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2024 (11) TMI 982
Classification of goods - Biovita - to be classified under heading 3101 0099 or under Central Excise heading as 3105 of Central Excise Tariff? - HELD THAT:- A perusal of show cause notice shows that it relies on the CBEC Circular 1022/10/2016-CX dated 06.04.2016. The said circular prescribed that micronutrient could not be classified under Chapter 31 as ‘fertilizer’. It also relies on the fact that the appellants had in the month of July 2015 themselves classified the goods under Central Excise Tariff Heading 3808 and in the months of June, August, September-2015 classified the product under Central Excise Tariff Heading 3105 as per directions of M/S. P.I. INDUSTRIES LIMITED (FORMERLY M/S. ISAGRO (ASIA) AGROCHEMICALS PVT. LTD.) ; M/S. AGRO PACK; SHRI PARTH H. PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, SURAT-II, SURAT [2024 (9) TMI 1655 - CESTAT AHMEDABAD (LB)] the principal manufacturer. It is noticed that subsequent to the impugned order, the issue regarding classification of goods between Chapter 31 and Chapter 38 was referred to the Larger Bench in the case of PI Industries (the Principal Manufacturer itself).
It is seen that while the products in the instant case are not identical but similar in nature, therefore, the principles laid down by Larger Bench of Tribunal in the case of PI Industries would equally apply to the product in the instant case.
In view of above, the impugned order is set aside and matter remanded to the original adjudicating authority for fresh decision in the light of observations made by Larger Bench in the case of PI Industries.
Appeal is allowed by way of remand.
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2024 (11) TMI 981
Allowing the claim of second sale exemption contrary to established facts that the so-called sellers were either non-existent or had not handled the goods - Deletion of consequential penalty under Section 12(5)(iii).
Whether the Tribunal was legally right in allowing the claim of second sale exemption despite the sellers being non-existent or not having handled the goods? - HELD THAT:- When the burden was on the dealer to prove the factum of second sale, the respondent had not discharged the burden of proving the actual first sale, for him to successfully claim the exemption on the ground of second sale. The Tribunal had erroneously shifted the burden from the dealer to the revenue, which is against Section 10 of the Act and had come to the conclusion that the revenue had not established by proving that the purchase of the respondent was a first sale.
Similar issue in M/S. MKR CASHEW EXPORTS VERSUS THE SECRETARY, TAMILNADU SALES TAX APPELLATE TRIBUNAL (MB) , CHENNAI, THE DEPUTY COMMERCIAL TAX OFFICER, PANRUTI (RURAL). [2024 (8) TMI 1485 - MADRAS HIGH COURT] where the dealer was not able to prove the factum of first sale to claim the exemption on the ground of second sale, as the burden of proof was on the assessee to prove the transaction.
Further, in A.S.Ganapathy Chettiar Vs. The State of Tamil Nadu [1976 (3) TMI 209 - MADRAS HIGH COURT], relied on by the learned Government Advocate for the appellant, the Division Bench of this Court has held that the burden of proving that there was an earlier taxable sale was on the assessee.
In view of the above decisions and the fact that the respondent dealer had failed to prove the transaction of the factum of first sale, the first question of law is answered in favour of the revenue and against the assessee.
Whether the deletion of the consequential penalty under Section 12(5)(iii) by the Tribunal is legally tenable? - HELD THAT:- In the instant case, the respondent had put forth a claim of second sales and further they submitted the documents, which on enquiry were found to be bogus and fictitious and the respondent had made no attempts to produce the documents through dealers before the authorities for confirmation of the alleged first sale. In view of our findings arrived at question No.1, the respondent, who is liable to pay tax had not filed any return for the assessment year 1982-83 and have wilfully suppressed taxable turnover and therefore, the Assessing Officer had rightly imposed the penalty under Section 12(5)(iii) of the Act - the decision of the Tribunal in deleting the penalty imposed by the Assessing Officer under Section 12(5)(iii) of the Act cannot be sustained. Under such circumstances, the second question of law is also answered in favour of the revenue and against the assessee.
The impugned order of the Tribunal is set aside and the assessment order as confirmed by the appellate authority stands restored - this Tax Case stands allowed.
