TMI Tax Updates - e-Newsletter
October 31, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise

Articles

1. Does Taxpayer has the choice for seeking revocation of cancellation of registration or filing appeal in GST Laws?

   By: Abhishek Raja

2. Income Tax Act, 1961 Authorities and Tribunal are Court

   By: DEVKUMAR KOTHARI

3. Charitable institution, society or trust should ‘solely’ engage itself in educational activities and not in any activity of profit to enjoy tax exemption

   By: Bimal jain

4. WHETHER E-WAY BILL IS REQUIRED FOR VEHICLES SENT FOR ROAD TESTING?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. PM’s ‘Panch-Pran’ to make India a developed country by 2047: Shri Piyush Goyal

2. Commerce Minister asks business community to give primacy to products that are made in India

Notifications

DGFT

1. 40/2015-2020 - dated 28-10-2022 - FTP

Date of ‘Restriction’ on export of Sugar - Extension of date.

GST - States

2. 04/2022–C.T./GST - dated 28-10-2022 - West Bengal SGST

Seeks to extend the due date of filing of FORM GSTR-3B for the month of September, 2022 till the 21st day of October, 2022

Circulars / Instructions / Orders

GST - States

1. 12/2022/LW/12/3040383/2022 - dated 26-9-2022

Commercial Taxes Department - Assessment / Adjudication proceedings - Under TNGST Act, 2017 and other legacy Acts - Adherence of the Principles of Natural Justice - Circular Instructions issued

Customs

2. Instruction No. 29/2022 - dated 28-10-2022

Procedure for identification of parboiled rice varieties during exports

Central Excise

3. CBIC-240137/14/2022-SERVICE TAX SECTION-CBEC - dated 28-10-2022

Pre-deposit payment method for cases pertaining to Central Excise and Service Tax

Highlights / Catch Notes

GST

• Court Restores GST Registration Due to COVID-19 Delays; Section 30 CGST Act Deadline Extended for Valid Reasons.

  Case-Laws - HC : Restoration of GST Registration of the Petitioner - Having regard to the material on record and specific assertion on the part of the petitioner that it was not possible for him to seek revocation of the cancellation order on account of the covid 19 pandemic and till disposal of the appeal by respondent No.1-Appellate Authority, the said explanation offered by the petitioner in not seeking revocation of the cancellation within a stipulated period of 30 days under Section 30 of the CGST Act is to be held as valid and proper - HC
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• Court Rules on Invalid Assessment Orders Due to Lack of Material Evidence; Violates Natural Justice Principles.

  Case-Laws - HC : Validity of assessment orders - allegation that the dealers, from whom the petitioner has purchased the goods, are not existing/fictitious - Since this material forms part of the impugned order, we are of the view that the assessing authority ought to have furnished the said material enabling the petitioner to make a representation or produce any material contra to the same, to substantiate his plea. Non-furnishing of the same, would be violation of principles of natural justice. - HC
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• Show Cause Notice Validity Questioned on Interest Levy u/s 50 of KGST Act; Response Required with Supporting Documents.

  Case-Laws - HC : Validity of show cause notice - Levy of Interest - jurisdiction or authority of law under Section 50 of the KGST Act, to levy interest - The petitioner has been merely called upon to show cause as to why the amounts, penalty, interest etc., has detailed in the audit report should not be levied upon him. The said SCN also provides an opportunity for personal hearing to the petitioner and who also be entitled to produce pleadings and documents in support of his claim along with the reply to the show cause notice. - petitioner directed to submit his reply/response to the aforesaid SCN - HC
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• Petitioner advised to pursue remedies and not contest show cause notice; jurisdictional issues to be addressed by authority.

  Case-Laws - HC : Jurisdiction for issuance of SCN - assessment in relation to the petitioner-assessee is assigned to Central Taxation Authority - the petitioner instead of challenging the show cause notice at this stage should workout its remedy. At present, only show cause notice has been issued. The petitioner may raise various grounds, except the issue of jurisdiction, which has been raised in the writ petition and the same are required to be considered by the authority. - HC
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Income Tax

• ITAT Rules Against Assessee: Insufficient Evidence on Transfer Pricing Adjustment for Administrative Services Using CUP Method.

  Case-Laws - HC : TP adjustment - ITAT decided that the transaction pertaining to receipt of administrative services to comparable uncontrolled price (‘CUP’) method - all the three authorities below have given concurrent findings of fact that the Appellant had failed to furnish evidence to demonstrate that administrative services were actually rendered by the AE and the assessee had received such services - Decided against the assessee - HC
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• Court Rules Transfer Pricing Adjustment Order Beyond Limitation Period; Cooperation Doesn't Extend Deadline, Says Court.

  Case-Laws - HC : TP adjustments - Period of limitation for proceedings before the DRP - As to acquiescence of the petitioner, reject the submission of the respondents for the reason that once an order is established to be beyond limitation, mere co-operation of the party in the proceedings would not extend the same. In fact, even as on 29.01.2020 when the petitioner had written to the DRP, limitation had long expired and thus there is no merit in this submission of the respondents. - HC
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• Court Rejects Tax Reassessment Based on Old Material; New Info Required u/s 147 of Income Tax Act.

  Case-Laws - HC : Reopening of assessment u/s 147 - Eligibility of reasons to believe - there is nothing new and it is, in fact, the very note filed by the assessee as well as material that was available on record that has been invoked by the Assessing Officer to reopen the assessment. The counter filed by the Department makes a lukewarm attempt to defend the impugned proceedings by stating that only a 'half page note' had been filed by the assessee which would not suffice. - This defence is only stated to be rejected. - HC
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• Section 68: Unexplained Credits Must Be Examined in Specific Assessee's Books, Not Others'.

  Case-Laws - AT : Addition u/s 68 - Deeming fiction applies in the hands of the person in whose book’s sums are credited. There it ends, such deeming fiction cannot travel to other assessee for satisfying ingredients of section 68 of the Act as held by ld. CIT [A] in this case. This addition needs to be tested u/s 68 in the hands of the assessee irrespective of the fact whether the sum is added in the hands of other assessee or not or beneficiaries are different. - AT
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• CIT Revises AO's Decision for Overlooking Section 40A(3) Violation on Cash Payments Exceeding Rs. 20,000 Per Day.

  Case-Laws - AT : Revision u/s 263 by CIT - As per CIT there is violation of section 40A(3) not considered by AO - if all such vouchers reflecting cash payment to a single party/creditor in a day are aggregated , then the total cash payment in a day to a particular party/creditor is exceeding Rs. 20,000/- - Assessing Officer has not considered the issue in proper perspective and there is no estoppels against law. - AT
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• Deduction of Commission Expenses Allowed u/s 37(1) Due to Lack of Justifiable Reason by Assessing Officer.

  Case-Laws - AT : Allowability of a claim of expenditure u/s. 37(1) - deduction of commission expenses - A.O had failed to give any justifiable reason as regards declining of the assessee’s claim for deduction of commission expenses that were paid to the aforementioned parties. - claim of deduction allowed - AT
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• CIT's Section 263 Revision Upheld Due to AO's Oversight of Invoice-Duty Discrepancy; Lack of Due Diligence Noted.

  Case-Laws - AT : Revision u/s 263 by CIT - there is a huge difference in invoice value and the duty paid as per the Annexure-15 and the ITS data available -reconciliation should have been sought by Ld. AO during the course of assessment proceedings. Non-seeking of such reconciliation, which apparently should have been sought, in our view, indicates non-application of mind to the given set of facts by Ld. AO during the course of assessment proceedings. - Revision order sustained - AT
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• Taxpayer Cleared of Unaccounted Purchases Allegation; Customs Valuation Alone Insufficient for Unexplained Expenditure Claim.

  Case-Laws - AT : Unexplained expenditure u/s. 69C - CIT(A) held that the AO was not justified in assuming that the assessee had made unaccounted purchases solitary on the basis that the customs authorities had enhanced the value of goods imported for the purpose of payment of custom, duty. In the absence of any evidence/material on record that the assessee has paid anything extra over and above the transaction value shown in import invoices, no addition on account of unexplained expenditure on purchases can be made - Order of CIT(A) sustained - AT
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• Tax Order by AO u/s 143(3) with 245D(4) Not Subordinate; Section 263 Revision Void Ab Initio.

  Case-Laws - AT : Revision u/s 263 - Validity of order passed by the AO as per the direction of the Settlement Commission u/s.254D(4) - The order passed by the ld. AO u/s.143(3) r.w.s. 245D(4) of the Act could not be construed as an order passed by a subordinate authority in view of the fact that the Settlement Commission order has been passed by the Officers in the rank of the Chief Commissioner. - The revision order is void ab initio - AT
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• Interest Disallowance u/s 36(1)(iii) Not Automatic; Advances May Be From Assessee's Own Funds, Not Borrowed.

  Case-Laws - AT : Disallowance of interest u/s 36(1)(iii) - Merely because the advances were given from assessee’s cash credit account, a simplistic presumption cannot be drawn that advances were from borrowed funds given that the cash credit account is likely to have credits/deposits from assessee’s business operations and/or other bank accounts. - AT
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• ITAT Agrees with Taxpayer: Withdrawn Cash from Home Re-deposited Post-Demonetization Not Unexplained Income.

  Case-Laws - AT : Unexplained cash deposited in the bank - ITAT accepted the contention of assessee that the assessee was withdrawing the cash from Bank and keeping it at home and subsequently when the demonetization scheme was announced, the assessee deposited the amount left over with him in the Bank account. - AT
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Customs

• Court Denies Vessel Operators' Request for Full Access to ICEGATE System; Penalties for Missing Export Manifests Stand.

  Case-Laws - HC : Levy of penalty on vessel operators - petitioners had not filed Export General Manifest (EGM) in respect of certain specified shipping bills - the request of the petitioner for access to the ICEGATE system is rejected for the reason as stated by the customs authorities. The system is a conglomeration of materials from various sources and is meant for effective functioning of the Department and smooth management of the transactions. No one operator can be provided with access to the entirety of the system. - HC
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• High Court Abates Appeal for Customs Duty Claim Post-CIRP Under IBC Due to Non-filing with Resolution Professional.

  Case-Laws - HC : Demand of customs duty - CIRP proceedings under IBC were concluded - Taking into consideration the fact of the completion of the resolution process of the respondent by the NCLT and undisputed fact that the appellant has not lodged any claim in the capacity of the Operational Creditor before the Resolution Professional, this appeal is required to be disposed of as having become infructuous and abated - HC
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• Appellant's Role in Hawala and Goods Undervaluation Verified; Revenue Confirms Findings, No Grounds for Order Change.

  Case-Laws - AT : Hawala transactions - valuation of imported goods - The offence committed by the appellant has not been rebutted by the appellant in many words. Moreover, the under valuation has been clearly established on the basis of the statements given by various persons, which were never retracted. The transaction of the deferential value due to under valuation made by hawala has also been proved by the Revenue - there are no reason to interfere in the impugned order - AT
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• Penalty on Steamer Agent Overturned; Responsibility for Clearance Lies with Importer, Not Agent, per Customs Act Section 112(a).

  Case-Laws - AT : Levy of penalty on steamer agent - Undeclared consignment - iolation of conditions / instructions contained in the Board Circular - Revenue has not whispered anywhere if it was the duty of the Steamer Agent to seek clearance of any goods since it is the importer who is required to fulfil any obligations ‘at the time of clearance of goods’ - The penalty under Section 112(a) of the Customs Act, 1962, as levied and confirmed on the appellant, is not sustainable - AT
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• Goods Value Rejected, Confiscated u/s 111, Penalty Imposed u/s 112 for Low Price Declaration.

  Case-Laws - AT : Rejection of the declared value by the original authority - The prices which were declared in the Bill of Entry were a fraction of the price of the Zhiyun brand goods imported by the same importer from the same overseas supplier and they were of the same models - the imported goods were correctly confiscated under section 111 and consequently, penalty was correctly imposed under Section 112 by the original authority. - AT
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IBC

• Letter of Comfort Not a Contract of Guarantee; Sanction Letter Valid for CIRP Involvement of Corporate Guarantor.

  Case-Laws - Tri : Initiation of CIRP - corporate guarantor or not - In a contract of guarantee, there are three different entities i.e. i) ‘surety’ ii) ‘principal debtor’ and iii) ‘creditor’. In the case in hand, the said letter of comfort cannot be termed as letter of contract of guarantee because it is neither signed by the creditor nor by the borrower and to the contrary, the sanction letter dated 22.08.2017 is signed by all the three i.e. creditor, borrower and guarantor. - Tri
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Service Tax

• Adjustment of Deposited Amounts Under Protest in Service Tax Liabilities Clarified by Sabka Vishwas Scheme 2019 Circular.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - adjustment of amount deposited under protect - The issues with regard to the liability of the respondent towards duty and interest were at large and the amounts were already deposited when the scheme came into force. The circular issued by the Central Board of Indirect Taxes and Customs relied upon by the respondent also clearly shows that the department was liable to adjust the entire amount deposited by the assessee under protest prior to the adjudication of the liability either towards Central Excise Duty or towards the interest. - HC
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Central Excise

• CENVAT Credit Not Reversed for Power Plant Capital Goods Sale; Liability Tied to Physical Removal, Not Ownership Transfer. (5A.

