Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 5, 2019
Case Laws in this Newsletter:
GST
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
GST - States
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S.O. 356 - dated
2-9-2019
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Bihar SGST
Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19.
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S.O. 355 - dated
30-8-2019
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Bihar SGST
Corrigendum - Notification No. 03/2019-State Tax (Rate), dated the 29th March, 2019
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28/2018 – State Tax - dated
2-9-2019
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Delhi SGST
Delhi Goods and Services Tax (Sixth Amendment) Rules, 2018
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26/2018–State Tax - dated
2-9-2019
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Delhi SGST
Delhi Goods and Services Tax (Fifth Amendment) Rules, 2018.
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20/2018-State Tax (Rate) - dated
2-9-2019
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Delhi SGST
Seeks to amend Notification No. 5/2017-State Tax (Rate), dated the 30th June, 2017
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41/2019-State Tax - dated
3-9-2019
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Gujarat SGST
Waive the late fees in certain cases for the month of July, 2019 for FORM GSTR-1 and GSTR-6 provided the said returns are furnished by 20-09-2019
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38/2019-State Tax - dated
3-9-2019
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Gujarat SGST
Waive filing of Form GST ITC-04 - job-worker for F.Y. 2017-18 & 2018-19
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.(GHN-78)GST-2019/S.9(1)(28)-TH - dated
30-8-2019
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Gujarat SGST
Corrigendum to Notification No 03-2019 State Tax (Rate)
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Order No. 07/2019-State Tax - dated
29-8-2019
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Maharashtra SGST
Maharashtra Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019
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GST-1019/C.R.101/Taxation 1 - dated
29-8-2019
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Maharashtra SGST
Seeks to amend Notification No. MGST.1017/C.R.193/Taxation-1, dated 24th October, 2017
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CT/LEG/GST-NT/12-17/577 - 12/2019 - dated
21-8-2019
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Nagaland SGST
Extention of the due date for furnishing FORM GSTR-3B for the month of July 2019
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FIN/REV-3/GST/1/08 (Pt-1) (Vol.1)/205 - dated
31-7-2019
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Nagaland SGST
Seeks to reduce the GST rate on Electric Vehicles and charger
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FIN/REV-3/GST/1 /08 (Pt-1)(Vol.1) /206 - dated
31-7-2019
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Nagaland SGST
Seeks to exempt the hiring of Electric buses by local authorities from GST.
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FIN/REV-3/GST/I/08 (Pt-I) (Vol 1) /204 - dated
29-7-2019
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Nagaland SGST
Seeks to extend the last date for furnishing FORM GST CMP-08 for the quarter April-June
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FIN/REV-3/GST/1/08 (Pt-1)(Vol.1)/188 - dated
18-7-2019
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Nagaland SGST
Seeks to extend the last date for furnishing FORM GST CMP-08
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. 29791 -FIN-CT1-TAX-0043/2017 - dated
30-8-2019
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Orissa SGST
Corrigendum - Notification No. 11266-FlN-CT1-TAX-0043-2017/FlN, dated the 30th March, 2019
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S.R.O.No.302/2019 - dated
27-8-2019
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Orissa SGST
Odisha Goods and Services Tax (Seventh Removal of Difficulties) Order, 2019.
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S.R.O. No.292/2019 - dated
20-8-2019
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Orissa SGST
Seeks to amend Notification No. 16540-FIN-CT1-TAX-0043/2017/FIN., dated the 24th April, 2019
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16/GOS/CTD/2019 - dated
13-8-2019
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Sikkim SGST
Modification Notification No. 32/CTD/2017 dated 07.11.2017
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15/GOS/CTD/2019 - dated
13-8-2019
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Sikkim SGST
Modification Notification No. 09/GOS/CTD/2018 dated 25.8.2018
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38/2019-State Tax - dated
2-9-2019
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West Bengal SGST
Seeks to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19
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1523-F.T. - dated
2-9-2019
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West Bengal SGST
Corrigendum 3 to notification No. 552-F.T. dated 29.03.2019 relating to Real Estate.
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37/2019 – State Tax - dated
22-8-2019
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West Bengal SGST
Seeks to extend the due date of furnishing FORM GSTR-3B for the month of July, 2019
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1466-F.T. - dated
22-8-2019
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West Bengal SGST
Seeks to amend notification No 1639-F.T. dated 14.09.2017 regarding West Bengal State Committee for anti-profiteering
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1465-F.T. - dated
22-8-2019
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West Bengal SGST
Seeks to extend the date from which the facility of blocking and unblocking of e-waybill facility as per the provision of Rule 138E of the WBGST Rules, 2017 shall be brought into force to 21.11.2019
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Expiry of the E-WAY BILL - Detention of goods alongwith vehicle - Once the assessing authority has recorded in his proceedings that the E-WAY BILL has been generated, meaning thereby the goods carried a valid E-WAY BILL, the proceedings ought to have been brought to a close, rather than to perpetuate the illegality as done in the present case.
Income Tax
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Unexplained income of the assessee u/s 69 - While exercising power u/s 260A we cannot consider ourselves as the Third Appellate Authority and reexamine the facts - HC
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Application u/s 220(6) for stay of unreasonably high-pitched and that enforcement of recovery of the demand - applicant directed to deposit 10% of the demand.
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Addition made on account of valuation of stock found in the survey proceedings - reliance upon statement by the son of the proprietor who is partner in another partnership firm - there was no evidence to show that the excess stock alleged to have been found at the warehouse premises belongs to assessee - Additions deleted.
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Accrual of income - advance receipt of golf course membership fee - Merely because the income, which is pertaining to subsequent years, is received by the assessee in earlier years does not become the income of the earlier years u/s 5 - the membership fee income should be chargeable to tax in the year to which it pertains.
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Rate of depreciation on golf-course - “building” OR “plant and machinery” - the golf course is a plant on which assessee is entitled to the depreciation at the rate of 25% under the income tax act.
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Computing the deduction u/s 10A - addition made on account of the disallowance of the provident fund/ ESIC payments u/s 36(v) r.w.s 2(24) (x) - The contention of the Revenue that in computing the deduction u/s 10A the addition made on account of the disallowance ought to be ignored cannot be accepted
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Deduction u/s 80IC - substantial expansion after claim 100% deduction - AO allowed the claim of 30% as against 100% claimed by the assessee - following the decision of SC in Aarham Softronics, 100% deduction allowed.
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Denial of registration u/s. 12AA - Charitable activity u/s 2(15) - quality education - running an existing institution - further, adoption of a running school and claiming business losses - All the objections for denial of registration could not find favor of ITAT
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Reopening of assessment u/s 147 - notice u/s 148 cannot be issued for verification of information, but here the jurisdictional satisfaction is the essential requirement has to be shown that there has been reason to believe that there was income chargeable to tax.
Customs
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IGST refunds - mechanism to verify the IGST payments for goods exported out of India in certain cases
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Smuggling - Betel Nuts - goods of Indian Origin or Indonesian origin? - there is no evidence produced by Revenue to establish as to through which route the good were smuggled into India - appeal of the revenue dismissed.
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Benefit of Duty Free Import Authorization (DFIA) - Green Cardamom - merely because CTH was not mentioned or ITC (HS) is not matching so far description covers the goods imported, the benefit cannot be denied to the assessee - there is no dispute that Green Cardamom is indeed used in manufacture of Pickles and Biscuits as observed from the various books on Green Cardamom - benefit cannot be denied on this ground.
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100% EOU - the petitioner could have obtained extension of the time limit not exceeding 5 years - It is well-settled that even a retrospective amendment will not take away the vested rights of the parties. The same logic and principle will apply in the case of accrued liability also - when liability has already accrued, the same cannot be washed away or effaced by a subsequent notification
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Request for personal presence of the petitioner as a witness through the authorised agent since the petitioner is a woman - Section 108(3) of the Customs Act - Plea of the petitioner rejected.
DGFT
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Allocation of preferential export of sugar to USA under TRQ for the year 2019-20
FEMA
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CBI investigation for violation of provisions of FCRA - Cancellation of registration under FCRA - Just because out of thirteen thousand NGOs, whose licences had been cancelled under FCRA, only thirty two had been referred to CBI for investigation, this Court is of the view that the petitioner cannot claim negative equality and that too without disclosing the nature of violations by the thirteen thousand NGOs.
Service Tax
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Refund claim - unjust enrichment - Retrospective exemption - appellants have failed to produce the letter from NHAI that they have not paid the service tax to the Appellant - As per CA certificate, tax was paid from own pocket- the evidence is sufficient to establish that the service tax has not been passed on to the customer i.e. NHAI by the Appellants - refund allowed.
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Appellate authority summarily dismissed the appeal on two counts, firstly, on the point of delay and secondly, on the point of non-deposit of necessary pre-requisite amount as is required under the Act of 1994. - Order sustained.
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RCM - payment of guarantee fee towards receipt of Bank Guarantees - These are not the guarantees provided by a corporation for it’s subsidiaries but are pure bank guarantees provided through banks by the service providers - the appellant received banking and financial services from abroad and is liable to discharge service tax under reverse charge mechanism.
Central Excise
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CENVAT Credit - Rule 9(1)(bb) - credit of service tax after issuing SCN -suppression of facts for non-payment of service tax under reverse charge basis - the proceeding, as regard the demand of service tax came to an end. This closer itself shows that there is no suppression of facts involved - Credit allowed.
Case Laws:
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GST
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2019 (9) TMI 160
Cancellation of registration of petitioner - petitioner failed to prove his e-way bill transaction details - Section 107 of CGST Act 2017 - HELD THAT:- When the impugned order is tested on the anvil of material on record and in absence of any cogent documentary evidence to prove that the bills in question were physically transferred from Agra to Gwalior, this Court does not find any error in the judgment rendered by the Deputy Commissioner as well as Appellate Authority, as would warrant any indulgence. Petition dismissed.
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2019 (9) TMI 159
Rate of GST - Reduction in the rate - submission of the learned counsel for the Petitioner is that the GST Council has decided the rate of tax on fabric items - HELD THAT:- Learned counsel for the Respondent submits that he will take instruction in this respect and is presently instructed to state that the reduction of the rate is only related to cotton and natural fabric. List on 11.10.2019.
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2019 (9) TMI 158
Detention of goods alongwith vehicle - detention of goods on the ground of expiry of the E-WAY BILL - HELD THAT:- We completely fail to appreciate that where the rules framed by the State of Bihar, itself enables a dealer to extend the validity period of the E-WAY BILLS on its expiry after updating the details in part B of form GST EWB-01, meaning thereby, the generation of the E-way bill on 26.4.2019 did not suffer infirmity and confirmed that it is the same vehicle which is transporting the goods; that there is no change in the nature of goods or the mode of conveyance and the generation had been done by the petitioner on 26.04.2019 i.e. before the detention order then in absence of any prescription in the Rule which debars a dealer from generating such E-WAY BILLS on its expiry, where is the default to invite a proceeding - We also fail to appreciate as to how after taking note of the generation on 26.04.2019 yet the Deputy Commissioner has proceeded to order for detention of the vehicle together with the goods loaded thereon on 27-04-2019 when admittedly whatsoever document that was missing on the date on which the proceedings had been initiated i.e. E-WAY BILLS, had since been generated on its validity period. This is the first lacuna which stares at the face of the respondent in the present proceeding. A cursory glance to the statutory provisions underlying under Section 129(1)(a) would confirm that it relates to goods on which tax is yet to be paid - the stipulations present in Section 129(1)(a) regulates the exercise in so far as it concerns non-tax paid goods and in which event the tax to be imposed is to be 100% with equal penalty thereon unless the goods being transported or found to be exempted from the tax. Once the assessing authority i.e. the Deputy Commissioner, State Tax has recorded in his proceedings on 26.04.2019 that the E-WAY BILL has been generated, meaning thereby the goods carried a valid E-WAY BILL, the proceedings ought to have been brought to a close, rather than to perpetuate the illegality as done in the present case. The conditional release of the goods together with the vehicle vide order passed on 17.5.2019 is confirmed and the petitioner is discharged from the liability of the security directed under the interim order - petition allowed.
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Income Tax
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2019 (9) TMI 163
Addition made on NRI Mobilization expenses - HELD THAT:- Delay condoned. Since the tax effect involved in this matter is less than ₹ 2 crores, we see no reason to interfere in this matter. The special leave petition is dismissed, leaving all the questions of law open.