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2024 (11) TMI 980
Jurisdiction of Micro and Small Enterprises Facilitation Council to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration - Validity of the "No Claim Certificate" issued by the supplier and its impact on the claims -
Jurisdiction of Micro and Small Enterprises Facilitation Council to refer the purported disputes obtaining between MRPL and Driplex for adjudication via arbitration - HELD THAT:- In the instant matter, MRPL and Driplex entered into an agreement on 01.12.2009. Driplex submitted a memorandum to register itself as a small enterprise under the 2006 Act on 09.12.2011. Concededly, Driplex completed its work and obtained a certificate from MRPL after registration under Section 8 of the 2006 Act i.e., only on 11.03.2013. Since Driplex had been awarded a turnkey contract, the work, quite naturally, would have continued even after it filed a memorandum i.e., obtained registration under the 2006 Act.
The judgment in Shanti conductors’ case [2019 (1) TMI 1906 - SUPREME COURT], which was rendered by a three-judge bench of the Supreme Court and concerned pari materia provisions contained in the 1993 Act tilts the balance in favour of Driplex as it, inter alia, holds that the applicability of the Act i.e., the 1993 Act would be determined on the date when the goods were supplied, and services were rendered and not the date when contract was entered into between the disputants.
It is noted that MRPL had filed a reply dated 20.02.2016 in which the jurisdictional issue appears to have been raised before the Council. This was clearly given up at the later stage as, concededly, this issue was not raised before the learned Single Judge - thus, the Council had the jurisdiction to refer the disputes under Section 18 of the 2006 Act to the arbitral tribunal.
Whether the present claims are tenable in the light of the No-Claim Certificate dated 25.09.2013 issued by the Claimant? - HELD THAT:- This area need not be delved upon since a petition preferred by MRPL under Section 34 of the Arbitration Act is pending adjudication.
Appeal disposed off.
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2024 (11) TMI 979
Levy of penalty for availing excess Input Tax credit - delay in filing the appeal by the petitioner - HELD THAT:- This Court allows the writ petition on the grounds that the delay in filing the appeal by the petitioner was due to an unavoidable personal circumstances, including the critical illness of her husband, which required extensive medical attention. The petitioner provided supporting medical documentation, but the Appellate Authority refused to condone the delay. This rigid approach fails to account for genuine extenuating circumstances, reflecting a lack of judicial empathy and an unreasonable interpretation of statutory time limits.
Given the petitioner's situation, this decision by the Appellate Authority to dismiss the appeal based solely on timing considerations was unduly harsh and legally unsound. Moreover, the petitioner’s right to further appeal has been obstructed by the non-formation of the GST Appellate Tribunal, effectively denying her a statutory right to a higher appeal.
In light of the procedural irregularities, the arbitrary nature of the actions and the statutory misapplication, this court finds the petitioner’s case to be meritorious. Accordingly, the writ petition is allowed, and the impugned orders dated May 24, 2024 is quashed. The petitioner’s rights under the WBGST Act, 2017, are restored, with all benefits that accompany this decision, without any adverse consequences arising from the annulled orders.
Application disposed off.
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2024 (11) TMI 978
Scope of Supply - GST on supply “agreed to be made” - Constitutional validity of Sections 7, 12, 13, and 16 of the CGST Act and corresponding MGST Act - Entitlement to Input Tax Credit (ITC) on receipt vouchers - the case of the petitioner is that the petitioner was precluded from availing of the Input Tax Credit (ITC) of the GST paid to L&T (its constituent) for the reason that Section 16 (2) (b) of the CGST and MGST Act provided that no ITC could be taken unless the service had been received - Refund of GST and ITC - HELD THAT:- It is not in dispute that for execution of the project work, purchase orders dated 23 March 2018 back-to-back with the Contract Agreement, were issued by the petitioner to its member, i.e. L & T. Reciprocally the constituent of the petitioner would raise bills on the petitioner for the portion of the work executed by it each month. In turn, the petitioner would raise a single consolidated invoice on the employer (MMRDA). On availing of these advances, the petitioner issued “advance receipt vouchers” to the MMRDA for both the first and second installment of the mobilization advance received by it. Such ‘advance receipt vouchers’ as issued/ executed by the petitioner in favour of the MMRDA, indicated several details inter alia the total amount of advance claimed before tax and the GST amounts payable on such advance and the total invoice value.
