Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 5, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Eligible unit for budgetary support - doctrine of promissory estoppel and legitimate expectation - sunset clause prescribed under Excise Exemption Notification, giving an option to existing units to undertake substantial expansion at any date without any limitation - The supersession or revocation of an exemption notification in the “public interest” is an exercise of the statutory power of the State under the law itself. - there is no naysaying that petitioner has failed to establish that its case squarely falls within the impugned notifications and exemptions provided thereunder. As a corollary thereof, both the writ petitions are devoid of any merit and are, thus, dismissed - HC
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Seeking exemption from the levy of IGST, CGST, SGT and Custom Duty - It is for the Government to take a policy decision whether to completely exempt drugs for treatment of rare diseases from the levy of IGST, CGST, SGT and Custom Duty. No writ of mandamus can be issued directing the respondent/Union of India to exempt the drugs from payment of any tax or custom duty - SC
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Levy of GST above the tender amount - whether the tender amount is inclusive of GST / Taxes or is only a Basic Amount - it is evidently clear that there was no auto generation of the amount at the site after filling in the basic rate - There are no irregularity much less any illegality in the demand raised by the respondents of GST @ 18% on the tender amount - HC
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Classification of services - applicability of GST rate - Works Contract - composite supply - receipt of contract for new construction of CBD railway station, platform, parking, building and all other civil constructions within the boundary of the station - Classification of services - applicability of GST rate - Works Contract - composite supply - receipt of contract for new construction of CBD railway station, platform, parking, building and all other civil constructions within the boundary of the station - as the said construction work undertaken by the applicant has been found not pertaining to railways, the same attracts GST @ 18% [9% CGST + 9% CGGST] - AAR
Income Tax
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Allowable business expenditure - Payment for breach of contractual obligation - by no stretch of imagination could it be said that the payment for breach of contractual obligation pursuant to an arbitration award in the pending litigation, cannot be said to have been incurred for any purpose which is an offence or which is prohibited by law. - Claim of deduction of expenditure cannot be denied - AT
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Depreciation on the Cranes given on lease to Oil India Limited @ 30% disallowed - according to the Revenue, such assets were not used for hire and, therefore, are not entitled to claim higher rate of depreciation - The moment assessee has let out the Cranes, then it is to be construed that these assets were being used in the hiring business of the assessee. - AT
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Penalty levied u/s. 271D - transactions through journal entries - assessee shall be deemed to have had reasonable cause to receive the deposits/loans through journal entries on account of various judgments/orders holding that journal entries in the book of accounts indicating deposit/loans did not fall foul of Section 269SS of the Act, which would also be a reasonable cause under Section 273B of the Act for non-imposition of penalty under Section 271D - AT
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Additions of surrendered amount as excess stock during the survey proceedings - During assessment proceedings production of stock register was insisted upon, though the assessee in reply to question No. 34 has stated that he is not maintaining any stock register because it involves various sizes, weight and quality of the paper. This statement of the assessee has completely been ignored by the Revenue Authorities. We, therefore, hold that the excess stock as worked out by the survey team does not rest on solid foundation as it has been arrived at by incorrect assumptions. - AT
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Deduction of interest expenditure of INR u/s 36(1)(iii) - the Assessee has undertaken only one redevelopment project. It is not disputed that interest cost is directly related to the project As per Accounting Standards 7 on Construction Contracts and Accounting Standard 16 on Borrowing Cost, the borrowing cost having direct nexus with the project needs to be treated as project cost and capitalized. - AT
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Bogus LTCG - exemption claimed u/s 10(38) - Onus to prove - the only logical recourse would be to place reliance on the orders passed by SEBI pointing out the malpractices by certain parties and taking action against them. Since assessee or his broker is not one of the parties who had been proceeded against by SEBI, the transaction carried out by the assessee cannot be termed as bogus. - AT
Customs
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A taxing statute is to be strictly construed. In a taxing statute, one has to look merely what is clearly said in the provision. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing has to be read in, nothing is to be implied. One can look only fairly at the end use - substantial question of law will have to be answered in the negative that is in favour of the appellant revenue and against the respondent. - HC
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Valuation of export goods for drawback purpose - rejection of declared value - The adjudicating authority had to first examine the correctness of the declared value of the export goods and after recording a finding that they were not correctly valued re-determine the value, but this was not done. This mistake has been noticed by the Commissioner (Appeals) in the impugned order. - Revenue appeal dismissed - AT
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Rejection of refund claim - The rejection for the balance amount has been re-adjudicated by Commissioner (Appeals) vide the order under challenge who while appreciating the C.A. Certificate and audited balance sheets produced by the assessee/respondent has concluded that there is no evidence to show that the burden of differential duty has been passed by the respondent to the prospective buyers - The bar of unjust enrichment cannot be applied upon such assessee - AT
IBC
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Intervention Application - We are of the considered opinion that at the instance of intervener, the order passed by the Adjudicating Authority dated 08.10.2021 cannot be set aside. We although have permitted the applicant to intervene in the Appeal but are unable to grant any relief to intervention as prayed in the Application. - AT
Service Tax
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Levy of service tax - Renting of immovable property service - revenue sharing arrangement - lending of theatre to the film distributors/sub-distributors for depicting the films - Both the parties are working independently and the share of the Distributor is given by the respondent from the gross receipts from movie tickets - This would be apparent from the agreement executed between the respondent and Mukta Arts which provides that out of the total revenue generated from the screening of films, the respondent would retain a fixed gross revenue and pay balance to the distributor - No service tax liability - AT
Central Excise
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Area Based Exemption - Determination of value addition - validity of notification of June 10, 2008 sustained by the Apex Court - The Department is now estopped from urging the objection of limitation and the respondents are bound by the submission attributed to them in the order of February 26, 2021 to consider the application for determination of the special rate of value addition in accordance with law, irrespective of when the application therefor may have been made by the petitioning assessee. - HC
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Maintainability of appeal before commissioner (appeals) - time limitation - When the Department failed to provide any evidence to controvert the submission of the appellant that the order was actually received by the appellant only on March 27, 2019, the appeal shall be deemed to have been filed within the stipulated period of sixty days as it was filed on May 27, 2019. The order of the Commissioner (Appeals) rejecting the appeal on the ground of limitation cannot, therefore, be sustained. - AT
VAT
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Condonation of delay of 469 days in the three appeals filed by the petitioners against the order of the State VAT Tribunal - These are cases where by the impugned orders the High Court has not deemed it fit to condone the delay of 469 days in the three appeals filed by the petitioners against the order of the State VAT Tribunal - SLP by revenue dismissed - SC
Case Laws:
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GST
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2023 (1) TMI 143
Direction to respondent to completely exempt drugs for treatment of rare diseases from the levy of IGST, CGST, SGT and Custom Duty - direction to respondents to permit import the drugs for treatment of SMA directly without approaching the Centre of Excellence - HELD THAT:- Ultimately it is for the Government to take a policy decision whether to completely exempt drugs for treatment of rare diseases from the levy of IGST, CGST, SGT and Custom Duty. No writ of mandamus can be issued directing the respondent/Union of India to exempt the drugs from payment of any tax or custom duty - No writ of mandamus can be issued directing the respondents to permit import the drugs for treatment of SMA directly without approaching the Centre of Excellence. There may be number of reasons why the drugs are to be cleared by the Centre of Excellence. The writ petition stands dismissed.
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2023 (1) TMI 142
Eligible unit for budgetary support - doctrine of promissory estoppel and legitimate expectation - sunset clause prescribed under Excise Exemption Notification, giving an option to existing units to undertake substantial expansion at any date without any limitation - Constitutional Validity of N/N. 10(1)2017-DBA-II/NER dated 5th October 2017 and Notification/SRO 519 and 521 dated 21st December 2017 read with Circular No.1060/9/2017-CX dated 27th November 2017 - HELD THAT:- From perusal of impugned Order dated 28th August 2018, it is vivid that petitioner-unit is not Eligible Unit , to be given the benefit that it exhorts to be bestowed under the auspices of the Scheme of 2017. It is clearly mentioned in the impugned order dated 28th August 2018 that petitioner-unit, working under and in terms of Notification of 2002, being Notification no.56/2002, was entitled to the benefits percolating in terms thereof, however, till 9th February 2017 - And insofar as benefits as available under and in terms of Notification/Scheme of 2017 are concerned, petitioner-unit is not entitled to any benefit thereunder as petitioner-unit was not availing any benefit immediately before and/or on 1st day of July 2017. Not only this, petitioner-unit has been unambiguously shown to have commenced its commercial production as on 25th September 2017 and,as such, petitioner-unit is not squarely qualified and covered to have had the benefits as are emanating from the Notification/Scheme of 2017. In the present case, impugned Notifications are lucid and eloquent and need not be interpreted or construed in the way and manner the petitioner intends and chooses to and as a result whereof, writ petition qua impugned Notifications is liable to be dismissed. It is worthwhile to mention here that exemption notification should not be read liberally construed and beneficiary must fall within the ambit of exemption and fulfil the conditions thereof and if the conditions are not fulfilled, the issue of application of notification does not arise at all by implication. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification - The statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions. It is also well settled eligibility clause in relation to exemption notification must be given effect to as per the language and not to expand its scope deviating from its language and therefore, there is a vast difference and distinction between a charging provision in a fiscal status and an exemption notification. While considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must forever be present to the mind of the court, while considering the applicability of the doctrine. Doctrine of promissory estoppel must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation - The supersession or revocation of an exemption notification in the public interest is an exercise of the statutory power of the State under the law itself. In KASINKA TRADING VERSUS UNION OF INDIA [ 1994 (10) TMI 64 - SUPREME COURT ], the Supreme Court has held that the appellants in the said case appear to be under the impression that even if, in the altered market conditions the continuance of exemption may not have been justified, yet, the government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption in public interest is a matter of policy and the courts would not bind the Government to its policy decision for all times. When the case in hand is looked into and examined in the backdrop of above well settled legal position of law, there is no naysaying that petitioner has failed to establish that its case squarely falls within the impugned notifications and exemptions provided thereunder. As a corollary thereof, both the writ petitions are devoid of any merit and are, thus, dismissed - petition dismissed.
