TMI Tax Updates - e-Newsletter
January 8, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

• GST LIABILITY ON SALE OF TRANSFER OF DEVELOPMENT RIGHTS
• Summary of Demand and Notice issued u/s 74 of the CGST Act is required to be issued electronically under Rule 142(1) of the CGST Rules
• ITR U filing for A.y.2023-24 is started from 1st jan 2024
• ITC for different financial years can be clubbed together for claiming refund under Rule 89(4) of the CGST Rules

News

• FIRST ADVANCE ESTIMATES OF NATIONAL INCOME, 2023-24

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• 63rd Network Planning Group Meeting under PM GatiShakti discusses 3 Infrastructure Projects

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Notifications

GST

• 04/2024 - dated 5-1-2024 - CGST
  Central Government notifies special procedure by a registered person engaged in manufacturing of the certain goods

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• 03/2024 - dated 5-1-2024 - CGST
  Rescinds the Notification No. 30/2023-CT, dated the 31st July, 2023 - Special procedure to be followed by a registered person engaged in manufacturing of the goods

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• 02-2024 - dated 5-1-2024 - CGST
  Extension of due date for filing of GSTR 9 and 9C for the Financial Year 2022-23 - Central Goods and Services Tax (Amendment) Rules, 2024 - For the districts of Chennai, Tiruvallur, Chengalpattu, Kancheepuram, Tirunelveli, Tenkasi, Kanyakumari, Thoothukudi and Virudhunagar in the state of Tamil Nadu.

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• 01/2024 - dated 5-1-2024 - CGST
  Extends the due date for furnishing the return in FORM GSTR-3B for the month of November, 2023 till the tenth day of January, 2024 - For the districts of Tirunelveli, Tenkasi, Kanyakumari, Thoothukudi and Virudhunagar in the state of Tamil Nadu

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• G.S.R. 28(E) - dated 5-1-2024 - IGST Rate
  Corrigendum - Notification No. 01/2024-Integrated Tax (Rate), dated the 3rd January, 2024

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• G.S.R. 29 (E) - dated 5-1-2024 - UTGST Rate
  Corrigendum - Notification No. 01/2024-Union Territory Tax (Rate), dated the 3rd January, 2024

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Income Tax

• 09/2024 - dated 5-1-2024 - IT
  Exemption from specified income U/s 10(46) – 'Polavaram Project Authority, Hyderabad', notified

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• 08/2024 - dated 5-1-2024 - IT
  Exemption from specified income U/s 10(46) – 'Haryana State Board of Technical Education, Panchkula', notified

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• 07/2024 - dated 5-1-2024 - IT
  Exemption from specified income U/s 10(46) – 'Karmayogi Bharat', notified

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• 06/2024 - dated 5-1-2024 - IT
  Exemption from specified income U/s 10(46) – 'District Legal Service Authority Union Territory Chandigarh, notified

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SEBI

• SEBI/LAD-NRO/GN/2024/163 - dated 5-1-2024 - SEBI
  Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2024

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Highlights / Catch Notes

GST

• Central Government notifies special procedure by a registered person engaged in manufacturing of the goods - Notification
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• Restriction availing on Input Tax Credit (ITC) - Constitutional validity of Section 16(4) of GST Act - Denial of entitlement of ITC for delayed filing of return - Patna High Court uphold the consitutional validity of section 16(4) - Notice issued to the Respondent / Government - SC
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• Power of GST authorities - Power to issue summons or conduct search and seizure - Challenge to N/N. 14/2017- Central Tax - the respondents are proper officer in relation to the function to be performed under the CGST Act, 2017 as contemplated under Section 2 (91) of the CGST Act, 2017, and as such, was entitled to issue summons under Section 70 of the CGST Act, 2017 in connection with the inquiry initiated against the petitioner. - HC
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• Non-payment of the interest on refund - there were deficiencies and the deficiencies were later on rectified by the petitioner. - there were deficiencies in three cases and in one case, there was no deficiency and the amount of CGST, SGST and IGST have been refunded to the petitioner beyond 60 days, the respondents are required to determine the actual delay and make payment of the amount of interest to the petitioner in terms of provisions of Section 56 of Act of 2017. - HC
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• Seeking refund on the Input Tax Credit - The system did not register the documents which were uploaded from the end of the petitioner. - A refund cannot be rejected merely on the ground of non-supply of authenticated document. In case party is entitled to refund, it is open to the Department to call for further clarification or documents as may be required to satisfy itself that refund is due and payable. - HC
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• Levy of penalty - vehicle number in Part-B of the e-way bill was incorrect - minor typographical error - Typically when the error is a minor error of the nature found in this particular case, the imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law. - HC
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• Best judgement assessment - GSTR returns were not filed by the petitioner within the prescribed time limit - At any cost, the right to file the returns cannot be taken away stating that the petitioner has not filed any returns within a period of 30 days from the date of best judgement assessment order. Thus, if any application is filed before the Authority concerned with sufficient reasons for non-filing of returns within the prescribed time limit as per section 62(2) of the Act, the same shall be considered on merits. - HC
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• Seeking refund of amount illegally and coercively collected by the respondents - entire amount was forcibly recovered - the sixth respondent cannot confirm the rejection of refund only because of the proceedings pending pursuant to the impugned Show Cause Notice but must necessarily consider the petitioner’s grievance in the light of the proposition as enunciated in the above decision and the Instruction and in a time bound manner. - HC
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• Validity of SCN - Cancellation of GST registration - Insofar as the show cause notice is concerned, prima facie, the same is unsustainable as it does not set out any specific reasons for proposing to cancel the petitioner’s GST registration. - HC
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Income Tax

• Central Government notifies activity of investment in a financial product by the non-resident - Notification
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• Reopening of assessment u/s 147 - reason to believe - the reassessment proceedings were triggered without the AO applying his own mind and articulating his reasons as to why he believed that the material available with him was indicative of the fact that the income which was otherwise chargeable to tax had escaped assessment. As correctly submitted, in law reasons to suspect are markedly different in quality and texture from reasons to believe. - HC
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• Disallowance u/s 40A(3) - assessee, who is the appellant, is a government contractor showed payments exceeding Rs. 20,000/- in cash on various dates for materials purchased - there are no vouchers produced to substantiate the claim of separate payments having been made on a single day at the work spots where the delivery of the goods supplied were made. - Additions confirmed - HC
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• LTCG - Deduction u/s 54 - investment was made in the name of her spouse and not in the name of the Assessee - Section 54F/54 of the Act are the beneficial provisions which should be interpreted liberally in favour of the exemption/deduction to the taxpayer and deduction should not be denied. - AT
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• Association of persons (AOP) - Consortium - Appellant No.1 is a member of AOP or not - There is no force in the contention of Appellant No.1 that due to absence of right to any profits of the consortium, the Appellant No.1 cannot be deemed to be a member of the AOP. Indeed, in the return filed, the share of Appellant No.1 is shown to be 0%. Indeed in the addendum, there is division of work, but, that is only a mode of completing the ‘Project’. As far as sharing of profits is concerned Deepali Designs, who is Appellant No.1 before us, had agreed by virtue of sub-clause (3) of Clause 2 of the addendum, to forego 23% of its gross revenue to PHKL. - AT
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• Addition u/s 68 - unsecured loan treated as unexplained cash credit - Even all the creditors have duly confirmed the transactions and also established the source of the credits and the loan being also repaid in a short span of time. CIT(A), therefore, has rightly held that the addition made by the AO was not justified. - AT
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• Fee for Technical Services (‘FTS’) u/s 9(1)(vii) - Amounts received by the assessee from an Indian group entity - Support services relating to MLN is provided by the assessee - the make available condition has not been satisfied, treated the payments not be in the nature of FTS. - AT
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• Validity of reopening of assessment - notices in the name of non-existing/dissolved entity - dissolution of partnership firm and discontinuation of business - assessment order is without jurisdiction and liable to be set aside and quash the same - AT
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• Additions u/s 68 - Unexplained Cash credit found in the bank account - The provisions of s. 68 & 69 use the word may indicating discretion conferred upon the AO by the statute, who is supposed to use such discretion judiciously and is not obliged always to make an addition - the saving of a meager Rs 2,50,000/- is not beyond the pre-ponderance of human probability so as to be disbelieved. - Additions deleted - AT
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• Protective assessment - Validity of the jurisdiction assumed by the A.O for initiating proceedings u/s. 147 - it is beyond comprehension that the AO after holding a belief that the amount was the income of another person, could have thereafter simultaneously held the said amount as the income of the assessee chargeable to tax that had escaped assessment - notice issued by the A.O u/s. 148 quashed for want of valid assumption of jurisdiction. - AT
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Customs

• Exemption from Basic Customs Duty (BCD) - deformed Steel Bars - goods were alloy steels or non-alloy steels and prime or secondary - Chapter 72 prescribes the percentage of each element/constituent in respect of non / other alloy steel and it is not the case of the Revenue that in respect of the 20mm, 25mm and 32mm TMT bars, the percentage of these elements is more than the prescribed limit. - Benefit of exemption allowed - Demand set aside - AT
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• Levy of penalties both u/s 114 and Section 114AA on both of the CB and the exporter together - The appellant was also not seen to be a part of a conspiracy to defraud the exchequer, however he has made a mistake by a conscious disregard of the illegality and in not distancing himself from the act and reporting the matter that he knew was wrong and this blameworthy conduct warrants a penalty. However, the penalty imposed in this case is shocking and requires to be modified. - AT
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• Prayer for setting aside of imposition of redemption fine and penalty - over valued export goods - As the supplier of the goods is issued invoices to the appellant paying GST and market survey was not done in proper manner, in that circumstances the impugned order is not sustainable and is accordingly set aside. - AT
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Corporate Law

• Compounding of offences - default in holding Annual General Meeting the company (AGM) - NCLAT has mainatined the order of NCLT where the said fine was reduced to the 1/5th of maximum fine and appellant has been imposed fine of Rs.26,53,000/- - Civil appeal filed by the appellant dismissed - SC
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• Professional Misconduct - The reports issued in form 10 DA u/s 80 JJAA of Income Tax Act by the Chartered Accountant - failure to obtain sufficient appropriate evidence and failure to exercise due diligence & professional skepticism - Allegation against the CA proved - monetary penalty of Rs fifty (50) lakhs only imposed - NFRA
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IBC

• Recall of an order - The Appellant was well aware that case was listed for hearing on 12.05.2023 and he entered appearance through Counsel, who inspite of entering his attendance in chat box, is not shown to be present. The relevant fact to be noticed is that the Appellant was well aware of the date 12.05.2023. - The Adjudicating Authority did not commit any error in rejecting IA No.3216 of 2023. - AT
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Service Tax

• Levy of service tax - banking and other financial services - Demat/ Depository charges collected from sub brokers - stock broker service - Transaction/ administrative charges collected from sub-brokers - VSAP/TWS charges collected from sub broker - During the period, not taxable as the same were not the service charges of the broking firm - AT
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Central Excise

• CENVAT Credit - input service or not - services related to effluent treatment of the waste generated at the appellant’ s factory - The revenue’s claim that since the service was availed beyond the place of removal, credit is not admissible completely fails and, on that ground, credit cannot be denied. - AT
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VAT

• Pizza and sandwiches were held to be cooked foods as per the decision of the High Court - HC has observed that, merely by stating that cooked food is necessarily prepared on gas burner, with aid of oil/ghee and spices, using exclusively fresh ingredients, revenue cannot classify the same as Non-cooked food - Supreme court dismissed the SLP flied by the Revenue.
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• Direction to refund allegedly due alongwith interest - The petitioner tried to file Form DVAT-21, however, on account of a technical error, the same was not accepted. - Revenue directed to process the refund within a period of two weeks. - HC
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• Benefit of exemption - Classification of the coconut oil sold by the appellant - It is settled law that a person claiming exemption has to establish that the product squarely falls within the category of exempted goods. It is also settled that while interpreting the exemption notification / statute, a consideration in favour of the Revenue has to be given and in case of ambiguity, the same has to be interpreted against the assessee. - HC
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Case Laws:

• GST

• 2024 (1) TMI 288
  Restriction availing on Input Tax Credit (ITC) - Constitutional validity of Section 16(4) of the Central Goods and Services Tax Act (CGST Act) and Section 16(4) of the Bihar Goods and Services Tax Act, 2017 - Denial of entitlement of Input Tax Credit (ITC) for delayed filing of return - HELD THAT:- Issue notice to the respondents on the prayer for interim relief as well as on the Special Leave Petition, returnable on 05.02.2024.

