TMI Tax Updates - e-Newsletter
July 17, 2023

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise

Articles

1. E-Appeals Scheme Expanded

   By: Vivek Jalan

2. GST Council's decision impacts gaming industry's future prospects

   By: Devan Gupta

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. Parts of LCD panel is to be classified as part of LCD panel and not part of final article

   By: Bimal jain

5. Venture of Indian Railways is a deemed railway company- not exigible to service tax

   By: Bimal jain

News

1. MCA approves withdrawal of another 7,338 prosecutions pending before various courts under Special Arrears Clearance Drive-II towards promoting Ease of Doing Business and decriminalisation of compoundable offences under Companies Act, 2013

Notifications

Central Excise

1. 23/2023 - dated 14-7-2023 - CE

SAED on production of Petroleum Crude and export of Aviation Turbine Fuel - Seeks to amend Notification No. 18/2022-Central Excise, dated the 19th July, 2022

Customs

2. 53/2023 - dated 14-7-2023 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

Income Tax

3. 49/2023 - dated 14-7-2023 - IT

Exemption to specified persons from requirement of furnishing a return of income u/s 139(1) - Meaning of "investment fund" substituted - Seeks to amend Notification No. 55/2019, dated the 26th July, 2019.

SEZ

4. S.O. 3143 (E) - dated 10-7-2023 - SEZ

Constitutes the Visakhapatnam Special Economic Zone Authority - Amendment in Notification No. S.O. 4503(E) dated 08th December, 2020

Circulars / Instructions / Orders

DGFT

1. Policy circular No. 03/2023-24 - dated 14-7-2023

Clarification regarding Notification No.19 dated 12.07.2023.

Highlights / Catch Notes

GST

• Court Dismisses Petition on Assessment Order Validity u/s 74(9); Suggests Alternative Statutory Remedy for Petitioner.

  Case-Laws - HC : Validity of assessment order passed u/s 74(9) - Appealable order - genuineness of the transactions of its sister concern - Petitioner contended that, without verifying the books of account of the petitioner's sister concern, that order is passed - Petition dismissed on the ground that, alternative statutory remedy is available to the petitioner - HC
  Visit to Get Source

  ---

• Court Orders Immediate Release of Cash Seized u/s 67 of CGST Act After Year-Long Unjustified Retention.

  Case-Laws - HC : Validity of Seizure of cash by invoking the power available u/s 67 of the CGST Act - tax evasion - Cash seized from the house and not forming part of stock-in-trade - The seizure was one year back, and there is no reason to retain it any further. - GST authorities directed to release the cash seized forthwith, at any rate, within a week - HC
  Visit to Get Source

  ---

Income Tax

• Supreme Court declines SLP; High Court quashes Charge Memo against Group-A Revenue officer due to lack of Finance Minister sanction.

  Case-Laws - SC : Disciplinary proceedings against the Revenue officer Group-A officer - CBDT gave approval for initiating penalty proceedings against the petitioner - However, “approval for issuing Charge Memo/sanction prosecution” lies with the Finance Minister - High Court quashed the Issuance of Charge Memo - Apex Court refused to entertain the SLP - SC
  Visit to Get Source

  ---

• Income Tax Appellate Tribunal Rules Subscription for E-Journals Not Royalty; No Copyright Rights Transferred to Subscribers.

  Case-Laws - HC : Royalty receipts or FTS - commission fee for payment “production and editorial charges”- the subscription amount cannot be treated as royalty, having regard to the fact that there is nothing on record to suggest that the respondent/assessee has granted the right in respect of copyright to the concerned subscribers of the e-journals. All that the respondent/assessee did was to sell the copyrighted publication to the concerned entities, without conferring any copyright in the said material. - ITAT rightly deleted the addition made - HC
  Visit to Get Source

  ---

• Court Rules Secured Creditors' Charges Take Priority Over Tax Dues, Quashes Tax Attachment Orders on Properties.

  Case-Laws - HC : Priority of charges - Recovery of tax dues over secured creditors - in light of the position that the creation of charge by the financial institutions was long prior to the orders of attachment having been passed by the Income-Tax Department / Commercial Taxes Department. These writ petitions are thus liable to be allowed - The proceedings for attachment of the properties in the respective writ petitions stand quashed. - HC
  Visit to Get Source

  ---

• ITAT President Can't Transfer Appeals Between Cities; Jurisdiction Limited to Specific Locations Like Kolkata or Indore.

  Case-Laws - AT : Appellate jurisdiction of ITAT - ITAT Kolkata or ITAT Indore - approaching the wrong appellate jurisdiction - President, ITAT, has no power to transfer appeal/s between one headquarters to other. The power of transfer available with the President is only qua a particular headquarters where large number of Benches are involved. For example in Kolkata there are three functioning Benches, then an appeal from Bench 1 to Bench 3 can be transferred by the President but it cannot be transferred from Kolkata to any other place in the country. - AT
  Visit to Get Source

  ---

• Taxpayer Successfully Revises Claim from Section 54F to Section 54 for Capital Gains Exemption, Appeal Approved.

  Case-Laws - AT : Deduction claimed u/s 54F OR 54 - Investment of LTCG - Owning more than one house property - CIT(A) deleted the addition considering the same u/s 54 - Assessee revised the claim of exemption from u/s 54F to u/s 54 in appeal - Assessee specifically claimed deduction u/s 54 only in the return filed in response to notice u/s 148. Therefore by no stretch of imagination, the claim of the assessee could be treated as fresh claim. - AT
  Visit to Get Source

  ---

• Undisclosed Income from Loans and Shares Not Taxable Retroactively u/s 56(2)(vii)(b) of Income Tax Act.

  Case-Laws - AT : Addition u/s 68 or 56 - Undisclosed income of unsecured loan - share application money receipt - the share application money was received in the financial year 2011-12 - provisions of Section 56(2)(vii)(b) cannot be made applicable as it was brought in the statute books only w.e.f. 01-04-2013 - Further since, the AO did not invoke Section 68 to bring the share premium to tax, additions can not be made u/s 68 also during the subsequent year - AT
  Visit to Get Source

  ---

• PCIT Orders Reassessment u/s 263 for Incorrect Capital Gains Calculation; AO to Verify Stamp Duty Expenses.

  Case-Laws - AT : Revision u/s 263 - wrongful Capital gain computation - As further seen from the Revision Order the assessee has not made the claim of Stamp Duty expenses which is also been directed by the Ld. PCIT to be allowed, after due verification by the AO, during the fresh assessment proceedings. Thus, it could be seen that the Revision Order passed by the Ld. PCIT is a well judicious order and also giving proper opportunity to the assessee de novo proceedings. - AT
  Visit to Get Source

  ---

• Penalty u/s 271(1)(c) Overturned: Missing PAN Details and Vouchers Not Concealment or Inaccuracy of Income.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - enhancement of assessment by CIT(A) - Merely because the assessee did not collect PAN details of the Payees, and the bills and vouchers of most of the payments, the disallowance was made. - Thus assessee cannot be penalized either for 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income' - AT
  Visit to Get Source

  ---

Customs

• High Court Evaluates Duty Demand Validity Under Advance Authorization Scheme Amid CIRP and Liquidation Proceedings.

  Case-Laws - HC : Validity of demand of duty as per precondition of re-export for violation of Advance Authorization Scheme - Petitioner was before NCLT in CIRP and moratorium was declared, and later to be liquidated - the show cause notice has been issued after moratorium has been imposed by the NCLT and the order determining liability has been issued long past the date of liquidation. This, when the customs department was well aware of the assessee/R2 being before the NCLT. Thus, and all the more, would the petitioner in the present case be eligible for re-export upon payment of charges alone. - HC
  Visit to Get Source

  ---

• Imported Line Extender reclassified under Chapter Heading 8517; cannot operate independently, part of Digital Subscriber Line system.

  Case-Laws - AT : Classification of imported goods - Line Extender - parts of Digital Subscriber Line system - It is an admitted fact that ‘Line Extender’ cannot function in isolation but except as a part of digital line system. Hence, the classification under Chapter Heading 8543 is ruled out. Accordingly, the ‘Line Extender’ is rightly classifiable under Chapter Heading 8517 as claimed by the appellant. - AT
  Visit to Get Source

  ---

• Supporting Manufacturer's DFRC Shipping Bills Converted to DEEC Scheme, Case Remanded for Amendment Implementation.

  Case-Laws - AT : Conversion of shipping bill - Request by the supporting manufacturer - DFRC shipping bills into DEEC Scheme - It is trite law that the exemption notifications relating to exports are required to be construed liberally. - The request of the appellant to allow amendment sought by them after examination of availability of relevant license etc. at the time of export is agreed upon - matter remanded back to original authority to implement the same by allowing amendment as per law - AT
  Visit to Get Source

  ---

• Customs broker fined maximum u/r 18 of CBLR, 2018; license not revoked, sparking debate on penalty rationale.

  Case-Laws - AT : Lvey of maximum penlaty on Customs Broker - Learned Adjudicating Authority finds that the appellant has violated the provisions of CBLR, 2018 and yet, he finds that the violations do not warrant revocation of license. It is very difficult to understand as to how the allegations would invite a maximum penalty under Rule 18 ibid. One has to conclude that if the violations are not grave enough to warrant revocation of license, they do not warrant maximum penalty under Rule 18 also. - AT
  Visit to Get Source

  ---

• Claim for Late Fee Refund Denied; Revenue Cites Section 27 of Customs Act 1962 and Unchallenged Assessment Order.

  Case-Laws - AT : Refund claim of late fee mistakenly paid - late fee waived off by public notice no.21/2020 - It is found that the Revenue is taking a contradictory stand in as much as on the one hand, it claims that the refund of late fees is not governed by the provisions of Section 27 of the Customs Act 1962 and on the other, they find that the order of assessment being not challenged, they cannot be challenged by taking the route of refund. - AT
  Visit to Get Source

  ---

• Import License Lapse: Rs. 5 Lakh Redemption Fine Imposed for Confiscated Used Tyres Without Proper Documentation.

  Case-Laws - AT : Confiscation of imported used tyres - imposition of redemption fine and penalty - Considering the fact that the goods are not prohibited to import, the redemption fine of Rs.5 lakhs is considered reasonable for the omission on the part of appellant to produce valid import license for clearing the goods - AT
  Visit to Get Source

  ---

• Appellant Challenges Confiscation and Redemption Fine on Foreign Betel Nuts; Delay Tactics Alleged in Final Arguments.

  Case-Laws - AT : Confiscation - Redemption fine - Betel nuts of foreign origin - In their Grounds of Appeal, they have not raised the issue about non-supply of these documents. Therefore, the Appellant raising this issue at the time of final arguments now shows that it is only a ploy on their part to drag the case further knowing fully well that the Department may not be in a position to place all the details before the Appellant for the action taken in April 2015. - the lower Authorities have followed the principles of natural justice and passed detailed and considered orders justifying the Redemption fine imposed - AT
  Visit to Get Source

  ---

• License Fee Inclusion in Import Valuation Questioned; No Evidence Found for Condition of Sale u/r 10(1)(c.

  Case-Laws - AT : Valuation of imported goods - inclusion of licence fee in the invoice value - It can be seen that Rule 10 (1) (c) uses the words ‘as a condition of sale’. The Explanation only states that if the licence fee paid as a condition of sale, such licence fee is includable in transaction value even if the goods have undergone some process. There is no evidence to establish that the licence fee paid is a condition of sale of the goods. - No demand - AT
  Visit to Get Source

  ---

• Imported External Hard Disk Drives Exemption Upheld Due to Ambiguity in Notification Terms.

  Case-Laws - AT : Classification of imported goods - Ext. Hard disc drives/Hard Disc Drives - The terms hard disk drive used in the notification has not been amplified either by adding “external” or “internal”. On this simple premise alone, exemption to the said item cannot be denied. - AT
  Visit to Get Source

  ---

IBC

• NCLT Denies Access to Resolution Plan for Non-Claimant Appellant; Plan Awaits Adjudicating Authority Approval.

