TMI Tax Updates - e-Newsletter
September 4, 2019

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• MAT computation - revenue generated from sale of agriculture land cannot be excluded from the book profit u/s 115JB

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Articles

1. For benefit of revenue collection and easy administration: ADVANCE TAX IS BETTER OPTION THAN TDS / TCS.

   By: DEVKUMAR KOTHARI

2. SUPERIOR VOTING RIGHTS EQUITY SHARES

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Cabinet approves Mechanism revision of ethanol price for supply to Public Sector Oil Marketing Companies for procurement of ethanol w.e.f. December’19 for one year period

2. Cabinet approves Infusion of capital by Government in IDBI Bank

Notifications

Customs

1. 28/2019 - dated 2-9-2019 - Cus

Exemption in relation to import of gold, silver and platinum imported under specified schemes - Seeks to amend Notification No. 57/2000-Customs, dated the 8th May, 2000

Circulars / Instructions / Orders

Customs

1. 28/2019 - dated 3-9-2019

Putting of mono-cartons on Bottled in Origin alcoholic beverages in both Public and Private bonded warehouses

2. PUBLIC NOTICE NO. 55/2019 - dated 26-7-2019

Implementation of PGA eSANCHIT- Paperless Processing under SWIFT- Uploading of Licenses/ Permits/Certificates/ Other Authorizations (LPCOs) by PGAs

Central Excise

3. F.No.276/104/2016-CX.8A (Pt.) - dated 3-9-2019

Adjudication of Show Cause Notices issued by DRI, DGCEI, SIIB, Preventive etc in light of the judgment in the case of M/s Mangali Impex

Highlights / Catch Notes

Income Tax

• Delay in Filing Miscellaneous Application Dismissed Due to Lack of Provision for Condonation of Delay.

  Case-Laws - AT : Condonation of delay for filing of the Miscellaneous Application - Miscellaneous Application filed belatedly due to late response from the DRP - when there is no provision of condonation of delay for filing of the Miscellaneous Application, then the same is dismissed.
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• Assessee's Income u/s 44AD Challenged Due to Lack of Evidence on Cash Deposits from Civil Contracts.

  Case-Laws - AT : Addition regarding cash deposit made in the bank account - it is contended that, assessee had filed return of income u/s.44AD and deposit was made from the civil contract works and under this section the only profit u/s.44AD can be added - The assessee could not establish the deposits in bank account that it has been received from the contractee with cogent materials. - Additions confirmed.
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• Revenue from Agricultural Land Sales Excluded from MAT Book Profit, No Specific "Revenue" Definition in Act.

  Case-Laws - HC : MAT computation - exclusion of revenue generated from sale of agriculture land from the book profit - In the absence of any specific definition as to what constitutes “revenue” under the Act, the normal meaning attributable (having regard to the rule of ejusdem generis, with respect to the expression “rent” used) would necessarily mean any form of income derived from the asset i.e. land which in turn pre-supposes its existence in the hands of assessee.
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• Assessee Cannot Use Mixed Accounting System; Must Choose Between Cash or Mercantile for All Entries.

  Case-Laws - AT : Interest income - system of accounting - The assessee is not permitted to use mixed or hybrid system of accounting under which some items of income / expenditure are accounted for under cash system and the remaining items of income / expenditure are accounted for under mercantile.
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• Carry Forward Losses Cannot Be Denied Due to Absence in System-Generated Acknowledgment if Properly Filed Electronically.

  Case-Laws - AT : Disallowance of carry forward of losses - Once the amount is duly claimed in the return of income filed electronically as well as also shown in the computation of income, then merely because the same is not appearing in the acknowledgement of return of income generated by the departmental systems cannot be the reason for denial of the claim
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• Tax Benefits Allowed for Crude Oil Exploration as Production Activity u/ss 80IB & 80IC.

  Case-Laws - AT : Disallowance 80IB / 80IC - Manufacturing or production activity or not - assessee admittedly drills / explores crude oil for the purpose of refining the same to various by-products - assessee’s crude oil exploration very much amounts to production going by the relevant facts.
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• Oil Wells as Composite Plant: No Impact on Section 80IB Deductions for Crude Oil Production.

  Case-Laws - AT : Disallowance 80IB - crude oil production - separate eligible undertaking - treating the oil wells as a composite plant for sec. 32(2A) investment allowance deduction does not apply so far as sec. 80IB deduction claim is concerned.
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• Disallowance u/s 40A(3) for Cash Payments Over Rs. 20,000 During Cricket Event Confirmed.

  Case-Laws - AT : Disallowance u/s 40A(3) - Assessee failed to prove that payment was made to different vendors at the spot where the cricket match was conducted for buying food items for its employees - since assessee has incurred expenditure in cash exceeding ₹ 20,000/-, additions confirmed.
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Customs

• Amendment to Notification No. 57/2000-Customs updates import duty exemptions for gold, silver, and platinum under specific schemes.

  Notifications : Exemption in relation to import of gold, silver and platinum imported under specified schemes - Seeks to amend Notification No. 57/2000-Customs, dated the 8th May, 2000
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• New Circular Requires Mono-Cartons for Bottled in Origin Alcohol in Bonded Warehouses to Enhance Security and Compliance.

  Circulars : Putting of mono-cartons on Bottled in Origin alcoholic beverages in both Public and Private bonded warehouses
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• Imported IT Software Licenses Reclassified: Use Rights Documents Now Under CTH 4907, Not CTH 8523 8020.

  Case-Laws - AT : Classification of imported goods - IT Software license - documents conveying the right to use software do not merit classification under CTH 8523 8020 but merits classification under CTH 4907.
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• Re-imported goods by EOU re-exported within three years; duty demand deemed unsustainable u/r.

  Case-Laws - AT : 100% EOU - re-import for re-processing - a period of three years is provided from the date of exportation for repair and reconditioning and the appellant re-exported the goods within this period - demand of duty cannot sustain.
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• Customs Officer Cleared of Duty Loss Charges; Further Prosecution on Same Facts Barred by Law.

  Case-Laws - HC : Proceedings against the officer of Customs - caused loss of customs duty and wrongful gain to the accused - the petitioner has been exonerated of the charges on merits. Under the said circumstances, the prosecution of the petitioner on the same set of facts and circumstances cannot be allowed to continue.
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• DGFT ordered to decide on license renewal and advance authorization in 6 months; DRI to provide evidence if found.

  Case-Laws - HC : Refusal to renew license - Redemption of advance authorization - revalidation of advance authorization - DGFT directed to take an informed decision within a period of six months from today. It is expected that the DRI would be able to provide the DGFT concrete material, if any, regarding any contravention, if found
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Corporate Law

• Company Law Board's Powers in Oppression Cases: Authority to Decide Employee Salaries in Interim Management Arrangements.

  Case-Laws - HC : Oppression and Mismanagement - Power of CLB to decide the issue of salary - Passing directions regarding the employees of the Company is an interim arrangement regarding management of the affairs of the Company. - The CLB is free to pass orders as long as they are in the interest of proper conduct of the affairs of the Company.
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Service Tax

• Appellant's 1146-Day Appeal Delay Raises Concerns Over Withholding Information from Tribunal; Transparency Issues Highlighted.

  Case-Laws - AT : Condonation of delay of 1146 days in filing the Appeal - the Appellant has not even disclosed as to on what date the letter sent by the Department was received by the Appellant. There is a deliberate attempt on the part of the Appellant to withhold vital information from the Tribunal.
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Central Excise

• Guidance Issued on Handling Show Cause Notices Post-M/s Mangali Impex Judgment for Central Excise Compliance.

  Circulars : Adjudication of Show Cause Notices issued by DRI, DGCEI, SIIB, Preventive etc in light of the judgment in the case of M/s Mangali Impex
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Case Laws:

• Income Tax

• 2019 (9) TMI 104
  Settlement Commission applications u/s 245(D)(1) - whether or not the disclosure was full and true - Pr. CIT submitted a report u/s 245D(2B) nowhere directly or indirectly indicated that the income disclosed by the petitioner is not full and true - Settlement Commission permitted the CIT (DR) to raise objections to the admission of the application and more so in permitting him to go beyond the report - decision making process of the Settlement Commission - permitting the Principal Commissioner to supplement the report submitted by the Commissioner by way of oral submissions - permission to raise objection to the admission of the application and be heard before the assessee and too, to supplement an incomplete report on the basis of the material and evidences on record - preliminary report based on prima-facie findings recorded by the Principal Commissioner or Commissioner HELD THAT:- Special leave petition is dismissed as having become infructuous

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• 2019 (9) TMI 103
  Reopening of assessment u/s 147 - live link between the material in the form of the investigation report and the formation of belief that income that has escaped assessment - HELD THAT:- Application seeking exemption from filing certified copy of the impugned judgment is allowed. Issue notice. There shall be stay of further A.O. proceedings in the meantime.

