The Delhi High Court held that no Bar of appointments of advocates as receivers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act).
The petitioner relied upon the judgment of the Division Bench 2002 of the Bombay High Court dated 06.11.2019, passed in W.P. (C) No. 28480/2019, titled Subir Chakravarty and Ors. vs. Kotak Mahindra Bank Ltd.
The receiver has been appointed by the learned CMM vide order dated 05.12.2019 and has appointed an advocate to take possession of the secured asset and Counsel for the petitioner does not dispute the fact that the receiver appointed by the learned CMM has taken possession of the subject secured asset on 16.01.2020.
The petitioners contended that the appointment of an advocate as a receiver was contrary to the provisions of Section 14 (1A) of the SARFAESI Act and, therefore, that part of the order passed by the learned CMM should be set aside as was done by the Bombay High Court in the aforementioned matter.
Justice Rajiv Shakdher observed that after the insertion of sub-section (1A) in Section 14, the only change that has been brought about is that the District Magistrate/CMM has now the discretion to appoint even their subordinate officers as receivers.
While dismissing the petition, the Court observed that provision vests discretion in the District Magistrate/CMM and as long the discretion is exercised with due care and caution, the appointment of advocates as receivers cannot be faulted.
Subscribe Taxscan Premium to view the JudgmentThe Telangana High Court has quashed the First Information Report (F.I.R.) on Corruption Charges against an Indian Revenue Service ( IRS ) officer.
The FIR has been quashed on the grounds that there was no prima facie case of corruption charges and misconduct under Section 13 (1)(e) of the Prevention of Corruption Act, 1988.
The petitioners were the husband and wife. The wife was the Civil Servant of Indian Revenue Service (I.R.S.) and she worked as a Commissioner of Income Tax (Audit) at Hyderabad and she was known for her excellent record in her department. Further, the husband was the Civil Servant in the Indian Railways wherein he held the post of Financial Advisor and Chief Account Officer in the Indian Railways and presently he is the sitting Member of Legislative Assembly of Andra Pradesh, having been elected from the constituency of Santhanuthalapadu.
Further, the petitioners contended that they are clear with all their income tax returns and due. However, one first Information Report (F.I.R.) was registered against the petitioner stating the petitioners have acquired assets and the pecuniary advantages and thereby misappropriated the assets from the income earned by them. The petitioners contended that the First Information Report(F.I.R.) is registered on the false grounds which are made by the opposition for the sake of power.
The issue raised in this case was whether the First Information Report(F.I.R.) is liable to be quashed or not?
While allowing the petition, the Single Judge Bench of Justice G. Shri Devi held that there was no prima facie case of misconduct under Section 13(1)(e) of the Prevention of Corruption Act, 1988 against the petitioners and therefore the First Information Report(F.I.R) was liable to be quashed and no further investigation on this matter can be done.
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal (ITAT), Delhi held that the Charitable trust is not eligible for standard deduction at the rate of 30% u/s 24 (a) of the Income Tax Act, out of the rental income chargeable to tax in the hands of the assessee.
The assessee is a charitable trust, filed its return of income having an excess of expenditure over income by Rupees 1 407083/–. The assessment under section 143 (3) of the income tax was passed by the income tax officer (exemption), as assessing Nil income.
The assessing officer noted that assessee is deriving income from rent of Rs 9 78600/– and has claimed a deduction at the rate of 30% amount into Rs 2 93580/– and the net rental income is been shown at Rs 6 85020/–.
The AO noted that assessee is registered under section 12 AA, accordingly, claiming the benefit of section 11 of the income tax act so the income was to be computed on commercial principle as per the provisions of sections 11 and 12 of the act.
The Assessee was therefore not entitled to claim standard deduction under section 24 (a) of the act as the assessee has already claimed all the capital expenditure at the time of acquiring/construction of the property.