  Case-Laws - AT : Reversal of CENVAT Credit - removal of capital goods as such - power plant - Rule 3(5A) of Cenvat Credit Rules, 2004 - The sale of goods or transfer of ownership of the goods from the seller to the buyer, is not the criteria to cast duty liability on the manufacturer/seller of excisable goods. What is important is the physical removal of excisable goods from the factory of the manufacturer. - Both the appellants were not required to reverse the cenvat credit on sale of capital goods, as part of running power plant - AT
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Case Laws:

• GST

• 2022 (10) TMI 1067
  Maintainability of petition - availability of alternative remedy of appeal - Restoration of GST Registration of the Petitioner - case of petitioner is that the petitioner has paid the entire tax payable upto to the date of cancellation and for the subsequent period also certain amount has been deposited by the petitioner before the respondent No.1-Appellate Authority - HELD THAT:- Perusal of the material on record and Section 107 of the CGST Act, 2017 will indicate that as against an order passed by the respondent No.3 canceling the registration of GST, the petitioner has an remedy by way of appeal under Section 107 before the respondent No.1-Appellate Authority. In this context, it is relevant to state that merely because that the petitioner has an option of seeking revocation of the cancellation under Section 30 of the CGST Act, it cannot be said that independent of the said remedy of seeking revocation of cancellation, an appeal would not be maintainable and as such, the impugned order passed by the respondent No.1-Appellate Authority summarily dismissing the appeal on the ground that it is not maintainable in view of availability of the remedy of seeking revocation of the cancellation is clearly contrary to Section 107 and Section 30 of the CGST Act and same deserves to be set aside. Having regard to the material on record and specific assertion on the part of the petitioner that it was not possible for him to seek revocation of the cancellation order on account of the covid 19 pandemic and till disposal of the appeal by respondent No.1-Appellate Authority, the said explanation offered by the petitioner in not seeking revocation of the cancellation within a stipulated period of 30 days under Section 30 of the CGST Act is to be held as valid and proper - respondent No.2 is to be directed to reconsider the claim of the petitioner for revocation of the cancellation order in accordance with law - Petition allowed.

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• 2022 (10) TMI 1066
  Refund of IGST with interest in terms of rule 96 of CGST Rules, 2017 R/witness Section 16 of IGST Act, 2017 - violation of terms and condition of notification No.131/2016 dated 31.10.2016 - HELD THAT:- Perusal of the material on record including the impugned letter at Annexure B dated 27.09.2021 would indicate that the specific contention urged by the petitioner in relation to his request for entitlement to refund of IGST paid by him on export of goods has not been considered by the respondents who have merely rejected the same by placing reliance upon circular No.37/2018 dated 09.10.2018 and not adverting to the other contentions of the petitioner with regard to his entitlement for refund. In the light of the circular dated 09.10.2018 and notification dated 31.10.2016 and the judgments relied upon by the learned counsel for the petitioner, without expressing any opinion on the merits/demerits of the rival contentions, it is deemed appropriate to set aside the impugned letter at Annexure B dated 27.09.2021 and remit the matter back to the respondents for reconsideration afresh bearing in mind the material on record - petition allowed.

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• 2022 (10) TMI 1065
  Confiscation of goods - It is a case of the petitioner that during the course of transit, the Lorry No. OR-04-N-1161 carrying the aforesaid goods was intercepted by the respondent No.3 at 2.10 pm on 29.06.2022 - section 130 of the CGST Act - HELD THAT:- By way of interim relief, it would be just and proper to direct the respondents to release the goods and conveyance of the petitioner, however, upon imposition of suitable condition on the petitioner - As could be seen from the impugned order, the penalty is calculated at Rs. 6,50,970/-. The same amount is calculated towards the fine in lieu of confiscation of conveyance. It will be expedient if the petitioner is asked to deposit Rs. 13 lakhs and furnish bank guarantee of Rs. 36,16,500/- of any nationalised bank till final disposal of this petition as a part of condition for grant of interim relief. Resultantly, by way of interim relief the respondents are directed to release the goods and conveyance of the petitioner on condition that the petitioner deposits with the competent authority of the respondents an amount of Rs. 13 lakhs within 10 days. The petitioner shall further comply with the condition of furnishing bank guarantee of Rs. 36,16,500/- to be furnished within 10 days alongwith deposit of amount of Rs. 13 lakhs - Direct service for respondent No.2 is permitted.

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• 2022 (10) TMI 1064
  Validity of assessment orders - allegation that the dealers, from whom the petitioner has purchased the goods, are not existing/fictitious - Provisional attachment of petitioner s properties - legality of impugned proceedings in Form GST DRC 22 dated 7.5.2022 - violation of principles of natural justice - HELD THAT:- A perusal of the revised notice issued in GST DRC-01, dated 30.05.2022, would show that the authority relied upon the material, which was not furnished to the petitioner. The assessment order does not indicate the dealers, whom the assessing authority claimed to have been examined to show that the petitioner has purchased goods from the dealers who are non-existing/fictitious - Since this material forms part of the impugned order, we are of the view that the assessing authority ought to have furnished the said material enabling the petitioner to make a representation or produce any material contra to the same, to substantiate his plea. Non-furnishing of the same, would be violation of principles of natural justice. Ergo, the impugned order passed by respondent No.1 in Form DRC-07, dated 20.06.2022, is set aside and the matter is remanded back to the assessing authority - the provisional attachment order passed by respondent No.2 in Form GST DRC-22, dated 07.05.2022, is set aside - Petition allowed by way of remand.

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• 2022 (10) TMI 1063
  Levy of Interest - jurisdiction or authority of law under Section 50 of the KGST Act, to levy interest - wrong posting of excess transitional input tax credit in the petitioner s GST portal due to departmental GST portal technical glitch - HELD THAT:- A perusal of the show cause notice dated 26.08.2022 issued by the respondents under Section 73(1) of the GST Act read with rule 142 of GST Rules, 2017 will clearly indicate that the petitioner has been merely called upon to show cause as to why the amounts, penalty, interest etc., has detailed in the audit report should not be levied upon him. The said show cause notice also provides an opportunity for personal hearing to the petitioner and who also be entitled to produce pleadings and documents in support of his claim along with the reply to the show cause notice. It is deemed just and appropriate to dispose off this petition reserving liberty in favour of the petitioner to submit his reply/response to the aforesaid show cause notice dated 26.08.2022, along with all relevant documents within a period of one month from today - petition disposed off.

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• 2022 (10) TMI 1062
  Jurisdiction for issuance of SCN - assessment in relation to the petitioner-assessee is assigned to Central Taxation Authority - petitioner has sought to assail the show cause notice on the issue of jurisdiction that once the assessment matter of the writ-petitioner was assigned to Central Taxation Authorities, the State Authority does not have jurisdiction to initiate proceedings under Section 73 of the Act of 2017 - HELD THAT:- Petitioner seems to be aggrieved by the issuance of show cause notice insofar as it is proposing imposition of tax based on discrepancy in the Input Tax Credit details in GSTR-02A and GSTR-03B is concerned. It is not the case of the petitioner that there is no discrepancy at all. Therefore, the petitioner instead of challenging the show cause notice at this stage should workout its remedy. At present, only show cause notice has been issued. The petitioner may raise various grounds, except the issue of jurisdiction, which has been raised in the writ petition and the same are required to be considered by the authority. Petition dismissed.

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• Income Tax

• 2022 (10) TMI 1061
  Reopening of assessment u/s 147 - Assessment regarding about royalty and surface rent expenses - HELD THAT:- When the respondent had called for details of the regular assessment and had examined the quantity of the marble rubbles, produced and sold, at that time, satisfying the query, the petitioner had given complete details of quantity of marble rubble in tax audit report in Form 3-CD at serial No.28. The details were also produced in Part-A-QD of prescribed return of income in Form ITR-6. In the course of regular assessment proceedings, as stated above, the respondent had asked relevant details under item No.22 which was furnished by the petitioner in reply dated 18.8.2015 detailing ledger account with complete narration relating to the royalty paid on the relevant quantity of sale of marble rubble was shown. The respondent had fully examined the rubble aspect and the royalty removal. Therefore it is clear that factual details on the basis of which the power to reasses was sought to be exercised was already furnished by the petitioner and considered by AO in the course of regular assessment. The Assessing Officer was within the know of such facts and details. Reassessment notice was acted upon basing the formation of reasons on very facts. It amounted to change of opinion on part of the Assessing Officer which is not permissible in law. Also on facts, it was the case of clear change of opinion on part of the Assessing Officer in exercising powers to reopen the assessment but he misguided himself in law in seeking to reassess the income on the ground of mined and produced. It could not have acted on the same material which was examined by him in the regular assessment, in addition that the erring Officer erred in law too. Thus the present petition deserves to be allowed. It is accordingly allowed.

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• 2022 (10) TMI 1060
  Assessment u/s 153A - Additions made on account of gross profit on bogus purchases - HELD THAT:- As both the appellate authorities below have recorded concurrent findings of facts that while calculating the GP ratio, the Assessing Officer has compared the purchase of scrap of desi led with the sale of finished goods without considering that the assessee is dealing in different types of items such as led, tin, selenium, arsenic etc. and that each of these items have different qualities having wide price fluctuation and therefore the Assessing Officer has erred in making a comparison between incomparable products. The appellate authorities below also noted that for the Assessment Year 2005- 06 to Assessment Year 2008- 09, there is no evidence available with respect to suppression of the gross profit by obtaining bogus purchase bills by the assessee and that the Assessing Officer has merely relied upon the documents seized during the course of search for Financial Year 201011 and 2011-12 even when the present batch of cases pertains to the Assessment Years 2005-06 to 2009-10. The Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), [ 1999 (8) TMI 1008 - SUPREME COURT] has reiterated that under Section 100 of the Code of Civil Procedure the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Consequently, this Court is of the view that no substantial question of law arises of consideration in the present appeals and accordingly, the same are dismissed.

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• 2022 (10) TMI 1059
  Disallowance of provision at the rate of 1% of the sale value of kitchen appliances, other than pressure cooker and cookware towards warranty - HELD THAT:- The warranty claims if any, will be received either in that year or subsequent years. CIT(A) has recorded the factual aspect that assessee had incurred warranty expenses of Rs.2.86 Crores for the claims during the financial years 2011- 12 and 2012-13. The warranty claims said to have been discharged for the subsequent years namely A.Y. 2013-14 to 2015-16 are also much higher and to be precise, Rs.4.96 Crores, Rs.7.89 Crores and Rs.3.85 Crores respectively. In para 27 of Rotork Controls, extracted hereinabove, it is held that when warranty costs are integral part of the sale price, then assessee has to provide for such warranty costs in its account for the relevant year, otherwise the matching concept fails. CIT(A) has passed a detailed order by recording the factual aspect of the case and considering the authorities on the point, where as, the ITAT has considered expenses incurred in incorrect A.Ys. Further, in our view, the ITAT has misconstrued the law laid down in Rotork. In view of undisputed facts that the exported products were pressure cookers and the kitchen ware and the claims received for the A.Y. in question, is in excess of the provision made, in our view, the provision has been made based on the past experience of the assessee in its business. These appeals merit consideration.

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• 2022 (10) TMI 1058
  Reopening of assessment u/s 147 - notice being in the name of a non-existent company which was amalgamated with the Petitioner Company - HELD THAT:- As notice being in the name of a non-existent company cannot be complied with and accordingly, the petitioner company cannot file return in response to notice under Section 148 of the Act in the name of Sare Marketing Private Limited with reference to PAN of above company. The impugned order passed under Section 148A(d) of the Income Tax Act, 1961 and the Notice issued under Section 148 for the Assessment Year 2014-15 are set aside. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioners have a grievance, they shall be at liberty to take their remedies in accordance with law.

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• 2022 (10) TMI 1057
  Reopening of assessment u/s 147 - order passed under Section 148A(d) - minimum time of seven days has to be granted to the assessee to file its reply to the said show cause notice - HELD THAT:- As decided in Shri Sai Co-Operative Thrift and Credit Society Ltd [ 2022 (5) TMI 1435 - DELHI HIGH COURT] wherein it has been held that under Section 148A(b) of the Act, a minimum time of seven days has to be granted to the assessee to file its reply to the said show cause notice. Respondent-revenue, accepts notice. He states that the respondent-revenue has no objection, if the present matter is remanded back to the Assessing Officer for a fresh decision in accordance with law. Consequently, the impugned order passed under Section 148A(d) for the assessment year 2018-19 is set aside and the Assessing Officer is directed to pass a fresh reasoned order within eight weeks in accordance with law after considering the reply of the petitioner, which is directed to be re-filed within a week.

