TMI Tax Updates - e-Newsletter
September 9, 2019

Case Laws in this Newsletter:

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

TMI SMS

• Denial of transitional credit for delay in Filing of GST Tran-1, Tran-2 is arbitrary, irrational, unconstitutional to Article 19(1)(g) - HC

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• An order u/s 201, treating the assessee as in default for failure to deduct TDS can be passed within 7 years from the end of relevant FY

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• Wrong classification - Customs & Excise Authority are totally independent authority, mistake by one need not be followed by another - Tri

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Articles

1. Some important points regarding Sabka Vishwas (Legacy Dispute Resolution)

   By: Ganeshan Kalyani

2. PROFITEERING ON SUPPLY OF FOOD ITEMS (PIZZA) UPHELD

   By: Dr. Sanjiv Agarwal

News

1. Fin Min sets up task force to identify infra projects for ₹ 100 lakh cr investment

2. Constitution of task force for drawing up National Infrastructure Pipeline of ₹ 100 Lakh Crore from FY 2019-20 to FY 2024-25

Notifications

Companies Law

1. F. No. 1/4/2016 CL-I - dated 5-9-2019 - Co. Law

National Financial Reporting Authority (Amendment) Rules, 2019

Customs

2. F.No.354/110/2019 –TRU - G.S.R. 639 (E) - dated 6-9-2019 - ADD

Corrigendum – Notification No. 33/2019-Customs (ADD), dated the 26th August, 2019

3. 35/2019 - dated 6-9-2019 - ADD

Seeks to rescind notification No. 11/2018-Customs (ADD), dated 20.3.2018, in pursuance of New Shipper Review final findings issued by DGTR

4. 34/2019 - dated 6-9-2019 - ADD

Seeks to amend notification No. 2/2016-Customs (ADD), dated 28.1.2016, in pursuance of New Shipper Review final findings issued by DGTR

GST - States

5. CCW/74/GST/2015 - dated 5-9-2019 - Andhra Pradesh SGST

Amendments to the notification issued in the Proceedings No. CCSTs ref. No. CCW/ 74/ GST/ 2015, dated the 5th July, 2019.

6. 23/2019-(State Tax) - dated 31-7-2019 - Arunachal Pradesh SGST

Amendments in the Notification of the Government of Arunachal Pradesh, Department of Tax, Excise & Narcotics No.13/2019- State Tax, dated the 23rd April, 2019.

7. 13/2019-State Tax (Rate) - dated 31-7-2019 - Arunachal Pradesh SGST

Amendments in the Notification of the Government of Arunachal Pradesh, Department of Tax, Excise & Narcotics, No.12/2017- State Tax (Rate), dated the 28th June, 2017.

8. 12/2019-State Tax (Rate) - dated 31-7-2019 - Arunachal Pradesh SGST

Amendments in the Notification of the Government of Arunachal Pradesh, Department of Tax, Excise & Narcotics, No.1/2017-State Tax (Rate), dated the 28th June, 2017.

9. 22/2019-(State Tax) - dated 18-7-2019 - Arunachal Pradesh SGST

Amendments in the notification of the Government of Arunachal Pradesh, Department of Tax, Excise & Narcotics No.13/2019- State Tax, dated the 23rd April, 2019.

10. 21/2019-(State Tax) - dated 18-7-2019 - Arunachal Pradesh SGST

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

11. FTX.56/2017/Pt-I/226 - dated 5-8-2019 - Assam SGST

Amendments in the Notification No.FTX.56/2017/412 dated the 13th June, 2019.

12. F-10-34/2019/CT/V(78) - dated 30-8-2019 - Chhattisgarh SGST

Corrigendum in Notification No. 3/2019-State Tax (Rate), No. F-10-17/2019/CT/V(36) dated the 29.03.2019

13. F-10-30/2019/CT/V(72) - 13/2019-State Tax (Rate) - dated 31-7-2019 - Chhattisgarh SGST

Which seeks to exempt the hiring of Electric buses by local authorities from GST.

14. 50/2018–State Tax - dated 5-9-2019 - Delhi SGST

Seeks to Notification No. 33/2017-State Tax, dated the 08th November, 2017

15. 27/2018–State Tax - dated 5-9-2019 - Delhi SGST

Notified to specify goods which may be disposed off by the proper officer after its seizure under section 67(8) of DGST Act,2017

16. 67/2018–State Tax - dated 3-9-2019 - Delhi SGST

Seeks to amend Notification No. 31/2018-State Tax, dated the 2nd September, 2019

17. 11/2019–State Tax - dated 3-9-2019 - Delhi SGST

Prescribe the due dates for furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover upto ₹ 1.5 crores for the months of April, May and June, 2019 under the DGST Act, 2017

18. 05/2019-State Tax - dated 3-9-2019 - Delhi SGST

Seeks to amend Notification No. 8/2017-State Tax, dated the 30th June, 2017

19. 01/2019-State Tax (Rate) - dated 3-9-2019 - Delhi SGST

Seeks to rescinds the Notification No. 8/2017-State Tax (Rate), dated the 30th June, 2017

20. 01/2019-State Tax - dated 3-9-2019 - Delhi SGST

Amendment in Notification No. 48/2017-State Tax dated the 23rd November, 2017

21. 79/GST-2 - dated 6-9-2019 - Haryana SGST

Seeking to waive filing of FORM ITC-04 for F.Y. 2017-18 & 2018-19 under the HGST Act, 2017

Income Tax

22. 60/2019 - dated 5-9-2019 - IT

Income-tax (6th Amendment) Rules, 2019.

SEBI

23. SEBI/LAD-NRO/GN/2019/30 - dated 5-9-2019 - SEBI

Renewal of recognition “National Commodity Clearing Limited, Ackruti Corporate Park, 1st Floor, L.B.S. Road, Kanjur Marg(W), Mumbai–400 078” for three years

SEZ

24. S.O. 3219(E) - dated 3-9-2019 - SEZ

Seeks to amend Notification No. 1026(E) dated 11th May, 2011

Circulars / Instructions / Orders

Income Tax

1. 23/2019 - dated 6-9-2019

Exception to monetary limits for filing appeals specified in any Circular issued under Section 268A of the Income-tax Act, 1961

GST - States

2. Circular No. 31/2019 - dated 5-9-2019

Refund of taxes paid on inward supply of indigenous goods by retail outlets established at departure area of the international airport beyond immigration counters when supplied to outgoing international tourist against foreign exchange.

GST

3. Trade Notice No. 05/2019-GST - dated 16-8-2019

Annual return filing compliance under GST

DGFT

4. 31/2015-2020 - dated 6-9-2019

Amendment/ Correction in the Appendix 3B, Table 2 of the Merchandise Exports from India Scheme (MEIS)

Central Excise

5. Trade Notice NO. 02/2019 - dated 30-8-2019

Procedure for get Declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Highlights / Catch Notes

GST

• Delayed GST Tran-1 & Tran-2 Filing Causes Double Taxation, Violates Article 19(1)(g) Right to Business Practice.

  Case-Laws - HC : Delay in Filing of Form GST Tran-1 and GST Tran-2 - transitional credit - The liability to pay GST on sale of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter and, therefore, it is arbitrary and irrational. - Such action violates the mandate of Article 19(1)(g) of the Constitution of India - HC
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• Rule 117 CGST: Filing Deadlines for GST Tran-1 and Tran-2 are Procedural, Not Mandatory for Transitional Credit.

  Case-Laws - HC : Filing of Form GST Tran-1 and GST Tran-2 - transitional credit - the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision - HC
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Income Tax

• Income-tax (6th Amendment) Rules, 2019: Streamlined Exemption Applications & Approval Criteria u/ss 10(23C) and 80G.

  Notifications : Income-tax (6th Amendment) Rules, 2019 - rules amended for filing of application for exemption u/s 10(23C)(iv),(v),(vi) and (via) and requirements for approval of an institution or fund u/s 80G
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• Appeals Allowed Beyond Monetary Limits for Organized Tax Evasion with Board's Special Order.

  Circulars : Exception to monetary limits - appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity.
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• Tax Case Examines Allowability of Reimbursement Expenses for Past Service Charges and Payments to Related Parties; Burden on Assessee.

  Case-Laws - AT : Allowability of expenses on account of reimbursement of service charges - expenses related to earlier years - payment to related parties / concerns - the onus was upon the assessee to justify expenditure, but same has not been fully discharged by assessee. - AT
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• Minimum Alternate Tax Applies to SEZ Units from Assessment Year 2012-13 Despite Section 10AA Exemption Eligibility.

  Case-Laws - AT : Applicability of MAT to the SEZ unit u/s 115JB - eligibility for exemption u/s 10AA - sub-section (6) specifically provides that MAT provisions continue to apply to the assessee company beginning assessment year 2012-13 onwards - AT
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• Tribunal advised to cite contrary decisions for clarity and efficiency in orders, reducing unnecessary effort and time.

  Case-Laws - HC : Message for the tribunal - All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. Therefore, we would request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations as in this case. - HC
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• Painting Sale Gains Not Taxable in 2007-08; Taxed as Long-Term Capital Gains in 2008-09 Under IT Act Sec 2(14.

  Case-Laws - AT : The gain derived from sale of painting in the assessment year 2007–08 is not taxable as it is personal effect as defined u/s 2(14) - However, insofar as assessment year 2008–09 is concerned, paintings have been specifically excluded from being treated as personal effect, therefore, the gain derived from sale of painting has to be assessed as long term capital gain. - AT
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• Revenue's Single Appeal Invalid: Separate Appeals Required for Different Proceedings per Legal Standards.

  Case-Laws - AT : If the Revenue was aggrieved with the decision of learned Commissioner (Appeals) in respect of both the appeals filed by the assessee, it should have filed two separate appeals, as the issue arising out of two separate proceedings cannot be clubbed in a single appeal. - AT
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• Court Rules Future Building Expenses Deductible: Accrued Liabilities Not Contingent for Tax Purposes.

  Case-Laws - HC : Deduction of future expenses - accrued liability towards construction of building which was sold as incomplete during construction - it is not a contingent liability- the expenditure incurred by the assessee company during the financial years subsequent to the sale of the building, is eligible for deduction in computation of taxable income - HC
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• Depreciation on Leased Assets Must Be Allowed in Subsequent Years if Initial Claim is Undisputed: Consistency Principle.

  Case-Laws - AT : Depreciation on assets taken on lease - once any asset enters into block asset and claim of depreciation in very first year is allowed, in subsequent year the deprecation cannot be disallowed in case the first year is not disturbed - claim of depreciation allowed on the issue of consistency - AT
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• Income Tax Penalty u/s 271(1)(c) Set Aside Due to Missed Deadline Per Section 275(1)(a) Proviso.

  Case-Laws - AT : Penalty under u/s 271(1)(c) - period of limitation - as per the proviso to section 275(1)(a) of the Act, the penalty order ought to have been passed on or before 31.3.2005. i.e. within one year from the end of the financial year in which the Id. CIT(A)'s order was received back by the Department - penalty set aside - AT
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• Income from CCDs Not a Back-to-Back Transaction; Assessing Officer to Accept Filed Income Return.

  Case-Laws - AT : Income on compulsorily convertible debentures (“CCD”) - Mere fact that the CCDs were funded using monies received by the appellant from its immediate shareholder does not make the arrangement a back-to-back transaction. - AO directed to accept the return of income filed by the assessee - AT
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• Assessee's Bad Debt Write-Off Denied for Lack of Recovery Efforts; Alternative Claim u/s 37 Also Rejected.

  Case-Laws - AT : Disallowance of assessee’s claim of bad debt written off u/s 36(2)(i) - alternative claim u/s 37 - nothing on record to show that any legal remedies were attempted by the assessee for recovery of the aforesaid amount - claim not allowed - AT
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• Income Sent from USA to India for Family Maintenance by Non-Resident Not Taxable Again in India.

  Case-Laws - AT : Income accrued in India - sending amount from USA to India for maintenance of family members - non-resident - salary payment from foreign employer, which was already taxed in USA - cannot be brought to tax in India - appeal of the revenue dismissed - AT
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• Consolidated Notices Invalid: Separate Notices Required for Each Assessment Year u/ss 153A, 153C, 143(2) of IT Act.

  Case-Laws - AT : Validity of consolidated Notice issued u/s 153A r.w.s. 153C/143(2) - Under these sections, the Assessing Officer cannot issue consolidated notices for different Assessment Years. - It is statutory requirement for each assessment year to issue statutory notice separately - notice itself is bad in law and void ab-initio. - AT
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• Court Dismisses Appeal for Condonation of 288-Day Delay in Filing Against Revision Order u/s 263.