Section 24 of the Income Tax Act lets homeowners claim a deduction of up to Rs. 2 lakhs (Rs. 1,50,000 if you are filing returns for last financial year) on their home loan interest if the owner or his family reside in the house property. The entire interest is waived off as a deduction when the house is on rent.
While dismissing the petition the bench comprising of Judicial Member, K.N Chary and Accountant Member, Prashant Maharshi states that assessee trust is not eligible for standard deduction at the rate of 30% u/s 24 (a) of the act, out of the rental income chargeable to tax in the hands of the assessee.
Subscribe Taxscan Premium to view the JudgmentThe Gujarat High Court has held that in the case of violation of exemption notification and advance authorization license by any company, the Director-General of Foreign Trade (DGFT) is empowered to initiate a legal proceeding.
The Appellant Rajhans Impex Pvt. Ltd. is a company which is engaged in the manufacturing of brass rods or hollow rods, etc. the company is engaged in the regular exports of final products as also supplying to 100% Export Oriented Unit (EOU) by following the procedure prescribed by law. Further, on the completion of such deemed export and the receipt of export obligation discharge certificate, a request was made to the issue advance authorization with the office of Joint Director General of Foreign Trade (DGFT).
The issues raised in this case was whether the Joint Director General of Foreign Trade (DGFT) is empowered to initiate the proceedings in the case of violation of the exemption notification or not?
The Division Bench of Justice S.R. Brahmbhatt and Dr. Justice A.P. Thaker held that the Director-General of Foreign Trade (DGFT) is empowered to initiate a legal proceeding in the case of the violation of the exemption notification. Further, the bench observed that the Central Board of Excise Department has not sanctioned any refund or rebate of the duty paid on the supply of Export Oriented Unit (EOU).
Subscribe Taxscan Premium to view the JudgmentThe Insolvency And Bankruptcy Board of India ( IBBI ) has notified citing an amendment to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2016.
As per the new amendment, a fee of five hundred rupees per Form for each calendar month of delay in filing of a Form under this regulation after the due date of submission, whether by correction, updation or otherwise, will be charged after 1st of April 2020. This new amendment is aimed at straitening the filing process.
The notification in the official gazette states the amendment in detail and also elaborates the amendment with an example as follows:
“No. IBBI/2019-20/GN/REG055.—In exercise of the powers conferred by clause (t) of sub-section (1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations further to amend the IBBI Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, namely:-
(2) They shall come into force on the date of their publication in the Official Gazette.
“(4) The filing of a Form under this regulation after the due date of submission, whether by correction, updation or otherwise, shall be accompanied by a fee of five hundred rupees per Form for each calendar month of delay after 30th April 2020.
Example: A Form is required to be filed by 30th April 2020. It shall be filed along with a fee as under
| If filed on | Fee (in Rupees) |
| 29th April 2020 | 0 |
| 30th April 2020 | 0 |
| 1st May 2020 | 500 |
| Any day in May 2020 | 1000 |
| Any day in June 2020 | 1500 |
The Security and Exchange Board of India (SEBI) has issued guidelines for Portfolio Managers. This circular has been issued to protect the interests of investors in the securities market and to promote the development of, and to regulate the securities market. The board had earlier reviewed the framework for the regulation of Portfolio Managers based on the recommendations of a Working Group and inputs from public consultation.
As per the circular, changes to the regulatory framework for SEBI Portfolio Managers are mandated in the areas of Fees and Charges, Direct onboarding of clients by Portfolio Managers, Nomenclature ‘Investment Approach’, Periodic reporting by Portfolio Managers, Reporting of Performance by Portfolio Managers, Disclosure Documents and Supervision of Distributors.
The Circular will be applicable form 1st of May 2020.
Subscribe Taxscan Premium to view the JudgmentThe National Anti-Profiteering Authority ( NAA ) has ordered the probe against L’Oreal in India.
