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TMI Tax Updates - e-Newsletter
January 30, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Confiscation of goods u/s 130 - Levy of penalty - The contention of the learned counsel appearing for the petitioners that the 2nd petitioner had forgotten to hand over about 100 gms of gold, which was being carried in his pocket, cannot be accepted, at least at this stage. The fact that there was discrepancy in the quantity in the documents stated to have been produced and the quantity recovered from the 2nd petitioner itself, is sufficient for the Department to suspect the evasion of tax. - HC
Income Tax
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Disallowance in respect of interest on delayed deposit of ‘taxes deducted at source’ (TDS) - Allowing of such interest payment on delayed deposit of TDS as deduction would defeat the very purpose of the TDS provisions ensuring the deduction of taxes from the income of the recipient and the payment/deposit thereof with the central Govt. within the due time. - AT
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Addition u/s 56(2)(viib) - application of Rule 11UA - FMV of redeemable preference shares - sub-Rule (2) of Rule 11UA deals valuation in respect of unquoted equity shares only and does not refer to valuation of preference shares in any manner, whatsoever. The sub- Clause (c) of Rule 11UA(1), deals with the valuation of unquoted shares and securities other than equity shares which is based on a report from a merchant banker or an accountant. - AT
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Revision u/s 263 by CIT - the assessee has written off an amount as advance written off towards cost of land and there is nothing available on record to show that the AO had made any enquiries in this regard which is required to be done - Revision proceedings sustained - AT
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TP Adjustment - Determination of ALP - electricity supply bites captive power generation plant to its AEs - the assessee is justified in adopting the ALP of the electricity supply bites captive power generation plant to its AEs at Rs. 8.74 and the Revenue is not justified in excluding certain heads of charges from out of it. - AT
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Income accruing or arising in India - dividend on IDR - The Tribunal, in case Morgan Stanley Mauritius Co Ltd. [2021 (5) TMI 968 - ITAT MUMBAI], after examining the transaction concluded that the taxability of IDR dividends fail in the light of India – Mauritius DTAA –Article 22. - AT
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TP adjustment - the alleged excess AMP expenditure does not result in an international transaction and the assessee cannot be expected to seek compensation for such expenses unilaterally incurred by it from the AE - Thus we direct the Assessing Officer /TPO to delete the impugned adjustment.- AT
Customs
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Withholding of final reward - petitioner's claim as a legal heir - Though there is no legal right to demand a reward, as stated in the policy, the rejection must not be arbitrary, and the approach should not be such that it discourages the Informers from coming forward. Ultimately, the objective of offering a reward to the Informer is to aid the department in taking measures to safeguard the public exchequer - HC
FEMA
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Foreign investment in India - certain ‘procedural’ or ‘technical’ contraventions under FEMA - Compounding of offense - Online i.e., website-based and mobile application games constitute ‘gambling’ as understood in law in this country - it is undoubtedly necessary that the Petitioner must remain clear of any illicit or prohibited gambling activity, whatever the platform. If this is illegal in India, it does not become legitimate merely because it is online or because foreign investors have put money into it. - HC
Service Tax
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Classification of Services - The appellant had merely carried out dismantling activity. This activity, in no way, can be considered as a taxable service under the category of “site formation and clearance, excavation and earthmoving and demolition service” - AT
Case Laws:
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GST
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2023 (1) TMI 1131
Realization of its Input Tax Credit (ITC) in the electronic credit ledger of the petitioner as for the Financial Year 2018-19 last date for availing ITC as per provisions under Section 16(4) of Jharkhand Goods Service Act, 2017 - violation of Section 16(4) of JGST Act, 2017 or not - violation of principles of natural justice or not - HELD THAT:- It appears that a show cause notice under Section 73(1) of the Act dated 12.02.2022 (Annexure-1) was issued to the petitioner which was issued in a format without striking out the irrelevant particulars and thus, there won t be an exaggeration in treating the same as vague as it does not spell out the contraventions for which the petitioner is charged. As a matter of fact, it is worse than the summary of show cause notice issued under FORM GST DRC-01 of the even date (Annexure-2). It further transpires that without giving any opportunity of hearing State Tax Officer was in so hurry, that he finally issued summary of order in FORM GST DRC-07 on 17.02.2022 (Annexure-3); that means just within five days from issuance of show cause. Now the law is no more res integra, inasmuch as, Rule 142(1) (a) of the JGST Rules provides that the summary of show cause notice in Form DRC-01 should be issued along with the show cause notice under Section 73(1) which will spell out the contraventions in details for which the Assessee is charged. The word along with clearly indicates that in a given case show cause notice as well as summary thereof both have to be issued. As per Rule 142(1)(a) of the JGST Rules, the summary of show cause notice has to be issued electronically to keep track of the proceeding initiated against the registered person whereas a show cause notice need not necessarily be issued electronically. This Court holds that the foundation of the proceeding in the instant case suffers from material irregularity and hence not sustainable being contrary to Section 73 (1) of the JGST Act. Thus, the subsequent proceedings/impugned orders issued under DRC-07 dated 17.02.2022 cannot sanctify the same and liable to be quashed and set aside. At the cost of repetition, DRC-07 has been issued within five days of issuance of DRC-01 is a clear picture of violation of principles of natural justice. The impugned show cause notice in the instant case does not fulfill the ingredients of a proper show cause notice and thus amounts to violation of principles of natural justice; the challenge is maintainable in exercise of writ jurisdiction of this Court - Application allowed.
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2023 (1) TMI 1130
Cancellation of their respective GST Registrations of petitioners - cancellation on the ground that the said appeals were filed beyond the maximum time limit stipulated under section 107 of GST Act - Difference of opinion. HELD THAT:- While dealing with the very same issue, one of the Hon'ble Single Judges of this Court (Anita Sumanth, J.) in MR. PANDIDORAI SETHUPATHI RAJA VERSUS THE SUPERINTENDENT OF CENTRAL TAX, CHENNAI [ 2022 (12) TMI 1028 - MADRAS HIGH COURT] held that this Court is having the power to condone the delay in filing the appeal under section 107 of the GST Act under certain extraordinary circumstances mentioned in the said order. However, another Hon'ble Judge of this Court in HEMASRI ENTERPRISES REPRESENTED BY ITS PROPRIETOR SAKTHI NARAYANAN VERSUS THE APPELLATE AUTHORITY / THE DEPUTY COMMISSIONER (ST) (FAC) GST-APPEAL, CHENNAI-II, THE ASSISTANT COMMISSIONER (ST) [ 2022 (12) TMI 705 - MADRAS HIGH COURT] and RAMANUJAN VENKATESAN VERSUS THE JOINT COMMISSIONER (APPEALS- II) O/O. OFFICER OF COMMISSIONER OF GST AND CENTRAL EXCISE (APPEALS- II) , THE DEPUTY COMMISSIONER, GST AND CENTRAL EXCISE, O/O. CHENNAI OUTER COMMISSIONERATE, THE SUPERINTENDENT GST AND CENTRAL EXCISE, O/O. CHENNAI OUTER COMMISSIONERATE [ 2023 (1) TMI 436 - MADRAS HIGH COURT] has held that this Court while exercising powers under Article 226 of the Constitution of India, does not have the power to condone the delay when the statutory appeal filed under section 107 of the GST Act is beyond the maximum time limit stipulated in the said section. Since there are two contradictory views expressed by two Hon'ble Judges of this Court, Judicial Discipline and Propriety demands that, the matter is referred to a Division Bench of this Court. The point of reference to the Division Bench is as follows: Whether the view taken by the Hon'ble Single Judge (Anita Sumanth, J.) in her decision dated 16.11.2022 in the case of Pandidorai Sethupathi Raja or the view taken by another Hon'ble Single Judge (M.Sundar, J.) in his decisions (a) Hemasri Enterprises vs. The Appellate Authority / The Deputy Commissioner and (b) Ramunajan Venkatesan vs. The Joint Commissioner (Appeals-II) is correct. Registry is directed to immediately place this matter before My Lord, the Hon'ble Acting Chief Justice of this Court for getting suitable orders for posting these writ petitions before the appropriate Division Bench nominated by him for early hearing of these writ petitions.
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2023 (1) TMI 1129
Detention of goods alongwith vehicle - whether section 129(3) of the Central Goods and Services Tax Act, 2017 was adhered to by the respondents or not? - HELD THAT:- As seen from section 129(3) of the Central Goods and Services Tax Act, 2017, the proper officer after detaining the goods or conveyance shall issue a notice of such detention or seizure specifying the penalty payable and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of Sub-Section (1) of Section 129. In the instant case, after detaining the petitioner's vehicle and the goods on 26.10.2022, notice was issued by the respondents on 31.10.2022 within seven days from the date of detention. However, the consequential order for payment of penalty was passed only on 10.11.2022 which is beyond the period of seven days from the date of service of notice on the petitioner. Having passed the impugned order beyond the period of seven days from the date of service of notice on the petitioner which is contrary to section 129(3) of the CGST Act, 2017, the impugned orders have to be necessarily quashed and the writ petitions will have to be allowed. The impugned detention order dated 31.10.2022 as well as the impugned consequential order dated 10.11.2022 are hereby quashed and the writ petitions are allowed.
