Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 28, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Detention of goods alongwith vehicle - Whether the value of the 33 out of 58 seized goods/bundles were valued between Rs. 4500 -5000 per bundle or R.20,000/- cannot be determined in a writ proceedings based on the submission of the appellant. The owner i.e. either the consignor or consignee have also not come forward to claim the Bundles. - WP dismissed - HC
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Classification of supply of service - composite supply or not - activity of design and development of patterns used for manufacturing of camshaft for a customer - intermediary service or not - contentions of the appellant that impugned transaction is composite supply where the principal supply is supply of services is not valid. In view of the above discussion, we hold that the impugned transaction is supply of goods i.e. pattern/tool of specified specifications. - AAAR
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Classification of supply - zero-rated supply - reverse charge mechanism (RCM) - supply of renting of immovable property services provided by the SEZ Authority - By virtue of deeming provision under section 5 (3) of the IGST Act, 2017, the levy on procurement of services specified in Notification 13/2017 CT (Rate) falls upon the unit in SEZ or SEZ developer - The appellant will not be required to pay any GST under RCM on the impugned supply of renting of immovable property services received SEEPZ SEZ, if appellant furnishes LUT. - AAAR
Income Tax
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Transfer of Case / jurisdiction passed u/s 127 - since no reasons have been recorded by the authority for dispensing with the opportunity of being heard, we find that there are no such reasons to do so. Therefore, the authority is bound to issue notice to the appellant and afford them a reasonable opportunity of being heard before a decision is taken. - HC
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Accrual of interest income - Assessee claims that no real income accrued to the company and merely as the assessee is following mercantile system of accounting it does not result in accrual of income from interest when there is no interest in real terms - There is also force in the contention of assessee that in any case, if shortfall in interest is adjusted from principal amount on principle of first appropriation towards interest before applying it to principal -Additions deleted - AT
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Addition u/s 69C - value of import goods enhanced by customs authorities - the value of the goods assessed/re-determined by the custom authorities as per valuation norms for the purpose of calculation of custom duty on the import. Therefore, the same would not attract the provisions of Section 69C of the Act, since, it has not been established as unexplained expenditure actually incurred by the assessee. - AT
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Exemption u/s 11 - assessee not having registration u/s. 12AA - voluntary donations received for specific purpose - the corpus specific voluntary donations are not taxable in the case of unregistered trust also - the denial of exemption for not having registration u/s. 12AA of the Act resulted into disallowance therein is deleted. - AT
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TP Adjustment - Assessee's main activity is nothing but marketing activity, whereas all the ownership of the product, the power to determine whether to accept / reject the order and the pricing is with the AE. The assessee is only getting 3.5% of the revenue from the receipts of the customers for the marketing function that it is doing. - Additions confirmed - AT
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Capital gain on lease hold properties - addition made u/s. 50C - transaction of transfer of leasehold right in question does not warrant invoking of section 50C(1) of the Act, as the property in question is not of the explicitly covered by section 50C(1) of the Act - AT
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TDS u/s 194C or 194I - payments towards rent and maintenance charges separately - Payments of rent and common area maintenance charges have been made to distinct entities/companies, therefore, the authorities below were not right in creating the impugned liability payable by the assessee firm under the provisions of sub-sections (1) and (1A) of section 201 - AT
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TP Adjustment - arm’s length price (ALP) of the international transaction - The tinkering of PLI by substituting the denominator with total cost is unacceptable considering that the TPO has included the cost of traded goods with unrelated parties in the total cost. Therefore, we do not find any infirmity in the decision of learned DRP in directing the TPO to recompute the ALP by strictly restricting himself to the international transaction with the AEs. - AT
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Addition u/s 41(1) - assessee has shown liabilities of sundry creditors - The expenditure incurred and purchases of machinery are certainly a capital expenditure. Further, the assessee has never claimed depreciation on such machinery. - No additions can sustain - AT
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Computation of Capital Gains (Loss) - Determining the cost of acquisition u/s 49(2AA) - Tax Residency Certificate (TRC) - In the instant case, since, the assessee had produced the TRC as per the directions of the DRP, we refrain from adjudicating whether TRC is mandatory for determining the cost of acquisition u/s 49(2AA) of the I.T.Act. - The A.O. is directed to examine the TRC and the same if it is found to be in order, the cost of acquisition shall be taken as claimed by the assessee - AT
Customs
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Advance License Scheme - actual user condition - sourcing Lauryl alcohol - The Respondent has used the imported material for manufacturing in its own M-3 Unit at Tarapur and there is also no dispute as regards fulfillment of the export obligation. - There would be no violation of condition (i) or (vii) of the Notification No. 30/97-CUS as amended - there is no transfer in violation of the actual user condition, the discharge of export obligation not being in question. - HC
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Amendment in the shipping bill - The power and scope of Section 149 are wide and have serious ramifications both for the revenue and the importer/exporter. Therefore, it is in the realm or jurisdiction of respondents herein to make Section 149 operable as prescribed by regulations subject to such terms and conditions as may be stipulated by the competent authority. - HC
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Change in classification - buttons imported as snap buttons - The product imported by the petitioners under the subject bills of entry is not claimed as stated differently from the goods imported by the petitioner in the first round of litigation. - Writ Petition stands allowed - However, revenue is free to examine each one of the consignments imported by the petitioners and verify - HC
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Levy of Anti-dumping duty - determination of the dumping margin by the designated authority - The matter has to be remitted to the designated authority to determine the export price by excluding the deductions from the export price of Xinyi Energy on account of the alleged liaison office in India. The designed authority shall also determine the normal value of the product in the light of the observations made in this order and forward the recommendations to the Central Government for issuance of a fresh notification under rule 18 of the 1995 Anti-Dumping Rules, if so considered necessary - AT
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Interest on the refund amount of pre-deposit - the amount remained with the revenue unadjusted by way of pre-deposit. - It is further found under the facts and circumstances, that such pre-deposit was made under protest - Such interest on refund should be granted within a period of 45 days from the date of receipt of copy of this order. - AT
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Violation of conditions of Exemption notification - ‘flying training' Aircraft - Allegation of misuse for ‘charter service’ - customs authorities could have proceeded to recover the duty on the basis of the undertaking only when the competent authority in the DGCA found as a fact that the appellant had violated the conditions of the permit - In the present case, such a finding has not been recorded and on the other hand, the permits have been renewed from time to time. - Confiscation order set aside - AT
Corporate Law
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Seeking cancellation of Name of another Company on the ground that it resembles the name of its company and its business - The Respondent no.3 is willing to cancel and give up the objectionable name. In view of the stand of Respondent No.3, the writ petition is disposed of directing the ROC to remove/modify the Register of Companies by removing the name of Respondent No.3 from the said register and rectifying the name of the company of Respondent No.3. - HC
Indian Laws
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Disproportionate assets were acquired by the accused person by commission of offence under the Prevention of Corruption Act, and there are no infirmity in the order of confiscation of the disproportionate asset by the learned Court below. - Disproportionate assets were acquired by the accused person by commission of offence under the Prevention of Corruption Act, and there are no infirmity in the order of confiscation of the disproportionate asset by the learned Court below. - HC
IBC
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Liquidation of Corporate Debtor - mode of sale - public auction - Section 33 of IBC - The order passed by the Adjudicating Authority approving the private sale of the Corporate Debtor by private treaty in favour of Respondent No.2 is set aside - liquidator is permitted to conduct a private sale of the assets of the Corporate Debtor by adopting Swiss Challenge Method treating the bid offered by the Respondent No.2 as an Anchor Bid. - AT
PMLA
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Provisional attachment of properties - The impugned PAO cannot be countenanced as falling within the meaning of an emergency attachment order bearing in mind that the allotment had itself occurred more than 11 years prior to the action initiated by the ED. In fact, even after the passing of 14 years, that aspect has neither been investigated by the competent agency nor has any report in that respect been lodged. - A PAO cannot possibly be sustained based upon what the ED may prospectively choose to do. - HC
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Money Laundering - proceeds of crime - Accumulation of disproportionate assets accumulated by the accused/ MLA/ Minister, Anos Ekka and Harinarayan Rai - considering the gravity of offence and the position of responsibility as held by the appellant/accused, the sentence of imprisonment and fine needs no interference by this Court. The learned Court below has recorded adequate and sufficient reasons for awarding sentence which will meet the ends of justice. - HC
SEBI
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SEBI settlement Scheme, 2022 - As on date the money towards penalty is due under an order issued under Securities Laws, which is liable to be recovered under Securities Laws. Regulation 5 of SEBI Regulation, 2018 puts a specific bar for settlement of such cases. Pendency of recovery proceedings cases are distinct than the original proceedings. - HC
Service Tax
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Deposit of tax under different head - Petitioner cannot be deprived of the benefits of this scheme just because the amount of interest was deposited under Accounting Code 00441481 (Other Receipts (interest)) and not under 00441480 in respect of tax receipts which change of Accounting Code was pending with the Respondents Authorities at the time of filing of Form SVLDRS-1 by the Petitioner. Petitioner, cannot be penalized for depositing the amount under different head. - HC
Central Excise
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CENVAT Credit - common input services used in taxable as well as exempt goods - The adjudicating authority straight away demanded 10% of the value of exempted goods. Therefore, he neither examined the reversal of cenvat credit made by the appellant nor even calculated the proportionate credit. The submission of the appellant also needs to be reconsidered whether the excess amount can be adjusted against the interest. - AT
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Reversal of CENVAT Credit - giving options for availing a particular option is procedural requirement and on failure of the same, the assessee cannot be deprived of choosing any of the option available in Rule 6(3) and one of the option is reversal of proportionate credit - AT
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Disallowance of part of CENVAT credit availed by the appellant on incurring of transportation charges paid to Indian Railways - during the relevant period, the practice was that the assessee retained one Xerox copy which was certified by the Railway staff. - Credit allowed - AT
VAT
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Reversal of ITC on furnace oil used as fuel - Input Tax Credit - The entitlement to ITC must thus be seen in the context of, and decided, bearing note, not just of the letter of the law but the purpose for which the benefit was intended in the first place. - Except to a small extent in the case of SKML, neither the input fuel nor electricity generated, have been sold as an independent commodity. In that exceptional case, the commodity has suffered the rigour of taxation per regular application of the Act. - Credit cannot be denied - HC
Case Laws:
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GST
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2023 (1) TMI 1098
Seeking release of confiscated goods - whether the authority was justified in holding that the appellant is not the owner of the goods? - HELD THAT:- The appeal is disposed off with a direction to the appellant to file an application before the Deputy Commissioner of State Tax, Goods and Services Tax, Bureau of Investigation, South Bengal, Durgapur zone seeking relief under Section 129(1) (a) of the said Act and such application shall be filed within one week from the date of receipt of the server copy of this judgment and order. On receipt of the said application, the said authority shall independently consider such a prayer uninfluenced by any of the observations made in its order dated 12th December, 2022, which is subject matter of the writ petition and such order shall be passed within a period of 10 days from the date on which the application is filed by the appellant. Appeal disposed off.
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2023 (1) TMI 1097
Maintainability of appeal - non-compliance with the requirement of pre-deposit - Attachment of Bank accounts of appellant - Initiation of garnishee proceedings - HELD THAT:- When the appeal was presented, the mandatory pre-deposit of 10% of the disputed tax has been complied with by the appellant. If that be so, no coercive action should be taken against the appellant till the appeal is heard and disposed of. In terms of the above direction, the appellant is granted liberty to file an appropriate interim application in the appeal petition and the appellate authority shall consider the same and pass appropriate orders for the purpose of lifting the garnishee order and the bank attachment. The appellant shall file the application in the statutory appeal not later than 10th February, 2023. Appeal disposed off.
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2023 (1) TMI 1096
Seeking grant of Anticipatory Bail - It is submitted by learned counsel for the applicant that proceeding u/s 74 of CGST Act is still pending, he is cooperating with the investigation/enquiry and did not misuse the liberty of aforesaid interim anticipatory bail which was granted on 22.03.2021 by the Coordinate Bench of this Court. HELD THAT:- Learned AGA for the State does not dispute the aforesaid factual aspect of the matter as argued on behalf of the appellant. The aforesaid interim anticipatory bail order dated 22.03.2021 is made absolute till finalization of proceedings on the terms and conditions as indicated in the above order dated 22.03.2021 - the instant anticipatory bail application is allowed .
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2023 (1) TMI 1095
Maintainability of petition - availability of alternate efficacious remedy under Section 107 of the respective GST Enactment - Detention of goods alongwith vehicle - HELD THAT:- The petitioner claims to be a transporter who was transporting goods for a dealer from the Tiruppur District in Tamil Nadu to a recipient in Hyderabad, Telangana. The consignment of Ready-Made Textile/ Hosiery Garments were being transported by the appellant for an unknown consignor and consigneer whose name has been later given as Star Handlooms in the affidavit filed in support of the Writ petition. About 58 bundles of Textile/ Hosiery Garments were being transported by the appellant and that out of 58 bundles 33 did not accompany necessary documents including invoices. For the balance, it can be inferred there was only lorry receipts. Under these circumstances, the lorry bearing registration number T.N. 39-Ck-5569 was detained by State Tax Officer (Intelligence), Roving Squad, Tiruppur on 4.3.2022 and that on the same day Form GST MOV-02[Order for Physical Verification/Inspection of the Conveyance, Goods and Documents] was issued to the driver in charge of the aforesaid vehicle and the aforesaid vehicle along with the consignments were detained. There is an indication that 33 bundles accompanied lorry receipts without invoices under section 68(2) and for the balance 25 there were neither any invoices nor any lorry receipts. In the reply dated 15.03.2022 of the appellant also there was no clear explanation as to whether the appellant was carrying the goods for the said Star Handlooms of Tiruppur District or it was being transported by the appellant for itself. The only response of the appellant in its reply dated 15.3.2022 was that only two of the bundles would be valued at Rs. 20,000 each and that rest of the bundles the value would be between Rs.4,500 to Rs.5000 and not Rs.20,000 per bundle. Whether the value of the 33 out of 58 seized goods/bundles were valued between Rs. 4500 -5000 per bundle or R.20,000/- cannot be determined in a writ proceedings based on the submission of the appellant. The owner i.e. either the consignor or consignee have also not come forward to claim the Bundles. Therefore, the order passed by the respondent State Tax Officer cannot be interfered by this Court. It cannot be construed that the value of two of the bundles out of 58 bundles alone were Rs.20,000 and that rest of them were only between Rs. 4500 -5000. There cannot be determination of the value n a writ proceeding. Whether the value was Rs.4500 - 5000 is something which the appellant will have to establish only before the appellate authority under section 107 of the respective GST enactments in an appellate proceedings. If the appellant wishes to pursue the appellate remedy, the appellant will have to pay deposit 25% of the amount determined by the respondent State Tax Officer, Intelligence. This Court is not really concerned with the disputed questions of fact. It is for the appellant to establish the same before the Appellate Authority and the amount that may be pre-deposited can be either appropriated or refunded back subject to the out come of the appeal in the proposed appeal against the aforesaid order. Writ petition dismissed.
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2023 (1) TMI 1094
Cancellation of the Registration Certificate of petitioner - failure to file Goods and Services Tax monthly returns for a continuous period of six months - HELD THAT:- In identical circumstances, this Court, in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] had 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. This Court has been consistently following the directions issued in the case of Tvl.Suguna Cutpiece Vs Appellate Deputy Commissioner (ST) (GST) and others and the Revenue/Department has also accepted the said view as evident from the fact that no appeal has been filed in any of the matters, this Court intends to follow the above order of this Court - Petition ordered.
