Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 4, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Central Excise
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02/2023 - dated
2-1-2023
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CE
Exemption to the excisable goods - Rates of Special Additional Excise Duty for exports of petrol and diesel - SAED on Diesel reduced to NIL - Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022.
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01/2023 - dated
2-1-2023
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CE
Special Additional Excise Duty on production of Petroleum Crude and export of Aviation Turbine Fuel - Rate amended - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022.
GST - States
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(14/2022) FD 20 CSL 2022 - dated
31-12-2022
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Karnataka SGST
Amendment in Notification (04/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(13/2022) FD 20 CSL 2022 - dated
31-12-2022
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Karnataka SGST
Amendment in Notification (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(12/2022) FD 20 CSL 2022 - dated
31-12-2022
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Karnataka SGST
Amendment in Notification (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
Highlights / Catch Notes
GST
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Levy of Interest and penalty - delayed payment of tax - the impugned orders, apart from suffering from the vice of non-application of mind to the reply of the party, also run in violation of mandatory requirement of Section 75(6) of the CGST Act - Hence, the impugned orders cannot be sustained and are hereby quashed and set aside. - HC
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Supply of Pencils Sharpener along with Pencils - A mixed supply containing more than two supplies shall be treated as a supply of that particular supply which attracts the higher rate of tax in the mix supply. We hold that the applicant is required to use the HSN code of the particular supply which attracts higher rate of tax among all the taxable supplies containing in a pack/box. - AAR
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The readily available food items (not prepared/cooked in the restaurant) sold over the counter by the Applicant to the customer whether consumed in the restaurant or by way of takeaway does not qualify as 'restaurant services' instead of falls under supply of goods which is liable to applicable rate of GST Tax - AAR
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Exemption from GST - activity of Afforestation, which includes the plantation of mangroves - The applicant activity of plantation of Mangrove are covered under Charitable Activity as defined under Clause 2(r) of the Notification No. 12/2017-CT (Rate) dated 28-6-2017. The applicant is registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) as Charitable Trust, thus service of plantation of Mangroves by the applicant is eligible for exemption from the payment of GST - AAR
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Supply of services for right to use of car parking space is a separate supply and not to be construed as a composite supply of construction of residential apartment services - In the instant case, supply of services for right to use of car parking space would be taxable @ 18% - tax is payable on supply of services for right to use of car parking space. - AAR
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Exemption from GST - Healthcare services - regular medical monitoring along with other logistic support as provided by the applicant to senior citizens at their door step - the services provided by the applicant can be termed as human health and social care services and is taxable @ 18% of GST - AAR
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Classification of services - Job-work - works contract services - welding services are provided on railway tracks - the contract awarded to the applicant is not limited to any treatment or process (the process of welding for the instant case) on goods belonging to another person. The scope of work as it is noticed from the work order covers the entire job for conversion of SWR to LWR including replacement of existing AT welds for a total distance of 54.03 km by flash butt welding. - The instant services, therefore, falls under Tariff Code 995429 and to be taxed @ 18% of GST - AAR
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Classification of supply - supply of goods or supply of services - transfer of business by way of merger of two registration/distinct person - going concern or not - The transaction of transfer of business of the applicant involved in the instant case shall be treated as a supply of services - Benefit of exemption is available subject to conditions - AAR
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Requirement to issue tax invoice - In the instant case, two separate supplies take place. The first one is made by the contractor to the applicant and thereafter another supply is made by the applicant to the department concerned in spite of the fact as stated by the applicant that there is no value addition in respect of the second supply - The applicant while working as a “Project Implementing Agency’ is making supplies to State Government Department/ Directorate and therefore is required to issue tax invoice on the contract value as determined by the department. - AAR
Income Tax
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Reopening of assessment - non-supply of relevant material - If the assessee is deprived of the relevant material he will not be in a position to submit a comprehensive and befitting reply to the show cause notice. Therefore, non-supply of relevant material, as stated supra, would amount to denial of principles of natural justice. - HC
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Disallowance of interest relating to Capital Work in Progress (CWIP) - The Appellant has furnished the relevant working capital facility agreements and ledger account to show that the unsecured loans were for working capital, and the interest paid thereon is also clearly reflected in the financial statements in Schedule 18 - “Interest – On working capital loans”. In our view, in absence of any information/circumstances to suggest, in some form or manner, any diversion of working capital loans for funds by the Appellant, in the facts and circumstances of the present case, the presumption drawn by the Assessing Officer cannot be sustained as it has no basis. - AT
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Additions towards unrecorded expenditure - A.O. has disallowed the said expenditure in Note 26 foreign currency transactions, pertaining to purchase of shooting equipment. - As the assessee was unable to furnish any documents or breakup of the said expenses, the A.O. rejected the assessee’s submission that the import transaction has been disclosed in the books of accounts of the assessee and was, therefore, treated as ‘unexplained expenditure’. The assessee has failed to substantiate its claim - Additions confirmed - AT
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TP adjustment - Arms’ length price of international transaction of overdue export proceeds - non-charging of interest on advances being overdue export proceeds from Associated Enterprises as a comparable internal CUP as for similar time on similar conditions, for almost similar period no interest is charged from Non Associated Enterprises - In view of this, we find that Arms Length Price of overdue Export proceeds and receivable from Associated Enterprises is ₹ Nil. - AT
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TDS u/s 194D - ceading commission - soliciting or procuring insurance business - As per the facts of the present case, the cedant commission paid by the assessee to the insurance company is actually the share of assessee in the nature of manpower cost, third party administration cost, administration cost, etc. which are actually reimbursement of expenses in relation to the gross premium - no TDS is required to be deducted. - AT
Customs
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Adjudication of SCN after a long gap - time limitation - In the present case the show cause notice was kept dormant and the notice for personal appearance was issued 18 years ago. There is no dispute and cannot be any dispute regarding the above position of law laid down in these decisions. The petition was admitted and Rule was issued, and thus, the position has continued for 25 years - SCN quashed and set aside - HC
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Revocation of Customs Broker Licence - forfeiture of security deposit - imposition of penalty - non-ascertainment of the premises from which the importer operated and unwonted reliance placed on an intermediary who allegedly misused the Import Export Code (IEC) of another entity for import of branded goods - the ends of justice would be met by setting aside the revocation while allowing the forfeiture of security deposit and imposition of penalty to sustain. - AT
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Valuation of imported goods - the importer specially stated in the statement recorded under section 108 of the Customs Act, after being shown the contemporaneous value, that it he agreed that the value of the goods should be enhanced. The importer also specifically stated that it did not want to avail of the right conferred under section 124 of the Customs Act and, therefore, did not want any show cause notice to be issued to or personal hearing to be provided. - the Commissioner (Appeals) was not justified in setting aside the orders passed by the assessing officer on the Bills of Entry - AT
Corporate Law
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Anti-competitive acts - bid rigging - use of dominion position - The Court has no such expertise in evaluating or interpreting the business data or statistical data pertaining to a particular commercial activity. - The angle of interpretation of such data may be different by different person and, therefore, the submission of the petitioner that information relating to the statistical datea including the interpretation of effect of L1 price in each packet and the negotiated price thereof, etc., is misunderstood by the Commission, cannot be accpeted at this stage, as it is prerogative of the Commission to form prima-facie opinion as to initiation of inquiry. - HC
IBC
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Initition of CIRP - Ex-parte order - Corporate Debtor could not appear before the NCLT - in the instant case on hand, there is overwhelming evidence of Debt Due, payable in Fact and in Law, and Default, the Adjudicating Authority, had exercised its subjective discretion in a sound, judicious and right thinking manner, and accordingly Admitted the application, filed by the 1st Respondent / Bank(Financial Creditor), which requires no interference, in the hands of this Tribunal, sitting in Appeal. Consequently, the Appeal fails. - AT
Service Tax
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Extended period of limitation - Issue involved was subject to various litigation - This appeal of Revenue seeking recovery as proposed in the demand by invoking of the extended period for subsequent period of time is not correct in law - AT
Central Excise
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Rectification of mistake - mistake apparent on the face of record or not - rectification of an order stems from the fundamental principle that justice is above all and it is to be exercised to remove the error and to disturb the finality - If non-consideration of a decision of the High Court or the Supreme Court can be said to be a “mistake apparent from the record‟, there can be no doubt that non-consideration of two important submissions which were advanced at the time of hearing of the appeal would constitute a mistake apparent from the record which would require rectification. - AT
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Recovery of cenvat credit of basic excise duty - The word “precincts” has to be given a broader meaning and the distance between such premises carrying out manufacturing process connected with the production of excisable goods, is not material to deny benefit of exemption notification. - , the additional premise is an extension of factory of the appellant and hence benefit of notification no. 67/95-CE cannot be denied to the appellant - the situation is therefore revenue neutral, in the circumstances, demand of duty on transfer of such capital goods on the ground that the other premise is to be treated as separate premise requiring separate registration under the Act is not tenable. - AT
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Cenvat credit - input services or not - services in relation to fabrication of plant and machinery - any service which is covered under the means part of the definition, the credit cannot be denied even if, it does not appear in the inclusive part of the definition - without use of these services, the appellant could not have possibly manufactured the excisable goods. In this background, we do not find any merit in the argument of the Revenue that by deletion of word ‘setting up’ from the definition of input service any significant change has happened. - AT
Case Laws:
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GST
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2023 (1) TMI 88
Levy of Interest and penalty - delayed payment of tax - petitioner has challenged the final assessment order on the ground of non-adherence to the principles of natural justice, violation of mandatory requirement of Section 75 of the CGST Act and numerous other grounds - non-application of mind - violation of principles of natural justice - HELD THAT:- It is clear on the face of the record that the officer did not consider the detailed reply submitted on behalf of the petitioner while passing the impugned orders which are sketchy and non-speaking on the face of it. Thus, the impugned orders, apart from suffering from the vice of non-application of mind to the reply of the party, also run in violation of mandatory requirement of Section 75(6) of the CGST Act - Hence, the impugned orders cannot be sustained and are hereby quashed and set aside. The petitioner s representative shall appear before the Joint Commissioner on 22.12.2022, whereafter, opportunity of hearing shall be provided and fresh order shall be passed assigning proper reasons - Petition allowed by way of remand.
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2023 (1) TMI 87
Construction services or not - whether the project which is currently under construction by the applicant shall be regarded as a Residential Real Estate Project (RREP) or Real Estate Project (REP)? - Whether the project consisting residential Apartment eligible for GST Rate 1% being an affordable residential apartment without ITC, 5% without ITC for other than residential affordable apartment and 5% without ITC for commercial shops? - HELD THAT:- The applicant is developing buildings consisting of apartments and commercial shops for the purpose of selling. The instant project, shall be treated as RREP if the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP. Here, we find that instant project having commercial shop carpet area less than 15% of total carpet area considering the submission of the applicant. As a result, the instant project falls under the category of Residential Real Estate Project (RREP). Applicable GST rate on affordable residential apartment, other residential apartment and commercial shop - HELD THAT:- The consideration of Rs. 45 Lacs as mentioned in the Notification in case of Affordable Residential Apartment is the gross amount which includes all types of charges collected from the potential buyer except Stamp Duty payable. We find that the applicant have not submitted any legal documents to ascertain that the which types of charges makes exact gross amount of the affordable residential flat which are collected from the customer. The applicant has not submitted the types of heads under which consideration have been received and make Gross Amount of the affordable Residential Flat less than 45 lacs - Similarly, the applicant have not submitted any legal documents in support of exact carpet area and consideration recovered from the customer in respect of other than affordable residential flat and commercial shops. The applicant have not submitted sufficient documents to decide the Ruling on the question sought for, therefore we are not inclined to pronounce the Ruling in absence of proper documents. The ruling can be pronounced on the basis of proper documents in support of the questions and not on simple facts and assumptions.
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2023 (1) TMI 86
Maintainability of Advance Ruling application - Levy of GST - Classification of services - rate of GST - sale of Land / Industrial Plot - legal basis of non applicability - Input tax credit - HELD THAT:- The transaction shall be out of GST net only if the activity is exclusively dealing with transfer of title or transfer of ownership of land, which is immovable property or earth. Here the substance of agreement between the parties is important. Where the nature of activity is that of ONLY sale of immoveable property of plot, it is excluded from GST levy. It has been observed from the submission that the applicant is in dilemma whether they will sale the whole land as purchased as such or will sale the individual plots of different sizes. The applicant is not sure about the proposed nature of activities to be undertaken by them. We find that to sale land as such i.e. barren land and to sale of individual plot with developed facilities are two distinct activities and attract different provisions of GST Act and Rules. The nature of taxability purely depends upon the type of activity proposed to be undertaken by the applicant - the applicant have not submitted any such documents by which it can be ascertain what types of activities have been permitted by the competent Authority to be carried out on the plot. The applicant has also failed to submit details of amenities to be provided in the plotted scheme and documents in support of it. The applicant also not disclosed/ submitted whether they proposed to construct any residential/ commercial construction on the plot or otherwise. In absence of specific activities proposed to be carried out by the applicant and lack of sufficient documents, the application does not have any locus standii - the application filed for Advance Ruling is not maintainable.