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2023 (1) TMI 1128
Confiscation of goods u/s 130 - Levy of penalty - goods in question were supported by valid documents - whether warrant exists for initiation, continuation and conclusion of proceedings under Section 130 of the CGST/SGST Acts or not? - HELD THAT:- The undisputed facts of the case are that the 2nd petitioner was carrying certain gold ornaments in a train from Thrissur to Alleppy. He was initially intercepted by the officials attached to the Railway Protection Force and the 2nd petitioner was able to only shown certain documents on his mobile phone, which according to the petitioners, suggest that the gold ornaments were being carried in a valid manner and in accordance with all the requirements of the CGST/SGST Acts and the Rules made thereunder. The contention of the learned counsel appearing for the petitioners that the 2 nd petitioner had forgotten to hand over about 100 gms of gold, which was being carried in his pocket, cannot be accepted, at least at this stage. The fact that there was discrepancy in the quantity in the documents stated to have been produced and the quantity recovered from the 2nd petitioner itself, is sufficient for the Department to suspect the evasion of tax. There are nothing found on merits regarding the order of adjudication issued by the 2nd respondent under Section 130 of the CGST/SGST Acts for the reason that it would not be proper to do so, considering the fact that the petitioners have appellate remedies against Ext.P18 order. There was no malice or ill-will or lack of jurisdiction in initiating proceedings under Section 130 of the CGST/SGST Acts - petition dismissed.
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2023 (1) TMI 1127
Betting/gambling - Actionable claim - whether nature of gaming services as provided by it is in the nature of services or an actionable claim or not? - HELD THAT:- A Division Bench of this Court in CHANDRESH SANKHLA VERSUS THE STATE OF RAJASTHAN AND OTHERS [ 2020 (2) TMI 1062 - RAJASTHAN HIGH COURT] in respect of a similar company Dream11 which also provided gaming services online held that the issue is no longer res-integra and as such gaming services are not in the nature of betting/gambling. Some of the games offered by the petitioners online have already been held to be games of skill rather than that of chance or that of betting/gambling. Thus when the matter is so settled by various Courts, the issuance of the impugned show cause notice is nothing but an abuse of the process of law. Accordingly, we call upon the respondents to file counter affidavit to the writ petition within a period of one month from today. The writ petition is directed to be listed for admission/final disposal immediately thereafter.
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Income Tax
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2023 (1) TMI 1126
Proceedings u/s 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - penalty proceedings initiated by the concerned officer against the petitioner for alleged failure to disclose foreign income/assets - petitioner was in employment of Vodafone Idea Ltd. and claims that he received stock options from the parent company i.e., Vodafone Group PLC - as contented no undisclosed foreign income or assets and therefore, the provisions of the 2015 Act have been wrongly triggered. HELD THAT:- This inquiry vis- -vis the petitioner, as per the record which is made available to us, has been going on since 27.02.2019, when summons under Section 131(1A) of the Income Tax Act, 1961 [in short, 1961 Act ] were issued. Petitioner claims that he has filed not one, but three responses, setting out the details sought by the respondent/revenue. In this regard, reference is made to the replies dated 06.03.2019, 12.03.2019 and 05.04.2019, appended on pages 69, 77 and 79 of the case file. The record also shows that a summon was issued, once again, to the petitioner after nearly three years on 31.01.2022, under Section 131(A) of the 1961 Act; which was also replied to by the petitioner on 11.02.2022. Insofar as the 2015 Act is concerned, notice, in the first instance, under Section 8 of 2015 Act was issued on 11.07.2022, which was replied to by the petitioner on 16.08.2022. The impugned show cause notice, as indicated above, was issued on 12.09.2022. A reply to the same has been filed, which is dated 07.10.2022. Given the fact that the matter is at the stage of show cause notice, we are of the view that the best way forward would be to direct the concerned statutory authority to adjudicate the impugned show cause notice. Writ petition is disposed of directing concerned statutory authority to adjudicate the impugned show cause notice dated 12.09.2022, having regard to the response dated 07.10.2022 and the earlier replies which have been placed on record and referred to hereinabove. The adjudication will be undertaken as expeditiously as possible, though not later than eight (8) weeks from the date of receipt of a copy of this judgement. The concerned authority, however, before proceeding further, will issue notice to the petitioner and grant him and/or his authorized representatives, personal hearing in the matter.
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2023 (1) TMI 1125
Reopening of assessment u/s 147 - Assessment u/s 143(3) Completed - deduction u/s 80IA - HELD THAT:- While completing the original assessment, the Assessing Officer has called for various details, which were duly furnished by the assessee and by accepting the explanations/details of the assessee, the assessment was completed under section 143(3) - On perusal of the details furnished by the assessee, it is amply clear that the assessee has very well furnished earlier years returns along with complete details vide its letter dated 12.07.2016 against the notice issued under section 142(1) of the Act dated 14.06.2016. Therefore, the contention of the Department that the reopening was carried out on totally a new issue that was detected at a later stage while studying the earlier year s return data, appears to be change in opinion. Again, vide notice under section 142(1) Assessing Officer has called for the copies of agreement relating to maintaining and operating of Industrial Park at S. No. 3 as well as explanation towards large increase of unsecured loans during the year assessee filed detailed reply and the same were reproduced hereinabove. Having applied his mind, the AO came to a conclusion that the same does not addition thereby proceeded to frame the original assessment by disallowing the claim made under section 80IA of the Act alone. Thus, the interest disallowance proposed in the reasons for reopening of assessment is nothing but change of opinion. Thus we are of the considered opinion that the Assessing Officer reopened the assessment, which is mere change of opinion, which is not permissible as per the law laid down in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein, it was held that an assessment cannot be reopened on a mere change of opinion; reason to believe that the income chargeable to tax has escaped assessment is one of the conditions precedent for invoking the jurisdiction of the Assessing Officer to reopen the assessment under section 147 - Assessing Officer had power to re-assess but no power to review. If the concept of change of opinion is removed, review would take place in the garb of reopening of assessment. In the instant case, since no new material was brought on record after completion of assessment under section 143(3) of the Act, the reopening of assessment was not on account of fresh material or change of law, the reopening of assessment is liable to be quashed. Accordingly, we set aside the order of the ld. CIT(A) and quash the assessment order passed under section 143(3) r.w.s. 147 - Decided in favour of assessee.
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2023 (1) TMI 1124
Delay in depositing the Employees Contribution to Provident Fund and Employees State Insurance - Addition u/s 43B read with sections 2(24)(x) and 36(1)(va) - HELD THAT:- This issue have come to rest by the recent verdict of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961 - Decided against assessee. Disallowance in respect of interest on delayed deposit of taxes deducted at source (TDS) - AO observed that such payment of interest on delayed deposit of TDS was not an allowable deduction - HELD THAT:- Jurisdictional Calcutta High Court in the case of Martin Harris (P) Ltd [ 1989 (7) TMI 342 - CALCUTTA HIGH COURT ] held that the character and quality of interest payable for non- compliance with the provisions of the Act would be the same, whether it is levied for non-submission of return in time or non-payment of tax within the prescribed time or for any other reason and that it cannot be allowed as deduction in computing total income as essentially interest in such a case for non-compliance with the provisions of the Act is inextricably connected with the amount of income-tax. The Hon ble High Court categorically held that where income-tax itself is not a deductible amount, be it compensation or be it penalty, payable in addition to the tax cannot be allowed as a deduction in computing total income. The findings arrived at by the Jurisdictional Calcutta High Court are, otherwise, binding on this Tribunal. In case Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] held that If, such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction.This proposition laid down by the Hon ble Supreme Court can be well applied in case of delayed deposit of TDS. TDS by deeming fiction has been made the tax liability of the deductor to ensure that the recipient of the payment cannot fade away without paying the due taxes on the income part of such receipts. Once, the deductee pays the due taxes, the deductor is absolved from the said tax liability but not of the interest liability on the delayed payment. Allowing of such interest payment on delayed deposit of TDS as deduction would defeat the very purpose of the TDS provisions ensuring the deduction of taxes from the income of the recipient and the payment/deposit thereof with the central Govt. within the due time. Thus we hold that the interest payment on delayed deposit of Income Tax, whether TDS or otherwise, is not an allowable expenditure. Appeal of the assessee is dismissed.
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2023 (1) TMI 1123
Addition u/s 56(2)(viib) - application of Rule 11UA of the Income-tax Rules, 1962 to the valuation of FMV of redeemable preference shares - valuation of unquoted shares and securities other than equity shares which is based on a report from the merchant banker or an accountant - HELD THAT:- AO had called for a valuation report in the course of assessment proceedings which the assessee could not produce, leading to adverse view by the ld. Assessing Officer. However, the same was produced before the CIT(A) who took cognizance of the same and called for a remand report from the ld. AO who did not deal with it for expression of his views on the same. Before us, assessee referred to the valuation report issued by Pallavi Prasad Associates, Chartered Accountants, dtd. 04/04/2014, wherein, valuation of preference shares has been arrived at a value of Rs.60.21. From the perusal of documents placed on record and the applicable provisions of the Act and the relevant Rules, we note that sub-Rule (2) of Rule 11UA deals valuation in respect of unquoted equity shares only and does not refer to valuation of preference shares in any manner, whatsoever. The sub- Clause (c) of Rule 11UA(1), deals with the valuation of unquoted shares and securities other than equity shares which is based on a report from a merchant banker or an accountant. In compliance to this sub-clause, a valuation report has been furnished by the assesse which justifies the premium charged by the assessee on the issue of cumulative redeemable preference shares and accordingly, no addition is called for under Section 56(2)(viib) of the Act by treating it as income from other sources. The valuation arrived at by the ld. Assessing Officer is a negative figure of Rs. (-)5.91/- and thereby considering the FMV is at Nil, is not in accordance with the relevant provisions of the Act and the Rules stated above. Accordingly, we uphold the findings of the ld. CIT(A) and set aside the addition made by the ld. Assessing Officer. Accordingly, grounds taken by the revenue in this respect are dismissed.
