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TMI Tax Updates - e-Newsletter
October 23, 2021
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Detention of goods alongwith conveyance - e-way bill could not be generated immediately - allegation also that the registration of the recipient was being shown as "suspended" and that the goods had been undervalued - Let a speaking order be passed by the authority / officer concerned in this regard on the issue of provisional release to enable the petitioner to take necessary legal course if in case there arises any need for challenge - HC
Income Tax
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Sworn statements used against the writ petitioner - request for cross-examination - If statements are not going to be used against the writ petitioner, it cannot be gainsaid that the persons, who made the sworn statements have to be cross-examined. Therefore, it is not necessary to further dilate into 'NJP' ['Natural Justice Principle']. - HC
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Exemption u/s 11 - withdrawing/cancelling the registration u/s.12AA - loose papers found in search relied upon -Such loose sheets are not signed and author of such sheet is not known. The same cannot be treated as part of the regular books of accounts of assessee, therefore, entries in such loose sheets are irrelevant. Even otherwise the Ld. AO has taken a particular version whereas as Ld. CIT(A) has taken another version which raises doubts on the correctness of the loose sheets and it further lays emphasis that this sheets is merely a rough jotting. - No justification for making additions - AT
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Transfer pricing adjustments - Location Savings and Imputation of mark-up on pass through costs - this intra-group services rendered by the assessee to the parent company cannot be considered as reimbursement of expenses or pass through costs. It is separate services in itself for which the assessee needs to determine the ALP which the assessee failed to do so. The assessee has provided services for which the TPO is justified in marking up the services so as to make TP adjustment. - AT
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Addition u/s 68 - Unexplained cash deposits - Provision to section 68 inserted w.e.f. 1.4.2013 requires the assessee to prove the source of source. This proviso shall apply to funds collected by a closely held company from resident shareholders. Hence the same will not be applicable to the assessee as she is an individual.In our opinion, the assessee discharged the burden cast upon her to explain the identity of parties, capacity and genuineness of the transaction. Accordingly, this addition is deleted. - AT
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Capital gain computation - Addition under the provision of section 50C - At the time of hearing a question was put to the AR to provide the stamp duty value as applicable at the time of agreement - he failed to bring anything on record but contended that the stamp duty value at the time of agreement was more than the amount of sale consideration shown therein. However, we disagree with the contention of the assessee in the absence of any documentary evidence. - AT
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Credit of TDS - tds deducted on the interest income which accrued the investments offered to tax under the ‘Income Declaration Scheme 2016’ - If after the necessary verification it is proved that the alleged IDS was deducted on the income/investment declared under IDS 2016 comprising of the principle amount of the investments and interest earned thereon, then the assessee should be allowed the benefit of tax deducted at source - AT
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Deemed dividend u/s 2(22)(e) - In the present case, the entire amount in question was taken by the assessee-company on interest and since the interest on the said loan was duly paid by the assessee-company after deducting tax at source, we find no infirmity in the impugned orders of the Ld. CIT(A) in deleting the addition made by the AO treating the said amount as deemed dividend under section 2(22)(e) - AT
Customs
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Territorial Jurisdiction - Transfer of appeal - seeking issuance of directions not to hear the appeal by the Technical member whose appointment was challenged by the Advocate of the petitioner in the Honourable Supreme Court - The review petition is disposed of directing that the appeal pending before CESTAT, Bangalore shall be heard by Ahmedabad Bench through video conference as Bangalore Bench of CESTAT as expeditiously as possible - HC
Corporate Law
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Freezing of Assets and ‘Bank Accounts’ of the Appellant - Opportunity of Hearing provided or not - principles of natural justice - NCLT is directed to pass necessary fresh recent orders in a fair, just, dispassionate manner on merits, afresh (because of the fact that there was a ‘negation of principles of natural justice’ in not adhering to the ‘National Company Law Tribunal’ Rules, 2016, in so far as the Appellants/Respondents 11 and 12 are concerned). - AT
Direct Taxes
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Transfer of interest on FD to stranger - The Bank has not produced any instructions issued either by the petitioner or any other person authorised by the petitioner to transfer the interest accrued on the fixed deposit to the 5th respondent. The Bank could not have acted on instructions of the 5th respondent, since the 5th respondent is a stranger to the contract. In view of the authoritative pronouncements of the Apex Court which have been extracted above and that of a Division Bench of this Court that the Bank owes a public duty to pay the amounts due on a fixed deposit which has matured, I am of the opinion that the writ petition is maintainable and the petitioner is entitled to the relief prayed for. - HC
Service Tax
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Levy of service tax - Business Support services - The impugned order has confirmed the demand on the basis that the appellant provided ‘infrastructure support services’ to the appellant. However, the show cause notice alleged that the appellant was providing ‘operational and administrative assistance’ with supplier. The Commissioner could not have gone beyond the scope of the show cause notice to confirm the demand. - AT
Central Excise
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Principles of natural justice - legality and validity of ex-parte order - There is nothing to indicate as to how this affixing at company premise should be construed as sufficient notice to the petitioner nor is it found on record from any document that he was made aware of the show cause notice which led to the order impugned - The foundation of principle of natural justice is audi alteram partem, the necessity of grant of opportunity of hearing and no party is to be condemned unheard. Here, there appears to be a flagrant violation of the said principle which necessitates indulgence. - HC
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Valuation - inclusion of value of software in the assessable value during clearances of telecom equipment or not - At the time of hearing, the Bench had directed the parties to furnish further details of the equipment as well as the software to understand the issue. However, both the parties were not able to furnish facts regarding the finished product. The description of the product in the form of brochures, pamphlets, photographs, etc., would help to bring out the nature of the software used in the telecom equipment. - Matter restored back - AT
VAT
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Levy of KST Act and KVAT Act on Liquor - right for disallowing the ITC claimed by the petitioner - There is no cavil with respect to the legal principle enunciated by the Hon’ble Apex Court regarding the speech made by the Hon’ble Finance Minister in moving the Bill would be significant in interpreting the provision. But the input tax credit has to be determined as per section 10 of the KVAT Act. There was no bar for the assessee to collect the output tax in its entirety by its buyers. - HC
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Warrant of arrest - willful defaulter - Recovery of arrears of sales tax dues - The reports of the revenue officials that, the defaulter is living in a highly financial family background with financially sound relatives and friends are not factors relevant under S. 65 of the Act to make an order for the detention of the defaulter in the civil prison. No objective assessment of facts and the factors relevant under S. 65 of the Act was made by the District Collector to make an order for the detention of the defaulter in civil prison. There is nothing on record before the District Collector to hold that the defaulter has means to pay the arrears, or the defaulter is willfully withholding payment of arrears of sales tax or has dishonestly transferred his property or guilty of fraudulent conduct. - the defaulter is set free - HC
Case Laws:
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GST
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2021 (10) TMI 926
Refund of Integrated Goods and Service Tax - export of goods on the date when the provisions for refund and calculation of IGST under the CGST Act and the Integrated Goods and Services Tax Act, 2017 had not been notified - HELD THAT:- At the beginning itself this court indicated to the Counsel that we are inclined to dispose the petition at this stage itself because respondent No.6 never attempted to resolve the problem of petitioner and no reply has been filed and directions of this court have not been complied with. Petition allowed.
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2021 (10) TMI 925
Seeking release of detained goods alongwith conveyance - bogus purchases - opportunity of hearing provided to the petitioner or not - entire order replaced by new order - HELD THAT:- Note for speaking to minutes stands disposed of.
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2021 (10) TMI 924
Seeking grant of Regular Bail - evidences not discussed on detail - principles of natural justice - HELD THAT:- In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the First Information Report, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail on executing a personal bond of ₹ 10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions - application allowed.
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2021 (10) TMI 923
Detention of goods alongwith conveyance - e-way bill could not be generated immediately - allegation also that the registration of the recipient was being shown as suspended and that the goods had been undervalued - Section 67(6) of the Central / Gujarat Goods and Service Tax Act - HELD THAT:- The petitioner herein is the owner of the goods and it is his case that his vehicle and goods both have been seized by the GST Authorities and when the goods were being transported in the alleged contravention of the Act and the Rules, order is passed of detention under the GST MOV 10 and as the matter is at the stage of GST MOV 10, this Court would not like to enter into the merits of the matter. However, we have taken note of the serious concern raised before us by the petitioner of provisional release of the goods and vehicle prior to moving of such stage of MOV. Let a speaking order be passed by the authority / officer concerned in this regard on the issue of provisional release to enable the petitioner to take necessary legal course if in case there arises any need for challenge - Petition disposed off.
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2021 (10) TMI 922
Blocking of input tax credit of the petitioner lying in the electronic credit ledger - opportunity of hearing not provided - also no order passed - Rule-86A of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- Issue Notice returnable on 30th September, 2021.
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2021 (10) TMI 882
Seeking provisional release of goods alongwith vehicle - discrepancy as per invoice and quantity loaded on conveyance - Section 67(6) of the Central / Gujarat Goods and Service Tax Act - HELD THAT:- Let a speaking order be passed by the authority / officer concerned in this regard on the issue of provisional release to enable the petitioner to take necessary legal course if in case there arises any need for challenge. The period of two weeks shall be allowed before the officer concerned chooses to pass the order of confiscation in the form of GST MOV 11. This writ application is disposed off with a direction to the respondent No.2 to look into the application and pass appropriate order in accordance with law. Since the hearing is scheduled tomorrow, we direct to first consider the application for release of the goods and vehicle in accordance with law. Let this exercise be undertaken without further loss of time - petition disposed off.
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Income Tax
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2021 (10) TMI 921
Validity of Faceless assessment - no draft assessment order as required u/s 144B issued - whether Assessment Order was passed after giving due opportunities to Petitioner and after considering its submissions? - Penalty u/s 274 read with Section 271AAC(1) - HELD THAT:- As under the Faceless Scheme, Section 144B of the Act provides for providing a draft Assessment Order if the Respondent was going to make any variation prejudicial to the interest of the assessee by serving a notice calling upon him to show-cause as to why the proposed variation should not be made. Such an opportunity has not been granted to Petitioner. This is one more ground for us to interfere. In the Affidavit-in-Reply filed by one Mahesh T. Variava, affirmed on 03/09/2021, it is stated that the addition on account of remaining 4 unsecured creditors was included in the Assessment Order. In the Assessment Order, however, the addition has been made with regard to 7 unsecured creditors. In the Affidavit-in-Reply it also says the Assessment Order was passed after giving due opportunities to Petitioner and after considering its submissions. This is an incorrect statement because Respondent did not provide a draft Assessment Order which was mandatorily required to be provided under Section 144B. Respondent has also not considered all submissions of Petitioner because in the Assessment Order, Respondent has not dealt with the request of Petitioner to issue summons to the third party lenders. There is certainly infirmity in the Assessment Order dated 23/04/2021 which is impugned in this petition. We hereby set aside the said Assessment Order along with notice of demand in Form 7 dated 23/04/2021 as well as show-cause notice dated 23/04/2021 issued under Section 274 read with Section 271AAC(1) of the Act. Respondent shall issue a draft of the Assessment Order to Petitioner and give an opportunity to Petitioner to file its objections along with documentary evidence and thereafter pass such order as it deems fit by also giving a personal hearing as per rules, to Petitioner.