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• 2024 (1) TMI 287
  Power of GST authorities - Power to issue summons or to conduct search and seizure - Delegation of power - Challenge to N/N. 14/2017- Central Tax dated 01.07.2017 primarily on the ground of it being ultra-vires to the power of the Central Government - jurisdiction of the Additional Director General of Goods and Services Tax Intelligence in authorizing the other Intelligence Officer to carry out inspection/search proceedings at the premises of the petitioner - HELD THAT:- A conjoint reading of Notification No. 14/2017 dated 01.07.2017 and Circular No. 3/3/2017-GST dated 05.07.2017 sufficiently contemplates the assigning of powers to DGSI officers by the Board - The jurisprudence on the implications of invocation of a wrong provision suggests that as long as an authority has power, which is traceable to a source, the mere fact that source of power is not indicated or wrongly indicated in an instrument does not render the instrument invalid - this Court is not inclined to hold that the impugned Notification No. 14/2014 dated 01.07.2017 is ultra vires to the powers provided to the Government under the CGST Act, 2017. From a bare reading of Section 70 of the CGST Act, 2017, it clearly emerges that the proper officer has the power to summon any person whose attendance he considers necessary either to give evidence or to produce the documents in any inquiry in the same manner in the case of a Civil Court under the Civil Procedure Code - the respondents are proper officer in relation to the function to be performed under the CGST Act, 2017 as contemplated under Section 2 (91) of the CGST Act, 2017, and as such, was entitled to issue summons under Section 70 of the CGST Act, 2017 in connection with the inquiry initiated against the petitioner. In the instant case, the petitioners having made payment under Section 74 (5) of the CGST Act, 2017, they appear to have informed the Proper Officer of such payment in the Form GST DRC-03 (Annexure No. 7) as contemplated in Rule 142(2) of the said Rules. It is needless to say that the said payment shall be dealt with or adjusted by the concerned respondent No.3 in accordance with law more particularly as per the provisions contained in Section 74 of the CGST Act, 2017. This Court does not find any merits in the present petition and as such the same is dismissed.

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• 2024 (1) TMI 286
  Non-payment of the interest on refund - relevant date - there were deficiencies and the deficiencies were later on rectified by the petitioner. - HELD THAT:- The provisions of Section 56 of the Act of 2017, interalia, provides that if any tax, ordered to be refunded to any applicant, is not refunded within 60 days from the date of receipt of application, the interest at such date, not exceeding 6%, shall be payable for the period of delay beyond 60 days - It is not in dispute that in three cases, there were deficiencies and the deficiencies were later on rectified by the petitioner. The provisions of Section 56 of the Act of 2017, interalia, provides that if any tax, ordered to be refunded to any applicant, is not refunded within 60 days from the date of receipt of application, the interest at such date, not exceeding 6%, shall be payable for the period of delay beyond 60 days. The indications made in Section 56 of the Act of 2017, pertaining to the date of receipt of the application , can only be read as date of receipt of a complete application i.e. in case, there are deficiencies, from the date the deficiencies are removed by the applicant - As in the present case, there were deficiencies in three cases and in one case, there was no deficiency and the amount of CGST, SGST and IGST have been refunded to the petitioner beyond 60 days, the respondents are required to determine the actual delay and make payment of the amount of interest to the petitioner in terms of provisions of Section 56 of Act of 2017. Petition disposed off.

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• 2024 (1) TMI 285
  Cancellation of GST registration of petitioner - wrongful availment or utilization of input tax credit or refund of tax - HELD THAT:- In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration. The Show Cause Notice as well as the impugned order are set aside - petition disposed off.

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• 2024 (1) TMI 284
  Violation of principles of natural justice - impugned order issued without providing a personal hearing as mandated by Section 75 of the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT:- In view of the statutory mandate for personal hearing and non-compliance therewith, the impugned order calls for interference. Therefore, the impugned order dated 11.10.2023 is quashed and the matter is remanded for reconsideration. The respondent is directed to provide a personal hearing to the petitioner and thereafter issue a reasoned order within a maximum period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2024 (1) TMI 283
  Seeking refund on the Input Tax Credit - rejection on the ground that there was a mismatch of turnover - excess availment and misdeclaration of invoice value and no supporting documents - HELD THAT:- The order-in-original records that the documents submitted by the petitioner have been considered, however, proceeds on the premise that the petitioner has not submitted any documentary evidence to substantiate the submission about technical error and has not submitted any documents before the appellate authority, which were submitted alongwith the reply to the show cause notice. The appellate authority appears to have misconstrued the submission of the petitioner. Case of the petitioner is that petitioner had uploaded documents, however, the system did not register the documents which were uploaded from the end of the petitioner. The appellate authority records that petitioner had not submitted any documents which were submitted alongwith the reply - From the record of the respondents, it appears that documents were not uploaded. Since documents were not uploaded, there could be no document which the petitioner could file in the appeal which had been submitted alongwith the show cause notice. A refund cannot be rejected merely on the ground of non-supply of authenticated document. In case party is entitled to refund, it is open to the Department to call for further clarification or documents as may be required to satisfy itself that refund is due and payable. Reference may also be had to Section 54 (1) of the Central Goods and Service Tax Act, 2017, which provides for a period of two years from the relevant date to make an application seeking refund. The relevant period in issue is April, 2021 to March, 2022 and as such, the application of the petitioner even today is within the limitation prescribed under Section 54 (1) of the said Act - the matter needs to be relegated to the concerned authority to re-adjudicate the application of the petitioner by taking into account the documents filed by the petitioner in support of his application for refund. Accordingly, the order-in-original dated 10.10.2022 and order in appeal dated 29.08.2023 are set aside. Petition allowed by way of remand.

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• 2024 (1) TMI 282
  Levy of penalty - vehicle number in Part-B of the e-way bill was incorrect - minor typographical error - no mens rea (intent to evade) - HELD THAT:- The principle that emerges is that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty. In the case of M/s. Varun Beverages Limited [ 2023 (2) TMI 133 - ALLAHABAD HIGH COURT] there was a typographical error in the e-way bill of 4 letters (HR 73). In the present case, instead of 5332 , 3552 was incorrectly entered into the e-way bill which clearly appears to be a typographical error. In certain cases where lapses by the dealers are major, it may be deemed that there is an intention to evade tax but not so in every case. Typically when the error is a minor error of the nature found in this particular case, the imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law. The impugned order set aside - petition allowed.

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• 2024 (1) TMI 281
  Best judgement assessment - returns were not filed by the petitioner within the prescribed time limit - HELD THAT:- In the present case, the returns were not filed by the petitioner for the month of December 2022, January 2023 and February 2023 within the prescribed time limit. Hence, the impugned orders dated 28.03.2023 and 10.04.2023 have been passed by the respondent under Section 62(1) of the GST Act. Thereafter, the returns were filed by the petitioner for the month of December 2022 and January 2023 on 30.04.2023 and for the month of February 2023 on 24.06.2023. In the present case, since the petitioner had not filed the returns for the months of December 2022, January 2023 and February 2023 within the prescribed time limit, the assessment order has been passed by the respondent under Section 62(1) of the GST Act on 28.03.2023 and 10.04.2023. In terms of the provisions of Section 62(2) of the GST Act, if a registered person furnishes the valid returns within a period of 30 days of the service of assessment order under Sub-section (1) of Section 62 of the GST Act, the said assessment order would be deemed to have been withdrawn. However, the liability for the payment of interest of Subsection (1) of Section 50 of the GST Act or for payment of late fee under Section 47 of the GST Act shall continue - The idea of implementation of the said provision is to afford an opportunity to the registered person to furnish and file the returns within a period of 30 days from the date of service of assessment order, which was passed under Section 62(1) of the GST Act. What will be the situation if the petitioner failed to furnish the returns within a period of 30 days as prescribed under Section 62(2) of the GST Act? - HELD THAT:- The limitation of 30 days period prescribed under Section 62(2) of the Act appears to be directory in nature and if the Assessee was not able to file the returns for the reasons, which are beyond his control, certainly the said delay can be condonned and thereafter, the Assessee can be permitted to file the returns after payment of interest, penalty and other charges as applicable. At any cost, the right to file the returns cannot be taken away stating that the petitioner has not filed any returns within a period of 30 days from the date of best judgement assessment order. Thus, if any application is filed before the Authority concerned with sufficient reasons for non-filing of returns within the prescribed time limit as per section 62(2) of the Act, the same shall be considered on merits. If the Authority is satisfied with the said reasons, they can condone the delay and permit the petitioner to file the returns. However, in the present case, no such application was filed by the petitioner. The petitioner is directed to file an application for condonning the delay in filing the returns within a period of 15 days from the date of receipt of copy of this order - Upon filing of the application for condonnation of delay, the respondent is directed to consider the said application and pass orders by taking into consideration of the reasons provided by the petitioner for non-filing of returns within a period of 30 days from the service of best judgement assessment order and thereafter, permit the petitioner to file the revised returns. Petition disposed off.

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• 2024 (1) TMI 280
  Seeking refund of amount illegally and coercively collected by the respondents - seeking to grant refund of the entire amount forcibly recovered less the pre-deposit of 10% of the tax component therein - HELD THAT:- It is seen from the fifth respondent s order dated 04.08.2023 rejecting the petitioner s application for refund, it is concluded that the deposit is a voluntary act and therefore it cannot be refunded, but the merits of this conclusion will have to be considered in the pending appeal before the sixth respondent not only in the facts of the case but also the settled proposition in the pending appeal. This Court is of the considered opinion that the sixth respondent cannot confirm the rejection of refund only because of the proceedings pending pursuant to the impugned Show Cause Notice but must necessarily consider the petitioner s grievance in the light of the proposition as enunciated in the above decision and the Instruction and in a time bound manner. The petition stands disposed of directing the sixth respondent the Joint Commissioner of Commercial Taxes (Appeals-4), Bangalore - to dispose of the petitioner s appeal as against the fifth respondent s order rejecting the request for refund within a period of six [6] weeks from the date of the first hearing after this order.

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• 2024 (1) TMI 279
  Maintainability of appeal - appeal dismissed for non-prosecution - appeal was filed in time and the appellate authority merely for the reason of absence of the petitioner or the authorised representative rejected the appeal - HELD THAT:- Looking at the provisions of the Bihar Goods and Services Tax Act especially sub-sections (8), (9), (10), (11) and (12) of Section 107 of the Act, that the Appellate Authority has a duty and an obligation under the statute to look into the merits of the matter and also examine the grounds raised by the appellant, even if there is no presence recorded of the appellant before the Appellate Authority and decide the issue on merits. The Appellate Authority by dismissing the appeal for non-prosecution would be abdicating its powers especially looking at the provisions where the Appellate Authority has been empowered to conduct such further enquiry as found necessary to decide the appeal, which decision also shall be on the points raised. The impugned order set aside - petition allowed.

