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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter January 5, 2024 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax News Indian Toy industry witnesses 52% decline in imports and 239% rise in exports in FY 2022-23 in comparison to FY 2014-15 Union Minister of External Affairs, Dr. S. Jaishankar and Union Commerce and Industry Minister Shri Piyush Goyal inaugurate Aatmanirbhar Bharat Utsav 2024 Notifications Customs G.S.R. 13 (E) - dated 1-1-2024 - Cus Corrigendum - Notification No. 68/2023-Customs, dated the 29th December, 2023 GST 01/2024 - dated 3-1-2024 - CGST Rate CGST Rate Schedule u/s 9(1) - Seeks to amend Notification No 01/2017- Central Tax (Rate) dated 28.06.2017. 01/2024 - dated 3-1-2024 - IGST Rate IGST Rate Schedule u/s 5(1) - Seeks to amend Notification No 01/2017- Integrated Tax (Rate) dated 28.06.2017 01/2024 - dated 3-1-2024 - UTGST Rate UTGST Rate Schedule - Seeks to amend Notification No 01/2017- Union Territory Tax (Rate) dated 28.06.2017. GST - States 34/2023-State Tax - dated 3-11-2023 - Chhattisgarh SGST Seeks to waive the requirement of mandatory registration under section 24(ix) of Chhattisgarh Goods and Services Tax Act, 2017 for person supplying goods through ECOs, subject to certain conditions. 32/2023 – State Tax - dated 3-11-2023 - Chhattisgarh SGST Seeks to exempt the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year. 29/2023 – State Tax - dated 3-11-2023 - Chhattisgarh SGST Seeks to notify special procedure to be followed by a registered person pursuant to the directions of the Hon’ble Supreme Court in the case of Union of India v/s Filco Trade Centre Pvt. Ltd., SLP(C) No.32709-32710/2018. 10/2023 – State Tax (Rate) - dated 30-10-2023 - Chhattisgarh SGST Amendment in Notification No.26/2018–State Tax (Rate), dated the 31st December, 2018 08/2023 – State Tax (Rate) - dated 30-10-2023 - Chhattisgarh SGST Amendment in Notification No. 13/2017–State Tax (Rate), dated the 28th June, 2017 07/2023 – State Tax (Rate) - dated 30-10-2023 - Chhattisgarh SGST Amendment in Notification No. 12/2017–State Tax (Rate), dated the 28th June, 2017 30/2023-State Tax - dated 29-12-2023 - Delhi SGST Special procedure to be followed by a registered person engaged in manufacturing of the goods - Additional records to be maintained by the registered persons manufacturing the goods mentioned in the Schedule Highlights / Catch Notes GST Violation of principles of natural justice - petitioner is entitled for three opportunities of personal hearing, however, only two opportunities were provided to him - This Court grants liberty to the petitioner to approach the Appellate Authority by filing the appeal within a period of 30 days from the date of receipt of copy of this order. - HC Visit to Get Source Scope of Advance Ruling application - Supply or not - the application seeking advance ruling was filed on 21.03.2023 before the RAAR with respect to supplies already being undertaken and GST has been already paid. Hence, the case is out of the purview of the Advance Ruling. As per Section 95 of CGST Act, 2017 - AAR Visit to Get Source Income Tax Corporate Social Responsibility (CSR) expenditure u/s 37 - allowable revenue expenditure or not? - ITAT allowed the claim, holding that, Explanation 2 inserted in Section 37(1) was prospective in nature - Supreme court refused to interfere into the matter - SLP of the revenue dismissed. Visit to Get Source Rectification of mistake - While filing the returns, the petitioner had inadvertently added an extra '0' (zero) in his total salary income - it is the duty of the officer, who scrutinize the records, to bring the said error to the knowledge of the petitioner and rectify the same without any inconvenience to the petitioner. However, the officer, who scrutinized the records, had not applied his mind either while scrutinizing the income of the petitioner or his rectification application. - AO directed to rectify the mistake - HC Visit to Get Source Stay of demand - attachments placed on the petitioner's bank accounts in relation to the outstanding demand - Department had already collected around 30% of the tax liability. In terms of the provisions of the Act, if 20% of the tax liability is paid to the Department, the Assessee will be automatically entitled for stay of recovery proceedings, which were initiated against him. - Attachment order vacated - HC Visit to Get Source Taxability of long term capital gain on sale of immovable property - value u/s 50C - difference in value determined by the SVA and DVO - These facts clearly establish that there can be difference in valuation of property at the same locality. Thus, considering the fact that difference in FMV as per actual sale consideration received by the assessee and DVO is much lesser in comparison to the difference in value as per SVA and DVO, in our view, deeming provisions of section 50C cannot be pressed into action. - AT Visit to Get Source Levying of penalty u/s 270A - Reasonable belief in claiming deduction which was disallowed - In the present case, neither in the assessment order nor in the subsequent show-cause notices, the Assessing Officer has specified that the case of the petitioner-company is covered under which part of sub-section (9) of Section 270A of the Act. Even in the impugned order dated 31.03.2023 also, it is not specified that which part of sub-section (9) of Section 270A of the Act is attracted in the case of petitioner. - No penalty - HC Visit to Get Source Offence u/s 276C(1) - CIT(A) while deleting the penalty held that, The Commissioner of Income Tax, Appeal held in the appeal No.16/10060/2019-20, the petitioner was under bonafide belief that there was no tax liability to be discharged by him on account of his residential status as NRE accounts and the TDS made by the bank. - once the penalty on the petitioner was deleted, the prosecution initiated by the respondent cannot be sustained. - HC Visit to Get Source Validity of reopening of assessment - period of limitation for issuance of notice u/s 148 - It is not the actual communication of the notice that is relevant. It is the issuance of the notice. - Scope of new regime u/s 148A - Once the notice has been dispatched either electronically or through post on the last date prescribed u/s 149 the proceeding cannot be questioned as time barred. - HC Visit to Get Source Accrual of income in India - royalty receipts for sale of software - sale of the copyrighted article - AO has read and interpreted the clauses of the agreement wrongly and selectively - In view of the decision of supreme court, additions deleted - AT Visit to Get Source Bogus purchases - The exclusion of purchases from the trading results is not permissible without corresponding exclusion of the sales in such trading activity for arriving at a fair and balanced view. The action of the AO patently offends the rudimentary principle of accounting. - AT Visit to Get Source TDS u/s 195 - Disallowance of commission, brokerage and discount expenses - in the instant case where the overseas agents were paid commission for securing order etc., and such services were utilised for the purpose of making or earning income from a source outside India, the assessee is under no obligation to apply with provisions of Section 195 for the reasons that commission to such overseas agents are not taxable under the Act. - Additions deleted - AT Visit to Get Source Unexplained investment u/s 69 - wire transfer from NRE account - assessee is a non-resident - transfer from the account of the assessee’s son, who is also a resident of UK - CIT(A) has erred in facts and law in confirming the additions made by the assessee received by way of wire transfer from NRE account of his son in UK to assessee’s NRE account from which investments were made into Mutual Funds. - no addition is sustainable u/s 69 - AT Visit to Get Source Addition u/s 56(2)(vii)(c) - related person - allotment of equity shares @ Rs. 10/- - book value of shares prior to allotment worked out at Rs. 552/- per share - the shares were issued by the company to the existing shareholders who are husband and wife being close relatives - The assessee’s case squarely falls under the provision of section 56(2)(vii)(c) and the same does not fall under any exceptions as provided in this explanation to proviso to section 56(1)(vii)(c) - the AO has rightly assessed the differential value of shares received by assessee - AT Visit to Get Source TP Adjustment - Adjustment for royalty income - maintaining of a brand - risky intangible - Since the assessee has offered royalty income higher than the ALP computed by applying WACC of 11.30% of the brand value, no further upward adjustment is called for. - AT Visit to Get Source Exemption u/s 11 - corpus donations - charitable purpose - society is exclusively working for the benefit of members - the assessee falls under the last limb of the definition ‘charitable purpose’ i.e. any other object of GPU. Therefore, the income of the assessee needs to be computed in light of amended provisions of Sec. 2(15) - AO directed to re-adjudicate the issue afresh - AT Visit to Get Source Disallowance of expenditure owing to suspension of business operations - To our mind, not carrying on any business activities during a particular period cannot be equated with closure of business since it will lead to a narrow view of the scope of cessation of business. There is nothing on record to show that assessee has completely abandoned or closed the business forever by disposing of its assets and going into liquidation. - Appeal of the revenue dismissed - AT Visit to Get Source Customs Classification of imported goods - Data Projector - While the ‘common parlance test’ or the commercial usage test’ is generally preferable especially while classifying consumer goods but when the goods have to be tested for their sole or principal use, technological capabilities cannot be completely discarded. - AT Visit to Get Source 100% EOU - Demand of differential customs duty on 22 looms / Capital goods that were imported without payment of duty - The appellant has not acted with dishonest or fraudulent intent and suppression of facts is not involved. This being so, question of invoking the extended time limit or imposing penalty does not arise. - AT Visit to Get Source Classification of imported goods - quicklime used by the appellant in their manufacture of paper - when only calcination process is carried out and CaO content is less than 98%, than the quicklime is correctly classification under CTH 2522 1000. - AT Visit to Get Source Import of Watermelon Seeds - Restricted item - it is undisputed that the appellant had complied with the stipulation of Transitional Arrangement as per Foreign Trade Policy as the appellant had paid entire amount of the consignment in question much prior to watermelon seeds being placed under restricted category from free category - the appellant are eligible for consequential benefit of import qua FTP provisions. - AT Visit to Get Source IBC Approval of the Resolution Plan - the CoC is well aware that there is delay in implementation of the plans of ‘Allied Strips Limited’ and ‘Tirupati Infraprojects Private Limited’ which was noticed in its minutes as has been brought on the record - From the facts of the present case, out of two entities for which allegation was made of non-implementation. Admittedly, for one i.e. ‘Allied Strips Limited’ has been implemented and for other plan has not been implemented but that itself shall not impart any ineligibility. - There were no grounds on which the plan could have been sent back for reconsideration before the CoC - AT Visit to Get Source Service Tax Distinct persons or not - partners and partnerships firm - Since the Adjudicating Authorities have not seen judgment of Cadila Healthcare, in the interest of justice, the matter needs to go back for reconsideration in the light of the judgments in the case of Cadila Healthcare. - AT Visit to Get Source Refund claim - unjust enrichment - The payment of service tax was borne by the appellant themselves and the same was not collected from the service receiver. It is also fact on record that as per books of account for the year 2013-2014, the amount of refund shown as service tax receivable under asset side of trial balance sheet, this also proves that the amount of service tax has not been passed on to any other person - Refund allowed - AT Visit to Get Source Classification of service - activity of supply of tangible goods for use or the leasing activity - Under the identical set of facts it was viewed that the right of possession and effective control has been transferred particularly considering the fact that the lessor have paid the VAT considering the transaction as deemed sale in terms of Article 366 29 (A) of the Constitution of India. - Demand set aside - AT Visit to Get Source Central Excise