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TMI Tax Updates - e-Newsletter
January 21, 2025
Case Laws in this Newsletter:
GST
Income Tax
Customs
FEMA
Service Tax
Articles
By: Ishita Ramani
Summary: Choosing a Private Limited Company (Pvt. Ltd.) structure offers startups several advantages. It provides limited liability protection, safeguarding shareholders' personal assets from financial or legal issues. This structure facilitates access to funding from venture capitalists and investors due to its established shareholding system. It enhances credibility and professionalism, appealing to clients and investors. The management structure supports efficient decision-making and scalability through share issuance. Pvt. Ltd. companies benefit from tax advantages and legal compliance, ensuring transparency. Additionally, they offer business continuity through perpetual succession, maintaining operations despite changes in ownership. Registering as a Pvt. Ltd. company is beneficial for long-term growth and investor confidence.
By: YAGAY andSUN
Summary: Rules of Origin (ROO) are criteria used in international trade agreements to determine the national source of a product, ensuring that only products genuinely produced or sufficiently processed within the trading bloc benefit from preferential tariffs. ROO prevent trade deflection, ensure fair use of preferences, and aid customs administration. They include non-preferential and preferential types, with criteria such as wholly obtained, substantial transformation, regional value content, cumulative rules, and de minimis rules. Challenges include complexity, verification, transshipment, and compliance costs. Understanding ROO is essential for businesses to secure preferential tariff treatment in trade agreements.
By: DEVKUMAR KOTHARI and CA UMA KOTHARI
Summary: The article discusses the issue of condonation of delay in filing appeals, focusing on a recent judgment where the delay was attributed to the inaction of tax authorities on rectification petitions filed by the assessee. The tribunal found a reasonable cause for the delay and condoned it, allowing the appeal on merits. The article highlights the diligent efforts of the assessee's representatives and the failure of authorities to follow binding precedents and instructions, leading to financial burdens on the assessee. It suggests that justice was served by stopping harassment from tax authorities, although the issue of appeal costs was not specifically addressed.
By: Bimal jain
Summary: The Andhra Pradesh High Court ruled that the Central GST Department must issue orders and documents in both Hindi and English. This decision arose from a writ petition filed by a company that received an order only in Hindi, despite not being conversant with the language. The court referenced the Government and Official Language Act, 1963, and the Official Language Rules, 1976, which mandate bilingual issuance of documents by the Central Government. The court directed the Commissioner (Appeals) to provide the order in English, clarifying that the limitation period starts when the English order is made available to the petitioner.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: In a Supreme Court case involving the Enforcement Directorate (ED) and accused parties under the Prevention of Money Laundering Act (PMLA), the court ruled that the ED cannot arrest an accused after a Special Court has taken cognizance of a complaint. The court emphasized that once cognizance is taken, the accused should not be deemed in custody and need not apply for bail unless they fail to appear after summons. The court also clarified that the ED must seek court permission for custody if needed for further investigation. This decision underscores the procedural safeguards for accused individuals under the PMLA.
By: YAGAY andSUN
Summary: International trade agreements such as FTAs, PTAs, CECAs, and CEPAs are designed to facilitate trade by reducing barriers like tariffs. FTAs eliminate or significantly reduce tariffs between member countries, making imports cheaper. PTAs offer preferential tariff rates on selected goods, not eliminating all tariffs. CECAs involve deeper economic cooperation, including trade, investment, and intellectual property, offering reduced tariffs and enhanced market access. CEPAs are broader, focusing on economic integration beyond trade, including labor mobility and regulations. Each agreement type benefits imports from member countries by lowering costs and improving market access.
By: YAGAY andSUN
Summary: The ATA Carnet is an international customs document allowing duty-free and tax-free temporary importation of goods for up to one year. Issued by authorized chambers of commerce, it facilitates the movement of items like commercial samples, exhibition goods, and professional equipment across 81 countries, including the USA, UK, China, and India. Compliance with ATA Carnet rules is crucial to avoid penalties, such as fines or confiscation of goods. Users must ensure proper documentation, adhere to the validity period, and guarantee re-exportation. The system is self-policing; failure to comply results in customs duties. Legal issues typically involve misuse, late re-exportation, incorrect declarations, and non-recognition in non-signatory countries.
By: YAGAY andSUN
Summary: Marine insurance is a specialized form of insurance that covers financial losses or damage to goods, vessels, and cargo during maritime transportation. It protects individuals or businesses from sea-related risks, including damage to ships and cargo, and liabilities. Coverage can extend to incidents during transit via other modes like rail or road. Key types include hull, cargo, liability, freight, and marine liability insurance. Marine insurance covers perils like piracy, fire, natural disasters, and theft. While it aids risk management and compliance with regulations, challenges include high premiums, exclusions, and complex claims processes. Understanding policy terms is crucial to avoid coverage gaps.
News
Summary: A Delhi court granted bail to eight individuals accused in a GST refund fraud case involving approximately Rs 54 crore claimed by around 500 non-existent firms. The court noted the accused were poor and had been in custody for about 90 days. The prosecution alleged that the accused conspired to register fake firms to claim GST refunds without actual business operations. The firms purportedly exported medicines and medical items only on paper. The judge highlighted the involvement of other accused, including those controlling the 96 firms that had obtained refunds, and criticized the lack of action against them.
Summary: The Congress party criticized the Modi government's economic policies, arguing they have undermined investor confidence and transformed the "ease of doing business" into "unease in doing business." They urged the upcoming budget to address "raid raj and tax terrorism" and protect Indian manufacturing jobs. The party highlighted issues such as a complex GST system, rising Chinese imports, and stagnant wages, claiming these factors have weakened private domestic investment and led to a significant outflow of high-net-worth individuals. The Congress emphasized the need for decisive action to boost wages, purchasing power, and incentivize Indian businesses to invest.
Summary: A member of the RBI Monetary Policy Committee emphasized the need for the 2025-26 budget to prioritize capital expenditure and infrastructure spending to sustain economic growth. With India's GDP growth slowing to a seven-quarter low of 5.4%, there is a call for increased public spending to counteract the effects of the COVID-19 pandemic and the end of pent-up demand. The strengthening of the US dollar has led to a depreciation of the rupee, affecting India's exports. Concerns were also raised about the resurgence of giveaways, which could detract from long-term development and infrastructure investment.
Summary: India's space sector is urging the government to enhance its budgetary allocation for space-based services and introduce a production-linked incentive scheme in the upcoming Union Budget for 2025-26. Key demands include tax reductions, import exemptions, and incentives for local manufacturing to boost start-ups. The sector is valued at $8.4 billion, with private entities beginning to build satellites and launch systems. The Indian Space Association and Satcom Industry Association are advocating for increased funding, focusing on satellite technologies, space safety, and cyber capabilities. They also propose a Space Economy Task Force to align financial strategies with long-term growth plans.
Summary: Uzbekistan is enhancing economic ties with India, focusing on investment, trade, and collaboration in sectors like quantum technologies, semiconductors, and manufacturing. The Uzbek government offers incentives such as land, infrastructure support, tax benefits, and cheap power to attract Indian companies. Uzbekistan, a strategic partner for India, provides access to the CIS region's 300 million consumer market. Indian companies have already invested in various sectors, and opportunities exist in gems and jewelry, tourism, and education. The countries aim to double their trade, currently at USD 470 million, and explore further collaboration in green energy and creative industries.
Summary: The Commerce and Industry Minister of India held a high-level dialogue with the European Commissioner for Trade and Economic Security in Brussels to advance a strategic trade and investment agenda between India and the EU. The discussions aimed at establishing a framework for a mutually beneficial Free Trade Agreement, focusing on six principles: building a commercially meaningful trade agenda, harmonizing standards, developing cutting-edge technologies, ensuring sustainable development, and fostering cooperation in resilient supply chains. Both leaders emphasized the importance of addressing legacy issues and set political directions for expedited progress on the trade and investment roadmap.
