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TMI Tax Updates - e-Newsletter September 7, 2019 Case Laws in this Newsletter: GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS Taking away the powers to make best judgment assessment cannot be challenged saying that the provisions prior to deletion were better - HC Articles ADDITIONAL DEPRECIATION UNDER INCOME TAX ACT, 1961 News Goa to demand reduction in GST on tourism: CM Sawant Finance Ministry meet Heads of CPSEs to boost Capital Expenditure & to ensure quickly payments to Vendors Commerce & Industry Minister to attend 7th RCEP Ministerial Meeting in Bangkok from 8-10 September 2019 6th India-China Strategic Economic Dialogue to be held from 7-9 September 2019 20th FIMMDA - PDAI Annual Conference (Shri B.P Kanungo, Deputy Governor, Reserve Bank of India - August 31, 2019 - Moscow) Notifications GST - States FTX.56/2017/Pt-III/207 - dated 23-7-2019 - Assam SGST Seeks to amend Notification No. FTX.56/2017/414, dated the 13th June, 2019 ORDER No. 4/2018-State Tax - dated 3-9-2019 - Delhi SGST Delhi Goods and Services Tax (Fourth Removal of Difficulties) Order, 2018 Order No. 3/2018-State Tax - dated 3-9-2019 - Delhi SGST Delhi Goods and Services Tax (Third Removal of Difficulties) Order, 2018 F.3(6)/Fin.(Rev.-I)/2018-19/DS-VI/389 - dated 3-9-2019 - Delhi SGST Lt. Governor of the National Capital Territory of Delhi constitute Delhi Appellate Authority for Advance Ruling 77/2018-State Tax - dated 3-9-2019 - Delhi SGST Seeks to amend Notification No. 73/2017-State Tax, dated the 31st January 2018 58/2018-State Tax - dated 3-9-2019 - Delhi SGST Seeks to provide taxpayers whose registration has been cancelled on or before the 30th September, 2018 time to furnish final return in FORM GSTR-10 till 31st December, 2018 56/2018 – State Tax - dated 3-9-2019 - Delhi SGST Supersession Notification No.32/2017 –State Tax, dated the 08th November, 2017 30/2018 – State Tax (Rate) - dated 3-9-2019 - Delhi SGST Insert the Explanation in Notification No. F.3(15)/Fin(Rev-I)/2017-18/DS-VI/381, dated the 30th June, 2017 29/2018 – State Tax (Rate) - dated 3-9-2019 - Delhi SGST Seeks to amend Notification No. 13/2017-State Tax (Rate), dated the 30th June, 2017 26/2018–State Tax (Rate) - dated 3-9-2019 - Delhi SGST Exemption on supply of gold by nominated agency for export of jewellery 25/2018 – State Tax (Rate) - dated 3-9-2019 - Delhi SGST Seeks to amend Notification No. 2/2017- State Tax (Rate), dated the 30th June, 2017 22/2018–State Tax (Rate) - dated 2-9-2019 - Delhi SGST Seeks to amend Notification No. 8/2017–State Tax (Rate), dated the 30th June, 2017 F.1-11(91)-TAX/GST/2019(PART) - dated 28-8-2019 - Tripura SGST Seeks to extend the date from which the facility of blocking and unblocking of e-way bill facility as per the provision of Rule 138E of CGST Rules, shall be brought into force to 21.11.2019. F.1-11(91)-TAX/GST/2019 - dated 22-8-2019 - Tripura SGST Seeks to Extend the due date for furnishing FORM GSTR-3B for the month of July, 2019. F.IV-3(15)-TAX/2017 - dated 16-8-2019 - Tripura SGST Appointment of Chief Commissioner of State Tax as the Revisional Authority. F.1-11(91)-TAX/GST/2019 - dated 31-7-2019 - Tripura SGST Seeks to extend the last date for furnishing FORM GST CMP-08 for the quarter April -June 2019 till 31.08.2019. 13/2019-State Tax (Rate) - dated 31-7-2019 - Tripura SGST Amendments in the Notification of the Government of Tripura, in the Finance Department, No. 12/2017- State Tax (Rate), dated the 29th June, 2017. 12/2019-State Tax (Rate) - dated 31-7-2019 - Tripura SGST Amendments in the Notification of the Government of Tripura in the Finance Department No. 1/2017-State Tax (Rate), dated the 29th June, 2017. F.1-11 (91)-TAX/GST/2019 - dated 20-7-2019 - Tripura SGST Seeks to Extend the last date for furnishing FORM GST CMP-08. 650/2019/4(120)/XXVII(8)/2019/CT-34 - dated 9-8-2019 - Uttarakhand SGST Seeks to amend notification No. 430/2019/03(120)/XXVII(8)/2019/CT- 21, dated the 31st May, 2019, SEZ S.O. 3206(E) - dated 30-8-2019 - SEZ Central Government de-notifies an area of 2.023 hectares at Ayiroopara Village, Trivandrum District, in the State of Kerala, thereby making the resultant area as 8.098 hectares S.O. 3205(E) - dated 30-8-2019 - SEZ Central Government de-notifies an area of 53.5295 hectares at Vadamugam Kangeyampalayam Village, Perundurai Taluk, Erode District in the State of Tamil Nadu, thereby making the resultant area as 50.1162 hectares S.O. 3192 (E) - dated 30-8-2019 - SEZ Seeks to amend Notification Nos. S.O. 596(E) dated 25th April, 2006 and S.O. 2045(E) dated 11th August. 2014 Circulars / Instructions / Orders Income Tax F.No.225/169/2019/lTA-ll - dated 5-9-2019 Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20 GST - States F.1-11(8)-TAX/GST/2018/7216-22 - dated 1-8-2019 Corrigendum to Circular No. 15/2019-GST (State). 28/2019-GST (State) - dated 25-7-2019 Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members. 27/2019-GST (State) - dated 19-7-2019 Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion. 26/2019-GST (State) - dated 19-7-2019 Clarification on doubts related to supply of Information Technology enabled Services (ITeS services). F.1-11(8)-TAX/GST/2018/6983-89 - dated 19-7-2019 Corrigendum to Circular No. 102/21/2019-GST dated 28th June, 2019 issued vide F.No. CBEC/20/16/4/2018-GST. F.1-11(8)-TAX/GST/2018/6997-7003 - dated 19-7-2019 Corrigendum to Circular No. 45/19/2018-GST dated 30th May, 2018 issued vide F.No. CBEC/20/16/412018-GST. GST Corrigendum to Circular No. 63/37/2018-GST - dated 6-9-2019 Corrigendum to Circular No. 63/37/2018-GST dated 14th September, 2018 issued vide F. No 349/48/2017-GST Trade Notice No. 02/GST/LDH/2019 - dated 4-9-2019 Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 Trade Notice No. 01/GST/LDH/2019 - dated 31-8-2019 GST Annual Return Mela - 2019 DGFT Trade Notice No. 31/2019-2020 - dated 6-9-2019 Reorganisation of Regional Authorities of DGFT Trade Notice No. 30/2019-2020 - dated 4-9-2019 Applications invited for recognition as Pre-shipment Inspection Agencies (PSIA) Customs PUBLIC NOTICE No. 37/2019 - dated 4-9-2019 IGST Refund Week from 06.09.2019 to 12.09.2019 and Rectification of Invoice Mis-match (SB005), GSTN Number Mismatch (SB003), EGM/Stuffing errors (SB002), Mismatch in Shipping Bill details (SB001), Gateway EGM Error (SB006) Public Notice No. 07/2019 - dated 2-9-2019 Recovery of export benefits given under Incentive and Reward Schemes under Chapter 3 of FTP on re-import of exported goods Public Notice No. 20/2019 - dated 30-8-2019 IGST Export Refunds-extension in SB005 alternate mechanism and revised processing in certain cases including disbursal of compensation Cess PUu1C NOTICE NO. 18/2019-CUSTOMS - dated 20-8-2019 Customs - Amendment to Sea Cargo Manifest and Transshipment Regulations, 2018 - Issue of amendment to Public Notice Facility No. 15/2019 - dated 19-8-2019 Launch of Indian Customs EDI System- (ICES 1.5) for Imports and Exports, at INKGJI (Karimganj Steamerghat & Ferry Station LCS), INMREB (Moreh LCS), INMHGB (Muhurighat LCS), INAGTB (Agartala LCS) and INSMPB (Srimantapur LCS)- amendment Facility No. 14/2019 - dated 7-8-2019 Implementation of Risk Management System (RMS) in Exports and Imports Facility No. 13/2019 - dated 5-8-2019 Launch of Indian Customs EDI System- (ICES 1.5) for Imports and Exports, at INKGJI (Karimganj Steamerghat & Ferry Station LCS), INMREB (Moreh LCS), INMHGB (Muhurighat LCS), INAGTB (Agar-tala LCS) and INSMPB (Srimantapur LCS)- amendment PUBLIC NOTICE No. 36/2019 - dated 4-8-2019 Putting of mono-canons on Bottled in Origin alcoholic beverages in both Public and Private bonded warehouses PUBLIC NOTICE No. 35/2019 - dated 4-8-2019 Roll out or Project Import Module in ICES Standing Order No. 06/2019 - dated 2-8-2019 Implementation of the Risk Management System (RMS) in Exports and Imports and Local Risk Management System Administration Highlights / Catch Notes Income Tax Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20 Visit to Get Source Capital Gain - Receipt of consolidated amount - where a gain from one of capital assets was a short-term capital gain while from other it was a long term capital gain, then the assessee is entitled to bifurcate the same and benefit to assessee could not be denied in respect of gain arising from sale of an asset which could be considered as long-term capital gain. - AT Visit to Get Source Setting off of the expenditure against the Capital gains - all these expenses had to be incurred for proper liquidation of assets of the company - expenses in question have to be allowed as a deduction - AT Visit to Get Source Rectification u/s 154 - non reliance or consideration of binding decisions of the superior court while pronouncing an order / judgement - appeal of the assessee dismissed - AT Visit to Get Source Reliance of Audit report in the absence of books of accounts - in case where books are not made available for AO’s verification the AO should rely on the Audit Report because the said evidence is admissible under Indian Evidence Act, 1872. - AT Visit to Get Source Rate of TDS - payment to non residents - rate to be applied on the payments made by assessee to a non-resident company - @25% u/s 206AA in the absence of PAN or 10% as per DTAA - Sec.206AA overrides the provision of sec.90(2) or not - section 206AA of the Act cannot override the provisions of DTAA - AT Visit to Get Source Non-passing of separate draft order pursuant to restoration by the Dispute Resolution Panel (DRP) - non- adhering statutorily mandated procedure - Order of DRP restoring the matter to the AO/TPO for undertaking a fresh benchmarking altogether afresh - assessment order is a nullity - AT Visit to Get Source Addition u/s 40A(2)(b) - payment sub-contractors who are the relative of the partners - the authority had rightly disallowed the expenditure so claimed by the assessee - HC Visit to Get Source Customs IGST Refund Week from 06.09.2019 to 12.09.2019 and Rectification of Invoice Mis-match (SB005), GSTN Number Mismatch (SB003), EGM/Stuffing errors (SB002), Mismatch in Shipping Bill details (SB001), Gateway EGM Error (SB006) Visit to Get Source Recovery of export benefits given under Incentive and Reward Schemes under Chapter 3 of FTP on re-import of exported goods - before allowing clearance in cases of re-import of exported goods, a 'no-incentive certificate' from the respective RA of DGFT shall be ensured by Customs field formations. Visit to Get Source Maintainability of appeal before HC or SC - The only question that is involved is whether the assessee had violated the conditions of the exemption notification by not utilizing the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. Neither any question with regard to determination of rate of duty arises nor a question relating to valuation of goods - appeal is maintainable before HC - SC Visit to Get Source Source of Gold bars of foreign origin - Received under Will - The Revenue’s appeals which are only against conversion of absolute confiscation into option of redemption, no longer survives - AT Visit to Get Source Valuation - relevant date - it is not made clear in the said notification itself that as to whether such value has to be arrived only on the date of filing the Bill of Entry. In the absence of any such clear indication, the normal course of arriving at the value is by taking into consideration of the date of invoice - HC Visit to Get Source Principles of Natural Justice - non-receipt of notice for personal hearing - the second respondent is unable to satisfactorily establish the service of notice of scheduled hearing on petitioner or that the procedural safeguards are substantially complied with before passing the order - Matter restored - HC Visit to Get Source Indian Laws Retirement from service with immediate effect - petitioner being an IRS Officer - claim of damages - the order passed under Rule 56(j) of Fundamental Rules cannot be adjudicated on the premise of inferences. - HC Visit to Get Source SEBI Manipulative transactions - artificial trades - the same set of buyers and sellers who were repeatedly buying and selling and creating artificial volumes without even changing the beneficial ownership. Such artificial trades is clearly violation of PFUTP Regulations, 2003. - AT Visit to Get Source Service Tax Demand of service tax - different approach of the revenue against the different assessees who provides similar services - different yardsticks cannot be adopted for identically situated assessees especially when neither Show Cause Notice nor Order-in-Original even whispers about any such dissimilarities - AT Visit to Get Source Delay in filing of appeal - Once appeal was registered, without noting any delay and without notice to the appellant, the Appellate Authority could not have held that the appeal was not maintainable as it was barred by limitation. - HC Visit to Get Source Central Excise Repeated proceedings - once the matter has been finalised on merits, the adjudicating authority had no jurisdiction to initiate proceedings in the same matter without a provision to that effect in the Act. - The subjecting of an assessee to repeated proceedings under section 11A is not the intent of law - AT Visit to Get Source VAT Recovery of tax dues - Deletion/withdrawal of charge and attachment on property - right of the purchaser of the property - Any transfer attempted or made to defeat/defraud Revenue’s interest is deemed void in the Statute. - HC Visit to Get Source Levy of Entry Tax at the rate of 12.5% treating Excavators as “motor vehicles” and/or at par with the “motor vehicles” is hereby held to be illegal, discriminatory, violative of Article 304(a) of the Constitution of India and against the object and purpose of the levy of Entry Tax under the Entry Tax Act - HC Visit to Get Source PIL - taking away the earlier vested powers to make best judgment assessment - Deletion of the provisions of Section 29(5) from the Goa Value Added Tax Act, 2005 - The deletion of Section 29(5), cannot be challenged simply on the ground that the provisions prior to deletion were better. - HC Visit to Get Source Disallowance of tax credit - Input tax credit cannot be disallowed by working out the percentage of purchases made from a dealer whose registration is cancelled, without first establishing that in respect of the goods purchased by the dealer, the vendor had not paid tax. - HC Visit to Get Source Case Laws: GST 2019 (9) TMI 269 Rectification of mistake in the earlier return - credit taken and utilized was not correctly reflected in the monthly returns i.e. GSTR-1, GSTR-2A and GSTR-3B - prohibition in the law for correction of such mistake or not - HELD THAT:- Mr. Mishra, learned Counsel appearing for the respondent seeks time to take instructions. He particularly states that he would take instructions as to the Authority who would deal with such applications / representations made by the petitioner. Petition adjourned to 5th September, 2019. 