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TMI Tax Updates - e-Newsletter October 28, 2023 Case Laws in this Newsletter: GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST Input Tax Credit - credit was not effected in Form GSTR-2A - If on examination of the evidence submitted by the assessee, the assessing officer is satisfied that the claim is bonafide and genuine, the assessee should be given the Input Tax Credit. Merely on the ground that in Form GSTR-2A the tax to an extent of Input Tax Credit being claimed by the petitioner is not reflected should not be a sufficient ground to deny the claim of the assessee for Input Tax Credit. - HC Visit to Get Source Income Tax Reopening of assessment u/s 147 - The entire exercise of re-opening would depend upon the reasons recorded by the AO and therefore the reasons recorded to re-open the assessment by the AO must disclose all relevant facts to the assessee so as to refute the reasons by filing objections. Unless the AO records his independent satisfaction in the reasons recorded on the basis of the information received and communicates the same to the assessee, right of the assessee to file objections would remain an empty formality. - HC Visit to Get Source Reopening of assessment - principles of natural justice denied - tax evasion petition [“TEP”] filed by one Mr S.K.S as working with the revenue in a senior position - as per assessee sufficient time to assessee to respond objections of the assessee as rejected was not provided - Reopening notice and order quashed - - HC Visit to Get Source Addition u/s 56 (2)(viib) - Valuation of shares - Faire Market Value (FMV) - the assessee has himself filed a valuation certificate before AO and accepted fair market value at Rs. 19.23 per share, hence the assessee does not have any dispute, quarrel or grievance qua the fair market value. Therefore, AO has rightly arrived at the difference by finding difference of issue price and fair market value and thereby made addition. - AT Visit to Get Source Assessment u/s 144C(13) in pursuant to the directions of DRP - In the case in hand, the direction for verification as issued were colourable and the Latin maxim “Quando aliquid prohibetur ex directo, prohibetur et per obliquum”, which means “you cannot do indirectly what you cannot do directly” when applied to aforesaid provisions applicable to DRP prohibits such directions of verification of the whole of the case of an assessee without any element of guidance for the Ld. AO. - AT Visit to Get Source Exemption u/s. 54EA - transfer of shares held as stock-in-trade - transfer of unlisted shares of DSPML is to be taxed under the head “capital gains” irrespective treating it as business income is set aside and the transfer of shares is treated as capital gains. Once, the gains arising of transfer of shares of DSPML is capital gains, then, the assessee is entitled for exemption u/s. 54EA - claim of deduction / exemption u/s. 54EA is allowed. - AT Visit to Get Source Royalty - Taxability of Management Service Fees (MSF) - For rendering of these services, there is no element of imparting any "know how or there is transfer of any knowledge, skill or experience. Thus, we hold that none of the services provided by the assessee in the term of "service agreement" falls within the scope and ambit of "royalty" as defined in Article 12(4) of the DTAA. - AT Visit to Get Source Customs Payment of penalty as a condition to re-export can be imposed or not - the respondent authorities ought to have permitted the petitioner to re-export the goods without insisting upon the payment of penalty imposed by the said order as the same is subject matter of appeal before the Appellate Authority. - HC Visit to Get Source Levy of penalty u/s 112 & 114 of the Customs Act, 1962 - allegation of abating the importer - In present import, there is no evidence to allege that appellants were actively involved in illegal import of goods by communicating with overseas agencies or by transferring any amount though illegal channel. Merely if the documents pertaining to the import is handed over through the appellants to clearing agent, no conclusion can be drawn that appellants are involved in illegal import. - AT Visit to Get Source Revocation of Customs Broker License - when the CBEC circular and FSSAI guidelines specifically provide that the Customs authorities should check on the issue of NOC before clearance of imported goods, the responsibility for exercise of due diligence or bringing this to the knowledge of Customs does not lie on the part of the appellants and for the same, responsibility cannot be fastened on the appellants - AT Visit to Get Source Refund claim - Benefit of exemption - the product under dispute fell both under for Sl No.20 and Sl No.20A during the period under question. - This is rather a case of ambiguity in the Taxation liability and not a case of ambiguity on account of exemption granted. The Revenue cannot deny that during this period, any importer could have insisted on getting the NIL rate of BCD benefit by citing the co-existence of Sl No.20 and Sl No.20A for the brief period. - Refund cannot be denied - AT Visit to Get Source IBC Initiation of CIRP - Period of limitation - the proceedings under IBC are not proceedings for recovery of contractual dues - The present was a case filed by the Operational Creditor only for recovery of its contractual dues with regard to default committed as per the case of the Appellant on 30.04.2015 for stage 1 and 23.10.2018 for stage 2. The Adjudicating Authority did not commit any error in rejecting Section 9 application as barred by time - AT Visit to Get Source SEBI It cannot be countenanced that some shareholders can take shelter under Regulation 29 to plead confidentiality of settlement information, against a group of other shareholders - No shareholder can take a position that he cannot disclose any information on the affairs of the company to other shareholders. This would bring about a situation of disharmony, distrust causing damage to the management and functioning of the company. - HC Visit to Get Source Service Tax Exemption from service tax - renting - The petitioner being a University recognized under the provisions of the UGC Act, 1956, has to be construed as an “educational institution”. As an “educational institution”, the petitioner would have been exempted from payment of service tax for renting out its “immovable property” for a brief period, till 1.4.2013 - The exemption for renting of immovable property was short lived. This exemption stood withdrawn in view of amendment to Entry 9 to Mega Exemption No.25/2012-S.T dated 20.06.2012 vide Notification No. 3/2013-S.T, dated 1-3-2013. - HC Visit to Get Source Valuation - inclusion of passenger service fee and airport taxes collected from passengers in the assessable value for computation of service tax - as per the exemption Notification No. 12/2010, dated 12-2-2010, statutory taxes charged by any Government on Air passengers would be excluded from the taxable value for the purpose of levy of tax and therefore, the service tax is not payable by the appellant. - AT Visit to Get Source Demand of Service Tax - notional interest towards security deposit taken by the appellant against the rental property - service tax could not have been levied on the notional interest calculated by the department on the interest fee security deposit collected by the appellant from tenants. - AT Visit to Get Source Demand of Differential Service Tax alongwith interest and penalty - It is not clear as to how the appellant has himself not accounted for the challans during the period of three years. Further as the appellant has unit at Bhubaneswar, there may be possibility these challans have been used for Service Tax to be paid by that Unit. Unless, the entire transaction of Kolkata Unit vis-à-vis their Bhubaneswar Unit is undertaken, the fact of challans not accounted, cannot be examined. - AT Visit to Get Source Levy of service tax - Advertisement Agency Service or not - In the instant case, the Appellant has not performed conceptualization, visualization and designing of the advertisement. Thus, they have not fulfilled the condition precedent required to satisfy the service under the category of Advertisement Agency Service. - AT Visit to Get Source Articles VAT Strategies for Business Growth & Optimization in India No Service Tax on construction activities for Mega Sports Complex to be used for non-commercial purposes VALIDITY OF ASSESSENT PASSED UNDER SECTION 144B OF THE INCOME TAX ACT, 1961 New Conditions for claiming exemption can’t be introduced via Circular GST Portal Changes – Electronic Credit Reversal and Re-claimed Statement Notifications Customs G.S.R. 796(E) - dated 26-10-2023 - ADD Levy ADD on Jute Products originating in or exported from Nepal and Bangladesh (SSR) - sunset review investigation concerning imports of Jute Products - Notification No. 33/2022-Customs (ADD), dated the 30th December, 2022 - Corrigendum - II DGFT 41/2023 - dated 27-10-2023 - FTP Streamlining of Halal Certification Process for Meat and Meat Products GST 52/2023 - dated 26-10-2023 - CGST Central Goods and Services Tax (Fourth Amendment) Rules, 2023 G.S.R. 793(E) - dated 25-10-2023 - CGST Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023. 05/2023 - dated 26-10-2023 - IGST Goods or services (except few specfied) may be exported on payment of integrated tax and on which the supplier of such goods or services may claim the refund of tax so paid - scope extended - Amendment in Notification No. 01/2023-Integrated Tax, dated the 31st July, 2023 GST - States 20/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST Amendment in Notification No. 5/2017- State Tax (Rate), dated the 29th June, 2017 19/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST Amendment in Notification No. 4/2017- State Tax (Rate), dated the 29th June, 2017 38/1/2017-Fin(R&C)(13/2023-Rate)/3743 - dated 19-10-2023 - Goa SGST Amendment in Notification No. 38/1/2017-Fin (R&C)(12/2017-(Rate), dated the 30th June, 2017 38/1/2017-Fin(R&C)(12/2023-Rate)/3742 - dated 19-10-2023 - Goa SGST Amendment in Notification No. 38/1/2017- Fin (R&C)(11/2017-(Rate), dated the 30th June, 2017 64/GST-2 - dated 27-10-2023 - Haryana SGST Notification under section 148 to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by unregistered persons under the HGST Act, 2017 63/GST-2 - dated 27-10-2023 - Haryana SGST Notification under section 148 to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by composition taxpayers under the HGST Act, 2017 11 /2023-State Tax (Rate) - dated 25-10-2023 - Maharashtra SGST Amendment in Notification No.01/2017-State Tax (Rate) dated the 29th June, 2017 47/2023—State Tax - dated 19-10-2023 - Maharashtra SGST Seeks to amend Notification No. 30/2023-State Tax dated 22nd August, 2023 Income Tax 93/2023 - dated 26-10-2023 - IT Exemption from specified income U/s 10(46) – ‘Telangana Building and Other Construction Workers Welfare Board’ notified 92/2023 - dated 26-10-2023 - IT Exemption from specified income U/s 10(46) – ‘West Bengal Pollution Control Board’ notified Indian Laws S.O. 4672(E). - dated 26-10-2023 - Indian Law Bring in force Section 45 of the Competition (Amendment) Act, 2023 SEZ S.O. 4670(E). - dated 24-10-2023 - SEZ SEZ for IT and ITES at Doddanakundi Industrial Area, Bangalore District, State of Karnataka - 1.97 hectares area notified thereby making resultant area as 2.63 hectares. News Fostering Economic Growth through Sustainable Finance and Financial Inclusion (Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India - October 12, 2023 - at the Conference on Priority Sector Lending held at College of Agricultural Banking (CAB), Pune) Indian mangoes shipment expands its footprints RBI invites comments on draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services Time Series data of Direct Taxes shows improved Taxpayer compliance Case Laws: GST 2023 (10) TMI 1208 Constitutional validity of section 84A of the Gujarat VAT Act - Section 19 of the Constitution (101st Amendment) Act, 2016 and Article 246A enacted in exercise of constituent power - vires of Article 14 and 19(1) (g) of the Constitution of India - power of amendment or repeal, subject to limitations under Section 19 or not Interpretation of Section 19 - HELD THAT:- In the opinion of this Court, the mere circumstance that Section 19 does not get added to the Constitution, would not make any difference. If one looks closely at Articles 243 ZF which this Court interpreted in BONDU RAMASWAMY VERSUS BANGALORE DEVELOPMENT AUTHORITY AND ORS. [ 2010 (5) TMI 867 - SUPREME COURT] and Article 243 ZT which was interpreted in VIPULBHAI M. CHAUDHARY VERSUS GUJARAT COOPERATIVE MILK MARKETING FEDERATION LTD. AND ORS. [ 2015 (3) TMI 1430 - SUPREME COURT] the effects of those provisions are the same as Section 19. Although those provisions continued to be part of the Constitution, they have no meaning and were merely historical. The reason is that they were operative, for a limited duration like Section 19. However, the fact remains that those provisions as well as Section 19 were enacted in exercise of the constituent power. Section 19 is not, in this court s opinion comparable to a mere Parliamentary enactment. There cannot be any gain in saying that Section 19 is not a mere legislative device. It was adopted as part of the 101st Constitutional Amendment Act. Undoubtedly, it was not inserted into the Constitution. Whatever reasons impelled Parliament to keep it outside the body of the Constitution, the fact remains that it was introduced as part of the same Amendment Act which entirely revamped the Constitution. It cannot be in dispute that Section 20 existed for a period of two years and enabled the President to issue orders for the removal of difficulties experienced in the course of implementing the amendments to the Constitution. If indeed those parts of the amendments were not enacted in the exercise of constituent power but mere legislative power, there would be no legitimacy of the power conferred upon the President under Section 20. On an overall interpretation of the provisions of the Amendment, it is held that Sections 19 and 20 constitute incidental and transitory provisions which have limited life, so to speak. Whether they became part of the Constitution or not is really academic. What really matters is the effect of those provisions. Whether the power of amendment or repeal is subject to limitations under Section 19? - HELD THAT:- The effect of the 97th amendment to the Constitution which came into force on 12.01.2012 was to introduce provisions, to strengthen the functioning of the cooperative societies in a democratic, autonomous and economically sound manner. Various new provisions granted constitutional status to cooperative societies and inserted Part IX-B in the Constitution which specified several conditions for state laws relating to cooperative societies. Article 243 ZT which is worded similarly to Section 19 of the present case sought to continue in force existing laws, for a limited duration until amended or repealed or until the expiration of one year from the commencement of the amendment act. Once it is conceded that Section 19 was enacted as part of the constituent power and has the same force as the rest of the constitutional amendment and is not a mere Parliamentary enactment, one has to consider the consequence of this sequitur to such a finding - The 101st amendment as noted earlier uniquely transformed the indirect taxation regime and revamped the constitutional compact itself in one sense. Gone were the traditional delineations of distribution of legislative power including taxation fields which traced their origins to Articles 245 and 246 and also the rules for handling repugnancy which Article 254 had enacted. Instead, what was brought in was an entirely new concept of sourcing common or concurrent power of both the state legislatures and the Union through the newly added provision Article 246A. There were no limitations under Section 19 (read together with Article 246A), of the Amendment. That provision constituted the expression of the sovereign legislative power, available to both Parliament and state legislatures, to make necessary changes through amendment to the existing laws. As held in Rama Krishna Ramanath [ 1962 (2) TMI 76 - SUPREME COURT] the transitional power (in that case, Section 143 (3)) the provision by its implication confers a limited legislative power to desire or not to desire the continuance of the levy. This limited legislative power was not constricted or limited, in the manner alleged by the states; it is circumscribed by the time limit, indicated (i.e. one year, or till the new GST law was enacted). It could, therefore, enact provisions other than those bringing the existing provisions in conformity with the amended Constitution. Validity of Telangana Act tested from the touch stone of its originating as an ordinance - HELD THAT:- In the present case, the Telangana ordinance was promulgated on 17.6.2016. The Telangana State GST Act was enacted and received the assent of the Governor on 25.05.2017; it was brought into force on 01.07.2017. The state GST Act contained a savings and repeal law, which sought to save acts done, privileges and rights accrued under the repealed enactment, i.e. the State VAT Act - The question of legislative competence would not arise, because the mere confirmation of an ordinance is within the competence of the State legislature. Since the law was introduced through a different procedure, i.e. ordinance, the effect of that law, empowering the VAT officials to reopen or complete assessments, was no different. The provisions of the ordinance, as approved by the later state act, which amended the local VAT Act s, are valid. Gujarat and Maharashtra Acts - HELD THAT:- There is no quarrel with the proposition that a legislative body is competent to enact a curative legislation with retrospective effect. Yet, the same vice that attaches itself to the Gujarat amendment, i.e. lack of competence on the date the amendment was enacted i.e. in this case, 09.07.2019, the Maharashtra legislature ceased to have any authority over the subject matter, because the original entry 54 had undergone a substantial change, and the power to change the VAT Act, ceased, on 01.07.2017, when the GST regime cam.e into effect. Therefore, for the same reasons, as in the other cases, the amendments to the Maharashtra VAT Act cannot survive. The appeals (and any other special leave petitions) filed by the States of Telangana and Gujarat are hereby dismissed. 