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2023 (1) TMI 141
Maintainability of appeal - condonation of period beyond the statutory time period under section 107 of the GST Act - mismatch between GSTR 3B and GSTR 2A - HELD THAT:- Considering the decision of the Hon ble Apex Court rendered in the case of UNION OF INDIA VERSUS BHARTI AIRTEL LTD. ORS. [ 2021 (11) TMI 109 - SUPREME COURT ], where the Hon ble Apex Court has held that Form GSTR-2A is only a facilitator for taking an informed decision while doing self-assessment and also bearing in mind the personal circumstances of the petitioner, this court is allowing this petition permitting him to go to the appellate authority, which shall without taking an objection with regard to the limitation, decide this matter on merits. Let an amount of pre-deposit i.e. Rs.2,02,245/- be deposited by the petitioner within a period of two weeks. Once that amount is deposited, he will be entitled to make a request for the release of his bank account, before the appellate authority immediately, which shall be decided within one week.
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2023 (1) TMI 140
Levy of GST above the tender amount - whether the tender amount is inclusive of GST / Taxes or is only a Basic Amount - it is submitted that the petitioner was liable to pay not only the bid amount of Rs. 1,61,74,260/- but also liable to pay 18% GST over the same - HELD THAT:- In order to check the correctness of the petitioner s claim that the bid amount was not being accepted as such and was auto corrected after calculating 18% GST, we filled Rs.1,61,74,260/- in column No.13 and the same was duly accepted and surprisingly it is this very amount of Rs.1,61,74,260/- which was then reflected in column No.53 which relates to the total amount with all taxes - it is evidently clear that there was no auto generation of the amount at the site after filling in the basic rate. On the other hand, it is absolutely clear that the amount as was entered at Sr. No. 13 was auto reflected at Sr. No.53. There is yet another reason for not accepting the plea of the petitioner as the official-respondents along with their reply have placed the price schedule of the other Company namely The Prince Trading Company , who too had participated and qualified the e-tendering process wherein the basic rate quoted by it was Rs.1,33,11,111/- and the same is duly reflected at Sr. Nos. 13 as also 53. There are no irregularity much less any illegality in the demand raised by the respondents of GST @ 18% on the tender amount of Rs.1,61,74,260/-, as offered by the petitioner - petition dismissed.
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2023 (1) TMI 139
Classification of services - applicability of GST rate - Works Contract - composite supply - receipt of contract for new construction of CBD railway station, platform, parking, building and all other civil constructions within the boundary of the station - applicability of Entry No.3(v) of Notification No.11/2017- Central Tax (Rate) Dated 28 June 2017 - HELD THAT:- In the instant case the eligibility or otherwise of reduced rate of GST under Notification no. 11/2017 Central Tax (Rate) as amended, provided under S.no. 3(v) ibid, is the subject matter of this proceeding. The aforesaid Notification stands amended vide Notification No. 03/2022-Central Tax (Rate)New Delhi, the 13thJuly, 2022, effective from 18.7.2022. In the instant case under consideration, the applicant has furnished the copy of letter of acceptance cum work order dated 31.3.2022 issued by CEO, NRANVP, Raipur for construction of CBD Railway station at Nava Raipur - As SAC 9954 covers construction services we now proceed to analyse the compliance of other vital conditions much essential for being eligible to the reduced rate of tax claimed by the applicant, as stipulated under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. Whether the instant supply is a Composite supply? - HELD THAT:- It is seen that the intended works to be undertaken by the applicant is construction of CBD Railway station. Now for the instant supply of Civil works to be undertaken by the applicant to be categorized as composite supply there needs to be supply of goods and services and the same should be a natural bundle of supply of both and supplied in conjunction with each other in the ordinary course of business. No such details of supply of goods for the intended civil works is forthcoming from the letter of acceptance furnished by the applicant. Thus without substantial evidence of the works contracted/undertaken, like materials/ goods to be supplied, related schedules, etc., it is practically impossible for this authority to conclude or for that matter hold that the works undertaken as is forthcoming form the letter of acceptance cum work order' and the tripartite agreement dated 25.4.2022 furnished by the applicant is composite supply' perse - this authority on the basis of records furnished and available on record, is not in a position to conclusively hold that the works mentioned in the letter of acceptance cum work order issued by Chief Executive Officer, Nava Raipur Atal Nagar Vikas Pradhikaran supra or tripartite agreement, intended to be undertaken by the applicant qualifies being treated as 'Composite supply' as per Section 2 (30) of CGST Act, 2017. The work undertaken by the applicant as is forthcoming from the same, it is seen that the work awarded to the applicant are Original work' as defined in the notification. Further, on a thorough look into the text of the claimed exemption as provided under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, vide Notification 01/2018 Central Tax (Rate) dated 25.01.2018. we find that the entry at 3(v)(a) is specific to the composite supply of works contract pertaining to railways including monorail and metro. It would be appropriate to conclude that till 17.7.2022, the applicability of Sl.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended to the applicant, M/s Shreejikrupa Project Limited, H.No. 289, behind C.S.E.B Office, Sunder Nagar, Raipur-492001. Chhattisgarh GST1N-22AALCS6689K1ZNfor the said work, is subject to the fact that apart from the other stipulated conditions therein as discussed, the works undertaken by them satisfy the condition of it being Composite supply as defined under Section 2 (30) of the CGST Act, 2017, the same are 'Works Contract' as per Section 2 (119) of the Act and that the same pertain to railways - As the applicant has been found wanting in compliance of the stipulations provided under Sr. no. 3(v) (a) of Notification no. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended including the condition that the work pertains to railway , the said construction works attract GST @ 18% under the residual entry at Sr. no. 3 (xii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended.
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Income Tax
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2023 (1) TMI 138
Revision u/s 263 - lack of enquiry with regard to claim of deduction made by the assessee under Section 80IB(10) - Whether the Tribunal was correct in holding that the order under Section 263 of the Act is not sustainable in view of insertion of Section 13(8) of the Act? - as per HC instant case was a case of lack of enquiry and not inadequate enquiry with regard to claim of the assessee with regard to deduction under Section 80IB(10) of the Act also as not expressed any opinion with regard to claim of the assessee for deduction under Section 80IB(10) of the Act and direct the Assessing Officer to deal with the aforesaid claim of the assessee afresh in accordance with law. HELD THAT:- The High Court by its impugned order directed the Assessing Officer to deal with the claim of the assessee afresh in accordance with law. Petitioner submits that in view of the observations made by the High Court, the consequences of the retrospective amendment in Section 13(8) may not be considered by the Assessing Officer. We make it clear that it shall be open for the Assessing Officer to consider all the pleas of the assessee including the consequences of the retrospective amendment in accordance with law irrespective of the observations made by the High Court or the ITAT. Subject to above observations, we are not inclined to entertain this petition. The special leave petition is, accordingly, dismissed.
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2023 (1) TMI 137
Delayed payments made to EPF and ESI - Whether allowable as a deduction under Section 37? - HELD THAT:- The first question stands covered by a judgment of this Court delivered in Checkmate Services P.Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] This appeal was dismissed along with four other appeals by a common judgment. The first question has been answered against the assessee(s) in the aforesaid judgment. We, thus, grant leave to the appellant in this proceeding but such leave shall be confined to examining the judgment under appeal only on the second question. The appeal shall be heard on this question alone.
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2023 (1) TMI 136
Disallowance u/s 36(1)(ii) of bonus paid to Directors - substantial question of law - As per AO bonus was paid to avoid payment of dividend distribution tax - whether the amount paid to the two directors/shareholders in the assessment years 2011-12 and 2014-15 should be allowed as a deduction or should be included in the income of the company? - as decided by HC there is no substantial question of law in the present cases. The assessing officer and CIT (A) have given a concurrent finding that the assessee has paid the bonus in lieu of the dividend and therefore, the above sum is disallowed u/s 36 (1) (ii) - ITAT also after considering the findings of the assessing officer and the CIT (A) had inter alia held that the payment of bonus or commission is not allowable as deduction under Section 36 (1) (ii) of the Act in the hands of the assessing company. In the absence of any substantial question of law, the appeals are liable to be dismissed HELD THAT:- There is a concurrent finding of fact by the Assessing Officer, CIT (Appeal) and Income Tax Appellate Tribunal, Delhi which has been duly affirmed by the High Court, disallowing the payment of bonus to the two Directors of the petitioner company No case to interfere with the impugned Order passed by the High Court of Delhi is made out. The Special Leave Petitions are, accordingly, dismissed.
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2023 (1) TMI 135
Reopening of assessment u/s 147 - reasons to believe - subjective satisfaction before initiating reopening - HELD THAT:- Having gone through the impugned judgment and order passed by the High Court, it appears that the reasons to re-open the assessment were recorded after issuance of the re-assessment notice and, therefore, it can be seen that at the time when the notice for assessment was issued, there was no subjective satisfaction, the High Court has not committed any error in setting aside re-assessment proceedings. 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 134
Benefit of the Income Declaration Scheme of 2016 (IDS) - petitioner submits that the case is actually covered as in terms of the 2 Notification dated 13.12.2019 of the Ministry of Finance that all such people who defaulted in making payment were permitted to deposit the amount with 12 per cent interest. That amount with interest stands deposited in pursuance to order dated 22.04.2019 albeit before this Court and has being kept in an interest bearing deposit - HELD THAT:- Respondents sought a short accommodation to obtain instructions. Today further time is sought. The request is declined. We put a question to learned counsel for the respondents that at least to the extent a notification has been issued, there cannot be further instructions sought. He admits that notification has been issued. In view thereof, the appellant is entitled to the relief in terms of the notification and since the amount stands already deposited in the Court along with interest, the said amount with any further accrued interest on the same be remitted to the respondents, particulars of which will be given by the learned counsel for the respondents. The consequence would be that the appellant would be entitled to the benefit of the Income Declaration Scheme of 2016 (IDS).