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2019 (9) TMI 157
Stay order - whether the stay of demand stands vacated after expiry of a period of 365 days, even if delay in disposal if appeal is not attributable to the assessee - HELD THAT:- The issue is covered against the Revenue by the Division Bench judgment titled as The Principal Commissioner of Income Tax, Gurgaon Versus M/s Mitsubishi Electric Automotive Indsia Pvt. Ltd., Manesar, Gurgaon [ 2019 (5) TMI 1656 - PUNJAB AND HARYANA HIGH COURT] Dismissed in the same terms.
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2019 (9) TMI 156
Rejection of cross-objections of the appellant by Tribunal - HELD THAT:- Tribunal was not justified in rejecting the cross-objections of the appellant without consideration of the said cross-objections on merit. The order of this Court could not be considered as either rejection of the said cross-objections, or as order of denial of opportunity to the appellant to urge her cross objections after remand to the Tribunal, while passing the earlier order dated 14.03.2012. The first question is, therefore, answered in favour of the appellant. ITAT's findings with regard to evidence qua sale of jewellery, as well as alleged confession of Bishan Chand Mukesh Kumar - Tribunal has remanded the matter back to the Assessing Officer for the purpose of recording further evidence, after observing that the appellant had not led any evidence to establish the sale of jewellery by her to Bishan Chand Mukesh Kumar - HELD THAT:- We are not inclined to interfere with the remand made by the Tribunal. We may only observe that the observations/ findings made and returned by the Tribunal in the impugned order qua the sufficiency of the evidence led by the appellant, and the evidentiary value of the said evidence, at this stage, can be regarded as finding only for the purpose of justifying the remand. The said findings though cannot be said to be perverse, but since the order of remand is not being interfered with, in all fairness, we hold that the same shall not come in the way of the AO evaluating the evidence that may already have been led, or that may be led by the Assessee. Thus, the second question is partly answered in favour of the Assessee in the above terms. Direct that the AO shall not be bound by the findings of fact returned by the Tribunal in the impugned order, qua the sufficiency/ evidentiary value of evidence already led, or that may be led before the Assessing Officer upon remand.
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2019 (9) TMI 155
Deduction u/s 10A - whether foreign exchange gains should form part of the profits for the purpose of deduction ? - HELD THAT:- Issue covered in favour of the assessee and against the Revenue in the assessee s own case for the assessment year 2001-02 [2010 (7) TMI 75 - MADRAS HIGH COURT] wherein a Division Bench of this Court held that gain due to fluctuation in foreign exchange rate is directly related to the export sales of the assessee and cannot be treated as other than part of profit from export. Income from training activity, sale of hardware and software and 39.33% of miscellaneous income are part and parcel of income for exemption under Section 10A - HELD THAT:- We find that there is inconsistency in the order in the sense that the Tribunal, considered the issue relating to net income from training activity, which was held to be part and parcel of the assessee s income entitled to exemption under Section 10A of the Act. The Tribunal, after taking note of its decision in the assessee s group companies case remanded the matter back to the file of the Assessing Officer for deciding the issue afresh after examining the true nature of the training activities and character of income earned by the assessee out of such activity. Tribunal dismissed the Revenue s appeal and upheld the order passed by the CIT(A) with regard to the miscellaneous income namely 39.33%, which was, according to the assessee, derived from its own training centres. The Tribunal could have followed its earlier order in the assessee s group companies case and remanded the issue and could not have rejected the Revenue s appeal and affirmed the finding with regard to the miscellaneous income. Therefore paragraph 10 of the impugned order passed by the Tribunal requires to be set aside. As assessee points out that the Central Board of Direct Taxes issued a circular in Circular No.717 dated 14.8.1995, which gives explanatory notes on the provisions of the Finance Act, 1995. It is pointed out in paragraphs 21.3 and 21.4 of the said Circular with regard to the benefits provided to units in free trade zones. Hence, it is submitted that de hors the findings of the CIT(A) with regard to the Third Proviso to Section 10A of the Act, the assessee has got a strong case based on the substantive provision such as Section 10A of the Act prior to its substitution by the Finance Act, 2000 with effect from 01.4.2001 - as matter has been remanded to the Assessing Officer for verification and for a fresh consideration, we give liberty to the assessee to raise this contention before the Assessing Officer Disallowance of depreciation - Tribunal confirming the order of the CIT (Appeals) by merely observing that there was no merit in the ground raised by the Revenue on the issue of deletion of depreciation - HELD THAT:- the order passed by the Tribunal does not contain elaborate reasons. But, the Tribunal affirmed the order passed by the CIT(A). Therefore, we are required to see as to whether the order passed by the CIT(A) contains sufficient reasons, which prompted the Tribunal to confirm the same. On a reading, it is evidently clear that the CIT(A) has done a thorough and elaborate exercise and arrived at a finding.
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2019 (9) TMI 154
Unexplained income of the assessee u/s 69 - HELD THAT:- Explanation offered by the assessee was found to be not satisfactory by the AO. CIT(A) re-examined the factual matrix, considered the sufficiency of the explanation and held that in the absence of verifiable evidence, the bank deposits could not be presumed to be a part of sales turnover. Tribunal also took into consideration the facts and held that the entire unaccounted deposits were to be considered as unexplained income of the assessee under Section 69 of the Act. A thorough fact finding exercise has been done by both the CIT(A) as well as the Tribunal. While exercising power under Section 260A we cannot consider ourselves as the Third Appellate Authority and reexamine the facts. We find that no substantial question of law arises for consideration in this appeal.
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2019 (9) TMI 153
Application u/s 220(6) for stay of unreasonably high-pitched and that enforcement of recovery of the demand - Assessment u/s 153A - addition of income where assessment has already completed - HELD THAT:- In case of section 153A the search or requisition are the trigger points, and once the trigger operates the AO is required to assess or reassess the total income of the assessee for six assessment years preceding the assessment year relevant to the previous year in which the search is carried out. Thus, while under section 158BB of the Act, it is the undisclosed income which is to be computed, u/s 153A there is assessment or reassessment of the total income of six assessment years. While in those cases, where an assessment order has already been framed under section 143(3) prior to initiation of proceedings u/s 153A or 153C of the Act, it has been held that any addition made in those proceedings should be on the basis of the material found during the course of search. In case of reassessment, the addition has to be based upon material found during the course of search, but insofar as assessment is concerned, all available material can be taken into consideration, whether it is found during the course of search, requisition or survey or is otherwise available with the AO. In case of assessment, the additions cannot be restricted to the material found during the course of search alone. Application made u/s 220(6) - PCIT has nowhere applied his mind to the contention of the assessee that the assessment is unreasonably high-pitched and that enforcement of recovery of the demand would cause genuine hardship to the assessee since the demand is unusually high looking to the financial standing of the assessee. In the opinion of this court, when the statute vests power in an authority, such power is required to be exercised in a reasonable manner, and not in the perfunctory manner in which both the AO and the PCIT have dealt with the applications made by the petitioner under section 220(6) of the Act. There is some merit in the submissions insofar as the additions are concerned. Moreover, considering the amount assessed during the course of regular assessment in the preceding years, the assessment order for the year under consideration appears to be unreasonably high-pitched. However, for the reasons recorded hereinabove, no case has been made out for unconditional stay of the demand. Besides, a perusal of the assessment order reveals that on behalf of the petitioner it has been admitted that an amount of ₹ 91,50,156/- is to be treated as out of books sales which is unrecorded in the books of accounts. Assessment is unreasonably high-pitched, the court is of the view that the ends of justice would be met, if instead of 20% of the demand, further recovery of the demand is stayed subject to the petitioner making payment of 10% of the demand of ₹ 8,57,91,420/-. The petition partly succeeds and is, accordingly, allowed to the following extent. The impugned orders dated 8.2.2019 and 11.3.2019 passed by the first and the second respondents, respectively, as well as the impugned notice dated 25.3.2019 issued under section 226(3) of the Act, are hereby quashed and set aside. Further recovery of the demand is stayed subject to the petitioner making payment of 10% of the demand of ₹ 8,57,91,420/-. Rule is made absolute accordingly to the aforesaid extent. It is clarified that the view expressed in this order is a prima facie view for the purpose of deciding the application under section 220(6) of the Act and the CIT (Appeals) shall decide the appeal without in any manner being influenced by any observations made in this judgment.
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2019 (9) TMI 152
Protective additions - rental income - addition made in the hands of the company - assessee is the beneficial owner - HELD THAT:- Both the companies have alleged to have earned the lease rental income for Assessment Year 2006-07. In one of the other share holders Mr. Ajay Kalsi in whose case in earlier year identical additions were made on protective basis. Furthermore, another beneficiary Smt Mala Kalsi, Such additions were also made being the share holder of those companies. All these additions were made on protective basis in their hands. In case of Smt Mala Kalshi the coordinate bench has already decided the issue deleting the above addition on protective basis as per order SMT. MALA KALSI AND VICE-VERSA [ 2017 (12) TMI 127 - ITAT DELHI] . Further, in case of Shri Ajay Kalsi the coordinate bench has deleted the above addition as per order dated 05.12.2018 for Assessment Year 2006-07 to 2012-13. Issue is now squarely covered in favour of the assessee by the above addition. DR could not cotrovert the above fact that the issue is squarely covered by the decision of the coordinate bench in case of other share holders. In view of this fact respectfully following the decision of the coordinate bench where identical additions were deleted, we also direct the ld AO to delete the above protective additions in the hands of the assessee for Assessment Year 2006-07. Therefore, the appeal filed by the assessee for Assessment Year 2006-07 is allowed.
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2019 (9) TMI 151
Reopening of assessment u/s 147 - notice u/s.148 was not served on the assessee - undisclosed capital gains - HELD THAT:- As relevant assessment year before us is AY.2007-08 for which, notice u/s.148 could be issued on or before 31-03-2014. In the case before us, the AO has issued notice u/s.148 of the Act on 26-03-2014. Therefore, it is within the period of six years from the end of relevant assessment year. However, it is clear that assessee has not been served notice u/s.148 of the Act and even the notice by affixture was also served on 04-04-2014. But as rightly pointed out by the Ld.Counsel for the assessee, there is no report of the AO, which contains the names and addresses of the witnesses, who have identified the property. Further, it is also not recorded in the docket order of the assessment records. Therefore, it is not clear as to whether notice by affixture has really been served on assessee. Further, the Hon'ble Punjab Haryana High Court in the case of CIT Vs. Avi-oil India Pvt. Ltd., . [ 2008 (7) TMI 520 - PUNJAB AND HARYANA HIGH COURT] has held that notice should not only be issued but should also have been served on the assessee within the stipulated period and in the absence of a valid notice, the assessment is initiated. Capital gain on transfer of property - considered the sale consideration to be at ₹ 13,44,000/- and after allowing 40% of the sale value as assessee s expenditure towards development, brought the balance of ₹ 8,06,400/- to tax - HELD THAT:- Assessee has developed the land and sold the same to the land owners. Therefore, the assessee s contention that - there is no transaction of any transfer by the assessee to the land owners, is to be accepted. Further, both the AO and the CIT(A) have failed to consider the transaction as a whole and failed to allow the cost of acquisition of the land to the assessee while computing the income from the transaction of sale. As rightly pointed out by the Ld.Counsel for the assessee, if the transaction was to be considered as transfer, then the AO and the CIT(A) ought to have taken the transaction of sale dt.15-11-2006 also into consideration and the cost of acquisition should have been allowed and if it was so done, there would be loss and not income from the said transaction. Therefore, the premise of the AO that there is income which has escaped assessment, is incorrect. The reasons recorded for reopening also are clearly erroneous as the AO has recorded that assessee has not filed the return of income. In view of these facts, we are of the opinion that the reassessment is not sustainable. Therefore, on both the grounds, assessee s appeal is liable to be allowed.
