Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 14, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Cancellation of supplier registration without show-cause notice violates natural justice.
Blocking of a supplier's credit ledger by mentioning 'Registration of supplier has been cancelled' without issuing a show cause notice violates principles of natural justice. Section 74 statutorily recognizes and mandates adherence to natural justice principles, while Rule 86A is silent on this aspect. Implementing Rule 86A without following natural justice may cause hardship and injustice, contrary to the lawmakers' intent. The Calcutta High Court's judgment in Basanta Kumar Shaw did not address whether natural justice principles apply to Rule 86A. Input Tax Credit is a concession, not a vested right, but natural justice principles must be read into Rule 86A. Blocking the petitioners' electronic credit ledger without following natural justice and assigning adequate reasons cannot sustain judicial scrutiny. The impugned action is set aside, and the petition is allowed.
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Taxpayer contests excess ITC claim, GSTR mismatch; seeks natural justice opportunity.
ITC availed in excess of credit reflected in GSTR-2A, mismatch between GSTR-3B and GSTR-2A, ITC not reversed based on GSTR-2A debit, non-generation of e-way bill. Petitioner seeks opportunity to explain discrepancies, invoking principles of natural justice. High Court set aside impugned order, directed petitioner to deposit 25% of disputed tax after adjusting Rs. 1,00,000 already paid within 4 weeks to lift bank attachment. Impugned assessment order treated as show cause notice, petitioner to file objections with supporting documents within 4 weeks. Respondent to consider objections after providing reasonable opportunity of hearing and pass orders in accordance with law. Writ Petition disposed of.
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Judicial review of tax authority's order for procedural flaws & lack of due process. Partial deposit ordered, fresh hearing granted.
Impugned proceedings challenged for exceeding scope of show cause notice, non-consideration of submissions during investigation and payments made, gross non-application of mind to material facts, and violation of natural justice principles. Impugned order set aside, petitioner directed to deposit 25% of disputed tax within two weeks, tax already paid adjusted towards deposit. Impugned assessment order treated as show cause notice, petitioner to submit objections with supporting documents within four weeks. Petition disposed of.
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Court overrules tax authority's order for denying Input Tax Credit without hearing petitioner's objections.
Impugned order set aside due to violation of principles of natural justice. Input Tax Credit disallowed without considering petitioner's objection. Petitioner granted final opportunity to appear before respondent authorities with supporting materials on specified date and time to present case. If opportunity not availed, impugned order revived. Petition disposed.
Income Tax
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Anonymous Donations in Temple 'Hundi': Religious Trust Exempted from Tax.
This case deals with the tax liability u/s 115BBC(1) for anonymous donations received in the "Hundi" by a charitable and religious trust. The key points are: The assessee is a public trust constituted under the Bombay Public Trusts Act and the Sai Baba Trust Act, a special legislation. The issue was whether the assessee qualifies as a charitable and religious trust to be exempt from tax on anonymous donations u/s 115BBC(2)(b), despite being registered u/s 80G. The High Court held that Sections 80G and 115BBC(2)(b) operate independently. Registration under 80G does not preclude exemption under 115BBC(2)(b) for religious and charitable trusts. Based on the trust deed, objects, and the Sai Baba Trust Act, the assessee was rightly considered a religious and charitable trust entitled to exemption u/s 115BBC(2)(b) for anonymous donations. The High Court upheld the view of the lower authorities in favor of the assessee.
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Customers' Cash Credit Accounts not attachable for tax recovery as banks aren't debtors.
Cash Credit Accounts cannot be attached u/s 226(3) of the Act as there is no relationship of 'debtor and creditor' between the bank and the customer. In a Cash Credit facility, the bank provides an overdraft limit for the customer to utilize, and interest is charged on the amount utilized. The bank does not hold any money belonging to the customer, nor does it owe any debt to the customer. The Cash Credit limit is merely a facility extended by the bank, and the amount cannot be attached as the bank is not a 'debtor' to the customer. The orders of attachment passed by the authorities are beyond the powers conferred u/s 226(3) and are liable to be quashed.
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Reopening of tax assessment upheld based on info about non-existent suppliers despite assessee's documents.
The reopening of assessment u/s 147 was based on information received from the tax department's investigation wing regarding two entities from whom the petitioner had availed supplies. The principal allegation was that the petitioner had availed accommodation entries from these two non-existent suppliers, suggesting that the petitioner's income for the relevant assessment year escaped assessment. Although the petitioner produced documents supporting genuine purchases, no material was provided to establish the creditworthiness or substance of the two named entities. The High Court held that the Assessing Officer had sufficient grounds to suggest that the assessee's income had escaped assessment, and it was not necessary for the court to adjudicate the allegations at this stage. The petition was dismissed.
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Dissolved firm's reassessment invalid; non-existent entity can't face tax proceedings.
Notice issued against dissolved firm invalid; firm ceased to exist, rendering reassessment proceedings untenable. Apex Court's decision in Maruti Suzuki case mandates quashing impugned notice and reassessment order issued against non-existent entity. Appeal allowed, reassessment proceedings quashed.
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Reassessment notice invalid if no new evidence of escaped income, mere disclosure insufficient.
The High Court held that the reassessment proceedings initiated u/s 148 were invalid. The assessee, a partner in a firm, had disclosed all financial transactions and deposits in the bank account. The Assessing Officer did not have any fresh tangible material to form a reasonable belief that income had escaped assessment, apart from the disclosed information. Merely disclosing financial transactions exceeding taxable limits does not justify reopening the assessment without additional evidence of escaped income. The court concluded that the reassessment notice was untenable and allowed the petition, quashing the reopening proceedings.
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Appellate authority ordered to consider manual filing date for online appeal despite technical glitches.
The court acknowledged the technical issues faced by the petitioners in filing the appeal online and affixing the digital signature. It held that the appellate authority had erroneously treated the manually filed appeal as invalid ab initio, without considering it on merits. The court found the petitioners' apprehension regarding potential rejection of the online appeal due to delay to be reasonable. Consequently, the High Court directed the appellate authority to consider the date of filing the manual appeal for calculating and determining the issue of delay concerning the online appeal.
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Excess self-assessment tax adjusted against regular assessment entitled to interest on refund.
Non-granting interest u/s 244A on excess self-assessment tax from January 2017 to October 2017 was denied, citing the refund was less than 10% of the tax determined in regular assessment u/s 143(3). The assessee argued the self-assessment tax, adjusted against the demand raised in assessment, lost its character. The Tribunal agreed with the assessee's contention, referring to the decision in AWP Assistance (I) Pvt. Ltd. Once adjusted against the tax liability determined in regular assessment, the self-assessment tax no longer retained its character under sub-clause (aa) of Section 244A(1). After adjustment, the refund fell under sub-clause (b) of Section 244A(1), not hit by the proviso denying interest where refund is below 10%. Consequently, the assessee is entitled to interest on the refund of self-assessment tax for January 2017 to October 2017.
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Reassessment proceedings invalid due to mechanical approval without independent scrutiny.
The assessment officer (AO) initiated reassessment proceedings u/s 147 of the Act, citing Section 147(b) as the basis for approval, which is a non-existent provision. The sanctioning authority granted approval without considering this vital aspect, indicating a lack of independent application of mind and inquiry into the matter. The approval was granted mechanically and perfunctorily, without providing minimal reasons for satisfaction. The transaction in question involved parties other than the assessee. The reasons recorded for exercising jurisdiction u/s 147 were plagued with critical defects, rendering the reassessment proceedings invalid u/s 292B of the Act. Consequently, the reassessment proceedings were held to be bad in law, and the assessee's appeal was allowed.
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Tax reassessment quashed for lack of new material after 4 years despite earlier notice.
Assessment completed u/s 143(3) accepting assessee's return, which included export incentive and foreign exchange fluctuation as other business income. Subsequently, notice u/s 154 issued based on audit objection regarding disallowance of export incentive and foreign exchange fluctuation from deduction u/s 80IC, but no rectification order passed. After four years, reopening assessment initiated, alleging escaped assessment. Assessee contended all material facts fully disclosed during original assessment and compliance with Section 154 notice. Held, no new material available after four years to justify reopening. Assessee truthfully disclosed all relevant facts. Notice u/s 148 invalid, addition made by Assessing Officer deleted. Appellate Tribunal ruled in favor of assessee, setting aside reassessment proceedings beyond four-year period due to lack of undisclosed new material.
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Penalty on unexplained income: Differing estimates by authorities, no concealment.
Penalty levied u/ss 271(1)(c) and 271AAA for unexplained investment and addition made by adopting net profit as per the books of accounts at 12.85% on the suppressed sales. The key points are: The addition was modified from gross profit basis to net profit basis by the CIT(A) and further restricted to 1% of turnover by the ITAT. Different authorities adopted varying estimates for determining the assessee's income, ranging from GP/NP on alleged suppressed turnover to 1% net profit on declared turnover. The addition towards undisclosed investments was deleted. The High Court confirmed the ITAT's order. In such cases of differing estimates, penalty cannot be levied for concealment or furnishing inaccurate particulars. The jurisdictional High Court's judgment in CIT vs. Valimkbhai H. Patel supported this view. Penalty under 271(1)(c) was deleted. For 271AAA, no penalty can be imposed on the remaining 1% net profit addition on declared turnover in the absence of identified assets representing undisclosed income.
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Taxability of Amalgamation Reserve: Capital vs. Income.
The case pertains to the taxability of a reserve arising from an amalgamation u/s 28(iv) and Section 56(2)(x)(c) of the Income Tax Act. The key points are: The appointed date for amalgamation was 01.04.2017, making Section 56(2)(viia) inapplicable. The assessee received assets worth Rs. 149.29 crore without consideration due to the amalgamation. The Assessing Officer sought to tax this amount u/s 28(iv) as a benefit/perquisite arising from business. However, the prerequisites for Section 28(iv) were not met as there was no benefit/perquisite, it did not arise from the assessee's business, and the receipt was capital in nature. The amalgamation reserve was created for accounting purposes and did not result from business activities. The CIT(A) correctly held that the capital reserve cannot be treated as income u/s 28(iv). The ITAT upheld the CIT(A)'s order, deciding against the revenue authorities.
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Taxpayer explains source of unsecured loans, discharge primary onus; Revenue fails to conduct proper inquiry.
U/s 68, the assessee provided relevant details to explain the nature and source of unsecured loans, as well as the interest paid thereon, discharging the primary onus. Once the assessee fulfills this onus, the Assessing Officer (AO) must conduct necessary inquiries and record satisfaction before making any addition. The AO should have exercised powers u/s 133(6) or contacted the concerned AOs of the alleged parties, as their PAN and addresses were available. Following the Supreme Court's decision in Orissa Corpn. and the Tribunal's own decision, the assessee successfully explained the loans' nature, source, and creditors' identity and creditworthiness, proving the transactions' genuineness. Therefore, the CIT(A)'s deletion of the addition u/s 68 and interest disallowance was upheld, dismissing the Revenue's appeal.
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Taxpayer's rightful MAT credit carry-forward denied, Tribunal grants relief.
The assessee failed to claim the Minimum Alternate Tax (MAT) credit in the original income tax return and did not file a revised return. The Assessing Officer (AO) did not set off the tax liability computed under normal provisions against the available MAT credit brought forward and disallowed carry forward of the balance MAT credit u/s 115JAA. The Tribunal held that as per Section 115JAA, there is no condition restricting allowance of MAT credit if it was not carried forward in the return. Since the total income was determined after appeal effect, the available MAT credit was eligible for set-off against tax payable under normal provisions, and the balance could be carried forward u/s 115JAA. The AO's action of not allowing set-off and carry forward of MAT credit was unjustified. The Tribunal set aside the CIT(A)'s order and directed the AO to allow set-off of tax liability with available MAT credit and carry forward the balance MAT credit after verification.
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Residential Property Sale: Owning Multiple Homes Doesn't Disqualify Capital Gains Deduction.
Joint ownership of multiple residential properties at the time of sale of the original asset does not disqualify the assessee from claiming deduction u/s 54F of the Income Tax Act. The Appellate Tribunal, relying on the judgments of the Madras High Court in Dr. Smt. P.K.Vasanthi Rangarajan and the Mumbai ITAT in Zainul Abedin Ghaswala, held that merely owning another property jointly on the transfer date cannot be a ground for denying Section 54F deduction on capital gains from the sale of the original asset. The Tribunal upheld the CIT(A)'s findings, dismissing the Revenue's grounds on this issue.
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NBFC cash loan repayment scrutinized, penalty waived for genuine transaction.
The Income Tax Appellate Tribunal held that the repayment of a loan in cash to a Non-Banking Financial Company (NBFC) is not entirely free from doubt, considering the Reserve Bank of India's (RBI) notification dated 9th March 2017. The RBI notification provides a plausible view, and the Tribunal found reasonable cause u/s 273B of the Income Tax Act in the peculiar facts of the case. Additionally, the Tribunal acknowledged the genuineness of the transaction in question. Consequently, the levy of penalty u/s 271E of the Income Tax Act was deleted, and the assessee's appeal was allowed.
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Significant tax rulings: Interest-free funds no disallowance, exempt income limit, tenant premises cost allowed, advance commission spread, termination pay deductible, NRI deposit expenses ok, pension fund deficit allowed.
The assessee made investments in tax-free bonds and had sufficient free reserves and interest-free capital. The Supreme Court held that if the assessee has sufficient interest-free funds, no disallowance u/s 14A can be made. For subsequent assessment years until Rule 8D was introduced, the disallowance u/s 14A was deleted, and the disallowance cannot exceed 1% of the total exempt income. The expenditure incurred for vacating premises given to a tenant is allowable as revenue expenditure. The guarantee commission received in advance should be recognized as income over the life of the guarantee, not in the year of receipt. The expenditure incurred on separation/termination of employees is fully deductible u/s 37 as it was not part of a voluntary separation scheme. For a deputed employee's salary, 50% disallowance should be restricted proportionately to 11 months. Nominal time spent by employees on overseas branches should not be disallowed. Expenses for mobilizing NRI deposits are allowable u/s 37, not section 44C. The increased provision towards the pension fund deficit is allowable u/s 37. No transfer pricing adjustment is warranted for correspondent banking activity and services provided to associated enterprises. For marketing derivative services, the TPO's approach is incorrect, and the CIT(A)'s findings should be upheld. The term.
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Deductions u/ss 80IA(4), 14A & 35D clarified - Matter remanded for fresh adjudication.
The Income Tax Appellate Tribunal (ITAT) has adjudicated on various issues concerning deductions u/ss 80IA(4), 14A, and 35D. Regarding Section 80IA(4) deduction, the ITAT found the Commissioner of Income Tax (Appeals) [CIT(A)]'s observations inadequate to determine the assessee's eligibility as a developer. Hence, the matter was remanded to the CIT(A) for fresh adjudication after examining relevant evidence and providing an opportunity of being heard. Concerning Section 14A disallowance, the ITAT held that no disallowance u/r 8D(2)(b) was warranted as the assessee had sufficient interest-free funds. However, the disallowance u/r 8D(2)(c) was upheld, subject to the CIT(A)'s fresh adjudication on its impact on Section 80IA(4) deduction. Regarding Section 35D disallowance, the ITAT upheld the CIT(A)'s order in part and remanded the matter for fresh adjudication after considering the assessee's evidence and following the principles of natural justice.
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Disallowance of sales commission to AEs; onus on assessee for documentation. CIT(A) remitted for fresh adjudication. Upheld allowance for Heubach & Darlington.
Disallowance of sales commission paid to two Associated Enterprises (AEs) being foreign entities - assessee failed to discharge the onus of proving legitimate business requirement and genuineness of payment by submitting relevant documentary proof. CIT(A) deleted the addition without calling for a remand report from the AO, violating Rule 46A. Matter needs to be restored to CIT(A) for adjudicating sales commission again. Sales commission paid to Heubach GMBH - assessee discharged onus, Revenue failed to provide cogent material to disallow, CIT(A)'s order upheld. Sales commission paid to Darlington Enterprises - assessee discharged onus, Revenue failed to provide cogent material to disallow, CIT(A)'s order upheld. Undervaluation of finished/closing stock of Beta Blue - assessee applied weighted average cost method of yearly costs for finished stock and monthly costs for WIP. AS-2 requires fairest approximation of cost incurred. Matter set aside to AO to determine reasons for adopting different methods and allow assessee to justify, after verifying consistent practice and Revenue's acceptance.
