2020-TIOL-NEWS-242, Dated: Tuesday, October 13, 2020

2020-TIOL-NEWS-242| October 13, 2020

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INCOME TAX


	2020-TIOL-1708-HC-MAD-IT Marg Ltd Vs CIT Whether, as per provisions of Sec 14 r.w Rule 8D, disallowance can exceed the sum earned as dividend income - NO: HC - Assessee's appeal allowed. : MADRAS HIGH COURT 2020-TIOL-1707-HC-KAR-IT CIT Vs Mandavi Builders Whether Clauses (e) and (f) of Section 80IB(10) are prospective in nature and apply in respect of transactions entered on or after 01.04.2010 - YES: HC - Revenue's appeal dismissed : KARNATAKA HIGH COURT 2020-TIOL-1706-HC-AHM-IT Sureshchandra D Khatod (HUF) Vs ITO Whether Tribunal can reverse order of CIT(A) without giving any reasons and without giving any finding for deciding the appeal against the assessee - NO : HC - Assessee's appeal allowed : GUJARAT HIGH COURT 2020-TIOL-1208-ITAT-MUM ITO Vs Leena Haresh Harde Whether any addition on account of unexplained cash credit is permissible u/s 68, when identity and genuineness of the creditors, the nature and source of the alleged loans received is proved - NO: ITAT - Revenue's Appeal is dismissed: MUMBAI ITAT 2020-TIOL-1207-ITAT-MUM DCIT Vs ICICI Bank Ltd Whether in the facts and circumstances of the case, CIT(A) erred in deleting the penalty levied u/s.271(1)(c) - NO: ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2020-TIOL-1206-ITAT-MUM DCIT Vs Cascade Holdings Pvt Ltd Whether in the facts and circumstances of the case CIT(A) is justified in confirming the interest disallowance - No: ITAT Whether in the facts and circumstances of the case CIT(A) is justified in charging of interest without giving credit for tax deducted at source - No: ITAT Whether in the facts and circumstances of the case CITA) is justified in capitalising the disallowance of interest made u/s.14A - Yes: ITAT - Revenue's appeal dismissed: MUMBAI ITAT 2020-TIOL-1205-ITAT-DEL Dynasty Construction Pvt Ltd Vs ACIT Whether, CIT(A) is justified in sustaining the disallowance when the same is not made on the basis of any incriminating material found during the course of search - NO: ITAT Whether CIT(A) is justified in sustaining the additions made by the AO, when the assessment order is void ab initio - NO: ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-1204-ITAT-DEL Dart Infrabuild Pvt Ltd Vs ITO Whether the serving of re-assessment notice by way of a fixture at the old address qualifies as proper service – NO : ITAT Whether a new of service of notice under section 143(2) has to be issued if the return of income filed by the assessee in reponse to notice u/s 148 is rejected – YES : ITAT - Assessee's appeal allowed: DELHI ITAT 2020-TIOL-1203-ITAT-BANG Crown Home Engineers Pvt Ltd Vs ACIT Whether the assessee is entitled to claim deduction if it has commenced its business by entering into agreement with the landlord with requisite licence and got permission from administration - YES : ITAT - Assessee's appeal partly allowed: BANGALORE ITAT

GST CASE

2020-TIOL-1711-HC-KERALA-GST

Malayalam Motors Pvt Ltd Vs ASTO

GST - It is the case of the petitioner that though the Company filed GSTR-1 returns for the months of February, 2020 to May, 2020, due to Covid pandemic, could not generate funds to make lump sum payment of the admitted tax - Petitioner is not disputing its liability to tax, or the quantum thereof, for the period in question - It only seeks an instalment facility to pay the admitted tax, together with interest thereon, in view of the financial difficulties faced by it during the Covid pandemic situation, when its business has come to a total standstill - Respondent Revenue would point out that the provisions of the Act do not provide for the payment of the admitted amount shown in the return in instalments, and hence the relief sought for by the petitioner cannot be granted in view of the express provisions of the statute.