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• 2019 (9) TMI 102
  Interpretation of the provisions in Section 3(1) of the Expenditure Tax Act, 1987 - whether room charges were less than Rs. 1,200/- per day per individual, no expenditure tax would be chargeable at all - HELD THAT:- According to us, Section 3(1) of the said Act will have to be interpreted, having regard to the provisions therein, in their entirety and not merely by focusing upon the various expressions used therein disjunctively. Further, for interpreting the provision in its entirety, interpretation which harmonizes all such expressions, will have to be preferred over the interpretation which ignores or leaves out any expressions found in the statute. Further, an attempt will have to be to harmonize the provision in Section 3(1) of the said Act with other provisions in the said Act as well as the basic scheme of the said Act. In doing so, due regard will have to be had to the principles of interpretation of statutes, including, in particular, the principles relating to interpretation of taxing statutes. According to us, Section 3(1) of the said Act will have to be interpreted, having regard to the provisions therein, in their entirety and not merely by focusing upon the various expressions used therein disjunctively - attempt will have to be to harmonize the provision in Section 3(1) of the said Act with other provisions in the said Act as well as the basic scheme of the said Act. In doing so, due regard will have to be had to the principles of interpretation of statutes, including, in particular, the principles relating to interpretation of taxing statutes. The said Act refers to room charges for an unit of residential accommodation in terms of the definition in Section 2(10) of the said Act. There is no further distinction made in the said Act on the basis of double occupancy or triple occupancy or quad occupancy when it comes to determination of room charges. Such distinction is some unilateral act by the hotel concerned and the same cannot govern the statutory construction, particularly when the provisions of a statute are quite clear. All that the Appellants contend is that they have fixed the room charges on double occupancy basis and, therefore, the room charges are required to be split or divided by two since the fraction does not exceed Rs. 1200, the said Act is inapplicable. Such contention, according to us, does not deserve acceptance. It was not even the case of the Appellants that the individual invariably or in particular cases split up the chargeable expenditure or incur the chargeable expenditure independent of one another when room charges are fixed on double occupancy basis or triple occupancy basis . Based upon some artificial ambiguity, when, in fact there exists none, the assessee cannot claim benefit of the principle that such ambiguities in a fiscal statue deserve to be resolved in favour of the assessee. The principle that the ambiguities in a fiscal statute have to be resolved in favour of the assessee, applies in case of genuine ambiguities and not to ambiguities created by overemphasizing upon one of the expressions in a statute and ignoring or downplaying the other expression in the same statute. Substantial question of law relating to the interpretation of the provision in Section 3(1) of the said Act is required to be answered against the Appellants and in favour of the Revenue. Appellants had virtually conceded before the ITAT that the benefit under the proviso to Section 4(a) of the said Act would be inapplicable to the Appellants for any assessment years, prior to 1995-96, because the approval of the Director General, (Exemption) was obtained only on 28/7/1994, relevant to the Assessment Year 1995-96 - We do not propose to non-suit the Appellants on this basis, accepting the contentions of Mr. Naniwadekar that the orders made on the rectification application had made it clear that the concession will not preclude the Appellants from raising further challenges and that there can be no estoppel against the law. The proviso to Section 4(a) of the said Act makes very specific mention to a hotel referred to in clause (ii) of sub-section (5) of section 80-IA of the Income-tax Act. There is no reference to clause (iii) of sub-section (4) of section 80-IA of the Income-tax Act. Admittedly, approval in terms of clause (ii) of sub-section (5) of section 80-IA of the Income-tax Act was obtained only on 28.7.1994 relevant to the Assessment Year 1995-96. Thus, upon plain reading of the proviso to Section 4(a), no exemption can be extended to the Appellants for any assessment year prior to 1995-96. To accept the Mr. Naniwadekar s contention and to grant exemption to the Appellants, would mean reading of some provision in the proviso to Section 4(a) of the said Act, which provision, admittedly, finds no place in the text of the proviso to Section 4(a) of the said Act. The exemption is, thus, sought to be claimed on the basis of some sort of implication. This, according to us, is impermissible. No such violence can be done to the statutory text and that too in determining whether the Assessee falls within the exemption clause. On a plain reading of the provisions in the proviso to Section 4(a) i.e. on interpretation of the provision on its own merits, we are satisfied that the Appellant has made out no case for the extension of exemption for any assessment year, prior to 1995-96. No error in the view taken by the ITAT and the additional substantial question of law, framed in these appeals, is also required to be answered against the Appellant and in favour of the Revenue.

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• 2019 (9) TMI 101
  MAT computation - exclusion of revenue generated from sale of agriculture land from the book profit - Explanation to second proviso of Section 115JB(2)(ii) - HELD THAT:- Revenue derived from land is not deemed to have been included in any income arising from transfer of land. This Explanation was introduced with retrospective effect from 01.04.1989 and was subject matter of the challenge before Union of India Vs. S. Muthyam Reddy, [ 1999 (10) TMI 2 - SUPREME COURT] . The provision, per se, in opinion of the court, itself is clinching. In the absence of any specific definition as to what constitutes revenue under the Act, the normal meaning attributable (having regard to the rule of ejusdem generis, with respect to the expression rent used) would necessarily mean any form of income derived from the asset i.e. land which in turn pre-supposes its existence in the hands of assessee. The other interpretation given by the assessee, that even sale constitutes revenue cannot be pressed into service because the transaction of sale results in destruction of a revenue or rent generating asset. The court is of the opinion that no question of law arises.

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• 2019 (9) TMI 100
  Correct head of income - rent receipt - business receipts OR House Property income - disallowing 30% of standard deduction - HELD THAT:- We are in agreement with the findings of the CIT(A) that principles of res judicata are not applicable to income tax proceedings and that each year has to be treated as such. Further we do not see any infirmity in the findings recorded by the CIT(A) holding receipts from Stargaze was business receipts and we uphold the same. Depreciation of building, depreciation on assets (pro rata basis) and common expenses (pro rata basis) - Assessing Officer shall calculate the depreciation on the area occupied by Stargaze and allow depreciation on building at the rates applicable. Similar exercise may be done for depreciation on assets (now held to be business assets) and other common expenses (now to be held as business expenses) after ascertaining their linkage with the running of the cinema hall. As regards the issue of carry forward of depreciation and business loss, it is held that no such claim has been made by the appellant and therefore, no such determination has been made in the past in terms of the provisions of section 32 (2) and 72. No claim at this stage can be adjudicated in terms of the ratio of the judgement of the Apex Court in the case of Goetze (India) Ltd. v CIT [ 2006 (3) TMI 75 - SUPREME COURT] which held that appellant-assessee cannot make a claim for deduction other than by filing a revised return - Decided against assessee

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• 2019 (9) TMI 99
  Addition regarding cash deposit made in the bank account - it is contended that, assessee had filed return of income u/s.44AD and deposit was made from the civil contract works and under this section the only profit u/s.44AD can be added - HELD THAT:- If the assessee has offered income u/s.44AD he should separately shown in the computation of income that the profit has been earned from civil contract and it has been offered for taxation under the presumptive Section 44AD. The assessee has also not produced any details before us of the relevant part of the Income Tax Return in which there is a separate columns for the income offered u/s.44AD. The assessee is also unable substantiate with any external vouchers that the amount has been received from the contractee for civil contract works done. No any work order nor any receipts from the contractee has been produced by the assessee. The assessee is only to correlate with the receipts from the contractee as well as the deposit of some amount in the bank account. Ld. AR before us submitted that there was a profit of Rs. 2,16,932/- has been earned from the civil petty contract but he has deposited of Rs. 9,61,984/- in his bank account. The assessee could not establish the deposits in bank account that it has been received from the contractee with cogent materials. Therefore, keeping in view of the facts and circumstances of the case, we are of the opinion that the observations of the lower authorities in this regard are justified. This ground of appeal is dismissed. Addition u/s 68 - HELD THAT:- The assessee has not proved the creditworthiness of the lenders in respect of total loan received by him. The letter sent by the Assessing Officer was also returned back which has not been made compliance before any of the authorities below. Keeping in view of the facts and circumstances of the case and considering the submissions of both the sides, we dismiss this ground of appeal of the assessee. Charging of interest u/s 234A 234B - HELD THAT:- We find that the Hon ble jurisdictional High Court in the case of Ajay Prakash Verma Vs. ITO [ 2013 (1) TMI 140 - JHARKHAND HIGH COURT] has held that the revenue can levy the interest only on the total income declared in the return of income and not on the income assessed and determined by the AO to that extent. We further notice that in case of Pr. CIT Vs. Haldia Petrochemicals Ltd., [2019 (8) TMI 938 - SC ORDER] , in case of charging of interest u/s.234B 234C of the Act, the Hon ble Supreme Court has admitted the SLP of the Revenue. Since the decision of the Hon ble jurisdictional High Court prevails as on date, we allow this ground of appeal of the assessee and direct the AO to delete the interest levied u/s.234A 234B of the Act.

