TMI Tax Updates - e-Newsletter
November 15, 2022

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. THE TRUE OBJECT OF APPEAL FUNCTIONS

   By: Sadanand Bulbule

2. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

3. STARTUP INDIA SEED FUND SCHEME – AN INITIATIVE TO SPUR ENTREPRENEURSHIP ACROSS INDIA

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. DEA, MoHUA and the World Bank Group jointly organise a 5-day Cities Creditworthiness Academy Workshop

2. Inflation falls to single digits; Annual rate of inflation based on all India Wholesale Price Index (WPI) number is 8.39% (Provisional) for the month of October, 2022 (over October, 2021) against 10.70% recorded in September, 2022

3. Repayment of ‘7% FERT COS GOI SPL BOND 2022’-Issue of Press Communique.

4. The world today recognises that India has arrived: Shri Piyush Goyal

Notifications

GST - States

1. 21/2022-State Tax - dated 10-11-2022 - Delhi SGST

Extends the due date for furnishing the return in FORM GSTR-3B for the month of September, 2022 till the 21st day of October, 2022.

Income Tax

2. 123/2022 - dated 14-11-2022 - IT

Control of income-tax authorities u/s 118 of IT ACT 1961 - Seeks to amend Notification No. 60/2022 dated the 10th June, 2022.

3. 122/2022 - dated 14-11-2022 - IT

Jurisdiction of income-tax authorities - Change in some Designation of the Income-tax Authorities, Headquarters and jurisdictions - Seeks to amend in Notification No. 51/2014 dated 22nd October, 2014

4. 121/2022 - dated 14-11-2022 - IT

Faceless Assessment proceedings - Income-tax Authorities of Units specified shall exercise the powers and functions of Assessing Officers concurrently - Seeks to amend Notification No. 61/2022 dated the 10th June, 2022.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2022/154 - dated 14-11-2022

Registration and regulatory framework for Online Bond Platform Providers (OBPPs)

Customs

2. Instruction No. 30/2022 - dated 14-11-2022

Requirement of Registration of foreign food manufacturing facilities as per Food Safety and Standards (Import) First Amendment Regulations, 2021 dated 03.11.2021

3. Instruction No. 31/2022 - dated 14-11-2022

Restricted entry of food items in under specific ports

Highlights / Catch Notes

GST

• Job Work for Chocolate and Confectionery Manufacturers Classified Under SAC 998816 at 5% Total GST Rate.

  Case-Laws - AAR : Classification of services - Job Work - work of Chocolate Manufacturers, Confectionery Manufacturers, Food Product Retailers, Sugar Coated Chocolate Manufacturers - the SAC of the Service Offered by applicant is “998816” i.e., “Other food product manufacturing services” and the rate of tax as seen from the above entry is 2.5 % CGST and 2.5% SGST - AAR
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• GST Printing Services Tax Rates Depend on Input Ownership: 2.5% or 9% CGST/SGST Since October 2021.

  Case-Laws - AAR : Classification of services - rate of tax - ervice of the printing - Where content as well as physical inputs are supplied by the recipient of printing services the rate of tax is 2.5% under CGST & SGST respectively - Where only content is supplied by the recipient of printing services, i.e., the publisher and the physical inputs used belong to the printer, the rate of tax on such service is 9% under CGST & SGST respectively w.e.f. 1.10.2021 - AAR
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Income Tax

• ITAT rules AMP expenses as legitimate business costs u/s 37(1), not capital, for advertising liquor. High Court agrees.

  Case-Laws - HC : Disallowance of AMP expenditure u/s 37(1) - Revenue expenditure or capital expenditure - advertising and promotion of liquor in India - ITAT has held that the AMP expenditure incurred by the Assesee was in the nature of bonafide business expenditure in furtherance of its legitimate business interests. - Order of ITAT allowing the deduction sustained - HC
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• Principal CIT's Section 263 revision deemed invalid; Assessing Officer's decision on Section 69A expenses upheld.

  Case-Laws - AT : Revision u/s 263 by CIT - Deduction of expenses from additional income (on money) declared u/s 69A - service tax which is related to “on money” and remuneration paid to partners - Since the order of the AO cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is “null” in the eyes of law - AT
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• Trust Approval u/s 80G(5) Effective from Start of Financial Year, Not Provisional Date.

  Case-Laws - AT : Approval of Trust u/s.80G(5) - To be effective from the first date of Financial Year or from the date of approval - approval was granted provisionally as on 23.09.2021 - assessee is entitled for approval w.e.f. 01.04.2021 and not from 23.09.2021. The provisions of the acts are clear and there is no ambiguity about it. - AT
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• Expenses for Abandoned Share Issue Qualify as Deductible u/s 37(1) for Business Purposes.

  Case-Laws - AT : Business expenditure u/s.37(1) - share issue expenses - assessee has abandoned the proposal to issue shares at later stage - when the nature of expenditure incurred by the assessee are Revenue in nature and further, said expenses has been incurred wholly and exclusively for the purpose of business, then said expenditure needs to be allowed as Revenue expenditure and deductible u/s.37(1) - AT
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• Tax Disallowance Reversed: Evidence Proves Harbor Expenses as Reimbursements, Not Direct Costs u/ss 40(a)(ia) and 194C.

  Case-Laws - AT : TDS u/s 194C - Disallowance u/s 40(a)(ia) - disallowance of Harbor expenses - although the assessee has filed various details including confirmation from the party and copies of debit notes to prove that it is a reimbursement but not direct expenses incurred by the assessee, the AO simply ignored all the evidences filed by the assessee and made additions - Additions deleted - AT
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• Revision u/s 263 Ordered Due to Inadequate AO Examination of Bio-Pharma R&D Deduction Claim.

  Case-Laws - AT : Revision u/s 263 - deduction claimed towards R&D expenditure incurred for Bio-pharma division - AO without considering relevant facts simply allowed the claim of the assessee. Therefore, in our considered view, the assessment order passed by the AO is erroneous and also prejudicial to the interest of the revenue, because the AO failed to carry out required inquires or verifications which should have been made in the given facts and circumstances of the case. - AT
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• Income Tax Officer's Share Premium Additions Deleted for Misapplying Section 56(2)(viib) Without Proper Consideration of Facts.

  Case-Laws - AT : Addition u/s 56(2)(viib) - share premium received - AO without appreciating above facts has simply made additions towards share premium on flimsy grounds by assigning grounds which are not relevant to consider share premium for the purpose of provisions of section 56(2)(viib) - Additions deleted - AT
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Customs

• Import of High-Risk Products Limited to 61 Ports; Includes Certain Foods per Recent Customs Circulars and Orders.

  Circulars : Import of specified high-risk products shall be permitted only through 61 ports - Restricted entry of food items - Order-Instruction
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• FSSAI Mandates Registration for Foreign Food Manufacturers per Import Regulations 2021; Compliance Essential for Importers.

  Circulars : Import of goods - Guidelines issued by FSSAI to be taken care of - the Requirement of Registration of foreign food manufacturing facilities as per Food Safety and Standards (Import) First Amendment Regulations, 2021 dated 03.11.2021 - Order-Instruction
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• Seized Vehicle Provisional Release Policy: Certificate Requirement Deemed Redundant, Not Essential for Import/Export Regulation Compliance.

  Case-Laws - AT : Provisional release of seized goods - Motor Vehicle - mandate to produce the certificate from the authority - The policy condition is not one incorporated merely for the sake of regulating imports and exports of the country but to ensure that the imported goods are compliant with the regulatory measures, other than that relating to imports and exports, under the municipal laws of the country. - The inclusion of this condition as necessary for provisional release is redundant and superfluous - AT
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• Show Cause Notice Validity Unchallenged After Duty & Penalty Paid, No Reassessment of SIIB Authority Needed.