2023 (10) TMI 1207 Constitutional Validity of Rule 31A of the CGST Rules, 2017 - HELD THAT:- After the pleadings are complete, place these matters for final disposal on 05.02.2024. Place the matters high on board subject to any overnight part-heard matters. All these matters are to be considered together. 2023 (10) TMI 1206 Jurisdiction - Initiation of proceedings by the proper officer under the MGST Act on the same subject matter, which a proper officer under the Central Goods and Services Tax Act has initiated - HELD THAT:- It is found that under the CGST Act proceedings are initiated against the petitioner, however, it clearly appears that the subject matter of such investigation is in respect of the period from 1 July 2017 till 31 March 2021. As informed by respondent Nos. 1 and 2, such investigation is in regard to the fraudulent ITC. Insofar as the investigation being resorted under the MGST Act by respondent Nos. 3 and 4 is concerned, it is in respect of the period from 1 April 2021 to 4 October 2023. This has been clarified by the Assistant Commissioner of State Tax (INV-02), Investigation-A, Mumbai, vide letter dated 7 October 2023 as addressed to the petitioners. It appears that although the petitioners were asked to furnish documents for the period from 1 July 2017 till 31 March 2021, the investigation, as informed to the petitioners, under the MGST Act would be for the period from 1 April 2021 to 4 October 2023. In such context, the petitioners themselves have taken a fair stand that the petitioners by requesting the State Authorities to investigate from 1 April 2021 till the date of such letter to avoid duplication of the proceedings. At this stage, Revenue has stated that the scope of investigation as has been undertaken under the MGST Act is in respect of illegal refunds as sought by the petitioners - considering the documents on record and the contentions as raised, petitioner's contention cannot be accepted that the provisions of Section 6(2)(b) of the MGST Act, in any manner, are attracted in the facts of the present case. The petitioners are not remediless as the petitioners can invoke provisions of Code of Criminal Procedure, as in the present proceedings no criminal cause of action can be subject matter of adjudication. Attachment of the property of the petitioners - HELD THAT:- The petitioners have a remedy of invoking Rule 159(5) of the MGST Rules, as and when the petitioners have a cause of action to raise such contentions against the attachment. Thus, such remedy being available to the petitioners, it would be premature for the petitioners to raise any such contention in the present proceedings. Petition disposed off. 2023 (10) TMI 1205 Constitutional Validity of Rule 31A of the Central Goods and Service Tax Rules, 2017 - issuance of the SCN has compelled the petitioners to approach this court challenging the vires of Rule 31A - HELD THAT:- Issue notice upon the respondents in Writ Petition as well as in I.A. No. 01 of 2023 subject to filing of requisites within three days. A copy of this order shall also be forward to the respondents along with the notice. Let I.A. No. 01 of 2023 be heard on 05.12.2023. Until then status quo as of today shall be maintained by the respondents - List on 05.12.2023 on which date I.A. No. 01 of 2023 shall be heard. 2023 (10) TMI 1204 Input Tax Credit - denial on the ground that the Input Tax Credit to such an extent claimed by the petitioner-assessee was not effected in Form GSTR-2A and the supply dealer has not mentioned the supplies involved in the petitioner-dealer in form GSTR-1 - HELD THAT:- Section 155 of the GST Act, 2017, takes care of such a situation wherein the fact that the assessee/dealer has taken inward supply, and the dealer has prepaid the admissible GST to the supplier-dealer and the supplier-dealer has not deposited the said tax amount to the Government, in such a situation the burden is on the person who claims the Input Tax Credit to prove his claim. The paid person in such a situation is required to furnish documentary evidence to prove that such tax has been paid by him. The assessing authority has denied the claim of the petitioner on the ground that the Input Tax Credit claimed by the petitioner was not reflected in GSTR-2A and he did not submit any proof of the payment of the GST to the Government. The Supreme Court in the case of THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED [ 2023 (3) TMI 533 - SUPREME COURT] has held that the assessing officer is required to give an opportunity to the assessee in respect of his claim for Input Tax Credit, if there is difference between GSTR- 2A and GSTR-3B. If on examination of the evidence submitted by the assessee, the assessing officer is satisfied that the claim is bonafide and genuine, the assessee should be given the Input Tax Credit. Merely on the ground that in Form GSTR-2A the tax to an extent of Input Tax Credit being claimed by the petitioner is not reflected should not be a sufficient ground to deny the claim of the assessee for Input Tax Credit. Considering the aforesaid facts of the case and the judgment in the case of 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] , the impugned assessment order so far as the denial of Input Tax Credit to the petitioner to the extent of Rs. 1,04,342/- is set aside. The case is remitted back to the file of the assessing authority to examine the evidence in possession of the petitioner as such irrespective of the difference in GSTR-2A and GSTR-3B and on examination of the evidence, if the assessing authority is satisfied with the claim of the petitioner for Input Tax Credit to the extent of Rs. 1,04,342/- which is denied by the Assessing Authority shall pass orders in accordance with law. Petition disposed off by way of remand. Income Tax 2023 (10) TMI 1203 Reopening of assessment u/s 147 - Reasons to believe - petitioner has entered into unaccounted transactions as per the information made available through Insight Portal along with the report of the DCIT Surat - Assessee submitted that the reasons recorded by the AO are absolutely vague, scanty and non-specific as AO has failed to disclose the nature of transaction, date of transaction, name of party with whom the transactions allegedly have been entered into and whether such transaction relates to balance-sheet item or profit and loss item of either of the petitioner - HELD THAT:- On perusal of the reasons recorded by the respondents, it is clear that no information is revealed with regard to the nature of transaction, date of transaction and name of party with whom such transaction has been entered into. In case of Harikishan Sunderlal Virmani ( 2016 (12) TMI 1558 - GUJARAT HIGH COURT ) this Court held that from the reasons recorded, if the same are on borrowed satisfaction without forming an independent opinion, the assumption of the jurisdiction to re-open the assessment u/s 147 was bad in law. The entire exercise of re-opening would depend upon the reasons recorded by the AO and therefore the reasons recorded to re-open the assessment by the AO must disclose all relevant facts to the assessee so as to refute the reasons by filing objections. Unless the AO records his independent satisfaction in the reasons recorded on the basis of the information received and communicates the same to the assessee, right of the assessee to file objections would remain an empty formality. Therefore, recording of reasons in the facts of the case not disclosing the nature of the transactions, date of transactions and other relevant details would render the entire exercise of reopening vitiated as the respondent-assessing officer has failed to record independent reason to believe that income chargeable to tax has escaped the assessment. Decided in favour of assessee. 2023 (10) TMI 1202 Capital gain tax liabilities adjustment against the Direct Tax Vivad Se Vishwas scheme - Correct incidence/year of capital gains - transfer the challans standing to the credit of AY 2016-17, along with the applicable interest u/s 244A to the credit of the tax demand raised as per Form 3 issued as per Section 5(1) and Rule 4 of DTVSV Act - Seeking refund the excess income tax to the petitioner, and further direct the respondents to issue Form 5, after accepting manual filing of Form 4 by the petitioner. HELD THAT:- The concerned respondent has to make suitable adjustments either physically or by online and to transfer the amount paid under the Direct Tax Vivad Se Vishwas Scheme for the assessment year 2016-2017 to the assessment year 2014-2015 without any further delay. If there is any difficulty for the Department, it is for them to sort out the same without providing any inconvenience to the Assessee with regard to the transfer of challans standing to the credit of assessment year 2016-17 to the assessment year 2014-15. If e-filing or e-transfer is not possible, the respondent is directed to accept the same manually and pass suitable orders. Department has to consider the amount paid as capital gain for assessment year 2016-17 under the Vivad se Vishwas Scheme for the assessment year 2014-15 as no incidence of tax arose for the assessment year 2016-2017, but paid for the incidence of tax which arose for the assessment year 2014-15. Thus, suitable orders can be passed in accordance with law within a period of 30 days from the date of issuance of a copy of this order. Further, the concerned respondents shall accept the Form 4 and issue the Form 5 for the clearance as well. 2023 (10) TMI 1201 Validity of reassessment proceedings commenced without the approval of the specified authority - HELD THAT:- Revenue have filed a counter-affidavit in the matter in which the only assertion made is that PCIT had conveyed her approval to the AO via letter but admittedly, this communication has never seen light of the day. For reasons best known to the respondent/revenue it has chosen not to file the said letter even with the counter-affidavit, despite the petitioner raising a specific objection that the PCIT had not applied its mind while granting approval. To our minds, approval granted by statutory authorities, as required under the provisions of the Act, has to be furnished to an assessee along with the reasons to believe. The statutory scheme encapsulated in the Act provides that reassessment proceedings cannot be triggered till the AO has reasons to believe that income, which is otherwise chargeable to tax, has escaped assessment and, reasons recorded by him are placed before the specified authority for grant of approval to commence the process of reassessment. In this case, the sense we get is that the second condition requiring AO to obtain prior approval of the specified authority was not fulfilled, as otherwise, there was no good reason not to furnish the same to the petitioner along with the document which contained the AO s reasons for holding the belief that income otherwise chargeable to tax had escaped assessment. We are of the view that neither the impugned notice issued u/s 148 nor the impugned order can be sustained. Decided in favour of assessee. 2023 (10) TMI 1200 Expenses incurred at pre-operative stage disallowed - expenditure commenced between the date when the business was set up and the date when the business was commenced - ITAT deleted the addition - HELD THAT:- Tribunal, according to us, noticed quite correctly that there is a distinction between the date when the business was set up and the date when the business was commenced. The expenses incurred between these two dates have rightly been categorized as revenue expenditure. Therefore, the Tribunal proceeded to sustain the view taken by the CIT(A), insofar as the first issue is concerned. We may note something which appellant/revenue, has brought to our notice, that since the pre-operative stage period spilled over to two succeeding years as well, the matter came up before the AO and that the AO made no addition with regard to the expenses incurred during this period. As following the principle of consistency, in our view, no substantial question of law arises, insofar as the first issue is concerned. Income from other Sources - interest was earned on fixed deposit created out of surplus funds, which were used for the execution of the project - HELD THAT:- Tribunal correctly deleted the addition made with regard to the interest as it is held when it is proved that the assessee has set up the business, earned the income from interest during the construction period and has set off the same against the loss under the head PGBP as per section 71 CIT(A) has rightly deleted the addition as the funds parked in the bank on which interest has been earned were inextricably linked with the setting up of the hospitability business - no substantial question of law. 2023 (10) TMI 1199 Reopening of assessment - principles of natural justice denied - tax evasion petition [ TEP ] filed by one Mr S.K. Srivastava as working with the revenue in a senior position - as per assessee sufficient time to assessee to respond objections of the assessee as rejected was not provided - undisclosed investment made in mutual funds and the interest earned thereupon and capital gains on investment made in a Joint Development Agreement (JDA) escaped assessment as no RoI had been filed by the petitioner/assessee. HELD THAT:- Having heard all we are in agreement to the extent that while exercising power under Article 226 of the Constitution, the court would neither examine the merits of the case not enter the quagmire concerning the inadequacy of the material available to the AO while triggering reassessment proceedings. Reassessment proceedings were triggered against the petitioner/assessee on account of the TEP filed - AO in framing the assessment order has accepted contents of the TEP as gospel truth, and has not subjected it to the usual rigoor of putting the material to the petitioner and eliciting his answers with regard to the same. The timeline alluded to hereinabove by us would show that the objection to the reopening were rejected on 13.10.2016 by the AO, who then within 10 to 12 days i.e., 25.10.2016, proceeded to pass the impugned assessment order. Substantial part of the addition is based on the complaint made by Mr S.K. Srivastava. Admittedly, this material was not put to the petitioner. The petitioner/assessee had no opportunity therefore to rebut the material and place his version before the AO. The objection taken by the petitioner that there ought to have been a hiatus of four (4) weeks between the date when the objection preferred by him were rejected and the assessment order was passed does not seem to have been appreciated by the AO. AO seems to have proceeded on the basis that at the relevant point in time, the judgments which, in essence, expanded the scope of principle enunciated in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] did not pertain to the jurisdictional High Court i.e. this court. Therefore, according to the AO, the period between 13.10.2016 (date when the objections preferred by the petitioner were rejected) and 25.10.2016 (when the impugned assessment order was passed) was sufficient. We may note that in a later judgment of Samsung India Electronics Pvt Ltd.[ 2013 (11) TMI 820 - DELHI HIGH COURT] this court categorically held that if objections of the assessee are rejected, then the AO should accord at least three weeks to the assessee to enable him to approach the court before taking up reassessment proceedings. We may however note that it is accepted by Mr Das and Ms Jha that the judgment rendered by this court in Samsung India Electronics case was perhaps not cited before the AO. But according to us that by itself would not be a sufficient cause to side step to principle of hiatus which was declared by the other High Courts, and judgments of those High Courts were concededly cited before the AO. Merely because the judgment in Samsung India Electronics case was not cited before the AO would not absolve him from adhering to the principles which was enunciated by other constitutional courts i.e.,in Allana Cold Storage Ltd. s case [ 2006 (9) TMI 123 - BOMBAY HIGH COURT] and Asian Paints Limited s case [ 2007 (1) TMI 159 - BOMBAY HIGH COURT] as long as there was no conflicting judgement of the jurisdictional court, i.e., this court. We are of the view that the impugned assessment order cannot be sustained, as there has been a grave infarction of principles of natural justice. Decided in favour of assessee. 