TMI Tax Updates - e-Newsletter
October 7, 2023

Case Laws in this Newsletter:

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

Articles

1. What are the exceptions for copyright protection?

   By: Ishita Ramani

2. Recipient not eligible for ITC of GST paid on transfer of rights of leasehold land

   By: Bimal jain

3. THE ABC OF ADJUDICATION.

   By: Sadanand Bulbule

4. SEBI INTERMEDIARIES - FOREIGN PORTFOLIO INVESTORS

   By: DR.MARIAPPAN GOVINDARAJAN

5. Agreement stating Agent, need not be Intermediary – Refund allowed

   By: Bimal jain

News

1. Advisory in respect of introduction of Compliance Pertaining to DRC-01C (Difference in Input Tax Credit (ITC) available in GSTR-2B & ITC claimed in the GSTR-R3B)

2. Monetary Policy Statement, 2023-24 Resolution of the Monetary Policy Committee (MPC) October 4 to 6, 2023

3. IICA successfully concludes first batch of three months Virtual Certificate Course in Research Methodology

4. Union Commerce and Industry Minister Shri Piyush Goyal expresses confidence in strengthening UAE-India Partnership

Notifications

GST - States

1. S.O. 264 - dated 5-10-2023 - Bihar SGST

Notify under sub-section (2) of section 23 to waive the requirement of mandatory registration under section 24(ix) of BGST Act, 2017 for person supplying goods through ECOs, subject to certain conditions under the BGST Act, 2017

2. S.O. 263 - dated 5-10-2023 - Bihar SGST

Notify "Account Aggregator" as the systems with which information may be shared by the common portal under section 158A of the BGST Act, 2017

3. S.O. 262 - dated 5-10-2023 - Bihar SGST

Seeks to exempt the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.

4. S.O. 261 - dated 5-10-2023 - Bihar SGST

Seeks to notify special procedure to be followed by a registered person engaged in manufacturing of certain goods.

5. S.O. 260 - dated 5-10-2023 - Bihar SGST

Special procedure to be followed by a registered person or an officer u/s 107(2) of BGST Act who intends to file an appeal against the order passed by the proper officer

6. S.O. 259 - dated 5-10-2023 - Bihar SGST

Seeks to bring in force Sections of the Bihar Goods and Services Tax (Amendment) Act, 2023

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/POD-III/CIR/2023/165 - dated 6-10-2023

Requirement of Base Minimum Capital Deposit for Category 2 Execution Only Platforms

2. SEBI/HO/DDHS/P/CIR/2023/0164 - dated 6-10-2023

Limited relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Highlights / Catch Notes

GST

• Goods Seized Without E-way Bills; No Tax Evasion Intent Found, Penalty Under CGST Sections 129 & 130 Challenged.

  Case-Laws - HC : Levy of penalty - goods were seized goods for not accompanied by E-way bills - Upon a purposive reading of the sections 129, 130 and 138, it would suffice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act. - While passing the order of detention, seizure or demand of penalty, tax, no such intent of the petitioner was observed. - HC
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• Input Tax Credit Denied for CSR Activities Under Companies Act, 2013 by AAAR Decision.

  Case-Laws - AAAR : Input Tax Credit - inputs and input services procured by the appellant, in order to undertake the mandatory CSR activities as required under the Companies Act, 2013 - The legislature has clarified its intent to disallow input tax credit on goods or services or both which are to be used for activities relating to obligations under corporate social responsibility (CSR) - No ITC - AAAR
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Income Tax

• Reopening Assessment Invalid if Notice Sent to Non-Existent Entity Post-Amalgamation: Section 148A(d) Case Explained.

  Case-Laws - HC : Reopening of assessment post amalgamation process - Mere activation of PAN number may not give a right to the revenue to issue notice to a non-existent entity. Admittedly, in the instant case, the notice was given to the Transferor company, which is a non-existent entity, after the appointed date, i.e. 01.04.2018. Admittedly, the order u/s 148 A (d) has been passed by the revenue against a non-existent entity. - HC
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• Reopening Tax Assessment Invalid Without Alleged Disclosure Failure, Violates Section 147 if Beyond Four Years.

  Case-Laws - HC : Reopening of assessment u/s 147 - reasons to believe - bogus transaction - It has been held that even in the reasons recorded when there is no allegation that there was any failure on the part of the assessee in not disclosing truly and fully material facts necessary for the assessment, the assumption of jurisdiction to reopen the assessment beyond a period of four years in exercise of powers under Section 147 of the Act is bad in law and contrary to the provisions of Section 137. - HC
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• Appellant Challenges Double Taxation: Income Taxed Twice Due to Section 68 and Cost of Sales Deduction Misapplication.

  Case-Laws - AT : Double additions - The claim of the appellant that such addition resulted into double taxation of the same income in the same year is also acceptable because on one hand cost of the sales has been taxed (after deducting gross profit from same price ultimately credited to profit & loss account) and on the other hand cash sales subjected to reported income are added u/s. 68 of the Act. - AT
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• Unaccounted Cash Found in Search; Party Retracts Disclosure, Surrenders Cash, Offers Tax Payment to Avoid Further Probe.

  Case-Laws - AT : Cash found in search action - retraction of disclosure of unaccounted cash seized - by surrendering the aforesaid amount and offering to pay tax, the assessee has prevented further enquiries by the department , obviously because it could have led to further revelations / unraveling of truth as to the persons who are also implicit with assessee in transporting of cash as well other transactions undertaken by the assessee in the past. - Addition confirmed - AT
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• No Penalty for Taxpayer: Section 270A Exception Applies Due to Honest Explanation and Full Disclosure of Facts.

  Case-Laws - AT : Penalty u/s 270A - under-reporting of income - the assessee’s case would squarely fall under the exception provided u/s 270A(6)(a) wherein, the assessee had given its bona fide explanation and had disclosed all the material facts that are relevant for the explanation offered. In view of the exception provided in section 270A(6)(a) of the Act, we hold that the present facts does not make the revenue eligible to levy penalty u/s 270A of the Act. - AT
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• Taxpayer Denied Deduction u/s 80IA Due to Lack of Agreement with Government Entity, Fails Statutory Compliance.

  Case-Laws - AT : Deduction u/s 80IA - Onus is on the assessee to prove strictly that assessee fulfills all the parameters laid down by the statute for claiming the deduction. In the present case, admittedly, the agreement was not entered between the assessee and the Government / Statutory Government and there was a violation laid down by the statute and therefore, the assessee is not entitled to claim deduction. - AT
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• Excess Stock Found in Survey to Be Assessed as Business Income, Not u/s 69B, for Further Directions.

  Case-Laws - AT : Excess stock found during the course of survey - Additions u/s. 69B r.w.s. 115BBE - the additional income offered towards excess stock found during the course of survey is assessable under the head income from business as claimed by the assessee, but not income assessable u/s. 69B - Matter restored back with directions - AT
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• Section 41(1) of Income Tax Act: No Addition if Loan Used for Business Expansion, Not Trading Liability Write-Back.

  Case-Laws - AT : Additions u/s 41(1) - Waiver of loan amount - The provisions of section 41(1) are attracted only if some trading liability is written back. - No addition can be made u/s 41(1), when factum of having utilising this amount towards the capital expansion of the assessee’s business is not in dispute and remains unchallenged. - AT
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• Company's Consultancy Fees to Directors Deemed Legitimate by Tax Authority; Extra Charges Dismissed by CIT Appeals.

  Case-Laws - AT : Genuineness of expenditure - Consultancy charges paid to three directors of the assessee company over and above the remuneration - these directors are separately assessed to tax and have duly declared the consultancy charges received from the assessee company and paid due taxes thereon. - CIT(A) rightly deleted the additions - AT
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Customs

• Confiscation of Goods Upheld: Claimant Fails to Prove Ownership Under Misused Importer Exporter Code (IEC.

  Case-Laws - AT : Confiscation of goods imported - misuse of its IEC - The assessee has not proved beyond reasonable doubt that the goods in question imported under the air way bills/bills-of-entry in dispute were in fact filed by him and hence the only natural corollary available to the Revenue is the confiscation of the same - the Revenue need not prove the owner of the goods; when a claimant does not prove that the goods in question belongs to him, it is not for the Revenue to thereafter establish a certain actual owner of the goods - AT
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• Customs Broker's license suspension overturned; no breach of CBLR 2018 regulations 10(d) and 10(n) found.

  Case-Laws - AT : Suspension of license of Customs Broker - Violation of principles of natural justice - The adjudicating authority has failed to appreciate the statements on record - if the statements would have been read as a whole, apparently there is no violation of 10(d) and 10(n) of CBLR, 2018 is observed to have been committed by the appellant - AT
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• Refund Claim Rejection Unjustified for Timely Filed Claims in Wrong Jurisdiction; Procedural Errors Not Grounds for Dismissal.

  Case-Laws - AT : Condonation of delay in filing refund claim - Rejecting the refund claim simply on the ground of delay in filing the claim before the proper authority while admitting that the appellant had filed the claim before the department on time, albeit at a wrong jurisdiction cannot be approved - AT
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• Customs broker's license revocation deemed too harsh for failing to perform duties diligently in cigarette consignment case.

  Case-Laws - AT : Revocation of Customs Broker License - There is no doubt that the appellant has not performed his duty with due diligence and utmost efficiency and has connived with Sandeep Kumar inspector and Rambir Superintendent in illegally clearing the consignment having cigarette and later on deleted all the whatsapp chats/call records with their crime partners - but his act and conduct does not warrant the imposition of extreme penalty of revocation of custom broker licence depriving him of his livelihood. - AT
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Indian Laws

• Supreme Court's Article 142 Powers Complement Statutory Law, Ensure Justice, But Cannot Override Substantive Law.

  Case-Laws - SC : Extension of time limit - The plenary powers of the Supreme Court under Article 142 are inherent in nature and are complementary to those powers which are specifically conferred on the court by various statutes. These powers though are of a very wide amplitude to do complete justice between the parties, cannot be used to supplant the substantive law applicable to the case or to the cause under consideration of the court. - SC
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• Respondent's Lease Fee Demand Violated Policy by Misclassifying Amalgamation as Transfer, Ignoring Exception Clause.

  Case-Laws - HC : Charging Lease transfer fee - Amalgamation of company - The respondent no.1 acted de hors its own General Policy and meeting resolutions in claiming full transfer fees from the petitioners by treating the amalgamation between the petitioners no.1 and its companies as a “transfer” within the contemplation of the General Policy of the respondent no.1, although it falls within the exception clause thereof. - HC
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PMLA

• Supreme Court Criticizes ED for Arbitrary Actions, Stresses Transparency and Legal Adherence u/s 19(1) of 2002 Act.

  Case-Laws - SC : Money Laundering - Corruption - To give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, it is held that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception - Further, the clandestine conduct of the ED in proceeding against the appellants, by recording the second ECIR immediately after they secured interim protection in relation to the first ECIR, does not commend acceptance as it reeks of arbitrary exercise of power. - SC
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VAT

• High Court Upholds Entertainment Tax on Ticket Fees for Trade Fairs at Pragati Maidan, Despite Business Promotion Focus.

  Case-Laws - HC : Imposition/levy of entertainment tax by the petitioners - admission fee in the form of ticket to allow people to visit trade fairs / Pragati Maidan - There are regulated hours for the purposes of trade and commerce, where the main purpose apparently is promotion of trade and business, however there is no challenge to the fact that entry of general public is not restricted, and people of all ages and genders visit the site for a variety of gratification, entertainment or amusement on payment of additional or higher charges/fee. - entertainment tax liability confirmed - HC
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• Court Rules Limitation Period in VAT Case Cannot Be Waived by Participation; Order Declared Nullity.

  Case-Laws - HC : Period of limitation for passing an order - The submission of the learned counsel for the respondent (Revenue) that by participating in the assessment proceeding, the petitioner must be understood to have waived his right to question the impugned proceeding which is otherwise barred by limitation, is unsustainable. Since, limitation relates to jurisdiction which cannot be conferred by consent, waiver or acquiescence. The impugned order being barred by limitation is thus a nullity. - HC
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Case Laws:

• GST

• 2023 (10) TMI 218
  Levy of penalty - goods were seized as goods for not accompanied by E-way bills - initiation of the proceedings under section 129 of the CGST Act - no genuine documents were accompanying the goods - HELD THAT:- Admittedly, the goods in question were coming from West Bengal to Kanpur, along with tax invoice of the petitioner, consignment note of the transporter and e-way bill of the purchaser. Though the e-way bill was cancelled by the purchaser, but it is stated that the same has not been intimated to the petitioner. Once the goods were seized and the petitioner, after inquiring the fact from the purchaser about the attending fact which led to cancellation of e way bill by the purchaser, it was communicated to the respondents, but not being satisfied, the goods were detained and the seizure order was passed. For invoking the proceeding under section 129(3) of the CGST Act, section 130 of the CGST Act was required to be read together, where the intent to evade payment of tax is mandatory, but while issuing notice or while passing the order of detention, seizure or demand of penalty, tax, no such intent of the petitioner was observed. Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach - Once the authorities have not observed that there was intent to evade payment of tax, proceedings under section 129 of the CGST Act ought not to have been initiated, but it could be done under section 122 of the CGST Act in the facts circumstances of the present case. It is also not in dispute that after release of the goods, the same were sold to P.L. Trading Company. Upon a purposive reading of the sections 129, 130 and 138, it would suffice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act. Petition allowed.

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• 2023 (10) TMI 217
  Maintainability of petition - availability of alternative remedy - Violation of principles of natural justice - non-affording of personal hearing to the petitioner - HELD THAT:- The show cause notice dated 22.07.2022 (Annexure P/5) issued under Section 74 of the Act, itself shows that before passing final order dated 24.08.2022 (Annexure P/6), the intention of the respondents was to give personal hearing to the petitioner as required under the law, but in the table given below, captioned as Details of personal hearing etc. , no Date, Time and Venue of personal hearing has been shown and in front of columns 3,4 5 of Date, Time and Venue, NA has been mentioned, which is sufficient to infer that no personal hearing was given to the petitioner before passing the impugned order dated 24.08.2022. Availability of alternative remedy of appeal - HELD THAT:- It is well settled that when due opportunity of hearing, as required under the law, has not been afforded and principle of natural justice has not been followed, then the question of availability of alternative remedy does not come in the way for exercising jurisdiction under Article 226 of the Constitution of India. The matter is remitted back to the Deputy Commissioner, Audit Wing, Jabalpur for passing order afresh, after giving personal hearing to the petitioner - Petition allowed.

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• 2023 (10) TMI 216
  Time limit for filing appeal - Input Tax Credit - inputs and input services procured by the appellant, in order to undertake the mandatory CSR activities as required under the Companies Act, 2013 - Books and stationery - All kinds of civil works, whether or not including plant and machinery items - All plant and machinery items - All plant and machinery items - furniture - HELD THAT:- The present appeal filed on 22.10.2021, has been filed after the prescribed time limit of 30 days from the date of communication of Ruling, which expired on 23/09/2021, as prescribed under section 100(2) of the CGST Act, 2017. There has been a delay of 30 days. In the application for condonation of delay filed by the appellant alongwith the appeal, the appellant submitted that the delay has occurred on account of ill health of their staff looking after litigation work because of Covid-19 and thereafter the resources were fully engaged in GST year end activity, further due to Covid-19 pandemic, the company was operating on a limited staff - there are sufficient cause to condone the delay of 30 days in filing the appeal after expiry of appeal period on 23.09.2021. Even otherwise, as per Order dated 10.01.2022 of Hon ble Supreme Court in Mise. Application No. 21 of 2022 in Misc. Application No. 665 of 2021 in Suo Moto Writ Petition (C) No.3 of 2020 [ 2022 (1) TMI 385 - SC ORDER] , the period from 15.03.2020 till 28.02.2022 shall stand excluded in computing the period of limitation and all persons shall have a limitation period of 90 days from 01.03.2022. In view of the foregoing, the delay is condoned in filing the appeal in terms of section 100 of the CGST Act, 2017 and proceed to decide the appeal on merits. The legislature has clarified its intent to disallow input tax credit on goods or services or both which are to be used for activities relating to obligations under corporate social responsibility. Appeal dismissed.

