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Showing 81 to 100 of 1428 Records
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2023 (12) TMI 1348
Unexplained cash deposits - Addition u/s 68 - cash sales made before demonetization which was deposited in the bank account as alleged unexplained amount cash sales to unverifiable persons - HELD THAT:- For Cash receipts from the customers and against which delivery of vehicle was made to them cash is generated out of the stock already on record and thus the sales made by the assessee company is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings.
Now on the part of the receipt of the cash from the customer the jurisdiction high court judgement in the case of Smt. Harshil Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition would not arise.
We, therefore, hold that no addition was required to be made nwhich was found to be the cash receipts from the customers and against which delivery of vehicle was made to them.
When the revenue partly considered the sales on the same invoice for an amount of Rs. 16,00,000/- why not on the balance. Thus, the facts of the case are different considering the finding recorded here in above. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we direct to delete the addition - Decided in favour of assessee.
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2023 (12) TMI 1347
Money Laundering - illegal mining and transportation of stones from Sahebganj and illegal activities were carried out under political and administrative patronage - HELD THAT:- It is difficult to be persuaded by the argument on behalf of petitioner that the mandate of directions given in Pankaj Bansal [2023 (10) TMI 175 - SUPREME COURT] was intended to have retrospective operation. The plain reading of para 35 of the said order and the use of word ‘henceforth’, can only mean that that direction of the Hon’ble Supreme Court was prospective and not retrospective in nature. Furthermore, if the suggested interpretation of the expression ‘henceforth’ is accepted, it will amount to review all the arrest so far made under Section 19(1) of PMLA.
Be that as it may, there are factors from which an inference can be drawn that rigors of Section 45 PMLA Act will not apply in the present case. The petitioner was not named in the earlier two prosecution complaints submitted by E.D. and his name has transpired in the 3rd supplementary prosecution complaint. The F.I.R. which has been lodged under Sections 279 and 304A, read with Section 120B of the IPC, will have no bearing on the present case.
The above named petitioner is directed to be released on bail on furnishing bail bond of Rs. 1,00,000/-(One Lakh) with two sureties of the like amount each to the satisfaction of the Court below, subject to the condition that one of the bailor shall be an income tax payee - Petition allowed.
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2023 (12) TMI 1346
Denial of exemption u/s 11/12 - audit-report (Form No. 10B) was filed after filing of return of income but before processing u/s 143(1) - HELD THAT:- In view of settled judicial rulings noted in foregoing paragraphs as in Indian Panel Board Manufacturer [2023 (3) TMI 1374 - GUJARAT HIGH COURT] we find that the assessee can’t be denied the benefit of exemption u/s 11/12 as claimed in return of income for mere delay in filing of audit-report (Form No. 10B), when the assessee has in fact filed such report though after filing of return. We, therefore, deem it fit to remand this matter back to the file of AO for a fresh assessment after considering audit-report (Form No. 10B) filed by assessee. The assessee succeeds in this appeal.
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2023 (12) TMI 1345
Classification of service - packing cement and loading the same in the wagons and in the trucks - to be classified as Manpower Services or as Cargo Handling Services? - extended period of limitation - suppression of facts or not.
Classification of service - HELD THAT:- The Appellant has been given a contract for packing, loading, unloading of the cement bags for which they were providing manpower services.
On an identical issue in the case of CCE, Bhopal Vs. Jagat Enterprises [2015 (11) TMI 970 - CESTAT NEW DELHI], the Hon’ble Delhi Tribunal has held that 'the Revenue has not given any reason as to why the impugned services were classifiable under “Cargo Handling Services” before 16-6-2005 and as manpower recruitment from 16-6-2005. The admitted fact is that the services remain same and there is no reason for different service tax treatment for different period. Considering the detailed discussions and findings in the impugned order we find no reason to interfere with the same.'
The facts in the present case are identical. Therefore, there are no necessity to take a different view - the Appeals allowed on merits.
Extended period of limitation - suppression of facts or not - HELD THAT:- First of all, in the first SCN, no specific about suppression has been brought in by the Department. Further, while issuing the second SCN, the Department was barred from invoking the extended period provisions when they have already issued the first Show Cause Notice by invoking such provisions as held by the Hon’ble Supreme Court in the case of Nizam Sugar Factory Vs. Collector of Central Excise [2006 (4) TMI 127 - SUPREME COURT]. Therefore, the demand in respect of the extended period in respect of the both SCNs is time barred and the same is set aside.
