TMI Tax Updates - e-Newsletter
October 18, 2024

Case Laws in this Newsletter:

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

Highlights / Catch Notes

GST

• Petition dismissed; no natural justice violation in show cause notice, detailed information provided.

  The court dismissed the petition, holding that there was no violation of principles of natural justice due to alleged vagueness in the show cause notice (SCN). The SCN was detailed, providing complete information about the case to be addressed. The petitioners' reply was thorough, and no serious grievance was raised regarding vagueness. The court cited Supreme Court precedents emphasizing that writ petitions should not be routinely entertained against SCNs unless there is absolute lack of jurisdiction or violation of natural justice principles. Recipients should respond to SCNs and raise all grounds, with jurisdictional issues adjudicated by the issuing authority initially before approaching the court. When there is a serious dispute over classification, respondents must respond to SCNs with supporting material. Litigation against SCNs should be discouraged to prevent frivolous cases and waste of public money and court time.
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• Statutory remedy of appeal takes precedence over writ petition, court exercises discretion.

  Petition maintainable but not entertainable due to availability of statutory remedy of appeal. Supreme Court held that merely because petition is maintainable, court not obligated to entertain it. Discretion lies with court. If petitioner failed to raise objections before authority, can do so in appeal memo before appellate authority. Petitioner unable to show palpable injustice if relegated to appeal remedy. In view of Supreme Court judgments, not required to entertain writ petition when statutory appeal remedy available. Petitioner can avail appeal remedy, time consumed in writ proceedings excluded for limitation purposes. Appellate authority directed to entertain appeal if filed physically. Writ petition disposed of.
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• Tobacco-lime mixture undergoes manufacturing process, classifying it as "manufactured chewing tobacco" liable to 28% GST and 160% Compensation Cess.

  Tobacco pre-mixed with lime undergoes a manufacturing process involving mixing of lime paste, evaporation of water content, and addition of aroma, menthol, and moisturizer, resulting in a new product distinct from raw tobacco leaves. This process transforms the raw material into a marketable/consumable product for chewing needs, classifying it as "manufactured chewing tobacco" under CTH 2403 99 10. Consequently, the applicable GST rate is 28%, and the Compensation Cess rate is 160% as per Notification No. 1/2017-Compensation Cess (R). The ruling relies on the Supreme Court's decision in State of Madras Vs Bell mark Tobacco Company, which held that the cumulative effect of various processes on tobacco amounts to a manufacturing process.
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• Foreign company's guarantee to Indian subsidiary for loans triggers GST under reverse charge.

  GST is payable under reverse charge mechanism on issuance of corporate guarantee without consideration by foreign group company to Indian subsidiary for loan taken from banks/financial institutions. The time of supply is the date of entry in books of Indian recipient. Prior to 26.10.2023, GST is payable at the time of execution based on valuation u/r 28(1). Post 26.10.2023, GST is payable one-time at 1% of total loan value u/r 28(2) at the time of execution. For continuing guarantees spanning multiple years, the value needs to be divided equally among relevant years, with GST payable at 1% of such divided value for the first year and 1% of outstanding loan value for subsequent years u/r 28(2).
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• Mining royalty payments to Rajasthan govt attract 18% GST under RCM; upfront amounts before lease also liable.

  GST is applicable on mining lease payments, including royalty, payable to the Government of Rajasthan under reverse charge mechanism (RCM) at 18% (9% CGST and 9% SGST). The applicant is liable to pay GST on upfront payments made as per tender conditions before issuing Letter of Intent (LOI) and after issuing LOI but before entering into the lease agreement, under RCM. The applicant can claim input tax credit (ITC) of GST paid under RCM, subject to conditions u/s 16 of CGST Act, 2017. The applicant needs to obtain GST registration in Rajasthan for paying GST.
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Income Tax

• Govt exempts RBI payments from tax collection under Income Tax Act Section 206C(1F.

  The Central Government, exercising powers under sub-section (12) of section 206C of the Income-tax Act, 1961, has specified that no tax collection shall be made under sub-section (1F) of section 206C on any payment received from the Reserve Bank of India. This notification comes into force on the date of its publication in the Official Gazette.
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• Tax compliance rules updated: Enhanced reporting for non/lower TCS cases & credit transfer to assessable party.

  This notification amends the Income-tax Rules, 1962, introducing changes related to tax collection at source u/s 206C of the Income-tax Act, 1961. The key amendments are: (1) Requiring furnishing of particulars regarding amounts received or debited where tax was not collected or collected at a lower rate due to notifications u/s 206C(12). (2) Allowing credit for tax collected at source to be given to the person in whose hands the collectee's income is assessable, subject to the collectee filing a declaration. (3) Mandating the collector to issue TCS certificate in the name of the person to whom credit is given. (4) Introducing a new code in Form 27EQ for reporting cases of non-collection or lower collection due to notifications u/s 206C(12).
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• Employees can now share income details with employers for accurate TDS calculation.

  This notification amends the Income-tax Rules, 1962. Key changes include: substituting references to "section 89(1)" with "section 89"; replacing Rule 26B to allow employees to submit details of other income, tax deducted/collected at source, and house property loss to employers for computing TDS u/s 192(1); inserting new Form 12BAA for providing such details; amending Forms 10E, 16, and 24Q to incorporate changes related to section 192(2B) regarding consideration of other income/loss and tax deducted/collected at source while computing TDS; and making consequential changes. The notification aims to streamline TDS procedures and reporting requirements u/s 192.
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• Streamlined registration for tax-exempt trusts/NGOs.

  The notification amends the Income-tax Rules, 1962 by modifying Form No. 10A and Form No. 10AB related to registration u/ss 12A and 80G of the Income-tax Act, 1961. Key changes include omitting references to section 10(23C), revising declaration statements, updating document requirements for registration u/s code 02 (sub-clause (vi) of clause (ac) of sub-section (1) of section 12A), removing document requirements for certain section codes, and simplifying affidavit requirements. The amendments aim to streamline the registration process for trusts, societies, and non-profit companies seeking tax exemptions under the specified provisions.
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• Taxpayer's plea for hearing by Local Committee on high-pitched assessment rejected.

  The High Court examined the grievances of an assessee against the Assessment Officer's rejection of their claim for High-Pitch scrutiny assessment without providing reasons. The court held that while the Local Committee must submit a report determining whether the order qualifies as High-Pitch assessment, there is no provision requiring the committee to provide an opportunity for hearing to the assessee. The assessee's claim of being heard by the Local Committee was deemed baseless, as the committee's purpose is to address genuine grievances efficiently, not serve as an alternative dispute resolution forum. The court concluded that if the Local Committee determines the case is not High-Pitch assessment, the assessee cannot compel the committee to examine and decide the case.
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• Protective additions on partner's share disallowed after Settlement Commission's order.

  The assessing officer made protective additions u/ss 69, 69C, and 68 for amounts already considered by the firm where the assessee was a partner. However, the settlement commission's order dated 03.12.2020, containing entries from serial numbers 1 to 2402 for which additions were made by the assessing officer on a protective basis, was not disputed by the revenue. Since the additions accepted by the firm were not contested by the revenue, they cannot be sustained in the assessee's hands on a protective basis. Consequently, the ground raised by the assessee stands allowed by the Income Tax Appellate Tribunal.
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• Share capital hike, unsecured loans treated as cash credits; interest disallowance deleted.

  This is a summary of an order from the Income Tax Appellate Tribunal (ITAT) dealing with various additions and disallowances made by the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) [CIT(A)]. The key points are: Increase in share capital and unsecured loans were treated as unexplained cash credits u/s 68, but the CIT(A) deleted the additions after the assessee furnished satisfactory explanations during remand proceedings. The ITAT upheld the CIT(A)'s decision. Interest expenditure disallowance was also deleted by the CIT(A), which the ITAT did not interfere with. The ITAT directed the AO to allow service charges, valuation charges, installation charges, and computer service charges as they were payments made through banking channels to organized sector vendors, fulfilling Section 37(1) requirements. Additions relating to investments were deleted by the CIT(A) based on the AO's remand report accepting the assessee's explanation supported by evidence. The ITAT did not interfere. Professional fees paid to a Chartered Accountant at 3% of the loan amount were accepted by the AO after TDS deduction. The CIT(A) restricted it to 1%, but the ITAT allowed the full 3% claim.
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• Tribunal deletes TP adjustment on share application money; directs recomputation after considering AO's rectification order.

  The Tribunal held that the onus was on the Revenue to demonstrate the Appellant's default leading to inordinate delay in allotment of shares, which the Revenue failed to discharge. Consequently, the transfer pricing adjustment treating share application money as an interest-free loan to the Associated Enterprise was deleted. Regarding the Dispute Resolution Panel's failure to consider the Assessing Officer's rectification order u/s 154 revising the income, the Assessing Officer was directed to recompute the income and tax liability after considering the rectification order. The Tribunal allowed the grounds raised by the Appellant on these issues.
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• No burden to prove innocence; Reversal of bogus purchases disallowance for lack of evidence.

  The High Court held that once the Income Tax Appellate Tribunal (ITAT) found no cogent or convincing evidence from the Revenue to allege bogus purchases, it was wrong to expect the assessee to prove its innocence. The ITAT erred in upholding the Commissioner of Income Tax (Appeals) (CIT-A)'s ad hoc disallowance of 10% of the total purchases as bogus, without analyzing the reasonableness or justification for such disallowance. The ITAT's approach of adopting a middle ground by endorsing the 10% disallowance, despite finding no cogent evidence from the Revenue, gave credence to the proposition that the law can demand proof of the negative from the assessee. The High Court opined that such an approach is repugnant and cannot be endorsed as a process known to law to disallow expenses on the premise of being bogus. Consequently, the High Court ruled in favor of the assessee and against the Revenue.
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• Software firm challenges comparables for transfer pricing adjustment.

  Comparable selection for determining arm's length price (ALP) adjustment. Appeals limited to including or excluding certain uncontrolled entities as comparables suggested by appellant. Impugned order set aside to extent of rejecting appellant's challenge to inclusion of Avani Cincom Technologies Limited, Ishir Infotech Limited, Tata Elxsi Limited and Sasken Communication Technologies as comparables and excluding Akshay Software Technologies Limited as comparable for ALP determination. Matters remanded to Tribunal for fresh decision on appellant's objections regarding inclusion/exclusion of Ishir Infotech Ltd, Tata Elxsi Limited, Sasken Communication Technologies Limited and Akshay Software Technologies Limited for ALP adjustment determination, with contentions on merits reserved.
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• Delay in tax filing condoned due to technical glitches on IT portal.

  The case pertains to a delay of two days in filing the Return of Income and Form 10-IC due to technical difficulties on the Income Tax Portal. The Chartered Accountant provided evidence of the technical issues faced. The Revenue did not dispute the bona fide nature of the delay. Applying the principles established in the Jyotsna Mehta case, the High Court directed the Respondents to condone the delay in filing the return, considering the delay was minimal and wholly bona fide.
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• Taxpayer wins against TDS adjustments for certain years, but liable for 2017-18 demand.

  The case pertains to tax deducted at source (TDS) by the respondent from the petitioner's income but not deposited with the tax authorities. The petitioner claimed non-liability to pay tax deducted by the respondent, as reflected in Form 16A. The revenue pointed out adjustments for different assessment years. The court held that the adjustment for the assessment year 2017-18 was permissible, as the outstanding demand of Rs. 42,070 was recoverable. However, for the assessment years 2009-10, 2010-11, and 2011-12, the adjustment was set aside in favor of the petitioner, following a previous decision. The impugned notices and order were set aside for those assessment years, and the revenue was directed to pass necessary consequential orders accordingly.
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• Taxpayer urged to pursue appeal against assessment order, notices despite alleged illegality under Hexaware, Siemens precedents.

  Petitioner availed alternate remedy of filing substantive appeal against assessment order and notices issued u/ss 148A and 148 of the Act. Court held that if assessment order and notices are contrary to Sections 151A and 151 as interpreted in Hexaware and Siemens, Appellate and Revisionary Authorities, being bound by jurisdictional High Court's decisions, must consider legal position. Petitioner can raise contentions regarding illegality of assessment order and notice u/s 148 before said authorities. Court opined that when Appellate Authority is seized with proceedings, entertaining writ petitions to adjudicate issues which can be decided by Appellate Authority considering Court's decisions would create situation where all such matters would require Court's intervention. Hence, Court held petitioner should pursue pending proceedings before Appellate and Revisionary Authorities. Court not persuaded to entertain present petition assailing assessment order when appeal and revision are already pending.
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• Govt funds for startup & interest earned not taxable as income, must be used only for specified project purpose.

  Interest income earned from funds received from Government for setting up a company is a capital receipt, not revenue receipt, as the funds and income must be utilized only for the specified purpose. The funds kept in short-term deposits cannot be termed surplus amounts to be utilized as per the company's wish. The interest income is inextricably linked to the setting up of the project and must be used exclusively for that purpose. Therefore, the interest income on short-term deposits of government funds is a capital receipt, not taxable as income from other sources.
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• Tax audit report issue: Claim remanded for fresh assessment after allowing submission of additional evidence.

  Impugned order set aside, matter remitted back to Assessing Officer for fresh consideration. Assessing Officer rejected claim based on Tax Audit Report not being duly signed and non-production of bank statements and other documents. Petitioner contended that if given opportunity, additional documents would be produced to substantiate claim and establish genuineness of Tax Audit Report. In light of this specific contention, High Court deemed it appropriate to remit matter to Assessing Officer to reconsider afresh in accordance with law after giving opportunity to petitioner to produce additional evidence and make submissions regarding authenticity of Tax Audit Report.
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• Charitable Society seeks condonation for delayed tax return filing due to late audit report.

  The petitioner sought condonation of delay in filing the return of income, asserting that the audit report was received only in December 2019, after the due date for filing the return. Although the petitioner did not provide evidence of the date of receipt, considering the nature of the petitioner's society and scale of operations, there would be genuine hardship to members if the delay is not condoned. Section 119(2)(b) of the Income Tax Act has been construed liberally by the High Court and Bombay High Court. Therefore, it is an appropriate case to condone the delay in filing the return of income.
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• Cash property deal penalty challenged. Court: No penalty if reasonable cause like legal unawareness shown.

  Penalty u/s 271D for violation of Section 269SS was challenged. ITAT held that where assessee received sale consideration for immovable property in cash exceeding Rs. 20,000, penalty u/s 271D was not leviable if reasonable cause u/s 273B for non-compliance with Section 269SS was demonstrated, such as lack of knowledge of legal provisions. Relying on precedents, ITAT allowed the appeal and deleted the penalty, finding that the assessee had reasonable cause for non-compliance with Section 269SS due to lack of awareness of legal provisions.
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• Assessee's single income source exempted from secs 69 & 115BBE, AO's non-application upheld in post-survey assessment.

  Non-application of Sections 69 and 115BBE by the Assessing Officer (AO) upheld. Assessee had only one source of income, therefore AO did not err in not invoking Section 115BBE. Additionally, the amendment to Section 115BBE came into force after the survey on the assessee, hence AO correctly did not apply it. Reliance placed on ITAT Surat ruling in Samir Shantilal Mehta's case, where addition made u/s 115BBE was held unsustainable as the search preceded the amendment. Consequently, the assessment order was not erroneous or prejudicial to Revenue's interest, and the assessee's appeal allowed.
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• Income Tax Dispute: Tribunal Upholds Assessee's Case on Merits.

  The Appellate Tribunal concurred with the Mumbai Tribunal's order in M/s Pooja Marketing, which comprehensively dealt with all aspects, facts, and applicable case laws. The bench not only considered the validity of revisionary jurisdiction u/s 263 but also decided the issue on merits in favor of the assessee. The case law in CIT vs. Dr. M.A.M. Ramaswamy was distinguished by the learned Senior Counsel in written submissions, which was deliberated upon and found concurrence. No distinguishing feature or reversal of the Mumbai Tribunal's decision by higher judicial authorities was shown. The Tribunal dismissed the revenue's appeal after elaborately dealing with the issue on merits.
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• Income tax case: Club's claim of interest as non-taxable based on mutuality rejected due to lack of evidence & binding precedents.

  The Appellate Tribunal upheld the Commissioner of Income Tax (Appeals) [CIT(A)]'s exercise of suo moto power u/s 154 to rectify their earlier order. The CIT(A) had not considered the Supreme Court's ratio decidendi in Saurashtra Kutch Stock Exchange Ltd., which amounts to a mistake apparent on record. The assessee club claimed interest income as non-taxable based on mutuality principles, but the Assessing Officer rejected this claim after allowing 10% deduction for expenses. The Tribunal found the assessee did not raise this claim before the AO or CIT(A) initially, nor provide evidence to substantiate their case aligning with the Bangalore Club judgments. Therefore, the AO rightly moved for rectification before CIT(A) in light of the Madras High Court's binding order in the assessee's own case, which concurred with the Bangalore Club ratio upheld by the Supreme Court. Consequently, the Tribunal dismissed the assessee's appeals as devoid of merit.
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• Interest-free advances to related parties presumed from interest-free funds unless surplus.

  The assessee failed to demonstrate that the financial assistance availed on interest was utilized for business purposes without diversion. Where an assessee has interest-free and interest-laden funds, advances made to subsidiaries, family, or friends are presumed from interest-free funds if sufficient. The AO cannot question commercial wisdom but can examine if interest-free funds meet interest-free advances. The CIT-DR rightly argued against relying on previous decisions due to factual differences each year. However, the CIT(A) found identical facts to the previous year's Tribunal order favoring the assessee. The assessee had sufficient interest-free funds to cover related party advances except for one at 9% interest. Other related parties were charged 12%. For unrelated advances at 9%, promoter/director relationship existed. Consequential disallowances of brokerage, commission, and bank charges were deleted upon deleting interest disallowance. The decision favored the assessee against the revenue.
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• Shipping firm's income classification under tonnage tax scrutinized for core vs incidental activities.

  The assessee, a shipping company under the Tonnage Tax Scheme, had declared certain incomes like sundry credit balances written back, excess provisions written back, sundry receipts, insurance and PI claims, house rent, bus service receipts, interest income, commission on disbursements, profit on bar and shop sales, sundries related to core shipping activities, and water charges recovery as part of core shipping income u/s 115V(2). The AO treated some of these incomes as non-core, taxing them under normal provisions. The CIT(A) and DRP provided relief on certain issues. The ITAT allowed the assessee's claim, treating these incomes as core shipping activities based on co-ordinate bench rulings, except for profit on bar/shop sales which was held incidental. The ITAT also allowed administrative expenses allocation against incidental activity income u/s 115VI, directed foreign tax credit u/ss 90/91 following its earlier order, and dismissed the revenue's appeal. The core issues revolved around determining the scope of core versus incidental shipping activities under the Tonnage Tax regime.
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Customs

• Revised tariff values announced for imports like crude palm oil, RBD oils, brass scrap, gold, silver & areca nuts.