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2023 (1) TMI 1093
Classification of supply of service - composite supply or not - activity of design and development of patterns used for manufacturing of camshaft for a customer - intermediary service or not - non-speaking order - violation of principles of natural justice. Whether activity of appellant is an intermediary service as held by the MAAR or as contended by the appellant, an activity of design and development of patterns/tools used for manufacturing of camshafts, for a overseas customer is a composite supply where the principal supply is supply of services? HELD THAT:- It is appellant who prepares the drawing and designs of tool / pattern and also check feasibility of its manufacturing. The techno commercial offer is being made by the appellant to overseas OEM / Machinist. Overseas OEM / Machinist releases the purchase order, for specific number of units of tools, after approval of techno commercial offer. The appellant undertakes in-house drawing, design, modelling, simulation and documentation for manufacture of the tools. Whereas, it hires third party vendor for machining (manufacturing) the tool as per specification provided by the appellant. The third party vendors charge for the manufacture of tools, which is paid by the appellant. The third party vendor delivers the tool to appellant, of which appellant further raises supply invoice to overseas OEMs / Machinist specifying therein the description of goods (tools), quantity, rate per unit, etc. However, as industry practice in this sector appellant keeps such tools with it for further use in manufacture of camshaft. The invoice raised by the appellant also exhibits that the tools of specific designs as per the specifications of overseas customer are supplied to them. Thus, from perusal of the purchase order placed by the overseas customers and supply invoice raised by appellant, it is clear that dominant intention of overseas customer is to get the supply of manufactured pattern/tools from the appellant as per specification provided by them. Thus, it is clear that the appellant is making such supply of tools on his own against the consideration which is price for tools and hence, there is no issue of receiving commission from overseas customers. Appellant is not facilitating any supply between overseas entity and third party vendor. The impugned transaction is supply of goods i.e. tools from appellant to customer on principal to principal basis. Considering these facts of and definition of intermediary provided under section 2(13) of the IGST Act, 2017, it is very much clear that appellant is not an intermediary . Hence, the findings of the MAAR that the impugned activity is an intermediary service is erroneous and not acceptable. On careful perusal of the definition of the term composite supply and the essential conditions enumerated in the definition, it is seen that the composite supply comprising two or more taxable supplies of goods or services or both, or any combination thereof should be made by a taxable person to a recipient - However, in the instant case, considering the facts of the case, it is amply clear that impugned transaction between appellant and overseas customer is of supply of goods i.e. pattern/tool of specified specifications. Hence, contentions of the appellant that impugned transaction is composite supply where the principal supply is supply of services is not valid. In view of the above discussion, we hold that the impugned transaction is supply of goods i.e. pattern/tool of specified specifications. Thus, the impugned transaction between appellant and overseas customer is supply of goods.
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2023 (1) TMI 1092
Classification of supply - zero-rated supply - supply of renting of immovable property services provided by the SEZ Authority - supply of any other services by the suppliers located in DTA to the SEZ unit - reverse charge mechanism - section 16(1) of the IGST Act, 2017 - HELD THAT:- On perusal of the provisions of the zero-rated supply under section 16(1) of the IGST Act, 2017, it is clear that any supply of goods or services or both made to a SEZ developer or SEZ unit for carrying out the authorised operation in SEZ will be considered as zero-rated supply. That is, the said supply will not attract any GST whatsoever. It is further mentioned here that this provisions of zero-rated supply will cover even the supply of services which are specified under the reverse charge Notification 10/2017-I.T. (Rate) dated 28.06.2017 as amended by Notification No. 03/2018, (Rate) dated 25.01.2018. This is so because it is the settled proposition of the law that the specific provisions made in the Act will have greater legal force than that of a notification issued under same or any other provisions of the same Act. Hence the provisions laid down under section 16(1) of the IGST Act, 2017 will supersede over the notification issued under section 5(3) of the IGST Act, 2017, which enumerates the services which attract GST under reverse charge basis. It is also pertinent to mention here that the said provision of section 16(1) ibid, merely mentions about the supply of goods or services or both to the SEZ developer or SEZ unit. The said provision does not mention any thing about the type of the supplier. From the provisions of section 16 (1) and Section 5 (3) of IGST Act it is clear that the intention of the legislature is not to tax the supplies made to a unit in SEZ or a SEZ developer, which has been made zero rated under clause (b) of section 16 (1) of the IGST Act. 2017. By virtue of deeming provision under section 5 (3) of the IGST Act, 2017, the levy on procurement of services specified in Notification 13/2017 CT (Rate) falls upon the unit in SEZ or SEZ developer - The appellant will not be required to pay any GST under RCM on the impugned supply of renting of immovable property services received SEEPZ SEZ, if appellant furnishes LUT. As regards any other services supplied by the DTA to the SEZ unit or developer, it is stated that the aforesaid principle will also be applicable in such cases. That is all the supply of services procured by SEZ unit from the suppliers located in DTA for carrying out the authorised operation in SEZ will not attract any GST in accordance with the provision of section 16(1) of the IGST Act, 2017, and the Appellant will not be required to pay any GST under RCM on the services received from DTA supplier for carrying out the authorized operation in SEZ, subject to LUT.
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Income Tax
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2023 (1) TMI 1099
Assumption of jurisdiction by the A.O for framing of the assessment u/s. 143(3) - HELD THAT:- As in the case of the present assessee before us the impugned assessment had been framed by the ITO-1(1), Bhilai vide his order passed u/s.143(3) dated 29.12.2016 on the basis of a notice u/s. 143(2), dated 24.09.2015 that was issued by the DCIT-1(1), Bhilai, i.e., an A.O who at the relevant point of time was not vested with jurisdiction over the case of the assessee, therefore, the assessment so framed cannot be sustained and is liable to be struck down on the said count itself. Apropos the notice issued u/s.143(2) of the Act, dated 05.05.2016 by the ITO-Ward 1(1), Bhilai, we are of the considered view that as the said notice was issued after the lapse of the stipulated time period, i.e., beyond the specified time frame which expired as on 30.09.2015, therefore, the assessment order so framed would also not be saved on the said basis. To sum up, as the impugned assessment u/s. 143(3), dated 29.12.2016 had been framed by the ITO- Ward 1(1), Bhilai de-hors the issuance of a valid notice u/s. 143(2) of the Act, therefore, the same cannot be sustained is liable to quashed. We, thus, in terms of our aforesaid observations quash the assessment framed by the A.O u/s.143(3), dated 29.12.2016 for want of valid assumption of jurisdiction on his part. Appeal of the assessee is allowed.
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2023 (1) TMI 1091
Transfer of Case / jurisdiction passed u/s 127 - Validity of Reopening of assessment notice - mandatory procedure to be followed u/s 127 by which the assessee is entitled to an opportunity of being heard before the assessment jurisdiction is transferred to the file of a different assessing officer - HELD THAT:- The language of Section 127 is clear that the assessee should be given a reasonable opportunity of being heard in the matter before the power under Section 127 of the Act is invoked. The statute is also clear that such opportunity of being heard is to be given wherever it is possible to do so. If the authority proposes to dispense with the opportunity of hearing, the statute states that reasons have to be recorded for not providing such an opportunity. On perusal of the order impugned in the writ petition dated 29th June, 2021, we find that no such reasons have been recorded by the authority for dispensing with the opportunity of personal hearing as no show cause notice was issued to the assessee prior to order of transfer. In any event, the learned Single Bench was of the opinion that the appellant had made out a prima facie case for entertaining the writ petition. But, however, if the assessment proceedings are to be proceeded by the assessing authority at Kanpur, then the writ petition itself would become infructuous. In any event, we are of the view that since no reasons have been recorded by the authority for dispensing with the opportunity of being heard, we find that there are no such reasons to do so. Therefore, the authority is bound to issue notice to the appellant and afford them a reasonable opportunity of being heard before a decision is taken. We are inclined to remand the matter back to the authority for a fresh decision. In the result, the appeal stands disposed of along with the writ petition by directing the appellant to treat the order passed by the Principal Commissioner of Income Tax-5, Kolkata dated 29th July, 2021 as a show cause notice and the appellant shall submit their objection within fifteen days from the date of receipt of the server copy of this judgment and order after which the Principal Commissioner of Income Tax shall afford an opportunity of hearing to the authorised representative of the assessee and pass a speaking order on merit and in accordance with law. Consequent upon the order dated 29th July, 2021, the assessing authority in Kanpur has taken up the reassessment proceedings and has passed an order dated 30th July, 2022 under Section 148A(d) of the Act and also issued a notice under Section 148 dated 30th July, 2022. The order passed under Section 148A(d) of the Act dated 30th July, 2022 and the notice issued under Section 148 dated 30th July, 2022 shall be kept in abeyance and shall abide by the fresh order that may be passed by the Principal Commissioner of Income Tax 5, Kolkata in terms of the above direction.
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2023 (1) TMI 1090
Condonation of delay in filling appeal before HC - present appeal filed after a delay of 109 days - only explanation provided for such delay that the delay of few days in filing the appeal is due to the administrative reasons beyond the control of the Appellant - HELD THAT:- We are unable to accept that the delay in filing the appeal can be condoned for the aforesaid reasons. It is settled law that each day of delay has to be explained. The appellant has not given sufficient explanation for the delay of 109 days. The fact that the appellant has casually termed the delay of 109 days as a delay of only of few days clearly indicates the lack of seriousness on the part of the Revenue in adhering to timeline stipulated under the Act. The application is accordingly dismissed. Revision u/s 263 - As per CIT provisions of Section 56(2)(vii)(a) would be applicable and the assessee would be liable to pay tax on the difference between the consideration paid for the said shares and their Fair Market Value - HELD THAT:- MAT credit entitlement is not a marketable asset, and the question whether such entitlement should be included while computing the fair market value of shares of a company is debatable. More importantly, the learned ITAT found that the learned Commissioner was not justified in assuming jurisdiction on the ground that no enquiries had been conducted by the AO. AO had issued queries regarding investment in unlisted equity shares. The assessee had responded to the questionnaire and submitted various details including the details of the shares purchased; the entities from whom the shares were purchased; copies of the bank accounts evidencing payments of consideration; and, the computation of the book value of the shares amongst other details. AO had applied its mind to the said information and had framed the assessment. ITAT rightly held that this is not a case that no enquiry has been conducted by the AO. Accordingly, the learned ITAT set aside the order dated 31.03.2021, passed by the learned Commissioner. We find that no substantial question of law arises in the present appeal. Maintainability of appeal on low tax effect - As appellant submits that since the Commissioner had set aside the assessment order with a direction to the assessee to make a fresh assessment, the tax effect could not be ascertained and the appeal was not covered under the Board Circulars issued in this regard. The said contention is unpersuasive. The orders passed under Section 263 of the Act are not excluded from the purview of the circular issued by the Central Board of Direct Taxes (CBDT) fixing the monetary limits for filing appeals. In the present case, although the Commissioner had remanded the matter to the AO, he had also broadly quantified the income, which, according to the Commissioner, had been under assessed. A meaningful reading of the order passed by the Commissioner under Section 263 of the Act clearly indicates that the net tax effect of setting aside the said order is far below the monetary limit specified by the CBDT. We dismiss the present appeal on the ground that it is belated; the tax effect is below the monetary limit; and no substantial question of law arises in the present appeal.
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2023 (1) TMI 1089
TP Adjustment - comparable selection - exclusion of Motilal Oswal Advisors India Pvt. Ltd (MOIALP) and the inclusion of IDC India Limited (IDCL) and ICRA Management Consulting Services Ltd (ICRA) as comparables for benchmarking of Arms Length Price (ALP) of investment advisory services rendered by the Respondent - HELD THAT:- Admittedly, the Respondent-assessee is engaged in the business of non-binding investment advisory services as against Motilal Oswal Advisors India Pvt. Ltd, which is engaged in merchant banking, securities brokering and other IT-enabled services. DRP held that Motilal Oswal Advisors India Pvt. Ltd (MOIALP) be taken out from the list of valid comparables. In regard to ICRA Management Consultancy Services (ICRA) and IDC India Limited (IDCL), DRP held that the functions performed by ICRA were different from the functions carried out by the Petitioner and ICRA was providing consultancy services and was engaged in management consultancy and therefore, could not be considered as comparable. As regards IDCL, it was held that the same was not engaged in activities of providing investment advisory services and was functionally different from the functions of the assessee. The Tribunal, however, placed reliance upon AGM India Advisors Pvt. Ltd. [ 2020 (6) TMI 300 - BOMBAY HIGH COURT] wherein it was held that ICRA and IDC were functionally similar to that of the Petitioner in the said Petition as it was providing non-binding investment advisory services. Insofar as Motilal Oswal Advisors India Pvt. Ltd. (MOIALP) is concerned, it has already been held to be not comparable in the case of the assessee itself, in Income Tax Appeal No.30 of 2017, decided 10 June 2019, wherein it has been held that the said company was engaged in merchant banking and registered and established as merchant banker. This view has also been taken in Principal Commissioner of Income Tax Vs. NVP Venture Capital India (P) Ltd. [ 2018 (9) TMI 1182 - BOMBAY HIGH COURT] Be that as it may, the questions A, B and C as suggested do not give rise to any substantial questions of law.
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2023 (1) TMI 1088
Deduction u/s 80P - investments made in TIDCO and TNEB Bonds - case of the appellant that Section 80P(2)(a)(i) of the Act does not limit or confine the benefit of deduction only in respect of investments made in SLR - Non SLR investment would have to be tested on the basis of Section 80(2)(d) - whether the benefit under Section 80P(2)(a)(i) is available only in respect of SLR investments and not to non- SLR investments? - HELD THAT:- It has been consistently held by various Courts that as long as it is Banking Business, the investment, whether it is SLR or non SLR may not make a difference - We are informed that there is no contrary view expressed in respect of the above issue. Yet another reason why we would think that the assessee must succeed is in view of the fact that Income Tax Act, being a Central Enactment, though normally, decisions rendered by other Courts would have persuasive value, in the case of Central Enactment, an attempt must be made not to depart from the view taken by other Courts unless there are sound and compelling reasons for consistency in taxing enactments is important. We do not find any compelling reason, for this Court to deviate from the views taken by other Courts. Reference made to Section 80P(2)(4) by the learned counsel for the Revenue may not have any bearing for the assessment year 2005-06 and 2006-07 for the above provision was made effective only from 01.04.2007. It is a cardinal principle of construction that every statute is prospective unless it is expressly or by necessary implication made to have retrospective operation [Keshvan vs. State of Bombay [ 1951 (1) TMI 32 - SUPREME COURT] - This presumption of prospectivity of any law is articulated in the following legal maxim viz., nova constitutio futuris formam imponere debet non praeteritis ( A new law ought to regulate what is to follow, not the past). The above maxim has been quoted with approval repeatedly by Indian Courts. Thus the benefit under Section 80P(2)(a)(i) is available to both SLR and non-SLR investments as long as it constitutes Banking Business . Decided in favour of assessee.
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2023 (1) TMI 1087
Accrual of interest income - Real income received / receivable by the company on inter corporate deposit - Assessment u/s 143 - real income or hypothetical income - Assessee claims that no real income accrued to the company and merely as the assessee is following mercantile system of accounting it does not result in accrual of income from interest when there is no interest in real terms and the statement of the accounts of the assessee also did not reflect any credit entry in respect of interest receipt from the borrower - HELD THAT:- Tax Authorities below have failed to keep in mind the fundamental principles of taxation that only real income should be taxed and not the hypothetical income. What the Ld. Tax Authorities below have considered to be income arising from interest to be taxable on accrual basis would be a case where interest account is not settled, however when the loan account and interest account stand settled between the parties and a deed of settlement stands then on the basis of accrual interest income cannot be attributed and only the actual interest received on that account, was liable to be shown in P L account. As rightly done by the assessee company. The assessee being in the business of lending, if had borrowed any amount on interest that is not of much consequence in the present facts and circumstances as being watchful of it s business interest and to secure the principal amount at least, the assessee gave up the claim of interest income. There is no allegation of untoward benefit to the borrower as the two entities were not known to each other. There is also force in the contention of assessee that in any case, if shortfall in interest is adjusted from principal amount on principle of first appropriation towards interest before applying it to principal. Then being in lending business, the shortage towards principal would be allowable as bad debt. Which assessee prevented. Being in lending business the bad debt ratio is crucial to the assessee and thus business expediency cannot be more justified then here. - Decided in favour of the assessee.
