TMI Tax Updates - e-Newsletter
September 9, 2020

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

TMI SMS

• Confiscation/ redemption fine cannot be excluded from Sabka Vishwas scheme - Explanation by the Board provides legitimate aid in the interpretations - HC

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• Communication of assessee proves that he has made efforts for uploading GST TRAN-1 form in GST portal but failed - Revenue to accept TRAN-1 by 30.9.20 - HC

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Articles

1. THE DIRE NEED FOR A NATIONAL COURT OF APPEAL

   By: Ameya Dadhich

2. APPOINTMENT OF REGISTERED VALUER IN CORPORATE INSOLVENCY RESOLUTION PROCESS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. ADB & India Sign $500 Million Loan for Delhi-Meerut RRTS Corridor

2. Pradhan Mantri Garib Kalyan Package - Progress so Far

3. Report of the Expert Committee on Resolution Framework for Covid-19 related Stress

Notifications

Companies Law

1. G.S.R. 548 (E) - dated 7-9-2020 - Co. Law

Companies (Acceptance of Deposits) Amendment Rules, 2020

GST - States

2. 25066- FIN-CT1-TAX-0002/2020 - dated 7-9-2020 - Orissa SGST

Amendment to notification no. 18491 dated 22.06.2020 bearing S.R.O. No. 138/2020 to extend due date of compliance under Section 171 which falls during the period from "20.03.2020 to 29.11.2020" till 30.11.2020

SEZ

3. S.O. 3027(E) - dated 31-8-2020 - SEZ

Central Government notifies the 2.098 hectares area at Village Mahape, Navi Mumbai in the State of Maharashtra; and constitutes an Approval Committee

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/DOP/CIR/P/2020/167 - dated 8-9-2020

Entities permitted to undertake e-KYC Aadhaar Authentication service of UIDAI in Securities Market – Addition of NSE to the list

Highlights / Catch Notes

GST

• SEZ Unit Wins Right to Refund Unutilized IGST Credit from Input Service Distributor, Department's Objection Overruled.

  Case-Laws - HC : Refund of unutilized IGST credit lying in Electronic Credit Ledger - It is the case of the petitioner that being a SEZ unit making zero rated supplies under the GST, the petitioner was not able to utilize the credit of the Input Tax Credit of IGST from its ISD - the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit is not tenable. - HC
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• Local Transportation Services with Sightseeing Not Eligible for 5% GST Tour Operator Rate, Focus on Transportation.

  Case-Laws - AAR : Classification of services - Tour Operator service or not - rate of tax - local transportation services along-with services like sightseeing, tour guide, elephant ride etc., provided by the Applicant to The Main Tour Operator - The applicant is rendering only transportation with some ancillary services and not accommodation - Not eligible for 5% rate of GST - AAR
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Income Tax

• Section 11 Exemption: Infrastructure Development Charges Classified as State Money, Tax-Free Without Finance Department Approval.

  Case-Laws - AT : Exemption u/s 11 - money received on account of IDC [Infrastructure Development Charges] - Merely because the assessee fund no longer requires approval of the Finance Department of the state while utilizing the funds, does not in our view alter or impinge upon its character as held by us as being money of the state kept aside for specific purpose.The presence of the Revenue Secretary in the high powered committee takes care of the requirement of obtaining approval of the Finance Department for utilization of funds. - the Fund belonged to the State and was not liable to tax. - AT
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• Reassessment Invalid: Officer Can't Reclassify Examined Expenditures as Capital Based on Audit Opinion.

  Case-Laws - AT : Validity of reopening of assessment - Entire attempt of the assessing officer was to hold that the expenditure incurred, in respect of which details are already available on record and was examined in original assessment, as capital expenditure and such opinion is solely based out of the opinion of the audit party, which in itself is not permissible. The reassessment is bad in law - AT
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• Interest Disallowance on Inventory Valuation Overturned; Section 145A(A) Does Not Require Interest Inclusion in Inventory Value.

  Case-Laws - AT : Disallowance of interest - Valuation of inventory - There is no such provision in section 145A(A) to include interest cost in the value of inventory - Therefor disallowance confirmed by CIT-A assessee should have taken into consideration the interest attributable to bringing the inventory to its present location and condition in accordance with explanation to section 145A(A) is not correct - AT
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• Rajasthan Medical Council Qualifies for Tax Exemption u/s 11, Registration u/s 12AA for Non-Profit Activities.

  Case-Laws - AT : Exemption u/s 11 - registration U/s 12AA - the primary or dominant purpose of the assessee council is to regulate the medical profession of registered nurses, midwives, health visitors and auxiliary nurse midwives in the state of Rajasthan - Merely because the assessee council has charged certain fees as part of rendering its statutory function and to meet its administrative/operative expenses, the same cannot be said to be done for the purpose of profit. - AT
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• Appellant Not Required to Deduct Tax on Interest u/s 194A; Gross Receipts Below Section 44AB Limits.

  Case-Laws - AT : TDS u/s 194A - non deduction of tds on such interest expenses - once the exempted income is excluded from the total income, then the gross receipts from business carried on by it shall not exceed the monetary limits specified u/s 44AB during the financial year - As a consequence, the appellant would not be liable to deduct tax u/s 194A - AT
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• Trust Faces Tax Liability Over Unexplained Cash; Calls for Commissioner to Consider Additional Evidence for Fair Decision.

  Case-Laws - AT : Assessment of trust - unexplained deposits of cash in bank - Punishment in the shape of tax liability is quite disproportionate than the negligence at the end of the assessee before the AO - CIT(A) ought to have taken additional evidence on record for a just decision of appeal. The quasi-judicial authorities are being respected not on account of their power to legalize injustice on technical ground, but because they are capable of removing the injustice, and is expected to so. - AT
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Customs

• Customs broker's license suspension overturned due to delay and lack of justification for urgency in over-valuation case.

  Case-Laws - AT : Suspension of Customs Broker License - over-valuation of ‘rough diamonds/precious stones’ - the gap of more than a year since the alleged overvaluation was attempted, and the continued operation of the appellant as a customs broker since then, does indeed raise doubts about the urgency for suspension. - the impugned order has not recorded any justification for curtailing the broking operations of the appellant at this stage. - order of suspension set aside - AT
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• DGFT's Joint Director General cannot review issued orders; only the Director General can u/s 16.

  Case-Laws - HC : Jurisdiction of Joint DGFT to review own order - The power of review of any decision or order is only under Section 16 - As and when the second respondent had issued the EPCG licence and the Export Obligation Discharge Certificate, he becomes “functus officio” and if at all, such an order of the second respondent is to be reviewed, the same can be done only by the Director General, as provided under Section 16. - HC
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Corporate Law

• Section 167(2)(a) Companies Act: Directors' DIN Valid Only During Tenure; No Prior Notice Required for Disqualification.

  Case-Laws - HC : Vires of the proviso under Section 167(2)(a) of the Act which was inserted to the Companies (Amendment Act 2017) - disqualification with respect to Directorship of 'Public' companies - Principles of Natural Justice - The DIN number can exist only during the life time of post of Directorship and not for the entire life of the individual. Issuing a prior notice would be of no avail and would only be an empty formality since the provision of law is clear on this aspect. - HC
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Indian Laws

• High Court Rules Dismissal Unjustified Due to Active Pursuit of Case by Complainant Since 2013.

  Case-Laws - HC : Maintainability of complaint - Dishonor of cheque - The Magistrate was not justified in dismissing the complaint in default for absence of authorized person of the complainant coupled with failure of its counsel to attend the case on that date, particularly, when the complainant was pursuing its case from 18.10.2013 and was being represented through counsel on numerous dates fixed for service of respondent through bailable and non-bailable warrants - HC
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Service Tax

• Farmers' Seed Multiplication Service Exempt from Tax as Agricultural Extension, Not Scientific Consultancy.

  Case-Laws - AT : Levy of Service Tax - Scientific or Technical Consultancy service or not - In order to help farmers efficiently multiply the seeds, the appellant provides guidance to them and charges a fee for providing such guidance. - It is an agricultural extension service - not liable to service tax - AT
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• Refund of Cenvat Credit Approved: Service Not Classified as Intermediary, Qualifies for Export Benefits Under Provision Rules.

  Case-Laws - AT : Refund of the accumulated Cenvat credit - export of service - Place of provision of service - intermediary service - , the service provided by the Appellant has been provided on its own account and therefore, does not qualify as intermediary service. - AT
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• CENVAT Credit Allowed for Input Services: Hotel Stays, Rent-a-Cab, and Catering Deemed Essential for Output Services.

  Case-Laws - AT : CENVAT Credit - input services - Short term hotel accommodation - rent-a-cab - outdoor catering - these services are essential for providing output services, credit allowed - AT
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Central Excise

• SVLDRS 2019 includes cases with confiscation and redemption fines, offering waivers and immunity per CBIC clarification.

  Case-Laws - HC : Applicability of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) to the cases involving confiscation and redemption fine - when the CBIC has issued FAQs, press notes and flyers by way of explaining the scheme providing waiver of interest, penalty and fine and immunity from prosecution, then case involving confiscation / redemption fine cannot be excluded under the Scheme, as such explanation by the Board provides legitimate aid in the constructions and interpretations of the provision of the Scheme. - HC
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Case Laws:

• GST

• 2020 (9) TMI 295
  Classification of services - Tour Operator service or not - rate of tax - local transportation services along-with services like sightseeing, tour guide, elephant ride etc., provided by the Applicant to The Main Tour Operator - taxable at the rate of 5% under Serial No. 23(i) Chapter head 9985 of Notification No. 11/2017-Central Tax (rate) dated 28.06.2017 (as amended) or otherwise? - HELD THAT:- The applicant is involved in supply of local transportation service and services like elephant ride, guide services and sightseeing to tourists engaged by various tour operators, also called in trade parlance as Main Tour Operators (hereinafter MTO). The tourists as discussed above are primarily engaged by MTO and thereafter delegated to the applicant and the likes. The above said Notification also delineates two conditions for a tour operator:- The first condition is related to restriction of input tax credit whereas second condition is related to criteria for inclusion of charges of accommodation and transportation in the bill of a tour operator; and The second condition clearly emphasise that a bill issued by a tour operator for supply of its services should be inclusive of charges of accommodation and transportation required for such a tour. The conjunction and clearly explains that accommodation and transportation, both are must elements for a tour whereas conjunction or may have rendered option between accommodation and transportation. The applicant is rendering only transportation with some ancillary services and not accommodation, as such does not satisfy the conditions as mentioned under Serial No. 23 (i) {Chapter heading 9985} of Notification No. 11/2017-Central Tax (rate) dated 28.06.2017 (as amended), therefore, rate of GST 5% is not applicable.