Summary: The Bharat Mobility Global Expo 2025, held in New Delhi, witnessed significant participation with over 90 product launches, showcasing advanced vehicles and mobility solutions. Notable launches included electric SUVs by VinFast Auto India, new models by BMW India, and a range of electric commercial vehicles by Eka Mobility. Other highlights included the unveiling of India's first solar electric car by Vayve Mobility and the introduction of a flying taxi by Sarla Aviation. The event, organized by EEPC India and industry associations, featured 1,500 exhibitors and attracted over 500,000 visitors, emphasizing advancements in sustainability and technology.
Summary: The Chief Minister of Andhra Pradesh is set to attend the World Economic Forum in Davos to promote "Brand AP" as an appealing investment hub. He plans to showcase the state's industrial policies, human resources, infrastructure, and stable governance to attract investments. His itinerary includes meetings with global business leaders, including executives from ArcelorMittal, Coca-Cola, and Cisco, as well as engagements with the Telugu diaspora. The CM will be accompanied by the IT and Industries Ministers and other officials, aiming to secure investments and discuss topics like green hydrogen during the four-day event.
Summary: The Chief Minister of Maharashtra has departed for Davos, Switzerland, to participate in the World Economic Forum. During the five-day event, he aims to sign memoranda of understanding across various sectors, including data centres, automobiles, semiconductors, electric vehicles, and more. The visit focuses on advancing Maharashtra's goal of becoming a trillion-dollar economy and generating employment opportunities. This marks his fourth participation in the forum, having attended three times during his previous term as Chief Minister.
Summary: Prime Minister Narendra Modi distributed over 65 lakh property cards under the SVAMITVA scheme, aiming to boost economic activities and alleviate poverty. The initiative involves digitizing rural land records and providing legal property documents to villagers across 50,000 villages in 10 states and two Union territories. This effort is expected to unlock economic activities worth over Rs 100 lakh crore by facilitating loans and business opportunities for rural residents. The scheme, launched in 2020, utilizes drone technology for land mapping and aims to reduce property disputes, enhance property tax assessments, and support village-level planning.
Notifications
GST - States
1.
08/2025- State Tax (Rate) - dated
16-1-2025
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Bihar SGST
Amendment in Notification No. 17/2017-State Tax (Rate), dated the 29th June, 2017
2.
07/2025- State Tax (Rate) - dated
16-1-2025
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Bihar SGST
Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017
3.
11 /GST-2 - dated
16-1-2025
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Haryana SGST
Amendment of Notification No.52/ST-2, dated 30.06.2017 under the HGST Act, 2017
4.
10 /GST-2 - dated
16-1-2025
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Haryana SGST
Amendment of Notification No. 48/ST-2, dated 30.06.2017 under the HGST Act, 2017
Highlights / Catch Notes
GST
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Central PSU's appeal rejected on delay grounds, HC condones delay citing lack of knowledge.
Case-Laws - HC : Petitioner, a central public sector undertaking, challenged rejection of its appeal by appellate authority solely on grounds of delay without considering merits. HC quashed appellate order as perverse for mechanically dismissing condonation application without adequately considering petitioner's lack of knowledge about impugned order's issuance. Relying on precedent, HC condoned delay, exercising power u/s 107(4) of the Act, rendering remand to appellate authority unnecessary. Petition disposed of.
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Appellant wins tax liability case due to data migration errors.
Case-Laws - HC : The HC held that the appellant's case has to be accepted and necessary rectification has to be done. Due to discrepancies in data migration from the Legacy ACES Application to the new Integrated ACES-GST Application, the appellant's tax liabilities were affected as PART B of the revised return was not duly populated. The impugned order was set aside with a direction to the authorities to make the necessary correction in the Portal and issue a revised order accepting the appellant's stand. The appeal was allowed.
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Late GST ITC filing: HC orders reassessment, allows objections.
Case-Laws - HC : ITC disallowed for late filing u/s 16(4) of GST Acts. HC set aside order, directing reassessment considering amendment. Petitioner allowed to file objections within 3 weeks and avail personal hearing. For other issues, impugned order upheld. Petition disposed.
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HC extends Suguna Cutpiece Center case benefit; sets aside CGST registration cancellation for non-filing returns.
Case-Laws - HC : The HC allowed the petition and extended the benefit granted in Suguna Cutpiece Center case to the petitioner. The petitioner's registration cancellation u/s 29(2) of CGST Act for non-filing statutory returns for six months was set aside. The petitioner was directed to file pending returns, pay defaulted tax with interest and belated filing fees within 45 days.
Income Tax
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Vedanta assessment order against non-existent Cairn India invalid.
Case-Laws - HC : Respondent M/s Vedanta Limited [Vedanta] is the resultant entity after M/s Cairn India Limited [Cairn] amalgamated with it. The TPO and AO inadvertently made the draft assessment order in the name of the non-existent Cairn instead of Vedanta, despite being apprised of the merger. The HC held that framing an order against a non-existent entity is a fatal flaw which cannot be rectified u/s 292B or Section 154 of the Act, following the Supreme Court's decision in Maruti Suzuki. The facts were distinguished from Sky Light, where the assessee's conduct led the SC to uphold the assessment despite being in the name of a non-existent entity. The HC found no merit in the revenue's argument and decided against it.
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Reassessment proceedings quashed: HC rejects blind reliance on surveys for PE determination.
Case-Laws - HC : The HC quashed the reassessment proceedings for AYs 2013-14 to 2017-18, holding that the findings from surveys conducted in 2007 and 2019 could not be blindly adopted to determine existence of a PE for those years. The HC reiterated that the position of a PE is fact-specific and requires examination of the prevailing facts for each tax period. The AO failed to demonstrate application of mind to the relevant facts and merely relied on earlier survey findings and court judgments. The HC emphasized that no principle akin to res judicata applies in tax matters and that consistency must be balanced against the facts of each assessment year.
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ITAT quashes time-barred penalty order u/s 271C due to limitation.
Case-Laws - AT : ITAT held that penalty order u/s 271C was barred by limitation. As per s. 275(1)(c), limitation began from date when AO recommended initiation of penalty proceedings to ACIT. Last date for passing penalty order was 30.06.2014, but it was passed on 14.07.2016, making it time-barred. Assessment order incorrectly initiated penalty for non-compliance of s. 192(1), while penalty order referred to ss. 194C/194J based on erroneous facts, showing non-application of mind. Revenue's appeal dismissed.
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Penalty under 270A(9)(a) deleted for lack of reasoning, satisfaction of ingredients.
Case-Laws - AT : The jurisdictional HC in the case of Schneider Electric South Asia (HQ) PTE. Ltd. vs. ACIT held that the mere reference to "misreporting" without specifying the limb of Section 270A attracted or satisfying the ingredients of subsection (9) renders the order imposing penalty u/s 270A(9)(a) manifestly arbitrary. Consequently, the levy of penalty u/s 270A(9)(a) was deleted in favor of the assessee.
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Limitation Period Breached, But Share Capital Addition Upheld u/s 153A.
Case-Laws - AT : The ITAT held that the assessment for AY 2008-09 initiated u/s 153A was beyond the 10-year limitation period prescribed, rendering the assessment order invalid. However, regarding the addition of share capital and share premium u/s 153A, the ITAT upheld the CIT(A)'s finding of incriminating material, validating the assessment order, relying on the Goldstone Cements Ltd. case. The appeals were partly allowed and partly dismissed.
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Partners' non-compete fees allowed as revenue expense; unexplained credits added u/s 68.
Case-Laws - AT : Non-compete fees paid to retiring partner held allowable as revenue expenditure. Addition u/s 68 for unexplained credits upheld due to lack of creditworthiness and genuineness of loan transactions; argument of assessee being newly established rejected as it claimed operational expenses.
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R&D expenditure in India eligible for weighted deduction u/s 35(2AB).
Case-Laws - AT : Appellant eligible for weighted deduction u/s 35(2AB) for entire R&D expenditure incurred in India. Revenue R&D expenditure incurred outside India allowed in assessment. Capital R&D expenditure incurred outside India eligible for deduction u/s 35(1)(iv). ITAT allowed assessee's appeal.
