Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 11, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Customs
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58/2023 - dated
9-10-2023
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Cus
Exempts goods when imported into India from the Republic of Korea - matter concerning imports of “Ferro Molybdenum” - Notification No. 152/2009-Customs, dated the 31st December, 2009 as amended.
GST - States
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27979-FIN-CT1 -TAX-0072/2017 - dated
6-10-2023
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Orissa SGST
Amendment in Notification No. 35008-FIN-CT1-TAX-0072/2017 dated the 16th December, 2021
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27430-FIN-CT1-TAX-0005/2023 - dated
30-9-2023
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Orissa SGST
Notify "Account Aggregator" as the systems with which information may be shared by the common portal under section 158A of the Odisha Goods and Services Tax Act, 2017
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27426-FIN-CT1-TAX-0016/2023 - dated
30-9-2023
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Orissa SGST
Seeks to bring in force provisions of Odisha Goods and Services Tax (Amendment) Act, 2023
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1057/XI-2–23-9(47)-17-T.C.222-U.P.Act-1-2017-Order (286)-2023 - dated
9-8-2023
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Uttar Pradesh SGST
Amendment in Notification No. 514/XI-2–23-9(47)-17-T.C.214-U.P.Act-1- 2017-Order (272)-2023, dated April 24, 2023
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1056/XI-2–23-9(47)-17-T.C.221-U.P.Act-1-2017-Order (285)-2023 - dated
9-8-2023
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Uttar Pradesh SGST
Amendment in Notification No. 513/XI-2–23-9(47)-17-T.C.213-U.P.Act-1- 2017-Order (271)-2023, dated April 24, 2023
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1055/XI-2–23-9(47)-17-T.C.220-U.P.Act-1-2017-Order (284)-2023 - dated
9-8-2023
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Uttar Pradesh SGST
Amendment in Notification No. 512/XI-2–23-9(47)-17-T.C. 212-U.P.Act-1- 2017-Order (270)-2023, dated April 24, 2023
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1054/XI-2–23-9(47)-17-T.C.219-U.P.Act-1-2017-Order (282)-2023 - dated
9-8-2023
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Uttar Pradesh SGST
Amendment in Notification No. 510/XI-2–23-9(47)-17-T.C. 211-U.P.Act-1- 2017-Order (269)-2023, dated April 24, 2023
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1053/XI-2–23-9(47)-17-T.C.218-U.P.Act-1-2017-Order (283)-2023 - dated
9-8-2023
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Uttar Pradesh SGST
Amendment in Notification No. . KA. NI.-2-136/XI-9(42)-17-U.P.Act-1-2017- Order (99)-2018 dated January 30, 2018
SEBI
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SEBI/LAD-NRO/GN/2023/155 - dated
9-10-2023
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SEBI
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Fifth Amendment) Regulations, 2023
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SEBI/LAD-NRO/GN/2023/154 - dated
9-10-2023
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SEBI
Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2023
SEZ
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S.O. 4383(E) - dated
9-10-2023
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SEZ
SEZ for Pharma & Bio-tech sector - Additional area of 3.5968 hectares, as a part of above Special Economic Zone, thereby making the total area of SEZ as 16.0104 hectares at Village Hadapsar/Manjri, District Pune (Maharashtra)
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Principles of natural justice - only notice in the proceedings was issued to the petitioner seeking his reply within 30 days - denial of opportunity of oral hearing - The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-1, Raebareli to issue a fresh notice to the petitioner within a period of two weeks from today - HC
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Adjustment interest against Refund - Unutilized balance of ITC was not used for payment of GST by the assessee wrongly - Deduction of an amount towards interest was unnecessary as there was really no loss to the revenue. It would have been different, if tax liability was adjusted earlier out of Input Tax credit availed on State GST borne and was utilized for payment of Central GST by the petitioner under the provisions of the Central Goods and Services Tax Act, 2017. - HC
Income Tax
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Addition of on-money paid by the assessee for purchase of land in the name of his mother - the assessee had no explanation and was just trying to find lame excuses here and there to come out of the situation contrary to him. - Addition confirmed - AT
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Monies being realised from the Petitioner in the guise of TCS - Petitioner seeking refund of forcefully realised and interest at the rate of 18% per annum - the entire sums of money collected as TCS from the Petitioner along with interest thereon, be refunded by Respondents 3 to 5 (Revenue) to Respondents No. 1 and 2 (CCL) who should thereafter forthwith refund the same to the Petitioner in a time-bound manner. - HC
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Validity of reopening of assessment - notice u/s 148A(b) - The corrigendum issued more than two months after the order under Section 148A(d) vitiates the order beyond repair. We also notice that sufficient material regarding the assets on which investments are alleged to have been made have also not been disclosed in the notice under Section 148A(b). If an agriculture land is referred to, it is only proper that the description along with the details of the location as also the specification of the deed by which the acquisition was made should be informed to the assessee. Similarly in the case of a vehicle, the Registration Number and the details are to be supplied - HC
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Reopening of assessment - change of opinion - Even de hors any additional explanation by Petitioner, the wording and language of the notice and the order impugned herein itself reveals the distinct views taken by the AO. We find that the reopening of assessment is merely based on a change of opinion on the same set of facts and material before the AO which was available to him at the time of original assessment. - The order and notice quahsed - HC
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Validity of reopening of assessment - assessment proceeding u/s 143(3) r.w.s. 153C of the Act was completed - When assessment is completed u/s 143(3) or u/s 144 of the Act, issuance of notice u/s 143(2) is mandatory and in case no such statutory notice is issued, the AO cannot assume jurisdiction to frame assessment u/s 143(3). - HC
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Set-off of capital loss - The assessee states that it be the ultimate holding company was obligated to support its subsidiary companies likes RCML to revive their business operations, if so, the entity RHC Holdings Pvt. Ltd. which is also part of this multi-national group and it is its responsibility to support the step-down subsidiaries as much it is that of the assessee. From the entire facts, it is clear that transaction has been so arranged that RHC Holdings Limited is the ultimate beneficiary of this entire transaction leaving the assessee to incur losses and hence, the capital loss claimed by the assessee cannot be allowed. - AT
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Correct head of income - Sale of Investment in Shares (ARLIC) - We have gone through the provisions of Section 28(va) and Section 28(iv) invoked by the revenue authorities. The assessee has invested the amount for acquiring 44% stake in the ARLIC and sold the same. Hence, it cannot be said that there is sale of business as the assessee do not own the 100% stake in ARLIC. The receipts be taxed under the head “capital gains” after giving due indexation - AT
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Addition u/s 68 - purchase of share capital /premium in Cash - despite the availability of banking facilities to the two investors, they invested cash towards purchase of share capital /premium of the closely held company directors of which were their relatives. - Additions confirmed - AT
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Disallowance on account of loss - The dynamics of business are variable and depend upon several factors and consideration, based on which assessee takes its business decision. In the present case before us, assessee found its expansion by setting up a clinic as economically not viable and in order to save its future loss has dropped and abandoned the said project. In order to mitigate the future loss, and to recoup maximum for the expenditure already incurred, the assets deployed on the expansion were put to sell, resulting in the loss which has been claimed by the assessee in computing its profit and loss from business. - Claim allowed - AT
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Deduction u/s 10(37) - sale of agricultural land - the land was agricultural land and was being used for agricultural operations prior to the date of acquisition during two years prior to acquisition. Accordingly, the conditions as envisaged u/s 10(37) of the Act are satisfied and any capital gain arose out of the said agricultural land is exempt under section 10(37) - AT
Customs
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Maintainability of petition before HC or SC - alternative remedy of appeal - issue related to rate of duty of customs or not - The determination by the CESTAT does not meet the test of real, direct and proximate relationship to rate of duty as enunciated by the Supreme Court in SAIL. An order which may merely have a consequential or inferential repercussion on the rate of duty question is not what is intended to be excluded from the ambit of Section 130 of the Act. - HC
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Smuggling - seizure of foreign currency - Beneficial owner of the currency - The proceedings emanating from the SCN in question stood restricted to the business travel of the respondent while acting as a Managing Director of HMC. - Tribunal has rightly come to the conclusion that the respondent could not be held to be the beneficial owner of the seized currency. - HC
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Maintainability of Appeal before CESTAT - Baggage Rules - misreading of the terms ‘goods’ and ‘baggage’ - In any case and once the department themselves had asserted that the goods in question were liable to be confiscated in terms of Section 113(d), the objection taken to the maintainability of the appeal would not sustain. - HC
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Classification of imported goods - 36-Port-100GE Interface Card - The exemption notification does not perse provide for any aid for classification of goods. - It is a settled law that while statutory notifications may be looked at for the purpose of ascertaining the scope of goods covered under the exemption notification, they cannot be used to determine the classification of goods. - AT
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Valuation - Reliance on the statement made before the customs officers - recording of statement u/s 108 - Certainly a statement recorded under duress or coercion cannot be used against the person making the statement. It is for the adjudicating authority to find out whether there was any duress or coercion in the recording of such a statement since the adjudicating authority exercises quasi-judicial powers. - SC
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Valuation of imported goods - Tuners - It is for the department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. - Enhancing the price by straightaway invoking Rule 8 of the Customs Valuation Rules when there was no evidence before them to do so. In these circumstances, CESTAT was justified in setting aside the order in original. - SC
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Concessional rate of duty - Transfer Door Color Strip - Transfer Rear Door Color Strip - goods used in motor vehicle namely Cars - The subject goods which are classifiable under Chapter sub heading 39199090 are entitled for the benefit of concessional rate of basic customs duty under Notification No. 57/2017-Cus - AT
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Valuation of imported Rough Emerald - Correctness of valuation by the Government approved valuer of Natural Rough Emerald - No valuer can give exact valuation of rough precious stones at any stage of time, however an expert the valuer may be. Generally, the prices are given with a margin of fluctuation of +/- 20% and the value declared by the appellant was well within this range. - The Department has failed to prove that the transaction value/invoice price was incorrect. - AT
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Levy of penalty u/s 112(b) and u/s 114AA of CA - Penalty on logistic service provider - There cannot be ulterior motive on their part to have filed the IGM and the amendment request letter. - This is a case of negligence on their part to specifically not to pose any query the importer as to why the description in the invoices is different from the description given earlier in the Bill of Lading - Penalty reduced to Rs. 50000/- - AT
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Confiscation of medicines which were being carried while travelling out of India - Penalty u/s 114 (i) of Customs Act - commercial quantity - restricted goods - although the Order of confiscation upheld, the Order of absolute confiscation set aside. In such circumstances, the Appellant was entitled to redemption of the goods. - AT
Corporate Law
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The ‘power to grant ‘permission to withdraw’ a ‘suit’ with ‘Liberty to file a fresh suit’, is to be used very cautiously. Also that ‘withdrawal of a suit’, as ‘plaintiff’, wants to file fresh ‘suit’ ‘on a new cause of action’, ‘Leave’ of the court, is not required - A ‘Court of Law’, cannot exercise its ‘discretionary jurisdiction’ de-hors, the ‘Statutory Law’ and in fact, ‘its discretion’ must be exercised in terms of the ‘existing statute’. - AT
SEBI
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Penalty imposed by SEBI - wrong PAN No. given - The PAN particulars are, but one of the mode to identify an individual, and merely because a wrong PAN number is given, it does change the individual, more so when the petitioner had paid the penalty without demur. Turning to the maintainability, the petitioner ought to have challenged it in the manner provided under the Act. - HC
Service Tax
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Cleaning Services or Manpower Supply Services? - Just because some persons have been deployed by the service providing agency for providing Cleaning Services, the activity of Cleaning Services cannot be converted into the activity of providing manpower. - AT
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Levy of Dredging Services provided to Dredging Corporation of India (DCI) for Sethu Samudram Project and Dhamra Port Company Ltd., and also on certain services imported - The consideration received for site formation services is exempted under the above Notification and cannot be subject to levy of Service Tax under dredging services. - AT
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Exemption from service tax - Transmission and distribution of electricity - There is no ambiguity in the exemption granted for services provided to distribution and transmission companies vide Notification No. 45/2010-ST, and the reliance placed by the Revenue on the clarificatory Circular dated 01.07.2010 is misplaced. - AT
Central Excise
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Refund claim - unspent amount lying in the current account (PLA) of an assessee - Once it is held that the unspent amount in “PLA” is duty of excise, a fortiori Section 11B and Section 11BB would be attracted. If the refund claimed on account of unspent amount in PLA is not paid within three months, it shall become payable with interest till it is actually paid. - HC
VAT
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Levy of VAT on works contract - Exclusion of Prime Location charges - By definition, ‘works contract’ does not include preferential location. Therefore the Revenue rejecting assessee’s request to exempt PLC/FRC from payment of KVAT is not sustainable in law. - HC
Case Laws:
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GST
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2023 (10) TMI 381
Declination to condone the delay of 132 days in filing appeal - cancellation of petitioner's GST Registration - amnesty scheme - HELD THAT:- The Government has itself issued a notification giving amnesty to file application vide G.O.Ms.No.36, Commercial Taxes and Registration (B1) dated 05.04.2023 holding that For the purposes of this notification, the person who has failed to apply for revocation of cancellation of registration within the time period specified in Section 30 of the said Act includes a person whose appeal against the order of cancellation of registration or the order rejecting application for revocation of cancellation of registration under Section 107 of the said Act has been rejected on the ground of failure to adhere to the time limit specified under sub-section (1) of Section 30 of the said Act. Petition closed.
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2023 (10) TMI 344
Maintainability of petition - availability of alternative remedy of appeal - HELD THAT:- When the High Court, at outset, stated that the petitioner had an alternative statutory remedy, it ought not to have proceeded to make observations on the merits of the case and thereafter, state that the petitioner would not be precluded from pursuing alternative remedies. SLP disposed off by reserving liberty to the petitioner to avail of the alternative remedy, if so advised.
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2023 (10) TMI 343
Principles of natural justice - only notice in the proceedings was issued to the petitioner seeking his reply within 30 days - denial of opportunity of oral hearing before the Assessing Authority - HELD THAT:- There are complete agreement with the view taken by the coordinate bench in BHARAT MINT AND ALLIED CHEMICALS VERSUS COMMISSIONER COMMERCIAL TAX AND 2 OTHERS [ 2022 (3) TMI 492 - ALLAHABAD HIGH COURT] . Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. The impugned order itself has been passed on 06.12.2022. The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-1, Raebareli to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand.
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2023 (10) TMI 342
Time limitation - appeal dismissed as being beyond limitation - HELD THAT:- Section 75(4) of the GST Act mandates the granting of an opportunity of hearing where an adverse decision is contemplated against a person. This provision was also interpreted by this Court in the case of PARTY TIME HOSPITALITY PROP. SMT. PUNITA GUPTA LKO. VERSUS STATE OF U.P. THRU PRIN. SECY. TAX AND REGISTRATION LKO AND 2 OTHERS [ 2023 (9) TMI 48 - ALLAHABAD HIGH COURT] and the Court was of the view that compliance of Section 75(4) of GST Act is mandatory; while doing so, this Court had also considered the earlier judgments of this Court. Considering the fact that the original order is contrary to the mandate of Section 75(4) of GST Act and is also violative of principles of natural justice, the order dated 15.03.2022 is liable to be quashed and is accordingly quashed. Matter is remanded to respondent no.3 to pass fresh orders after giving an opportunity of hearing and after permitting the petitioner to file a reply to the show-cause notice, in accordance with law - Petition allowed.
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2023 (10) TMI 341
Refund of unutilised Input Tax Credit (ITC) - mismatch in the reported turnover - inverted duty structure or not - petitioner s appeal was rejected on the ground that the petitioner had not submitted the copies of the statutory records (GSTR-1, GSTR-3B and GSTR-2A) for the relevant period and therefore, the petitioner s claim could not be co-related - HELD THAT:- It is not disputed that the petitioner was not asked to furnish the said documents. It is also the petitioner s case that the statutory records were available on its portal with the concerned authorities. It is considered apposite to remand the matter to the appellate authority for consideration afresh. The appellate authority shall issue an appropriate notice calling upon the petitioner to produce all such documents as the appellate authority considers necessary for processing the said claims - petition allowed by way of remand.
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2023 (10) TMI 340
Disallowance of Input Tax Credit - It has been observed that the petitioner neither filed any reply nor remitted the tax and interest on or after the due date - HELD THAT:- The period involved is 2017-18 when the GST regime was rolled out. There may be some substance in the submission of the learned Counsel for the petitioner that the petitioner faced enormous difficulty in understanding the provisions of the GST Act. He also submits that the tax has been paid to the Government. Therefore, the Government is not at a loss for which the petitioner's claim for input tax claim has been disallowed. The impugned order to the extent of disallowing the input tax credit of Rs. 4,84,448/- is set aside. The petitioner is directed to appear before the State Tax Officer, Kayamkulam, with all the relevant documents in his possession to support his claim for the input tax credit of an amount of Rs. 4,84,448/- for the Assessment Year 2017-18. Petition dismissed.