2023 (10) TMI 1198 Penalty proceedings u/s.271(1)(c) - Defective notice - as argued AO had failed to strike-off the irrelevant default while calling upon the assessee to explain as to why he may not be subjected to penalty u/s 271(1)(c) - HELD THAT:- Failure on the part of the A.O. to clearly put the assessee to notice as regards the default for which penalty u/s 271(1)(c) was sought to be imposed on him by clearly and explicitly pointing out the specific defaults in the SCN(s) for which he was called upon to explain that as to why penalty u/s. 271(1)(c) of the Act may not be imposed upon him, had, thus, left the assessee guessing of the default for which he was being proceeded against, and had divested him of an opportunity to put forth an explanation before the A.O that no such penalty was called for in his case. We, thus, are of a strong conviction that as the A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the defaults for which he was being proceeded against, therefore, the penalty u/s 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained. We, thus, for the aforesaid reasons not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O., set aside the order of the CIT(A) who had upheld the same. Thus penalty imposed by the A.O u/s 271(1)(c) is quashed - Decided in favour of assessee. 2023 (10) TMI 1197 Addition u/s 56 (2)(viib) - difference of issue price and fair market value of shares - rounding off of share prices - HELD THAT:- We find that the assessee has not cited any decision of any court where rounding off has been accepted in the matter of section 56(2)(viib). On the other hand, DR from revenue side has relied upon two decisions of ITAT where it is clearly held that rounding off of even one rupee is not allowed. DR is also very justified in pleading that if the rounding off is allowed in present case on seeing the low quantum of addition, one day it may lead to a huge tax loss to department in a big sized issue of shares. We also take note that the assessee has himself filed a valuation certificate before AO and accepted fair market value at Rs. 19.23 per share, hence the assessee does not have any dispute, quarrel or grievance qua the fair market value. Therefore, AO has rightly arrived at the difference by finding difference of issue price and fair market value and thereby made addition. We have no reason to upset the addition made by AO which is in terms of section 56(2)(viib) the same is hereby upheld. The assessee fails in this appeal. 2023 (10) TMI 1196 TP Adjustment - Comparable selection - HELD THAT:- Inclusion of cyber media research Ltd (formerly IDC (India) Ltd. with respect to the related party transaction filter, CIT- A that it does not cross 25% of the revenue of the comparable company. To establish the functional comparability, we have also compared the employee cost of assessee and this comparable and we found that the total employee cost of the assessee out of the operating cost was 34.9% whereas in case of the comparable company it is 34.5%. However, in the original except reject matrix of the assessee this company appeared as a comparable. Inadvertently it was excluded. When the assessee pointed out the same before the TPO asking for its inclusion, the learned TPO held it to be functionally not comparable stating that the annual account of the assessee company are not reliable because of incorrect disclosure of related party transactions. Before us it was not shown that how the disclosure in the annual accounts of that company could be said to be erroneous without making any enquiry under section 133 (6) of the act. As no new facts, additional evidences were submitted by the assessee for its inclusion before the learned CIT- A, we do not find any infirmity in the order of the learned CIT A in directing the learned TPO to include the above comparable. Accordingly ground number 1 of the appeal of learned AO is dismissed. CIT-A held that has excluded the IDFC investment advisors Ltd on the basis that it is engaged in the business of providing portfolio management services as a registered portfolio manager with the securities and board of India which is having 90% of its revenue coming from that stream and only 10% revenue stream is from advisory services. CIT- A has also directed for exclusion of Ledger up corporate advisory private limited, which is found to be engaged primarily in the business of providing investment banking services like that syndication, private equity deals and other corporate advisory mandates. It is also registered with the securities and exchange board of India and therefore the CIT - A held that it is engaged in merchant banking activities and therefore not comparable to the assessee. Exclusion of Motilal Oswal investment advisors private limited, it was held that it is engaged in the business of providing investment banking, merchant banking services based on the extracts of the annual reports. It was also found that it is an investment banking company engaged in providing comprehensive investment banking solution. All these findings of the CIT- A remain unchallenged by the learned departmental representative before us. We find that there is a reasonable basis for the learned CIT-A to hold so that all these entities are selected as comparable by the learned transfer pricing officer are having different functions. Disallowance on account of error trade loss - Speculative Loss or not - CIT- A deleted the disallowance following the decision of HSBC securities and capital markets India private limited [ 2015 (5) TMI 122 - BOMBAY HIGH COURT] - We also found that assessee does not have any share trading income and does not hold any stock in trade of equity except the shares of Bombay stock exchange. It is not also in dispute that losses have arising on account of error trades only. Therefore, provisions of section 73 of the income tax act with respect to the speculation loss does not apply in case of the assessee. Accordingly we do not find any infirmity in the order of the learned CIT A in deleting the above disallowance. Ground of the appeal of the learned assessing officer is dismissed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- AO has categorically stated that there is a composite use of funds and there is a common pool of human and financial resources which are being utilized by the assessee for earning income in various forms and therefore the claim of the assessee that it did not incur any expenditure towards earning of exempt income is not correct. We find that the satisfaction is recorded by the learned assessing officer. We also find that the law does not require a specific manner in which such satisfaction is to be recorded. We do not find any relevance of dominant purpose of holding investments while making disallowance u/s 14 A of the act. Thus, the claim of the assessee that the shares were acquired on demutualization of Bombay stock exchange membership card where assessee is a stockbroker does not help the case of assessee. In this case the total dividend income is received and according to rule 8D, the learned that AO has disallowed. We do not find any infirmity in the order of the learned lower authorities in confirming the above disallowance. Accordingly, ground number 3 of the appeal of the assessee is dismissed. Ad hoc disallowance of 10% of entertainment and conference expenses, repair maintenance expenses and books and periodical expenses - HELD THAT:- If the assessing officer is not satisfied by any amount of expenditure, the expenditure to that extent should have been disallowed irrespective of its percentage. Merely applying an ad hoc percentage to the total expenditure for holding that such expenditure are not bifurcated into business and non business expenditure is not correct. It is not the case of the revenue that any bogus expenditure has been debited in the books of accounts. Merely because certain vouchers are held to be prepared by self showing cash expenditure, does not result into any illegality as there are certain types of expenditure which are prepared on self made vouchers and reimbursed or paid in cash, i.e. Petty cash expenditure, conveyance etc. As such, the assessee has submitted all the Ledgers of such expenditure, which had proper narration of the nature, and the amount spent along with the name of the person who spent it. AO after obtaining the explanation of the assessee did not further point out to the assessee about specific instances of such expenditure with respect to disallowance. As the disallowance is ad hoc without pointing out any instances of nature of expenditure which are not supported by voucher, we reverse the orders of the lower authorities and direct the learned assessing officer to delete the disallowance of 10% of such expenditure confirmed by the learned CIT A - Accordingly ground number 4 of the appeal of the assessee is allowed. TPA - Kshitij investment advisory Co Ltd is required to be excluded from the comparability analysis - should be excluded from comparability analysis. In CIT versus Tata Power solar systems limited [ 2016 (12) TMI 1600 - BOMBAY HIGH COURT] wherein held that party is not barred in law from withdrawing from its list of comparables, if the same is found to have been included on account of mistake as on facts, it is not comparable, was upheld. In that case, the issue of exclusion of a comparable, which was included by the assessee, was argued before the TPO, it is not permitted by the TPO. In this case also, though it was not argued before the TPO, but first time argued before us, for exclusion of Kshitij investment advisory Ltd. We are also duty bound to compute the ALP of international Transaction. Therefore, there is not much difference whether it is challenged before TPO or before us for the first time. We find that comparable company with effect from 1 January 2010 has hived of its investment advisory services to Everstone investment advisors private limited. Therefore, there is an extraordinary event in the comparable company, which has affected the profitability/PLI of the comparable, as investment advisory services business revenue/expenses is not to be included in the financial of comparable company from 1/1/2010. Therefore, we direct the learned AO/ TPO to exclude Kshitij investment advisory Co Ltd from comparability analysis. The additional ground raised by the assessee is thus allowed. 2023 (10) TMI 1195 Assessment u/s 153A - income which had escaped assessment represented in the form of unaccounted cash paid for the acquisition of various assets by the assessee company - assessment based on loose sheet found during the search at the premise of assessee s major supplier of bottles and cartons HELD THAT:- As proviso to sub-section (1) of section 153A we are of the opinion that the loose sheet containing information regarding over-pricing or over-invoicing of purchase cost of bottles cannot be considered as an asset for the reason that the word asset is explained in Explanation 2 to fourth proviso to Sec. 153A which means any investment of the assessee towards land or building or both, share and securities, loan and advances, deposits in bank account. Moreover, in the assessment order, AO did not mention any evidence to corroborate his claim that the unaccounted cash was paid by the assessee for purchase of its assets or there were any unexplained asset/investment which had been purchased from the alleged unaccounted cash. As relying on Viraj Profiles Limited case [ 2023 (5) TMI 358 - ITAT MUMBAI ] we are of the considered opinion that the ld. CIT(A) has rightly held that the notice issued u/s 153A is without jurisdiction and quashed the assessment so framed under section 143(3) r.w.s. 153A - Decided in favour of assessee. 2023 (10) TMI 1194 Unexplained money u/s 69A - Addition as per the provisions of section 115BBE - CIT(A) giving relief to the extent of 50% of claimed sources from Agricultural income of the father and sustaining the balance addition - HELD THAT:- As observed that the assessee could not produce any documentary evidence in support of his claim, except the confirmation letters together with pattadar pass books of his father and wife, either before the CIT(A) or before the Tribunal. CIT(A) is justified in granting part relief to the assessee. Hence, find no infirmity in the order passed by the CIT(A) and accordingly dismiss the grounds raised by the assessee. 2023 (10) TMI 1193 TP Adjustment - comparable selection - HELD THAT:- Accentia Technologies Ltd. As provided KPO services and, therefore, it is not comparable with the assessee company, which is carrying on BPO activities. TCS E-Serve International Ltd' s annual report of the company does not provide any segmental information related to ITES as well as software development services. The company also owns intangible of substantial amount and is benefitted usually by the Tata Brand. The company is also making appellant for use of such brand. Therefore this aspect also makes this comparable is inappropriate and therefore we order to exclude this comparable. TCS E Serve Limited.nvolved in transaction processing and technology services. It carries on business of providing technology service such as software testing, verification and validation. It is also developed a software such as transport management software therefore functionally this company is dissimilar to the assessee company. It also owns huge intangible and use of 'Tata Brand, which has definitely benefited this comparable, it is directed to be excluded. No valid reason to interfere with the findings of the ld. CIT (Appeals) in excluding the above comparables from the final list of comparable - Appeal of the Revenue is dismissed. 2023 (10) TMI 1192 Genuineness of labour and material creditors - On opportunities provided by the AO, the assessee has failed to produce the required evidence in support of the expenditure claimed by the assessee - HELD THAT:- As found from the remand report of the Ld. AO that the assessee has produced confirmation letters from Eight Labour Groups out of the 17 Labour Groups. AO in his remand report also stated that these confirmation letters provided before the CIT(A) as additional evidence are similar to the one given before the AO and hence requested the Ld. CIT(A) to reject the admission of the additional evidence. We also find that there is no merit in the argument of the Ld. AR that the assessee was not given adequate opportunity to submit the additional evidence before the Ld. AO. AO has provided various opportunities to the assessee as detailed in the assessment order. As the assessee has failed to discharge the onus cast on it by providing material evidence with respect to labour payments and material payments even before us, we find that the Ld. CIT(A) has rightly sustained the addition made by the Ld. AO and therefore we find no infirmity in the order of the Ld. CIT (A) and hence no interference is required in the order of the Ld. CIT(A). Request of the assessee to estimate the income by rejecting the books of accounts rejected - HELD THAT:- The assessee being a Private Limited Company is necessarily subjected to Audit under Companies Act and was also covered by the provisions of section 44AB - AO has rightly not considered the request of the assessee to estimate the income by rejecting the books of accounts. Since the books of accounts have not been rejected and the income is not estimated by the Ld AO, and therefore the plea of the assessee that the additions made on account of labour creditors are liable to be deleted could not be accepted. Additions u/s. 40(a)(ia) - assessee has failed to deduct the tax at source - HELD THAT:- We find that it is not in dispute that the assessee is under obligation to deduct tax at source on various payments as envisaged in the Act. In the instant case, the assessee has failed to deduct the tax at source thereby disallowance U/s. 40(a)(ia) is warranted. Appeal of the assessee is dismissed. 