  Case-Laws - AT : Condonation of delay for filling appeal against the order of Revision u/s 263 - delay of 288 - the assessee being a private limited company, which was assisted by group of Advocates and Chartered Accountants and in such circumstances it cannot be said that the assessee is not aware of the necessity of filing the appeal against the order passed by the CIT u/s 263 of the Act, and it cannot be said that the case of this appeal alone was slipped away from the assessee’s mind - Appeal dismissed - AT
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• Section 201(1) Clarification: Assessee Cannot Claim Immunity from TDS Default if Order Issued Within 7 Years.

  Case-Laws - AT : Period of limitations for passing an order u/s 201(1) / 201 (1A) - Treating the assessee as “assessee in default” - failure to deduct TDS - assessee cannot seek immunity from the applicability of sec. 201(1) for alleged default where the order has been passed within seven years - AT
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• Court Approves Delayed TDS Refund with Interest for Person with Disability; Delay Condoned.

  Case-Laws - HC : Condonation application for claim of refund / loss - Claim for refund of TDS - person with disability - the delay can be condoned by this Court also, and therefore, the delay in filing the application for refund of tax is hereby condoned - refund to be allowed with interest - HC
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Customs

• Court Upholds Reclassification of Imported Windows XPE Stickers and Licenses; Shipping Declaration Considered Accurate Without Contradictory Evidence.

  Case-Laws - AT : Re-classification of imported goods - Import of ‘stickers’ and ‘license’ for Windows XPE Embedded software - The declaration in the shipping bill, according to us, in the absence of any other evidence must be accepted as truthful assertion of the contents therein - AT
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• Catalyst "Petromax-MD" Import Denied Exemption as It's Used in Production, Not Plant Maintenance.

  Case-Laws - AT : Import of catalyst called “Petromax-MD” - the product in question, i.e. “Petromax-MD” is not used for running, repair and maintenance of the plant. But it is used as input consumable in the production of final product - benefit of exemption not available to the importer - AT
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Corporate Law

• National Financial Reporting Authority Rules Amended: Changes to Rules 2, 3, 5, and 11 under Companies Law.

  Notifications : National Financial Reporting Authority (Amendment) Rules, 2019 - Rule 2, Rule 3, Rule 5 and Rule 11 amended.
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PMLA

• Supreme Court denies anticipatory bail in INX Media case over foreign investment irregularities under PMLA, citing investigation concerns.

  Case-Laws - SC : Offence under PMLA - Irregularities in Foreign Investment Promotion Board (FIPB) clearance given to the INX Media for receiving foreign investment above against approved inflow - grant of anticipatory bail to the appellant will hamper the investigation and this is not a fit case for exercise of discretion to grant anticipatory bail to the appellant. - SC
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Service Tax

• Service Tax Recovery Valid as Land Revenue: Certificate's Validity Upheld Despite Missing Specific Statute Reference u/s 87(D).

  Case-Laws - HC : Recovery of service tax with interest and penalty as land revenue - mere reference to Section 11 (without even reference to the statute) would not vitiate the Certificate itself. Clearly, the provisions of Section 87 (D) provide for the drawing-up of a certificate for tax arrears and that is what has been done in the present case - HC
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Central Excise

• New Scheme Offers Taxpayers Partial Waivers to Settle Central Excise and Service Tax Disputes Under Sabka Vishwas 2019.

  Circulars : Procedure for get Declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019
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• Central Excise Authority Can Reclassify Goods Independently of Customs Authority Decisions; Errors Aren't Binding.

  Case-Laws - AT : Whether it is open to Central Excise Authority to change the classification made by the Customs Authority? - It is apparent that two authorities i.e. Customs and Excise Authority are totally independent authority and mistake by one need not be carried out or followed by another. - AT
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• Appellant Must Prove No Unjust Enrichment for Duty Refund Claim u/s 11B(1) Due to Erroneous Payment.

  Case-Laws - AT : Refund of duty paid under mistake - The refund has been claimed on the ground of erroneous payment of duty. In view of the clear provision of section 11B(1), the onus of establishing the lack of unjust enrichment in this case is on the appellant. - AT
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• Melting and repacking raw beeswax not considered manufacturing, impacting Central Excise tax classification and implications.

  Case-Laws - AT : Process amounting to manufacture or not - Bees Wax cleared by the Appellant cannot be said to be manufactured by subjecting the raw Bees waxinto the processes of melting, purifying, re-packing into bags of 25/50kgs. - AT
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Case Laws:

• GST

• 2019 (9) TMI 319
  Filing of Form GST Tran-1 and GST Tran-2 - transitional credit - credit in respect of inputs held in stock on the appointed day in terms of Section 140(3) of the Central Goods and Services Tax Act, 2017- It is the case of the writ-applicants that the declaration in the form GST TRAN-1 could not be filed on account of the technical glitches in terms of poor net connectivity and other technical difficulties on the common portal - HELD THAT:- The right to carry forward credit is a right or privilege, acquired and accrued under the repealed Central Excise Act, 1944 (1 of 1944) and it has been saved under Section 174(2)(c) of the CGST Act, 2017 and, therefore, it cannot be allowed to lapse under Rule 117 of the CGST, 2017, for failure to file declaration form GST Tran-1 within the due date, i. e. 27. 12. 2017 - The right to carry forward CENVAT credit for not being able to file the form GST Tran-1 within the due date offends the policy of the Government to remove the cascading effect of tax by allowing the input tax credit as mentioned in the Objects and Reasons of the Constitution 122nd Amendment Bill, 2014. The Objects and Reasons of the Constitution 122nd Amendment Bill, 2014 clearly set out that it is intended to remove the cascading effect of taxes and to bring out a nationwide taxation system. The cascading of taxes, in simple language, is tax on tax . The denial of carry forward of tax paid on stock on the appointed day may lead to cascading effect of tax because the GST will again have to be paid on the Central Excise duty already suffered on the stock. It is an established principle of law that it is necessary to look into the mischief against which the statute is directed, other statutes in pari materia and the state of the law at the time. It was held by the Supreme Court in the case of District Mining Officer and Ors. v. Tata Iron and Steel Co. and Ors. , [ 2001 (7) TMI 1277 - SUPREME COURT ] that, the process of construction combines both literal and purposive approaches. In other words, the legislative intention, i. e. the true or legal meaning of an enactment, is derived by considering the meaning of the words used in the enactment in light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. It was held by the Supreme Court, in the case of U. P. Bhoodan Yagna Samiti, U. P. v. Braj Kishore and Ors. , [ 1988 (9) TMI 343 - SUPREME COURT ], that it is clear that when one has to look to the intention of the Legislature, one has to look to the circumstances under which the law was enacted, the Preamble of the law, the mischief which was intended to be remedied by the enactment of the statute. Thus, it is arbitrary, irrational and unreasonable to discriminate in terms of the time-limit to allow the availment of the input tax credit with respect to the purchase of goods and services made in the pre-GST regime and post-GST regime and, therefore, it is violative of Article 14 of the Constitution. - It is legitimate for a going concern to expect that it will be allowed to carry forward and utilise the CENVAT credit after satisfying all the conditions as mentioned in the Central Excise Law and, therefore, disallowing such vested right is offensive against Article 14 of the Constitution as it goes against the essence of doctrine of legitimate expectation. By not allowing the right to carry forward the CENVAT credit for not being able to file the form GST Tran-1 within the due date may severely dent the writ-applicants working capital and may diminish their ability to continue with the business. Such action violates the mandate of Article 19(1)(g) of the Constitution of India - The liability to pay GST on sale of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter and, therefore, it is arbitrary and irrational. The respondents are directed to permit the writapplicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act - It is further declared that the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision - Application allowed.

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• Income Tax

• 2019 (9) TMI 318
  Assessment of dividend income - Proviso to Section 10(34) read and along-with with the provisions of Section 115BBDA - hostile discrimination between a resident assessee and a non-resident assessee - HELD THAT:- As petitioner invited our attention to the judgment titled as Rajan Bhatia v. Central Board of Direct Taxes Another [ 2019 (1) TMI 1144 - DELHI HIGH COURT] which had rejected the challenge to Section 115BBDA of the Income Tax Act, 1961. Learned counsel prays for and is granted liberty to withdraw this writ petition, to enable him to challenge said judgment of the High Court. Liberty granted without expressing any opinion on the merits of the challenge.

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• 2019 (9) TMI 317
  Deduction of future expenses - accrued liability towards construction of building which was sold as incomplete during construction - distinction between amount spent to pay off an actual liability and a liability that would be incurred in future which is only contingent - HELD THAT:- Expenditure is not necessarily confined to the money which has been actually paid out. It covers a liability which has accrued or which has been incurred although it may have to be discharged at a future date. However, a contingent liability which may have to be discharged in future cannot be considered as expenditure. It also covers a liability which the assessee has incurred in praesenti although it is payable in futuro (See Madras Industrial Investment Corporation Limited v. Commissioner of Income Tax [1997 (4) TMI 5 - SUPREME COURT] In order to claim deduction of business expenditure, it is not necessary that the amount has been actually paid or expended during the relevant accounting year itself. It is sufficient that the liability for payment had incurred or accrued during the relevant accounting year. The actual payment of amount or discharge of liability may occur in future. What is crucial is the accrual of liability for payment or expenditure during the relevant accounting year. But, a contingent liability that may arise in future, cannot be treated as expenditure. Thus, the substantial question of law is answered in favour of the assessee and against the revenue. In the instant case, the revenue has no case that the sale deed executed in respect of the building did not provide that the assessee was liable to complete the construction of the building. The Tribunal was right in confirming the finding of the appellate authority that, the expenditure incurred by the assessee company during the financial years subsequent to the sale of the building, is eligible for deduction in computation of taxable income.

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• 2019 (9) TMI 316
  Condonation application for claim of refund / loss - Claim for refund of TDS on exempted disability pension along with interest - petitioner s contention is that he suffered a war disability, and finally, an order was passed by the Armed Forces Tribunal, Principal Bench, New Delh holding that the petitioner is entitled for disability pension - HELD THAT:- There is a power with the Central Board of Direct Taxes to condone the delay. There appears to be no justification in forcing the petitioner to file an application before Central Board of Direct Taxes. Once the power is there and it was not the petitioner, who was at fault in the matter, this Court, in the peculiar facts and circumstances of the case, is of the considered opinion that the delay can be condoned by this Court also, and therefore, the delay in filing the application for refund of tax is hereby condoned. It is not a case where the assessee was sleeping over his right, it is a case where the assessee was fighting with the department for his legitimate right of grant of disability pension, as he was disabled officer and his original application was allowed only on 03.08.2017 and the order was passed by the Ministry of Defence on 17.11.2017 granting him disability pension w.e.f. 01.01.2006 and with quite promptitude he has submitted an application for refund of tax. As this Court has already condoned the delay, the respondent is directed to process the claim of the petitioner and to grant a refund for which he is lawfully entitled within a period of sixty days from the date of receipt of certified copy of this order. In the matter of grant of interest, the CBDT circular will not come in way of the petitioner, as the petitioner is not at fault in the matter. The respondent shall also pay the interest in respect of the entire amount right from 2007 08 to 2015 16, as the statute i.e. Income Tax Act, 1961 does not debar an assessee, keeping in view the peculiar facts and circumstances of the case, for grant of interest.

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• 2019 (9) TMI 315
  Payment of interest on delayed payment of Custom Duty and Penalty - whether such interest was penal in nature and hence not allowable u/s. 37 - Tribunal allowed claim of assessee - HELD THAT:- no substantial question of law. Message for the tribunal - Tribunal after recording that the issue stands covered by various decisions of the Supreme Court and the various High Courts cases observes admittedly, there are contrary decisions where it is held that interest paid on delayed payments cannot be allowed as deduction in the assessment proceedings. The above statement in the impugned order led us to direct the counsel appearing for the parties to examine the law on this issue and to bring to our attention any decision contrary to the view taken by the Supreme Court in Mahalaxmi Sugar Mills [ 1980 (4) TMI 1 - SUPREME COURT] and other High Courts decisions. We are now informed by Counsel for both sides that there are no decisions contrary to the view taken by the Hon ble Supreme Court in Mahalaxmi Sugar Mills (supra) and the various High Court decisions referred to in the impugned order of the Tribunal. All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. Therefore, we would request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations as in this case.

