Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 30, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Customs
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3/2019 - dated
30-8-2019
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Cus
Revised limits of the Customs area of "M/S The Thar Dry Port, A unit of Hasti Petrochemical & Shipping Limited"
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51/2019-Customs (N.T./CAA/DRI) - dated
27-9-2019
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Cus (NT)
Appointment of CAA by DGRI
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50/2019-Customs (N.T./CAA/EXTENSION/DRI) - dated
26-9-2019
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Cus (NT)
Appointment of CAA by DGRI
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49/2019-Customs (N.T./CAA/DRI) - dated
26-9-2019
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Cus (NT)
Amendment in Notification No. 48/2019-Customs (N.T./CAA/DRI) dated 23.09.2019
GST - States
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Order No. 3/2019-State Tax - dated
12-9-2019
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Delhi SGST
Delhi Goods and Services Tax (Third Removal of Difficulties) Order, 2019.
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Order No. 01/2019-State Tax - dated
12-9-2019
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Delhi SGST
Delhi Goods and Services Tax (Removal of Difficulties) Order, 2019.
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75/2018-State Tax - dated
12-9-2019
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Delhi SGST
Amendments in Notification No.04/2018- State Tax, dated the 23rd February 2018, no. F.3(86)/Fin.(Rev-I)/2017-18/DS-VI/92.
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28/2018-State Tax (Rate) - dated
12-9-2019
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Delhi SGST
Amendments in the Notification No.12/2017-State Tax (Rate), dated the 30th June, 2017, no. F.3(15)/Fin(Rev-I)/2017-18/DS-VI/ 380,
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14/2019-State Tax - dated
12-9-2019
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Delhi SGST
Eligible registered person, whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees.
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10/2019-State Tax (Rate) - dated
12-9-2019
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Delhi SGST
Supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees.
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02/2019-State Tax (Rate) - dated
12-9-2019
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Delhi SGST
Notifies that the State Tax, on the intra-State supply of goods or services an aggregate turnover of fifty lakh rupees made on or after the 1st day of April in any financial year.
Income Tax
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74/2019 - dated
27-9-2019
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IT
Income-tax (10th Amendment) Rules, 2019 - Credit of TDS to be given to the person from whose account tax is deducted, in the year in which such amount is deducted.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Validity of assessment orders passed pursuant to a best judgment assessment - Section 62 of the GST Act - Default in filing of returns - pray for filing of belated returns rejected - HC
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Pre-Deposit - Appealable order before tribunal but tribunal yet to be constituted under GST - pray allowed to make a pre-condition for filing the appeal - HC
Income Tax
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Clarification on delay in filing of Form No.10B for AY 2016-17 and AY 2017-18 - Board's order under section 119(2) of the Income-tax Act, 1961
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Extension of the due date from 30th September, 2019 to 31st October 2019 for filing of ITR - However no extension for making payment of Tax and interest liability u/s 234A - Order u/s 119 issued.
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Credit for tax deducted at source for the purposes of section 199 - Rule 37BA of the Income-tax Rules, 1962 - As amended
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Addition u/s 68 - unsecured cash credit - Why he did not put the entire savings in the bank and why he retained a sum of ₹ 2,40,000/- with him in cash? - He is admittedly not an income tax assessee, thereby strengthening the view that not only he is not a rich man but he is barely able to make the ends meet, additions confirmed. - HC
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Recovery proceedings u/s 226(3)(iii) - attachment (Lien) of bank account - No notice issued to joint account holder - The mandatory requirement is not complied with by the revenue, in terms of Section 226(3)(iii) of the Act. - Notice quashed. - HC
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Addition u/s 40A(3) on account of payment in cash expenditure of ₹ 5 Lacs - Demand draft was made but the party refused to accept - The purpose of section 40A (3) is not to restrict the assessee`s genuine business activity. - AT
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Computation of LTCG - adoption of value u/s 50C - there is no value fixed by the Stamp Valuation Authority as there was no sale deed. -as the properties at Chowbaga (West) are located adjacent to each other, the value fixed by the DVO for plot no. 2, may be taken as the value of plot no. 3 for the purpose of Section 50C
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TDS u/s 194H - commission - payment of one time non-refundable premium to bank for purchase of gold - this transaction of payment of one time premium would effectively go to add to the purchase cost of the gold and cannot be categorised as commission - No TDS liability - Further, a debatable issue cannot be the subject matter of rectification proceedings u/s.154
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Bad & doubtful debt or mere Provisions were made - provisions u/s.36(1) (vii) and 36(1) (viia) are separate and independent to each other - CIT(A) has rightly observed that, creation of provisions for bad and doubtful debts by debiting profit and loss account reducing the same from debtor account constitutes write off.
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MAT - Adjustments to Book Profit - CIT(A) failed to consider the binding precedent and allowed the adjustment beyond what is provided in Explanation to Section 115JB by reducing the profit on sale of fixed assets which was credited by the assessee company to its profit and loss account.
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Jurisdiction of AO for service of notice u/s 143(2) - Difference in address as per PAN records and Income Tax Return (ITR) - even if presumed to be by jurisdictional Assessing Officer has not been served properly.
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Interest u/s. 244A on self assessment tax - Whether no interest u/s. 244A of the Act is allowable on the refund due to the assessee on the self-assessment tax? - Assessee is eligible for interest.
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Creation of HUF - The moment a person is born into a family, HUF is created and if the land holdings were in the joint names of the family members, the assessee also being part of the HUF, would have a right in the income there from. - AT
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Addition on account for cash deposits in Bank account - deposits from a close friend of assessee's father who is no longer alive - only evidence which the assessee could rely upon was the Affidavit of the sole surviving child of deceased - The insistence of the tax authorities without upsetting the evidences available on record cannot be accepted. - AT
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Order u/s 143 (3) r.w.s.144 C in the name of the predecessor of the amalgamated company - The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law - HC
Customs
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Classification of imported goods - Coco Jelly - Clearly the impugned goods cannot be classified under CTSH 2106 90 99 and would merit classification under CTSH 1704 90 90 only.
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Imposition of penalty on Customs Broker - It was alleged against the appellant that they had not obtained any authorization or document from Importer on behalf of whom they have filed Bill of Entry - the appellant has not abetted in mis-declaration of the goods, the penalty imposed u/s 112(a) or 114AA cannot sustain.
Indian Laws
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Complaint against the Chartered Accountant (CA) after 7 years of audit - the complaint should not be entertained as the auditors are not bound to keep their working papers beyond seven years and therefore all the relevant audit papers may not be available for reply to the complaint. - HC
IBC
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Resolution Process - exclusion of 35 days of delay in appointing the ‘Resolution Professional’ in place of the ‘Interim Resolution Professional’ and the period during which different applications were pending - period of 35 days and 18 days excluded for the purpose of counting 180 days or 270 days of ‘Resolution Process’
PMLA
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Money Laundering - attachment of properties - Since the charge-sheet/prosecution complaint has not been filed under the provision of Section 8(3)(a) of the Act within the prescribed period of time, the attachments stand lapsed, thus, the same are released. - AT
Service Tax
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Whether the Appellant is liable to pay interest under Section 75 of the Finance Act, 1994? - The Appellant prior to the issue of show cause notice, on being pointed by the audit, did not dispute and paid the service tax. - No case of mis-conduct is made out against the Appellant - Demand of Interest and penalty set aside.
Central Excise
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CENVAT Credit - capital goods - Only because the flay ash handling plant is situated 60 kms. away from the factory premises of the Appellant, it cannot be a ground to deny the Cenvat Credit Cenvat credit on capital goods used in the Fly Ash Handling Plant.
Case Laws:
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GST
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2019 (9) TMI 1250
Release of goods alongwith the truck - section 129 of the Goods and Services Tax Act - HELD THAT:- By way of interim relief, the respondents are directed to forthwith release truck No.MH-04- DK-9208 along with the goods contained therein, subject to the final outcome of the petition. Issue Rule returnable on 9th October, 2019.
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2019 (9) TMI 1249
Release of detained goods - section 130 of the Central Goods and Services Tax Act, 2017 - evasion of tax - HELD THAT:- By way of ad-interim relief, the respondents are directed to forthwith release the Truck No. MH18BG3887, upon the petitioner paying the amount of ₹ 58,576/-, as stipulated in the impugned order, as fine in lieu of confiscation of conveyance subject to the final outcome of the petition. Issue Notice, returnable on 10.10.2019.
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2019 (9) TMI 1248
Release of detained goods - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- By way of ad-interim relief, the second respondent is directed to release the vehicle of the petitioner being truck No.GJ-03-AX-5727 upon the petitioner paying a fine of ₹ 62,024/- as proposed in the notice dated 12.7.2019 issued under section 130 of the Act in lieu of confiscation of conveyance. Issue Notice returnable on 10th October, 2019.
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2019 (9) TMI 1247
Withdrawal of cancellation of petitioner's registration - input tax credit - GST Act - HELD THAT:- We direct the respondents to examine the petitioner s grievance and to unblock the petitioner s ITC balance, if the blocking is found to be unjustified. Decision in this regard should be taken positively within the next four working days. List on 15.10.2019.
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2019 (9) TMI 1246
Validity of assessment orders passed pursuant to a best judgment assessment - Section 62 of the GST Act - Default in filing of returns - HELD THAT:- The statutory prescription of 30 days from the date of receipt of the assessment order passed under sub section (1) of Section 62 has to be strictly construed against an assessee and in favour of the revenue, since this is a provision in a taxing statute that enables an assessee to get an order passed against him on best judgment basis set aside. The provision must be interpreted in the same manner as an exemption provision in a taxing statute. This Court may not be justified in granting an extension of the period contemplated under sub section (2) of Section 62, so as to enable the assessee to file a return beyond the said period for the purposes of getting the benefit of withdrawal of an assessment order passed on best judgment basis under Section 62(1) of the GST Act - the prayer sought for in the writ petition cannot be granted. Petition dismissed.
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2019 (9) TMI 1245
Validity of assessment orders passed pursuant to a best judgment assessment - Section 62 of the GST Act - Default in filing of returns - HELD THAT:- The statutory prescription of 30 days from the date of receipt of the assessment order passed under sub section (1) of Section 62 has to be strictly construed against an assessee and in favour of the revenue, since this is a provision in a taxing statute that enables an assessee to get an order passed against him on best judgment basis set aside. The provision must be interpreted in the same manner as an exemption provision in a taxing statute. This Court may not be justified in granting an extension of the period contemplated under sub section (2) of Section 62, so as to enable the assessee to file a return beyond the said period for the purposes of getting the benefit of withdrawal of an assessment order passed on best judgment basis under Section 62(1) of the GST Act - the prayer sought for in the writ petition cannot be granted. Petition dismissed.
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2019 (9) TMI 1244
Validity of Summon issued under Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Though the present writ petitions are filed by contending that the summon was issued by granting short time for the petitioners to appear and therefore, it has to be quashed. I am not inclined to entertain such a request as it is for the petitioners to approach the respondent and seek for sufficient time for appearance. Petition dismissed as not maintainable.
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2019 (9) TMI 1243
Release of detained goods - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The respondents are directed to release the goods under detention upon payment of the tax and penalty as demanded by the respondents, which shall be subject to the final outcome of the petition. In case, the action of the respondents is upheld, the petitioner shall be liable to pay the differential amount. Issue Notice , returnable on 3rd October 2019 .
