 (11) TMI 535 - ITAT MUMBAI] wherein it was held that BSE Card is not an asset of the nature referred under Section 32(1)(ii) of the Act and thus, depreciation on the said asset is not allowable. Thus, issue is covered against the assessee and in favour of the Revenue Disallowance of Client Assistance Charges and Client Maintenance Charges paid by the assessee to ICICI Bank Ltd. - expenses for expansion of business or excess payment - HELD THAT:- On perusal of the working of Client Assistance Charges, we find that it is not the cost per location, per branch which has increased, but the number of branches served by the Bank has increased, which has lead to increase in expenditure which fact the AO has ignored while passing the assessment order. Further, we find that the turnover of the assessee for the year under consideration has substantially increased to Rs. 269.58 Crores as compared to assessment year 2005-06 wherein turnover was Rs. 154.31 Crores and assessment year 2004-05 wherein the turnover was Rs. 95.09 crore. Thus, the increased cost of client assistance is justified by the corresponding increase in revenues of the assessee. No merit in the observation made by the AO in the assessment order. Increase in client assistance cost is justified by the corresponding increase in turnover and moreover, the increase in cost was due to the fact that the Bank had served more locations as compared to the preceding year, which can be termed as an expansion of business and not excess payment, as sought to be made out by the Assessing Officer. We accordingly set aside the order of CIT(A) and direct the Assessing Officer to allow the entire Client Assistance Charges paid by the assessee to Bank. Disallowance towards Client Maintenance Charges - related party payment in terms of Section 40A(2)(b) - AO disallowed the expenditure in this year stating that the same is not incurred wholly and exclusively for the purpose of business - HELD THAT:- Expenditure incurred by the assessee was very much for the purpose of business of the assessee and rather, these services are vital for running the business of the assessee. As regards various other contentions raised by the AO in the assessment order, we find that the same have been extensively dealt with by our co-ordinate bench while allowing the appeal of the assessee for assessment year 2004-05 [ 2014 (10) TMI 955 - ITAT MUMBAI] wherein it was held that ICICI Bank Ltd. does not fall in the definition of related party in terms of Section 40A(2)(b) of the Act. Thus, following the precedent, the contentions of the Assessing Officer are not again discussed here - set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Admittedly, the own funds of assessee are higher than the investment made by the assessee. The Hon ble Bombay High Court in the case of Reliance utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that if the own interest free funds of the assessee are higher than the amount of investment, then it should be presumed that the investment has been made out of the own funds and no disallowance of interest expenditure should be made. We hereby set-aside the order of CIT(A) and direct the Assessing Officer to delete the addition made in this ground. Rule 8D was inserted in the statute w.e.f. assessment year 2008-09 and in the case of CIT vs. Essar Techholdings Ltd. [ 2018 (2) TMI 115 - SUPREME COURT] held that Rule 8D is prospective in operation and cannot be applied to any assessment year prior to assessment year 2008-09. We, in the present case, are concerned with assessment year 2006-07, which is prior to assessment year 2008-09, the provisions of Section 8D of the Act are not applicable for the year under consideration. Thus, we hold that invoking of Rule 8D of the Rules in the instant year is not permissible - Decided in favour of assessee Disallowance of Bad debts - assessee failed to submit details of bad debts and justification for its write-off - HELD THAT:- We find that in assessment year 2004-05, on same issue, the Tribunal has allowed the appeal of the assessee as find that after 01.04.1989, the only requirement of writing off of bad debt is entries in the books of accounts by the assessee concerned. It has not to prove the justification of its action i.e. writing off, once it makes necessary entries in P L account. The Hon ble Apex Court in the matter of T.R. F.. Ltd. [ 2010 (2) TMI 211 - SUPREME COURT] had laid down the above basic principal and same is being followed by various Courts. Addition on account of depreciation allowed in the earlier years on BSE membership card - treating it as a benefit flowing to the assessee in the current year on protective basis for the reason that assessee has been allotted shares of BSE Ltd. pursuant to it holding BSE membership card - apprehension of the Assessing Officer is that the assessee may claim cost of BSE membership card as expenditure while computing the Capital Gains at the time of sale of shares of BSE Ltd. - HELD THAT:- No addition can be made merely on an apprehension that the assessee may take a double benefit in future. Assessment of income has to be made on the basis of real income theory and not on the basis of any perceived future contingent happening. Moreover, in the instant case, it has been factually explained by the assessee that at the time of sale of part shares of BSE Ltd. in assessment year 2008-09, assessee has claimed cost of shares at Rs. 1 and has not derived any double benefit as apprehended by the AO and thus, addition on protective basis is not warranted. CIT(A) has rightly analysed the fact-position that assessee has not derived any double benefit and accordingly, deleted the addition made by the Assessing Officer. We thus uphold the order of the CIT(A), and accordingly Revenue fails on this Ground. Excess claim of Deprecation - AO computed notional depreciation for assessment years 2000-01 and 2001-02 and re-computed the revised WDV of the assets in this year and allowed Depreciation on the same and disallowed the excess Deprecation. At the time of hearing, both the parties agreed that this issue is covered in favour of the assessee by way of the order of the Tribunal in assessee s own case for assessment year 2005-06 [ 2015 (2) TMI 1252 - ITAT MUMBAI] Non-deduction of TDS on transaction charges under Section 40(a)(ia) - TDS was not deducted on payment made to Stock Exchanges - HELD THAT:- It is pertinent here to refer to the decision of the Hon ble Supreme Court in the case of CIT vs. Kotak Securities Ltd. [ 2016 (3) TMI 1026 - SUPREME COURT] wherein it was held that transaction charges are in the nature of payments made for facilities provided by the Stock Exchange and no TDS on such payments would, therefore, be deductible under Section 194J of the Act - we hereby uphold the order of CIT(A). Accordingly, this Ground of appeal raised by the Revenue is dismissed. Addition on account of mark to market loss on outstanding derivative contract - CIT(A) allowed the loss - HELD THAT:- We find that the above issue is fully covered in favour of the assessee by the decision of Hon ble Supreme Court in the case of Woodward Governor India P. Ltd [ 2009 (4) TMI 4 - SUPREME COURT] Accordingly, we do not find any infirmity in the order of the CIT(A) and thus we uphold the decision of CIT(A) on this issue.