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Charity denied tax benefits due to lack of evidence on scholarship programs and education promotion activities.
The case pertains to the rejection of provisional registration u/ss 12AB/80G for charitable activities. The Commissioner of Income Tax (CIT) concluded that the assessee did not furnish detailed notes on activities carried out, with only general notes provided. The documentary evidence, including photographs, was deemed insufficient to support claims of providing scholarships, prizes, and promoting higher education. The assessee submitted certain details and photographs but failed to provide bills, vouchers, and supporting documents for expenditure incurred on the trust's objectives. The audited accounts showed minimal expenditure on the trust's objects. The Income Tax Appellate Tribunal (ITAT) held that the CIT should have given the assessee another opportunity to provide comprehensive details. The matter was restored to the CIT with directions for the assessee to substantiate the objects, activities carried out, and necessary supporting evidence for expenditure incurred on the trust's objectives. The assessee's appeal was allowed for statistical purposes.
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Depreciation disallowance & unexplained credits remanded for fresh adjudication.
Tribunal held that Assessing Officer's disallowance of depreciation u/s 32 was incorrect as no specific asset was singled out for testing its individual usage. CIT(A) failed to consider assessee's legal contentions. Matter remanded to Assessing Officer to allow assessee opportunity to prove entitlement to claim depreciation despite no business activity. Regarding addition of unexplained share application money u/s 68, assessee's contention that no fresh credits were received during the year was not examined. CIT(A) confirmed addition without verifying whether any sum was actually received. Matter remanded to Assessing Officer to allow assessee to substantiate no credits on account of share application money or membership fees and decide issue afresh. Appeal allowed for statistical purposes.
Customs
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Bamboo processing machines import: Court orders customs to consider waiver plea in 8 weeks.
Court directs competent customs authority to consider petitioners' claim for waiver of export obligation and duty-saved amount for import of bamboo processing machines under Export Promotion Capital Goods Scheme within eight weeks. Interim order restraining coercive action against petitioners to remain operative until determination. Petition disposed off, without commenting on merits including promissory estoppel claim against respondents. Court finds petitioners made out case for consideration of waiver claim, particularly regarding lack of financial assistance in form of grants to industrial units in North-Eastern Region instead of returnable Technical Developmental Assistance.
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TV Monitors Misclassified: Duty Hike Overturned on Technicalities.
Television receivers and monitors imported by appellant were reclassified from declared tariff items to attract higher duty. Appellant contended monitors were usable as televisions based on opinion of third party, which is insufficient ground for reclassification as use cannot be sole criterion. Regarding assembled television sets, BIS certification requirement applies at point of sale, not import of knocked-down condition goods. No evidence of smuggling to invoke Section 123 presumption. Demand of duty and confiscation u/ss 28 and 111(d) unsustainable. Impugned order set aside by CESTAT, appeal allowed.
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Customs improperly rejected import value without evidence; failed to follow valuation rules. Partner's penalty lacked basis. Tribunal favors importer.
Rejection of transaction value declared by appellant was improper as it lacked cogent and comparable evidence from contemporaneous imports. Adjudicating authority failed to consider appellant's evidence on contemporaneous lower-value imports and provide details of higher adopted values. Valuation rules were not followed systematically for re-determining assessable value. Penalty imposed on appellant's partner u/s 114AA lacked requisite ingredients. Impugned order set aside, appeal allowed by Customs, Excise and Service Tax Appellate Tribunal.
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Exporter allowed refund of excess export duty paid, as cost sheet proved duty not passed to overseas buyers in FOB contracts.
The appellant challenged the rejection of refund claim for excess export duty paid due to downward revision, on the ground of failure to rebut the presumption u/s 28D of the Customs Act, 1962 regarding non-passing of duty incidence to others. The Tribunal analyzed the cost sheet certified by the Chartered Accountant, which showed the export duty amount calculated separately and not included in the FOB value. Relying on the Andhra Pradesh High Court's decision in Asia Pacific Commodities Ltd. case and its own decision in Muneer Enterprises case, the Tribunal held that in FOB contracts, the presumption u/s 28D stands rebutted, and the incidence of duty has not been passed on to overseas buyers. The Circular No.18/2008-Cust cited by the Department was found inapplicable. Consequently, the Tribunal set aside the impugned order and allowed the appeal.
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Worn clothing imports confiscated due to licensing breach; Redemption fine & penalty reduced on equity grounds.
Customs authority confiscated imported old and used worn clothing for failure to comply with licensing requirements. The Tribunal upheld confiscation u/s 111(d) of Customs Act, 1962. However, considering the negligible scope for ascertainment, the Tribunal reduced redemption fine to 10% of assessed value and penalty to 5%, finding it sufficient to meet the ends of justice. The order of Commissioner (Appeals) confirming redemption fine and penalty at these reduced rates was upheld, and the Revenue's appeal was dismissed as there was no infirmity in the impugned order.
IBC
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Limitation period for Section 95 application extended due to COVID-19; balance sheet as debt acknowledgement.
The appellant wrongly relied upon the Amanjyot Singh case and changed stance during final arguments, having earlier contended the 26.05.2016 notice invoked personal guarantee. The Amanjyot Singh case involved Section 13(2) notice to corporate debtor and guarantors jointly by Punjab and Sind Bank on 04.10.2023. Section 18 provides for acknowledgement in writing, and the balance sheet indicating liability is such acknowledgement. The balance sheet signed by appellants on 01.09.2017 indicates debt from that date as per Supreme Court's Asset Reconstruction Company case. Counting limitation from 26.05.2016 to 01.09.2017, three years would restart from 01.09.2017 and end on 31.08.2020, which fell during COVID-19 period extended by Supreme Court till 01.03.2022 plus 90 days. Hence, the 02.12.2021 Section 95 application by Respondent 1 was within limitation. The appeals lack merit and are dismissed.
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Creditors cannot substitute successful bidder with non-participant in insolvency process.
The Committee of Creditors (CoC) does not have jurisdiction to substitute the successful resolution applicant (SRA) with another entity who was not part of the Corporate Insolvency Resolution Process (CIRP). The CIRP Regulations mandate that only resolution plans from prospective resolution applicants (PRAs) in the final list can be considered. Substituting a non-PRA as the SRA is a breach of Regulation 39(1)(B). The CoC cannot modify an approved resolution plan by substituting the SRA. The Adjudicating Authority erred in approving the modified resolution plan with the substituted SRA. The order approving the plan is unsustainable. The Appellate Tribunal set aside the order and directed the Resolution Professional to issue a fresh Form-G inviting resolution applicants and complete the CIRP within 90 days.
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Precedence clash: Corporate Insolvency vs. Cross-Border Insolvency under IBC clarified.
This case pertains to the precedence and priority of consideration between an application filed u/s 54(C) and Section 7 of the Insolvency and Bankruptcy Code (IBC) against the same Corporate Debtor. The key points are: Section 11A(2) mandates precedence to an application u/s 54C if already pending, or if filed within 14 days of a Section 7/9/10 application. However, Section 11A(3) provides an exception, giving precedence to Section 7/9/10 applications if the Section 54C application is filed after 14 days. Crucially, Section 11A(4) states that Section 11A shall not apply where a Section 7/9/10 application was filed and pending before the commencement of the IBC (Amendment) Act, 2021. In the present case, the Section 7 application was filed on 09.12.2020, before the 2021 Amendment on 04.04.2021, while the Section 54C application was filed much later on 04.09.2022. Thus, Section 11A(4) applies, and the Tribunal erred in giving precedence to the Section 54C application over the earlier Section 7 application. Consequently, the order initiating PPIRP based on.
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Bankrupt firm loses bid for revival due to guarantee non-submission.
Non-compliance with submission of Performance Bank Guarantee by the Appellant as per the Request for Resolution Plan's clause obliging the Resolution Applicant to furnish the guarantee after approval of the Resolution Plan. The Committee of Creditors objected to the Appellant's non-compliance and did not oppose applications from other parties to submit Resolution Plans. The Adjudicating Authority rejected the Appellant's application for approval of the Resolution Plan due to non-submission of the Performance Bank Guarantee despite reminders. The Appellate Tribunal upheld the Adjudicating Authority's order, considering the Appellant's non-compliance and granted the Appellant two weeks to submit a fresh Resolution Plan to be considered along with other plans received during the Corporate Insolvency Resolution Process.
Indian Laws
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Flawed legal presumption on promissory note overturned due to contradictory evidence & lack of consideration proof.
The trial court erroneously invoked the presumption u/s 118 of the Negotiable Instruments Act, 1881, without considering the contradictions in the evidence of the plaintiff's witnesses and the surrounding circumstances. The presumption of consideration upon execution of a promissory note is rebuttable. The defendant's version, supported by circumstantial evidence and probabilities, rebutted the presumption. The plaintiff failed to establish the passing of consideration through oral evidence alone. The High Court allowed the appeal, setting aside the trial court's decree for payment, as the findings disregarded the impact of evidence on record.
PMLA
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Money Laundering Case: Bail Granted for Disproportionate Assets Amid Pending Probe, Lack of Chargesheet.
Bail granted in money laundering case involving disproportionate assets due to absence of chargesheet in predicate offence and satisfaction of twin test u/s 45 of PMLA. Investigation in predicate offence pending, proceeds of crime indeterminate. Applicant made out prima facie case on merits and period of incarceration favored bail grant. Conditions imposed for release on bail.
VAT
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Vitamins & minerals pre-mix not 'chemicals' or 'ores'; unclassified item for tax as not 'drugs'.
The court held that "vitamins and minerals pre-mix" cannot be categorized under "chemicals" (Entry 29) or "ores and minerals" (Entry 89) of Schedule II of the Act, 2008. Tax is levied on the finished goods, not individual raw materials. The court rejected the contention that the product falls under "drugs and medicines" (Entry 41) as it is not used for alleviating diseases or symptoms. The product is an unclassified item, liable to be taxed as such. The revision petition was dismissed, upholding the orders of the Additional Commissioner and Tribunal.
Service Tax
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Taxman must allow cross-examination of witnesses whose statements were relied upon in excise duty case.
Violation of principles of natural justice - opportunity for cross-examination. Evidentiary value of statements recorded u/s 14 of the Central Excise Act, 1944 cannot be relied upon unless the procedure prescribed u/s 9D is followed. Section 9D(1)(b) provides conditions for admitting such statements as evidence. Courts have consistently held that if a statement is used against the appellant, the right to cross-examine the individual who made the statement is fundamental. If the person is available, they should be presented for cross-examination when requested. Failing to provide this opportunity would violate principles of natural justice. The Delhi High Court clarified that if the department relies on a previously recorded statement during an inquiry, the opposing party must be allowed to cross-examine that person to challenge the statement's veracity. In the instant case, the appellant did not seek cross-examination at the original adjudication stage, but requested it before the Tribunal. Cross-examination u/s 9D(1)(b) is a right that cannot be denied. The matter is remanded to the Commissioner (Appeals) to re-adjudicate, giving the appellant an opportunity to cross-examine all witnesses whose statements were relied upon.
Case Laws:
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GST
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2024 (10) TMI 552
Blocking of credit ledger of the petitioner by mentioning Registration of supplier has been cancelled - ledger is blocked without issuing any show cause notice - violation of principles of natural justice - HELD THAT:- A conjoint reading of Section 74 and Rule 86A leaves no room for any doubt that the intention and object behind insertion of those provisions is to deprive the person chargeable from a benefit which is wrongly or fraudulently claimed and enjoyed. A Section in a statute is always on a higher footing than the Rule made under the Act. As noticed, Section 74 statutorily recognizes and mandates that principles of natural justice are to be followed. Rule 86A, on the other hand, is totally silent on the aspect of applicability of principles of natural justice. Thus, if Rule 86A is implemented without following the principles of natural justice, it may cause hardship, inconvenience and injustice. It is difficult to accept that the law makers intended not to follow principles of natural justice while inserting Rule 86A in the statute book. A plain reading of the judgment in Basanta Kumar Shaw [ 2022 (8) TMI 50 - CALCUTTA HIGH COURT] shows that the question whether the principles of natural justice are to be read into Rule 86A was not subject matter of discussion. The Calcutta High Court opined that Input Tax Credit is a concession and not a vested right. Thus, Rule 86A neither expressly nor by necessary implication excludes the principles of natural justice, the principles of natural justice for the detailed reasons given hereinabove must be read into the provision. The action of blocking the electronic credit ledger of the petitioners without following the principles of natural justice and without assigning adequate reasons cannot sustain judicial scrutiny. Thus, the impugned action in all the Writ Petitions is set aside - the impugned action cannot be countenanced - petition allowed.
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2024 (10) TMI 551
Violation of principles of natural justice - Non-service of SCN - show cause notice and Form GST DRC-01 dated 30.09.2023 raised on the petitioner in the GST common portal, and the petitioner was unaware of the same - Wrongful availment of Input Tax Credit (ITC) for the financial year 2017-2018 - HELD THAT:- The impugned show cause notice was uploaded on the GST Portal Tab. According to the petitioner, the petitioner was unaware of the issuance of the show cause notice through the GST Portal and the original of the said show cause notice was not furnished to them. In such circumstances, this Court is of the view that the impugned order came to be passed without affording any opportunity of personal hearing to the petitioner to establish its case, thereby violating the principles of natural justice and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law. The order impugned herein is set aside and the matter is remanded to the respondent for fresh consideration - Petition allowe by way of remand.
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2024 (10) TMI 550
Maintainability of petiiton - availability of efficacious alternative remedy - Challenge to order u/s 129 of the WBGST/CGST Act, 2017 - seeking release of intercepted goods - HELD THAT:- Although, it is true that the petitioners may have an alternative remedy before the appellate authority in respect of the challenge to the order passed under Section 129 (3) of the said Act, however, in the event, the petitioners intend to invoke their rights as provided under Section 129 (1) (a) of the said Act, the petitioners are entitled to do so. However, in the instant case, there appears to be no formal application filed by the petitioners for invoking the provisions of Section 129 (1) (a) of the said Act. The petitioners are permitted to apply before the respondents by invoking the provisions of Section 129 (1) (a) of the said Act subject to the petitioners establishing their right to maintain such application. In the event, a formal application is filed with the respondents within a period of 10 days from date, the respondents shall dispose of such application as expeditiously as possible, preferably within a period of 10 days from the date of filing of such application. Insofar as challenge to the order passed under Section 129 (3) of the said Act is concerned, since an efficacious alternative remedy is available, there is no scope to entertain the writ petition, as regards such challenge. Petition disposed off.
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2024 (10) TMI 549
Availment of ITC in excess of the credit reflected in the GSTR-2A statement - Mismatch between GSTR-3B and GSTR-2A - ITC not reversed on the basis of debit reflected in GSTR-2A - E-Way bill not generated for the movement of goods - It is submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, he would be able to explain the above discrepancies - principles of natural justice - HELD THAT:- The impugned order is set aside and the petitioner shall deposit 25% of the disputed tax after adjusting the amount of Rs. 1,00,000/- which is already paid, within a period of four (4) weeks from the date of receipt of a copy of this order. On complying with the above condition, the bank attachment shall be lifted. The impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objection is filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. This Writ Petition is disposed of.
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2024 (10) TMI 548
Challenge to impugned proceedings of the respondent - scope of SCN crossed - impugned order made without taking into account the submissions made during the course of investigation and the payments made already - gross non-application of mind to the material facts on record - violation of principles of natural justice - HELD THAT:- The impugned order is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. The tax already paid by the petitioner in addition to the tax what is disclosed in the assessment order shall be adjusted towards the deposit of 25% of the disputed tax. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. Petition disposed off.