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2019 (9) TMI 1242
Pre-Deposit - Appealable order before tribunal but tribunal yet to be constituted under GST - Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- the petitioner is ready to deposit the amount as per the provisions of Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017, which is a pre-condition for filing the appeal. He prays for fifteen days' time to comply the terms and conditions as provided under Section 112 of the Uttar Pradesh Goods and Service Tax, 2017 and submit a receipt of the same - Prayer is allowed. List immediately after fifteen days.
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Income Tax
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2019 (9) TMI 1241
Entitlement to benefit u/s 80IB - assessee company is a private company, engaged in manufacture and trade of electronic and electrical equipments and goods - CIT(A) accepted assessee's plea and held that the turnover stipulations in terms of the investments in the fixed assets by Note 1 of the DIPP circular had been complied with also affirmed by ITAT - HELD THAT:- SLP dismissed on the ground of low tax effect.
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2019 (9) TMI 1240
Stay of demand - conditional stay was granted subject to the petitioner paying 20% of the tax amount attributable to the additions to income made under Section 68 - Deduction u/s 80(P) (2) (a) (i) - additions to the income declared by the petitioner under Section 68 - HELD THAT:- Taking note of the judgment of this Court in Mavilayi Service Co-operative Bank Limited v. Commissioner of Income Tax [ 2019 (3) TMI 1580 - KERALA HIGH COURT] in the context of the deduction claimed under Section 80P of the Income Tax Act, as also the directions stated to have issued by a Division Bench in writ appeals, that only 1% of the tax amount confirmed against assessees under Section 68 of the Income Tax Act, need to be deposited, pending disposal of the appeals by the First Appellate Authority, I dispose the writ petition by directing the 2nd respondent to consider and pass final orders on Ext.P3 appeal pending before him, within an outer time limit of four months from the date of receipt of a copy of this judgment, after hearing the petitioner. It is made clear that till such time as orders are passed by the 2nd respondent in the appeal as directed, and the order communicated to the petitioner, further proceedings including those pursuant to Exts.P7 and P8 communications, for recovery of amounts confirmed against the petitioner by Ext.P5 order, shall be kept in abeyance on condition that the petitioner pays an amount equivalent to 1% of the tax demanded on the additions made in the assessment order under Section 68 of the Income Tax Act, within one month from today. It is made clear that the attachment over the accounts of the petitioner, as contemplated in Exts.P7 and P8, shall stand lifted forthwith on the petitioner depositing the aforementioned 1% amount with the respondents.
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2019 (9) TMI 1239
Adjustment towards interest payable u/s 234B(2)(ii) - filing return of income i.e. when payment of Self-Assessment Tax u/s 140A is required to be made - whether the AO was correct in computing interest on the date of payment of taxes by the assessee and adjusting the amount so paid towards interest? - HELD THAT:- As per section 140A of the Act where any tax is payable on the basis of any return, the assessee shall be liable to pay such tax together with interest and the return is required to be accompanied by proof of payment of such tax and interest. Thus, the computation of interest and liability to pay such interest arises at the time of filing return. The Explanation below this Section 140A of the Act in fact supports the above interpretation. As per this explanation, where the amount paid by the assessee under this section falls short of the aggregate of the tax and interest, the amount so paid shall first be adjusted towards the interest payable and the balance shall be adjusted towards the tax payable. The amount paid here will be the aggregate of the amount paid under this section not the individual amount. This exercise is to be done at the time when the return is being filed so that in case any assessee has not paid the full amount i.e. tax and interest then, the amount paid shall first be adjusted towards interest and liability to pay interest on balance tax shall continue. The judgment delivered in the case of M/s Patson Transforms Ltd. Vs. DCIT [ 2005 (11) TMI 388 - ITAT AHMEDABAD] relied upon by the CIT (Appeals) and the Tribunal has examined this issue in detail with example. We are in agreement with the conclusion of CIT(Appeals) and the Tribunal based on the above judgment. Question answered in favour of the assessee and against the Revenue.
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2019 (9) TMI 1238
Addition u/s 68 - unsecured cash credit - tribunal upholding the action of the authorities in invoking Section 68 - HELD THAT:- The appeal has to fail. The Tribunal noticed that it was very strange that the appellant would keep his entire savings in cash. We further find it strange that if on 16.5.2013, the appellant decided to change his method of saving and put his money in the bank, why he did not put the entire savings in the bank and why he retained a sum of ₹ 2,40,000/- with him in cash. Chiman Lal is admittedly not an income tax assessee, thereby strengthening the view that not only he is not a rich man but he is barely able to make the ends meet. - Decided against assessee.
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2019 (9) TMI 1237
Recovery proceedings - attachment (Lien) of bank account - No notice u/s 226(3)(iii) to joint account holder - HELD THAT:- Revenue fairly submits that no such notice under Section 226(3)(iii) of the Act has been served on the petitioner - Joint Account Holder of the Savings Bank Account, regarding which notice has been issued to the bankers. In view of the aforesaid, it is discernible that no notice issued under sub-section 3[ii] was forwarded to the petitioner which is sine qua non for the recovery of tax as provided under Section 226 of the Act. The mandatory requirement is not complied with by the revenue, in terms of Section 226(3)(iii) of the Act. - Notice quashed.
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2019 (9) TMI 1236
Penalty u/s 271(1)(c) - exemption u/s 10(20A) - HELD THAT:- In a number of cases that in the absence of non-recording of satisfaction note by the AO during the course of assessment proceedings regarding concealment or furnishing of inaccurate particulars of income, penalty u/s 271(1)(c) is not impossible. It can be seen from the records that since Assessment Year 1996-97 (first year for which Income-Tax return was filed by the assessee company) exemption u/s 10(20A) was being claimed which was denied at the level of Assessing Officer and CIT(A). Against this decision, the assessee company has filed second appeals before the ITAT, right from Assessment Year 1996-97 onwards which are pending for adjudication before the ITAT. Since it is a matter of legal opinion whether exemption u/s 10(20A) is allowable or not, it cannot be said that the assessee company concealed its income or furnishing inaccurate particulars of its income. Hence Penalty u/s 271(1)(c) was not leviable. AR also pointed out that there is no satisfaction note regarding concealment or furnishing of inaccurate particulars of income was recorded by the Assessing Officer during the course of assessment proceedings. The question whether exemption u/s 10(20A) is allowable or not, is a question of law which is pending for adjudication before the ITAT. This issue, thus is debatable on which two opinions are possible and hence penalty u/s 271(1)(c) is not leviable. Under the penalty u/s 271(1)(c) is required to be imposed with reference to tax sought to be evaded. In the order imposing penalty, this requirement of law has not been fulfilled in as much as tax sought to be evaded has not been worked out. There is no tax which is sought to be evaded. The assessee company had paid full tax on income declared in the return without taking into consideration its claim for exemption u/s 10(20A). These facts were properly adjudicated by the CIT(A) and thus, there is no need to interfere with the findings of the CIT(A). - Decided against revenue Revision u/s 263 - assessment of income under head other sources and not business income - HELD THAT:- From the perusal of the said order it can be seen that in the earlier years, the order u/s 263 has been sustained by the Tribunal on the similar issue. In the present year as well the assessee has not demonstrate before the AO whether actual business was commenced or not and at the same time whether investment has inextricable link in respect of the project and not that of pre-operative expenses. As per the Hon ble Delhi High Court decision in case of Indian Vaccination Corporation Ltd. [ 2014 (3) TMI 299 - DELHI HIGH COURT] when there is no inextricable link between investment and project, interest income on said investment could not be permitted to be adjusted against pre-operative expenses in respect of said project. The case laws referred by the assessee are not applicable in the present case as the provisions under Section 263 are properly invoked by the Commissioner of Income Tax. Therefore, the order under Section 263 of the Act passed by the Commissioner of Income Tax is just and proper. There are no two views expressed but there is a failure on part of the Assessing Officer because of which there is escapement of income.
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2019 (9) TMI 1235
Penalty u/s 271(1)(c) - additional income declared in the revised return filed u/s 153C pursuant to search in connected groups cases - HELD THAT:- Application of pre-amended Explanation was limited to non-filer assessee whereas this anomaly was corrected in substituted Explanation. To elaborate, while the original Explanation 5A introduced by the Finance Act, 2007 w.e.f. 01.06.2007 held the persons guilty of concealment where the return was not filed only, the substituted Explanation 5A roped in with retrospective effect from 01.06.2007 by Finance (No.2) Act, 2009 attempted to cover both filers of return of income as well as non-filers for the purposes of penalty on undisclosed income found. Thus, when viewed the law as existing on the date of initiation of search, Explanation 5A was attracted only where the assessee failed to file return of income altogether. When seen with reference to date of search 11.02.2009 in the present case, the provisions of erstwhile Explanation 5A were not attracted to the assessee as the return of income was already filed prior to search and put on record. The application of amended provisions of Explanation 5A of Section 271(1)(c) of the Act which came into force by an amendment subsequent to search albeit with retrospective effect thus cannot be applied when seen with reference to cause of action i.e. date of search. It is to be borne in mind that Explanation 5A appended to s.271(1)(c) of the Act is a legal fiction for deeming concealment against the assessee in search cases. Both original return under u/s 139 of the Act as well as revised return under s.153C of the Act had been filed before the amended provisions were brought into force. Hence, we are of the view that shelter of substituted provisions of Explanation 5A to Section 271(1)(c) of the Act could not be taken to the instant case for fastening concealment penalty. The assessee having filed the return under s.139 of the Act prior to search as well as return under s.153C of the Act prior to substituted Explanation coming into force, would be governed by pre amended Explanation 5A and thus would escape the clutches of penalty under s.271(1)(c) of the Act due to non-fulfillment of conditions of pre amended Explanation. All of the broad contours complement the plea of assessee for deletion of penalty. The imposition of penalty with the aid of Explanation 5A to Section 271(1)(c) of the Act is thus not found to be objectively justifiable in the captioned appeals. AO is directed to cancel the penalty under s. 271(1)(c) - Decided in favour of assessee.
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2019 (9) TMI 1234
Revision u/s 263 - AO allowing deduction under section 54(1) - till the actual date of filing of return of income by the assessee for the impugned assessment year, the capital gain had not been utilized for purchase of new residential house - HELD THAT:- Though, the provision of section 54(2) of the Act encompasses due date of filing of return of income not only as per section 139(1) but even section 139(4) and 139(5) of the Act, however, the condition of section 54(2) of the Act would stand satisfied if the assessee invests the unutilized capital gain in purchase of new house property before the actual date of filing of return of income for the subject assessment year even within the extended time permitted under section 139(4) and 139(5) of the Act. That being the case, it cannot be said that the decision of the Assessing Officer is in accordance with the legal position prevailing at the relevant point of time. The other decisions cited by the learned Authorised Representative challenging the validity of exercise of jurisdiction under section 263 of the Act, would not help the assessee in view of the specific fact involved in the present case. Thus, on overall consideration of facts and the decision of the Hon'ble Jurisdictional High Court in Humayun Suleman Merchant [ 2016 (9) TMI 70 - BOMBAY HIGH COURT] we have no hesitation in holding that learned Principal Commissioner has correctly exercised his power under section 263 of the Act to revise the impugned assessment order. Accordingly, we uphold the order passed under section 263 of the Act by dismissing the grounds raised by the assessee.