2023 (10) TMI 1191 Addition u/s 68 - Unexplained loan - assessee's case was selected under complete scrutiny with various flagged parameters - CIT(A) deleted the addition - HELD THAT:- CIT(A) noted that assessee had produced the confirmation before the AO which was signed by the son of the assessee and the bank statement evidencing the debit in the account of the giver of the loan Mr. Ishwarbhai D Patel, who had expired on 20.11.2017 as per the death certificate filed and hence, nobody attended to the summons issued by the AO during the assessment proceedings. As decided in the case of CIT Vs Patel Ramniklal Hirji [ 2012 (8) TMI 1078 - GUJARAT HIGH COURT] that where the assessee received loan through account Payee Cheques and in support of loan transaction if he submits copy of books of accounts, bank statement, ITR of the lender, transaction in question was to be regarded as genuine and loan amount could not be added to assessee's taxable income u/s 68 - CIT(A) noted that from the above facts, the creditworthiness of the loan giver Late Ishwarbhai D. Patel has been established. The transactions in question are through banking channels wherein the loan has been received by the assessee through banking channels and even repaid subsequently through banking channels which proves the genuineness of the transaction. Hence, CIT(A) therefore deleted the addition made by the AO u/s 68 correctly - Decided in favour of assessee. Agriculture income - assessee has failed to submit, any sales bill and any other evidences to prove genuineness of the transactions - assessee received income from growing sugarcane, vegetables, mangoes, chickoos etc. The assessee had approximately 900 chickoo trees and 400 mango trees - CIT(A) deleted addition - HELD THAT:- The agricultural income offered by the assessee was accepted in scrutiny assessment of AY 2015-16 as evident from the copy of assessment order produced during the Appellate Proceedings. All these facts go to show that the assessee has agricultural land and is having agricultural income since several years which has been accepted by the Department. Having an agricultural income of Rs. 26,28,436/- for an agricultural land of about 30 acres seems to be quite reasonable and possible. CIT(A) deleted the addition made by the AO - We do not find any infirmity in the above findings of ld CIT(A) - Grounds of appeal of the Revenue are dismissed. 2023 (10) TMI 1190 Additions were made on the ground that Inflated purchase made by showing sale of scrap machinery without corresponding sales or inventory - as per DR CIT(A) committed error in deleting the addition without their being any documentary evidence of sale of scrap machinery or auction documents as claimed at the time of assessment proceedings and relying on the assessment order and sought for reversal of orders - HELD THAT:- CIT(A) after verifying the material on record observed that scrap machinery lying Noida Unit of the assessee was transferred to Kirti Nagar Unit, during the period 07/05/2010 to 09/11/2010 and in the books of Noida Unit, the said machinery has been excluded from the schedule of assets and was included as purchases in the Kirti Nagar Unit. During the year itself the machinery has been sold to one M/s Sh. Mahalaxmi Plywood Industries which has been corroborated with the sale invoices furnished in the paper books before the CIT(A).CIT(A) has also found that the ledger of scrap machinery account for the month of March 2011 which in the format of MM-DD-YYYY, wrongly interpreted as 03/05/2011 instead of 05/03/2011 . Considering the fact that sale proceedings are duly accounted for in the books of account and fixed deposits have been made out of the sale proceeding, the finding of the A.O. that the sales are made in the next financial year has been rightly negated by the CIT(A). No error or infirmity in the order of the CIT(A) in deleting the addition, accordingly, we dismiss the Ground No. 1 of the Revenue. Suppression of sales - Addition being margin sales out of books on the basis of consumption of electricity and powder consumed during the year in the manufacturing process - A.O. observed that no raw material (Powder) was issued in the month of February and March 2011, whereas consumption of electrical unit is shown in the respective month and no production of cabinets was shown - CIT(A) deleted the addition - HELD THAT:- As per the record, the assessee had production 4083 unit of cabinets for which no material could have been issued as the materials/powder was supplied by the customer for manufacture of cabinet on job work. The assessee had also furnished detailed reconciliation statement wherein the difference in terms of unit of electricity consumed as recorded by the A.O. was duly reconciled. CIT(A) also found that the main reason for variance is that in the preceding year there was large order of 14 inch TV Cabinets, whereas the production carried out during the relevant year was of 29 inch cabinets. Since 29 inch cabinets were manufactured on larger machines, the electricity consumption is on the higher side. It is also noticed that the report of the Excise Audit for the year does not indicate any material discrepancy in the goods manufactured or any instance of sales outside the books. It is well settled law that the Assessing Officer solely on the basis of variance in power/electricity, additions cannot be made on the allegation of unrecorded sales - No error or infirmity in the order of the CIT(A) in deleting the addition. Revenue appeal dismissed. 2023 (10) TMI 1189 Excess depreciation on the lorry hire charges - @ 30% or 15% - AO restricted the depreciation @ 15% by considering the vehicles as plant and machinery related to assessee s business - HELD THAT:- Claim of depreciation @ 30% is duly covered by order of Amar Singh Bhandari [ 2018 (10) TMI 296 - RAJASTHAN HIGH COURT] Accordingly, we set aside the order of the ld. CIT(A) and quash the addition related to rejection of depreciation by the ld. AO. Development charges - Assessee maintains the books of accounts in mercantile system - HELD THAT:- Assessee debited the development charge and also the contra entry was passed and treated the amount as the liability. The assessee is bound to pay the amount as per the agreement. After the settlement of dispute, the amount should be paid to the said authority. We respectfully relied on the order of Udaipur Mineral Development Syndicate (P.) Ltd [ 2002 (8) TMI 26 - RAJASTHAN HIGH COURT] The said expenses is allowable. The addition made by the ld. AO is quashed. Deduction u/s 80IA - admission of additional evidences - CIT(A) restricting the deduction u/s 80IA to Zero on the pretext that there was loss from business or profession for which application for admitting additional ground was raised before the CIT(A) - HELD THAT:- As assessee placed that a request was made to the ld. CIT(A) related to submission of additional ground during appeal hearing. DR had not made any objection about the submission of the assessee. The matter was remained untouched by the ld. CIT(A). So, in our considered view, ground be remanded back to the file of the ld. CIT(A) for adjudicating the issue after allowing opportunity to the assessee in the set aside proceeding. 2023 (10) TMI 1188 Assessment u/s 144C(13) in pursuant to the directions of DRP - payment made for immovable property - Addition u/s 69 - payment made for immovable property unexplained - HELD THAT:- The provisions of sections 144C provides the entire mechanism for making a reference to the DRP; powers of the DRP and also the procedures which have to be followed to issue directions to the Assessing Officer. Sub Section (5) when Read with Sub Section (7) and (8) makes it very clear that DRP could not have issued direction for verification in the manner it has done in the present case. Ld. DRP is supposed to examine the material before it and directions issued by way of guidance to Ld. AO under sub section (5) should be categorical, specific and comprehensive. In the case in hand, the direction for verification as issued were colourable and the Latin maxim Quando aliquid prohibetur ex directo, prohibetur et per obliquum , which means you cannot do indirectly what you cannot do directly when applied to aforesaid provisions applicable to DRP prohibits such directions of verification of the whole of the case of an assessee without any element of guidance for the Ld. AO. There was no liberty for further enquiry the Ld. AO has merely reasserted his opinion without any verification of the material and submissions which Ld. DRP had considered were relevant to settle the query raised in assessment. The verification is process of examination of truth by proof and a general direction to verify without liberty of further enquiry on the issue is of no help to Ld. AO. Thus the Bench is inclined to allow ground in favor of the assessee and allow the appeal for statistical purposes. 2023 (10) TMI 1187 Validity of Revision u/s 263 - prescription and requirement of revision u/s 263 - objection raised by Ld. AR that the show-cause notice issued on the very same day on which proposal is mooted before PCIT - Revenue submitted that there are multiple communications and in-house working in department before show-cause notice is actually issued to assessee and that the draft-notice was prepared by AO at the behest of PCIT - HELD THAT:- PCIT received proposal for revision from AO and the AO has even placed draft-notices before PCIT for signature. AR is successfully able to demonstrate that the revision in these cases had been conducted on the bedrock of AO s proposal and draft-notice. That means, the conditions prescribed in section 263 are not fulfilled As relying on Alfa Laval Lund AB [ 2021 (11) TMI 327 - ITAT PUNE] the present case is having a jurisdictional deficit resulting into vitiating the impugned order. Therefore, we quash the impugned order on legality aspect itself and restore the original assessment-order passed by AO - Decided in favour of assessee. 2023 (10) TMI 1186 Taxability of income in India - income earned from ILP[Industrial Liaison Program], Sponsorship assignments and consortium membership fees to tax as FIS u/A 12(4) of US-India DTAA - HELD THAT:- Receipts from Industrial Liaison Program - As for attracting liability to pay tax under the head FIS in terms of Indo-US DTAA, the services should not only be of technical nature, but it should also make available the technical knowledge, experience, skill, know how, etc., to the recipient of such technical services. In the case of ILP program, the assessee is merely introducing the corporates to its faculty, showcasing the research projects undertaken by them which will enable the corporates to see if any of this research could be leveraged by them in their own strategic plan. Assessee is neither rendering any technical services to the Corporates nor making available any technical knowledge or experience or skill. What is being transferred to the Corporates is purely the factual information with respect to the various research projects. Assessee is not making available the underlying know-how with respect to the said research projects as enumerated under the DTAA and MOU. From the above facts, we are of the opinion that the receipts under the head ILP cannot be reckoned as FIS in nature within the meaning of Article 12 of the India-US DTAA. Accordingly, we set aside the finding of the DRP and direct the AO to delete the addition made in relation to this ground. Hence the ground of appeal of the assessee is allowed. Sponsorship receipts - Assessee undertakes specific research for the corporate and the technology and knowledge from the research is provided to the corporate in the form of research report, who will apply the same and derive an enduring benefit. Once, the assessee after the research submissions report not only provides the research report to the Indian corporate who then apply the research work for their own business. Further, in the specific IP clause agreement as incorporated above, there is a clear-cut stipulation and sponsor will get IP and in some cases it was joint IP, which also goes to show that technical knowledge has been made available to the clients. Thus, in our view it was clearly making available of technical designs and knowhow and accordingly, the ld. AO and ld. DRP had rightly concluded that the receipts under this programme falls within five years clause of India-US DTAA. Accordingly, we conclude that the receipts earned by the assessee under the sponsorship arrangement qualify as FTS/ FIS within the meaning of the Act and DTAA. In the result, this ground filed by the assessee is dismissed. Receipts from co-ordination / consortium membership as FIS under the Treaty - In the case of co-ordination agreement, the assessee is merely acting as the host wherein the assessee has the responsibility to help manage the overall direction of the research performed by the consortium members and helps to provide access and dissemination of the Consortium research to its members. Assessee does not undertake any research nor does it describe any method or process involved in carrying out such research. The assessee s role is to merely act as a co-ordinator between all the consortium members. It is only providing administrative support to the members. Thus, the assessee is not rendering any technical services to the corporate members. Also, the assessee is not providing any technical plan or design to the corporate members. Assessee cannot be said to be making available any technical know-how, experience, etc., or technical plan / design to the members as enumerated under the DTAA and MOU. There remains no ambiguity to the fact that the receipts are not FIS in nature within the meaning of Article 12 of the India-US DTAA. Accordingly, we set aside the finding of the DRP and direct the AO to delete the addition made in relation to this ground. Hence the ground of appeal of the assessee is allowed. Not granting of credit as claimed in the Income-tax Return - AO is directed to verify and grant the credit of TDS in accordance with law. The ground of appeal of the assessee is thus allowed for statistical purposes. 2023 (10) TMI 1185 Withholding tax - Intimation u/s 201 - Effect of protocol signed at the time of conclusion of the principal tax treaty - Relevant notification yet to be issued by the Government - rate of tax to be deducted at source on the payment of fees for technical services by the assessee to TDK Electronics Components SA - rate of withholding tax as per the provisions of Income-tax Act, 1961 OR rate specified in the relevant 'tax treaty' entered into between India and Spain read with the protocol entered into with the members of the OECD - As per assessee in view of the provisions of Article 13 read with Protocol appended below the Indo-Spain tax treaty which forms an integral part of tax treaty from Assessment Year 2018-19 and onwards and as the treaty rate is more favourable to the assessee, the assessee was required to deduct tax at source under the head FTS @ 10% HELD THAT:- As in view of the decision of this tribunal in the case of ITC Ltd [ 2001 (12) TMI 196 - ITAT CALCUTTA-A] Tribunal has held that the protocol to the DTAA is an integral and indispensable part of the tax treaty and furthermore, the benefit of lower rate as prescribed in the protocol for fees for technical services under the relevant tax Treaty is not dependent on any further unilateral action or issuance of notification by the respective Governments. As also held by this Tribunal that no separate notification is required to be issued by the Government of India in order to make a protocol applicable. We find merit in the contention of assessee that as per the DTAA entered into between India and Spain read with the protocol entered into with the members of the OECD, tax rate of 10% was applicable on the payment for fees for technical services. To this extent, relevant grounds raised by the assessee are allowed. As 10% tax rate as per the DTAA includes surcharge and education cess and no separate surcharge of education cess needs to be added - We find that it has been well settled that in case the rate of tax are adopted as per the DTAA, then no surcharge and education cess is to be applied over and above the tax rate since the tax rate as per the DTAA is held to be all-inclusive of such surcharge and education cess. Since the rate of tax applicable in the case of the assessee is 10% and not 10.608% and since the assessee has rightly deducted the tax at source @ 10%, it cannot be treated as an assessee in default and accordingly the excess amount of tax demanded by the revenue authorities is deleted. Further as tax demand has been deleted, the interest levied also stands deleted being consequential in nature. Accordingly, all the effective grounds raised by the assessee in the instant bunch of appeal stands allowed. 2023 (10) TMI 1184 TP Adjustment - Disallowing economic adjustments for difference in working capital employed by assessee and its comparables - Comparability analysis - HELD THAT:- For negative working capital of the comparables, this issue has been settled in the case of Software AG (India) Pvt. Ltd [ 2015 (11) TMI 1895 - ITAT PUNE] and for this, even the OECD guidelines also confirmed the position. In the present case and noted that the Atmel India CDS segment operates with relatively favourable working capital position than that of comparable companies and as a result of this Atmel India working capital percentage on operating cost turns out to be negative i.e. -9.71%. We noted that this fact does not hamper from claiming of working capital adjustment as the Tribunal is consistently allowing this claim as held in the case of Software AG (India) Pvt. Ltd., supra. Hence, we direct the TPO to allow the claim of assessee accordingly. This issue of assessee s appeal is allowed. TPO rejecting Akshay Software Technologies Limited - As before us, argued that Akshay Software Technologies Ltd., is involved in procurement, installation, implementation, support and maintenance of ERP products services. It was also argued that Akshay Software Technologies Ltd., is financially comparable as it is engaged in providing computer software services with the assessee company. Actually this fact needs to be verified whether the Akshay Software Technologies Ltd., is comparable with the functions of the assessee or not. Hence, this issue needs to be referred back to the file of the TPO who will find out whether Akshay Software Technologies Ltd., is comparable to the assessee or not. R Systems International Ltd. rejected as adopted statutory year ending on 31 st December, 2012 as financial year as against the financial year ending for tax 31 st March, 2013 in the present year - We noted that this does not make any difference whether a company is maintaining its books of accounts for the December ending or March ending. Only a suitable adjustment has to be made in view of different fiscals. Hene, we direct the TPO to take this company as comparable after making suitable adjustments. We direct the TPO / AO accordingly. Appeal filed by the assessee is partly-allowed for statistical purposes. 