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2023 (1) TMI 133
Judgment and order passed by the High Court as a non-speaking and non-reasoned - HELD THAT:- Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Judicature at Bombay in Writ Petition . [ 2022 (1) TMI 1319 - BOMBAY HIGH COURT] by which the High Court has dismissed the said writ petition in the most casual and cursory manner and the order is a non-speaking order and nothing has been discussed on merits at all and the recent decision of this Court in the case of Vishal Ashwin Patel 2022 (3) TMI 1296 - SUPREME COURT by which this Court has set aside the similar order passed by the very Bench and remanded the matter to the High Court, we set aside the impugned order passed by the High Court dismissing the writ petition. We remand the matter to the High Court to decide and dispose of the writ petition in accordance with law and on merits and to pass a reasoned and speaking order. The present Appeal is accordingly allowed to the aforesaid extent.
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2023 (1) TMI 132
TDS u/s 192 or 194J - payment which was made to the professional is salary or professional fees - assessee is running a hospital within State of Rajasthan and they have entered agreement with three different doctors - HELD THAT:- Appellant frankly conceded that the appeals involving similar issue have already been dismissed by this Court in view of the judgment passed in Escorts Heart Institute Research Centre Ltd. 2017 (9) TMI 1660 - RAJASTHAN HIGH COURT as held that conditional order shall not absolve the assessee from the deduction of TDS liability. The compliance/non-compliance of the exemption conditions by the recipient in advance cannot be foreseen in advance by the assesseecompany. Moreover, TDS liability under s. 194-I is not dependent on the tax liability/entitlement toexemption of the recipient. Irrespective of the tax exemption/tax liability of the recipient the assessee has to discharge the TDS liability under s.194(1). No certificate under s. 197 of the Act is furnished by the assssee to establish that the recipient is exempted from the tax liability. Again same question came up for consideration in other decision of Karnataka High Court 2010 (2) TMI 1163 - KARNATAKA HIGH COURT where after considering the judgment in Elbit Medical Diagnostics Ltd., the Court has come to the conclusion that retainer in service are professional service and issue was answered in favour of the assessee.
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2023 (1) TMI 131
Assessment u/s 153A - Addition u/s 68 - unexplained share capital received from 21 persons - HELD THAT:- We are of the considered opinion that the decision of Hon ble Delhi High Court in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT [ is applicable in the facts and circumstances of the case. It is undisputed that no incriminating material was found during search and this is an unabated assessment. Hence, respectfully following the precedent, we hold that the addition is not sustainable on jurisdiction ground. - Decided in favour of assessee.
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2023 (1) TMI 130
Disallowance of claim for deduction u/s 54B as well as 54F - HELD THAT:- It is an admitted fact that the appellant had not deposited the unutilized sale consideration under the capital gains deposits scheme as prescribed under subsection (2) of section 54B of the Act. We also find that the agreement for purchase of new agricultural land was entered into on 28.06.2010 which is also beyond due date for filing the return of income and, therefore, the above fact clearly would go to show that the appellant had not utilized any portion of the sale consideration towards purchase of new agricultural land and the ratio of decision of the Hon ble Bombay High Court in the case of Humayun Suleman Merchant [ 2016 (9) TMI 70 - BOMBAY HIGH COURT] has been rightly applied by the ld. CIT(A). Deduction u/s 54F - CIT(A) has clearly set out the fact vide para 9 of his impugned order. On perusal of the said para 9 of the impugned order, it is clear that only amount of Rs.4,00,000/- was utilized before due date for filing of the return of income for purchase of residential house and the entire balance consideration was paid on 27.07.2010, 28.08.2010 and 12.02.2011 which is clearly beyond due date for filing the return of income for the assessment year 2009-10 and it is undisputed fact that unutilized consideration was not deposited under the capital gains deposits scheme, as stipulated time under sub-section (4) of section 54F - CIT(A) had rightly restricted the deduction to the extent of investment made in construction of new house till the date of construction of the house property and the ratio of the decision of the Hon ble Bombay High Court (supra) is squarely applicable. Therefore, we find that the order of the ld. CIT(A) is well reasoned and based on the proper appreciation of facts and legal position governing the issue on hand. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A). Thus, the ground of appeal no.3 filed by the assessee stands dismissed.
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2023 (1) TMI 129
Revision u/s 263 - As per CIT, AO did not make disallowance of consultancy fees paid to Shri Deepak Kochar - consultancy fees paid to Shri Deepak Kochhar was only accommodation entries - HELD THAT:- A careful perusal of the notice issued by Ld PCIT would show that the Ld PCIT has relied upon the report given by DDIT (Inv.) and has observed that the DDIT (Inv.) has conclusively established the fact of provision of accommodation entries. The Ld PCIT also expressed the view that the AO has also reached such a conclusion. A reading of assessment order would show that the AO has observed that there are no supporting evidences for the providing/receipt of service; Shri Deepak Kochhar has not met clients; he has not given any written reports with regard to the consultancy given. Even though the assessees have furnished the agreement entered between it and Shri Kochhar, the AO was reluctant to accept the same, as Shri Gaurang Gandhi had stated in the statement that there was no agreement. The AO has further stated that the consultancy fees paid was different in respect of different clients and it ranged from 24.23% to 71.09% of the fees received by the assessees herein and hence there is no scientific basis for computing the fees payable to Shri Deepak Kochhar. Accordingly, the AO has expressed the view that the payments made to Shri Deepak Kochhar were not explained. However, the AO did not specifically say that the consultancy fee payments are bogus. Hence, it appears that the AO did not make disallowance. With regard to the transfer of funds from Deepak Kochhar to M/s Aarem Management and from Aarem Management to the assessee, the AO has taken the view that Shri Deepak Kochhar has used the accounts of the assessees herein to get the unaccounted funds converted, i.e., there is circular movement of undisclosed fund through Pioneer group of companies. The AO has further held that the funds transferred to Shri Deepak Kochhar are also proved to be not genuine. All these observations of the AO are related to his comments upon transfer of funds. Since there was circular movement of funds, he chose to estimate commission income. Hence, we are of the view that it is not clear from the assessment order that the AO has come to definite conclusion that the consultancy fees paid to Shri Deepak Kochhar was only accommodation entries, as presumed by Ld PCIT. Whether impugned revision orders can be sustained ? - A perusal of the assessment orders would show that the AO has made complete enquiry on this issue. On the contrary, the Ld PCIT did not make any enquiry or verification in order to show that the finding reached by the AO is erroneous. While the AO has taken the view not to disallow the consultancy fees paid, the Ld PCIT has taken the view that the AO should have disallowed it. Thus, the AO has taken a possible view of the matter on the basis of his examination and merely because, PCIT has got different view, he cannot initiate revision proceedings. PCIT on the issue of examination of loans u/s 68 we have noticed that the Ld PCIT did not mention this issue in the notice issued by him for initiation of revision proceedings - A.R submitted that the assessees have made submissions on the issue of consultancy fee paid and submitted that no query was asked about sec.68 - At the time of hearing, it was not shown to us that the Ld PCIT has given opportunity to the assessee on the issue of examination of loans u/s 68 of the Act. Accordingly, we are of the view that the Ld PCIT could not have discussed this new issue in the impugned revision orders. We are of the view that the impugned revision orders passed by Ld PCIT in the hands of both the assessees herein are not sustainable in law. Accordingly we quash the impugned revision orders passed by Ld PCIT. Appeals filed by the assessee are allowed.
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2023 (1) TMI 128
Revision u/s 263 - Addition as deemed income u/s 2(22)(e) in the hands of the assessee - Assessee has received a loan from Leela Tubes Pvt. Ltd. in which the assessee had 51.42% share and also key managerial personnel in the company having more than 20% share holding during the Financial Year - HELD THAT:-As decided in assessee s own case for the Assessment Year 2013-14 [ 2018 (9) TMI 2108 - ITAT AHMEDABAD] we are of the considered opinion that assessee had received an amount from M/s.Leela Tube Pvt.Ltd. (LTPL) in order to safe-guard the interest of the company and the same was done in order to protect the interest of the company and assessee even sought help from his relatives and placed as security the ancestral House being Flat No.203 at Shripalnagar, Ahmedabad. Therefore, in our considered opinion, this was for the business expediency and same cannot be treated as deemed dividend u/s.2(22)(e) of the Act. Thus, we direct the Assessing Officer to delete the addition As a result, Assessee s ground of appeal is allowed. D.R. appearing for the Revenue could not state whether the Revenue has filed any appeal against the above order of the Tribunal before Hon ble High Court of Gujarat. The Ld. PCIT before passing this Revision order has not given due weightage to the Appellate order passed by the Tribunal, which is against the fundamental principle of Judicial Discipline, that is required to be followed by all the lower authorities. Not following the Judicial Discipline by the highest Officer of the Income Tax Department is highly deprecated. In this connection, it is appropriate to rely upon the celebrated judgment of the Hon ble Supreme Court in the case of Union of India Others vs. Kamlakshi Finance Corporation [ 1991 (9) TMI 72 - SUPREME COURT] wherein held order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. Respectfully following the above ruling of the Apex Court we have no hesitation in quashing the Revision order dated passed by the PCIT for the reason of nonconsideration of the higher judicial forums decision in assessee s own case for earlier Assessment Year 2013-14 on identical issue. Appeal filed by the assessee is allowed.
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2023 (1) TMI 127
Deduction u/s 80IA(4) - claim for deduction u/s 80IA(4) was also made even in the return of income filed in response to notice u/s 153A - HELD THAT:- As appellant had filed the return of income in response to notice u/s 153A of the Income Tax Act, 1961 ( the Act ) including the income as shown in the original return of income filed u/s 139(1) of the Act, wherein, similar claim for deduction u/s 80IA(4) was made and this claim was came to be dismissed by this Tribunal in assessee s own case [ 2017 (4) TMI 1608 - ITAT PUNE] Once again, the above said claim for deduction u/s 80IA(4) was also made even in the return of income filed in response to notice u/s 153A of the Act. For the reasons stated in the order of the Tribunal (supra), the claim for deduction u/s 80IA(4) cannot be accepted. Accordingly, the grounds of appeal filed by the assessee stand dismissed. Appeal filed by the assessee stands dismissed.