  Case-Laws - AT : Seeking direction to RP to serve a copy of the Resolution Plan - whether copy of the Resolution Plan, which has been approved by the CoC but awaits the approval of the Adjudicating authority, can be given to the Appellant who is neither a Claimant, nor a Creditor or a participant? - NCLT rightly rejected the application - AT
  Visit to Get Source

  ---

SEBI

• Director's Liability in Unregistered Investment Schemes to Be Decided at Trial; High Court Dismisses Petition.

  Case-Laws - HC : Offences under SEBI - collective investment schemes without applying for registration - petitioner (directors) was summoned for the offences under Sections 24(1) and 27 of the SEBI Act - Whether the present petitioner shall be liable as the director of the accused company with regard to the violations committed by the said entity in question is a matter of trial and shall be adjudicated before the Trial Court of competent jurisdiction. - Petition dismissed - HC
  Visit to Get Source

  ---

Service Tax

• Service tax refund denied as one-year time limit expired; no protest payment made to waive restriction.

  Case-Laws - AT : Refund of Service Tax paid - time limitation - It is not the case of the appellant that the service tax was paid under protest, in which case the one year time limit does not apply. The relevant date for the purpose of this case, in which the appellant have voluntarily paid the short payment of service tax, is the date of payment of duty/ tax - Refund was rightly rejected - AT
  Visit to Get Source

  ---

• Party Fails to Register and Pay Service Tax; 25% Reduced Penalty Offered if Paid Within 30 Days.

  Case-Laws - AT : Works Contract Services - Service Tax registration not taken - service tax not paid - while confirming the demand of service tax for the extended period of limitation, an option extended to pay penalty at reduced rate @25%, if the amount of tax and penalty is paid withing 30 days. - AT
  Visit to Get Source

  ---

Central Excise

• Central Excise Tribunal Order Violation: Inconsistent Appeal Practices Undermine Judicial Process with Selective Review Tactics.

  Case-Laws - AT : Violation of judicial discipline - reopening and review of previous Tribunal Order for subsequent period - while the accepting the order of tribunal for the earlier periods, SCN issued for the subsequent period involving the same issue - recovery of erroneous refund - the Department has followed ‘pick and choose’ method making a joke of the judicial process and putting the appellant to unwarranted hardship by refraining from appealing past and future cases and selecting only case for review. - AT
  Visit to Get Source

  ---

• Excise Duty Not Applicable on Manufacturing Waste Without Marketability or Saleability; Demand Set Aside.

  Case-Laws - AT : Valuation - Receipt of consideration for clearance of waste / rubbish - inclusion of additional consideration received by the appellants in the form of credit - It has neither any marketability nor saleability and therefore it’s not liable to any duty. Waste or rubbish, which is thrown up in the course of manufacture, cannot be said to be a produce of manufacture and cannot be said to be exigible to excise duty - Demand set aside - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2023 (7) TMI 627
  Detention of goods alongwith the vehicle - breakdown of vehicle - non-extension of the validity of the e-way bill - intent to evade tax or not - HELD THAT:- Issue notice. List the matters after six weeks.

  ---

• 2023 (7) TMI 626
  Rejection of Bail application - arrest without assigning any reason to believe nor any satisfaction to justify arrest - illegal arrest - No notice for recovery of G.S.T. has been issued against the applicant - till date penalty or taxes has not been ascertained as per Act - compoundable offences. HELD THAT:- It is a settled law that while granting bail, the court has to keep in mind the nature of accusation, the nature of the evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, the circumstances which are peculiar to the accused, his role and involvement in the offence, his involvement in other cases and reasonable apprehension of the witnesses being tampered with. Taking into account the totality of facts and keeping in mind, the ratio of the Apex Court s judgment in the case of STATE OF RAJASTHAN, JAIPUR VERSUS BALCHAND @ BALIAY [ 1977 (9) TMI 126 - SUPREME COURT] , GUDIKANTI NARASIMHULU AND ORS. VERSUS PUBLIC PROSECUTOR, HIGH COURT OF ANDHRA PRADESH [ 1977 (12) TMI 143 - SUPREME COURT] , RAM GOVIND UPADHYAY VERSUS SUDARSHAN SINGH AND ORS. [ 2002 (3) TMI 945 - SUPREME COURT] , PRASANTA KUMAR SARKAR VERSUS ASHIS CHATTERJEE AND ORS. [ 2010 (10) TMI 1199 - SUPREME COURT] and MAHIPAL VERSUS RAJESH KUMAR @ POLIA ANR. [ 2019 (12) TMI 1461 - SUPREME COURT] , the larger interest of the public/State and other circumstances, but without expressing any opinion on the merits, thus it is a fit case for grant of bail. Hence, the present bail application is allowed subject to conditions imposed.

  ---

• 2023 (7) TMI 625
  Rejection of application of the petitioner for releasing of the vehicle Truck - proceedings of detention of the vehicle of the petitioner was instituted on 04.01.2021 - applicability of amended provision of Section 129 of the GST Act - HELD THAT:- Having perused the pleadings made in the present petition along with the return of the State, the contention raised by the learned State counsel that the amended provision of Section 129 of the GST Act, which has come into effect on 1st January, 2022, cannot be made applicable in the case of the petitioner, has substance. Hence, the prayer of the petitioner for release of the vehicle is accordingly rejected. The instant petition is accordingly dismissed.

  ---

• 2023 (7) TMI 624
  Validity of assessment order passed u/s 74(9) - Appealable order - genuineness of the transactions of its sister concern - Petitioner contended that, without verifying the books of account of the petitioner s sister concern, that order is passed - HELD THAT:- On a perusal of Ext.P9 order, it shows that it is an order passed under Section 74(9) of the Central Goods and Services Tax Act, 2017 (CGST, Act). An order passed under Section 74(9) of the CGST Act is appealable under Section 107 of the CGST Act. In the light of the alternative statutory remedy available to the petitioner, the writ petition under Article 226 of the Constitution of India need not be entertained. Resultantly, without prejudice to the right of the petitioner to work out its statutory remedies in accordance with law, the writ petition is dismissed.

  ---

• 2023 (7) TMI 623
  Validity of Seizure of cash by invoking the power available u/s 67 of the CGST Act - tax evasion - Cash seized from the house and not forming part of stock-in-trade - It is contended that the word things in Section 67(2) will include cash also, and hence the seizure of cash was very much in accordance with the law - HELD THAT:- The Division Bench in W.A.No.514 of 2023 [ 2023 (4) TMI 252 - KERALA HIGH COURT] , after considering Section 67 of the CGST Act, held that the authority to seize things may include cash in appropriate cases, but it was unwarranted in the case before the Division Bench. The Court specifically held that in an investigation aimed and detecting tax evasion under the CGST Act, the Court fails to see how cash can be seized, especially when it is an admitted case that the cash did not form part of the stock-in-trade of the appellant s business. In the said case, the appellant was involved in the business of quarry. The Court also considered the findings of the Intelligence Officer in the said case that it was suspicious as to why large amounts had been kept idle without being deposited in the Bank. The Court held that such findings only reveal the extent to which the authorities under the Act are misinformed of their powers and the limits of their jurisdiction. It was observed that the said findings might be justified if the Officer was an Officer attached to the Income Tax Department and that in the context of the GST Act, the findings are wholly irrelevant - On the above said findings, the Division Bench directed the respondents therein to forthwith release the cash against a receipt to be obtained from the appellant. In the case on hand also, it is admitted that the petitioners are engaged in the manufacture and sale of dosa/idly batter, etc., and that cash has been seized from the house. An additional fact is that the authorities had also seized pay-in-slips which would show that the cash was intended to be deposited in the Bank. As observed by the Division Bench, the cash being not a stock-in-trade of the petitioners, was not a thing that ought to have been seized. The seizure was one year back, and there is no reason to retain it any further. The writ petition is disposed of directing the respondents to release the cash seized from the petitioners forthwith, at any rate, within a week from the date of receipt of a copy of this judgment.

  ---

• Income Tax

• 2023 (7) TMI 622
  Exemption u/s 11 - scope and amplitude of the definition charitable purpose - Claim denied as activities are commercial in nature and cannot be held to be charitable in view of the proviso (ii) to section 2(15) - ITAT and HC allowed exemption to assessee - As submitted that this Special Leave Petition could be dispose of in terms of the said judgment in AHMEDABAD URBAN DEVELOPMENT AUTHORITY [ 2022 (10) TMI 948 - SUPREME COURT] and observations of this Court, inter alia, in para 282 would squarely apply to this case also. HELD THAT:- In the circumstances, the impugned order is set aside. The Special Leave Petition is disposed of in terms of the [ 2022 (10) TMI 948 - SUPREME COURT] judgment.

  ---

• 2023 (7) TMI 621
  Disciplinary proceedings against the Revenue officer Group-A officer - CBDT gave approval for initiating penalty proceedings against the petitioner - However, approval for issuing Charge Memo/sanction prosecution lies with the Finance Minister - High Court quashed the Issuance of Charge Memo to the Officers of Rank of Commissioner - HELD THAT:- As informed that the respondent has already superannuated from service. Besides this, the inquiry proceedings were concluded against him (P.D. Kanunjna) vide inquiry report. Though, the Disciplinary Authority is yet to take a final decision on the said report but the fact remains that the Inquiry Officer has exonerated the respondent. We are not inclined to entertain this special leave petition, which is accordingly dismissed. The question of law as to whether the disciplinary proceedings were initiated under the orders of the competent authority or not is kept open and shall be dealt with in an appropriate case.

  ---

• 2023 (7) TMI 620
  Exemption u/s 10(23C)(iv)/11/12 - whether activities of the respondent/assessee do not qualify for charitable purpose in view of the Proviso to Sec 2(15)? - As decided by HC 2022 (1) TMI 544 - DELHI HIGH COURT] as relying on India Trade Promotion Organization case [ 2015 (1) TMI 928 - DELHI HIGH COURT] the learned predecessor Division Bench issued a Mandamus to the appellant herein to grant approval to the respondent herein u/s 10(23C)(iv) HELD THAT:- This special leave petition is arising out of the common order impugned in these proceedings i.e. [ 2023 (6) TMI 1044 - SC ORDER] which was dismissed by this Court. Consequently, this petition too has followed the same route and, is therefore, dismissed.

  ---

• 2023 (7) TMI 619
  Reopening of assessment - Deemed dividend u/s 2(22)(e) - change of opinion - reasons to believe - whether information received from the Deputy Commissioner of Income Tax, Company Circle V(1) constituted new information? - As decided by HC [ 2018 (10) TMI 373 - MADRAS HIGH COURT] considering factual position as well as the returns and the audit report, assessee failed to disclose vital details at the time when the scrutiny assessment was completed u/s143(3) and also findings rendered by the Tribunal and the Authorities below on the concept of deemed dividend call for no interference. HELD THAT:- This Court is not inclined to interfere with the impugned judgment and order of the High Court. SLP dismissed.

