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Showing 41 to 60 of 1308 Records
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2023 (2) TMI 1268 - ITAT MUMBAI
Addition u/s 68 - Appellant had deposited cash during the demonetization period - Appellant had submitted that after the transaction pertaining to deposit of cash the relationship between the Appellant and M/s Gupta Suppliers Company had soured and therefore, no adverse inference could be drawn against the Appellant on account of non-compliance of notice issued by the AO u/s 133(6) by M/s Gupta Suppliers Co.
HELD THAT:- The issue that requires verification in whether the money transferred by the Appellant to the bank account of M/s Gupta Suppliers Company has been withdrawn for making payment to farmers for purchase of the raw material and thereafter, deposited in the bank account of the Appellant in cash as the currency note withdrawn would not have amounted to legal tender on account of demonetization.
We remand this issue to the file of AO with Appellant is directed to furnish the details of bank account of M/s Gupta Suppliers Company in which payments were through banking channels along with the relevant extract of the bank statement of the Appellant exhibiting the aforesaid payments.
AO is directed to obtain the bank statement of M/s Gupta Suppliers Company for the relevant period, and/or from the concerned bank by exercising powers as per the provisions of the Act including Section 133(6) of the Act;
In case the cash withdrawals made by M/s Gupta Suppliers Company from the aforesaid bank account are sufficient to account for deposit of cash made by M/s Gupta Suppliers Company into the account of the Appellant, then the AO is directed to delete the addition u/s 68 to the extent of such cash withdrawals and as regards, the balance amount of addition made u/s 68 of the Act left (after deletion as aforesaid), if any, the Assessing Officer is directed to consider the details/documents furnished by the Appellant and gather such further information/documents from M/s Gupta Suppliers Company or any other source as it may deem fit, and decide the issue afresh as per law - Ground No. 3 raised by the Appellant is allowed for statistical purposes.
Computation of "Book Profits‟ as per Section 115JB - increase of the Net Profits as per Profit & Loss Statement of the Appellant being addition made u/s 68 for computing "Book Profit‟ u/s 115JB - HELD THAT:- The accounts prepared by the Appellant have been certified by the Auditor as having been prepared in compliance with the provisions of the Companies Act, 2013. Once the accounts including the profit and loss account are certified by the authorities under the Companies Act it is not open to the AO to contend that the Profit And Loss Account has not been prepared in accordance with the provisions of the Companies Act, 2013. The Assessing Officer, thereafter, has the limited power of making increase and reductions as provided for in the Explanation to the Section 115JB - AO does not have the jurisdiction to go behind the "Net Profit‟ shown in the profit and loss account except to the extent provided in the Explanation to section 115JB as held by the Hon'ble Supreme Court has, in the case of Apollo Tyres Ltd.[2002 (5) TMI 5 - SUPREME COURT] - Accordingly, keeping in view the facts and circumstances of the present case, Ground No. 4 raised by the Appellant is allowed.
Addition u/s 14A r.w.r. 8D - expenditure incurred in earning exempt income - HELD THAT:- We find merit in the contention advanced by Appellant that amount of disallowance u/s 14A cannot exceed the amount of exempt income as held in the case of DCIT Vs State Bank of Patiala[2018 (11) TMI 1565 - SC ORDER] which was followed in the case of DCIT Vs. Reliance Ports and Terminals Ltd [2019 (11) TMI 1194 - BOMBAY HIGH COURT] - The Hon‟ble Delhi High Court has, in the case of Era Infrastructure India Ltd (2022 (7) TMI 1093 - DELHI HIGH COURT] held that the amendments to Section 14A introduced by the Finance Act, 2022 shall apply from Assessment Year 2022-23. Thus, there is no change in law with respect to assessment years prior to 2022-2023. Accordingly, for the Assessment Year 2017-18 before us, the disallowance made by the AO under Section 14A of the Act read with Rule 8D of the Rules is restricted to INR 96,031/- and the balance amount is deleted. Ground No. 5 raised by the Appellant is partly allowed.
Addition made to the Net Profits for Section 14A while computing 'Book Profits‟ u/s 115JB - HELD THAT:- On perusal of Clause (f) of Explanation 1 to Section 115JB(2) of the Act it is clear that the computation under clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under Section 14A of the Act read with Rule 8D of the Rules. Therefore, the Assessing Officer erred in adding to the Net Profits while computing 'Book Profits‟ under Section 115JB of the Act. Accordingly, we remand this issue back to the file of Assessing Officer for determining the amount of expenditure deductible to earning exempt dividend income which is to be added to the Net Profits while computing Book Profit as per Clause (f) of Explanation 1 to Section 115JB(2) of the Act having regard to the provisions contained in Section 14A the Act (without resorting to the computation as contemplated under Rule 8D of the Rules).Ground No. 6 allowed for statistical purposes.