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2023 (1) TMI 126
Addition u/s 68 - unexplained unsecured loan - assessee has proved genuineness of the transaction and creditworthiness upto two degree. It cannot be compelled to prove source of source upto second degree - HELD THAT:- A perusal of the assessment order would indicate that it is a managed show. In five days, one of the companies of the assessee where he is having major stake-holding and controlling the whole affairs of the company received share capital money from individuals and that money has been routed to the assessee between different layers. Therefore, AO was very much right in investigating the root source of such funds. It is not a genuine transaction but it is a staged transaction. CIT(Appeals) has erred in placing reliance upon the decision of Nemi Chand Kothari 2003 (9) TMI 62 - GAUHATI HIGH COURT The assessee might have been proved the identity but failed to prove the creditworthiness and genuineness of the transaction. He just routed the transaction in such a manner that adjudicating authority ought to be persuaded to believe in his made belief story. Therefore, in our opinion, the finding of the Ld. 1st Appellate Authority is not sustainable on this issue. We allow this ground of appeal and restore the finding of the Ld. Assessing Officer on this issue. The addition as unexplained cash credit is confirmed. Depreciation on the Cranes given on lease to Oil India Limited @ 30% disallowed - according to the Revenue, such assets were not used for hire and, therefore, are not entitled to claim higher rate of depreciation - HELD THAT:- AO was expecting from the assessee to demonstrate that these Cranes were used by M/s. Oil India for hire basis. He failed to appreciate that transaction is to be viewed in the hands of assessee. The moment assessee has let out for the user of a third party, which means those equipments were used for commercial purposes in the business of the assessee whether the third party is using them at their own or giving on further let out, it is not the criteria to determine the nature of income in the hands of the assessee. The moment assessee has let out the Cranes, then it is to be construed that these assets were being used in the hiring business of the assessee. Therefore, the Ld. 1st Appellate Authority has rightly appreciated the controversy in the finding extracted supra and we do not deem it necessary to interfere in this finding. Accordingly, this ground of appeal is rejected. Addition u/s 68 - CIT-A restricted part addition - 1st Appellate Authority has granted a partial relief after going through the audited accounts of the earlier year, wherein the assessee has debited a sum towards purchase of building material - HELD THAT:- No ground to interfere in it because the assessee has proved his case with the help of audited accounts coupled with circumstantial evidences. The land has already sold but material is not available on the ground that there is no way-out to prove that no such material was sold by the assessee. Once it is demonstrated that he has purchased the material in earlier year and debited in the regular books of account, then weightage to that effect ought to be given, which has been given by the Ld. 1st Appellate Authority on an estimate basis. Therefore, we do not wish to interfere in his discretion. This ground of appeal is rejected.
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2023 (1) TMI 125
Penalty levied u/s. 271D - exigency of contravention of provisions of 269SS as the fact of each transaction need independent verification - assessee has not shown the reasonable cause w/s. 273B for entering into such transactions through journal entries - HELD THAT:- We note that the CIT(A) has granted relief to the Assessee by following the judgment of the Hon ble Bombay High Court [ 2018 (2) TMI 603 - BOMBAY HIGH COURT] rendered in identical facts and circumstances and deciding identical issue in favour of the Assessee. Following the judgment of the Hon ble Bombay High Court, we uphold the order of CIT(A) deleting penalty u/s 271D of the Act in respect of loans/advances received by the Assessee through journal entry. The deposits/loans received by the Assessee through journal entries though hit by Section 269SS would not result in levy of penalty since the transactions were undertaken by the assessee prior to the decision in the case of Triumph International Finance [ 2012 (6) TMI 358 - BOMBAY HIGH COURT] as the assessee shall be deemed to have had reasonable cause to receive the deposits/loans through journal entries on account of various judgments/orders holding that journal entries in the book of accounts indicating deposit/loans did not fall foul of Section 269SS of the Act, which would also be a reasonable cause under Section 273B of the Act for non-imposition of penalty under Section 271D of the Act. Accordingly, all the grounds raised by revenue are rejected.
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2023 (1) TMI 124
Computing income in case of transfer of asset (other than capital asset) being land and/or building - Special provision for full value of consideration for transfer of assets other than capital assets in certain cases - Applicability of provision of section 43CA - whether there is transfer land or building by the Assessee to the tenant? - Whether providing carpet area in the re-developed building to the tenants cannot be taken into the purview of Section 43CA ? - HELD THAT:- Provisions of Section 43CA would be attracted in case of transfer of land or building or both, the issue that arises for consideration is whether there is transfer land or building by the Assessee to the tenant. In our view whether allotment of area to a tenant/occupant on under a redevelopment project would result in transfer of land or building held as stock-in-trade would depend upon the facts and circumstances of each case that would require examination of the contractual arrangement between the owner, landlord, tenant, co-operative housing society and the developers. Coming to the facts of the present case, it is admitted position that the Assessee had undertaken redevelopment of the Old Building. Assessee was not the owner or either the land or the Old Building. On carrying out the redevelopment work the Assessee would have received some area in the new building in his capacity as the Developer. In order to resolve the deadlock the Assessee agreed to settle for a lesser area in the meeting held on 07.08.2006 which was attended by Deputy Chief Engineer, MBR RB who also signed the minutes of the meeting in this official capacity. In absence of any violation of specific provision of Maharashtra Housing Area Development Act, 1976 having been brought to our notice, we are not inclined to accept the contention of Revenue that the allotment of additional area to the tenants was contrary to law. The amount of area to be given to the tenants was agreed upon and finalized when the minutes of the meeting held on 07.08.2006 were recorded since Annexure A to the minutes of the meeting clearly provided for the details of the unit in the new building and the carpet area to be allotted to each tenant. Thus, the additional area that was allotted to tenants could not be considered as stock-in-trade for the Assessee as the Assessee was never entitled to hold/sale the same. We concur with the CIT(A) that the area allotted to the tenants (including the additional area) cannot be regarded as stock-in-trade of the Assessee and therefore, the provisions of Section 43CA would not be attracted. In view of the aforesaid, we decline to interfere with the order passed by the CIT(A) on this issue. Ground No. 1 raised by the Revenue is, therefore, dismissed. Deduction of interest expenditure of INR u/s 36(1)(iii) - HELD THAT:- Assessee has been following project completion method and had capitalized all cost relating to construction till part completion certificate was obtained during the previous year 2014-15 relevant to the AY 2015-16. Though the Assessee has not offered any profits to tax during the Assessment Year 2016-17, deduction for interest of INR 1,55,42,291/- has been claimed by the Assessee as period cost under Section 36(1)(iii) of the Act. We note that the Assessee has undertaken only one redevelopment project. It is not disputed that interest cost is directly related to the project As per Accounting Standards 7 on Construction Contracts and Accounting Standard 16 on Borrowing Cost, the borrowing cost having direct nexus with the project needs to be treated as project cost and capitalized. Appeal of Revenue is dismissed.
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2023 (1) TMI 123
Revision u/s 263 - unexplained cash - assessee has deposited cash during the demonetization period - HELD THAT:- CIT goes on to hold that the source of the cash deposits as explained by the assessee was without any details and no examination was done. CIT further goes on to hold that the opening cash balance was not properly explained. Consequently the ld. Pr.CIT drew the conclusion that the amount of Rs.9 lakhs representing Rs.26 lakhs less Rs.17,01,700/- was unexplained. A perusal of CIT s order shows that he has accepted the total turnover of the assessee at Rs.17,01,700/-. He has accepted the deposit in the bank during the demonetization period of Rs.26 lakhs, though the correct figure is Rs.26,50,000/-. When this is examined along with the assessment order passed u/s.143(3) of the Act on 26.12.2019, it shows that in assessment order in the second last paragraph the opening cash balance has been examined in total by the AO by verifying the returns of the earlier years. Thus, clearly the issues as has been proposed by the ld. Pr.CIT, has already been examined by the AO and the ld. Pr.CIT under the guise of revision u/s.263 is only proposing to force his opinion over that as arrived at by the ld. AO. This is not permissible in the revisionary proceedings u/s.263 of the Act. Consequently, the order passed u/s.263 of the Act by the ld. Pr.CIT stands unsubstantiated and the same is hereby quashed. Appeal of the assessee is allowed.
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2023 (1) TMI 122
Additions of surrendered amount as excess stock during the survey proceedings - Whether section 133A of the Act does not envisage recording of statement of the assessee and his wife on oath and therefore, the Ld. AO could not, in law rely on such statements? - HELD THAT:- We are of the view that the survey officer is vested with the power u/s 133A(3)(iii) to record the statement of the assessee which may be useful for or relevant to any proceedings under the Act. But he is not authorised to administer oath. Since the survey officer had recorded the statement of the assessee and his wife on oath in the case under our consideration, we hold that the action of the survey officer was not in accordance with law. Consequently, such statement cannot be conclusive piece of evidence by itself and it is open to the assessee to show that the same was incorrect. Accordingly, both the additional grounds are decided in favour of the assessee. Excess stock the assessee had replied to the question No. 36 that in order to purchase peace he surrendered the excess stock and in the letter of retraction, the assessee asserted that heavy paper reels weighed in average about 300 kgs 400 kgs per reel. The survey team had not taken reels of paper for weighment they did not have any equipment to verify the weight or value of stock. No physical inventory was ever prepared by the survey team and the value of stock was assumed without any basis or physical inventory and that the assessee was forced to accept the excess stock under pressure. The contention of the assessee before the Ld. AO/CIT(A) was that the average weight per reel is 346 kgs whereas the survey team had taken average weight of one reel as 680 kgs which is completely misplaced. The paper is an excisable item and the assessee had filed stock returns with the Custom Central Excise Department and the returns for the period from April, 2007 to September, 2007 was placed before the Ld. AO/CIT(A) and no discrepancy was found either by the Central Excise Department or by the Revenue Authorities therein. During assessment proceedings production of stock register was insisted upon, though the assessee in reply to question No. 34 has stated that he is not maintaining any stock register because it involves various sizes, weight and quality of the paper. This statement of the assessee has completely been ignored by the Revenue Authorities. We, therefore, hold that the excess stock as worked out by the survey team does not rest on solid foundation as it has been arrived at by incorrect assumptions. AO imposed penalty under section 271D for violation of provisions of section 269SS of the Act for obtaining cash loans by the assessee - However, the penalty has been deleted by the Ld. CIT(A) by accepting the explanation of the assessee that cash was collected in the morning of 20th September, 2007 by the assessee from his friends and relatives in order to get banker cheque favouring DCIT Circle 39(1). It may, not be out of place to mention that the Revenue s appeal against the order (supra) of the Ld. CIT(A) stands dismissed by the Tribunal[ 2016 (9) TMI 1642 - ITAT DELHI] AO rejected the assessee s explanation merely relying on the statement of the assessee recorded during survey. In fact, except cash of Rs. 22,143/- no more cash was available with the assessee and the survey team erred in treating the funds arranged by the assessee for depositing tax as excess cash available with the assessee. The addition is not sustainable and is deleted. Addition on account of investment in construction WIP - As it was explained in the letter of retraction and during assessment proceedings that certain renovations were carried out in the year 2005-06 and the amount spent was duly reflected in the books of account. At the time of survey no renovation work was going on. The only basis of the impugned addition is the statement of the assessee during survey which has been retracted. The explanation of the assessee could have been verified with reference to the books of account which has not been done. The impugned addition does not rest on any solid legal basis and is therefore, deleted. Accordingly, we decide ground No. 2, 3 4 in favour of the assessee. Additions challenged in these grounds were made on the basis of statement recorded on oath during the course of survey under section 133A which was retracted by the assessee. It is now well established that any admission made during statement recorded under section 133A cannot by itself, be made the basis for addition in the absence of any corroborative material brought on record by the Revenue. We have earlier observed that these additions are not sustainable even on merits. 50% disallowance out of rent paid by the assesee to his wife which has been confirmed by the Ld. CIT(A) - AO accepts that business letters of the assessee are being received at the premises for which rent is being paid by the assesee. The case of the assessee is that the premises was being used for placement of orders for purchase, meeting with suppliers, arranging dispatches, delivery etc. In none of the earlier years disallowance out of such rent has been made in assessments completed under section 143(3) of the Act. We agree with the submissions of the assessee and hold that no such adhoc disallowances based on surmises alone can be sustained. The impugned disallowance is deleted.
