Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 19, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Seeking grant of Regular Bail - intent to evade tax / gst - cyclic transactions was tracked in Business Analytics and Fraud Analysis module BIFA - Though non issuance of show cause notice for adjudication of the evaded tax under Section 74 of the PGST Act cannot be a solitary ground for grant of bail, but in the present case, this fact has assumed significance in the background of the conduct of the agency having failed to lead pre-charge evidence for 06 months - Bail to be granted - HC
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Validity of summary notices and summary orders - Admittedly, the petitioners in the respective applications have been denied of principle of natural justice. In view of the aforesaid discussion, the show cause notices in terms of GST DRC-01 read with Rule 142 of the JGST Rules, summary of orders in Form DRC-07 and respective adjudication orders and all consequential orders, are hereby, quashed and set aside. - HC
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Cancellation of GST registration of petitioner - dispute over unpartitioned property and of the business concern - The proper course was to leave the concerned authority free to take a decision as to who, out of the two, fulfils the criteria for holding a license without placing any embargo on its powers in contravention of the relevant provisions of the Act - HC
Income Tax
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TDS u/s 195 - Disallowance u/s 40(a)(i) - payment made to International Freight Forwarding Agents (related companies) - those foreign companies are independent legal entities in foreign countries and they have no business activity nor any permanent establishment in India and, therefore, cannot automatically have business connection in India just because they are related parties. - HC
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PE in India - employees visiting India prior to the date of contract - scope of Article 5(2)(g) of India Cyprus Treaty - As per ITAT threshold period of twelve months has not been exceeded in present case and consequently no Permanent Establishment (‘PE’) can be said to have been established - preparatory work like travelling for obtaining tender/contract cannot be deemed to be the starting point of the contract - order of ITAT sustained - HC
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Validity of E-Assessment u/s 147 read with Section 144B - The petitioners permitted the authorities to proceed under Section 147 by responding to the notice. It is only after passing of the assessment orders that is now sought to be urged that the re-opening was without jurisdiction and it ought to have been only u/s 153C of the Act of 1961. - we are not inclined to invoke extra ordinary jurisdiction in favour of the petitioners especially since an efficacious statutory remedy is available. - HC
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Penalty u/s 271(1)(c) - failure to re-invest the capital gains for the purpose of claiming Section 54 deduction - DR could hardly rebut the clinching settled legal preposition that quantum and penalty are parallel proceedings wherein each and every disallowance/addition made in course of the former does not ipso facto attract to penal mechanism - AT
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Assessment of trust - Deduction claimed under Chapter VI-A / Section 80G/80GGA r.w.s. 35AC in respect of donation paid to eligible trusts - application for rectification before the CPC was rejected - the assessee is entitled for deduction - AO directed to grant the benefit - AT
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Disallowance of Commission Expenses - prior period expenditure - due to poor sales performance, security was forfeited and adjusted - on request the same restored and commission paid in subsequent year after deduction of TDS - Thus, the findings of the ld CIT(A) holding that payment was on account of royalty and a prior period expense cannot be sustained. - AT
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Reopening of assessment u/s 147 - bogus purchases - not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. - AT
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Assessment of trust - unexplained investment - Merely because the building was used by assessee-trust without consideration that cannot be said to be, in any way, any unexplained investment by the assessee-trust justifying the addition of section 69 - AT
Customs
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Confiscation of imported goods - penalty u/s 112(a) (i) of Customs Act - LED Module Lights Brand Samsung - suspension was made on 22.03.2017 pursuant to examination of the goods. However, the Customs have given intimation to the right holder – Samsung Electronics Co. on 11.04.2017 i.e. after about 20 days and thus, have violated the time line - confiscation and penalty is bad and against the provisions of the law - AT
Corporate Law
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Oppression and mismanagement - the Applicants are seeking entirely new reliefs and the said reliefs are in the nature of fresh cause of action and completely out of the purview of this Tribunal - the `Application’ is an attempt of `vexatious act’, without approaching the `Proper Forum’, by exercising its jurisdiction as per `Law’. - AT
IBC
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Application for withdrawal of IBC - Section 12A of I&B Code - Once the CIRP proceedings initiated and the Committee of Creditors constituted, the Adjudicating Authority under Section 12-A of the Code, may allow withdrawal of application made by the Applicant i.e. IRP/RP where the Committee of Creditors approves with 90% voting share. - AT
Service Tax
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Refund of accumulated CENVAT Credit - After the introduction of GST, the appellant is not able to take recredit of the said amount. Thus, the alternative prayer put forward at the time of argument is to grant refund taking into consideration the practical difficulty in taking recredit after introduction of GST. There was no adjudication in regard to the application of Sec. 142 of GST Act, 2017. - The Tribunal being a creature of the statute cannot grant reliefs extraneous to the adjudication. - AT
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Refund of pre-deposit made under Section 35F by way of reversal in GST-ITC credit - Since the Commissioner (Appeals) has agreed that the appellant is eligible to avail the credit in their electronic credit ledger the appeal should not have been rejected, whereas the refund should have been allowed if not in cash, but atleast by way of credit in their electronic credit ledger - AT
Central Excise
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Restoration of appeal - The Tribunal became Functus officio once a final order has passed and there is no scope for restoring an appeal thereafter - there are no justification for the appellant to file a petition for restoration of appeals after the exorbitant delay of nearly 7 years. - HC
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Reversal of CENVAT Credit - The waste and scrap are not manufactured goods whether they are generated at the premises of the principal manufacturer or at the premises of job-worker and accordingly, the legislature have consciously not made any provisions for reversal of any credit taken on duty paid inputs in case of clearance of waste and scrap and/or, there non-return from the job worker’s premises under the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2002/2004. - AT
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Refund of excise duty - pre and post GST era - duty paid on clearance of goods prior to 1.7.2017 and such goods had been returned by the buyer as defective after 1.7.2017, within a period of six months - it is found that the goods have been returned by a Public Sector entity, which is not registered under the provisions of the CGST Act. - Refund to be granted within 45 days - AT
Case Laws:
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GST
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2022 (11) TMI 837
Seeking grant of Regular Bail - irregular availment of CENVAT Credit - fake firms - HELD THAT:- Without commenting anything as regards the merits of the case but while noticing that the petitioner has been behind bars for a substantial period of more than 2 years and 3 months and that the petitioner cannot be said to be the main accused, his further detention will not serve any useful purpose. The petitioner is ordered to be released on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned - Application allowed.
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2022 (11) TMI 836
Seeking grant of Regular Bail - intent to evade tax / gst - cyclic transactions was tracked in Business Analytics and Fraud Analysis module BIFA - umbrella of 16 fake firms has been created with an intent to evade tax - HELD THAT:- There is no denial to the fact that the economic offences constitute a separate class of their own, but trite it is that presumption of innocence is one of the bedrocks on which the criminal jurisprudence rests. Time and again, Apex Court has reiterated the need to integrate the right of investigating agencies to have effective interrogation of the accused with the right of liberty of the accused. Coming to the facts of the present case the investigation stands concluded and the challan stands presented. Thus, there cannot be any apprehension that the petitioner shall tamper with the evidence. The maximum sentence prescribed under the Act for the offence, the petitioner has been booked is 05 years. Though non issuance of show cause notice for adjudication of the evaded tax under Section 74 of the PGST Act cannot be a solitary ground for grant of bail, but in the present case, this fact has assumed significance in the background of the conduct of the agency having failed to lead pre-charge evidence for 06 months. Considering the cumulative effect of all these circumstances, the Court finds that the petitioner cannot be kept behind bars for indefinite period. The petitioner is ordered to be released on regular bail on his furnishing bail/surety bonds to the satisfaction of the Ld. Trial Court/Duty Magistrate, concerned - petition allowed.
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2022 (11) TMI 835
Validity of summary notices in terms of GST DRC-01 read with Rule 142 of the JGST Rules,and summary orders in Form DRC-07 respective adjudication orders - direction upon the respondents to unblocked/re-credit the amount of Input Tax Credit illegally blocked / debited from the Electronic Credit Ledger of the petitioners - HELD THAT:- It is clear that the petitioners have challenged the impugned notices/orders and action of the respondent authorities on the ground of non-compliance of statutory provision as mentioned in Jharkhand Goods and Services Tax Act, 2017 (in short JGST).Admittedly, no proper show-cause notices have been issued to the respective petitioners except a summary of SCN in GST DRC-01which are not in accordance with the provision of the JGST Act and to that extent these cases are covered by the judgment passed by this Court in the case of N M/S NKAS SERVICES PRIVATE LIMITED VERSUS THE STATE OF JHARKHAND, THE COMMISSIONER OF STATE TAXES, DHURWA, RANCHI, THE STATE TAX OFFICER HAVING ITS OFFICE AT GODDA, DIST. GODDA [ 2022 (2) TMI 1157 - JHARKHAND HIGH COURT] . Admittedly, the petitioners in the respective applications have been denied of principle of natural justice. In view of the aforesaid discussion, the show cause notices in terms of GST DRC-01 read with Rule 142 of the JGST Rules, summary of orders in Form DRC-07 and respective adjudication orders and all consequential orders, are hereby, quashed and set aside. Application allowed.
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2022 (11) TMI 834
GST in respect of development rights - Constitutional Validity of N/N. 4/2018-Central Tax (Rate) dated 25.01.2018 - vires to Section 148 of the CGST Act/ APGST Act - violation of the principles of natural justice - HELD THAT:- If tax payer has requested to grant personal hearing and the same was considered and granted. However, except this, in the impugned order, it is not specifically mentioned as to what date was fixed for personal hearing after filing reply by the petitioner and what happened on the date i.e., whether the petitioner and his counsel were present or not. Be that as it may, in the additional affidavit, at paragraph 4, it was mentioned that no opportunity for personal hearing was granted to the petitioner. The petitioner was not afforded an opportunity of personal hearing after he filed reply wherein he prayed for personal hearing. The reply itself is a detailed one which runs into several pages containing several factual details and some legal aspects. Therefore, the 1st respondent, ought to have afforded personal hearing to the petitioner so as to effectively adjudicate all the issues involved in the process of assessment. Since that was not done, the impugned order dated 25.07.2022 is liable to set aside. Petition disposed off.
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2022 (11) TMI 833
Cancellation of GST registration of petitioner - dispute over unpartitioned property and of the business concern - HELD THAT:- The license of the appellant granted under the Food Safety and Standard Act was valid upto 29th January, 2018, while as the license of the respondent no. 5 was valid till 14th May, 2021. Therefore, admittedly, neither the appellant nor the respondent no. 5 was having a license, during the pendency of the writ petition, to run the business in question. The issue, as such, was yet again open to be considered afresh by the competent authority. As regards the registration of the business unit, the same stands cancelled on 16th April, 2021 insofar as the appellant is concerned, however, the same, as of now, is registered in the name of respondent no. 5. The proper course was to leave the concerned authority free to take a decision as to who, out of the two, fulfils the criteria for holding a license without placing any embargo on its powers in contravention of the relevant provisions of the Act - the appeal is disposed off by providing that the appellant as also the respondent no. 5 shall be at liberty to approach the concerned authority for issuance/renewal of license.
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Income Tax
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2022 (11) TMI 848
Revision u/s 263 - assessee claimed an expenditure related to the expenditure incurred in foreign exchange towards watch duty - As per CIT part of the expenditure claimed by the assessee pertains to the A.Y.2013-14 and is not allowable for the year under consideration i.e.A.Y.2014-15 - HELD THAT:- In the instant case, the expenses claimed by the assessee are covered either by clause 5.3 or 6.1 of the agreement and therefore, the Ld.Pr.CIT has directed the Ld.AO to disallow the same. We are therefore of the considered view that the Ld.Pr.CIT has rightly directed the Ld.AO and find no infirmity in the order of the Ld.Pr.CIT and dismiss the ground raised by the assessee. Disallowance of loss on foreign exchange rate fluctuation - HELD THAT:- We observe from the statement submitted by the Ld.AR that the difference in exchange rate was computed as on 31.03.2012 in comparison with exchange rate prevailing on 31.03.2014. It is evident from workings that the exchange loss has been calculated for two assessment years and claimed in the impugned assessment year. AO has therefore rightly considered the exchange loss arising for the impugned assessment year and has allowed the same while passing order u/s 154 of the Act. Exchange loss for the F.Y.2012-13 cannot be claimed in the F.Y.2013-14, relevant to the A.Y.2014-15 u/s 37 of the Act, since it is considered as prior period expenses. We are therefore of the considered view that the Ld.AO has rightly allowed the exchange loss pertaining to the relevant assessment year and has disallowed the same pertaining to the previous assessment year. We, therefore, do not wish to interfere in the order of the Ld.AO on this ground and dismiss the ground raised by the assessee.