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• 2019 (9) TMI 935
  Validity of Adjustment of refund against interest payable and balance, if any, with the tax payable while computing the interest u/s. 244A - HELD THAT:- on. The issue of whether refund shall be adjusted against interest payable and balance, if any, shall be adjusted towards tax payable has come up for consideration in assessee s own case for the A.Y. 2008-09 [ 2015 (11) TMI 1058 - ITAT MUMBAI ] and the Coordinate Bench of the Tribunal held that the Assessing Officer while computing the interest u/s. 244A shall adjust the amount of refund already granted first towards the interest component and balance left, if any, shall be adjusted towards the tax component We find that this decision of the Coordinate Bench has been followed by the Ld.CIT(A) and directed to recompute the interest by first adjusting the refund towards interest and balance, if any, towards tax component. In the circumstances, we do not find any infirmity in the order passed by the Ld.CIT(A) in giving such direction. Thus, the ground raised by the Revenue is dismissed. Disallowance u/s. 14A - determining the reasonable expenditure attributable for earning exempt income - HELD THAT:- We are not inclined to restore the matter once again to the Assessing Officer for determining the reasonable expenditure attributable for earning exempt income. The Mumbai Tribunal in the case of Shakuntaladevi Trade Investments Pvt. Ltd., v. ITO, [ 2013 (12) TMI 1579 - ITAT MUMBAI ] held that disallowance u/s. 14A for the period before the A.Y. 2008-09 should be restricted to 2% of the dividend income. Also in the case of CIT v. M/s. Godrej Agrovet Ltd. [ 2014 (8) TMI 457 - BOMBAY HIGH COURT ] upheld the order of the Tribunal in estimating the expenditure to the extent of 2% of total exempt income earned by the assessee - we direct the AO to compute the expenditure attributable for earning exempt income at 2% of the exempt income earned by the assessee during the A.Y.2007-08. Suo moto disallowance towards expenditure attributable for earning exempt income, to this extent, the expenditure shall be reduced from total disallowance and compute the balance disallowance accordingly. Validity of reassessment order passed u/s. 143(3) r.w.s. 147 - disallowance of deduction claimed u/s.36(1)(vii) being the bad debts written off on the ground that this cannot be allowed since the claim for deduction u/s. 36(1)(viia) being the provision for bad and doubtful debts exceeded the bad debts written off to that extent - HELD THAT:- It is only from the records the Assessing Officer could collect the information that the provision for doubtful debts is inclusive of provision for standard assets and provision for restructuring of accounts. Nowhere in the reasons recorded, the Assessing Officer stated that any tangible materials/information to show that provision for bad and doubtful debts includes provision for standard assets and provision for restructuring of accounts have come on record subsequent to completion of assessment. In the reasons recorded the Assessing Officer states that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Except stating that there is a failure of the assessee, he has not pointed out what is the failure of the assessee to disclose fully truly all material facts. Nothing has been brought on record to suggest that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment. Therefore, in the absence of any failure on the part of the assessee to disclose fully and truly all material facts for completion of assessment, assessment cannot be reopened beyond four years from the end of the relevant Assessment Year in view of proviso to section 147 of the Act - we hold that reopening of assessment. u/s. 147 of the Act is bad in law - Decided in favour of assessee Reopening of assessment u/s 147 - AY 2009-10 - Deduction u/s. 36(1)(viia) denied - HELD THAT:- In this case the assessment was reopened within four years from the end of the Assessment Year as the relevant Assessment Year is 2009-10 and the notice u/s. 148 of the Act was issued on 28.03.2014 and the assessment was completed on 18.03.2015. Since the assessment for this Assessment Year i.e 2009-10 was reopened within four years from the end of the relevant Assessment Year the proviso to section 147 of the Act has no application. Whether the claim for deduction u/s. 36(1)(viia) has to be allowed on the provision made in the Books of Accounts or as per the statute provided in the section itself in the original assessment proceedings has bearing on the issue of allowance u/s. 36(1)(viia) in the reopened assessment, the issue thus in a way became consequential and should go back to the Assessing Officer for fresh adjudication depending upon the decision taken by the Assessing Officer in the original assessment proceedings which were set aside. Thus, we restore this issue on merits i.e. allowability u/s. 36(1)(viia) of the Act in the reassessment proceedings to the file of the Assessing Officer to decide afresh in view of our above observations. This ground is allowed for statistical purpose.