  Case-Laws - AT : Jurisdiction to issue Show Cause notice - Illegal removal of goods from CFS - Pilfered goods - When the entire duty and penalty has been paid up by the respondent, there are no grounds to re-examine as to whether the SIIB was the proper officer to issue SCN. - The direction to remand the matter is totally unnecessary and uncalled for. - AT
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PMLA

• Insolvency Code vs. Money Laundering Act: Section 32A Limits PMLA's Power After Specific Conditions Met.

  Case-Laws - HC : Money laundering - provisional attachment orders - Non-obstante clause in the IBC and PMLA - overriding effect - the power to attach under the PMLA would not fall within the ken of Section 14(1)(a) of the IBC. Through Section 32A, the Legislature has authoritatively spoken of the terminal point whereafter the powers under the PMLA would not be exercisable. The events which trigger its application when reached would lead to the erection of an impregnable wall which cannot be breached by invocation of the provisions of the PMLA. - HC
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SEBI

• SEBI Establishes Regulatory Framework for Online Bond Platform Providers to Boost Non-Institutional Bond Market Growth.

  Circulars : Registration and regulatory framework for Online Bond Platform Providers (OBPPs) - the bond market offering tremendous scope for development, particularly in the non-institutional space - Circular
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Service Tax

• Service Tax Dispute on Business Support Services: Renting of Property and Supply of Tangible Goods Not Taxable at Relevant Time.

  Case-Laws - AT : Levy of service tax - Business Support Service - the activity of the appellant falls under renting of immovable property in respect of land/ plant, land fixed plant. In respect of movable machinery equipment, the activity at the best can be classified as supply of tangible goods for use. It is undisputed fact that both services became taxable after the relevant period in the present case - AT
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• Court Rules CBEC Lacks Authority to Modify Service Tax Exemption on Textbooks Without Maximum Retail Price.

  Case-Laws - AT : Exemption from service tax - Valuation of goods - text books - no maximum retail price printed - The impugned order passed denying the benefit of exemption notification relying upon the CBEC Circular dated 20.06.2003 cannot be sustained as the CBEC has no power to modify the scope of the exemption notification No. 12/2003-ST dated 20.06.2003 issued by the Central Government - AT
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Central Excise

• Appellant Granted Duty Remission for Lost Ayurvedic Medicines u/r 21 Due to Natural Causes and Fire Accident.

  Case-Laws - AT : Remission of duty - Ayurvedic medicines - The loss has occurred including the loss of finished goods due to natural causes and/or by unavoidable fire accident and further the partially damaged goods were rendered unfit for human consumption being medicines, and were also unfit for marketing - the appellant is entitled to remission as provided under Rule 21 of the Central Excise Rules, 2002. - AT
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• Minute Maid Nimbu Fresh, Nimbu Masala Soda, and Nimbooz classified as fruit juice-based drinks under Tariff Item No. 2202 90 20.

  Case-Laws - AT : Classification of goods - Minute Maid Nimbu Fresh (MMNF) - the three products MMNF, Nimbu Masala Soda and Nimbooz would classify under Tariff Item No. 2202 90 20 as fruit juice based drinks. - AT
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VAT

• Plaintiffs lack legal standing to contest property attachment for sales tax arrears; document in their name is void.

  Case-Laws - HC : Attachment of property - recovery of sales tax arrears - bonafide purchaser - the defendant took steps to attach the property, which is valid under law and the same cannot be questioned by the plaintiffs, as they have no locus standi and the alleged document stands in their name also void and non-est in law.- HC
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Case Laws:

• GST

• 2022 (11) TMI 630
  Classification of services - Supply of services or not - Job Work - work of Chocolate Manufacturers, Confectionery Manufacturers, Food Product Retailers, Sugar Coated Chocolate Manufacturers - HELD THAT:- The applicants are undertaking the work of Chocolate Manufacturers, Confectionery Manufacturers, Food Product Retailers, Sugar Coated Chocolate Manufacturers. They are Job Work provider doing job work of manufacturing chocolates (food product falling under Chapter 19 of customs tariff Act) with inputs provided by the job work receiver . The final product is also owned by the applicants supplier - the supply of the applicant is that of supply of Service . From SAC 9988, it is clear that this heading covers those services characterized as outsourced portions of a manufacturing process. In the case at hand, the job work done by the applicant is a portion of manufacturing process of the customer of the applicant and therefore, the activity of the applicant is covered under SAC 9988 - the activity of undertaking manufacturing services by a registered person on the physical inputs owned by another registered person is a Job work . In the case at hand, the applicant is a registered person and when he undertakes work on the goods belonging to another registered person, then the nature of work of the applicant is job work . The SAC of the Service Offered by applicant is 998816 i.e., Other food product manufacturing services and the rate of tax as seen from the above entry is 2.5 % CGST and 2.5% SGST.

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• 2022 (11) TMI 629
  Classification of services - rate of tax - principal supply - composite supply - service of the printing in cases where content is supplied by the recipient along with raw materials such as paper cover board - HELD THAT:- Since the printing would be the principal supply of the composite supply, in these cases, the entire composite supply would be treated as a supply of services by way of printing (principal supply) and the tax rate applicable to such printing would be applicable on the entire value of such supply. Further, Entry No. 27 of Notification No. 20/2017 Central Tax (R) dated 22.08.2017 was substituted to bring in the sub-entry (i) which reads as Services by way of printing of newspapers, books (including Braille books), journals and periodicals, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer which deals with printing of newspapers, books, journals and periodicals on the physical inputs of the printer himself, which is taxable at 12%. If the printed item is not newspaper or book or journal or periodical, then the services of the applicant is covered under Entry No. 27(ii) which reads other manufacturing services; publishing, printing and reproduction services; materials recovery services, other than (i) above and hence is liable to tax at 18%.

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• Income Tax

• 2022 (11) TMI 628
  Assessment u/s 153A - Whether no incriminating documents or materials had been found and seized at the time of search? - HELD THAT:- This Court in Principal Commissioner of Income Tax vs. Bhadani Financiers Pvt. Ltd.[ 2021 (9) TMI 902 - DELHI HIGH COURT] has held that where the assessment of the Respondents has attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search, no addition could be made under Section 153A of the Act as the cases of the Respondents were of non-abated assessment. Though the issue involved in Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date. No substantial question of law arises.

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• 2022 (11) TMI 627
  Exemption u/s 11 - application of income - genuineness of the conduct of the charitable activity u/s 2(15) r.w.s 12AA - absence of formal recognition of the school by the competent authority - ITAT allowed the claim of assessee - HELD THAT:- There is no dispute raised in the appeal to the finding of ITAT that the Assessee is in fact running the Rainbow Kids Valley School. Further, the Respondent confirmed on written instructions that no scrutiny assessment was made in the case of the Respondent, Assessee, for Assessment Year (AY) 2017-18 which is relevant for FY 2016-17 when the cash deposits were made in the bank account of the Respondent, Assessee. There is, therefore, no adverse finding of the AO against the Assessee with respect to the said cash deposits. The scope of the application was to examine the genuineness of the objects of the society and to ascertain if the said objects are charitable or not. Learned senior standing counsel for Revenue, has failed to show any infirmity in the findings of the ITAT which hold that the objects of the Assessee are charitable.

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• 2022 (11) TMI 626
  Disallowance of AMP expenditure u/s 37(1) - Revenue expenditure or capital expenditure - advertising and promotion of liquor in India - HELD THAT:- We are not persuaded by the contention of the learned counsel for the Revenue that the AMP expenditure incurred by the Assessee is capital in nature, the said contention is vague and unsubstantiated from the record. Revenue itself has treated the AMP expenditure incurred by the Assessee in the previous assessment years as a revenue expenditure. ITAT while adjudicating the appeals of the Assessee for AY 2009-10 and 2010-11 has held that the AMP expenditure incurred by the Assesee was in the nature of bonafide business expenditure in furtherance of its legitimate business interests. Revenue has not assailed the said findings of ITAT in the appeals filed for the said assessment years. It is therefore, evident that Revenue s contention that the AMP expenditure should be treated as capital expenditure is without any legal basis.

