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Showing 721 to 740 of 420402 Records
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2024 (11) TMI 902
Grant of anticipatory bail - non-existent Firm/Entity carried out transactions - claim of Input Tax Credit without there being actual movement of goods and as such has defrauded the government exchequer of due taxes - HELD THAT:- Regard being had to the background facts of the case, in which, the assessment has already been quashed and the matter has been remanded back to the assessment authority apart from the quashment of the criminal case instituted in Bokaro Steel City relating to a similar nature of offence, it is required to extend the privilege of anticipatory bail to the petitioner.
The petitioner accordingly is directed to surrender before the learned court below within a period of four weeks and on her surrender, she shall be released on bail on furnishing bail bond of Rs. 10,000/ with two sureties of the like amount each to the satisfaction of learned Judicial Magistrate, Jamshedpur in connection with Telco P.S. Case No. 104/2018, corresponding to G.R. Case No. 2027/2018, subject to the conditions as laid down under Section 438(2) of the Code of Criminal Procedure.
Application allowed.
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2024 (11) TMI 901
Rejection of appeal on the ground that the ten per cent has to be paid from the Electronic Cash Ledger - HELD THAT:- N/N. 53/2023 dated 02.11.2023 issued by the Ministry of Finance, Department of Revenue (Central Board of Indirect Taxes and Customs), which permitted filing of delayed appeals even beyond the period provided under Section 107 of the GST Act, that the stipulation was of paying an amount of 12.5 per cent of the amounts pending and due to be paid to the Department as against the 10 per cent prescribed by the statute. In the said Notification issued by the Central Government on the recommendation of the GST Council, it has been specifically stated that at least 20 per cent of the 12.5 per cent remaining due and payable should be paid from the Electronic Cash Ledger. Hence, even the GST Council understood the ten per cent to be enabled for payment through the Electronic Credit Ledger.
It is noticed that the Hon’ble Supreme Court has stayed the Division Bench judgment and in such circumstances, especially since consideration of the appeal on merits is the question raised, it is opined that pending decision of the Hon’ble Supreme Court, the appeal should be considered on merits.
The order in appeal dated 14.01.2023 is set aside - petition allowed.
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2024 (11) TMI 900
Challenge to adjudication order dated 19th October, 2023 - rejection of petition on the ground of time limitation - HELD THAT:- Revenue submits, there is no dispute with regard to facts in relation to filing of the appeal.
Impugned order dated 24th April, 2024 is set aside since, thereby petitioner stood deprived of hearing - the writ petition is disposed of.
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2024 (11) TMI 899
Requirement to collect GST on the diagnostic and lab services provided through third party diagnostic labs - GST has to be collected for the whole invoice amount or on the margin on the supply alone? - applicable tax rate and which SAC to be used - collection of TCS - assesse fall under the definition/meaning of an "Insurance Agent" if invoiced to an insurance company or not.
Whether the assesse need to collect GST on the diagnostic and lab services provided through third party diagnostic labs? If yes, Whether GST has to be collected for the whole invoice amount or on the margin on the supply alone and what will be the applicable tax rate and which SAC to be used? - HELD THAT:- The applicant, with regard to taxability of diagnostic and lab services provided through third party diagnostic labs, contends that they act as an aggregator for the said services for companies/insurance companies/insurance brokers; they provide access to the digital platform and digital tools, for companies/insurance companies/insurance brokers, to manage the workflows for availing the services of the said diagnostic labs / clinical establishments for their employees or group of people; as per Notification 12/2017-Central Tax, services by way of health care services by clinical establishment are exempted and thus the service is being provided by the clinical establishment to the persons using the digital platform of the applicant and the applicant is only working as an aggregator; the service mentioned by the applicant comes under the definition of e-commerce and hence the applicant is not required to collect the tax under GST.
Whether the applicant qualifies to be an e- commerce operator or not? - HELD THAT:- In the instant case the applicant owns a digital platform / mobile App. The employees or group of people of companies / insurance companies / insurance brokers i.e. recipients of service having contract with the applicant, selects the diagnostic labs or wellness providers and books specific date & time, from the list provided on the digital platform / App. Once the tests are done the diagnostic labs or wellness providers raise invoice on the applicant and the applicant in turn raises the invoice on the companies after retaining their margin - The applicant merely provided the platform for the recipients so as to enable them to select the lab from whom the services are to be procured. Once the selection is over, the labs after the tests provide the reports directly to the recipients. The invoices are raised by the labs on the applicant. Thus the applicant doesn't qualify to be an e- commerce operator.