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2021 (10) TMI 920
Rectification of mistake - estimation of income on bogus purchases - restriction of profit of the petitioner on sale and purchase from 3% to 1.5% - HELD THAT:- As it is inferred that the modified or additional grounds in the Misc. Application were nothing but reproduction of the same original grounds stated in the Appeal and the core issue for adjudication in the Appeal and the Misc. Application was identical i.e. restriction of the profit of the Petitioners on sale and purchase from 3% to 1.5%. On due consideration on the submissions advanced, we are of the view that no case is made out to entertain the present Review Petitions seeking review of the order [ 2020 (2) TMI 271 - BOMBAY HIGH COURT] .
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2021 (10) TMI 919
Validity of Faceless assessment - no draft assessment order as required under Section 144B issued - petitioner argued assessment order has been passed without strictly complying with the mandatory provisions under Section 144B of the Act and also without giving a personal hearing - HELD THAT:- As perused the said notice dated 29th March 2021 with the assistance of Learned Counsel for petitioner and we agree with the counsel that even though this communication is referred to as show cause notice as to why assessment should not be completed as per draft assessment order , this communication by no stretch of imagination can be referred to as draft assessment order. By this communication, respondent is only seeking further details regarding the amount spent on certain theme park, relevant plans, copies of contract with employees etc. Petitioner replied to this notice by its communication dated 19th April 2021. Respondent, thereafter, passed the assessment order on 4th June 2021 disallowing expenses in the sum of ₹ 72,33,00,000/- and assessed total income of ₹ 74,62,11,790/-. This assessment order, however, was not preceded by any draft assessment order as required under Section 144B. No reply has been filed to the petition but Mr. Suresh Kumar submitted that even notice dated 19th February 2021 states why the assessment should not be completed as per the draft assessment order and, therefore, the requirements of Section 144B has been complied with. We do not agree with Mr. Suresh Kumar because the notice dated 19th February 2021 is also a show cause notice and not a draft assessment order. In the circumstances, there is a non compliance with the mandatory provisions of Section 144B of the Act, where sub Section 1(xvi)(b) provides for an opportunity to the assessee, in case any variation prejudicial to the notice of assessee is proposed, by serving a notice calling upon him to show cause as to why the proposed variation should not be made.
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2021 (10) TMI 918
Sworn statements used against the writ petitioner - request for cross-examination - HELD THAT:- As the stated position that the sworn statements are not going to be used against the writ petitioner as set out in the counter affidavit and as captured in this order elsewhere supra by itself douses the request for cross-examination. In other words, it draws the curtains on the request for cross-examination. If statements are not going to be used against the writ petitioner, it cannot be gainsaid that the persons, who made the sworn statements have to be cross-examined. Therefore, it is not necessary to further dilate into 'NJP' ['Natural Justice Principle']. Owing to all that have been set out supra, this Court deems it appropriate to dismiss the captioned writ petition.
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2021 (10) TMI 917
Disallowance of ESOP expenses u/s 37(1) - it is not a revenue expenditure actually incurred by the company, as per the provisions of the Act - ITAT allowed - HELD THAT:- Commissioner followed the decision of the Bangalore Special Bench in the case of BIOCON LIMITED OTHERS .v. DCIT OTHERS [ 2013 (8) TMI 629 - ITAT BANGALORE ] and allowed the appeal of the assessee.
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2021 (10) TMI 916
Exemption u/s 11 - granting registration u/s 12AA denied - whether the assessee is entitled for registration with effect from Assessment Year 2016-17? - HELD THAT:- There is no dispute with regard to the fact that originally the assessee had made application seeking registration u/s 12AA of the Act on 20.11.2015. The said application was rejected by the Ld. CIT(Exemption) on the ground that the assessee failed to produce the requisite details, however, the Ld. CIT(Exemption) had given liberty to apply afresh From the order of the Ld. CIT(Exemption), it is evident that the liberty was given to the assessee to comply with and furnishing the requisite details. Therefore, in our considered view, under the peculiarity of facts narrated hereinabove, the Ld. CIT(Exemption) should have granted registration w.e.f. Assessment Year 2016-17 as requested by the assessee. - Decided in favour of assessee.
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2021 (10) TMI 915
Disallowance u/s. 36(i)(va) - employees contribution to PF while processing return u/s. 143(1) - contribution paid beyond the due date prescribed under the ESI Act but before the due date prescribed u/s. 139(1) - Scope of amendment of section 43B - HELD THAT:- Hon'ble Karnataka High Court in the case of CIT Vs. Spectrum Consultants India Pvt. Ltd. [ 2014 (2) TMI 127 - KARNATAKA HIGH COURT ] wherein it was held that the contributions, if paid before the due date prescribed u/s. 139(1) of the Act, the same is allowable u/s. 36(1)(va) of the Act since the provisions of section 43B of the Act override section 36(va). Also in the case of M/s. Essae Teraoka Pvt. Ltd. Vs. DCIT [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] supports the case of the assessee. There should not be any dispute that the decision rendered by the jurisdictional High Court is binding on all authorities below it. Hence, the Ld CIT(A) was not justified in placing reliance on the decision rendered by non-jurisdictional High Court, when there is a decision of jurisdictional High Court on the very same issue. An identical issue in the case of Nirmal Enviro Solutions Pvt. Ltd. [ 2021 (10) TMI 844 - ITAT BANGALORE] relating to assessment year 2018-19, wherein the Tribunal following the decision rendered by another coordinate bench in the case of the Continental Restaurant Caf Company Vs. ITO[ 2021 (10) TMI 843 - ITAT BANGALORE] has held that disallowance u/s. 36(1)(va) r.w.s. 43B of the Act cannot be made for assessment year 2018-19 - Thus we direct the A.O. to delete the impugned disallowance. - Decided in favour of assessee.
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2021 (10) TMI 914
Reopening of assessment u/s 147 - deduction u/s. 54F on account of purchase of residential house - HELD THAT:- Assessee has claimed deduction u/s. 54F of the Act on account of purchase of residential house for an amount of ₹ 18,00,000/-. There was a cash deposit in the bank account. It was only while examining the bank account that the issue of credit entry amounting to more than ₹ 98,00,000/- was notice by the AO - addition under the head long term capital gain was based on the information obtained from the bank account of the assessee. But after going through the assessment order and the reasons, it is found that it is not reopened on this issue only and the cash deposits in the bank account are related to this long term capital gain which was for purchase of residential house. Assessing Officer has rightly made addition and the CIT(A) has rightly confirmed the addition. Hence, Ground No. 1 to 3 are dismissed. Interest u/s. 234A - HELD THAT:- CIT(A) should have considered that the interest can be charged up to the due date prescribed u/s. 139(4) of the Act and not the date of the assessment order. Therefore, we direct the AO to charge the interest as per Section 234A read with Section 139(4). Action of the Ld. A.O. to adopt the circle rate of land @ ₹ 27,000/- per acre as on 01-04-1981 - HELD THAT:- CIT(A) has rightly adopted the circle rate of land at ₹ 27,000/- per acre as the property is situated approximately two kilo meters away from the Municipal Limits of Gurgaon and not as contended by the assessee that it is at a distance of 15 kilo meter from the Tehsil Sohna. Hence, Ground No. 5 is dismissed.
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2021 (10) TMI 913
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Naturally the disallowance cannot exceed the expenditure incurred and claimed by the assessee as deductible expenditure. No other arguments are advanced and, therefore, we direct the ld. Assessing Officer to restrict the disallowance made by the ld. Assessing Officer and confirmed by the ld. CIT (Appeals) of ₹ 5,27,095/- to only ₹ 48,280/-. Accordingly, ground No. 2 of the appeal is partly allowed. Unexplained investment u/s 69 - HELD THAT:- As assessee did not file any confirmation of the party from whom the shares were received, what is the object of obtaining loan from a party, what is the relationship of the security lender with the assessee, when those shares were sold and at what price, whether the assessee has earned profit and whether anything has been transferred to the security lender over and above the securities. All these details are required to be verified. Even if it is accepted that assessee was not granted proper opportunity of hearing before the lower authorities i.e. before the Assessing Officer in absence of any show-cause notice, as alleged, it cannot be said that assessee was devoid of opportunity before the ld. First appellate authority as more than 10 notices of hearing were issued and assessee kept on seeking adjournments. Therefore matter is not at all examined by the lower authorities, before us only assertions are made, evidences were not produced. Therefore, as the full facts have not been examined by the lower authorities, and assessee also might not have proper opportunity before Ld. Ao, order of Ld. CIT (A) is ex parte, we set aside the whole issue back to the file of the ld. CIT (Appeals). Speculative activities - whether Explanation to Section 73 is applicable in the case of the assessee company or not? - AO held that the assessee company is engaged in speculative activities and, therefore, the speculative loss cannot be allowed to be set off against any other income - HELD THAT:- Naturally, the assessee did not appear before the ld. CIT (Appeals) and hence the issue was decided against assessee. For the reason given by us while deciding other grounds of appeal, we also set aside this ground of appeal back to the file of the ld. CIT (Appeals) with direction to the assessee to show that the assessee is not engaged in speculative activities or the Explanation to Section 73 do not apply. Thus, this ground of appeal is decided accordingly. Addition of shares taken on loan by the assessee from another person - HELD THAT: - As assessee has submitted all-new documents which have never been submitted before the lower authorities. Even before us no application for admission of additional evidences were made. Even otherwise on the merits we have set aside this issue back to the file of the learned CIT - A. The assessee will have the full opportunity there to explain his case. Thus the additional submission made by the assessee does not have any impact on our decision rendered earlier in this order.