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2022 (11) TMI 847
Late fee levied u/s. 234E - Levy for period prior to 1/6/2015 - TDS returns pertaining to the period prior to 01/06/2015, if filed after 01/06/2015 and processed after 01/06/2015 - whether they attract the amended provisions of Finance Act, 2012 and the specific provision for levy of fee under section 234E of the Act which was inserted w.e.f 1/6/2015 - HELD THAT:- As the assessee, viz., WS Industries India Limited, Visakhapatnam had deducted tax at source U/s. 195 of the Act. The due date for filing TDS returns is 15th May, 2014 but belatedly filed the returns on 2/08/2014 under the bonafide intention that the amended provisions will not attract for levy of late fee U/s. 234E of the Act. Since the period under consideration is the 4th Quarter of FY 2013-14 ie., prior to the amendment to section 200A(1) of the Act wherein clause (c) was inserted w.e.f 01/06/2015 and the assessee had already deposited the tax at source prior to the amendment to section 200A(1), the levy of late fee u/s. 234E for default in furnishing the statement beyond the stipulated time is not sustainable in law. Respectfully following the ratio laid down in case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] ; judgment of United Metals [ 2021 (12) TMI 1349 - KERALA HIGH COURT] and various decisions of the Tribunal levying of late fee under section 234E for the period prior to 1/6/2015 is not sustainable in law. Thus, in the instant case since the period of default was before the said date ie., 01/06/2015, there is no merit in charging late filing fee u/s. 234E of the Act. Accordingly the Ld. AO is directed to delete the fee levied U/s. 234E of the Act in the order passed U/s. 154 r.w.s 200A of the Act. Since hold that the no late filing fee is to be charged, the consequential interest charged U/s. 220(2) of the also does not survive - Decided in favour of assessee.
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2022 (11) TMI 846
Validity of reopening for the assessment framed u/s 147 - Reason to believe - HELD THAT:- Admittedly, the AO on verification of the same set of documents which were available during the original proceedings formed reasons to believe that there is an escapement of income on account of excess remuneration allowed to the assessee. In view of the above, we hold that the proceedings initiated under section 147 of the Act are not sustainable and therefore liable to be quashed for the reasons discussed above. Hence, the assessee succeeds on technical count raised by it. See Fibers and Fabrics International (P.) Ltd. [ 2022 (4) TMI 1433 - SC ORDER ] - Decided in favour of assessee.
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2022 (11) TMI 845
Deduction of interest expenditure u/s 57 against the interest income earned from fixed deposits prior to commencement of business - assessee in its Cross Objection pleads in alternate for treating the interest income as capital receipt which would reduce the cost of the qualifying assets - HELD THAT:- The activity of earning income should be directly connected with or be incidental to the primary activity for which borrowing was made. If the transactions involving activities of earning income and incurring expenditure are not even distantly related to each other, then deduction u/s 57(iii) fails. We are confronted with a situation in which the borrowing was made for developing highway. FDRs were purchased for utilization of idle funds. Such FDRs were not required to be made as a condition precedent for having letter of credit or furnishing of guarantee for doing any activity connected with the highway development. In such circumstances, it becomes glaring that the proportionate interest expenditure on borrowing for highway development has no relation with the making of FDRs on which the interest income chargeable to tax under the head `Income from other sources was earned. As decided in UNITED WIRE ROPES LTD. [ 1978 (7) TMI 40 - BOMBAY HIGH COURT] the interest paid on loan could not be set off under s. 57(iii) against interest earned on deposits, in the absence of any evidence that the two transactions were so integrated as to be regarded a single composite transaction. In the hue of the above discussion and the binding precedent, we hold that the ld. CIT(A) was not justified in allowing deduction of proportionate interest on borrowing u/s 57(iii) against the interest income earned on FDRs, which was offered by the assessee as chargeable to tax u/s 56 of the Act. The impugned order is overturned on this score. Cross objection that the interest income earned on FDRs is a capital receipt not chargeable to tax which would reduce the highway development costs including the interest expenditure etc. - distinction between the cases in which the transaction resulting into income is connected with the other activity for which capital was borrowed on which interest is paid - HELD THAT:- We are not convinced with the alternate submission of the assessee. It cannot be said that no income chargeable to tax can be earned simply because the business has not commenced. The receipt of interest on FDRs has no relation whatsoever with the business of the assessee much less with the improvement of State Highway and both the transactions are independent of each other. Having held that the assessee is not entitled to set off of interest paid amounting to Rs.6.82 crore against the interest income, and further that interest income of Rs.4.91 crore is chargeable to tax separately, the logical consequence of this is that the interest cost of Rs.6.82 crore would go to increase the amount of capital work-in-progress in the same way as has been the interest paid on bank borrowings not used for purchasing FDRs. To clarify, if, for example, an assessee borrows a sum of Rs.100/- for construction on which interest of Rs.10/- is incurred. Further suppose a sum of Rs.80/- out of such borrowing is utilised for making FDRs which is unconnected with the construction. Total interest of Rs.10/- payable by the assessee on the borrowings is liable to be capitalised. Proceeding with the hypothetical example, the assessee capitalized Rs.2 and claimed deduction of Rs.8 against the interest income. Once it is held that Rs.8 cannot be allowed deduction against interest income, then such interest of Rs.8 will also get the same treatment of capitalization as has been given to Rs.2. In other words, the entire interest of Rs.10 on borrowing will be capitalized. We order accordingly. Addition made by the AO u/s.56(2)(viib) by accepting the value of shares as fair market value (FMV) - assessee, has determined the FMV on the basis of Discounted Cash Flow method, which is one of the accepted methods of valuation of shares - HELD THAT:- The Hon ble High Court in VODAFONE M-PESA LIMITED [ 2018 (3) TMI 530 - BOMBAY HIGH COURT] ruling in favour of the assessee held that the AO is undoubtedly entitled to scrutinize the valuation report and determine a fresh valuation either by himself or by calling for a final determination from an independent valuer to confront the petitioner. However, the basis has to be the Discounted Cash Flow method and it is not open to him to change the method of valuation which has been opted for by the assessee Adverting to the facts of the instant case, it is seen that the assessee adopted the DCF method and determined the valuation of share at Rs.2,412/-. As against that the shares were issued only at premium of Rs.1,990/-. Since the AO has not found out any flaw in the calculation done by the IDFC Capital Limited under DCF method, the same has to be accepted. We, therefore, affirm the view taken by the ld. CIT(A) on this score.
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2022 (11) TMI 844
Exemption u/s.11 - Denial of exemption audit report in form 10B was not furnished along with the return of income - HELD THAT:- Admittedly, in the case on hand the assessee has not filed form 10B being the audit report along with the return of income and the same was also not filed till the completion of the assessment order as well as appellate order by the learned CIT-A. As such the order of the learned CIT(A) was passed dated 30th November 2017 whereas the Form 10B of the audit report was filed/ uploaded dated 25th December 2017 which evidences that the audit report in Form 10B was filed subsequent to the appellate order by the learned CIT-A. At this juncture it is also pertinent to note that the audit report in the prescribed form was prepared and signed by the qualified chartered accountant dated 5th September 2014 much before the date of filing the return of income by the assessee. Thus, it appears that report for the audit in the prescribed form was prepared well in time but it was filed belatedly. Whether the assessee can claim the benefit of exemption under section 11 of the Act in a situation where the audit report in the prescribed form was not filed along with return of income ? - In this context we note that act of the assessee to file the audit report duly signed by the qualified chartered accountant is a procedural requirement and the courts have held that the assessee cannot be denied the benefit for which it is entitled in the event of any procedural contravention specified under the provisions of the Act. We hold that the assessee cannot be denied the benefit of exemption for which it is entitled merely on the lapse of procedural requirement i.e. delay in filing the audit report in the prescribed form. In the judgment cited above, it was provided that the audit report was filed by the assessee before the completion of the assessment. In other words, the compliance of the law was made by the assessee when the assessment proceedings was pending before the AO whereas in the case on hand the assessee complied the requirement at the stage of appellate proceeding before tribunal. Admittedly, the appeal was pending before the ITAT at the time when the audit report in form 10B was filed which transpires that the assessment has not reached to the finality and therefore principle laid down by the Hon ble High Court of Gujarat in the case of CIT vs. Gujarat Oil Allied Industries [ 1992 (9) TMI 67 - GUJARAT HIGH COURT] that the requirement for filing the audit report is a procedural requirement, can be applied in the given facts and circumstances. Therefore, the benefit for which the assessee is entitled cannot be denied. Thus there was lack of guidance on the part of the assessee by the tax professionals. Thus, in the event of any disallowance of the benefits available to the assessee, it will cause undue hardship to it in the given facts and circumstances. Thus after considering the facts in totality, we set aside the finding of the learned CIT-A, and direct the AO to allow the exemption under section 11 of the Act. Hence the ground of appeal of the assessee is allowed.
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2022 (11) TMI 843
Nature of receipt - Agriculture income or not - treating the receipt from National Highways Authority of India (NHAI) on account of sale of tea bushes and receipt received on account of sale of trees as business income of the assessee - HELD THAT:- We agree with the submission of assessee that since the land, in question, has already been treated as agricultural land, therefore, the produce thereupon i.e. the tea bushes and even the shade trees grown for the protection of the tea bushes would also fall in the definition of income from sale of agricultural produce which is exempt u/s 10 - Our above view is fortified by the decision of CIT vs. Kanan Devan Hills Produce Company Ltd.[ 1990 (1) TMI 5 - CALCUTTA HIGH COURT ] Admittedly, in this case in hand, the land has already been treated as agricultural land not capital in nature and the tea bushes have been cultivated by the assessee to obtain tea leaves and the shade trees are grown by the assessee for the protection of its tea crops. Not only the tea leaves but the entire plant i.e. tea bushes is the agricultural produce and the shade trees has also been grown and cultivated by the assessee which is a part of its activity to grow and protect tea crops. In view of this, the action of the lower authorities in taxing compensation received on account of sale of tea bushes and shade trees cannot be held to be justified. The addition made by the lower authorities by taxing the sale of tea bushes and shade trees is ordered to be deleted - Decided in favour of assessee.
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2022 (11) TMI 842
CIT(A) admitting the additional evidence during the first appellate stage under Rule 46A of the Income Tax Rules, 1962 - HELD THAT:- During the appellate stage of proceedings, the assessee pleaded before the ld. CIT(A) that the AO did not ask the assessee to furnish the required documents for the purpose of proving the transaction in question. CIT(A) accordingly accepted the documents on record relating to the transaction of sale of shares (the issue relating to which, we will discuss in later part of this order). Since the opposite documents were necessary for going through the transaction in question and to determine the genuineness of the claim of loss made by the assessee, therefore, in our view, the ld. CIT(A) did not commit any error in taking on record the aforesaid documents. Ground No.1 of the revenue s appeal is, therefore, dismissed. Disallowance of loss on sale of shares being stock in trade - AO had made the impugned addition for want of verification of the transactions in question - CIT(A) considering submissions of the assessee allowed the claim of the assessee holding that the expenditure/loss claimed by the assessee was an allowable expenditure u/s 36(1)(vii)/36(2) of the Act by way of a non-speaking order - HELD THAT:- The transactions in question, in our view is not bonafide transaction of sale of shares being stock in trade as alleged by the assessee. The facts speak itself that the underlying transactions is relating to the sale of immovable property i.e., land. Another fact on the file is that the assessee is neither in the business of purchase and sale of shares nor in the business of purchase and sale of immovable property, land etc. Therefore, the assessee, in our view, has treated the said shares as stock in trade for the purpose of evasion of due tax. The transaction in question, since was not related to the business activity of the assessee, therefore, the said land/shares cannot be said to be a stock in trade. Even if for the sake of argument it is assumed that the transaction was of sale of shares, the said shares cannot be treated as stock in trade of the assessee. Even otherwise, the said transaction of shares would be hit by the provision of Section 73 of the Act and this loss claimed by the assessee being speculation loss could not be adjusted against the business income of the assessee. So far as, the claim of the ld. A/R that if the transaction has to be treated as that of sale of capital asset then, the aforesaid loss may be treated as short-term capital loss, we, in this respect, are of the view that the entire transaction requires examination/verification at the end of the AO. We, therefore, restore this issue to the file of the Assessing Officer for the purpose of examining the entire transaction and to find out the real facts and intent pertaining to the transaction and also to find out the tax evasion method, if any, adopted by the assessee and to decide the limited issue by way of a speaking order as to whether the assessee is entitled to claim short-term capital loss in this case or not. Accordingly, these grounds of the revenue are allowed for statistical purposes. Disallowance u/s 14A on account of expenditure incurred towards tax exempted income - CIT-A deleted the disallowance made by the Assessing Officer - HELD THAT:- As relying on various Hon ble High Courts decisions as unanimous to hold that where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A - Decided against revenue.
