TMI Tax Updates - e-Newsletter
September 3, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Continuance of Prosecution proceeding where Penalty u/s 271(1)(c) has been reduced - assessee is entitled to the benefit of Section 279(1A)

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• Refund of Cenvat Credit - legislative intent did not envisage the monetisation of CENVAT credit in the event of impossibility of utilisation

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Articles

1. GST: Filing of Form ITC-04 for July 2017 to March 2019 is waived off

   By: Ganeshan Kalyani

2. PROFITEERING ON SUPPLY OF GOODS (BEAUTY CREAM) UPHELD

   By: Dr. Sanjiv Agarwal

News

1. GST Revenue collection for August, 2019

2. CBDT consolidates Circulars for ease of compliance of Start-ups

3. Steering Committee on Fintech related issues submits its Final Report to Finance Minister

4. Income Tax department made history with a quantum jump in the e-filing of Income–Tax Returns With an All time high record of 49 lakh 29 thousand and 121 ITRs filed in a single day on 31st August 2019.

Notifications

Customs

1. 40/2019-Customs (N.T./CAA/EXTENSION/DRI) - dated 29-8-2019 - Cus (NT)

Appointment of CAA by DGRI

2. 39/2019-Customs (N.T./CAA/DRI) - dated 29-8-2019 - Cus (NT)

Appointment of CAA by DGRI

DGFT

3. 16/2015-2020 - dated 2-9-2019 - FTP

Amendment of Para 4.34 (i) of the Foreign Trade Policy 2015-20

GST - States

4. 33/2018 – State Tax - dated 30-8-2019 - Delhi SGST

Registered persons having aggregate turnover of up to 1.5 crore rupees - furnishing the details in Form GSTR-1

5. F-A-3-33-2019-1-V-(61) - dated 7-8-2019 - Madhya Pradesh SGST

Specifies retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist.

6. F-A-3-32-2019-1-V-(57) - dated 7-8-2019 - Madhya Pradesh SGST

Notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year furnish the details of outward supply of goods or services or both in FORM GSTR-1.

7. F-A-3-30-2019-1-V-(59) - dated 7-8-2019 - Madhya Pradesh SGST

Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”).

8. F-A-3-29-2019-1-V-(60) - dated 7-8-2019 - Madhya Pradesh SGST

The Madhya Pradesh Goods and Services Tax Rules, 2017.

9. F-A-3-28-2019-1-V-(56) - dated 7-8-2019 - Madhya Pradesh SGST

The Madhya Pradesh Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019.

10. ERTS(T) 4/2019/320 - 13/2019-State Tax (Rate) - dated 31-7-2019 - Meghalaya SGST

Amendments in Notification No.ERTS (T) 65/2017/12, dated the 29th June, 2017.

11. ERTS(T) 4/2019/319 - 12/2019-State Tax (Rate) - dated 31-7-2019 - Meghalaya SGST

Amendments in the Notification of the Government issued vide No.ERTS (T) 65/2017/1, dated the 29th June, 2017.

12. ERTS(T) 4/2019/318 - 35/2019-State Tax - dated 29-7-2019 - Meghalaya SGST

Amendments in Notification No. 21/2019- State Tax issued vide No.ERTS (T) 4/2019/229, dated the 23rd April, 2019.

13. ERTS(T) 4/2019/298 - 34/2019-State Tax - dated 18-7-2019 - Meghalaya SGST

Amendments in the notification No. 21/2019- State Tax issued vide No.ERTS (T) 4/2019/229, dated the 23rd April, 2019.

14. ERTS(T) 4/2019/297 - 33/2019-State Tax - dated 18-7-2019 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Fifth Amendment) Rules, 2019.

15. ERTS(T) 4/2019/281 - 11/2019-State Tax (Rate) - dated 29-6-2019 - Meghalaya SGST

Seeks to specifies retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, as class of persons who shall be entitled to claim refund.

16. Order No. 06/2019-State Tax - dated 28-6-2019 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Sixth Removal of Difficulties) Order, 2019.

17. ERTS(T) 4/2019/279 - 31/2019-State Tax - dated 28-6-2019 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Fourth Amendment) Rules, 2019.

18. ERTS(T) 4/2019/278 - 30/2019-State Tax - dated 28-6-2019 - Meghalaya SGST

Seeks to provide exemption from furnishing of Annual Return / Reconciliation Statement for suppliers of Online Information Database Access and Retrieval Services (“OIDAR services”).

19. ERTS(T) 4/2019/277 - 29/2019-State Tax - dated 28-6-2019 - Meghalaya SGST

Seeks to prescribe the due date for furnishing FORM GSTR-3B for the months of July, 2019 to September, 2019.

20. ERTS(T) 4/2019/276 - 28/2019-State Tax - dated 28-6-2019 - Meghalaya SGST

Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of more than 1.5 crore rupees for the months of July, 2019 to September,2019.

21. ERTS(T) 4/2019/275 - 27/2019-State Tax - dated 28-6-2019 - Meghalaya SGST

Seeks to prescribe the due date for furnishing FORM GSTR-1 for registered persons having aggregate turnover of up to 1.5 crore rupees for the months of July, 2019 to September,2019.

22. ERTS(T) 4/2019/246 - 25/2019-State Tax - dated 21-6-2019 - Meghalaya SGST

Seeks to extend the date from which the facility of blocking and unblocking on e-way bill facility as per the provision of Rule 138E of CGST Rules, 2017 shall be brought into force to 21.08.2019.

SEBI

23. SEBI/LAD-NRO/GN/2019/29 - dated 29-7-2019 - SEBI

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2019

Circulars / Instructions / Orders

Income Tax

1. 22/2019 - dated 30-8-2019

Consolidated circular for assessment of Startups

Highlights / Catch Notes

GST

• Court Grants Ad-Interim Order: GSTR-3B Not Considered a "Return" u/s 39, Delayed Filing Fees Challenged.

  Case-Laws - HC : Levy of late fees for the late filing of the Form GSTR-3B - The submission is that the GSTR-3B cannot be read in Section 39 as Return - The writ applicants have been able to make a strong prima facie case to have an ad-interim order.
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Income Tax

• High Court Upholds Cash Seizure from Angadiya Courier Service; No Error Found in Warrant of Authorization u/s 132A.

  Case-Laws - HC : Requisition of amount u/s 132A - Cash was seized from two persons of the Angadiya Courier Service by the police inspector - HC refused to interfere, since there it did not find any palpable error or gross illegality going to the root of the matter in the issue of Warrant of Authorization.
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• AO's Addition u/s 69A Unjustified; Entries Already Recorded in Books of Account.

  Case-Laws - AT : Addition u/s 69A - entries are recorded in the assessee’s books of account - it is evident that the AO has not made out a case calling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Act could have been considered; but then that is not the case of the AO
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• No Penalty for Assessee u/s 271C Due to Bona Fide Belief in TDS Non-Deduction Necessity.

  Case-Laws - AT : Penalty u/s 271C - non-deduction of tax under section 194C/194I - reasonable cause - assessee company has made payment to HUDA on directions of DTCP - assesse was under a bonafide belief that no TDS is required - no penalty.
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• Penalty Confirmed for Cash Loan Violation u/s 269SS; Assessee's Defense Lacked Evidence.

  Case-Laws - AT : Levy of penalty u/s 271D - violation of provision 269SS - assessee has given promissory note and accepted the loan in cash - The contention of the assessee that the transaction was related to the company was not established with any tangible evidence. - Levy of penalty confirmed.
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• Petitioners face penalties for not depositing deducted taxes on time u/ss 276B and 278B of the Income Tax Act.

  Case-Laws - HC : TDS default - Offences punishable u/s 276B r.w.s. 278B - the petitioners have deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, the petitioners cannot escape from the rigour of section 276B.
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• Trust Exemption Under Income Tax Act Sections 11 and 12 Not Retroactive to Prior Assessment Years.

  Case-Laws - HC : Exemption u/s 11 - retrospective effect - On registration of the Trust, benefit under Section 11 and 12 would be available to the assessee from the assessment year following the financial year in which application was given and not any previous year. The benefit of registration could not have been extended for the assessment year 2011-12, even if the matter was pending before the Tribunal when application for registration was submitted on 15.12.2014.
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• Prosecution u/s 279 can proceed despite penalty reduction; petitioners still benefit from Section 279 (1A) rights.

  Case-Laws - HC : Continuance of Prosecution proceedings u/s 279 where penalty has been reduced - it can only be said that the petitioner would be entitled to the benefit of Section 279 (1A) of the Act and the mere challenge to the order reducing the penalty may not suffice to deny such a benefit.
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• Section 56(2)(viib): Assessee Proves Genuine Share Transactions, Avoids Additions with Valuer's Report Showing Fair Share Price.

  Case-Laws - AT : Additions u/s 56(2)(viib) - share application money received - share premium - assessee has proved identity and genuineness of the transactions by filing necessary evidences. The assessee has filed valuation report from registered valuer as per which the share price of the company is over and above premium charged by the assessee - No additions.
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• Court Rules Bank Can't Deduct Losses Tied to Securities Scam; Not a Business Loss Under Tax Law.

  Case-Laws - AT : Disallowance of deduction being the loss/ expenditure/outgo from coffers of bank - For some reason best known to the appellant bank, proceeds were credited in the account of Shri Harshad Mehta and subsequently, the entire transaction was burnt in the fire of Security Scam - cannot be considered as deductible business loss.
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• College Staff TDS: Payments to Teachers, Lecturers Fall u/s 192 Due to Employee-Employer Relationship.

  Case-Laws - AT : TDS u/s 192 or 194J - there was employee and employer relationship between the college teachers/lecturers/staff - payments made to teachers/ lecturers/ staff by the assessee is covered u/s 192 of the Act and not covered u/s 194J
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• Interest Income from Bank Deposits Eligible for Business Gains Deduction u/s 80P(2)(a)(i) of Income Tax Act.

  Case-Laws - AT : Deduction u/s. 80P - Interest income earned from bank deposits is assessable as profits and gains of business in the hands of assessee and accordingly deduction u/s. 80P(2)(a)(i) of the Act is allowable thereon.
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• Penalty for Concealment Not Justified u/s 271(1)(c) When Income Estimated by Net Profit Rate.

  Case-Laws - AT : Penalty levied u/s 271(1)(c) - Rejection of books of accounts - where the income has been estimated in the hands of the assessee by applying net profit rate, there is no merit in the levy of the aforesaid penalty for concealment.
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• Arbitration Resolves Income Tax Dispute Over SRO Value vs. Actual Payment u/s 56(2)(vii)(b) Exception.

  Case-Laws - AT : Addition u/s 56(2)(vii)(b) - difference amount between the SRO value and the actual consideration paid - dispute between the parties settled through arbitration - no reason to disbelieve the submissions made by the assessee - the case of the assessee is squarely covered as exception as per proviso to section 56(2)(vii)(b) - No addition.
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• ITAT's Rejection of Assessee's Plea Questioned; Tribunal Criticized for Ignoring Improper Document Consideration.

  Case-Laws - HC : Validity of order of ITAT rejecting the application of assessee - the assessee had raised an issue regarding consideration of certain documents which had never been seized from the assessee but were considered by the authorities - impugned order passed by the Tribunal suffers from perversity
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Customs

• Penalty for Fraudulent Shipping Bill Dropped; New Penalty Imposed u/s 117 for Caution in Trade Practices.

  Case-Laws - AT : Levy of penalty - filing of the shipping bill fraudulently in the name of appellants - appellants before us are neither the exporters/ owners of the goods - there is no omission or commission hence penalty u/s 114 set aside - However penalty u/s 117 levied to deter appellants and signal to them to be more careful while conducting their business in relation to imports and exports of goods
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• Customs Duty Refunds Now Possible Without Formal Assessment Order Due to Section 27 Amendment of the Customs Act.

