Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 31, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Highlights / Catch Notes
GST
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Cancellation of GST registration of the Petitioner with retrospective effect - The High court noted that the Show Cause Notice and the order of cancellation did not specify cogent reasons for the retrospective cancellation of registration. The court observed that under Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel GST registration from a retrospective date if deemed fit, but such satisfaction must be based on objective criteria and cannot be subjective.
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Demand u/s 74 - violation of principles of natural justice - The High court noted that Section 75(4) of the CGST Act mandates that an opportunity for hearing must be granted either when a specific request is received in writing from a person chargeable with tax or when any adverse decision is contemplated against such a person. The court found that even if the petitioners did not specifically request a personal hearing, they were entitled to one since an adverse decision was contemplated against them.
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Maintainability of appeal before the appellate authority - time limitation - The High Court held that, appellate authorities under such statutes are not vested with the jurisdiction to condone delays beyond the permissible statutory period. It was also noted that the CGST Act is a special statute and a self-contained code by itself, which impliedly excludes the application of the Limitation Act, 1963. Therefore, Section 5 of the Limitation Act, which provides for the condonation of delay, does not apply to Section 107 of the CGST Act.
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Challenging the FIR - Recovery of goods without payment of Goods and Services Tax - involvement of GST officials and other government officials who were running racket for GST - cheating - criminal conspiracy - The High court concluded that the petition was premature and could not disrupt the ongoing investigation, particularly given the recovery of diaries suggesting bribe payments. Therefore, the petition was dismissed.
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Claim of interest on delayed refund - The claim was rejected on the ground that the amount was recredited to the credit ledger - High court found this contention incorrect since the petitioner was eligible for an SGST refund, indicating that the delay in recrediting was unreasonable. Section 56 of the CGST Act entitles a taxpayer to interest on delayed refunds if not processed within sixty days of the application. - Interest @6% to be granted.
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Refund of IGST on Ocean Freight - The High court quashed the impugned Deficiency Memo Form-RFD-03 related to the applicability of the Supreme Court decision and directed the authorities to process the refund application in accordance with the law.
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Refund of accumulated input tax credit - inverted duty (tax) structure - LPG supplies to domestic customers after bottling in cylinders - The High Court observed that, the stipulation in the Circular, denying refund of accumulated ITC when the input and output supplies are the same, was contrary to Section 54 of the CGST Act. - The court allowed the writ petitions, entitling the petitioner to a refund of the credit accumulated due to a higher tax rate on input supplies for bottling LPG for domestic supply.
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Cancellation of petitioner’s GST registration - fraudulent purchase - The High Court quashed the Show Cause notice (SCN) which proposed to cancel the petitioner's GST registration on the ground that the SCN lacked clear allegations and reasons, failed to meet the requisite standard, and did not specify a date or time for a personal hearing, denying the petitioner an opportunity to be heard.
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Seeking to set aside Summary of the Show Cause Notice - The High court quashed and set aside the Summary of Show Cause Notice in Form GSTR DRC-01 - This decision was based on the grounds that the proper Show Cause Notice was not issued to the petitioner, violating principles of natural justice, and that no opportunity for a hearing was provided before imposing the demand. The court allows the respondents to initiate fresh proceedings in accordance with the law. - HC
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Classification of treated water and exemption from GSt - Water recovered out of the effluent treatment process nothing but an ordinary water which is suitable for reuse by the dyeing and bleaching units as a solvent and as a washing, rinsing medium. - Treated water, which does not possess any special characteristics or specialized uses (like those in aerated drinks, medicinal uses, automotive cooling systems, etc.), falls under the category of ordinary water. Consequently, it is exempt from GST under the specified notification. - AAR
Income Tax
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Levy of penalty - debatable issue - As per AO assessee treated the revenue receipt of subsidy as capital receipt - As per High Court no error in the findings recorded by Tribunal while setting aside penalty - With the Supreme Court dismissing the Special Leave Petition (SLP) filed by the Revenue against the order, the decision of the lower courts stands affirmed.
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Revision u/s 263 - Taxability of income disclosed in survey proceedings u/s 133A at Higher Rate of tax u/s 115BBE - ITAT quashed order treating the undisclosed income as business income and not under the higher tax rate provisions of Section 115BBE. - The High court agreed with the Tribunal's finding that sufficient inquiry was made and the income was rightly treated as business income, thus, upholding the Tribunal's decision.
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Bogus sundry creditors - Whether CIT(A) had clearly violated the provisions of Rule 46A of the Income-tax Rules, 1962, while admitting additional evidence? - The High court noted that the assessee, being an illiterate person, could not appear before the Assessing Officer, and the CIT(A) rightly permitted the assessee to produce additional evidence in accordance with Rule 46A of the Income Tax Rules, 1962. The court emphasized that appellate proceedings are a continuation of assessment proceedings, and in this context, the CIT(A) acted correctly in allowing the assessee to produce the evidence.
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Validity of final assessment order u/s 144B - petitioner request for adjournment was ignored - The High court remanded the matter back to the Assessing Officer to decide afresh from the stage of the draft assessment order - This decision is made in light of a precedent that emphasizes the right of an assessee to respond to a draft assessment order and the expectation of a lenient approach by the Income Tax Department, particularly during the challenging times of the Covid-19 pandemic.
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Exemption u/s 11 / 10(23C) - delayed submission of Form 10B - The High court upheld the decision of the ITAT, which agreed with the CIT (Appeals) that furnishing an audit report in Form No. 10B along with the return of income is a procedural requirement. The court differentiated this case from the Supreme Court's decision in M/s. Wipro Ltd, stating that the circumstances of the present case involve Section 11 read with Section 12A(1)(b) of the Act, which is distinct from the conditions un/s 10B(8) discussed in Wipro's case.
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Revision u/s 263 - addition on account of notional interest @10% on deposit - The High court upheld the concurrent findings of the ITAT and the CIT(A) that no notional interest income accrued to the assessee, after its amalgamation, as per the loan agreement clause. - This decision was based on the principle that income cannot be taxed on a purely notional basis; it must either accrue as per agreement terms or be received by the assessee.
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Reopening of assessment u/s 147 - validity of order u/s 148A(d) without granting time to the petitioner to file reply to the notice u/s 148A(b) - The matter is remanded back to the respondent-Assessing Officer to provide an opportunity of hearing to the petitioner as required under Section 148A(b) of the Act. - The High court emphasized the need for the assessee to be given a chance to respond to the show-cause notice, ensuring compliance with procedural fairness in the reassessment proceedings.
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Addition u/s 68 - accommodation entries receipts - onus to prove - The tribunal held that, when an assessee provides all necessary documents and no adverse findings are noted, the assessee has discharged their onus. The tribunal referenced several case laws supporting this principle, including the principle that the source of the source of investment is not required to be explained. The addition for commission was also deleted as the main addition u/s 68 was removed.
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Validity of converting the “limited scrutiny” into “complete scrutiny” - The tribunal found substance in the claim of the AR that the A.O had clearly exceeded his jurisdiction by making disallowances/additions which never formed the basis for selection of the case of the assessee company for “limited scrutiny”. - Following the order the of the Co-ordinate Bench of the Tribunal, Raipur in the case of Aryadeep Complex (P) Ltd., the assessment order u/s 143(3) quashed.
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Computation of book profit u/s 115JB - MAT - refund claim of excise duty (CENVAT) being a capital receipt - The Tribunal allowed the claim, recognizing the refund as a capital receipt not forming part of book profit, in line with decisions in the assessee's own case for AY 2010-11 and the Calcutta High Court’s decision in PCIT vs. Ankit Metal and Power Ltd.
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Revision u/s 263 - Disallowance u/s 40(a)(ia) on non deduction of TDS - The Tribunal found that the Principal Commissioner had incorrectly invoked section 263 as the payments and Tax Deducted at Source (TDS) were related to the subsequent financial year and there was no revenue implication or prejudice to the Revenue.
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Powers of CIT(A) u/s 251 - Discovering new sources of income - ITAT found that the disallowances made by the CIT(Appeals) regarding travelling expenses, staff welfare expenses, and interest expenses were not sustainable. This decision was based on the principles of natural justice and the limitations of the Commissioner's authority u/s 251 - AT
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Validity of Adjustment done by the CPC u/s 143 (1)(a)(v) - Deduction u/s 80P disallowed - Prior to amendment in deduction u/s 143(1)(a)(v) by Finance Act on 01.04.2021, the disallowance of deduction was limited to sections 10AA, 80IA, 80IAB, 80IB, 80IC, 80ID and 80IE. Thus, the deduction claimed u/s 80P was not mentioned there. - The Tribunal found that the CPC's adjustment was not permissible.
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Revision u/s 263 - large share premium received - valuation of shares and the applicability of Section 56(2)(viib) - The Tribunal found that the PCIT's order was erroneous as it did not properly consider the assessee's provided documentation and valuation report under Rule 11UA of the Income Tax Rules. The Tribunal concluded that the original assessment order by the Assessing Officer (AO) was not erroneous, and thus, the exercise of power u/s 263 by the PCIT was incorrect.
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Validity of assessment order passed u/s 143(3) - Notice issued u/s 143(2) dated 29.03.2010 is avaialable on record. - The Tribunal found that the only notice issued under this section was dated 21.10.2010, which was beyond the statutory time limit, thus rendering the assessment order illegal and bad in law due to being time-barred. - AT
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Clubbing of income of Non-resident and Permanent Establishment (PE) - Levy of surcharge at 5% as against assessee’s claim of 2% - The royalty and Fee for Technical Services (FTS) income of the assessee, a non-resident corporate entity, should not be clubbed with the income of the Permanent Establishment for the purpose of surcharge under domestic law, as it is governed under the India-Germany Double Taxation Avoidance Agreement (DTAA). - The DTAA specifies a maximum tax rate of 10% on such income, and the imposition of a higher surcharge would violate this agreement. - AT
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Exemption u/s 11 - assessment of trust - accumulation of income - The AO and CIT(A) disallowed this accumulation, arguing that it was not for a specific purpose and was merely a reiteration of the trust's broad objectives. - The tribunal held that, the accumulation of income by the trust for its stated purposes was in line with the objectives of the trust and thus allowed the accumulation under section 11(2) of the Act.
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Estimation of net profits - addition on account of enhancement of net profit as the assessee has shown drastically low net profit as compared to preceding previous years - The AO’s rejection of books of accounts was unfounded, lacking specific discrepancies. - The assessee justified the net profit decline with audited accounts showing increased financial costs and foreign exchange losses. - AT
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Addition u/s 69A - unexplained jewellery - The Tribunal found that the addition made by the AO was not justified, especially in light of the appellant's consistent income and status. - While assessing unexplained jewelry, the AO must consider the assessee's income, status, and cultural norms, and that mere possession of jewelry beyond a certain limit doesn't necessarily imply undisclosed income. - AT
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Validity of Notice issued u/s 143(2) - Defective return - Removal of defect beyond 15 days u/s 139(9) - AO should have treated the return as non-est when the assessee has not removed the defect within prescribed time of 15 days from the date of issue of the notice. The Assessing Officer has no leverage to extend the time and drag it till the limitation of time to issue notice u/s. 143(2) expires. The notice issued in this case got time barred and the assessment is treated as nullity. - AT
Customs
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Refund claim - principles of unjust enrichment - There is no evidence of unjust enrichment as the dredger and its parts were still in use and not sold or transferred, negating the possibility of passing the duty burden to consumers. The substantial questions of law were answered against the appellant revenue. - HC
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Classification of imported goods - Gas chromatograph used for monitoring dissolved gas in Mineral Oil - classification depends on the principal function of the product - The Tribunal concluded that the Gas Chromatograph does not analyze combustible or burnt gases, but monitors gases in mineral oil. This function aligns with the specifications under CTSH 9027 20 00 for Chromatographs, rather than CTSH 9027 10 00 for Gas or Smoke Analysis Apparatus. - AT
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Classification and assessment of oil contained in the bunker tanks, both inside and outside the engine room of a vessel imported for breaking up - Tribunal had allowed the appeals, ruling that oil in bunker tanks inside the engine room of a vessel imported for breaking up should be classified along with the vessel under CTH 8908, and directed further assessment for oil in tanks outside the engine room. - Supreme Court has dismissed the revenue's appeal - Consequently, the legal position as determined by the Tribunal stands affirmed.