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2022 (11) TMI 841
Penalty levied u/s 271(1)(c) - Defective u/s 274 - mentioning of both the charges - HELD THAT:- Perusal of this notice shows that ld. AO has mentioned both the charges in the notice rather than raising a specific charge on the assessee. Such type of notices where specific charges are not levelled against the assessee, are found to be defective by various Hon'ble Courts. Since we are bound in the case of Brijendra Kumar Poddar [ 2021 (12) TMI 24 - CALCUTTA HIGH COURT] Hon'ble Court dealing with the similar facts and the issues, confirmed the order of the Tribunal deciding against the Revenue taking note of the judgment in the case of CIT vs. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] laying down the ratio that if the show cause notice issued u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income, such show cause notice are defective. Thus we are inclined to hold that since the notice issued u/s 274 of the Act is defective, penalty proceedings are invalid and bad in law and liable to be quashed. In the result, legal grounds raised by the assessee challenging the levy of penalty u/s 271(1)(c) of the Act are allowed.
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2022 (11) TMI 840
Fresh registration of trust u/s 12A(1) w.e.f. 1.4.2021 - Power of CIT(E) to impose conditions - registration u/s 12AB(1)(a) and under clause (iii) of the second proviso to Section 80G(5) denied - conditions stipulated in Form 10AC not satisfied - action of Ld. CIT(E) to have prescribed conditions for grant of registration u/s 12AB - power of CIT to impose additional conditions while passing the order - objection of the Revenue that this Tribunal is not empowered to look into the vires of the conditions stipulated in Form 10AC notified in terms of Rule 17A of the Rules - HELD THAT:- As held by the Hon ble Supreme Court (Constitutional Bench) in the case of L Chandra Kumar Rao vs. UOI [ 1997 (3) TMI 90 - SUPREME COURT] that even though this Tribunal is indeed a creature of the Statute, it is empowered to test the vires of subordinate legislation and rules. We note that there is no mention of conferring of power upon the Ld. CIT to stipulate conditions for granting registration in Rule 17A (already reproduced above) of the Rules. Hence, the contention of the Ld. CITDR, that the conditions stipulated at Sl No. 10 of Form 10AC had been placed and impliedly approved by the Parliament cannot be accepted. Even otherwise, if the said Form was indeed placed before the parliament, in view of case of Hukum Chand Vs UOI [ 1972 (8) TMI 130 - SUPREME COURT ] it cannot stipulate anything more than what is contained in the extant section/ provision of law as enacted by the Legislature [ie. in this case, Section 12AB of the Act]. We thus agree with the submissions of the Ld. Sr. counsel that the Ld. CIT(E) could not have been empowered to stipulate conditions while granting registration in Form 10AC, which is otherwise not expressly provided in provisions contained in Section 12AB of the Act. As relying on SAIFEE BURHANI UPLIFTMENT TRUST MUFADDAL SHOPPING ARCADE [ 2022 (5) TMI 768 - ITAT MUMBAI] CIT(E) could not have stipulated conditions on his own (other than what is stipulated in law) while granting registration under section 12AB of the Act as the scheme of the law does not visualize these conditions being part of granting of registration to charitable trusts. Accordingly, the grounds raised in the appeal by the assessee stands allowed. CIT(E) did not enjoy the power to prescribe/impose any conditions on his own (other than what is stipulated in law) while granting the registration u/s 12AB we similarly hold that the Ld. CIT(E) lacked jurisdiction to impose any conditions on his (other than what is stipulated in law) while granting the approval u/s 80G of the Act as well. Accordingly, this appeal also stands allowed.
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2022 (11) TMI 832
TDS u/s 195 - Disallowance u/s 40(a)(i) - payment made to International Freight Forwarding Agents (related companies) - HELD THAT:- Tribunal had dismissed the revenue s appeal by following the assessee s own case for the assessment year 2010-11 wherein a similar disallowance under Section 40(a)(i) was upheld by the Tribunal vide order [ 2019 (4) TMI 2000 - ITAT KOLKATA ] holding that the amount paid by the assessee company to International Freight Forwarding Agent was neither covered under Section 9(1)(i) nor under Section 9(1)(vii) of the Act and the same, therefore, did not construe the income as deemed to occur or arise in India in the Memorandum of Grounds of Appeal From the impugned order passed by the learned Tribunal we find that the learned Tribunal has taken note of the decision of the CIT (Appeals) for the assessment year 2010-2011 which was in favour of the assessee. There is nothing on record to indicates that the fact situation for the assessment year 2010-11 is materially different or in any manner different from the assessment year under consideration, i.e. A.Y. 2014. That apart we find that the learned Tribunal had examined the entire factual position and gone through the agreement and thereafter tested the correctness of the argument of the revenue on the ground that the foreign companies are related parties. Tribunal did not agree with the said condition since on facts it noted that those foreign companies are independent legal entities in foreign countries and they have no business activity nor any permanent establishment in India and, therefore, cannot automatically have business connection in India just because they are related parties. The revenue has not been able to dislodge the factual finding recorded by the Tribunal in its order. Thus we find that there is no question of law much less substantial question of law arises for consideration in this appeal.
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2022 (11) TMI 831
PE in India - employees visiting India prior to the date of contract - scope of Article 5(2)(g) of India Cyprus Treaty - As per ITAT threshold period of twelve months has not been exceeded in present case and consequently no Permanent Establishment ( PE ) can be said to have been established in accordance with Article 5(2)(g) of India Cyprus Treaty on the basis of the dates mentioned in the contract - whether ITAT has erred in not appreciating that Article 5(2)(g) of the India Cyprus Treaty refers to PE as construction, assembly or installation project or supervisory activities in connection therewith where such activities continue for a period of more than twelve months? - HELD THAT:- This Court in the case of National Petroleum Construction Company Vs. Director of Income Tax (International Taxation) [ 2016 (2) TMI 47 - DELHI HIGH COURT] has analysed a similar clause being Article 5(2)(h) of the India UAE DTAA and held essence of a PE under Article 5(2)(h) is a building site or a construction or assembly project and the activities of an enterprise relating thereto in the source country - duration of a permanent establishment would commence with the performance of business activities in connection with the building site or assembly project. This Court is of the view that no material has been placed before us to impugn the Tribunal s finding that work had commenced at the site only on or after 4th January, 2008. It is settled law that preparatory work like travelling for obtaining tender/contract cannot be deemed to be the starting point of the contract. Consequently, this Court finds no perversity in the findings of fact rendered by the Tribunal. Accordingly, no substantial question of law arises for consideration in the present appeals and the same are dismissed.
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2022 (11) TMI 830
Maintainability of the writ petitions against E-Assessment u/s 147 read with Section 144B - issue of jurisdiction to issue notice u/s 148 not raised before the assessment order passed - statutory remedy by way of an appeal under Section 246 (1) - HELD THAT:- The respondent have specifically asserted that they have proceeded to re-open the assessment in the light of the information uploaded on Insight Portal. The same is quoted to be a reason to believe that the income chargeable to tax had escaped assessment. It has also been asserted that the Income Tax Officer has not received any books of account or documents or assets seized or requisitioned during the search at M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited in the case of the petitioner. We therefore find that it would necessary for the petitioners to contest and challenge the assessment orders on merits so as to substantiate the stand that the re-opening of the proceedings under Section 147 of the Act of 1961 was not at all justified and thus without jurisdiction. In reply to the show cause notice the petitioners did not seek to challenge the re-opening on the ground that it was without jurisdiction since the assessment was not sought to be re-opened in the light of Section 153C -Having responded to the show cause notice and having contested the same, the petitioners have permitted the orders of assessment to be passed. It would have been a different matter had the petitioners challenged the notice issued under Section 148 seeking to re-open the proceedings at that stage itself. The petitioners permitted the authorities to proceed under Section 147 by responding to the notice. It is only after passing of the assessment orders that is now sought to be urged that the re-opening was without jurisdiction and it ought to have been only under Section 153C of the Act of 1961. We may not be understood to have stated that in no case could such challenge be raised to the jurisdiction to re-opening of the proceedings. However in the facts of the present cases when in the reply to the show cause notice such stand as regards lack of jurisdiction was not raised and the same is being now raised after passing of the assessment orders, we are not inclined to invoke extra ordinary jurisdiction in favour of the petitioners especially since an efficacious statutory remedy is available. There can be no dispute with the proposition that if the impugned exercise is without jurisdiction, extra ordinary jurisdiction under Article 226 of the Constitution of India could be invoked. Similarly, acquiescence of a party would also not be relevant in that regard. However in the facts of the present cases when it is asserted by the respondents that the re-opening of the proceedings is based on the information uploaded on Insight Portal, the same is found sufficient for not invoking the extra ordinary jurisdiction. For all these reasons we are not inclined to entertain the writ petitions as filed. By clarifying that it would be open for the petitioners to invoke the statutory remedy as provided under the Income Tax Act, 1961 and by stating that this Court has not examined the impugned orders of assessment on merits, the writ petitions are not entertained.
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2022 (11) TMI 829
Reopening of assessment u/s 147 - Notice issued in the name of non existing/transferor company - HELD THAT:- This Court is of the view that not only the notice was issued in the name of the transferor company but the impugned order u/s 148A(d) as well as the notice u/s 148 have been issued on the PAN of the transferor company. This Court is also of the view that the primary argument advanced by the Petitioner that the transferee company had filed its return inclusive of the financial data/numbers of the transferor company has not been examined on merit inasmuch as the scrutiny assessment order dated 07th October, 2015 has not been dealt with. The impugned order passed u/s 148A(d) as well as the consequential notice issued under Section 148 of the Act for the Assessment Year 2013-14 are set aside and the notice issued under Section 148A(b) of the Act is deemed to have been issued to the transferee company i.e. the Petitioner. In the interest of justice, the Petitioner is given liberty to file its reply/response to the notice issued under Section 148A(b) of the Act along with all the relevant documents within two weeks from today.
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2022 (11) TMI 828
Penalty u/s 271(1)(c) - assessee could not prove during the former proceedings to have re-invested the capital gains for the purpose of claiming Section 54 deduction since plot in issue was found to be a vacant one only - HELD THAT:- We find no merit in the Revenue s vehement contentions supporting the impugned penalty. It is an admitted fact that the assessee s plot formed part of a group housing society s lay-out plan which ultimately was found as not constructed, which in turn, made the assessee to surrender the impugned deduction claim itself. DR could hardly rebut the clinching settled legal preposition that quantum and penalty are parallel proceedings wherein each and every disallowance/addition made in course of the former does not ipso facto attract to penal mechanism as per CIT vs., Reliance Petro Products [ 2010 (3) TMI 80 - SUPREME COURT] . We thus note that even if the assessee is ultimately found to have not been able to prove her plot in question as a constructed one, that itself would not make him liable for the impugned penalty. We further make it clear that this is not the Revenue s case that assessee had not although re-invested his capital gains in a housing society plot which could not ultimately be completed owing to various issues amongst the members thereof. Assessee s appeal is allowed.