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• 2022 (11) TMI 625
  Revision u/s 263 by CIT - Deduction of expenses from additional income (on money) declared u/s 69A - service tax which is related to on money and remuneration paid to partners - HELD THAT:- As decided in MASKAR GENERAL HOSPITAL [ 2011 (8) TMI 1144 - GUJARAT HIGH COURT] additional income, i.e. on money received by assessee is from business, therefore the service tax which relates to on-money should be allowed as deduction and partners remuneration should also be allowed as deduction. We note that during the assessment proceedings, the AO issued notice to the assessee asking the assessee to justify service tax and partners remuneration. The said notice of AO is placed at paper book page no.16. In response to the show-cause notice of the AO, the assessee submitted its reply to the Assessing Officer which is placed - Thus, we note that Assessing Officer has conducted inquiry on the issues raised by Ld. PCIT in his order under section 263 - AO also applied his mind and took possible view, thus order passed by the AO is neither erroneous nor prejudicial to the interest of revenue. The order of the AO can be held to be erroneous order, that is (i) if the AO s order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)AO s order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the AO can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. Hon ble Supreme Court in the case of Malabar Industries [ 2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. prejudicial to the interest of the revenue has to be read in conjunction with an erroneous order passed by the AO. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law . Since the order of the AO cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is null in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 - Appeal of the assessee is allowed.

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• 2022 (11) TMI 624
  Reopening of assessment u/s 147 - reasons to believe - contention of the AR that the satisfaction recorded by the AO is not clear and the reason to suspect cannot replace the reason to believe for reopening of assessment u/s. 147 - HELD THAT:- The belief formed about escapement of income for recording reasons to reopen the assessment is only prima facie. Such material coming from independent source may not be complete or full, may prove to be incorrect on inquiry, but before reopening assessment, the AO must be able to infer in good faith that income of the assessee is chargeable to tax and has escaped assessment. Thus, relevancy of material for formation of belief is crucial. AO has noticed from the documents impounded during the course of search noticed that there are several entries relating to cash transactions and other receipts and payments which have not been recorded in the books of accounts of the assessee and on that ground the AO has a reason to believe that the income has escaped assessment. Therefore in our considered view the notings in the diary impounded during the course of survey proceedings is a relevant material for the formation of the belief by the AO and hence we see no reason to interfere with the order of CIT(A) in so far as the legal issue contended by the assessee is concerned. The grounds raised in this regard is dismissed. Suppressed sale of scrap - Addition made with respect to purported sale of steel based on the noting made - State Bank of Hyderabad had confirmed the outward remittance to SAIT vide letter dated 30.12.2016 addressed to the CIT(A). We further notice that this submission of the assessee regarding factual position has not been considered by the lower authorities as whether the noting in the diary crystallized in the subsequent financial year and the addition is made merely based on the entries in the diary - these transactions relate to import of materials from the vendor SAIT which is an expense in the hands of the assessee and from the records / ledger copies it is noticed this transaction has materialized in the subsequent financial year i.e. 2007-08. We therefore see merit in the argument that noting found in the diary are proposed imports which happened in the subsequent year. AO has made the addition as undisclosed income by sale of steel scrap, whereas based on facts submitted, the transaction is that of an import/purchase and hence the findings of the AO is factually incorrect. In view of this discussion and based on the perusal of the facts of the case, we are of the considered view that this addition is not tenable and therefore deleted. Addition based on the noting in the diary where it is mention as Steel Scrap Rs.17 lakhs - CIT(A) rejected these documents by stating that the assessee has not submitted the same before the AO inspite of having sufficient opportunity and did not provide sufficient cause for his failure to furnish these documents before the AO. On this ground the CIT(A) upheld the addition. AR during the course of hearing submitted that the major amount of Rs.4,99,000 does not belong to the assessee and belongs to some other entity. The ld AR in this regard drew our attention to pg 168 of paper book where the relevant document to substantiate the said claim and submitted that the same was furnished before the lower authorities. Since the CIT(A) did not admit the documents to arrive at the decision to uphold the addition and that the assessee s contention that the amounts are either personal in nature or does not belong to the assessee need to be factually examined. Since the AO has stated that the assessee has not furnished any details before him to support the claim in the interest of justice, we remit the issue back to the AO. AO is directed to consider the evidences and documents and decide the issue afresh after examination in accordance with law. Needless to say that the assessee may be given a proper opportunity of being heard. Appeal by the assessee is partly allowed.

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• 2022 (11) TMI 623
  Unexplained cash u/s 69A - assessee submitted that cash was deposited out of loan and advances recovered in the current year which were given in the preceding year and out of cash withdrawal and also out of the profit earned from business during the year - HELD THAT:- As perused the cash book and other details in support of the recoveries of the loan shown by the assessee and find that the assessee after recovery of the loan has shown deposits in the bank account which was subsequently withdrawn and again the advance was made by the assessee to the same parties. In many of the cases as perused the confirmation and find that the assessee after recovery of the loans and advances has again made the loans and advances in the short span of time. Therefore it is difficult to believe the version of the assessee that he has recovered loan advances in cash and deposited the same in the bank and again given the loans and advances to the same parties after making withdrawal from the bank. Indeed, the transaction shown by the assessee with respect to such loans and advances certainly seems to be abnormal but the same cannot be rejected until and unless it is cross verified from the concern parties. As such no addition can be made based on surmise and conjecture. Had there been any doubt about the credibility of the loan shown by the assessee, the onus was upon the revenue to disprove the contention of the assessee based on the relevant documentary evidence. Accordingly in the absence of any cross verification, we are not inclined to uphold the finding of the authorities below about the source of cash deposit. With respect to the bank withdrawal, we note that the assessee has claimed to have withdrawn from the bank which is evident from the order of the authorities below. Admittedly, the advances were made by the assessee as on 31 March 2014, thus it is transpired that withdrawal from the bank was utilized for making such loans and advances to the extent of the amount discussed above. However there was some amount left out of the withdrawal from the bank amounting which probably has been utilized by the assessee for making the cash deposit in the bank. Assessee has declared an income in the income tax return and therefore a presumption can be drawn that there was cash available with the assessee to the tune of such profit declared by the assessee in the income tax return which probably has also been utilized to some extent for making the deposits in the bank. Thus a cumulative reading of the above stated facts reveals that there was sufficient cash available with the assessee for making the deposits in cash in the bank. Accordingly we set aside the order of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed.

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• 2022 (11) TMI 622
  Addition u/s 68 - bogus LTCG claimed u/s.10(38) - whether the name of the script M/s Shree Nath Commercial Finance Ltd. is appearing in the investigation report carried out by investigation wing of income tax department or during any proceeding carried out by the Revenue or other agencies? - HELD THAT:- The income generated by the assessee cannot be held bogus only on the basis of the modus operandi, generalisation, and assumptions of certain facts. In order to hold income earned by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In the absence of such finding, no adverse inference can be drawn against the assessee. In absence of any specific finding against the assessee, the assessee cannot be held to be guilty or linked to the wrong acts merely on basis of surmises and assumptions. In view of the above discussion, we hold that the capital gain earned by the assessee cannot be held bogus merely on the basis of some assumption of the AO unless cogent material is brought on record. Therefore, we don t find any reason to disturb the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the grounds of Revenue s appeal is hereby dismissed. Income from House Property - deduction of interest on loan u/s 25 - the payment of interest was made from the account of her husband instead of her own account - HELD THAT:- There is no mention about the payment of the interest cost on the housing loan. In other words, it is not necessary to make the payment by the assessee on the money borrowed by him for acquiring the housing loan. What is necessary is this that the money should have been borrowed by the assessee for the purchase of the property on which the interest is payable. As far as, borrowing and the interest thereon is concerned, there is no dispute that the interest-bearing fund has been used by the assessee for acquiring the house property. Thus, to our understanding, the provisions of section 24(b) of the Act have been duly complied with as source of payment for the interest is known i.e. the husband of the assessee. Accordingly, we are of the view that the assessee cannot be denied the benefit of deduction with respect to the interest expenses provided under the provisions of section 24(b) of the Act. Hence, the ground of appeal of the assessee is allowed.