In the case of Director General of Anti-profiteering(DGAP), CBIT vs. M/s L’Oreal India Pvt. Ltd., the National Anti-profiteering Authority (NAA) has ordered the probe against L’Oreal has ordered the probe against L’Oreal in India, that L’Oreal India has failed to give any reasons pertaining to the reduction in its estimate and for not correcting the amount on its end and all of this was left on the authority to give its assent to the corrected amount.
Briefly, the facts of the case were that L’Oreal is engaged in the manufacturing and selling of more than 12,000 Stock Keeping Units (SKU) under 5 major categories namely hair colour, hair care, makeup, skincare, and luxury products. And the company asked for the benefit of deduction under various circumstances.
The issue in this case raised by the Director-General of Anti-profiteering (DGAP) was whether the rate of GST on the goods supplied by the respondent was reduced from 28% to 8% or not?
The reports furnished by the Director-General of Anti-profiteering (DGAP), CBIT consists of B.N. Sharma (Chairman), J.C. Chauhan and Amand Shah (Technical Members) were not accepted by the National Anti-profiteering Authority (NAA) and was directed to further investigate on the issue raised and also furnish the fresh in accordance with the Rule 133(4) of the Central Goods and Service Tax (CGST), 2017.
The National Anti-profiteering Authority (NAA) has observed that the report submitted by the Director-General of Anti-profiteering (DGAP) did not contain any reason for the reduction of its estimate or for the incorrect amount on its end, and why was it left to the authorities to approve the corrected amount. Further, it is a rule that in the case of absence of clear findings on the issue the authority can not pass a reasoned and just order and this approach were again not applied by the Director-General of Anti-profiteering(DGAP).
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Direct Taxes ( CBDT ) has notified new additions to the methods and procedures followed by new manufacturing companies for filing tax under section 115 BAB of the Income Tax Act, 1961.
These new tax rates were introduced by the Government of India through the Taxation (Amendment) Ordinance 2019 on the 20th of September 2019 which offered low tax rates of 15% (plus surcharge and cess) to new manufacturing companies.
The new amendment as published in the official gazette states, “In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), after rule 21AD, the following rules shall be inserted, namely: –
21AF. Exercise of option under sub-section (7) of section 115BAB.
On 11th February 2020, the Mexican Government approved the bill imposing a tax on digital service tax from foreign countries. Value-Added Tax (VAT) of 16% will be levied on digital services provided to recipients in Mexico with effect from 1 June 2020.
The rule is applicable to all suppliers even if it is a B2B transaction.
The scope of the Digital Service Tax (DST) will cover the services provided through any online application such as audio streaming, video, images, statistical analysis, teaching, news, online clubs, etc.
The recipient is deemed to be in Mexico if:
The foreign digital service (FDS) providers will have to register for Value-Added Tax (VAT) in Mexico and should obtain a tax identification number(TIN). The service provider will be required to appoint a legal representative in Mexico for notification purposes. The registration will begin from 1 June 2020 and should be completed by 30 June 2020.
The Income Tax Departments carried out Search and Seizure action on 6th February 2020 at Hyderabad, Vijaywada, Cuddapah, Vishakhapatnam, Delhi, and Pune. More than 40 premises were covered.
The search action included three prominent infrastructure groups based in Andhra Pradesh and Telangana. Investigations led to the busting of a major racket of cash generation through bogus sub-contractors, over-invoicing, and bogus billing. Several incriminating documents and loose papers were found and seized during the search, apart from emails, WhatsApp messages and unexplained foreign transactions unearthed during the search.
The search operation was also carried out on close associates including ex-personal secretary of a prominent person and incriminating evidence seized.
The search operations revealed that Infrastructure companies had sub-contracted work to several non-existent/bogus entities. Preliminary estimates suggest a siphoning of more than Rs. 2000 crore through transactions that were layered through multiple entities with the last in the chain being small entities with turnover less than Rs. 2 crores to avoid maintenance of books of accounts and tax audits etc by income tax departments. Such entities were either not found at their registered address or were found to be shell entities. Several such sub-contractors were controlled by the principal contractors with all their Income Tax Returns (ITR) filings and other compliances being done from the IP addresses of a main corporate office.