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• 2019 (9) TMI 314
  Reopening of assessment u/s 147/148 - notice beyond a period of four years from the end of the relevant Assessment Year - ITAT quashing reassessment proceedings - HELD THAT:- It is an undisputed position that for the Assessment Year 2005-06, assessment was completed under Section 143(3) of the Act on 29th December, 2008. Thereafter, on 27th March, 2012, a notice under Section 148 of the Act was issued to the Respondent, seeking to reopen the assessment for the Assessment Year 2005-06. Thus, the re-opening notice was admittedly beyond a period of four years. It is also an undisputed position that reasons recorded for reopening of an assessment does not mention any failure on the part of the Respondent to disclose fully and truly all material facts necessary for the assessment. As decided in TITANOR COMPONENTS LTD. VERSUS ACIT, CIT AND UOI [ 2011 (6) TMI 138 - BOMBAY HIGH COURT] it is necessary for the AO to first observe that there is a failure to discloser fully and truly all material facts necessary for assessment and having observed that there is such failure to proceed under Section 147 - no substantial question of law - decided against revenue

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• 2019 (9) TMI 313
  Reopening of assessment u/s 147 - change of opinion - reason to believe - non adherence to mandation of providing assessee an opportunity to put forth his submission - denial of natural justice - HELD THAT:- Filing of objections to the reasons for reopening is not an empty formality. If this is so, passing a speaking order on the objections cannot be treated as an empty formality and to be brushed aside as a procedural error. The purpose for passing a speaking order on the objections is to afford an opportunity to the assessee to question the same, in the event the assessee is aggrieved by such an order. Therefore, to state that it would be sufficient for the Assessing Officer to deal with the objections in the assessment order and thereafter, if the assessee is aggrieved, he can file a statutory appeal, is a proposition which would be against the principles of natural justice We are to bear in mind that the procedure carved out in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] is with a view to provide the assessee an opportunity to put forth his submission. This is in the light of the fact that reopening of a concluded assessment after a period of assessment is a very serious matter. This would be evident from the observations of the Hon ble Apex Court in Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein, it was held that post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, Section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. As pointed out that the conceptual difference between the power to review and power to reopen is to be kept in mind; the Assessing Officer has no power to review; he has the power to re-assess, but the re-assessment has to be based on fulfilment of certain pre-condition and if the concept of change of opinion is removed in the garb of reopening the assessment, review would take place. The Hon ble Supreme Court in GKN Driveshafts (India) Ltd. (supra) had clarified that when a notice under Section 148 of the Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek for reasons for issuing such notice. Further, it was held that the Assessing Officer is bound to furnish reasons within a reasonable time, on receipt of the reasons, the noticee is entitled to file objections and the Assessing Officer is bound to dispose of the same by passing a speaking order. We do not agree with the interpretation canvassed before us that assuming objections were not disposed of by a speaking order, it would be only a procedural error. Factual position in the assessee s case as well as the reasons for reopening mentioned in the notice dated 29.03.2005 and we find that there is absolutely no other material available with the assessee except the records which formed part of the assessment file. Therefore, the reopening was a clear case of change of opinion. - Decided in favour of the assessee.

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• 2019 (9) TMI 312
  Condonation of delay for filling appeal against the order of Revision u/s 263 - delay of 288 days - HELD THAT:- As originally the assessee had no intention to file an appeal against the order passed by the CIT u/s 263 of the Act. We find that giving effect order passed by the AO on 31.03.2017 alone is the provocation of filing the appeal before this Tribunal with the delay of 288 days against the order passed by the CIT u/s 263 of the Act. We find that this does not constitute sufficient cause for the delay caused in filing the appeal before us. In our opinion, the assessee cannot indefinitely wait for the fate of the consequential order to be passed by the A.O. against the order passed by the CIT u/s 263 of the Act. The assessee herein wants to take the benefit of its wrong doing which is evident from the above narrated facts in detail. The assessee has not explained proper reason for such a delay of 288 days in filing the appeal before the Tribunal and it cannot be said that the assessee was diligent in filing appeal before the Tribunal. It is the primary duty of the assessee to establish sufficient cause in not filing the appeal in time. The reason advanced by the assessee is very vague and cannot be said that the assessee is actually interested in pursuing the issue before this Tribunal. Thus, in the present case, there is no sufficient cause for presenting the appeal belatedly before the Tribunal. Accordingly, we decline to condone the delay of 288 days. We are of the opinion that the assessee being a private limited company, which was assisted by group of Advocates and Chartered Accountants and in such circumstances it cannot be said that the assessee is not aware of the necessity of filing the appeal against the order passed by the CIT u/s 263 of the Act, and it cannot be said that the case of this appeal alone was slipped away from the assessee s mind and he could not take remedial measure to file appeal before this Tribunal. AR pleaded before us that adjudication may be given on merits, even if the appeal is dismissed on condonation, to complete the legal proceedings. At this stage, we are refraining from going into the merits of the ground raised by the assessee on the addition proposed by the CIT. Accordingly, this plea of the learned AR is also rejected - Appeal filed by the assessee is dismissed.

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• 2019 (9) TMI 311
  Validity of consolidated Notice issued u/s 153A r.w.s. 153C/143(2) - HELD THAT:- From the perusal of the notice issued u/s 153A r.w.s. 153C/143(2) of the Act, it is a clear cut case of overlooking the procedure and provisions set out in the Income Tax Act, 1961. Under these sections, the Assessing Officer cannot issue consolidated notices for different Assessment Years. It is statutory requirement for each assessment year to issue statutory notice separately. The Assessing Officer failed to comply with the statute under which the prescribed procedure is mandatory for the Revenue to be followed. The reliance of the AR in case of Y Narayana Chetty vs. ITO [1958 (10) TMI 10 - SUPREME COURT] is relevant in present case, therefore, the notice itself is bad in law and void ab-initio. Thus, the assessment order does not survive.

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• 2019 (9) TMI 310
  Revision u/s 263 - Correct head of income - lease rental income as income under the head business and profession instead of income from house property - HELD THAT:- Assessment order passed under section 143(3) of the Act for Assessment Year 2012-13 was revised under by the CIT on identical reasoning on the basis of which he passed the order under section 263 of the Act for the impugned assessment year. However, while deciding assessee s appeal in the order referred to above, the Tribunal quashed the order passed under section 263 of the Act and accepted assessee s claim of lease rental as business income. Thus, applying the rule of consistency also, assessee s claim of lease rental as income from business and profession has to be accepted. In view of the aforesaid, we do not find any infirmity in the order of learned Commissioner (Appeals) on the issue. This ground is dismissed. Proceedings under section 154 - Interest expenditure - assessee had not claimed the expenditure in the return of income filed under section 139(1) of the Act, it is not allowable - HELD THAT:- Proceedings under section 154 - technically, the Revenue cannot challenge both these issues in a single appeal, which is the case at hand. As per the provision of the Act, if the Revenue was aggrieved with the decision of learned Commissioner (Appeals) in respect of both the appeals filed by the assessee, it should have filed two separate appeals, as the issue arising out of two separate proceedings cannot be clubbed in a single appeal. For this reason alone, ground no.2 raised by the Revenue deserves to be dismissed, as, the present appeal is to be treated as originating from the assessment order passed under section 143(3) r/w section 263 of the Act. Accordingly, ground no.2 is dismissed.

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• 2019 (9) TMI 309
  Correct head of income - receipt from the sale of paintings - income from business and profession or capital gain - HELD THAT:- Analysis of facts emerging from record does not suggest that the assessee has indulged in any organized or regular activity of purchase and sale of paintings. There is nothing on record to suggest that except the aforesaid assessment years, the assessee had engaged himself in the activity of purchase and sale of paintings in any other past or subsequent years. At least, no such fact has either been brought on record by the Departmental Authorities or brought to our notice by the Departmental Authorities. Therefore, in the absence of any material brought on record to demonstrate that the assessee is carrying on the business of purchase and sale of painting in an organized manner, it cannot be said that the sale of painting is a business activity or is an adventure in the nature of trade. That being the case, the conclusion drawn by the Departmental Authorities holding that the income from sale of painting is to be treated as business income, in our view, is unsustainable. As a natural corollary such income has to be treated as capital receipt. Having held so, now it is necessary to deal with assessee s contention that in assessment year 2007 08, such income is not taxable as it will come within the purview of personal effect as defined under section 2(14) In view of the aforesaid, we hold that the gain derived from sale of painting in the assessment year 2007 08 is not taxable as it is personal effect as defined under section 2(14) of the Act. However, insofar as assessment year 2008 09 is concerned, paintings have been specifically excluded from being treated as personal effect, therefore, the gain derived from sale of painting has to be assessed as long term capital gain. Undisclosed income on account of sale of shares of Matrix India Entertainment Consultant Pvt. Ltd. (MIECPL) - whether Commissioner (Appeals) had not given any opportunity of being heard to the assessee in complete violation of section 251(2) ? - HELD THAT:- We are of the view that learned Commissioner (Appeals) while enhancing the income of the assessee for the assessment year 2007 08 has not complied with the mandatory provision of section 251(2) of the Act. The aforesaid factual position has not been disputed by the learned Departmental Representative. In view of the aforesaid, we restore the issue to learned Commissioner (Appeals) for fresh adjudication after providing reasonable opportunity of being heard the to assessee. These grounds are allowed for statistical purposes.

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• 2019 (9) TMI 308
  TP adjustment - Adjustment made on account of domestic transactions - comparable selection - HELD THAT:- AO has picked up the figures of segmental revenue but has failed to take cognizance the reporting made under the head segment reporting , wherein the assessee following the requirement of AS-17 has segregated two segments i.e. the transaction of gold and silver division and transaction of diamond and others. Another analogy which has to be considered in the approach of AO that while picking up the margins of comparables, it had considered the revenue earned by said comparables from gold and silver and diamond jewellery transactions. Similarly, the said approach should have been applied in the hands of assessee. Our attention was drawn to the financial statements of PC Jeweller Ltd. wherein it is reported that revenue arises from the sale of gold, diamond and silver jewellery. Similarly, in the case of Tribhovandas Bhimji Zaveri Ltd., the entity-wise margins were applied wherein no breakup or no segmental of items dealt in had been given. In the case of KP Sanghvi International Limited, the sale of products on account of cut and polished diamonds at Rs. 75.93 crores, jewellery at Rs. 135 crores and other raw materials at Rs. 79 lakhs has been reported. The margins of third concern have been given but no segmentals in that concern has been given and the total revenue has been applied to compute the margins of said comparable. In such scenario, the TPO has erred in applying two different approaches i.e. first in computing margins of assessee by only taking segmentals of gold and silver division and excluding the second division of diamonds and semi precious stones. On the other hand, in the case of three comparables, revenue from all the divisions has been applied as no segmentals have been supplied or made available to the TPO in this regard. Accordingly, we hold that the assessee s entity-wise margins i.e. its dealings in gold, silver and diamond jewellery in entirety is to be applied and in this regard, the margins of assessee would work out to 8.47%. The TPO has after the directions of DRP worked out the mean margins of comparables at 8.73%. In such scenario, the margins shown by assessee were at arm s length price of its domestic transactions and no adjustment is warranted in the hands of assessee. Payment of Directors remuneration - HELD THAT:- We find that Mumbai Bench of Tribunal in the case of Hindustan Unilever Limited Vs. Addl.CIT [2012 (12) TMI 458 - ITAT MUMBAI ] had deliberated on the issue and held that if benchmarking was being done at the entity level either for the AE transactions or for the entire transactions, then there was no requirement for further adjustment as all the adjustments made by Assessing Officer / TPO would get automatically subsumed including those adjustments also relating to royalty, etc. as done by the TPO. Applying the said principle, we hold that no separate adjustment is to be made on account of Directors remuneration in the hands of assessee.