  This notification from the Ministry of Finance revises the tariff values for import of certain goods including edible oils like crude palm oil, RBD palm oil, crude palmolein, RBD palmolein, crude soya bean oil, brass scrap, gold in various forms, silver in various forms, and areca nuts. It provides updated tariff rate values in US dollars per metric ton or per specified unit for these commodities, which will be applicable for customs duty calculation effective from 16th October 2024. The tables outline the specific tariff headings, descriptions, and corresponding tariff values assigned to these imported items.
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• Refund claim rejected for interest paid on delayed IGST payment due to non-compliance with pre-import conditions.

  Refund claim for interest paid along with IGST was rejected due to non-fulfillment of pre-import conditions for goods imported under Advance Authorizations. Initially, IGST exemption was wrongly availed, but payment was made later. The pre-import condition in the notification was upheld as valid by the Supreme Court. The appellant admitted to not fulfilling the pre-import conditions, rendering them ineligible for IGST exemption. The interest liability on delayed IGST payment was automatic. The Bombay High Court's decision on interest refund for additional customs duty did not apply to IGST. The CESTAT dismissed the appeal, concluding that the refund claim for interest paid along with IGST was rightly rejected.
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• Logical error correction upholds Revenue's appeal, not rehearing.

  Error apparent on record rectified by allowing Revenue's appeal instead of wrongly dismissing it, as logical conclusion of upholding Revenue's contentions. Rectification limited to correcting error on record, not re-hearing matter. Apex Court's guidelines on rectifying apparent errors followed. Request to reconsider monetary limits post-disposal not entertained, as it would reopen decided matters. CESTAT's final order dated 18.03.2024 disposing appeal upheld, no other errors found.
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Corporate Law

• Disciplinary action against Resolution Professional upheld: Breach of duty can't be condoned.

  Wilful misconduct - Scope of judicial review limited - Seeking removal of Resolution Professional, providing documents for objections to Resolution plan, disqualifying proposed Resolution applicant, and action against petitioner for alleged fraudulent transactions - Court held that once Resolution Professional found guilty of breach, there was no occasion for the Board to take a lenient view, especially as violations went to the root of the matter - Court cannot reappraise facts as if sitting in appeal, merely because alternate punishment seems more appropriate - Resolution Professional cautioned and warned to be careful in future, with repetition treated as willful negligence - Clarified that Insolvency and Bankruptcy Code allows single-member Disciplinary Committee - No infirmity or irregularity in constitution of single-member Committee, no malafide alleged - No merit in argument that petitioners should have been afforded personal hearing by Disciplinary Committee prior to decision on complaint - Petition disposed of.
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IBC

• Belated creditor claim rejected, resolution plan upheld despite objections.

  The NCLAT dismissed the appeal filed by the Appellant challenging the approval of the resolution plan for the Corporate Debtor. The key points are: The Interim Resolution Professional made a public announcement with a deadline for claim submissions, which the Appellant failed to meet despite being informed about the CIRP initiation. The Resolution Professional regularly updated the list of creditors and their claim status on the Corporate Debtor's website and IBBI portal, but the Appellant did not raise objections regarding rejection of their claim during the CIRP period or when the resolution plan was approved. The NCLAT held that the Resolution Professional acted diligently, and the Appellant's objections to the resolution plan approval based on rejection of their belated claim lacked merit. The Appellant's claim of being a secured creditor was also found lacking force. Consequently, the NCLAT dismissed the appeal as devoid of merit.
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• Personal guarantor's debt under IBC doesn't halt creditor action on separate entities/assets.

  The interim moratorium u/s 96 of the Insolvency and Bankruptcy Code (IBC) applies only to the specific debt for which Section 95 proceedings have been initiated against a personal guarantor. It does not extend to other debts or properties of the personal guarantor or entities they are associated with. The moratorium prohibits other creditors from initiating legal action regarding the specific debt, but does not bar creditors from enforcing their rights against separate properties or entities. The IBC provisions take precedence over other laws u/s 238. In this case, the moratorium covers only the personal guarantee and does not restrain the creditor from auctioning partnership firm assets, as the firm is a separate entity from the personal guarantor. The appeal against allowing the auction was dismissed.
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• Developer's interest-bearing deposit classified as financial debt; NCLAT upholds insolvency admission.

  Admission of a Section 7 application under the Insolvency and Bankruptcy Code, 2016, concerning the classification of a debt as a Financial Debt within the meaning of Section 5(8). The key points are: The debt arose from a Development Agreement involving the payment of a Security Deposit and an additional amount carrying interest at 18% per annum, compounded quarterly, indicating the time value of money. The Corporate Debtor acknowledged the interest liability in its balance sheet. The Adjudicating Authority correctly held that the debt qualified as a Financial Debt, and the creditor was a Financial Creditor, not an Operational Creditor. The NCLAT upheld the Adjudicating Authority's order, finding no error in admitting the Section 7 application and classifying the debt as a Financial Debt. The appeal was dismissed.
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• Unstamped Assignment Agreement Upheld for Loan Recovery Under SARFAESI Act.

  The appeal challenges the admission of an unstamped Assignment Agreement dated 29.03.2022 under the Maharashtra Stamp Act, 1958. The court held that the Assignment Agreement is a registered document, and by virtue of Section 5(2) of the SARFAESI Act, 2002, the assignee, Phoenix Arc Pvt. Ltd., is entitled to prosecute and enforce all pending applications, appeals, and legal proceedings, including the Section 7 application filed by L&T Finance Ltd. The deeming clause in Section 5(2) protects and entitles Phoenix Arc Pvt. Ltd. to prosecute the Section 7 application. The Adjudicating Authority did not err in rejecting the Corporate Debtor's application to impound the document and allowing Phoenix Arc Pvt. Ltd. to prosecute the applications. The appeal was dismissed by the NCLAT (Appellate Tribunal).
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• Condonation of Delay in Filing Appeal: Interpreting "Sufficient Cause" Doctrine.

  The NCLAT considered the applicability of time limitation for filing an appeal and whether there was sufficient cause for condonation of delay. It held that when an order is not pronounced in open court, the limitation period for filing an appeal does not commence, as per the Supreme Court's judgment in Sanjay Pandurang Kalate. Although the appellant claimed the order was not uploaded until 20.02.2024, the liquidator had communicated the order to the appellant on 25.01.2024. Therefore, the appellant could not claim that the limitation period would not begin at least from 25.01.2024. The expression "sufficient cause" is elastic, allowing courts to apply the law meaningfully to serve the ends of justice. The Supreme Court in Sheo Raj Singh vs. Union of India held that condonation of delay is a discretionary power, and its exercise depends on the sufficiency of the cause shown and the acceptability of the explanation, regardless of the length of delay. In the present case, no date of uploading was brought on record, so the limitation period could not be pegged to the date of uploading. However, since the appeal was filed on 02.03.2024, within 45 days from 25.01.2024 when the order was communicated, the NCLAT found sufficient cause to condone the delay.
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• Appeal allowed after settlement & payment; IRP entitled to CIRP costs; creditor to file withdrawal form with bank guarantee.

  The Appellate Tribunal allowed the appeal, setting aside the order of admission against the Corporate Debtor due to the settlement reached and payment received by the creditor. The Insolvency Resolution Professional (IRP) worked for a brief period before the Committee of Creditors' (CoC) constitution was stayed. The IRP can claim CIRP costs by filing an application before the Adjudicating Authority. The Financial Creditor shall file the prescribed form along with a bank guarantee to the IRP, who will then submit it to the Adjudicating Authority for withdrawal of the petition. The other creditor's petition can be revived to pursue claims against the Corporate Debtor.
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Service Tax

• Interest on Pre-Deposit Amounts: Eligibility Dilemma Under Amended Excise Law Provisions.

  The case pertains to the interpretation of amended provisions of Sections 35F and 35FF of the Central Excise Act, 1944, regarding eligibility for interest on pre-deposit amounts. The appellant had deposited the entire pre-deposit amount on specific dates in 2015, after the commencement of the Finance (No. 2) Act, 2014, on 06.08.2014. The proviso to Section 35F categorizes pre-deposit amounts into two categories: (i) deposited prior to 06.08.2014 and (ii) deposited post 06.08.2014. For amounts deposited post 06.08.2014, the amended Section 35FF applies, while for amounts deposited prior to 06.08.2014, the erstwhile Section 35FF applies. The settled principle of statutory interpretation requires interpreting the statute in accordance with the words used. The CBEC circular clarified that where an appeal is decided in favor of the assessee, they shall be entitled to a refund of the deposited amount along with interest from the date of deposit to the date of refund u/s 35FF. The Tribunal held that since the circular was issued without qualification, subordinate authorities cannot introduce qualifications, and allowed the appeal.
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Central Excise

• Soda ash manufacturer allowed CENVAT credit on input services for salt procurement from salt pans.

  The appellant, engaged in manufacturing soda ash, availed CENVAT credit amounting to Rs. 46,27,417/- for the period 03.12.2005 to 31.03.2012 on input services utilized at salt pans for procuring salt, a raw material for soda ash production. The department rejected the credit on the grounds that it was availed beyond one year from the date of invoice, relying on Sections 11A and 11B of the CENVAT Credit Rules, 2004. However, these sections do not prescribe any time limit for availing credit. The amendment introducing the one-year time limit was made on 11.07.2014, after the relevant period. Relying on the Roquette Riddhi Siddhi case, the Tribunal held that credit can be availed even after one year for invoices issued before 01.09.2014. Regarding the second issue, the Tribunal, relying on precedents like Parry Engineering, held that credit cannot be denied merely because the input service was utilized outside the factory premises, as long as it has a nexus with manufacturing activity. Since salt procurement from salt pans is directly related to soda ash manufacturing, the appellant is entitled to the CENVAT credit on such input services.
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• Job-worker manufacturing RMC at builder's site liable for excise duty; plant ownership irrelevant, relationship with material supplier key.

  This is a case regarding levy of Central Excise Duty on Ready Mix Concrete (RMC) manufactured at construction sites by the appellant. The key points are: The appellant was manufacturing RMC at the site of the builder using raw materials provided by the builder, making it a job-work activity. The ownership of plant and machinery is irrelevant in determining job-work; the relationship between material supplier and processor is crucial. As the appellant was clearing goods manufactured on behalf of the builder, duty was payable by the appellant even as a job-worker. Regarding the extended period of limitation, it was held that due to a change in opinion based on a Supreme Court decision, the extended period could not be invoked, and the demand was confined to the normal period as correctly decided by the Commissioner (Appeals). The appellant's claim for concessional duty rate, if excess duty was due, was to be considered by the Original Adjudicating Authority. The appeal was dismissed, upholding the impugned order.
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Articles

• Why FTWZs and Bonded Warehouses Matter When You Import
• No GST on Extra Neutral Alcohol used in manufacturing of alcoholic liquor for human consumption
• INSURANCE OMBUDSMAN
• Non-Recovery of GST based on General Practice

Notifications

• DGFT

• 35/2024-25 - dated 1-10-2024 - FTP
  Amendment in Export Policy condition of Cough Syrup under Chapter 30 of Schedule-II (Export Policy) of ITC (HS) 2022

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• GST - States

• 31/GST-2 - dated 9-10-2024 - Haryana SGST
  Amendment of Notification no. 86/GST-2, dated 18.09.2018 under the HGST Act, 2017

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• 30/GST-2 - dated 9-10-2024 - Haryana SGST
  Amendment of Notification no. 27/ST-2, dated 22.06.2017 under the HGST Act, 2017

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• MGST-1524/C.R.38/Area Jurisdiction/ADL.CST/Tax-1. - dated 10-10-2024 - Maharashtra SGST
  Order for Area Jurisdiction in case of Additional Commissioner of State Tax.

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• 17/2024-State Tax - dated 10-10-2024 - Maharashtra SGST
  Seeks to bring in force provision of various sections of Maharashtra Goods and Services Tax (Amendment) Ordinance, 2024

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• 16/2024—State Tax - dated 10-10-2024 - Maharashtra SGST
  Seeks to notify section 35, 2 to 9 of Maharashtra Goods and Services Tax (Amendment) Ordinance 2024

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• 15-Eway Bill/2024-State Tax - dated 1-10-2024 - Maharashtra SGST
  Amendment in Notification No.15E/2018-State Tax regarding Exemption for generation of E-way bill for transportation for job work, storage and warehousing of Turmeric, Chilli (Genus: Capsicum), and Raisins.

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• Income Tax

• 115/2024 - dated 16-10-2024 - IT
  Central Government specifies that no collection of tax shall be made under sub-section (1F) of section 206C of the IT Act on any payment received from the Reserve Bank of India.

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• 114/2024 - dated 16-10-2024 - IT
  Income-tax (Ninth Amendment) Rules, 2024.

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/141 - dated 16-10-2024
  Introduction of Liquidity Window facility for investors in debt securities through Stock Exchange mechanism
• Customs - Instruction No. 22/2024 - dated 16-10-2024
  Implementation of "Agreement" signed between FSSAI, Ministry of Health and Family Welfare, Government of India and Bhutan Food and Drug Authority (BFDA)

News

• Attention – Hard - Locking of auto-populated values in GSTR-3B

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• Assessing Inflation Targeting (Address delivered by Michael Debabrata Patra, Deputy Governor, Reserve Bank of India - October 14, 2024 - at the High Level Conference “Central Banking at Crossroads” organised by the Reserve Bank of India as apart of commemoration of its 90th year at New Delhi, India)

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• CBDT Notifies Amendments in Income-tax Rules for Ease in Claiming Credit for TCS Collected/TDS Deducted for Salaried Employees and Enabling claiming TCS Credit of Minors in the Hands of Parents

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• The cumulative overall exports during April -September 2024 is estimated at USD 393.22Billion, as compared to USD 375Billion in April-September 2023, with an estimated growth of 4.86%.

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Case Laws:

• GST

• 2024 (10) TMI 782
  Violation of principles of natural justice - alleged vagueness in the SCN - SCN was vague and bereft of the relevant particulars - HELD THAT:- In the present case, considering the relief pressed, the argument was about violating the principles of natural justice because of the alleged vagueness of the impugned show cause notice. However, there was no vagueness in the impugned show cause notice. The impugned show cause notice was quite detailed and gave the Petitioners a complete idea of the case they were required to meet. The Petitioners reply is pretty thorough, and no serious grievance was made about any alleged vagueness in the impugned show cause notice. In Special Director and Another Vs. Mohd. Ghulam Ghouse and another [ 2004 (1) TMI 378 - SUPREME COURT] the Hon ble Supreme Court has held that unless the High Court is satisfied that the show-cause notice was totally non-est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine. The writ petitioner should invariably be directed to respond to the show cause notice and take all the grounds that may now be highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue which the recipient of the notice can even urge, and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the Court. In Union of India and others Vs. Coastal Container Transporters Association and others [ 2019 (2) TMI 1497 - SUPREME COURT] the Hon ble Supreme Court held that where the case was neither of lack of jurisdiction nor any violation of principles of natural justice, the High Court ought not to have entertained the writ petition at the stage of notice, more so, when against the final orders, appeal lies to the Supreme Court. Further, the Court held that when there is a serious dispute concerning the classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand. Accordingly, the appeals against the quashing of the show cause notices were allowed. In Mahanagar Telephone Nigam Ltd. Vs. Chairman Central Board, Direct Taxes and another [ 2004 (5) TMI 7 - SUPREME COURT ], the Hon ble Supreme Court held that it was settled law that the litigation against show cause notices should not be encouraged. The Court approved the decision of the High Powered Committee, which was eminently fair and aimed at preventing frivolous litigation. The Court held that the appellant s right was not affected. It was clarified that the appellant could move a court of law against an appealable order. By not maintaining discipline and abiding by the decision, the appellant had wasted the public money and time of the courts. Petition dismissed.

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• 2024 (10) TMI 781
  Maintainability of petiiton - appealable order or not - petitioner was not given any opportunity to go through the statement, file his revised reply and advance effective arguments - violation of principles of natural justice - HELD THAT:- The Hon ble Supreme Court in its judgment dated 10.04.2024 in the case of PHR Invent Educational Society Vs. UCO Bank and Others [ 2024 (4) TMI 466 - SUPREME COURT (LB)] disapproved the order of Telangana High Court in [ 2022 (2) TMI 1476 - TELANGANA HIGH COURT] , wherein a Division Bench of this Court entertained a Writ Petition despite availability of alternative remedy. The Hon ble Supreme Court opined that merely because a petition is maintainable, it is not necessary to entertain a petition. It is the discretion of the Court to entertain a petition and not a compulsion. Thus, it is clear that maintainability and entertainability are two different facets. Merely, because petition is maintainable , it creates no compulsion on the Writ Court to entertain it. If the petitioner has not raised any objection of limitation/jurisdiction before the Authority, he may raise all possible objections in his appeal memo before the Appellate Authority. The petitioner is unable to show if he is relegated to avail the remedy of appeal, it will cause any palpable injustice to him. Thus, in view of judgment of Supreme Court in R.S. Pandey [ 2005 (9) TMI 634 - SUPREME COURT] and also in its recent judgment in PHR Invent Educational Society [ 2024 (4) TMI 466 - SUPREME COURT (LB)] , it is not required to entertain this petition. The petitioner has an efficacious statutory remedy of appeal. The petitioner may avail the said remedy. The time consumed before this Court shall not be counted by the learned Appellate Authority for the purpose of counting limitation in preferring appeal. It is made clear that the respondents shall entertain the appeal, if the same is filed physically by the petitioner. This Writ Petition is disposed of.

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• 2024 (10) TMI 780
  Rejection of refund of Goods and Services Tax (GST) filed u/s 54 of the Central Goods and Services Tax Act, 2017 - It is stated by the petitioner that the impugned refund rejection order was decided without considering the submissions of the petitioner and without granting it any opportunity of personal hearing - violation of principles of natural justice - HELD THAT:- The present petition is amongst a batch of petitions that were heard together [being W.P.(C) No.1298/2023, W.P.(C) No.1299/2023 and W.P.(C) No.1300/2023] and W.P.(C) No.1298/2023 was heard as the lead matter. The questions raised in the present petition are covered by the decision rendered today in [ 2024 (5) TMI 177 - DELHI HIGH COURT ]. Matter remanded to the appropriate authority for consideration afresh - petition disposed off by way of remand.