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• 2024 (1) TMI 239
  Validity of SCN and summons issued - Cancellation of GST registration - HELD THAT:- Insofar as the summons are concerned, the petitioner has not responded to the same and this Court finds no ground to interfere with the summons. Insofar as the show cause notice is concerned, prima facie, the same is unsustainable as it does not set out any specific reasons for proposing to cancel the petitioner s GST registration. This Court has in a number of decisions set aside similar show cause notices which are bereft of any particulars. At the request of the learned counsel for the respondents, list on 19.12.2023. Counter affidavit, if any, be filed before the next date of hearing.

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• Income Tax

• 2024 (1) TMI 278
  Reopening of assessment u/s 147 - Unexplained gain on sale of shares of company abroad - assessee claimed gains earned by it on sale of Agile shares were not taxable in India by virtue of Article 13(4) the Double Tax Avoidance Agreement entered into and subsisting between India and Singapore ( India-Singapore DTAA ) based on the Tax Residency Certificate ( TRC ) - Relevance of information from a third party - borrowed satisfaction - Beneficial ownership under DTAA - Companies to be incorporated initially with minimum paid up share capital - Live link between the material disclosed and the formation of belief - Reasons recorded cannot evolve or be allowed to grow with age and ingenuity - Limitation of benefit[ LOB] clause - HC [ 2023 (2) TMI 35 - DELHI HIGH COURT] this Court is of the view that no income chargeable to tax has escaped assessment in the present case - this Court has held that reopening of assessment based on the return of income must show 'reasons to believe' that income chargeable to tax has escaped assessment. Consequently, the impugned reassessment proceedings are without jurisdiction and the impugned Notice under Section 148 of the Act, impugned Reasons undated and the impugned Order and the subsequent draft Assessment Order u/s 144C are quashed. HELD THAT:- Issue notice on the application seeking condonation of delay as well as on the Special Leave Petition. In the meantime, operation of the impugned order shall remain stayed.

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• 2024 (1) TMI 277
  TP Adjustment on account of receivables - Disallowance under Section 40(a)(ia) - Applicability of section 192 v/s 195 - Draft order framed u/s 144C(1) of the Act is in the name of a non-existent company - As decided by HC revenue has not brought on record that the assessee has been found paying interest to its creditors or suppliers on delayed payments AND in agreement with the opinion of the ITAT that Section 195 of the Act has no application once the nature of payment is determined as salary and deduction has been made u/s 192 - Question No.1 of Draft order framed u/s 144(c)(1) is left open to be agitated in an appropriate matter. HELD THAT:- There is a huge delay of 325 days in filing this Special Leave Petition. We are not satisfied with explanation offered by the petitioner. Hence, the special leave petition is dismissed on the ground of delay. Pending application(s) shall stand disposed of.

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• 2024 (1) TMI 276
  Validity of Notices / orders without DIN - Communications emanating from the revenue - HELD THAT:- We have heard learned ASG for the petitioner and learned senior counsel for the respondent/caveator. Interim stay of impugned order [ 2023 (4) TMI 579 - DELHI HIGH COURT] as well as order of the ITAT [ 2022 (11) TMI 34 - ITAT DELHI] until further orders.

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• 2024 (1) TMI 275
  Demand qua outstanding tax liability - seeking credit to the petitioner against the Tax Deducted at Source (TDS) by his employer - whether any recovery towards the outstanding tax demand can be effected against the petitioner in view of the admitted position that the tax payable on his salary was being regularly deducted at source by his employer who did not deposit the same with the authorities? - HELD THAT:- As relying on Jasjit Singh case [ 2023 (12) TMI 34 - DELHI HIGH COURT] s ince the petitioner accepted salary after deduction of income tax at source, it is his employer who is liable to deposit the same with the revenue authorities and on this count, the petitioner cannot be burdened. We find no substantial question of law to be considered by us in this appeal. Therefore, the petition is allowed and consequently the impugned demand notice dated 04.02.2019 is set aside and the respondent/revenue is directed to allow credit of TDS deducted by his employer for the Assessment Year 2013-14 to the petitioner.

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• 2024 (1) TMI 274
  Income taxable in India - gains arising from transfer of CCDs - taxability as capital gains - whether not taxable in view of the provisions of Article 13 of the India-Mauritius DTAA? - AO sought to treat the gains as interest, placing reliance upon Section 2(28A) and Article 11 of the India-Mauritius DTAA - HELD THAT:- As noted above, this was also the view of the AAR, which was overruled by this court via the aforesaid judgment [ 2014 (8) TMI 9 - DELHI HIGH COURT] . It has been brought to our notice that for AY 2011-12, appeals filed by the appellant/revenue have been dismissed by a coordinate bench, wherein the questions of law proposed were similar to those formulated for consideration in the instant appeal. Thus, having regard to the aforesaid position, the above-captioned appeals are closed. Since the appellant/revenue has preferred a Special Leave Petition, which has been converted into a Civil Appeal [i.e., Civil Appeal 10299/2016] [ 2018 (1) TMI 1688 - SUPREME COURT] counsel for the parties submit that they will abide by the final decision rendered by the Supreme Court in the said appeal. The appeals are, accordingly, closed. Parties will be bound by the stand recorded in para 15 above

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• 2024 (1) TMI 273
  Reopening of assessment u/s 147 - reason to believe - allegation of accommodation entry receipts - whether there was enough actionable material available with the AO to trigger reassessment proceedings against the petitioner? - HELD THAT:- If the correspondence placed before us by the respondents/revenue is taken into account i.e., the letters dated 12.03.2013 and 09.12.2013, one would have to assume that despite the AO having in his possession certain inputs, he did not deem it fit to enquire further into the matter as they perhaps in his wisdom did not constitute an actionable material. In the ordinary course the AO would have issued notices to TGFL and Surendra Kumar Jain for obtaining their responses vis- -vis the inputs made available to him. If such a step had been taken then necessarily the responses, if any, given by Surendra Kumar Jain or any other authorised representative of TGFL would have to be put to the petitioner and/or its authorise representative. Clearly, nothing of the sort was done by the AO. At this stage, there is complete opacity with regard to the material furnished to the AO. There is no clarity as to whether the single sheet of paper, which only records the transaction in issue, was furnished to the AO. If it was, the AO perhaps came to conclusion that it was not sufficient to allege that the petitioner, in particular, had taken accommodation entry from Surendra Kumar Jain. A perusal of the reasons to believe framed by the AO is suggestive of the fact that he had not applied his own mind to the material, if any, placed before him. He appears to have simply gone by the information contained in the letter dated 16.03.2018. As a matter of fact, the AO for some strange reason did not refer to the letter dated 12.03.2013 which was enclosed with the said communication. Curiously, the reasons to believe did not refer to the most crucial documents i.e., the letters dated 12.03.2013 and 09.12.2013 which allege that the accommodation entry was received by the petitioner. We are of the view that the reassessment proceedings were triggered without the AO applying his own mind and articulating his reasons as to why he believed that the material available with him was indicative of the fact that the income which was otherwise chargeable to tax had escaped assessment. As correctly submitted, in law reasons to suspect are markedly different in quality and texture from reasons to believe. As demonstrated above, this was not a case of no enquiry. Enquiry was made by the AO concerning the subject loan which culminated in disallowance of interest while framing the order under Section 143(3) of the Act. Impugned notice u/s 148 of the Act was issued based on borrowed satisfaction; bereft of independent application of mind. Thus the impugned notice and order cannot be sustained. Decided in favour of assessee.

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• 2024 (1) TMI 272
  Disallowance u/s 40A(3) - assessee, who is the appellant, is a government contractor showed payments exceeding Rs. 20,000/- in cash on various dates for materials purchased - specific ground on which the disallowance was made by the Assessing Officer is with respect to no substantiating bills or vouchers having been produced - HELD THAT:- The supplies admittedly have been obtained from a third party and it was delivered at the work site in trucks. If the payments are made to the different truck drivers, definitely there would have been vouchers obtained evidencing the receipt of such payments by the truck drivers. The Books of Accounts does not show the payments having been made by the appellant separately and not together as indicated in the Cash Book. If the payments were made at different points, definitely the Cash Book also would have indicated such payments having been made at the different sites in the registers maintained by the contractor at such different sites. It is the consolidated Day Book and Cash Book of the assessee which is produced before the AO which does not indicate such payments having not been made on a consolidated basis; which is the only inference available from the Cash Book of the assessee, which has been entered on a daily basis. We find that the Accounts Book cannot be relied on to challenge the disallowance made and the amendment made with effect from 01.04.2009 is not at all applicable in the above case. We specifically notice that Sunil Kumar [ 2016 (4) TMI 637 - PATNA HIGH COURT] was a case in which the AO had disallowed the aggregate payments made on a single day by several vouchers to a single person which aggregate amounts exceeded Rs. 20,000/-. It was specifically noticed by the Division Bench that in the present case not a single payment has been made through any voucher exceeding Rs. 20,000/- and hence it was not open to the AO to have aggregated the said payments. Such aggregation of payments would have been possible after 01.04.2009 is the corollary to the declaration made in the decision. We bow to the proposition as laid down by the Division Bench and notice specifically that there are no vouchers produced to substantiate the claim of separate payments having been made on a single day at the work spots where the delivery of the goods supplied were made. No reason to entertain the appeal and the question of law is decided against the assessee and in favour of the Revenue. The disallowance made by the Assessing Officer on the ground of no substantiating documents having been furnished to the Assessing Officer by way of bills/vouchers is found to be perfectly in order, on the facts available in the instant case, which is in accordance with the provision even as it existed prior to the amendment of 01.04.2009. Appeal dismissed.

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• 2024 (1) TMI 271
  LTCG - Deduction u/s 54 - claim denied as residential house in which the investment was made by the Assessee, was registered in the name of her spouse and not in the name of the Assessee - HELD THAT:- We find that the Hon'ble Jurisdictional Delhi High Court in the cases of CIT vs. Kamal Wahal [ 2013 (1) TMI 401 - DELHI HIGH COURT] and CIT vs. Ravinder Kumar Arora [ 2011 (9) TMI 343 - DELHI HIGH COURT] has held that new house purchased in the name of the spouse of the assessee was eligible for claiming deduction under section 54F. The provisions of section 54F are pari-materia with the provisions of section 54 of the Act and thus, the principle derived equally applies to section 54 as well. The Hon'ble Jurisdictional High Court has also held in the various judgments that Purposive construction is to be preferred as against the literal construction, more so when even literal construction also does not say that the house should be purchased in the name of the assessee only. Section 54F/54 of the Act are the beneficial provisions which should be interpreted liberally in favour of the exemption/deduction to the taxpayer and deduction should not be denied. Since, the sale proceeds have been duly invested in acquisition of new property within the due time allowed, the assessee is eligible for claim of deduction u/s 54F. Appeal of the assessee is allowed.

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• 2024 (1) TMI 270
  Excess gratuity u/s 10(10) - AO was of the view that assessee is not entitled for this claim because as an employee of Hisar Agriculture University, he cannot be considered as state Government employee or holder of civil post under the state - HELD THAT:- Since the facts are similar to [ 2022 (6) TMI 748 - ITAT DELHI] A.Y. 2011-12 vide order dated 15.06.2022 and the assessee is the employee of the same university, we set aside the order of learned CIT(A) and decide the issue in favour of the assessee. We direct the Assessing Officer to allow exemption under section 10(10) of the Act on the disputed amount of gratuity received by the assessee during the year.

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• 2024 (1) TMI 269
  Income taxable in India - royalty receipts - subscription revenue received by the assessee - addition u/s 9(1)(vi) and Article 12(3) of India-USA DTAA - assessee is a foreign Company - HELD THAT:- We note from the submissions that the issue has been decided by the coordinate bench of the Tribunal in assessee s own case for assessment year 2016-17 [ 2023 (9) TMI 252 - ITAT BANGALORE] and considering the submissions of the assessee that the facts and agreement made with the Indian entities are the same as submitted by the ld.AR in this assessment year. We also observe from the order that the issue is squarely covered in favour of the assessee to hold that the payment made for viewing the videos on the database cannot be termed as consideration for use or right to use any industrial, commercial or scientific equipment. Thus we hold that the subscription revenue received by the assessee is not taxable as Royalty in the hands of the assessee under Article 12 of the India-USA DTAA read with the provisions of the Act. Accordingly, the impugned addition made by the AO in this regard, as upheld by the CIT(A) is hereby deleted. Decided in favour of assessee.