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• 2019 (9) TMI 934
  Penalty u/s 271(1)(c) - Surrender of income as income from other sources in the revised return after receipt of summoned from the Dy. Director of Income Tax (Investigation) - further additions towards difference between the income shown in the revised return and the amount actually received in the bank account - HELD THAT:- The provisions of section 271(1)(c) of the Act are penal in nature and they are required to be strictly construed. These cannot be extended by way of liberal interpretation to include the cases, which otherwise, do not fall within the purview and scope of the provisions of section 271(1)(c) of the Act. In view of this, since the income has already been declared in the revised return, which was valid and filed within the limitation period prescribed for filing the same, hence, in view of our discussion made above, the penalty in respect of the aforesaid income declared is not leviable and the same is accordingly ordered to be deleted. Difference of an amount between the income shown in the revised return and the amount actually received in the bank account of the assessee asssessee could not address convincing arguments in this respect. The said difference between the amount offered for taxation and the amount actually received by the assessee was found by the A.O. during the assessment proceedings. Hence, there was concealment of income in respect of the aforesaid amount. Hence the penalty in respect of the income detected during scrutiny assessment proceedings is confirmed @ 100% of the tax amount sought to be evaded on the said income. In view of our findings given above, the appeal of the assessee is treated as partly allowed.

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• Customs

• 2019 (9) TMI 970
  Recovery of erroneous Duty Drawback - Rule 16 of the Drawback Rules, 1995 - rejection of value declared in the shipping bills after completion of export - self assessment - extended period of limitation - power to reject already assessed value of goods which stand exported. Whether writ petition under Article 226 is maintainable against impugned show cause notice dated 9.2.2018? - HELD THAT:- All the questions raised by Petitioner are question of jurisdiction, we find it appropriate to entertain present writ Petition under article 226 of the Constitution of India and accordingly proceed to answer other questions. Whether demand of duty drawback under Rule 16 of the Drawback Rules, 1995 can be made without any reasonable period of limitation? - HELD THAT:- Notice has been issued under Rule 16 and not 16A of Drawback Rules, 1995 so it is admitted fact that foreign currency stands realized thus in the absence of laying down some period as reasonable period, there would never be conclusion of assessment and it would be at the whims and fancies of Respondent to open any assessment at any point of time. Under Customs Act, 1962 every consignment passes through scrutiny of team of Customs officers and there may be mistake on the part of customs officers in one or two cases but cannot be so in every shipping bill - Period of 5 years for all purposes is reasonable period so we hold that any notice issued under Rule 16 of Drawback Rules, 1995 beyond 5 years from the date of export is bad in the eyes of law and barred by limitation - decided in favor of petitioner. Whether re-enacted Drawback Rules, 2017 w.e.f. 1.10.2017 save Show Cause Notice dated 9.2.2018 (Annexure P-9) issued under Rule 16 of repealed Drawback Rules, 1995? - HELD THAT:- By inserting Rule 20(2) government has shown its different intention and Rule 20(2) of Drawback Rules, 2017 does not save show cause notices relating to demand of already paid duty drawback, therefore, Respondent cannot initiate or continue with show cause notice ( P-9 ) issued under Rule 16 of erstwhile Drawback Rules, 1995. Whether Rule 16 of Drawback Rules, 1995 provides complete machinery to declare already paid drawback as erroneous or excess and thus recovery thereof? - HELD THAT:- Rule 16 of Drawback Rules, 1995 requires to pay drawback which has been availed erroneously or in excess of entitlement. The Rule does not prescribe mechanism to determine and demand any drawback as erroneous or in excess of entitlement - Rule 16 of Drawback Rules, 1995 does not have machinery to hold and demand any drawback as erroneous or excess and in the absence of mechanism demand is bad in the eye of law. Whether Respondent/customs department under Rule 6 8 of Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 has power to reject already assessed value of goods which stand exported? - HELD THAT:- Rule 16A provides for demand in case of non-realisation of export proceeds. Realisation of export proceeds is sine qua non to avail drawback and in case of non-realisation demand is raised under Rule 16A of the Rules. There was no need to insert Rule 16A if Rule 16 covers demand of erroneous and excess drawback in all cases - the mechanism is absent under Customs Act, 1962 read with Drawback Rules to hold any drawback as erroneous or excess and demand thereof. Petition allowed.

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• 2019 (9) TMI 969
  Refund Claim. - Seeking, Direction to be issued to the Assistant Commissioner of Customs (Refund) ICD, to decide the claim of the petitioner one way or the other within a time frame - HELD THAT:- Upon asking of the Court, Mr. Sourabh Goyal, Sr. Standing Counsel for Union of India, has sought instructions from the department concerned and submits that the application for refund will be decided within the statutory period of three months and in any case by 30.9.2019. Application disposed off.

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• 2019 (9) TMI 952
  Release of detained goods - initiation of proceedings under the Contempt of Courts Act, 1971 - non-compliance of this court order dated 26th July, 2019 - HELD THAT:- We issue notice to Dr. D. Gandhi, Joint Director, Directorate of Revenue Intelligence, Kolkata Zonal Unit to show cause as to why proceedings under the Contempt of Courts Act, 1971 be not initiated against him and as to why he should not be punished for non-compliance of this court order dated 26th July, 2019. He shall explain the reasons by filing an affidavit on or before the next date of hearing - This order will be communicated by the counsel appearing for the respondent no. 2 to the aforesaid officer forthwith. Similarly, we also issue notice to respondent no. 1 to show cause as to why proceedings under the Contempt of Courts Act, 1971 be not initiated against him and as to why he should not be punished for the non-compliance of order dated 26th July, 2019. Respondent no. 1 shall explain the reasons for the non-compliance of the aforesaid order by filing an affidavit on or before the next date of hearing - This order will be communicated to respondent no. 1 by the counsel appearing for respondent no. 1 forthwith. This matter is adjourned to 20th September, 2019.