Appeal allowed.
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2023 (12) TMI 1344
Dismissal of appeal by CIT(A) for want of payment of admitting tax due on the returned income - HELD THAT:- CIT(A) has referred to provisions of section 249(4)(a) of the Act which contemplates inter alia that no appeal under this chapter shall be admitted unless at the time of filing the appeal the assessee has paid the tax due on the income returned by him. Now the assessee has produced challans of payment of tax due on returned income.
Therefore, in the facts and circumstances of the case and in the interest of justice the matter is set aside to the record of the CIT(A) for deciding the same afresh after considering the payment made by the assessee as well as explanation for delay in making payment of due tax on returned income. Needless to say the assessee be given an appropriate opportunity of hearing before passing fresh order. Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 1343
Recovery of short levied duty alongwith interest on the said short levied duty - wrong exemption claimed by the petitioner by classifying the goods on wrong customs heads - competence of Deputy Commissioner of Customs to issue SCN - SCN barred by limitation under the provisions of Section 28(9) of the Customs Act, 1962 or not - HELD THAT:- The imported goods covered in the bill of entry No. 7517069, dated 24-4-2020 were out of charge on 5-5-2020 and, therefore, the last date for issuance of Show Cause Notice would be 3-5-2022. However, the subject Show Cause Notice was issued on 20-4-2022 and, therefore, the said notice was well within time.
The next objection of the petitioner is in respect of the demand for the Bills of Entry Nos. 7572108, dated 2-5-2020 and 7985069, dated 23-6-2020 which were said to be barred by limitation under the provisions of Section 28(9) of the Customs Act, 1962 was also rejected. It was said that only an interim Show Cause Notice was issued vide the letter dated 23-5-2022. Later on, a corrigendum to Show Cause Notice was issued on 15-10-2022 for a change of adjudication authority due to the monetary limit in terms of Notification No. 29/2022-Customs (N.T.), dated 31-3-2022. The petitioner did not submitted any reply to the show cause notice. In due observance to the principles of natural justice, the new adjudication authority had given the importer reasonable opportunity of personal hearing before the adjudication of the case.
Short payment of customs duty and wrong exemption claimed by the petitioner by classifying the goods on wrong customs heads - HELD THAT:- There are no substance in the challenge to the order-in-original on the ground of barred by limitation. The 2nd ground that the Show Cause Notice was not issued by the competent authority, the petitioner never took this objection before the adjudication authority in his reply or the submissions. This is the first time the petitioner has raised this objection before this Court. Even the Show Cause Notice is not challenged in this writ petition, and it is only the order-in-original which has been challenged. Even otherwise it is the order-in-original which is under challenge and that has been passed by the competent authority. It is not the case of the petitioner that the order-in-original has not been passed by the competent authority.
This writ petition is hereby dismissed leaving it open to the petitioner to approach the appellate authority if he so advised against the impugned order-in-original, and if appeal is filled, the same shall be adjudicated in accordance with the law.
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2023 (12) TMI 1342
Exclusion of the period of 1854 days in computing the period of limitation for filing the Petition challenging the Award - defect of jurisdiction - Section 14 of the Limitation Act - HELD THAT:- The Applicant in the present case has failed to exercise due diligence and good faith. Further, the proceedings adopted by the Applicant viz. the Writ proceedings cannot be said to be proceeding suffering from “defect of Jurisdiction” or “any other causes of like nature”. It is not the submission of the Applicant/Petitioner that the Writ Court cannot interfere with the Arbitral Award. In the present case, the Writ Court chose not to interfere on account of alternate remedy.
In the decision of the Supreme Court in Zafar Khan [1984 (7) TMI 404 - SUPREME COURT] “Defect of Jurisdiction” has been construed as well as “other cause of like nature” and explanation (c) to Section 14 has also been referred to which provides misjoinder of parties or causes of action shall be deemed to be a cause of like nature with defect of jurisdiction. This expression must take its colour and content from the just preceding expression, “defect of jurisdiction”. In the present case, the Writ Petition challenging the Award cannot be termed as “defect of jurisdiction”.