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2019 (9) TMI 150
Sales tax subsidy received - whether capital or revenue receipt - HELD THAT:- Undisputedly the issue of treatment of sales tax subsidy whether the capital or revenue, has been decided in favour of the assessee as being capital in nature by the decision of the I.T.A.T. in the case of M/s Trident Alco-chem Ltd. I.T.A.T. had followed the decision of the ITAT Chandigarh Bench in the case of Vardhman Textiles [ 2015 (10) TMI 2764 - ITAT CHANDIGARH] wherein the scheme of Punjab Government granting the subsidy had been considered at length and thereafter it was held that the purpose of the subsidy being promotion of industries the nature of the subsidy was capital in nature. In view of the same, we have no hesitation in holding that the sales tax subsidy received by the assessee is capital in nature. Disallowance of deferred revenue expenditure i.e. loan processing fee and interest differential - HELD THAT:- Assessee admittedly had claimed deduction u/s 35D of the Act, which it had admitted before us, it was not eligible for the same. Therefore, as far as the disallowance being made and upheld on account of the assessee being ineligible to claim the same u/s 35D of the Act is concerned, admittedly there is no infirmity in the same. But alternatively the assessee had contended that the fact that the expenses related to the business of the assessee not being denied, it was eligible to claim the said expenses on payment basis u/s 43B of the interest differential and also on the principle of consistency, having been allowed the claim in the preceding and succeeding years - claim be allowed in the impugned year since otherwise it would have multiple ramifications with the assessee staking its claim in the year in which it accrued and considering that the Revenue Authorities have already allowed the claim in preceding and succeeding years, it would lead to multiple litigation and adjustments requiring to be made. By allowing the claim in the impugned year, the issue, once and for all will be settled in relation to these facts. Addition on account of proportionate interest on machinery put to use and closing balance of capital-work-in-progress by treating the same as capital expenditure - HELD THAT:- Since we have noted from the order of the CIT(A) that the depreciation has already been allowed on the same, we do not find any merit in this plea of the assessee. In any case, no arguments have been made on the merits of the case. The ground of appeal No.3 raised by the assessee is, therefore, dismissed. Addition on account of previous year expenses - HELD THAT:- The assessee has time and again contended that though the expenses related to the preceding years, the bills were raised in the impugned year. This has not been controverted by the Revenue. Therefore, we agree with the Ld.Counsel for the assessee that since the bills were raised of these expenses in the impugned years, the liability for these expenses crystallized in the impugned year only and following the mercantile system of accounting the assessee had, therefore, rightly claimed the said expenses in the impugned year. Even otherwise following the same logic and reasoning, we have noted, that the Ld.CIT(A) had allowed identical expenses claimed by the assessee in assessment year 2003-04 which were disallowed by the AO for identical reasons treating them as previous year expenses - Decided in favour of assessee Characterization of income - treatment of interest income and miscellaneous income earned by the assessee - income from other sources or business income - HELD THAT:- Assessee had explained the reasons for treating so, stating that the interest income was earned on FDRs which were retained by the banks as margin money for releasing non fund based limits to the assessee. As for the miscellaneous income, the assessee had contended that these were in the nature of fines and penalties charged from contractors for non-complying the terms of the contract - gone through the order of the CIT(A) and we find that he has summarily dismissed the contention of the assessee without giving any reasons for the same by simply stating that he does not agree with the contention of the assessee. In view of the specific submissions made by the assessee, it was incumbent for the Ld.CIT(A) to deal with the same and dismiss it only after giving suitable reasons. Clearly the order passed by the Ld.CIT(A) on the issue is a non speaking order. We, therefore, consider it fit to restore the matter back to the Ld.CIT(A) to deal with the issue afresh. Disallowance of interest account on capital advances - capitalization of interest u/s 36(1)(iii) of the Act which was claimed by the assessee as revenue expenses - HELD THAT:- We find merit in the contention of the Ld.Counsel for the assessee that the Ld.CIT(A) has passed a non speaking order on the issue without dealing with the submissions made by the assessee. As rightly pointed out ,the assessee we find, had made submissions on facts to the effect that interest pertaining to the capital advances had not been claimed as revenue expenses. But the Ld.CIT(A), we find, went on to uphold the disallowance without dealing with the specific factual contentions of the assessee. In view of the specific submissions made by the assessee, it was incumbent for the LD.CIT(A) to deal with the same and dismiss it only after giving suitable reasons. Treating a sum as interest on FDR as a receipt and not eligible to be reduced from capitalization of interest - HELD THAT:- As rightly pointed out, the assessee we find, had stated that the interest income had been earned on funds raised for capital purposes, i.e project development. But the Ld.CIT(A), we find, went on to uphold the treatment of the same as being revenue in nature, without dealing with the specific contentions of the assessee. In view of the specific submissions made by the assessee, it was incumbent for the LD.CIT(A) to deal with the same and dismiss it only after giving suitable reasons. Clearly the order passed by the Ld.CIT(A) on the issue is a non speaking order. We, therefore, consider it fit to restore the matter back to the Ld.CIT(A) to deal with the issue afresh. The Ld.CIT(A) is directed to pass a speaking order after dealing with the specific contention made by the assessee after verifying the facts stated by the assessee Delayed payment of EPF and Punjab welfare Fund - HELD THAT:- CIT(A) deleted the disallowance made by the AO of delayed payment of employees contribution to EPF, following the decision of the Hon'ble Jurisdictional High Court on identical issue in the case of M/s Rai Agro Industries Ltd. [ 2010 (11) TMI 386 - PUNJAB AND HARYANA HIGH COURT] - DR has been unable to point out any distinguishing fact in the present case from the said decision relied upon by the Ld.CIT(A), nor has he been able to bring to our knowledge any subsequent decision of the Hon'ble Jurisdictional High Court or Hon'ble Apex Court deciding the issue against the assessee - no hesitation in upholding the order of the CIT(A) in deleting the disallowance made of the employees contribution to EPF Addition u/s 43B - CIT-A directing the Assessing Officer to verify and allow the claim of the assessee - HELD THAT:- As gone through the order of the CIT(A) and do not find any infirmity in the same. As rightly noted by the CIT(A) the AO had disallowed the claim for want of evidence. Since necessary evidence had been filed before the CIT(A), the CIT(A) had rightly restored the matter to the AO to verify the claim of the assessee. We see no reason to interfere in the order of the CIT(A) Addition to book profits u/s 115IB on account of provisions for gratuity made - HELD THAT:- DR was unable to point out any infirmity in the order of the Ld.CIT(A). The Ld. DR was unable to distinguish the facts of the present case with that of the INOX LEISURE LTD [ 2013 (2) TMI 353 - GUJARAT HIGH COURT relied upon by the Ld.CIT(A) while allowing assessee s claim. Further no decision of the Hon'ble Jurisdictional High Court or of the Hon'ble Apex Court was cited before us upholding the Revenue s stand that the provision for gratuity was to be added back to the net profit for calculating book profits of the assessee u/s 115JB of the Act. - Decided against revenue
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2019 (9) TMI 149
Addition made on account of valuation of stock found in the survey proceedings - reliance upon statement by the son of the proprietor who is partner in another partnership firm - evidence to show that the excess stock alleged to have been found at the warehouse premises as surveyed - HELD THAT:- In view of the decision of Hon ble Supreme Court in the case of S. Khader Khan sons [ 2013 (6) TMI 305 - SC ORDER] it is to be noted that there cannot be addition made on account of statements recorded under survey proceedings conducted u/s 133A of the Act and therefore the addition made in the present case in the hands of assessee is not maintainable only for the reason that the addition was made by Assessing Officer and confirmed by the CIT(A) is solely based on the statement of Shri Ajoy Kr. Das which was alleged to have been confirmed by the assessee during the course of survey. In the present case there was no evidence to show that the excess stock alleged to have been found at the warehouse premises bearing no.54/14, this belongs to assessee and the addition made in the hands of assessee is not maintainable. Therefore in view of our discussion made hereinabove paras, we delete the addition made by the Assessing Officer and confirmed by the CIT(A). Thus order of CIT(A) is set aside, only ground raised by the assessee is allowed.
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2019 (9) TMI 148
Rate of depreciation on golf-course - building OR plant and machinery - According to the revenue authorities, it is a building and not a plant whereas the assessee contends that it is a plant - HELD THAT:- Coordinate bench in case of Deputy Commissioner of Income Tax vs. JP greens Ltd [ 2010 (3) TMI 1248 - ITAT DELHI ], on identical facts and circumstances considered golf course as plant and depreciation at the rate of 25% was allowed holding that assessing officer himself has allowed depreciation at that rate in past in that particular case. The decision relied upon by the learned CIT DR that Toll Road does not qualify as a plant for higher rate of depreciation as held in the Moradabad Toll Road Co Ltd vs. Asst Commissioner of income tax [ 2014 (11) TMI 354 - DELHI HIGH COURT ] was decided as road was specifically considered as part of building in the part A of appendix 1 of The Income tax Rules 1962. Thus, the fact of that case is distinguishable. Further, it was not stated before us that revenue has not accepted the decision of the coordinate bench in DCIT vs. JP greens Ltd where golf course was held to be plant. Therefore, it stands concluded that golf course is a plant looking to the nature of business of the assessee. Further, the judicial precedents relied upon by the parties also only lays down the proposition established by the higher judicial forum supports the above view. In view of this, ground number 1 of the appeal of the assessee is allowed reversing the views of the lower authorities, holding that golf course is a plant on which assessee is entitled to the depreciation at the rate of 25% under the income tax act. Disallowing the expenses on account of golf course on repairs and maintenance - HELD THAT:- It is a fact that assessee has submitted the details of such expenses. The books of the accounts of the assessee are duly audited and the learned assessing officer has also not pointed out any specific debate the defect in the details of such expenses. The merely because there is an increase in the expenditure compared to the golf course income the disallowance cannot be made. Further the assessing officer has also not established that those expenditure have not been incurred wholly and exclusively for the purposes of the business. In view of this we do not find any infirmity in the order of the learned CIT A in deleting the above disallowance. Addition u/s 41(1) - HELD THAT:- CIT-A noted that a sum of INR 1 54606/ was disallowed by the assessee in assessment year 2000 01, ₹ 2886114 in assessment year 2001 02 and ₹ 3333882/ in assessment year 2003 04 and therefore he held that the assessee itself has disallowed the above sum amounting in all INR 2 6374602/ in the earlier years and therefore out of the sum of INR 80 416051/ a sum of INR 6 374602 is not following under the provisions of section 41 (1). He therefore held that the addition made by the learned assessing officer to that extent of INR 6 374602/ is not sustainable. We do not find any infirmity in the order of the learned CIT A to that extent. Further with respect to the disallowance of INR 2 041449/ of the balance sum sustained by the learned CIT A, the assessee could not show that whether these expenditure have already been disallowed by the assessee in the earlier years or not and therefore in absence of such details, the additions cannot be deleted. In view of this we find no infirmity in the order of the learned CIT A in upholding the disallowance of INR 2 041449/ Addition of security deposit received - Accrual of income - advance receipt of golf course membership fee - HELD THAT:- Merely because the income, which is pertaining to subsequent years, is received by the assessee in earlier years does not become the income of the earlier years under section 5 of the income tax act in case of either business income or u/s 28. Hence, according to us, the membership fee income of the assessee should be chargeable to tax in the year to which it pertains. Therefore, we reverse the finding of the learned CIT A in holding that that a sum of INR 3 5288416 received as golf course membership fee is chargeable to tax as income. As such, it is the claim of the assessee that subsequently such income has already been offered for taxation therefore for the year to which it pertains. Therefore, we direct the learned assessing officer to tax the above income as Income for the impugned assessment year to which it pertains to. Therefore, if the assessee has offered the income, to the year to which it pertains to, the addition is required to be deleted. Taxability of the security deposit against the golf course membership fee - HELD THAT:- The identical issue arose before the honourable Gujarat High Court in principal Commissioner of income tax vs. Gulmohar Green Golf and country club Ltd [ 2016 (12) TMI 1559 - GUJARAT HIGH COURT ] wherein it was been held that the security deposit recovered from the members at the time of their enrolment as a member is refundable on occurrence of the contingency mentioned in the rules and regulation and bylaws, therefore it is required to be treated as a deposit, thus, a capital receipt. Therefore, it was held that