Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 27, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seizure of goods alongwith vehicle - valid E-way bill or not - it is deemed just and proper to set aside the impugned orders and the matter remitted back to respondent No.1 - Prescribed Authority for re-consideration afresh in accordance with law after giving one more opportunity to the petitioner to file additional documents and additional objections if any, and thereafter to proceed and conclude the proceedings in accordance with law. - HC
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Scope of SCN - lack of jurisdiction - it is submitted that, passing orders, disposing of the SCNs in a hurry only to pre-empt today's hearing and to present the Court with a fait accompli - The Court finds this is to be extraordinary. It unmistakably reflects the anxiety of the Officer in question who has issued the SCNs to proceed to dispose them of hurriedly and thus preempt the hearing before this Court - This Court would not like to presume that statutory authorities would be unmindful of their statutory responsibilities of determining every SCN in an objective and impartial manner on the basis of the facts presented before them, addressing all the legal submissions made in response to the SCN. - HC
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Seeking grant of Bail - bogus transactions fake invoices - receipt of purchase invoices in the name of fake firms without physical receipt of goods and issuing sale invoices without onward physical movement of the goods - about five months have passed since the detention of the Petitioner in custody and thus those stages of the investigation here appear to be over when it can be said that the Petitioner being enlarged on bail may stand on the way of proper investigation in collecting all the materials triggering derailment of investigation process with the possibility of the Petitioner influencing the witnesses and absconding on which scores there too stand no material particulars. - Bail granted - HC
Income Tax
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Validity of National faceless assessment proceedings - violation of principles of natural justice - The fact remains that having granted a final opportunity of fixing a time limit, the time limit should commence to run from the date of the receipt of the notice and if that be so, the date should be computed from 11.09.2021 and it will expire on 17.09.2021. Therefore, completing the assessment well before the said time is not sustainable and it is in violation of principles of natural justice. - HC
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Sanction of the refund claim with interest u/s 244A - petitioner submits that it is his grievance that request letter seeking sanction of the refund claim with interest has not been processed and no orders has been passed by the respondents so far and as such, the petitioner is before this Court by way of the present petition - Revenue directed to consider and process the refund - HC
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Deduction u/s 80P(2)(a)(i) - It also appears that, though the word 'activity' is not defined, yet the investment activity, activity of renting of immovable property, etc., and the consequent income attributable to such activities would be covered under section 80P(2)(c). - AT
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Exemption u/s 11 denied - ssessee was not registered u/s 12AA - The activity of the assessee cannot be treated as business because the assessee had not rendered to any services to the entities from whom the payments are received. The concept of “diversion of income by overriding title” will also not be applicable in the case of the assessee because the amount collected by the assessee is for the purpose of the religious activities of the assessee and for such fund registration U/s. 12A is mandatory to claim the benefit U/s.11 of the Act. - AT
IBC
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Fresh demand of income tax after the Approval of Resolution Plan - Demand of Income Tax Dues after completion of scrutiny process - From the tone and tenor of the impugned notices what is evident is that respondents are seeking to pass assessment order under Section 143 (3) of the Act since the case of petitioner No.1 was selected for limited scrutiny under CASS. However, the period of the assessment order would be a period covered by the resolution plan - the claim of the Income Tax Department which is outside the resolution plan would stand extinguished. - HC
Service Tax
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Refund of Service Tax - SEZ unit - one time claim of refund instead of claiming on quarterly basis - the Commissioner (Appeals) have erred in concluding that the amount of refund is disbursable on quarterly basis - the impugned order-in-appeal modified to the effect that the whole amount of eligible refund shall be disbursed in one go to the appellant - AT
Central Excise
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Condonation of delay of 359 days in filing appeal - sufficient cause for delay existed or not - In view of the fact that the negligent act of the company in not assigning the responsibility of receiving at least important dak to a responsible person and leaving the same at the disposal of the security guard for which 359 days delay had occurred cannot be treated as a reasonable ground to condone the delay in filing the appeal - AT
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CENVAT Credit - input services that were received by the appellants outside their factory premises - Till the time it can be shown that input services have been used by the manufacturer of finished goods, in the process of manufacture or for conducting this business of manufacture of finished goods, the Cenvat credit on the input services cannot be denied, even if the said services are received at place other than factory premises - AT
Case Laws:
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GST
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2022 (1) TMI 999
Input tax credit - bogus firms - it is alleged that M/s. Vinayak Traders has not been found at the business place and the dealer and purchaser has claime the ITC wrongly - HELD THAT:- Without fail, the representations made by the petitioner shall be decided within a period of two (2) weeks. There is nothing further that needs to be added to what he has done earlier. Once the same is decided, if dissatisfied, the petitioner shall be at liberty to take legal recourse available under the law - Application disposed off.
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2022 (1) TMI 998
Seizure of goods alongwith vehicle - valid E-way bill or not - specific contention of the petitioner is that the E-way bill was valid up to 11.59. p.m. on 09.11.2018, however, much prior to the aforesaid time i.e., 11.59 p.m, on 09.11.2018, the goods in question had reached its destination and the driver of the vehicle had fallen asleep and consequently the goods were not unloaded at the destination point - HELD THAT:- A perusal of impugned orders passed by respondent Nos.1 and 2 - Prescribed Authority and Appellate Authority clearly indicate that though the petitioner has contended that he has produced the documents relating to vehicle in question passing through Toll Plaza at Nelamangala at 3.54 p.m on 09.11.2018 itself, the said documents have not been adverted to, much less considered or appreciated by the respondents before passing the impugned orders. Under these circumstances, without expressing any opinion on the merit/demerit on the rival contentions and in order to give one more opportunity to the petitioner to produce the said documents at Annexures-L M before the Prescribed Authority, to establish his claim that the vehicle and goods had reached the destination point on 09.11.2018 prior to expiry of the E-way bill at 11.59 p.m on 09.11.2018, it is deemed just and proper to set aside the impugned orders and the matter remitted back to respondent No.1 - Prescribed Authority for re-consideration afresh in accordance with law after giving one more opportunity to the petitioner to file additional documents and additional objections if any, and thereafter to proceed and conclude the proceedings in accordance with law. Petition allowed by way of remand.
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2022 (1) TMI 997
Scope of SCN - lack of jurisdiction - it is submitted that, passing orders, disposing of the SCNs in a hurry only to pre-empt today's hearing and to present the Court with a fait accompli - wrongful utilization of Input Tax Credit - intent of fraud and willful mistake - contravention of Sections 16, 20, 122, 132 of OGST/CGST Act read with Rule 54 (1A)(a) of the OGST/CGST Rules - HELD THAT:- The Deputy Commissioner of State Tax has already dealt with the averments in the writ petition, which are yet to be examined by the High Court, and purportedly negatived them as well as drawing inferences of 'admissions' by the Petitioner. The Court finds this is to be extraordinary. It unmistakably reflects the anxiety of the Officer in question who has issued the SCNs to proceed to dispose them of hurriedly and thus preempt the hearing before this Court - This Court would not like to presume that statutory authorities would be unmindful of their statutory responsibilities of determining every SCN in an objective and impartial manner on the basis of the facts presented before them, addressing all the legal submissions made in response to the SCN. This is what lends legitimacy to the system devised by the statutes under which quasi judicial adjudicatory powers are entrusted to authorities. The Court sets aside the two adjudication orders dated 26th November, 2021 passed by Opposite Party No.4, i.e. for the periods April, 2020 to March, 2021 and April, 2021 to August, 2021 - The Petitioner will file its reply to the two final SCNs issued for the mentioned periods on or before 1st January, 2022. The writ petition is disposed of.