  Case-Laws - AT : Refund claim - absence of assessment of duty (bill of entry) - In most cases, the declaration by the appellant is taken as self assessment and duty is paid and goods are cleared accordingly. In such cases, there is no assessment order by any officer to be challenged. Correspondingly, Section 27 of the Customs Act was also amended and the words “in pursuance of an order of assessment” have been deleted - Refund to be allowed.
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• Court Overturns Acquittal: No Intent to Declare Third Country Gold u/s 108, Section 79 Misapplied.

  Case-Laws - HC : Prohibited goods - gold of third country origin - acquittal of the respondent / accused - the respondent never stated anything about his intention of declaration in his statement under Section 108 of the Customs Act - giving benefit of Section 79 to the respondent by the lower court is not in accordance with law.
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• Supreme Court affirms exemption for old pipelines and pontoons as dredger parts under customs regulations, dismissing revenue appeal.

  Case-Laws - SC : Classification of imported goods - Old and Used Pipelines, Pontoons etc. as an integral part of the dredgers - SC dismissed the revenue appeal, against the order allowing benefit of exemption.
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IBC

• RERA and IBC: Distinct Roles in Real Estate Regulation and Insolvency Resolution with No Overlapping Conflicts.

  Case-Laws - Tri : RERA and IBC work in two different fields, while the former has been enacted with a view to regulate and promote the real estate sector while ensuring the protection of consumer interest; the latter seeks to consolidate the law relating to insolvency and bankruptcy and ensure resolution of insolvency of corporate persons, firms and individuals in a time bound manner. Thus, there is no question of a conflict between the two enactments and both will have an overriding effect in the fields exclusively assigned to them.
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• CIRP Application Can't Be Dismissed for Lack of Agreement: Section 9 of the Insolvency and Bankruptcy Code.

  Case-Laws - AT : Initiation of CIRP - existence of debt or not - merely on the ground that there is no agreement reached between the parties, it was not open to the Adjudicating Authority to reject application u/s 9 preferred by the Appellant.
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SEBI

• SR Equity Shares Lock-In Period Extended Under Amended SEBI Regulation 16 Until Conversion or Specified Duration Ends.

  Act-Rules : SR equity shares shall be under lock-in until conversion into equity shares having voting rights same as that of ordinary shares or shall be locked-in for a period specified in sub-regulations (1), whichever is later. - Regulation 16 as amended.
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• SEBI Updates Guidelines for SR Equity Shares Eligibility in Initial Public Offers under Regulation 6(3) to Ensure Compliance.

  Act-Rules : SR equity shares - Eligibility requirements for an initial public offer - New Guidelines issued as sub-regulation (3) to regulation 6
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• SEBI Regulations Govern SR Equity Shares with Superior Voting Rights Compared to Regular Shares in India.

  Notifications : Regulations for SR equity shares - "SR equity shares" means the equity shares of an issuer having superior voting rights compared to all other equity shares issued by that issuer.
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Central Excise

• Business Closure Refund Claim Denied: CENVAT Credit Cannot Be Monetized Post-Closure Due to Legislative Intent.

  Case-Laws - AT : Refund claim - CENVAT credit account that remained unutilized upon closure of business and surrender of registration certificate - legislative intent did not envisage the monetisation of CENVAT credit in the event of impossibility of utilisation.
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Case Laws:

• GST

• 2019 (9) TMI 61
  Release of vehicle alongwith goods - Section129 of the Central/Gujarat Goods and Service Tax Act, 2017 - HELD THAT:- It is not in dispute that the amount of tax and the penalty determined by the authority under Section129 of the Act to the tune of Rs. 1,35,308/only has been deposited on 29/08/2019. In such circumstances, it is directed that the authority to immediately release the goods as well as confiscation. However, it shall be open for the authority to proceed further so far as the proceedings under Section130 of the Act are concerned.

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• 2019 (9) TMI 60
  Levy of late fees for the late filing of the Form GSTR- 3B - Section 47 of the CGST Act as well as the SGST Act - applicant seeks the benefit of complete waiver of late fees in accordance with the second proviso to the Notification No.76/2018-Central Tax dated 31.12.2018 for the returns furnished upto September 2018 - HELD THAT:- In Para 3.3 of the writ application, a chart has been provided indicating the relevant section and the form number as well as the rule number. Section 37 corresponds to GSTR-1, Section 38 corresponds to GSTR-2, Section 39 corresponds to GSTR-3,4,5,6,7,8 respectively and Section 45 corresponds to GSTR-10. The submission is that the GSTR-3B cannot be read in Section 39 - In such circumstances, the levy of late fees by virtue of the power under Section 47 of the Act is something else which this Court will have to look into and adjudicate. The writ applicants have been able to make a strong prima facie case to have an ad-interim order in terms of Para -7(d). Let Notice be issued to the respondents, returnable on 16.10.2019.

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• 2019 (9) TMI 7
  Anti-Profiteering - Principles of natural justice - the impugned order dated 6th November, 2018 was passed by four members of the National Anti-Profiteering Authority, while the application itself was heard only by three members - HELD THAT:- Learned Counsel appearing for the Respondents sought time to address us on this issue and bring to our notice decision of Court in support of his contentions. Petition is adjourned to 11th September, 2019 at 3.00 p.m.

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• Income Tax

• 2019 (9) TMI 59
  Continuance of Prosecution proceedings u/s 279 where penalty has been reduced - Compounding petition u/s 279 of the Income Tax Act, 1961 rejected - petitioner alleged to have concealed an amount as deposited in a Foreign Bank Account and is thereby prosecuted for offences under Section 276C of the Income Tax Act, 1961 - HELD THAT:- It is not the case of the Department that this Court had stayed the order of the Commissioner of Appeals, as well as the Tribunal in the Tax Case Appeals. Just because the order reducing the penalty has been put under challenge in the Tax Case Appeals, it cannot be said that the order reducing the penalty itself has been kept under abeyance. In this background, it can only be said that the petitioner would be entitled to the benefit of Section 279 (1A) of the Act and the mere challenge to the order reducing the penalty may not suffice to deny such a benefit. In view of these subsequent developments, there cannot now be any impediment on the part of the Department to compound the offences under Sections 276C and 277 of the Act. The learned Standing counsel for the respondents made a faint attempt by placing reliance on paragraph 19 of the dismissal order [ 2019 (3) TMI 1638 - MADRAS HIGH COURT] and submitted that Prem Dass s case [ 1999 (2) TMI 6 - SUPREME COURT] has been distinguished and held to be not applicable to the present case. Hence the learned Standing counsel would submit that, since the order of reduction of penalty was not passed under Section 273B of the Act, Section 279 (1A) of the Act is not applicable to the petitioner. As observed earlier, Section 279 (1A) is self-explanatory and the Hon ble Supreme Court in Prem Dass s case (supra) has further clarified that the assessee cannot be proceeded against for an offence when the penalty imposed on him has been reduced. Under Article 141 of the Constitution of India, the law declared by the Hon ble Supreme Court shall be binding on all Courts, which includes the High Courts. As such, the decision in Prem Dass s case (supra) would be binding on this Court and as such, with due respects to the observations made in this regard in paragraph 19 of the order passed by the learned Judge in [ 2019 (3) TMI 1638 - MADRAS HIGH COURT] is per incuriam and the observation made therein is not the proper appraisal and cannot be relied upon. Matter remanded back to the Committee prescribed under the CBDT Guideline No.7.1 (c) dated 16.05.2008.

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• 2019 (9) TMI 58
  TP Adjustment - upward adjustment made by Transfer Pricing Officer on account of Management fees - Upward adjustment on account of Insurance Payment - ITAT deleted the addition - HELD THAT:- We are of the view that the findings of fact recorded by the Tribunal in its impugned order cannot be termed as perverse or contrary to the evidence on record. The very same issue was duly considered by the ITAT for the A.Y. 2008-09. However, according to the learned counsel appearing for the Revenue, having regard to the low tax effect, the order passed by the ITAT for the A.Y. 2008-09 could not be challenged. We are convinced that the decision of the Tribunal is correct and requires no interference. The Tribunal took into consideration the voluminous documentary evidence on record in the form of e-mails correspondence indicating the rendition of services. The Tribunal is right in its view that the assessee would be the right person to know whether the services are required or not. Such issues should be left best to the commercial wisdom of the assessee. What is important is whether the services were rendered or not and whether the cost allocation was on a fair and reasonable basis. In the case on hand, the rendition of services has not been disputed. However, lot of emphasis has been put on the issue of Arm s length price in respect of the management fees. This aspect has also been well discussed by the Tribunal. - Decided against revenue

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• 2019 (9) TMI 57
  Validity of order of ITAT rejecting the application of assessee - Whether the finding of the ITAT that the assessee under garb of the present application is trying to agitate a new ground which was not before the Ld. CIT(A) is perverse and contrary to record - Assessment u/s 153C - HELD THAT:- the assessee had raised an issue regarding consideration of certain documents which had never been seized from the assessee but were considered by the authorities. It is also evident from a perusal of the order of the CIT(A) and the application filed under Rule 27 of the Rules that these grounds were sought to be raised by the appellant before the Tribunal. We are of the considered opinion that the impugned order passed by the Tribunal suffers from perversity, as the Tribunal without considering the aforesaid issues has dismissed the application filed by the appellant under Rule 27 of the Rules by merely stating that the counsel for the assessee could not point out the grounds that were decided against him. More so, when the grounds raised by the appellant were manifestly apparent from the order passed by the CIT(A). Decided in favor of assessee - Matter restored before ITAT.

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• 2019 (9) TMI 56
  Revision u/s 264 - requirement of affording opportunity of being heard - power and obligation of CIT - erroneously taken up a petition for condonation of non-existent delay, condoned the same and passed orders on merits - HELD THAT:- Obvious error that has occurred in the impugned order, wherein a petition for condonation of delay has been taken up when there was no delay, this Court deems it appropriate to set aside the order with a direction to the 1st respondent to hold personal hearing on a specified date, time and venue and dispose of the matter afresh. Before that, it is to be noticed that even if there was a delay condonation petition, on condonation of delay, it would have been appropriate to communicate a date of personal hearing for main matter in cases where Revisional authority at his discretion chooses to give a personal hearing. At the risk of repetition, it is reiterated that this is a case, where 1st respondent has chosen to give an opportunity of personal hearing at his discretion though it is not statutorily imperative. Impugned order bearing reference C.No.217/264/Pr.CIT-1/2017-18 dated 04.03.2019 made by the 1st respondent is set aside. It is made clear that impugned order is set aside on the ground that it has erroneously taken up a petition for condonation of non-existent delay, condoned the same and passed orders on merits. In other words, no opinion is expressed on the merits of the matter.