  ---

• 2023 (7) TMI 618
  Royalty receipts or FTS - commission fee for payment production and editorial charges - Addition u/s 9(1)(vi) of the Act and Article 12 of the India-Germany DTAA - HELD THAT:- There were no special skills or knowledge that the respondent/assessee s personnel were required to possess to render the services that were contemplated under the Commissionaire Agreement. The respondent/assessee also did not render any professional advice, or service concerning a specialised field. As indicated for a service to be categorised as a technical service, it had to be concerned with applied science, i.e., using scientific knowledge for practical applications, or industrial science concerning, relating to or derived from industry. Therefore, the contention of Appellant that on account of there being human intervention, the services rendered by the respondent/assessee should be considered as technical services, is a submission, which according to us, is completely misconceived. Given this position, we are not inclined to interfere with the decision arrived at by the Tribunal concerning the deletion of the addition made on account of commission received by the respondent/assessee. CIT(A) s conclusion that the said amount received by the respondent/assessee had attributes of FTS was, in our view, erroneous. The attributes of what constitutes FTS has been dealt with extensively by the coordinate bench decision of this Court in DIT v. Panalfa Autoelektrik Ltd. [ 2014 (9) TMI 706 - DELHI HIGH COURT ] In this judgment, the coordinate bench has dealt with the order of the Authority for Advance Ruling (AAR) rendered in Wallace Pharmaceuticals (P.) Ltd. [ 2005 (9) TMI 26 - AUTHORITY FOR ADVANCE RULINGS ] The attempt of Mr Bhatia to distinguish the judgment in DIT v. Panalfa Autoelektrik Ltd. [ 2014 (9) TMI 706 - DELHI HIGH COURT ] must fail, as it misses the true ratio of the judgment. Addition of receipts as a subscription fee for e-journals from its affiliates, could not be treated as royalty, given the judgment of the Supreme Court rendered in Engineering Analysis [ 2021 (3) TMI 138 - SUPREME COURT ] However, in the written submissions, for the first time, contrary to the submission, an argument has been advanced that the subscription fee should be treated as FTS, and in the alternative, as royalty. We are of the opinion, the submission that subscription fee should be treated as FTS cannot be accepted, as this was not the stand of the appellant/revenue before the Tribunal. This is a flip-flop which the respondent/assessee would do well to abjure. As in our opinion, the subscription amount cannot be treated as royalty, having regard to the fact that there is nothing on record to suggest that the respondent/assessee has granted the right in respect of copyright to the concerned subscribers of the e-journals. All that the respondent/assessee did was to sell the copyrighted publication to the concerned entities, without conferring any copyright in the said material. Tribunal, in our view, rightly deleted the addition made under this head, given the judgment rendered by the Supreme Court in the case of Engineering Analysis.

  ---

• 2023 (7) TMI 617
  Validity of reassessment - notice against company amalgamated [the amalgamating entity] - HELD THAT:- As relying on M/S NEO STRUCTO CONSTRUCTION PVT LTD [ 2022 (8) TMI 137 - GUJARAT HIGH COURT] the legal principle is clear that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Hence, we find no reason to take different view. This petition deserves to be allowed.

  ---

• 2023 (7) TMI 616
  Exemption u/s 11 - application for registration u/s 12AA rejected - Assessee is into promote the game of Tennis and all other sporting activities - there is no element of charity in the activities of the assessee as reflected from said order of CIT in the assessment years considered - ITAT setting aside the order gives rise to substantial questions of law, on which the appeal be admitted - HELD THAT:- The accounts for assessment years considered reveal that there was construction undertaken for having tennis court. Construction of tennis court appears to be furtherance of the objectives. Another reason given by the CIT, for rejecting the application for registration, is future contingency as would appear from second paragraph of the order, reproduced above. Where section 12AA, by the sub-sections therein provides for cancellation of the registration, rejection of the application for registration based on a projection of what might happen in future, cannot be sustained. In the circumstances aforesaid we do not find that a substantial question of law arises from impugned order made by the ITAT. Decided against revenue.

  ---

• 2023 (7) TMI 615
  Priority of charges - Recovery of tax dues over secured creditors - Proceedings for attachment of various immovable properties - charge by the financial institutions v/s Income-Tax Department / Commercial Taxes Department - HELD THAT:- A Hon ble Division Bench of this Court had had occasion to consider the question of priority of charges in State Bank of India v Tax Recovery Officer and batch .[ 2022 (12) TMI 557 - MADRAS HIGH COURT] has reiterated the legal position that it is the orders of attachment passed first that would have to be reckoned in order to decide priority. There is consensus of all learned counsel before me, including learned counsel for the Revenue Department that the observations and conclusions of the Division Bench would apply on all forms in the present writ petitions as well, in light of the position that the creation of charge by the financial institutions was long prior to the orders of attachment having been passed by the Income-Tax Department / Commercial Taxes Department. These writ petitions are thus liable to be allowed - The proceedings for attachment of the properties in the respective writ petitions stand quashed.

  ---

• 2023 (7) TMI 614
  Jurisdiction to reassess - assumption of Jurisdiction over Appellant - assessee was employed with the Gurugram Gramin Bank - ITO, Ward 4(5) Gurgaon OR ITO, Ward 33(1), Rewari - ITO, Ward 4(5) Gurgaon has issued notice u/s 148 to the assessee but appellant was being assessed under the jurisdiction of the Salary Circle, ITO, Ward 33(1), Rewari - HELD THAT:- We find that the assessee Shri Satya Pal Yadav was an employee of Gurugram Gramin Bank and drawing salary filed his return of income for the assessment year 2010-11 on 22.07.2010 before the ITO, Ward 33 (1), Rewari with PAN identified. Income Tax Officer, Ward 4(1) asserts that the Income Tax Officer, Ward 4(5) Gurgaon had the jurisdiction over the assessee. It was also stated that subsequently the PAN is also transferred to the correct jurisdiction of the Income Tax Officer, Ward 4(1) Gurgaon. The report submitted by the Income Tax Officer, Ward 4(1) is silent no transfer order was passed under section 127 of the Act, if any. The principle that the Assessing Officer alone who was holding the original jurisdiction over the assessee, who could issue notice under section 148 of the Act has been considered by the Hon ble Punjab Haryana High Court in the case of Lt. Col. Paramjeet Singh Vs. CIT [ 1996 (3) TMI 120 - PUNJAB AND HARYANA HIGH COURT] held in the absence of any transfer order no Assessing Officer other than the one who initiated the proceedings or completed the assessment shall have jurisdiction to continue with the proceedings or even to re-open a concluded assessment. We also observe that an identical issue where the Gurgaon Income Tax Officer had remotely and erroneously assumed jurisdiction over the cases of other co-owners and had initiated and concluded re-assessments against them came up for hearing before the Tribunal in the batch of cases and the Tribunal held that the assumption of jurisdiction by the Gurgaon Income Tax Officer was improper incorrect and invalid by order in the case of Attar Singh Others [ 2019 (8) TMI 767 - ITAT DELHI] In the cases before us we find that Shri Satya Pal was employed in Gurugram Gramin Bank was regularly filing returns before the Income Tax Officer, Ward 33(1) Rewari, and was assessed by Income Tax Officer, Ward 33(1) Rewari and Shri Satyabir Singh Yadav was employed with Indian Institute of Air-craft Engineering, New Delhi was regularly filing returns before the Income Tax Officer, Ward 48(3), New Delhi, and Shri Rati Ram, who was employed with Haryana Vidyut Nigam Ltd. was regularly filing returns with Income Tax Officer, Salary Circle Ward 6, Gurgaon and was assessed by Income Tax Officer, Salary Circle Ward 6, Gurgaon. There is nothing on record to suggest that there was a transfer order passed by the Revenue transferring the cases to Income Tax Officer, Ward 3(4) Gurgaon. Therefore, the Income Tax Officer, Ward 4(5) Gurgaon, has no jurisdiction over the assessees. Thus re-assessment order passed under section 143(3) read with section 147 quashed - Decided in favour of assessee.

  ---

• 2023 (7) TMI 613
  Appellate jurisdiction of ITAT - Appeal lies with ITAT Kolkata or ITAT Indore - approaching the wrong appellate jurisdiction - Power of President of Kolkata ITAT to transfer the appeal to another headquarter of ITAT in the country e.g. ITAT Indore - HELD THAT:- Hon ble Supreme Court rendered in the case of Principal Commissioner of Income-tax vs. ABC Papers Ltd. [ 2022 (8) TMI 863 - SUPREME COURT] said that the appellate jurisdiction of the Tribunal will be the geographical area where the AO is situated, namely, in this case the AO is situated at Indore, therefore, appellate jurisdiction of ITAT as well as of the Hon ble High Court will rest at Indore. President, ITAT, has no power to transfer appeal/s between one headquarters to other. The power of transfer available with the President is only qua a particular headquarters where large number of Benches are involved. For example in Kolkata there are three functioning Benches, then an appeal from Bench 1 to Bench 3 can be transferred by the President but it cannot be transferred from Kolkata to any other place in the country. We find that these appeals are not maintainable in the present form before the ITAT Kolkata. The assessee as well as the revenue are at liberty to approach the competent authority, namely, Indore, if so advised. Case appeals are being filed before the Indore Bench of the ITAT, then the period consumed in litigating at Kolkata benches be excluded from the period of limitation. The simple reason for this observation is that prior to the decision of the Hon ble Bombay High Court, the Hon ble President used to transfer appeals across Benches on the request of parties. The position of law by interpreting the ITAT Rules, has been laid out recently. Therefore, there should not be any miscarriage of justice qua the assessee by approaching the wrong appellate jurisdiction.

  ---

• 2023 (7) TMI 612
  Excess cash found - unexplained source of cash - Unrecorded professional receipts - appellant had shown the income offered during the course of survey operation in the return of income - HELD THAT:- As appellant clearly stated that he is willing to offer a sum on account of unrecorded professional receipts and the same was offered to tax. Even the excess cash found can be telescoped against the unrecorded receipts. Therefore, it cannot be said that the source for the excess cash was not explained, as the source is clearly explained to be regular business professional receipts. Income can be brought to tax under the head business income not under the head other sources . The ratio in the case of CIT vs. Bajargan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT ] is clearly applicable to the facts of the present case. Decision of case of M/s. SVS Oils Mills [ 2019 (5) TMI 1392 - MADRAS HIGH COURT ] and Kim Pharma Pvt. Ltd. [ 2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT ] have no application to the facts of the present case. We direct the AO not to tax the excess cash found under the provisions of section 115BBE - Decided in favour of assessee.

  ---

• 2023 (7) TMI 611
  Penalty u/s 271(1)(c) - correct head of income - as per AO shares were held as stock in trade and the income on the sale of shares is qualified as business income and not income under the head long term capital gain - HELD THAT:- We note that the assessee has disclosed income from the sale of shares and claimed exemption u/s 10(38) - Thus, it is transpired that the income was duly disclosed by the assessee. Therefore, it cannot be said that the assessee has concealed the particulars of income. If at all the penalty was to be imposed u/s 271(1)(c) same can be under the charge of furnishing inaccurate particulars of income. We note that it is a trite law that every addition or disallowance made during the assessment proceedings cannot be treated either concealment or furnishing inaccurate particulars of income and thereby levying the penalty. The phrase furnishing inaccurate particulars of income has not been defined under the provision of the Act. The income disclosed by the assessee has been assumed as business income and not the income under the head capital gain. At the most, such disclosure can be said as inaccurate claim made by the assessee which cannot be equated with the inaccurate particulars of income. See Reliance Petro Products Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] Thus the claim made by the assessee not admitted by the AO cannot be termed as concealment of income or furnishing inaccurate particulars of income. Decided in favour of assessee.

  ---

• 2023 (7) TMI 610
  Revision u/s 263 - palpable incorrect claim of set off of brought forward Long Germ Capital Loss against Short Term Capital Gain earned by the assessee during the year was not duly examined and verified during the assessment proceedings by AO - HELD THAT:- PCIT has recorded no infirmity in the contentions made by the assessee before him that there was no error in the assessment order in allowing set off of brought forward Long Germ Capital Loss against Short Term Capital Gain returned u/s 50 of the Act since it was accordance with law. For that matter even the Ld. DR was unable to contradict the contention of the assessee that its claim was in accordance with law as interpreted by the Hon ble jurisdictional High Court. Assessee has placed before us copies of the decision of Aditya Sales [ 2013 (11) TMI 576 - GUJARAT HIGH COURT ] and Polestar Industries [ 2013 (11) TMI 910 - GUJARAT HIGH COURT ] relied upon by the assessee in support of its contention that its claim of set off of brought forward long term capital loss against short term capital gain returned u/s 50 was in accordance with law, which is completely agreable. This fiction created in the said section cannot be extended to deny benefit to which assets qualifying as long term are otherwise entitled on account of their said status. See V.S. Dempo Company Ltd. [ 2016 (10) TMI 62 - SUPREME COURT ] Surely therefore there is complete absence of finding of any error by the Ld. PCIT in the order of the AO with respect to the issue involved.AO had allowed the claim taking a plausible view on the issue and in such circumstances there is no scope for invocation of revisionary powers u/s 263 - The Hon ble apex court has laid down that where AO takes a plausible view there cannot be said to be any error in his order so as to invoke revisionary powers u/s 263 of the Act in the case of Kwality Steels [ 2017 (7) TMI 620 - SUPREME COURT ] Decided in favour of assessee.