2023 (10) TMI 1183 Addition u/s 68 - unexplained nature and source of the share premium and non discharge the onus of proving the genuineness of the transactions and identity and creditworthiness of the share applicants - assessee argued AO was satisfied with the share capital received from the alleged four share applicants and only added the share premium even though total amount of share capital and share premium were received from same share subscribers and same banking channel - HELD THAT:- Where the share applicants have duly responded to the notices u/s 133(6) of the Act and all documentary evidences have been filed by the assessee to discharge its primary onus explaining the nature and source of the alleged share premium and the ld. AO having failed to find any discrepancy in these details, the decisions of this Tribunal in the case of M/s. Mahalakshmi Vinimay (P) Ltd. [ 2023 (5) TMI 1264 - ITAT KOLKATA] holding in favour of the assessee observing that AO could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. Once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Thus we delete the addition made u/s 68 of the Act and allow all the effective grounds raised by the assessee. 2023 (10) TMI 1182 Exemption u/s. 54EA - surplus arising on transfer of 10,00,000 shares as the business receipt arising from transfer of shares held as stock-in-trade - whether the gain arising on transfer of shares of DSPML Sec should be assessed to tax under the head capital gains or as business income and, consequently, whether the assessee would be entitled to exemption in respect of the same u/s 54EA? - HELD THAT:- Equity shares of DSPML Sec is an unlisted shares and therefore, the principle laid down in the said Circular will apply to its case. The exceptions referred to paragraph of the said Circular will not apply as there is no doubt about the genuineness of the transfer, nor does the issue pertain to lifting of corporate veil. The third exception being transfer of shares along with the control and management of the underlying business is also not applicable to its case because, the AO has himself noted that Myrill Lynch had 4 members on the Board of Directors of DSPML when they held only 8.33% equity stake and there was no change in this position even after they acquired 40% stake. Even the ld. AO in the assessment report dated 01/01/2015 has accepted this position, accordingly, in view of the CBDT Circular itself, we hold that transfer of unlisted shares of DSPML is to be taxed under the head capital gains irrespective treating it as business income is set aside and the transfer of shares is treated as capital gains. Once, the gains arising of transfer of shares of DSPML is capital gains, then, the assessee is entitled for exemption u/s. 54EA - claim of deduction / exemption u/s. 54EA is allowed. 2023 (10) TMI 1181 Income taxable in India - Taxability of Management Service Fees (MSF) - services provided by the assessee in terms of service agreement - Royalty - whether any imparting of any kind of knowledge, skill or experience? - HELD THAT:- With regard to various streams of services like providing of information technology, operational support marketing, quality, health, safety and environment, estimating and engineering and personal and organization, administration and legal services, it has been held that there is no imparting of any kind of knowledge, skill or experience by way of information concerning industrial, commercial or scientific which is made available to VOIPL. For instance, assessee has stated that, information technology services are provided for use of group companies computer system where IT teams provide manual general information without providing any information or method to design or create a computer system. IT is mainly kind of help desk and trouble- shooting services which are required on a regular basis. For operational support system also, it mainly provides for check- list for project plans, safety work and inspection plans etc. Similarly, for marketing, the assessee provides for e- marketing through its website and maintaining it, printing and publishing brochures which can be distributed to its potential clients. It also helps VOIPL to obtain certificate of approval from concerned organizations and obtained the contracts on the regular basis. Regarding quality health and safety environment services, the assessee merely conducts internal audits at regular intervals so that proper adherence to such quality standards and procedures are valid/ should remain valid. Similarly, in the estimating and engineering services and other services also, the assessee is mainly providing tender process, helping and preparing (estimates) and bids and plan consisting in local performance and other guarantees to the client of VOIPL etc. For rendering of these services, there is no element of imparting any know how or there is transfer of any knowledge, skill or experience. Thus, we hold that none of the services provided by the assessee in the term of service agreement falls within the scope and ambit of royalty as defined in Article 12(4) of the DTAA. Here again, Management services fees charged is an allocation of cost which is without markup, hence it has been stated that the same being in nature of reimbursements do not constitute Royalty as per India-Netherlands Double taxation avoidance agreement (DTAA'). We find that the aforementioned decision of the ITAT in assessee s own case for AY 2009-10 [ 2016 (11) TMI 1249 - ITAT MUMBAI] has also held that the payments received by the assessee are in nature of reimbursement without any markup and thereby, such reimbursements cannot be held to be royalty. None of the services provided by the assessee in terms of service agreement falls within the scope of Royalty as defined in Article 12(4) of the India Netherlands DTAA and also that the payments received by the assessee are in the nature of reimbursement without any mark-up and therefore, the same cannot be held to be Royalty and not taxable in India. Further, Management Services if represents the allocation of the actual cost incurred which has been certified by the auditors and the Tribunal has held that Management Services Fee are not taxed in India. Accordingly, this issue is decided in favour of the assessee. 2023 (10) TMI 1180 TP Adjustment - ALP for corporate guarantee - HELD THAT:- Respectfully following the said decisions of the coordinate benches of the Tribunal in the case of the Appellant for the Assessment Years 2011-12 [ 2021 (10) TMI 822 - ITAT MUMBAI] , 2012-13 [ 2021 (4) TMI 254 - ITAT MUMBAI] , 2013-14 [ 2021 (10) TMI 453 - ITAT MUMBAI] and 2014-15 [ 2021 (4) TMI 254 - ITAT MUMBAI] , we hold that corporate guarantee commission determined by the Appellant at the rate of 0.35% per cent per annum is at arm s length not requiring any transfer pricing adjustment. Disallowance u/s 14A r.w. Rule 8D - assessee has suo moto disallowed expenses - Mandation of recording satisfaction - HELD THAT:- As decided in M/S GREATSHIP (INDIA) LTD. CASE [ 2022 (12) TMI 1464 - ITAT MUMBAI] the dissatisfaction has been recorded, however, the same is not in accordance with mandate of Section 14A(2) of the Act as the Assessing Officer has acted in a mechanical manner based upon conjecture/surmise and has recorded dissatisfaction without having regard to the accounts of the Appellant and/or the computation of suo moto disallowance made by the Appellant under Section 14A of the Act. The general hypothesis made by the Assessing Officer fails to meet the mandate of Section 14A(2) of the Act in view of the methodical computation of disallowance furnished by the Appellant taking into the account the actual expenditure incurred by the Appellant. Accordingly, we delete the addition. Computation of book profit making adjustment on account of addition made in respect of guarantee commission and disallowance made u/s 14A r.w Rule 8D by the assessing officer - HELD THAT:- We find that AO has neither made any discussion nor proposed any addition in the draft assessment order pertaining to making adjustment in the book profit u/s 115JB of the Act and also made no discussion or addition in the final assessment order. Therefore, following the decision of Sanmina SCI India (P) Ltd. ( 2017 (8) TMI 663 - MADRAS HIGH COURT ) and decision of Woco Motherson Advances Rubber Technologies Ltd. [ 2017 (4) TMI 660 - GUJARAT HIGH COURT] . We have already deleted the aforesaid further addition made u/s 14A of the Act on the basis adjustment made by the assessing officer in the computation of book profit u/s 115JB of the Act. In view of the above facts and judicial findings, the appeal of these grounds of appeal of the assessee are allowed. Short credit of TDS - HELD THAT:- As ITAT in the case of the assessee itself for assessment year 2018-19 [ 2022 (10) TMI 1209 - ITAT MUMBAI] in appeal against intimation u/s 143(1) has allowed the appeal in favour of the assessee. Therefore, we direct the AO to allow the claim of TDS credit as directed by the ITAT in the case of the assessee as referred above, therefore, this ground of appeal of the assessee is allowed for statistical purpose. Customs 2023 (10) TMI 1179 Payment of penalty as a condition to re-export can be imposed or not - Seeking permission to re-export the goods - Mis-declaration of quantity of goods - import of Shikakai and Areca nut - 9845 kgs of Areca nuts were in excess and 9920 Kgs of Shikakai were in short supply in terms of quantity declared in the bill of entry - HELD THAT:- Penalty imposed by the respondent authorities is for violation of the provisions of the Act, 1962 which has nothing to do with the redemption of the goods which are permitted to be re-exported on payment of fine though the same is also subject matter of the appeal. In such circumstances, the respondent authorities ought to have permitted the petitioner to re-export the goods without insisting upon the payment of penalty imposed by the said order as the same is subject matter of appeal before the Appellate Authority. The paragraph No. 17.4 with regard to making it mandatory for the petitioner to pay the penalty as a condition precedent for re-export the goods is without any basis and the same is required to be modified. Therefore, the paragraph No. 17.4 of the impugned order would now read as that the petitioner is permitted to re-export the goods on payment of redemption fine only. The respondent authorities are directed to permit the petitioner to re-export the goods without insisting upon the payment of penalty imposed by the respondent authority in the order permitting re-export of goods on payment of redemption fine of Rs. 5,00,000/- only - Petition allowed in part. 2023 (10) TMI 1178 Levy of penalty u/s 112 114 of the Customs Act, 1962 - abating the importer to import goods illegally by resorting to undervaluation - Proxy importer or not - HELD THAT:- The investigation was conducted alleging illegality by way of undervaluation of the goods. During investigation statements were recorded and during the pendency of the investigation, the importer approached the Hon ble High Court of Kerala and as directed by the Hon ble High Court, goods were released to importer. The Adjudication Authority has concluded the findings against the appellant on the ground that documents pertaining to the import was handed over to clearing agent by the appellant. However, there is no admissible evidence forthcoming in the impugned order that appellants had resorted to undervaluation of goods. Moreover as per the order issued by Adjudicating Authority, goods were released to the Proprietor of the importer M/s Pushpa Telecom. Once the importer itself appears before the Hon ble High Court by filing an affidavit and when the Hon ble High Court find the proprietor of the firm M/s Pushpa Telecom Shri R. Mohandas Rangasamy as bona fide importer to order release of goods, there is no reason to consider him as proxy importer as held by the adjudication authority. In present import, there is no evidence to allege that appellants were actively involved in illegal import of goods by communicating with overseas agencies or by transferring any amount though illegal channel. Merely if the documents pertaining to the import is handed over through the appellants to clearing agent, no conclusion can be drawn that appellants are involved in illegal import. Appeal allowed. 2023 (10) TMI 1177 Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Failure to bring the rejection report of FSSAI to the knowledge of Customs authorities - non conduct of due diligence and advise the importer properly - Withholding of information or not - delay or inefficiency or non-cooperation to join the investigation by the appellants or not - contravention of Regulations 10(d), (e), (f), (m) and (q) of the CBLR, 2018 - HELD THAT:- There is definitely delay in adjudication and that for the import transaction in September 2019, the order of revocation of appellant s customs broker license has been passed on 04.05.2023. Revenue is unable to explain why there was such a long delay in taking action against appellants, when the information about confirmation of penalties for improper import through SIIB investigation was received vide Order dated 31.03.2022. There is no mention of when the offence report was received from Kolkata Customs though it is shown that based on adjudication order of SIIB investigation, prohibition order of Commissioner of Customs, Kolkata, the Mumbai Customs authorities have initiated action under CBLR, 2018. There are no reasons recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner. It appears that the reasons having been not quoted and if such reasons exist, the same being not specified and not explained for undue delay cannot be accepted as reasonable grounds. On the basis of various decisions taken by the coordinate benches of the Tribunal and higher judicial forums on the adherence to time limits prescribed under CBLR, 2018, and for the opportunity to be given for cross examination of witness whose statements were relied upon for action to be taken under CBLR, it is found that there is no basis for sustaining the impugned order of the learned Principal Commissioner. Failure to bring the rejection report of FSSAI to the knowledge of Customs authorities - non conduct of due diligence and advise the importer properly - violation of Regulation 10(d) and 10(e) of the Rules - HELD THAT:- The records of the case indicate that the Non-compliance certificate/rejection report which was supposed to have generated on 17.03.2020, was communicated to the importer and the appellants by FSSAI vide their letter dated 14.01.2021 only on 14.01.2021 as attachment to the mail. The two e-mail dated 01.01.2021 and 14.01.2021 originating from Deputy Director (Eastern Region) of the FSSAI addressed to appellants and importer have been issued beyond the date of clearance of imported goods by Customs on 20.03.2020, and thus the appellants could not have either advised the importer or brought this to the knowledge of Customs - Further, when the CBEC circular and FSSAI guidelines specifically provide that the Customs authorities should check on the issue of NOC before clearance of imported goods, the responsibility for exercise of due diligence or bringing this to the knowledge of Customs does not lie on the part of the appellants and for the same, responsibility cannot be fastened on the appellants - there is no evidence to indicate any violation of Regulations 10(d) or 10(e) ibid, by the appellants. Withholding of information or not - delay or inefficiency or non-cooperation to join the investigation by the appellants or not - violation of Regulation 10(f), 10(m) and 10(q) ibid - HELD THAT:- There is no factual evidence to show that the appellants had withheld any information, or was there any delay or inefficiency or non-cooperation to join the investigation by the appellants. The factual records indicate that the appellants were not aware of the non-conformity certificate issued to the importer and they were informed by the importer about the NOC having been issued based on the follow-up visit of the importer to the office of FSSAI. There is no evidence to show any inefficiency or undue delay on the part of appellants in clearance of the imported goods. In fact, the B/E was filed on 25.09.2019 and it is due to inaction on the part of the Customs, the entire clearance of goods was delayed - the show cause proceedings have not duly observed the principles of natural justice in giving reasonable opportunity to the appellants to properly place their case before the appropriate authorities. Thus, there is no evidence to indicate any violation of Regulations 10(f), 10(m) or 10(q) ibid, by the appellants. It is factually incorrect to state that the appellants had colluded with the importer in clearance of imported goods contrary to the FSSAI rejection certificate. Thus, it is found that the conclusions arrived at by the Principal Commissioner in the impugned order is contrary to the factual position and thus it is not legally sustainable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants, as well as in imposition of penalty against them and for forfeiture of security deposit - appeal allowed. 