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• Income Tax

• 2023 (10) TMI 215
  TP adjustment - benchmarking international transactions of sale of Valves - aggregation of its transactions with the A.E. vs aggregation of its transactions with Non AE - HC confirmed [ 2019 (5) TMI 694 - BOMBAY HIGH COURT] Tribunal order upholding the order of CIT (A) benchmarking international transactions of sale of Valves to its Associated Enterprise (AE) by aggregating all its transactions with the A.E. and comparing it with aggregation of all comparable Non AE transactions and deleting the TPA on export of Valves and Valves in Kit form to its AE in USA viz. Flow Serve Sulphur Spring (Flow Serve) by holding the benchmarking of international transactions by comparing controlled (AE) transactions with uncontrolled (NonAE) transactions HELD THAT:- This Court is of the opinion that the impugned order does not call for interference. The special leave petition is accordingly dismissed. All pending applications are disposed of.

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• 2023 (10) TMI 214
  Exemption u/s 11 - Entitlement to registration u/s 12A - whether some of the activities of the assessee are found to be commercial in nature and its gross receipts from such activities exceed, year on year, the limit set out in the proviso to Section 2(15) ? - petitioner s grievance is that the respondent s application for registration u/s 12AA as an institution carrying on charitable objects, falling within the definition of Section 2 (15) in furtherance of the protection of the environment was allowed, as a result of the impugned order - HC [ 2017 (7) TMI 364 - ANDHRA PRADESH HIGH COURT] held Tribunal committed 2 mistakes,as that of overlooking the first 6 activities covered by Section 2(15) and focusing on the 7th activity which has a correlation to the first proviso and that of looking at the gross receipts even before the grant of registration. HELD THAT:- In the present case, the Court is of the opinion that the concerned Commissioner, overlooked the circumstance that the category within which the assessee claimed registration as a charitable trust, is considered to be per se a charitable object, and does not fall within the description of the residuary clause of a general public utility concern. The impugned order corrected the error. The Court is of the opinion that there is no infirmity in the impugned order. The special leave petition is, accordingly, dismissed.

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• 2023 (10) TMI 213
  Revision u/s 263 - whether the order of the AO is erroneous on the ground of not being in accordance with law? - as per HC [ 2017 (1) TMI 252 - BOMBAY HIGH COURT] AO has not taken into account the relevant consideration of absence of actual business activity of the appellant for the purpose of treating the expenditure claimed as an allowable expenditure and notional tax effect is directly attributable to the error in the assessment order. HELD THAT: On the request made by learned counsel for respondent, the matter is adjourned by two weeks to ascertain the position pursuant to the impugned order passed under Section 263 of the Income Tax Act, 1961.

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• 2023 (10) TMI 212
  TP Adjustment - MAM selection - ITAT justification in holding internal TNMM as the most appropriate method even when the transfer pricing documentation using internal TNMM were not filed before the AO - HELD THAT:- As on behalf of the appellant/revenue it was not demonstrated as to how change in MAM would produce better or more appropriate arms length price in the facts of the present case. Tribunal gave detailed reasons for arriving at a conclusion that internal TNMM and not CUP method would be the most appropriate method. Tribunal observed that the assessee had demonstrated the kind of services rendered by it to its AEs as well as non-AEs by placing reliance on agreements and it was argued before the Tribunal that the assessee deals with AEs as well as independent parties being network partners in all regions of the world wherever there were no affiliates of the parent company of the assessee; that agreements of the respondent/assessee with its AEs and non-AEs were in equal ratio; that the DRP had rejected internal TNMM because the respondent/assessee had not carried out an internal FAR and proper identification of revenue and costs vis- -vis the audited accounts. With these observations, Tribunal set aside the order passed by the TPO and Assessing Officer and directed assessee to carry out internal FAR and identify proper revenue and costs vis- -vis the audited accounts to establish internal comparability under TNMM as MAM - Tribunal proceeded further and held that if the respondent/assessee failed to demonstrate the internal FAR and identification of proper revenue and costs vis- -vis the audited accounts, it would file details in respect of external comparables under TNMM as MAM and the TPO would decide the issue as per law. As mentioned above, during the pendency of this appeal, the TPO held that it is the external TNMM which should be applied as the MAM. Reasoning of Tribunal in the impugned order robust and without any flaw. For, the ultimate aim of the transfer pricing exercise is to determine an accurate value of the arms length price for the purpose of taxation and as laid down in the above cited judicial precedents, the appellate authorities are not precluded from adopting a method different from that adopted by the assessee in transfer pricing report. No substantial question of law.

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• 2023 (10) TMI 211
  Estimation of income - Bogus purchases - CIT(A) partly allowed the appeal restricting the disallowance to 5% of the impugned purchases - as per ITAT considering overall facts and circumstances of the present case, disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage - HELD THAT:- The entire issue was decided based on appreciation of facts where it was found that the assesses had obtained the bill from M/s. Rajan Gems and M/s. Rajat Diamond Pvt. Ltd. which were Shri Gautam Jain and group concerns without actually getting the material. This was nothing but an accommodation entry. The finding of the Tribunal essentially are findings of facts. No substantial question of law is involved.

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• 2023 (10) TMI 210
  Reopening of assessment post amalgamation process - revenue proceed against an amalgamating company post appointed date - HELD THAT:- Admittedly, the petitioner had informed the revenue of the amalgamation process. The NCLT judgment observation has been made with regard to the submissions that were made by the revenue in the amalgamation proceedings. In the same paragraph, the NCLT has noted the undertakings that were given by the Transferee company, by which the Transferee company, i.e. the petitioner, undertook that the scheme of amalgamation would ensure that the statutory dues, tax, etc, that are due and payable by the Transferor company subsequent to the merger, would stand transferred to the Transferee company. The scheme of amalgamation was sanctioned by the NCLT. The petitioner did inform the revenue of it. In view of the settled law, from the appointed date, under the scheme of amalgamation, the existence of the Transferor company had merged into the Transferee company. That is what the scheme of amalgamation that has been proved in the instant case by NCLT also provides. It also provides for business and property-in-trust in Clause 8 of the scheme of amalgamation. Mere activation of PAN number may not give a right to the revenue to issue notice to a non-existent entity. Admittedly, in the instant case, the notice was given to the Transferor company, which is a non-existent entity, after the appointed date, i.e. 01.04.2018. Admittedly, the order u/s 148 A (d) has been passed by the revenue against a non-existent entity. Therefore, the order is bad in the eyes of law. Accordingly the petitioner deserves to be allowed.

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• 2023 (10) TMI 209
  Reopening of assessment - assessee has not offered his unaccounted unexplained income for taxation purpose in his return of income - time limit provided to submit reply to the show cause notice u/s 148A(b) was in contravention of the requirement of the law inasmuch as the law contemplate 07 day but only 05 days were provided to the petitioners - HELD THAT:- The Income Tax Act, 1961 does not contemplate any detailed adjudication on the merits of information available with the Assessing Officer at the stage of passing order under section 148A(d) of the Act of 1961. In our considered view there is a specific purpose for not introducing any further enquiry or adjudication in the statute, on the correctness or otherwise of the information, at this stage. The reason for it is obvious. Under the scheme of the Act a detailed procedure has been provided under Section 148 for issuance of notice whereafter the assessing authority has to determine, in the manner specified, whether income has escaped assessment and the defence of assessee, on all permissible grounds, remains open to be pressed at such stage. The ultimate determination made by the assessing authority under Section 147 for reassessment is otherwise subject to appeal under Section 246-A of the Act. Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the assessing authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment. Thus, in our opinion, the impugned order under Section 148A(d) of the Act and notice under Section 148 would not warrant any interference under Article 226 of the constitution of India as challenge to such order would be available to an assessee while challenging the order passed in reassessment proceedings consequent to the notice issued under Section 148 of the Act. The Apex Court in the case of Anshul Jain [ 2022 (10) TMI 3 - SC ORDER] as what is challenged before the High Court was the re-opening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the reassessment proceedings. Under the circumstances, the High Court has rightly dismissed the writ petition. Thus no merit in challenge against order passed u/s 148A. WP dismissed.

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• 2023 (10) TMI 208
  Validity of reassessment proceeding - notice issued solely on the basis of the statement obtained from the petitioner during the course of survey u/s 133A - HELD THAT:- This Court finds that there is merit in the submission made by the learned counsel for the respondent that the writ petitions at this stage is premature and thus ought not to be entertained. It is open to the petitioner to raise all its objection and place reliance on the judgment referred and circular before the assessing authority who shall consider the same while passing the orders of assessment. It is made clear that while completing the assessment, the assessing authority shall afford reasonable opportunity in accordance with law. Needless to state that if the petitioner were to raise the jurisdiction of the assessing officer to make assessment solely on the basis of statement obtained under Section 133A of the IT Act, the same would be dealt with.

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• 2023 (10) TMI 207
  Reopening of assessment u/s 147 - applicability of section 153C - entire exercise for reopening the assessment was based on the search that is said to have taken place in the premises of one Naresh Jain and his associates - petitioner would submit that once a search was conducted, all the proceedings u/s 148, 148A etc will have to be abated and therefore, a similar proceedings has to be taken even in the context of a person, who is said to have acted in consonance with the person, who was searched namely Naresh Jain and also submitted that the only option available to the Department was to issue a notice under Section 153C read with Section 158A HELD THAT:- A reading of Section 153A and 153C of the IT Act indicates that under the fourth proviso to Section 153A of the IT Act, all proceedings have abate once a machinery u/s 153A of the IT Act is invoked. A reading of Section 153 of the IT Act indicates that proviso to Section 153A of the IT Act is available for completing the assessment under Section 147 of the IT Act. Section 153C of the IT Act is only an enabling provision to issue a notice notwithstanding anything contained in Sections 139, 147, 148 etc of the IT Act. However, it does not preclude the Department from issuing notice for reopening the assessment under Section 148A(b) of the IT Act for the purpose of Section 148 of the IT Act to complete the assessment under Section 147 of the IT Act. Therefore, the argument that the notice was bad cannot be countenanced. As noticed that the petitioner has purchased the shares from M/s.Monotype India Private Limited as early as 30.03.2011. The impugned Assessment Order bears no discussion as to how the benefit of Section 10(38) of the IT Act could be denied to the petitioner by simply concluding that the petitioner was trading in penny stocks shares of M/s.Monotype India Private Limited, particularly, when the petitioner has taken a categorical stand that the shares were purchased by him from M/s.Monotype India Private Limited as early as 30.03.2011 and were sold during the Financial Year 2017-2018. (Assessment Year 2018-2019). This would require a proper consideration and discussion by the first respondent. Thus Assessment Order is set aside and the case is remitted back to the first respondent to pass a fresh order on merits.

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• 2023 (10) TMI 206
  Reopening of assessment u/s 147 - reasons to believe - bogus transaction - whether mere disclosure at the time of original assessment proceedings need not mean that the disclosure was true and full? - HELD THAT:- As specifically brought to the notice of the Intelligence Wing that the assessee/petitioner is engaged in the business of trading in land. That the land in question was held by the petitioner as stock-in-trade. The income that had arisen to the petitioner on this transaction was in the nature of income from business and profession. The assessee had duly got her books of account audited u/s 44AB. The land was treated as stock-in-trade and hence, jantri rates are not applicable in case of business transactions entered into by the assessee. It was specifically pointed out that in view of the above, the land was not subject to capital gain and jantri value is inapplicable. It was therefore also submitted that Section 50(C) of the Act could not have been applied. When specific queries were made regarding the sale of land and the assessee had given the required details, it could not be said that there was a failure to disclose fully and truly all material facts so as to assume jurisdiction u/s 148 - In fact, as is evident from the reasons itself, no fresh information of tangible material was on record and it was only an information which was known and explained was made a basis of the notice. Even on account of the concept of change of opinion, inasmuch as, based on the notices issued, the Assessing Officer had already made inquiries into the very same land and on the issue of applicability of Section 50C of the Act, it was not open for the respondent to give a different treatment. It has been held that even in the reasons recorded when there is no allegation that there was any failure on the part of the assessee in not disclosing truly and fully material facts necessary for the assessment, the assumption of jurisdiction to reopen the assessment beyond a period of four years in exercise of powers under Section 147 of the Act is bad in law and contrary to the provisions of Section 137. On the concept of change of opinion in the case of Gujarat Power Corporation Limited [ 2012 (9) TMI 69 - GUJARAT HIGH COURT] claims of the assessee which were not rejected by the Assessing Officer in the scrutiny assessment, the court held that in cases where the Assessing Officer has not made an assessment of any item of income chargeable to tax while passing the assessment order, it cannot be said that such income was subjected to an assessment. The court was of the opinion that in the original assessment, the Assessing Officer never really formed an opinion on a particular contentious issue. It was in this background that the Court was of the opinion that since no opinion was formed in this regard, consequently there would be no question of a mere change of opinion. The Court also expressed an opinion that in view of the explanation 2 to section 147 of the Act, power to make assessment or re-assessment within four years would be attracted even in cases where there has been complete disclosure of all material facts. WP allowed.

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• 2023 (10) TMI 205
  Attachment order passed u/s 281B - seeking orders to lift attachment as contention of the petitioner is that if the respondents allow to sell the property, he would pay the tax from the sale proceeds and has stated in the affidavit that he would submit an undertaking to this effect - HELD THAT:- On instructions, the learned Senior Standing Counsel appearing for respondents 1 and 2 submitted that if the assessee is submitting an affidavit or indemnity bond or any kind of assurance to the Court that he would pay the tax dues immediately after selling the property, then the respondents would obey the same. Therefore, this Court is directing the petitioner to submit an affidavit / indemnity bond to the respondents within a period of one week from the date of receipt of a copy of this order. Respondents shall lift the attachment within a period of one week thereafter and communicate the same to the 3rd respondent. The 3rd respondent shall reverse the entry of attachment. Then, the petitioner is directed to sell the property and shall adhere to the undertaking affidavit / indemnity bond.

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• 2023 (10) TMI 204
  Assessment u/s 153A - unexplained asset found in the course of search - assessee raised an objection as the AY 2011-12 was beyond the normal period of six assessment years and reopening of the ninth AY in terms of the fourth proviso to Section 153A of the Act was beyond jurisdiction - As argued contents of seized material are neither incriminating in nature nor do they in any manner reveal income represented in form of assets which had escaped assessment - HELD THAT:- We have no hesitation in holding that the AO did not have in his charge, any Jurisdictional fact (on or prior to 05.12.2019) to invoke and issue notice u/s 153C of the Act to the respondent assessee. The extended jurisdiction to invoke/assess 7th to 10th AY is conferred on the AO by authority of law and the AO cannot confer to himself the jurisdiction in a casual manner by stating/substituting the specific jurisdictional fact. As imperative that before issuance of notice u/s 153C (for the extended period) the AO sets out his objective satisfaction from the seized material, the details of the specified/undisclosed assets in possession qua the assessee for AY 2011-12 valued at Rs. 50 lacs or more. If this essential requirement of law is not satisfied, the AO does not get the authority of law to invoke the jurisdiction u/s 153A of the Act for 7th to 10th AY. As assessee had disclosed the sale transactions and liquidation of shares in his regular books of accounts and the liquidation of shares were received in bank. Thus the aforementioned assets cannot be termed as undisclosed assets. It has been appositely concluded in the concurrent decisions of the CITA and ITAT that it cannot be held that the allegedly undisclosed assets have escaped assessment. Addition was on account of unexplained cash credit represented by sale proceeds u/s 68 - The additions on account of unexplained cash credit , could not have been made by the AO, unless he initially made an addition of undisclosed asset valued at Rs. 50 lacs or more. In this case, as there was no addition made by the AO on account of undisclosed assets, ex consequenti, an inference deserves to be drawn that there was no jurisdictional fact for the AO to assume jurisdiction u/s 153C for AY 2011-12. The usurpation of jurisdiction u/s 153C of the Act is bad in law, for want of jurisdiction as the AO was precluded from making any other addition in the assessment for AY 2011-12. Therefore, the AO s action of addition u/s 68 of the Act for the relevant AY 2011-12 is untenable in the eyes of law. As observed in Singhad Technical Education Society s case [ 2017 (8) TMI 1298 - SUPREME COURT] that unless and until the AO establishes correlation between what has been seized from the searched person and how the same is incriminating in nature qua each of the assessment years in question for which jurisdiction u/s 153C is sought to be invoked for the other person (assessee in this case), then the notice u/s 153C to the assessee/third party qua the assessment year would be without satisfying the jurisdictional fact required to invoke Section 153C. As held by the ITAT that on the date of search the income tax assessment for AY 2011-12 of the assessee stood unabated. The concurrent decisions of both the CITA and the ITAT reflect that no incriminating materials were found during the search conducted by the AO. The pages 61 to 69 cannot be termed as undisclosed or unaccounted assets on the basis of the assessment order (Annexure-A). The addition to the income of the assessee u/s 68 of the IT Act for the relevant AY 2011-12 was found to be untenable in law.