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2022 (1) TMI 996
Seeking grant of Bail - bogus transactions fake invoices - receipt of purchase invoices in the name of fake firms without physical receipt of goods and issuing sale invoices without onward physical movement of the goods - requirement of detailed and extensive searches of business premises - HELD THAT:- The Hon ble Apex Court in case of NIRANJAN SINGH VERSUS PRABHAKAR RAJARAM KHAROTE [ 1980 (3) TMI 258 - SUPREME COURT] has observed which has also been reiterated in case of SHRI P. CHIDAMBARAM VERSUS CENTRAL BUREAU OF INVESTIGATION [ 2019 (10) TMI 879 - SUPREME COURT] that at the stage of consideration of the matter for granting bail, detailed examination of evidence and elaborate documentation of the merits of the case should be avoided. In the given case, the complaint has been lodged against the Petitioner and others for commission of the aforesaid offences under section 132(1)(b)(c) and (1) of the OGST Act. The maximum punishment prescribed thereunder is the imprisonment for a term of five years and with fine in case the amount of tax evaded or the ITC wrongly availed or utilized or the amount of refund wrongly taken exceeds ₹ 500.00 lakh. The investigation having commenced, it appears that extensive searches of business premises and the house of the Petitioner and other connected premises have already been conducted and a large number of documents have also been seized pursuant to the said search. All these are in custody of the complainant to which the Petitioner is having no more the access. In the circumstances of the case on hand, no other materials are placed to support that further detention of the Petitioner still stands as of necessity for the case. In the meantime, about five months have passed since the detention of the Petitioner in custody and thus those stages of the investigation here appear to be over when it can be said that the Petitioner being enlarged on bail may stand on the way of proper investigation in collecting all the materials triggering derailment of investigation process with the possibility of the Petitioner influencing the witnesses and absconding on which scores there too stand no material particulars. It is directed that the Petitioner be released on bail on furnishing bail bond of ₹ 35,00,000/- with two sureties for the like amount to the satisfaction of the learned court in seisin of the case with the conditions imposed - bail application allowed.
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Income Tax
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2022 (1) TMI 995
Disallowance u/s 14A r.w.r.8D - mandation of recording satisfaction - whether rule 8D of the Income Tax Rules, 1962 could have been invoked by the AO without examining the correctness of the assessee s claim of expenditure in relation to exempt income and without recording reasons as to why such a claim was not correct or acceptable? - HELD THAT:- The provisions of Section 14A has to be interpreted, particularly, the words that in relation to the income that does not form part of total income. Therefore, it was held that the principle of apportionment of expenses comes into play as that is the principle which is incorporated in Section 14A of the Act. With regard to as to how the power under Section 14A(2) read with rule 8D of the Rules could be invoked it was pointed out that the assessing officer needs to record satisfaction that having regard to the kind of the assessee suo motu disallowance under Section 14A was not correct and it will be in those cases where the assessee in his return has himself apportioned but the assessing officer was not accepting the said apportionment. In any event, the assessing officer will have to record its satisfaction to the said effect. AO has not recorded satisfaction and when this was pointed out before CIT(A) the same was not decided by the CIT(A), the issue was also not decided by the Tribunal when the assessee raised the same, though the grounds have been noted. The Tribunal has not rendered any decision on the said point but granted partial relief to the assessee with regard to the interest alone. See ASHISH JHUNJHUNWALA [ 2015 (12) TMI 905 - CALCUTTA HIGH COURT] and BRITANNIA INDUSTRIES LIMITED [ 2018 (9) TMI 152 - CALCUTTA HIGH COURT] See Godrej and Boyce Manufacturing Company Limited [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein it was held that the law postulates the recording of satisfaction as the requirement to be complied with by the assessing officer. Thus the appeals are allowed and substantial questions of law are answered in favour of the assessee, and the matter stands remanded to the Tribunal to decide the aforementioned issue namely with regard to whether the assessing officer has recorded his satisfaction as required to be done under Section 14A(2) before invoking the computation mode as specified in Rule 8D(2)(iii). As observed earlier, the relief granted to the assessee by the Tribunal for assessment years 2008-2009 and 2009-2010 by the CIT (A) for the assessment years 2011-2012 with regard to the interest portion shall stand affirmed. Tribunal while remanding the matter to the assessing officer particularly directed consideration of the investment which yielded dividend income to the assessee for computing the disallowance under Section 14A read with R. 8D (2) of the Rules. Whatever relief has been granted to the assessee by the Tribunal under the said head shall remain intact
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2022 (1) TMI 994
Validity of National faceless assessment proceedings - violation of principles of natural justice - as argued appellant was not granted opportunity of filing reply to the draft assessment order - HELD THAT:- The case in hand is that the appellant came to know of the notice for the first time on 11.09.2021 at 14.19 hours and received the same by speed post but the appellant s accountant entered the online portal to submit reply to the show cause notice dated 23.08.2021 and other notices which were enclosed and by that time the appellant found that the second respondent had passed the assessment order dated 08.09.2021 and raised demand by imposing penalty. The facts appeared to be not in dispute that the Department may contend that earlier notices were issued. The fact remains that having granted a final opportunity of fixing a time limit, the time limit should commence to run from the date of the receipt of the notice and if that be so, the date should be computed from 11.09.2021 and it will expire on 17.09.2021. Therefore, completing the assessment well before the said time is not sustainable and it is in violation of principles of natural justice. The decision in the case of Renew Power (P) Ltd. vs. National E-Assessment Centre Delhi [ 2021 (5) TMI 810 - DELHI HIGH COURT ] would also support the case of the appellant. Thus, for the above reasons, the instant appeal is allowed and the connected application is disposed of. Consequently, the writ petition is allowed and the assessment order dated 08.09.2021 and the notice of the demand dated 08.09.2021 as well as the penalty notice dated 08.09.2021 are quashed and the matter is remanded to the respondents for granting fresh opportunity to the appellant for filing reply/objection to the draft assessment notice.
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2022 (1) TMI 993
Sanction of the refund claim with interest u/s 244A - petitioner submits that it is his grievance that request letter seeking sanction of the refund claim with interest has not been processed and no orders has been passed by the respondents so far and as such, the petitioner is before this Court by way of the present petition -respondents submits that if reasonable time is granted, respondents would take necessary steps to consider the said application and address all the grievance of the petitioner - HELD THAT:- In view of the aforesaid facts and circumstances and the submissions made at the bar, we deem it just and appropriate to dispose of this petition directing the respondents to process the request letter dated 14.08.2013 and to refund the excess.
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2022 (1) TMI 992
Amount receivable on account of CER s (Carbon Emission Reduction) - Revenue or capital receipt - Disallowance of amount claimed as provision relating to CDM (Clean Development Mechanism) income in earlier year written back - assessee credited CDM revenue account and debited CDM revenue receivable account and booked income in that year - assessee has earned Carbon Credits in earlier years on the basis of wind-mill power generated during FYs 2007-08, 2008-09 2009-10 - HELD THAT:- CDM revenue receivable account was shown on asset side as amount receivable which would have liquidated upon sale of Carbon Credits by the assessee - unfortunately CER market crashed in 2012 and as a result, these credits could not be realized and the assessee had to forgo the credits ultimately. Accordingly, the income after adjusting exchange difference was reversed by reducing the opening balance of Accumulated Profit Loss Account and the claim was made in the computation of income. The said accounting treatment was in accordance with the applicable accounting standards. Logically also, when the provision was created in earlier years, the same was by way of credit to Profit Loss account. Accordingly, when the same has been reversed, the same has been adjusted from the accumulated balance of Profit Loss Account. Thus, it was a case when a provision of income was made in the books of account which was offered to tax The income could ultimately be not realized and accordingly, the same has been claimed as deduction. On the given facts, we concur with the submissions of Ld. AR that the provisions of Sec.36(1)(vii) r.w.s. 36(2) were not applicable since it was not the case of bad debts. The Ld. CIT(A) has denied the claim of the assessee by observing that the CER receipts would be capital receipts and therefore, any loss arising therefrom would be capital loss only and hence not allowable. The said observation over-look the fact that despite being capital receipts, the assessee has offered the same to tax in earlier years. The assessee s action of offering the income to tax, in our opinion, would entitle him to claim the expenditure if ultimately the receipts could not be realized by the assessee. The same is based on the principal of equity and natural justice. Therefore, on the given facts and circumstances, we would hold that the claim made by the assessee was an allowable deduction. The Ld. AO is directed to grant the deduction as claimed by the assessee. Resultantly, the appeal stand allowed. Interest disallowance u/s 36(1)(iii) - CIT-A deleted the addition - HELD THAT:- It is admitted position that the tax effect of quantum addition under dispute by revenue is less than the prescribed monetary limit of ₹ 50 Lacs and therefore, the appeal is not maintainable in terms of low tax effect circular issued by CBDT vide Circular No. 17/2019 dated 08/08/2019 [F.No.279/Misc. 142/2007-TTJ(Pt.). This recent circular further enhances the monetary limit fixed in earlier Circular No.3 of 2018 dated 11/07/2018 issued by CBDT as amended on 20/08/2018. Hence, the appeal stand dismissed with a liberty to revenue to seek recall of the appeal, if at a later stage, it is found that the matter is covered by any exceptions provided in any of the circular or in case the tax effect in any of the appeals exceeds the prescribed monetary limit. The appeal stands dismissed.
