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Showing 381 to 400 of 420205 Records
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2024 (11) TMI 1098
Validity of Revision proceedings u/s 263 against dead assessee - As per CIT AO had completed the assessment without carrying out the necessary and proper enquiry in respect of tax treatment of interest received on compensation or enhanced compensation - assessee submitted that notice u/s. 263 was given in the name of the deceased person - assessee informed the CIT and thereafter notice was given to the legal heir, but in the final order the PAN Number was mentioned of the deceased person
HELD THAT:- It is noted that the Coordinate Bench of Amritar in case of Avtar Singh [2023 (8) TMI 1566 - ITAT AMRITSAR] on similar circumstances had held that if the person is deceased and legal heir has been brought on record, mentioning of PAN of the deceased person in the order will render the order a nullity. No contrary decision has been shown to us. Accordingly, respectfully following the precedent of the Amritsar Coordinate Bench, as aforesaid, we quash the order of the Pr. CIT u/s. 263 of the Act. Appeal filed by the Assessee stands allowed.
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2024 (11) TMI 1097
Reopening of assessment u/s 147 - misappropriation of funds by one of the employees of the assessee - HELD THAT:- We note that the assessee claimed the expenses which was not related to the business, but the amount was utilized by the employee in fraudulent way. The assessee suffered the embezzlement of the fund by the employee. The assessee claimed these expenses u/s 37(1) of the Act
But on later stage, assessee came to know that these expenses are not a genuine expense, but it is an embezzlement of the fund by one of the employees. AR referred the CBDT Circular No 35-D (XLVII-20) [F.No. 10/48/65-IT(A-I)] dated 24/11/1965 where it is stated that loss arising due to embezzlement is allowable loss U/s 28(i) of the Act. The grievance of the revenue is that the claim of expenses is not under section 37(1), but it will come under section 28 of the Act considering the embezzlement. The assessee had never rectified the head during filing of return of Income in pursuance of notice U/s 148 of the Act.
We note that the assessee offered the sum of Rs. 229 lakhs to tax, after recovery of the funds. We find that it is a justified claim for assessee that after receiving all the recovery, the same will be offered to tax. But the impugned amount was not recovered during impugned assessment year.
It is only detected in the bank account of employee’s wife. Only on the basis of the assumption the addition is unjustified. The debited amount is not fulfilling the purpose of expenses claimed U/s 37(1) of the Act but after all this expense is related to loss due to embezzlement which is allowable expenditure. The assessee is in process of recovery and after recovering the same the realized amount was offered for tax.
We respectfully relied on the order of Bombay Forgings Pvt Ltd [1993 (9) TMI 99 - BOMBAY HIGH COURT] and G.G. Dandekar Machine Works Ltd [1993 (1) TMI 40 - BOMBAY HIGH COURT] In this issue, the assessee is eligible for the deduction due to loss of fund in embezzlement. AO unable to bring any evidence the impugned amount was recovered during impugned assessment year, in our considered view, the addition is unjustified - Decided in favour of assessee.
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2024 (11) TMI 1096
Right of the assessee (respondent) to defend the order of CIT(A) on the issue which was raised but not decided by the CIT(A) - Scope of cross objection - Raising plea before the Tribunal by way of application under Rule 27 of ITAT Rules, 1963 - Penalty proceedings u/s 270A and 271AAB - as alleged vague show cause notice issued u/s 274 r.w.s. 2701A / 271AAB, without specifying the limb under which, he proposed to initiate penalty proceedings under relevant sections - CIT(A) has not adjudicated the legal issue raised by way of written submission - whether the assessee can raise the said plea before the Tribunal by way of application under Rule 27 of ITAT Rules, 1963 or not.
HELD THAT:- This issue is no longer res-integra. Hon'ble Madras High Court in the case of CIT Vs. India Cement Ltd. [2019 (8) TMI 1485 - MADRAS HIGH COURT] had considered identical issue and held that, once the assessee raised an issue before the CIT(A), which was not adjudicated by the first appellate authority can be deemed to be decided against the assessee and that the assessee was entitled to canvass the said issue before the Tribunal without independently filing the appeal in the light of Rule 27 of ITAT Rules, 1963.
Hon'ble Bombay High Court in Peter Vaz and Others Vs. CIT [2021 (4) TMI 605 - BOMBAY HIGH COURT] also considered very similar issue and held that Rule 27 of ITAT Rules, 1963 gives a right to the respondent in an appeal before the Tribunal to support the order appealed against on any of the grounds decided against him, even though he may not have appealed against the order. For supporting the order, it is not necessary for the respondent in the appeal to file a memorandum of cross objection challenging a particular finding that is rendered by the trial court against him, when the ultimate decree itself is in his favour.
The sum and substance of ratio laid down by various courts is that the respondent can support the order appealed against on any points which has been decided against him by way of application under Rule 27 of ITAT Rules, 1963. Since the question raised by the assessee by way of application under Rule 27 of ITAT Rules, 1963 is purely a legal issue and further, the assessee has taken an argument before the Ld.CIT(A) on this issue by way of written submission, in our considered view, although the Ld.CIT(A) has not decided the issue against the assessee, application filed by the assessee under Rule 27 of ITAT Rules, 1963 is maintainable and thus admitted.
Having admitted the application filed by the assessee under Rule 27 of ITAT Rules, 1963, we find that the assessee has challenged the issue of legality of notice issued u/s 274 r.w.s. 270A / 271AAB for both the assessment years for the first time before the Tribunal and the facts with regard to said legal issue are not on record.