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2023 (1) TMI 1122
Disallowance u/s 14A r.w.r. 8D - As argued AO failing to enquire the allowability of relevant expenditure - HELD THAT:- it is imperative for the learned CIT(A) to consider the statement of the assessee that no expenditure is incurred for making and maintaining such a huge investment, and in that process, the learned CIT(A) has necessarily to delve deeper and record a satisfaction. There is a subtle difference between the learned Assessing Officer exercising jurisdiction 14A of the Act without recording satisfaction leaving it to be recorded by the learned CIT(A), and the learned CIT(A) looking into the aspect of learned Assessing Officer treating the exempt income as such but failing to enquire the allowability of relevant expenditure. This case falls in the second category whereas all the cases relied upon by the assessee fall in the first category. With this view of the matter, we reject the first contention of the assessee. Enough own funds available in the hands of the assessee to invest in shares - On this analysis, learned CIT(A) returned a finding that less than Rs. 8 crores was available in the hands of the assessee for investment, after exhausting the own funds in business assets, whereas the investment of the assessee to the tune of Rs. 304 crores which was obviously from out of the borrowed funds. No contrary material is placed on record to convert this finding of the learned CIT(A). We agree with the learned CIT(A) and reject this contention. Disallowance shall be restricted to the dividend income that was earned during the year under consideration and cannot exceed the same, there cannot be any quarrel with this proposition - AR drew our attention to the statement where the details of amount of investments from borrowed funds, dates of borrowal and investment are provided and such information as available - Basing on this, he submitted that at best, an amount of Rs. 29,89,465/- alone could be disallowed. This is a verifiable fact. learned Assessing Officer has to verify these figures, the interest expense viz-a-viz the quantum of exempt income to recompute the disallowance. In the interest of justice to set aside this issue to the file of the learned Assessing Officer for verification of the facts and figures and to compute the disallowance under section 14A of the Act read with rule 8D of the Rules. These grounds are accordingly treated as allowed for statistical purposes. Computation of long term capital gains - complains of the violation of the principles of natural justice - grievance of the assessee is that AO referred to the confessional statement of Mr. Raghurama Krishna Raju recorded under section 132(4) of the Act but such a document was not furnished to the assessee - HELD THAT:- Even if we exclude the so called statement of Mr. Raghurama Krishna Raju, the facts narrated in the preceding paragraph do not inspire any confidence to believe that the sale of shares under buy back at Rs. 10/- per share. When the assessee made huge investment in M/s. Ind Barath Power Infra (P) Ltd., and when M/s. Ind Barath Power Infra (P) Ltd., raised funds in October, 2009 from equity funds by allotting shares at a premium of Rs. 187.58/-, it cannot be said that the assessee will be totally ignorant of such a fact. It could be seen from the orders of the authorities below that while computing the long term capital gains, they are influenced by the statement of Mr. Raghurama Krishna Raju, and the assessee complains that the copy of it was never furnished it. Record does not reveal and for that matter, it is not the case of the assessee that the assessee made any attempt to secure such a copy or sought an opportunity to cross examine Mr. Raghurama Krishna Raju to controvert the so called statement made by him. What all assessee pleads that without furnishing a copy, the Revenue cannot made any addition, because, the principles of natural justice are violated in its case. Since we reached a conclusion that the authorities are justified in not believing the transaction of sale of shares at Rs. 10/- per share, and seems to have based the computation of capital gains on the statement of Mr. Raghurama Krishna Raju, we are of the considered opinion that the ends of justice would be met by directing the learned Assessing Officer to furnish a copy of the statement of Mr. Raghurama Krishna Raju to the assessee and to have a fresh look on this aspect. With this view of the matter, we set aside the findings of the authorities below on this issue also and restore it to the file of the learned Assessing Officer for considering it afresh. Disallowance u/s 14A r.w.r 8D - necessity of recording satisfaction - assessee had taken the plea that it did not utilize any borrowed funds for investment and, therefore, no disallowance could be made in respect of the exempt income to earn which no borrowed funds were utilized - AY. 2011-12 - HELD THAT:- We find that the learned Assessing Officer dealt with this issue in a detailed manner. He referred to the total amount of investment, dividend yielding net investment, figures in the P L Account referring to the interest expense etc. he also sought the explanation of the assessee while proposing to make disallowance under section 14A of the Act read with rule 8D of the Rules. He considered the decisions relied upon by the assessee viz-a-viz the CBDT Circular No. 5 of 2014 to reach a conclusion that when once there is an exempt income from the investments and there is a claim of interest expenses in the P L Account, provisions under section 14A of the Act read with rule 8D of the Rules are applicable. There is no specific form to record the satisfaction or otherwise of the learned Assessing Officer under the Act or Rules and it is only the conclusions reached by the learned Assessing Officer when having regard to the accounts of the assessee, he is not satisfied with the correctness of the claim of the assessee, that would constitute the requisite dissatisfaction. The quantum of interest and administrative expenses is a different matter, but according to us, it is suffice if the learned Assessing Officer considers the objections of the assessee before proceeding to invoke the provisions under section 14A of the Act read with rule 8D of the Rules. The discussion of the learned Assessing Officer at paragraph Nos. 4.1 to 4.7 of the assessment order really constitutes the recording of dissatisfaction and nothing more is required. The first contention of the assessee is accordingly rejected. Sufficiency of own funds - When once the assessee contracted loans for business purpose, and it is found that there is investment, it is for the assessee to establish with reference to the cash/funds flow that the borrowed amount is exhausted for business purpose. When once there is no evidence to show that the borrowed funds are not utilized fully and exclusively for the purpose of business, it cannot be said that the assessee is entitled to claim deduction of the entire interest expense. When this fact is coupled with the observation of the learned CIT(A) that after exhausting the own funds in the business assets, the assessee holds only Rs. 15 crores or less in its hands where the investment was found to the tune of Rs. 311.51 crores, considering disallowance under section 14A of the Act read with rule 8D of the Rules is imperative. Learned CIT(A) has taken care to see that out of the total interest expense, such portion as could reasonably be attributed to the Business is not brought to the disallowance. It is quite fair and reasonable. We uphold the same and reject the contention of the assessee. AO originally computed the disallowance by taking the entire interest expense and added the administrative expenses to it by taking the average value of the entire investment and thereafter, restricted the same to the expense claimed - CIT(A), however, excluded that portion of interest which is attributable to the business and took into consideration only the interest attributable to the investment. Apart from this, she also directed AO to consider the half percentage only in respect of the exempt income yielding investments. This action of the learned CIT(A) tends to reduce the disallowance, but will not enhance it. Administrative charges at one half percentage shall only be in respect of the investment which yielded the exempt income and the total disallowance under section 14A of the Act read with rule 8D of the Rules shall not exceed the exempt income that is earned during the year under consideration, it is in consonance with the settled principles of law. We, therefore, while accepting the contention of the assessee, direct the learned Assessing Officer to recompute the disallowance while taking the average value only of the exempt yielding investment into consideration and by restricting the disallowance to the exempt income earned during the year under consideration. With this view of the matter, we allow the appeals in part.
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2023 (1) TMI 1121
Time-limit for completion of assessment under section 153A - limitation to pass the assessment order - appointment of special auditor u/s. 142(2A) - whether the AO was justified to order the appointment of special auditor u/s. 142(2A) of the Act, and thereby getting additional time to frame the assessment in terms of explanation 1 (iii) to sub-section (3) of Section 153 of the Act? - HELD THAT:- As considering the relevant aspects that the reference by the AO to special auditor being bereft of plausible reasons for holding about the complexity of accounts and forming such opinion even without examining such accounts and the principals of natural justice being violated, the assessee being given no proper opportunity to object to such reference and even mechanical approval by the CIT, therefore, in the light of the legal proposition laid down by the Hon'ble Supreme Court in the case of Sahara India (Firm) [ 2008 (4) TMI 4 - SUPREME COURT] , we hold that the order appointing Special Auditor u/s 142(2A) of the Act passed by the AO as bad in law. Since the extended period was taken by the AO under the guise of Special audit, hence the same cannot be counted for computing the period of limitation to pass the assessment order. As held by the Hon'ble Supreme Court in the case of Harsha Dhingra Vs. State of Haryana [ 2001 (9) TMI 1171 - SUPREME COURT] the subordinate Forums including this Tribunal is bound to apply law declared by the Hon'ble Supreme Court and is duty bound to apply such dictum to case which would arise in future. The original limitation to pass the assessment order expired on 31.12.2008 in these cases and the impugned assessment order passed thereafter on 21.08.2009 are therefore held to be barred by limitation, hence, the impugned assessment orders passed u/s 153A in respect of the quantum appeals are hereby quashed and the consequential additions made by virtue of such invalid assessment orders stand deleted. Appeal of assessee allowed.