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2022 (1) TMI 991
Delay in deposit of employees' contribution towards ESI and PF - delay of few days from the due date mentioned in the respective Statutes, but the same was deposited well before the due date of filing of return of income u/s. 139(1) - HELD THAT:- CIT(A) has referred to the amendment brought in by the Finance Act, 2021 wherein an explanation has been introduced to Sections 36(1)(va) and u/s. 43B of the Income Tax Act. It is a consistent position across various Benches of the Tribunal including Chandigarh Benches that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2018-19, the said amendment cannot be applied in the instant case. Therefore, considering all the addition made by way of adjustment while processing the return of income u/s. 143(1) of the Act so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139(1) of the Act, is hereby directed to be deleted. - Decided in favour of assessee.
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2022 (1) TMI 990
Exemption u/s 11 - Reject the application for grant of registration u/s. 12AA - HELD THAT:- The assessee in all fairness if it expects the grant of Registration on a subsequent date is necessarily required to ensure that the necessary criteria is fully met in law and spirit. Infact the adjudicating authority expecting that their orders are respected and complied with per force expect self corrective actions as maintainable in law. Applications seeking Registration on same set of facts may warrant dismissal on this ground, however, where the taxpayer takes necessary steps to comply with the requirements, the application in a subsequent year cannot be outrightly dismissed. There is no bar to a taxpayer to ensure that he complies with the requirements of law on facts and then files a fresh application which has been done. CIT-DR was specifically required to bring to our notice any statutory bar or legal impediment. No provision of law supporting the view or any decision was brought to our notice by the Revenue. Considering the facts and the law, we hold that dismissal of the assessee's application on this ground per-se is contrary to the legal position as we understand. It is seen that the ld. CIT(Exemption) takes note of the fact that the assessee claims that its operations have started from 27.12.2020, however, he fails to consider the copy of the Balance Sheet which was stated to have been filed before the said Authority and shown to us. The said document demonstrates that expenditure for building a capital asset as claimed had started. The expenditure was for building a hospital needs verification on facts. Since filing of the Balance Sheet by itself may not be sufficient to fully demonstrate this claim and the facts need to be considered fully and correctly, accordingly, we set aside the impugned order back to the file of the CIT(E) directing the assessee to place full facts on record qua the alleged stated construction activity of a hospital in Bhopal alongwith all necessary approvals/permissions sought from the appropriate Regulatory Authorities required for setting up a hospital. CIT(E) shall consider all necessary evidences filed and if need be, call forth for further supporting documentation and thereafter, shall pass an order in accordance with law after considering the assessee. Said order was pronounced in the presence of the parties via Webex. Appeal of the assessee is allowed for statistical purposes.
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2022 (1) TMI 989
Delayed payments of employees contribution to ESI and PF - Addition by invoking the provisions of section 36(1)(va) - amendment to section 43B of the Act by insertion of Explanation-5 and to section 36(1)(va) of the Act by insertion of Explanation-2, by the Finance Act 2021 is prospective - HELD THAT:- In view of the aforestated decisions of the Ajay Piplani [ 2021 (10) TMI 1280 - ITAT] And M/S JUPITER AQUA LINES PVT. LTD. [ 2021 (11) TMI 761 - ITAT CHANDIGARH] therefore the contention of the Ld. DR before us that the amendment to section 36(1)(va) of the Act is retrospective is dismissed. Also since no facts distinguishing the present cases from those decided by the ITAT have been pointed out by the Ld. DR before us and admittedly the amounts of employees' contribution to ESI and PF stood paid before the due date of filing of return of income, the issue of disallowance on account of delayed payments of employees' contribution to ESI and PF is squarely covered by the aforesaid decisions, following which the disallowance made of ESI/PF employees' contribution u/s. 36(1)(va) is deleted. - Decided in favour of assessee.
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2022 (1) TMI 988
Late remittance of employees contribution to PF and ESI - HELD THAT:- As in the case of Essae Teraoka Pvt. Ltd Vs. DCIT[ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee
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2022 (1) TMI 987
Deduction u/s 80P(2)(a)(i) - deduction to a co-operative society engaged in the business of banking or providing credit facilities to its members - income eligible for deduction u/s 57 - CIT-A dis-allowing proportionate expenses against the income - assessee is not maintaining any separate books of accounts qua the income on the deposits from the bank - HELD THAT:- The income on the deposits from the bank has been treated as income from other sources but the gross income cannot be excluded from the deduction available to the assessee under the provisions of section 80P(2)(a)(i) - It is the net interest income on the deposits from the bank which needs to be excluded from the amount of deduction claimed under section 80P(2)(a)(i) and the same should be brought to tax under the head income from other sources under the provisions of section 56. To determine, the net income on the deposits from the bank, amount of expenses incurred in generating such interest income should be allowed as deduction from the gross income of interest in pursuance to the provisions of section 57(iii). Expenses which have been erred directly by the assessee in the earning of such income should only be eligible for deduction under section 57 of the Act. To put it differently, the expenses such as electricity, rental, audits, printing and stationery which cannot be said to have been incurred wholly and exclusively for the purpose of earning the interest income. Thus, we are not in agreement with the contention of the assessee. But it is also equally important to note that there is no mechanism provided under the provisions of section 57 of the Act for making the disallowance on ad hoc manner. Thus we direct the AO to work out the interest income on the deposits from the bank after deducting the corresponding expenses incurred by the assessee in generating the interest income. To our understanding such expenses have to be brought on record by the assessee based on cogent materials. Furthermore, if the assessee has made deposits in the banks out of the money borrowed from the members, then the corresponding interest cost borne by the assessee should be allowed as deduction. Deduction u/s 80P(2)(c) - In case of co-operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, e.g., rental income, interest income from surplus funds kept in FDs' of banks, etc., basic exemption of ₹ 50,000 as provided for in section 80P(2)(c)(ii) must be granted. It also appears that, though the word 'activity' is not defined, yet the investment activity, activity of renting of immovable property, etc., and the consequent income attributable to such activities would be covered under section 80P(2)(c). Hence, we direct the AO to allow the deduction under section 80P(2)(c) of the Act. Thus the ground of appeal of the assessee is allowed.
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2022 (1) TMI 986
Reopening of assessment u/s 147 - eligibility of reasons to believe - Addition of LTCG - taxability of the capital gain - HELD THAT:- We find that Ld. AO come across information through Annual Information Report that a registered sale deed was registered by Sub-registrar on 21.10.2009. Sale consideration stated is ₹ 30,00,000, but market value assessed by the Sub- Registrar is ₹ 1,31,00,000/-. There were 22 persons who jointly sold the immovable property in question. PAN No. of the assessee was not mentioned in the registered sale deed. In our view these information were sufficient enough for the Ld. AO to move ahead and issue notice u/s 148 of the Act to examine the transaction. Issuing of notice in itself cannot be given certainty that the addition will be made in the hands of assessee. By way of issuing notice Ld. AO gathers the information and examine the transaction and making addition in the hands of assessee comes at a subsequent stage i.e. during assessment proceedings. The assessee s case was not scrutinized u/s 143(3) of the Act for A.Y. 2010-11 and information was received by the Ld. AO from external sourced. We accordingly dismiss legal ground raised by the assessee challenging the validity of assessment proceedings by issuance of notice u/s 148 of the Act. Taxability of the capital gain - As per the definition of transfer provided in subclause (v) of section 2(47) of the Act, if possession is being given in lieu of consideration, then for the purpose of Income Tax it is to be assumed as transfer . We also find that the sale deed got finally registered on 21.10.2009 but the gap between the presentation of sale deed on 27.11.2007 and the deed getting finally registered on 21.10.2009 is attributable only for the necessary formalities being carried at the Sub-Registrar office as number of sellers were 22. We are of the considered view that for the purpose of taxability of the capital gain, the transfer of property took place during F.Y. 2007-08 when the sale deed was signed and presented for registration before Sub-Registrar on 27.11.20007 and by this date total sale consideration was received from the buyers M/s Sarthak Innovations Pvt. Ltd. It is also established fact that the assessee has disclosed this transaction in its income tax return for A.Y. 2007-08. AO erred in making the addition for Long Term Capital Gain in the hands of assessee during A.Y. 2009-10. The finding of Ld. CIT(A) is set aside and the ground raised on merit by the assessee are allowed.
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2022 (1) TMI 985
Deduction u/s 80P - Income from Commission,Miscellaneous Income and Net Income from public Distribution Scheme did not qualify for deduction under any of the provisions of section 80P(2)(a)/(b)/(d)/(e)/(f) - HELD THAT:- After perusal of the material on record it is noticed that AO has specifically asked the assessee to submit the supporting detail pertaining to such income to justify the claim of deduction u/s. 80P, however, the assessee has not made any compliance even before the CIT(A) the assessee has not submitted any detail. During the course of appellate proceedings before us the assessee has simply stated that lower authorities has not allowed deduction u/s. 80P which was allowable on the aforesaid income. Evening during the course of appellate proceedings before us, the assessee has not filed any supporting relevant material to demonstrate that how the assessee is entitled for deduction u/s. 80P on the aforesaid specific nature of income. Therefore, we do not find any infirmity in the decision of ld. CIT(A) and this ground of appeal of the assessee stands dismissed.