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• 2023 (10) TMI 203
  Disallow interest paid on capital borrowed for acquisition of new asset in light of provisions of section 36(1)(iii) and proviso provided therein - HELD THAT:- We find that as per proviso, interest paid on capital borrowed for acquisition of asset for expansion of existing business or profession cannot be allowed till date on which such asset was put to use in the business of the assessee. In the present case, new asset acquired by the assessee was ready for put to use in the business, even though, there is no revenue generated from the said new asset. It is well settle principles of law by the decisions of various courts that set up of business and commencement of business are two separate events. If a business has been set up, even it has not commenced its activities, then expenditure relatable to said business, including interest expenses, if any, should be allowed as deduction. In the present case, AO never disputed the fact that new asset was ready for use in the business of the assessee and also put to use in the business of the assessee. AO disallowed the interest only on the ground that booking has been started in new mandapam from financial year 2016-17 onwards. Date of inauguration and date of booking of hall is not relevant to decide whether business has been set up or not. The moment, the assessee has kept its asset for ready to use in the business, it can be said that business has been set up. There is no doubt with regard to fact that business of the assessee has been set up and accordingly, the assessee has rightly claimed interest paid on capital for acquisition of asset. CIT(A) without considering relevant facts has simply sustained additions made by the AO - Thus, we set aside the impugned order and direct the Assessing Officer to delete additions made towards disallowance of interest paid u/s. 36(1)(iii) - Appeal filed by the assessee is allowed.

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• 2023 (10) TMI 202
  Unexplained deposits in demonetization period to be out of books or tempered books - Assessee had made a submission that the cash was deposited out of cash balance available from cash sales and as the assessee is in the business of wheat flour, maida etc. accordingly, it is regular business practice to receive cash and all the cash deposited is out of cash in hand - HELD THAT:- CIT(A) has satisfied himself of trading results including quantified details of stock. There is substance in the contention of Ld. AR that once sales stood accepted, by Ld. AO, which has been also considered and offered for taxation, how could the cash deposited out of the very same cash sales can be regarded as unexplained cash credits. The bench is also of the view that when the nature of business is accepted by the Tax authorities to be of substantial cash component in purchase and sales, both, then without there being evidence to the contrary, cash flow as accounted in books should be accepted. There is no matter to show there was any discrepancy in the cash balances, withdrawals, cash expenditures. Merely on assumptions Ld. AO could not have considered that deposits in demonetization period to be out of books or tempered books. The ground thus raised by the Revenue has no substance. SBNs received from the undisclosed sources - HELD THAT:- Assessee should not be expected to establish the cash flow from cash sales with mathematical precisions and what is essential is to establish that on preponderance of probability the business of assessee was able to generate surplus cash to be deposited in the bank. Only because the period under examination is of demonetisation that does not change the basic principle with regard to discharge of burden of proof for purpose of Section 68 of the Act. The nature of business of the assessee was one which would have been directly affected by market forces, where whole sale dealers and customers would have used SBNs for cash purchases. To allege without any evidence that there can be possibility that the appellant might have booked these sales in books by 08.11.2016 to deposit the SBNs, but actually made sales thereafter, to keep the stock as per books, on mere conjectures is not sustainable. The Ld. CIT(A) has accepted the major part of the cash deposits on basis of examination of all information about sales, purchases, stock etc. but to disbelieve part on the basis of mere assumptions is not justified. Long back in the case of Lakshmi Rice Mills [ 1974 (4) TMI 8 - PATNA HIGH COURT] it has been held that, when books of account of the assessee were accepted by the revenue as genuine and cash balance shown therein was sufficient to cover high denomination notes held by the assessee, then the assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time. The claim of the appellant that such addition resulted into double taxation of the same income in the same year is also acceptable because on one hand cost of the sales has been taxed (after deducting gross profit from same price ultimately credited to profit loss account) and on the other hand cash sales subjected to reported income are added u/s. 68 of the Act. Consequently we are inclined to accept the grounds raised by assessee.

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• 2023 (10) TMI 201
  Validity of Revision u/s 263 - Inadequate/insufficient or no enquiry - main grievance of DR for the Revenue was that AO has not conducted further enquiry - HELD THAT:- We note that further enquiry may be conducted by the Assessing Officer, if he thinks fit that results of the first enquiry are not sufficient. Therefore, after conducting proper enquiry, if the assessing officer passed order in brief, that does not mean that assessing officer has not conducted enquiry. We note that main grievance of ld DR for the Revenue was that assessing officer has not conducted further enquiry. As we have noted earlier that it is the domain of the assessing officer to decide, based on the facts and circumstances that a further enquiry is needed or not. Pr. C.I.T. by invoking his jurisdiction u/s. 263 of the Act is giving another opportunity to the Ld. A.O., which is not permissible. Hon ble Bombay High Court in the case of Ranka Jewellers [ 2010 (3) TMI 544 - BOMBAY HIGH COURT] relying on the decisions of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] and Max India Ltd. [ 2007 (11) TMI 12 - SUPREME COURT] has held that once the issue was considered by the A.O., the remedy of the revenue could not lie in invoking of the jurisdiction u/s. 263 of the Act. Therefore, the order of the Ld. C.I.T. was definitely outside the purview of section 263. The exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Ld. A.O. by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s. 143(3) - certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. What is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. It is a settled position in law that provisions of section 263 of the Act do not permit substituting one opinion by another opinion. Therefore, the order of the Ld. Pr. C.I.T. cannot be sustained on the principle of erroneous nature of the order of the A.O., as it is not erroneous. Appeal filed by the assessee is allowed.

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• 2023 (10) TMI 200
  Cash found in search action - Managing Partner admitted total cash seized by the police as income of the assessee, and agreed to pay tax on it - retraction of disclosure of unaccounted cash seized , as was done by the assessee after 21 months - HELD THAT:- It is clear beyond doubt that the cash surrendered by the assessee is an unexplained money found in the possession of the assessee and the assessee has not offered any satisfactory source and nature of acquisition of the said money, thus, the AO has rightly invoked provisions of Section 69A. Further, the assessee surrendered an amount on 09.04.2005 , while the Police search took place on 26.03.2005, and there was a sufficient gap of 14 days, and it cannot be said that the assessee has given statement offering to tax an amount out of cash seized , being under mental tension or scared, as there was sufficient 14 days time available with the assessee to bring down mental tension as well to seek necessary legal assistance. Further, by surrendering the aforesaid amount and offering to pay tax, the assessee has prevented further enquiries by the department , obviously because it could have led to further revelations / unraveling of truth as to the persons who are also implicit with assessee in transporting of cash as well other transactions undertaken by the assessee in the past. The assessee retracted its own statement firstly by filing income tax return on 31.08.2015 wherein Rs. 49,00,000/- was not included as income and was not offered for tax, while Rs. 21,10,000/- being the remaining amount out of surrendered amount of Rs. 70,10,000/- was offered for tax while filing return of income. The assessee during the course of assessment before the AO, on 15.12.2017, also retracted from the aforesaid surrendered amount of Rs. 49,00,000/-. Thus, the retraction by the assessee of the aforesaid surrendered amount of Rs. 49,00,000/- does not inspire confidence, and was rightly confirmed by ld. CIT(A). So far as deletion of income of Rs. 21,10,000/- by ld. CIT(A) is concerned, it was rightly done by ld. CIT(A) as the same was duly added by the assessee voluntarily in its return of income filed with department, which was erroneously added by the AO again leading to double addition. Decided against assessee.

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• 2023 (10) TMI 199
  Penalty u/s 270A - under-reporting in consequence of misreporting of income - incorrect amount of excess allowance u/s 32AC claimed by the Appellant in its ITR - HELD THAT:- It is absolutely not in dispute in the instant case that assessee is indeed entitled for deduction u/s 32AC in view of the investment made in new plant and machinery. In fact the AO on being satisfied about the eligibility of the assessee to claim deduction u/s 32AC of the Act had indeed granted deduction @15% of value of new plant and machinery. Hence, the preliminary objection raised by the DR in this regard that assessee is not eligible to claim deduction u/s 32AC of the Act, does not have any legs to stand in the eyes of law and we hold that the DR is trying to make out a new case before the Tribunal which is not even the case of lower authorities. All these facts collectively go to prove that the assessee had come forward voluntarily before the ld AO to withdraw the excess claim of its deduction u/s 32AC of the Act before any detection by the Income Tax Department. Hence, in our considered opinion, the assessee s case would squarely fall under the exception provided u/s 270A(6)(a) wherein, the assessee had given its bona fide explanation and had disclosed all the material facts that are relevant for the explanation offered. In view of the exception provided in section 270A(6)(a) of the Act, we hold that the present facts does not make the revenue eligible to levy penalty u/s 270A of the Act. AR also made argument on the ground that there was absolutely no mala fide intention on the part of the assessee to claim excess deduction u/s 32AC of the Act in the facts of the instant case as even after the withdrawal of the differential 85% claim of deduction in the sum of Rs. 191 crores, the assessee still has brought forward losses to the tune of Rs. 2698.95 crores as is evident from the schedule CFL (details of loss to be carry forward) in the ITR filed for AY 2017-18. We are in agreement with this argument of the AR which proves the intention and behaviour of the assessee to withdraw the claim of deduction voluntarily by the assessee. Relief has already been granted to the assessee by applying the provisions of the Act itself considering the bonafide conduct of the assessee and the counter given by the DR. Hence, we direct the AO to delete the levy of penalty. Appeal of assessee allowed.

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• 2023 (10) TMI 198
  Assessment u/s 153A - Whether incriminating material having been found during the course of search? - HELD THAT:- We note that the Learned CIT(A) did not controvert that the present A.Y. 2012-13 is the year where on the date of search, assessments were completed but he denied relief to the assessee by referring to the judgment of Hon ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora [ 2014 (10) TMI 255 - ALLAHABAD HIGH COURT] and in the case of E.N. Gopakumar [ 2016 (11) TMI 72 - KERALA HIGH COURT] - However, now the issue has been settled by Hon ble Supreme Court by rendering judgment in the case of PCIT vs. Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] approving the proposition of jurisdictional High Court in the case of CIT vs. Kabul Chawla, [ 2015 (9) TMI 80 - DELHI HIGH COURT] In said judgments, it was categorically held by Hon ble Supreme Court and Hon ble Jurisdictional High Court that completed assessments can be interfered with by the AO while making assessment order under Section 153A of the Act only on the basis of some incriminating material unearthed during the course of search. As we have found, as noted above that there is no incriminating material in the hands of Assessing Officer, which was found and seized during the course of a search operation held on 22.01.2018, therefore, the completed assessment for A.Y. 2012-13 cannot be interfered in absence of any incriminating material found and seized during the course of search and seizure operation. Accordingly, are allowed and AO is directed to delete the addition.

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• 2023 (10) TMI 197
  Validity of Reassessment proceedings - period of limitation to issue notice - scope of amendment to section 149 by Finance Act 2012, which extended limitation for reopening assessment to sixteen years - HELD THAT:- As relying on Brahm Dutt [ 2018 (12) TMI 832 - DELHI HIGH COURT] the first issue before Hon ble High Court was, as to whether AY 1998-99 could not have been reopened beyond 31.03.2005 in terms of provisions of section 149 as applicable at relevant time. Hon ble High court answered in affirmative. The second issue before the Hon ble High Court was as to whether subsequent amendment to section 149, by Finance Act, 2012, which extended limitation for initiation of reassessment proceedings to sixteen years, could not be resorted to for reopening concluded proceedings in respect of which limitation had already expired/lapsed before amendment became effective. Hon ble High Court answered in affirmative. DR has placed vehement reliance on the order of ITAT Mumbai in the case of Dilip J. Thakkar [ 2022 (3) TMI 1307 - ITAT MUMBAI] and the ld. AR has pressed into service judgment of Hon ble jurisdictional High Court of Delhi in the case of Brahm Dutt (supra) which has binding effect on all the authorities below including this Tribunal. Therefore, binding preposition rendered by Hon ble jurisdictional High Court (supra) has rightly been followed by the ld. CIT(A). We are unable to see any ambiguity and perversity or any other valid reason to interfere with the findings recorded by the ld. CIT(A) while quashing the reassessment notice u/s. 148 and impugned reassessment order u/s. 147 r.w.s. 143(3) of the Act by relying ratio of the judgment of Hon ble jurisdictional High Court of Delhi in the case of Brahm Dutt vs. ACIT (supra). Accordingly, ground no.1 of Revenue is dismissed. Income taxable in India - interest income earned by the non-resident assessee from Standard Chartered Bank, New Jersey Foreign Branch - As per provision of section 5(2) of the Act which is charging section for non-resident, Indian income of non-resident is taxable under the provisions of Income Tax Act 1961, and any other income earned outside India is not taxable in India. As per said legal position the interest income earned by the non-resident assessee from Standard Chartered Bank, New Jersey Foreign Branch is not taxable in India as the same has been accrued to non-resident assessee from the deposits in the bank situated outside India and thus the same interest income cannot be deemed as received or deemed to be received in India or accrue or arises or deemed to be accrue or arise in India and thus the ld. CIT(A) was correct and justified in holding that the same was not liable to tax in India in the hands of non-resident Indian assessee. Accordingly, no interference is called for in the conclusion drawn by the CIT(A) on merits and thus the ground no. 2 of Revenue is dismissed.

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• 2023 (10) TMI 196
  Revision u/s 263 - As per CIT AO has not verified the creditworthiness of the creditors - HELD THAT:- As seen from the Record that the Ld. A.O., during the Assessment proceedings not only called for the record from the Assessee to submit, issued the questioners to the Assessee, but also issued Notice u/s 133(6) of the Act to the firms from whom the Assessee had the transactions calling upon them to produce the Balance sheet, Ledger and the ITR for the purpose of verifying the creditworthiness of the creditors. The said details were made available to the AO by the Creditors and also the Assessee respectively. A.O. not only made detail enquiry with the Assessee but also by issuing the Notice under Section 133(6) of the Act to the Creditors and after obtaining the details and convincing himself, found that the Creditors are genuine and passed the Assessment Order in-favour of the Assessee. There was no material brought by the Pr. CIT to observe that no verification was made during the course of the assessment by the A.O. On the other hand, it is seen from the record that, the Ld. A.O. has made detailed enquiry, considered all evidence and arrive to a conclusion to accepted the income declared by the Assessee. Thus, in our opinion, the Pr. CIT has only expressed the different view which is not permissible u/s 263 - Revisionary power u/s 263 of the Act is conferred by the Act on the Commissioner when an order is passed by the Authority is erroneous and prejudicial to the interest of the Revenue. Orders which are passed without inquiry or investigation are treated as erroneous and prejudicial to the interest of the Revenue, but which are passed after inquiry/investigation on the question/issue are not per se are normally treated as erroneous and prejudicial to the interest of the Revenue. Because, the Revisionary Authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken, the same cannot be initiated without following the proper provisions u/s 263 of the Act. The decision of the Hon ble Supreme Court in case of CIT vs. Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT] and Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT] are aptly applicable in the present case as the Hon ble Apex Court wherein it is held that Section 263 has to be read in conjunction with the expression erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial to the interests of the revenue - Appeal of assessee allowed.