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2023 (1) TMI 121
Revision u/s 263 - CIT power to travel beyond the issues for which the case was selected for scrutiny - whether the Pr.CIT could use his revisonary power to direct to make the addition by holding the assessment order erroneous and prejudicial to the interest of the revenue on the issues which are not connected issues to the issues which have been raised in the limited scrutiny in an assessment proceedings? - HELD THAT:- Since the matter has already been decided by this Bench of the Tribunal under identical facts and circumstances in favour of the assessee, therefore, respectfully following the decision in the case of M/s Shark Mines Minerals Pvt. Ltd [ 2022 (8) TMI 1334 - ITAT CUTTACK] we are of the considered opinion that the revisionary order passed by the Pr.CIT is unsustainable and the same is liable to be quashed. Appeal of the assessee is allowed.
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2023 (1) TMI 120
Allowable business expenditure - Payment for breach of contractual obligation pursuant to an arbitration award in the pending litigation - HELD THAT:- As could be seen from the record that the Ld. CIT(A) referred to the decision of the Hon'ble Apex Court in the case of Navsari Cotton [ 1981 (3) TMI 48 - GUJARAT HIGH COURT] wherein evolved the tests on principles to claim deduction of an expenditure as business expenditure, and it includes, the expenditure incurred with a view to bring profits or monetary advantages today or tomorrow, to render the assessee immune from impending or reasonably apprehended litigation, in order to save losses in foreseeable future, for affecting economy in working which may pay dividends today or tomorrow, for increasing efficiency and working and for removing inefficiency in the working. When viewed from the angle of the tests formulated by the Hon'ble Gujarat High Court in Navsari Cotton (supra) it is clear that the amounts paid by the assessee to M/s. Atlantic Pharmaceuticals fall in the category of the expenditure incurred by the assessee to make it immune from the impending or reasonably apprehended litigation, and to save losses in foreseeable future in the shape of damage to the brand image in the market. With this view of the matter, we are of the considered opinion that the Ld. CIT(A) is right in his approach. As stated supra, by no stretch of imagination could it be said that the payment for breach of contractual obligation pursuant to an arbitration award in the pending litigation, cannot be said to have been incurred for any purpose which is an offence or which is prohibited by law. With this view of the matter, we uphold the findings of the Ld. CIT(A) and decline to interfere with the same. Appeal of the Revenue is dismissed.
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2023 (1) TMI 119
Bogus LTCG - exemption claimed u/s 10(38) - long term capital gain derived from sale of shares denied - Onus to prove - HELD THAT:- Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips (read penny stocks) based on market information and try to exit at an appropriate time the moment they make their profits. In this process, they also burn their fingers by incurring huge losses without knowing the fact that the particular scrip invested is operated by certain interested parties with an ulterior motive and once their motives are achieved, the price falls like pack of cards and eventually make the gullible investors incur huge losses. In this background, the only logical recourse would be to place reliance on the orders passed by SEBI pointing out the malpractices by certain parties and taking action against them. Since assessee or his broker is not one of the parties who had been proceeded against by SEBI, the transaction carried out by the assessee cannot be termed as bogus. Thus hold that the entire addition has been made based on mere surmise, suspicion and conjecture and by making baseless allegations against the assessee herein. Whether the ld. AO merely on the basis of Kolkata investigation wing report could come to a conclusion that the transactions carried out by the assessee as bogus? - AO is expected to conduct independent verification of the matter before reaching to the conclusion that the transactions of the assessee are bogus. More importantly, it is bounden duty of the ld. AO to prove that the evidences furnished by the assessee to support the purchase and sale of shares as bogus. This view of mine is further fortified by the decision of PCIT vs Laxman Industrial Resources Ltd [ 2017 (3) TMI 1521 - DELHI HIGH COURT] It is well settled that the suspicion however strong could not partake the character of legal evidence. Hence the greater onus is casted on the revenue to corroborate the impugned addition by controverting the documentary evidences furnished by the assessee and by bringing on record cogent material to sustain the addition. No evidence has been brought on record to establish any link between the assessee herein either with the directors of Lifeline Drugs and Pharma Ltd or any other person named in the assessment order or in the SEBI order, as being involved in any price rigging or the exit provider. This onus is admittedly not discharged by the revenue in the instant case. Appeal of assessee allowed.
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2023 (1) TMI 118
Bogus LTCG - unexplained credit u/s 68 - sale of shares sold on recognized stock exchange and, eligible for exemption u/s 10(38) denied - HELD THAT:- We are in absolute agreement with the submission of Ld. DR that the issue of exempted capital gain arising from Turbotech Engineering Ltd. stands duly examined and concluded in the case of Shri Abhishek Gupta [ 2022 (8) TMI 1333 - ITAT INDORE] - We note that the although the present appeal concerns the shares of Lifeline Drugs and Pharma Ltd., but the position is pari materia similar to the share of Turbotech Engineering Ltd. We do not find any material change which could suggest non-applicability of the decision of Shri Abhishek Gupta in present appeal. Hence, we find no valid reason to deviate. Accordingly, we uphold the additions made by revenue-authorities and dismiss the Grounds raised by assessee.
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2023 (1) TMI 117
TP Adjustment - Exclusion of abnormal raw material consumption - assessee made an adjustment of 18% towards abnormal raw material consumption during the AY 2007-08 as it is the first full year of operation of the company - TPO while considering the issue during the remand proceedings did not allow the adjustment for the purpose of computation of ALP - HELD THAT:- We notice that the raw material consumption is not reducing in a linear manner as claimed by the assessee warranting an adjustment for the purpose of ALP. Further, this adjustment is done by the assessee during the remand proceeding as a new adjustment to the ALP and from the order u/s.92CA passed by the TPO it is not coming out clearly whether this adjustment is examined in detail during the remand proceedings by the TPO. One of the reasons quoted by the DRP for rejection of this adjustment is that the assessee has not submitted the annual reports of the subsequent years to substantiate the raw material consumption details. The raw material consumption is unique to each business and depends on many factors including internal and external factors like location, environment, etc. and needs to be examined factually based on evidences and supporting. In view of the above discussion we remit this issue back to TPO/AO to examine the issue afresh and pass a speaking order after giving a reasonable opportunity of being heard to the assessee. The assessee is directed to submit all the relevant details and evidences as may be called for in this regard and cooperate with the proceedings. It is ordered accordingly. This ground is allowed in favour of the assessee for statistical purposes. Exclusion of certain comparables - Exclusion of Mazda Ltd. - The overview of business of Mazda Ltd. shows that it a manufacturing and engineering company mainly into space and energy saving ejector vaccum systems. The product catalogue of the company includes vaccum systems, condenser, heater vaccum pump, hotshot pump, etc. One of the products manufactured is the value and the company in its annual report has given the financials of the valve product separately. We notice that the TPO has for the purpose of comparability considered the revenue and cost attributable to value products only. The level of comparability under TNMM is at a broad level of product comparability and high level functional comparability -we hold that Mazda Ltd. cannot be excluded and the orders of the lower authorities are upheld. Exclusion of Yuken India Ltd - Yuken India Ltd. is having a broad level of product comparability and high level of functional comparability and rightly included in the list of comparables by the revenue authorities. This issue is decided against the assessee. Inclusion of M/s. Leader Valves - Leader Valves Ltd. should be included as a comparable, considering the broader product comparability and high level of functional comparability. As regards the objection of the revenue authorities that this issue was not originally raised in the first round of proceedings, we agree with the contention of the ld. AR that the entire issue of comparability of the companies was set aside to the TPO and it was open for the assessee to seek inclusion of this company based on a fresh TP study. We hold this issue in favour of the assessee. Exclusion of working capital adjustment while computing the ALP - HELD THAT:- As relying on assessee own case [ 2022 (8) TMI 118 - ITAT BANGALORE] we direct the AO to allow the working capital adjustment to the assessee. This ground of the assessee is allowed. Adjustment to the interest on External Commercial Borrowings (ECB) - assessee has taken ECB from its AE at an interest rate of LIBOR + 1.5% - HELD THAT:- We see merit in the argument of the ld AR that the assessee s borrowing is for one year period as per the terms of the loan agreement (pg. 98 of PB) and therefore LIBOR + 150 basis points is justified to be at arm s length. In view of this we hold that the interest charged by the assessee at LIBOR + 150 basis points which is within the range as per the RBI s Master Circular, is within the arm s length. The adjustment made on this count is hereby deleted. This ground is held in favour of the assessee.