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• 2024 (10) TMI 779
  Classification of goods - applicable rate of GST - Compensation Cess - Tobacco pre-mixed with lime - HELD THAT:- Under N/N. 01/2017-Central Tax (Rate) no definition of manufactured or unmanufactured tobacco has been provided and accordingly we have to mainly rely upon the decision of Hon'ble Court and the Tribunals decisions in the matter. There is no doubt that chewing tobacco may be both manufactured and unmanufactured. The difference between the manufactured and unmanufactured tobacco is dependent on the process being undertaken to prepare the product. In the present case the process being undertaken by the Appellant involves mixing of Lime paste in raw cut tobacco, evaporation of the water content from the said tobacco mixed with lime paste, addition of aroma, menthol and moisturizer. Reliance placed upon the decision of the Apex Court in the State of Madras Vs Bell mark Tobacco Company [ 1966 (10) TMI 106 - SUPREME COURT ] wherein it was held by the Hon'ble Court that cumulative effect of various processes to which Tobacco was subjected, before it was sold, amount to the manufacturing process. In the instant case that mixing lime and other ingredients with the tobacco leaves would result into emergence of a new product with distinct name and character. Thus, it is evident that the raw material undergoes a set of processes and emerges as a distinct product which makes it marketable/consumable for the chewing needs. Therefore, the product to be supplied by the applicant is manufactured tobacco product for chewing'. Once, it is decided that the product is 'manufactured chewing tobacco', the classification of the product merit under CTH 2403 99 10 which specifies 'chewing tobacco' under the head 2403-0ther manufactured tobacco and manufactured tobacco substitutes. Thus, the product to be supplied by the applicant is manufactured tobacco classifiable under 24039910. Since it has been concluded that the product to be supplied by the applicant is classifiable under HSN 24039910 (Chewing Tobacco without Lime Tube), the applicable rate of GST Compensation Cess in term of Serial No.26 of [Notification No. 1/2017-Compensation cess (R) dated 28.06.20171 is 160% - the product (i.e. tobacco pre-mixed with lime) to be supplied by applicant is classifiable under HSN24039910 (Chewing Tobacco without Lime Tube). The rate of GST is 28% and IGST-28%) and that of Compensation Cess is 160%.

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• 2024 (10) TMI 771
  Levy of GST - value of loan for which guarantee is given needs to be divided equally amongst the relevant years of guarantee - reverse charge mechanism - 1% of total value of loan in first year - 1% of only remaining outstanding value of loan at beginning of each subsequent year - continuing guarantee. Whether GST under reverse charge mechanism on issuance of corporate guarantee is payable one-time or on periodical basis, considering that the guarantee has been issued only once and is valid for specified period of time without requirement of any periodical renewal in terms of Rule 28 (2) of the CGST Rules? - HELD THAT:- In the instant case, the Corporate Guarantee is received by the Applicant i.e. subsidiary company from Foreign Group Companies in respect of loan taken from banks and financial institution for which Foreign Company does not charge any consideration from the Applicant leading to the conclusion that it is import of service received by the Applicant. Since in the instant case, as no consideration has been charged by the Associated Enterprises from the Applicant and where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply i.e. Indian subsidiary and the GST liability is to paid by the Applicant at one time basis at the time of supply. If the GST under RCM is to be paid on periodical basis, then in order to determine the value of supply, whether the value of loan is to be divided equally amongst the relevant years of guarantee and GST is to be paid considering 1% of such divided deemed value each year or 1% of only remaining outstanding value of loan at the beginning of each subsequent year in term of Rule 28 (2) of the CGST Rules 2017? - HELD THAT:- If the guarantor executes the contract of guarantee without consideration, in the GST regime prior to 26.10.2023, for the benefit of a related party, GST would be payable on the basis of the valuation mechanisms as per Rule 28 (1) of RGST/CGST rules 2017 at the time of execution of the contract - GST under reverse charge mechanism is payable on 1% of deemed total value of loan after guarantees executed after 26-10-2023 as per rule 28 (2) of RGST/CGST rules 2017 on one time basis at the time of execution of the contract, if the guarantor executes the contract of guarantee without consideration, for the benefit of a related party in the GST regime post 26.10.2023.

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• 2024 (10) TMI 770
  Levy of GST on the Mining Lease payments (applicability of GST on the Royalty payment of Mining Lease to Government of Rajasthan under Reverse Charge Mechanism) - payment of upfront Payments as per the Tender Documents which are paid in installments much before issuing LOI and after issuing LOI but before entering in to the Lease Agreement - State of Telangana or to apply for registration in the State of Rajasthan and pay GST - applicable rate of GST - eligibility of Input Tax Credit. Whether the applicant is liable any GST on the Mining Lease payments (applicability of GST on the Royalty payment of Mining Lease to Government of Rajasthan under Reverse Charge Mechanism)? - HELD THAT:- Section 9 (3) of CGST Act, 2017 provides that the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both - the Applicant is liable to pay GST on Mining Lease Payments including Royalty, to be paid to the Govt. of Rajasthan under RCM. If the applicant is liable to pay GST on the above, what will be the applicable rate of GST? - HELD THAT:- The Applicant is liable to pay GST @ 18% (SGST 9% CGST 9%). If GST is applicable, whether the applicant is liable to pay GST on the payment of Upfront Payments as per the Tender Documents which are paid in installments much before issuing LOI and after issuing LOI but before entering in to the Lease Agreement? - HELD THAT:- The Applicant is of the opinion that payment of royalty amount to the Government will be coming in to effect only after entering in to the Mining Lease Agreement with the Government of Rajasthan. The lessor and lesee relationship will be coming into effect only after entering the lease agreement. The payments made as per the conditions in the Tender Documents prior to issue of Letter of Intent in the capacity of Preferred Bidder and payment made after issue of LOI but before entering into the Mining Lease agreement as Successful Bidder cannot be considered as Advance payments for supply of services and GST is not liable to be paid at the time of making payment by considering the same as Advance payments for supply of services. The advance deposit money is received only as security. Generally, it is not used by the supplier in the course of supply Of goods or services. It is forfeited in case of violations of terms and conditions as mentioned in tender document. As per point 13.1 of Tender Document, the upfront payment paid by the Successful Bidder shall be adjusted in full at the earliest against the amount to be paid under sub-rule (3) of rule 8 of Auction Rules on commencement of production of mineral which shows that advance payment made by the Applicant shall be adjusted towards future payments to be made by them. Hence Section 2 (31) of CGST Act, 2017 is not applicable in the instant case. The Applicant is liable to pay GST on the upfront payments made to the State Govt. under Reverse Charge Mechanism (RCM) in term of Serial No.5 of Notification No. 13/20317-CetraI Rate Dated 28.06.2017. lf GST is applicable, whether the applicant can pay GST from the State of Telangana or to apply for registration in the State of Rajasthan and pay GST. (v) Whether the GST paid is eligible to be claimed as Input Tax Credit or not? - HELD THAT:- The tax payable under the provisions of sub-section (3) and (4) of Section 9 is included in input tax and the credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger and so the applicant is eligible to avail ITC of GST paid by them under RCM subjected to fulfilment of conditions laid down under section 16 of CGST Act, 2017.

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• Income Tax

• 2024 (10) TMI 778
  Complaint against the Assessment Officer - Examining the grievances of assessee by Local Committee, in cases, which are of High-Pitch scrutiny assessment - respondents authority deprived an assessee by rejecting their claim stating that the assessment does not fall within the ambit of High-Pitch assessment and without giving any reason - HELD THAT:- While examining, the Local Committee has to submit a report when the order is to be treated as High-Pitch assessment or not. The petitioner has already been conveyed vide impugned order dated 02.11.2023 that the Local Committee did find their case to be of High-Pitch assessment. The question of giving an opportunity of hearing to the petitioner by the Local Committee, however, does not arise as there is no such provision laid down in the SOP. Claim of the petitioner that they should have been heard by the Local Committee is without basis. It may be noticed that if the revised SOP issued on 23.04.2022, the Director, CBDT has also noticed that the purpose of constitution of Local Committee is to be effectively and efficiently dealt with the genuine grievance of the tax payers and help in supporting environment where the assessment order has been passed in a fair and reasonable manner. It is to be noted that the Local Committee cannot be treated an alternative forum to dispute resolution/proceedings. Thus, an assessee cannot force that his case must be necessarily examined and decided by the Local Committee itself even if the Local Committee reached to the conclusion that it is not a case of High-Pitch assessment. Having reached to the aforesaid conclusion, we do not find any reason to entertain this writ petition.

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• 2024 (10) TMI 777
  Addition made to the income in the reassessment proceedings -Petitioner has done bogus financial transaction with said third party - formation of a reasonable belief that income had escaped assessmen - HELD THAT:- This Court in the matter of M/S. PASARI CASTING AND ROLLING MILLS PRIVATE LTD [ 2024 (2) TMI 280 - JHARKHAND HIGH COURT] has decided the issue that it is not the case of the department that Sri Ajay Kumar Sharma took name of the Petitioner that he has provided accommodation entry to him. As per the recorded reasons, Sri Sharma has stated that he provided accommodation entries to certain persons ; however, the name of the Petitioner has never been taken by him. The date on which statement of Sri Sharma is recorded is not known to Assessing Officer and also whether it relates to the assessment year in question is also not known. Further, the date of statement of Sri Sharma is neither mentioned in the recorded reasons nor in the show cause notice nor in the Assessment Order. The Counter Affidavit is also silent, hence, on its basis no reasonable belief could be formed that the said statement relates to the assessment year in question in which the income has escaped the assessment. In the absence of date of statement, it is far- fetched to assume that it relates to the assessment year in question as held in ITO Vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] It further transpires from records that the proceedings in the instant case is initiated for verifications and roving enquiry which is clearly impermissible under section 147/148 as held by this Court in the case of PCIT Vs. Maheswari Devi [ 2022 (11) TMI 1117 - JHARKHAND HIGH COURT] - It is also not clear whether the statement of Sri Ajay Kumar Sharma is recorded U/s 132(4) or Section 133A, inasmuch as, a statement recorded U/s 133A has no evidentiary value. Decided in favour of assessee.

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• 2024 (10) TMI 776
  Protective addition u/s. 69, 69C 68 - substantial addition of the amount which has already been considered by the firm where the assessee is partner - HELD THAT:- As is evident from the record that the order of the assessment was passed on 31.12.2019 whereas the application was filed on 27.03.2019 by the firm where the assessee was partner. The said application being not finalized the ld. AO partly accepting the contention of the assessee decided not to make the addition substantially but he has made these additions with a view to protect the interest of the revenue on protective basis vide order dated 31.12.2019. Now before us, the order of the ITSC dated 03.12.2020 was placed on record, which contains the entry starting from sr. no. 1 to 2402, all these entries incorporate the entries for which the addition was made by the ld. AO protective basis. AO neither disputed that working at the time of assessment proceeding in the case of the assessee nor before us through ld. DR. Therefore, once at the stage before us also the order of the settlement commission dated 03.12.2020 not being disputed the addition accepted by the firm, not disputed by the revenue cannot be sustained in the hands of the assessee on protective basis. Based on these observations ground raised by the assessee stands allowed.

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• 2024 (10) TMI 775
  Addition of increase in Share Capital - unexplained cash credit u/s 68 - HELD THAT:- The impugned order is based on detailed findings given by AO in remand report - CIT(A) noted that the assessee furnished details of increase in share capital and unsecured loans. The same were journal entries and the explanation furnished by the assessee was held to be satisfactorily by Ld.AO. Considering the same, CIT(A) deleted the addition of increase in share capital and unsecured loans. The same form part of subject matter of revenue s appeal. Since the above transactions are mere journal entries and the assessee has furnished satisfactory explanation thereof during remand proceedings to the satisfaction of AO, the adjudication of Ld. CIT(A) could not be faulted with. The corresponding grounds raised by the revenue stands dismissed. Disallowance of interest expenditure - CIT(A) deleted the same against which the revenue is in further appeal before us. Since the adjudication of Ld. CIT(A) is based on findings of Ld. AO, no interference is required in the same. Disallowance of Service charges - The same represent service charges, valuation charges, installation charges and computer service charges. The details thereof have been extracted in the impugned order. It could be seen that the payment has been made to procure services from vendors and the payments are to organized sector and through banking channels. Apparently, the expenditure fulfills the requirements of Sec. 37(1). Therefore, we direct Ld. AO to delete the same. The grounds raised by the assessee stand allowed. Addition of Investments - AO accepted the explanation of the assessee after examining the necessary evidences including share transfer application, bank account, confirmation letters etc. Considering the same, the impugned addition was deleted. Since the adjudication of Ld. CIT(A) is based on remand report, no interference is required in the same. Addition of professional fees paid to Chartered Accountant in connection with a loan - assessee paid fees @3% of loan amount. Due tax was deducted at source - AO accepted such claim. The Ld. CIT(A) accepted the claim to the extent of 1% only and confirmed the remaining addition - We find that this is contractual payment and accepted by Ld. AO in the remand report. The assessee has deducted due TDS and the claim is duly substantiated. In the absence of any adverse finding, this claim is to be accepted. We order so. The grounds raised by the assessee stand allowed whereas the grounds raised by the revenue stand dismissed. Disallowance of Electronic Transfer Charges - The expenditure is on account of purchase of share transfer stamps in cash from stamp vendors. The stamps are affixed on the reverse side of share transfer deed @.25% of transaction value. The assessee has purchased stamp of Rs. 2 Lacs each on 30-01-2000 and 01-02-2000. The assessee deals in sale and purchase of shares. Therefore, in our considered opinion, this claim is to be accepted. Hence, the impugned disallowance stand deleted. The assessee succeeds on this ground. Disallowance of brokerage claim - We find that this amount has been paid by the assessee to a corporate entity through banking channels after deduction of tax at source. AO has accepted the claim in the remand report. This is a contractual payment and in the absence of any adverse finding, the same could not be disallowed partly. Therefore, we direct Ld. AO to allow full brokerage claim.

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• 2024 (10) TMI 774
  CIT (A) not deciding and considering the legal grounds of appeal with written submission - whether CIT (A) erred in ignoring the legal submissions made and keeping SILENT on it renders all such orders as invalid which is well settled law? HELD THAT:- In view of the provisions of section 139(1), Fifth Proviso and section 142(1) of the Act, the assessee was liable to file the return of income and the assessee s arguments on non-filing of return is legally non-tenable. Rather, in the guise of (Assessee s claim that her income is below the limit) low taxable income, the assessee is violating the mandatory provisions of law In view of amendment in section w.e.f. 01.06.2001, it is certain that the First Appellate Authority is not empowered to set aside the Appeal before him and the assessee s reliance on Arun Kumar Bose [ 2023 (9) TMI 489 - CALCUTTA HIGH COURT] has a legal strength. In view of the above facts it is observed that despite of non-cooperation by the assessee and poor representation of the matter before the AO, as discussed (supra), CIT (A), exceeded his powers by setting aside the matter back to the AO, technically his order is faulty and considering the ratio laid down in the case of Arun Kumar Bose [SUPRA] we declare the order as beyond the powers provided by the statute. In view of the above, we restore the matter back to the file of CIT (A) with a direction to call for a remand report from the AO and then adjudicate the matter of the assessee.

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• 2024 (10) TMI 773
  Addition u/s 69A - unexplained money - HELD THAT:- It is an arbitrarily exercise of powers at the end of the revenue. There is no logic or reasoning given for not accepting these cash deposits. The assessee was in such a line of business, where it has to sale pulses, wheat gram, flour and related products in cash. The other argument given by assessee that cash was recorded and, therefore, section 69A cannot be invoked. For buttressing this proposition Roop Fashion case relied upon on identical circumstances the Revenue disbelieved the cash sales Tribunal has examined this issue in detail and then, compared the total sales of A.Ys. 2015-16, 2016-17, 2017-18 and deleted the addition. The cash was recorded in the books hence it cannot be termed as unexplained cash. Only thing which was required to be explained was the source of such deposits, which assessee has explained i.e. out of sale proceeds, deposits have been made. Thus, we are of the view that addition made by AO and confirmed by the ld. CIT(Appeals) is not sustainable. Decided in favour of assessee. Non payment of TDS - assessee has contended that actually it has paid the TDS vide Challan - AO disbelieved this version of the assessee on the ground that it failed to furnish copy of the Challan - HELD THAT:- We are of the view that once assessee has explained the BSR Code, details of payments, AO should have verified. Now the assessee has placed copy of the Challan whereby a sum stands deposited. Considering the above details, we delete this addition. Decided in favour of assessee.

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• 2024 (10) TMI 772
  TP Adjustment on Notional Interest on Share Application Money (TPO) treated the share application money as an interest-free loan to the Associated Enterprise (AE), citing an inordinate delay in the allotment of shares - inordinate delay in allotment of shares, and that the Appellant has failed to show that the delay was not on account of lapse of the Appellant - HELD THAT:- Onus was on the Revenue to bring on record material to show that there was default on the part of the Appellant leading to inordinate delay in allotment of shares. In our view, the Revenue has failed to discharge the aforesaid onus and to controvert the contention of the Appellant that the delay in allotment of shares was on account of non-receipt of appropriate approval of SAIF Zone Authority despite appropriate application having been made. Accordingly, we accept the contention of the Appellant that the delay in allotment of shares cannot be attributed to the Appellant. Therefore, the transfer pricing addition which is based upon incorrect understanding that there was inordinate delay in allotment of shares cannot be sustained. Accordingly, the transfer pricing addition is deleted. Ground No. 1 raised by the Appellant is allowed. DRP not considering the rectification order passed by AO u/s. 154 regarding the intimation u/s 143(1)(a) and adding the income as per intimation u/s. 143(1)(a) - It is admitted position that the Assessing Officer had passed rectification order under Section 154 of the Act on 06/06/2023 revising/rectifying total income to INR 22,01,32,774/. Accordingly the Assessing Officer is directed to re-compute the income and tax liability of the Appellant after taking into consideration the aforesaid rectification order dated 16/06/2024. In terms of the aforesaid, Ground No. 2 and 3 raised by the Appellant are allowed for statistical purpose.

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• 2024 (10) TMI 769
  Validity of reopening of assessment - Period of limitation to issue notice issued u/s 148A(b) - as decided by HC [ 2023 (2) TMI 1346 - GUJARAT HIGH COURT] issue is covered by the decision of this Court in case of Keenara Industries Private Limited [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] without giving the separate reasoning this petition deserves to be allowed. Resultantly, this petition is allowed. Notice u/s 148 of the IT Act and impugned order under section 148A(d) are quashed and set aside. HELD THAT:- The Special Leave Petitions are disposed of in terms of the judgment of this Court in Union of India v Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] - AO will dispose of the objections in terms of the law laid down by this Court in Rajeev Bansal (supra). Thereafter, the assessees who are aggrieved will be at liberty to pursue all the rights and remedies in accordance with law, save and except for the issues which have been concluded by the judgment [supra].

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• 2024 (10) TMI 768
  Treating interest earned on short-term fixed deposit - income from other sources and not business income - as decided in [ 2019 (4) TMI 1361 - ITAT NEW DELHI] which is for the Assessment Year 2010-2011 in respect of very same Assessee, wherein on the question as to whether the interest income derived from short-term fixed deposit made in a Bank is eligible for deduction for under Section 10-A or 10-B was considered on the basis of certain judgments and the matter was remanded to the Assessing Officer for giving a finding bearing in mind the facts of the Assessee and its business. Appellant submitted that the impugned Order, which is for the earlier Assessment year, namely, 2009-2010 was not right in holding that the FDs were not being maintained to meet any requirement of the Bank for opening LC or any other business purpose and therefore, the interest income had to be treated as income from other sources. HELD THAT:- We dispose of this appeal by setting aside the impugned order by remanding the matter to the Assessing Officer for consideration of the issue for AY 2009- 2010 by bearing in mind the nature of business of the Assessee and the purpose for which the short term fixed deposit accounts were opened by the Assessee in the Bank and the nature of income and the treatment of interest income as income from other sources or business income. It is needless to observe that the AO shall give his finding as expeditiously as possible.Further, we have not expressed anything on the merits of the matter. The appeal is allowed and disposed of in the aforesaid terms.