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• 2019 (9) TMI 98
  Accrual of income - addition to the income of the appellant being the difference in the amounts of commission and interest received as per form No. 26AS and as accounted for in the books of accounts of the appellant - HELD THAT:- A detail explaining the difference as above was also filed. But, we have noted from the order of the Ld.CIT(A), that no cognizance of the same has been taken while adjudicating the issue. The Ld.CIT(A) has in fact summarily dismissed the ground raised by the assessee without dealing with the factual contentions made before him. The findings of the Ld.CIT(A) that the assessee himself was not sure about the explanation being correct or not, we find, is ill conceived since the written submissions of the assessee, reproduced in the order of the CIT(A) show that specific detailed submissions had been made and nowhere the assessee has expressed uncertainty about his explanation. Since the factual contentions of the assessee need verification, we consider it fit to restore the issue back to the AO to verify the contentions made by the assessee and thereafter adjudicate the same in accordance with law. Needless to add the assessee be granted due opportunity of hearing. Disallowance u/s 36(1)(iii) - amount of interest paid on bank loan taken for acquiring of assets not put to use in the year under reference - HELD THAT:- As decided on own case Admitting the additional evidences and thereafter restoring the matter back to the AO for verifying the facts of the case and adjudicating the issue afresh in accordance with law Addition of expenditure incurred by the appellant towards rent - the expenditure incurred related to earlier assessment year, the same could not be allowed in the year under reference as the appellant was following mercantile system of accounting whereas the liability to pay the same crystallized in the year under reference itself - HELD THAT:- As decided on own case Admitting the additional evidences and thereafter restoring the matter back to the AO for verifying the facts of the case and adjudicating the issue afresh in accordance with law Disallowance of foreign travel expenses of the Director of the assessee company - non business expenses - HELD THAT:- As decided on own case restricting the disallowance to 50% of the expenses. The said decision will squarely apply to the present case also, following which we restrict the disallowance of foreign travelling expenses to 50% of that incurred. Non deduction of TDS - Disallowance u/s 40(a)(ia) - payment made to Roshan Studios and Wire Wireless payment made to Hotel Mountview - HELD THAT:- We agree with the assessee that despite specific submissions made by the assessee, CIT(A) has upheld the addition/disallowance, giving no basis/reasoning for arriving at his findings that the nature of expense relating to Hotel Mountview was not in the nature of work contract as contended by the assessee, nor has he given any basis for stating that TDS was deductible on total payment made to Rohan studios and every payment made was not to be considered separately as pleaded by the assessee. The order passed by the Ld.CIT(A), is, we find, not a reasoned and speaking order on the issue. Since the facts pleaded by the assessee need verification, we consider it fit to restore the matter back to the AO to verify the contentions of the assessee and thereafter adjudicate the issue in accordance with law. Disallowance invoking the provisions of section 40A(3) - HELD THAT:- The assessee, we have noted, has consistently pleaded that the payment was made in cash for purchasing tickets of cricket match for its staff/customers and for providing food to them during cricket match and that the payment was made to different vendors at the spot where the cricket match was conducted for buying food items. But no evidence has been filed to substantiate the same. Therefore the fact remains that the assessee has incurred expenditure in cash exceeding Rs. 20,000/-, thus violating the provisions of section 40A(3) of the Act calling for disallowance of the same. The order of the Ld.CIT(A), upholding the disallowance is upheld. Addition of pre-paid expenses relating to the subsequent assessment year - HELD THAT:- It is not disputed that the expenditure incurred on acquiring music permission for a period of three years, was in the nature of revenue expenditure of the assessee. It is not the claim of the Revenue that the impugned expenditure was a capital expenditure. On the contrary, we find that the Revenue has accepted that it was in the nature of revenue expenditure but on finding that the permission pertained to three years, the expenditure was spread over three years and the claim allowed accordingly. The Ld. DR has been unable to controvert the contention of the Ld.Counsel for the assessee that having treated the expenses as revenue, the same was allowable in the impugned year and could not be deferred in the next two years. The Revenue has been unable to draw our attention to any provision under the Income Tax Act for deferring revenue expenditure. We, therefore, agree with the Ld.Counsel for the assessee that the said revenue expenses were to be allowed in the impugned year itself. Allowance of depreciation on electric installation fittings - @ 15% OR 10% allowed by the revenue authorities - HELD THAT:- Assessee pleaded that its solitary prayer on the impugned issue was that the claim of depreciation be allowed at the enhanced WDV after allowing depreciation @ 10% on the impugned assets. In view of the above, we direct the AO to recompute the claim of depreciation on the impugned assets at the prescribed rate in accordance with law. The ground of appeal No.4 raised by the assessee is dismissed with the above directions. Non deduction of tax at source on certain payments made - HELD THAT:- As evidences now filed by the assessee proving to the contrary are very relevant for the issue and allowance of the claim of the assessee. We, therefore, admit the additional evidences filed by the assessee in the form of challans evidencing deposit of tax deducted at source and the statement showing tax deducted at source on the impugned payments. We further restore the issue to the AO Disallowance of interest pertaining to the interest bearing funds used for the same on a proportionate basis - HELD THAT:- The assessee, we find, had made specific pleadings before the Ld.CIT(A) of not having used any interest bearing funds for investing in its capita work in progress and had also pointed out that no fresh loans either secured or unsecured had been taken by the assessee during the year. .CIT(A) has, we find, upheld the disallowance of interest without dealing with the specific submissions of the assessee and in a summary manner. The order passed on the issue by the CIT(A) is a non speaking order. Since the facts canvassed by the assessee need verification, We restore the matter to the AO to verify the facts and deal with the specific submissions made by the assessee Addition of 1 /4th of the expenditure towards running and maintenance of cars - HELD THAT:- These issues need to be adjudicated afresh but since we have restored certain issues raised in this appeal to the AO, we restore these issues also to the AO to deal with the same afresh. We direct the AO to deal with the issue of disallowance of expenses incurred on vehicle running and maintenance on account of personal usage of the same by the Directors of the company on a reasonable basis considering the past history of the assessee, number of directors in the company, number of vehicles owned by the assessee company, the nature of business carried out by the assessee and such other factors.