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• 2022 (11) TMI 621
  Capital gain computation - cost of acquisition considered by the AO - HELD THAT:- From the perusal of the breakup of the cost acquisition extracted in the earlier part of this order and the assignment agreement it is noticed that the assessee has considered a sum paid to the assignment holders as per the assignment agreement dated 01.10.2007 as cost of acquisition. Also noticed that the assessee has paid towards covered car park charges, corpus deposit, etc. and also a sum as assignment fee to L T. From these facts, it is clear that the actual outflow in the hands of the assessee towards acquisition of the property includes the said amounts and is an undisputed fact as admitted by the AO in his order that the assessee has paid the above-mentioned amount through proper banking channels as mentioned in the Assignment Agreement. Therefore we see merit in the argument that merely for the reason that the assignment agreement is not registered, the actual outflow from the hands of the assessee towards acquisition of the property cannot be ignored for computing the capital gains.Assessee has claimed several items towards cost of improvement for which bills and invoices were submitted before the AO. The breakup of the amount considered by the AO as of acquisition i.e.Rs.40,94,980 is not available on record and the reference given in the assessment order as does not provide any clarity on how this amount is arrived at. In view of this discussion we remit the issue back to the AO for arriving at the cost of acquisition with proper breakup. AO while doing so is directed to consider the actual amount paid by the assessee as per the Assignment Agreement including amounts paid to L T and stamp duty based on evidences / supporting documents submitted in this regard. AO is also directed to verify the bills and documents with regard to cost incurred towards brokerage, interiors, painting etc., and consider these amounts for the purpose of arriving at the capital gains in accordance with law. Needless to say that the assessee may be given an opportunity of being heard. Appeal is allowed for statistical purposes.

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• 2022 (11) TMI 620
  Estimation of income - Bogus purchases - disallowance made on account of non-genuine purchases by estimating the profit element at 3% thereon as against 5% estimated by the ld. AO.- HELD THAT:- As per the report of the Task Force for Diamond Sector constituted by the Ministry of Commerce and Industry after considering the BAP (Benign Assessment Procedure) scheme, the Task Force recommended that the net profit prevailing in the Diamond Industry engaged in the business of trading would be in the range of 1% - 3% and those engaged in the business of manufacturing would be in the range of 1.5% - 4.5%. We find that the Tribunal has been consistently taking the stand by estimating the profit element on the basis of reliance placed on the aforesaid report of the Task Force. In the instant case, the assessee is engaged in the business of both trading as well as manufacturing of diamonds. We find that the ld. CIT(A) was duly justified in estimating the profit percentage at 3% on which we do not deem it fit to interfere. In other words, the estimation of profit percentage at 3% by the ld. CIT(A) is just and fair and does not require any interference. Accordingly, the ground raised by the assessee is dismissed.

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• 2022 (11) TMI 619
  Approval of Trust u/s.80G(5) - To be effective from the first date of Financial Year or from the date of approval - approval was granted provisionally as on 23.09.2021 - only grievance of the assessee is that the PCIT has erred in approving the Trust u/s. 80G(5) w.e.f. 23.09.2021 only as against it should have been from 01.04.2021 in term of sixth proviso to section 80G(5) - HELD THAT:- Relevant proviso (vi) of section 80G(5) which clearly provides that the registration is to be granted from the first of the assessment years for which such institution or fund was provisionally approved i.e., from the assessment year and not from the mid of the year. It means that the assessee is entitled for approval w.e.f. 01.04.2021 and not from 23.09.2021. The provisions of the acts are clear and there is no ambiguity about it. Hence, we direct the PCIT to carry out the required amendment. We direct the PCIT(Exemption) accordingly. Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 618
  Addition made towards cash deposits u/s.69A - HELD THAT:- The assessee explained before the AO that she had received a sum of Rs.13 lakhs from Smt.Vedhavathy for sale of property on 09.11.2016. AO accepted, the assessee has received consideration for sale of property from Smt.Vedhavathy and the purchaser has also filed a confirmation letter stating that she had paid consideration in cash. Once the AO is accepted the fact that the assessee has received consideration in cash, then the source for cash deposits during demonetization period should have been accepted out of sale consideration received for property. AO grossly erred in not accepting the source for balance cash deposits even though, the assessee has filed necessary evidences to prove the availability of source for cash deposits. CIT(A) without appreciating the fact simply confirmed the additions made by the AO. Hence, set aside the order of the Ld.CIT(A) and direct the AO to delete the addition made towards cash deposits u/s.69A - Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 617
  Business expenditure u/s.37(1) - share issue expenses - assessee has abandoned the proposal to issue shares at later stage - AO rightly disallowed such expenses while processing return of income u/s.143(1)(a) - HELD THAT:- As the assessee has not created any asset which gives enduring benefit and also it does not help in the business of the company and in profit making, because, there is no increase in capital employed in the business of the assessee. Therefore, under these facts and circumstances, it is very difficult to accept the arguments of the CIT(A) that expenditure incurred by the assessee is capital in nature which gives enduring benefit to the assessee. This legal principle is supported by the decision in the case of M/s.Adadyn Technologies Pvt. Ltd.,[ 2020 (8) TMI 669 - ITAT BANGALORE] where the Tribunal held that if expenditure incurred by the assessee for development new project is Revenue in nature, then if said project is abandoned and not put to use, the expenditure incurred by the assessee should be allowed as Revenue in nature. In this case, the assessee has incurred certain expenditure which are Revenue in nature. However, the proposal of share issue has been abandoned for the reasons best known to the assessee. Therefore, in our considered view when the nature of expenditure incurred by the assessee are Revenue in nature and further, said expenses has been incurred wholly and exclusively for the purpose of business, then said expenditure needs to be allowed as Revenue expenditure and deductible u/s.37(1) - CIT(A) without appreciating the above facts simply sustained the additions made by the AO - we set aside the order of the Ld.CIT(A) and direct the AO to delete the additions made towards disallowance of share issue expenses u/s.37(1) - Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 616
  Short term capital gain - AO has considered registered document between the parties and computed short term capital gains by taking into account deemed consideration as per provisions of section 50C - HELD THAT:- AO has rightly computed short term capital gains on the basis of registered document and ignored unregistered MoU between the parties, because the assessee could not substantiate transactions with necessary evidences. Hence, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to sustain additions made by the AO towards computation of short term capital gains and thus, we are inclined to upheld the findings of the CIT(A) and reject the ground taken by the assessee. Disallowance of other expenses made - AO has disallowed a sum of other expenses on the ground that the assessee had incurred all the expenses in cash and could not file necessary evidences - HELD THAT:- Fact remains unchanged that the assessee could not controvert the findings of the facts recorded by the Ld. CIT(A) with evidence except stating that books of accounts of the assessee were audited and the assessee has explained the expenses with documentary evidence. But, fact remains that no evidence has been filed to justify expenditure incurred in cash and also payments in cash in excess of prescribed limit as provided u/s. 40A(3) - Therefore, we are of the considered view that there is no error in the reasons given by the Ld. CIT(A) to sustain disallowance of expenses and thus, we are inclined to upheld the findings of the CIT(A) and reject the ground taken by the assessee. Appeal filed by the assessee is dismissed.