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2023 (1) TMI 1086
Validity of Assessment as notice u/s.143(2) issued being beyond the prescribed time limit of 6 months from the end of the financial year - CIT-A dismissed the appeal of the assessee for non-prosecution - assessee had failed to put up an appearance in the course of hearing of the appeal, therefore, the same was disposed off on an ex-parte basis - HELD THAT:- CIT(Appeals) had disposed off the appeal on the basis of a non-speaking order. As it is not open for the CIT(A) to summarily dismiss appeal on account of non-prosecution of the same by the assessee. Rather a perusal of Sec.251(1)(a) and (b), as well as the Explanation to Sec. 251(2) reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(A) is not vested with any power to summarily dismiss an appeal for non-prosecution - See PREMKUMAR ARJUNDAS LUTHRA (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] We are not being able to persuade to subscribe to the dismissal of the appeal by the CIT(A) for non-prosecution, therefore, set-aside the same to his file with a direction to dispose off the same on merits. CIT(A) shall afford a reasonable opportunity of being heard to the assessee in the course of the de- novo appellate proceedings. Additional ground of appeal raised by the assessee are allowed for statistical purpose.
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2023 (1) TMI 1085
Deduction u/s 54F - CIT-A deleted the addition - whether CIT(A) erred admitted additional evidence without confronting with the AO is in violation of Rule 46A of the Income Tax Rules, 1962 and wrongly allowed the claim of deduction - HELD THAT:- We find that the assessee has furnished various details and produced documents before the ld. CIT(A) for the first time and the ld. CIT(A) should have called for remand report from the Assessing Officer. However, by considering the details furnished by the assessee, the ld. CIT(A) has deleted the addition made by the Assessing Officer appears to be in violation of Rule 46A of the Income Tax Rules, 1962. Accordingly, we set aside the appellate order and remit the matter back to the file of the AO to reconsider the entire facts and material evidences as may be furnished by the assessee and decide the issue afresh in accordance with law by affording sufficient opportunities of being heard to the assessee. Assessee is also directed to furnish complete details before the Assessing Officer as was filed before the ld. CIT(A). Appeal filed by the Revenue is allowed for statistical purposes.
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2023 (1) TMI 1084
Assessment u/s 144C - AO passed the final assessment order without giving effect to the directions of the Ld. DRP - limitation period specified U/s. 144C(13) - HELD THAT:- In the instant case the assessee has accepted the final assessment order passed by the Ld. AO on 21/7/2022. The assessee has neither raised objections nor challenged the order dated 21/7/2022 but has preferred to file a rectification petition U/s. 154 - As pointed out by the Ld. DR, any order passed by the Ld. AO can be rectified U/s. 154 and the Ld. AO has rightly rectified the order on 13/10/2022. Therefore, we are of the considered view that the original assessment order passed by the Ld. AO on 21/7/2022 is valid in law as it has been rectified by the order dated 13/10/2022 which is deemed to be considered within the limitation period specified U/s. 144C(13) of the Act. We therefore dismiss this plea raised by the assessee and proceed to adjudicate the other grounds. Thus, Grounds No. 2 3 raised by the assessee are dismissed. TP Adjustment - Comparable selection - HELD THAT:- We find merit in the argument of the Ld. AR that the fundamentally dissimilar companies rejected by the DRP during the AY 2017-18 and 2018-19 and M/s. Orbit Exports Limited, shall be removed from the comparables and accordingly the (Arms Length Price) ALP of the assessee be recomputed after removing the above dissimilar companies. We therefore direct the Ld. TPO to compute the ALP as directed above. Fundamentally, in the absence of similarity between the comparables selected by Ld TPO and the assessee either during the current or any other previous or subsequent assessment year as held by LD DRP, should not be considered for the impugned assessment year also. Accordingly, this ground raised by the assessee is allowed for statistical purposes. Disallowance of Technical Support Service Fee paid to Teejay Lanka PLC - assessee submitted the Technical Services Agreement before the Ld. TPO - AR vehemently argued that the Technical Support Service Fee was incurred wholly and exclusively for the purpose of business operations of the assessee - HELD THAT:- We find merit in the argument of the Ld. AR and we are of the considered view that it would be deemed fit to remit the matter back to the Ld. TPO to decide the case on merits subject to final outcome of the Advance Pricing Agreement (APA) with CBDT by the assessee. We therefore allow these Grounds No.6 raised by the assessee for statistical purposes. Payment of interest on ECB - AR submitted that the ALP should be considered as LIBOR + 300 basis points as per the RBI Master Circular - HELD THAT:- We find from the Master Circular relied on by Ld AR, that RBI prescribed the maximum cap interest on ECBs with different tenures. Therefore, the Ld. DRP has rightly determined the ALP as LIBOR + 200 basis points considering it rational based on several judicial decisions while directing the Ld TPO to adopt the interest rate @ LIBOR + 200 basis points. We are therefore not inclined to interfere with the order of the Ld. DRP and hence this ground raised by the assessee is dismissed. Notional interest on outstanding receivables - AR submitted that the notional interest is subsumed in the working capital and no further adjustment is required as proposed by the Ld. DRP - assessee contested that the receivables is not an international transaction under the provisions of section 92B of the Act - HELD THAT:- While deciding on the identical issue the ITAT in the case of M/s. Devi Sea Foods Limited. [ 2022 (9) TMI 587 - ITAT VISAKHAPATNAM] there is no dispute with regard to the fact that receivables is included under the definition of international transaction consequent to the amendments made by the Finance Act, 2012 w.e.f 1/4/2002. Therefore we are of the considered view that there is no merit in the argument of Ld AR that receivables is not an international transaction. Working capital adjustment - HELD THAT:- In the decision of M/s. Devi Sea Foods Limited [ 2022 (9) TMI 587 - ITAT VISAKHAPATNAM] Tribunal has held that when TNM method is considered as the most appropriate method which was also not disputed by the Revenue the net margin thereunder would take care of such notional interest cost. We also direct the Ld. TPO to consider the working capital adjustment and its impact on the profits of the assessee vis- -vis its comparables. We are therefore of a considered view that no upward adjustment on the outstanding receivables is required and therefore we direct the Ld. AO to delete the upward adjustment made towards overdue receivables from AE. The contention of the Ld. AR that the assessee does not pay interest in relation to outstanding payable to AEs is of no relevance. Further, the Ld. DRP has provided a notional credit period of 30 days which is reasonable in the instant case. Accordingly this ground raised by the assessee is partly allowed for statistical purposes. Reworking charges carried out by the AE in relation to export - AE incurred certain expenses for reworking on behalf of the assessee on the fabric sold by the assessee to third party customers in Sri Lanka - HELD THAT:- We find that the assessee has not provided any details as reworking charges carried out by the AE in relation to export with supporting evidences either before the Ld. Revenue Authorities or before us. We therefore concur with the decision of the Ld. DRP and upheld the TP adjustment made by the TPO in this regard. Thus, the Grounds No. 9 10 grounds raised by the assessee are dismissed. Nature of expenses - Disallowance of leasehold amortization charges - HELD THAT:- Admittedly the assessee has paid a sum of Rs. 5.40 Crs for a period of 23 years for taking the land on lease. It is the case of the Ld. AO that it is one time lumpsum payment and a prior period expenditure which cannot be apportioned during the impugned assessment year as revenue expenditure. Assessee has claimed proportionate share of amortization of leasehold charges for the relevant assessment year. There are various judicial pronouncements as submitted by Ld AR, with respect to amortization of the leasehold charges over the lease period, and therefore we are of the considered view that the leasehold charges paid by the assessee shall be proportionately claimed as revenue expenditure, over the lease period and hence the amortization of leasehold charges claimed by the assessee for the relevant assessment year shall be allowed as revenue expenditure during the impugned assessment year. We therefore allow this ground raised by the assessee.
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2023 (1) TMI 1083
Addition of Sundry creditors and unsecured loans - re-payment of impugned sundry credit - non-submission of the relevant details and evidences in respect of the sundry creditors and unsecured loans - HELD THAT:- Hon ble Jurisdictional High Court in CIT Vs Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] held that where department has accepted repayment of loan in subsequent financial year, no addition was to be made in the current year on account of cash loan. Further, in case of CIT Vs Ranchod Jivabhai Nakhava [ 2012 (5) TMI 186 - GUJARAT HIGH COURT] held that where the lenders of the assessee are income tax assessee whose PAN have been disclosed, the assessing officer cannot not ask assessee to further prove genuineness of the transaction without first verifying such facts from income tax returns of lenders. We also find that in the present case, the assessee furnished all such details of the lenders/ depositors. We further find that there is no allegation of assessing officer that any of such lenders/ creditors are part of syndicate of accommodation entry provider. There is no evidence that credit/ advance in the books of assessee was result of some circular transactions. Now again adverting to the primary submissions of ld AR for the assessee that the assessing officer in fact has not made any addition either on account of disallowance of sundry creditors or unsecured loan, in fact such observation was the basis of rejection of books of account. As we have noted that the ld CIT(A) clearly held that the basis of rejection of books of account was not justified. We find that books of account of assessee was duly audited and no reference or whisper about the audited books were made no adverse remarks was made by auditor of assessee. no specific defect was pointed in the books of assessee as required under section 145(3) of the Act, thus, such rejection lacks the statutory conditions, which we do not approve. Hence, we do not find any infirmity or illegality in the order passed by ld CIT(A), which we affirms, with our additional observations. Thus, in view of the aforesaid discussions, we do not find any merit in the ground No.1 to 3 of appeal raised by the revenue. Whether CIT(Appeals) has erred in not enhancing the assessmen by adding the unsecured loan and sundry creditor to the returned loss which the AO had disallowed and determined at Rs. NIL only? - HELD THAT:- The assessing officer filed three remand report and no such plea was raised nor any basis of such enhancement was raised. Moreover, the assessing officer himself accepted the transaction of sundry creditors and accepted the repayment in next assessment year in the assessment order passed under section 143(3). As recorded above the assessee also fully discharged its onus on unsecured loan. It is settled position under law that after passing the assessment order the assessing officer become functus officio and if any material or information comes to his notice subsequently, then he is required to follow the course of action prescribed under Income Tax Act and not otherwise. The assessing officer has neither initiated action under section 154 or 147, if he was of the view that assessment was required to be enhance or reopened, within the time period prescribed under Act. Even otherwise, we find that once, the contention of the assessee was accepted, after receiving remand report from assessing officer, and no such plea was raised by assessing officer, hence, there was no scope left for enhancement. Therefore, we do not find any merit in the ground of appeal raised by the revenue. In the result, the ground No. 4 of appeal raised by the Revenue is dismissed.
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2023 (1) TMI 1082
Validity of reopening of assessment - three reasons so recorded, the subject matter of income escaped assessment, and quantum of income escaped - Accommodation entry pertaining to bogus purchases - HELD THAT:- Assessing Officer may reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148 of the Act. Therefore, there is no restriction on the number of reasons to be recorded, that is, reasons may be recorded twice, thrice etc. as per the circumstances, hence we do not agree with the ld Counsel to the effect that reasons cannot be recorded three times. Assessment was reopened after a period of four years and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for making original assessment - We do not agree with the ld Counsel, as in assessee`s case the original assessment was framed under section 143(3) of the Act, wherein the assessing officer had never discussed the issue of bogus purchases. The issue pertaining to bogus purchases was fresh issue before the Assessing Officer and it is a fresh and new information therefore assessing officer has rightly reopened the assessment. We note that reasons were recorded by the Assessing Officer within the legal framework of provisions of section 147 of the Act therefore, second objection/question raised by the ld Counsel is hereby rejected. As observed earlier not only there existed new information with the Assessing Officer from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss the additional ground raised by the assessee. Estimation of income - bogus purchases - Since, the issue under consideration is squarely covered by the judgment of the Co-ordinate Bench of ITAT, Surat in the case of Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT] - There is no change in facts and law and the Revenue, as well as Assessee are unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra), wherein the Tribunal considering overall facts and circumstances held that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. Therefore, respectfully following the binding judgment of Co-ordinate Bench, the appeal of the Revenue is partly allowed and cross objection filed by the assessee are dismissed.
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2023 (1) TMI 1081
Special audit u/s. 142(2C) - Special Auditor s Report submitted by the Special Auditor beyond the due date prescribed u/s. 142(2A) - time limit for submission of Special Audit Report as required u/s. 142(2C) - HELD THAT:- In the instant case, the Ld. AO failed to pass such order in both the circumstances to extend the time limit. AO merely communicated the decision of the Ld. Pr. CIT (Central), Visakhapatnam on 6/6/2019 which is beyond the limitation period of the second extended time. Even assuming a moment that it is a valid extension, we find that the extension as per the Limitation Act should have been granted before the expiry of the time limit permitted in the earlier extension ie., on 25/5/2019. We find force in the arguments of the Ld. AR that mere communication of extension by the Ld. AO instead of passing an order U/s. 142(2C) is not valid in law. The case law relied on by the Ld. AR, the judgment of the Hon ble Supreme Court in the case of State of Punjab Ors vs. M/s. Shreyans Indus Ltd i[ 2016 (3) TMI 331 - SUPREME COURT] is pertinent to mention here with respect to grant /order of extension of time limit should be given before the time for passing any order expires as prescribed under the Act or before the expiry of the original period of limitation prescribed in the original order. On this issue, the Hon ble Apex Court observed that once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Therefore in our considered opinion, the ratio laid down by the Hon ble Supreme Court squarely applies to the instant case also. In the instant case on hand, the Ld. AO ought to have passed an order U/s. 142(2C) of the Act on or before 25/5/2019 ie., expiry of the first extension. Therefore in our considered opinion, the ratio laid down by the Hon ble Supreme Court squarely applies to the instant case also. In the instant case on hand, the Ld. AO ought to have pass an order U/s. 142(2C) of the Act on or before 25/5/2019 ie., expiry of the first extension. The case law relied on by the Ld. AR in ACIT Vs Soul Space projects Limited [ 2020 (6) TMI 696 - ITAT DELHI] is relevant to the issue which was also considered by the Ld. CIT(A). We find that the Ld. CIT(A) has discussed the issue at length and rightly concluded the matter and therefore we are of the considered view that no interference is required in the order of the Ld. CIT(A) on this issue.
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2023 (1) TMI 1080
Penalty levied u/s 271(1)(c) - Defective notice u/s 274 - non specification of clear charge - HELD THAT:- As relying on BIJOY KUMAR AGARWAL [ 2019 (6) TMI 721 - CALCUTTA HIGH COURT] and MANJUNATHA COTTON AND GINNING FACTORY [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and AMRIT FOODS [ 2005 (10) TMI 96 - SUPREME COURT] notice issued under section 271(1)(c) without specifying which of the two contraventions, the assessee is guilty of was defective and the penalty imposed in pursuance of such defective notice was not sustainable. we cancel the penalty imposed upon the assessee under section 271(1)(c) by the ld. AO and sustained the order passed by the ld. CIT(A). - Decided in favour of assessee.