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• 2022 (10) TMI 1056
  TP adjustment - international transaction pertaining to receipt of business support services and the arm s length price of the said transaction at Nil - Whether ITAT has erred in subjecting the transaction pertaining to receipt of administrative services to comparable uncontrolled price ( CUP ) method without demonstrating any comparable instances and ignoring the arm s length analysis submitted by the Appellant? - HELD THAT:- This Court finds that all the three authorities below have given concurrent findings of fact that the Appellant had failed to furnish evidence to demonstrate that administrative services were actually rendered by the AE and the assessee had received such services. In fact, the ITAT has noted in the impugned order .On a specific query made by the Bench to demonstrate the receipt of services from AE through cogent evidence, including, any communication with the AE, learned counsel for the assessee expressed his inability to furnish any evidence and repeated his submission to restore the matter back to the Assessing Officer for enabling the assessee to furnish evidence, if any. . This Court is also of the view that every Assessment Year is a separate unit which is governed by its own peculiar facts. ITAT in the impugned order has clarified that its decision would not prejudice the assessee s claim in any other assessment year, as it has to be decided based on the evidences produced to establish the claim of receipt of services from AE. Further, this Court in Principal Commissioner of Income Tax-6 vs. Make My Trip India (P) Ltd. [ 2017 (11) TMI 587 - DELHI HIGH COURT ] has held that difference of opinion between the parties, as to the appropriateness of one or the other methods to calculate arm s length price, cannot per se be a ground for intereference and the appropriateness of the method unless shown to be contrary to the Rules specially 10B and 10C are hardly issues that ought to be gone into u/s 260A of the Act.

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• 2022 (10) TMI 1055
  Reopening of assessment - validity of order passed u/s 148A(d) - erstwhile Company got amalgamated with the Petitioner vide an order of NCLT dated 8th November, 2017 resulting in the merger of all the transactions entered into by the erstwhile company - Petitioner states that the Respondent wrongfully passed the order u/s 148A(d) of the Act ignoring the contentions of the Petitioner that assessment under Section 143(3) of the Act had already been finalized in case of the Petitioner for the relevant assessment year - HELD THAT:- As revenue, accepts notice. On instructions, he states that the respondents-revenue has no objection if the file is remanded back to the Assessing Officer for fresh consideration. Keeping in view the aforesaid statement, the impugned order passed under Section 148A(d) and notice issued under Section 148 of the Act both dated 31st July, 2022 are set aside and the matter is remanded back to the Assessing Officer for a fresh decision in accordance with law within four weeks. In the event, the petitioner is aggrieved by the said decision, the petitioner shall be at liberty to file appropriate proceedings in accordance with law.

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• 2022 (10) TMI 1054
  Addition of unsecured loan - primary evidences like confirmation accounts and acknowledgment of filling return of income Pan Card of depositors and audit report u/s 44AB of a Chartered Accountant who is like eye witness of having verified the books of accounts and the other related documents is on record of the Department and all these transactions are routed through Bank - HELD THAT:- On perusal of the orders it appears that there are concurrent findings of fact arrived at by the CIT (A) as well as the Tribunal to the effect that the Assessee has failed to produced the books of accounts and other relevant materials which was required by the AO to inquire into the transactions of unsecured loans undertaken by the appellant-assessee for the year under consideration. With regard to the addition made on account of the expenses also, there is no material available on record as per the findings of fact arrived at by the CIT(Appeals) and the Tribunal. The addition made on account of advance for goods is also not supported by any documentary evidence. Moreover, no one has come forward to give statement u/s 133(6) of the Act, 1961 and notices under Section 133(6) were not complied with. We are of the opinion that no question of law much less any substantial question of law as proposed or otherwise arises from the impugned order of the Tribunal and accordingly, the Appeal stands dismissed.

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• 2022 (10) TMI 1053
  TP adjustments - Period of limitation for proceedings before the DRP - HELD THAT:- As in this case, the order of the Tribunal having been received by the officer as early as in 2016, the limitation for passing of the order expires on or before 31.03.2017 and the proceedings under the impugned order are thus clearly barred by limitation. As to acquiescence of the petitioner, reject the submission of the respondents for the reason that once an order is established to be beyond limitation, mere co-operation of the party in the proceedings would not extend the same. In fact, even as on 29.01.2020 when the petitioner had written to the DRP, limitation had long expired and thus there is no merit in this submission of the respondents. The impugned order is set aside and this writ petition is allowed.

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• 2022 (10) TMI 1052
  Penalty u/s 271(1)(c) - Assessee furnishing inaccurate particulars of income in respect of the addition made on account of disallowance of interest expenses - ITAT deleting the penalty levied - HELD THAT:- As in view of finding of fact arrived at by the Tribunal to the effect that the assessee on realisation of the mistake, has rectified the same by offering the provision for interest of Rs. 11.90 crores as prior period income in subsequent year and therefore, in view of such necessary correction done by the assessee on detecting the mistake pointed out by the Assessing Officer during the assessment proceedings for the year under consideration, it can be inferred that there is no mensrea on part of the assessee so as to attract the penalty under section 271(1) (c) of the Act. We are therefore, of the opinion that no interference is required to be made in the impugned order passed by the Tribunal as no question of law much less any substantial question of law proposed or otherwise arise from the impugned order of the Tribunal. Revenue appeal dismissed.

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• 2022 (10) TMI 1051
  Reopening of assessment u/s 147 - grievance of the petitioner that the objections raised have not been considered at all by the respondent - HELD THAT:- It is the apprehension of the petitioner that without considering the case of the respondent and its defence, the authorities will proceed to frame the assessment pursuant to the impugned notice. As submitted that great prejudice would occur if the objections of the petitioner are not considered and disposed of in accordance with law by the assessing authority. In the facts of the case, when the objections of the petitioner are not considered and are not disposed of, which were given in response to the notice dated 30.3.2021 under section 148 of the Act in respect of Assessment Year 2014-2015, it would subserve the interests of justice that the competent authority of the respondent considers and disposes off the objections submitted by the petitioner. Accordingly, this petition is disposed of by directing the respondent No.1 to consider and dispose of the objections of the petitioner dated 20.1.2021 within six weeks from the date of receipt of this order.

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• 2022 (10) TMI 1050
  Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT:- Having noticed the issue, raised a specific query, received a reply and thereafter passed an order of assessment, a clear opinion has formed by the Assessing Officer in regard to the vitality of the assessee s claim. In such an event, the impugned re-assessment proceedings are nothing but a review in the guise of re-assessment, which is impermissible in law. We draw support in this regard from the celebrated decision of the Full Bench of the Delhi High Court in the case of Kelvinator India Ltd. [ 2002 (4) TMI 37 - DELHI HIGH COURT] that settles the proposition that re-assessment must be based on new and tangible material that has come to the note of the Assessing Authority after completion of the original assessment. In the present case, a perusal of the reasons would indicate clearly that there is nothing new and it is, in fact, the very note filed by the assessee as well as material that was available on record that has been invoked by the Assessing Officer to reopen the assessment. The counter filed by the Department makes a lukewarm attempt to defend the impugned proceedings by stating that only a half page note had been filed by the assessee which would not suffice. This defence is only stated to be rejected. It is not the length of the note that would determine the integrity of the procedure, but the contents thereof as well as other tests, such as, whether new or tangible material that has come to the possession of the Department. Since respondents have failed in the test as aforesaid, the brevity of the note does not come to their rescue. Notice set aside - WP allowed.

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• 2022 (10) TMI 1049
  Income deemed to accrue or arise in India - payments received by the assessee for rendering certain services to the Indian companies as per the terms of General Services Agreement (GSA) - Whether qualify as Fees for included Services (FIS) u/s 12(4)(b) of the India- USA DTAA? - HELD THAT:- Activities of the assessee is related to the GSA which the assessee was entered in agreement on 02.06.2003. The GSA receipts are not taxable under Article 12(4) of India-USA DTAA. From the memorandum of understanding, it is, obvious that as provided in clause 4B of Article 12 of the India-USA DTAA, that if the technical and consulting services made available are technical knowledge, experience, skill, know howor process orconsistthe development and transfer of a technical plan or technical design are considered to be technical or consultancy services. As also clarified that consultancy services not of technical nature cannot fall under Included Services . In view of this memorandum of understanding between two sovereign countries, the consultancy services which are technical in nature alleging to be included as technical and consultancy services for the purpose fees for included service as per sub-clause 4B of Article 12 of DTAA between India USA. While undertaking the above services, the assessee had not executed any contract to make anybusiness. So, as to use services independently by applying the technology. All the services undertaken by the assessee or either support service IT enable services; co-ordination of tax services as rendered above are not stage which request transfer of technology receipts to skill company. We are fully relied on the order of the coordinate bench in this issue and the addition amount - Decided against revenue.

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• 2022 (10) TMI 1048
  Correct head of Income - income from sale of shares - Business Income or Capital Gains - HELD THAT:- The carry over loss is a nature of capital gain loss which the assessee can adjust with the capital gain profit of this year. AO erred to treat the income from capital gain as a business income. The Coordinate Bench is already covered the issue for A.Y. 2008-09 to 2010-11. We find no infirmity in the claim of the assessee the income as capital gain and eligible to adjust this gain with a capital gain loss. Proportionate deduction @21.35% on total expenses which is worked out amount u/s 57(iii) - CIT(A) disallowed the assessee s claim in the ground that the assessee had not deducted TDS amount to Rs 613,789/- on payment of interest which is contravening the Section 40(a)(ia) of the Act. The appellant during the hearing unable to bring to details calculation related claim of Section 57(iii) in respect income from other sources. The ld. CIT. Dr only relied on order of the revenue authorities. In our opinion the claim of deduction u/s 57(iii) should be allowed amount. TDS u/s 195 - addition for violation of section 115QA - HELD THAT:- CIT(A) s divergent view is related to application of section 115 QA. Since section 115QA was introduced in statute by Finance Act, 2013 with effect from 1-6-2013, payment made by assessee on account of purchase of its own shares prior to 1-6-2013 could not be termed as dividend as per provisions of section 115QA. The fact that section 115QA was not applicable to appellant company as the payment is related to FY 12-13. The order of CIT(A) is ruled out for wrong ascertaining fact against the assessee. Mr Dileep Raghu Nath is a NRI and a resident of Singapore and accordingly the provision of DTAA article 13, applied to him. As per the provisions of Indo Singapore DTAA jurisdiction for taxing the capital gains arising in the hands of Mr. Dileep Raghu Nath is in Singapore and not in India. Therefore, the application of section 195 is not applicable for assessee-company. Accordingly, the addition for violation of section 40(a)(ia) read with section 195 amount is quashed. Decided in favour of assessee.

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• 2022 (10) TMI 1047
  Addition u/s 68 - unexplained share capital - deemed income - HELD THAT:- We find that Section 68 does not talk about any beneficiaries but is added in the hands of each and every person where Assessee fails to prove identity, creditworthiness and genuineness of the transaction to the satisfaction of AO. It is deemed income in the hands of the assessee who fails to explain nature and source of the same before the AO. Deeming fiction applies in the hands of the person in whose book s sums are credited. There it ends, such deeming fiction cannot travel to other assessee for satisfying ingredients of section 68 of the Act as held by ld. CIT [A] in this case. This addition needs to be tested u/s 68 in the hands of the assessee irrespective of the fact whether the sum is added in the hands of other assessee or not or beneficiaries are different. There is no concept of beneficial ownership of income u/s 68 of the act. Importing the same in section 68 is in clear violation of simple provisions of that section. We set aside the whole issue in the appeal of AO back to the file of AO with a direction to the assessee to prove identity and creditworthiness of the deposits as well as the genuineness of the transactions. AO should examine the claim of the assessee in light of various statements of entry operators recorded during the course of survey and search and there after decide the issue afresh in accordance with law. Needless to say initial onus would be on the assessee to prove the cash credit to the satisfaction of ld. AO. AO may carry out the inquiry as well as examination of various persons, if found proper, either directing assessee or by use of powers vested in him, before deciding the issue afresh.

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• 2022 (10) TMI 1046
  Unexplained money u/s 69A - assessee stated that the source of cash found in the search and seizure operation was out of repayment of principal as well as interest from the customers, and generated during the regular course of business activities - HELD THAT:- Entire issue revolves around the cash that was introduced on 29/1/2019, namely, the date of survey. Except the statement of the assessee that the cash that was introduced on 29/1/2019 is business receipt, the authorities did not find any material to support that statement. Even before us also no material is produced. The cash seized by the Department is supported by the entries in the cash book by way of closing balance on 29/1/2019, but the source of the additional income introduced on 29/1/2019 is not established. Assessee says that except this business they do not have any other source of income. If that be so, its not known where from this additional income of Rs. 95,23,000/- in respect of the main branch and Rs. 78,17,790/- in respect of branch SR Nagar is generated to show in the cash book. Authorities found that this particular amount that was introduced by way of additional income is not business income since the business income is subsumed into the amount that was seized. We too have no material to take a different view. In these circumstances, we find it difficult to hold that the view taken by the authorities below is either illegal or improper. We accordingly do not find any reasons to interfere with the considered findings of the authorities below. With this view of the matter, we dismiss the grounds of appeal.

