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2022 (5) TMI 1675
Seeking refund of the TDS credit for tax deducted during the Financial Year 2016‐17, but remitted to the Central Government and reflected in the Form‐26AS during the AY 2018‐19 - Stay petition seeking stay of enforcement of the demand resulted on disallowance of the TDS credit - HELD THAT:- In the case of ACIT Vs. Peddu Srinivasa Rao [2011 (3) TMI 1495 - ITAT VISAKHAPATNAM] observed that once any TDS is effected in accordance with the provisions of the Act and paid to the Central Government, such an amount shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, and, therefore, a credit of the same must be given to the person on whose behalf such TDS was made, irrespective of the year to which it relates.
The said view is followed by the another case of Zelan Projects (P) Ltd [2015 (6) TMI 66 - ITAT HYDERABAD] Since consistent view has been taken by the Co‐ordinate Benches on this aspect, we are of the considered opinion that the refund of TDS though in fact was effected during the AY.2017‐18 cannot be denied to the assessee when it was appearing in Form‐26AS in the AY.2018‐19 and claimed by the assessee.
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2022 (5) TMI 1674
Recovery of increments granted in error - whether increments granted to the appellant, while he was in service, can be recovered from him almost 10 years after his retirement on the ground that the said increments were granted on account of an error? - HELD THAT:- This Court in a catena of decisions has consistently held that if the excess amount was not paid on account of any misrepresentation or fraud of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order which is subsequently found to be erroneous, such excess payment of emoluments or allowances are not recoverable. This relief against the recovery is granted not because of any right of the employees but in equity, exercising judicial discretion to provide relief to the employees from the hardship that will be caused if the recovery is ordered. This Court has further held that if in a given case, it is proved that an employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, the courts may on the facts and circumstances of any particular case order for recovery of amount paid in excess.
In Sahib Ram v. State of Haryana and Others [1994 (9) TMI 373 - SUPREME COURT] this Court restrained recovery of payment which was given under the upgraded pay scale on account of wrong construction of relevant order by the authority concerned, without any misrepresentation on part of the employees.
Coming to the facts of the present case, it is not contended that on account of the misrepresentation or fraud played by the appellant, the excess amounts have been paid. The appellant has retired on 31.03.1999. In fact, the case of the respondents is that excess payment was made due to a mistake in interpreting Kerala Service Rules which was subsequently pointed out by the Accountant General.
Conclusion - An attempt to recover the said increments after passage of ten years of his retirement is unjustified.
Appeal allowed.
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2022 (5) TMI 1673
Disallowance of interest on bonds issued at the time of amalgamation - HELD THAT:- As decided in A.Y. 1995-96 disallowance of interest on the bonds issued to the shareholders of the Standard Pharmaceuticals Ltd. (SPL) on its amalgamation with the assesse-company. A.R. has very fairly conceded to this position of the matter, so that the same admits of no difference of opinion. Respectfully following the orders of the Tribunal in the assessee’s case for the earlier years, we uphold the impugned disallowance for the current year as well.
Disallowance u/s 43B(b) as employer’s contribution to PF/ESIC - HELD THAT:- It is pertinent to note that the assessee made suo moto disallowance but as regards the contribution in respect of employer, the delay whether it is within the statutory limit or not has not been demonstrated by the assessee before the AO. CIT(A) has rightly set aside this issue to the file of the AO for verifying whether payment was made on or before the due date of filing the return or not. There is no need to interfere with the finding of the CIT(A). Ground No. 2 of the assessee’s appeal is dismissed.
Disallowance of damages levied u/s 14B of the Provident Fund Act - HELD THAT:- In the present assessment year as well the facts are identical to that the earlier assessment years, yet the excess disallowance needs to be verified and the alternative contentions of the assessee as to 40% of the amount paid as damages may be allowed as compensatory.
Disallowance of salary and wages - HELD THAT:- It is pertinent to note that this issue is set aside to the file of the Assessing Officer for proper verification and adjudication in A.Y. 1996-97, 1997-98 & 1998-99 as well as in A.Y. 1999-2000. The Tribunal in A.Y. 1996-97 held that only the expenses which were incurred or has liability in terms of underlying contract, stands accrued, shall be allowed as an expenditure in the present assessment year as well. Thus, we remand back this issue to the file of the AO for verification of the relevant facts and proper adjudication. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 4 of the assessee’s appeal is partly allowed for statistical purpose.
Allowance u/s 35DDA as claimed by the assessee in respect of terminal benefit under Section 37 as revenue expenditure - HELD THAT:- The segregation done by the assessee that the entire leave salary and gratuity be allowed cannot be accepted as it is clearly a part of voluntary scheme of retirement as it is incidental to the retirement of employee. Thus, the CIT(A) has rightly allowed the deduction under Section 35DDA and confirmed the other aspects. The CIT(A) has given a detailed finding and there is no need to interfere with the same. Hence Ground of assessee’s appeal is dismissed.
Disallowance of Sundry Balances written off - A.R. submitted that the said Sundry Balances written off should be allowed as business loss - HELD THAT:- Though the issue is related to sundry creditors in this assessment year as well, this is an issue which is factual centric as per each years sundry creditors, therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for adjudicating it afresh after looking into the evidences. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 6 is partly allowed for statistical purpose.