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2024 (10) TMI 547
Violation of principles of natural justice - Input Tax Credit has been disallowed without considering the petitioner's objection - invocation of Section 161 of the GST Act to enable them to rectify the error apparent on the record - HELD THAT:- This Court is of the view that there is merit in the submission of the learned counsel for the petitioner that the impugned order is a non speaking order. The impugned order is passed without assigning any reason for the rejection of the reply filed by the petitioner, resulting in violation of principles of natural justice. The impugned order dated 30.07.2024 is set aside. The petitioner may be granted one final opportunity to appear before the respondent authorities along with supporting materials on 14.10.2024 at 11.00 A.M, to put forth his case. If the petitioner does not avail of the opportunity, the impugned order shall stand revived. Petition disposed off.
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Income Tax
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2024 (10) TMI 546
Tax liability u/s 115BBC (1) for Anonymous donations received in the Hundi - Such donations were sought to be taxed primarily on the ground that the respondent is a charitable institution falling within the purview of Section 80G -assessee is a public trust which was initially constituted in the year 1953 when it was registered as the Shirdi Sansthan of Shri Sai Baba trust under the Bombay Public Trusts Act, 1950 - ITAT considering the trust deed as also the Act of the State Legislature, the Sai Baba Trust Act , confirmed the findings of the CIT(A) that the assessee was a charitable and religious trust Whether the assessee is a charitable and religious trust, so as to fall within the exceptions to Section 115BBC carved out under sub-section (2) (b) of the said provisions notwithstanding the assessee being registered under Section 80G? - HELD THAT:- The entire thrust of the submissions on behalf of the Revenue is referring to the provisions of Section 80G, as applied by the Assessing Officer to contend that once the respondent / assesssee is registered under Section 80G, it would only be a charitable institution and would fall outside the provision of sub-section 2 (b) of Section 115BBC. We are afraid to accept such contentions in as much as, the provisions of Section 80G cannot be intermixed, from what is provided by Section 115BBC (2) (b). Both the provisions stand compartmentalized and are independent of each other. The very foundation of the operation and effect of Section 115BBC (2) (b) is a conclusive ascertainment, and a factual determination of a trust being religious and charitable as ascertained from the contents of the trust deed. Once such requirement is satisfied, any anonymous donation received by such trust would be eligible / entitled to the benefit of an exemption from tax, by the applicability of sub-section 2(b) of Section 115BBC. On the other hand, Section 80G certainly lays down quantum test that is the amounts spent for its purposes to ascertain whether the charitable trust is eligible for registration or not, which is clear from the provisions of Section 80G (5B) of the Act as noted hereinabove. From a cumulative reading of the objects of the assessee, read with the provisions of the Sai Baba Trust Act which is a special legislation promulgated by the State Legislature reflecting the objects and activities of the assessee, as also, considering the provisions of the Bombay Public Trusts Act, we are of the clear opinion that the assessee certainly is a religious and charitable trust, hence, the assessee rightly and legitimately claimed an entitlement under sub-section 2 (b) of Section 115BBC of the Act. Such entitlement of the assessee is rightly recognized by the CIT (A) and the Tribunal. In the light of the above discussion, we find that the view taken by the CIT (A) and as confirmed by the Tribunal, is correct in law and facts - Decided against revenue.
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2024 (10) TMI 545
Recovery proceedings - attachment orders u/s 226(3) of Cash Credit Accounts - whether the accounts which are in the nature of Cash Credit Accounts can be attached and that there was any money due to the petitioner from the bank which can be recovered in terms of sub section (3) of Section 226 of the Act? HELD THAT:- Proceedings u/ss (3) of Section 226 of the Act are in the nature of what is commonly called garnishee proceedings. Attachment of debts is a process by means of which judgment creditor is enabled to reach the money due to a judgment debtor which is in the hands of a third person. These are garnishee proceedings. To be capable of attachment, there must be in existence at the time when the attachment becomes operative, sometime which the law recognizes debt . So long as there is debt in existence, it is not necessary that it should be immediately payable. Where any existing debt is payable by future installments, the garnishee order may be made to become operative as and when installment becomes due. The debt must be one which the judgment debtor could himself enforce for his own benefit. The debt is a sum of money which is now payable or will become payable in future by reason of present obligation. In case titled K.M. Adam vs. The Income Tax Officer [ 1957 (10) TMI 32 - MADRAS HIGH COURT] Madras High Court while dealing with a provisions under Income Tax Act, 1922 was dealing with a case where the bank had afforded the overdraft facility to its customers. The question arose whether the bank account a holds the amount, specified as that up to which the customer may draw is either ' a debtor ' of the customer or holds that money on behalf of or on account of the customer. As decided in Kaneria Granitio Ltd. [ 2016 (7) TMI 65 - GUJARAT HIGH COURT] it was held that unless there exists a relationship of debtor and creditor the order of attachment by an authority under the provisions contained u/s 226 (3) cannot be passed. It was further held that the Cash Credit limit is a facility provided by the bank to its customers to use and utilize the money; and if such facility availed of, it would attract the interest to be charged for the same so utilized. Accordingly, the question, as framed above, is answered that mere providing a facility of an overdraft, it cannot be said that the bank is a debtor to its customers or holds the money for account of its customers, nor any point of time at which it holds any money of his on his account. The Cash Credit limit is a facility provided by the bank to its customers to use and utilize the money and if such facility availed of, it would attract the interest to be charged for the same so utilized and, therefore, the amount cannot be attached in terms of sub Section (3) of Section 226 of the Act. This Court does not find that the action on the part of respondent No. 1 in passing the order of attachment of Cash Credit Account would at all be sustainable, in view of the ratio laid down in the above noted judgments; even the meaningful reading of the language employed in Section 226 (3) does not suggest that the account like the Cash Credit or the overdraft is capable of being attached as the bank does not become a debtor. This Court, therefore, finds that the impugned orders of attachment passed by the authorities are clearly beyond the powers conferred under Section 226 (3) of the Act and, therefore, are liable to be quashed and set aside. Petition allowed.
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2024 (10) TMI 544
Reopening of assessment u/s 147 - information received from the investigation wing of tax department regarding two of the entities from whom the petitioner had availed the supplies - HELD THAT:- The principal allegation is that the petitioner had availed the accommodation entries from two above-named suppliers who were found to be non-existent by the investigation wing of the tax department. Clearly, the said information leads to the suggestion that the petitioner s income for the relevant Assessment Year escaped assessment. Although, the petitioner had produced documents in support of its claim that the purchases were genuine, however, it had not produced any other material to establish that the said two named entities were creditworthy or were of any substance. It is neither necessary nor apposite for this Court to proceed on an adjudicatory exercise regarding the allegations made in the notice as that is the matter which is to be considered by the AO in the reassessment proceedings. Suffice to say that the AO had sufficient grounds that suggest that assessee s income for the AY 2020-2021 has escaped assessment. The present petition is dismissed.
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2024 (10) TMI 543
Validity of reassessment proceedings against dissolved firm - notice issued against non-existent entity - HELD THAT:- In view of the undisputed fact about the dissolution of firm and the issuance of notice in name of the dissolved firm, the impugned notice and the order would not be tenable more particularly, when the petitioner has in reply to the notice issued u/s 148A (b) of the Act has drawn the attention of the respondent-Assessing Officer about such fact. In view of the settled legal position as held by the Hon ble Apex Court in case of Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT] the impugned notice and the order are required to be quashed and set aside. Assessee appeal allowed.
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2024 (10) TMI 542
Maintainability of the appeal in view of low tax effect - Revision u/s 263 - assessee had not furnished Form 10DA along with the return, resultantly, the deduction claimed u/s 80JJAA ought to have been disallowed - contention is that taking the case of the Department at the highest, the entire deduction even if disallowed, the tax demand would be less than two crores. As further argued that non-filing of the Form 10DA along with the return, in itself, cannot be a ground for disallowing the deduction, has been decided in favour of the assessee by the jurisdictional Court. As respondent submits that Circular 9 retains the exceptions provided in Circular 5 dated 15.03.2024. The argument is that the case in hand falls within the exception in Clause F of para 3.1 of Circular 5 of 2024. The appeal is maintainable as the order is passed u/s 263 of the Act and tax effect is not quantifiable. HELD THAT:- The contention of the counsel for the appellant lacks merit. There is a distinction between 'tax not quantifiable' and 'tax not quantified'. In the present case, the contention of respondent that even taking the case at extreme, the disallowance of deduction would be of Rupees Three Crores approximately and the tax effect would be of Rupees One Crore odd approximately. The appeal is dismissed as not maintainable in view of Circular 9 of 2024. The proposed substantial question of law is kept open.
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2024 (10) TMI 541
Validity of reassessment proceedings - legality and validity of the notice issued u/s 148 - assessee has entered into financial transactions exceeding the taxable limits - HELD THAT:- It is not in dispute that the petitioner who is a partner of the partnership firm in name and style of M/s. Bansal Petroleum had disclosed all the deposits made in the bank account which is the only information available with the respondent department for arriving at a conclusion of forming the reasonable belief that the income has escaped assessment. From the details placed on record, in form of the balance sheet, profit and loss account as well as the partnership deed etc. it is clear that the petitioner and the partnership firm has disclosed the deposit made in the bank. This fact is further fortified from the reply to the summons u/s 133 (1A) which is placed on record along with the reply filed by the petitioner raising the objections which, clearly shows that all the details were submitted in response to such summons and therefore the respondent AO could not have assumed the jurisdiction on the basis of the information, without there being any fresh tangible material to show that the income has escaped the assessment. Thus, we are of the opinion that the impugned notice u/s 148 for reopening the assessment is not tenable in the eye of law. The petition succeeds and is accordingly allowed.
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2024 (10) TMI 540
Non acceptance of appeal online as problem affixing the digital signature - seeking permission for physical filing of the appeal along with challan fee and acknowledgment - HELD THAT:- The present imbroglio has come about not on account of any human error or any omission or commission on the part of either of the parties, but prima facie appears to be on account of technical issues which are, as is well known, beyond human control at times. As perused the operative portion of the order authority has recorded that the appeal is treated as invalid ab initio, from which it is clear that the authority has treated the appeal as an invalidly filed appeal. The intent of the authority is further amplified by the last sentence, which states, For statistical purposes, it is treated as dismissed . Thus, it is apparent that the appeal filed manually has not been heard and disposed of on merits. In that view of the matter, the order impugned, in our considered opinion, would not warrant any interference. The apprehension expressed by the petitioners that the appeal filed online may be rejected on the ground of delay, also cannot be said to be without any basis. The apprehension is reasonable as delay is also a ground on which the right of appeal can be negated by the appellate authority. The instant writ petition can be disposed of by directing the appellate authority to take into consideration the date of filing of the manual appeal for the purposes of calculating and appreciating the issue of delay in respect of the appeal preferred online.
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2024 (10) TMI 539
Non granting interest u/s 244A on excess self-assessment tax from January 2017 to October 2017 - Claim denied for the reason that the refund of self-assessment tax was found to be less than 10% of the tax determined in regular assessment u/s 143(3) - Assessee argued this self-assessment tax paid by the assessee had been adjusted against the demand raised on account of assessment framed on the assessee, accordingly the self-assessment tax had lost its character - HELD THAT:- We are in agreement with the assessee that it is entitled to interest on refund of self-assessment tax. Considering the decision of AWP Assistance (I) Pvt. Ltd [ 2021 (4) TMI 397 - ITAT DELHI ] it is evident that self-assessment tax paid by the assessee losses its character as self-assessment tax once it got adjusted against the tax liability determined in regular assessment. Therefore, this tax paid by the assessee no longer retained its character of self-assessment tax and was not covered under sub-clause (aa) of Section 244A(1) of the Act. We agree with assessee that after adjustment of the self-assessment tax against the taxes determined to be paid by the assessee on regular assessment, the refund of this tax fell in the category of other taxes under sub-clause (b) of Section 244(A)(1) of the Act and therefore, was not hit by the proviso which applied to only clause (aa) of Section 244A(1) of the Act denying grant of interest on refund where the refund was below 10% of the tax determined to be paid by the assessee. Thus, assessee is entitled to interest on refund of self-assessment tax for the period from January 2017 to October 2017. Ground of appeal raised by the assessee is accordingly allowed.
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2024 (10) TMI 538
Validity of reassessment proceedings - approval based on Non-existent provision approval by the sanctioning authority which reads as yes, it is a fit case for issue of notice u/s 148 - whether the AO had independently applied its mind to the information received or conducted some enquiry into the matter for the purpose of coming to conclusion that income assessable to tax had escaped assessment? - HELD THAT:- The approval has been proposed by the AO with reference to Section 147(b) of the Act which provision is non-existent for the purposes of proceedings u/s 147 - Addl. CIT further granted approval ignoring this vital aspect as well. At this juncture, a reference may be made to the judgment delivered in the case of Kalpana Shantilal Haria [ 2018 (1) TMI 195 - BOMBAY HIGH COURT] wherein it was held that approval of action with reference to Section 147(b) of the Act is marred by non-application of mind. The Co-ordinate Bench in the case of Bhaijee Commodities (P.) Ltd. [ 2023 (8) TMI 1505 - ITAT DELHI] has observed that approval based on Non-existent provision of Section 147(b) of the Act is not sustainable in law. Besides, no minimal reasons were given regarding his satisfaction for such approval. The approval given is clearly mechanical, perfunctory and routine. Thus, neither the reasons recorded under Section 148 of the Act justify the allegation towards escapement of income nor the approval given by the ACIT stands the test of judicial scrutiny. The transaction of land parcel is also found to be between Mr. Khayali Ram and Rajeev and not assessee. Thus, looking from any angle, the jurisdiction assumed u/s 147 of the Act is not sustainable in law. It is evident that reasons recorded for exercising the jurisdiction is plagued with several defects of critical nature. Such defects are incurable u/s 292B of the Act. On the face of such lack of jurisdiction u/s 147 of the Act, the reassessment proceedings itself is bad in law. Assessee appeal allowed.
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2024 (10) TMI 537
Validity of reassessment proceedings beyond period of four years - undisclosed export incentive and foreign exchange fluctuation - HELD THAT:- In the present case the assessment was completed u/s 143(3) accepting the return of income of the assessee. In the return of incomed the assessee has declared export incentive and foreign exchange fluctuation as other income from business in the profit and loss account. Subsequently assessee has again received the notice u/s 154 based on the audit objection that export incentive and foreign exchange requires to be disallowed from the deduction u/s 80IC of the Act was received. After considering the reply no rectification order was passed by the AO u/s 154 of the Act. The assessee has made available all account and record at the time of the original assessment and in the compliance of the notice u/s 154 of the Act then the reopening of assessment after four years is not permissible. There is no new material with the AO after four years that the assessee has escaped assessment. The assessee has disclosed fully or truly all material facts necessary for assessment. The notice issued by the AO is not valid notice. The assessment made by AO is liable to be set aside. We find, from the above discussion, that the AO has wrongly made the assessment u/s 148 of the Act, therefore, addition made by AO and confirmed by the Ld. CIT(A) is here by deleted - Decided in favour of assessee.