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2023 (10) TMI 339
Rejection of application for revocation of cancellation of his registration - doubt as to whether the petitioner was carrying on its business from the principal place of business - HELD THAT:- One of the grounds urged by the petitioner before the appellate authority was that the impugned SCN proposing to cancel his GST registration was flawed as it did not disclose any specific reason for cancellation of its GST registration. However, the said contention was not examined. The appellate authority found that the petitioner s appeal was filed beyond the period of limitation and that the petitioner was not found present on physical verification of the registered business premises of the appellant. The impugned order records that the Officers had also proceeded for physical verification of the address (KH No. 633) which, according to the petitioner, was his correct address but had found a firm in the name of M/s SK Engineering Works functioning at the said premises. This Court had granted time for the respondents to once again physically verify the petitioner s claim that he carries on business from his principal place of business at Khasra No. 633 - impugned order as well as the Order-in- Original passed by the adjudicating authority are set aside - respondents are directed to restore the petitioner s GST registration from the date as initially granted - Petition disposed off.
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2023 (10) TMI 338
Maintainability of appeal - appeal dismissed on the ground that the same was barred by limitation as prescribed under Sub-section (1) read with Sub-section (4) of Section 107 read with Section 4 of the GST Act, 2017 - HELD THAT:- The appellate authority does not have any power to condone the delay in filing the appeal beyond the period of one month from the period of three months as prescribed under Sub-section 1 of Section 107 of the GST Act, 2017. As the petitioner has filed appeal beyond the total period of four months, it has been dismissed on the ground of delay. The petitioner is not in a position to point out any powers vested with the appellate authority to condone the delay beyond the period of four months. The appeal has to be filed within a period of three months and the appellate authority has the powe to condone the delay by one month if the appellate authority is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within a period of three months. In view of the fact that there is no power vested with the appellate authority to condone the delay beyond three months, this Court finds no grounds to entertain this writ petition and it is hereby dismissed.
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2023 (10) TMI 337
Levy of additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill of Quantities (BOQ) for inviting the bids - HELD THAT:- This writ petition is disposed of by giving liberty to the petitioner to file appropriate representation in the aforesaid regard as referred in preceding paragraph of this order, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representation the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned. Let the respondents file affidavit-in-opposition within four weeks, petitioner to file reply thereto, if any, within two weeks thereafter.
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2023 (10) TMI 336
Adjustment interest against Refund - Unutilized balance of ITC was not used for payment of GST by the assessee wrongly - Refund of amount that was lying unutilized in the Personal Ledger Account - utilization of Input Tax Credit availed on integrated tax, first towards integrated tax liability and the remaining amount, if any, towards Central Tax or State Tax liability - HELD THAT:- The petitioner could have paid the Central and State GST out of the Input Tax Credit availed on Integrated GST borne by the petitioner. The amount of Rs. 25,77,523/- was wrongly transitioned under Section 140 of the Central GST Act, 2017 and was utilized towards Central and / or State GST. It has been allowed to be re-paid post facto out of Integrated Input Tax Credit which was lying unutilized. Thus, the tax liability stands squared up. The amount of Rs. 25,77,523/- that was wrongly transitioned under Section 140 of the Central GST Act, 2017 and utilized towards tax liability has been also refunded. However, while refunding the amount, a sum of Rs. 9,25,366/- was deducted towards interest. Deduction of Rs. 9,25,366/- towards interest was unnecessary as there was really no loss to the revenue. It would have been different, if tax liability was adjusted earlier out of Input Tax credit availed on State GST borne and was utilized for payment of Central GST by the petitioner under the provisions of the Central Goods and Services Tax Act, 2017. The impugned order dated 31.01.2020 seeking to adjust a sum of Rs. 9,25,366/- towards interest cannot be sustained - the impugned order is liable to be modified - Petition allowed.
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Income Tax
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2023 (10) TMI 379
Determination of income on presumptive basis - Determination of the income in accordance with the provisions of section 44BB - assessee s nature of business is to provide services and facilities for prospecting/ extraction/ production of mineral oil - HELD THAT:- As relying on assessee s own case for AY 2011-12 [ 2023 (10) TMI 311 - ITAT DEHRADUN] we note that the Tribunal has elaborately considered the contract and provisions of law and finally come to the conclusion that income of the assessee should be determined on presumptive basis as per section 44BB(1) of the Act in the peculiar facts and circumstances of the case. We respectfully follow the same and direct accordingly.
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2023 (10) TMI 378
Addition of on-money paid by the assessee for purchase of land in the name of his mother - contention of the assessee that no plot was purchased by him from MPD is inconsequential because the incriminating material indicated the name of the assessee to have paid the on-money against the purchase of land - HELD THAT:- During the course of instant proceedings before the AO, which started with the receipt of information about the payment of on-money by the assessee, a request was made by the assessee for the supply of incriminating material from MPD. AO, vide notice u/s. 142(1) dt. 07-12-2018, offered the assessee to inspect the impounded material based on which the assessment was re-opened and requested the assessee to be present on 11-12-2018. Assessee chose to ignore this opportunity. The ld. DR has brought on record the service of such notice dt. 07-12-2018 on the assessee on the immediately next day, i.e. 08-12-2018. This shows that the assessee, despite requesting for the inspection of the incriminating material having his name with the amount of on-money, did not turn up to carry out the inspection of the impounded material when a specific opportunity was provided to him. This deciphers that the assessee had no explanation and was just trying to find lame excuses here and there to come out of the situation contrary to him. Page 12 of the impounded loose material, i.e. Annexure A4 had the name of the assessee at Sl.No. 21 giving the area, square feet rate, total amount, amount received till today, received amount before 27-04-2012 and amount due. Not only that even the dates of payments were also mentioned in the separate ledger maintained by MPD for this purpose. As absolutely clear that the assessee paid on-money to MPD for purchase of immovable property in the name of his mother. As such, we are satisfied that the authorities below were justified in making and confirming this addition. Appeal is dismissed.
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2023 (10) TMI 376
Revision u/s 263 - AO made an adhoc disallowance when the assessee failed to maintain salary ledger and vouchers thereby directed to make addition of salary paid by cash - 17th time of hearing of the above appeal - HELD THAT:- We have observed that adhoc disallowance to the tune of Rs. 84,000/- is upheld by ld. CIT(A). The assessee has claimed total salary of Rs. 3,43,600/- and the assessee on its part produced vouchers and details. We have observed that the assessee is in the business of cable network services and the total turnover of the assessee was Rs. 5,06,29,889/-, while total salary claimed was Rs. 3,43,600/- which is a meager sum vis- -vis total turnover. No specific defect has been pointed by the authorities below and adhoc disallowance is made. Keeping in view smallness of the amount vis- -vis turnover achieved and on preponderance of probabilities also keeping in view that adhoc disallowance is made by the authorities below, we are inclined to delete the addition of Rs. 84,000/- as sustained by ld. CIT(A). The assessee succeeds on this issue. We order accordingly. Additions to Partner s Capital account - additions sustained by ld. CIT(A) were towards goodwill earned from Den Digital which stood credited to the capital accounts of the partners for which no taxes were paid - The amount is credited in the books of the assessee, and the onus is on the assessee to substantiate that the said amount has suffered taxation, which assessee fails to prove and bring on record cogent evidences to substantiate that said amount has already suffered taxation. Thus, we don t find any infirmity in the well-reasoned appellate order passed by ld. CIT(A) confirming additions which we sustain. The assessee fails on this issue. We order accordingly. Remaining amount of additions as sustained by CIT(A), it is observed that the cash stood credited in the Partners Current Account namely Mr. Kamlesh Patel and Mr. Manojbhai Patel respectively, for which the assessee could not explain sources of cash credits in the Partners Current Account. Thus, it is a case of cash being received by the assessee ostensibly from Partners, for which no cogent explanation was forthcoming from the assessee to substantiate the sources of cash and the amount stood credited in the books of accounts of the assessee. Thus, the onus is squarely on the assessee to prove and substantiate with cogent evidences as to sources of the cash receipts as well as to satisfy the mandate of Section 68 to the satisfaction of the authorities, which does not stood satisfied as the assessee failed to substantiate. Before us, the assessee did not appear and based on material on record, we have no hesitation in upholding this addition as was sustained by Ld. CIT(A) as we do not find any infirmity in the well-reasoned appellate order passed by Ld. CIT(A), which we sustain. The assessee fails on this issue. We order accordingly. Appeal filed by the Assessee is partly allowed.
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2023 (10) TMI 375
Disallowance being interest - self occupied house property - Second loan taken to repay earlier loan for the same house property - HELD THAT:- It is an admitted fact that it is never disputed by the AO that the assessee has obtained a LIC loan for acquiring/purchasing property and in subsequent years obtained a loan from SBI for the second property for which he has also taken those funds to repay an earlier loan amount. At no point of time, the Revenue disputed that the assessee has paid the interest component and therefore the basis of the Revenue that the present appeal is identical to those for assessment year 2009-10 appears to be incorrect. Therefore, the Assessing Officer as well as CIT(A) is not justified in denying the claim of the assessee towards interest payment - Decided in favour of assessee.
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2023 (10) TMI 374
Disallowance on account of unaccounted sale of teak trees - assessee failed to explain the discrepancy in number of teak trees standing during the year under consideration - CIT deleted addition - HELD THAT:- The finding given by the ld. CIT(A) that the entire teak trees were sold during the year appears to be correct and the contention of the ld. Departmental Representative that the documents were not provided based on the assessment order is not supported by the findings given by the CIT(A) as well as the submissions made by the assessee during the assessment proceedings. There is no discrepancy as such pointed out by the AO related to the valuation of the teak tree given by the assessee as per the various documents. The so called discrepancy pointed out by the DR about the insurance policy report as well as valuation report is for the particular data entry and cannot be applied without any verification of the actual teak trees and its price per tree. The documents shows that the assessee has given all the details including the price adopted for sale rate as well the purchase price and therefore the findings given by the CIT(A) are correct and there is no need to interfere with the findings of the ld. CIT(A), thus ground no. 1 of Revenue s appeal is dismissed. Disallowance of income from other sources - DR submitted that the amount credited in bank account and books of accounts is not justifiable as the books in fact the accounting and tax treatment of the assessee company was rejected by the AO - As same amount was not received by assessee as payment for the sale of teak trees and there is unexplained credit in assessee s bank and books of accounts chargeable to tax u/s. 68 - HELD THAT:- There is no reasoning given for rejecting the books of account and tax treatment given by the assessee company. In fact, no discrepancy has been pointed out by AO by rejecting the same. The assessee has given a reconciled order identification vis- -vis the original agreements made to the purchase and sale of teak tree during the year through various documents including the scheme as well as the summary of capital work in progress, allotment letters given to member along with the sampling certificate, register, showing money received from members permission received from tax department for sale of teak trees and all the relevant documents related to the same. Therefore, the CIT(A) has rightly deleted the said addition in respect of amount credited in bank account. Thus, Ground No. 2 of revenue s appeal is dismissed. Penalty u/s. 271(1)(c) - As there is no concealment of particulars of income for furnishing of inaccurate particulars of income on the part of the assessee. In fact, all the relevant documents were present before the Assessing Officer as well as before the CIT(A) and therefore the penalty u/s. 271(1)(c) does not sustain hence is allowed.
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2023 (10) TMI 373
Assessment u/s 153A - Addition of unsecured loan receipts u/s 68 - as per assessee genuine loan is received where Identity, Genuineness and Creditworthiness had been proved - HELD THAT:- As per Meeta Gutgutia case [ 2017 (5) TMI 1224 - DELHI HIGH COURT] no assessment was pending on the date of search and the addition has been made merely on the basis of the book entries already disclosed to the department. Further, reliance is also placed on the decision of the Hon ble Jurisdictional High Court in the case of PCIT Vs. Subhash Khattar [ 2017 (7) TMI 1091 - DELHI HIGH COURT] The entire issue stands settled by the judgment of Hon ble Apex Court in the case of M/s. Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] wherein the held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Hence, we hold that no addition can be made in the case of the assessee sans seized material. Appeal of the assessee is allowed.
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2023 (10) TMI 372
Validity of appeal as instituted by AR [authorized representative] on behalf of the appellant - no document has been filed along with the appeal memo demonstrating the authorization by the assessee to the Authorized Representative - HELD THAT:- We find that the present appeal has been instituted on behalf of the assessee by one Shri Saurabh Jain, who has signed Form no. 36 under the designation of Financial Controller. However, no letter of authorization by the assessee company authorizing Shri Saurabh Jain to file the present appeal is enclosed along with the appeal memo. As Rule 16 of the Appellate Tribunal Rules, 1963 mandates filing of an document authorizing a representative, therefore, in the absence of such authorization the present appeal is dismissed. Assessee would be at liberty to seek restoration of appeal and submit the latter of authorization which authorized Shri Saurabh Jain for signing the appeal memo on behalf of the assessee company. Assessee appeal dismissed.
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2023 (10) TMI 371
Disallowance u/s 35AD being capital expenditure incurred for the purpose of specified business as per law - HELD THAT:- There being no material change in the facts and the applicable law as compared to the preceding years [ 2023 (7) TMI 1302 - ITAT KOLKATA] placing reliance on the decision in the case of Haryana Warehousing Corporation [ 2019 (7) TMI 1997 - ITAT CHANDIGARH] we follow the decision of the Coordinate Bench in assessee s own case and thereby allow the claim of the assessee u/s.35AD - Accordingly, ground no. 1 taken by the assessee is allowed. Disallowance on account of loss of sale of assets which were not part of block of assets as the expansion of business by setting up of clinic was abandoned, assessee furnished the details of the loss claimed by the assessee placed in the paper book - HELD THAT:- The fact of abandoning the expansion of business by setting up of a clinic is not in dispute. Also, the incurrence of loss has not been controverted by bringing any material to this effect. AO has disallowed the claim of loss by holding it as capital in nature. It is also noted that the assessee has accounted the expenditure incurred by it as capital work in progress on which no depreciation had been claimed as these assets were never put to use. We note that it is the prerogative of assessee to conduct and plan its business considering economic viability and making of profits. It is the sole discretion of the assessee to make its business decisions for the conduct and the manner in which it wants to plan its business. The dynamics of business are variable and depend upon several factors and consideration, based on which assessee takes its business decision. In the present case before us, assessee found its expansion by setting up a clinic as economically not viable and in order to save its future loss has dropped and abandoned the said project. In order to mitigate the future loss, and to recoup maximum for the expenditure already incurred, the assets deployed on the expansion were put to sell, resulting in the loss which has been claimed by the assessee in computing its profit and loss from business. In view of the decision of Binani Cement Ltd. [ 2015 (3) TMI 849 - CALCUTTA HIGH COURT] and the undisputed facts as stated above, we are of the view that claim of assessee is justifiable and is accordingly allowed.
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2023 (10) TMI 370
Unexplained cash payments - unaccounted receipts from the demonetization period were to be treated as unexplained as it had been preceded by IDS and then succeeded by PMGKY schemes - DR submitted that the assessee s case is clearly covered under the provisions of section 115BBE - DR submitted that the IDS disclosure that was made to disclose the undisclosed amounts of prior assessment years cannot be considered for AY 2017-18. Hence, the IDS amount paid by the assessee-firm and partner cannot be allowed for the purpose of telescopic benefit - As per assessee no material evidence was brought on record by the Ld. AO to prove that it is not a business income - HELD THAT:- CIT(A) has verified the income declared under IDS 2016 which was filed by the assessee on 26/09/2016 and based on such finding the Ld. CIT(A) has allowed the telescoping benefit claimed by the assessee. Further, we find force in the argument of the Ld. AR that the Ld. AO has not brought any material evidence to prove that it is not the business income of the assessee. Even before us, the Revenue has not produced any records supporting the claim of the Ld. AO. Further, we find that the Ld. AO has also failed to examine how the assessee generated the cash deposit outside the books of account. No documentary evidence was also gathered by the Revenue with respect to the excess stock as contended by the Ld. AO. Further, from the sworn statement of Sri Grandhi Ramjee, in response to Q. No. 15, he had admitted that an amount was generated by the assessee firm outside the books of account during the FY 2016-17. Further, in response to Q. No. 16, he has also admitted that the assessee-firm has offered Rs. 1 Cr under IDS scheme in the name of the assessee-firm and partners and has requested to give the telescoping benefit to pay the tax on the balance amount of Rs. 3,65,27,000/- We are of the considered view that the Ld. CIT(A) has rightly held that the assessee had explained nature and source of payment of Rs. 4.65 Crs - income of Rs. 4.65 Crs for the AY 2017-18 represents partly the transaction found in a search U/s. 132 of the Act. The transaction of the appellant was found in the search case of DRK Reddy Educational Society. The transaction has not been recorded in the books of account maintained in the normal course of business. Therefore, it is purely undisclosed income but cannot be unexplained as it does not form part of books of account. The appellant had also explained the source being cash generated out of business. It is for the Assessing Officer to examine how the sales were generated and the manner in which the undisclosed income is generated. AO s contention that no excess stock was found has not basis in the absence of any details of stock. The only point on which the survey conducted is the value of investment and no other details. Thus the appellant had explained that nature and source of payment - Decided against revenue.