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2023 (1) TMI 85
Classification of supply - principal supply - Composite Supply or Mixed Supply - rate of GST - supply of Pencils Sharpener along with Pencils - supply of sharpener having a nominal value along with the kit - supply of Sharpener along with the kit having a nominal value will have an impact on rate of tax or not - HELD THAT:- The applicant supplies Doms Al Pencil. Doms Smart Kit and Doms My First Pencil Kit do not get covered under the category of 'composite supply' - the applicant supplies of Doms Al Pencil, Doms Smart Kit and Doms My First Pencil Kit satisfied all the conditions of mix supply. Further, we observed that the illustration given under the definition of Mix supply is similar to all types of the supplies of applicant. Therefore, we hold that all the three types of supply covers under the category of 'mixed supply' as defined under Section 2(74) of CGST Act, 2017. A mixed supply containing more than two supplies shall be treated as a supply of that particular supply which attracts the higher rate of tax in the mix supply. We hold that the applicant is required to use the HSN code of the particular supply which attracts higher rate of tax among all the taxable supplies containing in a pack/box. The applicant in their addition submission has referred the General Interpretation of Rules of Custom Tariff Act, 1975 and argued that as per the GIR the classification of the pack/box containing multiple of goods will be decided by the essential characteristics of the goods containing in the packet - We find that the argument of the applicant does not hold much water as the present application is filed by the applicant for deciding the nature of supply and not for deciding the classification of all the taxable supplies containing in the box/pack. The applicant all the supplies are covered under the category of Mixed supply hence as per the provision of mixed supply, the supply which attracts higher rate of tax shall the applicable rate for the supply. The applicant all the supplies i.e. kit if containing Sharpener and if tax rate of that particular sharpener is highest among all the product containing in that particular supply i.e. kit, in such case the applicant is liable to pay the highest tax rate and HSN code is to be used of that particular supply having highest rate.
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2023 (1) TMI 84
Classification of services - food and beverages prepared and supplied by the Applicant to its customers whether consumed in the restaurant or by way of takeaway qualifies - readily available food and beverages (not prepared in the restaurant) sold over the counter by the Applicant to the customer whether consumed in the restaurant or by way of takeaway - restaurant services or not? - classifiable under SAC '996331 or not - input tax credit as per Sr. No. 7(ii) of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017, read with Sr. No. 7(ii) of Notification No. 11/2017-State Tax (Rate) dated June 30, 2017? HELD THAT:- The food and beverages prepared/cooked in the restaurant and supplied by the Applicant to its customers either consumed in the restaurant or by way of takeaway qualifies as 'restaurant services. The restaurant service is classifiable under SAC '996331: Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food' - the restaurant service is leviable tax rate of GST @ 5% with no input tax credit as per Sr. No. 7(ii) of Notification No.11/2017 - Central Tax (Rate) dated June 28. 2017, read with Sr. No. 7(ii) of Notification No. 11/2017 - State Tax (Rate) dated June 30, 2017. The readily available food items (not prepared/cooked in the restaurant) sold over the counter by the Applicant to the customer whether consumed in the restaurant or by way of takeaway does not qualify as 'restaurant services' instead of falls under supply of goods which is liable to applicable rate of GST Tax - The readily available food and beverages (not prepared in the restaurant) sold over the counter by the Applicant is supply of goods which is liable to applicable rate of GST Tax and does not qualify as restaurant services.
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2023 (1) TMI 83
Exemption from GST - activity of Afforestation, which includes the plantation of mangroves - Charitable activities or not - Sr. No.1 of Notification NO.12/2017-CT (Rate) - Whether the applicant is required to be get registered under GST? - HELD THAT:- The applicant has undertaken the project of afforestation which include plantation of Mangroves covering 200 hectare area along coastal belt of Jambusar taluka, Bharuch district, Gujarat. Mangroves are one of the earth's most important ecosystems and serve many critical functions: buffering coasts from storm surges, preventing coastal erosion, filtering water, storing carbon, serving as a vital habitat for a great number of species, and providing food and livelihoods for local communities. Planning Commission, New Delhi has published report of the Task Force on ISLANDS, CORAL REFS, MANGROVES WETLANDS IN ENVIORNMENT FORESTS For the Eleventh Five Year Plan 2007-2012. Chapter-3 of the report has elaborated causes of depletion of Mangroves, benefits of plantation of Mangroves on Environment, Economic and social aspect. The benefits of plantation of Mangroves along coastal and looking to the impact of plantation of mangrove on environment, social and economic, it is held that the activities of plantation of mangrove carried out by the applicant are covered under point (iv) of Charitable under clause 2 (r) of Notification No. 12/2017-CT (R) dated 28-6-2017 as amended. Determination whether activity of the applicant covered under Supply defined under Section 7 of CGST Act, 2017 - HELD THAT:- The applicant service of afforestation which include plantation of Mangroves along with the coastline to protect the environment and up liftmen of socially and economically marginalized people as discussed in the above paras cannot be considered a business activity. The said activity have not been done for the commercial benefit but it is being carried out for social and economic benefit of the marginalized people and to protect the environment. The applicant activity of plantation of Mangrove are covered under Charitable Activity as defined under Clause 2( r) of the Notification No. 12/2017-CT (Rate) dated 28-6-2017. The applicant is registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) as Charitable Trust, thus service of plantation of Mangroves by the applicant is eligible for exemption from the payment of GST and covers under entry No. 1 of the Notification No. 12/2017-CT (Rate) dated 28-6-2017 - the applicant service of plantation of mangrove is covered under point (iv) of Charitable Activity define under clause 2 (r) of Notification No. 12/2017-CT (R) dated 28-6-2017 as amended and is eligible for exemption from payment GST in terms of entry No. 1 of Not. No. 12/2017-CT (Rate) dated 28-6-2017. The applicant service does not covered under supply as defined under Section 7 of CGST Act, 2017, therefore, applicant is not liable for registration under the provisions of Section 22(1) of the CGST Act, 2017.
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2023 (1) TMI 82
Maintainability of Advance Ruling application - requisite fees not paid - Classification of goods - rate of GST - HSN code - fly ash brick - fly ash bricks having fly ash content around 60% - fly ash bricks having fly ash content less than 90% - HELD THAT:- It appears that the applicant has filed this application without the payment of requisite fees and the instant application is, therefore, found liable to be rejected. Accordingly the applicant has been communicated and asked to furnish a written submission by 02/11/2022 through e-mail. However, no clarification from the end of the applicant has been furnished by the specified date. As the application has been filed without making payment of requisite fee referred to in sub-section (1) of section 97 of the GST Act read with sub-rule (4) of rule 104 of the Central Goods and Services Tax Rules, 2017 and West Bengal Goods and Services Tax Rules, 2017 and as the applicant fails to furnish any clarification in this regard, the application is rejected.
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2023 (1) TMI 81
Classification of supply - distinct supply or composite supply - naturally bundled services or not - amounts charged by the applicant for right to use of car/two wheeler vehicle parking space along with the sale of under constructed apartments to its prospective buyers is to be treated as a composite supply of construction of residential apartment services - rate of tax applicable on such charges collected by the applicant from its prospective customers - amounts collected for right to use of car parking space will also be treated as a NON GST supply - taxability would change if such charges for right to use of car parking space is collected after the sale of the apartment has been done i.e. the customer had not opted for the car parking space at the time of purchase of the under constructed unit, but had sought for the same after the unit was handed over to the customer after receipt of the completion certificate. HELD THAT:- In the instant case, the applicant enters into agreement with prospective buyers for sale of residential apartment. Such agreement can be made prior to issuance of completion certificate or post-issuance of the same. In course of personal hearing, the authorised advocate of the applicant furnishes copies of some allotment letter and tax invoices issued by the applicant. Sample copies of invoices issued by the applicant for sale of apartment post receipt of completion certificate have also been furnished by the authorised advocate. Construction services under Heading 9954 specified at items (i), (ia), (ib), (ic) and (id) against serial number 3 of Notification 11/2017-Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019, attract tax @ 1.5% and @ 7.5%, as the case may be w.e.f. 01.04.2019. Further, construction services under Heading 9954 specified at items (ie) and (if) against the aforesaid serial number attract tax @ 12% and @ 18% respectively - In the instant case, the applicant enters into agreement with prospective buyers for sale of residential apartment. Such agreement can be made prior to issuance of completion certificate or post-issuance of the same. Admittedly, it is at the choice of the buyers whether they would avail the facility or not. Further, an owner of a flat may avail this facility even after the issuance of completion certificate of the project. Furthermore, if there remains any un-allotted car parking space after allocation among the intending buyers, it is offered to allottees desiring additional car parking space. The fact delineates that such supply is altogether a separate service and cannot be treated as naturally bundled with the construction services. The applicant draws attention to the press release of the 47th GST Council meeting wherein clarification has been brought for GST applicability on preferential location charges in case of lease of plot - It appears that the clarification has been given in respect of location charges or preferential location charges (PLC) collected in addition to the lease premium for long term lease of land. However, here the issue is related to construction of residential project and right to use of car parking space which is different from the subject matter, as clarified in the circular. Supply of services for right to use of car parking space is a separate supply and not to be construed as a composite supply of construction of residential apartment services - In the instant case, supply of services for right to use of car parking space would be taxable @ 18% - tax is payable on supply of services for right to use of car parking space.
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2023 (1) TMI 80
Exemption from GST - Healthcare services - regular medical monitoring along with other logistic support as provided by the applicant to senior citizens at their door step - classification of services - rate of tax - HELD THAT:- The applicant is found to be engaged in providing services to its enrolled members under two limbs. The first one, which is against a consolidated package amount, comprises inter alia of care manager visit for medical check-up, general physician home visit and home delivery of medicine. The other part also covers services by general physicians, nurses and care managers for which the applicant charges separately. The aforesaid services may get covered under health care services as defined in Para 2 (zg) of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. However, supply by way of health care services qualifies for exemption under serial number 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 if the same is provided by a clinical establishment, an authorised medical practitioner or para-medics - Admittedly, the applicant doesn t fall under any of the aforesaid categories of suppliers and the services provided by the applicant, therefore, fail to qualify as exempted service. Rate of tax on the instant supply of services - HELD THAT:- The applicant provides services for accompanying members for essential social outings, accompanying member to the Bank Post Office, organising social gathering and entertainment programmes etc. Thus, the services provided by the applicant can be termed as human health and social care services and is taxable @ 18% vide serial number 31 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 [corresponding West Bengal State Notification No.1135 F.T. dated 28.06.2017], as amended.
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2023 (1) TMI 79
Classification of services - Job-work - works contract services - welding services are provided on railway tracks - goods falling under Heading 9988 or not - HELD THAT:- In the case at hand, there can be no dispute in this regard that the intention of annexation of railway tracks involves significant degree of permanence and for this very characteristic of it, railway tracks are also called as permanent way - The railway tracks, for its permanent characteristic and in absence of mobility like other goods, would be regarded as immovable property and therefore fail to qualify to be goods. As a result, the work of conversion of Short Welded Rails (SWR) to Long Welded Rails (LWR) by Flash Butt Welding process cannot be treated as job work since we have already discussed that to qualify any treatment or process to be job work, the same has to be undertaken on goods only. The definition of job work is restricted to any treatment or process only i.e., the activities of a job worker is to undertake any treatment or process on goods which belongs to another registered person - In the case in our hand, we find that the contract awarded to the applicant is not limited to any treatment or process (the process of welding for the instant case) on goods belonging to another person. The scope of work as it is noticed from the work order covers the entire job for conversion of SWR to LWR including replacement of existing AT welds for a total distance of 54.03 km by flash butt welding. The work requires pulling back of rail, unfastening of fittings, lifting of rail with wooden block, opening out PSC sleepers either side of joints, removing of ballast, squaring, re-spacing and reinsertion of sleepers, putting back ballast, checking of joint sleeper, re-fixing of fittings etc. The instant services, therefore, falls under Tariff Code 995429 and to be taxed @ 18% vide serial number 3(xii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time [ corresponding West Bengal State Notification No.1135 F.T. dated 28.06.2017].