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2024 (10) TMI 536
Unexplained cash found deposited in his bank account during demonetization period - HELD THAT:- Assessee has made out a fairly good case before us that the ld. CIT(A) has reiterated the order of the AO without considering all the facts and material before him. As rightly pointed out by assessee, CIT(A) ought to have considered the audited financial results of the assessee, the Tax Audit Report of the assessee and the copy of bank statements collected by the AO during assessment proceedings for adjudicating the issue of cash found deposited in the bank account of the assessee, even if none appeared on behalf of the assessee. Having failed to do so and the assessee having now filed before us all evidences in support of his claim of the cash deposited in the bank account being from explained sources, it is in the interest of justice that the issue be reconsidered by the Revenue Authorities after due verification of all the claims made by the assessee. We, therefore, restore the issue back to the AO to decide the issue of cash deposited in the bank account of the assessee afresh after giving due opportunity of hearing to the assessee and after considering all explanation and evidences filed by the assessee in this regard. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2024 (10) TMI 535
Penalty levied u/s 271(1)(c) and 271AAA - unexplained investment - addition by adopting net profit as per the books of accounts @ 12.85% on the suppressed sales - HELD THAT:- It is undisputed fact that the entire basis of addition made by the AO have been modified from Gross Profit basis to Net Profit as per the books of accounts by the CIT(A) on the alleged suppressed turnover. Whereas the Hon ble ITAT restricted the addition to 1% of the turnover as per the audited books of accounts. Every appellate authority has justified the reasons for modifying the income with clear reasons. As further seen in assessee s own case, CIT(A) allowed the quantum addition in favour of the assessee, which was not challenged by the Revenue before this Tribunal and thus the order attained finality. Therefore different estimates have been adopted by different authorities while determining the income of the assessee company which ranges from GP/NP as recorded in the books of accounts on the alleged suppressed turnover on the basis of SCN issued by Central Excise Authority and finally adoption of 1% net profit of the sales recorded in the regular books of accounts. Thereby the addition made towards undisclosed investments have been deleted. This order of the Tribunal was confirmed by Hon ble Gujarat High Court in Revenue s appeal. Thus there is no change not only in the profit estimated but also the alleged turnover from the fact that the addition on account of investments have been deleted. In view of different estimates having been adopted at different stages and consequently the income determined purely on estimate basis in such cases penalty could not be leviable for filing concealment of income or furnishing inaccurate particulars of income by the assessee. The above view of ours are supported by the Jurisdictional High Court Judgment in the case of CIT Vs. Valimkbhai H. Patel [ 2005 (7) TMI 35 - GUJARAT HIGH COURT] wherein it was held that penalty cannot be levied on an estimation of addition which was substituted by another estimation. Further Punjab and Haryana High Court in the case of CIT Vs Prem Dass [ 2000 (8) TMI 31 - PUNJAB AND HARYANA HIGH COURT] held that when penalty was deleted on the ground that difference between returned and assessed income was due to difference of opinion about the estimate rates of income and expenditure. Thu we hereby delete the penalty levied u/s 271(1)(c). Penalty levied u/s 271AAA - addition which remains is 1% Net Profit on the declared turnover as against GP/NP of the turnover as alleged in the show cause notice issued by DGCEI - No penalty be imposed on the alleged addition which has undergone changes at various appellate stages. Therefore the addition which remains is 1% Net Profit on the declared turnover as against GP/NP of the turnover as alleged in the show cause notice issued by DGCEI. In the absence of any such identification of assets, which represent any income or expense, the question of undisclosed income on which penalty can be levied does not arise.
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2024 (10) TMI 534
Nature of receipts - reserve arising out of amalgamation - Applicability of Section 28(iv) and Section 56(2)(x)(c) - whether receipt is capital in nature and thereby not taxable? - HELD THAT:- In the instant case, it is admitted fact that the appointed date for the said amalgamation is with effect from 01.04.2017 being appointed date. The same was mentioned in the scheme approved by The Regional director, where appointed date defined as April 1, 2017, and also audited financial statements wherein the said facts have been mentioned. Thus, the said case law relied upon by the DR will not be applicable in the instant case as section 56(2)(viia) is applicable only till 31.03.2017. The appellant has received asset worth Rs. 149.29 Crore (on result of amalgamation) without consideration and ld. AO concluded that the said amount should be taxed u/s 28(iv) of the Act. In order to tax any amount u/s. 28(iv) of the Act, the following prerequisites need to be satisfied: a. there must be benefit or perquisite arising to the company. b. it must arise out of the business or profession carried on by the recipient; and c. it must be revenue in nature. In this regard, there is absolutely no benefit or perquisite arising out of the scheme of amalgamation. The appellant was ultimate holding company having the shares of Celina through its 100% subsidiary along with its nominees which after the amalgamation led to the direct ownership of the assets in the appellant s name. In the whole process, the appellant has neither become richer nor poorer. Thus, the first condition of section 28(iv) of the Act i.e., receipt of a benefit or perquisite, is completely absent in the present case as a sine qua non of the same is that the recipient has gained as a consequence of the transaction. Also contested that recording a reserve in consequence to amalgamation order is required to be passed for the limited purpose of balancing the accounts based on the double entry system employed and thereby cannot give rise to any benefit or perquisite in the course of the business - only relationship between two companies was that of indirect holding between them. In this factual background, it cannot be said that the amalgamation reserve arose out of any business activity of the appellant. Scheme of Amalgamation cannot be regarded to be the one carried into during the course of carrying on the business. Thus, the reserve created on account of amalgamation was contested as capital in nature and not created on account of business activity. CIT (A) considered several decisions wherein it is held that reserve arising out of amalgamation is capital in nature and cannot be treated as revenue under the ambit of section 28(iv) of the Act. Therefore, considering the aforesaid provisions, ld. CIT (A) is correct in holding that capital reserve cannot be treated as an Income u/s 28(iv) of the Act. Therefore, provision of section 28(iv) of the Act is not applicable to the present case. CIT(A) has rightly deleted the addition made by the ld. AO. Hence, we do not find any infirmity in the order of the learned CIT-A in deleting the addition made by the learned assessing officer. Decided against revenue.
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2024 (10) TMI 533
Assessment u/s 153A - additions can be made in assessment orders passed u/s 153A or u/s 153C of IT Act in cases falling under unabated/completed assessments, when no incriminating material was found at the time of search u/s 132 - HELD THAT:- It is not in dispute that no incriminating materials were found in the course of search u/s 132 of the IT Act in respect of the various additions made by the AO. Further it is also not in dispute that no assessment proceedings were pending in the cases of the assessee at the time of search conducted on 08/07/2016 in the case of the assessee, u/s 132. Furthermore, as no assessment proceedings were pending in the case of the assessee at the time when (on 08/07/2016) search u/s 132 was conducted, the case of the assessee in the present appeals before us, falls in the category of completed/unabated assessments within the meaning of orders passed in the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] and in the case of CIT vs. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] which was approved in the case of Abhisar Buildwell [ 2023 (4) TMI 1056 - SUPREME COURT] and U. K. Paints (Overseas) Ltd. [ 2023 (5) TMI 373 - SC ORDER] and by the aforesaid instruction No. 1 of 2023 of CBDT, which is binding on Revenue authorities. Accordingly, we direct the Assessing Officer to delete the additions made - Decided in favour of assessee.
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2024 (10) TMI 532
Addition u/s 68 - unexplained unsecured loan along with disallowing the interest paid / payable thereon - onus to prove - CIT(A) deleted addition - HELD THAT:- We observe that the assessee has duly discharged its primary onus casted upon it by furnishing the relevant details to explain the nature and source of unsecured loans and also explained that the interest paid there on are mostly on the loans taken in the preceding years and the remaining loans taken during the year but that all loan transactions are genuine and carried out in the regular course of business. Now, once the assessee discharges its onus, the AO has to record his satisfaction before making any addition. AO has to conduct necessary enquiry and to find any discrepancy in the details filed by the assessee. When the AO was made available with the PAN no. and the address of the alleged parties, AO ought to have carried out the exercise u/s 133(6) of the Act or to contact the concerned AO of the alleged parties. In the light of the ratio laid down by the Hon'ble Apex Court in case of Orissa Corpn. (P.) [ 1986 (3) TMI 3 - SUPREME COURT ] and the decision of this Tribunal in assessee s own case[ 2024 (7) TMI 1535 - ITAT KOLKATA] we find that the assessee has successfully explained the nature and source of the alleged unsecured loan and has proved the identity and creditworthiness of the cash creditors and genuineness of the transactions and therefore, we fail to find any infirmity in the finding of the ld. CIT (A) deleting the impugned addition u/s 68 of the Act and also deleting the interest disallowance made by the ld. AO. Accordingly, grounds of appeal raised by the Revenue are dismissed.
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2024 (10) TMI 531
Disallowance of deduction u/s 80IA(4) - assessee has failed to file Form no. 10CCB within the due date - HELD THAT:- Admittedly in the present case, the audit report in Form no. 10CCB was filed on 17/10/2022, i.e. prior to the due date for furnishing the return of income under sub-section (1) of section 139 and before the filing of return of income by the assessee on 04/11/2022. The amendment by the Finance Act, 2020 has reduced the timeline for filing the audit report in Form no. 10CCB only with an intention to enable the pre-filing of returns in case of persons having income from business or profession. The fact that the assessee filed the audit report in Form no. 10CCB on 17/10/2022, even though delayed by 10 days, however the same was filed before the filing of the return of income by the assessee, and thus in our considered view, the same is in conformity with the intention of the aforesaid amendment. Therefore, we are of the considered view that the decision of the Hon ble Supreme Court in Wipro Ltd [ 2022 (7) TMI 560 - SUPREME COURT] also does not support the case of the Revenue. Thus, the amendment by the Finance Act, 2020 has only modified the due date for filing the audit report in Form no. 10CCB without any other significant change, considering which it cannot be said that the requirement is now mandatory in nature. Apart from the aforesaid delay in filing the Form no. 10CCB, there is no other allegation by the Revenue to deny the deduction claimed under section 80-IA(4)(iv) of the Act for the year under consideration, which is the 9th year of the claim of deduction by the assessee. Therefore Addl./Joint CIT(A) erred in upholding the disallowance of deduction claimed u/s 80-IA(4)(iv) - AO is directed to allow the deduction claimed by the assessee under section 80-IA(4)(iv) - Assessee appeal allowed.
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2024 (10) TMI 530
Denial of MAT credit - assessee had failed to claim the MAT credit in the original ITR and had also not filed revised return to make the claim and in absence of the same - AO did not set off the tax liability computed under the normal provisions with the MAT credit (brought forward) available with the assessee and to allow the carry forward of the balance MAT credit u/s 115JAA - allowance and mechanism of set off of tax credit in respect of taxes paid on deemed income u/s 115JB of the Act with the tax payable under the normal provisions of the Act and the carry forward of amount of tax credit determined under sub section (2A) of this section and the extent and the timing of the set off available in Section 115JAA HELD THAT:- As per provisions of section 115JAA of the Act, it is held that the credit in respect of tax so paid u/s 115JB of the Act shall be allowed to the assessee in accordance with the provisions of section 115JAA of the Act, wherein, there is no condition/restriction that such MAT credit will not be allowable to the assessee if it had failed to carry forward the same in the return of income filed by the assessee in the particular assessment year in which such MAT credit is claimed. In this case, after giving appeal effect, vide order u/s 250/143(3) the total income as per the normal provisions of the Act was determined on which tax liability was determined payable and, therefore, as per the provisions of sub-section 4 of section 115JAA, the tax credit amounting available under MAT to the assessee was eligible for set off against the tax determined under the normal provisions of the Act and thereafter to allow the carry forward of balance MAT credit to the assessee for set off in future in accordance with the provisions as laid down u/s 115JAA of the Act. We, therefore, hold that the action of the AO in not allowing to set off the tax liability computed under the normal provisions with the MAT credit (brought forward) available with the assessee and to allow the carry forward of the balance MAT credit u/s 115JAA in the order u/s 250/143(3) and the consequent rejection of the rectification application by an order is not justified and the same is reversed. We, therefore, set-aside the order of the CIT(A) and direct the AO to allow set off the tax liability computed under the normal provisions determined vide order u/s 250/143(3) with the MAT credit (brought forward) available with the assessee and to carry forward the balance MAT credit u/s 115JAA as claimed by the assessee, after necessary verification. Appeal of assessee allowed.
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2024 (10) TMI 529
LTCG - deduction u/s 54F - joint ownership at the time of sale of the original asset - as per AO the assessee is owner of several other properties and therefore does not fulfil the requirement to claim deduction u/s 54F - whether joint ownership of more than one residential house shall disentitle the assessee from claiming deduction u/s 54F? - HELD THAT:- We find that in Dr. Smt. P.K.Vasanthi Rangarajan [ 2012 (7) TMI 563 - MADRAS HIGH COURT] held that merely because the assessee jointly owned another property on the date of transfer of the asset, its claim for deduction u/s 54F of the Act could not be rejected in respect of capital gains earned from transfer of original asset. Also see Zainul Abedin Ghaswala [ 2023 (6) TMI 663 - ITAT MUMBAI] Thus, we are of the considered view that the joint ownership at the time of sale of the original asset does not disentitle the assessee to claim the deduction under section 54F of the Act. Accordingly, we do not find any infirmity in the findings of the learned CIT(A) on this issue and the same is upheld. As a result, grounds raised by the Revenue are dismissed.
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2024 (10) TMI 528
Deemed dividend u/s. 2(22)(e) - addition made on the ground that the assessee had taken loan from company in which the assessee is 66.22% shareholder - Assessee argued these transactions are for commercial expediency and are not in the nature of loans and advances - HELD THAT:- We find that the transactions between the assessee and the EIHCPL are not in the nature of loans and advances but are transactions of commercial expediency and business exigencies. Since, the assessee is the key person looking after the day-to-day affairs of the hospital and considering the need of funds required by the hospital for day-to-day business, sometimes the funds are made available by the assessee to the hospital and sometimes hospital provides funds to the assessee for carrying out certain transactions on behalf of the hospital. Further, we find that these transactions have been consistently carried out for past many years and have been accepted by the Revenue Authorities. We are of the considered view that Section 2(22)(e) of the Act cannot be invoked on the given set of transactions in the instant appeal. Decided in favour of assessee.
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2024 (10) TMI 527
Levy of penalty u/s 271E r.w.s. 269T - transaction routed through banking channels. which otherwise gets reported - reasonable cause u/s 273B or not? - HELD THAT:- Seeing the entire conspectus of matter, we are of the considered view that issue of repayment of loan in cash to NBFC is not free from doubt specially in the light of Notification issued by the Reserve Bank of India (RBI) dated 9th March 2017 [RBI/2016-17/245 DNBR (PD),CC.No. 086/ 03.10.001/2016-17] and citations referred. In fact, Notification issued by the Reserve Bank of India (RBI) dated 9th March 2017 gives another plausible view hence, we find reasonable cause u/s 273B of the Act in peculiar facts of the case. We also find that transaction in question is genuine. Therefore, we delete the levy of penalty u/s 271E of the Act. Appeal of the assessee is allowed.
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2024 (10) TMI 526
Ex-parte order passed by the CIT(A) - No Opportunity of being heard - Plea of the assessee was that the non-appearance/participation was not deliberate and the ld. AR undertakes to appear before the authorities, provided an opportunity is given - HELD THAT:- Since, ex-parte order has been passed by the ld.CIT(A) we deem it fit to restore the appeal back to the file of the ld.CIT(A)-NFAC by relying on the decision Tin Box Company[ 2001 (2) TMI 13 - SUPREME COURT] and direct the ld.CIT(A)-NFAC to denovo frame the order in accordance to law, after providing reasonable opportunity to the assessee. The assessee shall deposit cost of Rs. 5,000/- within 30 days from the date of receipt of this order to Tamil Nadu State Legal Services Authority at Hon ble High Court of Madras. The proof of the same will be furnished by the Assessee before ld.CIT(A)-NFAC. Needless to say, assessee to be diligent and file written submissions and relevant documents if advised so. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (10) TMI 525
Rectification u/s 154 - Disallowance of TDS credit - Maintainability of appeal before ITAT - CIT(A) for dismissing the appeal that the assessee can file appeal against the order u/s 143(1) - HELD THAT:- The assessee claimed to have TDS in Income Tax Return as reflected inform No.26AS of the assessee. The CPC, Bengaluru while processing the return u/s 143(1) granted credit only by applying provisions of Rule 37AB of Income Tax Rules as against the claim of the assessee. The only reason assigned by the Ld. CIT(A) for dismissing the appeal that the assessee can file appeal against the order u/s 143(1) of the Act, but not against the order passed u/s 154 - On the other hand, the Ld. CIT(A) has not gone into the merit of the case of the assessee. It is well settled law that as per section 143(1) CPC has no power to reduce the claim of TDS under the provisions of section 143(1) of the Act. On the contrary, it is the duty of the CPC to give due credit of TDS reflected in Form No.26AS of the assessee. Thus, in our considered opinion, the CPC as well as the Ld. CIT(A) have committed error in not allowing the TDS Credit to the assessee. We direct the CPC to give due credit of TDS as reflected in Form No.26AS of the assessee. Appeal of the assessee is partly allowed for statistical purposes.