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2023 (10) TMI 369
Unexplained investment in land - CIT(A) restricted part addition giving a relief based on the purchase price so found by the ld. CIT(A) of the impugned properties, he took the same for determining short-term capital gain earned by the assessee from the sale of properties - HELD THAT:- With respect to factual finding of the ld. CIT(A) relating to the cost of purchase of 4 pieces of land, gathered from the registered sale deed of the said land, furnished by the assessee to the ld. CIT(A), we find they were verified by the AO in remand proceedings. He had no adverse comments to make with respect to the same, and even before us, the ld. DR was unable controvert the factual finding of the ld. CIT(A) in this behalf. There remains, therefore, we hold, no grievance of the Revenue with respect to the cost of four pieces of land taken at the consideration mentioned in the sale deeds by the Ld. CIT(A). NA premium added to the cost of investment, the ld. CIT(A), we have noted, has given a finding that, even the sale deed of these land mentioned conversion of agriculture land to non-NA land the assessee having claimed to incur cost towards the same, he added the same to the cost of investment. The ld. DR was unable to convert this finding of the ld. CIT(A). Therefore, with regard to cost of purchase of four pieces of land taken by the ld. CIT(A) DR being unable to controvert the factual finding of the ld. CIT(A), we see no reason to interfere in the order of the ld. CIT(A). Deletion of addition, on account of one piece of land i.e. survey no. 1/2, the ld. CIT(A) has noted that there was no information with the AO with respect to the said piece of land; that even in the reasons recorded by the AO for reopening the case of the assessee, this land was not mentioned as investment made by the assessee, and even the assessee had claimed to have made no investment in this piece of land. The ld. DR was unable to demonstrate before us by way of documents or evidence, as to the basis with the AO for treating the assessee to have invested in this piece of land i.e. survey no. 1/2. No reason to interfere in the order of the ld. CIT(A) deleting the addition made on account of unexplained investment in the impugned land to the tune of Rs. 1.13 crores. We uphold order of the ld. CIT(A) treating unexplained investment made by the assessee in the land relating to only 4 piece of land to the tune of Rs. 1,95,52,180/- as opposed to the addition made by the AO in relation to five piece of land to the tune of Rs. 2,44,77,073/-. The ground No. D raised by the Revenue, is thus, rejected. Determination of cost of acquisition of the said lands - short-term capital gain was reduced - It is, this reduction in short-term capital gain earned by the assessee, on account of enhanced amount of investment found to have been made in the four pieces of land, by the Ld. CIT(A), which is in challenge - HELD THAT:- Since, we have held in ground no. 1 above that the ld. CIT(A) has rightly computed the cost of investment made by the assessee in four pieces of land at Rs. 1,95,52,180/-, as a corollary the short-term capital gain computed calls for no interference at our end. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) reducing the quantum of short-term capital gain earned by the assessee to Rs. 2,73,44,720/- from Rs. 3,90,72,307/- computed by the AO.
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2023 (10) TMI 368
Addition u/s 40(a)(ia) - scope of payable' occurring in section 40(a)(ia) - non deduction of TDS u/s 194A on finance charges / interest paid to the non-banking finance companies and at the end of the year - assessee placed reliance on the case of Merilyn Shipping and Transport [ 2012 (4) TMI 290 - ITAT VISAKHAPATNAM] and contended that provisions of section 40(a)(ia) is applicable only when expenditure remained outstanding at the end of the financial year ad no amount remained outstanding towards finance charges/interest - HELD THAT:- Assessee has taken new sets of arguments which had not been taken before the Revenue Authorities during the course of assessment/appellate proceedings, which have been reproduced in the earlier part of the order. So far as the decision of Merilyn shipping is concerned, the same has been overruled by case of Crescent Export Syndicate [ 2013 (5) TMI 510 - CALCUTTA HIGH COURT] which held that the provisions of section 40(a)(ia) are applicable not only in respect of payments outstanding at end of year but also in respect of payments which have been paid during year without making TDS. The Calcutta High Court decision was also approved by the Hon'ble Supreme Court in the case of Palam Gas Service [ 2017 (5) TMI 242 - SUPREME COURT] which held that word 'payable' occurring in section 40(a)(ia) not only covers cases where amount is yet to be paid but also those cases where amount has actually been paid. Accordingly, in view of the above, reliance on the decision of Merilyn shipping supra would be of no assistance to the assessee. Alternate arguments of assessee which are to the effect that the assessee firm did not take any loans in the instant facts, and it was the partners of the assessee firm who had taken loans in their individual capacity and thereafter, introduced the same as capital in the assessee firm and secondly, the payees/recipients of interest had offered the aforesaid amount interest as income in their respective returns of income, we observe that the above arguments were never taken before the Department/Revenue Authority at any stage of the proceedings, and therefore, the Department never got an opportunity to test the veracity of those arguments (refer Written Submission before Ld. CIT(A) wherein no such arguments were placed on record before Ld. CIT(A). Therefore, the veracity of the aforesaid argument has not been examined by the Revenue Authorities at any prior stage since this argument has not been taken earlier and the Department has not had an opportunity to check the veracity of the aforesaid claim put forth by the assessee, which has been taken before us, for the first time. Accordingly, this issue is being set aside to the file of assessing officer to verify the claims/contentions put forth by the counsel for the assessee. Disallowance of freight payment - non deduction of TDS - Assessee submitted that the payee/recipient had reflected the aforesaid freight income in the income tax return filed for the impugned assessment year, and therefore, the assessee cannot be held to be an assessee in default - HELD THAT:- We observe that the veracity of the aforesaid argument has not been examined by the Revenue Authorities at any prior stage. This argument has not been taken earlier and the Department has not had an opportunity to check the veracity of the aforesaid claim which has been put forth by the assessee before us for the first time. Accordingly, in the interest of justice, the issue is being set aside to the file of assessing officer to verify whether the payee/recipient has offered the income in its return of income as contended before us. The assessee may also file necessary documents in support of the above contention before the assessing officer. Assessee s appeal is allowed for statistical purposes.
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2023 (10) TMI 367
Deduction u/s 10(37) denied - sustaining the addition on account of long-term capital gain on sale of agricultural land - assessee has received compensation on which TDS was deducted. The assessee filed the return for obtaining the refund of TDS deducted from the said compensation on the ground that capital gain arising from the sale of impugned asset is not taxable within the meaning of section 10(37) as the land was agricultural land and exclusively used for agricultural purposes during the period of two years prior to the date of acquisition. HELD THAT:- As perused the details of land to be Dhanattar, which means that the land was used for growing rice. After appreciating all these facts, we are satisfied that the impugned land was agricultural land and was being used for agricultural operations prior to the date of acquisition during two years prior to acquisition. Accordingly, the conditions as envisaged under section 10(37) of the Act are satisfied and any capital gain arose out of the said agricultural land is exempt under section 10(37) - thus set aside the order of ld. CIT(Appeals) by allowing the appeal of the assessee.
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2023 (10) TMI 366
Unaccounted/ undisclosed income - certain material was seized during the search and seizure operation conducted in the assessee s case - assessee had reiterated its claim that the plot owners had paid cash directly to Shri P. Damodar as part of sale consideration, and the assessee had acted as mediator without funds being routed through him - assessee further contended that the amount paid to P. Damodhar and others did not belong to him and therefore, the question of taxing it as undisclosed income should not arise - HELD THAT:- It is worth noting that the assessee has been a regular filer of income tax returns for the past three years and has declared income exceeding Rs. 10 lakhs for the relevant assessment years prior to the current one, which supports the assessee's claim that the undisclosed income of Rs. 10 lakhs can be explained from past accumulations or savings and we do not find assessee s contention as an after thought. Since the assessee failed to provide sufficient evidence before the Assessing Officer and he had only raised the plea before the ld. CIT(A), hence to balance the interest of parties and end the litigation, we allow the relief of Rs. 6 lakhs to assessee and confirm the remaining amount of Rs. 4 lakhs. Considering the submissions made by the assessee, the absence of evidence indicating that Rs. 10 lakhs belonged to the assessee, and the assessee's contention that he is a regular tax filer for the preceding years, we are of the opinion that an amount of Rs. 6,00,000/- on estimate basis is available to the assessee to explain out of the addition of Rs. 10,00,000/- and the amount of Rs. 4,00,000/- remained unexplained. Hence, the addition of Rs. 4,00,000/- is upheld. Thus, the ground of the assessee is partly allowed.
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2023 (10) TMI 365
Estimation of net profit - estimating the profit @ 10% of the turnover without rejecting books of accounts of assessee - HELD THAT:- We find that the assessee is a partnership firm engaged in the business of trading in jute, fertilizers, seeds etc. In the preceding past two financial years, net profit declared was 0.22% and 0.19% arrived at after claiming of incidental expenses including the interest in remuneration paid to partners. The preceding two financial years are on the basis of audited financial statement and the same has not been controverted by the revenue authorities. So far as the year under consideration is concerned, we notice that better net profit rate i.e. 0.49% has been declared. As per judicial precedence, normally average of 3 years profit rate / gross profit rate is adopted to estimate the income. However, since the assessee did not appear before the lower authorities, we estimate the net profit @ 0.50% and applying the same on the turnover of the assessee, the net profit will amount to Rs. 10,83,808/- and accordingly, the income shall be calculated and remaining addition stands deleted. Thus, ground no. 6 7 are partly allowed. Addition of interest income - As we notice that the said interest income is duly disclosed in the books of account and the net profit rate of 0.49% is after considering the said interest income and since we have held to apply net profit rate of 0.50%, it inter alia will take care of interest income of Rs. 1,55,791/- and, therefore, no separate additions is required to be sustained at Rs. 1,55,791/-. Thus, ground of assessee s appeal is allowed.
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2023 (10) TMI 335
Interest under Section 220(2) - effective date for collection of interest on unpaid tax whether it is from the date of demand notice following the first Assessment Order or from the date of demand notice pursuant to final Assessment Order? - divergent interpretations on the order dated 23.01.1992 passed by CIT(A) - tribunal observed that if there is a default on the part of the assessee to comply with the original demand notice, the provisions of Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 shall apply, meaning thereby, interest has to be payable from the original demand notice - HELD THAT:- In the light of the aforesaid divergent views, we have carefully gone through the order dated 23.01.1992 of CIT(A). No doubt in para-5 of the order the said authority mentioned as if it was necessary to set aside the assessment order. However, the said observation cannot be read in isolation. On the other hand, when the entire order was read in conjunction, as rightly observed by the tribunal, the CIT(A) gave main thrust on the computation of capital gain and interest addition. In that view, it cannot be contended that the said authority wanted to expunge the entire assessment order dated 25.03.1991. In fact in the consequential order the Deputy Commissioner of IT arrived at an increased amount of Rs.62,94,117/- as against the original capital gains - Therefore it is not a case of setting aside of the entire assessment order. The original assessment order dated 25.03.1991 and consequent demand notice, therefore stood valid. Since the petitioner did not pay the tax amount till 11.10.1996, in terms of the judgment in Vikrant Tyres Ltd s case [ 2001 (2) TMI 129 - SUPREME COURT] and Section 220(2) of the IT Act, the appellant /assessee is liable to pay interest from the date of original demand i.e., 25.03.1991. The order impugned does not suffer the vice of illegality or irregularity.
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2023 (10) TMI 334
Monies being realised from the Petitioner in the guise of TCS - Petitioner seeking refund of forcefully realised and interest at the rate of 18% per annum - petitioner contended that the benefit of Section 206C(1A) ought to have been granted to the Petitioner once Form 27C has been submitted by the Petitioner and there exists no material to conclude that the declaration forming part of such Form is false - HELD THAT:- The root cause of the present Lis lies in the illegality committed by the Revenue in compelling Respondent No. 1 and 2 (CCL) in effecting TCS qua the transactions of purchase of coal which according to the Petitioner was genuinely used in generation of power. Such TCS was affected by Respondent No. 1 and 2 (CCL) even though appropriate Form 27C was issued by the Petitioner with a verification that the goods so purchased would be used for the purposes of generation of power. The above stand of the Respondents No. 3 to 5 (Revenue) also lead to Respondent No. 1 and 2 (CCL) being declared as an Assessee-in-Default for not having collected TCS in respect of transactions made with various parties where one such party was the Petitioner. That allegation has been quashed by the Ld. ITAT vide its order dated 23.01.2023. While in its Petition the Petitioner had prayed that the illegal sums collected as TCS should be forthwith refunded along with interest recovered in respect thereto as also statutory interest, this Court deemed it appropriate that instead of a refund, issuance of a TCS certificate by Respondents No.1 and 2 (CCL) for the period 2012-2013 to 2017-2018 may in the alternative be an effective relief to the Petitioner. Accordingly, this Court directed Respondents No. 3 to 5 (Revenue) to provide a tangible solution for the issuance of TCS certificates for the period under dispute. In compliance with this Court s directions, Respondents No. 3 to 5 (Revenue) provided the procedure for the issuance of TCS certificates by Respondents No. 1 and 2 (CCL) to the Petitioner. In response, however, the Petitioner highlighted that the TCS certificates which would be issued by Respondents No. 1 and 2 (CCL) would not be capable of being utilized by the Petitioner because of the lapse in time in issuance thereof. Nonetheless, pursuant to the procedure provided by Respondents No. 3 to 5 (Revenue), Respondents No. 1 and 2 (CCL) issued TCS certificates to the Petitioner in February 2023 pertaining to the period FY 2012-2013 to the First Quarter of FY 2017-2018. Post the issuance of TCS certificates to the Petitioner, vide its order dated 06.04.2023, this Court recorded that as per the Petitioner, three issues remained unresolved, which were: a. The Petitioner was unable to take benefit of the TCS certificates; b. The Petitioner was entitled to statutory interest under Section 244A of the Act. c. The Petitioner deserved to be restituted of the interest component of TCS amounting to Rs. 1,60,75,329.93/-. It is in respect to the resolution to the three issues referred to herein above; Option No. 2 has been suggested by Respondents No. 3 and 4 (Revenue) in their Supplementary Affidavit and concurred by Petitioner as also Respondents No. 1 to 2 (CCL). As such therefore, Option No. 2 proposed by the Respondents No. 3 to 5 (Revenue) was suggested by them in compliance with a direction of this Court and Respondents No. 3 to 5 (Revenue) is therefore bound by the same. Having heard learned counsel for the parties and after taking cognizance of the statements made in the Supplementary Affidavit dated 13.06.2023 filed by the Respondents No. 3 to 5 (Revenue); we hereby direct that the entire sums of money collected as TCS from the Petitioner along with interest thereon, be refunded by Respondents 3 to 5 (Revenue) to Respondents No. 1 and 2 (CCL) who should thereafter forthwith refund the same to the Petitioner in a time-bound manner.