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Seeking the release of detained imported palmolein oil on the ground that same is without issuing an order, contrary to the provisions of Section 110 of the Customs Act, 1962. - The Court dismissed the petition for the release of detained palmolein oil, citing a lack of evidence and suggesting that the petition might be an attempt to obstruct the ongoing investigation. - HC
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Classification of imported goods - Tower Flanges - The Tribunal found that the flanges are design-specific for use in erecting Wind Mill Towers and should be classified under heading 8503 as parts of WOEG. - It was held that the flanges are eligible for exemption under Notification No. 12/2012-CE. - the Tribunal dismissed the Revenue's appeal - AT
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Classification of imported goods - Sensor Bag Assembly - The Tribunal found that the goods are not classifiable under CTI 87089500, as the HSN Explanatory Notes, which are a strong persuasive guide, exclude remote sensors or electronic controllers from this heading. - The Tribunal held that the burden of proving the correct classification is on the Department, which it failed to discharge.- AT
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Refusal for Renewal of Customs Broker’s Licence - The Tribunal noted serious allegations against the appellant, including the suppression of facts regarding the original license, allegations of forgery, and operating the license without a Customs authorized signatory for three years. - The appellant failed to provide reasonable explanations for these allegations. - The Commissioner's decision to not renew the License was based on adverse findings against the appellant, as authorized by the CBLR. - AT
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Initiation of Contempt proceeding against the concerned Commissioner - tendering unconditional apology for delay in implementing the Final Order dated 12.09.2019 of this Hon’ble Tribunal - the CESTAT accepted the Revenue's apology and actions taken for compliance, while emphasizing the need for government authorities to promptly implement Tribunal orders and seek extensions in a timely manner if unable to comply. - AT
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Classification of goods sought to be imported - Interactive Large Format Display - The Authority noted that the essential function of the goods, considering their capabilities, meets the requirement under Chapter Note 6(A) of Chapter 84 for an ADP machine. The ruling focused on the 'Interactive' aspect of the goods, which implies multiple functionalities beyond mere display. - AAR
Indian Laws
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Grant of default bail under Section 167(2) Cr.P.C. - The Supreme Court allowed the appeal, setting aside the High Court's and Special Court's orders granting default bail to the accused in a case involving Dewan Housing Finance Corporation Ltd. (DHFL). The Court ruled that the respondents were not entitled to statutory default bail under Section 167(2) Cr.P.C., as the chargesheet was filed within the prescribed time and cognizance of the offense was taken by the Special Court. - SC
IBC
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The NCLT's finding that the trademark transaction was preferential and undervalued under Sections 43 and 45 of the IBC was overturned. The Resolution Professional (RP) had not filed an application asserting such claims, and there was no forensic audit evidence of preferential, undervalued, or fraudulent transactions. - The Appellant's claim to the trademark was upheld based on the supplemental agreement, and the NCLT's ruling against it was set aside. - AT
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Seeking withdrawal of CIRP - The tribunal noted the appellant's repeated failures in meeting commitments to the operational creditor. - It highlighted that the HDFC Bank's decision to oppose the CIRP withdrawal was based on commercial wisdom, considering the substantial financial loss involved. - The threshold for CIRP withdrawal under Section 12A – approval from 90% of the CoC – was not met, as HDFC Bank, holding 19.94% of the voting share, opposed the withdrawal. - AT
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CIRP - Rejection of Application seeking intervention - Locus to file application - infringement of rights - Approval of resolution plan (offer) of another party - The tribunal decided that the appellant, having been a participant in the CIRP process and having submitted offers, does indeed have the locus to file the intervention application. It observed that the NCLT's order examining the appellant’s contentions on merits while also stating they lacked locus was contradictory. - However, the tribunal permits the appellant to file an application with their objections/affidavits before the NCLT - AT
Service Tax
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Tribunal dismissed the Revenue-Department's appeal against the Commissioner of CGST & Central Excise, Mumbai's decision. - The basis for the demand, which was the variance between Service Tax-3 Returns and Income Tax Returns, was deemed flawed due to inconsistencies, including mismatched financial year comparisons and incorrect service tax rate applications. - AT
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Adjustment of advance of service tax was paid but had not been shown in the ST-3 Return as advances and not been adjusted subsequently - Under Rule 6 of the Service Tax Rules, the advance payment of Service Tax can be adjusted against subsequent Service Tax dues. The appellant had discharged the duty liability but failed to record the same in the ST-3 Returns due to inadequate understanding of the law. - Adjustment allowed - Only the late filing fee/ penalty u/s 77(2) confirmed. - AT
Central Excise
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Levy of Cess under Clean Energy Cess’ 2010 - The court held that the revenue could levy Clean Energy Cess on coal produced and lying in stock as of 30th June 2017, as per Section 83(3) of the Finance Act, 2010. This levy was valid despite the repeal of Clean Energy Cess by the GST Compensation Cess under the Goods & Services (Compensation to States) Act, 2017, since the taxable event (production of coal) occurred when the cess was in force. - However, demand confirmed for normal period of limitation only - HC
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Levy of penalty u/r 26 on the Director of the company - Allegation of Clandestine removal of goods - The Tribunal observed that the statement of an employee, admitting to supplying goods, did not specify quantities, values, or payments, making it insufficient as evidence. - Further, The adjudicating authority did not cross-examine the employee, as required under Section 9 (d) of the Central Excise Act, 1944. Without cross-examination, the employee's statement could not be relied upon as evidence. - No penalty - AT
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Clandestine removal - suppression of production, under valuation and clandestine clearance of sponge iron - The Tribunal's decision primarily focused on the admissibility and reliability of various documents and records in confirming the demand for duty evasion by the appellant. - AT
VAT
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Maintainability of Revision application before GVAT Tribunal - the Deputy Commissioner, in cancelling the petitioner's registration with retrospective effect, had acted under delegated powers from the Commissioner as per Section 75(1)(a) of the VAT Act. Therefore, an appeal under Section 73 was not applicable, but a revision before the Tribunal under Section 75(1)(b) was. - HC
Case Laws:
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GST
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2024 (1) TMI 1209
Cancellation of GST registration of the Petitioner with retrospective effect - non-filing of returns for a continuous period of six months - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The order of cancellation is modified to the extent that the same shall operate with effect from 30.06.2020, i.e., the date on which the petitioner discontinued the business - Petition disposed off.
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2024 (1) TMI 1208
Demand for excess Input Tax Credit (ITC) along with interest and penalty u/s 74 - Reversal of excess Input Tax Credit availed - Order passed without considering the submissions of petitioner and also without providing an opportunity of hearing to the petitioner - violation of principles of natural justice - HELD THAT:- In the instant case whether or not the petitioners have specifically asked for personal hearing, fact remains that the adverse decision was contemplated against the petitioners. In that event, it was obligatory and mandatory on the part of respondents to provide the petitioners opportunity of personal hearing. Admittedly, no opportunity of personal hearing has been provided in both the matters. Resultantly, the decision making process adopted by the respondents is vitiated and runs contrary to the principles of natural justice and statutory requirement of sub-section 4 of Section 75 of GST Act. As a result, the impugned proceedings after the stage of reply of show cause notices, in both the cases are set-aside. The respondents shall provide opportunity of hearing to the petitioners in both the cases by some other officer than the officer who has issued the show cause notice as per M/S ULTRATECH CEMENT LIMITED HAVING OFFICE AT UNIT VIKRAM CEMENT WORKS THRU. ITS AUTHORIZED REPRESENTATIVE MR. VINOD KUMAR SONI S/O SHRI OM PRAKASH VERSUS UNION OF INDIA, STATE OF MADHYA PRADESH, DEPUTY COMMISSIONER OF STATE TAX UJJAIN-2 [ 2023 (1) TMI 1027 - MADHYA PRADESH HIGH COURT] . Both the writ petitions are disposed of.
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2024 (1) TMI 1207
Maintainability of appeal before the appellate authority - time limitation - appeal filed by the petitioner dismissed on the ground that the same was time barred as it was filed beyond the period of four months - HELD THAT:- Perusal of the record shows that the appeal was filed beyond time and when there is no dispute with regard to filing of the appeal beyond the time prescribed, this Court under the extraordinary jurisdiction cannot interfere with the appellate authority's order as the application of Limitation Act, 1963 does not apply to Section 107 of the Act. The Central Goods and Services Act is a special statute and a self-contained code by itself. Section 107 of the Act has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite law that Section 5 of the Limitation Act, 1963 will apply only if it is extended to the special statute. Section 107 of the Act specifically provides for the limitation and in the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. Accordingly, one cannot apply Section 5 of the Limitation Act, 1963 to the aforesaid provision. Thus, no interference is required in this petition and the same is, accordingly, dismissed.
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2024 (1) TMI 1206
Challenging the FIR - Recovery of goods without payment of Goods and Services Tax - involvement of GST officials and other government officials who were running racket for GST - cheating - criminal conspiracy - HELD THAT:- When the allegations prima facie disclose a cognizable offence, then the police is under a statutory obligation to investigate the same and concluding the investigation by either launching prosecution or by filing a closure report. In between the FIR can only be quashed if investigation is almost completed on all important aspects and remaining investigation will not unfold any significant fact or not likely to unearth any evidence which is likely to change the outcome of the FIR itself. Otherwise the FIR can be quashed and criminal proceedings can be disrupted under Section 482 CrPC only when the investigation is complete in all material particulars. In this case, it has been brought to the notice by the State that four diaries were recovered in which there was a mentioning of payment of bribe to the government officials, who in-turn would lead to petitioner s transporting the goods without payment of taxes. Thus, whether it is a case only of Section 122 of CGST Act 2017 or Section 420 120B IPC and/or under PC Act, it is the matter of investigation which is continuing. If this Court disrupts criminal proceedings at this stage, it would amount to interference in the powers of police to investigate and also it would be violative of statutory provisions of CrPC where police has been authorized to conduct investigation within the reasonable time till they come out with either closure report or a report under Section 173 CrPC. The present petition is premature and this Court cannot scuttle and disrupt the investigation by quashing the FIR for the reason of recovery of diaries pointing towards payment of bribe. Be that as it may, the petitioner shall be at liberty to file a fresh petition for quashing of FIR when he receives a report under Section 173 CrPC., provided the same is filed against the petitioner. Petition dismissed.
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2024 (1) TMI 1205
Claim of interest on delayed refund - The claim was rejected on the ground that the amount was recredited to the credit ledger - HELD THAT:- From a bare perusal of Section 56 of the CGST Act, it is evident that if any eligible tax amount ordered to be refunded under subsection (5) of section 54 is not refunded within sixty (60) days from the date of receipt of application, interest at such rate not exceeding six per cent is to be given, as may be specified in the notification to be issued by the Government on the recommendations of the Council. The petitioner had made application for refund on 17.1.2018 and refund has been granted/recredited vide order dated 10.8.2022. As per the provisions of Section 56, the petitioner is entitled for interest @ 6% on the amount ordered to be refunded from the date of expiry of sixty (60) days from the date of the application for refund, i.e. 17.1.2018, till the date of refund/credit to petitioner's credit ledger, as per notification No. 9/2017 dated 28.6.2017 - Ext. P5 order rejecting petitioner's claim for interest on the tax amount ordered to be refunded is quashed and the respondents are directed to calculate the interest on the amount, which was refunded/credited to the petitioner s cash credit ledger, as directed above, and disburse the same within a period of two months from today. The present writ petition stands finally disposed of.
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2024 (1) TMI 1204
Refund of IGST on Ocean Freight - reverse charge mechanism - HELD THAT:- The petition is disposed of with a direction to the respondent-authority to consider the refund application of the petitioner as per the decision of the Hon ble Supreme Court in case of UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [ 2022 (5) TMI 968 - SUPREME COURT] . The impugned Deficiency Memo Form-RFD-03, so far as it relates to the aspect of the applicability of the decision of the Apex Court is concerned, is quashed and set aside. The respondent-authorities are directed to process the refund application in accordance with law - Petition allowed.
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2024 (1) TMI 1203
Refund of accumulated input tax credit - inverted duty (tax) structure - LPG supplies to domestic customers after bottling in cylinders - case of the petitioner does not fall within the exception as provided in clause (ii) of sub-Section (3) of Section 54 of the CGST Act - HELD THAT:- On a bare reading of Section 54, it is clear that if the supplies are not coming within the exceptional clause and credit had accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, a dealer shall be entitled for refund of the credit accumulated in such a situation, irrespective of the fact whether the input and output supplies are one and the same or not. All the four High Courts in BMG INFORMATICS PVT. LTD., VERSUS THE UNION OF INDIA AND 3 ORS., THE COMMISSIONER CENTRAL GOODS AND SERVICE TAX GUWAHATI, THE JOINT COMMISSIONER (APPEALS) CGST CENTRAL EXCISE AND CUSTOMS GUWAHATI, THE ASSISTANT COMMISSIONER CGST AND CENTRAL EXCISE DIVISION II [ 2021 (9) TMI 472 - GAUHATI HIGH COURT] , M/S. SHIVACO ASSOCIATES ANR. VERSUS JOINT COMMISSIONER OF STATE TAX, DIRECTORATE OF COMMERCIAL TAXES ORS. [ 2022 (4) TMI 118 - CALCUTTA HIGH COURT] , BAKER HUGHES ASIA PACIFIC LIMITED VERSUS UNION OF INDIA, THE STATE OF RAJASTHAN, THE DEPUTY COMMISSIONER, STATE TAX, CIRCLE BARMER, RAJASTHAN, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS [ 2022 (7) TMI 73 - RAJASTHAN HIGH COURT] and INDIAN OIL CORPORATION LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX ORS. [ 2023 (12) TMI 361 - DELHI HIGH COURT] have held that the condition laid down in clause 3.2 of the Circular, which denies refund of credit accumulated to a dealer as a result of higher tax on inputs than the output supplies, when the input and output supplies are one and the same, would have to be ignored. Considering the ratio laid down in the aforesaid four judgments by the four High Courts, the present writ petitions are allowed and the petitioner is held to be entitled for refund of the credit accumulated on account of payment of higher rate of tax, i.e. @ 18%, on input supplies received by him for bottling of LPG for domestic supply, when the rate of tax is only @ 5%. The matter is remanded back to the assessing authority to calculate the refund amount of accumulated ITC admissible to the petitioner for the aforesaid periods on account of higher rate of tax having been paid by the petitioner on input supplies of LPG for bottling and supplying in the domestic market.
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2024 (1) TMI 1202
Cancellation of petitioner s GST registration - fraudulent purchase - impugned order does not disclose any reason for cancelling the petitioner s GST registration - violation of principles of natural justice - HELD THAT:- Undisputedly, the impugned Show Cause Notice fails to meet the requisite standard for such notice - It is also material to note that although the impugned show cause notice required the petitioner to appear for personal hearing on the appointed date and time and also cautioned that if the petitioner failed to do so, the case would be decided ex parte, but the notice does not specify any date or time at which the such personal hearing was scheduled - the petitioner had no opportunity to be heard. The impugned order passed pursuant to the impugned show cause notice, is also liable to be set aside on the ground that it had been passed in violation of principles of natural justice - the impugned show cause notice dated 29.10.2021 and the impugned order dated 16.12.2021 are set aside. The petitioner s GST registration is directed to be restored forthwith - Petition disposed off.