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• 2019 (9) TMI 307
  Period of limitations for passing an order u/s 201(1) / 201 (1A) - Treating the assessee as assessee in default - TDS u/s 194 - failure to deduct TDS on an amount lent by it to its shareholders which are covered under the provisions of sec. 2(22)(e) - default u/s 201(1)/201(1A) - HELD THAT:- The show-cause notice in the instant case was duly issued within the period of six years at which time the default in deduction of TDS was both committed as well as continuing and therefore the assessee, in our view, cannot seek immunity from the applicability of sec. 201(1) for alleged default where the order has been passed within seven years as provided in amended law. While holding so, we agree to the contentions raised on behalf of Revenue that CIT(A) has wrongly observed that the cause of action had ceased and the applicability of sec. 201(1) had already become time barred at the time of amendment and thus extended time limit could not be conferred on AO. The assessee has no where contended or demonstrated on facts that TDS return was filed and thus the case was not time barred as wrongly assumed. The reliance placed on behalf of assessee on the decision of Tata Teleservices [ 2016 (2) TMI 414 - GUJARAT HIGH COURT] in totally misplaced as right of the Revenue to pass order has already become time barred at time of amendment by Finance (No. 2) Act 2014 in that case. Thus, with the lapse of time a substantive right had already accrued to the assessee which could not be taken away by a subsequent amendment. The limitation already barred could not be revived by later amendment. This is not the factual situation in the instant case as noted earlier. The other decisions relied upon by assessee are also clearly distinguishable as the issue in the instant case relates to law of limitation which is procedural one. The ratio of decision of Hon ble Supreme Court in Brij Mohan vs. CIT [ 1979 (8) TMI 2 - SUPREME COURT] is also not applicable as no return has been filed by the assessee in the instant case and the default is not merely committed in this case but is also continuing. The issue is thus decided against the assessee and in favour of the Revenue. The order of the CIT(A) therefore requires to be set aside on this score. We however note in the same vain that the CIT(A) has not adjudicated the issue on merits. The matter is accordingly remanded back to the CIT(A) for adjudication for applicability of sec. 2(22)(e); sec. 194 and consequent application of sec. 201(1) and s. 201(1A) on merits in accordance with law after taking note of the relevant facts on record

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• 2019 (9) TMI 306
  Income accrued in India - sending amount from USA to India for maintenance of family members - period of stay in India / outside India - becoming non-resident - salary payment from foreign employer, which was already taxed in USA - DTAA between USA and India - HELD THAT:- Assessee was away from India and was working in USA from 01.08.2003 to 31.07.2004; which includes the period from 01.08.2003 to 31.03.2004 forming part of Previous Year relevant to AY 2004-05 with which we are concerned in the present appeal. Assessee was outside India for the period of more than 182 days during Previous Year relevant to Assessment Year 2004-05 and was a non resident within the meaning of Section 6 of Income Tax Act. During the aforesaid period on 01.08.2003 to 31.03.2004 the assessee was an employee of Tekelec, Inc. NC 27560, USA in a full time capacity in the role of Business Development Director based at Releigh, NC, USA. Perusal of the impugned order of the Ld. CIT(A) shows that the assessee had sent money through City Bank, USA for the maintenance of his son and wife in Delhi; that later on, there was divorce suit filed by the wife of appellant and they got separated in 2006, through court proceeding; that in the Court proceedings, the appellant also got a blow from his opponent lawyer and lost his left eyesight; that the separation happened in 2006; that the wife of the assessee wrote a Tax Evasion Petition ( TEP ) to Income Tax Department based on which assessment was made by the AO; and that the assessee had earned the aforesaid amount of Rs. 2,32,09,544/- as salary payment from aforesaid foreign employer, which was already taxed in USA and was not to be taxed in India again as per Double Taxation Avoidance Agreement between USA and India. These facts are also substantiated by the contents of the Paper Book referred to already in foregoing paragraph No. (C) of this order. Nothing has been brought to our notice by the Ld. DR to warrant any interference by us in the aforesaid impugned order dated 31.01.2013 of Ld. CIT(A) for Assessment Year 2004-05 - Decided in favour of assessee.

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• 2019 (9) TMI 305
  Disallowance of assessee s claim of bad debt written off u/s 36(2)(i) - alternative claim u/s 37 - HELD THAT:- assessee failed to prove that for what purpose the amount was given - whether it was for business purpose or for purchase of land - We also find nothing on record to show that any legal remedies were attempted by the assessee for recovery of the aforesaid amount. Assessee s claim for business loss or for deduction u/s 37 is not sustainable. There is, further, no material on record to show that aforesaid amount of Rs. 50, 00, 000/- or any part thereof has been taken into account in computing income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year; and thus, mandatory condition u/s 36(2)(i) of the Act is not fulfilled for claim of bad debt. Assessee also expressed inability to bring any further material on record in support of the assessee s claim for the aforesaid amount of Rs. 50, 00, 000/-. In the forgoing facts and circumstances, the assessee s claim for deduction of the aforesaid amount of Rs. 50, 00, 000/- deserves to be rejected whether this claim is made as bad debt written off u/s 36 of the Act or alternatively u/s 37 of the Act - Decided against assessee Disallowance on account of earth filling expenses - HELD THAT:- The assessee had filed no evidences before Ld. CIT(A) to explain how the assessee claimed an amount of Rs. 12, 72, 400/- when the valuation of the boundary wall by the Stamp Valuation Authority was only for Rs. 50, 00, 000/-. Even in the appellate proceedings in ITAT, the assessee has not adduced any evidences to support the claim of having actually incurred the aforesaid expenditure amounting to Rs. 12, 72, 400/- towards cost of earth filling/boundary wall. The assessee has failed to bring any material for our consideration to justify any further relief in addition to relief of Rs. 50, 000/- already allowed by Ld. CIT(A) on the basis of the valuation of boundary wall by Stamp Valuation Authority. In the absence of any supporting evidences in support of assessee s claim of the aforesaid amount of Rs. 12, 22, 400/- [disallowance of which has been sustained by Ld. CIT(A)], we are of the view that this claim of the assessee for aforesaid Rs. 12, 24, 400/- is unsustainable in law. As all the relevant evidences submitted by the assessee have already been appraised by the lower authorities [CIT(A) AO] and moreover, as no further material has been placed before us from assessee s side in support of the assessee s claim for deduction of aforesaid amount of Rs. 50, 00, 000/- Rs. 12, 22, 400/-, no useful purpose will be served by restoring the disputed issues back to the file of Ld. CIT(A). - Decided against assessee

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• 2019 (9) TMI 304
  PE in India - Income accrued in India - taxation of revenues from supply of telecom hardware to the Indian customers - HELD THAT:- Since, the matter of PE stands adjudicated in favour of the assessee, in the absence of any change in the material facts, following the earlier order of this Tribunal [ 2018 (6) TMI 497 - ITAT DELHI] , we hereby hold that the assessee do not have a PE within the terms of Article 5 of India-Finland DTAA. Thus, this ground of appeal of the assessee is allowed. Taxability of revenue from supply of software - whether the consideration towards the software portion of the equipment is in the nature of royalties under Article 13 of India-Finland DTAA? - HELD THAT:- Regarding the taxability of revenue from supply of software, the ld. CIT (A) held that since software is an integral part of the telecom hardware and software supply has been made pursuant to the contract in respect of which a PE has been upheld, software is effectively connected to the PE and should be dealt with as the business profits in accordance with provisions of Article 7. In view thereof, there is no need to segregate the payments for software from other business receipts from supply of telecom hardware. Sale of hardware took place outside India and hence no income from sale of hardware accrued to Nokia in India. The issue of royalty on the software has been held in favour of the assessee based on the order in the case of DIT Vs Ericssion AB [ 2011 (12) TMI 91 - DELHI HIGH COURT] . It was held that these payments cannot be said to be in the nature of royalty either as per the Indian Income Tax Act or DTAA and hence cannot be held to be taxable. It was held that what was sold was a GSM which consisted both hardware as well as the software and hence they cannot be taxed under two different articles Taxability of the notional interest /vendor financing on delayed consideration for supply of equipment and licensing of software - HELD THAT:- No income can be said to accrue to the assessee on account of delayed payments as neither there was any corresponding liability on any of the debtors nor assessee had claimed any entitlement on such an interest. Accordingly, this issue is also decided in favour of the assessee Taxability of revenue from R D activities undertaken in India - HELD THAT:- Fixed place PE do not exist as the right to use test or the disposal test is not satisfied. The appeal of the assessee on this ground is allowed.

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• 2019 (9) TMI 303
  Monetary limit - low tax effect - retrospective effect of CBDT circular - HELD THAT:- We hold that the revised / enhanced minimum threshold limit of tax effect of Rs. 50, 00, 000/- vide aforesaid recent CBDT Circular No. 17/2019 dated 08.08.2019 is applicable not only for appeals to be filed by Revenue in future; but also for appeals already filed by Revenue in ITAT. Accordingly, in view of the aforesaid recent CBDT Circular No. 17/2019 dated 08/08/2019; the direction in aforesaid earlier Circular dated 11.07.2018 to withdraw /not press Revenue s appeal with tax effect below Rs. 20, 00, 000/-; is now to be read as direction to withdraw / not press Revenue s appeal with tax effect below revised / enhanced limit of Rs. 50, 00, 000/-. By necessary implication, therefore, all existing appeals in ITAT, having tax effect below the revised / enhanced limit of Rs. 50, 00, 000/-, are to be treated as withdrawn / not pressed; and are, not maintainable.

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• 2019 (9) TMI 302
  Benefit of India - Cyprus Double Taxation Avoidance Agreement (DTAA) - income on compulsorily convertible debentures ( CCD ) issued by ABPL to the Appellan - back-to-back transaction lacking economic substance - AO taxing the entire amount of interest income received by the Appellant at 40% (plus surcharge and cess) and denying the Appellant relief of beneficial rate or interest at 10% under Article 11 of the India - Cyprus DTAA HELD THAT:- Mere fact that the CCDs were funded using monies received by the appellant from its immediate shareholder does not make the arrangement a back-to-back transaction. The appellant had the absolute control over the funds received from its immediate shareholder. Further, in the instant case the appellant wholly assumed and maintained the foreign exchange risk on the CCDs (as they were INR denominated), and the counter party risk on interest payments arising on the CCDs. In the instant case, the AO/DRP have failed to prove that (i) the appellant did not have exclusive possession and control over the interest income received, (ii) the appellant was required to seek approval or obtain consent from any entity to invest in ABPL, or to utilize the interest income received at its own discretion and (iii) the appellant was not free to utilize the interest income received at its sole and absolute discretion, unconstrained by any contractual, legal, or economic arrangements with any other third party. The transaction between the appellant and ABPL cannot be considered a mere back-to-back transaction lacking economic substance. Therefore, we direct the AO to accept the return of income filed by the appellant for the impugned assessment year disclosing a total income from interest on CCDs in ABPL, wherein it has offered such interest to tax @ 10%. - Decided in favour of assessee

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• 2019 (9) TMI 301
  Disallowance u/s 40(a)(ia) - non deduction of tds on discount as interest u/s 2(28) - HELD THAT:- We are of the considered opinion that since the CIT(A) has allowed part of the said discount in A.Y 2007-08, the same should be allowed in full. We, accordingly, dismiss the claim in A.Y 2006-07 and allow the cross objection in A.Y 2007-08. The Assessing Officer is directed to allow the cash discount in A.Y 2007- 08. Disallowance of depreciation on plant and machinery purchased out of surrendered amount - HELD THAT:- We find that the lower authorities have dismissed the claim of depreciation on the ground that there is no evidence and it is not possible to ascertain the value of plant and machinery claimed to be installed during the year under consideration. The surrendered amount of Rs. 3.50 crores on this account has been accepted by the department. Therefore, the revenue cannot blow hot and cold in the same breath. The decision of the co-ordinate bench in the case of Sheth Sura Engineering [P] Ltd [ 2007 (7) TMI 373 - ITAT PUNE] relied upon by the revenue authorities is misplaced because in that case the assessee had specifically stated that he is unable to furnish inventories in respect of plant and machinery and furniture and fixtures declared at the time of search action u/s 132 of the Act. Whereas, the facts of the case in hand show that the inventories of plant and machinery have been prepared by the Income tax department itself and has accepted the surrendered amount of Rs. 3.50 crores- the assessee has satisfactorily established its claim of depreciation Additional income disclosed over a period of six years on account of capital expenditure debited to the repairs and maintenance - no error or infirmity in the directions of the CIT(A). We, accordingly direct the Assessing Officer to compute the depreciation as per the rates applicable on the WDV of the block of assets as directed by the CIT(A). Ground No. 2 is, accordingly, allowed. Low tax effect - Monetary limit - retrospective effect of the CBDT circular - HELD THAT:- Tax effect involves in the appeal of the Revenue is below Rs. 50 lakhs. Circular No. 17/2019 dated 08/08/2019 will apply to all pending appeals. Therefore the precedent, it is held that the appeal is not maintainable in the instant case as the tax effect is less than Rs. 50 lakhs. Accordingly, it is held that appeal filed by the revenue is not maintainable. - Decided against revenue.