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2023 (1) TMI 78
Classification of supply - supply of goods or supply of services - transfer of business by way of merger of two registration/distinct person - going concern or not - applicability of Entry No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - levy of GST - transfer of existing stock (closing stock) assets, others etc. from proprietorship concern to the Partnership concern. HELD THAT:- Here the applicant intends to transfer his entire proprietorship business where the transferee agrees to take over the assets as well as the liabilities of the said transferor concern along with the employees and their benefits. In our view, such transfer of business cannot be treated as supply of goods since business cannot be said to be a movable property so as to qualify as goods as defined in clause (52) of section 2 of the GST Act. Further, anything other than goods, money and securities falls within the meaning of services as defined in clause (102) of section 2 of the GST Act. The term 'going concern' is not defined under the GST Act or rules framed there under. The concept of going concern has been defined in Accounting Standards 1 issued by ICAI which states that a fundamental accounting assumption is that of Going Concern according to which the enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations . It therefore appears that to qualify as a going concern , the business must not have intention or necessity of liquidation or of curtailing materially the scale of the operations . In this context, we like to mention that the applicant has furnished before us copy of Audit report under section 44AB of the Income-tax Act, 1961 related to the period from 01.04.2020 to 31.03.2021. However, we do not find any comments from the auditor in respect of the entity's ability to continue in operation for the foreseeable future . We are, therefore, unable to conclude that the applicant has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations. The transaction of transfer of business of the applicant involved in the instant case shall be treated as a supply of services - The transaction would be covered under Serial No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 [corresponding West Bengal State Notification No. 1136 F.T. dated 28.06.2017] subject to fulfilment of the conditions to qualify as a going concern.
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2023 (1) TMI 77
Requirement to issue tax invoice to State Government Department/ Directorate on the contract value as determined by the department where the applicant is working as a Project Implementing Agency - HELD THAT:- In the instant case, the applicant enters into an agreement with the contractor and so is liable to pay the consideration to the contractor. Further, the applicant himself has admitted that as a project implementing agency engaged by the administrative department of Government of West Bengal, he merely acts as an agent of the said administrative department to execute the work. In this context, we find that an agent shall also be treated as recipient of supply of goods or services or both since the aforesaid definition has made it abundantly clear that any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied . Thus, the applicant undisputedly is the recipient of supply provided by the contractor meaning thereby the contractor doesn t make any supply to the department concerned. In the instant case, two separate supplies take place. The first one is made by the contractor to the applicant and thereafter another supply is made by the applicant to the department concerned in spite of the fact as stated by the applicant that there is no value addition in respect of the second supply - The applicant while working as a Project Implementing Agency is making supplies to State Government Department/ Directorate and therefore is required to issue tax invoice on the contract value as determined by the department.
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2023 (1) TMI 51
Liability towards interest and penalty - It is a specific plea of the petitioner that detailed reply to the show cause notice was furnished and a request was also made for personal hearing to the Officer before adjudication of the matter - denial of principles of natural justice - HELD THAT:- A perusal of the impugned order would indicate that neither the reply of assessee was considered nor any opportunity of personal hearing was given. The Officer acted in a reckless illegal manner leading to unwarranted litigation being filed in the Court. Furthermore, we have serious reservations on the veracity of the dispatch register - Shri Hitesh Trivedi, Joint Commissioner, Circle Nimbahera is directed to personally remain present in the Court with the original record including the dispatch register on 15.12.2022 to show cause as to why cost should not be imposed upon him for nonperformance of duties enjoined upon him by law. List on 15.12.2022.
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2023 (1) TMI 50
Seeking withdrawal of petition - As there has been an order of confiscation, petitioner requires this petition to be withdrawn - HELD THAT:- Matter is being disposed of without entering into the merits. The other side also does not have any objection so long it is a simple withdrawal. Petition dismissed as withdrawn.
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Income Tax
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2023 (1) TMI 96
Discharging the accused for the offences punishable u/s 276B r.w.s. 278B confirmed by the High Court - HELD THAT:- Criminal complaints were filed against the Respondent-Company and one another, namely, S. Sunil V. Raheja, for the offences punishable u/s 276B r.w.s. 278B of the Act. In the complaints, accused No.2/S. Sunil V. Raheja is shown as Managing Director and is treated as the Principal Officer of the accused-Company. Trial Court discharged both the accused on the ground that Respondent No.2 was wrongly treated as the Principal Officer by the Department. Reliance was placed on Section 2(35) of the Act. The order of discharge has been confirmed by the High Court, by the impugned judgment and orders passed in revision petitions. Number of submissions have been made by learned counsel appearing for the respective parties in support of their rival submissions on the respondent No.2-accused No.2/S. Sunil V. Raheja treated as a Principal Officer. After making some submissions, Mr. Preetesh Kapur, learned Senior Advocate, appearing for Respondent No.2, under the instructions, has stated at the Bar that if the orders passed by the learned trial Court discharging the accused confirmed by the High Court are set aside and the trial is ordered to be proceeded further in accordance with law and on its own merits and keeping all the defences which may be available to the accused open, respondents have no objection. We do not further enter into the rival submissions made on behalf of the respective parties. The order(s) passed by the learned trial Court discharging the accused for the offences punishable under Section 276B read with Section 278B of the Act confirmed by the High Court are hereby quashed and set aside. Now the trials are ordered to be proceeded further which shall be decided and disposed of by the learned trial Court in accordance with law and on its own merits. It goes without saying that all the defences which will be available to the accused shall be considered by the learned trial Court in accordance with law and on its own merits and on the basis of the evidence led. We direct the learned trial Court to conclude the trial within a period of 12 months from the date of receipt of the present order.
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2023 (1) TMI 95
Validity of reopening of assessment - denial of principles of natural justice - non-supply of relevant material - Whether the impugned order u/s 148A(d) passed by the 2nd respondent is bad in law for non-supply of relevant material to the petitioner/assessee along with notice u/s 148A(b)? - HELD THAT:- As per Section 148A(b) reading there is an avowed object in it, as it is intended to provide an opportunity of being heard to the assessee before proceeding u/s 148. Issuance of show cause notice shall not be treated as a mere formality. It should be accompanied with the relevant material so as to put the concern assessee in notification as to the ground on which the assessing authority is proposing to proceed for re-assessment. If the assessee is deprived of the relevant material he will not be in a position to submit a comprehensive and befitting reply to the show cause notice. Therefore, non-supply of relevant material, as stated supra, would amount to denial of principles of natural justice. The writ petition is allowed and the impugned order dated 31.03.2022 passed by the Respondent No.2 under Section 148A(d) is set aside with a direction to the said authority to furnish the relevant material which prompted to initiate reassessment proceedings to the petitioner within two weeks from the date of receipt of copy of this order and thereupon the petitioner shall submit his reply along with relevant material to the said authority within two weeks from the date of receipt of the material and thereupon the 2nd respondent shall consider the reply and the material if any, submitted by the petitioner and after affording an opportunity of hearing to the petitioner, pass an appropriate order u/s 148A(d) of the IT Act.
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2023 (1) TMI 94
Assessment u/s 144B - National Faceless Assessment - procedure to be adopted by the National Faceless Assessment Centre on receipt of draft order from the assessment unit - no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7) is given to the petitioner - HELD THAT:- Section 144B of the Act, 1961 provides detailed procedure for Faceless Assessment introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 with effect from 1st April, 2021. Section 144B(1) starts with a non-obstante clause i.e. notwithstanding anything to the contrary contained in any other provisions of this Act, the assessment under sub-section (3) of section 143 or under section 144, in the cases referred to in subsection (2), shall be made in a faceless manner... as per the procedure prescribed therein. The above-referred clause of section 144B(1) and 144B(7) deals with the procedure to be adopted by the National Faceless Assessment Centre on receipt of draft order from the assessment unit who has prepared the draft after providing opportunity to the assessee by serving a notice upon him to show cause as to why the assessment should not be completed as per such draft or final draft or revised draft assessment order. Therefore, such personal hearing in era of Faceless assessment is to be provided through video conferencing. In facts of the case no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7) is given to the petitioner so as to enable the petitioner to give explanation for proposed addition during the hearing before the National Faceless Assessment Centre. Section 144B(1)(xii) provides that on receipt of show cause notice, assessee may furnish his response to the National Faceless Assessment Centre and as per clause (xiv), assessment unit shall make a revised draft assessment order after considering the response of the assessee and send it to the National Faceless Assessment Centre. As per the provisions of section 144B(7) in case of variation prejudicial to the assessee as proposed in the draft assessment order, the assessee is entitled to request for personal hearing and upon such request, the personal hearing may be provided by the authority, if the case of the assessee is covered by circumstances provided therein in exercise of powers under sub-clause (h) of clause (xii) of section 144B(7) of the Act, 1961. It can be safely be said that the impugned order was passed by the respondent in violation of principles of natural justice without affording an opportunity of personal hearing by not following the prescribed procedure laid down as per the provisions of section 144B of the Act, 1961 for Faceless assessment. This petition succeeds and is accordingly allowed. The impugned order of assessment passed by the respondent under Section 143(3) read with section 144B of the Act dated 23.09.2021 and demand notice under section 156 of the Act are quashed and set aside. The respondent/Revenue will be at liberty to proceed with assessment under the provisions of section 144B of the Act, 1961 as permissible under the law after issuance of show cause notice-cum-draft assessment order so as to provide an opportunity of hearing to the petitioner. The petitioner shall be given an opportunity of hearing as per the provisions of section 144B of the Act, 1961. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.
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2023 (1) TMI 93
Assessment u/s 143(3) r.w.s 144C - AO jurisdiction to make revised final assessment order without recourse to DRP - omission in re-doing the procedure u/s 144C - Whether, on the facts and in the circumstances of the case and in the initial assessment order being preceded by draft assessment order is not the final assessment order without a prior draft assessment order legal and with jurisdiction? - HELD THAT:- This Court has referred to the admitted dates in the orders made by the Assessing Officer in the first round etc. and also the revised final assessment order made in Annexure-E for the purpose of appreciating the legal objection raised by the assessee and now the grounds canvassed by the revenue. The citations relied on by the assessee are to the effect that with the interdiction of assessment order made under Section 143(3) read with Section 144C(5) (13) of the Act by the Tribunal, the matter is remitted to A.O. The issues revisit the table of AO for a decision in the same manner in which the first final assessment order was made by the AO. In cases to which Section 92CA is attracted, the assessment could be completed only by following the procedure under Section 144C - We do not prefer to burden our judgment with reproducing all the portions relied on by the assessee from the decisions cited at the Bar, except the view taken by the Delhi High Court in Nokia India (P) Ltd. [ 2017 (9) TMI 1838 - DELHI HIGH COURT ] and the Special Leave Petition filed against the said decision [ 2018 (5) TMI 1913 - SC ORDER] . The requirement of re-doing the same procedure upon remand to the AO u/s 144C is held to be mandatory and omission in following the procedure is held to be an incurable defect. The revenue does not dispute the omissions pointed out in this behalf by the Tribunal. The filing of appeal before the Commissioner of Income Tax (Appeals) cannot be treated as a waiver of an objection available to the assessee in this behalf u/s 144C etc. Section 253(1)(d) provides for appeal only when order has been made under Section 143(3) read with Section 144C of the Act. Annexure-E order is an order made under Section 143(3) of the Act and not a final revised assessment order made in compliance with the directions issued by DRP. The assessee, hence was justified in moving the CIT(Appeals). This Court has difficulty in accepting the argument of the revenue to sustain the order in Annexure-E. The arguments have been confined to the points considered above and we are of the view that the Tribunal has correctly considered the objections of assessee against Annexure-E order and recorded the findings which resulted in the order under appeal. The order of Tribunal is to be understood in the background of what is considered by the AO in Annexure-E and what was not the subject matter before the Assessing Officer, upon the remand in the first round of litigation cannot and could not be understood as made by the Tribunal. We are in agreement with the argument of Mr.Joseph Markos that Annexure-E is limited only to the issues remitted by the Tribunal in Annexure D order dated 21.11.2014 - Decided in favour of the assessee and against the revenue.
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2023 (1) TMI 92
Addition made u/s 40A(3) - expenditure incurred in cash in excess of the mandatory limit - CIT-A sustained part addition as per Rule 6DD of Income Tax Rules, 1962 - assessee primarily rested his arguments on the transactions being out of business expediency, hence they are out of rigorous of Section 40A(3) - HELD THAT:- So far as the argument that the transactions fall under clause (f) hence would be out of preview of Section 40A(3) is concerned, no evidence is brought on record for supporting such contention. It is incumbent upon the assessee to prove that purchases were made from such person mentioned under Rule 6DD(f). In the absence of any supporting evidence, no relief could be granted. Therefore, reject this plea of learned counsel. Assessee has placed reliance on the judgment of Attar Singh Gurumukh Singh [ 1991 (8) TMI 5 - SUPREME COURT] wherein it has been held that the term of Section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. Therefore, looking to the facts where the assessee has made clear averments regarding business expediency and the Revenue has not rebutted the same. We direct the Assessing Officer to delete the impugned disallowance. Decided in favour of assessee.