There are much merit in the submission of the Counsel of Respondent No.1 that presuming Section 14 applies to the Arbitration Petition, the Arbitration Petition is not preferred within the prescribed period of limitation as the delay is of 166 days as the period between receipt of the Award and filing of the Writ Petition as well as the period between the rejection of the Writ Petition and filing of the SLP and the period between the dismissal of SLP and filing of the Arbitration Petition cannot be counted in the exclusion period under Section 14 of the Limitation Act. Thus, in any event the Arbitration Petition has been preferred beyond the permissible period of 120 days under Section 34 of the Arbitration Act.
There are no merit in the present Interim Application for exclusion of the period of 1854 days from 5 th April, 2017 till 1st November, 2022 in computing the period of limitation for filing the Petition challenging the Award dated 31st March, 2017 passed by the Facilitation Council constituted under the MSME Act. The delay beyond the permissible period of 120 days under Section 34(3) and proviso thereto of the Arbitration Act can in no event be condoned.
The Commercial Arbitration Petition under Section 34 of the Arbitration Act is dismissed as being barred by Limitation and is accordingly disposed of.
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2023 (12) TMI 1341
Deduction u/s 80P(2)(d) - interest income earned from other co operative banks - HELD THAT:- The Hon’ble jurisdictional High Court in the case of PCIT Vs. Totagars Co-operative Sale Society Ltd. [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] had categorically held that interest income earned out of the surplus fund is to be taxed under the head “income from other sources” and is not entitled to deduction under section 80P(2)(a)(i) of the Act.
The Hon’ble jurisdictional High Court held that interest income received from co-operative banks cannot be equated with interest received from co-operative society and therefore is not entitled to deduction under section 80P(2)(d)
CIT (A) had relied on the order of Vasavamba Co-operative Society Ltd.,[2021 (8) TMI 706 - ITAT BANGALORE] considered the judicial pronouncements on the subject and had followed the judgment of the Hon’ble jurisdictional High Court in the case of PCIT Vs. Totagars Co-operative Sale Society Ltd.(supra).
Since the relevant finding of the Bangalore Bench of the Tribunal has been reproduced in the impugned order of the CIT(A), the same is not reiterated here. Therefore, hold that assessee is not entitled to deduction under sections 80P(2)(a)(i) or 80P(2)(d) of the Act with regard to the interest income that is received from the scheduled banks / co-operative banks - Appeal filed by the assessee is dismissed.
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2023 (12) TMI 1340
Refund along with interest at the rate of 12% p.a. on pre-deposit - HELD THAT:- Section 129EE of the Customs Act 1962 envisages that any amount that may have been deposited by way of a pre-deposit by an assessee is to be refunded along with interest not below 5% p.a. and not exceeding 36% p.a., and at such rate as may be notified by the Union Government.
In terms of the aforesaid provision, the Union Government by way of a notification dated 12 August 2014 has prescribed interest on refund to be fixed at the rate of 6% p.a. In that view of the matter, the order impugned cannot be sustained.
Interest shall consequently be computed and paid @ 6% p.a. - the impugned order is set aside - appeal allowed.
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2023 (12) TMI 1339
Taxability of income in India - services rendered for providing Supply Planning Services (SPS) - Royalty /FTS under the India – UK DTAA - services falls within the purview of “royalty” under Article 13(3) of India-UK DTAA and crediting services and DTC accreditation business as FTS under Article 13(4) or not? - HELD THAT:- From the perusal of the services, it is seen that what has been provided is intention to offer whereby assessee communicates in advance to every sight holder the aggregate value of each Box it intends to make available to the sight holder during the selling period. It also undertakes to use its reasonable efforts to ensure that, insofar as practicable, there is consistency as to the size, type, quality and colour of diamonds contained in each box in any category that it supplies during the intention to offer period.
This is purely service for providing diamonds to the sight holders and such service cannot be held that some kind of technical service is being provided by the assessee on this under Article 13 of DTAA or there is any managerial, technical or consultancy services even under the provision of section 9(1)(vii) of the Act.
Provision of extranet, it only accelerates efficiencies in the intention to offer process and provides a platform for sharing DTC information, propriety content plus tailored access to each sightholder to their own specific business information and processes via secured web-based, informationsharing and business platform. It is merely for providing information and there is no element of making available technical services and therefore, we are unable to appreciate as to how these can be treated as FTS. In so far as the provision of key account management, it is a kind of main point of contact between sightholder and assessee and assists in managing that relationship and to provide support in planning the intention to offer and delivery schedules. This account is related to supply of diamonds and nothing to do with providing any technical services.