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• 2022 (11) TMI 615
  Assessment u/s 153A/153C - Correct assessment year - HELD THAT:- In this case, search was conducted on 17.11.2015 and six assessment years preceding to the year of search are AY 2010-11 to 2015-16. Therefore, the AO can frame assessment u/s. 153A/153C up to AY 2015-16. In the present case, assessment year in question before us is AY 2016-17 and said AY is the year of search. Therefore, the question of issue of notice u/s. 153C does not arise. In fact, the AO has not issued notice u/s. 153C of the Act and this fact has been fairly accepted by Ld. DR present for the Revenue. AO has issued notice u/s. 142(1) of the Act and completed assessment u/s. 143(3) r.w.s. 153C of the Act, even though he cannot issue notice u/s. 153C for the impugned assessment year. Therefore, we are of the considered view that, in absence of notice u/s. 153C assessment framed by the AO u/s. 143(3) r.w.s. 153C of the Act dated 29.12.2017 is void and ab-initio and liable to be quashed. Thus, we quash the assessment order passed by the AO u/s. 143(3) r.w.s. 153C - Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 614
  TDS u/s 194C - Disallowance u/s 40(a)(ia) - disallowance of Harbor expenses - HELD THAT:- Harbour expenditure is a reimbursement of expenses to M/s.Trimex Minerals (P) Ltd., in turn, the party has incurred expenditure on behalf of the assessee and paid harbour expenditure to Chennai Port Trust for export of iron ore. As further noted that the assessee has filed copies of debit notes issued by M/s.Trimex Minerals (P) Ltd., along with ledger extract, and also confirmation from the parties where the party categorically confirmed a sum is paid to Chennai Port Trust, and said payment does not come under the provisions of TDS, because, Chennai Port Trust is a Government Organization and thus, TDS has not been deducted. We find that although the assessee has filed various details including confirmation from the party and copies of debit notes to prove that it is a reimbursement but not direct expenses incurred by the assessee, the AO simply ignored all the evidences filed by the assessee and made additions. Therefore additions made towards harbour expenditure for non deduction of TDS, is not sustainable and hence, we direct the AO to delete the addition made towards harbour expenditure. Appeal filed by the assessee is allowed.

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• 2022 (11) TMI 613
  Revision u/s 263 by CIT - deduction claimed towards R D expenditure incurred for Bio-pharma division - HELD THAT:- Assessee referring to annual report for the financial year 2012-13 argued that the assessee has generated revenue from Bio-pharma division, but there are certain doubts about the evidence filed by the assessee including annual report copy, because the assessee itself has filed a chart showing division wise revenue from operations as per which the assessee itself admitted that there is no revenue from operations from Bio-pharma division. AO without considering relevant facts simply allowed the claim of the assessee. Therefore, in our considered view, the assessment order passed by the AO is erroneous and also prejudicial to the interest of the revenue, because the AO failed to carry out required inquires or verifications which should have been made in the given facts and circumstances of the case. Thus, we are of the considered view that the PCIT has rightly invoked his jurisdiction and set aside the assessment order passed by the AO, on the issue of deduction claimed towards R D expenditure incurred for Bio-pharma division. Hence, we are inclined to uphold the order passed by the PCIT u/s. 263 of the Act and dismiss the appeal filed by the assessee.

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• 2022 (11) TMI 612
  Revision u/s 263 by CIT - assessee had claimed deduction with regard to various expenses like consultation charges, professional fees, security charges, professional expenses, brokerage expenses etc. on which no TDS was deducted - According to the Pr. CIT, omission to deduct TDS should have called for disallowance by the Assessing Officer u/s. 40(a)(ia) and hence the assessment order was erroneous in as much as prejudicial to the interest of the revenue - HELD THAT:- Regarding the issue of non-deduction of TDS, the assessee has placed detailed evidences that TDS has already been deducted in respect of all payments, however, the Pr. CIT was unable to appreciate the factual and legal submission placed before him. Regarding expenses on account of labour charges in connection with the construction of underground water tank and club house facility, the assessee has already placed on record, a detailed submission in this regard before AO, which was also duly considered by him while passing 143(3) order. Accordingly, in our view, since the Assessing Officer has conducted due enquiries on these aspects (TDS on various payments and allowability of deduction for labour charges), the order passed by the ld. Assessing Officer is not erroneous and prejudicial to the interest of the revenue. Regarding the scope of enquiry u/s 263 of the Act, it may be useful to refer to jurisdictional Gujarat High Court decision in the case of Principal Commissioner of Income Tax-3 v. Minal Nayan Shah [ 2020 (9) TMI 825 - GUJARAT HIGH COURT] . We are of the view that ld. Pr. CIT has erred in facts and in law invoking the provisions of section 263 in the instant set of facts. Accordingly, we direct that the order passed by the Pr. CIT u/s. 263 may be set aside - Decided in favour of assessee.

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• 2022 (11) TMI 611
  Unexplained credit u/s 68 - proof of money has come from a particular source - HELD THAT:- As appears that the accounts of the appellant company were audited under the provision of Section 44AB of the Act wherein no such defect in fact the above fund were source from OD account of the assessee company which is running by Mr. Atul K. Shah and his proprietary concern. The bank statement further shows various payments and receipts. Moreso, the appellant company audited under S. 44AB of the Act in which no defect has been pointed out, since, once the appellant has proved the money has come from a particular source, the impugned addition cannot be made under Section 68 of the Act on account of unexplained credit, hence, the same is deleted. Undisclosed short term capital gain (STCG) - assessee sold out an immovable property being a shop premises - HELD THAT:- The assessee submitted that it has disclosed the entire sale consideration in the return of income and neither he has received the difference amount as pointed out by the Ld. AO. However, without referring the matter to the District Valuation Officer, the AO added the same to the total income of the assessee, which was, in turn, confirmed by the First Appellate Authority. There is catena of judgments that in the present facts and circumstances of the case it is the duty cast upon the AO to refer the matter for determining the fair market value. In the absence of such statutory compliance made by the Ld. AO, we do not find the addition is justified and the same is, thus, deleted. Disallowance of ROC tax - HELD THAT:- The said addition has been made pursuant to the ratio laid down in the matter of Punjab Industrial Development Corporation Ltd.[ 1996 (12) TMI 6 - SUPREME COURT] and also the judgment passed in the matter of Brookebond India Ltd. [ 1997 (2) TMI 11 - SUPREME COURT] which has not been controverted by the assessee in the written notes of submission in the absence of which, we confirm the said addition. Addition on account of membership fees - HELD THAT:- It is the case of the assessee that such membership paid every periodical years has been allowed as business expenses. In that view of the matter, we do not find any justification in making such addition for the year under consideration, the same is, thus, deleted. Addition on car depreciation - HELD THAT:- In absence of any submission made by the assessee in this regard, we do not find any reason to interfere with the order passed by the authorities below, the same is, therefore, confirmed. This ground of appeal is, thus, found to be devoid of any merit and thus dismissed.

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• 2022 (11) TMI 610
  Addition u/s 56(2)(viib) - share premium received - Whether share premium received by the assessee has not been utilized for the objective meant for and has been diverted for non-specified purpose? - HELD THAT:- As per the assessee, land held by the partnership firm may get roughly about Rs. 850/- crores revenue if said land is put into development. If you consider fair amount of sharing between the developer and assessee, the assessee may get anywhere between Rs. 200 to 300 crores from the projects. Since, the assessee company is having 99.97% share in partnership firm and its free cash flows, the cash flow considered by the assessee on the basis of project of partnership firm is in accordance with law. Assessee has justified allotment of equity shares with premium of Rs. 1676/- per share with the help of multiple documents, including DCF method of valuation of shares. Further, the assessee had also justified share premium with the help of independent valuer report, as per which capital held by the assessee in the partnership firm is roughly valued about Rs. 367.96 crores. The assessee has also justified cash flows with the help of MoU with M/s. Prestige Estates Projects Pvt. Ltd. Therefore, we are of the considered view that there is no error or lacuna in the method followed by the assessee for determination of value of shares. AO without appreciating above facts has simply made additions towards share premium on flimsy grounds by assigning grounds which are not relevant to consider share premium for the purpose of provisions of section 56(2)(viib) - CIT(A) after considering relevant facts has rightly deleted additions made by the AO and thus, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the Revenue.