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2022 (11) TMI 827
Capital gains arising out of sale of property under the head short term capital gain u/s 50 - appellant has disclosed the asset under Companies Act as business asset and not claiming of depreciation under IT Act does not change the character of asset - assessee submitted that as per basic requirement for invoking section 50 of the Act the property must form in the block of assets and the depreciation should be allowed but in the case of the assessee, the property in question was never included in the block of assets and that depreciation has not been allowed - HELD THAT:- We observe from the reading of section 50 of the Act that the capital asset has to be part of block of assets in respect of which depreciation has been allowed. Before us, the parties have agreed that the matter may go back to the file of the ld. A.O for verification whether at all depreciation has been allowed in respect of the property in question and then the matter may be decided in accordance with the provision of section 50 - In the interest of justice, we set aside the order of the ld. CIT(A) and remand the matter to the file of the ld. A.O to verify as per above terms whether the assessee has been allowed depreciation and then re-adjudicate the issue as per law in terms of section 50 of the Act. Grounds of appeal are allowed for statistical purposes.
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2022 (11) TMI 826
Deduction u/s 80P(2)(a)(i) in respect of interest earned from credit facilities provided to nominal members - Claim disallowed as credit facilities provided to non-members were not eligible for deduction - HELD THAT:- The assessee Co-operative society is admittedly engaged in carrying on the business of banking and providing credit facilities. Section 80P(2)(a)(i) provides that in the case of co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profits and gains of business attributable to such activities shall be deductible in the computation of total income. The claim of assessee for deduction has been negated by the authorities below, inter alia, on the ground that it admitted certain Members, described as Nominal Members , who were neither entitled to dividend nor voting rights. On going through the above definition of Member , it becomes overt that the term Member also includes a Nominal Member. Once it is accepted that the assessee, governed by the Karnataka Act, made advances to certain Nominal Members from whom interest income was earned, there can be no doubt whatsoever that the deduction u/s 80P(2)(a)(i) has to be allowed. Taking note of the fact that the Citizen Co-operative Society Ltd. vs. ACIT [ 2017 (8) TMI 536 - SUPREME COURT] judgment dealt with the Andhra Act wherein the term Member did not include Nominal Member, the Hon'ble Supreme Court in Mavilayi Service [ 2021 (1) TMI 488 - SUPREME COURT] held that the interest on loans given to Nominal Members under the Kerala Act was eligible u/s 80P(2)(a)(i) of the Act as the term Member under the Kerala Act included Nominal Members . As evident that when the loans are given to Nominal Members and the relevant State Act includes, Nominal Member within the purview of Member , there can be no question of denial of benefit u/s 80P(2)(a)(i). We overturn the impugned order on this score and direct to allow the deduction. Appeal of assesee allowed
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2022 (11) TMI 825
Validity of Reopening of assessment u/s 147 - assessee submitted that the assessee had taken specific ground regarding validity of re-opening of the assessment - HELD THAT:- On a pointed query from the Bench of the Tribunal that there is no decision by the Ld.CIT(A) on the ground of validity of re-opening of the assessment, Ld. Sr. DR agreed that matter may be restored to the file of Ld.CIT(A) and direct the Ld.CIT(A) to adjudicate the grounds raised by the assessee. There is no dispute with regard to the fact that the assessee had raised specific ground related to validity of re-opening of the assessment u/s 148 of the Act however, this ground is not adjudicated by Ld.CIT(A) since the issue of jurisdiction goes to the root of any proceedings. We therefore, looking to the facts of the present case, the impugned order is set aside and the ground raised by the assessee are restored to the file of Ld.CIT(A) to decide it afresh by way of a speaking order. Thus, ground raised by the assessee in this cross-objection is allowed for statistical purposes.
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2022 (11) TMI 824
Assessment of trust - Deduction claimed under Chapter VI-A / Section 80G/80GGA r.w.s. 35AC in respect of donation paid to eligible trusts - application for rectification before the CPC was rejected - HELD THAT:- It is found that the Co-ordinate Bench of the Tribunal in the case of Parijat Trust vs. DCIT [ 2022 (7) TMI 633 - ITAT DELHI] has also followed the above order made in Sun Flower Trust [ 2022 (7) TMI 392 - ITAT DELHI] . Therefore, by respectfully following the above orders, we hold that the assessee is entitled for deduction claimed under Chapter VI-A/Section 80GGA read with Section 35AC of the Act and further we direct the A.O. to grant the benefit of deduction claimed by the assessee under Chapter VI-A of the Act in accordance with law. Appeal filed by the assessee is allowed.
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2022 (11) TMI 823
Deduction u/s 80P(2)(a)(i) - deduction with respect to the interest income earned from the bank - HELD THAT:- The provisions of section 80P(2)(a)(i) of the Act provides the deduction to a co-operative society engaged in the business of banking or providing credit facilities to its members. The provisions of the section are without any ambiguity - the income from the activity of financing from the members is only eligible for deduction under section 80P(2)(a)(i) - If there is any income arising to the co-operative society from the non-members that will not be subject to deduction under section 80P(2)(a)(i) - In holding so draw support and guidance from the judgment of the Hon ble Gujarat High Court in the case of State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT ] It is only the interest derived from the credit facilities provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the nationalized/commercial bank i.e. Bank of Baroda is not being attributable to the business as envisaged under the provisions of the Act. Thus the same cannot be deducted under section 80P(2)(a)(i) - there remains no ambiguity that income received by the assessee on the money deposited with the Bank of Baroda is not eligible for deduction under section 80P(2)(a)(i) Whether gross amount of interest should be reduced from the claim made by the assessee for the deduction under section 80P(2)(a)(i) of the Act ? - As direct interest expenses if any incurred by the assessee against such interest income on the fixed deposits made with the nationalized bank should be considered for calculating the net income which is not eligible for deduction under the provisions of section 80P(2)(a)(i) of the Act. Thus, hold that there is no infirmity in the order of the learned CIT (A), requiring any interference except the allowability of interest expenses against the interest income. Hence,uphold the same to the extent discussed above. Hence, the ground of appeal of the assessee is partly allowed.
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2022 (11) TMI 822
Undisclosed sale of scrap - HELD THAT:- On perusal of Vat returns, copies of bill issued by the assessee, extract of the Act/Rules containing the item scrap as taxable good find that the alleged sum is not an undisclosed sale of scrap. The assessee regularly discloses the sale of scrap in its books of account and charged/paid GST thereon. Thus, we do not find any merit in the findings of the ld. CIT(A) and we are inclined to hold that the AO erred in making the addition towards undisclosed sale of scrap ignoring the fact that the said sum duly disclosed/recorded as sales in the regular books of account. Therefore, the addition of Rs.10,01,000/- stands deleted. Ground nos. 1 to 3 raised by the assessee are allowed. Admission of additional ground raised by the assessee - addition of undisclosed stock - Excess stock found during the course of survey - HELD THAT:- The assessee did not raise this issue before the ld. CIT(A), thus, accepted the addition. Now the assessee has challenged this issue referring to the judgment of M/S. Subarna Rice Mill [ 2018 (8) TMI 1475 - CALCUTTA HIGH COURT] We, however, are of the considered view that this issue raised in additional ground is not a legal issue and is purely based on the facts of the case, which stands already adjudicated and assessee opted not to challenge it before Ld. CIT(A). Thus, the same cannot be raised at this stage. We, therefore, dismiss this additional ground raised by the assessee being infructuous
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2022 (11) TMI 821
Disallowance of Commission Expenses - prior period expenditure - due to poor sales performance, security was forfeited and adjusted - on request the same restored and commission paid in subsequent year after deduction of TDS - HELD THAT:- Nature of payment referred is u/s 194H which certainly is provision requiring deduction of tax on any income by way of commission or brokerage. Pertinent to mention is that the ld AO had referred in the assessment order about four amount claimed as commission expenses and these form No. 16A cover up all the four expenses under the head 194H of the Act. The bench is of firm view that the ld CIT(A) has fallen an error in not giving due consideration to the letter dated 24.01.2014 of M/s. Hitkari Potteries Pvt. Ltd which specifically mentioned that the amount lying as security is being forfeited has compensation for loss of commission or short sales. The TDS deduction against the same stands paid by the appellant in present FY. Thus, the findings of the ld CIT(A) holding that payment was on account of royalty and a prior period expense cannot be sustained. The ground no 1 is allowed in favour of the assessee. Addition of business promotion expense - Appellant had voluntarily disallowed towards personal expenses of Managing Director/ Directors - AR submitted that the Tax Authorities below have fallen in error in not appreciating that the personal expenditure of the directors were suo motto deducted while claiming the expenditure - HELD THAT:- The bench is of considered opinion that to substantiate the validity of the expenditure of the nature refered above it is necessary to establish that the same can be laid out wholly and exclusively for the purpose of business, however, the assessee failed to establish the same by filing any vouchers or other evidences which would have shown that these expenses were for the procurement of business or for business negotiations or specific business promotion activity. In case of business promotion expenses, the assessee is expected to show that the expenses intended to achieve any specific or general business target or how it could have helped the promotion of business or business interest of the assessee. Specially, when the expenses incurred are not supported by any vouchers and are on heads that same are generally of personal nature like bills of restaurant, hotels, clothing, fashion accessories, duty free shops, cosmetics, spa, gift shops, it becomes all the more necessary that the expenses are explained with some probability of being spent for business promotion and not just personal or for superfluous social networking. Thus AO was not justified to restrict the disallowance to ad hoc 20% and Ld. CIT(A), following due process of law has rightly enhanced the same. The same requires no interference and ground no 2 is decided against the assessee.
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2022 (11) TMI 820
Addition u/s 69A - cash deposited in the bank - income from undisclosed sources which was deposited in the bank account and the same is treated as unexplained cash deposit u/s 69A - HELD THAT:- As we note that assessee has duly explained before the AO that amount withdrawn from the bank was redeposited after a lapse of very few days in the same bank. In my considered opinion, authorities below are not justified in disallowing the small sum of Rs.75,000/-. CIT (A) in fact has not applied any mind and he has only harped upon that the assessee had not appeared before him. The assessee had sufficient income and has duly withdrawn the amount from the bank and the same was redeposited. Hence, in my considered opinion, orders of the authorities below are not sustainable and accordingly, the same are set aside and the issue is decided in favour of the assessee.
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2022 (11) TMI 819
Cash deposit made in the bank account - assessee could not explain the source of cash deposits, AO added the entire amount to the income of the assessee by invoking the provision of section 69 - HELD THAT:- After verifying the documentary evidences including letter of confirmation of M/s. Sheela Credit Leasing Ltd. the Bench had given a categorical finding that assessee s claim that it has repaid an amount of Rs. 8,40,000/- out of the total advance of Rs. 15,00,000/- received from M/s. Sheella Credit Leasing Ltd. towards sale of the property was found to be correct. Irrespective of the fact whether the assessee had enough documentary evidences to prove the ownership of the property, fact remains that assessee s claim that he has received advance of Rs. 15,00,000/- from M/s. Sheela Credit Leasing Ltd. on the basis of agreement to sell is established on record through proper documentary evidence. Therefore, the source of cash deposited in the bank account stands explained. Accordingly, delete the addition sustained by Commissioner (Appeals). Appeal of the assessee is allowed.
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2022 (11) TMI 818
Exemption u/s 11 - cancellation of registration of the assessee u/s 12AA(3) - As per CIT-E activities carried on by the Appellant are not genuine and are not in accordance with the objects of the assessee - HELD THAT:- A perusal of the objects show that the assessee society is created to promote national integration, communal amity and social harmony and uphold the democratic set up, secular order and rule of law in the country. There are in total 17 objects mentioned in the Memorandum of Association. The Ministry of Home Affairs, vide Notification dated 27.09.2022 published in the Gazette of India dated 28.09.2022 as notified by the Ministry of Home Affairs clearly demonstrates the malafides of the assessee society. Considering the aforementioned Notification, the appeal of the assessee is dismissed.