The applicant, admittedly, adds mark up on the cost of the services procured from the diagnostic labs / wellness providers and raises invoices on their clients with the marked up value. In this scenario, the applicant has to charge GST on the whole invoice amount, being the transaction value but not merely on the mark-up value, in terms of Section 15(1) of the CGST Act 2017 - In the instant case, the services being provided by the applicant are by way of diagnosis for illness etc., in a recognised system of medicines in India and hence the impugned services being diagnostic services are covered under healthcare services and thus gets covered under SAC 9993.
Rate of GST applicable to the impugned services - HELD THAT:- In the instant case, applicant does not qualify to be "a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India" as the applicant, admittedly, is not a hospital or nursing home or clinic or sanatorium or any other similar institution, but an aggregator procuring the services from diagnostic labs. Thus the applicant do not qualify to be a clinical establishment. Therefore the second condition is not fulfilled and hence the applicant is not entitled to avail the aforesaid exemption. Thus the applicant is liable to collect GST on the diagnostic and lab services provided through third party diagnostic labs to their clients.
Collection of TCS by the applicant - HELD THAT:- As the applicant does not qualify to be an e-commerce operator, the instant question becomes redundant.
Whether the applicant falls under the definition / meaning of Insurance Agent, if invoiced to an insurance company and if yes, how the GST is applicable? - HELD THAT:- In the instant case, the services being provided by the applicant are not connected, not even remotely, with the sale of insurance policies and hence the applicant does not fall under the definition / meaning of the “Insurance Agent". Therefore the applicant has to raise invoice on par with the other companies.
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2024 (11) TMI 898
Stay of demand - direction as called upon the writ petitioner to make a pre-deposit of 20% - As decided in PPK NEWSCLICK STUDIO PVT. LTD [2024 (8) TMI 888 - SC ORDER] admitted fact that 30% of the demand has already been recovered by the respondent. ITAT shall consider the appeal of the appellant in accordance with law on its own merits
HELD THAT:- There is omission on the part of the ICICI Bank which has not complied with the order of this Court dated 09.08.2024 and instead is seeking to comply with the communication dated 15.12.2023 issued by the Office of the Deputy Commissioner of Income Tax, Central Circle 1, Delhi to them.
It is needless to observe that the order of this Court dated 09.08.2024 is subsequent to the aforesaid communication.
Direction is issued to the Branch Manager, ICICI Bank, E-30, Saket, New Delhi to comply with the order of this Court dated 09.08.2024 both in letter and spirit forthwith.
Miscellaneous Application has been filed seeking the following reliefs:
“(i) Set aside the notice dated 15.12.2023 bearing No.ITBA/COM/F/17/2023-24/1058789726(1) sent by the Respondent to ICICI Bank, Saket Branch; AND
(ii) Direct that any amount credited in the Petitioner’s bank accounts with the ICICI Bank, Saket Branch, bearing Account Nos.017105010200 and 017105009185, shall not be debited to the Income Tax Department, pursuant to their letter dated 15.12.2023; AND
(iii) Direct that normal banking operations shall resume in the Petitioner’s bank accounts with the ICICI Bank, Saket Branch, bearing Account Nos.017105010200 and 017105009185; AND
(iv) Pass such further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case.”
The prayers stated above at (ii) and (iii) are granted.
Consequently, the Miscellaneous Application stands disposed of in the aforesaid terms and the application for appropriate Orders/Directions is allowed.
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2024 (11) TMI 897
Validity of Reopening of assessment u/s 147 - As decided by HC [2023 (10) TMI 1454 - BOMBAY HIGH COURT] this is not a fit case to exercise our discretionary jurisdiction under Article 226 of the Constitution of India. At the same time, Petitioner may raise all grounds which Petitioner has before the AO in reply to the notice u/s 148. The officer shall consider the objections and points raised by Petitioner and pass such order as he deems fit
HELD THAT:- On instructions, respondents states that the respondents have no objection to the notices issued u/s 148 being quashed, as the transaction in question was between a mother and son.
In view of the aforesaid position, the impugned judgment/order is set aside, quashing the aforesaid notices. The appeal is allowed. The writ petition will be treated as allowed.
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2024 (11) TMI 896
Deduction u/s 54EC - premature cancellation of the bonds - Petitioner sought to cancel PFC bonds to utilize the sale proceeds for a property purchase in Noida, claiming mistaken advice regarding tax benefits - legislative intent behind the bonds, lock-in period of 5 years as integral to ensuring long-term capital allocation and financial stability.
HELD THAT:- The PFC bonds, are known as “54EC Capital Gain Tax Exemption Bonds – Series VIII”. This is a type of investment instrument authorized by the Income Tax Act, 1961. These bonds provide an opportunity for individuals to save on long-term capital gains taxes incurred from the sale of property or assets. By investing in these bonds, one can defer the payment of capital gains tax and enjoy the potential benefits of a reliable investment option. Such investment is held for 5 years and the bonds so acquired cannot be transferred or converted into money or any loan and neither can an advance be taken on security of such bond within 5 years from date of acquisition. Any such action would result in withdrawal of the capital gain exemption benefit.