TP Adjustment - TPO concluded that the rate at which product was transferred by the Appellant's 80IB Unit to a non-80IB Unit was lower than the rate at which the same product were sold to third party/non-AEs sales in few cases, and therefore, proposed upward transfer pricing adjustment passed u/s 92CA(3) - HELD THAT:- Though the product has been sold to AEs at different prices on the same date, no reason has been furnished for this variation in the rate. In the cases where rate at which sales were made to AE were less than the rate at which sales were made to non-AEs, the TPO has proposed transfer pricing adjustment. Whereas in cases where the rate at which sale was made to AE was equal to or more than sale made to non-AE, no transfer pricing adjustment was called for and therefore, the TPO has accepted the same. In view of the aforesaid, we do not find any reason to interfere with the transfer pricing adjustment made in the Final Assessment Order, dated 28.07.2022. Accordingly, Ground No. 7 raised by the Appellant is dismissed.
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2023 (2) TMI 1267 - ITAT AHMEDABAD
Additions on account of Capital Grants & Subsidies and Consumers' Contribution - appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 10% offered by the appellant - HELD THAT:- Co-ordinate Bench decision on identical ground in assessee’s own case [2022 (7) TMI 1498 - ITAT AHMEDABAD] as per provisions of section 43(1) of the Act, the capital grant should be reduced from the cost/WDV of the relevant asset, and thereafter the depreciation is to be calculated. Thus, the capital grant receipt in respect of asset, on which depreciation is allowable at the rate different from 15% should be worked out as per the applicable rate.
DR could not point out any mistake in the above submission of the assessee, which we find is in accordance with law. We, therefore, set aside the orders of the lower authorities on this issue, and restore the matter back to the file of the AO for adjudication afresh - This ground of appeal preferred by the assessee is allowed for statistical purposes.
Correct head of income - Treating interest income on advances paid to staff as “income from other sources” instead of “business income” - HELD THAT:- We have heard the rival submissions and perused the relevant material and the judgment of the Odisha High Court in the case of Odisha Power Generation Corporation Ltd. [2022 (3) TMI 539 - ORISSA HIGH COURT]. In view of the same, we find it proper to direct the A.O. to consider the issue afresh upon examining the same in regard to the heads of income after considering the facts of each cases.
Treating miscellaneous receipts as “income from other sources” instead of “business income” - HELD THAT:- As decided in the case of CIT vs. New India Maritime Agencies (P.) Ltd. [2001 (6) TMI 27 - MADRAS HIGH COURT] wherein it was held that the “company had given the houses owned by it, to its Directors for their residences, it is doing so only in the course of his business. The principle is that if the owner of a property carries on business with a property owned by him, the income from that property must be assessed as only “income from business”. Since the Tribunal found that the house property had been used by the assessee as a part of the business and treated as business, the finding of the Tribunal that the income from the property could not be assessed separately as income from house property and included in the assessee’s total income, was correct.”
Also in the case of Triveni Engg. & Industries Ltd., [2010 (9) TMI 26 - DELHI HIGH COURT] wherein the “loss on account of non-recovery of loan given to employees was treated as loss incidental to business activity, then the interest on such loan falls within the purview of business activity only not “income from other sources”. Thus we find it fit to remand this issue to the file of the Assessing Officer for verification of the facts with proper materials and allow the claim in accordance with law.
Disallowance of prior period expenses - HELD THAT:- We find that the Co-ordinate Bench on identical issue following [2017 (5) TMI 1718 - ITAT AHMEDABAD] and [2022 (7) TMI 1498 - ITAT AHMEDABAD], on identical issue disposed of the ground by remitting the same to the file of the Ld. A.O. by adjudicating the issue afresh assessee is a Slate Government Undertaking and its accounts are subjected to review by CAG and therefore it cannot be postulated that there was any deliberateness in not furnishing relevant, details before the revenue authorities. The bonafides of the Assessee is also augmented by the facts that the Assessee has reported staggering carry forward losses in its returned income. Thus, there is no immediate tax advantage accrued to the assessee by the claim of impugned prior period expenses per se. We therefore deem it expedient to restore the issue back to the file of AO for examining the issue de novo after verifying facts as may be considered necessary and expedient in accordance with law. The AO shall bear in mind the ratio laid down by the Hon'ble Gujarat High Court in the case of Adani Enterprises Ltd. [2016 (7) TMI 1564 - GUJARAT HIGH COURT] while adjudicating the issue.
Addition of losses due to flood, cyclone, fire etc., under the head extraordinary items - sole ground for rejecting the claim in question to lack of evidence - HELD THAT:- This issue is covered in favour of the assessee in assessee’s own case [2022 (7) TMI 1498 - ITAT AHMEDABAD] as held that lower appellate order mentions very clearly that the assessee had duly filed a letter comprising of all necessary details; division-wise on expenses towards flood related damages. The Revenue does not produce on record copy of the above stated letter so as to dispel the above said specific findings. The CIT(A) further relies on an identical order dealing with the very claim. The same has also gone unrebutted in course of hearing before us. We decide this ground as well against the Revenue.
Addition of prior period expenditure - assessee submitted that this addition was deleted by the Ld. CIT(A), as the A.O. has made double addition on the same amount while computing the assessed income - HELD THAT:- D.R. could not controvert to the above submissions of the assessee. Therefore the additions made by the Ld. CIT(A) does not require any interference, hence this Ground is dismissed.