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Salary earned outside India not taxable per Section 9(1)(ii).
Case-Laws - AT : The ITAT held that salary received by the assessee in India for services rendered outside India is not taxable u/s 9(1)(ii), relying on Pramod Kumar [2017 (11) TMI 567 - ITAT Delhi] and Smt. Sumana Bandyopadhyay & Anr [2017 (7) TMI 503 - Calcutta HC]. The AO was directed to delete the addition made. The matter was decided in favour of the assessee.
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Transfer pricing adjustment upheld for excluding non-comparable companies, remanded for fresh adjudication on certain issues.
Case-Laws - AT : TP adjustment affirmed for excluding Universal Print Systems Limited and BNR Udyog Limited as functionally dissimilar comparables. Vama Industries Ltd. excluded as not functionally comparable for IT services. Remanded to TPO to explain margin computation of 28.17% for Thirdware Solutions Ltd. and reconsider inclusion after providing opportunity of hearing to assessee. ITAT remanded certain comparability issues to TPO for fresh adjudication.
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Singapore broadcaster's advertisement revenues in India taxed per MAP resolution.
Case-Laws - AT : Appellant, a Singapore tax resident company engaged in broadcasting television programs, challenged tax liability on advertisement revenues in India. ITAT held that following principle of tax certainty and consistency, appellant's revenue should be taxed as per Mutual Agreement Procedure (MAP) resolution for impugned AY 2013-14, similar to earlier and subsequent years, since there was no change in factual matrix and business operations: 10% of gross advertising revenues taxable @40%, net distribution revenues taxable @10% plus surcharge and cess. Regarding penalty u/s 271(1)(c), ITAT found no inaccurate income particulars furnished by appellant who disclosed complete facts and offered bona fide explanation based on judicial precedents. No penalty imposable given recent MAP resolution without mentioning penalty.
Customs
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Indian customs extends SCMTR compliance timeline for some ports amid implementation difficulties.
Circulars : The Central Board of Indirect Taxes and Customs (CBIC) extended the implementation date for the Sea Cargo Manifest and Transhipment Regulations (SCMTR) at certain ports as an interim measure due to issues faced by the trade in filing certain SCMTR messages. The extension aims to ensure smooth export-import operations without penalizing the trade during the initial implementation phase. Chief Commissioners were advised to conduct fortnightly outreach programs to facilitate stakeholders' smooth transition to SCMTR during the extended timeframe. Electronic filing of messages in the prescribed SCMTR format should continue during this period.
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Mandatory SCMTR manifest filing at all Indian ports & ICDs from 16 Jan 2025.
Circulars : Effective 16th January 2025, filing of arrival, departure and local manifests in accordance with Sea Cargo Manifest and Transshipment Regulations (SCMTR) 2018 formats will become mandatory at all Indian sea ports and ICDs. SCMTR formats are already implemented at 9 major ports since 10th September 2024. Stakeholders must comply with SCMTR message formats, guidelines and advisories available on ICEGATE website for smooth transition. Test filings in SCMTR format are recommended before the mandatory rollout date.
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Dhirpur, Kurukshetra Notified as New Inland Container Depot in Haryana.
Notifications : The CBIC, through Notification No. 04/2025-Customs (N.T.), amended the notification No. 12/97-Customs (N.T.) by inserting Dhirpur, Kurukshetra in the State of Haryana as an Inland Container Depot u/s 7(1)(aa) of the Customs Act, 1962 for unloading imported goods and loading export goods.
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Import exemption for defense equipment including LRSAM parts, tools, software.
Notifications : Customs notification amends exemption for import of specified defense equipment and parts, including systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software for Long Range Surface to Air Missile System (LRSAM) imported by Ministry of Defence or defence forces.
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IAEA Inspection Team imports exempted from customs duty, integrated tax (IGST).
Notifications : Exempts all equipment and consumable samples under Customs Tariff Act, 1975 when imported by IAEA Inspection Team from whole customs duty and integrated tax subject to producing certificate from Department of Atomic Energy regarding verification/inspections under safeguards agreement and undertaking from Department to export equipment within six months and account for consumables. Effective immediately.
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Importer wrongly claimed lower IGST rate on circular knitting machine import.
Case-Laws - AT : The CESTAT held that the respondent-importer had wrongly claimed a lower IGST rate on import of a Single Jersey Circular Knitting Machine, constituting suppression of facts. The extended period of limitation and penalties u/s 114A were rightly invoked, as there was no mala fide intent. The imported goods were liable for confiscation u/s 111(m), but no redemption fine was imposed since the goods were unavailable. The Revenue's appeal was allowed, upholding the demand for short-paid duty while setting aside the penalties.
FEMA
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Foreign company violated forex laws, penalized for unauthorized transactions.
Case-Laws - AT : Appellant company contravened Section 8(1) of Foreign Exchange Regulation Act, 1973 by acquiring and transferring foreign exchange of US$ 28,26,433.26 without requisite permission, and borrowing foreign exchange of US$ 3,33,025 and lb7,068.38. AT upheld findings of violation, reduced penalty on company to 25% already deposited considering case's antiquity and facts. However, AT set aside penalty on Mr. Ishaat Hussain finding no evidence of his involvement in company's affairs regarding aircraft purchase.
SEBI
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SEBI extends ESG rating review timeline to 45 days for BRSR publication.
Circulars : SEBI relaxed the timeline for review of ESG ratings by ESG Rating Providers (ERPs) pursuant to publication of Business Responsibility and Sustainability Reporting (BRSR) by listed entities from 10 days to 45 days, while retaining 10 days timeline for review upon occurrence of other material events impacting ESG profile of rated entity.
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SEBI mandates disclosure of Information Ratio for equity MF schemes.
Circulars : SEBI mandated mutual funds/AMCs to disclose Information Ratio (IR), a risk-adjusted return metric, on websites along with performance for equity schemes. IR calculation methodology using benchmark returns and standard deviation was prescribed. AMCs/AMFI to undertake investor awareness on IR's significance. Disclosure format with explanation on IR interpretation to be provided by AMFI. Circular effective within 3 months under SEBI Act.
Service Tax
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Petitioner liable for service tax only on service component, not entire turnover value.
Case-Laws - HC : Petitioner bifurcated amounts in invoices for material charges and service charges, paying tax accordingly. HC held petitioner liable to pay service tax only on service component, not entire turnover value. Constitutional separation of tax powers upheld. Writ petitions partly allowed.
Case Laws:
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GST
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2025 (1) TMI 926
Seeking permission to withdraw the present petition with liberty to file an application for review - Petitioner s right for cancellation of its Goods and Service Tax (GST) registration - it was held by High Court that It is considered apposite to dispose of the writ petition by directing that the respondent shall take steps for cancellation of the petitioner s GST registration in terms of its application. HELD THAT:- The Special Leave Petition is disposed of as withdrawn with liberty as prayed.
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2025 (1) TMI 925
Maintainability of petition - availability of alternative remedy - Seeking to challenge the order passed by the Authority under Section 73 of the Central Goods and Services Tax Act, 2017 on the sole ground that the petitioner has an alternative efficacious remedy of preferring an appeal - HELD THAT:- There are no good reason to interfere with the impugned order passed by the High Court. SLP disposed off.
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2025 (1) TMI 924
Appeal preferred by the petitioner under Section 107 of GST Act was dismissed as being beyond limitation - availment of ITC by mistake but the same is not utilised - HELD THAT:- Section 75(4) of the GST Act mandates the granting of an opportunity of hearing where an adverse decision is contemplated against a person. This provision was also interpreted by this Court in the case of Party Time Hospitality Prop. Smt. Punita Gupta Lko. v. State Of U.P. 2 Others [ 2023 (9) TMI 48 - ALLAHABAD HIGH COURT] and the Court was of the view that compliance of Section 75(4) of GST Act is mandatory; while doing so, this Court had also considered the earlier judgments of this Court. Considering the fact that the original order is contrary to the mandate of Section 75(4) of GST Act and is also violative of principles of natural justice, the order dated 25.03.2023 is liable to be quashed and is accordingly quashed. Matter is remanded to respondent no.3 to pass fresh orders after giving an opportunity of hearing and after permitting the petitioner to file a reply to the show-cause notice, in accordance with law - Petition allowed.