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• 2022 (10) TMI 1045
  Deduction u/s 80P(2)(a)(i) - addition in respect of collection from members @ 2.5% of the loan account which is attributable to the activity of the credit co-operative society of providing credit facilities to its members - HELD THAT:- The provisions of section 80P(2)(a)(i) of the Act allows deduction to the amount earned from the profits and gains of business attributable to the business activity of the assessee, which in this case is providing credit facilities to its members. The interest rate charged @ 2.5% of the loan amount as development fund, this has been passed in the Resolution of the Board of Directors of the assessee, but as rightly submitted by the DR, the nature and characterization of the term development fund is not clear on record whether this fund is something which can be said to be attributable to the business activity of giving credit facilities to its members of the assessee or is it something outside the purview that has to be examined. In the interest of justice, therefore, set aside the order of NFAC and remand the matter to the file of the AO for adjudication as per law to conduct the detailed verification regarding interest of 2.5% of the loan amount taken as development fund by the assessee and whether it is attributable to the business activity of the assessee. That after examination of the facts and circumstances, if the AO finds that such calculation of the amount can be said as attributable to the business of the assessee, in such case, he shall allow deduction u/s 80P(2)(a)(i) of the Act. Needless to say, the AO shall provide reasonable opportunity of hearing to the assessee. Appeal of assessee is allowed for statistical purposes.

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• 2022 (10) TMI 1044
  Revision u/s 263 by CIT - disallowance of a part of depreciation by reducing the value of plant and machinery and disallowance of higher rate of depreciation in respect of factory building - AO misunderstood the difference occasioned due to the variance in the method of valuation of the cost asset under Companies Act and section 43A - HELD THAT:- Method adopted by the assessee and accepted by CIT(A) is in accordance with the adjustment in the actual cost of the assets with reference to the change in the rate of foreign exchange subsequent to the acquisition of the asset. Hon ble Apex Court in the above decision clearly held that section 43A which corresponds to para 10 of AS-11, particularly in the light of section 43(1) makes it not possible to adjustment of the carrying cost of the fixed assets acquired in foreign exchange. Though the DR produced the details of year wise CWIP, EDCP and capitalized machinery/equipment, it missed the attention of the DR that an amount is mentioned therein as capitalized machinery cost. When the foreign exchange earned during the year under consideration to the tune the assessee rightly reached the difference which occasioned solely because of the different methods followed for valuation of the plant and machinery under the provisions of Companies Act and differently in compliance with the provisions of the 43A - This aspect has already been dealt with in the case of Woodward Governor India (P) Ltd., [ 2009 (4) TMI 4 - SUPREME COURT] and therefore, we do not find anything illegality or irregularity in the approach of the CIT(A) and accordingly, we decline to interfere with the same. Appeal of Revenue is dismissed.

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• 2022 (10) TMI 1043
  Allowance of project expenditure - Allowability of deferred revenue expenditure which is getting claimed by the assessee over and above the actual project expenses amount already considered in purchase - HELD THAT:- As sole project entered into by the assessee is pending at approval stage and the project has not taken-off yet. The assessee has only constructed model apartment and launched pre-commencement sale. During appellate proceedings, the assessee submitted that expenditure incurred are to be claimed in the years in which it is actually incurred and income is to be offered in the year of receipt which violates the matching concept of accounting. In the construction activities, the income has to be offered either on percentage of completion method or on the basis of completed contract method. From the fact, it emerges that the project has not taken-off and therefore, the expenditure incurred by the assessee are to be taken as incurred during pre-commencement stage. Under such circumstances, the same could not be allowed as business expenditure but the same are to be capitalized along with project expenditure as held by Tribunal in AY 2012-13 [ 2022 (2) TMI 696 - ITAT CHENNAI] Facts being pari-materia the same, we direct Ld. AO to verify the expenditure incurred by the assessee and allow capitalization of the same. The revenue s appeal stands partly allowed. Disallowance of project expenses written-off - HELD THAT:- Since we have allowed capitalization of expenses for AY 2013- 14, the same would have direct bearing on income computation of this year. It could also be seen that the expenditure has been allowed to be capitalized for AY 2012-13 also. In this year, the assessee has carried out business operations and would be entitled to claim the corresponding expenditure as per percentage of completion method of accounting being followed by it. Therefore, this issue stand restored back to Ld. AO for fresh adjudication in the light of adjudication of earlier years. The revenue s appeal stand allowed for statistical purposes. Disallowance of Bad Debts u/s 36(1)(vii) r.w.s. 36(2) - HELD THAT:- From the facts, it emerges that the assessee has lent surplus funds to another entity which are not business advances. No commercial expediency of advances could be demonstrated by the assessee. The assessee claimed the write-off of advances as irrecoverable u/s 36(1)(vii) which applies for a business transaction only and not otherwise. The money lending is not the business of the assessee neither the advances were incidental to the business activities of the assessee. In such a case, the ratio of recent decision in Ashok Leyland Ltd. [ 2022 (6) TMI 269 - MADRAS HIGH COURT] would squarely apply to the facts of the case - Respectfully following the same, we dismiss the ground raised by the assessee.

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• 2022 (10) TMI 1042
  Revision u/s 263 by CIT - As per CIT there is violation of section 40A(3) not considered by AO - HELD THAT:- AO did not gave its reasoning before allowing relief to the assessee, and erroneously accepted that since a single voucher cash payment in a day was below Rs. 20000/- and hence Section 40A(3) is not attracted, but failed to appreciate that if all such vouchers reflecting cash payment to a single party/creditor in a day are aggregated , then the total cash payment in a day to a particular party/creditor is exceeding Rs. 20,000/- which clearly is in violation of Section 40A(3) , as whether assessee making payment either through sales persons or agents is the same and the person to whom cash payment exceeding Rs. 20,000/- in a day is made is also one party Assessing Officer has not considered the issue in proper perspective and there is no estoppels against law.Thus, clearly the reassessment order passed by AO was erroneous so far as prejudicial to the interest of the Revenue, as to the enquiries and verification as ought to have been made by the AO were not made by AO during reassessment proceedings. The learned PCIT was justified in invoking its revisionary powers u/s 263, and the reassessment order dated 14.12.2018 passed by Assessing Officer u/s 147 read with Section 143(3) was rightly cancelled by ld. PCIT by invoking its revisionary powers u/s 263, and directions were rightly issued by ld. PCIT to AO to make fresh assessment denovo after investigating complete facts. We uphold the revisionary order passed by learned PCIT u/s 263 - assessee fails in this appeal which stand dismissed

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• 2022 (10) TMI 1041
  Validity of Assessment u/s 153A - no notice under section 143(2) was served on the assessee - HELD THAT:- We observe that despite several opportunities, DR has not been able to place on record any documents/assessment records/evidence which shows that notice under section 143(2) of the Act was issued/served upon the assessee at any time prior to completion of assessment. The assessee has filed a specific Affidavit to the effect that no notice under 143(2) of the Act was issued/served upon the assessee during the course of assessment proceedings i.e. prior to completion of assessment. DR has not placed on record any documents to contradict the Affidavit filed by the assessee regarding non-service/non-issuance of notice u/s 143(2). Hon ble High Court Gujarat High Court in the case of Panorama Builders (P.) Ltd [ 2012 (8) TMI 955 - GUJARAT HIGH COURT] held that Section 292BB is only confined to service of notice and does not apply to issuance of notice. In the case of Narendra Singh [ 2010 (11) TMI 209 - ITAT AGRA] the ITAT held that in pursuance of return filed by assessee u/s 153A, service of notice as per provisions of section 143(2) within prescribed time is mandatory. Therefore, in absence of service of such a notice, Assessing Officer cannot make addition and he is bound to accept income as returned by assessee. Thus, since the Ld. AO did not issue/serve notice under section 143(2) of the Act before completion of assessment under section 143(3) of the Act, the assessment order framed is void. DR has not brought anything on record to substantiate that notice u/s 143(2) of the Act was either issued/served on the assessee prior to completion of assessment. In view of the above, we are of the view that the assessment order is invalid in the eyes of law in absence of a valid issuance and service of notice under section 143(2) of the Act. In the result, appeal of the assessee is allowed on jurisdiction. Accordingly, we are not discussing the merits of the case.

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• 2022 (10) TMI 1040
  Long Term capital gain - valuation arrived by the Valuation Officer - HELD THAT:- Section 142A of the I.T. Act titled as Estimate by Valuation Officer in certain cases . This section prescribes that for the purpose for making an assessment, where an estimate of the value of any investment referred to in sections 69, 69A, 69B are required to be made, the A.O. may require the Valuation Officer to make an estimate of such value and report the same to A.O. Thus the scope of section 142A is limited in its span only to determine the value of investment in respect of certain assets, such as, bullion, jewellery, valuable articles etc. In this section as well there is no power vest with A.O. to seek the help of Valuation Officer in respect of determination of capital gain prescribed u/s 48 of the Act. Similarly Section 50C is titled as Special provision for full value of consideration in certain cases . Meaning thereby this section is not applicable to each and every case of sale but this is to be applied in respect of those sales instances where consideration received is less than the value adopted by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. In that situation, for the purpose of section 48 computation of capital gain, value so adopted by the stamp valuation authority be deemed to be the full value of the consideration received as a result of such transfer. Meaning thereby the substitution of full value of consideration is possible, if the disclosed consideration is less than the value determined for payment of stamp duty. It had also been prescribed that where the assessee claims that the value adopted by the stamp valuation authority exceeds their fair market value or the value so adopted by the stamp valuation authority is not decided by any other Court or High Court, then the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer under section 55A. Therefore the conclusion is that the Act has prescribed that a reference u/s 55A can be made for a limited purpose as prescribed under section 50C. As seen from records and the Paper Books filed in the present case, the Assessing Officer referred the transaction to the Valuation Officer, Sholapur u/s 142A on 09.11.2017 to ascertain the Fair Market Value as on the date of sale. The Valuation Officer determined the value of the property vide his report dated 14.08.2018. Based on the above report, the AO passed the assessment order on 28.09.2018 which is claimed by the assessee as barred by limitation u/s. 153(1) - The assessee s contention that the AO ought to have passed the assessment order under 153(1) on or before 31.12.2017 and then invoking subsection (15) of Section 155 and amend the assessment order within four years thereafter, is found to be justifiable. AO necessarily to pass the assessment order within the time limit as prescribed under section 153(1) of the Act which is in this case namely 31.12.2017. AO has wrongly referred the valuation of the immovable property u/s 142A of the Act which is not provided under the provisions of the Income Tax Act. However after receipt of the Valuation Report from the DVO, the A.O. passed the assessment order on 28.09.2008 which is clearly barred by limitation which is not sustainable in law. Therefore the assessment order is hereby invalid in law. Thus the ground no. 1 raised by the assessee is hereby allowed.