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2024 (1) TMI 1201
Seeking to set aside Summary of the Show Cause Notice - only Summary of Show Cause Notice has been issued and no proper Show Cause Notice has been issued to the Petitioner - violation of principles of natural justice - HELD THAT:- This Court, while considering the similar matter in the case of M/S. NKAS SERVICES PRIVATE LIMITED. VERSUS THE STATE OF JHARKHAND, THE COMMISSIONER OF STATE TAXES, RANCHI, DEPUTY COMMISSIONER OF STATE TAXES, GODDA [ 2021 (10) TMI 880 - JHARKHAND HIGH COURT] , has held that Since we are of the considered view that the impugned show cause notice as contained in Annexure-1 does not fulfill the ingredients of a proper show-cause notice and thus amounts to violation of principles of natural justice, the challenge is entertainable in exercise of writ jurisdiction of this Court. Accordingly, the impugned notice at Annexure-1 and the summary of show-cause notice at Annexure-2 in Form GST DRC-01 are quashed. In the instant case, from bare perusal of the order-sheet, it would transpire that Summary of Show Cause Notice in Form GST DRC-01 was issued to the Petitioner on 27.09.2019 and, although no date of compliance was given, the Petitioner, suo-motu, filed its reply on 22.10.2019. Thereafter, no date of hearing was fixed in the matter and, straightaway, vide order-sheet dated 02.09.2020, it has been recorded that Summary of Demand in Form GST DRC-07 is being issued to the Petitioner. Thus, admittedly, no opportunity of hearing was also granted to the Petitioner before the impugned demand was raised upon the Petitioner. There are no option, but to quash and set aside the Summary of Show Cause Notice contained in Form GSTR DRC-01 dated 27.09.2019 (Annexure 2/1) issued by Respondent No. 2 and consequently, set aside the adjudication order dated 02.09.2020 contained in the order-sheet pertaining to financial year 2018-19 and, consequently also, the Summary of the Order issued in form GST DRC-07 dated 04.09.2020 issued by Respondent No. 2. However, Respondents would be at liberty to initiate fresh proceeding in accordance with law, if so advised. The writ application is allowed and disposed of.
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2024 (1) TMI 1200
Classification of goods - treated water that would be sold by the Applicant, after carrying out various treatment process on the effluent water purchased by them - rate of GST applicable on the said treated water - HELD THAT:- Upon going through the processes effected by the Applicant, the effluent water is subjected to micro-filtration and sand filtration process to remove suspended impurities. They have then used a scries of RO units for removing minerals. In spite of the RO treatment, the TDS of the treated water is higher, which can be seen from the test report. As per the report furnished by The South India Textile Research Association (SITRA) Textile Testing and Service Centre, test report No. V2300303, dated 9-8-2023 of Sample given for testing, in the case of the Applicant, it is seen that the recovered water contains chlorides, sulphates, Bicarbonates, etc. The TDS levels of the treated water as per the test report is 294 mg/1, which clearly shows the treated water is not demincralized as per the standard norms. From the above, it is clear that treated water cannot be construed as demineralized water. Water recovered out of the effluent treatment process nothing but an ordinary water which is suitable for reuse by the dyeing and bleaching units as a solvent and as a washing, rinsing medium. Thus, it aptly fits into Sl. No. 99 of Notification No. 2/2017-C.T. (Rate), dated 28-6-2017 under the Heading 2201 rather than Sl. No. 24 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 under the same Heading 2201. The common effluent treatment plant has been set up in order to comply with the legislative and environment regulations thereby conserving water through recovery and reuse and not to manufacture water or chemicals - effluent treated water is eligible for exemption as per Notification No. 2/2017-Central Tax (Rate) as amended vide Notification No. 7/2022-Central Tax (Rate), dated the 13th July, 2022.
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Income Tax
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2024 (1) TMI 1199
Penalty levied for inaccurate particulars of income - As per AO assessee treated the revenue receipt of subsidy as capital receipt - debatable issue - as per HC no error in the findings recorded by Tribunal while setting aside penalty as there is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same as capital receipt, whereas it has been treated as to be revenue receipt. The issue; whether the amount of grant in aid is capital receipt or a revenue receipt, is a debatable issue. HELD THAT:- Additional Solicitor General, has in his usual fairness stated the correct position of law as it exists in the facts and circumstances of the case. Taking note of the legal position, the Special Leave Petitions are dismissed. Pending applications, if any, shall stand disposed of.
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2024 (1) TMI 1198
Addition on the basis of seized documents found during the course of the search - unaccounted transaction/Purchases - ITAT instructed to restore the issue to the file of the AO with a direction to obtain information from the parties regarding transactions carried on by the assessee during the above 2 years - HELD THAT:- It is thus manifest that since the exercise of assessment was not confined merely to the material gathered in the course of a search but was kept open to be examined with reference to all transactions in the Assessment Years in question, we find no ground to entertain the instant appeals on Question A. Estimation of income - bogus purchases - ITAT has essentially held that since the books of account had not been rejected it would not be open for the Assessing Officer to undertake an assessment of income - Appellant invited our attention to the following observations as appearing in the decision rendered in Unit Construction Co. Ltd. vs Joint Commissioner of Income-Tax [ 2003 (1) TMI 85 - CALCUTTA HIGH COURT ] to contend that it is not necessary for the Assessing Officer to reject the book of accounts in order to assess income on a best judgment basis - HELD THAT:- In order to enable learned counsels to examine whether this issue stands concluded by a decision rendered by this Court, let the appeals be re-notified on 13.02.2024.
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2024 (1) TMI 1197
Revision u/s 263 - Taxability of income disclosed in survey proceedings u/s 133A at Higher Rate of tax u/s 115BBE - While deleting the addition, ITAT found that there was nothing stated in either pre-amended or post-amended provision of Section 115BBE that when the assessee surrendered undisclosed income during the search action for the relevant years, higher tax rate is required to be charged. HELD THAT:- In the facts of the case, during the course of assessment proceedings, as the Assessing Officer had made due inquiries and was aware of the fact that the assessee had disclosed the income as business income in his return of income in respect of which it had claimed expenditure in relation to interest and remuneration paid to partners and after making inquiries, Assessing Officer allowed the claim of the assessee by treating undisclosed income found during the survey as assessee s business income and in view such finding of facts arrived at by the Tribunal, we are of the opinion that no substantial question of law arises from the impugned order of the Tribunal. Decided against revenue.
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2024 (1) TMI 1196
Bogus sundry creditors - difference between the outstanding balance of the sundry creditors as on 31.03.2015 and 31.03.2014, which was the net increase in creditors by treating the same as bogus creditors - CIT(A) deleted addition admitting additional evidences - whether CIT(A) had clearly violated the provisions of Rule 46A of the Income-tax Rules, 1962, while admitting additional evidence? - as per revenue assessee has not furnished any sufficient cause for not submitting the evidence and had remained absent in the assessment proceedings though sufficient opportunity was given HELD THAT:- CIT after considering the explanation of the assessee that the assessee was illiterate person and has studied upto fourth standard and he was not able to read English Language, we are of the opinion that the provision of Rule 46A(1) more particularly Sub-clause(b) thereof which reads as under is complied with as the assessee was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer. In view of the above provisions of Rule 46A of the Rules, the assessee being an illiterate person could not appear before the Assessing Officer and the appellate proceedings being the continuation of the assessment proceedings, the CIT(A) has rightly permitted the assessee to produce the additional evidence in consonance with the Rule 46A of the Rules. Decided against revenue.
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2024 (1) TMI 1195
Validity of final assessment order u/s 144B - petitioner request for adjournment was ignored - HELD THAT: -The issue is squarely covered by the decision of this Court in case of Verichand Bawandas HUF Karta of HUF Pawankumar Virdhichand Agrawal vs. National E-Assessment Centre [ 2022 (8) TMI 91 - GUJARAT HIGH COURT] Assessee congenial approach should be reflected not only in the application of taxation laws but also in the procedural mechanism to be applied towards assessee in treating him for the purpose of tax. It hardly stood to reason that the department refused the request of the assessee for grant of time to file his response to the draft assessment order. There was sufficient time available for the final assessment to be made. As it was pandemic time when the department should have adopted liberal approach in refusing the request for time for filing objection to the draft assessment order and finally passing the assessment order. The department acted thick skinned.Thus petitioner deserves to be granted a relief. The assessment order dated under Section 143(3) read with Section 144B are hereby set aside. In view of the above dictum of law in the aforesaid case, the petition is required to be allowed and is accordingly allowed. Matter is remanded back to the Assessing Officer to decide the same afresh from the stage of the draft assessment order.
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2024 (1) TMI 1194
Reopening of assessment u/s 147 - applicability of the time frame provided in Section 149(1) - validity of order passed u/s. 148A(d) - Review of final order passed [ 2023 (10) TMI 1353 - MADHYA PRADESH HIGH COURT] challenging order passed u/s. 148A(d) - Review petitioner is before this Court with the assertion that liberty be extended to petitioner to raise all contentions admissible in law in appeal which has been preferred against the final assessment order HELD THAT:- As evident from the reading of order under review that this Court had declined to enter into merits of the matter especially the legality and validity of the assessment order against which an appeal has now been preferred. Accordingly, this Court is of the considered view that petitioner who is an appellant before the Appellate Authority cannot be denied to raise any ground admissible in law and which can otherwise be raised under the relevant statute permitting filing of appeal. Especially when the scope and nature of interference available u/Art.226 of Constitution is at variance to an appeal. Review petition stands disposed of with liberty to the review petitioner to raise all possible, permissible contentions as per law u/s. 246A of the Income Tax Act while assailing the assessment order.
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2024 (1) TMI 1193
Validity of reassessment proceedings - Request adjournment date for submission of the response to the show cause notice - violation of the principles of natural justice - petitioner requested for adjournment to 17.3.2023 and the web portal of the Income Tax Department would suggest that the said request was considered, but no date was given for filing the response - petitioner was of the opinion that the petitioner had been granted time up to 17.3.2023 to give response to the notice , however, before 17.3.2023, the assessment order got finalised - HELD THAT:- As in agreement with the petitioner that in the absence of date mentioned for submission of the response to the show cause notice dated 23.2.2023, the petitioner had bona fide believed that the petitioner's request for adjournment to 17.3.2023 to give response to the show cause notice dated 23.2.2023 was accepted. However, before 17.3.2023, the impugned order, Ext. P6, has been passed on 14.3.2023, and therefore, there was violation of the principles of natural justice. For that reason, the impugned order is bad in law and is liable to be set aside. Present writ petition is allowed and the impugned order is set aside and the matter is remanded back to open the link provided to the petitioner for uploading the response to the show cause notice dated 23.2.2023. If the petitioner fails to upload the response within the time prescribed for the same, the assessing authority would be free to pass fresh order.
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2024 (1) TMI 1192
Exemption u/s 11 - delayed submission of Form 10B - mandatory v/s discretionary requirements - requirement of furnishing declaration for claiming exemption - audit report in Form No. 10B was not e-filed along with the return of income - non reliance of Supreme court decision - as submitted assessee ought to have filed the audit report in Form 10B before the due date of filing of the return to claim the exemption - ITAT allowed exemption - HELD THAT:- Reliance placed on the decision of M/s. Wipro Limited [ 2022 (7) TMI 560 - SUPREME COURT] would not be applicable as in the facts of the present case, the assessee has claimed the exemption u/s 11 read with Section 12A(1)(b) of the Act which required the assessee to file audit report in Form of 10B which has nothing to do with claiming 100% exemption of total income in respect of newly established 100% Export Oriented Undertakings under Section 10B. Section 10B(8) requires the assessee to file an undertaking before the due date of furnishing of return of income under sub-section (1) of Section 139 before the AO in writing that the provision of Section 10B may not be made applicable to him, otherwise the provision of this Section shall not apply to him for any of the relevant assessment year. Considering the language of the provision of Section 10B(8) of the Act, the Hon ble Supreme Court in M/s. Wipro Limited [supra] held that it was mandatory on part of the assessee to file declaration before the due date of filing of return under sub-section (1) of Section 139 of the Act, whereas in the facts of the said case the assessee filed such undertaking along with the revised return under sub-section (5) of Section 139 and in such facts the Hon ble Supreme Court held that the twin conditions prescribed under Section 10B(8) of the Act was mandatory to be fulfilled and it cannot be said that though the declaration is mandatory, the filing of such declaration within the due date of filing of return under sub-section (1) of Section 139 would be directory. Tribunal has rightly followed the decision of this Court in case of Sarvodaya Charitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] as well as Social Security Scheme of GICEA [ 2022 (12) TMI 1172 - GUJARAT HIGH COURT] to uphold the decision of the CIT (Appeals), wherein this Court has held that the approach of the authority in such type of cases should be equitable, balancing and judicious and respondent No. 2 might be justified in denying the exemption under Section 11 of the Act being a technical in nature by rejecting such application. But, in the facts of the case, when the assessee has already uploaded the audit report in Form 10B as required under Section 10(23)C r.w.s. 12A(1)(b) of the Act before the Assessing Officer prior to the original assessment order under Section 143(3) passed on 06th April, 2021. Decided in favour of assessee.
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2024 (1) TMI 1191
Revision u/s 263 - accrued interest income on deposit - addition on account of notional interest @10% on deposit - HELD THAT:- In view of the concurrent findings of the fact arrived at by both the authorities and in view of the fact that there was a stipulation in the loan agreement between the assessee and the M/s. Sanman Holdings Private Limited, which was placed on record by way of a paper book, Clause-f of the loan agreement reads as under Borrower shall pay interest at the end of the financial year to the Lender at the rate of 10% per annum, subject to its financial position and profitability, on the Loan from the date of disbursement of the Loan, after deduction of applicable Tax deduction at source. Any unpaid interest at the last business day of financial year shall be treated as loan to the borrower on first business day of next financial year. In event of amalgamation, merger or demerger or takeover of borrower or any other change in its management the liability to pay interest shall cease and lender shall not be entitled to any interest from the appointed date for such event . As M/s.Sanman Holdings Private Limited to whom the assessee has advanced the loan was amalgamated with M/s. Tanti Holdings Private Limited, no interest was liable to be paid to the assessee as per the aforesaid clause. This fact is considered by both the authorities and accordingly it was held that the no interest accrued to the assessee from 01.04.2010. No substantial question of law.