2023 (10) TMI 1176 Refund claim - fulfilment of the condition of filing Appeals against the self-assessed Bills of Entry as a pre-requisite to entertain the refund claim or not - classification of goods Pisum Sativum [Peas] - to be classified under Sl No.20 or under Sl No.20A during the period under dispute? - interpretation of Notification No.50/2017 Cus dated30.6.2017, as amended by Notification Nos.84/2017 Cus dated 8.11.2017, 93/2017 Cus dated 21.12.2017 and 29/2018 Cus dated1.3.2018. Whether the present case calls for fulfilment of the condition of filing Appeals against the self-assessed Bills of Entry as a pre-requisite to entertain the refund claim as per the judgement in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] by the Hon ble Supreme Court being relied on heavily by the Revenue? - HELD THAT:- The AMAN MEDICAL PRODUCTS LTD. VERSUS COMMISSIONER OF CUSTOMS, DELHI [ 2009 (9) TMI 41 - DELHI HIGH COURT] decision pertains to pre-amendment provisions and has been held as not correct by the Apex Court in the ITC case. The Micromax decisions of 2016 and 2019 MICROMAX INFORMATICS LIMITED VERSUS UNION OF INDIA OTHERS [ 2016 (3) TMI 431 - DELHI HIGH COURT] and MICROMAX INFORMATICS LIMITED VERSUS THE UNION OF INDIA AND ORS. [ 2018 (12) TMI 802 - BOMBAY HIGH COURT] respectively considered the amended provisions of Section 27 to arrive at the decisions. During the period under dispute the importers were without doubt covered by these decisions since the ITC judgement was rendered by the Supreme Court subsequently. In these decisions, it was held in respect of self-assessed Bills of Entry, the importers were not even required to file any application for re-assessment as was being directed vide the Board Circular 24/2004 Cus dated 18.3.2004. These decisions had effectively overruled the Board Circulars - In the present case, by documentary evidence the importers have proved that they have made the efforts to get the self-assessed Bills of Entry re-assessed as per the factual matrix. Whether the re-assessment request under Section 149 would meet the requirement of filing of Appeal, because the Hon ble Supreme Court in the ITC case has held that before the refund claim is entertained, Appeal has to be filed against the self-assessed Bills of Entry? - HELD THAT:- From a careful analysis of section 149, it is found that under the said provision a discretion is vested on the proper officer to authorise amendment of any document after being presented in the customs house. However, as per the proviso, no such amendment shall be authorised after the imported goods have been cleared for home consumption or warehoused, etc. except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, etc. Thus, amendment of the Bill of Entry is clearly permissible even in a situation where the goods are cleared for home consumption - In the instant case, petitioner has not sought for any refund on the basis of the self-assessment. It has sought re-assessment upon amendment of the Bills of Entry by correcting the customs tariff head of the goods which would then facilitate the petitioner to seek a claim for refund. Madras High Court in M/S. HEWLETT PACKARD ENTERPRISE INDIA PRIVATE LIMITED VERSUS JOINT COMMISSIONER OF CUSTOMS, DEPUTY COMMISSIONER OF CUSTOMS, THE PRINCIPAL COMMISSIONER OF CUSTOMS, UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2020 (10) TMI 970 - MADRAS HIGH COURT] correctly held that in a case of correction of inadvertent error, the appropriate remedy would be seeking an amendment to the Bills of Entry and not fling of appeal because there is no legal flaw in the order of self-assessment amenable to appeal but only a factual mistake which can be rectified by way of amendment or correction. Such correction or amendment has been sought for by the petitioner on the basis of documents which were already in existence at the time of release of the goods for home consumption. This judgement after considering the Supreme Court s decision of ITC with detailed analysis, clearly holds that the self-assessed Bills of Entry can be entertained for re-assessment under Section 149. It holds that there is no specific requirement for an Appeal under Section 128 and relies on the decision of ITC. Against this decision of Bombay High Court, the Revenue filed SLP, which has been dismissed by the Supreme Court as reported in COMMISSIONER VERSUS DIMENSION DATA INDIA PRIVATE LTD. [ 2022 (2) TMI 750 - SC ORDER] . Whether during the period under review the goods in question, Pisum Sativum [Peas] falling under Customs Tariff Heading 0713 10 00, are required to be assessed @ NIL rate of BCD in terms of Sl No.20 as claimed by the importers [two appellants and five respondents] or the goods are required to be assessed @50% rate of BCD in terms of Sl No.20A, as claimed by the Revenue? - HELD THAT:- During the period under dispute, in view of the amendment carried out under Notification No.29/2018 dated 1.3.2018, it is amply clear that the product under dispute fell both under for Sl No.20 and Sl No.20A during the period under question. If it were not to be so, there are no reason for the Revenue to bring in the amendment by way of this Notification No.29/2018 Cus dated 1.3.2018 at all. This is rather a case of ambiguity in the Taxation liability and not a case of ambiguity on account of exemption granted. The Revenue cannot deny that during this period, any importer could have insisted on getting the NIL rate of BCD benefit by citing the co-existence of Sl No.20 and Sl No.20A for the brief period. The very fact that the Sl No.20 was further modified on 1.3.2018 to include Pisum Sativum in the exclusion list, it would clarify that this product was very much part of both Sl No.20 and Sl No.20A. If there is a scope to hold that the product may fall both under Sl No.20 as well as under Sl No.20A during the period under dispute. If so, as to whether the beneficial rate of BCD can be claimed by the importers or the same is not to be extended to them in terms of the Hon ble Supreme Court s judgement in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] as is being canvassed by the Revenue? - HELD THAT:- During the period in question the Notification itself specifies two Effective Rates of 50% and NIL rate. This has resulted in ambiguity about as to whether the Taxing provision in this case is NIL or 50% BCD. As a matter of fact,the importers are not availing any exemption, but taking recourse to lesser Tax liability as per the Effective Rates specified in the Notification, which is beneficial to them, for which they are eligible to do so. The case law of Dilip Kumar, in fact helps the importer rather than the Revenue. The arguments of the Revenue cannot be agreed upon that the case law of Dilip Kumar would be of any help to them so as to overcome the dual rates of BCD specified during the period in question. The Notification No.50/2017 Cus dated 30.6.2017, being an Effective Rates Notification in respect of the goods in question, Pisum Sativum, rather helps the importer s case. Appeals of Revenue dismissed. 2023 (10) TMI 1174 Rectification of mistake - Error apparent on the face of record - appeal is dismissed under litigation policy - HELD THAT:- It is found that the appeal filed by the appellant before this tribunal in case of seizure/confiscation of gold biscuits to be maintainable before this Tribunal. Accordingly the same is dismissed as non maintainable. Same should have been the fate of the appeal filed by the Revenue which has been against the same order of Commissioner (Appeals). The appeal of the revenue was also filed before the wrong forum and could have been dismissed as not maintainable. However the bench dismissed the appeal on the ground that the amount involved in appeal is less than the threshold limit provided for by the litigation policy circular issued by the revenue. Against the order dismissing the appeal filed by revenue for the reason of amount involved, revenue has filed the application for rectification. When Revenue itself has stated in appeal as above they cannot claim any error apparent on record taken for which their appeal was dismissed. The grounds stated in the application for rectification of mistake are not the part of records before the tribunal for consideration. The new facts and grounds taken in the rectification application, which were never the part of the appeal considered cannot justify the rectification application. Accordingly, this rectification of mistake application can be dismissed on this ground itself. Rectification of Mistake application filed by the Revenue is dismissed. Securities / SEBI 2023 (10) TMI 1173 Writ petitions by minority shareholders of Bharat Nidhi Ltd. ( BNL ) - Request to place on record a compilation of documents - complains to the SEBI of violation by BNL of various provisions of the Securities laws - allegation of violations pertaining to the minimum public sharing norms ( MPS ) as also violations in respect of the promoters disclosure in shareholding in BNL - as contented that BNL was earlier listed on the Delhi Stock Exchange and after the same ceased to be functional, BNL had sought listing of its share at the Calcutta Stock Exchange, which is also not functional. BNL is now stated to be on the Dissemination Board of the National Stock Exchange. HELD THAT:- The contents of Regulation 29 to the effect may not be released to the public is with a further rider that only if the same prejudices the Board and/or the applicant . These contents are quite, significant, by virtue of which Regulation 29 cannot be read as a blanket or a mandatory bar on non supply of documents and information. By no stretch of imagination, can it be said that the petitioners in the present case, who are minority shareholders and in such capacity, being part owners of the company to the extent of their shareholding, are persons who are alien/outsiders to the company (BNL), moreover they are integral to the company, having an inextricable concern and interest in the functioning and management of the company. Thus the word public as used in Regulation 29 can in no manner be made attributable to shareholders of BNL like the petitioners. This apart, if such contention as urged on behalf of the respondents that the petitioners are public and therefore, they are not entitled to receive information by the applicability of Regulation 29, if accepted, the same yardstick and parameters become applicable to respondent Nos. 3 to 9, who are also shareholders of BNL, who are hence not a different class, than that of the petitioners. The petitioners as also respondent Nos. 3 to 9 belong to the same species as shareholders As it cannot be countenanced that some shareholders can take shelter under Regulation 29 to plead confidentiality of settlement information, against a group of other shareholders, so as to bring about an effect that information in relation to settlement be not supplied to such persons of their own class who are similarly situated. No shareholder can take a position that he cannot disclose any information on the affairs of the company to other shareholders. This would bring about a situation of disharmony, distrust causing damage to the management and functioning of the company. None of the contentions as urged on behalf of respondent Nos. 2 to 9 in opposing the prayer of the petitioners to furnish documents would persuade us to hold that there was any embargo legal and/or factual for such documents not to be furnished/supplied to the petitioners. The objection of such respondents that the petitioner ought not to have raised such plea on the documents at the midst of the final hearing, as this itself would show that no prejudice was caused to the petitioners, in our opinion, is certainly not a tenable contention, for more than one reason. Moreover, as observed above, the case of the petitioners is that the very basis of the SEBI undertaking investigation on the complaints as made by the petitioners of BNL violating the rules, regulations and norms as prescribed by SEBI, being violated by BNL and the same forming subject matter of investigation by SEBI and the resultant show cause notice were foundational facts, hence, in such context, it was the petitioners entitlement to receive all the documents in that regard. Such documents therefore have all relevancy as law would contemplates in the present lis between the parties. Thus, the impression of respondent Nos. 2 to 9 that the petitioners should not be provided with such documents, is not acceptable. Once it is the entitlement of the petitioners in law to receive such documents, they need to be furnished such documents, unless furnishing of these documents would stand prohibited in law, which is certainly not a situation in the present facts. Regulations are framed under the SEBI Act, 1992. The avowed object and intention of the Act is to protect the interests of investors in securities and to promote the development of, to regulate the securities market. Thus, all actions which are taken by the SEBI and through the various bodies as constituted under the Act and the regulations are required to act considering the paramount interest of the investors. For such reasons as well, we do not find as to why the petitioners ought not to be entitled to the documents. We do not find that there is any impediment whatsoever in law or otherwise for the documents, as demanded, to be supplied to the petitioners. We are inclined to grant to the petitioners interim relief in terms of prayer clause (g). Insolvency & Bankruptcy 2023 (10) TMI 1172 Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - It was held by NCLAT that The amount advance of Rs.1.2 Crore cannot be held to be financial debt and no error has been committed by the Adjudicating Authority in rejecting the Section 7 Application - HELD THAT:- There are no reason to interfere with the impugned order - appeal dismissed. 2023 (10) TMI 1171 Maintainability of section 9 application - initiation of CIRP - Application dismissed on the ground that it is barred by limitation - arbitration clause present in the agreement - eligibility for benefit of Section 14 of the Limitation Act. It is submitted that there is arbitration clause in the agreement and the suit could not have been decided on merits, hence, the benefit of Section 14 needs to be extended to the Appellant. Time Limitation - HELD THAT:- Benefit of Section 14 of the Limitation Act was sought by the Appellant on the basis of filing of suit and pendency of the suit during the period 03.10.2017 till 18.07.2022. The suit was withdrawn without any liberty from the Court to institute a fresh proceeding and termination of suit cannot be held on ground of defect of jurisdiction on cause of like nature. Thus, an essential condition for extending the benefit of Section 14 is absent. Thus, the delay in filing Section 9 application with delay cannot be said to be a sufficient cause within the meaning of Section 5. The benefit for exclusion of the time during which proceedings under SARFAESI Act was pending was based on the observation that the said proceedings are without jurisdiction, on which prima facie finding High Court has granted stay. Hon ble Supreme Court in Sesh Nath Singh [ 2021 (3) TMI 1183 - SUPREME COURT ] also observed that Section 5 of the Limitation Act is also applicable in proceedings under Section 9 and on sufficient cause, the said delay can be condoned - The Judgment of Sesh Nath Singh was in facts and grounds as noted above and does not help the Appellant in the present case. It is further observed that that the proceedings under IBC are not proceedings for recovery of contractual dues, as is apparent from the facts of the present case the Operational Creditor has initiated proceeding for recovery of its contractual dues arising out of contract between the parties. Suit for recovery of dues was already filed by the Appellant which was withdrawn by the Appellant. It is, however, relevant to notice that withdrawal of the suit was not on the ground contended by the Appellant nor any liberty was granted by the Civil Court to institute a fresh suit nor Appellant at any point of time resorted to the proceeding of arbitration which according to the Appellant was reason for withdrawal of suit. The present was a case filed by the Operational Creditor only for recovery of its contractual dues with regard to default committed as per the case of the Appellant on 30.04.2015 for stage 1 and 23.10.2018 for stage 2. The Adjudicating Authority did not commit any error in rejecting Section 9 application as barred