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• 2022 (11) TMI 609
  Cash deposits as income u/s 69A and charging special rate of tax - addition of cash deposit as income from other sources u/s.69A and charging under special rate of tax u/s.115BBE - HELD THAT:- Village Administrative Officer is not an authority to certify the agricultural income and assessee is unable to correlate these entries with that of the deposits of cash during demonetization period. But undeniable fact is also that the assessee is holding agricultural lands including her husband i.e. 15 acres and for that, we have to give some credit and assessee might have earned agricultural income although he has no definite evidence. It is also a fact that assessee is a pure agriculturist residing in a village and selling agricultural produce in cash to petty traders who are coming to villages to procure the products of coconut. In such circumstances, we have to estimate some agricultural income. If we give credit, the assessee might have earned some Rs.30,000/- per acre. The assessee s income during the year will be around Rs.4.5 lakhs. Giving further credit, the assessee might have accumulated some cash in earlier year also after allowing deduction of personal expenses, the assessee might have saved some cash. Hence, we estimate the availability of cash with the assessee at Rs.5 lakhs and direct the AO to delete this addition to the extent of Rs.5 lakhs and sustain the addition of Rs.2.70 lakhs, which assessee has to pay tax as per the provisions of section 115BBE - Appeal filed by the assessee is partly allowed.

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• 2022 (11) TMI 608
  Addition u/s 68 - unexplained cash credits of share capital and security premium received during the year - HELD THAT:- The assessee failed to file necessary details to explain the source of alleged cash credit and also unable to prove identity, creditworthiness of the shareholders as well as genuineness of the transaction. The assessee company has miserably failed to explain the source of alleged cash credit. If the assessee had sufficient details to explain the alleged sum, it could have certainly filed those details. Consistently escaping from appearing before the AO and the appellate authority(ld.CIT-A) indicates that the assessee has no plausible explanation to explain the source of alleged sum of share capital and security premium totalling to Rs.107.43 cr. The provisions of section 68 of the Act has rightly been invoked by ld. AO on the alleged transaction and it can be safely concluded that the assessee had unaccounted income, which has been routed in the books of account through bogus/accommodation entry in the form of share capital and security premium. No infirmity in the finding of the ld. CIT(A) confirming the addition made u/s. 68 of the Act. Thus, all the grounds of appeal raised by the assessee are dismissed.

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• 2022 (11) TMI 607
  Additions u/s. 69A - unexplained expenditure on the basis of District Valuation Officer s report - AO while referring the case for DVO u/s.142A, the assessing officer has not doubted the books of account maintained by the assessee - HELD THAT:- We are of the considered view that the assessment year involved herein is A.Y. 2010-11 which is prior to the insertion of sub-section (2) to Section 142A by the Finance Act, 2014 with effect from 2014. Without rejection of books of account the assessing officer ought not to have referred the matter to DVO to determine the cost of construction of the Project of the assessee. Therefore the ground raised by the Revenue does not find any merit and the addition made u/s. 69A deleted by the CIT(A) is hereby upheld. Addition u/s. 40(a)(ia) - HELD THAT:- Without looking into these details, the assessing officer made disallowance u/s. 40(a)(ia) which is arbitrary. CIT(A) after verification of the details have deleted the additions which does not require any interference by us. Therefore Ground is devoid of merits and the same is rejected. Adhoc disallowance of labour expenses - HELD THAT:- The assessee produced all the details namely Ledger account, bills/vouchers and Muster Roll of the employees who worked for the construction project. It is seen from record, the same have been produced before the AO but without assigning any good reason, the A.O. has made an adhoc disallowance at 20%. Therefore the addition is without any legal basis and therefore the deletion made by CIT(A) is hereby upheld.

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• Benami Property

• 2022 (11) TMI 606
  Benami transactions - Scope of amendemnt by the Benami Transactions (Prohibition) Amendment Act, 2016 which came into effect on 01st November 2016 - HELD THAT:- The Supreme Court in the judgment of Ganpati Dealcom [ 2022 (8) TMI 1047 - SUPREME COURT] has at paragraph no.92 recorded the concession made by the Union of India that the offence under Section 53 of the Act of 2016 is prospective and would only apply to those transactions which were entered into after amendment came into force i.e., 01st November, 2016. The Supreme Court at paragraph nos. 94 and 130(e) of the said judgment has categorically held that the Act of 2016 which contains the criminal provisions is applicable only prospectively and quashed the prosecution proceedings. It is admitted in the present case that the alleged benami transactions undertaken by the Petitioner were entered prior to 01st November 2016. In light of the law as declared by the Supreme Court in Ganapati Dealcom [ 2022 (8) TMI 1047 - SUPREME COURT] the present writ petition is allowed. The Show Cause Notice dated 04th April, 2022 shall stand quashed.

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• Customs

• 2022 (11) TMI 605
  Provisional release of seized goods - mandate to produce the certificate insisted upon as condition for provisional release from among the prescriptions in the licencing notes pertaining to imported vehicles - HELD THAT:- The Tribunal in EXCELLENT BETELNUT PRODUCTS PRIVATE LTD VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS, NAGPUR [ 2022 (3) TMI 1326 - CESTAT MUMBAI] , has held that the powers of the Commissioner of Customs under section 110A of Customs Act, 1962 cannot be interfered with by any circular or instructions. In the impugned order, it has been admitted that the provisional release has been subject to the conditions stipulated in circular no. 35/2017-Cus dated 16th August 2017 which traverse beyond the empowerment in section 110A of Customs Act, 1962. It is for the owner of the vehicle to be compliant with law upon provisional release. Furthermore, it is on record that the vehicle has already been registered with the competent authority under the Motor Vehicles Act, 1988. Provisions under the Foreign Trade Policy including licensing norms relevant to chapter 87 in ITC(HS) classification are intended to ensure that the import of any goods, post-clearance, would not be in breach of the essential requirements of law subject to which motor vehicles may be registered for operation on roads. The policy condition is not one incorporated merely for the sake of regulating imports and exports of the country but to ensure that the imported goods are compliant with the regulatory measures, other than that relating to imports and exports, under the municipal laws of the country. The inclusion of this condition as necessary for provisional release is redundant and superfluous and we allow this appeal by expunging the said condition as requirement of provisional release - Application disposed off.

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• 2022 (11) TMI 604
  Refund of SAD - difference of opinion between Hon ble High Courts of Bombay and Delhi on the issue - HELD THAT:- There is no dispute that the Hon ble High Courts of Bombay and Delhi have expressed divergent views and the Jurisdictional High Court in COMMISSIONER OF CUSTOMS (SEA) , CHENNAI-II VERSUS HLG TRADING [ 2018 (10) TMI 1819 - MADRAS HIGH COURT] , had chosen to follow one of the decisions which was in favour of the tax payer. In its subsequent decision in the case of THE COMMISSIONER OF CUSTOMS, CHENNAI VERSUS CMS INFO SYSTEMS LIMITED [ 2022 (6) TMI 436 - MADRAS HIGH COURT] , Hon ble High Court of Madras has felt it proper to remand the matter back to the file of the adjudicating authority to await the outcome of the SLP filed against the order passed by the Hon ble Bombay High Court in the case of CMS Info Systems Limited. The earlier decision in the case of COMMISSIONER OF CUSTOMS (SEA) , CHENNAI-II VERSUS HLG TRADING [ 2018 (10) TMI 1819 - MADRAS HIGH COURT] appears to have not been brought to the notice of the Hon ble High Court and in any case, following the latest decision of the Jurisdictional High Court, it is opined that the matter could be sent back to the file of the adjudicating authority, who shall follow the directions of Hon ble High Court and to await the outcome of the SLP in the case of CMS Info Systems Limited, and then pass a denovo order in terms with the decision of the Hon ble Apex Court. Appeal allowed by way of remand.