Since the Ld.CIT(A) has not discussed the issue or decided the issue raised by the assessee and further the assessee has raised the issue for the first time before the Tribunal, in our considered view, first appellate authority should get an opportunity to consider the legal issue raised by the assessee from his perspective and thus, we are of the considered view that, the issue needs to go back to the file of the Ld.CIT(A) for considering the preliminary legal issue raised by the assessee on validity of penalty proceedings initiated on the basis of vague notice issued u/s 274 r.w.s.270A/271AAB.
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2024 (11) TMI 1095
Addition of cash deposits as unexplained money - there was no proof of the assessee carrying on the business of the appellant dealing with stationery and general stores - HELD THAT:- As perused the copy of the statement of the bank account held by the appellant with ICICI Bank. From the perusal of the said statement, it would reveal that there was cash deposits followed by withdrawals as well. Without entering into any controversy, whether the appellant had really carried on the business or not, it would be suffice to hold that the amount withdrawn from the Bank account by cash, should be treated as available for the subsequent deposits in the bank account, in the absence of any evidence on record to show the utilization of the withdrawn amount.
Thus, the lower authorities, i.e. the AO as well as the learned CIT (A) should have given the benefit of telescoping of withdrawals against the subsequent deposits. Therefore, the approach adopted by the AO as well as the learned CIT (A) is totally unjustified and unreasonable.
In order to meet the ends of justice, we deem it proper to remand the matter back to the file of the AO with a direction that the amount withdrawn from the Bank Account by way of cash should be treated as available against the subsequent deposits and the balance, if any, can be brought to tax and the balance amount, if any, as reduced by the amount of returned income may be brought to tax.
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2024 (11) TMI 1094
Reopening of assessment u/s 148 beyond the limitation period - HELD THAT:- In the present case as it appears to us that before issuance of notices the AO did not get himself satisfied though he may obtain a copy of sale deed from the office of the ADSR, Siliguri to verify the truth. It is apparent from the sale deed filed by the assessee that property in question was not sold by the assessee alone but his two sons were also the vendors of the property.
As apparent from the assessment order that the AO had signed the notice u/s 148 of the Act on 31.03.2021 but did not issue the same although the AO had stated in his order that the notice was issued by him on 31.03.2021 but at the same time, AO had stated that as there was no e-mail address registered in the e-filing portal, the notice was served on the assessee on 28.12.2021. Hence, in our view, the notice was issued on 28.12.2021, much after the date of the limitation and accordingly, the issuance of notice is also bad in law.
We are in this view that issuance of notice is bad in law. Since issuance of notice is bad in law, hence, all the consequent orders passed thereafter has no legal force and accordingly set aside. Appeal filed by the assessee is allowed.
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2024 (11) TMI 1093
Addition u/s 68 - unexplained cash credit - share capital received from four specific parties - HELD THAT:- In the present case, we observe that no additions have been made in the hands of the four investors, regarding the source of their investment during the course of scrutiny assessments in their respective hands.
We are therefore, of the considered view that that if the investments had indeed been confirmed as genuine in the assessments of the respective investors, there would be little justification for the AO/CIT(A) to classify these same investments as bogus in the hands of the company receiving the share capital. Appeal of the assessee is allowed.
Revision u/s 263 - assessee had received an amount from certain depositors, which became shareholders at a subsequent stage - HELD THAT:- Since in the preceding paragraphs, we have held that the assessee has been able to substantiate the genuineness of the investors and have directed that no addition is liable to be sustained in the hands of the assessee company u/s 68 of the Act, accordingly, the present appeal of the assessee is also allowed is against the order passed under Section 263. Appeals filed by the assessee are allowed.
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2024 (11) TMI 1092
Addition u/s 14A invoking provisions contained in Rule 8D - AO noted that the Appellant has earned exempt dividend income - HELD THAT:- Where the interest-free owned funds available with the assessee are more than the investments made in the tax-free securities, the presumption would be that investments in tax-free securities have been made out of interest-free own funds and proportionate disallowance of interest u/s 14A of the Act was not warranted on the ground that separate accounts were not maintained by assessee for making investments and for other expenditure incurred for earning tax-free income.
In the present case, the Revenue has failed to bring any material on record to rebut the aforesaid presumption which is in the favour of the Appellant given the facts and circumstances of the present case. Accordingly, we accept the contention of the Appellant that no disallowance under Rule 8D(2)(ii) of the IT Rules was warranted in the present case and therefore, addition of INR 406.51 Crores made by the Assessing Officer by disallowing proportionate interest cost is deleted.
Disallowance made u/Rule 8D(2)(iii) of the IT Rules - We find that Special Bench of the Tribunal in the case of ACIT Vs. Vireet Investments Pvt. Ltd [2017 (6) TMI 1124 - ITAT DELHI] has held that for computing the disallowance under Rule 8D(2)(iii) of the IT Rules only the investments yielding exempt income are to be taken into consideration. Accordingly, we direct the Assessing Officer to recompute the disallowance under Rule 8D(2)(iii) of the IT Rules read with Section 14A of the Act.
Adjustment in respect of addition/disallowance u/s 14A to the Book Profits computed u/s 115JB - We find that no such adjustment was proposed in the Draft Assessment Order. The directions received from DRP on 21/09/2017 also do not contain any directions to the AO to make any adjustment to Book Profits computed in terms of Section 115JB of the Act. Accordingly, the adjustment made by the AO in respect of addition/disallowance u/s 14A of the Act to the Book Profits computed under Section 115JB of the Act in the Final Assessment Order is deleted.