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• 2024 (1) TMI 268
  Association of persons (AOP) - Consortium - Appellant No.1 is a member of AOP or not - Appeal against order passed u/s 254/153A/143(3) r.w.s. 144C - eligibility of assessee for the purpose of section 2(7) r.w.s. 253(1) having right to file appeal against this impugned final assessment order - earlier the Appellant No.1 had filed ITA on behalf of itself as alleged member of consortium and also filed another appeal in the name of consortium and claiming itself to be an alleged member of AOP - Whether the two appeals are maintainable against one assessment order? HELD THAT:- As the Appellant No.1 is now under a liability under the Act for the tax payment arising out of the final assessment order thus being aggrieved by the same has a right to file appeal u/s 253(1) of the Act under its own status and capacity to challenge the assessment as a whole and its own liability as separate entity. Thus the two appeals are maintainable. Idea of Consortium as Association of Persons for being treated as assessee - Whether the appellant No.1 is a member of Association of Persons (AOP) i.e Pico Deepali Overlays Consortium and the consortium has been rightly assessed as an Association of Persons ? - We here in these appeals, at this stage, are concerned with the tax liabilities of the appellant no 1 as member of AOP and not in the individual capacity and also not concerned with any other civil consequences that flow out of the agreement dated 09.12.2008 or the addendum dated 01.06.2010. The responsibility given by appellant no. 1 to PHK and PEMI to Manage all financial matters of the JV and for maintenance of records, effecting payment of taxes, filing of returns, etc.,. must have been with intention that as for assessment and tax liability, consortium shall be a unit and assessed as a unit, which can only be by way of the consortium being treated as AOP and all the members of consortium being member of the AOP. Thus this arrangement is completely out of scope of clause 3(d) of the Circular no 7/2016 of which appellant seeks benefit. There is unified control and management of the consortium as far as the statutory tax liabilities is concerned. Now if there is any tax liability created on the appellant no. 1 over and above the tax liability it was supposed to bear on the basis of scope of work falling in the hands of appellant no.1 then that may be a dispute inter se the members of consortium as AOP for which there may be remedy under civil law but assessing officer cannot be faulted to have competed the assessment on the consortium as AOP and appellant no. 1 as its member and caters to the argument of Ld. Counsel of appellant no. 1 that 4. AO has completely ignored the material fact that revenue from Deepali s scope of work has been brought to tax in the hands of Deepali in a regular assessment and Deepali has paid the income tax on the same. There is no force in the contention of Appellant No.1 that due to absence of right to any profits of the consortium, the Appellant No.1 cannot be deemed to be a member of the AOP. Indeed, in the return filed, the share of Appellant No.1 is shown to be 0%. Indeed in the addendum, there is division of work, but, that is only a mode of completing the Project . As far as sharing of profits is concerned Deepali Designs, who is Appellant No.1 before us, had agreed by virtue of sub-clause (3) of Clause 2 of the addendum, to forego 23% of its gross revenue to PHKL. Thus there is revenue sharing also from the works which had fallen in scope of work of Deepali Designs. Not only this but by virtue of sub-clause (4) of Clause 2 of the addendum if any new contract was to be allotted in share of Deepali Designs, again the new contract equivalent to 20% in value minus 23% were to be paid to PHK. Thus this arrangement is completely out of scope of clause 3(b) of the Circular no 7/2016 of which appellant no. 1 seeks benefit. There is no force in the contention of appellant no. 1 that this payment to PHK was merely on account of the fact that Deepali Designs had walked out of the earlier agreement. The original agreement and addendum both together lay out the terms of the JV and what addendum has done is that only the stage of the sharing of profits out of the project and the mode of calculating the profit is changed. Else PHK and Deepali Designs both are getting benefits out of the proceeds of the work assigned to Deepali Designs and that amounts to sharing profits and profits of the work assigned to Deepali Designs are not left to be exclusive to Deepali Designs. Certainly Deepali Designs is not getting any share of proceeds of the work assigned to PHK, but PHK is not disputing the existence of AOP so question of PHK not getting share of profit from Deepali Designs is not material. When we apply the idea of Consortium as Association of Persons for being treated as assessee under the Act we find that consortium came into existence for accomplishing the project as a whole and the participation of the consortium members in the tender process, the submission of bids, execution of contracts, nomination of consortium leader or Project Board, payments and receipts of considerations, the extent of joint and several liability accepted by the consortium members, the risks and cost of any defect or damage on the consortium, insurance in the names of consortium all indicate that there was lot of commonality of interest and mutuality of liabilities to form AOP. Thus, we are of the considered view that consortium as AOP fails to fulfill the requirement of clause (a) of Clause 3, clause (b) and clause (d) of the Circular No.7 of 2016 and there is no error in the findings of the ld. AO in treating Appellant No.1 as member of the consortium and to assess the consortium as AOP. The issue no. 2 is decided against the appellant no. 1. In the result, it is held that appellant no. 1 Deepali Designs Exhibits (P) Ltd.), is a member of assessee AOP, Pico Deepali Overlays Consortium for the purpose of assessment of relevant AY. The respective grounds taken in appeal arising out of issue no. 2 decided against the appellant no. 1 stand disallowed. Further, as affected party the appellant no. 1 has right to file appeal on merits of additions in its own capacity and status. So let both the appeals be fixed for final hearing on merits of grounds, by Registry in due course.

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• 2024 (1) TMI 267
  Addition u/s 68 - unsecured loan treated as unexplained cash credit - CIT(A) deleted addition - HELD THAT:- CIT(A) has noted that on perusal of the audited balance sheet of the assessee company, it was found that the said unsecured loans have been reported under short-term capital borrowings in item no.7 of the said balance sheet. That the director of the assessee company was duly confronted about the loan transaction, but nothing adverse could be extracted from him by the Assessing Officer. CIT(A) has also noted that during the appellate proceedings, the assessee had produced evidences of repayment of the loan amounts, whereupon, the remand report was called upon from the AO and the AO in the remand report duly confirmed the repayment of the loan amount through banking channel. CIT(A) has also discussed the financials of the creditors to hold that the creditors had sufficient net worth to give loans to the assessee company. It has also been noticed by the CIT(A) that apart from the aforesaid three borrowers, the assessee has also taken loans from other parties which has not been doubted by the AO. CIT(A) thereafter held that the sole basis of the Assessing Officer to make addition was on the basis of an earlier recorded statement of Shri Devesh Upadhyaya, which was neither recorded in the presence of the assessee nor the assessee was every confronted about the same. Even no incriminating material was found during the course of search action. Even all the creditors have duly confirmed the transactions and also established the source of the credits and the loan being also repaid in a short span of time. CIT(A), therefore, has rightly held that the addition made by the AO was not justified. No reason to interfere with the order of the ld. CIT(A) and there is no merit in the appeal of the revenue and the same is accordingly dismissed. Appeal of the revenue stands dismissed.

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• 2024 (1) TMI 266
  Income taxable in India - taxability of certain amounts received by the assessee from an Indian group entity, as Fee for Technical Services ( FTS ) u/s 9(1)(vii) of the Income-tax Act as well as under Article 12(4) of India Singapore DTAA - HELD THAT:- When the matter came up before the Tribunal in DCIT Vs. Bombardier Transportation India Pvt. Ltd. (payer of service charges) [ 2017 (1) TMI 780 - ITAT AHMEDABAD] the Tribunal after going through the nature of services received and whether make available condition was satisfied, ultimately concluded that while rendering such services, the service provider has not made available technical knowledge, know-how, skill etc. Therefore, payment would not qualify as FTS. On a perusal of the aforesaid decision of the Coordinate Bench, it is observed that the nature of services provided by Bombardier Transportation Canada were far wider in scope than the services provided by the assessee. However, on examining the facts the Tribunal having found that the make available condition has not been satisfied, treated the payments not be in the nature of FTS. The departmental authorities have failed to factually establish through cogent evidence that in course of rendition of services, the assessee has made available technical knowledge, know-how, skill etc. to BTIL so as to enable BTIL to employ/use such technical knowledge, know-how, skill etc. independently without the aid and assistance of the assessee. That being the factual position emerging on record, in our considered opinion, the receipts would not qualify as FTS under Article 12(4)(b) of the tax treaty. Therefore, we conclude that the additions made by the Assessing Officer treating the receipts as FTS are unsustainable. Grounds raised on the issue are allowed.

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• 2024 (1) TMI 265
  Deemed dividend u/s. 2(22)(e) - sum owed by assesee-director to SHPL as at the year-end was inferred by the Revenue as deemed dividend u/s. 2(22)(e) of the Act as his shareholding was in excess of 10% - HELD THAT:- All the debits in the account, to be maintained/tabulated separately, would stand to be adjusted first, i.e., where there is no debit balance in the current account; the balance, both in the current account as well as Flat account being reckoned date-wise and, in any case, month-wise, as the credit for the remuneration is on a monthly basis. As shown to us during the course of hearing, the amount due on sale of villa stands paid in full in the following year, i.e., f.y. 2011-12. That being the case, we do not think the same could be regarded as a loan or advance so as to attract section 2(22)(e) of the Act. SHPL, the company in which the assessee has substantial interest, is in the business of real estate, selling residential houses. The assessee, it s Director, with substantial interest therein, in purchasing one for himself, deals with the company in the capacity of a customer. Revenue has no case that in doing so there has been any under-selling by the company, as discount allowed to him, which, where so, would rather attract section 56 of the Act. True, he has been extended a credit, which it may not to it s other customers, as would be the inference arising as the assessee has, despite the AO clearly stating so, not adduced any material may, not even made any contention in rebuttal, i.e., to the effect of it similarly allowing credit to it s other customers. The payment for the Flat, adjusting the credits arising to the assessee, stands made latest by the end of the following year. The same would not, in our view, alter its character to a loan or advance, which would, we may add, surely be the case where an extended credit, dehors the trade practice, is allowed. The company paying the remuneration to an extent of Rs. 50 lakhs per annum to the assessee assumes a limited financial risk when it extends credit to him. No inference of diversion of funds, representing the profit of the company, arises under the circumstances, to ascribe it as coming within the mischief of section 2(22)(e) of the Act. This is of course subject to the nature of credit for Rs. 10 lac, forming part of Rs. 54.04 lacs, being clarified. Assessee s other, i.e., current, account comprises of Direct transfer of funds by the company the assessee and Monies received from the company s customers - Both qualify to be regarded as loans of advances within the meaning of the term u/s. 2(22)(e), case law on which, including by the Hon'ble Apex Court, is legion. Why, no objection or any contention in this regard stands made at any stage, including before us, nor could possibly be; it being the clear case of company s monies being advanced to the Director, falling within the mischief of section 2(22)(e) of the Act. We may, nevertheless, dilate upon the second category (b) with a view to allay any doubt in its respect as qualifying to be deemed as dividend u/s. 2(22)(e). As queried by the Bench during hearing, to no answer, if the assessee had any authorization to accept trade debts. Further, even assuming that he being a Director had the implied authority, the same is to be deposited forthwith with the company, and there is no question of it debiting him for the same, which implies it allowing him to retain the same. It is this retention which translates into a debit balance that assumes the form of loan or advance, attracting section 2(22)(e) of the Act. It would though be a different matter where the assessee has a credit balance on the relevant date, in which case there is no question of any loan or advance by the company to him, who thereby only receives from the company, albeit through its customer/s, monies due to him. Both the categories of amounts would, thus, need to be clubbed and maintained (tabulated) in separate accounts, which shall stand to be credited, similarly, when sums are paid or transferred to the company, as well as remuneration from it. Any debit balance in the account, even if adjusted subsequently, shall attract section 2(22)(e) of the Act A surviving issue would be the date of the debits or credits in respect of transactions by way of journal entries. This is as money (money s worth) stand already received or, as the case may be, discharged, though given effect to later (or, perhaps, even earlier). The transactions shall have to be reckoned, irrespective of the date of journal entry, with reference to the actual date of the transactions. The matter shall, accordingly, travel back to the file of the AO for determination of deemed dividend u/s. 2(22)(e) afresh along the lines indicated. The assessee shall provide necessary details and working, which the AO shall verify, including seeking clarification/s in its respect, duly supported by evidences. The difference between the amount debited in account and the cost as per the document, would need to be reconciled and explained. Any fresh/new facts (inasmuch as Ms. Krishna, the ld. counsel for the assessee, could not provide reconciliation, despite being allowed time during hearing, with the information furnished before us being again so in a piecemeal manner), coming to the notice of the AO would again require being considered as per law, for which guidance may be taken by him from the instant order. Appeal by the assessee is allowed for statistical purposes.