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• 2023 (10) TMI 195
  Deduction u/s 80IA - claim denied on profits derived from the projects/works executed as a of constituent of AOP/Joint Ventures - whether assessee has not entered into an agreement with the. Central Government or a State Government or a Local Authority or any other Statutory Body? - Whether assessee herein is not a developer but merely a contractor in respect of the project not directly awarded to it? - whether constituent is eligible for deduction u/s. 80IA(4)? - HELD THAT:- From the perusal of section 80IA(4) of the Act, it is abundantly clear that for the purpose of claiming deduction, it is essential for the assessee to prove that the agreement has been entered by the assessee with the government / statutory body. Admittedly, in the present case, the agreement was not entered between the assessee with the government body and the agreement was entered into by the Joint Venture company namely, HES-MEIL-ZVS, whereas the deduction was claimed by assessee which happens to be one of its constituent member. In our view, the statue is unambiguous and clear which only provides that the enterprise in whose favour the work has been allotted or agreement has been entered shall alone be entitled to claim deduction under section 80IA(4) of the Act. Therefore, in our view, the contention raised by the ld. DR for the Revenue is in accordance with the law and therefore, this legal issue is required to be decided in favour of the Revenue. However, the co-ordinate Bench of the Tribunal in the case of M/s. KNR Constructions [ 2021 (5) TMI 724 - ITAT HYDERABAD] has decided the issue in favour of the assessee. In our view, the above said proposition cannot be said to be binding on this Bench in view of the fact that in later decision of Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT] Thus it is clear that in case a person seeking the deduction under the provisions of the Act, then onus is on the assessee to prove strictly that assessee fulfills all the parameters laid down by the statute for claiming the deduction. In the present case, admittedly, the agreement was not entered between the assessee and the Government / Statutory Government and there was a violation laid down by the statute and therefore, the assessee is not entitled to claim deduction. In light of the above, with respect to the binding nature of the co-ordinate Bench of the Tribunal, it will be suffice to say that the co-ordinate Bench of the Tribunal has not had the benefit of applying the decision of the Hon ble Supreme Court in case of Dilipsingh (supra), which was later on followed in many cases. Therefore, the decision of the co-ordinate Bench of the Tribunal in the case of M/s. KNR Constructions Limited (supra) is not binding on this Bench. Therefore, the grounds raised by the Revenue are required to be allowed.

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• 2023 (10) TMI 194
  Excess stock found during the course of survey - Additions u/s. 69B r.w.s. 115BBE - additional income offered towards excess stock found during the course of survey - Appellant offered explanation with regard to excess stock found during the course of survey and claimed that said excess stock is on account of numerous items of physical stock carried by the assessee including old jewellery received from customers for repair and polish and also exchange and further said excess stock has been acquired out of business income generated for the impugned assessment year - HELD THAT:- As following the decision of ITAT, Chennai Benches in the case of M/s. Mookambika Impex [ 2023 (7) TMI 1159 - ITAT CHENNAI] we are of the considered view that the additional income offered towards excess stock found during the course of survey is assessable under the head income from business as claimed by the assessee, but not income assessable u/s. 69B of the Act, as assessed by the Assessing Officer. Thus, we set aside the order of the CIT(A) and direct the Assessing Officer to assess income towards excess stock under the head income from business as declared by the assessee. Decided in favour of assessee.

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• 2023 (10) TMI 193
  Reopening of assessment u/s 147 - investment in penny stock company - information received from DDIT(Inv), Unit-8(3), Mumbai stating that the assessee has traded in penny stock /shares of M/s Nivyah Infrastructure and Telecom Services Pvt. Ltd to bring its unaccounted income in the books through, circuitous route during AY 2011-12 - HELD THAT:- As decided in SOUTH YARRA HOLDINGS [ 2019 (3) TMI 582 - BOMBAY HIGH COURT] on receipt of information, the least that is expected of the Assessing Officer is to examine the same in the context of the facts of this case and satisfy himself whether the information received does prima facie lead to a reasonable belief that income chargeable to tax has escaped assessment. In this case, the reasons indicate that the Assessing Officer has not carried out such exercise and accepted the report of DDIT(Inv), Unit-8(3), Mumbai to conclude that the petitioner had dealt with Nivyah Infrastructure and Telecom Services Ltd during the previous year relevant to the assessment year 2011-12. Admittedly, there was no company by name M/s Nivyah Infrastructure Telecom Services Ltd in existence during that year for consideration. This clearly shows that the Assessing Officer acted on the satisfaction of the Deputy Collector of Income Tax (Investigation) that income chargeable to tax has escaped assessment. It must also be borne in mind that the impugned notice is issued beyond the period of four years from the end of the relevant assessment year in a case, where the assessment was completed u/s 143 (3) - Therefore, the Assessing Officer would have to examine the information received in the context of the facts on record. If such an exercise were to be done, it is likely that the Assessing Officer would have come to the conclusion that there was no failure to disclose truly and fully all material facts necessary for assessment. Thus, hit by the proviso to section 147 - AO has not applied his mind to the information received in the context of the facts on record. Appeal of the assessee is allowed.

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• 2023 (10) TMI 192
  Disallowance of gratuity while processing return u/s 143(1) - actual payment during the assessment year under consideration, which is allowable u/s 37(1) - CIT(A) observed that auditor is required to call for and verify the details of contribution to gratuity fund, etc.- HELD THAT:- If the assessee has charged gross provision for gratuity to the profit as per profit loss account, thereafter the assessee deducted actual gratuity payment assessee s claim cannot be disallowed in principle. On the other hand, if the assessee has debited actual payment of gratuity in the account provision for gratuity, then the payment of gratuity already gets subsumed, thereafter, the assessee cannot once again claim actual payment of gratuity in the return of income as it would amount to double deduction. To verify this, we remit this issue to the file of AO to examine the provision for gratuity account along with payment of gratuity. After satisfying the treatment given by the assessee in his books of accounts, the claim of assessee to be examined. Accordingly, the issue is remitted back to the file of AO for fresh consideration. Denial of carried forward current year loss - contention of the ld. AR is that though AO quantified the carried forward of current year loss at the tune of Rs. 53,87,78,963/- in the end in Annexure- Schedule CFL {as computed u/s 143(1)} in column no.(xiv) current year losses to be carried forward (xiv-xv) mentioned as 0 , which is incorrect - In our opinion, the claim of assessee to carry forward current year loss to be Rs. 53,87,78,963/- without prejudice to our findings in earlier ground. Accordingly, the error crept in the intimation u/s 143(1) of the Act is to be corrected as current year loss to be carried forward at Rs. 53,87,78,963/- which is subject to our findings in ground no. 1. Ordered accordingly.

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• 2023 (10) TMI 191
  Revision u/s 263 - as per CIT deduction allowed u/s 35(2AB) AO has allowed the claim without obtaining Form No. 3CL - HELD THAT:- On a perusal of Rule 6(7A)(b) would show that the said rule prescribes certain condition, which inter alia, includes quantification of Expenditure eligible for deduction u/s 35(2AB) in Form 3CL. Even though it is not the responsibility of the assessee to furnish above said form, yet it is the requirement prescribed in Rule 6(7A), which should have been examined by the AO before allowing deduction u/s 35(2AB) of the Act. We noticed earlier that the assessing officer had asked the assessee through the notice issued u/s 142(1) of the Act about the break-up details of expenses only and did not mention about Form 3CL. Even though the above said form has to be furnished by the prescribed authority directly to the PCCIT/CCIT, yet it is the responsibility of the AO to verify as to whether the requirement of Rule 6(7A) has been satisfied or not, before allowing the claim u/s 35(2AB) of the Act. Admittedly, the AO has not examined the same. We notice that the provisions of sec. 35(2AB)(3) of the Act was amended with effect from 1.4.2016 by Finance Act, 2015, wherein it is stated that the assessee should fulfil such conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed. We notice Rule 6(7A) was amended w.e.f 1.7.2016, i.e., after the amendment made in Sec. 35(2AB)(3) of the Act. Further, Form 3CL is one of the forms prescribed in Rule 6(7A)(b) of the Rules for quantifying scientific research expenditure by the prescribed authority. Since the rules prescribe for examination of the above said form, it is the duty of the AO to verify the same before allowing the deduction u/s 35(2AB) - Admittedly, the AO has not examined this aspect, even though it is not a fault upon the assessee. We agree with the view taken by PCIT on this issue that the AO has not carried out due enquiries or verification with regard to this issue. Accordingly, we uphold the order passed by Ld PCIT on this issue. Deduction allowed u/s 35(1)(i) - As is the view of the Ld PCIT that the said deduction was allowed by the AO without obtaining mandatory Form 3CM and Form 3CL issued by DSIR. A.R drew our attention to the provisions of sec. 35 of the Act and submitted that the above said Form 3CM and 3CL are applicable to the deduction claimed u/s 35(2AB) of the Act only, i.e., the above said forms are not required for allowing deduction u/s 35(1)(i) of the Act. On a perusal of the relevant provisions, we find that the above said submissions of Ld A.R to be correct, meaning thereby, the Ld PCIT has misdirected himself on this issue. Accordingly, we set aside the order passed by Ld PCIT on this issue. Deduction allowed u/s 80G the view of CIT is that the said claim has been made by the assessee in respect of the expenses incurred on Corporate Social Responsibility (CSR), which is disallowable u/s 37(1) of the Act and hence deduction under section 80G should not have been allowed. Disallowance of CSR expenses are required to be made u/s 37(1) of the Act, but there is no statutory bar in claiming the deduction u/s 80G of the Act if the said expenses are otherwise allowable as deduction - see ALLEGIS SERVICES (INDIA) PVT. LTD.[ 2020 (5) TMI 378 - ITAT BANGALORE] , M/S JMS MINING PVT. LTD. [ 2021 (7) TMI 907 - ITAT KOLKATA] . Thus, the view taken by PCIT on this issue is a debatable one, meaning thereby, the action of the AO in allowing deduction u/s 80G results in a possible view. Accordingly, PCIT was not justified in initiating revision proceedings on this issue. Accordingly, we set aside his order on this issue. Appeal of the assessee is partly allowed.

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• 2023 (10) TMI 190
  Addition u/s 68 - bogus unsecured loans and bogus interest expenses claimed on such loan - applicant had not satisfactorily established the identity, creditworthiness and genuineness of the transaction - CIT(A) deleted the addition - HELD THAT:- Assessee has placed complete details including PAN Nos., bank account statements, financial statements and income tax details of each of the cash creditors. The ld. Assessing Officer has not indicated any discrepancy in any of these details. CIT(A) has also examined each of the cash creditors in detail including the fact that in some of the cases there are cash creditors who had already advanced funds for the assessee in the preceding year and some fresh loans have been taken. Interest has been paid through banking channels and tax has been deducted at source. AO failed to bring any adverse material against the assessee and the loan borrowed. Most of the unsecured loans have been repaid in the subsequent period. We, thus are of the considered view that the ld. CIT(A) after examining the facts of the case and giving finding of fact that the assessee has explained the nature and source of alleged sum and has proved the identity and creditworthiness of the cash creditors and genuineness of the transactions and further placing reliance on the judgement of Dataware Pvt. Ltd.[ 2011 (9) TMI 175 - CALCUTTA HIGH COURT] , Sophia Finance Ltd. [ 1993 (8) TMI 62 - DELHI HIGH COURT] and Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] has rightly deleted the addition made by the Assessing Officer under section 68. Disallowance u/s 14A - HELD THAT:- As only investment made by the assessee firm in mutual funds is at Rs. 5,00,000/-. During the appellate proceedings before the ld. CIT(A), prayer of the assessee was to direct the Assessing Officer to verify the claim of the appellant in view of the decision of M/s. REI Agro Ltd. [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT] - Considering the same, we fail to find any infirmity in the finding of the ld. CIT(A) in restoring the issue of disallowance under section 14A to the assessing officer for necessary verification - Ground raised by the revenue is dismissed. Adhoc disallowance made @ 20% - CIT(A) has confirmed the said disallowance observing that the expenditure being personal nature cannot be ruled out - HELD THAT:- It was the assessee who had to raise such ground but there is no appeal filed by the assessee and it seems that the revenue has inadvertently raised a wrong ground challenging the finding of the ld. CIT(A) even though it has been decided in favour of the revenue. Thus, Ground raised by the revenue becomes infructuous and the same is dismissed as such.

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• 2023 (10) TMI 189
  Unexplained expenditure u/s 69C - documents which were seized during a search/survey on UPDA and its Secretary General Shri R. K. Miglani - HELD THAT:- Whether the documents seized from the searched party are held as belonging to or pertaining to , it does not materially effect the findings rendered by the Tribunal, in the batch of appeals decided on this issue and categorical findings have been rendered on the evidentiary value of the documents seized/impounded wherein it has been held by the Tribunal that such documents are dumb documents. Hence no mileage can be availed on this difference between belonging to or pertaining to as has been observed by AO/CIT(A) in their orders. Since the documents relied upon by the department or the statement of Sh. R. K. Miglani remains the same having no evidentiary value as per the factual findings recorded in the said order of ITAT and already relevant paras from the said order have already been extracted above in this order, which, in our considered opinion, are very much relevant to put the issue as rest. Therefore, we hold that no addition of any alleged unexplained expenditure u/s 69C can be made in the hands of the assessee and the additions made u/s 69C respectively are hereby directed to be deleted. Waiver of loan amount arising out of NCDs which were allotted by the assessee to M/s. Morgan Stainley in the public offer made in F. Y. 1993-94 - Such kind of waiver of loan on utilization of capital asset has now been set at rest in the case of Mahindra Mahindra[ 2018 (5) TMI 358 - SUPREME COURT] after discussing the various provisions as contained in section 41(1) of the Act and also u/s 28, held that there is a difference in trading liability and other liability. The provisions of section 41(1) are attracted only if some trading liability is written back. If the amount of loan is utilized towards acquisition of capital assets, then the provisions of section 41(1) of the Income Tax Act are not attracted. Thus, respectfully following the judgment of Hon ble Supreme Court, we hold that no addition can be made u/s 41(1) of the Income Tax Act and the amount being the amount waived by M/s. Morgan Stanley, cannot be brought to tax. This is more so especially when factum of having utilising this amount towards the capital expansion of the assessee s business is not in dispute and remains unchallenged. This ground of appeal is, accordingly allowed.

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• 2023 (10) TMI 188
  Bogus purchases from certain entities - purchases made by the four Jammu based partnership firms belonging to the assessee group are non-genuine - HELD THAT:- Once the CESTAT [ 2018 (12) TMI 1234 - CESTAT CHANDIGARH] has held the purchases made by four Jammu bases entities to be genuine, the entire case of the Revenue based on the investigation carried out by Central Excise Department, Jammu would fall flat. While deciding the appeals filed by the Revenue in case of M/s. Jai Ambay Aromatics, one of the four Jammu based entities from whom the assessee had purchased raw materials, the Tribunal [ 2021 (8) TMI 936 - ITAT DELHI] has upheld the decision of the first appellate authority in deleting the additions made by the Assessing Officer on account of bogus purchases. Thus, once, the CESTAT and the Tribunal have held the purchases made by the four Jammu based entities to be genuine, the corresponding sales effected by them to the assessee have to be accepted as genuine. In our considered view, FAA as justified in deleting the additions made on account of non-genuine purchases. Once the purchases are held to be genuine, then there cannot be any doubt regarding manufacturing activity of the assessee. Therefore, the manufacturing expenses claimed by the assessee have to be allowed. In this view of the matter, we do not find any infirmity in the decision of learned Commissioner (Appeals). Accordingly, we uphold the same by dismissing the grounds raised by the Revenue.