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• 2020 (9) TMI 294
  Refund of unutilized IGST credit lying in Electronic Credit Ledger - It is the case of the petitioner that being a SEZ unit making zero rated supplies under the GST, the petitioner was not able to utilize the credit of the Input Tax Credit of IGST from its ISD and it was lying unutilized in the Electronic Credit Ledger of the petitioner - applicability of Rule 89 or 96 of CGST Rules. HELD THAT:- In the present case, instead of Rule 96, Rule 89 would be applicable which is pertaining to refund of the input tax credit. Rule 89 of the CGST Rules provides for procedure for application for refund of tax, interest, penalty, fees and prescribes that in respect of supplies to a SEZ unit, the application for refund has to be filed by the supplier of goods or services. The contention of the respondents that as the petitioner is not the supplier of the goods and services, the petitioner would not be entitled to file application for refund is not tenable because in facts of the present case, input service distributor i.e. ISD as defined under section 2(61) of the CGST Act is an office of the supplier of goods and services which receives tax invoices issued under section 31 of the CGST Act towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of CGST, SGST Or IGST paid on such goods or services. Therefore, in facts of the case, it is not possible for a supplier of goods and services to file a refund application to claim the refund of the input tax credit distributed by ISD. Therefore, the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit is not tenable. This aspect is further fortified by notification no. 28/2012 dated 20th June, 2012 which was in connection with service tax attributable to the services used in more than one unit to be distributed pro-rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units and similarly, in facts of the present case also, credit of service tax is distributed to all the units by the ISD and therefore, the claim of refund made by the SEZ unit of the petitioner is required to be granted. In view of the decision in case of M/s. Amit Cotton Industries [ 2019 (7) TMI 472 - GUJARAT HIGH COURT ] , the petitioner is entitled to claim refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as input tax credit is distributed by the input service distributor. The impugned order is quashed and set aside. The respondents are directed to process the claim of refund made by the petitioner for unutilized IGST credit lying in Electronic Credit Ledger under section 54 of the CGST Act, 2017 - Petition allowed.

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• Income Tax

• 2020 (9) TMI 293
  Eligibility for deduction u/s 80IB(10) - large scale violations and deviations to the sanctioned plan of the local authority by the assessee firm in carrying out the Housing Project - Whether the appellate authorities were correct in construing that deviations and violations committed by the assessee while undertaking the housing project and yet to be paid compounding fee for regularizing the default is fairly enough to claim the deduction under Section 80IB(10)? - ITAT allowed the deduction as confirmed by CIT- A stating that authorities of the BBMP inspected the building for issue of occupancy certificate and it was observed that there was a deviation in construction with reference to the modified building plan, which is well within the permissible limit of regularization as per the revised Master Plan 2015 with levy of compounding fee which was accordingly paid HELD THAT:- Findings of fact are based on meticulous appreciation of evidence on record. The Bangalore Development Authority Act, Karnataka Municipal Corporation Act and Karnataka Municipalities Act do not contain any provision to obtain completion certificate and therefore, it was not necessary for the assessee to obtain any completion certificate in the absence of any provisions in the aforesaid Acts. From the findings recorded by the Commissioner of Income Tax (Appeals) as well as the Tribunal, it is evident that the project undertaken by the assessee was approved by the local authority and therefore, it had complied with the conditions mentioned in Section 80IB(10)(a) of the Act. - Decided in favour of assessee.

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• 2020 (9) TMI 292
  Assessment of trust - assessee is an educational society registered under section 12AA - unexplained deposits of cash in bank - HELD THAT:- Revenue authorities have not analytically examined the material even available before them - three bank accounts viz. account with Unjha Nagarik Sahakari Bank Ltd., Mehsana Urbank Co-op. Bank Ltd. and Market Yard Commercial Co-op. Bank been reconciled analytically, then it would reveal that Rs. 15 lakhs was not deposited in respective cooperative bank in cash, rather, it is a bank transfer from the assessee s bank with Unjha Nagarik Sah. Bank Ltd. Even if it is an ex parte order, then it has been appreciated that the AO is harping upon an AIR information. He should have analytically examined AIR information and should have called for further information from the bank, if some non-bank transaction is reflected, which is to be considered as unexplained credit. Punishment in the shape of tax liability on addition of Rs. 27,15,600/- and Rs. 19,44,000/- is quite disproportionate than the negligence at the end of the assessee before the AO - CIT(A) ought to have taken additional evidence on record for a just decision of appeal. The quasi-judicial authorities are being respected not on account of their power to legalize injustice on technical ground, but because they are capable of removing the injustice, and is expected to so. On the other hand, the conduct of the assessee is not above board. As prosecuted its income-tax litigations negligently and without any diligence. It has unnecessarily dragged the litigation in the second round. Therefore, considering this aspect, we allow the appeal of the assessee for statistical purpose, but subject to payment of cost. This cost is quantified at Rs. 10,000/- which is to be paid by the assessee, and certificate to this effect would be furnished before the AO as well as to the Registry of the Tribunal. Both the orders are set aside, and all the issues are restored to the file of the AO who will adjudicate the case in accordance with law. Appeal of the assessee is allowed for statistical purpose

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• 2020 (9) TMI 291
  Revision u/s 263 - TDS u/s 194A - non deduction of tds on such interest expenses - provisions of section 44AB applicability on assessee - TDS liability where assessee is liable to get its accounts audited - HELD THAT:- In the case of a person carrying on business, if the total sales, turnover or gross receipt in business in the previous year relevant to the assessment year exceeds Rs. 1 crore, then he is covered by the provisions of compulsory audit u/s 44AB. Even in a case of an individual carrying on business as a sole proprietor, it is necessary to comply with the provisions of section 44AB only in respect of his business income; it would not be necessary to comply with the provisions of section 44AB in respect of his other income as explained in Ghai Construction v. State of Maharashtra [ 2007 (4) TMI 763 - BOMBAY HIGH COURT ] The term gross receipts is not defined in the Act. It will include all receipts whether in cash or in kind arising from carrying on of the business which will normally be assessable as business income under the Act. The Guidance Note on Tax Audit u/s 44AB of the Income Tax Act, 1961 (Revised 2013 edition), issued by the Institute of Chartered Accountant of India, New Delhi, mentions inter alia that the following items, relevant in the instant case, would not form part of gross receipts in business for purposes of section 44AB. Dividends on shares except in the case of an assessee dealing in shares, Income by way of interest unless assessable as business income and Share of profit of a partner of a firm in the total income of the firm excluded from his total income u/s 10(2A) once, the above items which appear in the capital account of the appellant are excluded, then the gross receipts from business carried on by it shall not exceed the monetary limits specified u/s 44AB during the financial year 2013-14 relevant to the assessment year 2014-15. As a consequence, the appellant would not be liable to deduct tax u/s 194A - we set aside the order u/s 263 passed by the Pr. CIT. - Decided in favour of assessee.

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• 2020 (9) TMI 290
  Exemption u/s 11 - application of Rajasthan Nursing Council seeking registration U/s 12AA denied - observation of CIT is that, applicant society cannot be held as charitable within the meaning of Sec.2(15) of the Income -tax Act, 1961 - a per CIT- A Council is not engaged in the charitable purpose of education, and that its activities fall under General Public Utility thereby attracting proviso to Sec. 2(15) - dominant purpose test - determine the dominant objectives and purpose of the assessee Council - HELD THAT:- The assessee Council has been established by the Rajasthan Government under the Rajasthan Nursing Council Act, 1964 for the purpose of carrying out the provisions as so stated in the said Act. The preamble to the Act provides that the Act has been enacted by the Rajasthan State Legislature in the 50th year of Republic of India to provide for the registration of nurses, midwives, health visitors and auxiliary nurse-midwives in the state of Rajasthan. Rajasthan Nursing Council is a statutory authority established under the Rajasthan Nursing Council Act, 1964 consisting of ex-officio members who are officials of the health department Activities carried out by the applicant council have been reflected in its Income Expenditure accounts of various years - applicant council has shown receipt of direct income comprising of registration fees, counselling fees, examination fees, Inspection fees, revaluation fees etc and there are corresponding expenditure of councelling charges, examination charges, inspection charges, etc - such income receipts and expenditure describes its activities which are in the nature of General public Utility (GPU) - same income receipts (100%) are of nature of Business/commercial receipts and thus, in contravention of 20% limit as provided in the proviso to section 2(15) and also are not incidental but pre-dominant activities of the institution. How can the same activity qualify and falls in both the categories i.e, an activity in the nature of general public utility and at the same time, qualify as business activity. Merely because the assessee council has charged certain fees as part of rendering its statutory function and to meet its administrative/operative expenses, the same cannot be said to be done for the purpose of profit. It is not even the case of the Revenue that such activities are carried out for the purposes of profit and the fees so charged are exorbitant and not commensurate with the activities so undertaken by the assessee council. The test of carrying out the activities in the nature of trade, commerce or business is not satisfied in the instant case. As we have held above, the primary or dominant purpose of the assessee council is to regulate the medical profession of registered nurses, midwives, health visitors and auxiliary nurse midwives in the state of Rajasthan and to ensure that these persons have undergone requisite training and have passed the qualifying examination and hold the necessary degrees/certificates and thus eligible to practice as nurses, midwives, health visitors and auxiliary nurse midwives in their respective domains and services of such persons are thus available to the hospitals, nursing homes and public at large. Where as part of rendering of such activities, it recovers certain nominal fees to meet its operational and administrative expenses, the same will not disqualify it from being involved in activities of general public utility as the Courts have held that the proviso to section 2(15) does not seek to disqualify charitable organization covered by the last limb, when certain reasonable/nominal fee is collected from the beneficiaries in the course of activity which is not a business but clearly charity for which they are established and they undertake. Once it is held that the whole of the activities are in nature of general public utility and there are no separate business activities and no separate revenue streams from such business activities, the proviso to section 2(15) doesn t apply in the instant case and has been wrongly invoked by the ld CIT(E) - order passed by the ld CIT(E) is hereby set-aside and he is directed to grant registration to the assessee Council u/s 12AA as so applied. - Decided in favour of assessee.

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• 2020 (9) TMI 289
  Late filing fee u/s. 234E - Late filing of TDS returns / statement - contention that fee u/s 234E is not leviable before 01.06.2015, i.e., the date when clause (c) was inserted in section 200A(1) for the computation of the said fees at the time of processing - conflicting decisions by different High Courts - HELD THAT:- Levy of fee u/s. 234E for defaults of period in filing TDS/TCS statements / returns even for the period prior to 1.06.2015 is concerned, as mentioned earlier there are conflicting decisions by different High Courts and there is no decision on this issue by the jurisdictional High Court. While Hon ble Karnataka High Court is in favour of the assessee holding that the amendments brought in statute w.e.f. 01.06.2015 are prospective in nature and hence notices issued u/s. 200A for computation and intimation in payment of late filing fee u/s.234E of the Act relating to the period of tax deduction prior to 01.06.2015 were not maintainable, the Hon ble Gujarat High Court has decided the issue against the assessee and in favour of the revenue Tribunal are taking the view that when there are conflicting decisions, the decision in favour of the assessee should be followed in the light of decision of Hon ble Supreme Court in the case of Vegetables Products Limited [ 1973 (1) TMI 1 - SUPREME COURT] . We hold that the CIT(A) is not justified in confirming the late fee levied by the AO u/s. 200 A r.w.s. 234 E since the defaults are prior to 1.06.2015 - Fee levied u/s. 234 E is directed to be deleted. - Decided in favour of assessee.