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• 2019 (9) TMI 300
  Allowability of expenses on account of reimbursement of service charges - expenses related to earlier years - payment to related parties / concerns - AO disallowed 10% of expenses - CIT(A) enhanced the disallowance to the extent of 25% of service charges - HELD THAT:- the expenditure of Rs. 5.04 crores which admittedly, relates to assessment year 1997-98 is not allowable as expenditure in the hands of assessee, as it relates to the preceding year. However, in the present scenario, proceedings for assessment year 1997-98 have attained finality and the order of Tribunal has been passed, hence expenditure relating to assessment year 1997-98 to the extent of Rs. 5.04 crores is not allowable in the hands of assessee. Expenses towards reimbursement of depreciation and service tax - amount pertains to earlier years - Held that:- Since service tax was liability of service provider, as per provisions of Service Tax Act, and where the assessee had not provided any services, the said claim was also not accepted. Vide para 5.10.2, the Assessing Officer notes that during scrutiny proceedings, assessee was asked several times to produce details of services rendered. The assessee was specifically asked to produce evidence of services rendered but the assessee was only emphasizing on the service agreement for allowability of expenditure. Further, it was held by Assessing Officer that where the assessee was engaged only in the manufacturing of beverage base used by bottlers, services rendered to the bottlers was not allowable. - Expenses not allowed. Proof and genuineness of the expenses - Held that:- the onus was upon the assessee to justify expenditure, but same has not been fully discharged by assessee. Undoubtedly, the payments were made to a related concern and onus upon the assessee was greater in such circumstances to prove and establish that the price paid by assessee for services availed were at market rates. One of the issues which were raised by authorities below in denying the claim was the benefit of services to the bottlers and hence, expenditure not relatable to the business of assessee, cannot be allowed as expenditure. Allowability of travelling expenses - Merely on the ground the expense was reimbursement , can the assessee shy away from the onus cast upon him. The answer is No , where the payment was made to related party especially. The assessee could not shy away from filing the details on the ground that they were huge expenses. Even out of the details filed, the Assessing Officer had pointed out that from the breakup of expenses filed, that the same were not relatable to business of assessee. We thus, uphold the disallowance of expenses for which no details were filed i.e. Rs. 9.59 crores (-) Rs. 1.23 crores = Rs. 8.36 crores. Out of Rs. 1.23 crores, we confirm disallowance of 40% of expenses as in the case of service charges. Similarly, in the balance years, the assessee having failed to furnish breakup of travelling expenditure would not entitle it to the said claim of expenditure. Only to the extent the assessee had furnished breakup of travelling expenses, the disallowance is to be restricted to 40% of expenses but where the assessee has failed to give breakup of expenditure itself under the head travelling expenses , then the entire expenses needs to be disallowed. With this, we decide the first issue of allowability of service charges in the hands of assessee, reimbursement of expenses and its allowability and travelling expenses and its allowability. Depreciation on coolers - HELD THAT:- Assessee had two lines of business in earlier years. In accordance with the needs of its business, it had made investments in coolers which were then placed at the premises of retailer outlets, who were selling the beverages. When the assessee was carrying on the business both as manufacturer of concentrate and as a bottler in its line of business and where the finished products which were sold by it were beverages which if sold as such, as against, after cooling if sold would bring more profits to the assessee In such business arrangement, the investment in coolers made by assessee was accepted by the Revenue authorities and depreciation on coolers was allowed in the hands of assessee. The opening WDV of said coolers and other plant and machinery as on 01.04.1999 was Rs. 3.02 crores. The coolers and other plant and machinery were listed as others under the head plant and machinery and hence, the plea of assessee that the coolers have entered the block of assets and depreciation on such block of assets cannot be denied to the assessee. We find merit in the plea of assessee in this regard and hold that the assessee is entitled to claim depreciation on opening WDV as on 01.04.1999 of Rs. 3.02 crores from year to year. Merely because the assessee had purchased the assets and had shown the said purchases as addition in its block of assets, the assessee was not entitled to claim of depreciation on such assets. This is the basic non-discharge of onus cast upon it. Plea of assessee that placing the coolers also serves as an advertising tool does not carry any weight. The assessee again reiterated that the assessee was the manufacturer of concentrate and in the absence of any business agreement to that extent either with CCI Inc or bottlers, there is no merit in the aforesaid claim of assessee and accordingly we hold that the assessee had failed to establish that the said coolers have been used in the business of assessee. In the absence of assessee fulfilling the conditions laid down in section 32 of the Act, the assessee was not entitled to any claim of depreciation on the additions made to the coolers from assessment year 2000-01 onwards. As held in the above paras, the assessee is entitled to claim depreciation on WDV of coolers at Rs. 3.02 crores as on 01.04.1999. All the appeals of assessee and Revenue are partly allowed.

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• 2019 (9) TMI 299
  Applicability of MAT to the SEZ unit u/s 115JB - eligibility for exemption u/s 10AA - HELD THAT:- In the instant case, it is not in dispute that the assessee carries on its business in an SEZ Unit and its income will therefore be subject to the provisions of Section 115JB of the Act. On bare reading of provisions of subsection (6) to section 115JB, it is crystal clear that provisions of section 115JB will apply to the assessee company for the assessment year beginning assessment year 2012-13 onwards. Therefore, while passing the assessment order u/s 143(3), where the Assessing officer has forgot to invoke the provisions of section 115JB of the Act, the matter clearly falls within purview of section 154 of the Act and the same can be rectified as mistake apparent from record. In sub-section (6) to section 115JB, as we have noted above, it has been specifically provided that income accruing or arising from the business carried on by the assessee company in its SEZ Unit shall be subject to MAT provisions for assessment year beginning 2012-13 onwards. Therefore, provisions of sub-section (5) is subject to provisions of sub-section (6) of section 115JB and reading both the provisions harmoniously, it is clear that the income of the assessee company shall be subject to the provisions of MAT under section 115JB In the instant case, the assessee company is eligible for relief under Section 10AA of the Act however the sub-section (6) specifically provides that MAT provisions continue to apply to the assessee company beginning assessment year 2012-13 onwards. In other words, the application of other provisions of the Act as so provided in sub-section (5) has been barred by virtue of sub-section (6) to section 115JB of the Act. None of these decisions, the provisions as contained in sub-section (6) to section 115JB have been examined and/or discussed which clearly provides that the MAT provisions will be applicable to income from business carried on by the assessee company in its SEZ unit. Therefore, in view of the specific provisions so contained in sub-section (6) of section 115JB, these decisions doesn t support the case of the assessee company. - Decided against assessee

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• 2019 (9) TMI 298
  Depreciation on assets taken on lease - HELD THAT:- As noted that in the very first year i.e. AY 2011-12, the depreciation has already allowed the claim of depreciation. We noted that in the income tax code, there is a provision/ concept of block of asset and once any asset enters into block asset and claim of depreciation in very first year is allowed, in subsequent year the deprecation cannot be disallowed in case the first year is not disturbed. We noted that even in subsequent years, the Revenue is allowing the claim of the assessee as noted in above chart. Hence, we allow the claim of depreciation on the issue of consistency. This issue of assessee s appeal is allowed. Disallowance of expenses relatable to exempt income by invoking the provisions of section 14A read with Rule 8D - HELD THAT:- When these facts were confronted to the learned Counsel for the assessee, he fairly agreed that the disallowance can be restricted to the extent of Rs. 21,44,348/- under Rule 8D(2)(iii). The learned Sr. Departmental Representative has not made any argument on the above facts. Hence, we direct the AO to compute the disallowance accordingly. This issue of assessee s appeal is partly allowed and that of the Revenue is dismissed.

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• 2019 (9) TMI 297
  Low tax effect - Monetary limit - HELD THAT:- Tax effect involves in the appeal of the Revenue is below Rs. 50 lakhs. There is no dispute that the Board s instructions or directions issued to the Income-tax authorities are binding on those authorities, therefore, the Department should have withdrawn/not pressed the present appeal in view of the aforesaid instruction since the tax effect in the instant appeal is less than the amount of Rs. 50 lakhs. The issue of applicability of the above circular to pending appeals has been decided by the coordinate bench in Dinesh Madhavlal Patel [ 2019 (8) TMI 752 - ITAT AHMEDABAD] Circular No. 17/2019 dated 08/08/2019 will apply to all pending appeals. Therefore the precedent, it is held that the appeal is not maintainable in the instant case as the tax effect is less than Rs. 50 lakhs. Accordingly, it is held that appeal filed by the revenue is not maintainable. We also hastened to add that certain times instances stated in para No. 10 of the CBDT Circular No. 3/2018 dated 11.07.2018 is not discernable from the assessment and appellate orders, therefore, in such cases, we also give liberty to revenue that if such instances comes to their notice than, revenue may file miscellaneous application with such evidences. - Decided against revenue.

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• 2019 (9) TMI 296
  Assessment u/s 153A - undisclosed purchase price of society plot - transaction was not found recorded in the regular books of account in the year of purchase - assessee contended that, as alleged assessment being not pending on the date of search and no incriminating material was found during the course of search - HELD THAT:- In both the cases before us i.e. Dr. Swati Tomar and Dr. Anurag Tomar, assessments were pending. In so far as in case of Dr. Swati Tomar is concerned, the return for the relevant assessment year was filed on 04/6/2014 and six months for the issue of notice u/s 143(2) of the Act was not expired and the search took place on 30/10/2014. In the case of Dr. Anurag Tomar, return was filed on 30/05/2014, the time period of issue of notice U/s 143(2) was very much there in so far as search was undertaken on 30/10/2014. Thus, we found that in both these cases, assessments were abated meaning thereby these were pending as on the date of search. As during the course of search, Pattas of these two plots were found and the amount paid for acquisition of these plots were not found recorded in the books of account. The pattas of these plots constituted incriminating material, therefore, there is no merit in the contention of the AR that the addition should be deleted by following the decision of the Coordinate Bench. So far as the merit of the addition is concerned, we found that the A.O. has correctly taken value of these plots so determined by the JDA, the registered value of plots as per JDA pattas and Sub-Registrar, Jaipur-4. Thus, we confirm the addition so made by the A.O. subject to further direction to the A.O. to reduce this addition only to the extent of any investment, if any, shown by the assessee in regular books of account before the date of search in respect of any of these plots so acquired.

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• 2019 (9) TMI 295
  Deduction u/s 54F - Assessee has claimed deduction for 4 flats purchased by her and not a single flat - The flats were purchased in joint name i.e., of the assessee along with her son - Assessee had purchased the flat beyond the period of two years prescribed under the provisions - Unutilized portion of the amounts subject to capital gains tax was not deposited in capital gain account scheme as mandated u/s 54F(4) - The purchase of flats by the assessee was from a family firm. HELD THAT:- With respect to purchase of four flats, it is an undisputed fact that the flats were booked by the assessee vide allotment letter dated 12.07.2011 when the building was under construction. The entire payment for the purchase of flats has been made upto September 2012 i.e., upto the date of filing of return of income. It is Revenue s contention that the assessee had acquired the new asset only when the agreement was entered into on 19.03.2013 i.e., after the stipulated period. We find that recently Hon ble Bombay High Court in the case of Vembu Vaidyanath [ 2019 (1) TMI 1361 - BOMBAY HIGH COURT] after considering the CBDT Circular No.471 dated 15.10.1986 and Circule No.672 dated 16.12.1993 has held that the date of issuance of allotment letter by the builder is the date of acquisition of property. Deduction on four flats purchased by the assessee - the submission of the assessee that all the four residential flats are adjacent flats located on the same floor of the building has not been controverted by the Revenue. In the case of Trilokchand and Sons Vs. ITO 2019 (4) TMI 713 - MADRAS HIGH COURT] has held that so long as the assessee has purchased one more residential house out of the sale consideration for which the liability to the capital gain tax u/s 45 arises, assessee was entitled to deduction thereunder on the entire investment. Hon ble Delhi High Court in the case of CIT Vs. Gita Duggal [ 2013 (3) TMI 101 - DELHI HIGH COURT] has held that the fact that residential house consists of several independent units cannot be the reason for denying the claim of deduction u/s 54/54F of the Act. Purchasing flats in joint name is concerned, it is the assessee s contention that the entire consideration towards the purchase of flats was invested by the assessee and no amount was contributed by her son and further the name of the son was included as joint owner to avoid legal complication as the assessee is an old lady. The aforesaid submissions have not been controverted by the Revenue. We find that Hon ble Karnataka High Court in the case of DIT Vs. Mrs. Jennifer Bhinde [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT] has observed that to attract Sec.54 and Sec.54EC of the Act, what is the material is investment of sale consideration in acquiring the residential premises or constructing a residential premises or investing the amounts in the bonds. In the entire section of 54, the requirement that purchase to be made or the construction to be put up by the assessee is in the name of the assessee is not expressly stated. We further find that the Hon ble Delhi High Court in the case of CIT Vs. Kamal Wahal [ 2013 (1) TMI 401 - DELHI HIGH COURT] has also held that the new residential house need not be purchased by the assessee in his own name or exclusively in his name. Not depositing the unutilized portion of amount subject to capital gains in capital gain account scheme - it is fact that assessee had not filed the return u/s 139(1) of the Act but had filed the return of income within the time limit prescribed u/s 139(4) of the Act which was upto 31.03.2013. It is assessee s case that prior to filing of income tax return, assessee had utilized the entire sale proceeds in acquisition of the new residential house. The aforesaid contention of the assessee has not been controverted by Revenue. We find that Hon ble Punjab and Haryana High Court in the case of CIT Vs. Ms. Jagriti Aggarwal [ 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] has held that benefit of Sec.54 of the Act is allowable when the assessee has acquired the new asset before filing of return of income. Co-ordinate Bench of the Tribunal in the case of Ramarao Dhondiba Pimple Vs. ITO [ 2017 (10) TMI 1481 - ITAT PUNE] after considering the decisions of Hon ble Gauhati High Court in case of CIT Vs. Rajesh Kumar Jalan [ 2006 (8) TMI 126 - GAUHATI HIGH COURT] and CIT Vs. Ms. Jagriti Aggarwal [ 2013 (4) TMI 499 - PUNJAB AND HARYANA HIGH COURT] and the decision of Hon ble Bombay High Court in the case of Humayun Suleman Merchant Vs. CCIT [ 2016 (9) TMI 70 - BOMBAY HIGH COURT] has held that assessee is eligible to claim exemption in respect of investments made before filing of return of income. Assessee is eligible for deduction u/s 54F of the Act. We therefore direct the AO to grant deduction. Thus, the grounds of the assessee are allowed.