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• 2023 (10) TMI 187
  Addition u/s 40A(3) - cash payment in excess of Rs. 20,000/- - AO noted that these payments for purchase of rice is in excess of Rs. 20,000/- to a single person in a single day in violation of provisions of section 40A(3) and assessee does not fall under any of the exempted categories as per Rule 6DD - CIT(A) concluded that the assessee is a contractor and has purchased rice from rice mills who are the processor and not from the grower/purchaser/cultivator therefore, it is does not fall under any of the exceptions covered under Rule 6DD - HELD THAT:- Admittedly, the assessee is a trader in rice purchasing rice from rice mills who are the processor and not the grower / producer / cultivator i.e., agriculturists directly. Admittedly, the assessee is also not an agent or the rice mill is not an agent as claimed by assessee, even the assessee could not show me any business expediency that required to be considered in the light of the exceptions as provided under Rule 6DD of the Rules. As considered the facts whether the assessee s case requires any estimation of profit. I noted that the assessee made a claim before us that the assessee has made 98% of purchases in account payee cheque or bank draft or through banking channel only as envisaged in the provisions of section 40A(3) - But due to compulsion imposed by some of the farmers who wanted their money back from the rice mill, clearly reveals that there was a business expediency to make cash payment that being a very minimal amount ranging from 6.92% to 0.28% in various years. The assessee also argued that there was fluctuating demand in the rice due to which there is price raise of rice commodity and due to that the farmers agreed to sell in cash to the rice mills. In turn, the rice mill asked the assessee to make part of payment during some months in cash. Considering the entirety of facts, I m of the view that on the disputed purchase, the AO can apply a higher profit rate instead of profit rate declared by assessee of 0.26%. Thus estimation of profit @ 10% of the disputed purchases disallowed by AO by invoking the provisions of section 40A(3) of the Act will meet the ends of justice because otherwise this will distort the profit and seeing commercial expediency in the given facts and circumstances - Assessee appeal are partly-allowed.

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• 2023 (10) TMI 186
  Deduction u/s 80IC - profit rate of Dehradun unit was found unnaturally at very high level - AO restricted the claim to 50% of the total profit on the ground that details of expenses were not available and could not be verified - HELD THAT:- As we find that assessee s case is squarely covered in its favour in own cases [ 2018 (4) TMI 1118 - ITAT KOLKATA] and [ 2018 (4) TMI 1126 - ITAT KOLKATA] by the decisions of the coordinate benches wherein similar issue has been decided in favour of the assessee. The ld. CIT(A) allowed the appeal of the assessee after following the above decisions of the coordinate benches. The facts in the instant assessment year are materially same and, therefore, respectfully following the same, we uphold the order passed by the ld. CIT(A) and dismiss Ground No. 1 raised by the revenue. Disallowance u/s. 40(a)(ia) - Non deduction of TDS on rent paid, consultancy charges and commission - HELD THAT:- CIT(A) has passed a speaking and reasoned order giving substantive findings as to how the disallowance is not called for. We note that ld CIT(A) has analysed each and every item of expense and came to a conclusion that provisions of tax deduction at source are not applicable in some cases whereas in some instances in view of the decision of the apex court in the case of Hindustan Coca Cola Beverages P. Ltd. [ 2007 (8) TMI 12 - SUPREME COURT] the provisions of section 40(a)(ia) are not applicable as the payees have returned the said payments in their return of income and paid due taxes. Consequently, we do not find any reason to disturb the findings of the ld. CIT(A) and accordingly Ground No. 2 of the revenue is dismissed. Addition on payments made in cash in violation to provisions of Section 40A(3) - HELD THAT:- CIT(A) observed that in a single day, where the payment exceeded Rs. 20,000/-, the same was made by way of account payee cheque or account payee demand draft. CIT(A) observed that the said Section applies to payments made to a single party on a single day. The ld. CIT(A) have recorded a finding of fact that the single day payments to single individual, never exceeded Rs. 20,000/- by way of cash and, therefore, provisions of Section 40A(3) of the Act cannot be applied and correctly deleted the disallowance. Non-payment of dues in terms of provisions of Section 43B - HELD THAT:- We observe that none of the cases of outstanding payments/dues were paid beyond the due date of filing of return. We observe from the submissions made and evidences furnished by the assessee and also from the findings given by the ld. CIT(A) in respect all these payments that they were paid within the due date. Since the issue is a factual one, we do not deem it fit to delve further into the issue as all these payments were made before the due date of filing of the return as noted by the ld CIT(A) in his appellate order. Consequently ground is dismissed. Deduction u/s 80G in respect of donations made to three trusts - Addition made as assessee has not offered any explanation and accordingly the same was disallowed - HELD THAT:- CIT(A) in the appellate proceedings observed that these donations were made to the trust/institutions which are eligible for deduction u/s 80G of the Act and accordingly restored the issue to the file of the Assessing Officer and directed the Assessing Officer to allow the statutory deduction as per statutory limit prescribed u/s 80G of the Act. We do not find any reason to interfere with this finding of the ld. CIT(A) and accordingly uphold the order of ld CIT(A) on this issue. Consultancy charges paid to three directors of the assessee company over and above the remuneration - HELD THAT:- We have also noted the findings of the ld. CIT(A) that these payments were made to the directors for rendering services to the assessee company who were qualified in their respective fields. CIT(A) also noted that while making the payment, the TDS was duly deducted from consultancy charges and these directors were assessed to tax in their personal capacities also. CIT(A) specifically noted that this is not the case of the assessee that the payments made to the directors is excessive and unreasonable. Besides we note that these directors are separately assessed to tax and have duly declared the consultancy charges received from the assessee company and paid due taxes thereon. The finding to this effect has been given by the CIT(A) in his order also. Accordingly, we are inclined to uphold the order of the ld. CIT(A) Bogus and non-genuine commission payments - AO observed from the evidences furnished by the assessee in the form of agreements with these agents to whom commission was paid that assessee has failed to substantiate as to how these persons were rendering their services to the assessee - CIT(A) deleted addition - HELD THAT:- We observe that the assessee is engaged in manufacturing and supplying goods to Indian Railways. We note that the assessee has hired services of commission agents for keeping track of the tenders, applying for the tenders, and after the tenders are successfully obtained, the obtaining of supply orders , supply of goods and finally pursuing and receiving payments. We have perused the order of the ld. CIT(A) and observed that the services of these agents are indispensable to do business with Indian Railways. The ld CIT(A) has gone into the commercial angle of these expenses and held that these were incurred for the purpose of business wholly and exclusively. The mere fact that these expenses were outstanding at the year end would not colour them with taint that these expenses are non genuine and bogus. The ld. CIT(A) has taken into account all these aspects while allowing the appeal and passed a very detailed and reasoned order explaining each and every aspect of the issue by noting that similar commission has been paid in the preceding assessment years and was allowed. The ld CIT(A) has noted that these agents are experts in their field and that the assessee has duly explained the services rendered by these agents to the assessee. The ld CIT(A) relied on a series of decisions to justify his conclusion. Decided against revenue.

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• 2023 (10) TMI 185
  Disallowance u/s 54EC being investment in NHAI bond - AO noted that assessee is entitled for deduction only when the investment has been made within 6 Months after the date of transfer and in this case the assessee has made investment which is before the date of transfer - assessee submitted before AO that the investment was made out of the advance money received, therefore the advance money is part of receipt - HELD THAT:- On the identical facts, our view is fortified by the judgment of Subhash Vinayak Supnekar [ 2017 (1) TMI 58 - BOMBAY HIGH COURT] wherein it was held that when amount received as advance under an agreement to sell a capital asset is invested in specified bonds, benefit of section 54EC is available to assessee. We note that the case law referred by AO in the case of Smt. Dakshaben R. Patel [ 2012 (6) TMI 711 - ITAT AHMEDABAD] is distinguishable on facts and not applicable to the facts of assessee`s case in view of the fact that in said case there was no advance money received and the applicability of CBDT Circular No.359 (F. No.207/8/82.IT) dated 10.05.1983 was not brought on record wherein it is claimed that as section 54E contemplated investment of the net consideration in specified assets for a minimum period and as the earnest money/advance as a part of the sale consideration, if executed in the specified assets before the date of sale deed, the amount so invested would qualify for deduction under section 54E. Although this circular is issued in relation to section 54E, however it should be equally applicable to section 54EC of the Act also. Therefore, based on these facts and circumstances of the case, we allow ground No. 1 raised by the assessee. Disallowance u/s 54F considering it as investment in more than one residential house - As contented assessee owns only one house at the Oberoi Palace Housing Society in this name at the time of the sale and other two properties are owned jointly with others and therefore it is not required to be considered for the purpose of condition of section 54F - HELD THAT:- Hon`ble Madras High Court in case of Dr. (Smt.) P. K. Vasanthi Rangarajan [ 2012 (7) TMI 563 - MADRAS HIGH COURT] wherein it was held that where the assessee held the property jointly with her husband in equal proportion, it cannot be said that she is the owner of the house property at the time of the sale for availing the deduction u/s 54F of the Act. It is to be noted that w.e.f. 01.04.2001, there was the amendment in section 54F to the effect that assessee could be owner of one house at the time of the sale On the identical facts, in the case of Ashok G. Chauhan, [ 2019 (4) TMI 1024 - ITAT MUMBAI] held that where AO rejected assessee s claim for deduction under section 54F of the Act, on ground that at time of sale of capital asset, assessee was owner of more than one residential house properties, in view of fact that one residential property was co-jointly owned in name of assessee and his wife and he could not be treated as absolute owner of said property, deduction under section 54F could not be denied to him. We note that Hon`ble Supreme Court in the case of CIT vs. Vegetable Products Ltd, [ 1973 (1) TMI 1 - SUPREME COURT] held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted. Therefore, respectfully following the judgment of the Hon ble Madras High Court in case of Dr. (Smt.) P. K. Vasanthi Rangarajan (supra), we allow ground No. 2 raised by the assessee. Disallowance of expense against the taxable interest income from firm - Addition made as personal expenses are not allowable - AO noticed that the assessee was having only interest income from firm but had claimed expenses in nature which were depreciation, petrol, insurance etc. which are nowhere related to earning interest income and therefore assessing officer disallowed the expenses - HELD THAT:- AO never doubted the genuineness of expenses nor the nature of business income against which it was claimed. The assessing officer simply made addition without pinpointing the personal taint especially when the assessee has debited withdrawal for personal purpose separately. Thus, we note that the main grievance of the ld Counsel is that assessee was not granted sufficient opportunity to explain the nature of these expenses. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much deeper into the merits of the case, in the interest of justice, we restore the matter back to the file of assessing officer for de novo adjudication and pass a speaking order after affording sufficient opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith. For statistical purposes, ground raised by the assessee is allowed.

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• 2023 (10) TMI 184
  Unexplained cash credit and interest thereon u/s 68 - HELD THAT:- As addition on the basis of the statement recorded by the investigation wing of the department of one Shri Sharad Dharak in some other cases of search - AO has not brought on record any material to show that these loans transactions are nothing but assessee s own undisclosed income routing back through these loan creditors in the garb of unsecured loans - As decided in assessee own father case SHRI SANJAY SHUKLA, INDORE [ 2022 (4) TMI 385 - ITAT INDORE] as held that loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction [ 2016 (9) TMI 436 - ITAT INDORE] - Decided in favour of assessee.

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• Customs

• 2023 (10) TMI 183
  Scope of notification dated 09th July, 2020 - prohibition on importation of a variety of cut flowers into India through all airports, save for the Chennai airport - Petitioner contends that this regulatory measure discriminates against Delhi s flower traders by putting them in an unfavourable position relative to their Chennai-based counterparts - infringement of Petitioner s rights under the Constitution of India. Whether the Union Government, represented by its respective departments, is justified in allowing the importation of cut flowers exclusively through Chennai Airport? HELD THAT:- Considering the Respondents ongoing initiatives for phased enhancements to laboratory facilities and equipment across several ports, including Delhi, it is clear that the core concern of the Petitioner-the challenges faced in importing cut flowers via Delhi-has not only been recognized but is also presently being addressed by the appropriate authorities. Therefore, judicial intervention at this stage is not warranted. Petition disposed off.

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• 2023 (10) TMI 182
  Levy of penalty u/s 112(a) and u/s 114AA of Customs Act, 1962 - employee of the company - helping the importer in importing mis-declared and under-valued goods - evasion of Customs Duty - HELD THAT:- Admittedly, the said importer Mr. M.A. Mujahid, Proprietor of M/s Great Overseas, has used the email ID and address of this Appellant behind his back and without his permission - It is further found that the said mobile number 9246368100 was being used as a common telephone of the concern of the Appellant, wherein, all the staff were using it for making and receiving calls in connection with the business of the Appellant as well as for personal purposes. Thus, Mr. M.A. Mujahid had used the said phone which was also available to him as an employee. The statement of M.A. Mujahid was recorded on different occasions and he has never uttered a word or stated anything implicating this Appellant or pointing out any abetment on his part. We further find that the said importer M.A. Mujahid, having come to know of the error in the shipping documents had approached the Customs Department at the Gateway Port for amendment of their IGM. Under the facts and circumstances, on being so advised, the said importer had filed Bill of Entry on first check basis . Thus, under such admitted facts, no case of mis-declaration or undervaluation is made out - The whole case of Revenue is based on assumptions and presumptions which have no legs to stand. Appeal allowed.

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• 2023 (10) TMI 181
  Confiscation of goods imported - penalty under Section 112 (a) of the Customs Act, 1962 - misuse of its IEC - forgery of signature - no request for cross-examination made - burden to prove - HELD THAT:- The assessee is trying to blow hot and cold at the same end; on the one hand, he writes a letter complaining about the misuse of its IE Code, two days later he says that there is no misuse of his code insofar as the present bills-of-entry are concerned. But in any case, when a complaint which is of serious nature is received, the authority has initiated investigation into the same and hence, we find that the subsequent letters/request made by the assessee while the investigation was on, were only to distract the progress of the investigation. There is also a serious issue as to the signatures in document accompanying the bills of entry: assessee s manager categorically denies some of the signature as his own insofar as some of the signatures are concerned; he clearly says that there were some differences, which fact has not at all been denied by the assessee in any of his pleadings either before the lower authority or before us. Hence, the fact that there were differences in signature stood established. It has been clearly admitted that in the clearance process, the assessee himself had filed the documents on self-clearance basis without engaging the services of CHA. The investigation carried by the SIIB, as brought out in the impugned order, clearly establishes that neither the appellant-assessee nor the firm in the name of M/s. Ghazzali Trading, Chennai did seek any clearance on self-clearance basis, which is a very serious issue according to us. Other than merely claiming so, the assessee has not furnished any documentary evidence in his support. The assessee has not proved beyond reasonable doubt that the goods in question imported under the air way bills/bills-of-entry in dispute were in fact filed by him and hence the only natural corollary available to the Revenue is the confiscation of the same - the Revenue need not prove the owner of the goods; when a claimant does not prove that the goods in question belongs to him, it is not for the Revenue to thereafter establish a certain actual owner of the goods. The assessee made the Revenue believe his words, which resulted in the initiation of investigation and thereafter, he also claimed that he was the actual owner of the goods imported - the assessee could be held to be any person within the meaning of Section 112 of the Customs Act, 1962 and therefore, the Revenue is justified in imposing penalty on the assessee-appellant. There are no merit in the appeals, for which reason the appeals are dismissed.

