TMI Tax Updates - e-Newsletter
January 9, 2024

Case Laws in this Newsletter:

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

Articles

1. Appellate Authority is not empowered to dismiss the appeal for non-prosecution due to non-appearance of Assessee or authorised representative

   By: Bimal jain

2. GST MILESTONES: 2023 IN RETROSPECT

   By: Dr. Sanjiv Agarwal

3. Taxpayer entitled to refund of amount deposited due to coercion during search proceedings

   By: Bimal jain

News

1. 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs. 44,015 crore detected in a sustained drive against non-existent taxpayers by GST formations across the country since May 2023; 121 arrested

2. Shri Piyush Goyal inaugurates Indus Food 2024; exhibition to showcase India's vibrant and diverse food ecosystem

Notifications

GST - States

1. 09/2023 – State Tax (Rate) - dated 30-10-2023 - Chhattisgarh SGST

Amendment in Notification No. 1/2017–State Tax (Rate), dated the 28th June, 2017

2. 06/2023 – State Tax (Rate) - dated 30-10-2023 - Chhattisgarh SGST

Amendment in Notification No. 11/2017 State Tax (Rate), dated the 28th June, 2017

Highlights / Catch Notes

GST

• GST Registration Restored After Unsubstantiated Cancellation Notice Violated Natural Justice Principles.

  Case-Laws - HC : Cancellation of GST registration of petitioner - Violation of principles of natural justice - The impugned notice only states that the registration is liable to be cancelled for the reason “Rule 21(a)- a person does not conduct any business from declared place of business.” Thus it is evident from the notice itself that the impugned notice is bereft of any reason or documentary evidence in support of such reason. - GST registration restored - HC
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• Appeal Delay Excused Due to Health Issues; Court Permits Filing with Conditions Over Significant Tax Dispute.

  Case-Laws - HC : Condonation of delay of 65 days in filing appeal before the appellate authority - Since petitioner suffered from several health issues, which is supported by the medical prescriptions filed and huge amount of tax is involved in this matter, the delay in preferring the appeal is condoned by imposing certain terms so as to enable the petitioner to pursue his remedies under law. - HC
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Income Tax

• Claiming Tax Deductions for Agricultural Land Requires Registered Title Deed, Mere Agreement Insufficient.

  Case-Laws - AT : LTCG - Deduction u/s 54B on agricultural land purchased through agreement - absence of registered title deed - There is no merits or substance in the contention of the Ld. Authorized Representative of the assessee that for claiming the benefit of section 54-B, the registration of the title deed is not required. - AT
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• Reassessment Challenged: AO Must Specify Undisclosed Facts for Valid Reopening After Four Years.

  Case-Laws - HC : Reopening of assessment u/s 147 - reassessment based on the audit objections - Since the reassessment proceedings were triggered after four years, the AO ought to have indicated as to what were those material facts which the petitioner had failed to disclose. - HC
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• Court Overturns Penalty Decisions Due to Uncertainty in Misrepresentation and Expense Claims Under Income Tax Act.

  Case-Laws - HC : Revision u/s 264 - penalty u/s 270A imposed - waiver of penalty u/s 270AA - The very fact that the indications were made that the matter fall within (a) and (c), necessarily means that even the revisional authority was not sure whether it was a case of misrepresentation or suppression of facts or claim of expense, not substantiated by any evidence. - Order passed by the assessing authority rejecting application u/s 270AA and the order passed by the revisional authority rejecting revision petition, cannot be sustained. - HC
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• Gift from Grandparent Deemed Valid Despite Lack of Documentation; Cash Deposits During Demonetization Period Cleared.

  Case-Laws - AT : Cash deposits during demonetization period u/s 69A - So far as the gift of grand parent is concerned we are quite convinced that the family has financial worth to gift on the occasion of the grand daughter as the documents could not be furnished as the grand parent has since expired. - Additions deleted - AT
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• Court Upholds Order for Reopening Assessment; No Procedural Errors Found; Petitioner Can Argue Share Transaction Issues.

  Case-Laws - HC : Validity of the order passed u/s 148A(d) - Reopening of assessment - In exercise of jurisdiction under Article 226 of the Constitution of India, once this Court finds that the impugned order does not suffer from any procedural error and the same has been passed after giving an opportunity of hearing, it is advisable to restrain from interfering in the matter and left it open for the petitioner to raise all the grounds as raised in this petition to explain the transaction regarding issuance of shares in the assessment proceedings. - HC
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• Software Delivery Income Not Taxable in India Due to Foreign Services and Delivery Under Income Tax Act Section 5(2)(b.

  Case-Laws - AT : Income Accrue or arise in India - FTS - the ultimate delivery of the software was outside India - Since there is no dispute that the services were rendered outside India to the customers outside India, no part of the income accrues or arises or deemed to accrue or arise in India and accordingly the provisions of section 5(2)(b) of the Act are not applicable in the instant case. - AT
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• Ruling Clarifies: Nominating a Director Doesn't Establish Permanent Establishment in India for Shareholders.

  Case-Laws - AT : PE in India - scope of fixed place of business - The assessee being the major shareholder of EXL India, it has the legal right to nominate a director on the Board of EXL India and merely because the assessee has nominated a director on the Board of EXL India would not mean that the assessee has a “Place of Management” in India. - AT
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• Delay of 424 Days in Filing Appeal Condoned by Tribunal Due to Sufficient Cause; Appeal Accepted for Adjudication.

  Case-Laws - AT : Condonation of delay in filing appeals beyond the limitation period - delay of 424 days - the assessees have shown sufficient cause for the delay in filing the appeals before the Tribunal. Accordingly, we condone the delay in filing this appeal before us and admit the appeal for adjudication. - AT
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• Tax Dept. Consistently Accepts 10% Deduction; Assessing Officer's Decision Not Harmful to Revenue Interests.

  Case-Laws - AT : Revision u/s 263 - Claim of deduction u/s 57(iii) - Since this stand taken by the assessee with respect to claiming 10% deduction against income from other sources have been accepted by the Department in the past years, the order passed by the AO cannot be held to be erroneous and prejudicial to the interest of the Revenue u/s 263 - AT
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• Income Tax Assessment Reopening Invalid Without Proper Notice for Scrutiny u/s 143(2.

  Case-Laws - AT : Reopening of assessment u/s 147/148 - failure to issue notice u/s 143(2) - reopening of assessment is not valid as the Income Tax Department has power to conduct the scrutiny assessment by issuing notice u/s 143(2) of the Act. After filing the return of income u/s 139 of the Act, if the Department does not conduct the scrutiny assessment, by issuing notice u/s 143(2) of the Act then in that situation, on same set of facts, which are narrated in the return of income filed by the assessee, the Department cannot reopen the assessment u/s 147/148 of the Act. - AT
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Customs

• Refund of Invalid Terminal Excise Duty Payments Ordered with Interest to Petitioner.

  Case-Laws - HC : Refund of Terminal Excise Duty (TED) along with applicable interest - provision in relation to the Terminal Excise Duty have already been struck down. - The payments made by the Petitioner for Terminal Excise Duty (TED) shall be refunded to the Petitioner - HC
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• SEZ Units Not Exempt from GST Compensation Cess Under "Duty of Customs" in SEZ Act, 2005.

  Case-Laws - HC : Exemption from payment of GST compensation cess to SEZ unit - A conjunctive study of Section 26(1)(a), 2(zd) of SEZ Act, 2005 and Section 2(15) of Customs Act, 1962 would pellucidly tell that the phrase ‘duty of customs’ used in Section 26(1)(a) of SEZ Act only refers to duty leviable under Customs Act, 1962 but the said phrase does not include cess under GST Compensation Act. - HC
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Indian Laws

• Supreme Court overturns Civil Judge's decision for altering arbitral award without proper legal grounds u/s 34.

  Case-Laws - SC : Modification of the arbitral award - A perusal of the judgment and order of the learned Civil Judge, in the considered view of this Court, does not reflect fidelity to the text of the statute. Nowhere does it stand explained, as to, under which ground(s) mentioned under Section 34 of the A&C Act, did the Court find sufficient reason to intervene. In fact, quite opposite thereto, the Court undertook a re-appreciation of the matter, and upon its own view of the evidence, modified the order. - the impugned judgement(s) are required to be set aside - SC
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• Detention Order Upheld: Authority's Grounds Disclosed, Detainee Denied Access to All Evidence Including Phone Calls.

  Case-Laws - SC : Validity of the detention order - The grounds of detention forming the basis of the satisfaction of the detaining authority, were made known to the detenue. He cannot seek all the facts, including access to the telephonic conversation relied on - SC
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IBC

• Transaction Ruled as Operational Debt, Not Financial Debt, Due to Lack of Disbursement to Corporate Debtor in Sale-Purchase Case.