2019 (9) TMI 268 Levy of GST - Works contract - situation prior to GST regime - applicability of G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017- HELD THAT:- There is no disputation that paragraph 10(a) is applicable up to 30.06.2017 and paragraph 12 is applicable post 30.06.2017 i.e., on and from 01.07.2017. Parties hereto will now stand governed by paragraph 10(a) and paragraph 12 of aforesaid G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 - The exercise of quantification qua para 10(a) shall be completed by both the parties as expeditiously as possible and in any event within 12 weeks from the date of receipt of a copy of this order - petition disposed off. 2019 (9) TMI 267 Purchase of High Speed Diesel Oil - inter-state purchase - concessional rate of tax - rejection on the ground of failure to download C Forms - post GST implementation situation. HELD THAT:- In the case of Ramco Cements, M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] this Court allowed the petitions filed by the assessed and directed the Revenue to permit the petitioners assessees to download C Forms. It is not in dispute that though an intra court appeal has been preferred against Ramco Cements matter with a delay of three days, the same remains unnumbered as of today. Thus there is no dispute that the instant petition falls clearly within the four corners of Ramco Cements matter - petition allowed. 2019 (9) TMI 266 Levy of GST - Works contract - situation prior to GST regime - applicability of G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017- HELD THAT:- There is no disputation that paragraph 10(a) is applicable up to 30.06.2017 and paragraph 12 is applicable post 30.06.2017 i.e., on and from 01.07.2017. Parties hereto will now stand governed by paragraph 10(a) and paragraph 12 of aforesaid G.O.Ms.No.296, Finance [Salaries] Department, dated 09.10.2017 - The exercise of quantification qua para 10(a) shall be completed by both the parties as expeditiously as possible and in any event within 12 weeks from the date of receipt of a copy of this order - petition disposed off. 2019 (9) TMI 265 Unable to upload TRAN-1 - migration to GST regime - HELD THAT:- 5th respondent is directed to consider and dispose of petitioner's request as expeditiously as possible as already directed by Hon'ble predecessor Judge vide proceedings/order dated 29.03.2019, but in any event it shall not be later than a fortnight from the date of receipt of a copy of this order. Petition disposed off. 2019 (9) TMI 233 Rate of GST - contract for auctioning of Ash Pond for collection and sale of cenosphere at NTPC Vindhyachal - contention of the petitioner is that he was depositing GST as per 18% in terms of the award of contract - HELD THAT:- It would be appropriate to dispose of the writ petition with a direction to petitioner to deposit GST in the matter of contract for auctioning of Ash Pond for collection and sale of cenosphere at NTPC Vindhyachal at the rate of 5% as per government notification subject to furnishing the surety for remaining 13% GST, subject to decision taken by the respondents deciding the representation. The respondents shall take decision on the representation within a period of one month from the date of communication of this order on consideration of the government notification - Petition disposed off. Income Tax 2019 (9) TMI 264 Addition u/s 40A(2)(b) - excessive expenditure - payment sub-contractors who are the relative of the partners - whether it is a case of applicability of Section 37? - HELD THAT:- All the three sub-contractors are relatives of the partners of the assessee firm, and assessing authority recorded categorical finding had rightly disallowed the expenditure claimed in view of provisions of Section 40A(2)(b) of the Act. The argument raised by assessee does not have any force that it is a case under Section 37 and not under Section 40A(2)(a) of the Act. As the expenditure claimed by the assessee while computing the income chargeable under the head profit and gain of business or profession was disallowed, as payment has been made to persons referred in clause (b) of Section 40A(2) of the Act. The said finding has been confirmed by the first appellate authority as well as the Tribunal. Assessee could not deny the factum of relation of the sub-contractors with the partners of the assessee firm, nor would justify the payments so made by the firm to the sub-contractors who did not have the means and the source to make expenses for the work contract, as the balance in the saving accounts was negligible in comparison to the alleged work contract executed by them and the payments so made. As Section 37 of the Act envisages for any expenditure made for the purpose of business to be allowed in computing the income, while Section 40A puts a barrier for expenses of payments not deductible in certain circumstances as enumerated in the said section. In the present case, as it was found by the taxing authorities that payment made by the assessee firm to three sub-contractors out of 21 work contracts given by it was to the relatives of the partners of the firm, as such same was disallowed in view of Clause (b) of Section 40A(2) of the Act. Thus, the authority had rightly disallowed the expenditure so claimed by the assessee - Decided against assessee 2019 (9) TMI 263 Penalty u/s 271(1) (c) - Addition u/s 14A r.w.r. 8D - MAT computation for disallowance u/s.14A - Administrative expenditure disallowance u/s.14A - HELD THAT:- The Tribunal took notice of the fact that the contempt proceedings came to be dropped by the ITAT in [ 2018 (4) TMI 872 - ITAT AHMEDABAD] . Having regard to the fact that the ITAT had given relief to the assessee herein in the contempt proceedings, the Tribunal thought fit to delete the penalty. As further brought to our notice that the order passed by the Appellate Tribunal so far as the contempt proceedings is concerned, was a subject matter of challenge at the instance of the Revenue before this Court in [ 2019 (6) TMI 709 - GUJARAT HIGH COURT] preferred by the Revenue. The Tax Appeal No. 1225/2018 was ordered to be dismissed.This Appeal fails and is hereby dismissed. 2019 (9) TMI 262 Non-passing of separate draft order pursuant to restoration by the Dispute Resolution Panel (DRP) - non- adhering statutorily mandated procedure - Order of DRP restoring the matter to the AO/TPO for undertaking a fresh benchmarking altogether afresh - HELD THAT:- TPO in the second round carried out the benchmarking exercise all afresh treating the assessee as KPO service provider as against his earlier view of a BPO service provider in the first round. After passing of the order by the TPO on 21.11.2016, the AO proceeded to straightaway pass the final assessment order u/s.143(3) r.w.s. 144C(13) of the Act on 28-11-2016. It is, ergo, overt that pursuant to the fresh benchmarking done by the TPO in his second order, the AO omitted to pass a draft order which could have been challenged by the assessee before the DRP or the CIT(A). Law enjoins the passing of a draft order after the TPO s order against which the assessee can raise objection before the DRP before finally coming to the Tribunal as was done in the first round of proceedings. Once the DRP set aside the exercise of benchmarking by the TPO and directed to determine the ALP altogether afresh, the earlier round of the proceedings came to an end and a fresh round of proceedings started with the AO making a reference to the TPO for fresh benchmarking on 7.10.2016. The entire procedure was once again required to be adhered to starting with the passing of the order by the TPO; passing of the draft order; objections to be raised by the assessee before the DRP; and passing of a final assessment order. AO in the second round, on receipt of the order from the TPO, proceeded to pass a final assessment order, thereby omitting to pass a draft order and eventually denying the assessee an opportunity to raise objections before the DRP as enshrined under sub-section (4) of section 144C of the Act. Statutorily mandated procedure must be adhered to by the authorities, non-observance of which renders the assessment order null and void. As statutorily mandated procedure has not been followed in the instant case in as much as neither any draft order was passed in the second round nor the assessee could raise objection before the DRP, the edifice of the final assessment order, being devoid of a legal bedrock, stands shaked, thereby frustrating the legality of the order. Instant assessment is a nullity for two reasons, viz., first for the DRP exceeding its jurisdiction in restoring the matter to the AO/TPO for undertaking a fresh benchmarking altogether afresh; and two, the AO not following the statutorily prescribed procedure of first passing a draft order and snatching away a forum from the assessee for assailing the variation in the income pursuant to the order of the TPO before approaching the Tribunal. Ex consequenti, we set aside the impugned order as null and void. Thus declaring the assessment order as a nullity - Decided in favour of assessee 2019 (9) TMI 261 Rate of TDS - payment to non residents - rate to be applied on the payments made by assessee to a non-resident company - @25% u/s 206AA in the absence of PAN or 10% as per DTAA - Sec.206AA overrides the provision of sec.90(2) or not - HELD THAT:- As decided in CALDERYS FRANCE, C/O CALDERYS INDIA REFRACTORIES LTD. [ 2017 (9) TMI 107 - ITAT PUNE] where the provisions of section 206AA of the Act cannot override the provisions of charging sections 4 and 5 of the Act and also where under section 90(2) of the Act, it is provided that DTAAs would override domestic law, in cases where the provisions of DTAAs are more beneficial to the assessee. - Decided in favour of assessee. 2019 (9) TMI 260 N.P. rate determination - Reliance of Audit report in the absence of books of accounts - CIT-A restricting net profit rate to 8% of Gross Receipts in place of net profit rate of 12% estimated by the A.O - Assessee seeking more relief - rejection of the books of account. - HELD THAT:- AO who has chosen to apply N.P rate of 12% without bringing on record any comparable case where such an exorbitant rate of N.P was either shown by the assessee or assessed by the AO which has become final. AO while framing assessment has totally lost sight of the fact that during the year under consideration the turnover of the assessee has grown up by more than five times as compared to last year and therefore, assessee cannot be expected to report the same rate of Net Profit as was earned in last year. The Audited Accounts for year under consideration as well as for past assessment years were undisputedly available with the Department. It is not the case of the AO by drawing comparison with the past years Audited Accounts in the year under consideration assessee had either shown certain expenses in abnormal terms or that certain expenses were debited for an abnormal amount. Hon ble Delhi High Court in the case of Additional CIT Vs Jai Engineering Works [ 1978 (2) TMI 94 - DELHI HIGH COURT] had the occasion to consider a question that whether the report of the Auditor could be said to be material on which reliance could be placed by the Income Tax Authorities. The Hon ble High Court while approving the order passed by the Tribunal ruled that in case where books are not made available for AO s verification the AO should rely on the Audit Report because the said evidence is admissible under Indian Evidence Act, 1872. Reasonable rate of Net Profit - Since, the turnover, has gone up manifold in the year under consideration from ₹ 5,59,62,965/ to ₹ 27,72,26,469/- therefore, reliance to past years trading results may not be an appropriate guide. We reject the submission of the assessee to apply 2.65% as Net Profit as was applied in the case of M/s. Sri Siddheshwar Engineer India (P) Ltd. [ 2018 (3) TMI 1667 - ITAT AGRA] as assessee therein is based in Etawah, and is a Private Limited Company and the Assessing framing the assessment happened to be different. Therefore, preference cannot be given to M/s. Sri Siddheshwar Engineer India (P) Ltd (supra). Thus, we direct the learned Assessing officer to apply N.P rate of 6% on gross receipts. We also make it clear that assessee shall not be entitled for any other deduction such as depreciation and interest paid. Thus, ground of appeal No.1 to 4 are partly allowed. 