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2023 (10) TMI 333
Validity of reopening of assessment - notice u/s 148A(b) - Assessee under the IT Act had stood for the elections to the Legislative Assembly in pursuance to which he declared his movable and immovable assets as well as those in the name of his spouse and dependents, in accordance with the said requirement, along with his nomination papers - As per AO Amounts stated, with reference to unspecified lands and vehicles - sufficiency of the information supplied to the assessee based on which the proceeding under Section 148A was initiated - HELD THAT:- The petitioner was issued with a notice under Section 131(1A) produced at Annexure-2. It has been very specifically stated that the notice is pursuant to verification of the affidavits filed by the candidates contesting elections as mandated by the Election Commission of India. The disclosure of assets and liabilities were compared with the information available from the records of the department and sources of income with respect to five aspects, with separate amounts specified, were sought from the petitioner. The petitioner had supplied documents as per Annexures 3 to 6 and also as seen from Annexures 8 and 9. A further notice (Annexure-10) was issued under Section 148A(b) of the IT Act in which the specific proposal for escaped income was with respect to the purchase of agriculture land and purchase of vehicle, as available under the column for description and the amounts were specified as Rs. 55,00,000/- and Rs. 33,41,277/-. We should understand from the manner in which the tabulation is prepared that Rs. 55,00,000/- referred to, is of the agriculture land and Rs. 33,41,277/- referred to, is of the purchase of vehicle. We have to immediately notice that the amounts shown does not tally with what has been separately detailed under Annexure-2 notice. It also does not refer to the specific documents based on which the allegation of escaped income is raised. Despite this, the Income Tax Authority proceeded and passed an order under Section 148 A(d) as per Annexure-13. In Annexure-13 it has been stated that the showcause notice was not replied to. There is no reference to Annexure 8, which is said to have been filed by the assessee. Based on Annexure-13 order passed under Section 148 A(d), now a notice under Section 148 of the IT Act (Annexure-14) has been issued. We perfectly agree with the submission of the learned Senior Standing Counsel that an order passed under Section 148A(d) does not regulate the further proceedings under Section 148 and the prima facie satisfaction entered into by the Income Tax Authority, in so far as the case being one fit for being proceeded under Section 148, cannot lead to an automatic addition being made of the proposed unescaped income. However, when the statutory mandate is that an inquiry should be conducted, if required and a notice issued, both with the prior approval of the specified authority with supply of the information which prompted the initiation of the proceedings; then neither can the information supplied be meagre and haphazard nor can the prima facie satisfaction be entered into in a mechanical manner. As the submission of the department that the notice u/s 131(1A) was issued based on the declaration made by the petitioner along with his nomination papers. There were also documents supplied by the petitioner pursuant to the notice based on which a further notice was issued under Section 148A(b) in which the basis of the notice is to be disclosed; the absence of which is very evident. But for the description of unexplained investment with respect to landed property and vehicle and the amount of escaped income proposed, nothing else was stated. It is very evident that the details sought for u/s 131(1A) were with respect to separate investments made on agriculture land, inherited commercial land, investments made in the property belonging to the HUF comprising of the petitioner and his family members, deposits in banks and two vehicles purchased by himself and his son. There is no specification as to which among them was sought to be proceeded against under Section 148. Petitioner has now produced a corrigendum issued by the department as Annexure- 16 dated 30.05.2023. The corrigendum has more specification in so far as the unexplained investments, with respect to purchase of agriculture land coming to Rs. 26,72,000/- and the purchase of a vehicle coming to Rs. 6,69,277/-. We cannot but notice that the corrigendum is dated 30.05.2023 while the order passed under Section 148A(d) is dated 24.03.2023 on which date itself the notice under Section 148 was issued; the latter two documents having been produced as Annexure-13 and Annexure-14. Hence, obviously, there is infirmity and illegality in the order passed under Section 148A(d) which vitiates the further notice issued under Section 148. The corrigendum issued more than two months after the order under Section 148A(d) vitiates the order beyond repair. We also notice that sufficient material regarding the assets on which investments are alleged to have been made have also not been disclosed in the notice under Section 148A(b). If an agriculture land is referred to, it is only proper that the description along with the details of the location as also the specification of the deed by which the acquisition was made should be informed to the assessee. Similarly in the case of a vehicle, the Registration Number and the details are to be supplied. Only such information supplied would enable the assessee to make an effective reply; even if the said investments are picked out from the assets and liabilities declared by the assessee based on which the proceedings were initiated. We hence set aside Annexures 10, 13 and 14. We make it clear that the Assessing Officer would be entitled to initiate fresh proceedings subject to just exceptions.
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2023 (10) TMI 332
Reopening of assessment - Deduction u/s 10AA unit denied as unit was formed by splitting up of or reconstruction of its business, which was already in existence - HELD THAT:- The notice conveying its reasons to believe itself cites profit and loss statement and notes to the financial statements in relation to SEZ point which was already before the AO during the initial assessment proceedings. The notice also records that Petitioner had furnished Form No. 56F, copy of return of income along with the computation of income in which deduction under Section 10 AA of the Act was claimed in AY 2015-16 to the AO. The fact that Petitioner is conducting its operations from STP unit and SEZ unit is also evident in the notes to accounts forming part of the financial statements furnished by Petitioner during assessment proceedings 2015-16. Petitioner was specifically asked to produce Form No. 56F with respect to STP and SEZ units during proceedings for AY 2011-12 and the deduction under 10A of the Act was allowed after the scrutiny of the said forms. Petitioner furnished the same and other relevant documents as required by the AO from time to time, including financial statements for AY 2012-13 and AY 2013-14, wherein again details of SEZ were mentioned. Further financial statements of AY 2014-15 also mention details of the SEZ unit and Form No. 56F and relevant extract of ITR form for AY 2012-13 to AY 2014-15 as furnished also disclose details of the claim of deduction under section 10AA of the Act. Hence there is no neglect or failure on the part of petitioner to render full and true disclosure at the time of assessment. There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on an assessee. Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn. It is not for somebody else least of all an assessee to tell the AO what inferences should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that an assessee must disclose what inferences whether of facts or law he would draw from the primary facts. Petitioner has furnished all the details and relevant documents itself as also those required to be furnished by the AO from time to time during the assessment proceedings. AO has perused the documents and thereafter passed the original order. No failure on the part of Petitioner to make a full and true disclosure during the assessment proceedings to justify re-opening of the proceedings on this account. We thus answer the first issue accordingly. Re-opening the proceedings based on change of opinion - As there is no failure on the part of Petitioner in making true and full disclosure to the AO during the original assessment leading to the deductions being allowed by the assessing order. The Notice conveying reasons to believe as well as the Order rejecting Petitioner s objections clearly indicate that the original order was passed by the AO upon his satisfaction in respect of the material furnished by Petitioner. The notice simply says that the AO should not have allowed the deductions and should have arrived at an alternate finding. Thus, even de hors any additional explanation by Petitioner, the wording and language of the notice and the order impugned herein itself reveals the distinct views taken by the AO. We find that the reopening of assessment is merely based on a change of opinion on the same set of facts and material before the AO which was available to him at the time of original assessment. We thus, answer issue No. 2 accordingly. Thus we allow the Petition and hold that the Revenue has failed to show non-disclosure of facts by Petitioner and the reason to believe there was escapement of income is purely based on a change of opinion.
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2023 (10) TMI 331
Imposition of higher rate of tax - petitioner/assessee failed to file Form 10-IC electronically - Assessee submitted that the petitioner/assessee has been taxed at a higher rate of tax for a mere procedural lapse and therefore, seeks the indulgence of this Court to allow the petitioner/assessee to complete the requirements prescribed under Section 115BAA(5) and Rule 21AE(2) and avail the benefit of a lower rate of tax - HELD THAT:- As revenue, says that he would have no objection if this court were to direct the petitioner to move an appropriate application before the Central Board of Direct Taxes (CBDT) for giving leave to file Form 10-IC, pursuant to powers conferred on it by section 119(2)(b) of the Act. The writ petition is thus disposed of, with liberty to the petitioner/assessee to approach the CBDT. In case the petitioner approaches the CBDT within four (4) weeks from the date of receipt of a copy of the order passed today, it will consider the request of the petitioner/assessee, and pass an appropriate order. Also see Rajkamal Healds and Reeds Pvt. Ltd [ 2022 (3) TMI 531 - GUJARAT HIGH COURT] .
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2023 (10) TMI 330
Validity of reopening of assessment - assessment proceeding u/s 143(3) r.w.s. 153C of the Act was completed qua the respondent/assessee - In the original appellate proceedings, as carried out before CIT(A) assessee succeeded on the ground that the Assessing Officer (AO) had wrongly assumed jurisdiction u/s 153C - CIT(A) set aside the assessment order as there was no tangible material available with the AO, the sanctioning authority had not applied its mind, independently, to appraise the material based on which reasons to believe have been recorded by the AO and that no notice under Section 143(2) of the Act had been issued to the respondent/assessee, although there was material on record to show that the respondent/assessee had communicated to the AO that the return originally filed by it on 31.08.2007 should be treated as a return in response to the notice issued u/s 148 - ITAT appraised the aforementioned observations and findings returned by the CIT(A) AND dismissed the appeal of the appellant/revenue. HELD THAT:- We find upon perusal of the record that, apart from anything else, the appellant/revenue had not raised any ground before the Tribunal which assailed the finding returned by the CIT( A ) that the sanctioning authority had not applied its mind independently to the approval granted by it for triggering the reassessment proceeding. The grounds that the appellant/revenue took before the Tribunal were confined to whether the respondent/assessee had communicated to the AO that the return originally filed should be treated as a return in response to the notice issued under Section 148 of the Act. During the hearing, we are told appellant/revenue, that the revised grounds were filed; a hard copy of the same was furnished to us in the course of the hearing, but none of the revised grounds contained in the appeal dealt with the issue concerning the sanction accorded by the specified authority u/s 151 of the Act. Be that as it may, qua the aspect concerning the issue as to whether or not the respondent/assessee had communicated to the AO that the return originally filed should be treated as a return in response to the notice issued under Section 148 of the Act, the CIT(A) recorded the findings of fact which were again, sustained by the Tribunal that No notice u/s 143(2) is found on the record maintained by the AO which proves that the AO has not issued statutory notice u/s 143(2) of the Act. Once a return has been filed u/s 148, AO is bound to issue a notice u/s 143(2) in order to assume jurisdiction to frame assessment u/s 143(3) or u/s 144 which has not been done by the AO in the present case - also the assessment so completed without issuance of notice u/s 143(3) does not empower the AO to complete an assessment u/s 143(3) or u/s 144 of the Act. When assessment is completed u/s 143(3) or u/s 144 of the Act, issuance of notice u/s 143(2) is mandatory and in case no such statutory notice is issued, the AO cannot assume jurisdiction to frame assessment u/s 143(3). These findings of fact have not been disputed by the Tribunal. We also find that there is no ground taken in the instant appeal that the findings returned by the CIT(A) on the aforementioned aspect, which are, as noticed above, affirmed by the Tribunal, were perverse. A broad question has been proposed by the appellant/revenue that no return was filed by the respondent/assessee, without assailing the details given in CIT(A) s order. For the moment, even if we were to agree with the appellant/revenue that the respondent/assessee had never communicated to the AO that the original return should be treated as a return as against the notice dated 143(2) of the Act, the impugned order will still stand as the assessment order was set aside by the CIT(A) on other grounds, including the ground that the sanctioning authority has not applied its mind independently. No ground, even according to Mr Menon, was taken before the Tribunal assailing the conclusion reached by the CIT(A) in that regard. Thus no interference is called for with the impugned order passed by the Tribunal. No substantial question of law arises for our consideration.
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2023 (10) TMI 329
Nature of expenses - re-characterizing revenue expenses incurred by as capital expenditure by AO - correct approach in law and on the facts adopted or not? - Tribunal reversed the view taken by the CIT(A) and the AO took note of the fact that in AY 2012-13, the AO had accepted the stand of assessee that the expenses incurred by it were on the revenue account, and not capital expenditure - HELD THAT:- As perusal of the aforesaid extract from the assessment order would show that what worried the AO was that the respondent/assessee had made no effort to earn income. As a matter of fact, the proposition put forth by the AO that since there is no income chargeable under Section 28 of the Act, therefore, no expenses could be claimed by an assessee under Sections 30 to 37 of the Act, in our view, is completely unsustainable.This position has also been affirmed by the Tribunal. We are in complete agreement with the approach adopted by the Tribunal. The AO, in our opinion, asked the wrong question and, therefore, got the wrong answer. We may also note that during the course of arguments, we had asked Mr Maratha as to whether he had placed on record the order of the Tribunal concerning AY 2012-13. AO in the abovementioned AY, consciously stepped away from the line of inquiry which was adopted in AY 2012-13. In the AYs in issue, i.e., AY 2014-15 and AY 2013-14, the emphasis of the AO was that expenses incurred were directed towards building a brand for utilization in the future. Consequently, as noted above, the AO s approach, or rather we may say concern, was that the respondent/assessee was not earning revenue. This approach, as observed above, was completely misdirected. Therefore, for the reasons given above, we are not inclined to interfere with the impugned order. Decided against revenue.
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2023 (10) TMI 328
Addition u/s 68 - assessee had failed to demonstrate the creditworthiness of the source of source - ITAT Confirmed order of deletion as done by CIT(A) - HELD THAT:- As the identity of the investor, which is BBHL, is not in dispute. As a matter of fact, the source of source was also identified, which in this case, is one Mr Joseph Thomas, a permanent resident of UAE. The creditworthiness of the investor, i.e., BBHL, is demonstrated by the fact that the amount invested in India was sourced from a personal loan given by Mr Joseph Thomas. BBHL is an investment company and therefore, its creditworthiness can only be ascertained from the availability of funds and not by having regard to the period for which it has been in existence and earned its revenue. As far as the genuineness of the transaction is concerned, the respondent/assessee has adverted to the relevant material which was placed before the concerned statutory authorities, which included permission accorded by RBI and the methodology used for calculating the premium. Assessee has correctly argued before us, that insofar as the foreign investor is concerned, i.e., BBHL, the respondent/assessee could not have allotted shares below the floor price, which was Rs. 95.07 per share. This, to our mind, explains the difference between the price per share collected by the respondent/assessee from BBHL as against domestic investors. It is also relevant to note that the domestic investors, i.e., the two individuals, are promotor directors of the respondent/assessee, which is why perhaps, they were allotted shares at face value. The third domestic investor, i.e., Blue Ocean Resorts Pvt. Ltd. is controlled by Rishal Sawhney and Rohini Sawhney. As noticed hereinabove, both persons hold 50% shares in the said company. The argument advanced by revenue that the onus was on the respondent/company to further demonstrate credit worthiness of the source of source, i.e., Mr Joseph Thomas, is flawed as the amendment in law with regard to the identifying source of source was inserted by way of a proviso to Section 68 of the Act with effect from 01.04.2013. Therefore, this obligation in law could not be cast on the respondent/assessee, although it did identify the source of source and Mr Joseph Thomas furnished a personal loan to BBHL. Therefore, insofar as BBHL was concerned, the fund flow was disclosed to the statutory authority. Beyond that, in the AY in issue, nothing further was required to be shown. Mr Joseph Thomas is concerned, the CIT(A) found that he furnished a personal loan to BBHL. Therefore, insofar as BBHL was concerned, the fund flow was disclosed to the statutory authority. Beyond that, in the AY in issue, nothing further was required to be shown. Therefore, the deletion ordered by the CIT(A) which was confirmed by the Tribunal, was, in our view, the correct call, in the facts and circumstances obtaining in the case. Disallowance of 70% of the expenses incurred by the respondent/assessee for arranging hotel accommodation, air passage and vehicles for its directors - CIT(A) records in his order, that he examined the invoices and other material and thereafter concluded, that the expenses claimed by the respondent/assessee indeed had a nexus with its business interest. The CIT(A) records in the order that the AO had called for an explanation with regard to the purpose of the visits which had led to the directors incurring the expenses towards accommodation and travel. The CIT(A) also records that the appellant/revenue brought nothing on record to show that the expenses given were false/incorrect. The expenditure was disallowed, as it appears on the ground that it was expended for personal use as against business use, and not on the ground that it was expensed on accommodation or travel. We are of the view that the CIT(A) and the Tribunal came to the correct conclusion that the expenses incurred had a nexus with the business interest of the respondent/assessee. Revenue appeal dismissed.