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2025 (1) TMI 923
Violation of principles of natural justice - Rejection of petitioner s appeal solely on the grounds of delay - petitioner contends that it is a central public sector undertaking and that such rejection, without addressing the merits of the appeal, violates principles of natural justice - HELD THAT:- Taking into account the arguments put forth by the parties, this Court finds that the petitioner has adequately explained the reasons for the delay in filing the appeal. Regrettably, the appellate authority failed to appropriately consider this aspect and proceeded to summarily observe that, since the appeal was filed after a delay of 246 days, no reasonable cause was demonstrated for the delay. It is evident that the appellate authority mechanically dismissed the application for condonation of delay as well as the appeal, without adequately considering the petitioner s lack of knowledge regarding the impugned order s issuance. Such an omission renders the appellate order perverse. It is pertinent to note the Division Bench ruling in S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] , wherein it was held that the appellate authority is empowered to condone delays extending beyond the statutory period under Section 107 (4) of the Act. The order dated September 25, 2024, passed by the appellate authority is unsustainable and is accordingly quashed. Considering the explanation provided by the petitioner, this Court deems it unnecessary to remit the matter to the appellate authority for reconsideration of the application for condonation of delay - Petition disposed off.
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2025 (1) TMI 922
Maintainability of writ petition filed by the appellant - discrepancies in the data migration from the Legacy ACES Application to the new Integrated ACES-GST Application affected the appellant s tax liabilities - According to the appellant, when the data was populated, there is error wherein PART B of the revised return was not duly populated into the domain of the Department. - HELD THAT:- The case of the appellant/assessee has to be accepted and necessary rectification has to be done. Pursuant to the stand taken by the department, the Portal has to be created and thereafter a revised order has to be passed. The impugned order set aside with a direction to the authorities to make the necessary correction in the Portal and issue a revised order accepting the stand taken by the appellant/assessee - appeal allowed.
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2025 (1) TMI 921
Rejection of refund application - Refund Application was rejected by the Deputy Commissioner of State Tax on the ground that the same was not filed within a period of 2 years under Section 54 (1) of the CGST (Central Goods and Service Tax) Act, 2017 - HELD THAT:- Considering the fair stand taken by the State, the impugned order dated 27th May 2021 is quashed and the Refund Application filed by the Petitioner restored on the file of the Deputy Commissioner of State Tax. The Deputy Commissioner of State Tax shall process the Refund Application on merits and in accordance with law, without raising issue of limitation. Petition disposed off.
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2025 (1) TMI 920
Denial of ITC - Input Tax Credit has been disallowed only on the ground that the claims have been lodged beyond the period prescribed under Section 16(4) of the GST Acts - HELD THAT:- The impugned order passed by the respondent dated 27.07.2024 is set aside. The learned assessing/adjudicating authority/respondent would re-do the assessment by taking into account the amendment referred supra. The petitioner may submit their objection by way of reply, within a period of three (3) weeks from the date of receipt of a copy of this order along with the amendment and other details. If any such reply is filed, the same shall be considered and orders shall be passed, after affording reasonable opportunity of personal hearing to the petitioner. In respect of other issues, if any, the impugned order shall remain undisturbed. Petition disposed off.
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2025 (1) TMI 919
Cancellation of the registration of the petitioner on the premise that the statutory returns has not been filed for a continuous period of six months, thereby invoking Section 29(2) of CGST Act - HELD THAT:- This Court has been consistently following the directions issued in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] where it was held that The petitioners are directed to file their returns for the period prior to the cancellation of registration, if such returns have not been already filed, together with tax defaulted which has not been paid prior to cancellation along with interest for such belated payment of tax and fine and fee fixed for belated filing of returns for the defaulted period under the provisions of the Act, within a period of forty five (45) days from the date of receipt of a copy of this order, if it has not been already paid. The benefit extended by this Court vide its earlier order in Suguna Cutpiece Centre s case, may be extended to the petitioner. Petition disposed off.
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2025 (1) TMI 918
Challenge to impugned notice in DRC 01A and the order for the assessment year 2017-18 - challenge to order of assessment for the assessment year 2019-20 and the bank attachment - discrepancies in the Input Tax Credit (ITC) claims - implications of the amendment to Section 16 of the GST Act on the assessment order for the year 2019-20 - HELD THAT:- The impugned orders are set aside. The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. Petition closed.
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2025 (1) TMI 917
Challenge to impugned order - impugned order proceeds on the basis that no reply was filed overlooking the fact that the petitioner had in fact filed its reply to the show cause notice - HELD THAT:- On this being pointed out, the learned counsel for the respondent on instructions would submit that they would pass orders afresh after considering the petitioner s reply dated 17.08.2024 and after affording the petitioner a reasonable opportunity of hearing. The respondent is directed to consider the petitioner s reply dated 17.08.202 and pass orders afresh after affording the petitioner a reasonable opportunity of hearing - the impugned order is set aside - the writ petition stands disposed of.
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Income Tax
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2025 (1) TMI 916
Income taxable in India - PE in India Liaison Office of the assessee - Permanent Establishment, liable to tax in India when the said office was clearly a fixed place and the activities carried out could not be said to be preparatory or auxiliary in nature? - income as liable to be attributed in India - existence of Dependent Agency Permanent Establishment (DAPE) of the assessee in India - delay filling SLP - As decided by HC [ 2023 (1) TMI 1244 - DELHI HIGH COURT] Liaison office of the assessee did not constitute a Permanent Establishment - HELD THAT:- There is gross delay of 569 days in filing this Special Leave Petition. Nevertheless, we have heard learned counsel on the merits of the matter. We are not inclined to interfere in the matter. Hence, the Special Leave Petition also stands dismissed on the ground of delay as well as on merits as following our earlier order passed in the case of M/s MITSUI and Co. [ 2018 (7) TMI 141 - SC ORDER ] as well as MITSUI and Company Ltd. [ 2024 (4) TMI 205 - SC ORDER ]
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2025 (1) TMI 915
Validity of reopening of assessment - Reasons to believe - Delay filling SLP - as decided by HC [ 2024 (2) TMI 1506 - GUJARAT HIGH COURT] AO has mechanically recorded that the return was processed only u/s 143(1) of the Act which itself goes to suggest that recording of reasons at the instance of Assessing officer was nothing but in a mechanical manner and with no application of mind - HELD THAT:- There is a gross delay of 185 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Even otherwise, we see no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed on the ground of delay as well as on merits.
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2025 (1) TMI 914
Validity of reopening of assessment u/s 147 - Default in sanction/approval u/s 151 as obtained and granted without application of mind - Petitioner claimed that despite certain transactions being booked under the PAN of erstwhile company (amalgamated company) due to an error, they had correctly considered all transactions in their return - as decided by HC [ 2024 (3) TMI 1082 - BOMBAY HIGH COURT] a typographical error could have been committed by the AO, who was seeking the approval, but if only the Additional/Joint CIT or the PCIT had read the approval application and the draft of the order to be issued under Section 148A(d) they would have certainly noticed the discrepancy and they should have either refused approval or sent the application back to the AO for filing correct form for approval - Delay filling SLP HELD THAT:- There is a gross delay of 181 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Even otherwise, we see no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed on the ground of delay as well as merits.
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2025 (1) TMI 913
Deduction u/s 80IB - claim denied as petitioner/appellant is not engaged in any manufacturing activity and instead, it was only doing trading of mushroom powders in capsules - as decided by HC [ 2018 (7) TMI 1733 - MADRAS HIGH COURT] factual matrix clearly demonstrates that what has been done by the assessee is manufacture. In the assessee s case, the product which emerges after the process of manufacture is commercially a distinct commodity, can be of consumption as such containing a requisite amount of ingredients in the appropriate percentage, preserved in proper form as contained in the licence issued under the authorised enactments as well as the technical logo shared by the foreign company, thus claim allowed Maintainability of appeal before Supreme court on low tax effect - HELD THAT:- As tax effect in this case is less than Rs.5 crores. Therefore, in view of Circular dated 17th September, 2024, the Special Leave Petition is not entertained and the same is disposed of. However, question of law, if any, is kept open.