Adjustment to book profit u/s. 115JB as prior period expenses and Capital Grants - HELD THAT:- A.R. appearing for the assessee has no objection in setting aside the matter back to the file of the Assessing Officer for fresh adjudication. Thus we set aside this issue to the file of the Ld. Assessing Officer and pass orders in accordance with law by giving proper opportunity to the assessee.
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2023 (2) TMI 1266 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI
Jurisdiction - multiplicity of proceedings or not - insolvency proceeding is pending in different court room of a particular Bench of the NCLT - proceedings under Section 95 have been entertained by another court of the same Bench - whether order passed under Section 95 application by the court different from court where insolvency proceeding is pending, is without jurisdiction? - Whether Section 60(2) of the IBC contemplate application for personal guarantor before NCLT or its Benches or it contemplates filing of Section 95 application in the same court room of the NCLT? - HELD THAT:- NCLT Mumbai Bench transacts its business by two members out of which one is Judicial Member and another is Technical Member sitting in different Courts. The powers of the Tribunal as per sub-section (3) of Section 419 shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member - Sub-section (1) of Section 419 which empowers Central Government to constitute Benches of the Tribunal and sub-section (3) provides the powers of the Tribunal shall be exercisable by Benches consisting of two Members.
The ‘Adjudicating Authority’ is a NCLT which is constituted under Section 408 of the Companies Act, 2013 and the ‘Bench’ means a Bench of the Adjudicating Authority i.e. a Bench of NCLT. Under Section 419, Central Government has constituted Benches of the NCLT - From the definition of ‘bench’ as contained in the IBC as well as NCLT Rules, 2016 read with Sections 408 and 409, it is clear that the word ‘bench’ refers to a bench of NCLT as constituted under Section 419. The expression ‘bench’ as contained in IBC and NCLT Rules 2016 as well as under Section 419 of the Companies Act, 2013 only refers to Bench of NCLT. The legislature never contemplated NCLT for courts of particular Bench of NCLT sitting in composition of two members in a court, court of NCLT hearing a petition or application was not under contemplation in sub-section (2) of Section 60. Sub-section (2) of Section 60 refers to NCLT which includes also a bench of NCLT, hence, the bench shall mean a bench constituted under Section 419.
Section 419(3) provides that the powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member. The above provision was for the purposes of laying down how the power of NCLT shall be exercisable. The expression ‘benches’ as occurring in Section 419(3) has to be read along with the expression ‘benches’ as used in Section 419(1) of the Companies Act, 2013. Principal bench as well as the benches of the tribunal constituted under Section 419(1) has to exercise jurisdiction by two members; one judicial member and one technical member.
Section 60(2) only provided for filing of the application against personal guarantor before the same NCLT where insolvency resolution process against the corporate debtor is pending. Legislature neither contemplated nor intended hearing of both the applications by one particular court room. A bench of NCLT is a unit and filing of application and petitions are before the bench of the NCLT and not before a particular court - Where the petition filed for insolvency resolution under Sections 7, 9 and 10 as well as application filed under Section 95 against the personal guarantor are to be heard together or heard separately is a matter of general or special order issued by the President for hearing the application filed in a particular bench and no fetter can be read under sub-section (2) of Section 60 on exercise of general and special order passed by the President for hearing of the applications.
It is to be considered as to whether the order passed under Section 95 directing for appointment of a Resolution Professional for submitting a report is without jurisdiction only on the ground that it is passed by different court than one where insolvency application is pending. Whether the court where Section 95 application is pending was required to necessarily sent the proceedings before Court where insolvency proceedings is pending can be answered holding that since the court did not lack jurisdiction it was not necessary for the court to refuse to proceed to hear.
The interpretation which is sought to be advanced by the Appellant in event it is accepted shall lead to uncertainty and conflict regarding jurisdiction of a NCLT to entertain an application under Section 95. All applications and petitions filed in NCLT including its benches have to be heard and decided as per the general and special order of the President. Applications are listed in different court of one bench of NCLT as per the general and special order of the President. When a matter is listed before a particular court of bench of NCLT, the Court where the matter is listed has necessarily jurisdiction to entertain it. The submission that court has no jurisdiction since application of insolvency is pending in different court of same bench if accepted the same will be contrary to general and special order of the President under which Section 95 application is listed in different court.
In the facts of the present case, impugned order dated 18.12.2023 passed by Court III of the NCLT, Mumbai Bench was well within its jurisdiction. Similarly, the impugned order passed by NCLT, Court 1 dated 17.08.2023 was well within the jurisdiction of the court which passed the order. No infirmity can be found with the impugned order on the submission which has been advanced by the Appellant in the present appeal.
When an insolvency proceeding is pending in different court room of a particular Bench of the NCLT, the proceedings under Section 95 can be entertained by another court of the same Bench as per general or special order of the President and order passed under Section 95 application by the court different from court where insolvency proceeding is pending, shall not be without jurisdiction - Section 60(2) of the IBC contemplate filing of application for personal guarantor before NCLT or its Benches and not to a particular courtroom of NCLT or its benches.
Appeal dismissed.
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2023 (2) TMI 1265 - CESTAT CHENNAI
Valuation - Independent manufacturers or job-workers - Redetermination of value of Tin Containers manufactured on job work basis in terms of Central Excise Valuation Rules, 2000 - clubbing of value of Tin Containers manufactured in CGI with those of manufactured and cleared under the invoices of M/s. B.V. Industries, M/s. Golden Industries and M/s. Kishore Industries on job work basis for various Principals - levy of interest and penalty - Extended period of limitation.