Chargeability of interest in terms of rule 7 of Central Excise Rules, 2002 following confirmation of demand on finalization of provisional assessment - interest liability would arise only when the assessments were made provisional after the new rules came into existence. - AT Visit to Get Source Process amounting to manufacture or not - spare parts - unit container - the activity undertaken by the appellant of repacking from bulk into small packets in polythene bags and putting labels does not amount to manufacture as under Section 2 f (iii) of Central Excise Act, 1944 - AT Visit to Get Source VAT Levy of penalty u/s 27 (3) - TNVAT - once the Assessment Order is passed, without imposing penalty, subsequently the 1st Respondent cannot change his view and initiate the fresh penalty proceedings. - HC Visit to Get Source Case Laws: GST 2024 (1) TMI 173 Rejection of appeal preferred by the petitioner - Principal Supplier of the present petition had failed to upload the bills during the period under appeal - HELD THAT:- Rather than this Court exercising jurisdiction under Article 226 of Constitution of India, to examine this issue which involves the ascertainment of facts, it would be more appropriate to direct the appellate authority to re-examine the same for which the petitioner may file the necessary documents and explain before the appellate authority that the Principal Supplier had indeed uploaded the bills showing payment of GST so that the petitioner-appellant can claim ITC and other benefits under the law. The petition is disposed of. 2024 (1) TMI 172 Violation of principles of natural justice - petitioner is entitled for three opportunities of personal hearing, however, only two opportunities were provided to him - HELD THAT:- This Court grants liberty to the petitioner to approach the Appellate Authority by filing the appeal within a period of 30 days from the date of receipt of copy of this order. In such case, the Appellate Authority is also directed to entertain the appeal filed by the petitioner without insisting the issue of limitation and pass orders in accordance with law. In the meantime, there shall be an order of interim stay of the recovery proceedings until the filing of appeal. It is also made clear that if the petitioner failed to file the appeal within a period of 30 days, the said interim stay will automatically stand vacated. The writ petition disposed off. 2024 (1) TMI 171 Release of attachment made to the bank accounts of the petitioner - prior to the passing of the assessment order, the respondents had neither provided any opportunities for filing reply nor provided any opportunities of personal hearing to the petitioner - Violation of principles of natural justice - HELD THAT:- In the present case, the respondent had neither served any notice nor provided any opportunity of personal hearing to the petitioner. Under these circumstances, the impugned assessment order was passed by the respondent on 14.06.2023 and the petitioner came to know about the said impugned assessment order when the final notice was served to him on 14.09.2023. By this time, the limitation of filing an appeal has been expired. However, it was submitted by the learned counsel for the respondent that the petitioner is still entitled to file the statutory appeal before the concerned Appellate Authority. This Court is inclined to grant liberty to the petitioner to file the appeal before the Appellate Authority within a period of 30 days from the date of receipt of copy of this order. In such case, the Appellate Authority is directed to consider the said appeal without insisting the issue of limitation. These writ petitions are disposed of. 2024 (1) TMI 170 Scope of Advance Ruling application - Supply or not - providing food to employees at subsidized price - covered by Entry 1, Schedule III of the Central Goods and Services Tax Act, 2017 and Rajasthan Goods and Services Tax Act, 2017 or not - subsidized deduction made from the salary of employees, who are availing facility of food in the factory - Section 7 read with Schedule I of the Central Goods and Services Tax Act, 2017 and Rajasthan Goods and Services Tax Act, 2017 - GST on the amount deducted from the salaries of employees - Input tax credit on the GST charged by third party contractor for canteen services availed by it for its employees. HELD THAT:- The applicant is Involved providing Canteen Services to its workers/ employees through contractual agreement with third party contractor and recover subsidized deduction from workers. The applicant submitted that to provide canteen facility, Applicant has engaged a third-party canteen service provider ( canteen contractor), for providing quality food and refreshments to its employees. Canteen contractor charges as per the agreed price per meal from Applicant. It is raising invoice under SAC 996333 and is charging GST @ 5% from Applicant. This authority is constituted to decide on matters or questions specified in sub-section (2) of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Thus, the applicant is not a supplier in the present case, the applicant as per the contract is a receiver of services supplied by the canteen service provider also. The scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken. In the instant case, as already narrated, the application seeking advance ruling was filed on 21.03.2023 before the RAAR with respect to supplies already being undertaken and GST has been already paid. Hence, the case is out of the purview of the Advance Ruling. As per Section 95 of CGST Act, 2017; this authority shall decide on matters or on questions specified in sub-section (2) of Section 97, and Authority means the Authority for Advance Ruling, constituted under Section 96. Hence, the case does not fall under the purview of the Advance Ruling. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017. Income Tax 2024 (1) TMI 169 Corporate Social Responsibility (CSR) expenditure u/s 37 - allowable revenue expenditure or not? - as decided by HC [ 2022 (12) TMI 759 - DELHI HIGH COURT] Explanation 2 inserted in Section 37(1) was prospective in nature, and therefore was not applicable in the assessment years in issue - as per revenue as Tribunal had erred in law in sustaining the deduction claimed by the respondents/assessees under Section 37(1) of the Act is an argument, which cannot be accepted. HELD THAT:- No case for interference in exercise of our jurisdiction under Article 136 of the Constitution of India is made out in the peculiar facts of the case. The Special Leave Petition is, accordingly, dismissed. However, the question of law is kept open. 2024 (1) TMI 168 Income from other sources u/s 56(2)(x) - difference between the income disclosed in the return and the guideline value - petitioner reiterated that the document value represents the fair market value and that a reference should be made to the Departmental Valuation Cell for determination of the fair market value - HELD THAT:- The assessment order proceeds on the basis that the guideline value of the relevant immovable asset represents the real market value. Such conclusion has been drawn without awaiting the valuation report from the third respondent. As a consequence, in spite of the petitioner asserting and reiterating that the sale consideration specified in the sale deed represents the fair market value, the petitioner has been put to prejudice without any material to support the conclusion that the guideline value represents the fair market value. Therefore, the petitioner is entitled to an interim stay of coercive action pending disposal of the statutory appeal. It is needless to say that it is also just and necessary that the statutory appeal be disposed of expeditiously. The fourth respondent is directed to dispose of the statutory appeal against the assessment order within a maximum period of three months from the date of receipt of a copy of this order. Until the statutory appeal is disposed of, the first and second respondents are restrained from initiating any coercive action pursuant to the assessment order for recovery of the disputed tax demand. There shall be no order as to costs. 2024 (1) TMI 167 Rectification of mistake - While filing the returns, the petitioner had inadvertently added an extra '0' (zero) in his total salary income - HELD THAT:- In the present case, it appears that there is a mistake of mentioning the total income. The petitioner had erroneously mentioned his total income as a sum of Rs. 26,10,560/- instead of Rs. 2,61,056/-. However, it seems that the tax liability was calculated and paid by the petitioner only by taking the income as Rs. 2,61,056/-. Hence, it is only an apparent error on the face of the record and it is not that the petitioner had suppressed the material facts. This Court is of the view that it is the duty of the officer, who scrutinize the records, to bring the said error to the knowledge of the petitioner and rectify the same without any inconvenience to the petitioner. However, the officer, who scrutinized the records, had not applied his mind either while scrutinizing the income of the petitioner or his rectification application. Period of limitation - As in the present case, initially a rectification application was filed in the year 2013 and any such subsequent applications are only a reminder/continuation/representation of the original application for rectification filed in the year 2013. Thus, this Court directs the respondent to dispose of the representation filed by the petitioner in the year 2013, if it is available, otherwise, they shall dispose of the rectification application dated 14.09.2022 and 30.08.2023, which are filed in continuation as reminder of the aforesaid representation filed in the year 2013. Accordingly, respondent is directed to rectify the mistakes committed by the petitioner by taking into consideration of the application filed by the petitioner in the manner stated above and re-assess the income of the petitioner within a period of 4 weeks from the date of receipt of copy of this order. 2024 (1) TMI 166 Stay of demand - seeking permission for removal of attachments placed on the petitioner's bank accounts in relation to the outstanding demand - since around 30% of the tax liability has already been collected from the petitioner, a stay application was filed by the petitioner to lift the attachment order on 10.02.2022 and the same has not been disposed of by the respondent till date - HELD THAT:- Department had already collected around 30% of the tax liability. In terms of the provisions of the Act, if 20% of the tax liability is paid to the Department, the Assessee will be automatically entitled for stay of recovery proceedings, which were initiated against him. When such being the case, since the petitioner had remitted around a sum of Rs. 62,00,000/-, which comes around 30% of the tax liability, the continuation of bank attachment will prejudicially affect the interest of the petitioner. Hence, this Court is inclined to lift the bank attachment issued against the petitioner. Accordingly, the bank attachment issued by the respondent stands lifted. Further, the respondent is directed to dispose of the stay application filed by the petitioner by taking into consideration of the payment of 30% of the tax liability made by the petitioner. The impugned order was passed by the respondent on 30.11.2023, in which case, the time limit for filing appeal is not expired. Hence, if the petitioner preferred to file the appeal, this Court does not find any impediment for the appellate Authority to entertain the said appeal since the petitioner had already paid 30% of the tax liability. The respondent-bank is directed to permit the petitioner to operate their accounts upon production of this order copy. 2024 (1) TMI 165 Taxability of long term capital gain on sale of immovable property - difference in value determined by the SVA and DVO - CIT(A) adopting the value of the property as per section 50C of the Act by taking into account the date of registration of sale instead of adopting the value of the said property as it existed at the time of finalization of deal for sale - what should be the fair market value (FMV) of the disputed property on the date of execution of sale deed on 12/01/2015? HELD THAT:- It is a fact on record that in course of assessment proceedings, the Assessing Officer had made a reference to the DVO for determining the FMV of the property. Since, the report of the DVO was not received in time, the Assessing Officer had proceeded to complete the assessment by adopting value determined by the SVA[Stamp Valuation Authority] as deemed sale consideration. However, before the first Appellate Authority DVO report was available. Additionally, the assessee had also furnished a valuation report of the Govt. Registered Valuer. As very same property, the value determined by the SVA under no circumstances reflects the FMV as there is wide variation of more than Rs. 2,00,00,000/- between the value determined by SVA and the DVO. It is further observed that the Govt. Registered Valuer has determined the value of the property at Rs. 5,36,00,000/-. Valuation of property involves some kind of guess work and estimation and there cannot be any consensus in the opinion of two valuers. This fact is very much evident from three different FMVs determined by three valuers. Assessee has brought on record the mitigating circumstances resulting in sale of the property for the actual sale consideration of Rs. 5,50,00,000/-. We have further noted that in the same locality the assessee had two properties, one was sold at Rs. 32,258/- per sq. mtr. and disputed property at Rs. 45,156/- per sqm. The aforesaid facts show that the rate of property even in the same locality differs depending upon locational advantage and other factors. It is also revealed that though the Assessing Officer has brought to the notice of DVO certain sale instances in the same locality at higher price, however, DVO has not accepted them. These facts clearly establish that there can be difference in valuation of property at the same locality . Thus, considering the fact that difference in FMV as per actual sale consideration received by the assessee and DVO is much lesser in comparison to the difference in value as per SVA and DVO, in our view, deeming provisions of section 50C cannot be pressed into action. More so, when the registered valuer has valued the same property at Rs. 5,36,00,000/-. Thus, considering the overall facts and circumstances of the case, we hold that the addition sustained by Ld. First Appellate Authority deserves to be deleted. Assessee appeal allowed. 