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2025 (1) TMI 912
Rectification of mistake - order being framed in the name of a non-existent entity/entity merged - inadvertent mistake committed by the TPO as well as AO in not mentioning the name of the entity correctly - respondent-assessee, M/s Vedanta Limited [Vedanta] is the resultant entity which came into existence consequent to M/s Cairn India Limited [Cairn] amalgamating with it HELD THAT:- We had found that the decision of Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT ] had while enunciating the legal position with respect to an order being framed in the name of a non-existent entity had unequivocally held as being a fatal flaw which could neither be corrected nor rectified. It had held in explicit terms that such an order cannot be salvaged by taking recourse to Section 292B of the Act. We had also noticed the peculiar facts which obtained in Sky Light [ 2018 (4) TMI 529 - SC ORDER ] and which alone had led to the Supreme Court upholding the assessment made, albeit in the name of an entity which had ceased to exist. In the facts of the present case, we find that there was a valid disclosure made by the respondent-assessee and the AO being duly apprised of the factum of merger. Despite the above, it chose to make the draft assessment order in the name of a party which no longer existed on that date. This was, therefore, not a case where the factum of merger had either been suppressed or where the respondent had held out that Cairn still existed and could be proceeded against. It was the conduct of the assessee in Sky Light [ 2018 (2) TMI 1093 - DELHI HIGH COURT] which had convinced the Supreme Court to observe that the mistake would not render the order of assessment invalid and that it could be saved under Section 292B of the Act. The facts of the present case are clearly not akin to what prevailed in Sky Light. Regard must also be had to the fact that Section 154 enables an authority under the Act to rectify and correct an accidental slip or omission. It pertains to a power to rectify a mistake apparent from the record. Section 292B seeks to save orders which may suffer from similar mistakes provided they be otherwise compliant with the letter and spirit of the Act. However, and as the Supreme Court explained in Maruti Suzuki, the making of an order of assessment which is inherently flawed or suffering from a patent illegality, and which would include a case where the order is drawn in the name of a non-existent entity, cannot be saved or rescued. The power conferred by Section 154 would stand restricted to an inadvertent or unintentional error. The appellant has woefully failed to establish that the order of assessment as originally framed was intended to be in respect of the affairs of Vedanta, the respondent herein, or made cognizant of the factum of merger. We also bear in mind the indubitable fact that the AO proceeded to draw the order of assessment using the expression formerly known as . The appellant thus failed to acknowledge the merger even at this stage. The usage of the expression formerly known as is indicative of them presuming that the amalgamation was akin to a change to the fa ade of a legal entity as opposed to a fundamental alteration and the merger giving rise to a new being. It was these facts which had weighed upon us when we had amended the question of law on which the appeal was admitted. We thus find no merit in the argument that the challenge would be liable to be answered in light of Sky Light. Bearing in mind the fundamental error which beset the order of the TPO, the said decision would clearly not salvage the inherent and patent error which beset the order passed by the TPO. Absent any intent to assess the resultant entity, the order could neither have been rectified nor would it be saved by Section 292 B of the Act. Decided against revenue.
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2025 (1) TMI 911
Reopening of assessment - Income deemed to accrue or arise in India - Existence of a Permanent Establishment (PE) in India - whether the findings as recorded in the course of the 2007 or 2019 survey could have been blindly applied and adopted, extrapolated and read as being an accurate recordal of facts as they obtained in the AYs in question? - HELD THAT:- The position of a PE being a facts-specific issue and thus liable to be examined against the backdrop of what obtained in a particular tax period is one which is underscored even by the OECD Commentary on Article 5. It had been the consistent stand of the present writ petitioners that no PE had existed in the years in question. It is in the aforesaid light that we would have to evaluate and examine whether the findings as recorded in the course of the 2007 or 2019 survey could have been blindly applied and adopted, extrapolated and read as being an accurate recordal of facts as they obtained in the AYs in question. As conceded before us by the respondents that the reasons as recorded in support of the formation of opinion that income had escaped assessment had not alluded to any facts specific to AYs 2013-14 to 2017-18. Despite repeated queries respondents failed to draw our attention to any facet or fact pertaining to the AYs in question and which could have been read as demonstrative of an application of mind to the facts that prevailed or obtained in the years in question and thus justified a reassessment action being validly initiated. In fact, as we go through those reasons, it becomes more than apparent that the AO has merely proceeded to adopt and reiterate what was found in the course of the survey undertaken in 2007 and 2019 read alongside the judgment of this Court rendered in GE Energy [ 2019 (1) TMI 542 - DELHI HIGH COURT ] Indisputably, there is no principle akin to that of res judicata which can be recognized to be applicable to taxing disputes. Though this principle is well settled, we deem it appropriate to refer to the following enunciation of the well-settled legal position in National Petroleum Construction Co. [ 2022 (8) TMI 41 - SUPREME COURT ] The interplay between the principle of consistency and the facts of each year of assessment was lucidly explained by our Court in Galileo Nederland BV [ 2014 (8) TMI 902 - DELHI HIGH COURT ] It is in the aforesaid backdrop that the observations of the Supreme Court in CIT v Gupta Abhushan (P) Ltd [ 2008 (10) TMI 31 - DELHI HIGH COURT ] also assume significance and where it was unambiguously held that a survey report pertaining to a particular tax period cannot ipso facto be read or countenanced as being relevant and binding for independent assessment years as is evidenced from paragraph 6 of the report. The reassessment action is thus liable to be set aside. Decided in favour of assessee.
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2025 (1) TMI 910
Rejection of registration u/s 12A and u/s 80G - certain corroborative evidences as called for were not submitted by the assessee - HELD THAT:- As assessee had merely submitted a copy of income tax returns for the three years but there was no mention of satisfaction of conditions u/s. 12A(ac)(vi)-Item B of the Act in the said letter. CIT(E) had raised this specific query after furnishing of these documents by the assessee, vide show cause notice dated 08.07.2024, to which no compliance was made by the assessee. Neither any submission was made by the assessee regarding satisfaction of these conditions. CIT(E) also did not take any pain to verify the income tax returns for A.Ys. 2021-22, 2022-23 2023-24, already brought on record earlier by the assessee, to find out whether the assessee had claimed any deduction u/s. 10(23) or Section 11 or Section 12 of the Act in these years. Thus, we deem it proper to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity of being heard to the assessee to explain the fulfillment of conditions as stipulated u/s. 12A(1)(ac)(vi)-Item B of the Act. The assessee is also directed to make compliance before the Ld. CIT(E) and to submit the documents and details as required by him. Appeals filed by the assessee are allowed for statistical purpose.