Foreign direct investment(FDI) receipts of several crores in the group companies of one of the Infrastructure companies are suspected to be round-tripping of its unaccounted funds.
Unexplained cash of Rs. 85 lakh and Jewellery worth Rs. 71 lakh have been seized. More than 25 bank lockers have been restrained.
The Telangana High Court has held that service tax not applicable to the purchase of immovable property including an undivided share of land and also directed to refund the service tax collected.
The petitioners, under a registered Sale Deed, had purchased office space measuring 20,101 sft along with an undivided share of land measuring 492 sq.yards in a complex named M/s. Meenakshi Infrastructure Private Limited.
The respondent, in addition to the consideration agreed upon, also demanded and received from the petitioners an amount of Rs.33,77,539/- as service tax payable in respect of the sale of the said property in their favour on the ground that such an activity is considered ‘commercial and industrial construction’ service covered by Section 65(105)(zzq) of Finance Act,1994.
The Petitioners contend that they were initially under a bonafide impression and belief that the said sale and purchase of the commercial property including the undivided share of land is eligible to service tax under the provisions of the said Act and had paid the said amount as demanded by the 4th respondent towards service tax.
The Petitioners filed an application with one of the respondents seeking a refund of the said amount of Rs.33,77,539/- from the other respondent. Petitioners enclosed required documents enclosing receipt of payment of service tax to the other respondent and also provided details of respondent along with it’s Service Tax Registration number and address to enable the respondent to verify the payment and grant refund to the petitioners.
The division bench comprising of Justices M.S.Ramachandra Rao and K.Lakshman has observed that the gross consideration charged by a builder/promoter of a project from a buyer would not only include an element of goods and services but also the value of undivided share of land which would be acquired by the buyer and since neither the Act nor the Rules framed therein provide for a machinery provision for excluding all components other than service components from ascertaining the measure of service tax, the same cannot be levied.
While relying Delhi High Court Judgment in Suresh Kumar Bansal’s case and said that the service tax cannot be levied on the value of undivided share of land acquired by a buyer of a dwelling unit or on the value of goods which are incorporated in the project by a developer and that levying a tax on the constituent goods or the land would clearly intrude into the legislative field reserved for the States under List II of the Seventh Schedule of the Constitution of India.
Subscribe Taxscan Premium to view the JudgmentWhile dismissing a review petition, the Chhattisgarh High Court observed that the review power can be invoked only when there is an error apparent on the face of the record.
The Writ Petitioners are again before this Court, contending that there are some inadvertent errors in the common judgment.
The contention of the Petitioners is that though the matter was heard exhaustively on different dates, some of the issues and vital submissions made in this regard were inadvertently lost sight of while passing this judgment.
The specific case is that despite raising ‘threefold’ challenge, as to the sustainability of Annexure P/2 Gazette Notification dated 01.07.2017 for not having been issued by the Central Government, but the Central Board of Indirect Taxes and Customs(CBIC); the Annexure P/1 Circular dated 05.07.2017 in appointing the ‘Proper Officers’ without any notification in the gazette as envisaged.
Section 167 read with Section 168 of the Central Goods and Services Tax Act(CGST), 2017 and also as to the several Proper Officers appointed all throughout the territory of India, in violation of the scheme of the statute and also the Constitution of India, this Court has unfortunately omitted to consider the challenge in respect of ‘Annexure P/1 Circular’ dated 05.07.2017 and the ‘plurality of Proper Officers’ which requires interference and hence, the prayer to have the writ petitions heard afresh.