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• 2022 (10) TMI 1039
  Royalty payment - payments made by the Appellate under the Distribution Agreement - characterisation of the payments to Google Ireland - scope of Section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the Double Taxation Avoidance Agreement between India and Ireland - assessee (Google India Private Limited) (GIPL) is a company engaged in the business of providing Information Technology (IT) and Information Technology Enabled Services (ITES) to its group companies. The definition of the term royalty in Article 12(3) of the India - Ireland DT AA override the definition of royalty as provided in Explanation 2 to section 9(l)(vi) of the Act by virtue of section 90(2). Therefore, the definition of the term royalty under the India - Ireland DTAA being more beneficial to the assessee must only be considered in these appeals. The findings of the AO and CIT(A) as regards the characterisation of the payments to Google Ireland as Royalty under section 9(l)(vi) of the Act is therefore not relevant and consequently correctness of these findings need not be adjudicated in these appeals. Similarly, we do not think it is necessary to decide whether the services agreement and distribution agreement are interlinked or complementary to each other. ITES services are enabling the overall business and not directly related to generating revenue from Adword Program in India. Revenue is generated by end customers clicking on link and not because of ITES services. Even if it is interlinked, the internal tools / intangibles / software of Google Ireland are admittedly not transferred to assessee. The assessee has only right to use these for rendering ITES services. Applying ratio of the Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] this cannot result in royalty. We proceed to examine whether the definition of Royalty as per Article 12 of India- Ireland DTAA is satisfied in the present case considering the distribution agreement, services agreement and the facts on record. It is not in dispute that the Adwords Program is used by the assessee in the present case be it for the purpose of discharging its functions under the distribution agreement or under the services agreement. However, the question for our consideration is whether the copyright in Google AdWords Program is used by the assessee or not? In order to attract definition of Royalty , there has to be use or right to use, inter alia, any copyright. The issue as to whether usage of computer software tantamounts to royalty, is now resolved by the Supreme Court decision in the case of Engineering Analysis Centre of Excellence Private Limited (supra) We find that none of the rights as per section 14(a)/(b) and section 30 of the Copyright Act, 1957 have been transferred by Google Ireland to the assessee in the present case. As held by the Hon ble Apex Court in the case of Engineering Analysis Centre of Excellence Private Limited (supra) mere use of or right to use a computer program without any transfer of underlying copyright in it as per section 14(a)/(b) or section 30 of the Copyright Act, 1957 will not be satisfying the definition of Royalty under the Act / DTAA. Similarly, use of confidential information, software technology, training documents and others are all literary work with copyrights in it owned by the foreign entity and there was no transfer or license of copyrights in favour of the assessee company. Hence, the impugned payments cannot be characterised as Royalty under the DTAA. Delhi High Court in DIT v Sheraton International Inc [ 2009 (1) TMI 27 - DELHI HIGH COURT] held that when the use of trade mark, trade name etc are incidental to the main service of advertisement, publicity and sales promotion and further when there is no consideration payable for such use of trade mark, trade name etc, the consideration cannot be characterised as royalty. Applying the said principle, in the present case, use of Google Brand Features etc are de hors any consideration payable to Google Ireland and further they are incidental and ancillary for achieving the main purpose of marketing and distributing the Google Adwords Program. Hence, the lower authorities were not right in treating the payments as Royalty. Applicability of use of or right to use industrial, commercial or scientific equipment the CIT(A) held that the assessee cannot be said to have gained right to use any scientific equipment, since, Google Ireland has not parted with the copyright it holds in the Adwords program and hence it cannot be said that any kind of technical knowhow has been transferred to the assessee company. The revenue has not challenged the said finding of CIT(A). Hence, the impugned payments cannot be regarded as made for use of or right to use industrial, commercial or scientific equipment . The remaining portion of definition of Royalty under the India - Ireland DT AA is consideration for information concerning industrial, commercial or scientific experience. AO has not characterised the impugned payments as a consideration for the above. In any case, CIT(A) has given a finding that it cannot be said that any kind of technical knowhow has been transferred to the assessee company. This has not been challenged by the revenue. We hold that the impugned payments cannot be regarded as royalty under the India - Ireland DTAA. It is true that the Google Adword program was commercially and profitably exploited in a commercial sense and profitable manner in India to generate revenues from Indian customers or advertisers. This is the business or commercial aspect of the transaction. However, the stand of the lower authorities that the impugned payments are in the nature of Royalty cannot be upheld especially under Article 12 of the India - Ireland DTAA merely because the marketing, distribution and ITES activities are carried out in India and revenues are generated from India or from Indian Advertisers TAG was set up by OECD and its recommendation on changes to the OECD commentary were accepted by OECD. As per the recent decision of the Hon ble Supreme Court in Engineering Analysis, (supra), OECD commentary is a necessary aid for the interpretation of provisions contained in DTAA. In fact, the High-Powered Committee ( HPC ) on electronic commerce and taxation, set up by the Central Board of Direct Taxes ( CBDT ) had also accepted the view taken by TAG and recommended taxing consideration flowing for online advertisement under Article 7, and not Article 12 of the relevant DTAA. In terms of the international guidance as stated herein, the position regarding taxability of receipts from sale of online advertisement space is clear. Unless the non-resident, who is engaged in sale of online advertisement space, has a PE in India, no portion of receipts earned by it from sale of online advertisement space in India can be brought to tax in India as Act read with the relevant DTAA. PE definition presently is based upon the physical presence criteria. The new business models also created challenges in characterizing the nature of payment whether the payment is for services or for any IPR and hence royalty or whether it represents pure business profits. Various ITAT decisions, as discussed above, have held that income from sale of advertisement space on a website is not taxable in India if there is no PE of the foreign enterprise in India. As held that such income is not to be regarded as royalty or FTS. Such tax challenges is addressed by the introduction of EL. Section 165 of the Finance Act, 2016 provides for charge of EL at 6% on consideration for specified services. Section 164(i) of Finance Act, 2016 provides that specified service means online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government in this behalf. Thus, online advertisement is now covered under EL. If online advertisement was already covered under definition of royalty, then bringing it as part of EL scheme would not arise. We hold that the impugned payment cannot be characterized as royalty under the India- Ireland DTAA. It is ordered accordingly.

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• 2022 (10) TMI 1038
  Rejection of books of accounts - GP estimation - HELD THAT:- We find substance in the observations of the A.O that had prompted him to reject the trading results of the assessee, but are accept the manner in which he had determined the gross profit addition on the basis of an unsubstantiated; or in fact an ad-hoc application of gross profit rate of 1.98% of cigarette and tobacco products and 3.96% of other FMCG products. As stated by AR and, rightly so, there was no justification on the part of the A.O to have adopted the aforesaid basis which as the same was not supported by any concrete basis. On the contrary, in our considered view the estimation of the assessee s income for the year under consideration could have been safely done by taking cognizance of its disclosed gross profit rates for the immediately three preceding years [out of which two years had been subjected to scrutiny assessment u/s. 143(3) of the Act], as well as that of the immediately succeeding year which too have been subjected to a scrutiny assessment u/s.143(3). Gross profit rate of the assessee could have safely been taken by the A.O at 1.54% i.e. average gross profit rate of the last three years i.e. A.Y. 2010-11 to 2012-13. Accordingly, in terms of our aforesaid observations the A.O is herein directed to restrict the addition by adopting the overall gross profit rate of the assessee @1.54% of its total sales - Thus, the ground of appeal No.1 is partly allowed in terms of our aforesaid observations. Allowability of a claim of expenditure u/s. 37(1) - deduction of commission expenses - HELD THAT:- A.O for considering the allowability of the expenditure incurred by the present assessee before us, could not have been guided by the test of necessity, but by the fact that as to whether or not the expenditure had been laid out or expended wholly and exclusively for the purpose of the business of the assessee; and that the same is not in the nature of an expense which are specifically excluded as per the mandate of Sec. 37 of the Act. It is not the case of the A.O that the assessee had not incurred the aforesaid expenses wholly and exclusively for the purpose of his business, but for the reason that as per him there was no need for the assessee to have paid commission to the aforesaid parties. We are afraid that the aforesaid reasoning for dislodging the assessee s claim for deduction of the commission expenses by the A.O cannot be accepted on our part. A.O had failed to give any justifiable reason as regards declining of the assessee s claim for deduction of commission expenses that were paid to the aforementioned parties. Apart from that, we are of the considered view that considering the fact that payment of commission by the assessee to the aforesaid parties within the same parameters had not only been allowed by the department in his for the last three preceding years (for two years scrutiny assessment was framed), but also while framing assessment in his case for the immediately succeeding year i.e. AY 2014-15 vide order passed u/s.143(3), dated 15.11.2016, therefore, there was no justification on the part of the A.O in declining the assessee s claim for deduction of the commission expenses during the year under consideration - Decided in favour of assessee.

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• 2022 (10) TMI 1037
  Disallowance of deduction claimed u/s 80IA(4) - HELD THAT:- We find that the claim which has been decided in favour of the assessee [ 2022 (5) TMI 773 - ITAT AHMEDABAD] is on identical projects. After careful consideration of the order passed by the Co-ordinate Bench, we find that the assessee has been found to be a developer and not a work contractor and ultimately the benefit claimed under Section 80IA(4) of the Act has been granted. In the absence of any different fact, we do not find any reason to deviate from finding made by the Co-ordinate bench and therefore respectfully relying upon the same, we allow this ground of appeal preferred by the assessee.

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• 2022 (10) TMI 1036
  Deduction u/s. 80P(2)(d) - interest income earned from other cooperative banks/societies - HELD THAT:- As relying on Kshatriy Gadkari Maratha Cooperative Credit Society Ltd. [ 2019 (4) TMI 1932 - ITAT MUMBAI ] and Kaliandas Udyog Bhavan Premises Co-op Hsg Society [ 2018 (4) TMI 1678 - ITAT MUMBAI ] we hold that the assessee a cooperative society is eligible for deduction u/s.80P(2)(d) of the Act in respect of the interest income earned by the assessee either from any other cooperative society or from a cooperative bank. Grounds raised by the assessee are allowed.

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• 2022 (10) TMI 1035
  Revision u/s 263 by CIT - there is a huge difference in invoice value and the duty paid as per the Annexure-15 and the ITS data available - CIT came to the conclusion that the purchase value/invoice values have wrongly mentioned to reduce the net profit of the Firm and the same has not been verified by the AO at the time of finalizing the assessment under Section 143(3) - HELD THAT:- Now, assessee has submitted a Chart before the Ld. Pr. CIT giving a reconciliation of the difference pointed out by Ld. Pr. CIT and submitted that all difference has been duly explained. However, the issue for consideration is whether this aspect should have been enquired during the course of assessment proceedings. In our view, this glaring difference should have been enquired during the course of assessment proceedings, which the Ld. Assessing Officer omitted to do. In the case of L.A. Developers [ 2022 (6) TMI 1321 - ITAT CUTTACK] ITAT held that failure on part of Assessing Officer to examine or make addition in respect of difference between cash flow and balance sheet had clearly made assessment order erroneous and consequently prejudicial to interest of revenue. Therefore, Commissioner was right in invoking his powers u/s. 263 of the Act. In view of the above facts and the judicial precedents on the subject, in our considered view, reconciliation should have been sought by Ld. Assessing Officer during the course of assessment proceedings. Non-seeking of such reconciliation, which apparently should have been sought, in our view, indicates non-application of mind to the given set of facts by Ld. Assessing Officer during the course of assessment proceedings. Accordingly, we find no infirmity in the order of Ld. Pr. Ld. CIT(A), who, in our view, in the instant set of facts has correctly concluded that the order passed by Ld. Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Appeal of assessee dismissed.

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• 2022 (10) TMI 1034
  Unexplained expenditure u/s. 69C - addition on account of variation in the valuation made by the customs authorities in the assessable value of goods imported - HELD THAT:- As in the case of the assessee, there is no evidence on record to suggest that assessee, has paid any amount over and above the purchase consideration shown in the purchase bills. It may also be noted that the excise duty payable on each bill on the difference in valuation made by the customs authorities @ 16% works out to be in a few hundreds and there is a force in the contention of the assessee that, the cost of filing of further appeal is higher than additional custom duty paid and it was not economical to contest the variations. Moreover, if an assessee opts to contest the variations, it delays the clearance of the goods and result into higher cost. Therefore, only on the fact that the assessee had paid custom duty on the enhancement made by the custom authorities cannot be regarded has a valid basis to suggest that there was unaccounted purchases made by the assessee. CIT(A) held that the AO was not justified in assuming that the assessee had made unaccounted purchases solitary on the basis that the customs authorities had enhanced the value of goods imported for the purpose of payment of custom, duty. In the absence of any evidence/material on record that the assessee has paid anything extra over and above the transaction value shown in import invoices, no addition on account of unexplained expenditure on purchases can be made and deleted the addition of Rs. 31,07,529/- made by the AO. As gone through the entire factum and without any hesitation, we hold that the Assessing Officer has made addition on a deeming fiction and the CIT(A) has succinctly analyzed every aspect of the business and transactions and gave a surefire decision. Hence, we decline to interfere with the order of the Ld. CIT(A) on this issue. Addition in gross profit - AO has rejected the books of account holding that the purchases as well as sales have not been fully accounted for - The books cannot be rejected on the solitary basis that sales were shown to be made in cash specially when there is no difference in the rate charged on sale of same product booked either in cash or on credit. Therefore, we are of the opinion that there was no material in possession of the AO to conclude that books of account for the A.Y. 2003-04 maintained by the assessee were either incorrect or incomplete. Since there is no basis of rejection of books of account, provisions of section 145 cannot be attracted and no addition in the gross profit can be made on estimated basis, when the assessee has cogently explained the reasons for fall in the gross profit rate being on account of change in the pattern of business and increase in the total turnover. Hence, addition made on account of gross profit has been fittingly deleted by the Ld. CIT(A). The appeal of the revenue on this ground is dismissed.

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• 2022 (10) TMI 1033
  Foreign Tax Credit (FTC)) u/s 90 - delay in filling Form 67 - As per NFAC filing of form No.67 before the due date of filing return of income u/s.139(1) of the Act was mandatory and failure to do so will result in FTC not being allowed - HELD THAT:- The said issue under consideration is no longer res integra. We note that on identical issue, the Co-ordinate Bench of ITAT, Bangalore in the case of Brinda Rama Krishna [ 2022 (2) TMI 752 - ITAT BANGALORE] held that (i) Rule 128(9) of the Rules does not provide for disallowance of FTC in case of delay in filing Form No.67; (ii) filing of Form No.67 is not mandatory but a directory requirement and (iii) DTAA overrides the provisions of the Act and the Rules cannot be contrary to the Act. Therefore, non-furnishing of Form No.67 before the due date u/s 139(1) of the Act is not fatal to the claim for FTC The assessee is entitled to FTC and the AO is directed to allow the claim. The decision rendered in MURALIKRISHNA VADDI, VISAKHAPATNAM case [ 2022 (6) TMI 693 - ITAT VISAKHAPATNAM] is distinguishable in as much as in the present case, Form No.67 was filed along with the return of income by the assessee and not after the commencement of the scrutiny proceedings by the AO after a delay of more than 2 years, as was the facts in the case decided. We are therefore of the view that the said decision rendered by the Visakapatnam Bench is not applicable to the facts of the present case and the other decisions taking a view in favour of the assessee are applicable. The said decision also does not consider the effect of DTAA and Sec.90 of the Act, vis- -vis the provisions of Rule 128(9) of the Rules and as to whether the Rules can override the Act. Therefore, we hold that the assessee is entitled to FTC and the AO is directed to allow the same. - Decided in favour of assessee.

