Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 25, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Companies Law
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G.S.R. 790 (E) - dated
20-10-2023
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Co. Law
Companies (Incorporation) Third Amendment Rules, 2023
DGFT
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39/2023 - dated
23-10-2023
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FTP
Amendment of Import Policy conditions for item under ITC(HS) Code 0511 99 99 of Chapter 05 of ITC(HS), 2022, Schedule -I (Import Policy)
GST - States
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26/2023-State Tax - dated
17-10-2023
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Delhi SGST
Amendment in Notification No. 08/2023–State Tax, published in the Gazette of Delhi, Extraordinary, Part IV, vide No. F.3(05)/Fin.(Exp-I)/2023-24/DS-I/581, dated 30th June, 2023
SEBI
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SEBI/LAD-NRO/GN/2023/160 - dated
20-10-2023
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SEBI
Securities and Exchange Board of India (Real Estate Investment Trusts) (Third Amendment) Regulations, 2023
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SEBI/LAD-NRO/GN/2023/157 - dated
20-10-2023
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SEBI
Securities and Exchange Board of India (Investor Protection and Education Fund) (Second Amendment) Regulations, 2023
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SEBI/LAD-NRO/GN/2023/156 - dated
20-10-2023
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SEBI
Securities and Exchange Board of India (Employees' Service) (Second Amendment) Regulations, 2023
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Disallowance of Input Tax Credit (ITC) - supplier/dealer had not remitted the tax collected on the supply - Matter restored back to the Assessing Office to give one opportunity to the petitioner for giving evidence and documents in support of his claim for input tax credit which has been denied - HC
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Denial of TDS claimed as Transitional Credit under Section 140 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 - Matter restored back for fresh consideration - HC
Income Tax
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Disallowance of interest u/s. 36(1)(iii) - AO observed that, interest-bearing funds had been diverted/utilized by the assessee for making gifts to his nephews - it can safely be presumed that the said self-owned funds/ profit generated during the year by the assessee was utilized for making gifts under consideration and no part of the interest-bearing funds were diverted for the said purpose. - AT
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Unexplained cash credit u/s. 68 - Source of cash deposited during demonetization period - A.O. is not able to find any defect in the books of accounts, except general statements made in the assessment order. Though the A.O. has doubted the sales made during the year, he is not doubted the purchases made or stock maintained by the assessee during the year. - AT
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Additions towards loss on transactions of Future/option through National Stock Exchange - While filing the return, we note that the assessee has not claimed this loss and therefore, there is no question of disallowance of loss or addition of loss when the same is not claimed in the computation of income. AO has wrongly appreciated the facts of the case which is also in appellate proceedings by Ld. CIT(A) - direct the AO to delete the addition. - AT
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Disallowance u/s 40(a) - tds u/s 195 - fee for technical services - No information in the nature of technical, management or consultancy services had been provided by any of the agent. The assessee had no PE in USA. Both the agents are tax residents of USA and had no business connection in India nor they have any PE in India. None of the agents is related to any of the Director of the company directly or indirectly. All the payments have been made in US$ through proper banking channels. - No TDS liability - Additions deleted - AT
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Beneficial provisions of the India-Mauritius DTAA in respect of STCG - carry forward the LTCL as per section 74 of the Act - Gains / losses arising from different transactions are distinct transactions and a separate source of income; accordingly, STCG / STCL and LTCG / LTCL are distinct and separate streams of income arising to an assessee. Section 90(2) of the Act provides the provisions of the Act or the provisions of the Treaty, whichever are beneficial, shall apply to the assessee. - AT
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Amounts received under the Focus Market Scheme - capital OR revenue receipt - The subsidy received from Government of India under the Focus Market Scheme is Revenue in nature and the same was given to offset higher cost of freight and other disabilities of exporters to be more competitive in exports to certain regions. Thus, same cannot be at any stretch of imagination considered as capital in nature. - AT
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Revision u/s 263 - Cash deposits in the form of old currency notes in bank account on a single day during demonetization period - Since the AO has not examined the documentary evidences in respect of this issue and has not conducted the requisite verification due to which the assessment order u/s 143(3) of the I.T. Act is found to be erroneous in so far it is prejudicial to the interest of revenue. - AT
Customs
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Claim of duty drawback - Denial of permission for conversion/ amendment of 13 free shipping bills filed by the filed by the appellant without claiming AIR drawback - The reasons given for rejection by the Commissioner of Customs are flimsy and against the very spirit of Sec 149 of the Act read with Rule 12(1)(a) of Drawback Rules, 1995, read with clarification given by the Board - AT
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Classification of imported goods - badge reader - data collection device versus data processing machine - the device captures the data from the employee’s card or the data of the particular employee who key in the PIN into the device. - Since the specific function of the imported item is to mark attendance or to take note of the persons of the employees for the purpose of attendance or payroll or leave, they cannot be classified under Chapter 84 as it excludes from this Chapter as per the Chapter Note 5(e). - AT
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Smuggling - foreign origin Gold - The gold seized were of 99.5 purity. There was no foreign marking available on the gold. In fact, they were in the shape of ornaments. The adjudicating authority has given a clear finding as to why the goods are not smuggled in nature - the findings of the adjudicating authority agreed upon. - Appeal of Revenue dismissed. - AT
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Classification of imported goods - Joss Powder - There are no reason for the Department to suddenly change the classification from CET 44013000 to CET 12119029 when several consignments have been imported through Kolkata (Port) as well as Haldia (Port) during the period 2003 to 2004 were allowed to be classified under CET 44013000. Even the provisionally, assessed Bills of Entry has been finalized by classifying the goods under CET 44013000. - AT
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Classification of exported goods - It is well known that classification depends on various factors including description, and not description per se. Assuming that the description is the only criterion, then the same should sync with the HSN. It is well settled that the core element of determinative factor has to be gone into which is the first and essential step. Whereas, the classification appears to have been made on incorrect assumptions, which is not as per law. - AT
Corporate Law
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Failure to get its cost accounting records to be audited by a Cost Auditor - Since complaint was filed on 30.05.2017, complaint is well within time. The date of filing the complaint would be criteria and not the date on which the Court takes cognizance of the offences in the said complaint. For the said reason, the ground of complaint being barred by limitation cannot be accepted - Since the company itself had mentioned that the industry is “Edible Oil Seeds and Oils (including vanaspati) industry", the same cannot be determined in the proceedings for quashing the complaint. - HC
Indian Laws
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Professional misconduct - Chartered Accountant (CA) - Disciplinary proceedings kept pending for 27 years - The complaint against respondent was lodged in 1996 primarily for non return of the loan taken. The loan amount has been repaid way back in 1998. The fact that the pendency of this Reference itself as well as the process of Disciplinary proceedings instituted by the institute itself would be like the proverbial Damocles sword hanging over the head of respondent for over 27 years. - HC
IBC
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Challenge to resolution plan as approved by the CoC - Merely because there is a reduction in the claim of any creditor does not make the resolution plan fall foul of law. We quite agree with the Adjudicating Authority that “resolution plan providing a lesser amount than admitted does not make it illegal”. Any clause in the resolution plan which requires creditors to take a hair-cut cannot be construed as being violative of Section 30(2)(e) of the IBC. - AT
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Initiation of CIRP - Rejection of Section 7 application - status of the decree-holder - Real Estate Allottee or not - NCLT held that, being a single allotment, does not meet the threshold requirement as per second proviso to Section 7(1) of the I&B Code - Decision of NCLT sustained - AT
Service Tax
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Export of services or not - It is evident that the services rendered by the respondents are used by the overseas company who are benefitted by the same. It cannot be said that service is not used outside India just because the payment is made to third-party i.e.M/s Glaxo SmithKline Services, Unlimited, UK. It has been clarified that the said third-party has been maintaining the accounts of M/s SB Plc, UK - It is found that as long as the service is enjoyed by the contracting party, routing of payment or consideration through a third-party does not alter the position. - AT
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Nature of Activity - Payment of 'Address Commission' against 'Chartering of Ships' - Business Auxiliary Service (BAS) or not - When there is no evidence to substantiate the allegation that the discount was offered towards rendering of any service, no service tax is payable on those discounts - AT
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Nature of services - Professional services or existence of employee / employer relationship - The letters of appointment and the termination letter produced before us make it amply clear that Pual was appointed as the Chief Operating Officer. Therefore, the relationship between the appellant and Pual was that of an employer and employee. - AT
Case Laws:
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GST
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2023 (10) TMI 1043
Seeking direction on appropriate respondent to remit the amount of GST on works contract services provided on or before and after 1st July, 2017 i.e. before or after the introduction of GST Act - HELD THAT:- It appears the respondent authorities concerned have to bear the additional tax liability for execution of subsisting Government contract either awarded to the petitioner during pre-GST regime or in post-GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill for payment. This writ petition is disposed of by giving liberty to the petitioner to file appropriate representations stating all the facts and provision as referred in preceding paragraph of this judgment, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date.
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2023 (10) TMI 1042
Disallowance of Input Tax Credit - supplier/dealer had not remitted the tax collected on the supply - HELD THAT:- The question whether input tax credit to a dealer would be denied merely on the ground of non-remittance of tax by the supplier/dealer on the goods/services supplied to the assessee as the same tax is not reflected in the Form GSTR-2A, would be enough to deny the claim of input tax credit to the assessee has been considered in the DIYA AGENCIES VERSUS THE STATE TAX OFFICER, THE STATE TAX OFFICER, UNION OF INDIA, THE CENTRAL BOARD OF INDIRECT TAXES CUSTOMS, THE STATE OF KERALA [ 2023 (9) TMI 955 - KERALA HIGH COURT] where it was held that If the seller dealer (supplier) has not remitted the said amount paid by the petitioner to him, the petitioner cannot be held responsible. Whether the petitioner has paid the tax amount and the transactions between the petitioner and seller dealer are genuine are the matter on facts and evidence. The petitioner has to discharge the burden of proof regarding the remittance of tax to the seller dealer by giving evidence. Impugned order for denial of input tax credit to the petitioner to the extent of 19,830/- is hereby set aside and the matter is remitted back to the Assessing Office to give one opportunity to the petitioner for giving evidence and documents in support of his claim for input tax credit which has been denied vide order Ext. P1(A). If on examination of the evidence and documents submitted by the petitioner, the Assessing Officer is satisfied that the claim is bonafide and genuine, the petitioner should be given credit of input tax which has been denied by the order, Ext. P1(A). Petition disposed off by way of remand.
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2023 (10) TMI 1041
Denial of TDS claimed as Transitional Credit under Section 140 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 - Validity of impugned Assessment Order - writ petition is late by almost three years after the impugned Assessment Order was passed on 14.07.2020 as it has been filed only on 15.09.2023 - HELD THAT:- Although, explanations given by the petitioner in approaching this Court belatedly are not satisfactory, the issue on merits is prima facie covered in favour of the petitioner and against the revenue by the decision of the learned Single Judge of this Court in M/S. DMR CONSTRUCTIONS VERSUS THE ASSISTANT COMMISSIONER, COMMERCIAL TAX DEPARTMENT, RASIPURAM, NAMAKKAL DISTRICT. [ 2021 (4) TMI 261 - MADRAS HIGH COURT] - said decision has been followed by this Court in M/S. SEKAR CONSTRUCTIONS, REP. BY ITS MANAGING PARTNER - E. SEKAR VERSUS THE ASSISTANT COMMISSIONER (ST) , THIRUKAZHUKUNDRAM [ 2021 (12) TMI 1466 - MADRAS HIGH COURT] . The Court is inclined to set aside the impugned Assessment Order, and remits the case back to the first respondent to pass a fresh order de novo on merits and in accordance with law - petition disposed off.
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2023 (10) TMI 988
Additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST - Seeking neutralization of the impact of unforeseen additional tax burden - HELD THAT:- The writ petition is disposed of by giving liberty to the petitioner to file appropriate representation, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. Petition disposed off.
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Income Tax
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2023 (10) TMI 1040
Validity of assessment u/s 144B - Petitioner was granted only a short span of time, i.e. 5 days, and excluding the Sunday, which is a holiday, only three working days was given for filing their reply/objections - HELD THAT:- AO before passing any assessment order is that the AO, while issuing show cause notice shall provide sufficient time for the assessees to file their reply/objection, minimum of 21 days, unless and otherwise any specific time limit is fixed under the provisions of the Act; thereafter, shall afford an opportunity of personal hearing; in case, if the assessee is in need of any documents, which forms the basis for issuance of show cause notice, the same shall also be furnished to the assessee, as the case may be, wherever, it is required; and after conducting a full-fledged enquiry, shall conclude the assessment proceedings, in which, the AO has to deal with the queries/points, (which the assessee would raise/putforth in the form of reply/objections) in detail along with reasons for rejection of the reply, if any and thereafter, shall pass final assessment order in accordance with law. The above aspects are not scrupulously followed, the same would pave a way for the assessee to go on Appeal before the Appellate Authority and even in the Appeal, if the assessee is unable to succeed, ultimately, it will come to the scrutiny of this Court and Hon'ble Supreme Court, in which case, if the assessment order is set aside, the Department will loose it's revenue. Therefore, it is bounden duty of the Assessing Officer to pass a detailed order, providing reasons for rejection of the contention of the assessee. If any cryptic order is passed without touching upon the queries/contentions of the assessee, ultimately, it would be fatal to the assessee and also cause huge revenue loss to the revenue. Therefore, the orders to be passed by the Assessing Officer should always be a speaking order, safeguarding both the interest of the assessee and the Revenue. This Court is inclined to set aside the impugned order of assessment.