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2019 (9) TMI 1233
Reopening of assessment u/s 147 - Long Term Capital Gains with evidences of sale deed/purchase deed/additions made in each year and also explain deduction claimed u/s 54 - HELD THAT:- No specific information was noticed by the Revenue on the basis of which re-opening has been made, the fact remains that there is nothing placed on record by the AO or tax authorities to justify the claim that the re opening was warranted beyond the period of four years. In the facts of the present case, we find that on merits, the case of the assessee deserves to be allowed. The addition made by way of a disallowance on the claim of exemption cannot be upheld for the detailed reasons addressed herein above which are in line with the position of law as argued before the CIT(A) and canvassed before us. Even otherwise we find that in the facts of the present case, nothing has been brought on record by the revenue to demonstrate that the action was warranted beyond a period of four years in the facts as they stand. Accepting the explanation offered and on consideration of facts, circumstances and position of law as discussed herein above, the appeal of the assessee is allowed.
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2019 (9) TMI 1232
Addition on account of outstanding balance of sundry creditors - whether the impugned sundry creditors for the purchases and the expenses are liable to be taxed under section 41 (1) of the Act or 68 ? - HELD THAT:- Regarding the applicability of the provisions of section 41(1) of the Act, we note that it is applicable when the assessee has claimed deduction in respect of any loss, expenditure or trading liability and subsequently such liability ceases to exist. Indeed, the assessee in the case on hand has claimed the deduction for the purchases and the expenses incurred by it. But the same has not ceased to exist in the books of accounts. Therefore we are of the view that the provisions of section 41(1) of the Act cannot be applied to the case on hand. As per scheme, the assessee would enroll a member, who would deposit a sum of ₹ 500 with the company. If such member in turn enrolls four members within a period of 12 month, would be entitled to get a black and white TV set manufactured by the assessee for free of cost. By this scheme assessee has collected huge sum of 7.87 cr. treated the same as outstanding trade liability under the head customer advances. In the subsequent year assessee used the fund for investment purpose and earned interest income on the same. The fact of the above case is completely different from the case under observation, in current case sundry creditors are against the purchases and expenses incurred in earlier year and as well as in year under consideration. However in case of Gujtorn Electronics [ 2017 (7) TMI 574 - GUJARAT HIGH COURT] as per scheme it was very clear that the scheme was for 12 months and after that right of the member will be seized. Therefore in our opinion above case submitted by learned DR is not applicable to the case under observation. Whether the impugned sundry creditors can be treated as unsecured cash credit within the meaning of the provisions of section 68 ? - HELD THAT:- Provisions of section 68 do not apply to the sundry creditors for the purchases and expenses. It is because such sundry creditors are represented against the purchases and the expenses. In case the AO was to disturb the sundry creditors, then he cannot do so without disturbing the corresponding purchases or expenses. Therefore in our considered view the provisions of section 68 are not applicable with respect to the sundry creditors for the purchases and the expenses. In addition to the above, we also note that the impugned sundry creditors for the purchases of ₹ 98,26,896/- are representing the opening balances which were carried forward from the earlier year except for 1 for the amount of ₹ 5,72,360/-. Thus it is inferred that the account of the assessee was not credited in the year under consideration. If At all the addition needs to be made under section 68 of the Act, then it can be made in the preceding previous year in which such credit was found in the books of accounts. Disallowance being 1/5 of the other expenses - HELD THAT:- There is no provision under the Act to make the disallowance on ad-hoc basis and without pointing out any specific defect in the claim of the assessee. Therefore, we disagree with the finding of the learned CIT (A). However, at the same time we note that the assessee has not discharged his onus by furnishing the supporting vouchers and the bills in respect of such expenses. Therefore, we are not inclined to delete the addition made by the learned CIT (A) in its entirety. To our mind, the justice will be served to both the assessee and the revenue, if the disallowance is restricted to the tune of 10% of all the other expenses except depreciation. Accordingly we direct the AO to restrict the disallowance of all the expenses except depreciation to the tune of 10% claimed in the profit and loss account under the head other expenses. Hence the ground of appeal of the assessee is partly allowed. Addition on account of interest income - HELD THAT:- Copy of form 26AS was not supplied to the assessee by the AO on the basis of which the addition was made to the total income on account of interest income. However, we are of the view that the assessee should have been supplied the information based on which the addition was made by the AO. Thus in the interest of justice and fair play we are setting aside the issue to the file of the AO for fresh adjudication as per the provisions of law and after giving the due opportunity to the assessee. Hence the ground of appeal of the assessee is allowed for statistical purposes.
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2019 (9) TMI 1231
Unexplained investment - deposit of cash made by the assessee in the bank accounts, investment in the lands and the loan provided to KIT - HELD THAT:- Regarding the argument of the AR for the availability of cash in his hands out of the earlier years from the source of agricultural activity, we note that the assessee failed to file any documentary evidence suggesting that there was some cash available with him out of the agricultural operations carried on by him. Therefore, in the absence of such documentary evidence we reject the contention of the assessee. Regarding the surplus cash of ₹ 21,45,000 as claimed by the ld. AR, available with the assessee, we note that the benefit for all the deposit of cash has already been provided by the ld. CIT-A. Therefore, we are of the view that the same cannot be adjusted against the deposit of cheques in the central bank of India. Therefore, we reject the contention of the ld. AR for the assessee. Regarding the addition of ₹33.50 lakhs, we note that these payments were made through the banking channel by the assessee. It is also not in dispute that the entire credit entries reflecting in the Central Bank of India has been added to the total income of the assessee, therefore we are of the view further addition of the impugned amount will result the double addition to the income of the assessee. Therefore we are inclined to delete the addition of ₹33.50 lakhs. Regarding the investment made by the daughter in law namely Ms. Margi Darpan Shah of the 57 Lacs, we note that the assessee has vide letter dated 24-12-2012 has admitted that the impugned fund was provided by the assessee to his daughter in law. Moreover, the assessee has not explained the source of such investment before the authorities below. Even before us, the ld. AR could not controvert the finding of the ld. CIT-A. Accordingly, we reject the contention of the assessee. Regarding the addition of ₹15 lakhs, we note that there was no addition made on account of the deposit of cheque of ₹15 lakhs in the State Bank of India. Therefore, we reject the contention of the assessee. Hence the ground of appeal of the assessee is partly allowed. Appeal filed by the assessee is partly allowed.
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2019 (9) TMI 1230
Addition on account of interest income treating the same as inextricably linked with the business and accordingly reduced from the cost of the project - HELD THAT:- If the AO was not satisfied about the utilization of the fund, then he should have treated the interest income and interest expenses in the similar fashion. In other words, the AO should have treated the interest income from other sources and against that interest expenses should have been allowed as expenses against the same as these are inextricably linked. But the AO has not done so. Accordingly, we are of the view that the AO erred in treating the interest expenses and income differently despite these are inextricably linked. Thus, we are of the view that once the AO has accepted the interest cost as part of the project then the same treatment needs to be given even to the interest income by adjusting the same against the part of the project cost as the interest expense and income are inextricably linked. Accordingly, we do not find any reason to disturb the finding of the ld. CIT-A. Regarding the interest income from GMDCL, we note that such income was earned by the assessee on the fixed deposits on the bank guarantee made in connection with the project awarded by GMDCL. This fact can be verified from the bank guarantee furnished by the Axis Bank Ltd on behalf of the assessee. There was also no allegation that such bank guarantee represents the circular transaction. Moreover, there was no defect pointed out by the authorities below in the bank guarantee furnished by the assessee. Accordingly, we disagree with the finding of the learned CIT (A). Hence the ground filed by the assessee in its CO is allowed. Ground of appeal of Revenue is dismissed and the ground filed by the assessee in its CO is allowed. Addition on account of CENVAT Credit - contention of the assessee by observing that as per the provisions of section 145A of the Act the assessee is liable to include the amount of duty, cess, tax etc in the amount of purchases, sales and the closing stock - CIT(A) deleted the addition made by the Assessing Officer by observing that the assessee has been following its method of valuation consistently and there was no dissatisfaction of the Assessing Officer about the correctness/completeness of the books of accounts of the assessee - HELD THAT:- we note that the assessee has been recording its transactions of purchase, sales, and valuation of inventories, net of CENVAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of CENVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of the closing stock without giving effect to the purchases. See GUJARAT GAS COMPANY LTD. AND 1 [ 2017 (2) TMI 649 - GUJARAT HIGH COURT]. There is no ambiguity that the assessee has been following the exclusive method of accounting. In view of the above, we concur with the view of the Ld. CIT(A) and accordingly decline to interfere in his order.
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2019 (9) TMI 1229
Addition u/s 2(22)(e) as deemed dividend - accumulated profit needs to be worked out on the date of such payment/advancement of loan - HELD THAT:- In case only a single amount has been advanced to the assessee, then we may have set aside the issue to the file of the Ld. A.O to work out the amount of accumulated profits as on the date of giving advance. However from perusal of the fund flow statement we find that the assessee company started receiving funds from AOPL from 2.4.2014 and thereafter almost on 50 more occasions the amount have been received and there is alleged investment in other companies as per the strategic investment plan. Therefore in case of the assessee it will not be practicable to compute the accumulated profits on 50 days during the year since at some point of time there may be addition to the accumulated profit and at some time there may be reduction in the accumulated profits. Therefore without giving a general finding for the adoption of accumulated profits as on date of payment, in the instant case since the first day of receiving the fund from AOPL is 2.4.2014, therefore only the opening balance of the accumulated profits as on 1.4.2014 at ₹ 38.76 crores should have been considered for computing the amount of deemed dividend as per the provisions of section 2(22)(e) Disallowance of ROC expenses and stamp duty incurred for increase in share capital - HELD THAT:- Following the judgments BROOKE BOND INDIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1997 (2) TMI 11 - SUPREME COURT] as mentioned above we are of the view that Ld. CIT(A) has rightly confirmed the disallowance of ROC fees incurred exclusively for increase in share capital.
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2019 (9) TMI 1228
Addition u/s 40A(3) on account of payment in cash - genuineness of the transactions - HELD THAT:- Since the genuinity of the payments made to the party is not doubted by the revenue, the provisions of section 40A(3) could not be made applicable to the facts of the instant case - assessee had taken enough precautions from his side to ensure that the payee also don't escape from the ambit of taxation on these receipts by paying cash. This fact is also not disputed by the revenue - consequence, which were to befall on account of non-observation of section 40A(3) must have nexus to the failure of such object. Assessee made bank draft of ₹ 5,00,000/- to pay to M/s Mahima Alekha Coal Traders, but he refused to take bank draft therefore in order to run the business the assessee did not have any option but to make payment in cash. Had the assessee not been paid cash to M/s Mahima Alekha Coal Traders, his business would have been stopped or restricted to that extent. The purpose of section 40A (3) is not to restrict the assessee`s genuine business activity. As genuineness of the transactions and identity of the payee is established. Assessee has proved the pressing circumstances. The assessee acted with bona fide intention, as he made demand draft of the bank to make the payment to payee but later on it was cancelled on the request of the payee therefore, intention of the assessee was to make payment through banking channel only. This is exceptional circumstances where the assessee made payment in cash. It is observed that the assessee had taken enough precautions from his side.Hence, in the facts and circumstances as discussed above, the payment should not be disallowed as held in the case of Girdharilal Soni vs. CIT [ 1989 (3) TMI 84 - CALCUTTA HIGH COURT] - Decided in favour of assessee. Ad hoc additions - addition of purchases from 13 parties, carriage and wages and Transport charges - Non rejection of books of accounts - HELD THAT:- Here in this case,assessee submitted books of accounts and details during the assessment proceedings, however, the AO has passed order u/s 144/147 of the Act. The AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures that the assessee may be inflating its various expenses. While scrutinizing the expenditure if the expenses claimed are not having any nexus to the business of the assessee or if there is deficiency in the vouchers or there is no bills supporting the incurrence of an expenditure, at the most expenses to the extent that are not supported by the vouchers can be held to be non-genuine and can be disallowed by the AO; and item-wise the AO could have disallowed the expenditure rather than going for ad hoc disallowance of percentage basis of the expenses claimed by the assessee which action of the AO is arbitrary in nature and cannot be sustained. Therefore, the various ad hoc additions is to be deleted. - Decided in favour of assessee.