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2025 (1) TMI 909
Delay in filing the appeal before CIT(A) - appeal filed belatedly by the assessee by 2176 days beyond the time prescribed u/s. 249(2) - assessee has made legal challenge on merits before ld. CIT(A) to applicability of MMR to the assessed income against application of normal rate of taxation - main contention of the assessee that the assessee was not aware of the processing of the return by CPC u/s 143(1) and it is only when the notice of demand for recovery issued by department was received by the assessee, the assessee came to know of the outstanding demand against the assessee - Revenue has claimed that the said processing of return u/s. 143(1) and intimation was uploaded on IT e-portal, the same shall be deemed to be the service of intimation u/s. 143(1) HELD THAT:- CIT(Appeals) has not made any enquiry as to the manner in which the service of intimation u/s. 143(1) was effected by the Revenue on the assessee. He has simply dismissed the appeal of the assessee on the ground that there is a huge delay of 2176 days in filing of the appeal before ld. CIT(A) beyond the time prescribed u/s. 249(2) of the Act, and the assessee could not submit sufficient/ justifiable cause for delay in filing this appeal belatedly with ld. CIT(A). This requires investigation of facts which can be ascertained only after enquiry. We direct the ld. CIT(Appeals) to make enquiry as to the manner in which the service was effected by the Revenue of the Intimation u/s. 143(1) of the Act on the assessee, and to arrive at the finding/conclusion whether service of intimation u/s 143(1) effected by CPC was in compliance to section 282 of the 1961 Act read with Rule 127 of the 1962 Rules. As decided in Munjal BCU Centre of Innovation and Enterpreneurship, Ludhiana [ 2024 (3) TMI 479 - PUNJAB HARYANA HIGH COURT] as held that merely uploading of the communication(notice) in the Income Tax department e-portal is not sufficient mode of communication keeping in view principles of natural justice which are inherent in income tax proceedings as also keeping in view provisions of Section 282 of the 1961 Act and Rule 127 of the 1962 Rules. When technicalities are pitted against advancement of substantial justice, then the court will lean towards advancement of justice. Thus, restoring back the matter back to the file of ld. CIT(Appeals) to firstly decide afresh on the application for condonation of delay supported by affidavit filed by assessee before ld. CIT(A), keeping in view the provisions of section 282 of 1961 Act read with Rule 127 of the 1962 Rules. Appeal of the assessee is allowed for statistical purposes.
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2025 (1) TMI 908
Penalty u/s 271C as barred by limitation - non compliance of provisions of section 192(1) - HELD THAT:- Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, if he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending initiation of the penalty proceedings. So, as per section 275(1)(c) of the Act the last date by which penalty order could have been passed was 30.06.2014. The penalty order was passed on 14.07.2016. Therefore, the penalty order dated 14.07.2016 was time barred. Assessment order dated 20.03.2013 mentions Penalty proceedings u/s 271C(1)(a) of the Act is initiated separately for non-compliance to the provision of section 192(1) of the Act . Penalty order dated 14.07.2016 refers to section 194C/194J/and Annexure G of Tax Audit Report. The reference is completely erroneous. No contractual/professional payments are mentioned in P L Account. The incorrect facts and figures show non-application of mind. Appeal filed by the Revenue is dismissed.
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2025 (1) TMI 907
Penalty u/s 270A(9) - non specification of clear charge/instance - allegation of non-mentioning of the specific instance of misreported income in the show cause notice or in the assessment order - HELD THAT:- The Jurisdictional High Court in the case of Schneider Electric South Asia (HQ) PTE. Ltd. Vs. ACIT, International Taxation, Circle-3 (1)(2), New Delhi and ors . [ 2022 (3) TMI 1295 - DELHI HIGH COURT] held that, there is not even a whisper as to which limb of Section 270A of the Act is attracted and how the ingredient of subsection (9) of Section 270A is satisfied. In the absence of such particulars, the mere reference to the word misreporting by the Respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary. Thus we delete the levy of penalty u/s 270A(9)(a) - Decided in favour of assessee.
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2025 (1) TMI 906
Validity of Assessment u/s 153A beyond period of limitation - assessment initiated beyond the period of 10 years from the end of the relevant AY in which search had been carried out - HELD THAT:- This case is squarely covered by the decision of Ojjus Medicare [ 2024 (4) TMI 268 - DELHI HIGH COURT ] We therefore, following the reasoning given, hold that the AY 2008-09 is beyond the ten-year outer ceiling limit prescribed by the section 153A of the Act. Hence, the AO has erred in assuming the jurisdiction. Consequentially, the assessment order passed u/s 153A of the Act is held invalid in the eyes of law. Assessee appeal allowed. Addition u/s 153A - Addition of share capital and share premium - incriminating materials were seized during the said search operations or not? - as per revenue appellant/assessee was a paper company and it never existed at its registered place - HELD THAT:- We, in view of the decision of Goldstone Cements Ltd. [ 2023 (10) TMI 278 - GAUHATI HIGH COURT ] and reasoning therein emphasized by the Ld. CIT-DR, are of the considered view that there was incriminating material and information on the record before the AO. Accordingly, we decline to interfere in the finding of the Ld. CIT(A). Hence, the assessment order completed in pursuance of section 153A of the Act, notice is held valid in the eyes of law. Nothing has been brought on the record by the Ld. Counsel to contradict the finding of the Ld. CIT(A). Decided against assessee.
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2025 (1) TMI 905
Additions of gross profit over and above the gross profit declared by the assessee - rejection of the assessee s books of accounts by the AO was justified without pointing out specific defects as per Section 145(3) - HELD THAT:- We note that exactly similar issue has been dealt in the matter of Kamal Sharma [ 2024 (10) TMI 1628 - ITAT DELHI ] wherein held all relevant details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer. AO without detecting any defect in the books of accounts, rejected the same u/s 145(3) of the Act and made addition and fail to understand the reasoning of AO as at one hand he stated sale/purchase claimed to have been made by Company as bogus then he proceeds to make addition on the basis of GP disclosed by the assessee without any justification and explanation. Such order, on merit as well, fails to meet the test of law and deserves to be quashed. Assessee s appeals are allowed
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2025 (1) TMI 904
Nature of expenditure - non-compete fees - revenue or capital expenditure - disallowance of non-business expenditure - HELD THAT:- We observe that since the issue has been decided in favour of the assessee by Ahmedabad Tribunal in assessee s own case for the succeeding assessment year i.e. assessment year 2018-19 [ 2024 (7) TMI 961 - ITAT AHMEDABAD] in which the balance amount of non-compete fee was paid to the retiring partner (notably the assessee firm had paid non-compete fee to the retiring partner over two assessment years i.e. 2017-18 and 2018-19) and for assessment year 2018-19, the Ahmedabad Tribunal in assessee s own case has held that the aforesaid payment is allowable to the assessee firm, as revenue expenditure. Decided in favour of assessee. Addition towards unexplained credit u/s 68 - HELD THAT:- AO and Ld. CIT(Appeals) did not issue a blanket judgment but instead provided detailed findings on the financial status of each of the creditors. Additionally, the common trend amongst the lenders was that the bank statements of all creditors displayed a similar pattern: the credit balances were modest, a credit entry appeared, followed by the withdrawal of a cheque for nearly the same amount made out to the assessee, after which the bank balances reverted to their previous minimal levels. This recurring sequence in all creditors cases raises serious doubts about the authenticity of the transactions, as such patterns are unlikely to be coincidental. Therefore,no infirmity in the order of Ld. CIT(Appeals) in holding that the assessee s claim that it has satisfied the requirements of Section 68 remains unsubstantiated, particularly concerning the creditworthiness and genuineness of the loan transactions. The argument of assessee that it was established only in the earlier previous year and hence, no income can be attributed in its hand is also not acceptable, for the simple reason that the assessee firm was incorporated on 19-11-2014 and during the impugned year under consideration, the assessee firm was fully operational and had also claimed various expenses, with respect of its operations. Accordingly, in light of the above observations, we find no infirmity in the order of CIT(Appeals) so as to call for any interference. Decided against assessee.