Nature of receipt - transfer of trademark, marketing rights - revenue receipt or capital receipt - assessee while submitting its contentions stated that the assessee has suffered significant loss of revenue after the transfer of trademarks and marketing rights appears to be superficial - HELD THAT:- During the hearing before us as well as during the assessment proceedings and the appellate proceedings before the CIT(A) the assessee at no point of time submitted that the joint venture between the assessee and Cadila Healthcare Limited has totally taken over the trademark assignment as well as assignment of marketing rights exclusively from the assessee.
There are clauses in those assignment agreements which established that the assessee has made business arrangement for the benefit of its manufacturing activities and for the generation of revenue to the joint venture entered between the assessee and Cadila Healthcare Limited. The observation of the CIT(A) appears to be correct and thus there is no need to interfere with the same. The joint venture though shown as separate legal entity has not defined the separate operations from the activities of the assessee and it has participated in the activities of the assessee which was carried out earlier. Decided against assessee.
Disallowance of festival allowance, Misc. expenses, Telephone expenses, Vehicle expenses - HELD THAT:-Misc. expenses, Telephone expenses and Vehicle expenses are properly allowed by the CIT(A).
Adhoc disallowance of 5% out of selling expenses -Entire selling expenses incurred wholly and exclusively for the purposes of the business and, therefore, are of allowable nature. Moreover, the Assessing Officer has also not any adverse cogent material on record to prove that some of these expenses are of disallowable nature. On the other hand, the appellant itself has disallowed the expenses wherever the same were of disallowable nature. In view of this fact, hold that the ad hoc disallowance of 5% out of the said selling expenses amounting is not justified.
Addition of rent and insurance payment of Packart Press unit as unit was closed and there was no business activities - HELD THAT:- This issue is remanded back to the file of the Assessing Officer for verification of the relevant facts and proper adjudication accordingly.
Addition made u/s 40A(9) regarding the previous year’s expenses and foreign travel - HELD THAT:-Liability is crystallized during the year on account of settlement with those parties in current year as the assessee is follows mercantile system of accounting. The said expenses were also allowed in previous assessment years by the Tribunal as well. Hence, the CIT(A) has rightly allowed the previous period expenses. As regards to foreign travel expenses, the assessee placed on record all the details that the expenses were incurred for business purpose only and the same evidence was before the Assessing Officer. Thus, the CIT(A) has rightly allowed foreign travel expenses.
Transfer of Trademarks and Marketing rights allowed.
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2022 (5) TMI 1672
Reopening of assessment u/s 147 - disallowance of expenditure inadmissible u/s. 37(1) related to illegal mining - HELD THAT:- CIT (A) while quashing the reopening of assessment has given a categorical finding that the AO has accepted information from outside source without subjecting it to critical scrutiny and that the AO’s “reason to believe” that income had escaped assessment was not based on an independent application of mind to the facts available. The revenue, admittedly has not been able to dislodge any of the categorical findings of the ld. CIT(A). This being so, we find no error in the order of the ld. CIT (A) in quashing the reopening of assessment. Consequently, Ground No. 1 of revenue stands dismissed.
Illegal mining and disallowance of expenditure u/s. 37(1) - CIT(A) held that the disallowance u/s. 37 would only come into play if the assessee had been penalized under the appropriate sections of the respective statute and if the assessee has claimed this penalty as an expenses in the profit and loss account.
CIT (A) further goes on to hold that the payments made by the assessee to various parties represent genuine business expenditure for mining activities carried out by these parties like raising of iron ore and transportation of the same - they are neither in the nature of bribes/protection money nor do they suffer from the taint of illegality as no statutory law has been violated by the assessee in the course of incurring this expenditure. As the revenue has not been able to dislodge the findings of fact arrived at by the ld. CIT(A), we find no error in the findings of the ld. CIT(A).
Penalty u/s. 271(1)(c) - As the appeals filed by the revenue in quantum appeals have been dismissed above, the appeals against the deletion of penalty u/s. 271(1)(c) by the CIT (A) does not have any legs to stand.
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2022 (5) TMI 1671
Declination to allow an application seeking interim measures of protection under section 17 of the A & C Act - principal ground for seeking to secure the amount in dispute in the counter-claims was the alleged ruinous financial position of the claimant, who is the respondent in the present appeal - HELD THAT:- In the present case, quite clearly, the learned Sole Arbitrator has declined to grant the interlocutory order sought by the appellants in exercise of his discretionary power under section 17 of the A & C Act. Has this discretionary power been exercised in a manner that is palpably arbitrary, capricious, irrational or perverse? In the opinion of this court, the answer to that question is an emphatic 'No'. The interlocutory relief sought was to secure the counter-claims made by the appellants, which counter-claims are evidently disputed and the determination of which is yet to be made. In fact the learned Sole Arbitrator was in the process of hearing the appellants on their counter-claims. Interlocutory orders were sought on the ground that the respondent's financial position was weak and would render any award granted on the counter-claims, a mere 'paper-award'.