TDS u/s 194H - Disallowance of discount extended to Pre-paid Distributors u/s 40(a)(ia) - discount extended represented the difference between the Maximum Retail Price (MRP) of the talk-time & pre-paid connections; and the price at which these were transferred to the Pre-paid Distributors - AO treated the arrangement between the Appellant and Pre-paid Distributors as a ‘Principal to Agent’ arrangement instead of ‘Principal to Principal’ arrangement as claimed by Appellant on the basis of certain clauses of the agreement pertaining to exclusivity, right to inspect, etc. - HELD THAT:- We find that identical issue has been decided by the Mumbai Bench of the Tribunal in the case of the Appellant for the Assessment Year 2009-10 [2024 (1) TMI 991 - ITAT MUMBAI] Concluded that tax was not required to be withheld u/s 194H of the Act from the upfront discount offered to Pre-paid Distributors, and consequently, no disallowance could be made under Section 40(a)(ia) of the Act for failure to deduct tax at source. Thus disallowance made u/s 40(a)(ia) of the Act in respect of discount extended to Pre-paid Distributors is deleted.
Disallowance of depreciation on 3G Spectrum - Since the right to use 3G spectrum did not itself entitle a company to provide telecom services for which a telecom license was required, the Appellant treated such right as an 'Intangible Asset' for the purpose of Section 32 of the Act and accordingly, tax depreciation per the prescribed rate was claimed on such capitalized cost - HELD THAT:- For the Assessment Year 2011-12 [2024 (5) TMI 1490 - ITAT MUMBAI] the depreciation in respect of spectrum charges as claimed by the Appellant was allowed by the Assessing Officer. Subsequently, order of revision was passed under Section 263 of the Act on the ground that depreciation in respect of the 3G spectrum charges was incorrectly allowed to the Appellant by the Assessing Officer and that the Appellant could only be allowed the benefit of amortization. In appeal preferred against the aforesaid order passed under Section 263 of the Act for the Assessment Year 2011-12, the Mumbai Bench of the Tribunal concluded that depreciation in respect of 3G spectrum charges was correctly allowed by the Assessing Officer vide. Vodafone India Ltd. Vs. Principal Commissioner of Income Tax-8 [2020 (8) TMI 954 - ITAT MUMBAI]
Thus, we direct the AO to allow depreciation in respect of the 3G spectrum charges capitalize by the Appellant under Section 32(1)(ii) of the Act.
TP Adjustment made in respect of the payment of brand royalty for obtaining the right to use of Vodafone trademark and trade name - HELD THAT:- we note that during the course of hearing the Appellant had filed a fresh benchmarking study as per the directions of the Tribunal. The Revenue has again objected to the selection of comparables by the Appellant. Further, it was also contended on behalf of the Appellant that the corroborative benchmarking using Transaction Net Margin Method has also not been considered either by the TPO or DRP.
Given the aforesaid factual matrix and keeping in view the fact that for the Assessment Years 2011-12 and 2012-13 the issue of benchmarking of the royalty transaction has been remanded back to the file of the TPO/AO we deem it appropriate to remand this issue back to the file of TPO / AO with the directions to decide the issue of transfer pricing adjustment in relation to international transaction of royalty payment afresh after granting the Appellant reasonable opportunity of being heard.
Appellant is directed to file before the TPO/AO such documents/details/report as the Appellant may deem fit to support the contention that the royalty payment made by the Appellant to its AE are at arm’s length while the TPO is directed to examine the same afresh for determining the ALP and consequent transfer pricing adjustment, if any, as per law.
TP adjustment pertaining to reimbursement of expenses - HELD THAT:-We deem it appropriate to grant to the Appellant another opportunity to substantiate its claim that the INR 7,09,65,777/- were incurred in relation to the employees deputed with the Appellant and that the same, having being recovered on cost to cost basis from the Appellant, was at arm’s length. The Appellant is directed to furnish relevant documents/details to substantiate its claim.
TPO/AO shall grant reasonable opportunity of hearing to the Appellant and shall decide the issue in accordance with law after taking into consideration the details/documents furnished by the Appellant and as per the directions issued by the Tribunal in the case of the Appellant for the Assessment Year 2008-09 [2023 (5) TMI 576 - ITAT MUMBAI].
Non-grant of additional credit of TDS as claimed by the Appellant on the basis of TDS Certificates filed during the course of assessment proceedings - AO is directed to grant credit of tax deducted at source as per law after verifying the claim of additional TDS Credit made by the Appellant during the assessment proceedings. Thus, Ground raised by the Appellant are allowed for statistical purposes.
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2024 (11) TMI 1091
Revision u/s 263 - assessment order was passed without verifying the allowability of the cost of improvement as per Section 55(1)(b)(2) and the failure to conduct this inquiry rendered the order erroneous and prejudicial to the interests of the Revenue - assessee’s claim for the cost of improvement is allowable u/s 55(1)(b)(2) as the expenses incurred were of a capital nature - HELD THAT:- Capital expenditure u/s 55(1)(2) must be incurred to enhance or improve the value of the property. Such expenditure must be distinguishable from revenue expenditure (e.g., repairs or maintenance), which is generally allowable as a deduction from other heads of income, such as "Income from House Property" or "Business Income."
The property in question was purchased by the assessee in FY 2002-03 and was sold in FY 2018-19. Assessee claimed a cost of improvement incurred in FY 2008-09, consisting of interior work, kitchen appliances, plywood flooring, and tiles. These items are typically considered capital in nature as they add permanent value to the property and are incurred to improve the property’s condition.
Assessee also submitted a valuation report from an independent valuer who personally inspected the property and provided a detailed breakdown of the improvements made. Expenditure was supported by bank statements showing payments made through the banking channel, which the AO examined. As evident from the assessment order that the AO exercised his judicial discretion and adopted a plausible view based on the material on record - AO was satisfied with the evidence submitted and did not find it necessary to call for further documentary proof, such as bills or vouchers, for expenses incurred 14 years ago.
CIT, in his order u/s 263 emphasized that the AO should have conducted a more in-depth inquiry into the cost of improvement, especially by asking for bills and invoices.