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• 2019 (9) TMI 97
  Disallowance 80IB / 80IC - Manufacturing or production activity or not - crude oil production - AO disallowed the benefit on the ground that, assessee s oil wells for which the claim is made, is not an new industrial undertaking or enterprise; though there is no dispute that these are plants - assessee was supposed to furnish a separate audit report as prescribed under IT Rules in case of an eligible undertaking or enterprise claiming sec. 80IB deduction to be further accompanied by the relevant profit and loss account / balance-sheet as if the undertaking is a distinct entity. HELD THAT:- Section 80IB(13) imports sec. 80IA(5) and (7) to (12) to be applicable to the eligible business carried out by the eligible undertaking in question. We notice in this backdrop that the clinching legislative s expression 80IA(7) is accounts of the undertaking than a complete set off separate books of account. And sec. 80HH(5), 80I(7), sec. 80IA(7) as well as sec. 80IB(13) also use the very statutory expression accounts of the undertaking . We hold in this backdrop that the CIT(A) has rightly followed the hon ble jurisdictional high court s decision in taxpayer s favour. Same is the fate of the Revenue s next argument that assessee s each oil well ought not to be treated as a separate eligible undertaking. Hon ble Gujarat high court s and this tribunal decision in Nicco Laboratories Ltd. [ 2015 (3) TMI 986 - GUJARAT HIGH COURT ] decided the very issue in assessee s favour that each oil well can indeed be treated as a separate eligible undertaking Reliance of the revenue on hon ble Calcutta high court s judgment in assessee s case [ 1991 (6) TMI 17 - CALCUTTA HIGH COURT ] treating the oil wells as a composite plant for sec. 32(2A) investment allowance deduction does not apply so far as sec. 80IB deduction claim is concerned. Assessee had used its machines or plant for other purposes as per page-6 of the assessment order dated 30.11.2005 also does not carry merit. We notice first of all that the Assessing Officer had nowhere indicated as to what kind of plant and machinery had been used for other purposes. Be that as it may, hon ble apex court s judgment in Bajaj Tempo Ltd. [ 1992 (4) TMI 4 - SUPREME COURT ] held long back that the legislative expression form alongwith a pre-fix negative covenant has to be interpreted discussion. We conclude in these facts that the assessee s oil wells had come into existence after earth digging through rigs. There is thus no violation of the legislative condition of use of old machinery for formation of the undertaking / oil wells. The assessee is therefore held to have used its oil rigs, equipments and tools for bringing into existence the new oil well / eligible undertaking than having formed the same through the old plant and machinery. Assessee had not filed its Form- 10CCB audit report alongwith return or during assessment fails to invoke our concurrence since the Assessing Officer had himself noted that the said report stood duly submitted as per the CIT(A) s detailed discussion Assessee s impugned deduction claim u/s 80IB(9) had not sec.80IB(4) - The above former provision grants deduction for seven consecutive assessment years in case of an undertaking located in north eastern region commencing its commercial production as per the due dates prescribed. We wish to reiterate here as per page 214 in the paper book that the assessee s Form 10CCB had specifically raised sec. 80IB(4) deduction claim for ten assessment years. Pages 226 is the very Form-10CCB report for assessment year 2004-05 in identical manner. We therefore reject the Revenue s instant grievance which turns out to be against the facts on record. We make it clear that Form 10CCB is a specific document prescribed for claiming the impugned deduction. The Revenue s above stated arguments that the assessee had not expressly made it clear in its computation about the impugned deduction claim raised u/s. 80IB(4) of the Act is declined. Assessee is engaged in a mineral based industry as per the foregoing clinching expression employed as in 14th Schedule. The Revenue s case that this crude oil production does not amount to mineral based industry as per item No.16 in 14th Schedule of the Act carries no substance since the above stated expression has to be construed in ordinary connotation without having regard the further classification of minerals i.e. ferrous or nonferrous and metallic or non-metallic etc. We also wish to make it clear that there is further no dispute about the impugned statutory provision requiring in assessee to maintain its books of account qua each undertaking to be treated as separate unit in sec. 80IC(7) of the Act incorporating the very legislative intent as is there in sec. 80IB(13) Assessee s oil exploration activity cannot be taken manufacture or production as prescribed in sec. 80IC(2)(b) - Hon ble apex court s landmark judgment in CIT vs. N.C.Budharaja and Co. and Another [ 1993 (9) TMI 6 - SUPREME COURT ] held long back that the statutory expression produce has wider connotation than the word manufacture . The former; when used in juxtaposition with the latter, brings into existence new goods by a process which may or may not amount to manufacture. And that the same also includes in all the by products; intermediary or residuary hon ble Delhi high court s decision in HLS India Ltd. [ 2011 (5) TMI 322 - DELHI HIGH COURT ] also holds that whether or not any particular business activity amounts to manufacture or production for the purpose of various incentives schemes under the Act is required to be examined in the light of facts and circumstances in each case. These can be no denial of the fact that crude oil contains hydrocarbons as paraffin, cycloparaffin, napthene and araomatic comprcands which is obtained from beneath the earth s surface. We reiterate that this assessee admittedly drills / explores crude oil for the purpose of refining the same to various by-products - assessee s crude oil exploration very much amounts to production going by the relevant facts in the light of the preceding legal position. The Revenue s instant last argument is also rejected. CIT(A) has rightly granted sec. 80IC(2)(b) deduction to the taxpayer - Decided in favour of assessee.

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• 2019 (9) TMI 96
  Disallowance u/s 36(1)(iii) - amount of interest paid on bank loan for setting up new stores or stores in which business activities did not commenced in the year under reference - admission of additional evidence - HELD THAT:- The disallowance of interest, admittedly has been made for the reason that the assets /stores for which the loans had been taken and to which the interest related, were not started during the year. The additional documents filed by the assessee by way of Sanction letter of Bank for term loans taken and the utilization certificate of the term loans given to the bank by the assessee, are in support of its claim that interest paid pertained to loans utilized for renovating shops and not acquiring them and in any case the interest paid pertained to period after the asset for which the loans were taken were put to use. - The additional evidences ,we find, therefore, go the root of the matter and are relevant for bringing the correct facts on record - Matter restored before the AO to decide the issue afresh. Depreciation on electrical installations and fittings - 10% OR 15% - HELD THAT:- No reason to interfere in the order of the CIT(A). The factual findings of the CIT(A) made after perusing the details filed by the assessee that the additions made were in the nature of furniture and fittings, have not been controverted by the assessee by way of any explanation or detail filed before us, nor the Ld.Counsel for the assessee was able to point out any discrepancy in the findings of the CIT(A). That the applicable rate of depreciation on the said assets is 10% is not disputed. In view of the same, we find no reason to interfere in the order of the CIT(A) in restricting the depreciation to 10% on electric fittings Accrual of income - Difference in the amount of interest receivable on FDRs on accrual basis and accounted for by the appellant on receipt basis in the books of accounts - HELD THAT:- Undisputedly the income had accrued in the impugned year to the assessee and TDS also deducted on the same. The same has, therefore, been rightly taxed in the impugned year. Expenditure incurred towards rent disallowed - claim pertained to preceding year and disallowance of excess purchases booked - HELD THAT:- Assessee has filed additional evidences before us contradicting the findings of the Revenue. Copy of rent agreement entered into during the year has been filed to show that the impugned expenditure arose on account of the same and thus accrued during the year itself. - there was reasonable cause with the assessee for not producing them before the lower authorities, since as stated by the director of the company on oath, the documents had got misplaced in shifting of the premises of the assessee, which has not been controverted by the Revenue. We therefore admit the additional evidences .Further since the facts as contended by the assessee need to be verified, we restore this issue back to the AO Expenditure incurred on foreign travelling of the Directors - non business expenses - HELD THAT:- though undoubtedly the assessee has not filed any evidence of foreign travel undertaken for the purpose of its business, at the same time, it cannot be completely ruled out that certain amount of expenses is incurred in the course of its business considering the nature of its business dealing in trading of branded clothes/apparels. We, therefore, consider 50% of the amount actually claimed by the assessee as reasonable and disallow the balance 50%. Disallowance u/s 40(a)(ia) - contention of assessee by was that out of the advertisement expenses, the amount paid to Fine Ads of Rs. 26,472/- did not qualify for tax deduction at source since the limit for TDS was Rs. 30,000/- and above and for the professional charges to Noshe Oceanic in fact TDS had been deducted on the impugned payment - HELD THAT:- restore the issue back to the AO to verify both the claims of the assessee vis- -vis the advertisement payment to Fine Ads not qualifying for TDS deduction and the fact that TDS having been deducted to Noshe Oceanic.The AO is directed to adjudicate the issue in accordance with law after duly verifying the contentions of the assessee. Needless to add, the assessee be granted due opportunity of hearing. Accrual of income - difference in the amounts of receipt as per form No. 26AS and as accounted for in the books of accounts of the appellant - HELD THAT:- Assessee had consistently pleaded that the difference was on account of reimbursement received from M/s V.F. Brands which was booked in the subsequent year when the fact of the reimbursement came to its knowledge by way of credit notes issued. CIT(A), we find, despite specific averments made by the assessee upheld the disallowance by giving general findings that income is to be taxed on accrual basis and that income had accrued to the assessee, without addressing the facts as stated by the assessee and pointing out how he arrived at the finding that income accrued to the assessee in this year. We, therefore, consider it fit to restore the issue back to the AO to consider the contention of the assessee

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• 2019 (9) TMI 95
  Assessment u/s 153A - addition on the basis of statement in the absence of incriminating material - deemed dividend addition u/s 2(22)(e) - HELD THAT:- The Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has held that if two conditions of completed assessment and no incriminating material for making addition are fulfilled then no addition could have been made in that assessment year. On perusal of the order of the lower authorities, we find that the instant addition has been made on the basis of the submissions made by the assessee during the course of assessment proceedings under section 153A of the Act. DR could not point out any incriminating material on the basis of which this addition could have been claimed to be made. It is also not disputed that the assessments stood completed prior to the date of the search in view of no notice issued under section 143(2) for scrutiny of the case within the limitation period available in the Act. Thus, the assessee fulfils both the conditions for invoking the ratio in the case of Kabul Chawla that no addition could have been made in case of completed assessment in absence of any incriminating material found during the course of the search. In similar set of facts, the Hon ble High Court of Bombay in the case of Principal CIT Vs. Jignesh P. Shah [ 2015 (9) TMI 80 - DELHI HIGH COURT] held that no addition of deemed dividend could be made in assessment order passed under section 153A of the Act in absence any incriminating material. Addition on the ground that the document relied upon for making the addition was found from the premises of the third party and thus, the addition could have only been made u/s 153C - HELD THAT:- Separate search warrant has been issued in the case of the assessee as well in the case of Sh. Ashok Chowdhary and the Assessing Officer has used the material found in the course of search at the premise of Sh. Ashok Chowdhary, which is not permitted in view of the express provision of the law. The addition made by the Assessing Officer in violation of the procedure provided in the Act is bad in law and void-ab-initio and cannot be sustained. Accordingly, the addition of Rs. 3.3 crore, made protectively on the basis of the documents found from the premises of the third party, by the Assessing Officer and upheld by the Ld. CIT(A) on substantive basis, is deleted. The ground of the appeal of assessee is accordingly allowed.