2024 (1) TMI 164 TP adjustment - addition towards interest at a rate of 2% - TPO was of the view that the assessee has provided excess credit period to its US AE over and above the stipulated credit period and called on the assessee to explain why an adjustment should not be made on account of excess grace period - TPO also observed that the assessee has charged 10% interest from its German AE for Euro denominated loan granted by the assessee and called on the assessee to also explain as to why interest @10% should not be charged on the delayed receipts on account of software services provided to the US AE HELD THAT:- We notice that the co-ordinate bench in assessee s own case [ 2023 (6) TMI 1349 - ITAT MUMBAI] A.Y. 2005-06 has considered a similar issue to hold that adjustment is required to be made towards interest on the delayed receipts from US AE. It is relevant to note that the department had filed a cross appeal for AY 2004-05 [ 2011 (6) TMI 140 - ITAT, MUMBAI] on the same issue against the decision of CIT(A) to apply LIBOR rate as against 10% rate charged by the TPO. The coordinate bench vide order dated 30.06.2011, though has dismissed the revenue's appeal on the issue of rate to be applied had made a specific observation that though the CIT(A)'s action with regard to rate is upheld, it does not imply that the ALP adjustment in principle is upheld too. Accordingly the issue of determination of ALP by imputing interest on the delayed receipts from US AE is left open which we have adjudicated in the current appeal. Appeal is allowed in favour of the assessee. 2024 (1) TMI 163 Levying of penalty u/s 270A - misreporting by way of underreporting of income - disallowance of deduction in respect any surcharge of cess which is not allowable as deduction under Section 40 - action of respondents of rejecting the application of petitioner-company seeking immunity from imposition of penalty under Section 270AA of the Act, holding that the petitioner-company is not fulfilling the condition mentioned in the sub-section (3) of the Section 270AA - HELD THAT:- Maintainability of writ petition - We find that in the present case, there is no requirement of making an investigation into facts and the question raised by the petitioner in this writ petition is only this that whether the petitioner-company is entitled to claim benefit of immunity from imposition of penalty under Section 270A of the Act or not. The Hon'ble Supreme Court in M/s Godrej Sara Lee Ltd. [ 2023 (2) TMI 64 - SUPREME COURT] has held that where the controversy is purely legal one and does not involve disputed question of fact but only question of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of alternative remedy. Thus the preliminary objection raised by the respondents regarding maintainability of the writ petition is rejected. Penalty for under reporting and misreporting of income - Section 270A of the Act specifies penalty for under-reporting and misreporting, wherein sub-section (9) of Section 270AA of the Act categorizes the cases of misreporting of income. Sub-section (3) of Section 270AA of the Income Tax Act empowers the assessing officer to grant immunity from imposition of penalty under Section 270A and initiation of proceedings under Section 276C or under Section 276CC of the Income Tax Act on fulfillment of the conditions of sub-section (1) of Section 270AA after the expiry of the period of filing the appeal if the proceeding has not been initiated against the assessee under the circumstances referred to in sub-section (9) of Section 270A. Sub-section (4) of Section 270AA provides that the assessing officer shall pass an order accepting or rejecting any application filed by the assessee seeking immunity from imposition of penalty under Section 270A within a period of one month from the end of month in which the application under sub-section (1) is received. In the present case, neither in the assessment order nor in the subsequent show-cause notices, the Assessing Officer has specified that the case of the petitioner-company is covered under which part of sub-section (9) of Section 270A of the Act. Even in the impugned order dated 31.03.2023 also, it is not specified that which part of sub-section (9) of Section 270A of the Act is attracted in the case of petitioner. Otherwise also, the petitioner-company in its reply to show cause notice and subsequent replies to the different show cause notices has justified its claim for deduction of education cess, however, the Assessing Officer without considering the said justification or rejecting the same has passed the impugned order mechanically. We are of the view that once the petitioner-company has withdrawn its claim for deduction of education cess in view of insertion of sub-Section (18) of Section 155 before it came into force w.e.f. 01.04.2022, the petitioner-company is entitled for immunity from imposition of penalty under Section 270A of the Act though the proceedings against it were initiated for imposition of penalty. Moreover, while initiating the said proceedings vide order dated 22.09.2022, the Assessing Officer has failed to specify that which part of sub-Section (9) of Section 270A is attracted in the case of petitioner-company, the said initiation is nonest. The respondent vide impugned order dated 31.03.2022 has clarified that the petitioner-company is fulfilling the conditions mentioned in sub-Section (1) and (2) of Section 270AA, however, its conclusion that the petitioner-company do not fulfill the condition mentioned in sub-section (3) of Section 270AA of the Act is illegal and cannot be sustained. Apart from that the application filed by the petitioner-company under Section 270AA of the Act seeking immunity from imposition of penalty has not been decided by the Assessing Officer within prescribed time as per sub-section (4) of Section 270AA of the Act, the impugned action of the Assessing Officer of imposing penalty against the petitioner-company is liable to be set aside. Resultantly, this writ petition is allowed. The penalty order passed under Section 270A of the Income Tax Act is set aside 2024 (1) TMI 162 Revision u/s 263 - CIT(A) s view that the loss claimed by assessee upon transfer of shares concerning Indian entities was both erroneous and prejudicial to the interest of revenue - HELD THAT:- The record shows that in the notes of accounts appended to the balance sheet as on 31.03.2017, the respondent/assessee had clearly indicated that it was not carrying forward the cumulative loss. It is not in dispute that the assessee has not carried forward the aforementioned loss registered upon transfer of the shares of the Indian entities. Respondent says that he has instruction to convey to the court that the said loss will not be carried forward. It is, therefore, in these circumstances, no prejudice can be caused to the revenue. Concededly, for invoking powers under Section 263 of the Act, twin conditions have to be satisfied i.e., the order of the AO should be erroneous and prejudicial to the interest of the revenue. The other condition is not fulfilled. Therefore, the appeal is disposed of, based on the statement made by Respondent which shall bind the respondent/assessee. 2024 (1) TMI 161 Assessment u/s 153A - Undisclosed profit/loss made from trading in pulses and menthe on MCX/NCDEX - AO invoked the provisions of Section 69A - addition in the hands of assessee, on substantive basis, and in the hands of Sharp Group of Companies Ltd., albeit on protective basis - HELD THAT:- As indicated above, insofar as the Sharp Group of Companies Ltd. and respondent/assessee were concerned, the search and survey was conducted on 07.04.2017. This aspect has been recorded by the Tribunal in the impugned order. Clearly, no incriminating material vis- -vis the respondent/assessee was found in the search conducted on 07.04.2017. Even according to Appellant AY in issue would have to be treated as a concluded assessment. Given the position that no incriminating material was found in the AY in issue, the addition made by the AO cannot be sustained. [See CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] Principal Commissioner of Income Tax vs. Abhisar Buildwell[ 2023 (4) TMI 1056 - SUPREME COURT ] We are therefore sustaining the impugned order, having regard to only this aspect of the matter.The appeal is accordingly closed in view of what we have recorded above. The conclusion arrived at by the Tribunal is correct and therefore, no other substantial question of law requires to be adjudicated by us. 2024 (1) TMI 160 Offence u/s 276C(1) - as in the bank account maintained by the petitioner, there was unusual credit of large amount through RTGS and funds were debited for investment in the stock market - CIT(A) while deleting the penalty held that, The Commissioner of Income Tax, Appeal held in the appeal No.16/10060/2019-20, the petitioner was under bonafide belief that there was no tax liability to be discharged by him on account of his residential status as NRE accounts and the TDS made by the bank. HELD THAT:- The petitioner is now aged about 77 years. Admittedly, he is a Non Resident Indian. He is maintaining an account with his banker in India. The penalty was deleted by the CIT(A) since the intention to conceal income by furnishing inaccurate particulars is not established. Therefore, the assessment officer was directed to delete the penalty imposed on the petitioner. Therefore, once the penalty on the petitioner was deleted, the prosecution initiated by the respondent cannot be sustained. Further, it is true that already the petitioner filed a petition to quash the impugned proceedings and the same was dismissed by this Court [ 2020 (11) TMI 228 - MADRAS HIGH COURT] order dated 28.10.2020. However in the case on hand, in view of the subsequent development by the appellate order passed by the Commissioner of Income Tax, this Court is inclined to entertain this petition. Considering the subsequent development, in order to meet the ends of justice, the continuation of prosecution cannot be possible and it is liable to be quashed. 