HELD THAT:- In the manufacture of Tin Containers, cost of raw-material accounts for more than 90% and job work charges come to only around 10%. The principals are purchasing the Tin Sheets which are supplied to the Noticees at their cost and reportedly exercising control over the raw-material usage and quality of Tin Containers. Principals are the only buyers of these containers and it is not in dispute that only payment of coolie charges or conversion cost was being paid to these job workers.
In the instant case, the principal is the actual consumer and even assuming that the goods viz. Tin Sheets are consumed by CGI in the production or manufacture of tin cans, we find that the Show Cause Notice has not prudently determined the Cost of Production as per accepted Cost Accounting practices in vogue by duly accounting for cost of other raw-materials used in the manufacture like lid, handles, etc., cost of overheads and the wastage, but simply applied unconventional methods in arriving at the COP as revealed in the Annexures to the Show Cause Notice. Further, the application of SSI exemption to arrive at the net duty liability in Annexure D of the Show Cause Notice, adopting unscientific methods basing on the average assessable value per day in not legal and proper and cannot be sustained.
The Show Cause Notice dated 14.03.2012 proposes to club the value of clearances of C.G. Industries with that of Golden Industries, B.V. Industries and Kishore Industries and also to re-determine the value of clearances in terms of provisions of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - in the instant case tin sheets are supplied by various principals like M/s. Kaleesuwari Refineries Pvt. Ltd. and other principals to M/s. CG Industries for conversion in to Tin Containers which are used as primary packing materials for the oil manufactured and cleared by the principals. It appears that M/s. Golden Industries, owned by Smt. Vasuki, wife of Mr. Bose had commenced business in 2006 and was filing VAT and IT returns till September 2009 and later got shifted to Chennai - the clearances of M/s. Kishore Industries, owned by Shri Satish Kumar, brother-in-law of Bose was sought to be clubbed with the clearances of M/s. CG Industries by alleging that the said entity was a dummy/ non-existent unit for a part of the disputed period.
In case of clubbing of clearances of different units to deny the SSI exemption benefit there should be concrete evidence of mutuality of interest, financial flow among the units. The decision in the case of Commissioner of Central Excise, Chennai IV Vs. B.K. Office Needs (P) Ltd. [2015 (4) TMI 241 - CESTAT CHENNAI] was relied wherein it was held that mere common partners, common staff, common managerial control is not enough to hold that there is flow back of funds and mutuality of interest so as to club the clearances.
The Tribunal in the case of Associated Engineering Projects Vs. Commissioner of Central Excise & Service Tax, Meerut-I [2018 (9) TMI 375 - CESTAT ALLAHABAD] while considering the issue of clubbing of clearances held that merely because the units are run by some family members and books of accounts maintained by accountant in one common office it cannot be held that there is mutuality of interest or financial flow back. In absence of such evidence, the clearances cannot be clubbed.
The Impugned order has confirmed that all the clearances of specified goods had been manufactured in the premises of the main Noticee (CGI) basing on the fact that there is no evidence of movement of raw materials to the premises of M/s. Golden Industries, M/s. B.V. Industries and sub-contractors and for movement of finished goods to the principals back; that denial of the manufacture of the specified goods by the sub-contractors; that there was progressive consumption of electricity by the main Noticee; that the management of entire affairs of M/s Golden Industries by CGI and floating of Kishore Industries in the premises of the Noticee and non-existence of M/s BV Industries.
The impugned order has failed to discuss whether manufacturing was carried in the premises of the main Noticee by its employees or by its sub-contractors. The reason for not conducting stock verification at C.G. Industries to ascertain whether Tin Sheets pertaining to other concerns were stocked there or not and whether finished goods got manufactured in the names of other concerns is inexplicable. No enquiries were conducted with the employees whether they are the sub-contractors or employees of other concerns. It is recorded that there are no production records available and so the investigation is compelled to compute the number of Tin Containers and the value of these on the basis of the quantum of Tin Sheets supplied by the principals and the amount of coolie bills settled. Further, the impugned order has failed to consider that Mr. K. Bose, Proprietor and as Karta of HUF have two PAN cards and Income Tax returns being filed separately.
Though from the various statements recorded from persons concerned as to production of Tin Containers accepting that Mr. Bose is exercising pervasive control on the management of affairs of the Noticees for most part of the disputed period, the evidence unearthed is not sufficient enough to conclusively justify to club the clearances of all these four units. There is evidence that on certain occasions, M/s. B.V. Industries and M/s. Golden Industries purchased Tin Sheets on their own account and effected sales of these containers to the principals. It is on record that manufacture of Tin Containers can be carried out without the aid of power and also through sub-contractors. The Ld. Advocate has put forth that there is no bar from the principals or otherwise for manufacture of Tin Containers through sub-contractors.