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2023 (10) TMI 327
Special Audit u/s 142(2A) - return filed by the appellant was selected for scrutiny and was then referred to transfer pricing officer (TPO) u/s 92CA in respect of international transactions entered into by the appellant - HELD THAT:- The matter stands settled by the order of the Hon ble High Court of Delhi [ 2019 (9) TMI 734 - DELHI HIGH COURT] said that there is no reason to hold that the Assessing Officer has shifted the responsibility of scrutinizing the accounts and passed buck to the special auditor, as has been contended by the Petitioner. Special auditor who has been appointed, has been asked to give comments on several issues. Of course, while carrying out the audit, the special auditor would have to verify the books of accounts of the Petitioner so that the report furnished by him, is of assistance to the Assessing Officer to determine the taxable income. We have per used the terms of reference and do not find the same to be inappropriate, especially having regard to the fact that despite the honest attempt made by the AO in understanding the accounts of the assessee, it has not yielded the desired results, thereby warranting the appointment of the special auditor. At this stage, we cannot hold that there is no co-relation between the aspects which require scrutiny and the terms of reference for the special auditor under the law. Petitioner can raise such objections at the appropriate stage. In view of the afore-going observations, the Court is of the opinion that there is no infirmity in the order directing the special audit. Long- term and short term capital loss on write- off of investment in preference shares of Religare Capital Markets Ltd ( RCML ) - Disallowance of loss as investment made in loss making foreign entities - entire monies in the Indian company went into subsidiary companies situated abroad and Mauritius entity namely, RCMIML incurred losses resulting in erosion of its net worth - conclusion drawn by the special auditor merely on the basis of fact that RCML has made investment in its loss making foreign subsidiary - Whether business rationale behind making such investment is highly erroneous? - clear case of flight of capital from India to abroad and Indian entity incurring and claiming long term capital loss and short term capital loss - scope of concepts of tax planning vs. tax avoidance vs. tax evasion. HELD THAT:- From the entire events, it can be found that the funds invested by the assessee company in RCML was not made for any business investment but to repay its associate company i.e. RHC by routing of funds through RCML (Mauritius) and booked as loss in RCML (Mauritius) financial statements. The sole purpose of the investment in RCML is to take over the liability of RHC towards capital commitment or repayment of existing liability of RHC and investment made by the assessee company are treated as loss. We are in agreement with the submissions that anti-avoidance provisions provides that the primary onus lies upon the assesses to show that the transaction it related party is a arm s length such a nature that would be as carried between unrelated entities. The assessee states that it be the ultimate holding company was obligated to support its subsidiary companies likes RCML to revive their business operations, if so, the entity RHC Holdings Pvt. Ltd. which is also part of this multi-national group and it is its responsibility to support the step-down subsidiaries as much it is that of the assessee. From the entire facts, it is clear that transaction has been so arranged that RHC Holdings Limited is the ultimate beneficiary of this entire transaction leaving the assessee to incur losses and hence, the capital loss claimed by the assessee cannot be allowed. In the result, the appeal of the assessee on this ground is dismissed. With regard to the disallowance of interest, since the assessee had sufficient own funds, no disallowance on account of interest is called for. Correct head of income - Sale of Investment in Shares (ARLIC) - as per AO transaction is taxable as business income and not capital gains, treated the aforesaid sale of investment in shares as sale of business in joint venture company and re-characterized the gains arising thereon as business income of the appellant in terms of section 28(va) r.w.s. 28(iv) - HELD THAT:- We find that the assessee has continuously treated the same as investments in the balance sheet. We have gone through the page no. 1376 of the paper book reflecting joint venture agreement relating to Life Insurance business in India amongst Aegon International NV and Religare Insurance Holding Company Ltd. As per this agreement, the par ties agreed to establish the JV company for the purpose of carrying on the business of providing insurance products. The assessee has invested 99.41% of share capital consisting of 50,20,000 shares In this case, the assessee has made investment in the share s over a period of 8 years and sold the shares to M/s Bennett Coleman Co. Ltd. and the proceeds have been offered under the head capital gains . We have gone through the provisions of Section 28(va) and Section 28(iv) invoked by the revenue authorities. The assessee has invested the amount for acquiring 44% stake in the ARLIC and sold the same. Hence, it cannot be said that there is sale of business as the assessee do not own the 100% stake in ARLIC. The receipts be taxed under the head capital gains after giving due indexation. The AO shall verify the expenses incurred in connection with the transfer of shares and allow the same. Prior Period Expenses - assessee has claimed expenses as disallowed holding that they are prior period expenses - as submitted that the expenses have been crystallized during the year and were not claimed in any of the earlier years - HELD THAT:- Having gone through the facts on record, we hold that the expenses be allowed in the current year - In the result, the appeal of the assessee on this ground is allowed. Disallowance of Interest on Non-Convertible Debentures (NCD) u/s 40(A)(2)(b) - excess interest payment i.e. 4.27% has been treated by the TPO to be excessive and unreasonable in terms of Section 40A(2)(b) and added back to the income of the assessee company - HELD THAT:- As primary difference between a regular bond and a zero-coupon bond is the payment of interest, known as coupons. A regular bond pays regular annual interest to bondholders, while a zero-coupon bond does not make such interest payments and instead, zero-coupon bondholders receive the entire value of the bond inclusive of compounded interest when it reaches maturity/redemption. The interest of Rs. 30,33,19,164/- was recorded as payable by the assessee to RSL on the Zero coupon NCDs that were outstanding as on 31.03.2018. The ld. DRP held that the assessee has stated that the interest rate for the regular bond and zero-coupon bond issued to Standard Chartered bank and Religare Securities Limited ( RSL ) respectively, has been same i.e. 14% only. The difference of Rs.7,08,90,686/- is on account of compound interest paid against the zero-co upon bond to Religare Securities Limited. In case of the regular bond issued at the rate of 14% to Standard Chartered bank the interest, was paid to the company against the debenture issued on annual basis. On the other hand, no interest on annual basis was paid to Religare Securities Limited as the payment in this case is to be made at the time of maturity when Religare Securities Limited supposed to receive the principal amount plus the accumulated compound interest over the period. Thus observing, the ld. DRP directed the AO to verify the assessee's claim on record that payment @ 14% interest rate was payable at the time of maturity under the said bond. Since, the matter has been referred to the AO for examination, we refrain to interfere with the directions of the ld. DRP on this issue. TP Adjustment - ALP on Legal Advisory Services - HELD THAT:- As having gone through the FAR of the comparables and direct the AO to recompute the margin by considering the 5 comparables mentioned above.
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2023 (10) TMI 326
Addition u/s 68 - Assessee invested cash towards purchase of share capital /premium of the closely held company directors of which were their relatives - CIT(A) deleted the said addition on the ground that the assessee had filed confirmation from investor companies to show that the entire amount had been paid through normal banking channels and hence discharged initial onus under section 68 for establishing creditability and identity of share holders - HELD THAT:- We are inclined to agree that the legislative intent has always been that in the case of closely held companies like that of the assessee before us heavier obligation is cast upon it to prove the receipt of share application money/premium etc. to the satisfaction of the AO. It may be stated that law has to be applied to the facts of the given case. In our humble opinion, the legal propositions and case laws in support of them canvassed by AR before us are inapplicable to the facts of the assessee s case available on the records. On Revenue s petition before the Hon ble Supreme Court in their decision in Principal CIT vs. NRA Iron Steel (P) Ltd.[ 2019 (3) TMI 323 - SUPREME COURT] their Lordships held that the assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors and creditworthiness of the investors who should have financial capacity to make the investment in question to the satisfaction of the AO, so as to discharge the primary onus. AO is duty bound to investigate into the creditworthiness of the creditor/subscriber, verify the identity of the subscribers and ascertain whether the transaction is genuine or those are bogus entries of name-lenders. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack creditworthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by section 68. It may be reiterated that in the case before us, despite the availability of banking facilities to the two investors, they invested cash towards purchase of share capital /premium of the closely held company directors of which were their relatives. On the facts and in the circumstances of the case and following the decision in NRA Iron Steel (P) Ltd. (supra) of the Hon ble Supreme Court we uphold the impugned order of the Ld. CIT(A) and reject ground of the assessee.
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Customs
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2023 (10) TMI 364
Valuation of imported goods - Tuners - Enhancement of value - under-valuation based on contemporaneous import - evasion of customs duty - levy of penalty - Reliance on the statement made before the customs officers - recording of statement u/s 108 - HELD THAT:- The export declarations relied upon by the appellant and earlier by the Directorate of Revenue Intelligence were unattested photocopies. Since those documents were used as a piece of evidence against the respondents, it was necessary that those documents were required to have been proved as is understood in law. Rule 5 deals with transaction value of identical goods, Rule 6 deals with transaction value of similar goods. On the other hand, Rule 6A provides for determination of value when transaction value is not available. Rule 7 which comes after Rule 6A provides for determination of deductive value and Rule 7A provides for computed value - Where the value of imported goods cannot be determined under the provisions of any of the aforesaid rules, the value shall be determined using reasonable means as provided in Rule 8 i.e. the residual method. The dispute involved in South India Television (P) Ltd. [ 2007 (7) TMI 9 - SUPREME COURT] , was as regards the assessable value of ceramic capacitors and diodes imported by the importer from the foreign supplier at Hongkong. The price declared by the importer was not accepted by the customs authority on the basis of overseas investigation report whereafter Rule 8 of the Customs Valuation Rules was invoked - This court held that before rejecting the invoice price, the department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. In this regard, this court held that under valuation has to be proved. If the department wants to allege under valuation, it must make detailed inquiries, collect material and also adequate evidence. If the charge of under valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. The charge of under invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Reverting to Section 14(1) of the Customs Act, this court held that it is for the department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. On a cumulative analysis of the facts and the legal position, there are no hesitation in coming to the conclusion that both the department as well as the adjudicating authority were not justified in rejecting the import invoice price of the goods as not correct and enhancing the price by straightaway invoking Rule 8 of the Customs Valuation Rules when there was no evidence before them to do so. In these circumstances, CESTAT was justified in setting aside the order in original. Reliance on the statement made before the customs officers - recording of statement u/s 108 - HELD THAT:- Since the objective is to ascertain the truth, the customs officer must ensure the truthfulness of the statement so recorded. If the statement recorded is not correct, then, the very utility of recording such a statement would get lost. It is in this context that the customs officer who is empowered under Section 108 to record statement etc. has the onerous responsibility to see to it that the statement is recorded in a fair and judicious manner providing for procedural safeguards to the concerned person to ensure that the statement so recorded, which is admissible in evidence, can meet the standard of basic judicial principles and natural justice. It is axiomatic that when a statement is admissible as a piece of evidence, the same has to conform to minimum judicial standards. Certainly a statement recorded under duress or coercion cannot be used against the person making the statement. It is for the adjudicating authority to find out whether there was any duress or coercion in the recording of such a statement since the adjudicating authority exercises quasi-judicial powers. Conclusion There are no error or infirmity in the impugned judgment and order of CESTAT - appeals filed by the department are devoid of merit and those are accordingly, dismissed.
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2023 (10) TMI 363
Concessional rate of duty - Transfer Door Color Strip - Transfer Rear Door Color Strip - goods used in motor vehicle namely Cars - classified under Customs Tariff Heading 39199090 or not. Benefit of concessional rate of duty under N/N. 57/2017-Cus dated 30.06.2017 as amended by N/N. 22/2018-Cus dated 02.02.2018 denied on the ground that the notification provides concessional rate of duty only to goods that are meant to be used with cellular phones and other electronic goods and whereas the impugned consignment was used in motor vehicle namely Cars. HELD THAT:- Serial No. 9 of Notification No. 57/2017-Cus dated 30.06.2017 is meant for all goods which are classified under Chapter sub-heading 39199090, except the items which are specifically excluded in serial No. 9 which are following parts or parts of cellular mobile namely:- (i) Heat Dissipation Sticker Battery Cover (ii) Sticker-Battery Slot (iii) Protective Film for main Lens (iv) Mylar for LCD FPC (v) Film-Front Flash. Thus, except the above mentioned items which are also classifiable under CTH 39199090 all other goods will attract concessional rate of basic customs duty as provided in the said notification. The denial of the benefit of notification by the lower authorities is without any logic and arbitrary in its application. The subject goods which are classifiable under Chapter sub heading 39199090 are entitled for the benefit of concessional rate of basic customs duty under Notification No. 57/2017-Cus dated 30.06.2017 and accordingly the impugned orders-in-appeal as well as orders-in-original are without any merit and therefore, set aside. Appeal allowed.
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2023 (10) TMI 362
Valuation of imported goods - Correctness of valuation by the Government approved valuer of Natural Rough Emerald - imposition of redemption fine - rejection of declared value on the ground that undeclared Natural Rough Diamond were found during the examination of the import consignment - HELD THAT:- No cogent reason has been given by the revenue for rejection of the transaction value. The learned counsel for the appellant has argued that the valuation has been done by so called Government approved valuer Shri Kamal Kant Parekh, who did not figure in the list of the Government approved valuers as intimated vide Public Notice no.03/2022 dated 08.03.2022. On perusal of the contents of the aforesaid Public Notice and it is found that it lists names of 29 members of the Gems and Jewellery Export Promotion Council, Jaipur/Regional Jewellers Association empanelled for the purpose of identification, classification, purity, weight and valuation of precious/semiprecious stones, pearls as well as gold/silver and jewellery for customs purposes. No valuer can give exact valuation of rough precious stones at any stage of time, however an expert the valuer may be. Generally, the prices are given with a margin of fluctuation of +/- 20% and the value declared by the appellant was well within this range. It has further been contended that the valuation report of the said Government approved valuer does not specify whether the rate is wholesale or retail sale value or the CIF value. Further, during the course of investigation itself, it has been observed that the valuation cannot be determined under Rules 4 to 7 of Customs Valuation Rules, 2007 as the nature of each stone and its value is distinct and varied, and even the market value cannot be ascertained. Consequently, other than the valuation report submitted by the valuer who does not appear in the panel of Government approved valuers, and there being no other corroborative evidence to establish any undervaluation by the appellant, the transaction value is liable to be accepted. The Department has failed to prove that the transaction value/invoice price was incorrect. Consequently, the valuation done by the valuer cannot accepted and is set aside. Imposition of Rs 50 lakh as Redemption fine on the said goods under Section 111 read with Section 118(a) and 119 of the Customs Act, 1962 - HELD THAT:- There is no prohibition in the import of such Natural Rough Emerald. Therefore, the provisions of Section 111(d) is not attracted. It is an admitted fact that 3 packets of Natural Rough Diamonds were found along with the Natural Rough Emerald, which had not been declared by the appellant. As the said diamonds was not accompanied by the KP Certificate, the said goods took on the nature of prohibited goods - there is no case for imposition of Rs. 50 lakh as redemption fine on the Natural Rough Emerald. Imposition of redemption fine on the undeclared Natural Rough Diamonds - HELD THAT:- The original adjudicating authority has gone on to confiscate the Natural Rough Diamonds valued at Rs. 10,98,670/- under Section 111 of the Customs Act, 1962, with an option given to the importer to redeem the goods for re-export on payment of redemption fine of Rs. 2 lakh. It is a fact on record that 3 packets of natural rough diamond were found in the consignment which had not been declared by the appellant. It is also on record that such import of rough diamond was restricted in terms of DGFT circular number 34/2015 2020 dated 28.09.2020. The condition for import was that it had to be accompanied by a Kimberley process certificate - the Director in his statement has accepted that he had not ordered the rough diamonds, and hence he could not produce the Kimberly Process Certificate. It has been also pleaded before us that the provisions of Circular No. 53/2003 Cus dtd 23.6.2003 vide para 6 allow the goods to be sent back to the exporting country in the same is not accompanied by the valid KP certificate. The Department has not drawn any Panchnama to establish that the rough diamonds were concealed in the import consignment in any manner. The appellant had submitted necessary documentation to evidence that he had not placed the order for import of Natural Rough Diamond to the exporter. The appellant has also clarified the different signatures in the invoice and the email belong to the owner and the authorised signatory. Consequently, it is established that there was no attempt by the appellant import these undeclared goods and the same has happened due to the mistake on the supplier side. Therefore, the goods viz., Natural Rough Diamond are permitted to be re-exported, without payment of redemption fine. Thus, no penalty or fine is leviable on the appellant - appeal allowed.
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2023 (10) TMI 361
Levy of penalty u/s 112(b) and u/s 114AA of CA - Penalty on logistic service provider - Misdeclaration of imported goods - mobile accessories found inside the container whereas the goods declared was assorted chappals - role of appellant in such abetting of misdeclaration - absence of mens rea - HELD THAT:- The appellant has filed IGM in the normal course based on the documents available with him, wherein the description has been mentioned as assorted chappals . Subsequently they have got the amendment done only on the basis of instructions received from the proprietor of M/s Great Overseas, Mr M.A. Mujahid which is also confirmed by him in his recorded statements. Therefore, there cannot be ulterior motive on their part to have filed the IGM and the amendment request letter. However, this is a case of negligence on their part to specifically not to pose any query the importer as to why the description in the invoices is different from the description given earlier in the Bill of Lading, While agreeing with the appellant that there is no ulterior motive in the entire passage, the learned A.R. agreed upon that act of appellant has been negligent. The penalty imposed under section 112(b) set aside - The penalty imposed under section 114AA is reduced to Rs 50,000/- - appeal allowed in part.
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2023 (10) TMI 360
Confiscation of medicines which were being carried while travelling out of India - Penalty u/s 114 (i) of Customs Act - goods of commercial quantity or not - restricted goods - valuation of the goods - HELD THAT:- The Appellant have attempted to export goods in commercial quantity, for which proper permission/ license is required from the Drug Control Authority. Further it is found that the goods under export are not prohibited, but restricted, requiring license. Thus, under such facts and circumstances, absolute confiscation is not called for. Accordingly, although the Order of confiscation upheld, the Order of absolute confiscation set aside. In such circumstances, the Appellant was entitled to redemption of the goods. However, it is informed by the Appellant that pursuant to the Order of confiscation, the goods were disposed of by the Customs Department - valuation has been done on higher side on the basis of MRP. Accordingly, the valuation adopted by Revenue is set aside and the same reduced to purchase price of Rs.16,62,083 plus 15% for trading profit and/or rounded off to Rs.19,00,000/-. It is observed that as a long time has passed since the date of seizure and confiscation, the goods have deteriorated in value and are no longer available for redemption. Taking notice that Appellant has already suffered loss due to confiscation of the medicines, the penalty imposed on the Appellant Mr. K. Raghavendra Reddy, reduced from Rs.2,50,000/- to Rs.50,000/- under Sec 114(i) of the Customs Act - appeal allowed in part.