In State of M. P. Vs. Rakesh Kohli & Anr. [2012 (5) TMI 262 - SUPREME COURT], the Court was considering the challenge whether the High Court was justified in declaring Clause (d) of Article 45 of Schedule 1-A of the Indian Stamp Act, 1899 which was brought in by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 as unconstitutional being violative of Article 14 of the Constitution of India. In such context, the Supreme Court, not agreeing with the view taken by the High Court, held that the well defined limitation in the constitutional validity of the statute enacted by the Parliament or the State Legislature has not been kept in mind by the High Court.
On a plain reading of Section 7, the expression “supply” includes “all forms of supply of goods or services or both”, such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration (as defined under Section 2 (31)) by a person in the course or furtherance of business. It is well settled that every word as contained in the provision as used by the legislature, is required to be given its due meaning, so as to gather the object and intention behind the provision as intended by the legislature. In the context of Section 7 (1) (a), it is apparent that it inter alia includes “all forms of supply of goods or services or both”, of the nature as specified therein which are “made” or “agreed to be made” for a “consideration” by a person in the course or furtherance of business - Once the test in such form is satisfied in relation to the supply of goods or services, the levy of collection of tax under Chapter III and more particularly, Section 9 (charging section) would stand attracted. As to how the expression “in the course or furtherance of business” is legally understood and interpreted by the Courts can be discussed.
Adverting to the interpretation of the expression “in the course of business” and in the present context, an expression added to it namely of the words “in furtherance of business”, as used in Section 7 (1) (a) would necessarily mean that the supply is connected to or in relation to the activities in question or is the integral part of such activity. By applying such interpretation, it cannot be denied that once an advance was received by the petitioner in the course of or in furtherance of the contract in question, it would necessarily amount to a supply attracting payment of GST - the legislative intention behind Section 7 is quite clear that such composite contract would fall within the definition of supply as envisaged by Section 7 (1) (a).
The petitioner’s case challenging the vires of Section 12 and 13, is to the effect that these provisions are invalid and ultra vires as they apply to ‘supply agreed to be made’, for the reason that Article 246A applies only in respect of the ‘supply of goods or services’ and not in relation to supply “agreed to be made” - It is hence the petitioner’s case that once the actual supply itself is not made, there is no warrant for the levy in question either by virtue of the applicability of Section 7 read with Section 9 and Sections 12 and 13.
The petitioner merely referring to the provisions of Article 246A read with Article 366 (12A) of the Constitution which provide that the Parliament as also the State Legislature would be empowered to make laws in respect of goods and services tax to be imposed by the Union or a State, would be required to be interpreted in a broad sense. Thus, the Parliament as also the State Legislature were within their constitutional authority, to not only enact the provisions which are assailed by the petitioner, but also to prescribe / stipulate the manner and the method under which the scheme of the GST laws ought to work, in regard to the applicability of such provisions, was also the domain of the respective legislatures.
In the present case as contended on behalf of the petitioner, the provisions of Section 31 read with Rule 36 are being applied by the Revenue to deny the input tax credit to the petitioner on the ground that on account of lack of supply, no invoice was available or issued so as to entitle the petitioner to claim the input tax credit - the rigour and the mandate of sub-section (1) and (2) of Section 31 is not applicable to the operation of sub-section (3) which stands on its independent legs, when it recognises the tax paying documents as referred thereunder. In any event sub-section (3) of Section 31 is also required to be read in the context of the companion provisions namely sub-section (4), (5), (6) and (7). These provisions contemplate a variety of situations, even when at a belated stage, an invoice can be issued and which can be a situation of advance payment being received in relation to the transactions between the parties. Thus, Section 31 is required to be holistically read so as to make the provision meaningful and more particularly in the context in hand. For such reason, when the petitioner satisfied the requirements of Section 31 (3) (d) as also accepted by the revenue to be a tax paying document, it would not be correct in law that the petitioner is denied input tax credit, merely because the petitioner has not complied with the part of the provisions, namely sub-section (1) of Section 31 read with Rule 36.