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2023 (1) TMI 1120
Disallowance u/s 14A r.w.r. 8D - expenditure incurred to earn exempt income - HELD THAT:- Averments made by the Ld. Authorised Representative for the Appellant are factually correct as the Appellant is a debt free company having sufficient own capital for making investments. In the case of ACB India Ltd. [ 2015 (4) TMI 224 - DELHI HIGH COURT ] has held that only investments yielding exempt income during the relevant previous year are to be considered while computing the average value of investment for the purpose of Rule 8D(2)(iii) of the Rules. In the present case the Assessing Officer has taken into consideration the entire Investments. Accordingly, we set aside the addition made under Section 14A - AO is directed to re-compute disallowance under Section 14A read with Rule 8D(2)(iii) of the Rules by taking into consideration only the investments yielding exempt income during the relevant previous year as per the judgment of ACB India Ltd. (supra). In view of the above Ground No. 1 to 4 raised by the Appellant are partly allowed. Depreciation on application software - excess depreciation claimed by the Appellant by adopting higher rate of 60% as against the applicable rate of 25% - HELD THAT:- As relying on Computer Age Managements Services Private Limited [ 2019 (7) TMI 1153 - MADRAS HIGH COURT ] rate of 60% shall be applicable in the case of application software. In view of the same, we hold that the Appellant is entitled to claim depreciation at the rate of 60% in respect of application software. The disallowance of depreciation is, therefore, deleted. Admission of additional claims - Net foreign exchange gain - DR denied claim as it was not made in the return of income and was raised for the first time during the assessment proceedings - HELD THAT:- An assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. We hold that the CIT(A) erred in not adjudicating the claim of the Appellant raised by way of letter dated 15.11.2013. It has been contended that the net foreign exchange gain pertains to advance for purchase of capital asset and has been credited to the Profit Loss Account under head Miscellaneous Income (Schedule 8). We direct the assessing officer to verify (a) whether the net foreign exchange gain pertains to the purchase of capital asset and (b) whether the same is included in Miscellaneous Income credited to Profit Loss Account. In case on verification the Assessing Officer is satisfied that both the aforesaid conditions are satisfied, then the Assessing Officer shall reduce the amount of income by the amount of net Foreign Exchange Gain and reduce the same from the cost of capital asset as per Section 43A - Ground raised by the Appellant is treated as being allowed for statistical purposes.
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2023 (1) TMI 1119
Unexplained cash found at the residence of the assessee at the time of search - search team found physical cash at the premises of the assessee at the time of search - HELD THAT:- AO has not considered the statement given by assessee at the time of search proceedings, wherein he has explained the sources of cash found at the time of the search. We also notice that the AO has also not given any reason for disregarding the statement given by the assessee. In the statement, the assessee has explained that a sum of Rs.50,000/- belongs to all the family members. We are of the view that the statement given by the assessee should be given credence, since the addition has been made in his hands. As per the statement given by the assessee, a sum of Rs.50,000/- belongs to other family members, meaning thereby, the balance amount of Rs.49,900/- may be considered as belonging to him. The assessee has already offered ₹ 45,000/- as his income in the return of income filed by him. Accordingly we are of the view that the assessee should be given credit for cash to the extent of ₹ 95,000/- (Rs.50,000/- + Rs.45,000/-). Hence the balance amount of ₹4,900/- can be considered as not explained. Accordingly, we are of the view that the addition could be sustained to the extent of Rs.4,900/- only. Accordingly we set aside the order passed by Learned CIT(A) on this issue and direct the AO to restrict the addition to ₹ 4,900/-. Addition u/s 69 - unexplained investment - the search proceedings of the assessee, the revenue carried out Survey operations u/s 133A at the premises of the employer of the assessee named Mr Kishore Janani, who was a stockbroker - HELD THAT:- We notice that the assessee has explained the trade practice and has also furnished materials to prove the trade practice, as per which, the impugned shares do not belong to him and he was holding them on behalf of others. Hence we are of the view that the above said explanations, in the facts and circumstances of the case, may be accepted. Further, when an asset is not belonging to the assessee, the question of assessing the same u/s 69 of the Act does not arise, as held in the case of Ushakant Patel (supra). Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete the addition of Rs.86,300/- relating to unexplained investment in shares. Addition u/s 69A relating to Bank deposits - AO noticed that the family members of the assessee have given loans to Shri Harshad Mehta - HELD THAT:- The transactions are in the nature of giving loans by issuing of cheques to Shri Harshad Mehta and receiving back the same by way of cheques from him. When asked about the sources for issuing cheques, the family members have replied that they have received cash from Shri Harshad Mehta and in lieu of the same, they have issued cheques to him. When loans were received back from Shri Harshad Mehta, the AO has presumed that the family members would have returned back cash to Shri Harshad Mehta. Since there was no cash withdrawal from their bank accounts for returning back cash to Shri Harshad Mehta, the AO has presumed that the said cash payment would have been made out of undisclosed sources. First of all, it is not shown by the AO that these transactions have been made by the assessee, i.e., the AO himself admits that these transactions have been carried on by the family members. It is also accepted that the family members are also assessed to income tax. Hence, we do not find any reason to assess this amount in the hands of the assessee. The cause of action, if any, shall arise in the hands of family members. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete this addition. Addition being cash deposits made into the bank account of assessee s wife - AO noticed that Smt Heena A Vyas is not assessed to income tax and hence took the view that the above said cash deposit would have been made by the assessee only - HELD THAT:- AO has made this addition on the presumption that the assessee would have made the impugned deposits of Rs.10,000/-. AO has disregarded the submission of Smt Heena A Vyas that she has made this deposit out of her past savings. It is a joint bank account and it may not be possible to presume that the assessee alone would have funded. Hence, we are of the view that the AO has made this addition only on presumption and hence the same cannot be sustained. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition. Addition of brokerage income - HELD THAT:- Assessee has not brought on record any other material to support his submissions. We noticed earlier that the assessee herein is one of the confidant employees of broker Shri Kishor J Janani and hence he has transferred shares belonging to others in the name of the assessee. Further, the assessee was also duly paying interest payable to Shri Kishor J Janani. All these facts would show that the assessee was having good relationship with the above said broker. Hence the explanation of the assessee that Shri Kishor J Janani has disputed and denied brokerage amount is hard to believe. The assessee has also not given any credible reason as to why the brokerage amount was denied by Shri Kishor J Janani. The responsibility of the assessee to give proper reasons is fortified for the reason that he himself has admitted that the brokerage amount is due from Shri Kishor J Janani. In our view, the assessee has failed to discharge this responsibility. Accordingly, we confirm this addition made by the AO. Disallowance of claim of loss being hedging loss claimed on sale of shares of M/s Mazda Leasing and Industries Ltd (MLIL) - CIT-A upheld the disallowance made by the AO on the ground that hedging transactions entered by the assessee is against bye laws of Stock Exchange and hence illegal in nature - HELD THAT:- Even though the tax authorities have stated that the impugned transactions are illegal, yet they have not referred to any of the provisions of Bye laws of Stock Exchange, which specifically state that, the hedging transactions in non-cleared securities are illegal. Further, the broker note placed at page 103 of the paper book would show that the assessee has carried forward the hedging transactions to March, 1992 and started purchasing shares from 24th March, 1992 onwards. Hence, it cannot be said that the transactions are illegal. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete this disallowance. Addition of unexplained investment made in UTI Schemes in the name of assessee s wife - CIT(A) confirmed the addition to the extent of 50%, being the investment standing in the name of assessee s wife - HELD THAT:- We notice that assessee s wife has furnished a confirmation letter stating that the above said investment has been made out of her own savings and not out of income of the assessee herein. Considering the smallness of the amount, we are of the view, the explanations of the assessee may be accepted. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition. Unexplained investments and dividend income - HELD THAT:- AO could not have made the impugned addition on presumptions, that too in the absence of availability of such investments with the assessee or their subsequent sale. We are of the view that the additions relating to unexplained investments and dividend income in the hands of the assessee, in the facts and circumstances of the case and also considering the then prevailing trade practice, were not justified. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition.
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2023 (1) TMI 1118
Revision u/s 263 by CIT - advance written off under the head cost of land - PCIT noticed that the AO did not call for any details with regard to the amount written off and the assessee did not furnish any evidence with regard to the advances received towards purchase of land and the reasons for write off - HELD THAT:- In the case under consideration the PCIT has exercised the revisionary powers u/s. 263 of the Act since he has noticed that the assessee has written off an amount as advance written off towards cost of land and there is nothing available on record to show that the AO had made any enquiries in this regard which is required to be done. We are therefore, of the considered view that the AO has not conducted the verification that should have been conducted during the course of assessment proceedings. Respectfully following the decision of jurisdictional High Court in the case of Infosys Technologies Ltd. [ 2012 (1) TMI 76 - KARNATAKA HIGH COURT] and case of Gee Vee Enterprises [ 1974 (10) TMI 29 - DELHI HIGH COURT] we hold that the PCIT was justified in assuming the jurisdiction u/s 263 of the Act by setting aside the assessment order. We therefore modify the order passed u/s.263 with a direction to the AO to examine the issue afresh and decide the allowability in accordance with law. Appeal by the assessee is dismissed.
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2023 (1) TMI 1117
Revision u/s 263 - Unexplained cash deposits - as submitted cash deposit made in his savings account was pertaining to cash sales of agricultural products - HELD THAT:- From the perusal of the invoices, it is evident that these invoices appear to be mere self-made invoices showing the sale of Mango, chikoo and dry raw coconut. We also find that two invoices issued to the same party on different dates have the same invoice number. This appears to be more than a mere coincidence. Further, apart from the name of the person to whom the assessee alleged to have sold the agricultural products, there is no mention of the address or village/town/city to which that person belongs, even though a huge quantity of aforesaid products has been alleged to have been sold. As regards the reliance placed on 7/12 extracts and land revenue records, we find that the coordinate bench of the Tribunal in Abhijit Subash Gaikwad [ 2015 (5) TMI 971 - ITAT PUNE] held that in absence of fulfilment of fundamental fact that land was used for agriculture, merely mentioning of land as agricultural land in purchase deed or sale deed or even in revenue records cannot establish the case of the assessee that land sold by it was agricultural land. We find that none of the aforesaid aspects have been gone into by the AO while accepting the claim of the assessee that cash deposited is pertaining to cash sales of agricultural products. Apart from the documents, as discussed above, no other evidence has been brought on record by the assessee in support of its claim. Further, it is pertinent to note that the cash deposit of Rs. 15,05,000 was claimed as cash sales of agricultural products only during the reassessment proceedings, and therefore it was all the more important for the AO to have thoroughly examined the fresh claim made by the assessee. Thus, in the present case, it cannot be said that the AO has carried out the enquiry/verification that would have been carried out by a prudent officer. The lack of investigation/enquiry by the AO, particularly when the assessment has been reopened on the very same issue and the information was received in this regard from ITS details (AIR), would render the assessment order amenable to revision under section 263 in the peculiar facts of the present case. Therefore, the assumption of jurisdiction under section 263 of the Act read with Explanation 2 to the said section is upheld. As a result, grounds raised by the assessee for the assessment year 2012 13 are dismissed. As stated earlier, the facts for the assessment year 2015 16 are identical to the assessment year 2012 13 except for variance in figures. Hence, the decision rendered hereinabove for the assessment year 2012 13 shall apply mutatis mutandis to the assessment year 2015-16, and accordingly, the revision order passed by the learned PCIT under section 263 of the Act for the assessment year 2015 16 is upheld. As a result, grounds raised by the assessee for the assessment year 2015 16 are dismissed.