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• 2019 (9) TMI 55
  Exemption u/s 11 - admittedly the assessee got registration U/s 12AA from A.Y. 15-16 - Exemption claim from prospective effect that is from assessment year 2011-12 - HELD THAT:- It is in respect of the assessment year prior to the date of application. It is in the circumstances that registration was finally given on 08.06.2015. We are required to consider proviso below sub-Section 2 of Section 12 A. The proviso provides that if registration has been given to the Trust or the Institution under Section 12 AA of the Act, 1961, then provisions of Section 11 12 of the Act, 1961 shall apply in respect of any income derived from the property held under the Trust or the institution for any assessment year proceeding, for which assessment is pending before the Assessing Authority as on the date of registration. The Tribunal has given interpretation to the proviso to hold that irrespective of the date of application, the benefit of Section 11 12 of the Act, 1961 would be available to the assessee retrospectively, if the assessment proceedings were pending and pendency of such proceedings may be not only before the Assessing Office, but even before the Tribunal. According to us, the interpretation of the proviso has been given in ignorance of the main provision of Section 12A(2) of the Act, 1961. For the purpose of proper interpretation of Section 12A of the Act, 1961, the Tribunal was required to make interpretation after taking into consideration the main provision along with the proviso and not by giving meaning to the proviso in ignorance of substantive provision. Tribunal has even ignored the basic principle of law in giving interpretation in charging provisions, the benefit is to be given to the assessee but same principle is not applicable for an exemption notification or exemption clause, where the benefit of ambiguity must be given to the Revenue/State. It is also that burden to prove applicability of exemption would be on the assessee that it comes squarely within the parameters of the exemption notification or exemption clause. The Tribunal was required to make distinction between charging provision where benefit of ambiguity is given to the assessee and the exemption notification or clause where interpretation is to be given in the form of Revenue. In the instant case the application for registration was given on 15.12.2014 i.e. in the financial year 2014- On registration of the Trust, benefit under Section 11 and 12 would be available to the assessee from the assessment year following the financial year in which application was given and not any previous year. The benefit of registration could not have been extended for the assessment year 2011-12, even if the matter was pending before the Tribunal when application for registration was submitted on 15.12.2014. The Tribunal even ignored the fact that proviso not only require registration of the Trust or the Institution while the assessment proceedings are pending, but it refers to assessment proceedings before the assessing authority and not elsewhere. In a common parlance, whenever matter is pending before the Tribunal in appeal, considered to be pendency of the assessment proceedings. The aforesaid principle would be applicable in the instant case is another question because proviso qualifies not only pendency of the assessment proceedings, but should before the Assessing Officer not else where, if in the proviso words pendency of the assessment proceedings , would have been used then pendency of the appeal against the assessment could have been considered to be pendency of the assessment proceedings, but in the instant case the words used are pendency of the assessment proceedings before the Assessing Officer . The assessment proceedings of the year 2011-12 was not pending before the Assessing Officer, but before the Tribunal. The observation aforesaid is relevant on the facts of this case. This Court has otherwise given proper interpretation to the substantive provision as well as the proviso. We find reasons to allow the appeal preferred by the revenue and the substantial questions of law framed herein above are answered in favour of the Revenue and thereby we set-aside the order passed by the Tribunal.

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• 2019 (9) TMI 54
  Offences punishable u/s 276B r.w.s. 278B of the Income-tax Act, 1961 - non-payment of tax deducted at source - whether the prosecution of the petitioners for the offence punishable under section 276B of the Income-tax Act could be sustained without determination of the liability of the petitioners under section 201? - HELD THAT:- In order to get over the penal consequences that follow on account of non-payment of tax deducted at source, it is open for the accused persons to come clean of the said charge by showing reasonable cause for failure to deposit the said amount. In the light of this provision, contentions urged by the learned counsel for the petitioners cannot be accepted. Since the material placed on record prima facie discloses that the petitioners have deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, the petitioners cannot escape from the rigour of section 276B of the Act. The alternative argument canvassed by petitioners that without determining the penalty, the respondent was not entitled to resort to criminal prosecution of the petitioners under section 276B also cannot be accepted for the reason that the petitioners/ accused have not disputed their liability. The question of determining the liability and consequent imposition of penalty would arise only in the case of dispute with regard to the liability to remit the deducted tax. In the instant case, the facts alleged in the complaint clearly indicate that the amount was credited subsequent to the survey. As a result, even this defence is not available to the petitioners. Contention urged by the petitioners that the circular/instruction issued by the Department have binding force though needs to be accepted as a principle of law, but in the instant case, none of the parties have placed the said instruction or circular for perusal of this court. No material is available to show that the petitioner No. 1-company has deposited the amount within the extended time. On the other hand, the allegations are to the effect that survey itself was conducted on September 27, 2011. According to prosecution, the amount was deposited subsequent to survey conducted by the Department. Under the said circumstances, even on question of fact, the above principle does not come to the aid of the petitioners. As a result, no merit in the contentions urged by the petitioners. Consequently, the petition is dismissed.

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• 2019 (9) TMI 53
  Levy of penalty u/s 271D - violation of provision 269SS - assessee has given promissory note and accepted the loan in cash - AY 2002-03 - HELD THAT:- No amount was outstanding as per the recitals of the sale deed. There was no mention with regard to the fact that the Managing director has given promissory note towards part of sale consideration in the sale deed. As per CIT(A), there was no entry in the company s books of accounts with regard to amounts received from Sri K.Mallesh for pending sale consideration. Therefore, we are unable to accept the contention of the assessee that the transactions were related to the company in respect of sale transaction of Agreement cum GPA dated 27.06.2001. The company has refunded the plot advance, but not the balance sale consideration. The account also does not relate to the impugned assessment year, but related to the financial year 01.04.2005 to 31.03.2006 relevant to the A.Y. 2006-07. The assessee could not furnish any evidence to establish that the transaction in question was related to the company, but not related to him. There is no dispute that the assessee has given promissory note and accepted the loan in cash in violation of provision 269SS of the act. The contention of the assessee that the transaction was related to the company was not established with any tangible evidence. AY 2004-05 - ledger account copies alone cannot establish that loans accepted by the assessee were related to the company. The entries of the books of accounts of the company and the seized documents should support the contention of the assessee. Against the opening balance of Rs. 85,000/- as on 01.04.2005 in the books of the company, the company has refunded the sum of Rs. 1,35,000/- and shown closing balance of Rs. 50,000/-. The opening balance in the company s accounts, the amount refunded to Shri Rao and Shravani and the cash loans of Rs. 60,000/- each does not match with the explanation and the entries in the books of accounts of the company and the claim of the assessee. Since the assessee could not substantiate with supporting evidence, we are unable to accept the contention of the assessee that the transactions were related to the company. Therefore, we hold that the assessee failed to establish with tangible evidence that the transactions were pertaining to the company, but not to the assessee. The assessee also failed to assign reasonable cause for accepting the loan in cash in violation of provisions of section 269SS AY 2006-07 - As per the promissory note in page No.74 of the paper book, it is evident that the assessee has accepted the cash loan from Shri P.Rayappa on 25.11.2005. The said transaction was not recorded in the books of accounts of the company. Repayment of loan was not established with the bank account of the company. The Ld.CIT(A) has given finding that the transaction was not recorded in the books of accounts of the company. And the seized material also did not establish that the amount was related to the company and during the appeal hearing also, the assessee failed to produce any evidence to show that the cheque given to P.Rayappa for Rs. 11 lakhs was to square off the loan received by the assessee.. Therefore, we hold that the assessee has accepted the cash loan of Rs. 11 lakhs from P.Rayappa in violation of provisions of section 269SS and there is no evidence to establish that the transaction in question was related to the company, but not related to the assessee. The assessee also failed to submit reasonable cause for accepting the loan otherwise than account payee cheque Assessee s appeal dismissed.

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• 2019 (9) TMI 52
  Addition invoking the provisions of section 56(2)(vii)(b) - income from other sources - difference amount between the SRO value and the actual consideration paid - dispute between the parties settled through arbitration - HELD THAT:- There is no dispute that there was agreement and both the parties have agreed. The assessee has made the payments as per the agreements which were acknowledged by the recipient, the cheque payment also was made in the bank account to clear the debt of the vendor which was evidenced in the plaintiff copy filed before the District Judge. There is no reason to disbelieve the submissions made by the assessee in the civil suit filed before the Hon ble District Judge and the case of the assessee is squarely covered as exception as per proviso to section 56(2)(vii)(b) of the act and accordingly, we, hold that there is no case for invoking the provisions of section 56(2)(vii)(b) to tax the difference amount between the SRO value and the actual consideration paid as income from other sources. - Decided in favour of assessee.

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• 2019 (9) TMI 51
  Income accrued In India - granting access to CAD/CAM software application - maintenance of software - Royalty under the Act as well as the Double Taxation Avoidance Agreement between India and Sweden (DTAA) - PE in India - HELD THAT:- Unlike the insertion of Explanation 4 to section 9(1)(vi) engulfing consideration for use of software in any form within the ambit of `Royalty , there is no corresponding amendment in the DTAA and hence the DTAA, in the absence of the applicability of section 90(2A) to the year under consideration, would not automatically imbibe the changes made in the Act. As noticed above that if the provisions of DTAA are more beneficial to the assessee then those would apply in supersession of the provisions of the Act. It is, therefore, held that the sum of Rs. 1.48 crore and odd cannot be construed as `Royalties in the hands of the assessee as per the mandate of Article 12 of the DTAA. It is relevant to note that the assessee specifically stated before the AO that it did not have any PE in India and further it is not the case of the AO that the assessee has any PE in India, so as to warrant the consideration of the amount in question as Business profits under Article 7 of the DTAA. Receipts from SAPL for providing maintenance services in respect of GSS software - AO held this amount to be in the nature of Fees for technical services u/s.9(1)(vii) of the Act and also under the DTAA - HELD THAT:- Technical services provided by the assessee for maintenance of the existing GSS software supplied to SAPL amounts to rendering of technical or consultancy services simplicitor without `making available any technical knowledge, experience, skill, know-how or processes etc. to SAPL for use in future independently. In other words, it is a simple case of providing services involving technical knowledge which exhausted with its provision itself. Since such services did not result into provision of any technical knowledge, experience or skill etc. to SAPL, we are satisfied that the consideration so received by the assessee cannot be categorized as fees for technical services in terms of DTAA. Going by the beneficial provision in the DTAA vis- -vis the Act, this amount is directed not to be considered as fees for technical services. Similar view has been taken by the Tribunal in its afore-referred order in the assessee s own case for the earlier years. Further, it is not the case of the AO that the assessee has any permanent establishment in India, so as to necessitate the consideration of the aspect of its taxability as Business profits under Article 7 of the DTAA.

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• 2019 (9) TMI 50
  Transfer pricing adjustment - Comparable selection - functional similarity - HELD THAT:- Vishal Information Technologies Ltd. - On a perusal of the financial statements of this company, we have noticed that the employee/personnel cost of this company, as a percentage of the total cost and sales, is negligible compared to the personnel cost of the assessee as a percentage of total cost and sales turnover. The aforesaid facts do establish that the company does not undertake the provision of services itself but outsources major part of the work to third parties. In contrast, the assessee provided ITeS on its own without outsourcing. That being the case, the business model of this company is totally different from the assessee. Due to the distinct business model of outsourcing of work followed by this company, it has been rejected as a comparable in case of various other assessees. Datamatics Financial Services Ltd. - This company cannot be selected as a comparable since it does not satisfy certain filters applied by the Transfer Pricing Officer himself. Accordingly, we direct the Assessing Officer to factually verify this aspect and excluded this company as a comparable. Maple E Solutions Ltd - the material on record clearly reveal that the directors/promoters of this company were involved in serious fraud earlier. Therefore, different Benches of the Tribunal as well as different High Courts including the Hon ble Jurisdictional High Court have held that this company cannot be treated as comparable due to unreliability of its financials. Asit C. Mehta. - the company has various segments and the ITeS segment does not provide ITeS alone. It appears from the annual report, the ITeS segment also includes income from software development services. However, segmental details relating to the aforesaid services are not available. Even otherwise also, the nature of services provided by this company is relating to GIS which is considered to be KPO services. Therefore, the company is functionally different from the assessee. It is also noticed from the judicial precedents cited before us that the company has been rejected as a comparable due to various other factors such as extra ordinary business activity due to merger, low employee cost, etc. Therefore, keeping in view the judicial precedents cited before us which are for the very same assessment year, we hold that this company cannot be treated as comparable to the assessee.

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• 2019 (9) TMI 49
  Penalty levied u/s 271(1)(c) - Rejection of books of accounts - AO completed the assessment by applying net profit rate @ 8% to work out the income in the hands of the assessee - HELD THAT:- On perusal of the assessment order passed for the instant assessment year reflects no such satisfaction has been recorded. In the absence of the same, the assessee was not in a position to meet the requirements of the section. Merely, an order issuing notice u/s 274 r.w.s 271(1)(c) do not meet the conditions of the said initiation of penalty proceedings. In the absence of the same, there is no merit in the penalty order passed in the case. In this regard, we find support from the ratio laid down in the case of CIT Vs. Shri Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] AO had levied the penalty both for concealment of the particulars of income and furnished inaccurate particulars of income. AO thus failed to come to any conclusion as to which limb of the said section has not been fulfilled by the assessee. In the absence of the same, we find no merit in the order passed by the AO in this regard. For this, we place reliance on the decision of Pune Bench of the Tribunal in the case of Kanhaiyalal D. Jain Vs. ACIT [ 2016 (12) TMI 1238 - ITAT PUNE] Even on merits where the income has been estimated in the hands of the assessee by applying net profit rate, there is no merit in the levy of the aforesaid penalty for concealment. Where there is only an estimation of income in the hands of the assessee, there is no merit in the aforesaid levy of penalty for concealment. We find support from the ratio laid down in CIT vs Aero Traders P.Ltd. [ 2010 (1) TMI 32 - DELHI HIGH COURT] . Accordingly, we direct the AO to delete penalty levied u/s 271(1)(c) of the Act.- Decided in favour of assessee.