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• 2020 (9) TMI 288
  Fees charged u/s 234E - default in not filing TDS returns in time - intimation under section 200A - whether where the return for the TDS deduction was filed under respective sections of the Act, for the period prior to 01.06.2015 though belatedly, but no late filing fee can be charged under section 234E? - whether the amendment brought in by the Finance Act, 2015 w.e.f. 01.06.2015 by way of insertion of clause (c) to section 200A(1) of the Act is clarificatory or is prospective in nature and is not applicable to the pending assessments? - HELD THAT:- The machinery provisions of charging the said fee as per clause (c) of Section 200A(1) of the Act was inserted by legislature with effect from 01.06.2015. We find that the said issue has been decided by the Hon ble Karnataka High Court in the case of Fateh Raj Singhvi Ors. vs UOI [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] and it is held that section 200A of the Act inserted with effect from 01.06.2015 had prospective effect and was not applicable for different quarters of assessment years prior to 01.06.2015. Where power is being enshrined upon the AO to charge late fees while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. In any case, the Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the AO under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. - Decided in favour of assessee.

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• 2020 (9) TMI 287
  Levy of late fees payable u/s 234E - charging of fees payable under section 234E of the Act prior to amendment to section 200A(1)(c) of the Act vide Finance Act, 2015 w.e.f. 01.06.2015, while processing the TDS returns - whether where the return for the TDS deduction was filed under respective sections of the Act, for the period prior to 01.06.2015 though belatedly, but no late filing fee can be charged under section 234E? - HELD THAT:- Undoubtedly, the provisions of section 234E were inserted by the Finance Act, 2012, under which the liability was imposed upon the deductor in such cases where TDS statements / returns were filed belatedly to pay the fees as per said section. In cases, where the assessee has failed to deposit the said fees, then in order to enable the AO to collect the said fees chargeable under section 234E it is incumbent upon the Legislature to provide mechanism for the Assessing Officer to charge and collect such fees. In the absence of enabling provisions, the Assessing Officer while processing the TDS statements, even if the said statements are belated, is not empowered to charge the fees under section 234E of the Act. The amendment was brought in by the Finance Act, 2015 w.e.f. 01.06.2015 and such an amendment where empowerment is given to the Assessing Officer to levy or charge the fees cannot be said to be clarificatory in nature and hence, applicable for pending assessments. Legislature itself recognized that under the existing provisions of section 200A of the Act i.e. prior to 01.06.2015, the Assessing Officer at the time of processing the TDS statements did not have power to charge fees under section 234E of the Act and in order to cover up that, the amendment was made by way of insertion of clause (c) to section 200A. It cannot be said that insertion made by section 200A(1)(c) of the Act is retrospective in nature, where the Legislature was aware that the fees could be charged under section 234E of the Act as per Finance Act, 2012 and also the provisions of section 200A of the Act were inserted by Finance (No.2) Act, 2009, under which the machinery was provided for the Assessing Officer to process the TDS statements filed by the assessee. The insertion categorically being made w.e.f. 01.06.2015 lays down that the said amendment is prospective in nature and cannot be applied to processing of TDS returns / statements prior to 01.06.2015. Where power is being enshrined upon the AO to charge late fees while processing the TDS returns w.e.f. 01.06.2015, such provision cannot have retrospective effect as it would be detrimental to the case of tax payer. The provision under which a new enabling power is being given to charge fees under section 234E of the Act while processing TDS returns / statements and such power is to be applied prospectively. In any case, the Parliament itself has recognized its operation to be prospective in nature while introducing clause (c) to section 200A(1) of the Act and hence, cannot be applied retrospectively. Amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted. The intimation issued by the Assessing Officer was beyond the scope of adjustment provided under section 200A of the Act and such adjustment could not stand in the eye of law. - Decided in favour of assessee.

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• 2020 (9) TMI 286
  TP Adjustment - Comparable selection - HELD THAT:- Assessee provides Information Technology enabled Services (in short ITeS ) and is mainly engaged in research support for a broad array of business challenges, including competitive intelligence, customer experience and branding customer analytics, investment and due diligence, market entry and product launch. Exclusion of TCS e-Serve Ltd. from the final list of comparables on the ground of the said concern having both brand value and high turnover - where TCS e-serve Ltd. has high brand value then it cannot be selected as comparable with a concern whose brand value is less. The Ld.DR for the Revenue stressed that the global entity of which the assessee is the subsidiary has high brand value. No merit in the stand of the Revenue in this regard. Even on the second issue of high turnover, the said concern i.e. TCS e-Serve Ltd. cannot be selected as comparable. The total turnover of the assessee during the year is Rs. 30.92 crores. On the other hand, the turnover of the TCS e-Serve Ltd. is Rs. 1578 crores. Accordingly we hold that the TCS e-Serve Ltd. is to be excluded from the final list of comparables. Infosys BPO Ltd. which has both brand value and high turnover of Rs. 1312 crores cannot be selected as a concern comparable to the assessee whose total turnover is only Rs. 31 crores (approx.). Accordingly, we hold so. - Decided in favour of assessee.

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• 2020 (9) TMI 285
  Late filing fee u/s. 234E - contention that fee u/s 234E is not leviable before 01.06.2015, i.e., the date when clause (c) was inserted in section 200A(1) for the computation of the said fees at the time of processing - conflicting decisions by different High Courts - HELD THAT:- Levy of fee u/s. 234E for defaults of period in filing TDS/TCS statements / returns even for the period prior to 1.06.2015 is concerned, as mentioned earlier there are conflicting decisions by different High Courts and there is no decision on this issue by the jurisdictional High Court. While Hon ble Karnataka High Court is in favour of the assessee holding that the amendments brought in statute w.e.f. 01.06.2015 are prospective in nature and hence notices issued u/s. 200A for computation and intimation in payment of late filing fee u/s.234E of the Act relating to the period of tax deduction prior to 01.06.2015 were not maintainable, the Hon ble Gujarat High Court has decided the issue against the assessee and in favour of the revenue Tribunal are taking the view that when there are conflicting decisions, the decision in favour of the assessee should be followed in the light of decision of Hon ble Supreme Court in the case of Vegetables Products Limited [ 1973 (1) TMI 1 - SUPREME COURT] . We hold that the CIT(A) is not justified in confirming the late fee levied by the AO u/s. 200 A r.w.s. 234 E since the defaults are prior to 1.06.2015 - Fee levied u/s. 234 E is directed to be deleted. - Decided in favour of assessee.

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• 2020 (9) TMI 284
  Levy of late filing fee u/s 234E - delay in filing of TDS return/statement before 01.06.2015 i.e. insertion of clause (c) to section 200A - conflicting decisions - HELD THAT:- We find, identical issue had come up before the coordinate Bench of the Tribunal in the case of Udit Jain [ 2019 (11) TMI 1390 - ITAT DELHI] after considering the decision of Fatehraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] as well as the decision of Rajesh Kourani vs. UOI [ 2017 (7) TMI 458 - GUJARAT HIGH COURT] has decided the issue in favour of the assessee. After considering the above conflicting decisions, the coordinate benches of the Tribunal are taking the view that when there are conflicting decisions, the decision in favour of the assessee should be followed in the light of decision of Hon ble Supreme Court in the case of Vegetables Products Limited [ 1973 (1) TMI 1 - SUPREME COURT] . In the light of the above discussion we hold that the CIT(A) is not justified in confirming the late fee levied by the AO u/s. 200 A r.w.s. 234 E since the defaults are prior to 1.06.2015. Accordingly we set aside the order of the Ld. CIT(A) and the fee levied u/s. 234 E is directed to be deleted. - Decided in favour of assessee.

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• 2020 (9) TMI 283
  Exemptions u/s. 11 and 12 - appellant was allowed registration u/s. 12AA by the CIT concerned during the pendency of appeal - HELD THAT:- In the present case it appears that when the A.O. framed the assessment and the Ld. CIT(A) decided the first appeal, the assessee could not produce the certificate of Registration granted under section 12AA of the Act which the Ld. Counsel for the Assessee claimed that now the assessee in a position to produce the said certificate. We therefore by keeping in view the peculiar facts of this case and the principles of natural justice, deem it appropriate to set aside this case back to the file of the A.O. to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Appeal of the Assessee is allowed for statistical purposes.

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• 2020 (9) TMI 282
  Reopning of assessment u/s 147 - roving and fishing enquiry - Whether a classic case of borrowed satisfaction where the AO has not conducted any inquiry to find out whether the report received by him from ITO (I CI) was correct or not - HELD THAT:- Reasons so recorded by the AO before issuance of notice u/s 148 of the Act, around which the rival contentions have been advanced, is not discernable either from the assessment order or any other material brought on record by either of the parties and in absence of the same, we are unable to take a view in the matter. Having said that, the fact that the assessee has already taken this ground of appeal before the ld CIT(A) and there is no finding recorded by the ld CIT(A) disposing off such ground of appeal, we believe that it would be fair that the ld CIT(A) should dispose off the said ground of appeal first and where the assessee still have any grievance, he can approach the Tribunal and we will then have the opportunity to consider the findings of the ld CIT(A) as well. To our mind, the same is also in accordance with judicial discipline where the ground of appeal is decided by the first appellate authority and then, by the Tribunal. We accordingly set aside this ground of appeal to the file of the ld CIT(A) to decide the same by way of a speaking order after providing reasonable opportunity to the assessee. The assessee shall be at liberty to raise the contentions so advanced before us and the same are thus left open and the ld CIT(A) shall decide the same as per law. Hence, the ground of appeal is allowed for statistical purposes. Non provising reasons to beileve - HELD THAT:- Reasons so recorded before issuance of notice u/s 148 have been duly communicated to the assessee and the latter having not objected to the reopening of the proceedings, there is no prejudice which is caused to the assessee by way of denying his rightful right to object to the reopening of the proceedings and there is thus no violation of the directives of Hon ble Supreme Court as laid down in the case of GKN Driveshaft. [ 2002 (11) TMI 7 - SUPREME COURT] The decision of the Hon ble Karnataka High Court in case of CIT vs V. Ramaiah [ 2020 (7) TMI 134 - KARNATAKA HIGH COURT] is distinguishable as in that case, it was established on facts that reasons were not supplied to the assessee, however, in the present case, as we have seen above, the reasons have been supplied not once but twice to the assessee but the assessee has chosen to remain silent and has not objected to the reasons so recorded. In the result, the ground so taken is dismissed. Order passed by the ld CIT(A) without providing sufficient and adequate opportunity to the assessee - HELD THAT:- This matter has been listed for hearing on couple of occasions by the ld CIT(A) and has been adjourned at the request of the ld AR on behalf of the assessee and again on the last date of hearing when the matter was scheduled for hearing, apparently, there is no compliance on part of the assessee or his ld AR. Thereafter, on the next day, the matter was decided ex-parte by the ld CIT(A) summarily without deciding on merits. Therefore, in the interest of justice and fair play and especially where the matter has not been decided on merits, we believe that the assessee deserves one more opportunity to put forth his arguments and contentions and we accordingly set aside the matter to the file of the ld. CIT(A) to examine the matter afresh after providing reasonable opportunity to the assessee - Ground allowed for statistical purposes