Thus, the subject bonds issued by the Respondent fall within the category of ‘long-term specified assets’, in terms of notification dated 8th June, 2017 issued by the Ministry of Finance, and as defined in Section 54EC of the Act to mean “any bond, redeemable after five years and issued on or after the 1st day of April, 2018”. The long term specified assets/bonds can be redeemed only after 5 years from the date of the issuance due to the lock-in period under Section 54EC of the Act as amended by Section 21 of the Finance Act, 2018. Furthermore, this information with regard to the lock-in period is mentioned in Clause 13 of the information memorandum issued by the Respondent regarding the subject bonds.
In the opinion of the Court, having regard to the statutory scheme and the terms and conditions of the subject instrument, the Petitioner’s request for cancellation or redemption, cannot be accepted. The funds raised through the 54EC bonds are specifically intended to support Respondent’s financial objectives. The ‘Object of the Issue’ of the PFC Capital Gain Tax Exemption Bonds is – ‘to augment resources of PFC for meeting fund requirement’. These funds are in the nature of long term funds borrowing. This intent, combined with the five year lock-in period, imposes a clear embargo on premature redemption, as it ensures that the investments remain committed to Respondent’s financial stability and to meet the object of the Issue. This lock-in period is not a mere formality but a substantive requirement, integral to the legislative intent behind Section 54EC.
Terms and conditions governing the bonds, stipulated by the Respondent clearly restrict any withdrawal, redemption, or transfer of these bonds before the completion of the mandated 5-year period. This restriction applies regardless of whether the Petitioner has claimed the capital gains exemption or not, and regardless of any willingness on the Petitioner’s part to forgo interest, as these bonds are essentially bound by legislative and contractual rigidity. Permitting any deviation from the stipulated lock-in period would compromise the object and purpose underlying these bonds, creating an avenue for circumventing statutory obligations under Section 54EC.
The statutory framework does not just seek to incentivize tax savings but to ensure that these savings result in actual, long-term capital allocation. Allowing premature redemption through judicial intervention would not only be against the contractual terms, but also contravene the statutory intent of encouraging long-term investment. Thus, it is beyond the scope of this Court, particularly under the writ jurisdiction under Article 226 of the Constitution, to modify or rewrite the conditions stipulated for allocation of bond.
Court is of the view that the judgment in Major Amandeep Singh [2015 (8) TMI 1585 - DELHI HIGH COURT] 3does not apply to the present case. Upon issuance of the bonds to the Petitioner, the rights and obligations of both parties are governed by the specific terms of the financial instrument. Neither party can alter the same unilaterally. Any attempt would not only contravene the contractual terms, but would also be against the statutory purpose underlying the bond scheme.
Although not expressly argued, and only vaguely alluded to, the Petitioner’s claim for cancellation appears to stem from an alleged mistake of fact and reliance on misguided financial advice. Such grounds, in the opinion of the Court, do not create any enforceable right and cannot be adjudicated under Article 226 of the Constitution.
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2024 (11) TMI 895
Revision u/s 263 - assessee to be a beneficiary on account of funds received from four parties - PCIT cancelled the assessment framed u/s 147 r.w.s. 144 by directing AO to frame the assessment afresh after doing necessary verification - HELD THAT:- The assessment framed by AO cannot be said to be being erroneous nor prejudicial to the interest of revenue as these items of so-called bogus loans of Rs. 3,13,000.- from four parties did not come to the notice of the AO during the assessment proceedings warranting the addition by the AO. Therefore, we are inclined to hold that the jurisdiction exercise by ld. PCIT is bad in law.
In our opinion the assessment framed by the AO u/s 147/144 of the Act is neither erroneous nor prejudicial devoid of which the jurisdiction u/s 263 of the Act cannot be invoked.
The case of the assessee is supported by the judgment of Malabar Industries Limited [2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that in order to invoke jurisdiction u/s 263 of the Act, the assessment order passed has to be erroneous as well as prejudicial to the interest of revenue and even if one of the two conditions are satisfied, even then section 263 by ld. PCIT cannot be invoked. Appeal filed by the assessee is allowed.
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2024 (11) TMI 894
Addition u/s 68 - unexplained cash credit - non proving in identity, creditworthiness, and genuineness of the share premium received by the assessee - HELD THAT:- Hon’ble Supreme Court in the case of CIT vs. Kamdhenu Steel & Alloys Ltd. [2012 (9) TMI 950 - SC ORDER] held that mere non-appearance of director cannot be held to be justified in treating the share premium and share capital as unexplained income if sufficient documentary evidences are provided. In the present case of the assessee, the shareholders were scrutinised u/s 143(3)/147 of the Act, further detailed evidences were submitted to establish genuineness of the transactions.