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• 2019 (9) TMI 94
  Penalty u/s 271(1)(c) - pre-printed notice without striking off the unnecessary portions of the notice - HELD THAT:- A.O. while issuing notice U/s 274 r.w.s. 271(1)(c) was vague in so far as notice so issued did not clearly mention the limb on which amount penalty has been initiated i.e. whether for concealment of particulars of income or for furnishing inaccurate particulars of income, thus, found that the A.O. has just issued pre-printed notice without striking off the unnecessary portions of the notice. If the A.O. was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the A.O. clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind. It is the requirement of law that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income; only sending printed form where all the grounds mentioned in Section 271 are mentioned would not satisfy the requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice are violated. On the basis of such proceeding, no penalty could be imposed on the assessee. Therefore, the initiation and imposing of penalty proceedings is wrong, bad in law, invalid and void ab initio in view of judicial pronouncements referred by assessee. For the reasons that now there is a settled law position on the issue that the notice u/s 271 should be specific on imposing of penalty u/s 271 (1) (c) i.e. concealed particulars of income or furnishing inaccurate particulars of income. See CIT Vs. M/s SSA s Emerald Meadows [ 2015 (11) TMI 1620 - KARNATAKA HIGH COURT] or M/S MANJUNATHA COTTON AND GINNING FACTORY OTHS., M/S. V.S. LAD SONS, [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2019 (9) TMI 93
  Condonation of delay for filing of the Miscellaneous Application - Miscellaneous Application filed belatedly due to late response from the DRP - barred by limitation provided under section 254(2) - HELD THAT:- In view of the facts and circumstances of the case when the miscellaneous application is barred by limitation and following the earlier order of this Tribunal in case of ITO vs. Shri Ram Ratan Modi [ 2018 (2) TMI 589 - ITAT JAIPUR] we dismissed the miscellaneous application as not maintainable being barred by limitation. Accordingly, when there is no provision of condonation of delay for filing of the Miscellaneous Application, then the Miscellaneous Application filed belatedly is not maintainable being barred by limitation provided under section 254(2) of the Act and accordingly, the same is dismissed. Miscellaneous Application of the Revenue is dismissed.

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• 2019 (9) TMI 92
  Disallowance of carry forward of losses claimed by the assessee in the proceedings u/s 153A - assessee s claim of loss so filed in the return U/s 139(1) - HELD THAT:- We have perused the relevant record including the returns of income filed under section 139(1) as well as returns of income filed u/s 153A and noted that the assessee has claimed the respective amounts of losses for these three assessment years in the returns of income under section 139(1) and the same amounts were also claimed in the returns of income filed u/s 153A though in the acknowledgements generated by the departmental system for the returns of income filed under section 153A the amount of loss has not been shown. In the computation of total income, this income is duly reflected and matching with the amount as shown in the return of income filed electronically. Once the amount is duly claimed in the return of income filed electronically as well as also shown in the computation of income, then merely because the same is not appearing in the acknowledgement of return of income generated by the departmental systems cannot be the reason for denial of the claim. See M/S O.K. SILK MILLS LTD., M/S OKAY PLUS BUILDERS PVT. LTD., M/S SHREE KRISHNA VATIKA BUILDWELL PVT. LTD. [ 2019 (5) TMI 749 - ITAT JAIPUR] and M/S SHREE KRISHNA VATIKA CONSTRUCTION PVT. LTD. [ 2019 (8) TMI 605 - ITAT JAIPUR] - Decided in favour of assessee.

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• 2019 (9) TMI 91
  Revision u/s 263 - AO simply accepted the case decision relied on by the assessee in the case of Lovely Exports (P) Limited [ 2008 (1) TMI 575 - SC ORDER] and the AO had not made any further enquiry regarding such share applicants - enquiries were conducted twice i.e. once during the original assessment proceedings passed u/s. 143 (3) and subsequently during the reassessment proceedings where order was passed u/s. 143 (3)/ 147 - HELD THAT:- We find the AO in the order passed u/s. 143(3) /147 has followed the decision of Hon ble Supreme Court in the case of Lovely exports (P) Limited (supra) in letter and spirit. In the office note, copy of which is available in the paper book, it is seen that the Assessing officer had forwarded information to the concerned AO of the investor companies for taking further necessary action against them. When the AO passed the order u/s. 147 / 143 (3), we find he has followed the decision of Hon ble Supreme Court in the case of Lovely Exports (P) Limited (supra) in letter and spirit. So far as the allegations of the Ld. CIT that subsequent decision had come for which he referred to the decision of Hon ble Delhi High Court in the case of Nova Promoters Finlease [ 2012 (2) TMI 194 - DELHI HIGH COURT] is concerned we find the Hon ble Delhi High Court pronounced the said decision on 15.02.2012 whereas the AO in the instant case has passed the order u/s. 143(3)/147 on 13.12.2011. Therefore, we do not find any merit in the allegation of the Ld. CIT of non consideration of the above decision since the same was not available at the time of passing of the assessment order. So far as the allegation of the Ld. CIT that the AO should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do and there was non application of mind on the part of the AO is concerned, we find in the instant case thorough enquiries were conducted by the AO both at the time of original assessment and at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of nominal value and share premium amount of all the share holders alongwith their bank statements, copy of IT returns, PAN etc. were filed before the AO. Even if the share holders were bogus as per allegation of the revenue in view of the reasons recorded for reopening, however, as per prevailing law at that time in view of decision of Hon ble Supreme Court in the case of Lovely Exports (P) Limited (surpa) addition could not have been made in the hands of the assessee and addition, if any, could have been made only in the hands of such bogus share holders. Since AO has taken a plausible view, therefore, it cannot be said that the order of the AO is erroneous. AO in the instant case cannot be held as erroneous. Since for invoking jurisdiction u/s. 263 the twin conditions i.e. order must be erroneous and the order must be prejudicial to the interest of revenue must be fulfilled and since, we have held that the order is not erroneous, therefore, the twin conditions are not satisfied. Therefore, the Ld. CIT in our opinion could not have invoked jurisdiction u/s. 263 of the IT Act. We, therefore, set aside the order of the CIT passed u/s. 263 of the IT Act and the grounds raised by the assessee are allowed.

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• 2019 (9) TMI 90
  Cash payments in excess of the prescribed limit u/s 40A(3) - HELD THAT:- We note that the issue in no longer res integra and we note that the Tribunal s decision in a similar case where in the assessee purchased country liquor from dealers from their bonded warehouse appointed under the notification of Govt. of West Bengal this Tribunal has held the dealers are the agents of Govt. of West Bengal in the case of Riktwik Kumar Bera [ 2014 (3) TMI 259 - ITAT KOLKATA] that the payment is covered under Rule 6DD(b) and, therefore, the provisions of sec. 40A(3) are not applicable - Decided against revenue