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2019 (9) TMI 1227
Re-opening of assessment u/s 147 - computation of LTCG - assessee had not filed his return of income within the due date allowed either u/s 139(1) of the Act or u/s 139(4) - HELD THAT:- In the case on hand the assessee has not filed his return of income u/s 139(4) of the Act and whereas in the case of UP Housing Development Board [ 2015 (1) TMI 570 - ITAT LUCKNOW] the return of income was filed on 30.03.2006. There was no intention to file the return of income before 31.03.2010. The return of income was filed only on 26.11.2015. Thus we cannot apply the ratio of this order to the case on hand. In view of the above we hold that re-opening of assessment is valid. Hence this ground of the assessee is dismissed. Computation of LTCG - adoption of value fixed by the DVO - There were a total of three properties which were sold. As regards the property located at Mouza Mashapur, P.S. Diamond Harbour and property located at Chowbaga (West) which was sold by way of a registered sale deed, we find no infirmity in the order of the ld. CIT(A) in directing the AO to adopt the value as fixed by the DVO. In the case of the sale of the third property i.e. Chowbaga (West) which was sold by way of a Power of attorney there is no value fixed by the Stamp Valuation Authority as there was no sale deed. This was the reason why the DVO did not fix any value to the property. In our considered opinion, as the properties at Chowbaga (West) are located adjacent to each other, the value fixed by the DVO for plot no. 2, may be taken as the value of plot no. 3 for the purpose of Section 50C of the Act. When this is computed on proportionate basis, the sale value of property would work out to ₹ 6,87,382.39. In our view this value would be fair and reasonable and may be considered as the value fixed by the DVO. Hence we direct the AO to adopt this figure as the full value of consideration u/s 50C of the Act for the purpose of computing LTCG of property no. 3 as this is the sale value declared by the assessee and is in excess of ₹ 6,87,382.39 computed above. Appeal of the assessee is partly allowed.
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2019 (9) TMI 1226
Rectification u/s 154 - TDS u/s 194H - Disallowance u/s.40(a)(ia) - one time premium paid by the assessee to the bank - HELD THAT:- We find from the submissions made by the assessee before the lower authorities, which had been completely ignored by the AO and by the ld. CIT(A) that assessee has made payment of one time non-refundable premium to bank of Nova Scotia for purchase of gold for the purpose of his business in order to ensure continuous and uninterrupted supply of gold by the bank to the assessee. We find the bank had also confirmed the receipt of said sum of ₹ 20 lakhs towards one time non-refundable premium from the assessee. Hence, this transaction of payment of one time premium would effectively go to add to the purchase cost of the gold and cannot be categorised as commission. Accordingly, there is no requirement of deduction of tax at source on the part of the assessee in terms of Section 194H of the Act and consequently, no disallowance u/s.40(a)(ia) of the Act would come into operation thereon. CIT(A) had completely shifted the stand taken by the AO by considering that the said payment of one time premium is capital expenditure as against the claim of revenue expenditure made by the assessee. It is well settled that the issue of capital vs revenue expenditure is always a debatable issue. Hence, we hold that the debatable issue cannot be the subject matter of rectification proceedings u/s.154 of the Act as it would not fall within the ambit of patent, glaring, apparent issue from the records. Reliance in this regard is placed on the decision of Hon ble Supreme Court in the case of TS Balaram, ITO vs. Valkart Bros [ 1971 (8) TMI 3 - SUPREME COURT] Hence, we hold that the impugned disallowance of ₹ 20 lakhs could not be done in the proceedings u/s.154 of the Act. In view of the aforesaid submissions, the additional grounds and regular grounds raised by the assessee are allowed.
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2019 (9) TMI 1225
Disallowance u/s.36(1) (vii) and 36(1) (viia) - bad doubtful debt or mere Provisions were made - HELD THAT:- Now the law is settled to the extent that provisions u/s.36(1) (vii) and 36(1) (viia) of the Act are separate and independent to each other - CIT(A) has rightly observed that, creation of provisions for bad and doubtful debts by debiting profit and loss account reducing the same from debtor account constitutes write off. It is an admitted fact that in the year subsequent recovery, the same credited to Profit and Loss account and offered to tax. We find merit in the submissions of the assessee bank that the CIT(A) grossly fell in error in combining the provisions of Section 36(1) (vii) and 36 (1) (viia) of the Act ignoring the principle emanated by the Hon ble Supreme Court in the case of Catholic Syrian Bank Ltd [ 2012 (2) TMI 262 - SUPREME COURT] Matter remanded back to the file of the Assessing Officer for limited purpose of verifying the amount of write off debited to provisions of bad and doubtful debts and reduced from advance account in the Accordingly, this ground of appeal raised by the assessee is partly allowed for statistical purpose. Disallowance of loss on account of shifting of securities - as during the previous year relevant to assessment year, the assessee bank had shifted certain securities from AFS to HTM in order to comply with the RBI guidelines in preparation of accounts - AO disallowed the claim on the ground that RBI guidelines are not binding while computing taxable income and the ld. CIT(A) confirmed the findings - HELD THAT:- Assessee bank has shifted the investment from one category to another is of no relevance, in as much as, fall in value of investment is held to be allowable as deduction. Thus, ground of appeal filed by the assessee is allowed. See CANARA BANK VERSUS JOINT COMMISSIONER OF INCOME-TAX, LTU AND VICE VERSA [ 2017 (11) TMI 1425 - ITAT BANGALORE] Disallowance u/s.14A - HELD THAT:- AO had not assigned any reason whatsoever as to how the claim of the assessee is incorrect. In the similar facts, the Hon ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT, [ 2018 (3) TMI 805 - SUPREME COURT] held that in the absence of the finding of the Assessing Officer resort to provisions of Section 14A of the Act r.w.r 8D of the Rules cannot be made Interest accrued on Government securities - HELD THAT:- This issue is covered in favour of the assessee in assessee s own case by the Jurisdictional High Court in [ 2014 (8) TMI 604 - MADRAS HIGH COURT] held that the assessee is taxable for interest on securities only on specified dates when it becomes due for payment, in view of third proviso to Section 145(1) of the Act, which was in force during the relevant assessment years. Allowance of depreciation u/s.36(1) (vii) and 36(1) (viia) of the Act to the extent of the provision created by debiting the profit and loss and reducing the sundry creditors account. The decision of the ld. CIT(A) is based on the law laid down by the Hon ble Supreme Court in the case of Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] and Catholic Syrian Bank Ltd [ 2012 (2) TMI 262 - SUPREME COURT] and therefore we do not find any merits in the grounds of appeal filed by the Revenue Premium paid on purchase of securities as cost of acquisition in the year of investments itself though amortized in the books of accounts. This issue is decided against the Revenue and in favour of the assessee in assessee s own case following the decision of Hon ble Jurisdictional High Court in assessee s own case reported [ 2007 (2) TMI 187 - MADRAS HIGH COURT] No addition can be made on account of stale drafts and cheques - amount cannot be brought to tax as a cessation of trading liability u/s. 41(1) of the Act, where the appellant had not written off the liability Depreciation at 60% on ATM treating it as computers - See M/S. SARASWAT INFOTECH LTD. [ 2013 (1) TMI 861 - BOMBAY HIGH COURT] TDS u/s 194A - TDS liability on interest in respect of recurring deposit - HELD THAT:- CIT(A) held that interest in respect of recurring deposit cannot be disallowed for non deduction of TDS thereon. The ld. CIT (A) had referred to the relevant provisions of Section 194A of the Act and amendment made by Finance Act, 2015. The decision of the ld. CIT(A) is based on proper appreciation of the legal position. Addition u/s 36(1) (viii) - AO had disallowed a sum on the ground that the assessee had not made advance to eligible activities - HELD THAT:- CIT(A) taking note of the fact that the Assessing Officer had made disallowance based on the names of the borrowers without looking into purpose of the loan, deleted the addition. The ld. CIT(A) order is based on proper appreciation of the legal positions and evidence. We do not find any reason to interfere with the order of the ld. CIT(A). Accordingly, ground No.8 filed by the Revenue is dismissed. Taxability of interest on NPA - AO brought to tax interest on NPA following the decision of Southern Technology Ltd. [ 2010 (1) TMI 5 - SUPREME COURT] - HELD THAT:- This issue was dealt by the Co-ordinate Bench of the Tribunal in the case of Karur Vysya Bank . [ 2017 (4) TMI 566 - ITAT CHENNAI] wherein after referring to the decision of Hon ble Supreme Court in the case of CIT vs. Vasisth Chay Vyapar Ltd [ 2018 (3) TMI 56 - SUPREME COURT] - We further note that the decision of Hon ble Supreme Court in the case of Vasisth Chay Vyapar Ltd (supra) is subsequent to the decision in the case of Southern Technology Ltd (supra). Therefore the decision of Hon ble Supreme Court in the case of Vasisth Chay Vyapar Ltd (supra) shall prevail over the decision of Southern Technology Ltd. Therefore, we direct the Assessing Officer not to assess interest on NPA.
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2019 (9) TMI 1224
Disallowance on account of works contract tax - AO found that the sum was not related for the year under consideration - CIT(A) deleted the said disallowance - HELD THAT:- Although the learned DR has contended that the amount in question on account of works contract tax liability was not related to the year under consideration on the basis of deduction of the said tax by the concerned party and payment thereof in the subsequent year as mentioned in the relevant certificate, it is observed that the corresponding works receipts were accounted for by the assessee in the year under consideration as found by the Ld. CIT(A). As rightly held by him, when the works was executed and amount of erection sales was accounted for and offered to tax in the year under consideration, deduction for the corresponding amount of works contract tax incurred on such erection sales / works receipt was rightly claimed by the assessee as deduction. CIT(A) thus allowed the claim of the assessee by applying the matching principle and we do not find any infirmity in his impugned order - Decided against revenue Disallowance on account of alleged unascertainable payments to subcontractors - said labour charges in the absence of TDS were not ascertainable - CIT(A) deleted the said disallowance - HELD THAT:- As explained by the assessee that the amount of unbilled sales represented revenue booked in the accounts on the percentage completion method for incomplete contracts at the end of the year. It was explained that corresponding expenditure incurred in relation to the unbilled sales including sub-contract charges for earning the revenue so booked was also provided for in the accounts. Since this method was followed by the assessee company consistently in the earlier years, the Ld. CIT(A) allowed the claim of the assessee as the same was made as per the method of accounting consistently followed by the assessee. Moreover, we are of the view that the said claim of the assessee is liable to be allowed even as per the matching principle. We, therefore, find no infirmity in the impugned order of the Ld. CIT(A) - Decided against revenue Disallowance on account of excise duty - as there was no corresponding credit made by the assessee in the profit and loss account on account of Excise Duty, the AO disallowed the claim - HELD THAT:- Inclusive method was followed by the assessee in respect of excise duty and since the sales credited by the assessee to the profit and loss account as well as the stock of finished goods were inclusive of excise duty, there was no credit separately made on account of excise duty to the profit and loss account. It appears that this accounting treatment given by the assessee however was not appreciated by the AO while making the disallowance on account of excise duty. CIT(A), on the other hand, appreciated the said treatment in the right perspective and since he rightly allowed the claim of the assessee for excise duty on such appreciation, we do not find any justifiable reason to interfere with the impugned order of the Ld. CIT(A) on this issue. Ground No. 3 is accordingly dismissed. Addition on account of profit on sale of fixed assets while computing the book profit u/s 115JB - HELD THAT:- As held by the Hon ble Supreme Court in the case of Appollo Tyres Ltd vs CIT [ 2002 (5) TMI 5 - SUPREME COURT] relied upon by the AO in his order and cited by the learned DR at the time of hearing before us, the profit as shown in the accounts of the company, which are certified by the auditors of the company as having been maintained in accordance with the provisions of the Companies Act and which have been accepted in the general meeting of the company as well as by the Registrar of the Company, has to be taken as the starting point for computation of book profit u/s 115J and only the adjustments to the extent provided in the Explanation to Section 115J can be made. It appears that the Ld. CIT(A) however failed to consider this binding precedent and allowed the adjustment beyond what is provided in Explanation to Section 115JB by reducing the profit on sale of fixed assets which was credited by the assessee company to its profit and loss account. We set aside the impugned order of the CIT(A) giving relief to the assessee on this issue and confirm the addition made by the AO on account of profit on sale of fixed assets while computing the book profit of the assessee company u/s 115JB of the Act. Disallowance on account of charities and donations - HELD THAT:- As observed that the disallowance made by the AO on account of puja donations was deleted by the Ld. CIT(A) after having found that the said donations were made by the assessee to various local entities primarily towards community celebrations in order to build goodwill within the community and to ensure the smooth conduct of business. Being satisfied that the business expediency of the expenses incurred by the assessee on payment of the said donations, CIT(A) allowed the same u/s 37(1) of the Act and keeping in view the relevant facts of the case, we do not find any infirmity in the impugned order of the Ld. CIT(A) on this issue
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2019 (9) TMI 1214
Eligible deduction u/s 10B - Ownership of the firm is 100% EOU Unit - HELD THAT:- Delay condoned. Leave granted.