by time - there are no merit in this Appeal - appeal dismissed. PMLA 2023 (10) TMI 1170 Money Laundering - proceeds of crime - Changing hands of settlement money - requirement of impleadment of petitioner - HELD THAT:- It is noticed that Soshit Karamchari case [ 1980 (11) TMI 160 - SUPREME COURT ], Fertilizer Corporation case [ 1980 (11) TMI 158 - SUPREME COURT ] as well as R.Rathinam case [ 2000 (2) TMI 881 - SUPREME COURT ] were rendered prior to 31.12.2009 before the aforementioned amendments kicked in qua Cr.PC. In this view of the matter also, they do not come to the aid of the petitioner. However, as regards Jagjeet Singh case [ 2022 (4) TMI 1519 - SUPREME COURT ], it is post amendment i.e., rendered in 2022 and what Jagjeet Singh case deals with is, right of a victim. This has been elucidatively articulated by Hon'ble Supreme Court in paragraph Nos.14 and 15 of Jagjeet Singh case, holding that Until recently, criminal law had been viewed on a dimensional plane wherein the Courts were required to adjudicate between the accused and the State. The 'victim' - the de facto sufferer of a crime had no participation in the adjudicatory process and was made to sit outside the Court as a mute spectator. However, with the recognition that the ethos of criminal justice dispensation to prevent and punish 'crime' had surreptitiously turned its back on the 'victim', the jurisprudence with respect to the rights of victims to be heard and to participate in criminal proceedings began to positively evolve.' This Court has no hesitation in saying that victimology has no application to implead petitioner. Whether the settlement money has not changed hands? - HELD THAT:- This is a case where there is nothing to demonstrate that there is 'proceeds of crime'. This is a private transaction between private individuals / entities and the two individuals /entities have chosen to resort to ADR [Alternative Disputes Resolution] i.e., arbitration by SIAC [Singapore International Arbitration Centre]. In the course of arbitration by SIAC, the private entities / individuals have chosen to give a closure to the dispute by entering into a Memorandum of Understanding / Settlement. This Court is also acutely conscious of the position that an Arbitration Tribunal (SIAC) is a Private Tribunal and as far as this Court is concerned, the paramount consideration is, this is not a matter where it is anybody's case, much less the case of prosecution that public money is involved. Paragraph No.467 of Vijay Madanlal [ 2022 (7) TMI 1316 - SUPREME COURT ] case is the ratio. It is instructive and we respectfully follow paragraph No.467 of Vijay Madanlal case. In the case on hand, to state with specificity, what is applicable is paragraph No.467(v)(d) of Vijay Madanlal case. This is a case where there is a closure of the predicate offence and therefore, we say that paragraph No.467(v)(d) of Vijay Madanlal case is applicable in all force to the case on hand. In any event, this paragraph No.467(v)(d) of Vijay Madanlal case is now subject to the caveat in Emta Coal case [ 2023 (7) TMI 885 - SC ORDER ], i.e., caveat that if predicate offence is resuscitated or opened, the entire matter will get revived. The rights are preserved as done in Emta Coal case by Hon'ble Supreme Court. Therefore, we make it clear that we respectfully follow the ratio in Vijay Madanlal case {paragraph No.467(v)(d)} and Emta coal case {paragraph No.16} which we have followed in Anil Jain case [ 2023 (9) TMI 1379 - MADRAS HIGH COURT ]. Law is well settled that in a Section 482 of Cr.PC quash legal drill, what the Section 482 Court would look into is, uncontraverted averments in the complaint without adding or subtracting to the same. In the case on hand, this legal drill becomes extremely simple as quash prayer turns on the legal point that on closure of predicate offence, ECIR cannot proceed. In this view of the matter, there are no hesitation in saying that the inevitable conclusion is that prayers need to be answered in the affirmative i.e., acceded to. Applications disposed off. Service Tax 2023 (10) TMI 1175 Refund of service tax paid - Clearing Forwarding Agent Service - Banking Other Financial Service - Courier Service - Customs House Agent Service - refund claim was rejected by the Original Authority by observing that port of export was the place of removal and Clearing Forwarding Agent Service, Courier service and Customs House Agent Service, were not used beyond the port of export i.e. place of removal - HELD THAT:- From the N/N. 41/2012 itself it is evident that the notification has been issued to grant the rebate/ refund of service tax paid in respect of export of goods. Such a beneficial notification which provide for refund/ rebate of taxes to the exporters are in line with the most talked philosophy in this regards that export the goods and not the taxes . If the taxes paid on the goods either at the stage of input of finished product as exported, are exported than that will render the exports of the country un-competitive with the goods being exported from elsewhere. Hence all such notifications which provide for disburdening the exports from the domestic taxes need to be interpreted with the above objective in mind. There are no merits in the impugned order by holding that this calculation has to be done shipping bill wise and rebate claim rejected where the difference arrived at in respect of those shipping bills where the papers arrived at is less than twenty percent when such a condition is not prescribed by the notification. The grounds for denial had been stated in the show cause notice but the same were never taken up by the original authority for denying/ modifying the rebate/ refund claim made by the appellant. The grounds on which the rebate/ refund claim made by the appellant was rejected by the original authority has not been agreed to by the Commissioner (Appeals). He has to that extent of merits of the order set aside the order of original authority but goes on to uphold the denial of the refund claims made in respect of the shipping bills mentioned in para 2 3 of the Show Cause Notice. Such an approach were by Commissioner (Appeal) decides the appeal beyond the scope of impugned order cannot be appreciated, because it is also settled principle in law that no person can be made worse off in his own appeal. The impugned order is set aside and appeal is allowed. 2023 (10) TMI 1169 Condonation of delay of one year and eight days in filing appeal - petitioner neither filed an appeal within the period of limitation under Section 85(3) of Finance Act, 1994 nor within the condonable period of limitation - providing services to various educational institutions - applicability of Mega Exemption Notification No.25 of 2012-ST- dated 20.06.2012 - HELD THAT:- In this case, the Court concerned with Mega exemption Notification No.25/2012-S.T. dated 20.06.2012 issued under Sub -Section (1) to Section 93 of the Finance Act, 1994 as amended from time to time and Section 66D(l) of the Finance Act, 1994 until its deletion in 2016. In the case of Manonmaniam Sundaranar University vs. The Joint Director (GST Intelligence), Coimbatore [ 2021 (4) TMI 819 - MADRAS HIGH COURT ], a learned Single Judge of this Court accepted the claim of the petitioner therein in so far as exemption for payment of service tax on amounts collected towards affiliation. However, learned Single Judge did not accept the contention of the said University in so far as collection of rent from service providers like Bank, Post Office, Canteens, etc. In UNION OF INDIA VERSUS WOOD PAPERS LTD. [ 1990 (4) TMI 55 - SUPREME COURT ], the Hon ble Supreme Court held that at the stage of applicability, the Notification has to be construed strictly and the ambit should not be widened or extended. It further held that once only when the first stage is crossed, the notification should be construed liberally that is other technicalities and procedural compliances should not come in the way of extending the benefit. There was no scope for expanding the scope of negative list in Section 66D(l) of the Finance Act, 1994 as the petitioner has not crossed the threshold. The Hon ble Supreme Court has repeatedly held that the operation of the notification has to be judged not by the object which the rule making authority had in mind but the words it has employed effectuate the legislative intend. Therefore, there is no scope for extending the benefit of Section 66 D(l)(ii) of the Finance Act, 1994 to the petitioner. With effect from 01.07.2012, under Section 66B of the Finance Act, 1994, service tax was to be levied at the rate specified therein on the value of services other than the services specified in the negative list provided or agreed to be provided in the taxable territory by one person to another and concluded in as much as the manner as may be prescribed - to begin with the services provided by the petitioner did not fall within the purview of negative list as defined in Section 65B(34) read with Section 66D(l)(ii) of the Finance Act, 1994 and/or as amended by Notification No.9 of 2016-S.T dated 01.03.2016. Therefore, the contention of the petitioner that the petitioner was outside the purview of Service Tax levy under Section 66B of the Finance Act, 1994 is liable to be rejected. The petitioner being a University recognized under the provisions of the UGC Act, 1956, has to be construed as an educational institution . As an educational institution , the petitioner would have been exempted from payment of service tax for renting out its immovable property for a brief period, till 1.4.2013 - The exemption for renting of immovable property was short lived. This exemption stood withdrawn in view of amendment to Entry 9 to Mega Exemption No.25/2012-S.T dated 20.06.2012 vide Notification No. 3/2013-S.T, dated 1-3-2013. This writ petition has to fail, on all counts except, for renting of immovable property for a brief period between 01.07.2012 and 31.03.2013. The said exemption is not available with effect from 01.04.2013 in view of amendment to vide Notification No.3/2013 ST dated 01.03.2013 amending Mega Exemption Notification No.25/2012 ST dated 20/06/2012 - After 1.4.2013, only if the petitioner had rented out its immovable property by to an Educational Institution . After amended to Mega Exemption Notification No.25/2012 ST dated 20/06/2012, vide Notification No.6/2014-S.T dated 11.07.2014, there was no exemption for renting of immovable property . Petition dismissed. 2023 (10) TMI 1168 CENVAT Credit - Service or Repair of Motor Vehicles carried out by Authorized Service Station (ASS) of motor vehicle manufacturers - service provided by the Salvager under Port services for refloating a grounded dredger - denial of credit on the ground that the invoices are raised where the name of the owner of the vehicle is mentioned and not that of the assessee. HELD THAT:- The very same issue was considered by the Tribunal in the assessee s own case M/S. UNITED INDIA INSURANCE CO. LTD. VERSUS CCE ST, LTU, CHENNAI [ 2018 (6) TMI 200 - CESTAT CHENNAI ] where the Tribunal held that not having the invoice in favour of the appellant should be considered only as a procedural infraction and should not be used to deny the credit which otherwise they are eligible. After appreciating the facts and noting that the Commissioner (Appeals) has allowed the credit after which the refund has been sanctioned to the appellant, it is opined that the denial of credit is without any legal or factual basis. The impugned order set aside - The appeal filed by the assessee is allowed. 2023 (10) TMI 1167 Valuation - inclusion of passenger service fee and airport taxes collected from passengers in the assessable value for computation of service tax - HELD THAT:- The appellant has complied with the condition of Rule 6 of Service Tax (Determination of Value) Rules, 2006 and the same are not includible in the assessable value of service provided by the appellant, as the impugned period is, post 27-2-2010 and the said issue has been examined by this Tribunal in the appellant s own case in [ 2017 (9) TMI 715 - CESTAT CHANDIGARH ] wherein this Tribunal has made it clear that these charges are not to be included in the assessable value of the services provided by the appellant relying on the decision in the case of Continental Airlines v. CST, New Delhi [ 2015 (7) TMI 1079 - CESTAT NEW DELHI ]. Moreover, as per the exemption Notification No. 12/2010, dated 12-2-2010, statutory taxes charged by any Government on Air passengers would be excluded from the taxable value for the purpose of levy of tax and therefore, the service tax is not payable by the appellant. Thus, Passenger Service Fee (PFS) and Airport Tax are not includible in the assessable value of the services provided by them. Therefore, the impugned order deserves no merit, accordingly, the same is set aside - appeal allowed. 2023 (10) TMI 1166 Levy of Service Tax - notional interest towards security deposit taken by the appellant against the rental property - April, 2007 to September, 2012 - HELD THAT:- A perusal of decision of Division Bench of this Tribunal in Murli Realtors [ 2014 (9) TMI 461 - CESTAT MUMBAI] reveals that since the consideration for leasing of the property is rent, so what can be levied to service tax is only rent and notional interest on the security deposit cannot be subjected to levy of service tax. Thus, it has to be held that service tax could not have been levied on the notional interest calculated by the department on the interest fee security deposit collected by the appellant from tenants. The orders impugned in the four orders passed by the Commissioner (Appeals) that have been assailed in the four appeals cannot be sustained - Appeal allowed. 2023 (10) TMI 1165 Rejection of benefit of Voluntary Compliance Encouragement Scheme, 2013 - ante-dated SCN - case of Revenue is that since the notice under section 72 of the Finance Act, 1994 have been issued dated 18th January 2013, which is prior to 1 March 2013, the Appellant is not eligible to avail the benefit of VCES, 2013. HELD THAT:- The Show Cause Notice dated 31st December 13 is anti-dated and have been dispatched only on 10 January 2014 by speed post - It is found that the Show cause Notice has been issued beyond the period of 30 days as prescribed by the Board vide clarificatory circular No. 170/05/2013-ST dated 8 August 2013 and further reiterated vide the Circular No. 174/09/2013 ST dated 25 November 2013. The Show Cause Notice is bad and hit by limitation - the impugned order set aside - appeal allowed. 2023 (10) TMI 1164 Non imposition of penalty under Section 76 of the Finance Act, 1994 - Non-inclusion of value of materials received free of cost from the service recipient and used in providing construction of residential complex and civil structures, in the assessable value - demand of differential duty - HELD THAT:- The issue has been settled by the decision of the Hon ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] , wherein it has been held that value of goods/materials supplied free of cost by the recipient used for providing taxable service are not includable in the assessable value for the purpose of payment of service tax. It is observed that the decision of Hon ble Supreme Court is squarely applicable in this case. Relying on the above said decision of the Hon ble Supreme court, it is held that the demand of service tax along with interest and penalty confirmed in the impugned order are not sustainable. Since the demand of service tax is not sustainable, the demand of penalty under Section 76 does not arise. Accordingly, there is no merit in the department s appeal. Appeal of Revenue dismissed. 