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• 2024 (1) TMI 264
  Disallowance of claim u/s 42 - claim rejected on the ground that as per the section 42 of the Act, only those deductions are allowable which are specifically provided in the agreement entered into between the assessee and the Central Government and in the agreement entered into by the assessee with the Government, no such provision has been made to allow any deduction falling within the domain of section 42 - HELD THAT:- In light of the above observations made by ITAT in assessee s own case for A.Y. 2007-08 and and 2008-09 in [ 2023 (5) TMI 1003 - ITAT AHMEDABAD ] held that Product Sharing Contracts (PSCs) entered into between the assessee and the Government of India did not include a clause pertaining to section 42 and therefore deduction under this section could not be allowed to the assessee. Decided against assessee. Depreciation u/s 32 on Oil wells - DR considering oil- well house as building instead of Plant and Machinery for the purpose of allowance of depreciation - HELD THAT:- We hold that the oil wells are eligible for depreciation as Plant Machinery and the Assessing Officer is directed to re-compute the depreciation on oil wells on opening WDV. With respect to additions made during the year, the A.O. may call for necessary details from the assessee to ascertain the nature of additions made and allow depreciation as per the above directions. Disallowance of deduction u/s 80IB(9) for Dholka Oil field - whether each well operated by the assessee is a separate undertaking eligible for deduction under Section 80IB(9)? - HELD THAT:- Since the issue whether the Explanation to section 80IB(9) would operate retrospectively or not is pending adjudication before the Hon ble Supreme Court, following the decision of the assessee s own case for assessment year 2001-02, 2002-3 and 2005-06 at this juncture, we are refraining from adjudicating ground nos. 3 4 and restore the matter back to the file of Assessing Officer to decide the issue in accordance with the directions of the Hon ble Supreme Court decision in Commissioner of Income Tax ors. Versus Gujarat State Petroleum Corporation Ltd. [ 2015 (11) TMI 1685 - SC ORDER ] as referred to above. Depreciation on goodwill - depreciation on any other commercial right or intangible assets under Section 32 - HELD THAT:- As in light of the directions given by the ITAT Ahmedabad for assessee s own case for A.Y. 2007-08 [ 2023 (5) TMI 1003 - ITAT AHMEDABAD ] the matter is being restored to the file of Assessing Officer for carrying out necessary verification to examine firstly, whether or not depreciation is allowable on the aforesaid asset and under which categorically the assessee is claiming depreciation on the same i.e. as depreciation on goodwill or as depreciation on any other commercial right or intangible assets under Section 32 of the Act and secondly, the Assessing Officer is also directed to examine the necessary supporting documents in justification for assessee s claim of depreciation. Accordingly, this issue is set-aside to the file of Ld. AO, with the aforesaid direction. TDS u/s 195 - Disallowance on reimbursement of expenses paid to Head Office u/s 40(a)(ia) - non-deduction of tax at source - HELD THAT:- AO do not comply with the direction given by DRP and has not examined whether Article 12 of the Tax Treaty or Article 15 relating to independent personal services would be attracted in the instant set of facts. We observe that even the assessee apart from furnishing self-declaration filed by the individual consultants to whom the payments were disbursed by the JTI Head Office on behalf of the assessee, did not furnish any conclusive evidence to show that the individual consultants were tax residents of USA In the interest of justice the matter being restored to the file of the Assessing Officer to examine whether the correct Article to be applied in the instant facts should be Article 12 relating to fee for technical services / fee for included services or Article 15 relating to independent personal services of the DTAA between India and USA. Further, we are also of the considered view that merely filing of self-declaration by the individual consultants is not adequate proof of residency and accordingly, the assessee is directed to file necessary supporting documents to prove the tax residency of the individual residency of the individual consultants to whom the payments were made by JIT Head Office on behalf of the assessee. Depreciation on opening WDV of expenditure held to be of capital nature in the assessment proceedings - HELD THAT:- We are in agreement with the Ld. Counsel for the assessee that the depreciation may be allowed to the expenditure which has been held to be capital expenditure as per directions given by the ITAT in assessee s own case for A.Y. 2007-08. Accordingly, the Assessing Officer is directed to grant depreciation to the assessee on expenditure held to be capital in nature, in accordance with law. Nature of expenses - preliminary drilling expenses - HELD THAT:- It would be useful to reproduce the relevant extracts of the ITAT in assessee s own case for A.Y. 2007-08 [ 2023 (5) TMI 1003 - ITAT AHMEDABAD ] nature of expenses incurred by the assessee coupled with the fact that the Department has not brought anything on record to show that any capital asset of enduring nature was brought into existence, the claim of the assessee on expenses incurred on preliminary drilling expenditure is hereby allowed. Disallowance of subscription charges on the ground that no technical services has been made available - HELD THAT:- We observe that the ITAT in various cases have held that payments towards subscription fees for access to specified online data base could not be considered as fees for technical services , support may be drawn from the following judicial precedents which have upheld the above proposition of law like Elsevier Information Systems GmbH [ 2019 (5) TMI 405 - ITAT MUMBAI] , TIS Two Administration (Singapore) Pte. Ltd. ( 2010 (4) TMI 860 - ITAT MUMBAI ), De Beers India Minerals P. Ltd. [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT] , ADANI PORT- INFRASTRUCTURE PVT. LTD. AND DHOLERA PORT LTD., [ 2014 (9) TMI 352 - ITAT AHMEDABAD] - Thus we are of the considered view that the DRP has not erred in holding that the aforesaid payments towards subscription charges do not qualify as fee for technical services. TDS u/s 195 - disallowance of training expenses - whether training and travelling etc. would not qualify as technical services in terms of the Act or the DTAA ? - HELD THAT:- On going through the facts of the instant case, on a preliminary perusal of the expenses (training expenses), the same prima facie seem to qualify as payment for technical services . Further, we observe that the DRP, while allowing the appeal of the assessee has not given in specific finding on merits as to why payment for providing training services do not qualify as fee for technical services under the Act read with the Treaty. Accordingly, in the interest of justice, the matter is being restored to the file of AO to give detailed findings as to the nature of expenses and the assessee is also directed to file necessary details and also provide break-up as payment in support of its contention that the aforesaid payment do not qualify as fee for technical services under the Income Tax Act read with the DTAA. Disallowing reimbursement of expenses paid to Head Office under Section 40(a)(ia) - HELD THAT:- DRP is directed to give a finding as to whether the aforesaid services qualify as fee for technical services under the Income Tax Act read with India-USA Tax Treaty, since from perusal of the contents of the order passed by DRP, no specific findings has been given by DRP on this issue. Accordingly, the matter is being restored to the file of DRP with the aforesaid directions. Allowability of audit expenses - assessee s Head Office had taken services of RPS of USA in relation to Dholka Oil Fields Reserve Audit - whether the payment towards such audit fees qualifies as fee for technical services under the Act read with the Treaty.? - HELD THAT:- We observe that in the instant facts, payment was made by the assessee carrying out of reserve audit of Dholka Unit. Looking into the facts of the instant case, we are of the considered view that in the instant case, no technology has been made available to the assessee during the course of providing of aforesaid audit services , which is a mandate of Article 12 of the India-USA DTAA for any services to qualify as fee for technical services / fee for included services under the India-USA Tax Treaty. In our considered view, DRP has correctly observed that looking into the instant facts and nature of services for which payment was made by the assessee viz. audit services, there can be no inference that any technology was made available to the assessee, looking into the nature of services availed by the assessee. It is also not the allegation of the Department that RPS, USA has a permanent establishment or fixed placed of business in India so that the income erred by RPS USA should be taxable under Article 7 of the India-USA Tax Treaty as business profits in India. In the case of ACIT vs. BSR and Company [ 2016 (5) TMI 356 - ITAT MUMBAI ] ITAT held that different types of professional services rendered to an Indian company by overseas companies outside India in relation to audit, taxation, transfer-pricing, information technology, background checks, etc would be independent personal services; since these overseas companies had no fixed base or PE in India, payment made to them would not be chargeable to tax in India.

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• 2024 (1) TMI 263
  Validity of reopening of assessment - notices in the name of non-existing/dissolved entity - dissolution of partnership firm and discontinuation of business - HELD THAT:- Hon'ble Gujarat High Court in the case of Adani Estate Management (P) Ltd [ 2023 (6) TMI 1039 - GUJARAT HIGH COURT] held that where an assessee company was amalgamated and same was intimated to the Assessing Officer, reopening notice issued in the name of erstwhile company which was amalgamated with assessee company was to be quashed. Hon'ble Supreme Court in the case of PCIT Vs Maruti Suzuki India Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] also held that where an assessee company was amalgamated with another company and thereby loss its existence, the assessment order passed subsequently in the name of same non-existent entity would without jurisdiction and was to be set aside. Keeping in view the fact that the assessee has intimated the AO at the earliest possible opportunity about the dissolution of assessee firm, the AO still issued notices in the name of non-existing entity and passed the order against such entity, therefore, assessment order is without jurisdiction and liable to be set aside and quash the same. Decided in favour of asseessee.

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• 2024 (1) TMI 262
  Validity of reopening of assessment - no valid service of the notice u/s 148 - HELD THAT:- We find that the ld CIT(A) was justified in rejecting the claims so made by of the assessee by way of a detailed discussion in the light of the judicial pronouncements cited therein. Finding no merit in this ground of appeal, therefore, this Ground No. 1 taken by the assessee is rejected. Cash credit found in the bank account which remained unexplained u/s 68 - It is an admitted fact that the assessee had been getting salary from RJ. He was aged 34 years at that relevant time and therefore the saving of a meager Rs 2,50,000/- is not beyond the pre-ponderance of human probability so as to be disbelieved. Otherwise also the Id. CIT(A) has not completely rejected the contention but estimated the same at Rs. 50,000/- but without any basis. In these circumstances, we find no justification in rejecting the contention of availability of opening cash in and of Rs. 2,50,000/- as claimed and the same is also allowed. The provisions of s. 68 69 use the word may indicating discretion conferred upon the AO by the statute, who is supposed to use such discretion judiciously and is not obliged always to make an addition. In view of the above discussion and in absence of any contrary evidence brought on record by the Revenue, we do not find any justification in making the addition considered u/s. 69 of the Act by the Id. CIT(A) and the same is directed to be deleted. The Ground No. 2 taken by the assessee is allowed. Appeal of the assessee is partly allowed.