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2023 (10) TMI 1039
Income taxable in India - Fees for Technical Services - income from information technology and other administrative services provided by assessee to its affiliate in India[Indian subsidiary] - India-Singapore DTAA - AO concluded that the services provided by the respondent/assessee to the Indian subsidiary were in the nature of management support services and hence, taxable at the rate of 10% plus surcharge and education cess under the Indo-Singapore DTAA. HELD THAT:- Tribunal, in concluding that services offered by the respondent/assessee to its Indian affiliates did not come within the purview of FTS, as reflected in Article 12(4)(b) of the Indo-Singapore DTAA, concluded that they did not fulfil the criteria of make available principle. According to the Tribunal, the agreement between the respondent/assessee and its Indian affiliate had been effective from 01.01.2010, and if, as contended by the appellant/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. We tend to agree with the analysis and conclusion arrived at by the Tribunal. No substantial question of law.
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2023 (10) TMI 1038
Validity of reassessment notice in the name of the non-existing Company - scheme of amalgamation approved - HELD THAT:- We are of the considered view that the present is also the case which squarely stands covered by the decision of Maruti Suzuki (India) Limited [ 2019 (7) TMI 1449 - SUPREME COURT] and the recent decision of the High Court of Bombay in the case of CLSA INDIA (P) LTD. [ 2023 (2) TMI 469 - BOMBAY HIGH COURT] and the earlier judgment of Spice Infotainment [ 2011 (8) TMI 544 - DELHI HIGH COURT] The present Writ Petition deserves to be and is accordingly allowed, holding that the notice issued Section 148A(d) of the Act and the consequential notice of the same date under Section 148 of the Act, both being bad in law, are set aside, as the entire proceedings itself is against a non-existing Company - Decided in favour of assessee.
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2023 (10) TMI 1037
Business promotion expenses - claim disallowed as these expenses are not fully vouched and contained personal element thereon - HELD THAT:- AO observed truely that the assessee had debited a sum on account of Diwali expenses, miscellaneous expense much more as compared to immediately preceding year. Before us, no contrary evidence has been placed on record by the assessee to prove as to why the disallowance have been wrongly made. Accordingly, we deem it fit not to deviate from the stand taken by the ld CIT(A). Accordingly, we uphold the order of the ld CIT(A). Grounds raised by the assessee are dismissed.
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2023 (10) TMI 1036
Nature of expenses - due diligence expenses under the head exceptional items - revenue or Capital expenditure - HELD THAT:- We find that this issue is no longer res integra in view of the decision of Onmobile Global Ltd [ 2021 (1) TMI 923 - KARNATAKA HIGH COURT] wherein, it was held that the expenditure incurred by the assessee for conducting due diligence of a company which was eventually acquired by the company to be allowable as revenue expenditure. Further, we find that in the case of PCIT Vs. Vaibhav Global Ltd [ 2021 (12) TMI 1407 - RAJASTHAN HIGH COURT] had also held under similar circumstances, the expenses incurred thereon to be revenue expenditure u/s 37 - Decided in favour of assessee.
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2023 (10) TMI 1035
Revision u/s 263 - taxability of capital gain arising on compulsory acquisition of land of appellant - award of the compensation to the assessee was under RFCTLARR Act - HELD THAT:- On perusal of the Response of assessee wherein the assessee has submitted an exhaustive response explaining all the possible point of view those could possibly have involved pertaining to the query of Ld. PCIT to satisfy him that the award of the compensation to the assessee was under RFCTLARR Act, and there was no nexus with any of the enactments as prescribed under Fourth Schedule of the RFCTLARR Act, and accordingly, the exemption available under section 96 of the RFCTLARR Act, cannot be denied. PCIT apart from putting the liability on the shoulder of the assessee to substantiate it otherwise, was unable to surface any cogent information/evidence to prove that the acquisition of land of the assessee is connected and acquired under any of the enactments prescribed under Fourth Schedule of the RFCTLARR Act, accordingly, the contentions raised by the Ld. AR, are found to be justifiable, having material substance, which constitutes that the acquisition of land in the case of assessee was under RFCTLARR Act, and is not covered by any of the enactments as prescribed under Fourth Schedule of the RFCTLARR Act, which is further substantiated by the department itself, when the same issue in the case of co-owner of the land Mr. Mahendra Lodha, who has received 1/3 share of the impugned compensation a/w the assessee, which is disputed in the present case, wherein the exemption from income tax has been allowed, without any adverse inference, considering that the receipt of compensation was exempt u/s 96 of RFCTLARR Act. We are of the considered opinion that the order of the Ld. AO, though found to be erroneous but could not be established by any supporting material that the same is also prejudicial to the interest of revenue. The prejudice from the order of Ld. AO was only an anticipation / presumption of the Ld. PCIT, which can not be the basis for initiation of proceedings u/s 263, therefore, the same is not sustainable in the eyes of law. Much less, when the same issue in the case of Co-owner, who had shared the compensation with the assessee, has already been decided in favour of the assessee by the revenue, stating that income tax shall not be levied on any award agreement made under the Act except as provided under section 46 of the Act, the compensation receipt was exempt under section 96 of the RFCTLARR Act, 2013. Consequently, grounds raised in the present appeal by the assessee are allowed.
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2023 (10) TMI 1034
Suppressed contract receipts - difference in receipts as per books of accounts and Form No.26AS - HELD THAT:- Admittedly, it is a matter of fact borne from the assessment order that the assessee firm had maintained its accounts as per the mercantile system of accountancy. Based on the aforesaid method of accountancy followed by the assessee firm, the accounting for the aforesaid amount of contract receipts on the date on which the bill was raised by it on M/s. Thermax Ltd. is found to be in order. As the A.O., while framing the assessment, had admittedly, due to paucity of time, not deliberated upon the aforesaid explanation of the assessee, therefore, in our considered view, the matter in all fairness requires to be restored to his file. Needless to say, the A.O. shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee firm, which shall remain at liberty to substantiate its claim on the basis of fresh documentary evidence. Thus, the Grounds raised by the assessee firm are allowed for statistical purposes in terms of our aforesaid observations.
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2023 (10) TMI 1033
Validity of order passed by the A.O u/s. 201(1) 201(1A) - default for non-deduction of tax at source u/s. 194C and u/s. 194J - HELD THAT:- AR had failed to point out any infirmity in the order passed by the CIT(Appeals). Apart from that, it is not the case of the assessee that as respective payees having included the aforementioned amounts in their respective returns of income and paid taxes on the same, it was, thus, not liable to be held as being in default. Having given thoughtful consideration, find no infirmity in the view taken by the CIT(Appeals), who had rightly upheld the liability fastened upon the assessee u/s. 201(1) 201(1A) of the Act by the A.O. Decided against assessee.
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2023 (10) TMI 1032
Disallowance of interest u/s. 36(1)(iii) - whether the interest-bearing funds had been diverted/utilized by the assessee for making gifts to his nephews? - As argued assessee had sufficient self-owned/interest-free funds available with him - HELD THAT:- We are of the considered view that as the self-owned funds available with the assessee as the opening balance of his capital on 01.04.2009, along with the net profit earned by him during the year under consideration was much higher which, therein, was sufficient to source the gifts to the aforesaid donee s, therefore, it can safely be presumed that the said self-owned funds/ profit generated during the year by the assessee was utilized for making gifts under consideration and no part of the interest-bearing funds were diverted for the said purpose. Unable to concur with the view taken disallowing claim for deduction of interest expenditure on the presumption that the interest-bearing funds were utilized by the assessee for making gifts to his nephews, and, thus, vacate the said disallowance so made/sustained by them u/s. 36(1)(iii) of the Act. Decided in favour of assessee.
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2023 (10) TMI 1031
Validity of Reopening of assessment u/s 147 - reasons to believe - addition u/s. 69 - HELD THAT:- As is discernible from the assessment order, the A.O. had categorically stated that notice u/s. 148 was issued to the assessee. As no material is discernible from the record that could support the aforesaid claim of the assessee that notice u/s. 148 suffered from any infirmity, which would suffice to render the assumption of jurisdiction for framing of the impugned assessment u/s. 144 r.w.s. 147 as invalid and void ab initio; thus, the same is rejected. Assessee has assailed the validity of the reasons to believe, on the basis of which proceedings u/s. 147 of the Act had been initiated in his case. Although it is the claim of the assessee that the AO on a fallacious basis, had assumed jurisdiction and wrongly initiated proceedings u/s 147 on the basis of his observation that bank deposits constituted the undisclosed income of the assessee, we are unable to concur with the same. Assessee had made cash deposits in his savings bank account in Punjab Sind Bank and also received interest income on the said deposits during the year, but had not filed his return of income, therefore, the said facts were sufficient for the A.O to form a bona fide believe that the income of the assessee chargeable to tax had escaped assessment within the meaning of Section 147 of the Act. Addition u/s 69 - As the assessee had neither filed any explanation as regards the cash deposits made in his bank account during the year under consideration; or as regards the interest income earned on the same, therefore, find no reason to intervene with the well-reasoned view taken by the lower authorities who had rightly held the same as his unexplained investment u/s. 69 - Decided against assessee.
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2023 (10) TMI 1030
Addition on account of reversing amount - assessee has reversed bills on account of uncertainty of receiving of sale proceeds - HELD THAT:- There is no relevance and compulsion on the assessee to put any effort for recovery of the debt post amendment under the relevant provisions of the Act after 01.04.1989. All that is required is to actually write off the debt in the books of account and show that the same was considered in the income of the earlier years. As the assessee has fulfilled both the conditions, therefore, the ratio laid down in the case of TRF Limited [ 2010 (2) TMI 211 - SUPREME COURT] squarely applies. No interference is called for in the findings of the ld. CIT(A). Ground No. 1 of the Revenue is, accordingly, dismissed. Addition on account of additional Sales Tax - HELD THAT:- We find that the additional tax was paid as liability by the assessee for additional tax payment raised by the Sales Tax Department, which was discharged during the year under consideration. Since the deletion of the addition is after verification of evidences by the ld. CIT(A), we do not find any error or infirmity in the findings of the ld. CIT(A). Expenses towards business promotion - AO observed that these expenses were claimed to be paid through credit cards of the Directors thus element of personal expenses cannot be ruled out - CIT(A) Restricted the disallowance to 20% - HELD THAT:- Since the assessee is a limited company, there cannot be any personal element in the expenses claimed by it. If the AO is of the opinion that certain expenses may have the color of personal expenses/benefits extended to the directors of the company, then the same should be treated as perquisites in the hands of the directors but the expenses cannot be disallowed as having personal element in it. Secondly, it is difficult to ascertain which vouchers or bills pertained to personal expenses and which pertained to business promotion, as the directors of the company were entertaining customers during the Common Wealth Games. We do not find any merit in the disallowance made by the AO and restriction done by the ld. CIT(A) on the given facts. AO is directed to delete the entire addition. Additional professional charges - CIT(A) deleted the addition as found that the said party provided services of electrical engineers, draughtsman - HELD THAT:- If the AO had any doubt in his mind, he could have very well brought on record some adverse material by conducting enquiry u/s 133(6) of the Act. In the absence of any adverse material brought on record, we decline to interfere with the findings of the ld. CIT(A). Unexplained purchases - CIT(A) deleted the addition - HELD THAT:- It is an undisputed fact that the entire Common Wealth Games was surrounded by controversy/complaints and legal actions. A careful reading of the ld. CIT(A) shows that the ld. CIT(A) has factually verified the evidences in respect of each and every party and after verification of the evidences, the ld. CIT(A) has deleted the addition. Before us, the ld. DR could not point out any factual error in the findings of the ld. CIT(A) and since the ld. CIT(A) has deleted the addition on appreciation of evidences, we do not find it necessary to interfere with the findings of the ld. CIT(A). Scrap sales of carpet and fence - AO was of the opinion that scrap value of the item must have been 30% to 40% approx of the purchase price and, accordingly, estimated the scrap value and made the addition - HELD THAT:- It is true that the scrap value of the impugned items have been shown on lower side, but it is equally true that what happened during the construction of the Common Wealth Village and Sports Complex, the Government agencies were after the Organizing Committee and the participating contractors to which included CBI enquiry and other judicial enquiries. We are of the considered view that considering the distress sales surrounded by controversies, it is possible that the carpets must have been sold at throw-away prices. Considering the nature of event, we are inclined to accept the version of the ld. counsel for the assessee. The Assessing Officer is directed to delete the addition on account of scarp sales of carpets. Scrap sales of fence - No logic in the addition made by the Assessing Officer. The assessee itself has shown scrap value at Rs. 1,03,35,511/- deducting the estimated sales value of Rs. 73,27,511/-. We do not find any sense in making the addition of the balance amount of Rs. 62,79,183/- when the assessee itself has shown scrap value at Rs. 1,03,35,511/-.