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2023 (10) TMI 325
Maintainability of petition before HC or SC - alternative remedy of appeal - appropriate jurisdiction to maintain appeal - rate of duty of customs - Section 130E(b) of the Customs Act, 1962 - HELD THAT:- As would be evident from a conjoint reading of Section 130 and Section 130E, all appeals would lie to the High Court except where they relate to the determination of any question having a relation to the rate of duty of customs. While it is true that the exclusion of color coated coils in terms of the impugned order may have an inferential impact on the rate of duty that may liable to be imposed on those articles, we find that the Supreme Court in STEEL AUTHORITY OF INDIA LTD. VERSUS DESIGNATED AUTHORITY, DIRECTORATE GENERAL OF ANTI-DUMPING ALLIED DUTIES OTHERS [ 2017 (4) TMI 881 - SUPREME COURT ] has while explaining the ambit of the exclusionary provisions as appearing in Section 130 and Section 130E has culled out the basic principle to be that the determination of a rate of duty must be read as meaning a direct and proximate relation to the question of rate of duty. The determination by the CESTAT does not meet the test of real, direct and proximate relationship to rate of duty as enunciated by the Supreme Court in SAIL. An order which may merely have a consequential or inferential repercussion on the rate of duty question is not what is intended to be excluded from the ambit of Section 130 of the Act. Whether the writ remedy would be appropriate or whether the petitioners would have to be relegated to invoke the jurisdiction of the Court which otherwise flows from Section 130? - HELD THAT:- Section 130 constructs an adequate and efficacious alternative remedy for the purposes of considering all questions that may arise from the order of the CESTAT impugned before us. We also bear in mind the well-settled principle of the extraordinary nature of the remedy which Article 226 constitutes and the self-imposed restraints which High Courts bear in mind when called upon to invoke their constitutional power - In the facts of the present case, it is found that the writ petitioners here would be well advised to pursue the remedy as constructed in terms of Section 130 since all questions that are raised with respect to the order of the CESTAT can very well be advanced in those proceedings. For the purpose of considering the applications for vacation of stay as moved, let these matters be called again on 10.11.2023 in the category of End of Board matters.
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2023 (10) TMI 324
Maintainability of Appeal before CESTAT - Baggage Rules - Interpretation of statute - Smuggling - seizure of foreign currency - legislative edicts manifested in first proviso to section 129A of Customs Act - misreading of the terms goods and baggage defined in the Customs Act, 1962, to arrogate the jurisdiction - proper interpretation to the expression beneficial owner defined in section 2(3A) of the Customs Act, 1962 - failure to appreciate that the ultimate beneficiary of the foreign currency would be the Respondent herein and not SEMPL, thereby failing to notice the form and substance of the transaction. HELD THAT:- The Appellate Authority proceeded to invoke the principles of beneficial owner as flowing from Section 2(3A) of the Act and consequently found the respondent liable to be penalized under Section 114(i) of the Act. It is the aforesaid findings as returned by the Appellate Authority, which constrained the respondent to approach the CESTAT. While the expression goods as contained in Section 2(22) of the Act, includes baggage as well as currency, the exclusion contemplated under Section 129A clearly appears to be restricted to a seizure of goods which are sought to be imported as baggage. The expression baggage as appearing in that provision would necessarily have to draw color from the provisions contained in Chapter XI of the Act. In any case and once the respondent themselves had asserted that the goods in question were liable to be confiscated in terms of Section 113(d), the objection taken to the maintainability of the appeal would not sustain. Beneficial owner of the currency - HELD THAT:- Undisputedly, the journey in the course of which the seizure was affected was not a personal visit of the respondent but was to attend to various business meetings and events for and on behalf of HMC and which meetings and events were being managed by SEMPL. It is in the aforesaid background that the Tribunal has come to the conclusion that the respondent could not be held to be the beneficial owner of the seized currency. It is noted from the various statements made in the course of investigation and the facts that stood recorded in the Order-in-Original that it was not the case of the appellant that the currency had been provided by the respondent - while appellant had sought to contend that in the past SEMPL employees are allegedly stated to have admitted to carrying currency which was utilized to meet the personal expenses of the respondent, the same is clearly immaterial since the proceedings emanating from the SCN in question stood restricted to the business travel of the respondent while acting as a Managing Director of HMC. The issues which were canvassed for consideration by the appellant essentially require us to re-appreciate the evidence and the material that formed part of the proceedings as drawn. That cannot possibly be undertaken since the appeal itself would have to be restricted to a question of law. Appeal dismissed.
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2023 (10) TMI 323
Classification of imported goods - to be classifiable under Customs Tariff Item 8517 7010 as claimed by the appellants or classifiable under Customs Tariff Item 8517 62 90 as contended by the Department? - HELD THAT:- The government had provided concessional rate of basic customs duty of 10% on all products covered under the scope of tariff item 8517 6290 or 8517 6990, except for eight specified products specified therein. These include Optical Transport Network (OTN) products under entry 20(d). The said exemption notification does not perse provide for any aid for classification of goods. Hence, the conclusion arrived at by the learned Commissioner (Appeals) in the impugned order for excluding the classification of the imported goods under CTH 8517 7010 and for deciding the classification under CTH 8517 6290 on the basis of entries under exemption notification, cannot be agreed upon. It is a settled law that while statutory notifications may be looked at for the purpose of ascertaining the scope of goods covered under the exemption notification, they cannot be used to determine the classification of goods. The Co-ordinate Bench in the case of COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S RELIANCE JIO INFOCOM LTD [ 2019 (11) TMI 451 - CESTAT MUMBAI] had dealt with the product antenna used with Base Transmission Station (BTS) for mobile telecommunication network, in which the matter is shown as pending in the Apex Court; whereas, in the case in hand, it is dealt with interface cards , whose features are entirely different than the products dealt with by the Co-ordinate Bench. Hence, the ratio of the judgement of Co-ordinate Bench does not apply to the facts of this case. The decision of the Tribunal in the case of COMMISSIONER OF CUSTOMS-MUMBAI (AIR CARGO IMPORT) AND COMMISSIONER OF CUSTOMS-MUMBAI (ACC) VERSUS RELIANCE JIO INFOCOMM LTD. [ 2022 (6) TMI 1051 - CESTAT MUMBAI] deals with classification of cards i.e., Populated Printed Circuit Boards (PCBs) incorporated in photonic service switch. Thus, the imported goods in the present case interface cards being functionally similar, the decision of the Co-ordinate Bench of the Tribunal, which has been upheld by the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) VERSUS M/S. RELIANCE JIO INFOCOMM LTD. [ 2023 (1) TMI 1297 - SC ORDER] , by holding that they do not think it is appropriate to interfere in the impugned order, is relevant to the present case. Thus, on the basis of the decision of the Tribunal which was upheld by the Hon ble Supreme Court, the impugned order is not sustainable. Appeal allowed.
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Corporate Laws
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2023 (10) TMI 359
Violation of principles of natural justice - Petition for Oppression and Mismanagement dismissed as withdrawn without furnishing any reasons for denying liberty - HELD THAT:- When a civil suit , is filed, all the provisions of the Civil Procedure Code , 1908 will apply, pertaining to the conduct of the proceedings before Court . However, in respect of proceedings filed under the Companies Act, 2013 , the procedure, to be followed, shall be as specified in the Rules - As a matter of fact, any order, passed by the Tribunal / Appellate Tribunal, shall be enforced as a Decree , passed by the Court . The fetters of Civil Procedure Code , are not binding on the Tribunal , and the Appellate Tribunal , but they are guided by the Principles of Natural Justice . The power to grant permission to withdraw a suit with Liberty to file a fresh suit , is to be used very cautiously. Also that withdrawal of a suit , as plaintiff , wants to file fresh suit on a new cause of action , Leave of the court, is not required - A Court of Law , cannot exercise its discretionary jurisdiction de-hors, the Statutory Law and in fact, its discretion must be exercised in terms of the existing statute . It cannot be brushed aside, that the grant of such a relief , in the light of express provisions of the statute , to the contrary, is not permissible . After all, Equity must yield to Law , as opined by this Tribunal . More importantly, this Tribunal, points out that a Civil Court , does not Grant Leave , to file another suit . If the Law , permits, the plaintiff , may file another suit , but not on the basis of observations made by a superior court . This Tribunal , significantly, points out that a Petitioner , has no right to withdraw his Application / Petition filed before the Tribunal , unless, he is granted Leave , to withdraw the Application/ Petition . Once he is granted the Leave , the Withdrawal Application / Petition under sub-Rule (1) of Rule 82 of the NCLT Rules, 2016 shall be filed in Form NCLT 9. Appeal dismissed.
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2023 (10) TMI 322
Sanction of composite scheme of amalgamation - locus Standi to challenge the Impugned Order - HELD THAT:- There is no mandatory requirement under the Companies Act, 2013 to conduct a meeting of secured and unsecured creditors if an arrangement or compromise is not envisaged with them. Hence, as per the provisions of the Companies Act, 2013, there was no necessity of either conducting a meeting of the unsecured creditors of Respondents, or of obtaining consent affidavits from the unsecured creditors of the Respondents before dispensing with the meeting of unsecured creditors. Since, both the Appeals fails on the account of locus itself and do not meet the minimum threshold of 10% shareholding and 5% of the total outstanding debts as per latest Auditors Financial Statement (in the relevant period at that time), it is not required to go into details of other issues. Appeal dismissed.
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Securities / SEBI
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2023 (10) TMI 358
Request to place on record a compilation of documents - request as made to place on record the compilation of documents, and at this stage, when the Court had already commenced with the final hearing of the proceedings is strongly objected by petitioners - HELD THAT:- We find much substance in the contentions as urged on behalf of the petitioners by Mr. Seervai and Mr. Joshi. At the outset, we may observe that we cannot accept a compilation of documents to be placed on record of the proceedings at the stage the present proceedings stand, that is the Court having already commenced final hearing on the petitions. More particularly on a crucial issue the petitioners have already and quite substantively having argued their case for the entire second session yesterday. It may be that such averments are made in the affidavit as noted by us above, however, such averments would not confer any right or entitlement on respondent no. 2 to place on record a big bunch of documents, at the midst of the final hearing as requested by Mr. Dhond in his oral application. This would be certainly contrary to the basic rule the Court would adopt on pleadings. Also after such long lapse of time and that too after the proceedings have commenced final hearing and the petitioners had commenced their arguments and quite substantially it would not be fair to the petitioners that new material documents unknown to the parties are permitted to be placed on record. It would also not be fair to the process of adjudication of the proceedings. Moreover, this would be completely contrary to the basic law of pleadings under which any plea to be taken by a party which may be on documents or otherwise would be required to be taken by way of a pleading in that regard, and such documents on which a plea is taken are required to form part of the record, in a manner known to law. This is the normal rule, so that such plea and documents are made known to all the parties on which the parties can advance their case before the Court. If we permit such compilation of documents to be placed on record, we permit a completely new course of action, which would be permitting respondent no. 2 to make out a case on documents which are not part of the record and on which there is no specific pleading on any such document and above all which are not in the knowledge of the petitioners. This can certainly cause a grave and serious prejudice to the petitioners.
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2023 (10) TMI 357
Penalty imposed by SEBI - petitioner's PAN No. given in the order does not belong to him, but to a third party - According to the first respondent, the petitioner is liable to pay interest on the penalty amount from 16.06.2017 till 11.05.2023 - HELD THAT:- If the facts of this case is tested on the touchstone of Section 220 of the Income Tax Act, it will be evident that the first respondent cannot claim any interest, since the order of SEBI imposing the penalty carries a wrong PAN particulars. It may be that the petitioner might have chosen to challenge that order before the appellate Tribunal and also before this Court, but vis-a-vis the payment of interest, it must be fastened on the person satisfying all the features that goes to identify the person conclusively, argued the counsel. First respondent submitted that if the petitioner is aggrieved by the order of the appellate Tribunal, he ought to approach the Hon'ble Supreme Court u/s 15-Z and challenge it. And if it is against such other orders of the Board or the adjudicating officer, then the petitioner ought to approach the SEBI Appellate Tribunal u/s 15T. Hence, the present writ is not entertainable. Secondly, so far as the present dispute itself is concerned, the petitioner knew against whom the order of penalty was passed, and it is hence he has to approach the appellate Tribunal, and it is too late in the day for the petitioner to plea innocence. This Court concurs with the submission of the counsel for the first respondent on both the scores. It is not in dispute that the SEBI has imposed the penalty on the petitioner and he had also paid it. The interest is but incidental to it. Therefore, the petitioner cannot escape paying the interest component as is now demanded. The PAN particulars are, but one of the mode to identify an individual, and merely because a wrong PAN number is given, it does change the individual, more so when the petitioner had paid the penalty without demur. Turning to the maintainability, the petitioner ought to have challenged it in the manner provided under the Act.
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Insolvency & Bankruptcy
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2023 (10) TMI 356
Jurisdiction of Adjudicating Authority to pass an order in regard to payment of pre-CIRP dues during the CIRP - HELD THAT:- Though the issue raised by the Appellant may be attractive but in the present case, no such issue survives after the order dated 15.05.2023 is passed, therefore, the same is dismissed.
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FEMA
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2023 (10) TMI 377
Offence under FEMA - gold bullion of 3773.52 gm. was seized along-with other articles like electronic devices mobile phones, hard disk etc during search operations - HELD THAT:- The provisions of Section 37 of the FEMA read with Sections 132 and 132B of the Act of 1961 including its proviso clauses clearly speak that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorized officer shall make a note or inventory of such stock-in-trade of the business. Further, where the person concerned makes an application to the AO within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained, to the satisfaction of the AO, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released with the prior approval of the certain authorities, as mentioned in the provisions, to the person from whose custody the asset was seized. The proviso clause further provides that such asset or any portion thereof is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last date of the authorizations for search under Section 132 or for requisition under Section 132A, as the may be, was executed. Recently in Mangilal Agarwal vs. Deputy Director of Income Tax (Investigation-1) [ 2023 (8) TMI 1358 - RAJASTHAN HIGH COURT] this Court considering the statement made by the counsel appearing for the respondents upon instructions from the respondent authorities submitted that no order has been passed by the competent authority under section 132B of the Income Tax Act. On the basis of such statement, the Court observed that the goods including gold bullion, which were taken in possession, have to be released and the respondents counsel therein informed that in case the petitioner approaches the competent authority for release of the Gold Bullion, the same shall be accordingly released. Finally the writ petition was disposed of as having become infructuous in view of the fact that the gold bullion was released to the petitioner therein. The judgments cited by the counsel for the petitioners as a whole speak that the respondent authorities are under an obligation to consider the representation of the petitioners including all the relevant documents submitted along-with the same explaining that the gold bullion seized during the search is stock in trade and are duly accounted in the books of accounts. The aforesaid inaction on the part of respondents in failing to consider and decide the representation of the petitioners in not releasing the seized gold bullion, is illegal and contrary to the provisions of Section 132(1) and 132B of the Act of 1961. The provision of Section 132B of the Act of 1961 mandates the respondent authorities to take a call on the application/ representation submitted by a person and after consideration such asset or any portion thereof seized during the search of which nature and source of acquisition is explained, the same should have been released within one twenty days. The respondent authorities are under an obligation to abide by the law in force but in the present case the respondent authorities have failed to act upon the representation submitted by the petitioners on 19.02.2020 which led to miscarriage of justice. Respondent authorities in view of the mandate of Section 132B were under an obligation to consider the application/ representation of the petitioners submitted on 19.02.2020 showing the credentials and explaining that the gold bullion seized during the search was stock-in-trade and are duly accounted in the books of accounts which were based on the documents enclosed along-with the representation which have been placed on record before this Court also. The respondent authorities have not cared to consider the representation and the documents submitted by the petitioners and to hold that the gold bullion seized during the search was not stock-in-trade. Therefore, this Court on consideration of the documents submitted along-with the petition without there being otherwise decision of the respondent authorities, does not hesitate to hold that the gold bullion seized during the search was stock-in-trade and are duly accounts in the books of accounts and accordingly the petitioners are entitled to retain the same. Writ petition deserves to be allowed and is therefore allowed. The respondent authorities are directed to return the gold bullion 3773.52 gm. seized by them in the course of search on 15/16.02.2020 forthwith to the petitioners after complying with the requirement provided i.e. making a note of inventory.