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2022 (11) TMI 817
Reopening of assessment u/s 147 - bogus purchases - HELD THAT:- Even if the information be such that it could have been obtained by the I.T.O. during the previous assessment proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income Tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under Section 147 of the Act are satisfied. As observed earlier not only there existed new information with the AO from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss the ground No.1 raised by the assessee. Addition at the rate of 6% of bogus purchases - Since the issue is squarely covered by the decision of the Co-ordinate Bench in the case of Pankaj K. Chaudhary [ 2021 (10) TMI 653 - ITAT SURAT] and there is no change in facts and law and Revenue is unable to produce any material to controvert the aforesaid findings of the Co-ordinate Bench (supra). We find no reason to interfere in the above said order of Co-ordinate Bench, therefore we dismiss the appeals of the assessees and we allow the appeals of the Revenue partly.
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2022 (11) TMI 816
Revision u/s 263 - AO in determining the net rate of profit on estimation basis - no enquiry by the Assessing Officer - contention of the ld. counsel that section 44AD was not applicable as the gross receipts of the assessee were more than the prescribed limit for applicability of provision of section 44AD to determine the income on presumptive basis - HELD THAT:- We find that the AO estimated the net profit @5% on gross receipts without any basis and without consulting any records either of the assessee s income in the earlier years or income returned by the other persons having same type of business as that of assessee. AO has not given any basis or reasoning for assessing the net profits of the assessee @5% of the gross receipts on pure estimation basis. There was absolutely no effort to collect information or data by the Assessing Officer for estimating the net profits/income of the assessee. No enquiry was made by the AO in this respect. PCIT, however, observed that the data was available to show that in the earlier years, the assessee has returned net profit @15% and 18% in assessment year 2015-16 and assessment year 2016-17 respectively. The ld. PCIT also considered that even in the case of no accounts and presumptive income on ad hoc basis, the minimum net profit should have been determined @8% on gross receipts u/s 44AD of the Act. In this case, the LD. PCIT has not directed the Assessing Officer to determine profits of the assessee as per provision of section 44AD - PCIT has just taken note of the provisions of section 44AD to observe that even in the case of no accounts, if the gross receipts are less than the prescribed limit as mentioned under the provisions of section 44AD, even then the minimum net profit should be determined @8% of the gross receipts/turnover. However, the ld. PCIT has restored the matter to the AO to frame the assessment afresh after conducting necessary enquiries and even after giving opportunity to the assessee to present his case. Even, as contended by the ld. counsel that the gross receipts are more than the prescribed limit as provided u/s 44AD, the assessee was supposed to maintain his accounts. However, in this case, the assessee has not furnished any details, information/account before the AO. The assessee, therefore, cannot be allowed to take benefit of his own wrong Since it was a case of no enquiry by the Assessing Officer and even the assessee has failed to furnish the required information to the Assessing Officer for estimation of net profits , therefore, we do not find any reason to interfere with the aforesaid revision order passed by the ld. PCIT. There is no merit in the appeal of the assessee and the same is accordingly hereby dismissed.
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2022 (11) TMI 815
Unexplained cash credit u/s 68 - Bogus share capital and share premium - non compliance to summons issued u/s 131 of the Act or non appearance of the directors of the subscribing companies before the AO - HELD THAT:- Mere non-compliance to the summons cannot be the basis for making addition.On the issue of high premium, we note that issuing of shares at a premium is a business decision taken by the board of directors and the AO cannot dictate the assessee as to at what rate the shares are to be issued. Besides there are no provisions under the Act to assess the said issue of shares at a high premium as the amendment was brought out in the Section 56(2)(viib) by Finance Act, 2012 w.e.f 01.04.2013 and accordingly is effective from AY 2013-14. So far as non-compliance of summons u/s 131 is concerned the same cannot be the ground for making addition. We note that the assesse has received the amounts through account payee cheques and source of investments were fully explained and proved. We further note that the AO has made the addition that no compliance was made to the summons issued to the investors. In our considered view non compliance to summons issued u/s 131or non appearance of the directors of the subscribing companies before the AO can not be basis for making addition as the assessee has filed all the necessary documents before the authorities below proving the identities , creditworthiness of the investors and genuineness of the transactions. The case of the assessee is squarely covered by the decisions of Hon ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] , wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. As the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides all the four investors have also furnished complete details/evidences before the AO which proved the identity , creditworthiness of investors and genuineness of the transactions. Under these facts and circumstances we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
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2022 (11) TMI 814
Assessment of trust - unexplained investment by the assessee-trust justifying the addition of section 69 - HELD THAT:- The building was not constructed or owned by the trust/institute for the relevant assessment year A.Y 2011-12. We find that the ld. CIT(A) has also categorically made observation that the building was constructed by the trustees of the assessee and not by the assessee itself. Since the building was not constructed by the assessee-trust, there was no question of any addition on account of unexplained investment by the assessee-trust. There is no justification on the part of the CIT(A) in confirming the impugned addition especially when the CIT(A) himself has observed that the building was not constructed by the assessee-trust rather the same was constructed by the trustees of the assessee i.e. Smt. Mamata Mondal and Shri Aditya Mondal. Merely because the building was used by assessee-trust without consideration that cannot be said to be, in any way, any unexplained investment by the assessee-trust justifying the addition of section 69 of the Act. In view of this, the impugned order of the CIT(A) is set aside and the addition made by the Assessing Officer is hereby ordered to be deleted. - Decided in favour of assessee.
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2022 (11) TMI 813
Reopening of assessment u/s 147 - Eligibility for deduction u/s 80P(2)(d) in respect of the interest income from investment made with the co-operative bank - HELD THAT:- We find that the reopening is made on the basis of information available on record by drawing an inference that deduction allowed u/s 80P was irregular because interest is received from cooperative bank and not cooperative society. We note that this information was already on record. Further on the issue as to whether a cooperative bank is a cooperative society or not, there are decisions of various High Courts and ITAT in favour of the assessee at the relevant point of time when notice u/s 148 was issued. Even the Coordinate Bench in case of ITO Vs. Shree Keshorai Patan Sahakari Sugar Mill [ 2018 (2) TMI 499 - ITAT JAIPUR] held that co-operative bank is to be treated as co-operative society for the purpose of interest income on investment in such co-operative bank and thus, eligible for deduction u/s 80P(2)(d) in respect of the interest income from investment made with the co-operative bank. When AO has taken one of the permissible view for allowing deduction u/s 80P(2)(d) in respect of interest earned by the assessee on investment made in FDR with Jaipur Central Cooperative Bank Limited, then on the basis of various decisions relied by Ld. A/R (supra), we have no hesitation to hold that reopening is bad in law and thus, this ground of the assessee is allowed. Interest expenditure allocation against the interest receipt for computing the deduction u/s 80P(2)(d) - When interest receipt excluding the interest receipt from JCCB Ltd. is more than the interest expenditure, expenditure on interest cannot be attributed against the interest receipt from JCCB Ltd. In view of above, we are of the view that the decision of ITAT in assessee s own case for AY 2016-17 setting aside the issue to ld. CIT(A) would serve no useful purpose in as much as from the legal and factual position stated above, no interest expenditure can be allocated against the interest receipt from JCCB Ltd. for computing the deduction u/s 80P(2)(d).The AO is therefore directed to verify the above factual position and allow deduction u/s 80P(2)(d) accordingly after making verification of these factual aspects for A.Y. 2014- 15.
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2022 (11) TMI 812
Revision u/s 263 - subject matter of appeal before the Ld. CIT(Appeals) and is still pending adjudication - as per CIT, difference in closing stock was not added U/s 68 but net profit was assessed as income and therefore the assessment order dated 30.12.2017 passed u/s 143(3) r.w.s 147 of the Act appears to be erroneous as well as prejudicial to the interest of the revenue - HELD THAT:- We could see from the grounds of appeal that the assessee disputed the entire addition including the difference in closing stocks and, therefore, when the larger issue of whether there is any difference in closing stock at all is the subject matter of appeal before the Ld. CIT(Appeals) and is still pending adjudication the Ld. PCIT could not have assumed jurisdiction u/s. 263 of the Act. The jurisdictional High Court in the case of CIT Vs. Vam Resorts and Hotels Pvt. Ltd. [ 2019 (8) TMI 1418 - ALLAHABAD HIGH COURT] held that when an appeal is pending before the Ld. Commissioner (Appeals) the exercise of jurisdiction u/s. 263 of the Act by the CIT is barred as per clause (c) of Explanation 1 to Section 263 of the Act - Also see SMT. RENUKA PHILIP [ 2018 (12) TMI 129 - MADRAS HIGH COURT] Thus since the larger issue of whether there is any difference in closing stock at all is the subject matter of appeal before the Ld. CIT(A) we hold that the Ld. PCIT is barred in assuming jurisdiction u/s. 263 of the Act. Also from the order of the Ld. PCIT the assessment order passed by the Assessing Officer was held to be erroneous and prejudicial to the interest of the Revenue stating that the AO has not made enquiries. The Ld. PCIT is also of the view that the difference in closing stock should have been added as income u/s. 68 of the Act. In the course of assessment proceedings the assessee was required to explain the difference in closing stock and the assessee has furnished charts, reconciliation statement, explanations etc., which was examined by the AO and decision was taken to treat the difference in opening stock, purchases, sales, closing stock, GP/net profit as income of the assessee. Therefore, the observations of the Ld. PCIT that the AO has not carried out any enquiries are not borne out from record. We also observe that the Ld. PCIT having observed that the AO has not made an enquiry the Ld. PCIT failed to point out any deficiency in enquiries and also not made any minimal enquiry by himself to prove that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. As enquiries were certainly made by the Assessing Officer as observed above and it is not a case of no enquiry at all. In view of the decision in the case of DIT vs. Jyoti Foundation [ 2013 (7) TMI 483 - DELHI HIGH COURT] we hold that the Ld. PCIT should not have set aside the assessment order and directed the Assessing Officer to conduct enquiry. - Decided in favour of assessee.
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2022 (11) TMI 811
Validity of reopening of assessment u/s 147 - amount received by the assessee towards share application money and sale of shares not genuine - HELD THAT:- Admittedly, the return of income filed by the assessee was not subjected to scrutiny but was only process u/s 143(1) - Therefore, the assessing officer had no occasion to verify various issues relating to assessee s affairs in the year under consideration. It is a fact on record that subsequent to processing of return of income u/s 143 (1) AO received information from the Investigation Wing indicating that the amount received by the assessee towards share application money and sale of shares are not genuine. Based on such information, the assessing officer had reopened assessment under Section 147 of the Act. Thus, it is a fact on record that at the time of reopening of assessment, the assessing officer had tangible material to form prima facie belief that income had escaped assessment. The final outcome of the proceeding is not relevant. Hence, AO was not required to conclusively establish the fact of escapement of income. That being the position in law, find no merit in assessee s challenge regarding validity of reopening of assessment under Section 147 - Thus hold that the assessing officer has validly reopened the assessment under Section 147. Addition u/s 68 - Facts on record reveal that the additions were made on conjecture and surmises by entertaining doubts regarding the genuineness of the transaction. It is fairly well settled, suspicion, howsoever, strong cannot take place of evidence - amount representing share application money received from M/s. Rapid Impex Pvt. Ltd., cannot be treated as unexplained cash credit under Section 68 of the Act. More so, when it is a fact on record that against the share application money, the assessee has issued equity shares to the concerned party. As regards, sale of shares of M/s. Taurus Packaging Pvt. Ltd. to M/s. Globetec Solution Pvt. Ltd., facts are more or less identical with the share application money received from M/s. Rapid Impex Pvt. Ltd. In this regard, the assessing officer has primarily relied upon the statement of Shri S.H. Malik to conclude that the share transaction is ingenuine. However, as discussed earlier, in the statement recorded from Shri S.H. Malik, the name of M/s. Globetec Solution Pvt. Ltd. does not appear. The assessee has also furnished various documentary evidences, such as, copy of ITR, company master data of ROC, confirmation etc. to prove the identity and creditworthiness. Further, the transaction has been carried out through banking channel. Therefore, my reasoning for not sustaining the addition of share application money received from M/s. Rapid Impex Pvt. Ltd. would also apply to this transaction as well. Thus delete the addition - As a natural corollary, the disallowance of long term capital gain also stands deleted. For the very same reason, the addition being the alleged commission paid is also deleted.