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• 2024 (10) TMI 767
  Section 40A (2) applicability to a co-operative society - additional payment over and above the statutory minimum price (SMP) was cane price and not diversion of profit and as such allowable as business expenditure under section 37(1) - whether part of the cane price paid to the sugar cane suppliers and the khodki charges incurred by the assessee could be disallowed on the ground that the said expenditure constitute appropriation of profits / bonus under the provisions of M.C.S. Act, 1960 ? - HC [ 2009 (5) TMI 1026 - BOMBAY HIGH COURT] decided issue in favour of assessee. HELD THAT:- The present case is covered by a decision TASGAON TALUKA S.S.K. LTD. [ 2019 (3) TMI 321 - SUPREME COURT] wherein held to the extent of the component of profit which will be a part of the final determination of SAP and/or the final price/additional purchase price fixed under Clause 5A would certainly be and/or said to be an appropriation of profit. However, at the same time, the entire/whole amount of difference between the SMP and the SAP per se cannot be said to be an appropriation of profit. Only that part/component of profit, while determining the final price worked out/SAP/additional purchase price would be and/or can be said to be an appropriation of profit and for that an exercise is to be done by the assessing officer by calling upon the assessee to produce the statement of accounts, balance sheet and the material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under Clause 5A of the Control Order, 1966. Merely because the higher price is paid to both, members and non-members, qua the members, still the question would remain with respect to the distribution of profit/sharing of the profit. AO will have to take into account the manner in which the business works, the modalities and manner in which SAP/additional purchase price/final price are decided and to determine what amount would form part of the profit and after undertaking such an exercise whatever is the profit component is to be considered as sharing of profit/distribution of profit and the rest of the amount is to be considered as deductible as expenditure. The question of law is answered accordingly, partly in favour of the department and partly in favour of the assessee. The impugned orders passed by the High Court, ITAT, CIT(A) as well as the assessing officers are hereby quashed and set aside and the matters are remitted to the respective assessing officers to undertake the exercise as stated hereinabove and after giving an opportunity to the respective assessee's.

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• 2024 (10) TMI 766
  Estimation of income - bogus purchases - onus to prove - CIT-A disallowing 10% of the total purchases as confirmed by ITAT - HELD THAT:- In the instant case, we find that the Revenue in fact viewed the position as warranting a 100% disallowance of the expenses. In the context of the Impugned Order, that is understandable since one could question if there is no cogent and convincing evidence at all. A Division Bench of this Court did not consider that appeal to be worthy of consideration. In Nikunj, the ITAT reversed the entire disallowance on the part of the Assessing Officer and the CIT-A. But purporting to adopt Nikunj [ 2013 (1) TMI 88 - BOMBAY HIGH COURT ], in the instant case, the ITAT fell short of analysing if the disallowance of 10% was reasonable and justifiable. Not only has the Assessing Officer not conducted the exercise as expected of him, the CIT-A has effected a summary measure of disallowing 10% of the expenses and the ITAT has been happy to endorse the same as an equitable middle ground. Such an approach cannot be endorsed as a process known to law to disallow expenses on the premise of their being bogus. ITAT has returned a firm finding that there is no cogent or convincing evidence in the AO Order. Against such backdrop, the ITAT believed that the factual pattern of the matter at hand is similar to the factual context of Nikunj. That being the case, the outcome too ought to have been similar to Nikunj, where the disallowance was entirely rejected by the ITAT. In the instant case, the ITAT appears to have found it convenient that the CIT-A had chosen to disallow 10% of the expenses and it appears to be an acceptable consolation to strike a balance. We have to note that once there is a quasi-judicial finding that there is no cogent and convincing evidence at all on the part of the Revenue in levelling an allegation, it would be wrong to expect that the Assessee would still have to prove its innocence. The ITAT ought to have gone into this facet of the matter and dealt with why the 10% disallowance was plausible, reasonable and necessary in the context of the facts of the case. Such an analysis is totally absent in the Impugned Order. In our opinion, in adopting such an approach, the ITAT has given credence to the proposition that the law can call for proof of the negative. The ad hoc rejection of 10% of the expenses, found in the order of the CIT-A, appears to have been a convenient via media that has been endorsed by the ITAT. It is repugnant for the ITAT to uphold such an addition of 10% of the allegedly bogus purchases to the income of the Appellant-Assessee, despite returning a firm finding that the AO Order was untenable not being backed by cogent and convincing evidence. Therefore, in our opinion, the substratum of the adverse findings returned in the AO Order having been undermined, we are unable to agree, in the facts and circumstances of the case, with the conclusion of the ITAT. Decided in favour of the Appellant-Assessee and against the Respondent-Revenue.

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• 2024 (10) TMI 765
  TP Adjustment - comparable selection - Appeals is confined to including certain uncontrolled entities as comparables for determining the ALP and excluding certain uncontrolled entities as comparables as suggested by the appellant - HELD THAT:-We set aside the impugned order to the limited extent of rejecting the appellant s challenge to inclusion of Avani Cincom Technologies Limited, Ishir Infotech Limited, Tata Elxsi Limited and Sasken Communication Technologies as comparables for the purpose of determining ALP and excluding Akshay Software Technologies Limited as comparable for the purpose of determining the ALP. The matters are remanded back to the Tribunal for deciding afresh the appellant s objections in regard to inclusion and exclusion of Ishir Infotech Ltd, Tata Elxsi Limited, Sasken Communication Technologies Limited and Akshay Software Technologies Limited for determining the ALP adjustment, if any. It is clarified that all contentions of the parties on the merit whether the said companies are required to be included or excluded, are reserved.

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• 2024 (10) TMI 764
  Delay in filing Return of Income - two-day delay - Petitioner as submitted that the Chartered Accountant had made efforts to file Return of Income and Form 10-IC within the prescribed time limit, however, due to technical difficulties on the Income Tax Portal, the same could not be filed. A screen shot of the technical issues faced by the Chartered Accountant in filing of Form 10-IC was placed for consideration HELD THAT:- Revenue does not dispute that the delay in filing the Return is only of two days and that it appears to be wholly bona fide. The principles which are paramount and jurisprudentially accepted, and as discussed by this Court in the case of Jyotsna Mehta [ 2024 (9) TMI 585 - BOMBAY HIGH COURT ] in our opinion, mandates their application in the present facts, for the delay to be condoned. Direction to Respondents to condone the delay in filing the return of income (Exhibit C) .

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• 2024 (10) TMI 763
  Validity of assessment u/s 153C - Interpretation of the terms belongs to and pertains to in Section 153C - ITAT justification in holding that the Land Aggregation Agreement entered into between the Ramprastha Group of companies (searched person) and the respondent-assessee and which was discovered during the course of search did not belong to the respondent-assessee, especially in light of the 2015 amendments made by the Legislature HELD THAT:- Undisputedly, the said questions are covered by the decision of Vikram Sujitkumar Bhatia [ 2023 (4) TMI 296 - SUPREME COURT] . The Supreme Court had, in its decision, noted that this Court had in the case of Pepsico India Holdings (P.) Ltd. [ 2014 (8) TMI 898 - DELHI HIGH COURT] taken a restrictive view of the words belong to as used in Section 153C of the Act. Thus, even though incriminating material pertaining to the third parties was found during a search conducted u/s 132 Revenue could not proceed against such other persons if the document did not belong to the said person. The Parliament had substituted the words belongs or belongs to with the words pertains or pertains to by the Finance Act, 2015. In the present case, the Tribunal has proceeded on the restrictive interpretation of the words belongs to as interpreted by this Court in Pepsico India Holdings (P.) Ltd. v. ACIT and Anr. (supra). The said decision in this regard does not hold good, in view of the legislative amendment to Section 153C of the Act brought by the Finance Act, 2015. Further, in the case of Income-tax Officer v. Vikram Sujitkumar Bhatia (supra), the Supreme Court has also authoritatively held that the same would be applicable to the searches conducted prior to the enactment of the Finance Act, 2015. Assessee does not dispute that the questions now stand fully covered by the said decision in favour of the Revenue. He submits that the other questions that were not decided by the Tribunal in view of its decision that the material found during the search did not belong to the assessee. And, the same require to be considered. Revenue also submits that in view of the above, it is necessary that the matter be remanded to the Tribunal to decide the remaining grounds as raised in the given appeals.

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• 2024 (10) TMI 762
  Intimation u/s 245 - Tax Deducted at Source (TDS) which was deducted from the petitioner s income by respondent no. 2, but was not deposited with the Income Tax Authorities - As TDS deducted by respondent no. 2 was duly reflected in Form 16A issued by respondent no. 2, petitioner thus claims that he is not liable to pay tax, which had been deducted by respondent no. 2 from his remuneration - Revenue pointed out adjustments made for different assessment years HELD THAT:- Revenue as submits that the question of adjustment in respect of the AY 2009-10, AY 2010-11, and AY 2011-12 is covered in favour of the petitioner by the decision in Sanjay Sudan [ 2023 (2) TMI 1079 - DELHI HIGH COURT ] However, the adjustment in respect of the outstanding demand of Rs. 42,070/- pertaining to the AY 2017-18 is permissible as the said amount is recoverable. Petitioner submits that the petitioner is not challenging the adjustment of demand of Rs. 42,070/- as set out in the impugned notices in respect of the AY 2017-18. The petitioner s challenge is confined to the adjustment of demand in respect of the earlier AY. He states that the demand in respect of AY 2017-18 was accepted by the petitioner and has been paid. Concededly, the said issue is covered in favour of the petitioner by the earlier decision of Sanjay Sudan (supra). The impugned notices and order are set aside in respect of the adjustment of demands pertaining to the AY 2009-10; 2010-11; and AY 2011-12 as stated in the tabular statement set out in the intimation - Revenue shall pass the necessary consequential orders accordingly.

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• 2024 (10) TMI 761
  Condonation of delay in filing an application for restoration of a dismissed Order - petitioner submits that due to mistake on part of counsel for the petitioner, default was not cured and application for condonation of delay was not filed, which resulted in dismissal of ITA. He further submits that the said mistake was bona fide, therefore, this ITA, which is duly supported by an affidavit deserves to be allowed. HELD THAT:- The reasons assigned by learned counsel for the applicant appear to be genuine and bona fide. Looking to the nature of cause and bona fide intents as well as settled law that for the fault of the counsel, the litigant should not be made to suffer. A suggestion has been given to counsel for the applicant to invest one hour of community service while visiting Mercy Home namely Madhav Andha Ashram, (Gwalior) with some food items/snacks of Rs. 1000/- and spend one hour with the children/ inmates/ families, who are of humble background and are being taken care of by the NGO/Society sponsored by State Government. This community service of one hour would not only be satisfying to the soul but would also give a message to the differently abled children that society and its members care for them and that they are not considered as the children of the Lesser God. Therefore, keeping the said spirit, counsel for the applicant is directed to submit a report regarding their visit to the Mercy Home within fifteen days elaborating their experience and status of mercy home with suggestions, if any, in the litigation which is going to be restored by this order.

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• 2024 (10) TMI 760
  Validity of reassessment proceedings initiated beyond the period of limitation u/s 149 - HELD THAT:- The ruling in Godrej [ 2024 (3) TMI 109 - BOMBAY HIGH COURT] explicitly rules that the validity of a notice under Section 148 must be judged on the basis of the law as existing on the date of which the notice is issued. In the instant case, the deadline for issuance of notices for Assessment Year 2014-15 had expired on 31st March, 2021. Consequently, and evidently, the notice issued in the instant case was hopelessly barred by limitation. Therefore, the 148 Notice issued indeed deserves to be quashed as being barred by limitation. We hereby quash and set aside the 148 SCN and all consequential actions emanating from the 148 SCN.

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• 2024 (10) TMI 759
  Validity of reopening of assessment - applicability of Section 151 of the Act as the sanction has not been granted by the appropriate authority as specified under the said provision - HELD THAT:- Once the petitioner has availed of an alternate remedy as provided under the Act, namely, of a substantive appeal being filed, and if the assessment order as also the notices issued to the petitioner prior thereto under Section 148A and u/s 148 are contrary to the substantive provisions of Section 151A and Section 151 of the Act, as interpreted by this Court in Hexaware and Siemens [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] the Appellate Authority as also the Revisionary Authority being bound by the said decisions of the jurisdictional High Court, need to consider such legal position. Thus, the petitioner is not precluded from raising all such contentions, as raised before us in the present proceedings, before the said authority. Accordingly, we are of the opinion that the proceedings which are pending before the CIT (A) as also the Revisionary proceedings, be decided considering the contentions of the petitioner, namely, as to whether the impugned assessment order as also the notice u/s 148 of the Act is illegal when tested on the law as declared by this Court in the aforesaid decisions. We are of the opinion that an approach ought not to be followed that when the appellate authority is already seized with the proceedings, we entertain writ petitions to adjudicate, what can certainly be adjudicated by the appellate authority, considering the said decisions of this Court. As rightly pointed by Respondents an approach otherwise, would create a situation that all matters which are pending before the Appellate Authority and which are supposed to be decided in accordance with law involving issues on applicability of the decisions of this Court, in disposing of the proceedings would be required to be entertained by this Court. Certainly, such approach cannot be adopted by the Court. We are hence of the opinion that it would be appropriate that the petitioner-assessee pursues such pending proceedings as already filed before the appropriate Appellate Authority and Revisionary Authority. Accordingly, we are not persuaded to entertain the present proceedings which assail the assessment order when appeal is already filed by the petitioner as also the revision proceedings are pending.

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• 2024 (10) TMI 758
  Characterization of receipts - interest income earned by the assessee from the funds received from the Government of India for setting up of the Company - capital receipt v/s revenue receipt - Whether taxable as income from other sources ? - HELD THAT:- As categorically mandated that the funds and income earned out of the funds provided by the Government shall be utilized only for the purpose for which they are released. It has also been clarified that any interest income from the said funds consequent on bank deposits, shall also be utilised only for the purpose of the project. Therefore it is evident that the deposits and the income are inextricably linked with the setting up of the project. It is not in dispute that the setting up of the project was not over and is in the process. The funds disbursed and utilised are stage-wise. The portion of the funds kept in short-term deposits could not be termed as surplus amounts which could be utilised as per the wish and will of the Company. The funds, with the income derived therefrom are to be used exclusively for the setting of the project. Thus understanding the characteristics of the amount, we hold that the interest income on the short-term deposits of the funds infused by the Government are, in the case at hand, in the nature of capital receipt and not revenue receipt . We cannot agree with the finding of the authorities to the contrary. The substantial question of law posed, is answered accordingly and in favour of the assessee.

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• 2024 (10) TMI 757
  Refusal to register the Society u/s 12A r.w.s. 12AA - charitable activity or not? - application was rejected by the CIT (E) on the ground that gaining of knowledge or skill does not qualify for the label education and does not come within the four corners of education as defined in the case of Sole Trustee Loka Shikshana Turst [ 1975 (8) TMI 1 - SUPREME COURT] and assessee-Society did not partake the character of voluntary donations, and the income received from the property cannot be said to be vested in the trust for charitable purpose and purchase of two cars by the society alleged to be meant for personal use of the members of the society - ITAT allowed exemption - HELD THAT:- The law as laid down in M/S NEW NOBLE EDUCATIONAL SOCIETY [ 2022 (10) TMI 855 - SUPREME COURT] requires to be applied and the view expressed by the Kerala High Court M/S. ANNADAN TRUST [ 2018 (8) TMI 518 - KERALA HIGH COURT] cannot be accepted to be the correct interpretation. We are also of firm view that vocational education is a form of education which is necessary for the development of an individual for the purpose of earning his living. Vocational training has been now recognized to be as important as any other field of education, and it is for this reason that National Council for Vocational Training has been established to streamline and lay down a systematic pattern of providing education. As the institute is duly approved by the NCVT, it cannot be said that the institute is not imparting education. In view of the specific findings of fact arrived at by the ITAT as noticed above, no interference of this Court is warranted. Appeal is thus found to be without merits and the same is accordingly dismissed.

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• 2024 (10) TMI 756
  Substantial questions of law or not - additions made by the assessing officer merely on account of non-payment of taxes due on the returned income and in violation of Article 265 of the Constitution of India and consequently the appellant is liable to pay huge taxes - Whether the appellate authorities below are justified in law in not adjudicating the issues on re-opening of the assessment under Section 147 of the Act, issues on treating the capital gain as business income contrary to what is declared in the return, disallowance of a sum under Section 40A (3) of the Act in respect of earth-filling/project development expenses, disallowance of a sum in respect of the interest paid, disallowance of a round-sum in respect of expenses supported by self-made vouchers and levying interest under sections 234B and 234C on the facts and circumstances of the case? HELD THAT:- The substantial questions of law on which, the appeal was admitted would not arise for consideration at this stage, since we are of the view that the matter needs to be remanded to the First Appellate Authority i.e., Commissioner of Income Tax. The First and Second Appellate Authorities refused to entertain the appeal of the appellant herein only on the ground that the appellant had failed to deposit the admitted tax. Therefore, any question that is to be examined shall have to be decided by the Appellate Authorities on merits. Since the appellant has deposited the admitted tax as on this date, we deem it appropriate to remit the subject matter of the appeal to the First Appellate Authority i.e., Commissioner of Income-tax. Accordingly, order passed by the Income Tax Appellate Tribunal, Bangalore Bench C and order passed by the Commissioner of Income-Tax (Appeals)-III, Bangalore are quashed.

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• 2024 (10) TMI 755
  Allowable deduction in computing the income under the heads profit and gains of the business - Discount on the issue of ESOP - AO had held that the same tantamounted to revenue expenditure and hence, disallowed the same and DRP affirmed - ITAT as relying on NOVO NORDISK INDIA PVT LTD [ 2013 (11) TMI 218 - ITAT BANGALORE] allowed the contention of the assessee regarding disallowance of ESOP expense HELD THAT:- The position of law as relied on by the Tribunal not having been disputed, considering a question of fact in the present appeal does not arise and hence the contention sought to be put forth by the Revenue in the present appeal is liable to be rejected. It is clear and forthcoming that the Revenue had sought to contend in the present appeal that the expenditure towards ESOP is not an allowable expenditure as per Section 37 (1) of the IT Act. However, this Court in the case of Biocon Ltd.[ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] having categorically held that the same is an allowable expenditure, there is no merit in the contention sought to be put forth by the Revenue. No substantial question of law would arise. Decided in favour of assessee.