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• 2022 (10) TMI 1032
  Nature of receipt - Sales Tax Subsidy - revenue or capital receipt - MAT Computation u/s 115JB - HELD THAT:- Undisputedly, assessee company has received an amount on account of sales tax exemption benefit. The assessee company by relying upon the decision rendered in case of DCIT vs. Reliance Industries Ltd. [ 2003 (10) TMI 255 - ITAT BOMBAY-J] sought to treat the sales tax incentives received as capital receipt in nature, which plea has not been accepted by the AO who has proceeded to treat the sales tax subsidy as revenue receipt in the hands of the assessee. We direct the AO not to add sales tax subsidy received by the assessee, which is in the nature of capital receipt while computing the book profit u/s 115JB.

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• 2022 (10) TMI 1031
  Revision u/s 263 - Validity of order passed by the AO as per the direction of the Settlement Commission u/s.245D(4) - Claim of deduction in respect of loss by way of liquidated damages on account of delay in execution of contracts, Claim of deduction towards provision for warranty, Adjustment u/s.145A of the Act in respect of MODVAT - HELD THAT:- We find that pursuant to the directions of the Hon ble Settlement Commission, the ld. AO had indeed examined the 35 issues listed in the said order while framing the assessment giving effect to Settlement Commission s order. In fact in the said order, AO after due examination had accepted to the stand of the assessee for certain items and wherever he is not in agreement with the contentions of the assessee, the ld. AO had resorted to make suitable disallowances / additions. Hence, this goes to prove that the ld. AO had indeed made thorough examination and enquiries with regard to 35 items listed in the Settlement Commission s order. The order passed by the ld. AO u/s.143(3) r.w.s. 245D(4) of the Act dated 25/02/2008 could not be construed as an order passed by a subordinate authority in view of the fact that the Settlement Commission order has been passed by the Officers in the rank of the Chief Commissioner. Hence, we have no hesitation to hold that revision jurisdiction invoked u/s.263 by the ld. CIT seeking to make adjustment in respect of (a) claim of deduction in respect of loss by way of liquidated damages on account of delay in execution of contracts (b) adjustment u/s.145A of the Act in respect of MODVAT as void ab initio as the same was already the subject matter of consideration by the ld. AO while passing an order giving effect to Settlement Commission proceedings. Hence, due enquiries had been carried out by the ld. AO on these two items. In respect of aforesaid two items, revision jurisdiction invoked by the ld. CIT u/s.263 of the Act is unsustainable in the eyes of law. The various arguments made by the ld. AR on the merits and other legal submissions in respect of the aforesaid two issues, need not be gone into and they are left open as adjudication of the same would only be academic in nature. Impact of Section 145A of the Act of MODVAT - AO in the instant case had passed an order giving effect to the directions of the Settlement Commission. The Settlement Commission had indeed directed the ld. AO to examine 35 items that are listed in pages 27 28 of the Settlement Commission order for various years. Hence, the ld. AO does not have jurisdiction to travel beyond those 35 items listed in the Settlement Commission Order. The examination of those 35 items alone would be in direct consonance and compliance with the directions of the Hon ble Settlement Commission. This is what has been done by the ld. AO in the instant case. How the ld. CIT could expect the ld. AO in the aforesaid scenario to look beyond 35 items. Hence, the order of the ld. AO cannot be treated as erroneous in respect of the issues that were not forming part of 35 items listed in the order of the Settlement Commission. To this extent, the revision order passed by the ld. CIT u/s. 263 of the Act is quashed. Hence, the observations made by the ld. CIT in his order u/s.263 of the Act in respect of (a) impact of taxable income as a consequence of change in the method of recognition of the Revenue and (b) quantitative details in respect of raw materials and finished goods are dismissed and quashed. Claim of deduction towards provision for warranty - Revision jurisdiction u/s.263 of the Act cannot be invoked by the ld. CIT for directing to make fishing and roving enquiries by the ld. AO. Moreover, the ld. CIT had not stated as to how the claim for provision of warranty made by the assessee is incorrect or erroneous, as admittedly reply was given before the ld. CIT by the assessee in response to show-cause notice. Hence, it is incumbent on the part of the ld. CIT to atleast make preliminary enquiry on the submissions made by the assessee before concluding that the order passed by the ld. AO is erroneous in respect of this issue. Hence, we hold that the revision jurisdiction u/s.263 of the Act invoked by the ld. CIT fails in respect of this issue also. Thus revision order passed by the ld. CIT u/s.263 of the Act is hereby quashed. - Decided in favour of assessee.

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• 2022 (10) TMI 1030
  Reopening of assessment u/s 147 - validity of notice - Reasons are handwritten and there is no signature of the AO thereon - HELD THAT:- As on verification of the assessment record including the order sheets from the date of recording of reasons clearly reveals that the order sheets by the AO from recording of reasons, issuing of notice u/s 148 and notices u/s 142(1) are handwritten and there is no signature of the AO thereon. Thus, safely hold that the AO neither complied with the statutory requirements and issuing notice u/s 148 of the Act nor complied with the law laid down by the Hon ble Supreme Court in the case of reassessment proceedings. Consequently, as compelled to hold that the AO did not have valid jurisdiction to initiate reassessment proceedings and to issue notice u/s 148 of the Act to the assessee. Therefore, notice issued u/s 148 of the Act, reassessment proceedings and the impugned reassessment order are bad in law. Accordingly, the same are quashed and the consequent reassessment order made u/s 147 r.w. section 143(3) of the Act is annulled and the appeal of the assessee is allowed.

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• 2022 (10) TMI 1029
  Addition u/s. 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT:- Assessee failed to produce the alleged 8 parties who had subscribed to the equity shares of the assessee company. The assessee was asked to explain the cash credits received by it during the year. The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the cash creditors as well as genuineness of the transaction. The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details at any stage. Consistently escaping from appearing/producing the alleged parties before the ld. AO and the appellate authority(ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium and, therefore, the provisions of section 68 of the Act have rightly been invoked by ld. AO and alleged sum is the unaccounted income of assessee, which has been routed in the books through bogus/accommodation entry in the form of share capital and security premium. No infirmity in the finding of the ld. CIT(A) confirming the addition made u/s. 68 of the Act. Thus, all the grounds of appeal raised by the assessee are dismissed.

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• 2022 (10) TMI 1028
  Delayed deposit of ESI PF - Scope of amendment to section 43B - HELD THAT: - We are in agreement with the view taken by the coordinate Bench of Kolkata in the case of Lumino industries Ltd. [ 2021 (11) TMI 926 - ITAT KOLKATA] that the amendment brought to the statute by Finance Act 2021 is applicable from AY 2020-21 onwards and the present appeal pertains to AY 2018-19. In the present case, undisputedly, the assessee deposited amount of ESI PF before due date of filing of return and impugned disallowance has been made by CPC while processing the return of income u/s 143(1) of the Act. In the similar situation the coordinate Bench of the Tribunal in the case of Kalpesh Synthetics (P) Ltd. [ 2022 (5) TMI 461 - ITAT MUMBAI] observed that the scope of prima facie disallowance u/s 143(1) of the Act is inherently very limited and only such disallowance can be made under this statutory provision as can be conclusively held to be inadmissible based on material on record. Appeal filed by the assessee is allowed.

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• 2022 (10) TMI 1027
  Deduction u/s 80P(2)(d) - interest income from Co-operative Banks - conflicting decisions - whether interest income derived from deposits with cooperative banks is eligible for deduction under section 80P(2)(d) of the Act or not? - HELD THAT:- The Hon ble Bombay High Court in the case of K. Subramanian vs. Siemens India Ltd. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT] has held that when two conflicting decisions of non-jurisdictional High Courts are available, the view that favours the assessee is to be preferred. Accordingly, following the decision of Totagars Co-operative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and case of Vankar Sahakari Sangh [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] the deduction claimed by the assessee under section 80P(2)(d) of the Act in respect of interest derived from investments with the cooperative banks is allowed. Appeals by assessee are allowed.

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• 2022 (10) TMI 1026
  Disallowance u/s 36(1)(iii) - amount advanced by the assessee on which no interest has been charged by the assessee - DR submitted that the amount has been advanced from the assessee s cash credit bank account and it is thus evident that there is a direct nexus between interest bearing funds - HELD THAT:- Where the deposits are more than the withdrawals on a given day and such excess deposits are utilised by the assessee for the purpose of making any loans and advances, no interest would be charged by the bank as the assessee would in effect be using its own funds at the given point of time - nature of deposits in such cash credit account needs to be examined as to whether the deposits are from business operations or there are also deposits by way of fund transfer from other bank accounts and the nature of such funds from other bank accounts in the nature of borrowings or from business operations. In case of borrowed funds have been transferred to this particular cash credit account and such funds are then utilized in giving loans and advances, again a nexus is established between the borrowed funds and the loans/advances. In our view, this particular aspect of the matter in terms of nature and movement of funds in the cash credit account through which the advances have been given to M/s Mirage Infrastructure Private Limited has not been examined by either of the lower authorities. Merely because the advances were given from assessee s cash credit account, a simplistic presumption cannot be drawn that advances were from borrowed funds given that the cash credit account is likely to have credits/deposits from assessee s business operations and/or other bank accounts. The credits and withdrawals in such cash credit account need to be examined and a clear nexus is required to be established between the borrowed funds and making of loans/advances to M/s Mirage Infrastructure Private Limited. On the same footing, the argument of the assessee regarding availability of its own funds need to be tested and examined after analyzing the nature and position of funds at the relevant point of time of making such advances. We, therefore, deem it appropriate to remand the matter to the file of the AO to examine this matter afresh in light of above discussions. AO shall provide reasonable opportunity to the assessee and the latter shall submit the desired information/documentation as so desired by the AO. Ground of appeal is allowed for statistical purposes.

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• 2022 (10) TMI 1025
  Revision u/s 263 by CIT - short working of capital gain - assessee has received ancestral property from her father late - PCIT held that the Assessing Officer has not correctly verified the different valuation adopted by the assessee in different areas for the same land and, therefore, set aside the assessment order and directed the AO to pass fresh assessment order - HELD THAT:- It is pertinent to note that the Assessing Officer in notice under Section 142(1) of the Act has asked the query not in general but specifically asked the details about the land purchased and sold along with sale deed and purchase deed. The reply of the assessee clearly shows that the assessee has given all the details in response to DVO s calculation related to land and the indexation thereto. In fact, AO in reopening has categorically made finding and made addition to the extent of Rs.18,63,319/- on account of short working of LTCG. DVO s report was authenticated and accepted by the Revenue. This is not a case of lack of enquiry or no enquiry at all. Besides this, the PCIT has given his own observation which amounts to review and change of opinion or review while exercising Section 263 is not permitted by the Income Tax Statute. Thus, the PCIT was not right in exercising Section 263 in assessee s case. The appeal of the assessee is thus allowed.

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• 2022 (10) TMI 1024
  Unexplained cash deposited in the bank - Addition of Cash deposit in the Bank invoking section 69A - HELD THAT:- Considering the amount of cash withdrawn by the assessee during the period from 30.06.2015 to 09.10.2015 the source of which is not in dispute. We find merit in the contention of assessee that the assessee was withdrawing the cash from Bank and keeping it at home and subsequently when the demonetization scheme was announced, the assessee deposited the amount left over with him in the Bank account. Thus hold that the cash withdrawn by the assessee during the period 30.06.2015 to 09.10.2015 is sufficient to explain the source of the alleged cash deposited in the Bank - Therefore, delete the addition made under section 69A of the Act by setting aside the finding of the ld. CIT(Appeals) and allow the appeal of the assessee.