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• 2022 (11) TMI 603
  Jurisdiction to issue Show Cause notice - Illegal removal of goods from CFS - Pilfered goods - demand of duty u/s 45(3) of Customs Act, 1962 - imposition of penalty for allowing removal of containers without proper customs clearance - confiscation of goods - HELD THAT:- As per the OIO No.78721/2020 dated 29.12.2020 duty amount of Rs.22,77,047/- was confirmed. On the very same investigation, the respondent was issued SCN under the Handling of Cargo Regulations, 2009. The said SCN was adjudicated, and OIO No.79248/2021 dated 29.01.2021 was passed wherein a penalty of Rs.50,000/- was imposed on the respondent. It is submitted that the respondent has paid the duty as well as the above penalty and is not contesting these issues any further. In para-7 of the impugned order passed by the Commissioner (Appeals) it is noted that respondent has paid up the entire duty demanded as well as penalty imposed by the original authority. In spite of payment of duty and penalty, the Commissioner (Appeals) has directed for remand for the matter on the basis of the judgment of the Hon ble Apex Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . When the entire duty and penalty has been paid up by the respondent, there are no grounds to re-examine as to whether the SIIB was the proper officer to issue SCN. The direction to remand the matter is totally unnecessary and uncalled for. Therefore, the impugned order directing the matter to be remanded to the original authority in the light of decision of the Apex Court in the case of Canon India Private Ltd. is set aside - appeal allowed - decided in favor of Revenue.

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• 2022 (11) TMI 602
  Seeking provisional release of seized containers - requirement of execution of bond supported by Bank Guarantee - HELD THAT:- Apparently in this case, against the estimated value of Rs.64,26,000/- of the seized goods, appellant has been directed to execute a bond of the estimated value supported by bank guarantee i.e. 50% of the estimated value. The Revenue authorities are directed to accept the offer made and provisionally release the goods on execution of a bond of value of Rs.64,26,000/- supported by bank guarantee of Rs.10,00,000/- for allowing the goods back to town. All other conditions as specified in the provisional release order dated 01.09.2021 shall stand. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2022 (11) TMI 601
  Seeking directions to all Directors as per signatory details available on the website of Ministry of Corporate Affairs (MCA) and Statutory Auditor of the corporate debtor to appear personally to provide requisite information, assistance and cooperation to IRP/RP - Section 19(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per Section 19(1) of the Code, the suspended management is under obligation to extend all assistance and cooperation to the IRP/RP as required in managing the affairs of the company. Mr. Shri Krishna Kajaria - respondent No. 1 and U P Singh and Associates - respondent No. 2, Statutory Auditor of corporate debtor are directed to provide assistance as required by the IRP/RP and complete the process within three weeks from the date of this order, failing which the IRP/RP is at liberty to approach local police on the basis of this order and local police to render all necessary assistance to IRP/RP. In case of non-compliance, the IRP/RP is at liberty to move an appropriate application before this Adjudicating Authority. Application allowed.

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• PMLA

• 2022 (11) TMI 600
  Money laundering - provisional attachment orders - proceeds of crime - Impact that a moratorium that comes into effect in terms of Section 14 of the Insolvency and Bankruptcy Code, 2006 on the powers of the Enforcement Directorate (ED) to enforce an attachment under the provisions of the Prevention of Money Laundering Act, 2002 - freezing of bank accounts of petitioner - HELD THAT:- While proceeding to attach the tainted property, the respondents are not in essence effacing the property rights that may be claimed by an individual. It is a symbolic taking over of the custody of the property and for its preservation till such time as the proceedings that may be initiated under the PMLA come to a conclusion. Attachment thus is not liable to be viewed as an effacement of all rights that may exist or be claimed to be exercisable in respect of a property. Attachment essentially seeks to stamp the tainted property of having been found to represent proceeds of crime pursuant to the adjudicatory process which is undertaken under Sections 5 and 8 of the Act. It is essentially a seizure of property bringing it into the constructive possession of a court or as in this case, the authorities under the PMLA. An attachment is essentially aimed at preventing private alienations. It does not confer a title on the authority which has taken that step. The attachment only enables the authorities under the act to restrain any further transactions with respect to the aforesaid property till such time as a trial with respect to the commission of an offence of money laundering comes to an end. Attachment under the PMLA does not result in an extinguishment or effacement of property rights. It is essentially a fetter placed upon the possessor of that property to deal with the same till such time as proceedings under the aforesaid enactment come to a definitive conclusion on the question of confiscation - it is essentially an action aimed at bringing into the control of a court or an authority, property over which multiple claims may exist. In any case, since the act of attachment does not result in the effacement of rights in property, it would clearly stand and survive outside the scope of a moratorium or an action relating to an action in respect of a debt due or payable. The attached property comes to vest in the Union Government only upon the passing of such an order as may be passed by the special Court either under sub-Sections 5 or 7 of Section 8 or Sections 58B or Section 60(2)(a). The provisional attachment of properties would in any case not violate the primary objectives of Section 14 of the IBC. Non-obstante clause in the IBC and PMLA - HELD THAT:- While there can be no doubt that where two special statutes incorporate non obstante clauses it is the later enactment which would ordinarily or normally prevail, the same cannot possibly be recognised as constituting the solitary principle of interpretation which would apply or an inviolable rule. It must be fundamentally borne in mind that a non obstante clause in any statute is looked at principally in case of an asserted irreconcilable conflict between statutes. However, that does not preclude courts from identifying or discerning the core objectives of the competing statutes - More importantly and while dealing with the question which arises for determination in this case, the Court would have to bear in mind the undisputed fact that while the PMLA was originally promulgated on 01 July 2005, the IBC came to be enforced with effect from 28 May 2016 and on subsequent dates when its various provisions were separately enforced. Section 238 of the IBC came to be energised in terms of the notification dated 30 November 2016 and was ordained to come into effect from 01 December 2016. Section 32A of the IBC on the other was introduced by Amending Act No.1 of 2020 with retrospective effect from 28 December 2019. The introduction of Section 32A constitutes an event of vital import since it embodies a provision which effectively shut out criminal proceedings including those under the PMLA upon the CIRP reaching the defining moment specified therein. However, when the Legislature introduced the said provision, it was conscious and aware of the fact that the provisions of the PMLA could be enforced against the properties of a corporate debtor notwithstanding the pendency of the CIRP - The Legislature thus in its wisdom chose to place an embargo upon the continuance of criminal proceedings including action of attachment under the PMLA only once a Resolution Plan were approved or a measure in aid of liquidation had been adopted. The Court comes to the conclusion that Section 32A would constitute the pivot by virtue of being the later act and thus govern the extent to which the non obstante clause enshrined in the IBC would operate and exclude the operation of the PMLA - while both IBC and the PMLA are special statutes in the generic sense, they both seek to subserve independent and separate legislative objectives. The subject matter and focus of the two legislations is clearly distinct. When faced with a situation where both the special legislations incorporate non obstante clauses, it becomes the duty of the Court to discern the true intent and scope of the two legislations. Even though the IBC and Section 238 thereof constitute the later enactment when viewed against the PMLA which came to be enforced in 2005, the Court is of the considered opinion that the extent to which the latter was intended to capitulate to the IBC is an issue which must be answered on the basis of Section 32A. The introduction of that provision in 2020 represents the last expression of intent of the Legislature and thus the embodiment of the extent to which the provisions of the PMLA are to give way to proceedings initiated under the IBC. The Court has independently come to the conclusion that the power to attach under the PMLA would not fall within the ken of Section 14(1)(a) of the IBC. Through Section 32A, the Legislature has authoritatively spoken of the terminal point whereafter the powers under the PMLA would not be exercisable. The events which trigger its application when reached would lead to the erection of an impregnable wall which cannot be breached by invocation of the provisions of the PMLA. The non obstante clause finding place in the IBC thus can neither be interpreted nor countenanced to have an impact far greater than that envisaged in Section 32A. It is manifest that an order of attachment when made under the PMLA does not result in the corporate debtor or the Resolution Professional facing a fait accompli. The statutes provide adequate means and avenues for redressal of claims and grievances. It could be open to a Resolution Professional to approach the competent authorities under the PMLA for such reliefs in respect of tainted properties as may be legally permissible. The challenge to the Provisional Attachment Orders as well as orders of confirmation passed by the Adjudicating Authority on grounds as raised fails and stands negatived - Petition dismissed.