The division bench comprising of Chief Justice P.R. Ramachandra Menon and Justice Parth Prateem Sahu observed that It is quite evident that the attempt of the Review Petitioners is only to have a “re-hearing” of the matter, which is not permissible in exercise of the power of review. The ‘review power’ can be invoked only when there is an ‘error apparent on the face of the record’ and it is not a substitute for appeal.
Subscribe Taxscan Premium to view the JudgmentThe Delhi Bench of Income Tax Appellate Tribunal (ITAT) in the case of Maruti Insurance Pvt. Ltd. vs. DCIT held that the expenses which are incurred before the operation of a company are called preoperative expenses and these expenses cannot be allowed as business expenses.
The facts of the case are that the assessee is a company that is engaged in the business of soliciting the motor insurance business. The company was incorporated on November 24, 2010, and applied for the grant of license on December 1, 2010, and got the license in February 2012 by the Insurance Regulatory and Development Authority. Further, the company filed the income tax return wherein the assessee declared its total income and claimed the losses of the current year i.e. 2012. However, the Assessing Officer (AO) held that the expenses incurred by the assessee cannot be allowed as business expenses, which was further upheld by the Commissioner of Income Tax (Appeals).
The issue raised was whether the pre-operative expenses can’t be allowed as a business expense or not?
The Income Tax Appellate Tribunal (ITAT) bench comprising of Judicial Member K. Narashima Chary and Accountant R.K. Panda held that the assessee applied for the license on December 1, 2010, and got the license in February 2012 by the Insurance Regulatory and Development Authority.
Relying the decisions of the Supreme Court, the Income Tax Appellate Tribunal (ITAT) considered that the business was commenced on the date of the grant of the license which was in February 2012 and so the entire expense was disallowed and was held that expenses which are incurred before the operation of a company are called preoperative expenses and these expenses can not be allowed as business expenses.
Subscribe Taxscan Premium to view the JudgmentThe Maharashtra Appellate Authority for Advance Ruling (AAAR) has held 18% Goods and Services Tax (GST) applies to the construction of flats to be given on lease.
The appellant wishes to submit that since the provisions of CGST Act, 2017 and the rules and notifications issued thereunder are in parametric to corresponding provisions in the Maharashtra SGST Act, 2017 and the rules and notifications issued thereunder, the provisions of CGST law alone are referred to in this appeal, which would imply reference to corresponding provisions under the SGST law also unless specified.
The Maharashtra Airport Development Authority(MADC), a company registered under the Companies Act, is a special planning authority under the Maharashtra Regional and Town Planning Act, 1966, for the Multimodal International Hub Airport, Nagpur Project (MIHAN) which includes development of Nagpur Airport as an international hub, development of a Special Economic Zone and other facilities around the Nagpur Airport.
M/s.Chourangi Builders and Developers Pvt. Ltd. has formed a Special Purpose Vehicle (SPV), along with M/s IJM Realty (Mauritius) Ltd., under the name and style of M/s Nagpur Integrated Township Pvt. Ltd., the appellant herein.
The Maharashtra Airport Development Authority(MADC) and the appellant have entered into a Development Agreement, has been granted the right to design, finance, develop, a township project, comprising of residential apartments, commercial complexes, etc. in the land owned by Maharashtra Airport Development Authority(MADC).
As per the agreement, the appellant had been permitted only to grant long term lease of the residential apartments and commercial buildings and the same cannot be sold outright in favour of the buyers. The land in which the construction of flats is undertaken is a leasehold land, which cannot be transferred.
It may be observed that the identified apartment unit in the residential complex is proposed to be given on long term lease for 99 years, expiring on 21.06.2105, against payment of lease consideration by the lessee to the appellant.
The bench comprising of Members, Rajiv Jalota and Sungita Sharma pronounced the order based on an appeal filed by Nagpur Integrated Township Pvt Ltd.
The Appellate Authority for Advance Ruling (AAAR) observed that the transaction between the developer and the lessee is taxable under Goods and Services Tax (GST) and that it is a composite supply of works contract in relation to the construction of a complex, building ie, flats which are intended to be handed over to the buyer and will attract tax at the rate of 18 percent.