  Case-Laws - AT : Nature of transactions entered between the parties - The transaction emanates from sale and purchase of goods in the present case. No disbursement was made to the Corporate Debtor, hence, the transactions cannot be held to be a financial debt - there are no error in the order of the Adjudicating Authority agreeing with the view of the RP that claim of the Appellant is only an ‘operational debt’. - AT
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SEBI

• Regulation 20 mandates transparency, governance, and risk management for alternative investment funds in India.

  Act-Rules : General Obligations - Regulation 20 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 as amended
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• Investment Rules for Indian Alternative Funds Updated for Transparency and Investor Protection.

  Act-Rules : General Investment Conditions - Regulation 15 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 as amended
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Service Tax

• No Interest on Service Tax Refunds Due to Comprehensive Code in 1944 Act, Court Upholds Statutory Procedures.

  Case-Laws - HC : Interest not awarded on the amount of service tax refunded - Considering the fact that the Act of 1944 is a self-contained code, which provides a definite and systemic mechanism for the recovery of demand and the consequential refund thereof, this Court cannot issue directions dehors the law whilst disregarding the statutorily prescribed mechanism mandatorily required to be followed in cases of refund. - HC
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VAT

• Memory Cards Classified Favorably for Taxpayers Under RVAT Act; Revenue Authority Fails to Prove Alternate Classification.

  Case-Laws - HC : Classification of goods - memory cards - Since the revenue has not discharged its burden to show that the good in question, i.e. memory cards, which is undisputedly ‘media’ which can record ‘sound’ and other phenomena, would not be covered under the specific entry of either Entry No. 10 or Entry No. 3 of Part A to Schedule IV to the RVAT Act - HC
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Case Laws:

• GST

• 2024 (1) TMI 323
  Interest on refund - HELD THAT:- Although the Composition scheme was between March, 2020 to August, 2020, in the instant case, the respondents had sought benefit or extension of the Composition scheme only by one month, that is, September, 2020. It is pointed out by learned A.S.G. that there is no excess recovery made by the Department. However, the same is subject to verification and in the event, there is any excess recovery, the direction of the High Court shall prevail. SLP dismissed.

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• 2024 (1) TMI 322
  Unblocking of Input Tax Credit - time limitation as per Sub-rule (3) of Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- In the light of the undisputed fact that one year as stipulated in Sub-rule (3) of Rule 86A CGST Rules, 2017 came to an end on 11.5.2023 in so far as petitioner was concerned, question of respondents continuing to block ITC of the petitioner is clearly illegal and arbitrary and the same deserves to be unblocked by issuing necessary directions in this regard. The 1st respondent is to be directed to unblock the ITC to the tune of Rs.98,68,146/- as per the petitioner s Electronic Credit Ledger, Annexure-B by issuing writ of mandamus and further directions in this petition. Petition allowed.

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• 2024 (1) TMI 321
  Rejection of Refund claim - tax evasion - HELD THAT:- It is a clear stand of Revenue that this is not a case of any defect in the application for refund but instead is a case of tax evasion as detected in the inquiry conducted by Revenue, for which separate notice has been issued to petitioner. Accordingly, it is obvious that this case involves disputed questions of fact which ought not to be gone into while exercising writ jurisdiction under Article 226 of the Constitution. This Court declines interference and relegates petitioner to avail remedy of appeal u/S 107 of the GST Act, which if availed by filing an appeal u/S 107 of the GST Act by petitioner within a period of 30 days from today alongwith copy of this order, the same shall be entertained and decided on merits without being dismissed on limitation alone. Petition disposed off.

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• 2024 (1) TMI 320
  Violation of principles of natural justice - petitioner did not have a fair opportunity to defend itself - non application of mind - Cancellation of GST registration of petitioner - HELD THAT:- On perusal of the tenor of impugned show cause notice, it appears that neither specific reasons are assigned as to why the registration of the petitioner is proposed to be cancelled nor any supporting documents are attached to justify the reason - The impugned notice only states that the registration is liable to be cancelled for the reason Rule 21(a)- a person does not conduct any business from declared place of business. Thus it is evident from the notice itself that the impugned notice is bereft of any reason or documentary evidence in support of such reason. By now it is well settled that the reasons are heart and soul of any order and non-communication of the same amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice and resultantly violates principles of natural justice. The impugned show cause notice dated 23.06.2023 is hereby quashed and set aside. The respondent authorities shall issue fresh notice with particulars of reasons incorporated with details and thereafter to provide reasonable opportunity of hearing to the petitioner and to pass appropriate order in accordance with law. The concerned respondent is hereby directed to restore the registration of the petitioner forthwith. Petition allowed.

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• 2024 (1) TMI 319
  Condonation of delay of 65 days in filing appeal before the appellate authority - sufficient reasond for delay or not - suffered from severe ill-health and could not prefer appeal - HELD THAT:- As per Section 107 of the C.G.S.T Act, 2017, the petitioner has to prefer an appeal against the impugned Order passed by the respondent No. 4 before the respondent No. 3 within a period of three months from the date of service of the Order. Petitioner within a period of one month after expiry of three months also can file appeal against the impugned Order by showing the sufficient cause. Since petitioner suffered from several health issues, which is supported by the medical prescriptions filed and huge amount of tax is involved in this matter, the delay in preferring the appeal is condoned by imposing certain terms so as to enable the petitioner to pursue his remedies under law. It is considered apposite to allow the Writ Petition and permit the petitioner to prefer an appeal before the respondent No. 3 within a period of one week from the date of receipt of a copy of this Order subject to the petitioner depositing 20% of the disputed tax - petition allowed.

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• Income Tax

• 2024 (1) TMI 326
  Condonation of delay - delay of 2083 days in filing the appeal before the Tribunal - HELD THAT:- Basically the appeal has been filed after 2083 days of the ld. CIT s order but almost more than two years is attributable to COVID period, i.e. March ,2020 to May,2022. Besides , we note that the assessee has shifted to Portblair and has been filing the returns of income there only from A.Y. 2008-09 onwards. However the Notices in this case were issued by JCIT ,Range 37 Kolkata and were sent on the kalkata address and hence the proceedings could not be attended. Similarly the appeal of the assessee was also decided ex-parte the order was not served on the Portblair address. Moreover, making the appeal time-barred has not been used by the assessee as a tactics to avoid the litigation with the Revenue because such strategy would not give any benefit to the assessee in this type of litigation. Therefore, we condone the delay and proceed to decide the appeal on merit. AO jurisdiction to frame the assessment - scrutiny notice u/s 143(2) was issued by JCIT , Range-37, Kolkata - HELD THAT:- We find that in this case the jurisdiction of assessee was with JCIT, Austinabad, Port Blair whereas the notice u/s 143(2) of the Act was issued by JCIT, Range-37, Kolkata. It is also pertinent to note that the assessee has been filing the returns of income in Port Blair right from A.Y. 2008-09 to 2011-12 and even the communications to the assessee by ACIT CPC Bangluru has been addressed at Port Blair address meaning thereby that even in the PAN data, the address of the assessee has been changed. We note that the assessment has been framed by JCIT, Range-37, Kolkata who is not having the jurisdiction over the assessee. The Ld. A.R also placed before us the copy of CBDT circular being No. 228/2001 [(S.O. 732(E)F. No. 187/5/2001-ITA-1] dated 31.07.2001 states that the Commissioner of Income Tax, West Bengal has the jurisdiction over Union Territory of Andaman and Nicobar Island and Commissioner of Income Tax,-13, Kolkata with Head Quarter Kolkata, West Bengal is neither having the territorial jurisdiction nor pecuniary jurisdiction over the assessee. Thus we note that the assessment has been framed by the AO which is not having the jurisdiction to frame the assessment. Accordingly the assessment is invalid. The case of the assessee finds support from the decision of Co-ordinate Bench, Kolkata in the case of DCIT vs. Smt. Manjula Shukla [ 2022 (10) TMI 1111 - ITAT KOLKATA] and in the case of M/s Rupasi Bangla Agro Industries Pvt. Ltd. [ 2023 (12) TMI 930 - ITAT KOLKATA] . We therefore respectfully following the same, quash the assessment framed by the AO and allow the appeal of the assessee on legal issue.

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• 2024 (1) TMI 325
  Deduction u/s 80P on interest income - interest income earned from Co-operative Bank is allowable as deduction u/s 80P(2)(d) of the Act or not? - HELD THAT:- In view of the consistent decisions taken by the Hon ble Co-ordinate Benches of the Tribunal, the income if any earned by way of interest or dividend from the investments made with any other Co-operative Bank as well, is allowable as deduction under section 80P(2)(d) of the Act. Coming to the instant case, from the orders passed by the authorities below, nothing is clear about the bifurcation of interest amount earned and its is also not clear from which Co-operative banks the interest claimed has been earned and even the Assessee also did not file any bifurcation of the income earned from Co-operative banks before this bench. Thus for just decision of the case and for the ends of justice, the Assessee is directed to file bifurcation of interest/dividend income earned before the AO, who will accordingly grant the deduction qua interest earned from Co-operative Banks only. Appeal filed by the Assessee stands allowed in the aforesaid terms.