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• 2019 (9) TMI 294
  Addition u/s 14A r.w.r. 8D - HELD THAT:- As the issue under consideration is materially identical in TRANSPORT CORPORATION OF INDIA LTD. [ 2016 (11) TMI 245 - ITAT HYDERABAD] following the conclusions drawn therein we direct the AO to recalculate the disallowance as per rule 8D as per the guidelines given as above in the case of Transport Corporation of India and calculate the disallowance of expenditure under rule 8D(2)(ii) (iii) taking the average investment from which the exempt income is received. Interest expenditure incurred by the assessee are towards the secured loans which are secured against the stock and working capital - HELD THAT:- AO cannot consider the above interest on secured loans which are committed to the business exclusively. AO may consider the other interest incurred by the assessee for the purpose of disallowance u/s 14A. Accordingly, these grounds are also remitted to the AO for recalculation. We cannot accept the contention of the assessee that investments were made on business expediency. When assessee makes investments and earns exempt income, irrespective of the fact that whether assessee has own funds or not, when the business has mixed funds, rule 8D will apply. Accordingly, this ground raised by the assessee is dismissed.

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• 2019 (9) TMI 293
  Gain on prepayment of sales tax deferral loan - capital receipt or revenue receipt - income liable to be charged to tax as deemed profits and gains of firm u/s. 41(1) - HELD THAT:- We find that the issue whether the gain of pre-mature payment of deferred Sales Tax at net present value against total Sales Tax liability is capital in nature or revenue receipt/remission or cessation of liability u/s. 41(1) has been laid to rest by Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Sulzer India Ltd. [ 2014 (12) TMI 267 - BOMBAY HIGH COURT] as held to invoke the provisions of section 41(1) of the Act, the first requirement is as to whether in the assessment of the assessee, an allowance or deduction has been made in respect of loss, expenditure or the trading liability incurred by the assesse in CBDT Circular No. 496 dated 25.9.1987 it has been clearly stated that the statutory liability shall be treated to have been discharged for the purposes of Section 43B - the Tribunal rightly concluded that it is incorrect or erroneous to hold that the assessee obtained benefit of reduction of Sales Tax liability under section 43B of the I.T. Act as per Central Board of Direct Taxes Circular No. 496 dated 25th September, 1987. Some time has to be given to the unit to establish itself before it starts giving corresponding benefit to the state - That opportunity is granted by deferring the remittance of the Sales Tax collected by the unit like the Assessee - the Government Resolution dated 4th May, 1983 evolves a package of incentives to disperse the industries from Bombay Thane Pune belt and to attract them to underdeveloped and developing areas of the State of Maharashtra - To carry this object further and also to achieve the purpose of early remittance of deferred Sales Tax collected by the units availing of the Schemes, the statutory option was incorporated in section 38 by substituting the 4th proviso to subsection 4 of section 38 of the Bombay Sales Tax Act, 1959 a combined reading of the Schemes and this Circular reveals the legislative intent thus, the order of the Tribunal is upheld Decided against revenue.

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• 2019 (9) TMI 292
  Penalty under u/s 271(1)(c) - period of limitation - GP addition confirmed at the rate of 5% on the estimated sales - whether the order passed by the AO is barred by the limitation? - HELD THAT:- Penalty order was passed by the AO, which is barred by the limitation. It is also a settled law that the penalty provisions shall be applicable as prevailed in the year under consideration. In the present case, the order of the Ld.CIT(A) in the quantum appeal was passed after 1.6.2003. i.e. on 31.7.2003 as available from the record. It was received by the Department on 7.8.2003 as unrebuttedly contended by the learned counsel for the assessee. Thus, as per the proviso to section 275(1)(a) of the Act, the penalty order ought to have been passed on or before 31.3.2005. i.e. within one year from the end of the financial year in which the Id. CIT(A) s order was received back by the Department. The penalty order, however, got to be passed only on 28.7.2009, that being so, the contention of the assessee is correct. The penalty order is clearly barred by limitation provided by the proviso to 275(l)(a) - Decided in favour of assessee

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• 2019 (9) TMI 291
  Unexplained cash credit u/s 68 - assessee could not prove the basic condition i.e. identity of the actual loan creditor; genuineness of the source, and capacity / credit worthiness of the creditor - HELD THAT:- Assessee has shown the transaction with Mr. Ramesh Havele and later had modified its case that the loan was received from Mr. Prafulla Anil Madiwale. The onus was on the assessee to establish and fulfill all the three conditions of section 68 which have not been fulfilled. In any case, the creditor is not person of means and the plea of receiving money and advancing the same cannot be accepted at face value. Accordingly, we remit this issue back to the file of AO, who shall carry out necessary verification and the assessee is directed to fulfill the conditions laid down in section 68 of the Act to establish its case. The assessee is also directed to produce Mr. Ramesh Havele, as Summons issued by Assessing Officer had remained un-complied. Further, Assessing Officer may summon Mr. Prafulla Anil Madiwale, as the facts of the present case are peculiar and require verification. Reasonable opportunity of hearing shall be given to the assessee and the Assessing Officer is directed to decide the issue in accordance with law. The grounds of appeal raised by Revenue are thus, allowed.

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• Customs

• 2019 (9) TMI 290
  Import of catalyst called Petromax-MD for use in the production of other final product manufactured in FCC unit of its refinery - benefit of N/N. 228 of notification 21/02-Cus dated 01/03/2002, available to all goods specified in entry no. 45 of List 17 - Revenue submits that the entry no. 45 of list 17 of Sno. 228 of notification no. 21/2002-Cus is unambiguous, according to which, only those goods are exempted which are used for setting up of Crude Petroleum Refinery . It is beyond doubt that catalyst which is used for production of final products is not used for setting up of refinery. HELD THAT:- It is a case of the appellant that the goods is used as consumable for running, repair or maintenance of the goods specified in list - We are of the view that the use of goods for running, repair or maintenance of the goods specified in the list denotes that the same should be used in the setting up for crude petroleum refinery whereas the product in question, i.e. Petromax-MD is not used for running, repair and maintenance of the plant. But it is used as input consumable in the production of final product. Therefore, the goods in question is not covered under entry no. 45 of List 17 of S. no. 228 of N/No. 21/2002-Cus. dated 01/03/2002. Exemption rightly denied - appeal dismissed - decided against appellant.

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• 2019 (9) TMI 289
  Re-classification of imported goods - Import of stickers and license for Windows XPE Embedded software - recovery of duties - reliance on statement which was retracted later - section 28 of Customs Act, 1962 - denial of N/N. 12/2012-CE dated 17th March 2012 (at serial no. 266) - Imposition of penalties u/s 112(a) or section 114A of the Customs Act, 1962 - retraction of statement of deponent. HELD THAT:- The value declared itself is not in doubt. The statement recorded from Shri Aditya Bhuwania is undoubtedly inculpatory but not against the claim of having been retracted which, even if not done before the authority which recorded the statement, was, nevertheless, placed later before the adjudicating authority, there can be no doubt that the contents of the said statement is not acceptable without some corroboration. It is clear that the adjudicating authority, or the investigating officers, were not privy to the contents of either the export or import goods and rely heavily on the declarations in the documents and the purported confessional statement. Though doubts are sought to be cast on the retraction, it may not be easily discardable. The acceptance of the shipping bills and the conclusion that the bills of entry were mirror images fortifies the claim of the appellant for eligibility to drawback under section 74 of the Customs Act, 1962. In these circumstances, the motive distances itself from the method and without motive there can be no offence. The adjudicating authority has placed overwhelming reliance on the statement of the Director and as the retraction of that statement has not been taken into consideration, we are of the opinion that the adjurement in KI. PAVUNNY VERSUS ASSTT. COLLR. (HQ.) , C. EX. COLLECTORATE, COCHIN [ 1997 (2) TMI 97 - SUPREME COURT] mandates independent corroboration. The declaration in the shipping bill, according to us, in the absence of any other evidence must be accepted as truthful assertion of the contents therein - In view of the absence of any evidence of the imported goods being nothing other than licence stickers or licences, we are not inclined to agree that the motive for such an elaborate exercise has been established. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 288
  Valuation of imported goods - enhancement of declared value - violation of Import Trade Control restrictions - enhancement of value has been ordered by the First Appellate Authority on the basis of concurrence given by the importer for such enhancement - quantum of redemption fine and penalty - HELD THAT:- The Ld. Commissioner (Appeals) has ordered reduction of redemption fine and personal penalty on the basis of ratio laid down by the Three Member Bench of CESTAT, Delhi in the case of M/S. OMEX INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2015 (4) TMI 112 - CESTAT NEW DELHI (LB)] . The Three Member Bench has taken the view that redemption fine of 10% and penalty of 5% of the value of the imported goods, would be appropriate in case of import violating Exim Policy Provisions. There are no reason to interfere with the findings of the Ld. Commissioner (Appeals) on the basis of such decision. Appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2019 (9) TMI 287
  Territorial Jurisdiction - transfer of the Company Petition to the Hon ble National Company Law Tribunal, Bengaluru - proviso inserted to Section 434[1][c] of the Companies Act, 2013 - HELD THAT:- In view of the application filed by the petitioner under Section 434 [1][c] of the Companies Act read with proviso thereof, there is no inhibition for this Court to transfer the pending Company Petition to NCLT to enable the applicant/petitioner to pursue its remedies under the provisions of the Code, accepting the reasons set out for such transfer - It is to achieve the objects of the new Rules, 2016 as regards to provide an opportunity of arrangements and re-construction/rehabilitation and other proceedings relating to the winding up to be adjudicated by the NCLT under the provisions of the Code, this Court deems it appropriate to transfer the pending Company Petition No.125/2014 to the NCLT. Petition transferred - application allowed.

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• PMLA

• 2019 (9) TMI 286
  Offence under PMLA - Irregularities in Foreign Investment Promotion Board (FIPB) clearance given to the INX Media for receiving foreign investment above against approved inflow - grant anticipatory bail - HELD THAT:- Section 4 of the Act read with the Second Schedule of the Code makes it clear that the offences under the PMLA are cognizable offences. As pointed out earlier, Section 8 of the Prevention of Corruption Act was then found a mention in Part ‘A’ of the Schedule (Paragraph 8). Section 8 of the Prevention of Corruption Act is punishable for a term extending to seven years. Essential requirement of Section 45 of PMLA “accused of an offence punishable for a term of imprisonment of more than three years under Part ‘A’ of the Schedule” is satisfied making the offence under PMLA. There is no merit in the contention of the appellant that very registration of the FIR against the appellant under PMLA is not maintainable. While considering the request for anticipatory bail and while perusing the materials/note produced by the Enforcement Directorate/CBI, Single Judge could have satisfied his conscience to hold that it is not a fit case for grant of anticipatory bail. On the other hand, Single Judge has verbatim quoted the note produced by the respondent- Enforcement Directorate. Single Judge, was not right in extracting the note produced by the Enforcement Directorate/CBI which in our view, is not a correct approach for consideration of grant/refusal of anticipatory bail. But such incorrect approach of the learned Single Judge, in our view, does not affect the correctness of the conclusion in refusing to grant of anticipatory bail to the appellant in view of all other aspects considered herein. Since the interrogation of the accused and the questions put to the accused and the answers given by the accused are part of the investigation which is purely within the domain of the investigation officer, unless satisfied that the police officer has improperly and illegally exercised his investigating powers in breach of any statutory provision, the court cannot interfere. In the present case, no direction could be issued to the respondent to produce the transcripts of the questions put to the appellant and answers given by the appellant. Grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the court. Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Having regard to the materials said to have been collected by the respondent-Enforcement Directorate and considering the stage of the investigation, we are of the view that it is not a fit case to grant anticipatory bail. In a case of money-laundering where it involves many stages of “placement”, “layering i.e. funds moved to other institutions to conceal origin” and “interrogation i.e. funds used to acquire various assets”, it requires systematic and analysed investigation which would be of great advantage. As held in Anil Sharma, success in such interrogation would elude if the accused knows that he is protected by a pre-arrest bail order. Section 438 Cr.P.C. is to be invoked only in exceptional cases where the case alleged is frivolous or groundless. In the case in hand, there are allegations of laundering the proceeds of the crime. The Enforcement Directorate claims to have certain specific inputs from various sources, including overseas banks. Letter rogatory is also said to have been issued and some response have been received by the department. Having regard to the nature of allegations and the stage of the investigation, in our view, the investigating agency has to be given sufficient freedom in the process of investigation. Though we do not endorse the approach of the learned Single Judge in extracting the note produced by the Enforcement Directorate, we do not find any ground warranting interference with the impugned order. Considering the facts and circumstances of the case, in our view, grant of anticipatory bail to the appellant will hamper the investigation and this is not a fit case for exercise of discretion to grant anticipatory bail to the appellant. Appeal is dismissed

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• Service Tax

• 2019 (9) TMI 285
  Permission for withdrawal of appeal - monetary amount involved in the appeal - Refund of unutilized CENVAT Credit - export of services - HELD THAT:- At the time of hearing learned counsel for the appellant by citing letter dated 5.9.2018 written by Assistant Commissioner (Legal) CGST Gurugram, seeks permission to writhdraw the present appeal, as the revenue involved in the present appeal is 22.22 lakhs which is below the thresh hold limit prescribed by the Central Board of Indirect Tax and Customs as contained in instructions dated 11.7.2018. Appeal dismissed as withdrawn.