Held: Court in W.P.(C) No.14275/2020 [2020-TIOL-1302-HC-KERALA-GST], in similar circumstances, directed the respondent tax authority to accept the belated returns and permitted the petitioner therein to discharge the balance tax liability in equal monthly instalments - respondent is directed to accept the belated return filed by the petitioner for the period from February, 2020 to April, 2020, without insisting on payment of the admitted tax declared therein - The petitioner shall be permitted to discharge the tax liability, inclusive of any interest and late fee thereon, in equal successive monthly instalments commencing from 15th November, 2020 and culminating on 15th August, 2021 - It is made clear that if the petitioner defaults in any single instalment, the petitioner will lose the benefit of this judgment and it will be open to the respondent to proceed with recovery proceedings for realisation of the unpaid tax, interest and other amounts, in accordance with law - Petition disposed of: High Court [para 5, 6]

- Petition disposed of: KERALA HIGH COURT

2020-TIOL-1709-HC-DEL-GST

Prasad Media Corporation Pvt Ltd Vs UoI

GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Petition has been filed challenging the judgment and order dated 07th July, 2020 passed by National Anti Profiteering Authority (NAPA) = 2020-TIOL-37-NAA-GST whereby it has been held that the petitioner profiteered Rs.30,13,058 during the period 01st January, 2019 to 07th February, 2019 - Petitioner also prays for quashing the directions with regard to interest and penalties issued under the impugned order - Petitioner further prays that due to Covid-19 pandemic, the petitioner be allowed to deposit the aforesaid amount in installments.

Held: Court directs the petitioner to deposit the principal profiteered amount i.e. Rs. 25,53,454/- (Rs.30,13,058/- minus Rs. 4,59,604/-) in six equated installments commencing 02nd November, 2020 - The interest amount directed to be paid by the respondents as well as penalty proceedings are stayed till further orders - Matter to be listed on 03rd November, 2020: High Court

- Matter listed: DELHI HIGH COURT

MISC CASE

2020-TIOL-1701-HC-KERALA-VAT

Smart Footwear Marketing Vs CTO

Whether if the AO omits to consider a relevant and applicable judgment of the jurisdictional High Court while passing assessment order, qualifies as an error which warrants rectification - YES: HC

- Assessee's writ petition allowed: KERALA HIGH COURT

INDIRECT TAX

SERVICE TAX

2020-TIOL-1504-CESTAT-KOL

Coal Mines Associated Traders Pvt Ltd Vs CCGST & CE

ST - Applicant submits that they have opted to avail the benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under Section 127 of the Finance (No.2) Act, 1994 read with Rule 9 of SVLDRS Rules, 2019, therefore, they wish to withdraw their appeal - AR submits that since the copy of form SVLDRS-4 has not been received by them, it is not clear whether the application filed by the applicant/appellant has been settled or not.

Held: In view of the detailed submission made by the applicant/appellant, the prayer for withdrawal of the appeal is allowed - However, it is made clear that in case the settlement under the Scheme fails, the appellant assessee can file an application before the Tribunal for restoration of their appeal - application/appeal is disposed of: CESTAT [para 4]

- Application disposed of: KOLKATA CESTAT

2020-TIOL-1503-CESTAT-MUM

HDFC Bank Ltd Vs CCE

ST - The holders of credit cards provided by the appellant, as issuing bank, procure goods and services from merchant establishments and the expenditure so incurred becomes due for payment by the holder to the appellant at the end of the agreed-upon cycle as indicated in the billing statement - The debt to the merchant establishment is transferred, at pre-determined discount, to an acquiring bank, viz., VISA or Mastercard, which is credited by the issuing bank with the invoiced amount and the said discount is split between them - In cross-border procurements, the inter-bank transaction is agreed to be effected at rates of exchange of the currencies involved that prevail on the date of the transaction and to which the issuing bank adds 'mark-up' while billing the holder of the credit card - It is this additional amount [mark-up] retained by the appellant that is bone of contention between the tax authorities and the assessee.