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2021 (10) TMI 912
Revision u/s 263 by CIT - Reopening of assessment u/s 147 initiated - huge value of deposits were made in the bank account of one company called M/s. Miracle and thereafter the money was transferred to some third party account and that further investigation had revealed that large amount of money was routed to the assessee company - whether the AO had the requisite jurisdiction to re-open/re-assess the escaped income of the assessee? - HELD THAT:- Foundation on which the reason to believe escapement of income by the AO to issue notice u/s. 148 of the Act on 17.03.2017 itself was on wrong assumption of fact as is evident from the finding of fact by the Ld. PCIT that no money from M/s Miracle has been routed to the assessee company directly or indirectly whereas the foundation fact on the basis of which reopened the assessment as is evident from the reasons recorded was that high value of money was deposited in the bank account of M/s Miracle which in-turn has been routed to the assessee through third party in the form of share subscription to the tune of ₹ 8.34 crores which fact was found by Ld. PCIT to be absent. So, the AO s belief of escapement of income was on wrong assumption of facts and so invocation of reopening jurisdiction by issue of notice u/s 148 of the Act is bad in law and, therefore, the consequent re-assessment order dated 29.12.2017 of the AO is a nullity and, therefore, the order of the Ld. Pr. CIT to interfere in the order of the AO dated 29.12.2017 u/s. 144/147 of the Act is also a nullity and, therefore, the action of the Ld. Pr. CIT to invoke his jurisdiction u/s. 263 of the Act itself was without jurisdiction - Decided in favour of assessee.
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2021 (10) TMI 911
Exemption u/s 11 - withdrawing/cancelling the registration u/s.12AA - search and seizure action u/s 132 - loose papers found in search relied upon - treating the assessee as carrying out business and not carrying out charitable activities, holding that funds of the society have been used for the benefit of members of the trust and cancelling registration 12AA of the Act with retrospective effect from 01.04.2008 - HELD THAT:- It is settled issue that the registration u/s 12AA cannot be cancelled from retrospective effect. See case of Auro Lab[ 2019 (1) TMI 1478 - MADRAS HIGH COURT] . Pr. CIT erred in cancelling the registration with retrospective effect from 01.04.2008 and secondly, we are also of the view that Ld. Pr. CIT erred in cancelling the registration u/s 12AA(3) and 12AA(4) of the Act without placing any material evidences which could indicate that the assessee society was not running for the charitable objects for which it was established and nor any doubt has been raised about genuineness of the activities carried out by the assessee society with regard to imparting of education and carrying out charitable activities. Addition based on loose papers - As in this case alleging that the fund of the assessee society have been misappropriated by the members of the society or there is any ambiguity in the claim of expenses, it can well be taken care of at the time of assessing the income and if needed the additions can be made to the income of the assessee and the same should be restricted only to the issue involved. However in no case the remaining income of the trust/society should be affected by way of denying the benefit of exemption u/s 11 12 of the Act. Whether Pr. CIT erred in invoking the provisions of section 12AA(4) of the Act as it was not applicable in the case of assessee because section 12AA(4) of the Act was inserted w.e.f. 01.10.2014? - This ground to be infructuous in nature firstly because the ld. Pr. CIT has carried out the proceeding u/s 12AA(3) of the Act as well as 12AA(4) of the Act. Though rightly contended that amended provision i.e. section 12AA (4) of the Act were inserted from 01.04.2014 but it in itself cannot challenge the validity of the impugned order because Ld. Pr. CIT has also invoked the provisions of sections 12AA(3) of the Act. Had Ld. Pr. CIT carried out the proceedings only u/s 12AA(4) of the Act the assessee may had case - in the instant case both subsection (3) (4) of section 12AA of the Act were invoked and Ld. Pr. CIT(A) was well within in his jurisdiction to carry out the impugned proceedings. We accordingly dismiss ground no.5 raised by the assessee. Whether CIT erred in invoking the provision of section 12AA(3) of the Act merely on the basis of his finding that the provisions of section 13(1)(c)(ii) are applicable on the assessee? - We find that the alleged seized documents only pertains to financial year 2009-10 i.e. A.Y. 2010-11 and not for any other year. Nothing adverse has been observed by Ld. Pr. CIT(Central) from the date of registration u/s 12AA of the Act i.e. 01.04.2008 till the date of passing impugned order except for A.Y. 2010-11. It is judicially settled that if provisions of section 13(1)(c) of the Act are attracted, the benefits of exemption under section 11 12 of the Act are not available to the assessee, it is subject matter of the assessment proceedings as to whether the exemption u/s 11 12 of the Act is to be denied or forfeited to the extent of violation of provision of section 13(1)(c) of the Act is formed by the Ld. AO but it can in no way lead to cancellation of registration granted u/s 12AA of the act unless any cogent and positive material is brought on record to establish that the society is not carrying out genuine charitable activities as per the objects for which it has established. If the provisions of section 13 are violated, it empowers the assessing officer to forfeit the exemption permissible u/s 11 12 of the act only to the extent of amount not allowed u/s 11 12 of the Act. However, such violation cannot form a ground for cancellation of registration u/s 12AA(3) - Thus violation of u/s 13 of the Act cannot be the basis for cancellation of registration 12AA - Decided in favour of assessee. Initiation of proceedings u/s 148 - contention of the assessee that nothing corroborating cogent/positive and independent evidence has been brought on record which could support the adverse influence drawn by AO - HELD THAT:- As no merit in the contention of assessee because there were loose papers found during the course of search bearing No. LPS-6, LPS-7 LPS-11which contained the details of salary of teaching staff and non-teaching staff, person wise details of salary payment, summery of source of funds, sundry creditors and also hand written documents showing the amount of fees collection and other details. So far as these documents are concerned they are having connection to the assessee society and it cannot be said that Ld. AO proceeded without having any adverse material in its possession. We, therefore, find no merit in this ground no.1 raised by the assessee and the same stands dismissed. Treating income of assessee as business income - assessee not carrying ay charitable activity u/s 2(15) - HELD THAT:- We are of the view that assessee is not carrying out any business of profession and it is established that the assessee is a charitable society running for charitable purpose and imparting education through its colleges and institutions and the objects of the assessee society failed under the provisions of section. 2(15) of the Act and is not in the nature of advancement of any other object of general public nor it is involved in carrying out of any activity in the nature of trade, commerce or business. Therefore neither the proviso to section 2(15) are applicable to the assessee nor it can be held that assessee is carrying out business of profession. Disallowance of bogus salary expenditure - Addition based on loose papers - HELD THAT:- It is a settled law that any document can be either accepted as a whole or denied in its entirety. When the salary expenditure showing in the income and expenditure account is less than the alleged amount shown in the loose sheets, there remains no justification of disallowing the salary expenditure. Even otherwise except these loose papers no other incriminating material was found. There is no statement of any employee stating that they were paid higher amount in cheque and difference amount was repaid by them to the members of the society. No appropriate account was taken by the ld. AO for cross checking contents of seized loose sheets with the concerned employee. In the instant case, the alleged seized documents on the basis of which disallowance of bogus salary has been made are merely loose sheets which are not corroborated any other evidence to prove the contents of such loose papers. We, accordingly are of the considered view that Ld. CIT(A) erred in sustaining the disallowance of bogus salary - Decided in favour of assessee. Payment to one of the trustees as based on the seized loss sheet and violation of provisions of section 13(1)(c) - HELD THAT:- It seems that the alleged figure for assets expenses, liabilities source of funds etc. In the last line of the sheet is mentioned that shortage of cash is linked to Vijay sir and the date is 30th June 2010 which falls under the A.Y. 2011-12. However, Ld. AO has made the addition for A.Y. 2010-11. This fact in itself proves that the action of the Ld. AO of making addition during A.Y. 2010-11 was wrong. As there are various other items with figures mentioned in front of them. Ld. AO had not made any comment nor made any efforts to examine the correctness of these figures, AO has merely picked up some figures as per his comfort which shows that either the remaining entries are not material or they are merely rough jottings. It is also not proved that Mr. Vijay Hariramani has taken money because in the alleged loose sheets only says shortage of cash with mentioned to Vijay Sir. It nowhere indicates that the alleged sum has been taken by Mr. Vijay Hariramani from the society - we are of the view that the alleged addition has been made by the Ld. AO merely on surmises and conjectures which deserves to be deleted - allow ground raised by the assessee. Suppressed unrecorded fees - HELD THAT:- From perusal of the alleged loose sheet which is neither signed no the author of it is known we observe that some jottings of fees collection, major expenses, bank loan, unsecured loan, assets are written. Prima facie, it looks to be a some estimate or projection or rough jottings which may have been carried out at any particular time. It in itself indicates that this sheet is a dumb document/rough jottings which cannot be correlated to the actual figures for F.Y. 2009-10. Such loose sheets are not signed and author of such sheet is not known. The same cannot be treated as part of the regular books of accounts of assessee, therefore, entries in such loose sheets are irrelevant. Even otherwise the Ld. AO has taken a particular version whereas as Ld. CIT(A) has taken another version which raises doubts on the correctness of the loose sheets and it further lays emphasis that this sheets is merely a rough jotting. We, therefore, in absence of any corroborative evidence brought on record by both lower authorities and Ld. CIT(DR) find no justification in finding of Ld. CIT(A) sustaining the addition. Disallowance of deduction for capital expenditure incurred towards application of income - HELD THAT:- As the assessee is a charitable society carrying out genuine activities for its charitable objects falling under the provision of section 2(15) of the Act and is therefore eligible for benefit of exemption u/s 11 12 of the Act. We have already held that the ld. AO erred in making the additions for A.Y. 2010-11 on the basis of loose sheets and all these disallowance and additions have already been deleted by us. Therefore, under the given facts and circumstances of the case, the assessee is eligible to claim the deduction for capital expenditure u/s 11 12 of the Act on an application of societies fund for charitable activity. Thus relevant finding of Ld. CIT(A) is set aside. - Decided in favour of assessee.