So far as maintaining integrity of supplier of choice, assessee has engaged an organization to verify the accuracy of the information contained in sightholder submissions and information supplied or ought to be supplied by sightholders during the term of the contract. Thus, this has nothing to trigger FTS clause of DTAA. Accordingly, the finding and observation of ld. CIT (A) is upheld. Accordingly, this issue is decided in favour of the assessee.
Receipts being fees for SPS not falling under the purview of royalty under Article 13(4) - The receipt of SPS fees by the assessee cannot be said to be falling in the definition of Royalty by virtue of information concerning industrial, commercial or scientific experience as the information is provided based on experience and not for imparting of experience.
However, with regard to taxability of supply planning services under Article 13(4)(a), for use of brand "Nakshatra or "Forevermark to promote sale of branded diamond products, it has been stated that the Nakshatra brand which was owned by assessee from which it has earned royalty income, earlier was sold in AY 2008-09. Thus, this payment cannot be held in the nature of FTS or royalty. Albeit this is business income for assessee in India. However, if assessee does not have a PE in India, therefore, in the absence of PE, the receipts from supply planning services cannot be taxable in India.
Receipts being receipts/ fees received for grading services as business income of assessee and not as royalty - We find that this issue stands covered by the decision of the Hon”ble Jurisdictional High Court in the case of Diamond Services International (P) Ltd. [2007 (12) TMI 182 - BOMBAY HIGH COURT] and also it has been brought on record that assessee's group company, Forevermark Limited, also a tax resident of UK. The Tribunal for A.Y.2013-14 has held that grading services rendered by it is not taxable as royalty. Thus, we upheld the order of the ld. CIT(A) that grading services do not fall within the ambit of royalty as per Article 13.
Receipts/ fees received from DTC Accredited Business Programme (DTC-ABP) as not falling within the purview of royalty or FTS under the Indo - UK Treaty - AO in his draft assessment order treating the receipts from DTCABP as an extension of Value Added Services and accordingly, taxed the same as FTS and royalty under Article 13 which has been confirmed by the DRP also - HELD THAT:- We agree with the submissions with the ld. Counsel that once it is not a registered trademark, it does not have a sign or logo and it is not owned by the assessee, there is no question of taxing the same as royalty. Further, it cannot be held to be taxable as FTS also under Article 13 because there is no make available technical knowledge under this programme. Accordingly, order of the ld. CIT (A) is upheld and the grounds raised by the Revenue are dismissed.
It has been stated that in the appeals for A.Yrs. 2010-11 to 2012-13 have exactly similar issue under consideration with similar facts. However, they are assessee”s appeal, since post assessment order assessee has preferred DRP route and accordingly, the order of the AO has been upheld. Accordingly, our finding given in the A.Y.2009-10 will apply mutatis mutandis for these years also.
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2023 (12) TMI 1338
Export of non-Basmati White Rice - grievance of the petitioner- Company is that it has already entered into contract for supply of aforesaid rice to various foreign entities prior to issuance of notification (Annexure P-1) and if terms of the contract are not fulfilled, then of-course same will be create various hardship to the petitioner alongwith goodwill of his business - HELD THAT:- Considering the fact that contract was already entered into for supply of non- Basmati White Rice with foreign entities and letter of credit has also been issued by the petitioner for the said quantity, therefore, this Court finds that prima facie point is made out for consideration and considering the facts of the case, objection raised by learned Deputy Solicitor General is not found to be appropriate to disallow the aforesaid application.
The respondents are directed to permit the petitioner to export the Non-basmati White Rice to foreign entities in compliance of contract entered into between them, to which letter of credit has been issued by the petitioner for supply of quantity - Application allowed.
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2023 (12) TMI 1337
Direction to the respondent to restore the petitioner's GST Registration - HELD THAT:- It appears that the present issue was already covered by the aforesaid judgement of this Court in W.P. No. 25048 of 2021 [2022 (2) TMI 933 - MADRAS HIGH COURT] where it was held that 'Therefore, if such a person is not allowed to revive the registration, the GST will not be paid, unless of course, the recipient is liable to pay tax on reverse charge basis. Otherwise, also there will be no payment of value added tax. The ultimate goal under the GST regime will stand defeated. Therefore, these petitioners deserve a right to come back into the GST fold and carry on their trade and business in a legitimate manner.'