In the instant case, without establishing financial flow back and mutuality of interest between the various units, clubbing of value of clearances of various units has been resorted to by revenue which is not just and fair. Moreover, the re-determined value of clearances of CG Industries owned by a HUF, which is a distinct and separate legal entity and which is engaged in Job Work for various principals is sought to be clubbed with others without complete justification. If the so called re-determined value of clearances of CG Industries is ignored, then the value of clearances of the other units are below the threshold limit as per Notification No. 08/2003 as discussed above - the job work of CGI Industries cannot be clubbed with that of other entities. Not enough evidence exist to call these units as dummy units or created fictitiously to justify the clubbing of job work of all these units.
Extended period of limitation - HELD THAT:- There is no need to discuss about invokability of extended period in this case. The demand raised pertains to the period from 2007-2008 to 2011-2012 whereas the Show Cause Notice was issued on 14.03.2012 - there was not enough evidence unearthed for clubbing of clearances and also for raising of demand of demand of excise duty.
Imposition of penalties on the principals viz., M/s. Kaleesuwari Refinery Pvt. Ltd., M/s. Arun Oil Trade and M/s. GMS Traders - HELD THAT:- The Original Adjudicating Authority has held in the impugned Order-in-Original No. 07/2013-CE dated 30.04.2013 that the value of their materials had far exceeded the value limits of the clearance of the specified goods prescribed in the SSI exemption Notification and these principals were under the excise control and the raw-materials supplied and their utilization for conversion into Tin Containers, the quality of manufactured Tin Containers and there is some sort of agreement which may not be in writing for payment of piece rate of conversion charges between the principals and the Noticees, make them liable for penalty under Rule 26 of the Central Excise Rules, 2002. The modus operandi adopted by the Noticees is fully supported by the principals. However, we find except M/s. Kaleesuwari Refinery Pvt. Ltd. who have came on appeal vide Appeal No. E/41709/2013 and other principals viz., M/s. Arun Oil Trade and M/s. GMS Traders are not in appeal. In view of the above, the penalty imposed on M/s. Kaleesuwari Refinery Pvt. Ltd. is upheld.
Appeals disposed off.
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2023 (2) TMI 1264 - CESTAT MUMBAI
Excisability - waste arising in the form of cigarette/CT paper, mix pulp, aluminium foil during the course of manufacture of cigarette - HELD THAT:- The issue is no longer res integra. In the case of INTERNATIONAL TOBACCO CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD [2003 (10) TMI 171 - CESTAT, NEW DELHI], the Tribunal has held The Revenue has not controverted the contention of the learned Advocate for the appellants that there is no provisions in Cenvat Credit Rules, 2001 providing for payment of duty on waste and scrap, which has arisen during the manufacture of the finished product. Such a provision had existed in the erstwhile Rule 57F of the Central Excise Rules, 1944. In view of this, the impugned order is not sustainable.
The facts being completely identical, following the decision of the Tribunal in appellant’s own case, the impugned order needs to be set aside - Apppeal allowed.
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2023 (2) TMI 1263 - CESTAT CHENNAI
Classification of goods - SCM 435 and C45E varieties of steel - eligibility for exemption provided under Sl. No. 190C of Notification No. 21/2002 - misdeclaration and suppression of facts - invocation of extended period of limitation - whether there was indeed a breach and if so whether it was committed with a view to evade tax by misdeclaration and suppression of facts or whether it was a bonafide dispute, without any fraudulent / reckless intention? - HELD THAT:- The import took place in the pre-self-assessment period. The obligation was on the part of the department to assess the imported goods. The Appellant had along with the Bills of Entry and invoices, furnished copies of inspection certificate as well. They had produced test certificate containing the composition of various alloys and the relevant invoice at the time of filing the Bills of Entry.
This being so the charge of misdeclaration and suppression of fact, fails. Since the onus of assessment was on the department and the Appellant had submitted the necessary documents to facilitate the same, they cannot be held responsible for suggesting a certain classification heading in the Bill of Entry. As held by the Hon'ble Supreme Court in NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS & CENTRAL EXCISE [1998 (7) TMI 91 - SUPREME COURT] that mere claiming the benefit of exemption or a particular classification under the bill of entry does not amount to mis-declaration or suppression of facts.
The charge of the Appellant having mis-declared the goods and supressed facts fails. The demand has hence to be restricted to the normal period and the penalty needs to be set aside. The impugned order is modified on the said terms. The appeal is disposed of.
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2023 (2) TMI 1262 - AUTHORITY FOR ADVANCE RULING, TELANGANA
Classification of goods - rate of GST - Teicoplannin - Caspofungin - HELD THAT:- These goods are taxable at the rate of 2.5% CGST & 2.5% of SGST further the commodity name is enumerated in the lists appended to this schedule. The commodities regarding which the clarification sort are enumerated in this list as follows:
1. Capsofungin acetate - Sl.No. 130 in List – 1 to Schedule-I.
2. Teicoplanin - Sl.No. 216 in List – 1 to Schedule-I.
Thus, the above two (2) commodities are taxable at the rate of 2.5% CGST & 2.5% of SGST.
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2023 (2) TMI 1261 - PUNJAB AND HARYANA HIGH COURT
Revocation of cancellation of Registration - petitioner has failed to submit certified copy of impugned order - HELD THAT:- Keeping in view the fact that now the provision of certified copy of the decision or order appealed has now been done away with, as per memo dated 24.02.2023 and this memo has been reiterated to the First Appellate Authorities, the present petition is also allowed and order dated 30.01.2023 (Annexure P-4) is set aside. A direction is given to the Appellate Authority to decide the appeal on merits, expeditiously, after taking into consideration the photocopy of the impugned order.