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2024 (1) TMI 1190
Reopening of assessment u/s 147 - validity of order u/s 148A(d) without granting time to the petitioner to file reply to the notice under Section 148A(b) of the Act - HELD THAT:- Petitioner was not provided an opportunity of hearing and the matter may be remanded back to the respondent-AO so as to enable the petitioner to file a reply to the notice u/s 148A(b) because keeping this matter pending before Hon ble Court would delay the assessment proceedings, if required to be re-opened after considering the reply of the petitioner and giving opportunity of hearing to the petitioner. Considering the above submissions, the impugned notices issued u/s 148A(b) and 148 respectively of the Act as well as the order passed u/s 148A(d) of the Act are hereby quashed and set aside remanding the matter back to the respondent-Assessing Officer so as to grant an opportunity of hearing to the petitioner to file a reply as provided u/s 148A(b).
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2024 (1) TMI 1189
Addition u/s 68 - accommodation entries receipts - onus to prove - notices u/s 133 (6) issued to the companies but assessee could not produce the Directors/Principal Officers of the said companies - information was received by AO from the Investigation Wing of the Department that the assessee is beneficiary of taking accommodation entries in the garb of share application money/share capital from entry providers - HELD THAT:- All the documentary evidences were duly provided to the AO. AO did not offer any examination of these documents and did not mention even a single adverse point in the financials of these companies. His whole exercise was based upon his claim that section 133 (6) notice was returned unserved. It was not at all the case that these companies were not having PAN or they were not filing income-tax returns. CIT (A) has mentioned that AO has issued summons u/s 131 of the Act to the Directors of the company but no such mention was there in the order of the AO. From the examination of the financials, balance sheet and bank statement, it is noted that transactions were through banking channel and these companies have sufficient financial reserves to provide the credits/ loans to the assessee company. Thus when all the details were provided and no adverse feature was noted therein, assessee has discharged the onus cast upon it. The authorities below have based these adverse orders only by making general observation and repeating that assessee did not produce the directors of these companies. Thus as assessee has discharged its onus, hence orders of authorities below are set aside. Since addition under section 68 of the Act has been directed to be deleted, the addition for commission does not survive and the same is also directed to be deleted - Decided in favour of assessee.
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2024 (1) TMI 1188
Validity of Reopening of assessment u/s 147 - receipt of interest income - HELD THAT:- Admittedly, it is a matter of fact borne from record that the A.O while framing assessment vide his order passed u/s. 143(3)/147 had not made any addition qua the very reason for which the case of the assessee company was reopened u/s. 147. We find substance in the claim of the AR that in absence of any addition having been made by the A.O as regards the very reason based on which the case of the assessee company was reopened u/s. 147 then no valid jurisdiction could have there been assumed by him to frame assessment u/s. 147 of the Act. Our aforesaid view is fortified by the judgement of Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] . At this stage, we may herein observe that the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Jet Airways (I) Ltd. (supra) had been followed in case MAJOR DEEPAK MEHTA [ 2011 (11) TMI 462 - CHATTISGARH HIGH COURT] Considering the fact that the A.O in the present case before us, had wrongly assumed jurisdiction and made the impugned additions vide his order passed u/s. 143(3)/147 we herein quash the same. Decided in favour of assessee. Validity of scrutiny assessments - converting the limited scrutiny into complete scrutiny - additions on items not covered under scope of limited scrutiny - HELD THAT:- As is discernible from the assessment order the case of the assessee company was selected for limited scrutiny for the following reason: (i) Large share premium received during the year (verify applicability of Section 56(2)(viib) Admittedly, it is a matter of fact borne from record which has not been rebutted by the Ld. DR that the A.O at no stage of the assessment proceedings had obtained approval of the Pr. CIT for converting the limited scrutiny into complete scrutiny as provided by the CBDT Circular No. 20/2015 [F. No.225/269/2015-ITA-II], dated 29.12.2015. Considering we find, that as stated by the AR, and rightly so, the scope of jurisdiction of the A.O while framing the limited scrutiny was circumscribed by the very purpose/reason, for which, the case of the assessee company was selected for scrutiny assessment. Accordingly, we find substance in the claim of the AR that the A.O had clearly exceeded his jurisdiction by making disallowances/additions which never formed the basis for selection of the case of the assessee company for limited scrutiny . Our aforesaid view is fortified by the order of the Co-ordinate Bench of the Tribunal, Raipur in the case of Aryadeep Complex (P) Ltd [ 2022 (8) TMI 383 - ITAT RAIPUR] . Considering the fact that the A.O in the present case before us, had wrongly assumed jurisdiction and made the impugned additions/disallowances vide his order passed u/s. 143(3) we herein vacate the same. Decided in favour of assessee.
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2024 (1) TMI 1187
Disallowance u/s 14A r.w.r. 8D - AO found that the assessee earned dividend income - mandation of recording satisfaction - assessee contended that the purpose of investment in equity shares is to have controlling interest in the respective investee companies and not to earn dividend income which has causally arisen; the expenditure incurred is not in relation to exempt dividend income and that the investments have been made out of surplus funds available with the company - CIT(A) confirmed the disallowance representing administrative expenses @0.5% u/R 8D(2)(iii) on the total average investment and allowed relief being indirect interest disallowed by the Ld. AO on account of investments made in earlier years and new investments made in the year - HELD THAT:- As factual finding of the CIT(A) could not be controverted by the Ld. CIT-DR by bringing on record any adverse material whereas the record reveals that as against available amount of share capital, reserve and surplus was more than investment in shares for AY 2011-12, 2012-13, 2013-14 and 2014-15 respectively. In such a scenario, the decision of the CIT(A) cannot be faulted on the ground that he erred in holding that no interest bearing funds were used by the assessee in making investment giving rise to tax exempt income i.e dividend. We, therefore, reject the Revenue s stand in this regard. Moreover, the decision of the Ld. CIT(A) is in consonance with the view expressed by the Hon ble Supreme Court in the case of South Indian Bank Ltd. ( 2021 (9) TMI 566 - SUPREME COURT] . Mandation of recording satisfaction - Non-recording of satisfaction as embedded in sub-section (2) of section 14A is a legal infirmity committed by the Ld. AO which cannot be ignored. Computation of book profit u/s 115JB - The Hon ble Karnataka High Court has held in its decision in Shobha Developer Ltd. ( 2021 (1) TMI 378 - KARNATAKA HIGH COURT] that once disallowance made u/s 14A r.w. Rule 8D is deleted, said disallowance cannot be made while computing book profit u/s 115JB of the Act. No contrary decision has been brought to our notice by the Ld. CIT-DR. We therefore, accept the contention of the Ld. AR in this regard. Denial of reduction of refund claim of excise duty (CENVAT) being a capital receipt while computing book profit under section 115JB - HELD THAT:- As decided in Ankit Metal and Power Ltd. [ 2019 (7) TMI 878 - CALCUTTA HIGH COURT] as held the CENVAT credit, as received by the appellant, in accordance with the incentive scheme for J K as Formulated by the Central Government is a capital receipt not liable to tax, accordingly the same cannot be part of book profit u/s 115JB also. Deduction u/s 80IB on scrap sale generated out of manufacturing activity of the assessee - disallowance for the reason that income from sale of scrap generated during manufacturing cannot be said to have been derived from industrial activity as it does not flow directly from such activity - CIT(A) deleted addition - HELD THAT:- Since the issue is covered in favour of the assessee and against the Revenue by the decision of Sadhu Forging Ltd [ 2011 (6) TMI 9 - DELHI HIGH COURT] which has been followed by the Ld. CIT(A) as also by the Coordinate Bench of the Tribunal, we decline to interfere with the order of the Ld. CIT(A) on the point and reject this ground of the Revenue. Deduction u/s 80IB other income comprising of freight, exchange rate fluctuation and insurance recovery - CIT(A) deleted addition - HELD THAT:- Nothing has been brought on record by the Ld. CIT-DR to interfere with the above findings of the Ld. CIT(A). AR has relied on the decision of the Hon ble Supreme Court in CIT vs. Meghalaya Steels Ltd. [ 2016 (3) TMI 375 - SUPREME COURT] - Hence, we have no reason to interfere with the findings of the Ld. CIT(A). Accordingly, ground No. 3 of the Revenue is dismissed. Deduction u/s 80IB export incentive receipt - as held by the Ld. CIT(A) as part of sale proceeds and hence an allowable - HELD THAT:- We find no infirmity in the order of the Ld. CIT(A). Interest, export incentive and other misc income as already been reduced from eligible profit which is evident from the computation of income itself. The nature of remaining amount of other income in Jammu Unit I, Unit II and Unit III has been explained by the CIT(A) along with cogent reasons for their inclusion in eligible profits in the respective units. We, therefore, decline to interfere.
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2024 (1) TMI 1186
Revision u/s 263 - Disallowance u/s 40(a)(ia) on non deduction of TDS - HELD THAT:- As assessee has demonstrated that invoices were indeed raised and payments were made to the mentioned parties during the subsequent financial year, i.e., Financial Year 2010-11, for which the TDS was duly deducted and remitted to the Government. In support of its claims, the assessee has furnished a copy of the work orders, Form No.16A, a comprehensive chart delineating the details of the invoices, payments, and TDS payments, along with ledger accounts pertaining to both parties. Details furnished convincingly indicate that the work carried out by the two parties was quantified and crystalised during the subsequent year. Assessee's genuine admission of inadvertently including the names of the aforementioned parties in the list of entities with no TDS deduction, which was duly recognized by the AO during the framing of the assessment under section 143(3), it becomes evident that there is no justifiable ground for the Principal CIT to invoke power u/s 263 of the Act. As important to note that there is no revenue implication, and no prejudice has been inflicted upon the Revenue, as the applicable tax rate for the invoice payment in the subsequent year, during which the invoice payment was properly accounted for, included the appropriate TDS deduction. Considering the lack of substantial grounds for the CIT to exercise authority u/s 263 of the Act, and in light of the absence of justifiable reasons to alter the assessment framed by the AO u/s 143(3) we hereby quash and set aside the impugned order of the CIT passed u/s 263 and restore the original assessment order of the AO passed under section 143(3) of the Act. Assessee appeal allowed.
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2024 (1) TMI 1185
Rejection of books of accounts - estimation of income of the assessee by applying 10% to the gross turnover of the assessee - disallowance of staff welfare expenses, interest expenses and on the disallowance of travelling expenses by CIT - HELD THAT:- On travelling expenses, the assessee had time and again reiterated that the AO had examined only 0.6% of the total expenses, and found them to be unverifiable. But that the ld.CIT(A) without giving any reason for not agreeing with the assessee s contention, went on to summarily hold that 20% of the expenses are to be disallowed, that too without giving any opportunity of hearing to the assessee before doing so. Similarly, the staff welfare expenses were also disallowed to the tune of 10% of the same, without even giving an opportunity to the assessee or confronting the same to the assessee. In the same manner, CIT(A) has made disallowance of interest expenses on WIP without confronting the same to the assessee. Clearly, the order passed by the CIT(A) is in gross violation of the principles of natural justice and the additions made by him are not sustainable for this reason alone. Powers of CIT(A) - Whether disallowance of staff welfare expenses and interest expenses was beyond the power of the CIT(A)? - Though section 251 of the Act gives power to the ld.CIT(A) to expand scope of the assessment made, but the Hon ble Supreme Court in various decisions has held that the scope cannot be expanded to discover new source of income. Once an assessment comes before the first appellate authority, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee, but ranges over the whole assessment and it is open to him to correct the Assessing Officer not only with regard to matter raised in appeal but also with regard to all matters considered by the AO . He can revise every process which led to the ultimate computation or assessment. But this power cannot extend to the Ld.CIT(A) discovering new sources of income. The Hon ble apex court laid down this law in CIT vs Shapoorji Pallonji Mistry [ 1962 (2) TMI 12 - SUPREME COURT] which was followed in the case of Union Tyres [ 1999 (9) TMI 81 - DELHI HIGH COURT] and Scindia Steam Navigation Co. Ltd. [ 1970 (3) TMI 34 - BOMBAY HIGH COURT] We hold, that the disallowance made with respect to the staff welfare expenses and interest expenses, is not sustainable in law being beyond power of the CIT(A). The same is directed to be deleted. Decided in favour of assessee.
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2024 (1) TMI 1184
Adjustment done by the CPC u/s 143 (1)(a)(v) - Deduction u/s 80P disallowed treating the return filed by the assessee as belated return - As argued accounts of the assessee are required to be audited u/s 64 of the U.P. Cooperative Societies Act, 1965 and as such the due date of the return fails within Explanation 2(1)(ii) to section 139 (1) and the return filed on 01.10.2018 by the assessee was not a belated return - whether the adjustment done by the CPC u/s 143 (1)(a)(v) of the Act is correct or not? HELD THAT:- As noted that prior to amendment in deduction u/s 143(1)(a)(v) by Finance Act on 01.04.2021, the disallowance of deduction was limited to sections 10AA, 80IA, 80IAB, 80IB, 80IC, 80ID and 80IE. Thus, the deduction claimed u/s 80P was not mentioned there. Hence, we are of the opinion that ld. CIT (A) has erred in interpreting the amendment. We are of the opinion that assessee is correct in saying that the impugned adjustment by the CPC was not permissible u/s 143(1)(a)(v) of the Act at the extant time. Accordingly, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2024 (1) TMI 1183
Revision u/s 263 - large share premium received during the year under consideration - valuation of shares and the applicability of Section 56(2)(viib) - PCIT held that the assessment records reflect complete lack of enquiry on the issue of fair market value of the shares issued during the year , as the order revolves only around the transaction of EPF/ESI Contribution and the assessment order is cryptic and non-speaking - HELD THAT:- For the purpose of determination of fair value, the Assessee produced Valuation Report prepared under Rule 11UA of Income Tax Rule 1962. The said valuation has been prepared by the Chartered Accountant based on the books of account, financial statements and other records of the Company drawn up to 26/02/2015. Assessee produced audited balance sheet before the A.O. as on 31/03/2015 and furnished balance sheet as on 02/03/2015, but the audited balance sheet has been disbelieved by the PCIT on the ground that the balance sheet as on 02/03/2015 has not been approved by the Annual General Meeting the same cannot be considered for the purpose of Rule 11UA of the Rules. The said observation of the Ld. PCIT is not supported by any of the provisions of law. On the contrary, the Rule 11UA of the Rules does not mentions the pre-condition of approval of the balance sheet by the Annual General Meeting. Therefore, the above finding of the Ld. PCIT is found to be perverse. As assessee has already produced all the details in respect of the issue of large share premium received during the year under consideration at the time of original assessment proceedings itself which has been already dealt by the A.O. and decided in favour of the Assessee CIT(A) has committed error in exercising the power conferred u/s 263 - Decided in favour of assessee.