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2023 (10) TMI 1029
Addition u/s 68 - cash deposits in the Appellant s bank account unexplained - onus to prove - assessee contented cash deposits were made out of gross sale proceeds from both aqua culture and agriculture and also the gross proceeds from the sale of land besides accumulated saving for the past several years - HELD THAT:- The assessee explained before the AO that he received 1/4th share from sale of ancestral property and received Rs. 2,30,628/- which was deposited in his bank account and the balance cash in bank was the income received on sale of fish. Now, the onus is on the assessee to substantiate his claim with proper evidence. However, the assessee has not furnished any details of such accumulated savings deposited in his account either before the lower authorities or before us. Hence, in the absence of any evidence to establish his contention, no reason to interfere with the order passed by the CIT(A) and accordingly dismiss the grounds raised by the assessee.
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2023 (10) TMI 1028
Unexplained cash credit u/s. 68 - assessee was not authorized to accept Specified Bank Notes during demonetization period as observed in the assessment order - HELD THAT:- It is an admitted fact that the cash deposit is on account of sale of petrol, diesel and other petroleum products. These sales have been duly recorded in the books of accounts and appropriate VAT taxes also collected by the assessee. The Manager of the assessee company also filed a Notarized Affidavit accepting the above facts during the course of assessment proceedings. Thus it is clearly established that the Ld. A.O. on one side accepting the source of cash deposit and on the other side, he is making the cash deposit as unexplained cash credit which is self-contradictory. The Assessing Officer following the Circular dated 08-11-2016, which is not applicable since Para (e) of the Circular deals with the cases of purchase of petrol, diesel etc., and not to sale of petrol, diesel by accepting Specified Bank Notes. Thus the invocation of Section 68 is invalid in law. Assessee filed complete details of Purchase register, Sales register, Cash Book, Bank statement, Month-wise details of purchase and sales, Copies of VAT returns etc. A.O. is not able to find any defect in the books of accounts, except general statements made in the assessment order. Though the A.O. has doubted the sales made during the year, he is not doubted the purchases made or stock maintained by the assessee during the year. Further the assessee also demonstrated the fluctuations in the sales during the entire period and there is no drastic increase in sales during the period of demonetization. It is further noticed that it is the month of May 2016 sales reported at 84.81 lacs. Similarly, in the month of November 2016 (demonetization period), the sales is reported at 1.04 crores which is not found to be drastic higher figure - Decided in favour of assessee.
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2023 (10) TMI 1027
Addition u/s 69 - cash deposited towards repayment of home loan being 75% of total cash deposit - AR submitted that the CIT(A) uphold the addition by merely mentioning that what has been stated by the Assessing Officer in the assessment order and simply by accepting the same in 2-3 lines - HELD THAT:- As undisputedly the impugned cash deposit was made by the assessee on her own and on behalf of her wife to their joint home loan account as repayment of home loan. Thus it can be presumed that assessee has not made any investment for acquiring any movable or immovable property. Therefore, the allegation of unexplained investment cannot be made against the assessee invoking the charging section u/s 69. From the relevant part of assessment order, we note that the AO has made addition by mentioning charging section as 69 and CIT(A) has also upheld the same without any change or without addressing the grievance of the assessee in this regard. Thus reach to a logical conclusion that the complete cash book statement clearly explains the source of cash deposit to the bank account of assessee, wherein the assessee has not only included cash receipts as salary and capital withdrawal from two partnership firms and a cash salary and has also reduced the amount of drawings for household expenses. The copy of return of income of wife of assessee and father of assessee co-jointly established that the other family members of assessee are also earning and contributing towards household expenses. Thus understanding the source of cash deposit during demonetization to the bank account of assessee is properly explained by the assessee by way of self speaking documentary evidence and explanation. Secondly, the AO has made addition u/s 69 of the Act which pertains to unexplained investments, whereas the assessee has not made any investment either in movable or any immovable property during the relevant period by way of using cash amount. CIT(A) has upheld the part addition without mentioning any charging section and impliedly adopting section 69 of the Act in the line of assessment order. Respectfully following the case of Sarika Jain [ 2017 (7) TMI 870 - ALLAHABAD HIGH COURT] , thus no hesitation to hold that the addition made by the AO by mentioning incorrect and irrelevant charging section is not sustainable and valid being bad in law. Decided in favour of assessee.
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2023 (10) TMI 1026
TP Adjustment - MAM Selection - HELD THAT:- By respectfully following the above order of the Co-ordinate Bench for AY 2012-13 [ 2022 (12) TMI 1072 - ITAT DELHI ] we hold that the RPM is the most appropriate method to determine the arms length price of International transaction undertaken be the assessee. Accordingly, we direct the AO/TPO to accept the RPM as most appropriate method and decided the issue accordingly. Inclusion of certain Companies in the final set of comparable companies - As assessee submitted that the inclusion of certain companies in the final set of comparable companies ignoring the fact that those companies fail the related party transaction filter of 25% and prayed for remanding the issue to the TPO for de-novo consideration. DR has not objected for remanding the said issues to TPO for denovo consideration. Therefore, we deem it fit to remand the issue involved to the file of the TPO for de-novo consideration on hearing the assessee. Appeal filed by the Assessee is partly allowed for statistical purposed.
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2023 (10) TMI 1025
Assessment u/s 153A - Income from Trading - difference between the receipts and payments as the undisclosed income of the assessee - AO has also determined the unaccounted investment - HELD THAT:- AO having determined the unaccounted investment has also held that since the unaccounted receipts was the source of making above investments has already been brought to tax, no separate addition is required to be made, thus interpolating the unaccounted income with unaccounted expenditure. Income from Commission - AO held that the assessee has acted as a facilitator for providing accommodation entries and commission as per prevailing market rate @ 2% of the amount has been determined as the undisclosed income of the assessee - CIT(A has confirmed the addition made by the AO to the tune of the peak credits and deleted the addition equivalent to the amount which is the rotation of the monies - addition made of the difference between the receipts and payments was re-determined by the ld. CIT(A) resorting to the peak theory and determined the undisclosed amount to Rs. 19.86 Cr. - HELD THAT:- We find that the ld. CIT(A) has made addition of expenditure incurred by the assessee reflected in the same excel sheets wherein the receipts and payments have been found out. The excel sheets reflect receipts, payments and expenditure. The expenditure as found in the excel sheets as determined by the Assessing Officer and allowed by the Assessing Officer We find that the investment in E-24 has been made in the name of Sh. Sanjay Gupta and the property has been duly registered in his name. The investment in property cannot be said to be a part of the expenditure incurred for earning of the income. Since, Sh. Sanjay Gupta is the owner of the property and all the documents are in the position of the revenue authorities, the same should have been rightly taxed in the hands of Sh. Sanjay Gupta. We make it clear that this amount of investment in E-24 cannot be considered as application of income or expenditure incurred for earning the unaccounted income. Also been informed by the ld. AR that the amounts allegedly earned by different clients has also been taxed in the hands of different assessees. Expenditure incurred at serial no. 2 3 as depicted in the table above pertains to Renovation of Flat at Common Wealth Games Village which is an asset of the assessee company and Expenses made in Mumbai Kolkata Offices are can be considered as unaccounted expenses made out of the unaccounted income earned and determined. Similarly, the payments made to Omega Securities, OFT/Option Fintech, miscellaneous office and personal, salary payments and payments made to Sh. Vinay Jain which are the part of receipts of Rs. 157,48,09,680/- and payment of Rs. 144,00,97,270/- stands interpolated in the determination of unaccounted income of Rs. 19,86,12,311/-. No separate addition on account of expenditure such as office maintenance, software expenses, salary payments made for earning of unaccounted income of Rs. 19,86,12,311/- is required to be made on account of expenditure. The order of the Assessing Officer is affirmed on this issue. All assessee arguments are found to be against the facts on record and the panchnama drawn. The panchnama drawn on the date of search clearly establish the seizure of material. This issue cannot be raised at this point in time before us. Hence, the technical grounds raised by the assessee are hereby dismissed. Commission Income earned by the assessee for facilitating normal accommodation entries - We find that these are the entries given by the assessee to various parties by utilizing the services of different broker as mentioned in the seized material on account of short term capital gains which do not form part of the receipts and payments mentioned above which have been already considered separately. Hence, we hold that the commission charged by the Assessing Officer is not on ad-hoc basis but taking into consideration the prevailing market trend in providing such accommodation entries. Keeping in view the facts, we hereby affirm the order of the ld. CIT(A).
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2023 (10) TMI 1024
Validity of reopening of assessment - information received from the Investigation Wing - independent application of mind or borrowed satisfaction - CIT(A) deleted addition - HELD THAT:- Though, the assessee has filed his return of income voluntarily disclosing the transaction appearing in the bank account, however, being completely oblivious of the return of income filed by the assessee, AO has proceeded to reopen the assessment merely relying upon the information received from the Investigation Wing. The very fact that the AO has proceeded to reopen the assessment assuming that the assessee has not filed his return of income for the assessment year under dispute, clearly reveals non-application of mind by the AO to the facts and materials on record. On perusal of return of income and the computation of income filed by the assessee, it is evident that the assessee has considered the income derived from sale of property credited to the bank account. That being the factual position emerging on record, in our view, reopening of assessment appears to be without proper application of mind and based on conjectures and surmises. There is no live link between the materials available on record and the formation of belief. Therefore FAA was justified in holding the reopening of assessment u/s 147 to be invalid. On merits also, the assessee has made out a strong case. As rightly observed assessee furnished the necessary details explaining the source of the credit entries. Without properly examining the materials brought on record, the Assessing Officer has made the addition. Since, the assessee has explained the source of credit entries, in our view, Commissioner (Appeals) was justified in deleting the addition. Accordingly, we uphold the decision of Commissioner (Appeals) by dismissing the grounds of appeal.
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2023 (10) TMI 1023
Characterization of the subsidy received - Revenue or capital receipt - HELD THAT:- We have thoughtfully considered the aforesaid issue and find that the same is squarely covered by the order passed by the Tribunal in the assessee s own case for A.Y.2010-11 [ 2018 (8) TMI 2132 - ITAT RAIPUR] , wherein following its earlier order for the immediately preceding year [ 2015 (11) TMI 1865 - ITAT RAIPUR] , the Tribunal had approved the order of the CIT(Appeals) who had vacated the addition that was made by the A.O by recharacterizing the capital subsidy received by the assessee company as a revenue receipt. No infirmity in the view taken by the CIT(Appeals), who had rightly vacated the addition of Rs. 3,09,58,737/- made by the A.O. by treating the subsidy as a production incentive and not a capital subsidy, we uphold the same. Deduction u/s. 80IA - 7th year of claim of deduction - As observed by the A.O. that the power generation unit of the assessee company had sold electricity to outside parties as well as transferred the electricity to its other divisions for captive consumption - HELD THAT:- CIT(Appeals) observed that the issue involved in the present appeal was squarely covered by the order of the Tribunal in the assessee s own case for [ 2015 (11) TMI 1865 - ITAT RAIPUR] . Also, the CIT(Appeals) had drawn support from the judgment of Godavari Power Ispat Ltd. [ 2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] wherein involving identical facts, the Hon ble High Court had held that the market rate of power will be the rate of power available in the open market, namely the price charged by the Board. As the issue involved in the present appeal before us remains the same as was there in the aforementioned judgment/order, therefore, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the disallowance of the assessee s claim for deduction u/s. 80IA. Disallowance u/s. 14A r.w.r 8D - Mandation of recording satisfaction - HELD THAT:- We concur with the view taken by the CIT(Appeals) that in the absence of any dissatisfaction having been recorded by the A.O as regards the claim of the assessee that no part of expenditure claimed as deduction was incurred in relation to earning of exempt income, no disallowance u/s. 14A could have been validly made in its hands. In our considered view, the A.O. had not recorded any satisfaction as to why the assessee s claim that no part of the expenditure pertaining to its investment could be attributed to earning of the exempt dividend income by the assessee. Apropos the amendment in 14A vide the Finance Act, 2022, we concur with the view taken by the CIT(Appeals) who, after relying upon the judgment of Era Infrastructure (I) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] had observed that the said amendment whereby the requirement of actual earning of exempt income had been dispensed with for computing disallowance u/s. 14A r.w.s. 8D was applicable prospectively w.e.f. 01.04.2022 onwards, and thus, would not have any bearing in the case of the present assessee before us. We, thus, in terms of our aforesaid observations, find no infirmity in the view taken by the CIT(Appeals), who had rightly vacated the disallowance made by the A.O u/s. 14A r.w.r. 8D, and uphold the same.