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2024 (10) TMI 524
Penalty u/s 271(1)(c) - allegation of defective notice u/s 274 - difference between sale consideration stamp value u/s 56(vii)(b) of the Act and unexplained cash credits - HELD THAT:- Ratio of this full bench decision of in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB) ] squarely applies to the facts of the present Assessee s case as a joint satisfaction for concealment of income and for furnishing inaccurate particulars has been recorded in the Assessment Order and the penalty proceedings has been initiated and order of penalty imposed on concealment of income . Thus, by following the above ratio, we hold that, the penalty order passed u/s 271(1)(c) of the Act by the AO and the order of the CIT(A) in confirming the penalty order are erroneous. Appeal filed by the assessee is allowed.
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2024 (10) TMI 523
Disallowance u/s 14A - Assessee made the investment in tax free bonds - as submitted Assessee had sufficient free reserves and interest free capital - HELD THAT:- The Supreme Court of India in the case of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] has upheld the contention that if the Assessee has sufficient interest free funds, no disallowance under 14A can be made. Moreover, in subsequent AYs 2005-06 to 2007-08 (i.e., until Rule 8D: Method for determining amount of expenditure in relation to income not includible in total income of the Rules was introduced), the CIT(A) deleted the ad hoc disallowance under section 14A of the Act made by the learned AO and held in favour of the Assessee (that no disallowance is warranted under section 14A of the Act), and the AO has not filed an appeal against the CIT(A) order on this ground. Without prejudice, the Assessee submitted that the disallowance cannot exceed 1% of the total exempt income earned during the year, as determined by the Tribunal in AY 2002-03 and 2003-04. Thus, consistent with the past precedence, we hold that disallowance of 1% of the total exempt income is justified for the purpose of disallowance u/s 14A. Accordingly, this ground is partly allowed. Depreciation towards the compensation for vacating the premises towards Gillanders - HELD THAT:- Here in this case, the Tribunal as noted above has already held that expenditure incurred by the assessee for vacating the premises given to the tenant is business expenditure and allowable as Revenue expenditure as paying compensation to the tenant for vacating premises cannot be capital expenditure. Since ITAT has allowed similar amount as revenue expenditure, therefore, consistent with the same we allow same as revenue expenditure. Accordingly, this ground is allowed in favour of the assessee. Deferred guarantee commission - guarantee commission was received in respect of the period for which the guarantee was issued and assessee had spread the guarantee commission over the period for which it is issued - as stated that under the accrual method of accounting, such commission was required to be spread over the validity period of the guarantee - HELD THAT:- We agree with the contention of the assessee that no adjustment is required to be made to the total income in respect of the guarantee commission received in advance, which has been rightly recognized as income over the life of the guarantee and not at the time when the guarantee is issued. The sample copies of the guarantees placed before us evidence that, with respect to big relationship customers, the Bank refunds a portion of the guarantee commission relating to the unexpired period after obtaining special internal approvals if a guarantee were to be revoked before its maturity date. The deferred guarantee commission did not accrue or arise in the year in which guarantee agreements were entered. Accordingly, we hold that the guarantee commission should be spread over the period to which it relates and should not be taxed upfront in the year of receipt. Thus we hold that no adjustment can be be made to its total Income in respect of the guarantee commission received in advance, which is rightly recognized as income over the tenure of the guarantee and not in the year in which the guarantee is issued. This ground is thus allowed. Expenditure incurred on separation/ termination of employees - HELD THAT:- We hold that expenditure is fully deductible u/s 37 since the expenditure is incurred wholly and exclusively for its business and the rationalization was not a part of voluntary separation scheme and, as such, was not covered by the provisions of Section 35DDA of the Act. Accordingly, this ground is allowed. Salary to deputed employee for global role - addition of 50 per cent of total salary and perquisites - Ashok Bhatia was employed by HSBC Asia Holdings BV as the Chief Information Officer of India, Middle East and Africa located in the HSBC Software Development Centre, India as deputed to the Indian branch of the Assessee for three years. As a part of his global role, he spent 50 per cent of his time rendering services to the Indian branch of the Assessee and the balance of 50 per cent of time was spent rendering services to the overseas associated enterprise ( AE') of the Assessee - HELD THAT:- In view of the fact that Ld. CIT (A) has directed the AO to disallow 50 per cent of the total salary and perquisite, in respect of the perquisite component of the off shore salary, therefore, no disallowance can be made as the said amount has not been claimed as a deduction in the return of income; and secondly we agree with the contention of the Ld AR that the disallowance of 50 per cent of both onshore salary and offshore salary (cash component) should be restricted proportionately to 11 months only and not the entire year. Accordingly, this ground is allowed partly. Salary pertaining to Mr. C. Trench and Mr. Peter E. Davies - It is not in dispute that a nominal time of 3 days and 12 days, respectively, was spent on internal audit work for overseas branches. As a part of their global role in a multinational group, these expatriate employees were required to undertake certain co-ordination work for overseas branches. The Tribunal in the Assessee own case for AY 2002-03 and 2003-04 has held that; These are mere incidental activities carried out by the employees, which acquire group wise liaising and coordination and the same need not be required to be compensated. Given the nominal amount of time spent on the same, the portion of the salary paid to these employees continues to relate to the Assessee's India operations, and that has been claimed as a deduction by the Assessee in its books of accounts, in our opinion ought not to be disallowed. Accordingly this ground of the revenue is dismissed. Expenses incurred for mobilization of deposits from Non-resident Indians (NRIs) - AO held that the expenditure could not be allowed u/s 37 of the Act and should be considered part of head office expenditure under section 44C - HELD THAT:- ervices to customers. It is not in the nature of general administration expenses and is also not in the nature of common expenditures allocable to the branches. The expenses incurred and the benefit derived is directly attributable to the Indian branch of the Assessee, and therefore, such expenditure cannot be held to be covered under section 44C of the Act. The Assessee has also furnished the details of expenditure incurred which is duly supported by Independent accountants certificates and expenses statement. We find that, the Tribunal in Assessee's own case (including that of the British Bank of Middle East now merged / amalgamated with the Assessee) from AY 1992-93 to AY 2003-04 has held in favor of the Assessee. Disallowance on increased provision made towards pension fund - Assessee had made a provision towards funding of overall deficit in the pension fund, which has arisen on account of changes in annuity rates as based on an independent actuarial report - HELD THAT:- As relying on Surat District Coop. Bank Ltd. [ 2023 (7) TMI 1448 - ITAT SURAT] we allow that a deduction of the said expenditure u/s 37 of the Act as it is not a 'contribution credited to any individual account of any employee', and hence, not covered under the provisions of section 36(1)(iv) of the Act but allowable under section 37 of the Act. TP Adjustment - Correspondent Banking Activity - HELD THAT:- The issue is covered in favor of the Assessee by order of the Hon'ble Tribunal in the Assessee's own case for AY 2002-03 and 2003-04 [ 2020 (1) TMI 443 - ITAT MUMBAI] wherein the Hon'ble Tribunal has deleted the TP adjustment as there is no international transaction identified by the Ld. TPO, no Associated Enterprises identified by the Ld. TPO, no search process identified by the Ld. TPO, and no comparable identified by the Ld. TPO. Hence, no adjustment on account of corresponding banking activity is warranted. Services provided by employees of the Assessee to overseas' AE's - Respectfully following the above order of the Tribunal in assessee s case [ 2020 (1) TMI 443 - ITAT MUMBAI] AY 2002-03 and 2003-04, we delete the adjustment made by the TPO. Furthermore, the Assessee has voluntarily disallowed a proportionate salary for certain employees in relation to services rendered to foreign AEs. Given the fact that the primary banking transactions have been accepted at ALP, then separately benchmarking the incidental activities is not feasible. As held by the Tribunal, the oversight role provided by the employees at the group level is part of the functions of the employees in a multinational group. These employees (other than Mr Bhatia, who has been dealt with separately) are not functioning on a day-to-day basis for any group entity. Hence, it cannot be considered as a separate international transaction as the liaison and coordination services provided by the employees at the group level cannot be regarded as distinct transactions. Accordingly, this ground is decided in favour of the assessee following the past precedent. Marketing/support services as regards ECB transactions - As original ECB transactions with the associated enterprise have been transfer-priced and accepted at arm's length. Therefore, there cannot be any further attribution towards the said transaction. This finding has not been contradicted by the Revenue. In the subsequent years, the Assessee does not assume any risk nor conduct any services except for the credit appraisals, which the Assessee conducts from time to time for their local business. Marketing of Derivatives Services - Assessee primarily interacts with Indian customers to understand their requirements and communicates this information to the overseas AE. Subsequently, the overseas AE may directly engage in transactions with Indian customers - As Counsel submitted that the actions of the Ld. TPO are contrary to the provisions of the Act and the provisions of transfer pricing. The Ld. TPO has not followed any method and disregarded his own show cause notice and relied upon undisclosed secret comparables in respect of controlled transactions. Thus he submitted that the Ld. CIT (A) findings ought to be upheld, especially since the pricing policy of the Assessee of 30% of the NNBV is a globally accepted practice, followed by the HSBC group. Further, the Ld. TPO has accepted the same in AY 2002- 03 and AY 2003-04. Hence, the CIT (A) order should be upheld and the adjustment deleted. Nature of expenses - Expenditure incurred on separation/ termination of employees - HELD THAT:- As the amount has been paid by the Assessee to such employees, representing lump sum compensation on account of separation. Appropriate taxes have been deducted on such amounts paid to employees, and the taxes were deposited to the central government. The details of employees, along with sample copies of the termination letter, were handed over to the Bench during the course of the hearing. The said termination was not part of any Voluntary Retirement Scheme (VRS); hence, the provisions of section 35DDA are not applicable. We have already given our finding in A.Y. 2004-05 and accordingly, in the finding given above, this issue is allowed in favour of the assessee. Addition of overfunding of Employees Gratuity Fund (Income Tax Approved Fund) - HELD THAT:- As been submitted that oonce the payment has been made to the employees' gratuity fund and there is no provision in the Trust Deed for refunds, the Assessee neither obtained nor received any amount from the Trust nor has the Trust agreed to refund any amount to the Assessee. Furthermore, by making these payments, the Assessee did not obtain any benefit regarding liability remission or cessation, nor did it write off any liabilities in its accounts. Hence, the unilateral credit to the Profit Loss A/c. did not amount to any cessation of liability that could be taxed. Also it has been submitted that the excess funds have been adjusted against the contribution of liability payable to the gratuity fund in AY 2006-07 - CIT(A) in AY 2006-07 has not allowed the deduction as the same has been allowed in AY 2005-06. If assessee has recongnised the excess contribution as asset in its books and credited to profit and loss account and has been reduced their contribution payable for A.Y. 2006-07 as it was already discharged in A.Y. 2005-06. Then it has been allowed in this year because in A.Y. 2006-07 ld. CIT(A) has not allowed deduction of this amount on the ground that same has been allowed in A.Y. 2005-06. Even if we agree with the ld. AO that it should be disallowed in this year, then the same has to be allowed in A.Y. 2006-07. Decided against revenue. Addition on account of loss on certain security transactions undertaken by the Assessee - HELD THAT:- We held that the liability to pay has accrued and quantified in current year and hence the deduction is allowed in this year. Addition on account of interchange income received by the offshore (non-India) branches of the Assessee is to be deleted. Allowance of expenditure to an extent of 5 per cent on adjusted total income - HELD THAT:- For the purpose of allowing deduction u/s 44C, the amount equal to 5 per cent of adjusted total income or the expenditure or the amount incurred and attributable to the India branch (i.e., 98,98,69,000) is to be considered. The amount of Rs. 35,36,04,000 debited to the Profit Loss A/c is irrelevant. We do not find any infirmity in the order of the ld. CIT(A) directing to allow expenditure to the extent of 5% of adjusted total income. Accordingly, ground No.10 raised by the Revenue is dismissed. TP Adjustment - interest received from HSBC Bank USA - Assessee maintains an account with HSBC USA denominated in USD, which is used for settling dollar clearance - HELD THAT:- The assessee has benchmarked the transaction using CUP method thereby various Indian banks have applied similar services from HSBC USA which have also been incorporated above. Assessee stated that Best Efforts are based on similar marketing conditions and the best effort rate has been lower than the generally committed rates. Thus, assessee is not at disadvantage compared to transaction between HSBC USA and unrelated banks, therefore, we agree with the ld. Counsel that the transaction between the Assessee and HSBC USA is at an arm's length price. The ld. AO has applied ALP at LIBOR + 15 basis points based on the borrowing rate of the assessee on a USD loan taken from HSBC London. Such approach is not correct because LIBOR rate cannot be applied on the US loan taken from HSBC USA. The ld. TPO ought to have considered the Fed Fund which is a target interest rate that is fixed by the Federal Open Market Committee ('FOMC') for implementing the USA's monetary policies, plus the relevant geographic market funds is the USA, for which the Fed Fund rate used should be the most appropriate for the purposes of benchmarking rather than taking LIBOR rates. Accordingly, we agree with the contention of the ld. Counsel. Accordingly, we hold the order of the ld. CIT(A) and accordingly, the ground raised by the Revenue is dismissed.
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2024 (10) TMI 522
Deduction u/s 80IA(4) - denial of deduction as assessee cannot be held to be developer and merely a work contractor - AO denied the deduction u/s 80IA(4) by holding assessee to be contractor and hit by newly inserted explanation below Section 80IA(13), but while granting relief to the assessee, CIT(A) did not discuss elaborately about the eligibility or otherwise of the assessee to the deduction u/s 80IA(4) vis- -vis specific work orders executed by the assessee during the year under consideration HELD THAT:- CIT(A) has made general and balled observations while granting deduction to the assessee u/s 80IA(4), which general and balled observations are not sufficient to hold in favour of the assessee. We could have decided the issue ourselves as these appeals are old appeal pending for last more than 12 years, but the material filed before us vide paper books are not sufficient for us to decide the issue . Even tender documents, agreements with the Government for executing the work, PERT chart, financial statements, Men, material and machines deployed, the roles and responsibilities performed by the assessee, details of deployment of funds, details of statutory clearances obtained, penal provisions in the agreements etc. were all not provided in the paper book filed by the assessee. It would be fit and appropriate in the interest of justice and fair play that the matter be restored back to the file of CIT(A) for fresh adjudication of this issue after making detailed analysis of all the specific work executed by the assessee in which the assessee has claimed that it acted as developer and claimed to be eligible for deduction u/s 80IA(4). Assessee as well the AO shall be given opportunity of being heard by the CIT(A), keeping in view principles of natural justice. The evidences filed shall be admitted by ld. CIT(A) in accordance with law. The appeal of the Revenue on this issue is allowed for statistical purposes. Disallowance u/s 14A read with Rule 8D of the Income-tax Rules, 1962, as well disallowance u/s 35D - HELD THAT:- As presumption will apply that the assessee has invested own interest free funds in the securities/JV which yield exempt income. Thus, no disallowance u/s 14A read with Rule 8D(2)(b) is warranted, as available owned interest free funds with the assessee are much higher than the investments made by the assessee which yield exempt income. Reference is drawn to the decision in the case of PCIT v. Sintex Industries Limited [ 2018 (3) TMI 1448 - SC ORDER] wherein Hon ble Supreme Court dismissed SLP arising from Hon ble Gujarat High Court judgment and order in CIT v. Sintex Industries Limited [ 2017 (5) TMI 1160 - GUJARAT HIGH COURT] Disallowance u/s 14A read with Rule 8D(2)(c) as was made by AO and later confirmed by ld. CIT(A) is concerned, we donot find any infirmity in the order passed by ld. CIT(A). So far as contention of the ld. Senior Advocate that if disallowance u/s 14A is confirmed by ITAT, then the assessee will be entitled for higher deduction u/s 80IA(4), we have already restored the issue of disallowance u/s 80IA(4) to the ld. CIT(A) for fresh adjudication, and hence, in the fitness of the things and fair play keeping in view facts and circumstance of the case, this issue to the extent of confirmation of addition u/s 14A read with Rule 8D(2)(c) by us as is confirmed by us vis- -vis higher deduction u/s 80IA(4), is restored to the file of ld. CIT(A) for fresh adjudication. We order accordingly. Disallowance of Preliminary expenses u/s 35D - We do not find any infirmity in the order passed by ld. CIT(A) so far as disallowance is concerned. So far as remaining preliminary expenses are concerned, the AO has observed that these expenses were incurred for increase in authorized capital anad also that no details were furnished. The assessee has filed details with ld. CIT(A), but ld. CIT(A) did not call for the remand report from the AO. There is a brach of Rule 46A of the 1962 Rules. The Rule 46A is not an empty formality. The matters needs to go back to the file of ld. CIT(A) for fresh adjudication, after giving AO as well the assessee, opportunity of being heard in accordance with principles of natural justice. So far as contention of the ld. Senior Advocate that if disallowance u/s 35D is confirmed by ITAT, then the assessee will be entitled for higher deduction u/s 80IA(4), we have already restored the issue of disallowance u/s 80IA(4) to the ld. CIT(A) for fresh adjudication, and hence, in the fitness of the things and fair play keeping in view facts and circumstance of the case, this issue to the extent of confirmation of addition u/s 35D by us as well partly setting aside to the file of ld. CIT(A) for fresh adjudication vis- -vis higher deduction u/s 80IA(4), is restored to the file of ld. CIT(A) for fresh adjudication.