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Service Tax
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2023 (10) TMI 355
Levy of service tax - Auto Mobile Parts used during service of motor vehicle in authorized service station - handling charges billed and collected by the respondent from their customer of the motor vehicle in the same bill of motor vehicle - spare parts were sold by the appellant and required VAT was paid - Board Circular No.96/7/2007-ST dated 23.08.2007 - HELD THAT:- From the clarification, it is absolutely clear that even during the course of servicing of the vehicle, if any spare part is used and the same is shown as sale of the goods and VAT is paid no service can be demanded on the same. The revenue in the appeal misinterpreted the said clarification by considering part of the portion of the clarification in second Para thereof that any goods used in the course of providing services are to be treated as inputs and used for providing the service and accordingly cost of such inputs to be included. Considered the third Para of the clarification according to which where spare parts are used by service station for servicing of vehicles. Service tax should levied on the entire bill including the value of the spare parts raised by the service provider namely service stations. The revenue in their appeal taken the above clarification in isolation as the same is applicable only in such cases where any assessee is providing the service of authorized service stations and in the bill service charges and cost of spares are shown and a consolidated bill of service is raised. In the present case even though the consolidated bill was raised but they have shown separate portion of service and spare parts and in the portion of spare parts, it is clearly shown as a sale of goods and VAT was paid. Therefore, even by considering the above board circular according to Para1 of the clarification, It is clear that when the spare parts was sold and VAT was paid no service tax can be charged thereon. Similarly, in the case of handling charges the same is included in the sale value of the sale of the vehicle and on total value the VAT was paid. Therefore, the handling charges are nothing but incidental to the sale of the goods and the same is part and partial of sale value of the vehicle on which VAT was paid. Therefore, no service tax can be charged on handling charges. The issue related to the spare parts as well as the handling charges have been considered in INFINIUM MOTORS GUJ PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (11) TMI 948 - CESTAT AHMEDABAD] where it was held that Moreover, in some of the judgments, even the fact that one common invoice was issued showing both service part and sale of spare parts with payment of VAT/sales tax, is absolutely same. In view of the above judgments, issue involved in the present case is squarely covered. Hence, the demand of Service Tax on the value of spare parts and lubricants is not sustainable in the present case. On both the issues i.e. use of spare parts during service under authorised service stations and sale thereof on payment of VAT and handling charges recovered from the customers in the invoices of vehicle sale, it is held that no Service Tax can be charged on that amount - Appeal of Revenue dismissed.
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2023 (10) TMI 354
Entitlement for abatement of 67% under notification No. 01/2006-ST dated 01.03.2006 - Thermal Insulation Services which included supply of various capital goods, which can be considered as plant /machinery /equipment and labour charges. Denial of benefit on the ground that as per explanation given in the exemption entry, the abatement is available only if the assessee supply the plant and machinery, equipment parts. HELD THAT:- In the present case, there is no dispute that the appellant have provided insulation service along with insulation material to their service recipient. Considering the exactly same set of facts, this Tribunal decided the issue in the case of RUDRA ENGINEERING VERSUS C.C.E. S.T. -VADODARA-I [ 2023 (1) TMI 690 - CESTAT AHMEDABAD ] wherein the Tribunal has held it cannot be considered that the said entry is applicable only on the supply of plant, machinery or equipment or structures. Besides, it is also applicable on any other material soLearned In the present matter there is no dispute on the facts that the Appellant is Commissioning and Installation agency and for providing the taxable services appellant has provided the thermal insulating materials i.e. Hot insulation including supply of LRB and Aluminium Sheet, Cold insulation with Thermocol and Aluminium Sheet, Insulation of Pipeline with black superion sleeve providing and fixing of black superion with cellotape , insulation with black nitrile rubber foam, sheet, etc. and on supply of goods appellant also paid sales tax/ VAT. Hence, in our opinion, the Appellant are eligible to the benefit of the Notification No. 1/2006-S.T., dated 1-3-2006. The demand of Service Tax by denying the abatement notification No. 1/2006- ST is not sustainable - Appeal allowed.
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2023 (10) TMI 353
Levy of Service Tax - Business Auxiliary Service - deduction of 10%/12.5% as commission and after deduction of the said commission the amount was realized against the exports proceeds - levy of service tax on the GTA service availed in respect of goods actually exported - time limitation - HELD THAT:- If any amount in the sale invoice is deducted by whatever name, the same is nothing but discount given during the course of sale of goods. In the present transaction only appellant being a seller of the goods and foreign buyer of the goods are involved. Therefore, relationship between the appellant and the foreign buyer is of seller and buyer of the goods and the transaction is purely of sale of goods. Even, though the word commission is mentioned in invoice and the same was deducted from the sale price, it is nothing but extended the discount to the buyer. The commission shall be chargeable to the Service Tax only in case, if there is a third party who has independently provided the commission agent service in relation to sales promotion and related service. In the present case no independent sales commission agent is involved. This Tribunal has taken a consistent view that merely by mention of commission or any other term, whereby the deduction was given in the sale invoice, the same cannot be treated as commission for the purpose of levy of Service Tax under business Auxiliary Service . Accordingly, the demand of service tax on the commission shall not sustain. Time Limitation - HELD THAT:- Since this sale is for export of goods obviously the departmental officers have verified the transaction at the time of export for various reason of refund/ drawback or any other export incentive. Accordingly, the entire fact about the commission being shown deduction in the sales invoice was very much in the knowledge of the department. The appellant being registered manufacturer with Central Excise having filed their regular return to the department, there is absolutely no suppression of fact of mis-declaration on the part of the appellant. Revenue Neutrality - HELD THAT:- The present case is of revenue neutrality for this reason also extended period cannot be invoked as held in various judgments. This proposition is agreed with, that if at all there is a service tax liability on the commission the appellant is not only entitled for Cenvat credit but also prima facie eligible for refund, as the said commission service is exclusively in respect of export of goods. For this reason also the demand for extend is not invokable. Accordingly, the demand of service tax on the commission as well as on GTA service is not sustainable also on the ground of limitation - the impugned orders are not sustainable - appeal allowed.
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2023 (10) TMI 352
Exemption from service tax - Transmission and distribution of electricity - work executed as sub-contractor, on back to back basis, allotted by the main contractor - benefit of N/N. 45/2010-ST dated 20.07.2010 denied - Commercial or Industrial Construction service (CICS) - work being earth work, laying of concrete, shuttering rod bending. HELD THAT:- There is no ambiguity in the exemption granted for services provided to distribution and transmission companies vide Notification No. 45/2010-ST, and the reliance placed by the Revenue on the clarificatory Circular dated 01.07.2010 is misplaced. Further, it is found that there is no reference of earlier Notification No. 11/2010-ST in the Notification No. 45/2010- ST and hence, attempt by the Revenue to read the exemption notification with the previous notification, is also misplaced. There is no error in the Impugned Order - Appeal of Revenue dismissed.
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2023 (10) TMI 321
Classification of services - Manpower Supply Services or Maintenance and Repair Services? - abatement under Notification No.24/2012-ST dated 06.06.2012 - reverse charge mechanism - extended period of limitation - HELD THAT:- From the documents submitted by the appellant, it is clear that the services rendered by them have been rightly classified under the category of Maintenance and Repair Services . It further says that the appellant company approached, to provide the said service as required expressing the desire to take job of coil winding and Core Coil Assembly of transformers at their factory. The other clauses in the agreement also speaks about management or supervision activities to be carried out by the appellant company. In order to execute any work or provide any services some sort of manpower is required, however by reason thereof the agreement cannot be construed as one of providing manpower - the authorities below have rightly classified the services rendered by the appellant as one of Maintenance and Repairs only rather than for Supply of Manpower . Whether the appellant is entitle to claim the benefit of abatement of duty under Notification No.24/ 2012? - HELD THAT:- The services rendered by the appellant falls in the category of Maintenance and Repairs Services for which no abatement is available under any of the two Notifications. Consequently, the service tax is payable on the whole gross amount received or billed by the appellant for providing the services. The appellant has next contended that under the RCM, the service tax has been paid by the recipient of the service, however perusal of the bills raised, the TDS Certificate of the service recipient does not disclose that the service tax has been paid by the recipient of the service and therefore the submissions made by the appellant cannot be agreed upon. The demand raised under both the show cause notices is recoverable from the appellant along with interest as the entire amount of service tax was not paid by the due date under section 75 of the Finance Act, invoking the extended period of limitation under section 73 as the appellant neither assessed the correct amount of service tax nor revealed the actual amount in the ST 3 returns - Appeal dismissed.
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2023 (10) TMI 320
Non-levy of penalties that were proposed in the Show Cause Notice - Dindigul Municipality was unaware of the levy of Service Tax on renting of immovable property - no intentional evasion of payment of Service Tax - lapse was due to unawareness - HELD THAT:- The facts on record clearly reveal hat the assessee having approached the Hon'ble High Court in MADURAI CORPORATION, REP. BY COMMISSIONER ARIGNAR ANNA MALIGAI VERSUS THE COMMISSIONER OF CENTRAL EXCISE, MADURAI [ 2020 (9) TMI 1303 - MADRAS HIGH COURT] , had also urged these very grounds and has obtained a common order whereby the leviability has been upheld. In view of the above High Court Order, the above grounds do not survive and the same may not require a separate order by this Bench since there has already been an order by the Hon ble High Court. There are no merit in the appeal filed by the Revenue - appeal dismissed.
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2023 (10) TMI 319
Classification of services - Cleaning Services or Manpower Supply Services? - supply of manpower for housekeeping i.e. cleaning of appellant s plant and office premises - HELD THAT:- It is observed from the invoices of both the companies that they charged not only for service of cleaning but also for housekeeping tools, equipments, chemicals and consumables. From such contracts, it is held that none of the observed requirements of Manpower Supply Service stands fulfilled in the given set of the discussed circumstances. It is observed that both the service providers have nowhere mentioned to have been registered as Manpower Supply Services. Their invoices also identify them as an agencies involved in Housekeeping and Cleaning services. The invoices were also for provision of Housekeeping Services. It is clear from the contract and invoices that activities in question fall within the scope of cleaning activities as defined under Section 65(24b) of the Finance Act. It has been held in PANKAJ KUMAR VERSUS C.C.E. S.T. -RAIPUR CENTRAL EXCISE, CHHATTISGARH [ 2014 (12) TMI 1420 - CESTAT NEW DELHI] that since the contractual production charges has been paid to the contractor on per metric tone basis, the contract for supply cannot fall under the definition of Manpower Supply. The findings of the adjudicating authority below are not correct. Just because some persons have been deployed by the service providing agency for providing Cleaning Services, the activity of Cleaning Services cannot be converted into the activity of providing manpower. The order is therefore set aside. Appeal allowed.
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2023 (10) TMI 318
Levy of Dredging Services provided to Dredging Corporation of India (DCI) for Sethu Samudram Project and Dhamra Port Company Ltd., and also on certain services imported - penalties - HELD THAT:- he demand of Service Tax confirmed under the category of Dredging services at Dhamra Port, on the consideration received for activities of Soil Stabilisation and Land Reclamation has been decided by the Tribunal in the appellant s own case INTERNATIONAL SEAPORT DREDGING LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2018 (6) TMI 933 - CESTAT CHENNAI] . It was explained by the appellant that three separate contracts for dredging, soil stabilisation and land reclamation were entered by them. In the present case also the demand is made under dredging services on amounts received for soil stabilisation and land reclamation services at Dhamra Port. In paragraph 14.2.0, the adjudicating authority has held that the activities undertaken were not stand-alone and therefore, the contract has to be considered as composite one. The Notification No. 17/2005-ST dated 07.06.2005 exempts site formation services (soil stabilisation, land reclamation) provided in the course of construction of road, airports, railways, transport terminals, bridges, tunnels, dams, major and minor ports. After considering the agreement, the original authority in the above extracted order has come to the conclusion that the consideration received for site formation services is exempted under the above Notification and cannot be subject to levy of Service Tax under dredging services. The facts entirely being the same, the demand of Service Tax under the category of dredging services for the amount received by the appellant for soil stabilisation and land reclamation services cannot sustained and requires to be set aside. Whether the service offered by the appellant to Dredging Corporation of India by way of charter-hire of vessel for dredging work of the Sethu Samudram Canal Project? - HELD THAT:- The very same issue was considered by the Tribunal in the appellant s own case for the earlier period INTERNATIONAL SEAPORT DREDGING LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2018 (6) TMI 933 - CESTAT CHENNAI] wherein it was held that the charter/hire of vessel would at the best fall under Supply of Tangible Good Services and not under dredging services - Following the same, the demand of Service Tax on amount received by the appellant upon the charter-hire agreement under the category of dredging services cannot sustain and requires to be set aside. Demand of Service Tax under Maintenance and Repair Services received from the Foreign Service provider - HELD THAT:- The levy of Service Tax on Maintenance and Repair Services is on the basis of the place of performance and therefore the demand cannot be sustained as the services have been performed outside India and not received in India - the demand under this category cannot sustain and requires to be set aside. Demand of Service Tax on reverse charge basis under the category of Manpower Recruitment and Supply Agency (MRSA) services received from Foreign Service providers - HELD THAT:- The issue as to whether secondment agreement entered by the appellant with the foreign companies for deputation of employees would come within the ambit of the definition of Manpower Recruitment And Supply Agency services was analysed by the Hon'ble Apex Court in the case of C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT] holding that the activity may be taxable under MRSA - the demand under this category is sustainable, and the same is upheld. Penalties - HELD THAT:- The appellant has made out sufficient cause for non-payment of Service Tax and is a fit situation to invoke Section 80 of the Finance Act, 1944 to set aside the penalties. Appeal allowed in part.
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2023 (10) TMI 317
Services in relation to transmission or distribution of electricity - period 2005- 2009 - Exemption form service tax under N/N. 45/2010-ST dated 20/7/2010 or not - HELD THAT:- Notification No. 45/2010 was issued by CBEC in order to put to rest all the litigations which were prevailing during the period 2005 to 2010. After this notification was issued, the Tribunals have been consistently holding that any service provided in relation to transmission or distribution of power shall be eligible for the exemption from service tax payment. This bench in the case of COMMISSIONER OF CENTRAL TAX VERSUS SRI SRINIVASA ELECTRICAL WORKS [ 2023 (7) TMI 1298 - CESTAT HYDERABAD] has held Facts on the records were specifying that the services rendered by the respondent assessee are covered under scope of exemption granted vide Notification No. 45/2010-ST till the period 21.06.2010, in respect of service to distribution company and till 26.02.2010 in respect of transmission companies. Accordingly, the demand for the relevant period stands set aside. Appeal allowed.
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Central Excise
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2023 (10) TMI 351
Refund claim - unspent amount lying in the current account (PLA) of an assessee - amount is merely an advance amount for payment of excise duty or is actually or shall be deemed to be Excise Duty for the purpose of claim of refund - HELD THAT:- As is evident from bare reading of Section 3 of CEA, in particular sub-section 1 thereof, duty of excise is leviable on all excisable goods which are produced or manufactured in India in the manner prescribed and at the rates set forth in Fourth Schedule. It is, thus, crystal clear that event of levy and collection of duty of excise is the production and manufacture of the excisable goods though, as prescribed, the duty is actually paid by the manufacturer at the stage of removal of excisable goods from the manufacturing unit or production house as the case may be. The amount credited into the current account (PLA) by an assessee is, in a way, prospective excise duty to be utilized by the assessee at the stage of removal of excisable goods from his manufacturing unit from time to time. From careful perusal of sub-Section 2 along with proviso thereof, it clearly comes out that the refund of duty of excise claimed by an assessee may be credited to the welfare fund except when such refund is relatable inter alia to unspent advance deposits lying in balance in applicant s current account maintained with the Principal Commissioner of Central Excise or Commissioner of Central Excise - The term unspent advance deposit would mean, unspent advance deposit of excise duty refund whereof can be claimed by an assessee under Section 11B read with Rule 173G. Such refund in terms of proviso to Section 11B (2) is required to be made by tendering payment directly to the applicant-assessee. Hon ble Supreme Court in the case of Modipon [ 2017 (11) TMI 1429 - SUPREME COURT] answered the question in the context of provisions of Section 43-B of the Income Tax Act, nonetheless, what was held qua the amount lying in PLA is binding here - From the judgment of Supreme Court, it is now beyond any pale of discussion or debate that the amount credited by the asseessee in the account current is duty of excise paid in advance in respect of excisable goods manufactured to be paid by debit to such account at the stage of actual removal of excisable goods from the manufacturing unit. Once it is held that the unspent amount in PLA is duty of excise, a fortiori Section 11B and Section 11BB would be attracted. If the refund claimed on account of unspent amount in PLA is not paid within three months, it shall become payable with interest till it is actually paid. The respondents to pay to the petitioner interest at the rate of 6% per annum from the date of application till the order of refund within a period of two months from today - Petition allowed.