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2025 (1) TMI 903
Disallowance of deduction claimed u/s 36(1)(viia) - HELD THAT:- As in assessee s own case for assessment years 2010-11 and 2015-16 and the issue has been restored to the file of the AO with certain directions, therefore, in absence of any contrary material brought to our notice, we deem it proper to restore the issue to the file of the AO with similar directions to consider the said claim of the assessee in the light of the judgement of Catholic Syrian Bank Ltd [ 2012 (2) TMI 262 - SUPREME COURT] Disallowance of prior period expenses - HELD THAT: Respectfully following the decision of the Tribunal in assessee s own case [ 2022 (12) TMI 242 - ITAT PUNE] assessment year 2015-16 and in absence of any contrary material brought to our notice, this issue is restored to the file of the AO with similar directions wherein held no force in the Revenue s supportive arguments as there is no material in principle which has been rejected by the Assessing Officer while dealing with the assessee s crystallization plea. That being the case, we allow the assessee s impugned claim in principle and direct the Assessing Officer to examine its supportive evidence of crystallization of the corresponding expenditure items in the relevant previous year by quoting CIT Vs. Indian Petrochemicals Corporation Ltd. [ 2016 (9) TMI 110 - GUJARAT HIGH COURT] and Adani Enterprises Ltd. [ 2016 (7) TMI 1250 - GUJARAT HIGH COURT] as holds that such prior period expenditure items ought not to be disallowed where the taxpayer concerned is assessed at the same rate all along. Disallowance of donations - HELD THAT:- As admitted fact that due to non submission of the details of AO made disallowance which has been confirmed by the Ld. CIT(A)/ NFAC and as submitted if assessee given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate its case by filing the requisite details. MAT/section 115JB applicability to the assessee bank - HELD THAT:- We find the Special Bench of the Tribunal in the case of Union Bank of India [ 2024 (9) TMI 789 - ITAT MUMBAI] allow the ground raised by the assessee on this issue by holding that provisions of section 115JB are not applicable to the assessee bank. Allowance of loss of valuation to Held to Maturity (HTM) securities, when HTM securities are capital in nature - CIT(A) allowed claim - HELD THAT:- Respectfully following the decision of the Tribunal and the Hon ble High Court in assessee s own case, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC in allowing the loss of valuation to Held to Maturity (HTM) Securities. Disallowance of write back of provision for restructured advance - CIT(A) / NFAC restoring the matter to the file of the AO for verification on the issue of - HELD THAT:- Although the CIT(A)/ NFAC has no power to set aside the matter to the file of the AO, the Tribunal has the power to restore the issue to the file of the AO. We, therefore, restore the issue to the file of the Assessing Officer for due verification and decide the issue afresh in accordance with law. Needless to say, the AO shall afford reasonable opportunity of being heard to the assessee and decide the issue as per fact and law. Ground of appeal No.2 raised by the Revenue is accordingly allowed for statistical purposes. Disallowance of write back provision for standard assets - CIT(A) / NFAC in restoring the issue of disallowance - HELD THAT:- Although the Ld. CIT(A)/ NFAC has no power to set aside the matter to the file of the AO Tribunal has the power to restore the issue to the file of the AO. We, therefore, restore the issue to the file of the AO for due verification and decide the issue afresh in accordance with law.
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2025 (1) TMI 902
Disallowance of claim u/s 35(2AB) of the R D expenditure - appellant is not eligible to claim deduction for the amount which is in excess of the amount approved by DSIR - HELD THAT:- Respectfully following the decision of the Co-ordinate Bench of the Tribunal in assessee s own case [ 2021 (9) TMI 139 - ITAT PUNE ] we hold that the entire amount of R D expenditure incurred in India is eligible for weighted deduction u/s 35(2AB); revenue R D expenditure incurred outside India as claimed by the assessee got allowed in the assessment itself; total of capital R D expenditure incurred outside India will be eligible for deduction u/s 35(1)(iv) of the Act. Appeal filed by the assessee is allowed.
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2025 (1) TMI 901
Income deemed to accrue or arise in India - salary earned towards services rendered in Egypt - CIT(A) upheld the addition made by the AO stating that the assessee continued receive salary in India and accordingly the same is taxable as per the provisions of section 5(2) - HELD THAT:- As the assessee has received salary in her bank account in India for the services rendered outside India. as relying on Pramod Kumar [ 2017 (11) TMI 567 - ITAT DELHI ] and Smt. Sumana Bandyopadhyay Anr [ 2017 (7) TMI 503 - CALCUTTA HIGH COURT ] salary received by the assessee for services rendered outside India though received in India is not taxable as per the provisions of section 9(1)(ii) of the Act. The AO is directed to delete the addition made in this regard. Decided in favour of assessee.
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2025 (1) TMI 900
TP Adjustment - international transactions of receipt from production services - comparable selection - HELD THAT:- As the business profile of the assessee is inline with that of GTS eservices direction for exclusion of Universal Print Systems Limited from the list of comparables as functionally dissimilar. BNR Udyog Limited - As on perusal of the annual report it is seen that apart from medical transcription activities, it is also into medical billing and coding services. The functional profile of the medical transcription segment is almost akin to functions of Accentia Technologies Ltd. and again for the various activities of medical transcription, medical billing and coding services there is no separate segment thus excluded the said comparable. TP adjustment on account of receipt from software development services - exclusion of two comparables, namely, Vama Industries with margin at 31.08 % and Spry Resources India Pvt. Ltd. with margin at 22.37% - HELD THAT:- As IT and ITeS services are not comparable, the assessee rendering only IT services cannot be compared with a company which renders both IT and ITeS. In view of the foregoing discussion, we are satisfied that Vama Industries Ltd. is not a functionally comparable company and the same should be excluded from the list of comparables - See Approva Systems Private Limited [ 2019 (6) TMI 437 - ITAT PUNE] . I nclusion of the Thirdware Solutions Ltd.- as argued that nowhere the TPO has explained how he has worked out the margin of this comparable at 28.17% when as per the assessee, the margin comes at 19.63% - We are left with no choice but to restore this issue to the file of the TPO. TPO is directed to explain how he has computed the margin at 28.17% and re-determine the inclusion/exclusion of this comparable after affording a reasonable and adequate opportunity of being heard to the assessee.
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2025 (1) TMI 899
Tax liability of the appellant in India - taxability of advertisement revenues - adopting the earlier resolution in MAP for subsequent years - consistency in tax treatment across different assessment years - Appelant is a tax resident company of Singapore engaged in the business of broadcasting television programmes through linear channels - HELD THAT:- Following the principle of tax certainty and consistency, especially when there is no change in factual matrix and business operations of assessee in the year under consideration, compared to earlier and subsequent years, we are of the considered view that the taxation of assessee s revenue may be based on the resolution as per MAP in the impugned AY 2013-14 as well. We are fortified in our view by the decision in the assessee s group company namely ADIT v. Animal Planet (Asia) LLC [ 2015 (4) TMI 670 - ITAT DELHI] We are inclined to hold that though there is merit in the ld DR arguments that MAP resolution applies to the particular assessee for particular year, taxation of business profit of the assessee in line with MAP would bring tax certainty as well as consistency, for both the Revenue and the assessee, in making assessment. We find that the Revenue itself has accepted the taxation of assessee receipts of Advertisement and Distribution on the basis of MAP resolutions in earlier as well as the subsequent years. We therefore are of the view that there should be tax certainty in the assessment of the assessee in the impugned assessment year for assessing the income of the assessee in a consistent manner. Since the issue pertain to AY 2013-14 and the assessee itself has adopted/accepted MAP resolution of DALLC of 24.08.2017, for AYs 2004-05 to 2012-13 and AYs 2017-18 to 2019-20, following the principle of certainty and consistency, we direct that the income of the assessee (DNAP) for the impugned AY be taxed as per resolution of MAP of DALLC i.e., (i) 10% of gross advertising revenues to be taxed @40% and (ii) Net Distribution revenues to be taxed @10% + surcharge and Cess. Penalty u/s 271(1)(c) - As the assessee has disclosed complete facts with respect to aforesaid receipts in the submissions filed during the course of assessment proceedings. We further find that the Assessment Order nowhere lays down that the information/details were not filed and/or the Company failed to offer any explanation in respect to claim made. We also find that the issues pertaining to taxability of the assessee revenue have different judicial views. We are satisfied that the explanation offered by the assessee are bona-fide and based on judicial precedents. Taxability for the subject AYs has been recently resolved through MAP resolution agreed between the CA of India and Singapore and no mention of imposition of penalty has been made in aforesaid MAP resolution. Subsequently, the AO passed an order giving effect to the MAP resolution wherein no mention of penalty has been made. Thus, we hold no penalty can be imposed in the instant case u/s 271(1)(c) on account of furnishing inaccurate particulars of income.
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2024 (12) TMI 1519
Bogus purchases - rejecting the books of account maintained by the assessee u/s 145(3) - additions made by applying the Gross Profit (GP) - HELD THAT:- As decided in own case [ 2024 (10) TMI 1628 - ITAT DELHI] we fail to understand the reasoning of AO as at one hand he stated sale/purchase claimed to have been made by M/s Kamal Trading Company as bogus then he proceeds to make addition on the basis of GP disclosed by the assessee without any justification and explanation. Such order, on merit as well, fails to meet the test of law and deserves to be quashed. Assessee appeal allowed.