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• 2020 (9) TMI 281
  Disallowance of interest - Valuation of inventory - as per CIT-A assessee should have taken into consideration the interest attributable to bringing the inventory to its present location and condition in accordance with explanation to section 145A(A) - HELD THAT:- Valuation of inventory should be in accordance with the method of accounting regularly employed by the assessee and is to be further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation and as per the explanation it is provided that for this purpose, any tax, duty, shares or fee by whatever name called under any law for the time being in force and it shall include all such payments notwithstanding any right arising as a consequence to such payment. There is no such provision in this section to include interest cost in the value of inventory. Tribunal order cited of DLF Ltd.,. [ 2016 (12) TMI 1295 - DELHI HIGH COURT] supports the case of the assessee and therefore, respectfully following this Tribunal order and in view of the above discussion, we decide this issue in favour of the assessee. Non genuine payment - Addition of payments were otherwise than by an account payee cheque - disallowance was made by the AO on this basis that the AO issued notices to verify these transactions under section 133(6) of the Act and these notices were sent by the AO by Speed Post Acknowledgement Due (SPAD) to the 10 entities out of 28 entities on a Test Check Basis but these notices has been returned unserved - HELD THAT:- W e set aside the order of CIT(A) on this issue and restore this matter back to the file of AO for a fresh decision with the direction that the assessee should furnish the comparison of quantity of opening stock + purchase and closing stock + sales and if there is no difference in such two quantities and difference, if any is explained/reconciled then quantity of purchase should be accepted and in case of unexplained difference in such two quantities, only such unexplained difference in quantity should held to be bogus claim. Regarding the pricing part also, the assessee should bring on record necessary details and evidences in support of the price paid by the assessee. The AO should also examine the reasonableness of such pricing and then pass necessary order - Ground allowed for statistical purposes. Disallowance of commission payment - CIT-A deleted the addition - HELD THAT:- There is no finding of the CIT(A) that the documents and evidences required by the AO as noted by him in the assessment order were submitted before the AO or before CIT(A). In the absence of required details and documents regarding receipt of services from the agents, it is not proper to delete the disallowance of commission payment. No such document was brought on record even by way of additional evidence and therefore, on this issue, we reverse the order of learned CIT(A) and restore that of the AO. - Decided in favour of revenue. Addition u/s 40A - CIT-A deleted the addition accepting additional evidence - HELD THAT:- In view of these details available in the Paper Book filed by the assessee containing 103 pages, it is seen that details are made available as per which it is made clear that all these payments are made by account payee cheques and as per the certificate given in the Paper Book, all these documents were made available by the assessee before both AO and learned CIT(A) and therefore, there is no violation of Rule 46A of the Income Tax Rules, 1962, also, as alleged by Revenue in ground of this appeal.

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• 2020 (9) TMI 280
  Reopening of assessment u/s 147 - power of the AO to reopen - HELD THAT:- Interdiction provided in the proviso appended to section 147 of the Income Tax Act puts embargo on the power of the AO to reopen an assessment in the cases where four years have been expired and the assessment was framed under section 143(3) of the Act. The assessment cannot be reopened unless it is established that the assessee has failed to disclose fully and truly all material facts necessary for the assessment for that assessment year. A perusal of the reasons extracted would indicate that nowhere the AO has made out that the income has escaped the assessment on account of failure of the assessee to disclose all material acts fully and truly. Therefore, reassessment is not sustainable. - Decided in favour of assessee.

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• 2020 (9) TMI 279
  Assessment on a non-existing entity - Scheme of amalgamation - change in name - assessee submits that in identical circumstances ITAT in assessee s own case has quashed assessment hence the same should be duly followed - HELD THAT:- Upon careful consideration we find that honourable Supreme Court in the case of Honda CIEL [ 2007 (11) TMI 8 - SUPREME COURT ] has held that non-consideration of the order of the ITAT in assessee s own case can render the order of another bench of the ITAT containing mistake apparent from record. Since the above said order of the ITAT in assessee s own case has not been reversed by the honourable High Court, we duly follow the aforesaid order and hold that since the facts are identical, the assessee succeeds on addition ground following the aforesaid ratio. Accordingly the assessment is treated as null and void.

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• 2020 (9) TMI 278
  Validity of reopening of assessment - non independent satisfaction regarding escapement of income - borrowed satisfaction - disallowing business development and marketing expenses holding the same to be capital expenditure, as against revenue expenditure claimed by the assessee - HELD THAT:- We find that in the reasons, the Assessing Officer himself has mentioned The scrutiny of assessment revealed . This itself shows that the details were very much available in the assessment record. We find that in the original assessment proceedings, the Assessing Officer raised a query asking the assessee to give details of expenditure of more than Rs. 10 lakhs. The assessee filed complete list of expenses which were more than Rs. 10 lakhs. Expenses are found to be debited in the Profit and Loss Account under Schedule 15 which is demonstrated at page 17 of the paper book. Under Schedule 17 of the financial statement, which is exhibited at page 20 of the paper book, the assessee has shown professional service expenses incurred during the relevant Assessment Year under the head Expenditure in foreign currency . In the tax audit report, in clause 17 relating to expenditure of capital nature, it is mentioned as NIL . This means that even the auditors were of the opinion that no capital expenditure was incurred during the year under consideration, which is debited to the profit and loss account. Since this reimbursement of professional expenses tantamount to international transactions, the assessee has, in Form 3CEB, which relates to particulars relating to International Transactions required to be furnished u/s 92E of the Act, furnished complete details in relation to transactions with NIIT Technologies INC UK and US. In column 10 of Form No. 3CEB, it was stated that amount has been paid to the sister concerns in lieu of services rendered by them and further, such transactions have been entered into at Arm s Length price Surprisingly, no adverse inference has been drawn in so far as the payments made in the months of December and March are concerned and adverse inference has only been drawn in the months of June 2004 and September 2004, as exhibited elsewhere. Reasons for reopening the assessment do not specify any failure on the part of the assessee to disclose truly and fully all material facts. On the contrary, we find that full and true disclosure was duly made by the assessee. All material information was duly filed and was available on record before the Assessing Officer. Therefore, on perusal of reasons, it cannot be comprehended as to what more information remained to be disclosed by the assessee and moreover, no instance of any non disclosure has been pointed out by the Assessing Officer in the reasons recorded. The Revenue has heavily relied upon Explanation 1 to section 147 of the Act. In our considered opinion, the onus is also on the Assessing Officer to show that primary disclosure was not sufficient for further investigation by the Assessing Officer. Entire attempt of the assessing officer was to hold that the expenditure incurred, in respect of which details are already available on record and was examined in original assessment, as capital expenditure and such opinion is solely based out of the opinion of the audit party, which in itself is not permissible. The reassessment is bad in law and, therefore, no interference is called for. - Decided in favour of assessee.

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• 2020 (9) TMI 277
  Exemption u/s 11 - money received on account of IDC [Infrastructure Development Charges] - AO treating the interest income earned and the IDC receipts as its income and deducting therefrom the expenses as per the Income Expenditure account of the assessee - as per assessee the Fund was just a bank account of the State Government and was not a separate legal entity - HELD THAT:- Fund merely represents money, belonging to the State, pooled for specific user purposes of infrastructure development in the state. The Fund belongs entirely to the State and has no distinct or separate identity of its own. From copies of documents being inter government department communication and minutes of the meeting of the High powered committee we find that the documents bring out the fact that the assessee Fund merely contributed to infrastructure projects in the state approved by the government and on direction of the government. No role in the development of infrastructure projects except being a depository of IDC charges collected by the state for the said purpose, to be utilized as determined by the State. Assessee fund merely represented money set apart/pooled by the government so as to facilitate its user for a specific purpose of infrastructure development in the state, all control over its collection and user remaining with the state - Fund entirely vested in the State and no separate entity, distinct from the state had been created by virtue of the creation of the fund. Argument of the Revenue that the formation of a high powered committee for administration of the Fund sufficiently established that an entity distinct from the State has been created, in our view holds no ground. No merit in the argument of the Revenue that the assessee itself having admitted being a distinct and separate entity from the state, while applying for grant of registration u/s 12A and filing income tax returns, it cannot now take a contrary stand. Undoubtedly the aforesaid admission of the assessee related to an interpretation of facts and did not relate to admitting a fact. Merely because the assessee had interpreted the facts relating to its creation and administration as demonstrating itself to be an entity distinct and separate from the state, while seeking registration u/s 12A of the Act, does not estop the assessee from taking a contradictory stand, which is in accordance with law, in any other proceeding. Merely because the assessee fund no longer requires approval of the Finance Department of the state while utilizing the funds, does not in our view alter or impinge upon its character as held by us as being money of the state kept aside for specific purpose.The presence of the Revenue Secretary in the high powered committee takes care of the requirement of obtaining approval of the Finance Department for utilization of funds. In view of the above we hold that Upto A.Y 2013-14, the Fund belonged to the State and was not liable to tax.The addition made of the IDC receipts and interest on FDRs in A.Y 2009-10 and A.Y 2013-14 are therefore directed to be deleted. Fund vested in the Board which was an entity distinct and separate from the State and was also not a nodal agency of the State - receipts of IDC and interest on FDR s created from the IDC receipts are liable to tax under the Act. Denial of benefit of accumulation u/s 11(2) - Non allowance of benefit of accumulation of income as per section 11(2) - non-filing of notice of accumulation in prescribed Form No.10 - HELD THAT:- ITAT has held in a number of decisions that the assessee can file Form No.10 at any time during assessment proceedings and which has to be considered for granting benefit u/s 11(2) of the Act and the non filing of the same is a mere irregularity and technical lapse which needs to be condoned - we hold, that the denial of benefit of accumulation for delayed filing of Form No.10 is not as per law . Mismatch in the figure of accumulation as reported in the audit report filed in Form No.10B and that filed in the notice for accumulation in Form No.10 - We are not in agreement with the same since the requirement of law is to intimate the amount of accumulation in Form No.10, therefore a different figure reported in any other form should be of no relevance or consequence.As rightly argued by assessee the audit report is furnished by the auditor while the statement of accumulation is to be filed by the assessee. Therefore a figure reported by the auditor is of no consequence in the scheme of law for the purpose of claiming benefit of accumulation u/s 11(2) of the Act. There was a plausible explanation for the different figure reported by the auditor, since the audited profit and loss account did not take into consideration the IDC and IAC receipts, which were reflected as capital receipts in the audited Balance Sheet, as finds mention in the assessment order - only when the AO confronted the assessee with the proposed addition to be made of IDC and IAC receipts to the income, thus increasing the shortfall in 85% utilization of income to Rs. 382 crores, that the assessee filed Form No.10 notifying accumulation of the said shortfall u/s 11(2) - there was a bonafide explanation for the difference in reporting of accumulation by the auditors in form No.10B and by the assessee in Form No.10 being based on different figures of income reflected in the audited profit and loss account and income assessed by the AO respectively. We therefore do not agree with the finding of the Ld.CIT(A) that the form No.10 was unreliable on account of the aforesaid discrepancy - we hold that the assessee was entitled to benefit of accumulation u/s 11(2) of the Act as per Form 10 filed during assessment proceedings - Decided in favour of assessee.