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2023 (10) TMI 1022
Condonation of delay filling appeal - delay by 1,200 days - HELD THAT:- We find that substantial part of the delay is covered by COVID-19 period and whatever remaining period was there that is on account of non-supplying of copy of the appellate order to the assessee by the first appellate authority despite repeated communications. In our opinion, the delay in filing the appeal cannot be attributed to the assessee as the assessee was not having the copy of appellate order. Besides, the assessee has not gained anything in any manner whatsoever by delayed filing of the appeal. In our opinion, the substantial delay was for COVID pandemic and other technicalities and therefore the assessee needs to be given a fair chance to represent its case on merit. Considering these facts, we are inclined to condone the delay and admit the appeal for adjudication. Estimation of income - Bogus purchases - AO after receiving information from DDIT (Inv.), Kolkata that Sri Sanjiw Kumar Singh is providing accommodation entries and the assessee is the beneficiary of the same - HELD THAT:- As in the case of bogus purchases the entire purchases cannot be added to the income and only profit element embedded in the said purchases can be added. In the similar type of cases, the various Coordinate Benches have held that where the assessee has obtained bogus bills of purchases and the purchases were in fact made from the other suppliers i.e grey market thereby making the savings in respect of VAT and other additional expenses and therefore, the assessee earns more than the normal profits. In the present case the assessee has duly furnished bills and vouchers and the material was consumed in the manufacturing process. Since the assessee has failed to offer any cogent and convincing reply about the goods being received by the assessee with necessary evidences, we deem it fit to make a reasonable disallowance of 5% on account of profit element. Appeal filed by the assessee is partly allowed.
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2023 (10) TMI 1021
Additions towards loss on transactions of Future/option through National Stock Exchange - Additions towards Purchase of forward transactions of Future/option through National Stock Exchange without considering the sale of future/option - HELD THAT:- We find that the assessee has done some transactions of purchases and sales of future/option. The modus operandi of the future/option is such that whenever the purchases are made, the same are squared off by making the sales as is apparent from the contract notes filed by the assessee before us. We have also perused the profit and loss account filed by the assessee before us and find that the assessee has charged to the profit and loss account, the loss from trading of shares which is in agreement with the contract notes filed by the assessee. While filing the return, we note that the assessee has not claimed this loss and therefore, there is no question of disallowance of loss or addition of loss when the same is not claimed in the computation of income. AO has wrongly appreciated the facts of the case which is also in appellate proceedings by Ld. CIT(A) - direct the AO to delete the addition. Therefore, ground no. 1 raised by the assessee is allowed. Interest on unsecured loans disallowed - CIT(A) simply affirmed this addition on the same ground that the loan was taken for the personal purposes as decided by AO - HELD THAT:- The observations of the AO that the interest paid on the unsecured loan is personal in nature is without any substantive finding whereas on the other hand the assessee has vehemently argued before us by referring to the balance sheet and profit and loss account that the said loan was in fact taken for the purpose of business and interest was incurred wholly and exclusively for the purpose of business of the assessee. We find merit in the contentions of the assessee that the loan is taken only for the purpose of business and not for any personal objectives. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition.
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2023 (10) TMI 1020
Estimation of income - bogus purchases - AO applied gross profit rate of 7.99% on the purchases thereby making an addition - HELD THAT:- We find that the assessee has executed a Government projects qua school buildings during the year. We note that the copy of the certificate of completion of the said works from the Executive Engineer, Social Sector, PW Directorate and PW(CB) Directorate were furnished certifying that the material purchased has been used in the construction of these buildings. We also note that the assessee has filed all the evidences before the AO as well as before CIT(A) and both the authorities below have failed to carry out any enquiry or investigation into the bills/evidences filed by the assessee and simply relied on the report of the Investigation wing. Order passed by Ld. CIT(A) confirming the addition without any substantive basis is wrong and cannot be sustained. Accordingly, we direct the AO to delete the said addition by setting aside the order passed by Ld. CIT(A). Assessee appeal allowed.
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2023 (10) TMI 1019
Unexplained investments u/s 69B - assessee is dealing in liquor which is an excisable item and passes through various checks and scrutinies by the Excise Department - HELD THAT:- Assessee has maintained stock register recording therein opening stocks, purchases, sales and closing stocks including item-wise identification of each brand. Similarly, the assessee has maintained the excise register also. Both these were produced before us and were test checked by us. We observe from the assessment order that the AO while taking a few items out of the total items calculated the suppression in the value of stock and calculated the understatement of closing stock at 50% of the suppressed stock value without any basis and without any reasoning. Addition made by the AO is purely based upon conjectures and surmises as the AO has failed to taken note of the evidences filed by the assessee before the AO in the form of purchase bills, stock register etc. and also the fact that the wastage and breakage sustained by the assessee in the ordinary course of business. Under these circumstances, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Thus, ground no. 1 raised by the assessee is allowed. Addition of publicity expenses - HELD THAT:- AO has cited the only reason for disallowance that the assessee has failed to prove that these are only and exclusively for the purpose of business of the assessee whereas on the other hand the assessee is in the business of liquor trading and has received the reimbursement of publicity expenses from the suppliers of liquor after the same were incurred by the assessee. Therefore, to say that these expenses were not exclusively incurred for the purpose of business of the assessee would be contrary to the facts of the case. In our opinion, the AO has wrongly made the addition which has also been sustained by Ld. CIT(A). Assessee appeal allowed.
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2023 (10) TMI 1018
Addition u/s 69A - Unexplained cash seized in search seizure operation - HELD THAT:- As regards the rejection of claim of cash from assessee s proprietorship concern, we find that books have not been rejected. It has also not been proved that cash withdrawn is also put to any other use. In such circumstances, there is no reason to reject the source of cash in this regard. See KULWANT RAI. [ 2007 (2) TMI 185 - DELHI HIGH COURT] . Amount belonging to Narender Kumar Gupta and Sons HUF we note that 44AD return has been submitted which has been accepted. The income, therefore, therein has been accepted. There is no reason why the cash due of the income disclosed u/s 44AD should not be accepted. It is settled law that books of account vouchers are not required in 44AD return. Hence, adverse inference cannot be taken that cash book vouchers have not been maintained. The same income cannot be taxed twice once in the hands of HUF and once again in the hands of the assessee. We set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2023 (10) TMI 1017
Expenses/income for relevant assessment year - Principal of tax jurisprudence - income from other sources and the expenses disallowed by observing that the transaction was complete in FY 2006-07 and therefore the inventory stock was to be amended accordingly in that year itself. HELD THAT:- As entries in the books of accounts are not determinative of true nature of transaction and nature of income as per preposition rendered in the case of Kedarnath Jute Mfg. Co. Ltd. [ 1971 (8) TMI 10 - SUPREME COURT] It is also a well established and accepted principal of tax jurisprudence that the right income should be taxed in the right hands, under right head of income in the right year of assessment. Undisputedly, in the present case the transaction of sale of property was undertaken by the assessee during FY 2006-07 pertaining to AY 2007-08 but the assessee did not recorded the entry in the books of accounts and continuously shown the property in the balance sheet till AY 2012-13. Hence, the books of accounts of assessee were not revealing correct factual position of properties owned by assessee till 2012-13. As noted that as per assessee during assessment proceedings of AY 2012-13 AO issued notice u/s. 133(6) to the purchaser and in response to said notice the purchaser company submitted that the company has not purchase any property from the above party (the assessee) during the financial year 2011-12 . Copy of sale deed available at pages 108 to 155 shows that the assessee company sold the land on 21.03.2007 which falls within the ambit of AY 2007-08 and as per recital in the sale deed the assessee had received sale consideration also at the time of execution and registration of sale deed on 21.03.2007. We note that despite the fact that during AY 2012-13 no transaction of sale of property/land was undertaken by the assessee but the assessee recorded book entries pertaining to the sale of property/land transaction, which was in fact, undertaken during AY 2007-08, in the books and financial statements for AY 2012- 13 by passing books entries only. As following the principal of tax jurisprudence that the right income should be taxed in the right hands, under right head of income in the right year of assessment, we direct the Assessing Officer to tax the income/profit accrued to the assessee from sale of land/property in AY 2007-08. Grounds of assessee are partly allowed.
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2023 (10) TMI 1016
Penalty u/s 271AAA - Income surrendered in search seizure operation - Unaccounted income of group which was voluntarily offered as additional income - AO alleged assessee has shown the surrendered income as income from other sources - CIT(A) has deleted the same on the basis of fact that in the quantum appeal, the Tribunal in appea has deleted the addition - HELD THAT:- As in the quantum appeal, a co-ordinate Bench has giving a finding that the amounts disclosed during the search were part of the cash sales and included in the books of accounts. The same substantiates the manner of earning alleged undisclosed income and thus Ld. CIT(A) was not in error deleting the penalty imposed u/s 271AAA. The ground raised in the appeal have no substance. The appeal of Revenue is dismissed.
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2023 (10) TMI 1015
Disallowance u/s 40(a) - tds u/s 195 - fee for technical services as liable to be taxable in India as income deemed to have accrued/arisen in India - HELD THAT:- As decided in [ 2023 (4) TMI 1260 - ITAT DELHI] assessee receives the orders from parties through agents electronically and the goods are dispatched directly to the party with a copy invoice to agents. The role of the agent is for procuring orders/RFQ and getting the payment released from party. When the goods are exported and the payments are released by the party, the agents raise invoice in respect of commission giving complete details of sale invoice, the amount received and its commission. No information in the nature of technical, management or consultancy services had been provided by any of the agent. The assessee had no PE in USA. Both the agents are tax residents of USA and had no business connection in India nor they have any PE in India. None of the agents is related to any of the Director of the company directly or indirectly. All the payments have been made in US$ through proper banking channels. None of the ingredient contained in the definition of Fees for technical services as per Explanation 2 to section 9(1)(vii) and/or in Article 12(4) of the India-USA DTAA is found in the impugned payment of commission by the assessee to AM and ETCS. No managerial services or technical services are involved since the non-resident parties (AM and ETCS) were merely commission agents appointed to procure purchase orders for assessee s products. Further, the impugned payment is not in relation to any services which make available any technical skill or know-how. Nothing of the sort was involved in the assessee s case. In Mahindra and Mahindra Ltd [ 2009 (4) TMI 207 - ITAT BOMBAY-H] it has been held that where the payer only obtained the benefit from the services, but did not get any technical knowledge experience or skill in its possession for future use, it cannot be said that technical know-how was made available. Thus the impugned disallowance u/s 40(a)(i) of the Act made by the Ld. AO and confirmed by the Ld. CIT(A) is not sustainable - Decided in favour of assessee.
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2023 (10) TMI 1014
Addition of sundry creditor - whether CIT(A) erred deleting addition merely accepting the contention of the assessee without conducting independent enquiry? - HELD THAT:- CIT(A) rightly observed that the assessee had presented credible evidence regarding the source of loan by filing copies of PAN, ITR, bank statement and ledger of creditors, therefore, the identity and creditworthiness could not be alleged as doubtful. Regarding Amit Gaur (HUF) there was bank balance and current year s income similar in the case of creditors Surender Kr. Garg (HUF) there was sufficient balance in his account. Likewise, in the case of Smt Indravati Devi, Nisha Agarwal, Ruby Goel and Santosh Goel the loans were advance mainly on account of interest on old loans paid by the assessee and the same interest was re-invested with the assessee for earning interest income. Therefore, factual finding recorded by the ld CIT(A) do not require any interference as the reinvestment of interest received by creditors goes to show that the creditworthiness of the creditors is not in doubt and same cannot be doubted without any adverse positive material. CIT(A) rightly noted that it is not the case of AO that the old balances standing in the names of the creditors were money belonging to the assessee. Ground No. 1 of revenue is dismissed. Unexplained interest expenses paid to sundry creditors - HELD THAT:- CIT(A) has granted relief to the assessee by observing that the AO has no facts in record to show that opening loans from creditors were bogus therefore, the addition on account of new loan has also been deleted. Consequently, the disallowance of interest payment cannot be sustained. We are unable to see any valid reason to interfere with the conclusion drawn by the ld CIT(A) in deleting the interest payment to the creditors. Rejection of books of accounts - Estimation of GP - HELD THAT:- We note that the AO mentioned major expenses like electricity, job work and bank charges have increased. CIT(A) further noted that if there was doubt in his mind of AO regarding such expenses then he should have make some basic enquiry before resorting to drastic step of rejecting the books of account. The ld CIT(A) further observed that unless the AO on facts showing incorrect disclosure of receipts and bogus claim of expenses or inconsistencies in accounts maintained by the assessee then rejection of books of account cannot be held sustainable and valid. With these observations the ld CIT(A) deleted the addition made by the AO on account of GP rate. In our considered opinion the AO rejected the books of account of assessee without having any valid basis and the conclusion drawn by the AO so set aside by the CIT(A) on the strength well accepted principles of tax jurisprudence pertaining to the rejection of books of account. Thus, we are unable to see any valid reason to interfere with the finding arrived by the ld CIT(A) and hence we uphold the same. Appeal of revenue is dismissed.