CIT cited Explanation 2 to Section 263 of the Act, which allows revision of an order that is passed without proper inquiry or verification. However, it must be noted that Section 263 cannot be invoked merely because the AO did not carry out the inquiry in the manner the CIT would have preferred.
AO had asked for the necessary documents to substantiate the assessee’s claim and, after considering the bank statements and the valuer’s report, came to a reasoned conclusion.
As in the case of Sourabh Sharma [2024 (2) TMI 660 - ITAT JAIPUR] held that if the AO conducts adequate inquiries and adopts one of the possible views, the CIT cannot substitute his own opinion u/s 263 - In the present case, the AO's acceptance of the cost of improvement was a possible view based on the material provided by the assessee, and the CIT’s revisionary jurisdiction cannot be invoked simply because the inquiry was not conducted to his satisfaction.
We find that the AO conducted adequate inquiries into the assessee’s claim for the cost of improvement and took a plausible view based on the documents submitted, such as the valuation report and bank statements.
Assessee’s claim for the cost of improvement is allowable u/s 55(1)(b)(2) of the Act, as the expenses incurred were of a capital nature. The revisionary proceedings u/s 263 of the Act were unjustified, as the AO’s order was neither erroneous nor prejudicial to the interests of Revenue. Accordingly, we quash the revisionary order passed by the learned CIT u/s 263 of the Act, and the appeal of the assessee is allowed.
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2024 (11) TMI 1090
Rejected registration u/s 12AB - Whether any object of the trust has been found to be profit making? - HELD THAT:- CIT(E) relied on decision in Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] wherein it was clarified that the assessee advancing general public utility cannot engage itself in any trade, commerce or business or provide service in relation thereto for any consideration.
Section 2(15) of the Act defines “charitable purposes”. Appellant has pointed out that in the MOA/deed, it has been specifically mentioned that the activities or objects of the trust specified therein would not be to earn profit.
In India Trade Promotion Organisation [2015 (1) TMI 928 - DELHI HIGH COURT] while upholding the constitutional validity of the proviso to section 2(15) of the Act held that same would apply where the dominant intention of a trust or the institution is profit making.
Here, nothing has been brought to our notice from the side of the department to suggest that any of the objects of the trust was found to be profit oriented/making.
Whether any activity was conducted by the trust against its objects? - The events were organized by Ms. Ritu Agarwal, it cannot be said that any activity was conducted by the applicant trust against its objects, particularly, and when Learned CIT(E) has clearly mentioned in para 3.2 of the impugned order that no expenses are shown to have been incurred on the said activity, as per Income and Expenditure Account statements submitted before him. This supports the contention raised by the applicant trust that it did not conduct any such activity.
We find that CIT(E) fell in error in arriving at the conclusion that activities of the applicant trust were found to be not in accordance with its objects.
As a result, the impugned order deserves to be set aside. Accordingly, this appeal is disposed of and the impugned order rejecting prayer of the applicant trust seeking registration u/s 12AA is set aside. CIT(E) to do the needful for registration of the applicant trust in accordance with law.
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2024 (11) TMI 1089
Disallowance of expenses being relatable to exempt income by invoking the provisions of section 14A r.w.s. 8D(ii) - as argued provisions of section 14A of the Act does not apply to the case of assessee as it is in the banking business and the exempt income is business income from banking as the assessee has kept these shares/investments as stock in trade - HELD THAT:- After hearing rival contentions and considering the ratio of the aforesaid decision of Hon’ble Supreme Court in the case of South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] we hold that the provisions of section 14A of the Act would not attract to such income and such income is held by bank being shares and securities as ‘stock-in-trade’.
In case, stock-in-trade are held as investments then the provisions of section 14A of the Act will apply. Since there is no finding in the order of AO or CIT(A) that the shares and securities held by assessee bank as stock-in-trade and not investment, we principally agreeing with the argument of assessee that this issue is covered but for verification purpose, we remit this issue back to the file of the AO. The AO is directed to first give a finding as regards to the fact that these shares and securities are held as ‘stock-in-trade’ or as ‘investment’ in assessee’s bank balance sheet and in case, these are held as investment, the AO will recompute the disallowance by applying the provisions of section 14A r.w.rule 8D of the Rules as per law after considering the facts and circumstances of the case. Accordingly issue of assessee’s appeal is allowed for statistical purposes.
Disallowance of loss on treasury investments being mark-to-market loss - HELD THAT:- As assessee stated that this has been accepted by the AO while framing assessment for the assessment year 2017- 18 and for the purpose of consistency also this should have been accepted by the AO once he accepted the income on the same concept or principle. We noted that this issue stands covered by the decision of Lakshmi Villas Bank Ltd. [2006 (2) TMI 99 - MADRAS HIGH COURT] and it is the case of valuation of investment at cost or market value whichever was lower and the difference arising as a result of valuation has to be allowed to the assessee either as loss or income. Hence, we find that the assessee’s claim is perfectly alright and hence, the order of AO and that of the CIT(A) is reversed and the claim of assessee is allowed. This issue of assessee’s appeal is allowed.
Disallowance of deduction claimed on account of interest on delayed payment of service tax - HELD THAT:- As relying on decision of Vegetable Vitamin Foods Co.(P) Ltd. [1994 (3) TMI 60 - BOMBAY HIGH COURT] wherein it is held that the deduction claimed u/s. 37(1) of the Act can be allowed being payment made by way of interest on delayed payment of sales tax being purely compensatory in nature and not penal in nature. Thus, we allow the claim of assessee and hence, this issue of assessee’s appeal is allowed.