The prayers of the petitioner challenging the constitutional validity and legality of Sections 7, 12, 13 and 16 (2) (b) of the CGST/MGST Act are rejected - It is declared that in the peculiar facts of the case on the basis of Receipt Voucher issued by L&T in favour of the petitioner, the petitioner was entitled to avail the Input Tax Credit under section 16 of the CGST/MGST Act.
Petition disposed off.
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2024 (11) TMI 977
Maintainability of the writ petition - Jurisdiction of SCN - quashing the exercise of the jurisdiction vested in this Court under Article 226 of the Constitution of India - challenge to Ext.P9 notification which relates to the rate of GST for commission received in terms of the provisions contained in Section 21(1)(b) of the Chit Funds Act, 1982.
Maintainability of the writ petition - HELD THAT:- The contention of the Senior Standing Counsel appearing for the respondents that this Court should not interfere with a show cause notice should be accepted in normal circumstances. However, where on admitted facts, the show cause notice is found to be without jurisdiction, it is not that an objection raised to the maintainability of the writ petition is sustainable. It is settled law that where the proceedings are challenged as being without jurisdiction, the availability of an alternate mechanism for resolution of disputes (here through adjudication of the show cause notice) is no ground for the Court to refuse to exercise jurisdiction.
The judgment of a Constitution Bench of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO and Anr, [1960 (11) TMI 8 - SUPREME COURT] is the authority for this proposition. When faced with an argument that the question as to whether re-assessment notices were properly issued under the provisions of Section 34 of the erstwhile Indian Income Tax Act, 1922 should not be investigated in a writ petition under Article 226 of the Constitution of India it was held 'We have therefore come to the conclusion that the Company was entitled to an order directing the Income Tax Officer not to take any action on the basis of the three impugned notices.'
In the facts of the present case, it is clear on the authority of the judgment of the Supreme Court in Oriental Kuries Limited [2019 (11) TMI 1818 - SUPREME COURT] and the provisions of Notification No.12 of 2017 that the issuance of a show cause notice alleging that the transactions, which are the subject matter of Ext.P1 show cause notice, should be subject to a levy of GST is clearly without jurisdiction. There are no disputed questions of fact.
The matter can be decided purely as a matter of law. Therefore, the fact that this writ petition has been filed challenging a show cause notice is no ground to refuse the exercise of jurisdiction under Article 226 of the Constitution of India.
Ext.P1 show cause notice is confined to the interest received from the defaulting subscribers. In such circumstances, for reasons indicated, it must be held that the amount of interest received by the foreman of a chit on defaulting subscriptions cannot be said to be amounts received as consideration for the supply of services.
It is declared that Ext.P1 show cause notice is issued without jurisdiction. It is accordingly quashed - this writ petition is allowed.
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2024 (11) TMI 976
Violation of principles of natural justice - notices were uploaded on the “view additional notices and orders” tab of the GST portal - the petitioner asserts that he was unaware of proceedings - HELD THAT:- On examining the impugned order, it is evident that the order pertains to discrepancy between the petitioner’s GSTR-3B return and the auto populated GSTR-2A and also reconciliation of turnover as per the Income Tax return and GSTR-3B return. It is also clear that the tax proposal was confirmed because the petitioner did not reply to the show cause notice. In these circumstances, albeit by putting the petitioner on terms, it is just and necessary that the petitioner be provided an opportunity to contest the tax demand on merits.
The impugned order dated 9-8-2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is directed to submit a reply to the show cause notice - petition disposed off.
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2024 (11) TMI 975
"Governmental Authority" or "Local Authority" - Government of Karnataka holds 99.99% of equity in the Corporation - exemption from filing of Annual Return in Form GSTR9 and Form GSTR9C - input tax credit on the inward supply of goods and services, which are capitalized in the books of accounts - input tax credit on the inward supply of services against output taxable supplies of support and auxiliary services and other supply of taxable goods - input tax credit (on inputs, input services and capital goods) proportionately on the taxable output supply of support services and goods (scrap etc.) - eligibility to claim taxes paid under RCM, as input tax credit - levy of Additional Surcharge collected from Open Access Consumer - taxability of "Wheeling and Banking Charges allowed by Commission (KERC) as 5% and 2% of the energy input into the distribution system by Open Access consumer.