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2024 (1) TMI 1182
Validity of assessment order passed u/s 143(3) - Notice issued u/s 143(2) as time barred - HELD THAT:- We have perused the assessment record. We find that there is no notice dated 29.03.2010, is available on record. This fact is fairly admitted by Ld. Sr. DR for the Revenue. Therefore, it can be safely inferred that the only notice u/s 143(2) of the Act was issued on 21.10.2010. However, as per record, in response to the notice u/s 142(1) of the Act, the assessee had filed return of income on 30.09.2009, declaring NIL income. Therefore, we find merit into the contention of the assessee that notice u/s 143(2) dated 21.10.2010 is barred by time. The assessment order in consequence of time barred notice u/s 143(2) of the Act, is thus bad in law. Decided in favour of assessee.
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2024 (1) TMI 1181
Clubbing of income of Non-resident and Permanent Establishment (PE) - Levy of surcharge at 5% as against assessee s claim of 2% as clubbing the total amount exceeded the threshold limit of Rs. 10 lakhs - whether the royalty and FTS income can be subjected to levy of surcharge, as provided under the domestic law? HELD THAT:- Taxability of royalty and FTS has been dealt under Article 12 of India Germany DTAA. As per Article 12(2) of the treaty, royalty and FTS can be taxed in the source state at a rate not exceeding 10% of the gross amount, if the recipient is the beneficial owner of such royalty and FTS. Undoubtedly, the assessee, being a beneficial owner of royalty and FTS, has offered to tax the royalty and FTS on gross basis by applying rate of 10%. This, in our view, is in compliance with the treaty provisions. Therefore, further levy on account of surcharge exceeds the rate of 10%, hence, cannot be levied on royalty/FTS income, as, it would be in violation of Article 12(2) read with Article 2 of India Germany DTAA. To get over the mandatory condition of Article 12(2) of the Act, learned first appellate authority has made an attempt to link royalty/FTS income to the Supervisory PE. Neither it is the case of the assessee that such income is linked to the PE, nor the department has brought any material on record to demonstrate that royalty and FTS income is effectively connected to the PE. Therefore, in our view, the r oyalty and FTS income offered by the assessee has to be essentially governed under the treaty provisions and not under the domestic law. Thus, in our view, the Departmental Authorities have erroneously clubbed the royalty and FTS income with the income of the PE for the purpose of surcharge at the rate of 5% . Direct the AO to accept assessee s computation and delete the extra demand raised on the assessee, both on account of surcharge as well as consequential demand relating to cess and interest. Decided in favour of assessee.
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2024 (1) TMI 1180
Exemption u/s 11 - assessment of trust - accumulation of income as per section 11(2) of IT Act r.w.r.17 of the Income Tax Rules - Charitable activity u/s 2(15) - According to the assessee merely because assessee has stated the purpose for which the income is being accumulated as Basic Education, Health Care and Nutrition to Underprivileged children , the Ld. CIT(A) could not have upheld the action of the AO - Whether Section 11(2) of the Act makes it necessary for the assessed to make specific mention of any purpose or purposes to enable it to accumulate the income? HELD THAT:- We note that the assessee is a public charitable trust registered u/s 12A of the Act with the main objective to do philanthropic acts and to take care/education of street-children/under-privileged children. The objective for the Trust were to do philanthropic acts and to take care of street-children/under-privileged children and especially their (i) Health Care (ii) Nutrition (iii) Literacy and basic education (iv) Self-esteem (v) Group skill, support services and associated support services (vi) Income generating schemes and (vii) Advancement of any other, social welfare objective. According to AO, the assessee had not applied 85% of the income but has accumulated income u/s 11(2) for the purpose of Basic Education, Health Care and Nutrition to Underprivileged children which reason for accumulation, according to him, was not for a specific purpose, and instead was only a reiteration of the broad objectives of the trust - We note that assessee Trust while making a claim for accumulating income as per sub-section (2) of section 11 of the Act, has fulfilled the conditions prescribed therein by filing the Form 10 wherein the assessee has spelled out the purpose for accumulation as Basic Education, Health Care and Nutrition to Underprivileged children which we find is in consonance with the purpose/object of the trust itself. Therefore, according to us, the claim for accumulation u/s 11(2) of the Act cannot be denied to assessee. As decided in the case of Hotel and Restaurant Association ( 2003 (3) TMI 92 - DELHI HIGH COURT ), held that even though it is true that specification of certain purpose or purposes is needed for accumulation of trust s income u/s 11(2) of the Act, but at the same time, the purpose or purposes to be specified cannot be beyond the objects of the Trust. Their Lordships observed Plurality of the purposes for accumulation is not precluded, but it depends on the precise purpose for which the accumulation is intended . Thus, we find that in the present case that income sought to be accumulated by the assessee was to achieve the object for which the assessee was incorporated. We find that it is not the case of AO/Ld. CIT(A) that any of the objects of the assessee trust were not for the purpose beyond the object of the trust or not charitable purpose. Statement of financials of the trust that assessee has applied its income for the education, feeding and clothing of the street children of Mumbai. We note that the income sought to accumulated by assessee was to achieve the three objects for which the assessee was formed. Before us, the Ld. DR could not point out that purpose shown in Form 10 for accumulating Rs. 30 Lakhs was not for object of the trust. In such a scenario, since assessee has satisfied the conditions laid down in section 11(2) of the Act for accumulation of the income, the same has to be allowed. Appeal of the assessee is allowed. CIT(A) not allowing the credit for TDS - At the time of hearing no arguments was advanced on this issue. However, we note that the Ld. CIT(A) has remanded this issue back to the file of the AO for verification and pass order. We confirm the action of the Ld. CIT(A) to the extent of remand back to the AO, and direct the AO to adjudicate the issue afresh.
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2024 (1) TMI 1179
Addition of income based on Disclosure made by assessee during survey - whether any incriminating material found during survey? - HELD THAT:- CIT(A) rightly held that having accepted the disclosure of the assessee as representing profits of the year in the preceding year, AO could not have taken a different stand in the impugned year for treating the disclosure as an independent disclosure of income and not relating to the profits of the assessee for the year. In the absence of any incriminating material found during survey to form the basis for the surrender made by the assessee and the assessee duly explaining the basis of its surrender and the reason for not disclosing the same in the return filed, duly backed with evidence, we do not find any infirmity in the order of the CIT(A) deleting the addition made on account of the disclosure made by the assessee during survey of Rs. 7 crores. The contention of the DR that the assessee had retracted its disclosure which was possible only if the retraction was supported with evidence and explanation, we find that, in the present case, there was in fact no retraction made by the assessee. As noted above, what the assessee had disclosed was the profits that it estimated to earn during the year and what it had returned was its actual profits and the reasons for the fall in profits had been duly explained by the assessee, in which explanation there was no infirmity pointed out by the AO. Therefore, it is not a case of retraction of disclosure or surrender made by the assessee and even if found so the assessee has given basis for retracting the surrender. It is relevant to note that the disclosure was not based on any incriminating material found during survey which the AO had admitted. It is only when the disclosure is based on some incriminating material found with the assessee that it is required to substantiate its retraction with evidences. It is only when the Revenue has found the assessee to have not disclosed particular income supported with evidence and which the assessee surrenders, the retraction of such surrender then has to be duly supported with evidence and cannot be based on a blanket retraction without any evidence. The case law relied upon by the ld. DR has not pointed out how the decision relied upon by it, is applicable to the facts of the present case. Ground of appeal Nos. [i] to [iv] raised by the Revenue, therefore, are dismissed. Estimation of net profits - addition on account of enhancement of net profit as the assessee has shown drastically low net profit as compared to preceding previous years without furnishing any cogent reason - CIT(A) deleted addition - HELD THAT:- AO has made some general comments without bringing on record any specific instance of what books of accounts are incorrect and incomplete. He noted that these are audited books of accounts and merely on account of claiming certain expenditures in cash, the same cannot be rejected. As observed that AO has brought no material to justify the rejection of books of accounts. With respect to the fall in net profits which the AO had noted from the preceding year, CIT(A) noted that the assessee had justified the fall with a reasonable expenditure evidenced by its audited books of accounts of the assessee. He noted that the gross profit of the assessee in fact had increased in the impugned year as compared to the preceding year but there was a fall in net profit on account of unprecedented circumstances resulting in huge interest expenditure and foreign exchange loss incurred by the assessee. DR was unable to controvert the above findings of the ld. CIT(A). A perusal of the assessment order also reveals that the ld. CIT(A) has rightly noted the AO to have rejected the books of accounts of the assessee in a very casual manner, without pointing out any specific major discrepancy in its books to lead to such a conclusion. We have noted of the assessment order that he has made a general statement of various expenses viz. communication, travelling and conveyance, printing and stationery, postage and courier, office expenses, vehicle running and hiring expenses, legal and professional, freight and forwarding, and so on and so forth, having not been properly vouched and not fully verifiable, and expenses having been incurred in cash. He has also noted the fall in net profit of the assessee from 6.24% in the AY 2010-11, 4.87% in AY 2011-12, 0.51% in the impugned year. We concur with the ld. CIT(A) that for rejecting the books of accounts, there has to be a specific finding by the Assessing Officer that the books are not reliable for arriving at a true and correct profits earned by the assessee. Merely making a general statement that some vouchers were unsupported or there were expenses incurred in cash by the assessee, cannot justify such adverse action of the Assessing Officer in rejecting the otherwise audited books of accounts of the assessee. Also we find that the assessee had explained reasons for fall in net profit, pointing out that while its gross profits had increased during the year, the net profit had fallen on account of increase in financial cost and huge foreign exchange losses incurred by it which were pointed out even by the auditors of the assessee-company. No anomaly in these accounts or claims of the assessee has been found by the Assessing Officer. Therefore, we completely agree with the ld. CIT(A) that the rejection of books of accounts of the assessee was totally unjustified. The addition, therefore, made by estimation of the net profits, we hold, has been rightly deleted by the ld. CIT(A). Disallowance of expenses incurred for the purpose of earning exempt income u/s 14A - CIHELD THAT:- DR was unable to controvert the factual findings of the ld. CIT(A) with respect to the sufficiency of own funds available with the assessee for the purposes of making investment for earning exempt income, nor was he able to distinguish the decision of the Hon ble Apex Court relied upon by the ld. CIT(A) in the case of South Indian Bank Limtied [ 2021 (9) TMI 566 - SUPREME COURT] for applying the proposition that where sufficient own funds are available, no disallowance of interest was warranted. In view of the same, we do not find any merit in the ground raised by the Revenue in this behalf and the same is thus dismissed. Disallowance of interest expenditure u/s 36(1)(iii) - failure of the assessee to provide one to one nexus between the interest free fund vis-a-vis its interest free advances - HELD THAT:- CIT(A) had deleted this disallowance noting that sufficient owned interest free funds are available with the assessee and the fact that similar disallowance made in AY 2014-15 was deleted by the ITAT in its order passed [ 2020 (6) TMI 831 - ITAT AHMEDABAD] Since the issue is covered by the decision of the ITAT in the case of the assessee for A.Y 2014-15, with no distinguishing facts being pointed out by the DR, we see no reason to interfere in the order of the CIT(A) deleting the disallowance made of interest expenses u/s 36(1)(iii) - Decided against revenue.
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2024 (1) TMI 1178
Penalty levied u/s. 271 (1)(c) - addition was on account of valuation of stock - HELD THAT:- Since this Tribunal has set aside the issue for fresh consideration. We deem it fit to restore the issue relating to the levy of penalty to the files of the AO with a direction to decide the levy or otherwise of the penalty after deciding the quantum as per the directions of this Tribunal in [ 2019 (3) TMI 1597 - ITAT DELHI ] Disallowance u/s. 14A - As assessee made suo motu disallowance under section 14A, but, assessing officer did not record any satisfaction as to how the disallowance made by the assessee was unreasonable or unsatisfactory. In the absence of any satisfaction recorded u/s 14A of the Income Tax Act, no disallowance could be made against assessee. Further, assessee has own sufficient funds to make investment, therefore, there is a presumption in favour of the assessee that assessee has used own funds to make investment in shares. Therefore, no addition under section 14A of the nature could be made against the assessee -. Since the addition has been deleted the penalty has no legs to stand. To this extent no penalty is leviable. Appeal of the revenue is partly allowed for statistical purpose.
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2024 (1) TMI 1177
Addition u/s 69A - unexplained jewellery - search and seizure operation u/s 132 - jewellery as received on occasions and family functions - status of the family - appellant submits that the aforesaid jewellery was gifted to her on various occasions such as marriage, birth of children, etc.; such gifts are very common in Indian culture and society - HELD THAT:- As issues exactly similar to the case of Preeti Singh [ 2023 (11) TMI 1215 - ITAT DELHI] which was adjudicated by this Tribunal as held since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and, thus, no addition under section 69A was called for. Since the assessee has got sufficient return income, in the absence any change in the factual matrix and the legal preposition, the appeal of the assessee is hereby allowed.
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2024 (1) TMI 1176
Validity of Notice issued u/s 143(2) - Period of limitation - Defective return - Removal of defect beyond 15 days u/s 139(9) - AO took up the original ROI filed for processing after the defects were removed - HELD THAT:- AO should have treated the return as non-est when the assessee has not removed the defect within prescribed time of 15 days from the date of issue of the notice. The Assessing Officer has no leverage to extend the time and drag it till the limitation of time to issue notice u/s. 143(2) expires. The notice issued in this case got time barred and the assessment is treated as nullity. Decided in favour of assessee.