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• 2019 (9) TMI 48
  Deduction u/s. 80P - interest income earned from banks as income under the head income from the other source - HELD THAT:- Interest income earned from bank deposits is assessable as profits and gains of business in the hands of assessee and accordingly deduction u/s. 80P(2)(a)(i) of the Act is allowable thereon. See Gandhinglaj Taluka Sahakari Patpedhi Ltd [2015 (12) TMI 287 - ITAT MUMBAI]

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• 2019 (9) TMI 47
  Denial of natural justice - additional evidence admission under Rule 46A before the CIT(A) - addition u/s 68 - sufficient opportunity not afforded to the assessee for furnishing the confirmations - HELD THAT:- Substantial force in the claim of the A.R that as the assessee was not afforded sufficient time for furnishing the aforesaid confirmations of the parties in the course of the assessment proceedings, therefore, the same could not be obtained by him from the parties and thereafter filed with the A.O. Nothing is discernible from the orders of the lower authorities from where it could be gathered that the assessee was afforded sufficient time to furnish the confirmations of the aforementioned 19 parties in the course of the assessment proceedings. Perusal of the notice issued under Sec.142(1), dated 15.02.2016, reveals that the A.O had observed that the assessee as on 07.01.2016 was directed to furnish the confirmations along with the other details in respect of the aforementioned parties. Accordingly, we are of the considered view that it can safely be concluded that sufficient opportunity was not afforded to the assessee for furnishing the confirmations of the aforementioned parties in the course of the assessment proceedings. A perusal of the confirmations of the parties that the same mainly pertains to the same parties to whom interest on loan, office rent etc was paid by the assessee during the year under consideration. Accordingly, now when the A.O had not drawn any adverse inferences as regards the genuineness of the aforesaid interest expenditure, rent expenditure claimed by the assessee in its profit and loss account for the year under consideration viz. A.Y. 2013-14, therefore, the said fact in itself inspires substantial confidence as regards the genuineness of the credits appearing against the names of the aforementioned parties. CIT(A) was in error in declining to admit the aforesaid confirmations which were filed by the assessee as an additional evidence under Rule 46A of the Income Tax, Rules, 1962. Addition u/s 41(1) - HELD THAT:- Admittedly, as per Sec. 41(1), in a case where the deduction has been made in the assessment for any year in respect of any trading liability incurred by the assessee, and subsequently during any previous year the assessee had obtained some benefit in respect of such trading liability by way of remission or cessation thereof, the benefit accruing to the assessee shall be deemed to be the profits and gains of its business or profession and accordingly chargeable to income tax as its income of that previous year. However, merely for the reason that a liability is outstanding in the books of accounts of the assessee for several years cannot on the said standalone basis justify characterising of the same as a ceased liability under Sec.41(1) of the Act A.O while making an addition under Sec.41(1) had failed to point out as to what benefit the assessee had obtained in respect of the aforesaid trading liability during the year under consideration. In sum and substance, as to on what basis the cessation of the aforesaid liability had been related to year under consideration is also not discernible from the assessment order. Accordingly, we are unable to persuade ourselves to sustain the aforesaid addition of Rs. 7,51,308/- made by the A.O under Sec.41(1) of the Act, and thus vacate the same. Disallowance under Sec. 40(a)(ia) - addition made under Sec.68 - HELD THAT:- Interestingly, we find that all of the 4 parties appear in the list of the 19 parties in respect of which addition had been made by the A.O under Sec.68 of the Act. As we have restored the addition made by the A.O under Sec. 68 to the file of the CIT(A) for fresh adjudication, therefore, in all fairness as the disallowance made by the A.O under Sec. 40(a)(ia) in respect of the aforesaid parties is inextricably linked to the addition made under Sec.68 by the A.O, therefore, the same also is restored to the file of the CIT(A). At this stage, we may herein observe that the amount of interest credited by the assessee in the accounts of the aforementioned 4 parties prima facie is not found to be in conformity with the amount that had been disallowed by the A.O under Sec.40(a)(ia) of the Act. Accordingly, the CIT(A) is also directed to take cognizance of the aforesaid fact while adjudicating the issue pertaining to the disallowance made by the A.O under Sec.40(a)(ia) and addition under Sec.68 in respect of the said parties. Addition in respect of the amount that was credited by the assessee in his capital account - HELD THAT:- As is discernible from the orders of the lower authorities, in the absence of any explanation as regards the nature and source of the aforesaid amount, the same had been added by the A.O to the returned income of the assessee. We have given a thoughtful consideration to the said issue and finding no infirmity in the view taken by the CIT(A) confirm the said addition.

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• 2019 (9) TMI 46
  Reopening of assessment u/s 147 - source of money received - verification of the commission received - CIT has taken up the case for revision u/s 263 - HELD THAT:- During the reassessment proceedings, the assessee explained that he had received the money of Rs. 8.00 lakhs from Shri Sastry in the year 2008 which was his own money returned by Shri Sastry which was given in the year 1999 for purchase of the land admeasuring 180 sq.yds at Balayyasastry Layout. According to the assessee it was not a commission. Though the assessee stated that he had received the money paid by him to Shri Sastry, no evidence was produced before the AO regarding the payments made to Shri Sastry for purchase of the said land in question. The recitals of the agreement also did not support the contention of the assessee. AO had accepted the explanation of the assessee without production of any evidence to show that the assessee has paid the amount to Shri Sastry earlier. Not even confirmation was obtained from Shri Sastry with regard to payment of Rs. 8 lakhs for purchase of the land. The assessee had entered into agreement cum possession of the property dated 21.04.1999 placed in page No.8 to 10 of the paper book as per which the total consideration was only Rs. 30,000/- and the property was given possession with a condition to register the said land whenever the assessee requested for registration. As per the said sale agreement cum possession, the transaction was complete and the sale consideration was fixed at Rs. 30,000/- which was fully paid by the assessee. Though the assessee stated to have paid Rs. 8,00,000/- subsequent to registration, there was no mention regarding the amounts payable in the sale agreement or the evidence with the assessee regarding the payment. AO simply accepted the explanation of the assessee without any supporting evidence. AO did not examine the settlement deed of the assessee and Shri Sastry which resulted in payment of Rs. 8 lakhs to the assessee. AO also did not examine the sale deed executed by Shri Sastry in favour of third party. Letter dated 24.06.2007 placed in paper book annexed in page No.14 shows that the property was in possession of Shri S.V.Ramana Rao and the assessee intended to register the property in his own name. All these facts establish that the AO did not verify the details and actual sale consideration, hence, there was an error in the assessment order. Similarly, the assessee had received a sum of Rs. 8 lakhs. The same was allowed without supporting evidence. Hence, the assessment order passed by the AO was prejudicial to the interest of the revenue. CIT has rightly taken up the case for revision u/s 263 and the same is upheld. However, the Ld.Pr.CIT directed the AO to bring the sale consideration for long term capital gains and the cost of acquisition to be taken as Rs. 32,400/- after allowing the indexed cost of acquisition. Pr.CIT also directed the AO to examine the taxability of consideration received by the assessee with particular reference to settlement deed between the assessee and Shri Sastry or the sale deed of Shri Sastry after examining Shri Sastry and decide the issue on merits. However, we keep all the issues mentioned in the revision order open before the AO to examine afresh and decide the same on merits. The AO is directed to give reasonable opportunity to the assessee and decide the issue on merits. -Appeal of the assessee is allowed for statistical purpose.

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• 2019 (9) TMI 45
  Addition u/s 68 - share application money received by the assessee company from alleged bogus share holders - Addition based on statement made u/s 131 - HELD THAT:- No doubt, none of the investors companies have responded to 133(6) notices issued by the AO, but fact of the matter is when, assessee has filed complete set of documents, including name and address of the parties, it is for the AO to carry out further investigation by exercising all possible options available to him, but non attendance of parties in response to 133(6) cannot be attributed to the assessee, because due to time lag certain persons might have left the place and for this no responsibility can be fastened upon the assessee. It is a settled position of law that once, any third party information/statements is relied upon to make additions, it is the obligation of the AO to provide copies of such statements/information and also to provide an opportunity of cross examination of the person, who gave the statement, when such opportunity has been availed by the person against whom, such statements are used. The Hon ble Supreme Court in the case of Andaman Timber Industries Ltd Vs CCE, Kolkata II [ 2015 (10) TMI 442 - SUPREME COURT] had also upheld a similar legal position and held that not allowing the assessee to cross-examine the witnesses by the adjudicating the authority, though the statements and those witnesses were made the basis of the impugned order is a serious flaw, which makes the order nullity in, as much as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. Therefore, on this count also the additions made by the AO cannot be sustained. Additions by invoking the provisions of section 56(2)(viib) - We find that the said provision has been inserted by Finance Act, 2012 w.e.f 10.04.2013, where it provides that where a closely held company issues its shares at a price which is more than its fair market value, then amount received in excess of fair market value will be charged to tax in the hands of the company as income from other sources. On perusal of amendments brought out by Finance Act 2012, w.e.f. 01.04.2013 to the provisions of section 56(2)(viib) and section 68 it is very clear that where the assessee has issued shares at premium and also received share capital and if such company do not offer any explanation about the nature and source, then sum so received may be regarded as income of the assessee from undisclosed sources. In this case, from the facts on record, it is clear that the assessee has proved identity and genuineness of the transactions by filing necessary evidences. The assessee has filed valuation report from registered valuer as per which the share price of the company is over and above premium charged by the assessee.Therefore, we are of the considered view that provisions of section 56(2)(viib) has no application. - Decided against revenue

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• 2019 (9) TMI 44
  Addition u/s 68 - share application money received by the assessee company from alleged bogus share holders - Addition based on statement made u/s 131 - HELD THAT:- AO, except issue of 133(6) notices nothing has been done to find out, the nature of transactions between the parties. Therefore, we are of the considered view that when, assessee has filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, then there is no reason for the AO to came to the conclusion that share capital and share premium is unexplained only for the reason that during the survey proceedings, the director of the company had admitted that those five companies are shell companies ignoring the fact that such admission has been retracted by filing affidavit along with letter explaining reasons fro such admission during survey proceedings. It is a settled position of law that once, any third party information/statements is relied upon to make additions, it is the obligation of the AO to provide copies of such statements/information and also to provide an opportunity of cross examination of the person, who gave the statement, when such opportunity has been availed by the person against whom, such statements are used. The Hon ble Supreme Court in the case of Andaman Timber Industries Ltd Vs CCE, Kolkata II [ 2015 (10) TMI 442 - SUPREME COURT] had also upheld a similar legal position and held that not allowing the assessee to cross-examine the witnesses by the adjudicating the authority, though the statements and those witnesses were made the basis of the impugned order is a serious flaw, which makes the order nullity in, as much as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. Therefore, on this count also the additions made by the AO cannot be sustained. Additions invoking the provisions of section 56(2)(viib) - We find that the said provision has been inserted by Finance Act, 2012 w.e.f 10.04.2013, where it provides that where a closely held company issues its shares at a price which is more than its fair market value, then amount received in excess of fair market value will be charged to tax in the hands of the company as income from other sources. On perusal of amendments brought out by Finance Act 2012, w.e.f. 01.04.2013 to the provisions of section 56(2)(viib) and section 68 it is very clear that where the assessee has issued shares at premium and also received share capital and if such company do not offer any explanation about the nature and source, then sum so received may be regarded as income of the assessee from undisclosed sources. In this case, from the facts on record, it is clear that the assessee has proved identity and genuineness of the transactions by filing necessary evidences. The assessee has filed valuation report from registered valuer as per which the share price of the company is over and above premium charged by the assessee.Therefore, we are of the considered view that provisions of section 56(2)(viib) has no application. - Decided against revenue