it is not an income of the assessee. As in the case of the assessee also the security deposit is refundable hence respectfully following the decision above, we also hold that the sum of refundable security deposit received from the members of the assessee is a capital receipt and cannot be charged to tax as income. Accordingly, we direct the learned assessing officer to delete the addition to the extent of refundable deposit received from the members Disallowance of bad debt/advances written off in the normal course of the business - HELD THAT:- We are not impressed to allow the claim of the assessee, as none of the decision cited before us relates to advances written off for purchase of a capital asset given in earlier years was involved. Further, for the claim of allowability u/s 28, loss should be of revenue nature. For the claim of allowability u/s 37 (1) of the act, the expenditure should be of revenue nature. Therefore, the prime condition that is required to be satisfied by the assessee is that that expenditure is revenue in nature. According to us the advances given for purchase of capital goods, cannot be considered to be revenue in nature, when they are written off. In view of this, we do not find any infirmity in the order of the learned CIT A, in principle, that the advances given for the purchase of capital goods he further written off in this year is a capital expenditure. With respect to the allowability of bad debts, there is no infirmity in the order of the CIT A mentioned in his order that such advances should have been shown as income in the earlier years. - Decided against assessee Undisclosed income on sale of land - HELD THAT:- In the case of CIT v. George Henderson And Co. Ltd. [ 1967 (4) TMI 18 - SUPREME COURT ] it is held that, the expression full value of the consideration could not be construed as the market value but must be taken to be the price bargained for by the parties to the sale. Further the assessee before the learned CIT-A has clearly stated that the comparable sale of land to ITC Ltd that the above agreement did not materialize and subsequently it was cancelled since the assessee was not able to obtain the required permission and it is still continues to be owned and possessed by the assessee. Even further, the comparison of the sale of the plot of land with the sale of flat in the adjoining area is not comparing apples with Apple but Apple with oranges. Thus, in absence of any corroborative evidence of having received the consideration higher than what has been stated in the sale deed and in the books of account, the addition made by the learned assessing officer is not in accordance with the law. Long-term capital gain on transfer of ownership of ITC Ltd - above addition has been made subject to the exact details of the date on acquisition cost of the land on protective basis and on substantive made a basis the addition has been made in assessment year 2001 02 and 2003 04 on the basis of agreement to sale dated 16th/2/2001 and 17/3/2003 - HELD THAT:- As the revenue could not point out that what is the trigger point of taxing the above amount in this year and further in which year the transfer of the capital asset has happened, the above addition has rightly been deleted by the learned CIT A. In view of this we do not find any infirmity in the order of the learned CIT A deleting the protective addition Addition on account of interest disallowances - HELD THAT:- No infirmity in the order of the learned CIT A wherein it has been held that that fresh borrowing of INR 7.75 crore were utilized for repayment of loan pertaining to earlier years and the purpose of the loan has been accepted by the learned assessing officer, the disallowance made by the learned assessing officer is not sustainable. We also do not find any infirmity in the order of the learned CIT A mentioning the reasons for deletion of the disallowance Penalty u/s 271(1)(c) - Defective notice - HELD THAT:- None of the twin charges have been struck off by the learned assessing officer in notice dated 18/05/2007. Honourable Delhi High Court in M/S. SAHARA INDIA LIFE INSURANCE COMPANY, LTD. [ 2019 (8) TMI 409 - DELHI HIGH COURT ] as per paragraph number 21 of that order has also upheld the view of the coordinate bench that notice issued by the learned assessing officer would be bad in Law if it did not specify under which limb of section 271 (1) (c), penalty proceedings had been initiated. Advance membership fees chargeable to tax in this year or not - HELD THAT:-w e hold that membership fees received by the assessee as advance membership fees, and shall be chargeable to tax on the basis of the accrual income to which it pertains. For such verification as in assessment year 2005 06, we set aside the issue back to the file of the learned assessing officer. With respect to the issue of taxability of the non-refundable security deposit we have already hold that such receipt is not an income of the assessee. Accordingly, we hold for this year too that non-refundable security deposit received by the assessee is not an income chargeable to tax. Accordingly, ground number of the appeal of the assessee is allowed.
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2019 (9) TMI 147
Addition u/s 68 - unexplained cash credit - identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions - HELD THAT:- Assessee had, inter-alia, not only furnished copies of bank statements but also placed on record financial statements reflecting the source stated investments in the assessee company. This is coupled with the admitted fact that Shri Abhishek Morarka, director of as many as 3 entities visited the office of AO twice but still nothing adverse could be brought on record by AO to contradict the claim the assessee. None of the evidences submitted by the assessee were ever rebutted by Ld. AO but heavy reliance was placed on third party statements which were never confronted to the assessee and no opportunity of cross-examination was ever provided to the assessee. Nothing has been brought on record to establish the fact that any cash got exchanged between the assessee and investors which would corroborate the fact that assessee s unaccounted money got routed back in the garb of share capital. AO, while confirming the addition, has already admitted that the bank statements of the investors were duly furnished and there is no allegation of any immediate cash deposits in those accounts. No adverse inference could be drawn on bare facts that shares were subsequently repurchased by the promoters or similar shares were issued to the promoters at face value during the year unless the said facts were corroborated by any adverse evidences, which we are unable to find. Similarly, so far as the valuation of shares is concerned, we find that the assessee had justified the valuation by adopting discounted Cash Flow Method and the onus was on revenue to rebut the method of valuation. We are unable to find any such exercise by revenue Lastly, it is trite law that no addition could be made merely on the basis of suspicion, conjectures or surmises. The extent and degree of investigation carried out by Ld. AO do not inspire us to concur with the submissions made by Ld. DR before us. We are of the considered opinion that the revenue was not able to discharge the burden of disproving the genuineness of the stated transactions. - Decided in favour of assessee.
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2019 (9) TMI 146
Addition u/s 68 - undisclosed cash credit - creditworthiness of share applicants - HELD THAT:- All the lender companies are (i) income tax assessee s, (ii) they are filing their return of income, (iii) confirmations available on record, (iv) the loan was made by account payee cheques, (v) the details of the bank accounts belonging to the lenders and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee , (vii) the lenders are having substantial creditworthiness which is represented by a capital and reserve as noted above. In the instant case, the credit is in the form of receipt of loan from lending companies. The nature of receipt towards loan is seen from the entries passed in the respective balance sheets of the companies as loan to assessee firm. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of lenders, genuineness of transactions and creditworthiness of lenders. For proving the identity of lenders, the assessee furnished the name, address, PAN of lender companies together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicants, as we noted supra, these Companies are having capital in several crores of rupees and the investment made in the appellant company is only a small part of their capital. These transactions are also duly reflected in the balance sheets of the lenders, so creditworthiness is proved. It will be evident from the paper book that the appellant has even demonstrated the source of money deposited into their bank accounts which in turn has been used by them to lend it to the assessee firm as loan. Hence the source of source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The lending companies have confirmed about the loan in response to the notice u/s 133(6) of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. Assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the lender companies, thereafter the onus shifted to AO to disprove the documents furnished by assessee and it cannot be brushed aside by the AO to draw adverse view which action cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the AO, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance. - Decided in favour of assessee
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2019 (9) TMI 145
Denying deduction u/s 11(2) - failure to file Form No. 10 being notice to the AO of accumulation of income - Exemption u/s. 11(1)(a) on account of application of its income for religious purpose - accumulation of income for purchase of property for temple, dharmshala etc..- HELD THAT:- We have seen that Hon ble Supreme Court has held in Nagpur Hotel Owners Association [ 2000 (12) TMI 99 - SUPREME COURT] that it will be sufficient compliance of law, if Form No. 10 is filed at any stage prior to completion of assessment proceedings by the AO. The law as declared by Hon ble Supreme Court in the above case shall hold the field till amendments were brought in the 1961 Act itself by Parliament which are substantive amendments in the 1961 Act - there will be substantial compliance if the said Form No. 10 is filed by the assessee before the AO before completion of assessment proceedings, The assessee did filed Form No. 10 in physical mode on 21.12.2016 before the AO during the course of assessment proceedings which culminated into an assessment order dated 28.12.2016 passed by the AO u/s 143(3) of the 1961 Act. The assessee also filed Resolution dated 10.02.2014 of the Board of Trustee authorising accumulation of income to the tune of ₹ 6.50 crores for purchase of property for temple, dharmshala etc. Thus, the assessee did substantial compliance of requirements of filing form no. 10 with the AO before the culmination of assessment proceedings. There was an amendment in proviso to Rule 12(2) of the 1962 Rules which provided Form No. 10 to be filed electronically w.e.f. 01.04.2014. This is the first year for compliance of said amended Rule to file Form No. 10 electronically. The assessee however defied proviso to Rule 12(2) of the 1962 Rules as it did not file Form No. 10 electronically before the conclusion of the assessment proceedings by the AO. The assessee however later on 07.11.2017 e-filed Form No. 10 electronically. The said Form No. 10 filed electronically along with Resolution dated 10.02.2014 of the Board of Trustee authorising accumulation of income to the tune of ₹ 6.50 crores for purchase of property for temple, dharmshala etc. were duly filed before learned CIT(A) before the culmination of first appellate proceedings vide appellate order dated 08.02.2019. As observed that the assessee has stated that it is due to oversight that it skipped its attention that from this assessment year onwards i.e. with effect from 01.04.2014 , there was an amendment in proviso to Rule 12(2) requiring it to file Form No. 10 electronically which amendment was applicable from 01.04.2014. Further, it is claimed that Rule 17 was not amended simultaneously when aforesaid amendment in proviso to Rule 12(2) of the 1962 Rules took place. We have also observed that CBDT vide its circular number 7 of 2018 has taken a liberal view in condoning delays in electronic filing of Form No. 10 albeit it is for ay: 2016-17. We are presently concerned with ay: 2014-15 . CBDT circular no. 7 of 2018 dated 20.12.2018(F.No. 197/55/2018-ITA-I) wherein CBDT has relaxed the provisions relating to filing of form no. 10 electronically for AY 2016-17 There is no dispute between rival parties as to the genuineness of the deduction claimed by the assessee u/s 11(2). It is also undisputed that purpose of accumulation of income u/s 11(2) of ₹ 6.50 crores was to purchase property for furtherance of activities and objects of the assessee. It is also undisputed that the assessee invested said accumulation of income in one of the modes prescribed u/s. 11(5) of the 1961 Act by taking FDR s with banks. It is also undisputed that the assessee did purchase property in immediately succeeding financial year for ₹ 16.50 crores and the aforesaid accumulation of income of ₹ 6.50 crores u/s 11(2) stood applied in immediately succeeding year for the purposes of the objects and activities of the assessee trust - the assessee is entitled for deduction u/s 11(2) of the 1961 Act to the tune of ₹ 6.50 crores towards accumulation of income for purchase of property for temple, dharmshala etc.. We have also observed that the assessee rightly relied upon judicial precedents which are mentioned in preceding para s of this order. The assessee succeeds on ground number 1 raised by it in memo of appeal filed by it with tribunal which stand allowed Disallowance of expenses which are stated to be incurred against earmarked donations received by the assessee - HELD THAT:- Claim made by the assessee that these expenses and donations were not routed through Profit and Loss Account but were directly reflected in Balance Sheet, we are of the considered view that this matter is factual and requires verification by the AO and hence in the interest of justice and fairness to both the rival parties, the matter need to be set aside and restored to the file of the AO for fresh adjudication after due verification and enquiry as the AO may deem fit. Needless to say that the AO shall grant proper and adequate opportunity of being heard to the assessee in denovo assessment proceedings . The AO shall admit all relevant evidences and explanations submitted by the assessee in its defence in denovo proceedings. The ground number 3 is allowed for statistical purposes. We order accordingly.