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• Insolvency & Bankruptcy

• 2019 (9) TMI 968
  Maintainability of application - Initiation of CIRP - Section 7 of Insolvency and Bankruptcy Code, 2016 - disputes between the Appellants and Respondent, pending proceedings in various Forums or not - pre-existing dispute or not - HELD THAT:- The amounts borrowed by the Respondent is a debt due and payable and it is borrowed against a time value of money. The Adjudicating Authority (NCLT, Chennai Branch, Chennai) is directed to admit the application under Section 7 of IBC after notice to Respondent, in case Respondent wants to settle claim before order of admission. Parties to appear before the Adjudicating Authority on 16.10.2019 for fixing the date of hearing.

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• 2019 (9) TMI 967
  Withdrawal of petition - constitution of Committee of Creditors (CoC) - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per record, the present application is moved by the applicant/financial creditor before formal Constitution of the under Section 60(5) read with Rule 11 of the NCLT Rules, 2016 for seeking appropriate order for withdrawal of the IB Petition and for recalling the CIRP (Corporate Insolvency Resolution Process), as the matter has been settled between the parties and the corporate debtor has paid entire amount of settlement to the applicant on 01.07.2019. This Adjudicating Authority possess necessary power and jurisdiction to permit a petitioner to withdraw its IB Petition at post admission stage and to recall the CIRP for this the consent from the members of the CoC, is not required because the COC has not been formally constituted - Therefore, there remains no legal impediment for accepting the proposal of settlement even at the post-admission stage of the IB Petition, because the CoC has not been formally constituted so far. Hence, the present application deserves to be allowed. Hence, it is allowed. It is further made clear that, in case full payment is not made within such stipulated period nor it is further extended by this Adjudicating Authority, then the IRP shall proceed further so as to complete the CIRP in respect of the Corporate Debtor company, as per the provisions of the Code. Petition disposed off.

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• 2019 (9) TMI 966
  Re-opening the right of the applicant/Original Respondent - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- It was found that the case was proceeded ex-parte for the fault on the part of then advocate of the Corporate Debtor. It is an established law that due to the fault of the advocate, the litigant/party should not suffer. Otherwise also, when the matter has already been opened for clarifications from the side of the Financial Creditor, we find no reason to stop the Corporate Debtor to file his reply and advance arguments. Application allowed.

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• 2019 (9) TMI 965
  Validity of Resolution plan - Attachment of Bank Accounts - HELD THAT:- The Plan approved by the Committee of Creditors, giving benefit to all stake holders in proportion to the resolution amounts to be paid by the Resolution Applicant. There are two Financial Creditors, one is Secured Financial Creditor i.e. Allahabad Bank and another is Unsecured Financial Creditor i.e. Todi Investors(India) Pvt. Ltd. While the Secured Financial Creditor voted in favour of the Resolution Plan, the Unsecured Financial Creditor did not choose to vote and thereby dissented from approving the Resolution Plan. The single majority of voting share of Secured Creditors comes to 90.93 percentage, thereby on its strength, the Plan has been approved by the Committee of Creditors - On a look at the distribution of the resolution amounts, it is understood that the Secured Financial Creditor agreed to share 57.3% of total admissible claim to the tune of INR 52.36 crores and the Unsecured Creditor has been provided 0.96 percentage of total admitted claim to the tune of INR 5 lacs. The workmen and the employees, the Operational Creditors, as well as the existing shareholders would also be benefitted to the extent of their proportionate share in the remaining amount available for distribution. This is a case in which the CoC has judiciously distributed the financial bids to the stakeholders as per their entitlements. There is nothing in the plan, so as to disapprove it. The financial matrix has been approved by the CoC already. The Resolution Plan of PND Infrastructure Pvt. Ltd., which is approved by the CoC with 90.93% voting share, is hereby approved under provisions of sub-section(1) of Section 31 of the Insolvency and Bankruptcy Code, 2016, which shall be binding on the Corporate Debtor, KND Engineering Technologies Limited, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan subject to the below mentioned modification - application disposed off.

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• 2019 (9) TMI 964
  Maintainability of application - initiation of CIRP - Corporate Debtor - Default in repayment of amount alongwith interest - pre-existing dispute or not - HELD THAT:- It is clear that there was a pre-existing dispute which was brought to the notice of the Operational Creditor before the receipt of the Demand Notice by the Corporate Debtor. The Company petition has been filed by Supreme Transport Organisation Pvt Ltd, the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 ( I B Code ) for initiation of Corporate Insolvency Resolution Process ( CIRP ) against DSV Air Sea Pvt Ltd, the Corporate Debtor is rejected.

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• 2019 (9) TMI 963
  Maintainability of application - initiation of CIRP - Corporate Debtor - Section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - whether the Operational Creditor proved that the claim made by them is covered under the category of Operational debt as defined under Section 5 (21) of the Code, 2016? HELD THAT:- Considering the arguments of the Corporate Debtor which primarily rests on the ground of a pre-existing dispute prior to the filing of the application and in the circumstances the application should be dismissed as not maintainable, it is necessary to ascertain the definition of dispute . In an application filed under Section 9 of the Code, Tribunal is not supposed to examine the merits of the dispute nor the adequacy of the dispute is to be seen. However, in matters under Section 9, the tribunal is only to see that a dispute pre-exists and that the dispute is not vague, got up or raised for the first time to evade the liability. The documents on record clearly show that the dispute was raised by the respondent prior to the demand notice issued under Section 8 (1) of the Code. Section 9 (5) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility - this application fails and the same is hereby rejected and dismissed.

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• 2019 (9) TMI 962
  Admissibility of application - Initiation of CIRP - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The order (s) passed by Ld. Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action taken by the Resolution Professional are set aside. The application preferred by the Respondent under Section 9 of the I B Code is disposed of as withdrawn. Appeal allowed.