Claim of amortization of premium on HTM securities - deduction for perquisite charged in the hands of employees on exercise of ESOPS - HELD THAT:- As we are of the view that all the details and facts are available but none of the authorities below i.e., the AO or CIT(A) has not considered this claim. We admit these two claims and the finding of the AO and CIT(A) on these two issues are set aside and matter remanded back to the file of the AO for adjudicating the same on merits. The AO will adjudicate these two claims after examining the facts and legal position and accordingly, decide these two claims. These two issues are allowed for statistical purposes.
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2024 (11) TMI 1088
Import of “Roasted areca nuts” from Indonesia - Classification of imported areca nuts are "roasted" or "raw." - As per the Advanced Ruling Authority, if the moisture content of the areca nuts is between the range of 10% and 15%, it would be considered as “raw areca nuts”, whereas, if the moisture content is below 10%, it would be considered as “roasted areca nut” - HELD THAT:- As per the answers received from the Farmers, who are cultivating the betel nuts (areca nuts) and doing the process of roasting the same, it appears that if the areca nuts are not dried (fruits before peeling) or roasted (after peeling), the same will get affected with fungus. Further, it was informed by the farmers that once the raw areca nuts (before its ripening stage) are peeled out and kept for more than a week, the same will get spoiled and will not become viable to sell it commercially. Hence, in the case of “raw areca nuts”, it is clear that the same cannot be imported unless and otherwise it is “boiled” or “roasted”. In this case, the Lab reports had made it clear that the said Labs have witnessed the burning smell while testing the imported areca nuts, which ultimately proves that the said imported areca nuts are “roasted”.
In this case, though the goods were imported an year ago, still it had not lost its originality and it is in good condition, which ultimately shows that the imported goods are “roasted areca nuts”.
Thus, this Court is of the considered view that as per the parameters determined by the Advance Ruling Authorities and taking into consideration of other aspects as discussed above, the areca nuts, imported by the petitioners, will squarely fall within the parameters of “roasted areca nuts”.
The respondent had failed to consider the aspects, which were discussed above, and passed the order-in-original without even considering the order passed by this Court in M/S. SHAHNAZ COMMODITIES INTERNATIONAL P. LTD., M/S. NEENA ENTERPRISES, M/S. UNIVERSAL IMPEX [2023 (8) TMI 492 - MADRAS HIGH COURT] whereby the order of the Advance Ruling Authorities was confirmed. Therefore, the impugned order passed by the respondent is liable to be set aside. Accordingly, the impugned order passed by the respondents is set aside.
In view of the above, this Court directs the respondents to release the areca nuts, imported by the petitioner, within a period of 2 working days from the date of receipt of copy of this order. Further, since the fault is purely on the part of the respondents, they shall release the goods without any demurrage charges. In this regard, the respondents are directed to issue a detailed certificate for waiver of demurrage and container charges.
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2024 (11) TMI 1087
Demand in respect of imports - demand for IGST @ 18% and imposed penalty and interest under Customs Act, 1962 - HELD THAT:- As submission of the petitioner has been considered and appropriate decision has been arrived by the respondents rejecting the objection of the petitioner. Therefore, the invocation of Article 226 of the Constitution of India is not available to the petitioner. The petitioner has to file a Statutory Appeal before the Appellate Commissioner under Section 128(1) of the Customs Act, 1962.
This Writ Petition is dismissed. However, liberty is given to the petitioner to file a Statutory Appeal before the Commissioner of Customs (Appeals) within a period of 30 days from the date of receipt of a copy of this order. In case, such appeal is filed, the Appellate Commissioner shall consider the same and dispose it on merits and in accordance with law.
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2024 (11) TMI 1086
Provisional attachment of Bank account - Legality and validity of the action of the respondents in freezing the bank account of the petitioner - HELD THAT:- Without there being any proceedings pending under the Act, the power of attachment could not be exercised on stand alone basis.
In the present case, the exercise of power, if we may say so, is in violation of the statutory mandate, as referred under subsection 5 of Section 110 of the Act. The petitioner has assailed validity of communication made by the respondent-authorities to the bank. A perusal of the said communication shows that it contains nothing much less an opinion based on any tangible material to the effect that it has become necessary to freeze the bank account for the purpose of either protecting the interest of revenue or preventing smuggling. The text and tenor of the order is merely a communication and not an order in writing, which is mandated under the law.
Though, the petitioner terms it as an order, in our considered opinion, it does not fulfill any legal requirements of an order. It is merely a communication addressed to the bank. The order was required to be in writing and that too recording opinion, as envisaged under the law. In the absence of all those things, communication is merely a communication and not an order at all.
We are unable to accept the submission of custom department that while passing the order of provisionally freezing the bank account at the first instance, there is no legal requirement of passing an order. This argument is completely against not only the letter but also spirit of law.
The expression "order in writing" preceding the expression "provisionally attach any bank account for a period not exceeding six months" clearly shows that the order of provisional attachment has to be by an order in writing and not by other mode. It is well settled principles of law that when power is required to be exercised in a particular manner, as provided under the law, it has to be exercised in that manner alone and not otherwise.
The argument that the opinion formed by the authority which may have contained the records and files, is substantial compliance of requirement of law, cannot be accepted. It is not the language of the statue that only recording of opinion is enough. Use of expression "by order in writing", reflects the necessity to regulate the exercise of power. Requirement of passing an order in writing is not an empty formality but such provisions have been made by the statue to militate against arbitrary or malafide exercise of power.
Once the Court holds that the first action of freezing of account, as communicated to the bank vide order dated 14.03.2024 itself was in breach of law, there is no question of extending any illegal order. Therefore, all subsequent action which has been taken on the basis of the impugned action and order of the respondents must also go.
In the result, the petition is allowed. The action of the respondents in freezing the bank account of the petitioner is held illegal and inoperative in law. The result would be that the bank account of the petitioner shall forthwith be released and the petitioner is allowed to operate the account.