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• 2019 (9) TMI 43
  Maintainability of appeal on low tax effect - monetary limit - HELD THAT:- Respectfully following the principles laid down by the Hon ble Supreme Court in the case of Commissioner of Income Tax-5,New Delhi Vs. Keshav Power Ltd. [ 2019 (8) TMI 811 - SC ORDER ] and in the light of the above discussions, all the appeals filed by the Revenue are found to be non-maintainable, and as all the related cross-objections of the assessee arise only as a result of those appeals and merely support the order of the CIT(A), the cross objections filed by the assessee are also dismissed as infructuous

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• 2019 (9) TMI 42
  Disallowance of deduction being the loss/ expenditure/outgo from coffers of bank incurred by the assessee as a consequence of the full and final settlement arrived at with National Housing Bank [NHB] - HELD THAT:- Transactions were peculiar and were not transacted in the ordinary course of business. The bare fact is that for some reasons best know to NHB and the appellant bank, the assessee received Rs. 506.54 crores from NHB and for obvious reasons, it had to repay the said amount to NHB. For some reason best known to the appellant bank, proceeds were credited in the account of Shri Harshad Mehta and subsequently, the entire transaction was burnt in the fire of Security Scam. We once again failed to persuade ourselves to consider the entire transaction done in the ordinary course of business. In our considered opinion, the repayment of Rs. 506.54 cores even if it enured loss to the appellant bank, by any stretch of imagination, cannot be considered as deductible business loss. Addition being claim of expenses incurred outside India - HELD THAT:- There is no dispute that no such claim was made in the return of income. There is also no dispute that all the claims of expense has already been allowed by the Assessing Officer u/s 44C of the Act. It is equally true that neither the Assessing Officer nor the first appellate authority have examined the claim in the light of certificates in this respect. In the interest of justice and fair play, we deem it fit to restore this issue to the file of the Assessing Officer. The assessee is directed to demonstrate its claim of expenditure with supporting evidences and the Assessing Officer is directed to examine the same and decide the issue afresh as per provisions of law after giving reasonable and sufficient opportunity of being heard to the assessee.

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• 2019 (9) TMI 41
  TDS u/s 192 or 194J - non-deduction of tax at source on payments made to employees u/s 194J - Default u/s 201(1)/ 201(1A) - HELD THAT:- The assessee has appointed teachers/ lecturers and staff for full time employment as per terms of appointment letter issued by the college. The assessee is paying monthly fixed salary as per the terms of employment of service. The appointment is made under an employer-employee relationship between the college and the teachers/lecturers/ staff - the college authorities has full control over the teachers/ lecturers/ staff as per their working hours and working days fixed by the employer and they were also supposed to do other work related to the college activities as and when required. Since there was employee and employer relationship between the college teachers/lecturers/staff, therefore, tax on the salary paid to them was correctly deductible u/s 192 - As found that in order to establish employee and employer relationship between the college teachers/lecturers/staff, the assessee also produced salary registers and appointment letters before the lower authorities. Payments made to teachers/ lecturers/ staff by the assessee is covered u/s 192 of the Act and not covered u/s 194J of the Act. - Decided in favour of assessee.

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• 2019 (9) TMI 40
  Reopening of assessment u/s 147 - reasons recorded for reopening the assessment were recorded by the Income Tax Officer, Ward 29(3), New Delhi whereas the return was filed with Income Tax Officer, Ward 39(4), New Delhi with whom the jurisdiction lies - HELD THAT:- Reasons recorded for reopening the assessment were recorded by the Income Tax Officer, Ward 29(3), New Delhi whereas the return was filed with Income Tax Officer, Ward 39(4), New Delhi with whom the jurisdiction lies. Thus as relying on SMT. KAMLESH GOEL VERSUS THE I.T.O, WARD 59 (3) , NEW DELHI [ 2018 (9) TMI 102 - ITAT DELHI] assessment order dated 30.03.2015 framed u/s 144 r.w.s 147 of the Act is bad in law and deserves to be quashed. - Decided in favour of assessee.

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• 2019 (9) TMI 39
  Penalty u/s 271C - non-deduction of tax under section 194C/194I - reasonable cause - assessee company has made payment to HUDA on directions of DTCP - HELD THAT:- Payments have been made by the assessee to HUDA which is an authority of Haryana Government created by enactment of Legislature for carrying out developmental activities in the state of Haryana. Such Authorities admittedly are not in the category of local authority or Government. These payments were made during the year 2013-2016 and during this period, that is, prior to issue of CBDT Circular dated 23.12.2017, there was no clarity as regard the deduction of tax on these payments. We are of the view that the assesse was under a bonafide belief that no tax is required to be deducted at source on such payments, firstly, for the reason that agreement was between DTCP, who is Governmental authority and licence was granted by the Government and EDC charges was directed to be paid to HUDA, therefore, this could led to reasonable cause that TDS was not required to be deducted; Secondly, DTCP had issued a clarification dated 29.06.2018 to the effect that no TDS was/is required to be deducted in respect of payments of EDC and this clarification issued by DTCP, covers both past and future as the words used are was/is. This shows that Governmental authority itself has demanded not to deduct TDS. In case even if tax was required to be deducted on such payment but not deducted under a bonafide belief then no penalty shall be leviable under section 271 C of the Act as there was no contumacious conduct by the assessee. - Decided in favour of assessee.

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• 2019 (9) TMI 38
  Addition u/s 68 - unsecured loan received - CIT-A deleted the addition - HELD THAT:- CIT(A) recorded a finding to the effect that identity of lender is established beyond doubt by filing of PAN Card, Aadhar Card, TT return, affidavit confirming the transaction, loan confirmation duly signed by both the parties. CIT(A) also recorded finding to the effect that the genuineness of transaction is also proved as the loan amount is routed from lender s bank account to the assessee through RTGS noted by the AO himself. Thus, the loan transaction is through normal banking channels is a genuine transaction. After recording detailed findings with respect to the lender being Director in many companies, details of which were submitted before the A.O., which companies have substantial paid up capital and have also raised substantial funds, the CIT(A) concluded that the creditworthiness of the lender was also established. With regard to the A.O s contention that the loan creditor was not produced before him, the ld. CIT(A) categorically observed that the A.O. has sufficient power U/s 131 of the Act or to issue commission U/s 131(1)(d) of the Act, which the A.O. completely failed. The ld. CIT(A) also observed that even the bank statement which was called by the A.O. directly from the bank clearly indicate that there was sufficient credit balance in the bank account of the lender. CIT(A) considered various judicial pronouncements and after applying the ratio of these judicial pronouncements to the facts of the instant case recorded finding to the effect that the assessee has discharged his onus to fulfill all the three ingredient of loan creditor i.e. identity, genuineness and creditworthiness. The detailed finding so recorded by the ld. CIT(A) are as per the material on record and it has not been controverted by the ld. DR by bringing any positive material on record. - Decided in favour of assessee.

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• 2019 (9) TMI 37
  Interest Income - taxable as income from other sources u/s 56 or business income - interest income earned on parking of funds with banks - balance amount of interest income was earned on loans given to related party and others - HELD THAT:- In the instant case, the assessee is engaged in the business of constructing residential complexes and the assessee has failed to demonstrate any business compulsion nor did it show that the advancing of loans or depositing of money in fixed deposits are integral part of its business activities. Hence we are of the view that the Ld CIT(A) was justified in confirming the assessment of interest income as income of the assessee from income from other sources. Disallowance u/s 43B - assessee has made provision for approval fees payable for renewal of construction plan and electricity license, i.e., the approval fee was not actually paid during the year. - HELD THAT:- In the instant case, the assessee has made provision in the books of accounts for the Approval fee payable to the VUDA, which was the authority constituted by the State Government to regulate the development of City and large scale construction projects. It should be according its approval to the construction plans on the basis of parameters, rules and regulations prescribed by the State Government. Without the said approval, the assessee cannot carry out construction activities, meaning thereby, it is in the nature of statutory permission. By according approval for construction, in our view, no service is provided by VUDA. Accordingly we are of the view that the VUDA is performing a Statutory function only and hence the approval fee payable to it would fall under the category of fees stated in sec.43B of the Act. Accordingly we are of the view that the provision made for Approval fee payable to VUDA would fall under the ambit of sec. 43B of the Act. Accordingly, we are of the view that the Ld CIT(A) was justified in confirming the disallowance made u/s 43B of the Act. Since the assessee cannot carryout construction without plan approval, the approval fee cannot be considered as unascertained liability, since in the instant case, the assessee has provided for the amount computed as per the rules of VUDA. Revision of the amount cannot lead to the conclusion that the same is an unascertained liability. Accordingly, this observation of CIT(A) is set aside. Rightly pointed out by A.R, there is no estoppel against operation of law. Hence the assessee can contend legal issues even if had agreed for the addition before the AO. Before us, the assessee has raised an alternative claim that the amount disallowed u/s 43B should be reduced from the cost of work in progress. We have noticed that the assessee is under the stage of construction and it is offering income under percentage completion method. Hence the expenses incurred by the assessee are accumulated as work in progress. Since the alternative claim of the assessee requires examination, we modify the order passed by Ld CIT(A) on this issue and restore the same to the file of AO to examine the alternative claim of the assessee. Disallowance of de-recognised sales - HELD THAT:- AO did not have occasion to examine the quantum of de-recognised income, since he had rejected the same. We have noticed that the Ld CIT(A) has observed that the AO has mentioned in the assessment order of succeeding year that the claim of the assessee that it was not receiving payments in relation to the derecognized income was found to be incorrect. Hence, we are of the view that the quantum of de-recognised income claimed by the assessee requires verification at the end of the AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore this issue to the file of the AO for the limited purpose of verifying the quantum of deduction claimed by the assessee towards de-recognising of sales and cost.

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• 2019 (9) TMI 6
  Requisition of amount u/s 132A - Cash was seized from two persons of the Angadiya Courier Service by the police inspector - Seeking quashing the Warrant of Authorization issued by the Principal Director of Income Tax (Investigation) u/s 132A(1) - HELD THAT:- the scope of interference with the Warrant of Authorization in a writ application under Article 226 of the Constitution is very limited. As held by this Court in the case of Shalini Verma [ 2012 (5) TMI 20 - GUJARAT HIGH COURT] , whether on the information the authority concerned should have exercised his power under section 132A must be decided by the said authority and not by this Court. The concerned authority under section 132A alone is entrusted with the power to demonstrate the same. If from the materials disclosed, it must be prima facie said that the authority had reason to believe that any of those conditions existed, then, it is not open for this Court while exercising power under Article 226 of the Constitution to set aside the Warrant of Authorization on a reappraisal of the evidence. The Affidavit-in-reply filed on behalf of the respondent speaks for itself. Initially the writ applicant declared that he had withdrawn the amount from his bank accounts as well as from the accounts of his wife. He also declared that some amount was also taken from his cash book. - When asked to submit the bank account details and cash withdrawals so far as the account of his wife is concerned, the writ applicant declined to submit the details and prayed for some more time to produce the relevant documents. The writ applicant was also asked to submit confirmation from the parties with respect to cash payment along with the relevant cash as well as bills. However, the information provided by the writ applicant was not found convincing. The authority found the statement of the writ applicant recorded periodically quite contrary to each other. In the overall view of the matter, we are convinced that we should not interfere in the present matter. We do not find any palpable error or gross illegality going to the root of the matter in the issue of Warrant of Authorization under subsection (1) of section 132A

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• 2019 (9) TMI 5
  Addition u/s 68 - Addition made on account of share capital and premium - HELD THAT:- As relying on M/S JANSAMPARK ADVERTISING AND MARKETING (P) LTD. [ 2015 (3) TMI 410 - DELHI HIGH COURT] we find in the present case the issue is involving an addition u/s 68 of the Act. The said provision requires an explanation to the satisfaction of AO regarding the three ingredients i.e identity, creditworthiness and genuineness of the transactions. As discussed above, the Assessing Officer discharged his duty in the remand proceedings by examining the additional evidences filed by the assessee before the CIT(A) and found satisfied with the correctness in respect of the three ingredients mentioned above. Therefore the ratio laid down by the Hon ble High Court does not come to the rescue to the appellant-Revenue. Having considered the submissions of ld. DR, case laws as discussed above, the submissions of ld. AR and facts and circumstances of the case, the finding of the Assessing Officer wherein it establishes that the assessee proved identity, creditworthiness and genuineness of share subscribing companies and we find no infirmity in the order of CIT(A) and it is justified. Thus grounds raised by the Revenue are dismissed.