2024 (1) TMI 159 Validity of reopening of assessment - period of limitation for issuance of notice u/s 148 - Scope of new regime u/s 148A - HELD THAT:- Limitations for issuance of notice under Section 148 of the IT Act, 1961, was to be governed by Section 149 as it stood till 31.03.2021. Substituted Section 149 of the IT Act, 1961 w.e.f reduced the permissible time limit for issuance of such a notice to three years. Such notice could be issued only in exceptional case within ten years from the end of the relevant year. It also provides further additional safeguards which were absent under the earlier regime pre-Finance Act, 2021. The last date for issuance of the notice under Section 148 of the IT Act, 1961 for the Assessment Year 2014-2015 to the petitioner was on 31.03.2021 under the old regime prior to 1.4.2021. The impugned notice was delivered to the petitioner on the following date at 7.12.04 a.m, the day on which old provisions stood substituted with new provisions. The hard copy of the same notice was also despatched to the petitioner on 07.04.2021 and was also received by the petitioner on the following day. As per Sub-section (2) to Section 282 Board may make rules providing for the addresses (including the address for electronic mail or electronic mail message) to which the communication referred to in sub-section (1) may be delivered or transmitted to the person therein named. As per Rule 127A(1)(a)(i) of the IT Rules, 1962, every notice or other document communicated in electronic form by an authority under the Act shall be deemed to be authenticated in case of electronic mail or electronic mail message (e-mail), if the name and office of such income tax authority is printed on the e-mail body, if the notice or other document is in the e-mail body itself and the e-mail, is issued from the designated e-mail address of such income tax authority. Similarly, every notice or other document communicated in electronic form by an authority under the Act shall be deemed to be authenticated in case of electronic mail or electronic mail message (email), if the name and office of such income tax authority is printed on the attachment to the e-mail, if the notice or other document is in the attachment and the e-mail, is issued from the designated e-mail address of such income tax authority. It is not the actual communication of the notice that is relevant. It is the issuance of the notice. - Once the notice was signed and delivered for being despatched whether through post or through e-mail it is deemed to have been issued for the purpose of Section 149. Communication and delivery of such communication can be on a date after it is issued. Section 149 as it stood prior to its substitution with effect from 01.04.2021 which has been extracted above also makes it clear no notice under Section 148 shall be issued for the relevant assessment year in terms of the sub-clause (a), (b) (c) to Section 149(1) of the IT Act, 1961 It is not the actual communication of the notice that is relevant. It is the issuance of the notice. Notice can be issued on the last date. All that is required is that it should be dispatched. Once the notice has been dispatched either electronically or through post on the last date prescribed u/s 149 the proceeding cannot be questioned as time barred. The decision of the Supreme Court in Ashish Agarwals Case [ 2022 (5) TMI 240 - SUPREME COURT] which was in the context of delay due TLA Act, 2020 will not come to the rescue of the petitioner. It therefore cannot be said that either the impugned notice that was issued to the petitioner on 31.03.2021 was time barred or that the assessment had to be completed under the amended provisions of the IT Act, 1961 with effect from 01.04.2021. A Division Bench of this Court in Malavika Enterprises Vs. Central Board of Direct Taxes [ 2022 (8) TMI 586 - MADRAS HIGH COURT] dismissed the writ petition while dealing with a case under similar circumstances. Therefore, the challenge to the impugned notice in this writ petition has to fail. The petitioner has also participated in the proceedings by filing a response on 24.04.2021 along with a Return of Income. The petitioner has also received notices and has also been served with the reasons for reopening the assessment on 27.01.2022. The petitioner has also received another notice on 13.02.2022 u/s 142(1). 2024 (1) TMI 158 Accrual of income in India - royalty receipts for sale of software - AO treated the receipts earned by the assessee through sale of software as taxable u/s 9(1)(vi) as well as under Article 12(3) of India-Singapore DTAA - as argued AO failed to appreciate that the Appellant is a mere distributor of the software and that ownership of the copyright continues to remain with the original owner of the software, throughout the term of the agreement - HELD THAT:- We find that the AO has read and interpreted the clauses of the agreement wrongly and selectively. While the AO has concluded that the agreements between the assessee and the end user/ distributor give credence to the fact that the terms of software sales by the assessee to its distributor/ end users in India are clearly distinguishable from the case of Engineering Analysis Centre of Exellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] the assessee has contended that the AO has not read/ interpreted the agreements between the assessee and the distributor/ end user in the proper context. Having gone through the various clauses of the distributor agreement, we hereby hold that the subject matter is squarely covered by the judgment of Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited (Supra). Appeal of the assessee is allowed. 2024 (1) TMI 157 TDS u/s 195 - Disallowance of commission, brokerage and discount expenses claimed by the assessee - disallowance of export commission expenses owing to non-deduction to tax at source on such remittances is in controversy - HELD THAT:- Under the provisions of s. 195 of the Act, taxes are required to be deducted at source on the payments made to non resident, only if the income payable to the non resident is chargeable to tax in India. The income is chargeable to tax in India in the hands of the non resident where income received or deemed to have been received in India or the income has accrued or arisen or deemed to have accrued or arisen in India. Assessee has appointed several non-resident entities to act as agent for services such as soliciting customers, securing orders, assisting in deliver of goods outside India etc. The commission in the instant case has thus derived its genesis from sales. The property in goods have been transferred in overseas jurisdiction. We thus find force in the plea of the assessee that in the instant case where the overseas agents were paid commission for securing order etc., and such services were utilised for the purpose of making or earning income from a source outside India, the assessee is under no obligation to apply with provisions of Section 195 of the Act for the reasons that commission to such overseas agents are not taxable under the Act. The AO has not alleged or established any thing to the contrary. The AO was thus not justified to disallow such commission expenses under the Act. We thus direct the AO to reverse and cancel the additions on this score. Disallowance u/s 14A - assessee as contends that in view of suo motu disallowance which far exceeds the exempt income, no further disallowance is permissible u/s 14A r.w. Rule 8D - HELD THAT:- In the light of the submissions made on behalf of the assessee, no further disallowance under Section 14A is called for in the light of the judgment rendered in the case of Joint Investments P. Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT] and Pr.CIT vs. Caraf Builders and Constructions P. Ltd. ( [ 2018 (12) TMI 410 - DELHI HIGH COURT] . It is well settled law that disallowance under Section 14A can be made only in respect of those investments which have yielded tax free income during the year as held in Caraf Builders (supra) and ACB India Ltd. vs. ACIT ( 2015 (4) TMI 224 - DELHI HIGH COURT ) - AO is thus directed to delete the disallowance under Section 14A made over and above the disallowance offered by the assessee. Disallowance of ESOP expenses - Before the DRP, the assessee reiterated that the expenses are neither notional nor capital in nature. The expenses incurred are revenue in character and is incurred wholly and exclusively for the purpose of business - HELD THAT:- The issue is no longer res integra and covered in favour of the assessee in Lemon Tree ( 2018 (4) TMI 1680 - DELHI HIGH COURT] . The DRP however confirmed the proposal moved by the AO essentially on the ground that judgment rendered in the case of Lemon Tree Hotel Ltd. (supra) has been admitted in the Revenue Appeal by the Hon ble Supreme Court as reported [ 2019 (4) TMI 602 - SC ORDER] . The additions based on admission of SLP by Hon ble Supreme Court is not tenable. While holding in favour of the Assessee, we also notice the assertions made on behalf of the assessee that similar claim has been allowed in the earlier years by the AO. No reason to take different stance in captioned assessment year has been brought to our notice. Thus, contrary view is not warranted. Bogus purchases - HELD THAT:- AO in the final assessment order however continued to treat the purchases of fabric from STPL as bogus and refused the claim made under Section 37 of the Act We find that the additions made by the AO is not only erroneous but is also contrary to directions of DRP and settled legal position as held in Tejua Rohit Kumar Kapadia [ 2017 (10) TMI 729 - GUJARAT HIGH COURT] ; CIT vs. JMD Computers and Communications P. Ltd. [ 2009 (1) TMI 855 - DELHI HIGH COURT] ; Pr.CIT vs. Bansal Strips P. Ltd.[ 2021 (4) TMI 231 - DELHI HIGH COURT] and plethora of other judgments. Thus we find prima facie merit in the plea of the assessee. While the AO has cast doubt on propriety of purchases of fabric made from Sungold Trade P. Ltd. on the basis of assessment order passed in the hands of such supplier, the AO has accepted the corresponding sale transactions. The exclusion of purchases from the trading results is not permissible without corresponding exclusion of the sales in such trading activity for arriving at a fair and balanced view. The action of the AO patently offends the rudimentary principle of accounting. We accordingly direct the AO to reverse the additions made and restore the position taken by the assessee. TP Adjustment on account of commission on standby letter of credit - HELD THAT:- In the light of the undisputed fact emerging from record that no cost has been borne by the assessee company and in the absence of any rebuttal to the assertion that actual bank commission charges incurred has been fully recovered from the AEs, we hardly see any justification in the Transfer Pricing Adjustment on this score. We thus are not inclined to address the alternative plea of excessive estimation. 2024 (1) TMI 156 Validity of assessment order u/s 148 with no DIN mentioned - HELD THAT:- Non-mentioning of DIN on the body of the order is not a defect curable u/s 292B and in the absence of a DIN on the body of the order, the said order is deemed to never have been issued We find that there is consistent view taken across various Benches of the Tribunal starting from the Calcutta Bench in case of Tata Medical Centre Trust [ 2023 (9) TMI 1324 - CALCUTTA HIGH COURT] , Brandix Mauritius Holding Ltd. [ 2022 (11) TMI 34 - ITAT DELHI] , Pratap Singh Yadav [ 2023 (6) TMI 270 - ITAT DELHI] , Abhimanyu Chaturvedi [ 2023 (8) TMI 378 - ITAT DELHI] , Sharda Devi Bajaj [ 2023 (11) TMI 645 - ITAT DELHI] , Teleperformance Global Services Private Limited [ 2023 (4) TMI 1235 - ITAT MUMBAI] , Bangalore Benches in case of Dilip Kothari [ 2022 (11) TMI 33 - ITAT BANGALORE] , that the communication issued by the Income tax authorities by way of notices and assessment orders which are not in compliance with the aforesaid CBDT Circular no 19/2019 are non-est in eyes of law. As we have seen and discussed above, some of these matters have reached the respective Hon ble High Courts and the findings of the Tribunal have been upheld in case of Brandix Mauritius Holding Ltd. and Tata Medical Centre Trust. On this account as well, we respectfully follow the collective wisdom as expounded in various decisions rendered by the Coordinate Benches across the Country and do not see any justifiable basis to deviate from the same. We are of the considered view that the impugned order passed u/s 147 r/w 143(3) cannot be upheld and deserve to be set-aside as the same has been passed in violation of CBDT Circular no 19/2019 r/w CBDT Circular No 27/2019 and the same is hereby treated as non-est in eyes of law. Decided in favour of assessee. 2024 (1) TMI 155 Unexplained investment u/s 69 - wire transfer from NRE account - assessee is a non-resident during the impugned year under consideration holding a UK Passport and the amounts in question were transferred to the assessee s NRE bank account by way of wire transfer from the account of the assessee s son, who is also a resident of UK - only reason on the basis of which the additions have been made are that the assessee has not been able to explain the source of funds received by the assessee in his NRE account (although it has not been disputed that the aforesaid amount has been received by way of wire transfer from another NRE account of the assessee s son). HELD THAT:- It would be useful to refer to the case of Tarun Kumar Sarkar [ 2017 (6) TMI 644 - ITAT KOLKATA] wherein the ITAT held that where foreign employer directly credited salary for services rendered outside India into NRE bank account of non-resident seafarer in India, same could not be brought to tax in India in terms of section 5 of the Act. In this case of Iqbal Ismail Virani [ 2021 (3) TMI 664 - ITAT PANAJI] ITAT held that money brought in India by non-resident for investment or for other purpose is not liable to tax under provisions of Act and question of assessment to income-tax arises only when there is no evidence to show that amount in question in fact represents remittance from abroad. In the case of Hemant Mansukhlal Pandya [ 2018 (11) TMI 949 - ITAT MUMBAI] ITAT held that where additions were made to income of assessee, who was a non-resident since 25 years, since, no material was brought on record to show that funds were diverted by assessee from India to source deposits found in foreign bank account, impugned additions were unjustified. In the case of Smt. Susila Ramasamy [ 2009 (4) TMI 554 - ITAT CHENNAI] ITAT held that in case of remittances by way of banking channel onus on assessee under Section 69 stands discharged, and, therefore, section 5(2)(b) does not apply. Thus CIT(A) has erred in facts and law in confirming the additions made by the assessee received by way of wire transfer from NRE account of his son in UK to assessee s NRE account from which investments were made into Mutual Funds. In our considered view, in the instant facts, no addition is sustainable under Section 69 of the Act. Decided in favour of assessee. 