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2023 (2) TMI 1260 - ITAT RAIPUR
Addition u/s 69A r.w.s. 115BBE - unexplained amounts deposited in his bank account - HELD THAT:- Assessee had failed to explain the nature and source of the cash deposits made in his bank account during demonetization period.
Observing, that the assessee could not justify the “nature” and “source” of the amounts deposited in Specified Bank Notes (SBN) in his bank account during the demonetization period, the A.O had made an addition of the same u/s. 69A. '
Also, it is discernible from the assessment order that though the A.O had issued a “Show Cause Notice” (SCN) to the assessee to explain the nature and source of the cash deposits but no compliance was made by the assessee. Also, as several opportunities to the assessee to participate in the course of proceedings before him, but he failed to participate in the same.
As assessee had failed to come forth with any plausible explanation as regards the “nature” and “source” of the cash deposits made by him in his bank account in SBN during the year, therefore, no infirmity arises from his order - Appeal of the assessee is dismissed.
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2023 (2) TMI 1259 - ITAT BANGALORE
TP Adjustment - comparable selection - HELD THAT:- Concord United Pvt. Ltd. company is majorly dealing with medium and drilling products whereas the assessee deals in industrial automation and process control - we hold that Concord is not functionally comparable to the assessee and accordingly we direct the TPO to exclude the company from the list of comparables.
Sharpline Automation Pvt. Ltd. company is deriving income from Sale of products as well as services whereas there is segmental information available in this regard. Considering these facts we are of the view that the company being functionally different cannot be comparable with assessee and accordingly we direct the AO to exclude the company from the list of comparables.
Treatment of provision for expected loss and the reversal as being non-operative in nature - AR submitted that the assessee has debited the profit & loss account towards provision for estimated loss on construction contract and the reversal of excess provision is credited to the profit & loss account - AR drew our attention in this regard to the directions of the DRP where the direction is given for parity of treatment for the provision and the reversal and submitted that the TPO has not properly given effect to the same - HELD THAT:- We remit the issue back to the AO/TPO to consider the issue afresh in the light of the directions of the DRP and the Hon’ble Tribunal in assessee’s own case [2021 (11) TMI 1178 - ITAT BANGALORE]
TDS u/s 192 - no TDS was deducted on the salary reimbursement - AO held that the salary cost of seconded employees form an integral part of fees for included services and they are not just reimbursements ,therefore tax should have been deducted on the payments - AR submitted that the DRP has upheld the disallowance on the ground that the secondment agreement and assignment letters were produced and whatever was produced was rejected stating the same to be unreliable - AR prayed for the admission of additional evidence as these evidences when considered would substantiate the claim of the assessee - HELD THAT:- With regard to disallowance made towards secondment cost, the additional evidences now produced go the root of the issue and the core reason for not allowing the deduction by the lower authorities. For a proper adjudication of the issue and for substantial cause, the additional evidence is admitted and taken on record. We accordingly remit the issue back to the AO/TPO for verification of the evidences and allow the deduction as relying on Flipkart Internet Pvt. Ltd case [2022 (6) TMI 1251 - KARNATAKA HIGH COURT] Thus ground is allowed for statistical purposes.
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2023 (2) TMI 1258 - SUPREME COURT
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - it was held by NCLAT that The reasons given by the Adjudicating Authority while passing the impugned order is agreed upon and as the CoC has recommended for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence this Appeal has become infructuous.
HELD THAT:- There are no error in the order of the National Company Law Appellate Tribunal - appeal dismissed.
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2023 (2) TMI 1257 - BOMBAY HIGH COURT
Proceedings by the corporate debtor consequent to insolvency proceedings - overriding nature and supremacy of the provisions of the Code over any other enactment in case of conflicting provisions by virtue of Section 238 of the Code - HELD THAT:- Clause (a) of Sub-section (1) of Section 14 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) only prohibits the institution of suits or continuation of pending suits or proceedings “against” the corporate debtor including execution of any judgment, decree or order in any Court of law, Tribunal, Arbitration Panel or other authority. It does not prohibit any proceedings by the corporate debtor.
This Court in Reliance Communication Ltd. v. Rajendra P. Bansal [2023 (2) TMI 45 - BOMBAY HIGH COURT]held that a bare perusal of section 14(1) makes it clear that subclause (a) only prohibits the institution or continuation of suits or proceedings against the corporate debtor. This clearly would not be attracted in the present case as the present proceedings are an appeal filed by the corporate debtor. That being so, the moratorium can never apply to the present First Appeal since it is filed by the corporate debtor
Therefore, in our view, the Tribunal was not correct in dismissing the appeal filed by Petitioner. The Tribunal, however, was correct to say that on admission of the insolvency petition filed by the financial creditor under Section 7 of the IBC, the Directors of Petitioner have become functus officio. The Tribunal gave liberty to the IRP or the RP, as the case may be, to pursue all litigations pertaining to Assessee Company in consultation with the Committee of Creditors. It also gave liberty to the IRP/RP to apply for recall of the impugned order. The Tribunal has missed the fact that the appeal itself has been filed through the Resolution Professional. Tribunal should not have dismissed Petitioner’s appeal. The impugned order to that extent is quashed and set aside.