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• 2019 (9) TMI 4
  Addition u/s 68 - unexplained cash credits - allegations that, loan was received from dummy company/ entities - no inquiry by issuing notices under Sec. 133(6) or summons under Sec. 131 - HELD THAT:- Assessee had placed on record supporting documentary evidence to substantiate the authenticity of the loan transactions viz. confirmation letters, bank statements, financial statements of the lender parties, and thus had discharged the onus that was cast upon it - no adverse inferences could have been drawn by the A.O without making any inquiry by issuing notices under Sec. 133(6) or summons under Sec. 131 of the Act. As regards the admission of the undisclosed income by the director of the assessee company in his statement recorded in the course of the survey proceedings, it was observed by the Tribunal that a disclosure obtained in the course of survey de hors corroborative evidence cannot be a conclusive proof for making an addition in the hands of the assessee. Tribunal on the basis of his aforesaid observations had in the case of the aforementioned sister concern of the assessee company wherein identical facts were involved, had upheld the order of the CIT(A) and therein concluded that the A.O in the absence of the corroborative evidence was not justified in treating the loans received by the assessee before them as unexplained cash credit under Sec. 68. CIT(A) after deliberating at length on the issue under consideration had rightly concluded that as the assessee had discharged the onus that was cast upon it under Sec.68 therefore, the A.O was not justified in treating the loans received from the aforementioned parties as unexplained cash credits under Sec.68 - Decided in favour of assessee

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• 2019 (9) TMI 3
  Charging of interest under section 234B, 234C and 234D - HELD THAT:- Charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon ble Apex Court in the case of Anjum H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] and therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234A, 234B and 234C of the Act. The AO is, however, directed to re-compute the interest chargeable u/s 234A, 234B and 234C of the Act, if any, while giving effect of this order. Addition u/s 69A - entries are recorded in the assessee s books of account - HELD THAT:- Cash deposits are recorded in the books of account and are reportedly made on the receipt from a creditor. Further, the PAN and address of the creditor as well as ledger account copies of the creditor in the assessee s books of account have also been field before the AO. In these circumstances, it is evident that the AO has not made out a case calling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Act could have been considered; but then that is not the case of the AO As in the case of DCIT Vs. Karthik Construction Co. [ 2018 (3) TMI 39 - ITAT MUMBAI] held that addition under section 69A of the Act cannot be made in respect of those assets / monies / entries which are recorded in the assessee s books of account. In considered view, the aforesaid decision of the ITAT Mumbai Bench (supra) is squarely applicable to the facts of the case on hand, where the entries are recorded in the assessee s books of account - thus addition made under section 69A of the Act is bad in law - Decided in favour of assessee

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• 2019 (9) TMI 2
  Reopening of assessment u/s 147 - reopening after four years - HELD THAT:- As decided in FORAMER FRANCE [ 2003 (1) TMI 101 - SC ORDER] admittedly no failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. Hence, the proviso to the new section 147 squarely applies, and the impugned notices were barred by limitation mentioned in the proviso Although we are of the opinion that the law existing on the date of the impugned notice under section 147/148 has to be seen, yet even in the alternative even if we assume that the law prior to the insertion of the new section 147 will apply, even then it will make no difference since even under the original section 147 notice for reassessment could not be given on the mere change of opinion as held in numerous cases - Decided in favour of assessee.

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• Customs

• 2019 (9) TMI 36
  Ship spares for repair of ocean-going vessel - HELD THAT:- There are no reason to interfere with the impugned order - appeal dismissed.

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• 2019 (9) TMI 35
  Classification of imported goods - Old and Used Pipelines, Pontoons etc. as an integral part of the dredgers - it was held that pontoons imported by the appellant in the present case is in any case not classifiable under CTH 89011090, however, it is clearly classifiable as integral parts of dredgers under CTH 89051000 - all parts of Dredger has to be classified under the head Dredger i.e. 89051000 - the goods of bills of entry No. 8465433 and 8465442 both dated 07.02.2017 are correctly classifiable under heading CTH 89051000 and accordingly eligible to exemption Notification No. 12/2012-Cus dated 17.03.2012. HELD THAT:- The appeals, being devoid of any merit, are liable to be dismissed - appeal dismissed.

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• 2019 (9) TMI 34
  Refund of SAD - N/N. 102/2007-CUS dated 14th September, 2007 - whether limitation period specified under Section 27 of the Act would apply to claims for refund made under the notification of 2007? HELD THAT:- Leave granted. List these matters along with Civil Appeal arising out of Special Leave Petition (C) No. 11646 of 2017.

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• 2019 (9) TMI 33
  Interpretation of statute - correct interpretation of the term preserved - export under duty entitlement scheme - HELD THAT:- Leave granted. Tag with Diary No. 7547/2019.

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• 2019 (9) TMI 32
  Recovery of Short Levy - HELD THAT:- Issue notice on the prayer for interim relief, application for condonation of delay as well as on the Special Leave Petition, returnable within three weeks.

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• 2019 (9) TMI 31
  Prohibited goods - gold of third country origin - acquittal of the respondent / accused by the Court - criminal complaint - N/N. 9/1996, dated 22-1-1996 - Declaration of statement u/s 108 of CA - HELD THAT:- This Court finds that after being apprehended by the S.S.B. the respondent was taken before the Customs Officer. He was not carrying the gold seized from him, in any baggage but was hiding the same in his clothes and shoes. Had the intention of the respondent been fair, he would have taken the confiscated gold in his baggage and would have declared the same after reaching Nepal from U.K. at the Airport itself or at Sonauli border. Then benefit of Section 79 or 80 of the Customs Act could have come to his rescue. In the present case the respondent never stated anything about his intention of declaration in his statement under Section 108 of the Customs Act. Therefore the judgment of the lower appellate Court dated 20-7-2018 giving benefit of Section 79 to the respondent is not in accordance with law and is hereby set aside. The counsel for the respondent has submitted that no useful purpose would be served by sending the respondent to jail again. - after overall consideration of fact situation, conviction of the appellant is confirmed as per trial Court s order. The Appellate Court s order is set aside and the remaining sentence of two months required by the respondent to be served is converted into fine of Rs. 15,000/-. Appeal allowed in part.

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• 2019 (9) TMI 30
  Levy of penalty - filing of the shipping bill fraudulently in the name of appellants - appellants before us are neither the exporters/ owners of the goods - Export of Red Sanders Wood Logs - absolute confiscation - imposition of Section 114 117 of the Customs Act, 1962 - HELD THAT:- From plain reading of Section 114, it is evident that the said section is applicable only in respect of a person who has in relation to any goods omitted to do any act, the omission of which would have rendered the goods liable for confiscation under Section 113 of the Customs Act, 1962 - Since in the present case, we do not find anything ascribed to any of appellant as an act of commission or omission which would have rendered the goods liable for confiscation under section 113 of the Customs Act, 1962 - The show cause notice and the order in original have proceeded to impose penalties on the appellants not for abetting or for any act of omission or commission leading to confiscation of goods as per section 113 of the Customs Act, 1962. Penalties u/s 114 of CA - HELD THAT:- Not even investigations reveal that the appellants have not acted in manner expected of them in normal course of business to facilitate the fraud being perpetuated by the fraudsters - In absence of any such charge or finding in the impugned order, that any of appellant has deliberately knowingly or unknowingly assisted in commission of fraud by the fraudsters, we are not in position to uphold the penalties imposed under Section 114 of the Customs Act, 1962 - Penalty set aside. Penalties u/s 117 of Customs Act, 1962 - HELD THAT:- Penalty under Section 117, could have been imposed only in cases where the Custom Act, do not prescribe for imposition of penalty under any other provision. Once we have set aside the penalties under Section 114, we proceed to examine the penalties imposed under Section 117. In fact the Commissioner in his order have observed that appellants on whom the penalties under section 117 have been imposed were negligent in some manner in fulfilling the statutory responsibilities in the manner in they should have been done - the penalties imposed under is necessary to deter appellants and signal to them to be more careful while conducting their business in relation to imports and exports of goods - Penalty upheld but quantum reduced. Appeal allowed in part.

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• 2019 (9) TMI 29
  Refund claim - absence of assessment of duty - time limitation - section 27 of CA - assessment of duty - HELD THAT:- There are three periods in the of the Customs Law and the procedures. Initially, as per Section 17 of the Customs Act, the officer was required to assess the duties of customs based on the declaration made by the appellant in the bill of entry and they were doing so. When an officer has assessed the duty in pursuance of which any amount has been paid by the importer, they could file a refund claim under Section 27 of the Customs Act, 1962. The question before the Hon ble Apex Court in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [ 2004 (9) TMI 105 - SUPREME COURT] , was whether the importer needs to challenge the order of assessment before filing a refund claim or they could file a refund claim and the officer deciding the refund claim can determine if the assessment was done correctly and sanction the refund - The Hon ble Apex Court held that an officer sanctioning refund under Section 27 without modifying the assessment order would amount to the refund sanctioning officer modifying order of assessment of the assessing officer which is not permissible. An order of assessment of the assessing officer can only be set aside or modified by the superior judicial / quasi-judicial authority. Therefore, the order of assessment needs to be challenged before a refund claim can be filed. The law has been brought in consonance with the Customs EDI system and the responsibility for assessment has been shifted from the officer to the importer themselves. The self assessment by the assessee is either accepted or in some cases the officers can reassess the duty. There is no assessment by the officer but there can be re-assessment in some cases - In most cases, the declaration by the appellant is taken as self assessment and duty is paid and goods are cleared accordingly. In such cases, there is no assessment order by any officer to be challenged. Correspondingly, Section 27 of the Customs Act was also amended and the words in pursuance of an order of assessment have been deleted. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 28
  Import of restricted item - old and used photocopiers - appellant did not posses any valid license and further there was a suspicion that the goods were under-invoiced - HELD HAT:- When the goods were imported, the value of imported goods were doubted by the Customs authorities and in the presence of the representative of the importer as well as a Chartered Engineer the goods were opened and examined. The value was assessed with the help of the Chartered Engineer. The value so assessed was accepted by the appellant vide their letter dated 16-4-2008 and based on such acceptance the assessment was completed - there is no force in the argument of the appellant that a market enquiry should have been conducted and they should have been provided a copy of such market enquiry when they have not disputed the value of the goods at the time of assessment. Confiscation of goods - quantum of redemption fine - HELD THAT:- The goods were undisputedly imported in violation of Para 2.17 of FTP without a license. Therefore, the goods were liable for confiscation under Section 111 and have been rightly confiscated so. The redemption fine imposed is Rs. 6,50,000/- on a total estimated value of Rs. 18,50,272/-. It works out to about 33% of the estimated market value. In cases of confiscation, usually, the value of 10% is adopted - Accordingly, the appellant has a case for reduction of redemption fine to Rs. 2,00,000/-. Quantum of penalty - HELD THAT:- The penalty of Rs. 1,00,000/- imposed under Section 112(a) works out to about 5% of the value of the goods - penalty upheld. Appeal allowed in part.