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2023 (1) TMI 1116
Unexplained investments - certain documents were seized from the residence of assessee as per panchnama under Exhibit B1 and agreement to purchase (isar chitthi) stated to have been drawn between the assessee and another person - HELD THAT:- As during the course of assessment proceedings, there was a letter of confirmation issued by the Abdul Razzaq Haji Daud about the cancellation of agreement to purchase (issar chitthi) as well as non-receipt of Rs.1 lakh. It is to be noted that the contention of the assessee is that no amount was paid and the said agreement to purchase (issar chitthi) was only agreed to purchase said property in future. This aspect was not at all considered by the AO and the CIT(A) but both the authorities below went out to disbelieve the version of the assessee as an afterthought. Admittedly, the AO added an amount of Rs.1,60,000/- to the total income of the assessee on account of undisclosed investment which is evident from computation vide para 7 of the AO s order. CIT(A) also without verifying whether there is any investment as brought on by the AO in terms of alleged cash payments reflected in agreement to purchase (issar chitthi). Before us nothing was brought on record to show that the alleged cash payments towards purchase of property were resulted into any investment. Therefore, in the absence of any corresponding asset stated to have been materialized in terms of agreement to purchase (issar chitthi), the addition as confirmed by the CIT(A) is not justified. Thus, the order of CIT(A) is set aside and the grounds raised by the assessee are allowed.
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2023 (1) TMI 1115
TP Adjustment - Determination of ALP - electricity supply bites captive power generation plant to its AEs - As contended internal CUP i.e., the rate at which the non-eligible unit and other AEs procured power in an uncontrolled transaction from an unrelated entity viz. APSPDCL, was the right basis for determination of Arms Length Price (ALP) - HELD THAT:- TPO himself conceded that the rate at which the assessee supplied the power to the APSPDCL during the financial year 2015-16 at Rs. 5.45 cannot be an uncontrolled transaction, TPO cannot ignore the transaction as submitted by the assessee between TGV Projects, Gauri Gopal Hospital and SRHHL with the APSPDCL at Rs. 8.98, Rs. 8.82 and Rs. 10.71 per unit cannot be ignored. At the same time the consistent view taken by the higher judicial fora and also the Tribunal in the cases referred to by the assessee is to the effect that when the assessee had set up a captive power generating unit and provided electricity to its AEs and claimed deduction under section 80-IA of the Act in respect of profits arising out of such activity, for the purpose of such deduction the market value of power supplied by the assessee to its AEs should be computed considering the rate of power charged by the State Electricity Board for supply of electricity to industrial consumers. We, therefore, respectfully following the decisions of Reliance Industries Limited [ 2019 (2) TMI 178 - BOMBAY HIGH COURT ], Godavari Power and Ispat Ltd [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT ], Gujrat Alkalis and Chemicals Ltd [ 2016 (10) TMI 1111 - GUJARAT HIGH COURT ] and Kanoria Chemicals and Industries Ltd [ 2013 (5) TMI 357 - CALCUTTA HIGH COURT ] are of the considered opinion that the assessee is justified in adopting the ALP of the electricity supply bites captive power generation plant to its AEs at Rs. 8.74 and the Revenue is not justified in excluding certain heads of charges from out of it. With this view of the matter, we allow the grounds of appeal on this aspect.
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2023 (1) TMI 1114
DRP not giving opportunity of being heard to the revenue as per provision of sec. 144C(11) - HELD THAT:- AO / TPO filed rectification application before the DRP raising certain contentions on merits. DRP has noted that the notices were issued to the AO, AO failed to appear on the date of hearing. DRP rejected the rectification application vide order dated 05.01.2015. Since notice of hearing was given to the AO / TPO and he had failed to appear, we see no merit in the contention raised in grounds 1 and 2. We dismiss grounds 1 and 2 raised by the Revenue. TP Adjustment - comparable selection - objection of RPT - HELD THAT:- Lotus Labs cannot be accepted as a comparable as it has significant RPT as per the financials of Lotus Labs for December 2010 sourced from the Ministry of Corporate Affairs Website and the year ending March 2010. Working of RPT was not controverted by Revenue, even before the Tribunal. Therefore, Lotus Labs was rightly rejected by the DRP and not taken as a comparable. In this context, we would also like to state that the Tribunal in assessee s own case for assessment year 2009-2010, has remanded the issue of Lotus Labs RPT to the files of the TPO for verification. The TPO while giving effect to the Tribunal order for assessment year 2009-2010, had excluded Lotus Labs as a comparable after verifying the facts from the financial statement and noting that the company has significant RPT transaction. Therefore, in the light of the aforesaid reasoning, the Revenue s appeal is dismissed. Expenditure / break up incurred on the Doctors - MCI Regulations Applicabilty - assessee has filed additional evidence - HELD THAT:- It is pertinent to note that prior to the judgment of M/s.Apex Laboratories Pvt. Ltd. [ 2022 (2) TMI 1114 - SUPREME COURT] many of the judicial pronouncements had held that MCI Regulations are not applicable on pharmaceutical companies and expenses incurred by such companies are not violative of CBDT Circular. During this phase of assessment, there were only adhoc summary basis evaluation of expenditure. In the present case also there is no critical evaluation of the expenses and post the Hon ble Supreme Court judgment, the dictum laid down, same needs to be followed and each of the expenditure needs to be evaluated to see if the disallowance is justified. A.O. had primarily made disallowance by referring the CBDT Circular No.5/2012 dated 01.08.2012. The A.O. has not critically examined the nature of expenditure incurred by the assessee. In the larger interest of justice, in view of the latest judgment of the Hon ble Apex Court, which has examined the very same issue, it becomes necessary to examine the exact nature of expenses incurred by the assessee for Doctors from all angles. Therefore, for substantial question and cause, the additional evidence are taken on record. Since the additional evidence is taken on record, necessarily, the matter needs fresh verification by the A.O.
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2023 (1) TMI 1113
TP Adjustment - payments to its overseas associate enterprise AE in lieu of Receipt of Advisory Services - HELD THAT:- The assessee s service agreement has remained the same throughout since 2003 onwards - We therefore conclude in this factual backdrop that the assessee has sufficiently proved to have received advisory services from its group entity(ies) and the learned lower authorities have erred in law and on facts in rejecting the same in entirety. We, accordingly, delete the impugned adjustment in these peculiar facts and circumstances. The assessee succeeds in its first and foremost grievance.
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2023 (1) TMI 1112
Income accruing or arising in India - dividend on IDR - assessee has received dividend from Indian entity and the dividend had accrued/ paid to the assessee in India - DRP and AO after examining the transaction, facts of the case and Article-10 of the India Mauritius DTAA rejected assessee s contention, that the dividend on IDR is taxable in Mauritius - whether the assessee would be eligible for treaty benefit, if yes, whether the transaction would fall within the meaning of Article-10 or Article-22 of the DTAA? - HELD THAT:- As in case Morgan Stanley Mauritius Co Ltd. [ 2021 (5) TMI 968 - ITAT MUMBAI ] in a lucid manner explained the provisions of Article- 10 and Article-22 and thereafter explained as to how the transaction would not fall within the ambit of Article 10 and hence, is covered by residuary Article - 22. The Tribunal after examining the transaction concluded that the taxability of IDR dividends fail in the light of India Mauritius DTAA Article 22. Revenue has not brought out any distinguishing feature in the transaction in assessee s case and in the case of Morgan Stanley Mauritius Co Ltd vs. DCIT (supra). In the absence of any contrary material, we see no reason to take any other view except to follow the order of Co-ordinate Bench on identical set of facts. Following the order of Tribunal in the case of Morgan Stanley Mauritius Co Ltd vs. DCIT (supra), Ground No.1 of appeal is allowed for parity of reasons
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2023 (1) TMI 1111
Revision u/s 263 - assessee has failed to explain the source of investment made for purchase of the immovable property - HELD THAT:- Assessee had furnished return of income for the year under consideration under presumptive taxation under section 44AD and disclosed required particulars. The Assessing Officer while passing the order has categorically mentioned that he had verified and examined the reply and documents furnished by the assessee. AO has further mentioned that the assessee had furnished written reply, copy of Income-tax return with computation of income, profit and loss account, cash flow statement, confirmation of accounts, receipts for sale consideration, agreement for sale, sale deed dated July 20, 2011 bank statements, etc. This finding and recording of these facts is not disputed by PCIT. Initial reply furnished by the appellant vide letter dated June 20, 2019 wherein the appellant disclosed that the appellant deals in real estate business activity and that main source of business income is from real estate business. Appellant also furnished copy of purchase deed dated July 20, 2011 for Rs. 60,00,000 in respect of agricultural land purchased by the appellant. This information was furnished in compliance to notice dated June 13, 2019 issued under section 142(1) - From the copy of purchase deed it is apparent that the appellant purchased agricultural land from two ladies, paid consideration in cash which is acknowledged by the sellers of land, that purchased deed was signed on July 18, 2011 and got registered in the office of sub-registrar on July 19, 2011. The appellant paid stamp duty and registration expenses of Rs. 3,58,360 in cash. Therefore, genuineness of payment and identity of recipients got established and which has not been disputed even by the learned Principal Commissioner of Income-tax. Thereafter, the Assessing Officer issued another notice under section 142(1) Thus after carefully, analysing the facts and circumstances and the settled position of law, we hold that the revision order passed by the learned Principal Commissioner of Income-tax is not justified.