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2019 (9) TMI 144
Addition of interest amount on which TDS was deducted - Addition made on the basis of the information contained in AIR and on the basis of the ledger of the payer - difference in interest income reported by the assessee and interest income reflected in the books of PRMPL(payer) - assessee disputes the correctness of the details contained in the said documents - HELD THAT:- Evidence cannot be used against the assessee unless assessee is given a chance to rebut the same. In the present case, the AIR and the ledger details of PRMPL were reflecting higher income than what was reported by the assessee in its return of income which went against the assessee. The amount reported in AIR or as per books of account of PRMPL cannot be treated as income of the assessee. Burden thereafter shifts on AO to establish the fact that the contents of the document relied upon by him is in fact true with supporting evidence. AO was very well empowered to summon the party, call for additional details from the parties to establish how that income pertained to the assessee and when the same was paid to the assessee. AO has not carried out any such exercise to rebut the contention of the assessee that they have not received any higher sum than what has been reported in its books of account. AO has the power to pass on the information to the Assessing Officer having jurisdiction over PRMPL to find out the correctness of claim of interest expenditure of the PRMPL and if not found to be correct, the same could be added to the income of the PRMPL. The mere fact that TDS has been deducted on a particular amount cannot ipso facto lead to an inference that assessee has a right to receive and has in fact, received the corresponding amount when the assessee disputes the correctness of the said figure. The presumption is applicable when the deduction of TDS is followed-up by the actual payment to the party and not applicable in cases wherein there is no receipt of amount by the parties as there is no right to receive the said amount. AIR and ledger of the PRMPL reflects higher amount, no addition can be made based on the said evidence when the AO has not rebutted the contention of the assessee that no amount over and above what is recorded in the books of the assessee have been ever received by the assessee. - Decided in favour of assessee.
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2019 (9) TMI 143
Computing the deduction u/s 10A - addition made on account of the disallowance of the provident fund/ ESIC payments - HELD THAT:- As decided in assessee's own case in the present case it cannot be disputed that the net consequence of the disallowance of the employer's and the employees' contribution is that the business profits have to that extent been enhanced. There was as we have already noted, an add back by the Assessing Officer to the Income. All profits of the unit of the assessee have been derived from manufacturing activity. The salaries paid by the assessee, It has not been disputed, relate to the manufacturing activity. The disallowance of the provident fund/ ESIC payments has been made because of the statutory provisions-section 43B in the case of the employer's contribution and section 36(v) read with section 2(24) (x) in the case of the employees' contribution which has been deemed to be the income of the assessee. The plain consequence of the disallowance and the add back that has been made by the Assessing Officer is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under section 10A the addition made on account of the disallowance of the provident fund/ ESIC payments ought to be ignored cannot be accepted. No statutory provision to that effect having been made, the plain consequence of the disallowance made by the Assessing Officer must follow. Decided against the Revenue
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2019 (9) TMI 142
Deduction u/s 80IC - substantial expansion - claimed allowed 30% as against 100% claimed by the assessee - HELD THAT:- As gone through the order of the Hon'ble Apex Court in the case of M/s Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] and find that the entire scheme of the Act relating to the relevant section i.e. section 80IC of the Act, and arrived at the conclusion that the definition of the initial assessment year contained in clause (v) of sub- section(8) of section 80IC of the Act can lead to a situation where there can be more than one initial assessment year within the said period of ten years. A newly set up undertaking or enterprise in the State of Himachal Pradesh would be entitled to deduction @ 100% of the Act its profits for the first five years and even thereafter in the case of substantial expansion is carried out by it, then the assessment year relevant to the previous year in which substantial expansion is undertaken becoming the initial assessment year. That in any case, the period of deduction u/s 80IC of the Act would not exceed 10 years. It is now settled law that even a new undertaking, which has claimed deduction of its eligible profits @ 100% thereof for the first five years, is entitled to claim deduction @ 100% of its profits thereafter on account of substantial expansion undertaken by it. Since in the present case the fact that the assessee had undertaken substantial expansion in the impugned year is not disputed, the assessee, we hold, is entitled to claim deduction @ 100% of its eligible profits even if it has already claimed deduction of its profits at the said rate for first five years - Decided in favour of assessee.
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2019 (9) TMI 141
Denial of registration u/s. 12AA - Charitable activity u/s 2(15) - quality education - running an existing institution - further, adoption of a running school and claiming business losses - denial of registration on the ground that, the assessee s returns for the last three years are as applicable to a business concern, i.e., the assessee-society considers itself as a business entity, which now wishes to declare itself as a charitable institution, i.e., in the garb of running a school - if the educational activity carried out in pursuance of its objects by the assessee-society, could be, on account of its pricing, discounted, i.e., not regarded as education , given its definition u/s. 2(15) ? HELD THAT:- We are unable to appreciate as to how the take over has been regarded as fuzzy or not in advancement of the objects of the society. The continuing affiliation with CBSE, not doubted, and qua which we have reasonably satisfied ourselves, including the no takeover of any land (immovable property), put pays all doubts with regard to the acquisition of a running school or, rather, adoption of a running school. Prima facie , the affiliation to a recognized university, which is not in doubt, should allay any doubt in the matter. In fact, quality is an aspect which, though integral to education, as it indeed is to any other human endeavor, is something the assessment of which is outside the scope of the instant proceedings. Then, it would raise a question as to whether any education can be regarded as not so on account of poor quality, besides the issue of its definition, i.e., as to what constitutes quality education . - Without doubt, the cost of education, as of any other service, can not be properly compared without taking into account its quality; rather, the quality of both the input resources as well as the output. If the educational activity carried out in pursuance of its objects by the assessee-society, could be, on account of its pricing, discounted, i.e., not regarded as education , given its definition u/s. 2(15)? - Held that:- Education, as defined u/s. 2(15), makes the same an irrelevant consideration. One could argue for a need for effecting some change/s in law, which has to be read, and given effect to, as expressed. The issue, i.e., education being pursued as an economically sound and prosperous activity, has been extensively considered by the Tribunal in Lord Shiva Educational Welfare Society v. CIT(E) [ 2018 (9) TMI 954 - ITAT AMRITSAR] , holding, with reference to judicial precedents, that the activity of education cannot be impugned on account of it being carried out on commercial basis. Finally, the assessee may have returned its income as a business enterprise in the past. Where assessed as a business loss, the assessee cannot claim set-off against income for the years for which it is regarded as a charitable institution, claiming exemption u/s. 11 on the application of income for charitable purpose/s from property held under trust. Even as we may not be construed as having issued any factual finding in the matter the said aspect having not been argued, there does not appear to be any bar for set off against income that in not subject of exemption, as, for instance, assessable u/s. 11(4A). The import of the fore-going observation, however, is that the same by itself cannot be held against the assessee so as to deny it registration, where otherwise eligible. Thus no case for non-grant of registration is made out - direct registration u/s. 12AA - Decided in favour of assessee.
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2019 (9) TMI 140
Reopening of assessment u/s 147 - reasons recorded which pertains to fact of purchase of property, sources of which allegedly remained unexplained at the stage of enquiry proceedings - HELD THAT:- Proceedings under section 148 cannot be initiated for verification of the sources of investment. Such an action of the AO in respect of the case on hand cannot be approved in law and is therefore, quashed. The text of the reasons recorded do proves that virtually there has been no application of mind by Assessing officer so as to form requisite satisfaction that investment in property is income of current year and which has escaped assessment; that the reasons recorded in the case in hand are no reasons in the eye of law, being completely barren and bald in nature as it is not mentioned that in what material terms the reply is lacking in nature; that the reasons do not show any mental exercise having been done by him before arriving at the satisfaction for escapement of income and thus, the AO made his conclusions, leaving the reader to guess for the material on basis of which of belief of escapement is founded. The so called reasons instead of being reasons to believe are reasons to suspect and sought to extend the scope of enquiry from the stage where it was left vide enquiry letter. The investment need not necessarily come from the income. It may be out of income exempted from tax, past savings, loans, gifts, liquidation of investment or sale of another property etc., notice under section 148 cannot be issued for verification of information, but here the jurisdictional satisfaction is the essential requirement has to be shown that there has been reason to believe that there was income chargeable to tax. The reasons recorded by the Assessing officer should speak his mind and the basis for coming to conclusion that investment had been sourced from income, which should have been disclosed and had not been shown therefore, there was escapement of income. There must be direct nexus between the material and belief of escapement. This mental exercise must be self-evident from the reasons recorded. Reasons recorded by the Assessing officer, are no reasons in the eye of law for assuming jurisdiction in this case for issuing notice under section 148 - Decided in favour of assessee.
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Customs
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2019 (9) TMI 139
Non-appearance in proceedings under Section 108 of Customs Act, 1962 - Section 174 and 175 of IPC - jurisdiction of officers working in the DRI at various levels - HELD THAT:- During the pendency of the present writ petition, the investigations have been transferred to the DRI Zonal Office, Ludhiana where the unit of the private company/petitioner no. 2 is situated and engaged in its business. It is submitted that in view of the conceded cooperation by the officers of the petitioner company in the pending investigations, the impugned complaint and summoning orders are required to be set aside as concededly the documents were furnished before the officials at Ahmedabad, however, it was the non-presence of the director which had actuated the initiation of the complaint. The DRI had sought time to seek instructions with regard to withdrawing of the said complaint at Ahmedabad, the proceedings of which are not warranted in view of the subsequent developments - Counsel for the DRI states that investigations have been transferred to Ludhiana and he further undertakes to get the aforesaid complaint at Ahmedabad withdrawn by moving appropriate application within next one month, thus, it is conceded that no further adjudication is required in the present writ petition. Petition disposed off.
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2019 (9) TMI 138
Valuation of goods - under-valuation and Hawala remittance - maintainability of appeal before the High Court - Sections 130(1) and 130 (E) of the Customs Act, 1962 - HELD THAT:- No appeal would lie to the High Court, where the cases involve any issue relating to rate of duty or value of goods for the purposes of assessment, and that, in all such cases, the assessee would have to move the Supreme Court, under Section 130(E). It appears that basically this appeal is challenging the valuation of the goods. So far as this challenge is concerned, the present appeal is not tenable in law. This appeal is dismissed on the ground of jurisdiction.
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2019 (9) TMI 137
Personal presence of the petitioner as a witness through the authorised agent - Section 108(3) of the Customs Act - HELD THAT:- This Court is not inclined to accede to the plea of the petitioner that she has a statutory right to appear before the officer concerned as a witness through an authorised agent, in the facts of this case. However, Sri S. Manu, the Learned Central Government Counsel appearing for respondents 2 to 4, on instructions, would submit that since the petitioner is a woman, it shall be ensured that a woman Customs officer will be personally present throughout the questioning process of the petitioner by the officer concerned in pursuance of Ext. P2 summons - The said undertaking of the respondents made through the Central Government Counsel appearing for respondents 2 to 4 is recorded and it is ordered that respondents 2 to 4 shall ensure that a woman Customs officer shall be personally present throughout the questioning process of the petitioner as a witness pursuant to Ext. P2 summons. Original petition disposed off.
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2019 (9) TMI 136
100% EOU - Transfer of capital goods in question from their unit to the writ petitioner - satisfaction of condition of N/N. 52 of 2003, dated 31-3-2003 - Extension of time limit for installation of machinery - HELD THAT:- The said notification requires that in the case of capital goods they should have been installed or otherwise used within the unit within a period of one year from the date of import or procurement. Of course, the petitioner could have obtained extension of the time limit not exceeding 5 years. In this case, the petitioner did not obtain such an extension. Therefore, on account of the operation of the Clause 3(d)(1)(i) of Notification No. 52/2003, dated 31-3-2003, the petitioner came under a liability. It is true that this notification was later amended on 25-5-2015 vide Notification No. 34/2015. It is also true that the notification reads as if it is a substitutive amendment. But then, when liability has already accrued, the same cannot be washed away or effaced by a subsequent notification, because, there is no clause in the Notification No. 34/2015, dated 25-5-2015 stating that it would cover even antecedent cases which failed to satisfy the conditions laid down in the Notification No. 52/2003, dated 31-3-2003. It is well-settled that even a retrospective amendment will not take away the vested rights of the parties. The same logic and principle will apply in the case of accrued liability also - The writ petitioner had already come under a liability on account of non-adherence to conditions stipulated in the Notification No. 52/2003, dated 31-3-3013. Petition dismissed.