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Customs
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2024 (1) TMI 1175
Valuation - Oil in the Bunker Tanks of the Engine Room/outside the Engine Room of the vessels sent for being broken up, are to be assessed separately or as part of the vessels to be scrapped? - HELD THAT:- The impugned order (sic) cannot be sustained in view of the order of this Court in M/S MAHALAXMI SHIP BREAKING CORP. ETC. VERSUS COMMISSIONER OF CUSTOMS BHAVNAGAR [ 2023 (4) TMI 1250 - SC ORDER] where it was held that In the appeals preferred by the Revenue, which are directed against the orders of the CESTAT in NAVYUG SHIP BREAKING CO., DHAN STEELS PRIVATE LIMITED. AND OTHERS VERSUS C.C., JAMNAGAR (PREV) [ 2022 (12) TMI 100 - CESTAT AHMEDABAD] , the CESTAT ruled that the oil is to be assessed as part of the Ship. Appeal dismissed.
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2024 (1) TMI 1174
Refund claim - principles of unjust enrichment - Proper appreciation of provision of Section 28D of the Customs Act, 1962 or not - verification of contents of provision of Section 28D of the Customs Act, 1962 - HELD THAT:- The appellate authority took note of the certificate issued by the Chartered Accountant dated 11.06.2015 wherein the Chartered Accountant again certified that all the goods brought under the cover of the three Bills of entries are still in use by the Dredging Corporation of India. The Director (Operations and Technical) of the assessee vide a letter dated 11.06.2015 certified that the vessel is in operation and has not been sold. Therefore, the appellate authority held that when the goods are still in use the question of passing the burden of duty does not arise and the question of unjust enrichment will not be applicable. While on this issue, it will be beneficial to refer to the decision in the case of COMMISSIONER OF C. EX., CHENNAI-I VERSUS SUPERINTENDING ENGINEER, TNEB [ 2011 (3) TMI 1500 - MADRAS HIGH COURT ] wherein the Hon ble Division Bench after taking note of the findings of the Hon ble Supreme Court in paragraph 99 of the judgment in Mafatlal Industries held that there was no unjust enrichment even as regards the Government undertakings and following the same it was held that unjust enrichment is not applicable as far as the state undertakings are concerned. The learned tribunal after taking note of the factual position has conclusively held that the bar of unjust enrichment would not apply as the vessel in question is still in use and has not been sold or disposed of. Furthermore, the certificate issued by the Chartered Accountant was also taken note of which was not shown to be factually incorrect by the department. The appeal is dismissed and the substantial questions of law are answered against the appellant revenue.
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2024 (1) TMI 1173
Violation of principles of natural justice - Detention of goods purchased by the petitioner which was imported palmolein oil without passing any order - HELD THAT:- On perusal of the facts stated in the memo of the petition, it appears that the petition is filed only on the basis of oral information given to the petitioner by the custodian of the goods M/s Deepak Estate Agency. The petitioner has not produced on record the letter dated 03.11.2023 received by M/s Deepak Estate Agency from the respondent authority to put on hold the consignment lying with it. It appears that the petition is filed only to avoid the compliance of the summons issued by the respondent authority to the directors of the petitioner company and to stall the investigation proceedings without disclosing the true and correct facts. In absence of the pleadings and the documents on record, the petition is not entertained and is accordingly dismissed.
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2024 (1) TMI 1172
Classification of imported goods - Gas chromatograph used for monitoring dissolved gas in Mineral Oil - classifiable under CTSH 9027 20 00 or not - HELD THAT:- As is evident from the literature produced on behalf of the appellants, the word Gas in Gas Chromatograph refers not to the sample being analysed, but to the carrier gas which carries the vaporised sample (Mobile Phase) from the Inlet to the Column. It would be contrary to the HSN explanatory notes to classify Gas Chromatograph as Gas Analyser under CTSH 9027 10 00 instead of classifying the same as Chromatograph under CTSH 9027 20 00 which is more specific description. The HSN Notes while explaining the scope of Chromatograph has referred to all kinds of Chromatographs, whether Gas, Liquid, Ion or thin Layer Chromatographs and have not excluded Gas Chromatographs from Chromatographs. The US Customs Tariff, gives 10-digit sub-classification and as per which Gas Chromatograph appears at Sub-heading 9027. 20.50.50. Foreign manufacturer-supplier s Invoice also mentions the said Sub-heading 9027.20.50.50. The Appellant s claim for classification of Gas Chromatograph for monitoring of Dissolved gases in mineral oil, under CTSH 9027 20 00, is also supported by the decision of the HS Committee taken at its 64th Session. The product considered by the HS Committee in the said decision is Online Dissolved Gas Analysis (DGA) Apparatus used for monitoring dissolved gases in transformer oil, which consisted of Gas Chromatography System. The Hon able High Court of Delhi has in the case of MANISHA PHARMA PLASTO PVT. LTD. VERSUS UNION OF INDIA [ 1999 (5) TMI 33 - HIGH COURT OF DELHI] held that the opinion of the HS Committee has a lot of pervasive value and should ordinarily be taken as binding. The subject goods imported by the Appellants are held to be classifiable as Gas Chromatograph under CTSH 9027 20 00. The impugned order is therefore set aside - Appeal allowed.
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2024 (1) TMI 1171
Classification of imported goods - Tower Flanges - Benefit of exemption from customs duty - to be classified under Customs Tariff Heading 8503 0010 as Parts of Wind Operated Electricity Generator or not - Notification No. 12/2012--CE (Sl.No. 332) dated 17.03.2012 - HELD THAT:- The issue is no more res integra as flanges imported are design specific and are meant only for use in erection of Wind Mill Towers and are treated as parts of Wind Operated Electricity Generator falling under CTH 8503 and not general purpose flanges falling under 7307. Even, a perusal of the HSN explanatory notes to Heading 7307 indicates that the said heading excludes constructions clearly identifiable as machine parts. The Respondent has relied upon the decisions of the Hon ble Tribunal in the cases of BHEL [ 1999 (4) TMI 149 - CEGAT, NEW DELHI] , COMMISSIONER OF C. EX., CALCUTTA-II VERSUS TECHNO FAB MANUFACTURING LTD. [ 2003 (9) TMI 180 - CESTAT, KOLKATA] and Hyundai Unitech Electrical Transmission [ 2005 (7) TMI 129 - CESTAT, MUMBAI] which held that Wind Mill Tower is a part of WOEG. This Tribunal in the case of Commissioner of Customs (Port--Import) Vs. Gamesa Wind--Turbines [ 2024 (1) TMI 736 - CESTAT CHENNAI] has held that the imported flanges with specific part numbers are the parts required for Wind Operated Electric Generators (WOEG) classifying them under CTH 85030010 and to be eligible for the benefit of Notification No. 12/2012--CE (Sl.No. 332). The appeal filed by the Department is without merits and as such cannot be sustained - Appeal of Revenue dismissed.
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2024 (1) TMI 1170
Classification of imported goods - Sensor Bag Assembly - to be classified under CTI 90328910 or under CTI 87089500? - HELD THAT:- The original authority after considering the submissions of the respondent came to the conclusion that the subject goods did not merit classification under CTH 9032 as claimed by the respondent because in order merit classification under Heading 9032, the instrument or automatic regulator must maintain a factor at a desired value by measuring it constantly or periodically. No such function is performed in the present case. Rather, the original authority held that the subject goods would merit classification under Heading 8537. It is found that the appellate authority has also upheld the Order-in-Original classifying the said goods under Heading 8537. Further, it is found that the subject goods are not classifiable under CTI 87089500 as Safety airbags with inflator system; parts thereof because there is an exclusion in HSN Explanatory Notes to Heading 8708 where electronic controllers are excluded from Heading 8708. In view of the settled position of law as held in various decisions, the subject goods are not classifiable under CTI 87089500 as Safety airbags with inflator system; parts thereof , as claimed by the Department. Further, it is settled position of law that the burden of proving the correct classification is on the Department as held in various cases relied upon by the respondent. It is a settled law that when the classification proposed by the department cannot be sustained, then irrespective of the fact as to whether or not the classification of the assessee is proper, the same would prevail. The Hon ble Apex Court in the case of Warner Hindustan Ltd. [ 1999 (8) TMI 75 - SUPREME COURT] has held The Tribunal also noted that both sides have not adduced any detailed arguments as to why these tablets can be considered as confectionery item or otherwise although a plea is there from the Collector in the grounds of appeal that the goods are assessable under Tariff 17.04 . In our opinion, the Tribunal was quite wrong in these circumstances in allowing the appeal of the Excise authorities and classifying the mint tablets as items of confectionery under Heading 17.04. The correct course for the Tribunal to have followed was to have dismissed the appeal of the Excise authorities making it clear that it was open to the Excise authorities to issue a fresh show cause notice to the appellant on the basis that the tablets were classifiable under Heading 17.04 as items of confectionery. There is no infirmity in the impugned order - Appeal of Revenue dismissed.
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2024 (1) TMI 1169
Refusal of Renewal of Customs Broker s Licence - no supporting documents have been filed - Regulation 9 of the CBLR, 2013 - HELD THAT:- The appellant-firm was not having any Customs authorized signatory from 2012 onwards and hence, their Customs Broker Licence could not be operated, but the appellant, knowing fully well, had operated the Licence without the Customs authorized signatory continuously for three years i.e., 2013, 2014 and 2015 and cleared various consignments, which could be seen from their business volume details. The above observations are quite serious, having known that the other party had with him the original licence, the appellant appears to have filed a false complaint with the police alleging about the loss of the original licence, a copy of which was also filed with the Revenue authorities requesting for a duplicate of the same on the very same ground of loss/misplacement. There was also an allegation of forgery. The other crucial misconduct which is highlighted in the impugned order is that the appellant had operated the licence without the Customs Authorized Signatory for three years, which fact also shakes the bona fides of the appellant. Instead of offering plausible explanation for the said misconduct, the appellant has only questioned the authority of the Commissioner as going beyond the issue. There are no irregularity or illegality committed by the Commissioner, Regulations of the CBLR authorize the Commissioner to check if there is anything adverse against a firm or company seeking fresh licence and to grant renewal of the same if there are no instances of any complaints of misconduct. There are no merit in the appeal filed by the appellant, for which reason the appeal is dismissed.
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2024 (1) TMI 1168
Initiation of Contempt proceeding against the concerned Commissioner - tendering unconditional apology for delay in implementing the Final Order dated 12.09.2019 of this Hon ble Tribunal - HELD THAT:- The statement made by the revenue is not convincing, in the miscellaneous application that they did not implement the order of CESTAT for the reason of the legal opinion given to them. In our view the issue is well settled by the decision of Hon ble Supreme Court in the case of Krishna Sales (P) Ltd., [ 1993 (9) TMI 124 - SUPREME COURT] wherein it is held that If the authorities are of the opinion that the goods ought not to be released pending the Appeal, the straight forward course for them is to obtain an Order of Stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an Order they cannot refuse to implement the Order under Appeal. As is well-known, mere filing of an Appeal does not operate as a Stay or suspension of the Order appealed against. The basic contention raised by the Revenue in their miscellaneous application is in respect of the cost imposed and the initiation of proceedings of contempt against the concerned Commissioner. Commissioner s have by way of the present miscellaneous applications rendered an unconditional apology for the delay in implementing the Final Order dated 12.09.2019. The Government procedure takes time and courts have to take a balanced view in the matter while taking harsh views in the matter. There are number of clearances by various agencies which cause delay though such delay cannot be justified and we express unhappiness for the delay of 04 (Four) years in the matter but taking note of all the facts and circumstances stated in the application specifically the unconditional apology tendered by the concerned commissioners we are of the view that end of justice will be met for which the concerned officers are warned to be careful in dealing with the matters like this one. In similar situation Hon ble Bombay High Court has in case of S.J. Enterprises [ 2022 (8) TMI 508 - BOMBAY HIGH COURT] after taken note of the unconditional apologies tendered discharged the notice for contempt. In view of the unconditional apologies tendered, except the part whereby we have passed direction for implementation of Final Order No 71733-71742/2019 dated 12.09.2019 read with Misc Order No 70019/2021 dated 21.06.2021, all other parts of our order like imposition of cost and reference of the matter to the Hon ble High Court for initiating contempt proceedings are reconsidered and set aside. Application disposed off.
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2024 (1) TMI 1167
Classification of goods sought to be imported - Interactive Large Format Display - to be classified under Heading 8528 or under Heading 8471? - HELD THAT:- On perusal of the comments of the concerned Commissionerate on the application for advance ruling, it is observed that word Display in the description of item Interactive Large Format Display has caught their attention and same has been made basis to arrive at essential/principal function of the subject goods however, it appears that importance of the word Interactive in the description of the subject goods, has not been discussed much. The word Interactive in the description of the subject goods immediately brings to the front various capabilities of the subject goods and on closer examination, the capabilities of the subject goods meet the requirement under Chapter Note 6(A) of Chapter 84 for a machine to mean as automatic data processing machine . Moreover, once an item has inbuilt input unit, output unit along with processing unit then it is obvious that the item is capable of performing multiple functions - the issue of classification, in the instant application gets settled in terms of Rule 1 and Rule 6 of General Rules for Interpretation of Import Tariff (GRI) without inviting reference to Rule 3 of GRI. It is also noted that a number of rulings and judgments have been quoted by the concerned Commissioner to justify classification under Heading 8528. However, it is felt that judgment of CESTAT, New Delhi in the case of M/s. Ingram Micro India Private Limited [ 2022 (2) TMI 308 - CESTAT NEW DELHI ] is the most appropriate, giving detailed explanation for classification of goods similar to the subject goods under Heading 8471. It is also noted that the Customs Authority for Advance Rulings, Mumbai examined the question of classification of similar goods and ruled for classification of such goods similar to the subject goods in sub-heading 8471 41 90, while referring to the Final Order of Hon ble CESTAT, New Delhi in an appeal filed by M/s. Ingram Micro India Private Limited. The proposed items of import namely, Interactive Large Format Display-Model Think Vision T86, T7S, T65 (with camera) T65 (without camera) merit classification under sub-heading 8471 41 90 of the First Schedule to the Customs Tariff Act, 1975.