2024 (1) TMI 154 Validity of assessment framed u/s. 153C - incriminating material found during search or not? - HELD THAT:- CIT-DR could not answer or could not convert the statement that there is no seized material or he could not produce any seized material in relation to these issues for the relevant assessment year 2012-13. In the absence of any incriminating material, we feel that the issue is squarely covered by the decision in the case of Abhisar Buildwell (P) Ltd., [ 2023 (4) TMI 1056 - SUPREME COURT] and hence, we allow the additional ground raised by assessee and quash the assessment framed u/s. 153C r.w.s. 143(3) of the Act. Disallowance of expenditure towards helper allowance claimed as deduction u/s. 10(14)(i) - HELD THAT:- Assessee only made submission that the assessee has expended the money and this claim is made by assessee in the return filed u/s. 153(3A) of the Act. But on query from the Bench, the ld.counsel could not state any evidence is filed even now before us in regard to claim of helper allowance paid to them. The ld.counsel stated that only few self-made sample copies of vouchers are available. After hearing ld.counsel for the assessee and ld. CIT-DR, we are of the view that the CIT(A) has rightly confirmed the action of AO, we uphold the same. Salary - Taxable perquisites being electronic items like T.V. sets and furniture items placed in assessee s residence and claimed the same as tax free - AO added this sum towards the assets on the ground that same were used by the assessee at his residence and thus 10% of cost of such equipments/perquisites is charged to tax in the hands of the assessee as per section 17(2) - CIT(A) also confirmed the action of the AO - HELD THAT:- Before us, assessee could not adduce any evidence or could not controvert the findings of the CIT(A) or could not make any legal arguments on this. Hence, we have no agitation in confirming the order of CIT(A). This issue of assessee s appeal is dismissed. Estimation of income - deemed rental income - HELD THAT:- We noted the fact neither the AO nor the CIT(A) has carried out the exercise of as certaining the market value of rent by adopting a scientific method or by going through the municipal valuation. Since the assessee suo-motto quantified deemed rental income of this house at Rs. 1.20 lakhs and divided among himself and his wife and declared Rs. 60,000/- from this property and none of the authorities below have carried out this exercise of computing the correct market value, we feel that on estimate deemed rental income cannot be added u/s. 24 of the Act. Hence, we delete the addition and allow this issue of assessee s appeal. Unexplained expenditure u/s. 69C - foreign travel expenditure - HELD THAT:- Even now before us, the assessee could not file any details of his foreign trips and how he made the expenditure. Once details are not available before lower authorities or even now before us, we are of the view that the AO has rightly made addition of foreign travel expenditure of Rs. 1,50,000/- treating the same as unexplained expenditure u/s. 69C of the Act and CIT(A) has rightly confirmed the same in the absence of any evidence to the contrary. We confirm the addition and dismiss this ground of assessee s appeal. Addition u/s 56(2)(vii)(c) - allotment of equity shares @ Rs. 10/- - book value of shares prior to allotment worked out at Rs. 552/- per share - the shares were issued by the company to the existing shareholders who are husband and wife being close relatives - whether the the assessee case squarely falls in the exception as provided by the fourth proviso in term of the definition of relative ? - HELD THAT:- A company is a separate and distinct taxable entity being a juristic person eligible to own property and to sue, or be sued, in its name. A company is separate and distinct from its shareholders. Hence, it cannot be stated that the individual assessee who has been allotted shares is relative within the definition provided in Explanation to the proviso to section 56(2)(vii) of the Act. Hon ble Madras High Court in the case of K.S. Mothilal, K.S. Damodaran others, [ 2001 (10) TMI 1093 - HIGH COURT OF MADRAS] held that it is the well settled legal position that a shareholder has no interest in the property of the company, which is a juristic person and which is entirely distinct from the shareholders. According to us, the the individual, the assessee in the present case and the allotter company does not fall under definition of relative. The definition to relative as defined in the Explanation, as reproduced above, is categorical that the definition of relatives defines only blood relations or who are lineal ascendant or descendant of the individual or of the spouse of the individual and so on. Nowhere the company is defined under the definition of relative as provided in the Act. - We have to ascribe the natural and ordinary meaning to the words used by the legislature and ought not, under any circumstances, to substitute our own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. This view has been held by the Hon ble Supreme Court in the case of Orissa State Warehousing Corporation [ 1999 (4) TMI 3 - SUPREME COURT] The assessee s case squarely falls under the provision of section 56(2)(vii)(c) of the Act and according to our view, assessee s case does not fall under any exceptions as provided in this explanation to proviso to section 56(1)(vii)(c) of the Act. Hence in the present case before us, the shareholder was allotted shares in private placement in number 23,04,114 being equity shares at the face value of Rs. 10 per share whereas the fair market value of each share was at Rs. 552. Therefore in our view, the AO has rightly assessed the differential value of shares received by assessee of Rs. 1,24,88,29,788/- to tax as income from other sources as per the provisions of section 56(2)(vii)(c) of the Act and upheld by CIT(A). - Additions confirmed. 2024 (1) TMI 153 Disallowance on cost of production and other expenses with respect to the production of TV serial - HELD THAT:- The assessee in its computation of total income already disallowed such sum. In the additional evidences filed before the CIT- A, the assessee itself submitted that even if the addition/disallowance is required to be confirmed, the same should be restricted to some lower percentage. CIT-A has granted reduction of the already disallowed sum out of the total expenditure by the assessee and restricted the disallowance to the extent of 2% of such sum. This is because of the reason that during the assessment proceedings, in the remand proceedings as well as before us, no evidences were placed. Accordingly, no merit in ground No.1 of the appeal. Accordingly, the disallowance made by the learned CIT A is confirmed. Disallowance of interest expenditure/finance cost - After careful consideration and hearing the parties, we find that a sum of Rs. 3,24,000/- disallowance confirmed by the learned CIT A is also pertaining to the loan, which is accepted by the lower authorities as genuine. Therefore, the disallowance to the extent of Rs. 3,24,000/- deserves to be deleted. With respect to the balance interest of Rs. 64,661/, on which assessee itself has disallowed the sum for non-deduction of tax at source, therefore, the said disallowance if retained would result into double disallowance. Therefore, the same is also deleted. With respect to the brokerage expenses there is no adverse view of the learned AO. Accordingly, we direct the learned Assessing Officer to delete the disallowance of the same. Accordingly, the total disallowance retained of Rs. 6,15,600/-, the assessee deserves a further relief of Rs. 4,51,161/-. Accordingly, the disallowance confirmed by the learned CIT -A to that extent is deleted. In the result, the ground No.2 of the appeal is partly allowed. Unexplained addition of assets - AO noted that the assessee has claimed that depreciation on account of addition on plant and machinery and further sum towards furniture and fixture. This was the addition made to the block of assets during the year. Naturally, the assessee claimed depreciation thereon during the year against the income offered - HELD THAT:- Assessee has claimed depreciation as a deduction/allowance and not the amount of fixed assets purchased. Therefore, what could be disallowed in the hands of the assessee is only the depreciation claimed by the assessee. It is not the claim of the Revenue that the amount of purchase of the fixed assets is not recorded in the books of account of the assessee. Therefore, addition to that extent in spite of the fact that assessee failed to produce the bills, etc., what could have been disallowed is only the depreciation claimed by the assessee. Therefore, the lower authorities are not justified in making the disallowance/addition of the cost of fixed assets purchased by the assessee. We direct AO to restrict the disallowance to the extent of depreciation claimed during the year on these two assets. Appeal of the assessee is partly allowed. 2024 (1) TMI 152 Working out profit as per the percentage of completion method OR project completion method - disallowing part of the expenses claimed by it as deduction - disallowance in this case is admission by one of the director - CIT(A) deleting the addition because the applied percentage completion method in assessment order is correct as the Project Completion Method was not in existence before 01.04.2003. HELD THAT:- The aspect that disallowance in this case is admission by one of the director is ignored by the Ld. CIT(A). He has accepted the explanation that the admission was wrong. The Ld. CIT(A) has accepted the detailed submissions in this regard and observed that he has examined these submissions and the books of the assessee. We find that these aspects considered by the Ld. CIT(A) were never before the Assessing Officer. We find that this is contravention of Rule 46A. Hence, in the interest of the justice, we remit this issue to the file of the Assessing Officer to consider the issue afresh considering the submission made before the Ld. CIT(A). Appeal filed by the Revenue stands allowed for statistical purposes. 