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• Corporate Laws

• 2019 (9) TMI 27
  Approval of sale of the shares of Specified Wind SPVs held by IWEL to ORIX, free and clear from all encumbrances, liens, security interest and third party claims upon receipt of the ORIX Revised Bid amount for ORIX, in compliance of the terms of the SPA - price discovery mechanism - penultimate lap - HELD THAT:- The Resolution Framework is based on the principles underlying the Insolvency Bankruptcy Code, 2016 and is in line with the mandate of the New board ( In terms of the October 1 Order). Under the circumstances, it is in larger public interest and in the interests of justice that this Tribunal approves the sale of 51% of the shareholding of each Specified Wind SPVs to ORIX and passes necessary directions to facilitate/consummate the said resolution on the terms as contemplated under the SPA. It is submitted that the approval of the resolution process of the Specified Wind SPVs will enable the New Board to take steps to finalise a resolution plan/ plans for the overall resolution of the Applicant Group. It is pertinent to mention that after approval of GAIL s bid from the Creditors committee of IWEL, in terms of the Second MOU, GAIL s bid was disclosed to ORIX vide intimation letter dated 18.4.2019 - Subsequently, ORIX, by way of its letter dated May 13, 2019, issued to IWEL and IEDCL, confirmed its intention to exercise its right under the Second MoU to acquire 51% of the share capital in each of the Specified Wind SPVs based on the highest bid price ( i.e. GAIL s bid amount of INR 1,064 Crores for 100% of the share capital of each of the specified Wind SPVs). The sale of shares is approved - application allowed.

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• Insolvency & Bankruptcy

• 2019 (9) TMI 26
  Maintainability of petition - Initiation of CIRP - Default in repayment of Debt - extension of time to complete the project - Section 89 of RERA - Section 7 of the Insolvency Bankruptcy Code, 2016, read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- It is settled principle of law that wherever time is the essence of a contract in such types of construction contracts, the builder is required to adhere to the date of delivery mentioned in the builder-buyer agreement despite the presence of similar reservations in the contract. The Corporate Debtor has proceeded on incorrect premise of Section 89 of RERA. The provisions of RERA cannot override the non-obstante clause laid down under Section 238 of IBC. It is a settled principle of law that a non-obstante clause has effect only in case of a conflict between two statutes. It is submitted that RERA and IBC work in two different fields, while the former has been enacted with a view to regulate and promote the real estate sector while ensuring the protection of consumer interest; the latter seeks to consolidate the law relating to insolvency and bankruptcy and ensure resolution of insolvency of corporate persons, firms and individuals in a time bound manner. Thus, there is no question of a conflict between the two enactments and both will have an overriding effect in the fields exclusively assigned to them. Petition admitted - moratorium declared.

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• 2019 (9) TMI 25
  Admissibility of application - Initiation of CIRP - existence of debt or not - Section 9 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Adjudicating Authority has not applied its mind nor gone through the application under Section 9 (Form 6) to find out whether there is debt payable or not. It has simply rejected the application on the ground that there is no contract between the parties which cannot be a ground. It is not the case of the Respondent that there is a pre-existing dispute. The Respondent has not pleaded and nor the Adjudicating Authority held that there is no record of debt or default. In this background, merely on the ground that there is no agreement reached between the parties, it was not open to the Adjudicating Authority to reject application under Section 9 preferred by the Appellant. From the decision of the Hon ble Supreme Court in the case of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ], it is clear that the Adjudicating Authority is only required to notice as to whether there is a debt and default or not. It was open to the Respondent (Corporate Debtor) to take plea that there was no debt payable in law or in fact but no such plea was taken. Therefore, as per decision of the Hon ble Supreme Court, if the record is complete and debt is payable, it was duty of the Adjudicating Authority to admit the application. The case remitted to the Adjudicating Authority for passing appropriate order - appeal allowed by way of remand.

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• 2019 (9) TMI 24
  Maintainability of application - initiation of Corporate Insolvency Resolution Process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors have not been constituted - HELD THAT:- The Corporate Debtor is a small scale industry and the parties have reached settlement; the Committee of Creditors have not been constituted and till date no claim has been received except the Operational Creditor (Respondent before us), who also has not filed a claim, in view of the settlement; we set aside the impugned order dated 10th April, 2019 and allow the respondent Operational Creditor to withdraw the application under Section 9 of the I B Code. Fee and resolution cost of the Interim Resolution Professional - HELD THAT:- The Corporate Debtor will pay a sum or Rs. 1,20,000/- in his favour within three weeks. The application preferred by the Respondent under Section 9 of the I B Code is disposed of as withdrawn.

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• PMLA

• 2019 (9) TMI 8
  Offence under PMLA - summons issued by ED to appear for an investigation and other proceedings - HELD THAT:- As to whether by a criminal conspiracy the offences indicated in the schedule to PML Act is made out or not would be an issue which can be unearthed only after investigation. During the course of investigation, the authorities may arrive at a conclusion that there is no necessity to further investigate the matter and it may drop the investigation or in the event of authorities finding there is some material, it may then proceed to adjudicate. It all depends on circumstances emerging from investigation in a given case. If principles of interpretation is adopted, then, there was no necessity for the expression conspiracy being indicated in several enactments as found in the schedule to the PML Act. Section 120B of IPC found in part-A of the schedule to PML Act refers to IPC offences only and if it was referable to other offences, the framers of law would not have incorporated the expression conspiracy under Part-A Paragraph -1 as defined under other enactments. Section 120B is a predicate, distinct and stand alone offence. The inclusion of said offence under the schedule is not under challenge in these writ petitions. As rightly contended by Sri K M Nataraj, learned Additional Solicitor General of India that summons issued under Section 50(2) of PML Act has nothing to do with the regulations as defined under the Regulatory Rules and said rules is referable only to proceedings for adjudication and not to pre-adjudication proceedings. In fact, Section 50(2) does not refer to an accused at all. Summons issued under Section 50(2) is contrary to the Adjudicating Authority Procedure Regulation, 2013 and it does not contain material particulars nor the details which is required to be furnished by the petitioner - A plain reading of the said Regulation would indicate that same has been enacted in exercise of the power conferred by subsection (15) of Section 6 of the Act. Section 6 of the Act relates to the power of adjudicating authorities and the composition of such adjudicating authority. Section 2(a) defines Adjudicating Authority to mean an authority appointed under sub-section (1) of Section 6. Section 2(na) defines Investigation so as to include all proceedings under the Act conducted by the Director or by an authority authorized by the Central Government under the Act for collection of evidence. Section 6(15) provides the method of adjudication to be followed by the adjudicating authority and it does not refer to any procedure to be adopted by the investigating authority. The definition clauses as noticed herein above viz., sections 2(a) and 2(na) is relatable to adjudicating authority and not to investigation and they are separate, distinct and independent. Hence, mere mention of Section 50(2) or 50(3) in the summons issued, it cannot be contended by petitioners that even at pre-adjudication stage i.e., during investigation stage, the authorities are required to state or reveal the nature of material upon which they intend to rely upon for summoning a person for investigation. If same is accepted, it would defeat the purpose of investigation itself. In the light of aforestated discussion and for the reasons indicated hereinabove, this Court is of the considered view that there is no merit in these writ petitions

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• Service Tax

• 2019 (9) TMI 23
  Extended period of limitation - penalty u/s 78 of FA - It was held that No fault can be found in the present facts with the impugned order of the Tribunal restricting the demand only to that extent of normal period of limitation and deletion of equivalent penalty under Section 78 of the Act. HELD THAT:- Issue notice.

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• Central Excise

• 2019 (9) TMI 22
  CENVAT credit - benefit of N/N. 50/2003 dated 10.06.2003 - denial of credit on the ground that the benefit of notification was availed by the assessee - HELD THAT:- Issue notice both on the civil appeals as also on the limitation, returnable on any Tuesday in the month of September, 2019.

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• 2019 (9) TMI 21
  Area based exemption - Benefit of N/N. 50/2003-CE dated 10.06.2003 - denial on the ground that no capital goods were installed in the appellant s unit except one compressor, stating that manufacturing activities by the appellant is not possible - HELD THAT:- Issue notice on the application for condonation of delay as well as on the Civil Appeal, returnable within four weeks.

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• 2019 (9) TMI 20
  Misdeclaration of goods - Department observed that the respondent is mis-declaring one of the products that is Natural Gasoline Liquid (NGL) as Naphtha at the time of clearance from their factory premises - CESTAT decided the issue in favor of revenue - Held that:- There shall be ad interim stay of the impugned judgment on the condition that the appellant deposits a sum of Rs. 20 crores in this Court and, in addition, furnishes security to the extent of Rs. 132 crores to the satisfaction of the Jurisdictional Commissioner. Liberty is granted to the respondent (revenue) to withdraw the afore-mentioned amount.

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• 2019 (9) TMI 19
  Validity of Private Complaint and prosecution proceedings on behalf of the revenue - Clandestine removal of goods - Section 200 of the Code of Criminal Procedure - HC dismissed the petition - HELD THAT:- Issue notice on the special leave petition as well as on the prayer for interim relief.

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• 2019 (9) TMI 18
  SSI exemption - change of classification of the products - job-work - N/N. 08/2003-CE dated 01.03.2003 - the learned Commissioner (Appeals) had given his findings on classification primarily on the ground that Heading 5911 is a residual entry and covers goods which cannot be classified under any of the Headings of Section XI of the Central Excise Tariff Act, 1985 - HELD THAT:- The said Heading covers textile products and articles for technical use which would indicate that woven fabrics should be subjected to some process to convert fabric into textile product and articles for technical use, which was found absent in the case of the appellant s product. Rejecting the contention of the appellant that it had earlier intimated to the department regarding manufacturing of woven fabrics of Synthetic Filament Yarn falling under Chapter 5406 vide its letter dated 29th April 2004 and the certificate issued by the buyers concerning use of woven fabrics for industrial application, he opined that nowhere appellant had pleaded that Synthetic Woven Fabrics were intended for industrial purpose and basing on the statement of witness, primarily on the statement of proprietor Mr. Hrishikesh Mimani that they had mistakenly classified the product under Chapter 59 instead of Chapter 54, he confirmed the findings in the Order-in-Original that SSI exemption was not available to the appellant for which appropriate duty demand along with interest was made. Invocation of extended period of limitation - period from April, 2003 to July, 2004 - HELD THAT:- Admittedly show-cause notice was issued on 17.04.2006 which was not within the normal period prescribed at the relevant time and the learned Commissioner (Appeals) had confirmed the justification of invocation of extended period by observing that proprietor had admitted that they had misclassified the product and therefore a clear case of suppression was established against the appellant, contrary to his own observation and acknowledgement in the order itself that vide its letter dated 29.04.2004 appellant had informed to the department that it was claiming benefit of exemption Notification No. 08/2003-CE dated 01.03.2003 and was engaged in the manufacture of woven fabrics of synthetic filament yarn falling under Chapter 5911 - no case of suppression of facts to evade duty is made out to justify imposition of duty liability against the appellant to invoke extended period though no error is noticed in the Order-in-Appeal in respect of classification of the product cleared by the appellant. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 17
  Reversal of CENVAT Credit - exempt goods with 1% duty - applicability of rule 6 of CENVAT Credit Rules, 2004 - whether the discharge of National Calamity Contingent Duty with cess thereon suffices for the purpose of exclusion from the ambit of rule 2(d) of CENVAT Credit Rules, 2004 being exempted goods? - HELD THAT:- It is pertinent to note that GSM mobile handsets are excisable and, therefore, discharge of any liability of duty of excise would suffice for eligibility to CENVAT credit of duty paid on inputs used in the manufacture thereof - The absence of levy of any duty other than CENVAT in Central Excise Act, 1944 is unambiguous and it is only the empowerment of section 136 of Finance Act of 2001 that imposes this levy. It would, therefore, appear that the duty of excise referred to rule 2(t) is limited to the duty leviable under Central Excise Act, 1944 except where the CENVAT Credit Rules, 2004 prescribes otherwise. This is made further apparent in rule 3 of CENVAT Credit Rules, 2004 which, while allowing availment of credit of National Calamity Contingent Duty, restricts its utilization in accordance with fifth proviso in rule 3(4) of CENVAT Credit Rules, 2004. In view of this clear segregation of National Calamity Contingent Duty from the general pool of CENVAT credit, the discharge of duty liability under National Calamity Contingent Duty would not qualify the goods to be other than exempted goods - To permit the availment of credit of duties/tax paid on inputs/input services utilized in the manufacture of GSM mobile sets would be tantamount to grant of refund of tax that were collected, under authority of law and in accordance with the provisions of law, at the immediately preceding stage. Thus, the respondent herein is within the ambit of rule 6 of CENVAT Credit Rules, 2004. Ineligibility to CENVAT credit of tax paid on services used in common - legality of recovery in the face of reversal claimed by respondent - HELD THAT:- It is seen that the impugned order has not examined the submissions that the obligation under rule 6 of CENVAT Credit Rules, 2004 has been duly discharged by reversal of proportionate credit and that the bar of limitation impedes recovery. The adjudicating authority should have ascertained the correctness of the claim of the respondent that the proportionate of amount of CENVAT credit had been reversed and that interest thereon had been paid before issue of show cause notice. Matter remanded for fresh decision - appeal allowed by way of remand.