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2023 (10) TMI 1013
Beneficial provisions of the India-Mauritius DTAA in respect of STCG - carry forward the LTCL as per section 74 of the Act - Capital gains derived by the tax resident of Mauritius in India - tax treatment adopted in respect of capital gains and losses from transfer/ alienation of Indian securities - HELD THAT:- As assessee is a company incorporated in and a tax resident of Mauritius engaged in investment activities in India through the Foreign Direct Investment Route or through subsidiaries. It holds a valid Tax Residency Certificate (TRC) issued by the Mauritian Tax Authorities. Short term capital loss can be carried forward or adjusted intra head but the long term capital loss can be carried forward or intra head adjusted cannot be made against the short term capital loss or gain. Therefore, the legislature has kept this difference in carry forward as well as intra head adjustment separate for LTCG/LTCL and STCG/STCL. Perusal of Section 70 to Section 74, it can be seen that the Legislature itself has recognized LTCG/LTCL and STCG/ STCL to be two distinct sources owing to computational dissimilarities. Accordingly, the Assessee, by virtue of the provisions of section 90(2) of the Act is eligible to claim the beneficial provisions of the Treaty in respect of STCG and with regard to LTCL, the assessee has only option to apply the provisions of section 74 of the Act, accordingly chose to carry forward LTCL. In this regard, for the proposition that a taxpayer is able to choose the provisions of the Act or those of the Treaty for different sources of income, reliance is placed on decision of Bangalore ITAT in case of IBM World Trade Corpn. [ 2020 (10) TMI 367 - KARNATAKA HIGH COURT] - In this case, it is held that in case of multiple sources of income an Assessee is entitled to adopt provisions of the Act for one source of Income while applying the provisions of DTAA for the other source. It is clear that source of income has a direct nexus with the stream out of which the income springs to the assessee. The heads of income are provided to aggregate similar incomes derived from different sources for deduction and taxation purposes. In the head of income Capital Gains , the short-term and long-term assets are different sources of income, but each transaction constituting the short-term and long-term assets are different sources of income. Accordingly, gains / losses arising from different transactions are distinct transactions and a separate source of income; accordingly, STCG / STCL and LTCG / LTCL are distinct and separate streams of income arising to an assessee. Section 90(2) of the Act provides the provisions of the Act or the provisions of the Treaty, whichever are beneficial, shall apply to the assessee. As held by the Bangalore ITAT and affirmed by the Hon'ble Karnataka High Court in case of IBM World Trade Corporation (supra), the provisions of section 90(2) of the Act will apply to each stream of income and not the head of income. Respectfully, following the decisions in case of IBM World Trade Corporation(supra), Dimension Data Asia Pacific Pte. Ltd. ( 2018 (12) TMI 57 - ITAT MUMBAI ) and Montgomery Emerging Markets Fund ( 2006 (3) TMI 202 - ITAT BOMBAY-H ), the Assessee has claimed beneficial provisions of the India - Mauritius DTAA in respect of STCG and allowed to carry forward the LTCL as per section 74 of the Act. Allow the Assessee's claim for carry forward of LTCL - Decided in favour of assessee.
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2023 (10) TMI 1012
Disallowances u/s. 14A r.w.r.8D - Assessee has earned dividend income from mutual funds, which is exempt from tax however, did not made any suomotu disallowance of expenditure relatable to exempt income - HELD THAT:- We find the issue of disallowance u/s. 14A of the Act r.w.r.8D of the IT Rules, 1962, is covered in favour of the assessee by the decision of the ITAT Chennai Benches in the assessee s own case [ 2021 (9) TMI 1013 - ITAT CHENNAI] for AY 2013-14, wherein following the decision of Marg Ltd. [ 2020 (10) TMI 102 - MADRAS HIGH COURT] held that disallowances contemplated u/s. 14A of the Act, cannot exceed exempt income, and thus, directed the AO to restrict disallowance to the extent of exempt income. Thus we direct the AO to restrict disallowance u/s. 14A of the Act, to the extent of exempt income earned for the impugned assessment year. Depreciation on capital subsidy - HELD THAT:- We find that the Tribunal had considered an identical issue in assessee s own case for assessment year 2006-07 [ 2019 (2) TMI 1962 - ITAT CHENNAI] and after considering nature of subsidy, has allowed claim of the assessee by observing that for earlier years, the CIT(A) has allowed claim of the assessee and the AO has accepted decision of the CIT(A) and deleted additions, while passing order giving effect to the order of the CIT(A). Therefore, consistent with the view taken by the coordinate Bench, we direct the AO to delete additions made towards disallowance of depreciation on capital subsidy received from SIPCOT. Excess depreciation claimed on UPS, Printers Scanners under the block computers - assessee has claimed depreciation on printers scanners on the ground that printers scanners and also UPS is an integral part of computer and computer software - AO had restricted depreciation claimed on printers scanners to 15% on the ground that these are only office equipments - HELD THAT:- We find that an identical issue had been considered by the Tribunal in the assessee s own case for AYs 2009-10 to 2011-12 [ 2017 (4) TMI 1193 - ITAT CHENNAI] where, the Tribunal by following the decision of BSES Yamuna Powers Ltd [ 2010 (8) TMI 58 - DELHI HIGH COURT] held that computer accessories and peripherals such as printers scanners and UPS forms an integral part of computer system and eligible for higher rate of 60% depreciation. Therefore, we are of the considered view that the assessee is entitled for higher rate of 60% depreciation on UPS, printers scanners, and thus, we direct the AO to delete disallowance of excess depreciation on UPS, printers scanners. Disallowance u/s. 43B(c) - performance incentives paid to employees - HELD THAT:- We find that an identical issue had been considered by the Tribunal in the assessee s own case for AYs 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI] , 2014-15 [ 2022 (3) TMI 1558 - ITAT CHENNAI] , 2015-16 [ 2021 (9) TMI 1070 - ITAT CHENNAI] and 2016-17 [ 2022 (1) TMI 1030 - ITAT CHENNAI] where, it has been held that performance bonus paid to employees is in the nature of bonus which comes under the provisions of Sec.36(1)(ii) of the Act, and if such payment is not remitted on or before due date, then, same is covered u/s. 43B(c) of the Act - we are inclined to uphold the findings of the DRP and reject the ground taken by the assessee. Fresh claim of deduction towards foreign exchange loss on restatement of loans utilized for purchase of domestic assets - HELD THAT:- As only legitimate tax payable by the assessee needs to be collected. Further, even in a case where the assessee has failed to make a claim towards any expenditure or allowance, it is the duty of the AO to compute correct taxable income after allowing deductible losses/expenses. Since, the assessee claims that foreign exchange loss on restatement of loans availed for purchase of domestic assets is allowable deduction, in our considered view, the AO ought to have admitted claim made by the assessee towards deduction for expenditure and decide the issue in accordance with law. Therefore, we admit the fresh claim made by the assessee and restore the issue to the file of the Assessing Officer. We, also direct the AO to verify the issue with reference to relevant materials that may be filed by the assessee and decide the issue in accordance with law. Nature of receipt - Investment Promotion Subsidy ( IPS ) received from Government of Tamil Nad u - HELD THAT:- In the present case, IPS Scheme given by the Government of Tamil Nadu aims reimbursing cost of infrastructure of setting up/expansion of manufacturing facility in Mega Automobile Industry. If you go by the Scheme, it aims to reimburse cost incurred by an entity to set up a manufacturing facility which consists of various forms of assets. Although the Scheme does not specify any particular asset on which reimbursement is granted, but it aims to provide reimbursement towards total cost incurred by an entity for setting up/expansion of manufacturing facility - subsidy given to an entity in any form including reimbursement by giving refund of Output VAT is to share/reimburse part of cost incurred by an entity in setting up a plant or facility. Therefore, we are of the considered view that there is not merit in the arguments taken by the Ld. Counsel for the assessee that the IPS is not given to offset cost of any particular asset and is merely issued with an objective of accelerating the industrial development. Although, the SIPCOT has issued final eligibility certificate quantifying the amount of investment and subsidy therein, no details are forthcoming from said certificate. Further, in order to ascertain the nature of investment and to consider the exact amount of investment made in any asset or fixed asset, these details are necessarily to be examined. The issue needs to go back to the file of the AO for further verification and thus, we set aside the issue to the file of the AO and direct the AO to re-examine the claim of the assessee in light of provisions of Explanation-10 to Sec.43(1) of the Act, provided thereunder and also by considering IPS Scheme given by the Government of Tamil Nadu and other relevant evidences to ascertain whether the subsidy given by the State Government is to offset portion of the cost of an asset acquired by the assessee or is merely issued with an objective of accelerating the industrial development. Amounts received under the Focus Market Scheme - capital OR revenue receipt - Whether to be excluded from the total income? - HELD THAT:- We find that an identical issue had been considered by the Tribunal in the assessee s own case for AY 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI] in light of subsidiary received from Government of India, Ministry of Commerce Industry under the Focus Market Scheme, and held that said subsidy is Revenue in nature which is taxable as income of the assessee. Thus subsidy received from Government of India under the Focus Market Scheme is Revenue in nature and the same was given to offset higher cost of freight and other disabilities of exporters to be more competitive in exports to certain regions. Thus, same cannot be at any stretch of imagination considered as capital in nature. Additions towards brand adjustment - HELD THAT:- We find that an identical issue had been considered by the Tribunal in the assessee s own case for AY 2013-14 [ 2021 (9) TMI 1013 - ITAT CHENNAI] decided the issue in favour of the assessee wherein as held TPO as well as learned DRP were erred in making transfer pricing adjustments towards brand services by adopting Spearman s Rank Correlation method and concluded that there is positive accretion between brand value and market capitalization of HMC Korea and hence, we direct the Assessing Officer/TPO to delete transfer pricing adjustment made towards brand development services. TP adjustment - international transactions of the assessee with its AE - assessee is engaged in the business of manufacture and sale of passenger vehicles in domestic as well as export market. The sourcing, purchasing, manufacturing and warehousing facility of the assessee is common for cars manufactured for all geographies - HELD THAT:- We find that an identical issue had been considered by the Tribunal in the assessee s own case in light of TP adjustment carried out by the TPO by considering total margins of the assessee including margins earned from domestic transactions and after considering relevant facts held that the whole issue of TP adjustment in respect of import of goods pertains to domestic sale segment needs to go back to the file of the TPO to reconsider the issue in light of directions given therein. Thus we set aside the order of the TPO/AO and restore the issue back to the file of the AO/TPO to re-consider the TP adjustment towards international transactions of the assessee with reference to import of raw materials related to domestic car sale segment and decide the issue in accordance with direction given in the assessee s own case for earlier assessment years. Excess levy of interest u/s. 234C - HELD THAT:- In case, calculation errors, if any, then same needs to be rectified by the AO by considering relevant pre-paid taxes paid by the assessee including TDS credit as per records. Therefore, we direct the AO to re-examine the contention of the assessee with regard to computation of interest u/s. 234 of the Act, and decide the issue in accordance with law. Short credit of TDS and relief u/s. 90 - assessee submitted that a direction may be given to the AO to verify the claim of TDS available as per records and adjust against tax demand and also prayed to give a direction to the AO to allow relief u/s. 90 of the Act, in accordance with law - HELD THAT:- We find that credit for TDS should be given as per Form No.26AS and also other relevant details filed by the assessee. Similarly, if assessee is entitled for any relief u/s. 90 of the Act, then same needs to be allowed in accordance with law. Therefore, we direct the AO to consider the contentions of the assessee and decide the issue in accordance with law.