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2021 (10) TMI 910
Revision u/s 263 - Reopening of assessment u/s 147 or assessment u/s 153C - Appeal raised by the assessee is that the Assessing Officer should have initiated proceedings under Section 153C of the Act instead of Section 148 - HELD THAT:- On careful consideration of the above argument, we find that on the search on Mr. S.K. Jain, no material pertaining to or belonging to this assessee was found. From the material an information was available that assessee is beneficiary of accommodation entries taken from Mr. S.K. Jain. We also found that all the material belonging to and pertaining to Mr. S.K. Jain was used as information in case of assessee. In view of this, according to us, the ld. Assessing Officer has correctly assumed jurisdiction under Section 148 of the Act. Therefore, ground No. 1 is dismissed. Eligibility of reasons to believe - On perusal of the reasons recorded by the ld. Assessing Officer, we find that there is no infirmity in the reasons recorded by the ld. Assessing Officer. He has given the complete details including the name of the middleman and mediator, who arranged these accommodation entries. Therefore, there is no infirmity in the reasons recorded, hence ground No. 2 of the appeal is dismissed. AO has not applied his mind and, therefore, 148 issued by the ld. Assessing Officer is invalid - We find that the ld. Assessing Officer has written detailed reasons after perusal of the return of income filed by the assessee. The reasons recorded, according to us, prima facie shows reason to believe with the Assessing Officer. Accordingly ground No. 3 is dismissed. Non-granting of opportunity and not considering the explanation furnished by the assessee - We find that the ld. CIT has granted more than 5 opportunities of hearing and considered the explanation of the assessee at page No. 20 of his order. Therefore, ground No. 4 is dismissed. Not a case of no enquiry, but of inadvertent enquiry - We find that the ld. CIT has himself verified the records and after verification of the records took out the relevant pages of the information. He further looked at the return of income filed by the assessee and perused the information supplied by the assessee during the course of assessment proceedings. Based on this the ld. CIT has passed the order under Section 263 of the Act. Even otherwise the documents are so glaring and clear-cut that the CIT (Appeals) after applying his mind and verifying return of income as well as the assessment records has come to the conclusion that no enquiry is made by the ld. Assessing Officer. In view of this, we dismiss ground of the appeal. - Assessee appeal dismissed.
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2021 (10) TMI 909
TP Adjustment - addition of interest on receivables - adjustment on account of interest on overdue intra-group receivable - HELD THAT:- As the interest on intra-group receivable is less than the interest on intra-group payables, therefore, the adjustment on account of interest on overdue intra-group receivable does not hold good. Assessee had transactions with both AEs and Non-AEs and accordingly, a comparison of outstanding position in terms of debtor days in both the AE as well as non-AE transactions can be done for determining whether the credit period extended to the AEs is at arm's length or not. The debtor days given to the AEs are less than the debtor days given to the non-AEs. Also contended that it did not levy any interest on delayed payments made by the non-AEs, despite the fact that the debtor days given to the non-AEs were more than the debtor days given to the AEs and therefore, justified not to charge interest on the delayed payments by the AEs as well. At times 120 days are given to the non-AE entity for payment from billing date. In view of the above discussion, the ld. CIT(A) held that the AO/TPO is not justified to charge interest on receivables without factoring in the payables to the AE/AEs. Having considered the entire facts and found them to be irrefutable, we decline to interfere with the order of the ld. CIT(A). - Decided in favour of assessee.
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2021 (10) TMI 908
Transfer pricing adjustments on account of Location Savings and Imputation of mark-up on pass through costs - Comparable selection - HELD THAT:- As decided in own case [ 2017 (6) TMI 1357 - ITAT BANGALORE] we find that the orders of the TPO and DRP are not sustainable as suffer from serious defect of considering the location saving as basis of adjustment - computation of the location saving by the TPO is purely based on some articles and not on the basis of actual cost in the US in comparison to India - price/cost as computed by the TPO is not based on actual data but on presumption of accepting the article on the subject as the comparable cost. Since the functional comparability of the companies selected by the assessee has not been examined by the TPO as well as no steps were taken to find out the other comparables of the assessee for determination of ALP therefore, the issue of determination of ALP and consequential adjustment, if any, is required to be examined and adjudication afresh at the level of TPO/A.O. Needless to say that the assessee is receiving its price in foreign currency therefore the comparable uncontrolled price shall also have at least 75% of their revenue in foreign currency otherwise the price received from domestic market may not be acceptable when the assessee is receiving its 100% revenue in foreign exchange. Accordingly, the matter is set aside to the record of the TPO/A.O. for adjudication of the same afresh. Adjustment on account of recovery of expenses (investigator's fee) from AE - TPO alleged that the assessee is deploying considerable resources and time to in finding and appointing investigators and therefore. should have charged a mark-up on the costs incurred - HELD THAT:- In this case, the assessee coordinated between the individual investigator and Paraxel International GmbH Germany. The contention of the assessee is that assessee has not undertaken any risk and all risk was taken over by Paraxel International GmbH Germany and relied on the Addendum dated 19.9.2007 - assessee acted as coordinator and facilitator in selecting the investigator so as to conduct clinical trial. Selection of the investigator demonstrates that clinical trial is important task in the whole work undertaken by the assessee. The assessee invested considerable time and resources in this. The plea of assessee is that assessee has not received any amount as fee for doing this coordinator and facilitator job. In our opinion, this is an inter-group services provided by the assessee to its parent company and assessee must charge some fee as it would have, had the services been provided to a third party. Contention of the ld. AR is that remuneration for these services has already been included in the provision of clinical trial services and no separate fee is charged for coordinating and facilitating with the investigators - As per OECD guidelines, this is an intra-group services provided by the assessee to its parent company for which the assessee is entitled to remuneration. The parent company derived economic or commercial benefit from the services offered by the assessee company for which the assessee has to be suitably remunerated. More so, the assessee would not have rendered this kind of services to unrelated party.The assessee only relied on the Addendum filed by the assessee, wherein it was mentioned that it was only pass through costs. As discussed earlier, this Addendum is only a make believe story and the AO has right to go beyond this document to find out the real intention of the parties. We observe that the real intention to this Addendum is different from what it appears ex facie - as proceed on the basis of the professed intention and the AO is justified in finding out the real intention of the parties by ignoring the apparent and the conceded intention was to evade the tax liability. The lower authorities merely removed the facade to expose the real intention of the parties cleverly cloaked and discovered the real intention was to evade the taxes and Addendum cannot be given effect and the overall arrangement made by the assessee was to evade the taxes. We are well aware that all commercial arrangements and documents or transactions have to be given effect even though they result in avoidance of tax liability, provided that they are genuine, bonafide and not colourable transaction. In the present case, in the immediate earlier AY 2012-13, the assessee has shown investigator payment with mark-up and in this year on the basis of Addendum entered by the parties as discussed earlier, made the investigator payment as pass through costs and claimed as reimbursement without any profit element, which is against the agreed norms in the earlier years which cannot be effected and accepted as genuine agreement. Accordingly, we are of the opinion that this intra-group services rendered by the assessee to the parent company cannot be considered as reimbursement of expenses or pass through costs. It is separate services in itself for which the assessee needs to determine the ALP which the assessee failed to do so. The assessee has provided services for which the TPO is justified in marking up the services so as to make TP adjustment. The various case laws relied on by the ld. AR are different on its own facts, which cannot be applied to the facts of the present case. Hence the TPO/AO correctly ascertained the ALP of this transaction and made adjustment on this count. The same is sustained. This ground of the assessee is dismissed.
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2021 (10) TMI 907
Receipt pertaining to the rights of distribution - Unsecured loan or business receipts - whether the receipt received by the assessee as advance can be treated as business receipt u/s 28(i) of the Act or not ? - HELD THAT:- As the assessee has not undertaken any business activity and he has received only advance for setting off of losses for future years, which commence w.e.f. 01/04/2016, but, no commercial activity has been started, which is clear from the audited financial statements. Therefore, the agreement in this regard for treating it as a revenue income cannot arise. Accordingly, we observe that the advance received is not a revenue in nature for the year under consideration. As decided in SIDDHESHWAR SAHAKARI SAKHAR KARKHANA LTD., COMMISSIONER OF INCOME TAX [ 2004 (9) TMI 6 - SUPREME COURT] amounts collected by the respondent-societies towards the Cane Development Fund and was allowed, the amount collected towards the Cane Development Fund would be treated as the income of the assessee and any claim for deduction would be entertained and decided by the Tribunal. - We find substance in the submissions made by the ld. AR of the assessee and accordingly, we direct the AO to delete the addition made on this count. Thus, the grounds raised by the assessee on this issue are allowed Disallowance of expenditure u/s 37(1) - administrative expenses and payment of salaries - assessee submitted that the expenditure was incurred for the purpose of business, and it is allowable as business expenditure if it is incurred on the ground of commercial expediency - HELD THAT:- It is only after the business is set up that the expenses incurred in the business can be claimed as permissible deduction under Section 37 of IT Act. For commencement of a business, there must be some income generating asset or income earning structure. In the case on hand, the assessee is incurring capital expenditure and till date of FY ending, the assessee has not commenced its commercial operations. As per the balance sheet filed by the assessee, the assessee is incurring capital expenditure, therefore, factory maintenance and repair maintenance expenditure do not arise. The assessee failed to establish that expenditures incurred under Sl. No. 3, 4 5 are not directly relating to the installation of the project. The assessee has incurred R D expenditure earlier, which has been capitalized and, therefore, this expenditure cannot be treated as revenue expenditure since the assessee has not yet started commercial production. In view of the above observations and considering the totality of the facts of the case, this ground of the assessee is partly allowed.
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2021 (10) TMI 906
Addition u/s 68 - Assessee failure to discharge the onus of proving the Cash Credit in the Bank Account - HELD THAT:- We have carefully gone through this entry in the bank statement on this date, which shows the withdrawal of ₹ 1 crore vide Cheque No.3564 on 13.7.2012. However, the AO has mistaken it as a deposit of ₹ 1 crore. Section 68 cannot be applied for withdrawal made from the bank account. It is not a case of unexplained deposit so as to sustain the addition u/s. 68 of the Act. Accordingly, the addition of ₹ 1 crore is deleted. Unexplained cash deposits - AO cannot by merely rejecting a reasonably good explanation by converting it as no proof. In our opinion, the explanation offered by the assessee was reasonable and genuine explanation cannot be rejected by the AO without any cogent material. In the present case, the AO wants the assessee to prove the source of source of credits which is not required u/s. 68 in the case of these kind of credits. Primarily the assessee has established the source of credit that she has received it from her husband and also brought on record that assessee s husband is having vast agricultural lands. The owning of agricultural lands by assessee s spouse is not at all doubted by the AO. It is also brought on record by the assessee that she is also owning agricultural land and entered into sale deed in favour of M/s. Dreamz Infra India Pvt. Ltd. on 05.9.2012 in respect of converted property bearing Survey No.121/3 (Old No.121/1) measuring 1 acre 10 guntas at Boganahali Village, Varthur Hobli, Bangalore East Taluk for a consideration of ₹ 3,20,00,000. The genuineness of assessee s spouse entered into sale agreements with various parties cannot be doubted without any material in hand. Provision to section 68 inserted w.e.f. 1.4.2013 requires the assessee to prove the source of source. This proviso shall apply to funds collected by a closely held company from resident shareholders. Hence the same will not be applicable to the assessee as she is an individual.In our opinion, the assessee discharged the burden cast upon her to explain the identity of parties, capacity and genuineness of the transaction. Accordingly, this addition is deleted. Cash deposits remained unexplained and un-reconciled - As the assessee has explained that ₹ 28 lakhs has been deposited into the bank account out of the advance of ₹ 50 lakhs received from N. Gopalaiah. The AO accepted the advance of ₹ 50 lakhs received from N. Gopalaiah, but he has doubted the deposit of ₹ 28 lakhs out of advance of ₹ 50 lakhs into the assessee s bank account. We find that ₹ 50 lakhs received from N. Gopalaiah as advance by assessee s husband is available to the assessee to deposit ₹ 28 lakhs in the bank account. The AO has not doubted the receipt of ₹ 50 lakhs by the assessee s spouse from N. Gopalaiah. The source is explained. Hence, we delete this addition. Appeal of assessee allowed.