This ground was premised solely on the fact that the respondent's net-worth was in the 'negative'. However, the learned Sole Arbitrator proceeded objectively on the basis that the 'negative' net-worth had reduced over the period March 2017 to March 2021, partly for the reason that the respondent had discharged the dues owed by DMT, i.e. the unit purchased from the appellants, to third party creditors. In any case, grant of the interlocutory relief sought, would have amounted to converting the indeterminate and unsecured counter-claims preferred by the appellants, into secure claims, which is ordinarily frowned upon in law.
Conclusion - Viewed from the settled perspective of guarded and sparing use of the powers under section 37(2)(b) of the A & C Act in only exceptional circumstances; and even more so when the exercise of discretion by the arbitrator is not seen to be arbitrary, capricious, irrational or perverse, this court finds no reason to interfere in the order made by the learned Sole Arbitrator in this case.
The appeal under section 37(b) of the A & C Act is accordingly dismissed, as being without merit.
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2022 (5) TMI 1670
Unexplained cash credit u/s. 68 - Determination of profit element from the 'on-money' receipts - assessee itself accepted that On-Money receipts as unaccounted income in the form of advances -additions of total gross receipts have been made and not the profit amount - CIT(A) restricted the addition to 20% of gross receipts, assuming profit element @ 20%
HELD THAT:- The assessees own records are one of the factors which has to be considered and kept in mind while estimating the profit as has been held in the case of Delta Engineering Co [1990 (5) TMI 25 - ALLAHABAD HIGH COURT]
Net profit is taxable income. Hence, considering the facts and circumstances of the case, we direct the assessing officer to compute the net profit @ 8% of the gross receipts.
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2022 (5) TMI 1669
Validity of recent amendment vide the Finance Act, 2022, which come into effect from 30.03.2022, in particular, clause 97 - HELD THAT:- List these matters on 18th July, 2022 along with the proposed writ petition, to be filed by the respondent(s) for further consideration.
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2022 (5) TMI 1668
Maintainability of the Writ Petition in public interest - Release of entire segregated trial data for each of the phases of trials that have been undertaken with respect to the vaccines being administered in India - lack of transparency in the disclosure of segregated clinical trial data in the public domain.
Maintainability of the Writ Petition in public interest - HELD THAT:- A petition had been filed by the Petitioner earlier, during his tenure as a member of the NTAGI, with respect to the Rotavac vaccine claiming that adequate data from the clinical trials had not been provided to the NTAGI. The rejoinder affidavit further states that the petition was dismissed by this Court, on the ground that the Petitioner could not have filed the said petition while being a member of the NTAGI. The enthusiasm of the Petitioner in approaching this Court has not gone unobserved. However, as the issues raised by the Petitioner have a bearing on public health and pertain to the fundamental rights of the country’s populace, it is opined that they warrant due consideration by this Court. Therefore, it is not required to entertain the challenge mounted by the Union of India to the maintainability of the Writ Petition.
Judicial review of executive decisions based on expert opinion - HELD THAT:- There can be no ambiguity in the principles of law relating to judicial review laid down by this Court. A perusal of the judgments referred to above would clearly show that this Court would be slow in interfering with matters of policy, especially those connected to public health. There is also no doubt that wide latitude is given to executive opinion which is based on expert advice. However, it does not mean that this Court will not look into cases where violation of fundamental rights is involved and the decision of the executive is manifestly arbitrary or unreasonable. It is true that this Court lacks the expertise to arrive at conclusions from divergent opinions of scientific issues but that does not prevent this Court from examining the issues raised in this Writ Petition, especially those that concern violation of Article 21 of the Constitution of India.
Vaccine mandates violate Article 21 of the Constitution of India, which protects personal autonomy and bodily integrity - HELD THAT:- On one hand, the Union of India made it clear in the counter-affidavit that vaccination is voluntary and on the other, a series of advisories and material had been filed by the Union of India, supporting the claim of vaccination being mandatory - any restrictions placed on personal autonomy of individuals would be violative of Article 21, unless the criteria laid down in K.S. Puttaswamy [2017 (8) TMI 938 - SUPREME COURT] is met.
Evolution of COVID-19 and vaccines - HELD THAT:- Vaccination of a majority of the population of this country has undoubtedly been instrumental in preventing severe disease, hospitalisation and deaths, and benefited the community at large, especially those members with co-morbidities, the elderly and sick persons. Even the Petitioner is not opposed to the vaccination programme and does not challenge the vaccination drive of the Government of India, as has been reiterated by him during the course of his arguments. Exception to the vaccination programme taken by the Petitioner is only to coercive vaccination through vaccine mandates, which place unjustifiable restrictions on those who wish to not be vaccinated.
In light of the virulent mutations of the COVID-19 virus and advice of experts from the WHO as well as common findings of several studies on this subject, the vaccination drive that is being undertaken by the Government of India in the interest of public health cannot be faulted with.
Personal autonomy and public health - HELD THAT:- i) Bodily integrity is protected Under Article 21 of the Constitution of India and no individual can be forced to be vaccinated. ii) Personal autonomy of an individual involves the right of an individual to determine how they should live their own life, which consequently encompasses the right to refuse to undergo any medical treatment in the sphere of individual health. iii) Persons who are keen to not be vaccinated on account of personal beliefs or preferences, can avoid vaccination, without anyone physically compelling them to be vaccinated. However, if there is a likelihood of such individuals spreading the infection to other people or contributing to mutation of the virus or burdening of the public health infrastructure, thereby affecting communitarian health at large, protection of which is undoubtedly a legitimate State aim of paramount significance in this collective battle against the pandemic, the Government can regulate such public health concerns by imposing certain limitations on individual rights that are reasonable and proportionate to the object sought to be fulfilled.