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• 2020 (9) TMI 276
  TP Adjustment - adjustment relating to corporate guarantee - TPO benchmarked the transaction of guarantee fees @1.25% which is average of fees charging for bank guarantee by banks - HELD THAT:- Almost on similar set of facts in assessee s own case for A.Y. 2013-14 [2020 (1) TMI 607 - ITAT MUMBAI ] the TPO made adjustment of corporate guarantee @ 1.25% and on appeal before the Tribunal the same was reduced to 0.5% by following the decision of the Hon ble Bombay High Court in the case of Everest Canto Cylinders Ltd. [ 2015 (5) TMI 395 - BOMBAY HIGH COURT] . Considering the decision of the Hon ble Jurisdictional High Court we accept the alternative pleas of the learned A.R. of the assessee to restrict the adjustment on account of corporate guarantee @0.5% till July 2013 till the corporate guarantee remained in existence. The learned TPO is directed accordingly to restrict the adjustment on account of corporate guarantee @0.5% till July 2013. In the result, this ground of appeal is partly allowed. Interest on loan given to AE - commercial expediency of loan given to subsidiary - assessee submits that interest on the loans given to AE to be benchmark by using the prevalent rate in the country where loans utilised for appropriate LiBOR rates - HELD THAT:- As decided in own case [ 2018 (11) TMI 864 - ITAT MUMBAI] AR submitted that the assessee had advanced loans in foreign currency i.e. US Dollars and therefore, the benchmarking was to be done at LIBOR and to support the same, additional evidences in the shape of outward remittance advices issued by the bank and other documents has been placed - For the aforesaid limited purpose, the matter stand remitted back to the file of Ld. AO / TPO with a direction to the assessee to provide requisite details information to substantiate the claim. This ground stand partly allowed for statistical purposes -, respectfully following the orders of the coordinate benches of the Tribunal this issues is restored back the file of TPO/AO to pass the order by following the directions in [2018 (11) TMI 864 - ITAT MUMBAI] . Disallowance under Section 14A - DRP affirmed the disallowance made by AO holding that disallowance made by him is in accordance with Rule 8D(2)(iii) being .5% of average value of investment - HELD THAT:- Considering the submission of the learned A.R. of the assessee that no exempt income was earned by the assessee and the AO has not identified any exempt income, therefore, following the decision of the Tribunal in assessee s own case for A.Y. 2013-14, wherein the Coordinate Bench has followed the decision in the case of Chem Invest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] and Principal CIT vs. Ballarpur Industries Ltd. [2016 (10) TMI 1039 - BOMBAY HIGH COURT] no disallowance in this regard for the year under consideration is warranted. Therefore, the AO is directed to delete the entire disallowance under section 14A. MAT adjustment - Since we have deleted the entire disallowance under section14A, similarly no adjustment on account of disallowance of section 14A in the book profit under section 115JB is warranted as per the decision of the Special Bench of the Delhi Tribunal in Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] . In the result this ground of appeal is allowed. Disallowance of interest under section 36(1)(iii) - HELD THAT:- Respectfully following the decision of the Coordinate Bench in earlier assessment years [ 2020 (1) TMI 607 - ITAT MUMBAI ] wherein it was held that the assessee has sufficient interest free funds available with it and the advances was given for commercial expediency - delete the addition/disallowance under Section 36(1)(iii) hence we are in agreement with the submissions of the assessee that this ground of appeal is covered in favour of the assessee. Addition on account of mismatch in 26AS data - HELD THAT:- As relying on own case [ 2018 (11) TMI 864 - ITAT MUMBAI ] we restore the issue to the file of the AO to reconsider the issue and verify the facts including reconciling the entries in Form-AS26 and grant appropriate relief to the assessee in accordance with law. In the result this ground of appeal is allowed for statistical purposes.

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• 2020 (9) TMI 275
  Deduction u/s 80P(2)(a)(i) - As per AO assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 1-4-2007, the assessee will not be entitled to deduction u/s 80P - HELD THAT: -Narration in loan extracts in the audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. There should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. The A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) - the issue raised in these appeals is restored to the files of the Assessing Officer. - Directions to follow case THE MAVILAYI SERVICE CO-OPERATIVE BANK LTD. [ 2019 (3) TMI 1580 - KERALA HIGH COURT] - Appeals filed by the assessee are allowed for statistical purposes

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• 2020 (9) TMI 274
  Disallowance u/s. 14A r.w.r. 8D - assessee is pleading that its capital as on 31.03.2013 was at Rs. 4.27 crores, while its investments in shares on that date was at Rs. 2.81 crores only, all these investments were made long back, the assessee has not borrowed any loan towards any investment which earned exempt income and it has not claimed any interest expenditure as an expenditure from any of its income and therefore, section 14A r.w.r. 8D is not applicable. HELD THAT:- Since these aspects have not been examined, we are of the view that this issue requires a fresh examination. Therefore, we remit the issue back to the AO for a fresh examination. The assessee shall lay relevant materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. The AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law - Assessee s appeal is treated as partly allowed.

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• 2020 (9) TMI 273
  Revision u/s 263 by PCIT - as observed AO failed to made independent inquiries with regard to the genuineness of the agricultural income, sundry creditors and mismatching in sales turn over - HELD THAT:- PCIT had asked the assessee about the genuineness/validity of various claims to which the assessee had given a detailed reply. Once a point wise reply was given by the assessee, then a duty was cast upon the Ld. PCIT to examine the reply of the assessee and form a prima-facie opinion as to whether the order of the AO was erroneous so far as it was prejudicial to the interest of Revenue. Perusal of the impugned order of the Ld. PCIT reveals that the Ld. PCIT without considering the submission of the assessee and even without giving any prima-facie findings that explanation given by the assessee was not correct or that the same was not reliable, proceeded to hold that the order of the Assessing Officer was erroneous and prejudicial to the interest of Revenue because of the inadequate inquires. Action of the Ld. PCIT without considering the explanation given by the assessee and without pointing out as to what other enquires were required to be made by the Assessing Officer in the facts and circumstances of the case, has set aside the order of the Assessing Officer and remanded the matter back to the file of the Assessing Officer for passing of the assessment order afresh. The above action of the Ld. PCIT cannot be held to be justified. Merely because the Assessing Officer has not discussed about the enquires made by him in detail in the assessment order is no ground to hold that the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue. PCIT in this case wrongly exercised revision jurisdiction u/s. 263 - Decided in favour of assessee.

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• 2020 (9) TMI 272
  Validity of the assessment framed u/s. 143(3) r.w.s. 147 - statutory notice u/s. 143(2) was not issued or served upon the assessee - HELD THAT:- So far as the mandatory requirement of issue of notice u/s. 143(2) of the Act in the case of re-assessment proceeding carried out u/s. 147 is concerned, the issue has been settled in the case of PCIT vs. Jai Shiv Shankar Traders Pvt. Ltd. [ 2015 (10) TMI 1765 - DELHI HIGH COURT] held that the failure of the AO to issue a notice to the assessee u/s. 143(2) subsequent to the filing of the return pursuant to the notice issued u/s. 148 is fatal of the order of the re-assessment. Assessment/re-assessment framed by the AO u/s. 143(3) read with section 147 of the Act is liable to be quashed. We order accordingly. In view of this, the consequential addition pursuant to such invalid assessment framed will have no legs to stand and are accordingly ordered to be deleted. Estimation of income - addition on account of GP rate applied on alleged bogus purchases - HELD THAT:- entire details were submitted by the assessee. AO without any verification of any of the details submitted by the assessee and even without verification from the concerned seller M/s. Nazar Impex Pvt. Ltd. made the additions without application of mind merely on the basis of the some investigation report from the Director General (Investigation), Mumbai which on stand-alone basis without corroboration with any of the facts of the case of the assessee cannot be made the sole basis to hold that the assessee had made bogus purchases. Assessee has demonstrated that if the alleged bogus purchases and corresponding sales are ignored or excluded, there will be a resultant loss of Rs. 20,16,844/- and under the circumstances, it cannot be said that the assessee had booked bogus purchases to reduce the profits. When the sales have been admitted and there is sufficient profit shown by the assessee on such sales and even without any iota of evidence on the file that the assessee was indulged in bogus purchases, the lower authorities were not justified in making/confirming the impugned additions. Moreover, no defect has been pointed out in the books of account of the assessee and even the books of account have not been rejected by the AO. - Decided in favour of the assessee.

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• 2020 (9) TMI 271
  Reopening of assessment u/s 147 - HELD THAT:- A.O. issued the notice under section 148 for the reasons that the assessee had not filed her return of income and that the assessee had purchased a property during the F.Y. 2009-10. However, the said reasons given by the A.O. for reopening the assessment are not correct since the assessee had filed the return of income on 30/03/2011. The assessee had also shown the investment in agricultural land amounting to Rs. 52,20,000/- in her Balance Sheet as on 31/03/2010, copy of which is placed of the assessee s compilation therefore both the reasons given by the A.O. i.e.; the assessee had not filed the return of income and invested in the property amounting to Rs. 1,49,02,500/- were wrong. A.O. reopened the assessment on the basis of wrong facts, so respectfully following the ratio laid down in the aforesaid referred to cases, reopening of the assessment in the present case was not valid, accordingly, the same is quashed. Since the appeal of the assessee is decided on the legal issue, therefore no findings are being given on the merit of the case relating to the quantum of addition. - Decided in favour of assessee.