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2021 (10) TMI 905
Disallowance u/s 40(a)(ia) - Scope of 2nd proviso to Sec. 40(a)(ia) - amount paid by the assessee company towards transportation charges to Reliance Gas Transportation Infrastructure Ltd. (RGTIL) - HELD THAT:- Now when the deductee/payee i.e RGTIL had duly considered the transportation charges of ₹ 82.65 crores as part of its turnover for the year under consideration, and had duly considered/offered the said amount for tax while compiling its return of income for the year under consideration i.e A.Y. 2010-11, therefore, it could not be held to be an assessee in default qua the said amount. Accordingly, finding no infirmity in the view taken by the CIT(A) who had rightly vacated the disallowance u/s 40(a)(ia) made by the A.O, we uphold his order to the said extent. The Grounds of appeal Nos. 1.1 1.2 are dismissed. Addition of prior period expenditure - HELD THAT:- In the backdrop of the aforesaid facts, we find that no infirmity arises from the order of the CIT(A), who in our considered view had rightly directed the A.O to restrict the disallowance of the prior period expenditure to an amount of ₹ 11.97 crores. Accordingly, finding no infirmity in the view taken by the CIT(A) qua the aforesaid issue in question, we uphold his order to the said extent. The Ground of appeal No. 2 is dismissed. Disallowance u/s 14A r.w Rule 8D - claim of the ld. A.R that as the assessee during the year under consideration had not received any exempt income, therefore, no disallowance u/s 14A was called for in its hands - HELD THAT:- As is discernible from the order of the CIT(A), it is a matter of fact borne from the record that the assessee company had not received any exempt income during the year under consideration. Backed by the aforesaid facts, we concur with the claim of the ld. A.R that now when the assessee had not received any exempt income during the year under consideration, therefore, no disallowance u/s 14A could have been made in its hands - No infirmity with the view taken by the CIT(A) who had rightly vacated the disallowance - Decided in favour of assessee. Bogus purchases -CIT-A deleted the addition - HELD THAT:- We find that the assessee in the course of the proceedings before the CIT(A) had duly substantiated the genuineness and veracity of the purchases that were claimed to have been made from one of the supplier party, viz. M/s Forum Traders. As the assessee had submitted the purchase bills, documents relating to the transportation and receipt of goods, copy of the bank statements evidencing the payments made to the aforementioned party, therefore, we find no infirmity in the view taken by the CIT(A), who had rightly held that the assessee had made genuine purchases from the aforementioned party. Neither is anything discernible from the records nor has been placed on our record which would point out any perversity in the aforesaid view so taken by the CIT(A). CIT(A) had rightly observed that the assessee had made genuine purchases from M/s Forum Traders. Accordingly, finding no infirmity in the view taken by the CIT(A) we uphold his order to the said extent. The Ground of appeal No. 4 is dismissed.
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2021 (10) TMI 904
Capital gain computation - Addition under the provision of section 50C - value to be determined for the purpose of the stamp duty as applicable at the time of agreement - HELD THAT:- As there is no dispute to the fact that the assessee has received the consideration in the financial year under consideration and therefore the stamp duty value as applicable at the time of agreement should be adopted as sale consideration for working out the capital gain. The revised Jantry value/ stamp value which came with effect from 11 April 2011 and applicable from the assessment year 2012-13 cannot be adopted as sale consideration for the purpose of calculating the capital gain. To this extent, we disagree with the orders of the authorities below. At the time of hearing a question was put to the AR to provide the stamp duty value as applicable at the time of agreement - he failed to bring anything on record but contended that the stamp duty value at the time of agreement was more than the amount of sale consideration shown therein. However, we disagree with the contention of the assessee in the absence of any documentary evidence. No addition made in the hands of the co-owner namely Shri Dharatbhai Prahald Bhai Patel on account of the difference in the amount of sale consideration viz a vis stamp duty valuation. For this purpose, the learned AR drew our attention on the assessment order framed under section 143(3) read with section 147 in the case of Shri Dharatbhai Prahald Bhai Patel - stamp duty valuation as shown by Shri Dharatbhai Prahald Bhai Patel as sale consideration was admitted by the revenue. Accordingly the AR contended that same value should also be adopted in the present case. DR at the time of hearing has not brought anything on record against the argument advanced by the learned AR for the assessee. Accordingly we agreed the contention of the AR for the assessee. It is because the Revenue is precluded from taking different stand with respect to the different assessee for the common property. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Thus the ground of appeal of the assessee is allowed.
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2021 (10) TMI 903
Assessment u/s 153C - Addition u/s 68 - unexplained cash credits - HELD THAT:- It has been well settled in case of CIT Vs. Sinhgad Technical Education Society[ 2017 (8) TMI 1298 - SUPREME COURT] wherein upheld the order of the Tribunal that addition cannot be made for the assessment years for which there are no incriminating documents found during the course of search in the assessments framed u/s 153C. Seized incriminating material has to pertain to the assessment year in question and have co-relation, document-wise, with the assessment year. This requirement u/s 153C is essential and becomes a jurisdictional fact. It is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S. 153A . No addition can be made where the assessment have not abated and were pending at the time of search, no addition can be made without any incriminating material. Thus, the finding by the ld. CIT (A) which is based on various judicial principles and on the facts of the case cannot be tinkered with without any contrary material or rebuttal by the Department, therefore same is confirmed. - Decided against revenue.
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2021 (10) TMI 902
Credit of TDS - tds deducted on the interest income which accrued the investments offered to tax under the Income Declaration Scheme 2016 - Credit for TDS has not been allowed only for the reason that PAN No. of the payee is not mentioned in the certificate due to which tax credit is not appearing in the income tax portal - HELD THAT:- It is an evident fact that since the investments was unaccounted, assessee had not given the PAN to the Bank where such investments were made. However, since the assessee has declared the income under IDS 2016, now the assessee is eligible to get credit for TDS as provided in the clarification on the IDS 2016 vide circular no.25/2016 dated 30th June 2016. Necessary verification should be made at the level of the Ld. AO, before whom assessee shall provide all the details of IDS 2016, certificate of tax deducted in the name of self and children and also provide complete details of TDS - If after the necessary verification it is proved that the alleged IDS was deducted on the income/investment declared under IDS 2016 comprising of the principle amount of the investments and interest earned thereon, then the assessee should be allowed the benefit of tax deducted at source - Needless to mention that proper opportunity of being heard to be provided to the assessee. - Assessee appeal allowed for statistical purposes.
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2021 (10) TMI 901
Addition towards relief claimed u/s 54F - purchase of residential house property located at first floor of a complex having shops constructed on ground floor - HELD THAT:- As per the permission granted by the Municipal Corporation, Bhopal, the ground floor is to be utilized for commercial activities and thus shops are constructed on ground floor and first floor to be utilized for residential purpose. We also find that the assessee has purchased a property as a residential property and registering authority have also registered the said purchase after charging expenses valuing the said property for stamp duty value as a residential property. Copy of registration papers and guidelines for stamp duty valuation are placed on record. It is noteworthy that Electricity Department had also considered the use of the said premises as a residential use and has charged the electricity rates accordingly. Perusal of record also shows that the assessee has submitted the copy of the Municipal receipt and return during the course of assessment proceedings itself. Municipal authorities have charged the property tax treating it as a residential property. From perusal of the purchase deed we find that the complete details of the property purchased by the assessee is mentioned which is measuring 864 sq.ft. and consists of residential rooms all located at first floor. Copies of electricity bills relating to the property in question are also placed in the paper book which also supports the contention that the property is used for residential purpose. We are satisfied with the contention made by the Ld. counsel for the assessee and Ld. DR being unable to place any contrary material to prove otherwise, are of the considered view that the assessee has rightly claimed exemption u/s 54F for purchase of residential house property located at first floor of a complex having shops constructed on ground floor - Decided in favour of assessee.
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2021 (10) TMI 900
Deemed dividend u/s 2(22)(e) - Assessee company has taken loans from the three concerns - as submitted by assessee the loan amounts in question treated as deemed dividend u/s 2(22)(e) by the AO were taken by the assessee-company from the three concerns on interest and since the said lending companies were compensated by interest paid by the assessee-company on the loans, the assessee-company in real sense did not derive any benefit from the said loans so as to attract the provisions of section 2(22)(e) - HELD THAT:- As in the case of Pradip Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] wherein it was held that the phrase by way of advance or loan appearing to sub-clause (e) of section 2(22) must be construed to mean those advances or loans which a shareholder enjoys for simply on account of being a beneficial owner of shares, but if such loan or advance is given to such shareholder as a consequence of any further consideration, which is beneficial to the company, received from such shareholder, in such case, such advance or loan cannot be said to be deemed dividend within the meaning of section 2(22)(e). Gratuitous loan or advance given by a company to those classes of shareholder thus would come within the purview of section 2(22)(e) and not the cases where loans or advances given in return to an advantage conferred upon the company by such shareholder. In the present case, the entire amount in question was taken by the assessee-company on interest and since the interest on the said loan was duly paid by the assessee-company after deducting tax at source, we find no infirmity in the impugned orders of the Ld. CIT(A) in deleting the addition made by the AO treating the said amount as deemed dividend under section 2(22)(e) - Decided against revenue.
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2021 (10) TMI 881
Delayed deposits of employees contribution of ESI PF - assessee did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) - deposits made prior to filing of the return of income u/s 139(1) - HELD THAT:- As decided in HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [ 2021 (7) TMI 942 - ITAT KOLKATA] we do not accept the Ld. CIT(A)'s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per the binding decision in Vijayshree Ltd.[ 2011 (4) TMI 63 - ITAT KOLKATA] u/s. 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.