2024 (1) TMI 151 TP Adjustment - corporate guarantee fees to its AE and towards royalty income - HELD THAT:- This Tribunal in the assessee s own case for AY 2012-13 [ 2018 (5) TMI 1816 - ITAT KOLKATA ] has restricted the addition of corporate guarantee fee @ 0.25% as against 3% made by the AO/TPO. Under similar set of facts, we find that in the instant year, assessee had already offered income of Corporate guarantee fee @ 0.30% which is higher than 0.25% as held by the Tribunal for Assessment Year 2012-13 and, therefore, taking consistent view, we fail to find any inconsistency in the finding of the ld. CIT(A), who has deleted the impugned addition observing that there being no change in the factual matrix during the year and the guarantee fee have been charged at a rate higher than 0.25% which was held to be ALP of this transaction by this Tribunal in the assessee s own case for AY 2012-13. Thus, no interference is called for in the finding of the CIT(A) and issue is decided against the revenue. Adjustment for royalty income - TPO/AO had adopted an analogy that the brand value is well established from many years and is not a risky intangible and, therefore, WACC cannot be applied - We fail to find any merit in such observation of the ld. TPO/AO because maintaining of a brand is a consistent activity and to maintain a brand value is always a risky task and a small mistake at the end of the assessee or its AE can damage the brand value drastically. Therefore, since it is a risky intangible and there is a cut throat competition in such field, WACC method is a suitable method for the purpose of computing ALP of royalty income under the given facts and circumstances of the case. Since the assessee has offered royalty income higher than the ALP computed by applying WACC of 11.30% of the brand value, no further upward adjustment is called for. It is also noteworthy that assessee has been consistently showing royalty income since Assessment Year 2008-09 to 2013-14 and the same has never been disputed by the revenue authorities and even in the subsequent years also the same has not been disputed. Therefore, no interference is called for in the finding of the ld. CIT(A) and the grounds raised by the revenue is dismissed. Disallowance u/s 14A r.w.r.8D - AO made adjustment @ 0.5% of the average investment after giving benefit of suo moto disallowance by the assessee - HELD THAT:- AO in terms of Rule 8D(2)(iii) computed the amount @ 0.5% of the average investment irrespective of any bifurcation whether the investments have given rise to exempt income or not. We further notice that the ld. CIT(A), applying the ratio laid down in the case of M/s. Ashika Global Securities Ltd [ 2018 (7) TMI 1425 - CALCUTTA HIGH COURT] has directed the AO to recomputed the amount by applying the rate of 0.5% on only those average investment which actually yielded dividend income. We fail to find any infirmity in this finding of the ld. CIT(A) directing to recomputed the disallowance. Nature of receipt - VAT subsidy - revenue receipt or capital receipt - HELD THAT:- After perusal of the Industrial policies of the Governments of Bihar and Odisha, we find that firstly introduction of amendment in Section 2(24)(xviii) of the Act is prospective in nature and applicable from Assessment Year 2016-17 and onward. Secondly, so far as the nature of the subsidy is concerned, the alleged incentive was assured under the Industrial policy for the purpose of encouraging the assessee to set up new industries in the State. We find that the objective contained in the Industrial policy was not to reduce operation costs of the company or facilitate working of existing undertaking. Therefore, subsidy received in form of VAT reimbursement from the State Governments was towards industrialisation in the State and to generate employment and, therefore, the entrepreneurs with the attraction of such subsidy (VAT Subsidy) plan to establish and commence business operations in such areas and for establishing such business has to make capital expenditure in the form of land, building, plant and machinery and such investments are partly reimbursed by the subsidies granted by the State Governments. Therefore, the alleged subsidy has been rightly held to be capital receipt by the ld. CIT(A) which thus calls for no interference. Ground No. 3 of the revenue is dismissed. Applicability of rate of tax on the assets sold by the assessee during the year on the depreciable assets - whether the depreciable asset used for business and part of block of asset if held for more than three years and sold then whether such gain is liable to be taxed as per the tax rates applicable for long term capital gain from sale of long term capital asset? - HELD THAT:- We notice that Section 50 of the Act is a special provision for computation of capital gain in case of sale of depreciable assets and it provides that notwithstanding anything contained in clause 2(24)(xviii) of the Act, where the capital gain is from an asset forming part of the block of asset in respect of which depreciation has been allowed then subject to certain conditions, the capital gain arising from such transfer is deemed to be a short term capital gain. Section 112 of the Act which provides for concessional rate of tax on long term capital gain is only applicable on transfer of long term capital asset. The long term capital asset is defined under Section 2(29A) of the Act as capital asset which is not a short-term capital asset. Since special provision is provided under the Act for computation of capital gain on depreciable assets u/s 50 of the Act and it starts with the line Notwithstanding anything contained in clause (42A) of section 2, we are of the considered view that the depreciable asset which forms part of the block of asset even if held for more than three years cannot be brought under the category of long term capital asset for the purpose of concessional rate of tax. The alleged gain during the year from sale of depreciable fixed asset is a short term capital gain and is liable for levy of tax at normal tax rates and not under special rate provided u/s 112 of the Act. Thus, Ground No. 4 of the revenue is allowed. Taxability of dividend distribution of non-residents as per rate provided in the agreement for avoidance of double taxation between India U.K. - HELD THAT:- As relying on Total Oil India Pvt. Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB) ] we are of the view that the dividend distributed by the assessee during the year is liable to be taxed as per the provision of Section 115O of the Act, irrespective of the fact whether such dividend is distributed to resident or non- residents. Thus, Ground No. 2 is dismissed. Deduction for amortization of payment - Both the lower authorities have denied the said claim - HELD THAT:- We, however, find that the Hon ble Jurisdictional High Court in the case of Balmer Lawrie Co. Ltd [ 2019 (8) TMI 569 - CALCUTTA HIGH COURT ] has held that upfront lease premium on lease-hold land is nothing but advance payment of rent and the same is not a capital expenditure and as such the deduction should be allowed u/s 37(1) of the Act. Considering the said judgment which is squarely applicable on the fact of this case, we are inclined to hold in favour of the assessee and direct the Assessing Officer to allow the claim of deduction for lease premium for Assessment Year 2014-15. Accordingly Ground No. 3 of the cross- objection is allowed. 2024 (1) TMI 150 Validity of TP order u/s 92CA(3) beyond the time limit prescribed u/s 92CA (3A) r.w.s. 153 - counting of 60 days for passing TPO order - HELD THAT:- 60 days period as per the provisions of section 153(1) read with section 92C(3) expires on 30/03/2021 and therefore, the transfer pricing order should have been passed one day prior i.e.by 29/01/2021. In assessee's case it is further noticed that the TPO has actually passed the order on 30/01/2021. Therefore, relying on the decision in the case of Pfizer Healthcare India Pvt Ltd [ 2022 (4) TMI 808 - MADRAS HIGH COURT] we are of the considered view that the impugned order passed by the TPO is barred by limitation and, therefore, liable to be quashed. Assessee appeal allowed. 2024 (1) TMI 149 Exemption u/s 11 - taxed corpus donations as income of assessee s Trust - scope of amended definition of charitable purpose and proviso provided therein - ' charitable purpose as defined u/s. 2(15) of the Act, i.e. any other objects of General Public Utility ( GPU ) - application of principles of mutuality for total tax exemption to receipts of assessee s Trust on the ground that the society is exclusively working for the benefit of members and out of contribution received from the members - HELD THAT:- As per proviso to Sec. 2(15) of the Act, the advancement of any other object of GPU shall not be a charitable purpose , if it involves carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a fees or cess and further, the aggregate receipt from such activity during the previous year, exceeds 20% of the total receipt of the Trust or Institution. In the present case, undoubtedly, the objects and activities of the Trust are in the nature of trade, commerce or business and hit by proviso to Sec. 2(15) of the Act. Therefore, the assessee entitlement for exemption needs to be examined in light of gross-receipts and receipts from the activity of trade, commerce or business. The gross income of the assessee from conducting conference is more than 20% of the gross-receipts of the assessee for the impugned assessment year. We have gone through the computation filed by the assessee s Society and we find that the Ld.Counsel for the assessee has considered net income after expenses from conducting conference and then, compared with gross- receipts of the assessee to work out the limit prescribed under provisions of Sec. 2(15) - working furnished by the Ld.Counsel for the assessee is not in accordance with law, because, as per provisions of Sec. 2(15) of the Act, if gross receipts from the GPU activity, i.e. from trade, commerce or business exceeds 20% of gross receipts, then, the assessee is not entitled for exemption u/s. 11 of the Act. If you consider the gross-receipts from conducting conference, then undisputedly, said receipts exceeds 20% of the gross receipts of assessee s Trust for the impugned assessment year. But, fact needs to be verified with reference to financial statement of the assessee for relevant AY. As per objects of the assessee s Trust/Society and its activities, it is undisputed fact that the assessee falls under the last limb of the definition charitable purpose i.e. any other object of GPU. Therefore, the income of the assessee needs to be computed in light of amended provisions of Sec. 2(15) of the Act. and proviso provided therein in light of the latest decision in the case of ACIT v. Ahmedabad Urban Development Authority ( 2022 (10) TMI 948 - SUPREME COURT ). Thus, we set aside the order of the Ld.CIT(A) and restore the issue back to the file of the AO and direct the AO to reconsider the issue de novo in light of our discussion given hereinabove and also by following the decision mentioned supra. AO is also directed to look into the arguments of the assessee for applicability of principles of mutuality in light of any evidence that may be filed by the assessee. Further, all other issues including computation of taxable income, if any, and taxability of corpus donations receipts towards Magazine Fund and also depreciation issue needs to be reconsidered afresh after considering the assessee s case in light of amended provisions of Sec. 2(15) of the Act, and also in light of decision of the Hon ble Supreme Court in the case of ACIT v. Ahmedabad Urban Development Authority (supra). 2024 (1) TMI 148 Addition on account of share application money u/s. 68 - addition made as assessee did not furnish bank statement of the share applicant - CIT(A) deleted addition - HELD THAT:- We have gone through the assessment order passed in the case of share applicant, perusal of the same reveals that AO has accepted the submissions and claims made by him in his return. We also take note of the fact that the share applicant has made investments, both in the preceding as well as succeeding years, details of which has already been tabulated above. Thus, it is not a sole transaction with the assessee in this year only. We do find force in the submission made by the Ld. Counsel and have no reason to interfere with the findings given by the Ld. CIT(A) in deleting the addition - While holding so, we draw force from the decision of Satkar Infrastructure Pvt. Ltd. [ 2022 (10) TMI 460 - DELHI HIGH COURT] Accordingly, ground no. 1, taken by the revenue in this respect is dismissed. Disallowance of expenditure owing to suspension of business operations by the assessee since year 2009 - CIT(A) deleted addition as on rule of consistency - HELD THAT:- As it is an undisputed fact that airline operations of the assessee are in suspended mode since the year 2009. However, there is no closure of the assessee by way of its liquidation since it is a corporate set up under the Companies Act. We find force in the submissions made by the Ld. Counsel that assessee being a company set up has to incur expenses irrespective of active business. We find that the sole basis of disallowance of expenses by the Ld. AO is in the backdrop that assessee did not carry out any business activity during the year. To our mind, not carrying on any business activities during a particular period cannot be equated with closure of business since it will lead to a narrow view of the scope of cessation of business. There is nothing on record to show that assessee has completely abandoned or closed the business forever by disposing of its assets and going into liquidation. On the contrary, from the perusal of its audited financial statement, it is revealed that assessee had been meeting various statutory and regulatory expenses. We also take note of the fact that such expenses have been allowed both in the preceding and succeeding assessment years, details of which is already tabulated above. From the perusal of the finding of CIT(A), we note that relief has been granted by following the principle of consistency. A specific query was posed to the Ld. Counsel whether rule of consistency should be followed as such to which he submitted that department should be consistent to themselves . No reason to interfere with the well reasoned findings given by the Ld. CIT(A) Appeal of revenue