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• 2024 (1) TMI 261
  Power of appellate authorities to entertain any fresh claim filed during appellate proceedings - Exemption of leave encashment entitled u/s 10(10AA)(i) and 10(10AA)(ii) - assessee superannuated from undertaking of Madhya Pradesh Government i.e. Madhya Pradesh Power Management Co.Ltd. and received Leave encashment - HELD THAT:- We find that as held by Hon ble Supreme Court in the case of M/s Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] appellate authorities can entertain any fresh claim filed by the assessee during appellate proceedings and therefore, there was no bar for the Ld.CIT(A) to admit the claim and decide on merit. Accordingly, we admit the claim of the assessee for adjudication. Before us, assessee has relied upon the decision of Liyakatali Chhotumiya Saiyed vs ITO i[ 2023 (3) TMI 768 - ITAT AHMEDABAD] wherein the assessee was retired from Bharat Sanchar Nigam Limited which was earlier a part of the Department of Communication, Government of India. The leave encashment received by the said assessee was directed to be allowed in proportionate of the services rendered in Government Department as well as Public Sector Undertakings. We find that facts of the instant case are exactly identical to the above case. The assessee was admittedly employed with the Madhya Pradesh State Electricity Board which was a Government Organization, which later on converted into a company namely, Madhya Pradesh Power Management Company Ltd., Jabalpur. Therefore, we restore the matter back to the file of AO for determination of the exemption of leave encashment entitled to the assessee under the provision of section 10(10AA)(i) and 10(10AA)(ii) - Decided in favour of assessee for statistical purposes.

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• 2024 (1) TMI 260
  Penalty u/s 271(1)(c) - defective notice - not specification of clear charge - HELD THAT:- As relying on MANJUNATHA COTTON AND GINNING FACTORY[ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and MR. MOHD. FARHAN [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] and M/S SSA'S EMERALD MEADOWS [ 2016 (8) TMI 1145 - SC ORDER] since, the Assessing Officer has not been specified under section 274 as to whether penalty is proposed for alleged concealment of income or furnishing of inaccurate particulars of such income , the penalty levied is hereby obliterated. Appeal of the assessee is allowed.

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• 2024 (1) TMI 259
  Validity of the jurisdiction assumed by the A.O for initiating proceedings u/s. 147 - addition of cash deposit in his bank account, on a protective basis - HELD THAT:- Reopening is permissible only when the A.O gives a clear finding that ascertainable income has escaped in the hands of a definite assessee and find substance in the claim of the Ld. AR that recourse to proceedings u/s. 147 of the Act would not be permissible for framing of a protective assessment. As taking recourse to framing of a protective assessment in itself pre-supposes and has as its foundation, a probability, that on arising of a contingency in the future, say, order of an appellate authority/court would result into escapement of income in the hands of the assessee, the fundamental requirement for assuming of jurisdiction u/s 147 of the Act, i.e formation of a bonafide belief that the income of the assessee chargeable to tax had escaped assessment is found to be seriously amiss. Expectation that an income may arise in the hands of an assessee i.e, based on a contingency in the future, can by no means justify assumption of jurisdiction u/s 147 of the Act. When the AO holding a bonafide belief that the income of another person, viz. Shri. Inder Lal Ramrakhyani had escaped assessment, and on the said basis had initiated proceedings u/s 147 of the Act on a substantive basis in the case of the said person, then, it is beyond comprehension that the AO after holding a belief that the amount was the income of another person, could have thereafter simultaneously held the said amount as the income of the assessee chargeable to tax that had escaped assessment - notice issued by the A.O u/s. 148 quashed for want of valid assumption of jurisdiction. Decided in favour of assessee.

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• Customs

• 2024 (1) TMI 258
  Exemption from Basic Customs Duty (BCD) in terms of Sl. No. 190C of Notification No. 21/2002-Cus. dated 01.03.2002, as claimed - deformed Steel Bars Grade HRB 500 (TMT Bars) - whether the impugned goods were alloy steels or non-alloy steels and prime or secondary? - HELD THAT:- This is a case where apparently the demand has been raised by the Revenue by re-classifying the TMT bars under CTH 72279090, which action is not at all supported by any evidence. Thus, the very demand appears to be only on assumptions and presumptions of the adjudicating authority. From the test reports placed in the appeal paper book from page 28 onwards reveal that 15 samples of 20mm TMT bar were tested and 14 samples of 25mm TMT bar were tested by NML; the percentage of silicon content of 20mm TMT bar was between 0.37 and 0.62 and in respect of 25mm TMT bar, the same was between 0.57 and 0.66. The average would be 0.58% in respect of the 20mm TMT bar. The Commissioner (Appeals), however, in the impugned order, has held that the average silicon content was more than 0.6%, which is also baseless and it only shows the non-application of mind. Having referred for test analysis, his observation that the application of Indian Standards guidelines would not be correct is a misnomer, especially when he is not an expert himself. Chapter 72 prescribes the percentage of each element/constituent in respect of non / other alloy steel and it is not the case of the Revenue that in respect of the 20mm, 25mm and 32mm TMT bars, the percentage of these elements is more than the prescribed limit. The Revenue is not justified in denying the benefit of Notification No. 21/2002-Cus. dated 01.03.2002 (Sl. No. 190C) and the consequential demand in respect of the 32mm TMT bars cannot sustain. The impugned order deserves to be set aside in toto, which is done - appeal allowed.

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• 2024 (1) TMI 257
  Levy of penalties both under Section 114 and Section 114 AA on both of the CB and the exporter together - classification of the goods declared in the Bill of Lading and in Bill of Entry - Safety Matches - initiation of recovery proceedings - Power to grant the MEIS rewards/benefit - failure to review Statutory order passed by the proper officer of Customs under Sec. 51 of the Customs Act accepting the classification - Onus of classification of the product especially when the issue involves interpretation and complex questions of law - Action against the CB - Goods attempted to be exported liable for confiscation - Initiation of Recovery Proceedings - HELD THAT:- Recovery proceedings should be from the person who had obtained the MEIS scrips/instruments through fraud willful mis-representation or suppression and not against the CB - It is found from the impugned order that no recovery of duty is ordered from the appellant. The plea has no merits. Power to grant the MEIS rewards/benefit - HELD THAT:- The Scrips can be used for payment of various Customs and Central Excise duties and fees as specified. In the impugned case no dispute on the classification heading of the goods under the schedule to the Customs Tariff Act 1975 has been raised. In fact, it is mentioned that as soon as the discrepancy in the classification heading was pointed out the exporter has paid the excess MEIS benefits claimed. In the era of self-assessment any wrong declaration including that of the classification of the goods which is done deliberately in the Shipping Bill / Bill of Lading for earning undue benefit on export of goods can be examined and penal action taken against all the persons concerned by Customs if so warranted. Such blame worthy acts ultimately affect the payment of Customs and Excise duties through use of freely transferable ineligible scrips, thus defrauding the exchequer. Hence while grant of rewards to the exporter is by the DGFT preventing the leakage of revenue is the concern of Customs. Therefor while the power to grant the MEIS rewards/benefit is conferred on the DGFT authorities, action for violation of specific provisions of law can be taken under both the Acts by the respective authorities. Failure to review Statutory order passed by the proper officer of Customs under Sec. 51 of the Customs Act accepting the classification under Sec. 129D of the Customs Act - HELD THAT:- There is no separate assessment done by the Customs Officer, unless a need is felt to verify the self-assessed Shipping Bill based on risk-assessment parameters or otherwise. Clearence of goods for export under section 51 of the Customs Act 1962 is a procedural provision based on the satisfaction of the proper officer and no review of such subjective satisfaction is contemplated under Sec. 129D of the Customs Act 1962. Onus of classification of the product especially when the issue involves interpretation and complex questions of law - HELD THAT:- The onus is on the assessee and not on the Customs Officer. In cases, where the importer or exporter is not able to determine the duty liability / make assessment for any reason, he may request the proper officer for assessment of the same under Section 18(a) of the Customs Act, 1962. The appellant has not shown that overwhelmed by the complex questions of law he had advised the exporter to request for assessment under Section 18(a) ibid. This is perhaps because as pointed out by Revenue, there can be no confusion with only one specific heading for Safety Matches in the Customs Tariff and in the MEIS schedule i.e. CTH 3605 0010. Hence the averments of the appellant is not correct. Action against the CB - HELD THAT:- Action taken by a broker in terms of the license requirements are actionable under CBLR, but for actions relating to intentionally using incorrect documents etc. collusion with exporters for defrauding the exchequer etc. the cause of action is different and separate action can be taken under the Customs Acy 1962. Onus of correct classification - HELD THAT:- Classification under two different Acts cannot be compared. Both the tariff schedules are not aligned and are hence not pari materia for purposes of classification of export goods - The onus of correct classification is on the appellant. If he had any doubts regarding the rates etc. he should have checked with the Department or sought assessment under Section 18(a) of the Customs Act, 1962. Goods attempted to be exported liable for confiscation - HELD THAT:- Sec. 113 [i] provides for goods attempted to be exported liable for confiscation when the exporter mis-declares the material particulars or its value this is not the case here - Section 113 (i) of the Customs Act 1962, provides for the confiscation of goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this. Material particulars would include the CTH of the goods as it has a bearing on the benefits accruing to the appellant. Hence a mis-declaration relating to the classification of the goods is also actionable under the said section. Onus of proving that the appellant had intentionally or knowingly made any false declaration or statement - HELD THAT:- The onus of proving that the appellant had intentionally or knowingly made any false declaration is on the Department. However, when people collude to do a blame worthy act it is always hatched in secrecy, and it is impossible to adduce direct evidence of the same. The offence can be largely proved from inferences drawn from acts or illegal omission or commissions made - While it is true that Appellate bodies should not interfere with the penalty imposed by the Original Authority just because another view is possible, at the same time the legal principle is that penalty ought always to fit the misconduct. While the penalty when warranted should act as a deterrent it should not be disproportionate. It has not been brought out that the appellant illegally profited from the act. The appellant was also not seen to be a part of a conspiracy to defraud the exchequer, however he has made a mistake by a conscious disregard of the illegality and in not distancing himself from the act and reporting the matter that he knew was wrong and this blameworthy conduct warrants a penalty. However, the penalty imposed in this case is shocking and requires to be modified. Imposing penalties both under Section 114 and Section 114 AA on both of the appellant and the exporter together for the same act - HELD THAT:- The penalties imposed have been done by splitting a single action under two different sections of the Customs Act, one which is in general and the other more specific to the impugned misconduct. If the appellant was being alleged to have committed two distinct offences then there should have been two distinct allegations. The fact is that goods were exported improperly only because the appellant as agent for the exporter knowingly used a declaration which was false or incorrect for export of goods. Since the role of the appellant was in knowingly using false / incorrect declaration for the improper exports of the goods, the penalty under section 114AA which is more specific to the misconduct alone would be appropriate. It is deemed appropriate that penalty of Rs 1,00,000/- under section 114AA of the Customs Act 1962 on the appellant would suffice and is so ordered - The penalty under section 114(iii) is set aside - The impugned order in as much as it relates to the appellant is modified accordingly.

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• 2024 (1) TMI 256
  Prayer for setting aside of imposition of redemption fine and penalty - over valued export goods - GST registration of the supplier is suspended - whether supplier is non-existent and no enquiry was conducted at the end of the supplier - HELD THAT:- As the supplier of the goods is issued invoices to the appellant paying GST and market survey was not done in proper manner, in that circumstances the impugned order is not sustainable and is accordingly set aside. In that circumstances, the goods are not liable for confiscation, accordingly, no redemption fine and penalty can be imposed upon the appellant. Appeal allowed.

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• Corporate Laws

• 2024 (1) TMI 255
  Compounding of offences - default in holding Annual General Meeting the company (AGM) - non-compliance of Section 166/96 of the Companies Act, 1956/2013 - It was held by NCLAT that Once the appellant has admitted his default and thereafter approached the Tribunal for compounding the offence there was no ground for the appellant to assail the order of the compounding passed by the NCLT. HELD THAT:- There are no reason to interfere with the impugned judgement - Civil appeal dismissed.