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Benami Property
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2021 (10) TMI 899
Benami Transactions - ownership in the property - ancestral property - when respondents (original Plaintiffs) approached the concerned authority for mutation, it was realized that the name of the ancestor i.e. father/father in law of the original defendants was found on record, along with the name of the mother of the respondent no. 1, on the strength of sale deed dated 29.3.1993 in respect of the suit property - whether the plaint deserved to be rejected as being hit by the provisions of the aforesaid Act? - whether the statement made in paragraphs 7 and 8 would be enough to conclude that the suit itself stood barred by the provisions of the said Act and therefore, the plaint deserved to be rejected under Order 7 Rule 11(d) of the CPC? - HELD THAT:- A perusal of the plaint shows that there is reference to an order dated 16.8.2017, passed by the competent Court in the inventory proceedings wherein the suit property came to be allotted to the respondent nos. 1 and 2. It is then stated that when the said respondents approached the competent authority for mutation of their names in respect of the suit property on the strength of the order passed in the Inventory proceedings, they came to know that the sale deed dated 29.3.1993 consisted of the name, not only of the mother of the respondent no. 1 as purchaser, but also the name of the father/father in law of the original defendants which led to respondent nos. 1 and 2 to approach the Court by filing the suit for declaration and consequential reliefs. It is specifically stated in the plaint that the cause of action arose in September 2017, after the order dated 16.8.2017 was passed in the Inventory proceedings. It is significant that the statement made in the plaint indicates that cause of action arose in September 2017 and that the respondent nos. 1 and 2 became aware about the existence of the name of the father/father in law of the original defendants in the sale deed dated 29.3.1993, only at the stage when they approached the competent authority for mutation of their names in respect of the suit property. When the pleadings in paragraphs 7 and 8 are read in conjunction with the contents of the entire plaint, it appears that the aspect as to whether the respondent nos. 1 and 2 were all along aware about the details of the sale deed dated 29.3.1993 and whether their claim of accrual of cause of action in September 2017, is correct or not, are matters that would need evidence and trial. At this stage, it would be inappropriate to jump to the conclusion that statements made in paragraphs 7 and 8 would be enough to demonstrate that the plaint itself deserved to be rejected, as being barred under the provisions of the said Act. In any case, the question as to whether the suit is hit by Section 4 of the aforesaid act would have to be decided only after sufficient material is brought on record by way of evidence to demonstrate that the ingredients of Section 4 read with Section 9A of the aforesaid Act are satisfied, in the facts and circumstances of the present case. The reliefs sought in the prayer clause are relatable to the pleadings made on behalf of the respondent nos. 1 and 2 in the context of the inventory proceedings and the right claimed by the respondent nos. 1 and 2 on the basis of inheritance. The approach adopted by the Court below cannot be found fault with and that the contentions raised on behalf of the applicants require to be tested by way of trial and by allowing the parties to lead evidence in support of their respective stands.
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2021 (10) TMI 898
Benami transaction - claim on FD amount - Transfer of interest on FD to stranger - whether such deposits are permissible under the Banking Regulations? - Legal requirement that the Bank has to get a consent from a third party to the contract for the purpose of setting the amounts due under the fixed deposit account with the petitioner - order of the Ombudsman that interest is being credited to the 5th respondent and the petitioner had not objected to the same - Can a public sector Nationalised Bank, refuse to pay the proceeds of a fixed deposit, to the holder of the deposit, on the ground that a consent is required from a person from whose account the amount for opening the fixed deposit account was debited? - HELD THAT:- As the relief claimed in the writ petition does not involve any detailed analysis of disputed facts. As the 1st respondent Bank is a debtor of the petitioner, with regard to amounts held in fixed deposit, the Bank cannot have a stand that they will not pay the amounts due on maturity of the fixed deposit to the deposit holder. The monetary claims if any, of the 5th respondent against the petitioner, are not matters on which the 1st respondent Bank, which is a public sector bank, can intermeddle. It is for the 5th respondent to agitate such claims in appropriate proceedings. Admittedly, the 5th respondent who claims to have advanced money to the petitioner has not initiated any legal proceedings for realisation of the same, even after all these years. So also, the 1st respondent cannot transfer any funds that accrue to the fixed deposit of the petitioner, to any stranger, so long as there are no specific instructions to that effect from the petitioner. The petitioner has specifically pleaded that they have not issued any such instructions. The Bank has not produced any instructions issued either by the petitioner or any other person authorised by the petitioner to transfer the interest accrued on the fixed deposit to the 5th respondent. The Bank could not have acted on instructions of the 5th respondent, since the 5th respondent is a stranger to the contract. In view of the authoritative pronouncements of the Apex Court which have been extracted above and that of a Division Bench of this Court that the Bank owes a public duty to pay the amounts due on a fixed deposit which has matured, I am of the opinion that the writ petition is maintainable and the petitioner is entitled to the relief prayed for. In the result, the writ petition is allowed. The 1st respondent is directed to pay the maturity value of Ext.P3 Fixed Deposit with the applicable interest as per the Reserve Bank of India Circulars from the date of deposit, to the petitioner within two weeks from the date of receipt of this judgment. Ext.P3 order of the Ombudsman is set aside.
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Customs
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2021 (10) TMI 897
Condonation of delay of 584 days in filing appeal - certificate cases - the appeal was allowed on 2-7-2018, by the time this order was examined, it was 19-11-2020, i.e., over two years have passed - HELD THAT:- This is one more case of what we have already categorized as certificate cases and we do not delve further, as the purpose seems just to bring the matter to the Courts to put a closure to the same without giving any cogent explanation for condonation of delay in terms of OFFICE OF THE CHIEF POST MASTER GENERAL VERSUS LIVING MEDIA INDIA LTD. [ 2012 (4) TMI 341 - SUPREME COURT] . A correct view has been taken by the Tribunal as the Department itself is treating the assessee in the same manner for subsequent years so far as classification is concerned - the appeal is not liable to be entertained - Appeal dismissed.
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2021 (10) TMI 896
Territorial Jurisdiction - Transfer of appeal - seeking issuance of directions not to hear the appeal by the Technical member whose appointment was challenged by the Advocate of the petitioner in the Honourable Supreme Court - HELD THAT:- It is not feasible that Mr. Raju, Member (Technical) attached at Ahmedabad, who is perpetually on tour and the matter to be heard while sitting with the Member (Judicial), is also on tour, thus, it would most appropriate and suitable approach, would be, to direct the Ahmedabad Bench of CESTAT to decide the appeal through video conference, for the reason, that one of the technical Member i.e., Mr. Raju would be also technical Member of Bangalore Bench. The review petition is disposed of directing that the appeal pending before CESTAT, Bangalore shall be heard by Ahmedabad Bench through video conference as Bangalore Bench of CESTAT as expeditiously as possible, not later than within a period of forty five (45) days from the date of receipt of a certified copy of this judgment.
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Corporate Laws
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2021 (10) TMI 895
Freezing of Assets and Bank Accounts of the Appellant - Opportunity of Hearing provided or not - principles of natural justice - HELD THAT:- It must be borne in mind that the Rules of Natural Justice are not the edicts of a statute. As a matter of fact, the rudimentary requirement is that (i) Fair play (ii) a Determination/An Adjudication is to be made after ascribing necessary reasons in a fair, just, and objective manner of course, based on the relevant facts/materials in a given case - an opportunity of hearing is to be afforded to an individual to air / put forward is point of view by either contradicting or raising objection, in regard to the claim which is Detrimental to him. No wonder, the Rules of Natural Justice do supplement the Law and they do not Supplant the Law . It cannot be forgotten that the Tribunal has the trappings of a Court and its powers are limited to the ingredients of the Companies Act, 2013 in that behalf and exercised in specified matters mentioned therein. The Tribunal and the Appellate Tribunal are to be guided by the Principles of Natural Justice - this Appellate Tribunal makes a significant mention that whether a certain Principles of Natural Justice is applicable to a particular situation or whether in a given case there is violation of Principle of Natural Justice is to be judged on the facts and circumstances of each case, which float on the surface. Rule 44 of the NCLT Rules, 2016 pertains to hearing of petition or applications. Rule 45 deals with rights of a party to appear before the Tribunal . Rule 49 speaks of Ex parte hearing and disposal. Rule 51 refers to Power to regulate the procedure . Rule 55 says that No pleadings subsequent to the reply, shall be presented except by the leave of the Tribunal upon such terms as the Tribunal may think fit - there is no two opinion of a primordial fact that the Tribunal in a given case is not to pass an order in a flurry manner and of course, it is to pass an order with utmost care, caution and circumspection. Ordinarily, no man shall be condemned without being heard. Notice is the initial element and integral part of the principle of natural justice. Section 241(2) of the Companies Act, 2013 empowers the Central Government, if it is of the opinion that the affairs of the Company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order etc. under the Companies Act, there is no restriction on the generality of the power of a Tribunal. Section 242 of the Companies Act is verbatim similar to that of Section 402 of the Companies Act. As per Section 242(m) of the Companies Act, 2013, the Tribunal, for any other matter, in its opinion it is just and equitable that a provision should be made can pass orders on just and equitable ground. NCLT is directed to pass necessary fresh recent orders in a fair, just, dispassionate manner on merits, afresh (because of the fact that there was a negation of principles of natural justice in not adhering to the National Company Law Tribunal Rules, 2016, in so far as the Appellants/Respondents 11 and 12 are concerned). Appeal disposed off.
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PMLA
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2021 (10) TMI 894
Money Laundering - Provisional attachment of amounts that were frozen - substantive offence under Section 3 r/w Section 4 of the PMLA - HELD THAT:- Coming to Rule 3A of the Prevention of Money-Laundering (Restoration of Property) Rules 2016, this Rule is undoubtedly sequel to the inclusion of the second proviso to Section 8(8) of the PMLA. However, both the second proviso to Section 8(8) and Rule 3A use the expression may and not shall . Where in a given case, the Special Court decides to proceed under the second proviso to Section 8(8), then Rule 3A prescribes a procedure for proceeding with the matter further and not otherwise. It is gainsaid that it is public money which, as narrated supra , had transcended into the hands of the accused and the respondent bank is justified in laying its claim for restoration of the property, more so, as a public sector bank. A fortiori , it would be purposeless to retain the property till the conclusion of the trial, which we find from a reading of the amendment, cannot be the intended purpose. Canara Bank will be entitled only to the balance amount that is now available. Canara Bank will not only be entitled to the principal amount but also the interest accrued thereon - In this case, the money that were attached are not counterfeit currency notes or phenolphthalein applied currency notes to be marked as material objects during trial. The proof of the fact that these amounts were provisionally attached by the Enforcement Directorate, the confirmation of the attachment by the Adjudicating Authority and the return of the amounts to Canara Bank can be established by marking a copy of the order of this Court. This Criminal Revision stands dismissed.