  ---

• 2023 (7) TMI 609
  Exemption u/s 11 - claim denied as Form 10B was not filed along with the Return of Income - Late filing of Audit Report in Form 10B - HELD THAT:- It is an admitted fact that Audit Report in Form 10B was physically filed before the Jurisdictional Assessing Officer (JAO) on 20.05.2014 but the same was uploaded in the ITB Portal on 14.04.2019 after denying the benefit u/s. 11 of the Act. Late filing of Audit Report in Form 10B is considered by the very same Bench of this Tribunal in the case of Shree Charitable Trust [ 2023 (7) TMI 282 - ITAT AHMEDABAD ] as held provisions regarding furnishing of audit report along with the return has to be treated as a procedural provision. It is directory in nature and its substantial compliance would suffice. Thus the Hon ble Court Held that the benefit of exemption should not be denied merely on account of delay in furnishing the same. Decided in favour of assessee.

  ---

• 2023 (7) TMI 608
  Levy of penalty u/s 271(1)(c) - disallowance of deduction u/s 80IA and 80HHC on the profits earned in the various divisions of the assessee-company, relating to the income which were found by the Revenue authorities as having no nexus with the business activities of the assessee - HELD THAT:- Considering the nature of insurance claim being compensatory, there is no profit element involved in the same, and the assessee is only compensated for the loss that the insurance company evaluated the assessee to have incurred in such circumstances. Assessee cannot be said to have claimed any deduction on the income in the nature of insurance claim, therefore, there arises no question of excluding the entire insurance claim for the purpose of claiming deduction under section 80HH/80IA of the Act. On merits, therefore, we hold that the disallowance of deduction of insurance claim was not in accordance with law, and therefore, there arises no question for levy of penalty u/s 271(1)(c)on the same. Disallowance of Driver s salary - As assessee has repeatedly contended that it was merely a reimbursement of salary. Again, reimbursement of salary received is not in the nature of income, and following the reasoning given by us on the issue of insurance claim, there arises no question of disallowance of any deduction on the salary paid to the drivers and thus, no case for levy of penalty under section 271(1) (c) on the same. Interest income earned on FDs and on loans - There are decisions of Hon ble High Courts holding that it is in the nature of business income more particularly where the FDs have been created for statutory components and regulations. Therefore, there is no doubt that the issue of denial of claim of deduction under section 80HH/80IA of the Act on interest on FDs and others, is a debatable issue, and considering the fact that it is not the case of the Revenue that the assessee has not furnished complete particulars relating to the same or has concealed any particulars of income relating to the same the mere denial of claim of deduction will not tantamount to concealment of income and/or furnishing of inaccurate particulars of income so as to attract levy of penalty under section 271(1)(c) - The proposition of law in this regard has been settled in the case of CIT Vs. Reliance Petroproducts P. Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] Decided in favour of assessee.

  ---

• 2023 (7) TMI 607
  Scope of Reopening of assessment u/s 147 - addition made by the AO in the income already assessed u/s 143(3) - stand of the assessee is that if an addition on the item for which assessment was reopened is not made, then no addition can be made - HELD THAT:- As per case of CIT vs.- Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] Ranbuxy Laboratories [ 2011 (6) TMI 4 - DELHI HIGH COURT] and Md. Juned [ 2013 (2) TMI 292 - GUJARAT HIGH COURT] as unanimous in their approach that if an assessment is reopened on account of escapement of income of item A , then, discovery of any other escapement during reassessment proceedings would only be added if addition is being made on item A . In this case as per relevant part of the reason above but no addition is being made on that item, therefore, no other addition can be made. We, thus delete the addition and allow this appeal of the assessee.

  ---

• 2023 (7) TMI 606
  Penalty u/s. 271(1)(c) - nature of the expenses which has been claimed by the assessee as to revenue or capital - HELD THAT:- There is no new asset which has been created giving benefit of enduring nature. It is a case where the claim of the assessee of repairs to machinery and building as revenue expenditure has been characterized as capital in nature by the AO on which the penalty has been imposed u/s. 271(1)(c) of the Act. As relying on case of Reliance Petroproducts Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] we are inclined to delete the penalty imposed by the ld. AO. Accordingly, grounds taken by the assessee are allowed.

  ---

• 2023 (7) TMI 605
  Deduction claimed u/s 54F OR 54 - Investment of LTCG - Owning more than one house property - CIT(A) deleted the addition considering the same u/s 54 - Assessee revised the claim of exemption from u/s 54F to u/s 54 in appeal - whether or not the assessee was owning more than one residential houses other than new asset on the date of original asset? - HELD THAT:- After comparing both the provisions of law, we can easily infer that Section 54 is more assessee friendly as compared to Section 54F. The proviso to Section 54F which prohibits an assessee from claiming deduction, if he owns more than one residential house, other than the new asset, on the date of transfer of original asset is not there in Section 54. Therefore, in our view, the assessee can claim deduction u/s 54 of the Act if he constructs/ purchases a new house property within the stipulated time irrespective of any number of residential houses owned by him. As per facts of this case, the assessee has fully complied with all the conditions of Section 54 therefore, he is entitled to claim a deduction u/s 54 as the assessee had specifically claimed deduction u/s 54 of the Act in his return filed in response to notice u/s 148 AO has disallowed claim u/s 54F by alleging that the assessee was owning more than one residential house on the date of transfer of asset . Therefore, in our view, the entire assessment passed by the AO is wrong application of facts. Even otherwise, the ld. CIT(A) was competent enough to appreciate the entire facts of the case in his order and CIT(A) has thoroughly discussed the claim of the assessee for deduction u/s 54 of the Act and finally allowed the claim u/s 54 of the Act. Therefore, in our view the whole discussion as to whether or not the assessee was owning more than one residential houses other than new asset on the date of original asset has become redundant as the assessee in return filed in response to notice u/s 148 had specifically claimed deduction u/s 54 of Income Tax Act and thus we are of the considered view that there is no such restriction on the assessee under that section. Even otherwise, second claim of the assessee u/s 54 of the Act cannot be treated as fresh claim as at very first instance i.e. in first notice issued u/s 148 of the Act, the assessee filed return thereby specifically claimed deduction u/s 54 of the Act. Assessee specifically claimed deduction u/s 54 only in the return filed in response to notice u/s 148. Therefore by no stretch of imagination, the claim of the assessee could be treated as fresh claim. Even if the assessee had wrongly claimed deduction u/s 54F in the original return of income and the same was allowed to him by the AO in the assessment completed u/s 143(3). Even if there is no bar on the assessee to make correct claim for deduction under the provisions to law while filing return of income in response to notice under section 148 as if for some reason the AO wanted to withdraw the deduction given u/s 54F in the original assessment, then in that eventuality, AO should have considered the claim of the assessee for deduction u/s 54 in the return filed in response to notice u/s 148. Department could not controvert the findings of the ld. CIT(A). Hence Bench does not find any merit in the submission/ argument of the Department as to the order of the ld. CIT(A) and we concur with the findings of the ld. CIT(A). - Decided against revenue.

  ---

• 2023 (7) TMI 604
  Addition u/s 68 or 56 - Undisclosed income of unsecured loan - share application money receipt - as per assessee addition made by AO u/s 68 which has absolutely no application to the facts of the case and also section 56(2)(vii)(b) was applicable from assessment year 2013-14 and as CBDT Instruction No. 2/2015 dated 29-1-2015 is clear on the issue in which it has been held that premium on share issued was on account of capital account transaction and does not give rise to income - HELD THAT:- Assessee had given names and address of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income tax assessee. Their index numbers were in the file of the Revenue. Hence, it appears from the record that the above concern parties had replied to the notices of the AO and made available the records as directed by the AO and the assessee made the efforts to supply the information as desired by the AO. Hence, it does not indicate that the assessee had avoided in supplying the information as to shares holding companies. Bench noted that in the case of the assessee, the share application money was received in the financial year 2011-12 and till that period neither the provision of Section 56(2)(vii)(b) was in the statute nor Rule 11U 11UA was prescribed and therefore, provisions of Section 56(2)(vii)(b) cannot be made applicable as it was brought in the statute books only w.e.f. 01-04-2013. We also take note of the decision of CIT vs Apeak Infotech [ 2017 (9) TMI 1590 - BOMBAY HIGH COURT] Amendment to section 56(2)(vilb) of the Act by the addition of proviso thereto took place with effect from 1st April, 2013. Therefore, it was not applicable for the subject Assessment year 2012-13. So for as the pre amended Section 68 of the Act was concerned, the same cannot be invoked in this case, as evidence was led by the Respondents Assessee before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke Section 68 of the Act to bring the share premium to tax. Similarly, the CITA) an consideration of facts, found then Section 68 of the Act cannot be invoked.Similarly, the amendment to Section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject Assessment year 2012- 13 and cannot be invoked. We find that the said sum was received in preceding A.Y. 2012- 13, provisions of Section 56(2)(vii)(b) were in applicable and it was brought in the statute books only w.e.f 01-04-2013 and thus we do not concur with the findings of the ld. CIT(A). Hence, the Ground No. 1 of the assessee is allowed. Disallowance of PF Expenses - Belated payment - HELD THAT:- The issue raised is not maintainable in view of the decision of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] . Thus Ground No. 2 of the assessee is dismissed.

  ---

• 2023 (7) TMI 603
  Inventory Written off - as submitted that the assessee has not claimed deduction in the P L account and hence no disallowance is called for - HELD THAT:-We are in agreement with the contention of the ld. AR that no disallowance is called for unless claimed in the P L account. AO is directed to examine and delete the addition after verification in case the expenditure is not claimed in the P L account. Administrative Expenses Ballarpur Industries - HELD THAT:- The similar expenses disallowed by the revenue have been allowed by the revenue for A.Y. 2007-08 and A.Y. 2010-11 and by the ITAT [ 2023 (1) TMI 1270 - ITAT DELHI] - In the absence of any change in the factual matrix, we hereby direct that the addition be deleted. Provision for Bad Doubtful Debts/Farmers Advance - HELD THAT:- AO is directed to allow the amount on write off basis. The assessee shall produce the written off details before the AO. ESI/PF Contribution - As contended that part of amount was paid within the due date - HELD THAT:- AO may examine the exact details of payment of Employee Contribution Employer Contribution and disallow the amount not paid within the due date as per the judgment of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] MAT - Section 115JB on provisions for Doubtful Debts - HELD THAT:- All the debts which have been rightly obliterated even though the terminology used was provision was directed to be excluded from the purview of computation of Section 115JB. Adjustment u/s 92CA(3) - MAM selection - TPO compared the price charged by the assessee from its AEs for each transaction with the weighed average selling price (WASP) of the sales made by it to third parties - As argued TPO arbitrarily adopted third parties sale transaction and in most of the cases compared the selling price of different grades of GHERKINS sold to the AEs with the WASP of different grades sold to the third parties - HELD THAT:- We hold that internal CUP is the most appropriate method for undertaking the determination of Arm s Length Price. Hence, we direct that the economic analysis be conducted afresh by taking into consideration the like with the like and following right foreign currency conversion. The AO is also directed to accord reasonable and accurate adjustment to Product characteristics, contractual terms, risk incurred and geographical factors. Provision for bad debts farmers/trade - HELD THAT:- As Directed to be allowed on actual write off basis. Loss on Foreign Exchange Fluctuation - AO disallowed the loss on exchange fluctuation holding it to be notional. The AO held that actual loss would arise only at the time of remittances and not before - HELD THAT:- Keeping in view, the judgments of Hon ble Apex Court in the case of ONGC Vs. CIT [ 2010 (3) TMI 81 - SUPREME COURT] and CIT Vs. Woodward Governor [ 2009 (4) TMI 4 - SUPREME COURT] we hold that the Loss on Foreign Exchange Fluctuation is an allowable expenditure. TP ALP on Interest Received - whether the interest rate prevailing in India should be applied, for the lender who was an Indian company, or the lending rate prevalent in the state of recipient company should be applied? - HELD THAT:- By adopting a commonsensical and pragmatic reasoning, it was held that interest should be the market determined interest rate applicable to the currency concerned in which the loan has to be repaid. It was clarified that interest rates should not be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. The Hon ble Court in Cotton Naturals [ 2015 (3) TMI 1031 - DELHI HIGH COURT] concluded that the currency in which the loan is to be repaid normally determines the rate of return on the money lent. The Hon ble Court also held that in case of capital investment borrowing rate will apply whereas in case of credit allowed to a customer on sale of goods, the lending rate would apply. This would require examination of loan agreement. AO shall charge suitable interest after examination of the loan agreement as per the guidelines given above. Corporate Guarantee Commission - International Transaction or not? - HELD THAT:- The issue of credit guarantee fees has been examined by the Hon ble Court. In most cases, interest rates quotes and guarantee rate quotes available from banking companies are taken as the benchmark rate to arrive at the ALP. The difference in the credit ratings between the parent in India and the foreign subsidiary is taken into account and the rate of interest specific to a credit rating of Indian bonds is also considered for determination of the arm s length price of such guarantees. The Hon ble Court held that there would be a difference between the lending rate and borrowing rate in each country. The Hon ble Court held in case of a capital investment, the borrowing rate will apply, whereas in case of credit allowed to a customer on sale of goods, the lending rate would apply. With regard to Corporate Guarantees, the Co-ordinate Bench of ITAT in the case of Kohinoor Foods Ltd. [ 2015 (7) TMI 147 - ITAT DELHI] held that commission at the rate of 1% is fair and reasonable. In Havells India Ltd. [ 2022 (5) TMI 685 - ITAT DELHI] the corporate guarantees determined @ 0.5%. In the specific facts of the instant case, we hold that 0.5% can be considered as the justifiable corporate guarantee commission. Disallowance u/s 36(1)(iii) - AO disallowed the interest on the amounts invested in the subsidiary company - CIT(A) relying on the judgment of Hero Cycle [ 2015 (11) TMI 1314 - SUPREME COURT] held that the disallowance of interest on the investments in the subsidiaries cannot be disallowed in the absence of evidence that the said investment had no element of commercial expediency from the business point of view - HELD THAT:- Since, the decision of the ld. CIT(A) is based on the order of the Hon ble Apex Court, we decline to interfere with the adjudication of the ld. CIT(A).