HELD THAT:- The clause 8.5.4 of the Tariff Policy, 2016 notified by the Ministry of Power, Government of India provides that: "The additional surcharge for obligation to supply as per section 42(4) of the Act should become applicable only if it is conclusively demonstrated that the obligation of a licensee, in terms of existing power purchase commitments, has been and continues to be stranded, or there is an unavoidable obligation and incidence to bear fixed costs consequent to such a contract. The fixed costs related to network assets would be recovered through wheeling charges."
As per National Electricity Policy, an additional surcharge be levied for meeting the fixed cost of the distribution licensee arising out of his obligation to supply in cases where consumers are allowed open access. As per Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulation, 2004, the open access customer shall be liable to pay such additional surcharge as may be determined by the Commission from time to time. It is also noticed that Regulation 3 of KERC (Electricity Supply) Code, 2004 empowered the appellant to charge additional surcharge from their open access consumers. Thus, it is apparent that the appellant is collecting additional surcharge as per the Electricity Act; Tariff Policy; National Electricity Policy of Ministry of Power, Government of India and Karnataka Electricity Regulatory Commission (Terms and conditions for open Access) Regulation, 2004, KERC (Electricity Supply) Code, 2004 of Karnataka Electricity Regulatory Commission, Government of Karnataka from the open access customers, and therefore it forms part of tariff for the supply and distribution of electricity.
It is found that collection of Additional Surcharge from OA consumers on the basis of quantum of energy wheeled from the private generators of OA consumers is only to meet the fixed cost of the appellant arising out of this obligation to supply. Such collection mechanism is backed by an Act and policies of Central Government as well State Government. In the instant case, the Appellant has entered into agreements with their customers, basically for supply of electricity - From the submissions of the appellant, there are no independent arrangement entered into by the appellant for tolerating an act against which the consideration is collected as Additional Surcharge. It is found that such amounts do not constitute payment (or consideration) for tolerating an act, rather these amounts are collected only to cover the fixed costs the appellant has to incur in terms of power purchase agreements they have entered into with power generating companies.
The Additional Surcharge levied under Electricity Act from their customers who opted for sourcing electricity from open access, over and above the consideration charged towards supply and distribution of electricity should form part of taxable value, determined in terms of Section 15 of the CGST Act, 2017 - the supply of electricity as goods and/or distribution of electricity as service are covered under exemption either in terms of entry No. 104 of Notification No.02/2017 CT(R) dated 28.06.2017 applicable to goods and /or entry No.25 of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 applicable to services.
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2024 (11) TMI 974
Exemption from charge of GST under Notification No.32/2017-Central Tax (Rate) dated 13-10-2017 (entry number 21A) & IGST Notification No.33/2017-IGST(Rate) dated 13-10-2017 (entry number 22A) - supply of pure service made by our organization, (being a GTA- cum-Packing & Moving Company) to or on behalf of a foreign entity unregistered in India (unregistered person) - HELD THAT:- From the description of service in the aforesaid entry at S.No 21A it is evident that the said exemption is exclusively in respect of Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person, other than certain specified recipients. The term "goods transport agency" is defined in para 2 (ze) of the Notification supra, "goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. In the instant case the applicant has nowhere claimed to have issued a consignment note in relation to transport of goods and therefore his claim that he is providing goods transport agency service is not justified. It is also observed that applicant is providing a bundle of services of customs clearance (CHA service), loading & unloading services, port handling, liner fee and destination services in India. Further it is observed from the copy of invoice raised by the applicant that many services are individually charged.
The exemption is not applicable to the applicant's case.
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2024 (11) TMI 973
Revision u/s 263 by CIT - assessee had purchased the property in question with an intention to build Tech Park, but due to recession, the building was not constructed and as the firm had no funds, assessee sold the land - As decided in HC [2022 (10) TMI 1120 - KARNATAKA HIGH COURT] merely because two plausible views are available and the AO has taken one view, the jurisdiction u/s 263 cannot be exercised. Invoking Section 263 in the facts and circumstances of the case was erroneous. Land was purchased and sold without any development, no elaborate enquiry was required and the AO has noted the facts required for the case and passed the AO.