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2023 (10) TMI 1011
Revision u/s 263 - Allowability of business expenditure challenged by CIT - scope of limited scrutiny - as per CIT the impugned expenditure is neither a capital expenditure not a revenue expenditure and the same ought not to have allowed by the A.O. thereby making the assessment order erroneous and prejudicial to the interest of the Revenue - assessee s case was selected for limited scrutiny - HELD THAT:- As evident from the records of the assessment order that neither was it a case of complete scrutiny nor was the issue pertaining to the expenses incurred by the assessee was before the A.O. during the assessment proceeding u/s. 143(3) of the Act. We are conscious of the propositions laid down by the various courts wherein it was held that the A.O. cannot go beyond the scope for which the assessment proceeding was initiated and thereby restricted to make a roving enquiry, into issues not confronted to the assessee. See SHREE ANIRUDDHA UPASANA FOUNDATION VERSUS CIT (EXEMPTION) , MUMBAI [ 2022 (9) TMI 973 - ITAT MUMBAI] Revenue has failed to substantiate that the issue related to the expenditure claimed by the assessee was before the A.O. during the assessment limited scrutiny proceeding nor it brought on record any fact to show that the A.O. had authority to go beyond the issue for which scrutiny assessment was initiated. Assessment order passed by the A.O. for the purpose of verifying the limited issue is not considered to be erroneous insofar as it is prejudicial to the interest of the Revenue. PCIT lacks jurisdiction to invoke the provision of section 263 of the Act in the present case in hand. Grounds raised by the assessee Allowed.
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2023 (10) TMI 1010
Proceedings before CIT (E) u/s 264 raising similar grounds as were raised before the ld. CIT(A) - addition made on account of denial of exemption u/s 11 - assessee filed an application before the ld. CIT(A) stating to withdraw the appeals on the ground that the assessee wants to opt for option u/s 264 of the Act - HELD THAT:- We notice that the assessee after filing the appeal before the ld. CIT(A) moved an application for withdrawal of the appeals stating the reason that it wants to file a petition u/s 264 of the Act. This application of the assessee was towards adopting an alternative remedy provided under the Act by way of Section 264. Now if, the ld. CIT(A) had refused to accept such application, then also assessee would have been aggrieved for not having been given the recourse for section 264 - CIT(A) in this case dismissed the appeal has withdrawn considering the application of the assessee opting for an alternative remedy and the issues raised before him will again be the subject matter of adjudication before the ld. CIT(E). We are of the considered view that the application made by the assessee for withdrawal of appeal before the ld. CIT(A), was a conscious effort towards getting relief by taking recourse to Section 264 of the Act and the ld. CIT(A) has just acted within the four corners of law in order to provide remedy to the assessee, for which it is eligible, u/s 264 of the Act, and he gave the assessee a way for doing the same because without doing so proceedings u/s 264 of the Act could not be initiated in terms of provision of Section 264(4)(b) of the Act. Therefore, by doing so the ld. CIT(A) has acted well within the powers provided u/s 250 of the Act. In view of the above discussion, we fail to find any infirmity in the action of the ld. CIT(A) dismissing the appeals of the assessee has withdrawn and not dealing with the merits of the case in pursuance to the application for withdrawal filed by the assessee to take recourse u/s 264 of the Act and uphold the same. Assessee appeal dismissed.
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2023 (10) TMI 1009
Excessive or unreasonable expenses - Payment to relatives / specified persons - Fair Market value of services rendered - Reimbursement/ support services - AO disallowed 25% thereof applying the provisions of section 40A(2)(b) - CIT(A) deleted the additions - HELD THAT:- During the year out of the expenditure incurred, expense partly cross charged to the assessee on a cost to cost basis in the ratio of the office space sub-leased by the assessee for its art gallery to the total area of the branch. AO wrongly treated reimbursement as support service expense when no support service expenses were incurred / claimed during the year. As submitted by the AR that actual expenses incurred is allocated and recovered by REL Infra on the basis of Cost Allocation Logics Policy for the Religare group. TDS is duly deducted on payment made to REL Infra. AO has not doubted the genuineness of expenditure and there is nothing on record to establish that payment is excessive or unreasonable. CIT(A) is perfectly justified in deleting the impugned disallowance. We find that the appeal of the Revenue filed against the CIT(A) s order for AY 2012-13 stands dismissed by the Tribunal [ 2019 (12) TMI 1662 - ITAT DELHI] - We therefore find no reason to sustain the impugned disallowance. These grounds are rejected. Disallowance of rental expenditure claimed - On the basis of old rent agreement the AO computed rent payable and disallowed amount for not being for the purpose of assessee s business out of the total rental expenditure claimed - Owing to continuous losses in the operation of art gallery business, the assessee shut down its art gallery and vacated the premises taken on lease except for area of 837 sq. ft. which was retained for functioning of registered office, thus revised rent agreement made - CIT(A) deleted addition - HELD THAT:- AR supported the order of the Ld. CIT(A) who deleted the impugned disallowance after considering the correct revised rent agreement holding that the expenditure was incurred for the purposes of business. On consideration of the facts and circumstances of the case, we observe that the impugned disallowance has been made by the AO due to inadvertent submission of the old rent agreement by the assessee before him. However, revised rent agreement was produced before the CIT(A) who after allowing opportunity to the Ld. AO to offer his comments gave relief to the assessee, interalia that the revised rent agreement cannot be treated as an afterthought and that the expenditure was incurred wholly and exclusively for the purposes of assessee s business. We concur with the findings of the Ld. CIT(A) and decline to interfere. Write off of CENVAT tax Credit - disallowance made holding that the assessee cannot suo-moto write off the credit available and the same is allowable only against future service tax liability - CIT(A) deleted the addition - HELD THAT:- It is not in dispute that the statutory auditors of the assessee company have duly certified the impugned write off in the company s audited financial statements which is on record of the Ld. AO. Therefore, it cannot be said that it is not verifiable. The explanation of the assessee for write off has not been accepted by the Ld. AO without any cogent and valid reasons. The judicial consensus is that write off of CENVAT Credit is an allowable deduction under section 37(1) of the Act in the year it has been debited to the books of account. Disallowance on account of finance cost - assessee paid interest on ICDs taken from group companies out of which the assessee suo moto disallowed u/s 14A and the balance amount was claimed as deduction - AO disallowed 50% u/s 37(1) for the reason that such huge amount of borrowing and repayment is not attributable to the business of the assessee - CIT(A) deleted the impugned disallowance - HELD THAT:- There is no finding that any part of the borrowed funds were utilised for purposes other than business. Hence adhoc 50% disallowance is not justified. On perusal of the order of the Ld. CIT(A) we observe that the CIT(A) noted of his appellate order that during the year the funds required by the assessee aggregated to Rs. 36.03 crores and that the quantum of ICDs borrowed by the assessee never exceeded Rs. 30.75 crores. Consequently, the borrowals made by the assessee never exceeded its working capital requirement of Rs. 34.67 crore in the year. The Ld. CIT(A) s order on the issue is well reasoned and backed by precedents. Appeal of the Revenue is dismissed.
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2023 (10) TMI 1008
Revision u/s 263 - Cash deposits in the form of old currency notes in bank account on a single day during demonetization period - PCIT observed that due to lack of enquiries and also due to incorrect and incomplete appreciation of facts and law, the assessment order u/s 143(3) has been rendered erroneous in so far it is prejudicial to the interest of Revenue - HELD THAT:- It is noteworthy to mention from the order of ld. PCIT, Udaipur that various additional documentary evidences which have been furnished in compliance to notice u/s 263 of the I.T. Act were not produced before the AO. This becomes all the more important in view of the fact that one of the key reason of scrutiny is Large squared up loan during the year . Since the AO has not examined the documentary evidences in respect of this issue and has not conducted the requisite verification due to which the assessment order u/s 143(3) of the I.T. Act is found to be erroneous in so far it is prejudicial to the interest of revenue. Hence, taking into consideration the above facts and circumstances, we find that the ld. PCIT is justified in holding that that the assessment order u/s 143(3) made by the AO had been rendered erroneous and prejudicial to the interest of the revenue and we concur with the findings of the ld. PCIT taking into consideration the written submissions of the assessee. Thus the appeal of the assessee is dismissed.
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Customs
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2023 (10) TMI 1007
Denial of permission for conversion/ amendment of 13 free shipping bills filed by the filed by the appellant without claiming AIR drawback - oversight of the clearing agent and denying AIR drawback to the appellant. HELD THAT:- The Appellant is a regular exporter as well as manufacturer of CPC. We further find that such goods are not stocked in containers for export. These goods are exported without any packing as bulk cargo, which is admitted fact. Further, admittedly, Appellant was regularly claiming the benefit of drawback at AIR. It is found that the exports in question were made during the period April, 2016 to December, 2016. The Appellant came to know of the mistake during verification of records during the end of December or beginning of January and have immediately filed the request for grant of drawback before the Commissioner of Customs by allowing them to amend shipping bills without converting them into drawback shipping bills, as provided under Sec 149 of the Act read with Rule 12(1)(a) of the Drawback Rules, 1995, read with aforementioned Circular No. 36/2010-CUS. The reasons given for rejection by the Commissioner of Customs are flimsy and against the very spirit of Sec 149 of the Act read with Rule 12(1)(a) of Drawback Rules, 1995, read with clarification given by the Board vide its Circular No. 04/2004-CUS read with amended Circular No. 36/2010-CUS - the Board have categorically provided for allowing the benefit of drawback on AIR where there is no case of any mis-declaration or fraud, etc. In the present case, there is no such allegation or finding in the Impugned Order. Appeal allowed.
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2023 (10) TMI 1006
Classification of imported goods - 553 series for 4500 Full A/N Prox. Exp Memory - to be classified under Chapter Heading 8473 3020 as part of the computers or classifiable under chapter 8543? - HELD THAT:- As noted by the original authority, the device captures the data from the employee s card or the data of the particular employee who key in the PIN into the device. The device does not do anything except for collecting the data at the time of entry or exit and this data is transmitted to a central server for further processing like marking the attendance, preparation of payroll or for other purposes. These facts are not in dispute. Based on the General Rules of Interpretation and the Chapter Notes, the item needs to be classified in the heading akin to it or where the specific description is provided. In this case, the data collection device imported by the respondent is nothing but a card reader working in conjunction with the server - Since the specific function of the imported item is to mark attendance or to take note of the persons of the employees for the purpose of attendance or payroll or leave, they cannot be classified under Chapter 84 as it excludes from this Chapter as per the Chapter Note 5(e). In the case of COMMISSIONER OF CUSTOMS BANGALORE-CUS VERSUS M/S. SHAKYA TECHNOLOGIES LTD [ 018 (8) TMI 1029 - CESTAT BANGALORE ], a similar product viz., fingerprint scanner was classified under Chapter Heading 8543 7099 as per the observations made by the Tribunal at para 5.1, wherein it has held that We find that the Head 8543 covers electrical machines and apparatus having individual functions not specified or included elsewhere in the chapter. Therefore, the classification of the Finger Print Reader would be more appropriate under this heading. Hence, based on the discussions above and by following the decision of this Bench, the product is rightly classifiable under chapter 8543. Appeal allowed.
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2023 (10) TMI 1005
Smuggling - foreign origin Gold - evidences available on record indicate that the goods seized in this case are smuggled in nature or not? - burden to prove - HELD THAT:- The Commissioner has given a detailed finding as to why the seizes goods are not smuggled in nature. The gold seized were of 99.5 purity. There was no foreign marking available on the gold. In fact, they were in the shape of ornaments. The adjudicating authority has given a clear finding as to why the goods are not smuggled in nature - the findings of the adjudicating authority agreed upon. In order to seize the goods, there must be a reasonable belief that the goods are smuggled in nature. The provisions of section 123 of Customs Act are not applicable in this case. Accordingly, the impugned order passed by the adjudicating authority is legal and proper and it does not warrant any interference. Appeal of Revenue dismissed.
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2023 (10) TMI 1004
Classification of imported goods - Joss Powder for usage in their finished goods known as Jigged Powder - to be under Chapter sub-heading 1211 9029 as against the Appellant s claim that the product was classifiable under 4401 30 00 or not - HELD THAT:- On going through the Chapter Notes of Chapter 12, it is seen that Heading 12.11 applies to the plants or parts thereof: basil, borage, ginseng, hyssop, liquorice, all species of mint, rosemary, rue, sage and wormwood. The Test Report obtained from the CRL by the Department does not specify that the goods in question fall under any of these categories. There are no reason for the Department to suddenly change the classification from CET 44013000 to CET 12119029 when several consignments have been imported through Kolkata (Port) as well as Haldia (Port) during the period 2003 to 2004 were allowed to be classified under CET 44013000. Even the provisionally, assessed Bills of Entry has been finalized by classifying the goods under CET 44013000. There are no proper evidence being brought in by the Customs Department to adopt new classification under CET 12119029, particularly when even the Test Reports obtained from CRL do not support the view of the Department - appeal allowed.