2023 (10) TMI 1163 Demand of Differential Service Tax alongwith interest and penalty - mismatch in figures shown in the ST-3 Returns and the figures shown in the Balance Sheet - it is alleged that appellant could not substantiate their claim towards the excess payment of Service Tax by way of various challans and did not produce the relevant copies of challans - HELD THAT:- Admittedly, the Department has acceded to the request of the appellant and has arrived at the net Service Tax payable by the Kolkata Unit. The appellants were claiming that they have submitted several challans which were not reflected in the ST-3 Returns, but could not produce copies of such challans. On enquirty, even before the Tribunal, no such copies of the challans could be produced. It is not possible to take a view that they have themselves did not account for such several challans during the period of more than three years and did not reflect the same in the ST-3 Returns till the issue was pointed out by the Service Tax Audit Team. It is not clear as to how the appellant has himself not accounted for the challans during the period of three years. Further as the appellant has unit at Bhubaneswar, there may be possibility these challans have been used for Service Tax to be paid by that Unit. Unless, the entire transaction of Kolkata Unit vis- -vis their Bhubaneswar Unit is undertaken, the fact of challans not accounted, cannot be examined. Since the issue pertains to 2007-2008 to 2009-10, at this stage, it would not possible for two Jurisdictional authorities to undertake this huge work to verify the appellant s claim. Therefore, as the appellant is not in a position to bring any proper clear evidence towards his explanation, it is deemed fit to dismiss their appeal. The appellant is required to pay the confirmed demand along with interest - Noting that the appellant has also made same claims before the lower authorities that they have paid the excess Service Tax, the penalty imposed on the appellant under Section 78 of the Finance Act, 1944, is reduced to 25% subject to the appellant paying the confirmed demand along with interest and reduced to 25% penalty, within 30 days from the date of communication of this order. Appeal disposed off. 2023 (10) TMI 1156 Levy of service tax - Advertisement Agency Service or not - providing the space for the advertisement to other advertisement agencies - HELD THAT:- In the instant case, it is observed that the Appellant was only providing space for advertisements on collection of rental charges. The impugned order did not disclose any evidence to the effect that the Appellant themselves had conceptualized, visualized and designed the advertisements. In the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI VERSUS TEAM UPD LTD. [ 2004 (10) TMI 9 - CESTAT (CHENNAI) ], it has been held that unless it is established that the person concerned had conceptualized, visualized and designed the advertisement, merely allowing its site to be used for display of advertisement by another party against payment of charges are not covered under the definition of Advertisement Agency in Section 65(3) of Finance Act, 1994. In the instant case, the Appellant has not performed conceptualization, visualization and designing of the advertisement. Thus, they have not fulfilled the condition precedent required to satisfy the service under the category of Advertisement Agency Service. It is not disputed that the Appellant has rented out the space obtained by them from organizations like Calcutta State Transport Corporation and Metro Railway to other Advertisement Agencies like M/s Sampark (Kolkata), Bells Advertising (Kolkata), Dilip Kumar Bhattacharya (Kolkata) and M/s M.A. Publicity (Kolkata) on fixed monthly charges. These Advertisement Agencies who has taken these space on rent from the Appellant actually conceptualize and design the advertisements and they are liable to pay service tax under the category of Advertisement Agency Service and not the Appellant. Accordingly, letting out space for advertisement on hoarding sites, on collection of rental charges, as done by the Appellant are not liable to service tax under the category of Advertisement Agency Service as defined under Section 65(105)(e) of the Finance Act, 1994. The demand of service tax confirmed in the impugned order is not sustainable. Since the demand itself is not sustainable, the demand of interest and imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994 is also not sustainable - Appeal allowed. Central Excise 2023 (10) TMI 1162 Area based exemption under N/N. 50/2003-CE - non-fulfilment of mandatory condition of the notification that the unit must have commenced its commercial production on or before 31.03.2010 - amount involved in the appeal being less than prescribed threshold limit under litigation policy - HELD THAT:- Both the authorities have considered the evidence produced and concluded that commercial production was started prior to 31.03.2010. Even a single clearance made by the Respondent would have justified the start of production by the Respondent - Further, this issue as observed by Commissioner (Appeals) has been settled in favour of the Respondent by the decision in case of CCE VERSUS M/S HARI CHAND SHRI GOPAL [ 2010 (11) TMI 13 - SUPREME COURT ]. Revenue has not contradicted the said finding of Commissioner (Appeals). There are no merits in this appeal which could have been dismissed for the amount involved being less than prescribed threshold limit under litigation policy. Appeal filed by the revenue is dismissed. 2023 (10) TMI 1161 Clearance of footwear (not intended for retail sale) - denial of benefit under N/N. 12/2012-CE dated 17.03.2012 (Entry No.180) - denial of benefit on the ground that the goods cleared are not intended for retail sale - applicability of Section 4 or Section 4A of Central Excise Act, 1944 - Penalty of Rs.25 lakhs on the Secretary Shri Ajay Agarwal. The stand taken by the revenue is that since the goods were cleared to institutional buyers, provisions of Legal Metrology (Package Commodities) Rules, 2011 were not applicable in the present case and therefore, assessment should be as per provisions of Section 4 of Central Excise Act, 1944. HELD THAT:- The issue is no more res-integra and the Hon ble Supreme Court in CCE, Panchkula Vs M/s Liberty Shoes Ltd. [ 2015 (12) TMI 1159 - SUPREME COURT] has held that Once we find that the footwear is an item which is specified under Section 4A, which is covered by Weights and Measures Act and Rules, and MRP was fixed on the products supplied, which were not exempted under Rule 34 of the Rules, the provision of Section 4A of the Act shall stand attracted. It is found that retail sales price was embossed on footwear supplied to Arm Forces and Paramilitary forces. Therefore, by respectfully following the judgement of Hon ble Supreme Court in the case of CCE, Panchkula Vs M/s Liberty Shoes Ltd. the assessment would be under the provisions of Section 4A of the Central Excise Act, 1944. Penalty of Rs.25 lakhs on the Secretary Shri Ajay Agarwal - HELD THAT:- Since the entire demand against the main Appellant is found to be unsustainable, the penalty imposed on the Appellant No.2 cannot be justified. Accordingly, the same is set aside. The impugned order cannot be sustained and is accordingly set aside - Appeal allowed. 2023 (10) TMI 1160 Invocation of extended period of limitation - suppression of facts or not - Levy of service tax - Business Auxiliary Service - commission income received on account of sale of bonds. Appellant contended that the services rendered by them in relation to marketing of securities have been concluded prior to June 2003 and service tax under the category of Business Auxiliary Service was introduced as a taxable service only w.e.f 01.07.2003, as defined under Section 65(105)(zzb)of the Finance Act, 1994. HELD THAT:- The Appellant has not denied the rendering of services related to sale of bonds and earning commission income. The contention of the Appellant is that such services were rendered by them prior to introduction of service tax under the category of Business Auxiliary Service w.e.f 01.07.2003. The bills submitted by them in support of this claim was not accepted by the lower authorities on the ground that there was no running serial number in the bills. Extended period of limitation - HELD THAT:- The demand in the impugned order pertains to the period 2003-2004 and the Notice was issued on 11.06.2007, beyond the normal period of limitation. The details of commission income received by the Appellant have been collected by the Audit team form their Audited Balance Sheet, which is a public document. Thus, there is no suppression involved in this case, Hence, the demand raised by invoking extended period of limitation not sustainable. As the Notice was issued on 11.06.2007 for the demand pertained to the period 2003-2004 , the entire demand of service tax in the impugned order is time barred. Appeal allowed. 2023 (10) TMI 1159 CENVAT Credit - allegation of contravention of rule 3(5) of Cenvat Credit Rules - clearance of pure lead ingot on which CENVAT Credit was availed, but were sold as such in the home market on payment of an amount as duty which was less than the amount of Cenvat Credit availed by them at the time of it s procurement. HELD THAT:- The department has not adduced any evidence to substantiate the allegation that the Appellant has availed excess credit on the inputs and paid less duty at the time of clearance of the inputs as such . In the grounds of appeal, the department stated that the Appellant themselves are manufacturers of pure lead ingot of a quantity more than required for its captive consumption. Hence, there was no necessity for importing the pure lead ingot and then re-selling the same in the market - the allegation is very strange. In business, there is nothing wrong in manufacturing one product and importing the same to meet the market requirement. If there is any malafide intention in it, the department should have brought it out clearly with evidence. Mere allegation without any evidence is not sufficient to demand the differential duty. There is no material evidence available on record to substantiate the allegation of the department regarding excess availment of Cenvat credit on the imported pure lead ingot. Hence the allegation of excess availment of credit by the department is not sustainable - Further, the department has not adduced any evidence for diversion of Cenvat credit availed inputs as such . All the allegations of the department were only on presumption basis, without any evidence. One such allegation of the department is that during the period Sept 2010 to March 2011, the Appellant procured 1,11,808 Kgs of pure lead ingot and availed Cenvat credit. During this period they have also manufactured 13,77,957 Kgs of the same pure lead ingot and cleared the same to domestic market. Thus, allegation of the department is that there is no need to procure 1,11,808 Kgs of pure lead ingot when they themselves manufactured 13,77,957.10 Kgs of pure lead ingot during the same period - it is found that there is nothing wrong in procuring pure lead ingot from outside sources when there was a shortage. Just because they manufacture huge quantity of pure lead ingot, it does mean that they should not import the same goods to meet their requirement. Thus, the allegations are only on presumption basis without any evidence. Appeal of assessee allowed. 2023 (10) TMI 1158 Reversal of CENVAT Credit - fake invoices - vendor not having proper infrastructure for manufacturing and generating such scrap at his end - activity of cutting and generating scrap, amounts to manufacture or not - denial of cross-examination - violation of principles of natural justice - HELD THAT:- When a proper invoice has been made by vendor, which clearly shows the payment of Excise duty and the vendor has filed their Returns, the eligibility of cenvat credit cannot be questioned at the end of the appellant who is the receiver of goods. Further, it is also observed from the Orders passed by the lower authorities that they have not denied the cenvat credit on this ground. Paper transaction - non-receipt of scrap - HELD THAT:- In spite of seeking a copy of these statements and seeking cross examination of these persons, the same was not granted by the authorities. When the statement itself is not issued to the appellant, it is not clear as to whether the same were supporting the Department s case or not - merely by the observations of the adjudicating authority cannot be relied upon that the statements are in favour of the Department. It is a gross error on the part of the Adjudicating authority that when the appellant sought to cross examine of the said 8 persons, the same was not granted - It has been held in catena of decisions that the persons recording the statement under Section 14 of Central Excise Act, 1944 have to reiterate the same before the adjudicating authority and then only it should be admitted as an evidence. After this, an opportunity should be given to the noticee to cross-examine them. In this case, in spite of the appellant seeking cross examination of these persons, the adjudicating authority has failed to give them this opportunity. Non-issue of recorded statement of 8 transporters and 2 other officials, denial of cross-examination of these persons and nonproviding of the statements/letters from RTO about the vehicles, are grave errors committed in the investigation process which have proved to be fatal to the Department s stand. The entire proceedings have been initiated based on presumption and assumption without any concrete evidence brought in by the Department against the appellant. After going through in details of payments made both to the vendor and to the transporter for the freight charges, which are already admitted in the show-cause notice itself, the Department has not made out any case against the appellant. Appeal allowed. 2023 (10) TMI 1157 Constitutional Validity of Rule 8 (3A) of the Central Excise Rules, 2002 - bar on use of the credit accumulated in Cenvat Credit in making payment of Central Excise Duty - failure to pay duty involving on goods removed for the months of November December 2006, within the due dates as specified in Rule 8(1) of the Central Excise Rules, 2002 - demand of duty alongwith interest and penalty - HELD THAT:- It is found that the provisions of Rule 8 (3A) of the Central Excise Rules, 2002, based on which the demand for duty has been raised by the Department has been struck down by the various High Courts as ultra vires. In this connection, reference can be made for the decisions in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] , M/S. MALLADI DRUGS PHARMACEUTICALS LTD. VERSUS THE UNION OF INDIA, THE COMMISSIONER OF CENTRAL EXCISE [ 2015 (5) TMI 603 - MADRAS HIGH COURT] , M/S SANDLEY INDUSTRIES VERSUS UNION OF INDIA AND OTHERS [ 2015 (10) TMI 2455 - PUNJAB HARYANA HIGH COURT] PRECISION FASTENERS LTD 1 VERSUS COMMISSIONER OF CENTRAL EXCISE 2 [ 2014 (12) TMI 655 - GUJARAT HIGH COURT] and M/S A.T.V. PROJECTS INDIA LTD. VERSUS UNION OF INDIA AND OTHERS [ 2016 (9) TMI 321 - ALLAHABAD HIGH COURT] . In view of the above decisions including the decision of the Jurisdictional High Court, there is no bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period. The Jurisdictional High Court at Calcutta, in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS [ 2017 (8) TMI 1515 - CALCUTTA HIGH COURT] has followed the decision of the Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 [ 2014 (12) TMI 585 - GUJARAT HIGH COURT] and has held the portion of rule 8 (3A) as ultra vires. Thus, there is no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise Duty even during the default period. In the result, the Impugned Order is set aside - appeal allowed. CST, VAT & Sales Tax 2023 (10) TMI 1155 Maintainability of first appeals - first appeals were dismissed by the appellate authority summarily on the ground of non-compliance of the directions of pre-deposit. It was the case of the appellants before the Tribunal that the orders dismissing the first appeals summarily were bad inasmuch as of the total tax dues under various assessment orders which came to Rs. 204 crores and odd, an amount of Rs. 119 crores were already deposited under protest which were approximately more than 20% of the tax payable and therefore the appeals could not have been dismissed summarily on the ground of failure to pre deposit. HELD THAT:- Perusal of the order of the Tribunal indicates that it was the case of the principal appellant that the transactions in question were not bogus and the appellant cannot be liable for the other business done by the agents. Effectively, the tax dues against the appellants is Rs. 204 crores of which Rs. 119 crores has been paid under protest. The case of the appellants before the Tribunal was that the deposit so made be considered towards pre-deposit under Section 73 of the GVAT Act. Merely because the amount was paid, as protest amount , the first appellate authority could not have directed the pre-deposit without considering the payment already made by the appellant, particularly, when such amounts were paid before passing of the assessment orders. The decision of the Hon ble Apex Court in the case of VVF India [ 2021 (12) TMI 477 - SUPREME COURT] was in context of Section 26(6A) of the Maharashtra VAT Act which did not have a stipulation of the discretion in the appellate authority as is evident from the language of Section 73 of the GVAT Act. There is no reason why the appeals on the facts of the present case need to be entertained - Appeal dismissed. Indian Laws 2023 (10) TMI 1154 Dishonour of Cheque - legally recoverable debt - actual amount due and payable on the part of petitioner/accused towards the complainant/respondent - whether the amount due as on date of presentation of cheque for encashment and its subsequent dishonoring was less than the amount of cheque in question? HELD THAT:- The legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. In a situation where the accused moves Court for quashing even before trial has commenced, the Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint. The legal presumption of the cheque having been issued in the discharge of liability must also receive due weightage. In a situation where the accused moves Court for quashing even before trial has commenced, the Court's approach should be careful enough to not to prematurely extinguish the case by disregarding the legal presumption which supports the complaint. This Court is of the opinion that the issues raised before this Court can only be decided by the learned Trial Court at appropriate stage, on their own merits. Since a prima facie case exists against the petitioner under Section 138 of NI Act, there are no reasons to quash the summoning order dated 25.09.2019. Petition dismissed.
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