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2023 (1) TMI 91
Capitalization of software charges as debited to Profit Loss account - Appellant has not provided any description in respect of expenses incurred - HELD THAT:- While the Assessing Officer referred to some of the documents filed by the Appellant, the CIT(A) has returned a finding that the Appellant has not provided any description in respect of expenses incurred. The finding returned by the CIT(A) is contrary to the material on record. While concluding that the expenditure incurred by the Appellant in respect of software was capital in nature, the CIT(A) has proceeded on the presumption that the software would have useful life for many years. The approached adopted by the CIT(A) cannot be countenanced as it is based upon presumption rather than examination of facts. Details submitted by the Appellant are not supported by the certificate from the external auditor which, though giving details of allocation keys, does not cover the relevant previous year. The Assessing Officer has also observed that while the IS Service Agreement was executed on 14.10.2011, the expenses claimed pertain to period prior to execution of the IS Service Agreement (as can be seen from the invoice date). In view of the aforesaid, we deem it appropriate back to the file of Assessing Officer for de-novo adjudication after giving the Appellant an opportunity of being heard. Ground No. 2 raised by the Appellant is treated as allowed for statistical purposes. Disallowance of expenditure incurred on travelling conveyance AND disallowance of expenditure incurred on legal professional fees - HELD THAT:- The primary evidence in support of incurring the expenditure was placed before the CIT(A) as additional evidence. Perusal of record shows that the Appellant was also not called upon by the Assessing Officer to submit more/additional invoices in support of the claim. The reason for concluding that the Appellant was not able to support the claim with evidence was that the Appellant did not furnish party-wise details and/or failed to co-relate the expenses debited to Profit Loss Account. We are not inclined to accept the aforesaid approach adopted by the CIT(A)/Assessing Officer for the reason that the primary fact as well as supporting evidence were placed on record. The finding returned by the CIT(A) that the Appellant had furnished no supporting documents to substantiate the claim is, therefore, factually incorrect. Further, the CIT(A) and Assessing Officer (in remand proceedings) neither pointed out any infirmity in the same nor the necessity of the detailed break-up asked for by the Assessing Officer. The quantum of disallowance was also computed by the Assessing Officer on ad-hoc basis. - Decided in favour of assessee. Disallowance of interest relating to Capital Work in Progress (CWIP) - AO disallowed interest expenses being 2.15% of capital work-in-progress out of the interest expense claimed by the Appellant as Revenue expenditure and capitalized the same as capital work-in-progress - HELD THAT:- It is not the case of Revenue that the Appellant did not have sufficient own funds. To the contrary the Assessing Officer had clearly stated that the Appellant also had own funds but proceeds to make disallowance on the presumption that, both, borrowed funds and own funds have been used. The Appellant has furnished the relevant working capital facility agreements and ledger account to show that the unsecured loans were for working capital, and the interest paid thereon is also clearly reflected in the financial statements in Schedule 18 - Interest On working capital loans . In our view, in absence of any information/circumstances to suggest, in some form or manner, any diversion of working capital loans for funds by the Appellant, in the facts and circumstances of the present case, the presumption drawn by the Assessing Officer cannot be sustained as it has no basis. Accordingly, we overturn the decision of CIT(A) and delete the disallowance on interest made by the Assessing Officer. Ground No.5 raised by the Appellant is allowed.
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2023 (1) TMI 90
Prior Period Expenditure disallowance of expenses (AMC) by considering the same as expenses , pertaining to F.Y. 2012-13 - HELD THAT:- CIT(A) has confirmed the said addition on the ground that the assessee has not furnished the ledger account and has also not furnished the breakup of Rs.16,23,225/- under the head prepaid expenses under Schedule 13 as short term loans and advances. Even before us, the assessee has failed to furnish the required details to establish the claim that the impugned amount pertains to prepaid expenses (AMC) during the year under consideration. In view of the same, we find no infirmity in the order of the ld. CIT(A). Thus, ground no. 1 raised by the assessee is dismissed. Disallowance being Property Tax for Dock Yard Godown - assessee has failed to prove the business utilization of the said Dock Yard Godown - HELD THAT:- Assessee has not furnished the copies of bank statement from which the payment was made to the said taxes before the lower authorities. As the copies of agreement for purchase of the said dockyard had the description that the said plot, the license for the said plot was issued for storing of grains and pulses and the assessee was unable to justify that the same was used for the assessee s business which is creation, production and development of programs and other software media which can be broadcasted through the audio visual medium vide television. Assessee has failed to substantiate that the said plot was not used for the purpose mentioned in the license. On this observation, the lower authorities has disallowed as alleged to be paid by the assessee towards property tax for the Dock Yard Godown. It is observed that the assessee has neither produced evidences before the lower authorities nor before us to substantiate its claim of expenses paid towards property taxes. We find no infirmity in the order of the ld. CIT(A) and, therefore, ground no.2 raised by the assessee is dismissed. Depreciation claimed on addition of new assets @ 15% flat and disallowing balance depreciation and depreciation on software restricted to 25% instead of 60% - HELD THAT:- The assessee had claimed depreciation on addition of Rs.1,99,83,359/- for more than 180 days @ 60% and that the assessee has furnished bills for the addition of assets only to the tune of Rs.10,56,500/- and has furnished bills for depreciation claimed on addition of Rs.2,50,76,640/- which was less than 180 days @ 60%, amounting to Rs.46,06,684/-. It is also observed that the assessee has claimed depreciation on Sony 26 no. Monitors valued at Rs.30,37,108/- and it was found that the said monitors were not received during the year as per the details furnished by the assessee. As the assessee failed to substantiate that the said monitors were received during the assessment year in dispute, the ld. CIT(A) disallowed the claim of depreciation on the said monitors and added the same to the income of the assessee. Even before us, the assessee has failed to furnish the documents pertaining to its claim and in the absence of which, we find no infirmity in the order of the ld. CIT(A) and we hereby uphold the order of the ld. CIT(A). Hence, ground nos. 3 4 raised by the assessee are dismissed. Increasing disallowance on account of Travelling and Conveyance , on account of Electricity Charges, on account of Miscellaneous Expenses,on account of Manpower Deputation Charges and on account of Security charges - assessee has failed to furnish documentary evidences in supports of its claim that the above mentioned expenses were incurred wholly and exclusively for the purpose of business - HELD THAT:- It is observed that the assessee has neither filed any evidences either by way of documentary evidence or otherwise neither before the lower authorities nor before us. On this observation, we find no reason to interfere with the order of the lower authorities. Hence, ground no. 6 raised by the assessee is dismissed. Addition being the import transaction from the Export Import Summary Data CBSE by considering the same as an unrecorded expenditure by inferring that there is no purchase as per the return of income filed by the assessee - A.O. had made the impugned addition on the ground that the assessee was unable to furnish any explanation pertaining to the import transaction for the impugned amount, which was appearing in Export Import Summary Data CBSE - HELD THAT:- A.O. has disallowed the said expenditure in Note 26 foreign currency transactions, pertaining to purchase of shooting equipment. As the assessee was unable to furnish any documents or breakup of the said expenses, the A.O. rejected the assessee s submission that the import transaction has been disclosed in the books of accounts of the assessee and was, therefore, treated as unexplained expenditure . The assessee has failed to substantiate its claim, neither before the first appellate authority nor before us, there was no evidence produced by the assessee, pertaining to the breakup of the impugned expenses - no infirmity in the order of the ld. CIT(A). Hence, this ground of appeal raised by the assessee are dismissed.
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2023 (1) TMI 89
TP adjustment - Arms length price of international transaction of overdue export proceeds - HELD THAT:- In the present case on the bills/ invoices itself assessee has mentioned the credit period on export receivable of AE and Non AE. In case of independent third parties on similar transaction with similar credit period of similar goods no interest is charged. This fact is proved by the assessee for this year by producing the bills of AE as well as Non AEs - we find that non-charging of interest on advances being overdue export proceeds from Associated Enterprises as a comparable internal CUP as for similar time on similar conditions, for almost similar period no interest is charged from Non Associated Enterprises. In view of this, we find that Arms Length Price of overdue Export proceeds and receivable from Associated Enterprises is ₹ Nil. Assessee has failed to show any evidence that there exists a trade practice of not charging interest on overdue advances of export proceeds. Even common sense defies such an argument. Assessee has also failed to show any evidence that due to recession the interest was not charged. Evidence were not laid down that , there was recession in the business of the assessee in this year or when there was boom , assessee was charging interest on such advances. We reverse the orders of the lower authorities; direct the learned Transfer Pricing Officer/ Assessing Officer to delete the above adjustment. Accordingly, ground no.1 of the appeal is allowed. Assessee has given advances - HELD THAT:- As assessee has the share capital of ₹ 9.80 crores and reserves and surplus of ₹117 crores which is much more than the amount advanced for fixed assets. It is the claim of the assessee that it has not incurred any interest expenditure which is covered by the Provision of Section 36(1) (iii) of the Act. We find that assessee has interest free funds available which were more than the amount of advance for capital asset. Therefore, the issue is squarely covered by the decision of Reliance Industries Ltd. [ 2019 (1) TMI 757 - SUPREME COURT] . In view of this, we direct the learned Assessing Officer to delete the disallowance and accordingly, we reverse the orders of the lower authorities. Ground no. 1.1 of the appeal is allowed.
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2023 (1) TMI 76
Benefit of Vivad Se Vishwas Scheme - petitioner has filed application filed u/s 154 of the Income Tax Act, 1961 for rectification of some errors, which is partly allowed - HELD THAT:- Petitioner has filed application filed u/s 154 for rectification of some errors, which is partly allowed. The petitioner has filed another application which is pending. We take the statement on record, the special leave petition insofar, which relates to the year 2006-2007 is dismissed as withdrawn. We clarify that we have not commented on the merit of the computation of tax made under the aforesaid scheme or on the grievance or remedy, which would be available to the petitioner. Income/capital gain earned on sale of shares - LTCG or STCG - AY 2010-2011 - HELD THAT:- We are inclined to grant leave in respect of income/capital gain earned on sale of shares of M/s J.K. Investo Trade Ltd., M/s Mujnal Showa Ltd. and Samtel Colours Ltd. The parties are given liberty to file additional documents in respect of the said shares. Gain on sale on shares - LTCG OR STCG - HELD THAT:- No good ground and reason to interfere with the impugned order passed by the High Court [ 2015 (7) TMI 813 - KERALA HIGH COURT] affirming the decision passed of the Income Tax Appellate Tribunal as the period of holding of the shares sold in the present case was less than one year. We have also taken into account the frequency of transactions.
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2023 (1) TMI 75
Appellate jurisdiction of the High Court u/s 260A - Whether this Court has territorial jurisdiction adjudicate upon the lis over an order passed by the Assessing officer, i.e. Income Tax Officer, Ward 1(1), at Surat? - HELD THAT:- The very question fell for consideration before a Bench of three learned Judges which is reported in Principal Commissioner of Income Tax-I, Chandigarh v. ABC Papers Ltd. [ 2022 (8) TMI 863 - SUPREME COURT ] Therein this Court has held that the appellate jurisdiction of the High Court under Section 260A is exercisable by the High court within whose territorial jurisdiction the assessing officer is located. In the facts of this case, we have noticed that by the impugned order, the High Court has precisely proceeded on the same principle. This means that the order by which the appeal has been directed to be presented before the High Court of Gujarat as the AO who passed the order was located at Surat within the State of Gujarat, is unexceptionable. We see no reason to interfere with the impugned order. Learned counsel for the petitioner would point out that on an earlier occasion, the High Court of Gujarat has taken a contrary view. We need only mention that any contrary view which has been taken cannot survive after the authoritative announcement by this Court in the decision we have referred to. Making this also clear, the special leave petition will stand dismissed.
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2023 (1) TMI 74
Unaccounted purchases - method for discerning the cost of the raw material - GP adoption - Excess Stock - Addition made on the basis of statement, recorded during the course of search proceedings - HELD THAT:- Having heard Mr. C.S. Aggarwal, learned Senior Advocate, appearing for the petitioner and Mr. N. Venkataraman, learned ASG, appearing for the Revenue and having gone through the impugned judgment and order passed by the High Court and the reasoning and the findings recorded and having gone through the order passed by the ITAT as well as the assessment order, it cannot be said that the High Court has committed any error in allowing the appeal and quashing the order passed by the ITAT. We are in complete agreement with the view taken by the High Court. Special Leave Petition stands dismissed.
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2023 (1) TMI 73
Reopening of assessment u/s 147 - Notice beyond four years - conditions precedent for reopening - HELD THAT:- Having gone through the reasons recorded for re-opening, we are of the opinion that the conditions precedent for reopening of the assessment beyond four years are not satisfied. The re-assessment was on change of opinion. There are no allegations of suppression of material fact. Under the circumstances, no error has been committed by the High Court in setting aside the re-opening notice under Section 148 - We are in complete agreement with the view taken by the High Court. The Special Leave Petition stands dismissed.