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal (ITAT) in Mumbai held that unabsorbed depreciation pertaining to assessing year AY 1997-98 to AY 2001-02 can be carried forward and set off in the later years.
The assessee company is engaged in the business of project engineering and manufacturing of TPE.
The Assessing Officer(AO), during the course of assessment proceedings, required the assessee to furnish the ledger of creditors, original purchase bills with delivery challans, lorry receipts, original sale bills with delivery challans, lorry receipts, original inward register and outward register for the year under consideration i.e. FY 2010-11.
The Assessing Officer(AO) also asked the assessee to produce the ledger of creditors, original purchase bills with delivery challans, lorry receipts and original sale bills with delivery challans, lorry receipts, original inward register and outward register for AY 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11.
The Assessing Officer(AO) noted that the carry forward and set off of unabsorbed depreciation was claimed beyond 8 years and therefore, he disallowed the set off of brought forward losses of unabsorbed depreciation amounting to 66,79,03,134/-.
The Tribunal comprising of Judicial Member, Mahavir Singh, and Accountant Member, M Balaganesh pronounced order against ATV Projects India Limited.
The Finance Act, 2001 has amended Section 32(2) which prior to the amendment had a limit of eight years for the carry forward of depreciation. This restriction was brought in, by Finance Act, 1996. It is notable that prior to that amendment also, there was no restriction or cap in the carrying forward of depreciation.
Relying upon the decision of Gujarat High Court has in the case of General Motors India Pvt. Ltd the Tribunal came into the conclusion that the unabsorbed depreciation pertaining to AY 1997-98 to 2001-02 will be carried forward to AY 2002-03 and as a result became part thereof in terms of the provisions of section 32(2) as amended by Finance Act, 2001. Accordingly, it will be available for carrying forward and set off against the profits and gains of subsequent years, without any limits.
Subscribe Taxscan Premium to view the JudgmentThe National Company Law Appellate Tribunal (NCLAT), New Delhi has held that claim amount towards Interest on loan alone, cannot be termed as an ‘Operational Debt.’
The appeal came out from the order requested by the appellant M/s Steel India to initiate Corporate Insolvency Resolution Process (CIRP) against the corporate debtor M/s Theme Developers Pvt. Ltd. The appellant contended that the „Corporate Debtor‟ committed default in making payment to the extent of Rs.22,64,054/-, which is inclusive of interest calculated @ 2% on the delayed payments against goods sold and delivered by the ‘Operational Creditor’ to the ‘Corporate Debtor’. The Applicant states that it supplied the steel bars to the ‘Corporate Debtor’ for their construction activity, at their project sites and against these supplies various invoices were raised.
It was further that as per the terms and conditions between the parties that in case the payment is delayed beyond sixty days, 2% interest per month will be charged. The Appellant further contended that amount due towards the ‘Corporate Debtor’ is of interest amounting to Rs.22,64,054/-., for delayed payment against the goods sold and delivered.
The tribunal consisting of judicial member Justice Venugopal M. and technical members Mr. Kanthi Narahari and Mr. V P Singh while dismissing the petition ruled, “ It is also pertinent to allege that the outstanding amount is towards interest on the delayed payments, for which there was a pre-existing dispute, before issuance of demand notice. The alleged claim amount, towards interest on loan alone, cannot be termed as an „Operational Debt‟. For the reasons aforesaid, we are not inclined to interfere with the order passed by the Learned Adjudicating Authority.”
Subscribe Taxscan Premium to view the JudgmentThe Delhi High Court in the case of Housing and Urban Development Corporation Ltd. vs. Additional Commissioner of Income Tax held that the assessee is not entitled to claim the deduction until the liability for which deduction is claimed is accrued.