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Customs
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2025 (1) TMI 898
Classification of imported goods - Single Jersery Circular Knitting Machine, Model MV 4-3.2(ii) - act of declaring a lower IGST rate constituted suppression or misrepresentation of facts or not - extended period of limitation - HELD THAT:- The assesseerespondent, in the present case, had filed the cross objection no. 50303 of 2023 mentioning that Gujarat High Court decision in the case of M/s Prince Spintex [ 2020 (2) TMI 1168 - GUJARAT HIGH COURT ] is squarely applicable to the facts of the present case more so for the reason that the said order has not yet been set aside by Hon ble Supreme Court. The reliance was also placed on Notification no. 79 of 2017 dated 13.10.2017 which extends exemption from the whole of IGST on the import of capital goods. The Hon ble Gujarat High Court has allowed the refund of IGST to the petitioner even if paid on the capital goods imported under EPCG scheme during the period 1.07.2017to 12.10.2017. Hence the IGST paid @5% is rather refundable to the assessee-respondent and there is no short payment of duty. The demand was wrongly confirmed by original adjudicating authority. The respondent mentioned in their cross objection, that they have strong case on merits in their favour. Serial 230, the rate of IGST thereunder, was admittedly not applicable to the goods imported by the respondent importer. Extended period of limitation - penalty - HELD THAT:- There was no malafide on part of the respondent. Hence the extended period of limitation was wrongly invoked while issuing the impunged the show cause notice and the penalties were also wrongly imposed. Conclusion - The findings arrived at by the original adjudicating authority not differed while confirming the demand of amount of short paid duty and the order of imposing penalty under section 114 A of Custom Act 1962. The imported goods are rightly held liable for confiscation under section 111 (m) of Custom Act 1962. The goods, however were not available for confiscation. Hence original order of not imposing any redemption fine on the respondent-importer is also justified. Appeal of Revenue allowed.
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FEMA
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2025 (1) TMI 897
Offence under FERA - appellant company got involved in acquisition of foreign exchange and its borrowing without permission of Authorised Dealer or of the Reserve Bank of India - penalty imposed on contravention of section 8(1) - element of acquisition and transfer of the foreign exchange of US$ 28,26,433.26 coupled with the allegations of borrowing of foreign exchange amounting to US$ 3,33,025 and 7,068.38 HELD THAT:- The draft of US$ 333025 and 3270.20 and 3798.18 were utilized for payment of customs duty. However, the earlier draft was received from M/s Tata Industries USA and other two drafts from M/s Tata Ltd. London and Sh. Raj Kadan of M/s Tata Inc. who played vital role in arranging the remittances. It is also a case that the appellant company acquired and transferred foreign exchange of US$ 28,26,433.26. The authority thus passed the impugned order holding the contravention. We do not find any error in findings and otherwise the judgment cited by the appellant would not support a case of civil nature but can be handful in prosecution or criminal case. In substance, we find contravention in Section 8(1) of the Act of 1973 for arranging and transferring foreign exchange. Penalty imposed on the appellant company u/s 8(1) of the Act of 1973 for acquiring and transferring of foreign exchange with separate penalty for violation of Section 8(1) of the Act of 1973 towards the borrowing of foreign exchange of US Dollars and Sterling Pounds - The appellant company has already deposited 25% of the penalty amount to satisfy the condition of pre-deposit. It was in pursuance to the order of the Calcutta High Court. We find this case to be old by more than 20 years and looking at all the facts, we find a case to make penalty proportionate. It is looking to appeal, evidence available on record and the peculiarity of the facts and thereby we cause interference in the penalty and reduce it to 25% of the amount of penalty imposed by the authority. The amount aforesaid has already been satisfied by the appellant company. Hence the present appeal is partly allowed and disposed of with the aforesaid. Separate Penalty imposed on the appellant for alleged contravention of Section 8(1) of the Act of 1973 for different amount - It is for acquisition and also for borrowing. The respondents have, however, failed to show any role of the appellant, Mr. Ishaat Hussain to implicate him as one of the violators of the provisions. He has not been shown to be incharge of the Company or was monitoring the affairs of the company for purchase of the aircraft. The respondents have implicated him for the sake of it without clarifying his role. In the light of aforesaid, we find a case in his favour to cause interference in the impugned order qua Mr. Ishaat Hussain and accordingly the impugned order is set aside qua the appellant. The appeal is disposed of with the aforesaid.
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Service Tax
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2025 (1) TMI 896
Maintainability of petition - availability of alternative remedy - Levy service tax on the entire turnover of the value of the service provided by the petitioner - Business of retreading tyres - deemed sale component, already subjected to VAT - HELD THAT:- In the present case, the writ petitions are listed for final hearing and there is abundant material on record to demonstrate that the issue under consideration is squarely covered by the judgment of the Hon ble Supreme Court in the case of Safety Retreading Company (P) Ltd3. Hence, the contention of alternative remedy raised by the Revenue is untenable and accordingly rejected. The petitioner has furnished copies of tax invoices maintained by it, wherein the petitioner has indicated the value of the material and labour charges separately and as also indicated that in respect of the value of the materials the tax has been paid to State Government and with respect to the value of the labour charges the service tax has been paid to the Union Government. The said invoices have also been submitted to the tax authorities in the State Government and the State has passed re-assessment orders under KVAT Act. The Hon ble Supreme Court in the case of Safety Retreading Company (P) Ltd [ 2017 (1) TMI 1110 - SUPREME COURT ] has clearly held that no dispute has been raised in the show cause notice (as in the present case also) with regard to the correctness of the figures furnished by the petitioner and at no point of time the respondents raised a plea as to the correctness of the invoices. The Division Bench of the Bombay High Court has also noticed a similar factual circumstance and relying upon the judgment of the Hon ble Supreme Court in the case of Safety Retreading Company (P) Ltd, held that the Revenue did not dispute the invoices furnished. In the present case also, the respondents have not denied the correctness of the said bifurcation of the amounts made by the petitioner/assessee. Hence, the same is required to be accepted in the present case also. In the present case, the petitioner having clearly bifurcated the amounts in invoices with respect to the amounts incurred towards material charges as also the amounts towards service charges and tax having been paid in respect of both the said amounts by classifying the same accordingly, the question of the respondent authorities seeking to levy service tax on the entire value mentioned in the invoices does not arise. Conclusion - The petitioner/assessee is liable to pay the service tax only with respect to the service component under the State Act. The constitutional separation of tax powers upheld. The writ petitions are partly allowed.
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2025 (1) TMI 895
Levy of service tax - Cleaning Service and Goods Transport by Road Service - evacuation and transportation of fly ash - time limitation - HELD THAT:- Timilar issue was before this Bench in the case of M/S MARSHALL CORPORATION LTD., VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, KOLKATA. [ 2023 (7) TMI 766 - CESTAT KOLKATA] . In this case, the entire consideration was sought to be taxed under the category of Cleaning services , without any bifurcation between Cleaning service and GTA services. There are considerable force in the arguments of the appellant that if there is any movement of goods resulting in GTA Service, the Service Tax is required to be paid by the recipient of the service. It is not in dispute that the clients the corporate public limited companies, who are one of the seven categories of persons responsible to pay the Service Tax on Reverse Charge basis. On this count itself the confirmed demand under this heading is required to be set aside. Time limitation - HELD THAT:- No case has been made out by the Revenue towards suppression with an intent to evade Service Tax payment. Therefore, the confirmed demand for the extended period is not legally sustainable and the same is set aside on account of limitation also. Conclusion - The activities undertaken by the Appellant are not chargeable to service tax under the category of Cleaning Service . The demands for service tax under Cleaning Service and GTA Service were set aside. The demand for the extended period was deemed time-barred, and the penalty under Section 78 was not justified. The appeal is allowed on merits fully and partly on account of limitation.
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