2019 (9) TMI 259 Rectification u/s 254 - TP adjustments - determination of ALP - Expenditure towards payment of Technical Fee and Project Management Fee was capitalized by the assessee and capital transactions are outside the purview of transfer pricing mechanism - HELD THAT:- As decided in own case [ 2019 (3) TMI 1537 - ITAT PUNE] undisputed fact that the assessee has not claimed the expenditure toward payments of Technical Assistance fees and Project Management fees. The assessee has capitalized the same as the project was not complete in the period relevant to the assessment year under appeal. The capital transactions are outside the purview of Transfer Pricing mechanism. There is no denying the fact that in the subsequent years the assessee would be claiming depreciation on the cost of capital asset which would include payment of fees for Technical Assistance and Project Management. Therefore, determination of ALP of such services in the year of payment of such fees would be relevant. While concluding, a mistake has crept in the order. In para 12 of the order, it was wrongly mentioned that ground No.1 and 2 are restored to the file of Assessing Officer. In fact, it is ground No.3 which needs to be restored to the file of Assessing Officer for determination of ALP. Further, in para 13 while summing up the finding on ground No.3, it was wrongly observed that ground No.3 becomes academic and hence, is not deliberated upon. In para 10 of the order there is specific finding on the issue of determination of ALP by the Assessing Officer. The mistake crept in paras 12 and 13 of the order dated 15-02-2019 therefore, needs to be rectified 2019 (9) TMI 258 Rectification u/s 154 - non reliance or consideration of binding decisions of the superior court while pronouncing an order / judgement - additional depreciation on plant and machinery was disallowed - whether the assessee is engaged in the business of manufacturing - HELD THAT:- Hon'ble Supreme Court in the case of CIT vs Gem India Mfg. Co. [ 2000 (12) TMI 7 - SUPREME COURT] has considered and decided this issue in respect of activity of cuttings and polishing of diamonds and it was held that said activity does not result new article or thing which can be held as manufacturing or production Thus once the issue is settled by the Hon'ble Supreme Court then it is a binding law for all the authorities including the AO. This is also an undisputed fact that allowing the claim of additional depreciation while passing the assessment order u/s 143(3), the judgement of Hon'ble Supreme Court was not considered. Therefore, the order passed by the AO without considering the binding of law laid down by the Hon'ble Supreme Court would amount an apparent mistake on record which can be rectified u/s 154 of the Act. The Hon'ble Supreme Court in the case of ACIT vs Saurasthra Katch Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] has held that non-consideration of a binding decision would render the Tribunal decision liable for rectification of mistake apparent from record. While considering the issue in the case of ITO vs Arihant Tiles Marbles (P) Ltd. [ 2009 (12) TMI 1 - SUPREME COURT] has noted that the assessee in the said case was engaged in the activities which include excavation of marble blocks and processing of such blocks by cutting into tiles and thereafter processing the tiles in different shapes and sizes and polishing was held to be manufacture or production. Thus the process undertaken while manufacturing of tiles from the blocks of marbles is different than cutting and polishing of raw diamonds. Even otherwise the decision in the case of CIT vs Gems India Mfg. Co. ( [ 2000 (12) TMI 7 - SUPREME COURT was not at all referred or considered in the case of ITO vs Arihant Tiles Marbles (P) Ltd. (supra), though both the decisions are passed by the same strength of Bench of Three Judges - Decided against assessee. 2019 (9) TMI 257 Bogus LTCG - Addition u/s 68 - case was selected for scrutiny under CASS for examining suspicious long term capital gain on share on the basis of inputs from Investigation Wing, Kolkata - HELD THAT:- Directorate of Investigation (Wing), Kolkata had carried out, the investigation in which the M/s. HPC Bio Ltd. was found indulging in the activity in contravention of SEBI Act and Rules. SEBI had suspended the trading in the securities of M/s. HPC Bio Ltd. The financial position of the company was not good while purchasing the shares whereas the company was at giving after the expiry of one years the amount in sum of ₹ 21,92,278/-. It also speaks that the said transaction is non-genuine. CIT(A) has relied upon the number of decision to arrive at this conclusion that the transaction was bogus. Each and every aspects of the transaction has been properly dealt with. The reason for declining the claim of the assessee has duly been discussed which nowhere required to discuss again. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we decided these issues in favour of the revenue against the assessee. 2019 (9) TMI 256 Reopening of assessment - reopening on basis of report of the investigation wing - non independant application of mind - addition u/s 68 - HELD THAT:- The Hon ble Delhi High Court in a number of cases has held that the reopening on the basis of report of investigation wing without independent application of mind by the Assessing Officer is not valid. Accordingly the reassessment proceedings which were based on the report of the investigation wing and without independent application of mind by the Assessing Officer have been held to be illegal. Since the Assessing Officer in the instant case has reopened the assessment on the basis of report of the investigation wing and there appears to be no independent application of mind by the Assessing officer for reopening of the case, therefore, the reassessment proceeding initiated by the Assessing Officer are not proper. Therefore, hold that the reassessment proceeding initiated by the Assessing Officer is illegal and accordingly the subsequent proceedings also become illegal and void - Decided in favour of assessee. 2019 (9) TMI 255 Disallowance u/s 14A r.w.r. 8D - no expenditure incurred to earn the dividend income - reasonable nexus between the expenditure disallowed and the dividend income received - HELD THAT:- Assessee has not at all incurred any expenditure to earn the dividend income and this being the factual position and not having been rebutted by the AO in any manner, the provisions of S.14A could not have been invoked. The disallowance was made by the AO by invoking provisions of S.14 A r/w Rule 8D of the Rules by alleging that the part of expenditure claimed by the assessee has been incurred for earning of tax-free income though the assessee had not incurred any expenses to earn tax free income. AO before making said addition has simply referred to the relevant provisions and judgment of Hon'ble Supreme Court in the case of CIT vs United General Trust Ltd. [ 1993 (2) TMI 96 - SC ORDER] which cannot be applied to the instant case as the facts of the present case are totally different from the above case. No merit in the disallowance so made U/s 14A - decided in favour of assessee 2019 (9) TMI 254 Unexplained cash deposits in the banks - Income from undisclosed sources - availability of cash in hand out of past four financial years withdrawals - estimation of household expenditure - HELD THAT:- As during the last four years, the assessee has withdrawn ₹ 81,17,425 from his bank account which has been claimed in support of opening cash in hand. AO has however estimated household expenses at ₹ 5 lacs per annum totaling to ₹ 20 lacs and the balance ₹ 61,17,425 has been accepted as fair and reasonable towards the source of cash in hand. Therefore, the differential amount of ₹ 61,32,575 has been added and brought to tax as unexplained in the hands of the assessee. Estimation of household expenditure, it has been an admitted position by the Revenue that the same have been met largely out of pension and earnings from the shop. Given the standard of living of the assessee and his family, and the fact that assessee s daughter is doing MBBS Course and the son is studying in JNNIT, Jaipur, AO has estimated household expenditure of ₹ 5 lacs per annum - in view of the overall facts and circumstances of the case, we find that the estimation of household expenditure is on a higher side and it would be fair and reasonable to restrict the same to ₹ 2 lacs per annum as against ₹ 5 lacs per annum. Regarding the contention of the AR that only withdrawals for last 4 years have been considered by the AO and not the earlier years withdrawals, we are unable to accede to the said contention of the ld AR as the lower authorities have been fair and reasonable to consider the availability of cash in hand out of withdrawals from last four years and it would be highly unrealistic that cash withdrawals made in years prior to last four years are kept by the assessee as cash in hand given that the assessee is a merchant navy official mostly on high seas and his expenses being met by the employer and thus not having the necessity to hold cash in hand. Further, he maintains account with banks and thus having regular banking facility and the cash can be withdrawn as and when needed by his family which in any case, as per assessee s own submission doesn t have very high cash requirement for meeting household expenditure. Aailability of cash in hand out of past four financial years withdrawals of ₹ 81,17,425, after considering the household expenditure at ₹ 2 lacs per annum as against ₹ 5 lacs determined earlier, comes to ₹ 73,17,425 and thus, the balance addition of ₹ 49,32,575 is hereby confirmed as remain unexplained and the assessee gets relief of ₹ 12,00,000. - Decided partly in favour of assessee 2019 (9) TMI 253 Addition on account of travelling expenses - disallowance of Directors Travelling Expenses - non business purposes - HELD THAT:- No evidence or details have been produced by the assessee before the authorities below as to what was necessary for Smt. Lalita Nijhawan to visit Abroad. Since assessee claimed business expenditure, therefore, assessee shall have to prove that expenses have been incurred wholly and exclusively for the purpose of business. In the absence of any evidence on record for the purpose of personal visit to Abroad by the wife of the Director of the assessee company, the same cannot be allowed as business expenditure. An employee who is getting small salary of ₹ 4,20,000/- per annum, it is difficult to believe that huge expenses would be spent for her visit Abroad. Assessee made only general explanation that she was associated with travelling business, but, it is not supported by any evidence or material on record. - Decided against assessee Addition on account of business promotion expenses - entitlement to deduction of the expenditure under section 37 - HELD THAT:- The assessee could explain the issue relating to expenses of ₹ 74,000/- only before A.O, however, no explanation has been given for remaining amount. It is an admitted fact that the entire expenses have been incurred for payment of restaurant bills. These clearly appear to be personal in nature which assessee has debited as business expenditure for which no bills/explanation or evidence have been furnished. Merely because auditor has not given any remarks that expenses are not personal in nature, would not entitle the assessee to claim deduction of the expenditure under section 37 of the I.T. Act. Burden is upon the assessee to prove that expenses have been incurred wholly and exclusively for the purpose of business. The assessee further failed to prove the same. - Decided against assessee 2019 (9) TMI 252 Unexplained deposit made in the bank account - unexplained withdrawals - HELD THAT:- AO made addition of ₹ 4,51,000/- by considering the total deposit made by the assessee being ₹ 1,51,000/- at the time of opening of the account on 08.08.2009 and ₹ 3,00,000/- on 20.02.2010. There is no dispute that a sum of ₹ 1,50,000/- was withdrawn from the bank account on 10.08.2009 therefore, while considering the deposit made in the bank account as unexplained the withdrawal made by the assessee of ₹ 1,50,000/- is also required to be taken into account. Though there is a time gap of the said deposit however, once income is added on account of the deposit then the withdrawal cannot be ignored as both the deposit as well as withdrawal transactions are during this financial year. Therefore, even if taking pick credit the said amount of ₹ 1,50,000/- is required to be taken into consideration. Thus, the addition made by the AO to the extent of the said amount of ₹ 1,50,000/- is not sustainable. CIT(A) has accepted the fact that the assessee was running a beauty parlour and boutique for last about 17 years and accepted the saving of the assessee of the past years but only to the extent of ₹ 1,50,000/-. CIT(A) has estimated the saving without referring the basis therefore, in the facts and circumstances of the case when the assessee s activity of running of beauty parlour and boutique for so many years is not dispute then the saving of ₹ 3,00,000/- as claimed of the assessee is reasonable and proper - addition sustained by the ld. CIT(A) is deleted. Capital gain computation - cost of improvement denied while computing the capital gain on sale of land - AO as well as CIT(A) denied the claim of cost of improvement on the ground that no such averment were made in the sale deed revealing the fact of cost of improvement - HELD THAT:- Except the bill on plain paper the assessee has not produced any other documents in support of the claim. The AO has also not conducted any inquiry whether any work of improvement was carried out at the site prior to the sale of the plot of land on 20.08.2009. Therefore, in the fact and circumstances of the case when neither the assessee has produced the conclusive evidence for carrying out the improvement work nor the AO conducted a proper inquiry to rebut the claim of the assessee it is proper to allow the claim of the assessee on some estimate basis. Accordingly, a sum of ₹ 40,000/- is allowed on account of cost of improvement on estimate basis. - Appeal filed by the assessee is partly allowed. 