Assessment of the vaccine mandates imposed by State Governments - HELD THAT:- While there is abundant data to show that getting vaccinated continues to be the dominant expert advice even in the face of new variants, no submission nor any data has been put forth to justify restrictions only on unvaccinated individuals when emerging scientific evidence appears to indicate that the risk of transmission of the virus from unvaccinated individuals is almost on par with that from vaccinated persons. To put it differently, neither the Union of India nor the State Governments have produced any material before this Court to justify the discriminatory treatment of unvaccinated individuals in public places by imposition of vaccine mandates - While vaccination mandates in the era of prevalence of the variants prior to the Delta variant may have withstood constitutional scrutiny, in light of the data presented by the Petitioner, which has not been controverted by the Union of India as well as the State Governments, it is opined that the restrictions on unvaccinated individuals imposed through vaccine mandates cannot be considered to be proportionate, especially since both vaccinated and unvaccinated individuals presently appear to be susceptible to transmission of the virus at similar levels.
Non-disclosure of segregated clinical trial data in public domain - HELD THAT:- The information provided on behalf of the Union of India substantiates that the data provided by the vaccine manufacturers was considered by the SEC over a period of time and several conditions were imposed at the time of recommending approvals, which have been modified or lifted subsequently on availability of further data arising from the clinical trials before the SEC, as can be seen from the minutes of the meetings of the SEC, available on the website of the MoHFW. We do not agree with the submission on behalf of the Petitioner that emergency approvals to the vaccines were given in haste, without properly reviewing the data from clinical trials - As long as the relevant information relating to the minutes of the meetings of the regulatory bodies and the key outcomes and findings of the trials are available in public domain, the Petitioner cannot contend that every minute detail relating to clinical trials be placed in public domain to enable an individual to take an informed, conscious decision to be vaccinated or not. Given the widespread affliction caused by the virus, there was an imminent need of manufacturing vaccines which would keep the infection at bay - A perusal of the material placed on record would show that there is material compliance with the procedure prescribed under the Drugs and Cosmetics Act, 1940 and the 2019 Rules, before grant of approval for the emergency use of the two vaccines.
Improper collection and reporting of AEFIs - HELD THAT:- The National AEFI Surveillance Secretariat has been functioning for 10 years and as has been pointed out, there is a well-established protocol in place for identification and monitoring of AEFIs. The website of the MoHFW carries the results of causality assessment of AEFI cases, from which the public can obtain relevant information pertaining to AEFIs. We have been informed that a thorough causality assessment analysis of AEFIs is carried out by experts and not every severe disease and death can be attributed to vaccination. Reactions are examined by experts specifically trained to undertake causality analysis before notifying such reactions as adverse events arising from vaccination. There is a well-defined mechanism for collection of data relating to adverse events that occur due to COVID-19 vaccines and the Government of India has taken steps to direct all concerned medical professionals at the ground level to report adverse events.
There is an imminent need for collection of requisite data of adverse events and wider participation of people in reporting the adverse events is necessary for the purpose of gathering correct information. Thus, the Union of India is directed to facilitate the reporting of suspected adverse events by individuals and private doctors on a virtual platform and the reports so made shall be publicly accessible after being given unique identification numbers, without listing any personal or confidential data of the persons reporting. All necessary steps to create awareness of, and to navigate, this platform for self-reporting shall be effectuated by the Government, roping in and training relevant participants right from the ground level of vaccine administration.
Vaccination of Children - HELD THAT:- The Union of India has stated that the results of clinical trials of COVAXIN for paediatric population have already been published. It is also noted that for the age group of 12 to 14 years, Biological E's Corbevax is being administered. Keeping in line with the WHO Statement on Clinical Trials, the Declaration of Helsinki and the GCP guidelines, the Union of India is directed to ensure that key findings and results of the clinical trials of Corbevax be published at the earliest, if not already done. Neither vaccine is an mRNA vaccine and to this extent, the apprehensions of the Petitioner with respect to the associated risks of mRNA vaccines are unfounded in the present situation.
Conclusion - (i) Vaccine mandates should be reviewed in light of current data. (ii) No need to disclose primary clinical trial data beyond existing requirements. (iii) AEFI reporting system is adequate, but self-reporting should be enabled. (iv) Paediatric vaccination is justified and should continue.
Petition disposed off.
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2022 (5) TMI 1667
Disallowance of deduction of travelling expenses - assessee company had incurred most of the expenses in cash and the same were not supported by proper bills and vouchers, proper bills and details of expenses regarding travelling by the employees have not been maintained and the involvement of personal element in the tour and travels undertaken by the directors of the assessee company could not be ruled out.
HELD THAT:- As assessee company had failed to produce proper bills and vouchers, as well as had not maintained proper bills in respect of the traveling expenses of its employees, we find the same are merely in the nature of general observations and not a single instance of any such bill/voucher or details suffering from any infirmity had been referred to by him while making the aforesaid disallowance. Accordingly, we are unable to concur with the aforesaid reasoning of the A.O. for making the disallowance in question which thereafter had been sustained by the CIT(Appeals).