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2022 (1) TMI 984
Addition u/s 68 - unexplained share application money received and loan obtained - HELD THAT:- All evidences proved the genuineness and creditworthiness of the investors. Moreover, the addition was made on the basis of the statement of Mr. Praveen Kumar Jain but Praveen Kumar Jain had retracted from his statement. Therefore addition can not be made on the basis of statement with has been retracted. Non genuine loans u/s 68 - As assessee has filed the copy of ledger account , confirmation, PAN bank statement, ITR and audited annual accounts both the lenders which are also available in the paper book which showed the transactions in question are proved by the assessee. In this regard, we also place reliance upon the decision of CIT Vs. A.L. Lalpuria Construction Pvt. Ltd [ 2013 (10) TMI 316 - RAJASTHAN HIGH COURT] and PCIT Vs. Texraj Reality Pvt. Ltd. [ 2018 (7) TMI 1561 - GUJARAT HIGH COURT] The assessee has given the sufficient documentary proofs to prove the transactions which areon record. The Hon ble ITAT in the case of Diwali Capital Finance Pvt. Ltd. [ 2019 (1) TMI 681 - ITAT MUMBAI] and Blue Stock Investment Pvt. Ltd. [ 2018 (10) TMI 1633 - ITAT MUMBAI] has held that the sufficient evidences have been given by the assessee qua the money raised , the no the addition towards the loan/share application money could be made - Decided in favour of assessee.
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2022 (1) TMI 983
Revision u/s 263 - Deduction u/s. 80P(2)(a)(i) denied - assessee is a souharda and therefore not entitled to deduction u/s. 80P - HELD THAT:- As decided in own case [ 2021 (9) TMI 1329 - ITAT BANGALORE] primary reason for the Assessing Officer to deny the benefit of deduction u/s 80P of the I.T.Act was that the assessee is not registered under the Co-operative Societies Act. In view of the Hon ble jurisdictional High Court judgment in the case of Swabhimani Souharda Credit Co-operative Limited [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] which has categorically held that a society registered under the Karnataka Souharda Sahakari Act, 1997 is also entitled to the benefit of section 80P of the I.T.Act, the matter is restored to the files of the A.O. The A.O. is directed to examine the claim of deduction u/s 80P of the I.T.Act afresh and decide the issue in accordance with law. Thus we set aside the order of CIT(A) and restore the issue to AO to examine the claim u/s. 80P of the Act as directed by the Tribunal- Appeal filed by the assessee is treated as allowed for statistical purposes.
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2022 (1) TMI 982
Deduction u/s 54F - investment in purchase of flat made by assessee on sale of the 12 residential plots - Denial of deduction as assessee did not comply with the requirement of provisions to be eligible to claim deduction u/s 54F - As submitted that the purchase of new site took place after one year after the date of transfer of original asset and no construction commenced till the date - HELD THAT:- CIT(A) has not verified the submissions made by assessee in respect of purchase of site. Merely on surmises, the deduction is denied. In our opinion it is a fit case to be remanded to Ld.CIT(A) to carry out necessary verification. Assessee is directed to file all relevant documents in respect of purchase of site in support of its claim. CIT(A) is directed to verify all the relevant documents and to consider the claim in accordance with law - Ground raised by assessee stands allowed for statistical purposes.
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2022 (1) TMI 981
Penalty levied on derivative loss - defective notice u/s 274 - CIT-A deleted the addition - Revenue argued though it is a speculative loss, holding that the genuineness of this loss is not in dispute - whether CIT (A) has erred in deleting the penalty ignoring the fact that the speculative loss was due to trading in derivatives and wrong claim of it as business loss cannot be bonafide because its main business is sugar export the claim cannot be because of oversight but is an act of commission? - HELD THAT:- Bare perusal of the notice issued u/s 274 read with section 271(1)(c) of the Act, extracted above, in order to initiate the penalty proceedings against the assessee goes to prove that the AO himself was not aware / sure as to whether he is issuing notice to initiate the penalty proceedings either for concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee rather issued vague and ambiguous notice by incorporating both the limbs of section 271(1)(c). When the charge is to be framed against any person so as to move the penal provisions against him/her, he/she is required to be specifically made aware of the charges to be leveled against him/her. Following the decisions rendered in the cases of CIT vs. Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] , CIT vs. SSA s Emerald Meadows and Pr. CIT vs. Sahara India Life Insurance Company Ltd.[ 2019 (8) TMI 409 - DELHI HIGH COURT] , we are of the considered view that when the notice issued by the AO is bad in law being vague and ambiguous having not specified under which limb of section 271(1)(c) of the Act the same has been issued, the penalty proceedings initiated u/s 271(1)(c) are not sustainable. Even otherwise, when returned income/assessed income is made under MAT provisions and thereby made certain additions under normal provisions of the Act, penalty cannot be imposed on the basis of disallowances or additions as has been held by Hon ble Delhi High Court in case of CIT vs. Nalwa Sons Investments Ltd. [ 2010 (8) TMI 40 - DELHI HIGH COURT] - Decided against revenue.
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2022 (1) TMI 980
Exemption u/s 11 denied - Addition of donation received as the income of the assessee because the assessee was not registered under section 12AA - AR argued stating that the assessee received the money from various institutions which was handed over to various parties who expended the money according to the wishes of the donor - HELD THAT:- From the facts of the case, it is evident that the assessee is not registered U/s. 12A of the Act. In such circumstances, the assessee would be disentitled to enjoy the benefit of section 11 of the Act. From the first page of the FCRA certificate itself it is evident that the assessee is bound to file a return disclosing the particulars of foreign donation received and how it was applied and even when there is no transaction a nil return is to be filed. There are also various other statutory compliances that has to be fulfilled by the assessee in order to enjoy the benefit of FCRA Certificate and those compliances are not produced before us. The current status of the FCRA registration is also not disclosed before us. The activity of the assessee cannot be treated as business because the assessee had not rendered to any services to the entities from whom the payments are received. The concept of diversion of income by overriding title will also not be applicable in the case of the assessee because the amount collected by the assessee is for the purpose of the religious activities of the assessee and for such fund registration U/s. 12A is mandatory to claim the benefit U/s.11 of the Act. Further, the concept of diversion of income by overriding title is well explained in M/S. CHAMUNDI WINERY AND DISTILLERY [ 2018 (10) TMI 65 - KARNATAKA HIGH COURT] stating that if those principles are not adhered the provisions of section 11, 12, 12A and 12AA of the Act will become redundant. Considering these facts and the decisions of the Hon ble Higher Judiciaries, we are of the view that the action taken by the Ld. Revenue Authorities are as per the provisions of the Act and therefore we do not find it necessary to interfere with their orders. - Decided against assessee.
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2022 (1) TMI 965
Validity of assessment order u/s 143(3) - Violation of principles of natural justice - challenge made to the assessment order passed by respondent No.3 and the notices issued thereof - grievance of the petitioner that no reasonable opportunity was provided to furnish the reply to the notice along with the information and documents - HELD THAT:- The arguments of the learned counsel appearing for the petitoner that the objections filed by the petitoner was not considered by the Assessing Officer, appears to have some force. At this juncture, it will be beneficial to refer to the judgment of the Hon'ble Apex Court in the case of Magadh Sugar Energy Limited [ 2021 (10) TMI 691 - SUPREME COURT] Similarly in the case of Vodafone India Limited [ 2014 (1) TMI 88 - BOMBAY HIGH COURT] while considering the show cause notice issued to the assessee giving less than 24 hours to respond to the show cause notice observed that the same is a flaw in the decision making process and therefore amenable to judicial review; it has further observed that it has been stated times without number that Justice must not only be done but also appear to have been done, the non-consideration of the petitioner's response to the notice by making it impossible to the petitoner to file its reply for the consideration of the Assessing Officer does cause prejudice to the petitioner leading to palpable injustice; thus, warranting the exercise of writ jurisdiction. Thus, without going into merits or demerits of the case, it would be suffice in restoring the proceedings to the Assessing Officer to provide reasonable opportunity of hearing to the petitioner with liberty to file additional reply, annulling the assessment order. Accordingly, we set aside the assessment order and the demand notices. The proceedings are restored to the file of the Assessing Officer for re consideration
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2022 (1) TMI 964
Reopening of assessment u/s 147 - capital gain resulted from transfer of agricultural land - Assessee is against not providing opportunity to the assessee as against validity of the proceedings - HELD THAT:- The assessee has not brought any material in support of his averments. Therefore, these grounds of the assessee s appeal are dismissed. Deduction u/s 54 - Issue whether the land was an agricultural land and did not fall within the definition of capital asset was not adverted and adjudicated. Therefore, under these facts, the impugned order is hereby set aside and the issue whether the land as transferred fall within the definition of capital asset u/s 2 (14) of the Act. If yes, whether the assessee was entitled for any deduction u/s 54 of the Act. The A.O is, therefore, directed to decide these issues after presiding adequate opportunity of hearing to the assessee. Ground allowed for statistical purpose.