In this regard, we rely on the decision of Lovely Exports (P) Ltd. [2008 (1) TMI 575 - SC ORDER] wherein, it was held that once company proves the existence and authenticity of shareholders, it had discharged its burden u/s 68 of the Act. We find merit in the contention of the ld. AR.
That the premium is matter of business prerogative as held in the Coordinate Mumbai Bench of the Tribunal in the case of M/s Greek Infra Ltd. [2013 (12) TMI 949 - ITAT MUMBAI] and in the case of Trident Shelters Pvt. Ltd. [2014 (1) TMI 1224 - ITAT HYDERABAD]
That revenue cannot question the quantum of share premium in the absence of evidence of collusion or mala fide intent.
We hold that the addition made by the AO as unexplained cash credit u/s 68 of the Act is unsustainable since the assessee has sufficiently established the identity, creditworthiness and genuineness of the transaction relating to the share capital received during the relevant financial year. We, therefore, direct the Assessing Officer to delete the addition u/s 68 - Appeal of the assessee is allowed.
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2024 (11) TMI 893
Levy of penalty u/s. 271(1)(c) - defective notice u/s 274 - omnibus notice - Non mentioning of charge for which penalty is to be levied - HELD THAT:- An examination of the first notice reveal that it is in a preprinted performa, wherein both limbs of section 271(1)(c) of the Act have been mentioned.
AO has not struck off irrelevant clauses in the preprinted performa. The omnibus notice is vague. The subsequent notice is equally ambiguous as the AO has not mentioned any of the limbs of section 271(1)(c) of the Act in the notice for which the penalty is to be levied. Non mentioning of charge for which penalty is to be levied makes the notice as much defective as non striking of irrelevant clauses in the notice. Both make the notice ambiguous and vague. Hence, the proceedings arising from defective notice are vitiated.
Hon’ble Jurisdictional High Court in the case of PCIT vs. Sahara India Life Insurance Company Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] following the decision rendered in the case of CIT vs. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] deleted penalty where the AO failed to clearly specify the limb of section 271(1)(c) of the Act for levy of penalty in the notice.
Also in the case of Mohd. Farhan A Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] has held that where assessment order records satisfaction for imposing penalty on one or other or both grounds mentioned in section 271(1)(c) of the Act, a defect in notice in not striking of irrelevant matter would vitiate penalty proceedings. An omnibus notice suffers from the vice of vagueness. Assessee appeal allowed.
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2024 (11) TMI 892
TDS u/s 194A - Demand u/s. 201(1) r.w.s. 201(1A) - TDS on profits earned from commodity transactions treated as interest income - Forward Market Commission directed NSEL to stop launching contracts after the payment default and this led to the closure of NSEL in July 2013 - As per the findings of the Investigation agencies, the brokers had sold the commodities on the floor of National Spot Exchange to the clients by assuring them fixed returns and transactions on the exchange were carried out in the guise of commodity trading without ensuring delivery of the commodity traded on the exchange
HELD THAT:- As borne out from the records and also from the finding of the lower authorities that assessee was acting as a broker and intermediary as the entire set of transactions carried out by the assessee was on behalf of the client of NSEL platform. The assessee had undertaken the transactions only to earn brokerage and such income from brokerage have duly been offered to tax.
Section 194 is attracted when a person is responsible for payment of interest other than income by way of income and securities. However, in the case of the assessee, assessee being a broker of certain exchange cannot be held to be a person who has been paying any interest to the clients and therefore, we hold that provision of Section 194A cannot be invoked in the case of the assessee because it cannot be reckoned as a person responsible for payment of income by way of interest to the clients.
Ld. Counsel has referred few judgments of CIT vs. Hardarshan Singh [2013 (1) TMI 314 - DELHI HIGH COURT] and CIT vs. Cargo Linkers [2008 (3) TMI 619 - DELHI HIGH COURT] wherein as held that provision of TDS cannot be applied in case of intermediary / agents acted on behalf of its clients and intermediary cannot be held to be person responsible for the purpose of TDS provisions. Though these decisions have been rendered in the case of CNF agents, however, the same principle will apply in the present case also because assessee was also an intermediary between the clients and the NSEL and was never party to any counter party members.
CIT(A) has referred to SEBI order dated 29/11/2022 and in that order SEBI in para 28 held that the primary responsibility was on NSEL and not the brokers. In short there was and adequate collateral to secure the sale orders posted on its platform. The entire responsibility has been put on to the exchange and not of the brokers facilitating these transactions. Thus, the order of the ld. CIT (A) holding that assessee is not required to deduct TDS u/s. 194A is upheld and consequently, the grounds raised by the Revenue are dismissed.