2019 (9) TMI 251 Condonation of delay - delay in filing the appeals before the CIT(A) - whether meritorious matter should not be thrown out on the ground of limitation and that substantial justice deserves to be preferred ? - HELD THAT: - In this case, the assessee slept more than two years after the decision rendered and published in various journals, the delay of more than two years in filing the appeal cannot be acceptable by any court of law without reasonable cause. We find no reasonable cause, belatedly that too more than two years, in filing the appeals before the ld. CIT(A). We find no reason to interfere with the order passed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed. 2019 (9) TMI 250 Setting off of the expenditure against the Capital gains - addition stating that there was no business and that the expenditure claimed is disallowed u/s 37 - HELD THAT:- It is an undisputed fact that though business of assessee came to a halt in the year 2010, yet the assessee was liquidating its assets. The assessee had only a leasehold rights on the land and it had to get the permission of SIPCOT for transfer of leasehold rights. The major portion of expenses claimed is on account of sales tax demand of ₹ 53.33 lakhs, property tax, audit fees, property maintenance, settlement amount paid on labour court s order. It is therefore clear that all these expenses had to be incurred for proper liquidation of assets of the company. In identical circumstances, in the case of Lawrence D'Souza [ 2011 (9) TMI 212 - KARNATAKA HIGH COURT] took the view that expenditure in question had to be allowed in AY 1996-97, though business came to a halt in the year 1994 - expenses in question have to be allowed as a deduction. This issue is accordingly decided in favour of assessee. Capital gain on sale of land building and leasehold rights - bifurcation of capital gain - short term capital gain - as per assessee same needs to be treated as short term capital gains for sale of building and long term capital gains for leasehold rights in land - HELD THAT:- On a plain reading of section 50 of the Act, it is clear that it is applicable for transfer of buildings and not for transfer of right in lease hold land. Therefore, the Capital Gains on the transfer of the right in lease hold land has to be computed under the normal provisions as Long Term Capital Gains and the Capital Gains on the transfer of the buildings has to be computed under the provisions of section 50 as Short Term Capital Gains. Observations of the CIT(Appeals) contrary to the aforesaid provisions are unsustainable and are hereby vacated. The ld. counsel for the assessee has in this regard rightly placed reliance on the decision of CIT v. Vimal Chand Golecha [ 1992 (12) TMI 33 - RAJASTHAN HIGH COURT] wherein it was held that when price of two capital assets is charged at one consolidated price, where a gain from one of capital assets was a short-term capital gain while from other it was a long term capital gain, then the assessee is entitled to bifurcate the same and benefit to assessee could not be denied in respect of gain arising from sale of an asset which could be considered as long-term capital gain. Set off of business loss and unabsorbed depreciation - As per section 32(2) of the Act, the unabsorbed depreciation is deemed to be current year's depreciation and can be set off against Capital Gains as per section 71 of the Act. The AO is directed to examine the claim of assessee for set off in the light of other observations in this order. 2019 (9) TMI 232 Income accrued in India - Income allocable to the Appellant s PE in India - direction issued by DRP upon conditional admission by the assessee - business connection in India - short term visits of expatriates who visited India came for purposes - whether the assessee has a permanent establishment in India and if yes what is the amount of the profit that can be attributed to the permanent establishment? - HELD THAT:- Dispute resolution panel has gone under the presumption that assessee has conceded the aspect of the existence of the permanent establishment in India of the assessee. The assessee now denies the above fact and says that it has never considered the issue of the existence of the permanent establishment. On careful analysis of the letter dated 05/12/2016 submitted by the assessee before the learned dispute resolution panel it states in para number 3 of that letter that assessee submits that without prejudice to the assessee s view towards the non-existence of permanent establishment in India, from the limited perspective of the attribution of income to the alleged PE, it is being acceptable to the assessee that the taxable income of the assessee in India is directed to be determined at 10% (profit margin) of 50% of salary cost of expatriates in India during the relevant year. Says that the clarify, where the salary cost of expatriates in India during the relevant year is rupees hundred, the assessed income of the assessee will be computed at INR 5. It further says in the next paragraph that the aforesaid is without prejudice to the assessee s right to challenge existence of permanent establishment in India for the relevant year or any other years and other grounds raised by the assessee or its associated enterprise in India viz. LG Electronics India private limited in various other proceedings in India. Thus this letter has been accepted by the learned dispute resolution panel and straightway went on to attribute the profit to the permanent establishment. As per the letters of the assessee mentioned in the direction of the learned dispute resolution panel, the assessee has reserved its right to challenge the existence of the PE at various forums and in case of other associated concerns also for relevant year or any other assessment year. Therefore there is no clear-cut admission of the assessee of the existence of the PE before the learned dispute resolution panel. Therefore, apparently, in all these years, the learned dispute resolution panel has not at all given any finding on the existence of the permanent establishment of the assessee in India. In almost all the cases the learned dispute resolution panel has referred the above two letters submitted by the assessee and based on that has upheld the action of the learned assessing officer except to the small extent of adjustment of the profit attribution for assessment year 2007 08 from the suggested lines by the assessee. Though we have recorded the complete arguments of both the parties with respect to the existence of the permanent establishment, however, in view of the submission of the assessee before the learned dispute resolution panel and consequent understanding of the learned dispute resolution panel that the assessee has conceded the existence of the permanent establishment, we have refrained from giving our findings on the existence of the permanent establishment as it will prejudice the interest of the assessee to the extent that it will not be able to avail the benefit of the direction of the learned dispute resolution panel on the existence of the permanent establishment. In normal circumstances, as necessary facts are laid down before us, we would have decided the issue but the specific letters before the ld DRP, where DRP in its own understanding, rightly or wrongly, considered the concession by the assessee on this issue and has not directed the AO on its merit about the existence of PE. The Object of the incorporation of the provision of Dispute Resolution Panel is to resolve a dispute by directing the ld AO on a specific issue. If that right of the assessee is not allowed to be exercised, then it may cause irreparable damage to the assessee. We set aside all the appeals of the assessee back to the file of the learned dispute resolution panel with a direction to first ascertain the fact about the admission of the assessee with respect to acceptance of the assessee of the existence of the permanent establishment. If it is found that there is an admission on part of the assessee about the existence of the permanent establishment, then, the learned dispute resolution panel will decide the issue in accordance with the law considering the above admission. However, if it is found that there is no admission on this aspect, then to decide the issue of existence of the permanent establishment and consequent profit attribution thereto with respect to each of the assessment years. Needless to say, the learned Dispute Resolution Panel will afford reasonable opportunity of hearing to the assessee. The learned dispute resolution panel, then, will direct the learned assessing officer to pass the final assessment order incorporating its direction in accordance with the law. In absence of any admission about the existence of the PE by the assessee, all issues, with respect to the existence of the permanent establishment as well as the profit attribution thereto would be open before the learned dispute resolution panel. - Appeals filed by the assessee are allowed with above direction for statistical purposes. 2019 (9) TMI 231 Broken period interest paid on purchase of Securities, which were held as investments - HELD THAT:-The issue raised in this ground was squarely covered by the decision of Co-ordinate Bench of this Tribunal in assessee s own case for assessment year 2011-12 [ 2016 (3) TMI 1361 - ITAT CHENNAI ] as held held that when interest received by an assessee, from transferees for broken period is included under the head business income , amounts paid by the assessee to the transferors for broken periods could not have been disallowed. Depreciation of investment on securities at the time of shifting from available for sale to held to maturity - HELD THAT:- As in assessee s own case for assessment year 2011-12 [ 2016 (3) TMI 1361 - ITAT CHENNAI ] direct the AO to allow depreciation / fall in value of investment in Government Securities including those classified under HTM category. No doubt the value in opening stock in the next year would correspondingly be adjusted. This issue is decided in favour of the assessee Deduction of bad debts written off (technical write off) - HELD THAT:- As in assessee s own case for assessment year 2011-12 [ 2016 (3) TMI 1361 - ITAT CHENNAI ] besides debiting the P L a/c and creating a provision for bad and doubtful debts, the assessee bank had simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance sheet and consequently, at the end of the year, the figure of loans and advances/debtors was shown as net of the provision - assessee is entitled to benefit of deduction under s. 36(1)(vii) - Contention that it is imperative for the assessee-bank to close the individual account of each debtor in its books and a mere reduction in the loans and advances account or debtors to the extent of the provision for bad and doubtful debt is not sufficient, is not sustainable Depreciation on ATM - 60% OR 15% - HELD THAT:- As in assessee s own case for assessment year 2011-12 [ 2016 (3) TMI 1361 - ITAT CHENNAI ] allowing depreciation @ 60% Adjustments as done in computing Minimum Alternate Tax (MAT) u/s.115JB - HELD THAT:- As decided in own case the provisions of sec.115JB of the Act cannot be applied to the Banks. Income from foreign branches - to be included in the total income and only double taxation relief as contemplated as per the agreement is allowable - HELD THAT:- As decided in own case the income of the assessee at Singapore and Colombo would be included in the return of income of the assessee in India and whatever taxes paid by the branches in foreign countries, credit of such taxes shall only be given. Accordingly, the ground raised by the assessee is dismissed Addition u/s 14A r.w.r. 8D - HELD THAT:- this issue is now squarely covered by the decisions of Hon ble Jurisdictional High Court in the case of Chettinad Logistics [ 2017 (4) TMI 298 - MADRAS HIGH COURT ] and Joint Investment (P) Ltd Vs.C.I.T [ 2015 (3) TMI 155 - DELHI HIGH COURT ] respectfully following the same, the Assessing Officer is directed to restrict the disallowance u/s.14A read with Rule 8D to the extent of the exempted income earned. Interpretation of provisions of Rule 6ABA for the purpose of Section 36(1)(viia) in so far as computing the deduction only the outstanding rural advances ought to be considered and not the incremental advances made by rural branches - HELD THAT:- Issue is now squarely covered by the decision of Co-ordinate Bench of this Tribunal in the case of Karur Vysya Bank [ 2019 (3) TMI 1002 - ITAT CHENNAI ] the Assessing Officer is directed to recompute the deduction u/s.36(1)(viia) of the Act for considering only the outstanding rural advances and not incremental advances made by the Rural Branches. The Ground No.5 of assessee is partly allowed. Benefit of MAT Credit entitlement on the amalgamation of IndFund Management Ltd., with the assessee s bank - HELD THAT:- As fairly agreed by both the sides that the issue raised in this ground was squarely covered by the decision of Co-ordinate Bench of this Tribunal in the case of Suraj Agro Infrastructure Vs. DCIT [ 2012 (6) TMI 890 - ITAT CHENNAI ] Assessing Officer is directed to grant the assessee the benefit of MAT credit in respect of amalgamation of IndFund Management Ltd., with the assessee s bank. Computation of deduction u/s.36(1)(viii) - As submitted that the assessee had been following the method of computing 20% book profit of the eligible business of development of infrastructure facilities by applying the formula business income multiplied by the interest from eligible business and divided by total interest income - HELD THAT:- A perusal of the provisions of section 36(1)(viii) of the Act shows that the words used therein are an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head Profits and gains of business or Profession subject to other conditions specified therein. The interest earned in respect of the said eligible business is specifically available. Once this is available, the total expenditure incurred by the assessee is also available, and obviously, the total income of assessee is also available. When these figures are very much available, then expenditure incurred on pro-rata basis for the purpose of earning the said interest income in respect of the eligible business can easily