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2022 (11) TMI 810
Bogus loss from sale of equity shares - disallowance of assessees claim of exemption u/s 10(38) of the Act in respect of long-term capital gain arising from sale of equity shares - HELD THAT:- As similar to the facts dealt in the case of Swati Bajaj [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] and the submissions made by the ld. Counsel for the assessees that the alleged claim of long-term capital gain under section 10(38) in the case of Manish Goel and Modhu Goel and loss claimed in the case of Enkay Trafin Pvt. Limited are accommodation/bogus entries through penny stock companies is found to be correct. We herefore, respectfully following the ratio laid down in the case of Swati Bajaj (supra) confirm the additions made by the AO in respect of bogus long-term capital gain/bogus loss. - Decided against assessee.
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2022 (11) TMI 809
Revision u/s 263 by CIT - cash deposits during the demonetisation period - HELD THAT:- Questionnaire issued by the AO along with notice u/s 142(1) of the Act includes the details of cash deposits during the demonetisation period as well the contention of the Ld. DR that submissions of the assessee filed after the conclusion therein which appears to be not in consonance with the facts on record. The details related to cash deposits in respect of demonetisation was very much before the AO. PCIT has not given proper opportunity for filing reply on behalf of the assessee and without giving hearing or any opportunity to file any details before him has passed the order under Section 263 of the Act. PCIT has not taken cognisance of the assessment proceedings wherein the details were called related to demonetization period and related cash deposits. The CBDT circular in respect of cash deposits in Rs. 500 and Rs.1000 denomination notes are permissible and, therefore, the assessee has justified his conduct in relation to cash deposits during demonetization period. Therefore, AO has rightly accepted the contention without giving any details thereto in the assessment order. Once the Assessing Officer is satisfied, it is not necessary to comment on the same in the assessment order. Thus, the assessment order was neither erroneous nor prejudicial to the interest of the Revenue. Therefore, invocation of Section 263 provisions are not just and proper as the PCIT has not looked into the assessment proceedings and the documents filed before the Assessing Officer - Appeal of assessee allowed.
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Customs
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2022 (11) TMI 808
Confiscation of imported goods - penalty u/s 112(a) (i) of Customs Act - LED Module Lights Brand Samsung - HELD THAT:- The first time line prescribed that the Customs is, required to immediately inform the right holder on suspension of clearance. Such suspension was made on 22.03.2017 pursuant to examination of the goods. However, the Customs have given intimation to the right holder Samsung Electronics Co. on 11.04.2017 i.e. after about 20 days and thus, have violated the time line. Secondly, the right holder is required to furnish the bond within a period of 5 days and was required to furnish such bond /bank guarantee by 17.4.2017. Whereas the Bond has been filed on 24.5.2018 and thus, there is breach of time limit at this stage also. The impugned order for confiscation and penalty is bad and against the provisions of the law. Further, the impugned order is bad for violation of the prescribed conditions and limitation prescribed under the Intellectual Property Rights; Customs Authorities prescribed by the Board and further also is in violation of Notification No.47 of 2007-Customs and the instructions dated 29.10.2007 prescribed by the Board vide F.No.305/96/2004-FTT(Part-I) read with F.No.305/1/2008-FTT dated 24.02.2011. Appeal allowed.
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Corporate Laws
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2022 (11) TMI 807
Reduction of share capital - buy back of shares - Special Resolution passed under sections 100-104 of the erstwhile Companies Act, 1956 read with section 52 of the Companies Act, 2013 is in the nature of buy-back shares of non-promoters shareholders or not - requirement to follow the various circulars issued by SEBI for providing exit to its non-promoters shareholders upon de-recognition of a stock exchange where the Company was earlier listed - correct valuation of shares, protecting the interest of its public shareholders who wanted to voluntarily exit the company, or not - guidelines given by SEBI in its Exit Circular dated 10.10.2016, followed or not. HELD THAT:- It is noted that sub-section (3) of section 419 of the Companies Act, 2013 provides that if a Single Member Bench comprising of a Single Judicial Member is constituted by President of NCLT in respect of such class of cases or such matters pertaining to such class of cases, then such a Bench would be considered competent to hear such cases. We also note that the Single Member (Judicial) Bench constituted at NCLT, Chennai by the order of the Hon ble President, NCLT on 27.11.2017 in exercise of powers under section 419 of the Companies Act, 2013, whose copy is attached with the report of the Learned Amicus Curiae, the Single Judicial Member, Bench was entrusted with powers to dispose of cases relating to Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016 - the Single Judicial Member Bench that heard the Company Petition bearing No. CA/212/66(1)/CB/2017 and passed order dated 18.9.2019 was a validly constituted bench to hear cases under the Companies Act, 2013 by Hon ble President, NCLT and was fully empowered and competent to hear and dispose of the said company petition. Whether the Special Resolution passed under section 100-104 of the erstwhile Companies Act, 1956, the buy-back of non-promoters shares is a valid modality for providing exit to the shareholders? - HELD THAT:- A perusal of section 100 provides for the Special Resolution for reduction of shares capital in three cases viz. clauses (a), (b) and (c) of sub-section (1) of section 100. Since the share capital of the non-promoters who were to be provided option by the company, sub-sections (a) and (b) are not applicable and sub section (c) makes it clear that any paid-up share capital, which in excess of the wants of the company, can be paid off. Insofar as the present case of providing exit to the shareholders of the company, it is clear that the payoff of any paid up share capital is not in excess of the wants of the company, but due to the reason that this exclusively listed company Reed Relays on Madras Stock Exchange has got delisted because Madras Stock Exchange has been de-recognized - the buy-back of shares of exiting shareholders cannot be done by using the Securities Premium Account reserve of the company, though in the present case, the Securities Premium Account of the company has been used for buy-back of the shares. Whether the company Reed Relays was obligated to follow various Exit Circulars issued by SEBI for providing exit to its non-promoters shareholders consequent to the de-recognition of a stock exchange where the company was exclusively listed? - HELD THAT:- The various Exit Circulars issued by SEBI are mentioned in the application but curiously the application fails to mention Exit Circular dated 10.10.2016, which provides clarity about the procedure for providing exit to public shareholders. Moreover, while this application is made on 9.2.2017, the manner in which the public shareholders have been provided exit option, is through reduction of share capital and not in accordance with the stipulations in the various Exit Circulars of SEBI - It is clear that while the circular dated 10.10.2016 of SEBI had already been issued, which the company should have known, the Company s Board did not take note of this circular in its Board meeting on 13.10.2016 and followed a procedure that had not been stipulated by SEBI through its Exit Circulars, and which actually meant compulsory buy-back of shares rather than the opportunity of voluntary exit option. Whether the company's funds could have been used for buy-back of shares of the exiting non-promoter shareholders in view of the guidelines issued by SEBI for providing exit to public shareholders after de-recognition of the Regional Stock Exchange (Madras Stock Exchange in the present case)? - HELD THAT:- It is clear from the procedure outlined to provide exit to investors in Annexure A of the Exit Circular dated 10.10.2016 that the promoters of the company shall acquire shares of such companies from public shareholders by paying them such value determined by the valuer - two facts are clear from these Exit Circulars. viz (i) that the Exit Circulars have been issued in exercise of powers conferred under the Securities and Exchange Board of India Act, 1992 by SEBI to provide exit option to public shareholders of ELCs of a de-recognised Regional Stock Exchange, and (ii) the promoters of the ELCs shall be responsible for making payment of consideration to the exiting public shareholders. In the present case, where the company has used its Securities Premium Account to make payment to the exiting public shareholders, the procedure adopted is not in accordance with the procedure stipulated for providing exit to public shareholders by SEBI consequent to de-recognition of an exclusively listed company after de-recognition of a Madras Stock Exchange. The Respondent No. 1 company has not provided voluntary exit option to its public shareholders but resorted to compulsory buy-back of shares under section 100 104 of the Companies Act, 1956, when SEBI through its Exit Circulars, particularly the Circular dated 10.10.2016, had provided a very clear and unambiguous modality/ procedure for providing an exit to non-promoter, public shareholders - In view of the infirmities in the procedure employed by Respondent No. 1 company in providing purported exit to its public shareholders through compulsory buyback of their shares, we find that the interests of the public shareholders have not been duly protected and preserved, as was required to be done by complying with the various Exit Circulars issued by SEBI in this regard. The Impugned Order has erred grossly by not considering these factors when passing the Impugned Order. The impugned order is set aside - Respondent No.1 company shall provide voluntary exit to its non-promoter, public shareholders in the manner outlined in the Exit Circular of SEBI dated 10.10. 2016 - Since it appears that a number of non-promoter shareholders have already availed of the buy-back of shares and accepted demand drafts/warrants in payment, the company shall now engage an independent valuer from amongst the SEBI approved panel and cause a valuation exercise to be undertaken based on financials as they existed on 10.10.2016. Those non-promoter shareholders shall be paid the difference amount if the valuation comes to be more than Rs. 107/- per share. The non-promoter shareholders who have not accepted any payment till now shall be entitled to receive the full value of their shareholding as per the accepted valuation. Further, the non-promoter shareholders shall be given interest @ 9% p.a. on the amount due to them for the period 10.10.2016 till the date of this order. This entire exercise shall be completed within 75 days from the date of this order. Appeal disposed off.
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2022 (11) TMI 806
Oppression and mismanagement - Wilful refusal by Respondent No.1 / ABT Ltd. and its nominees in complying with and give effect to the NCLAT judgment - Rule 11 and 31 of the National Company Law Appellate Tribunal Rules, 2016 - HELD THAT:- The Applicant filed Appeal before this Tribunal in CA (AT) (CH) No. 27 of 2022 aggrieved by the order dated 29.03.2022 passed by the NCLT, Division Bench-II, Chennai in CP No. 25/CHE/2022. The Company Petition No. 25 of 2022 was filed by the 1st Respondent herein under Section 241 242 of the Companies Act, 2013 by arraying the Appellants and the Company as Respondents alleging certain acts of oppression and management in the affairs of the Company. It is to state that the SGAH (Sakthi Global Auto Holdings Limited) on 15.11.2021 issued a requisition under Section 100(2)(a) of the Companies Act, 2013 calling upon the current SACL (Sakthi Auto Component Limited) Board to call an EGM inter-alia to pass resolution for removing the existing Directors who are Sakthi Groups/ABT Nominees from the SACL Board and appointing Additional Aapico Nominee Directors in accordance with articles. The Applicant categorically stated at para 12 13 of the Application that pursuant to passing of the judgment by this Tribunal, the SACL Board, the Company filed Forms with the Registrar of Companies (RoC) in relation to the appointment of Appellant nominee directors and the independent directors and complied with Section 117 of the Companies Act, 2013 and the appointment of the directors reflected on the website of the Ministry of Corporate Affairs - the judgment of this Tribunal dated 02.08.2022 has been complied with in toto with regard to implementation of the resolution passed at the EGM held on 25.01.2022. This Tribunal is of the view that the Applicants are seeking entirely new reliefs and the said reliefs are in the nature of fresh cause of action and completely out of the purview of this Tribunal - the `Application is an attempt of `vexatious act , without approaching the `Proper Forum , by exercising its jurisdiction as per `Law . Application dismissed.
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Insolvency & Bankruptcy
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2022 (11) TMI 839
Direction to Financial Creditors to pay the dues of erstwhile RP - reasonable fees or not - case of Appellants/ Respondents are that they are saddled with Harsh and Burdensome order thereby, their rights are prejudiced and affected - opportunity of hearing - principles of natural justice - HELD THAT:- This Tribunal, without delving deep into the subject matter in issue, and not expressing any opinion, one way or the other, on the Merits, of the pending matter, at this stage, simpliciter, directs the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench, Bengaluru) to take into consideration the Circular of the IBBI dated 16.01.2018 and the Circular dated 12.06.2018, made mention of by the Appellants (in the Counter to IA Nos.295/2021 in CP (IB) No.165/BB/2018 filed on behalf of the Committee of Creditors 3rd to 4th Respondent), and in the event of any payment not being made, and also not filing the Receipt, for the said payment, is to provide an opportunity of Hearing to the Appellants and other Parties to the proceedings / List, by adhering to the principles of natural Justice and to pass a reasoned speaking order on Merits, in a qualitative and quantitative term, adverting to the points raised by the parties and make out the same in one way or the other, completely, comprehensively and finally dispose of the said application, of course, in the manner known to Law and in accordance with Law. Appeal disposed off.