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• 2019 (9) TMI 961
  Maintainability of Petition - Initiation of CIRP - RBI Circular dated 12.2.2018 - HELD THAT:- It is clear that this Petition, which was filed based on RBI Circular dated 12.2.2018 is not maintainable. The Petition filed by Union Bank of India under Section 7 of IBC, 2016 based on RBI Circular dated 12.2.2018 is dismissed with liberty to file fresh.

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• 2019 (9) TMI 960
  Maintainability of application - Initiation of CIRP - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Considering the provisions of Section 7 of the IB Code read with Rule 4 of the IB Rules and the information contained in Form-1, the application is complete in all respects. It is clear that it is settled law that at the stage of admission of application under Section 7 of IB Code, only the applicant Financial Creditor and the Respondent Corporate Debtor is required to be heard. No other person including a shareholder, an operational creditor, an employee, guarantor or even a director of the Corporate Debtor is separately required to be heard. Application disposed off.

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• FEMA

• 2019 (9) TMI 940
  Contravention of Regulation 7 of Foreign Exchange Management (Acquisition and Transfer of Immovable property in India) Regulations, 2000 - Confiscation of 8 flats and five car parking - penalty under section 13(2) of the FEMA Act - HELD THAT:- National of the countries specified under Regulation 7 of the Regulations can acquire or transfer immovable properties in India, provided that such a person obtains the requisite permission from the Reserve Bank of India. If the national so fails to apply for such a permission, the Reserve Bank of India has the power to accord an ex post facto permission with regards to the said transaction. The transaction in question is not a commercial transaction; as a matter of fact the Appellant still resides in the Flats. The Flats were purchased by Indian Rupees, out of monies earned in India on which Income Tax has been paid, as well as monies loaned from India banks. The loans have been duly repaid. The Appellant pursuant to purchase of the Flats had also applied to the Government of India for grant of Citizenship and as stated above was granted a certificate of naturalization on 01.01.2016. It is stated that Sami is residing in five flats out of the said eight flats with his wife and their two years old daughter. The interse dispute between the Appellant and the appellant in Appeal No. 17/2011 is outside the purview of the present appeal. The impugned order is set-aside as far as exercise of discretion under Section 13(2) of the Act. The finding arrived under section 13(1) shall remain intact. Mr. Sami shall deposit the remaining Rs. 40 Lakhs with the respondent with three months from today. As no case of under section 13(2) (about confiscation of eight flats and five parking space), the said findings and part of the order is quashed. However, the penalty amount under the said provision of Section 13(1) is enhance to Rs. 50 Lakhs from Rs. 20 Lakhs. In view of changing his stand from time to time. This tribunal is empowered to increase the penalty amount under section 19(6) of the Act.

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• PMLA

• 2019 (9) TMI 956
  Bail plea in a money laundering case - white collar crimes/economic offenders - HELD THAT:- Tentacles of the crime are so widespread and it is not that the investigation can be segregated in respect of one or the other accused, the entire crime committed is indeed interlinked. The economic offences like the one in hand constitute a class part and they are not like other criminal cases and need to be visited with a different approach. Therefore taking note of huge magnitude of conspiracy angle qua petitioner, it would be premature to jump to the conclusion that investigation in this case in respect of the petitioner is complete, rather huge amount of money is still to be trailed. As gone through the diary of proceedings handed over by the ld. ASG during the course of the arguments and the perusal of the same shows that despite being in J.C. how the petitioner is still ruling the roost and is in constant touch with co-accused and interfering with the investigation. So when this is the clout of the petitioner that despite being in J.C. he is managing things then one can very well imagine what he can do once out on bail. The Supreme Court in Rohit Tandon Vs. Directorate of Enforcement [ 2017 (11) TMI 779 - SUPREME COURT] while dealing with the bail plea in a money laundering case, has again reiterated that white collar crimes/economic offenders have deep rooted conspiracies involving huge amount of public funds and this should be viewed seriously and such offences ought to be considered as grave offences. Pertinently, the bail plea in the case of Rohit Tandon (Supra) was repelled by the Supreme Court while observing that duty of the Court at the bail stage is not to weigh the evidence meticulously but to arrive at a finding on the broad probabilities of the case - this Court is of the considered opinion that the petitioner is not entitled to the grant of bail

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• 2019 (9) TMI 943
  Offence under PMLA - Attachment of property involved in money-laundering - mortgage properties in favour of banks which are not purchased from proceeds of crime - HELD THAT:- In the event of the attachment being lifted, the RP would take steps to get a viable Resolution Plan. A Resolution Plan is a scheme and provides for payment of debts owed to various creditors of the company. The Committee of Creditors ( CoC ) is vested with the power to take a decision to approve, or reject a Resolution Plan. In the event that the CoC approves a particular Resolution Plan, it requires confirmation and approval by the Adjudicating Authority (National Company Law Tribunal). After approval of the Resolution Plan, the enterprise as a going concern would be handed over to the Resolution Applicant, under the supervision of the Monitoring Committee, which would oversee the implementation of the Resolution Plan. This order is being passed in relation to mortgage properties in favour of banks which are not purchased from proceeds of crime. The same were purchased and mortgage with the banks prior to the of crime period. ED is not precluded to attach other private properties and all other assets of the alleged accused. It is clarified that this order shall have no bearing in any proceedings initiated against the alleged accused including extradition proceedings pending or proposed to be initiated in any part of the world. Those are to be considered as per law and without any influence of this order which is being passed in the interest of public as bank money is a public money. Most of the banks are public sector banks. Their valid and legal recovery cannot be blocked for years without valid reasons. Therefore, the issue in hand is being decided only for limited purposes The impugned order is pertaining to the appellant is set-aside. Consequently, the provisional attachment order also quashed by allowing the appeal.