This Court is inclined to allow this petition - it is made clear that if the petitioner is liable to pay any tax or penalty, he is required to pay the same in accordance with law - Petition allowed.
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2023 (12) TMI 1336
Seeking grant of regular bail - illegal availment of ITC - Section 132(1)(c) of the Central Goods and Services Act, 2017 - HELD THAT:- It appears that the present applicant has been arrested in connection of the offence punishable under Section 132(1)(c) of the Central Goods and Services Act, 2017 for which punishment is five years of imprisonment. The applicant is arrested on 13.10.2023 and since then the applicant is in custody. The investigation appears to be virtually over. The case of the prosecution rests upon documentary evidence. All the documentary evidence and other material appears to have been seized by the Investigating Agency. Therefore, presence of the present applicant does not appear to be necessary for the purpose of investigation. The trial is not likely to commence and conclude in the near future.
Considering the nature of allegations made in the FIR and without discussing the evidence in details as well as without going into details, prima-facie, this Court is of the opinion that this is a fit case to exercise the discretion to enlarge the applicant on bail. Hence, the application is allowed and the applicant is ordered to be released on bail in connection with the aforesaid FIR, on executing a bond of Rs.10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions.
Application allowed.
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2023 (12) TMI 1335
Scope of jurisdiction exercised by this Court under Section 37(2)(b) of the Arbitration Act - true purport and nature of the Term Sheet, based upon interpretation of its various clauses - HELD THAT:- Section 37 of the Arbitration Act, pertains to appealable orders and it provides for filing of an appeal before the Court, inter alia, to challenge an order granting or refusing interim measure under Section 17 of the Arbitration Act. In the very same provision under Section 37 (1)(c) of the Arbitration Act, an appeal can be filed against an order setting aside or refusing to set aside an arbitral award under Section 34 of the Arbitration Act.
So long as the learned Arbitrator has considered the relevant material and a plausible view has been adopted in the facts and circumstances of the case, this Court would be loathe to interfere with the order passed by the learned Arbitrator. This Court would not interfere with the order of the learned Arbitrator passed under Section 17 of the Arbitration Act, merely because another view is possible in the matter. The discretion exercised by the learned Arbitrator, based upon a plausible view and upon taking into consideration all relevant material, cannot be lightly interfered with by this Court exercising jurisdiction under Section 37(2)(b) of the Arbitration Act - This Court intends to consider the impugned order passed by the learned Arbitrator in this backdrop and based upon the material available on record, in the light of the rival submissions made on behalf of the parties.
The findings rendered by the learned Arbitrator that the Term Sheet was prima facie an agreement to enter into an agreement, was not even a plausible view. This Court finds that the learned Arbitrator took into consideration all the relevant material, including the clauses of the Term Sheet in detail, while rendering findings on the said aspect of the matter, which cannot be termed as wholly implausible. Therefore, on the said aspect of the matter, no ground is made out on behalf of the petitioner for holding that the finding rendered by the learned Arbitrator could be said to be perverse or illegal, to warrant exercise jurisdiction under Section 37 (2)(b) of the Arbitration Act.
Applying the law pertaining to the scope of jurisdiction while considering the present petition filed under Section 37(2)(b) of the Arbitration Act, akin to considering an Appeal from Order, this Court does not find any ground for interference with the impugned order and hence, the present petition deserves to be dismissed.
Petition dismissed.
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2023 (12) TMI 1334
Penalty u/s 271(1)(c) - bogus LTCG on penny stock - CIT(A) deleted addition - HELD THAT:- As observed by the CIT(Appeals), and rightly so, as the assessee had offered LTCG on sale of 2500 shares of M/s. Blueprint Securities Ltd. as a part of her total income in the return of income filed in response to the notice u/s. 148 of the Act, therefore, the AO without establishing that the assessee had concealed her income, could not have saddled her with penalty u/s. 271(1)(c) of the Act. We, thus, concur with the view taken by the CIT(Appeals), who had rightly vacated the penalty u/s. 271(1)(c) of the Act and uphold the same. Decided against revenue.