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• 2024 (1) TMI 324
  LTCG - Deduction u/s 54B on agricultural land purchased through agreement - absence of registered title deed, the transfer of land cannot be treated as valid - HELD THAT:- A transfer may or may not involve a sale or purchase, but the purchase is definitely falling in the ambit of transfer. Capital gain arising from transfer may not be necessarily resulting any consideration, but the purchase of another land certainly involves the payment of consideration either in cash or kind. The capital gain on transfer is computed as per the provisions of the Act and, therefore, even in case of no consideration is received by the assessee under a mode of transfer, the full value consideration has to be taken into consideration as per the provisions of Section 50C of the Income-tax Act, 1961. Hence, a purchase has an inevitable transaction of sale by the other party to the transaction and therefore, is part of the transfer, then purchase of an immovable property cannot be without a valid title document as held in the case of CIT vs. Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] . The decisions relied upon by assessee are prior to the judgment of the Hon ble Supreme Court in the case of Balbir Singh Maini(supra) and, therefore, those decisions cannot be applied by ignoring the judgment of the Hon ble Supreme Court. Accordingly, we do not find any merits or substance in the contention of the Ld. Authorized Representative of the assessee that for claiming the benefit of section 54-B, the registration of the title deed is not required. Validity of the transaction of exchange of land between the assessee and one Mr. Suresh Verma - The assessee has filed the copies of legal notices dated 05.03.2020 and 27.01.2023, wherein the transaction has been challenged as illegal being The Government land which was transferred by the assessee under the said exchange. Accordingly, in the facts and circumstances of the case, we set-aside the matter to the record of the AO for proper verification and deciding the same after considering the new development in respect of the land transferred by the assessee under the exchange. Needless to say, the assessee be given an appropriate opportunity of hearing before passing the fresh order. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (1) TMI 318
  Scope of of Sections 44BB(1) and 44BB(2) - inclusion of service tax collected by the assessees - HC held that [ 2022 (11) TMI 385 - UTTARAKHAND HIGH COURT] the amount reimbursed to the assessee (service provider) by the ONGC (service recipient), representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in Clauses (a) and (b) of sub-section (2) of Section 44 BB HELD THAT:- Following the order of this Court in M/s Vantage International Management Company [ 2023 (11) TMI 90 - SC ORDER ] this Special Leave Petition is also dismissed, as we are not inclined to interfere in the matter. Pending application(s), if any, shall stand disposed of.

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• 2024 (1) TMI 317
  Exemption u/s 11 - condonation of delay in filing Form 10 prior to 31.12.2018 i.e., before completion of assessment proceedings for AY 2016-17 - according to the petitioner, the delay in filing Form 10 occurred because their officials failed to notice the amendments in the Act and the Rules - HELD THAT:- We are unable to decipher from the impugned order as to what those reasons to believe were which led the respondent to arrive at a conclusion that the petitioner had no intention to file Form 10 within the due date. Mere failure to claim accumulation cannot be read as reasons to believe that the petitioner did not intend to file Form 10. CBDT Circular No. 7/2018 dated 20.12.2018 records that representations had been received qua Forms No. 9A and 10 not having been filed within specified time for AY 2016-17, which was the first year of e-filing qua those forms; and that in supersession of earlier circular in that regard with a view to expedite the disposal of such representations, the CBDT authorized the Commissioners of Income Tax to admit the belated applications in Forms No. 9A and 10 in respect of AY 2016-17 where such forms were filed after expiry of the prescribed period, in case the Commissioners were satisfied that the assessee was prevented by reasonable cause from filing the said forms within the stipulated period. By way of further circular No. 30/2019 dated 17.12.2019, similar directions were issued by CBDT for the AY 2017-18 as well. Subsequently, by way of CBDT Circular No. 03/2020 dated 03.01.2020, the Commissioners were authorized to admit the belated delay condonation applications under Section 119(2) of the Act where delay is upto 365 days. More recently, by way of similar CBDT Circular No. 17/2022 dated 17.07.2022, the Commissioners were authorized to condone delay beyond 365 days upto 03 years in filing Forms 9A and 10 for AY 2018-19. For AY 2017-18 also, the petitioner/assessee had filed a similar application seeking condonation of delay in filing Form 10, which was allowed by the Commissioner Income Tax vide order dated 26.12.2019 correctly, laying emphasis that the mandate of Section 119(2)(b) of the Act is to mitigate the genuine hardship of assessee in certain circumstances and authorization to the Commissioners to admit the belated Form 10. Thus the delay in filing Form 10 in the present case occurred because the amendments went unnoticed by the officials of the petitioner. The assessment year 2016-17 was the first occasion subsequent to those amendments. Therefore, we find no reason to disbelieve the explanation furnished by the petitioner to explain the delay in filing Form 10. Further, we are unable to fathom as to what benefit would accrue to the petitioner by delaying the filing of Form 10. In our opinion the discretion conferred for condoning the delay was not correctly exercised by the Commissioner Income Tax. Petition is allowed and accordingly, the impugned order is set aside and the delay on the part of the petitioner in submission of Form 10 is condoned. Form-10 will be accepted and necessary consequences will follow.

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• 2024 (1) TMI 316
  Revision u/s 264 - penalty u/s 270A imposed - waiver of penalty u/s 270AA - petitioner had merged the provision for doubtful GST input tax credit in expense account, whereas the same was part of income and it is only during the scrutiny proceedings that the said income was offered for taxation - Deputy Commissioner rejecting the application seeking immunity from imposition of penalty and the revisional authority has thoroughly considered all the aspects, as raised by the petitioner, and has recorded a categoric finding that case of the petitioner falls within sub-Clause (a) and (c) of Section 270A (9) of the Act HELD THAT:- From the assessment order, one aspect is very clear that the authorities under the Act had not detected the said aspect of amount of provision for GST and it was voluntarily offered by the petitioner. Admittedly, the petitioner in its application under Section 270AA of the Act had sought personal hearing and the authority was bound to provide such personal hearing, however, admittedly no opportunity of hearing was provided to the petitioner. Authority had passed a wholly non-speaking order by only reiterating the provisions of sub-Section (3) of Section 270AA and indicated that the application was not found tenable, as penalty under Section 270AA of the Act has been initiated under the circumstances, referred to in sub-Section (9) of Section 270A of the Act. Nothing has been indicated as to under which sub-clause of Section 270A (9), the case of the petitioner falls and only mechanical observations have been made to justify the imposition of penalty. The revisional authority, in its order cursorily observed that the case is observed to be within the ambit of Clause (a) and (c) of Section 270A (9) of the Act, therefore, 270AA (c) may apply to petitioner s case. The revisional authority apparently did not consider the fact that the petitioner was not afforded opportunity of hearing in violation of provisions of proviso to Section 270AA (4) and that the order impugned before it was wholly non-speaking and attempted to justify imposition of penalty under Section 270A (9) (a) and (c). The very fact that the indications were made that the matter fall within (a) and (c), necessarily means that even the revisional authority was not sure whether it was a case of misrepresentation or suppression of facts or claim of expense, not substantiated by any evidence. The finding recorded by the revisional authority is apparently contrary to the facts and essentially based on assumptions only on account of the fact that the petitioner on its own disclosed the income in question. Several notices were issued u/s 142 of the Act, during the course of scrutiny proceedings and as many as ten issues were raised, on which the authority could not make any additions, the aspect of merging GST Input Credit with expenses was not pointed out/detected and the same was only pointed out voluntarily by the petitioner and, therefore, apparently sub-Clauses (a) and (c) of Section 270A (9) of the Act are not attracted. Order passed by the assessing authority rejecting application under Section 270AA and the order passed by the revisional authority rejecting revision petition, cannot be sustained. Decided in favour of assessee.

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• 2024 (1) TMI 315
  Validity of order u/s 144 r.w.s.144B - notice issued under Section 143(2) of the Act was not served on him - HELD THAT:- As conceded before us that the assessment order was not available on the designated portal. It was his submission that this situation may have occurred because of a technical glitch. It is in these circumstances that Mr Chandra was requested to return with appropriate instructions in the matter. Respondent/revenue, says that he has received instructions. It is conceded that the assessment order was not available on the designated portal, contrary to the assertion made on the previous occasion. Given this position, the impugned assessment order, dated 30.08.2022, is set aside. The concerned AO is directed to activate the designated portal so that the petitioner/assessee and/or his authorized representative can upload replies to the notice been issued in the matter.