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• 2024 (1) TMI 254
  Professional Misconduct - The reports issued in form 10 DA u/s 80 JJAA of Income Tax Act - failure to obtain sufficient appropriate evidence and failure to exercise due diligence professional skepticism - Failure to verify reorganization of business with various parties - Failure to exclude employees whose contribution was paid by the Government - Lapses in reporting additional employees during FY 2020-21 - Failure to verify payment of additional employee cost by account payee cheque/draft/electronic means - Failure to verify salary limit of Rs 25,000 per month for new employees - penalties and sanctions. HELD THAT:- It has been established that CA Pawan Jain failed to obtain sufficient appropriate evidence and failed to exercise due diligence professional skepticism before issuing report in Form 10 DA. He did not verify the basic conditions i.e., (a) excluding the additional employees of merged/amalgamated business; (b) excluding additional employees whose EPS contribution was paid by the Government; (c) whether there was increase in the total number of employees; (d) whether additional employee cost was paid by account payee cheque/draft/electronic means; and (e) whether total emoluments of additional employee was not more than Rs 25000 per month. In addition to the above charges, there are many other conditionalities under section 80JJAA, which are required to be checked by the CA who certifies eligibility of the amount of Income Tax deduction to be claimed by the assessee company. These relate to ascertaining whether the new employees participated in a recognized Provident fund, whether there was no rehiring of old employees, and whether additional employees were employed for not less than 240 days. Besides these, there were deficiencies in sample testing done by the CA. The CA was charged with non-verification of the same. While denying all of these charges, the CA claimed that he had looked into these matters. As stated earlier, none of these are evidenced in the working file and therefore, we are unable to accept his defense. Findings on the Articles of Charges of Professional Misconduct - HELD THAT:- CA Pawan Jain has failed to exercise due diligence in ensuring the presence of the basic qualifying criteria to qualify for the tax benefit and obtaining sufficient appropriate evidence to support his certification. Thus, he was negligent in the conduct of his professional duties by not adhering to the scope of the work undertaken by him. As per section 132(4) of the Companies Act, Professional or other misconduct shall have the same meaning assigned to it under section 22 of The Chartered Accountants Act 1949. Thus, failure of CA Pawan Jain to exercise due diligence and failure to obtain sufficient appropriate evidence resulted in the following professional misconducts within the meaning of Section 132 (4) of the Companies Act, 2013: a) Failure to exercise due diligence in the conduct of professional duties (clause 7 of part-I of second schedule of The Chartered Accountants Act 1949), This charge is proved that the CA Pawan Jain failed to exercise due diligence in the conduct of professional duties as explained in Section - C- I to V above. b) Failure to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion. (clause 8 of part-I of second schedule of The Chartered Accountants Act 1949). This charge is proved as CA Pawan Jain failed to obtain sufficient information which was necessary to ensure that the report issued by him in Form 10 DA is true and correct. Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The seriousness with which proved cases of professional misconduct are viewed is evident from the fact that a minimum punishment is laid down by the law - CA Pawan Jain failed to exercise due diligence in the conduct of professional duties while certifying the information in form 10 DA based on examination of the relevant records. It has been proved that before issuing the reports, the CA did not obtain sufficient appropriate evidence with regard to compliance of conditions stipulated in section 80 JJAA for claiming deduction in respect of new employees. Considering the proved professional misconduct and keeping in mind the nature of violations, their impact on revenue and deterrence against future professional misconduct, monetary penalty of Rs fifty (50) lakhs only imposed upon CA Pawan Jain.

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• Insolvency & Bankruptcy

• 2024 (1) TMI 253
  Recall of an order - seeking removal of the Appellant as RP - Application filed on the ground that RP in spite of request has not convened the meeting, hence he may be removed - HELD THAT:- On looking into Rule 49, sub-rule (2), it is clear that ex-parte order can be recalled on two grounds, firstly, when notice was not served or that the Respondent/ Applicant was prevented by any sufficient cause from appearing when the Application was called for hearing. The Adjudicating Authority in the impugned order, rejected the Recall Application holding that no sufficient case was shown for exercising the power under Rule 49 of the NCLT Rules, 2016. The Appellant was well aware that case was listed for hearing on 12.05.2023 and he entered appearance through Counsel, who inspite of entering his attendance in chat box, is not shown to be present. The relevant fact to be noticed is that the Appellant was well aware of the date 12.05.2023. On 12.05.2023, according to the Appellant himself, the case could not be taken up due to paucity of time and next date was fixed. The Appellant s case is that his Counsel wrongly noted the date as 08.06.2023 instead of 07.06.2023, hence, on 07.06.2023, he could not appear and the order was passed ex-parte against him - When a party appears on a date which is fixed before the Court, it is presumed that the party is well aware of the proceedings, which was taken up by the Court on the said date. On 12.05.2023, the next date fixed was 07.06.2023. In the present case, the Appellant is not denying that he was not served with the copy of the IA No.2121 of 2023, nor he denies the service of copy of Application. The fact remains that he did not file reply within the time allowed and also did not appear on 07.06.2023, when the case was taken up - the Adjudicating Authority did not commit any error in rejecting IA No.3216 of 2023. The Adjudicating Authority being satisfied that no sufficient cause has been shown for nonappearance passed the impugned order dated 12.12.2023. There are no good ground or reasons to interfere with the impugned order in this Appeal - appeal dismissed.

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• Service Tax

• 2024 (1) TMI 252
  Classification of services - Erection Commissioning and Installation Service or construction service - Refund of tax paid - tax paid under mistake of law - applicability of provisions of section 11B of CEA. Classification of services - HELD THAT:- The Commercial or Industrial Construction Service includes within its scope construction of a new building or a civil structure or a part thereof. Construction of rooms for educational institutions would ordinarily be covered under the description of construction of new building or a civil structure or a part thereof. In that sense, ordinarily Erection, Commissioning or Installation of rooms would fall under the category of construction of new building or a civil structure or part thereof. The said activity would become taxable only if the same is provided for use for Commerce or Industries - In the instant case, there is no dispute that the said rooms were not used for commerce/ industry and therefore, the appellant s service could not be classified under the head of Commerce or Industrial Construction Service. In view of above, it is clear that the tax has been paid wrongly. Applicability of provisions of Section 11B to the refund claim - HELD THAT:- Unless tax has been collected under a provision which has been held to be unconstitutional in the appellant s own case all refunds would be covered by Section 11B of the Central Excise Act or Section 27 of the Customs Act, 1962 - the provisions of unjust enrichment as provided under Section 11B become applicable to the case. The appeal filed by the Revenue as well as the appeal filed by the Sintex BAPL Limited are dismissed.

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• 2024 (1) TMI 251
  Classification of service - Works Contract Service or commercial or Industrial Construction Service? - activity of construction of roads, buildings etc - facts not verified properly - violation of principles of natural justice - HELD THAT:- The aspect that whether service is classifiable under work contract service has not been examined properly by the Adjudicating authority. Whether a service is classified as work contract service depends on various facts such as whether the contract is executed with service and material both, whether the appellant has paid the State VAT, etc. Therefore, since the aspects of work contract service has not been examined properly by the Adjudicating Authority, the entire matter needs to be reconsidered. As regard the appellant s claim that the Adjudicating Authority has given hypothetical finding that the appellant could have entered in a single contract i.e. construction of building and road - in this regard prima facie view is that the finding of the adjudicating authority in this regard is not correct. For the purpose of levy of service tax individual contract has to be taken in account. Accordingly, the service tax demand can be determined. Therefore, merely on assumption that the appellant have entered into two separate contracts intentionally to evade the service tax is prima facie not tenable - however since the important aspect of works contract service needs to be reconsidered, the matter needs to be decided a fresh. Appeal allowed by way of remand.

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• 2024 (1) TMI 250
  Levy of Service Tax - Construction of Complex Service - service provided to GSPHCL - service provided to Municipal Corporation and Nagarpalika under the JNNURM Scheme - Commercial or Industrial Construction Service or not - service by way of construction of compounding wall for BECL - facts not verified properly - violation of principles of natural justice. HELD THAT:- The levy of service tax under the construction must be based on the terms of the contract. Therefore, to arrive at a final conclusion of levy of service tax, on the services in question the terms of the contract vis-a-vis the judgements delivered which were relied upon by appellant needs to be considered. However the adjudicating authority has not properly examined the facts/ terms of the contract and he has not seen the light of the judgements given subsequently on the identical issue. Therefore, the entire matter needs a relook and to be decided a fresh. The appeal is allowed by way of remand to the adjudicating authority for passing a fresh order.

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• 2024 (1) TMI 249
  Exemption from Service Tax - services provided to International Finance Corporations - exempt under N/N. 16/2022-ST. or not - extended period of limitation - CENVAT Credit - input service or not - reimbursement of share of common expenses - renting of immovable property service - insurance service. Exemption from Service Tax - services provided to International Finance Corporations - exempt under N/N. 16/2022-ST. or not - extended period of limitation - HELD THAT:- The identical issue has been examined in the case of M/S AC NIELSON ORG. MARG PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II [ 2018 (2) TMI 153 - CESTAT MUMBAI] where it was held that the exemption to United Nations would include services provided to all institutions working under the United Nations or working under the umbrella of the United Nations - In view above the exemption Notification No. 16/2002-ST would be available in respect of services provided to IFC which is the part of United Nations. The demand of this count therefore, cannot survive and same is set aside - part of the demand of Service Tax relating to the period 01.4.2012 to 31.3.2015 is also not sustainable on the ground of limitation as the issue in dispute were earlier agitated by revenue in the earlier show cause notices as well - entire demand is also not sustainable on the ground of the limitation and on merit. CENVAT Credit - input service or not - reimbursement of share of common expenses - HELD THAT:- A perusal of the invoices shows that the DTTIPL has discharge service tax at the rate of 12% on the entire amount of cost sharing. From the description all the services provided by DTTPIL it is apparent that same would be in the nature of management of consultant services and the credit of same would be admissible to the appellant - The document issued by DTTIPL is not in the nature of the cost sharing document but either proper invoices issued by registered service provider. It may be an arrangement between the appellant and DTTIPL that the value of the said service would be based on the actual case incurred by DTTIPL but from the description given by the appellant about the service provided by the membership of DTTPIL. It would be clear that it is not mere sharing of cost. CENVAT Credit - renting of immovable property service in respect of the invoices of M/s Sabien Trusts for office No. 202, Heritage, Ashram Road, Ahmedabad - rent invoices of Mr. Raj Bhikhubhai Shah for office No.602, Heritage, Ashram Road, Ahmedabad - HELD THAT:- The allegations that the premises were being used by C C Chokshi are not substantiated by impugned order. Moreover, the impugned order also does not deny that the said premises were rented to the appellant. In this background the fact that the appellants were using the said premises cannot be doubted. In this background the defect in the invoice can only be treated as a procedural lapse, which cannot came in way by eligibility of Cenvat Credit. The Cenvat Credit in respect of the office No. 202 is therefore, admissible to the appellant - As regard Office No. 602, it is seen that the appellant have admitted that they were not the sole users of said premises. The said premises were also being used by DTTIL along with the appellant. In this background, there are no merit in the appellant s claim that they are entitled to the Cenvat Credit of the entire amount of service Tax paid. CENVAT Credit - input services - insurance services - HELD THAT:- It is not disputed by the revenue that the appellant are using the said premises and it is also not disputed that the appellant have installed equipment in the said premises. With these circumstance, the Cenvat Credit of insurance would be admissible to the appellants. As regard the use of the said office by M/s C C Chokshi Chartered Accountant is concerned, revenue has failed to provide any proof to substantiate its claim. In view of the above, the benefit of Cenvat Credit on insurance services cannot be denied. Appeal allowed in part.