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2023 (1) TMI 1079
Deduction U/s. 54F - period of holding of the asset(land) - considering Long Term Capital Gain as Short Term Capital Gain - Whether CIT(appeals) erred confirming action of the AO in treating the sale of land as Short Term Capital Gain by considering purchase deed dated 14.09.2009 not considering notarized Banakhat dated 19.12.2007 for calculating period of holding of the asset(land), though actual possessing of land was obtained by the Appellant from the date of the Banakhat i.e. 19.12.2007 and payment have been made thereafter? - HELD THAT:- The transfer of property cannot take place on simple agreement. The transfer of the property only takes place when either the possession of the property is transferred or sale deed is executed. Documents like unregistered Banakhat, power of attorney are not the substitute of sale deed. So in present case the land has been sold and sale deed is executed on 14.09.2009 only. The sale of the piece of land within 36 months resulted in short term gain to the assessee. Even in the sale deed there is no mentioned of Banakhat. The issue of invoking the exemption under sec 54F was also held invalid by the lower authorities. The onus to proof the findings of the authorities below as not justified lies upon the assessee. However, the assessee has not brought anything contrary to the findings of the authorities below. As such, it seems that the assessee is not interested in pursuing his claims as he failed to appear despite giving so many opportunities by the Tribunal. Therefore, we are not inclined to interfere in the finding given by the Ld. CIT(A). Hence, the ground of appeal raised by the assessee is dismissed.
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2023 (1) TMI 1078
Addition u/s 69C - Addition on difference between the invoice value and the accessible value of the imports - assessee has failed to produce the Invoices Value- wise of the total figure in question before the assessing officer as well as Ld. CIT(A) - CIT(A) is of the opinion that accessible value of the goods is the value on which the custom duties are calculated and ultimately deleted the addition - HELD THAT:- The transaction value of the goods (invoice values) are accessible value as defined in Section 14 of Customs Act, 1962. If declared invoice value appears to be low terms of Rule 12 of Customs Valuation Rules, 2007, then a new value is re-determined in terms of Rule 4 to 9 of Customs Valuation Rules, 2007 and this determined value becomes accessible value and custom duties collected on the said determined value even though transaction value is different. Thus, it appears that accessible value which has been considered by the A.O. is not suppression of purchase price or unaccounted purchase. Moreover, the value of the goods assessed/re-determined by the custom authorities as per valuation norms for the purpose of calculation of custom duty on the import. Therefore, the same would not attract the provisions of Section 69C of the Act, since, it has not been established as unexplained expenditure actually incurred by the assessee. CIT(A) has considered the remand report and pass the order impugned. Therefore, restoring the file back to CIT(A) for fresh adjudication does not arise. A.O. has conducted proper enquiry while preparing the remand report. In our considered opinion, CIT(A) has committed no error in come to such conclusion and deleting the addition made by the Ld. A.O. thus, the grounds of Appeal No. 1 to 8 of the Revenue are devoid disamissed.
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2023 (1) TMI 1077
Exemption u/s 11 - assessee not having registration u/s. 12AA - voluntary donations received for specific purpose - Addition on account of corpus contribution treating the same as revenue receipts - HELD THAT:- In the present case, as is evident from the impugned order that the assessee claimed a fund as donation to the corpus of the assessee. The AO held that the assessee is not eligible for exemption as the assessee not having registration u/s. 12AA of the Act. Admittedly, the voluntary donations received for specific purpose forming the corpus of assessee s trust for directly made to the Balance sheet as the capital receipt. Therefore, when the donations forming the corpus of the assessee s trust received with specific purpose are capital in nature. Thus, we hold the corpus specific voluntary donations are not taxable in the case of unregistered trust also and in view of the same the order of CIT(A) is not justified. Therefore, the denial of exemption for not having registration u/s. 12AA of the Act resulted into disallowance therein is deleted. Thus, the grounds raised by the assessee are allowed.
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2023 (1) TMI 1076
TP Adjustment - functions performed by the assessee and the comparables selected - whether the assessee is in distribution support services or is doing marketing support services as held by the TPO - HELD THAT:- As perused the Reseller agreement between the assessee and its AE and in this agreement the very term the assessee is referred to as Reseller . In the recital part clause (B), it states Company wishes to appoint reseller to market and sell the products in the territory (as defined herein) and reseller desires to accept such appointment. Here, the reseller is MSC Software Corporation India Pvt. Ltd. i.e. the assessee and this clearly signifies that the assessee has to do the marketing activities and sell the products. Assessee being the reseller is doing only marketing support services. That MSC India is actually performing routine marketing activities in India attracting customers of software products in the Indian market. The marketing material is provided by company to the assessee at no cost and even when assessee prepares localized products, the copyrights are always with the company. The routine marketing activity primarily includes attending conferences, exhibitions, seminars to showcase the product to the targeted customers. When an order is received from the customer by MSC India that would be submitted to AE with specific type quantity of the product name and e-mail address of the customer and the requisite delivery date. However, the AE has the discretion either to accept or reject that order. If accepted, the delivery of the product is the responsibility of AE. The company will deliver the product directly to the customer and company will provide the assessee just a notification of such delivery. The customer makes payment to the assessee, the assessee retains 3.5% of revenue from the receipts from customers and the remaining amount is passed on to the company i.e. AE. The copy of agreement with customer is done in a format which also to be approved by the AE. AE has right to call for periodic report regarding the activities of the assessee and verify the books of account of assessee as evident from clauses 3.8 and 3.9 of the agreement. Assessee's main activity is nothing but marketing activity, whereas all the ownership of the product, the power to determine whether to accept / reject the order and the pricing is with the AE. The assessee is only getting 3.5% of the revenue from the receipts of the customers for the marketing function that it is doing. We, therefore, set aside the findings of ld. CIT(A) and restore the order of ld. TPO - grounds of appeal of Revenue are allowed. Treat foreign exchange gain as non-operating in nature for the purpose of computation of the PLI of the appellant as well as that of the comparable companies - We find that Pune Bench of Tribunal in several decisions have held that forex gain is operating in nature. See TRANSPERFECT SOLUTIONS INDIA PVT. LTD. VERSUS ACIT, CIRCLE-7 PUNE [ 2022 (8) TMI 521 - ITAT PUNE] - Thus we hold that forex gain is operating in nature and accordingly, ground of objection No.2 is allowed.
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2023 (1) TMI 1075
Deduction u/s 54F - delay on the part of contractor to complete the construction - CIT(A) allowing partial relief to the assessee in respect of amount spent towards construction of new property - HELD THAT:- Substantial portion of net consideration so received was re-invested within stipulated period from the date of transfer of capital asset. Certain amount was retained for construction of property whereas the remaining portion was offered to tax. It could also be seen that the assessee entered into construction agreement on 05.03.2012 wherein the contractor was required to complete the construction within a period of 12 months. Considering the same, the construction would have been completed well within the stipulated time - delay in construction is nowhere attributed to the assessee and the assessee could not be penalized for delay on the part of the contractor to complete the construction particularly considering the fact that the provisions of Sec.54F are beneficial provisions to promote investment in housing sector and encourage investments in acquisition of residential property. Once the assessee is found eligible to claim the same, the benefit should be granted to full extent as held in various judicial pronouncements. Therefore, the deduction could not be denied simply because there was delay on the part of contractor to complete the construction. The decision in CIT vs Sardarmal Kothari and Shanthilal Kothari [ 2008 (6) TMI 15 - MADRAS HIGH COURT] supports the case of the assessee. Depositing the unappropriated capital gains in capital gain account scheme before date of filing of return u/s 139(1) - CIT(A) has relied on the binding judicial precedent of Chennai Tribunal in ACIT vs T.S. Arunachalam,[ 2018 (1) TMI 1572 - ITAT CHENNAI] wherein it was held that it was enough if the assessee had invested substantial portion of net consideration in new asset within the stipulated period. No contrary decision has been placed on record. Further, from the factual matrix, it could be seen that the assessee has received the sale consideration in installments up-to financial year 2013- 14 and entire funds were not even otherwise available for the assessee to deposit the same into capital account scheme during this year. The assessee is only claiming part exemption. The same is evident from payment and investment schedule as extracted by us in preceding para- 4 of this order. - Decided against revenue.
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2023 (1) TMI 1074
TP Adjustment - Comparable Selection - working capital adjustment - DRP directed for exclusion of 2 out of 9 comparable companies selected by the ld. TPO and upheld the action of the ld. TPO denying working capital adjustment to the assessee - HELD THAT:- It is not in dispute that the claim of working capital adjustment together with its detailed workings were indeed made and submitted by the assessee before the ld. TPO and also before the ld. DRP. This is evident representing submissions made before the TPO and pages representing submissions made before the ld. DRP. The assessee also stated that working capital adjustment had indeed been granted to the assessee either by the ld. TPO or by the ld. DRP, in the earlier years commencing from A.Y. 2011-12 onwards, as the case may be. AR before us drew our attention to the relevant pages of the paper book where working capital adjustment has been granted to the assessee in the past commencing from A.Yrs.2011-12 to 2017-18. In fact, we also find that on the final set of comparables chosen by the DRP, the assessee had given the working capital adjustments for the said comparable companies which has been ignored by the lower authorities. Hence, we deem it fit to restore the issue to the file of the ld. TPO with a direction to grant working capital adjustment to the assessee after examining the workings given by the assessee thereon. The computation of ALP should be done accordingly. Hence, the ground No.7.9 raised by the assessee is allowed for statistical purposes.
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2023 (1) TMI 1073
Addition u/s. 68 - difference in the returned income and assessed income - HELD THAT:- It is evident that the assessee was working with M/s. Pfizer Ltd. and had taken voluntary retirement. On a perusal of Form 26AS, the gross total income of the assessee was declared as Rs.63,58,458/- and the assessee has filed his original return of income dated 26.08.2015, declaring net income of Rs.45,39,698/- and revised his return of income declaring Rs.23,26,687/- and Rs.24,26,682/- in his second revised return dated 17.02.2016. The allegation by the lower authorities that the assessee has fraudulently claimed higher refund by filing the revised return twice is not controverted by the assessee either by way of return submission or by producing any documentary evidence in support of his stand. The assessee has failed to rebut the addition made by the A.O. and confirmed by the ld. CIT(A). A.O. had issued notice u/s. 133(6) to M/s. Pfizer Ltd. which had replied stating that the assessee has received Rs.63,75,681/- during the impugned year. The assessee has failed to establish the difference amount specified in Form 26AS and the returns filed by the assessee. Though several opportunities have been given to the assessee, the assessee has failed to furnish any documentary evidence for rebuttal. Thus assessee has nothing to controvert the view of the lower authorities in making the addition u/s. 68 of the Act as unexplained cash credit . Appeal filed by the assessee is dismissed.
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2023 (1) TMI 1072
Capital gain on lease hold properties - addition made u/s. 50C - whether the deeming provision of section 50C applies to leasehold rights in land or building? - HELD THAT:- Phraseology in section 50C(1) of the Act only covers exclusively land or building or both and does not refer to any right in land or building. Thus, the expression land or building in its coverage is quite distinct from the expression any right in land or building. The legislature, in its wisdom, for the purpose of section 50C without referring to section 2(14) of the Act, has used the expression land or building or both in section 50C(1) of the Act itself, and without the expression of any right in therein i.e. land or building. Therefore, the precise use of one expression would exclude the other, a legal premise which is supported by the judgment of Hon ble Apex Court in the case of GVK Industries Ltd. Vs ITO [ 2011 (3) TMI 1 - SUPREME COURT ] In our considered opinion, the point sought to be raised by the Ld. AR deserves to be upheld. Such a distinction also has found approval of CIT Vs Greenfield Hotels Estates Pvt. Ltd. [ 2016 (12) TMI 353 - BOMBAY HIGH COURT ] We find that the present transaction of transfer of leasehold right in question does not warrant invoking of section 50C(1) of the Act, as the property in question is not of the explicitly covered by section 50C(1) of the Act, for the reason, we set aside the order of the Ld. FAA and direct the Ld. AO to delete the impugned addition. Appeal of assessee allowed.
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2023 (1) TMI 1071
TDS u/s 194C or 194I - payments towards maintenance charges - payments received by Ambience group are split into two companies of same group on single contract one for rent and the other for maintenance charges - HELD THAT:- When the receiver of rent and receiver of maintenance charges are different and distinct and the character of the payment is also different and distinct, then, the payments towards maintenance charges has to be made after TDS @ 2% u/s 194C of the Act and not @ 10% u/s 194I - From the material available on record, it is clearly discernible that the assessee company has paid rent to the owner after deduction u/s 194 of the Act @ 10% and the payment for operation/maintenance was made directly to the service provider company after deduction of tax u/s 194C. We are inclined to hold that in the present case the common area maintenance charges was not forming part of the actual rent paid to the owner by the assessee company. Payments of rent and common area maintenance charges have been made to distinct entities/companies, therefore, the authorities below were not right in creating the impugned liability payable by the assessee firm under the provisions of sub-sections (1) and (1A) of section 201 - As respectfully following the order of Nijhawan Travel Service (P) Ltd. [ 2022 (7) TMI 176 - ITAT DELHI] the grievance/grounds of the assessee are allowed and the AO is directed to delete the impugned liability u/s 201(1) and 201(1A) of the Act. Appeal filed by the assessee is allowed.
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2023 (1) TMI 1070
Non-grant of Foreign tax Credit - delay in filing of Form No. 67 - assessee is an individual who is a Resident and Ordinary Resident (ROR) of India - HELD THAT:- As per Rule 128 of the I. T. Rules it is evident that the assessee has to file Form 67 on or before the due date of furnishing the return of income as per section 139(1) of the Act, which the statement specifies as mandatory and not directory as per the word shall used in the said provisions. It is evident that the assessee has filed Form 67 belatedly after the due date for filing of return u/s. 139(1) and, hence, the lower authority have rejected the claim of the assessee. We are inclined to peruse the decisions of the tribunal cited by the assessee in the case of Ms. Brinda Ramakrishna [ 2022 (2) TMI 752 - ITAT BANGALORE] . On similar facts, the co-ordinate bench has considered the delay in filing of Form No. 67 as only a procedural defects and has also considered the decision of Mangalore Chemicals Fertilizers Ltd. [ 1991 (8) TMI 83 - SUPREME COURT] and Sambhaji and Others vs. Gangabai and others [ 2008 (11) TMI 393 - SUPREME COURT] which laid down the proposition that procedural law should not be construed as mandatory and should only aid the claim of substantive right. The said decision of the tribunal has also relied on various decisions, which held that provisions of DTAA override the provisions of the Act, as far as it is beneficial to the assessee. The Tribunal has held that delay in filing Form No. 67 should not by, in anyway, deny the claim of FTC enumerated in the DTAA and the intention of the legislation in the said case has to be construed in a manner which benefits the assessee. The A.O. is hereby directed to allow the FTC claim of the assessee and to grant refund in accordance with the law. Appeal of the assessee is allowed.
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2023 (1) TMI 1069
TP Adjustment - transfer pricing adjustment suggested by the Transfer Pricing Officer (TPO) on the arm s length price (ALP) of the international transaction with the overseas Associated Enterprises (AEs) - Comparable selection - HELD THAT:- It is a fact on record that the assessee operates in two segments. While, in one of the segment assessee undertakes international transactions relating to provision of agency support services to AEs, in the other segment, the assessee is engaged in trading of goods to customers in India. Thus, while the provision of agency support services is purely with related parties, the trading in goods domestically is exclusively with unrelated parties. While, rejecting assessee s benchmarking of international transactions with AEs, undisputedly, the TPO had aggregated transactions in both the segments at entity level and determined the ALP of the transactions with the AEs. This approach of the TPO is fundamentally wrong and against the statutory provisions. While benchmarking international transactions with AEs, the transactions relating to unrelated parties cannot be clubbed. Therefore, the benchmarking done by the TPO is flawed, hence, unacceptable. The tinkering of PLI by substituting the denominator with total cost is unacceptable considering that the TPO has included the cost of traded goods with unrelated parties in the total cost. Therefore, we do not find any infirmity in the decision of learned DRP in directing the TPO to recompute the ALP by strictly restricting himself to the international transaction with the AEs. Inclusion of Besant Raj International as a comparable, it is observed that only reason on which the TPO excluded this company is because it is a persistent loss making company. As per settled legal principles, a company can be considered as a persistent loss making company if it has shown loss in the current year as well as two preceding assessment years. Factually, the assessee has established that Besant Raj International Ltd. has shown profit in assessment year 2004-05. In fact, while giving effect to the directions of learned DRP, the TPO has accepted this fact. Therefore, Besant Raj International Ltd., being otherwise functionally similar to the assessee, has to be treated as comparable. Revenue appeal dismissed.