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2024 (10) TMI 521
Disallowance of sales commission paid to two Associated Enterprise (AE) being foreign entities - onus to prove - assessee failed to discharge the primary onus placed on it to establish the legitimate requirement for its business and genuineness of the payment by submitting relevant documentary proof - CIT(A) deleted addition - HELD THAT:- The assessee never furnished the details before the AO w.r.t. sales commission which also included sales commission to both domestic parties as well foreign parties namely Heucotech Limited, Edward Kellar(Philippines) Inc., Diethelm Co.(SE Asia) Limited, Fuji Kasei Trading Corporation etc.. The AO mistook the entire commission as being paid to the afore-stated two foreign parties. Thus, the sales commission was never verified by the AO as the assessee never submitted complete details of sales commission, despite being called upon by the AO to explain the same. CIT(A) gave relief on account of sales commission without calling remand report from the AO, as additional evidences were filed by the assessee w.r.t. the aforesaid sales commission paid by the assessee which were not forwarded by ld. CIT(A) to the AO for comments/remand report. Thus, there is a breach of Rule 46A of the Income-tax Rules, 1962, and the matter needs to be restored back to ld CIT(A) for adjudicating again sales commission. Rule 46A is not an empty formality - Thus ground of appeal raised by Revenue so far as allowability of sales commission by ld. CIT(A) which was earlier disallowed by the AO, is allowed for statistical purposes. Sales commission paid by the assessee to the foreign entity Heubach GMBH - we are of the considered view that the assessee has discharged its onus and now it was for the Revenue to have brought on record cogent material to disallow the sales commission paid by the assessee to its AE Heubach GMBH, which department failed to do so Thus, ground of appeal raised by Revenue so far as allowability of sales commission paid to Heubach GMBH by ld. CIT(A) which was earlier disallowed by the AO, is dismissed as we donot find any defect in the appellate order passed by ld. CIT(A) on this issue. We order accordingly. Sales commission paid to Darlington Enterprises - The books of accounts were also not rejected by the AO, and also no specific defect is pointed out by the AO except that the assessee failed to provide documentary evidence to prove rendering of services. The AO is both the investigator as well adjudicator. Thus, in view of the above, we are of the considered view that the assessee has discharged its onus and now it was for the Revenue to have brought on record cogent material to disallow the sales commission paid by the assessee to Darlington Enterprises Limited, which department failed to do so Thus, ground of appeal raised by Revenue so far as allowability of sales commission paid to Darlington Enterprises Limited by ld. CIT(A) which was earlier disallowed by the AO, is dismissed as we do not find any defect in the appellate order passed by ld. CIT(A) on this issue. We order accordingly. Undervaluation of finished/Closing stock of Beta Blue - DR submitted that it is the valuation of stock which is a matter of dispute between the assessee and the Revenue -submitted that the assessee has consistently followed FIFO method by applying Weighted average method - HELD THAT:- As observed that the assessee has applied weighted average cost method of the yearly costs while valuing finished stock, and weighted average cost method of monthly costs while valuing WIP. The assessee has itself stated that WIP is of 4 days, while we have observed that finished goods holding for different products varies from 1-3 months. AS-2 clearly stipulates that formula used in determining the cost of an item of inventory needs to be selected with a view to providing the fairest possible approximation to the cost incurred in bringing the item to its present location and condition. FIFO formula assumes that the items of inventory which were purchased or produced first are consumed or sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the enterprise. Thus, in view of prescription by AS-2, it requires to be determined the fairest possible approximation to the cost incurred in bringing the items to its present location and condition. The assessee need to explain this aspect of reasons for adopting yearly costs while valuing finished goods and adopting monthy costs while valuing WIP, and we are of the considered view that the assessee be given one more opportunity to justify before the AO reasons for adopting weighted average cost method of the yearly costs while valuing finished stock, and weighted average cost method of monthly costs while valuing WIP. The claim of the assessee that the assessee has consistently followed the same method while valuing inventory over the years and the same was accepted by Revenue also need verification. Thus, to this limited extent, we are setting aside the matter back to the file of the AO for adjudication afresh, after giving opportunity to the assessee.
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2024 (10) TMI 520
Rejection of Provisional registration u/s 12AB/ 80G - Charitable activity or not? - CIT reached at a conclusion that assessee did not furnish note on activities giving details of activities actually carried out by assessee, the details are general note without activity wise details and with respect to the documentary evidence, he held that photographs do not support the assessee's contention and no documentary evidences furnished to prove that the trust is engaged in providing scholarship, prizes and promote for getting higher education etc. HELD THAT:- Assessee submitted certain details as per letter dated 21/9/2023 by showing activities and further submitting certain photographs. With respect to the bills and vouchers of the expenses, assessee merely submitted the audited accounts of the trust for last three years. With respect to the objects of the trust and the activities carried on by the trust, assessee has given some details in the above stated later. Some of the photographs also shows the name of the trust. However, with respect to the expenditure incurred by the assessee, nothing was provided except audited annual accounts. In the audited annual accounts for the year ended on 31/3/2019 assessee did not incur any expenditure, for the year ended on 31/3/2020 assessee has incurred expenditure on the object of the trust of ₹ 41,000, for the year ended on 31/3/2021 assessee has incurred expenditure on the object of the trust of ₹ 12,425, and for the year ended on 31/3/2022 assessee has incurred expenditure on object of the trust of ₹ 10,000. Except this no details of such expenditure are available before the approving authority. Therefore, there was no verification about the activities of the trust and expenditure incurred on such activities. Assessee has provided certain details about the activities of the trust supported with some photographs, but CIT was not satisfied with this. If this be the case, the assessee should have been issued one more letter asking for other comprehensive details as desired by the CIT. This opportunity was not provided to the assessee. Assessee also failed to provide the details of the expenditure by producing bills/vouchers and supportings of the expenditure incurred on the object of the trust. In view of this, in the interest of Justice, we restore the matter back to the file of the learned CIT with a direction to the assessee to substantiate the objects with activities carried on and necessary supportings of expenditure incurred shown as spent on the object of the trust. Assessee appeal allowed for statistical purposes.
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2024 (10) TMI 519
Nature of land sold - agricultural land v/s capital asset - addition treating agricultural land sold to be a Capital Asset allegedly being within the municipal limits which is arbitrary and unjustified - HELD THAT:- As the population has been found to be less than the figure of 10 lakh, for which, the second condition to bring the land outside the ambit of agricultural land, is absent. Therefore, in keeping with Pr. CIT-3 Vs Anthony John Pereira [ 2020 (3) TMI 472 - BOMBAY HIGH COURT] as elaborately dealt with by us, we hold that the land sold was agricultural land, not forming part of capital asset , with in the meaning of Section 2(14) of the Income Tax Act. Then, besides the above, it again remains undisputed that in view of Notification (APB 18-22) No. 9447, dated 06. 01.1994, relied on by the assessee all through, the amount received by the assessee is exempt, as rightly contended. This is so, since at the time of receipt of the last payment by the assessee in the year under consideration, Zirakpur was not a Municipality. As is evident from a perusal thereof, which, again has not been denied on behalf of the Department. Too, the Sale Deed clearly mentions that the possession of the land was handed over by the assessee to the purchaser at the site after receipt of the entire amount of payment, before the Joint Sub Registrar, Zirakpur. In this regard, reliance has rightly been placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] Therefore, the matter considered from any angle, the order under appeal is found to be unsustainable in law and the same is hereby reversed. The claim of the assessee is found to be justified and it is accepted as such. Assessee appeal allowed.
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2024 (10) TMI 518
Additional interest claim u/s 244A - claim rejected as assessee had failed to prove that TDS was deducted and paid to the Govt. - as argued AO himself had granted interest u/s. 244A for a particular period and hence, the assessee was not required to prove that the TDS was deducted and paid to the Govt.- HELD THAT:- As per the provision, the interest u/sec. 244A has to be calculated from 1st April at the rate of 6% p.a. which is the rate prescribed u/sec. 244A. Thus, matter should be remitted to the file of the NFAC for de novo adjudication considering the documents on record and the judgment of the Hon'ble jurisdictional High Court placed on record and come out with a speaking order as per law complying with the principles of natural justice. Assessee also relied on the decision of Koninklijke Philips N.V. [ 2023 (1) TMI 1198 - ITAT KOLKATA ] wherein it was held that interest u/sec. 244A has to be granted up to the date when the actual refund was received. The NFAC shall take cognizance of this proposition while deciding the matter. We set aside the order of NFAC and remand the matter back to its file as per our afore stated directions. The grounds of appeal stands allowed for statistical purposes.
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2024 (10) TMI 517
Disallowance of depreciation u/s 32 - claim of AO and CIT- A is that there is no business carried on by the assessee during the year - HELD THAT:- It is not the case of the assessee that the learned assessing officer has singled out any asset forming part of the block of the asset to test its individual user. Therefore the judicial precedents relied upon by AO does not help the case of the assessee. Before the CIT- A assessee has raised several legal contentions, none of those decisions were considered by the CIT-A. CIT-A merely referred to the notes to the accounts and confirmed the disallowance of depreciation. Assessee did not get any opportunity of explanation before the learned assessing officer who passed an assessment order is assessee did not furnish details before him, in the interest of justice, we set-aside this issue back to the file of the learned assessing officer with a direction to the assessee to prove that in absence of any business activity carried on by the assessee, how the assessee is entitled to claim of depreciation u/s 32 (1) - AO may examine the same and decide the issue afresh. Addition towards unexplained sale application money - the claim of the assessee that there are no fresh credits during the year is apparent. However, as AO in the assessment order has specifically stated that the reason addition during the year and the same amount has been added as unexplained cash credit u/s 68 of the act. Neither the AR nor the learned departmental representative could explain how the above figure is arrived at. Further the learned CIT - A also not considered that how the amount has been arrived at by the learned assessing officer. Without examining the fact that whether the assessee has received any sum during the year or not, he has confirmed the addition u/s 68 of the act. The learned CIT A also did not consider the facts stated by the assessee that the share capital of the assessee company remains unchanged for last 3 years. Therefore, we set-aside the whole issue back to the file of the learned assessing officer within direction to the assessee to substantiate before the learned assessing officer that there are no credits in the books of account during the year on account of share application money or membership fees. The learned assessing officer may examine the same and decide the issue afresh. Appeal filed by the assessee is allowed for statistical purposes.
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Customs
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2024 (10) TMI 516
Entitlement for waiver of export obligation and duty-saved amount for import of bamboo processing machines under the Export Promotion Capital Goods Scheme - One of the many grievances of the petitioners is that instead of providing financial assistance to the industrial units, particularly those located in the North-Eastern Region in the form of grants, assistance has been provided in the form of returnable TDA i.e. Technical Developmental Assistance - HELD THAT:- It is seen from the record that the facts so far relating to the establishment of the industry and beneficial scheme made available are not disputed by the respondents. This Court is of the opinion that, at least the petitioners have been able to make out a case for consideration of their case for waiver and therefore, without commenting on merit of the claim of the petitioners including the claim that the respondents that actions are hit by the principle of promissory estoppels, the present writ petitions stands disposed with a direction to the competent authority in the Customs Department to consider the claim of the petitioners and to pass a speaking order within a period of eight weeks from the date of receipt of a certified copy of this order. It is further provided that till such determination is made, the interim order passed earlier on 18.04.2018, restraining the respondents from taking any coercive action against the petitioner shall remain operative. Petition disposed off.
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2024 (10) TMI 515
Re-classification and confiscation of goods under different tariff items - Samsung UHD TVs and LEDOVA monitors - television sets or not - smuggling of goods - burden to prove - applicability of section 123 of Customs Act, 1962 - HELD THAT:- The monitors had been imported by the appellant against bill of entry no. 4716732/31.08.2019 and 4977959/ 20.09.2019. These were cleared as declared and it is upon seizure effected subsequently on search of premises of the appellant that the goods were proposed to be re-classified as television receivers and with consequent detriment. The sole ground for re-classification was the opinion of an employee of another commercial concern that these were usable as television receivers also. It is settled law that use cannot be a criterion for assessment and also it is found that the opinion of one individual does not make for re-classification merely to levy higher rate of duty. As far as the assembled television sets are concerned, the question of conforming to the stipulation of Bureau of Indian Standards (BIS) is the responsibility of the appropriate statutory authorities for enforcement at the point of sale; customs authorities are obliged to ascertain such certification only at the time of import - In the present case, it is the claim of the appellant that these had been imported in knock down condition ; there is nothing on record to evince otherwise. As pointed out by the Learned Counsel for the appellant, presumption of smuggling under section 123 of Customs Act, 1962 does not operate outside the goods specified therein. The decision of the technical advisory committee of 2nd April 2013 makes it clear that the specifications of Bureau of Indian Standards (BIS) do not require ascertainment when knock down goods are imported. It is for the appropriate authority to ascertain conformity once goods are assembled and ready to be sold in the domestic market. The duty liability has been fastened on television sets solely on the ground that these are smuggled. There is no evidence of smuggling and consequently the demand under section 28 fails. In view of other prescriptions not applying, confiscation under section 111(d) also fails. The impugned order is set aside - appeal allowed.
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2024 (10) TMI 514
Valuation of imported goods - rejection of transaction value declared by the appellant - rejection on the basis of some contemporaneous imports - admissible evidences or not - Penalty imposed on Shri Sanjay Mehta, Partner of the Appellant-company. HELD THAT:- The rejection of transaction value can be done only on the basis of cogent and comparable material and when there is no case of contemporaneous bill of entry or contemporaneous import available on record, the transaction value cannot be rejected on the basis of materials which are not admissible into evidence. For rejection of transaction value, contemporaneous import of identical and/or similar import is essential. The ld. adjudicating authority has not taken into account the evidences submitted by the appellant on contemporaneous imports with lower value. Also, he has not furnished the details of the Bills of Entry where higher value has been adopted. The ld. adjudicating authority has also not followed the valuation rules in a systemic mannerto re-determine the Assessable value, by stating that it will be in conflict with the intelligence about the rampant under-invoicing as alleged in paragraph 14.4 of the notice. In the impugned order, it has been admitted that none of the Rules from Valuation Rule 4 to Rule 8 are applicable and valuation has been done under Rule 9 of the valuation rules - the declared value in the Bills of Entry cannot be rejected on the basis of some details mentioned in the Proforma Invoice and documents attached with the said email. Penalty imposed on Shri Sanjay Mehta, Partner of the Appellant-company - HELD THAT:- It is observed that the ingredients required for imposing penalty on him under Section 114AA of the Customs Act are not existing in this case. Accordingly, the penalty imposed on him is liable to be set aside. The impugned order is set aside - appeal allowed.