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• 2024 (1) TMI 248
  Levy of service tax - banking and other financial services - Demat/ Depository charges collected from sub brokers - stock broker service - Transaction/ administrative charges collected from sub-brokers - VSAP/TWS charges collected from sub broker - HELD THAT:- All the charges on which service tax was demanded by the Revenue are statutory charges which are though collected from the sub- brokers but the same was deposited to the stock exchange i.e. Vadodara Stock Exchange Clearing House, Bombay Stock Exchange National Stock Exchange , therefore, these charges were not collected as service charge of the appellant but only as reimbursement which was paid to the stock exchange. Therefore, these charges cannot be considered as the service charge of any services provided by the appellant to their sub-broker. These issues have been consistently decided in various judgments cited by the appellant. In the case of Edelweiss Financial Advisor Ltd. [ 2023 (9) TMI 522 - CESTAT AHMEDABAD ] it has set aside the demand of service tax on computer to computer linkage service. In the case of Saurin Investments Pvt Ltd [ 2023 (1) TMI 454 - CESTAT AHMEDABAD ] this Tribunal has held that NSDL/CDSL charges collected by the stock broking firm cannot be liable for service tax. Thus, it is settled that all the charges which are involved in the present case have been held as not the service charges of the broking firm and hence not liable to service tax and this consistent view has been taken in the other judgments cited by the appellant. Therefore, in the present case also all the charges which were collected on behalf of the stock exchange are not liable to Service Tax. The impugned orders confirming the demand of service tax are set aside - Appeal allowed.

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• Central Excise

• 2024 (1) TMI 247
  Clandestine removal of goods - removal on the basis of panchnama and statements of various persons - cross- examination which is mandated under Section 9D of Central Excise Act,1944 not allowed - HELD THAT:- There is no evidence of clandestine clearance of galvanized MS wires from the factory of the appellant being a job worker. No investigation has been carried out with the transporter, not a single buyer was brought on record who allegedly purchased the clandestinely removed goods. There is absolutely no evidence of any payment received against the alleged clandestine removal. The most important is that admittedly the case of the department is that the appellant have cleared the job work goods clandestinely, if this be so, the owner of the goods is the principal manufacturer of the goods who were not interrogated or investigated to ascertain that they being owner of the goods are aware of clandestine removal and whether the money received by them or the job workers. There is no tangible evidence to prove the clandestine removal beyond doubt - the demand, interest and penalties set aside - Since the demand of the main appellant manufacturer is not sustained, the penalties on other persons which are consequential to the demand of duty from the main appellant, shall also not sustain. The impugned order is set aside - Appeal allowed.

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• 2024 (1) TMI 246
  CENVAT Credit - input service or not - services related to effluent treatment of the waste generated at the appellant s factory and such effluent treatment service availed from the third party agency i.e. Narmada Clean Tech Ltd, Saurashtra Enviro Projects Pvt Ltd and Bharuch Enviro Infrastructure Ltd. The contention of the Revenue is that the effluent treatment of waste is not related to manufacture of final product, therefore, it does not have nexus with the manufacturing activity of the appellant. HELD THAT:- This contention of the Revenue cannot be agreed for the reason that as per the pollution control act, it is mandatory for every industrial unit to treat the effluent waste generated during the manufacture of final product, therefore, the industrial unit cannot carry out the production without compliance of pollution control norms which includes effluent treatment of waste generated during the manufacturing activity. Therefore, the effluent treatment of waste is necessary for overall manufacturing activity of the industrial unit. This issue has been considered in the various judgments - reliance placed in the case of INDIAN FARMERS FERTILISER COOP. LTD. VERSUS CCE., AHMEDABAD [ 1996 (7) TMI 141 - SUPREME COURT] where it was held that It is held that the raw naphtha used to produce ammonia which is used in the water treatment, steam generation, inert gas generation and effluent treatment plants of the urea plant of the appellants is entitled to the exemption provided by the Exemption Notification No. 187/61 as amended from time to time. The revenue s claim that since the service was availed beyond the place of removal, credit is not admissible completely fails and, on that ground, credit cannot be denied. The appellant is legally entitled for availment of Cenvat credit in respect of effluent treatment service - Hence, the impugned order is set aside - Appeal is allowed.

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• 2024 (1) TMI 245
  Refund claim - Applicability of principles of unjust enrichment - manufacturer had not paid the duty at the time of clearance of goods due to availing the benefit of SSI exemption, however he was asked to pay that amount pending the investigation of the case - HELD THAT:- Merely because the amount, the refund whereof was claimed, was shown as expenses in Profit and Loss Account of the appellant, the incidence thereof cannot be presumed to be passed on to the consumers that too in absence of any positive evidence produced by the Revenue. The Chartered Accountant Certificate should have been relied upon by the Commissioner (Appeals). The order under challenge is hereby set aside - Consequent thereto, the appeal stands allowed.

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• 2024 (1) TMI 244
  SSI Exemption - use of brand name of another person - Brand Roopkala owned by family and used by the appellant being one of the family member - N/N. 08/2003-CE dated 01.03.2003 - HELD THAT:- The fact is not under dispute that the brand Roopkala belongs to a family and the same is used by different members of the same family. It is also found that either side have no objection in use of Roopkala brand. Moreover, the appellant is using the Club Roopkala and the allegation is that the appellant is using the brand name of another person i.e. Roopkala . Firstly, even if the same brand name is used by two family members, it cannot be said that one is using the brand name of another person. The appellant is entitled for SSI exemption Notification No. 8/2003-CE. Therefore, the impugned order is set aside - Appeal allowed.

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• 2024 (1) TMI 243
  Valuation of Excise Duty - excess freight collected by the appellant from their customers as compared to actual freight paid to the transporter is liable to be included in the assessable value for discharging the excise duty or not - HELD THAT:- As regard the dutiability of excess freight collected from the customers as compared to the actual freight paid to the transporter, the Hon ble Supreme Court in the case of BARODA ELECTRIC METERS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1997 (7) TMI 126 - SC ORDER] held that the difference is on account of profit against the transportation charges and not the profit against the sale of goods and accordingly held that the differential freight amount is not liable to excise duty. The impugned order set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (1) TMI 242
  Classification of goods - Entitlement for exemption of payment of VAT in excess of 5% thereupon - Pizza - sandwich - It was held by High Court that This Court holds that the question(s) of law framed above are answered in the favour of the petitioner-assessee and against the respondent-revenue. As a result, pizza and sandwiches are held to be cooked foods - HELD THAT:- There are no reason to interfere in the matter. The Special Leave Petition is dismissed.

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• 2024 (1) TMI 241
  Direction to refund allegedly due alongwith interest - Petitioner filed a return for the fourth quarter and claimed a refund under the Delhi Value Added Tax Act - HELD THAT:- The petitioner tried to file Form DVAT-21, however, on account of a technical error, the same was not accepted. As per the petitioner, the refund for the tax period already paid has already been filed by the respondents and no demand appears in the portal, however, refund has not yet been processed for the said quarter. Issue notice. Notice is accepted by learned counsel appearing for respondents, who submits that on account of an error, the same could not be processed and assures that the refund shall be processed within a period of two weeks from today. The statement is taken on record. The petition is disposed of, directing the respondents to process the refund within a period of two weeks.

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• 2024 (1) TMI 240
  Classification of the coconut oil sold by the appellant - to be classified under Entry No. 25 of the Third Schedule appended to DVAT Act as Edible Oils and Oil cake or to be classified as a residuary item under Section 4(1)(e) of the DVAT Act bi-monthly publication namely Amagram ? - HELD THAT:- The argument of the appellant that the product Amagram is a periodical since it is published periodically, and is a book having collection of number of leaves or sheets or paper, is not persuasive. Even though the product is published periodically, but from the bare glance, the same in the nature of a catalogue, containing list of goods that can be bought from Amway. Though it contains other information like upcoming training schedules, achievement levels of distributors, etc., however, the nature of the product being a catalogue, cannot be taken away. Strictly speaking, even a diary is a book and the book is also a printed material. The printed material has been taxed under Entry No. 52 of the Third Schedule, however, the limited exemption has been given to the material which falls under Entry No. 5 of the First Schedule. The same has to be given a restricted interpretation. In the case of INDUSTRIAL AND COMMERCIAL SERVICE, ALLAHABAD VERSUS COMMISSIONER OF SALES TAX, UP., LUCKNOW [ 1962 (12) TMI 44 - ALLAHABAD HIGH COURT] , the Division Bench of the Hon ble Allahabad High Court had answered the issue whether books used in Section 4 of the UP Sales Tax Act would include the diaries sold by the appellant therein. In terms of Section 4 of the UP Sales Tax Act, the sale of books was exempted from taxation. The appellant therein was selling the diaries, which were claimed to be books as they were bound like a book. There were few pages in the diary containing general information on various matters and the Shlokas from Bhagavad Gita were referred. The Hon ble High Court noted that book has got several meanings and in a wider sense, means a writing in the collection of sheets of paper, blank, written or printed, strung or bound together and the diary would come within this meaning. However, it held that the diary would not come within the restricted meaning because primarily it is meant to be written and not to be read. It held that the books referred to in Section 4 are not to be interpreted in a wider sense but in a restricted or popular sense, which is the one that can be read for education, knowledge, enlightenment or recreation, the book that one would find in a literary or a book seller shop. In the present case also, the appellant is contending that Amagram is a periodical since the same is published periodically and would fall within Entry 5 of the First Schedule. On first blush, the contention might appear to be merited, however, when the Entry is read as a whole, which is accompanied with journals, including maps, charts and globes, the intention of Legislature does not appear to exempt periodicals as circulated by the appellant. In the case of MINERVA PRINTING WORKS VERSUS STATE OF BIHAR [ 1973 (6) TMI 51 - PUNJAB HIGH COURT] , the Hon ble Patna High Court had considered whether the sale of blank registers, exercise books, letter pads was exempted under the Bihar Sales Tax Act in the category of books and periodicals. It was held that the word book is used along with the word periodical and are meant for reading purposes and derive lessons from and gather information. Therefore, in a wider sense, blank registers, exercise books, etc. might fall within the category of books, the restricted meaning has to be given by looking at the entry in its entirety and gathering the intensity of the Legislature. In the present case also, the product sought to be classified as periodicals by the appellant, is essentially in the nature of catalogue containing information in relation to the products being offered for sale. No doubt, certain other information and news in relation to events, being organized, is also mentioned for the purpose of the consumption of its dealers. The same, however, cannot be held to be a periodical as referred in Entry No. 5 of the First Schedule. Moreover, it is not disputed that Amagram is in the nature of a catalogue , which has specifically been included in Entry No. 52 of the Third Schedule by Circular No. 2 dated 26.04.2005 - It is settled law that a person claiming exemption has to establish that the product squarely falls within the category of exempted goods. It is also settled that while interpreting the exemption notification / statute, a consideration in favour of the Revenue has to be given and in case of ambiguity, the same has to be interpreted against the assessee. The question of law as to whether the periodical Amagram is to be classified as catalogue liable for tax under Entry 52 of Third Schedule of the DVAT Act, is answered in favour of the Revenue. Coconut Oil - HELD THAT:- In view of the admitted fact that the coconut oil is sold by the appellant in small packs; is displayed in the category of hair care; the manner in which it is to applied on hair; and the purpose for which it is purchased by the consumer leaves no manner of doubt that the coconut oil sold by the appellant is wrongly sought to be classified under Entry 25 of the Third Schedule of the DVAT Act - the question of law as to whether the coconut oil is wrongly classified under Entry No. 25 of the Third Schedule of the DVAT Act is answered in favour of the Revenue as well. Appeal disposed off.

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