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Insolvency & Bankruptcy
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2024 (1) TMI 1166
Undervalued/Preferential/wrongful transaction - exclusion of rights in the Trade Mark Gloster from the assets of the corporate Debtor - it is argued that the dispute is in regard to the title over the registered trademark for which the jurisdiction vests with the District Court in terms of Section 134 of the Act, 1999 and the Adjudicating Authority cannot take a decision under Section 60(5) of the Code - HELD THAT:- It is found that the legislature has used the different language in Section 43 and 45 of the Code because in Section 43, the RP or the liquidator has to form an opinion whereas in Section 45 the RP or the liquidator has to examine and then determine that the transaction in question were undervalued during the relevant period. In the case of Anuj Jain [ 2020 (2) TMI 1700 - SUPREME COURT ] the Hon ble Supreme Court has also held that specific material facts are required to be pleaded if a transaction is sought to be brought under the mischief sought to be remedied by Sections 45/46/47 or Section 66 of the Code. It further said that it is expected of any resolution professional to keep such requirements in view while making a motion to the Adjudicating Authoritybut in any case the action could not have been taken under Section 43 and 45 without there being an application moved by the RP. In the present case, the CoC was apprised in its 5th meeting that the forensic audit report found no preferential, undervalued, fraudulent or wrongful trading transactions nor it has found any related party preferential or fraudulent transaction whatsoever, therefore, only on the basis that the trademark was hypothecated for a bigger amount and has been assigned for lesser amount would not be a criteria for the purpose of declaring it to be undervalued transaction without there being sufficient material before the Adjudicating Authority to pass such an order, therefore, the finding recorded in this regard is not in accordance with law and thus reversed. The present appeal is hereby allowed and the impugned order is set aside.
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2024 (1) TMI 1165
Seeking withdrawal of CIRP - dismissal merely on the ground of commercial wisdom of the CoC without looking into spirit of the Code, which is meant for revival of the Corporate Debtor and not for recovery mechanism for the bankers - Section 12A r/w Regulation 30 A for CIRP Regulation 2016 - HELD THAT:- In view of provisions laid down under Section 12A of IBC, it is crystal clear that, once CoC is constituted, there is a mandatory requirement of 90% of the voting shares of the CoC in favour of the resolution for withdrawal of the CIRP of the Corporate Debtor and if the voting of the CoC is below 90% then the application of withdrawal cannot be allowed and hence it need to be dismissed. In the present case the Respondent No. 1 with 19.94% voting did not support 12A Application filed by the Corporate Debtor, hence the Adjudicating Authority rightly gave its verdict. Section 12A of the Code is very clear that any withdrawal of CIRP by the Appellant need to have minimum voting support of 90% of the CoC and in the present case never met this threshold. Thus, the Adjudicating Authority could not direct for settlement to the HDFC in contravention of the Code. On taking into consideration the various judgments where it has been held by the Hon ble Supreme Court of India that commercial wisdom is non judiciable and there is extremely limited scope for judicial intervention. There are no merit in the appeal - appeal dismissed.
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2024 (1) TMI 1164
CIRP - Rejection of Application seeking intervention - Locus to file application - infringement of rights - Approval of resolution plan (offer) of another party - HELD THAT:- The impugned order of the Adjudicating Authority clearly indicates that Adjudicating Authority proceeded to consider the objections raised by the Appellant to the process under which RP and CoC has approved the offer submitted by Respondent No.2. The Adjudicating Authority proceeded to examine the said contention on merits and has rejected the same by the impugned order. The fact that Adjudicating Authority proceeded to examine the contentions raised by the Appellant on merits itself indicate that objections raised by the Appellant required consideration. The Adjudicating Authority proceeding to examine the objections on merits and thereafter saying that Appellant has no locus is a contradiction in itself. On looking into the facts and sequence of events, the Appellant has submitted offer after receipt of EOI and RFRP for Resolution Plan. The Appellant also revised its offer and had negotiation with CoC and RP, which is a fact established from the record. The RP and CoC interacted with the Appellant in respect of its offer and it appears that on the basis of the offer submitted by the Appellant Right of First Refusal was exercised by Respondent No.2 and consequently offer was received Company Appeal (AT) (Insolvency) No.1650 of 2023 10 from Respondent No.2, which find favour by the CoC. The Appellant, who participated in the process cannot be said to be a person having no locus to object the Application filed by the RP for approval of offer submitted by Respondent No.2. Appeal disposed off.
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Service Tax
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2024 (1) TMI 1163
Failure to discharge Service Tax liability - Works Contract service - Bus Shelters for construction BRTS, Ahmedabad and other for construction of a Conventional Centre, Auditorium and Exhibition Hall for Gujarat University - contravention of provision of Section 68 read with Rule 6 of the Service Tax Rules, 1994 - failure to apply for registration with service tax department - failure to assess the tax due on the services provided and failure to furnish ST 3 returns - failure to pay the interest leviable on the service tax not paid - Recovery alongwith interest and penalty - extended period of limitation - HELD THAT:- On going through the order in original, it is found that the learned commissioner of the view the services are covered under works contract service but no elaboration was given as regards the exemption, valuation and ingredients of the service i.e. works contract service. In the said service, the main ingredients are that of construction BRTS, Ahmedabad and other for construction of a Conventional Centre, Auditorium and Exhibition Hall for Gujarat University. However, the learned Commissioner has not given clear findings why the services are not exempted on basis of valuation. These are the main factor which decide whether the service is taxable or not. Therefore, this aspect needs to be reconsidered. It is found that although the show cause notice refer to the charge of intention to evade payment of tax on the part of the appellant, no concrete evidence is forthcoming to substantiate this charge against the appellant. This aspect has not been fully examined and discussed in any of the orders passed by the authorities below. It is, therefore, necessary that in the interest of justice, the matter needs to be remanded to the Commissioner (Appeals) keeping all the issues open. Appeal allowed by way of remand.
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2024 (1) TMI 1162
Club or association service - appellant is a Member society of the Members, who are the owners of various commercial units in a commercial complex - appellant collect amounts from its members, which is used for maintenance of the commercial complex - HELD THAT:- The issue involved in the present case is prima facie covered by the cited judgment of Apex Court in the case of State of West Bengal [ 2019 (10) TMI 160 - SUPREME COURT] . However, at the time of passing of adjudicating order the said judgment was not available being passed subsequently. It is also observed that the judgment is based on certain facts such as the status of the association and the fact and the nature of the charges collected by the association from the members. In this position entire matter needs to be reconsidered in the light of the Hon'ble Supreme Court judgment in the West Bengal case vis-a-vis facts in the present case whether the same are similar to the fact of the said Apex Court Judgment. Accordingly, the adjudicating authority should reconsider the matter in the light of the facts of the present case as well as applicability of the various judgments including the judgment of Apex Court cited by the appellant. The appeals are allowed by way of remanded to the adjudicating authority.
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2024 (1) TMI 1161
Duty demand on the basis of differential figures available in Service Tax-3 Returns and Income Tax Returns for the period between October 2013 and March 2014 - reliance mainly on the certificate issued by the Chartered Accountant - HELD THAT:- At the outset it is to be noted that certificate issued by the Chartered Accountant is alone a valid piece of evidence without corroboration in view of several decisions of this Tribunal in the case of Rajashree Polyfil Vs. Commissioner of Central Excise Service Tax, Surat-II [ 2023 (6) TMI 456 - CESTAT AHMEDABAD] . It can be treated as expert s evidence for the reason that Institute of Chartered Accountants of India, a statutory body instituted by the Government of India has recognized them to be competent to issue certificates on Financial Statements and Auditor General of India has been accepting the Financial Statement of registered Companies, when endorsed by Chartered Accountants with their signatures and seals, apart from the fact that Section 32(2) of the Indian Evidence Act, 1872 permits acceptance of such document without a formal proof, in their absence under certain contingences. In view of irregularity in the Show cause and the non-sustainability of demand purely on the basis of difference between ST- 3 return and Income Tax returns of any other period, without any further examination to establish that the difference is on account of consideration received towards discharge of services, the order passed by the Commissioner is hereby confirmed. Appeal dismissed.
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2024 (1) TMI 1160
Erection, Commissioning and Installation service - whether the demand raised for the period earlier to 01.06.2007 and sustained in the impugned order is justified? - period from July 2003 to April 2006 - HELD THAT:- The Show Cause Notice, which is the starting point, clearly reveals that the period was from July 2003 to April 2006. At paragraph 3 of the Show Cause Notice, the issuing authority has worked out the total Service Tax after allowing abatement of 67% at Rs.3,98,763/-, which was proposed to be demanded and thereafter, vide Order-in-Original No. 95/2010 dated 31.12.2010, came to be confirmed. It is clear that the Revenue has accepted that the service carried out by the appellant was in terms of the works contract and admittedly, the period is also prior to 01.06.2007 and hence, it is agreed that the issue involved in the above case is no more res integra as the same stands covered in favour of the taxpayer by the above ruling of the Hon ble Apex Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] . There are no merit in the demand raised and upheld in the impugned order - appeal allowed.
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2024 (1) TMI 1159
Recovery of short payment of Service Tax - stand of the Appellant is that Service Tax in advance was paid but had not been shown in the ST-3 Return as advances and not been adjusted subsequently in the returns filed for subsequent period - HELD THAT:- Section 68 commands for payment of Service Tax by the person providing taxable service and Rule 6 provides the manner in which payment of Service Tax can be effected. Rule 6 Sub Rule 1A, Sub Rule 4A and Sub Rule 4B deal with payment of Service Tax made in advance that can be adjusted against subsequent Service Tax dues for the succeeding fact that quarter or subsequent period and while Sub Rule A is conditional to the intimation of advance tax paid is to be given within 15 days to the Jurisdictional Superintendent of Central Excise, Sub Rule 4A has not stipulated any such condition and, therefore, such excess amount paid by the Appellant against his Service Tax liability could have been adjusted for the subsequent period, which Appellant failed to do may be due to inadequate knowledge/understanding of law till it was put to notice for recovery but that cannot be the sole ground to conform the demand when duty liability for the consideration amount received in advance was discharged, though without a proper intimation. This being the fact on record and having regard to the rules that enable adjustment of advance payment of tax against subsequent dues, there are no hesitation to hold that Appellant had discharged the duty liability but only failed to record the same in the ST-3 Returns, apparently for the reason that it had filled the returns subsequently upon payment of late fee of Rs.20,000/-, which was also confirmed by the Commissioner and that remained unchallenged in this appeal. The appeal is allowed in part.
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Central Excise
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2024 (1) TMI 1158
Levy of Cess under Clean Energy Cess 2010 which has been repealed by the GST Compensation Cess under the Goods Services (Compensation to States) Act, 2017 - Revenue can take recourse of first proviso to section 11A(1)/ section 11A(4) on the ground of suppression, fraud etc. - liability to pay interest penalty over the Cess amount. Whether the Revenue is entitled to levy Cess under Clean Energy Cess 2010 which has been repealed by the GST Compensation Cess under the Goods Services (Compensation to States) Act, 2017? - HELD THAT:- Section 83(3) of Chapter VII of Finance Act, 2010 itself provides for Levy , Collection and Rates of Tax at Tenth Schedule. As per Section 83, the levy of duty is on the production of Coal. The taxable event is production of coal and not its removal. Further, the Finance Act, 2010 itself provides for Collection and Rates of Tax . Rules 4 Rule 6 of Cess Rules specifies the procedure that the Cess is payable by 5th of the second month. The Rule does not specify that the Cess is to be paid at the rate applicable at the time of removal. Therefore, prima-facie it appears that respondent had the power to levy and collect Clean Energy Cess on the coal already produced and lying in stock as on 30.06.2017 - respondent had the power to levy and collect Clean Energy Cess on the coal lying in stock as on 30.06.2017 at the specified rates which were produced when the said cess was in force. It is reiterated that liability to pay cess only accrues at the time of production and its payment is scheduled when the coal is removed in view of Rule 4 and 6 of Cess Rules since, as per section 83(3) of Finance Act, 2010 levy is on production of coal. Rule 4 and 6 deals only with time and manner of payment/discharge of cess and not the rate. In this regard, reference may be placed on the dictionary meanings of the words 'accrued' and 'acquired'. The Revenue is right is demanding the tax on production which was lying on stock as on the date of amendment and repeal of Clean Energy Cess for the sole reason that the taxable event was production and only the payment was deferred at the time of Removal - by virtue of Section 83(3) playability is created; and only the payment is deferred to be done in the manner provided in Rule 4 6 - issue decided in favour of Revenue. If the Revenue is entitled to levy Cess under Clean Energy Cess 2010 then as to whether in the facts and circumstance of this case the Revenue can take recourse of first proviso to section 11A(1)/ section 11A(4) on the ground of suppression, fraud etc.? - If the Assessee is liable to pay Cess under Clean Energy Cess 2010 then as to whether he is also liable to pay interest penalty over the Cess amount? - HELD THAT:- Since, the present case is an interpretational issue and petitioner was paying GST Compensation Cess with a bona-fide belief that Clean Energy Cess was not payable. Further, the petitioner has been filing regular returns under GST law for all the supplies of coal made after introduction of GST. Petitioner was not filing returns under Clean Energy Cess Rules with a bona fide belief that Clean Energy Cess was not payable. Further, these facts were in the knowledge of the respondents; however, despite said facts being in the knowledge of the respondents, show cause notice was issued almost after two years from the date Clean Energy Cess was repealed. Thus, as aforesaid, since the instant case involves an interpretational issue, therefore in such circumstances, no penalty under Section 11AC can be levied as demand of Cess under the extended period of limitation is unsustainable. As the allegation of suppression and wilful intent to evade tax is baseless and incorrect, penalty under Section 11AC(1)(c) of the Central Excise Act, 1944 cannot be imposed - inasmuch as, no penalty under Section 11AC can be levied as demand of Cess and further extended period of limitation can not be invoked. However, the Assessee is liable to pay Cess for the normal period including interest over the same. The matter is remitted back to the adjudicating authority: respondent no. 3 to recalculate the amount of clean environment cess confirming the demand to normal period of limitation - The instant writ application stands partly allowed.