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• 2023 (10) TMI 180
  Absolute Confiscation - Penalty - Gold Bar - entire allegation is based upon the statement of Shri Narayan Sharma - despite request cross examination of the said person was denied - violation of principles of natural justice - HELD THAT:- As far as the appeal of Shri Narayan Sharma is concerned, it is found that in his confessional statement, he has admitted that he was a carrier of the gold which was recovered from the cavity near the driver seat in the Bus bearing No. PB-02-CR 3991 operated by M/s Inter Globe Aviation Limited (Indigo Airlines). Further, Shri Narayan Sharma has stated in his confessional statement that he is working as salesman with M/s Ganesh Book Depot and went to Dubai along with Shri Vaibhav Rai son of Shri Rakesh Rai and brought the gold which was handed over to Shri Sahib Singh driver of the bus. Further, in his statement, he admitted that Shri Rakesh Rai and Shri Vaibhav Rai played major role in the entire smuggling of gold and both were the actual beneficiary of the smuggling of gold and he was only getting Rs. 10,000/- as a carrier for carrying the gold and handing over the same to the driver of the bus. The demand of customs duty has been wrongly confirmed under Section 28 of the Customs Act along with interest under Section 28AA because no show cause notice which is required to be served upon the person chargeable with duty was issued to Shri Narayan Sharma - the demand of duty of Rs. 11,80,872/- alongwith interest under Section 28AA of the Customs Act is not sustainable in law - Penalties upheld. It has been held by the Hon ble Supreme Court in the case of KI. PAVUNNY VERSUS ASSTT. COLLR. (HQ.) , C. EX. COLLECTORATE, COCHIN [ 1997 (2) TMI 97 - SUPREME COURT] , the confessional statement under Section 108 of Customs Act, 1962, if found to be voluntary, can form the sole basis of conviction and that the burden is on the accused to prove that the statement was obtained by threat, duress or promise. The entire case is based on facts and statements of the appellants coupled with documentary evidence about purchase of gold in Dubai and how its purchase/smuggling was facilitated by the appellants and the role played by each one of them has been discussed in detail in order-in-original - further, the penalties imposed on Shri Pardeep Saini and Shri Rakesh Rai amounting to Rs. 15,00,000/- each is on the higher side which is reduced to Rs. 5,00,000/- in each case. Appeal disposed off.

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• 2023 (10) TMI 179
  Suspension of license of Customs Broker - Violation of principles of natural justice - no proper notice about the SCN which was issued by DRI which was the basis for these proceedings was given to the appellant - Mis-declaration of value and description of goods - willful misstatement and suppression with an intent to evade payment of customs duty - HELD THAT:- It is observed that all the six importing firms herein had duly applied for IEC and the Directorate General of Foreign Trade issued IEC. Though Shri Sandeep Jain was taking care of the transactions of these firms. These statements have been the sole basis for the order under challenge. It is observed from the statement of Shri Anil Ahuja, Proprietor of M/s. Durga Enterprises that he has deposed about the impugned imports to have been made at the instance of Shri Sandeep Jain who only had interacted with the exporters, negotiated the prices and had done everything required for importing the Vontron RO machines. However, he simultaneously has deposed that the IEC is obtained in the name of his firm with his consent as he got convinced with the offer given to him by Shri Sandeep Jain that he has not to take any troubles and pains and efforts of importing things except allowing the goods to have been imported on his IEC code against receiving 5% of the profits. This deposition of Shri Anil Ahuja of M/s. Durga Enterprises has fully been corroborated by Shri Sandeep Jain himself. Further perusal of statement of appellant himself reveals that he had met the proprietors/IEC holders of four impugned importing firms M/s. Arvi International, M/s. Sunshine Enterprises, M/s. Swift Enterprises and M/s. Durga Enterprises. He deposed that KYC of four of these firms was done by him. For completing the said procedure, he met four of the IEC holders at his office, verified all original documents i.e. IEC, GST, Aadhaar Card, PAN Card, cancelled checks and bank statements. From the statements on record there is apparent consensual arrangement between Shri Sandeep Jain and the IEC holders which has nowhere been barred under CBLR, 2018. In any circumstance CB/appellant cannot be held responsible for the reason that admittedly he is not the party to the alleged mis-declaration and undervaluation nor department could produce any evidence that the appellant had been a beneficiary of this arrangement. The exports for these two firms also have been made during the same proximity of time and imported goods have been transported through the same transporter Vijay Transport Company to the same godown at Paschim Vihar and Mundka Village in Delhi where used to go the imported goods of remaining importing firms. These godowns have been acknowledged by Shri Sandeep Jain. In the given circumstances irrespective Shri Sandeep Jain is admittedly the beneficiary of imports made by six importers but the fact remains is that all importers have requisite documents, all of them are actually existing and it was a consensual arrangement between them and said Shri Sandeep Jain with no benefit to the appellant out of the said arrangement. Appellant otherwise was admittedly having all the requisite documents of these importing firms which he admittedly produced before the department. Thus, the appellant has not violated Regulation 10 (n) of CBLR, 2018. The adjudicating authority has failed to appreciate the statements on record - if the statements would have been read as a whole, apparently there is no violation of 10(d) and 10(n) of CBLR, 2018 is observed to have been committed by the appellant - appeal allowed.

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• 2023 (10) TMI 178
  Condonation of delay in filing refund claim - condonation sought on the ground that refund claim filed in a wrong jurisdiction - HELD THAT:- If the refund of duty paid was filed by an assessee in the wrong jurisdiction before an authority who not competent to entertain the refund claim, that too within the time limit, the said authority must transfer the application for refund claim to the competent authority, as has been correctly done in this case. As rightly held in the impugned order, the period during which the claim remained with the wrong jurisdictional authority should not be considered for calculating the time limit. The Hon ble Apex Court in The State of Jharkhand and others v. Brahmaputra Metallics Ltd and others [ 2020 (12) TMI 1241 - SUPREME COURT ] held that a decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred. Rejecting the refund claim simply on the ground of delay in filing the claim before the proper authority while admitting that the appellant had filed the claim before the department on time, albeit at a wrong jurisdiction cannot be approved - Appeal dismissed.

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• 2023 (10) TMI 177
  Revocation of Customs Broker License - Forfeiture of Security deposit - levy of penalty under Regulation 18 read with Regulation 14 of CBLR, 2018 - fraudulent import - illegal clearance of consignment having cigarette - HELD THAT:- In the present case Sunil Dutt G- card holder in connivance with other accused managed to illegally cleared the consignment having cigarette and later deleted all the whatsapp chat/call records in connivance with their crime partners. It is found that Sunil Dutt has categorically admitted in his statement that he has not obtained any KYC documents from the actual importer and all the documents including the KYC were given to him by Sandeep Kumar inspector and he has never contacted and met the actual importer at any point of time. Thereby, he has violated the regulation 10(n) which prescribed that the custom broker has to verify correctness of the importer exporter code (IEC) number, goods and services tax identification number (GSTIN), identify of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. The appellant had failed to verify the correctness of IEC, identity and whereabouts of the firms with authentic data and information thereby violating the obligations cast upon it under Regulation 10 (n) of CBLR 2018. From the evidence on record, it appears that the custom broker was having the knowledge that container does not contain the scrap but something else. It is also fact that Sunil Dutt informed the CGST team after the goods were cleared and thereafter the CGST department seized the goods when the same was in transit. Therefore, there is no doubt he has helped the Custom Department to confiscate the illegal smuggled items which was cleared without payment of duty and without examination. There is no doubt that the appellant has not performed his duty with due diligence and utmost efficiency and has connived with Sandeep Kumar inspector and Rambir Superintendent in illegally clearing the consignment having cigarette and later on deleted all the whatsapp chats/call records with their crime partners which clearly shows that he has not fulfilled the obligation under regulation 10 of CBLR, 2018 but his act and conduct does not warrant the imposition of extreme penalty of revocation of custom broker licence depriving him of his livelihood. But certainly his conduct warrants, the imposition of penalty and forfeiture of security deposit. The revocation of custom broker licence of the appellant is not warranted and revocation is set aside - As far as the imposition of penalty and forfeiture of security deposit are concerned, the imposition of penalty of Rs. 50,000/- and forfeiture of security are justified in the facts and circumstances of the case. Appeal allowed in part.

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• Corporate Laws

• 2023 (10) TMI 155
  Condonation of delay in filing application - extension due to Covid-19 pandemic - period of 30 days to file the written statements had expired on 08.03.2020 - whether the High Court justified in rejecting the application for extension of time dated 20.01.2021 and in not taking the written statements on record? - HELD THAT:- The very basis of the judgment in Sagufa Ahmed [ 2020 (9) TMI 713 - SUPREME COURT] that under the 23.03.2020 order, only the period of limitation has been extended and not the period up to which delay can be condoned, has been taken away by expanding the protection by excluding the period even for computing outer limits within which the court or tribunal can condone delay. This is an important subsequent aspect which has a great bearing in deciding the present controversy. Prakash Corporates case [ 2022 (2) TMI 1268 - SUPREME COURT] also notices the fact that the order of 08.03.2021 and subsequent orders also by a Bench of three Hon ble Judges were not and could not have been available for the Bench which decided Sagufa Ahmed s case since Sagufa Ahmed s case was decided on 18.09.2020. In Prakash Corporates, though the period of 30 days for filing written statements expired on 05.02.2021 and the 120-day outer limit expired on 06.05.2021, written statements notarized on 07.07.2021 was directed to be taken on record. The Court in Prakash Corporates relied on the orders of 23.03.2020, 08.03.2021, 27.04.2021 and also noticed the order of 23.09.2021 while so ordering. While summons was served on 07.02.2020, the 30 days period expired on 08.03.2020 and the outer limit of 120 days expired on 06.06.2020. The application for taking on record the written statements and the extension of time was filed on 20.01.2021. Applying the orders of 08.03.2021 and the orders made thereafter and excluding the time stipulated therein, the applications filed by the applicants on 19.01.2021 are well within time. The judgment passed by the High Court needs to be set aside. The principle underlying the orders of this Court dated 08.03.2021, 27.04.2021 and 23.09.2021, in In Re: Cognizance for Extension of Limitation, albeit those orders being passed, subsequent to the impugned order, would enure to the benefit of the applicants-defendants. The Appeals are allowed.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 176
  Application for recalling an order passed by five-member bench of NCLAT in UNION BANK OF INDIA (ERSTWHILE CORPORATION BANK) VERSUS DINKAR T. VENKATASUBRAMANIAN ORS. [ 2023 (7) TMI 308 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] where the matter was referred to Larger Bench - HELD THAT:- Since the Financial Creditors of M/s Amtek Auto Limited were not a party before this Tribunal when it was considering CA(AT)(Insolvency) No. 729 of 2020 which was disposed off in UNION BANK OF INDIA (ERSTWHILE CORPORATION BANK) VERSUS MR DINKAR T. VENKATASUBRAMANIAN, DVI PE (MAURITIUS) LTD, DECCAN VALUE INVESTORS LP [ 2022 (1) TMI 1382 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI , by which the Resolution Professional was directed not to deduct the amount of Rs. 34 crores, it was necessary that the Financial Creditors of M/s Amtek Auto Limited (who comprised the CoC) should have been heard before making an order, which was a variance with the commercial decision of the CoC. In doing so, this Tribunal did not follow the dictum that no one shall be Condemned unheard . The judgment of three-member bench of this Tribunal in [ 2022 (1) TMI 1382 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI ] is hereby recalled - application disposed off.

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• PMLA

• 2023 (10) TMI 175
  Money Laundering - Corruption - bribery along with criminal conspiracy - constitutional validity of Section 19 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The failure of the appellants to respond to the questions put to them by the ED would not be sufficient in itself for the Investigating Officer to opine that they were liable to be arrested under Section 19, as that provision specifically requires him to find reason to believe that they were guilty of an offence under the Act of 2002. Mere non-cooperation of a witness in response to the summons issued under Section 50 of the Act of 2002 would not be enough to render him/her liable to be arrested under Section 19. As per its replies, it is the claim of the ED that Pankaj Bansal was evasive in providing relevant information. It was however not brought out as to why Pankaj Bansal s replies were categorized as evasive and that record is not placed before us for verification. In any event, it is not open to the ED to expect an admission of guilt from the person summoned for interrogation and assert that anything short of such admission would be an evasive reply . In Santosh S/o Dwarkadas Fafat vs. State of Maharashtra [ 2017 (10) TMI 1478 - SUPREME COURT] , this Court noted that custodial interrogation is not for the purpose of confession as the right against self-incrimination is provided by Article 20(3) of the Constitution. It was held that merely because an accused did not confess, it cannot be said that he was not co-operating with the investigation. Similarly, the absence of either or both of the appellants during the search operations, when their presence was not insisted upon, cannot be held against them. In Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT] , this Court held that non-supply of the ECIR in a given case cannot be found fault with, as the ECIR may contain details of the material in the ED s possession and revealing the same may have a deleterious impact on the final outcome of the investigation or inquiry. Having held so, this Court affirmed that so long as the person is informed of the grounds of his/her arrest, that would be sufficient compliance with the mandate of Article 22(1) of the Constitution. There is no valid reason as to why a copy of such written grounds of arrest should not be furnished to the arrested person as a matter of course and without exception. There are two primary reasons as to why this would be the advisable course of action to be followed as a matter of principle - In the case on hand, that is the situation insofar as Basant Bansal is concerned. Though the ED claims that witnesses were present and certified that the grounds of arrest were read out and explained to him in Hindi, that is neither here nor there as he did not sign the document. Non-compliance in this regard would entail release of the arrested person straightaway, as held in V. Senthil Balaji [ 2023 (8) TMI 410 - SUPREME COURT] . Such a precarious situation is easily avoided and the consequence thereof can be obviated very simply by furnishing the written grounds of arrest, as recorded by the authorized officer in terms of Section 19(1) of the Act of 2002, to the arrested person under due acknowledgment, instead of leaving it to the debatable ipse dixit of the authorized officer. To give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, it is held that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception - Further, the clandestine conduct of the ED in proceeding against the appellants, by recording the second ECIR immediately after they secured interim protection in relation to the first ECIR, does not commend acceptance as it reeks of arbitrary exercise of power. In effect, the arrest of the appellants and, in consequence, their remand to the custody of the ED and, thereafter, to judicial custody, cannot be sustained - the impugned order set aside - appeal allowed.

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• Service Tax

• 2023 (10) TMI 174
  Invocation of extended period of limitation - non-payment of service tax - activity of take-away of food (take-away food items over the counter and not serving on the tables) - rent shared by the associated enterprise - privity of contract - composite services - period involved in the appeal is from April 2014 to June 2017 - it was held by CESTAT that demand on above services do not sustain. HELD THAT:- There are no merit in the civil appeal. Hence, the civil appeal is dismissed.

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• 2023 (10) TMI 173
  Levy of Service tax - auctioneer s service - assessee, a Co-operative Society, is conducting auction of various commodities for which they receive consideration labelled as commission/service charges - Business Support Service - Renting of Immovable Property Service. Auctioneer s service - Business Support Service - HELD THAT:- Since these issues have been considered and decided in favour of the taxpayer. Nothing is brought on record by the Revenue as to any appeals filed or any stay orders by higher courts against the orders of the co-ordinate Benches in M/S. NAMAKKAL AGRICULTURAL PRODUCERS CO-OPERATIVE MARKETING SOCIETY VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [ 2023 (4) TMI 1077 - CESTAT CHENNAI] - Hence, it is held that the demands confirmed in the impugned Order-in-Appeal deserve to be set aside. Renting of Immovable Property Service - HELD THAT:- The very classification of renting of the above under renting of immovable property service is a misnomer and the consequent demand, therefore, can never be justified. Hence, this part of the demand as well as the impugned order set aside. Appeal allowed.