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• 2024 (1) TMI 314
  Validity of Reopening of assessment - depreciation claimed @ 100% with regard to the temporary structures - HELD THAT:- There is no dispute that depreciation on subject temporary structure(s) was claimed by the petitioner. In fact there is no cavil that once a structure is categorized as temporary, the deprecation rate provided under Rule 5 of Appendix I appended to the Income Tax Rules, 1962, is 100%. The arguments advanced that merely because books of account were made available to the AO and he could have discovered material evidence had he been diligent could not be the reason for not triggering reassessment proceedings against the petitioner, does not find favour with us. This is not a case where an aspect was not in the notice of the AO and that he could have discovered by employing diligence. The issue concerning the claim of depreciation by the petitioner with regard to the subject temporary structure(s) was flagged by the AO. The petitioner submitted its reply along with the relevant details and material. The AO after considering the same, accepted the claim made by the petitioner with regard to the subject temporary structure(s). Reliance placed on Explanation 2 (c) (iv) appended to Section 147 of the Act would not in our opinion further cause of the respondent/revenue. The reason we say so is, once it is accepted that the subject structure(s) were temporary no case can be made out that the depreciation allowance claimed was excessive. It is not in dispute that for temporary structures, the prescribed rate of depreciation is 100%. Whether the impugned notice issued under Section 148 of the Act was barred by time? - Although, in the reasons to believe the AO has not stated that the petitioner had failed to disclose full and truly all material facts, in our view, this aspect need not detain us in view of the reasons that we have given hereinabove, that is, it is a clear case of change of opinion. The provisions cited before us on behalf of respondent/revenue i.e., Explanation 1 and Explanation 2 (c) (iv) appended to Section 147 of the Act would not be applicable on the facts and circumstances obtaining in the present case. Writ petition is, accordingly, allowed.

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• 2024 (1) TMI 313
  Validity of the order passed u/s 148A (d) - information gathered during a survey conducted u/s 133A relied upon initiating proceedings against an assessee u/s 148 - petitioner-company issued shares on the basis of valuation made by the accountant and not by the merchant banker - HELD THAT:- We found that the AO has not initiated the proceedings u/s 148 of the Act against the petitioner on the basis of information collected during survey u/s 133A conducted on 04.03.2020 but for the reason that the case of the petitioner is selected under the risk management strategy. Issue of shares on the basis of valuation made by the accountant and not by the merchant banker - We found that though in the Shares Subscription Agreement and the Share Holders Agreement executed on 22.02.2018, the valuation report of the CA valuing the shares as on 15.02.2018 had already been given but admittedly the shares had been issued by the petitioner prior and after 24.05.2018, whereas as per Section 56(2)(viib) of the Act and Rule 11UA of the IT Rules, after 24.05.2018, valuation of the shares is required to be determined by the merchant banker. We are of the opinion that with regard to the question of issuance of shares without valuation by the merchant banker is concerned, the question would be matter of enquiry by the assessing officer that whether the valuation made by the accountant before 24.05.2018 is sufficient as per the requirement of law or not. In exercise of jurisdiction under Article 226 of the Constitution of India, once this Court finds that the impugned order does not suffer from any procedural error and the same has been passed after giving an opportunity of hearing, it is advisable to restrain from interfering in the matter and left it open for the petitioner to raise all the grounds as raised in this petition to explain the transaction regarding issuance of shares in the assessment proceedings. Thus we are satisfied that prima facie material was available with the department to proceed against the petitioner.

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• 2024 (1) TMI 312
  Validity of reopening of assessment - period of limitation - COVID period from 24.02.2021 to 13.03.2023 was required to be excluded from computation of limitation as stipulated under Explanation 1 (ii) of Section 153 (2) - Exclusion of certain period - HELD THAT:- In the instant case, as per the notification No. 10 of 2021/S.O. 966 (E) dated 27th Feb. 2021, the period for completion of reassessment was extended from 31.3.2021 to 30.9.2021 and this Court stayed the proceedings on 24.2.2021, therefore, from the said date, time to complete the reassessment was available upto 30.9.2021 i.e. total 219 days were available with the department for completing the proceedings. The stay granted on 24.2.2021 remained operative till 13.3.2023 which period is required to be excluded as per the provisions of the Act and after dismissal of the assessee s writ petition on 13.3.2023, the period for completion of the reassessment proceedings is to be counted from 13.3.2023 by adding 219 days which comes to 18.10.2023. Thus, time upto 18.10.2023 is available to the Revenue to complete the reassessment proceedings. In this view of the matter, the stand taken by the petitioner regarding the impugned show cause notice/order being barred by limitation is not sustainable. The assessee is still having sufficient opportunity to defend his case during assessment proceedings by requesting for personal hearing and submitting documents well within time. So far as the stand taken by the petitioner claiming parity with the case of similarly situated assessee i.e. ASG Hospital Pvt. Ltd. is concerned, 219 days period was available on the date of granting stay and accordingly, after dismissal of the writ petition on 13.03.2023, again that period of 219 days will be available to the department for completing the reassessment proceedings thereby the reassessment proceedings are to be completed by 18.10.2023 and therefore, we do not find any substance in the argument raised by the petitioner regarding parity also.

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• 2024 (1) TMI 311
  Cash deposits during demonetization period u/s 69A - as per assessee amount gifted by father and mother - whether assessee s parents have sufficient sources to gift the amount? - HELD THAT:- As it is apparent from the ITR filed by the assessee and the evidences furnished before us in the form of ITRs, computations of income, balance sheets, profit and loss accounts explaining the creditworthiness of the donors and the gift given on the occasion of marriage of the assessee out of natural love and affection. Assessee has sufficient sources of cash which was deposited into bank during demonetization period. We note that the assessee got married on 10.03.2016 and immediately after marriage she left her parental house in Raiganj to stay with her in-laws. Money was kept only with parents and the same was deposited into the bank by the parents of the assessee. So far as the gift of grand parent is concerned we are quite convinced that the family has financial worth to gift on the occasion of the grand daughter as the documents could not be furnished as the grand parent has since expired. We have also perused and considered written submission filed by the DR on 7.12.2023 after conclusion of hearing despite there being no direction to that effect and also the reply of the assessee dated 11.12.2023 thereto while arriving at the above conclusion. In view of the above facts and circumstances, we are inclined to set aside the order of CIT(A) and direct the AO to delete the addition. Decided in favour of assessee.

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• 2024 (1) TMI 310
  Penalty u/s 271(1)(c) - defective notice - one of the limbs of penalty was not marked meaning thereby that the penalty notice has been issued in a standard format - HELD THAT:- We find that the notice was issued in a standard format, i.e. by mentioning both the limbs of penalty. In other words, it has been mentioned that the assessee has furnished inaccurate particulars of income, which is not correct position of law. In our opinion, AO has to issue the show-cause notice by mentioning the correct limb on the penalty was propose d to be levied, which is lacking in this case and thus the assessee was deprived from replying to the show-cause notice thereby violating the principle of natural justice. Accordingly, we hold that the order passed by the ld. AO is not sustainable in law and is quashed. Appeal of the assessee is allowed.