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• 2019 (9) TMI 942
  Money Laundering - proceeds of crime - immovable property acquired as divorce alimony - whether any proceed of crime has been used by her and or her ex-husband, ShivrajPuri in acquiring the said property? - Attachment of the property. HELD THAT:- From the investigation conducted, it has inter-alia emerged that Shri Shivraj Puri by abusing his official position as the Relationship Manager in Citibank Gurgaon, and in furtherance to a criminal conspiracy hatched and executed by him together with his relatives/associates fraudulently opened and operated Custodian Account No. 5011666247 in the Bank in the names - the appellant was removed from the aforesaid premises by the Gurgaon Police on 9.6.2011 without any notice. The premises was locked. Her belongings including her education and experience certificates, clothes and her personal belongings are inside the house. The possession was taken by the ED. The appellant is neither an accused nor a co-accused nor even a witness in the Citibank Scam being investigated and was named merely as a respondent as she was rightly a defendant and a rightful claimant of one of the property. The above-mentioned property was not acquired from the proceed of crime and is not involved in money laundering, therefore, the attachment at the hand of respondent is released by setting aside the impugned order only pertaining to said property - Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 941
  Offence under PMLA - Attachment orders - proceeds of crime - HELD THAT:- As already mentioned that the original cheques are already filed and placed on record of this file. The respondent is at liberty to obtain the same from the Registrar of this Tribunal. As far as the attachment of properties are concerned, the said property will be released after the entire payment against the post dated cheques are encashed in favour of the respondent. Once the said entire alleged proceed of crime is received by the respondent, the impugned order dated 14th March, 2019 as well as provisional attachment order dated 01st October, 2018 shall be modified/quashed. The present appellant who has allegedly bonafide received alleged proceeds of crime in question. It is also not denied by the learned counsel for the respondent that the appellant has not been charge sheeted under the schedule offence or any prosecution complaint has been filed against the appellant. In view of the undertaking and return of the alleged proceeds of crime to the respondent. The present appeal is accordingly dispose of. The attachment of the properties shall continue till the entire payment of alleged proceeds is received by the respondent.

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• 2019 (9) TMI 939
  Offence under PMLA - attachment orders - funds with the bank that are secured for the Bank Guarantee issued by the Appellant bank attached - whether Appellant Bank holding any funds of the Accused/Respondents? - whether the property which has been attached has any nexus whatsoever with that of money laundering or not? - HELD THAT:- Adjudicating Authority failed to appreciate that the fixed deposits have been taken as margin money for the bank guarantee issued by the Appellant Bank and as such bank has exclusive charge on them. The Authority has not recorded any reason as to why funds with the bank that are secured for the Bank Guarantee issued by the Appellant bank could be attached and there is no reason to believe placed on record by the ED. The banks cannot be harassed without their fault. Adjudicating Authority failed to appreciate that the Appellant Bank is not holding any funds of the Accused/Respondents, whereas on the other hand, the Appellant Bank itself has to recover more than Rs. 4.79 crores in Cash Credit Account and Rs. 31.18 Crores in Bank Guarantee as on 25.07.2018 from the company i.e. Respondent no. 2. Hence, the bank being the secured creditor has priority over the rights of Central or State Government or any other Local Authority. The Adjudicating Authority failed to appreciate that the Adjudicating Authority has to take into consideration the plea of innocence of the bank and whether the property which has been attached has any nexus whatsoever with that of money laundering or not. The bank had advised by the letter dated 19.11.2016 the list of FDs outstanding in the name of the company which are encumbered and issued against BG facility sanctioned to the company as Cash Margin against BGs issued by the bank. The bank has neither directly nor indirectly attempted to indulge in any activity in connection with proceeds of crime, hence the question of bank s involvement does not arise as they are third party and the bank cannot be asked to wait till the trial/proceeding are over. The Adjudicating Authority failed to appreciate that the Scheme of Prevention of Money Laundering Act clearly provides the mechanism whereby the innocent parties can approach the Adjudicating Authority for the purposes of release of properties which have been attached in terms of the provisions of Section 5 of the Act. This can be seen by reading Section 8(1) and the proviso to Section 8(2) of the Act whereby Adjudicating Authority has to rule whether all or any of the properties referred to in the notice are involved in money laundering or not and the authority while arriving at any conclusion has to give valid reasons. Adjudicating Authority has failed to establish a prima facie case against the appellant banks. There are no proofs on records that the bank is parking the proceeds of crime. It is incorrect to allege that the FDRs will be frustrated if they are not provisionally attached. The bank has exclusive charge over the margin money and the same is safely kept with the bank and cannot be used by the company. Further, the Adjudicating Authority has failed to appreciate that the property attached under the provisional order is not acceptable to money laundering or that the property has been obtained out of proceeds of crime. The bank money/bank guarantees cannot be allowed to be attached in this fashion unless the banks have link and nexus in the criminal actively, otherwise banking system would be collapsed. The most important point in the present case is that Magistrate (SPE) where CBI has held the total loss to government is Rs. 62,75,020/- which is nowhere close to the figure as alleged by ED in its reply to the present Appeal (i.e. in para 9.11 recovery of Rs. 23.92 crores), hence the total amount of Rs. 8,05,91,575/- kept in the form of FDs with the appellant Dhan Laxmi bank has been erroneously attached by the ED in its impugned order. Presumption of innocence in presumptive reverse burden of proof cases, proportionality and view of the Hon ble Supreme Court of India in decided cases. Whole case of the Respondent Directorate of Enforcement falls to the ground as the whole case of the Repondent till today proceeded on the figure of 23.9 Crore Approx, which in reality as on today is nothing but an imaginary figure, without any basis. The same figures are yet to be established at the time of trial and final arguments. It is a matter of record that on the basis of CBI allegation, the respondent has passed the PAO. CBI has discussed each and every document in relation to the case in hand and has come to conclusion that the total loss is Rs. 62,75,020/- and it is pertinent to mention on the basis of same material the respondent says that loss is about 23.92 crores. The findings of respondent have to be tested at the time of trial. How the contrary figures have been mentioned by the respondent as per its own investigation of the same allegation. Without expressing any opinion in this regard, we are of the view that all these contrary figures of two agencies are to be tested in evidence. The banks are innocent parties. One is failed to understand after filing the reply, the banks are un-necessary dragged in the litigation. Their duty amount has to be secured. They cannot be harassed in this fashion. No civil death should be given to banks without their involvement. The banks money is a public money. The appeals filed by the banks are allowed and impugned order is set-aside against them. The attachment is not sustainable, without application of mind and very harshful. There is no material of record that the banks have any nexus and link with the other appellants. Appellants without prejudice are liable to secured a sum of Rs. 62,75,020/- with the respondent. The rest of the attachments stand released. However, it is clarified that the above said appeals are decided on the basis of charge-sheet filed by CBI and without going into merit of the case of criminal liabilities which would be considered as per its merit without the influence of this order. All appeals are disposed of. The appeals filed by the banks are allowed.