dismissed. Customs 2024 (1) TMI 147 Classification of imported goods - Data Projector Model X 122H DLP XGA Projector 270 3D with carrying case - to be classified under Customs Tariff Heading (CTH) 85286100 as projectors of a kind solely or principally used in an automatic data processing system of heading 8471 or not - exemption from basic customs duty in terms of Notification No. 24/2005-Cus dated 1.3.2005 - HELD THAT:- While the common parlance test or the commercial usage test is generally preferable especially while classifying consumer goods but when the goods have to be tested for their sole or principal use, technological capabilities cannot be completely discarded. As per the Appellant the goods in the impugned case have a native resolution of 1024 x 768, native aspect ratio of 4:3 and contrast ratio 3000:1 and a pixel capacity of 1024 x 768 or less, which are normally not capable of efficient reception and projection of television or video signals. This along with other technological features plays a persuasive role in determining its intended use solely and principally with ADP machines. The issue of classification of data projectors of various models has been examined by a Coordinate Bench of this Tribunal at Chennai vide Final Order Nos. 1643-1655/2009 dated 09.21.2009 in the Appellants own case i.e M/s Acer India Pvt Ltd Vs Commissioner of Customs, Chennai [ 2009 (11) TMI 931 - CESTAT AHMEDABAD] where it was held that Looking at the features of the impugned data projectors imported by the appellants, we have not doubt in our mind that the same merit classification under SH 852861 and automatically become entitled to exemption under Notification No. 24/2005 as the same exempts all goods under the said sub-heading. Thus, the video projectors are classifiable under Heading 85286100, they thereby become entitled to exemption under Notification No. 24/2005-Cus. dated 1.3.2005 The impugned order is set aside - appeal allowed. 2024 (1) TMI 146 Extended period of limitation - 100% EOU - Demand of differential customs duty on 22 looms / Capital goods that were imported without payment of duty - Suppression of facts or not - HELD THAT:- The appellant had sought permission from the department before clearing the goods. He had reported the matter in their ER-II returns. The issue also involves the interpretation of law with even a difference of opinion among the Tribunal Single Member Bench and its Division Bench on certain aspects of payment of duty. The appellant has not acted with dishonest or fraudulent intent and suppression of facts is not involved. This being so, question of invoking the extended time limit or imposing penalty does not arise. The merits of the issue not gone into, due to a lack of challenge on the said grounds, further the appeal on time bar is answered in favour of the appellant. Since the Show Cause Notice has been issued beyond the normal time-limit, the impugned order is set aside - appeal allowed. 2024 (1) TMI 145 Validity of order of forfeiture of security deposit and imposition of penalty - charge of mis-classification by the importer - HELD THAT:- In the present case the appellant was imposed with the penalty of Rs. 50,000/- and also their deposit was forfeited only on the ground that the appellant was involved in connection with the offence committed by M/s. Ridava Petrochemicals Pvt. Ltd. The case of RIDAVA PETROCHEMICALS PVT LTD VERSUS C.C. -KANDLA [ 2023 (3) TMI 842 - CESTAT AHMEDABAD] has been decided by this Tribunal in the favour of the importer. From the above decision, it can be seen that the entire foundation of the present is the case of alleged mis-classification by M/s. Ridava Petrochemicals Pvt. Ltd in respect of the imported goods which was handled by present Custom Broker - Since, the case of M/s. Ridava Petrochemicals Pvt. Ltd has been quashed by allowing the appeal, the entire foundation itself got demolished. Therefore, no consequential punishment can be given to the present appellant. The impugned order set aside - appeal allowed. 2024 (1) TMI 144 Classification of imported goods - quicklime used by the appellant in their manufacture of paper - whether classifiable under the CTH 2522 1000 as declared by the appellant or under CTH 2825 9090 as claimed by the Revenue? - HELD THAT:- There is no dispute on the fact that the CaO content in the quicklime is less than 98% i.e. between the 92-97% and the process carried out by the supplier is only calcination, these facts are not under dispute. On this identical facts, the very same issue has been considered by this Tribunal in the case of M/S. JINDAL STAINLESS (HISAR) LTD. VERSUS COMMISSIONER OF CUSTOMS NEW DELHI [ 2020 (8) TMI 743 - CESTAT NEW DELHI] , wherein it was held that the product is rightly classified under chapter 25. From the above decision of this Tribunal, it can be seen that when only calcination process is carried out and CaO content is less than 98%, than the quicklime is correctly classification under CTH 2522 1000. Since, the identical facts involved in the present case, the ratio of the above decision is directly applicable in this case. The impugned order set aside - appeal allowed. 2024 (1) TMI 143 Confiscation - penalty - import of Watermelon Seeds falling under Customs Tariff Heading 12077090 - restricted vide Notification No. 03/2015-20 dated 26.04.2021 or not - the case was made by the department on the basis that the restriction imposed on goods namely Watermelon Seeds at the time of filing of Bill of Entry and the clearances of the goods thereunder. HELD THAT:- If the goods are imported which is freely importable under foreign trade policy and the same is subsequently subject to any restriction or regulation , the import shall be permitted notwithstanding such restriction subject to condition that the shipment of import is made within the original validity period of an irrevocable commercial letter of credit established before the date of imposition of such restriction - the documents were admittedly submitted before restriction imposed in import of watermelon seeds brought vide DGFT Notification No. 3/2015-20dated 26.04.2021. From the documents, it is undisputed that the appellant had complied with the stipulation of Transitional Arrangement as per Foreign Trade Policy as the appellant had paid entire amount of the consignment in question much prior to watermelon seeds being placed under restricted category from free category - the appellant are eligible for consequential benefit of import qua FTP provisions. The lower authorities have failed to appreciate the aforesaid factual and legal position whereby the impugned order upholding confiscation of goods and penalties on the appellant is not sustainable and liable to be set aside. The impugned order set aside - appeal allowed. Insolvency & Bankruptcy 2024 (1) TMI 142 Approval of the Resolution Plan - power of the Adjudicating Authority to remit the Resolution Plan for consideration before the CoC - HELD THAT:- In EBIX SINGAPORE PRIVATE LIMITED VERSUS COMMITTEE OF CREDITORS OF EDUCOMP SOLUTIONS LIMITED ANR., KUNDAN CARE PRODUCTS LIMITED VERSUS MR AMIT GUPTA AND ORS. AND SEROCO LIGHTING INDUSTRIES PRIVATE LIMITED VERSUS RAVI KAPOOR RP FOR ARYA FILAMENTS PRIVATE LIMTIED ORS. [ 2021 (9) TMI 672 - SUPREME COURT] , the Hon ble Supreme Court has considered a case where Successful Resolution Applicant sought to withdraw the Resolution Plan and third withdrawal application before the Adjudicating Authority for permitting withdrawal of the Resolution Plan was allowed which order was set aside by this Appellate Tribunal against which the Civil Appeal was filed before the Hon ble Supreme Court. The law is thus well settled that the Resolution Plan approved by the CoC is binding on the CoC and it cannot have reviewed its own decision or pray for review of its opinion. Adjudicating Authority in the impugned order has taken the view that the Resolution Plan can be sent for re-consideration to the CoC - Present is not a case where CoC is claiming in its application that the Resolution Plan which was approved by the CoC is in violation of any provisions of Section 30(2). There is a delay in implementation of the Resolution Plan of Allied Strips Limited and Tirupati Infraprojects Private Limited by the Appellant was very much raised before the CoC and were considered by the CoC before approving the Resolution Plan of the Appellant and the CoC is well aware that there is delay in implementation of the plans of Allied Strips Limited and Tirupati Infraprojects Private Limited which was noticed in its minutes as has been brought on the record - From the facts of the present case, out of two entities for which allegation was made of non-implementation. Admittedly, for one i.e. Allied Strips Limited has been implemented and for other plan has not been implemented but that itself shall not impart any ineligibility. There were no grounds on which the plan could have been sent back for reconsideration before the CoC. In result, both the Appeals are allowed. Service Tax 2024 (1) TMI 141 Levy of service tax - advertising services - It was held by High Court that It becomes pertinent to note that the engagement of the sub-contractors was solely for the purposes of discharge of its contractual obligations. The sub-contractors had not undertaken the work at the behest of the principal party which had awarded the contract to the petitioner. HELD THAT:- There are no reason to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed. 2024 (1) TMI 140 Distinct persons or not - partners and partnerships firm - Whether a partner can be considered as service provider for the service rendered to its partnership firm as the partners of partnership firm are individually called as a partners? - HELD THAT:- It is found that the issue involved in the present case and the issue in the judgment of PRINCIPAL COMMISSIONER, CENTRAL TAX AND SERVICE TAX VERSUS CADILA HEALTHCARE LIMITED [ 2022 (5) TMI 800 - GUJARAT HIGH COURT] prima facie appears to be identical. However, the submission of the learned AR agreed upon that before applying the ratio of any judgment, it needs to be seen whether the facts of both the cases are identical or otherwise. Since the Adjudicating Authorities have not seen judgment of Cadila Healthcare, in the interest of justice, the matter needs to go back for reconsideration in the light of the judgments in the case of Cadila Healthcare. Appeals are allowed by way of remand to the adjudicating authority for passing a fresh order. 2024 (1) TMI 139 Refund claim - rejection on the ground of unjust enrichment - incidence of service was passed on or not - HELD THAT:- Even though the terms of inclusive of tax in the value is mentioned in the contract but the appellant have paid the Service Tax over and above the bill value, therefore, it cannot be said that the service tax paid by the appellant is included in the gross value of the service which was recovered by the appellant from the service recipient. This is further reinforced from the chartered accountant certificate which certifies that the service tax is nil rated or otherwise, the amount receivable from the service recipient is same. It was also certified that no separate recovery on account of service tax was made from the service recipient. The payment of service tax was borne by the appellant themselves and the same was not collected from the service receiver. It is also fact on record that as per books of account for the year 2013-2014, the amount of refund shown as service tax receivable under asset side of trial balance sheet, this also proves that the amount of service tax has not been passed on to any other person - the amount of refund has not been passed on to any other person. Hence, the same is not hit by unjust enrichment. The order of the Adjudicating Authority is correct and legal and the same is upheld. The order of the Commissioner (Appeals) is not sustainable, hence, the same is set aside - Appeal allowed. 2024 (1) TMI 138 Levy of Service Tax - Construction services - Commercial or Industrial Construction and Construction of residential complex - Suppression of facts or not - invocation of extended period of limitation - HELD THAT:- There is no dispute that the appellant had provided the construction service in respect of construction of building belonging to Income Tax Department and Construction of staff quarters for Central Administrative Tribunal. Undisputedly, the buildings are government building and not commercial building, therefore, the service neither fall under Commercial or Industrial Construction Service nor under construction of residential complex. The appellant have provided the service in the capacity of sub- contractor. In catena of case laws, this Tribunal has taken a view that since the issue whether sub- contractor is liable to pay the service tax or otherwise was under litigation and it was finally decided by the larger bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] , in view of that larger bench judgment there cannot be any malafide intention or suppression of fact with intent to evade the service tax on the part of the appellant. Therefore, the demand is not sustainable on the ground of limitation also. The impugned order is set aside. Appeal is allowed. 