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2023 (1) TMI 72
TDS on commission income paid to foreign agents and the non-deduction of TDS - addition u/s 40(a)(ia) r/w. Section 195(1) as demurrage paid to a non-resident buyer of iron ore without deducting TDS - HELD THAT:- As issues raised before the High Court [ 2017 (9) TMI 248 - BOMBAY HIGH COURT] were held against the Revenue with respect to the earlier assessment years 2005-2006 2009-2010. The matter has not been carried further by the Revenue. In that view of the matter, no error has been committed by the ITAT and/or even the High Court. Hence, the present Special Leave Petition stands dismissed. Losses due to foreign exchange fluctuation on the export proceeds - SLP against HC [ 2018 (3) TMI 2003 - DELHI HIGH COURT] - HELD THAT:- The issue is covered by the decision of this Court in the case of CIT vs. Woodward Governor India (P) Ltd. [ 2009 (4) TMI 4 - SUPREME COURT] Mr. N. Venkatraman, learned ASG, is not in a position to dispute the above. Under the circumstances, it cannot be said that the High Court has committed any error in holding the said issue against the Revenue relying upon the decision in the case of Woodward Governor India (P) Ltd. (supra). Advance of interest-free loans to the related party - As the amount involved is Rs.6,00,000/- only, keeping the question of law, if any, open, we dismiss the present Special Leave Petition(s) qua the said issue. Non-deduction of TDS on account of export commission - It is required to be noted that there are concurrent findings recorded that the foreign entity receiving the amounts were not Indian residents and subject to tax and that the services rendered were rendered outside India, neither the ITAT nor the High Court have committed any error in holding the said issue against the Revenue.
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2023 (1) TMI 71
Reopening of assessment u/s 147 - Exemption u/s 11 - exemption registration U/s 12AA pending - request of the petitioner to set aside the assessment orders and remand the matter to the 1st respondent - as argued that the assessment orders made by the 1st respondent without acceding to the request of the petitioner that their appeal relating to issuance of exemption certificate u/s 12A was pending, hence the principles of natural justice were denied to the petitioner - whether there are merits in the writ petition to allow? - HELD THAT:- Admitted facts in these cases are that while the 1st respondent passed assessment orders on 30.03.2022, the appeal filed by the petitioner was allowed thereafter on 07.04.2022 by the ITAT, Visakhaptnam and the said appellate order was given effect by the department and registration certificate U/s 12AA was issued as per the proceedings dated 26.10.2022. It is true, as contended by learned Standing Counsel no exemption was granted by the date of passing of the assessment orders. However, such exemption was granted within short time thereafter. The petitioner has requested the 1st respondent to keep the proceedings on hold. Due to close of Financial Year, it appears the 1st respondent passed the assessment orders. This Court is of the considered view that in the interest of justice the request of the petitioner to set aside the assessment orders and remand the matter to the 1st respondent shall be considered without expressing any opinion on the merits of the petitioner s case. Accordingly, without expressing any opinion on merits of the petitioner s case, the writ petitions are allowed and the impugned assessment orders dated 30.03.2022 for the assessment years 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19 passed by the 1st respondent are hereby set aside and the matters are remitted back to the 1st respondent with a direction to issue notices to both parties and afford an opportunity of hearing to them.
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2023 (1) TMI 70
Disallowance u/s 14A r.w.r. 8D - assessee had earned tax free dividend income during the year under consideration that needed to be apportioned - HELD THAT:- A perusal of the paper book reveals that the AO rejected the assessee company s computation on the ground that the assessee company had raised substantial amount of loans for investment in new ventures on which substantial amount of interest was paid . Appellate Authorities below held that the investments were made out of assessee s own funds and no borrowed funds were used to acquire investments. There was no interest expenditure which could be directly or indirectly attributed to the exempt income. Appellate Authorities upheld the suo moto disallowance made by the assessee after taking 20% of employee cost and 5% of the administrative cost. The Supreme Court in South India Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] has held that where the assessee has mixed funds (made up partly of interest free funds and partly of interest bearing funds) and the payment is made out of mixed fund, the investment must be considered to have been made out of the interest free fund. CIT(A) deleted the additions u/s 32 based on documents which were duly submitted to the AO as well as CIT(A). CIT (A) duly considered the documents on record and after the verification of the evidence, rightly deleted the addition. ITAT has even recorded that the details were submitted by the assessee during the assessment proceedings as per the reply/submissions dated 11th December, 2012 which is mentioned at page 1 of the assessment order itself. ITAT has also recorded that there was no new evidence brought on record by the assessee and in fact, the AO has totally ignored the reply dated 11th December, 2012, filed by the Assessee. Both the appellate authorities below have recorded concurrent findings of fact on both the issues.
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2023 (1) TMI 69
Stay application - Reopening of assessment u/s 147 - petitioner states that he would be satisfied, if the stay application already filed by the petitioner, after the filing of the present writ petition, is disposed of in a time-bound manner - HELD THAT:- Keeping in view the aforesaid limited prayer, the present writ petition along with pending applications stands disposed of with a direction to the AO to decide the petitioner s stay application, if already filed, within four weeks by way of a reasoned order in accordance with law. The rights and contentions of all the parties are left open. The petitioner is also given liberty to file an appeal within two weeks in accordance with law. In the event the petitioner is aggrieved by the disposal of the stay application, the petitioner shall be at liberty to file appropriate proceedings in accordance with law.
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2023 (1) TMI 68
Reopening of assessment u/s 147 - petitioner s return of income did not offer to tax receipts of professional service charges from S.R. Batliboi Associates LLP - HELD THAT:- The order passed under Section 143(1) of the Act is not an assessment for the purposes of Section 147 - Further, it is not necessary in such a case for the Assessing Officer to come across some fresh tangible material to form a belief that income has escaped assessment. The scrutiny assessment for assessment year 2019-20 also offers no assistance to the petitioner, as the petitioner did not place on record any documents such as Contract Agreement under which such transactions were carried out, copy of original invoices (not just invoice breakup) to show that the services rendered by the petitioner during assessment year 2018-19 were identical/similar to the services rendered to M/s Batliboi Associates LLP in the assessment year 2019-20. Needless to state that if petitioner is able to satisfy the AO that the services rendered in the present assessment were similar/identical to the services rendered in the assessment year 2019-20, the re-assessment proceedings would be closed.
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2023 (1) TMI 67
Reopening of assessment u/s 147 - period of limitation - notice beyond the period of six years - HELD THAT:- The impugned notice under Section 148 of the Income Tax Act, 1961 seeking to reopen the Assessment Year for 2013-14, was issued on 31st March, 2021 which is beyond the period of six years of the close of the Assessment Year and therefore, it is clearly time-barred. On the above short ground, the impugned notice dated 31st March, 2021 as well as all consequential proceedings thereto including the Assessment order dated 30th March, 2022 and the consequential demand are hereby quashed. Writ petition is allowed.
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2023 (1) TMI 66
Assessment u/s.153C OR assessment order u/s. 144 - date of initiation of search in case of other person‟ - Last date which can be assumed safely being the date of search‟ in case of the assessee i.e. other person‟ - HELD THAT:- As the facts in the case of the assessee as well as the facts in the case of the Global Papers Impex Ltd [ 2022 (9) TMI 1141 - ITAT MUMBAI] are identical, respectfully following the decision we also quash assessment order for A.Y. 2010-11 passed by the ld. AO u/s. 144 of the Act. Accordingly, Ground No. 1 of the appeal of the assessee is allowed.
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2023 (1) TMI 65
Disallowance of deduction u/s. 80-IA - income on sale of certified emission - Reduction by treating the same as capital asset - As per AO the benefit of carbon credit and the activity carried out by the assessee are separate and independent activity. It does not represent any byproduct of the activity carried out by the company - HELD THAT:- We note that there are several orders/ judgments wherein it has been held that the carbon credit received by the assessee represents the capital receipt which is not chargeable to tax. Tribunal in case of Gujarat Fluorochemicals Ltd vs. DCIT [ 2018 (8) TMI 857 - ITAT AHMEDABAD] after considering several judicial Pronouncement including the observation of Hon ble Jurisdictional High Court in case of Alembic Ltd [ 2017 (9) TMI 189 - GUJARAT HIGH COURT] has held that the receipt on account of sale of Carbon credit are to be treated as capital receipts which is not chargeable to tax. We do not find any infirmity in the order of the learned CIT-A. Hence we uphold the same and direct the AO to delete the addition made by the AO. Hence, the ground of appeal of the revenue is hereby dismissed. Deduction u/s 80IA by treating them as profit derived from the business of distribution of power - AO disputed the deduction with respect to such items of income - Delayed payment charges from customers - HELD THAT:- No material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IA of the Act with respect to delayed payment charges from customers. Interest from customer - No material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the Higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IA of the Act with respect to interest from customer. Shifting Services - Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we uphold the finding of the learned CIT(A). Thus, we hold that the assessee is eligible for deduction under section 80-IA of the Act with respect to Shifting Services. Liquidation damage/ Rebate - If the assessee would have reduced the cost of material purchase by the amount of liquidated damages, there would not have been any question of showing any income under the captioned head and consequently denying the deduction claimed by the assessee under section 80 IA of the Act. It is just a manner of presentation. As such, the assessee has represented the liquidated damages separately as income but it has a live link with the activity of the assessee. Accordingly, we hold that the assessee is eligible for deduction on such liquidated damages. Moving forward, the rebate fetched by the assessee on account of quick payment made to PGCIL has direct link with the activity of the assessee being distribution of power. Similarly, the amount of rebate received by the assessee has been presented in the financial statement in a different format. As such, the assessee instead of showing the rebate income as a separate items income, it could have adjusted such rebate against the payment made to PGCIL. In such an event, there would not have been any question for disclosing any income under the captioned head and consequently disallowing the deduction claimed by the assessee under the provisions of section 80 IA of the Act. Accordingly, we hold that the assessee is eligible for deduction on such rebate. Sale of Scrap - AO was of the view that the income shown by the assessee by way of scrap sale is not directly arising from the activity of power generation but incidental to the business of the assessee. Accordingly, the same cannot be made subject to deduction under section 80 IA - in effect only the amount of material consumed is claimed as deduction against the income of the assessee. If obsolete stores have been sold out in the year under consideration the same will be shown as income in the profit and loss account at the sale price and simultaneously the corresponding material cost of the consumables will be debited in the profit and loss account. Thus in effect the losses that the assessee has incurred on account of obsolescence of consumable materials is reduced by the amount of sale s realization. It is a matter manner of presentation in the books of accounts about the sale of consumable materials. If the assessee instead of showing the sale of the consumable materials as income and adjusting the same against the cost of the consumables sold by it there will not be any income in the books of accounts of the assessee and accordingly the question of disallowances of deduction under the section 80IA of the Act will not arise. Thus, merely the assessee has presented the sale of consumable stores in a particular manner, the assessee cannot be debarred from claiming the deduction under the provisions of section 80IA of the Act. It is also pertinent to note that the income from the sale of consumable stores used in the eligible unit has direct link with the generation and distribution of power, therefore on this score as well, the assessee cannot be denied the benefit of the deduction under section 80IA of the Act. Accordingly, we uphold the order of the learned CIT-A, and direct the AO to delete the addition made by him. Hence the grounds of appeal of the revenue is dismissed. Disallowance of deduction made by the AO under section 80G and 80GGB - assessee has made certain donations from different units and claimed deduction under section 80G/80GGB - AO was of the view that such donation shown in the profit and loss account of the eligible undertaking cannot be claimed as deduction under the provisions of section 80G /80GGB of the Act from the gross total income of the assessee - HELD THAT:- As decided in own case[ 2022 (1) TMI 174 - ITAT AHMEDABAD] no dispute to the fact that the amount of donation was claimed by the assessee in the profit and loss account of the eligible undertaking which has been disallowed while computing the eligible profit. Certainly, the profit of the eligible undertaking will increase by the amount of disallowance made by the assessee on account of the donations paid to the institutions which is entitled for deduction under section 80G/80GGB of the Act. It has to be disallowed/added back while computing the eligible profit of the business referred therein under section 80-IA of the Act. It is for the reason that this donation does not relate to the business referred under section 80-IA of the Act which is eligible for deduction. But the same can be claimed as deduction by virtue of the provisions of section 80G/80GGB of the Act separately subject to the conditions specified therein. Hence, we do not find any infirmity in the order of learned CIT (A). Thus, the ground of appeal of the Revenue is dismissed. Disallowances u/s 14A read with rule 8D - HELD THAT:- We hold that the disallowance under section 14A read with rule 8D of Income Tax Rule was not warranted. Hence the ground of appeal of the assessee is allowed whereas ground of appeal of the Revenue is dismissed. Disallowances of interest fmade on account of diversion of interest bearing fund - HELD