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• 2019 (9) TMI 284
  Recovery of amount due to Central Government - threat of coercive action - the second respondent has called upon the petitioner to remit the admitted service tax along with appropriate interest, penalty and late fee under the threat of coercive action. Since there was no compliance with the notice measures were initiated in terms of the Revenue Recovery Act. - applicability of Certificate No.1 of 2013 issued under Section 11 of the Central Excise Act, 1944 - HELD THAT:- The provisions of the Finance Act, 1994 are adequate to support the action taken in the present case for recovery. No doubt, the Certificate referred to in the impugned communication states at the top Section 11 Certificate No.1/2012 - However, mere reference to Section 11 (without even reference to the statute) would not vitiate the Certificate itself. Clearly, the provisions of Section 87 (D) provide for the drawing-up of a certificate for tax arrears and that is what has been done in the present case. The objections raised by the petitioner are seem to hyper-technical and rejected as such - Petition dismissed.

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• 2019 (9) TMI 283
  Validity of remand order - Refund claim of excess amount - cum-tax benefit - case of appellant is that this is a case of gross negligence on the part of the Departmental Officer who in spite of so many representations made by him did not fix the personal hearing and did not determine the amount of refund which is due to the appellant from the Department. HELD THAT:- The Commissioner (Appeals) vide his order dated 03.08.2012 has given cum-tax benefit to the appellant and the said benefit was to be determined after proper verification by the jurisdictional officer. Further, the Commissioner (Appeals) has also dropped the penalty by resorting to Section 80 of the Finance Act, 1994. After the decision of the Commissioner (Appeals), the appellant has been writing various letters to various Departmental Officer for proper verification as per the directions of the Commissioner (Appeals) but none of the officers bothered to comply with the order of the Commissioner (Appeals) and they have been delaying the matter without any proper reasons. The appellant has placed all the letters on record which clearly shows that he has been pressing and requesting the Departmental Officer to comply with the order of the Commissioner (Appeals) but no Departmental Officer did the proper verification and thereafter the appellant himself filed the refund application on the basis of their calculation. Further, when the refund application was filed, the Departmental Officer without issuing the show-cause notice straightaway rejected the same on time-bar which is not tenable in law. Since the refund application has been rejected without issuing show-cause notice which is not sustainable in law and therefore I set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.

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• Central Excise

• 2019 (9) TMI 282
  Condonation of delay of 111 days in filing appeal - HELD THAT:- There are no reason to interfere with the judgment(s) and order(s) under appeal - SLP dismissed.

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• 2019 (9) TMI 281
  Principles of natural justice - appellant could not get opportunity of hearing - HELD THAT:- There occurred denial of natural justice in affording a reasonable opportunity to the appellant in the matter of hearing of the appeal before the Tribunal. Therefore we are inclined to remand the matter for a fresh hearing and disposal by the Appellate Tribunal - appeal allowed by way of remand.

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• 2019 (9) TMI 280
  Principles of Natural Justice - petitioner was not given an opportunity to cross examine the witnesses - case of Revenue is that, Since the order was passed after 15 months from the show cause notice and the entire period of 15 months was only at the instance of the petitioner, it can only be said that the petitioner was given sufficient opportunity and therefore it will not amount to violation of the principles of natural justice. HELD THAT:- No reply statement has been filed opposing such a statement made in the counter affidavit. As such it is seen that the petitioner was granted opportunity at least on four occasions which have not been availed by the petitioner. It is also seen that the petitioner has not produced any list of witnesses whom they intend to cross examine. In these circumstances, it can be said that sufficient opportunities were extended to the petitioner, which was not availed by them, within a reasonable time - Since the respondents had granted sufficient opportunities to the petitioner, it is held that there is no violation of principles of natural justice and hence setting aside the impugned order will not be proper. Maintainability of petition - alternative remedy of appeal - HELD THAT:- Section 35(B) of the Central Excise Act, 1944 provides for an appeal against the impugned order to the CESTAT within a period of three months from the date of the impugned order - In the instant case, the impugned order was passed on 29.06.2004 and the writ petition came to be filed on 20.08.2004 - Since the petitioner has approached this Court within the appeal time prescribed to approach the CESTAT, this Court is of the view that the petitioner can be granted an opportunity to file an appeal within a stipulated time. This writ petition stands closed with liberty to the petitioner to file an appeal before the CESTAT, under Section 35(B) of the Central Excise Act, 1944, within a period of three months from the date of receipt of a copy of this order - petition closed.

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• 2019 (9) TMI 279
  Refund of duty paid under mistake - rejection on the ground that the appellant could not substantiate their claim regarding reversal of Cenvat Credit under Rule 6(3)(iii) of the Cenvat Credit Rules, 2004 - HELD THAT:- In the instant case, the appellants have exported goods on payment of duty. The fact of export is not challenged and the purpose of the procedure export under bond is just to ensure that the goods are exported. In the instant case, since the fact of export of goods is not under challenge, even if the Cenvat Credit is not reversed in respect of these exports, the appellant would be principle covered by the clause (v) of sub-Rule 6 of Rule 6 of Cenvat Credit Rules, 2004 and therefore, exempted from the provision of sub rule (1), (2), (3) (4) of the Rule 6 of Cenvat Credit Rules, 2004. Rebate claim - rejection of claim was that the goods cleared by the appellant were exempted under notification 12/2012-CE dated 17/03/2012 and, therefore, the payment made by the appellant was not duty and in these circumstances, no claim of the refund can be filed - HELD THAT:- In view of the fact that the goods are exempted and not liable to pay duty, however, the appellant chose to pay duty knowingly, is also established from the fact that in the other unit of the appellant, the appellant was asked to reverse the said amount, which the appellant did on 16.06.2011. In the instant case, the appellant has chosen to pay duty in the year 2013 and thus, it can be said that it was a voluntary act - In view of the fact that the goods are exempted and not liable to pay duty, however, the appellant chose to pay duty knowingly, is also established from the fact that in the other unit of the appellant, the appellant was asked to reverse the said amount, which the appellant did on 16.06.2011. In the instant case, the appellant has chosen to pay duty in the year 2013 and thus, it can be said that it was a voluntary act. Refund claim - unjust enrichment - HELD THAT:- A perusal of sub-section (1) of section 11B of the Central Excise Act shows that provision of unjust enrichment is applicable to all refunds. However, in proviso to sub section 11B(2), certain exemptions have been carved out. One such exemption relates to rebate of duty on excisable goods exported out of India - It is seen that in the instant case the refund claim by the appellant does not relate to rebate of duty. The refund has been claimed on the ground of erroneous payment of duty. In view of the clear provision of section 11B(1), the onus of establishing the lack of unjust enrichment in this case is on the appellant. The appellants are entitled to refund - the same can be given only when they pass the test of unjust enrichment - matter remanded for such reconsideration - appeal allowed by way of remand.

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• 2019 (9) TMI 278
  Classification of goods - Megaboost - It was alleged by the Excise Authority that the said goods were not fertilizer as claimed by them before Customs Authority but are classifiable under Chapter 29 therefore, were liable to be assessed to duty - whether the product sold by the appellant is classifiable under chapter 31 as fertilizer or under chapter 29 specifically defined chemical? HELD THAT:- It is seen that the Coordination Compound is a molecule consisting of metal item with numbers of other items or groups, thus it is separately defined chemical and not amixture of different items. In this context, Ld. Counsel for the appellant was asked to assist by providing the meaning of words Coordination Compound and the word Chelated appearing in Chapter Note 5 to Chapter 29 and in test report which Ld. Counsel refuse to give - the chelate is specifically separately defined chemical and not a mixture. The chemical examiner report clearly points out that the Chapter Note 5 (c) is relevant for the classification of the product as the said product has been describes by the chemical examiner as Coordination Compound . The literature of foreign supplier as well as the test reports produced by the appellant also describe prodyuct as chelated Iron or Chelated Zinc . It is seen that the decision in case of Ciba India Ltd [ 2008 (12) TMI 475 - CESTAT, CHENNAI ] was taken in respect of Ethylene Diamine Tetraacetic Acid (EDTA) which is on chelating agent and also contains Nitrogen, Zinc, Manganese and Iron. In the said case, the reliance has been placed on Note 6 of Chapter 31 of Central Excise Tariff Act, 1985 - It fails to notice that the Chapter 31 does not include separate chemically defined compounds. In respect of separately defined chemical, the chapter Notes permits classification under Chapter 31 only with reference to chapter 2(a), 3(a), 4(a) or 5 to Chapter 31. It is apparent that separately define chemical which may also answered to Note 6 to Chapter 31 would not be covered under Chapter 31. Moreover, it is seen that Chapter 29 covers all separate chemical define organics compound. The Note 2 of Chapter 29 excludes only Urea falling under heading 3102 or 3105 from the purview of Chapter 29. On combine reading of Chapter Note 1 of Chapter 29 and Chapter Note 2(e) of chapter 29, Chapter Note 1 (b) of Chapter 31 and Chapter Note 6 of Chapter 31 shows that separately define compound which might answer to Chapter 6 would not be classifiable under Chapter 31 - It is seen that the decision in case of Ciba India Ltd are per incurium as they have fail to examine the aforesaid Chapter Notes before reaching to conclusion. Whether it is open to Central Excise Authority to change the classification made by the Customs Authority? - HELD THAT:- It is apparent that two authorities i.e. Customs and Excise Authority are totally independent authority and mistake by one need not be carried out or followed by another. Appeal dismissed.

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• 2019 (9) TMI 277
  Time Limitation - whether the demand is barred by limitation? - manufacture of Relax Drum Washer Machine - benefit of notification - Sr. No. 193 of N/N. 06/2002-C.E. dated 01.03.2002 - Sno. 5 of the list as specified under no. 3 of N/N. 06/2006-C.E. dated 01.03.2006) - HELD THAT:- The issue on merit is settled as the same has been decided in the case of COMMISSIONER OF CENTRAL EXCISE ST., SURAT AND OTHERS VERSUS M/S. BHAGYAREKHA ENGINEERS PVT. LIMITED AND OTHERS [ 2014 (8) TMI 778 - CESTAT AHMEDABAD] against the assessee and the same was upheld by the Hon ble Supreme Court. Time Limitation - HELD THAT:- The appellant have heavily relied upon the physical verification report for registration vide F.no. RI Registration/AEW/07-08/Surat dated 30.08.2007 given by Superintendent Range-I Division-3, Surat-I to the Assistant Commissioner - The copy of the report was obtained by the appellant under RTI with a letter no. XIX/01/2011 dated 09/07/2019 almost after 8 years of filing the appeal. It is observed that this letter was not considered by the lower authorities as the same was neither presented nor available at the time of adjudication. Since, only on this letter, by verification report, the Superintendent has mentioned about availing the exemption notification no. 06/07-CE dated 01.03.2007, the appellant s submission is that there is no suppression of fact. Hence, the extended period of will not apply. Since this vital letter dated 30.08.2007 was not dealt with by the lower authorities, entire matter on limitation needs to be reconsidered by the Adjudicating Authority - appeal allowed by way of remand.

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• 2019 (9) TMI 276
  Valuation - inclusion of amount collected by the Appellant from their customers as mould modification/repair charges during the period 1997 to 2002, in the assessable value - related party transaction - determination of price at which moulds were sold by their inter-connected undertaking M/s MTIPL - admissibility of SSI exemption notification. Repairing/modification of moulds - HELD THAT:- Tribunal in the case of Ampson Engineering Pvt. Ltd [ 2016 (2) TMI 780 - CESTAT MUMBAI ] and Karthigeya Moulds Dies Pvt. Ltd [ 2007 (10) TMI 49 - CESTAT, CHENNAI ], held that the activity of modification/rectification of the existing mould does not pass the test of manufacture, as defined under Section 2(f) of Central Excise Act, 1944, since no new product other than mould emerges in the activity of modification of the mould - on repairing/modification of moulds, the demand confirmed against the Appellant is unsustainable. Applicability of the provisions of related person under the category of inter-connected undertaking - HELD THAT:- This Tribunal in the case of Dujodwala Products Ltd [ 2007 (3) TMI 27 - CESTAT,MUMBAI ], it is held that the Proprietaryship Concern and a Limited Company could not fall under the category of Explanation 2 (G) of MRTP Act, as the same applies to two body corporates and not one body corporate and a proprietary-ship concern. Thus there are no merits in the findings of the adjudicating Commissioner, holding that the price at which M/s MTIPL sold the goods to customers be considered the value, in computing the aggregate value of clearance while determining the SSI exemption benefit of the Appellant for the financial year 2001-2002. Appeal allowed - decided in favor of appellant.