be quantified. The same is to be reduced from the said interest expenditure earned and that would give the profits derived from the eligible business, out of which 20% deduction would be the eligible deduction u/s.36(1)(viii) of the Act subject to the compliance of the other conditions mentioned therein being the creation of special reserve and carrying of the same to the Reserve Account. In this circumstance, the issue raised in ground-7 is restored to the file of Assessing Officer to re-compute the deduction u/s.36(1)(viii) 2019 (9) TMI 230 Revision u/s 263 - expenditure allowable as deduction u/s. 48 (i) - exgratia payment made to employee directors towards the consideration for service rendered in connection with the sale of shares of Prizm Payment Services Pvt Ltd - HELD THAT:- It is settled position of law that there must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. In the present case, the ld. PCIT had not referred to any material which indicates that the exgratia payment made to employee directors towards the consideration for service rendered in connection with the sale of shares of Prizm Payment Services Pvt Ltd held by it is not an allowable expenditure u/s.48(1) of the Act. As apparent that though the assessment order does not patently indicate that the issue in question had been considered by the AO, the material on record could show that the Assessing Officer had applied his mind on the issue. The fact the PCIT has sought to revise the issue which is not subject matter of deduction i.e. loss on account of foreign exchange fluctuation on receivables would suggest that there was no proper application of mind on the part of PCIT. Thus, considered opinion that the material on record would establish application of mind on the part of the Assessing Officer while allowing the claim during the assessment proceedings. Once such application of mind is discernible from the record, the proceedings under section 263 of the Act would fall into the area of the ld. PCIT having a different opinion and it is settled proposition of law that an assessment order cannot be treated as erroneous and prejudicial to the interests of the Revenue simply because in the opinion of the ld. PCIT some other views are possible as held by the Hon ble Supreme Court in the case of CIT vs. Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] . PCIT does not satisfy the prerequisite condition of assessment order being erroneous and prejudicial to the interest of the Revenue. Therefore the order of the ld. PCIT cannot be sustained in the eyes of law. Accordingly, we set aside the order passed u/s.263 by the ld. PCIT and allow the appeal filed by the assessee company. - Decided in favour of assessee. Customs 2019 (9) TMI 249 Principles of Natural Justice - non-receipt of notice for personal hearing - Section 129 of the Customs Act, 1962 - case of the petitioner is that through Ext. P5, the petitioner has come to know that the second respondent has been authorised to act as adjudicating authority into the show cause notice issued to the petitioner - HELD THAT:- After juxtaposing the hearing dated 27. 07. 2019 referred to in Ext. P8 order and the reply given in the statement filed by the second respondent, prima facie this Court is of the view that the second respondent is unable to satisfactorily establish the service of notice of scheduled hearing on 27. 07. 2019 on petitioner or that the procedural safeguards are substantially complied with before passing the order in Ext. P8. The second respondent is not also proposing to establish its case that principles of natural justice are followed by producing the original record - the order in Ext. P8 could be set aside as violative of principles of natural justice and restore the matter back to the file of the second respondent for disposal in accordance with law. Petition allowed by way of remand. 2019 (9) TMI 248 Release of detained goods - prohibited goods or not - import of Black Pepper Matured Berries - detention on the ground that CIF value was not taken on the date of filing the Bill of Entry - benefit of N/N. 53/2015-2020 dated 21.03.2018 - HELD THAT:- The N/N. 53/2016-2020 dated 21.03.2018 issued by the Minister of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade clearly indicates that Black Pepper is entitled for free import, if the cost including freight is above ₹ 500/- per kg. - Perusal of the commercial invoice filed by the Petitioner dated 07.11.2018 clearly indicates that the transaction between the Petitioner and their seller for purchasing the Black Pepper measuring 14,000 kgs took place on 07.11.2018 and the total value of the said goods was arrived as USD95,900.00. It is not in dispute that if the said amount involved in the subject matter transaction is taken into account, the CIF value as on 07.11.2018 would be ₹ 511.70/-. The value of the goods as reflected in the invoice alone will speak for considering as to whether the import is entitled to the benefit under N/N. 53/2015-2020 dated 21.03.2018. Moreover, it is not made clear in the said notification itself that as to whether such value has to be arrived only on the date of filing the Bill of Entry. In the absence of any such clear indication, the normal course of arriving at the value is by taking into consideration of the date of invoice - Therefore, if the value of CIF is taken as ₹ 511.70/- as on the date of invoice, certainly the petitioner is entitled to the benefit under the N/N. 53/2015-2020 dated 21.03.2018. Appeal dismissed - decided against Revenue. 2019 (9) TMI 247 Source of Gold bars of foreign origin - Received under Will - appellants contention is that Will does not require any registration under the Registration Act and the same was Notarized as is clear from the stamp of the Notary Public, who is an officer of the court - absolute confiscation - conversion of absolute confiscation into option of redemption. HELD THAT:- No doubt that gold is specified item in terms of the provisions of section 123 of the Customs Act and the onus to prove that the foreign origin gold, found in possession of any person, was legally imported by them is on the possessor. In the present case, the appellants have contended that the gold bars in question were possessed by them as a result of execution of the Will by her grandmother, after her death in the year 2010. Revenue has tried to find some holes in the said Will to discard the same and to cast the onus on the appellants to prove the licit receipt of the gold bars - No investigations, no enquiries stand made from the Notary, who Notarized the Will or from the office of the District Magistrate, where the same was probated. As such, the Revenue s endeavor to discard the said Will without the production of any evidence to establish the same as a fraudulent document, cannot be appreciated. There was no requirement to amend the specifications of the gold bar in the old Will inasmuch as no specifications, in any case, were mentioned in the original Will - apart from the said gold bars, Revenue has not found any other gold bars from the possession of the appellant. If the gold bars mentioned in the Will of Smt.Dadan Devi were not the one which stand seized and confiscated by the officers, then the authorities would have found another set of three gold bars from the appellants possession. The gold in question were possessed by the appellants as a result of the legacy transferred to the appellants by Smt.Disha Tulsiani s grandmother through her Will, it cannot be held that the goods in question were smuggled items. In such a scenario, the confiscation of the same or imposition of penalties upon the appellants cannot be held to be sustainable. The Revenue s appeals which are only against conversion of absolute confiscation into option of redemption, no longer survives - Appeal allowed - decided in favor of appellant. 2019 (9) TMI 229 Maintainability of appeal before HC or SC - appropriate forum or not - whether an appeal from the order of CESTAT, involving an issue regarding violation of conditions contained in customs exemption notification, would lie before the High Court under the provisions of Section 130 of the Customs Act, 1962 or to this Court under the provisions of Section 130E of the Customs Act? HELD THAT:- An appeal shall lie to the High Court against every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The only exception carved out is that an appeal shall lie before this Court and shall not lie before the High Court against the order relating, amongst other things, to the determination of any question having relation to the rate of duty of customs or to the value of goods for the purposes of assessment. Only if any question having relation to the rate of duty is involved in an appeal or if it relates to value of goods for the purpose of assessment, the appeal would lie to this Court and in all other cases it would lie before the High Court. The issue is no more res integra - In a catena of the judgments, right from the judgment of this Court in the case of Navin Chemicals Manufacturing Trading Company Ltd. vs. Collector of Customs, [ 1993 (9) TMI 107 - SUPREME COURT] , the position has been clarified - it has been held that appeal dismissed on the ground that the appellants were in error in contending that their appeal before CEGAT ought to have been heard by a Special Bench and could not have been heard and decided by a member of CEGAT, sitting singly. This Court, while considering the provisions of Section 130 and Section 130E of the Customs Act, has held that where an appeal involves determination of any question that has relation to customs duty for the purpose of assessment or where an appeal involves determination of any question that has relation to the value of goods for the purposes of assessment, such cases will have to be treated separately and have to be given special treatment. The only question that is involved is whether the assessee had violated the conditions of the exemption notification by not utilizing the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. Neither any question with regard to determination of rate of duty arises nor a question relating to valuation of goods for the purposes of assessment arises in the present case. The appeals also do not involve determination of any question relating to the classification of goods, nor do they involve the question as to whether they are covered by the exemption notification or not - Undisputedly, the goods are covered by the said notification. The only question is as to whether the assessee has breached the conditions which are imposed by the notification for getting exemption from payment of the customs duty or not. The appeals do not involve any question of law of general public importance which would be applicable to a class or category of assessees as a whole - The question is purely inter-se between the parties and is required to be adjudicated upon the facts available. The High Court was not justified in holding that the appeals are not maintainable under Section 130 of the Customs Act but are tenable before this Court under Section 130E of the Customs Act - appeal allowed. Securities / SEBI 2019 (9) TMI 246 Manipulative transactions - artificial trades - violation of SEBI Act and PFUTP Regulations - penalty imposed - HELD THAT:- Volume of trading, percentage of the market share traded by the appellants, timing of trades etc. are so glaring to ignore the manipulative nature of transactions concerned. The appellant and another Noticee No. 3 were the major traders on the market wherein substantial trades matched between them and sizable quantity of self-trades also happened. Though, the appellant had traded in some other time slot as well in moderate quantity as contended, substantive volume of trade was carried out during the closing half an hour of trading clearly demonstrate that the objective was in manipulating the volume and prices though the rise in prices happened to be moderate (1.21%). In any case, volume manipulation is also a market manipulation under PFUTP Regulations, 2003. So the appellant (along with Noticee No. 3) had bought a total of 26.05 lakh shares and sold 20.73 lakh shares between 15:04 and 15:06 hours on August 23, 2010 and matched 78% of buy quantity and 100% of sell quantity of appellant with Noticee No. 3. Such a huge matching cannot happen without prior meeting of minds. Therefore, the contention that appellant had no connection with Noticee No. 3 does not have any merit. Similarly, in the case of Green Field Infrastructure Pvt. Ltd. apellant along with other two appellants in the same appeal and Noticee No. 1 had taken large positions in call options on the same day i.e. April 28, 2010 with a total quantity exercised as 37,73,000 and an amount of ₹ 1,90,65,200 profit made. The submission by appellant in Sandeep Paul Ors. that appellant Sandeep Paul was abroad and not even in India and it is the broker misusing the power of attorney that the impugned trades have been conducted is without any merit since the appellant had not taken any action on the issue. On the contrary, we note that the appellant had continued to deal with the same broker for almost a month thereafter and the appellant also availed the payouts credited to his account. In any case, the responsibility of giving a power of attorney lies with the person who gives the same and in this case we notice that it was a blank power of attorney which was given and that too along with an advance credit amount of ₹ 5 crores. As regards the alleged manipulation in the price volumes of MTNL substantial volume of trading between these entities happened between 15:29:24 and 15:58:25 hours. Therefore, the same set of buyers and sellers who were repeatedly buying and selling and creating artificial volumes without even changing the beneficial ownership. Such artificial trades is clearly violation of PFUTP Regulations, 2003. Trading of this nature and in such huge volumes could not have happened between the parties at such short time intervals of just a few seconds without some prior meeting of their minds. In view of this, we cannot find fault in the findings in the impugned order that the appellants in these appeals have violated Section 12A (a), (b), (c) of the SEBI Act, 1992 and various stated provisions of PFUTP Regulations, 2003. 