Held: The 'mark-up' charged by the appellant is neither received nor billed in convertible foreign currency and such being the determinant, along with location, for the rendering of service outside the tax jurisdiction, the claim of the appellant to be exempt from tax fails - The complexity of exports and the lack of distinguishment for exports during much of the period of dispute is obvious and it may not be unnatural for an assessee to resort to superficial interpretation without intention to evade tax - Show cause notice and the impugned order lack convincing evidence of suppression or misrepresentation and, in the circumstances of discharge of tax liability, along with interest, for the period of dispute, it would have been appropriate for the proceedings to have terminated under section 73(3) of Finance Act, 1994 without issue of show cause notice - The imposition of penalty under section 78 of Finance Act, 1994 is not merited - Appeal is allowed to the extent of setting aside the penalties: CESTAT [para 16, 17]

- Appeal partly allowed: MUMBAI CESTAT

CENTRAL EXCISE

2020-TIOL-1500-CESTAT-MUM

Shreyas Intermediates Ltd Vs CCE

CX - Application filed for Rectification of Mistake (ROM) against the final order No. A/85298-300/2018 dated 16.2.2018 = 2018-TIOL-3048-CESTAT-MUM passed by the Tribunal.

Held: For rectification of mistake application there has to be mistake apparent on the face of record, which the appellant has failed to point out from the impugned order - Whatever grounds have been raised in the instant application are not sufficient to change the decision already taken by the Tribunal - The grounds raised by the applicant are not sufficient for any kind of rectification - It is settled legal principle that the Tribunal cannot take up exercise of re-appreciating the evidences and to embark on an act of reviewing the decision under the guise of rectification of mistake - An error apparent on the face of the record means an error which strikes on the mere looking and does not need long drawn-out process of reasoning on points where there may conceivably be two opinions - Such effort should not require any extraneous matter to show its incorrectness - To put it differently, it should be so manifest and clear that no court would permit it to remain on record - While applying the guiding principles in the facts of the present case, there is no error apparent from the record calling for rectification - Accordingly, there is no merit in the instant ROM application and the same is accordingly dismissed: CESTAT [para 2]

- Application dismissed: MUMBAI CESTAT

2020-TIOL-1502-CESTAT-DEL

Hindustan Zinc Ltd Vs CC, CE & CGST

CX - Moot issue is as to whether the services availed by a manufacturer at the port are the services availed by him upto the place of removal i.e. as to whether "at the port" is included in "upto the port".

Held:

+ Section 23 of Sale of Goods Act answers as to when such right passes away by saying that when the seller delivers the good to a buyer or to a carrier or to other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer and does not reserve a right of disposal, he is deemed to have unconditionally appropriated the goods to the contract and therefore, in view of section 23 Sub section 1 of Sale of Goods Act the property in goods would thereupon pass to the buyer.

+ Section 39 of the Act in addition provides that wherein pursuance of a contract of sale the seller is authorised or required to sent the goods to the buyer, delivery of the goods to a carrier whether named by the buyer or not, for the purpose of transmission to the buyer or delivery of the goods to a wharfinger for safe custody is prima facie deemed to be delivery of the goods to a buyer. Therefore, it appears that handing over of the goods to the carrier /transporter for the further delivery of the goods to the buyer with the seller not reserving the right of the disposal of the goods, would lead to passing of property from the seller to the buyer.

+ As per the definition of place of removal, it generally happens at the factory gate or the warehouse or the depot of the manufacturer, hence any service availed by the manufacturer beyond this point will not be eligible for cenvat credit on input tax paid by him as has been held by Apex Court in the Ultratech - 2018-TIOL-42-SC-CX. However, in case of clearance of goods for exports, the place of removal may be a factory gate or warehouse or depot but only in a situation when manufacturer himself is not exporting his goods, but is selling them to the merchant-exporter.

+ Manufacturer in such case will not be entitled for credit on the services if availed beyond his factory gate or warehouse or depot, or it may not be. But when the goods are to be exported by the manufacturer directly to his foreign buyer, the property in the goods shall not pass on from manufacturer exporter to his buyer till the goods have reached the port from where those have to be exported and till the shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. It is still after LeT export order is issued that shipping line becomes responsible to ship the goods to the foreign buyer and the exporter remains with no control over the goods once these are handed over to the shipping line.

+ Once this is the clear interpretation of the relevant law of the subject, there remains no ambiguity to hold that place of removal for goods to be exported is the port from where those are to be exported and word "upto the place of removal" includes the area till the manufacturer exporters hands over the goods to the shipping line after the LeT export order is issued. In no circumstance, the handing over of the goods by the manufacturer exporter to shipping line can happen at the gate of the port, the manufacturer exporter has to enter the gates of the port and has to comply with all the formalities of filing shipping bills and of getting the LeT export order at the port i.e. beyond the gates thereof. Thus "at the port" becomes, the part of the phrase "upto the place of removal".