The appellant was the Public Sector Undertaking (PSU), who filed his income tax return for the Assessment Year 2007-08 on October 30, 2007. The same declared income was revised on October 24, 2008. The scrutiny made by the Assessing Officer (AO) in the assessment order made disallowances which included the disallowance pertaining to the provision of salary because of the change in the accounting policy which had an adverse financial impact. On an appeal made by the assessee to the Commissioner of Income Tax (Appeals), it upheld the order of the Assessing Officer (AO). And then the same was challenged in Income Tax Appellate Tribunal (ITAT) wherein the disallowance was again upheld on the grounds that it did not accrue and the same was merely a contingent liability without appreciating the legal proceedings.
The issue raised namely was whether the order of disallowance in the claim of the provision for salary by the Income Tax Appellate Tribunal (ITAT) is valid or not?
While allowing the appeal, the division bench comprising of Justice Vipin Sanghi and Justice Sanjeev Narula held that an assessee is not entitled to claim the deduction until the liability for which deduction is claimed has accrued by following the mercantile system of accounting. Further, the court after hearing the submissions held that the change in the accounting policy is a result of the audit objection bt CAG. Further, relying on the decision of the Supreme Court, the high court held that the change is revenue-neutral.
Subscribe Taxscan Premium to view the JudgmentIn a Relief to Price Waterhouse & Co ( PwC ), the Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has quashed the re-assessment and held that in order to reopen the assessment by the Assessing Officers (AO) there must be a ‘reason to believe’.
The assessee PwC had filed the income tax return under Section 143(1) of the Income Tax Act, 1961 of the total income of Rs. 0. Subsequently, the same case was reopened by the Assessing Officer (AO) under Section 148 of the Income Tax Act, 1961 on the grounds the assessee’s amount of income is not assessable under the head business and profession, further in the balance sheet the assessee has shown the amount under the head “reserve and surplus” and later it was revealed that no such amount has been transferred in the earlier years and as a consequence, AO claimed that the assessment has skipped. Therefore, the notice under Section 147 was sent to the assessee and the same is challenged.
The issue raised in this case pertains to the question that is the reopening of the assessment by the Assessing Officer (AO) is valid on the above-mentioned grounds or not.
While allowing the appeal, the Kolkata Bench of ITAT comprising of Accountant Member Dr. A.L. Saini, while taking into consideration the decisions of the Apex Court, the tribunal observed that the Assessing Officer (AO) is supposed to have the ‘reason to believe’ that the income chargeable to tax has escaped assessment. Further, it held that there must be the direct nexus between the material and the formation of such belief. The Assessing Officer has not scrutinised the assessment within the prescribed statutory limit and the act of reopening the assessment by AO did not meet the requirements of the phrase ‘reason to believe’ as there is no direct nexus.
Subscribe Taxscan Premium to view the JudgmentThe Authority of Advance Ruling(AAR) Maharashtra has ruled that manufacturers of laboratory medical equipment are not eligible to concessional GST rates when supplied to distributors.
The applicant, M/s Equitron Medica Pvt. Ltd. is engaged in the manufacture of laboratory medical equipment like Autoclaves, Incubators, Rotary Vacuum Evaporators, Baths, etc..Their Target market includes institutions engaged in Scientific Research. They are currently selling all their products through distributors’ networks and issues invoices to distributors at the normal rate of Goods and service tax(GST) at 18% because the distributors or channel partners are not engaged in scientific research of any type in any manner. The distributors are only engaged in trading of the subject goods and in some cases, they sell the same to certain notified institutions engaged in the scientific research, at a concessional rate of 5% because the end use of the product sold is exclusively for scientific research.
This concessional rate is applicable via GST notification 45/2017 & 47/2017 on supply to the end-users who undertake/are engaged in the scientific research and the goods supplied are used for the same purpose.
The question raised by the applicant before the authority was whether as a manufacturer of such goods, whether such concessional rates were available for them.