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2023 (1) TMI 116
TP Adjustment - Computation of the working capital adjustment - HELD THAT:- We find that the reasons given by the DRP and the TPO for not providing working capital adjustment has been that because of the inputs in determining the working capital adjustments being variables, it is not possible to reasonably give accurate adjustments. On identical reasons, working capital adjustments was denied to the assessee in the case of Huawai Technologies India Pvt. Ltd. [ 2018 (10) TMI 1796 - ITAT BANGALORE] In the present case, the assesse has given the computation of the working capital adjustment and the same is given an Annexure to this order. Similar computation has been given for AY 2014-15, 2015- 16 and the same are given in the assessee s Paper Book. We are of the view that in the light of the decision referred to above, the assesse is entitled to working capital adjustment. The TPO is accordingly directed to allow the same as per law.
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2023 (1) TMI 98
Revision u/s 263 - As per CIT, income from offshore supplies was not brought to tax by the Assessing Officer in the assessment order passed u/s 143(3)/144(3) - As per CIT amount received from offshore supply is to be taxed under Section 44BB - HELD THAT:- The assessee is a tax-resident of Singapore and is engaged in the business of supply of equipment, plant and machinery as well as services in connection with prospecting for, extraction or production of mineral oil. Revenue earned from onshore activities is concerned, undisputedly, the assessee has computed the tax liability by applying provisions of section 44BB of the Act. As regards the revenue earned from offshore activities, the assessee had claimed that, since, sale was completed in Singapore and payments were received in Singapore, no part of such income can be taxed in India. In course of assessment proceedings, the assessing officer issued notice dated 01.02.2019 under Section 142(1) of the Act with a detailed questionnaire seeking various informations in respect of revenue earned both from onshore activities as well as offshore supplies. A reading of the assessment order would reveal that the assessing officer has specifically enquired into assessee's claim regarding non-taxability of income earned from offshore supplies and after due deliberation on the issue regarding applicability of section 44BB of the Act to such income, the Assessing Officer has ultimately attributed 1% of the gross receipts as profit attributable to the PE in India. The assessing officer has adopted this approach by referring to Rule 10 of the Rules as it empowers the assessing officer to tax profit by adopting a certain percentage, in case, profit attributable to the PE is not ascertainable. AO has also referred to CBDT Instruction No. 767/1987. However, as could be seen, the biggest single factor which persuaded the Assessing Officer to adopt such approach is the consistent view taken by the Assessing Officers while bringing to tax the income from offshore supply in the past assessment years. In assessment year 2010-11, the assessee while offering the income from onshore activities under Section 44BB of the Act had claimed that the income earned from offshore supply of equipment is not taxable in India. However, while completing the assessment for that assessment year, the assessing officer held that 1% of the gross receipts from the offshore supply of equipment is attributable towards profit of the PE in India. The same approach was adopted by the assessing officer in subsequent assessment years 2011-12 to 2016-17, which is the immediately preceding assessment year. Thus, as could be seen from the aforesaid facts on record, the Department has all along adopted a consistent approach with regard to taxability of profit from offshore supply of equipment. In the impugned assessment year, the Assessing Officer has merely followed the consistent approach adopted in the past assessment years. Thus, in the aforesaid context, it can be very well said that the view adopted by the Assessing Officer is a possible view based on past assessment history of the assessee. That being the factual position emerging on record, it cannot be said that the assessment Order is erroneous. In the facts of the present appeal, neither the revisionary authority in his order nor learned Departmental Representative was able to demonstrate before us any change in the factual position between the impugned assessment year and the past assessment years. Therefore, in our considered view, the decision taken by the assessing officer in bringing to tax 1% of the gross receipts from offshore supply by attributing to the PE, being consistent with the approach adopted in the past assessment years, cannot be held to be erroneous and for that reason, proceedings under Section 263 of the Act cannot be initiated. Taxability of the alleged royalty income received from Halliburton Offshore Services from rental/leasing of rigs - Assessee has factually demonstrated before us that the amount of Rs. 9,73,19,312 was not received from Halliburton Offshore Services, but, was received from Oil India and ONGC Ltd. In fact, such amount forms part of revenue received from offshore supplies, which the assessing officer has brought to tax in India by adopting 1% as profit attributable to the PE. Thus, for this reason also, the exercise of power under Section 263 of the Act is unsustainable. We hold that the order passed under Section 263 of the Act deserves to be quashed. Accordingly, we do so. Consequently, the assessment order passed for the impugned assessment year is restored. Assessee appeal allowed.
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2023 (1) TMI 97
TP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- The assessee had provided Information Technology Enabled Services (ITES) to its Associated Enterprises (AE) during the year under consideration and the said international transaction has been benchmarked by the assessee using Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM). The Profit Level Indicator (PLI) used by the assessee is Operating Profit to Total Operating Cost (OP/TC). The assessee s margin is 32.01%. Companies functionally dissimilar with that of assessee need to be deselected from the final list. We direct the ld. TPO to include R.Systems International Ltd., CG-VAK Software and Exports Pvt. Ltd., and Jindal Intellicom Pvt. Ltd. and exclude E-Clerx Services Ltd., in the final list of comparables. When this is done, according to ld. AR , the assessee would be well within the tolerance band of +/-5% statutorily provided in the Act and hence, its pricing with AE would be at arm s length. Cross objections raised by the assessee by way of original grounds, in respect of aforesaid comparables are partly allowed and additional ground raised by the assessee is allowed.
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Customs
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2023 (1) TMI 115
Levy of duty on expiry of warehoused goods - Whether the tribunal was justified in holding that, even though the duty was confirmed by adjudication process, the same is payable only when goods are cleared for home consumption? - re-export of the goods without payment of duty - extension of warehousing period - board circular 03/2003-Cus dated 14/1/2003 - review of order. Whether the Hon ble Tribunal was justified in entertaining an appeal against the Chief Commissioner s letter under Section 129A of the Act which mandates appeal against the Order of Commissioner /Commissioner (Appeals)? - HELD THAT:- In the instant case, the thrust of the arguments of the learned counsel appearing for the revenue is that there was no order adjudicating right of the parties which gave cause of action for the respondent herein to file an appeal before the CESTAT by invoking Section 129A of the Act. He has drawn the attention of the Court to the communication dated 07.03.2019 which was impugned before the Tribunal whereunder the Additional Commissioner of Customs with the approval of the Chief Commissioner has referred to the communications dated 14.02.2019 and 15.02.2019 addressed by the respondent herein requesting for reconsideration of the request for extension of the warehousing period and held such consideration would not arise as the matter had already attained finality - The Tribunal entertained the appeal under Section 129A(1) of the Act and impugned order was set aside and matter was restored to the Commissioner of Customs for deciding the issue afresh. Challenging the said decision, an appeal under Section 130A of the Customs Act was filed and it is in this background, High Court of Bombay has held that Section 110A of the Act is required to be viewed and the decision in the letter dated 25.09.2017 is in terms of Section 110A. A taxing statute is to be strictly construed. In a taxing statute, one has to look merely what is clearly said in the provision. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing has to be read in, nothing is to be implied. One can look only fairly at the end use - substantial question of law will have to be answered in the negative that is in favour of the appellant revenue and against the respondent. Whether in the facts and circumstances of the case and law, the Tribunal was justified in holding that even though the duty was confirmed by adjudication process, the same is payable only when goods are cleared for home consumption, considering the provisions of section 72 of the Customs Act, 1962? - HELD THAT:- In the instant case, undisputedly the goods remained in the warehouse beyond the period of extension granted and the prayer for further extension was not acceded to or in other words not granted and as such they did not qualify to be construed as goods warehoused in due compliance of Section 72 and in the facts obtained in the present case it would also emerge from the records that on account of such goods having continued in the warehouse beyond the period permitted it is deemed to have been removed improperly attracting the penal provision which resulted in show cause notice being issued and same being adjudicated which resulted in orders being passed and assailed by the respondent before the appellate authority and also before the Tribunal which had resulted in its dismissal is a clear mirror to the fact that duty demand had been confirmed and as such, Tribunal was not justified in arriving at a conclusion that though duty demand was confirmed by adjudicating process, same would become payable only when it is cleared for home consumption. The Tribunal was not justified in holding that even though the duty was conferred by adjudication process, section 69 would be applicable and as such finding recorded by the Tribunal requires to be set aside. Hence, the substantial question of law answered in the negative namely in favour of Revenue and against the respondent. Whether in the facts and circumstances of the case and law, the Tribunal was justified in holding that in terms of the board circular 03/2003-Cus dated 14/1/2003, the Respondent was entitled to re-export of the goods without payment of duty and consequently also entitled for extension of warehousing period? - Whether in the facts and circumstances of the case and law, the Tribunal was justified in entertaining and allowing the appeal which is against its own Order dated 25.11.2002 that had attained finality and thus reviewing their own order? - HELD THAT:- In the instant case that entire adjudicating process with regard to liability of respondent to pay duty - penalty had got crystallised and had attained finality and as such by taking aid of the circular dated 14.01.2003 and reading the same disjunctively, no undue benefit could have been extended to the respondent by impugned order. Hence, we are of the considered view that Tribunal committed a gross error in entertaining the prayer of the respondent. A taxing statute is to be strictly construed. The Courts have stated greater latitude to the legislature is to be extended in formulating its tax policy either directly or by delegated legislation - The appellant has made out a strong case to accept the appeal. Hence, substantial questions of law are answered in the negative viz. in favour of the Revenue and against the respondent. Application disposed off.