As regards the observation of the A.O that the involvement of personal element in the tours and travels of the directors of the assessee company cannot be ruled out, we are unable to persuade ourselves to subscribe to the same. As the assessee before us is a company, i.e, a distinct assessable entity as per the definition of “person” contemplated in Sec. 2(31) of the Act, therefore, being an inanimate person there cannot be anything personal about such entity. Thus we vacate the ad-hoc disallowance.
For deduction of vehicle running and maintenance expenses we are unable to concur with the disallowance made by the A.O. on the basis that they are not supported by any material. As regards the observation of the A.O that the personal usage of the vehicles and the consequential expenses towards running and maintenance expenses of the vehicles cannot be ruled out, we are of the considered view, that as the assessee is a company, i.e, a distinct assessable entity therefore, being an inanimate person there cannot be anything personal element qua incurring of running and maintenance expenses of its vehicles. In view of our aforesaid observations we vacate the ad-hoc disallowance.
Ad-hoc disallowance made by the A.O. out of communication expenses we find that the same had been made for the reason that as per the A.O. the involvement of personal element in usage of telephones and mobiles by the assessee company cannot be ruled out. On the basis of our aforesaid observations that an assessee company is a distinct assessable entity, i.e an inanimate person, therefore, no disallowance on account of personal expenditure could have been validly made, we vacate the aforesaid ad-hoc disallowance made by the A.O.
Ad-hoc disallowance of depreciation on vehicles we are of the considered view that now when for the reasons discussed by us hereinabove the disallowance of vehicle running and maintenance expenses had been ruled out by us, therefore, backed by the said reasoning no part of ad-hoc disallowance of depreciation on account of personal usage of the vehicles by the directors can be sustained.
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2022 (5) TMI 1666
Condonation of delay - appeal of assessee is time barred by 689 days - as contended by the assessee that the delay in submission of the appeal occurred due to the fact that the assessee was totally in dark about the fate of the appeal pending before the CIT(A) which to assesse’s knowledge only upon receipt of the penalty notice u/s. 271(1)(c) issued by the NFAC - HELD THAT:- As the assessee immediately took steps to submit the appeal before the ITAT which was done on 02.02.2022. Also vide order [2022 (1) TMI 385 - SC ORDER by the Hon’ble Supreme Court, the period from 15.03.2020 to 28.02.2022 is to be excluded for the purpose of computing the limitation period during the COVID-19 Pandemic. Considering the facts and the explanation of the assessee, we condone the delay in filing the appeal and admit it for adjudication.
Ex parte order passed by CIT(A) without affording reasonable time to the assessee to comply with the hearing notice issued - HELD THAT:- Keeping in mind the provision of sections 250 and 251 of the Act and the decision of Tin Box Ltd. [2001 (2) TMI 13 - SUPREME COURT] is incumbent upon the Ld. CIT(A) to pass a speaking order on the merits of the case by examining, verifying and analyzing the material on record.
Since there are no meritorious finding given by the Ld. CIT(A) on the submissions made by the assessee and also considering the grounds raised by the assessee where the Ld. CIT(A) has passed an ex parte order without giving opportunity of being heard, we find it fit to remit the matter back to the file of the Ld. CIT(A) for his objective and meritorious observations and findings on the submissions made by the assessee.
Appeal of assessee is allowed for statistical purpose.
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2022 (5) TMI 1665
Deduction claimed u/s 80IB(10) - return of income has not been filed within the due date u/s 139(1) as required by section 80AC - sufficient and reasonable cause occurred in filing the return late - HELD THAT:- It is sufficiently clear from the assessee’s averments that the learned lower authorities have declined to entertain its Section 80IB(10) deduction claim for the reason that the same had not been raised in its return filed within the “due date” prescribed under Section 139(1) of the Act. And that the learned lower authorities quote Sections 80A(5) r.w.s. 80AC of the Act. Case law in EBR Enterprises vs. Union of India [2019 (6) TMI 484 - BOMBAY HIGH COURT].holds that filing of such return under Section 139(1) for claiming Chapter VIA deduction is very much a mandatory condition. We thus adopt stricter direction in light of Commissioner of Customs vs. Dilip Kumar [2018 (7) TMI 1826 - SUPREME COURT] and affirm learned lower authorities action rejecting the impugned deduction claimed.
Our attention to the assessee’s petition dated 23.04.2022 that it had filed an application before the CBDT under Section 119(2)(b) seeking condonation of delay in filing the above statutory return. He clarified that the Board had rejected the same on 11.10.2019. And that the assessee’s Writ Petition challenging the same is pending for final adjudication before the hon'ble jurisdictional high court. He therefore sought adjournment to await its final outcome. We find no merit in assessee’s instant adjournment request as its return is found to have been filed well beyond the “due date” prescribed in Section 139(1) of the Act. The assessee’s foregoing pleas fail accordingly. Assessee appeal dismissed.