17. Accordingly, penalty is imposed on Appellants in all these Appeals under Section 15HA of SEBI Act, 1992 for violation of Section 12A (a),(b),(c) of SEBI Act read with various provisions of PFUTP Regulations, 2003. The penalty imposable under Section 15HA of the SEBI Act, 1992 for violations relating to fraudulent and unfair trade practices at the relevant time was twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher. In the instant matters wherever there is findings to the effect that profits are made a higher penalty has been imposed while in other cases a lower/ nominal penalty has been imposed by taking the mitigating factors under Section 15J of the SEBI Act into account. Therefore, the submission that the penalties imposed are too harsh also has no merit. 2019 (9) TMI 228 Application for settlement rejected on the ground of delay which is not condoned - eligible reasons for delay - Contravention of non-disclosure of tax demand - violation of certain provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 alleging certain non-disclosures - HELD THAT:- Sufficient grounds were made out for condonation of delay. It may be that from the date of second show-cause notice, the period of delay was substantial. Mere number of days of delay would not decide the sufficiency of cause made out by the applicant for condonation of delay. In the present case, it was pointed out that there was legal doubt whether once the company has been visited with penalty, subsequently show-cause notice can be issued against the directors of the company. Keeping the said legal dispute aside, it was decided to offer the settlement which would bring an early end to the dispute. The decision to offer settlement was, therefore, taken for saving time, cost and to bring early end to the litigation. The Board summarily rejected the said application by recording one line reason that the panel of whole time members did not find the reasons sufficient. So is the case with the second application for condonation of delay dated 16.8.2017. In this application, the petitioner had made out further elaborate grounds. It was pointed out that upon receipt of the show-cause notice alleging certain non-disclosures, the petitioner began to verify whether all disclosures were duly made or not. These non-disclosures pertained to December, 2007, April, 2008, March, 2010 and March, 2011. Since the records were old, verification exercise took considerable time. Attempt was made to trace out documents of disclosure and despatch made to NSE and BSE. This caused further delay. It was further stated that even at present, the petitioner was not fully confident whether all disclosures were duly made or not. It is possible that though disclosures may have been made, documents are not immediately traceable since various officers in charge have changed from time to time. The petitioner was also additionally seeking legal advice on various aspects. Considering such facts and also looking to the fact that the adjudication proceedings have not commenced, the petitioner had in order to save time, cost and to curtail litigation, decided to apply for settlement. The grounds made out for condonation of delay were elaborate and sufficient. Such grounds were rejected with one sentence that they were not found sufficient. In this case also, in our opinion, the Board has committed a serious error. In both the cases, it was specifically stated by the petitioner and not refuted by the Board that at the time of making the settlement application, adjudication proceedings (of second and third show-cause notices) had not yet commenced. No progress at all in the show-cause notices had, therefore, been made. The petitioner had not benefited out of delay. The applications for condonation of delay at exhibit M and exhibit P stand allowed. Insolvency & Bankruptcy 2019 (9) TMI 227 Maintainability of application - Initiation of Corporate Insolvency Resolution Process - corporate debtor defaulted in repayment of sum - existence of debt and default or not - HELD THAT:- This Corporate Debtor has not placed any material disputing the claim raised by the Operational Creditor herein, therefore, this Bench, having not noticed any material contrary to the petition averments, hereby holds that the Operational Creditor has proved existence of debt and default. Petition admitted - moratorium declared. 2019 (9) TMI 226 Initiation of Corporate Insolvency Resolution Process - Corporate Debtor defaulted in repayment of Earnest Money Deposit and Security Deposit - existence of dispute or not - HELD THAT:- It is evident on record that the correspondence between the Operational Creditor and the Corporate Debtor reveals that there has been dispute between the parties with regard to supply of clinker by invoices dated 20.02.2016 and 17.03.2016, out of these two invoices, the invoice dated 17.03.2016 for an amount of USD 1,33,782.40 is being included in the claim amount by giving Section 8 notice on 13.11.2017 i.e. subsequent to the Corporate Debtor raising dispute in respect to the invoices 20.02.2016 and 17.03.2016, the dispute is in existence between the parties in respect to the quality of clinker supplied through invoice dated 17.03.2016 which is part of the claim amount. Since this Bench cannot segregate the claim as to how much amount is disputed and as to how much amount not disputed. It is the look out of the Operational Creditor to make a claim to the extent that has not been disputed by the Corporate Debtor. If at all payment of undisputed claim is dependent upon dispute in respect to the material supplied, then also it is a point to be looked into whether dispute is in existence or not. However, in the present case, the Operational Creditor having included the disputed claim as claim in the Petition filed under Section 9, we are of the considered view that it is hit by dispute as contemplated under Section 8 of the code. Once it is proved that dispute is in existence, it does not matter if part payments are made in respect to the claim not disputed. Petition dismissed. 2019 (9) TMI 225 Complaint against Resolution Professional - grievance of the Appellant is that the Resolution Professional wanted to take over the hypothecated goods i.e. the four cranes - HELD THAT:- In Swiss Ribbons Pvt. Ltd. Anr. vs. Union of India Ors [2019 (1) TMI 1508 - SUPREME COURT] as already held that the Resolution Professional has no jurisdiction to decide the claim of one or other party. This Appellate Tribunal has also held earlier that the Resolution Professional can only collate the claim. Apart from the fact that earlier the same issue was raised and we did not entertain the appeal in view of the fact that nobody appeared on behalf of the Appellant and observed that the Appellant can raise such issue and claim at an appropriate stage i.e. after Moratorium is over, we are not inclined to give any finding for the same prayer in this appeal. PMLA 2019 (9) TMI 224 Offence under PMLA - Provisional Attachment Order - recovery of amounts outstanding against Respondent no.4 from the sale of the Mortgaged Properties - HELD THAT:- It is not denied on behalf of the respondent that the Appellant being the mortgagee and secured Creditor is entitled to recover amounts outstanding against Respondent no.4 from the sale of the Mortgaged Properties as it was never the case of the ED that the attached properties were purchased out of proceeds of crime. It has also come on record that the Appellant acted bonafidly while rendering the facilities and mortgage of the Properties was done for bonafide purposes. The Appellant is not involved in the schedule offence. There is also no criminal complaint under the schedule offence under PMLA is pending against the Appellant or any of its officials. Thus, the mortgaged properties are security to the loans and cannot be subject matter of attachment particularly when the same were purchased much prior to the commission of alleged offences. Respondent has failed to consider that it has attached all the properties without properly examining the case of the Appellant. The mortgaged properties of the Appellant cannot be attached or confiscated unless link and nexus directly or indirectly established and there is no illegality or unlawfulness in the title of the Appellant and there is no charge of money laundering against the Appellant. The mortgaged of properties are under the Transfer of Property Act as there is no dispute as regards the origin of funds or the title of the Property. The Respondent does not have any lien over the said properties as the Appellant is now the Legal transferee of said Properties. The Respondent cannot retain the properties over which they have no legal title and the property is to be returned to the persons lawfully entitled as the Appellant is the victim. As such the properties acquired by Appellant before the initiation of the proceeding under PML Act and properties in respect of which security interest has been created in favour of the bona-fide secured creditor ought not be subjected to attachment in view of the aforesaid observations of the Hon ble Delhi High Court and the State Action would be restricted to such part of the value of the properties as it exceeds the claim of the bona-fide third party. In the present case once it has been showed by the Appellant that proper and due diligence was conducted before the properties were mortgaged to them, the properties thus cannot be attached, neither as a tainted property nor as alternative attachable property since it is nobody s case that the secured creditor had not done the due diligence and/or the transactions were not legitimate. The Appellant undertakes to deposit any amount realized, which is in excess of its outstanding dues, with the ED if such situation would arise. The Appellant is a Public Limited Government Company. The money must come to the public forthwith not after the trial of criminal case against the borrowers which may take many years. The trial may continue against the borrowers. No material has been placed before us to show that the properties attached are part of any prosecution complaint arising out of the present ECIR. Impugned Order of attachment and the PAO are not in accordance with law, so not sustainable. Hence, the appeal is allowed. 2019 (9) TMI 223 Offence under PMLA - retention of the seized goods - failure to file complaint within 90 days - summons were addressed to Mr. Iqbal Mubarak, a shareholder holding less than 1% shares of the Appellant Company and served at the address of the Appellant - HELD THAT:- It is an undisputed fact that Mr. Iqbal Mubarak is not an FIR named accused nor named in the ECIR and no prosecution complaint has also been filed against him even though prosecution complaint under PMLA has been filed against several persons arising out of same ECIR and the Special PMLA Court has taken the cognizance of the same and further trial proceedings are underway. There is no whisper anywhere in the appeal that either Mr. Iqbal Mubarak is prosecuted under PMLA. In the circumstances, as per the provisions of Section 8(3)(a) of PMLA, 2002 as existed till 13.07.2019 prosecution complaint was to be filed within 90 days. The impugned order was passed on 01st February, 2018. As per the said mandatory provision then existed, the prosecution complaint was to be filed involving the property in question within the prescribed period of 90 days and that if no prosecution complaint is filed in respect of the property concerned, the retention order of seizure lapses. In the present case more than 90 days have been passed since the day of passing of the impugned order and no prosecution complaint was filed that the materials seized herein are part of any prosecution complaint. Therefore, in the light of the above the impugned order to the extent that The seized item should be restored to the appellant which is confirmed with a direction to the respondent that the retained material shall be returned to the appellant within four weeks. 2019 (9) TMI 213 Offence under PMLA - pre-arrest bail seeked - HELD THAT:- Upon oral mentioning made by Mr. Kapil Sibal, learned Senior counsel appearing for the petitioner seeking urgent listing of the matter, the Registry is directed to place the matter, subject to curing of defects, before Hon ble the Chief Justice of India for urgent hearing. Service Tax 2019 (9) TMI 245 CENVAT Credit - input services - insurance premium to ensure the deposits of its constituents with it to the different Insurance and Guarantee Corporation - HELD THAT:- Mr. Jetly, learned Counsel appearing for the Revenue submits that the impugned order dated 12th February, 2019 of the Tribunal has been challenged by the Revenue to the extent it has not imposed any penalty upon the appellant. Mr. Jelty, states that the appeal has been filed and the objections of the Registry are to be removed. Mr. Jetly, further undertakes to remove the objections within one week, so the Revenue s appeal as well as the appellants appeal could be heard together - This appeal along with the Revenue s appeal, particulars of which would be given by Mr. Jetly to the Court Associate, be listed on 13th September, 2019. Stand over to 13th September, 2019. 