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2023 (1) TMI 1110
TP adjustment - Advertisement, Marketing and Sales Promotion Expenses [AMP] incurred by the assessee - DR concluded by saying that since the Tribunal in the preceding years has upheld the bench marking of AMP expenses by applying TNMM, the same may be applied in the year under consideration also but after making comparability adjustment on account of AMP expenses - HELD THAT:- We have to state that this Tribunal in for Assessment Year 2008-09 [ 2019 (1) TMI 1567 - ITAT DELHI ] and in Assessment Year 2009-10 [ 2019 (2) TMI 2062 - ITAT DELHI] had the occasion to consider an identical quarrel and had the benefit of the decision of the Hon'ble Delhi High Court in the case of Sony Ericsson Mobile Communications India Pvt Ltd [ 2015 (3) TMI 580 - DELHI HIGH COURT ] as held that the assessee being a full-fledged manufacturer, entire AMP expenditure is incurred at its own discretion and for its own benefit for sale of LG products in India. In the case of the appellant, the advertisements are aimed at promoting the sales of the product sold under trademark LG manufactured by the assessee and not towards promoting the brand name of the AE. In such circumstances, the alleged excess AMP expenditure does not result in an international transaction and the assessee cannot be expected to seek compensation for such expenses unilaterally incurred by it from the AE - Thus we direct the Assessing Officer /TPO to delete the impugned adjustment. Excessive AMP expenses have been incurred by the assessee so as to benefit AE - HELD THAT:- Nothing has been brought on record by the Revenue to demonstrate that there is a direction from LG Korea to incur certain minimum level expenditure on AMP. Therefore, we are of the considered view that the said Article in TLA does not provide for or result in rendering of any service in relation to AMP expenses incurred by the assessee as an independent full risk-bearing manufacturer/ distributor of the products manufactured/distributed in the Indian market. Reimbursement of certain advertisement expenses by LG Korea - HELD THAT:- As mentioned elsewhere, in terms of Article 20, LG Korea did not have any obligation whatsoever to indicate or reimburse advertisement expenditure in relation to sale of products by the assessee in India. It appears that the said reimbursement of AMP expenses have been made by LG Korea voluntarily and without any legal binding and by way of support the assessee. We find that similar reimbursement has been received by the assessee in earlier years and as mentioned elsewhere, this quarrel has been decided by this Tribunal in earlier Assessment Years in favour of the assessee and against the Revenue. Bench marking of AMP expense on aggregation basis applying TNMM - HELD THAT:- It would be pertinent to mention here that the TPO did not dispute the combined benchmarking analysis undertaken by the assessee in its Transfer Pricing study in respect of all international transactions and, in fact, accepted the same to be at arm s length. The TPO has proceeded on the premise that an international transaction in respect of AMP expenses is to be bench marked separately applying BLT. The contention of the ld. DR that profit margin of assembly segment of the assessee is 3.70% whereas the same for comparable companies is at 4.70% cannot be accepted since the said margin is within arm s length range of +/- 5% as per proviso to section 92C of the Act. Considering the factual matrix from all angles, TP adjustment made by treating AMP expenses as an international transaction deserves to be deleted in line with the decision of this Tribunal in assessee s own case for Assessment Years 2008-09 and 2009-10. Accordingly, Ground No.4 is allowed. TP adjustment in respect of royalty - HELD THAT:- We find that this Tribunal[ 2019 (2) TMI 2062 - ITAT DELHI] in Assessment Year 2009-10 has followed its own decision given [ 2019 (1) TMI 1567 - ITAT DELHI ] in Assessment Year 2008-09 as we direct the TPO to determine the Arm s Length royalty @ 4.05%. TP adjustment in respect of Asian Regional Overheads expense - HELD THAT:- In our considered opinion, the assessee is free to conduct business in the manner that the assessee deems fit and the commercial or business expediency of incurring any expenditure has to be from the assessee s point of view, which means that the Assessing Officer cannot step into the shoes of a business man. In our considered view, an item of expenditure has to be incurred wholly and exclusively for the purpose of business of the assessee and whether the assessee has derived any benefit from incurring such expenditure is, according to us, irrelevant consideration for the purpose of determination of ALP. There is no dispute that the brand LG is owned by LG Korea but such expenses are incurred for undertaking marketing or promoting sale of the group companies which includes the assessee. Therefore, it can be safely concluded that the same has been incurred for the purpose of the business of the assessee in ordinary course of its business. As already decided the quarrel relating to the aggregate bench marking while deciding Ground No. 4 relating to AMP expenses and the same reasoning would fully apply here also. Allocation of expenses in proportion to sale - HELD THAT:- We find that the same is supported by the decision of the Hon'ble Madras High Court in the case of Manjushree Plantations Ltd [ 1979 (2) TMI 11 - MADRAS HIGH COURT ] which has been approved by the Hon'ble Apex Court in the case of Consolidated Coffee [ 2000 (11) TMI 136 - SUPREME COURT ] and also supported by the Hon'ble Delhi High Court in the case of EHPT India Pvt Ltd [ 2011 (12) TMI 49 - DELHI HIGH COURT ] Thus we do not find any merit in the transfer pricing adjustment in respect of allocation of Asian Regional Headquarter expenses and direct the Assessing Officer/TPO to delete the same. TP adjustment in respect of international transaction of payment of export commission - HELD THAT:- A perusal of the additional evidence shows that the same indicates brand promotion expenses incurred by LG Korea for promoting its brand name and overseas marketing and network. The assessee has been providing access to the overseas marketing/network which is continuously developed and maintained by the AE, because of which the assessee is able to export its product in these markets. It is not in dispute that the assessee has no office set up or infrastructure outside India to undertake exports and it is also not disputed by the Revenue that the assessee is able to secure orders for exports in the overseas market through the network and basis the established brand name of LG Korea. In our considered view, the Assessing Officer shall examine the additional evidence and decide the issue afresh. Adjustment to the service warranty charges received by the assessee by apportioning a margin of 32.95% on such cost of reimbursement - HELD THAT:- It is an undisputed fact that the products are imported from the AE, which is the manufacturer and, therefore, the ultimate warranty liability/cost is to be borne by manufacturing entity i.e. the AE. In such a scenario, the assessee is only acting as a pass through. The entire cost incurred in providing warranty services is reimbursed by the AE and now, such reimbursement, in our considered view, there is no basis for charging of mark-up by the assessee. We find that the facts are identical to the facts considered by this Tribunal in[ 2019 (2) TMI 2062 - ITAT DELHI] for Assessment Year 2009-10. Therefore, considering the facts in totality, in light of the decision already taken on this issue by this Tribunal, we direct the Assessing Officer/TPO to delete the impugned adjustment. Ground No. is 8 allowed. TP adjustment in respect of international transaction of payment of design and development charges - HELD THAT:- Rule 10A(d) of the Rules provides that closely linked transactions can be considered together. In light of the above discussion, we are of the considered view that it is possible to conduct combined evaluation of interlinked transactions and it is equally possible for the AE involved in the controlled transaction to undertake/provide benefit in one controlled transaction to compensate for the benefit received in the other controlled transaction. Accordingly, benefit received should be set off against the benefit provided. Clubbing of closely linked transactions has also been upheld in the case of Sony Ericsson Mobile Communications [ 2015 (3) TMI 580 - DELHI HIGH COURT ] wherein the Hon'ble Jurisdictional High Court held that clubbing of closely linked, including continuous transactions, is permissible in appropriate cases. In the same breath, the Hon'ble High Court held that once the Revenue accepts the TNMM as the most appropriate method, then it would be inappropriate for the Revenue to treat a particular expenditure as a separate international transaction. We do not find any merit in the TP adjustment in respect of international transaction of payment of design and development charges. We, accordingly, direct the Assessing Officer/TPO to delete the same. TP adjustments in respect of amount outstanding in the account of AE written off during the year under consideration - HELD THAT:- Dehors whether the impugned transaction can be termed as an international transaction, the write off has to be allowed as a trading loss and also as a bad debt, as the same was given in the ordinary course of the business for purchase of monitors. We, therefore, do not find any reason in denying the write off. Further, bankruptcy certificate which is placed at pages 3414 to 3422 of the paper book Volume IX clearly shows the fact that the liabilities in the books of AE were far more than the book value of assets and the AE was not even able to pay the debt due to third-party creditors. Even assuming that the impugned transaction falls within the ambit of international transaction between two AEs, then also, the TPO is obliged under the law to determine ALP by following any one of the prescribed methods of determining the ALP as detailed in section 92C(1) of the Act. This has also been clarified by the Central Board of Direct Taxes in Instruction No. 3 of 2003 dated 20.05.2003. Facts on record show that the TPO has not applied any one of the prescribed methods in Section 92C(1) of the Act to determine ALP before disallowing the write off. In view of the above, we direct the AO/TPO to delete the impugned disallowance. Ground is, accordingly, allowed. Disallowance of salary paid to expatriates u/s 37(1) - expatriate employees work under direct control of LG Korea - HELD THAT:- The only logical conclusion that can be drawn is that, such expatriates were employees of the assessee during the year under consideration and worked under the direct control and supervision of the assessee for the purpose of business of the assessee, and for such services they were paid remuneration directly by the assessee, on which tax was deducted at source as per the relevant provisions of the