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2022 (1) TMI 963
Validity of reopening of assessment u/s 147 - disallowance of other reconciliation items - HELD THAT:- AO has made the impugned addition for want of details. Before Ld. CIT(A), the assessee has furnished details to the extent of ₹ 159.56 crores, as against the disallowance of ₹ 167.58 crores. It has been tabulated above in the remand report. A perusal of the same would show that the details furnished for all items (except relating to 'Discount Account' and 'Other item') are more than that addition made by the AO, meaning thereby, the assessee has furnished details, even though it could not make one to one tally. In respect of 'Discount Account', the assessee could not furnish details. Similarly in respect of 'Other item', the assessee could not furnish details to the tune of ₹ 7,82,41,309/-. The total of both these amounts works out to ₹ 9,88,29,444/-. Despite furnishing details, we notice that the CIT(A) has confirmed disallowance of ₹ 167.58 crores. In our view, this is not justified. Accordingly, we are of the view that the disallowance should have been restricted to the amount for which details could not be furnished by the assessee. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the AO to restrict the addition to ₹ 9,88,29,444/- on this issue. Addition relating to accrual entries - AO noticed that the assessee company has posted accrual entries in all expenses account in order to match the ledger amount with the amount shown in the P L account - disallowance u/s. 40(a)(ia) - HELD THAT:- CIT(A) has extracted the reconciliation statement with regard to the other reconciliation items (referred as 'miscellaneous accruals') which is not relevant to the present issue. Further, in paragraph 13.2, extracted above the Ld. CIT(A) has observed that the assessee has demonstrated that the above said amount has already been disallowed in determination of taxable income for assessment year 2008-09. However, it appears that the assessee has not submitted so before Ld. CIT(A). Accordingly, there was confusion in the mind of Ld. CIT(A) on this issue.Disallowance to the extent reclassification of expenditure is not justified. In respect of year end accrual adjustment, the case of the A.O. is that the same is liable for disallowance u/s. 40(a)(ia) of the Act for non-deduction of tax at source even though the assessee has submitted that it has considered the year-end accruals appropriately for disallowance u/s. 40(a)(ia) of the Act. From the computation statement filed by the assessee,we notice that the assessee has made disallowance u/s. 40(a)(i) and u/s. 40(a)(ia) of the Act. However, no details were furnished to support the claim that the yearend provisions, that attract TDS liability have been included in the above said disallowances. We noticed earlier that the Ld. CIT(A) has granted relief to the assessee on this issue without properly appreciating the facts. Accordingly, we are of the view that this issue requires examination at the end of the A.O. Accordingly, we partially confirm the order passed by Ld. CIT(A) on this issue and restore the matter relating to applicability of provisions of sec. 40(a)(ia) on the amount to the file of the A.O for examining the same in accordance with law. The relief granted by Ld. CIT(A) is sustained to the extent of ₹ 81.02 crores. - Decided partly in favour of assessee.
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2022 (1) TMI 962
Addition of cash payment by the assessee to the sellers of the land - unexplained cash/on-money - CIT(A) deleted the addition observing that merely on the basis of admission of joint seller Shri Manohar Patel, it cannot be concluded that the assessee had paid the cash/on-money - as per CIT-A in cases of allegation of on-money , burden to prove such allegations lies on the Assessing Officer and in the instant case, there are no evidence on record except admission by joint seller to prove the same - HELD THAT:- We find that ld. CIT-DR except placing reliance upon the orders of the Assessing Officer could not bring any contrary material on record to controvert the finding of the ld. CIT(A). We find that the assessee had categorically denied to have paid any alleged cash/on money to the sellers either individually or as director on behalf of company submitting that the purchase transaction was executed at value mentioned in the purchase deed and no payment whatsoever beyond this sum was given. We find that the onus of proof was also discharged by the assessee by submission of various details and documentary evidences during the assessment proceedings substantiating the said fact. AO merely placed reliance on the Statements of Shri Manohar Patel but failed to appreciate the fact that there was no tangible evidence brought on record to substantiate the allegations made and no independent inquiries were conducted by the Ld. AO either u/s 131 or 133(6) to bring out correct facts on record rather sole reliance was made on the information given by DDIT (Inv.)-II, Indore. - there are no evidences on record to establish the market value of land being more than actual sale consideration. Thus, the alleged additions made by the ld. Assessing Officer are purely based on suspicion, conjectures and surmises. We are of the view that mere admission of seller of acceptance of cash/on-money cannot be considered as tangible material in the absence of any other corroborative material. See SHREE PARSHWANATH CONSTRUCTION VERSUS ITO-2 (1) , UJJAIN [ 2014 (7) TMI 1290 - ITAT INDORE] We also find that during the course of assessment proceedings, the assessee had requested the Ld. AO for opportunity of cross-examination with the sellers on whose statement s reliance was placed but the same was ignored by the Ld. AO leading to violations of principles of Natural Justice which is, in our view, unjustified in view of the judgment of ANDAMAN TIMBER INDUSTRIES [ 2015 (10) TMI 442 - SUPREME COURT] wherein as examined the omission on the part of the AO not providing opportunity to assessee to cross-examine of two witnesses and held that it was a serious flaw and since the statements of those witnesses were made the basis of the impugned order, this omission on the part of AO makes the order nullity inasmuch as it amounted to violation of Principles of natural justice. Thus addition made on account of alleged payment of cash/on-money is totally baseless and erroneous - Decided in favour of assessee.
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2022 (1) TMI 961
Addition u/s 40(a)(ia) - payments as actually made to the payee which attract liability to deduct tax at source - Scope of amendment by virtue of which 2nd proviso has been provided to section 40(a)(ia) - HELD THAT:- We find that an amendment has been brought in by the Finance Act, 2012 w.e.f. 1.4.2013 by virtue of which 2nd proviso has been provided to section 40(a)(ia) . The impugned assessment year is assessment year 2013-14 and there cannot be any dispute that the aforesaid amendment is applicable in the instant case. It has been contended that the payees are publicly known NBFCs and it is unlikely that they have not considered the payments so made by the assessee while computing their income and filing their respective tax returns and the assessee may be allowed an opportunity to furnish the requisite certificates in support of the same. We find that the legislative mandate so provided by the aforesaid amendment should be allowed to reach its logical conclusion and considering the same and in the interest of substantial justice, we hereby allow the assessee one more opportunity to furnish the requisite certificates from the respective parties and where the certificates are so furnished by the assessee containing the requisite information, allow the necessary relief to the assessee. The alternate contention is therefore not considered and left open. The matter is accordingly set-aside to the file of the Assessing officer for the limited purposes of examining and considering the certificates which shall be furnished by the assessee within reasonable period of time as so specified by the Assessing officer. Appeal of the assessee is allowed for statistical purposes.
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2022 (1) TMI 960
Taxability of income received from re-insurance business in India - PE in India - business connection in India - income taxable in India - Indo-Swiss Tax Treaty - HELD THAT:- This issue has already been decided in favour of the assessee that assessee has neither a business connection in India nor it has a PE in India in view of the provisions contained in Explanation 2 to section 9(1) of the Act as well as under the provisions of Indo Swiss Tax Treaty, the operative part of the order passed by the Coordinate Bench of Tribunal in assessee s own case for AY 2014-15 [ 2021 (7) TMI 1018 - ITAT MUMBAI ] We are of the considered view that assessee has neither a business connection in India in the light of the Explanation 2 of section 9(1) of the Act nor it have PE in India under the provision of Indo-Swiss Tax Treaty, hence business income of the assessee computed by AO under rule 10 of the I.T. Act to the tune of ₹ 89,94,57,360/- is not sustainable, hence, order to be deleted - Decided in favour of assessee.