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2019 (9) TMI 135
Benefit of Duty Free Import Authorization (DFIA) - FTP, 2009-14 read with Notification No. 98-2009-Cus dated 11.09.2009 - import of Green Cardamom - DFIA benefit denied on the ground that Green Cardamom is not mentioned in the Licence in the list of imported goods, Green Cardamom was not used actually in the export goods and that Customs Tariff Head is not mentioned in the Licence. HELD THAT:- In the Licence, there is no mention of name of specific items but it only mentioned relevant Food Additives for Pickles FDI approved, therefore, all those goods which are used as Food Additives for making Pickles will be covered under this category. Similarly in the case of export product of Biscuits, the imported goods includes Flavouring Agent therefore, there is no doubt that the Green Cardamom is used as Flavouring Agent in the manufacture of Biscuits. Mention of specific name of Green Cardamom - HELD THAT:- Once the imported goods is covered under broad description in Licence and if any item covered in such broad description will stand covered - If Revenue s contention regarding specific product being not covered is accepted, then since Licence does not mention specific name of any goods, no any goods can be allowed to be imported under the said Licence, which is not the intention of DGFT in issuance of Licence - the description of relevant Food Additives/ or Food Flavouring clearly covers the Green Cardamom, therefore, it cannot be said that only because the specific name of Green Cardamom is not mentioned, the benefit will not be given. Denial also on the ground that CTH is not mentioned in the Licence - HELD THAT:- The ITC heading is not significant, once the imported goods is covered under the description, the benefit is available - merely because CTH was not mentioned or ITC (HS) is not matching so far description covers the goods imported, the benefit cannot be denied to the assessee. Production of evidence of actual use of imported goods in the export goods - HELD THAT:- There is no requirement of actual use, only the requirement is that whether the imported goods is capable of being used in the export goods and there is no dispute that Green Cardamom is indeed used in manufacture of Pickles and Biscuits as observed from the various books on Green Cardamom referred by Ld. Counsel - benefit cannot be denied on this ground. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 134
Imposition of penalty u/s 117 of CA on CHA - it is alleged that CHA has failed to make necessary corrections in the Bills of Entry - presence of malafide intent or not - HELD THAT:- The appellant before filing the Bill of Entry has sent the checklist and after confirmation from the importer, he filed the bill of Entry containing the details which were supplied to him by the importer. Further, the appellant has filed the Bill of Entry on the basis of the invoices which is given to him and if the importer has given him the wrong invoice then it is the importer who has contravened the provisions of the Act and penalty should have been imposed on the importer and not the appellant who is only acting as a CHA. Further, the department has not brought any evidence on record to prove that the appellant had the knowledge of the final invoice or the payment made by Weir to M/s. Barron. This issue has been considered in many decisions of the Tribunal and it has been consistently held that if there is no evidence of aiding and abetting against the CHA, then penalty cannot be imposed on CHA - reliance placed in the case of FALCON INDIA VERSUS COMMR. OF CUS., ICD, TUGHLAKABAD [ 2018 (1) TMI 1526 - CESTAT DELHI] . The imposition of penalty of ₹ 50,000/- on the appellant under Section 117 of the Customs Act, 1962 is not sustainable in law - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 133
Penalty on CHA under Regulation 18 of Customs Brokers Licensing Regulation, 2018 - appellant submits that for imposition of penalty under Regulation 18 of said Regulations, the appellant was not put on notice and as a result appellant did not have opportunity to defend himself - principles of natural justice - HELD THAT:- Through the proceedings we have not come across anything to suggest that the appellant were put on notice for imposition of penalty under Regulation 18 of said Regulations. The contention of Revenue is that the Commissioner is having power to impose penalty. There is no doubt that the Commissioner is having power to impose penalty under Regulation 18, however, the said power needs to be exercised by observing principles of natural justice. The appellants were not put on notice to defend themselves against imposition of penalty. Therefore, the penalty imposed is not sustainable. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 132
Grant of interest on delayed refund - appellant had paid the duty under-protest during the pendency of litigation - Section 27 of Customs Act, 1962 - HELD THAT:- As per Section 27 of the Customs Act, 1962, the appellants are eligible for interest in case refund is not sanctioned within three months from the date of application. On perusal of the facts presented before me, it is seen that the department has filed stay application before the Tribunal. The stay application was dismissed on 30.4.2013. The refund ought to have been sanctioned to the appellant on dismissal of the stay application. Thus, there is indeed delay in sanctioning the refund. The appellant is therefore eligible for the interest on the delayed refund - the appellants are eligible for interest from three months after the dismissal of the stay application - the impugned order rejecting the interest on delayed refund is unjustified - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 131
Permission for withdrawal of appeal - HELD THAT:- The Revenue has filed Miscellaneous Applications for withdrawal of their Appeals. Accordingly, the prayer of the Revenue is allowed and the appeals are dismissed as withdrawn.
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2019 (9) TMI 130
Permission for withdrawal of appeal - condonation of delay of 111 days in filing appeal - HELD THAT:- Applications for withdrawal of appeals, are allowed and the appeals are dismissed as withdrawn under National Litigation Policy.
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2019 (9) TMI 129
Smuggling - Betel Nuts - goods of Indian Origin or Indonesian origin? - section 108 of the Customs Act, 1962 - HELD THAT:- The learned Commissioner(Appeals) in his impugned order has observed that betel nuts are not notified under section 123 of Customs Act, 1962 and therefore onus is on Revenue to prove that impugned goods were not properly imported into India. He has further held that no such evidence was produced by Revenue and therefore the said Order-in-Original dated 14.08.2018 was not sustainable - I note that to prove that the goods were of smuggled nature Revenue has relied upon statement of Shri Ram Prakash Kapoor in the grounds of appeal. On perusal of record, there is no evidence produced by Revenue to establish as to through which route the good were smuggled into India - appeal dismissed - decided against Revenue.
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2019 (9) TMI 128
Valuation of imported goods - aluminium scrap - rejection of transaction value - enhancement of value by the assessing officer based upon the NIDB data - HELD THAT:- The transaction value declared by the importer does not stand rejected by the lower authorities on the basis of any evidence indicating the same to be incorrect. The officers merely rejected the same and enhanced the value on the basis of NIDB data. Hon ble Supreme Court in their recent decision in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, NOIDA VERSUS M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD. [ 2018 (12) TMI 738 - SUPREME COURT] have upheld the Tribunal decision laying down that without rejecting the transaction value, NIDB data cannot be resorted for the purpose of enhancement of value. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 127
Provisional release of the confiscated goods - Model Helicopter - restricted goods or not - case of appellant is that the applicant has been importing the very same items through the very same port year after year and there has not been any restriction - change of classification by Revenue. HELD THAT:- The applicant has been importing the same item for the last couple of years from the same port and has been classifying the same under Chapter 95 and the Customs authorities have never raised the objection that the said goods are falling under the restricted category - also the applicant has placed on record his earlier Bill of Entry filed before the same Customs authorities which have been clearing the same goods without any objections. In the present case, the impugned goods also fall under the category of Nano and therefore as per the latest instructions issued by the DGCA, no clearance from DGCA and licence from DGFT is required. The order of confiscation is not sustainable in law - the application of the applicant for provisional release of the impugned goods on payment of appropriate Customs duty is allowed - the applicant is directed to furnish a bond of ₹ 20 lakhs to the Customs authorities - Customs authorities are directed to release the impugned goods, thereafter. Appeal allowed in part.
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2019 (9) TMI 126
Imposition of penalty u/s 112 and 114 of CA - import of second-hand photocopiers - Violation of import condition - non-fulfillment of export obligation - no authorization for DTA clearances - penalty on Shri Hemant Gogia - HELD THAT:- He was made Director of M/s. PTLPL on 30-7-2003 and resigned on 30-8-2003 i.e. within a period of one month. However, the imports were made by M/s. PTLPL in the year 2004-2005. Appellant was not even the Director of the said importer company. Even while discussing his role, the Commissioner has not attributed any role to him or show that he was an abettor to the violations committed by M/s. PTLPL - the imposition of any penalty upon him is neither justified nor warranted - penalty set aside. Penalty imposed on Shri Vimal Kalra - HELD THAT:- In spite of the fact that he was one of the Director of the importing firm, Revenue has not shown his active involvement in the import of the goods. The appellant has submitted that he was running a photocopier shop in Kanpur and he was lured to become the Director of the firm. He was not associated with the day to day work of the firm and is not connected with the import of the photocopiers and subsequent fraud by M/s. PTLPL. M/s. PTLPL had already been imposed penalty equivalent to the duty confirmed - except the fact that the appellant was director of the importing firm, there is neither any allegation nor any evidence to the effect that he was the one who was managing all the affairs of the company. As such being a sleeping director by itself, when the importing firm has already been penalized, it would not invite any penal action against them - penalty set aside. Appeal allowed - decided in favor of appellant.
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FEMA
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2019 (9) TMI 162
CBI investigation for violation of provisions of FCRA - Cancellation of registration under FCRA - diversion of the funds for personal benefit of the office bearers or any other individuals - Constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 ( FCRA ) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (FCRR) - whether they are arbitrary, unreasonable, ultra vires and violative of Articles 14 and 21 of the Constitution of India? HELD THAT:- It is equally well settled principle of law that laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. In fact, it must be presumed, unless the contrary is proved, that administration and application of a particular law would be done not with an evil eye and unequal hand . There is a principle and/or policy for guidance of exercise of discretion by the Government in the matter of selection of an investigative agency and there is no arbitrary, vague and uncontrolled power with the Government so as to enable it to discriminate between persons or things similarly situated. Accordingly, this Court is of the view that Petitioner s reliance upon State of Punjab vs. Khan Chand [ 1973 (12) TMI 91 - SUPREME COURT] is misconceived. Also as the Notification dated 27th October, 2011 is neither an interpretation nor an understanding of Section 43 of FCRA but a convention/practice/policy to be followed by the Union of India while implementing Section 43, this Court is of the view that judgment of the Apex Court Bhuwalka Steel Industries Ltd. vs. Bombay Iron and Steel Labour Board Anr. [ 2009 (12) TMI 697 - SUPREME COURT] is inapplicable to the present case. Consequently, the Notification dated 27th October, 2011 as well as the consistent practice followed by the Central Government lay down a principle and/or policy in the matter of appointment/selection of an investigative agency under Section 43 of FCRA and saves it from attack on the ground that it violates Articles 14 and 21 of the Constitution. Just because out of thirteen thousand NGOs, whose licences had been cancelled under FCRA, only thirty two had been referred to CBI for investigation, this Court is of the view that the petitioner cannot claim negative equality and that too without disclosing the nature of violations by the thirteen thousand NGOs. Authorisation letter dated 07th February, 2017 issued under Section 23 of FCRA, the officer appointed in the present cases had been authorised to exercise power under Sections 23 to 26 and 42 of FCRA only. No power to investigate offences under Section 43 had been conferred upon the said officer. Just because the inspecting authority has been empowered to seize the account or record and produce the same before the Court, does not mean that it has to mandatorily carry out investigation under Section 43 of FCRA also. Additionally, the proceedings under Chapter V of FCRA cannot be termed as investigation as the provisions under the said Chapter pertain to inspection and seizure of accounts/records only. Under Chapter V of FCRA, no procedure for filing of a complaint/charge-sheet has been mentioned. There is also nothing to suggest either in the FCRA or in the letter dated 7th February, 2017 that investigation under Chapter VIII of FCRA had to be carried out by the Inquiry Officer. Even in the letter dated 04th August, 2017 while referring the matter for investigation to CBI, the Ministry of Home Affairs had opined that its inquiry had prima facie and not conclusively revealed violation of various provisions of FCRA. Since the officer authorized under Section 23 FCRA did not have any power to investigate offences under Chapter VIII, the judgment in Directorate of Enforcement vs. Deepak Mahajan Anr. [ 1994 (1) TMI 87 - SUPREME COURT] does not apply to the present cases. The officer authorised to carry out inspection of records and accounts under Section 23 of FCRA in the present cases was authorised and had carried out inspection and enquiry only under Chapter V of FCRA. Departmental inquiry report concluding that an officer has committed malfeasance or violations to benefit himself personally can lead to subsequent criminal investigation and prosecution by the police. Similarly a sexual harassment committee report can lead to subsequent investigation by police into allegation of rape or outraging modesty of a woman. Even under FCRA for instance, it is possible that an inspection ordered by Central Government may reveal that foreign funds received by an organisation certified by the Central Government had been used to fund terror activities in the country and in such circumstances, no one can say that investigation under Chapter VIII offences as well as IPC and other terror acts cannot be transferred to specialised agencies like CBI midstream . In fact, the officer appointed by the Central Government under Section 23 of FCRA would neither have the wherewithal nor the expertise to carry out such an investigation. Consequently, to submit that once the Central Government has chosen the route of empowering and authorising a particular officer/authority to conduct inquiry under Sections 23 to 26 and 42 of the FCRA, then it is only that authority which can investigate and file a criminal complaint, if so warranted, is untenable in law. The argument that the power of arrest has been given to officers under Customs Act, Central Excise Act, PMLA etc. and not under FCRA is fallacious as in Customs Act, Central Excise Act, PMLA Acts, the power is given to the officer conducting investigation in the said Acts who is not a police officer. In the present cases, the power to investigate has been given to the CBI which has all the powers which an officer in charge of a police station has while making an investigation into a cognizable offence. This Court has no doubt that the investigative agency and the Trial Courts shall keep in mind the maxim that bail is the rule and jail is an exception . In any event, absence of power to arrest, if any, cannot be a ground either for seeking declaration that Section 43 of FCRA is ultra vires or for quashing of the impugned FIR. In the present cases, all the offences which are mentioned in the RC 36/2017 are not non-cognizable by virtue of Part-II of First Schedule of Cr.P.C, as contended by the learned counsel for the petitioners, because as per Schedule II of Cr.P.C., if any offence is punishable with imprisonment for less than three years or with fine, then only it shall be classified as non-cognizable. In the present cases, the impugned RC 36/2017 had been registered even under Section 35 of FCRA which provides for imprisonment upto five years or fine or both. Further not all offences punishable with imprisonment or with fine or both are non-cognizable. For instance, Section 429 IPC which prescribes imprisonment for five years or fine or both is cognizable. In any event, as this Court is of the opinion that Section 43 of FCRA is constitutionally valid, the offences punishable under FCRA will have to be investigated as cognizable offences irrespective of anything contained in the Cr.P.C. The argument of the petitioners that Sections 33, 35 and 37 of FCRA encompass and imbibe the substance and spirit of penal provisions and hence, external penal provisions like Sections 199, 468, 471 and 511 IPC cannot be invoked is untenable in law. This Court is of the view that offences mentioned in FCRA essentially relate to mis-utilisation of the Foreign Contribution and giving false information, whereas the offences in IPC like Section 468 relate to forging of the documents for purpose of cheating. Consequently, IPC offences are not subsumed in offences under FCRA. Even if it is assumed that some of the IPC offences mentioned in the FIR overlap with the offences under FCRA, yet the same will not render the registration of the impugned FIR illegal. In any event, the said plea will have to be decided after the investigation is over and that too by the appropriate court. Further, this cannot be a ground to challenge the constitutional validity of the provisions of FCRA. Upon perusal of RC 9/2013, ECIR 10/2017 and RC 36/2017, this Court is of the opinion that while RC 9/2013 and ECIR 10/2017 have been registered in relation to undue pecuniary advantage given to Airbus Industry which has caused corresponding loss to the Government, impugned RC 36/2017 relates to violation of FCRA provisions as well as the offences committed under IPC in the process of committing violations under FCRA by the petitioners. In fact, the primary allegation in RC 9/2013 and ECIR 10/2017 is that the concessions obtained by the Empowered Group of Ministers (for short EGOM ) regarding setting up of training centre for US$ 75 million and creation of Maintenance, Repair and Overall facility (for short MRO ) for US$ 100 million were deliberately not made part of the final agreement signed by Indian Airlines with Airbus Industries. Accordingly, RC 36/2017 has nothing to do with pecuniary advantage given to Airbus Industry by the public servants by abusing their official positions. This Court is of the view that present batch of writ petitions are without any merit.