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2024 (10) TMI 513
Refund of export duty being the excess duty paid on account of downward revision of export duty - price revision clause - rejection on the ground that the appellant failed to produce documents to rebut the presumption under Section 28D of the Customs Act, 1962 - to discharge the burden to show that incidence of duty had not been passed on to others - principles of unjust enrichment - HELD THAT:- The learned Commissioner in the impugned order, without analysing the documents concluded that appellant had only placed the balance sheet for the year 2007-08 and 2009-10 but failed to produce any bills, vouchers, receipts relating to various expenses relatable to cost of the goods for verification and rejected the argument of the appellant that the incidence of export duty was borne by them and not passed on to the overseas buyers. On going through the cost sheet duly certified by the Chartered Accountant enclosed with the appeal paper book, we find that in arriving the cost of the material, the export duty amount was calculated @ Rs.51/- per MT for 20102 MT, which was shown separately and not included in the FOB value. The Hon ble Andhra Pradesh High Court in the case of ASIA PACIFIC COMMODITIES LTD. VERSUS ASSISTANT COMMR. OF CUS., KAKINADA-I [ 2012 (11) TMI 919 - ANDHRA PRADESH HIGH COURT] , more or less analysing a similar FOB value contract rejecting the contention of Department that bar of unjust enrichment is applicable in such cases observed ' In these appeals, the invoice value is also FOB value. Therefore it cannot be said to include the duty paid under the Cess Act and, therefore, the presumption under Section 28D of the Act stands rebutted by the appellants. The CCE (A) went utterly wrong in construing the point A6 ignoring paragraph 14 of Incoterms as well as the sale contract between the appellant and buyer. Therefore the CESTAT was justified in holding that the finding of CCE (A) that FOB value included the cess is unsustainable.' Further, this Tribunal in M/S. MUNEER ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, MANGALORE [ 2024 (3) TMI 1054 - CESTAT BANGALORE] , in similar circumstances analysing the admissibility of refund of export duty paid consequent to issuance of Notification No.62/2007 dated 03.05.2007, on export of Iron Ore fines against FOB contracts held that incidence of duty has not been passed on to overseas buyers. Further, the Circular No.18/2008-Cust dated 10.11.2008 referred to by the Department in support of their case is not applicable to the facts of the present case inasmuch as under the said Circular, the practice of determination of assessable value of export of goods was continued to be from cum-duty price on back ward calculation till 31.12.2008 in consonance with long standing practice followed by various Customs Houses; however, the practice was discontinued w.e.f. 01.01.2009. There are no merit in the impugned order. Consequently, the impugned order is set aside being devoid of merit and the appeal is allowed.
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2024 (10) TMI 512
Enhancement of declared value of imported goods - old and used worn clothing, completely fumigated - confiscation - redemption fine - penalty - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has observed ' Considering the various issues and submissions made and the failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%.' It is held that the redemption fine and penalty imposed on the respondent to the tune of 10% 5% respectively on the assessed value is sufficient. Therefore, the redemption fine and penalty confirmed by the ld. Commissioner (Appeals) are sufficient to meet the end of justice. There are no infirmity in the impugned order and the same is upheld - appeal of Revenue dismissed.
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Insolvency & Bankruptcy
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2024 (10) TMI 511
Condonation of 15 days delay in filing the Appeals - time limitation - computation of limitation period - Whether the Appeal is filed with delay of 15 days or with delay of 16 days? - HELD THAT:- The law is well settled that limitation for filing the Appeal under Section 61 of the IBC commences after pronouncement of the order and in event, the certified copy is applied within 30 days, period which is consumed in preparation of certified copy of the order is excluded. Timelines under IBC are tightly circumscribed as has been held in V. Nagarajan [ 2021 (10) TMI 941 - SUPREME COURT (LB) ]. The judgment of this Tribunal in Ashok Tiwari [ 2023 (11) TMI 313 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] has no application in the facts of the present case. Since present is not a case of modification of the order. The Application filed by the Appellant in the above case for rectification of the order was partly allowed and order was modified and earlier order dated 17.01.2023 was modified, hence, this Tribunal held that earlier order stood merged with the subsequent order dated 21.03.2023. Present is not a case of any modification of the judgment dated 13.05.2024. The order delivered on 13.05.2024 in no manner was modified or changed. What was corrected was only a typographical error in the date of pronouncement which was wrongly mentioned as 13.06.2024 in place of 13.05.2024. The Hon ble Supreme Court in V. Nagarajan [ 2021 (10) TMI 941 - SUPREME COURT (LB) ] has categorically held that period of limitation in filing the Appeal commences from the date when order was pronounced. In V. Nagarajan , the order was passed on 31.12.2019 by the NCLT and the Hon ble Supreme Court held that 30 days period expired on 30.01.2020. The proposition laid down by the Hon ble Supreme Court in V. Nagarajan is fully attracted in the present case. When the order was pronounced on 13.05.2024, 30 days period expired on 12.06.2024 and Appeal was filed on 28.06.2024 i.e. 16th day after expiry of limitation. The jurisdiction to condone the delay is limited to 15 days only as per Section 61(2) proviso. The delay of 16 days in filing these two Appeals cannot be condoned - appeal dismissed.
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2024 (10) TMI 510
Time limitation of section 95 application - whether the application filed under Section 95, at the instance of Respondent No. 1, is within the period of limitation if it is to be counted from the date when the notice under Section 13(2) was issued on 26.05.2016 and or on the basis of the acknowledgement in the balance sheet which was signed by both the appellants on 01.09.2017? - HELD THAT:- The appellant has wrongly relied upon the decision of Amanjyot Singh [ 2023 (1) TMI 253 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] and has changed his stand so conveniently during the course of final arguments which he had otherwise taken at the time when stay was granted because at that time it was the case of the appellant that the notice dt. 26.05.2016 is for invoking the personal guarantee. The facts in the case of Amanjyot Singh are that the Corporate Debtor M/s Gulati Retail India Ltd. had obtained financial facilities from Punjab and Sind Bank and ICICI Bank Ltd. Amanjyot Singh was one of the personal guarantors of the financial facilities extended by Punjab and Sind Bank. The Punjab and Sind Bank issued a notice under Section 13 (2) of the Act on 04.10.2023 to both the corporate debtor and the guarantors. By the said notice, they were called upon jointly and severally to make the payment and discharge their liability with interest with effect from 01.10.2023. Amanjyot Singh, being the guarantor, himself filed an application under Section 94 of the code to initiate the CIRP. If the notice dated 26.05.2016 is treated to be the notice invoking the personal guarantee, whether the petition having been filed on 02.12.2021 is still within the period of limitation? - HELD THAT:- Section 18 provides for acknowledgement in writing and the balance sheet indicating the liability is the acknowledgement in writing - It is also pertinent to mention that the balance sheet has been signed by the both the appellants herein and it has been held by the Hon ble Supreme Court in the case of Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal Anr. [ 2021 (4) TMI 753 - SUPREME COURT ] that the admission of liability in the financial statement i.e. balance sheet indicates the debt from the date when it is signed. Since the balance sheet was signed on 01.09.2017, therefore, counting the limitation from 26.05.2016 to 01.09.2017, the period of three years would again start running from 01.09.2017 and shall come to an end on 31.08.2020. This date i.e. 31.08.2020 happens to fall during the period of covid 2019 for which the Hon ble Supreme Court has passed an order in Suo Motu 3/2020 order in [ 2022 (1) TMI 385 - SC ORDER ] that if the limitation expires during this period then it shall continue to run till 01.03.2022 and an additional period of 90 days shall also be available in particular circumstances. Since the period of limitation to file petition under Section 95 by Respondent No. 1 was expiring during the period protected by Hon ble supreme Court, therefore, it cannot be said that this application which has eventually been filed on 02.12.2021 was beyond the period of limitation. There is hardly any merit in the present appeals and hence, both the aforesaid appeals are hereby dismissed.
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2024 (10) TMI 509
Approval of Resolution Plan - Jurisdiction of CoC to substitute the SRA with another SRA who was not part of the CIRP process - Resolution Applicant after approval of plan by the CoC on 21.10.2021 has substituted the Resolution Applicant with Respondent No.4 with the approval of the CoC - Jurisdiction of to modify a Resolution Plan already approved by the CoC and submitted before the Adjudicating Authority for approval under Section 30(6) of the IBC - HELD THAT:- The clear provision of the statute is that the Resolution Plan received from a person who does not appear in the final list of Prospective Resolution Applicants (PRAs) cannot be considered. In the present case, there is no dispute that the Respondent No.4 has never submitted a Resolution Plan and he was not included in the list of PRA. The CoC has no jurisdiction to approve the Resolution Plan treating it to be the plan of Respondent No.4 or to substitute Respondent No.4 as Resolution Applicant. The outcome of the CoC approval and filing of revised Form-H is that now the Respondent No.4 has become the SRA whose plan has been approved. The approval of the Resolution Plan of Respondent No.4 is clearly in breach of Regulation 39(1)(B). Right from Request for Resolution Plan and mandatory contents consideration of the Resolution Plan, there are different stages for reevaluation of the Resolution Plan and applicant who has not participated in any of the stages of CIRP process cannot suddenly be substituted as SRA to impleme - it is opined that substitution of Respondent No.4 in the Resolution Plan is contrary to the statutory scheme of the IBC read with CIRP Regulations 2016. The Adjudicating Authority committed error in approving the Resolution Plan which was modified Resolution Plan substituting Respondent No.4 as SRA. Order of the Adjudicating Authority is unsustainable and cannot be approved. In the facts of the present case, one more time bound opportunity to be given for finding out as to whether any other Resolution Applicants can revive the Corporate Debtor - by setting aside the order of the Adjudicating Authority approving the Resolution Plan, it is directed for issuance of fresh Form-G by the Resolution Professional and complete the entire process within 90 days from today. The Order is set aside. The Resolution Professional and the CoC is directed to issue fresh Form G inviting Resolution Applicants and thereafter complete the entire process leading to approval of the Resolution Plan, if any, within 90 days - appeal allowed.
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2024 (10) TMI 508
Precedence/priority of consideration and decision filed by application u/s 54(C) of IBC, over and above the application filed under Section 7 of IB, against the same Corporate Debtor - application under Section 7 is filed much prior of enforcement of the amendment of the Act, 2021 i.e. w.e.f. 04.04.2021 and is hit by Section 11A(4) of the Code - HELD THAT:- Section 11A(2) says that precedence is to be given to an application if the application under Section 54C already pending and application under Section 7, 9 or 10 is filed or if the application under Section 7, 9 or 10 is pending and the application under Section 54C is filed within 14 days of the filing of the said application then the precedence has to be given to the said application but Section 11A(3) cast an exception as it provides that where an application under Section 54C is filed after fourteen days of the filing of the application under Section 7, 9 or 10 then it has not to be given precedence rather the precedence has to be given to the application filed under Section 7, 9 or 10 of the Code. Section 11A(4) of the Code says that the provision of this Section i.e. 11A shall not apply where an application under Section 7, 9 or 10 is filed and pending as on the date of the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2021. Meaning thereby, if the application under Section 7, 9 or 10 is already filed and then the Act of 2021 came into being then the applicant filing the application under Section 54C cannot take the help of this Section. In the present case, what precisely has happened is that the application under Section 7 was filed on 09.12.2020, the Act of 2021 came into being on 04.04.2021 and the application under Section 54C was filed on 04.09.2022 that is much after the expiry of year, therefore, the rigours of Section 11A(4) is squarely applied to the controversy at hand and hence the Tribunal has committed a patent error in taking up the application under Section 54C of the Code over and above the application filed much earlier under Section 7 of the Code and decided the same. This procedure could not have been followed as the law is totally against it, therefore, in such circumstances, the order passed on the application filed under Section 54C on 20.04.2023 for the purpose of initiation of PPIRP is patently illegal and thus, the same is hereby set aside. Appeal allowed.
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2024 (10) TMI 507
Non-compliance with submission of Performance Bank Guarantee (PBG) by the Appellant - insertion of Clause (4-A) in the Regulation on 24.01.2019, much after submission of the Resolution Plan and approval of the Resolution Plan - Jurisdiction of Adjudicating Authority to permit participation of the Applicants, who were not part of the CIRP. HELD THAT:- The Performance Bank Guarantee was not submitted by the Appellant despite dozens of reminders sent by the Resolution Professional to the Appellant. There was clear non- compliance of provisions of the RFRP Clause 1.9.3 which oblige the Resolution Applicant after approval of the Resolution Plan by the CoC to furnish the Performance Bank Guarantee of an amount equivalent to 20% of the bid consideration amount within two business days. It is also noticed that the two applications one by the State of Arunachal Pradesh and another by THDC were filed before the Adjudicating Authority praying for liberty to submit the Resolution Plan for resolution of the corporate debtor. The stand which was taken by the CoC before the Adjudicating Authority is that the Appellant did not give any heed to submit Performance Bank Guarantee and it failed to adhere to the terms and conditions. CoC in its reply, therefore, clearly stated that after deliberation CoC is not objecting to the applications filed by the State of Arunachal Pradesh and the THDC and which applications need to be allowed in the interest of the Corporate Debtor. The requirement of submission of Performance Bank Guarantee was contained in the RFRP. RFRP was dated 21.05.2018. Clause (4-A) which was inserted in Regulation 36B only made it mandatory for Request of Resolution Plan to provide a performance security within time specified therein. There is no conflict in the provisions of the RFRP in the present case and Regulation 36B (4-A). The fact that Clause (4-A) was added subsequently has no bearing in the present case since in the present case RFRP dated 21.05.2018 itself contained Clause 1.9.3 requiring submission of the Performance Bank Guarantee of an amount equivalent to 20% of the bid consideration amount within two business days. The Application for approval of the Resolution Plan being CA No. 246 of 2019 was heard by the Adjudicating Authority and by impugned order, the said application stood rejected. The application for intervention filed by the Appellant became inconsequential when the application for plan approval of the Appellant stood rejected on account of non-compliance by the Appellant - there are no substance in the submission of the Appellant that the order passed by the Adjudicating Authority is in violation of principle of natural justice. The view taken by the CoC that Resolution Applicant who has not been able to deposit the Performance Bank Guarantee of Rs.72.72 Crores it cannot be trusted for implementation of the huge project. Adjudicating Authority in the impugned order has considered all aspects of the matter and has rightly come to the conclusion that Appellant having not deposited the Performance Bank Guarantee inspite of several opportunities/reminders given to the Appellant, Adjudicating Authority has no option except to reject the application for approval of the Resolution Plan - The Adjudicating Authority by the impugned order has also clearly given liberty to the Appellant to submit a Resolution Plan in response to EoI. Thus, no grounds have been made out to interfere with the impugned order. Looking to the fact that Appellant has filed this appeal and Appellant was already permitted by the Adjudicating Authority to submit a Resolution Plan, it is inclined to grant two weeks time to the Appellant to submit a Resolution Plan before the Resolution Professional which may also be considered along with the other Resolution Plans which have already been received in the CIRP of the Corporate Debtor. Appeal dismissed.