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• 2024 (10) TMI 754
  Validity or order passed - proof of amount was received prior to 01.04.2011 - genuineness and authenticity of Tax Audit Report not accepted - HELD THAT:- A perusal of the material on record would indicate that the respondent-Assessing Officer has refused to accept the Tax Audit Report by Chartered Accountant on the ground that the schedule and Annexures were not signed by the partner of the CA Firm and contained only signature of the assessee. AO has also come to the conclusion that the Bank Statement of the petitioner and other documents had not been produced and consequently, proceeded to reject the claim of the petitioner. However, in the light of the specific contention urged on the part of the petitioner that if one more opportunity is provided, the petitioner would produce additional documents to substantiate his claim and also establish genuineness and authenticity of Tax Audit Report by making necessary submissions in this regard before the AO, we deem it just and appropriate to set aside the impugned order and remit the matter back to the AO for reconsideration afresh in accordance with law.

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• 2024 (10) TMI 753
  Same PAN number allotted to two different persons - Income Tax Department issued Permanent Account Number (PAN) to the petitioner and later on the same PAN number was also issued to respondent No.6, who has obtained loan and is a defaulter, therefore, due to same PAN number, CIBIL score of petitioner has been affected adversely - Petitioner aggrieved by consequence of the same as CIBIL rating of the petitioner comes down due to financial condition of respondent No.6. - During the pendency of present petition, mistake was corrected by Income Tax Department HELD THAT:- Grievance of petitioner in respect of issuance of PAN card of same number to respondent no.6 has already been resolved. However, petitioner is at liberty to approach the authorities concerned for correction in CIBIL credit score of petitioner. As the ambiguity arose due to erroneously assigning same PAN number to two persons, it is directed that Income Tax Department shall forward a letter to Credit Information Bureau (India) Ltd. (CIBIL)/respondent No.5 informing about the issuance of same PAN number to petitioner as well respondent No.6 and clarifying the position, within a period of one month from the date of receipt of copy of this order. In the letter, Income Tax Department shall intimate to respondent No.5 that the department has already issued new number to respondent No.6 and the department is not having any objection in correction of CIBIL score of petitioner.

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• 2024 (10) TMI 752
  Delay filling return of income - petitioner had not placed evidence of the date of receipt of the audit report - HELD THAT:- On examining the impugned order, it is clear that the Chief Commissioner of Income Tax was conscious of the fact that the audit was completed only on 30.09.2019. The said date was the original deadline for filing the return of income. Although the petitioner asserted in the application that the return was received only on 31.12.2019, the said aspect was not taken cognizance of in the impugned order. As asserted both in the application u/s 119(2)(b) of the Income Tax Act and in the affidavit before this Court that such audit report was only received in December 2019. Even after extension, the time limit for filing the return of income for the relevant assessment year expired on 31.10.2019. Therefore, the petitioner was clearly not in a position to file the return of income within time. Although the explanation of the petitioner that the report was received only in December 2019 is not corroborated by evidence, by taking into account the nature of the petitioner's society and the scale of operation, there would be genuine hardship to the members if the delay in filing the return of income is not condoned. In this connection, it should be noticed that Section 119(2)(b) was construed by this Court and the Bombay High Court liberally. Thus, this is an appropriate case to condone delay in filing the return of income.

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• 2024 (10) TMI 751
  Withholding the refund amount on the pretext of lack of mechanism to verify the claim of the petitioner - inability to verify the record to determine whether the amount in question was paid to the petitioner or not - HELD THAT:- The relief granted to a citizen by way of an order passed by a competent forum cannot be permitted to be taken away on the ground that government authorities cannot verify their own records for issuing a refund. In the absence of any fault being attributed to the assessee, the lack of verification by the respondents of their own records, cannot be a ground to deny the refund. As in the instant case, the refund sought for is in pursuance of the respondents own decision dated 30 May 2002 i.e., the appeal effect order. The petitioner immediately had made an application dated 11 September 2002, requesting for the refund of the determined amount in light of the appeal effect order. However, the respondents failed to deal with the said request. Therefore, the facts of the case cited by the respondents are clearly distinguishable. The respondents are estopped from contending that the petitioner sought enforcement of refund belatedly. In view of the aforesaid, the sum already determined by the respondents to be refundable to the petitioner cannot be retained and negated on the alleged grounds of laches. Therefore, the respondents are, hereby, directed to refund the amount along with the applicable interest in accordance with law, within a period of eight weeks from the date of passing of this order.

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• 2024 (10) TMI 750
  Rectification u/s 154 - applicability of the provisions of Section 40(a)(ia) of the Act regarding to the non-deduction of tax at source to the labour charges - debatable issue - HELD THAT:- We are of the considered opinion that keeping in view the the observations of the Apex Court made in Mepco Industries Ltd. Case [ 2009 (11) TMI 24 - SUPREME COURT ] pertaining to the power u/s 154 and the fact that the rectification was not permissible on a debatable issue, the concurrent findings which have been recorded as such are not liable to be disturbed. It is also to be noticed that initially the appeal was dismissed on 18.07.2018 on the ground that the it is covered by the circular No.03/2018 dated 11.07.2018 and in view of low tax effect. Revenue thereafter, filed the application and got the appeal restored on 27.09.2019, claiming that the case would fall under the exceptions in para No.10 of the Circular No.3/2018 dated 11.07.2018. The matter is again been heard on merits. Keeping in view the above discussions, we are of the considered opinion that the view which has been taken by the Tribunal is a plausible view in view of provisions of Section 40(a)(ia) of the Act being a subject matter of debate as such regarding the deduction. The attempt made by the revenue to submit that the substantial question of law arises is misplaced - Appeal dismissed.

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• 2024 (10) TMI 749
  Addition of Opening stock - as in the order the transaction of the appellant with KFIL was not verifiable and only closing stock was reflected in the books of accounts where it had actually been sold outside the books - there was actually no closing stock of the amount included in the income of the Assessee - ITAT deleted addition - HELD THAT:- Tribunal, came to the conclusion that the opening stock is shown by the assessee as closing stock in the previous Assessment Year 2009-10, the CIT(A) found that closing stock shown by the assessee was utilised for making unaccounted sale, meaning thereby that no actual closing stock was available. The profit declared by the assessee for Assessment Year 2009-10 includes the closing stock of the said amount but no set-off has been provided by treating the same at the nil value and therefore, the Tribunal held that the closing stock of Assessment Year 2009-10 is required to be treated as opening stock and could not have been disallowed by the Assessing Officer as well as by CIT(A). We are in agreement with the aforesaid findings arrived at by the Tribunal and accordingly, no substantial questions of law can be said to be arising from the impugned order of the Tribunal.

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• 2024 (10) TMI 748
  Levy of penalty u/s 271D - violation of provisions of section 269SS - assessee received physical gold rather than cash - HELD THAT:- In the case of Sudhir Kumar Rawat [ 2022 (8) TMI 33 - ITAT JABALPUR] ITAT held that penalty under Section 271D was levied upon assessee for alleged violation of Section 269SS for having received certain amount from his wife in cash but it was found that assessee had not received any amount in cash from his wife and instead he received sale consideration for a shop owned by his wife and ultimately returned said amount to his wife in cash, penalty as levied was unsustainable in law. In the case of Smt. Pushpalatha [ 2024 (10) TMI 238 - ITAT BANGALORE] ITAT held that where assessee sold a property and received cash exceeding Rs. 20,000/- as part of sale consideration, since amendment effected by Finance Act, 2015, to Section 269SS, which had laid a restriction for receiving cash for transfer of immovable property would not have come to knowledge of assessee who was a woman having elementary education and no knowledge of tax laws, there was reasonable cause as mandated u/s 273B for failure to comply with Section 269SS and, therefore, penalty u/s 271D was not warranted and same was to be deleted. Accordingly, in view of the facts of the assessee s case and the judicial precedents on the said subject which have held that provisions of Section 271DD are not attracted in circumstances where the assessee has been able to demonstrate a reasonable cause for non-complying with the provisions of Section 269SS of the Act, no penalty can be levied u/s 271D we are of the considered view that Ld. CIT(A) erred in facts and in law in upholding the penalty under Section 271D on the assessee, looking into the instant facts. Appeal of assessee allowed.

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• 2024 (10) TMI 747
  Revision u/s 263 - non application of Sections 69 and 115BBE by AO - HELD THAT:- In the instant case, admittedly assessee has only one source of income and therefore, looking into the instant facts, in our considered view the Assessing Officer has not erred in facts and law in not invoking the provisions of Section 115BBE of the Act. Further, we also observe that in the instant case, the survey was conducted on the assessee on 23.09.2016, whereas the amendment in Section 115BBE came into force on 15.12.2016 and therefore, on this count as well, the AO has not erred in facts and in law invoking provisions of Section 115BBE of the Act which came into force only from 01.04.2017. It would be useful to club the relevant extracts of the case of Samir Shantilal Mehta [ 2023 (5) TMI 1279 - ITAT SURAT] wherein on identical set of facts, the ITAT made as held since the search in the case of the assessee was carried out before the amendment the addition ought to have been made in terms of the prevailing provision and therefore, the addition made by the assessing officer invoking section 115BBE, provision of which came into force only on 01.04.2017 is not sustainable. Thus we are of the considered view that the assessment order is not erroneous in so far as and prejudicial to the interest of the Revenue and accordingly, the appeal of the assessee is allowed.

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• 2024 (10) TMI 746
  Deduction of interest paid to bank against interest income offered to tax while computing income from other sources - HELD THAT:- We find that scrutiny assessment for AY 2016-17 was framed on the assessee wherein, the very same query was raised by the AO vide notice u/s 142(1) - assessee filed a reply proving one to one nexus thereon. AO on being satisfied with the same completed the assessment for the AY 2016-17 u/s 143(3) on 30.11.2018 granting deduction for interest paid to Allahabad Bank while computing income from other sources. The very same claim for a different figure is being made in the year under consideration. During the year, there is no requirement for the assessee to prove the nexus between borrowed funds and its utilization as it had already been proved by the assessee in AY 2016-17 and accepted by the revenue. Accordingly, we hold that the assessee would be eligible for deduction of interest paid to Allahabad Bank u/s 57(iii) of the Act. Accordingly, the grounds raised by the assessee are allowed.

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• 2024 (10) TMI 745
  Denial of foreign tax credit - AO having taxed the additional income offered by the assessee in the revised computation denied foreign tax credit while completing the assessment - HELD THAT:- Only an additional income towards salary from HSBC USA was offered in the revised computation during the course of assessment proceedings. A sum as already offered by the assessee in the original return of income. Hence, the lower authorities ought not to have taxed the very same sum again in the assessment. The action of the AO is without any basis and reflects complete non-application of mind. Assessee for the additional income offered in the revised computation had claimed foreign tax credit which would be obviously allowable to the assessee. It is not the case of the revenue that the assessee had not paid the tax to the tune of Rs. 98,852/- in USA. Hence, we hold that the assessee would be entitled for foreign tax credit - We also direct the ld AO to delete the addition made reflecting the double addition - Appeal of the assessee is allowed.

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• 2024 (10) TMI 744
  Determination of correct head of income - prize winning from unsold lottery tickets - AO considering the provisions of Sec.2(24)(ix) r.w.s. 56(2)(ib) Sec.58(4) concluded that such winning from lotteries from unsold lottery tickets would be separately chargeable to tax at the rate of 30% in terms of Sec.115BB r.w.s. 58(4) - assessee is not permitted to claim any expenditure against the same. HELD THAT:- The order of Mumbai Tribunal in M/s Pooja Marketing [ 2024 (10) TMI 649 - ITAT CHENNAI] we concur that all the aspects / facts of the matter as well as applicable case laws have elaborately been dealt with by the co-ordinate bench in its order. The bench has not only considered the validity of revisionary jurisdiction u/s 263 but also decided the issue on merits. After much deliberation, the impugned issue has ultimately been decided in assessee s favor. The case law in the case of CIT vs. Dr. M.A.M. Ramaswamy [ 2015 (1) TMI 439 - MADRAS HIGH COURT] has elaborately been distinguished by Ld. Sr. Counsel in its written submissions. The same has already been deliberated upon by us in preceding paragraphs. The same found our concurrence. Nothing has been shown to us that the aforesaid decision of Mumbai Tribunal has been reversed by higher judicial authorities in any manner or the same is not applicable to the facts of this year. No distinguishing feature has been shown to us. The issue, on merits, has elaborately been dealt with by the Tribunal in its order. We dismiss the appeal of the revenue.

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• 2024 (10) TMI 743
  Unexplained cash credit/ loan transaction - onus to prove - whether assessee had duly discharged the onus as casted under law i.e., to establish identity of the lender, their creditworthiness and the genuineness of the transactions? - CIT(A) deleted addition - HELD THAT:- All loans have come through banking channels. The assessee has paid interest thereon and deducted applicable TDS against the same. The loans have duly been confirmed by all the lenders. The complete documents of all the loan creditors have been placed by Ld. AR. Upon perusal of the same, it could be seen that in many cases, the assessee has repaid the loan back to the lenders. All the loan creditors have confirmed the transactions. As against this, Ld. AO rejected the same without any cogent reasons. AO, while accepting a part of the loan from a particular lender has rejected the other part of the loan which is without any logic or justification. It could also be seen that no independent enquiries whatsoever has been conducted by Ld. AO to verify the claim of the assessee. No notice u/s 133(6) has been issued to any of the lenders. Once the assessee has furnished the requisite documents to support its case, the onus would shift on Ld. AO to controvert the same. No investigation is shown to have been carried out by Ld. AO during the course of assessment proceedings to ascertain the genuineness of loan creditors. During appellate proceeding, remand report was sought by Ld. CIT(A). Even during remand proceedings, no action is shown to have taken place. In such a case, the appellate authority would have no option but to proceed further to examine the claim of the assessee. The power of Ld. CIT(A) is co-extensive with that of Ld. AO. Therefore, in our considered opinion, the impugned issue has been clinched in right perspective by Ld. CIT(A) and the impugned addition has rightly been deleted. Decided against revenue.

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• 2024 (10) TMI 742
  Penalty u/s 271(1)(c) - defective notice u/s 274 - allegation of non specification of clear charge - AO reached at the conclusion that the assessee has furnished inaccurate particulars of income in order to decrease its tax liability - HELD THAT:-We note that assessee has duly raised issue against the assumption of jurisdiction for the levy of section 271(1)(c) that in the penalty notice, relevant limb was not specified whether the penalty proceedings were initiated for concealment of income or furnishing of inaccurate particulars of income. When the same was not so specified in the penalty notice it has been held in the case laws cited before us that mention of the same in the assessment order or penalty order cannot cure fatal short-coming. When the charge has not been specified in the notice, it is an omnibus notice. In such circumstances, Hon ble jurisdictional High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] has held that the penalty order passed is liable to be quashed on account of this defect which is fatal. Full Bench of Hon ble Bombay High Court in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] has held that no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted. Thus on the undisputed proposition that relevant limb of the penalty notice was not specified as to whether penalty was for concealment or furnishing of inaccurate particulars of income, we direct that the penalty in this case is liable to be deleted. Hence, we set aside the orders of the authorities below and decide the issue in favour of the assessee.

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• 2024 (10) TMI 741
  Addition u/s. 50C on cancellation of tenancy rights - AO added this amount to the income of the assessee as long-term capital gain - HELD THAT:- The undisputed fact is that the assessee is a tenant / occupant of Shop No.3, 1st Floor, Rani Building, at Junction of V.P. Road, Raja Rammohan Roy Road, Girgaum, Mumbai. It is also not in dispute that as per the Articles of agreement of October 2016, assessee agreed to surrender his tenancy rights in lieu of the allotment of a permanent alternate accommodation. As per the agreement the assessee was assured 351.87 sq.ft on the second floor of the proposed building and 105.81 sq.ft on the first floor immediately over and above. Since, no alternate accommodation was provided in the impugned year, no transaction was reported by the registering authority. Subsequently, vide deed of transfer dated 21/07/2017, the assessee was allotted only 351.86 sq.ft carpet area and on such deed of transfer, stamp duty was paid at Rs. 38.48 lakhs which is the bone of contention. Assuming that there was a transfer of tenancy right during the year under consideration even then as per the decision of Abdul Aziz Abdul Kadar [ 2015 (10) TMI 2859 - BOMBAY HIGH COURT] provisions of Section 50C of the Act do not apply. We are of the considered view that provisions of Section 50C of the Act do not apply on the facts of the case in hand. AO is accordingly, directed to delete the impugned additions. Appeal is allowed.

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• 2024 (10) TMI 740
  Nature of receipt - incentive given by the Govt to the assessee for exploring new market - revenue v/s capital receipt - HELD THAT:- We refer to the decision of Ponni Sugars Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] which held that the purpose test is determination of whether a benefit under a Government policy is income or otherwise. Hon ble Supreme Court by referring to facts of the Sahney Steels Press Works [ 1997 (9) TMI 3 - SUPREME COURT] observed if the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account and the basic test to be applied in judging the character of a subsidy, that test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. Taking into account the same, held if the object of the assistance under the subsidy scheme was to enable the assessee to set up new unit or to expand the existing unit, then the receipt of the subsidy was on capital account. By applying the same ratio as held in the case of CIT v. Ponni Sugars Chemicals Ltd. ors. (supra) to the facts of the present case, we note that the reward by way of MEIS scrips is given to offset infrastructure inefficiencies, but, not for the purpose of running the business more profitably. As noted further that though the said amounts are brought into profit and loss account claimed as exempt in the return of income, we find the said treatment in the books of accounts by itself cannot be determinative of taxability, we, therefore, hold that the same treatment of amounts received by way of sale of MEIS scrips as credited to the profit and loss account cannot alter the receipt, in our opinion, does not fall in the definition of income even after insertion of sub-clause (xviii) to section 2(24) of the Act. Thus, it is a capital receipt, not chargeable to tax. Therefore, the contention of the ld. DR relying upon the decision in the case of Sahney Steels Works Ltd (supra) is not acceptable. A taxing statute has to be interpreted what is clearly expressed, it cannot employ anything which is not expressed, it cannot import provision to statute so as to supply any deficiency, that before taxing any person, it must be shown that he falls within the ambit of section 2(24)(xviii) of the Act and in the absence of inclusion of words under the said clause, the scope of section cannot be enlarged to include exemption by interpreting with its subsidy. We find the facts of the present case are identical to the facts before ITAT Amritsar Benches in Gravita Metal Inc [ 2023 (6) TMI 1438 - ITAT AMRITSAR] and Dilip Kumar Co [ 2018 (7) TMI 1826 - SUPREME COURT] . In the present case, the word reward is absent in the provisions of section 2(24)(xviii) of the Act, in the absence of said word in section 2(24)(xviii) of the Act, the scope of the section cannot be enlarged to include reward . We hold that as per the Foreign Trade Policy-2015, the benefit given by way of MEIS scrips are rewards, the meaning of which is completely different from the meaning of the term assistance under the provisions of section 2(24)(xviii) of the Act. We hold that the benefit by way of MEIS scrips could not fall within the meaning of the terms subsidy or grant or cash incentive or duty draw back or waiver or concession or reimbursement provided under section 2(24)(xviii) of the Act. We hold the ICDS-VII is not applicable as it deals with Government grants only, but not inclusive of the duty credit scrips under MEIS, which are rewards. We hold that the benefit under Foreign Trade Policy-2015 received being MEIS scrips cannot fall within the meaning of cash assistance under section 28(iiib) of the Act. We hold the sums received as a sale of MEIS scrips credited to the profit and loss account, the said treatment in the books of accounts by itself cannot be determinative of taxability of said receipt. Thus, the benefit derived by way of sale MEIS scrips in the open market is not an income with the meaning of provisions under section 2(24)(xviii) of the Act. Therefore, we find no infirmity in the order of the ld. CIT(A) for the reasons recorded therein and also for discussion made by us in the aforementioned paragraphs, the grounds raised by the Revenue fails and are dismissed. Nature of expenses - Disallowance of expenses on construction of building on leasehold land by treating the expenditure as revenue expenditure - HELD THAT:- We find, admittedly, no change in the facts and circumstances in the year under consideration to that of the AYs 2014-15 2015-16 [ 2023 (2) TMI 461 - ITAT CHENNAI] since issue is similar basing on same identical facts, we find no infirmity in the order passed by the ld. CIT(A) in allowing the claim of the assessee in treating the cost of construction as revenue expenditure.