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2022 (5) TMI 1663
Validity of the Errata Notification dated 14.07.2016 issued by the State of Goa modifying/correcting its earlier notification dated 23/24.05.2016 by which the State of Goa fixed the rates of minimum wages in various sectors - HELD THAT:- Vide Notification dated 23/24.05.2016, the State Government determined the minimum wages, which included the basic rates of wages and the special allowance. The notification specifically stated that the said notification has been issued in exercise of powers conferred by Clause (b) of Sub-section (1) of Section 3 read with Clause (i) of Sub-section (1) of Section 4 and Sub-section (2) of Section 5 of the Act, 1948. As can be seen from the contents of the said notification, the said notification was issued in consultation with the Minimum Wage Advisory Board and thereafter the minimum wages were revised. Thus, the minimum wages were revised under Clause (i) of Sub-section (1) of Section 4 after following the due procedure as required Under Section 5.
Once the minimum wages were revised and determined, which included the basic rates of wages and the special allowance as per Section 4(1)(i) of the Act, 1948, thereafter it cannot be said that there was any clerical and/or arithmetical mistake in mentioning Clause (i). The minimum wages were revised and determined even after consultation with the Minimum Wage Advisory Board as required Under Section 5 of the Act, 1948. Therefore, once there was no mistake, the same could not have been corrected in exercise of powers Under Section 10 of the Act, 1948.
In the present case, a conscious decision was taken by the State Government after consultation with the Minimum Wage Advisory Board and thereafter the minimum wages were revised and determined in exercise of power Under Section 4(1)(i). Therefore, it cannot be said that there was any arithmetical and/or clerical mistake, which could have been corrected in exercise of powers Under Section 10 of the Act, 1948.
Even by applying Section 21 of the General Clauses Act and assuming that the State was having power to amend, vary or rescind the notification, in that case also such power can be exercised in a like manner, namely after following the procedure, which was followed while issuing the original notification. Therefore, in the present case, assuming that the State was having the power to amend, vary or rescind the notification in exercise of powers Under Section 21 of the General Clauses Act, in that case also, when the earlier notification dated 23/24.05.2016 was issued after following the due procedure as required Under Sections 4 and 5 of the Act, 1948, the same procedure ought to have been followed even while varying and/or modifying the notification. Hence, the notification dated 23/24.05.2016 could not have been modified by such an Errata Notification which was issued in purported exercise of Section 10 of the Act, 1948.
Conclusion - The Errata Notification dated 14.07.2016 was wholly without jurisdiction and contrary to the relevant provisions of the Minimum Wages Act, 1948, which ought to have been set aside by the High Court. The High Court has erred in dismissing the writ petition challenging the Errata Notification dated 14.07.2016 by accepting the case on behalf of the State that there was a clerical mistake, which is subsequently corrected by the Errata Notification.
Appeal allowed.
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2022 (5) TMI 1662
Validity of assessment order passed u/s 147 r.w.s. 144B - violation of principle of natural justice by not providing the petitioner an opportunity to file reply to the show-cause-notice - HELD THAT:- The impugned assessment order dated 30th March, 2022, which has been passed before the expiry of the time granted by the Assessing Officer to the petitioner to file reply to the aforesaid show-cause- notice relating to the draft assessment in question and further in view of the technical glitches in the portal of the Department by which petitioner could not file his aforesaid objection, the impugned assessment order is not sustainable in law and the same is set aside and the case is remanded back to the Assessing Officer concerned to pass a fresh assessment order in accordance with law after giving an opportunity to the petitioner to file reply to the aforesaid show-cause-notice
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2022 (5) TMI 1661
Rectification u/s 154 - entitlement to weighted deduction - as pleaded in the application that the assessee had made donation to M/s Herbicure Healthcare Bio Herbal Research Foundation which was earlier recognised as scientific research institute and was grated certificate u/s 35(1)(ii) to receive donation and the donors of the said foundation could claim weighted deduction u/s 35(1) but approval to the said institution u/s 35(1)(ii) was withdrawn retrospectively, therefore the assessee was not entitled to weighted deduction. It has, therefore, been pleaded that the decision of the Tribunal [2019 (11) TMI 1843 - ITAT KOLKATA] was passed on wrong appreciation of facts
HELD THAT:- AR has invited our attention to the impugned order of the Tribunal dated 13.11.2019 to point out that the above facts of withdrawal of approval to the said M/s Herbicure Healthcare Bio Herbal Research Foundation has been duly taken note of by the Tribunal in the impugned order.
Since the aforesaid fact has already been looked into by the Tribunal and the issue has been adjudicated after considering the said fact, therefore, it cannot be said that any error apparent on record has occurred in the order of the Tribunal.
Revenue through this application wants to re-contest the issue by way of review petition which cannot be allowed as per the provisions of the Act. The Revenue if is aggrieved by the order of the Tribunal it can file appeal to the higher authority/Hon’ble High Court. There is no merit in this petition of the Revenue and the same is accordingly dismissed.
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2022 (5) TMI 1660
Income deemed to accrue or arise in India - Taxability of receipts towards sale of software products - income from sale of shrink-wrapped software is taxable in India, being in the nature of royalty under the provisions of section 9(1)(vi) as well as Article 12(3) of the DTAA between India and USA - assessee is a non resident company incorporated in USA, which is into the business of developing and marketing of 3D mechanical design solutions - HELD THAT:- As decided by tribunal in order [2020 (7) TMI 97 - ITAT MUMBAI] for A.Y. 2016-17 held that income derived by the assessee from the sale of “shrink wrapped software” being a copy righted article would not be construed as royalty.