HELD THAT:- We find no reason to interfere with the view taken by the High Court.
The Special Leave Petition is accordingly dismissed.
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2024 (11) TMI 972
Nature and Character of receipt - sum received under the co-marketing agreement - capital receipt or revenue receipt - HELD THAT:- It is well settled that contract or an agreement between the parties must be construed having regard to the intention of the parties and such an intention has to be gathered from the language employed in the agreement. It is equally well settled proposition that an agreement has to be read as a whole.
The Supreme Court in Kettlewell Bullen and Company Limited [1964 (5) TMI 4 - SUPREME COURT] has laid down the test to distinguish the capital receipt from the revenue receipt. It has been held that where payment is made under a covenant to compensate a person which does not affect his trading structure or his business or deprive him of his source of income, such a covenant being a normal incident of business, which leaves him free to carry on his trade shall be treated as revenue receipt. However, if the covenant impairs the trading structure of the assessee or results in loss of income to the source of income of the assessee, the payment made under such a covenant shall be treated as capital receipt.
The issue whether an amount received by the assessee on the condition not to carry on a competitive business was in the nature of capital receipt was considered in Gillanders Arbuthnot and Company Limited [1964 (5) TMI 5 - SUPREME COURT] - as held that the compensation received by the assessee for loss of agency was revenue receipt, whereas compensation received for restraining from carrying on the competitive business was capital receipt.
The nature and character of a receipt whether the same is a capital receipt or a revenue receipt has to be ascertained in the facts and circumstances of the case.
The payment of the amount under the agreement has been made to the assessee as it has surrendered its rights in a capital asset, namely patent and trademark. The agreement in question is a negative/ restrictive covenant and the amount has been paid to the assessee in lieu of the rights which it has surrendered under the agreement. The surrender of the rights results in impairment of profit making apparatus of the company and therefore, is a capital receipt.
The finding recorded by the Tribunal that the amount received under the agreement is a capital receipt, which has been recorded on the basis of meticulous appreciation of evidence on record. The aforesaid finding cannot be termed as perverse.
It is well settled in law that this Court in exercise of powers under Section 260A of the Act cannot interfere with the finding of fact until and unless the same is demonstrated to be perverse. (see Syeda Rahimunnisa vs. Malan Bi [2016 (10) TMI 1233 - SUPREME COURT] and Softbrands India Private Limited [2018 (6) TMI 1327 - KARNATAKA HIGH COURT]). Decided in favour of the assessee.
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2024 (11) TMI 971
Revision u/s 263 - Deduction u/s 80P - taxability of the interest earned by assessee from the investment made with the Co-operative bank - HELD THAT:- The controversy sought to be canvassed with regard to deduction u/s 80P(2)(d) of the Act is no more res integra in view of the decision of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. [2022 (1) TMI 1309 - GUJARAT HIGH COURT] as well as in case of State Bank of India [2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it was held that the deduction of u/s 80P(2)(d) of the Act is available to the cooperative societies on the income earned as interest on the investment made with the cooperative bank which in turn, is a cooperative society itself.
Provisions of section 80P(2)(d) would be applicable in the facts of the case and the PCIT was not justified in invoking revisional powers under section 263 of the Act which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled. Decided in favour of assessee.
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2024 (11) TMI 970
Scope of limited Scrutiny - Validity of Notice u/s 143(2) - case of the assessee was selected for limited scrutiny i.e. for verifying the cash deposits during demonetization - DR concluded that notice would indicate that the case was selected for scrutiny assessment, thus tried converting the limited scrutiny to a full scrutiny,
HELD THAT:- Though in the heading, it exhibits limited scrutiny (Computer Aided Scrutiny Selection) but thereafter in the first paragraph, it only talks of scrutiny and then in second paragraph, it talks upon the opportunity being provided to the assessee what he wants to say in support of the return. It is pertinent to observe that in para one, the ld. AO has to identify the issues for examination. If this proforma is being read with the first paragraph of the assessment order, then, it would reveal that in the third line of the first paragraph, ld. AO has used the expression “this return was selected for scrutiny in “CASH” on the issue of cash deposits during demonetization period”.