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• 2024 (1) TMI 309
  Income Accrue or arise in India - treatment of the remittances made by HCLT to assessee as FTS - amounts were received outside India by the assessee - HELD THAT:- In the instant case, there is no dispute that the amounts were received outside India by the assessee. Hence the provisions of section 5(2)(a) of the Act are not applicable. Since there is no dispute that the services were rendered outside India to the customers outside India, no part of the income accrues or arises or deemed to accrue or arise in India and accordingly the provisions of section 5(2)(b) of the Act are not applicable in the instant case. In the instant case, HCLT is an Indian entity and had paid monies to the assessee (overseas entity). So it falls under the Source Rule in clause (b) of section 9(1)(vii) of the Act supra. But the said provision contain an exception, wherein it provides that FTS payable by an Indian resident shall not be chargeable to tax in India in the hands of the overseas recipient if i) fee is payable in respect of services utilized in a business or profession carried on by such resident outside India , or ii) fee is payable for the purposes of making or earning any income from any source outside India. In the instant case before us, both the aforesaid conditions provided in exception to section 9(1)(vii)(b) of the Act stand fulfilled. Hence it cannot be taxable as FTS under section 9(1)(vii) of the Act. Source of income refers to something from where the income flows. In the present case, the fact that the services rendered by the assessee were utilized in respect of customers of HCLT located outside India ; the ultimate delivery of the software was outside India, i.e., at the customers location; the contract was effectively concluded outside India; that no part of the services rendered by the assessee are transferred to India; that the source of income of the payer in respect of which payment was made to the assessee was outside India and hence, the said payment in the hands of the assessee did not accrue or arise in India in terms of section 9(1)(vii)(b) of the Act. We hold that the payment made by the HCLT to the assessee cannot be construed as income that accrues or arises in India or deemed to accrue or arise in India and hence cannot be brought to tax as FTS u/s 9(1)(vii)(b) of the Act as it falls under the exceptions thereon. Offshore project lead or project manager of HCLT manages his offshore team in India, whereas the assessee s project lead manages his team independently, which executes work from the overseas locations directly on the customer s server. Both the project managers/ leads only coordinate with each other on need basis; that each team of HCLT and the assessee develops the particular modules as assigned to them; that the delivery team of the assessee reports to the delivery manager who sits in the foreign country and the delivery team of HCLT reports to the delivery manager who sits in India; that both onsite and offsite personnel of the assessee and HCLT respectively are responsible for writing the code; that the offshore teams of HCLT work directly with customer managers or through project managers in India and the onsite team engineers belonging to the assessee company work directly with foreign customer s managers; that in majority of the projects, the entire development environment is owned by foreign customer; that the code and test scripts are worked on from foreign customers servers and provided directly on the said servers; that the integration is normally done through Customer build machines that integrate the various units of code into a solution. Thus we have no hesitation to conclude that the payments made by HCLT to the assessee could not be construed as Fee for technical services and accordingly the same is not taxable in the hands of the assessee in India as per the domestic law. Accordingly, the Ground Nos. 3,4,7 8 raised by the assessee are disposed off in the aforementioned terms. Since the payments made by HCLT to the assessee is held not be taxable in India as per the domestic law, the other elaborate arguments by the ld. AR and grounds raised by the assessee on the applicability of Double Taxation Avoidance Agreements (DTAA) benefits ; make available clause in DTAA and Most Favoured Nation (MFN) clause in Protocol etc need not be gone into, as adjudication of the same is merely academic in nature in these appeals. Hence no opinion is rendered by us on the same and they are left open. Accordingly, the Ground Nos. 5 9 raised by the assessee are allowed. Taxability of payments received by the assessee for certain categories of Infrastructure Services - We find that the assessee had not rendered any services to HCLT under the Infrastructure Services, which is evident from the submissions of the assessee and discussions made by us hereinabove on the earlier grounds raised by the assessee. We have already held that both the assessee as well as HCLT work independently and render services directly to the end customers and that no service is provided by assessee to HCLT. In any case, from the aforesaid facts explaining the activities carried out by the assessee, it is clear that no technical knowledge, experience, skill, knowhow or process is made available and accordingly the payments received does not qualify as FIS within the ambit of the applicable treaty. It is not in dispute that the assessee does not have any PE in India. At best, the payments received could only be construed as Business Profits in terms of Article 7 of the DTAA and in the absence of PE in India, the same cannot be brought to tax even as per the treaty in the hands of the assessee. Hence the Ground No. 6 raised by the assessee is allowed. Chargeability of interest u/s 234B - We are conscious of the fact that proviso to section 209(1) of the Act has been amended w.e.f. 01.04.2012, wherein, payments made during the said financial year i.e. during the Financial Year 01.04.2012 to 31.03.2013 relevant to AY 2013-14 would be covered by the said amendment in the proviso to section 209(1) of the Act. Since, we are concerned with AY 2012-13 before us, the said amendment also would not be applicable to the assessee. We find that the Hon ble Supreme Court in the case of DIT Vs. Mitsubishi Corporation [ 2021 (9) TMI 875 - SUPREME COURT] had categorically held that prior to FY 2012-13, the amount of tax deductible at source can be reduced while calculating advance tax and therefore, interest u/s 234B of the Act cannot be levied. As stated earlier, even if the entire payment made by HCLT to the assessee is to be construed as FTS (which we have already held that it is not so) still, the entire sum of FTS would be subjected to tax deductible and hence, there will be absolutely no obligation on the part of the non-resident assessee like the assessee before us to pay any advance tax in terms of section 209 of the Act. Hence, there cannot be any chargeability of interest u/s 234B of the act on the assessee. Interest u/s section 234A of the Act has been incorrectly calculated by the ld AO - This being a mathematical exercise, we direct the ld AO to re-compute the interest u/s 234A of the Act in accordance with law.

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• 2024 (1) TMI 308
  PE in India - Income taxable in India or not? - scope of Article 5 of the DTAA between India and the United States of America and u/s 9(1)(ii) of IT Act - scope of fixed place of business - HELD THAT:- The business profits arising to a US enterprise shall be taxable in India, only if the US enterprise has a PE in India, meaning thereby, that if there is no PE in India, no part of the business profit arising to the US enterprise is taxable in India. Nature of fixed place of business is very much that of a physical location, i.e., one must be able to point to a physical location at the disposal of the enterprise through which the business is carried on. Understandably, the fixed place of business need not be owned or leased by the foreign enterprise, provided it is at the disposal of the enterprise in the sense of having some right to use the premises for the purposes of its business and not solely for the purposes of the project undertaken on behalf of the owner of the premises. This means that a fixed place of business should satisfy, amongst others, the power of disposition test to qualify as PE under Article 5(1). The core business of the foreign enterprise should be conducted through the place of business which means that there should be a nexus between the place of business and carrying on of business. Supreme Court in the case of Formula One World Championship Ltd [ 2017 (4) TMI 1109 - SUPREME COURT] after referring to the OECD Model Tax Convention, Commentaries by Professor Philip Baker and Professor Klaus Vogel, international tax jurisprudence observed that in terms of Article 5(1) of the India-UK Tax Treaty, a fixed place PE is constituted in India, if the following twin conditions are satisfied viz, (i) Existence of a fixed place of business at the disposal of the foreign enterprise in India; (ii) through which the business of the foreign enterprise is wholly or partly carried on. On the issue of fixed place of business , we find that the facts considered by the Hon ble Supreme Court in the case of eFunds IT Solution and Ors [ 2017 (10) TMI 1011 - SUPREME COURT] are pari materia same as that of the assessee. We are of the considered view that it is not the case of the Revenue that the employees of foreign enterprises furnished services in India - Nothing has been brought on record by the Revenue to show that there was secondment of employees by Exl US to Exl India. A perusal of the Service Agreement shows that foreign enterprise i.e. Exl US is doing marketing work only and its contracts with clients are assigned or sub-contracted to Indian entity i.e. Exl India. PE being Agency PE - In our understanding, an Agency PE is constituted where a person, other than an agent of an independent status, is acting on behalf of a US enterprise in India and such person has authority to conclude contracts on behalf of the US enterprise and such authority habitually secures orders in India wholly or almost wholly for the foreign enterprise. On the facts of the case in hand, such conditions are absent, as Exl India has no authority to conclude any contract on behalf the US enterprise and all customers are based out of US and none of it is present in India. Exl India is merely a work contract to it by the assessee and core activities such as key management functions, such as, development of strategy, identifying new business areas, guidance to the group, sales and marketing, contract negotiation and conclusion, and customer relationship management are managed by the assessee from outside India. Merely because the assessee owns 100% of share capital of EXl India does not have effect or consequence of EXL India becoming the PE of the assessee in India. The assessee being the major shareholder of EXL India, it has the legal right to nominate a director on the Board of EXL India and merely because the assessee has nominated a director on the Board of EXL India would not mean that the assessee has a Place of Management in India. Considering the facts in totality in light of the decision of the Hon ble Supreme Court in the case of eFunds IT Solution and Ors [ 2017 (10) TMI 1011 - SUPREME COURT] and Morgan Stanley Co. Inc [ 2007 (7) TMI 201 - SUPREME COURT] , we are of the considered view that the assessee does not have a fixed place PE in India, Service PE in India and dependent Agent PE in India. Therefore, no profit is attributable as no business connection has been established under Article 5 of the DTAA between India and the US. For the sake of completeness, in respect of attribution of income to the PE, the Hon ble Supreme Court in the case of Morgan Stanley Co. Inc [ 2007 (7) TMI 201 - SUPREME COURT] has held that if the transactions between the PE and the foreign Associated Enterprise are found to have taken place at arms length prices, then there is no question of attributing any income to the PE. Levy of interest u/s 234A is consequential and the Assessing Officer is directed to charge interest as per provisions of law. Interest u/s 234B - The assessee being a non-resident, tax is deductible at source u/s 195 of the Act from the payments made to the assessee. Therefore, no advance tax was payable as per the provisions of section 208 r.w.s. 209 of the Act. Therefore, the assessee had no liability for payment of advance tax. Provisions of section 234B are not applicable.. Though the Finance Act, 2012 has amended the relevant provisions, but the said amendment is w.e.f. 01.04.2012 and not applicable for the years under consideration.