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2019 (9) TMI 1209
Application filed by the petitioner u/s 264 - filed beyond the time stipulated u/s 264 - HELD THAT:- Intimation u/s 143(1) raising the demand was issued on 20.10.2008 itself. According to the petitioner, they are not aware of such intimation. On the other hand, it is contended by the revenue that such intimation was readily available in the e-filing portal of the petitioner. No doubt, the petitioner has approached the first respondent and filed application u/s 264 to set right the dispute. The fact remains that such application was filed on 06.10.2015 with delay. The first respondent has specifically pointed out that the petitioner has not filed any application to condone the delay specifically indicating the reasons for such delay. It is also seen that the first respondent has chosen to reject the application only on the ground that it was filed belatedly. Therefore, this Court is of the view that ends of justice would be met if the matter is remitted back to the first respondent for reconsidering the matter afresh if the petitioner is in a position to satisfy the first respondent that the delay in filing such application under section 264 was neither willful or intentional. The order of the first respondent impugned in this writ petition is set aside and the application filed under section 264 is restored to file.
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2019 (9) TMI 1207
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Only some questions of law arise which, according to Mr. Khaitan, learned senior advocate, have not been properly appreciated by the tribunal. Altogether throwing out the appeal might cause injustice to the appellant. In those circumstances, we had directed the appellant s advocate on record to serve notice on the respondent. By consent of the parties, we have heard out the appeal. On the facts and in the circumstances of the case, we feel that the above questions of law should be referred to the tribunal. On remand, it shall decide both the legal and factual issues arising out of Section 14A of the Income Tax Act, 1961 as contained in the said questions and pass a reasoned order after hearing the parties within six months from the date of communication of the order.
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2019 (9) TMI 1206
Order u/s 143 (3) r.w.s.144 C in the name of the predecessor of the amalgamated company - HELD THAT:- The Supreme Court in a recent decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law - no merit in the present appeal and no question arises for consideration
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2019 (9) TMI 1205
TDS u/s 194J - HELD THAT:- Tribunal has followed the decision of the Calcutta Bench of the Tribunal in the case of Vodafone Essar Mobile Services Ltd. [ 2015 (9) TMI 1358 - ITAT KOLKATA] . We note that it is the assessee s contention that in providing roaming service, no technical services are given as there is absence of any human intervention in providing it. On the other hand, the Revenue has placed reliance upon the evidence of the technical expert in the case of Vodafone Essar Mobile Services Ltd. (supra) to canvass the view that even in the present facts that the technical services are rendered. Thus, requiring deduction of tax u/s 194J of the Act. We asked Mr. Suresh Kumar, whether the decision of the Calcutta Bench of the Tribunal in the case of Vodafone Essar Mobile Services Ltd. (supra) has been accepted by the Revenue or any appeal has been filed by the Revenue and if so, the result thereof. Mr. Suresh Kumar, seeks time of two weeks to enable him to take appropriate instructions. Admit admit question nos. (a) and (b) for consideration as they do give rise to substantial question of law
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2019 (9) TMI 1202
Addition on account for cash deposits in Bank account - deposits from a close friend of assessee's father who is no longer alive - only evidence which the assessee could rely upon was the Affidavit of the sole surviving child of deceased - HELD THAT:- Tax authorities have made the addition and sustained the addition on the grounds that the consistent submission that Shri Jarnail Singh verbally asked the assessee to invest is a fact supported only by the assessee and not corroborated by Shri Jarnail Singh. The fact that Shri Jarnail Singh who had been suffering from liver cancer etc. was no longer alive, stands ignored. The sole surviving child does not plead ignorance on facts and infact corroborates the assessee's version by an affidavit dated 21.08.2015. The said Affidavit is not even attempted to be upset by the Revenue. For reasons best known to the tax authorities, it has been left unaddressed. Onus placed upon by the assessee to explain the deposits in his bank account stands satisfactorily discharged. The orders of the AO ignoring the evidences on whims cannot be upheld. The insistence of the tax authorities without upsetting the evidences available on record cannot be accepted. In the facts of the present case without any effort on the part of the Revenue to assail the contents of the affidavits, prayer for remand back to the AO has no meaning. Accepting the explanation of the assessee the addition for the reasons set out hereinabove in detail is directed to be deleted. - Decided in favour of assessee.
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2019 (9) TMI 1201
Jurisdiction of AO for service of notice u/s 143(2) - Difference in address as per PAN records and Income Tax Return (ITR) - HELD THAT:- As per jurisdiction chart of Income Tax Department in Delhi, extracted from the website of Income Tax Department, the jurisdiction of assessee as per his address in PAN application is with Assessing Officer Ward 39(1). The jurisdiction of the Assessing Officer, as per the address mentioned in the return of income is with Assessing Officer Circle No.47(1) who has passed the assessment order. The notice issued u/s 143(2) has been issued by the Assessing Officer Circle 34(1) who is neither the Assessing Officer of assessee on the basis of address in PAN application nor is the Assessing Officer of assessee as per address mentioned in the returns of income. Further, even if presumed to be by jurisdictional Assessing Officer has not been served properly since the address mentioned in the notice and address as per tracking report is different and moreover there is discrepancy in the name of the assessee. Therefore, on this ground also the assessee succeeds as in this case also the service of notice was not proper.
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2019 (9) TMI 1200
TP Adjustment - adjustment to International transactions of software development services and marketing support services - comparable selection - HELD THAT:- Thirdware Solutions Ltd. - The perusal of the pages of the annual report cited by the learned counsel of the assessee, it is evident that the company has shown revenue only from sale of product and no segment data in respect of the software services is available in annual report of the company. In view of the facts, we hold that the Learned AO/TPO is not justified in including the company in the set of the comparables in the final assessment order passed. Larsen and Toubro Infotech Ltd - As function of the assessee is concerned, the word service and products have been used interchangeably and it cannot be ascertained from the part of the annual reports filed before us, that the company was engaged only in providing software services. In the circumstances, we feel it appropriate to restore the issue of deciding functional comparability to the learned AO/TPO with the direction to the assessee to file the complete annual report of the company. If required, the TPO may gather information u/s 133(6) of the Act form the company. He shall provide a copy of the information to the assessee also. Infobeans Technologies Ltd.-Margin 48.97% - Annual report has provided details of earning in foreign exchange, which mentioned that export of goods/services amounting to ₹ 32,96,59,883/- have been calculated on FOB basis. The Note - 20 of the annual report mention revenue from operations earned on sale of software (export) amounting to ₹ 32,96,59,883/-. Thus, in view of the Note 27, the quantum of export of the goods and export of the services cannot be ascertained and thus in view of no segmental data of export of the goods and export of the services available separately, we are of the opinion that the company cannot we selected as comparable at entity level. Accordingly, we direct the Ld. AO/TPO to exclude the company from the set of the comparables. Persistent Systems Ltd. - As forming part of the financial restatement of the company, under the head segmental information, it is mentioned that the company operates predominantly for providing software products, services and technology innovation covering full life-cycle of products to its customers. The segmental information, however, has been provided for the verticals in the field of telecom and wireless , life science and healthcare and infrastructure and systems . No segmental data of software products and services are available in the annual report of the company. In the circumstances, we are of the opinion that the company cannot be selected as comparable at entity level in absence of any segmental data of software product and software services Mindtree Limited. - The various segments mentioned in the annual report comprises of manufacturing, BFSI, hi-tech, travel and transportation and others, but the assessee is primarily engaged in providing global software development in these areas. In the background to significant accounting policies, however, mention other services offered by the company which also include business process management, business technology consulting, cloud, digital businesses, independent testing, infrastructure management services, product engineering and SAP services. The company also own intellectual property rights as pointed out by the learned counsel as against no intellectual property rights owned by the assessee, and thus, assets of the company cannot be compared with the assessee. In view of functional dissimilarity as well as the difference in the assets owned by the company vis- a-vis the assessee, we direct the Learned AO/TPO to exclude the company from the set of the final comparables. Tata Elexi Ltd. - On perusal of the annual report of the company, we find that revenue from operations include sale of traded goods of ₹ 47 crore and revenue from rendering of the services comprises of product design (₹ 664 crore), graphic animation and gaming (₹ 18.43 crores) and system integration and support (₹ 42.39 crores). In our opinion, in absence of any segmental result of trading as well as services rendered, the company cannot be selected as comparable at entity level, accordingly, we direct the learned AO/TPO to exclude the company from the set of the comparables. Cigniti Technologies Ltd. - In view of extraordinary event during the year under consideration, we direct the Ld. AO/TPO to exclude the company from the set of the comparables. R. S. Software (India) Ltd. - We find that in case of on-site development and off-site developments services are rendered in different geographical locations. In case of on-site development, the company charge higher revenue from the customers in view of the expenses incurred in foreign currency and higher input costs on human resources, whereas in case of off-site development all expenses on human resources are incurred domestically and thus revenue or fee charge from the customer would be generally less than what would be charged in case of on-site customers. This business model difference makes difference in FAR analysis. As relying on MICROSOFT INDIA (R AND D) PVT. LTD. VERSUS DCIT, CIRCLE 16 (2) , NEW DELHI [ 2019 (1) TMI 1136 - ITAT DELHI] the company becomes functionally dissimilar to the assessee CAT Technologies Ltd. - Revenue receipts also include consultancy fee received and there is no separate segment for consultancy in the annual accounts of the company. In our opinion, in absence of any separate segmental date of software development services, the company cannot be treated as comparable at entity level Mavrick Systems Ltd. - In view of no documentary evidence filed in support of its claim of functional similarity, we reject the request of the learned counsel for sending the matter of examining comparability of the company back to the learned DRP. Treating of foreign exchange gain/loss as non-operating items by the learned DRP while determining the ALP of international transactions - HELD THAT:- We agree with the contention of the learned DR that there are no details, whether the foreign exchange gain/loss appearing in the annual reports of the comparable is related only to the revenue transactions. We also agree with the contention that the transaction of overseas purchase or sales in foreign currencies are booked in books of accounts in Indian rupees at relevant foreign exchange rate. So once, a transaction has been converted into Indian rupees, it becomes at par with other transaction, removing the effect of transaction made in other currency. Now, if subsequently, in the year under consideration or in subsequent year, the taxpayer gains or loss on account of those overseas transaction, such forex gain or loss is purely on account of subsequent financial forex market and should not impact the value of the overseas purchase or sale transaction for the purpose of comparability with the International transaction of the assessee - Decided against assessee. Risk Adjustment - HELD THAT:- As assessee admitted that no comparative data to account for any risk adjustment was either provided before the lower authorities or provided before the Tribunal and hence, it was not possible to work out the risk adjustment. Accordingly, the ground of the appeal was dismissed. Transfer pricing adjustment in relation to notional interest on outstanding receivables - HELD THAT:- On perusal of financial statements of the assessee placed on page 1 to 27 of the paper book, we find that assessee has not borrowed any money. We find that the Hon ble Delhi High Court in the case of Bechtel India [ 2016 (9) TMI 196 - DELHI HIGH COURT] has observed that where the appellant is a debt free company, the question of receiving any interest in receivable did not arise. No adjustment on account of interest on outstanding receivable is warranted in the case of the assessee Reconciliation of the revenue/receipts corresponding to TDS statement in form No. 26AS and the receipt shown in TDS claimed by the assessee - HELD THAT:- This is a matter of verification, whether the amount represented in in Form No. 26A-S, is income of the assessee for the year under consideration or advance or otherwise. We, therefore, direct the assessee to produce all necessary documents in support of its claim that receipt are not income taxable in the year under consideration. The Assessing Officer may decide the issue in dispute in accordance with law. The ground of the appeal is accordingly allowed for statistical purposes Allowing TDS credit - HELD THAT:- The matter is only of verification at the level of the Assessing Officer, and accordingly, we direct the Assessing Officer to verify the claim of the assessee and decide the issue in accordance with law. The ground of the appeal is accordingly allowed for statistical purposes.