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• 2019 (9) TMI 275
  Misdeclaration of value of intermediate goods - Job-work - Benefit of N/N. 214/86-CE dated 25th March 1986 - it is alleged that the inputs received from customers and claimed to have been utilized for job-work had not complied with prescription relating to supplies from principal manufacturer - HELD THAT:- We find nothing on record to contradict the documented claim of the appellant that some downstream manufacturers did supply them with grinding/scrap which is one of the sources for manufacture of ABS/PP sheets/HIPS sheets. Admittedly, the appellant is also required to utilize some prime material of their own in the manufacture and, in proportion with the contribution so made, is entitled to claim ownership of some of the products while the rest are required to be returned to the principal-manufacturer as the job-work undertaken by them. It is apparent from the decisions of the Hon ble Supreme Court in INTERNATIONAL AUTO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BIHAR [ 2005 (3) TMI 132 - SUPREME COURT] and of the Tribunal in UMESH RAI VERSUS COMMR. OF C. EX. CUS., VAPI [ 2009 (6) TMI 274 - CESTAT AHMEDABAD] that job-worker is not transformed as independent manufacturer merely because of their own material being deployed. Therefore, it is well within the scheme of job-work for the appellant-assessee to be entitled to the benefit of exemption intended for job-workers subject to fulfilment of the conditions prescribed therein. As the said exemption is available to job-workers, it naturally follows that the consequences should necessarily be available to the appellant-assessee if the conditions therein are complied with. The ordinary scheme of levy of duties of excise does not brook any distinction among manufacturers. However, to accommodate the commercial reality of outsourcing, job-workers are segregated for appropriate exemption from payment of duties and in the rules pertaining to availment of credit of duties/taxes paid on input goods/input service. Thus, the provisions of exemption notifications, as interpreted in the decisions, accord the privileges of job-worker to a manufacturer if the supplier of inputs undertakes to discharge the duty liability on the finished goods so manufactured with the job-worker as the default manufacturer even for a contracted manufacturer. The facts of the present case would need to be tested against this meaning of job-worker. We discern a patent lack of such examination in the impugned order. Ascertainment of value to be adopted for the purpose of discharge of duty liability - HELD THAT:- In the normal course, liability of a job-worker, for the discharge of duty of central excise, is restricted to the labour charges and the nominal profit - It is common ground that the raw material supplied by the customer was to be mixed with the material belonging to the appellant-assessee for manufacture of the products to be cleared to the former. A part of the production, claimed to represent the value of the inputs belonging to the appellant and utilized for production, is retained by the appellant for sale on its own account on payment of full duty. The other portion, admittedly containing also material belonging to the appellant-assessee has been cleared as that of job-work. Thus, the entire quantity of raw material received from the customer has not been utilized for job-work and not included in the resultant product cleared to the supplier. The presumption of the goods remaining unutilized merely because of artificial segregation based on the input contribution of the supplier and the appellant-assessee may not be sustainable. This is an aspect that has not been examined in the order of the first appellate authority who has preferred to be convinced by the circumstances of entries in the production register, first to conclude non-utilisation of goods supplied as job-worker. In the process, there has been no ascertainment of discharge of duty liability on input received as job-worker that was not returned along with finished products. Matter remanded back to the first appellate authority to consider the dispute in the light of the findings that the appellant-assessee is a job-worker, that the portion of inputs received from the principal-manufacturer which was not put to use for production as job-worker has discharged duty liability and that, as producer of goods, duty on job-work has also been discharged - appeal disposed off by way of remand.

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• 2019 (9) TMI 274
  Process amounting to manufacture or not - processes of melting, purifying, re-packing of the Bees wax and synthetic wax - section 2(f) of CEA,1944 - classification - rate of tax - fatty acids. HELD THAT:- Merely because of some processes are carried out on the raw Bees Wax to make the product in a presentable and better marketable form, without significant change in the character and use between the raw Bees wax and the cleaned/purified Bees Wax,the processes under taken resulted into manufacture - More or less in similar circumstance the Tribunal in the case of COMMR. OF C. EX., CHANDIGARH VERSUS MAHAVIR SPINNING MILLS LTD. [ 2000 (11) TMI 552 - CEGAT, NEW DELHI] while considering the question whether the process of producing Wax washers from duty paid paraffin Wax resulted into manufacture has held that no knew or different article or commodity is thus manufactured by them. The process adopted by them for changing the form of the wax from lump to washers cannot be equated to the process of manufacture. Also, there is no Section/Chapter Note, specifying such processes amounting to manufacture under Chapter 15 of Central Excise Tariff Act, 1985. Merely because the product Bees wax is mentioned under Chapter Sub-Heading 1507, it cannot be considered that the processes carried out on the raw Bees Wax resulted into manufacture within the definition of Sec. 2(f) of CEA,1944. Thus, Bees Wax cleared by the Appellant cannot be said to be manufactured by subjecting the raw Bees waxinto the processes of melting, purifying, re-packing into bags of 25/50kgs. Also, the learned Commissioner, while examining the dutiability in relation to mineral waxes has held that the simple processes of re-melting and packing would not bring into existence a new product. Thus, a different yard stick cannot be applied to Bees wax. The impugned Order is modified to the extent of setting aside confirmation of duty, interest and penalty, directing confiscation imposition of personal penalty relating to processing of Bees Wax - appeal allowed in part.

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• 2019 (9) TMI 273
  Liability of excise duty - job-work - case of the department is that the principal manufacturer are using the job worker manufactured goods in the manufacture of exempted goods, therefore, the job worker being a manufacturer are required to pay excise duty - Extended period of limitation - HELD THAT:- In the case of Thermax Babcock Wilcox Ltd [ 2017 (12) TMI 266 - CESTAT MUMBAI ], Division Bench of Mumbai Tribunal referred the matter to Larger Bench and then only the Larger Bench has held that in case of job worker when the procedure under N/N. 214/86- CE is not followed and the principal manufacturer is not discharging the excise duty on their final product, job worker is required to pay excise duty. Therefore the appellants have correctly entertained the bonafide belief that on the basis of various judgments that excise duty was payable by the principal supplier of the raw material. It is settled law in various judgments in the case of Marsha Pharma Pvt. Ltd [ 2009 (6) TMI 818 - CESTAT, AHMEDABAD ] which was upheld by Hon ble Gujarat High Court in case of Charak Pharma P. Ltd [ 2012 (11) TMI 475 - GUJARAT HIGH COURT ] that the demand for the extended period of limitation was not permissible when the issue was referred to Larger Bench of Tribunal - we have no hesitation in holding that since in the present case is of prior to Larger Bench decision, the matter was in favour of the assessee in many judgments and the matter was finally settled by Larger Bench. The period involved in the present case is much before the Larger Bench Decision, therefore, there is no malafide on the part of the appellant. Hence the demand for the extended period is set aside. If any demand for the normal period exists, the adjudicating authority should be recomputed - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2019 (9) TMI 272
  Defects noticed at the time of inspection - deemed assessment u/s 22(2) of TNVAT Act - validity of revised assessment order - proceedings u/s 27(1)(a) of TNVAT Act - opportunity to show cause - principles of natural justice - HELD THAT:- This Court had already taken a view that with regard to the proviso to Section 27(1)(a), reasonable opportunity to show cause against such orders will suffice and it is not statutorily imperative to hold personal hearing unlike proviso to Section 22(4) of TNVAT Act - This is a case where the 1st respondent Assessing officer, in his discretion, has thought it fit to give an opportunity of personal hearing to the writ petitioner dealer. This Court is left with the considered view that this is an appropriate case to set aside the impugned orders and remit the matter back to the 1st respondent, for redoing the revised assessment after holding a personal hearing and taking into account the writ petitioner dealer s reply / objections dated 19.10.2018 sent in response to revisional notice dated 20.09.2018 - Petition disposed off by way of remand.

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• Indian Laws

• 2019 (9) TMI 271
  Floatation of an e-tender no. 30/EQ/2018 dated 22.3.2018 for supply, installation and maintenance of 74 videoscopes at various field formations of CBEC - It is the case of the petitioner that the price sheet of the bidders disappeared form the portal of the Authority from 8.8.2018 till 6.12.2018 - It is also the contention of the petitioner that the bid of respondent No. 2 was non-responsive on account of column No. 3 relating to custom duty in the Price Schedule Bid having been left blank, and thus the same ought to have been rejected - HELD THAT:- There is no dispute on the basic facts viz. the nature of tender being was an Etender for supply, installation and maintenance on 74 Nos. videoscope; opening and closing date of the tender; the place of the opening of tender and the tender conditions. At this stage reference is required to be made to the relevant clauses in Section II of the General Instructions to the Tenderers (GIT) which was a part of the e-tender Inquiry Document. Contract Price has been defined in clause 2.2.1 to mean the price provided in clause 2.12.1 of Section II of the tender document. L-1 means the tenderer whose tender is the lowest as per clause 2.2.1(xi). Having traversed through the different clauses relating to the terms and conditions governing the present tender, we find that the conditions mandate that the tenderers must read the Instructions given in Form 1 carefully before the tender forms are filled and the bids are submitted. The bidding process was a two-stage process, the first stage being the Technical Bid and the second being a Price Bid. Technically valid and responsive tenders could only be opened for Price Bids. After opening of the Price Bid, the tender was to be awarded to the lowest bidder (L-1). Section VIII provides two proformas in Part I and Part II. Part I relates to the price schedule while part II relates to CCAMC. A perusal of the price bids submitted by the petitioner and respondent No. 2 respectively shows that while the petitioner has claimed the custom duty, respondent No. 2 has not added the duty to the price bid. Column No. 3 of the proforma in Part-I of Section VIII therefore only has a blank in case of the bid of respondent No.2. We may at this stage refer to paras 3 and 5 of the Instruction to tenderers mentioned in Form -1 of Section X, as quoted by us above. It is clear from a reading of the Instructions that the tenderer was required to fill in all columns of the tender form, and if the tender form was incomplete, the same ought to have been rejected. In our view, when respondent No. 2 left the column of custom duty blank, this was an incomplete form and ought to have been rejected as non-responsive in terms of the above mentioned instructions to tenderers. It is evident that it is the absence of the two factors that the contract price of respondent No. 2 has become lower than the petitioner, as rightly contended by learned senior counsel for the petitioner. Thus, the CAMC charge, is not the only factor which has resulted in the price difference between the two parties. In fact, as noted above the CAMC charges of the petitioner are on the lower side. Thus, the contention of respondent No. 1 that the price difference is on account of the CAMC charges which has determined the Net Cash Outflow and has resulted in respondent No. 2 being lower deserves to be rejected. There is complete arbitrariness in the decision making process by which the tender has been awarded to respondent No. 2. This apart, respondent No. 1 has also violated various conditions of the tender as well as the circular issued by the concerned Department - Having come to this conclusion, we quash and set aside the Letter of Award dated 12.11.2018 issued in favor of respondent No. 2. No other relief has been claimed by the petitioner in the present writ petition. Petition allowed.

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• 2019 (9) TMI 270
  False declaration of caste - it is submitted that it was established from the Caste Scrutiny Committee reports that the respondent belonged to the extremely backward community and not to the Scheduled Tribe community and, consequently, had obtained employment in the petitioner Department on the basis of a false declaration of caste - HELD THAT:- As on date the caste certificate which was issued to the respondent-applicant in the year 1993 holds good so long as the decree of the Civil Court stands. In this background, we are of the considered opinion that the Tribunal has not committed any error in proceeding to issue a direction to reinstate the respondent-applicant who had already served for ten years when the verification began and he came to be suspended in the year 2010, i.e. almost after 17 years of his service. His dismissal came only in the year 2015. It is this dismissal order which was challenged before the Tribunal and the claim of the respondent-applicant has been allowed taking into consideration the entire facts on record, but mainly basing its finding on the strength of the decree of the Civil Court. We do not find any error in the approach of the Tribunal in doing so, inasmuch as, so long as the decree holds valid, the respondent-applicant was entitled for the relief that was prayed for. Maintainability of petition - claim petition had been instituted without impleading proper and necessary parties, namely, the District Level and the State Level Committees constituted for the purpose of scrutiny of caste - HELD THAT:- Inasmuch as it is open to the petitioner Department to pursue its remedy of appeal against the decree of the trial court declaring the status of caste of the respondent is concerned. Petition dismissed.

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