2019 (9) TMI 244 Maintainability of appeal - appeal was filed belatedly without any condonation application - HELD THAT:- Once appeal was registered, without noting any delay and without notice to the appellant, the Appellate Authority could not have held that the appeal was not maintainable as it was barred by limitation. It is to be noted that the appeal was not found defective as it was unaccompanied by any delay petition and the appeal was registered. If there was any delay involved, the Office ought to have brought it to the notice of the petitioner with regard to the delay involved, so as to give an opportunity to the petitioner to explain the delay - Once appeal was registered, without noting any delay and without notice to the appellant, the Appellate Authority could not have held that the appeal was not maintainable as it was barred by limitation. The delay involved even according to calculation of the Appellate Authority is around five days. The date on which the appeal is received in the Office will have to be calculated for reckoning the limitation. Since the appeal was received in the Office on 31.8.2018, that date has to be taken for reckoning the limitation. The date of registration of the appeal is purely an administrative matter within the office. That cannot be reckoned for the purpose of limitation. There is no delay in filing appeal - appeal restored. 2019 (9) TMI 243 Reduction in the quantum of penalty u/s 78 - Failure to deposit the tax amount with Government - services of transportation of passengers by air - April 2009 to March 2014 - HELD THAT:- The Learned Commissioner (Appeals) has extended the statutory benefit of discharging 25% of the penalty imposed under Section 78 of Finance Act, 1994 subject to fulfillment of the condition laid down under the said provision. Appeal dismissed - decided against Revenue. 2019 (9) TMI 242 CENVAT Credit - processing of certain goods by job work items at hands of job workers providing services to the appellant - HELD THAT:- There is no dispute that the said material is used in provision of the services on which the appellants are paying Service Tax - The SCN seeks to deny the credit on the ground that the activity undertaken by the appellant is not manufacturing but repair of goods and thus, no credit on input can be allowed. It ignores the fact that the appellants are also a service provider and said goods are used in provision of said services in which the appellants are discharging the Service Tax liability. In these circumstances, there is no merit in denial of CENVAT credit to the appellants - credit allowed. Demand of Duty - irregular availment of CENVAT Credit - HELD THAT:- Irrespective of the facts whether the credit is allowed of denied, the second demand amounts to double jeopardy, hence, is not sustainable and is therefore, set aside. Appeal allowed - decided in favour of appellant. 2019 (9) TMI 241 Jurisdiction to issue SCN - Centralised registration taken at Delhi - SCN issued by issued by the Commissioner of Central Excise, Jaipur - HELD THAT:- It is undisputed fact that in this case the appellant has obtained the Centralised Registration including the unit at Jaipur with the Commissioner of Service Tax, Delhi. In the previous Show Cause Notice to the appellant the demand has been issued by the Commissioner of Service Tax Delhi, and which was adjudicated by him - So we find as far as jurisdiction is concerned, it is settled in view of Centralised registration that Commissioner of Central Excise and Service Tax, Jaipur lacks the jurisdiction to issue SCN and adjudicate the case in view of the provisions as contained in Rule 4(2) of Service Tax Rules, 1994. Appeal allowed - decided in favor of appellant. 2019 (9) TMI 222 Demand of service tax - manpower supply services - different approach of the revenue against the different assessees who provides similar services - contention of the appellant is that the appellant has never supplied any Manpower whereas by virtue of the respective agreements, they only carried on the assigned work on job work basis for which, the materials were supplied by the appellant and they are not amenable to service tax - HELD THAT:- One of the sample Bills reproduced by the Ld. First Appellate Authority is not the only activity performed by the workers engaged by the said contractor and nor does the relevant agreement say that the agreement/contract entered into with the particular contractor, or any other contractor for that matter, was only for processing and cleaning because I find that all the agreements are similarly worded. The First Appellate Authority holds in respect of two contractors that the agreements/contracts in question were for job work and deletes the tax demand which was raised by holding that the agreements were not for supply of Manpower Services, but retains the tag of Manpower as against job work in respect of the agreement with M/s. Sri Kavery Agency. Undisputedly, the Revenue is not in appeal in respect of the other part of the Order of the First Appellate Authority and therefore, on the very principles of consistency, when there is no change of facts, the impugned order of the First Appellate Authority cannot be sustained since different yardsticks cannot be adopted for identically situated assessees especially when neither Show Cause Notice nor Order-in-Original even whispers about any such dissimilarities. There is also no reasoning to accept the contentions of the Revenue that the agreements/contracts entered with the above three contractors are different because, the Show Cause Notice does not allege any such differences and nor is there any finding to this effect by the Adjudicating Authority in the Order-in-Original. Appeal allowed - decided in favor of appellant. 2019 (9) TMI 221 Manpower Recruitment/Supply Agency Services - period October, 2007 to March, 2012 - invocation of extended period of limitation - HELD THAT:- Admittedly SCN stand issued on 20.04.2013 covering the period from October, 2007 to March, 2012 - The appellant is a proprietory Unit and as soon as they came to know about their tax liability, they got themselves registered with the Department and started paying Service Tax regularly. Further, the appellant was not collected any Service Tax from M/s IFFCO. Further, the scrutiny of the agreement also reveals that there was a clause to the effect that if Service Tax is applicable, that will be payable by M/s IFFCO on production of documentary evidence. This clearly shows that the Service Tax liability shall be borne by M/s IFFCO, in which case there may not be motive on the part of the assessee to avoid payment of service Tax. These facts leads to establish bona-fide on the part of the assessee. Also, Revenue has not referred to any positive evidence on record to establish mala-fide intent on the part of the appellant. Mere non-taking of registration and non-filing of ST-3 Returns under a bona-fide belief of non-taxability of the Services, would not establish suppression, with mala-fide intent on the part of the assessee - the longer period would not be available. Penalty - HELD THAT:- As longer period is not available, penalty also set aside. As a part of the demand falls within the limitation period, the same shall be calculated by the Original Authority to whom the matter is being remanded for the said purpose - Appeal allowed by way of remand. Central Excise 2019 (9) TMI 240 Penalty u/s 11AC of CEA - differential duty payable due to determination of the cost of production, applying CAS-4 method on the data available on monthly basis - suppression of facts or not - HELD THAT:- There is no dispute of the fact that by applying CAS-4 method with appropriate data, the differential duty of ₹ 3,16,512/- became payable by the appellant. The appellant has not disputed the amount on merit and a part of it was paid by them along with interest. During the relevant period, by applying CAS-4 method on monthly basis, they have paid duty on the stock transferred goods to their sister unit where they availed MODVAT credit. The department applying the CAS-4 method correctly redetermined the value and accordingly, differential duty of ₹ 3,16,512/- became payable. There is no suppression of fact or malafide intention on the part of the appellant in discharging lesser duty involving normal period - the imposition of penalty under section 11AC of Central Excise Act, 1944 is not warranted and the same is set aside - appeal allowed in part. 2019 (9) TMI 220 CENVAT Credit - Construction Services - input services - Professional Consultancy Service on Real Estate - Topography Survey Service - Cleaning and Leveling service - Suppression of facts or not - extended period of limitation - HELD THAT:- The impugned services have not been used for the purpose of carrying out construction - Further, the exclusion clause in Rule 2(l) of Input Service is very clear and in the exclusion clause only construction services have been excluded and not the services in preparation of construction of building - Further, the exclusion clause in Rule 2(l)(A) of CENVAT Credit Rules, 2004 excludes those services falling under Section 66E(b) / 66E(h) of the Finance Act, 1994 and the impugned services availed by the appellant do not fall under the exclusion clause. Further, the impugned services fall within the definition of input service because the expression in the manufacture or in relation to manufacture or includes employed in Rule 2(l) of the CENVAT Credit Rules, 2004 connotes very wide scope as held by the Supreme Court in the case of Ramala Sahkari Chini Mills Ltd. vs. CCE [ 2016 (2) TMI 902 - SUPREME COURT ] - the impugned services in the present case fall in the definition of input service and the appellant is eligible to take the CENVAT Credit of the same. Extended period of limitation - HELD THAT:- The appellants have been regularly filing ST-3 returns and has been showing the credit taken by them and the Department has not raised any objection and it is only during the audit that the audit party has raised the said objection and thereafter, show-cause notice was issued by invoking the extended period of limitation, which in the present case is not justified because the department has failed to bring on record any material for suppression of facts with intent to evade payment of duty, therefore, show-cause notice is also wholly barred by limitation. Appeal allowed on merits as well as on limitation. 2019 (9) TMI 219 Repeated proceedings - Clandestine removal - clearance of goods to job-worker - safety razor blades - parts and components for shaving system - value of goods was arrived at on the basis of cost construction that relied upon the balance sheet for the previous year in the absence of actual cost of clearance ascertained for the year of manufacture with the differential duty, if any, being paid on finalization of the balance sheet of the year. HELD THAT:- The show cause notice covers the same period as those issued earlier on finalization of the cost of production, we take note that in re Dee Kay Exports [ 2010 (10) TMI 473 - PUNJAB HARYANA HIGH COURT ] the Hon ble High Court of Punjab Haryana held that once the matter has been finalised on merits, the adjudicating authority had no jurisdiction to initiate proceedings in the same matter without a provision to that effect in the Act. The subjecting of an assessee to repeated proceedings under section 11A is not the intent of law - appeal allowed - decided in favor of appellant. 2019 (9) TMI 218 Clandestine manufacture and removal - Hellogen Bulbs - parallel invoices - the whole case of Revenue against these appellants is linked to the receipt of glass shells of Unit No.I with further allegation of manufacture of Automotive Bulbs and clandestine clearance - HELD THAT:- The very basis of the demand (receipt of bulb shells /capsules), no longer remains in existence. The very basis for alleged manufacture and removal of the goods, no longer exists. In view of the findings of a Coordinate Bench of this Tribunal in the appellant s own case Unit M/S AUTOLITE INDIA LIMITED, MAHIPAL GUPTA, GOPAL MATHUR, R.K. MATHUR VERSUS VS. CCE, ALWAR [ 2018 (3) TMI 766 - CESTAT NEW DELHI ] , where it was held that the charge of clandestine clearance cannot be upheld only on the basis of the seized private record especially in view of the fact that the statements admitting clandestine clearance of such goods stand retracted. Appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (9) TMI 239 Principles of Natural Justice - the complaint of petitioner is that without actually deciding on the request of the petitioner made in Ext.P2, the order in Ext.P3 is issued - Section 25(1) of the Kerala VAT Act, 2003 - HELD THAT:- The petitioner through Ext.P2 requested time. It is in fairness of procedure, even one got reasonable time, ought to have been granted to petitioner for filing reply and producing books of accounts. In the case on hand, the first respondent has not communicated the decision taken on Ext.P2 and the petitioner for all reasons is clueless of the proceedings after submission of Ext.P2. The Ext.P3 order is illegal and violative of principles of natural justice - assessment is completed on or before 15.10.2019. 2019 (9) TMI 238 Continuation of stay granted against Recovery - Revenue had fairly submitted that, the appeals concerned are now posted for final hearing to 3. 9. 2019 - HELD THAT:- The stay granted against recovery can be continued till the disposal of such appeals, provided the review petitioner participates in the hearing and co-operate with disposal of the appeals at the earliest. The Deputy Commissioner (Appeals), Ernakulam is directed to dispose of Exts. P27 to P31 appeals (originally filed as revision petitions) at the earliest possible - petition disposed off. 2019 (9) TMI 237 Purchase of High Speed Diesel Oil - inter-state purchase - concessional rate of tax - rejection on the ground of failure to download C Forms - post GST implementation situation. HELD THAT:- In the case of Ramco Cements, M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE ADDITIONAL COMMISSIONER (CT) [ 2018 (10) TMI 1529 - MADRAS HIGH COURT] this Court allowed the petitions filed by the assessed and directed the Revenue to permit the petitioners assessees to download C Forms. It is not in dispute that though an intra court appeal has been preferred against Ramco Cements matter with a delay of three days, the same remains unnumbered as of today. Thus there is no dispute that the instant petition falls clearly within the four corners of Ramco Cements matter - petition allowed. 