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• 2024 (10) TMI 739
  Depreciation claimed u/s 32(1)(ii) on toll roads - Appellant prays that the right to set up an infrastructure facility' and collect annuity thereon being in the nature of a license or business' or 'commercial right' be regarded as an intangible asset in terms of the provision of Section 32(1)(ii) - assessee submitted that it claimed depreciation treating the road as plant and machinery and depreciation @15% of the total cost of construction of the project facility - assessee submitted that if the road is treated as a building then depreciation @10% be allowed, and if, in the alternative, it is treated as an intangible asset, then the depreciation @25% may be allowed - HELD THAT:- In light of the detailed analysis of case law relied upon by both sides we are of the considered view that the decision of L T Infrastructure Development Projects Limited. [ 2023 (2) TMI 32 - MADRAS HIGH COURT] being the sole decision by any Hon ble High Court on the issue under consideration before us, is binding on us in the absence of any contrary decision by any other Hon ble High Court including the Hon ble Jurisdictional High Court. Further, the decision in L T Infrastructure Development Projects Limited (supra) has been rendered by a forum higher in the judicial hierarchy as compared to the decision in DCIT v/s Progressive Constructions Ltd [ 2017 (3) TMI 1167 - ITAT HYDERABAD] rendered by the Special Bench of the Tribunal on this issue. Therefore, we are of the considered view that the learned CIT(A) correctly denied the claim of depreciation by the assessee on the right to collect toll on the roads developed by it on a BOT basis - claim of depreciation by treating the road as a tangible asset, has already been found to be covered against the assessee by the decisions of the Hon ble Jurisdictional High Court. Decided against assessee.

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• 2024 (10) TMI 738
  Validity of order u/s. 154 - non-consideration of a ratio decidendi/decision of the Hon ble Supreme Court/jurisdictional High Court - CIT(A) exercised suo-moto his power of rectification of his own earlier order passed - assessee club has shown gross income which included interest income which was claimed as not taxable on principles of mutuality but AO didn t accept the claim of the assessee that the interest income from investment/bank wouldn t be taxable and after giving deduction of 10% (income spent for administrative other expenses) computed taxable income HELD THAT:- As decided in decision in the case of Saurashtra Kutch Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] , it is crystal clear that non-consideration of the decision of the Hon ble jurisdictional High Court in the assessee s own case by the Ld.CIT(A) would definitely amount to mistake apparent on the face of the record. in the absence of such a claim being made before the AO even after 10 years after the order of the Hon ble Madras High Court in their own case [ 2009 (7) TMI 68 - MADRAS HIGH COURT] , setting up such a case before Ld CIT(A) during the first round was an afterthought because no material was kept before Ld CIT(A) to make such a claim. We came to such a conclusion after perusal of records, which doesn t reveal that assessee filed any additional evidence before the Ld.CIT(A) [in the first round] to prove its assertion that its case would fall in the case-scenario as stated at Para Nos.30 36 of the Hon ble High Court Bangalore Club [ 2006 (7) TMI 146 - KARNATAKA HIGH COURT] . And even if for argument sake it is assumed that such a claim was set up before the Ld.CIT(A), who enjoyed co-terminus power as that of AO, then he could have very well examined the relevant facts and ascertained as to whether the assessee has made out a prima facie case that the funds were invested in the form of Fixed Deposits or securities which were kept in such a deposit with a definite idea of using the same in a specific project for further development of the infrastructural facilities of the Club in the form of building or other facilities. Even before us, the assessee has neither filed any material to show that such a claim was raised before the AO at the first instance nor before the Ld.CIT(A) or before us to show the bonafide of such a claim. In the aforesaid background, the action of the AO can t be faulted for moving Miscellaneous Application before the Ld.CIT(A) for correcting the mistake apparent on the face of the record, when there was a binding order of the Hon ble Madras High Court in assessee s own case for AY 1996-97; and moreover, it is noted that the Hon ble Madras High Court concurred with the ratio of decision of Bangalore Club [ 2006 (7) TMI 146 - KARNATAKA HIGH COURT] which has been upheld by the Hon ble Supreme Court in the case of Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT] Therefore, we find that the Ld.CIT(A) rightly exercised his power u/s. 154 of the Act which is sustainable in law and therefore, upheld. Consequently, both the appeals preferred by assessee are devoid of merits and stands dismissed.

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• 2024 (10) TMI 737
  Additions towards excess of interest expenditure claimed on unsecured/bank loans, brokerage/commission and bank charges - assessee has failed to demonstrate that the financial assistance availed of on interest has been utilized for the purpose of business and that there is no diversion - HELD THAT:- It is now well-settled that where an assessee has a pool of funds comprising of both interest free and interest laden funds, the advance made to subsidiaries, family, friends or relatives are presumed to be made out of such interest free funds, provided the interest free funds available are sufficient to meet the amount of such advances. It is also well settled that the AO cannot question the commercial wisdom/expediency. AO cannot place himself in the armchair of the assessee. The only aspect which would normally enter into the consideration of the AO is whether the interest free funds available are sufficient to meet the interest free advances or advances at a lower rate of interest. It can thus be seen that it would essentially be an exercise of examination of the facts pertaining to the particular assessment year. CIT-DR is right that an omnibus reliance cannot be placed in such a case on the previous decision in the assessee s own case inasmuch as the question about the availability of sufficient interest free funds as well as the nature and extent of the advances made during the relevant period would be a question of fact relevant to the said period. On perusal of order passed by the CIT(A), we find that the CIT(A) has recorded a specific finding that the facts obtaining in the year under consideration are identical to the facts for assessment year 2015-16 in respect of which there is already an order passed by the Tribunal in assessee s favour deleting the addition made towards excess of interest expenditure. We have made an attempt to examine the facts and have found on the basis of the statements as reproduced above that even under the year under consideration, assessee had sufficient interest free funds so as to cover the advances made on interest to related parties except in case of Shreepati Build Infra Investment Ltd. where the rate of interest is said to be 9%. For all other related parties, the interest rate charged is 12%. Insofar as Shreepati Build Infra Investment Ltd. is concerned, the promoter is shown to be a shareholder/Director. In respect of two unrelated parties, Jitendra F. Jain and New India Roadways, the advance is made at 9% p.a. The other two additions relating to brokerage, commission and bank charges are consequential in nature. Since we have deleted interest disallowance, both these additions are liable to be deleted - Decided against revenue.

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• 2024 (10) TMI 736
  Sundry credit balances written back - Excess provision written back (being 80% of the excess provision written back) - HELD THAT:- Assessee has declared certain income relating to earlier years pertained to excess provision/sundry credit written back had been considered as core shipping income of the assessee as defined in Sec. 115V(2) - assessee has also declared sundry creditors written back as its core shipping income from the core activity as defined in Sec. 115V(2) of the Act. AO observed that assessee has opted for Tonnage Tax Scheme w.e.f assessment year 2005-06, therefore, aforesaid income would not qualified to be categorised as shipping income from core activity. Therefore, the assessing officer noticed that out of the sundry credit written back of Rs. 3.32 crores a sum of Rs. 19,58,670/- was pertained to the pre- tonnage tax era, therefore, he brought the same to tax under the normal provision of the Act. Similarly in respect of excess written back of Rs. 62.85 crores the assessing officer observed that a sum of Rs. 24,27,86,267/- pertained to the pre-tonnage tax era and he treated 80% of such excess provision written back as pertaining to the pre-tonnage period and same was taxed under the normal provision of the Act. As relying on assessment year 2007-08 [ 2015 (3) TMI 751 - ITAT MUMBAI ] issue on hand being squarely covered we find merit in the submission of the assessee and allow the claim of the assessee for treating the income under the core activity, therefore, ground no. 1 of the assessee is allowed. Taxing the sum being 80% of the sundry receipts pertaining to certain receipts recorded under sundry receipts - HELD THAT:- During the course of assessment the assessing officer has taxed the sundry receipt under the normal provision of the Act as discussed supra in this order on the ground that tonnage tax scheme was applicable to the income earned from operation of qualified ships and that too from the activities which was listed as core activities. The assessee explained that sundry receipts were related to the operation of ships therefore the same was required to be considered as income from core activities. As in relevant extract of the decision vide [ 2023 (3) TMI 713 - ITAT MUMBAI ] pertaining to assessment year 2008-09 ground no.2 of the assessee is allowed excluding the amount on the issue of application money for right to information Act which was not pressed. Sundry receipts should be treated as profit from core activities HELD THAT:- The assessee explained that receipt from insurance and PI claim was directly related to the core shipping activity of the assessee in respect of its ships as the same was arised out of insurance claim for damages which was restricted up to the actual expenses incurred by the assessee. Similarly, the house rent was related to the accommodation arranged by the assessee for its employees on lease basis for which it had incurred expenditure on lease rent and recovered from normal house rent from the employees, therefore, same is related to the core activity of the assessee company and these expenses were incurred every year for the purpose of the business of the assessee. Therefore, the part of the amount recovered out of the expenditure is a receipt related to the core activity of the assessee company. Similarly, the bus service were arranged by the assessee for its employees who were working in the assessee company, which is related to the business of the assessee and part of the core activity. With the assistance of ld. Representative we have also gone through the decision in the case of assessee itself for A.Y. 2008-09 [ 2023 (3) TMI 713 - ITAT MUMBAI ] wherein identical issue on similar fact has been decided in favour of the assessee. Interest income constituted profits from core activities and therefore could not be separately assessed to tax - HELD THAT:- With the assistance of the ld. representative we have gone through the decision of ITAT for A.Y. 2008-09 [ 2023 (3) TMI 713 - ITAT MUMBAI ] held as undisputed that the only business activity pursued by the assessee relates to shipping, and thus the entire receipts are from the shipping activity, which qualifies for computation on a presumptive basis under the tonnage tax provisions. We find that in CIT vs Varun Shipping Co Ltd. [ 2008 (9) TMI 591 - BOMBAY HIGH COURT ] held that where the assessee borrowed certain amount for its business purpose and earn interest on unutilised portion of the loan, interest income is taxable as business income. Thus, since the funds are nothing but the funds required for running the shipping business, which has been invested by the assessee, and interest income is earned, therefore, we are of the considered opinion that income by way of interest arising from the said deposits is in the nature of business income and relates to the core shipping activity. Disallowance of administrative expenses against income from incidental shipping activities - HELD THAT:- After referring the aforesaid provision of Sec. 115VI DRP agreed that in respect of profit from incidental activities only the net receipt cannot be treated as income and reasonable allocation of administrative expenditure is required to be made. Also stated in the finding of the DRP that assessee has shown the same on the basis of turnover, therefore, the same is reasonable. Considering submission of the assessee that administrative expenses are required to be incurred for all activities of the assessee company, therefore, we consider that the same is required to be attributed on a reasonable basis to arrive at profit from the incidental activities in the case of the assessee in accordance with the Sec. 115VI - direct the AO to allow the claim of the assessee for allocating the administrative expenditure on the basis of turnover therefore this ground of appeal is allowed. Treatment of commission of disbursement as part of profit and turnover from core activity - HELD THAT:- Assessee sometimes takes vessels owned by third parties on a charter basis and further out-charters the same to third parties. In chartering activity, all the expense of the vessels are required to be borne by the ship owner but if the assessee incurs certain expenses on behalf of the vessels owner for managing the vessel, the same are reimbursed to it by the vessels owner along with commission. We have perused the decision of ITAT for A.Y. 2008-09 [ 2023 (3) TMI 713 - ITAT MUMBAI ] wherein the similar issue on identical fact was decided by the assessee held as per the assessee, such disbursement was pursuant to an agreement with certain ship owners. We have already upheld the taxability of commission on disbursement under Chapter XII-G, which was forming part of the prior period income. Since this commission is also of a similar nature and that too pertaining to the post tonnage tax era, therefore, same forms part of core shipping activity. Treatment of Profit on bar and shop sales as part of turnover from core activity - HELD THAT:- We find that identical issue on similar fact has been adjudicated by the ITAT in the case of the assessee for assessment year 2008-09 [ 2023 (3) TMI 713 - ITAT MUMBAI ] wherein held as per the assessee, though the receipts have been referred to as incidental in the aforesaid order, what was meant was that it is a receipt from core activity. However, no order modifying the aforesaid findings by the coordinate bench is placed on record. Thus, respectfully following the judicial precedent in assessee s own case, the profit on bar plus shop sales are held as incidental activity of the operation of the qualified ship. Treatment of Sundries core shipping as part of profit and turnover from core activity - CIT(A) held that such receipts are related to core shipping activity and same was treated as part of business receipt of the assessee - HELD THAT:- We find that ld. CIT(A) held that such receipts are recovered from the container freight station and include various receipts including reserves on behalf of the customer which indicate that such receipts are related to the core shipping activity. Considering the aforesaid findings of the CIT(A) we don t find any reason to interfere in the decision of ld. CIT(A) therefore, this ground of revenue stand dismissed. Treatment of recovery of water charges as part of profit and turnover from core activity - HELD THAT:- Water charges recovery are made from the vessel owners towards supply of fresh water for use by crew staff which showed that this recovery is part of the shipping activity therefore, we don t find any error in the decision ld. CIT(A), therefore, this ground of appeal of revenue are dismissed. Credit of Foreign Taxes paid u/s 90 and 91 - CIT(A) held that tax deducted in countries with whom India does not have a DTAA, the manner of determining the independent rate of tax has been specifically provided by explanation to Sec. 91 and the effective rate of tax determined by the AO was not proper, therefore, AO was directed to follow the same as per Sec. 91 - HELD THAT:- We find that similar issue on identical fact has been decided by the ITAT in the case of the assessee itself vide [ 2015 (3) TMI 751 - ITAT MUMBAI ] for A.Y. 2007-08 on 21.03.2014 and the matter was restored to the file of the AO after referring the decision of the ITAT on the similar issue for assessment year 2005-06 claim of the assessee for relief u/s 90 and 91 of the Act in respect of foreign taxes paid outside India deserves to be entertained and since the ld. D.R. has also not raised any objection in this regard, the matter should go back to the A.O. for deciding the same afresh after necessary verification. Appeal of the assessee is partly allowed and the appeal of the revenue is dismissed.

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• Customs

• 2024 (10) TMI 735
  Provisional release of goods - Stay of Notification No. 5/2023 dated 08 05.2023 by the Kerala High Court - Bombay High Court has permitted the respondent(s) herein to provisionally assess the Bill of Entry and release the goods to the petitioner therein on 08.12.2023 by furnishing a bond - HELD THAT:- Pending disposal of these petitions, it is directed that the stock of apples which have been already imported by the petitioners and which are lying in customs warehouse/CFS shall be provisionally released subject to the petitioners furnishing a bond. The said exercise shall be carried out forthwith. It is clarified and observed that this interim order is restricted to the stock of apples already imported and lying in the CFS.

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• 2024 (10) TMI 734
  Interest on the delayed refund of Special Additional Duty (SAD) in terms of Sections 27 and 27A of the Customs Act, 1962 - relevant date for calculation of interest - whether interest is to be calculated only from 08 November 2022, i.e. three months from the date of the application dated 08 August 2022? HELD THAT:- There is no allegation about the initial application for refund being incomplete or containing any other deficiencies. Admittedly, no deficiencies were pointed out to the petitioner either within 10 days or even later. The application dated 08 August 2022 only requested the respondent to implement the order dated 30 June 2022 made by the Commissioner (Appeals). This application/letter was mere in the nature of a follow-up letter or reminder. This application can not be styled or construed as an application for refund under Section 27A of the Customs Act or the Regulations. Based upon such misconceived construction or by referring to the explanation to Section 27A of the Customs Act, the respondent can not avoid payment of interest at the rate of 6% per annum from 04 August 2014, having retained and utilised the amount which was ultimately found to be refundable to the petitioner. The respondent has delayed granting the refund that was due and payable to the petitioner for almost ten years. Now, the respondent is avoiding the payment of interest on the delayed refund amounts by raising frivolous pleas even though the interest component comes to hardly Rs. 4,21,940/ as of the date of institution of the petition. In the context of Sections 11B and 11BB of the Central Excise Act, the Hon ble Supreme Court, in the case of Union of India Vs. Hamdard (Waqf) Laboratories [ 2016 (3) TMI 68 - SUPREME COURT] has considered and rejected similar arguments made on behalf of the Revenue. Hon ble Supreme Court held the liability for the interest payment is statutory, and it is the bounden duty of the Assistant Commissioner to pay interest. Further, the court held that the liability of the Revenue to pay the interest under Section 11BB, which corresponds to Section 27A of the Customs Act, commences from the date of expiry of 3 months from the date of receipt of the application for refund or on the expiry of the said period from the date of which the order of refund is made. The Delhi High Court's decision in S.R. Polyvinyl Ltd. vs. Commissioner of Customs [ 2019 (11) TMI 543 - DELHI HIGH COURT] , which interprets the provisions of the Customs Act, also supports the petitioner's case. On an identical issue, the Karnataka High Court has held that the period for calculating interest would start from the date of application even if a refund arose on account of appeal orders. Thus, on facts and in law, this Petition deserves to succeed. The revenue's entire approach has been far from fair. The petitioner was forced to litigate for the refund's recovery, and after the refund was sanctioned belatedly, the revenue, quite unreasonably, resisted interest payment on the delayed refunds. It is not as if the stakes were high for the revenue. The interest claim of the Petitioner comes to Rs 4,21,940/-. The respondent is directed to pay the petitioner the interest amounting to Rs. 4,21,940/- on the delayed refund of SAD. The respondent must pay the petitioner this amount within two months of today - petition allowed.