+ In the present case, the property in the goods passed from the appellant to his buyer only at the port where they have obtained the Let export order and the services in question are such as were availed by the manufacturer prior getting the said order - Hence, the said services as that of CHA, CNF, testing and sampling etc. are eligible to be classified as input services - Resultantly, the appellant is entitled to avail the cenvat credit for the tax paid on such input services - The findings of the Commissioner are held to be false - These are rather observed to be mere literature or language oriented than being technical in nature - The findings with respect to the period from April 2008 to September 2008 are, therefore, set aside - Appeal is allowed with consequential benefits: CESTAT [para 13, 15]

- Appeal allowed: DELHI CESTAT

CUSTOMS

2020-TIOL-1710-HC-DEL-CUS

Modak Dyeing And Printing Company Pvt Ltd Vs DCC

Cus - Petitioner undertakes that the balance amount [as on 08th October, 2020 due and payable by the petitioner of Rs.1,16,15,920/-] along with any additional demurrage shall be paid within four weeks - aforesaid undertaking and statement is accepted by the Court and the petitioner is held bound by the same - The petitioner is also given liberty to file an application for waiver and the same shall be decided by the Container Corporation of India Limited in accordance with law - In the event of breach of the aforesaid undertaking, respondent no.2-Container Corporation of India Limited shall be at liberty to auction the nine containers of the petitioner forthwith - With the aforesaid directions, the present writ petition is disposed of: High Court [para 5 to 7]

- Petition disposed of: DELHI HIGH COURT

2020-TIOL-1501-CESTAT-MUM

Lalit Ganatra Vs Pr CC

Cus - Application filed for condonation of delay of around 4700 days in filing the appeal before the CESTAT against the order dated 22.06.2005 passed by the Commissioner of Customs(Import).

Held: Despite being informed about the change of address to the department vide letter dated 7.12.2005 [copy of the said letter produced and which bears an acknowledgment dated 8.12.2005 of the department], the department did not send the copy of the impugned order dated 22.6.2005 or any communication on the said address for almost 12 years and on one fine day i.e. on 9.12.2017 they sent the communication at the changed address for recovery of dues i.e. penalty of Rs.5 lakhs in terms of the impugned order dated 22.6.2005 - there is, therefore, force in the submission of the appellant that the applicant's address had changed and that despite being informed about the same, the department has issued the copy of the order to the old address; that the impugned order dated 22.6.2005 which was sent to the old address was returned by postal authority with remarks 'Not known' - As per the affidavit of the applicant, after the request made by the applicant, the certified copy of the impugned order was served on the applicant by hand on 26.7.2018 by a custom officer of Recovery Cell - There is no denial in the communication dated 30.8.2019 placed on record by Revenue, about the aforesaid date of service of the impugned order by the department on the applicant - Thereafter as per the case records, the appeal has been filed by the applicant immediately on 10.08.2018 with the instant application - Therefore, in the peculiar facts of this case, sufficient cause has been shown by the applicant for not preferring the appeal within the normal period of limitation - There is some negligence on the part of the applicant also as he did not take any steps to inquire about the status of his case before the adjudicating authority for so many years, therefore, although Bench is condoning the delay but with a cost of Rs.5,000/- to be deposited by the applicant within a period of 8 weeks to be paid to the "PM CARES Fund" - Application allowed: CESTAT [para 2, 3]

- Application allowed: MUMBAI CESTAT

HIGH LIGHTS (SISTER PORTAL )


	TII I-T - Tax on royalty can be computed with reference to provisions of agreement if such rates are more beneficial to it: HC TP - Absence of segmental information and functional dissimilarity debars an entity for purposes of benchmarking: ITAT TP - Foreign exchange gain/loss being an operating item cannot be excluded from computation of profit margins: ITAT TIOL CORPLAWS Companis Act - Beneficiary can be denied the benefit of scheme if documents were uploaded pursuant to court orders though beyond prescribed time limit: HC Constitution of India - After writ petition is dismissed by Apex Court u/Art 32, another writ petition, on same set of facts seeking same set of reliefs, can be filed before HC Court u/Art 226 of Constitution of India: HC

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