THAT:- Admittedly, the own fund of the assessee exceeds the amount of loans provided without charging interest thereon. The own fund of the assessee stands at Rs. 3960.15 crore only whereas the amount of loans and advances to subsidiary stands at Rs. 49.79 crore only which can be verified form the financial statement available on record. Thus, a presumption can be drawn that such amount of loan advances have been provided by the assessee out of its own fund. Therefore, there cannot be any disallowance of interest expenses. Hence the ground of appeal of the Revenue is hereby dismissed. Addition made to the books profit u/s 115JB being disallowances under section 14A read with rule 8D of the Income Tax Rules - HELD THAT:- DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we set-aside the finding of the learned CIT(A) and direct the AO make adhoc disallowances @ 1% of exempted income. However, in the given facts and circumstances, we find that there was no exempt income in the year under consideration, therefore there cannot be any disallowance while computing the book profit under section 115JB of the Act. Thus, the ground of appeal raised by the Revenue is hereby dismissed. Credit of dividend distribution tax - HELD THAT:- AO is directed to verify the payments of DDT made by Appellant and allow credit of such taxes while giving effect to this order. AO also directed to verify the claim of Appellant regarding short credit of TDS and if it is found that income pertaining to such TDS is already offered to tax, credit of such TDS needs to be given while giving effect to this order. Deduction under section 80 IA - disallowance of deduction representing street light maintenance income on the reasoning that it is not derived from the activity of power generation - HELD THAT:- We hold that the assessee is not eligible for deduction of income derived from the services of streetlight maintenance. Alternate contention of the assessee that it should be allowed to be adjusted the income of streetlight maintenance with the corresponding expenses - AO has given the benefit of the expenses against the income from streetlight maintenance on ad hoc basis. Even before us, the learned AR has not brought anything on record about the expenses incurred against such street light maintenance income. Thus in the absence of such details, we do not find any merit in the argument of assessee. Before parting, we also note that the basis adopted by the AO for computing the income relating to streetlight maintenance does not seem to the proper. It is because, the AO has considered all the income of the assessee for working out the profit from the activity of streetlight maintenance instead of making the estimate directly on the income shown by the assessee under the head streetlight maintenance. In simple words, the AO could have estimated the profit on some reasonable basis in relation to the gross income shown by the assessee from the activity of streetlight maintenance. As such, we are of the view that the justice shall be served to the assessee and the revenue, if the income of the assessee from the streetlight maintenance is estimated at the rate of 8% being gross income from the streetlight maintenance activity. Hence the ground of appeal of the assessee is partly allowed. Disallowance of deduction claimed under section 80-IA on account of recovery of bad debts in Ahmedabad unit and Surat unit - HELD THAT:- Where Assessing Officer finds that claim has already been allowed in the earlier year then such benefit under section 80-IA should be given to the profits taxed under section 41(1). The argument of ld. AR is that once it has declared profits under section 41(1) it would mean that assessee has already claimed and allowed deduction thereof in earlier years but in our considered view it requires verification and for that matter we restore the matter to the file of Assessing Officer. Accordingly this ground of assessee is allowed for statistical purposes. Disallowances of deduction under section 80-IA on account of FD interest income and interest on IT refund - HELD THAT:- Identical issue with respect to the eligibility of deduction of income from the activity of interest on FD and income tax refund came up before this Tribunal in the own case of the assessee for AY 2008-09 [ 2022 (1) TMI 174 - ITAT AHMEDABAD ] where the issue has been decided against the assessee. The provisions of Section 80-IA of the Act provides for deduction of the profits derived from the business by an undertaking or enterprise, engaged inter alia, in generation or generation and distribution of power. But the interest income was not arising to the assessee from the activity of distribution of power. Thus, on the same reasoning given in the relation to streetlight maintenance activity in para no. 38 of this order, the impugned income is not eligible for deduction under section 80-IA of the Act. Therefore the authority below rightly excluded the same from the computation of deduction under section 80IA of the Act. Hence the assessee ground of appeal is dismissed. Disallowance of deduction claimed under section 80-IA representing Rental income with respect to Ahmedabad unit and Surat Unit - HELD THAT:- The provisions of Section 80-IA of the Act provides for deduction of the profits derived from the business by an undertaking or enterprise, engaged inter alia, in generation or generation and distribution of power. But the rental income was not arising to the assessee from the activity of distribution of power. Thus, on the same reasoning given in the relation to streetlight maintenance activity in para no. 38 of this order, the impugned income is not eligible for deduction under section 80-IA of the Act. Thus in view of the above discussion we are of the opinion that the rental income received from employee should not be included in the computation of deduction under section 80IA of the Act as the same is not the profit or gain derived from the eligible business activity. Disallowance of deduction under section 80-IA representing miscellaneous receipt with respect to Bhivandi unit - HELD THAT:- Admittedly, the miscellaneous receipts discussed above is not connected with the generation and distribution activity of the assessee. Thus, the same is not eligible for deduction under the provisions of section 80IA of the Act. However, while excluding the impugned miscellaneous receipt, the assessee is eligible for deduction of the expenses incurred, if any, against such miscellaneous receipt. With respect to the other income we find that no detail has been furnished by the assessee in support of his contention that such other revenue represents the income from the activity of power generation and power distribution. In the absence of any nexus, we do not find any reason to interfere in the finding of the learned CIT-A. Accordingly, we confirm the same. Hence, the ground of appeal of the assessee is partly allowed. Disallowance of deduction under section 80-IA representing receipt of store billing charges - HELD THAT:- Eligibility of deduction of income from the activity of store billing charges came up before this tribunal in the own case of the assessee for AY 2011-12 [ 2022 (1) TMI 174 - ITAT AHMEDABAD ] where the issue has been decided against the assessee. AR or DR has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the own case of assessee, we hereby set aside the finding of the learned CIT(A). Thus, the ground of objection raised by the Assessee is hereby dismissed. Denying the benefit of deduction under section 80 IA with respect to certain incomes - HELD THAT:- It is the trite law that the income, which has direct nexus with the activity of power generation and power distribution carried out by the assessee, are eligible for deduction under section 80IA of the Act. In other words, there has to be proximity between the income shown by the assessee viz a viz income derived from the activity of eligible undertaking. The onus lies upon the assessee to establish such nexus. However, what we find is this that the assessee before us failed to establish such nexus. Therefore, we decline to interfere in the order of the authorities below. Hence, the ground of objection raised by the assessee is hereby dismissed. MAT Computation u/s 115JB - sale of carbon credit being capital in nature cannot be made subject to tax under the provisions of MAT as specified under section 115 JB. Deduction u/s 80IA - Supplier discount and penalty Late delivery payment - HELD THAT:- We note that the assessee in connection with the purchases made by the eligible unit received the certain amount from the supplier on late delivery/supply of material. Thus, it appears that such receipt has direct link from the activity of generation and distribution of power. Besides the above, if the assessee reduces the cost of material purchase by the amount of late delivery charges, there would not have been any question of showing the impugned income and consequently denying the deduction claimed by the assessee under section 80 IA - It is just a manner of presentation of the income and expense. As such, the assessee has represented the late delivery charges separately as income instead of reducing the cost. Admittedly, the corresponding expenses i.e. material purchases has been allowed as deduction against the income from generation and distribution of power. Thus,it has a live link with the activity of the assessee. Accordingly, we hold that the assessee is eligible for deduction on such receipt of late delivery charges. Supplier discount and penalty fetched by the assessee because of quick payment made to GETCO has direct link with the activity of the assessee being distribution of power. Similarly, the amount of discount received by the assessee has presented in the financial statement in a different format. As such, the assessee instead of showing such discount income as a separate items income, it could have adjusted such receipt against the payment made to GETCO. In such an event, there would not have been any question of showing the impugned income and consequently for disallowing the deduction claimed by the assessee under the provisions of section 80 IA of the Act. Accordingly, we hold that the assessee is eligible for deduction on such discount. Unscheduled interchange income - We note that in the process of supply of electricity through GETCO, sometimes there were excess or short transmission of electricity to customer than the billed unit. On such excess transmission of electricity, the assessee charged consideration. Thus, it appears that such receipt has direct link from the activity generation and distribution of power as it is charged on the excess supply of power. In our considered view, such receipt is part parcel to the sales made by the assessee. Accordingly, we hold that the assessee is eligible for deduction on such discount. Meter fixing fee - We note that the assessee was in receipt of an amount of Rs. 41,51,680/- from the meter fixing services, testing fee, fault attending fee etc. The AO held that the such receipts are not derived from the activity of the generation or distribution of power. At the outset, we note that electricity to the end customer cannot made available to the customer without fixing meter. Further, meter is necessary for measurement of unit supplied to particular customer and based on which bills are issued. Thus, in our considered opinion meter fixing services has direct link with the activity of distribution of power. Therefore, the assessee is eligible for deduction under section 80IA of the Act on such receipt. Gain on foreign currency exchange - From the preceding discussion we note that impugned gain of foreign currency rate fluctuation arises on import of material, equipment and natural gas which were utilized in generation of power. Thus, the same has direct and live nexus with the eligible business. At this point, we also referred the judgment of Hon ble Gujarat High Court in case of CIT vs. Deverson Industries Ltd. [ 2015 (1) TMI 394 - GUJARAT HIGH COURT ] -The above case law is in relation to export business whereas the case on hand of the appellant assessee has made import of materials and equipment for the eligible unit. But the principle laid down by the Hon ble Court in the case cited above is squarely applicable in the case on hand. Thus, in view of the above, the ground of appeal of the Revenue is hereby dismissed.
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2023 (1) TMI 64
Principle of mutuality - CPC Bengaluru while processing the return of income considered amount as income of the assessee by treating as income not covered by mutuality - HELD THAT:- We find that there is no dispute that assessee was settled / incorporated as per the order of Hon'ble jurisdictional High Court to treat the effluent of hazardous / created in and around of Vapi. There is no dispute that the similar receipt from its members was treated as income in various preceding years. However, on appeal before Ld.NFAC/CIT(A) the assessee was granted relief in all preceding years and on further appeals by Department the order of Ld.NFAC/CIT(A) were upheld by Tribunal. As in assessee s own case for assessment years 2013-14 [ 2021 (11) TMI 1123 - ITAT SURAT] as noted that assessee s own case for AY 2010-11 [ 2018 (3) TMI 1983 - ITAT SURAT] the co-ordinate bench of Tribunal while following the order in earlier year accepted the status of assessee as a mutual association - No contrary facts or law is brought to our notice to take other view - Decided against revenue. Allowances of depreciation - not reducing the contribution of members for acquisition of assets while computing depreciation - HELD THAT:- As decided in assessee own case for assessment year 2013- 14 [ 2021 (11) TMI 1123 - ITAT SURAT] we held the principle of mutuality in the case of assessee, therefore, the allowances of depreciation and prior period expenses by AO has no bearing as the principle of mutuality has been accepted by the Tribunal. In the result, appeal of the assessee is set aside and disposed of for statistical purposes. This ground of Revenue s appeal is allowed for statistical purposes.
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2023 (1) TMI 63
Disallowance u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- Firstly, no satisfaction has been recorded by the Ld. Assessing Officer. Secondly, merely because expenditure was debited to profit and loss account does not entitle for disallowance u/s 14A. Thirdly, no disallowance u/s 14A of the Act should have been made if no exempt income was earned. CIT(A) held that since disallowance u/s 14A was deleted in respect of regular provisions and therefore, no adjustment was to be made u/s 115JB for computation of book profit. Respectfully following the finding of the Tribunal in the case of the assessee as well as finding of the Hon ble Delhi High Court in the case of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute and accordingly, we uphold the same. The ground No. 1 and 2 of the appeal in respect of all three appeals are dismissed. Addition of income u/s 5 of the Act under regular provisions as well as under provisions of section 115JB - advances made by assessee to its subsidiaries - assessee company being a holding company advanced certain sum to its subsidiary specifying rate of interest @ 12.5 per cent per annum - CIT(A) deleted the entire addition - HELD THAT:- As in the present case that the assessee advances to its subsidiary for business requirements, which may have impact on the objectives of the assessee for earning future revenue to the assessee. When it made in relation to advances. Though, it is another fact that the business of such nature did not materialized in positive outcome and the subsidiary had to close such business operation. The Hon'ble Supreme Court in S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] held that whether expenditure may not have been incurred under any legal obligation, yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. The case of the assessee is that the assessee has made advances to its subsidiary for business expediency. Therefore, considering the decision of Hon'ble Supreme Court in SA Builder (supra), we do not find any infirmity in the order passed by Id. CIT(A) - Appeals of the Revenue are dismissed.