2019 (9) TMI 236 Grant of stay against recovery of dues - requirement of pre-deposit - disallowance of tax credit - whether the first appellate authority and the Tribunal were justified in directing the petitioners to make pre-deposit in terms of the orders passed by them? - HELD THAT:- At the time when the assessment orders were made, the petitioners did not have the copies of the assessment orders made in the case of the vendors, the petitioners did not have any opportunity to prove the genuineness of such transactions. Sub-section (7A) of section 11 of the GVAT Act envisages disallowance of tax credit in excess of the amount of tax paid in respect of the same goods. Therefore, to disallow tax credit on any purchase, it has to be established that it is in respect of the very goods purchased by a dealer that the tax has not been paid. Input tax credit cannot be disallowed by working out the percentage of purchases made from a dealer whose registration is cancelled, without first establishing that in respect of the goods purchased by the dealer, the vendor had not paid tax. The court is of the view that the petitioners have made out a strong primafacie case in their favour - Under the circumstances, the Tribunal and the first appellate authority were not justified in directing payment of huge amount of pre-deposit for the purpose of admitting the appeal and staying recovery. The matters are remanded to the first appellate authority to decide the matters afresh in accordance with law and on merits, on the basis of payment already made and treating the aforesaid property of the partner of the petitioners as security towards the pre-deposit for admission of appeals and grant of stay - petition allowed by way of remand. 2019 (9) TMI 235 Demand of penalty - assessment year 2012-13 - Telangana VAT Act, 2005 - HELD THAT:- The petitioner has filed a first appeal as against the penalty and got it dismissed. The petitioner has now gone before the Value Added Tax Appellate Tribunal by way of a second appeal. In this process, the petitioner has already paid 50% of the penalty. What is demanded by the impugned notice is the balance 50%. Since the petitioner is already on second appeal and also since he has already paid 50% of the penalty, we are of the considered view that the petitioner deserves stay pending disposal of the appeal - petition is disposed of granting stay of collection of balance of penalty relating to the assessment year 2012-13 till the disposal of the appeal by the Value Added Tax Appellate Tribunal. 2019 (9) TMI 217 Maintainability of appeal - appeal dismissed on the ground that statutory deposit of 12.5% of the disputed amount of tax was not paid within time - delay on the part of the petitioner-company to make such deposit - HELD THAT:- It was not proper on the part of the Appellate Deputy Commissioner (CT), Punjagutta Division, Hyderabad, to reject the appeals filed by the petitioner-company on the ground of delayed deposit of 12.5% of the disputed amount of tax - The appellate orders dated 17.02.2017 and 30.03.2017 passed by the Appellate Deputy Commissioner (CT), Punjagutta Division, rejecting the petitioner-company s appeals on this ground are accordingly set aside and the said appeals are restored to the file of the said appellate authority. Appeal disposed off. 2019 (9) TMI 216 Recovery of tax dues - Deletion/withdrawal of charge and attachment on property - right of the purchaser of the property - it was alleged that seller has sold the property during the pendency of assessment proceedings to defraud the revenue - section 47 and section 48 of the VAT Act - HELD THAT:- Any transfer attempted or made to defeat/defraud Revenue s interest is deemed void in the Statute. Section 47 of the Act is concerned with a dealer who creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer, after any tax becomes due from him, and when he so does in favour of any other person with the intention of defrauding the government revenue, this provision states that such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer - Section 48 of the Act creates first charge on the property of the dealer or any other person from whom tax is due. It is required to be noted at this juncture that section 47 of the GVAT Act is similarly worded to section 281 of the Income Tax Act, 1961. It is true that there is no explicit provision made under the GVAT Act as is provided under the Second Schedule of the Income Tax Act, however, it is a well settled law that in the event of any dispute in relation to the title of any property, it is the Civil Court which shall have a jurisdiction. This has also been emphatically held and observed by the Apex Court in TAX RECOVERY OFFICER VERSUS GANGADHAR VISWANATH RANADE (DECD.) [ 1998 (9) TMI 1 - SUPREME COURT] and followed by this Court in the case of KARSANBHAI GANDABHAI PATEL SHOP NO. 7 3 VERSUS TAX RECOVERY OFFICER [ 2014 (4) TMI 411 - GUJARAT HIGH COURT] and therefore, there is no reason why the same would have no applicability in the instant case. This Court in the case of Karsanbhai Gandabhai Patel had an occasion to deal with section 281 of the Income Tax Act and relying on the judgement of the Apex Court in the case of Gangadhar Viswanath Ranade, struck down the order of attachment. Thus, it can be seen that even if the transactions creating a charge or parting of possession has been entered into by the assessee during the pendency of any proceedings under the Act or after completion thereof, the eventuality of such charge or transfer being declared void can be avoided provided one of the two conditions contained in the proviso is satisfied. Under such circumstances, the transferee can demonstrate that the transaction had taken place with the previous permission of the Assessing Officer or that the same was entered into for adequate consideration and without notice of pendency of such proceedings or without notice of such tax or other sum payable by the assessee - This element of the transaction being with adequate consideration and without notice would equally apply to the assessee as well as the transferee. In a given case, it may even be open for the assessee to establish that the transaction was for adequate consideration without notice. In a given case, even if the assessee had notice of the pendency or the outstanding tax or sum payable, the transferee can still take shelter of the transactions having been entered into by him for adequate consideration and without notice. The impugned order creating charge over the property of the petitioner does not warrant any interference and the petition is required to be dismissed - Petition dismissed. 2019 (9) TMI 215 Levy of Entry Tax - import / sale of Excavators within the State of Gujarat - Treating the Excavators as motor vehicles - taxable at the rate of 12.5% - year 2006-07- works contractor engaged in construction of road Gujarat VAT Act - HELD THAT:- The statement and objects of the Entry Tax Act make it clear that due to the difference in the rate of Sales Tax applicable to the State of Gujarat and that to neighbouring States, diversion of trade has taken place and cases sales tax payments are avoided or evaded by various methods, in some cases resulting in the loss of sales tax revenue legitimately due to the State of Gujarat and with a view to compensating such loss of sales tax revenue, it was considered necessary to levy a tax on entry of certain specified goods purchased / manufactured outside the State and brought into the local areas of the State of Gujarat. Before this High Court in the case of Eagle Corporation Pvt. Ltd (supra) constitutional validity of the Entry Tax Act was challenged and after considering the Statement and Objects of the Entry Tax, Preamble and the relevant provisions of the Act, while upholding the constitutional validity of the Entry Tax Act, the Division Bench of this Court in the case of EAGLE CORPORATION PVT. LTD. VERSUS STATE OF GUJARAT AND OTHERS [ 2006 (10) TMI 395 - GUJARAT HIGH COURT] , upheld the vires of Entry Tax Act by observing that if the rate of sales tax on specified goods in the State of Gujarat is 12% and rate of sales tax payable by the importer in a particular state is 4% and if the importer in fact pays sales-tax and/or central sales-tax at the rate of 4%, then, in that case, while importing the specified goods into the State of Gujarat/local area, such an importer is required to pay the entry tax at the rate of 8%. The Division Bench has also further observed that, thus, an importer who has paid 4% of sales-tax in a particular State while importing the goods in the State of Gujarat is required to pay Entry Tax at 8% which puts such importer at par with the local persons and thus when there is no discrimination at all in view of juxtapose effect of the two Acts, levy of entry-tax would be non-discriminatory - While holding that the levy of Entry Tax Act is not in violation of Article 304(a) of the Constitution of India, it is observed by the Division Bench of this Court that as per Article 304(a) of the Constitution of India, discrimination is required to be considered between the goods so imported and the goods so manufactured or produced. It has been further observed that on payment of Entry Tax as a reduced liability does not put the importer at a position worse in comparison to local producer, dealer or manufacturer. It has been further observed that if no Entry Tax is levied then the importer would still a march over the local person and he would be in a dominating position to the extent of the Tax difference. Considering various decisions and the Statement and Objects of enactment and/or levy of Entry Tax under the Entry Tax Act, controversy in the present case i.e. levy of Entry Tax on Excavators at the rate of 12.5% is required to be considered. The entire legislative history of the Entry Tax Act as well as object and reasons behind the introduction as well as amendments of the Entry Tax Act establish that Entry Tax was always sought to be levied at the rates prescribed for such goods under the Sales Tax Act / VAT Act - In other words, there is a nexus between the Entry Tax rates and local Sales Tax / VAT rates on similar goods. Thus, only those motor vehicles which were covered under Entry 128 of Schedule-IIA to the Sales Tax Act and which are now covered under residuary Entry 87 of Schedule-II to the VAT Act which attract 15% tax under the VAT Act would be covered under the entry of motor vehicles under the Entry Tax Act. Levy of entry tax at the rate of 12.5% on Excavators by treating them as falling under Entry for motor vehicles even though Excavators have always been covered by separate entry under the Sales Tax Act and the VAT Act during the relevant period and for which rate of tax under the VAT Act is 4%, therefore is dehors the scheme of the Entry Tax Act as countenanced by the legislative history as well as objects of the Entry Tax Act. Levy of Entry Tax at the rate of 12.5% treating Excavators as motor vehicles and/or at par with the motor vehicles is hereby held to be illegal, discriminatory, violative of Article 304(a) of the Constitution of India and against the object and purpose of the levy of Entry Tax under the Entry Tax Act - the respondents State cannot levy / charge Entry Tax on Excavators beyond Value Added Tax under the VAT Act i.e. beyond 4%. Petition allowed. 2019 (9) TMI 214 PIL - taking away the earlier vested powers to make best judgment assessment - Deletion of the provisions of Section 29(5) from the Goa Value Added Tax Act, 2005 - validity of first appellate forum of assistant commissioner or deputy commissioner - public interest litigation or not - HELD THAT:- The petitioner is a practicing Chartered Accountant who represents the cause of the dealers and other assessees under the said Act. According to us, such dealers and assessees under the said Act are not poor or ignorant persons who are unable to espouse their own cause. In this case, the petitioner has given certain instances relating to his own clients. We are not prepared to accept that such clients, if aggrieved by any orders made by the Appellate Authorities or the Tribunals are not in a position to seek redressal for themselves. Accordingly, there is no case made out to relax the rule of locus standi and entertain this petition as a public interest litigation. The deletion of Section 29(5), cannot be challenged simply on the ground that the provisions prior to deletion were better. However, we do not wish to delve any further on this issue lest, we might be preempting challenges from a proper relator. This petition cannot be entertained as public interest litigation - petition dismissed. Indian Laws 2019 (9) TMI 234 Retirement from service with immediate effect - petitioner being an IRS Officer - claim of damages made by the petitioner - powers conferred by clause (j) of Rule 56 of the Fundamental Rules - HELD THAT:- When alternative remedies under law are available to the petitioner for both the reliefs, what is so extraordinary in the claim for damages to maintain the instant petition and thereby, attract challenge to the orders passed under Rule 56(j) of Fundamental Rules, cannot be understood. More so, when, nothing has come to be pointed out that the order passed under Rule 56(j) was so patently erroneous or perverse, which invites interference by this court - Needless to say, the order passed under Rule 56(j) of Fundamental Rules cannot be adjudicated on the premise of inferences. In view of the foregoing, because the writ jurisdiction is unfettered, it does not invest a legal right in anyone to maintain it for all purposes. None of the judgments relied upon by the ld. Senior Counsel for the petitioner are of any avail to the petitioner. Petition dismissed as not maintainable.
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