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2024 (11) TMI 891
Unexplained cash credit u/s. 68 - taxation under the provisions of section 115BBE - CIT(A) deleted the addition by accepting the submissions of the assessee that the cash receipt by various sources i.e., cash sales, debtors outstanding realization and debtors of current year realized is matching with the VAT returns and hence, he accepted the cash deposited during the year before demonetization - HELD THAT:- As noted that the assessee has explained the cash deposit in SBNs received during demonetization period on account of cash sales during the relevant assessment year, realization of debtors outstanding in previous years and also debtors during current year which is a fact as per books of accounts.
Admittedly, there are amount received on account of current debtors from specified parties - assessee has also reconciled the cash sales, debtors outstanding, viz-a-viz VAT returns.
Admittedly, the assessee’s turnover during the year is Rs. 810 crores as compared to last year turnover of Rs. 383 crores, which means that the turnover has jumped 211.48% during the year. These facts show that the cash realized through cash sales, debtors is not abnormal and the AO could not point out any defect in the same. Admittedly, these parties, from whom the assessee has realized the debts, the confirmation was received late and assessee now before us filed the confirmed account statement, which were filed before CIT(A). Once there is no defect in the books of accounts and the VAT returns which accepted as it is and corresponding sale is also not disturbed, we find no infirmity in the generation of this cash on or before 08.11.2016. This cash generation is over the period from 01.04.2016 to 08.11.2016. Out of total cash available in assessee’s books of accounts as on 08.11.2016 of Rs. 3,09,45,227/-, a sum of Rs. 3,05,14,820/- is in demonetized currency i.e., Specified Bank Notes.
As the cash is explained and sources are recorded in books of accounts and books of accounts are not rejected by AO and there is no iota of evidence that the assessee has introduced unaccounted cash, the cash deposited by assessee during demonetization period in SBNs stands explained. Further, we find that this issue is covered by the decision of TamilNadu State Marketing Corporation Ltd [2024 (10) TMI 1614 - ITAT CHENNAI] wherein it is held that simpliciter the SBNs will not be added when the source of cash is explained.
Thus, no fault in the order of CIT(A) and hence, the same is confirmed. Accordingly, this appeal of Revenue is dismissed.
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2024 (11) TMI 890
Disallowance u/s. 36(1)(iii) - advance to related parties - Since the reserves and surplus of the assessee was less than the advance given to related parties, the AO made a disallowance u/s. 36(1)(iii) - assessee contended that the advance was not given during the year under consideration and that the balance shown is the outstanding carried forward from earlier years - HELD THAT:- We notice that there was an opening outstanding balance of Rs. 10,47,87,979/- as on 01.04.2011 and the assessee had given an advance of Rs. 28 crores during the financial year relevant to AY 2012-13. We further notice that the balance is the reserve and surplus stood at Rs. 61,60,35,571/- as on 31.03.2012. We also notice that the outstanding balance in the impugned advance account has been decreasing YoY. Therefore there is merit in the contention of the ld AR that no new advance is extended to sister concern and that the revenue did not bring anything on record to controvert the said contention. See Brindavan Beverages Pvt. Ltd [2016 (10) TMI 1242 - KARNATAKA HIGH COURT].
AO is not correct in making the disallowance u/s. 36(1)(iii) of the Act and direct the AO to delete the disallowance made in this regard. Decided in favour of assessee.
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2024 (11) TMI 889
Validity of reopening assessment u/s 147 - materials unearthed relating to and belonging to the assessee during the course of search conducted on Third party - HELD THAT:- Keeping in view this particular legal aspect of the matter as certain documents unearthed/found and seized during the course of search in the residential as well as other premises related of Shri Surendra Kumar Jain and Shri Virendra Kumar Jain, on the basis of which the additional income was to be assessed in the hands of the assessee, such addition can only be made taking recourse of the provision of Section 153C and no proceeding can be initiated u/s 147, 148, 153 and 151 of the Act.
In the instant case, therefore, reopening of proceeding u/s 148 has no legs to stand upon particularly when the reason to believe is on the basis of search conducted on a third party and on the basis of documents unearthed during search of the said third party namely Shri Surendra Kumar Jain group of companies.
The initiation of proceeding in the case in hand u/s 148 on the basis of materials unearthed relating to and belonging to the assessee during the course of search conducted on Jain brothers is found to be not sustainable in the eyes of law. The assessment is void-ab-initio and thus, quashed. Assessee’s appeal is allowed.
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2024 (11) TMI 888
Addition on account of accommodation entries - CIT(A) restricting the addition to only 15% instead of 100% - HELD THAT:- The Coordinate Bench in [2024 (6) TMI 1416 - ITAT MUMBAI] for AY 2011- 12, had the occasion to consider an identical issue find merit in the contention advance on the behalf of the Appellant that the Assessing Officer has failed to bring any material on record to establish that the work was not actually performed and therefore, disallowance of 100% payments made to sub-contractors is not warranted in the facts and circumstances of the present case.