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• 2023 (10) TMI 172
  Disallowance of CENVAT Credit - availment of credit twice - non-production of any proof or evidence of reversal of cenvat credit taken inadvertently - HELD THAT:- It is a fact on record that the appellant has taken cenvat credit on advance payment made by them and the cenvat credit was also taken on full amount raised by the service provider, but later on the appellant has availed less cenvat credit on the amount equivalent to the amount of cenvat credit pertaining to the advance paid by them. As this fact has not been disputed by either of the sides, therefore, it is concluded that the appellant has reversed the excess cenvat credit and are not liable to reverse the cenvat credit again. There is ample cenvat credit lying in the cenvat credit account, therefore, no payment of interest is required to be made by the appellant in the light of the decision of the Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT ], wherein the Hon ble High Court has held that once the entry was reversed, it is as if that the Cenvat credit was not available. No penalty is imposable on the appellant - Impugned order set aside - appeal allowed.

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• 2023 (10) TMI 171
  Levy of service tax - construction of residential complex in respect of works contact - construction of residential complex under GnnRUM Scheme for Surat Municipal Corporation - HELD THAT:- The works contract service of construction of residential complex for JawaharLal Nehru Urban Renewal Mission (JnRUM) is not liable to service tax being not a commercial in nature. This issue has been considered by this Tribunal in various judgments. One of the judgment of RJP INFRASTRUCTURE PVT LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 023 (9) TMI 1281 - CESTAT AHMEDABAD ], this Tribunal considering various earlier judgments held that the service in question is not liable for service tax. Thus, it is settled that construction of residential complex under GnRUM Scheme is not liable to service tax. Accordingly, the demand in the present case is not sustainable. Hence, the impugned order is set aside. Appeal is allowed.

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• 2023 (10) TMI 170
  Refund claim - transfer of technology - Export of Service or not - technical knowhow transferred by them to a recipient in Singapore wherein consideration was received in US Dollar - HELD THAT:- An identical issue has been decided by Tribunal in the case of M/S. MUNJAL SHOWA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, DELHI (GURGAON) AND (VICE-VERSA) [ 2017 (6) TMI 819 - CESTAT CHANDIGARH ]. In the said decision following has been observed that Admittedly, Trade Mark rights which have been used by the appellant-assessee are not registered in India, therefore, the same are not liable to tax under IPR service. It can be seen from the decision of Tribunal in the case of Munjal Showa Ltd. that to qualify as Intellectual Property Right, the said right should be protected by some law for the time being in force within India. It is seen that Revenue has not pointed out any law under which the said technical knowhow being transferred to Sicgen Singapore is protected. In absence of any clear evidence of the said knowhow being protected by any law, the same cannot qualify as Intellectual Property Right and therefore, no tax can be levied of such transfer of technical knowhow under the head of Intellectual Property Service . Thus, no tax was leviable on the said transaction under the head of IPR - appeal allowed.

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• 2023 (10) TMI 169
  Levy of Service Tax - corporate guarantee for associate enterprise - appellant claims that it has not received any consideration from the associated enterprise for providing the corporate guarantee - HELD THAT:- This issue has been decided by the Supreme Court in COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S EDELWEISS FINANCIAL SERVICES LTD. [ 2023 (4) TMI 170 - SC ORDER] where it was held that This was a case where the assessee had not received any consideration while providing corporate guarantee to its group companies. No effort was made on behalf of the Revenue to assail the above finding or to demonstrate that issuance of corporate guarantee to group companies without consideration would be a taxable service. In these circumstances, in view of such conclusive finding of both forums, there are no reason to admit this case. The order impugned in this appeal cannot be sustained - Appeal allowed.

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• Central Excise

• 2023 (10) TMI 168
  Precedent decision - Learned Additional Solicitor General appearing for the appellant submitted that the observations of the Tribunal in paragraph 12 of the impugned final order M/S BIRLA CORPORATION LIMITED VERSUS COMMISSIONER, CGST CENTRAL EXCISE, JABALPUR (M.P.) [ 2023 (3) TMI 1067 - CESTAT NEW DELHI] would become a precedent in subsequent cases as those observations are general in nature and, therefore, would be followed by the Tribunal in other cases. HELD THAT:- The said contention of learned ASG cannot be agreed for the simple reason that those observations have been made in the context of what has been stated by the Tribunal in paragraph 13 of the impugned final order wherein details of as many as five audits for the relevant periods have been noted by the Tribunal and, therefore, in the facts and circumstances of the said case, the Tribunal held that the Department could not have the benefit of the extended period of limitation. Appeal dismissed.

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• 2023 (10) TMI 167
  100% EOU - Import of Cotton contained in Cotton Waste which is subsequently cleared at NIL rate of duty - Fulfilment of conditions of Exemption Notification No. 23/03-CE dated 31.03.2003 or not - benefit of N/N. 53/97 dated 03.06.1997 Notification No. 52/03- Cus dated 31.03.2003. HELD THAT:- It is not in dispute that the assessee s unit is an export-oriented unit (EOU) since the year 1997, hence, being entitled to the benefits as conferred under the EXIM policy. It also appears to be not in dispute that the assessee was clearing cotton waste which was generated from the process of manufacturing of cotton yarn. Thus cotton waste was not the product for which the LOP was granted. Such cotton waste was excisable and the rate of duty specified for cotton waste being Nil, also appears to be not in dispute. Even otherwise, in respect of cotton waste generated in a 100% export-oriented unit, the rate of duty was Nil as specified in Notification No. 23/2003 dated 31 March, 2003 being General Exemption No. 32 - Also cotton waste being excisable was classified under Heading no. 52.02 under Chapter 52 of the Central Excise Tariff Act 2001-2002 at Nil Page 12 of 17 rate of duty. It thus appears that on clear application of Notification No. 23/2003-CE dated 31 March, 2003 as also Notification No. 52/2003-Cus dated 31 March, 2003, the cotton waste as generated in the assessee s unit and as cleared in the domestic tariff area, although excisable fell under the category of Nil duty. The CESTAT was thus correct in observing that when a manufacturer sets out to produce waste which is only incidentally generated in the process of manufacture of finished goods, the law would regard such waste as excisable goods, however, being exempted by application of notifications as discussed above, which permitted clearance into the domestic tariff area by adhering to the prescribed procedure - Once the notification(s) as discussed hereinabove provided Nil rate of duty in respect of such goods incidentally produced or manufactured by 100% export oriented unit and allowed it to be sold in the domestic tariff area, no duty could be leviable thereon. Even otherwise not only the notification provided for exemptions but also the provisions of the Customs Tariffs Act provided for Nil duty. It is agreed that the observations of the Tribunal that the decision of the Supreme Court in Collector of Central Excise vs. M/s. Dhiren Chemicals Industries [ 2001 (12) TMI 3 - SUPREME COURT] ] would not apply to the present case. In any event, M/s. Dhiren Chemicals Industries was not a case which pertained to an export oriented unit. Such decision as rendered by the Constitution Bench of the Supreme Court had arisen in view of the conflict between the view taken in the decision of Collector of Central Excise, Patna vs. Usha Martin Industries [ 1997 (8) TMI 77 - SUPREME COURT] and the decision in Motiram Tolaram Anr. vs. Union of India Anr. [ 1999 (8) TMI 68 - SUPREME COURT] . The Constitution Bench resolved the conflict by holding that the conclusion reached in Usha Martin Industries (supra) that the exemption notification had imposed a condition on the export product should contain the raw materials on which an appropriate amount of duty of excise has already been paid, was not a correct view. The Tribunal in the case of Winsome Yarns Ltd. [ 2000 (10) TMI 406 - CEGAT, NEW DELHI] in similar circumstances, had held that when the exemption notification provide Nil rate of duty and as such no duty was payable by the appellant therein on the cotton waste falling under heading 52.02 of the Central Excise Tariff Act. It appears that the said decision has been accepted by the Department as there is no material placed on record that the said decision of the Tribunal was assailed much less reversed. The appeal does not involve any substantial question of law - Appeal dismissed.

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• 2023 (10) TMI 166
  Application under SVDLR rejected - Rejection of application on the ground that the issue was pending before the Settlement Commission - ineligibility in light of Section 125(1) (g) of the Finance Act (No. 2) of 2019 - HELD THAT:- In the perception of the respondents, the petitioner no. 1 was held ineligible in light of Section 125(1) (g) of the Finance Act (No. 2) of 2019. The stand of the respondents is misconceived. Though the petitioners had filed application before the Settlement Commission, the said application was already decided by the Settlement Commission in the year 2002. When there are arrears emerging out of orders of the Settlement Commission, the assessee is eligible under the scheme. Therefore though no appeal or reference were pending, here was a case where the Settlement Commission had passed a Final Order on 24.05.2002. MA was also disposed of on 20.07.2004, thus no case was pending. Even reading of the communication dated 06.03.2020 under the RTI Act would reveal that the benefit of the circular particularly para 10 has been extended to others. Once it is held that the petitioner no. 1 was entitled to the benefit of the scheme, petitioner nos. 2 to 4 would automatically be held entitled to the benefit thereof. The respondents are directed to accept the declarations filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 and issue consequential statements of estimated amount payable in Form SVLDRS-3 and on payment of the estimated amount by petitioner no. 1 issue discharge certificates in Form SVLDRS-4 to the petitioner nos. 1 to 4 - petition allowed.

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• 2023 (10) TMI 165
  Levy of penalty under Section 11AC of CentralExcise Act, 1944, Rule 25 and Rule 27 of Central Excise Rules, 2002 and Rule 15(2) of Cenvat Credit Rules, 2004 - appellant have defaulted the monthly payment of duty within the stipulated time period - subsequent payment of duty from CENVAT Credit - HELD THAT:- This is a simplicitor case of delayed payment of admitted excise duty liability on monthly basis. The appellant have never denied the liability and the entire transaction has been recorded in their books. Goods were cleared under invoices, therefore, it is not a case of avoidance or evasion of excise duty. In this fact the proviso to section 11A has no application as the appellant have never intention to evade the payment of duty. The ingredients provided under proviso to section 11A for invoking suppression, fraud mis-declaration etc. do not exist in this case. As per Rule 8 regarding monthly payment of duty also, there is no specific provision for imposition of penalty. There is only a requirement of payment of interest in case of delay. As regard, the utilization of cenvat credit for payment of duty during default period, the same has been held in favour of the assesseein the Indsur Global Limited case by the Hon ble Gujarat High Court, according to which the assessee is allowed to utilize the cenvat credit for payment of excise duty even during the default period. The entire penal provision was invoked on the basis that there is a non-payment of excise duty whereas the fact remains the appellant have already paid the major amount from cenvat credit and a small amount from cash and for the delay, interest was also paid. In this position, there are no penalty in regard to allegation of evasion of duty shall sustain. The penalties under Section 11AC of the Act, Rule 25 of Central Excise Rules, 2002 and Rule 15(2) of Cenvat Credit Rules, 2004 are not sustainable - there is lapse on the part of the appellant for delayed payment of duty for which penalty under Rule 27 is sufficient - there is admitted position that the appellant have been filing ER-1 returns belatedly which appellant supposed to file by 10th of following month and thereby contravened of provision of Rule 12 of Central Excise 2002. Therefore, for this lapse the appellant is liable to pay the penalty in terms of Rule 27 of Central Excise Rules, 2002. The penalty imposed for Rs. 60,000/- under Rule 27 of Central Excise Rules, 2002 is maintained - Appeal allowed in part.

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• 2023 (10) TMI 164
  CENVAT Credit on duty wrongly paid - Classification of goods - printing cylinder - classified under Chapter heading No. 84425010 or not - exemption under Notification No. 49/2006-CE dated 31.12.2006 - whether supplier of printing cylinder was not supposed to pay the duty as the same were exempted under Notification No. 49/2006-CE dated 31.12.2006? - HELD THAT:- From the clarification vide letter F. No. V/Tal/DFA/SCN/Accuprint/08-13-14 dated 08.08.2003 given to the supplier of the Rotogravure Printing Cylinder, there is no ambiguity that the supplier have correctly paid the duty without availing the Exemption Notification 49/2006-CE dated 30.12.2006. The entire basis for denial of the credit is on the view which was completely contrary to the clarification given in the above letter dated 08.08.2013. It is found that it is the supplier s Jurisdictional Officers who have to assess whether duty was correctly paid or otherwise and the same has been clarified by the supplier s jurisdictional officer. The jurisdictional officer of the appellant has no jurisdiction to question the assessment or correctness of the payment of duty. Thus, the appellant have correctly availed the cenvat credit on the Rotogravure Printing Cylinder supplied by M/s Accuprints System. Hence the demand is not sustainable - appeal allowed.

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• 2023 (10) TMI 163
  Valuation of goods - value of freight charged separately on the invoices has to be excluded from the assessable value or not - Rule 5 of the Central Excise (Valuation) Rules - non-speaking order - violation of principles of natural justice - HELD THAT:- The finding in the impugned order are not supported by the exact provisions / clauses of the contracts examined. It is not understood from which clause of the contract or purchase order these conclusions have been reached. The impugned order reaches to the conclusions without stating the exact provisions on the contract from which these conclusions have been reached. In this background, it is not found that the impugned order is a speaking order. The impugned order is therefore set aside and matter remanded to the Commissioner (Appeals) for fresh adjudication after giving exact reasons along with evidence for reaching the conclusions arrived at therein. Appeal allowed by way of remand.

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• 2023 (10) TMI 162
  Process amounting to manufacture - fitting the lens on to the frames to make spectacles that can be used by a customer - Department was of the view that after fitment of the lens in to the frames a distinct new marketable commodity viz. spectacle emerges - N/N. 16/2012-CE dated 17.03.2012 and at 6% (with CENVAT Credit) vide N/N. 19/2012 CE dated 17.03.2012 - HELD THAT:- As categorically held by the Hon ble High Court that the activity of fitting the power lens into the frames does not amount to manufacture. After appreciating the facts and evidence and also following the decision of the Jurisdictional High Court in the case of TITAN COMPANY LIMITED, M/S. PREMIER OPTICAL PVT. LTD., MRS. GEETANJALI D SOUZA PRABHU VERSUS COMMISSIONER OF CENTRAL EXCISE LTU, ADDITIONAL DIRECTOR GENERAL DIRECTORATE GENERAL OF CENTRAL EXCISE, CHAIRMAN CENTRAL BOARD OF EXCISE CUSTOMS DEPARTMENT OF REVENUE AND THE JOINT COMMISSIONER OF CENTRAL EXCISE, CHENNAI II [ 2021 (10) TMI 1029 - MADRAS HIGH COURT] , it is held that the activity does not amount to manufacture. The demand cannot be sustained. The issue on merits is answered in favour of the assessee and against the Revenue. Time Limitation - HELD THAT:- The department has derived the figures from the income tax returns filed by the appellant. Several audits were conducted as the appellant is registered with service tax commissionerate. Further the issue is purely interpretational in nature. There is no evidence that appellant has suppressed facts with intent to evade payment of duty. Taking these aspects in to consideration, the show cause notice issued invoking the extended period cannot sustain. The issue on limitation is answered in favour of assessee and against the department. The impugned order is entirely set aside. The appeals are allowed.

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• 2023 (10) TMI 161
  Rejection of request of provisional assessment - it is submitted that the Adjudicating Authority has passed the impugned order without verifying the records - violation of principles of natural justice - HELD THAT:- It is found that initially the request for provisional assessment made by the respondent was rejected. In consequent to that impugned show cause notice has been issued to the respondent for demand of differential duty arising on account of discounts offered to their buyers. Although, the request of provisional assessment has been admitted by this Tribunal but no proceedings were initiated against the respondent for provisional assessment. Further, in this case a show cause notice has been issued to the respondent which has been adjudicated by the Adjudicating Authority after verifying all the records as the Adjudicating Authority has confirmed part of the demand against the respondent and where they found the respondent is eligible and the respondent has rightly passed on the discounts to the buyers and thus, demand was dropped. There are no infirmity in the impugned order and we also take the note of the fact that the revenue have misunderstood the proceedings initiated against the respondent. In fact, the impugned show cause notice has been issued after rejecting the request of provisional assessment by the respondent. In that circumstances, the defence taken by the Revenue that the Adjudicating Authority has to first adjudicate the provisional assessment and thereafter do the finalization of provisional assessment is misconceived. The appeal filed by the Revenue is dismissed.