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• 2024 (10) TMI 733
  Refund of SAD - failure to satisfy conditions at Para 2(d)(e)(II)(III) of N/N. 102/2007-Cus. dated 14.09.2007 - whether the appellant is eligible for the refund when the conditions of the Notification are not satisfied? - HELD THAT:- From the Notification read with Circular No. 16/2008 dated 13.08.2008, it is clear that the importer should pay appropriate Sales Tax or value added tax, as the case may and documents evidencing payment of the said additional duty to be produced before the authorities concerned. The Circular in the case of sale by the consignment agents stipulates that there should be an agreement between the importer and the consignment agents to sell the goods in terms of the agreements and each of the sale invoices issued by the consignment agent should indicate that the sales made by him on behalf of the importer in the capacity of consignment agent. The Commissioner (Appeals) has rightly rejected the refund claims in the absence of necessary proof to show that the imported goods were cleared by the consignment agent and VAT was paid by them on behalf of the importer. Moreover, though they produced the Chartered Accountant certificate in one of the appeals and there is no such certificate on record for the second appeal. In the present cases, no such evidences are produced and having placed only a notarised copy of the Agreement copy, which is not relevant to the period of dispute and also without any other documentary evidences to prove that VAT was paid by them for being eligible for the benefit of the Notification, the refund claims are rightly rejected. In the case of Union of India Versus VKC Footsteps India Pvt. Ltd. [ 2021 (9) TMI 626 - SUPREME COURT ], the Hon ble Supreme Court of India observed ' when the first proviso to Section 54(3) has provided for a restriction on the entitlement to refund it would be impermissible for the Court to redraw the boundaries or to expand the provision for refund beyond what the legislature has provided. If the legislature has intended that the equivalence between goods and services should be progressively realized and that for the purpose of determining whether refund should be provided, a restriction of the kind which has been imposed in clause (ii) of the proviso should be enacted, it lies within the realm of policy.' Since the conditions of the Notification No. 102/2007-Cus. dated 14.09.2007 read with the Circular No. 16/2008 dated 13.08.2008 are not satisfied, the appellant is not eligible for the refund of special CVD amount. Therefore, the impugned orders are upheld - Appeal dismissed.

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• 2024 (10) TMI 732
  Refund of amount of interest paid alongwith the amount of IGST - non-fulfilment of pre-import condition as the goods imported under Advance Authorizations - wrongful availment of benefit of IGST exemption for import under mistake of wrongly interpreting the definition of pre-import condition - HELD THAT:- It is clear that the appellant initially claimed IGST exemption, however, made the payment thereof at a subsequent later stage. This issue before the adjudicating authority below had not yet attained the finality as the Revenue s appeal against the decision of Hon ble Gujarat High Court in M/s. Maxim Tubes [ 2019 (2) TMI 1445 - GUJARAT HIGH COURT] was pending adjudication. Subsequent to the order under challenge the Supreme Court decision in that respect has been announced on 28.04.2023 setting aside the said order of Gujarat High Court. The pre-import condition in the Notification No.79/2017 dated 13.10.2017 has been held to be valid and intra vires. Also it is an admission of appellant itself that pre-import conditions were not fulfilled by the appellant. Though the plea taken to be a bonafide mistake but today it stands established that appellant was not entitled for availing IGST exemption under Advance Authorization. The said amount of IGST was paid voluntarily at a later date subsequent to the re-assessment of 18 Bill of Entries. Coming to the decision in the case of Mahindra Mahindra [ 2022 (10) TMI 212 - BOMBAY HIGH COURT] , it is held that present is the case where interest on late payment of IGST is prayed to be refunded whereas in the said case (Mahindra Mahindra) the refund claim was filed about amount of interest paid alongwith additional duty of customs which was paid at the date later than the relevant date. IGST on imports is not additional duty of customs hence the logic arrived at by Bombay High Court (affirmed by Hon ble Supreme Court) is not applicable to the interest on IGST. The opinion is based on following discussion on statutory provisions. The liability of the appellant to pay interest on delayed payment of IGST was automatic. The appellant is not entitled to claim the refund of the said amount of interest paid along with amount of IGST. The refund claim is therefore held to have been rightly rejected - Appeal dismissed.

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• 2024 (10) TMI 731
  Rectification of Mistake - error apparent on the face of record - HELD THAT:- When the appeal was listed on 18.03.2024, after hearing the learned Authorised Representative for the Revenue, the final order was passed on the appeal considering that there was a contradiction in the earlier final order dated 18.01.2018. Having upheld the contentions of the Revenue, the logical conclusion would have been that the appeal filed by the Revenue was required to be allowed whereas it was wrongly stated to be dismissed . Considering the scope of rectification of mistake, as has been settled by plethora of decisions that the rectification of mistake does not imply a complete re-hearing of the matter and it only requires that the error found apparent on record, needs to be rectified. In terms thereof, we passed the final order rectifying the error as noted in the order dated 05.04.2019 and consequently, allowed the appeal filed by the Revenue. The Apex Court in Master Construction Co. (P) Ltd. vs. State of Orissa [ 1965 (12) TMI 108 - SUPREME COURT] was pleased to observe that an error which is apparent from record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. The second limb of the application that suitable order may be passed on account of monetary limits in view of the Instructions dated 02.11.2023 issued by the CBIC cannot be the scope of application for recalling of the order as it would amount to opening the Pandora box in all the disposed of matters. This is not the correct stage as the appeal has already been disposed of by a final order. There are no error in our order dated 18.03.2024, whereby the appeal was finally disposed of.

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• Corporate Laws

• 2024 (10) TMI 730
  Wilful misconduct - Scope of judicial review - seeking removal of the Respondent No. 2 as a Resolution professional - providing documents and other information to enable the applicant to file objections to the Resolution plan - seeking disqualification of the proposed Resolution applicant - seeking action against the petitioner for alleged fraudulent transactions - HELD THAT:- The scope of judicial review in present proceedings wherein petitioners seek setting aside of order dated 22.08.2022 passed by IBBI, taking a lenient view qua shortcomings on the part of RP besides declaring all CIRP proceedings before learned NCLT to be illegal and non-est, is limited. Primary argument raised before us was that once RP was found guilty of the breach in question there was no occasion for the Board to have taken a lenient view especially as the violations go to the root of the matter - Merely because in the opinion of the Court another alternate punishment would be more appropriate, cannot be a ground to interfere with the discretion of Disciplinary Authorities. There should be no reappraisal of the facts of the matter as if sitting in appeal. Respondent no.2 was accordingly cautioned and warned to be more careful in future while handling process under the Code and that in case such repetitive instances are noticed in future, the matter would be treated as willful negligence and action would be taken accordingly. It is succinctly explained in the reply filed on behalf of the Board, that in order to plan effective implementation of provisions of IBC, Ministry of Corporate Affairs constituted four working groups in July 2016. First working group was entrusted with the task to 'Recommend the design of the IBBI'. As per its recommendation in respect to constitution of the 'Committee', it is duly observed that once IBC neither explicitly permits nor prohibits the possibility of one member Disciplinary Committee, the word 'Committee' used in Section 220(1) IBC can be interpreted to be inclusive of one member Committee. There are no infirmity or irregularity in the constitution of a single member Disciplinary Committee. It is to be noted that no malafide is alleged qua Disciplinary Committee. There are no merit in the argument raised on behalf of petitioners that they should have been afforded an opportunity of personal hearing/hearing by Disciplinary Committee prior to its decision on the complaint filed by it. Petition disposed off.

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• Insolvency & Bankruptcy

• 2024 (10) TMI 729
  Approval of resolution plan of the Corporate Debtor - resolution plan did not incorporate the claims of the Appellant - whether the Appellant had shown due diligence in submitting their claim before the IRP/RP and, if not, whether sufficient reasons/grounds exist to admit the belated claim at a time when resolution plan has already been approved by the Adjudicating Authority? - HELD THAT:- In the present case, it is noticed that after the Corporate Debtor was admitted into the rigours of CIRP on 28.01.2022, the Interim Resolution Professional made a Public Announcement on 04.02.2022, in compliance with Sections 13 and 15 of the IBC read with Regulation 6 of CIRP Regulations. The Public Announcement had set 16.02.2022 as the deadline for claim submissions. On 10.02.2022, the RP also informed the Appellant of the CIRP initiation against the Corporate Debtor, a fact which has not been controverted by the Appellant - the Appellant cannot deny that he was unaware that the CIRP process had already commenced and that it was incumbent upon the Appellant to make due endeavours on their part to submit their claims. The RP had also not committed any error in making the Public Announcement in the newspapers. Regulation 6 of the CIRP Regulations only mandates pronouncement through newspapers and not through personal service and therefore the RP was not obligated to inform the Appellant through personal service. The RP in accordance with the CIRP Regulations had regularly uploaded from time to time the list of creditors of the Corporate Debtor both prior to submission of claim by the Appellant and even after the submission of claim. The status of their claims of the creditors was also put up on the websites of Corporate Debtor as well as the Insolvency and Bankruptcy Board of India (IBBI) portal on several occasions. From the material on record, it is clear that the list of creditors was uploaded five times on 23.02.2022, 14.04.2022, 06.05.2022, 20.06.2022 and 04.08.2022. On 23.02.2022, the first updated list of creditors was published, indicating the status of claims received on the Corporate Debtor's website and the IBBI portal - The Appellant cannot shift the burden of their own negligence of not checking the website to ascertain the status of their claim. Hence there is no force in the contention of Appellant that they became aware that their claim was rejected only when the impugned order was emailed by the RP. Whether the RP ever agitated the issue of rejection of their claims? - HELD THAT:- It is clear that even until 180 days of CIRP completion, no objections were raised by the Appellant regarding rejection of their claims. The same position continued even when the resolution plan came up for approval before the Adjudicating Authority. When the RP moved IA No. 899 of 2022 before the Adjudicating Authority seeking approval of the resolution plan, the Adjudicating Authority vide order dated 09.11.2022 directed issue of notice upon the Appellant. Whether sufficient reasons/grounds exist to admit the belated claim at this stage? - whether such undecided claims can be entertained once the resolution plan is approved by the CoC and the Adjudicating Authority? - HELD THAT:- In the instant case, the facts on record do not show that the RP had acted in contravention of the IBC in rejecting or stalling the filing of belated claims or that he did not show due diligence in performing his duty. Hence the objections of the Appellant to the approval of the resolution plan approval merely on the ground that their claims were rejected lacks merit. It is also found that the Respondents have contended that the Appellant can claim the status of a Secured Creditor only if the relevant statutory provision provides basis for such a claim - the claim of the Appellant of being a secured creditor lacks force. The Appeal is devoid of merit - The Appeal is dismissed.

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• 2024 (10) TMI 728
  Applicability of interim moratorium under Section 96 of the Insolvency and Bankruptcy Code (IBC) - sale of partnership firm assets - Seeking restraint on the Respondent in the conduct of auction of sale notices dated 15.12.2023 under SARFAESI Act - whether in the backdrop of Section 95 proceedings under IBC having been initiated against the Appellant in his personal capacity as a personal guarantor, can the Respondent be barred from conducting sale of the subject property , belonging to a partnership firm (under dissolution), in which the Appellant is a partner, on grounds of operation of moratorium under Section 96 of the IBC in respect of personal guarantee of the Appellant? HELD THAT:- In the present case, admittedly, White Line Enterprises had filed C.P.(IB)No.10/ND/2024 invoking Section 95 of the IBC against RKC for standing as a personal guarantor for repayment of operational debt owed by M/s Sahil Home Loomtex Pvt Ltd. following which resolution process had commenced. Clearly, therefore, it is the personal guarantee of the Appellant against which the Section 95 has been invoked and not against the property of the partnership firm. The use of the expression all the debts and any debt are phrases with a very wide amplitude and it clearly covers debts other than the debt basis which moratorium has commenced. Though encompassing in nature, the moratorium relates only to the specific debt and not to the debtor. In addition, we notice the use of the phraseology of creditors of the debtor in Section 96(1)(b)(ii) which obviously refers to other creditors of the debtor apart from the creditor on whose application interim moratorium has commenced. Thus, the interim moratorium under Section 96(1)(b)(ii) creates a prohibition on the other creditors of the debtor from initiating any legal action in respect of the debt for which Section 95 has been initiated. In the present facts of the case, the moratorium imposed under Section 96 of IBC would apply only to the security interest created by the Appellant under the personal guarantee in his capacity as a personal guarantor with respect to default of operational debt qua White Line Enterprises. Merely because the Appellant claims to be an erstwhile partner of partnership firm-Sheetal Exports whose dissolution has been purportedly triggered by the Appellant, the interim moratorium would not cover the subject property against which SARFAESI proceedings have been initiated by the Respondent - It is well settled that Section 238 of IBC bestows on IBC the priority over other laws. Section 238 of IBC provides that the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. In the present case, interim moratorium has come into play only with respect to the personal guarantee of the Appellant as personal guarantor and not of the partnership firm, we find no good grounds for the Adjudicating Authority to have entertained the application of the Appellant to withdraw the notice issued under Rule 8(6) of Security Interest (Enforcement Rules) and restrain the Respondent from taking further action on these notices with respect to subject property having been put to auction. There are no cogent grounds to interfere with the impugned order - appeal dismissed.

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• 2024 (10) TMI 727
  Assignment of debt - Refusal to acknowledge the assignment of debt from Rolta Private Limited to Peanence Commercial Private Limited - Rolta Private Limited being a related party has not been given a berth in the CoC - HELD THAT:- From the facts as noticed above, it is clear that the entire claim filed by Rolta Private Limited, a related party of the Corporate Debtor, has been admitted in the CIRP. The Rolta Private Limited, however, being a related party has not been given a berth in the CoC. The copy of the Assignment Agreement dated 15.01.2024 has been brought on the record. Present is a case where in fact no assignment has taken place. What is entered between the parties is agreement for assignment that is contingent on approval by the Resolution Professional that Assignee will be given a seat in the CoC. The Adjudicating Authority has rightly taken the view that the whole exercise is a malafide exercise by Rolta Private Limited whose claim has been admitted and who being related party has not been given berth in the CoC and by means of alleged assignment is trying to bring Peanence Commercial Private Limited into the CoC. The real intent of the assignment is clear from the email send to the Resolution Professional where the Resolution Professional has been requested to confirm that Assignee would be declared as nonrelated party to the Corporate Debtor, meaning thereafter the Assignee shall get a berth in the CoC. The Adjudicating Authority has rightly noticed the judgment of the Hon ble Supreme Court in Phoenix ARC Private Limited vs. Spade Financial Services Limited Ors. [ 2021 (2) TMI 91 - SUPREME COURT] . It has also been noticed that the Assignor is a related party of the Corporate Debtor and the Suspended Board of Corporate Debtor. Resolution Plan of the respective Resolution Applicants being placed and discussed, the Suspended Board of the Corporate Debtor is privy to the amounts which has been set aside for payment to Rolta Private Limited in the plan. At this stage, the Assignment Agreement which has been entered by the parties and has been communicated to the Resolution Professional, clearly indicates that Rolta Private Limited is trying to bring its Assignee to create hurdles and delay in the CIRP of the Corporate Debtor. The Adjudicating Authority has given ample reasons in the impugned order for not allowing the prayers made by the Applicant/ Appellant in the application - Appeal dismissed.

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• 2024 (10) TMI 726
  Admission of Section 7 application - Financial Debt within meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - default with regard to payment of Security Deposit under the terms Development Agreement - estoppel from asserting the claim for refund of Security Deposit without completing the development work under the Development Agreement. Whether the debt for which the application under Section 7 was filed can be treated to be a Financial Debt? - HELD THAT:- For a transaction to be covered under Section 5(8) first requirement is disbursal against the consideration of the time value of money. Sub section (f) of Clause 8 is a residuary Clause which provides for any amount raised under any other transaction having the commercial effect of the borrowing . The Development Agreement is a transaction between the parties and looking to the Clauses of Development Agreement, it is clear that transaction has commercial effect of the borrowings. Payment of 18% interest compoundable and payable quarterly clearly indicate time value of money. Corporate Debtor has clear understanding that advance made over and above of Security Deposit Rs. 12 Crores carry interest @ 18% interest p.a. compounded and payable quarterly. Letter further said that since even after more than five an half years of signing of Development Agreement, Project has not taken off, hence they are not in a position to make provision for interest for the time being on the additional part of Security Deposit received. An application was filed before the Adjudicating Authority by first Respondent seeking a direction to IRP to admit the claim as Financial Creditor. Adjudicating Authority held that first Respondent was a Financial Creditor and not an Operational Creditor. Appeal was filed by challenging the order of the Adjudicating Authority. In the above context, Hon ble Supreme Court has occasion to consider the ingredients of a Financial Debt. Development Agreement clearly contains the details of transaction entered between the parties which makes it clear that advance of Rs. 3.5 Crores carried interest of 18% which transaction falls within Financial Debt under Section 5(8) - Classification of the same as inventory in the Books of Financial Creditor will not change the nature of transaction and the Financial Creditor has been relying on the acknowledgement of the Corporate Debtor in the Balance Sheet for purposes of limitation under Section 18, which has rightly been noted and accepted by the Adjudicating Authority. The Adjudicating Authority did not commit any error in considering the relevant issues which arose between the parties and after detailed discussion came to the conclusion that Financial Creditor has been able to prove debt and default. No error has been committed by the Adjudicating Authority in admitting Section 7 application - there are no error in the order of the Adjudicating Authority, warranting our interference in the exercise of the appellate jurisdiction. There is no merit in the appeal. The appeal is dismissed.

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• 2024 (10) TMI 725
  Admission of Assignment Agreement - appellant contends that the Assignment Agreement dated 29.03.2022 was not duly stamped and a document which was not properly stamped under the Maharashtra Stamp Act, 1958 could not have been admitted - HELD THAT:- There is no dispute between the parties that the Assignment Agreement dated 29.03.2022 is a registered document. Counsel for the Respondent has relied on the provision of SARFAESI Act, 2002 which empowers the assignee to continue prosecute and enforce all applications, appeals and legal proceedings which were pending on the date of assignment. Section 7 application filed by L T Finance Ltd. was pending on the date of assignment. Hence, Phoenix Arc Pvt. Ltd. has jurisdiction to prosecute the application. By virtue of Section 5(2) of the SARFAESI Act, Phoenix Arc Pvt. Ltd. is fully entitled to prosecute the application which was filed by L T Finance Ltd. . Present is a case where Assignment Agreement is a registered document. In the facts of the present case where Assignment Agreement is registered and has been filed in the proceedings under Section 7, by virtue of Section 5(2) of the SARFAESI Act, Phoenix Arc Pvt. Ltd. is entitled to prosecute and deeming clause as contained in Section 5(2) fully protects and entitled the Phoenix Arc Pvt. Ltd. to prosecute Section 7 application. There are no error in the order of the Adjudicating Authority allowing application. The Adjudicating Authority did not commit any error in rejecting the application of the Corporate Debtor praying for impounding of the document - there are no error in the order passed by the Adjudicating Authority deciding both the applications - appeal dismissed.