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• 2022 (10) TMI 1023
  Revision u/s 263 - As per CIT, AO has not examined all the unsecured loans taken during the year - HELD THAT:- AO has discussed only the issue regarding unsecured loan that too giving reference to the balance sheet of unsecured loan as on 31.03.2013 and as on 31.03.2012. Addition was made only on the basis of the admission of the assessee that he was unable to provide the details of other unsecured loan. We note that during the year under appeal i.e. AY 2012-13, the AO was required to examine the unsecured loan taken during the year i.e. FY 2011-12. AO has only given reference to the balances of unsecured loan appearing on 31.03.2013 and comparing the same with the balances of unsecured loan as on 31.03.2012 and has completely overlooked the fact that various unsecured loans were taken during FY 2011-12 which is part of the details filed by the assessee itself. AO has only confirmed the addition of unsecured loan of Rs. 17,00,000/- which the assessee himself admitted to be unable to explain. Therefore, so far as the issue of unsecured loans are concerned, ld. AO has not examined all the unsecured loans taken during the year and the same has been rightly directed by ld. PCIT to be examined in the set aside proceedings. Addition to the capital account - A perusal of the bank account of the assessee placed that Rs. 21,50,000/- was received in lieu of agreement for construction and out of this sum Rs. 15,00,000/- was transferred in March 2012 and Rs. 1,00,000/- was transferred from other sources of the assessee on 04.11.2011. In our view, the assessee has duly explained the source of capital addition in the account of the proprietorship concern which ld. AO has examined properly and the source of addition to capital account stands duly explained and no further examination needs to be carried out by the ld. AO on this issue and, thus, the finding of the ld. PCIT on this issue is reversed. Addition of fixed assets - There is no information provided by the assessee before the ld. AO and nor proper explanation was given before the ld. PCIT also and therefore, this issue has been rightly set aside by ld. PCIT to the ld. AO for doing the needful. Sundry creditors - We find that the assessee provided complete details of the sundry creditors with the ledger accounts and on going through the same, we find that with all the sundry creditors the assessee is carrying out regular business activity, they are running accounts and there is no reason to doubt the genuineness of the sundry creditors appearing in the balance sheet as on 31.03.2012 which includes the sundry creditors Ori-Plast Limited of which detailed vouchers, bills and ledger accounts were filed. We, therefore, are of the considered view that since the ld. AO examined this issue, the same need not be set aside for fresh adjudication and to this extent, the finding of the ld. PCIT on this issue is reversed. Calculation of gross profit - During the survey it was noticed that the assessee was maintaining two sets of books of account. A perusal of the assessment order reveals that AO has made no efforts to examine this issue as to whether the assessee was keeping two sets of books of account for the year under appeal and whether any such evidence was gathered by the survey team pertaining to FY 2011-12. Assessment order is completely silent on this issue and the reconciliation statement filed by the assessee before ld. AO do not contain any specific details and it refers to gross profit as per the impounded books at Rs. 14,04,012/- and the same has been compared to gross profit as per the audited books of account at Rs. 3,50,752/-. There is complete mismatch of figures. Thus, in our view this issue of reconciliation of gross profit has rightly been set aside to the ld. AO for afresh examination and to this extent the finding of the ld. PCIT is confirmed. The action of PCIT invoking jurisdiction u/s 263 of the Act and holding the assessment order as erroneous insofar as prejudicial to the interests of the Revenue is partly sustained in view of the observations made herein above.

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• 2022 (10) TMI 1002
  Rectification of mistake - Assessee contends that Ground Nos. 3 to 5 for A.Y. 2008-09 where it was pointed out that the said ground remained from being decided in our order - HELD THAT:- Vide order Ground Nos. 3 to 5 has inadvertently remained undecided, though it was argued by both the sides. In view of the above, the order dated 09.10.2019 is recalled. The appeal is ordered to be restored to its original no. in situ. For merits, it shall now, come up for hearing on 13.10.2022

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• Customs

• 2022 (10) TMI 1022
  Smuggling - import of Cigarettes - opportunity for cross examination has been provided or not - principles of natural justice - HELD THAT:- The premise of order dated 12.07.2022 is that both the impugned orders dated 15.05.2019 have been passed without any opportunity for cross-examination having been afforded to the petitioners, which is in violation of principles of natural justice - It is admitted by the respondents that there has been no opportunity granted for cross-examination and order passed on 12.07.2022 was after a detailed hearing of both sides. The impugned orders-in-original dated 15.05.2019 is set aside - petition allowed.

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• 2022 (10) TMI 1021
  Levy and collection of Anti-Dumping Duty - Extra Clear Float Glass - N/N. 4/2009-Cus. dated 6.1.2009 as amended from time to time - HELD THAT:- Learned advocate for the respondent was apprised of the provisions of Sub-section (2) of Section 131BA above, that where a appeal is not filed pursuant to the orders or instructions, such non-filing of appeal in a given case shall not preclude the competent authority from filing any appeal, application and revision or reference in any other case involving the same or similar issues or questions of law. Sub-section (3) says that non-filing of appeal in a given case will not be treated that the authority has acquiesced in the decision on the disputed issue by non filing appeal. In the facts and circumstances of the case, Rule. Expedited.

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• 2022 (10) TMI 1020
  Levy of penalty on vessel operators - Penalty u/s 117 of Customs Act, for contravention of the provisions of Section 41 of the Customs Act, 1962 - petitioners had not filed Export General Manifest (EGM) in respect of certain specified shipping bills - error rectified only post the issuance of show cause notices - specific averment by the petitioners to the effect that penal action has been taken only in the present cases, and in no other charge in the country, has not been denied by the respondents - HELD THAT:- A consistent methodology must be followed by customs authorities pan India. The Circulars and Instructions that have been placed before the Court also indicate categorically that the overriding spirit in terms of which the procedure must be understood and implemented, is one of facilitation, rather than adversarial. The shipping industry comprises of several stakeholders, exporters, vessels/carriers, officials of the Customs department, Port authorities and facilitators, such as customs agents, freight forwarders, transporters, consolidators, CFS and many more. It is important for the authorities to arrive at a proper methodology for capturing information from each of the stake holders. This is the attempt of the Electronic Data Interface (EDI) and the ICEGATE system. Clearly, the system requires fine tuning and the quicker the authorities respond and resolve issues that stakeholders face, as and when they arise, the smoother the functioning of the system will be - the request of the petitioner for access to the ICEGATE system is rejected for the reason as stated by the customs authorities. The system is a conglomeration of materials from various sources and is meant for effective functioning of the Department and smooth management of the transactions. No one operator can be provided with access to the entirety of the system. The petitioners are given liberty to make a representation before the appropriate authority setting out the circumstances in which they seek access to the electronic system and raising any/all submissions as necessary in support of the request, including but not limited to the practice followed by other Ports and Commissionerates in other States in the Country as well as Circulars and Instructions of the Board, as appropriate - the request of the petitioners for access to the ICEGATE system is rejected - Petition disposed off.

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• 2022 (10) TMI 1019
  Demand of customs duty - CIRP proceedings under IBC were concluded - Benefit of concessional rate of duty exemption - sr. no. 34 of Notification no.21/2002-Cus dated 1.03.2002 as amended - Whether it is correct to hold that carotene value in crude palm oil decreases due to passage of time relying upon the test report which no where provides that carotene value in crude palm oil decreases with passage of time? - HELD THAT:- In the facts of the present case also, no claim was filed by the appellant-Commissioner of Customs with regard to demand after the issuance of the notice under IBC for initiation of the resolution process before the Resolution Professional. In terms of the provisions of the IBC, Resolution Plan was approved by the Committee of Creditors on 30.04.2019 and thereafter the same was approved by NCLT and the corporate insolvency resolution process was completed on 6.09.2019. It is also not in dispute that plan has been successfully implemented and consequently change in control and ownership of the respondent has taken place with effect from 18.12.2019 and there is no involvement of any erstwhile promoters and erstwhile directors on the Board of Directors of respondent. Taking into consideration the fact of the completion of the resolution process of the respondent by the NCLT and undisputed fact that the appellant has not lodged any claim in the capacity of the Operational Creditor before the Resolution Professional, this appeal is required to be disposed of as having become infructuous and abated - Appeal disposed off.

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• 2022 (10) TMI 1018
  Hawala transactions - valuation of imported goods - import of furniture from China - undervaluation of the furniture to the extent of 17% and the undervalued amount have been transacted through hawala - Recovery of differential duty - interest and penalty - Confiscation - HELD THAT:- The under valuation has been established on the basis of confessional statements given by various witnesses in their statement. Therefore, more or less there is no dispute about the charge of under valuation against the appellant. The appellant have mainly harped on the excessive imposition of redemption fine. Considering the gravity of the offence committed by the appellant under a systematic modus operandi, the redemption fine imposed by the Lower Authority appears to be proper. The offence committed by the appellant has not been rebutted by the appellant in many words. Moreover, the under valuation has been clearly established on the basis of the statements given by various persons, which were never retracted. The transaction of the deferential value due to under valuation made by hawala has also been proved by the Revenue - there are no reason to interfere in the impugned order - appeal dismissed.

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• 2022 (10) TMI 1017
  Levy of penalty on steamer agent - Undeclared consignment - Section 112(a) of the Customs Act, 1962 - violation of conditions / instructions contained in the Board Circular No. 56/2004 dated 18.10.2004 read with Public Notice No. 152/2004 dated 19.10.2004 - import of Aluminium Scrap - HELD THAT:- The pre-shipment inspection certificate, as required, is to be furnished at the time of clearance of the goods by an importer and hence, any other person including a Steamer Agent has no locus to meet the above requirement. The responsibility was that of the importer, as prescribed, and in any case, the non-fulfilment of the above requirement would not ipso facto tantamount to declaring the goods as prohibited under Section 111(d) ibid. This is because Section 111(d) could be invoked only when any goods are imported or attempted to be imported contrary to any prohibition imposed and in any case, it is not the case of the Revenue that the import of Aluminium Scrap was never prohibited under any law for the time being in force. Moreover, Revenue has not whispered anywhere if it was the duty of the Steamer Agent to seek clearance of any goods since it is the importer who is required to fulfil any obligations at the time of clearance of goods . The penalty under Section 112(a) of the Customs Act, 1962, as levied and confirmed on the appellant, is not sustainable - Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 1016
  Maintainability of appeal - Review of the impugned order by the Committee of Commissioners - Time limitation u/s under section 129A (2) of CGST Act - rejection of the declared transaction value under Rule 12 - re-determination of value - demand of differential duty with interest and the fine and penalty on the respondent - HELD THAT:- The preliminary objection by the learned counsel for the respondent that the Review Order passed by the Committee of Commissioners is not correct because no time limit is prescribed under section 129A (2) and a time limit cannot be read into it. Rejection of the declared value by the original authority - Section 14 of Customs Act - HELD THAT:- Section 14 requires the valuation to be done as per the transaction value subject to some conditions. Clause (iii) of the second proviso to this Section provides for rejection of transaction value by the proper officer under certain circumstances. If the transaction value is rejected, then the value shall be re-determined as per the Valuation Rules. Rule 12 of the Valuation Rules deals with the rejection of transaction value - the importer s assertion that the existence of such lower end versions were communicated to it by WECHAT could not be substantiated because no such WECHAT message was produced. No such lower end versions were found during the market survey nor were any such low end versions put up on the website of the company maintained by the importer itself. The Commissioner (Appeals) has erred in relying on an email obtained by the importer after the case was booked when all other evidence is to the contrary. Therefore, the Commissioner (Appeals) was not correct in setting aside the rejection of the transaction value and its re-determination under Rules 4 5 by the original authority. In this case, the goods which were indicated in the Bill of Entry were unpopular brands while what were imported were Zhiyun brand goods. The prices which were declared in the Bill of Entry were a fraction of the price of the Zhiyun brand goods imported by the same importer from the same overseas supplier and they were of the same models - the imported goods were correctly confiscated under section 111 and consequently, penalty was correctly imposed under Section 112 by the original authority. Since the importer had made false declarations in the Bill of Entry, penalty was also correctly imposed under section 114AA by the original authority. The Commissioner (Appeals) has erred in setting aside the confiscation of the goods and imposition of penalties by the original authority. Appeal allowed - decided in favor of Revenue.

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• Corporate Laws

• 2022 (10) TMI 1015
  Seeking permission to issue further redeemable preference shares for a period of 5 years equal to the amount due - Section 55 (3) of the Companies Act, 2013 - HELD THAT:- An examination of the contents of the present petition shows that it meets the criteria laid in the Section and Rule 69 of NCLT Rules, 2016. The Petitioner has filed Form-MGT 14 before the ROC which is not disputed by the ROC. Therefore, the present Company Petition deserves to be allowed and the relief sought for by the Petitioner be granted permitting the Petitioner Company to issue further redeemable Preference Shares for a period of 5 years equal to the amount due, including the dividend thereon, in respect of the unredeemed preference shares and allow to treat the unredeemed preference shares shall be deemed to have been redeemed. This Company Petition is hereby Allowed.

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• 2022 (10) TMI 1014
  Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- Perusing the records, documents annexed to the application and consent affidavits filed on behalf of the shareholders of the Transferor Companies and the Transferee Company to approve the proposed Company Scheme in the instant proceedings, the requirement of convening and holding of meetings of the equity shareholders of the applicant Companies is dispensed with. In view of the fact that there are NIL Creditors in the Transferor Companies, and the consent affidavit on behalf of the creditors of the Transferee Company, the requirement of convening and holding separate meeting of the Creditors of the Applicant Companies is also dispensed with. The present Company Application deserves to be allowed - the scheme is approved - application allowed.

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• Insolvency & Bankruptcy

• 2022 (10) TMI 1013
  Initiation of CIRP - corporate guarantor - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Contract of guarantee - surety - whether letter of comfort allegedly issued by the respondent/corporate debtor amounts to contract of guarantee? - HELD THAT:- The said letter of comfort, which is undated, without seal and authorization on behalf of the respondent-company, cannot be termed as letter or contract of guarantee, particularly in presence of the corporate guarantee on behalf of Strawberry Star India P. Ltd., as mentioned in the sanction letter dated 22.08.2017. In a contract of guarantee, there are three different entities i.e. i) surety ii) principal debtor and iii) creditor . In the case in hand, the said letter of comfort cannot be termed as letter of contract of guarantee because it is neither signed by the creditor nor by the borrower and to the contrary, the sanction letter dated 22.08.2017 is signed by all the three i.e. creditor, borrower and guarantor. More so, there is no evidence placed on record to show that the said letter of comfort was signed in pursuance of any resolution passed by the Board of Directors of the respondent/corporate debtor. Thus, it can be safely said that the said letter of comfort, if any, issued, is not in conformity with the provisions of Section 179(3)(f) and Section 185 of the Companies Act, 2013. The present respondent/corporate debtor, taken from any angle, cannot be termed as a corporate guarantor on the basis of alleged letter of comfort. Therefore, the present petition is not maintainable against the respondent/corporate debtor and the same is dismissed on the ground of maintainability - Petition dismissed.