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• Customs

• 2020 (9) TMI 270
  Jurisdiction of Joint DGFT to review own order - Section 16 of the Foreign Trade (Development and Regulation) Act, 1992 - Time Limitation for making such review - notice issued after about 10 years from the issuance of the EOD Certificate - proviso to Section 16 of the Act - opportunity of personal hearing - HELD THAT:- Section 16 of the FTDR Act empowers the Director General to review any decision or order made by the Joint Director of Foreign Trade. The power of review of any decision or order is only under Section 16 - As and when the second respondent had issued the EPCG licence and the Export Obligation Discharge Certificate, he becomes functus officio and if at all, such an order of the second respondent is to be reviewed, the same can be done only by the Director General, as provided under Section 16. Apparently, the impugned notice issued by the second respondent itself is without any jurisdiction and contrary to the statutory provisions. Time Limitation - HELD THAT:- Section 16 empowers the Director General to review the order, within a period of two years from the date of the decision or the order passed. Apparently, all the impugned notices in the aforesaid Writ Petitions are beyond the period of two years. As a matter of fact, the notices are after a long delay between 8 to 10 years and there is absolutely no explanation for this inordinate delay in the proposal to review the order. The only ground raised by the learned Additional Solicitor General, is that, the two years period prescribed under Section 16 would commence from the date of the demand notices - I am unable to contemplate as to how such date of reckoning could be construed from the proviso to Section 16, when it is unambiguously provided that two years period will commence from the date of decision or order which is sought to be revised. Opportunity of personal hearing - learned Additional Solicitor General also submitted that since the petitioner had requested for an opportunity of personal hearing, pursuant to the impugned notices, the option of filing the Writ Petitions instead of availing the personal hearing, requires dismissal of the Writ Petitions on the ground of non availment of the alternate remedy - HELD THAT:- I am not in agreement with such a submission. It is a settled proposition of law, that when a notice is issued without jurisdiction and against the authority of law, this Court may be justified in exercising its powers under Article 226 of the constitution of India and interfere with such a notice. Even otherwise, a mere option expressed to raise objections to the impugned notices will not disentitle or be a bar to the petitioner to avail the powers under Article 226 of the Constitution of India. Thus the petitioner would be entitled to succeed on the second ground of limitation also. Petition allowed.

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• 2020 (9) TMI 269
  Jurisdiction - power of CESTAT to prescribe the amount fixed for filing appeal under 129E of the Customs Act, 1962 as the quantum of Bank Guarantee under Section 110A ibid for release of seized goods - amendment in quantum of the Bank Guarantee ordered to be furnished by the Competent Authority under Section 110A ibid read with CBEC Circular 35/2017-Cus. dated 16.08.2017 - Jurisdiction of Tribunal o entertain an appeal against a letter allowing provisional release under Section 110A of the Customs Act, 1962. HELD THAT:- It is an undisputed fact that, prior to the notification No.84/2017-Customs dated 08.11.2017, the import of yellow peas was not liable for payment of duty. According to the learned Counsel appearing for the respondent/importer, the notification No.84/2017-Customs dated 08.11.2017, came to be published at 22.15 Hrs., whereas, the formalities regarding assessment of Bills of Entry have completed much earlier at 12.50 Hrs., on 08.11.2017. The Tribunal in the peculiar facts and circumstances of the case, especially, with regard to the time of the notification No. 84/2017-Customs, dated 08.11.2017, as well as, in prior to the said notification, there was no requirement to pay the duty, had exercised the discretion. In the considered opinion of this Court, the discretion came to be exercised by the CESTAT in the facts and circumstances of the said case and that apart, the Commissioner of Customs has also disposed of the matter vide order No.12/2018 dated 15.10.2018 and nothing remains for further adjudication in this matter for the reason that the present appeal technically has become infructuous. Other issues left open to be decided in an appropriate proceedings and therefore, it need not be answered - the disposal by the CESTAT in the facts and circumstances of the case, especially, in the light of the time at which the notification came to be issued and that prior to the notification, the duty on the imported goods was also not paid. Therefore, it is answered in negative against the Appellant/Revenue.

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• 2020 (9) TMI 268
  Suspension of Customs Broker License - over-valuation of rough diamonds/precious stones - regulation no. 16(2) of Customs Brokers Licensing Regulations, 2018 - HELD THAT:- The procedure laid down, in regulation 17, as a prerequisite for revoking of the license, or for imposing a penalty under regulation 14 of the said Regulations, are not mandated to be gone through before suspension. Nevertheless, five essential aspects must be complied with; an enquiry against the broker is pending or contemplated, immediate action is necessary, an opportunity to be heard to be granted within fifteen days from the date of such suspension, passing order of revocation, or continuation, of suspension within fifteen days from the date of hearing and, in the event of the latter, to be followed by initiation of proceedings under regulation no. 17 with adherence to all the timelines therein - The business activities of an importer or exporter, against whom proceedings are initiated under Customs Act, 1962, are not jeopardised as it is only the impacted consignments that are interdicted. Any deviation from the procedures for suspension, revocation or penalising has to be approached with due responsibility and, owing to the unsupervised exercise of power, will have to be at the cost of the detriment being overruled. In no uncertain terms, that statutory actions against customs broker, the hyphen that connects the importer/exporter with the customs authorities and, thereby, administratively accountable to the licensing authority, are to be interfered with only for colourable decisions, adjudged against prescriptions in the Regulations and proportionate deprivation by such authority. The temptation to take a stick to an underling for any real, or perceived, misdemeanour is as old as the master-servant institution and which the wheels of justice must, unhesitatingly, obliterate. For lapses in import and export in which breach of the obligations prescribed in Customs Broker Licensing Regulations, 2018, the licensing authority is empowered, under regulation no. 14 of Customs Broker Licensing Regulations, 2018, to revoke the license and/or to impose appropriate penalties, subject to compliance with procedure laid down in regulation no. 17 of Customs Broker Licensing Regulations, 2018. This process could take as long as six months, as per prescribed timelines, for investigations, issue of notice comprising specific charges of violation, conduct of enquiry in hearing, furnishing of a report of enquiry, response of the broker and culminating in issue of speaking order by the licensing authority. In the meanwhile, the continued validity of the licence would entitle the broker to carry on normal activities which may, in specific circumstances, be prejudicial to public interest and, regulation no. 16 of Customs Broker Licensing Regulations, 2018 permits temporary validation subject to certain basic procedural prescriptions. In the present instance, the gap of more than a year since the alleged overvaluation was attempted, and the continued operation of the appellant as a customs broker since then, does indeed raise doubts about the urgency for suspension. We find that the impugned order has not recorded any justification for curtailing the broking operations of the appellant at this stage. The Regulations do not into envisage suspension to be retribution for alleged wrongdoing for which separate provisions exist and which should already have been initiated if the licensing authority is serious about compliance with the timelines prescribed therein. Appeal allowed - decided in favor of appellant.

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• 2020 (9) TMI 267
  Jurisdiction - Smuggling - Gold Jewellery - Baggage Rules - Revenue objected to the disposal of this appeal on the ground that the jurisdiction in a dispute relating to baggage vested with the Government of India, in its revisionary authority, and was not under the appellate jurisdiction of the Tribunal - HELD THAT:- On perusal of the Rules pertaining to importation of jewellery, as baggage by an arriving passenger, it is seen that the quantity in the present dispute is far in excess of that allowed free of duty on import into India, Therefore, the passenger has failed to comply with declaration requirements and confiscation under section 111(1) of Customs Act, 1962 is not misplaced - The appellant is a citizen of Malaysia and intends to return to her country of domicile. She was unable to carry into, and wear the gold jewellery in, India and it is her request that she should be allowed to carry it back with her on the return trip to Malaysia. In view of these circumstances and this plea, while holding that the goods are liable for confiscation under section 111(1) of Customs Act, 1962, we desist from endorsing the conformation. Accordingly, the confiscation effected under section 111(1) of the Customs Act, 1962 is set aside. As the goods were liable for confiscation, the liability to penalty under section 112(a) of the Customs Act, 1962 is not unwarranted - the imposition of penalty of Rs. 1,00,000/- would suffice to meet the ends of justice - the appellant is directed to retrieve the gold jewellery and export it out of the country upon complying with the penalty imposed under this order. Appeal disposed off.

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• Corporate Laws

• 2020 (9) TMI 266
  Admission of Winding up petition - appointment of the Official Liquidator as a Provisional Liquidator - only ground on which this petition can be dismissed is when the respondent company disputes the debt and such dispute is bona-fide and substantial - the respondent s case is that only 50% of the Bonds were restructured and the remaining 50% remained as Bonds. The Bonds were to be redeemed in December, 2012. Admittedly, to date even the admitted amounts due towards this 50% has not been paid. HELD THAT:- The Bond holder who had initially filed a term sheet agreeing to the restructuring of the FCCB in principle has thereafter on 02.02.2011 expressed in writing their intention not to go ahead with restructuring which was reiterated in August, 2011 and forwarded to the respondent as attachment to Email dated 17.08.2011. The notice for default has been issued after the Bond holders had expressed their intention not to proceed further with the restructuring. The notice was issued on 06.04.2011 and the Statutory notice under Section 434(1)(a) of the Act has been issued on 18.05.2011 and the present petition filed on October, 2011. That apart it is after the issue of the Statutory notice that the respondent send a letter dated 03.08.2011 to all the Bond holders asking them to give their assent for any one of the terms of restructuring. It is therefore clearly evident that till the date of the filing of the winding up petition, the restructuring had not taken place and only the preliminary stage of signing the term sheet had taken place. This was also thereafter, revoked by QVT Bond holder in February, 2011. Therefore, the defense that there is no debt and the liability is bonafide disputed rings hollow and is clearly a defense lacking in substance and a moonshine one. Whether the liability has been admitted? - HELD THAT:- In the 20th Annual Report for the period 2014-2015 in the notes forming part of the financial statement the respondent company has stated that a Restructuring had been entered and in terms there of 50% of the bonds worth 15 Million USD has been redeemed and the balance is to be converted into 1,91,53,012 Equity shares. This statement has been appended when the petitioner has filed the winding up petition in the year 2011 itself denying any restructuring argument. The respondent had admitted the liability even in the Balance Sheet for the year 2010-2011 though they would state that the restructuring argument had been entered in June 2009 - Considering the financial position of the respondent Company which has declared a loss for the period ended 31.03.2019 the apprehension appears to be well founded. In View of the fact that the dispute put forward by the respondent lacks substance and is contrary to the documents produced and since the liability has been admitted in the Balance Sheet for the year ending 31.03.2011 which is just a few months prior to the filing of the winding up petition and in the light of the Judgments referred herein above, the winding up petition is admitted - The respondent Company is restrained from transferring, alienating encumbering or dealing with its immovable assets. Citation is directed to publish in the Times of India and the Daily Thanthi for 22.06.2020 - Post the matter for further hearing on 09.07.2020.