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2023 (2) TMI 1256 - ITAT MUMBAI
TP adjustment relating to Specified Domestic Transactions - resultant effect of omitted clause (i) of section 92BA with effect form 01/04/2017 - HELD THAT:- Effect of omission of a provision has been examined in the case of Texport Overseas (P) Ltd [2017 (12) TMI 1719 - ITAT BANGALORE] and the same has been affirmed by Hon’ble Karnataka High Court [2019 (12) TMI 1312 - KARNATAKA HIGH COURT]. It has been held in the above said cases that the proceedings in respect of omitted provisions cannot be continued. Accordingly transfer pricing adjustment relating to Specified Domestic Transactions is liable to be deleted on account of omission of provisions of sec. 92BA(i) of the Act.
Even though the co-ordinate bench of Mumbai, in the case of Firemenich Aromatics (I) (P) Ltd [2020 (7) TMI 658 - ITAT MUMBAI] has expressed its doubt on the correctness of the decision rendered by the Bangalore bench of Tribunal in the case of Texport Overseas (P) Ltd (supra), yet the fact remains that the said decision of Bangalore bench has since been upheld by Hon’ble Karnataka High Court. Accordingly, we prefer to follow the decision rendered by Higher Court of Wisdom and accordingly hold that the transfer pricing adjustment made in respect of Specified Domestic Transaction on the basis of omitted provision is liable to be deleted.
Specified domestic transactions are required to be examined u/s 40A(2)(b) - We notice that the Bangalore bench of Tribunal has expressed the view that the transactions with Associated Enterprises need to be examined u/s 40A(2)(b) of the Act after omission of sec.92BA(i). Accordingly, the matter has been restored to the file of AO and direct the AO to delete the addition made towards the transfer pricing adjustment. Since the said specified domestic transactions are required to be examined u/s 40A(2)(b) of the Act, we restore the same to the file of AO for carrying out such examination.
Appeal filed by the assessee is treated as allowed for statistical purposes.
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2023 (2) TMI 1255 - CESTAT MUMBAI
CENVAT Credit - Service Tax paid on service charges of toilets located in port user building and residential building is admissible or not? - HELD THAT:- The territorial location cannot decide the admissibility of CENVAT Credit under the provisions of Rule 2(l) of CENVAT Credit Rules, 2004. Issue is covered by the definition of input service as defined under Rule 2(l) of CENVAT Credit Rules, 2004. The general understanding emerges from the reading of the said rule is that the input service should be used for providing output service to be eligible for CENVAT Credit. The Revenue has not established that the services used in port user building are not used for providing output service. Therefore, the CENVAT Credit of Service Tax paid on services of toilets located in port user building is admissible to the appellants.
The appeals are partially allowed. The appeals related to CENVAT Credit regarding residential area stand withdrawn.
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2023 (2) TMI 1254 - SC ORDER
Maintainability of appeal - monetary limit involved in the appeal - HELD THAT:- This appeal is dismissed on the ground of low tax effect as being covered by the Circular No. 17 of 2019 dated 08.08.2019 issued by Department of Revenue, Ministry of Finance.
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2023 (2) TMI 1253 - ITAT AMRITSAR
Additions u/s 69A - unexplained money deposited in bank account - as submitted that the cash deposit in bank have been made by the assessee out of the previously withdrawn cash - case of the assessee was selected for “Limited Scrutiny” on the ground “Large Value cash deposits during demonetisation period as compared to Returned Income”
HELD THAT:- The said facts have been duly explained by the assessee even before revenue authorities. The assessee had withdrawn the cash from her bank account maintained with Oriental Bank of Commerce. The cash flow statement was submitted from 01.04.2013 to 31.03.2017 by the assessee before the the ld. AO. Both the revenue authorities have not found any specific lacuna in the cash flow statement of assessee.
We respectfully relied on the order of Shivcharan Dass vs. CIT, [1980 (4) TMI 74 - PUNJAB AND HARYANA HIGH COURT] & Shri M Prabhakar [2016 (11) TMI 1685 - ITAT HYDERABAD] and Smt Veena Awasthi, [2018 (12) TMI 206 - ITAT LUCKNOW] - As revenue has not filed any contrary judgment against the submission of assessee. The cash trail of the assessee undoubtedly stated that the sufficient cash balance was with the assessee to explain the deposit of cash in bank account. Accordingly, the order of the ld. CIT(A) is dismissed. Assessee appeal allowed.
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2023 (2) TMI 1252 - CESTAT CHENNAI
Rejection of refund claim - time limitation - the date of last challan on which service tax was paid was on 08/07/2017 and the last return filed on 13/08/2017, whereas the Appellant filed refund claim only on 12/03/2019 for the refund of prepaid service tax - Double taxation or not - violation of principles of natural justice - HELD THAT:- The appellant is involved in civil construction and works contract service and the completion of a project is spread over a period of time. They have filed a Trans1 declaration for the service tax paid on advances after the introduction of GST on 01/07/2017. On being pointed out by the Department about having wrongly carried forward the prepaid service tax to TRAN-1, they reversed the same in the GST return filed in the month of January 2019. Consequent to reversal, they filed refund claim on 12.3.2019 for the refund of prepaid service tax. The cause of action took place only after the introduction of GST due to which they had to pay duty once again under the GST regime for part taxes paid under Service tax for their projects. The matter is hence not time barred.