It would indicate that the case was selected for scrutiny but for the issue of cash deposit during demonetization, this mention of the issue would indicate that it was for a limited purpose of scrutinizing the cash deposits during demonetization. Its scope for making other additions would only be enlarged by following due procedure laid down by the CBDT vide its Instruction No. 5
AO has not made any addition of cash deposit during demonetization period. The assessee has deposited small amounts, which have been accepted by the ld. Assessing Officer. Therefore, the assessment order itself is not sustainable because it has been passed by the AO by exceeding his limited powers. The ld. Assessing Officer ought to have followed the procedure contemplated in CBDT Instruction bearing No. 5 of 2016 for converting a limited scrutiny assessment into a full scrutiny. Accordingly, we quash the assessment order. Appeal of the assessee is allowed.
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2024 (11) TMI 969
Denial of Tax relief u/s 89 towards the arrears of salary received - Form 10E was not filed on or before filing of the return on 23.12.2021 - claim of the assessee u/s 89 was rejected by the CPC while issuing the intimation u/s 143(1) - HELD THAT:- As per provisions of first proviso to section 143(1)(a), it was mandatory on the part of department to make any adjustment as prescribed in the said section after giving an intimation to the assessee in writing or in electronic mode to which the assessee would be entitled to respond within 30 days, which has to be considered before making such adjustment.
In present case, whether such opportunity was afforded to the assessee are not prima facie coming out from the material available before us, therefore, in all fairness to verify such aspects, the matter needs to be restored back to the files of AO to examine and verify such material aspects before rejecting the claim of the assessee u/s 89(1).
An application for rectification was filed by the assessee on 05.11.2022, whereas Form 10E and relevant documents was furnished online which were available with the department on 04.11.2022, however, such information was not considered by the department while passing the order u/s 154. This matter deserves to be set aside and to be adjudicated afresh by the Ld. AO on the basis of material furnished by the assessee and after considering the explanations therein. Appeal of the assessee is partly allowed for statistical purposes.
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2024 (11) TMI 968
Validity of order passed by CIT(A) passed u/s 250 - demands raised u/s 143(1) was wiped out vide order U/s 143(1)/ 154 - HELD THAT:- AO has nullified the demand by issuing a rectification order u/s 143(1)/154 of the Act. Consequently, no demand remains outstanding against the assessee as per the rectification order of the ld. AO in impugned assessment year. Therefore, the demands upheld in the impugned appellate order cannot be sustained against the assessee. The Ld. DR has acknowledged this position and accepted the submissions of the Ld. AR. In light of this, the grounds raised by the assessee are allowed, and the impugned appellate order is hereby quashed. Assessee's appeal is allowed.
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2024 (11) TMI 967
Adhoc disallowance of business expenses - HELD THAT:- We are in agreement with the contention of the Ld. A.R. that ad-hoc disallowances, without pointing out any specific instance and for the general reason of covering any possible revenue leakage, cannot be upheld. There have been innumerable orders of this Tribunal where such adhoc disallowances were held to be bad in law.
Assessee cannot be put to pay increased tax demand only on account of presumption that there could have been possible revenue leakage, especially when the assessee has duly offered explanations regarding each and every expenditure under dispute.
Both the lower authorities have not given due weightage to the explanations offered by the assessee and have rather proceeded in a hasty manner to first make the disallowances and then uphold such disallowances. Therefore, in the absence of any specific finding, ad-hoc disallowances in appeal before this Tribunal (that is as sustained by the Ld. First Appellate Authority), cannot be held to be justified. Decided in favour of assesee.
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2024 (11) TMI 966
Bogus purchases/transaction of shares - onus to prove - HELD THAT:- As the shares were purchased in the FY 2010-11 relevant for AY 2011-12 through Motilal Oswal Investment Services and securities transaction tax and service tax along with other charges were paid to the broker. The assessee has relied upon the decision of Smt. Sudha Loyalka [2018 (7) TMI 1892 - ITAT DELHI] in support of the claim that since the shares were not sold during the FY 2010-11 and nothing has been brought on record in support of the claim of the sale of the same, therefore, the same could not be treated as bogus transaction relating to sale of shares in the AY 2011-12 and the assessee succeeds.