So following the earlier year precedence on the identical issue by the co-ordinate Bench of the Tribunal, we are of the considered view that income derived by the assessee from the sale of “shrink wrapped software” being a copy righted article would not be construed as royalty under the provisions of section 9(1)(vi) of the Act as well as Article 12(13) of the DTAA between India and the USA. Co-ordinate Bench of the Tribunal also held that assessee being a non resident company incorporated in the USA would not be liable to tax in India in respect of the receipt from the sale of software by treating the same in the nature of royalty and as such ordered to be deleted. Merely because of the fact that the Revenue has gone in appeal in the earlier years the findings returned by the co-ordinate Bench of the Tribunal cannot be brushed aside. Assessee appeal allowed.
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2022 (5) TMI 1659
Disallowance of deduction claimed u/s 80IC - validity of adjustment u/s 143(1) - Assessee not filed Form No. 10CCB in support of its claim of deduction along with the return but in the tax audit report in Form 3CD - procedural irregularity and legitimate quantification for disallowance - HELD THAT:- If the adjustment has been made on the basis of first defect i.e., for procedural irregularity then according to the decisions referred by the ld. Counsel for the assessee, this irregularity is not fatal enough to deny the claim of deduction u/s 80IC.
More so, when in response to the first proposed adjustment, the assessee has reiterated submission of Form 10CCB. As far as the arguments raised by the ld. D/R is concerned, if a disallowance is to be made after filing of Form 10CCB, then it is a debatable issue and the same is not permissible u/s 143(1) in a prima facie adjustment and the assessee should have been given a notice for that.
If a disallowance is required to be established by arguments and long drawn process of reasoning on points, which there may conceivably be two opinions about, then the case should have been selected for scrutiny assessment. Thus, we delete the disallowance of deduction u/s 80IC made by the AO and upheld by the ld. CIT(A) and allow the appeal of the assessee.
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2022 (5) TMI 1658
Reopening of assessment u/s 147 - reasons to believe - reliance on observations of the Investigation Wing - non independent application of mind by AO - HELD THAT:- As no live link presented by the AO between the material available with him i.e. the report of the investigation and to reason to belief that the assessee has tried to evade the assessment for the particular year in question. Simply stating and doubting that the assessee is involved in obtaining accommodation entries without providing proof, reason, information to back-up the claim cannot be considered as a valid reason to issue notice u/s 148 of the I.T. Act. There is no independent application of mind that could be deciphered from the reasons recorded. There is no reference to examination of the returns filed and whether the entries taken or on account of bogus capital, a balance sheet item or on account of bogus sales or purchases on account of revenue account. As per the record and the reasons recorded, no enquiries have been conducted by the Assessing Officer to come to a conclusion or reasons to belief with regard to evasion of tax which has escaped assessment.
Placing reliance on the decisions of Meenakshi Overseas (P) Ltd. [2017 (5) TMI 1428 - DELHI HIGH COURT], G&G Pharma [2015 (10) TMI 754 - DELHI HIGH COURT], Sabh Infrastructure[2017 (9) TMI 1589 - DELHI HIGH COURT] and Pr. CIT Vs. RMC Potyvinyl (I) Ltd [2017 (7) TMI 371 - DELHI HIGH COURT] wherein the Delhi High Court has held that observations of the Investigation Wing should not be treated as conclusions without the AO independently verifying the same, in the absence of which the Hon’ble Court held that the reopening of assessment was bad in law. We hold that the proceedings u/s 148 are void ab initio and are liable to be quashed. Decided in favour of assessee.
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2022 (5) TMI 1657
Challenge to election notices issued by the respondent nos.1 & 2, the election officers appointed for conducting elections for the management committee of the respondent no.4/All India Motor Transport Congress for the term 2022-24.
It is contended that merely because the petitioner is the Managing Director of a company, which is a member of the respondent no.4, it would not entitle him to challenge the election thereof and that too, without placing on record any resolution to this effect by M/s Karnataka Freight Movers Private Limited, of which he is a Managing Director.
HELD THAT:- It is found that even though there can be no dispute to the settled legal position that a writ petition under Article 226 of the Constitution of India, can in certain circumstances lie against a private body as well, the real test, however, in such cases is whether the said private body is discharging any public functions or not. In the present case, once it is an admitted position that the respondent no. 4 is a private company registered under Section 8 of the Companies Act, 2013, the question that really needs to be determined is whether the respondent no.4 can be said to be discharging any public function, so as to make it amenable to the writ jurisdiction of this Court.
When the factual position that the respondent no.4 is representing the interests of only 6500 members/transporters, is considered with reference to the population of the country, and the number of transporters engaged in this industry, it clearly emerges that the respondent no.4 represents only the interests of a small number of transporters, which is not sufficient enough to categorize the said company as a body discharging any public function.