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2023 (1) TMI 1068
Addition u/s 41(1) - assessee has shown liabilities of sundry creditors - assessee stated that the outstanding liability is against the purchase of machinery from Sabko Emerystone Engineering Industries - As assessee has not claimed depreciation on this machinery in any of the assessment order. In absence of any claim of expenditure/loss, depreciation in any assessment year, the provision of Section 41(1) cannot be applied - AO held that assessee has not established his claim of sundry creditor is capital in nature - HELD THAT:- Lower authority has not disputed about the purchase of machinery. No adverse evidence is brought on record that the liability is other than purchase of machinery. Thus, the credit in the books is not on account of trading liability. The expenditure incurred and purchases of machinery are certainly a capital expenditure. Further, the assessee has never claimed depreciation on such machinery. In the case of CIT vs Mahindra Mahindra [ 2018 (5) TMI 358 - SUPREME COURT] held on a perusal of section 41(1), it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax u/s 41. The objective behind this section is simple. It is made to ensure that the assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year with reference to deduction allowed earlier in case of remission of such liability. In absence of any evidence that liability shown by assessee was other than purchase of machinery (capital asset), which was never put to use and the assessee never claimed depreciation thereof. That the consideration under section 41(1) of the Act is not sustainable. Appeal filed by the assessee is allowed.
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2023 (1) TMI 1067
Computation of Capital Gains (Loss) - Determining the cost of acquisition u/s 49(2AA) - Restriction of cost of acquisition in respect of shares sold - assessee had not produced Tax Residency Certificate (TRC) as directed by the DRP - return of income was filed in the capacity of non-resident - loss claimed under the head capital gains - HELD THAT:- The assessee had furnished the proof that he has paid taxes in USA (as perquisite) and in India. In the instant case, since, the assessee had produced the TRC as per the directions of the DRP, we refrain from adjudicating whether TRC is mandatory for determining the cost of acquisition u/s 49(2AA) of the I.T.Act. Hence, we affirm the directions of the DRP. In the interest of justice and equity, we restore the issue to the files of the A.O. The A.O. is directed to examine the TRC and the same if it is found to be in order, the cost of acquisition shall be taken at Rs.2,13,73,563 as claimed by the assessee in his return of income. With these observations, we restore the matter to the files of the A.O. The A.O. is directed to afford a reasonable opportunity of hearing to the assessee and decide the issue in accordance with law - Appeal filed by the assessee is allowed for statistical purposes.
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2023 (1) TMI 1066
TP Adjustment - comparable Selection - assessee has challenged that the upper turnover of the companies selected by the TPO which are more than 200.00/- crores cannot be considered as a good comparable - HELD THAT:- Respectfully following the decision of the coordinate bench of the Tribunal in the case of Barracuda Networks India Private Limited [ 2022 (5) TMI 322 - ITAT BANGALORE ] we hold that the companies whose turnover in the current year is more than Rs. 200 crores needs to be excluded for the purpose of comparable companies. Exclusion of R S software (India) Ltd - This issue of inclusion of R S software (India) Ltd has also been decided by the Hon'ble Tribunal in the case of Barracuda Networks India (P.) Ltd. [ 2022 (5) TMI 322 - ITAT BANGALORE ] If by application of any filter an enterprise undertaking uncontrolled transaction similar to an international transaction is regarded as not being comparable in the earlier two years immediately preceding the current year and thereby attracting the provisions of rule 10B(2) or 10B(3) then the data for those years will not have any influence on the determination of transfer prices in relation to the transactions being compared for the current year and hence have to be ignored. On a harmonious reading of the provisions of rule 10CA, 10B(3) (4) of the Rules, we agree with the stand taken by the learned counsel for the Assessee. Therefore, if at all R.S.Software Ltd., is to be regarded as a comparable company, then the margins for AY 2014-15 and 2015-16 of the company have to be ignored because in those years they are to be regarded as not comparable. Thus we hold that R.S. Software Ltd., should be excluded from the list of comparables. Akshay Software Technologies Ltd.- As per director s report the Technology Absorption (i) The assessee company does not import any technology during the year under review (ii) The company is a service provider and therefore has not set up a formal Research and Development unit whereas in the case of assessee company the Research and Development activity is done at the entity level as noted supra. As per director s report the Akshay Software is a service provider. The assessee company is engaged for providing I. T. Infrastructure Services as narrated above. These facts require consideration and reexamination by the TPO/AO. However the comparability of this company is sent back to the TPO/AO for fresh consideration. A Miles Software Services Ltd., and Sasken Technologies Ltd., the assessee first time sought to be included for the comparable before the DRP as a good comparable because it passes all the filters and FAR analysis and the ld.DRP has without examining the functions and applying filters rejected. Considering to the file of assessee we are remitting back the issue to the file of TPO for de-novo consideration and the TPO will deicide the issue as per law. Exclusion of CG Vak Software and Exports Ltd., by holding that the company is not functionally comparable and it is engaged in diversified activities and engaged in providing outsourced product development which is dissimilar to the IT infrastructure support services as engaged by the assessee and significant research and development activities has also been carried out by this company - We consider it appropriate to direct the TPO to verify and adopt the figures as per the annual report of these companies and accordingly their PLI margin shall be recomputed. We, therefore, remand to TPO/AO, the question whether CG Vak is a comparable company functionally and also compute correct margin in the light of the above observations. Accordingly this ground is allowed for statistical purpose. Interest on delayed receivables in ground - HELD THAT:- We are not accepting the direction of the DRP for applying short term SBI Interest rate because the interest on receivables are a separate international transactions as decided by the Hon.ble jurisdictional High Court in the case of DCIT vs.AMD India Pvt. Ltd. [ 2018 (8) TMI 2094 - KARNATAKA HIGH COURT ] therefore, it requires separate bench are also rejecting marking. We also reject the arguments of the ld.AR that the interest on receivables is not international transactions. On going through the order of DRP we noted that the principles of natural justice have been violated since no opportunity of being heard was provided when DRP directed to adopt SBI short term deposit rate instead of Libor plus 450 basis points adopted by the TPO. Since the tax payer has not complied the notice issued by the ld.TPO on 27/05/2019 and the assessee has filed detailed chart in the case of delay receivables from the debtors. therefore, the matter needs reconsideration. As in the case of Verifone India Technology (P.) Ltd. [ 2022 (12) TMI 1203 - ITAT BANGALORE ] wherein the Tribunal has directed the lower authorities to benchmark the transactions by following any one of the methods prescribed under the Income-tax Rules. We are inclined to follow the same and direct the AO/TPO to benchmark the transaction as per the provisions of the Act and Rules formulated there under. It goes without saying that any proposed addition should result in an opportunity of being heard and adhere to the principles of natural justice. Capacity Utilization - HELD THAT:- We observe from the order of the DRP that he claimed first time before the ld. DRP. Since this is the first year of operation and if the assessee has underutilized his capacity and if he satisfied the provisions of the income tax act on this issue then the assessee is eligible for capacity utilization. On perusal of the documents/Financial Statements/ Copy of Income Tax Return filed before us, we observed that the assessee has claimed full depreciation on entire Fixed Assets as per section 32 of the I. T. Act. and the revenue has also allowed the Depreciation claimed, it shows that the entire assets were put to use during the impugned financial year i.e there was no under utilized capacity. If the claim of the assessee is accepted for under utilization sitting capacity i.e. the relevant assets which were kept idle for the year or sitting capacity were not utilized, therefore, in theses assets depreciation can not be claimed as per section 32 of the I.T. Act. because of it is the first year of operation. Since this issiue has not been examined by the lower authorites on this aspect also. Considering the entire observations and facts of the case of the assessee the TPO is directed to decide the issue denovo and decide the issue in accordance with law and the assessee is directed to provide requisite documents for early disposal of the case.
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2023 (1) TMI 1065
Addition u/s 56(2)(vii)(b) - difference in the consideration paid for purchase of a property and the guideline value fixed by the SRO - contention of the Assessee was that the guideline value fixed by the SRO is not the fair market value of the property and thus, had requested the Assessing Officer to refer the valuation of the property to the DVO - DVO had not submitted the report when the assessment was getting time barred and therefore, the Assessing Officer completed the assessment without waiting for the DVO s report and had made the additions towards the differential amount as per the provisions of Section 56(2)(vii)(b) - HELD THAT:- We find that once the Assessing Officer has referred the valuation of the property to the DVO, then he ought to have waited for the DVO s report to ascertain the fair market value of the property for the purchase as per the provisions of Section 56(2)(vii)(b) of the Income Tax Act, 1961. Since the Assessing Officer has made the additions without waiting for the DVO s report, we are of the considered view that the issue needs to be remitted back to the file of the Assessing Officer to reconsider the issue afresh after taking into account the report submitted by the DVO. Hence, we set aside the issue and remit back the matter back to the file of the Assessing Officer and direct the Assessing Officer to redo the assessment and consider the issue in accordance with law after taking into account the valuation report submitted by the DVO. Appeal of the Assessee treated as allowed for statistical purposes.
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Customs
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2023 (1) TMI 1064
Non-clearance of consignment of soyabeans imported by the Petitioner from Mozambique - petitioner has sought to contend that the Food Standards Act, 2006 being a later legislation would prevail over the Environment Protection Act, 1986 - HELD THAT:- Considering the larger implications of the issue at hand and that no specific stand of the Genetic Engineering Approval Committee and the Ministry of Environment and Forests and Climate Change (MoEF CC) in respect of the subject matter is on record, it would be appropriate that the Food Safety and Standards Authority of India, the Genetic Engineering Approval Committee and the MoEF CC are impleaded in this Petition. Accordingly, we grant leave to the Petitioner to add the Food Safety and Standards Authority of India, the Genetic Engineering Approval Committee, Ministry of Health Family Welfare and MoEF CC as party respondents. Amendment to be carried out within a period of two days. Re-verification is dispensed with. If the Petitioner will give notice to the added Respondents and file the affidavit of service, stand over to 31 January 2023.
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2023 (1) TMI 1063
Seeking a composite license for import and trading of restricted items and had paid the requisite fee for the same - actual user condition - permission to import and avail of the remaining guns which could not be imported, by way of an extension of the license by for a period of one year at least - HELD THAT:- Considering the fact that the reliefs sought in both the writ petitions, when they were filed, have almost being satisfied and the outstanding issues relating to extension of license are pending before the DGFT, it is deemed appropriate to direct the DGFT to take a decision on the said application for extension of the licence within a period of two months from today. The DGFT may afford the Petitioner a hearing and pass a reasoned order in accordance with the Act and Rules. Demurrage which the Petitioner incurred during the period of late inspection and release of the consignment - HELD THAT:- Considering the fact that if there is a delay in inspection, as per Rule 88(6), the additional charge or demurrage incurred by the Petitioner would be attributable to the licensing authority, the Petitioner is permitted to seek refund of the demurrage charges in accordance with law. The said application may be filed within a period of two weeks and, if preferred, shall be decided within a period of four weeks. Petition disposed off.
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2023 (1) TMI 1062
Advance License Scheme - actual user condition - sourcing Lauryl alcohol either through indigenous purchase on payment of appropriate excise duty or it is imported under advance licence without payment of duty or it is imported on payment of customs duty - N/N. 30/97-CUS dated 1 April 1997 as amended by Notifications upto No.63/2004-CUS dated 14 May 2004 - HELD THAT:- The question of breach of paragraph 7.4(ii) of the EXIM Policy which clearly provides that Advance Licences and / or materials imported thereunder shall not be transferable even after completion of the export obligation would not arise. Also, the question of breach of paragraph 7.16 of the EXIM Policy which pertains to actual user condition and provides that the licences granted under this scheme are subject to actual user condition till endorsement of transferable by the Licencing Authority would not arise, as there has been no transfer in the instant case as the materials have been received by one of the Units of the Respondent - The Respondent has used the imported material for manufacturing in its own M-3 Unit at Tarapur and there is also no dispute as regards fulfillment of the export obligation. Therefore, the contentions of the learned Counsel for the Appellant appear to be misplaced. There would be no violation of condition (i) or (vii) of the Notification No. 30/97-CUS dated 1 April 1997 as amended by Notifications upto No. 63/2004-CUS as there is no transfer in violation of the actual user condition, the discharge of export obligation not being in question.
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2023 (1) TMI 1061
Amendment in the shipping bill - Export Obligation against the Advance Authorisation - Duty Drawback scheme - Section 149 of the Customs Act, 1962 - HELD THAT:- The judgment under appeal principally proceeded on the extent to which a Circular could prescribe the limits within which a request for amendment of Customs documents can be made. In the case on hand, respondents endeavour to elevate Circular No. 36/2010 to the level prescribed by the regulation. The definition clauses define what constitutes prescribed and regulations . The onus is on the respondents to demonstrate that irrespective of the year in which Circular no. 36/2010 was issued, the Circular still satisfies as one issued as a regulation under the Act by the Competent authority. The reading of Circular No.36/2010 looks more like guidelines for the Officers under Section 149 of the Act. Therefore, the judgment under appeal does not warrant our interference. It is taken note of the omission in excerpting Section 149 in the judgment under appeal. We have reproduced Section 149 of the Act effective from 01.08.2019 and tested the efficacy of Circular 36/2010 in the background of defined words under the Act. Circular No.36/2010 cannot be construed as a regulation issued under the Act. The power and scope of Section 149 are wide and have serious ramifications both for the revenue and the importer/exporter. Therefore, it is in the realm or jurisdiction of respondents herein to make Section 149 operable as prescribed by regulations subject to such terms and conditions as may be stipulated by the competent authority. Appeal disposed off.
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2023 (1) TMI 1060
Change in classification - buttons imported as snap buttons - consideration changed from Sl.Nos.232 to 282 - argument of petitioners is that the change of expression in Sl.No.282 of Notification No.12 of 2012 is not the deciding factor and the deciding factor is whether the entry under which the import has been permitted, and exemption has been extended continues to be in operation even under Notification No.12 of 2012 - HELD THAT:- The answer to the said question will not invite long deliberation. It may be noticed and recorded from the exhibits filed by the petitioner in the writ petition that the petitioner continues to import snap buttons. The product imported by the petitioners under the subject bills of entry is not claimed as stated differently from the goods imported by the petitioner in the first round of litigation. After appreciating the entries in Notification No.21 of 2002, the snap buttons imported by the petitioners by claiming exemption under the said notification, the adjudication as a matter of fact by this Court and confirmation by the Supreme Court, we are convinced that there is no disputed question of fact for verification by the appellate authority vis-a-vis the subject Bills of Entry and relegating the petitioners to work out the remedy of appeal. Even other at this point of time such course is avoidable and unnecessary both from the point of view of the importer and the department. Hence, the judgment under appeal needs to be set aside, and accordingly, set aside and the Writ Petition stands allowed. However, it is made clear that the relief granted to the petitioners shall be limited to the subject consignments. The revenue is free to examine each one of the consignments imported by the petitioners and verify whether the product imported by the petitioners as a fact would fall within the same category of product considered by this Court.