Act, which part has not been disputed by the revenue. The decision of the Hon'ble Supreme Court in the case of Carborandum [ 1977 (4) TMI 2 - SUPREME COURT] squarely apply on the facts of the case, in as much, as the assessee company had taken such expatriates on its payroll on the basis of various agreements of employment, and such expatriate employees worked under the direct control of the assessee company for day to day working. The expatriates were wholly and exclusively working for the business interest of the assessee and payment of salary to such expatriates is allowable u/s 37 of the Act. We, accordingly, direct the Assessing Officer to delete the impugned addition. Ground is allowed. Treatment of sales tax subsidy as taxable revenue receipt - HELD THAT:- The findings given by this Tribunal in Assessment Year 2009-10 [ 2019 (2) TMI 2062 - ITAT DELHI] as held neither the certificates issued by Greater Noida Industrial Development Authority nor the Notification issued by the State Govt. authorises the assessee to collect sales tax from its customers. The assessee has been exempted from collecting the sales tax from customers on the sales made with effect from 27th March, 1998 The assessee had included the element of sales tax in the dealers' price as a sale price of the product. In the States other than Uttar Pradesh, the sales tax so collected as a part of dealers' price has been paid to respective State Governments, whereas in the case of the assessee, since the assessee was not liable to pay sales tax, as exemption has been provided to the extent of 200 per cent of fixed capital investment, the sales tax element which is embedded in the sale price have been retained by the assessee as excess sales consideration. At the year end the assessee has allocated the sales tax element from dealer s price and has claimed the same as capital subsidy. Therefore, the collection of dealers' price has been made in the ordinary course of trading activities. When the assessee is not permitted to collect the sales tax under the notification issued by the State Govt. the collection of sales tax as a part of dealers' price is nothing but constitutes a trading receipt - Respectfully following the decision of the co-ordinate bench, Ground is dismissed. Nature of expenditure - Disallowance paid to LK Electronics Inc. Korea holding the same to be in the nature of capital expenditure - HELD THAT:- This Tribunal in assessee s own case in Assessment Year 2008-09 [ 2019 (1) TMI 1567 - ITAT DELHI ] AND Assessment Year 2009-10 [ 2019 (2) TMI 2062 - ITAT DELHI] direct the Assessing Officer to treat royalty payment as revenue expenditure. Disallowance of export commission paid to LG Electronics Inc. Korea holding the same to be diversion of income - HELD THAT:- Respectfully following the findings of the co-ordinate bench [ 2019 (2) TMI 2062 - ITAT DELHI] we restore this matter to the file of the Assessing Officer. The Assessing Officer is directed to consider the additional evidences and decide the same afresh after giving reasonable opportunity of being heard to the assessee. Restriction of the deduction claimed u/s 80JJAA - HELD THAT:- This Tribunal in [ 2019 (1) TMI 1567 - ITAT DELHI ] and in Assessment Year 20009-10 followed in[ 2019 (2) TMI 2062 - ITAT DELHI] has decided this issue as relying on Alom Extrusions Ltd [ 2009 (11) TMI 27 - SUPREME COURT ] held where a proviso in section is inserted to remedy unintended consequences to make section workable the proviso which supplies obvious omission therein in required to be read retrospectively in operation particularly to give effect to section as a whole. Same view was followed by the Hon'ble Supreme Court in the case of CIT Vs. Kolkata Export Company [ 2018 (5) TMI 356 - SUPREME COURT ]- we direct the Assessing Officer to allow claim of deduction u/s 80JJAA of the Act as claimed by the assessee.
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Customs
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2023 (1) TMI 1109
Recovery of Validity of Audit Consultative Letter issued as per the provisions of Section 28 of the Customs Act, 1962 - pre-notice consultation - import of Horse Feed - exemption from payment of IGST Duty? - HELD THAT:- As no final decision has been taken till date by the respondent as to whether a notice contemplated under Section 28(1) of the Customs Act, 1962 has to be issued to the petitioner or not with regard to the recovery of duties not levied or not paid or short levied or short paid or erroneously refunded, the question of entertaining this writ petition, at this stage, will not arise as the petitioner has approached this Court pre-maturely. However, the respondent will have to necessarily give due consideration on merits and in accordance with law to the contentions raised by the petitioner in this writ petition that the horse feed is exempted from payment of IGST Duty. This writ petition is disposed of on the ground that the writ petition has been filed pre-maturely.
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2023 (1) TMI 1108
Withholding of final reward - petitioner's claim as a legal heir - establishment of identity - HELD THAT:- It is not in dispute that the information was received which led to the successful seizure of the smuggled goods. The Informer for this seizure was therefore entitled to final reward. It is not the case of the Respondents that there is some other person entitled to final reward. Most importantly, two interim rewards have been released. They are obviously released after establishing the identity of the Informer. No explanation is being offered on this count. Except for disputing the Informer's identity, the Respondents have not positively stated that the interim reward was released to some other person and not the Petitioner's husband- Chandrakant. The Petitioner has given a reasonable explanation for variances in the signature of her husband on the receipt and subsequent signature that her husband had lost his eyesight due to an accident. Once the deponent has accepted that reward at the interim stage was paid to Chandrakant and that the Petitioner has established that she is the legal heir of Chandrakant, then withholding the final reward is entirely arbitrary. Even keeping aside the above two statements made in the affidavit, considering the totality of the circumstances and that nothing is placed before us that there was some other Informer and not Chandrakant who received the interim reward in respect of the concerned case, it is found that the claim of the Petitioner could not have been rejected on the ground of identity. The policy under the Circular of 2015, postulates rewards for information. Clause 7.2, which postulates the time limit to sanction the final reward, emphasizes that it is desirable that immediately upon conclusion of the adjudication, the final reward be released as an intensive to improve compliance. Though there is no legal right to demand a reward, as stated in the policy, the rejection must not be arbitrary, and the approach should not be such that it discourages the Informers from coming forward. Ultimately, the objective of offering a reward to the Informer is to aid the department in taking measures to safeguard the public exchequer - Having concluded that the Petitioner s claim is meritorious, we find that this is a fit case where the interference of the Court is necessary. In the facts of this case, non-intervention by us in the writ jurisdiction would amount to a failure of justice. The Respondents will treat the claim of the Petitioner's husband Chandrakant as eligible for the grant of final reward in respect of the concerned case and process the Petitioner s claim as his legal heir - Application disposed off.
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2023 (1) TMI 1107
Refund of Special Additional Duty of Customs (SAD) - Can the refund can be claimed after the period prescribed by the Notification No.102/2007-Cus. dated 14.09.2007? - HELD THAT:- It is the first principle of law that justice must not only be done but must also be seen to be done. It is clear from the impugned order that the appellant has not been heard, for whatever reason, and without following the principle of natural justice, the appeal has been decided against the appellant. There are force in the submissions of learned Counsel that this ground itself is sufficient for setting aside the impugned order and therefore without going into the merits of the matter, the case is remanded to the 1st Appellate Authority to decide the Appeal afresh after giving due notice to the appellant for personal hearing and also giving sufficient opportunity of hearing to the appellant. The appeal is accordingly, allowed by way of remand to the Commissioner of Customs (Appeals).
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Insolvency & Bankruptcy
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2023 (1) TMI 1106
Recall of order - power to review - CIRP initiated - Corporate Debtor failed to make repayment of its dues - Operational Creditors - HELD THAT:- It is clear that the Corporate Debtor had appeared on both the dates and that the copy of the Petition and the supporting documents were served on them on 02.11.2022, hence the Adjudicating Authority had closed the opportunity to file the Counter; the matter was posted For Hearing on 05.12.2022 and thereafter on 05.01.2023, the CIRP was initiated. When the matter came up For Hearing on 05.12.2022, the Corporate Debtor could have been present and submitted his arguments. Though, his right to file the Counter was closed, he was not set Ex Parte as on the date 21.11.2022 and therefore he could have appeared on 05.12.2022 when the matter was posted For Final Hearing and having been present as on 11.12.2022, the Counsel was very much aware that the matter was posted For Hearing on 05.12.2022. Though, the Adjudicating Authority does not have the Power of Review it can, based on the facts and circumstances of the case, Recall the Order - In the instant case, this Tribunal, sitting in Appeal, does not find any tangible / substantial grounds to interfere with the impugned order. The Appellant, has challenged the Admission Order, dated 05.01.2023 on merits, on the ground that there was an Arbitration Clause, in the C F Agreement, and that the Respondent, ought to have invoked this Clause. There is no embargo on the Operational Creditor, to file a Section 9 Petition, under I B Code, 2016, even if there is an Arbitration Clause, in the Agreement. The scope and objective of the Code is Resolution, and not a Recovery Mode / Forum - In the instant case, the Adjudicating Authority, based on the material on record, had arrived at a conclusion that there were recurring defaults on behalf of the Corporate Debtor and that the Operational Creditor, has requested for full and final payment of the outstanding dues. This Tribunal, does not find any illegality or infirmity, in the Order dated 05.01.2023, passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench I), in petition, and this Appeal is dismissed.