2024 (1) TMI 137 Classification of service - appellant had leased equipment called as Gas Genset to M/s. Gujarat Agrochem Ltd. during the material period along with legal right of possession and effective control - classifiable as an activity of supply of tangible goods for use or the leasing activity? - scope of agreement between the lessor and lessee - HELD THAT:- From the relevant clauses of the agreement, it is clear that during the lease period the right to possession and effective control is completely with the lessee and not with the lessor (appellant). It is also not disputed that the said transaction is the deemed sale in terms of Article 366 29 (A) of Constitution of India which is liable to State VAT - In the present case also the appellant considering the transaction as deemed sale discharged the VAT liability to the state Government. Therefore, the transaction which is a domain of VAT department, the same cannot be liable to service tax. In the case of GS. LAMBA AND SONS VERSUS STATE OF ANDHRA PRADESH [ 2011 (1) TMI 1196 - ANDHRA PRADESH HIGH COURT] Hon ble Andhra Pradesh has held that The existence of goods is identified and the transit mixers operate and are used for the business of Grasim. Therefore, conclusively it leads to the only conclusion that the petitioners had transferred the right to use goods to Grasim. In the case of GIMMCO Ltd. [ 2016 (12) TMI 394 - CESTAT MUMBAI] , Mumbai Tribunal has held that the transaction involved herein is transfer of right to use which is a deemed sale and not supply of tangible goods for use service. Under the identical set of facts it was viewed that the right of possession and effective control has been transferred particularly considering the fact that the lessor have paid the VAT considering the transaction as deemed sale in terms of Article 366 29 (A) of the Constitution of India. Since the same facts and issue involved in the present case, the ratio of above judgments are directly applicable in the present case also. The demand of service tax under tangible goods for use service in the present case is not sustainable - the impugned order is set aside - Appeal allowed. Central Excise 2024 (1) TMI 136 Levy of Central Excise Duty - crane cleared within the factory - amounts to clearance or not - time limitation - suppression of facts or not - HELD THAT:- In general the goods manufactured and used within the factory is prima facie eligible for exemption Notification No. 67/95-CE. However, the said notification carries certain conditions and said conditions. However, in case of non-compliance of the condition the exemption shall not apply. On the scrutiny of the impugned order we find that though the adjudicating authority has given general remark about the captive consumption but the Notification No. 67/95-CE was neither explicitly mentioned nor it s conditions were verified. Time Limitation - suppression of facts or not - HELD THAT:- As regards the valuation of the goods it is found that adjudicating authority has not followed the cost accounting standard as per the CAS-4 to arrive at the value of the goods for discharging Excise Duty in terms of Rule 8 for captive consumption. Therefore this aspect needs to be reconsidered. The entire matter on all the issues need to be reconsidered by the adjudicating authority afresh. The matter remanded to Adjudicating Authority for passing a fresh order - appeal allowed by way of remand. 2024 (1) TMI 135 CENVAT Credit - MS angles, channels, beams etc. - denial of part credit for the reason that the these goods are used in the manufacture of supporting structures of capital goods, and that as per Explanation to Rule 2(k) is ineligible. HELD THAT:- The said Explanation was introduced by Notification No.16/2009-CE (NT) dated 07.07.2009 only. The decision rendered by the Larger Bench of the Tribunal in Vandana Global Ltd. [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] has been set aside by the Hon ble High Court of Chhattisgarh as reported in [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] . Further, the Hon ble Jurisdictional High Court in the case of Thiru Arooran Sugars [ 2017 (7) TMI 524 - MADRAS HIGH COURT] has held that the Explanation does not have a retrospective application and also that user test has to be applied. As per the Annexure to the show cause notice, three invoices No.274/17.09.2009, 3009/02.02.2010 and 3100/02.02.2010, fall beyond the period of 07.07.2009 - the credit on these invoices are disallowed - Appellant is eligible for the credit in respect of all invoices which are issued prior to 07.07.2009. Appeal allowed in part. 2024 (1) TMI 134 Process amounting to manufacture or not - repacking of the spares from the bulk to small packets and labelling - demand of Excise Duty alongwith interest and penalties - invocation of Extended Period of Limitation. The whole case of the department is founded on the allegation that the concrete mixers and concrete pumps cannot be sold as such and that these have to be fitted on chassis which makes these products SPVs and therefore the spares sold by appellant are nothing but spares of SPVs. HELD THAT:- There is no commonality, except for the logo. The label on each packet mentions different numbers of the spares. On perusal of Invoice no.85157799 dated 31.12.2023 issued to M/s. Axon Constructions (P) Ltd, there are 4 items of spares supplied. These are valve cartridge press relief valve 2 nos., O Ring 14 x 2 5 nos., Ring D14 x 2.5 x 2.3 5 numbers, spring cover 2 nos. These are packed and consigned to the customer. The order is not placed unit wise or packet wise . The learned counsel for appellant has stressed on the word unit container used in Section 2 f (iii). It is argued by the counsel that unit container means container with predetermined quantity. The polythene bags used by appellant to repack are not designed to carry predetermined quantity. After goods are sold, it is packed in polythene bags and a label is fixed for identification. In the case of Lakme Lever Limited Vs CCE, Mumbai [ 2000 (10) TMI 96 - CEGAT, MUMBAI] it was held that if the product is marketable any amount of treatment to enhance its marketability would not amount to manufacture as per the definition - The Tribunal in the case of Lupin Laboratories Ltd. Vs. CC, and CE, Aurangabad [ 2001 (10) TMI 136 - CEGAT, MUMBAI] has taken similar view wherein the Tribunal held that since each product was marketable on its own, putting them all together did not confer them any attribute of marketability that the goods did not possess earlier. Thus, given by the facts of this case, the activity undertaken by the appellant of repacking from bulk into small packets in polythene bags and putting labels does not amount to manufacture as under Section 2 f (iii) of Central Excise Act, 1944 - the department has failed to establish the allegations raised in the Show Cause Notice that the appellant has to discharge excise duty on the spares sold by the appellant. The issue on merits is answered in favour of appellant and against the department. Time Limitation - HELD THAT:- The entire issue is interpretational in nature. Further the appellant has filed ER 1 returns clearly stating the description of goods manufactured by them. There is no positive act of suppression established against the appellant indicating intent to evade payment of excise duty - thus, there are no grounds for invocation of extended period - the issue on limitation is answered in favour of the appellant. The demand of duty interest and penalties imposed cannot sustain - the impugned orders are set aside - appeal allowed. 2024 (1) TMI 133 Invocation of extended period of limitation - penalty - includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - HELD THAT:- The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] , has held that the sales tax concession retained by the assesses is required to be added in the assessable value for the purpose of levy of Central Excise duty. By relying on the above decision of the Hon ble Supreme Court, the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty. The Appellant has agreed for the payment of duty for the normal period of limitation.. The Appellant has not suppressed any information from the department - As there is no evidence of suppression of facts available on record, we hold that the demand confirmed by invoking the extended period is liable to be set aside. Penalty - HELD THAT:- The Appellant submits that they have not suppressed any information from the department. There were decisions of the Tribunals that the sales tax concession retained by the assesses is not required to be added in the assessable value for the purpose of levy of Central Excise duty. Thus, the appellant cannot be faulted for not including the same in the assessable value. In the impugned order, the adjudicating authority while agreeing that extended period not invocable in this case, imposed penalty equal to the duty confirmed under Section 11AC of the CEA, 1944 - the penalty imposed under Section 11AC not tenable. The Appellant is liable to pay duty for the normal period of limitation. The demand confirmed by invoking the extended period of limitation is set aside - penalty imposed under Section 11AC of the CEA, 1944 is set aside - appeal is disposed by way of remand for calculating the duty, payable for the normal period of limitation, with consequential relief, if any, as per law. Appeal allowed in part and part matter on remand. CST, VAT & Sales Tax 2024 (1) TMI 132 Grant of Regular Bail - commiting fraud with the intention of not paying the tax with the support of proper planning by showing the false inter state sales for on bogus documents and causing the loss to tax department by claiming refund - HELD THAT:- The object of the bail is to secure the presence of the accused at the trial only. It is also observed that the object of bail is neither punitive nor preventive and deprivation of liberty must be considered a punishment, unless it is required to ensure that an accused person will stand his trial when called upon. Hon ble the Supreme Court has observed in catena of judgments that when a person is punished by denial of bail in respect of any matter upon which he has not been convicted, it would be contrary to the concept of personal liberty enshrined in the Constitution except in cases where there is reason to believe that he may influence the witnesses. In GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [ 1980 (4) TMI 295 - SUPREME COURT ], Hon ble the Supreme Court has observed as under:- Judges have to decide cases as they come before them, mindful of the need to keep passions and prejudices out of their decisions. The Court has also observed that in which case bail should be granted and in which case it should be refused is a matter of discretion. Admittedly, the petitioner is a senior citizen and is in custody since 22.08.2023. The challan has already been presented against the petitioner and his co-accused. The present petition is allowed and the petitioner is ordered to be released on bail subject to his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate, concerned. 2024 (1) TMI 131 Levy of penalty u/s 27 (3) of the Tamil Nadu Value Added Tax Act, 2006 - assessment order was already passed before, without imposing penalty - HELD THAT:- A mere reading of the judgment in The Deputy Commissioner (C.T.), Coimbatore Vs. V.S.R.Ramaswami Chettiar and Bros [ 1975 (8) TMI 114 - MADRAS HIGH COURT] would make it clear that no penalty proceedings can be initiated independently in terms of provisions of Section 16 (2) of the Tamil Nadu General Sales Tax Act, 1959 - In the present case on hand, the penalty proceedings were initiated under Section 27 (3) of the TNVAT Act and the provisions of Section 27 (3) of the TNVAT Act and Section 16(2) of the TNGST Act are similar. A reading of the provisions of Section 27 (3) of the TNVAT Act and Section 16(2) of the TNGST Act would make it very clear that unless there is a definite finding as to the wilful non-disclosure of taxable turnover, the assessing officer will have no jurisdiction to impose the penalty. Therefore, this Court is of the considered view that once the Assessment Order is passed, without imposing penalty, subsequently the 1st Respondent cannot change his view and initiate the fresh penalty proceedings. This Court is inclined to quash the impugned proceedings of the 1st Respondent dated 15.03.2023 - the impugned orders passed by the 1st Respondent are quashed - Petition allowed.
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