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• 2022 (10) TMI 1012
  Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- This Adjudicating Authority is satisfied that: a. Existence of operational debt is above Rupees One Crore. b. Debt is due and defaulted. c. Default occurred on 02.02.2022 and continuing, d. Demand Notice dated 18.02.2022 has been served at the Registered and Administrative office of the CD and proof of delivery of notice has been filed by the OC/Applicant. e. Petition has been filed within the limitation period, as the default date is 02.02.2022 and onwards when the petition under Section 9 of the IBC has been filed on 22.03.2022 f. Existence of dispute prior to the issue of demand notice is not found. The application filed by the Petitioner under Section 9 of the IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process in respect of the Corporate Debtor - the petition filed by the Operational Creditor under Section 9 of the Insolvency Bankruptcy Code, 2016 is hereby admitted for initiating Corporate Insolvency Resolution Process in respect of the CD-Matiz Metals Private Ltd. The date of admission of this petition is 30.09.2022. Applicaton admitted - moratorium declared.

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• 2022 (10) TMI 1003
  Condonation of delay in filing the Appeal - power to condone the delay of limited to 15 days under Section 61(2) proviso - appellant submits that Appellant received a free certified copy of the Impugned Order on 27th July, 2022 and thereafter the Appeal was filed within one month - HELD THAT:- In view of the law laid down by the Hon ble Supreme Court in V Nagarajan Vs. SKS Ispat and Power Ltd. [ 2021 (10) TMI 941 - SUPREME COURT ], the limitation for filing the Appeal begins when order was pronounced. The mere fact that Appellant received free certified copy of the Impugned Order on 27th July, 2022, the period of limitation shall not stop running after passing of the order/judgment. Our jurisdiction to condone the delay is only limited to 15 days under Section 61(2) proviso. There being delay of more than 15 days, the Delay Condonation Application cannot be allowed - Application is dismissed.

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• Service Tax

• 2022 (10) TMI 1011
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDRS - adjustment of amount deposited under protect - seeking direction to the respondent to issue fresh Form No.3 after adjusting the amount already deposited by the respondent - HELD THAT:- As the part of the Finance Act, 2019 the Parliament framed the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 which is contained in Chapter-V of the said Finance Act. The relevant scheme is discernible, in so for as it is relevant for our purpose from Sections 120 and 124. The appellant department was not justified in estimating the duty payable by the respondent while ignoring the amount deposited by the respondent under protest. There are merit in the submission of Mr. Priyadarshi Manish that the amount deposited has no specific colour since the amount was deposited under protest and even before the crystallisation of the liability of the respondent-assessee as Central Excise Duty or as interest. Pertinently, the show cause notice was issued some time after the petitioner had already deposited the amounts aforesaid under protest. The issues with regard to the liability of the respondent towards duty and interest were at large and the amounts were already deposited when the scheme came into force. The circular issued by the Central Board of Indirect Taxes and Customs relied upon by the respondent also clearly shows that the department was liable to adjust the entire amount deposited by the assessee under protest prior to the adjudication of the liability either towards Central Excise Duty or towards the interest. Appeal dismissed.

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• 2022 (10) TMI 1010
  Constitutional Validity of Section 66D(a)(iv) of the Finance Act, 1994 and entry No.6 of Notification 30/2012-ST dated 20.06.2012, as amended with effect from 01.04.2016 - activity of parting with the exclusive privilege/right or transferring/ granting the exclusive right or privilege of the State - grant of liquor licence - HELD THAT:- On perusal of the Amendment to the Finance (No.2) Act, 2019 clearly indicates that retrospective exemption has been granted in favour of the assessees, including the petitioner, from payment of service tax on service by way of grant of liquor licence. Under these circumstances, in view of the amendment vide Finance (No.2) Act, 2019, vide Act No.23 of 2019 which came into force with effect from 01.08.2019, it is opined that the said amendment would enure to the benefit of the petitioner-assessee. In view of the specific assertion on the part of the petitioner that the liability along with interest has been discharged already by the petitioner, it is deemed just and proper to direct the respondents to consider the claim of the petitioner of discharge of liability of the show-cause notice by providing an opportunity in this regard to the petitioner and considering the pleadings and documents submitted by him, and proceed to pass appropriate orders in accordance with law. Petition disposed off.

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• 2022 (10) TMI 1009
  Refund of CENVAT Credit - providing Business Support Services to their foreign clients - Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-C.E (N.T.) dated 18.06.2012 - July 2014 to September 2014 - the grievance of the appellant is that the amount of Rs.2,93,427/- was not sanctioned to the appellant in cash and instead, was directed to take re-credit of the said amount - HELD THAT:- Whatever the reasons may be for rejection of cash refund, it has to be seen that after the introduction of G.S.T., the said direction to take re-credit has become impractical for the appellant - The Tribunal in the case of VEER-O-METALS PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALURU SOUTH COMMISSIONERATE [ 2021 (4) TMI 117 - CESTAT BANGALORE] had considered a situation as to whether refund in cash can be allowed when credit cannot be availed by the assessee. As the appellant has been allowed to take re-credit and is not able to do the same due to the introduction of G.S.T., I am of the view that he has to be given refund of the said amount in cash - the appellant is eligible for refund of the amount of Rs.2,93,427/-. Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 1008
  Short payment of service tax - Works Contract Services - Commercial or Industrial Construction Services - Civil Structures, Construction of Residential Complex - CENVAT Credit - demand alongwith interest and penalty - revenue neutrality - extended period of limitation - HELD THAT:- The court below is not in error in observing that the credit of the amount of Rs.3,58,555/- was not available on 31.03.2013. However, in view of the transitional provisions under CGST Act, if the appellant is required to deposit the said amount again in cash, the amount of tax adjusted earlier through cenvat credit will become refundable to them. Thus, the situation is definitely revenue neutral. Further, this amount was admittedly deposited by the service provider with interest. In view of the matter, this appeal is allowed and the demand of Rs.3,58,555/- is set aside. Further, in the facts and circumstances, penalty imposed under Section 78 is also set aside. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2022 (10) TMI 1007
  Demand of duty - levy of 100% penalty upon the appellant - manufacture of aluminium ingots and die castings falling under Chapter 76 of the Central Excise Tariff Act 1985 - Section 35G of the Central Excise Act, 1944 - HELD THAT:- As per averments on record appellant purchases from first stage dealer and second stage dealer and credit is availed on the basis of invoices issued by both the first stage dealer as also second stage dealer. Apparently, the Directorate General of Central Excise Intelligence conducted an investigation against M/s Bhagwati Trading Company (first Stage dealer) and M/s Jagdamba Metal Store (second stage dealer). On the basis of such investigation an opinion was formed that the first stage dealer and second stage dealer have passed cenvat credit to the appellant without actual delivery of the goods. Accordingly a show cause notice was issued to the appellant alleging that cenvat credit amounting to Rs.8,74,357/- had been availed of without actually receiving goods. The demand was confirmed by the adjudicating authority vide order dated 01.04.2010. Such demand was confirmed by the Appellant Authority. An allegation of fraud must necessarily be proved by the person who levels such an allegation. Where, however, the department succeeds in prima-facie proving its allegation of fraud, the onus would shift to the assessee to prove the genuineness of the transaction. The department relies upon the statement made by Shri R.K. Gupta, the cheque signed by the appellant company recovered from the premises of Shri R.K.Gupta, the alleged discrepancies in description of goods in invoices and purchase invoices, the different mode of transport mentioned in purchase invoices, various documents i.e. fraudulent GR books/receipts, rubber stamps etc. recovered from the office of Shri R.K.Gupta but without a detailed reference to the appellant s transactions, part of the statement by Shri R.K.Gupta exonerating the appellant and without examining for RG 23-A part I, RG 23-A part II, details in cenvat return filed under Rule 57 A(c) of the Central Excise Rules, 1944 and RG 12 submitted to the Central Excise Department, Faridabad. The mere fact that the appellant purchased goods from Shri R.K.Gupta, would not by itself raise an inference of culpability or wrong doing. Matter remanded to the CESTAT for adjudication afresh after examining the statement made by Shri R.K.Gupta, bills, invoices, receipts, cheques and various forms and declarations etc. filed by the appellant before the department - the facts of the present case also warrant and justify a remand to the CESTAT for adjudicating the matter afresh and after examining the entire material in the nature of statutory returns/registers in question as also the declaration etc. that had been filed by the appellant - matter on remand.

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• 2022 (10) TMI 1006
  Interpretation of statute - interpretation of mandatory time limit to file refund claim prescribed in clause (e) of the Para 3(III) of the Notification No.12/2013-ST dated 01.07.2013 issued by the Government of India, Ministry of Finance, Department of Revenue - right to hold and interpret that the mandatory condition of the Notification that the SEZ unit shall submit only one claim of refund for every quarter, can also include refund claim pertaining to invoices of previous quarters as well, i.e. consolidated invoices of period from August 2013 to October 2017, which is a a complete misreading of clause (f) of Para III of Notification No.12/2013- ST dated 01.07.2013. HELD THAT:- This court is of the view that the appeal deserves Admission on the substantial questions of law - Application disposed off.

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• 2022 (10) TMI 1005
  CENVAT Credit - removal of capital goods as such - power plant - Rule 3(5A) of Cenvat Credit Rules, 2004 - it appeared to Revenue that the appellant have not given proper information to the Department of such transaction wherein they transferred their power plant to SPPL on as is where is basis under BTA - extended period of limitation - HELD THAT:- The appellant-seller agreed to sell, convey, assign and transfer to the purchaser, all the assets and liabilities as defined in Schedule-I and Schedule-II, free from all encumbrances as a going concern and as an inseparable whole, on slump sale basis for an aggregate consideration of Rs. 85 cr. as set out in Clause 3 of the BTA. It is not in dispute that the appellant as seller has transferred the entire movable and immovable assets and liabilities as a going concern on as is where is basis to the purchaser without uprooting or physically shifting the capital goods from the place of installation of the power plant. This is clear from preamble clause (E), clause 2.1.1 and clause 3.1.1 of the BTA. In the erstwhile Central Excise Rules, 1944 or the Central Excise Rules, 2002, the manufacturer of excisable goods was required to pay duty on the goods removed from the factory or the bonded warehouse. The sale of goods or transfer of ownership of the goods from the seller to the buyer, is not the criteria to cast duty liability on the manufacturer/seller of excisable goods. What is important is the physical removal of excisable goods from the factory of the manufacturer. Both the appellants viz. M/s Simbhaoli Sugars Ltd., Chilwaria and Simbhaoli were not required to reverse the cenvat credit on sale of capital goods, as part of running power plant, in terms of rule 3(5A) of CCR, 2004. We further hold that no penalty is imposable under Rule 26 of CER, 2002 on the Chairman of the appellant company. In view of the ruling of Hon ble Madras High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, M/S. DALMIA CEMENTS (BHARAT) LTD. [ 2015 (7) TMI 267 - MADRAS HIGH COURT] , which have been accepted by the CBIC as clarified in the Circular No. 1063/2/2018-CX, we hold that in the facts and circumstances of the present case, there is no removal of capital assets/power plant. As There have been no removal, the provision of Rule 3(5A) of Cenvat Credit Rules are not attracted. Appeal allowed - decided in favor of appellant.

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• 2022 (10) TMI 1004
  CENVAT Credit - inputs - capital goods - short payment of duty due to difference in assessable value in ER-I Return vis- -vis with the sales register - whether the show cause notice was rightly issued invoking the extended period of limitation? - HELD THAT:- The items Floor Top Hardener/Paint has been used for repair maintenance of the floor of the factory for filling in the gaps between the floor tiles. Accordingly, this is an eligible input under Rule 2 (k) of the Cenvat Credit Rules and accordingly, cenvat credit on the same is allowable. CENVAT Credit - capital goods - Induction lamps - Lift table - HELD THAT:- These are essential for use in the factory, without which taxable finished goods cannot be manufactured. Demand of Rs.90,665/- - it is alleged in the show cause notice that during re-conciliation of the assessable value shown in ER-1 Returns vis- -vis Sales Register, there was some apparent difference, on which duty has been demanded - HELD THAT:- The appellant have explained that this relates to the period May, 2016 and Jan. 2017. In order to arrive at the correct excise duty liability, they receive reports from the SAP Programmes, which were duly verified from the Accounts for discharging the excise duty liability. It is explained that there is some difference in the assessable value as per data submitted to the Audit and as per ER-I Return, as the assessee is working under MRP basis, under which duty was paid on the MRP subject to abatement. The appellant has turnover of approximately Rs.30 plus crores p.m. and hence for such accounting difference, no adverse inference can be called for - no duty can be demanded as there is no case made out of any clandestine removal on the part of the appellant. Appeal allowed - decided in favor of appellant.

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