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2024 (11) TMI 1085
Seizure of gold at Railway Station - show cause notice was issued based upon the statement of the co-noticee that the goods so seized were of foreign origin and are being illegally imported into the country - HELD THAT:- It is an admitted fact that this gold was having no foreign inscription or embossment or marking and were not having purity of 99.9% and were sized vide seizure memo.
Thereafter, the Panchnama was also drawn in the presence of Panchayat and the statement of co-noticee/Shri Rajendra Mishra was recorded, who stated that the gold does not belong to him and the same belong to M/s Ashish Ornaments House. Shri Ashish Kumar Agarwal and Shri Pradumanji Agarwal, the owner of M/s Ashish Ornaments House.
In terms of Section 110 (1) of the Customs Act, 1962, the gold can be seized if the proper officer have reasoned to believe that the gold are liable for confiscation under the Customs Act, he may seize the gold, but in the seizure memo, nowhere it is mentioned that he has a reasonable belief that the gold seized in question on reasonable belief is liable for confiscation.
We rely on the Board’s Circular No.1/2017-Cus dated 08.02.2017, which prescribed that whenever the goods are being seized in addition to Panchnama, the proper officer must also pass an appropriate order (seizure memo/order/etc.) clearly mentioning the reasons to believe that the goods are liable for confiscation.
In the seizure memo, nowhere it is mentioned that the proper officer is having reasoned to believe that the seized gold with reasonable belief is liable for confiscation. In that circumstances, the seizure is not legal. In Panchnama also, the gold has been seized, but nowhere it is mentioned that the proper officer is having with reasonable belief that the gold in question is liable to confiscation. In that circumstances, the gold cannot be seized.
It is not a case of seizure of gold at Port, Airport or International Border having any inscription/marking or embossment to believe that it is of foreign made and the purity is also less than 99.9%. In that circumstances, the benefit of doubt goes in favour of the appellants and the gold in question cannot he seized.
Thus, the appellant who claimed the owner of the gold, has produced the documents of procurement thereof and those documents are found to be genuine. Revenue has not adduced any documentary evidences that the gold in question has been illegally imported.
Thus, the gold in question cannot be held liable for confiscation. Accordingly, the same is to be released., no penalties are imposed on the appellants.
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2024 (11) TMI 1084
Seeking an injunction restraining infringement of copyright, piracy of registered design, passing off etc. - whether the filing of a design infringement action could constitute an anti-competitive practice or vexatious/sham litigation, so as to lead to a conclusion that the Plaintiff in the infringement action in the original suit has engaged in abuse of dominance? - HELD THAT:- The potential for the CCI to continue an inquiry after a settlement has been reached, could even jeopardize the settlement, dissuading parties from opting for mediation in the first place. It could lead to a lack of trust in the mediation process, as parties may fear that their efforts to settle disputes amicably would be disregarded. Moreover, settlements in general being agreements voluntarily agreed to between parties, unless there is an extraordinary situation, they cannot be permitted to be reopened – so as to ensure ‘FINALITY’ and ‘CLOSURE’. Furthermore, the threat of continued investigations by the CCI could compel parties to engage in prolonged and costly legal battles, defeating the purpose of settlements.
The question whether JCB’s stance is misleading or not would have been for the High Court to decide, not the CCI. Thereafter, the Information makes an reference to the ad-interim injunction dated 25th November, 2011 granted by the Delhi High Court. The allegation is that the litigation in itself is an overall diabolical and insidious strategy and is a misuse of judicial process. In the entire Information, the repeated allegations are of abuse of judicial process and regulatory process. Details of various hearings in the Delhi High Court are set out in the Information. The consequences of the litigation are set out in the Information and it is argued that JCB abused its dominance in view of the said litigation, which is termed as a ‘predatory litigation’ - No issues regarding anti-competitive practices were also raised in the information, apart from the allegation of abuse of dominant position in the garb of filed injunction suit and being lead players in the market.
In the present dispute also the substratum of the dispute being the design infringement action filed by JCB for protection of its registered designs, the said suit having itself being settled, in the opinion of this Court, the CCI proceeding cannot continue and deserves to be disposed of - This is in line with the decision of the Division Bench in Telefonaktiebolaget LM Ericsson (PUBL) v. Competition Commission of India & Anr. [2014 (1) TMI 1954 - DELHI HIGH COURT] where the Court categorically holds that once the settlement is reached, the substratum of the proceedings itself no longer exists.
The settlement dated 22nd July, 2021 is taken on record. The impugned order dated 11th March, 2014 under Section 26(1) of the Act is set aside. The proceedings before the CCI in Case No. 105/2013 are accordingly terminated. The order dated 17th September 2014 passed by the ld. Metropolitan Magistrate is also set aside. Any material seized by CCI shall not be used in any other proceedings and be returned to JCB - the application is allowed.
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2024 (11) TMI 1083
Oppression and mismanagement under Sections 241 and 242 of Companies Act, 2013 - seeking a waiver for initiation of the proceedings under Section 244(1)(b) of the Companies Act, 2013 - HELD THAT:- The intention of legislature by introducing the proviso to Section 244 of the Companies Act, to grant a waiver is by way of an exception to the general law. It is not a waiver by conduct or by way of a right. Waiver herein would mean that a person is granted an exemption, in special circumstances from satisfying the pre-established conditions for instituting a judicial proceeding. In that eventuality, the concept of waiver under the proviso to Section 244, has to be strictly and rigidly followed, as it is a waiver by implication of law, which is carving out an exception, to the general provision to litigate, for the reason being that, if the said waiver is not granted, it would amount to that, the apparent legal disabilities to initiate the proceedings, were declined to be granted, due to non-satisfaction of the mandatory pre-conditions contained under Section 244 for initiating proceedings under Section 241 and 242.