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Service Tax
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2021 (10) TMI 893
Levy of service tax - Business Support services - services to distributors/producers in the nature of infrastructure support services - revenue sharing arrangement - Circular dated 13.12.2011 - section 65(104c) of the Finance Act - HELD THAT:- It would be seen from the agreement that the SPE Films is a producer/distributor engaged in the business of production and distribution of films, while the appellant is an exhibitor engaged in the business of exhibition of films and owns/operates a chain of multiplex theatres under the brand name Inox - The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. It was further made clear in the Agreement that either of the party shall not interfere or otherwise influence any decision of the other party in respect of the conduct of its business. Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in Moti Talkies [ 2020 (6) TMI 87 - CESTAT NEW DELHI ]. The Department alleged that the agreement was for renting of immovable property as defined under section 65(90a) of the Finance Act. This contention was not accepted by the Tribunal and it was observed that the appellant did not provide any service to the distributors nor the distributors made any payments to the appellant as consideration for the alleged service. In fact, it was the appellant who had paid money to the distributors for the screening the rights conferred upon the appellant and it was finally held that Commissioner (Appeals) completely misread the agreements entered into between the appellant as an exhibitor of the films and the distributors to arrive at a conclusion that the appellant was providing the service of renting of immovable property. What also needs to be noticed is that if the appellant was providing such a service, it would be the producers/ distributors who would be making payments to the appellant, but what comes out from a perusal of clause 5.1 of the Agreement is that in consideration for the distributor agreeing to grant to the appellant the license to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the distributor as provided for in the said clause. In fact, clause 3.1 of the Agreement provides that distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. The impugned order has confirmed the demand on the basis that the appellant provided infrastructure support services to the appellant. However, the show cause notice alleged that the appellant was providing operational and administrative assistance with supplier. The Commissioner could not have gone beyond the scope of the show cause notice to confirm the demand. This apart, in view of the decision of the Supreme Court in Faqir Chand Gulati [ 2008 (7) TMI 159 - SUPREME COURT ] and the decision of the Tribunal in Mormugao Port Trust [ 2016 (11) TMI 520 - CESTAT MUMBAI ] , no service tax can be levied on the appellant under BSS. Appeal allowed.
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Central Excise
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2021 (10) TMI 892
Demand u/s 11D - Collection of amount in the name of duty - Cash recovery of Money Credit Scheme - applicability of Section 11D of the Central Excise Act, 1944 - HELD THAT:- Much emphasis was placed on the last sentence appearing in the said circular, which predicates that the manufacturer is utilized to pay duty on any finished excisable product and which duty is collected from the buyer. This expression, though, wide enough but cannot travel beyond Section 11D of the Act and in reference to the Board Circular Bearing No. 216/50/96-CS, dated 4-6-1996, referred to in the stated circular dated 7-8-2002. Besides this, nothing more is required to be said. The claim set up in the Writ Petition, therefore, has been rightly negated by the High Court. SLP disposed off.
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2021 (10) TMI 891
Violation of principles of natural justice - Scope of SCN - benefit of deemed credit to the rerollers whose value of clearances have crossed ₹ 75 lakhs in a particular financial year - whatever interpretation was put on Notification No. 1/93 would affect the availment of the benefit of the deemed credit order No.TS/36/94TRU dated 1.3.1994 or not - HELD THAT:- The questions raised in this appeal are identical to what have been decided in case of VINUBHAI STEEL CO. PVT. LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2015 (3) TMI 746 - GUJARAT HIGH COURT] where it was held that to the extent M/s Sonthalia Steel Re-Rolling Mills had availed the benefit of the order dated 1st March, 1994 after it came to be rescinded with effect from 1st April, 1995, it was not entitled to such benefit. Questions are answered in favour of the assessee - appeal allowed.
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2021 (10) TMI 890
Principles of natural justice - legality and validity of ex-parte order - levy of personal penalty on the petitioner without service of show cause notice and without service of notices of personal hearing - HELD THAT:- From the reply of the respondent department, it can be deduced unequivocally that the show cause notice and the personal hearing notices have not been served upon the petitioner. It has a reference of the first show cause notice served upon the company and therefore, it assumed that the show cause notice and the personal hearing notices have been served upon the present petitioner also. This stand on the part of the respondent of not having known the changed address of petitioner on his having failed to put to the notice of department is wholly unacceptable. Failure to send the show cause notice and the notices of personal hearing therefore, upon the last known address of the petitioner is also unsustainable as the department of Income Tax already had details. The penalty imposed upon the petitioner in the order in original is to the tune of ₹ 4,50,000/-. Any penalty imposed personally on the person cannot be saddled, unless due opportunity is given. Here not only there is a question of availing opportunity of hearing, the very service of the show cause notice is also seriously questioned and we also could notice from the pleadings before us that neither the show cause notice was served upon the petitioner nor was he served notice of personal hearing. There is nothing to indicate as to how this affixing at company premise should be construed as sufficient notice to the petitioner nor is it found on record from any document that he was made aware of the show cause notice which led to the order impugned and therefore, merely because in reply to another show cause notice, he has been made aware also cannot furnish the ground to assume that he was aware of the show cause notice, the order of which is impugned in this matter. Such assumption and presumption are absent in the statute and they cannot furnish the basis to sustain the order of huge amount of personal penalty. The foundation of principle of natural justice is audi alteram partem, the necessity of grant of opportunity of hearing and no party is to be condemned unheard. Here, there appears to be a flagrant violation of the said principle which necessitates indulgence. Reluctantly, without touching the merits of the matter and leaving it to the parties to decide it before the appropriate forum, the order in original to the extent concerning the present petitioner is quashed and set aside - Matter shall be decided by the authority concerned by giving the fullest opportunity without being influenced by any other aspects - petition allowed by way of remand.
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2021 (10) TMI 889
Valuation - inclusion of value of software in the assessable value during clearances of telecom equipment or not - want of necessary evidences - period involved is from March 2005 to January 2006 - HELD THAT:- The Commissioner (Appeals) has not gone into the details as to whether the software is only an operational / application software, as contended by the respondent, whether the software is an integral part of the telecom equipment/hardware without which the telecom equipment cannot function. In paragraph 4.2 of the impugned order, it is merely stated that the telecom equipment can function without the usage of said Network Management Software . This finding is not seen supported by discussion of necessary evidence. If the software is operational / application software, the decision in COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY VERSUS ACER INDIA LTD. [ 2004 (9) TMI 106 - SUPREME COURT] would apply and the value need not be included. If the software is integral to the hardware and the said equipment cannot function without the use of such software, the value of the software has to be included in the assessable value of the hardware and it is immaterial whether it is embedded/etched software or not. The Commissioner (Appeals) has not considered in detail any of these facts with regard to the functionality of the software. At the time of hearing, the Bench had directed the parties to furnish further details of the equipment as well as the software to understand the issue. However, both the parties were not able to furnish facts regarding the finished product. The description of the product in the form of brochures, pamphlets, photographs, etc., would help to bring out the nature of the software used in the telecom equipment. Though the Department has put forward contentions explaining the function of COT, RT, NMS, etc., and argued that without the software the hardware cannot function, there is no reliable evidence placed before us by the Department to support the above arguments. On such score, we have no other option but to remand the matter to the Adjudicating Authority. The matter is remanded to the Adjudicating Authority for reconsideration of the issue. The appeal is allowed by way of remand.
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CST, VAT & Sales Tax
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2021 (10) TMI 888
Levy of KST Act and KVAT Act on Liquor - right for disallowing the ITC claimed by the petitioner - tax can be levied on the entire sales turnover or not - eligibility for deduction under 3[2][f] of the KVAT Rules - levy of KVAT on the Value Addition or on the entire sales turnover - eligibility for tax deduction as per Rule-3 of the KST Rules - levy of entire sale value/total turnover and not on the value addition/taxable turnover - validity of conformation of order of the appellate authority and audit authority - violation of principles of natural justice - applicability of notification published in the Departmental Website - HELD THAT:- Rule 3 of the Rules deals with determination of turnover. As per Rule 3(1), the total turnover of a dealer has to be determined as set out in clauses (a) to (g) with explanations thereof. Sub-Rule (2) of Rule 3 has to be read conjointly with sub-Rule 3(1) since the taxable turnover has to be determined by allowing deductions from the total turnover. Thus it cannot be gainsaid that Rule 3(2)(f) relates to the dealer where the exempted goods under section 5 of the KVAT Act are sold and such amounts are liable for deduction. Admittedly, liquor is not exempted under section 5 of the KVAT Act in the hands of the assessee herein. There is no cavil with respect to the legal principle enunciated by the Hon ble Apex Court in the Judgment of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS, [2015 (8) TMI 749 - SUPREME COURT] regarding the speech made by the Hon ble Finance Minister in moving the Bill would be significant in interpreting the provision. But the input tax credit has to be determined as per section 10 of the KVAT Act. There was no bar for the assessee to collect the output tax in its entirety by its buyers. Giving interpretation of the said Rules vis- -vis the exemption provision Section 4 of the Act, has ruled that when a registered dealer sells to another registered dealer and the first registered dealer is exempted from payment of sales tax, the sale by the second registered dealer cannot be deemed to be sale at the first point and he cannot be subjected to sales tax. The crux of the controversy therein, relates to levy of single point tax, being at the first point of sale. With great respect, this judgment would be of no assistance to the assessee in the case on hand where the input tax credit has to be determined in terms of Section 10 of the KVAT Act. The substantial questions of law is answered in favour of the Revenue and against the assessee - revision petition is dismissed.
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2021 (10) TMI 887
Deemed assessment - assessment of escaped turnover - Section 27 of TNVAT Act - HELD THAT:- The order made under Section 27 of TNVAT Act has been called in question inter alia on the ground that Narasus principle being ratio in NARASUS ROLLER FLOUR MILLS VERSUS THE COMMERCIAL TAX OFFICER [ 2015 (4) TMI 361 - MADRAS HIGH COURT] which inturn was made by following an earlier Hon'ble Division Bench judgment in Madras Granites Private Limited Vs. CTO., [ 2002 (10) TMI 767 - MADRAS HIGH COURT] has been given a go by; that it is to be noted that this principle is to the effect that the Assessing Authority exercising best judgment assessment qua alleged escaped assessment should not go solely / blindly by the report of the Enforcement Wing officials and should independently make an assessment. On the short point of Madras Granite and Narasus principles infraction, captioned writ petition is disposed of - impugned Assessment Order is set aside solely on the ground of infraction of Narasus and Madras granite principles (not making the assessment independent of the Enforcement Wing report) without expressing any view or opinion on the other aspects of the matter - Petition disposed off.