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2022 (11) TMI 805
Application for withdrawal of IBC - Section 12A of I B Code - HELD THAT:- It is an admitted fact that CIRP was initiated against the Corporate Debtor and the Adjudicating Authority vide its order dated 16.04.2018 admitted the application and appointed IRP. The IRP took charge and proceeded in accordance with law, namely making public announcement regarding initiation of CIRP against the Corporate Debtor in Form-A, preparation of list of creditors, and convening the Meetings of the Committee of Creditors and calling the Expression of Interest (EoI) etc. It is seen that one of the Prospective Resolution Applicant viz. namely Paras Agarwal submitted its plan for CD - As per the decision of the CoC, the Respondent / RP filed the Application before the Adjudicating Authority seeking withdrawal of CIRP Proceeding against the Corporate Debtor. This Tribunal is of the view that the impugned order passed by the Adjudicating Authority is a cryptic order without assigning any reasons. Once the CIRP proceedings initiated and the Committee of Creditors constituted, the Adjudicating Authority under Section 12-A of the Code, may allow withdrawal of application made by the Applicant i.e. IRP/RP where the Committee of Creditors approves with 90% voting share. In the present case, the CoC in its 15th Meeting approved withdrawal of application against the Corporate Debtor by more than 93% voting share and issued Form-FA which is a statutory requirement - this Tribunal is of the view that the order passed by the Adjudicating Authority is a non-speaking and without assigning any reasons is per se illegal. The Adjudicating Authority is directed to reconsider the Application on its merit and pass a reasoned order in accordance with law within a period of 45 days from receipt of copy of this order - Appeal disposed off.
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2022 (11) TMI 804
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - first defence of the Corporate Debtor regarding entering into a separate settlement sanction with the Financial Creditor cannot sustain since there is mention of certain pre-conditions for the agreement to come into effect - HELD THAT:- The Corporate Debtor has failed to satisfy the compliance of the first condition precedent i.e. payment of 15% of the total settlement amount of Rs. 89 crore. Moreover, it is nowhere mentioned that the present sanction letter debars the Financial Creditor to approach this forum, considering that the Corporate Debtor has once previously breached the consent terms. This Bench concludes that there exists a valid Power of Attorney signed by the Financial Creditor in the favour of Mr. Akash Deep, the Applicant. In reference to Exhibit-I(B) as pointed out by the Corporate Debtor, claiming that a specific authorisation has not been given to the applicant to file the Petition on its behalf, we have in the contrary found a clear power of attorney executed by the financial creditor in favour of the Applicant in paragraph 2 of the Power of Attorney as annexed to the Petition - the claim of the Corporate Debtor that it is not the Corporate Debtor in the present petition is nothing but an attempt to shy away from its liability, considering that all the clauses were agreed between the Assignor Bank and the Corporate Debtor . The Corporate Debtor has potrayed the facts in a deranged manner and has tried to misguide this Bench. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.
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2022 (11) TMI 803
Seeking direction to respondent to accept the claim submitted by the appellant/ Applicant - whether a Leasehold Land forms a part of the Liquidation Estate as per the provisions of Section 36 (3) read with Section 36 (4) of the Code as the Corporate Debtor is not the owner of the land? - Section 42 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, it is noted that the leasehold land in question was allotted to Mehfil Restaurants and Hotel Limited in the year 1986 through an auction process and its name was subsequently changed to James Hotels Limited. Three different promoters bought this company by taking over the corporate debtor and changing the management. All this happened before the Liquidator came into the picture. The lease deed, through which the property was auctioned, contains express covenants regarding the transfer of property to a third party, thus signifying that the corporate debtor has the right to transfer the property to a third party and not merely the right to use the property. In the present context, the Chandigarh Administration has not raised any objection despite being informed about the liquidation proceedings and there are provisions in the lease deed regarding transfer of the property to a third party subject to certain conditions. The title to the land continues to remain with the corporate debtor, i.e. James Hotels Limited even after the successful bidder takes over the Corporate debtor. Thus, the assertion of the applicant that the lease deed is a contractual agreement, and the leased land cannot form a part of the Liquidation Estate of the Corporate Debtor is in the teeth of the provisions of Section 36(4)(a)(iv) of the Code appears misconceived - the leasehold rights of the Corporate Debtor over the land in the present case are its intangible assets within the meaning of Section 36(3)(d) of the Code and the same can be a part of the assets for E-auction as a Going Concern , especially when even after the implementation of the bid the corporate debtor continues to exist as the same corporate entity i.e. James Hotel Limited with the existing shareholders replaced by the Successful Bidder, and the existing lease deed with the Chandigarh Administration continues in its name as such. Application disposed off.
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Service Tax
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2022 (11) TMI 802
Extended period of Limitation - activities related to State Government roads and buildings and providing services in relation thereto - service tax was not paid and service tax registration also not done - Section 69 of Chapter V of the Finance Act, 1994 - HELD THAT:- Admittedly, the order-in-original is an appealable order. However, no appeal was filed. Long after the limitation period for filing appeal was over, the present writ petition came to be filed - Since then petitioner has not furnished the names of the officers responsible for the present state of affairs. Ultimately, on 10.10.2022 after recording the submission of learned Special Government Pleader, it is made clear that if by the next date, information pertaining to names of the officials responsible for not filing the appeal against the order-in-original dated 16.11.2018 was not furnished, we may consider recalling our order dated 24.03.2022. Considering the fact that the writ petition has been filed long after expiry of the limitation period for filing appeal, we are not inclined to entertain the writ petition - Petition dismissed.
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2022 (11) TMI 801
CENVAT Credit - contravention of provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 and Rule 3 and Rule 4(1) of the CENVAT Credit Rules, 2004 - whether the 3rd Proviso of Rule 4(1) of CENVAT Credit Rules, 2004 as introduced w.e.f. 01.09.2014, has got retrospective effect? - HELD THAT:- The 3rd proviso was introduced w.e.f. 01.09.2014 and there is no stipulation in the amending Notification that the same shall apply retrospectively. Rules of interpretation provide that whenever any statute is newly added, the same has got only prospective effect unless it is specifically provided in the amending statute or the amendment is by way of substitution of an existing provision mainly by way of clarification or removal of defects - the said proviso to Rule 4(1) of CENVAT Credit Rules, 2004 has got only prospective effect. Tribunal in the case of M/S. VOSS EXOTECH AUTOMOTIVE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2018 (3) TMI 1048 - CESTAT MUMBAI] has observed that Notification No.21/2014-CE(NT) dated 11.07.2014 should be applicable to those cases, wherein the invoices were issued on or after 11.07.2014 for the reason that Notification was not applicable to the invoices issued prior to the date of Notification. Therefore, at the time of issuance of invoices, no time limit was prescribed and limitation of six months cannot be made applicable. Appeal allowed - the issue stands decided in favour of the assessee.
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2022 (11) TMI 800
Refund of accumulated CENVAT Credit - Information Technology Software Services - rejection on the ground of being time-barred and also as inadmissible CENVAT availed - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE (NT) dated 18.6.2012 - October 2015 to March 2017 - HELD THAT:- From the narration of facts, it is clear that when the period of one year is computed from the last month of each quarter of refund claim, all refund claims filed are well beyond the period of one year. Hence the rejection of refund claim as time-barred by the authorities below cannot be considered to be totally erroneous. After the introduction of GST, the appellant is not able to take recredit of the said amount. Thus, the alternative prayer put forward at the time of argument is to grant refund taking into consideration the practical difficulty in taking recredit after introduction of GST. There was no adjudication in regard to the application of Sec. 142 of GST Act, 2017. There was no direction in the order to take recredit. Some amount is denied as not eligible also. The proceedings have emanated by filing refund claims under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012, the adjudication has been only in terms of the above and not under the provisions of Section 142 of GST, 2017. The Tribunal being a creature of the statute cannot grant reliefs extraneous to the adjudication. Appeal dismissed.
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2022 (11) TMI 799
Refund claim - time limitation - rejected as time-barred stating that the refund claims have been filed beyond the period of one year as envisaged under Section 11B of the Central Excise Act, 1944 - HELD THAT:- The rejection of refund claims as time-barred by ignoring the date of initial filing of the claim is not sustainable. The Tribunal in the case of REPRO INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [ 2016 (4) TMI 328 - CESTAT MUMBAI] had analyzed the similar issue and held that when claim has been returned for rectifying the deficiencies the claim cannot be held to be time-barred by computing the period of one year from the date of resubmitting the claim. The Principal Bench of the Tribunal in the case of COMMR. OF C. EX., INDORE VERSUS NATIONAL STEEL AGRO INDUSTRIES LTD. [ 2015 (11) TMI 1575 - CESTAT NEW DELHI ] held that if the claim is initially filed within time, the resubmission of claim has to be considered in continuation of the earlier claim and cannot be held to be time-barred. In the present case, when the period of one year is computed from the date of initial filing of the claim, the claims are made well within time. The date of initial submission of the refund claim is 10.07.2015, 10.07.2015, 01.09.2015 - In regard to the claim for July 2014-September 2014 it is seen that when computed from the last month of the quarter, the claim is filed well within time. The claim has been held to be time-barred computing the period of one year from the first month of the quarter. When the notification prescribes to file the refund claim for a quarter, the entire quarter has to be considered as a whole, without splitting each month. The appellant is eligible to get refund of unutilized credit of every month. The procedure to file refund claim for a quarter is only to make the filing and processing easier. It is noted in the impugned order as well as the order passed by the original authority that the appellant has not furnished E.R.2 returns and other necessary documents for processing the refund claims - matter requires to be remanded to the original authority for processing the refund claims after giving an opportunity to the appellant to furnish the required documents - Appeal allowed by way of remand.
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2022 (11) TMI 798
Levy of Service Tax - freight (ocean/ air) under reverse charge mechanism - It appeared to Revenue that as per provisions of Rule 2(1)(d)(i) (EEC) of the Service Tax Rules, 1994 as amended vide Notification No. 16/2017-ST, effective from 23.04.2017 read with Notification No. 30/2012-ST, as amended - HELD THAT:- Out of total demand of Rs. 86,185/-, Rs. 75,401/- pertains to air freight and due to calculation error this amount has been sustained as is evident from the record - the amount of Rs. 7,456/- is not liable on account of freight services provider being located in India. As the Indian service providers registered under the provision of service tax and paid the tax, no demand is exigible on this amount. Demand set aside - appeal allowed - decided in favor of appellant.
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2022 (11) TMI 797
Refund of pre-deposit made under Section 35F by way of reversal in GST-ITC credit - rejection on the ground that 7.5% was paid by way of reversal in the GST-ITC account - HELD THAT:- There is no dispute that the appellant have made pre-deposit in terms of Section 35F for entertaining the appeal by the Commissioner (Appeals). The learned Commissioner (Appeals) also entertained the appeal on payment of 7.5% though the same was reversed in the GST-ITC account. This clearly shows that the Commissioner (Appeals) has accepted the 7.5% reversal in GST-ITC as per-deposit in terms of Section 35F. The Commissioner (Appeals) has upheld the order-in-original and rejected the appeal which is contrary to his findings. Since the Commissioner (Appeals) has agreed that the appellant is eligible to avail the credit in their electronic credit ledger the appeal should not have been rejected, whereas the refund should have been allowed if not in cash, but atleast by way of credit in their electronic credit ledger. This is an apparent error in the order of the Commissioner which needs to be rectified - matter remanded to the Commissioner (Appeals) to give a clear order considering his own finding that the appellant is eligible to avail the credit in their electronic credit ledger. Appeal allowed by way of remand.