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FEMA
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2023 (1) TMI 1105
Foreign investment in India - certain procedural or technical contraventions under FEMA - Compounding of offense - Online i.e., website-based and mobile application games constitute gambling as understood in law in this country - delays in the filings of the prescribed forms and reporting of the inward remittances and also delays in the allotment of shares - Petitioner received foreign remittances at diverse periods between 2006 and 2012 and it issued equity instruments i.e., shares, to certain non-resident investors, the Petitioner had committed certain procedural or technical contraventions under FEMA - whether, for the relevant period, it can be said that the business activity of the Petitioner was illicit, prohibited by law, or illegal such that it would be disentitled to receive foreign investment at all? - HELD THAT:- actual nature of the activity. As we have seen the relevant period is 2006 to 2012. What the DPIIT seems to have done is to have visited the Petitioner s website at rummycircle.com and found that there was an offering called Ultimate Teen Patti and another called Call it Right. The Affidavit clearly says that these were noted on the Petitioner s website. The DPIIT asked for no explanation from the Petitioner. It sought no clarification. It sought no explanation as to the nature of these games or offerings. There is nothing to indicate that the DPIIT, in response to the Petitioner s applications, called on the Petitioner to explain when these online games were first offered, how they were conducted, what they involved or any other material particulars. The Affidavit and the letter to the ED from the DPIIT clearly show that the DPIIT proceeded only on the basis of the name, i.e., the label attached to the name; in another manner of speaking, because Teen Patti , therefore gambling. Predominant element of the activity - skill or chance - determines the character of the game. But to constitute gambling , both conditions must be met: (i) it must be predominantly a game of chance, and (ii) it must be played for reward. DPIIT does not show on Affidavit or otherwise that there is any element of reward in either the so-called Ultimate Teen Patti or the Call it Right game. It does not show that it asked for such a clarification at all. Terms of Service on the Petitioner s website, quoted above, that there was no reward at all. We have therefore a situation where there is a categorical statement made by the Petitioner on its own that none of its activities involved gambling , as understood in Indian jurisprudence, that is a game of chance with no element of skill, for any gain or reward. If we view it like this, and given the material, we do not see any other way to it, the mere positioning of these two games (that too after 2012) on the Petitioner s website cannot render illicit or illegal any activity on the Petitioner s website or mobile platforms, let alone for the earlier reporting period in question. This is the factual and legal position as it emerges from the record before us. We must clarify that whether it is for a past period or for an ongoing or future period, it is undoubtedly necessary that the Petitioner must remain clear of any illicit or prohibited gambling activity, whatever the platform. If this is illegal in India, it does not become legitimate merely because it is online or because foreign investors have put money into it. We have the statement made across the Bar and which we will of course have to accept as an undertaking to the Court that at no point will the Petitioner s activities involve gambling, so long as it is prohibited by our law. The mere fact that there is a game of chance on the website does not in itself make the activity gambling unless there is an accompanying reward or promise of a reward. It is also clear that for any further foreign investments or FDI equity allotments that the Petitioner makes, it will necessarily have to comply with all applicable statutes. It may indeed have to be subjected to scrutiny yet again. We do not exempt the Petitioner from any of these requirements. We also make direct the RBI in view of our judgment today to consider the application by the Petitioner for compounding the non-compliances for the period 2006 to 2012 noted above. At this stage, Mr Shenoy states that a fresh application will be required. The Petitioner will submit that within two weeks. We proceed on the basis that this application will not be confronted with a problem of delay in filing. If there is any such delay, we hereby condone it. The Fresh application will be decided by the RBI as expeditiously as possible and preferably in four weeks from the date of application. The only reason for specifying a period is that the compounding pertains to 2006 to 2012 and the Petition itself has been pending before us for much too long.
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Service Tax
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2023 (1) TMI 1104
Classification of Services - Site Formation and Clearance, Excavation and Earthmoving and Demolition Service - activity Dismantle is different from the activity demolition or not - HELD THAT:- The appellant had merely carried out dismantling activity. This activity, in no way, can be considered as a taxable service under the category of site formation and clearance, excavation and earthmoving and demolition service inasmuch as the work assigned under the work order for do not attract any of the clauses itemized in the definition provided under Section 65(97a) ibid. Thus, the activities undertaken by the appellant will not fall under the taxing net for levy of service tax under the disputed taxable service. There is merit in the finding of the Ld. Commissioner. Therefore, the work undertaken by the respondent cannot be termed as an activity of Site formation and clearance, excavation earthmoving demolition . Appeal dismissed - decided against Revenue.
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Central Excise
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2023 (1) TMI 1103
Levy of Central Excise Duty - Compounded levy scheme - breach of rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- The provisions of rule 8 of Central Excise Rules, 2002, as prevalent in September and October 2008, had been breached and that the appellant herein upon being aware of the breach had not made good the deficiency immediately but awaited the report of audit in 2009. On the surface, it would appear that the discharge of duty liability in November 2009 did not suffice to restore the privilege of clearance of goods by debit of CENVAT credit account as the appellant continued to be in breach for the period till then. It is not recorded anywhere that the debit had ceased at any stage before surrender of the registration certificate in December 2010. We are inclined to take note of the developments between the takeover of the undertaking in November 2008 leading to subsequent closure including addition in the account current with no record of the same having been refunded to appellant thereafter. It would also appear that the plea of the appellant on incorrectness of demand under section 11A of Central Excise Act, 1944 beyond the normal period as well as the drawing of attention of central excise authorities to the deficiency in the returns had been ignored as is evident from the finding of the adjudicating authority that the memorandum of understanding (MoU) between the erstwhile management and the appellant, which was relevant, had not been furnished. To remedy these deficiencies, it would be necessary for the adjudicating authority to take stock of these facts and circumstances noted supra, to enable which it would be appropriate to set aside the impugned order and remand the matter back to the adjudicating authority. Appeal disposed off.
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CST, VAT & Sales Tax
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2023 (1) TMI 1102
Principles of Natural Justice (Audi Alteram Partem) - rectification of mistake - whether in all cases where rectification of the Assessment Order is sought for under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 is there a need for the Assessing Officer to provide an opportunity of hearing to the Dealer? - HELD THAT:- In the case of AUTOMOTIVE TYRE MANUFACTURERS ASSOCIATION VERSUS THE DESIGNATED AUTHORITY ORS. [ 2011 (1) TMI 7 - SUPREME COURT ], the 1st proviso to Section 84(1) of the Act, which makes it clear that only in cases, where the rectification which has an effect of enhancing the assessment or penalty, there is a statutory requirement for granting reasonable opportunity of hearing to the Dealer and not when the assessment has been confirmed. The application of the Principle of Audi Alteram Partem is a general principle, which will not apply to the cases, where there is no enhancement of assessment or penalty in an order passed under Section 84 of the Act is passed. In the case on hand, the assessment or penalty has not been enhanced by the 1st respondent but the 1st respondent has only confirmed the earlier Assessment Order passed against the petitioner in the year 2016. Therefore, there is no necessity for the 1st respondent to afford an opportunity of hearing to the petitioner. This Court does not find any infirmity in the impugned order - petition dismissed.
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2023 (1) TMI 1101
Disallowance of Input Tax Credit - failure to produce the relevant documents along with tax invoices despite notices - Section 100A(2) of the Delhi Value Added Tax Act, 2004 - HELD THAT:- According to the learned counsel for the appellant, provisions of Section 100A(2) of the Delhi Value Added Tax Act, 2004 do not support the stand of the respondent. He submits that although the electronic communications may not be required to be personally signed, in terms of Section 100A(2), the said communications must necessarily be authenticated by the digital signature of the concerned authority - The learned Tribunal did not decide the controversy, but remanded the matter to the learned OHA. This was, essentially, for the reason that one of the contentions advanced on behalf of the appellant was that the learned OHA had not put the issue of limitation to the appellant and therefore, the appellant did not have the opportunity to respond to the same. There are no infirmity with the decision of the Tribunal in remanding the matter to the learned OHA. It would be apposite for the learned OHA, in the first instance, to decide the contentious issues, including the issue whether the notices were required to be digitally signed as contended by the petitioner - appeal dismissed.
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2023 (1) TMI 1100
Maintainability of petition - appeal provided against the reassessment order or not - Validity of re-assessment order - challenge on the ground of the same being invalid due to non-availment of an opportunity and the final hearing not being given despite the acknowledgment of the lock down due to the COVID-19 virus - whether the circumstances existed at the relevant point of time had actually made any breach of principle of natural justice? HELD THAT:- Noticing the fact that the officer concerned had the statutory time limit to meet with as the same was expiring on 31.03.2020, although later on the period of limitation had also been extended by the Apex Court in its various orders, but, the officer can be given the benefit that at the time when he actually passed this order on 25.03.2020, he may not be aware of such developments. In fact, no one was aware of the seriousness of the entire issue. And, yet, the fact remains that the officer concerned, having taken a note of the fact that the request has been made by the petitioner to the Rajasthan Authority for issuance of Form- F , he has chosen not to accommodate the petitioner nor was he given an opportunity to tender the Form-F nor any opportunity of hearing was accorded. Therefore, this petition under Article 226 of the Constitution of India can be entertained bearing in mind the fact that this is a clear violation of principle of natural justice. Availability of alternative remedy in the form of appeal this stage would not have served the purpose for this being a violation of the principle of natural justice. It was an unprecedented situation where people had suffered, no one was sure as what is going to be the future. In such circumstances, when peoples were struggling to save the human lives, the request for the petitioner to get the Form-F from the concerned authority was a mere impossibility, the opportunity shall need to be availed. The reassessment order dated 25.03.2020 and the final notice of assessment are quashed and set aside with all consequential reliefs. The matter shall be taken up from the stage where it was left. The officer concerned shall avail an opportunity of hearing of the petitioner. The petitioner is permitted to file Form- F or any other documents within a period of one week before the officer concerned, who will continue to hear the reassessment proceedings - this petition is allowed.
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