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2021 (10) TMI 886
Scope of SCN and the order passed - petitioner has a case that the notice issued, which is produced as Ext.P3, was under Section 25(1) of the KVAT Act. However, when the order was passed, it is seen to be passed under Section 25(A) of the KVAT Act - opportunity of hearing provided to the petitioner or not - HELD THAT:- It is found from Ext.P5 that there has been undue haste in issuing the said order, which, in the circumstances of the case, is not warranted. In a case, where tax liability imposed on the petitioner is large as can be seen from Ext.P5, strict compliance of law is essential. Rule of law demands that a proper opportunity of hearing ought to be given before passing orders of assessment. Fair submission of the Learned Government Pleader, is placed on record, who submitted that the assessment order does not reflect such an opportunity as having been granted. The respondent is directed to pass fresh orders after affording a proper opportunity of hearing to the petitioner in accordance with law - petition allowed.
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2021 (10) TMI 883
Warrant of arrest - willful defaulter - Recovery of arrears of sales tax dues - allegation is that the defaulter is willfully withholding payment of the arrears - dishonestly transferring the father's property to the name of his minor son - HELD THAT:- The 'will' by which the property has been bequeathed to the defaulter's son by the defaulter's father is produced as Ext. P6 and from a perusal of the same it can be seen that the property bequeathed is the balance extent available with Sri Johny from out of the property obtained by him as B schedule in the partition deed No. 1080/1965 of Oorakam SRO and purchase certificate No. 1480/1977 issued by the Land Tribunal, Thrissur. Therefore, the finding in Ext. P7 that the property involved is hereditarily acquired by Sri. Johny over which the defaulter has right cannot be sustained - Even according to the District Collector the property of the defaulter's father was bequeathed to the defaulter's son. Therefore, the finding of the District Collector that the defaulter can claim for his right on the property and pay the dues using the said property is not sustainable. The reports of the revenue officials that, the defaulter is living in a highly financial family background with financially sound relatives and friends are not factors relevant under S. 65 of the Act to make an order for the detention of the defaulter in the civil prison. No objective assessment of facts and the factors relevant under S. 65 of the Act was made by the District Collector to make an order for the detention of the defaulter in civil prison. There is nothing on record before the District Collector to hold that the defaulter has means to pay the arrears, or the defaulter is willfully withholding payment of arrears of sales tax or has dishonestly transferred his property or guilty of fraudulent conduct. The petitioner's husband, the defaulter is set free - Petition allowed.
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Indian Laws
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2021 (10) TMI 885
Vires of Sections 12 and 13 of the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 and Sections 184 and 186(2) of the Finance Act, 2017 as amended by the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 - violation of principles of separation of powers and independence of judiciary - stipulation of a minimum age limit of 50 years for appointment - HELD THAT:- The challenge to the first proviso to Section 184, which prescribes the age qualification, has to be seen from several angles. First, the underlying parent statutes which created the Tribunals (ITAT, CESTAT, TDSAT, CAT) did not prescribe, as an eligibility criterion for selection of candidates as members, any minimum age. The prescription of 50 years as a minimum eligibility criterion, in the opinion of this Court, is without any rationale. The ITAT has existed for the last 79 years; no less than 33 of its members were appointed as judges of various High Courts; one of them (Ranganathan, J.) was appointed to this Court. The CESTAT too has comprised advocates who have staffed the Tribunal efficiently. The absence of any explanation for the preference given to older persons, in fact leads to an absurd result - as was pointed out in MBA-III and as has been reiterated by L. Nageswara Rao, J. in his opinion. Prescribing 50 years as a minimum age limit for consideration of advocates has the devastating effect of entirely excluding successful young advocates, especially those who might be trained and competent in the particular subject (such as Indirect Taxation, Anti-Dumping, Income-Tax, International Taxation and Telecom Regulation) - Prescribing 50 years minimum age as a condition for appointment to these Tribunals is arbitrary also because absolutely no reason is forthcoming about what impelled Parliament to divert from the long-established criteria of giving weightage to actual practice, reputation, integrity and subject expertise, without a minimum age criterion, in the pleadings in this case, nor in any other cases. The age criteria, impugned in this case also leads to wholly anomalous and absurd results. For instance, an advocate with 18 or 20-years practice, aged 44 years, with expertise in the field of indirect taxation, telecom, or other regulatory laws, would be conversant with the subject matter. Despite being eligible, (as she or he would fulfil the parameters of at least 10 years practice, in the light of the decision in MBA-III) such a candidate would be excluded - the age criterion would result in filtering out candidates with more relevant experience and qualifications, in preference to those with lesser relevant experience, only on the ground of age. Given that the essential educational qualifications and experience in the relevant field are fixed for all candidates, for a classification based on minimum age for appointment (like in the present case) to succeed, the Union cannot say that it should be held to be valid, irrespective of the nature and purposes of the classification or the quality and extent of the difference in experience between candidates - In the present case, the rule has the effect of excluding deserving candidates, without subserving any discernible public policy or goal. Thus, the classification is based on no justifiable rationale; nor can it be said that the age criterion has some nexus with the object sought to be achieved, such as greater efficiency or experience. In Anuj Garg v. Hotel Assn. of India [ 2007 (12) TMI 448 - SUPREME COURT ] one of the issues was the bar to employment of anyone less than 25 years of age in the hotel industry. This Court held that such age discrimination was unsustainable, and struck it down. In the present case, therefore, the qualification of a minimum age of 50 years as essential for appointment, is discriminatory because it is neither shown to have a rational nexus with the object sought to be achieved, i.e. appointing the most meritorious candidates; nor is it shown to be based on any empirical study or data that such older candidates fare better, or that younger candidates with more relevant experience would not be as good, as members of Tribunals. It is plain and simple, discrimination based on age - the Tribunals which were reorganized by the Finance Act, 2017 and now, through the impugned ordinance, exercise judicial functions of the State, interpret and enforce the law, in the course of adjudication of disputes. As repeatedly emphasized by this court in previous Constitution Bench judgments, appointment of members (of such Tribunals), their conditions of service, manner of selection, remuneration and security of tenure are vital to their efficiency and independent functioning. The manner of selection, conditions of eligibility, rules for their removal upon proven misbehaviour and so on, are entirely different from public servants. In fact, the latter category, i.e. members of Tribunals not drawn from public service sources, are not even holders of civil posts or members of any encadred civil service. This has been clarified in at least two judgments of this Court. They are not governed by Article 311 of the Constitution, nor are their conditions of service laid out in rules framed under the proviso to Article 309 of the Constitution. Such being the position, the argument of parity, in the opinion of the Court, is entirely devoid of merit. Nor is the argument of the Attorney General that a uniform age is necessary, merited. There is no material to show that members recruited on the technical side, such as experts in engineering, scientific or other technical fields would be suitable only after they cross the age of 50. In fact, one can complete a doctoral thesis and become a holder of a Ph.D at the time that she or he is 30 years or even below - the Union s argument that 50 years is necessary as it brings about parity between the members of the civil services who are eligible to be considered in their stream for Tribunals or that there is an overall uniformity, is without merit and accordingly rejected. The proviso to Section 184(1), inserted by the impugned ordinance is declared void. A declaration is issued that all candidates, otherwise eligible on their merit, based on qualifications and experience in the relevant field, are entitled to be considered, without reference to the impugned minimum age (of 50 years) criteria - The sheer volume of pendency is an indicator of the substantial judicial functions carried out by Tribunals, necessitating that they be manned by efficient, well qualified judicial and technical members. It is necessary that the Union expedite the process of appointments to Tribunals, towards ensuring swifter, and efficacious justice delivery. The first proviso to Section 184(1) of the Finance Act, 2017, introduced by Section 12 of the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 is hereby declared void and inoperative. Similarly, the second proviso to Section 184(1) of the Finance Act, 2017, introduced by Section 12 of the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 is held to be void and inoperative - Section 184(7) of the Finance Act, 2017, introduced by of the Finance Act, 2017 introduced by Section 12 of the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 is hereby declared void and inoperative. Petition allowed.
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2021 (10) TMI 884
Smuggling - Methaqualone - contraband item - evidence of any independent witness or not - conscious possession of the contraband item or not - framing a charge against the accused - Section 50 of the NDPS Act - HELD THAT:- Before analyzing the oral evidence adduced by the appellant, it is apparent that the prosecution case itself stands vitiated on account of non compliance of section 42 (2) and section 50 of the NDPS Act - It is equally important to note that except officials of the NCB, there is no evidence of any independent witness except the owner of the tempo, P.W.8-Ankush Bhoite, who turned hostile. The appellant emphasized on the testimony of it s witnesses coupled with statements of the accused recorded by them. There is no evidence in the complaint that the copy of the information received by the officer was forwarded to the superior official. The complaint is also silent as regards appraisal of the legal right to the accused and that thereafter his search was made. In his cross-examination, P.W.3-Shastrinath Sawant though had stated that the accused was appraised of his legal right, nevertheless, it does not find place in the complaint and, therefore, it can safely be inferred that P.W.3-Shastrinath Sawant, by way of an afterthought, stated about the said fact only with a view to suit the prosecution story. This indeed goes to the root of the prosecution case - It reveals from the record that most of the evidence of the prosecution comprises testimonies of their officers from NCB. Statement of the accused came to be recorded on four occasions which the prosecution wants this Court to rely upon and accept as a voluntary statement made while in their custody. Confessional statement alleged to have been given by the accused is essentially a weak piece of evidence which does not have any corroboration from the other evidence on record. The prosecution has not adduced any evidence as to from which place the consignment was loaded and was destined to which foreign country. P.W.8-Ankush Bhoite who is the owner of the tempo bearing No MMS-1580 did not support the prosecution case. Sum and substance of his evidence is that he could not identify the accused in the dock as to the person who had engaged his tempo on hire at the relevant time for transporting goods. Rather, it is his evidence that on the date of the incident besides the cleaner, the person who was owner of that consignment were with him. There is no compliance of section 42 (2) of the NDPS Act which would go to the root of the matter and vitiate the trial. There are no independent witnesses. The overall evidence does not at all inspire confidence and, therefore, it is highly unsafe to rely upon such evidence. The learned Special Judge has rightly appreciated the entire evidence and circumstances on record and reached a legal and proper conclusion in acquitting the accused - there are no reason to interfere with the impugned judgment in view of the settled principle of law that while considering the appeal against acquittal, the Appellate Court is first required to seek an answer to the question whether the findings of the trial court are palpably wrong, manifestly erroneous or demonstrably unsustainable and if the Court answers above questions in the negative, acquittal cannot be disturbed. Petition dismissed.
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