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2023 (1) TMI 62
TDS u/s 194D - disallowance being 30% of ceding commission u/s 40(a)(ia) alleging failure to deduct tax at source on such commission under section 194D - AO was of the opinion that a reading of provisions of section 194D provides that TDS has to be deducted where any sum is paid for soliciting or procuring insurance business - HELD THAT:- The assessee company is in the business of reinsurance ceded from the insurance companies in India. The term reinsurance ceded means the portion of one or more risk that the cedant transfers to the reinsurer with the object of reducing the cedant s liability by sharing with reinsurer the insurance liability, premiums, and losses from the reinsured business in that proportion. The reinsurance company also bears a proportionate cost of cedant in this connection which is termed as cednat commission. During the year under consideration, from the gross premium payable by the insurance company to the assessee, a sum was deducted on account of reimbursement of expenses for the share of assessee in the nature of manpower cost, third party administration cost, administration cost, etc. which are termed as cedant commission. As per the facts of the present case, the cedant commission paid by the assessee to the insurance company is actually the share of assessee in the nature of manpower cost, third party administration cost, administration cost, etc. which are actually reimbursement of expenses in relation to the gross premium which the assessee company has received in this regard, so ceading commission cannot be considered to be paid for soliciting or procuring insurance business. As decided in the case of M/s Royal Sundaram Alliance Insurance Company Limited [ 2019 (2) TMI 923 - MADRAS HIGH COURT] CIT(A) noted that as a matter of industrial practice it was termed as commission on reinsurance premium received , however, in substance it is discount on re-insurance premium received by an Insurance Company from an other Insurance Company. We find that the Tribunal rightly decided the issue in favour of the assessee and the revenue has not brought out any ground to interfere with the said finding. Accordingly, the appeals filed by the revenue on this ground are dismissed and consequently, the substantial question of law is answered against the revenue. Thus no TDS is required to be deducted. The other limb of ld. counsel for the assessee s submission is that no TDS is required in as much as it is reimbursement of expenses and on the touch stone to the decision of the Hon ble Supreme Court in the case of of DIT(IT)-1 vs Moller Maersk [ 2017 (2) TMI 993 - SUPREME COURT] no TDS was required to be deducted. Another plea was that on the basis of proviso to section 201(1) of the Act, since the payees have offered the income to pay tax, no TDS was required to be deducted. Appeal of the assessee stands allowed.
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Customs
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2023 (1) TMI 61
Adjudication of SCN after a long gap - time limitation - gross delay and resultant prejudice to the Petitioner - when the Petition has come up for hearing in 2022, whether the Petitioner can be subjected to further proceedings in furtherance of the show cause notice dated 7 July 1997 that is 25 years (including the period of interim order)? HELD THAT:- Assertion of the Petitioner that the Petitioner was not informed that the file of the Petitioner was transferred to the call book has not been controverted. The position continued for 18 years. The fact situation where show cause notice has been transferred to the Call book and the noticee is not informed about the pendency for an unreasonable period of time has been considered in various decisions. It has been held that not only it is necessary that the show cause notice should be taken to its logical end at the earliest as a matter of administrative discipline, but keeping the show cause in Call book without informing the notice for a long period of time causes severe prejudice, as the notice may act on the premise that the proceedings have been dropped and it is also likely that the record and proceedings are not available. In the present case the show cause notice was kept dormant and the notice for personal appearance was issued 18 years ago. There is no dispute and cannot be any dispute regarding the above position of law laid down in these decisions. The petition was admitted and Rule was issued, and thus, the position has continued for 25 years. Notice dated 8 April 2015 and 7 July 2015 calling the petitioner for personal hearing in consequence of show cause notice dated 7 July 1997 are quashed and set aside. The Respondents are restrained from enforcing the impugned show cause notice dated 7 July 1997 - petition allowed.
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2023 (1) TMI 60
Revocation of Customs Broker Licence - forfeiture of security deposit - imposition of penalty - non-ascertainment of the premises from which the importer operated and unwonted reliance placed on an intermediary who allegedly misused the Import Export Code (IEC) of another entity for import of branded goods - HELD THAT:- The appellant had not verified the premises of the importer in person. Undoubtedly, there is no prescription, in procedure or instruction, that the premises of the client should be visited in person or verified appropriately. Norms for familiarity with the background of client are mandated and it is the contention of the Learned Counsel that these were conformed to. It is also seen that the enquiry proceedings restricted itself to the technical aspect of the allegation without endeavouring to ascertain if acts of omission or commission as custom broker had, in fact, contributed to the act of smuggling. The appellant has, at the same time, been unable to evince due to discharge of obligation. The licensing authority has revoked the licence of the appellant herein besides forfeiting the security deposit and imposing further penalty. Considering the nature of lapse on the part of the customs broker , the ends of justice would be met by setting aside the revocation while allowing the forfeiture of security deposit and imposition of penalty to sustain. Appeal disposed off.
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2023 (1) TMI 59
Valuation of imported goods - Hair Bow Raw Accessories Articles - mis-declaration and mis-classification of goods - rejection of declared assessable value of the goods - reassessment of imported goods - redetermination of value on the basis of the value of contemporaneous imports of similar goods and the NIDB data - HELD THAT:- Section 14 of the Customs Act provides that the transaction value of goods shall be the price actually paid or payable for the goods when sold for export to India where the buyer and the seller of the goods are not related and the price is the sole consideration for the sale, subject to such other conditions as may be specified in the rules made in this behalf. In the present case, the proper officer doubted the truth or accuracy of the value declared by the importer for the reason that contemporaneous data had a significantly higher value. It was open to the importer to require the proper officer to intimate the grounds in writing for doubting the truth or accuracy of the value declared and seek a reasonable opportunity of being heard, but the importer did not do so. On the other hand, the importer specially stated in the statement recorded under section 108 of the Customs Act, after being shown the contemporaneous value, that it he agreed that the value of the goods should be enhanced. The importer also specifically stated that it did not want to avail of the right conferred under section 124 of the Customs Act and, therefore, did not want any show cause notice to be issued to or personal hearing to be provided. The Commissioner (Appeals) placed emphasis on the classification of the goods shown as Serial No. 4 in the Bill of Entry and observed that the evidence gathered by the revenue to prove that the goods would fall under a different classification has a vital role. The Commissioner completely loss sight of the fact that Deepak Garg, who had appeared on the behalf of the importer, had specifically stated that the importer accepted the valuation (based on the classification proposed by the department) and also stated that he would pay the differential duty and would not require any show cause notice to be issued or personal hearing to be granted. Despite the categorical statement made by Deepak Garg in the statement recorded under section 108 of the Customs Act, the Commissioner (Appeals) still observed that the department did not adduce any clear and cogent evidence that any additional consideration, over and above the transaction value, had flown - the Commissioner (Appeals) was not justified in setting aside the orders passed by the assessing officer on the Bills of Entry. The order dated 08.05.2018 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. Appeal allowed - decided in favor of Revenue.
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Corporate Laws
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2023 (1) TMI 58
Anti-competitive acts - bid rigging - use of dominion position - it is alleged that the impugned order of CCI does not comply with the requirements of Section 26(1) of the Competition Act, 2002 and the same is arbitrary, perverse and illegal - formal agreement exists between the parties or not - HELD THAT:- On plain reading of Section 2(b), it clearly reveals that an agreement includes any arrangement or understanding or action in concert, whether it is formal or in writing or whether it is intended to be enforceable by legal proceedings. Thus, for an agreement, under this Act , need not be in writing. On the facts and circumstances of each case, the conduct of the parties to agreement can be inferred. At the same time, under Section 2(c) Cartel would include association of producers, sellers, distributors, traders or service providers, who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services. Thus, even an action which may form itself, may be agreement of creating Cartel. It is obvious that there may not be patent evidence as to forming Cartel or creating an agreement in writing. The facts and circumstances of the case may reflect, primafacie, that there is agreement and/ or Cartel. Now, it is well settled that under Section 26(1) of the Act, the Commission is only required to see whether a primafacie opinion exist or not. The order under Section 26(1) of the Act can be passed when there is prima-facie material to direct an inquiry and elaborate reasons are not required, as Commission is required to express only a tentative view. It is also settled that in case elaborate reasons are provided in the order passed under Section 26(1), it will certainly prejudice the person against whom the complaint has been made, and therefore, the Statute provided a safeguard for holding an inquiry after an order is passed under Section 26(1) and the Director General is certainly required to grant an opportunity of hearing by holding inquiry in the matter - considering the provision of Section 53A, admittedly, the order of inquiry passed by the Commission, by virtue of power under Section 26(1) of the Act, no appeal is permissible. Therefore, the Constitutional power under Article 226 is available to the concerned person to challenge the order of the inquiry issued by the Commission under Section 26(1) of the Act. But, the action under Section 26(1) being an administrative in nature, there would be a judicial restrain on the High Court to interfere with such administrative order unless and until it is shown that the order was contrary to law, or relevant factors were not considered or relevant factors were considered or the decision was one which no reasonable person could have taken. Considering the material placed on record, it reveals that the Commission has initiated proceedings in accordance with Section 26 of the Act, pursuant to it, forming an opinion under Section 26(1) of the Act as to the existence of a prima-facie case. This exercise has been undertakne on the basis of the information received by the Commission from Respondent No.3 regarding the Cartel in the form of anti-competitive agreement. No Statutory right is availabe to the person concerned against whom any inquiry is ordered to be initiated by the Commission on the exercise of its administrative power available to it under the Act. Further, it is well settled that in an order of Inquiry under Section 26, which is only prima-facie opinion and does not affect the rights of any person, it cannot be reviewed by the High Court unless and until it is shown that it is contrary to any provisions of the Act or irrelevant material has been considered or relevant material has not been considered - it is the prerogative of the Commission to invite any person or sought information from any person for forming primafacie opinion as to whether any inquiry contemplated under Section 26(1) of the Act is necessary or not. Such action of the Commission cannot be said to be bias one or giving any right to other person against whom any order of inquiry is passed. The Commission has considered material placed on record by the respondent No.3 as well as GCEE for forming its primafacie opinion as to initiate inquiry under Section 26(1). It clearly reveals that while passing order for initiation of inquiry, the Commission has also considered that the allegation of the informant regarding provision of restriction on Standard terms and conditions have not been accepted by the Commission. Thus, the Commission has considered every material placed before it before arriving at the prima-facie opinion as to inquiry. Now, the main grievance of the petitioner is the interpretation of L1 price and negotiation price in each packet and has submitted that the Commission has misinterpreted the information provided to it. However, it needs to be observed that it is for the Commission to interprete and consider the information provided to it by the person concerned relating to material, which may be in the form of business transactions, information relating to Accounts or such statistical data, etc. The Court has no such expertise in evaluating or interpreting the business data or statistical data pertaining to a particular commercial activity. Any such information which is in the form of statistical data relating to any business or commercial transaction and accounting procedure may be interpreted in a different manner by different person having such expertise, knowledge in such fields. The angle of interpretation of such data may be different by different person and, therefore, the submission of the petitioner that information relating to the statistical datea including the interpretation of effect of L1 price in each packet and the negotiated price thereof, etc., is misunderstood by the Commission, cannot be accpeted at this stage, as it is prerogative of the Commission to form prima-facie opinion as to initiation of inquiry. In the considered opinion of this Court, unless and until a detailed inquiry is conducted by the Director General, the question of dealing a finding in respect of violation of the statutory provision does not arise. Therefore, the petitioner should not have hesitated in participating in the inquiry which is yet to be commenced by the Director General and all the grounds raised by the Petitioners will be available before the Director General as well as before the Commission. The impugned order passed under Section 26(1) is only a starting point of the process and the petitioners want to stop process at the threshold and the Commission is not being permitted by the petitioner to proceed ahead in the matter - Further, it is well settled that when questions of fact are involved in any matter, the High Court may not exercise its constitutional power under Article 226 of the Constitution. Admittedly, in this case, as discussed hereinabove, the disputed question of facts relating to interpreation of information in the form of data is agitated. Therefore, on this ground also, this court deems it fit not to exercise its discretionary power under Article 226 of the Constitution of India, especially when the impugned order is administrative in nature. This Court is of the considered opinion that the Writ-Petitions are devoid of merit and deserved to be dismissed. However, it is pertinent to note that during the pendency of the petitions, the Director General has also issued certain notices to initiate penalty proceedings under Section 43 of the Act, as there was no stay in operation against the impugned order of the Commission - since all the petitions are devoid of merits and deserve to be dismissed, all are hereby dismissed.