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2023 (12) TMI 1333
Time Limitation - Review Petition under Section 5 of Limitation Act - HELD THAT:- As per opinion of the Board vide letter dated 04.05.2023, the Review Petition is filed only for limited purposes for expunging the remarks and waiver of the cost. In para 26, this Court has deprecated the action of the respondents/authority in this matter and left it open to the Higher Officers of CGST to take appropriate action against the responsible Officers, therefore, it is for the Department to examine the conduct of their Subordinate Officer for taking appropriate action.
So far as waiver of cost is concerned, Review Petition is not liable to be entertained because after the date of raid, two years, the seal was not removed and assessee was not permitted to operate the machines and Manufacturing Unit which has suffered the loss to assessee as well as to the revenue loss to the Government.
Review petition dismissed.
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2023 (12) TMI 1332
CENVAT Credit - Goods Transport Agency [GTA] (outward Transport) service - whether the hearing and resolution of the issue referred to the Larger Bench be continued at the instance of the intervener or as the case of the appellant has been settled under SVLDRS subsequent to reference, the appeal be returned to the Referral Bench for disposal without answering the reference?
HELD THAT:- The present reference to the Larger Bench is on the issue of admissibility of CENVAT credit on the service tax paid on GTA (outward transportation of goods) service after delivery of the judgment of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT] and the Circular of the Board dated 08.6.2018. Thus, resolution of the reference by the Larger Bench would not be limited to the appeal in which the reference has been made, but would have implication on all appeals pending before other Benches of the Tribunal involving same issue and are awaiting the outcome of the present reference.
The decision in M/S KARAIKAL PORT PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [2015 (1) TMI 87 - CESTAT CHENNAI] is neither relevant nor applicable to the present circumstances. In that case, the applicant sought permission to be impleaded as a necessary party in the appeal filed by the Port Department, Karnataka on the ground that on confirmation of the service tax demand against the Port Department a notice was issued for recovery of the confirmed service tax. Consequently, the applicant approached the Tribunal to allow them to intervene in the appeal. The application was filed under Order 1 Rule 8A of the First Schedule to the Code of Civil Procedure.
In a case where clearances of goods are against FOR contract basis, the authority needs to ascertain the ‘place of removal’ by applying the judgments of the Supreme Court in COMMISSIONER CENTRAL EXCISE, MUMBAI-III VERSUS M/S. EMCO LTD. [2015 (8) TMI 200 - SUPREME COURT] and COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [2015 (4) TMI 857 - SUPREME COURT], the decision of the Karnataka High Court in BHARAT FRITZ WERNER LTD. AND MAPAL INDIA PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX, BANGALORE [2022 (7) TMI 352 - KARNATAKA HIGH COURT], and the Circular dated 08.06.2018 of the Board to determine the admissibility of CENVAT credit on the GTA Service upto the place of removal.
The reference is answered, accordingly. The appeal shall now be listed before the Division Bench for hearing.
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2023 (12) TMI 1331
TP adjustment - price of the power transferred by the captive power plant of the assessee eligible for deduction u/s 80IA to the non- eligible manufacturing units of the assessee and thereby reducing the claim of deduction claimed by the assessee u/s 80IA of the Income Tax Act - DR has strongly relied upon the observation made by the Transfer Pricing Officer and has submitted that for determination of arm’s length price in relation to power supply by the captive power plants of the assessee, the average market rates at which the other power generating units sell the power to distribution companies is required to be taken
HELD THAT:- Assessee’s main business is not of generating of power to further sell the same to the distribution companies/State Electricity Boards. The point to be noted here is that the respective captive power plants were established by the assessee for its own needs i.e. for the purpose of supply uninterrupted powers to its manufacturing units as well as to save the cost of power purchased from State Electricity Boards.
Here, in the facts and circumstances, in our view, the arm’s length price could not be determined by taking the average market rates of power supply units to distribution companies as the assessee is not into the said business of selling of power to distribution companies. The arm’s length price in this case, in our view, has to be determined taking into mind the business perspective of the assessee which was to get uninterrupted power and to save cost of electricity paid to the State Electricity Boards.
When we look into the facts in this perspective, the relevant factor in this case would be the market price of the power at which the assessee’s manufacturing units purchased the power from the market or from the State Electricity Boards. Moreover, as per the Electricity Act, 2003 the captive power plants are kept outside of the regulatory mechanism and are free to supply electricity to its associate enterprises/manufacturing units or to the contracting parties and consumers, at the rates mutually settled between them. The said captive power plants are not mandatorily required to supply the electricity to the distribution companies and even are exempt of other charges which the other generating companies/distribution companies has to pay to the Government/ State Electricity Boards. The captive power plants are required only to pay wheeling charges if they use the distribution lines of the State Electricity Boards/distribution companies.