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• 2019 (9) TMI 89
  Addition on account of income from Dilli Haat - treating part of income from Dilli Haat as rental income and restricting the claim of expenses to 30% of the receipts - HELD THAT:- As decided in own case [ 2018 (4) TMI 699 - ITAT DELHI] we direct the AO to assess the amount of Rs. 2,39,66,739/- received by assessee for use of the craft stalls in A. Y. 2010-11 and Rs. 2,78,05,181/- for A. Y. 2012-13 as Assessee s income under the head Profits and Gains of Business or Profession and the balance amount of Rs. 98,87,914/- for A.Y. 2010-11 and Rs. 1,98,51,494/- for A.Y. 2012-13 is to be assessed as Income from House Property . Addition to the income of the assessee on account of understatement of bank interest - HELD THAT:- Income of a taxpayer is not required to be computed merely with reference to the TDS Certificate, but assessment of an income is an altogether independent exercise. We wish to add that income of an Assessee under the head Profits and Gains of Business or Profession and Income from other sources is to be determined regardless of whether tax was deducted at source in respect of amounts received or accrued to the assessee. What is relevant is the system of accounting regularly employed by the assessee - whether it is cash system or mercantile system. The assessee is not permitted to use mixed or hybrid system of accounting under which some items of income / expenditure are accounted for under cash system and the remaining items of income / expenditure are accounted for under mercantile. Assessee is a public sector undertaking is irrelevant. It is also immaterial whether the assessee was facing liquidity crunch. When the income has to be assessed during the year and when tax is to be paid in accordance with law on such income, the assessee cannot postpone the year in which the income will be offered to tax merely because the assessee has a liquidity crunch. Requirement of liquid funds by an assessee, howsoever genuine the requirement may be, cannot be accepted as a legitimate justification for postponement of the year in which income will be offered by the assessee. Therefore, in the facts of the case before us, the exercise of determining assessee s income lead us to the conclusion that the aforesaid income amounting by way of interest on Fixed Deposits in Bank is to be assessed during the year. Addition u/s 43B on account of advance excise duty - HELD THAT:- Respectfully following these judicial precedents, we also decide this issue in favour of the assessee and direct the AO to delete additions for A.Y. 2010-11 and 2012-13 made by the Assessing Officer U/s 43B of I.T. Act on account of advance excise duty. Disallowance of the provision for the Leave Encashment - AO invoked Section 43B(f) of I.T. Act and made additions - HELD THAT:- This issue is covered against the assessee vide aforesaid order [ 2018 (4) TMI 699 - ITAT DELHI] of Co-ordinate Bench of ITAT, Delhi in assessee s own case. Respectfully following the aforesaid decision of Co-ordinate Bench of ITAT, Delhi vide order dated 28.03.2018; we also decide this issue in favour of Revenue Disallowance of the payment made by the assessee to Central Road Research Institute ( CRRI ) for undertaking research regarding the concrete strength in bridges and had claimed weighted deduction @ 125% of the sum so paid U/s 35(1)(iia) - AO disallowed this claim on the ground that the documentary evidence did not contain the name of the assessee - HELD THAT:- After considering the order of the Ld. CIT(A) and on perusal of the evidences filed by the Ld. AR of the assessee and after taking into account the submissions made by the Ld. AR of the assessee, we are of the view that the claim made by the assessee is proper and sustainable. The order passed by Ld. CIT(A) on this issue is sound, proper and in accordance with law in the facts and circumstances of the case. Disallowances of loss claimed - HELD THAT:- CIT(A) allowed assessee s claim, holding that the assessee has been exclusively managing, administrating this institute without any interference of the concerned Ministry; and that the AO had not disputed that the institute was run by the assessee and had sustained the losses claimed by the assessee. At the time of hearing before us, the Ld. DR drew our attention to the facts that the issue was remanded back to the AO in [ 2018 (4) TMI 699 - ITAT DELHI] in assessee s own case for A.Y. 2009-10. The Ld. DR submitted that for A.Y. 2010-11 and 2012-13 also this issue may be remanded back to the AO for fresh order after necessary verification of the claim. The Ld. AR of the assessee agreed that the issue may be remanded back to the AO for fresh order. Disallowance being 50% of the expenses claimed by assessee towards Tourism promotion expense and Hiring of tent purpose thereof - HELD THAT:- Assessee submitted that the issue may be remanded back to the file of the AO for verification and fresh order on this issue. In reply, the Ld. DR did not express any objection to remanding of the issue back to the file of the AO for verification and fresh order. In the fitness of things, and as both sides agree, we remand this issue to the file of the AO for necessary verification and fresh order. The AO is directed, before he passes fresh order, to provide opportunity to the assessee to produce / submit relevant details and documentary evidences.

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• Customs

• 2019 (9) TMI 88
  Classification of imported goods - hook and eye fastening strip Nylon 60 - goods containing essential character of brassieres or not - whether classified under CTH 8308 10 10 or under Tariff Heading 6212 90 90 - adoption of HSN. HELD THAT:- The appeal is admitted.

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• 2019 (9) TMI 87
  Penalty u/s 112(a) of the Customs Act - case of appellant is that there was fraud by CHA, the appellant/facilitator cannot be held responsible - It was held in the case that he was merely a facilitator and working outside the margin of law as it was, cannot be accepted. HELD THAT:- There is no reason to entertain this petition - SLP dismissed.

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• 2019 (9) TMI 86
  Refund of the export duty - rectification of defects - refund was allowed holding that there is no infirmity in the First Appellate Authority sanctioning the refund while correcting to clerical or arithmetical mistakes in the Shipping Bills. HELD THAT:- Issue Notice.

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• 2019 (9) TMI 85
  Grant of registration for the project - Classification - custom duty demand - Project import - project relating to Water Supply project - appellants to be granted registration when they are not direct party to the import contract? HELD THAT:- Appeals are admitted.

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• 2019 (9) TMI 84
  Condonation of delay in filing appeal - HELD THAT:- We are not satisfied with the explanation furnished for condonation of delay in filing the appeals. Even otherwise, we do not find any merit in the civil appeals. The civil appeals are dismissed on the ground of delay as well as on merits.

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• 2019 (9) TMI 83
  Refusal to renew license - Redemption of advance authorization issued to the petitioner - Removal of deficiencies for the consideration of its application for revalidation of advance authorization - DRI s contention is that it would complete the investigation within a period of 5 years from the concerned exports - HELD THAT:- There is no provision in the Act or the Rules that would entitle the DGFT to withhold the petitioner s request indefinitely. Rule 7 of the Rules indicates that the DGFT may refuse to grant or renew the licences. However, the same has to be done by an order in writing and only for the reasons as stated therein. Thus, the DGFT may refuse to grant or renew the licence if it is of the view that any of the reasons as set out in Rule 7(1) of the Rules are established. And, he is required to pass an order specifically stating the said reason. In the present case, it is alleged that the petitioner has contravened the Act and thus the licence can be refused for the reasons as stated in Rule 7(1)(a) of the said Rules - Similarly, in terms of Rule 10 of the Rules the DGFT may, by an order in writing, cancel the licence if the licensee has contravened any law relating to customs or foreign exchange or the rules and regulations relating thereto. In either case, it would be essential for the DGFT to arrive at a firm conclusion regarding violation of the conditions of licence, or, provisions of the Act or Rules made thereunder. It will certainly not be open for the DGFT to not pass any order or to not take a decision for an indefinite period. This Court considers it apposite to direct the DGFT to take an informed decision within a period of six months from today. It is expected that the DRI would be able to provide the DGFT concrete material, if any, regarding any contravention, if found - applications of the petitioner cannot be deferred indefinitely - petition allowed.

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• 2019 (9) TMI 82
  Proceedings against the officer of Customs - caused loss of customs duty and wrongful gain to the accused - Clearance of parcels as non-taxable articles in gross violation of the procedure for assessment and collections of custom duty - offences punishable under Sections 135(1)(a) and 136(1) of the Customs Act, 1962 - HELD THAT:- A perusal of the private complaint indicates that the petitioner herein is sought to be prosecuted for the offences punishable under Sections 135(1)(a) and 136(1) of the Act on the charge that the petitioner entered into conspiracy with Accused No. 2 and in furtherance thereof, cleared parcels of dutiable computer parts without collecting the duty payable thereon and thereby caused extensive loss to the Customs Department and wrongful gain to the petitioner and other accused. The order passed by the Tribunal clearly indicates that the petitioner has been exonerated of the charges on merits. Under the said circumstances, the prosecution of the petitioner on the same set of facts and circumstances cannot be allowed to continue. Hence, the petition deserves to be allowed and the impugned proceedings are liable to be quashed. Petition allowed - decided in favor of petitioner.

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• 2019 (9) TMI 81
  100% EOU - re-import for re-processing - benefit of N/N. 52/2003-Cus dt. 31/03/2003 - Department found that the appellant was not entitled to claim duty exemption on re-importation of exported goods since in terms of Sl.No.15 in Annexure-I to Notification No.52/03-Cus dt. 31/03/2003, the goods could have been imported only if the import had taken place before the expiry of one year from the date of export - HELD THAT:- In the present case, the appellant is 100% EOU and they had exported the final product and subsequently the final product was re-imported for carrying out re-processing due to complaint from the foreign buyer and the appellant re-processed the imported goods and finally exported the same which is not in dispute. Further, the Commissioner(Appeals) has not given any findings on this material aspect also. Also, the appellant s case falls under Sl.No.14 of Annexure-I of Notification No.52/03-Cus dt. 31/03/2003 wherein a period of three years is provided from the date of exportation for repair and reconditioning and the appellant re-exported the goods within this period. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 80
  Classification of imported goods - IT Software license with part No. 452158 B21 HP ILO Select NM 1 Ser 24x7 Support, 452141 B21 HP ILO ADV NM1 Ser 24x7 Support, 436747 B 22 HP IC Environment BL No. Media Licenses - whether classified under Tariff Heading 49070030 of the CTA or under heading 8471? - HELD THAT:- In the present case, the appellants have only imported paper licences which are documents of title conveying the right to use software loaded in the HP ILO Proliant Serve -. Further, the CBEC has also clarified vide Circular 15/2011 that documents conveying the right to use software do not merit classification under CTH 8523 8020 but merits classification under CTH 4907. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 79
  Smuggling - Gold - provisional release of the vehicle - time limitation - appeal ought to have been filed within 90 days including the condonable period as provided in the statute - HELD THAT:- The appellant was diligently prosecuting the appeal filed before Commissioner (Appeals) against the order of provisional release. The Deputy Director of DRI vide Order, dated 15.01.2018 had directed for provisional release of the vehicle under provisions of section 110A of the Customs Act, 1962 on deposit of cash security of Rs. 5 lakhs. Aggrieved by such order, the appellant being the owner of the vehicle had filed an appeal before Commissioner (Appeals). They were given a personal hearing in this appeal on 29.06.2018 on which date the appellant had informed the Commissioner (Appeals) that the proceedings in respect of the show-cause notice issued, pursuant to the investigation had culminated in passing the Order-in-Original, dated 02.05.2018. Even then the Commissioner (Appeals) has taken another one month to dismiss the appeal observing that the application for provisional release has become infructuous. Had the appellant been informed that they could file an appeal against the Order-in-Original, dated 02.05.2018, and that the request for provisional release of vehicle has become infructuous on the date of personal hearing itself, the appellant would not have waited or continued to prosecute the appeal against the provisional release order. Thus, it can be seen that all through till the date of filing the appeal against this impugned order on 04.09.2018, the appellant has been consistently and diligently prosecuting her grievances for release of the vehicle. The Commissioner (Appeals), who while hearing the appeal also has a duty to inform the appellants at the time of personal hearing that when the show-cause notice has culminated in confirming confiscation of the vehicle, the application for provisional release cannot sustain. In not doing so, on the date of personal hearing itself, and thereafter passing the order after one month which was served much later sufficiently explains the reasons for the delay - the period taken by the appellant for prosecuting the grievance before the wrong authority ought to be excluded. Thus, when such period is excluded the appeal would be within time. Taking note of these facts and also together with the finding of fact in the Order-in-Original that the appellant had no involvement in the smuggling of the gold, she has to be given a chance to contest her grievance for release of the vehicle on merits. The appeal is remanded to the Commissioner (Appeals), who is directed to consider the same on merits - Appeal allowed by way of remand.