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Insolvency & Bankruptcy
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2023 (1) TMI 57
Initition of CIRP - Ex-parte order - Corporate Debtor could not appear before the NCLT - Validity of impugned order - Burden to prove - It is the version of the Appellant that when a Statute specifies that a particular thing, is to be performed in a particular manner, it has to be done only in that fashion, and further that in the present case, the procedure enunciated, under Rule 37 of NCLT Rules, 2016, was not followed, by the Adjudicating Authority / Tribunal - HELD THAT:- The Burden of Proving, the Service of Summons, is on the Petitioner / 1st Respondent / Bank / Financial Creditor. In Law, if a registered Summons / Notice is sent to a Respondent / Defendant, at his / her correct address, the presumption of Service, arises, and an Ex-parte Decree, will not be set aside - In a given case, where Summons / Notice, correctly addressed sent by a Registered Post with Acknowledgement, not received back, the same is presumed to be Served. An Adjudicating Authority, under the I B Code, 2016, is to provide a reasonable opportunity, to a Corporate Debtor, and as per sub-section 4 (7) of the Code, is to ascertain the factum of Default, from the records of Information Utility or from the evidence furnished, by the Financial Creditor - Where the Record showed that an Application / Petition was preferred on the Proforma, prescribed under the Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and if an Adjudicating Authority, was satisfied, if the Default, had taken place, there is no illegality, in admitting the Application, filed by the Financial Creditor, under the I B Code, 2016. An Application / Petition, under Section 7 of the Code, is to be considered by an Adjudicating Authority, on its own merits, taking into consideration of the available materials on record - Where the post filing, the Notice, as required under Rule 4 (3) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, was sent to the Corporate Debtor, and if the said Corporate Debtor, does not appear, before the Adjudicating Authority, the Petition, filed by a Financial Creditor, can be determined Ex-parte. There is no prohibition in Law, in this regard - An Application, under Section 7 of the I B Code, 2016, is not to be rejected, merely on technical ground. An Acknowledgement - HELD THAT:- Under the Limitation Act, 1963, an Acknowledgement, ought to be in writing and signed by a Person, making an Acknowledgement. In fact, the exact sum or nature of Claim, need not be Acknowledged - the requirement of Section 18 and 19 of the Limitation Act, 1963, are quite independent and they are not cumulative in character. A mere denial, will not take the sheen off the document(s) and the Claim of the Creditor, remain alive, within the meaning of Section 18 of the Limitation Act, 1963. A Judicial Discretion, is to be regulated, as per known Rules of Law, and not on mere impulse or whim of a Person, for whom, it is given on the hypothesis that he is circumspect - In the instant case, it cannot be forgotten that the Adjudicating Authority (Tribunal), on 21.10.2022 at 2.30 P.M. (through Video Conferencing Hearing in CP (IB) / 308 / 7 / HDB / 2022), had directed the 1st Respondent/Bank (Financial Creditor), to serve Notice to the 2nd Respondent / M/s. Gayatri Projects Ltd. (Corporate Debtor), by Speed Post, and Email, within 5 days from today, i.e., 21.10.2022 and the Proof of Service, was directed to be filed, before the next hearing date. Any Person, who is in Law, entitled to Stake a Claim for payment, has no prohibition, under the I B Code, 2016, to prefer the same, by means of an Application / Petition. The prevalent of Default, is a Sine Qua Non, for Admitting, an Application/ Petition, under the I B Code, 2016, in respect of the Insolvency Proceedings. This Tribunal, on going through the impugned order (Filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, r/w Rule 4 of the I B (Application to Adjudicating Authority) Rules, 2016, passed by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench II, Hyderabad), comes to a consequent conclusion that in the instant case on hand, there is overwhelming evidence of Debt Due, payable in Fact and in Law, and Default, the Adjudicating Authority, had exercised its subjective discretion in a sound, judicious and right thinking manner, and accordingly Admitted the CP (IB) No.308 / 7 / HDB / 2022, filed by the 1st Respondent / Bank(Financial Creditor), which requires no interference, in the hands of this Tribunal, sitting in Appeal. Consequently, the Appeal fails. Appeal dismissed.
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Service Tax
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2023 (1) TMI 56
Extended period of limitation - Issue involved was subject to various litigation - Correctness of proceedings initiated in show-cause notice dated 15th April 2014 for the period from 2008 to 2012 - inconsistent with bar of limitation prescribed in section 73 of Finance Act, 1994 - HELD THAT:- It is seen from the records that show-cause notice for the period from October 2003 to September 2008 dated 6th April 2009 on the same issue had been adjudicated and was carried to the Tribunal who, while upholding the default, had held that the demand was liable to be restricted only to the normal period in section 73 of Finance Act, 1994. An appeal against this order of the Tribunal, though admitted, is, as yet, pending before the Hon'ble Supreme Court. The demand for October 2003 to September 2008 has been, thus, curtailed and the present demand leading to the impugned order relates to the period thereafter till 2012 for which show-cause notice was issued on 15th April 2014. This appeal of Revenue seeking recovery as proposed in the demand by invoking of the extended period for subsequent period of time is not correct in law - the appeal of Revenue is dismissed.
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Central Excise
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2023 (1) TMI 55
Recovery of cenvat credit of basic excise duty - it is alleged that amount wrongly utilized for payment of education cess and secondary and higher education cess as both the cess are not considered as excise duty - additional premise is not registered under the Act and hence benefit of duty exemption under notification no. 67/95-CE is available to such premise or not - revenue neutrality - time limitation - HELD THAT:- It can be seen from the available records that the capital goods in question were transferred by appellant under transfer invoice to its additional premise situated about 500 mtrs away from its registered factory premise. Further, it is not in dispute that both the premises are known as M/s. Jyoti CNC Automation Pvt Ltd; are owned and controlled by the same legal entity; and the use of the said capital goods so transferred to the additional premise is exclusive and in or in relation to manufacturing of final products cleared by the appellant at its registered factory on payment of duty. If that be so, capital goods in question cannot be said to have been cleared from the appellant s factory attracting excise duty but have to be treated as captively used in the factory of the appellant. The additional premise of the appellant where the said capital goods were installed is to be treated as extension of appellant s factory in view of definition of Factory as provided under section 2(e) of the Central Excise Act, 1944. The word precincts has to be given a broader meaning and the distance between such premises carrying out manufacturing process connected with the production of excisable goods, is not material to deny benefit of exemption notification. This issue is settled by the Hon ble Supreme Court in the case of SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER, CUS. C. EX., MP [ 2006 (8) TMI 3 - SUPREME COURT] . Thus, the additional premise is an extension of factory of the appellant and hence benefit of notification no. 67/95-CE cannot be denied to the appellant - the situation is therefore revenue neutral, in the circumstances, demand of duty on transfer of such capital goods on the ground that the other premise is to be treated as separate premise requiring separate registration under the Act is not tenable. The OIAs to the extent confirmed the duty and penalty is required to be set aside and appeals of the appellant is required to be allowed - Appeal allowed - decided in favor of appellant.
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2023 (1) TMI 54
Availment of cenvat credit of the service tax paid by the appellant - input services or not - services in relation to fabrication of plant and machinery in the factory and making plant and machinery operational - credit denied for the period April 2011, when the setting up of the factory started to the period March 2016, when the setting up of the factory was completed and commercial production started. HELD THAT:- The appellants are engaged in manufacture of goods falling under Chapter 39 of the Central Excise Tariff Act, 1985 and availed cenvat credit of service tax during setting up of the factory. Revenue is of opinion that cenvat credit of services used for setting up of factory, premises of provider of output service or the office relating to said factory or premises would not be admissible as the word setting put has been deleted from the definition of input service. This very issue has been examined by Tribunal in the case Reliance Industries Limited [ 2022 (4) TMI 729 - CESTAT AHMEDABAD ] . In the said decision similar dispute was examined. The Tribunal in the case of Semco Electricals Private Limited [ 2009 (12) TMI 143 - CESTAT, MUMBAI ] has held that in order to qualify as an input service, the service has to either fall within the means part or inclusive part of the definition of input service. Thus, any service which is covered under the means part of the definition, the credit cannot be denied even if, it does not appear in the inclusive part of the definition - without use of these services, the appellant could not have possibly manufactured the excisable goods. In this background, we do not find any merit in the argument of the Revenue that by deletion of word setting up from the definition of input service any significant change has happened. However, w.e.f. 01.04.2012, a specific exclusion clause has been introduced in the definition of input service - the exclusion clause would obviously make such services ineligible for the cenvat credit under the head of Input Service . It is seen that the appellant has claimed that they have on their own not availed such credits relating to the exclusion clause. Denial of cenvat credit invoking Rule 4(7) of the Cenvat Credit Rules - HELD THAT:- It is apparent that the defence and documents in support of appellant s claim has not been examined. In view of above, we find that demand on this count cannot be sustained as the order fails to examine the defence given by the appellant. In these circumstances, the demand on this count is set aside and matter is remanded to the original adjudicating authority. Credit of input services availed in respect of alleged setting up of the factory as well as the suggestion of the appellant about the credit not availed on account of exclusion clause - HELD THAT:- The matter needs to be examined again by the original adjudicating authority in light of the decision of Tribunal in the case of Reliance Industries Limited [ 2022 (4) TMI 729 - CESTAT AHMEDABAD ] which clearly holds that so long as input services on which the credit is taken by the appellant are covered under the means part of the definition, the credit even if, used for setting up of the plant or factory, cannot be denied. The matter is remanded to the original adjudicating authority for fresh adjudication.
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2023 (1) TMI 53
Rectification of mistake - mistake apparent on the face of record or not - whether non-consideration of the contentions relevant to the issue for determination which were raised before Bench of the Tribunal, can be said to be mistakes apparent from the record so as to be rectified under section 35C(2) of the Excise Act? - invocation of extended period of limitation - entitlement to avail CENVAT Credit - HELD THAT:- In ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT VERSUS SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT ] the Supreme Court held that non-consideration of a decision of a High Court or the Supreme Court can be said to be a mistake apparent from the record , which mistake can be rectified. It was pointed out that the error apparent from the record should be so manifest and clear that no Court would permit it to remain on record. It should be pertinent and self-evident and not require any elaborate discussion of evidence or argument. It was also observed that rectification of an order stems from the fundamental principle that justice is above all and it is to be exercised to remove the error and to disturb the finality - If non-consideration of a decision of the High Court or the Supreme Court can be said to be a mistake apparent from the record‟, there can be no doubt that non-consideration of two important submissions which were advanced at the time of hearing of the appeal would constitute a mistake apparent from the record which would require rectification. Invocation of extended period of limitation - HELD THAT:- It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 [the 2002 Rules] that the assessee is expected to self assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. Not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so - the finding in the order of the Commissioner that the applicant had deliberately filed incorrect returns as a result of which the extended period of limitation could be invoked cannot be sustained. The Department was aware of the material facts, more particularly when the availment of exemption benefit under notification dated 17.03.2012, had been categorically declared by the applicant in the excise returns. Thus, it is clear that material facts were in the knowledge of Department but still the Department issued show cause notice after inordinate delay of three years - the invocation of extended period of limitation for confirmation of the duty cannot be sustained and is set aside - penalty imposed for this period cannot, therefore, also be sustained. Entitlement to avail CENVAT Credit - HELD THAT:- The paragraph 23 of the final order dated 22.04.2022 passed by the Tribunal shall stand deleted and shall be replaced by the following paragraph:- The impugned order dated 15.07.2019 passed by the Principal Commissioner is modified to the extent that the duty demand confirmed for the extended period of limitation i.e. for the period upto November, 2016 and the imposition of penalty are set aside. The appellant would also entitled to avail CENVAT credit of duty paid on the inputs, input services and capital goods in the manufacture of final products. The remaining part of the demand confirmed by the Principal Commissioner in the order dated 15.07.2019 is confirmed. The appeal is, accordingly, allowed to the extent indicated above. The matter is remitted to the Principal Commissioner to re-determine the duty demand in the light of the observations made above. Application disposed off.
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2023 (1) TMI 52
Recovery of Central Excise Duty alongwith interest and penalty - SSI Exemption - clubbing of clearances - non-clearance of the excisable goods under proper invoice - non-payment of appropriate duty on the clearances of the excisable goods - non-assessment of excisable goods cleared from their Powai outlet - non-filing of periodical returns with the department showing the details of the production and removal of excisable goods - HELD THAT:- This show cause notice was adjudicated as per order-in-original and the appeal against the said order has been dismissed by the Commissioner (Appeals) as per the impugned order. The issue involved in the present case is no longer res integra and has been decided by various authorities - Reliance can be placed in the case of M/S. RAMANI HOTELS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V [ 2022 (9) TMI 1055 - CESTAT MUMBAI] where it was held that The show cause notice itself makes an averment that the appellants operate under the name and style of Ramee Guestline Hotel and have cleared the goods with the brand name and logo belonging to Ramee Guestline Hotel. If that is the case, then the appellants were clearing the goods under the brand name and logo held by them - they cannot be hit by clause 3(b) of Notification No.8/2003. Appeal allowed - decided in favor of appellant.
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