  ---

• 2023 (7) TMI 602
  Revision u/s 263 - wrongful Capital gain computation - non-consideration of the sale value of the property as per Section 50C and wrong allowance of indexation of cost of acquisition of the property by AO - HELD THAT:- On perusal of the original assessment order passed by AO is a very cryptic order without any details and discussion on any of the enquiries made by the AO. AO simply accepted the returned income filed by the assessee as the assessed total income. As further seen from the assessment order the case was selected for complete scrutiny for the reason of no capital gains with respect to sale consideration and also less sale consideration reported in Form 26QB by the assessee. Assessment Order does not describe whatever the kinds of enquiries made and how he is satisfied with the returned income made by the assessee. When the Ld. PCIT proposed to revise this Assessment Order on two counts namely non-consideration of the sale value of the property as per Section 50C and the second issue namely wrong allowance of indexation of cost of acquisition of the property by issuing the show- cause notice. After considering the detailed reply filed by the assessee and the revised Long Term Capital Loss by the assessee the Ld. PCIT has fairly dropped the revision proceedings on the application of Section 50C in the computation of capital gain. Regarding the second limb of the notice namely non- application of cost inflation indexed by the assessee. PCIT has clearly brought out from the registered Sale Deed dated 25.06.2016 that a sum was paid by the assessee as early as 18.03.2010 by various cheques numbers drawn of Bank of Baroda all dated 18.03.2010 and is adjusted against the sale consideration. However, remaining balance amount was paid by two cheques drawn on HDFC Bank dated 22.07.2016 to the assessee. It is further seen from the Registered Sale Deed that the above amount was given at the time of Banakhat. However, the assessee claims the same sum as loan transaction which is an independent transaction between the same parties is not proved by the assessee with proper documentation and evidences. In the absence of the same, we do not find any merits in the arguments of the assessee. As further seen from the Revision Order the assessee has not made the claim of Stamp Duty expenses which is also been directed by the Ld. PCIT to be allowed, after due verification by the AO, during the fresh assessment proceedings. Thus, it could be seen that the Revision Order passed by the Ld. PCIT is a well judicious order and also giving proper opportunity to the assessee de novo proceedings. For the above reasons, we do not find any in infirmity in the order passed by the Ld. PCIT and therefore, the grounds raised by the assessee does not found any merits and therefore, the same are rejected. Appeal filed by the assessee dismissed.

  ---

• 2023 (7) TMI 601
  Penalty u/s. 271(1)(c) - enhancement of assessment by CIT(A) - excess claim of indexed cost of acquisition - CIT(A) rejected the brokerage expenses paid by the assessee on the ground that PAN No. were not taken from the persons to whom the brokerage was paid in cash - HELD THAT:- The expression has concealed the particulars of income and has furnished inaccurate particulars of income have not been defined either in section 271 or elsewhere in the Act, but notwithstanding the difference in the two circumstances, it is now well established that they lead to the same effect namely, keeping off a certain portion of the income from the return. The penalty u/s 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In the present facts of the case the Ld.CIT(A) has not made out a case where the assessee has filed any inaccurate particulars or concealed any income. Assessee has filed all relevant materials for determining the income in his hands. CIT(A) has not unearthed any details/ evidences that has lead to enhancement of income in the hands of the assessee. In fact the enhancement of income by the Ld.CIT(A) is due to disallowance made by the Ld.CIT(A) of the commission paid and the cost of improvement claimed by the assessee for the reason that the assessee did not collect the PAN of the persons to whom the payments were made. There is no doubted that the payments were made through banking channels. Merely because the assessee did not collect PAN details of the Payees, and the bills and vouchers of most of the payments, the disallowance was made. Thus assessee cannot be penalized either for concealment of particulars of income or furnishing of inaccurate particulars of income . Decided in favour of assessee.

  ---

• Benami Property

• 2023 (7) TMI 600
  Use of joint nucleus funds for the purchase of the suit property - Whether the Lower Appellate Court is correct in law in relying upon Patta Ex.B4 for concluding that the property belonged to Rangaraj totally overlooking the fact that patta is not a document of title? - HELD THAT:- The impugned judgment, however, does not deal with and answer the substantial questions of law, but relies upon Section 4 of the Benami Transactions (Prohibition) Act, 1988 a plea and contention which was never raised by the respondents, to dismiss the appeal. Our attention is drawn to the exceptions carved out to Section 4 of the 1988 Act. According to the appellants, the exceptions are applicable in the present case. As per the appellants, applicability or bar under the 1988 Act would be a mixed question of law and facts. Looking at the nature of controversy, including the contentions raised, and the impugned judgment, we are of the opinion that the same cannot be sustained being devoid of in-depth examination and considerations of the issues involved, including whether or not bar of Section 4 of the 1988 Act would be attracted. We, accordingly, pass an order of remit restoring the second appeal for fresh consideration by the High Court. The impugned judgment is set aside and the appeal is allowed with an order of remand to the High Court to decide the second appeal afresh, and expeditiously in accordance with law.

  ---

• Customs

• 2023 (7) TMI 599
  Validity of demand of duty as per precondition of re-export for violation of Advance Authorization Scheme - Petitioner was before NCLT in CIRP and moratorium was declared, and later to be liquidated - unexplained delay in complying with the direction in order of this Court - whether at all the import of the goods in question by the petitioner would come within the ambit of security interest under Section 3(31) of the Act? HELD THAT:- The attempt of R1 is misconceived on a plain reading of the definition. Security interest as envisaged, must be created by virtue of a transaction securing payment or performance of an obligation. In the present case, there is no cause of action whatsoever that would construe a transaction inter se R1 and the petitioner, much less one which secures payment or performance of an obligation inter se the two parties. Thus, there has been no creation of security interest giving rise to any scope for action by R2 as against the petitioner - That apart, there has been no communication of any sort between R1 and the petitioner till the passing of impugned order, wherein also, the stand of R2 is that its claim cannot be entertained as the petitioner is not a party to dispute adjudged by this office . The aforesaid conclusion reflects the categoric stand of R2 that the petitioner is wholly unconnected with the customs department. However, re-export requires the permission of the customs department, and it is to this limited extent that they have a role to play. The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (2016 Regulations) provide for a clear and transparent procedure by which the public/creditors are made aware of the proceedings before the NCLT. The proceedings of the NCLT are stated to be uploaded promptly and advertisements are issued in publications with sufficient circulation to enable the creditors to be aware of pending proceedings - It is thus necessary for the concerned creditor, whether operational or financial to file a claim within the time limit stipulated under Regulation 16 of the 2016 Regulations that is, within 30 days from date of publication of advertisements in order to secure its rights. In the present case, it is nobody s case that R1 has filed a claim and the fact that it has not, is admitted. Consequence would have to flow from this position. Sufficient time is available for submission of claim even beyond the initial period granted, till such time the resolution process itself was complete. The customs department has not taken the benefit of the wide timeframe available - The scheme of the IB Code proceeds on the basis that the CIRP shall be time bound and adhere to the statutory time frame, in a scrupulous manner. This is made clear by the provisions of Section 12 which sets out the time limit for completion of insolvency resolution process. A second proviso has been inserted to Section 12(3) making it clear that the outer time limit for completion of CIRP shall mandatorily be within a period of 30 days from commencement of insolvency taking into account any exemptions granted and the time taken in legal proceedings in relation to such process. The Court had not found the request of that petitioner for re-shipment unacceptable and had permitted it to make a representation before the authorities seeking re-export, though on terms. That apart, an added dimension in the present case is that the assessee/R2 has been liquidated and no valid claim has been made before the authorities - the show cause notice has been issued after moratorium has been imposed by the NCLT and the order determining liability has been issued long past the date of liquidation. This, when the customs department was well aware of the assessee/R2 being before the NCLT. Thus, and all the more, would the petitioner in the present case be eligible for re-export upon payment of charges alone. It is only re-export charges that would be payable by the petitioner and not duty and penalty as computed under the impugned order, for the following reasons: i) It is an admitted position that the petitioner is an unpaid exporter. R2 has, admittedly, not settled the amounts relating to 11,000 MT of sugar. ii) Order dated 30.08.2022 has been passed on R2 post the date of liquidation. In any event, any liability under that order would attach only to R2 and not to the petitioner or R3. iii) R1, ought to have, if convinced of the violation committed by R2, secured its interest at the relevant point in time and in any event prior to 07.06.2019, when moratorium was imposed. iv) Securing of interest could have been of two kinds: a) by issuance of notice and passing of order-in-original denying the benefit of exemption granted under advance authorization scheme in a timely fashion or b) by filing a claim before the Resolution Professional appointed by the NCLT. Neither of the two options were availed. v) R1 was well aware of the proceedings pending before the NCLT even as early as in July, 2021 when order dated 09.07.2021 had been passed in the Writ Petition. Hence, the consequences from the failure to file a claim in time before the authority must be suffered. As a matter of prudence, the Departments must consider appointing a Nodal officer who would monitor the proceedings before the NCLT on a regular basis. This process does not appear very cumbersome as the proceedings are stated to be available online for periodical reference and timely action. The impugned order dated 30.08.2022 insofar as it raises a demand on duty and penalty as a pre-condition to re-export by the petitioner, is quashed - Petition allowed.