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• 2019 (9) TMI 16
  Refund claim - CENVAT credit account that remained unutilized upon closure of business and surrender of registration certificate - HELD THAT:- Tribunal in COMMR. OF CUS. C. EX., BHOPAL VERSUS BOMBAY BURMAH TRADING CORPN. LTD. [ 2005 (8) TMI 178 - CESTAT, NEW DELHI] and in COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-I VERSUS ARCOY INDUSTRIES [ 2004 (4) TMI 175 - CESTAT, MUMBAI] , was considering the appeal of Revenue against the sanction, in cash, of refund of duties collected without authority of law and relief had been granted even though collected through debit of the MODVAT/CENVAT credit account. In these, as well as that of the Larger Bench in GAURI PLASTICULTURE (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE [ 2006 (8) TMI 225 - CESTAT, MUMBAI] , it has been held that cash refund is not precluded even if duty was not paid in cash. All these pertained to ongoing business where the discharge of duty liability itself was in dispute - The present proceedings arise, not from discharge of duty liability on the part of appellant but of credit taken on discharge of duty liability by their suppliers. The issue decided in the case of VOLTAS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE IV [ 2018 (4) TMI 352 - CESTAT MUMBAI ] where it was held that It is clear that legislative intent did not envisage the monetisation of CENVAT credit in the event of impossibility of utilisation. CENVAT Credit Rules, 2004 is not an exemption scheme but a contrivance to ensure that the incidence of duty or tax is borne by the ultimate purchaser of goods or service in a chain. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2019 (9) TMI 15
  Condonation of delay - Validity of assessment order - Levy of Sales tax in terms of Section 4 (7) (e) of Telangana VAT Act - it was held in the case that question whether there was suppression and the question whether enlarged period of limitation will apply on account of suppression, are all mixed questions of fact and law. Therefore, the petitioner ought to have raised them in the appeal by filing it within time and by complying with the conditions for filing of the appeal in the proper form. HELD THAT:- The impugned judgement need not be interfered - SLP dismissed.

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• 2019 (9) TMI 14
  Maintainability of petition - alternative remedy of appeal - non-compliance with the pre-deposit - TNVAT Act - petitioner submits that it would be desirable to give one more opportunity to the writ petitioner - HELD THAT:- If the writ petitioner were to avail the alternate remedy of an appeal to the jurisdictional Appellate Deputy Commissioner under Section 51 of TNVAT Act, it would be appropriate to direct the jurisdictional Appellate Deputy Commissioner to entertain the appeal without insisting on 25% predeposit. This view has been taken owing to the peculiar facts and circumstances of the case and owing to the undisputed position that writ petitioner has paid the entire tax liability. The learned counsel for writ petitioner is unable to give the exact date on which impugned order was served on the writ petitioner - Therefore, appeal if any before the Appellate Authority will be subject to limitation, which is adumbrated in Section 51 of TNVAT Act. Petition disposed off.

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• 2019 (9) TMI 13
  Maintainability of appeal - time limitation - condonation of delay in filing appeal - Validity of assessment order - Section 58 of Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- A perusal of Section 58 TNVAT Act makes it clear that as far as the writ petitioner assessee is concerned, time limit for preferring an appeal before TNSTAT is 60 days from the date on which the order is served on the dealer/assessee. If an appeal is presented beyond the 60 days period, vide proviso to Section 58(1) of TNVAT Act, TNSTAT can condone the delay, but there is a cap of 60 days. Therefore, the total time available for writ petitioner is 120 days and there is no disputation that these 120 days have elapsed. Whether there can be a direction to TNSTAT to condone delay beyond 120 days when there is a statutory cap? - HELD THAT:- When there is a cap, delay cannot be condoned under Section 5 of Limitation Act. Following a long line of case laws of Hon ble Supreme Court in this regard, this Court passed an order to the effect that delay is not condonable beyond the period of cap when cap for condonation is statutorily prescribed - reliance can be placed in the case of M/S. AMMAN AGENCIES VERSUS THE APPELLATE DEPUTY COMMISSIONER (CT) [ 2019 (7) TMI 1 - MADRAS HIGH COURT] . This writ petition cannot be entertained - Petition dismissed.

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• 2019 (9) TMI 12
  Validity of revised assessment order - Section 27(1)(a) of TNVAT Act - imposition of penalty u/s 27(3)(c) of TNVAT Act - principles of natural justice - HELD THAT:- There is nothing that was canvassed by learned counsel for writ petitioner to show that alternate remedy is ineffectual or not efficacious. It is not the writ petitioner s case that the order has been passed by the respondent without jurisdiction. From the narrative thus far, it is clear that there is no violation of principles of natural justice as an opportunity to show cause has been given vide revisional notice and the writ petitioner has also availed the same by filing objections on 05.12.2017. Therefore, this Court is convinced that respondent has complied with the mandate under proviso to Section 27(1)(a) of TNVAT Act i.e., the mandate of giving reasonable opportunity to show cause before making the impugned order. Alternate remedy - HELD THAT:- Though alternate remedy rule is a rule of discretion and not a rule of compulsion, Hon ble supreme Court in a long line of authorities has repeatedly held that when it comes to matters pertaining to Taxes, CESS, Revenue etc., the rule of alternate remedy should be applied with utmost rigour. In UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS [ 2010 (7) TMI 829 - SUPREME COURT] , it was held that the principle that rule of alternate remedy though a rule of discretion should be applied with utmost rigour when it comes to fiscal statutes - Satyawati Tandon principle was subsequently reiterated by Hon ble Supreme Court in AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. [ 2018 (2) TMI 25 - SUPREME COURT] . It is open to the writ petitioner to pursue the alternate remedy subject to conditions adumbrated in Section 51 of TNVAT Act. Petition dismissed.

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• 2019 (9) TMI 11
  Penalty u/s 27(4) of TNVAT Act - Validity of assessment order - deemed assessment under Section 22(2) of TNVAT Act - reversal of ITC on ineligible commodities - HELD THAT:- The issue decided in the case of SUSPA PNEUMATICS (INDIA) PVT. LTD. VERSUS THE ASSISTANT COMMISSIONER (ST) [2019 (8) TMI 121 - MADRAS HIGH COURT] , where it was held that entire sub-section (4) of Section 27 of TNVAT Act i.e., this provision together with the proviso whicih was inserted in the statute book on and with effect from 29.01.2016, but it is also noticed that the proviso makes it statutorily imperative to give reasonable opportunity of showing cause being given before imposition of penalty was there even prior to 29.01.2016 The impugned Assessment Orders are set aside solely on the ground of non-adherence to proviso to Section 27(4) as penalty under Section 27(4) has been imposed vide impugned Assessment Orders without giving the writ petitioner an opportunity to show cause against the same - matter remanded for fresh consideration - petition allowed by way of remand.

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• 2019 (9) TMI 10
  Mismatch - purchase suppression - case of the writ petitioner is that IEC Code of the writ petitioner has been misused by someone - HELD THAT:- This Court is of the considered view that the respondent cannot be found fault with for passing the impugned orders on the ground of purchase suppression as the respondent cannot examine the alleged misuse of IEC plea as that plea is within the domain of Customs Commissionerate. It is for the writ petitioner to carry the issue to its logical end with the Customs Commissionerate. This Court is of the considered view that writ petitioner, not being able to demonstrate that they pursued the matter with the concerned authorities in the last 2 years and now be heard to contend that it is for the respondent to furnish details of bills of entry and this Court is convinced that challenge to two impugned orders cannot be predicated on this basis. This Court is also of the considered view that there is no impediment for the writ petitioner to pursue the complaint said to have been given before the Commissionerate and carry the same to its logical end. If the writ petitioner carries the compliant to its logical end and if something favourable to the writ petitioner comes out of the same, documents such as bills of entry and other import particulars, which are subject matter of purchase suppression can always be produced by the writ petitioner before the Appellate Authority. Appellate remedy - HELD THAT:- There is nothing to demonstrate that the order has been passed without jurisdiction or disregarded settled legal position or without giving an opportunity to writ petitioner to show cause. In other words, the rule of alternate remedy is not a rule of compulsion. It is a rule of discretion. To put it differently, alternate remedy rule is not an absolute rule. Suffice to say that there is nothing to demonstrate that this case, more particularly, the impugned orders does not fall under any of the exceptions to the rule of alternate remedy. Therefore, this Court is of the considered view that this is a fit case to relegate the writ petitioner to alternative remedy under Section 51 of TNVAT Act to the jurisdictional Appellate Deputy Commissioner. This Court comes to the conclusion that there is no merit in the writ petitions and no ground which warrants interference in the impugned orders in writ jurisdiction has been made out - petition dismissed.

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• Indian Laws

• 2019 (9) TMI 9
  Seeking approval for manufacturing the Combikit as an FDC - therapy entailing the drugs comprised in the Combikit - whether there is any therapeutic justification for comprising the three drugs which are included in the Combikit. And, there may be good reasons not to prescribe such therapy. - Notification [No. S.O. 4429(E)] - powers under Section 26A of the Drugs and Cosmetics Act, 1940 HELD THAT:- A plain reading of Section 26A of the Act indicates that the Central Government is empowered to regulate, restrict or prohibit the manufacture, sale or distribution of any such drug or cosmetic, that is, (a) likely to involve any risk to human beings or animals, or (b) a drug which does not have the therapeutic value claimed or purported to be claimed for or contains ingredients, and in such quantity for which there is no therapeutic justification, and (c) where it is necessary to do so in public interest - In the present case, there can be no dispute that the Combikit is not a drug. The Combikit comprises of three different types of tablets : (i) One Tablet of Fluconazole 150 mg; (ii) one Tablet of Azithromycin 1 gm; and (iii) two tablets of Secnidazole 1 gm tablet. The four tablets are packaged in a single strip and sold as the Combikit. The petitioner is licensed to manufacture each of the said formulations. The Combikit cannot be sold except on a medical prescription prescribing all the three drugs, which are packed in a single strip. Plainly, if that therapy is irrational for the indication, the necessary action would have to be taken against the medical practitioner prescribing the said therapy, however recourse to Section 26A of the Act is unavailable to prohibit prescription of a therapy. The issue relates to packaging of the three separate drugs in one single package. The said issue may also be addressed in the context of the regulations relating to packaging of drugs, if any. However, the powers under Section 26A of the Act cannot be exercised to proscribe packaging of drugs in any particular manner. The impugned notification is, accordingly, set aside - Appeal allowed - decided in favor of appellant.

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