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2023 (1) TMI 1059
Levy of Anti-dumping duty - exports by Xinyi Energy - submission is that its exports to India by Xinyi Energy are not at dumped prices, and the determination of the dumping margin by the designated authority in the final findings is erroneous for the reason that it is based on a faulty determination of the normal value and export price. Whether the designated authority was justified in making deductions from the export price of Xinyi Energy on account of liaison office? - HELD THAT:- A person who is not a resident of India can open a branch office or a liaison office only with the prior approval of the Reserve Bank of India and in accordance with the Regulations. Secondly, the liaison office cannot undertake any commercial/trading/industrial activity directly or indirectly. The domestic industry has not brought on record any evidence to suggest that Xinyi Glass carried out any commercial activity. There was only one employee of Xinyi Glass in India who was merely looking after the registration process of the liaison office. It would, therefore, not be appropriate to examine the information referred to by the learned senior counsel to determine whether Xinyi Energy had a liaison office in India - the expenses, if any, incurred by Xinyi Glass would have no bearing or impact on the price at which the goods were exported. Section 9A(1)(b) of the Tariff Act which deals with the definition of export price provides for a construction of an export price where either on account of relationship between exporter and importer or a third party, the export price to India becomes unreliable. The present is a case where the exporter and importer are not related parties and the sale price to the Indian importer represents the true and full consideration for the sale. The findings recorded by the designated authority on this aspect, therefore, cannot be sustained. n the absence of any opportunity or any specific request from the designated authority for furnishing such information, rule 6(8) would not be applicable in the present case. Loading the Cost of Production - It is argued that the designated authority was not justified in making adjustment to the normal value by loading the cost of production - HELD THAT:- The rate offered by the Bank is 0.8% plus the Hong Kong Interbank Offer Rate [ HIBOR ] notified by the Hong Kong Association of Bank. The Hong Kong Association of Banks, has as its members banks such as Bank of America, Bank of India, Barclay s Bank, PLC, Citi Bank NA, Credit Suisse AG. The HIBOR is an international Benchmark for lending and debt instruments issued in the Asian region - the interest free advances received from the parent company are for expansion of the production facility and future production activity, and not relatable to the production and export of subject goods to India during the period of investigation. Even if the advances are to be treated as an interest free loan relatable to the subject goods, then too, the actual interest cost as per the loan agreement should be taken, but the designated authority took the interest cost based on a notional rate of interest prevailing in Malaysia, without rendering any finding as to why the actual interest cost is not acceptable for determining the interest foregone. It is, therefore, not possible to accept the contentions advanced by the learned counsel for the appellant that Xinyi Energy should have been treated as a non-co-operating exporter by the designated authority and should have been relegated to residuary anti-dumping duty. The matter has to be remitted to the designated authority to determine the export price by excluding the deductions from the export price of Xinyi Energy on account of the alleged liaison office in India. The designed authority shall also determine the normal value of the product in the light of the observations made in this order and forward the recommendations to the Central Government for issuance of a fresh notification under rule 18 of the 1995 Anti-Dumping Rules, if so considered necessary - Appeal allowed.
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2023 (1) TMI 1058
Benefit of exemption from health cess under Notification No. 08/2020-Cus have been wrongly refused to them - import of SPECTROMETERS (MODEL 800MB) and parts thereof - HELD THAT:- Admittedly, appellant have not claimed the exemption in the Bill of Entry, secondly, these new evidences have been brought before this Tribunal for the first time. Accordingly, these appeals are allowed by way of remand to the Commissioner (Appeals), with the direction to peruse the evidence laid before him by the appellant-assessee and on being satisfied that these spectrometers have not been used for medical purpose, shall allow the exemption accordingly. Accordingly, the appeals are allowed by way of remand.
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2023 (1) TMI 1057
Interest on the refund amount of pre-deposit - rejection on the ground that original copy of bill of entry and TR-6 challan could not be made available - HELD THAT:- The learned Commissioner (Appeals) have rightly held that the amount remained with the revenue unadjusted by way of pre-deposit. It is further found under the facts and circumstances, that such pre-deposit was made under protest which is writ large on the face of the record. There is no merits on the grounds of appeal raised by revenue. Relying on the ruling of the Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] , the Cross-objections with directions to the revenue to grant interest @ 6% per annum from the date of deposit till the date of refund. Such interest on refund should be granted within a period of 45 days from the date of receipt of copy of this order. The appeal filed by revenue is dismissed and Cross-objection by assessee are allowed.
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2023 (1) TMI 1056
Violation of conditions of Exemption notification - flying training' Aircraft - Allegation of misuse for charter service - Confiscation of eight CESSNA 172R Aircrafts with redemption fine imposed - recovery of import duty forgone on the import of eight CESSNA Aircrafts import duty forgone on imports of spare parts for maintenance of the said aircrafts with interest - levy of penalty - acts of omission and commission - Jurisdiction of customs authorities to decide violation of the exemption notification. HELD THAT:- the appellant had initially imported Aircrafts for flying training purpose and had given such an undertaking to the customs authorities. The DGCA had also granted permits to the appellant. It is subsequently on 23.04.2009 that the appellant submitted an application before the MCA for grant of a No Objection Certificate to operate non-scheduled (charter) services, which certificate was granted by the MCA on 15.06.2009 and on 28.07.2009 an endorsement was made in the permit. The issue as to whether the customs authorities would have the jurisdiction to decide violation of the exemption notification was examined at length by a Larger Bench of the Tribunal in M/S VRL LOGISTICS LTD VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD [ 2022 (8) TMI 720 - CESTAT AHMEDABAD (LB)] where it was held that the jurisdictional authorities under the Civil Aviation Ministry that alone can monitor the compliance of the conditions imposed and the Customs Authorities can take action on the basis of the undertaking submitted by the importer only when the authority under the Civil Aviation Ministry holds that the conditions have been violated. It is not possible to accept the contention of the learned special counsel appearing for the Department that the decision of the Larger Bench of the Tribunal distinguishable on facts. The Larger Bench of the Tribunal in VRL Logistics had arrived at the conclusion after placing reliance upon the decision of the Supreme Court in Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi [ 2002 (11) TMI 108 - SUPREME COURT] . It has, therefore, to be held that the customs authorities could have proceeded to recover the duty on the basis of the undertaking only when the competent authority in the DGCA found as a fact that the appellant had violated the conditions of the permit - In the present case, such a finding has not been recorded and on the other hand, the permits have been renewed from time to time. Appeal allowed.
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Corporate Laws
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2023 (1) TMI 1055
Seeking cancellation/ rectification of the name of Respondent No.3 - seeking cancellation on the ground that it resembles the name of its company and its business - Validity of incorporation of the Respondent No.3 under the name Purecure Pvt. Ltd. which was incorporated on 11th April, 2020 - HELD THAT:- A perusal of Section 4(2)(a) as also Section 16 of the Companies Act, 2013 makes it clear that the name of a company which too nearly resembles an earlier existing name cannot be allotted to a company. The purpose of these two provisions is to ensure that companies do not register names which are identical or similar to earlier registered corporate names or registered trademarks so as to avoid any confusion in the market place between similarly sounding or identical businesses. The perusal of the two names, in the present case, Pure Cure Ayurveda Private Limited and Purecure Private Limited leaves no doubt in the mind of the Court that they are resembling each other and there is likelihood of confusion between the two businesses. The Petitioner s company is registered prior in point of time than the Respondent no.3. The Respondent no.3 is willing to cancel and give up the objectionable name. In view of the stand of Respondent No.3, the writ petition is disposed of directing the ROC to remove/modify the Register of Companies by removing the name of Respondent No.3 from the said register and rectifying the name of the company of Respondent No.3. For the said purpose, if any forms are to be filed, the same shall be filed by Respondent No.3 within three weeks. Petition disposed off.
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Securities / SEBI
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2023 (1) TMI 1054
SEBI settlement Scheme, 2022 - penalty imposed as petitioner alleging that he carried out non-genuine trades i.e. in liquid stock options at the Bombay Stock Exchange, whereby, he violated Regulations 3(a)(b)(c)(d), 4(1) and 4(2)(a) of SEBI (prohibition of Fraudulent and Unfair Trading Practices related to Securities Markets), Regulations 2003 - advantage of the scheme while accepting online payment - petition seeks for issuance of directions in the nature of mandamus directing the respondents to open/enable the link for payment of penalty in terms of the Scheme and accept the payment on behalf of the Petitioner on or before the closure of the Settlement Scheme of 2022 either physically or online - HELD THAT:- SEBI settlement Scheme, 2022 with an object to settle enforcement proceedings approved/initiated and pending in respect of Illiquid stock Options. A perusal of the concerned Regulation and the eligibility Clause would clearly indicate that all the entities who had executed non-genuine trades/trade reversals on the stock option segment of BSE during the period April 01, 2014 to September 30, 2015 and against whom enforcement proceedings have been approved or initiated and are pending before any authority/forum, viz. Adjudicating Officer/Hon ble SAT/Hon ble Courts/Recovery Officer etc. shall be eligible to avail the one time settlement opportunity. It clearly indicates that the benefit of Scheme can only be extended where the enforcement proceedings have been approved or initiated and are pending before any authority/forum. In the instant case, the argument made by learned counsel for the petitioner cannot be accepted that the enforcement proceedings are still pending. After approval of the enforcement proceedings, the same are required to be formally initiated before the adjudicating authority and in the instant case, the stage of approval of initiation and of initiation is already over when the adjudicating officer had already passed an order. It is thus seen that as on date the money towards penalty is due under an order issued under Securities Laws, which is liable to be recovered under Securities Laws. Regulation 5 of SEBI Regulation, 2018 puts a specific bar for settlement of such cases. Pendency of recovery proceedings cases are distinct than the original proceedings. Hence, the case of the petitioner does not fall within Clause 6 of the said scheme for eligibility, accordingly, no mandamus can be issued. Petition stands dismissed.
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Insolvency & Bankruptcy
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2023 (1) TMI 1053
Seeking directions against the Respondents 2 3 for malicious and frivolous initiation of CIRP - HELD THAT:- Having regard to the fact that the CIRP Process is over, the Liquidation Process is almost complete as on the date of Impugned Order i.e., 12.03.2021 and the Assets were sold at a good price and sale proceeds were distributed amongst the Shareholders, we do not see any ground to set the clock back or to interfere with the Orders of the Adjudicating Authority dated 27.02.2020 and 12.03.2021 respectively. Furthermore, a perusal of the material on record shows that the Appellant and Respondents 2 3 entered into a Memorandum of Settlement on 15.03.2016 and the Petition was disposed of vide Order dated 17.03.2016 - It is seen from the aforenoted Order that the remedy available for the Appellants was to file appropriate Proceedings before the Civil Court instead of trying to enforce the decree by way of an Application under Section 65 of the Court. The Adjudicating Authority has, rightly after going through the Prayers of the Appellants and material on record, and also considering the stage of the Liquidation Process, dismissed the Application. Appeal dismissed.
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2023 (1) TMI 1052
Liquidation of Corporate Debtor - mode of sale - public auction - Section 33 of IBC - HELD THAT:- In the present case, Respondent No.2 who was the Applicant making an offer to acquire the assets of the Corporate Debtor was at best an offeror whose offer was required to be tested with any other willing interested person and the Adjudicating Authority ought to have asked the liquidator to conduct the private sale and give opportunity to others to compete since the maximisation of the assets of the Corporate Debtor is the object of the IBC. Merely on the basis of one application and other by an intervenor, the Adjudicating Authority could not have concluded the sale in favour of the Respondent No.2. The liquidator has earlier rejected the offer given by the Respondent No.2 which clearly meant that the liquidator was not satisfied with the offer made by Respondent No.2 which was far below the last reserve price of Rs.181 Crores. The Adjudicating Authority by adopting a process of taking two bids, one by the Applicant and another by intervenor could not have concluded the sale of the Corporate Debtor without giving an opportunity to the liquidator to take steps for private sale. In the present case, the facts clearly indicate that the liquidator has not embarked upon private sale process nor had sought any permission from the Adjudicating Authority to proceed with the private sale. Thus, private sale procedure by the liquidator was not in place to know as to whether there are other interested bidders who are interested to acquire the Corporate Debtor by means of private sale. Without giving opportunity to the liquidator to take steps to sell the assets of the Corporate Debtor by private sale, the Adjudicating Authority itself has taken two bids and confirmed the sale, which according to us, is not the proper procedure for maximisation of the assets of the Corporate Debtor. We are unable to uphold the order of the Adjudicating Authority dated 16.06.2022 confirming the sale in favour of the Respondent No.2 on the basis of bids received by the Respondent No.2 and one intervenor before the Adjudicating Authority. The order passed by the Adjudicating Authority approving the private sale of the Corporate Debtor by private treaty in favour of Respondent No.2 is set aside - liquidator is permitted to conduct a private sale of the assets of the Corporate Debtor by adopting Swiss Challenge Method treating the bid offered by the Respondent No.2 as an Anchor Bid. Appeal disposed off.
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PMLA
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2023 (1) TMI 1051
Provisional attachment of properties under Section 5 of the Prevention of Money Laundering Act, 2002 - no proceedings relating to the predicate offense may have been initiated by the competent agency functioning under an independent statute and in terms of which the scheduled offense stands created - whether the ED could be recognised to have the jurisdiction to enforce the measures contemplated in Section 5 of the Act solely upon it being of the opinion that the material gathered in the course of an investigation or enquiry evidences the commission of a predicate offense? HELD THAT:- The Court finds that till date the ED has failed to take any steps as are envisaged under Section 66(2) of the PMLA. As would be manifest from a reading of sub-section (2) of Section 66 if the Director or other authority on the basis of material in its possession comes to form the opinion that the provisions of any other law in force are contravened, it is obliged to share that information with the concerned agency for necessary action. Section 66(2) thus fortifies the conclusion of the Court that ED does not stand conferred with any independent power to try offences that may be evidenced or may stand chronicled as offences under any other law. What the Court seeks to highlight is that the jurisdiction and authority of the ED stands confined to considering whether an offence of money laundering stands evidenced. If in the course of its enquiry and investigation, it were to come to the conclusion that the material in its possession evidences the commission of an offence created under any other enactment, it would be obliged to furnish requisite information in respect thereof to the concerned agency for necessary action. The allocation of the preferential shares and the proceeds garnered therefrom is what constitutes the substratum of the PAO. However, no report or complaint in relation thereto stands registered. In fact, the allegation of an offense having been committed by the petitioner in the course of allotment of preferential shares was also not shown to have been ever investigated by the concerned agency. It is thus established beyond an iota of doubt that the PAO rests on a mere presumption of the ED that a scheduled offense was committed by the petitioner while allotting preferential shares. The Court is constrained to observe that despite both those proceedings being pending since 2014, ED did not deem it fit, appropriate or imperative to furnish any information to the CBI in order to enable it to examine whether the allotment of preferential shares would evidence the commission of an offence under the IPC or any other Statute. Regard must also be had to the fact that the PAO itself came to be made on 29 November 2018 and thus almost four years after the registration of the FIR by the CBI and the filing of the ECIR. In fact, and undisputedly, the ED was not shown to have furnished information with respect to allotment of preferential shares even when the present petitions were closed for rendering judgment. The Court is further constrained to observe that the preferential allotment of shares was made on 03 January 2008. The respondent alleges that the coal block allocation and disclosures in respect thereof were made before the BSE and other regulatory authorities around that time. It was the increase in the share price of the petitioner between 02 January 2007 and 01 January 2008 which formed subject matter of its scrutiny. The premium amount of Rs.118.75 crores was also received during this period. The Court is thus faced with a situation where the PAO was based on events which had occurred six years prior to the submission of the ECIR. The PAO came to be drawn ten years after the allocation of preferential shares - In fact, and till date even though more than fourteen years have elapsed, ED has failed to furnish any information to the competent agency to try, investigate or examine aspects pertaining to the preferential allotment of shares in order to ascertain whether they evidence the commission of a scheduled offence. Thus, in the considered opinion of the Court, the aforesaid facts render the impugned PAO s not only violative of the statutory provisions but also patently arbitrary and illegal. The impugned PAO cannot be countenanced as falling within the meaning of an emergency attachment order bearing in mind that the allotment had itself occurred more than 11 years prior to the action initiated by the ED. In fact, even after the passing of 14 years, that aspect has neither been investigated by the competent agency nor has any report in that respect been lodged. While it may be urged that it would still be open to the ED to provide information under Section 66(2) of the Act, that too does not convince the Court to hold in favour of the respondent in the facts of the present case. It must be stated that an action to attach properties provisionally under Section 5 must necessarily be tested based upon the facts and the material that exists on the day when it comes to be made. A PAO cannot possibly be sustained based upon what the ED may prospectively choose to do. The impugned PAO shall stand quashed - Petition allowed.