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• 2024 (1) TMI 307
  Condonation of delay in filing appeals beyond the limitation period - sufficient cause of delay - delay of 424 days - Addition u/s 69A - assessee has deposited a sum into his bank account during demonetization period - HELD THAT:- The assessee has explained that assessee is of 74 years old and not well acquainted and conversant with the digital system in order to follow up with the income tax notices, which are posted in IT portal. - The assessee has not seen the NFAC s order in its portal and the same has been came to knowledge of assessee when it received a message about penalty notice issued u/s 270A 270AAC of the Act directing him to file reply in response to the notice issued. This Tribunal is bound to remove the injustice by condoning the delay on technicalities- If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay has to be condoned. Whether delay was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessees was a reasonable cause for not filing the appeals. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. [ 1984 (4) TMI 24 - MADRAS HIGH COURT] considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd [ 2004 (5) TMI 531 - ITAT MUMBAI] has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. Thus in the matter of condonation of delay in filing appeals beyond the limitation period, the courts are empowered to condone the delay, provided the litigant is able to demonstrate that there was sufficient cause in preferring appeal beyond the limitation period. The Courts have also held that the expression sufficient cause should receive liberal construction so as to advance substantial justice. Hence, the question of condonation of delay is a factual matter and the result would depend upon the facts of the case and the cause shown by the assessee for the delay. It has also been opined that generally delays in preferring appeals are required to be condoned in the interest of justice, where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay. In view of the foregoing, we are of the view that the assessees have shown sufficient cause for the delay in filing the appeals before the Tribunal. Accordingly, we condone the delay in filing this appeal before us and admit the appeal for adjudication. After condoning the delay, the issue on merit of the additions is covered by the judgement of coordinate bench in the case of Bhoopalam Marketing Services Ltd [ 2022 (11) TMI 331 - ITAT BANGALORE] , thus we inclined to remit the issue in dispute to the file of AO to examine the issue in the light of various circulars issued by CBDT on addition relating to deposit of demonetized currency to the bank account of the assessee. Appeal of the assessee is partly allowed for statistical purposes.

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• 2024 (1) TMI 293
  Revision u/s 263 - Claim of deduction u/s 57(iii) - Assessee claiming 10% deduction against income from other sources - HELD THAT:- Firstly, this issue was examined by the Assessing Officer during the course of assessment proceedings and therefore, it is not the allegation of the Department that the Ld. AO had failed to apply his mind to the issue under consideration. Secondly, it is also an admitted fact that the assessee has been consistently following the practice of claiming 10% deduction against income from other sources on a consistent basis for A.Y. 1994-95 onwards. This fact is also not in dispute. Thirdly, similar claim has been allowed to the assessee in the past assessment year after carrying out due verification by the concerned Assessing Officers during the course of assessment proceedings. Assessee has produced before us copies of assessment orders passed by Assessing Officers for various assessment years (From A.Ys. 2008-09 to A.Ys. 2014-15), wherein for several years this issue had been examined by the Assessing Officer and claim of deduction was allowed to the assessee under Section 57(iii) of the Act. Fourthly, on identical set of facts, in the case of [ 2016 (10) TMI 1351 - ITAT AHMEDABAD ] has allowed this issue in favour of the assessee. Since this stand taken by the assessee with respect to claiming 10% deduction against income from other sources have been accepted by the Department in the past years, looking into the facts of the instant case, we are of the considered view that the order passed by the Assessing Officer cannot be held to be erroneous and prejudicial to the interest of the Revenue under Section 263 of the Act - Appeal of assessee allowed.

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• 2024 (1) TMI 292
  Reopening of assessment u/s 147/148 - failure to issue notice u/s 143(2) - assessee has sold jointly held immovable property admeasuring area 19627 sq. mtr. during F.Y.2011-12, relevant to A.Y.2012-13 - violation of provisions of section 50C as assessee is required to show the consideration received in the computation of capital gain, however, the assessee was failed to do so - assessee argued that provision of section 143(2)/143(3) of the Act, cannot be substituted with the provision of section 147/148 of the Act, hence reasons recorded by the Assessing Officer on same set of facts, which were disclosed by the assessee in the return of income, are not a valid reason to reopen the assessment. HELD THAT:- As provisions of section 143(2)/143(3) of the Act, have been substituted by the Income Tax Department with the provisions of section 147/148 of the Act, which is not acceptable in the eye of the law, hence reasons recorded by the Assessing Officer on same set of facts, which were disclosed by the assessee in the return of income filed u/s 139 of the Act, are not a valid reason to reopen the assessment. I also note that in the return of income, the assessee has disclosed the correct and full material facts about the disputed land, therefore on the same set of facts, the reopening of assessment is not allowed. We also note that assessee filed return of income for the assessment year under consideration and it is within the power of the Income Department to issue the scrutiny notice u/s 143(2) of the Act and conduct the scrutiny assessment on the assessee instead of reopening of the assessee`s case u/s 147/148. Therefore, reopening of assessment is not valid as the Income Tax Department has power to conduct the scrutiny assessment by issuing notice u/s 143(2) of the Act. After filing the return of income u/s 139 of the Act, if the Department does not conduct the scrutiny assessment, by issuing notice u/s 143(2) of the Act then in that situation, on same set of facts, which are narrated in the return of income filed by the assessee, the Department cannot reopen the assessment u/s 147/148 of the Act. The assesse has disclosed in the return of income filed by him, all material facts relating to disputed land, therefore the Department should have conducted the scrutiny assessment by issuing notice u/s 143(2) of the Act rather than reopening the assessment u/s 147/148 of the Act, which is not acceptable. If the Assessing Officer had any doubt about the correctness of the items disclosed in the return of income filed by him u/s 139 of the Act, and he wanted to verify the same, he ought to have issued notice u/s 143(2) of the Act within the time limit permissible under the proviso to above sub-section. Having failed to issue the notice u/s 143(2) of the Act, within the period of limitation, the provisions of section 147/148 cannot be invoked to get the extended time limit for verification of the correctness of the income returned. Based on these facts and circumstances, quash the reassessment proceedings. Appeal of assessee allowed.

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• 2024 (1) TMI 290
  TP Adjustment - Most Appropriate Method (MAM) for determining the Arm s Length Price (ALP) - as per assessee Comparable Uncontrolled Price (CUP) Method should be applied - whether appellant/assessee had recovered from its AE a price higher than that which the AE received from DMRC? - comparables analysis - HELD THAT:- The matter is remitted to the CIT(A) for examination of the issues set forth hereafter: (i) Whether or not the appellant/assessee recovered from its AE a price higher than that which the AE received from DMRC against the supply of bogies/wagons. (ii) The comparables against which ALP should be benchmarked. (iii) Whether, in the facts and circumstances obtaining in the AY in issue, i.e., AY 2011-12, requires the usage of CUP Method for determining ALP as against TNM Method, as held by this court in its order dated 09.04.2018 passed in ITA No.223/2018. In other words, only if the CIT(A) finds that facts and circumstances subsist which distinguish it from those obtained in AY 2010-11, would he adopt a method different from the TNM method.

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• 2024 (1) TMI 289
  Reopening of assessment u/s 147 - reassessment proceedings against the petitioner had been triggered based on the audit objections - eligibility to deduction u/s 80-IC - HELD THAT:- AO while triggering the reassessment proceedings had not applied his mind independent of what the auditor had flagged. As a matter of fact, the AO did not even examine the reply given by his counterpart to the audit objection. Petitioner is right that this very aspect concerning claim of deduction under Section 80-IC of the Act was examined in the scrutiny proceedings and it was only when the AO was satisfied that the assessment order dated 30.01.2014 was framed. The logical sequitur of this assessment order was that the petitioner obviously had truly and fairly disclosed all material facts. There is not a whisper in the reasons to believe which would point in the direction that the petitioner had failed to disclose truly and fairly all material facts. Since the reassessment proceedings were triggered after four years, the AO ought to have indicated as to what were those material facts which the petitioner had failed to disclose. Thus, the impugned proceedings are flawed on various grounds, i.e., borrowed satisfaction, reasons to believe not adverting to the failure on the part of the petitioner to disclose truly and fairly all material facts, and also the change of opinion. Thus, for the foregoing reasons, we are inclined to allow the writ petition. Consequently, the impugned notice and the order whereby, the petitioner s objections were rejected, are quashed.

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• Customs

• 2024 (1) TMI 306
  Refund of Terminal Excise Duty along with applicable interest - HELD THAT:- As was recorded by this Court in BROADWAYS OVERSEAS LIMITED VERSUS UNION OF INDIA AND ORS. [ 2023 (11) TMI 1208 - DELHI HIGH COURT] , the provision in relation to the Terminal Excise Duty have been struck down. The payments made by the Petitioner for Terminal Excise Duty shall be refunded to the Petitioner in terms of the judgment in UNION OF INDIA ORS VERSUS AUROBINDO PHARMA LTD. M/S. MOTHERSON SUMI ELECTRIC WIRES, M/S DEEPAK ENTERPRISES [ 2023 (5) TMI 677 - DELHI HIGH COURT] and SANDOZ PRIVATE LIMITED VERSUS UNION OF INDIA OTHERS [ 2022 (1) TMI 225 - SUPREME COURT] - It is further directed that the interest @ 6% per annum be also granted. Petition disposed off.