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• 2020 (9) TMI 265
  Vires of the proviso under Section 167(2)(a) of the Act which was inserted to the Companies (Amendment Act 2017) - disqualification with respect to Directorship of Public companies - Principles of Natural Justice - HELD THAT:- The issue decided in the case of KHUSHRU DORAB MADAN VERSUS UNION OF INDIA [ 2020 (1) TMI 1212 - MADRAS HIGH COURT] where it was held that the three financial years 2014-2015, 2015-16 and 2016-17 have been completed and since annual returns / financial statements have not been filed, disqualification automatically follows and when disqualification is incurred, deactivation of Director Identification Number also automatically follows. The DIN number can exist only during the life time of post of Directorship and not for the entire life of the individual. Issuing a prior notice would be of no avail and would only be an empty formality since the provision of law is clear on this aspect. Petition dismissed.

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• Insolvency & Bankruptcy

• 2020 (9) TMI 264
  Maintainability of petition - Delay in paying interest to the Bank - Section 13 (2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- This writ petition is liable to be rejected for more than one reason. Firstly, the petition is not maintainable as it has been filed by the petitioner-Company represented by its erstwhile Director; secondly, petitioner has given false assurance with regard to settlement before the NCLT and this Court on several dates of hearing and thirdly, the impugned order is an appealable order. In PRESTIGE LIGHTS LTD. VERSUS STATE BANK OF INDIA [ 2007 (8) TMI 446 - SUPREME COURT ] , it is held that an order passed by competent court -interim or final - has to be obeyed without any reservation. If such order is disobeyed, court may refuse the party violating such order to hear him on merits. In that case, the order of the Court was not complied with by the petitioner therein. In this case, petitioner has given repeated assurances but not fulfilled them. The petitioner is not entitled for the discretionary relief under Article 226 of the Constitution of India - petition dismissed.

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• 2020 (9) TMI 263
  Lacunae and inordinate delay in the commencement and implementation of CIRP - exclusion of 120 days of the CIRP Process from the date of commencement of the CIRP viz., 29.12.2017 and direct the continuation of the CIRP Process for a further period of 120 days - HELD THAT:- In the instant case, the guarantor is not directly involved in the management of the company. She is a third party. It is also observed in the instant case that the securitization notice under Section 13 (2) is dated 13.02.2019 and is not an independent notice. It is not only for the guarantors property when the appeal of the company under NCLAT was pending, but for all the properties taken as collateral securities for the credit facilities to the corporate Debtor. The final order of the NCLAT is dated 25.02.2019 and this in fact marked the culmination of the proceedings under the Insolvency and Bankruptcy Code, 2016, though technically speaking the CIRP was over on 24.09.2018. The outcome of the appeal in NCLAT was crucial because the petitioner / appellant had wanted further extension of time. Moreover, the financial creditor, State Bank of India did not proceed against the personal guarantor separately. It was only by way of the securitization notice dated 13.02.2019 issued to the Corporate Debtor with copies to all the guarantors. The prayer in the WP.No.31140 of 2019 is filed for writ of mandamus directing the Insolvency and Bankruptcy Board of India to dispose of the complaint dated 23.01.2019 submitted by the petitioner to them in Form A against the orders in NCLT in MA/498/2018 and MA/460/2018 in CP/666/IB/2017. Mr.M.L.Ganesh, learned counsel appearing for the 7th respondent / State Bank of India, contended that the writ petition itself has become infructuous since the 4th respondent had already considered the complaint dated 09.01.2019 (and not 23.01.2019 as mentioned in the writ petition) and the same has been closed after verification of records submitted by the IRP / RP. He would further contend that the 4th respondent had also directed the RP to follow the liquidation rules. This writ petition is also infructuous for the reason that the NCLAT on an appeal preferred by the petitioner in this writ petition had disposed of both the petitions filed by him against the orders of NCLT. Petition disposed off.

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• 2020 (9) TMI 262
  Implementation of Resolution Plan - set off of losses under Income Tax Act - HELD THAT:- The Resolution Plan have been implemented by 18.03.2019 and a lot of time has lapsed in getting final approval and landing into appeals before this Appellate Tribunal. The grey area in this case is that the setting up off losses under Income Tax Act, 1961 is subject to scrutiny by the Income Tax Department and IBC 2016 lays down that the Resolution Plan should be in compliance with the law laid down. Hence, there is a need for getting an affidavit from the Resolution Applicant that he will be successfully completing the Resolution Plan whether he gets this set off under Income Tax Act or not. Secondly the issue is payment of licence fee to the building owner where the CIRP has been carried out and business was running on a going concern basis for the period till CIRP was continued or they have handed over the building to the building owner whichever is earlier and the same is to be restricted to his Income Tax Returns so far filed. This costs needs to be included in CIRP costs. Application dismissed.

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• 2020 (9) TMI 261
  Maintainability of application - initiation of CIRP - outstanding operational debt - default of debt or not - respondent/corporate debtor filed affidavit in reply inter alia stating that the petition is contrary to the object of the I B Code, the corporate debtor is not an insolvent company and is merely facing a temporary financial crunch. HELD THAT:- The demand notice issued by the applicant on 14th December, 2019 has been replied by the corporate debtor vide letter dated 18th December, 2019 (page 39 of the application) wherein the corporate debtor has categorically admitted the operational debt and has requested the operational creditor to give more time to settle the outstanding amount. Moreover, the corporate debtor has also confirmed the dues payable to the applicant in confirmation of accounts from 1st April 2019 to 30th September, 2019 annexed to the application (page 22) which bears the seal and signature of the respondent. Under such circumstances contentions raised by the respondent that there is nothing on record to show that the goods in respect of the invoices mentioned in the petition were actually delivered on the desired time and claiming that the goods were not delivered to the respondent etc. are illusory and far from truth. The instant petition filed by the applicant is well within limitation and there is no denial of the operational debt and/or any pre-existing dispute regarding the operational debt from the corporate debtor - from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the operational debt to the Applicant. On perusal of the records it is also found that the corporate debtor has never raised any dispute on issuance of notice u/s 8 of the I B Code nor have ever raised any dispute prior to the issuance of notice - it is evident that the respondent has defaulted the debt and has admitted the operational debt. On the basis of material available on record it is evident that the corporate debtor has committed default in payment of operational debt and, therefore, it is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Petition admitted - moratorium declared.

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• Service Tax

• 2020 (9) TMI 260
  CENVAT Credit - input services - Short term hotel accommodation - rent-a-cab - outdoor catering - period from April 2015 to March 2016. Short term hotel accommodation - HELD THAT:- The crew is necessarily required to seek the required instructions from the Rig Manager, which is a pre-requisite for such crew before they assume their duties at the rig. In the absence of such instructions, the Appellant s crew would be unable to carry out the designated task in the desired manner. Therefore, the Appellant had no choice but to accommodate its crew in such circumstances and when the transportation facility for transporting the crew members was unavailable due to unforeseen circumstances. The said service extended to its personnel by the Appellant would not qualify as a service availed for personal consumption - thus, the said service is in relation to and in pursuance of the service being provided by the Appellant and therefore, Cenvat credit availed on the same is admissible. Rent-a-cab service - HELD THAT:- Tribunal in M/S. MARVEL VINYLS LTD. VERSUS C.C.E. INDORE [ 2016 (11) TMI 1126 - CESTAT NEW DELHI] , while considering the amended definition of input service has already decided the matter in favour of the assessee and held that the definition does not provide for total exclusion, but only restricts those cases where the vehicles do not qualify as capital goods - From the recipient s point of view, motor vehicle can never be capital goods and would never be eligible for credit, if a narrow interpretation is given - Cenvat credit on rent a cab is allowed. Outdoor catering service - HELD THAT:- Access to proper food is the most basic requirement for any person to carry out a task. It is obvious that if the Appellant s personnel fall ill on account of stale/spoilt food, the operation being carried out by the Appellant would be adversely impacted and consequently, the output service being provided by the Appellant. The Commissioner (Appeals) ought to have appreciated the facts of the present case, wherein the personnel have been deployed on a rig and away from the coastal area. The said personnel do not have access to food other than what is available on the rig and therefore, it is apposite in the given circumstances for the Appellant to ensure that its personnel remain healthy - the service availed by the Appellant is in relation to the output service being provided by the Appellant and is therefore, admissible for Cenvat credit. Appeal allowed - decided in favor of appellant.

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• 2020 (9) TMI 259
  Refund of the accumulated Cenvat credit - Place of provision of service - intermediary service - rejection of refund on the ground that the services provided by the Appellant are not to be considered as export of service as the services were executed in India - Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012-C.E. (N.T.), dated 18th June 2012 - period from October 2014 to September 2015. Whether the services provided by the appellant qualify as export of services or intermediary services ? - HELD THAT:- CBEC vide Guidance Note dated 20th June 2012, had few conditions which are to be satisfied for a service to be designated as export of service - In the present case, the service provided by the Appellant satisfies all the above mentioned conditions and hence, is an export of service. The Appellant is situated in taxable territory, the recipient of service is located outside India, the service provided by the Appellant does not fall under the negative list, the place of provision of service as per Rule 3 of the POPS Rules, 2012 is outside India, the payment has been received by the Appellant in convertible foreign exchange and the Appellant and the service recipient are separate legal entities. However, for removal of doubt, it is pertinent that the service provided by the Appellant must at the same time also not qualify as intermediary service. Thus, the service provided by the Appellant has been provided on its own account and therefore, does not qualify as intermediary service. Input service having no nexus with output service - HELD THAT:- The services were availed for right to use certain footage in the film, which were brought from an online vendor database and to enable the Appellant to undertake production work. Therefore, such services were in relation to the output service provided by the Appellant and therefore, are input services as per the Cenvat Credit Rules, 2004. Credit availed on the basis of three invoices amounting to Rs. 60,578/- which were not issued in favour of the Appellant - HELD THAT:- As such invoices were not issued in favour of the Appellant, it is not open to the Appellant to avail credit on the basis of such invoices. Therefore, the credit availed to the extent of Rs. 60,578/- is liable to be denied. Appeal allowed in part.