We are not inclined to interfere with the order passed by CIT(A) restricting the disallowance to 15% of payments made to sub-contractors. There is nothing on record to persuade us to take a view that disallowance at a higher rate was warranted in the facts and circumstances of the present case. We have already rejected the contention of the Revenue to restore the disallowance at the rate of 100% of payments made to sub-contractors. We also concur with the CIT(A) that in absence of any material to substantiate the allegation that Assessee had paid commission at the rate of 1%, the addition made in respect of commission expenses of INR 8,81,3000/- cannot be sustained merely on assumptions and guess work. Decided against revenue.
Additional deduction u/s 80IA - denial of claim of deduction u/s 80-IA because the said claim was not made in the original return of income - HELD THAT:- CIT(A) called for a remand report from the AO who in his remand report fairly conceded that the claim of deduction has been allowed in all subsequent assessment years. Therefore, the ld. CIT(A) also allowed the claim of deduction u/s 80-IA of the Act correctly. Decided against revenue.
Disallowance u/s 14A - assessee has suo moto disallowed amount being 1% of the average investment as on 31/03/2016 - HELD THAT:- The undisputed fact is that the assessee borrowed funds from Shapoorji Pallonji and Company Ltd., and it is also not in dispute that the said borrowings were interest free and the shares were purchased out of such interest free borrowings. Therefore, no merit in the addition on account of interest payment. Insofar as, administrative expenses are concerned, the AO has disallowed 0.5% but the assessee has disallowed a higher amount of 1% at Rs. 13,69,000/- which is more than the disallowance computed by the AO. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). Accordingly, Ground dismissed.
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2024 (11) TMI 887
Addition on account of difference between the value of closing stock shown in the return of income and in the statement made to the bank - HELD THAT:- We note that the assessee, undoubtedly shown a different value of closing stock to the bank stating to be for availing credit facilities. Admittedly the said value is different from the statement of value of closing stock as annexed to the balance sheet.
Neither the bank authorities nor the AO made any effort to verify the actual stock to prove that there is existence of unaccounted stock. In common parlance, under open loan system, the parties tend to inflate figures of quantity of stock as well as rate merely to enjoy higher cash credit limits.
Hon’ble High Court in N. Swamy [1998 (9) TMI 27 - MADRAS HIGH COURT] held that the AO shall consider the material, which is required to be considered for the purpose of assessment. The Assessing Officer shall not consider any statement that might have given to a 3rd party unless there is any material to corroborate the statement given to a 3rd party. Admittedly, nothing was brought on record by the AO that any existence of corroborating value of closing stock given to the bank.
We find the burden is on the AO to show that the assessee has undisclosed income and the said burden cannot be said to be discharged by merely referring to the statement given by the assessee to the 3rd party, which is not directly related to the assessment, making the sole foundation for finding merely the assessee has deliberately suppressed income.
Thus, we hold the addition made by the Assessing Officer is not justified and the order of the ld. CIT(A) is justified in directing the Assessing officer to consider the value of closing stock of current year as opening stock of subsequent assessment year. Therefore, the Assessing Officer shall consider the value of stock as annexed to balance sheet. Thus, the ground raised by the Revenue fails and are dismissed.
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2024 (11) TMI 886
Chargeability of income earned under the Act / DTAA - Royalty or FTS receipts - Payment receipts for online education of MBA course - jurisdiction of AO by reclassifying the income as FTS instead of "royalty" - HELD THAT:- On careful reading of the Order of the Tribunal it is observed that it was also limited to examine the chargeability of income earned under the Act / DTAA as “royalty”.
The remand to the AO was also limited to examine and follow the judgment of the Hon’ble Apex Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd [2021 (3) TMI 138 - SUPREME COURT] - Tribunal did not remand to the AO to examine the applicability of definition of FTS as per the Act / DTAA in respect of the income of the assessee. Only subsequent to the remand proceedings by the Tribunal, it dawns upon the AO after examining the services agreement to tax the same as FTS under section 9(1)(vii) of the Act instead of “royalty” under section 9(1)(vi) of the Act. The AO after examining the agreement ideally ought to have filed a MA before the Tribunal seeking for an ‘open remand’ so that the receipt could have been either taxed under “FTS” or under “royalty”.
On perusal of the above Order of the Tribunal, it is clearly discernible that it is not an open remand but only a limited remand to examine the receipt whether it can be taxed in light of the judgment of Engineering Analysis Centre of Excellence (P.) Ltd., (supra) and other judicial pronouncements relied on by the assessee.