Incorrect credit of TDS - AO is directed to verify the same and the assessee is also directed to furnish necessary evidences for the same before the ld. AO who shall allow the credit in accordance with law as this ground of appeal has not been adjudicated upon by the ld. CIT(A). The same was specifically raised as ground no. 12 (additional ground) before him.
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2024 (11) TMI 965
Denial of credit of TDS in the intimation made to the assessee u/s 143(1) - CIT(A) held that the CPC was correct in restricting the grant of TDS credit to the extent of that relating to the receipts reflected in the return of income filed in the impugned assessment year - HELD THAT:- Assessee before us was unable to point out any infirmity in the findings of the Ld.CIT(A), as stated above, both with regard to the interpretation of law on the grant of TDS credit in terms of provisions of Section 199 read with Rule 37BA of the Income Tax Rules, 1962, as also with respect to the fact of the TDS being deducted on a portion of income which had already been returned to tax in the preceding assessment years.
As we see no reason to interfere with the order of the Ld.CIT(A) confirming the adjustment made by the CPC in the intimation made u/s.143(1) of the Act, restricting the grant of TDS credit to the tune of Rs. 4,07,968/- as against TDS credit of Rs. 5,24,600/- claimed by the assessee.
But, at the same time, since the assessee has consistently pleaded both before the CPC and also the CIT(A) that the gross receipts on which TDS was deducted during the impugned assessment year amounting to Rs. 5,24,60,000/- included receipts which had already been returned to tax in the preceding two assessment years; i.e. AYs 2021-22 & 2022-23 as tabulated above, the AO is directed to give necessary credit of TDS to the income returned to tax in those years. In terms of the aforesaid directions given by us, the appeal of the assessee is dismissed.
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2024 (11) TMI 964
Unexplained cash deposits u/s.69A - rectification application had been filed to correct the amount of cash deposited in one of the bank accounts, which was initially noted as Rs.15 lakhs but was actually Rs.1.50 lakhs
HELD THAT:- We do not find any merit in the appeal filed by the assessee against the addition made to its income on account of cash found deposited in nits bank accounts to the tune of Rs.32 lacs, except to the extent of addition to the tune of Rs. 13.50 lacs .
For the simple reason that the AO himself has reduced the addition to this extent by passing a rectification order u/s.154 of the Act noting and agreeing with the fact brought to his notice of the incorrect quantum of cash noted to be deposited by the assessee in one of his bank accounts. This fact was brought to the notice of the CIT(A), but it seems to have not been taken note of by him since his order reveals no reason for confirming the addition made to the tune of Rs.32 lacs despite the AO having reduced it by Rs.13.50 lacs.
Therefore, to this extent, we hold that the Ld.CIT(A) has erred in confirming the addition made to the tune of Rs.32 lakhs when the addition ought to have been confirmed only to the extent of Rs.18.50 lakhs.
Having said so, we further hold that we do not find any merit in the contentions of assessee on the merits of the addition made.
Undoubtedly the only manner in which the assessee has explained the source of cash deposit in his bank account is by way of furnishing book/cash flow statement, that too, all entries therein being unsubstantiated. Also the primary source of cash deposited in Bank is attributed to cash withdrawn from his bank account almost four years back and no reason has been given by the assessee for holding such huge amount of liquid asset for such a long period of time and redepositing it later. We agree with the findings of the Ld.CIT(A) that it is highly improbable that any person would withdraw such a huge amount of cash and retain it for such a long period of time for no reason at all.
We agree with the Ld.CIT(A) that the assessee has given no reasonable explanation of the source of cash deposit in his bank account to the extent of Rs.18.50 lakhs. The addition to this extent made to the income of the assessee is accordingly confirmed by us. Decided partly in favour of assessee.
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2024 (11) TMI 963
Deemed dividend u/s 2(22)(e) - AO calculated proportionate profit upto the date of advances and added the same to the total income of the assessee u/s 2(22)(e) - as argued accumulated profit must exclude the proration of current year’s business profit - HELD THAT:- We direct the AO to restrict the addition on account of deemed dividend only to the extent of accumulated profits and delete the balance addition made.
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