  ---

• 2023 (7) TMI 598
  Classification of imported goods - Line Extender - classifiable under Chapter Heading 8517 or 8543? - HELD THAT:- The amplifier that falls under Chapter Heading 8543 has to be an independent functional unit but the Line Extender cannot function independently as it forms part of the Digital Subscriber Line systems. The Original Authority had categorically found that Line Extender was only a part of the machine digital line system and not the whole machine and once it is accepted as a part of the digital line system, the item is rightly to be classified as parts of Digital Subscriber Line system under Chapter Heading 8517. Moreover, the technical literature placed on record by the appellant clearly establishes that it is nothing but a part of the digital line system. The item Line Extender being a part of digital line system, even as per the HSN Notes falls under Chapter Heading 8517. As per the Chapter Notes of Chapter 8543, Electrical appliances and apparatus of this heading must have individual functions. It is an admitted fact that Line Extender cannot function in isolation but except as a part of digital line system. Hence, the classification under Chapter Heading 8543 is ruled out. Accordingly, the Line Extender is rightly classifiable under Chapter Heading 8517 as claimed by the appellant. The impugned order is set aside - Appeal allowed.

  ---

• 2023 (7) TMI 597
  Conversion of shipping bill - Request by the supporting manufacturer - DFRC shipping bills into DEEC Scheme - case of Revenue is that the present applicant being supporting manufacturer (and M/s. B. Framjee Co., being merchant exporter as per the body of the shipping bill) could not have claimed the conversion from one scheme to another - HELD THAT:- The submissions of the appellant is agreed upon as what is to be considered is amendment in the shipping bill under Section 149 of the Customs Act, which is an independent provision and has to be examined as per its own ambit. There can be no reasons not to permit amendment under Section 149, if the requirement of pre-existing documents was fulfilled as mentioned in proviso. In fact, the benefit sought being an export benefit has to be liberally construed, and so are the relevant Export Notifications. There are also merit in the submissions made by the advocate for the appellant that the shipping bills even when filed by M/s. B. Framjee Co., clearly indicated in the body of the shipping bills that they were allowed to claim the benefits and likewise the liabilities if any will equally be that of the supporting manufacturers in the matter, which were M/s Royal Cushion Vinyl Products Limited. Such a dispensation having been permitted and not specifically restrained under the relevant scheme, the benefit of Exports Scheme can well be claimed by the present appellant after suitable amendment in the relevant shipping bills. The request of the appellant to allow amendment sought by them after examination of availability of relevant license etc. at the time of export is agreed upon - matter remanded back to original authority to implement the same by allowing amendment as per law - appeal allowed by way of remand.

  ---

• 2023 (7) TMI 596
  Levy of penalty under section 112(a) of CA and redemption fine of Rs. 175,000 on conveyance - Old and used clothes cleared by misdeclaring the same as Mix Mutilated Rags - Appellant claims it to be a mistake committed by employee - HELD THAT:- The submission made by the appellant that goods i.e. Old and used clothes cleared by misdeclaring the same as Mix Mutilated Rags appeared due to mistake of employee is untenable as clearing in DTA at the relevant time would have normally brought a good profit to the appellant as the Foreign Trade Policy at the relevant time had made the Old and Used clothes as the restricted item and working in SEZ environment where checks and examination are kept at the minimum, greater care on the part of the appellant was warranted. Therefore, the Commissioner (Appeals) has rightly, relying upon the decision of the Apex Court in PINE CHEMICAL SUPPLIERS VERSUS COLLECTOR OF CUSTOMS [ 1992 (9) TMI 111 - SUPREME COURT ] held that the goods are misdeclared, Section 112 gets attracted. This is specially so, when violation are accepted by the concerned party. Accordingly, the penalty under Section112 (a) is sustainable, however, the same is reduced to Rs. 1,00,000/-. Accordingly, the penalty under Section 112(a) is sustained but stands reduced to Rs. 1,00,000/-, similarly, the redemption fine of Rs. 35,000/- each on five truck clearing , carrying goods when intercepted is also reduced to Rs. 10,000/- each from Rs. 35,000/-, as the truck were not offending goods, per se - It is made clear that apart from above, the other elements of duty and penalty etc. were not contested before this court. Appeal allowed in part.

  ---

• 2023 (7) TMI 595
  Levy of maximum penalty under Regulation 18 of CBLR - Customs Broker License was not revoked - unilateral and illegal untested version of CBI - SCN relies only upon alleged self-contained note of CBI - no relevant documents supplied to appellant - violation of principles of natural justice - HELD THAT:- The learned Adjudicating Authority concludes with all the force of argument that the Custom broker (the appellant) has violated the provisions of Rule 10(i) and Rule 13 (12) of CBLR, 2018. However, the Adjudicating Authority does not deem it fit to revoke the license of the appellant. The Adjudicating Authority finds that the revocation of license is not warranted in the present case. However, it is not explained as to how the learned Adjudicating Authority has come to such a conclusion though holding that the appellants have rendered themselves liable to pay maximum penalty as applicable under Rule 18 of CBLR, 2018. Understandably, the evidence made available to the Adjudicating Authority in the instant case is not of a kind to be a proof beyond doubt; set of evidence available before the Adjudicating Authority was a report by the CBI, which itself at best, offers scope for conducting further enquiries in this regard. Other than, the report of the CBI and the statement said to have been given by the employee of the Custom broker before the Magistrate, the enquiry conducted by the Customs authorities did not indicate any further corroboration. Learned Adjudicating Authority finds that the appellant has violated the provisions of CBLR, 2018 and yet, he finds that the violations do not warrant revocation of license. It is very difficult to understand as to how the allegations would invite a maximum penalty under Rule 18 ibid. One has to conclude that if the violations are not grave enough to warrant revocation of license, they do not warrant maximum penalty under Rule 18 also. Moreover, the appellants have brought out the procedural inadequacies. The impugned order is not sustainable and is set aside - appeal allowed.

  ---

• 2023 (7) TMI 594
  Refund claim of late fee mistakenly paid - late fee waived off by public notice no.21/2020 dated 26/03/2020, later on withdrawn by public notice dated 10/06/2020 - time limitation - HELD THAT:- The issue involved here is not refund of duty or an interest thereof but a simple return of the amount paid by the appellant under mistaken notion of law. This is governed by the general principles of restitution as in the case of refund of deposits, fines and penalties - It is found that the Revenue is taking a contradictory stand in as much as on the one hand, it claims that the refund of late fees is not governed by the provisions of Section 27 of the Customs Act 1962 and on the other, they find that the order of assessment being not challenged, they cannot be challenged by taking the route of refund. When the refund is not covered by Section 27, as revenue content, the question of challenging the assessment does not arise. Moreover, it is on record that the appellant has sought for reassessment of the bills of entry which were denied to the appellant saying that there was no provision in the system. Thus, the stand of the Department is not only contradictory to their own argument but also legally not acceptable. The issue is of a simple restitution. Even if one argues that the limitation provided in Section 27 is applicable to any type of refund. The Hon ble Supreme Court s order on exclusion of the limitation period in view of the pandemic comes into picture. In view of the Supreme Court order, it had to be held that the refund is not hit by the limitation. As the issue involved is not of assessment of duty on classification, valuation of goods, the challenge of the assessment is not warranted. It is humbly opined that the ITC case does not cover such situations. Moreover, the appellant s application for reassessment has been rejected. The appeal succeeds on both counts i.e, limitation and merit - Appeal allowed.

  ---

• 2023 (7) TMI 593
  Confiscation of imported goods - imposition of redemption fine and penalty - import of used tyres - mis-declaration of the country of origin - allegations regarding involvement of appellant in producing fraudulent documents for clearance - HELD THAT:- The reliance of the appellant in the matter of M/s Baby Marine Seafood Retail Pvt. Ltd. [ 2021 (4) TMI 1089 - CESTAT BANGALORE] , this Tribunal set aside the order of redemption fine and penalty imposed by the Adjudication Authority on entirely different circumstances and ratio of the said finding is not applicable in appellant s case. Similarly in the matter of Allen Bradley India ltd. [ 1991 (8) TMI 192 - CEGAT, NEW DELHI] , this Tribunal has set aside the fine and penalty imposed by the Adjudicating Authority and permitted the appellant to re-export the goods. Similarly in the matter of Agarwal Industries Corporation Ltd.(Supra) omission on the part of the appellant was regarding the mis-declaration of the country of origin and subsequently the appellant had taken effective steps and cleared the goods on furnishing license for clearance of goods. In the present case, there is no evidence to substantiate the allegations regarding involvement of appellant in producing fraudulent documents for clearance and adjudication authority categorically stated that appellant was not knowingly involved in the creation of false DGFT license. Thus appellant can be treated only as a victim of fraud committed by the co-noticee Shri Ravi Shekhar Jha. For that reason, no penalty can be imposed on him under Section 112 A of the Customs Act, 1962. Redemption fine - HELD THAT:- Though the appellant is not involved in the fraudulent activity, the goods imported by the appellant is illegally imported without valid license and for that reason, goods are liable for confiscation. There is no allegation of undervaluation and also there is no finding regarding the margin of profit earned by the appellant through such import. The goods were detained since 25.03.2019 and only after the directions by the Hon ble High Court vide order dated 24.07.2019, it was released. Thus the appellant had faced financial loss due to delay in clearance of goods. Considering the fact that the goods are not prohibited to import, the redemption fine of Rs.5 lakhs is considered reasonable for the omission on the part of appellant to produce valid import license for clearing the goods - Order of confiscation is upheld. However, the redemption fine imposed by the Adjudication Authority is reduced to Rs. 5 lakhs and penalty imposed to the appellant under Section 112 of the Customs Act, 1962 is set aside. Thus appeal is partially allowed.

  ---

• 2023 (7) TMI 592
  Confiscation - Redemption fine - Betel nuts of foreign origin - case of appellant is that he was not provided with the copies of Panchnama, Seizure Report and Recorded Statements of the two persons which have been relied upon by the Department to issue the Show Cause Notice - violation of principles of natural justice - HELD THAT:- Admittedly there is no dispute that the vehicle in question is bearing Nepal Registration number and the owner of the vehicle has appeared before the Customs Officials and claimed the ownership and stated that the vehicle was taken for movement within Nepal only. The Driver has also corroborated the same stating that the goods were loaded at Birganj Nepal for delivery at Baiswal, Nepal. If these factual details are seen together, it would clarify that the goods were of foreign origin only. When the seizure was effected, the Appellant was nowhere in the picture. He suddenly emerges as the owner of the goods after about five months - It is surprising that the Appellant did not follow up to locate his consignment worth more than Rs.1.65 Lakhs (as given in the Invoice No. 10 dated 10/04/2015). After more than five months, he has approached the Customs Officials on the ground that he is the owner of the goods. It is seen from the records that he has not sought copies of the Panchnama, Recorded Statement etc. from the Adjudicating Authority. It is on record that he has not attended the Personal Hearings granted to him and OIO was passed ex-parte based on the facts available on record with the Department. Even in the Appeal filed before the Commissioner (Appeals), he has not raised the issue of non supply of these documents. It is seen from the present Appeal Papers, in their Grounds of Appeal, they have not raised the issue about non-supply of these documents. Therefore, the Appellant raising this issue at the time of final arguments now shows that it is only a ploy on their part to drag the case further knowing fully well that the Department may not be in a position to place all the details before the Appellant for the action taken in April 2015. From the OIO and OIA, it is seen that the lower Authorities have followed the principles of natural justice and passed detailed and considered orders justifying the Redemption fine imposed, Custom Duty demanded and penalty imposed on the Appellant - there are no reason to interfere with the impugned OIA - appeal dismissed.

  ---

• 2023 (7) TMI 591
  Smuggling or not - Town Seizure - Absolute Confiscation of gold - penalties - burden to prove - whether 3327.40 gms of gold can be absolutely confiscated without having any iota of evidence that the gold being smuggled in nature? - HELD THAT:- In fact, it is a case of town seizure and the appellants were carrying job-work voucher with them in support of their claim. Moreover, the test report also certified that the purity of the gold is not up to the mark and the gold which is seized having no foreign marking to prove its foreign origin - In that circumstances, it is to be seen that can it be alleged that 3327.40 gms of gold is of foreign origin. Admittedly in the case in hand it is a case of town seizure and gold in question was not bearing any marking of foreign origin. Moreover, purity of the gold is also less than the purity of foreign origin gold. In that circumstances, the provision of section 123 of the Customs Act, 1962 are not attracted to allege that the 3327.40 gms of gold in question is smuggled one - Moreover, the statements recorded during the course of investigation have been retracted by the appellants during the course of adjudication by way of cross-examination, but no procedure has been followed in terms of section 138B of the Customs Act, 1962 to testify the statements recorded during the course of investigation, therefore, as held by the Hon ble Punjab Haryana High Court in the case of M/S JINDAL DRUGS PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] and M/S AMBIKA INTERNATIONAL AND OTHERS VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 919 - PUNJAB AND HARYANA HIGH COURT] , the statements are not reliable statements. In that circumstances the Revenue has failed to make out a case against the appellants, therefore, the impugned order qua absolute confiscation of 3327.40 gms of gold is liable to be set aside and penalty on the appellants are not imposable - appeal allowed.