In this eventuality in the instant case, where the appellant has sought a waiver, by placing his case under Section 244 of the Companies Act, there has had to be an incidental consideration of, as to what would be the elements which would be required to be satisfied to permit the appellant to initiate proceedings under Section 241 of the Companies Act, against the respondents.
In the instant case, since the waiver is a concept, added by the proviso to Sub-Clause (b) of Sub-Section (1) of Section 244, the philosophy of waiver shall not be read in exception to the principle provision, but it should be read as to be in addition to qualifying the conditions of the principal provisions of law. At times, the concept of waiver is under either of the circumstances, that, waiver by conduct or waiver by prescription of law. It normally resembles as to be a form of election of a right, but that may not be the case at hand, it is rather not an election, but rather a grant of a right claimed by attracting the proviso, and once it overrides or attempts to or intends to override the principal provision, a very rigid attitude has to be adopted for granting a waiver and that too particularly, when in the instant case where a right to proceed under section 241 was being sought by only one member of the club, that is the appellant herein, which is nowhere near to the prescribed strength of 1/5th of the total number of members as contemplated under Sub-Clause (b) of Sub-Section (1) of Section 244.
The Hon’ble Apex Court, as back as in 1965 in a matter reported in S. P. Jain versus Kalinga Tubes Limited [1965 (1) TMI 17 - SUPREME COURT], had an occasion to deal with the precepts of “oppression” and in the said matter the Hon’ble Apex Court was dealing with Section 153C in relation to The Indian Companies Act, 1913 and Section 397 in relation to the Companies Act of 1956. The Hon’ble Apex Court had elaborately dealt with as to what would the term ‘oppression’ would actually mean.
The Tribunal has taken a view that, a waiver under the proviso could not be granted, because none of the other members have ever raised any grievances and since the proceedings under section 244 was sought by only one member in a company limited by guarantee the waiver under the proviso was denied. The proviso of Section 244 Sub-Section (1)(b) provides that “provided that the Tribunal ‘may’ on an application made to it in its behalf, waive all or any of the requirements specified in Clause (a) or Clause (b), so as to enable the member to apply under Section 241”. The use of word ‘May’ is directory in nature.
The waiver sought for, under the proviso is not an absolute waiver, which could be granted by the Tribunal as a matter of course because that would always depend upon the facts and circumstances of each case and grant of such waiver will be only when there is a strong case made out and not merely based on self-generated allegations. Further in the instant case the appellant has already instituted two Civil Suits, on the same subject matter, as it has been pleaded in his application under Section 244(1) and therefore the waiver has rightly been rejected.
There are no merit in the appeal - appeal dismissed.
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2024 (11) TMI 1082
Exclusion of commercial spaces from the assets of the Corporate Debtor - owners of the units allotted, on the basis of allotment of commercial spaces by the CD - dissenting Financial Creditors - entitlement for the amount as per Section 30, sub-section (2)(b) of IBC - sufficient grounds to interfere with the order passed by the Adjudicating Authority, approving the Resolution Plan.
Whether the units allotted to commercial space buyers (the Appellant(s) herein), required to be excluded from the assets of the Corporate Debtor? - Whether the Appellant(s) on the basis of allotment of commercial spaces by the CD, by virtue of Lease Deed dated 24.12.2014 in respect to Appellant, the Appellant(s) are owners of the units allotted to them? - HELD THAT:- The Hon’ble Supreme Court had occasion to consider a homebuyer’s project in Jaypee Kensingston Boulevard Apartment Welfare Association & ors. Vs. NBCC (India) Ltd. & Ors. [2021 (3) TMI 1143 - SUPREME COURT], where Hon’ble Supreme Court has held that Resolution Plan has to comprehensively deals with all the assets and liabilities of the Corporate Debtor and no housing project could be segregated for the reason that the same has been completed or is nearing completion.
Thus, by virtue of allotment of commercial space in favour of the Appellant(s), including the Lease Deed dated 24.12.2014, the Appellant(s) cannot claim to have become owners of the commercial spaces. The CD continues to own the assets and the plea of the Appellant(s) that assets be excluded from CIRP of the CD, or the Appellant(s) are owners of the commercial space/ units allotted to them, cannot be accepted.
Whether the Appellant(s) being dissenting Financial Creditors, entitled for the amount as per Section 30, sub-section (2)(b)? - Whether the Appellant(s) had made sufficient grounds to interfere with the order dated 30.10.2023 passed by the Adjudicating Authority, approving the Resolution Plan submitting by the SRA? - HELD THAT:- As per Resolution Plan and the order passed by the Adjudicating Authority, the commercial space buyer are entitled for 100% of their principal amount with alternate option for commercial space buyers. Thus, as per the Resolution Plan, the Appellant(s) are entitled either to opt for 100% refund of the principal amount within 90 days or to opt for an alternate option for commercial space, which is part of Resolution Plan. Thus, the Appellant(s) under Section 30, sub-section (2)(b) were entitled for only liquidation value, which according to the Resolution Plan is ‘zero’. However, the SRA having offered 100% refund of the principal amount with alternative proposal for commercial space, the entitlement of Appellant(s) as per the Resolution Plan is of 100% refund of the principal amount or the option for alternate commercial space.
The law with regard to interference with the commercial wisdom of the CoC approving the Resolution Plan is well settled. The limited ground on which the Adjudicating Authority or the Appellate Tribunal can interfere with the approval of the Resolution Plan is only to examine as to whether the Resolution Plan is in compliance of Section 30, sub-section (2) of the IBC. The present is not a case that Appellant(s) have pleaded or proved any ground that Resolution Plan is in violation of provisions of Section 30, sub-section (2) (b) - the payment offered to the Appellant(s) in the Resolution Plan, does not violate the provisions of Section 30, sub-section (2) (b) - there are no ground to interfere with the order dated 30.10.2023 passed by Adjudicating Authority approving the Resolution Plan. The question is answered accordingly.