AO cannot go beyond the directions given in the remand order and look into the matters which was not subject matter of appeal before the Tribunal. This proposition was affirmed by the Hon’ble Allahabad High Court in the case of S. P. Kochhar [1982 (5) TMI 3 - ALLAHABAD HIGH COURT] wherein the scope of remand by the Tribunal was explained as when the Tribunal allows the appeal and sets aside the assessment and remands the case for making a fresh assessment, the power of the ITO is confined to such subject-matter only. He cannot take up the questions which were not the subject-matter of appeal before the Tribunal.
The Tribunal in the case of Bhagwandas associates [2007 (9) TMI 333 - ITAT PUNE-B] had held that Revenue has no scope for improving an already assessed income either by way of enhancement or in pretext of rectification while giving effect of an appellate Order. The Tribunal held that the statute does not provide such a wide unlimited and unending power to the AO.
Thus, AO has clearly exceeded his jurisdiction by taxing the income of the assessee as FTS which was not the subject matter of appeal before the Tribunal nor has the Tribunal given an open remand to the AO (in light of the master services agreement being produced before it for the first time). On perusal of the entire Order of the Tribunal, it is clear that the examination is limited to taxability of the receipts only in light of the judgment of Engineering Analysis Centre of Excellence (P.) Ltd., Vs. CIT (supra) and other judicial pronouncements relied on by the assessee which deals with the taxability of the receipt as “royalty” under section 9(1)(vi) of the Act.
Thus, the impugned addition is deleted on technical grounds.
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2024 (11) TMI 885
Disallowance of business expenses - Assessee by filing first appeal before the Ld. Commissioner challenged the disallowance of expenses, however, as it appears from the impugned order the Assessee not responded to the various notices sent by the Ld. Commissioner and therefore in the constrained circumstances having left no option dismissed the appeal of the Assessee - HELD THAT:- We observe that though the Ld. Commissioner has written in the impugned order that multiple opportunities of being heard by way of issuing of hearing notices were given to the Assessee, however, from the order it nowhere appears by which mode and on which dates the notices were sent to the Assessee.
Even otherwise we observe that the Ld. Commissioner did not pass the order on merits, hence for the just decision of the case and for the ends of substantial justice, we are inclined to remand the instant case to the file of the Ld. Commissioner for decision afresh on merits, suffice to say by affording reasonable opportunity to the assessee to substantiate its claim before the Ld. Commissioner.
We also direct the assessee to cooperate with the appellate proceedings and to file the relevant submissions/documents which would be essential and required by the Ld. Commissioner for proper adjudication of the case. We clarify that in case of further default the assessee shall not be entitled for any leniency. Hence, the case is remanded accordingly.
Appeal filed by the assessee stands allowed for statistical purposes.
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2024 (11) TMI 884
Classification of imported goods - ‘Low Aromatic White Spirit’ classifying the same under the Customs Tariff Item No. 2710 1990. v/s ‘Kerosene’ classifiable under CTH 2710 1910 - Allegation of mis-declaration - goods were confiscated u/s 111 (m) and Section 111(d) of the Customs Act, 1962 for mis-declaration and violation of the siprovions of Para 2.20 of the Foreign Trade Policy read with the rules made under the Petroleum Act, 1934 read with the Petroleum Rules, 2002 and the Customs Tariff Act, 1975
HELD THAT:- We observe that no test has been conducted to find out whether the goods imported by the appellant meets the requirement of ‘Low Aromatic White Spirit’ as claimed by the appellant. The claim of the appellant cannot be rejected without testing whether the goods imported by the appellant satisfy the requirements for ‘Low Aromatic White Spirit’, which is similar to “light oils and preparations”.
From the literature submitted by the appellant, we observe that Low Aromatic white Spirits (LAWS) is a specific high value segment of non-fuel petroleum products. These are manufactured by refractionation of wide boiling refinery products like, gasoline fraction. This is further subjected to 'Dearomatization' process to make aromatic free to specified aromatic content, products. Products of different aromatic content as required by application could be made by blending aromatic free products to base fraction or partially dearomatized stocks.
With regard to Nomenclature and classification, we find that these products widely vary in boiling range, hydrocarbon group composition, depending upon the end use, storage, safety, environmental and health considerations. Petroleum products are complex mixtures of hydrocarbons and the products are designed based on application requirements. Therefore overlapping of boiling range, compositions and physical characteristics amongst various products is common.
For the purpose of international trade and movement, the World Customs Organization (WTO) has classified goods under the Harmonized System Nomenclature (HSC). Each material is assigned a unique eight digit code number, reflecting some basic characteristics. For instance number '27' refers to 'Chapter', '10' to 'Petroleum Oils'. The next two digits '12' refers to hazardous nature. Flash point lower than ambient temperature API Class 'A' material. 19 refers to fire safe API Class 'B' and 'C' materials. The next two digits refer to specific products like '10' for 'kerosene' '20' for 'ATF' and '90' for minor products like LAWS. HSN Code for the Low Aromatic White Solvent (LAWS) is 27101990.