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• 2019 (9) TMI 78
  Permission for withdrawal of appeal - HELD THAT:- The rayer of the Revenue is allowed and the appeal is dismissed as withdrawn - Miscellaneous Application and also Stay Petition gets disposed off.

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• 2019 (9) TMI 77
  Imposition of penalty u/s 114 and 114 AA of the Customs Act, 1962 - export of restricted/prohibited item - Muriate of Potash (MOP) - mis-declaration of export goods - Confiscation of goods - HELD THAT:- Considering the fact that it is a case of the clear cut misdeclaration of goods and in the guise of nut and bolts, the appellant sought to export MOP for which licence is required and it was also found that during the investigation, all the documents were fake - In these circumstances, the goods were rightly held liable for confiscation. Penalty - HELD THAT:- Shri Rajnish Kansal is the main person who fabricated the documents and misdeclared the goods - the penalty of Shri Rajnish Kansal is rightly imposed and no leniency is required - however quantum of penalty reduced. Appeal allowed in part.

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• Corporate Laws

• 2019 (9) TMI 76
  Oppression and Mismanagement - Power of CLB to decide the issue of salary - section 397/398/402 and 403 of The Companies Act, 1956 - disbursement of outstanding salary of the intervener for the month of November 2013 - HELD THAT:- The CLB is free to pass orders as long as they are in the interest of proper conduct of the affairs of the Company. Earlier also the CLB had passed the order dated 28.02.2013 by which it had made certain directions regarding the employees of the company including that the employees shall not be suspended or terminated. It is manifest from the said order that the employees would have also to be paid their salaries. The said order was not challenged in any proceedings and to that extent has attained finality. The present impugned order has been passed only in furtherance to the said directions given on 28.02.2013. It is clear that the impugned order has been passed in appropriate exercise of the powers under Section 403 of the Companies Act. Passing directions regarding the employees of the Company is an interim arrangement regarding management of the affairs of the Company. There are no questions or issues raised in this appeal which would warrant exercise of powers of this court under Section 10 F of the Companies Act 1956. Appeal dismissed.

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• Service Tax

• 2019 (9) TMI 75
  Scope of SCN - case of appellant is that Commissioner has traversed beyond the scope of Show Cause Notice by not appropriating the amount of Service Tax paid by them through Cenvat Credit while he has appropriated the amount paid by cash - denial of cum-duty benefit. HELD THAT:- Revenue claims that only when the appellants have submitted that a part of the demand has been paid through Cenvat Credit, Ld. Commissioner had to go into the issue to find that Ld. Commissioner held that the condition for allowance of Cenvat Credit in respect of input service is as per Rule 4 (7) of the Cenvat Credit Rules, 2004. He holds that for availing of Cenvat Credit, the noticee must pay the value of input service check with the documents submitted by the appellants as to the correctness of their claim - We find that for this issue, it is required to go through the claim of the appellants about the arithmetical correctness of the duty paid by them through Cenvat Credit, verification needs to be undertaken by the Adjudicating Authority - matter remanded back for reconsideration. Benefit of Cum Duty value while computing the duty liability - HELD THAT:- The appellants are a Public Sector Undertaking and as such, as held by the Tribunal as well as various Courts Mens- aria cannot be assumed in respect of PSUs - It was consistently held that no particular person or officer could be benefited by such suppression/mis-declaration by the Organization. Therefore, the appellants are entitled to the benefit of Cum Duty price. The amounts received by them by the appellants from their Customers should be treated to be inclusive of Service Tax and accordingly, the liability of Service Tax re-calculated - For this purpose, also the impugned order needs to go back to the Adjudicating Authority. Appeal allowed by way of remand.

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• 2019 (9) TMI 74
  Short payment of service tax - discharge of liability on accrual basis or on receipt basis - Point of Taxation rules - According to the Department, the Appellant had short paid service tax amounting to Rs. 1,76,429/- for the year 2007-2008, whereas according to the Appellant there is no short payment of Service Tax liability because this amount of Service Tax was discharged by the Appellant in April, 2008, since Rs. 14,27,411/- was received by the Appellant in April, 2008. HELD THAT:- It is not in dispute that prior to 1 July, 2011, the Appellant could have discharged Service Tax liability on receipt basis even though the ledger was maintained on accrual basis. If that be so, then it is clear from the financial summary referred to above submitted by the Appellant, that the short paid Service Tax demanded in the Show Cause Notice to the extent of Rs. 1,76,429/- is towards receipts issued in 2007-2008 for an amount of Rs. 14,27,411/-, which amount the Appellant received in the month of April, 2008 - The adjudicating authority has not accepted this contention of the Appellant only for the reason that the figures in the two challans do not correspond to tax liability of Rs. 1,76,429/-. The adjudicating authority committed an error in rejecting this contention of the Appellant for the reason that the tax amount mentioned in the two challans would also include that tax amount for the other amount received by the Appellant in the month April, 2008. It would have been different if the amount mentioned in the Challans was lesser than Rs. 1,76,429/- because in that case the Appellant would not have discharged the entire tax liability - The Commissioner (Appeals) completely failed to advert to this issue in the order even though the said submission was noticed by the Commissioner (Appeals) in the impugned order. There is no short payment of Service Tax for the period in issue - appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 73
  CENVAT Credit - common input services used for manufacture of dutiable goods and for providing the exempted service - non-maintenance of separate records - Rule 6 of the CENVAT Credit Rules 2004 - Penalty u/s 78 - HELD THAT:- The impugned order imposing penalty under Section 78 equal to the proportionate credit is not sustainable in law because of the fact that there was no suppression with intention to evade payment of duty. Further, in the earlier audit for the period August 2009 to July 2014 , the Department did not raise any objection in spite of the fact that the Department was aware of the input credit, which the appellant was availing. It is only during the subsequent audit that this objection was raised and the present show-cause notice was issued. The appellant is entitled to avail the benefit of less penalty provided under Second proviso to Section 78(1) of the Act which he has rightly availed. The order of the Commissioner(Appeals) is contradictory when he says that payment of interest and penalty is found to be correct as per the provisions of Rule 14 of CCR, Section 78 of the Finance Act, 1994 and Rule 15(3) of the CCR and also observed that it needs no interference. But thereafter, he also imposed equal penalty under Section 78 which according to my considered opinion is not sustainable. Further the appellant is entitled to avail the benefit of less penalty provided under Second proviso to Section 78(1) of the Act which he has rightly availed. The order of the Commissioner(Appeals) is contradictory when he says that payment of interest and penalty is found to be correct as per the provisions of Rule 14 of CCR, Section 78 of the Finance Act, 1994 and Rule 15(3) of the CCR and also observed that it needs no interference. But thereafter, he also imposed equal penalty under Section 78 which according to my considered opinion is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 72
  Condonation of delay of 1146 days in filing the Appeal - case of appellant is that the Consultant of the Appellant had sent the Appeal by speed post to the Tribunal on 16 April, 2015 and so, the Appellant was under a bonafide belief that the same had been received by the Tribunal - HELD THAT:- The Appeal has been filed to assail the order dated 15 January, 2015 passed by the Commissioner (Appeals). The forwarding communication of the Department which was enclosed with order of the Commissioner (Appeals) clearly mentions that an appeal can be filed before the Customs, Excise and Service Tax Appellate Tribunal under Section 86 of the Finance Act 1944. The address of the Tribunal was also mentioned - when the letter accompanying the order of the Commissioner (Appeals) clearly mentions that an Appeal could be filed before the Customs, Excise and Service Tax Appellate Tribunal at West Block- II, R.K.Puram, New Delhi, the Consultant was not justified in sending the Appeal by speed post to an Assistant Commissioner and that too at an incorrect address. The Consultant cannot be said to be unaware of the procedure. It is also clear that neither the Consultant nor the Appellant made any effort to enquire from the Tribunal whether the appeal that is alleged to have been sent by speed post had actually been received in the Tribunal - No attempt was also made by the Appellant or its Counsel to visit the website of the Tribunal to find out the status of the appeal or seek any enquiry from the Tribunal regarding the filing of the appeal. This amply demonstrates the casual manner in which the Appellant proceeded in the matter - What is also important to notice is that the Appellant has not even disclosed as to on what date the letter sent by the Department was received by the Appellant. There is a deliberate attempt on the part of the Appellant to withhold vital information from the Tribunal. Thus, the facts stated in the application do not convince us that the Appellant was prevented by sufficient cause from filing the Appeal within the stipulated time - application for COD dismissed.