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2019 (9) TMI 1199
Disallowance of agricultural income - treated as income from other sources - Creation of HUF - HELD THAT:- CIT(A) observed that, Assessee cannot create a status of HUF for the purpose of taxation. We are, however, not in agreement with this contention of CIT(A). The moment a person is born into a family, HUF is created and if the land holdings were in the joint names of the family members, the assessee also being part of the HUF, would have a right in the income there from. We find that the Revenue is taking contrary stands. AO has taken the stand that there is no evidence filed in proof of land in the name of the HUF and therefore, the income has to be treated as assessee s individual income under the head income from other sources while CIT(A) held that the assessee is not part of the HUF and therefore, the income cannot be held to be belonging to the assessee. The existence of the joint family property is recorded by the CIT(A) and the assessee being the member of the joint family, is entitled to his share in the property. Once joint family property is established, then on partition, the assessee becomes the owner of such share in his individual capacity. In the paper book filed by the assessee, we find that there are copies of revenue records, wherein the name of the assessee is recorded as the owner of agricultural land in Ramtek. Therefore, it is to be accepted that the oral partition, subsequently reduced into writing has been given effect to. The assessee has filed the returns in the status of HUF admitting agricultural income in 2012, i.e. after the search. Thus, there cannot be any doubt that the assessee or the HUF possessed agricultural land. Therefore the income from agricultural land is available with the assessee to the extent of his share. As held by the Hon ble Supreme Court in the case of Gurucharan Singh vs. Kamla Singh [ 1975 (9) TMI 183 - SUPREME COURT] there can be oral partition of joint family property. Therefore, agricultural income offered by the assessee has to be accepted and cannot be treated as income from other sources . Assessee gets relief accordingly in all the A.Ys before us - Disallowance of agricultural income and consequential additions for all the A.Ys in the hands of assessee before us, are deleted. Addition u/s 68 - HELD THAT:- assessee has declared agricultural income of ₹ 2,00,000/- for the A.Y. 2001-02. Going by the same, the agricultural income for the earlier years from 1992 can be estimated at ₹ 50,000/ per year i.e. ₹ 4,50,000/-. The marriage expenses incurred outside the books of accounts have already been brought to tax as unaccounted income of the assessee. Therefore, the agricultural income from the earlier years can be accepted as the source for the opening cash balance claimed by the assessee. The peak cash credit of ₹ 4,94,665/- also should be considered as cash available with the assessee. Further, as regards the payment to labour contractor also, we are of the opinion that it should be taken into consideration in A.Y. 2004-05 as the construction of the house commenced in August, 2003. Therefore, AO is directed to redraw the cash flow statement for all the AYs by accepting the opening cash balance as on 1.4.2000 at ₹ 6,26,500/- and considering the labour contractor payment of ₹ 5,00,000/ in the A.Y. 2004-05 and if there is any negative closing cash balance for any of the A.Ys, only such negative cash balance shall be considered as unexplained expenditure of the assessee for such A.Y. and can be brought to tax. The grounds against such additions for all the AYs are accordingly partly allowed for statistical purposes Addition on account of two crossed cheques found in the possession of the assessee - HELD THAT:- we find the contentions of assessee to be correct, because both the cheques were found in possession of the assessee, but the cheques were neither issued in his name nor were issued by him. In fact, they were part of litigation between assessee s brother and issuer of cheques. Therefore, we delete the addition of ₹ 4 lakhs made by AO and confirmed by CIT(A) for A.Y. 2001-02. Thus assessee s appeal for A.Y. 2001-02 is partly allowed. Unexplained cash deposits into bank accounts - HELD THAT:- We find that the CIT(A) has considered the issue but has held that the assessee has not filed confirmation letters from Chit Fund Companies, GPR Chits, Laxmi Sridevi Chit Fund etc. and therefore has not discharged the onus to support his explanation. Before us, assessee is referring to payment by cheques. In view of the same, we deem it fit and proper to direct the AO to consider if the deposits were by the cheques whose numbers are mentioned by assessee and if they are found to be by way of cheques, then no addition as unexplained deposits into bank account shall be made. The assessee gets relief accordingly and the grounds of appeal on account of unexplained deposits into bank account by way of cheques are treated as allowed for statistical purposes.
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2019 (9) TMI 1198
Disallowance of interest expenditure u/s 36(1)(iii) - disallowance of interest expenditure on loans advanced to three parties have been sustained by him primarily for the reason that interest bearing funds have been advanced for non business purpose - HELD THAT:- As regards assessee s claim that the loan advanced to the aforesaid three parties were for the purpose of business, we must observe that the loan advanced to the two individuals i.e., Khusru Jujina and Ramesh Jogani cannot be considered to be for the purpose of assessee s business as they are not the employee of the assessee but are employees of another group company and the assessee has not established the business gain derived by it by advancing such loan. By merely stating that the concerned parties have rendered some services, assessee s claim cannot be accepted. Insofar as the loan advanced to Nariman Infrastructure Pvt. Ltd., the assessee is required to establish the business expediency in advancing the loan. By merely claiming that the subsidiary is in real estate business assessee s claim cannot be allowed. However, it is the specific contention of the assessee that the assessee had sufficient interest free fund available to make such advances. The aforesaid contention of the assessee requires verification as neither the AO nor learned Commissioner (Appeals) have factually verified the availability of sufficient interest free fund with the assessee. In case, the assessee is found to be having sufficient interest free funds to advance the aforesaid loans, no disallowance of interest expenditure should be made. Disallowance of expenditure u/s 14A r/w rule 8D - HELD THAT:- Notably, before the first appellate authority, the assessee had specifically pleaded that no disallowance under section 14A r/w rule 8D can be made in the absence of any exempt income earned by the assessee during the year. The fact that the assessee has not earned any exempt income during the year, has not been disputed by the Revenue. That being the case, as per the ratio laid down in the decisions cited before us by the learned Sr. Counsel for the assessee, no disallowance under section 14A r/w rule 8D can be made. Addition for deduction of interest expenditure claimed under section 24(b) - HELD THAT:- When a part of the building is used for commercial purpose and the rest of it is let out, the interest expenditure on the loan availed for construction of building has to be apportioned between the area let out and area used for commercial purpose, as this is the most scientific basis on which the interest can be allocated. It is also very much clear that the Assessing Officer has not pointed out any major deficiency in allocation of interest expenditure between the area used for commercial purpose and area let out. The allegation of the Assessing Officer that the assessee at its own will changes the area let out is on a mere presumption. We do not find any material on record to indicate that the Assessing Officer had carried out any specific enquiry to disprove assessee s claim regarding the area let out. Moreover, when the allocation of interest expenditure in identical manner has been accepted by the Assessing Officer in past assessment years, there is no valid reason for not accepting it in the impugned assessment year when the facts are identical. In any case of the matter, the expenditure incurred by the assessee would be allowable either under section 24(b) or under section 36(1)(iii) of the Act. That being the case, it will make no difference to the Revenue
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2019 (9) TMI 1197
Penalty u/s 271(1)(c) - non specification of charge - HELD THAT:- AO has not mentioned the specific charge in its penalty order whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, in our considered view, the penalty levied by the AO and confirmed by the learned CIT (A) is not sustainable. - Decided in favour of assessee.
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2019 (9) TMI 1193
TDS on expenditure incurred towards reimbursement - addition u/s 40(a)(ia) - HELD THAT:- Reimbursements of expenses do not require tax deduction at source. The tax deduction liability arises only at the point of time when payment is for carrying out any work in pursuance of a contract for the specified purposes. The payment, in the present case, is not for carrying out any work of the specified nature but only a partial reimbursement of such a payment of specified nature. The distinction is subtle and significant. The lower authorities clearly lost sight of the above aspect of the matter, and proceeded to treat reimbursement of expenses as incurring of expenses. CIT(A) has also stated that there is no evidence of the fact that the tax deduction at source was made by the person actually making payment of expenditure. In our considered view, this is wholly irrelevant. All that we are concerned at this stage is whether the assessee has failed to discharge his tax withholding obligation, and when the assessee has not committed any such failure, there is no question of his being visited with the consequences of such a non-existent failure. We uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee
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2019 (9) TMI 1192
Validity of proceedings u/s 153C/143(3) - HELD THAT:- Ld. CIT(A) correctly cancelled the assessment order dated 29.12.2010 under section 153A/153C/143(3) of the I.T. Act. Since in this case similar loss have been assessed under section 143(3) originally vide Order dated 18.07.2009, therefore, the present proceedings under section 153C/143A should have been dropped by the A.O, after verification of the seized material. There were no justification to assess the same loss in parallel proceedings. The Ld. CIT(A), therefore, correctly cancelled the assessment order. We, accordingly, confirm the Order of the Ld. CIT(A) and dismiss the departmental appeal.
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2019 (9) TMI 1191
Interest u/s. 244A on self assessment tax - Whether no interest u/s. 244A of the Act is allowable on the refund due to the assessee on the self-assessment tax? - whether assessee is liable to get refund on interest of self-assessment tax u/s. 244A of Income Tax Act is or not? - HELD THAT:- Section 244 is speaks about interest on refund wherein it is mentioned that where refund of any amount become due to the assessee under this Act, he shall, subject to the provision of Section, be entitled to receive, in addition to said amount simple interest thereon As matters are squarely covered by the orders of the Hon ble Supreme Court and Hon ble different High Courts as well as Income Tax Act provisions are also in favour of assessee. In our considered opinion, ld. CIT(A) has passed reasoned order and same does not require any kind of interference at our end. Appeals filed by the Revenue are dismissed.