  ---

• 2023 (7) TMI 590
  Confiscation - import of Digital Multifunction Printers - restricted items or not - requirement of license to import or not - HELD THAT:- In this case, the issue has been raised by the ld.A.R. for the Revenue that the date of importation is 28.02.2013 whereas the ld.Counsel for the appellant submitted that it should be 13.02.2013 - The said issue has been answered by the decision of the Bangalore Bench of this Tribunal in the case of RAJESH EXPORTS LTD. VERSUS COMMISSIONER OF CUSTOMS, BANGALORE [ 2022 (3) TMI 239 - CESTAT BANGALORE] wherein it has been held that the date is when the goods left the last Port in the country from which the import is affected and the Tribunal has observed The relevant date for import of the goods by air is the date on which Airway bill is issued that on which date goods left the last airport in the country from which the import is affected. Admittedly, in this case the Airway bill has been issued on 17/10/2017 and thereafter there is no control of the importer or the seller of the goods. In that circumstance, in the facts and circumstances of the case, the relevant date for import by air is the date on which Airway bill has been issued i.e. 17/10/2017 and the date of import of the impugned gold is 17/10/2017. Thus, the date of importation in this case is 13.02.2013, which is prior to issuance of DGFT Notification No. 35 (RE- 2012)/2009-2014 dated 28.02.2013 - as the import has been affected prior to 28.02.2013, there is no restriction of import of the subject goods. Hence, no specific license is required for import of the impugned goods. Thus, for enhancement of value, the Chartered Accountant s Certificate cannot be relied upon unless and until there is no corroborative evidence. Therefore, the goods are not liable for confiscation. No redemption fine can be imposed and no penalty on the appellant - appeal allowed.

  ---

• 2023 (7) TMI 589
  Valuation of imported goods - inclusion of licence fee in the invoice value - licence fee payable is related to the imported goods or not - condition of sale - HELD THAT:- The relevant part of the License agreement has been already noticed. It shows that the payment of licence fee is for each WTG commissioned. Thus, it cannot be said that the licence fee is a condition of sale of the parts and components imported by appellant. The Explanation of Rule 10 (1) (c) was considered by the Tribunal in the case of Brembo Brake India Pvt. Ltd. Vs Commissioner of Customs (Imports), Mumbai [ 2014 (11) TMI 22 - CESTAT MUMBAI] has held that the royalty and other charges are not includible and the impugned order is not sustainable and is set aside. It can be seen that Rule 10 (1) (c) uses the words as a condition of sale . The Explanation only states that if the licence fee paid as a condition of sale, such licence fee is includable in transaction value even if the goods have undergone some process. There is no evidence to establish that the licence fee paid is a condition of sale of the goods. The Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS VERSUS M/S FERODO INDIA PVT. LTD [ 2008 (2) TMI 12 - SUPREME COURT ] had occasion to analyse the very same issue and has held that the decision in Essar Gujarat Ltd. [ 1996 (11) TMI 426 - SUPREME COURT] is not applicable - The Tribunal in the case of Remy Electricals India Ltd. [ 2017 (6) TMI 32 - CESTAT CHENNAI] has followed the decision of Hon ble Apex Court in Feroda India Pvt. Ltd. [ 2008 (2) TMI 12 - SUPREME COURT] to hold that the licence fee cannot be included to the transaction value when the same is not a condition of sale. The order passed by the Commissioner (Appeals) does not require any interference. The appeal filed by Department is dismissed.

  ---

• 2023 (7) TMI 588
  Classification of imported goods - Ext. Hard disc drives/Hard Disc Drives - to be classified under CETH 84717020 as hard disc drives or should have been classified under CETH 84717030 as removable or exchangeable disc drives - eligibility for benefit under Sr. No.17 of exemption Notification No. 06/2006-CE dated 01.03.2006 till 16.03.2012 and thereafter under Sr. No. 255 of Notification No. 12/2012-CE dated 17.03.2012 - HELD THAT:- The issue is squarely covered by the decision of the Tribunal in the case of Supertron Electronics Pvt. Ltd. [ 2017 (1) TMI 1529 - CESTAT NEW DELHI] where it was held that we note that the exemption notification specifies tariff heading up to six digits only, 8471 70, which covers both, hard disk drive and removable or exchangeable disk drives. Further, the next column of the table for description explain the goods only as hard disk drive among many other items. On careful consideration of the technical specification furnished, and the sample of imported items along with tariff entries and the exemption notification, we are in agreement with the findings in the impugned order. The terms hard disk drive used in the notification has not been amplified either by adding external or internal . On this simple premise alone, exemption to the said item cannot be denied. Chennai Bench of the Tribunal vide final order No.42907/2018 dated 16.11.2018 in appellant s own case [ 2019 (2) TMI 264 - CESTAT CHENNAI] held that This Tribunal in the case of M/s. Fortune Marketing Pvt. Ltd., vide Final Order, dated 24.08.2017 [ 2017 (8) TMI 1506 - CESTAT CHENNAI] has already decided the issue in favour of the assessee. As the issue is squarely covered by the above decision, there are no merits in the impugned order - appeal allowed.

  ---

• Securities / SEBI

• 2023 (7) TMI 586
  Offences under SEBI - collective investment schemes without applying for registration - petitioner (directors) was summoned for the offences under Sections 24(1) and 27 of the SEBI Act - company never initiated any steps for winding up of the schemes and for repayment to the investors despite notices - HELD THAT:- The complaint filed by respondent, SEBI makes a specific averment that the present petitioner was the director and was in-charge of and responsible to the company for the conduct of its business for the relevant period of time in terms of Section 27 SEBI Act, 1992. No documents have been produced on record to rebut the aforesaid averment made by the respondent to demonstrate that making the petitioner stand trial would be an abuse of process of the Court. It is pertinent to state that the question as to whether the present petitioner shall be liable as the director of the accused company with regard to the violations committed by the said entity in question is a matter of trial and shall be adjudicated before the Trial Court of competent jurisdiction. This Court need not examine disputed factual issues involved in the present case while exercising the jurisdiction u/s 482 of Code of Criminal Procedure.

  ---

• Insolvency & Bankruptcy

• 2023 (7) TMI 587
  Permission to applicant to intervene - direction to RP to serve a copy of the Resolution Plan - whether copy of the Resolution Plan, which has been approved by the CoC but awaits the approval of the Adjudicating authority, can be given to the Appellant who is neither a Claimant, nor a Creditor or a participant? - whether there is any provision in the Code for the purpose of giving a copy of the Resolution Plan to the Appellant who is neither a Claimant, nor a Creditor or a participant, even before the approval of Resolution Plan by the Adjudicating Authority? - HELD THAT:- The answer to this question is no more res integra as it has already been answered by this Tribunal in Association Jet Airways [ 2022 (2) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] and by the Hon ble Supreme Court in the case of Vijay Kumar Jain [ 2019 (2) TMI 97 - SUPREME COURT] - In the case of Association of Jet Airways, this court categorically observed that The above scheme of the Code also indicates that after Resolution Plan is submitted to the Adjudicating Authority and it is approved by the Adjudicating Authority, it no longer remains a confidential document, so as to preclude Regulator and other persons from access the said document. In the case of Vijay Kumar Jain, it has also held that Last but not least, a resolution plan which has been approved or rejected by an order of the Adjudicating Authority, has to be sent to participants which would include members of the erstwhile Board of Directors vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file an appeal from the Adjudicating Authority s order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the Adjudicating Authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code. None of the judgments, cited at the instance of the Appellant, either of this Tribunal or the Hon ble Supreme Court has held that the copy of the Resolution Plan, which is still in the process of approval or rejection by the Adjudicating Authority, be given to a party who is neither a Claimant nor a Creditor or a participant - Therefore, there are no error on the part of the Adjudicating Authority in rejecting the application of the Appellant by way of the impugned order. Appeal dismissed.

  ---

• PMLA

• 2023 (7) TMI 585
  Seeking grant of anticipatory bail - possession of tainted money, transfer of same to others based on telephonic instructions of her son accused Suryakant Tiwari - applicability of rigor of twin conditions, as prescribed under Section 45 of the Act of 2022, on account being an infirm woman - HELD THAT:- From the allegations contained in the complaint and statements recorded under Section 50 (2) of the Act of 2002, it is clear that applicant was in possession of tainted money, she has transferred the same to others based on telephonic instructions of her son accused Suryakant Tiwari. For considering application for grant of bail, fulfilment of twin conditions under Section 45 (1) (i) (ii) of the Act of 2002 is must. The material collected and available in the complaint, prima facie indicates involvement of applicant in crime in question. Twin conditions also applies to anticipatory bail application. Except submission that applicant is an infirm woman, no material has been placed on record showing that applicant is suffering from any old age disease or is seriously sick. Offence under the Act of 2002 is an offence under the special Act, therefore, normal consideration for grant of bail under Section 438 or 439 CrPC may not be only consideration for grant of bail under Section 439 or 438 of CrPC and therefore, unless applicant comes out of rigor of twin conditions, as prescribed under Section 45 of the Act of 2022, he/she may not be entitled for benefit of bail. In the case of Vijay Madanlal [ 2022 (7) TMI 1316 - SUPREME COURT ] the Hon ble Supreme Court observed the expression and occurring in Section 3 has to be construed as or , to give full play to the said provision so as to include every process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity. The order passed in case of M. NAGARAJAN ANR. VERSUS DIRECTORATE OF ENFORCEMENT ORS. [ 2023 (1) TMI 1268 - SC ORDER] , which was relied upon by learned counsel for applicant, is of no help to the applicant because facts of that case are entirely different from the facts of present case. In that case, closure report was filed which was later accepted by the Magistrate - In this case, there is no closure with respect to offence under Section 384 of IPC. In fact, police of Police Station Kadugodi, Whitefield, Banglore taking note of the place of incident alleged, forwarded the complaint to police of Chhattisgarh through proper channel, and further taking note of the fact that in the complaint there is categorical mention of applicant that she has not co-operated during investigation by non-applicant Department. This is not a fit case to extend benefit of Section 438 of CrPC to applicant - this anticipatory bail application is rejected.

  ---

• Service Tax

• 2023 (7) TMI 584
  CENVAT Credit - capital goods - invoices issued by the manufacturer were not genuine and the appellant has indulged in paper transaction without bringing the capital goods in their factory in connivance with the supplier - HELD THAT:- It is the fact on record that the appellant has availed cenvat credit on capital goods procured from the supplier/manufacturer against duty paying documents, who was having Central Excise Registration. In that circumstances, the cenvat credit cannot be denied to the appellant as held by this Tribunal in the case of SUNVIK STEELS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2011 (8) TMI 926 - CESTAT, BANGALORE] , wherein this Tribunal has observed Since the supplier was a registered unit, and had paid duty from PLA as well as the Cenvat credit and the department itself had failed to notice the fact that no goods were manufactured by the supplier for a period of five years, it is difficult to expect an assessee located in Karnataka to go and verify whether the manufacturer had the facility and whether he had really manufactured the goods before purchasing the same. The very fact that the supplier was in existence for 15 years, had availed Cenvat credit of more than Rs. 18 crores would show that the supplier did have some standing in the market. Since the Cenvat credit availed by the appellant is reflecting the duty paid on the goods by the supplier for which no evidence is available to show to the contrary and in view of the above circumstances, it will not be appropriate to demand duty and deny the Cenvat credit from the appellant. As the appellant has taken cenvat credit on the procurement of capital goods on the strength of duty paying documents, therefore, the cenvat credit cannot be denied - Appeal allowed.