Sale of electricity by the generating companies to the distribution company/state electricity board - The consumer /contracting parties will certainly want to purchase the electricity at somewhat lesser rate than the rates of the State Electricity Boards, whereas, the captive power plants/generating companies would try to get maximum rate on the sale of power in unregulated and uncontrolled transactions and under the circumstances, both the parties would settle at the mutually agreed rates, irrespective of the rates at which the State Electricity purchases power from the other generating units. When we consider this bargain power of captive units and other generating companies in uncontrolled and unregulated transactions, then market value to determine arm’s length price, in our view, would not be dependent upon of the average market value electricity sold by other generating units to the distribution companies in controlled and regulated transactions. As observed above, the very purpose and objective of the installation of captive units by an assessee is to supply of electricity to its own manufacturing units for uninterrupted power supply and saving of electricity expenses and whatever expenses are saved that certainly would be the profit of the captive unit which, in our view, will be eligible for deduction u/s 80IA of the Income Tax Act.
Considering this aspect, the contention of the Revenue that the rates determined by the Regulatory Commission for generating units for supply of electricity to the distribution companies should be taken as benchmark, in our view, would not be accurate benchmarking of the price.
Thus, as discussed in the preceding paras of this order in context to the provision of Electricity Act 2003, that the market value of the power in case of supply by generating units to the distribution units cannot be said to be an uncontrolled market conditions and under the circumstances, the aforesaid observations of the Hon’ble Supreme Court M/s Jindal Steel & Power Ltd.[2023 (12) TMI 417 - SUPREME COURT] is squarely applicable in this case also wherein held the market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board’s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction under Section 80-IA of the Act.That being the position Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Therefore, the High Court was fully justified in deciding the appeal against the revenue.
In view of the above observations, we do not find any merit in the appeal of the revenue and the same is hereby dismissed.
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2023 (12) TMI 1330
Extension of stay of outstanding demand - assessee took us through the ITAT’s order [2023 (5) TMI 1349 - ITAT RANCHI] and submitted that on the last occasion, stay was extended on the ground that there is no change in the facts and circumstances - HELD THAT:- As the assessee has not sought any adjournment, rather applied for early hearing so that appeal could be disposed of on an early date. Due to certain unavoidable circumstances, namely non-functionality of the Bench or adjournment request at the end of the Revenue, this appeal could not be disposed of. Apart from the above fact, there is one more important fact brought to our notice, namely the assessee has filed a rectification application before the ld. DRP, whose disposal is still pending.
According to the assessee, if that application is allowed, then, instead of any payment, assessee will be entitled for a refund. Therefore, while earlier extending the stay, Bench has observed that adjudication of that application has a bearing on the ultimate disposal of the appeal. We allow this application and extend the stay on the recovery of demand for a period of 180 days or till the disposal of the appeal, whichever event occurs first. The assessee will not seek any adjournment without unavoidable circumstances. The appeal be listed on the date already fixed. Stay Application of the assessee is allowed.
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2023 (12) TMI 1329
Levy of penalty u/s 272A(2)(e) - delay of 851 days in filing the return of income for the assessment year 2014-15 - main contention of the ld. A.R. is that as per section 275(1)(c) order u/s 272A(2)(e) of the Act is to be passed before the expiry of financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or 6 months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later
HELD THAT:- The assessee has filed return of income for the assessment year 2014-15 on 31.3.2017. There was no regular assessment and the return of income has been accepted as it is. In our opinion, copy of the return of income itself serve as an assessment order for all practical purposes. So the penalty proceedings has been initiated vide notice dated 21.12.2020, which is approximately after lapse of 45 months. Therefore, the penalty order passed by ld. AO u/s 272A(2)(e) of the Act is not within reasonable time.
As considering Hon’ble Delhi High Court in the case of JKD Capital & Finlease Ltd. [2015 (10) TMI 1281 - DELHI HIGH COURT] we are of the opinion that penalty order has not been passed within reasonable time. Accordingly, we quash the penalty order on this reason. Decided in favour of assessee.
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