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• 2024 (10) TMI 724
  Condonation of delay in filing appeal - Applicability of time limitation for filing appeal - Sufficient cause for delay or not - HELD THAT:- It is clear that 22.11.2023 was date fixed for hearing of the IA No.4434 of 2023 and the arguments were heard on IA No.4434 of 2023. It is not disputed by the Respondent that no order was pronounced on 22.11.2023 by the Court. Judgment of the Hon ble Supreme Court in Sanjay Pandurang Kalate [ 2023 (12) TMI 1249 - SUPREME COURT (LB)] supports the submission of the Appellant that when order is not pronounced in the open court, limitation for filing the appeal shall not commence. In Sanjay Pandurang Kalate case, the Hon ble Supreme Court has granted the benefit to the Appellant and held that limitation is to be counted from the date when order was uploaded on the website. Although the Appellant s case is that till 20.02.2024 the order was not uploaded. Appellant has also along with the appeal brought on record the screenshot but in the present case, there is no dispute to the fact that by e- mail dated 25.01.2024, liquidator has informed the Appellant about the order dated 22.11.2023. Thus, the Appellant cannot claim that limitation will not begin at least from 25.01.2024 when the order was communicated by the liquidator to him. The law indicate that the expression sufficient cause employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice. The Hon ble Supreme Court in Sheo Raj Singh vs. Union of India and Anr. [ 2023 (11) TMI 814 - SUPREME COURT] has held that condonation of delay being a discretionary power available to courts, exercise of discretion must necessarily depend upon the sufficiency of the cause shown and the degree of acceptability of the explanation, the length of delay being immaterial. In the above case, Single Judge of the High Court has allowed Section 5 application filed by the Union of India and condoned the delay of 479 days. Ultimately, the Hon ble Supreme Court dismissed the appeal upholding the condonation of delay of 479 days. In the present case, no date of uploading has been brought on the record, hence, the date for commencement of the limitation cannot be pegged on date of uploading. However, the liquidator having shared the order on 25.01.2024, Appellant had to file the appeal within 45 days. 30 days time expired from 24.02.2024 and filing of the appeal on 02.03.2024 is within condonable period and in the facts of the present case, the sufficient cause has been made out to condone the delay. Delay Condonation Application is allowed.

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• 2024 (10) TMI 723
  Admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - IRP has worked only for 8 days because the constitution of the CoC was stayed by this court on 18.04.2023 which is continuing - non-constitution of the Committee of Creditors (CoC) due to a stay order - HELD THAT:- In view of the settlement arrived at and the money having been paid, duly received by the creditor (Omkara asset Reconstruction Company Pvt. Ltd.), order of admission passed against the CD does not survive and hence CA (AT) (Ins) No. 711 of 2023 is hereby allowed. CP (IB) No. 439 of 2022 has been disposed of as infructuous because of the admission of CP (IB) No. 1089 of 2022, can be revived for pursuing their remedy against the corporate debtor for the resolution of their claim/debt. In so far as, issue regarding the dues of the IRP are concerned, it can be taken care of by the Adjudicating Authority, if and when the IRP file an application on form FA and put up his claim for the CIRP cost. The order dated 30.03.2023 is set aside. The FC shall file the form FA along with the bank guarantee to the IRP who shall in turn file the same to the Adjudicating Authority for an order regarding to the withdrawal of the petition. First appeal is allowed.

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• Service Tax

• 2024 (10) TMI 722
  Interpretation of statute - amended provisions of Section 35F and 35FF post-06.08.2014 - eligibility for interest sanctioned (on pre-deposit) - pre-deposit amount is related to appeal filed prior to 06.08.2014 - HELD THAT:- The entire amount was deposited by the appellant on 08.01.2015 and 17.01.2015 which has been claimed as refund by the appellant. There is no dispute in respect of the deposit made or the date of deposit. At least impugned order do not record any other date of pre-deposit. It is not even the case of revenue that these amounts have been deposited prior to 06.08.2014 i.e. the date of commencement of Finance (No 2) Act, 2014. From proviso to the Section 35F, it is evident that the said section, categories the amounts deposited under Section 35F in two categories, (i) deposited prior to 06.08.2014, the date of Commencement of Finance (No 2) Act, 2014 (ii) deposited post 06.08.2014, the date of Commencement of Finance (No 2) Act, 2014. In respect of the amounts deposited post 06.08.2014, the provisions of the amended section 35 FF will be applicable and in respect of amounts deposited prior to 06.08.2014, the provisions of erstwhile section 35FF as it stood prior to date will apply. It is settle principle of interpretation that the statute should be interpreted in accordance with the words used in the statute. By circular no 1053/02/2017-CX dated 10.03.2017 Board has clarified that ' Where the appeal is decided in favour of the party/assessee, he shall be entitled to refund of the amount deposited along with the interest at the prescribed rate from the date of making the deposit to the date of refund in terms of Section35FF of the Central Excise Act, 1944 Since the said Circular has been issued without any qualification it would not be open to authorities subordinate to introduce qualification as has been sought to by the impugned order and not apply the said circular.' There are no merits in the impugned order - appeal allowed.

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• Central Excise

• 2024 (10) TMI 721
  Maintainability of petiiton - non-compliance of the statutory requirement of pre-deposit - power of the Tribunal or the Commissioner (Appeals) to waive the pre-deposit requirement - HELD THAT:- It would be seen from a bare perusal of section 35F of the Central Excise that after August 06, 2014 neither the Tribunal nor the Commissioner (Appeals) have the power to waive the requirement of pre-deposit, unlike the situation which existed prior to the amendment made in section 35F on August 06, 2014 when the Tribunal, if it was of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship, could dispense the said deposit on such conditions as it deemed fit to impose so as to safeguard the interest of the Revenue. The Supreme Court in Narayan Chandra Ghosh vs. UCO Bank and Others [ 2011 (3) TMI 1478 - SUPREME COURT] , examined the provisions contained in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 relating to pre deposit in order to avail the remedy of appeal. The provisions are similar to the provisions of section 129E of the Customs Act. The Supreme Court emphasised that when a Statute confers a right to appeal, conditions can be imposed for exercising of such a right and unless the condition precedent for filing appeal is fulfilled, the appeal cannot be entertained. The Supreme Court, therefore, held that deposit under the second proviso to section 18(1) of the Act, being a condition precedent for preferring an appeal, the Appellate Tribunal erred in law in entertaining the appeal. The Supreme Court also held that the Appellate Tribunal could not have granted waiver of pre-deposit beyond the provisions of the Act. It will also be appropriate to refer to a decision of the Delhi High Court in Dish TV India Limited vs. Union of India Ors. [ 2020 (8) TMI 183 - DELHI HIGH COURT] , wherein the requirement of pre-deposit under section 129E of the Customs Act, came up for consideration. The High Court held that when the Statute itself provided wavier of pre-deposit to the extent of 90% or 92.5% of the duty amount and made it mandatory to deposit 7.5% or 10% of duty amount, the Courts cannot waive this requirement of deposit. The appellant has not made the pre-deposit. In view of the aforesaid decisions of the Supreme Court and the Delhi High Court, it is not possible to permit the appellant to maintain the appeal without making the required pre-deposit. Appeal dismissed.

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• 2024 (10) TMI 720
  Rejection of availment of Cenvat credit on the grounds that it was availed more than 1 year after the date of issuance of the documents - denial of CENVAT Credit in respect of services which were used at salt pans for manufacturing salt which was the raw material for manufacturing soda ash. Whether the Commissioner (Appeals) was right in rejecting the availment of the Cenvat credit, amounting to Rs.46,27,417/- for the period of 03.12.2005 to 31.03.2012 on the ground that the credit was availed more than 1 year after the date of the issuance of the documents? - HELD THAT:- The case of the department is that the credit should have been taken within 1 year from the date of invoice. Therefore, in respect of this Cenvat Credit since, the credit was taken after 1 year the same is not admissible. It is found that for arriving at this conclusion the Revenue has relied upon the provision 11 A and 11 B. These Sections nowhere prescribe about the time limit for availment of the Cenvat credit. Therefore, the borrowing of the provision of Section 11A and 11B is absolutely illegal and incorrect. As regard the amendment in Cenvat Credit Rules, 2004 prescribing the time limit of 1 year, the said amendment was made on 11.07.2014. Since in present case, entire period is up to 31.03.2012, the credit on the time limit cannot be denied. In case of Roquette Roquette Riddhi Siddhi P Ltd vs. C.C.E.-Ahmedabad-II [ 2024 (1) TMI 1210 - CESTAT AHMEDABAD] this Tribunal has held that ' appellants have correctly taken the cenvat credit on 18/09/2014 for the invoices issued prior to 01/09/2014.' Whether the respondent can be denied Cenvat credit of the services which were used at salt pans for manufacturing salt which was the raw material for manufacturing soda ash? - HELD THAT:- There is no dispute that the appellant is engaged in manufacture of salt in their factory for the purpose of manufacturing the soda ash. The appellant used salt which is the main input material. The salt is procured through salt pans which is obviously located outside the factory premises. For procurement of salt from the salt pans input service is used. Since, the salt is used directly in the manufacture of the final product viz. soda ash, the service used for procuring the salt from salt pans is directly in or in relation to manufacture of soda ash. In the various cases, it is consistently held that merely because the service is used outside the factory premises, Cenvat Credit cannot be denied so long the service has nexus with the manufacturing activity of the manufacturer. Therefore, merely because the input service is used outside the factory premises for procuring the salt from the salt pans, credit cannot be denied. In the case of PARRY ENGG. ELECTRONICS P. LTD. VERSUS C.C.E. S.T., AHMEDABAD-I, II, III [ 2016 (1) TMI 546 - CESTAT AHMEDABAD-LB] , the issue involved was that the service was received in connection with the windmills of generation of electricity which is located outside the factory premises. The Revenue has disputed the credit only on the ground that the service was received outside the factory premises. The Larger Bench of the Tribunal, Ahmedabad clearly answered the question in favour of the assessee whereby it was held that even if the service is received outside the factory but in relation to the manufacture of the final product, the credit cannot be denied. Thus, the appellant is entitled for the Cenvat credit in respect of input service received at salt pans. Both the issues involved in the present case are in favour of the assessee. Hence, the impugned order stands modify to the above extent. The assessee s appeal is allowed.

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• 2024 (10) TMI 719
  Levy of of Central Excise Duty - Ready Mix Concrete (RMC) manufactured at construction sites - activity of job-work or not - extended period of limitation - HELD THAT:- The undisputed facts in the present case are that appellant was manufacturing Ready Mix Concrete (RMC) at the site of the builder, as per requirement of the builder and out of the raw material provided by the builder. The contention of the revenue for the reason that the plant (Plant and Machinery) used for such activities was procured by the appellant and was owned by them would not alter the situation that appellantwas manufacturing the entire goods out of the raw material provided by the builder. Thus he was the job worker as the ownership of plant and machinery is not relevant for determination whether the activities undertaken by him is job work or otherwise. It is the relationship between the material supplier and the processor which would determine whether the activity is of job work or not. In the present case when the activity was undertaken on the raw material supplied by the builder the processor is nothing but the job work. From perusal of the definition of job-work and job-worker, it is clear that the job-work and job-worker has been defined clearly with reference to the processing of raw material or sami-finished goods supplied to the job-worker. The definition does not make any reference to the plant and machinery or its ownership. As the appellant was undertaking clearances of the goods manufactured on behalf of builder, the duty was required to be assessed and paid by the appellant even if he was a job worker. Extended period of limitation - HELD THAT:- On account of change of opinion in view of the decision of Hon ble Supreme Court in the case of Larsen and Tubro Ltd. [ 2015 (10) TMI 612 - SUPREME COURT] , extended period could not have been invoked for making the demand as has been rightly held by Commissioner (Appeals) and the demand has been confined to the normal period of limitation. Commissioner (Appeals) has by the impugned order directed the original authority to calculate the demand of duty and interest payable for the normal period. In case appellant has raised the grounds that if excess duty was due, they were liable for concessional rate of duty as no Cenvat credit was paid, we do not have anything available on the record to verify the said claim, while determining the duty liability as per the directions of Commissioner (Appeals). Original Adjudicating Authority should consider this aspect and determine the duty after allowing for admissible exemptions, if any. Appellant has stated with regards to the exemption of normal period of limitation. There are no merit in the appeal filed by the appellant - the impugned order is upheld - appeal dismissed.

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• 2024 (9) TMI 1647
  CENVAT Credit - outward transportation of the finished product namely cement from the factory / to dealers to the buyer s premises - HELD THAT:- The issue of eligibility of credit on outward transportation of goods has been considered by the Tribunal in the appellant s own case for different periods and the matters have been remanded. The Tribunal observed in M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE, TRICHY [ 2024 (7) TMI 680 - CESTAT CHENNAI] where it was held that 'the Tribunal had considered the definition of input services prior to 01.04.2008 as well as after 01.04.2008 and held that the credit is eligible.' The matter requires to be remanded to the Adjudicating Authority for ascertaining the place of removal and also for considering whether the appellant is eligible for Cenvat Credit of service tax paid on outward transportation. The impugned orders are set aside - Appeal allowed by way of remand.

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• 2024 (9) TMI 1646
  CENVAT Credit - freight charges for outward transportation - credit is availed beyond the time limit of 6 months / 1 year - time limitation. CENVAT Credit - freight charges for outward transportation - HELD THAT:- The very same issue was considered by the Larger Bench of the Tribunal in M/S. THE RAMCO CEMENTS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [ 2023 (12) TMI 1332 - CESTAT CHENNAI-LB] in which it was held that after the ascertainment of the place of removal, the assesse would be eligible for credit if the place of removal is buyer s premises / depots. Following the same, the Tribunal in the appellant s own case M/S. THE RAMCO CEMENTS LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE, TRICHY [ 2024 (7) TMI 680 - CESTAT CHENNAI] had remanded the matter. Accordingly, this issue requires to be remanded to the adjudicating authority who is directed to ascertain the place of removal in accordance with Large Bench decision of the Tribunal and also to consider whether the appellant is eligible for credit. Disallowance of credit alleging that the credit is availed beyond the time limit of 6 months / 1 year - HELD THAT:- In order to protect their right of credit, they were availing and reversing the credit to avoid unnecessary proceedings. The credit has been denied for the reason that it is availed beyond the period of time limit prescribed under sub-rule (7) of Rule 4 of CCR 2004. It has been held that the time limit prescribed cannot apply to invoices issued prior to the date on which the restriction came into force. This issue also needs to be looked into by the adjudicating authority. The issue of delay in taking credit was considered by the Tribunal in the Final Order dt. 10.07.2024 and the matter was remanded for reconsideration by the adjudicating authority. The impugned order is set aside. The appeal is allowed by way of remand to the adjudicating authority.

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• CST, VAT & Sales Tax

• 2024 (10) TMI 783
  Challenge to impugned order and the impugned demand notice - failure of natural justice - non-application of mind - legal mala fides - HELD THAT:- In the gross facts of the present case, there is no question of relegating the Petitioners to the alternate remedy of appeal under the provisions of the MVAT Act. In a case where the violation of the principles of natural justice is apparent, the objection based upon the non-exhaustion of alternate remedies is rarely entertained. In this case, the Respondents did not even raise or, in any event, press the objection based upon the non-exhaustion of the alternate remedies. Though the impugned assessment order is dated 14 March 2022, the same was served upon the 3rd Petitioner (though it relates to the 1st and 2nd Petitioners) only on 1 July 2023, after 15 months. In the Affidavit filed on behalf of the 3rd Respondent, there is no explanation for this inordinate delay in communicating or serving the impugned assessment order dated 14 March 2022. The impugned assessment order refers to notice being served upon the Petitioners and the Petitioners filing their reply to the show cause notice. However, in the Affidavit, it is admitted that no show cause notice was ever served upon the Petitioners, and therefore, the Petitioners had no opportunity to file any reply. Section 23 (4) of the MVAT Act provides for the issue of a notice followed by a reasonable opportunity to be heard before assessing any assessee to the best of his judgment. Since neither any notice was issued to the Petitioners nor that the Petitioners granted any opportunity of being heard, the impugned assessment order is liable to be set aside for failure of natural justice and breach of the provisions of Section 23 (4) of the MVAT Act. The impugned assessment order is vitiated by legal mala fides - the impugned assessment order dated 14 March 2022 is entirely unsustainable and is required to be quashed and set aside for gross failure to comply with the statutory provisions in Section 23 (4) of the MVAT Act and the principles of natural justice and fair play, non-application of mind and legal mala fides. The impugned assessment order needs to be quashed and set aside on the grounds of breach of Section 23 (4) of the MVAT Act, violation of the principles of natural justice and fair play, non-application of mind, and legal mala fides. Whether in the facts of the present case, accede to Ms Vyas s submission about remanding the matter to the assessing officer for fresh adjudication after granting full opportunity to the Petitioners of being heard in the matter? - HELD THAT:- The Petitioners have made out the strong prima facie case that the impugned assessment order dated 14 March 2022 was, in fact, not made on the said date but made beyond 31 March 2022, on which date the statutorily prescribed period for making an assessment order expired given the proviso to Section 23 (4) of the MVAT Act. Under the proviso, the Assessing Officer had eight years to assess the Petitioners and make the assessment order. Any indulgence by way of remand would not only reward the respondents with an enhanced limitation period to complete the FY 2013-2014 assessment proceedings but embolden unscrupulous tax officials to manipulate orders or otherwise mistreat the assessees - it is declined to remand the matter to the assessing authority after quashing and setting aside the impugned assessment order purportedly made out on 14 March 2022. The impugned assessment order, purportedly made on 14 March 2022, is quashed and set aside - petition allowed.

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• Indian Laws

• 2024 (10) TMI 718
  Stay of criminal proceedings under Section 138/141 of the Negotiable Instruments Act due to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Upon considering the facts of the case and the provisions laid down in Section 94 and 96 of the Insolvency And Bankruptcy Code, 2016, this court is of the view that even if an accused does not appear before the learned trial court when such order passed by the learned tribunal is within the knowledge of the complainant, such fact should be brought to the notice of the learned Magistrate. Mhe Hon ble Punjab and Haryana High Court in the case of Vijay Kumar Ghai [ 2022 (8) TMI 477 - PUNJAB HARYANA HIGH COURT ] has observed that by virtue of the term in legal actions or proceedings in respect of any date as per Section 96 and proceedings under Section 138 of the Act would be deemed to be stayed irrespective of the fact that such proceedings were initiated far before the application under Section 94 of the Code was filed by the personal guarantor of the Corporate debtor. This revisional application is admitted.

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