  ---

• 2023 (7) TMI 583
  Levy of Service tax - renting of immovable property service - grant of sole and exclusive right to recommence the hotel and to run, conduct, manage operate and market the same in the name and style as Palmgrove may from time to time in its absolute discretion deem fit - extended period of limitation - HELD THAT:- A principle for interpretation of an activity, is that the nomenclature assigned to it is not decisive of its nature. Further the fact that a method of payment is worked out or calculated in a particular manner, as a consideration for the agreement, as per the convenience of the parties involved, is not in itself determinative of the nature of the service being offered. The method of collection of consideration does not affect the essence of the service so long as a service is actually rendered. As per the agreement the hotel is run, conducted, maintained and managed by the conductor / operator at the costs, risks, expenses and responsibility of the conductor / operator alone and on a principal-to-principal basis. The appellant has also averred that Section 65(90a) of the Finance Act, 1994 as amended defines renting of immovable property and Section 65(105)(zzzz) of the Finance Act, 1994 defines taxable service provided in relation to renting of immovable property. In terms of Section 65(105)(zzzz) hotels are specifically excluded under clause (d) to Explanation 1 of Section 65(105)(zzzz). The words including hotels used in the Explanation to Section 65(105)(zzzz) of the Finance Act, 1994 while listing out the exclusions from the scope, has to be given its plain meaning. The issue have been examined in the Coordinate Bench decision in Grand Royale Enterprises [ 2018 (10) TMI 656 - CESTAT CHENNAI] where it was held that the transaction between the appellant and IHCL is definitely not one of renting of immovable property but a business transaction between the two, where the consideration is not like a regular rent but is dependent on the annual performance and profits of the hotel. The said judgment was affirmed by the Hon ble Apex court in COMMISSIONER OF SERVICE TAX 1 CHENNAI VERSUS GRAND ROYALE ENTERPRISES LTD. [ 2022 (9) TMI 273 - SC ORDER ], hence the same is binding on us and we respectfully follow the ratio of the said case laws and hold that Revenue s stand that Service Tax is liable for renting of the impugned property is not correct and is untenable in law. The matter having been decided in the appellants favour, the question of limitation does not arise - appeal allowed.

  ---

• 2023 (7) TMI 582
  Refund of Service Tax paid - time limitation - rejection on the ground that refund application has been filed after a period of more than 22 months thus becoming time-barred - prospective or retrospective effect of N/N. 04/2014-ST dated 17.02.2014 - HELD THAT:- All cases of refund of Service Tax is to be dealt with in terms of the statutory provisions of section 11 B of the Central Excise Act, 1944 as the said provision has been made applicable in relation to service tax through Section 83 of the Finance Act, 1994. The said legal provisions specify the period within which any refund application is required to be filed and how the refund application would be dealt with - The plain reading of the legal provisions of Section 11B, amply makes it clear, that any refund of excise duty/service tax can be entertained only in terms of sub-section (1) of Section 11B and any refund shall be made strictly in terms of sub-section (2) of Section 11B of the said Act. Accordingly, any person claiming refund is required to file the refund application in the prescribed manner and within one year from the relevant date as provided under the Explanation clause (B). It is not the case of the appellant that the service tax was paid under protest, in which case the one year time limit does not apply. The relevant date for the purpose of this case, in which the appellant have voluntarily paid the short payment of service tax, is the date of payment of duty/ tax - In the present case, since the refund claim has been filed for the total payment of service tax of Rs. 1,06,62,609/- which covers the payment made on 25.03.2014, 29.03.2014, 25.11.2014, it is found that the refund claim filed on 23.02.2016 for these payments were beyond the prescribed period of one year. Further, there is/are no separate refund application(s) with breakup detail in respect of payments made on 07.04.2015, 01.09.2015, 11.09.2015 and 01.10.2015 for entertaining these as having been filed within one year time period. Hence, on the limited angle of time limit, the refund application is not maintainable in terms of Section 11B of the said Act as made applicable in relation to Service Tax. Central Board of Indirect Taxes and Customs had issued a circular No.177/03/2014-Service Tax dated 17.02.2014, clarifying that services by way of transportation of rice by rail or a vessel from one place in India to another is exempt as foodstuff includes rice . Hence, the services provided for transportation of rice by rail is exempt from 26.06.2012 and the same has been clarified in the above referred circular issued subsequently - the taxable services under the head cargo handling services were not exempt during the disputed period. The Commissioner of CGST Central Excise, Raigad in the impugned order has discussed these aspects before coming to a conclusion at paragraphs 18, 19 and 22, which is the correct interpretation of the law. Reopening of completed proceedings - HELD THAT:- The service tax short paid as has been identified in the DGCEI investigation proceedings, which was voluntarily paid by the appellants, have been specifically closed at the request of the appellants. Hence it is not feasible to reopen the completed proceedings particularly when the same has attained deemed conclusion of the demand proceedings in respect of service tax, interest and penalty under section 78 of the Finance Act 1994. Both on time limit and on merits the appeal filed by the appellants does not sustain - there are no grounds made by the appellants for interfering with the order passed by the first appellate authority - Appeal dismissed.

  ---

• 2023 (7) TMI 581
  Works Contract Services - Service Tax registration not taken - service tax not paid - Service Tax Returns not filed - suppression on the part of appellant - extended period of limitation - penalties - HELD THAT:- The Appellant were required to pay Service Tax on certain portion of their operation. The very fact that the Appellant has not contested Rs.4,96,711/- on merits shows that the Appellant had rendered services which were liable for Service Tax as has been observed by the Commissioner (Appeals). Only detailed investigation and verification of the records of the Appellant, the fact of non-payment of Service Tax to the extent of Rs.4,96,711/- has come to light. As a matter of fact, since the Appellant have been providing services even prior to 2007-08, (during 2002 to 2007) the Service Tax liability could not be recovered by the Department as the period was even beyond the extended period of five years. Therefore, it is not a case of mere interpretation or bonafide belief but the case wherein the Appellant did not get themselves registered and did not make disclosure of all their activities to the Department. Extended period of limitation - penalty - HELD THAT:- There are no merits in the submissions made by the Appellant that there is no suppression and hence the extended period could not have been invoked for raising the demand and imposing the penalty under Section 78 - demand and penalty imposed under Section 78, Section 77 (1) (a) and Section 77 (2) are required to be upheld. In respect of penalty of Rs.4,96,711/- imposed under Section 78, it is seen that the Adjudicating Authority and lower Appellate Authority have not given an option of paying the reduced penalty @ 25%, if the Service Tax along with interest is paid within 30 days. Now option given to the Appellant to pay the penalty @ 25% of Rs.4,96,711/-, if they pay the Service Tax of Rs.4,96,711/- along with interest and this re-quantified penalty within 30 days from the date of receipt of this Order. If they fail to fulfill this condition, the penalty under Section 78 will stand at Rs.4,96,711/- - Needless to say that they are also required to pay penalty imposed under Section 77(1)(a) and Section 77(2) as held by the lower Authorities. Appeal disposed off.

  ---

• Central Excise

• 2023 (7) TMI 580
  Method of Valuation - valuation of free samples of P and P medicaments - applicability of section 4A of the Central Excise Act, 1944 or rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 - HELD THAT:- The issue before the Larger Bench in CADILA PHARMACEUTICALS LTD. VERSUS COMMR. OF C. EX., AHMEDABAD-II [ 2008 (9) TMI 98 - CESTAT AHEMDABAD ] was in respect of valuation of physician sample of medicines supplied free of cost. The operative part of views expressed by the majority was notwithstanding the non-availability of the normal sale price under Section 4(1)(a) of the Act, by reason of the goods being specified under Section 4A(1) making the retail sale price i.e. MRP as its deemed value, the appropriate rule governing the valuation of physician s samples would continue to be Rule 4. Thus, the contention of the appellant before the Supreme Court in Medley Pharmaceuticals [ 2011 (1) TMI 13 - SUPREME COURT] that the free physician samples have to be assessed on the cost of manufacture plus 15% profit as contemplated under rule 8 of the 2000 Rules was not accepted by the Supreme Court - In the present appeal, the appellant has also determined the valuation under rule 8 of the 2000 Rules by adding 15% profit to the cost of manufacture. Such a determination of the assessable value has not been accepted by the Supreme Court. The Commissioner (Appeals), therefore, committed no illegality. Appeal dismissed.

  ---

• 2023 (7) TMI 579
  Violation of judicial discipline - reopening and review of previous Tribunal Order for subsequent period - while the accepting the order of tribunal for the earlier periods, SCN issued for the subsequent period involving the same issue - recovery of erroneous refund - whether the Department can reopen and review the order of the Tribunal, by way of a show cause notice on the grounds that refund granted was erroneous, where no appeal was filed against the order of the Tribunal? HELD THAT:- The Tribunal s order which attained the finality by not filing an appeal was not implemented in spirit and a review process has been initiated through the back door by issuance of a show cause notice. This is clearly against the principles of judicial discipline. In case, the protective demand was issued before the finalization of the appeal by CESTAT, it was within the permissible limits of the Department to withdraw the same. It is found that the Original Authority vide OIO No.25-35/2020 dated 21.09.2020 has rightly discharged the same - Commissioner (Appeals) cannot sit in judgment of the Tribunal s order and to hold the same to be issued per incuriam , whereas no appeal has been filed against the CESTAT Order and an appeal filed earlier on a case involving identical issue was withdrawn on monetary grounds. It is curious to note that whereas some 10 to 12 orders were passed on the issue against the very same appellant covering the periods before and after the period covered in the impugned order. The Revenue contends that there is no estoppel in Revenue s matter. Maybe it so, it s not open to the Department to open up a case which attained finality. In passing an order contrary to the order of the CESTAT and holding that the CESTAT order was per incuriam , learned Commissioner (Appeals) has exceeded his brief. Moreover, in the instant case, it is found that the Department has followed pick and choose method making a joke of the judicial process and putting the appellant to unwarranted hardship by refraining from appealing past and future cases and selecting only case for review. The finding of the Commissioner as regards the applicability of the provisions of Section 11B to the facts of the case are incorrect and are as a result of incoherent reading of the provisions of the statute. The impugned order is set aside and the appeal is allowed.

  ---

• 2023 (7) TMI 578
  Valuation - Receipt of consideration for clearance of waste / rubbish - inclusion of additional consideration received by the appellants in the form of credit notes from M/s. Indrox Global Pvt. Ltd. (IGPL) for sale of Ferric Oxide by IGPL, which emerged through chemical reaction of Waste Pickle Liquor, (generated during the course of manufacture of finished goods in the factory of the appellants) in assessable value or not - Rule 6 of Excise Valuation Rules, 2000. HELD THAT:- On identical set of facts wherein also the credit notes were issued by IGPL to the assessee therein and differential duty was demanded from the assessee by considering it as additional consideration received in terms of Rule 6 ibid, this Tribunal in the matter of M/S. TATA STEEL LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2019 (1) TMI 2021 - CESTAT MUMBAI] has held that WPL is not an excisable goods therefore Rule 6 of Valuation Rules, 2000 has no application and the question of undervaluation does not arise. It is settled position that receipt of sale proceeds of the by-product i.e. Ferric/ Iron Oxide emerged as a result of chemical reaction of a waste product WPL in IGPL s reactor cannot be said to be the consideration for WPL as the product has to be assessed in the form in which it is cleared. WPL is nothing but waste which emerges in the process of manufacture of steel articles or finished goods. It s not an end product or finished product and merely because it fetches some price in the market does not bring it out from the category of waste. It has neither any marketability nor saleability and therefore it s not liable to any duty. Waste or rubbish, which is thrown up in the course of manufacture, cannot be said to be a produce of manufacture and cannot be said to be exigible to excise duty - the appellant is not at all involved in converting of Ferric/Iron Oxide out of the said WPL and resultantly no demand can sustain against the appellant on that count also. The appeal filed by the appellant is allowed.

  ---