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PMLA
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2024 (10) TMI 506
Seeking grant of bail - Money Laundering - predicate offences - amass of assets disproportionate to known sources of income - twin test contemplated u/s 45 of the PMLA satisfied or not - HELD THAT:- Since the check period extends from 12.01.2011 to 31.08.2020, offences have been registered against the applicant under the PC Act, as it stood prior to the amendment of the year 2018 as also post-amendment - the offences have been registered in the predicate offence under the FIR as per Section 13 (2) read with Section 13 (1) (e) of the PC Act (prior to amendment in the year 2018) and Section 13 (2) red with Section 13 (1) (b) of the PC Act (post its amendment in the year 2018). In the present case, admittedly, till date, the chargesheet has not been filed by the CBI in connection with the FIR registered against the applicant in the predicate offence. In other words, the investigation into the said matter is still pending and it is yet to culminate into filing of a final report. In the present case, there is substance in the contention raised on behalf of the applicant that the offence which is treated as the predicate offence, is a peculiar offence, the principal ingredient of which is failure of the accused to satisfactorily account for the assets in question and thereafter, it can be said that specific assets could be categorized as disproportionate assets or assets disproportionate to the known sources of income of the accused. In the present case, the CBI has not even filed a chargesheet and if the applicant is able to satisfactorily account for the assets alleged to be disproportionate to his known sources of income, the CBI may not have any occasion to file the chargesheet against the applicant - The investigation still remaining pending in the predicate offence, in the facts of this case and the nature of offence alleged against the applicant, shows that what could be termed as proceeds of crime is yet in a flux and indeterminate, due to which this Court finds substance in the aforesaid contention raised on behalf of the applicant. This Court is of the opinion that the applicant has indeed satisfied the stringent twin test contemplated under Section 45 of the PMLA, as he has made out a prima facie case on merits to satisfy the first limb of the test and the second limb is also satisfied in the facts and circumstances of the present case. Even otherwise, in the context of period of incarceration suffered by the applicant and remote possibility of the trial being completed within a reasonable period of time, inures to the benefit of the applicant and the present application deserves to be allowed. The applicant shall be released on bail subject to fulfilment of conditions imposed - bail application allowed.
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Service Tax
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2024 (10) TMI 505
Violation of principles of natural justice - opportunity of cross-examination - Evidentiary value of statements recorded under Section 14 of the Central Excise Act, 1944 - Case of appellant is that the statement of witness recorded u/s 14 of the Act before the gazetted Central Excise Officer during the course of investigation cannot be relied upon, unless procedure prescribed under Section 9D of the said Act is scrupulously followed - HELD THAT:- Section 9D of the Central Excise Act, 1944 deals with the evidentiary value of statements recorded before a Central Excise Officer in certain situations. Section 9D(1)(b) provides the conditions under which such a statement can be admitted as evidence. As regards cross-examination, we note that the when a statement is used against the appellant in proceedings, the courts have consistently held that the right to cross-examine the individual who made the statement is fundamental. If a person is available for testimony and their previous statement is being used as evidence, the other party must be given the opportunity to cross-examine the person. Failing to provide this opportunity would violate principles of natural justice. The Delhi High Court in the caseJ K CIGARETTES LTD. ORS. AND M/S. GTC INDUSTRIES LTD VERSUS COLLECTOR OF CENTRAL EXCISE ORS. [ 2009 (8) TMI 64 - DELHI HIGH COURT] clarified that if the person who made the statement is available, the person should be presented for cross-examination when requested. It is also noted that the Courts have consistently recognised that if the department seeks to rely on the previously recorded statement of a person during an inquiry, the opposing party must be allowed to cross-examine that person in court to challenge the veracity of the statement. This provision ensures that any statement made in the absence of the accused (during the investigation phase) does not automatically hold evidentiary value unless the maker of the statement is subjected to questioning by both sides, thus adhering to principles of natural justice - In the instant case, it is noted that at the original stage of adjudication, the adjudicating authority considered the submissions made by the appellant and set aside the proceedings. There does not appear to be any request seeking cross examination of the persons whose statements were relied upon, in the show cause notice. There is no evidence of the appellant seeking cross examination. However, this request has been made before this Tribunal. The cross-examination under Section 9D(1)(b) is a right granted to the appellant, which cannot be denied. It is found appropriate to remand the matter to the Commissioner (Appeals) to re-adjudicate the matter, giving an opportunity to the appellant to cross examine all the witnesses whose statements have been relied upon in the impugned order and the show cause notice - the impugned order is set aside and the appeal is allowed by way of remand.
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Central Excise
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2024 (10) TMI 504
Valuation of goods cleared to related entities - Seeking repudiation of the order of the first appellate authority in directing finalization of provisional assessment of M/s Dhariwal Industries Ltd on clearance of Dhariwal Compound S G - assessment of price of impugned goods being cleared to their related units - rule 8 of Central Excise Valuation (Determination of Value of Excisable Goods) Rules, 2000 - violation of principles of natural justice - HELD THAT:- It is apparent from the impugned order that the first appellate authority concluded that the original authority was required to proceed in accordance with rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and with the circular of Central Board of Excise Customs (CBEC) supra. This was on a clear finding that transactions with unrelated persons did not exist for application in clearances to related person. It is seen from the order of the original authority that, despite having been furnished with costs sheet necessary for assessing the value as per rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, the original authority proceeded to determine otherwise for the year 2012-13. The principle of natural justice requires that any order to the detriment of an assessee must necessarily be preceded with a show cause notice to enable response to the reasons adduced for disallowance of their claim. The original authority had proceeded on the assumption that transactions with unrelated persons existed and, therefore, sufficient reason to discard the CAS-4 statement furnished by the assessee. Impliedly, a favourable finalization was presumed by the assessee. The interests of justice will be served by remanding the matter back to the original authority after upholding the setting aside of the order with the direction that the assessment be taken up for finalization after due notice to the assessee of non-entitlement for coverage under rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - appeal allowed by way of remand.
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2024 (10) TMI 503
Recovery of inadmissible CENVAT Credit on interest and penalty - input service or not - service tax paid on sales commission - Business Auxiliary Service - HELD THAT:- Undisputedly, the appellant who manufactures, inter alia, LPG gas stoves, entered into agreements / MOUs with various oil companies including BPCL would be sold through BPCL s distributors and agreed to pay commission as stipulated in the said agreement. Since the commission paid to BPCL is leviable to service tax, appellant discharged service tax on the sales commission which they had later availed as credit being an input service. On a plain reading of the definition of input service , it is clear that advertisement or sales promotion service has been specifically included in the scope of the input service defined under Rule 2(l) of the CCR, 2004. Besides being a manufacturer of excisable goods, marketing expenses incurred till the date of delivery apparently sale of the goods as held by the Hon ble Supreme Court in the case of UNION OF INDIA ORS. ETC., ETC. VERSUS BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. [ 1983 (10) TMI 51 - SUPREME COURT] ought to be included in the assessable value of the goods for the purpose of payment of duty. Therefore, the commissions paid under the agreement / MOU for sale of their gas stoves through the distributors of BPCL definitely would fall within the scope of the definition of input service. The service tax paid on the sales commissions is admissible as credit to the appellant. In the result, the impugned orders are set aside being devoid of merit - Appeal allowed.
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2024 (10) TMI 502
CENVAT Credit - input services used exclusively in the manufacture of the dutiable goods - required to be included in the numerator for apportioning the common credit between the exempted service (trading) and dutiable goods or not - Extended period of limitation - interest and penalty. CENVAT Credit - HELD THAT:- This issue is no more res integra as it has been held that the CENVAT Credit, which pertains to input services exclusively used in dutiable goods, is not required to be included in the total CENVAT Credit for apportionment between exempted services and dutiable goods. It has been held that for apportionment of CENVAT Credit, only such credit which was availed on input service used commonly in exempted service and dutiable goods has to be taken into consideration. In order to bring parity with the underlying objective of Rule 6, Rule 6(3A) of the Credit Rules was amended vide Notification No. 13/2016-CE (NT) dated 01.03.2016, effective from 01.04.2016, by substituting Rule 6(3A) (b)(ii) of the Credit Rules, to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal - It is observed that such amendment in Rule 6(3A) by virtue of substitution was clarified by the Board vide TRU Circular No. 334/8/2016-TRU dated 29.02.2016, to apply retrospectively. The clarification clearly mentioned that the provisions of Rule 6 providing for reversal of Credit in respect of input services used w.r.t. exempted goods/services, is being redrafted with the objective to simplify and rationalize the same without altering the established principles of reversal of such credit. The modality adopted by the Appellant for reversal of credit on proportionate basis is in accordance with the provisions of Rule 6(3A). Hence, the impugned order by upholding the demand on incorrect understanding of provision is erroneous and not sustainable. Extended period of limitation - HELD THAT:- There is no suppression of facts in the instant case. It is observed that the Appellant periodically intimated the department about their selection of option to reverse Cenvat credit under Rule 6(3A) of CCR. They have also intimated the department about the amount of credit reversed by them - Hence the department already had the knowledge of the said transactions. Moreover, mere fact that the dispute on eligibility of impugned credit is disputed by the department does not ipso facto mean the fact was suppressed - the extended period of limitation is not invokable. Imposition of penalty - recovery of interest - HELD THAT:- Since the demand of Cenvat Credit itself is not sustainable, penalty is not imposable and consequently, no interest is also recoverable. The impugned order is not sustainable and is accordingly set aside - Appeal allowed.
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2024 (10) TMI 501
Reversal of proportionate CENVAT Credit attributed to the trading goods - compliance with Rule 6 of CENVAT Credit Rules, 2004 regarding maintenance of separate accounts for dutiable and exempted goods - HELD THAT:- The demand of CENVAT Credit was raised which is equal to 6% of difference between the purchase price and sale price of trading goods in terms of Rule 6 (3). However, it is also not in dispute that the appellant have reversed the proportionate credit along with payment of interest. Therefore, after such reversal and payment of interest for the delayed period i.e. from the date of taking credit till the date of reversal of proportionate credit the demand equal to 6% under Rule 6 (3) shall not sustain as held in numerous Judgments. Reliance can be placed in PI INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-II [ 2023 (6) TMI 455 - CESTAT AHMEDABAD] and C.C.E. S.T. -VADODARA-II VERSUS ALSTOM INDIA LIMITED [ 2022 (11) TMI 1070 - CESTAT AHMEDABAD] where it was held that 'the demand equal to 6% on the traded goods (exempted service) is not sustainable.' The demand is not sustainable. Hence the impugned order is set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (10) TMI 500
Rate of tax applicable to the tread rubber that was sold by the assessee to the customers in the course of execution of the works contract - transfer of goods not in the form of tread rubber but in some other form - applicable rate would be 12.5% / 14.5% for the assessment years 2011-12 / 2013-14 respectively or not - HELD THAT:- It is found that apart from the fact that the clarificatory order dated 7.4.2016 admittedly governed the parties for the assessment years 2011-12 and 2013-14 respectively, the process adopted by the assessee for the purposes of retreading works involved the incorporation of a tread rubber strip manufactured by it on to the old tyres that were brought by the customers for retreading. The process of works contract apparently involved the scraping of the outer layer of the old tyre so as to make it suitable for the affixation/fusion of the tread rubber strips manufactured by the assessee onto it. There may have been other processes including vulcanization which were necessary for the purposes of effective retreading done on an old tyre. In our view, the processes undertaken by the assessee were sufficient to rob the tread rubber strips manufactured by it of their original identity and shape while being incorporated into the works contract of retreading the old tyre. As rightly noticed by the First Appellate Authority and in the clarificatory order dated 7.4.2016, that the transfer of goods involved in the execution of the works contract in the instant cases was not in the form of goods but in some other form. The impugned orders of the Appellate Tribunal cannot be legally sustained. The appropriate rate of tax on the sale of tread rubber by the assessee would have to be taken as @ 12.5% for the assessment year 2011-12 and 14.5% for the assessment year 2013-14. The O.T. Revisions are thus disposed by answering the questions of law raised in favour of the Revenue and against the assessee.
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2024 (10) TMI 499
Classification of goods categorized as vitamins and minerals pre-mix - to be categorised in the category of Entry 29 of Schedule II of the Act, 2008 under the heading chemicals and to be taxed @ 4% or under the Entry 89 under the heading ores and minerals taxable @ 12.5%? - HELD THAT:- Section 4 of the Act, 2008 which a charging section clearly states that the tax payable on sale of goods under this Act, shall be levied and paid. accordingly tax is levied on the goods and not individually on the raw material from which the goods are prepared. Undisputedly, items given in Entry 29 are not the goods which are being sought to be taxed in the present case, but it is the finished product which is vitamins and minerals pre-mix - this Court is unable to accept contention of the revisionist that goods classified as vitamins and minerals pre-mix would fall under the category chemicals . Whether vitamins and minerals pre-mix would fall under the category drugs and medicines as provided under Entry 41? - HELD THAT:- Entry 41 also specifically in its contents excludes medicated soap, shampoo, antiseptic cream, face cream, massage cream, eye gel and hair oil etc. This entry very clearly defines the products which are used for alleviation of any disease or its symptoms - vitamins and minerals pre-mix does not fall in the category of drugs and medicines nor has any material adduced either before the authorities below or before this Court that it would qualify for being classified as drugs and medicines and accordingly, there is no reason to accept the contention of the revisionist that vitamins and minerals pre-mix would fall under the category of drugs and medicines . Inclusion of vitamins and minerals pre-mix under ores and minerals as defined in Entry 89 of Schedule II of the Act, 2008 - HELD THAT:- The said entry provides only for raw oars and minerals , without mentioning vitamins and minerals pre-mix falling under the said entry, and hence it is clear that vitamins and minerals pre-mix would not fall under the category of oars and minerals . This Court does not find any infirmity in the order passed by the Additional Commissioner or the Tribunal that vitamins and minerals pre-mix would be termed as unclassified item and liable to be taxed as such - the revision is dismissed.
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Indian Laws
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2024 (10) TMI 498
Decree for payment of money granted by the trial Court - suit for recovery of amount allegedly due under a promissory note - rebuttal of presumption - Whether the trial Court was justified in invoking the presumption without adverting to the conflicts and contradictions in the evidence of PW1 and PW2 as well as between the proof affidavits filed in chief examination and the cross examination of the plaintiff as PW1? HELD THAT:- Section 118 of the Negotiable Instruments Act, 1881, enacts the presumption as to consideration once the execution of the promissory note is admitted, but the said presumption is rebuttable. In T. MOHAN KUMAR VERSUS R. ASOK KUMAR [ 2023 (12) TMI 1358 - MADRAS HIGH COURT] , this Court after referring to the judgments in Bharat Barrel Drum Manufacturing Company's case [ 1999 (2) TMI 627 - SUPREME COURT ] and Hiralal vs. Badkulal [ 1953 (3) TMI 36 - SUPREME COURT ], wherein, the Supreme Court had held that the defendant may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff, had held that direct evidence of absence of consideration is not the only mode of proving absence of consideration. Surrounding circumstances and probabilities can also be relied upon by the Court to non suit the plaintiff on the ground of absence of consideration. A holistic reading of the evidence of PW1 and PW2 impels us to believe the version of the defendant. Once it is found that the version in defence is more probable, it is necessary to look for something more than the mere oral evidence of PW1 to establish the passing of consideration. Unfortunately for the plaintiff, the evidence of PW2 is also not very helpful. His evidence contradicts the evidence of the plaintiff. Therefore, it is clear that the plaintiff has not established passing of consideration and the presumption under Section 118 stood rebutted by the prevailing circumstances. The findings of the trial Court which do not reflect the impact of the evidence on record, are not sustained. The Appeal Suit stands allowed with costs.
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2024 (10) TMI 497
Grant of regular bail - inordinate delay of six days in lodging the instant FIR - supply of intoxicant goods - dismissal of the instant petition on the ground that the petitioner is a habitual offender as he is involved in two more cases - right to speedy trial - HELD THAT:- This Court is conscious of the basic and fundamental principle of law that right to speedy trial is a part of reasonable, fair and just procedure enshrined under Article 21 of the Constitution of India. This constitutional right cannot be denied to the accused as is the mandate of the Apex court in Hussainara Khatoon and ors (IV) v. Home Secretary, State of Bihar, Patna [ 1979 (3) TMI 215 - SUPREME COURT ]. Besides this, reference can be drawn upon that pre-conviction period of the under-trials should be as short as possible keeping in view the nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence, reasonable apprehension of tampering with the witness or apprehension of threat to the complainant. This Court has held that no doubt, at the time of granting bail, the criminal antecedents of the petitioner are to be looked into but at the same time it is equally true that the appreciation of evidence during the course of trial has to be looked into with reference to the evidence in that case alone and not with respect to the evidence in the other pending cases. In such eventuality, strict adherence to the rule of denial of bail on account of pendency of other cases/convictions in all probability would land the petitioner in a situation of denial of concession of bail. The petitioner is hereby directed to be released on regular bail on his furnishing bail and surety bonds to the satisfaction of the trial Court/Duty Magistrate, concerned - petition allowed.
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