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• Central Excise

• 2019 (9) TMI 71
  Clandestine removal of goods Benefit of SSI Exemption Notification No.8/2001 withdrawn - It was held that Grant of SSI exemption to various goods is the policy matter of the Government of India and cannot be interpreted by the judiciary on the ground that such benefit should have been extended to the manufacturers of arms and ammunition with effect from 1-4-2001 - HELD THAT:- SLP dismissed.

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• 2019 (9) TMI 70
  Whether Circular No. 162/73/95-CX, dated 14th December, 1995 issued by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India is in conformity/authorized by the provisions of Section 37B of the Central Excise Act, 1944 read with the relevant provisions of the Central Excise Rules? HELD THAT:- Issue notice on this issue.

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• 2019 (9) TMI 69
  Area based exemption - proof of filing of declaration - exemption from payment of Central Excise under the Notification No. 50/03-CE, dated 10.06.2003 - HELD THAT:- Issue notice, returnable within four weeks.

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• 2019 (9) TMI 68
  Imposition of penalty - Clandestine manufacture and removal - gross undervaluation of products manufactured and sold - demand based on various gross undervaluation of products manufactured and sold - retraction of statements - Whether the imposition of penalty to the tune of Rs. 20 lakhs on the appellant without any documentary evidence and based on uncorroborated oral statements was proper? HELD THAT:- The orders of the Adjudicating Authority and the Tribunal would indicate that the accounts were examined, statements were recorded and there was finding that the company have resorted to unaccounted raw materials and administrative expenses. There was also evidence of clandestine removal of goods. These were all discernible from documentary evidences and the computer statements recovered on search. Being the Managing Director of the company during the relevant period, the appellant could not have been exonerated from the liability, in view of the evidence, which have been elaborately discussed by the fact finding authorities. The appellant cannot state that he was not aware of the activities of his factory. Retraction of statements given on oath, alone would not exonerate him. There is absolutely no reason for us to re-appreciate the evidence on facts. There is no illegality or infirmity pointed out by the Counsel appearing for the appellant to interfere with the findings on facts by the authorities and the Tribunal. The question of law as framed by us following those raised in the memorandum, is in fact a question of fact. The various documentary evidences and the statements recorded on oath amply prove the clandestine despatch of manufactured goods from the factory leading to suppression and undervaluation. Appeal dismissed.

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• 2019 (9) TMI 67
  CENVAT Credit - input services - case of appellant is that the original authority has not verified the true usage of the input service - HELD THAT:- The appellant has produced the invoice wherein it is clearly mentioned that the service was pure labour and did not involve goods. Copies of the invoice are also on record. Further the service tax challan of the vendor also shows that the tax paid was under Erection, Commissioning and Installation Service. Further the Service Tax Returns filed by the vendor also shows that those returns were filed under Erection, Commissioning and Installation Service and the copies of returns are also on record. Further, the Department has not been able to establish that the input services availed by the appellant falls under Construction Service/Works Contract Service. Extended period of limitation - HELD THAT:- The appellants have availed the cenvat credit in the month of April 2012 and May 2012 and has informed the Department with a letter along with Cenvat Register on 18.06.2012 and the said cenvat credit was noticed by the audit and audit report was issued on 19.12.2012 whereas show-cause notice was issued on 07.11.2014. Further the appellant has produced on record the acknowledgment of RPAD whereby he has informed the Department and also shown in the returns filed by him which clearly shows that there is no suppression on the part of the appellant with intent to evade payment of duty - the appellants have produced all the copies of invoices, challans and returns and also produced the copies of acknowledgment vide which the Cenvat Register was submitted to the Department on 18.06.2012 - Thus, the entire demand is barred by limitation. Appeal allowed on merits as well as on limitation.

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• 2019 (9) TMI 66
  Valuation - inclusion of element of the sales tax collected by it from the buyers in the assessable value - Section 4 of Central Excise Act, 1944 - HELD THAT:- The matter is no longer res-integra as the issue involved in the appeal has already been decided by this Tribunal in the appellant s own case M/S SHREE CEMENT LIMITED VERSUS CCG ST, JODHPUR [ 2018 (4) TMI 1161 - CESTAT NEW DELHI ] where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 65
  Maintainability of appeal - monetary amount involved in the appeal - HELD THAT:- The Revenue is in appeal against the interest amount of Rs. 12,06,291/- involved in dispute which is less than Rs. 20,00,000/-, below the prescribed limit as per the litigation policy and as conveyed vide Board s Circular F. No. 390/Misc./116/2017-JC dated 11.07.2018. Therefore the appeal is liable to be dismissed on monetary grounds. Appeal is dismissed on monetary grounds as per the litigation policy, without going into the merits of the case.

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• CST, VAT & Sales Tax

• 2019 (9) TMI 64
  Validity of revised assessment orders - Revenue raises an objection that the orders made by Original Authority having been carried in appeal before Statutory Appellate Authority cannot now be called in question in these writ petitions alongside challenge to orders made by Appellate Authority in the stay petitions - HELD THAT:- The writ petitioner company namely Diamond Engineering (Chennai) Private Limited represented by its Senior Vice President (Taxation), cannot maintain these writ petitions and any action on behalf of the writ petitioner company / dealer, which is a juristic person can be taken only by the IRP. Petition not maintainable.

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• 2019 (9) TMI 63
  Principles of natural justice - Service of order - TNVAT Act - case of petitioner is that the petitioner did not receive revisional notices prior to the impugned orders, that impugned orders were served on the writ petitioner only in the second week of June 2019, that only from the impugned orders the writ petitioner came to know that two revisional notices dated 26.07.2017 (first revisional notice) and 22.11.2017 (second revisional notice) were issued prior to the impugned orders. HELD THAT:- The writ petitioner has admittedly paid around 50% of the tax/penalty liability qua impugned orders - there is also no difficulty in accepting the submission that writ petitioner being given a reasonable opportunity to show cause against impugned orders is statutorily imperative in the light of proviso to sub-Sections 1 and 2 of Section 27 of TNVAT Act. This Court is left with the considered view that in the facts and circumstances of this case, it will be appropriate to set aside the impugned orders, remit the matter back to the respondent for redoing the revised assessment afresh after serving the revisional notices to the writ petitioner after getting response/objections from the writ petitioner - Petition allowed by way of remand.

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• 2019 (9) TMI 62
  Principles of natural justice - service or order - TNVAT Act, 2006 - entire revised assessment is based on mismatch issue - HELD THAT:- The two revisional notices were issued, replies / objections were sent by the writ petitioner dealer, first personal hearing was held, thereafter a third revisional notice was sent and after the third revisional notice, second personal hearing was held, wherein reply to the third revisional notice also was filed and after considering all these, the impugned order has been passed - there is clearly no violation of Natural Justice Principles . It is also nobody s case that the respondent does not have jurisdiction or powers to pass revised assessment orders under Section 22(4) of TNVAT Act. Alternate remedy - HELD THAT:- It is clearly a self imposed restraint qua writ Courts. Though it is a self imposed restraint qua writ Courts, Hon ble Supreme Court had repeatedly held that in fiscal law matters, this rule of alternate remedy has to be applied with utmost rigour. In other words, this Court reminds itself that though alternate remedy rule is a rule of discretion and not a rule of compulsion, in fiscal statute matters, the same has to be applied with utmost rigour. It has been held in UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS [ 2010 (7) TMI 829 - SUPREME COURT] Hon ble Supreme Court held that in cases pertaining to tax, cess etc., alternate remedy rule has to be applied with utmost rigour. This Court is not inclined to interfere with the impugned order albeit preserving the rights of the writ petitioner to prefer a statutory appeal, if the writ petitioner is within the prescribed time limit and subject to pre deposit conditions adumbrated in Section 51. This Court notices from the case file that this writ petition itself was dismissed for default on 11.09.2018 as the writ petitioner did not pursue / prosecute the same. This writ petition is dismissed albeit preserving the rights of the writ petitioner qua alternate remedy.

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