The factual question is whether tax has been discharged twice for the same activity. The transition from one tax regime to another has its own challenges for tax payers and an overtly legalistic view is not called for in this difficult period. The Appellant has made available documents that would facilitate the verification of double taxation as claimed. Since the department has asked the Appellant to reverse the prepaid service tax claimed as per GST TRAN – 1, and if the facts on verification are found in order then the amount has to be refunded in cash to the Appellant. The ends of justice would be met if Revenue verifies the facts of the activity being taxed twice and decides on the refund application accordingly.
The refund matter is remanded back to the Original Authority for verification of facts and de novo adjudication on the only issue of taxation of the same activity twice which has led to the claim of refund. The lower authority shall follow the principles of natural justice and afford a reasonable and time bound opportunity to the appellant to state their case both orally and in writing if they so wish, before issuing a speaking order in the matter - Appeal disposed off by way of remand.
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2023 (2) TMI 1251 - DELHI HIGH COURT
Accrual of income in India - sale of software product - royalty receipts - India USA DTAA - HELD THAT:- As per revenue the issue raised in the instant appeals is covered against the appellant/revenue by the judgment rendered by the Supreme Court in Engineering Analysis Centre of Excellence [2021 (3) TMI 138 - SUPREME COURT] as held amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195.
Revenue however, informs us that a review petition has been filed qua the aforesaid judgment. In these circumstances, the above-captioned appeals are closed.
However, it is made clear that in case a decision is rendered in the review petition, which is against the respondent/assessee, the respondent/assessee will have liberty to approach the court to reopen the appeals.
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2023 (2) TMI 1250 - ITAT MUMBAI
TDS u/s 194H - disallowance of discount given to prepaid distributors u/s. 40(a)(ia) of the Act for non-deduction of tds - HELD THAT:- We find that assessee in the course of its business appoints prepaid distributors (i.e. distributors). The assessee supplies prepaid sim cards and recharge vouchers to its distributors at a discounted price. The assessee supplies prepaid sim cards containing the talk time worth at a higher figure than the discounted price to the distributors. The distributors supply them to the retailers and retailers sell the same to the ultimate customer / user. The distributors make payment of the discounted price in advance to the assessee and there is no payment of any kind made by the assessee to its distributors. The distributors would sell to the retailers after adding its margin and the retailers would sell to the customer after adding his margin. The ultimate price to the customer / user is subjected to the Maximum Retail Price (MRP) fixed by the assessee. It is pertinent to note that the distributor does not earn any income just by obtaining the prepaid sim cards and recharge vouchers from the assessee.
From the perusal of the distributors agreement, we find that the distributor is allowed to distribute to its retailers at any price between the consideration paid to the assessee and the MRP fixed by the assessee. The distributor possesses complete freedom of pricing. Hence, the first tranche of the transaction is selling of prepaid sim cards and recharge vouchers containing the talk time for a higher value by the assessee to the distributors, on which the distributor does not earn any income at all. As stated supra, the distributors earn income only when the said sim cards and recharge vouchers were sold at a price higher than its purchase price (i.e. the price paid by the distributor to the assessee herein). Hence, it is highly impossible to determine the amount of income that would accrue to the distributor on which tax ought to have been deducted by the assessee u/s. 194H of the Act. Hence, the entire TDS computation mechanism fails in this case.
Thus we hold that the sale of prepaid sim cards / recharge vouchers by the assessee to distributors cannot be treated as commission / discount to attract the provisions of section 194H of the Act and hence there cannot be any obligation on the part of the assessee to deduct tax at source thereon and consequentially there cannot be any disallowance u/s 40(a)(ia) of the Act.
TDS u/s 194J - Disallowance of roaming charges paid / payable to other telecom operators u/s. 40(a)(ia) for nondeduction of tax at source - HELD THAT:- We find that the Chandigarh Tribunal in the case of DCIT vs. Idea Cellular Ltd [2018 (6) TMI 1646 - ITAT CHANDIGARH] held that it does not require any human intervention and charges received or paid on account of this is not fees for technical services as envisaged in section 194J read with section 9(1) (vii) read with Explanation-2 of the Act. We find that in the absence of any change in facts or law, the payments made for interconnection are not fees for rendering any technical services as envisaged in section 194J of the Act. Therefore, no tax is deductible at source u/s 194J of the Act on payment of roaming charges to the OTOS and the assessee therefore cannot be treated as an assessee in default. Decided in favour of assessee.
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2023 (2) TMI 1249 - SC ORDER
Validity or reassessment order u/s 148A(d) passed without considering the reply filed by the assessee - As decided by HC as the impugned order has been passed without considering the reply revenue has no objection if the impugned order u/s 148A(d) - HELD THAT:- Issue notice to the respondent.
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