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2019 (9) TMI 161
Guilty of contravention of the provisions of Section 26(7)(i)(ii) of FERA 1973 - Penalty imposed on directors - dealing between a FERA Company and a Person resident in India (which could only be an individual) - arrangement between two bodies corporate - whether amount given by LIL to HLL can neither be treated as a loan or deposit ? - HELD THAT:- Scope of person resident in India , it cannot be held that the amount given by LIL to HLL in the aforesaid circumstances was not bonafide and that the Company did not act under an honest and genuine belief that it was permissible to do so. Nor can it be said that the company acted deliberately in defiance of law or were guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation . Assuming without admitting that there is a technical or venial breach, there is no justification for imposition of Penalty. Apart from the bonafide belief of the Appellant that in the facts and circumstances of the case and on proper appreciation of the aforesaid entry read with the explanatory note and the letter dated 13.2.1987 sent by LIL to the Dy. Director, ED, as well as the interpretation of Section 2(p) of FERA dealing with person resident in India , the Appellant also sought opinion from Shri M. Hidayatullah (Hon'ble Chief Justice of India- Retd.) annexed to the Additional Affidavit dated 29.3.2010 as Annexure D. At pg. 81 onwards, it is opined that in the facts and circumstances of the case referred to therein, the amount given by LIL to HLL can neither be treated as a loan or deposit . As such, Section 26(7) cannot be invoked and where it is opined that since the arrangement in the present case is between two bodies corporate and the two clauses of sub-section (7) of Section 26 contemplates dealing between a FERA Company and a Person resident in India (which could only be an individual), the said sub-section would not apply. The impugned order is also not sustainable with regard to the penalty imposed on directors as it is settled law that in order to invoke Section 68 to proceed vicariously against the Directors of the Company for an offence committed by the Company, it is not enough to merely allege set out the contents of Section 68 in the Show Cause Notice /Memorandum. It is necessary to make specific factual averments against the particular director as to how he is alleged to be incharge of and responsible to the Company for the conduct of business of the Company. In the absence of any such factual averments, no action can be taken with reference to Section 68 against any Director. In the present case, apart from merely repeating the language of Section 68, no factual averment is made against any director as to how he is incharge of and was responsible to the Company for the conduct of its export business and was responsible for the recovery of the export proceeds in question. In the absence of any such factual averments, the Show Cause Notice /Memorandum is bad and the proceedings stand vitiated. One of the Directors Mr. N. Vaghul joined the Board of Directors of the Appellant Company only in 1987 and prior thereto he was working with ICICI. Since the entry relating to the amount given by LIL to HLL, on the basis of which proceedings were initiated in the present case relates to the year 1985-86 before he joined the Appellant Company, in any event he cannot be held vicariously liable under Section 68 in respect of the alleged contravention by the Appellant Company. Dr. A.S Ganguly, who was the Chairman of the Board of Directors was in any event not concerned with the day-to-day functioning of the Appellant Company and was not concerned with the transaction in question and as such he could not be held vicariously responsible under Section 68. All other Directors were Non-executive Directors and not Whole-time Directors and as such were not responsible or concerned with the day-to-day functioning of the Appellant Company and as such Section 68 could, in any event, not be invoked in respect of such Non-executive Directors. The penalty imposed against all the Directors is liable to be set aside. The view of an eminent Jurist also establishes the bonafide of the Appellant. Keeping in view the principles laid down in the aforesaid decision of Hindustan Steels, there could be no case for imposition of penalty.
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Service Tax
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2019 (9) TMI 124
Renting of immovable property service - supplying the tangible goods to persons - non-compliance with the Section 67 of the Finance Act 1994 - HELD THAT:- Appellate authority summarily dismissed the appeal on two counts, firstly, on the point of delay and secondly, on the point of non-deposit of necessary pre-requisite amount as is required under the Act of 1994. Both defaults went to the root of the matter - Consequently, the respondents were fully justified in dismissing the appeal on both counts. Petition dismissed.
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2019 (9) TMI 123
Management, maintenance or repair service - amount received from the customers for Corpus Fund / Escrow Fund and Maintenance Security Deposit - liability of service tax - HELD THAT:- In the present case, we consider it appropriate to remand the matter for a consideration as to whether the Corpus Fund / Escrow Fund before transfer of the said fund to the society was utilized by the appellant for replacement of any of the items for it is only in such a situation that it could be levied to service tax. Maintenance and security amount -HELD THAT:- The contention of the learned counsel for the appellant is that it is distinct from maintenance charges and since the refundable maintenance security deposit is ultimately transferred by the appellant to the resident co-operative society, it cannot be said that the maintenance security deposit is towards any service - The maintenance security deposit is to cover an exigency when the owner of the house does not pay the maintenance charges after the society is formed. It has, therefore, to be ascertained whether this amount before it is transferred to the society has been utilized. This aspect of the matter, therefore, also needs to be examined on remand. Demand of service tax - late payment charges - HELD THAT:- Any additional amount collected towards delay in making the payment of the installments cannot be subjected to levy of service tax. This position stands clarified by the Circular dated 3 August 2011 issued by the Central Board of Excise and Customs New Delhi - Demand set aside. Short payment of service tax - period 1 July 2011 to 30 September 2012 - payment made on receipt basis instead of accrual basis - HELD THAT:- The payment is made on receipt basis instead of accrual basis had actually deposited the amount prior to the issuance of the show cause notice and that is why the amount has also been appropriated in the impugned order - only aspect that needs to be examined in regard to this issue is about the penalty that has been imposed by the Commissioner. Appeal allowed by way of remand.
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2019 (9) TMI 122
RCM - payment of guarantee fee towards receipt of Bank Guarantees - Banking and other Financial Services - the overseas service providers Dexia and Cordaid who had provided bank guarantee services to the appellant had provided Banking and other Financial Services - reverse charge mechanism - HELD THAT:- A plain reading of Section 65(12) shows that it covers various services including providing a bank guarantee by a banking company, financial institution or any other body corporate or commercial concern. It is true that Dexia and Cordaid are not banking companies but they have provided bank guarantees through Standard Chartered bank and through Robo, Netherlands, respectively to guarantee the borrowings by the appellant. Learned counsel argued that these are corporate guarantees and we are not convinced. These are not the guarantees provided by a corporation for it s subsidiaries but are pure bank guarantees provided through banks by the service providers - the appellant received banking and financial services from abroad and is liable to discharge service tax under reverse charge mechanism. Extended period of limitation - period April 2009 to March 2012 - revenue neutrality - HELD THAT:- The entire demand is under reverse charge mechanism and if the appellant had paid the service tax under reverse charge mechanism, they would have been entitled to CENVAT credit of exactly the same amounts. Therefore, the revenue neutrality in this case is evident - the entire demand is hit by limitation and therefore needs to be set aside. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 121
Imposition of penalty u/s 77(1)(a) and section 78 of the Finance Act, 1994 - non-payment of service tax under reverse charge mechanism - GTA service - intent to evade present or not? - HELD THAT:- The levy of service tax under GTA service under reverse charge was a new subject for which there was non-payment of tax. The assessee is a PSU. No evidence has been brought on record to show that tax was deliberately not paid. On being pointed out, the assessee obtained service tax registration and made the payment by availing prescribed abatement. The appellant is entitled to relief under Section 80 of the Act for waiver of penalty - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 120
Condonation of delay in filing appeal - delay of more than one month after the expiry of normal period of limitation - power of Commissioner (appeals) to condone delay - HELD THAT:- Even if the appellant stand that the order was not originally received by them is accepted we find that the copy of the order was again provided to them under the cover of letter dated 30.04.2012. As such, even if the letter dated 30.04.2012 is taken as the relevant date the appeal filed in October, 2013 is barred by limitation. It is well settled law that Commissioner (Appeals) has no powers to condone the delay beyond the period of one month provided under the Act. Reference can be made to the decision of the Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] . Appeal dismissed.
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2019 (9) TMI 119
Demand of service tax - renting of immovable property - appellant had taken a stand that said income was from renting of residential dwelling, which were not taxable - HELD THAT:- Inasmuch as the issue relates to the production of evidence to support the assessee s stand, we are of the view that the appellant should be given another chance to produce the evidence, in support of their plea - the impugned order is set aside and matter is remanded for fresh decision. Appeal allowed by way of remand.
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2019 (9) TMI 118
Business Auxiliary Services - rendering of services in relation to threshing and redrying of tobacco leaves - GTA Services - HELD THAT:- On identical issue was decided by this bench in the case of M.L. AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CUS., C. EX. S.T., GUNTUR [ 2017 (2) TMI 1355 - CESTAT HYDERABAD] wherein, it was held that service tax liability on threshing and redrying of tobacco leaves does not arise under the category of Business Auxiliary Services. The said judgment of the Tribunal was carried in Civil Appeal by the revenue before the Apex Court and Apex Court dismissed the said Civil Appeal, after condoning the delay - thus, the appeal of the appellant on the issue of tax liability under the category of Business Auxiliary Services stands allowed. GTA services - HELD THAT:- The said liability arises and accordingly we uphold the demand of ₹ 34,000/- along with interest on GTA services, but noticing that the appellant could have entertained the bonafide belief that the tax liability may not arise on GTA services, by invoking the provisions of Section 80 of the Finance Act, 1994, we set aside the penalties imposed on appellant. Appeal disposed off.