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2022 (1) TMI 959
Late deposit of Employees Contribution to ESI and EPF - amount deposited after the due date but before the due date of filing of return of income - AO made the additions of the impugned amounts for the reasons that the assessee did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) - HELD THAT:- As decided in RAJA RAM VERSUS THE ITO, WARD 3 AND SANCHI MANAGEMENT SERVICES PRIVATE LIMITED VERSUS THE ITO, WARD 5 (2) , CHANDIGARH [ 2021 (11) TMI 370 - ITAT CHANDIGARH] assessee deposited the contribution of PF ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1). Impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee
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Customs
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2022 (1) TMI 958
Inaction on the part of the respondents to dispose of their first representation as well as the second representation by way of a reminder - violation of a circular of the Central Board of Excise Customs, New Delhi, Ministry of Finance (Department of Revenue), Government of India being Circular No. 8/2018-Cus., dated March 23, 2018 F. No.450/119/2017-Cus.IV - HELD THAT:- Mr Maiti, learned advocate appearing for the respondents, is not in a position to defend the inaction on the part of the respondents in disposing of the aforesaid representations. He submits that he is not sure whether the aforesaid representations are still pending or have been disposed of, in spite of specific submission made by the petitioners in court that such representations are still pending and have not been disposed of. The writ petition is disposed of directing the respondents concerned to consider and dispose of the representation in accordance with law by passing a reasoned and speaking order, after giving an opportunity of hearing to the petitioners or their authorised representative, within six weeks from the date of communication of this order.
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2022 (1) TMI 957
Levy of penalty u/s 112 of Customs Act, 1962 - diversion of nonmagnetic stainless steel/coil, imported without payment of duties of customs against 25 advance licences - duty exemption entitlement certificate (DEEC) scheme - entire case against Mr Lalit Mange revolves around the statement of Mr Mohan Shah of Chanakya Impex - relevant evidences or not - HELD THAT:- From the statement of the transport operators narrated in the impugned order, it would appear that payments were made to the transporters by the appellant-Director and with instructions to proceed to the weighbridge beyond which the actual place of delivery was known only to the drivers of the trucks who remained untraceable. It cannot be considered beyond the normal course of a commercial transaction to have the goods weighed upon clearance from customs control and the participation of the appellant- Director in such undertaking does not suffice to establish any role in the further movement thereafter. The proceedings themselves comprised two parts: the goods which were found at the premises of the original high-sea sellers and imports of goods valued at ₹9,50,30,917.43 against 25 advance licence effected prior to the searches. As far as the previous consignments are concerned, and from the narration of the transactions pertaining to the seized goods, it would appear that the culpability of the appellant-Director stands solely upon the statement of Mr Mohan Shah, the principal noticee in the proceedings. Being a co-noticee, and even if sought to be cross examined, permitting such confrontation during adjudication would have been legally improper. It would have been more appropriate for these statements of Mr Mohan Shah to have been used for confronting the appellant-Director when he was subject to interrogation under section 108 of Customs Act 1962. There is no evidence of that; nor is there any record of such ascertainment having taken place. Accordingly, the statements of Mr Mohan Shah fails the test of relevancy prescribed in section 138B of Customs Act, 1962. In the decision of the Hon ble High Court of Delhi in S.N. OJHA VERSUS COMMISSIONER OF CUSTOMS [ 2015 (11) TMI 312 - DELHI HIGH COURT] , the statements were used in support of other evidence that were available as corroboration. In both of these judgments, the principle laid down is that the statement of co-accused cannot be discarded merely because of coverage by common proceedings; it is abundantly clear that the statements were supplementary to the material evidence that were available against the parties concerned. In the present proceedings, admittedly, there is no material evidence that the said statement can claim to support. In the light of the inadequacy of the statements for establishing the complicity of the appellant-Director in the alleged diversion, the penalty imposed under section 112 is liable to set aside - Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2022 (1) TMI 979
Condonation of delay of 3696 days in filing petition - Continued negotiations, did not settle - process of settlement was turned down with no positive response, for which the petition got more delayed - sufficient cause or not - HELD THAT:- The causes for delay in filing the Application as mentioned by the Applicant, such as continuation of negotiations/further negotiations with the Respondents for seven years, writing letters to the Respondents, ill health, cases filed in other forums, lack of legal knowledge, are not only sufficient but also not convincing at all to condone the delay of such a long period of 3696 days i.e. around 10 years from the reported cause of action in filing the Petition before this Bench under Section 59 of the Companies Act 2013. Rather it is found inaction on the part of the Petitioner for seven years in not filing the Application before this Bench in time. The prayers made in this application to condone the delay of 3696 days and take up the Main Petition under 59 of the Companies Act, 2013 filed by the Petitioner before this Bench as a regular Petition are hereby rejected - Application dismissed.
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2022 (1) TMI 978
Sanction of the Scheme of Amalgamation - Section 230(6) read with Section 232(3) of the Companies Act, 2013 - HELD THAT:- Various directions with regard to holding, convening and dispensation of various meetings issued - directions with regard to issuance of various notices also issued. The scheme is approved - application allowed.
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Insolvency & Bankruptcy
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2022 (1) TMI 977
Fresh demand of income tax after the Approval of Resolution Plan - Demand of Income Tax Dues after completion of scrutiny process - validity of re-opening the claims which were settled in insolvency proceedings - HELD THAT:- The Insolvency and Bankruptcy Code, 2016 (IBC) is an act to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India and for matters connected therewith and incidental thereto. After elaborate discussion in Ghanashyam Mishra case [ 2021 (4) TMI 613 - SUPREME COURT ], Supreme Court held that any debt in respect of payment of dues arising under any law for the time being in force including the ones owed to the Central Government or any State Government, or any local authority which does not form a part of the approved resolution plan shall stand extinguished. Clarifying further it has been held that once a resolution plan is approved by the adjudicating authority, all such claims /dues owed to the State / Central Government or any local authority including the tax authorities who were not part of the resolution plan shall stand extinguished. In the present case, it is seen that the date of approval of the resolution plan by the Tribunal is 19.07.2018. For the assessment year 2017-18, the resolution professional on behalf of the corporate debtor had filed the return of income on 07.11.2017. In that return of income, the corporate debtor disclosed loss of ₹ 15,49,43,866-00 and claimed refund of ₹ 11,47,698-00 on account of TDS. Thus the return was filed prior to approval of the resolution plan. After approval of the resolution plan by the Tribunal on 19.07.2018, Deputy Commissioner of Income Tax, CPC, Bangalore, issued notice dated 02.10.2018 to the corporate debtor stating that there was some arithmetical error in the return of income which needed to be corrected. Corporate debtor i.e. petitioner No.1 found on verification that interest income of ₹ 97,28,737-00 was not disclosed under the head income from other sources though it has reduced while computing the income under the head business or profession - petitioner No.1 filed a revised return on 17.10.2018 whereby the loss figure was reduced by the quantum of interest income. Accordingly the loss figure was revised at ₹ 14,52,15,129-00 {₹ 15,49,43,866-00 (-) ₹ 97,28,737-00}. Subsequently by letter dated 01.11.2018 petitioner No.1 informed the Deputy Commissioner of Income Tax, CPC, Bangalore, that the arithmetical mistake in the return was rectified in the revised return. It is evident that Income Tax authorities are seeking information for the purpose of making assessment for the assessment year 2017-18 as the return of the corporate debtor (petitioner No.1) has been taken up for scrutiny under CASS. The assessment year 2017-18 (previous year 2016-17) covers the period prior to approval of the resolution plan by the Tribunal on 19.07.2018. Clause 7.5 (c) as extracted and discussed above, bars all notices to initiate any proceeding against the corporate debtor in relation to the period prior to the date of the Tribunal s order, clarifying that such notices would stand abated. All assessment proceedings relating to the period prior to the completion date would stand terminated with all consequential liabilities being abated. From the tone and tenor of the impugned notices what is evident is that respondents are seeking to pass assessment order under Section 143 (3) of the Act since the case of petitioner No.1 was selected for limited scrutiny under CASS. However, the period of the assessment order would be a period covered by the resolution plan - In view of Clause 7.5 (c) of the resolution plan, as approved by the Tribunal and in view of the decisions of the Supreme Court in Committee of Creditors of Essar Steel India Limited [ 2019 (11) TMI 731 - SUPREME COURT ] and Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ], the claim of the Income Tax Department which is outside the resolution plan would stand extinguished. Carry forward of losses and adjustments against future profits - HELD THAT:- As and when such carry forward and set off is claimed by the petitioner in future, i.e. beyond the period covered by the resolution plan, the Income Tax Department would be entitled to verify such claim and pass appropriate order. But for the period covered by the resolution plan, it cannot carry out any scrutiny or carry out assessment in respect of the corporate debtor. To that extent, the impugned notices cannot be justified. What the resolution plan provides and which is in conformity with the law laid down by the Supreme Court is that on and from the date of approval of the resolution plan by the Tribunal, the same would prevail over the claims of the Income Tax Department and such claims which are outside the resolution plan for the period covered by the resolution plan would stand extinguished. The impugned notices seek to initiate assessment proceedings under Section143 (3) of the Act for a period which is squarely covered by the resolution plan as approved by the Tribunal - impugned notices dated 22.09.2019, 21.10.2019 and 30.10.2019 being wholly unsustainable in law are hereby set aside and quashed. Petition allowed.