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2023 (1) TMI 1050
Money Laundering - proceeds of crime - Accumulation of disproportionate assets accumulated by the accused/ MLA/ Minister, Anos Ekka and Harinarayan Rai - criminal conspiracy - misappropriation - criminal breach of trust - cheating forgery fraudulent execution of deed of transfer containing false statement of consideration amount - acquiring assets disproportionate to his known lawful source of income and also to have acquired lands in violation of C.N.T. Act in the name of his wife Smt Menon Ujjana Ekka - scheduled offence/predicate offence. HELD THAT:- The three ingredients of the offence under Section 3 read with Section 4 of PMLA are: I. A criminal activity which is a scheduled offence, should have been committed. II. Some money should have been generated by the criminal activity; III. The money so generated (proceed of the crime) should have been projected as untainted one. In the present case the prosecution has proved all the three basic ingredients of the offence. I do not find any infirmity in the impugned Judgment of conviction by the trial Court. Judgment of conviction under predicate offence is also affirmed in Criminal Appeal no.326/,327/ and 328/ pending before this Court and pronounced by a separate Judgment today. Sentence - HELD THAT:- It is a settled principle that criminal law generally adheres to the principles of proportionality in sentencing. Imposition of sentence without considering its effect on the social order in many cases can render the criminal adjudication as an exercise in futility. Appellant in the present case was none other than an elected representative of the people, who was reposed with faith to discharge his constitutional obligations with the highest degree of probity. Unfortunately, power blinded his wisdom and he indulged in rampant corruption by acquiring movable and immovable property much beyond his known sources of income. The proceeds of crime under a grand design and various contrivances, were projected as untainted by the process of money laundering. The nature of crime, post held by the appellant, does not justify any leniency in sentencing. On the point of sentence, considering the gravity of offence and the position of responsibility as held by the appellant/accused, the sentence of imprisonment and fine needs no interference by this Court. The learned Court below has recorded adequate and sufficient reasons for awarding sentence which will meet the ends of justice. These are species of crime that strike at the financial foundation of the State and the convict does not deserve any clemency so that the deterrent effect of punishment is not completely diluted - the order of confiscation of crime proceeds is also affirmed. The Judgment of conviction and sentence passed by the learned Court below is upheld - Appeal is dismissed.
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Service Tax
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2023 (1) TMI 1049
Constitutional Validity - Chargeability of service tax on sale and supply of electricity - Section 66D(k) of the Finance Act, 1994 and the impugned Notification No. 32/201 0-Service Tax, dated 22-6-2010 - petitioner s challenge to Section 66Dk of the Act is premised on the basis that placing the service relating to transmission or distribution of electricity by electricity transmission or distribution utility would mean that consumption of electricity is chargeable to service tax - HELD THAT:- It is relevant to note that by virtue of the said notification, the Government of India has exempted taxable services provided to any person by a distribution licensee, a distribution franchisee or any other person by whatever mean called as authorized to distribute the power under the Electricity Act, 2003, from the scope of Section 66 of the Act . This notification also cannot be construed to mean that consumption of electricity as otherwise is chargeable to tax but for the said notification - impugned notification has no bearing on this contention. Seeking a declaration that sale and supply of electricity is not chargeable to service tax under any of the sub clauses of Section 65 of the Act - HELD THAT:- The petitioner manages a mall. The petitioner receives supply of 4000 KV from the electricity distribution company for Non-Domestic High Tension on 11 KVA for its own use at the given premises (Plot no.67, DLF Industrial Area, Najafgarh Road, Delhi-110015 - hereafter the Mall). The petitioner has entered into agreements with various shop owners / licensees in the said mall and makes available the electricity on sub meter basis. The petitioner claims that the charges received from various shop keepers are essentially towards service charges as well as for the purchase of the electricity - It is his contention that not limiting the levy of service tax to the component of services provided by the petitioner and extending it to the costs of electricity is impermissible. According to petitioner, no service tax can be levied on the component which constitutes the cost of the electricity. Therefore, the petitioner seeks a declaration that service tax is not payable on the cost of supply / generation of electricity. Mr. Harpreet Singh seeks time to take instructions in this regard and to advance arguments. List for hearing on 27.02.2023.
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2023 (1) TMI 1048
Demand made by issuance of Form SVLDRS-3 - demand on the ground that the tax dues comprise of only duty amount and, therefore, only deposit of any stage is allowed under Section 124 (2) of the Finance Act, 2019 pertaining to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- It is not in dispute that the Petitioner has, prior to the issuance of the show cause notice, paid an amount of Rs.1,49,35,618/- electronically out of which a sum of Rs.1,09,06,948/- was deposited under the Accounting Code 00441480 as tax receipts and Rs.40,28,670/- was deposited under Accounting Code 00441481 towards interest under other receipts. That, during the pendency of the show cause notice, Petitioner had also requested for change of Accounting Code in respect of the interest amount to the Accounting Code relevant to tax receipts which request was also pending when the SVLDR Scheme was notified pursuant to which the Petitioner filed a declaration in Form SVLDRS-1 to avail of the scheme. The Designated Committee has issued form SVLDRS-3 without adjusting the amount of interest as tax dues, the reason being that any amount paid referred to in Section 124(2) referred to the tax dues as contained in Section 123(b) of the Finance Act which refers to the amount of duty as defined in Section 121(d) - The SVLDR Scheme is a beneficial legislation, not only for liquidation of legacy disputes for the benefit of the tax payers but also for recovery of unpaid taxes: it is a scheme for amicable resolution of disputes and in the interest of revenue. The Statement of Objects and Reasons clearly provide that the declarant would be entitled to benefits in the form of waiver of interest, fine, penalty and also immunity from prosecution. Keeping in mind these objectives, failure to adjust interest paid by the Petitioner, appears to be hyper-technical and should not come in the way of implementation of schemes of this nature. Petitioner cannot be deprived of the benefits of this scheme just because the amount of interest was deposited under Accounting Code 00441481 (Other Receipts (interest)) and not under 00441480 in respect of tax receipts which change of Accounting Code was pending with the Respondents Authorities at the time of filing of Form SVLDRS-1 by the Petitioner. Petitioner, cannot be penalized for depositing the amount under different head. Once the provision speaks of any amount paid without distinguishing between the heads of tax or between tax, interest or penalty, the provision mandates the deduction of the amounts deposited prior to issuance of the show cause notice. As rightly observed by the Madras High Court in M/S. VAMSEE OVERSEAS MARINE PRIVATE LIMITED VERSUS THE COMMISSIONER OF SERVICE TAX, DESIGNATED COMMITTEE [ 2021 (2) TMI 801 - MADRAS HIGH COURT] the object of the scheme should not be lost sight of, as the scheme has itself been formulated for the smooth settlement of disputes. The interpretation of the provisions thereof should be to carry forward the object rather than to frustrate the same giving rise to more litigation. In our view, had the Designated Committee taken a pragmatic view, more so, in the light of the law settled by atleast three High Courts, this litigation was clearly avoidable. The Designated Committee ought to have given due credit of the sum of Rs. 40,28,670/- as interest deposited by Petitioner was prior to the issuance of the Show Cause Notice - Form 3 issued by the Designated Committee cannot be sustained and deserves to be set aside. Petition allowed.
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2023 (1) TMI 1047
Levy of service tax - Tour Operator Service - case of Revenue is that appellant recovered the actual ticket fares from the customers but paid only the agreed price to the Airlines, which was much less than the ticket cost - Whether the activity undertaken by the appellant would get covered under taxable service provided under tour operator service? - extended period of limitation - HELD THAT:- As per the agreement the appellant conducting tours, offering specially designed package tour to their customers and are operating as Tour Operator and are booking tickets as per the agreement. Whereas they are paying service tax under the category of Air Travels Agent Service however appellant are liable for payment of Service tax on the total value of ticket which includes the cost of package tour provided by Appellant under the category of Tour operator Service . The Tour Operator has been defined under Section 65(115) ibid to mean any person engaged in the business of planning, organizing or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made there under . The scope of service was substantially enhanced by the Finance Act (No.2) of 2004 by including the person who are engaged in planning, scheduling, organizing or arranging tour by wherever means like rail, air, waterway, etc. - On a conjoint reading ibid, it reveals that the person providing business of planning, scheduling, organizing or arranging tours should fall under the ambit of taxable category of Tour Operator Service for the purpose of payment of service tax. On perusal of the disputed package features, it is clear that prima-facie appellant is not providing any consultancy in the nature of planning, scheduling, organizing and arranging tour on behalf of the particular tour for the passengers. Extended period of limitation - HELD THAT:- The Appellant were paying service tax under the category of Air Travel Agent Service and also filed ST-3 accordingly. The adjudicating authority have not properly examined the fact whether there is a suppression of facts or otherwise. Accordingly, the issue of limitation was also not considered properly. Appeal is allowed by way of remand to the adjudicating authority.
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Central Excise
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2023 (1) TMI 1046
CENVAT Credit - common input services used in taxable as well as exempt goods - whether the appellant is liable to pay 10% of the value of exempted goods when they have availed the cenvat credit on common input service used in the exempted and dutiable goods however, subsequently, the entire cenvat credit on common input service was reversed? - levy of personal penalty - suppression of facts or not - extended period of limitation - HELD THAT:- This issue has been considered in various judgements as cited by the appellant wherefrom we find that once the assessee has reversed the proportionate credit attributed to the exempted goods, no demand of 10% of the value of goods can be raised by the department. Reversal of proportionate credit is one of the option provided under Rule 6(3). Therefore, it is upto the assessee which option needs to be availed. The department cannot arbitrarily choose any particular option and impose on the assessee. In the present case as per the submission of the appellant, the entire credit of Rs. 22,18,585/- has been reversed on all the common input service used in or in relation to manufacture of dutiable and exempted goods. The adjudicating authority straight away demanded 10% of the value of exempted goods. Therefore, he neither examined the reversal of cenvat credit made by the appellant nor even calculated the proportionate credit. The submission of the appellant also needs to be reconsidered whether the excess amount can be adjusted against the interest. Personal penalty - HELD THAT:- Firstly the appellant company has reversed the credit accordingly, the demand is not prima facie sustainable. Consequently, since the issue relates to the interpretation of Rule 6 of Cenvat Credit Rules, 2004, malafide intention of the present employee with the appellant cannot be attributed. Therefore, considering the facts of the present case, the personal penalty imposed on the appellant is not sustainable. Hence the same is set aside. Appeal allowed in part and part matter on remand.
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2023 (1) TMI 1045
Clandestine clearance - Clearance of sugar in excess to the quota allowed to them and on this excess clearances, parallel invoices were issued whereas no duty was paid on the parallel invoices - levy of penalty under Rule 26 for the charge of abatement in evasion of duty by the company - HELD THAT:- The fact of clandestine removal done by the company M/s Shree Sardar Co-operative Sugar Industries Limited is not under dispute as the company has issued parallel invoices on which no duty was paid. The transaction were also not booked properly in the books of accounts. Against the said parallel invoices, the company also received the payment which intentionally not shown in the sales account but shown as deposit against the respective customers, therefore, it clearly transpires that the company and its board under systematic modus operandi, carried out the clandestine removal of the excisable goods - As per the facts of this case, the entire modus operandi can only be done by the board of the company which includes all the directors, it is beyond imagination that such a systematic act of clandestine removal and in proper accounting of the payment in the books as deposit can be done without the knowledge of the Directors of the company. Such type of act cannot be accepted from the employee of the company - Such type of act cannot be accepted from the employee of the company. It is also observed that the employee in their statement clearly stated that for the entire act, information is available with Shri Narendra C Solanki. Penalty under Rule 26 is decided on the basis of the fact of each case depending on the role of the person which varies from case to case. Therefore, considering the fact of the present case, the judgments are not applicable. Accordingly, I do not find any infirmity in the impugned order imposing penalty on the present appellants. Appeal dismissed.
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2023 (1) TMI 1044
Reversal of CENVAT Credit - seeking permission to retake credit of wrongly reversed amount - case of Revenue is that the amount was correctly reversed under Rule 6 (3) of CCR as the option once exercised to reverse amount in terms of Rule 6 cannot be changed during the financial year - HELD THAT:- The fact is not under dispute that the appellant s products namely, Colour Positive Unexposed Cinematographic Film became exempted vide notification No. 33/2011-CE dated 25.06.2011. In case of goods became exempted for the purpose of cenvat, the procedure prescribed under Rule 11(3) need to be followed - From the provision of said section, it is clear that in case of any dutiable goods became exempted, the assessee is required to reverse the cenvat credit in respect of inputs lying in stock or in process or is contained in the final product as of date of opting for the exemption notification. In terms of above specific provision, the appellant is required to reverse the credit attributed to inputs as such, in process, contained in finished gods, therefore, the appellant have mistakenly reversed 5% in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004. As per the specific provision particularly in a case that the goods which were earlier dutiable and at interim stage became exempted, the provision which predominantly apply is Rule 11(3) of Cenvat Credit Rules, 2004. According to which the appellant is required to reverse the cenvat credit attributed to the input, in process and/ or contained in finished goods. The appellant have made good even though at a later stage by reversing the amount of Rs. 5,40,069/- therefore, the reversal of 5% made by the appellant is an excess reversal which need to be recredit/ refunded to the appellant. In the present case, the fact is different inasmuch as the dutiable goods became exempted for which Rule 11(3) is applicable, therefore, the Circular in the peculiar facts of the present case is not applicable. Moreover, in catena of decision, it was held that giving options for availing a particular option is procedural requirement and on failure of the same, the assessee cannot be deprived of choosing any of the option available in Rule 6(3) and one of the option is reversal of proportionate credit - the appellant s excess reversal of Rs. 3,24,664/- required to be refunded/re-credit. The appellant is entitled for re-credit/ refund of Rs. 3,24,664/- and interest thereupon, if any, as per law - Appeal allowed.
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2023 (1) TMI 1043
Cenvat Credit - Duty paying documents - Disallowance of part of CENVAT credit availed by the appellant on incurring of transportation charges paid to Indian Railways - HELD THAT:- The appellant has led sufficient evidence with regard to the cenvat credit under dispute, that they have received the certified copy of RR in question given by the Railways and on the body of the RR, amount of service tax and cess is duly reflected. Further, it is found that the period under dispute is before August, 2014 when the Government issued notification to take care of the difficulty faced by the assessee, in view of the fact that Railways are issuing only a single copy of RR, which was deposited with the Railway at the time of delivery of the goods. Thus, during the relevant period, the practice was that the assessee retained one Xerox copy which was certified by the Railway staff. The benefit of cenvat credit under dispute is allowed - appeal allowed.