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2019 (9) TMI 117
Refund claim - unjust enrichment - Retrospective exemption - Works contract service - Management, Maintenance or Repair Service - HELD THAT:- No service tax shall be levied or collected in respect of management, maintenance or repair of roads, during the period from 16.6.2005 to 26.7.2009 (both days inclusive). The period involved in the present appeal is also 16.6.2005 to 26.7.2009. It seems that the learned commissioner rejected the refund of service tax on the ground of unjust enrichment because it has been recorded in the impugned order that the appellants have failed to produce the letter from NHAI that they have not paid the service tax to the Appellant. The appellants have not received any amount against service tax from NHAI and that they have paid the service tax amount of ₹ 6,19,766/- out of their own pocket under the category of Management Maintenance and Repair service for the period 2005-06 to 2009-10. According to us this evidence is sufficient to establish that the service tax has not been passed on to the customer i.e. NHAI by the Appellants - Appellants are eligible for refund of service tax. Penalty u/s 78 - HELD THAT:- Had the service tax been not there, no penalty would have been imposed on the Appellants. Only because the appellants did not challenge the imposition of penalty and deposited the same without challenging it, cannot be a ground to refund the penalty because without demanding service tax, penalty cannot be imposed. Once service tax is set aside or refunded, penalty cannot survive. Therefore since the Service tax itself has been ordered to be refunded as aforesaid, the penalty deposited by the Appellant for default in not depositing the service tax on time, is also liable to be refunded. Appeal allowed - decided in favor of appellant.
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Central Excise
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2019 (9) TMI 116
Permission for withdrawal of appeal - monetary amount involved in the appeal - HELD THAT:- The appellant admits that in view of instructions dated 22.8.2019 issued by Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs (Judicial Cell) the instant appeal is not maintainable before this Court, the monetary limit being below ₹ 1, 00, 00, 000/-. Appeal dismissed as withdrawn.
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2019 (9) TMI 115
Admissibility of appeal - imposition of penalty on the Company as well as its Director, without complying the provision u/r 26 of CER, 2002 - HELD THAT:- Perusal of order would reflect that no discussion has been made with regard to imposition of penalty at all. The matter requires re-examination on the question whether the appellant was liable to pay the penalty or not after determining the matter under the provision of Rule 26 of the C.E. Rules, 2002 - appeal allowed by way of remand.
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2019 (9) TMI 114
Maintainability of petition - non-compliance with the order - Section 35F of the Central Excise Act - HELD THAT:- It is made clear that this Court has not expressed any of its views with regard to the applicability of the decision rendered by the the Hon ble Apex Court to the petitioner s case and that the Tribunal would be in its own liberty to arrive at a conclusion. The matter is remanded back to the first respondent for fresh consideration - petition allowed by way of remand.
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2019 (9) TMI 113
CENVAT Credit - suppression of facts for non-payment of service tax under reverse charge basis - Rule 9(1)(bb) of Cenvat Credit Rules, 2004 - HELD THAT:- Though the matter was investigated by the Preventive Officer but after pointing out the non- payment of service tax, the appellant have admittedly paid the amount along with the interest and penalty under Section 76, thereafter, neither any SCN was issued nor any adjudication order was passed on the issue of non-payment of service tax. Consequently the proceeding, as regard the demand of service tax came to an end. This closer itself shows that there is no suppression of facts involved. Since, there is no case being covered under proviso under Section 73(1), there is no suppression Moreover, the department itself in writing asked the appellant to pay the penalty under Section 76, otherwise in case of suppression of facts the provision of Section 78 is invokable which was neither invoked nor asked to pay the penalty under Section 78. These undisputed facts clearly show that there is no suppression of facts on the part of the appellant for non-payment of Service Tax. Rule 9(1)(bb) cannot be invoked, accordingly, the denial of cenvat credit is not tenable - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 112
Finalization of provisional assessment - goods cleared on stock transfer basis to the depot - Rule 7(4) of Central Excise Valuation (Determination of price of excisable goods) Rules, 2000 - case of Revenue is that the detail work-sheet of the calculation of the greatest aggregate quantity of goods sold has not been elaborated in the order of the adjudicating authority while finalization of the assessment - HELD THAT:- The assessment was made provisional as the value of the goods cleared could not be determined at the time and place of removal, since the said goods were sold from the depots. Therefore, resorting to Rule 7 of the Central Excise Valuation Rules, 2000, the value was determined on the basis of the greatest aggregate quantity of goods sold i.e. the normal transaction value of the goods and adopted the same for finalization of the assessment. The grievance of the Revenue is that even though assessment was made final by the adjudicating authority on the basis of the report of the Range Superintendent dated 03.09.2007, who verified the data and the normal transaction value is determined in accordance with CBE C Circular No. 803/33/04-CX dated 27.12.2004, but the detail work-sheet in arriving at the said normal transaction value was not enclosed with the impugned order - there is no fine merit in the said contention of the Revenue, as in para 16 of the order of the adjudicating authority, relevant month-wise data for the assessment period has been mentioned, which was based on the report of the Range Superintendent. No contrary evidence has been placed by the Revenue to show that the data reflected in the impugned order by the adjudicating authority is incorrect. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 111
Classification of goods - Polyester Staple Fibre using the old and used PET bottles - classified under chapter note 1 to chapter 54 of CETA, 1985 or under chapter 55? - section 37B of the Central Excise Act - Revenue s contention is that the adjudicating authority has erred in concluding that the said Board Circular dated 29.06.2010 has only prospective effects. HELD THAT:- There is no merits in the above stand of the Revenue. Admittedly the goods in question were being classified under chapter 39 as also under chapter 55 in different Commissionerates and the said Circular has streamlined the classification of the goods in question. Prior to the issuance of the said Circular, the appellant was not discharging its duty liability and it is only with the issuance of the said Circular, the proceedings were initiated against them - Admittedly the Circular in question is not favourable to the assessee and as such the ratio of the various decisions of the Hon ble Supreme Court stands correctly followed by the adjudicating authority. No infirmity is found in the order of the Commissioner. Appeal dismissed - decided against Revenue.
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2019 (9) TMI 110
Default for payment of Central Excise duty - vires of Rules 8 (3) 8 (3A) of the Central Excise Rules, 2002 - bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period or not - HELD THAT:- There is no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise Duty even during default period - reliance placed in the case of Gujarat High Court in Indsur global Ltd. V. Union of India [ 2014 (12) TMI 585 - GUJARAT HIGH COURT ] and has held the portion of rule 8 (3A) as ultra vires. In the result, the impugned order is set aside and the appeal is allowed with consequential benefits, if any.
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2019 (9) TMI 109
CENVAT Credit - input services - goods transport agency service utilized by them for outward transportation - period prior to 1st April 2008 - credit denied on the ground that freight had been shown separately without inclusion in the assessable value for such goods that were cleared to the domestic market and that, in relation to exports, the port could not be accepted as place of removal. HELD THAT:- The issue can be settled without venturing into those. The case made out by the Learned Authorised Representative does not find favour as the assessment of the final product does not in any way impinge upon claim for credit under CENVAT Credit Rules, 2004. Learned Authorised Representative was unable to bring any provision that does so to our notice. The decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [ 2018 (2) TMI 117 - SUPREME COURT ] has also equally made clear that the law as settled by decision of the Larger Bench would hold for the period prior to 1st April 2008. Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 108
Recovery of central excise duty - alleged undervaluation for the period prior to April 2000 and after August 2000 - section 11A of Central Excise Act, 1944 - discarding of the request of the appellant for cross-examination of four witnesses. HELD THAT:- The dispute appears to be not one of compliance with the remand order of the Tribunal but of inconsistency with the procedure for recovery of differential duty stipulated in section 11A of Central Excise Act, 1944. We are not concerned with fresh pleas that are at variance, with those that were considered by the Tribunal on the former occasion. Just as piecemeal notices are repugnant to judicial correctness, piecemeal appeal is no less. We have no hesitation in asserting that co-noticees cannot, notwithstanding the completion of proceedings against them, be deprived of the status of co-noticees merely because one of the other noticees has chosen to challenge the detriment and to revive their continuance, if any, in the proceedings that are already completed. As far as the other two individuals are concerned, the adjudicating authority has given a very clear finding that the evidences that are on record suffices to uphold the case against the appellant herein without assistance of the statements that were recorded from them. The conclusions in the impugned order make it apparent that there has been no examination of the charges or the evidences that are claimed to support the charges. In these circumstances, the impugned order fails to have sanctity in the eyes of law and must be set aside. The matter is remanded back to the original authority for fresh consideration of the documents and evidences available to reconsider the plea of the appellant herein for cross-examination of such witness who were not co-noticees in the show cause notice - Appeal disposed off.
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2019 (9) TMI 107
100% EOU - Clearance of Spent Salt and Spent Acid - N/N. 23/2003-CE dated 31.03.2003 - demand on the ground that the appellant have not taken a specific permission for removal for Spent Salt and Spent Acid from the Development Commissioner - HELD THAT:- The Commissioner (Appeals) recorded in his finding that the appellant have not produced the evidence of their being status holder. In this position, we are giving opportunity to the appellant to produce the evidence of their being status holder, if it is so even though the appellant have not given intimation, the same may be considered as procedural lapse and benefit of Exemption Notification No. 23/2003-CE may be extended. The appeal is allowed by way of remand to the adjudicating authority.
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CST, VAT & Sales Tax
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2019 (9) TMI 106
Validity of assessment orders in relation to tax and penalty payable - Telangana VAT Act - tax periods 2014-15 to 2017-18 - arithmetical errors in the orders under challenge - HELD THAT:- We are of the opinion that the first respondent should undertake the exercise afresh. It is not open to the first respondent to pass orders in such a careless manner when the same have adverse civil consequences for the assessee, viz., the petitioner firm - the impugned order of assessment dated 29.04.2019 and the consequential penalty order dated 22.05.2019 are accordingly set aside. Petition allowed.
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2019 (9) TMI 105
Levy of sales tax / VAT - Lease rent - sale of boilers in running condition and embedded to earth - works contract - purchase of bricks and 'gitti' - HELD THAT:- Referring to the definition of the word 'goods' under Section 2(d) of the Act, this Court had reasoned the phrase which under the contract of sale are agreed to be severed refers to lessee or the licensee, as the case may be, to severe the goods attached to, or fastened to any thing permanently attached to, the earth - the reasoning given by the Tribunal cannot be sustained. However, the issue of taxability would survive to be considered by the Tribunal in terms of the other clauses in the agreement i.e. whether the turbo alternators leased out by the assessee could be severed by the lessee. If such a clause is absent in the agreement, the assessee cannot be subjected to tax as in that case, there would be no movable goods but only immovable property that had been leased out. - Matter restored before tribunal. Levy of tax - sale of boilers in running condition and embedded to earth - HELD THAT:- The Tribunal has proceeded on the reasoning that since the equipment was sold not with the land or earth to which it was attached, therefore, only movable goods had been sold - it would have to be seen whether, under the sale deed, the purchaser had right to remove the boiler equipment. If such right is found to be existing, the goods may be treated as movable subject to further objections that may arise at the instance of the assessee. However, if that right is found not existing under the sale deed, the goods would remain immovable property, irrespective of the title over the land to which such boiler may be found attached in view of the definition of goods u/s. 2(d) of the Act - The matter is thus remitted to the Tribunal to pass a fresh order in accordance with law, as expeditiously as possible, preferably within a period of six months from the date of production of a certified copy of this order. Levy of tax - turnover amounting to ₹ 22,25,388/- received for execution of works contract U/s 3AAAA of the Act - HELD THAT:- It is undisputed that, in the relevant year, the commodities bricks and ballast 'gitti' were taxable at the point of sale by the manufacturer or the importer. Therefore to that extent, the liability could not arise on purchase of bricks and 'gitti'. Revision disposed off.
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