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2022 (1) TMI 976
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - settlement of dues by the Corporate Debtor - charge of Interest on Corporate Debtor - existence of debt and dispute or not - HELD THAT:- The Bench observed that the Operational Creditor and Corporate Debtor had entered into the Settlement Deed for settlement of dues by the Corporate Debtor. The said Settlement Deed clearly shows the liability of Corporate Debtor to pay the outstanding. As per the terms of the Settlement Deed the payment was to be made from 15.06.2018 till 06.03.2019. The Corporate Debtor filed the Reply and denied the interest portion stating that there is no interest clause mentioned in the invoices raised on the Corporate Debtor. However, upon perusal of the records and documents filed by the Operational Creditor, the Purchase Order at p. 41 and the Invoices attached clearly show that interest is chargeable @ 21% p.a. after the due date of payment. Further, as per Settlement Deed dated 10.03.2019, both Operational Creditor and the Corporate Debtor have agreed for interest @ 18% p.a. for payment after due date. Hence, the Bench is of the considered view that the Operational Creditor is entitled to charge interest from Corporate Debtor. The Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of One Crore rupees stipulated amendment made under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. Accordingly, this Adjudicating Authority admits the Petition and orders initiation of CIRP against the Corporate Debtor - Petition admitted - moratorium declared.
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2022 (1) TMI 975
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The Financial Creditor instead of extending helping hand, has issued various legal notices to the Corporate Debtor. As a result, the Corporate Debtor could not recover from the lenders hostile attitude. The Corporate Debtor's precarious financial situation compounded further due to the hostile attitude of the Financial Creditor and led to severe cash flow mismatches, which hurt the Corporate Debtor's operations. The hopes of revival also have been severely and adversely impacted since March, 2020 due to Covid-19 outbreak - the Corporate Debtor Company has been particular that the Financial Creditor examines the genuine grievances and addresses its Concerns comprehensively to arrive at an amicable solution to adequately compensate the Corporate Debtor in quick time for the irreparable damage caused to the business and losses incurred that are solely attributable to the acts of omission on the part of the Financial Creditor. Upon reconciliation, the Debt may not exist and therefore, the Petition is not maintainable. The Counsel appearing for the Corporate Debtor reported that though he contacted by his client, his client did not give any instructions to him and he sought the Tribunal to pass orders on merits. He did not make any submissions either opposing the submissions made by the Counsel for the Financial Creditor or in support of the contentions made in his counter - application admitted - moratorium declared.
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PMLA
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2022 (1) TMI 974
Seeking grant of Bail - Action against the Chartered Accountant under PMLA for issuing bogus CA certificates - Money Laundering - shell entities - proceeds of crime - only allegation against the petitioner is that being a Chartered Accountant, without verifying the Bills of Entry and economic rationale of such large payments from paper entities had issued the certificates - HELD THAT:- Admittedly, as of now the other accused are not arrested and the contention of learned Special Public Prosecutor that till such time, petitioner shall not be released from jail is not justifiable, because of the fact that custody of petitioner was already sought and no purpose will be served by detaining the petitioner in jail. Hence, this Court deems it appropriate to grant bail to the petitioner, however on certain conditions. Petitioner / Accused shall be enlarged on bail on his executing a personal bond for a sum of ₹ 20,000/- with two sureties for a like sum each to the satisfaction of the Metropolitan Sessions Judge, Nampally, Hyderabad. On such release, petitioner shall not leave Hyderabad until further orders - petition allowed.
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Service Tax
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2022 (1) TMI 973
Seeking grant of Regular Bail - shell/defunct companies - issuance of invoices without providing any services - formation of cartel to siphon the public funds running into crores of rupees - As per the prosecution case, the petitioner never held any position in the management of M/s. Skillar Enterprises India Pvt. Limited. and not involved in day to day affairs of the company - HELD THAT:- FIR was registered after considering the findings of the DGGST investigation, SIEMENS Internal investigation, and Forensic audit report. In all the reports it is conclusively established that the petitioner in connivance with the other accused played an active role in getting fake invoices and in routing the diverted amount back to the DesignTech and others assigned by it. Finally considering all the aforesaid facts and circumstances and huge magnitude of the fraud running into several crores of rupees, the IO is still in the process of securing various incriminating documents/records from various Central and State Government Agencies including Income Tax Authorities, GST officials, ROC authorities, Bank officials to correlate and verify the nature and quantum of fraud and modus operandi adopted for incorporating shell companies, raising of fake invoices, routing back the amount through various associated shell companies. Hence petitioner, does not deserve for bail. The object of bail is to secure appearance of the accused person at his trial by a reasonable amount of bail. Unless it can be required to ensure that an accused person will stand his trial where called upon. As observed by the Hon ble Apex Court in catena of judgments, the basic principle of our criminal justice system is bail, not jail. Considering the specific contentions of the learned Additional Advocate General that the investigating agency requires couple of weeks to conclude the investigation and after that there is no necessity of judicial custody of the petitioners and also in view of the rejection of the petition filed by the CID in the Court below for police custody of the petitioners herein and the same was unchallenged by the respondents - there is no necessity to grant of police custody of the petitioners - this Court is inclined to enlarge the petitioners on bail, but with some conditions - petition allowed.
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2022 (1) TMI 972
Refund of Service Tax - SEZ unit - refund of service tax paid on lease premium charges paid - one time claim of refund instead of claiming on quarterly basis - HELD THAT:- The appellant assessee have rightly been sanctioned the refund claim by the Commissioner (Appeals) as lease premium have been paid for acquiring the lease of the premises in the Special Economic Zone, which is essential for carrying of the business activity of the appellant assessee. It is further found that levy of service tax is exempt under the provision of the SEZ Act. Only the procedure for exemption is provided by way of refund. In this view of the matter, it is held that the Commissioner (Appeals) have erred in concluding that the amount of refund is disbursable on quarterly basis - the impugned order-in-appeal modified to the effect that the whole amount of eligible refund shall be disbursed in one go to the appellant assessee with interest under Section 11BB as per Rules - appeal allowed - decided in favor of appellant-assessee.
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2022 (1) TMI 971
CENVAT Credit - input services - Airport services - Passenger Service Fee (PSF) - User Development Fee (UDF) - appellant is claiming to have admitted and reversed the entire credit confirmed by the impugned order - extended period of limitation - penalty - HELD THAT:- To verify the claim of reversal made by the appellant in their miscellaneous application, revenue authorities are directed. The verification report submitted by the revenue through authorized representative is without any merits. The fact that was required to be verified from the ST-3 returns was vis a vis the reversal entries reflecting in the ST-3 return. To verify the reversal made the authorities have sought to verify the invoices against which the credit was taken. The futile exercise of verification of invoice undertaken by the revenue, cannot certify the reversal entries made. The reversal entry cannot be corroborated back to the invoices. It is not to be verified whether the credit has been taken against the proper invoices/ documents evidencing the payment of tax. The matter needs to be relooked by the adjudicating authority vis a vis the claim of reversal made by the appellant. Extended period of limitation - penalty - HELD THAT:- When the appellant is claiming to have admitted and reversed the entire credit confirmed by the impugned order, there are no merits in the submissions made by the appellant vis a vis the invocation of extended period of limitation. However in remand proceeding adjudicating authority should consider the said letter for taking into account this letter for establishing bonafides, for purpose of penalty imposed. The matter needs to be relooked into by the adjudicating authority for verification of the following: Amount of credit reversed by the appellant as claimed on the basis of ST-3 return filed by them; In case on verification, if appellant is able to substantiate their claim no further action is required; In case the some amount is not found to be reversed, consequences as per law follows; Issue needs to examine afresh for bonafides in view of exhibit 15. Appeal allowed by way of remand.