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2023 (10) TMI 1003
Classification of exported goods - Upgraded Beneficiated Ilmenite (Synthetic Rutile) TiO 2 95% Min. Moisture 0.5% Max. - classifiable under CTH 2614 as contended by the Revenue, or CTH 2823 as declared by the exporter-assessee? - HELD THAT:- There are no hesitation to hold that the scientific analysis carried out by the Government agencies like BARC/CSIR are clear and understandable and hence, the same prevails over the mere download from website of Kerala Minerals. It is the above Government agencies who have reported that the change in the chemical composition/crystallographic structure from Raw Ilmenite ore and the final exported goods has happened during the chemical process of leaching. In view of this, the final product that emerges and which is exported is nothing but synthetic Rutile and not natural Rutile, not only because there is a structural change but also for the fact that such a change has occurred as a result of the leaching process. Further, only natural Rutile stands excluded from the heading CTH 2823 as per HSN and it remains classified under Chapter 26 - the goods in question i.e., synthetic Rutile can only be classified under CTH 2823. In the order of learned Hyderabad Bench in the case of M/s. Trimax Sands Pvt. Ltd. [ 2017 (11) TMI 489 - CESTAT HYDERABAD] , it has been held that Assuming that the Department s argument is that only upgraded Ilmenite which is synthetic rutile is classifiable under 2614 00 20, the argument is self-defeating because rutile clearly falls under 2614 00 31, 2614 00 39 and 2614 00 90 in the tariff and no distinction is made between naturally occurring rutile and synthetic rutile in the Heading for Rutile. The ratio in the above order is squarely applicable to the case on hand to justify the conclusion that the goods in question could only be classified under Chapter Heading 2823. It is well known that classification depends on various factors including description, and not description per se. Assuming that the description is the only criterion, then the same should sync with the HSN. It is well settled that the core element of determinative factor has to be gone into which is the first and essential step. Whereas, the classification appears to have been made on incorrect assumptions, which is not as per law. The goods in question are synthetic Rutile which merit classification only under CTH 2823 and hence, the stand of the assessee is accepted - Appeal allowed.
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Corporate Laws
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2023 (10) TMI 1002
Failure to get its cost accounting records to be audited by a Cost Auditor and failed to file Cost Audit Report to the Central Government - time limitation for filing such reports - violation of Section 148(8) of Companies Act, 2013 - HELD THAT:- According to the notice sent by the Registrar of Companies, it was observed from the records of the accused company that the cost audit report was not filed with the Central Government for the financial year ending 31.03.2014 within the stipulated time. The period of limitation is dealt under Code of Criminal Procedure under Section 468 to 473. Admittedly, punishment prescribed under the Section 147 of the Companies Act is one year in the present facts of the case. Accordingly, under Section 468 of Cr.P.C, the period of limitation for an offence punishable is one year under Section 468(2)(b) of Cr.P.C. Under Section 469 of Cr.P.C, the commencement of period of limitation is prescribed - In view of Section 469 of Cr.P.C, the commencement of period of limitation would be from the date of knowledge to the Registrar of Companies. The said date can be taken as 14.06.2016 on which date the show-cause notice was sent to the accused company. Since complaint was filed on 30.05.2017, complaint is well within time. The date of filing the complaint would be criteria and not the date on which the Court takes cognizance of the offences in the said complaint. For the said reason, the ground of complaint being barred by limitation cannot be accepted - Since the company itself had mentioned that the industry is Edible Oil Seeds and Oils (including vanaspati) industry, the same cannot be determined in the proceedings for quashing the complaint. If the ROC has no provision of seed manufacturing companies and for which reason, the company had entered the name as Edible Oil Seeds and Oils (including vanaspati) , to enable themselves to upload the relevant documents into the ROC, the said ground can be agitated only before the trial Court. Petition dismissed.
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Insolvency & Bankruptcy
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2023 (10) TMI 1001
Challenge to resolution plan as approved by the CoC - Reduction of the claim of the home buyers / creditors - to be ranked at the top in terms of the waterfall mechanism or not - HELD THAT:- In the present facts of the case, it is found that the Appellants were given a chance to raise their objections before the RP as well as the Authorized Representative of the Home Buyers. The RP did not falter in accepting their claims in spite of expressing some reservations initially. The RP had also facilitated the Appellants in routing their objections to the Authorized Representative and the latter had provided them the window of opportunity of taking up their issues with the resolution applicants. The RP and the Authorized Representative did not fail in the discharge of their responsibilities and no cause of action survives on this count. Once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law the same cannot be a subject matter of judicial review and modification - the plea raised by the Appellants that the Adjudicating Authority had committed an error in rejecting their IA without having considered the main petition seeking approval of the resolution plan, is not impressing. Merely because there is a reduction in the claim of any creditor does not make the resolution plan fall foul of law. We quite agree with the Adjudicating Authority that resolution plan providing a lesser amount than admitted does not make it illegal . Any clause in the resolution plan which requires creditors to take a hair-cut cannot be construed as being violative of Section 30(2)(e) of the IBC. There is nothing to show that there has been transgression of the bounds of rules and regulations which have caused any serious miscarriage of justice to the Appellants - the Adjudicating Authority did not commit any error in dismissing Application. There are no good grounds to entertain this appeal. Appeal is dismissed.
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2023 (10) TMI 1000
Initiation of CIRP - Rejection of Section 7 application - status of the decree-holder - Real Estate Allottee or not - NCLT held that, being a single allotment, does not meet the threshold requirement as per second proviso to Section 7(1) of the I B Code - HELD THAT:- Respondent has relied on judgment of Hon ble Supreme Court in VISHAL CHELANI ORS. VERSUS DEBASHIS NANDA [ 2023 (10) TMI 949 - SUPREME COURT] where in it has been held that to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. In view of the law laid down by the Hon ble Supreme Court, it is now well settled that the status of the party i.e. allottee does not change and therefore the Adjudicating Authority has rightly concluded that threshold being not met one allottee cannot trigger the insolvency. The rejection of Section 7 application cannot be faulted - there are no merit in the appeal - appeal dismissed.
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Service Tax
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2023 (10) TMI 999
Principles of natural justice - show-cause notice and personal hearing notices were never served on the petitioner - HELD THAT:- It appears that petitioner neither responded nor submitted data sought for in the letter, dated 09.12.2020 - the petitioner failed to respond to the notices issued by the respondent No. 1 and therefore, respondent No. 1 proceeded with adjudication and passed the impugned order- in-original, dated 20.06.2022. The explanation offered by the petitioner that after receipt of impugned order, the same was misplaced inadvertently and therefore, he could not take further steps and thus, delay caused in filing present writ petition, does not inspire confidence of this Bench, considering the conduct of the petitioner even after service of the show-cause notice, personal hearing notices and order in original. There are clear latches, defaults on the part of petitioner. Firstly, in not availing alternate efficacious remedy of filing appeal before the Commissioner (Appeals) and secondly, unexplained delay in approaching this Court. In considered opinion of this Bench, the writ petition is devoid of any merits and no grounds are made out to interfere with the impugned order - Petition dismissed.
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2023 (10) TMI 998
Export of services or not - services rendered by the respondents are performed in India or not - providing Business Support Services and Manpower Recruitment and Supply Services to M/s SmithKline Beecham Plc. (SB Plc), U.K. as per an Agreement entered into between them - period January 2009 to September 2009 - demand of service tax alongwith interest and penalty - HELD THAT:- On the perusal of the Agreement, it appears that the respondents are rendering services with respect to clinical trials for the overseas company located in U.K. who undertake further research on the basis of the reports submitted by the respondent; therefore, it is not correct that the use of services is in India; it is evident that the services rendered by the respondents are used by the overseas company who are benefitted by the same. It cannot be said that service is not used outside India just because the payment is made to third-party i.e.M/s Glaxo SmithKline Services, Unlimited, UK. It has been clarified that the said third-party has been maintaining the accounts of M/s SB Plc, UK - It is found that as long as the service is enjoyed by the contracting party, routing of payment or consideration through a third-party does not alter the position. The services rendered by the respondents to M/s SB Plc, UK constitute export of service as the services are utilized by a company situated outside India and used outside India - the Department has not made out any case for intervening with the impugned order - Appeal of Revenue dismissed.
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2023 (10) TMI 997
Nature of Activity - Payment of 'Address Commission' against 'Chartering of Ships' - Business Auxiliary Service (BAS) or Discount - Amount paid to foreign companies as per Section 66A of the Finance Act. The argument of the Department is that the discounts from the Hire Charges were allowed by the Appellant only to promote their business and therefore, it should be treated as a commission and leviable to service tax under the category of Business Auxiliary Service (BAS). HELD THAT:- It is observed that in chartering business as a normal trade practice, the charterer is allowed a discount from the hire charges payable by them and the net hire charges is received by the ship owner. Thus, for all practical purposes, the charter is given a discount by the owner on the hire charges and no remittance is being made by owner of the ship i.e. ASL to charters. As the Address Commission was not paid towards rendering of any taxable service, no service tax is payable on Address Commission as the same is in the nature of discount and not a payment for provision of any taxable service. It is a settled principle of law that service tax is leviable only on consideration received for provision of service. When there is no evidence to substantiate the allegation that the discount was offered towards rendering of any service, no service tax is payable on those discounts - the demand is not sustainable and set aside the same. As the demand itself is not sustainable, the question of charging interest or imposing penalty does not arise. Appeal allowed.
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2023 (10) TMI 996
Classification of services - Cargo Handling Service or Tour Operator/Rent-a-Cab service? - services of transportation of coal to Eastern Coal Field (ECL), at Ukhra, Khandra and Bankola area from the Mines area to Railway Siding - Demand of service tax on Hiring of Vehicle Service - demand under Rent-a-Cab Operator service - Demand raised based on the Balance Sheet figures only. Classification of services - HELD THAT:- The Appellant has been provided the services of transportation of coal for Eastern Coal Field (ECL) from the Mines area to Railway Siding. The Work Orders received by them indicate that the primary activity is transportation of coal. All other activities undertaken are incidental or ancillary to transportation. Board has clarified the issue vide Circular No. 104/07/2008-S.T. dated 06.08.2008, wherein it has been clarified that the service rendered under such composite contract would be classifiable as GTA service only. This view has been taken by this bench in in the case of M/S MAA KALIKA TRANSPORT PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, ROURKELA, ROURKELA [ 2023 (7) TMI 435 - CESTAT KOLKATA] . The recipient has agreed to pay service tax as per the work order. Thus, by following the Board Circulars and the decision cited, it is held that the service rendered by the Appellant in this case is GTA service and hence the demand confirmed in the impugned order under Cargo Handling Service is not sustainable. Demand of service tax on Hiring of Vehicle Service - HELD THAT:- The Appellant have provided Buses to Eastern Coal Field Ltd.(ECL) for transporting/carrying DSP Employees/Staffs from their residents at the Township Area to Plant Back - The buses were also used for transporting children to their school and back. As per Section 65(115), Tour Operator means any person engaged in planning, scheduling, organizing or arranging tours by any mode of transport. In this case the buses provided by the Appellant carry the employees/staff from the factory to residence and back. Similarly, children were carried from residence to school and back. This does not involve any planning, scheduling, organizing or arranging tours as required under Tour Operator service. Accordingly, the service rendered cannot be classified as Tour Operator service. Demand under Rent-a-Cab Operator service - HELD THAT:- There is no specific demand of service tax under the category of Rent-a-Cab service in the impugned order. As per the impugned order, the service may fall under either of the category. As there is no specific demand for Rent a Cab service in the impugned order, the demand is not sustainable. Demand raised based on the Balance Sheet figures only - HELD THAT:- The Appellant contended that the department is fully aware of the activities undertaken by them. There is no evidence brought on record to substantiate the allegation of suppression of fact. Accordingly, the penalty not imposable. Even otherwise, as the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise. Appeal allowed.
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2023 (10) TMI 995
Nature of services - Professional services or existence of employee / employer relationship - services received by it from foreign companies in the capacity of recipient of services - demand of service tax alongwith interest and penalties u/s 77 and 78 of FA. The Principal Commissioner confirmed the demand of service tax on the amount paid to Pual Cerullo for the reason that the appellant had not submitted evidence to substantiate that Pual was its employee. HELD THAT:- The matter need not be remanded as it is evident from the impugned order that the only reason the Principal Commissioner confirmed the demand on the payment made to Pual is that the employment contract and other evidence were not produced before him. The letters of appointment and the termination letter produced before us make it amply clear that Pual was appointed as the Chief Operating Officer. Therefore, the relationship between the appellant and Pual was that of an employer and employee. It is undisputed that the services rendered by an employee to its employer are out of the ambit of service tax. The demand of service tax, therefore, needs to be set aside to the extent of Rs. 9,45,494/- on this count - The remaining amount of Rs. 6,24,074/- with interest is uncontested and needs to be upheld. Penalty u/s 77 of FA - HELD THAT:- The penalty under section 77 of Rs. 10,000/- was imposed for the reason that the appellant had not correctly reflected the total amount of service tax due from it. This fact is evident as an amount of Rs. 6,24,074/- was admittedly short paid by the appellant. Penalty upheld. Penalty u/s 78 of FA - HELD THAT:- The appellant does not have an intention to evade payment of service tax because by not paying such service tax the appellant would gain nothing - the imposition of penalty under section 78 of the Finance Act cannot be sustained and needs to be set aside. Appeal allowed in part.