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• 2024 (1) TMI 305
  Exemption from payment of GST compensation cess to SEZ unit - Section 26 of the SEZ Act - HELD THAT:- The tax so raised i.e., income tax, sales tax, excise tax etc., can be utilized for any public purpose i.e., for payment of salaries, infrastructure creation, developmental programmes etc. However a cess is though broadly a tax, it is a special kind of tax levied for some special purpose which will be levied as an increment to the existing tax. The cess is utilized for a specific purpose i.e., for education, health etc., depending the nature of the cess levied. Then duty is concerned, duty is a tax levied on goods and services produced within or imported into a country. Keeping the aforesaid distinction in view, when Section 26 of SEZ Act is perused, it is discernible that the word duty alone is used in the said section but not the word cess . More prominently U/s 26(1)(a), on which much reliance is placed by the petitioners, what is exempted is only duty of customs but not any cess much-less the GST Compensation Cess. In Section 7 the words tax, duty and cess are specifically and distinctly used and stated that any goods or services exported or imported or procured from the DTA by a SEZ unit or developer shall subject to such terms and conditions and limitations be exempt from payment of taxes, duties or cess under all enactments specified in the First Schedule. The sine qua non for application of Section 7 is that in order to get exemption, the enactment which imposes tax, duty or cess shall be mentioned in the First Schedule. Therefore, from the said section two things are clear. Firstly, the Goods and Services Tax (Compensation to States) Act, 2017 is not mentioned in the First Schedule of the Act and secondly, the words tax, duty and cess are differently mentioned. However, in Section 26(1)(a) the phrase duty of customs alone is mentioned. A conjunctive study of Section 26(1)(a), 2(zd) of SEZ Act, 2005 and Section 2(15) of Customs Act, 1962 would pellucidly tell that the phrase duty of customs used in Section 26(1)(a) of SEZ Act only refers to duty leviable under Customs Act, 1962 but the said phrase does not include cess under GST Compensation Act. Petition dismissed.

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• 2024 (1) TMI 291
  Maintainability of appeal - monetary amount involved in the appeal - Tribunal has dismissed the revenue appeal on the ground of Monetary limit (low tax efffect) - HELD THAT:- The Appeal is dismissed owing to low tax effect, leaving the question of law, is any, open.

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• Insolvency & Bankruptcy

• 2024 (1) TMI 304
  Nature of transactions entered between the parties - Whether any financial debt was owned to the Appellant in the facts of the present case? - - HELD THAT:- In the present case, trade receivables by the Suppliers were discounted by the Financers and liability arose to the Corporate Debtor to pay the Financers as per Agreement and as per transactions carried on M1 Platform - the averments made by the Appellant noticed, which indicates that invoices were raised by the Suppliers at the behest of the Corporate Debtor were discounted by the Financers, hence, the Corporate Debtor was liable to make payment to the Financers along with interest. The transaction was that of discounting of the invoices by the Financers and the Financers have made payment to the Suppliers. The present is not a case that any disbursement is made to the Corporate Debtor by the Financers. Liability to make payment to Financers arose to the Corporate Debtor as per Master Buyer Agreement 21.12.2018. The Corporate Debtor having failed to honour the commitment, a claim was filed by Assignee of Financer. Nature of transaction between the parties arose out of sale of goods and services - there are no financial transaction between the parties. In the case of M/S. ORATOR MARKETING PVT. LTD. VERSUS M/S. SAMTEX DESINZ PVT. LTD. [ 2021 (8) TMI 314 - SUPREME COURT] , it was held that Section 5 (8) does not expressly exclude an interest free loan. The above judgment of the Hon ble Supreme Court was on entirely different facts, where Lender had advanced a loan without any interest - The present is not a case of financing any loan, rather present is a case of transaction of M1 Platform, on which Platform, both Seller, Buyer and Financers are registered and transaction takes place for sale and purchase of goods and discounting of invoices, payments and recoveries of payment by Financers. The transaction emanates from sale and purchase of goods in the present case. No disbursement was made to the Corporate Debtor, hence, the transactions cannot be held to be a financial debt - there are no error in the order of the Adjudicating Authority agreeing with the view of the RP that claim of the Appellant is only an operational debt . There are no ground to interfere with the impugned order. There is no merit in the Appeal - appeal dismissed.

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• 2024 (1) TMI 303
  Rejection of claim by Resolution Professional - Resolution Plan was duly approved by the CoC - HELD THAT:- The Resolution Plan of the Corporate Debtor was approved by the CoC on 13.08.2021 and the Applications/ IA Nos.721 and 722 of 2023 were filed by the Appellant(s) in February 2023, i.e., more than one and a half year after approval of the Resolution Plan. The Adjudicating Authority has rightly taken the view that no good reasons have been explained by the Appellant(s) in filing the Application(s) with great delay of more than one and a half year. Resolution Plan having been approved by the CoC on 13.08.2021, the Adjudicating Authority rightly rejected the Application(s). The mere fact that Application for approval of Resolution Plan is pending for consideration by the Adjudicating Authority does not entitle the Appellant(s) to file an Application for acceptance of their Claim after more than one and a half year of the approval of the Resolution Plan by the CoC. The Resolution Plan of the Corporate Debtor, which was approved by the CoC on 13.08.2021 has now been approved by the Adjudicating Authority by order dated 23.06.2023, as has been pleaded by the Appellant in his additional affidavit. The Resolution Plan having been approved, the order approving the Resolution Plan dated 23.06.2023 has also been brought on record as Annexure A7 in IA No.5941 of 2023 filed by the Appellant in Company Appeal (AT) (Ins.) No.923 of 2023. The Resolution Plan has already been approved, which order has also not been challenged by the Appellant. In any view of the matter, after considering the facts and the sequence of event in the present Appeal(s), the Adjudicating Authority has rightly rejected IA Nos.721 and 722 of 2023, refusing to accept the prayer of the Appellant(s) to issue a direction to admit their claim. No grounds have been made out to interfere with the order - Appeal dismissed.

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• Service Tax

• 2024 (1) TMI 302
  Interest not awarded on the amount of service tax refunded - Section 11BB of CEA, 1944 - HELD THAT:- It was held in section 11BB that any duty which is ordered to be refunded under Section 11B(2) to any applicant, must be refunded within a period of three months, from the date of receipt of any application in this regard, failing which, interest shall forthwith accrue on the amount liable to be refunded. In the facts and circumstances of the present case, it is clear that the petitioner filed an application for refund of Rs. 14,42,900/- on 18.10.2021, pursuant to which, the refund was sanctioned on 08.12.2021 i.e. within the statutorily prescribed time period of effectuating refund within 3 months from the date of receiving an application to that effect. Therefore, having satisfied the requirement of effectuating refund within the prescribed time period, no liability qua awarding interest in favour of the petitioner, accrues. Considering the fact that the Act of 1944 is a self-contained code, which provides a definite and systemic mechanism for the recovery of demand and the consequential refund thereof, this Court cannot issue directions dehors the law whilst disregarding the statutorily prescribed mechanism mandatorily required to be followed in cases of refund. Petition dismissed.

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• 2024 (1) TMI 301
  Levy of Service Tax - Commercial or Industrial Construction Service - supply of materials like cement, sand, jally, bricks etc., and free supply of materials like ready-mix concrete (RMC) and steel required for the construction of hotels entrusted by M/s. Motels Infrastructure India Pvt. Ltd. - HELD THAT:- The Works Contract Service became taxable w.e.f. 01.06.2007 as held by the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] and in the said case, it has been held that prior to 01.06.2007, works contract service cannot be subjected to service tax levy by vivisecting the composite service contract, which includes both goods and service. The said judgment has been followed by the Hon ble Supreme Court in the case of Total Environment Building Systems (P) Ltd. Vs. Deputy Commissioner of Commercial Taxes [ 2022 (8) TMI 168 - SUPREME COURT ]. The impugned order is upheld to the extent of confirmation of demand of Rs.1,15,651/- with interest under Consulting Engineer Service and modified by setting aside the demand of Rs.15,00,040/- confirmed against Commercial or Industrial Construction Service which in fact is Works Contract Service . Appeal is partly allowed

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• Central Excise

• 2024 (1) TMI 300
  CENVAT Credit - credit allowed on photocopies of invoices - valid document as envisaged under rule 9 of CENVAT credit rules, 2004 or not - CENVAT credit allowed despite ISD registration not having been obtained prior to seeking to avail CENVAT credit - HELD THAT:- From the factual findings recorded by the Tribunal, it can be seen that the respondent-assessee had availed the Cenvat credit on the basis of the statement provided by the Head Office after procuring the goods and services and accordingly, the Tribunal has come to the conclusion that such Canvet credit availed by the respondent cannot be denied. There are no reason to interfere with the impugned order as no question of law much less any substantial question of law arises - appeal dismissed.