We observe that high flash solvents, both low aromatic or high aromatic, come under HSN classification 2710 1990, technically as well as in industry practice. In view of the above discussions and based on the technical literature produced by the appellant, we hold that the Low Aromatic White Spirit imported by the appellant having the same characteristics as required under the standard IS 1459:2018, are rightly classifiable under the CTH No. 2710 1990.
The goods imported by the appellant are ‘Low Aromatic White Spirit’, as claimed by the appellant and the same are appropriately classifiable under the Customs Tariff Item No. 2710 1990.
Adjudicating authority has reclassified the goods imported by the appellant as “Kerosene” under the Tariff Item No. 2710 1910. Kerosene, classifiable under CTH 2710 1910, could be imported only by State Trading Enterprises (STEs) or the agencies approved by DGFT, in terms of the Foreign Trade Policy, 2015-20.
As the goods imported by the appellant are ‘Low Aromatic White Spirit’ and classified under the CTH 2710 1990, there is no violation of the Foreign Policy 2015-20. Accordingly, we hold that the goods are not liable for confiscation under Section 111 (m) and Section 111(d) of the Customs Act, 1962 for mis-declaration and violation of the provisions of Para 2.20 of the Foreign Trade Policy read with the rules made under the Petroleum Act, 1934 read with the Petroleum Rules, 2002 and the Customs Tariff Act, 1975. Thus, the question of allowing re-export of the goods on payment of redemption fine under Section 125 of the Act does not arise.
As the allegation of mis declaration is not sustained, the penalty imposed under Section 112(a)(i) of the Customs Act, 1962 is also not sustainable and accordingly, we set aside the same.
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2024 (11) TMI 883
Demand of duty foregone on account of the scrips of Vishesh Krishi and Gram Udyog Yojna[VKGUY] issued to u/s 28 of the Customs Act, 1962 Act read with their Letter of Undertaking - penalties imposed on individuals - allegation of appellant exporting meat using pre-signed and pre-stamped veterinary certificates - HAIL was engaged in slaughtering animals and exporting their meat during the relevant period. It availed the benefit of VKGUY scheme of the DGFT under which exporters of agricultural and village industry products are given an incentive in the form of scrips issued by DGFT which can be either used by the person to whom they are issued to pay duty on imports or transferred or sold to others who can use them to pay duty on imports.
What is the meaning of the term relevant? - HELD THAT:- The undisputed fact is that the recovered pre-signed and pre-stamped certificates were not used to export meat. The case of the department is built on the premise that previous meat consignments were also exported based on such certificates without actual inspection of the animals pre-mortem and post-mortem. After detailed investigation beginning on 3.10.2010 and culminating in the SCN issued on 4.8.2011, these allegations were made and actions against the appellant proposed. SCN relied upon the following 22 documents numbered relied upon documents RUD-1 to RUD-22.
As many as 14 of the 22 relied upon documents are statements of various persons recorded during investigation by the Customs officers under Section 108 of the Act. Of these, the statements of Dr Shiv Kumar, the veterinarian and a few others are said to establish the fact that the appellant had exported meat in the past without actual examination of the animals by the veterinarian.
Any statement made before any gazetted officer of customs is relevant to prove the truth of the fact which it contains as per section 138B under two situations- either the person is dead, cannot be found, is incapable of giving evidence or has been kept out of the way by the adverse party OR the person is examined as a witness and the court is of the opinion that it should be admitted as evidence. There is no other section in the Act which makes the statements relevant to prove the truth of the facts contained in them.
In this case, the fact that blank signed and stamped certificates of veterinarian were recovered from the appellant has to be linked to the fact that meat was similarly exported using pre-signed certificates in the past. The evidence which provides this link are, according to the learned authorised representative for the Revenue, the statements recorded by the Officers under section 108 of the Act and relied upon in the SCN. However, as per section 138B of the Act, they can be relevant only in one of the two situations indicated in 138B (1) (a) and (b). There is no evidence or assertion that the situation under section 138B(1) (a) of the Act was present and the adjudicating authority did not follow the procedure prescribed under section 138B(1) (b). He neither examined the persons who made the statements nor allowed the appellant to cross-examine them.
In this case, after extensive investigation spanning several years, the SCN was issued relying on as many as 22 documents including 14 statements of different persons recorded by the officers under section 108 of the Act. By not following the mandatory procedure under section 138B, the adjudicating authority brought to naught 14 of the 22 relied upon documents effectively destroying the case of the department. We do not find that the remaining 8 relied upon documents establish the fact that the appellant had exported meat using pre-signed and pre-stamped veterinary certificates. Once the case against HAIL is not established, the penalties on HAIL and other appellants also cannot be sustained. Therefore, the impugned order upholding the OIO cannot be sustained and needs to be set aside.
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