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2023 (10) TMI 994
Denial of benefit of closure of proceedings u/s 73(3) of the Finance Act - levy of penalty u/s 77 78 of FA - HELD THAT:- Admittedly, transaction has been duly recorded in books of accounts maintained in the normal course of business. Further, as the Cenvat credit of the tax paid under reverse charge mechanism is available to the Appellant, as they are manufacturing dutiable goods as well as rendering dutiable services, there is no incentive to evade. Further, admittedly, Appellant had paid the tax with interest as pointed out by the audit without disputing the same and have even paid the tax for the period even prior to 18.04.2006, which on the face of it is not payable. The Appellant was entitled for closure of dispute relating to the demand, under Sec 73(3) of the Act - penalties set aside - appeal allowed.
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2023 (10) TMI 993
Validity of SCN - SCN issued by way of change of opinion - Invocation of Extended period of limitation - Construction of Residential Complex service - Site formation and clearance, excavation and earth moving and demolition service - demand alongwith penalty - sale of individual houses constructed along with the plot of land to a buyer on a registered sale deed amounts amounts to service or not. HELD THAT:- The SCN is evidently issued by way of change of opinion, in view of the facts, particularly the Appellant was registered with the Department, maintaining proper records and was filing returns as well as paying admitted tax. Further, Appellant, as early as on 07.10.2009, raised the issue of taxability with the Department for clarification and they have produced all their documents with respect to housing project promoted by them including development construction agreement. Thus, SCN dated 24.10.2011 is issued by way of change of opinion and there is no case made out of any concealment, suppression or fraud, etc., on the part of the Appellant and therefore on this account also, the entire demand has to fail. The impugned order set aside - appeal allowed.
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Central Excise
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2023 (10) TMI 992
Exemption on investment in investment in plant and machinery after 06.02.2010 under N/N. 01/2010-CE dated 06.02.2010. Denial of benefit on the ground that as per the conditions of the notification, the investment in plant and machinery ought to have been made after 06.02.2010 whereas in the instant case the appellant had made substantial expansion prior to 06.02.2010 except for generator which is added after 06.02.2010. HELD THAT:- On analysing the provisions in serial no. 8(i) of the Notification it is found that the it talks of undertaking substantial expansion by way of increase of not less than 25% in the value of fixed capital investment in plant and machinery and having commenced commercial production from such expanded capacity on or after 6th day of February, 2010. It is found that the language of the notification is very clear and the only requirement of the notification is that in order to avail the benefit of exemption is that the unit should have commenced commercial production from such expanded capacity on or after 06.02.2010 by investing 25% or more. In the present case, the appellant has produced the certificate issue of the director industries Centre Anantnag vide letter No. DICA/DEV of 2013/273 whereby they have certified the date of commencement of commercial production from substantial expansion as 12.11.2012. Further, there is a difference between the condition prescribed in serial no. (i) and Serial No. (ii). The department cannot import condition prescribed in another serial no. (ii) to deny the exemption to the appellant which was not present in serial no. (i) under which the appellant had availed the benefit. Further, it is found that the investment made by the appellant after 31.03.2004 is to the tune of 29.24% as certified by the Chartered Accountant in the certificate dated 31.03.2017 which is on record. The appellant is entitled to the benefit of exemption Notification No. 01/10-CE and denial of the same by the Commissioner (Appeals) is set aside - Appeal allowed.
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2023 (10) TMI 991
Area based exemption - Computation / Determination of Value Addition - Rejection of the applications of fixation of special rate - Time Limitation - N/N. 32/99-CE dated 08.07.1999 - HELD THAT:- The said issue has been examined by the Hon ble Apex Court and the Hon ble Apex Court in the case of UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. [ 2020 (4) TMI 669 - SUPREME COURT] has held that the pending refund application shall be decided as per the subsequent notification/industrial policies, which were impugned before the respective Hon ble High Courts and they shall be decided in accordance with the law and on merits and as per the subsequent notifications/industrial policies impugned before the respective Hon ble High Courts. Further, the Hon ble Guwahati High Court in the case of M/S JYOTHY LABS LTD. (ERSTWHILE JYOTHY LABORATORIES LTD.) VERSUS UNION OF INDIA AND 2 ORS., PRINCIPAL COMMISSIONER CGST COMMISSIONERATE, ASSTT. COMMISSIONER OF GST AND CENTRAL EXCISE [ 2021 (8) TMI 726 - GAUHATI HIGH COURT] has held that making such application for fixation of special rate under Notification No. 32/99-CE and Notification No. 31/2008-CE, after the judgement of Hon ble Supreme Court in the case of UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. [ 2020 (4) TMI 669 - SUPREME COURT] were in time. As all the applications were filed by the appellants before 20.04.2020. In that circumstances, all the applications were filed within time, therefore, the applications in question cannot be rejected on limitation. The first ground for denial of special rate of fixation is that the balance sheet is not in conformity with Section 211 of the Companies Act, 1956 and there is no provision to prepare the balance sheet or financial records under the provision of 211 of the Companies Act, 1956 - HELD THAT:- As per the said provisions, the profit and loss accounts and the balance sheet of the Company shall comply with the accounting standards - the figures in the Extract of Balance Sheets, arem based on which the value addition, has been calculated, is very much in conformity with Companies Act and the Income Tax Act - The rejection of application for special rate fixation on the balance sheet is not in conformity with the Companies Act, 1956, is not correct. On the said ground, the said application cannot be rejected. Whether the statutory auditor s report is acceptable or not? - HELD THAT:- The statutory auditor s report is acceptable in terms of the decision of this Tribunal in the case of THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS GUNTUR. VERSUS M/S. CRANE BETEL NUT POWDER WORKS [ 2011 (2) TMI 785 - CESTAT BANGALORE] wherein this Tribunal has observed In the absence of any effective rebuttal of the said Chartered Accountant certificate by leading a contrary evidence, we are of the considered view that the Chartered Accountant s certificate which indicates that the duty liability has not been passed on and has been absorbed by the assessee, cannot be rejected as an evidence in support of non-passing of the burden of incidence of duty - thus, the statutory auditor s report is acceptable as an evidence. Another issue raised by the ld. Commissioner that the gross sales value based on all India average rate is not acceptable - HELD THAT:- For the purpose of calculation of actual value addition, as per the prescribed format, relevant figures from the audited Balance Sheet have been extracted, which has been enclosed along with each application. Hence, it is not a case that a separate Balance Sheet was prepared for the purpose of special rate fixation, as held by the adjudicating authority. An extract of Balance Sheet containing figures required for computation, in a format exclusively to suit the calculation of value addition was enclosed, which gets evidenced from the Notes accompanying the said extract of Balance Sheet, to the effect that the said extracted Balance Sheet has been prepared solely for the purpose of and as basis for claim of fixation of special rate and nowhere the Notification stipulates that copy of the Balance Sheet is to be enclosed. Instead, it mandates that the value addition must be calculated based on the audited Balance Sheet and in the present case, the computation of value addition has been done based on the figures taken from such audited Balance Sheets only. Another reason for rejection of application is that the average rate of VAT at the rate of 12.5% is not acceptable - HELD THAT:- The average rate of VAT at the rate of 12.5% is equalized the basis and the same is permissible for fixation of special rate. Hence, rejection of special rate of fixation, the applications cannot be rejected on that ground. The next issue is that inclusion of work in progress is not correct - HELD THAT:- What is to be added is the inventory of goods available at the end of each of the Financial Years and not cleared. Similarly, the value of inventory not cleared at the end of the financial year preceding to the Financial Year under consideration has to be deducted. It may be relevant to note that the term inventory would include stock of finished goods as well as stock of unfinished goods in as much as some stock of goods may be incomplete or just few steps/process away from the stage of completed finished product. The said stock of incomplete/ unfinished goods, which have passed through some processes and are yet to be subjected to some processes to reach the final stage of production, are termed as work-in-progress , which are also the part of the inventory, as per the accounting standards - the work in process is to be included in the opening stock and closing stock in computation of actual value addition. The rejection of the applications of fixation of special rate by the adjudicating authority is not correct and are in violation of law - Appeal allowed.
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CST, VAT & Sales Tax
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2023 (10) TMI 990
Exemption from payment of tax - turnover of books and periodicals printed at the printing press of the petitioner in terms of G.O. Ms. No. 625 Rev. (CT-II) dated 31.07.1996 - nature of job undertaken by the petitioner would fall within the purview of works contract or whether it would be termed as a sales in terms of the definitions provided under the provided under the provisions of APGST Act, 1957? HELD THAT:- Admittedly, the petitioner is a business organization which is otherwise into the business of printing of textbooks, periodicals and other materials as per the orders/demand received from the various customers. What is also undisputed is that there is a contract entered with the customers for the printing of the books and magazines as the case may be. The contract is for the quantity of the printed materials in the form of books and magazines - What is required to be understood further is that in terms of the contract itself, it is the responsibility of the petitioner to use the required paper for the purpose of printing. Neither the printed material nor the raw material paper can be separated, nor can the aforesaid two materials be sold independently at the first instance and neither can the same can be sold by the petitioner in any manner. It can be sold only by the publisher who has got the materials printed. The fact which needs to be further looked into is that if the transaction between the printer and the publisher is treated as sale, then the publisher in turn would claim exemption on the sale value of the textbook on the ground of the same being second sale. Therefore, the contention of the learned counsel for the petitioner becomes difficult to be accepted - Yet another fact which needs to be considered is that if the contention of the learned counsel for the petitioner is to be accepted, then there shall be no distinction between the printing of textbooks, magazines and periodicals and the printing works of letter heads, bill books, account books, leaflets etc., as any printing carried on by the printer would have to be treated as sale upon which G.O. Ms. No. 625 would become applicable. No strong case for interfering with the impugned order of the Tribunal has been made out - Tax Revision Cases being devoid of merits, deserves to be and are accordingly, rejected.
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Indian Laws
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2023 (10) TMI 989
Professional misconduct - Charge of carrying on business without permission, i.e., professional misconduct within the meaning of Clause (11) of Part I of the First Schedule - Respondent using his position as Chartered Accountant induced the Complainant to give a loan, which was not repaid fully - HELD THAT:- As held in D.K. AGRAWAL VERSUS COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA [ 2021 (10) TMI 526 - SUPREME COURT] report of the Disciplinary Committee will only contain a statement of the allegations, the defence entered by the members, the recorded evidence and the conclusions expressed by the Disciplinary Committee. The conclusions of the Disciplinary Committee are tentative and the same are not recorded as findings. It is only the Council which is empowered to find out whether the member is guilty of misconduct. The Council has to determine that a member is guilty of misconduct and the task of recording of the findings has been specifically assigned to the Council. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. The penalty which follows is so harsh that it may result in the removal from the Register of Members for a substantial number of years. The removal of his name from the Register deprives a member of the right to a certificate of practice. The findings by the Council constitutes the foundation for the penalty imposed by the Council on him - The person who is adversely affected wants to know as to why his submissions have not been accepted. Giving of reasons ensures that a hearing is not rendered as a meaningless charade. Unless an adjudicatory body is required to give reasons and make findings of fact indicating the evidence upon which it relied, there is no way of knowing whether the concerned body genuinely applied itself to and evaluated the arguments and the evidence advanced at the hearing. Giving reasons is all the more necessary because it gives satisfaction to the party against whom a decision is taken. It is a well known principle that justice should not only be done but should also be seen to be done. Charge of carrying on business without permission, i.e., professional misconduct within the meaning of Clause (11) of Part I of the First Schedule - HELD THAT:- The Council states that it has decided that an opportunity of hearing be given to him before passing any orders. There is nothing to indicate any further hearing happened or any decision has been taken. Therefore, we will proceed on the basis that there is no recommendation as regards this charge - Moreover, there are no discussions or reasons as regards the recommendations for removal for a period of three months or why the recommendations of the Disciplinary Committee was not acceptable. Therefore, we are not inclined to accept the recommendations in respect of Other Misconduct . The complaint against respondent was lodged in 1996 primarily for non return of the loan taken. The loan amount has been repaid way back in 1998. The fact that the pendency of this Reference itself as well as the process of Disciplinary proceedings instituted by the institute itself would be like the proverbial Damocles sword hanging over the head of respondent for over 27 years. There is no need to take any further action against respondent - Reference disposed.
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