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• CST, VAT & Sales Tax

• 2023 (10) TMI 160
  Imposition/levy of entertainment tax by the petitioners - admission fee in the form of ticket to allow people to visit trade fairs / Pragati Maidan - grievance of the petitioners is that respondent No. 1 was initially exempted from payment of entertainment tax for several years but a policy decision was taken on 18 November 1996 by the Competent Authority and exemption from payment of entertainment tax was withdrawn - HELD THAT:- A careful perusal of the various provisions would show that Section (6) is the charging Section whereby the government may prescribe a levy of entertainment tax on all payments for admission to any entertainment , while Section 15 of the Act lays down the procedure for the assessment of tax. A bare perusal of unamended Section 2(a) of the Act, which would be applicable in this case, as it stood prior to the amendment w.e.f. 01 February 2010 would show that it is an inclusive definition defining admission to any place in which entertainment subject to the context in which it comes for consideration that may provide otherwise. Further, a bare perusal of the Section 2(i) of the Act would show that the definition of the word entertainment is a restricted one to mean any exhibition, performance, amusement, game, sport, or race, further extending the meaning of entertainment to cinematographic exhibitions. In the case of GEETA ENTERPRISES AND OTHERS VERSUS. STATE OF U.P. AND OTHERS [ 1983 (9) TMI 319 - SUPREME COURT] , the Supreme Court had an occasion to interpret the word Entertainment as used in Section 2(3) of the United Provinces Entertainment and Betting Tax Act, 1937, which defined the word entertainment to include any exhibitional, performance, amusement, game or sport to which persons are admitted for payment. The issues arose in the background of the factual matrix where the assessee/petitioner permitted persons to enter the premises without any charge to view a show on the video which consisted mainly of sports, games etc. played on the screen of the video. It was canvassed that the petitioner was not charging any admission fee but the electronic machines imported from Japan having educational value for persons playing the games were meant to provide educational entertainment by showing sea warfare, battle field, space warfare, sports and many other things which were likely to provide both education and entertainment to the viewers, particularly to young children. In the case of HOTEL RAJDOOT PVT. LTD. VERSUS UNION OF INDIA (UOI) AND ORS. [ 2008 (8) TMI 1022 - DELHI HIGH COURT] , the question for determination was whether the petitioner was liable to pay entertainment tax on the payment received for admission to Pussycat Discotheque in its Hotel under the provision of U.P. Entertainment and Betting Tax Act, 1937, as extended to Union Territory of Delhi in which Section 3(1) was the charging Section. Section 2(3) of the above mentioned Act defined the word entertainment to include any exhibition, performance, amusement, game or sport to which persons are admitted for payment - It was held that entertainment tax was leviable on the coverage/fixed entry charges to access to the discotheque, this Court out rightly rejected the plea by the petitioner that the primary object of running the Pussycat discotheque was to provide a different menu and atmosphere to the customers. The Court found no merit in the plea that only couples were permitted entry so that there could be an element of privacy. It was held that the petitioner was charging entry fee and the serving of meals and alcohol undoubtedly had an element of amusement as the customers were not only enjoying music but also dancing on the floor. There are regulated hours for the purposes of trade and commerce, where the main purpose apparently is promotion of trade and business, however there is no challenge to the fact that entry of general public is not restricted, and people of all ages and genders visit the site for a variety of gratification, entertainment or amusement on payment of additional or higher charges/fee. It is pertinent to mention here that the assessee may also be imposed with a levy of entertainment tax wherever people are allowed free of charge inside the complex by virtue of Section 14 of the Act. The impugned order dated 30 November 2007 passed by the FC cannot be sustained in law - Petition allowed.

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• 2023 (10) TMI 159
  Benefit of Central Sale against I Form C provided - HELD THAT:- It is admitted that the sales have been disclosed by the revisionist through 23 invoices for a sum of Rs. 2,11,47,201/- to M/s Yash Traders, for which one Form C No. 4930498 has been submitted, but on verification from the corresponding State, i.e., Rajasthan, the information was given that the purchasing dealer has only shown purchase against one invoice no. 45 dated 12.12.2013 for a sum of Rs. 2,75,049/-. The benefit of concession has been given to the revisionist for the said invoice. So far as other 22 invoices are concerned, the same have been disbelieved. The present proceeding is an original proceeding, i.e., the revisionist is claiming concession rate on the strength of Form C. Once the corresponding State authority has sent information that only one purchase made by the purchasing dealer could be verified, the benefit of other purchases as alleged to be made by the revisionist against the said Form C cannot be granted. The onus is upon the dealer to prove its case beyond doubt when the dealer is claiming concession rate of tax. The said onus has not been discharged by the revisionist. The Supreme Court in the case of ITC. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [ 2004 (9) TMI 103 - SUPREME COURT ] has held that the Assessing Authority is competent to scrutinize the certificate to find out the contents to be genuine and he is competent to inquire about the contents of the certificate to satisfy himself that the goods purchased are verifiable and once the truth of declaration on verification was not found to be correct, the benefit cannot be granted. The judgement relied upon by the revisionist in Star Paper Mills Limited [ 2003 (10) TMI 625 - ALLAHABAD HIGH COURT ] is of no aid to it as in the said case, in the first paragraph of the judgement itself it has been mentioned that reassessment proceedings for the assessment year 1984-85 have been initiated under section 21 of the U.P. Sales Tax Act. When the reassessment proceedings are being initiated, the burden is shifted to the Revenue, but in the original proceeding, the onus is upon the dealer to discharge beyond doubt the claim so made. The revisionist has failed to discharge its burden by any cogent material - revision dismissed.

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• 2023 (10) TMI 158
  Classification of goods - Bakery Shortening and Vanaspati (Hydrogenated Vegetable Oil) - both are one and the same commodity or not - whether bakery shortening should be covered under Entry 130, Part A, Schedule II of UP GST Act or to be taxed as unclassified goods at a higher rate of tax, i.e., 12.5%? HELD THAT:- After considering various materials brought on record from the stage of Assessing Authority to the stage of Tribunal, the Assessing Authority brushed aside the evidence brought on record and levied higher rate of tax, which has been turned down by the appellate authority after due consideration of materials on record, holding that bakery shortening is one and the same thing as vanaspati. The Apex Court in Mauri Yeast India Private Limited [ 2008 (4) TMI 101 - SUPREME COURT ] has specifically held that if there is a conflict between the two entries, one which favours the assessee must be followed. he judgement relied upon by the Revenue of the Kerala High Court in the case of M/s Parisons Food Private Limited [ 2018 (1) TMI 1195 - KERALA HIGH COURT] is distinguishable and not applicable in the present case, since the entries in both the Kerala VAT Act/UP VAT Act are different. Under the aforesaid case, entry of others , including vanaspati was interpreted by the Kerala High Court by holding that the general word other is followed by the specific word including vanaspati . Hence, the definition is exhaustive, coupled with the fact that 8 digit HSN Code is provided against the said entry under the Kerala VAT Act, while under the UP VAT Act, entry is Vanaspati (hydrogenated vegetable oil) , which is specific word being followed by general words. Further, the notifications dated 16.12.1998 and 30.04.2003 issued by the Government of India were not placed for consideration before the Kerala High Court, wherein, it has been acknowledged by the Government of India that bakery shortening means and is commonly known as vanaspati . The revision fails and is hereby dismissed.

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• 2023 (10) TMI 157
  Revision of assessment - revision sought on the premise of non-disclosure certain transactions of sales - time limitation - HELD THAT:- This Court finds that the submission of the respondent that limitation must be reckoned from the date of assessment i.e., 25.01.2016 is misconceived. The above submission overlooks the fact that in view of the deeming contained in Section 22 of the TNVAT Act the petitioner must be deemed to have been assessed on 31.10.2012. In view thereof, the order dated 25.01.2016 itself is a reassessment traceable to Section 27 of the TNVAT Act. The present proceeding is also traceable to Section 27 of the TNVAT Act. Though exercise of power of assessment / reassessment under Section 27 of the TNVAT Act would not result in exhaustion of the power and it is open to exercise the power vested under Section 27 of the TNVAT Act on more than one occasion - though there is no limitation as to the number of occasions the power of assessment / reassessment under Section 27 of the TNVAT Act may be exercised. However, any such exercise ought to be made within the period of six years from the date of original assessment including deemed assessment as stipulated under Section 27 of the TNVAT Act. The submission of the learned counsel for the respondent that by participating in the assessment proceeding, the petitioner must be understood to have waived his right to question the impugned proceeding which is otherwise barred by limitation, is unsustainable. Since, limitation relates to jurisdiction which cannot be conferred by consent, waiver or acquiescence. The impugned order being barred by limitation is thus a nullity. This Court finds that the impugned proceeding is barred by limitation and thus the impugned proceeding is set aside - Petition disposed off.

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• Indian Laws

• 2023 (10) TMI 156
  Extension of time limit - Seeking directions to Union Bank of India (original Appellant) to issue Sale letter in favour of the Applicant - whether the extension of time sought by the Applicant in the successive applications was permissible in the eye of law? - whether the Applicant had in fact complied with the orders passed by the Court from time to time in the said applications? HELD THAT:- It is well settled proposition of law that when a statute requires a particular thing to be done in a particular manner, it must be done in that manner or not at all, and other methods of performance are necessarily forbidden. In the instant case, out of the total bid amount of Rs.65.62 Crores finalized on the date of auction sale i.e., 11.11.2019, the Applicant had deposited an amount of Rs.31,20,50,000/- (Rupees Thirty-One Crores Twenty Lakhs Fifty Thousand) only with the bank and was required to deposit the balance amount with the authorized officer of the bank on or before the fifteenth day of the confirmation of sale of the subject property i.e., on or before 26.11.2019 as per Rule 9(4) of the said Rules. However, this Court while disposing of the said Civil Appeals in UNION BANK OF INDIA VERSUS RAJAT INFRASTRUCTURE PVT. LTD. ORS. [ 2020 (3) TMI 76 - SUPREME COURT] permitted the Respondent No.6 (Applicant herein) to deposit the balance of sale amount till 20.03.2020 - the Applicant did not deposit the balance sale amount on or before 20.03.2020. Thereafter, the Applicant projecting the cause of Covid-19, sought extension of time for payment of the balance sale price by filing the M.A. No.894 of 2020. The court in UNION BANK OF INDIA VERSUS RAJAT INFRASTRUCTURE PVT. LTD. ORS. [ 2020 (3) TMI 76 - SUPREME COURT] , extended the date upto 30.04.2020, clarifying that no further extension shall be granted. The extension of time granted by the court vide the order dated 12.05.2020, which was selflimiting, had lapsed or expired at least by 30.04.2022 as per the version of the Appellant Bank. Thereafter, there was no order passed by the court specifically extending the time limit. Significantly, there is no clarification made by the Applicant M/s. Sunview Assets Pvt. Ltd., as to how the deposit of Rs.34,41,50,000/- on 22.07.2022 and the deposit of Rs.7,17,02,859.45/- on 26.08.2022 made with the Appellant Bank were in due compliance of the orders passed by the Court from time to time and particularly of the order dated 12.05.2020. The submission of the Applicant that this Court should treat the deposits made by the Applicant on 22.07.2022 and on 26.08.2022 as due compliance of the order dated 12.05.2020, extending the time limit by exercising the inherent powers of the Supreme Court under Article 142 of the Constitution of India or exercising the powers conferred on the court under Section 148 of the Civil Procedure Code, cannot be accepted in view of the statutory provision contained in Rule 9 of the said Rules - The plenary powers of the Supreme Court under Article 142 are inherent in nature and are complementary to those powers which are specifically conferred on the court by various statutes. These powers though are of a very wide amplitude to do complete justice between the parties, cannot be used to supplant the substantive law applicable to the case or to the cause under consideration of the court. There is nothing on record to suggest as to whether the Respondent No.1 Rajat Infrastructure Pvt. Ltd. and Others had preferred any appeal before the DRAT in view of the order passed in UNION BANK OF INDIA VERSUS RAJAT INFRASTRUCTURE PVT. LTD. ORS. [ 2020 (3) TMI 76 - SUPREME COURT] , and if preferred whether the same is pending or not. There is also no clarity about the final outcome of the main Security Application preferred by the Respondent No.1 Rajat Infrastructure Pvt. Ltd. and Others before the DRT. The instant Miscellaneous Application being not maintainable cannot be entertained and deserves to be dismissed - Application dismissed.

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• 2023 (10) TMI 154
  Charging Lease transfer fee - Amalgamation of company - Claim of transfer fees by the respondent no.1 - petitioners submits that the stipulation of taking prior approval before entering into a scheme of amalgamation is neither a pre-condition nor is mandatory, inasmuch as no penal consequence is specified for non-compliance of the same - HELD THAT:- In the present case, nothing has been produced by the respondents to rebut the contention of the petitioners that the companies among which there was an amalgamation of the petitioners are group companies of the petitioner no.1. The annexures to the writ petition indicate that the shareholding and Board of Directors were common between the said companies. Hence, the amalgamation of the petitioner no.1 squarely comes within the exception clause carved out of transfer as per the General Policy of the respondent no.1 itself. The respondent no.1 is not entitled to claim transfer charges, as applicable to other entities, in case of the petitioners. Only the processing fee of Rs.10,000/- can be claimed by the respondent no.1. Whether such transfer is between entities identical on point of shareholding and directorship, thus coming within the exclusion contemplated in the General Policy and minutes of meeting of the WBSIDCL itself, as annexed to the opposition of the WBSIDCL - an amalgamation of the lessee within its group companies is not considered as transfer for the purpose of charging transfer fees under the said policy of the WBSIDCL. This Court is of the opinion that the respondent no.1 acted de hors its own General Policy and meeting resolutions in claiming full transfer fees from the petitioners by treating the amalgamation between the petitioners no.1 and its companies as a transfer within the contemplation of the General Policy of the respondent no.1, although it falls within the exception clause thereof. Petition allowed.

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• 2023 (10) TMI 153
  Dishonour of Cheque - insufficient funds - amicable settlement of dues - compounding of offence - HELD THAT:- Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has amicably settled the matter with the complainant-respondent before the learned Mediator and as per the settlement the complainant-respondent has abandoned and relinquished all his rights and entitlements in respect of the cheque in question forming subject matter of the proceedings under Section 138 of the NI Act, the instant prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court in K. Subramanian Vs. R. Rajathi [ 2009 (11) TMI 1013 - SUPREME COURT ]. In view of the detailed discussion made hereinabove as well as law laid down by the Hon ble Apex Court, the present matter is ordered to be compounded, as per the terms and conditions, recorded by the learned Mediator and reproduced hereinabove. Accordingly, judgment of conviction, dated 31.05.2017, and order of sentence dated 02.06.2017, passed by the learned Judicial Magistrate First Class, Karsog, District Mandi, H.P., in Complaint No. 83 of 2014, and affirmed by the learned Additional Sessions Judge-I, Mandi, District Mandi, H.P., vide judgment dated 12.08.2022, in Criminal Appeal No. 51 of 2017, are quashed and set-aside and the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Taking into consideration the law laid down by the Hon ble Apex Court and the financial condition of the petitioner, as he is a poor person, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.5000/- (rupees three thousand) only with the H.P. State Legal Services Authority Shimla, H.P., within four weeks from today. Petition disposed off.

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