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• 2019 (9) TMI 938
  Money Laundering - attachment of property - Validity of Interim Order passed - Jurisdiction of this Tribunal to pass the interim order - Section 35 of PMLA - HELD THAT:- Mr. AmitMahajan admits that the proceedings of PMLA were initiated by invoking the section proviso of Section 5(1) of the Act - When it was asked to him to produce the reason to belief to satisfy the mandatory conditions of second proviso, it is replied by him that the said issue is the subject matter of appeal which is listed for final hearing and at that time, he would argue the said issue. With regard to query about the undivided share of his mother, no arguments are addressed on behalf of respondent. The interim order passed on 01.08.2019 is liable to be confirmed - The prayer made in the applications are allowed.

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• 2019 (9) TMI 933
  Offence under PMLA - Provisional Attachment orders - HELD THAT:- The appellant is a Public Sector Bank. The money must come to the public forthwith not after the trial of criminal case against the borrowers which may take many years. The banks are in crisis, no attempt should be made to block the loan amount in order to avoid worsen positions in the commercial market. The trial may continue against the borrowers. One is failed to understand why the bank loan amount be blocked in view of settled law. This Tribunal is of the considered opinion that the proceeding u/s 8 of PMLA, 2002 before the Adjudicating Authority is a civil proceeding and the Adjudicating Authority should have stayed the proceedings on passing of the moratorium order by the NCLT. The continuation of the proceedings from the date of commencement of the moratorium order is contrary to the intention of the legislature hence the consequential order of confirmation of PAO is contrary to law. In the facts of the present case, it appears that hurdle has been created in the process after passing the order of NCLT which ought not to have been done. The question of registering ECIR does not arise. The passing of provisional attachment order was not application of mind and without consulting the facts and law. Orders are set-aside by allowing the appeals. The attachment order with regard to the mortgaged property is quashed. The appellants are at liberty to take further steps in accordance with law.

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• Service Tax

• 2019 (9) TMI 955
  Refund claim - alternate remedy of appeal - disputed question of facts involved - HELD THAT:- The Commissioner has stated that in absence of original documents, the claim could not have been processed. The list of documents relied upon by the Petitioner in this Petition shows that there were copies and not the original - Apart from this position, it cannot be said that there is any consensus as regard the fact that the necessary original documents were submitted by the Petitioner and were lost by the Respondent Department - This aspect, in view of the statements in the impugned order and the affidavit-inreply, is a disputed question of fact. Alternate remedy - HELD THAT:- Section 35 of the Central Excise Act provides an appeal to the Commissioner - Appeals. There is no dispute that the impugned order passed by the Assistant Commissioner is appealable under Section 35 to the Commissioner - Appeals. Therefore, this disputed question of fact has to be decided in the statutory appeal provided under Section 35 of the Act. Thus, on both counts, that the Petition involved disputed question of fact and that a statutory remedy of appeal is available to the Petitioner, we are not inclined to exercise our writ jurisdiction - petition rejected.

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• 2019 (9) TMI 954
  Permission for withdrawal of petition - security services to various Government Departments - HELD THAT:- Petition dismissed as withdrawn.

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• Central Excise

• 2019 (9) TMI 957
  Permission to withdraw appeal due to low tax effect - CENVAT Credit - job-work - Rule 4(5) (a) of Cenvat Credit Rules 2002/2004 - HELD THAT:- The appellant prays for withdrawal of the instant appeal, however the question of law raised would remain open. Appeal dismissed as withdrawn.