The Authority benched by Addl. Commissioner of Central Tax Ms. P. Vinitha Sekhar and Joint Commissioner of Sales Tax Shri A. A. Chahure held that “we find that the applicant does not supply goods to the end-users who undertake or are engaged in the scientific research. The goods are supplied to their distributors only. . . The said notification requires the said certificate to be issued to the supplier who in the subject case, is the distributor and not the applicant. In this view, we hold that the applicant cannot sell their product to their dealers/ distributors by charging Goods and service tax(GST) @5% as per notification no.s 45/2017 & 47/2017”.
Subscribe Taxscan Premium to view the JudgmentThe Authority for Advance Ruling (AAR) in Maharashtra has held that 18% of goods and services tax(GST) applicable to supply of food or drinks in the restaurant for consumption within or away from the restaurant premises.
The Cheaters, a restaurant operated by Applicant, is a restaurant located at J. W. Marriott Hotel, Mumbai where they are planning to start the business of providing the services of serving food and beverages for consumption.
The planned restaurant shall be a part of a retail arcade which is owned and operated by Mis. Chalet Hotel Limited. This arcade is located at The ORB, JW Marriott Hotel, Next to Intl. Airport, Mumbai. Ws. Chalet Hotel Limited also operates a hotel under the brand name “JW Marriott” on the same plot as the arcade.
The hotel, as well as the arcade, are owned and operated by Ws. Chalet Hotel Limited. There is an inter-connectivity to the arcade from the hotel and vice versa via a private passageway between the hotel and the arcade. There is no need to exit the hotel premises to enter the arcade and vice versa as the main entry gate is common for both structures.
There are no facilities for residence or lodging in the arcade. All such services are provided only on the hotel premises, which is the adjacent building to the arcade. JW Marriott Hotel offers rooms for lodging and boarding which have a declared tariff above Rs.7500 per day.
An applicant has reproduced the relevant portions of amended Section 7 of the CGST Act_ 2017 for understanding the applicability of goods and services tax(GST) on their services
They have submitted that it is a well-established principle that food or beverages provided for consumption in restaurant premises are a “supply”. They have also submitted that as per Clause 6, Sub-clause (b) of Schedule 11 the supply of food or drink (other than alcoholic liquor for human consumption), which is supplied whether as a service or otherwise, for cash or other consideration, is a supply of services under GST Laws.
An applicant has further reproduced the GST rate on restaurant service shall be 18% if the restaurant is located on the premises of a hotel or other places offering accommodation services having a declared tariff of Rs. 7500 or more for any unit in such places. As per their interpretation, their restaurant shall be located on the premises of the arcade and not on the premises of the hotel. The arcade does not offer accommodation or lodging and boarding services in any part of the establishment.
The Authority for Advance Ruling (AAR) bench constituting of Additional Commissioner, Vineetha Sekhar and Joint Commissioner, A A Chahure observed that applicant restaurant is located in the same premises as JW Marriot Hotel having rooms with a tariff of seven thousand five hundred rupees and above, per unit/room per day or equivalent for any unit/room and applicant will be supplying food or drinks for consumption within the JW Marriot Hotel.
The Authority further observed that supply of food or drinks in a restaurant for consumption within the restaurant premises or away from the restaurant premises, where the restaurant located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes with a tariff at seven thousand five hundred rupees and above per unit/room per day or equivalent for any unit/room in the premises, the applicable rate of GST will be 18%.
Subscribe Taxscan Premium to view the JudgmentThe Indira Gandhi Institute of Development Research (IGIDR) has invited applications from qualified Chartered Accountants(CA) for the post of Finance Officer. Indira Gandhi Institute of Development Research (IGIDR) is an advanced research institute established by the Reserve Bank of India for carrying out research on development issues from a multi-disciplinary point of view.
Qualification:
Should be a Qualified Chartered Accountant(CA) from the Institute of Chartered Accountants of India.
Application Mode: Offline
For Further Information Click here.