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2023 (1) TMI 114
Maintainability of the PIL - Imposition of fee for availing benefit of Online Queue Management System upon the transporters/exporters exporting their goods to Bangladesh from various international border checkposts located at Indo-Bangladesh Border - validity of notifications dated 12th of July, 2022 and 29th of September, 2022 - HELD THAT:- The record reflects that the writ petitioner is a practicing advocate of this Court unconnected with the business of export. A perusal of the writ petition reveals that in this public interest petition, cause of the exporters has been taken up by projecting the problems which may be faced by them on account of imposition of fee by the impugned notification. The issue of quid pro quo has also been raised which is mainly concerning the exporters. Nothing prevents the exporters to approach the competent Court and raise their grievances. Learned Advocate General has also raised the plea that the impugned levy infact has facilitated such exporters. No exporter is before this Court even in the representative capacity to ascertain this fact. A PIL on such an issue at the instance of an advocate practicing in this Court having no connection with the issue cannot be entertained especially when the affected persons are adequately well off to raise their personal cause in the appropriate judicial proceedings. So far as reliance of learned counsel for the petitioner in the matters of AHMEDABAD URBAN DEVELOPMENT AUTHORITY VERSUS SHARAD KUMAR JAYANTIKUMAR PASAWALLA AND OTHERS [ 1992 (5) TMI 175 - SUPREME COURT] , FEDERATION OF INDIAN MINERAL INDUSTRIES ORS. VERSUS UNION OF INDIA ANR. [ 2017 (10) TMI 1519 - SUPREME COURT] , these judgments relate to the issue of a levy without authority of law which is an issue on merit which can be raised by the effected parties in appropriate maintainable proceedings. Even if the rule of locus is relaxed in a PIL, yet the issue which is involved in the present petition cannot be permitted to be raised at the instance of a person totally unconnected with the issue and unaffected by the notification. The preliminary objection raised by the learned Advocate General is sustained and present public interest litigation is held to be not maintainable which is accordingly dismissed, however, making it clear that if any affected party approaches the competent Court, then the issue will be decided on its own merit without being influenced by any observation made in this order - Petition dismissed.
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2023 (1) TMI 113
Validity of Notification bearing no.54/2022-Customs dated 19.10.2022 [i.e., Sl. No. 2(ii)] and the communication dated 21.11.2022 issued by respondent no.2 - import of equipment for the purpose of its solar power project - benefit of the concessional rate of customs duty available to the petitioner, denied on account of a purported retrospective amendment to the Project Import Regulations, 1986 - balance of convenience - HELD THAT:- The petitioner has set up a prima facie case. In case no interim protection is granted, the entire process of import is likely to get derailed. Although letters of credit have to be established in this particular case between March and April 2023, and in some other connected matters relating to group companies, have to be established in February-March 2023, the uncertainty as to whether or not the petitioner would be entitled to a concessional rate of duty would perhaps delay the execution of the project at hand. The balance of convenience, thus, is in favour of the petitioner because in case the petitioner was to fail in the instant writ petition, it would have to pay duty at the tariff rate and not at the concessional rate. Therefore, at the end of the day, this aspect of the matter has only a financial impact either way, qua which, a suitable direction can be issued. We are inclined to direct that no precipitate action be taken against the petitioner at the stage of import. This would, however, not create any equity in favour of the petitioner - List the matter on 26.04.2023.
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2023 (1) TMI 112
Valuation of export goods for drawback purpose - rejection of declared value - FOB and duty drawback was re-determined on the basis of lower mean value obtained from the market enquiry - levy of penalty u/s 114 of the Customs Act - HELD THAT:- It cannot be doubted that under rule 12 of the 2007 Valuation Rules, the adjudicating authority has to first give cogent reasons to reject the declared value and thereafter re-determine it - In the instant case, the adjudicating authority noted only two questions to be answered, namely, re-determination of value of the export goods for drawback purpose and whether the exporter was liable to penalty under section 114 of the Customs Act. The adjudicating authority, after observing that the export goods were over-valued by the exporter with an intent to avail higher drawback, observed that the declared value of the goods attempted to be exported should, therefore, should be rejected under rule 8 of the 2007 Valuation Rules. The adjudicating authority had to first examine the correctness of the declared value of the export goods and after recording a finding that they were not correctly valued re-determine the value, but this was not done. This mistake has been noticed by the Commissioner (Appeals) in the impugned order. There is, therefore, no infirmity in the impugned order which may call for any interference in this appeal - appeal dismissed.
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2023 (1) TMI 111
Rejection of refund claim - failure to show that the burden of duty has not been passed on to the respective buyers - principles of unjust enrichment - HELD THAT:- The amount of Rs.1,08,54,152/- was the amount deposited by the appellant pursuant to the confirmation of differential duty demand. The moment, the said demand was set aside by this Tribunal, the amount deposit with the department was not the amount of duty but was the revenue deposit to which the assessee/respondent was entitled for the refund. There is no dispute to this fact even by the original adjudicating authority. Major amount of the refund claim i.e. Rs.97,58,928/- out of Rs.1,08,54,152/- was sanctioned by the original adjudicating authority itself. The rejection for the balance amount has been re-adjudicated by Commissioner (Appeals) vide the order under challenge who while appreciating the C.A. Certificate and audited balance sheets produced by the assessee/respondent has concluded that there is no evidence to show that the burden of differential duty has been passed by the respondent to the prospective buyers. The Mumbai Bench of this Tribunal in another case of COMMISSIONER OF C. EX., PUNE-I VERSUS DGP HONODAY INDUSTRIES LTD. [ 2014 (5) TMI 1096 - CESTAT MUMBAI ] has also held that where the assessee/respondent through the certificate issued by Chartered Accountant and the Balance Sheet have shown that the amount in question is receivable from the department. The bar of unjust enrichment cannot be applied upon such assessee - there are no reason to differ with these findings, specifically for the reason that there is no documentary evidence on record to falsify the Chartered Accountant Certificate. The observations of review order are therefore opined to be the result of mere presumption and surmises. The department s appeal stands dismissed.
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Insolvency & Bankruptcy
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2023 (1) TMI 110
Seeking Withdrawal of company appeal - Whether Applicant who has not filed any Appeal, can claim for setting aside the Order on the basis of Intervention Application? - HELD THAT:- The Order dated 08.10.2021 which has been challenged in the Company Appeal (AT) Ins. No. 880 of 2021 has been passed by the Adjudicating Authority on an Application filed under Section 60(5) of the Code. IBC provides for filing an Appeal against the Order passed by the Adjudicating Authority by virtue of Section 61(1) - Admittedly, no Appeal has been filed by the Applicant and filing of any Appeal by the Applicant at this stage shall stand barred by time. Hon ble Supreme Court in SARASWATI INDUSTRIAL SYNDICATE LTD. VERSUS COMMISSIONER OF INCOME-TAX [ 1999 (3) TMI 3 - SUPREME COURT ] has categorically held that only purpose for granting an Intervention Application is entitled to intervene in support of one or other side. The intervener is well within its rights either to support the order dated 08.10.2021 or to oppose the said order. But when the Company Appeal (AT) Ins. No. 880 of 2021 which has been filed challenging the Order dated 08.10.2021 is sought to be withdrawn, there is no proceeding in which intervener can be heard in opposition of the Order dated 08.10.2021. Proceedings under the IBC are proceedings in a special statute with timeline where limitation prescribed under the Act is for a purpose - Order 23 which came for consideration before the High Court pertains to withdrawal of suit or amending part of claim, the restriction contained in Order 23 for withdrawal were for purpose of object and in the context of Order 23 of the CPC observations as noted above were made by the High Court. It was held that withdrawal cannot be as a matter of course and its Court s discretion. In the present case, Order dated 08.10.2021 has not been challenged by the SREI Equipment Finance Ltd. who has sought intervention. The judgment of the Hon ble Supreme Court relied on by the Appellant do support the contention of the Appellant. Hon ble Supreme Court has held that 3rd parties including interveners have their own remedies in law and they cannot insist upon their grievance being addressed in the appeals filed by the Appellants herein. We are of the considered opinion that at the instance of intervener, the order passed by the Adjudicating Authority dated 08.10.2021 cannot be set aside. We although have permitted the applicant to intervene in the Appeal but are unable to grant any relief to intervention as prayed in the Application. We are thus of the view that prayer of the appellant Indiabulls Housing Finance Ltd. to withdraw the Appeal is to be allowed and the Appeal is to be dismissed as withdrawn. Appeal dismissed as withdrawn.
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2023 (1) TMI 109
Restraint on Committee of Creditors from considering the Resolution Plan of the 3rd Respondent - seeking consideration of resolution plans which are already received including that of the 3rd Respondent - HELD THAT:- This Tribunal, simpliciter, in the instant Appeal, without expressing any opinion on the Merits of the matter, one way or the other, and not delving deep, permits the Appellant/ Applicant to raise all available factual and legal pleas, before the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I), including the aspect of raising such necessary pleas concerning the recent Order, about which the Appellant / Applicant is aggrieved, viz., in respect of the impugned order passed by the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I). The Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I) shall expressly permit the Appellant / Applicant to raise those pleas (both on Facts and in Law), which are available to it, before the Adjudicating Authority, (National Company Law Tribunal, Hyderabad Bench I), at the time of Hearing in a conclusive manner and after providing an opportunity of Hearing to the other side, by adhering to the Principles of Natural Justice, is to pass a fair, just and a reasoned Order (speaking one) on Merits, by adverting to the pleas raised by countering them and to pass final Orders, of course, uninfluenced and untrammelled with any of the observations made by this Tribunal. Appeal disposed off.
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Service Tax
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2023 (1) TMI 108
Levy of service tax - Renting of immovable property service - revenue sharing arrangement - existence of service provider or service recipient relationship or not - respondent was engaged in lending the theatre to the film distributors/sub-distributors for depicting the films, whose copyrights were retained by the distributors - inter-connected services with predominance of the service of renting of immovable property to the distributor. HELD THAT:- According to the respondent, the viewers visit the theatre for entertainment and the consideration is paid to the respondent for the same. The distributor and the theatre owner i.e. respondent have come together on a common platform under revenue sharing arrangement. Therefore, the two have provided the service jointly to each other and are working for the mutual benefit of both the parties. Both the parties are working independently and the share of the Distributor is given by the respondent from the gross receipts from movie tickets - This would be apparent from the agreement executed between the respondent and Mukta Arts which provides that out of the total revenue generated from the screening of films, the respondent would retain a fixed gross revenue and pay balance to the distributor. Further, as per the agreement, the gross revenue is to be distributed in the following ratio on weekly basis. This Division Bench of the Tribunal in INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD [ 2021 (10) TMI 893 - CESTAT HYDERABAD] , examined the same issue, as has been raised in this appeal, namely whether service tax would be leviable if revenue is shared between the appellant and the producer of films and held that even in such a situation no service tax can be levied - It was held in the case that Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in Moti Talkies [ 2020 (6) TMI 87 - CESTAT NEW DELHI ]. The Department alleged that the agreement was for renting of immovable property as defined under section 65(90a) of the Finance Act. This contention was not accepted by the Tribunal and it was observed that the appellant did not provide any service to the distributors nor the distributors made any payments to the appellant as consideration for the alleged service. A revenue sharing arrangement would, therefore, not necessarily imply provision of services, unless the service provider and service recipient relationship is established. This is what was observed by the Tribunal in MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) [ 2016 (11) TMI 520 - CESTAT MUMBAI] , M/S. OLD WORLD HOSPITALITY LIMITED VERSUS CST, NEW DELHI [ 2017 (2) TMI 1176 - CESTAT NEW DELHI] and DELHI INTERNATIONAL AIRPORT P. LTD. MUMBAI INTERNATIONAL AIRPORT P. LTD. VERSUS UNION OF INDIA ORS. [ 2017 (2) TMI 775 - DELHI HIGH COURT] - In the present case, there is no service provider or service recipient relationship. The contention advanced by the learned authorised representative for the department cannot be accepted. Thus, no illegality was committed by the Principal Commissioner in discharging the show cause notice - The appeal is dismissed.