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• CST, VAT & Sales Tax

• 2019 (9) TMI 953
  Demand of Entry Tax - machinery imported by the assessee during the A.Y. 2000-2001, but exported outside the country in the year 2004-2005 - HELD THAT:- The levy of tax on entry of machinery (valued at more than 10 lacs) arose, no sooner the assessee caused the entry of those goods into the local area Allahabad from outside that local area for use. Under the Old Act, the subsequent Act of export of the machinery out of the country, was wholly irrelevant and had no bearing on the tax liability that had otherwise arisen and got finally attached to the transaction upon causing entry of such machinery inside the local area, for use. For the purposes of clarity, it has to be stated that no provision of the nature contained in Section 4(6) of the Act (New Act) existed under the Old Act. The tax liability may arise in each unit/assessment year only with respect to taxable event/transaction completed therein. The same has to be assessed for that assessment year. Also, it has to be discharged or recovered, as the case may be, with reference to that assessment year only. The legal basis of the claim raised by the assessee is found non-existent. There is nothing to doubt the existence of the tax liability and its crystallization at the end of the A.Y. 2000-01. It also did not get diluted or wiped out upon occurrence of export of the machinery, in subsequent assessment year. Thus, the factual and legal basis of the claim raised by the assessee having arisen more than three years after the close of the assessment year 2000-01, the same is wholly unfounded. The taxable event occurred in and tax liability arose upon the assessee having caused the entry of machinery for use in the local area Allahabad, during the A.Y. 2000-01. It got crystallized on 31st March, 2001. The event of subsequent export of machinery outside the country during the A.Y. 2004-05, had no bearing on the unit of assessment being the A.Y. 2000-01. Revision dismissed.

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• Indian Laws

• 2019 (9) TMI 959
  Summary disposal of arbitration proceedings - Whether the parties can adduce evidence to prove the specified grounds in sub-section (2) to Section 34 of the Arbitration and Conciliation Act, 1996? - HC allowed the respondents to produce additional evidences. HELD THAT:- By perusal of the award, it is seen that before the arbitrator, respondent No.1 filed her written statement and other respondents also filed separate written statements. It was contended that the documents were forged. Both parties adduced oral and documentary evidence. The appellant led evidence by examining two witnesses Balakrishna Nayak (PW-1) and B.A. Baliga (PW-2) and exhibited documents P1 to P47. Respondent Nos.1 and 2 also examined five witnesses viz. M. Shashikala (RW-1), Mamatha @ Mumtaz Hameed (RW- 2), Latha (RW-3), Chitralekha Umesh (RW-4) and B.R. Nagesh (RW-5). Respondent Nos.1 and 2 also produced documentary evidence Ex.-R1 to R13. As held by the District Judge, the grounds urged in the application can very well be considered by the evidence adduced in the arbitration proceedings and considering the arbitral award. Further, the application filed by respondent Nos.1 and 2 seeking permission to adduce evidence, no ground was made out as to the necessity of adducing evidence and what was the nature of the evidence sought to be led by respondent Nos.1 and 2. The proceedings under Section 34 of the Act are summary proceedings and is not in the nature of a regular suit. By adding sub-sections (5) and (6) to Section 34 of the Act, the Act has specified the time period of one year for disposal of the application under Section 34 of the Act. The object of sub-sections (5) and (6) to Section 34 fixing time frame to dispose of the matter filed under Section 34 of the Arbitration Act, 1996 is to avoid delay and to dispose of the application expeditiously and in any event within a period of one year from the date of which the notice referred to in Section 34(5) of the Act is served upon the other party. In the arbitration proceedings, the parties had sufficient opportunity to adduce oral and documentary evidence. The High Court did not keep in view that respondent Nos.1 and 2 have not made out grounds that it is an exceptional case to permit them to adduce evidence in the application under Section 34 of the Act. The said directions of the High Court amount to retrial on the merits of the issues decided by the arbitrator. Order of HC set aside - Appeal allowed.

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• 2019 (9) TMI 958
  Contempt Petition - the alleged contemnors have violated the order of this court dated 07.05.2012 - proceedings u/s 13 of SARFAESI Act, 2002 - recovery of amount on sale of properties - HELD THAT:- We cannot appreciate the conduct of Alchemist and its officers. Both the High Court and this Court had clearly directed that out of the amount recovered by sale of the properties of the borrowed Company by Alchemist, Rs. 4.5 crores were to be paid to KMBL, and Rs. 9 crores were to be retained by Alchemist. Any amount in excess was to be deposited in Court. Though liberty was given to Alchemist on 02.07.2014 to approach the High Court, such application was filed only in February, 2017. There is no explanation as to why such application was not filed for three years. It is obvious that this application was filed only after the sale certificate was issued and KMBL sent various communication to Alchemist to pay a sum of Rs. 4.5 crores to it. Having held so, we are of the view that it may not be necessary to take action against the alleged contemnors under the Contempt of Courts Act, in view of the fact that pursuant to the order of this Court they have now deposited Rs. 4.5 crores. The amount of Rs. 4.5 crores deposited by Alchemist shall be paid to KMBL along with interest, if any, accrued thereupon - contempt petition closed.

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• 2019 (9) TMI 951
  Compulsory Acquisition - Taking over of petitioner s property by the Central Government - pre-emptive purchase under Chapter XX-C, consisting of Sections 269U to 269UO of the Income Tax Act, 1961 as inserted by Finance Act, 1986 - liability of purchaser to pay the pending amount - under-valuation of property or not - HELD THAT:- What prompted the appropriate authority to take action was the fact that apartment No.62-B in Building No.103 on 6th floor which was also located in the same premises and was similarly situated was proposed to be sold for Rs. 20.00 lakh odd and consequently no fault can be found with the finding that as against the market value of Rs. 20.00 lacs, the petitioners were selling the property at a much lesser rate. Liability of purchaser to pay the pending amount - HELD THAT:- The reading of the agreement does not reveal that any liability of the purchaser remained. Petition dismissed - other related applications also dismissed.

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