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• 2020 (9) TMI 258
  Levy of Service Tax - Scientific or Technical Consultancy service or not - export of services - amounts which they received in foreign currency for rendering services to their parent company, M/s. Aventis Cropscience GmbH, Germany - amounts which they charge from the farmers for providing guidance in multiplying the seeds? HELD THAT:- The issue decided in the case of BAYER BIO SCIENCE PVT LTD VERSUS CCCE ST, HYDERABAD II [ 2019 (2) TMI 1567 - CESTAT HYDERABAD] in favour of the assessee and it was held that while the nature of service is scientific or technical consultancy service , the service which when rendered qualifies to be called as export of services and therefore, no service tax is chargeable on such service. In these three appeals, there is no demand on this head at all. The second source of income for the appellant is, after the seeds are developed and patented by M/s Aventis, they provide the seeds to the appellant who get them multiplied by the farmers and buy-back such seeds. In order to help farmers efficiently multiply the seeds, the appellant provides guidance to them and charges a fee for providing such guidance. It is the case of the revenue that the amounts which are charged by the appellant from the farmers is chargeable to service tax under the head of scientific or technical consultancy service . After examining this issue at length, this bench had decided that the nature of service rendered by the appellant to the farmers is one of the agricultural extension and it does not qualify to be called as scientific or technical consultancy service . Therefore, no service tax can be levied on the amounts which the appellant receives from the farmers on this count. The appellant is not liable to pay service tax on the amounts which they have received from the farmers for providing guidance in multiplying the seeds - Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2020 (9) TMI 257
  Applicability of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to the cases involving confiscation and redemption fine - Rejection of the declaration made by the petitioners by the Designated Committee formed under SVLDRS HELD THAT:- The Coordinate Bench of this Court has done analysis in detail of the provisions of the Scheme in para 6 to 9 of the order dated 24.12.2019 and has also discussed the frequently asked questions (FAQs) and flyers issued by the Central Board of Indirect Taxes as well as the letter dated 20.12.2019 in para-10 to 12 to form a prima-facie opinion that when the Board has issued FAQs, press notes and flyers stating that the scheme grants waiver of interest, fine and penalty, then the scheme would be relatable to redemption fine also, because there is no other fine which is contemplated under the Act coupled with the fact that Section 125 of the Finance Act, 2019 does not exclude the categories of cases involving confiscation / fine in lieu of confiscation. In view of the Scheme as was introduced by Chapter-V of the Finance Act, 2019 comprising of Sections 120 to 135, flyers issued by the Central Board of Indirect Taxes and Customs and press note dated 22.08.2019 issued by the Ministry of Finance, Government of India, the intent and purpose of the Scheme appears to reduce litigation by giving a window to the taxpayers to pay the tax and end the litigation. The object of the Scheme was to provide one time measure for putting an end to past disputes of central excise and service tax and to provide the opportunity of voluntary disclosure to non complying taxpayers. Section 121(c) of the Scheme defines the amount in arrears which means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of adjudication by the competent authority or on account of admitted tax liability but not paid. Section 121 (h) of the Scheme provides that declarant means a person who is eligible to make a declaration and files such declaration under Section 125. Though, there is no express provision in the Scheme with regard to providing immunity from payment of fine, the respondent authorities have specifically stated in FAQs, press notes and flyers that the Scheme provides for full waiver of interest, fine and penalty. In the facts of the case, there in no other fine which is envisaged under the indirect tax enactment. At this juncture, the contention raised on behalf of the respondents that the fine would mean the fine to be levied by the competent Court under Section 9 of the Central Excise Act and not fine as referred to be the redemption fine under Section 34 of the Act cannot be accepted considering overall intent and object of the Scheme, and we therefore, concur with the prima-facie opinion of the Coordinate Bench - Coordinate Bench expressed in para-10 of the order that in terms of the FAQs, press notes and flyers issued by the Board, the Scheme provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. Thus, having regard to the fact that: (i) section 125 of the Finance Act says that all persons shall be eligible to make declaration under the Scheme except for the categories specifically enumerated therein; and (ii) under section 125 of the Finance Act, cases involving confiscation and fine in lieu of confiscation (redemption fine) are not excluded from the benefit of the Scheme, and (iii) according to the Board, the Scheme provides relief in tax dues for all categories of cases; prima facie it appears that the legislature did not have the intention of excluding cases involving confiscation and fine in lieu of confiscation from the purview of the Scheme. When the respondents had issued show cause notice demanding excise duty together with confiscation of the goods in terms of Rule 25 (a) and (d) of the Central Excise Rules, 2002 and redemption fine in lieu of confiscation under Rule-25 as goods were not available for confiscation, it is clear that by issuing the show cause notice , the respondent has invoked Rule-25 of the Central Excise Rules, 2002 for levy of redemption fine in lieu of confiscation as goods which were sought to be confiscated were not available for confiscation. Therefore, the levy of the redemption fine equivalent to demand of central excise duty under Rule-25 of the Central Excise Rules, 2002 would be an amount in arrears as defined in Section 121 (c) of the Scheme along with the amount of duty which is recoverable as arrears of duty under indirect tax enactment - the interpretation made by the Board in the communication dated 20.12.2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, the declarant is required to include redemption fine as part of the duty demanded, so as to calculate the amount in arrears as per Section 121 (c) of the Scheme. The Supreme Court in the case of KP VARGHESE VERSUS INCOME-TAX OFFICER, ERNAKULAM, AND ANOTHER [ 1981 (9) TMI 1 - SUPREME COURT ] has laid down that the Rule of construction by reference to the principle of contemporanea exposition est optima et fortissima in lege which is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. Therefore, when the Central Board of Indirect Taxes has issued FAQs, press notes and flyers by way of explaining the scheme providing waiver of interest, penalty and fine and immunity from prosecution, then case involving confiscation / redemption fine cannot be excluded under the Scheme, as such explanation by the Board provides legitimate aid in the constructions and interpretations of the provision of the Scheme. The declaration filed by the petitioners and other similarly situated persons are required to be considered by the designated committee without payment of redemption fine by the declarant. The impugned orders passed by the designated committee are therefore quashed and set aside - Petition allowed.

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• Indian Laws

• 2020 (9) TMI 256
  Maintainability of complaint - Dishonor of cheque - complaint preferred by the appellant under Section 138 of the Negotiable Instruments Act has been dismissed in default for want of prosecution - HELD THAT:- In view of Section 143 of the NI Act, offence under Section 138 of the NI Act is to be tried summarily and accordingly, procedure for summons case provided in Chapter XX of the Code of Criminal Procedure is applicable during the trial initiated on filing a complaint under Section 138 of the NI Act. In this Chapter, Section 256 Cr.P.C. deals with a situation of non-appearance or death of complainant. Section 256 Cr.P.C. provides discretion to the Magistrate either to acquit the accused or to adjourn the case for some other day, if he thinks it proper. Proviso to this Section also empowers the Magistrate to dispense with the complainant from his personal attendance if it is found not necessary and to proceed with the case. Also, when the complainant is represented by a pleader or by the officer conducting the prosecution, the Magistrate may proceed with the case in absence of the complainant - Keeping in view the effect of dismissal in default, the Magistrate is supposed to exercise his discretion with care and caution clearly mentioning in the order that there was no reason for him to think it proper to adjourn the hearing of the case to some other day. In present case complainant was contesting its case with due diligence and in fact trial was almost complete on 18.02.2015 when arguments were heard and case was listed for furnishing requisite bonds by the respondent under Section 437-A Cr.P.C. and final order on 26.02.2015. But final order could not be passed on account of conduct of the respondent. The Magistrate was not justified in dismissing the complaint in default for absence of authorized person of the complainant coupled with failure of its counsel to attend the case on that date, particularly, when the complainant was pursuing its case from 18.10.2013 and was being represented through counsel on numerous dates fixed for service of respondent through bailable and non-bailable warrants - Appeal allowed.

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• 2020 (9) TMI 255
  Maintainability of Revision - jurisdiction to take cognizance of offence - Dishonor of Cheque - summon trial - Section 142(2)(a) of the N.I. Act - petitioner would submit that both the Courts below are absolutely unjustified in rejecting the objection raised by the petitioner as Ms. Neha Usendi, J.M.F.C. Raipur had no jurisdiction to take cognizance of offence under Section 138 of the N.I. Act against the petitioner - HELD THAT:- Both the Courts below have partly agreed with the petitioner/accused that cognizance of offence under Section 138 of N.I. Act could not have been taken by Ms. Neha Usendi, J.M.F.C. Raipur as she was conferred with the jurisdiction to try the cases based on N.I. Act arising from Khamtarai, Abhanpur, D.D. Nagar and Aamanaka Police Stations and the cognizance of offence ought to have been taken by Ms. Namrata Norge, J.M.F.C. Raipur as the offence under Section 138 of the N.I. Act alleged to have been committed by the petitioner/accused has arisen from Police Station Pandri and it lies within her jurisdiction, but both the Courts below have categorically held that taking cognizance of offence against the petitioner under Section 190(1)(a) of the Cr.P.C. by Ms. Neha Usendi, J.M.F.C. Raipur is only an irregularity which would not vitiate the proceedings in view of provision contained under Section 460(e) of the Cr.P.C. The provision contained in Section 460(e) of the Cr.P.C. saves proceedings before a Magistrate taken on complaint or on police report of which cognizance is taken erroneously and in good faith but without the Magistrate having the requisite power to take cognizance on such material and irregularities set out in Section 460 do not vitiate proceedings. It is quite vivid that in the instant case, admittedly, Ms. Neha Usendi, J.M.F.C. Raipur has taken cognizance of offence under Section 138 of the N.I. Act against the petitioner under Section 190(1)(a) of the Cr.P.C. though she was not empowered to do so in light of provision contained under Section 142(2)(a) of the N.I. Act read with the work division memo dated 02/08/2018 issued by the Chief Judicial Magistrate. It is not alleged by the petitioner that jurisdiction of taking cognizance under Section 190(1)(a) of the Cr.P.C. was exercised by Ms. Neha Usendi, J.M.F.C. Raipur in bad faith, though it has been argued that matter is not covered by Section 460(e) of the Cr.P.C., but in my considered opinion, cognizance of offence against the petitioner under Section 138 of the N.I. Act was taken by Ms. Neha Usendi, J.M.F.C. Raipur under Section 190(1)(a) of the Cr.P.C. in good faith and that too, erroneously therefore, it is squarely covered by Section 460(e) of the Cr.P.C. and thereby, proceeding would not vitiate, as such, the proceeding is not liable to be set aside and the same has rightly been held by the trial Magistrate which has rightly been affirmed by the revisional Court and it is hereby reaffirmed. The next contention of learned counsel for the petitioner is that cognizance of offence under Section 138 of the N.I. Act taken against the petitioner is also hit by virtue of Section 202(1) of the Cr.P.C. as the said provision is mandatory - HELD THAT:- The Supreme Court in the matter of K.S. Joseph v. Philips Carbon Black Ltd. and Anr. [ 2016 (4) TMI 613 - SUPREME COURT ] has held that Section 145 of the N.I. Act, being non obstante clause overrides the requirement of examination of the complainant and complainant s evidence on affidavit will be sufficient. The present petition under Section 482 of the Cr.P.C. deserves to be and is accordingly dismissed.

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