Whether rejection of IA 3524 of 2020, filed by the Appellant of Company Appeal (AT) (Ins.) No.61 of 2024 and the rejection of IA No.4369 of 2022 and 5253 of 2023 filed by the Appellant(s) of Company Appeal (AT) (Ins.) No.45 of 2024 deserve to be interfered with? - HELD THAT:- The prayer of the Appellant to exclude the commercial space from the Resolution Plan, could not have been accepted, nor any direction could have been issued for registration of Sale Deed. The claim, which was submitted by the Appellant was admitted in the CIRP. In the Appeal filed by Nupur Garg, at Annexure A-10, the list of financial creditors in the class of commercial space buyers has been annexed at page 175, which include the amount of claim submitted and amount of claim admitted by the RP - There has been no consideration of the claim of the rent by the Appellant from July 2019, which was one of the prayers made in the application, we are of the view that ends of justice will be served in granting liberty to the Appellant to file an appropriate application for claim of rent subsequent to commencement of CIRP. It shall also be open for the Appellant to claim the said rent as CIRP cost. However, no concluded opinion expressed for the said claim and it is for the Adjudicating Authority to consider and take appropriate decision.
The order of the Adjudicating Authority upheld - appeal dismissed.
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2024 (11) TMI 1081
Rejection of refund of amount pre-deposited u/s 35F of the Central Excise Act, 1944 - petitioner had earlier suffered an adverse order whereby the service tax demand was confirmed on the reimbursable expenses which was corrected/allowed by CESTAT - HELD THAT:- As per impugned order passed rejecting the claim of the petitioner clearly indicates that the petitioner has not produced any documents to substantiate the tax that was paid on the reimbursable expenses. The claim has not been substantiated by the petitioner.
Under the circumstances, no merits in challenge the impugned order. However, one opportunity can be given to the petitioner to produce the documents before the respondents to substantiate that petitioner was indeed entitled for refund of the amount paid by the petitioner.
The impugned order is quashed and the case is remanded back to the respondent to pass a fresh order. It is made clear that, it is the last opportunity to the petitioner to substantiate his claim. Since the impugned order was passed in the year 2019, the respondent shall pass order as expeditiously as possible preferably within a period of six months from the date of receipt of copy of this order. Petitioner is directed to cooperate with the respondent.
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2024 (11) TMI 1080
Refund claim on ocean freight - non taxability of service of ocean freight covered by judgment of SAL Steel Limited [2019 (9) TMI 1315 - GUJARAT HIGH COURT] on the ground that the matter is pending before the Supreme Court - HELD THAT:- Since the service of ocean freight was held by the Hon’ble Jurisdictional High Court of Gujarat[supra} as unconstitutional and appellant was not liable to pay service tax on ocean freight, they are eligible for refund claim without following the refund process under Notification No.12/2013-ST.
Revenue’s contention that the Revenue’s appeal is pending before the Hon’ble Supreme Court in the case of SAL Steel Limited [supra] Hon’ble Supreme Court decision in the case of Union of India vs. Mohit Minerals Pvt. Limited [2022 (5) TMI 968 - SUPREME COURT] as find that there is no stay against the said High Court judgment. In view of this position, I find no infirmity in the impugned order which was passed relying on the jurisdictional High Court judgment in the case of SAL Steel Limited. Accordingly, following the Hon’ble Gujarat High Court decision in the case of SAL Steel Limited, the impugned order is upheld and the Revenue’s appeal is dismissed
Thus, as the ocean freight is not liable to service tax, appellant is eligible for the refund only on the ground of the non taxability of the ocean freight itself. Appellant is eligible for the refund.
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2024 (11) TMI 1079
Clandestine removal - allegation of shortage of raw material for clearance of the finished goods - Procedural lapses in investigation and stock verification or not - Revenue submits that the respondent, since initiation of the investigation, has only tried to hide their incriminating activities by citing the shortcomings of the Departmental officers and have tried to divert the entire attention towards the allegedly procedural lapses during the investigation - HELD THAT:- It is an admitted position that the investigation which has been carried out, lacks the following of proper procedure. To allege clandestine removal of goods, proper procedure was required to be followed. During the course of investigation, it is a position on the record, that physical verification of the stock was not done; it was only done on eye-estimation basis and the alleged shortage of raw material has not been supported by any tangible evidence.
Although allegation of clandestine clearance thereof has been raised by the investigating team, the suppliers of raw material were examined and no discrepancies could be found in the raw materials supplied to the respondent. Before adjudication, the adjudicating authority had sought a report from the jurisdictional Range Officer, who had also not found any discrepancy in the activity of the respondent - Moreover, it has been alleged that the respondent has manufactured the final product and cleared the same clandestinely, but while doing so, the Revenue on the one side alleges that there was a shortage of raw material and on the other side, alleges clandestine clearance of finished goods, all the while without bringing any evidence on record to show as to from where the respondent procured raw materials to manufacture the goods which were alleged to have been cleared clandestinely. The investigating team has not alleged any excess consumption of electricity, shown as to how the goods were transported or as to how much labour was employed.
The observations made by the ld. adjudicating authority in the impugned order agreed upon. It is also seen that no tangible evidence in support of the allegation of shortage of raw material for clearance of the finished goods has been brought on record by the Revenue, other than the statement recorded during the investigation of Shri Munnoo Prasad Jaiswal, the authorized signatory of the respondent.
The charge of clandestine removal of the goods and shortage of raw materials is not sustainable - There are no infirmity in the impugned order and the same is upheld - the appeal filed by the Revenue is dismissed.
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