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2023 (1) TMI 107
CENVAT credit of service tax paid - duty paying documents - service tax on reverse charge basis in respect of ocean freight services - suppression/misdeclaration of facts or not - HELD THAT:- A perusal of the impugned order shows that the order first decides that the appellant are not entitled to cenvat credit invoking Rule 9(1)(bb) of the Cenvat Credit Rules. On that account, the impugned order denies the refund claimed by the appellant. The issue regarding admissibility of credit under Rule 9(1)(bb) has nothing to do with the CGST Act and therefore, the reference made to the larger bench in the case of M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF G.S.T. AND CENTRAL EXCISE, CHENNAI [ 2021 (10) TMI 1345 - CESTAT CHENNAI] has no relevance in the instant case. The instant case is solely based on the admissibility of credit under Rule 9(1)(bb). In view of that, it is apparent that the claim of the appellant to avail credit on the strength of Challan of Service Tax paid by them in the capacity of service recipient cannot be denied under Rule 9(1)(bb). Moreover, there is no evidence on record to show that the appellants have engaged in any mis-declaration, suppression etc. especially in view of the fact that the levy of service tax on Ocean Freight itself was held ultra virus by Hon ble High Court of Gujarat in case of MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] . It is held that the appellants are entitled to take credit of CENVAT credit paid on ocean freight - matter is remanded to the original adjudicating authority for fresh consideration - Appeal allowed by way of remand.
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2023 (1) TMI 106
Denial of cash refund of service tax - Export of final products - period prior to amendment of Notification 41/2007-STdated 06.10.2007 by Notification 33/2008-STdated 07.12.2008 - HELD THAT:- The appellant have exported certain goods and utilized certain services. The appellant have sought refund of service tax paid on those services under Notification 41/2007-ST. the decision of Tribunal in the case of BHARAT ART AND CRAFTS, SHIVAM EXPORT (100% EOU) , BOTHRA INTERNATIONAL VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II [ 2016 (4) TMI 197 - CESTAT NEW DELHI] clearly lays down that if the appellants have availed draw back, the refund under Notification 41/2007 dated 06.10.2007cannot be claimed for the period prior to amendment of Notification 41/2007-STdated 06.10.2007 by 33/2008-ST dated 07.12.2008. Appeal dismissed.
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Central Excise
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2023 (1) TMI 105
Seeking retrieval of matter from call book after several years - HELD THAT:- In reply to the writ petition, there is no valid explanation offered by the Department as to what prompted it to shift the case to the Call Book on 7th February, 2011 and then retrieve it from the said Call Book 5 years later, all of a sudden. In M/S. MAXCARE LABORATORIES LTD. VERSUS JOINT COMMISSIONER, CGST, CENTRAL EXCISE AND CUSTOMS, BHUBANESWAR AND OTHERS [ 2021 (7) TMI 28 - ORISSA HIGH COURT ], in more or less similar circumstances, this Court quashed the SCN and the further notice fixing the date of hearing. In the presence case as well, the Court is unable to find any valid explanation offered by the Department in delaying the initial SCN under Section 11A of the CE Act, 3 years after the period of demand and then, more importantly, taking 5 years to retrieve the matter from the Call Book. This Court quashes the impugned SCN dated 3rd February, 2010 and all proceedings consequent thereto including the impugned notice dated 26th May, 2017 - Petition allowed.
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2023 (1) TMI 104
Area Based Exemption - Determination of value addition - validity of notification of June 10, 2008 sustained by the Apex Court - the respondents (Revenue) now seeking to assert that the petitioning assessee applied for determination of the special rate of the value addition at a time long after the period therefor under the notification of June 10, 2008 - respondents contend that as a consequence of such stay granted by the Supreme Court, the legal effect was that the relevant notification revived - application for special rate of value addition had to be made in terms of the notification - HELD THAT:- In view of the submission of the Department as recorded in the order dated February 26, 2021 which has attained finality and which has not sought to be assailed by the Department, the issue as to whether the application was made by the petitioning assessee for determination of a special rate of value addition within the permissible time or not cannot be reopened. Implicit in the submission of the Department as recorded in the order of February 26, 2021 is the acceptance that the matter would be considered on merits. If the Department wanted to assert that the belated application of the petitioning assessee could not be entertained in terms of the relevant notification, the issue would have called for an answer in course of the proceedings. It was open to the Department to canvass such ground - The Department is now estopped from urging the objection of limitation and the respondents are bound by the submission attributed to them in the order of February 26, 2021 to consider the application for determination of the special rate of value addition in accordance with law, irrespective of when the application therefor may have been made by the petitioning assessee. At this stage, it is pointed out on behalf of the petitioner that by a communication in writing dated June 1, 2021, the Commissioner of Goods and Services Tax, Shillong had indicated at paragraph 3 of the relevant document that the rate of value addition in respect of the goods manufactured by the petitioning assessee was determinable at the rate of 81.9 per cent. Full particulars of the determination were indicated. Petition disposed of by affording the respondents a period of four weeks from date to affirm or alter the determination indicated in the letter of June 1, 2021 in accordance with law so that appropriate steps consequent thereupon can be taken by the parties thereafter.
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2023 (1) TMI 103
Maintainability of appeal before commissioner (appeals) - time limitation - appeal dismissed solely for the reason that it was not filed within the stipulated period provided under section 35(1) of the Central Excise Act, 1944 - HELD THAT:- It is not in dispute that the date of the order passed by the Assistant Commissioner, which order had been assailed before the Commissioner (Appeals), is January 18, 2019. It is also not in dispute that in Form EA-1 the appellant had specifically stated that the copy of the order was actually served upon the appellant on March 27, 2019. The Commissioner (Appeals) had sought verification from the Office of the Assistant Commissioner regarding the date on which the order was served upon the appellant and in this connection the Office of the Assistant Commissioner informed the Commissioner (Appeals) that the order was despatched to the appellant on January 18, 2019 and in support thereof a copy of the relevant page of the despatched register was submitted. In our opinion, this was not relevant for the purpose of determination of the period of limitation contemplated under section 35(1) of the Excise Act. What was necessary to be ascertained by the Commissioner (Appeals) for the purpose of limitation under section 35(1) of the Excise Act was the date on which the order was actually served upon the appellant. What is also important to notice is that the mode by which the order was communicated has also not been mentioned nor noticed by the Commissioner (Appeals), leave alone the date on which it was received by the appellant. When the Department failed to provide any evidence to controvert the submission of the appellant that the order was actually received by the appellant only on March 27, 2019, the appeal shall be deemed to have been filed within the stipulated period of sixty days as it was filed on May 27, 2019. The order of the Commissioner (Appeals) rejecting the appeal on the ground of limitation cannot, therefore, be sustained. What transpires from the order of the Assistant Commissioner is that even the date on which the order was passed has not been mentioned either at the start of the order or where the Assistant Commissioner has signed the order. This is not the only case in which this fact has come to our notice, for in many earlier orders, it was also noticed that the adjudicating authority or the appellate authority had not indicated the date of the order - The Department should maintain the postal tracking report in each case for the purpose of determining the limitation period. The order dated January 18, 2019 passed by the Commissioner (Appeals) is, accordingly, set aside and the appeal is allowed.
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CST, VAT & Sales Tax
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2023 (1) TMI 102
Validity of reassessment order - reassessment made by the Assessing Authority for the year 2000-01 was beyond the period of 5 years - HELD THAT:- After hearing learned counsel for the parties for quite some time, we are not inclined to interfere with the judgment impugned dated 29.01.2019 but since the petitioner/company has not challenged the reassessment for the years 2001-02 to 2004-05 on merits and right of appeal indeed was available to it, we consider appropriate to observe that if appeal is being preferred by the petitioner/company within 60 days from today before the Appellate Authority against the order of reassessment years 2001-02 to 2004- 05, the same shall be treated to be within a period of limitation and the Appellate Authority may examine the appeal on its own on merits in accordance with law. It is further made clear that all contentions under the law are available for the petitioner/company to be raised before the Appellate Authority. SLP dismissed.
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2023 (1) TMI 101
Maintainability of SLP - amount of penalty involved is Rs.2,15,770/- only - threshold monetary limit involved in the appeal - HELD THAT:- As the amount of penalty involved is Rs.2,15,770/- only, the Special Leave Petition is not entertained. However, the question of law, if any, is kept open. SLP dismissed.
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2023 (1) TMI 100
Maintainability of petition seeking leave to appeal - HELD THAT:- There are no reason to entertain this petition under Article 136 of the Constitution of India. The petition seeking special leave to appeal is, accordingly, dismissed.
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2023 (1) TMI 99
Maintainability of SLP - Condonation of delay of 469 days in the three appeals filed by the petitioners against the order of the State VAT Tribunal - HELD THAT:- These are cases where by the impugned orders the High Court has not deemed it fit to condone the delay of 469 days in the three appeals filed by the petitioners against the order of the State VAT Tribunal. We do not think that the High Court has erred in its approach in the matter of considering the question as to whether the delay should be condoned. The special leave petitions stand dismissed.
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