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2023 (10) TMI 350
Classification of goods - combipack which contains the EMD and MRR - to be classified under the Heading 85167920 of CETA 1985 or not - penalty u/r 25 of CER - HELD THAT:- The issue has been considered by the Tribunal in the case of KARAMCHAND APPLIANCES PVT. LTD. VERSUS COMMR. OF C. EX., CHANDIGARH [ 2013 (4) TMI 79 - CESTAT, NEW DELHI] . The Tribunal in the said case observed that the essential character of the combi pack is that of MRR and not EMD - The Tribunal thus held that the product is classifiable under 3808.10. By judicial discipline, following the above decision of the Tribunal and hold that the goods viz. the combipack consisting of EMD MRR are classifiable under 38089191 as determined by the department. The issue on merits is answered in favour of the Revenue and against the assessee. Levy of penalty u/r 25 of Central Excise Rules, 2002 - HELD THAT:- The first Show cause notice has been issued invoking the extended period of limitation alleging suppression of facts with an intent to evade payment of duty. The adjudicating authority has rendered a finding that the issue was contentious and there were divergent views prevailing during the relevant time - the demand was thus restricted to normal period. In the absence of any malafide intention, penalty cannot be imposed under Rule 25 of Central Excise Rules, 2002 also. The said rule states that only when there is non-payment of duty with an intent to evade payment of duty, the penalty can be imposed. The findings recorded by the original authority itself shows that there was no intention to evade payment of duty and therefore the penalty imposed under Rule 25 of Central ExciseRules 2002 is not justified and requires to be set aside - the impugned order is modified to the extent of setting aside the penalty of Rs.5,00,000/- lakhs imposed under Rule 25 of Central Excise Rules, 2002. The demand confirmed along with interest is sustained. Appeal allowed in part.
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2023 (10) TMI 349
Recovery of Central Excise duty alongwith interest and penalty - attribution of the impugned taxable services in production of rectified spirit and of kraft paper along with manufacture of sugar , molasses and denatured spirit that are cleared on payment of duty - availability of option other than the one resorted to by the adjudicating authority - HELD THAT:- The coverage of partial, and conditional exemption, as a bar to retention of credit, in terms of rule 6 of CENVAT Credit Rules, 2004 is no longer res integra. The Tribunal in M/S. SHARDLOW INDIA LTD. VERSUS CCE, CHENNAI II [ 2017 (8) TMI 1162 - CESTAT CHENNAI] has held that In similar case, where the goods were cleared to M/s. Space Centre and M/s. Baba Atomic Research Centre in the case of COMMISSIONER OF CENTRAL EXCISE, THIRUNELVELI VERSUS DCW LTD. [ 2008 (10) TMI 380 - MADRAS HIGH COURT] , the jurisdictional High Court has considered that the said goods cannot fall under the category of exempted goods as provided in Rule 57CC(1) of the erstwhile Central Excise Act, 1944. In M/S. MERCEDES BENZ INDIA (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2015 (8) TMI 24 - CESTAT MUMBAI] , the Tribunal held that we do not understand that when the appellant have categorically by way of their intimation opted for option provided under sub-rule (3)(ii), how Revenue can insist that option (3)(i) under Rule 6 should be followed by the assessee. Thus, it is not in doubt that any of the options may be chosen by the assessee - the recovery under rule 14 of CENVAT Credit Rules, 2004 restricted to such amount as is computed by the appellant herein. There is no reason to sustain the penalty imposed under section 11AC of Central Excise Act, 1944 as there is no allegation of evasion of duty otherwise payable on account of non-availability of sufficient credit on clearance of dutiable goods - the impugned order is modified to limit recovery by any method then available under rule 6 of CENVAT Credit Rules, 2004 to be exercised by the appellant herein within 30 days of receipt of this order and to the extent of tax attributable to input service used in manufacture of rectified spirit during the relevant period. Appeal disposed off.
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2023 (10) TMI 348
Fraudulent availment Cenvat credit without receipt of inputs - entire case is based mainly on the statements of various persons - request for cross-examination of those witnesses were not considered properly by the Adjudicating Authority - Violation of principles of natural justice - HELD THAT:- From Section 9D of Central Excise Act, 1944, it is seen that it is not a choice of the Adjudicating Authority whether to grant cross-examination or otherwise. It is mandate of the statute that the witnesses have to be examined before their statements are relied upon against the assessee in any case. Therefore the Adjudicating Authority must grant cross-examination of the witnesses before passing fresh order. The impugned order set aside - appeal allowed by way of remand to the Commissioner for passing a fresh order that too preferably within a period of four months from the date of this order.
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2023 (10) TMI 347
Refund of pre-deposit alongwith interest and penalty - part amount rejected - amount covered under section 35F of CEA or not - HELD THAT:- The issue with respect to the amount deposited as interest during investigation stands clarified by the Department s own Circular No. 111/05/2009 dated 24.02.2009 wherein it has been clarified that the tax and interest collected without authority of law has to be refunded where the tax which no longer remain the tax cannot continue to retain the character of interest. This Tribunal Bangalore Bench in the case of G Tech Computer Education (supra) has relied upon the decision of High Court of Kerala in the case of THE COMMISSIONER OF CUSTOMS VERSUS M/S. SHREE SIMANDAR ENTERPRISES, [ 2012 (8) TMI 176 - KERALA HIGH COURT] wherein the Hon ble High Court has held that when an appellate authority allows an appeal filed against imposition of tax, duty, fine, penalty, etc., it is the bounden duty of the assessing authority, as part of a democratic Government, to refund the amounts covered by orders of the appellate authority, when appeals are allowed fully or partially. The amount of Rs. 62,12,944/- since was deposited during the investigation of such a proposal which stands finally set aside by this Tribunal, the entire deposited amount was liable to be refunded to the appellant, the entire amount being have acquired the character of pre-deposit as is required to be paid under section 35F of Central Excise Act alongwith interest - Commissioner (Appeals) has rightly granted interest on the amount of Rs. 54,84,578/- however has wrongly rejected the balance claim by bifurcating the amount of Rs. 7,28,366/- as interest. The order to that extent is hereby set aside. Appellant is held entitled for the refund of Rs. 7,28,366/- alongwith the interest at the rate of 12% from the date of the order of this Tribunal dated 08.10.2020 - Appeal allowed.
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2023 (10) TMI 316
Denial to clear the goods on provisional assessment basis under Rule 7 of the Central Excise Rules, 2002 - It was held by High Court J.K. TYRE INDUSTRIES LIMITED, VERSUS UNION OF INDIA, ASSISTANT COMMISSIONER, CENTRAL EXCISE, UDAIPUR. [ 2017 (3) TMI 1931 - RAJASTHAN HIGH COURT] that Since none of the conditions mentioned above exist in the present case and there is an equally efficacious alternative and statutory remedy of appeal under Section 35 of the Central Excise Act available to the petitioner, we are not persuaded to exercise the jurisdiction under Article 226 of the Constitution of India in this case. HELD THAT:- This Court is of the opinion that the impugned order does not call for interference. The appeal is accordingly dismissed.
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2023 (10) TMI 315
Method of Valuation of goods for finalization of the provisional assessments - cigarettes and Packaging Materials cleared for captive consumption - Revenue's contention is that while computing the cost of production it is not correct to exclude the unabsorbed overheads. HELD THAT:- It is observed that whether unabsorbed overheads are includable in the cost of production or not is a legal principle that is to be decided by an expert. In this case, for the purpose of arriving at the cost of production, Cost Audit under Section 14 A of the Central Excise Act, 1944 by an independent Cost Accountant was ordered by the Chief Commissioner. In addition to this, the Chief Commissioner, Central Excise, Ranchi Zone, Patna has also constituted a special team to finalize the provisional assessment. On 14.11.07, the special team submitted their report. Though they were not professionally qualified to study the issue and submit a report, a sincere effort has been made to adopt the broad principles of CAS-4 to arrive at the cost of production. It was also observed by the special team that the cost incurred against the expenditure under unabsorbed overheads has not been considered while calculating the cost of production. It is observed that when the Special team submitted their report and made an observation regarding non-inclusion of certain elements in cost of production as per CAS-4 principles, the Appellant submitted the clarifications/explanation wherein they categorically stated that the cost of production has been arrived at as per the principles adopted in CAS- 4 - There is nothing on record to Show that there were any deficiencies in the Report of the Special Audit Team. Neither the Authority who constituted the Special Audit Team nor the Reviewing Commissioner has expressed any lacunae in the Report. The Lower authority has gone by the Report and finalized the pending Provisional Assessments - the Deputy Commissioner has finalized the provisional assessments by adopting the principles of CAS-4 to arrive at the cost of production and the assessable value for the purpose of payment of duty has been correctly determined in the Order-in-Original dated 12.12.2007. The method of valuation adopted by the adjudicating authority is as per the principles enshrined in CAS-4 and it does not warrant any intervention - Matter remanded for fresh adjudication for determining the valuation issue afresh - appeal allowed by way of remand.
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2023 (10) TMI 314
Method of calculation for availing CENVAT Credit - purchase of inputs from EOUs and availed full credit of CENVAT, as per the invoices - supplier EOUs did not avail the benefit of Notification No. 23/2003 dated 31.03.2003 - whether the method of calculation, for availing CENVAT Credit, adopted by the appellants, by taking into account the Tariff Rate of basic Customs Duty is correct? - extended period of limitation. HELD THAT:- The learned Commissioner (appeals) observes that though the appellants have applied the formula given under Rule 3(7)(a) of the CENVAT Credit Rule, taking into account Tariff Rate of BCD is not correct; CENVAT Credit is to be calculated by taking into account the basic Customs duty leviable and charged. We find that the appellants rely upon Tribunal s orders, by this bench in M/S SUN PHARMA LABORATORIES LTD VERSUS. CCE ST, JAMMU KASHMIR [ 2018 (12) TMI 1983 - CESTAT CHANDIGARH] and CESTAT Ahmedabad in SUN PHARMACEUTICAL INDUSTRIES LTD VERSUS C.C.E. S.T. SURAT-II [ 2023 (4) TMI 710 - CESTAT AHMEDABAD] . For the purpose of allowing the Cenvat credit, both the additional duties have to be taken into account and restricting the benefit to only one additional duty is not warranted under the strict interpretation principle of statutory interpretation. Further, CENVAT is as beneficial provision for reducing the cascading effect of taxation and if the object of CENVAT has to be subserved, the credit should be made available in respect of both the additional duty of customs. The economic rationale for the same has already been explained in the preceding paragraph. The basic issue that is under dispute is as to whether the appellant requires to take credit of duty at the tariff rate or at the effective rate. The cases relied upon by the Department as well as the appellant are not exactly on the issue. In the case of Micropure Parental Pvt. Ltd. [ 2015 (10) TMI 1919 - CESTAT MUMBAI] , it was held that it is very clear that the term BCD in the second proviso implies the basic customs duty applicable on the goods by a normal importer from abroad. In the case of Venkateshwara Precision Components [ 2010 (8) TMI 243 - CESTAT, CHENNAI] , it was held that with effect from 01.03.2005, if the inputs were imported, the manufacture would be eligible for CENVAT credit of duties paid under Section 3(1) and Section 3(5) of the Customs Tariff Act, 1975; under the circumstances, there is no warrant to treat the terms CVD referred to in Rule 3(7) of the CENVAT Credit Rules as applicable only to additional duty leviable under Section 3(1) of the Customs Tariff Act; additional duty levied under Section 3(5) has also been made eligible for credit. In view of the factual position, it appears that the contention raised by the appellants is not discussed in the above cited cases. The answer to the issue raised in the impugned case is answered by the facts of the case alone and is not a legal issue to be decided. Extended period of Limitation - HELD THAT:- The Department has not brought anything on record to substantiate the allegation of suppression etc. to enable invocation of extended period. Commissioner (Appeals) set aside the penalty and has also not given any specific findings on the invocation of the extended period. In the facts and circumstances of the case, the extended period cannot be invoked. The appeal is allowed on limitation by holding that the impugned order is sustainable for the normal period.
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CST, VAT & Sales Tax
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2023 (10) TMI 346
Rejection of Petitioner s claim of deduction/exemption on Prime Location charges - works contract or not - HELD THAT:- Undisputed facts of the case are, assessee is engaged in the business of development and construction of residential apartments. Assessee has collected PLC and FRC from the buyers and discharged the service tax payable on PLC/FRC. The estimate and actual cost of construction depends upon the material used for construction. The cost of construction shall be the same without reference to the direction of the flat, the view from a particular flat vis- -vis the other flat situated on the same floor. The PLC/FRC are based on the choice of buyer and cannot be treated as cost of construction. For example, a flat situated on a higher floor over-looking a garden or seashore shall have better locational advantage than the flat in the same floor from where the garden or the seashore may not be visible. Nonetheless the cost of construction of both flats situated in a particular floor shall be the same. By definition, works contract does not include preferential location. Therefore the Revenue rejecting assessee s request to exempt PLC/FRC from payment of KVAT is not sustainable in law. These revision petitions are allowed.
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Indian Laws
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2023 (10) TMI 380
Appointment to the post of Income Tax Inspectors - notice issued by the Income Tax Department, Kerala for recruitment of meritorious sports persons against sports quota vacancies for the year 2016-2017 - HELD THAT:- Sports persons who are already employed in Central Government or State Government or PSU, under the advertisement issued on 10.08.2016 are required to furnish NOC form the present employer and such NOC is to be enclosed with the application. Admittedly, the petitioner satisfies the qualification prescribed for recruitment against the sports quota vacancies. She secured 4th rank in the recruitment examination. However, she was denied appointment only on the ground that she failed to enclose the NOC from her employer (Central Railways) along with her application. As learned Senior Counsel would firstly submit that Clause 12 of the advertisement, does not specifically refer to NOC to be furnished by applicants employed with the Railways. In any case, the Counsel would point out that the Central Railways has issued the NOC for the petitioner on 28.05.2018 and the same is marked as Annexure P-19 with the additional document filed by the petitioner. As submitted that the recruiting Department should consider the petitioner for appointment against the sports quota vacancy by virtue of eligibility and merit position. It is further pointed out that a vacancy of ITO/Tax Assistant continues to exist as one of the selectees had not joined and the petitioner can be accommodated in the said vacancy. To receive instruction on the above submission on whether the petitioner can be accommodated on the strength of the current employer s NOC dated 28.05.2018, Mr. Arijit Prasad, learned Senior Counsel prays for time.The matter be listed after two weeks.
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2023 (10) TMI 345
Dishonour of Cheque - insufficient funds - settlement of matter done between parties - compounding of offence - imposition of compounding fee - HELD THAT:- Having taken note of the fact that the parties have settled the matter and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein the Hon ble Apex Court has held since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant, as per the compromise deed, dated 29.09.2023, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court - the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. The present matter is ordered to be compounded and the impugned judgment of conviction is quashed and set aside - the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Imposition of Compounding fee - HELD THAT:- Undisputedly, the total amount of cheque is Rs.1,60,000/-, however, the learned counsel for the petitioner submitted that the petitioner is a poor person and the imposition of compounding fee may be reduced - In case K. Subramanian vs. R. Rajathi [ 2009 (11) TMI 1013 - SUPREME COURT ], the Hon ble Apex Court had issued the guidelines with respect to the imposition of compounding fee held that The competent court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end. Therefore, taking into consideration the law laid down by the Hon ble Apex Court and the financial condition of the petitioner, as he is a poor person, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.8,000/- i.e., 5% of the cheque amount, only with the State Legal Services Authority, Shimla, H.P., within four weeks from today. Petition disposed off.
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2023 (10) TMI 313
Dishonour of Cheque - insufficient funds - settlement of matter done between parties - compounding of offence - imposition of compounding fee - HELD THAT:- Having taken note of the fact that the parties have settled the matter and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ] , wherein the Hon ble Apex Court has held since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant, as per the compromise deed, dated 09.03.2023, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court. - the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. The present matter is ordered to be compounded and the impugned judgment of conviction is quashed and set aside - the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Imposition of Compounding fee - HELD THAT:- Undisputedly, the total amount of cheque is Rs.4,57,000/-, however, the learned counsel for the petitioner submitted that the petitioner is a poor person and the imposition of compounding fee may be reduced - In case K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT] , the Hon ble Apex Court had issued the guidelines with respect to the imposition of compounding fee held that The competent court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end. Therefore, taking into consideration the law laid down by the Hon ble Apex Court and the financial condition of the petitioner, as he is a poor person, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs. 20,000/- (rupees twenty thousand), only with the H.P. State Legal Services Authority, Shimla, within four weeks from today. Petition disposed off.
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