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• Service Tax

• 2022 (11) TMI 599
  Levy of service tax - Business Support Service which includes infrastructural support or not - permitting ISFPL to use the land and plant, machinery and equipment ( PME ) at Palghar Factory on rental basis - demand of duty alongwith penalty - HELD THAT:- From the extract of the agreement, it is clear that the appellant have not provided any regular services to the International Syntha Fabs Pvt Ltd (ISFPL) whereas they have given their plant and machinery equipment, on rental basis to International Syntha Fabs Pvt Ltd (ISFPL) for running their production activity wherein the appellant has not involved. From the said agreement, it is clear that the activity of the appellant falls under renting of immovable property in respect of land/ plant, land fixed plant. In respect of movable machinery equipment, the activity at the best can be classified as supply of tangible goods for use. It is undisputed fact that both services became taxable after the relevant period in the present case - since the very activity of the appellant have been brought under the taxable net subsequently it makes clear that the said activity was not covered under any taxable activity for the earlier period. The identical issue has been considered by this Tribunal in case of M/S BAJAJ HINDUSTAN LIMITED VERSUS CCE, LUCKNOW [ 2018 (5) TMI 552 - CESTAT ALLAHABAD] wherein it was held that The activity of renting of land and renting of plant and machinery cannot fall under the said explanation so as to recovered by the definition of support services of business or commerce. The activity of the appellant i.e. of renting of immovable property and supply of tangible goods cannot be classified under infrastructural support service. Accordingly, the impugned order is not sustainable - Appeal allowed - decided in favor of appellant.

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• 2022 (11) TMI 598
  Exemption from service tax - Valuation of goods - text books - no maximum retail price printed - whether the exemption Notification No. 12/2003-ST dated 20.06.2003 was available to the appellant for study materials which it had provided which, undisputedly, were not standard text books printed with maximum retail price but were material printed by the appellant and bound together through spiral binding? - CBEC circular dated 20.06.2003 - HELD THAT:- It is evident from the exemption notification that the exemption was available from so much of the value of all the taxable services as is equal to the value of goods and materials sold by the service provider to the recipient of service subject to the condition that there is documentary proof specifically indicating value of the said goods and materials. The exemption notification does not place any restriction on the type of goods or materials which are entitled to the exemption. As long as there is documentary proof, indicating the value of the goods and materials sold by the service provider to the service recipient, their value gets excluded from the taxable value and hence no service tax will be leviable on such goods. In respect of commercial coaching and training services, the materials in question will, obviously, be the study materials which the appellant has undisputedly provided. The documentary evidence of value of such materials is also not in dispute. The exemption notification is a delegated legislation made under the power of granting exemption available to the Central Government and not to anybody else, including the Central Board of Excise and Customs [CBEC]. Whenever any delegated legislation is framed, it is placed before both houses of the Parliament along with a note. Thereafter, the Committee on subordinate legislation of each house of the Parliament examines the notification so issued to ensure that it is consistent with the powers delegated by the law to the Government under the Act. The impugned order passed denying the benefit of exemption notification relying upon the CBEC Circular dated 20.06.2003 cannot be sustained as the CBEC has no power to modify the scope of the exemption notification No. 12/2003-ST dated 20.06.2003 issued by the Central Government - Appeal allowed.

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• Central Excise

• 2022 (11) TMI 597
  CENVAT Credit - CVD plus cess - import of raw materials, where duty and cess have been paid by utilizing the DEPB scrips - HELD THAT:- There is no disability in availing the credit, where CVD and Cess have been paid by utilizing DEPB scrips. Further, there is no dispute that the credit has been availed on the basis of bill of entry and certified copy of the same produced before the Range Authority. The appellant have rightly availed the cenvat credit. Accordingly, the appeal is allowed.

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• 2022 (11) TMI 596
  Remission of duty - incidence of fire and loss - case of negligence or not - Rule 21 of the Central Excise Rules, 2002 - HELD THAT:- The incidence of fire and the loss of goods due to fire are undisputed. Under the facts and circumstances the fire was caused due to sparks, which have come out from the transformer due to stormy weather condition. On such fire incidence the appellant had no control nor such incidence were avoidable on the part of the appellant. The appellant was manufacturing since 1992 at the said premises and this was the first incidence of fire, which has occurred. Further, as per the report of the Fire Department, no case of negligence has been made out against the appellant. The loss has occurred including the loss of finished goods due to natural causes and/or by unavoidable fire accident and further the partially damaged goods were rendered unfit for human consumption being medicines, and were also unfit for marketing - the appellant is entitled to remission as provided under Rule 21 of the Central Excise Rules, 2002. Consequently the demand of duty of the matching amount is also set aside alongwith penalty. Appeal allowed.

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• 2022 (11) TMI 595
  Classification of goods - Minute Maid Nimbu Fresh (MMNF) - to be classified under Chapter sub-heading 220290.20 of Central Excise Tariff Act, 1985 or under chapter sub-heading No 220210.20 of the Central Excise Tariff Act, 1985 - exemption under N/N. 3/2006-C.E. dated 01.03.2006 - HELD THAT:- The issue involved in the present case is covered by the decision of the Larger Bench in the case of M/S BRINDAVAN BEVERAGES PRIVATE LIMITED, KRANTI KUMAR CHANDRAKAR, M/S PEPSICO INDIA HOLDINGS PRIVATE LIMITED VERSUS COMMISSIONER CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HAPUR AND BAREILLY [ 2019 (10) TMI 762 - CESTAT ALLAHABAD (LB)] . Taking note of the difference in the opinions, the Larger Bench held that the three products MMNF, Nimbu Masala Soda and Nimbooz would classify under Tariff Item No. 2202 90 20 as fruit juice based drinks. Following the decision and the consensus arrived at by the Larger Bench, the appeals are allowed.

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• CST, VAT & Sales Tax

• 2022 (11) TMI 594
  Attachment of property - recovery of sales tax arrears - non-suiting the appellants without considering the fact that the appellants are bonafide purchaser for consideration without notice - transfer in favour of the appellants was hit by Sec.24A of the Sales Tax Act or not - Whether the courts below are correct in law in nonsuiting the appellants when Sec.100 of Transfer of Property Act prohibits that no charge shall be enforced against any property in the hands of a transferee for consideration with the notice of charge? HELD THAT:- Knowingfully well about the pendency of the said surcharge proceedings, the said K.Muthusami executed a gift deed in favour of his 2nd daughter clearly denotes that to defraud the claim of defendant, such document was executed. So, neither Muthusami nor plaintiffs entitled to get any protection under Sec. 24-A (i) of the Act and the same was rightly appreciated by the courts below, which needs no interference. Furthermore, the 1st plaintiff has no title over the property for the reason that the alleged gift deed stands in the name of 2nd daughter of K.Muthusami itself void under law. Hence, based upon the void document, the 2nd and 3rd plaintiffs are not entitled to get any better title. Apart from that, the 2nd and 3rd plaintiffs also contended that they are bonafide purchasers and they are entitled to get benefits under Sec.24-A (i) of the Act. Admittedly, they have purchased the property in the year of 2004 and they were not aware of the proceedings initiated by the defendant - the alleged gift deed executed by K.Muthusami in favour of his 2nd daughter is void under law and subsequently, she sold the property in favour of 1st plaintiff and though the plaintiffs 2 and 3 have purchased the property from the 1st plaintiff in the year of 2004, till 2010, they have not taken any steps to transfer the names in the revenue records. Furthermore, before they purchased the property, they ought to have made enquiry about the ownership of the property, but no evidence placed before this court that they have made valid enquiry. Hence, the courts below have rightly appreciated this aspects, which needs no interference. Though the attachment was effected only in the year of 2009, but the tax due from the year of 1993 was under challenge by the Kaveri Agencies before the Tax Appellate Tribunal and the same was negatived by this court in the appeal proceedings. Thereafter, the defendant took steps to attach the property, which is valid under law and the same cannot be questioned by the plaintiffs, as they have no locus standi and the alleged document stands in their name also void and non-est in law. Appeal dismissed.

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