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2022 (1) TMI 970
Rejection of refund claim - input services utilized in export of support services of business or commerce - rejection on the ground of lack of nexus - absence of supporting invoice - failure to explain the relevance of works contract service in export activity - period from January 2017 to March 2017 - HELD THAT:- As pointed out by the Learned Counsel, submission of invoice is not enumerated in the safeguards and procedures prescribed in the relevant notification. Furthermore, the absence of invoice corresponding to credit taken by an assessee should be proceeded against for denial of credit by the competent authority in proceedings under rule 14 of the CENVAT Credit Rules, 2004 and not to be adjudicated while disposing off claim of refund under rule 5 of the said Rules and, that too , without show cause notice to that effect. Works contract service - HELD THAT:- The Tribunal has settled the dispute on eligibility in RED HAT INDIA (P.) LTD. VERSUS PRINCIPAL COMMISSIONER, SERVICE TAX, COMMISSIONERATE, PUNE [ 2016 (6) TMI 619 - CESTAT MUMBAI] where it was held that it is clear that Works Contract Services are excluded only when it is used for construction service, whereas in the present case input services were used for maintenance of office equipment and building therefore, this particular works contract service does not fall under the exclusion category in the definition of input service, therefore works contract service in the present case is input service and eligible of refund under Rule 5. Appeal allowed - decided in favor of appellant.
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2022 (1) TMI 969
Valuation - commission payable to agent is inclusive of service tax or not - Revenue was of the view that respondent are not authorized to deduct the amount from the commission - demand u/s 73A(2) of Chapter V of the Finance Act, 1994 - HELD THAT:- The issue is no longer res-integra and has been decided in the favour of respondents, by CESTAT in case of M/S BAJAJ ALLIANZ LIFE INSURANCE CO. LTD, TATA AIA LIFE INSURANCE CO. LTD, KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD, INDIA FIRST LIFE INSURANCE CO. LTD, BHARATI-AXA LIFE INSURANCE CO LTD VERSUS COMMISSIONER OF C.E. S.T., PUNE-III, C.S.T., PUNE-I, MUMBAI-II, VII, VI (VICE-VERSA) [ 2019 (6) TMI 104 - CESTAT MUMBAI] where it was held that The service tax initially paid by the Appellants and later collected from the insurance agents by adjusting the commission paid, cannot be directed to be deposited under Section 73A(2) of Finance Act, 1994. Appeal dismissed - decided against Revenue.
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2022 (1) TMI 956
Refund claim - export of consultancy engineering services - services said to have been exported by the appellant to Wasco Engineering - contention of the appellant is that the recipient of service, which is Wasco Engineering, is located outside India and, therefore, the services rendered by the appellant to Wasco Engineering would qualify as export of services - HELD THAT:- It needs to be noted that earlier the Central Government made the Export of Services Rules, 2005 by Notification No. 9/2005-ST, dated 03.03.2005. Subsequently, the Central Government made the Place of Provision of Services Rules, 2012 by Notification No. 28/2012-ST dated 20.06.2012. These 2012 Rules were in supersession of the Export of Services Rule, 2005 that had been notified by Notification No. 9/2005-ST dated 03.03.2005. Rule 3 of the 2012 Rules deals with place of provision generally and it provides that the place of provision of a service shall be the location of the recipient of service. The Commissioner (Appeals) found that though Wasco Engineering had entered into a contract with Cairn India for inland transportation, installation and commissioning of the electric power house at Rajasthan but the scope of the Agreement was for performance of services at Rajasthan and, therefore, the conditions laid down in rule 3 of Export of Services Rule, 2005 read with rule 6A of the Service Tax Rules had not been fulfilled - In the first instance, the Commissioner (Appeals) wrongly placed reliance upon rule 3 of the Export of Services Rules, 2005, which Rules, had been superseded by the 2012 Rules w.e.f. 20.06.2012. A perusal of the Agreement between the appellant and Wasco Engineering shows that the appellant was required to perform the services for which Wasco Engineering was to make the payment to the appellant. There is no flow of consideration from Cairn India to the appellant - this apart, the Agreement for performance of service was executed between Wasco Engineering and the appellant. Wasco Engineering was stated to be a company incorporated in Singapore having its principal place of business at No. 5 Pandan Road. The service was, therefore, required to be provided by the appellant to Wasco Engineering located outside India. The business establishment of Wasco Engineering is in Singapore and it has received the services from the appellant, though, under the Agreement the appellant was to provide the service within India for and on behalf of Wasco Engineering. The finding recorded by the Commissioner (Appeals) is, therefore, not on a correct interpretation of the Service Tax Rules and the 2012 Rules - It cannot be doubted that the consultancy engineering services provided by the appellant to Wasco Engineering would qualify as export of service and the findings to the contrary recorded by the Commissioner (Appeals) cannot be sustained. In the present case, upon filing of the refund claims, only a deficiency memo was issued to the appellant requiring the appellant to appear on a particular date and produce the required documents indicated in the memo to substantiate the claim. What information was required to be provided by the appellant has been stated in the deficiency memo and they relate to the location of the project where the services were provided by the appellant, copy of the Agreement with the service receiver and bank realization certificates, amongst others. This deficiency memo does not even remotely indicate the reason why the refund claim would be rejected. It was, therefore, obligatory on the Department to have issued a show cause notice to the appellant before rejecting the claim, since seeking information on certain matters would not suffice. Section 83 of the Finance Act makes applicable the provisions of sections 11B and 11BB of the Excise Act in relation to service tax as they apply in relation to duty of excise. Thus, the provisions of section 11B and 11BB of the Excise Act would also be applicable - appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (1) TMI 968
Condonation of delay of 359 days in filing appeal - sufficient cause for delay existed or not - delay occurred due to the negligence of security guard in handing over the letter to the official concerned - responsibility of the company for employing irresponsible guard for the purpose - HELD THAT:- Admittedly, it is a refund application that has been rejected and by delaying the process appellant could not have gained much. However, having regard to the content of the affidavit mainly at para 2 that the said security guard had not attached any importance to a letter delivered to him by Speed-post, left it unattended and forgot to hand it over to the concern official would itself speak volumes about the negligent approach of the appellant company in authorising the security guard as Dak receiving staff and not becoming vigilant in cross checking whether inward entry of correspondences were effected properly - as has been accepted as a settled position of law, period of delay being a significant factor to weigh the same with sufficient cause is held to be a question of fact and the assessment of the same is discretionary in nature. In view of the fact that the negligent act of the company in not assigning the responsibility of receiving at least important dak to a responsible person and leaving the same at the disposal of the security guard for which 359 days delay had occurred cannot be treated as a reasonable ground to condone the delay in filing the appeal - the COD application seeking condonation of delay of 359 days in filing the appeal is rejected.
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2022 (1) TMI 967
CENVAT Credit - input services that were received by the appellants outside their factory premises - HELD THAT:- The issue is squarely covered by the decision of the Tribunal in appellants own case M/S JSW STEEL (SALAV) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2016 (8) TMI 450 - CESTAT MUMBAI ] where it was held that the Service Tax credit in respect of shipping fees and services availed in respect of vessels and barges is allowed. It is also noted that for availing cenvat credit in respect of input services, no condition has been prescribed of receipt of the said services within the factory premises. The input service credit is available only on the receipt of the services received by the manufacturer of the finished goods. The inclusive part specifically states that in respect of services in relation to procurement of goods and inward transportation of inputs is admissible - Since the services in the present case are received at captive jetties which are used for procurement and inward transportation of the goods, cenvat credit could not have been denied. Till the time it can be shown that input services have been used by the manufacturer of finished goods, in the process of manufacture or for conducting this business of manufacture of finished goods, the Cenvat credit on the input services cannot be denied, even if the said services are received at place other than factory premises - Appeal allowed - decided in favor of appellant.
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2022 (1) TMI 966
CENVAT Credit - credit denied on the premise as per Notification No.02/14-CE (N.T.) dt.20.1.2014, the appellant was not entitled to credit prior to the N/N. 01/10-CE dt.6.2.2010 - period involved in this case is 14.8.2012 to 19.1.2014 whereas the show cause notice has been issued on 17.8.2017 - invocation of extended period of limitation - HELD THAT:- Similarly placed assessee DHARMPAL SATYAPAL LTD. VERSUS COMMISSIONER OF C. EX., NOIDA [ 2016 (9) TMI 1389 - CESTAT ALLAHABAD] was allowed the credit although against those orders, the appeals have been filed by the Revenue before the Commissioner (Appeals), in that circumstance, when the Revenue is having divergent views on the issue, the extended period of limitation is not applicable. Admittedly, in this case, the show cause notice has been issued by invoking the extended period of limitation, therefore, the denial of credit is barred by limitation. Appeal allowed - decided in favor of appellant.
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