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2024 (1) TMI 1157
CENVAT Credit - input services or not - services related to effluent treatment of the waste generated at the appellant s factory and such effluent treatment service availed from the third party agency i.e. Bharuch Enviro Infrastructure Ltd., Ankhleshwar (BEIL) - HELD THAT:- As per the pollution control act, it is mandatory for every industrial unit to treat the effluent waste generated during the manufacture of final product, therefore, the industrial unit cannot carry out the production without compliance of pollution control norms which includes effluent treatment of waste generated during the manufacturing activity. Therefore, the effluent treatment of waste is necessary for overall manufacturing activity of the industrial unit. This issue has been considered in the various judgments - reliance can be placed in INDIAN FARMERS FERTILISER COOP. LTD. VERSUS CCE., AHMEDABAD [ 1996 (7) TMI 141 - SUPREME COURT] where it was held that The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process of that end-product. The ammonia used in the treatment of effluents from the urea plant of the appellants has, therefore, to be held to be used in the manufacture of urea and the raw naphtha used in the manufacture of such ammonia to be entitled to the said exemption. The revenue s claim that since the service was availed beyond the place of removal, credit is not admissible completely fails and, on that ground, credit cannot be denied. The appellant is legally entitled for availment of Cenvat credit in respect of effluent treatment service - the impugned order is set aside - Appeals are allowed.
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2024 (1) TMI 1156
Levy of penalty u/r 26 of Central Excise Rules, 2002 - appellant being Director of M/s. Senor Metal Pvt Ltd Supplied the raw material clandestinely to M/s. Silver Techno cast who inturn manufactured and cleared their final products clandestinely - witnesses were not cross-examined - violation of principles of natural justice - HELD THAT:- From the statement of partner of M/s. Silver Techno Cast it is clear that though the appellant companies M/s. Senor Metal Pvt Ltd has been stated as supplier of the goods but as regards the supplies made without payment of duty the name of M/s. Senor Metal Pvt Ltd is not appearing which shows that all the supply is made by appellant s company is under invoice and no clandestine removal was made. It is found that though the employee of the appellant company admitted to supply the goods but no quantity, value or payment thereof was brought on record as evidence. Therefore, mere verbal admission will not help the revenue. The appellant s company M/s. Senor Metal Pvt Ltd is an excisable unit liable to pay excise duty it is worth to note that despite making charge that the appellant company has supplied the goods without issuing invoice which means without payment of duty no action was taken by the department for payment of duty from M/s. Senor Metal Pvt Ltd This also strengthen the case of the appellant that no clandestine goods removal of the M/s. Senor Metal Pvt Ltd was established. It is further found that when the appellant has seriously objected the charge of supply of goods by M/s. Senor Metals without issuing invoice to M/s. Silver Techno cast the adjudicating authority was duty bound to cross examine the employee of the M/s. Senor Metal Pvt Ltd to admit his statement as evidence which is required under Section 9 (d) of Central Excise Act, 1944 without cross examine the witness his statement cannot be relied - the department could not establish case of removal of goods by M/s. Senor Metal Pvt Ltd Without issuing invoices to M/s. Silver techno cast. Accordingly, there is no case of abetment of evasion of duty by the present appellant. Hence, the penalty is not sustainable. Appeal allowed.
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2024 (1) TMI 1155
Clandestine removal - suppression of production, under valuation and clandestine clearance of sponge iron - demand confirmed on the basis of computer printouts seized from the Appellant s premises - under valuation - difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report - penalties. Demand of Rs.32,36,758/- has been confirmed on the basis of the details available in the computer print-out - HELD THAT:- The Appellant stated that the computer print-out recovered from their office does not belong to them. It belonged to one Mr.Sanjay Bhalotia, a trader having business relationship with the Appellant. It is found that the said Sanjay Bhalotia through an affidavit dated 24.01.2008 claimed that those papers belonged to him and he had inadvertently left those papers on the table of Nimananda Pradhan on 19.05.2006 when he had visited the Appellant s Office about an hour before the search by DGCEI - the statement dated 18.02.2009 has no evidentiary value as the Appellant has not been informed about the contents of the statement. Without sharing it with the Appellant, it cannot be used against him. Accordingly, the statement dated 18.02.2009 cannot be taken to into cognizance. Demands of Rs.32,36,758/- and Rs 3,37,080/- have been worked out on the basis of the details available in the computer sheets recovered from the office of the Appellant - HELD THAT:- The department has not followed the mandate under section 36B and the author of the entries made in the computer printout has not been identified. Accordingly, it is observed that the computer sheets recovered cannot be relied upon to work out the duty liability on the allegation of clandestine removal. As the demands mentioned at Sl. no (i) and (ii) of para 2 has been confirmed solely based on the data available in the computer print outs, the demand of Rs. 32,36,758/- and Rs 3,37,080/-confirmed only on the basis of computer print-outs seized from the Appellant s premises is not sustainable and accordingly, the same is set aside. Demand of Rs. 18,37,986/- confirmed on the basis of difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report - HELD THAT:- In this case, the shortages have been arrived at on the basis of the registers maintained by the Appellant themselves. The reasons for the discrepancies have to be explained by the Appellant only, as they are the authors of the entries made in the Registers. However, the Appellant could not give any valid explanation for the shortages. Thus, the discrepancies in the registers itself is sufficient to corroborate the clandestine clearance. Accordingly, the demand of Rs. 18,37,986/-confirmed on the basis of difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report, is sustainable. The Appellant is liable to pay this duty along with applicable interest. As the Appellant has suppressed the actual production with an intention to evade payment of duty, they are liable for penalty equivalent to the duty evaded under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. Penalty on the Director, Sh.C.S.Grewal - HELD THAT:- It is observed that only part of the demand confirmed in the impugned order is held to be sustainable. Hence, the penalty can be imposed only in proportion to the demand confirmed. Accordingly, the penalty imposed on the Director Shri. C.S. Grewal from Rs. 10,00,000/- reduced to Rs. 2,00,000/-. Penalty imposed on Mr. Nimananda Pradhan, Manager - HELD THAT:- The incriminating documents recovered have been found to be not reliable and the demand confirmed based on the document has been held as not sustainable. Hence, the penalty imposed on the Manager on that basis of these documents also will not survive. Accordingly, the penalty imposed on Shri. Nimananda Pradhan is set aside. Penalty imposed on Sh. R.S. Pandey, DGM, as the head of production - HELD THAT:- It is observed that he is an employee of the company. His duty is to carry out the work as ordered by the management. He has accounted the production as advised by the Director of the company. In a family based private limited company, the Director is the ultimate beneficiary of the illegal activities. The Director has already been held responsible for the short accountal of sponge iron and penalty has been imposed on him. Thus, Mr. R.S.Pandey, DGM being employee of the company is not liable for penalty and accordingly the penalty imposed on him is set aside. Appeal disposed off.
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CST, VAT & Sales Tax
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2024 (1) TMI 1154
Maintainability of Revision application GVAT Tribunal - Cancellation of registration of the petitioner with retrospective effect - whether the Revision Application filed by the petitioner under Section 75(1)(b) of the VAT Act would be maintainable before the Tribunal when the order for cancellation of registration is passed by the Deputy Commissioner under Section 27(5)(i) of the VAT Act? - HELD THAT:- It is also not in dispute that the Deputy Commissioner passed the order under Section 75(1)(a) of the VAT Act under the delegated powers of the Commissioner. That means, the Deputy Commissioner has exercised the powers of Commissioner under Section 75(1)(a) of the VAT Act. Therefore, considering the provision of Section 75(1)(b) of the VAT Act, any application made to the Tribunal against an order of the Commissioner is to be treated as Revision and would be maintainable before the Tribunal only. The Tribunal was not justified in holding that the Revision Application filed by the petitioner against the order passed by the Deputy Commissioner under Section 27(5)(i) read with Section 75(1)(b) of the VAT Act is not maintainable in view of provision of Section 73 of the Act because, as per Section 73, an Appeal of every original order not being an order mentioned in Section 74 passed under the Act is maintainable - In the facts of the case, the order passed by the Deputy Commissioner is not an original order but is a revisional order under Section 75(1)(a) of the VAT Act and therefore, Appeal under Section 73 would not be maintainable, but only Revision before the Tribunal under Section 75(1)(b) of the VAT Act would be maintainable. The impugned order passed by the Tribunal is hereby quashed and set aside and the matter is remanded back to the Tribunal for considering the Revision Application No. 59 of 2021 on merits - Petition allowed by way of remand.
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Indian Laws
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2024 (1) TMI 1153
Grant of default bail under Section 167(2) Cr.P.C. - criminal conspiracy to cheat the consortium of 17 banks led by Union Bank of India - induced the consortium banks to sanction huge loans - siphoning off of the funds - investigation qua some of the accused named in the FIR was pending, though the report under sub-section (2) of Section 173 (Chargesheet) against respondents along with the other accused was filed within the prescribed time limit - cognizance of the offence was taken by the special court before the consideration of the application of the respondents seeking default bail under Section 167 (2) Cr.P.C. HELD THAT:- There cannot be any disagreement with the well settled legal position that the right of default bail under Section 167(2) Cr.P.C. is not only a statutory right but is a right that flows from Article 21 of the Constitution of India. It is an indefeasible right, nonetheless it is enforceable only prior to the filing of the challan or the chargesheet, and does not survive or remain enforceable on the challan being filed, if already not availed of. Once the challan has been filed, the question of grant of bail has to be considered and decided only with reference to the merits of the case under the provisions relating to grant of bail to the accused after the filing of the challan. In SURESH KUMAR BHIKAMCHAND JAIN VERSUS STATE OF MAHARASHTRA ANR. [ 2013 (2) TMI 821 - SUPREME COURT] the appellant-accused had sought default bail under Section 167(2) on the ground that though the chargesheet was filed within the stipulated time, the cognizance was not taken by the court, for want of sanction to prosecute the accused. The court dispelling the claim of the accused held an investigating authority fails to file the charge-sheet within the stipulated period, the accused is entitled to be released on statutory bail. In such a situation, the accused continues to remain in the custody of the Magistrate till such time as cognizance is taken by the court trying the offence, when the said court assumes custody of the accused for purposes of remand during the trial in terms of Section 309 CrPC. The two stages are different, but one follows the other so as to maintain a continuity of the custody of the accused with a court. There remains no shadow of doubt that the statutory requirement of the report under Section 173 (2) would be complied with if the various details prescribed therein are included in the report. The report under Section 173 is an intimation to the court that upon investigation into the cognizable offence, the investigating officer has been able to procure sufficient evidence for the court to inquire into the offence and the necessary information is being sent to the court. The report is complete if it is accompanied with all the documents and statements of witnesses as required by Section 175 (5). As settled in the afore-stated case, it is not necessary that all the details of the offence must be stated. The benefit of proviso appended to sub-section (2) of Section 167 of the Code would be available to the offender only when a chargesheet is not filed and the investigation is kept pending against him. Once however, a chargesheet is filed, the said right ceases. It may be noted that the right of the investigating officer to pray for further investigation in terms of sub-section (8) of Section 173 is not taken away only because a chargesheet is filed under sub-section (2) thereof against the accused - Once from the material produced along with the chargesheet, the court is satisfied about the commission of an offence and takes cognizance of the offence allegedly committed by the accused, it is immaterial whether the further investigation in terms of Section 173(8) is pending or not. The pendency of the further investigation qua the other accused or for production of some documents not available at the time of filing of chargesheet would neither vitiate the chargesheet, nor would it entitle the accused to claim right to get default bail on the ground that the chargesheet was an incomplete chargesheet or that the chargesheet was not filed in terms of Section 173(2) of Cr.P.C. There are no hesitation in holding that the chargesheet having been filed against the respondents-accused within the prescribed time limit and the cognizance having been taken by the Special Court of the offences allegedly committed by them, the respondents could not have claimed the statutory right of default bail under Section 167(2) on the ground that the investigation qua other accused was pending. Both, the Special Court as well as the High Court having committed serious error of law in disregarding the legal position enunciated and settled by this Court, the impugned orders deserve to be set aside and are accordingly set aside. Appeal allowed.
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2024 (1) TMI 1152
Dismissal from service - Disciplinary proceedings against police officer - appellant has been acquitted in the criminal case - Involvement in Customs case of Smuggling of heroin - multiple proceedings - HELD THAT:- In the instant case, the appellant deliberately kept away from the inquiry proceedings. He was aware of the manner in which the disciplinary proceedings were going on but elected to stay away. He did not report for duty from 23rd February, 1989 till the order of dismissal from service was passed against him by the respondent No. 4 - Disciplinary Authority on 20th December, 1991. It took the appellant seven long years to approach the Appellate Authority against the dismissal order passed against him sometime in the year 1998. The factum of the appellant having been discharged in the criminal case would not be of any material consideration as the Disciplinary Authority1 had taken action against the appellant for remaining absent from duty which is clearly brought out from the record. The present appeal is dismissed as meritless while leaving the parties to bear their own expenses.
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2024 (1) TMI 1151
Grant of permission to respondent No. 1 to travel abroad subject to certain conditions. The respondent No. 1 submits that in terms of the aforesaid order, the respondent No. 1 traveled abroad and has also returned back to India. By a further order dated 18th December, 2023 in Misc. Application No. C.C.No.4767/Misc./2023, the learned Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Mumbai has further relaxed the conditions which were imposed by earlier orders. HELD THAT:- Nothing survives in this petition - The petition stands disposed.
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