The decisions in Ramesh Ahluwalia [2012 (9) TMI 1135 - SUPREME COURT], ROYCHAN ABRAHAM VERSUS STATE OF U.P. AND ORS. [2019 (2) TMI 2110 - ALLAHABAD HIGH COURT] and C. DHANABAL; S. SANKAR; D. JOSEPH MANOHARAN VERSUS THE CENTRAL REGISTRAR OF CO-OPERATIVE SOCIETIES, DEPARTMENT OF CO-OPERATION, NEW DELHI AND ORS. [2018 (9) TMI 2148 - MADRAS HIGH COURT] relied upon by the petitioners, reiterate the well settled principle that a writ petition would be maintainable against a private party if it discharges a public function. Although the respondent no.4 has been established to cater to the interests of transporters and the transport industry, it represents a very small faction of transporters in the country. The respondent no. 4 is clearly not discharging any public functions and therefore these decisions relied upon by the petitioner are not at all applicable to the facts of the present case.
In view of the conclusion that no writ petition is maintainable against the respondent no. 4, it being a private party not discharging any public function, it is not deemed necessary to examine the respondent’s objections that the petitioner has no locus to approach this Court or to assail the election process of respondent no. 4.
For the aforesaid reasons, the writ petition is dismissed.
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2022 (5) TMI 1656
HRA Allowances - no letter/application made by the petitioner regarding allotment/non-allotment of company’s residence at the new place of posting during the first six months of his posting or even thereafter - "accommodation” v/s “residence”- grievance of the petitioner was that since the present employer of the petitioner failed to provide accommodation/quarter to the petitioner. The petitioner was eligible for HRA at the rate of 30 per cent of his basic salary for six months in terms of Rule 3.4 of the said HRA Rules
HELD THAT:- On a close scrutiny of the said Rule 3.4 of the HRA Rule the same would apply for an employee when such an employee had taken over duty in the new station and not been allotted accommodation by the employer company at the said new station. In case, he had been allotted a residence at the new station (place and posting), his entitlement to House Rent Allowance at the old rate, would be limited only to the period of joining time in the manner mentioned therein. From a harmonious reading and upon a true construction of the said Rule 3.4 it is clear that, in the first paragraph the expression used “accommodation” and in the second paragraph the expression used “residence”.
The distinction between the two expressions are very clear and obvious. The expression “accommodation” denotes an immediate one simultaneously with the new posting and the expression “residence” denotes with some stability of a permanent nature, of course limited to the course of his employment only. In the facts of the instant case, the petitioner was admittedly accommodated at the said Sitalpur Guest House immediately on his transferred posting where he stayed for a short while and left for a hotel at Asansol at his own expense. Therefore, “accommodation” was duly provided to the petitioner immediately on his transferred posting where he refused to stay after a short while as stated above. Such an act on the part of the petitioner made him ineligible to receive House Rent Allowance from his employer. The House Rent Allowance was, therefore, not payable to the petitioner as claimed in his writ petition.
Ratio decided In the matter of Patil Vijay Kuraar [1984 (8) TMI 68 - KARNATAKA HIGH COURT] has no application in the facts of this case, as there was no case of tenancy existed or claimed by the writ petitioner. So application of the relevant provision on the rent paid by an individual employee under the said 1961 Act did not arise in the facts of this case. The case of the petitioner was governed by the relevant HRA Rules as discussed above, which made the petitioner ineligible from receiving HRA.
Even under the communication dated April 03, 1987 being Annexure XVI which was issued by Coal India Limited and made a part of the HRA Rules, did not make the petitioner eligible to receive HRA because the petitioner did not stay at the said guest house provided by his employer at a transferred place except a short while and not for the required tenure and then he shifted to a hotel at Asansol at his own expense by surrendering the same. Thus, the petitioner did not adhere to the relevant HRA Rules as discussed above. WP dismissed.
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2022 (5) TMI 1655
Seeking quashing of FIR - petitioners submits that since it is a private dispute between the parties and they have effected a compromise, no useful purpose would be served to continue the proceedings against the petitioners in furtherance of the registration of the FIR - HELD THAT:- Admittedly, the petitioners and the complainant have entered into a compromise. However, a perusal of the FIR would reveal that a complaint has been submitted before the GST authorities against the petitioners. The police proceedings would also reveal that M/s Jain Trading Company-complainant had submitted a complaint against M/s Suraj Rubber Industries regarding questioned bills/cheques returned to the Commissioner, Central GST Commissionerate, Jalandhar on 07.06.2019.
As per the police proceedings, the status report of this complaint had been obtained by M/s Jain Trading Company from the GST Department, which has stated that M/s Suraj Rubber Indus tries of which the petitioners are the partners have failed to appear before the GST Department despite repeated reminders. Certain other allegations have been levelled against the petitioners’ firm regarding GST violations.
In the present case, the offence pertains not only to inter se dispute between the parties but there is an element of possible evasion of GST. As per the judgments passed in the cases of State of Madhya Pradesh [2019 (3) TMI 1935 - SUPREME COURT] and Parbatbhai Aahir @ Parbatbhai Bhimsinhbhai Karmur and Ors. [2017 (10) TMI 1194 - SUPREME COURT], the power to quash the FIR on the basis of compromise is not to be exercised for offences under the Special Statutes like the Prevention of Corruption Act, etc.
In the present case, the investigation might reveal the commission of an offence under the GST Act.
The present petition is dismissed.
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