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Customs
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2019 (9) TMI 1223
Demand of duty based on the statements of two person claimed to be as Partner and Director of the petitioner - Petitioner in the writ petition, challenging the statement, failed to produce both of them - Reliability on statements made - HELD THAT:- the excuses advanced by learned counsel for the Petitioner for the non-appearance of Mr. Surat and Mr. Baweja to be completely unacceptable. The Petitioner has approached this Court by way of the present writ petition to seek relief from this Court in the exercise of its discretionary writ jurisdiction. A Petitioner who approaches the Court has to come clean, and cannot play hide and seek with the Court. The statements made by Mr. Surat in his affidavit are completely belied by his statement recorded under Section 108 of the Customs Act, which is admissible in evidence. Aforesaid being the position, we are satisfied that the Petitioner has not come to this Court with clean hands. We are accordingly dismissed this writ petition with costs quantifying as ₹ 2 lacs to be deposited with the Advocates Welfare Trust Fund. Bailable warrants issued for production of Mr. Surat before this Court, since he appears to have consciously sworn a false affidavit before this Court. He shall also show cause as to why proceedings for perjury should not be initiated against him.
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2019 (9) TMI 1222
Maintainability of petition - alternate remedy of appeal - Benefit of concessional rate of duty - demand of differential duty - import of Areca nuts. Whether it is an established position that there have been breach of principles of natural justice and, if disputed questions of fact arise on this aspect? - Whether the same point can also be urged in a substantive appeal which remedy is available to the Petitioners under section 129 of the Customs Act? HELD THAT:- The conduct of the Petitioners is such that the Petitioners are not entitled to invoke extra ordinary jurisdiction of this Court. This is not a fit case where we can conclusively hold that the Petitioners were not aware of the proceedings and that there is no merit in the stand of the Respondents that the Petitioners have deliberately adopted this strategy so as to create lacuna to challenge the impugned order. Since the Petitioners have an alternate remedy of appeal against the impugned order and that the Petitioners can urge all the points available to them in law including those raised in this petition before the Appellate Authority, we do not feel it necessary to delve upon the matter any further. Petition rejected.
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2019 (9) TMI 1221
Classification of imported goods - Coco Jelly - whether classified under CTH 17049090 or under CTH 21069099? - benefit of exemption notification No. 46/2011 Cus dt. 01.06.2011. HELD THAT:- The heading 1704 90 10 covers Jelly confectionary. What is being imported by the Appellant is Coco Jelly. It is not sweetened food preparation viz. Vegetables, fruit, fruit peel preserved by sugar and jams, peel etc so as to exclude the same from 1704. Therefore by taking recourse to such exclusion, it cannot be said that the impugned products would merit classification under chapter 2106. Under CTH 21.06 only those food preparation will be included which are Not elsewhere specified or included . The Appellate authority has not given reason to exclude the goods from 1704 and straightway taken recourse to exclusion clause of HSN in 1704 which is not applicable as the goods nowhere fall under the excluded category. Clearly the impugned goods cannot be classified under CTSH 2106 90 99 and would merit classification under CTSH 1704 90 90 only. We also find from the Bill of Entries filed by other importers that the Pudding and Jelly are being classified under CTSH 1704 90 90 and there is no objection from the revenue. Even the Food Safety and Standards Authority of India has classified the goods as Pudding or jelly as the case may be. The impugned goods would merit classification under Chapter sub heading 17049090 - Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1220
Imposition of penalty on Customs Broker - Valuation of imported goods - import of heavy melting scrap on high sea sale basis - It was alleged against the appellant that they had not obtained any authorization or document from M/s. V.V. Iron Steel Company Ltd. on behalf of whom they have filed Bill of Entry - imposition of penalty - HELD THAT:- The appellant has filed the Bill of Entry of M/s. V.V. Iron Steel Company Ltd. The high seas sales between MM Traders and the client of the appellant is a DDP transaction. As per such nature of transaction, the seller bears cost, risk and responsibility for the cleared goods. The seller is thus responsible for import, clearance, duties and taxes that have to be paid. It is therefore the responsibility of MM Traders. Further in the Show Cause Notice, the allegation is that the appellant has not obtained document from M/s. V.V. Iron Steel Company Ltd. There is no allegation that the appellant has knowingly and intentionally abetted any misdeclaration of goods. The authorities below, though have come to the conclusion that the appellant has abetted making false declaration in the Bill of Entry, there is no iota of evidence furnished by the department to support this conclusion. Imposition of penalty - HELD THAT:- There is nothing to establish or prove that the appellant has knowingly or intentionally abetted to make false declaration in the Bill of Entry - the penalty imposed under section 112(a) of the Customs Act, 1962 cannot sustain. The penalty imposed u/s 114AA would be attracted only if the person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect. In the present case, the appellant has not abetted in mis-declaration of the goods, the penalty imposed under section 114AA of the Customs Act, 1962 also cannot sustain. The impugned order is set aside insofar as the penalties imposed under section 112(a) and 114AA of the Customs Act, 1962 on the appellant - Appeal allowed.
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2019 (9) TMI 1219
Condonation of delay of about 4 years in filing appeal - rejection of refund claim - HELD THAT:- The Proprietor has not enquired about the outcome of their appeal. It is only on 29.01.2019 that the very same Proprietor Shri Vinod Kumar has filed the RTI application requesting for details of the OIA. In reply to the RTI query, the department has furnished the number and date of the OIA and also provided a copy of the same. The date of despatch is mentioned as 11.04.2014 and the mode of despatch is also shown as Speed Post . The appellant has not preferred any appeal against the said reply furnished by the CPIO of the department under the RTI Act. There has been inordinate delay on the part of the appellant to file the appeal. The plea put forward by the appellant that department did not inform them as to whether the matter was referred to call book etc. is not reflected anywhere in the records. This is a mere assumption made by the appellant. There is huge delay in filing the appeal which remains unexplained by the appellant - COD application dismissed.
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Insolvency & Bankruptcy
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2019 (9) TMI 1218
Time limit for Resolution Process - Relevant time for appointment of Resolution Professional - exclusion of 35 days of delay in appointing the Resolution Professional in place of the Interim Resolution Professional and the period during which different applications were pending - HELD THAT:- In the present case, as the Corporate Insolvency Resolution Process could not proceed in the absence of Resolution Professional for 35 days the case of Appellant being covered by decision of this Appellate Tribunal in QUINN LOGISTICS INDIA PVT. LTD. VERSUS MACK SOFT TECH PVT. LTD., MOHD. SABIR PARVEZ AND MR. M.L. JAIN, (RESOLUTION PROFESSIONAL) [ 2018 (6) TMI 904 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] , we allow the prayer as made in this appeal and exclude the period of 35 days for the purpose of counting 180 days or 270 days of Resolution Process - We also exclude the period of pendency of 18 days during which the application remained pending before the Adjudicating Authority. Thereby, we exclude the total period of 53 days for the purpose of counting 180 days or 270 days. Part of the impugned order dated 30th April, 2019 passed by the Adjudicating Authority is set aside - rest part of the impugned order is affirmed - appeal disposed off.
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2019 (9) TMI 1190
Status of other COC members as financial creditors - financial creditors on the basis of their lending of money to the Corporate Debtor as unsecured loans - HELD THAT:- On perusal of Section 73(1) of the Companies Act, 2013 read with Rule 2(c) of Companies (Acceptance of Deposit) Rules and after analysing the transactions between the Corporate Debtor and Respondents No. 3 to 11, it can be said that the said advance of money was accepted by Corporate Debtor as loan. Section 73(2) will not apply since none of the respondents no. 3-11 are members of Corporate debtor advancing such money - Considering that the said money advanced by the respondents to the Corporate Debtor is not deposit but loan, the question arises as to what kind of debt can it be categorised into. Certainly, this is not an Operational debt as there is no transaction for goods or services, the money is plainly advanced for the business purpose of the Corporate Debtor having clause of Interest though much higher as compared to market or other prevailing rates in normal parlance or business dealings. The Application is allowed thereby Respondents no. 3-11 are declared as not falling under category of Financial Creditors but may be unsecured creditors who may avail other remedies to recover their debt. Further it is ordered that the COC meetings held on 13.06.18, 29.08.18, 12.09.18 and 29.09.18 are non-est and resolutions passed if any therein such meetings stands nullified.
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2019 (9) TMI 1189
Maintainability of application - initiation of CIRP - Corporate debtor - operation debt - existence of dispute or not - HELD THAT:- This adjudicating authority is of the considered view that operational debt is due to the Applicant and in support of that operational creditor has placed copy of the invoices at page No. 38 to 45 to the application. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default - the Application filed by the Applicant is complete in all respects. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Petition admitted - moratorium declared.
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PMLA
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2019 (9) TMI 1196
Money Laundering - attachment of properties - non-filing of charge sheet at the time of passing the confirmation order - proceeds of crime - relationship of proceeds with alleged crime - whether the attachment lapses in the absence of non-filing of the charge-sheet at the time of passing the confirmation order before the Adjudicating Authority? HELD THAT:- It is admitted on behalf of respondent in its written-submission that the amendment dated 19.04.2018 amending section 8(3) of PMLA, 2002 brings into the effect that order confirming the attachment passed under section 8(3) would only subsist during the period of investigation for a period not exceeding 90 days. In other words, the prosecution complaint shall be filed under 45(1) PMLA, 2002 within 90 days of confirmation of provisional attachment order. This amendment is prospective in nature and not retrospective. Following the amendment, prosecution complaint under section 45(1) PMLA, 2002 was filed on 11.06.2018 which is within the time limit of 90 days prescribed by the amendment from the date it became effective. Section 8(3)(a) of the Prevention of Money Laundering Act, 2002 was amended through Section 207-208 of the Finance Act, 2018. As per Section 207 of the Finance Act, 2018, the Central Government was required to notify the date for coming in to force of Section 208 of the said Act. Notification bearing no. G.S.R.383(E) dated19.4.2018 issued by the Department of Revenue, Ministry of Finance, Government of India, appointed 19.04.2018 as the date for coming into force of Section 208 of the Finance Act,2018 which amended Section 8(3)(a) of the PMLA. Section 44(1)(b) of PMLA underwent an amendment where the words upon perusal of police report of the case(s) which constitute an offence was deleted and thus by deletion, it is clear that cognizance of offence u/s 3 PMLA can be taken only upon a complaint in writing and not on a Police report, i.e. charge sheet filed by Police u/s 173(5) Cr.PC. PMLA does not define complaint but complaint is defined under Section 2(d) CrPC as allegation made orally or written to be Magistrate for taking action against the persons who have committed the offence. It is clear after going through the scheme of the Act that being a Special Act, all PMLA proceedings are to be conducted within the four corners of Act. These are stringent provisions. Criminal liabilities are involved at the end of the day if the charges are proved. Different meaning or interpretation cannot be given if the language of the said provisions are simple and understandable. Since the charge-sheet/prosecution complaint has not been filed under the provision of Section 8(3)(a) of the Act within the prescribed period of time, the attachments stand lapsed, thus, the same are released. Therefore, there is no need to go into the merit of the case. Appeal allowed.