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• CST, VAT & Sales Tax

• 2024 (1) TMI 299
  Classification of goods - CAT-5/CAT-6 cables - HELD THAT:- CAT-5/CAT-6 cables will fall in the Category of Computer System and peripherals which is specified in the Entry No. 3 right from its inception. Hence, no case for interference is made out in exercise of jurisdiction under Article 136 of the Constitution of India - SLP dismissed.

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• 2024 (1) TMI 298
  Penalty for not deducting TDS on the amounts which were paid to the U.P. Awas Evam Vikas Ltd. - It was held by High Court that Non deduction of TDS would be deemed to be intentional for which the penalty has rightly been imposed - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The special leave petitions are dismissed.

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• 2024 (1) TMI 297
  Detention of goods - detention on the ground that goods were not accompanied with the proper and genuine documents and that the petitioner had made an attempt to evade tax - HELD THAT:- The plea of the petitioner that the transaction is not taxable, is a bonafide plea and in the absence of either mis-declaration or concealment, it has to be held that the exercise of power of imposing penalty at Check Post, was not warranted. Undoubtedly, sale against From-C and Form E-1 is exempt from CST under Section 6(2) of the CST Act ; Form-C needs to be furnished by the seller to the prescribed authority of the Seller s State; so the onus is on the State from where the goods are being sold to ensure that the Form against which such sale is being conducted, is legitimate and genuine - the finding in the impugned order regarding genuineness of the statutory Forms C and E-1, issued by the Excise Taxation Department of the other States, is unwarranted , perverse and contrary to law. In ONKARLAL NANDLAL VERSUS THE STATE OF RAJASTHAN AND ANOTHER [ 1985 (9) TMI 314 - SUPREME COURT ] the Supreme Court held that there is no antithesis between a sale in the course of inter-State trade or commerce and a sale inside the State. Even an inter-State sale must have situs , and the situs may be in one State or another. It is held that the ETO at the Barrier or the Check Post, in the facts and circumstances of the case, could not have examined the nature of the sale transaction and act beyond the limited jurisdiction of examining the documents, accompanying goods, and impose a penalty on a transaction not otherwise liable to tax under the Act; and that the impugned order is perverse for not considering the fact that the Assessing Authority, in the assessment order dt. 04.09.2008, passed for the Assessment Year 2006- 07, had accepted the Returns filed by the petitioner and had not imposed any tax on the transaction disputed in the impugned order. It is also held that the genuineness of the Form-C and Form E-1, cannot be doubted by the Excise Taxation Authorities in Himachal Pradesh. The respondents are directed to refund the penalty collected with interest at the rate of 6% per annum from the date on which the said amount was taken from the petitioner till the date of repayment - the Revision is allowed.

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• 2024 (1) TMI 296
  Classification of goods - memory cards - IT products covered under Entry No. 10 of Part A of Entry 65 of Schedule IV of the Rajasthan Value Added Tax Act, 2003 or taxed at residuary rate as per Entry 78 of Schedule V to the RVAT Act? - HELD THAT:- As per settled position of law, a specific entry would always trump a general entry and the burden would always be on the Revenue to prove that the goods in question would have to fall in residual entry as opposed to the specific entry. The Commissioner opined that since the use of memory cards is not restricted to recording sound and that since memory card can be used in a variety of devices, to increase functionality, the same cannot be said to be covered under any of the specific entries. A bare perusal of the aforesaid determination would reveal that the same is merely the opinion of the Commissioner and is not supported by any cogent reasons and or technical/expert opinion. It cannot be emphasized enough that in indirect tax matters, long standing classification cannot be disturbed merely on personal opinion/knowledge. The revenue has to discharge its burden to prove that the change in classification is warranted and necessary by adducing cogent and corroborating evidence. Mere assertion or personal opinion, even of the Commissioner, without any supporting evidence is of no use or value. Since the revenue has not discharged its burden to show that the good in question, i.e. memory cards, which is undisputedly media which can record sound and other phenomena, would not be covered under the specific entry of either Entry No. 10 or Entry No. 3 of Part A to Schedule IV to the RVAT Act, the levy of additional tax and interest, merely on the basis of determination order passed by the Commissioner, cannot be sustained. Because the Entry 10 of Part A of Schedule IV to the RVAT Act is inclusive and illustrative and not exhaustive. The items CD and DVD are merely listed as examples - Because reassessment after substantial period of time cannot be made merely on change of opinion. Because the case is of classification and interpretation of taxing statute and not of avoidance or evasion of taxes, therefore invoking of Section 25 and 26 of the RVAT Act was not warranted. Further the judgment of RAJASTHAN FELTS MANUFACTURING COMPANY VERSUS THE STATE OF RAJASTHAN AND OTHERS [ 1978 (1) TMI 160 - RAJASTHAN HIGH COURT] , relied upon by learned counsel for the revenue to support reassessment, was passed under the erstwhile regime of Rajasthan Sales Tax Act, 1994, that too under different facts, and therefore the same has no application in the facts and circumstances of the present case. The question(s) of law framed hereinabove have to be answered in favour of the petitioner-assessee and against the Revenue - the STRs are allowed.

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• Indian Laws

• 2024 (1) TMI 295
  Modification of the arbitral award as carried out by the learned Civil Judge as confirmed by the High Court - Whether the petitioner made out the proper grounds that the award passed by the arbitrator is not supported by sound reasonings and it is in arbitrary nature and it is liable to be set aside? HELD THAT:- In the instant case, the only provision under which the award could have been assailed was for it to have been in conflict with the public policy of India. A perusal of the judgment and order of the learned Civil Judge, in the considered view of this Court, does not reflect fidelity to the text of the statute. Nowhere does it stand explained, as to, under which ground(s) mentioned under Section 34 of the A C Act, did the Court find sufficient reason to intervene. In fact, quite opposite thereto, the Court undertook a re-appreciation of the matter, and upon its own view of the evidence, modified the order. The reasons recorded by the learned Civil Judge for modifying the arbitral award, as reflected from a perusal thereof, have been recorded in an earlier section of the judgment. None of those reasons even so much as allude to the award being contrary to the public policy of India, which would enable the court to look into the merits of the award. The reasons assigned by the Court under Section 34 of the A C Act, are totally extraneous to the controversy, to the lis between the parties and not borne out from the record. In fact, they are mutually contradictory. The award passed by the learned Arbitrator is patently illegal, unreasonable, contrary to public policy. There is no reason forthcoming as to how the holding of the learned Arbitrator flies in the face of public policy - it cannot be doubted that the Claimant-Appellant is entitled to interest. In the absence of compliance with the well laid out parameters and contours of both Section 34 and Section 37 of the A C Act, the impugned judgement(s) are required to be set aside. Consequently, the award dated 18th February 2003 of the learned Arbitrator is restored, for any challenge thereto has failed. Appeal allowed.

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• 2024 (1) TMI 294
  Validity of the detention order - refusal of the High Court of Calcutta to set aside the order of detention passed by the respondents - Smuggling of gold and foreign currencies - bounden duty of the authorities in serving the grounds of detention containing such grounds which weighed in the mind of the detaining authority in passing the detention order - HELD THAT:- There is a subtle difference between the background facts leading to detention order and the grounds of detention. While the background facts are not required in detail, the grounds of detention which determine the detention order ought to be found in the grounds supplied to the detenue. In other words, the knowledge of the detenue is to the subjective satisfaction of a detaining authority discernible from the grounds supplied to him. It is only thereafter that a detenue could be in a better position to take a decision as to whether he should challenge the detention order in the manner known to law. This includes his decision to make a representation to various authorities including the detaining officer. Therefore, an effective knowledge qua a detenue is of utmost importance. To what extent a communication can be made both orally and in writing ? - HELD THAT:- In a case where a detenue is not in a position to understand the language, a mere verbal explanation would not suffice. Similarly, where a detenue consciously declines to receive the grounds of detention, he has to be informed about his right to make a representation. In such a scenario, the question as to whether the grounds of detention contained a statement that a detenue has got a right to make a representation to named authorities or not, pales into insignificance. This is for the reason that a detenue despite refusing to receive the grounds of detention might still change his mind and receive them if duly informed of his right to challenge a detention order by way of a representation - in a case where a detenue receives the ground of detention in the language known to him which contains a clear statement over his right to make a representation, there is no need for informing verbally once again. Such an exercise, however, would be required when the grounds of detention do not indicate so. The grounds of detention forming the basis of the satisfaction of the detaining authority, were made known to the detenue. He cannot seek all the facts, including access to the telephonic conversation relied on, especially when he did not exercise his right to make the representation. It is pertinent to mention that we are only dealing with the validity of the detention order and not a regular criminal case against the accused. There are no ground to interfere with the impugned order passed by the High Court of Calcutta - appeal dismissed.

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