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Central Excise
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2022 (11) TMI 796
Seeking recall of the order - applicability of monetary limit on issues related to refund - appeal closed on the ground that the tax effect was below the threshold limit prescribed in the instruction dated 22.08.2019 issued by the Central Board of Indirect Taxes and Customs - HELD THAT:- The Board, in its communication dated 19.10.2022 has indicated, that an SLP should not be filed, having regard to the monetary limit, keeping the question of law open in terms of Section 35R of the Central Excise Act, 1944. Since the Board has declined to file an SLP, surely, this application for recall cannot lie - we are not inclined to entertain the recall application. Application dismissed.
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2022 (11) TMI 795
Restoration of appeal - non-compliance of the pre-deposit of duty within the period stipulated by the Tribunal - HELD THAT:- There is no dispute with regard to the facts of this case and hence, it will be more appropriate to directly go into the issue that is involved in these appeals. The appeals filed by the appellant against the order passed by the Commissioner of Central Excise (Appeals) Madurai, before the Tribunal was accompanied by an application seeking for dispensing with the predeposit of the duty amount - Admittedly, the condition imposed by the Tribunal was not complied with and hence, a final order was passed by the Tribunal on 09.08.2007 dismissing the appeals. The Tribunal is a creature of the Statute. Hence, the Tribunal can act only in exercise of such power and jurisdiction as is conferred under the Central Excise Act. On carefully going through the Act and Rules, there are no specific power conferred on the Tribunal to restore the appeals which has been dismissed finally. The Tribunal became Functus officio once a final order has passed and there is no scope for restoring an appeal thereafter - there are no justification for the appellant to file a petition for restoration of appeals after the exorbitant delay of nearly 7 years. The amount that was directed to be deposited was not exorbitant and the total amount that is involved in all the three appeals put together did not even exceed Rs.7 lakhs. Hence, seeking for restoration of appeals after 7 years without any justification, only calls for a dismissal. Appeal dismissed.
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2022 (11) TMI 794
CENVAT Credit - benefit under Section 73 of the Finance Act 2010 without paying 24% interest per annum from the due date as contemplated under Section 73(2) of the Finance Act, 2010 - proviso to Rule 6(7) of the CENVAT Credit Rules 2004 - whether the subsequent amendment that was brought into force in the year 2010 and was given retrospective effect, can be put against the assessee? - HELD THAT:- There is no dispute with regard to the fact that the respondent had reversed the credit with interest by availing of the option provided under Section 73(2) of the Finance Act, 2010, on 01.08.2007, even before the issuance of show cause notice. Reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II VERSUS ICMC CORPORATION LTD. [ 2014 (1) TMI 1646 - MADRAS HIGH COURT] where it was held that Considering the fact that the assessee had reversed the credit even prior to the amendment and the order of the Tribunal is in fact no different from what is contemplated under the Finance Act, 2010, we do not find anything survives further for this Court to consider the merits of the case pleaded by the Revenue. There is no manifest error in the final order passed by the Tribunal and the substantial question of law raised in this appeal is answered accordingly.
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2022 (11) TMI 793
Reversal of CENVAT Credit - credit attributable to the inputs contained in waste and scraps, which have not been received from the job-worker - shortages in quantity of processed inputs received back by the Appellant - Rule 4(5)(a) of the Cenvat Credit Rules, 2004 - HELD THAT:- The duty is being demanded by treating them as a manufacturer of waste and scrap, which is factually incorrect. The present provisions of Rule 4(5)(a), when compared with erstwhile Rule 57F(4) of Central Excise Rules, 1944, makes a clear distinction, inasmuch as the said Rule nowhere requires the return of waste and scrap generated at the job worker s end. The issue stands settled by the Tribunal s decision in the case of ROCKET ENGINEERING CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., PUNE-II [ 2005 (6) TMI 184 - CESTAT, MUMBAI ]. By relying upon the Tribunal s decision in the case of INTERNATIONAL TOBACCO CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD [ 2003 (10) TMI 171 - CESTAT, NEW DELHI] , it was held that when no process of manufacture of waste and scrap has taken place at the end of principal manufacturer, duty cannot be demanded from the principal manufacturer. The waste and scrap are not manufactured goods whether they are generated at the premises of the principal manufacturer or at the premises of job-worker and accordingly, the legislature have consciously not made any provisions for reversal of any credit taken on duty paid inputs in case of clearance of waste and scrap and/or, there non-return from the job worker s premises under the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2002/2004. The demand of duty, interest and imposition of penalty upon the Appellant is set aside by holding that the Appellant was under no obligation to pay duty on waste and scrap used at the job worker s end - appeal allowed.
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2022 (11) TMI 792
CENVAT Credit - purchase against advance authorization - exemption under para 4.1 of FTP 2009-14 or not - supplier has discharged the duty duly - duty payment on the part of the supplier can be disputed at the end of the recipient of the input, or not? - HELD THAT:- There is no dispute on the fact that the supplier M/s. Reliance Industries Ltd. has discharged the duty as per law. The inputs were received by the appellant for use in the manufacture of final product therefore, the sufficient compliance of the provision of Cenvat Credit Rules, 2004 stood made. It is settled law that at the end of the service recipient of input, cenvat credit cannot be disputed on the ground that whether the said input is liable to duty or otherwise at the end of the supplier. Once the supplier has paid the duty whether it is payable or otherwise, the said duty is clearly admissible as cenvat credit. The assessment of duty payment on the part of the supplier cannot be disputed at the end of the recipient of the input therefore, there is no reason to deny the cenvat credit once the duty paid inputs were received by the appellant - reliance can be placed in the case of COMMR. OF C. EX. S.T., JAIPUR-I VERSUS DCM SHRIRAM CONSOLIDATED PVT. LTD. [ 2017 (8) TMI 886 - CESTAT NEW DELHI] . In the present case duty was paid by M/s. Reliance Industries Ltd. against invalidation of advance authorisation, the cenvat credit to the appellant is admissible - Demand not sustainable - penalty set aside - appeal allowed.
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2022 (11) TMI 791
Refund of excise duty - pre and post GST era - duty paid on clearance of goods prior to 1.7.2017 and such goods had been returned by the buyer as defective after 1.7.2017, within a period of six months - HELD THAT:- In the facts and circumstances of the present case, there is no dispute with regard to the identity of the goods cleared and the same goods have been returned back. Further, there is no dispute as to the duty paid nature of the goods under the provisions of the Central Excise Act. Further, it is found that the goods have been returned by a Public Sector entity, which is not registered under the provisions of the CGST Act. The Adjudicating Authority is directed to grant refund of the said amount of Rs.35,04,322/- with interest under Section 11 BB of the Central Excise Act, within a period of 45 days from the date of receipt of copy of this order - appeal allowed.
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CST, VAT & Sales Tax
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2022 (11) TMI 838
Non-grant of refund with interest - notice under section 59 (2) of the Delhi Value Added Tax Act, 2004 issued - HELD THAT:- The Commissioner, Trade and Taxes [Commissioner] is directed to remain present in court on the next date of hearing, to explain as to why, in matter after matter, we find that steps are not taken to refund monies which are otherwise due to petitioners, resulting in a heavy burden on the exchequer. List the matter on 05.12.2022.
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2022 (11) TMI 790
Seeking summon of entire records in connection with revisionary proceedings initiated through notices - Section 74A(2) of the Delhi Value Added Tax Act, 2004 - HELD THAT:- The notice dated 07.11.2022, which required petitioner s authorised representative to remain present before the concerned officer on 10.11.2022, projects the said notice as a reminder - What is also strange, to which we have not received any explanation as yet, is that the impugned notice dated 25.10.2022 is almost identical to the notice dated 07.10.2022, which was withdrawn by the respondents/revenue as recorded in our order dated 17.10.2022 passed in W.P.(C) 14633/2022. 10.1. According to Mr Nischal, the only change that has taken place is that the impugned notice is now confined to clause (b) of sub-section (1) of Section 74A of the DVAT Act. The earlier notice i.e., notice dated 07.10.2022, triggered both clauses (a) and (b) of Section 74A(1) of the DVAT Act. Since we need to examine the record and have the say of respondents/revenue placed before us, we are inclined to issue formal notice in the matter - Issue notice.
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2022 (11) TMI 789
Levy of penalty u/s 23 of the Tamil Nadu General Sales Tax Act, 1959 - Process amounting to manufacture or not - activity undertaken by the petitioner on job work basis for dyeing fabrics - eligibility to procure furnace oil against Form XVII under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT:- The penalty under Section 23 of the Act is attracted where if any person purchasing goods is guilty of an offence under Section 45(2)(e) of the Act. As per said Section 23, the authority can impose penalty for a maximum amount not exceeding one and a half times (150%) the tax payable on the turnover relating to the sale of such goods at a rate which is equal to the rate prescribed in the First Schedule less three percent - As per Section 45(2)(e) of the Act, if any person who after purchasing any goods in respect of which he has made a declaration under the second proviso to Sub-Section (3) or Sub-Section (5) of Section 3 fails without reasonable excuse to make use of the goods for the declared purpose, such person is a guilty of such offence and penalty may be imposed on him. On going through the Circulars of the Principal Commissioner and Commissioner of Commercial Taxes and the instructions therein are no doubt binding on the officers of the Department. However, they are not binding either on the Higher Jurisdiction Forum such as Tribunal, High Court or the Supreme Court in terms of the decision of the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES [ 2008 (10) TMI 5 - SUPREME COURT] . Section 23 of the Act is elastic in nature. Discretion of power is vested with the Authority to impose penalty which is a maximum penalty. Discretion vested with a quasi jurisdictional authority cannot be taken away by a Circular. Therefore, Circular / Clarification of the Principal Commissioner and Commissioner of Commercial Taxes which is contrary to the provisions of the Act is not binding on the Court - The activity undertaken by the petitioner would have amounted to manufacture within the meaning of Central Excise Act, 1944 with introduction of Section 3A of the Central Excise Act, 1944 with effect from 14.05.1997 which was later omitted by Finance Act, 2001. The dispute pertains to the Assessment Year 2000-2001. Though the order of the second respondent Appellate Assistant Commissioner has placed reliance on the Circular / Instruction of the Principal Commissioner and Commissioner of Commercial Taxes dated 27.02.2002 which was reversed by the Appellate Tribunal, considering the fact that the petitioner has also paid back the tax and concessional availed, the reduced penalty imposed by the second respondent Appellate Assistant Commissioner in the peculiar facts of the case is to be upheld and the impugned order of the Appellate Tribunal dated 05.10.2004 is quashed - Petition allowed.
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Indian Laws
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2022 (11) TMI 788
Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - failure to establish the case beyond any reasonable doubt to prove his case - rebuttal of statutory presumption - Section 138 of Negotiable Instruments Act - HELD THAT:- Admittedly, Exs.P2 to P4 were issued for legally enforceable debt in favour of the respondent. All the cheques were returned by the bank unpaid. Therefore, the respondent clearly fulfilled the basic requirement under Section 138 of Negotiable Instruments Act. The reason stated by the petitioners' bank is clearly attracted for the offence punishable under Section 138 of Negotiable Instruments Act for returning the cheque dishonoured. The first petitioner is the Proprietrix of Arpan Exports. The second petitioner is the Mandate Holder of the said Arpan Exports and he is authorized to run the Proprietrix concern including to operate the account of the first petitioner herein. Therefore, the respondent rightly filed a complaint for the offence punishable under Section 138 of Negotiable Instruments Act as against the Proprietrix and the mandate holder, who signed the cheque. It is not the case of the petitioners that without the consent of the first petitioner, the second petitioner issued cheques. In order to repay the loan which was borrowed by both the accused, they issued cheques in favour of the respondent - it cannot be said that Exs.P8 and P9 is inadmissible evidence. Hence, the respondent proved his case in terms of Sections 118 and 139 of Negotiable Instruments Act. Though, the said presumption is rebuttable in nature, it is the burden of the petitioners to rebut the said presumption. However, in order to rebut the said presumption, the petitioners neither produced any oral nor marked any documentary evidence. In fact, nothing was elicited from P.W.1 to rebut the presumption. Both the Courts below rightly found the petitioners guilty for the offence punishable under Section 138 of Negotiable Instruments Act and this Court finds no infirmity or illegality in the orders passed by the Courts below and this revision is liable to be dismissed - this Criminal Revision case stands dismissed.
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