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2023 (1) TMI 1042
Rejection of refund claim - time limitation - rejection on the ground that the same has been filed after one year from the relevant date i.e. date of the final order of this Tribunal and accordingly, held that the claim is barred by limitation under Section 11B of the Central Excise Act - unjust enrichment - HELD THAT:- The Court Below has erred in rejecting the refund claim on ground of limitation, as evidently, the court below has failed to take notice of the transitory provisions under the CGST Act. The refund claim is not barred by limitation. Accordingly, this appeal is allowed and the impunged order is set aside - it is further directed that the Adjudicating Authority to grant the refund within 45 days from the date of receipt of this order along with interest under Section 35 FF, @ 12% p.a. - appeal allowed.
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CST, VAT & Sales Tax
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2023 (1) TMI 1041
Condonation of delay of 163 days in filing revision - It is submitted that state entities are on separate footing from an individual and ample leeway is required to be granted to state entities since it involves betting at various stages - HELD THAT:- The delay in filing revision has been considered by this Court in COMMISSIONER COMMERCIAL TAX U.P. LKO. VERSUS M/S R.C. AND SONS RAKABGANJ LUCKNOW [ 2022 (9) TMI 533 - ALLAHABAD HIGH COURT ], where the delay of 163 days was sought to be explained on the basis of the casual and lethargic attitude of the officials which prevails in the Department, on the part of the Officers concerned. From a perusal of the affidavit filed in support of application, it is apparent that no explanation whatsoever has been given from 31st August, 2010 till 21st June, 2010. Limitation period for filing revision against order dated 18th August, 2010 was 90 days and therefore revisionist has miserably failed afford any explanation for delay of two years in filing the revision. All these facts indicate the casual and cavalier attitude on the part of the department in filing of the revision belatedly, rather, as observed by the Apex Court in the case of Central Tibetan Schools [ 2021 (2) TMI 1214 - SUPREME COURT ] other than the lethargy and incompetence of the revisionist, there is nothing which has been brought on record to explain the delay. The revision itself is dismissed.
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2023 (1) TMI 1040
Maintainability of petition - availability of alternative remedy - common argument of the petitioners is that Section 19(2)(ii) of the TNVAT Act permits the availment of ITC on goods purchased as inputs in the manufacture or processing of goods in the State - HELD THAT:- All the impugned orders comprise orders of assessment, that are amenable to statutory appeal, and in one case an appellate order as well and hence, a preliminary submission has been raised assailing the very maintainability of these Writ Petitions - the question raised in these Writ Petitions revolves around an interpretation of the statutory provisions, specifically touching upon the eligibility or otherwise to ITC. The facts are undisputed. The authorities have, including the appellate authority, adopted the categoric view that the petitioners are not entitled to ITC in a situation where they have merely manufactured/purchased and consumed, an exempt product, though admittedly, such exempt product is not sold as an independent commodity, barring in one case. The authorities, as revealed by the submissions of the Revenue and the stand taken in the impugned orders, have revealed their propensity to adopt a view that bypasses the spirit of the statutory provisions and scheme of the Act. The writ petitions are thus held to be maintainable. Reversal of ITC on furnace oil used as fuel - HELD THAT:- Section 19(2) permits grant of ITC on any goods purchased and used as input in the manufacturing or processing of goods in the State or used as capital goods in the manufacture of taxable goods. Section 19(5)(a) denies ITC on the turnover from sale of exempt products. The entitlement to ITC must thus be seen in the context of, and decided, bearing note, not just of the letter of the law but the purpose for which the benefit was intended in the first place. Whether ITC on fuel purchased as an input for use in power generation came to be considered by several Courts. In the case of Saurashtra Calcine Bauxite [ 1992 (9) TMI 314 - GUJARAT HIGH COURT ] the statutory provision considered was Section 5A of the Gujarat Sales Tax Act, 1969. The Court considered the import of its earlier judgments in the cases of J.K.Cotton Spinning Weaving Mills Co. Ltd. V. The Sales Tax Officer, Kanpur and another [ 1964 (10) TMI 2 - SUPREME COURT ] and Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam V. Thomas Stephen Co. Ltd. [ 1988 (3) TMI 59 - SUPREME COURT ] - The question that arose in these two cases was whether the furnace oil used must be regarded as a mere fuel and not as processing material. On an overall consideration of the matter, the Court held in favour of the assessee concluding that the authorities were not justified in taking a view that furnace oil is used only as fuel and not as a processing material within the ambit of Rule 42A of the Gujarat Sales Tax Rules. There is no dispute in the present cases, either by way of pleading or argument that the fuels used do not constitute industrial input. In the present case, there is no dispute whatsoever that input fuel/electricity generated, has only been used to aid the process of manufacture. Except to a small extent in the case of SKML, neither the input fuel nor electricity generated, have been sold as an independent commodity. In that exceptional case, the commodity has suffered the rigour of taxation per regular application of the Act. The Court rejected the case of the revenue holding that the assessee was eligible to the exemption in terms of clause (a) of Section 5A, in light of the admitted position that the shells purchased had been consumed in the manufacture of other goods . Petition allowed.
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Wealth tax
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2023 (1) TMI 1039
Wealth tax assessment - assets within the meaning of Section 2(ea) of the Wealth Tax Act - assessee submitted that the land at Sakarda which is an agricultural land, hence not an asset within the meaning of explanation (1)(b)(ii) to Section 2(ea) of the Wealth Tax Act - AO held that the land was situated within the distance of 2-3 k.m. from the municipal limits of Vadodara and the assessee failed to establish the said land was used for agricultural purpose and therefore added as an asset for Wealth Tax purpose - HELD THAT:- The findings of the Ld. CIT(A) in the penalty proceedings that the land at Sakarda is treated as business asset not liable to Wealth Tax. Similarly, the land at Kapurai wherein the assessee is the Power of Attorney holder and agreement to sell the above land to third party. Thus the assessee is not the owner of the land at Kapurai and the same is treated as business activity of the assessee, which is not an asset u/s. 2(ea) of the Wealth Tax Act. The Ld. D.R. appearing for the Revenue could not able to inform, whether this penalty order is also a subject matter of appeal before this Tribunal. Thus the findings made by the Ld. CIT(A) in penalty proceedings has attained finality. Addition made on the land at Sakarda and land at Kapurai are not an asset within the meaning of Section 2(ea) of the Wealth Tax Act. Therefore the additions made by the A.O. are hereby deleted. Thus the grounds raised by the Assessee is hereby allowed.
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2023 (1) TMI 1038
Addition of wealth of the assessee on account of immovable property - valuation of property - value as per the provisions of wealth tax Act or the value of the property declared in the income tax return - As submitted that the value of the property in dispute has to be determined in the manner laid down in part B of schedule III of the Wealth Tax Act - whether the property for the purpose of wealth tax has to be valued as per the provisions of wealth tax Act or the value of the property declared in the income tax return can be adopted for the purpose of the wealth tax? - HELD THAT:- As no ambiguity to the fact that the assessee has furnished the necessary details before the AO during the assessment proceedings. However, the AO without pointing out any defect in the details furnished by the assessee has adopted the value of the bungalow in dispute declared in the balance sheet filed in the income tax return. We note that the provisions of section 7 of the Wealth Tax Act is a substantive procedure as laid down in the case Commissioner of Wealth Tax Vs Shravan Kumar Swarup Sons [ 1994 (9) TMI 2 - SUPREME COURT] No ambiguity to the fact that the value of the property has to be determined in accordance to the method prescribed under the Wealth Tax Act and without making any reference to the valuation done for any other purpose under any other Act. In our humble understanding, the case laws referred by the learned Commissioner of Wealth Tax (Appeals) in his order in the case of K.E.M.I Kwaja Mohideen V. Income Tax Officer Ward I(1) Nayapattinam [ 2019 (7) TMI 1442 - MADRAS HIGH COURT] is not applicable in the given facts and circumstances for the reasons as discussed above. As such the issue before The Hon ble High Court of Madras was with regard to computation of capital gain under section 48 of the Income Tax whereas the issue before us is related the valuation of property for the purpose of wealth tax. Allahabad High Court in the case of CIT vs. Padampat Singhania [ 2016 (11) TMI 708 - ALLAHABAD HIGH COURT] has held that the value asset/property is govern by section 7 of wealth tax Act read with Schedule III of Wealth tax Act We are of the opinion that the valuation of the bungalow in dispute has to be done as per the provisions specified under the Wealth Tax Act. Thus, the value declared under the income tax Act of the bungalow in dispute cannot be adopted for the purpose of the Wealth Tax Act. Accordingly, we set aside the finding of the learned Commissioner of Wealth Tax (Appeals) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed.
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2023 (1) TMI 1037
Exigibility of 'Urban Land' to wealth tax - wealth Tax Officer considering the property situated at Radha Realtors, which was under construction, as asset within the meaning of section 2(ea) of the Wealth Tax Act. HELD THAT:- As assessee fairly conceded that the ground is decided against the assessee by the decision of the Hon'ble Supreme Court in the case of Giridhar G.Yadalam v. CWT . [ 2016 (1) TMI 826 - SUPREME COURT] Accordingly, the ground of appeal No.1 raised by the assessee is dismissed. Taxability of the entire land for the purpose of wealth tax - HELD THAT:- We find the AO in the instant case valued the entire land of 1 Acre.03 guntas at Rs.1,40,02,927/- as the value of the asset for the year under consideration. It is the submission of assessee that in view of the decision in the case of Potla Nageswara Rao [ 2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT] for the purpose of arriving at the value of the land in question, the land that was transferred pursuant to the development agreement cannot be taken into consideration in the hands of the assessee as there is a transfer within the meaning of section 2(47) r.w.s. 45 of the Act and only the value of the land that has been retained by the assessee of 1067 sq. yards valued at Rs.29,73,920/- can be considered for the purpose of net wealth. Since the lower authorities have not considered the applicability of the decision of the Hon'ble jurisdictional High Court cited(Supra), therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh regarding the value of the land in question that has been retained by the assessee and the portion of the land that has been given to the Developers as per the Jt. Development Agreement. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee
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Indian Laws
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2023 (1) TMI 1036
Vacation of order restraining the transfer, selling or alienating of 11 properties purchased by a consortium of six land-owning companies - HELD THAT:- While passing an order of injunction, the Courts are required to be guided by the principles of prima facie case, balance of convenience and irreparable injury. We find that, assuming for a moment that the respondent Nos. 1 and 2 along with the other claimants have a claim of around Rs.31 crores, the entire project in an area of 115 acres cannot be stalled. If the Division Bench of the High Court found that, there was a prima facie case in favour of the respondent Nos. 1 and 2, they could have passed an appropriate order to protect the interests of the said respondents rather than stalling the entire project. It is further to be noted that the audit report dated 16th January 2023 of Ellahi Goel Co., Chartered Accountants would reveal that an amount of Rs.66.18 crores has been received by A.R. Developers Private Limited as sale consideration of shares of AERENS ENTERTAINMENT ZONE LIMITED from Mondon Investments Ltd. It is further to be noted that part of the amount received by A.R. Developers Private Limited has been used to pay Rs.52.76 crores to the consortium of six land-owning companies as Advance against Future Projects . A blanket order directing maintenance of status quo in respect of the all 11 properties admeasuring 115 acres is not justified. If such an order is allowed to continue, it will cause irreparable injury to the appellant and the respondent No.4 inasmuch as the entire development would be stalled - Appeal allowed in part.
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2023 (1) TMI 1035
Misuse of political position by the Accused / MLA / Minister - acquiring disproportionate assets - Criminal conspiracy - misappropriation - criminal breach of trust - cheating forgery fraudulent execution of deed of transfer containing false statement of consideration amount - acquiring assets disproportionate to known legal source of income by Anosh Ekka - acquisition of lands in violation of C.N.T. Act in the name of his wife Smt Menon Ujjana Ekka - applicability of presumption under Section 20 relating to Section 13(1)(e) of the P.C. Act. Assets - HELD THAT:- The evidence of assets acquired during the check period is not under challenge, nor in the name of which they have been acquired. The valuation of house has been disputed. There is no room to dispute the valuation of the land and flat purchased by registered sale deed or the vehicles and arms. Learned trial Court has given sufficient reasons for accepting the valuation report. The balance as standing in the bank accounts has also not been denied at any stage. Income - HELD THAT:- There was sudden surge of the assets in the name of accused Anosh Ekka and his family members after he became minister in the State of Jharkhand. The accused has failed to account for acquisition of the assets which were disproportionate to his known source of income. Prosecution has thus proved the charge under Sections 13(2) r/13(1)(e) of the PC Act against the accused Anosh Ekka. As far as the complicity of the other accused persons is concerned, as discussed above there is definite and clinching evidence that assets were acquired in the name of the co-accused persons namely Menon Ekka, Jaykant Bara and Deepak Lakra (appellants in Criminal appeal no.328) and Gidyon Ekka, Roshan Minz and Ibrahim Ekka (appellants in Criminal appeal no.327) . These evidence unerringly point to the active role of the appellant/accused persons in abetting the principal accused in acquiring disproportionate assets by the principal accused. A man is presumed to know the natural consequence of his act. To aid and abet means to help, assist, or facilitate the commission of a crime, or to promote the accomplishment thereof, or to help in advancing or bringing it about. The word abet includes knowledge of the wrongful purpose of the perpetrator and counsel and encouragement in the crime. It is to be born in mind that it is not necessary that an instigation should be only words and may not be conduct - In the present case from the evidence of purchase of plots of land, flats, and vehicles in their name without any other lawful source of income during the check period are evidence to show that the appellants namely Menon Ekka (wife of Anosh Ekka), Jaykant Bara, Deepak Lakra and Gidyon Ekka, Roshan Minz and Ibrahim Ekka (brother and nephew of Anosh Ekka) of Criminal appeal 328 and 327 entered into a conspiracy, aided by their active role in commission of the offence of acquisition of disproportionate property. Judgment of conviction of these accused persons on the basis of Section 109 of the IPC for engaging in criminal conspiracy with the principal accused Anosh Ekka and aiding him in acquiring the disproportionate assets by different contrivances punishable under Section 13 (1)(e) of the PC Act is affirmed. Sentence - HELD THAT:- Under Section 13(2) of the PC Act,1988, before coming into force of 2014 amendment, the minimum sentence of imprisonment was one year and the maximum was seven years and the convict shall also be liable for fine. Further, Section 16 the Act of 1988 provides that where a sentence of fine is imposed the Court shall take into consideration the amount or value of property, if any, which the accused person has obtained or the pecuniary resources the accused person is unable to account for satisfactorily. Considering the crime test, criminal test and comparative proportionality test laid down Hon ble the Supreme Court, the sentence of imprisonment and fine imposed to the appellant Anosh Ekka and Menon Ekka does not require any interference by this Court and is accordingly affirmed. The argument questioning the power of the trial Court to order confiscation under Section 452 Cr.P.C. does not merit consideration in view of the law settled by Hon ble the Supreme Court in State of Karnataka v. J. Jayalalitha, (2017) 6 SCC 263 at para 565, wherein it has been held that in the absence of any provision in the Prevention of Corruption Act, excluding its operations to effect confiscation of the property involved in any offence thereunder the trial Court had power of confiscation under Section 452 of the Cr.P.C. Disproportionate assets were acquired by the accused person by commission of offence under the Prevention of Corruption Act, and there are no infirmity in the order of confiscation of the disproportionate asset by the learned Court below. The Judgments of conviction and sentence against Anosh Ekka and Smt Menon Ekka is affirmed. With regard to other appellant accused namely Jaykant Bara and Deepak Lakra and Gidyon Ekka, Roshan Minz and Ibrahim Ekka the Judgment of conviction is affirmed with modification of sentence. Appeal dismissed.
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