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Service Tax
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2019 (9) TMI 1217
Classification of services - port services or not - providing Stevedoring Services which include the work of unlashing / lashing of containers in vessels for discharge of import and export containers - extended period of limitation - HELD THAT:- Larger Bench in the case of WESTERN AGENCIES PVT. LTD. VERSUS CCE [ 2011 (3) TMI 528 - CESTAT, CHENNAI (LB)] it was held that the service provided in any manner serves the purpose of serving the clients of stevedore in relation to goods or services indirectly through stevedores. Therefore, the service provided by stevedores fall under the class of port service and taxable - thus, the services rendered by the appellant fall under Port Services . Extended period of limitation - period involved is 16/07/2001 to 31/12/2005 whereas SCN was issued on 11.10.2006 - HELD THAT:- It cannot be alleged that there was suppression of facts with an intent to evade payment of duty on the part of the appellant - as mens rea is not established, penalties are liable to be set aside - the matter requires to be remanded to the Original Authority for computing the duty demand for normal period. The appeal is allowed partly and remanded to the original authority for computation of duty demand for normal period - penalties set aside.
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2019 (9) TMI 1213
Liability of tax - Monetary limit - Tour Operator Services - It is submitted that instead of multiplying the proceedings, it is but appropriate that the Department takes a holistic view of the matter and make appropriate statement before this Court on the next occasion - HELD THAT:- We defer the hearing of these matters till 7th November, 2019, to be listed in the miscellaneous list under caption For Directions .
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2019 (9) TMI 1203
Territorial Jurisdiction of tribunal - assessee is situated in Gurgaon - order was passed by the Commissioner of Service Tax at Gurgaon - appeal lies before Delhi bench of tribunal or Chandigarh bench of tribunal - HELD THAT:- In Ambica Industries [ 2007 (5) TMI 21 - SUPREME COURT] , on which reliance has been placed by learned Counsel for the Appellant, the issue was regarding determination of the High Court before which Appeals would lie under Section 35G (1) of the Central Excise Act, 1944. The Appellant carried business at Lucknow and the matter was ultimately decided by the Tribunal at New Delhi since the Tribunal at New Delhi exercised jurisdiction in respect of cases arising within the territorial limits of Uttar Pradesh, National Territory of Delhi and the States of Maharashtra. In the present case, it is not in dispute that the Appellant is situated in Gurgaon and the impugned order was passed by the Commissioner of Service Tax at Gurgaon. The aforesaid decision of the Supreme Court in Ambica Industries cannot be pressed by the Appellant to contend that the Principal Bench of the Tribunal at New Delhi would have jurisdiction to hear the appeal. The jurisdiction to hear the appeal would lie with the Regional Bench of the Tribunal at Chandigarh. The records of the appeal shall, therefore, be sent to the Regional Bench of the Tribunal at Chandigarh.
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2019 (9) TMI 1195
Maintainability of appeal - requirement of pre-deposit - section 35F of Central Excise Act, 1944 - HELD THAT:- The maintainability of appeal, with concurrent stay of recovery of remaining demand and/or fines/penalties, are subject to pre-deposit prescribed in section 35F of Central Excise Act, 1944. Prior to such prescription, the Tribunal was vested with discretion to stay further recovery till the outcome of the appeal was decided subject to such pre-deposit as was prescribed by the Tribunal. In the changed circumstances of statutory disbarment of recovery beyond that prescribed in section 35F of Central Excise Act, 1944, an application for early disposal is not only a circumventing of this statutory disbarment but also directly in breach of legislative disbarment. A plea by Revenue based only on revenue consideration for early hearing of appeal of assessee or individual does not merit consideration. Application rejected.
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2019 (9) TMI 1188
Works contracts service - exclusion of value of free supplies in assessable value - benefit of composition scheme - HELD THAT:- The issue as to whether free supplies has to be included in the total taxable value for discharge of service tax liability, is decided by Hon ble Apex Court in the judgment of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] where it was held that the value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005 - appeal dismissed.
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2019 (9) TMI 1187
Whether the Appellant is liable to pay interest under Section 75 of the Finance Act, 1994? - The Appellant prior to the issue of show cause notice, on being pointed by the audit, did not dispute and paid the service tax. HELD THAT:- No case of mis-conduct is made out against the Appellant and as such the SCN invoking the extended of limitation is not maintainable - the demand of interest under section 75 of Finance Act, 1994 and also the penalty set aside. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1186
CENVAT Credit - input services - General Insurance Services - Repair Maintenance of vehicles - service Tax paid on expenses of staff welfare - denial on account of nexus with output services - period 2010-11 to 2013 -14 and 2014-15 - HELD THAT:- As per the impugned order of the learned commissioner, the appellant failed to produce any evidence to substantiate its claim whereas the learned chartered account submitted that all the evidence were submitted but both the authorities below failed to look into the same. Be that as it may, without going into the merits of the matter, the case is remitted back to the original authority for the period 2014-15 also for de novo adjudication after following the principle of natural justice - appeal allowed by way of remand.
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Central Excise
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2019 (9) TMI 1216
SSI exemption - clubbing of clearances - whether the value of the clearances of the Appellant M/s Durable Drums, be added to the value of clearance of M/s Machine Crafters in computing the aggregate value of the clearances for the period 2000-2001 in extending the benefit of SSI exemption? HELD THAT:- There is no dispute of the fact that during the relevant period, M/s Machine Crafters were the manufacturer of excisable goods viz. slotted angles/brackets etc. The said finished goods emerge after carrying out the processes of shearing, punching, bending, welding and painting. It is the contention of M/s Machine Crafters that except painting and the process of bending, all other processes were carried out on job work basis from various job workers by sending the raw materials to them. Similar is the situation with M/s Durable Drums. In the premises of M/s Durable Drums, only facility for painting was available and all other processes in similar way were carried out on job work basis by them. The above processes were carried out on job work basis by sending the raw materials to various job workers has been fairly established by the Appellant M/s Machine Crafters, enclosing the relevant challans sending raw materials and receipt of the processed goods, in the appeal paper book. Benefit of N/N. 83/94-CCE and No.84/94-CE available to SSI unit - denial on the ground that the Appellant M/s Durable Drums did not have the manufacturing facility other than the process of painting - HELD THAT:- It cannot be denied that the process of painting is the ultimate and final process which makes the product marketable and hence, it is the process ancillary and incidental to manufacture of the finished goods, hence M/s Durable Drums also is a manufacturer and eligible to the benefit of said Notification. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1215
Liability of Central Excise Duty - motor vehicle parts - benefit of reduced penalty - HELD THAT:- Revenue contends that mandatory penalties were bound to be imposed as appellants had failed to produce evidence of such inclusion as required under rule 6 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000. The appeals are allowed to the limited extent of including the option of reduced penalty under section 11AC of Central Excise Act, 1944 subject to fulfilment of appurtenant conditions.
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2019 (9) TMI 1194
CENVAT Credit - inputs/capital goods - inputs and capital goods purchased by the Appellants for setting up its Fly Ash Handling Plant at the site of Chandrapur Super Thermal Power Station (CTSPS), for exclusive use by the Appellants for manufacture of cement in their factory - denial of credit merely on the ground that the said Plant is not situated within the factory premises of the Appellants - period involved is January, 2007 to June, 2007 and July, 2007 to March, 2008. HELD THAT:- Only because the flay ash handling plant is situated 60 kms. away from the factory premises of the Appellant, it cannot be a ground to deny the Cenvat Credit Cenvat credit on capital goods used in the Fly Ash Handling Plant. Captive does not mean that it has to be within the factory premises only. In VIKRAM CEMENT VERSUS CCE, INDORE [ 2006 (2) TMI 1 - SUPREME COURT] , the Hon ble Supreme Court has specifically held that explosives in the mines are used for manufacture of final products and hence Modvat credit cannot be denied even though not used in the factory. The Hon ble Supreme Court has made it clear that if the capital goods are used by the assessee for their own use, be it inside the factory premises or outside the factory premises, they are entitled for Modvat credit. In the instant matter, the Fly Ash so handled at the plant is used entirely in the appellant s factory for the manufacture of dutiable products and hence the said plant can be said to be a captive plant and therefore in view of the aforesaid decisions of the Hon ble Supreme Court, the Appellants are entitle for the Cenvat Credit. Credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2019 (9) TMI 1212
Principles of natural justice - Service of notice - case of petitioner is that the petitioner was not afforded an opportunity of being heard by the assessing authority - Validity of assessment order - imposition of penalty - KVAT Act - HELD THAT:- The notices were sent to the addresses furnished by the consignor, the owner of the vehicle as also the driver of the vehicle. The notices sent to the petitioner, owner of the vehicle and the driver were returned by the postal authorities with the endorsement not known and no such addressee in the door number respectively. This would indicate that the petitioner and the driver of the vehicle had either furnished a wrong address to the department or had since changed their address of residence from what had earlier been furnished to the authorities while obtaining the transit pass. It cannot be said that the authorities had not issued a notice to the address of the petitioner and that the non-receipt of the notice by the petitioner was on account of any latches on the part of the VAT Authority. The impugned orders in Exts.P1 and P2 do not suffer from any violation of the rules of natural justice - Petition dismissed.
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2019 (9) TMI 1211
Imposition of penalty - undisclosed income - Compounded rate of tax - Kerala VAT Act - HELD THAT:- In Ext.P7 series of orders, the 1st respondent has given reasons as to why the averments of the petitioner in response to the notices issued proposing penalty could not be considered for dropping the proceedings against the petitioner. There is nothing in the said orders which would suggest that the petitioner was not granted sufficient opportunity to present his case before the 1st respondent or that the 1st respondent had not considered the factors that were relevant for the purpose of confirming the penalty against the petitioner. The petitioner has not made out a case warranting interference with Ext.P7 series of orders in these proceedings under Article 226 of the Constitution of India. This is more so, because I find that against Ext.P7 series of orders the petitioner has an effective alternative remedy by way of an appeal before the First Appellate Authority under the KVAT Act - petition dismissed.
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2019 (9) TMI 1208
Maintainability of appeal - monetary limit amount involved in the appeal - Validity of assessment order - reversal of input tax credit - Section 34 of HVAT Act read with Section 9(2) of the CST Act, 1956 - HELD THAT:- We are not inclined to invoke jurisdiction on the ground that amount involved is only ₹ 1,54,606/-, hence, the appeal is dismissed.
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Indian Laws
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2019 (9) TMI 1210
Dishonor of cheque - insufficiency of goods - rebut of presumption under Section 139 of the Act - section 138 of NI Act - HELD THAT:- The petitioner has admitted the cheque in question as well as his signatures on the same. He has also admitted the execution of the loan receipt , as well as his signatures and handwriting on the same. In view of the above admitted facts, this Court is of the view that the petitioner has admitted the existence of the debt. At the same time, he failed to rebut the presumption by raising any probable defence. It is thus held that the petitioner has failed to discharge the onus and the presumption under Section 118A and 139 of NI Act has remained unrebutted. Petition dismissed.
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2019 (9) TMI 1204
Maintainability of Letters Patent Appeal - locus of the appellant- complaint against the Chartered Accountant (CA) after 7 years of audit - Appellant / complainant not satisfied with the order of passed by Board of Discipline discharging the CA - Single Judge bench dismissed the appeal on the ground that appellant has nothing to do with the companies under question - it was further observed that, the complaint should not be entertained as the auditors are not bound to keep their working papers beyond seven years and therefore all the relevant audit papers may not be available for reply to the complaint. HELD THAT:- We are in full agreement with the reasons given by the learned Single Judge. There is no substance in this LPA and the same is, therefore, dismissed.
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